Safestore: Share price dips after ‘robust’ trading
Shares in Safestore Holdings dipped in early trades, despite the self-storage provider reporting “solid” trading conditions in the UK market.
On Wednesday, its share price fell by over three per cent as the listed firm unveiled a 0.8 per cent fall in revenue over the six months to April.
Underlying earnings before interest, taxes, depreciation, and amortisation was also down 3.7 per cent to £67m.
Meanwhile, satutory profit before income tax came in at £173.7m up from £103.4m in the first half of 2023.
After the slight fall in earnings, chief Frederic Vecchioli described the performance as “robust”.
He said: “Our track record has delivered market leading returns with revenue growing 49.3 per cent since pre-pandemic as we grew occupied space by 31.8 per cent and increased rental rates by 14.7 per cent and ancillary revenue by 33.3 per cent across all of our markets.
“During the period our central pricing approach has meant that we have been able to adapt our approach across our different markets to enable optimisation of revenue.”
He added: “In the UK, despite a challenging economic backdrop, we have seen solid like-for-like revenue performance with broadly flat average storage rates and a small occupancy decline.
“We have delivered strong like-for-like revenue growth in our other markets demonstrating the value of our diversified approach led by our Benelux markets with 13.5 per cent like-for-like revenue increases.”
Meanwhile, the dividend was increased by one per cent to 30.1p which it said was in line with its payout policy.
Shares in the firm are down by around eight per cent in the year to date.
Analysts at Peel Hunt rated the stock at ‘Hold’.
“A tougher trading period is reflected in a small pullback in revenue, and a 10.5 per cent decline in EPS. The dividend has been upped by one per cent, and the shares sit on c.19x based on a five per cent cut to our 2024E forecast. Hold, TP 830p.”
GPE’s rights issue brings in the money for property group
Great Portland Estates (GPE) has raised gross proceeds of £350m to capitalise on its pipeline of new opportunities in central London.
Back in May, the London landlord launched a fully underwritten three-for-five rights issue to raise gross proceeds of approximately £350m – £336m net of expenses – through the issue of 152m new Shares at a price of 230 pence each.
This morning, GPE confirmed it had received acceptances from existing shareholders in respect of 96.8 per cent of the new shares.
The deal’s underwriters will place the remainder of the issue. The final figures will be published at a later date.
“The combination of the Capital’s disrupted investment market and the increasingly evident supply drought of high quality spaces in our core market of the West End, means we are optimistic about the returns we can generate from both our £1.4bn pipeline of potential acquisitions and across our existing HQ and Flex offerings.”
He added: “I want to reiterate our thanks to all our shareholders and we look forward to providing an update on our progress in due course.”
The fundraising comes as demand for the group’s office spaces across London has continued to return to pre-pandemic levels.
After the pandemic, tenants have become increasingly picky and tend to favour best-in-class buildings with less space due to work-from-home practices.
GPE intends to use £168m of the proceeds from the Rights Issue to commit to capex for its Soho Square Estate and a new development, The Courtyard.
This will take total capex on committed GPE schemes from £498m to £666m.
The group acquired the Courtyard via a property swap with the City of London Corporation. GPE swapped its interest in 95/96 New Bond Street while simultaneously acquiring the long leasehold interest at The Courtyard.
DFS Furniture: Sofa retailer issues second profit warning as Red Sea disruption takes toll
Sofa retailer DFS Furniture has issued its second profit warning this year in the face of tricky Red Sea disruptions and weak consumer spend.
Back in March, the popular upholstery store warned it would make around £20-£25m, due to a weak retail market but the figure has now been slashed to between £10-12m.
This morning, the board said the cut to its profit was driven by a lower level of delivered customer orders, with £12-14m of delayed deliveries from the Red Sea disruption.
Those deliveries are now expected to move into the next financial year. The financial year of 2024’s revenue is now expected to be in a range of £995m-£1,000m. It said there was an “additional profit risk of up to £4m if Red Sea shipping delays continued through to our year end date.”
The brand, which has around 128 sites across the UK and wider Europe, said it was also dealing with the impact of higher shipping costs as “a result of freight rates increasing above previous expectations in our fourth quarter”.
DFS board members told the market that consumer demand in the upholstery sector has declined 10 per cent in volume terms year on year from a weak starting point bringing overall market demand levels to record lows.
The group has continued to operate through the period with market share of over 38.5 per cent.
The board said: “We have been encouraged by an improving trend in our group order intake, which is up over nine per cent in our fourth quarter to date, in line with our expectations.”
“The recent improvement comes as we annualise weaker prior year comparatives and also following successful initiatives to strengthen the product ranging and pricing in Sofology and reintroducing four year interest free credit at select times to maximise revenue and profit in this difficult trading environment.
