Safestore Holdings Plc · LSE:SAFE
Safestore — FY2012 Earnings Presentation
53 slides from Safestore's earnings presentation, Jan 30, 2013
Slide 1: Full Year Results to October 31, 2012
Safestore the things you love Safestore Holdings plc Full Year Results to October 31, 2012 30 January 2013
Slide 2: Headlines
Headlines Peter Gowers sofestore
Slide 3: Strategic progress and financial resilience in a year of change
Strategic progress and financial resilience in a year of change Revenue, RevPAF and store EBITDA growth Encouraging early results from the More Space strategy Impact of VAT is significant but to date within our initial estimates New store opening programme completed Group EBITDA slightly d
Slide 4: Conversion to REIT status
Conversion to REIT status Safestore has strong REIT characteristics – Property income business – Cash generative – Dividend paying – Steady growth potential from occupancy and rental increases REIT status has benefits to shareholders – Removes ‘double tax’ for shareholders – Reduces Corporation
Slide 5: Finance
Finance Richard Hodsden sofestore
Slide 6: Our RevPAF focus has driven good trading progress
Our RevPAF focus has driven good trading progress Occupancy, rate, revenue performance change in constant currency RevPAF1 Revenue Average Rate Occupancy +5.3% +5.2% +8.1% London & SE -2.8% +7.1% +5.4% +11.9% Rest of UK -5.6% Paris (in CER2) +2.6% +6.3% +6.6% +0.2% Group (in CER2) +5.2% +5.5% +9.0%
Slide 7: France continued to perform well in constant currency terms
France continued to perform well in constant currency terms Total Revenue in €'000 Occupancy in m2 30,000 29,322 75,000 27,573 70,000 69,359 25,539 66,063 25,000 24,211 65,000 62,665 22,299 59,614 60,000 58,903 20,000 55,000 FY2008 FY2009 FY2010 FY2011 FY2012 FY2008 FY2009 FY2010 FY2011 FY2012 Rev
Slide 8: Constant currency revenue growth was moderated by weakening Euro exchange rates
Constant currency revenue growth was moderated by weakening Euro exchange rates 101.0 0.1 100.0 1.3 1.3 99.0 0.5 98.0 0.6 £m 97.0 2.7 98.8 96.0 95.0 95.1 94.0 Revenue FY11 UK Self Storage UK Ancillary UK Other FR Self Storage FR Ancillary & FX impact Revenue FY12 Revenue Revenue Other Revenue 8
Slide 9: Underlying Cost of Sales were controlled
Underlying Cost of Sales were controlled Cost of Sales (“CoS”) FY12 FY11 £'000 £'000 Per Statutory Accounts 34,665 31,222 11.0% Compensation for store closure last year 609 Adjusted CoS 34,665 31,831 Adjusted CoS FY 2011 31,831 Strategic expenditure 363 New store costs 1,170 Other net cost increases
Slide 10: Underlying administrative expenses were held just above inflation
Underlying administrative expenses were held just above inflation Administrative Costs FY12 FY11 £'000 £'000 Per statutory Accounts 9,818 15,476 Exceptionals, depreciation, contingent rent, movement in 4,056 (2,151) derivatives and asset impairments Underlying Admin Costs 13,874 13,325 4.1% Underlyi
Slide 11: EPRA Earnings were down largely as a result of strategic investment
EPRA Earnings were down largely as a result of strategic investment and the final new store opening costs 20.0 19.0 1.8 18.0 3.8 1.2 17.0 5.5 1.1 19.8 £m 16.0 0.5 15.0 1.1 16.1 14.0 14.3 13.0 Earnings Increase in Incease in New store Underlying Increase in Increase in Earnings Deferred tax EPRA Cash
Slide 12: Overall financial performance was resilient in a year of change
Overall financial performance was resilient in a year of change Year ended 31 Year ended 31 EPRA Adjusted Income Statement October 2012 October 2011 Movement (£m) (£m) Revenue 98.8 95.1 +4.0% Operating expenses (excluding exceptionals) (48.5) (44.6) -9.1% EBITDA before exceptional items and investme
Slide 13: Operating cash flow remains strong
Operating cash flow remains strong Year ended Year ended 31 October 2012 31 October 2011 (£m) (£m) Operating profit (including exceptional items but before investment loss) 54.4 48.4 Working capital, non-cash movements and exchange gains (2.7) (1.5) Operating cash flow 51.7 46.9 Non-discretionary ca
Slide 14: Property portfolio impacted by foreign exchange translation and VAT adjustment
