Third Quarter Trading Update

RNS Number : 6878Q

Safestore Holdings plc

14 September 2017

 

                                                                                                14 September 2017

Safestore Holdings plc

Third quarter trading update for the period 1 May 2017 to 31 July 2017

 Strong revenue growth, Space Maker and new stores delivering, Paris accelerating

Group Operating Performance	Q3 2017	Q3 20162	Change	Change- CER1
Revenue (£'m)	32.9	28.6	15.0%	12.5%
Revenue (£'m)- year-to-date	95.5	82.7	15.5%	12.4%
Closing Occupancy (let sq ft- million) 4	4.20	3.69	13.8%	n/a
Closing Occupancy (% of MLA) 5	73.1%	74.8%	(1.7ppts)	n/a
Average Storage Rate (£)	26.06	25.87	0.7%	(1.5%)
Average Storage Rate (£)- year-to-date	26.58	25.97	2.3%	(0.6%)

Group Operating Performance- like-for-like3	Q3 2017	Q3 20162	Change	Change- CER1
Revenue (£'m)	29.9	28.4	5.3%	3.2%
Revenue (£'m)- year-to-date	87.3	82.0	6.5%	3.5%
Closing Occupancy (let sq ft- million) 4	3.72	3.67	1.4%	n/a
Closing Occupancy (% of MLA) 5	76.0%	74.8%	+1.2ppts	n/a
Average Storage Rate (£)	26.77	25.91	3.3%	0.8%
Average Storage Rate (£)- year-to-date	27.26	26.00	4.8%	1.5%

Highlights

·   Group revenue in Q3 in CER¹ grew by 12.5%

·   Group like-for-like revenue in Q3 in CER¹ increased 3.2% with strong Paris performance

o UK up 2.3%

o Paris up 5.7%

·   Group like-for-like closing occupancy of 76.0% (up 1.2 ppts on Q3 2016)

·   Group like-for-like average storage rate in Q3 in CER¹ grew 0.8%

·   New store at Paddington Marble Arch expected to open in 2018

·   Sale of Deptford store for £4.8m

Frederic Vecchioli, Chief Executive Officer commented:

"I am pleased to report continuing positive trading across the group in the third quarter with particularly strong momentum in our Paris business. As ever, our top priority remains the significant organic growth opportunity represented by the 1.5m square feet of currently unlet space in our existing fully invested estate.

Our recent openings in London (Wandsworth and Chiswick), Paris (Emerainville and Combs-la-Ville), Birmingham and Altrincham, are all performing in line or ahead of their business plans as is Space Maker, the twelve-store portfolio acquired in July 2016. I am also pleased to announce our new store at Paddington Marble Arch and look forward to its forthcoming opening along with our new store in Mitcham in the next financial year.

I am confident that our leading market positions in the UK and Paris will enable us to withstand any challenges presented by the current uncertain macro-economic backdrop. The company is in a strong position and remains on course to meet the Board's full year expectations."

Business highlights

UK Trading Performance

UK Operating Performance	Q3 2017	Q3 20162	Change
Revenue (£'m)	24.7	21.5	14.9%
Revenue (£'m)- year-to-date	72.0	62.6	15.0%
Closing Occupancy (let sq ft- million) 4	3.32	2.86	16.1%
Closing Occupancy (% of MLA) 5	72.5%	73.0%	(0.5ppts)
Average Storage Rate (£)	23.82	24.29	(1.9%)
Average Storage Rate (£)- year-to-date	24.43	24.64	(0.9%)

UK Operating Performance- like-for-like3	Q3 2017	Q3 20162	Change
Revenue (£'m)	21.8	21.3	2.3%
Revenue (£'m)- year-to-date	64.0	61.9	3.4%
Closing Occupancy (let sq ft- million) 4	2.87	2.84	1.1%
Closing Occupancy (% of MLA) 5	73.7%	73.0%	+0.7ppts
Average Storage Rate (£)	24.33	24.32	=
Average Storage Rate (£)- year-to-date	24.95	24.68	1.1%

The UK business grew revenue by 14.9% in the quarter with like-for-like revenue growing by 2.3%. Whilst performance in London was solid, our South East stores outside London and Regional UK stores performed strongly.

We saw good enquiry growth in the quarter of 4.5%. The third quarter is traditionally the busiest period in the year and the UK business added 162,000 sq ft of like-for-like occupancy since the end of Q2 (2016: 170,000 sq ft added). As a result, Q3 like-for-like closing occupancy, at 73.7%, increased by 0.7 percentage points compared to the prior year and by 4.2 percentage points over the peak season as compared to the position at the end of Q2.

When the impact of the 2016 acquisition of Space Maker, and the opening of four new stores in the last twelve months is taken into consideration, revenue grew by 14.9% in the quarter. These new stores, in the initial period after opening, are dilutive to occupancy and rate. However, all new stores and Space Maker are trading in line or ahead of our business plans.

