Safestore Holdings Plc · LSE:SAFE
Safestore — FY2016 Earnings Presentation
59 slides from Safestore's earnings presentation, Jan 9, 2017
Slide 1: Full Year Results Presentation
sofestore Personal storage Business storage How storage works Find a store @ 0800 444 800 Safestore the things you love 50% off your storage for up to 8 weeks | ener pose, etyatom | = : ee os a See all 109 stores nationwide ©. We are the UK's No.1 for choice in Self Storage Lowest Price Guarantee i
Slide 2: Frederic Vecchioli
New London Wandsworth Store Frederic Vecchioli
Slide 3: Highlights
3 Highlights Strong Financial Performance • Group like-for-like1 revenue at CER2 up 8.1% with UK up 9.2% and Paris up 5.0% • Cash Tax Adjusted Earnings per Share up 19.3% at 19.8p (+78% over 3 years) • Full year dividend up 21% at 11.65p (+103% over 3 years) Operational Focus • Balanced approach to
Slide 4: Andy Jones
New Birmingham Store Andy Jones
Slide 5: Financial highlights
5 Financial highlights Change vs Income Statement & Cash flow FY2016 FY2015 Absolute CER Revenue (£’m) like-for-like1 112.5 10.0% 8.1% Underlying EBITDA (£’m) like-for-like1 62.7 12.2% 11.8% Revenue (£’m) 115.4 10.1% 8.3% Underlying EBITDA (£’m) 64.2 12.4% 12.1% Underlying EBITDA (post Leasehold cos
Slide 6: All regions performed strongly
6 All regions performed strongly London / Rest of UK Total Paris Group SE UK Total Act 1.549 1.180 2.729 0.811 3.540 Average Occupancy LFL1 (sq ft ‘m) YoY 3.1% 4.5% 3.8% 2.5% 3.5% Act 75.1% 67.9% 71.8% 80.7% 73.7% Closing Occupancy LFL1 % YoY 0.7%pts 2.3%pts 1.4%pts -1.1%pts 1.0%pts Act 29.21 18.66
Slide 7: Group P&L
7 Group P&L FY2016 FY2015 UK Paris Total UK Paris Total (£'m) (€'m) (£'m CER) (£'m) (€'m) (£'m CER) Revenue 87.4 35.4 113.5 79.9 33.7 104.8 Underlying Cost of Sale (32.4) (9.7) (39.5) (30.9) (9.3) (37.7) Store EBITDA 55.0 25.7 74.0 49.0 24.4 67.1 Store EBITDA Margin 62.9% 72.6% 65.2% 61.3% 72.4% 64.
Slide 8: Strong revenue performance drives improved EBITDA (after leasehold rent)
8 Strong revenue performance drives improved EBITDA (after leasehold rent) Business Rates: 0.5 Premises insurance: 0.2 Other 0.2 CER 15.5% improvement
Slide 9: Strong cash flow financing dividend and developments
9 Strong cash flow financing dividend and developments FY2016 FY2015 (£'m) (£'m) Underlying EBITDA 64.2 57.1 Working Capital/ Exceptionals/ Other (1.8) 1.8 Operating cash inflow 62.4 58.9 Interest payments (9.5) (12.0) Leasehold rent payments (8.8) (9.0) Tax payments (1.7) (0.6) Free cash flow (befo
Slide 10: Strong and flexible Balance Sheet
10 Strong and flexible Balance Sheet Capital Structure Oct 16 Oct 15 Variance Property valuation (£’m)* 954.2 781.5 22.1% UK (£’m)* 710.6 603.6 17.7% FR (€’m)* 270.9 249.3 8.7% Gross Debt (£’m) 315.7 249.5 £66.2m Adjusted Gross Debt (£’m) ** 294.9 249.5 £45.4m Net Debt (£’m) 310.3 235.7 £74.6m Adjus
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 or future years Tax No further tax losses utilised in FY2016 Effective underlying cash tax rate in France estimated at c. 28% in FY2017 and beyond No tax anticipated in UK I
Slide 12: Frederic Vecchioli
12 Frederic Vecchioli
Slide 13: Operations overview
13 Operations overview • Leading marketing platform • Sales performance • Rate management • Continued focus on existing assets • Sale teams and pricing systems in place • Selective development and asset management • Limited market supply Foundations for further growth in place
Slide 14: Leveraging marketing scale in the UK
14 Leveraging marketing scale in the UK Self Storage Association 2016 Survey emphasizes the need for search engine efficiency: • 82% of potential customers would search for storage online using generic keywords • 88% of people would not consider brand in their search and only 3% would search using c
Slide 15: Balanced approach to revenue growth
15 Balanced approach to revenue growth Revenue management UK: • 9.2% like-for-like revenue growth • 3.8% like-for-like average occupancy growth • 4.5% like-for-like average rate growth (ten consecutive quarters of growth) Rate growth drivers: • Number of enquiries • Catchment area • Store team skill
Slide 16: Paris: 18 years of uninterrupted growth
16 Paris: 18 years of uninterrupted growth Very solid market fundamentals: • Balanced revenue management: • Average like-for-like occupancy up 2.5%, closing at 81% occupancy • Average rate increase 2.3% • Unique and densest network of stores in central Paris – impossible to replicate • Strong brand
Slide 17: Space Maker