They added: “Whilst the economic outlook remains hard to predict we expect the widely predicted lower inflation and interest rate environment to have a positive impact on upholstery market demand levels with the declines experienced across the last three years starting to reverse and the market slowly recovering in our FY25 period.
“We are well placed to capitalise on any market recovery given our market leadership position, the operational leverage in the business and the progress we are making on our cost base.”
Shares in the firm fell by over four per cent in early trade.
Analysts at Jefferies rated the stock a ‘Buy’.
They said: “DFS has updated ahead of plan to highlight a weak market, delayed deliveries, and higher shipping costs. As a result, FY24 PBT is guided to £10-12m (from £20-25m). Supported by an improved early Q4 trend, we continue to anticipate a recovery in FY25, and see upside when the market recovers.”
Tory manifesto? More drive to survive than revved up ambition
Those strategists who cooked up the idea of launching the Conservative manifesto at a Formula One venue no doubt had visions of Rishi Sunak putting some forward momentum in his campaign. Unfortunately for him, the whole event begged one question: has the Prime Minister got the drive to survive?
The manifesto itself is a hodge podge of sensible ideas (the abolition of national insurance, a smart little tax break for landlords to sell homes to tenants without getting hit by capital gains) and ‘popular’ policies that do not bear up particularly well to scrutiny of even the most rudimentary nature. The party’s crime and punishment policy (loosely translated: lock ‘em up and throw away the key) does not necessarily tally with the wider British public’s current understanding of Conservative crime and punishment policy.
The party’s housing aspirations sound awfully similar to those announced last time, and remain just as hollow. At no point in yesterday’s manifesto launch was it obvious to anybody watching what the bold plan actually was: the coherent vision under which the great British public might be able to march. It’s clearly not competent leadership (see: the past five years) and it’s not liberal economics (see: highest tax burden in seventy years). Frankly, it feels a little like going in circles. Perhaps that’s why they launched it at Silverstone.
For all that, the jury remains out on what Labour will slide into their manifesto. It is highly likely some in the party will feel emboldened by a 20-point lead and attempt to make the document more radical: perhaps with a hint here and there of a more aggressive capital gains regime. Such a move would be a mistake.
The Tory party may appear to be out of ideas; that does not mean the business community nor the City is desperate for bad ones.
London Tech Week day two: How can tech help solve the climate crisis?
As London Tech Week kicks off, Russ Shaw, founder of Tech London Advocates & Global Tech Advocates, gives us the inside scoop on the industry with his daily diary
A central question in the tech ecosystem is what can tech do to solve the climate crisis.
Technology is rightly considered a powerful asset when approaching the target of net-zero, providing the innovative solutions required, backed by investor confidence.
Recent L&P research found that London-based Climate Tech startups raised $3.5bn, ranking second globally in terms of investment in the sector. More broadly, the sector has a current turnover of £344.6bn and is growing at 11.1 per cent per year.
To put things in perspective, the UK cleantech sector is three times the size it was in 2017.
These numbers speak volumes , and a clear demonstration of the economic incentive that is coupled with the moral case for urgently finding solutions to the climate crisis, recognising tech as fundamental to the UK’s path to net-zero.
London (Clean)tech Week
It comes as no surprise that at London Tech Week this year, there is a commitment to sustainability, with the event working to achieve carbon net-zero and zero waste.
As tech experts from over 100 countries gather in London this week, they will engage with themes addressing today’s most pressing issues, showcasing how technology can positively impact society.
The focus on a sustainable future at the UK’s biggest tech event aims to inspire attendees by providing a platform for decision-makers, industry leaders, and entrepreneurs to implement change.
Today, attendees at Olympia heard from ClimateTech founders and CEOs, from companies including ENSO and Materials Nexus, as part of a green-focused speaker line-up with the message of providing a better future for our planet through technology.
In the festival’s fringe events I attended today with Tech in Ghana, Tech Malaysia Advocates and Tech China Advocates, sustainability was a theme across the board. Each group spoke about the importance of net-zero, how we can look after the planet and underlined how tech for net-zero is something that we must work together on to achieve global sustainability goals.
Furthermore, the ClimateTech Summit returns to London Tech Week once again this year, with speakers from the SOSV, National Grid and Katapult all set to offer their insights.
These convening moments all restate the commitment of the tech sector to putting the planet at the forefront of tech decision-making.
How tech can lead the green-way
The incentive to position London tech at the heart of our fight against climate change goes beyond the moral argument – though that of course plays a major role too.
London is respected, and renowned around the world, for its approach to climate tech – the fact that investment in climate tech in the UK was only second globally is clear testament to that fact. This tech vertical is a significant asset that brings in billions in investment yearly and has the potential to create thousands of jobs around the country.
Addressing climate change requires innovative solutions – an area in which tech clearly shines. Just today, high-level representatives from IBM, AVEVA and Cognizant discussed potential usage of AI in reaching a ‘sustainable future’.
