Safestore Holdings Plc · LSE:SAFE
Safestore — H1 2016 Earnings Presentation
57 slides from Safestore's earnings presentation, Jun 16, 2016
Slide 1: Half Year Results Presentation 16 Jun 2016
11 Half Year Results Presentation 16 Jun 2016
Slide 2: Introduction
Introduction Frederic Vecchioli
Slide 3: Highlights
3 Highlights 1. Strong revenue and profitability growth • UK like for like revenue up 11.7% - 6 quarters of double digit growth • Paris like for like revenue up 6.8% – 18 years of uninterrupted growth • Focus on leveraging existing assets • Cash tax Earnings per share (EPS) up 18.4% • The Board expe
Slide 4: Financials
Financials Andy Jones
Slide 5: Financial highlights
5 Financial highlights Change vs Income Statement & Cash flow HY 2016 HY 2015 Revenue (£’m) Like for Like* 54.1 10.4% Underlying EBITDA (£’m) Like for Like* 29.3 12.7% Revenue (£’m) 54.1 7.3% Underlying EBITDA (£’m) 29.3 8.9% Underlying EBITDA (post Leasehold costs) (£’m) 25.4 13.4% Cash Tax Adjuste
Slide 6: All regions performing strongly
6 All regions performing strongly London / Rest of UK Total Paris Group SE UK Total Act 1.53 1.16 2.69 0.80 3.49 Closing Occupancy LFL 1 (Sq Ft ‘m) YoY 3.9% 2.2% 3.2% 2.6% 3.1% Act 72.8% 63.9% 68.6% 79.4% 70.9% Closing Occupancy LFL1 % YoY 2.6%pts 0.9%pts 1.8%pts 2.2%pts 1.9%pts Act 29.34 18.74 24.8
Slide 7: Group P&L
7 Group P&L HY 2016 HY 2015 UK Paris Total UK Paris Total (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) Revenue 41.1 13.0 54.1 38.2 12.2 50.4 Underlying Cost of Sales (Excl Hedge Income) (15.4) (3.6) (19.0) (15.3) (3.7) (19.0) Store EBITDA 25.7 9.4 35.1 22.9 8.5 31.4 Store EBITDA Margin 62.5% 72.3% 64.9% 59.9
Slide 8: Strong revenue performance drives improved EBITDA (after leasehold rent)
8 Strong revenue performance drives improved EBITDA (after leasehold rent) CER
Slide 9: Improved cash flow financing dividend and developments
9 Improved cash flow financing dividend and developments HY2016 HY2015 (£'m) (£'m) Underlying EBITDA 29.3 26.9 Working Capital/ Exceptionals/ Other (0.1) 0.2 Operating cash inflow 29.2 27.1 Interest payments (4.7) (6.7) Leasehold rent payments (3.9) (4.5) Tax payments (0.9) (0.2) Free cash flow (bef
Slide 10: Strong and flexible Balance Sheet
10 Strong and flexible Balance Sheet Capital Structure Apr 16 Oct 15 Variance Apr 15 Property valuation (£’m)* 838.6 781.5 7.3% 743.5 UK (£’m)* 634.3 603.6 5.1% 579.8 FR (€’m)* 260.8 249.3 4.6% 228.2 Gross Debt (£’m) 255.7 249.5 (£6.2m) 261.2 Net Debt (£’m) 244.5 235.7 (£8.8m) 248.1 Group LTV 30% 32
Slide 11: Guidance – non trading and one-off items
11 Guidance – non trading and one-off items Item Guidance Foreign exchange impact No hedging of French profits in current year Hedge income received in 2015 was £0.9m of which £0.4m was received in the first half of the year Revenue Stores closed in 2015 contributed £0.7m of revenue and £0.2m of EBI
Slide 12: Operational Delivery
12 Operational Delivery Frederic Vecchioli
Slide 13: Operations overview
13 Operations overview Foundations for future growth in place: • Leading marketing platform • Sales performance • Rate management • Sale teams and pricing systems in place • Continued focus on existing assets • Selective development and asset management • Limited market supply
Slide 14: Marketing: leveraging scale
14 Marketing: leveraging scale Safestore capturing growing market New trading website performing share: strongly: • UK enquiry growth gaining momentum • Leading platform for web efficiency: after new website launch - exited the half • Technical back-end rebuilt year strong, with an average for the •
Slide 15: Occupancy - Rate management
