Safestore Holdings Plc · LSE:SAFE
Safestore — FY2015 Earnings Presentation
58 slides from Safestore's earnings presentation, Jan 21, 2016
Slide 1: Full Year Results Presentation 21 Jan 2016
11 Full Year Results Presentation 21 Jan 2016
Slide 2: Introduction
Introduction Frederic Vecchioli
Slide 3: Highlights
3 Highlights 1. Turnaround delivered since 2013: • UK new lets up 43% on 2013 • UK rate decline reversed – Q4 2015 up 10% on Q4 2013 • Like for like (LFL) growth across all regions • Loan to value ratio (LTV) from 47% to 32% & Interest cover ratio (ICR) from 2.1 to 4.2 • Cash tax Earnings per share
Slide 4: Financials
Financials Andy Jones
Slide 5: Financial highlights
5 Financial highlights Income Statement & Cash flow FY 2015 Change vs FY 2014 Absolute CER** Revenue (£’m) Like for Like* 103.0 8.9% 11.5% Underlying EBITDA (£’m) Like for Like* 56.2 10.2% 11.8% Revenue (£’m) 104.8 7.0% 9.7% Underlying EBITDA (£’m) 57.1 7.7% 9.2% Underlying EBITDA (post Leasehold co
Slide 6: All regions performing strongly
6 All regions performing strongly London / Rest of UK Total Paris Group SE UK Total Closing Occupancy LFL1 Act 1.565 1.192 2.757 0.826 3.583 (Sq Ft ‘m) YoY 5.0% 7.9% 6.2% 5.9% 6.2% Act 74.2% 65.7% 70.2% 81.8% 72.6% Closing Occupancy % YoY 3.4%pts 4.3%pts 3.6%pts 4.6%pts 3.8%pts Act 28.06 17.70 23.64
Slide 7: Summary Group P&L
7 Summary Group P&L FY 2015 FY 2014 UK Paris Total UK Paris Total (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) Revenue 79.9 24.9 104.8 71.8 26.1 97.9 Costs (39.3) (8.4) (47.7) (35.1) (9.8) (44.9) Underlying EBITDA 40.6 16.5 57.1 36.7 16.3 53.0 EBITDA Margin 50.8% 66.3% 54.5% 51.1% 62.5% 54.1% Leasehold Rent
Slide 8: Strong revenue performance drives improved EBITDA
8 Strong revenue performance drives improved EBITDA CER
Slide 9: Cash generation drives lower debt
9 Cash generation drives lower debt FY2015 FY2014 (£'m) (£'m) Underlying EBITDA 57.1 53.0 Working Capital/ Exceptionals/ Other 1.8 0.8 Operating cash inflow 58.9 53.8 Interest payments (12.0) (15.1) Leasehold rent payments (9.0) (10.3) Tax payments (0.6) (1.9) Free cash flow (before investing and fi
Slide 10: Strong and flexible Balance Sheet
10 Strong and flexible Balance Sheet Capital Structure Oct 15 Oct 14 Variance Property valuation (£’m) * 782 709 10.2% UK (£’m) * 604 532 13.5% FR (€’m) 249 225 10.7% Gross Debt (£’m) 250 265 (£15m) Net Debt (£’m) 236 249 (£13m) Group LTV 32% 37% (5%pts) UK LTV 36% 42% (6%pts) Interest Cover Ratio (
Slide 11: Guidance – non trading and one-off items
11 Guidance – non trading and one-off items Item Guidance Foreign exchange impact Average exchange rate (excluding hedge) in 2015 was €1.3556 Hedge income was £0.9m No hedging of French profits from 2016 onwards Tax French tax losses fully utilised in 2015 Effective underlying cash tax rate in Franc
Slide 12: Operational Delivery
12 Operational Delivery Frederic Vecchioli
Slide 13: Operations overview
13 Operations overview Foundations for future growth in place: • Marketing • Sales performance • Rate management • Development and asset management • Market supply and barriers to entry
Slide 14: Marketing: leveraging scale
14 Marketing: leveraging scale Safestore capturing growing market New trading website launched to share: provide further benefits: • Safestore UK outperformed the market • Technical back-end rebuilt with 8.0% enquiry growth • Optimised for mobile – now 51% of • Paris enquiry growth 9.2% web enquirie
Slide 15: Sales performance
15 Sales performance Emphasis on Team • Immature market – 70% first time users • Customer service earns trust • Key role in conversion and pricing • Focused team performance management • Coaching and training development Growing National Accounts platform: • Leading position in the market • Requires
Slide 16: Rate management
