Safestore Holdings Plc · LSE:SAFE
Safestore — H1 2014 Earnings Presentation
46 slides from Safestore's earnings presentation, Jun 26, 2014
Slide 1: Interim Results Presentation 26 June 2014
Interim Results Presentation 26 June 2014 1
Slide 2: Introduction
Introduction Frederic Vecchioli 2
Slide 3: Highlights
Highlights Operational Delivery Positive enquiry growth in the period with improving conversion, gathering momentum on new lets (up 8.8%) and closing occupancy up 2.2 ppts Revised pricing policy driving significant increase in move-in rates Operational transformation progressing well with seni
Slide 4: Financials
Financials 4 Andy Jones
Slide 5: Financial Highlights
Financial Highlights H1 ended 30 Change vs H1 Apr Income Statement Apr 2014 2013 Revenue (£’m) 46.9 (0.4%) Like-for-like revenue (CER) 46.9 +1.7% Underlying EBITDA (£’m) 25.1 +2.4% Like-for-like EBITDA (CER) 25.1 +5.5% Cash Tax Adjusted EPS (pence) 6.0 +20.0% Dividend per share (pence) 2.15 +16.2% A
Slide 6: Trading Update – Like for Like performance
Trading Update – Like for Like1 performance London / Rest of UK Total France Group SE UK Total Act 23.1 10.8 33.9 13.0 46.9 Revenue £m (in CER2) YoY 2.1% (2.6%) 0.6% 4.7% 1.7% Act 1.46 1.10 2.55 0.76 3.323 Occupancy (SqFt ‘m) YoY 6.3% (0.2%) 3.4% 2.7% 3.1% Act 26.02 16.27 21.87 31.64 24.18 Rate (£ p
Slide 7: Improving Year-on-year UK Revenue Trends
Improving Year-on-year UK Revenue Trends Our operational actions are starting to gain traction For the last 9 months we have seen an improving trend in year-on-year revenues UK revenue became positive in April and the momentum continued into the beginning of Q3. 7
Slide 8: Summary Group P&L
Summary Group P&L H1 2014 H1 2013 UK France Total UK France Total (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) Revenue 33.9 13.0 46.9 34.6 12.5 47.1 Costs (17.3) (4.5) (21.8) (18.0) (4.6) (22.6) Underlying EBITDA 16.6 8.5 25.1 16.6 7.9 24.5 EBITDA Margin 49% 65% 54% 48% 63% 52% Leasehold Rent (2.6) (2.4) (5.
Slide 9: Costs reductions drive EBITDA improvement
Costs reductions drive EBITDA improvement 9
Slide 10: Cash flow reflects recent capital restructuring
Cash flow reflects recent capital restructuring Half Year 2014 2013 (£'m) (£'m) Underlying EBITDA 25.1 24.5 Working Capital/ Exceptionals/ Other (2.7) 1.4 Operating Cash flow 22.4 25.9 Capital Expenditure- investment properties (1.6) (2.3) Capital Expenditure- property, plant and equipment (0.1) (0.
Slide 11: Capital Structure Changes
Capital Structure Changes Comparison of Previous and New Capital Structure Previous New Gross Debt (£’m) 343 265 Group LTV 47% 39% UK LTV 57% 47% Interest Cover Ratio 2.1x 2.75x Proforma annual Interest Charge (same hedge levels/ rates) (£’m) 18.4 c. 13.0 Estimated 2014 Interest Charge (same hedge l
Slide 12: Strategic Overview
Strategic Overview Frederic Vecchioli 12
Slide 13: Investment Case
Investment Case Capital Priority 1 structure Completed Operational Strong Priority 2 delivery progress made Asset Priority 3 management Ongoing 13
Slide 14: Portfolio strength with further potential
Portfolio strength with further potential • 122 Store portfolio • 5.1m maximum lettable area • 1.8m sqft available Paris – 1.0m London, SE and Paris • 43 stores within the M25 UK • 25 stores in Paris • 15 stores in the South-east • 39 stores in the UK regions London • New store in London (Chiswick)
Slide 15: Safestore well positioned to capture demand growth
Safestore well positioned to capture demand growth Demand drivers are: – Lifestyle customers (students – marriage – new baby – divorce – bereavement) – Rental/Owner occupier Customers (rental moves – housing transaction) – Businesses (small businesses, e-tailers, blue-chips, archiving) Storage p
Slide 16: Leading UK enquiry generation platform
Leading UK enquiry generation platform Improvements made on our desktop and mobile website Benefits of scale even stronger in mobile Cost per enquiry has been managed down 16
Slide 17: Store teams drive performance
