Last checked at 3 Sep 2014 07:00
3 September 2014
Safestore Holdings plcThird quarter trading update for the period 1 May 2014 to 31 July 2014
Continued improvement in trading trends, on course to meet expectations
Group Operating Performance | Q3 2014 | Q3 20132 | Change | Change- CER1 |
Revenue- like-for-like (£'m) | 24.9 | 24.0 | 3.8% | 5.4% |
Revenue (£'m) | 24.9 | 24.3 | 2.5% | 4.1% |
Revenue- like-for-like year-to-date (£'m) | 71.8 | 70.2 | 2.3% | 3.0% |
Revenue- year-to-date (£'m) | 71.8 | 71.3 | 0.7% | 1.4% |
Closing Occupancy (let sq ft- million) 3 | 3.48 | 3.34 | 4.2% | n/a |
Closing Occupancy (% of MLA) | 68.4% | 65.4% | +3.0ppts | n/a |
Average Storage Rate (£) | 24.00 | 24.01 | (0.0%) | 1.7% |
Average Storage Rate (£)- year-to-date | 24.09 | 24.45 | (1.5%) | (0.7%) |
Highlights
· Group Revenue trends continuing to improve with like-for-like Q3 2014 revenue in CER1 up 5.4% on Q3 2013
· Group closing occupancy3 of 68.4% (up 3.0 ppts on Q3 2013) at 3.48 million square feet ("sq ft")
· Continued operational progress in the UK with new lets growth of 18.6% driving an increase in closing occupancy of 4.1 ppts to 67.2%
· UK rate up 2.5% in the quarter and like-for-like revenue growth accelerating to 6.4% from 0.6% in H1 2014
· French business continues robust performance with CER revenue up 3.0% on Q3 2013 with further improvement in occupancy and rate in CER1
Frederic Vecchioli, Chief Executive Officer commented:
"The trading progress achieved in the first half of the year has continued throughout Q3. Our focus on operational improvement in the UK is resulting in higher occupancy and rate growth whilst our French business has continued to perform well following a strong first half.
Although the trading performance is improving, there is much to do to achieve the long term opportunity of filling the 1.6m square feet of currently unlet space. Our focus remains on driving the operational performance of the business and I am confident that the recent progress in the business will continue through the remainder of the financial year. Early Q4 trading in both countries is encouraging and we remain confident in generating earnings in line with the Board's expectations."
Business highlights
UK Trading Performance
UK Operating Performance | Q3 2014 | Q3 20132 | Change |
Revenue- like-for-like (£'m) | 18.4 | 17.3 | 6.4% |
Revenue (£'m) | 18.4 | 17.6 | 4.5% |
Revenue- like-for-like year-to-date (£'m) | 52.3 | 51.0 | 2.5% |
Revenue- year-to-date (£'m) | 52.3 | 52.1 | 0.4% |
Closing Occupancy (let sq ft- million) 3 | 2.71 | 2.58 | 5.0% |
Closing Occupancy (% of MLA) | 67.2% | 63.1% | +4.1ppts |
Average Storage Rate (£) | 22.08 | 21.54 | 2.5% |
Average Storage Rate (£)- year-to-date | 21.95 | 22.26 | (1.4%) |
The business performed well in what is traditionally the busiest period in the year, showing significant growth compared to the prior year and continuing the improving trends reported in the first half of the year. Like-for-like revenues were up 6.4% and occupancy increased 4.1 percentage points compared to the prior year to 67.2% in Q3.
Our key focus in the UK remains on our store operational performance and on improving the conversion of enquiries at an appropriate rate to maximise revenues. New lets growth of 18.6% has continued to drive performance, with 151,000 sq ft of occupancy added since the end of Q2, demonstrating that encouraging operational progress is being made. In addition, the adjustments made to our pricing policy in the first half of the year have continued to impact positively on the average rate which, in Q3, was up 2.5% year-on-year and 1.0% compared to H1. As a result, the improving revenue trend, reported at our Interim Results, has continued through Q3, as illustrated below.