These are conversations that demonstrate the very best uses of transformational technologies that stand at the frontier of innovation, and it is great to see London Tech Week acting as a crucial facilitator of such insight sharing.
No time to waste
Ultimately, we are behind in the climate fight.
The time for tech in the path to net-zero is now, as it was when hydroelectricity – the first renewable energy source – was created, when wind turbines were manufactured in the late 1800s, or when solar panels were first used in the 1950s.
This is tech’s moment, and we have an opportunity to push ahead with the climate fight by doubling down on climate tech and the benefits it can deliver.
We need to use moments like this week, with 45,000 tech leaders all gathering in London, to galvanise progress and plan how we can accelerate the tech innovation that will shape a sustainable, green future.
Moments like London Tech Week have the power to inspire solutions and drive forward the urgent action needed to combat climate change.
Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates
John Lewis appeals on plan for Waitrose and 428 homes
John Lewis will appeal plans after a local London council failed to agree on plans to build 428 homes and a Waitrose in West Ealing, a move which has come under attack by campaign groups.
The retailer, which owns the supermarket chain and a string of eponymous department stores, said the development was still under review by Ealing Council. This is long past the statutory 13 weeks which such applications need to be resolved.
In a statement, John Lewis said its foray into the property sector would create “vital new housing and a community space” amid a challenging period for the UK’s housing market.
The struggling retailer, said the move would generate over £8m in council tax revenues and boost the local economy by an estimated £45m a year in extra spending.
However, campaign groups such as Stop the Towers have called for the build to be stopped on the grounds that the building will be too tall and not feature enough affordable housing.
John Lewis plans for over 80 of the homes on the scheme to be affordable.
Katherine Russell, Director of build-to-rent at JLP, said: “We have taken the decision to appeal for non-determination of our planning application to build new rental homes nearly one year on from first submitting it to Ealing Council.
“Our proposals will create hundreds of homes at a time when all political parties agree there’s a desperate need for more housing and local investment to spur economic growth, with a priority on brownfield land.
She added: “An appeal is not something we take lightly, however, we believe we have strong grounds to be successful given the opportunity to transform an under-used brownfield site close to the publicly-funded Crossrail station with new homes and investment that will benefit the wider community.”
The group aims to be on site in late 2025 and complete in 2029.
Walgreens shelves plans to take Boots public in another blow for London market
The American owner of Boots has parked plans to list the high street chemist on the London Stock Exchange, in another blow for the market.
According to a Bloomberg report, Walgreen Boots Alliance is no longer exploring a public offering for the retailer and will instead seek to sell the chain.
New York-listed Walgreens has struggled in the past year due to high debt following an acquisition spree. It reported operating losses of £13.2bn in the last year.
Two years ago, the firm tried to sell Boots but later pulled out, citing an “unexpected” change. At the time, the historic retailer had a slew of suitors, including the billionaire Issa Brothers.
The Nottingham-headquartered business is the UK’s biggest pharmacy chain with over 2,000 stores.
Accounts filed on Companies House showed Boots reported revenue of £7bn in the latest financial year, up from £6.5bn, while its pre-tax profit jumped from £4m to £60m.
The firm has been helped by shoppers continuing to spend on beauty amid the cost of living crisis.
Reports of the abandoned IPO plans come amid a challenging time for London’s public market, with a number of high profile firms leaving such as TUI.
Investors are still keeping a close eye on fast fashion giant Shein, who is rumoured to make its first public listing on the London market later this year.
City A.M. has contacted Walgreens for comment.
Olympia London: ‘Transformative’ glass canopy added to £1.3bn Hammersmith project
Olympia London, the £1.3bn regeneration scheme in Hammersmith, has unveiled its “transformative” glass canopy as construction work continues for the landmark development.
The project, which is currently Europe’s largest regeneration project currently under development by Yoo Capital and Deutsche Finance International, said the canopy is “a remarkable feat of engineering” and spans nearly 1,000 sq metres.
The design features five large curved structural steel arches, each with a span of 22 metres.
John Hitchcox, chairman at YOO Group: “Olympia’s transformation is more than a brick-and-mortar project; it’s about cultivating a thriving community.
“We are delighted to have had the opportunity to collaborate with the renowned Heatherwick Studio on this bold vision and excited to reveal the canopy – the crown jewel of the design.”
“This soaring structure will represent Olympia’s welcoming embrace, encouraging visitors to explore the vibrant tapestry of culture and entertainment woven into the heart of the new Olympia.”
Olympia London will open in 2025, and alongside commercial office space will include amenities such as the largest new permanent theatre and over 30 new restaurants.
Frank RoccoGrande, founding partner at DFl, added: “Steeped in 138 years of history, Olympia is a site with immense potential waiting to be unlocked. After years of redevelopment in the making, the visionary canopy by Heatherwick Studio will mark a significant milestone towards unveiling Olympia’s true potential.
