Safestore Holdings Plc · LSE:SAFE
Safestore — H1 2017 Earnings Presentation
60 slides from Safestore's earnings presentation, Jun 15, 2017
Slide 1: Half Year Results Presentation 15 June 2017
11 Half Year Results Presentation 15 June 2017
Slide 2: Frederic Vecchioli
New London Wandsworth Store Frederic Vecchioli
Slide 3: Highlights
3 Highlights Good Financial Performance • Group Revenue up 12.4% at CER² • Group like-for-like¹ revenue at CER² up 3.7% with UK up 3.9% and Paris up 2.9% • Cash Tax Adjusted Earnings per Share up 15.6% at 10.4p • 16.7% increase in the interim dividend to 4.2p (HY16: 3.6p) Operational Focus • Space M
Slide 4: Andy Jones
New Birmingham Store Andy Jones
Slide 5: Financial highlights
5 Financial highlights Change vs Income Statement & Cash flow HY2017 HY2016 Absolute CER² Revenue (£’m) like-for-like1 57.4 7.1% 3.7% Underlying EBITDA (£’m) like-for-like1 31.5 9.0% 4.8% Revenue (£’m) 62.6 15.7% 12.4% Underlying EBITDA (£’m) 34.2 16.7% 12.3% Underlying EBITDA (post leasehold costs)
Slide 6: Solid revenue growth across the portfolio
6 Solid revenue growth across the portfolio London / Rest of UK Total Paris Group SE UK Total Act 1.52 1.18 2.70 0.81 3.51 Average Occupancy LFL 1 (sq ft ‘m) YoY 0.7% 3.5% 1.9% 1.3% 1.7% Act 72.3% 66.3% 69.5% 80.9% 71.9% Closing Occupancy LFL1 % YoY (0.5%pts) 2.6%pts 0.9%pts 1.5%pts 1.1%pts Act 30.0
Slide 7: Group P&L
7 Group P&L HY2017 HY2016 UK Paris Total UK Paris Total (£'m) (€'m) (£'m CER) (£'m) (€'m) (£'m CER) Revenue 47.3 17.9 60.8 41.1 17.3 54.1 Underlying Cost of Sales (17.9) (5.0) (21.7) (15.4) (4.8) (19.0) Store EBITDA 29.4 12.9 39.1 25.7 12.5 35.1 Store EBITDA Margin 62.2% 72.1% 64.3% 62.5% 72.3% 64.9
Slide 8: Revenue increase drives improved EBITDA (after leasehold rent)
8 Revenue increase drives improved EBITDA (after leasehold rent) Like-for-Like revenue: 2.0 New stores & Space Maker: 4.7 Business rates & maintenance: 0.2 Volume related & employee: 0.1 New & closed stores & Space Maker: 2.4 Like-for-Like rent: 0.3 New stores and Space Maker: 0.6 CER 10.6% improvem
Slide 9: Strong cash flow financing dividend
9 Strong cash flow financing dividend HY2017 HY2016 (£'m) (£'m) Underlying EBITDA 34.2 29.3 Working Capital/ Exceptionals/ Other 1.4 (0.1) Operating cash inflow 35.6 29.2 Interest payments (5.8) (4.7) Leasehold rent payments (5.0) (3.9) Tax payments (1.6) (0.9) Free cash flow (before investing and f
Slide 10: Strong and flexible Balance Sheet
10 Strong and flexible Balance Sheet Capital Structure Apr 17 Oct 16 Variance Apr 16 Property valuation (£’m)* 980.3 954.2 2.7% 838.6 UK (£’m)* 738.2 710.6 3.9% 634.3 FR (€’m)* 287.8 270.9 6.2% 260.8 Gross Debt (£’m) 311.4 315.7 (£4.3m) 255.7 Adjusted Gross Debt (£’m) ** 298.5 294.9 £3.6m 251.4 Net
Slide 11: Refinancing
11 Refinancing Previous New Facilities 2020 UK Term Loan £126m 2022 UK Revolver £190m 2020 UK Revolver £125m 2022 Euro Revolver €70m 2020 Euro Revolver €70m 2024 USPP €51m (1.59%) 2019 USPP $66m (5.83%) 2027 USPP €74m (2.00%) 2024 USPP $47m (6.74%) 2029 USPP £51m (2.92%) UK Accordion £15m UK Accordi
Slide 12: Guidance – non trading and one-off items
12 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Strengthening of Euro contributed £1.1m to EBITDA in HY2017 In H2, each 10c fluctuation from last year’s H2 FX rate of 1.20 equates to c.£0.7m of Group EBITDA Tax Effective underlying cash tax rate in France estimated
Slide 13: Frederic Vecchioli
13 Frederic Vecchioli
Slide 14: Operations overview
14 Operations overview All of the numbers include Space Maker on a pro-forma basis for 2016 Limited market supply growth, c. 2% to 3% expected in 2017 – barriers to entry Leveraging leading marketing platform: • Competitive advantage of scale – growing market share • Rolled-out to Paris • Group enqu
Slide 15: Limited market supply growth
