Q1 Interim Management Statement

RNS Number : 8413Y

Safestore Holdings plc

28 February 2013

 

FOR IMMEDIATE RELEASE                                                                   28 February 2013

Safestore Holdings plc
First quarter trading update for the period 1 November 2012 to 31 January 2013

Trading in line with expectations

Safestore Holdings plc ("Safestore" or "the Company"), the largest self storage retailer in the UK and Paris, is pleased to report on its trading progress (unaudited) for the quarter ended 31 January 2013 ("Q1 2013").

				In CER1
	Q1 2013	Q1 20122	Growth	Growth
	£m	£m
Q1 revenue	23.9	24.5	-2.3%	-1.4%
	£	£
Q1 RevPAF3	18.82	19.61	-4.0%	-2.9%

Highlights

·      Revenue proving resilient and in line with expectations

·      Closing occupancy⁴ broadly flat on Q1 2012 at 3.18 million square feet ("sq ft")

·      Impact of the imposition of UK VAT on the quarter remains in line with initial guidance

·      On-course for REIT conversion with effect from 1 April 2013

Peter Gowers, Chief Executive Officer commented:

"The year has started as expected, in what is typically our quietest quarter. First quarter revenues were below last year's record performance, reflecting the headwinds of VAT, unfavourable foreign exchange rates and the general economic backdrop in the UK and France.

However, beyond these near term headwinds, solid demand for self storage combined with our focus on driving returns, controlling costs and our expected conversion to REIT status all position Safestore well to deliver increased shareholder value over the medium term."

Business highlights

In line with our 'More Space' strategy, we continue to focus on driving organic growth by striking the appropriate balance between occupancy and rate while maintaining tight control on costs. Total group revenue for the quarter was down 2.3% to £23.9 million with total group occupancy down 0.2% to 3.18 million sq ft and group average self storage rate down 2.9% to £24.70.  Highlights of trading in our two key markets of the UK and Paris are detailed below.

UK - solid demand impacted by the imposition of VAT

Total revenue in the UK for Q1 2013 was down 3.3% compared to Q1 2012, at £17.7 million. RevPAF was £17.38, down 4.4% on the same period last year. Closing occupancy⁴ across all stores was 2.45 million sq ft., down 1.4% on 31 January 2012.  Occupancy measured as a percentage of Maximum Lettable Area ("MLA") was 59.7% compared to 61.2% at 31 January 2012.  The average self storage rate per sq ft for Q1 was £22.14, 3.8% lower than last year.

UK demand for self storage remains solid and our progress on yield management and national accounts place Safestore in a strong position.  As noted in our recent annual results release, the imposition of VAT on self storage in the UK led to higher than usual vacates in September and October and this led to lower opening occupancy levels which impacted revenue throughout Q1.  Since November we have seen vacate rates return to more normal levels.  During the first quarter the continuing impact of VAT has led to a moderation in the rate of new let growth and lower average rental rates.  While it will take more than one quarter to fully assess the impact of this legislative change on our business, current performance suggests that it remains in-line with initial guidance. 

France - continued growth in spite of macroeconomic headwinds

Total revenue for Q1 2013 was up 4.4% over the prior year in CER and up 0.8% in Sterling to £6.2 million. RevPAF was €30.50 up 0.3% on the same period last year. Closing occupancy⁴ was 0.73 million sq ft, up 2.5% compared to 31 January 2012. Occupancy measured as a percentage of Maximum Lettable Area ("MLA") was 69.9% at 31 January 2013, down from 71.7% at 31 January 2012, principally owing to the opening of two new stores during the last financial year. The average self storage rate per sq ft for Q1 2013 was €37.40, up 1.3% on the same period last year.

We continue to deliver growth in Paris despite the challenge presented by the weakening French economy.  Our focus on the key Parisian market, strong competitive position and the lack of new supply all create resilient conditions for self-storage performance.

Outlook

As anticipated, we have experienced a slower start to the year, reflecting tough comparatives, the full year impact of the introduction of VAT and unfavourable foreign exchange movements.  While external conditions in our markets are likely to remain challenging throughout the current financial year, we are encouraged by the resilience of demand and the slowing pace of industry supply growth.

Our strategic focus on driving returns and cash from our existing estate, combined with further progress on active yield management, national accounts and tight cost control will position us well as the short-term challenges unwind.  Our planned conversion to REIT status with its associated tax advantages remains on track for 1 April 2013.

Despite the economic backdrop and imposition of VAT, our current performance and active cost management indicate that we remain on course to meet our expectations for the financial year.

Ends

1 - 'CER' is Constant Exchange Rate

2 - Q1 2012 is the quarter ended 31 January 2012

3 - RevPAF is calculated as Total Revenue divided by total MLA excluding the four stores opened since 1 November 2011

4 - Closing occupancy excludes offices but includes 87,300 sq ft of bulk tenancy as at 31 January 2013 (31 January 2012 - 80,300 sq ft)

Enquiries

Safestore Holdings plc	020 8732 1500
Peter Gowers, Chief Executive Officer
Richard Hodsden, Chief Financial Officer
www.safestore.com
College Hill	020 7457 2020
Matthew Smallwood Justine Warren Mark Reed

Notes to editors:

·	Safestore is the UK's largest self storage group with 135 stores. They include 98 wholly owned stores in the UK and 25 wholly owned stores in the Paris region together with 12 stores under management in the UK.
·	The Company provides storage to around 44,200 personal and business customers.
·	Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.24 million sq ft (including the expansion pipeline stores) of which 3.18 million sq ft is currently occupied.
·	A strong balance sheet and operational cash flow allow Safestore to invest in continual improvements in the operational performance of its stores, in new store development and acquisitions where appropriate.
·	Safestore employs around 550 people.

 

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