Property portfolio impacted by foreign exchange translation and VAT adjustment France UK France Total (in Euro) £m £m £m €m Value as at 1 November 546.6 167.8 714.4 191.1 2011 New stores opened in year 14.1 10.5 24.6 12.9 FX movement (14.0) (14.0) Like for like stores revaluation (39.2) - (39.2) - V
Slide 15: Full refinancing secured with extended maturities
Full refinancing secured with extended maturities Drawn as at Total Facility Term 31 October New Facilities 2012 UK Term Facility (in £) £230m Aug 16 £230m UK Revolver (in £) £40m Aug 16 £Nil Bank debt (in €) €70m Aug 16 €53m US Private Placement (7 year) £43m May 19 £43m US Private Placement (12 ye
Slide 16: Final dividend increased by 7%
Final dividend increased by 7% 2008 2009 2010 2011 2012 Dividend 4.65p 4.65p 4.95p 5.30p 5.65p EPRA adjusted EPS 8.32p 8.52p 8.19p 8.58p 7.65p EPRA Adjusted EPS (cash tax) 10.07p 9.53p 10.72p 10.99p 10.56p Dividend Cover (cash tax) 2.2x 2.0x 2.2x 2.1x 1.87x Progressive dividend policy remains in f
Slide 17: Tax – Guidance on calculating tax going forward
Tax – Guidance on calculating tax going forward UK France Group £'000 £'000 £'000 UK tax removed as a REIT EPRA adjusted Profit before Tax 13,240 7,011 20,251 Cash Tax - (450) (450) EPRA Earnings (on a cash tax basis) 13,240 6,561 19,801 Deferred Tax (3,575) (1,893) (5,468) EPRA adjusted Earnings 9,
Slide 18: REIT status will remove considerable future UK tax liabilities
REIT status will remove considerable future UK tax liabilities UK property income (c.84% of UK revenue) will become exempt from corporation tax UK ancillary income remains taxable French property and ancillary income remains taxable EPRA tax charge for FY 2013 expected to fall from circa £5.
Slide 19: Guidance on non-trading items
Guidance on non-trading items Capex Maintenance capex expected to continue at £6m to £7m for the next two years and then revert to £4m to £5m ongoing Expansion capex expected to be restricted to new store fit outs only Interest Debt levels are not expected to move materially next year The bl
Slide 20: Strategy Update
Strategy Update Peter Gowers
Slide 21: We have completed the first year of the 'More Space' strategy
We have completed the first year of the ‘More Space’ strategy I 2011-2012 II Strengthen Platform 2012-2013 III Exploit Scale 2013-2014 Extend Reach Strengthen the brand Brand visibility Strengthen the brand Strengthen the brand Update website Branded experience Product innovation Build a powerfu
Slide 22: More Space is designed to drive organic growth
More Space is designed to drive organic growth Focus on organic growth, through sales, marketing and pricing Aim to reach 75% occupancy at growing levels of RevPAF Use free cashflow to drive progressive dividend and debt reduction Conversion to a REIT following the completion of store roll-o
Slide 23: More Space reflects the evolving self-storage market
More Space reflects the evolving self-storage market Used to be... Trending to... Demand Growth from new supply Growth from rising awareness Personal Customers Personal Customers Led by housing market Fuelled by lifestyle need, rental market Larger spaces, short-term stays Smaller spaces, long-term
Slide 24: More Space is underpinned by our market leadership position
More Space is underpinned by our market leadership position High density... National UK With scale network... to win ..... 98 66 54 24 Safestore Big Access Lok N Yellow Store Source: Company websites Optimises Opens up Spreads burden internet search costs large business of fixed and sales conversion
Slide 25: Work on our strategic priorities is strengthening performance
Work on our strategic priorities is strengthening performance Strengthen the brand – market leader already - improving brand visibility and awareness Build the team – experienced in self-storage – enhancing sales and marketing capabilities Drive operational excellence – good operators – drivin
Slide 26: Brand – television trial and new website driving brand visibility
Brand – television trial and new website driving brand visibility TV campaign London TV and >1 million web views good start - almost trebling of low London awareness helps name recognition on web searches 26