Variance v prior year | Aug-13 | Sep-13 | Oct-13 | Nov-13 | Dec-13 | Jan-14 |
Total Revenue | (8.8%) | (6.9%) | (5.3%) | (3.7%) | (2.9%) | (3.9%) |
Like-for-like revenue | (7.9%) | (5.5%) | (3.8%) | (1.3%) | (0.3%) | (1.3%) |
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Variance v prior year | Feb-14 | Mar-14 | Apr-14 | May-14 | Jun-14 | Jul-14 |
Total Revenue | (1.5%) | (0.3%) | 0.6% | 2.5% | 4.9% | 6.2% |
Like-for-like revenue | 1.2% | 2.4% | 2.9% | 4.4% | 6.6% | 7.8% |
French Trading Performance
France Operating Performance | Q3 2014 | Q3 20132 | Change | Change- CER1 |
Revenue (£'m) | 6.5 | 6.7 | (3.0%) | 3.0% |
Revenue- year-to-date (£'m) | 19.5 | 19.2 | 1.6% | 4.2% |
Closing Occupancy (let sq ft- million) 3 | 0.77 | 0.76 | 1.3% | n/a |
Closing Occupancy (% of MLA) 5 | 72.9% | 74.7% | -1.8ppts | n/a |
Average Storage Rate (£) | 30.45 | 32.24 | (5.6%) | 0.2% |
Average Storage Rate (£)- year-to-date | 31.11 | 31.61 | (1.6%) | 0.8% |
Our French performance remains robust on a CER basis with both occupancy and rate improving on the same period in the prior year and as a result we have delivered revenue growth of 3.0%. We have, however, been impacted by the weakening of the Euro and in sterling terms our revenue is down 3.0% on the same quarter last year.
Subsequent to the acquisition of the freehold of our St Denis store in May 2014, we will be closing our leasehold Landy store at the end of October 2014 and consolidating its business into the St Denis store.
Our strategy of achieving an appropriate balance of rate and occupancy growth has been successful and we are now in the sixth consecutive quarter of year-on-year rate growth.
Outlook
We are pleased with our operational progress in the UK and the continued robust performance in France. Reflecting normal industry trading patterns, we anticipate a reduction in Q4 occupancy compared to Q3. However, we are encouraged by early Q4 trading.
We have strong market positions in both the UK and Paris and ample scope for further operational upside in our fully invested portfolio, with 1.6m square feet of space to fill. We are fully focused on further improving the operational performance of the business and remain confident of delivering earnings and dividend growth to shareholders in line with the Board's expectations.
Ends
1 - 'CER' is Constant Exchange Rate
2 - Q3 2013 is the quarter ended 31 July 2013
3 - Closing occupancy excludes offices but includes 65,572 sq ft of bulk tenancy as at 31 July 2014 (31 July 2013 - 59,722 sq ft)
4 - MLA is maximum Lettable Area- following a review of MLA in 2013 across the estate and adjusting for the closure of Enfield South, Group MLA has been adjusted to 5.08m sq ft
5 - In France, our occupancy as a percentage of MLA4 dropped by 1.8ppts as a result of revisions to the MLA in Q4 2013
Enquiries
Safestore Holdings plc | 020 8732 1500 |
Frederic Vecchioli, Chief Executive Officer |
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Andy Jones, Chief Financial Officer |
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www.safestore.com |
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Instinctif Partners | 020 7457 2020 |
Matthew Smallwood Mark Reed |
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Notes to editors:
· | Safestore is the UK's largest self storage group with 134 stores. They include 97 wholly owned stores in the UK and 25 wholly owned stores in the Paris region together with 12 stores under management in the UK.
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· | The Company provides storage to around 46,000 personal and business customers.
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· | Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.08 million sq ft (including the expansion pipeline stores) of which 3.48 million sq ft is currently occupied.
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· | Safestore employs around 550 people. |