15 Limited market supply growth Growing and fragmented industry: • 1,430 self storage sites (of which 317 are container sites) – 693 storage businesses • Fragmented market with the six largest operators only owning 315 stores • 25 new store openings in 2016 • c. 25 – 40 new stores are likely to be a
Slide 16: Leveraging leading marketing platform
16 Leveraging leading marketing platform Safestore capturing growing market share: • 81% of group enquiries generated online • New website delivered average HY2017 UK LFL enquiry growth of 4.1% • Platform rolled-out to Paris business • Paris enquiry growth +7.0% with increasing momentum • 56% of onl
Slide 17: Continuing sales performance
17 Continuing sales performance New let square feet: • +5.7% in the UK in HY • Stronger growth in the UK regions (+6.8%) versus London (+4.9%) • +5.2% in Paris in HY • Like-for-like growth inline with prior year in both countries Vacate square feet: • Length of stay stable in all regions, with group
Slide 18: Balanced rate management
18 Balanced rate management Rate growth (CER): • 0.7% in the UK in HY • 1.7% like-for-like • 2.2% in Paris in HY • 2.7% like-for-like Centrally driven pricing promotions reduced as we enter peak trading season Continued discipline at store level discounting Rate growth drivers: • Enquiry generation
Slide 19: Diversified drivers and business geography generate resilient revenue and profits
19 Diversified drivers and business geography generate resilient revenue and profits c. 8% - 13% owner occupier UK moving owner occupier represent close to 20% group new lets but c. 10% of revenue due to shorter stay and smaller size
Slide 20: Continued focus on existing assets
20 Continued focus on existing assets Group London & UK Paris SE Regions Maximum lettable area (m sq ft) 5.64 2.45 2.12 1.07 Let Square Feet (m sq ft) 3.94 1.72 1.39 0.83 Available space (m sq ft) 1.70 0.73 0.73 0.24 Fully invested portfolio of 5.64m square feet 1.7m available – equivalent of around
Slide 21: Disciplined development
21 Disciplined development Space Maker: • Fully integrated • Revenue growth 6.2% • Now 9.9% cash on cash Newly opened stores • On target UK • All new stores opened will exit (109 stores) their first 12 months profitably Paris New stores and developments (25 stores) • Longpont extension (March 2017)
Slide 22: Well positioned for further growth
22 Well positioned for further growth Attractive market • Young and growing industry • Secure and diversified income stream from 55,000 customers • Customers staying on average 9.7 months (existing customers 24.8 months) • Resilient during downturn Unique portfolio • Leading presence in key markets
Slide 23: Appendices
23 Appendices
Slide 24: Index
24 Index: Financial 48 French leases 26 Detailed P&L 27 Non-underlying items Portfolio summary: 28 Detailed Balance Sheet 49 Geographic 29 Underlying to Statutory Adjustments 50 Maturity 31 Movement in Cost Base 51 Freehold / Leasehold 32 Group Banking Covenants 52 Maturity (LFL CER) 33 Group Debt p
Slide 25: Financial
wi é Financial
Slide 26: Detailed P&L
26 Detailed P&L Group HY2017 HY2016 £’m £’m Revenue 62.6 54.1 Cost of sales (22.5) (19.3) Gross profit 40.1 34.8 Administrative expenses (6.3) (6.1) Underlying EBITDA * 34.2 29.3 Cost incurred relating to corporate transactions - (0.3) Depreciation and contingent rent (0.4) (0.3) Operating profit be
Slide 27: Non-underlying items
27 Non-underlying items HY2017 HY2016 (£'m) (£'m) Underlying EBITDA 34.2 29.3 Gain on investment properties 30.8 28.2 Depreciation (0.2) (0.2) Contingent rent (0.2) (0.1) Costs incurred relating to corporate transactions - (0.3) Statutory Operating Profit 64.6 56.9
Slide 28: Detailed Balance Sheet
28 Detailed Balance Sheet Group HY2017 HY2016 £’m £’m Assets Non-current assets Investment properties 972.0 826.6 Investment properties under construction 8.3 12.0 Other non-current assets 72.8 58.9 Non-current assets 1,053.1 897.5 Current assets 32.9 33.8 Liabilities Current liabilities (57.0) (50.