15 Occupancy - Rate management Strategy of maximising revenue through balancing rate and occupancy Rate growth drivers: • Number of enquiries • Catchment area • Store team skills – training and coaching – discounts control • Central pricing team • Investment in analytical capacity • Network manageme
Slide 16: 6 quarters of double-digit LFL UK revenue growth
16 6 quarters of double–digit LFL UK revenue growth • Balanced occupancy-rate growth strategy • c. 30,000 sq. ft of discounted bulk vacated to provide more storage units • +2.6 ppts LFL occupancy growth with adjustment for discounted bulk
Slide 17: Paris: 18 years of uninterrupted growth
17 Paris: 18 years of uninterrupted growth Very solid market fundamentals: • Densest network of stores in central Paris • Strong Brand and digital platform • Revenue growth of 6.8% • EBITDA growth of 9.7%
Slide 18: Space Maker
18 Space Maker • Option to purchase for £43.0m and £1.4m potential deferred (less certain downward adjustments) • 12 well invested stores (9th largest portfolio in the UK) • 496,000 Built out lettable area – 62% occupied UK • Under Safestore management contract since 2010 London • First year net ope
Slide 19: Development
19 Development Net additional new space of c. 217,000 to be added in 2016: Five New stores: • London Chiswick - 42,500 MLA • Birmingham – 51,000 MLA (25,000 Net) • London Wandsworth – 33,200 MLA (23,200 Net) • Paris Emerainville – 60,000 MLA • Altrincham – 39,000 MLA Two extensions: • Acton – +4,900
Slide 20: Asset Management
20 Asset Management Portfolio Management: • Existing Birmingham central site sold for £3.6m subject to planning – store to be consolidated into new Birmingham store Lease regears • Burnley • Since 2012 we have regeared 57% of our leases
Slide 21: Development Characteristics
21 Development Characteristics Limited Site High land Planning Long Availability price restrictions Lead-time London / SE Regional City Centres Secondary towns Central Paris Paris 2nd belt • Six largest UK operators own just 28% of market* • Excluding container stor
Slide 22: Well positioned for further growth
22 Well positioned for further growth Attractive market • Young and growing industry • Secure and diversified income stream on 48,300 customers • Customers staying on average 9.5 months (existing customers 24.8 months) • Resilient during downturn Unique portfolio • Leading presence in key markets •
Slide 23: Appendices
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Slide 24: Index
24 Index: Financial Portfolio summary: 26 Detailed P&L 47 Geographic 27 Non-underlying items 48 Maturity 28 Detailed Balance Sheet 49 Freehold / Leasehold 29 Underlying to Statutory Adjustments Resilient business model: 31 Movement in Cost Base 51 Robust Business model 32 Group Banking Covenants 52
Slide 25: Financial
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Slide 26: Detailed P&L
26 Detailed P&L Group HY 2016 HY 2015 £’m £’m Revenue 54.1 50.4 Cost of sales (19.3) (19.3) Gross profit 34.8 31.1 Administrative expenses (6.1) (4.7) EBITDA * 29.3 26.9 Cost incurred relating to corporate transactions (0.3) - Change in fair value of derivatives - 0.2 Depreciation and contingent ren
Slide 27: Non-underlying items
27 Non-underlying items HY 2016 HY 2015 (£'m) (£'m) Underlying EBITDA 29.3 26.9 Gain on investment properties 28.2 43.9 Depreciation (0.2) (0.2) Contingent rent (0.1) (0.5) Change in fair value of derivatives - 0.2 Costs incurred relating to corporate transactions (0.3) - Statutory Operating Profit
Slide 28: Detailed Balance Sheet
28 Detailed Balance Sheet Group HY 2016 HY 2015 £’m £’m Assets Non-current assets Investment properties 826.6 737.6 Investment properties under construction 12.0 5.9 Other non-current assets 58.9 57.2 Non-current assets 897.5 800.7 Current assets 33.8 36.1 Liabilities Current liabilities (50.1) (56.