“We are delighted to be part of this transformation of a landmark for cultural experiences, leisure, and business ventures – all in the heart of London. This is an investment opportunity unlike any other.”
‘Deepening crisis: London house building craters as UK pipeline at lowest since records began
England’s house building pipeline is at the lowest level since records began 17 years ago, as fresh pressure is piled on whoever wins the election to mend a “deepening housing crisis”.
Just 2,472 sites were granted planning permission in the first half of this year, the Home Builders Federation latest pipeline study has found, making it the lowest quarterly figure since records began in 2006.
The damning report also found London experienced a 39 per cent drop in the number of builds being approved when compared to the same period the year before.
Across the capital just 7,613 units were approved in the first half of the year, down 51 per cent on the last quarter of 2023 and the lowest figure since 2012.
Other regions seeing significant drops included the East Midlands, which saw a 47 per cent drop on the previous quarter and 36 per cent drop compared to quarter one last year.
Stewart Baseley, executive chairman at the Home Builders Federation said the housing pipeline is smaller than 2009 when the county was in the “depths of a recession”.
He explained: “Amidst a deepening housing crisis and with house building levels already falling sharply, these numbers present a bleak picture for future housing supply.
“The report also puts into stark perspective the challenges a new government faces to meet its housing ambitions with a pipeline smaller even than during 2009 and the depths of recession.”
Today’s worrying findings follow what has been a challenging 18 months for the UK’s property sector.
Red hot inflation and low consumer spending hit property developers hard and limited the number of homes that could be built.
Meanwhile, would-be-buyers were stuck renting as they struggled to afford mortgage deals in the face of high interest rates.
The UK’s housing crisis has left voters keen to see what the next political party will do to improve the market.
Labour, which is currently leading the polls, has promised to reform planning rules to build 1.5 million more homes. The Starmer fronted party also said it would give a “first dibs” to locals to end developments being sold off to international investors.
In its 2019 manifesto, the Conservative Party pledged to build 300,000 new houses each year by the mid-2020s. However, that figure has not yet been achieved.
Sunak, who unveil the Conservative manifesto later on today, said: “It has got harder and I want to make sure that it’s easier and what we will do is not just build homes in the right places and do that in a way that is sensitive to local communities, but make sure that we support young people into great jobs so they can save for that deposit.”
What next for building in Britain?
Baseley said the UK needs to see “immediate action” to reverse the “damaging changes made in recent years to the planning system and to ensure local authorities have the capacity to deal effectively with permissions”.
He explained: “We also need to see effective support put in place to help buyers purchase high quality, energy efficient new homes. For the first time in many decades, there is no effective government support in place for prospective buyers.
“It is also essential that politicians find a solution to the pointless blockade of 160,000 homes now entering its sixth year as a result of nutrient neutrality, towards which new homes make a negligible contribution.
He added: ”The next government must grasp the nettle and be bold and brave if it is going to help meet the country’s housing needs. Doing so will deliver huge social and economic benefits and the industry stands ready to deliver.”
GB Group’s loss shrinks as tech group’s new chief gets stuck in
London-listed tech group GB Group reported a slight dip in revenue during the year ending March but managed to reduce its overall loss and pay down debt.
The identity verification, location intelligence and fraud prevention company said the figure fell by 0.5 per cent to £277m for the year to 31 March 2024.
Amid a tough economic climate, GB Group said the firm had a strong focus on “cost-effectiveness”, which delivered annualised savings of £10m.
Adjusted operating profit grew eight per cent to £61.4m, although the group reported an overall operating loss of £41.4m caused by a £54.7m exceptional non-cash goodwill impairment charge.
GB Group also reported a reduction in net debt during the period, from £105.9m at the end of fiscal 2023 to £80.9m at the end of March 2024.
The figures were the first under the new chief executive, Dev Dhiman, who took over at the start of the year.
He commented: “This is my first set of results since taking the role of chief executive and I am pleased to report a more positive trading momentum.
“My first few months have focused on our teams, customers and business partners across GBG. This has reinforced my confidence in our competitive differentiation and our market opportunity. I believe we have opportunities to build on our momentum and capitalise on the strong and attractive structural growth drivers in the market.”
He added: “The time I have spent with our key stakeholders has informed our focus areas around simplicity; being globally aligned; driving a performance culture and differentiation through innovation.
“I am looking forward to working with everyone across GBG to deliver on these priorities. In doing so, we will ensure that GBG continues to help our 20,000+ customers grow, by giving them the intelligence to make the best decisions, when it matters most.”
“GBG plays an important role in protecting consumers and businesses from fraud while enabling our customers to reach and build trust with their customers. And we will continue to play this critical and increasingly relevant role over the long term for the benefit of all of our stakeholders.”