Safestore Holdings Plc · LSE:SAFE
Safestore — H1 2020 Earnings Presentation
69 slides from Safestore's earnings presentation, Jun 18, 2020
Slide 1: Half Year Results Presentation 18 June 2020
11 Half Year Results Presentation 18 June 2020
Slide 2: Introduction
Merry Hill Store Introduction Frederic Vecchioli
Slide 3: Strong record of value creation
3 Strong record of value creation +69% +79% +142% +168% EBITDA and EPRA EPS adjusted for historic share based payment charges and current dilutive shares Above variances has not been fully adjusted for the impact of rounding
Slide 4: Highlights
4 Highlights COVID-19 • Health, safety and well-being of our employees and customers of paramount importance • No UK employees furloughed and no plans to access UK COVID-19 related government funding • Operations continued during lockdown with some restrictions, now reverting to full operations with
Slide 5: Highlights
5 Highlights Operational and Strategic Progress Despite COVID-19 our proven business model and balanced approach to revenue management drives resilient operational performance • Like-for-like average occupancy for the period up 3.7% • Like-for-like average storage rate for the period up 2.1% in CER
Slide 6: COVID 19 Update
New Carlshalton store 6 COVID 19 Update Frederic Vecchioli Frederic Vecchioli
Slide 7: COVID-19 management and recovery update
7 COVID-19 management and recovery update: COVID-19 management: • Balanced occupancy/rate management during lockdown to protect revenue • Reduced spend on Marketing during lockdown Recovery update : • Post relaxation of lockdown restrictions demand returned: • Enquiries June MTD: +18% • Enquiries, n
Slide 8: COVID-19 Impact - UK
8 COVID-19 Impact - UK Enquiries year-on-year: • March: + 32% driven by early student season • April & May: -20% • June 1st – 15th : +17% • Enquiries in June 1st – 15th excluding students up 38% year on year Balanced rate and occupancy (LFL for the period 30 Apr to 15 Jun): • Average occupancy -1.5%
Slide 9: COVID-19 Impact - FR
9 COVID-19 Impact - FR Enquiries year-on-year: • March: -32% • April & May: -25% • June 1st – 15th : +16% Balanced rate and occupancy (LFL for the period 30 Apr to 15 Jun): • Average occupancy +0.6% YoY • Average rate +2.3% YoY • Storage revenue +2.6% YoY • Closing occupancy 15th June: • 0.98m SqFt
Slide 10: Financials
Newcastle Central Store Financials Andy AndyJones Jones
Slide 11: Financial highlights
11 Financial highlights Change vs Income Statement & Cash flow HY 2020 HY 2019 Absolute CER² Revenue (£’m) like-for-like1 77.0 5.5% 5.9% Underlying EBITDA (£’m) like-for-like1 44.9 8.7% 9.0% Revenue (£’m) 79.3 8.5% 9.0% Underlying EBITDA (£’m) 45.9 10.9% 11.4% Underlying EBITDA (post leasehold costs
Slide 12: Solid revenue growth across the portfolio
12 Solid revenue growth across the portfolio London / Rest of UK Total Paris Group SE UK Total Act 2.01 1.77 3.78 0.99 4.77 Average Occupancy LFL 1 (sq ft ‘m) YoY 4.1% 3.5% 3.8% 3.1% 3.7% Act 73.7% 69.3% 71.6% 77.4% 72.7% Closing Occupancy LFL1 % YoY -0.2% ppt -0.5% ppt -0.3% ppt -0.3% ppt -0.3% ppt
Slide 13: Group P&L
13 Group P&L HY 2020 HY 2019 UK Paris Spain Total UK Paris Spain Total (£'m) (€'m) (€'m) (£'m CER) (£'m) (€'m) (€'m) (£'m CER) Revenue 59.8 21.8 1.0 79.7 55.2 20.5 - 73.1 Underlying Cost of Sales (21.6) (6.0) (0.2) (27.0) (20.6) (5.8) - (25.7) Store EBITDA 38.2 15.8 0.8 52.7 34.6 14.7 - 47.4 Store E
Slide 14: Revenue increase drives improved EBITDA (after leasehold rent)
14 Revenue increase drives improved EBITDA (after leasehold rent) New stores: (1.5) Enquiry generation 0.2 CER 9.1% improvement Excludes share of associate’s EBITDA
Slide 15: Strong cash conversion
15 Strong cash conversion HY 2020 HY 2019 (£'m) (£'m) Underlying EBITDA 45.9 41.4 Working Capital/ Exceptionals/ Other - (1.4) Adjusted operating cash inflow 45.9 40.0 Interest payments (4.6) (4.2) Leasehold rent payments (6.3) (5.3) Tax payments (2.6) (2.9) Free cash flow (before investing and fina