Paris Trading Performance

Paris Operating Performance	Q3 2017	Q3 20162	Change
Revenue (€'m)	9.4	8.8	6.8%
Revenue (€'m)- year-to-date	27.3	26.1	4.6%
Closing Occupancy (let sq ft- million) 4	0.88	0.83	6.0%
Closing Occupancy (% of MLA) 5	75.3%	82.0%	(6.7ppts)
Average Storage Rate (€)	39.45	38.84	1.6%
Average Storage Rate (€)- year-to-date	40.18	39.42	1.9%
Revenue (£'m)	8.2	7.1	15.5%
Revenue (£'m)- year-to-date	23.5	20.1	16.9%

Paris Operating Performance- like-for-like3	Q3 2017	Q3 20162	Change
Revenue (€'m)	9.3	8.8	5.7%
Revenue (€'m)- year-to-date	27.1	26.1	3.8%
Closing Occupancy (let sq ft- million) 4	0.85	0.83	2.4%
Closing Occupancy (% of MLA) 5	84.7%	82.0%	+2.7ppts
Average Storage Rate (€)	39.95	38.84	2.9%
Average Storage Rate (€)- year-to-date	40.50	39.42	2.7%

Paris had a strong quarter growing revenue by 6.8% compared to last year.

On a like-for-like basis the business grew both rate and occupancy at or above the upper end of our guidance with revenue up by 5.7% for the quarter.

Like-for-like occupancy grew by 39,000 sq ft since the end of Q2 (2016: 26,000 sq ft) resulting in closing occupancy of 84.7%, up 2.7 percentage points compared to the prior year and by 3.8 percentage points over the peak season as compared to the position at the end of Q2.

Pricing showed improved momentum and our like-for-like average rate was up 2.9% year-on-year in the quarter.

The impact of the new stores opened in the last twelve months at Emerainville and Combs-la-Ville is to dilute rate and occupancy in the initial period after trading commences. Both stores are trading in line or ahead of our business plan.

The impact of the 8% weakening of Sterling compared to Q3 2016 contributed to the Sterling equivalent total revenue increasing 15.5% on the prior year.

New London Store

We are pleased to confirm that we obtained planning permission and exchanged contracts in July 2017 for a new 37,000 sq ft leasehold store located between Paddington and Marble Arch in central London. The lease will be for a period of 20 years, with an option to extend for a further 10 years. We anticipate that the store will open in the second quarter of 2018.

Deptford⁶

In June 2017 we accepted an offer of £4.8m on our leasehold Deptford store. The store contributed £0.4m of EBITDA after rent in the year ended October 2016. The transaction was completed on 31 August 2017.

Lease Extension

Earlier this month we continued our programme of extending the leases on our leasehold store portfolio. The lease on our Oldbury store, which had 6 years remaining, has been extended to 2042 resulting in a certain term of 25 years. A year's rent free period was agreed as part of the extension.

Outlook

Reflecting normal industry trading patterns, we anticipate a reduction in occupancy in Q4 compared to Q3. Similar trading trends have continued in the UK and Paris in the early part of Q4 and, with the company in a strong position, we anticipate full year earnings will be in line with the Board's expectations.

Ends

Notes

1 - CER is Constant Exchange Rates (Euro denominated results for the current period have been retranslated at the exchange rate effective for the comparative period, in order to present the reported results on a more comparable basis).

2 - Q3 2016 is the quarter ended 31 July 2016.

3 - Like-for-like information includes only those stores which have been open throughout both the current and prior financial years, with adjustments made to remove the impact of new and closed stores, as well as corporate transactions.

4 - Closing occupancy excludes offices but includes 36,250 sq ft of bulk tenancy as at 31 July 2017 (31 July 2016 - 37,750 sq ft).

5 - MLA is Maximum Lettable Area.

6 - Deptford has been reported within like-for-like trading for these Q3 results to 31 July 2017, but will be excluded from like-for-like in our full year results.

Enquiries

Safestore Holdings plc	020 8732 1500
Frederic Vecchioli, Chief Executive Officer
Andy Jones, Chief Financial Officer
www.safestore.com
Instinctif Partners	020 7457 2020
Matthew Smallwood Mark Reed

Notes to editors:

·      Safestore is the UK's largest self-storage group with 134 stores, comprising 108 wholly owned stores in the UK (including 62 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 26 wholly owned stores in the Paris region.

·      Safestore operates more self-storage sites inside the M25 and in central Paris than any competitor providing more proximity to customers in the wealthiest and densest UK and French markets.

·      Safestore was founded in the UK in 1998. It acquired the French business "Une Pièce en Plus" ("UPP") in 2004 which was founded in 1998 by the current Safestore Group CEO Frederic Vecchioli.

·      Safestore has been listed on the London Stock Exchange since 2007. It entered the FTSE 250 index in October 2015.

·      The Group provides storage to around 55,000 personal and business customers.

·      As at 31 July 2017, Safestore had a maximum lettable area ("MLA") of 5.742 million sq ft (excluding the expansion pipeline stores) of which 4.196 million sq ft was occupied.

·      Safestore employs around 600 people in the UK and France.

 

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