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Safestore Hldgs plc (SAFE)

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Wednesday 18 November, 2020

Safestore Hldgs plc

Fourth quarter trading update

RNS Number : 6347F
Safestore Holdings plc
18 November 2020
 

Safestore Holdings plc


Fourth quarter trading update for the period 1 August 2020 to 31 October 2020

 

Improving trading momentum and record occupancy. A strong performance for the year.

 

Group Operating Performance

Q4 2020

Q4 2019 2

Change

Change- CER 1

Revenue (£'m)

42.8

40.5

5.7%

5.4%

Revenue (£'m)- full year

162.3

151.8

6.9%

7.0%

Closing Occupancy (let sq ft- million)4

5.454

4.978

9.6%

n/a

Closing Occupancy (% of MLA)5

79.5%

77.0%

+2.5ppts

n/a

Average Storage Rate (£)

26.21

26.09

0.5%

=

Average Storage Rate (£)- full year

26.44

26.09

1.3%

1.4%

 

Group Operating Performance- like-for-like3

Q4 2020

Q4 2019 2

Change

Change- CER 1

Storage Revenue (£'m)

33.7

32.6

3.4%

3.1%

Ancillary Revenues (£'m)

7.2

7.4

-2.7%

-2.7%

Revenue (£'m)

40.9

40.0

2.3%

2.0%

Storage Revenue (£'m)- full year

129.1

123.8

4.3%

4.3%

Ancillary Revenues (£'m)- full year

27.3

27.4

-0.4%

-0.4%

Revenue (£'m)- full year

156.4

151.2

3.4%

3.4%

Closing Occupancy (let sq ft- million)4

5.171

4.940

4.7%

n/a

Closing Occupancy (% of MLA)5

80.8%

77.6%

+3.2ppts

n/a

Average Occupancy (let sq ft- million)

5.100

4.949

3.1%

n/a

Average occupancy- full year (let sq ft-million)

4.854

4.743

2.3%

n/a

Average Storage Rate (£)

26.35

26.15

0.8%

0.4%

Average Storage Rate (£)- full year

26.61

26.10

2.0%

2.0%

 

 

Highlights

 

· All stores in all geographies operating normally despite return to more stringent COVID-19 restrictions. Our priority remains the safety and well-being of our employees and customers.

· Group revenue for the year in CER 1 up 5.4%

· Like-for-like 3 Group storage revenue for the year in CER 1 up 4.3%

UK up 4.4%

Paris up 4.1%

· Strong occupancy performance with group like-for-like closing occupancy of 80.8% (up 3.2ppts on Q4 2019).

· Group like-for-like average occupancy for the year up 2.3%

· Record Q4 increase in like-for-like occupancy in the UK of 228,000 sq ft (2019: 5,000 sq ft). The Group has now recovered its pre-lockdown year-on-year position.

· Group like-for-like average storage rate for the year up 2.0% in CER 1

· Planning permission granted on Birmingham Middleway site

· Anticipate Adjusted Diluted EPRA earnings per share 6 will be in line the Board's expectations.

 

Frederic Vecchioli, Chief Executive Officer commented:

 

"I am pleased to report a strong final quarter's trading resulting in another good performance for the year. Through much of the year, the COVID-19 pandemic has presented unprecedented challenges and I would like to thank our staff for their tremendous effort and resilience demonstrated over recent months, allowing the business to react positively to the COVID-19 crisis. As we navigate through further COVID-19 restrictions, I am confident that the business will continue to respond well to the challenge.

 

"All geographies have performed well and the UK business has shown particularly pleasing momentum, growing like-for-like occupancy by 4.2ppts to 81.0% in the final quarter. Since 2013, we have added 19.5ppts of occupancy to the 113 stores still in the Group today, which now have an occupancy of 82.6% (an average increase of 2.8ppts per annum). Over that period the same stores have grown average rate by 13.6% (a CAGR of 1.8% per annum).