16 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 • Central pricing team • Investment in analytical capacity • Network management in Paris
Slide 17: Development and Asset Management
17 Development and Asset Management New store development of incremental 117k square feet: • New stores: London Chiswick (Q4 2016), London Wandsworth (Q3 2016), Birmingham (Q4 2016) Existing store extension: • Acton (Q4 2016) Leasehold purchase: • High Wycombe for £1.8m (£2.5m valuation uplift) Leas
Slide 18: Market Supply
18 Market Supply Barriers to Entry Site Price of Planning Long Availability Land restrictions Lead-time London / SE Regional City Centres Secondary towns Central Paris Paris 2nd belt • Six largest UK operators own just 28% of market • SSA UK* - Likely development of
Slide 19: Robust trading in November and December
19 Robust trading in November and December • November and December is our traditional low season - expecting occupancy outflow • Occupancy c. 3% up on same time last year • Group rate CER growing c. 4% ahead of prior year • Group like for like CER revenue up c. 7%
Slide 20: Well positioned for growth
20 Well positioned for growth Attractive market • Young and growing industry • Secure and diversified income stream on 49,000 customers • Customers staying on average 9.8 months (existing customers 24.4 months) • Resilient during downturn Unique portfolio • Leading presence in key markets • 76% of r
Slide 21: Appendices
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Slide 22: Index
22 Index: Financial Portfolio summary: 24 Detailed P&L 46 Geographic 25 Non-underlying items 47 Maturity 26 Detailed Balance Sheet 49 Freehold / Leasehold 27 Underlying to Statutory Adjustments Resilient business model: 29 Movement in Cost Base 52 Robust Business model 30 Group Banking Covenants 53
Slide 23: Financial
Financial
Slide 24: Detailed P&L
24 Detailed P&L Group FY 2015 FY 2014 £’m £’m Revenue 104.8 97.9 Cost of sales (32.2) (32.3) Gross profit 72.6 65.6 Administrative expenses (17.3) (14.1) EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss 57.1 53.0 on investment properties, contingent r
Slide 25: Non-underlying items
25 Non-underlying items FY 2015 FY 2014 (£'m) (£'m) Underlying EBITDA 57.1 53.0 Gain on investment properties 78.9 24.1 Depreciation (0.4) (0.5) Contingent rent (1.1) (1.2) Change in fair value of derivatives (0.3) 1.2 Exceptional Items - (1.0) Statutory Operating Profit 134.2 75.6
Slide 26: Detailed Balance Sheet
26 Detailed Balance Sheet Group FY 2015 FY 2014 £’m £’m Assets Non-current assets Investment properties 775.5 704.0 Investment properties under construction 6.0 5.3 Other non-current assets 52.8 59.3 Non-current assets 834.3 768.6 Current assets 33.4 36.2 Liabilities Current liabilities (44.4) (49.7
Slide 27: FY 2015 Underlying to Statutory adjustments
27 FY 2015 Underlying to Statutory adjustments Tax / Underlying Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings Exceptionals CGS / Statutory Headings P&L Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 104.8 104.8 Revenue Cost of Sales / Administrativ
Slide 28: FY 2014 Underlying to Statutory adjustments
28 FY 2014 Underlying to Statutory adjustments Tax / Underlying Derivative Contingent Valuation Finance Dep'n LH Statutory Underlying Headings Exceptionals CGS / Statutory Headings P&L Movements Rent / Dep'n Movement Lease Int properties P&L FX Sales 97.9 97.9 Revenue Cost of Sales / Administrative
Slide 29: Movement in cost base
29 Movement in cost base Cost of Sales Administrative Expenses FY 2015 FY 2014 FY 2015 FY 2014 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (32.2) (32.3) Reported administrative expenses (17.3) (14.1) Adjusted for: Adjusted for: Depreciation 0.4 0.5 Exceptional expense - 1.0 Contingent rent 1.1 1.