Store teams drive performance High operational leverage: Occupancy Ancillary sales – First contact with enquirers movement through email followed by telephone conversation Driving Revenue – Sales take place in the store and not online – Self-storage is not a Rate New Let SqFt commodity – majority
Slide 18: Operational Leadership
Operational Leadership UK senior appointments in operations and human resources - Significant operational and retail experience Closer store management with 3 additional regions – Pricing discipline – Revised pricing policy driving significant increase in move-in rates – Store team coaching Ne
Slide 19: Pricing policy change gradually impacting the entire customer base
Pricing policy change gradually impacting the entire customer base • Current existing customer moved in on average 25 months ago: • Average move-in rate had been declining for 3 years • Vacating old customers have been replaced during the 3 year period with new customers at a lower rate • Despite re
Slide 20: National accounts and Customer support centre
National accounts and Customer support centre National accounts leverage UK platform further and now accounts for 10% of all occupancy in the UK - Four consecutive years of occupancy growth CSC handles 18% of all enquiries 20
Slide 21: Une Pièce en Plus
Une Pièce en Plus • Unrivalled network of inner Paris stores - Strong barriers to entry • Very high density population – low storage supply • 16 consecutive years of uninterrupted growth in rate, occupancy, revenue and EBITDA • St Denis freehold acquisition and consolidation 21
Slide 22: Une Pièce en Plus
Une Pièce en Plus • Internal succession with new CEO with 8 years of experience driving revenue • Operational excellence continues • Lower cost base 22
Slide 23: Current Trading and Outlook
Current Trading and Outlook Frederic Vecchioli 23
Slide 24: Current Trading and outlook
Current Trading and outlook • We are pleased with progress • Operational transition progressing to plan with encouraging early results • Positive enquiry and new lets growth • Improving rate and revenue trends • Ongoing focus on tight cost control • Improved capital structure • In line with the Boar
Slide 25: Appendices
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Slide 26: Financial
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Slide 27: Detailed P&L
Detailed P&L Group H1 2014 H1 2013 £’m £’m Revenue 46.9 47.1 Cost of sales (16.0) (16.7) Gross profit 30.9 30.4 Administrative expenses (6.3) (8.8) EBITDA before exceptional items and investment gain/loss 25.1 24.5 Exceptional items (0.6) (0.4) Change in fair value of derivatives 0.7 (1.5) Depreciat
Slide 28: Non-underlying Items
Non-underlying Items H1 2014 2013 (£'m) (£'m) Underlying EBITDA 25.1 24.5 (Loss)/gain on investment properties (6.8) 3.1 Depreciation (0.2) (0.3) Contingent rent (0.4) (0.7) Change in fair value of derivatives 0.7 (1.5) Exceptional Items - insurance proceeds - 0.3 - VAT and REIT related costs - (0.1
Slide 29: Detailed Balance Sheet
Detailed Balance Sheet Group H1 2014 H1 2013 £’m £’m Assets Non-current assets Investment properties 674.3 697.8 Investment properties under construction 5.6 5.4 Other non-current assets 63.7 64.2 Non-current assets 743.6 767.4 Current assets 28.6 36.5 Liabilities Current liabilities (45.4) (48.5) N
Slide 30: H1 12/13 Underlying to Statutory Adjustments
H1 12/13 Underlying to Statutory Adjustments H1 12/13 Underlying to Statutory Adjustments Underlying Derivative Contingent Valuation Finance Dep'n LH Tax / Statutory Underlying Headings Exceptionals Statutory Headings P&L Movements Rent/ Dep'n Movement Lease Int properties CGS P&L Sales 47.1 47.1 Re
Slide 31: H1 13/14 Underlying to Statutory Adjustments
H1 13/14 Underlying to Statutory Adjustments H1 13/14 Underlying to Statutory Adjustments Underlying Derivative Contingent Valuation Finance Dep'n LH Tax / Statutory Underlying Headings Exceptionals Statutory Headings P&L Movements Rent/ Dep'n Movement Lease Int properties CGS P&L Sales 46.9 46.9 Re
Slide 32: Movement in Cost Base