Slide 16: Strong and flexible Balance Sheet
16 Strong and flexible Balance Sheet Capital Structure Apr 20 Oct 19 Variance Apr 19 Property valuation (£’m)* 1,466.8 1,345.7 9.0% 1,238.7 UK (£’m)* 1,087.8 1,012.8 7.4% 936.1 FR (€’m)* 421.0 386.1 9.0% 351.0 ES (€’m)* 14.4 - - - Gross Debt (£’m) 436.8 413.0 £23.8m 384.5 Net Debt (£’m) 422.2 379.8
Slide 17: Revenue collection UK
17 Revenue collection UK • Above chart shows the percentage of customer rent due that was collected within the period +30days. • In April and May 96.9% of revenue was collected (97.5% in 2019) • In May-20 (to the 11th) 96.9% of revenue was collected within the period +30days, compared to 97.2% in th
Slide 18: Revenue collection Paris
18 Revenue collection Paris • Above chart shows the percentage of customer rent due that was collected within the period +30days. • In April and May 83.8% of revenue was collected (84.4% in 2019) • In May-20 (to the 11th) 82.8% of revenue was collected within the period +30days, compared to 82.4% in
Slide 19: Guidance – non trading and one-off items
19 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Slight weakening of the Euro (1.162 in HY2020, 1.1329 in FY2019) diluted EBITDA after leasehold rent by £0.1m In the year, each 10c fluctuation from the FY2019 FX rate of 1.1329 would equate to c. £1.0m of Group EBITDA
Slide 20: Operational Delivery
New Gateshead store 20 Operational Delivery Frederic Vecchioli Frederic Vecchioli
Slide 21: Operations overview
21 Operations overview Record pre-COVID-19 occupancy and new let growth in HY 2020 driven by increased conversion and enquiry growth • Efficient marketing platform drives better targeted enquiries – enquiry growth +11.7% • Continued investment in pricing and data analytics support • Enhanced quality
Slide 22: Leveraging leading marketing platform
22 Leveraging leading marketing platform Marketing efficiency increased further • Enquiry growth +11.7% • Focus on targeted and quality enquiries Group marketing budget at 4.3% of revenue (PY 4.8%) • Improving our advertising targeting logic drives costs per enquiry down – 13.0% • Requires focus, in
Slide 23: Occupancy and MLA and HY Revenue
23 Occupancy and MLA and HY Revenue 2.0m sq ft available plus 0.13m sq ft pipeline, extensions Pipeline excludes development sites in Morden and Bermondsey as well as Joint Venture’s in Netherlands and Belgium
Slide 24: Balanced occupancy and rate growth management
24 Balanced occupancy and rate growth management Like-for-like¹ UK Paris Rate per Closing Sq Revenue in Rate per Sq Closing Sq Revenue in Sq Ft Ft Let CER² Ft Ft Let CER² % YoY % YoY % YoY % YoY % YoY % YoY 2017 Q1 2.2% 2.7% 4.9% 4.5% 1.3% 4.6% 2017 Q2 1.2% 1.1% 3.0% 0.9% 2.5% 1.7% 2017 Q3 0.0% 1.1%
Slide 25: Key urban areas developments
25 Key urban areas developments Lokabox Self Storage (Belgium): Joint venture with Carlyle: • Six freehold storage locations in Brussels, Liege, Charleroi and Nivelles (MLA – 222,000 sq ft) • Extending Safestore’s operational platform: • Stores to be integrated and rebranded • Portfolio will benefit
Slide 26: Development
26 Development Pipeline since 2016: MLA Occupancy at FY of purchase purchase / opening Space Maker (12 Stores) 496,000 327,360 2016 London Wandsworth 33,200 0 2016 Total pipeline investment Birmingham Central 51,000 0 2016 since 2016 Altrincham 43,500 0 2016 Paris Emerainville 60,000 0 2016 • Recent
Slide 27: 2m square feet fully invested available
27 2m square feet fully invested available – equivalent of around 49 new stores As at 30 Apr 2020 Group London UK Paris Spain & SE Regions Current Maximum lettable area (m sq ft) 6.78 2.74 2.62 1.31 0.11 Let Square Feet (m sq ft) 4.82 1.99 1.75 0.98 0.10 Current Available space (m sq ft) 1.96 0.75 0
Slide 28: Flexible investment model