Slide 30: Group banking covenants – Oct 2015
30 Group banking covenants – Oct 2015 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 tha
Slide 31: Hedging of French profit exposure ends in 2015
31 Hedging of French profit exposure ends in 2015 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 1.2086 (98) H2 FY14 5,250 1.2350 1.2577 77 H1 FY15 6,000 1.2346 1.3350 365 H2 FY 15 6,000 1.234
Slide 32: Group Debt position at 31 Oct 2015
32 Group Debt position at 31 Oct 2015 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 £ 80.0 20.0 - - 1.50% - 0.51% 2.01% UK Revolver - non-utilisation £ 60.0 -
Slide 33: Operational Delivery
Operational Delivery
Slide 34: Growing National Accounts platform
34 Growing National Accounts platform • National Accounts leverage UK platform further and now accounts for 12% of all occupancy in the UK • 65% of occupancy outside London • Square feet let up 22% over prior year • Storage revenue up 28% on prior year
Slide 35: Head Office functions supporting revenue growth
35 Head Office functions supporting revenue growth: • Customer Support Centre: Customer IT & • CSC handled 16% 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 36: Portfolio Management
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Slide 37: Portfolio strength with further potential
37 Portfolio strength with further potential • 119 store portfolio • 4.93m maximum lettable area • 1.35m sq ft available Paris – 0.7m 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 Chis
Slide 38: Densest network of stores in London and Paris
Densest network of stores in London 38 and Paris Paris and London combined represent 65 stores – 65% of Revenue, 70% of EBITDA and 38% of currently unoccupied square feet
Slide 39: Property valuation movement
39 Property valuation movement (including investment properties under construction) Key assumptions Oct 2015 Apr 2015* Oct 2014 Average Self Storage Rate per sq ft £24.85 £24.86 £24.24 Exit Cap Rate (Freehold only) 7.18% 7.37% 7.73% Weighted average stabilised occupancy 77.87% 77.66% 77.81% Stabilis
Slide 40: Pipeline stores
40 Pipeline stores MLA Pipeline store / site Full planning sq ft Estimated opening Stores opened in FY 2015 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 Total sq ft in pipelin
Slide 41: Very strong position in the two best European markets for storage
41 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 42: Une Pièce en Plus – high potential demand and limited supply
42 Une Pièce en Plus – high potential demand and limited supply 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 43: Leading market positions in key UK regional conurbations
43 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 44: High Barriers to entry in major markets
44 High Barriers to entry in major markets 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
Slide 45: French Commercial Lease Statute provides security of tenure
45 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 46: Portfolio summary split geographically
46 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 SqFt) 1.57 1.19 2.76 0.83 3.58* Maximum Lettable Area (m SqFt) 2.11 1.81 3.92 1.01 4.93 Let Square Feet per store (k SqFt) 28 31 29 34 30 Average Store Capacity
Slide 47: Portfolio summary split by store maturity
47 Portfolio summary split by store maturity 2015 2014 Total Total Developing Established Mature Large Developing Established Mature Large (sq ft (sq ft (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) ‘000) ‘000) Number of stores 8 18 85 8 119
Slide 48: Portfolio summary split by store maturity (CER)
48 Portfolio summary split by store maturity (CER) 2015 2014 Total Total Developing Established Mature Large Developing Established Mature Large (sq ft (sq ft (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) (sq ft ‘000) ‘000) ‘000) Number of stores 8 18 85
Slide 49: Portfolio summary split between freehold & leasehold
49 Portfolio summary split between freehold & leasehold 2015 2014 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 64 33 13 11 77 44 Self storage income £m 41.1 21.4 11.1
Slide 50: Portfolio summary split between freehold & leasehold (CER)
50 Portfolio summary split between freehold & leasehold (CER) 2015 2014 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 64 33 13 11 77 44 Self storage income £m 41.1 21.
Slide 51: Resilient business model
Resilient business model
Slide 52: Robust business
52 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 106 weeks) • Value of individual customer is small (largest customer only 0.2% of revenue) • Demand drivers are varied
Slide 53: Safestore UK historical performance
53 Safestore UK historical performance
Slide 54: Safestore UK historical performance
54 Safestore UK historical performance
Slide 55: Customers
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Slide 56: Customer length of stay
56 Customer length of stay UK FR Group 2015 2014 2015 2014 2015 2014 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 132 30.4 134 30.9 130 30.0 136 31.5 132 30.3 136 31.4 Vacated 42 9.6 47 10.8 53 12.3 53 12.2 43 9.9 49 11.4 Total 48 11.1 54 12.5 66 15
Slide 57: Group customer split as at 31 Oct 2015
57 Group customer split as at 31 Oct 2015
Slide 58: Business and domestic numbers
58 Business and domestic numbers Business and Personal Customers UK Paris Personal Customers Numbers (% of total) 72% 81% Square feet occupied (% of total) 50% 64% Average length of stay (months) 20.3 26.5 Business Customers Numbers (% of total) 28% 19% Square feet occupied (% of total) 50% 36% Aver