 

"Further to our successful openings this year in Carshalton, Gateshead and Sheffield, we plan to open new stores in Birmingham Middleway and Paris-Magenta during the 2020/2021 financial year.

 

"Despite the pandemic, the Company continues to be in a very strong position. Notwithstanding the recent strong occupancy performance, the business still has 1.4m square feet of currently unlet space in our existing fully invested estate, representing a significant organic growth opportunity in what remains a fragmented market. Our leading market positions in the UK and Paris, combined with our balance sheet strength and resilient business model, leave us well positioned for the future . The Company remains on course to meet the Board's full year expectations."

 

 

Safestore will announce its Results for the year ended 31 October 2020 on Thursday, 14 January 2020.

 

 

Business highlights

 

UK Trading Performance

 

UK Operating Performance

Q4 2020

Q4 2019 2

Change

Revenue (£'m)

31.9

30.7

3.9%

Revenue (£'m)- full year

121.3

114.7

5.8%

Closing Occupancy (let sq ft- million)4

4.325

3.963

9.1%

Closing Occupancy (% of MLA) 5

79.4%

76.9%

+2.5ppts

Average Storage Rate (£)

23.81

23.83

-0.1%

Average Storage Rate (£)- full year

24.37

23.93

1.8%

 

UK Operating Performance- like-for-like3

Q4 2020

Q4 2019 2

Change

Storage Revenue (£'m)

24.6

23.7

3.8%

Ancillary Revenues (£'m)

6.3

6.5

-3.1%

Revenue (£'m)

30.9

30.2

2.3%

Storage Revenue (£'m)- full year

94.1

90.1

4.4%

Ancillary Revenues (£'m)- full year

23.9

24.1

-0.8%

Revenue (£'m)- full year

118.0

114.2

3.3%

Closing Occupancy (let sq ft- million)4

4.172

3.934

6.0%

Closing Occupancy (% of MLA)5

81.0%

76.8%

+4.2ppts

Average Occupancy (let sq ft- million)

4.101

3.936

4.2%

Average Occupancy- full year (let sq ft-million)

3.863

3.762

2.7%

Average Storage Rate (£)

23.88

23.86

0.1%

Average Storage Rate (£)- full year

24.37

23.94

1.8%

 

The UK's fourth quarter performance was strong with the business growing total revenue by 3.9% and like-for-like storage revenue by 3.8%. Momentum was strong in the quarter with October 2020 like-for-like storage revenues up 7.7% compared to October 2019. Like-for-like ancillary revenues improved over the quarter and were down 0.6% in October 2020 compared to October 2019.

 

The business saw an exceptionally strong Q4 occupancy performance adding 228,000 sq ft of occupancy on a like-for-like basis (Q4 2019: 5,000 sq ft). Over the year the business added occupancy of 238,000 sq ft on a like-for-like basis (2019: 199,000 sq ft). As a result, Q4 like-for-like closing occupancy, at 81.0%, increased by 4.2ppts compared to the prior year.

 

Like-for-like average rate in the UK was up 0.1% compared to Q4 2019. Over the year it grew by 1.8%.

 

Total revenue grew by 5.8% for the full year. This included the Fort Box acquisition, newly opened stores in Carshalton, Gateshead and Sheffield, management revenue from our Dutch joint venture business and the annualisation of 2019 new store openings and acquisitions at London Heathrow, Birmingham Merry Hill and Peterborough. New stores, in the initial period after opening, are dilutive to occupancy and rate. However, all new and acquired stores are trading in line or ahead of our business plans.

 

During the COVID-19 lockdown in March to May of this year, our stores stayed open with fewer staff and with reception areas closed. Since the first lockdown ended all stores were made COVID-secure with social distancing measures in place, Perspex screens and hand sanitiser in reception areas and staff wearing personal protective equipment. Stores are all currently open and reception areas operational under the aforementioned COVID-secure procedures.

