Highlights of the fourth trading quarter:
· Group revenue for the year up 10.0%.
· Like for like Group revenue for the year up 3.3%.
· Balanced approach to revenue management continues to drive returns.
. Like for like average occupancy for the year up 1.4%.
. Like for like closing occupancy of 75.0%.
. Like for like average storage rate for the year up 1.3%.
· Freehold site acquired at Merry Hill, west of Birmingham for a 55,000 sq ft store, subject to planning.
· Cash Tax Adjusted Earnings per Share for the year ended 31 October 2017 is expected to be slightly ahead of consensus.
Frederic Vecchioli, Chief Executive Officer commented:
"We have had a good final quarter and a successful year, through a combination of organic and acquisitive growth combined with a strong operational performance. Over the last 18 months our market leading positions in the UK and Paris have been consolidated, supported by the acquisitions of Space Maker and Alligator Self Storage, which added 24 stores to the UK portfolio and boosted earnings from the outset. Organically we have developed and opened six new stores in the UK and Paris, with a pipeline of a further three new stores opening in London and Birmingham.
"The refinancing of our borrowings earlier in the year has resulted in a strengthened, efficient, low cost balance sheet which gives us the flexibility to continue to target selected development and acquisition opportunities.
"We enter the new financial year in a strong position with substantial growth potential from the integration of Alligator Self Storage and the development of three new sites. However, our priority and the largest opportunity remains the significant upside from our 1.6m square feet of invested unlet space. We remain confident in the future and focused on the continued delivery of value to all shareholders."
The UK has performed well over the year resulting in revenue growing by 11.6%. This performance reflects the full year contribution from the acquisition of Space Maker in July 2016 as well as the impact of the new stores opened in Wandsworth, Chiswick, Birmingham and Altrincham, offset by the closure of Deptford and our old Birmingham Central store. The new store openings and Space Maker have performed in line with or slightly ahead of their business plans.
On a like for like basis full year revenue grew by 3.1%. Average occupancy over the year was up 1.5% with closing occupancy at 72.5%. Average rate grew by 0.9% over the year with the fourth quarter rate returning to growth at 0.6% year on year after a flat third quarter. Sequentially, the fourth quarter rate was up 2.8% on the third quarter.
In addition, in October 2017, we completed the acquisition of a 1.34 acre industrial site at Merry Hill, around ten miles west of the centre of Birmingham close to a major regional shopping centre. Subject to receiving planning consent we expect to open a purpose built freehold 55,000 sq ft store in the first quarter of 2019.
Our Paris business had a further strong quarter growing total revenue by 6.5% resulting in 5.1% growth for the full year. Our new stores at Emerainville and Combs-la-Ville are performing well and contribute to the total revenue figures. However, the immaturity of these stores has had a dilutive effect on the closing occupancy and the average rate.
Like for like revenue grew by 4.3% in the quarter and delivered 4.0% growth for the full year. The impact of the weakening of Sterling in the period resulted in the Sterling equivalent like for like revenue growing by 7.4% in the quarter and 14.3% for the full year. Our like for like occupancy performance was strong for the year with closing occupancy at 84.7%, up 4.0 percent compared to 2016. Pricing was robust and our like for like average rate was up 0.8% year on year in the quarter, reflecting a very strong performance in the same quarter in the previous year and, for the full year, grew by 2.3% compared to 2016.
As ever, we continue to pursue our proven strategy of growing the revenue of our market leading Parisian portfolio by achieving an appropriate balance of rate and occupancy growth.
In the last 18 months Safestore has further strengthened its market positions in both the UK and Paris with the acquisitions of Space Maker and Alligator, the opening of six new stores and the establishment of a pipeline of a further three new stores. The Group has 1.6m square feet of fully invested unlet space available offering significant operational upside in the existing portfolio. We remain focused on further optimising the Group's operational performance whilst our balance sheet strength and flexibility provides us with the opportunity to actively consider further selective development and acquisition opportunities in our key markets.
We believe Safestore is well placed to withstand the uncertain macroeconomic backdrop in the UK. We have seen some positive trends in the final quarter in relation to enquiry growth and rate in the UK. The Group has the benefit of operating in two countries and, in Paris, momentum has been strong in the second half of the year. As a result we expect cash tax adjusted earnings per share to be slightly ahead of consensus for the year ended 31 October 2017 and we look forward with confidence to the 2017/18 financial year.