Safestore Interim Results - Ask Active
18th June 2019
Solid Financial Performance:
- Group revenue up 5.6%.
- Group like for like revenue up 5.9% with UK up 5.6% and Paris up 6.3%.
- Adjusted Diluted EPRA EPS6 up 7.1% at 13.5p.
- 7.8% increase in the interim dividend to 5.5p.
- Statutory Profit before tax down to £38.2m from £81.9m in 2018 driven by reduced gain on investment properties of £7.9m (2018: gain of £51.8m).
Operational and Strategic Progress
Continued balanced approach to revenue management drives returns:
- Like for like closing occupancy of 74.3% (up 2.2ppts on 2018).
- Like for like average occupancy for the period up 3.9%.
- Like for like average storage rate for the period up 1.9%.
- Peterborough site acquired for new 42,000 sq ft store to be opened at the end of 2019.
- Further new store openings scheduled in Paris Pontoise in Summer 2019, London Carshalton and Birmingham Merry Hill in the second half of 2019, and Paris Magenta, subject to planning, in the 2019/20 financial year.
- Extension of Bedford and Barking stores in early 2020, adding 29,000 sq ft.
Frederic Vecchioli, Safestore's Chief Executive Officer, commented:
"Safestore's performance has been robust in the first half of the year and continues to build on the strong earnings and dividend growth achieved over the last five years. Since we recommenced our store acquisition and development programme in 2016, we have added 38 stores, including our new store pipeline of three sites in the UK in London Carshalton, Birmingham Merry Hill and Peterborough (subject to planning) and two sites in Paris at Pontoise and Magenta (subject to planning). Going forward, we expect to be able to continue to seize consolidation opportunities as well as new development sites that can be turned relatively quickly into new stores.
The self storage market remains resilient to macroeconomic uncertainty and we continue to capture growing levels of demand in the UK and in Paris, with double digit new let growth on a like for like basis on both markets. As we enter our peak trading period we are well placed to meet this demand with our 1.72m sq ft of currently unlet, fully invested space, and our pipeline of five stores that will add a further 252,000 sq ft.
Our scale continues to allow us to invest in our digital marketing platforms and service proposition, and this remains a key competitive advantage in a fragmented industry. Our balance sheet remains strong and efficient, with a low cost of debt. Our existing financing capacity, combined with the strong free cash generation of the business, allows us to continue to target selected development and acquisition opportunities. With our leading market positions across the UK and in Paris, the Company is in a strong position with significant low-cost growth potential. We remain on-course to meet the Board's full year expectations."
Entering into Q3, we are continuing to progress our sales and generate year on year like for like new lets growth in what was a strong quarter last year. Safestore has a strong market presence in both the UK and Paris which continues to be strengthened by new store developments and acquisitions. Trading in the stores that we have opened since 2016 continues to be strong. Our recently opened stores in London Mitcham, Paddington Marble Arch and Paris Poissy have started well and are performing in line with or ahead of their business plans. We look forward to further openings, spread over the rest of the year, in Paris Pontoise, London Carshalton and Birmingham Merry Hill. In addition, subject to planning permission, we hope to open stores in central Paris at Boulevard Magenta in 2020 and in Peterborough in late 2019. With 1.72m sq ft of fully invested unlet space available at 30 April 2019 (the equivalent of c.40 stores) and a pipeline of 0.25m sq ft, we have significant but low cost growth potential ahead.
As ever, our priority remains the ongoing improvement of the operational performance of the business and leveraging our leading market positions to full effect. We will continue our strategy of managing revenue growth, with our central pricing team leveraging our dynamic pricing systems to optimise tactical store level rate and occupancy decisions. Our strong and flexible balance sheet, healthy cash generation sufficient to fund the building of 2-4 new stores per annum, and proven management expertise, provides us with the opportunity to take advantage of further selective development and acquisition opportunities in our key markets, subject to our rigorous investment criteria.
Our business model remains highly resilient. Combined with our scale, geographical diversity, strong balance sheet and marketing expertise, we believe that we are well placed for continued future growth in what remains a young and expanding industry where consumer awareness is growing steadily. As we progress into our peak Q3 trading period, we are on course to meet the Board's full year expectations.