Slide 29: HY 2016 Underlying to Statutory adjustments
29 HY 2016 Underlying to Statutory adjustments Corporate Tax / Underlying Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings transaction CGS / Statutory Headings P&L Movements Rent / Dep'n Movement Lease Int properties P&L costs FX Sales 54.1 54.1 Revenue Cost of Sales /
Slide 30: HY 2015 Underlying to Statutory adjustments
30 HY 2015 Underlying to Statutory adjustments Tax / Underlying Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings CGS / Statutory Headings P&L Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 50.4 50.4 Revenue Cost of Sales / Administrative Costs (23.5)
Slide 31: Movement in cost base
31 Movement in cost base Cost of Sales Administrative Expenses HY 2016 HY 2015 HY 2016 HY 2015 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (19.3) (19.3) Reported administrative expenses (6.1) (4.7) Adjusted for: Adjusted for: Depreciation 0.2 0.2 Exceptional items and transaction costs 0.3 - Cont
Slide 32: Group banking covenants – Apr 2016
32 Group banking covenants – Apr 2016 reported Covenants Interest Cover Ratio Loan to Value Consolidated level Sterling Loan to Value Quarterly to Apr 2013 Not less than 1.80:1 Quarterly to Apr 2015 Not more than 0.625:1 Quarterly to Apr 2014 Not less than 2.00:1 Thereafter Not more than 0.60:1 Quar
Slide 33: Group Debt position at 30 Apr 2016
33 Group Debt position at 30 Apr 2016 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/$'m £'m £'m % Margin Rate Rate Rate UK Term Loan Jun 20 £ 126.0 126.0 90.0 71% 1.50% 1.45% 0.59% 2.70% UK Revolver Jun 20 £ 125.0 23.0 - - 1.50% - 0.58% 2.08% UK Revolver - non-utilisation £ 102.0
Slide 34: Operational Delivery
Operational Delivery
Slide 35: Growing National Accounts platform
35 Growing National Accounts platform • National Accounts leverage UK platform further and now accounts for 13% of all occupancy in the UK • Two thirds of customers outside London • Square feet let up 12% over prior year • Storage revenue up 24% on prior year
Slide 36: Head Office functions supporting revenue growth
36 Head Office functions supporting revenue growth: • Customer Support Centre: Customer IT & • CSC handled 17% of all support enquiries Systems centre • Supports the sales teams in store HR & Pricing & • Industry leading IT solutions: Training Finance • Automated contracts for seamless customer expe
Slide 37: Portfolio Management
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Slide 38: Portfolio strength with further potential
38 Portfolio strength with further potential • 119 store portfolio • 4.9.m maximum lettable area • 1.44m sq ft available – Paris 0.79m London, SE and Paris • 41 stores within the M25 UK • 24 stores in Paris • 15 stores in the South East • 39 stores in the UK regions London • New stores: • London Chi
Slide 39: Densest network of stores in London and Paris
Densest network of stores in London 39 and Paris Paris and London combined represent 65 stores – 64% of Revenue, 68% of EBITDA and 40% of currently unoccupied square feet
Slide 40: Property valuation movement
40 Property valuation movement (excluding investment properties under construction) Key assumptions Apr 2016* Oct 2015 Apr 2015* Average Self Storage Rate per sq ft £26.02 £24.85 £24.86 Exit Cap Rate (Freehold only) 7.2% 7.2% 7.4% Weighted average stabilised occupancy 79.7% 77.9% 77.7% Stabilised oc
Slide 41: Pipeline stores
41 Pipeline stores Total MLA Pipeline store / site Planning Estimated opening sq ft Stores opened in HY 2016 No openings Total sq ft added in FY 0 Development stores acquired / under contract London Chiswick 42,500 2016 London Wandsworth 33,200 2016 Birmingham 51,000 2016 Altrincham 39,000 2
Slide 42: Very strong position in the two best European markets for storage
42 Very Very strong strong positionposition inEuropean in the two best the two best markets for storage European markets for storage GDP (£'bil) Population GDP (£'bil) Population GDP (£'bil) Population (mil) (mil) (mil) London 372 7.7 Vienna 66 1.7 Lyon 45 2.1 Paris 371 9.9 Berlin 63 3.3 Turin 45 0.