28 Flexible investment model UK Lease regears – demonstrable track record • c. 63% of UK leases regeared since 2012 • Leases regeared: Notting Hill • All leases in England within renewal protection rights of the Landlord and Tenant Protection Act FR lease regularly renewed • “Commercial Property” ow
Slide 29: Total Shareholder Return
29 Total Shareholder Return Over both periods, Safestore has provided the highest returns of all stocks in the FTSE350 Real Estate Super Sector index Data supplied by PWC & Investec. FTSE350 Real Estate is the FTSE350 Real Estate Super Sector index
Slide 30: Well positioned for further growth
30 Well positioned for further growth Attractive market • Immature and growing industry • Very constrained supply growth Unique portfolio • Leading presence in London, Paris and key markets • 72% of revenue from London / South East and Paris • Unlet invested space equivalent to around 49 stores incl
Slide 31: Appendices
31 Appendices
Slide 32: Index
32 Index: CSR 58 UK regional market position 33 CSR Update 59 Paris development characteristics Financial 60 French leases 37 Detailed P&L 38 Non-underlying items Portfolio summary: 39 Detailed Balance Sheet 61 Geographic 40 Underlying to Statutory Adjustments 62 Freehold / Leasehold 42 Movement in
Slide 33: Sustainability @ Safestore
33 Sustainability @ Safestore
Slide 34: We have aligned to relevant Sustainable Development Goals
34 We have aligned to relevant Sustainable Development Goals We will take action where we can have a meaningful impact OUR COMMITMENT OUR COMMITMENT OUR COMMITMENT We will be one of the best and We will protect the planet from our We will take actions to minimize fairest places to work activities ou
Slide 35: Sustainability Targets and KPIs
35 Sustainability Targets and KPIs Corporate UN Sustainable Targets Sustainability Sustainable Performance measures business Development strategy "pillar" business goals (“KPIs”) goals Goals 2020 2022 Percentage of females applying for roles at 35% 40% 5. Gender Safestore equality The fairest Mean g
Slide 36: Significant progress already on Green House Gas
36 Significant progress already on Green House Gas Total GHG emissions have been reduced 40% Intensity of GHG already at 50% of 2013 baseline below 2013 baseline despite portfolio growth (newer stores, energy mix, efficiency initiatives) Baseline year Baseline year
Slide 37: Detailed P&L
37 Detailed P&L Group HY 2020 HY 2019 £’m £’m Revenue 79.3 73.1 Cost of sales (27.5) (26.4) Gross profit 51.8 46.7 Administrative expenses (10.0) (8.7) Underlying EBITDA * 45.9 41.4 Exceptional Items (0.4) - Depreciation and contingent rent (0.6) (0.7) Share based payments (2.8) (2.7) Share of assoc
Slide 38: Non-underlying items
38 Non-underlying items HY 2020 HY 2019 (£'m) (£'m) Underlying EBITDA 45.9 41.4 Gain on investment properties 64.0 7.9 Depreciation (0.4) (0.4) Contingent rent (0.2) (0.3) Share-based payments (2.8) (2.7) Exceptional items (0.4) - Share of associate's gain on investment properties, depreciation, int
Slide 39: Detailed Balance Sheet
39 Detailed Balance Sheet Group HY 2020 HY 2019 £’m £’m Assets Non-current assets Investment properties 1,451.2 1,226.5 Investment properties under construction 15.6 12.2 Other non-current assets 89.2 63.5 Non-current assets 1,556.0 1,302.2 Current assets 43.1 46.9 Liabilities Current liabilities (6
Slide 40: HY 2020 Underlying to Statutory adjustments
40 HY 2020 Underlying to Statutory adjustments Share Tax / Underlying Derivative Contingent Valuation Finance Dep'n LH Share of Statutory Underlying Headings Exceptionals based CGS / Statutory Headings P&L Movements Rent / Dep'n Movement Lease Int properties Associate P&L payments FX Sales 79.3 79.3
Slide 41: HY 2019 Underlying to Statutory adjustments
41 HY 2019 Underlying to Statutory adjustments Tax / Underlying Share based Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings CGS / Statutory Headings P&L payments Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 73.1 73.1 Revenue Cost of Sales / Adminis