Slide 29: HY2017 Underlying to Statutory Adjustments
29 HY2017 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 62.6 62.6 Revenue Cost of Sales / Administrative Costs (28.4) (
Slide 30: HY2016 Underlying to Statutory adjustments
30 HY2016 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 / A
Slide 31: Movement in Cost Base
31 Movement in Cost Base Cost of Sales Administrative Expenses HY2017 HY2016 HY2017 HY2016 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (22.5) (19.3) Reported administrative expenses (6.3) (6.1) Adjusted for: Adjusted for: Depreciation 0.2 0.2 Exceptional and non-underlying items - 0.3 Contingent
Slide 32: Group Banking Covenants – Apr 2017
32 Group Banking Covenants – Apr 2017 reported Covenants Interest Cover Ratio Loan to Value Consolidated level Not less than 2.40:1 Sterling Loan to Value Not more than 0.60:1 Euro Loan to Value Not more than 0.60:1
Slide 33: Group Debt position at Apr 2017
33 Group Debt position at 30 Apr 2017 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/$'m £'m £'m % Margin Rate Rate Rate UK Term Loan Jun 20 £ 126.0 126.0 100.0 79% 1.50% 1.34% 0.26% 2.62% UK Revolver Jun 20 £ 125.0 61.0 - - 1.50% - 0.26% 1.76% UK Revolver - non-utilisation £ 64.0
Slide 34: Refinance
34 Refinance Had the refinanced arrangements been in place at 30 April 2017, on a pro forma basis the Group’s effective interest rate would have been as follows Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/$'m £'m £'m % Margin Rate Rate Rate UK Revolver £ 190.0 117.0 100.0 85% 1.25% 1
Slide 35: Operational Delivery
Operational Delivery ss ee ee
Slide 36: Growing National Accounts platform
36 Growing National Accounts platform • National Accounts leverage UK platform further and now accounts for 12% of all occupancy in the UK • Two-thirds of customers outside London • Square feet let up 13% over prior year • Storage revenue up 22% on prior year
Slide 37: Head Office Functions supporting revenue growth
37 Head Office Functions supporting revenue growth: • Customer Support Centre: Customer IT & • CSC handled 18% 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 38: Portfolio Management
! ~ 7 : ps al i : Portfolio Management ‘
Slide 39: Portfolio strength with further potential
39 Portfolio strength with further potential • 134 store portfolio • 5.6m maximum lettable area • 1.7m sq ft available – 1.0m London, South East and Paris • 44 stores within the M25 • 25 stores in Paris • 19 stores in the South East UK (109 stores) • 46 stores in the UK regions Paris • New stores op
Slide 40: Densest network of stores in London and Paris
Densest network of stores in 40 London and Paris Paris and London combined represent 69 stores – £38.4m of Revenue, £26.3m of Store EBITDA and 41% of currently unoccupied square feet
Slide 41: Property valuation movement
41 Property valuation movement (excluding investment properties under construction) Key assumptions Apr 2017* Apr 2016* Oct 2016 Average Self Storage rate per sq ft £26.85 £26.02 £26.17 Exit Cap rate (Freehold only) 7.2% 7.2% 7.2% Weighted average stabilised occupancy 80.8% 79.7% 80.2% Stabilised oc
Slide 42: New stores and Pipeline
42 New stores and Pipeline Total MLA Pipeline store / site Planning Estimated opening sq ft Stores opened in HY2017 London Chiswick 42,500 Total sq ft added in HY2017 42,500 Development stores acquired / under contract London Mitcham 54,000 2018 Paris Combs-la-Ville (opened June 2017) 73,000 2017 To