Slide 43: Une Pièce en Plus – strong market characteristics
43 Une Pièce en Plus – strong market characteristics Density of population Density of storage per square mile supply per inhab. 60000 1.2 50000 1 40000 0.8 30000 0.6 20000 0.4 10000 0.2 0 0 Paris London Paris London
Slide 44: Leading market positions in key UK regional conurbations
44 Leading market positions in key UK regional conurbations Data supplied by the UK Self Storage association - 2015 Safestore also has strong market positions in Newcastle (Pop. Den. 6,343) and Stockport (Pop. Den. 11,937)
Slide 45: Development characteristics
45 Development characteristics Paris • Paris planning now prohibits mixed use with warehousing • Potential available sites reserved for social housing • First belt town reluctance to accept self storage • Only two storage centres opened inside Paris since 2005 – no known projects London • Price of l
Slide 46: French Commercial Lease Statute provides security of tenure
46 French Commercial Lease Statute provides security of tenure French commercial lease laws highly protective: • Right of renewal • Rent increase normally based on state construction cost index • Compensation for any loss arising in case of Landlord's refusal to renew – equivalent to full business v
Slide 47: Portfolio summary split geographically
47 Portfolio summary split geographically London & Rest of UK UK Paris Group South East Number of stores 56 39 95 24 119 Let Square Feet (m sq ft) 1.53 1.16 2.69 0.80 3.49 Maximum Lettable Area (m sq ft) 2.11 1.81 3.92 1.01 4.93 Let Square Feet per store (k sq ft) 27 30 28 33 29 Average Store Capaci
Slide 48: Portfolio summary split by store maturity
48 Portfolio summary split by store maturity H1 2016 H1 2015 Developing Established Mature Large Total Developing Established Mature Large Total Number of stores 8 18 85 8 119 8 17 88 8 121 MLA self storage only (m) 0.403 0.843 3.044 0.635 4.925 0.403 0.843 3.149 0.639 5.034 Closing Occupancy (m) 0.
Slide 49: Portfolio summary split between freehold & leasehold
49 Portfolio summary split between freehold & leasehold H1 2016 H1 2015 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 65 30 13 11 78 41 65 32 13 11 78 43 MLA self storage only (m) 2.727
Slide 50: Resilient business model
Resilient business model
Slide 51: Robust business
51 Robust business • Group Revenue has been growing steadily • The self storage model is attractive as a result of: • Longevity of customers (average stay of existing customer is 108 weeks) • Value of individual customer is small (largest customer only 0.5% of revenue) • Demand drivers are varied
Slide 52: Safestore UK historical performance
52 Safestore UK historical performance
Slide 53: Safestore UK historical performance
53 Safestore UK historical performance
Slide 54: Customers
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Slide 55: Customer length of stay
55 Customer length of stay UK Paris Group H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 131 30.2 134 30.8 133 30.5 141 32.5 131 30.3 137 31.7 Vacated 53 12.3 47 11.0 55 12.6 53 12.3 53 12.3 50 11.4 Tota
Slide 56: Group customer split as at 30 Apr 2016
56 Group customer split as at 30 Apr 2016
Slide 57: Business and domestic numbers
57 Business and domestic numbers Business and Personal Customers UK Paris Personal Customers Numbers (% of total) 72% 81% Square feet occupied (% of total) 51% 64% Average length of stay (months) 20.8 27.5 Business Customers Numbers (% of total) 28% 19% Square feet occupied (% of total) 49% 36% Aver