The introduction of VAT on self-storage hit first-half revenues at market leader Safestore (SAFE). It passed the full tax onto consumers through 20 per cent price increases, which reduced occupancy rates from 64 per cent to 63.1 per cent over the year to the end of April. But discipline on costs and a strong performance from the French business meant underlying cash profits were flat. The company has another half year of tough pre-VAT comparatives before the tax change falls out of the growth figures next year.
Net earnings for the period were skewed by a £65.4m non-cash credit as the company wrote off tax liabilities in the wake of its conversion to the real-estate investment trust (Reit) regime. This helps explains an EPS figure of almost 40p. The depressed prior year's results also reflect a substantial property write-down as surveyors tried to factor the imposition of VAT on rents into capital values. This year the portfolio recorded a modest £3.1m valuation surplus, pushing adjusted book value per share up from 192p to 193p. In the absence of a liquid market in self-storage assets, however, it's important to remember these valuations are largely a matter of conjecture.
Chief executive Peter Gowers says a "modest pick-up in the pace of new lets" recently may reflect the nascent recovery in housing transactions - historically a big driver of Safestore's consumer business. House broker Investec Securities expects full-year recurring pre-tax profits of £24.4m and EPS of 10.1p (down from £29.8m and 10.6p in 2012).
SAFESTORE (SAFE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 127p | MARKET VALUE: | £239m | |
| TOUCH: | 126-128p | 12-MONTH HIGH: | 143p | 98p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 167p | NET DEBT: | 123% | |
| Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 48.4 | -11.8 | -3.31 | 1.85 |
| 2013 | 47.1 | 12.9 | 39.84 | 1.85 |
| % change | -3 | - | - | - |
Ex-div: 10 Jul Payment: 15 Aug | ||||