Slide 43: Development characteristics
43 Development characteristics Limited site High land Planning Long lead- availability price restrictions time London / SE Regional City Centres Secondary towns Central Paris Paris 2nd belt • Six largest UK operators own just 22% of market* • Excluding container sto
Slide 44: Very strong position in the two best European markets for storage
44 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 45: Une Pièce en Plus – strong market characteristics
45 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 46: Leading market positions in key UK regional conurbations
46 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 47: Paris development characteristics
47 Paris 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 London • Price of land • Long lea
Slide 48: French Commercial Lease Statute provides security of tenure
48 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 49: Portfolio summary split geographically
49 Portfolio summary split geographically London & Rest of UK UK Paris Group South East Number of stores 63 46 109 25 134 Let Square Feet (m sq ft) 1.72 1.39 3.11 0.83 3.94 Maximum Lettable Area (m sq ft) 2.45 2.12 4.57 1.07 5.64 Let Square Feet per store (k sq ft) 27 30 29 33 29 Average Store Capac
Slide 50: Portfolio summary split by maturity
50 Portfolio summary split by maturity HY2017 HY2016 Developing Established Mature Total Developing Established Mature Total Number of stores 5 6 123 134 0 6 113 119 MLA self storage only (m) 0.230 0.305 5.107 5.642 0.000 0.305 4.620 4.925 Closing occupancy (m) 0.072 0.244 3.588 3.904 0.000 0.237 3.
Slide 51: Portfolio summary split between freehold and leasehold
51 Portfolio summary split between freehold and leasehold HY2017 HY2016 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 73 36 14 11 87 47 65 30 13 11 78 41 MLA self-storage only (m) 3.134
Slide 52: Portfolio summary split by maturity (LFL CER)
52 Portfolio summary split by maturity (LFL CER) HY2017 HY2016 Established Mature Total Established Mature Total Number of stores 6 111 117 6 111 117 MLA self storage only (m) 0.305 4.594 4.899 0.305 4.594 4.899 Closing occupancy (m) 0.244 3.240 3.484 0.237 3.196 3.433 Occupancy (%) 80.0% 70.5% 71.1
Slide 53: Portfolio summary split between freehold and leasehold (LFL CER)
53 Portfolio summary split between freehold and leasehold (LFL CER) HY2017 HY2016 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 63 30 13 11 76 41 63 30 13 11 76 41 MLA self storage only
Slide 54: Resilient business model
Slide 55: Safestore UK historic performance
55 Safestore UK historic performance
Slide 56: Safestore UK historical performance
56 Safestore UK historical performance
Slide 57: Customers
Customers
Slide 58: Customer length of stay
58 Customer length of stay UK Paris Group HY2017 HY2016 HY2017 HY2016 HY2017 HY2016 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 133.2 30.7 131 30.2 137 31.5 133 30.5 134 30.8 131 30.3 Vacated 55 12.6 53 12.3 57 13.0 55 12.6 55 12.7 53 12.3 Total 64
Slide 59: Group customer split as at Apr 2017
59 Group customer split as at 30 Apr 2017
Slide 60: Personal and business customers
60 Personal and business customers Personal and Business Customers UK Paris Personal Customers Numbers (% of total) 72% 82% Square feet occupied (% of total) 52% 66% Average length of stay (months) 21.0 27.1 Business Customers Numbers (% of total) 28% 18% Square feet occupied (% of total) 48% 34% Av