Movement in Cost Base Cost of Sales Financial Year Administrative Expenses Financial Year H1 H1 2014 H1 2013 H1 2014 2013 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (16.0) (16.7) Reported administrative expenses (6.3) (8.8) Adjusted for: Adjusted for: Depreciation 0.2 0.3 Exceptional expense 0.6
Slide 33: Group Exceptional Items – April 2014 Reported
Group Exceptional Items – April 2014 Reported H1 2014 H1 2013 Exceptional Costs (£m) (£m) Insurance proceeds - 0.3 Restructuring costs (0.4) (0.6) VAT and REIT related costs - (0.1) Other Exceptional items (0.2) - Total exceptional costs (0.6) (0.4) 33
Slide 34: H1 2014 Bank Facilities and Finance Costs
H1 2014 Bank Facilities and Finance Costs Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/$'m £'m £'m % Margin Rate Rate Rate UK Term Loan Jun 18 £ 156.0 £156.0 £80.0 51% 2.50% 1.64% 0.52% 3.59% UK Revolver Jun 18 £ 50.0 £2.5 - - 2.50% - 0.52% 3.02% UK Revolver- non-utilisation £ 47
Slide 35: Group Banking Facilities – Apr 2014 Reported
Group Banking Facilities – Apr 2014 Reported New Facility 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
Slide 36: 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 FY13 6,000 1.1392 1.1921 233 H2 FY13 4,500 1.2393 1.1700 (216) H1 FY14 5,250 1.2364 1.2039 (98) Tota
Slide 37: Property valuation metrics reflect economic conditions
Property valuation metrics reflect economic conditions October Key variables 2013 Average Self Storage Rate per Sq Ft £24.39 Exit Cap Rate 7.73% Weighted average stabilised occupancy 77.12% Stabilised Occupancy in Sq Ft 3.90m Average number of months to stabilised 37 occupancy October 2013 valuati
Slide 38: No new stores opened in H1 2014; pipeline unchanged
No new stores opened in H1 2014. Pipeline unchanged; three UK sites acquired and planning permission obtained MLA Pipeline store / site Full planning Opened / estimated opening sq ft Stores opened in H1 2014 No openings Total sq ft added in HY 0 Development stores acquired / under contract Chiswick
Slide 39: Portfolio
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Slide 40: Portfolio summary split between freehold & leasehold
Portfolio summary split between freehold & leasehold London & Rest of UK UK Paris Group South East Number of Stores 58 39 97 25 122 Let Square Feet (m SqFt) 1.46 1.10 2.55 0.76 3.32* Maximum Lettable Area (m SqFt) 2.18 1.84 4.02 1.06 5.08 Let Square Feet per store (k SqFt) 25 28 26 30 27 Average Sto
Slide 41: Portfolio summary split by store maturity
Portfolio summary split by store maturity H1 2014 H1 2013 Developing Established Mature Large Total Developing Established Mature Large Total (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) (Sq ft ‘m) Number of Stores 8 17 89 8 122 8 17 90 8 123 MLA
Slide 42: Portfolio summary split between freehold & leasehold
Portfolio summary split between freehold & leasehold H1 2014 H1 2013 UK France Group UK France Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of Stores 64 33 12 13 76 46 65 33 12 13 77 46 Self storage income £m 15.2 11.4
Slide 43: Customer average length of stay - Group
Customer average length of stay - Group Portfolio at Portfolio at Age of Store 1-2 Years 2-5 Years > 5 Years Apr 2014 Oct 2013 No of Stores 4 12 104 120 121 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 46 10.6 79 18.3 144 33.2 136 31.3 131 30.2 Vacated 21 4.8 26
Slide 44: Customer average length of stay in the UK
Customer average length of stay in the UK Portfolio at Portfolio at Age of Store 1-2 Years 2-5 Years > 5 Years Apr 2014 Oct 2013 No of Stores 2 8 85 95 95 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 47 10.8 85 19.6 139 32.1 134 30.9 128 29.5 Vacated 20 4.6 26 5
Slide 45: Customer average length of stay in France
Customer average length of stay in France Portfolio at Portfolio at Age of Store 1-2 Years 2-5 Years > 5 Years Apr 2014 Oct 2013 No of Stores 2 4 19 25 25 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 45 10.4 67 15.5 152 35.1 135 31.2 133 30.7 Vacated 22 5.2 29 6
Slide 46: Group Customer split as at 30 April 2014
Group Customer split as at 30 April 2014 46