 

Recent revenue collections have been largely unaffected by the COVID-19 pandemic. 97.8% of August 2020 revenues were collected within 30 days of the period end (2019: 97.6%). 98.2% of September 2020 revenues had been collected by the year-end (2019: 97.8%) and 77.6% of October 2020 revenues had been collected within the month (2019: 79.3%).

 

Paris Trading Performance

 

Paris Operating Performance

Q4 2020

Q4 2019 2

Change

Revenue (€'m)

11.3

11.0

2.7%

Revenue (€'m)- full year

44.1

42.1

4.8%

Closing Occupancy (let sq ft- million)4

1.034

1.015

1.9%

Closing Occupancy (% of MLA)5

78.8%

77.4%

+1.4ppts

Average Storage Rate (€)

39.58

39.08

1.3%

Average Storage Rate (€)- full year

39.64

38.93

1.8%

Revenue (£'m)

10.2

9.8

4.1%

Revenue (£'m)- full year

38.8

37.1

4.6%

 

Paris Operating Performance- like-for-like3

Q4 2020

Q4 2019 2

Change

Storage Revenue (£'m)

10.12

10.01

1.1%

Ancillary Revenues (£'m)

0.96

0.97

-1.0%

Revenue (€'m)

11.08

10.98

0.9%

Storage Revenue (£'m)- full year

39.78

38.22

4.1%

Ancillary Revenues (£'m)- full year

3.76

3.74

0.5%

Revenue (€'m)- full year

43.54

41.96

3.8%

Closing Occupancy (let sq ft- million)4

0.999

1.006

-0.7%

Closing Occupancy (% of MLA)5

80.1%

80.7%

-0.6ppts

Average Occupancy (let sq ft- million)

0.999

1.013

-1.4%

Average Occupancy- full year (let sq ft-million)

0.991

0.981

1.0%

Average Storage Rate (€)

40.29

39.22

2.7%

Average Storage Rate (€)- full year

40.13

38.96

3.0%

Revenue (£'m)

10.0

9.8

2.0%

Revenue (£'m)- full year

38.4

37.0

3.8%

 

Paris had another good quarter growing revenue by 2.7% compared to last year.

 

On a like-for-like basis, the business grew storage revenue by 1.1% for the quarter and by 4.1% for the full year. This was driven by average occupancy growth of 1.0% for the year and average rate growth of 3.0%.

 

The quarter ended strongly with October 2020 like-for-like revenue up 4.1% compared to October 2019.

 

Like-for-like occupancy reduced by 7,000 sq ft for the year (2019: increase of 52,000 sq ft) resulting in closing occupancy of 80.1%, down 0.6ppts compared to the prior year. However, the year ended strongly with a small occupancy inflow in October as compared to an outflow of 12,000 sq ft in the prior year.

 

Like-for-like average rate in Paris was up 2.7% in the quarter and 3.0% for the full year.

 

The impact of the new store opened in August 2019 in Pontoise is to dilute rate and occupancy in the initial period after trading commences. This store, however, is trading ahead of our business plan.

 

Over the year, the Sterling-Euro exchange rate was 1.1356, marginally stronger than the prior year (2019: 1.1329). As a result, there was minimal foreign exchange impact on the translation of Paris revenues.

 

Similarly to the UK, during the COVID-19 lockdown in March to May of this year, our stores stayed open with fewer staff and with reception areas closed. Since the first lockdown ended all stores were made COVID-secure with social distancing measures in place, Perspex screens and hand sanitiser in reception areas and staff wearing personal protective equipment. Stores are all currently open and reception areas operational under the aforementioned COVID-secure procedures.

 

Recent revenue collections in Paris have also been largely un-impacted by the COVID-19 pandemic. 85.3% of August 2020 revenues were collected within 30 days of the period end (2019: 82.8%). 87.3% of September 2020 revenues had been collected by the year-end (2019: 82.6%) and 71.6% of October 2020 revenues had been collected within the month (2019: 68.1%).

