Safestore Holdings plc Third Quarter Trading Update (6878Q)

TIDMSAFE

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     Q3 2016(2)    Change     Change- 
                                   2017                             CER(1) 
-------------------------------  ------  -----------  ----------  -------- 
 Revenue (GBP'm)                  32.9       28.6        15.0%      12.5% 
-------------------------------  ------  -----------  ----------  -------- 
 Revenue (GBP'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 
  (GBP)                           26.06     25.87        0.7%      (1.5%) 
-------------------------------  ------  -----------  ----------  -------- 
 Average Storage Rate 
  (GBP)- year-to-date             26.58     25.97        2.3%      (0.6%) 
-------------------------------  ------  -----------  ----------  -------- 
 
 
 Group Operating Performance-      Q3     Q3 2016(2)    Change    Change- 
  like-for-like(3)                 2017                            CER(1) 
-------------------------------  ------  -----------  ---------  -------- 
 Revenue (GBP'm)                  29.9       28.4        5.3%      3.2% 
-------------------------------  ------  -----------  ---------  -------- 
 Revenue (GBP'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 
  (GBP)                           26.77     25.91        3.3%      0.8% 
-------------------------------  ------  -----------  ---------  -------- 
 Average Storage Rate 
  (GBP)- year-to-date             27.26     26.00        4.8%      1.5% 
-------------------------------  ------  -----------  ---------  -------- 
 

Highlights

   --   Group revenue in Q3 in CER(1) grew by 12.5% 
   --   Group like-for-like revenue in Q3 in CER(1) 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 CER(1) grew 0.8% 
   --   New store at Paddington Marble Arch expected to open in 2018 
   --   Sale of Deptford store for GBP4.8m 

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     Q3 2016(2)    Change 
                                   2017 
-------------------------------  ------  -----------  ---------- 
 Revenue (GBP'm)                  24.7       21.5        14.9% 
-------------------------------  ------  -----------  ---------- 
 Revenue (GBP'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 
  (GBP)                           23.82     24.29       (1.9%) 
-------------------------------  ------  -----------  ---------- 
 Average Storage Rate 
  (GBP)- year-to-date             24.43     24.64       (0.9%) 
-------------------------------  ------  -----------  ---------- 
 
 
 UK Operating Performance-         Q3     Q3 2016(2)    Change 
  like-for-like(3)                 2017 
-------------------------------  ------  -----------  --------- 
 Revenue (GBP'm)                  21.8       21.3        2.3% 
-------------------------------  ------  -----------  --------- 
 Revenue (GBP'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 
  (GBP)                           24.33     24.32         = 
-------------------------------  ------  -----------  --------- 
 Average Storage Rate 
  (GBP)- 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     Q3 2016(2)    Change 
                                   2017 
-------------------------------  ------  -----------  ---------- 
 Revenue (EUR'm)                   9.4       8.8         6.8% 
-------------------------------  ------  -----------  ---------- 
 Revenue (EUR'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 
  (EUR)                           39.45     38.84        1.6% 
-------------------------------  ------  -----------  ---------- 
 Average Storage Rate 
  (EUR)- year-to-date             40.18     39.42        1.9% 
-------------------------------  ------  -----------  ---------- 
 Revenue (GBP'm)                   8.2       7.1         15.5% 
-------------------------------  ------  -----------  ---------- 
 Revenue (GBP'm)- year-to-date    23.5       20.1        16.9% 
-------------------------------  ------  -----------  ---------- 
 
 
 Paris Operating Performance-      Q3     Q3 2016(2)    Change 
  like-for-like(3)                 2017 
-------------------------------  ------  -----------  --------- 
 Revenue (EUR'm)                   9.3       8.8         5.7% 
-------------------------------  ------  -----------  --------- 
 Revenue (EUR'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 
  (EUR)                           39.95     38.84        2.9% 
-------------------------------  ------  -----------  --------- 
 Average Storage Rate 
  (EUR)- 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.

Deptford(6)

In June 2017 we accepted an offer of GBP4.8m on our leasehold Deptford store. The store contributed GBP0.4m 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. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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September 14, 2017 02:00 ET (06:00 GMT)