Slide 42: Movement in Cost Base
42 Movement in Cost Base Cost of Sales Administrative Expenses HY 2020 HY 2019 HY 2020 HY 2019 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (27.5) (26.4) Reported administrative expenses (10.0) (8.7) Adjusted for: Adjusted for: Depreciation 0.4 0.4 Share based payments 2.8 2.7 Contingent rent 0.2
Slide 43: Group Banking Covenants
43 Group Banking Covenants – Apr 2020 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 44: Group Debt position at 30 April 2020
44 Group Debt position at 30 April 2020 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/'m £'m £'m % Margin Rate Rate Rate UK Revolver Jun 22/Jun 23 £ 250.0 123.5 55.0 45% 1.25% 0.82% 0.20% 1.72% UK Revolver - non-utilisation £ 126.5 - - - 0.50% - - 0.50% Euro Revolver Jun22/Jun 23
Slide 45: Hedging of Euro Earnings – FX Forwards
45 Hedging of Euro Earnings – FX Forwards Value Date € Cover Forward Rate €’000 € H2 FY20 6,500 1.0751 H1 FY21 7,000 1.0751 H2 FY21 7,500 1.0751 H1 FY22 8,000 1.0751 H2 FY22 8,000 1.0751 H1 FY23 8,500 1.0751 • The group has hedged a proportion of its Euro denominated earnings, partially mitigating n
Slide 46: Revenue predictability and resilience
46 Revenue predictability and resilience Store square feet occupancy- split by year of customer move-in date: To BE UPDATED • Typically the customers moved in during the year make up 40% to 50% of the year end occupancy, but only between 20% to 30% of revenue (due to the impact of the introductory o
Slide 47: Diversified drivers and business geography generate resilient revenue and profits
47 Diversified drivers and business geography generate resilient revenue and profits c. 8% - 13% owner occupier Diversified business drivers, different business geographies and a stable average customer length of stay and unit mix provides resilient group profits. At the end of 2012, VAT was introdu
Slide 48: National Accounts and Customer Support Centre
48 National Accounts and Customer Support Centre National Accounts: • Leverage UK platform further and accounts for 12% of all occupancy in the UK • Two-thirds of customers outside London Customer Support Centre: • CSC handled 13% of all enquiries • Supports the sales teams in store
Slide 49: Portfolio strength with further potential
49 Portfolio strength with further potential • 158 store portfolio (As at Apr 20) • 6.8m maximum lettable area • 2.0m sq ft available – 1.1m London, South East and Paris UK (126 stores) • 48 stores within the M25 • 28 stores in Paris • 23 stores in the South East • 55 stores in the UK regions • 4 st
Slide 50: Densest network of stores in London and Paris
Densest network of stores in 50 London and Paris Paris and London combined represent 76 stores – £46.1m of Revenue, £31.8m of Store EBITDA
Slide 51: Paris unique competitive market position
51 Paris unique competitive market position Very solid market fundamentals: • 21 years of uninterrupted growth • Unique and densest network of stores in central Paris • Opportunity to leverage digital platform • Magenta to open 2021 (50,000 sq ft) • All new stores trading above plan • Density of sto
Slide 52: Limited UK Supply
52 Limited UK Supply Growing and fragmented industry: • 1,900 self storage sites (of which 563 are container sites) – 972 storage businesses • Fragmented market with the ten largest operators only owning UK 23% of stores (126 stores) • c. 25 new stores per annum expected in 2018 - 2020 Immature indu
Slide 53: Property valuation movement
53 Property valuation movement (excluding investment properties under construction) Key assumptions Apr 2020* Oct 2019 Apr 2019* Average Self Storage rate per sq ft £26.52 £26.09 £26.30 Exit Cap rate (Freehold only) 6.6% 6.6% 6.8% Weighted average stabilised occupancy 84.8% 86.2% 85.3% Average numbe
Slide 54: New, pipeline and extension stores