 

Spain Trading Performance

 

OMB was acquired on 30 December 2019 so has contributed ten months of trading to the Group's results. In that period the business delivered €2.5m of revenue.

 

In Q4, as expected, the business saw a modest seasonal outflow of occupancy and ended the quarter at a closing occupancy of 90.0%. However, the average rate grew by 2.2% compared to the third quarter. The impact of the COVID-19 lockdown on the trading of the business between mid-March 2020 and the end of April 2020 was minimal.

 

Included in the acquisition of OMB was an option to purchase the freehold of the Glories store. This option was exercised in September 2020. In addition, a further 3,000 sq ft of MLA and a number of car parking spaces were acquired over and above the parameters of the original option. The total investment was €5.8m.

 

Property Update

 

In July 2020, the Group completed the acquisition of a freehold 2.17 acre site including an existing warehouse in Birmingham. The site is located on the southern side of the inner A4540 ring-road. It is anticipated that the existing warehouse will be converted to a 58,500 sq ft storage facility. Planning permission has now been granted and we anticipate opening the new store in the second quarter of 2021 and intend to relocate our existing Digbeth store (MLA 44,500 sq ft) to the new site.

 

During the period we completed the extension to our Chingford store. Prior to the extension, occupancy in this 42,500 sq ft freehold store was at 84% in November 2020. We have now added an additional 5,800 sq ft of MLA to this store. The existing store remained open throughout construction.

 

In September 2020 the Group received planning permission to extend its Southend store by 8,600 sq ft. The existing store has a MLA of 49,400 sq ft and was 86% occupied at the end of September 2020. It is anticipated that the extension will be open in the second calendar quarter of 2021 and that there will be minimal impact on day to day operations of the store during construction.

 

Outlook

 

Performance in the final quarter across the Group was strong and we anticipate that our Adjusted Diluted EPRA earnings per share6 will be in line with the Board's expectations for the year-ended 31 October 2020. COVID-19 continues to create uncertainty but we believe that the performance of the business through the crisis to date demonstrates the business model's resilience and we anticipate that the Group is in a good position to withstand any ongoing challenges presented by the crisis.

 

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 - Q4 2019 is the quarter ended 31 October 2019.

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 14,000 sq ft of bulk tenancy as at 31 October 2020 (31 October 2019 - 14,000 sq ft).

5 - MLA is Maximum Lettable Area.

6 - Adjusted Diluted EPRA earnings per share is defined as profit or loss for the period after tax but excluding corporate transaction costs, change in fair value of derivatives, gain/loss on investment properties and the associated tax impacts, IFRS 2 share-based payment charges, exceptional tax items and deferred tax charges. This adjusted earnings is divided by the diluted number of shares (excluding shares held by the Safestore Employee Benefit Trust).

 

 

Enquiries

 

Safestore Holdings plc

020 8732 1500

Frederic Vecchioli, Chief Executive Officer

 

Andy Jones, Chief Financial Officer

 

 

 

www.safestore.com

 

 

 

Instinctif Partners

 

Guy Scarborough

Catherine Wickman

020 7457 2020

 

Notes to editors:

 

· Safestore is the UK's largest self-storage group with 159 stores at 31 October 2020, comprising 127 wholly owned stores in the UK (including 71 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool, Sheffield, Leeds, Newcastle and Bristol) and 28 wholly owned stores in the Paris region and recently acquired 4 stores in Barcelona. In addition, the Group operates 6 stores in the Netherlands and 6 stores in Belgium under a joint venture agreement with Carlyle.

 

· 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 75,000 personal and business customers.

 

·   As at 31 October 2020, Safestore had a maximum lettable area ("MLA") of 6.861 million sq ft (excluding the expansion pipeline stores, and the Carlyle Joint Venture) of which 5.454 million sq ft was occupied.

 

· Safestore employs around 680 people in the UK, Paris and Barcelona.

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