Slide 27: Brand – awareness and new website helped drive enquiries up 14%
Brand – awareness and new website helped drive enquiries up 14% enquiries up 14% on prior year 80% of all enquiries now originate via web now focusing on improving quality 27
Slide 28: Brand – focus on business customers starting to drive benefits
Brand – focus on business customers starting to drive benefits Business customers in total now account for more than half our occupied space Strategic investment into building national accounts team in 2012 National accounts occupancy up 43% on prior year to >200,000 sq ft National network m
Slide 29: Team – targeted investment in call centre helped drive sales
Team – targeted investment in call centre helped drive sales – UK Call Centre – Supports toll-free calls – Rapid response out of hours – Handled c.30,000 enquiries – Sold almost 400,000 sq.ft during the year 29
Slide 30: Operations – building on last year's record occupancy
Operations – building on last year’s record occupancy Entered year with record occupancy H1 continued occupancy focus, H2 was more rate-led Maintained occupancy growth in run-up to VAT imposition Revenues and Store EBITDA up Opportunity remains to grow occupancy 30
Slide 31: Value – asset management beginning to drive savings and value
Value – asset management beginning to drive savings and value Lease improvements – Sunderland – New Malden – Hanworth – Croydon Letting of under-utilised space Extending planning adds value to asset base – Notting Hill permanent consent enhances value from January 2012 31
Slide 32: Early days in our plan – operational progress is on-track
Early days in our plan – operational progress is on-track Illustrative incremental revenue potential from operational gearing Drive Get ancillary 12 mature income stores 10 growing c.£1-2m 8 Potential Fill Revenue Recently 6 £m Opened c.£3-5m 3-Year Stores Growth 4 Opportunity 2 c.£3-4m 0 Increase o
Slide 33: VAT impact to date remains in line with our initial estimates
VAT impact to date remains in line with our initial estimates Full 20% VAT now charged on all UK self-storage rentals Safestore strategy – Pass on VAT where possible and only discount selectively Changes observed to date – We estimate c.51,000 square feet vacated as a direct result of VAT – Ov
Slide 34: Outlook for 2012-2013
Outlook for 2012-2013 Trading conditions expected to remain challenging – Underlying self-storage demand is solid – VAT impact remains within initial estimates but will continue to impact us – Solid demand in Paris with personal growth ahead of business – Expecting slightly lower sales than the pr
Slide 35: Summary – strong business with attractive prospects
Summary – strong business with attractive prospects Strong industry fundamentals – Growing awareness and demand – Modest supply growth Safestore the market leader in the UK and Paris with scale to win Clear strategy in place – now focusing on execution to drive organic growth Long term fundi
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Slide 38: Appendices
Appendices sofestore
Slide 39: Portfolio summary under IFRS
Version 4 Portfolio summary under IFRS Full Year ended 31 October 2012 Full Year ended 31 October 2011 Mature Large Total Mature Large Total Developing Established Developing Established (Sq ft (Sq ft (Sq ft (Sq ft (Sq ft (Sq ft (Sq ft ‘000) (Sq ft ‘000) (Sq ft ‘000) (Sq ft ‘000) ‘000) ‘000) ‘000) ‘
Slide 40: Portfolio summary split between freehold & leasehold
Version 4 Portfolio summary split between freehold & leasehold October – 2012 October - 2011 UK France Group UK France Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of Stores 65 33 12 13 77 46 62 34 10 13 72 47 Self sto
Slide 41: New banking facilities
New banking facilities Year ended Year ended Net Debt Position 31 October 2012 31 October 2011 (£m) (£m) Available facilities at the reporting date* 398.0 385.1 Total bank borrowings (gross of FRS 4 Adjustment) 344 341.3 Cash (6.9) (14.7) Net debt 337.1 326.6 * €70m facility translated at €1.2424:£1
Slide 42: The group has hedged approximately two-thirds of its French profit exposure