54 New, pipeline and extension stores Total MLA Pipeline store / site Estimated opening sq ft Development stores acquired / under contract Sheffield 47,000 2020 Paris Magenta 50,000 2021 Barking extension 5,000 2020 Bedford extension 26,000 2020 Chingford extension 6,000 2020 Total sq ft in pipeline
Slide 55: Development characteristics
55 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 Barcelona • Ten largest UK operators own just 23% of market* • Only
Slide 56: Very strong position in the two best European markets for storage
56 Very Very strong strong positionposition inEuropean in the two best the two best markets for storage European markets for storage Metropolitan GDP (£'bil) Population GDP (£'bil) Population GDP (£'bil) Population area (mil) (mil) (mil) London 587 14.3 Ruhr 123 5.1 Brussels 102 2.5 Paris 526 12.2 B
Slide 57: Une Pièce en Plus – strong market characteristics
57 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 58: Leading market positions in key UK regional conurbations
58 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 59: Paris development characteristics
59 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 London • Price of land • Long lead-time to open a store • Limited site availability
Slide 60: French Commercial Lease Statute provides security of tenure
60 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 61: Portfolio summary split geographically
61 Portfolio summary split geographically London & Rest of UK Paris Spain Group South East UK Number of stores 71 55 126 28 4 158 Let Square Feet (m sq ft) 1.99 1.75 3.74 0.99 0.09 4.82 Maximum Lettable Area (m sq ft) 2.74 2.62 5.36 1.31 0.11 6.78 Let Square Feet per store (k sq ft) 28 32 30 35 24 3
Slide 62: Portfolio summary split between freehold and leasehold
62 Portfolio summary split between freehold and leasehold HY 2020 HY 2019 UK Paris Spain Group UK Paris Spain Group FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Freehold Leasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold FreeholdLeasehold Number of stores 89 37 17 11 0 4 106 52
Slide 63: Portfolio summary split between freehold and leasehold (LFL CER)
63 Portfolio summary split between freehold and leasehold (LFL CER) HY 2020 HY 2019 UK Paris Spain Group UK Paris Spain Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 83 36
Slide 64: Portfolio summary split by maturity
64 Portfolio summary split by maturity HY 2020 HY 2019 Developing Established Mature Total Developing Established Mature Total Number of stores 11 6 141 158 5 4 137 146 MLA self storage only (m) 0.480 0.304 5.998 6.782 0.305 0.170 5.894 6.369 Closing occupancy (m) 0.172 0.220 4.418 4.810 0.127 0.118
Slide 65: Portfolio summary split by maturity (LFL CER)
65 Portfolio summary split by maturity (LFL CER) HY 2020 HY 2019 Developing Established Mature Total Developing Established Mature Total Number of stores 3 6 137 146 5 4 137 146 MLA self storage only (m) 0.171 0.304 5.894 6.369 0.305 0.170 5.894 6.369 Closing occupancy (m) 0.073 0.220 4.323 4.616 0.
Slide 66: Safestore UK historic performance
66 Safestore UK historic performance EBITDA in 2017 and 2018 has been adjusted for Share based payment charge
Slide 67: Customer length of stay
67 Customer length of stay UK Paris Group HY 2020 HY 2019 HY 2020 HY 2019 HY 2020 HY 2019 (mths) (mths) (mths) (mths) (mths) (mths) Business Existing 32.0 30.8 35.8 32.8 32.7 31.2 Vacated 12.3 12.5 13.8 13.5 12.5 12.7 Total 13.9 14.5 16.2 15.8 14.2 14.8 Personal Existing 21.6 20.6 28.3 27.0 23.2 22.
Slide 68: Group customer split as at 30 Apr 2020
68 Group customer split as at 30 Apr 2020
Slide 69: Personal and business customers as at 30 Apr 2020
69 Personal and business customers as at 30 Apr 2020 Personal and Business Customers UK Paris Personal Customers Numbers (% of total) 75% 84% Square feet occupied (% of total) 56% 67% Average length of stay (months) 21.6 28.3 Business Customers Numbers (% of total) 25% 16% Square feet occupied (% of