The group has hedged approximately two-thirds of its French profit exposure and partially mitigated the negative currency impact Actual € cover Swapped Rate Actual Rate Gain/(loss) €'000 € € £'000 H1 FY12 5,500 1.1545 1.1937 156 H2 FY12 5,500 1.1545 1.2543 379 Total 11,000 535 Future € cover Swapped
Slide 43: Exceptional items (Operation and Financial)
Exceptional items (Operation and Financial) Exceptional Items included in Administrative Costs £'000 Insurance Proceeds (net of fees) 5,260 REIT costs (46) Restructuring Costs (165) VAT related costs (175) Total Exceptional Items in Administrative Costs 4,875 Exceptional Items included in Finance Co
Slide 44: Safestore continues to deliver high quality, consistent growth
Safestore continues to deliver high quality, consistent growth [Update title] Revenue EBITDA 105,000 52,000 50,512 50,320 100,000 98,836 50,000 49,178 95,059 95,000 48,000 89,214 90,000 45,736 84,433 46,000 45,145 85,000 82,875 44,000 80,000 75,000 42,000 70,000 40,000 FY2008 FY2009 FY2010 FY2011 FY
Slide 45: Strategic investments having positive impact on revenue but not yet fully feeding through to EBITDA
Strategic investments having positive impact on revenue but not yet fully feeding through to improved EBITDA performance Summary IFRS income statement Year ended 31 October 2012 Year ended 31 October 2011 Movement (£m) (£m) Revenue 98.8 95.1 +4.0% Operating expenses (excluding exceptionals) (48.5) (
Slide 46: Property valuation metrics reflect economic conditions
Property valuation metrics reflect economic conditions October October Key variables April 2012 2012 2011 Average Self Storage Rate per Sq Ft £24.91 £25.09 £26.11 Exit Cap Rate 7.85% 7.84% 7.83% Weighted average stabilised occupancy 78.28% 78.80% 78.72% Stabilised Occupancy in Sq Ft 4.03m 4.03m 4.02
Slide 47: Summary IFRS balance sheet
Summary IFRS balance sheet As at As at 31 October 2012 31 October 2011 (£m) (£m) Assets Non-current assets Investment properties 685 714 Development properties 5 15 Other non-current assets 69 72 Non-current assets 759 801 Current assets 34 32 Liabilities Current liabilities (44) (55) Non-current li
Slide 48: Four stores opened in FY 11-12 delivering over 186,000 sq ft of MLA
Four stores opened in FY 11-12 delivering over 186,000 sq ft of MLA ● Pipeline of three expansion stores totalling Pipeline store / site Full planning MLA Opened / 81,900 sq ft of MLA. Of these: sq ft estimated opening Stores opened in FY2012 – Two are freehold, one (Birmingham) is long leasehold Ne
Slide 49: Customer split
Customer split Occupancy Number 100% 100% 90% 90% 80% 80% 51.3% 48.1% 70% 70% 33,036 31,442 60% 60% 50% 50% 40% 40% 30% 30% 48.7% 51.9% 20% 20% 11,836 11,471 10% 10% 0% 0% FY11 FY12 Oct Oct 2011 2012 Business Domestic Business Domestic Excluding La Défense Domestic includes students Unless otherwise
Slide 50: Customer average length of stay - Group
Customer average length of stay - Group Portfolio at Portfolio at Age of Store < 1 year 1-2 Years 2-5 Years > 5 Years October 2012 Oct 2011 N0 of Stores 4 4 19 94 121 117 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 20 4.6 49 11.4 69 15.8 137 31.7 1
Slide 51: Customer average length of stay in the UK
Customer average length of stay in the UK Portfolio at Portfolio at Age of Store < 1 year 1-2 Years 2-5 Years > 5 Years October 2012 Oct 2011 N0 of Stores 2 2 16 76 96 94 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 23 5.4 62 14.2 71 16.3 133 30.7 1
Slide 52: Customer average length of stay in France
Customer average length of stay in France Portfolio at Portfolio at Age of Store < 1 year 1-2 Years 2-5 Years > 5 Years October 2012 Oct 2011 N0 of Stores 2 2 3 18 25 23 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 18 4.1 36 8.2 58 13.5 143 32.9 124
Slide 53: Expected REIT Process and Timetable
Expected REIT Process and Timetable Jan 30, 2013 March 20, 2013 April 1, 2013 Announcement EGM REIT status of intent to Approval in force convert Articles amended All UK rental profits exempt from corporation tax Formal approval sought from HMRC UK deferred taxes will cease to be shown in income sta