17 Space Maker • Completed the acquisition of Space Maker for £42.3m including deferred consideration • 12 well invested stores (9th largest portfolio in the UK) • 496,000 sq ft built out lettable area – 66% occupied at time of acquisition • First year net operating income yield of c. 9.3%* – curren
Slide 18: Property
18 Property Net additional new space of c. 217,000 sq ft added: Five new stores completed on time and on budget: • London Chiswick – 42,500 sq ft MLA (opened Nov 16) • Birmingham – 51,000 sq ft MLA (25,000 sq ft Net) • London Wandsworth – 33,200 sq ft MLA (23,200 sq ft Net) • Paris Emerainville – 60
Slide 19: Asset Management
19 Asset Management Portfolio Management • Existing Birmingham Central site sold for £3.6m subject to planning – store consolidated into new Birmingham store Lease regears – demonstrable track record • Burnley • c. 47% of UK leases regeared since 2012 (including Space Maker)
Slide 20: Portfolio
20 Portfolio Fully invested UK (109 stores) portfolio of 5.59m sq ft Paris (25 stores) 1.62m available – equivalent of around 40 new stores London (44 stores)
Slide 21: Well positioned for further growth
21 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 24.3 months) • Resilient during downturn Unique portfolio • Leading presence in key markets
Slide 22: Appendices
22 Appendices
Slide 23: Index
23 Index: Financial 25 Detailed P&L Portfolio summary: 26 Non-underlying items 47 Geographic 27 Detailed Balance Sheet 48 Maturity 28 Underlying to Statutory Adjustments 49 Freehold / Leasehold 30 Movement in Cost Base 50 Maturity (LFL CER) 31 Group Banking Covenants 51 Freehold / Leasehold (LFL CER
Slide 24: Financial
W) t Financial
Slide 25: Detailed P&L
25 Detailed P&L Group FY2016 FY2015 £’m £’m Revenue 115.4 104.8 Cost of sales (40.9) (38.3) Gross profit 74.5 66.5 Administrative expenses (12.5) (11.2) Negative goodwill on acquisition of subsidiary 5.6 - Underlying EBITDA * 64.2 57.1 Exceptional items 4.3 - Change in fair value of derivatives - (0
Slide 26: Non-underlying items
26 Non-underlying items FY2016 FY2015 (£'m) (£'m) Underlying EBITDA 64.2 57.1 Gain on investment properties 41.7 78.9 Depreciation (0.4) (0.4) Contingent rent (0.5) (1.1) Change in fair value of derivatives - (0.3) Exceptional items: Costs incurred relating to corporate transactions (1.3) - Negative
Slide 27: Detailed Balance Sheet
27 Detailed Balance Sheet Group FY2016 FY2015 £’m £’m Assets Non-current assets Investment properties 943.3 775.5 Investment properties under construction 10.9 6.0 Other non-current assets 84.1 52.8 Non-current assets 1,038.3 834.3 Current assets 28.6 33.4 Liabilities Current liabilities (53.8) (44.
Slide 28: FY2016 Underlying to Statutory Adjustments
28 FY2016 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 115.4 115.4 Revenue Cost of Sales / Administrative
Slide 29: FY2015 Underlying to Statutory adjustments
29 FY2015 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 / Administrative
Slide 30: Movement in Cost Base
30 Movement in Cost Base Cost of Sales Administrative Expenses FY2016 FY2015 FY2016 FY2015 (£'m) (£'m) (£'m) (£'m) Reported cost of sales (40.9) (38.3) Reported administrative expenses (12.5) (11.2) Adjusted for: Adjusted for: Depreciation 0.4 0.4 Exceptional items and transaction costs 1.3 - Contin
Slide 31: Group Banking Covenants – Oct 2016
31 Group Banking Covenants – Oct 2016 reported Covenants Interest Cover Ratio Loan to Value Consolidated level Sterling Loan to Value Not more than 0.60:1 Euro Loan to Value Not more than 0.60:1 Quarterly to Apr 2016 Not less than 2.20:1 Thereafter Not less than 2.40:1
Slide 32: Group Debt position at Oct 2016
32 Group Debt position at 31 Oct 2016 Term Facility Drawn Hedged Hedged Bank Hedged Floating Total £/€/$'m £'m £'m % Margin Rate Rate Rate UK Term Loan Jun 20 £ 126.0 126.0 100.0 79% 1.50% 1.34% 0.39% 2.64% UK Revolver Jun 20 £ 125.0 61.0 - - 1.50% - 0.38% 1.88% UK Revolver - non-utilisation £ 64.0
Slide 33: Operational Delivery
Poe] 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 • Two-thirds of customers outside London • Square feet let up 16% over prior year • Storage revenue up 20% 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
; Portfolio Management :
Slide 37: Portfolio strength with further potential
37 Portfolio strength with further potential • 134 store portfolio • 5.6m maximum lettable area • 1.62m sq ft available – 0.9m London, South East and Paris • 44 stores within the M25 • 25 stores in Paris UK • 19 stores in the South East (109 stores) • 46 stores in the UK regions Paris • New stores o
Slide 38: Densest network of stores in London and Paris
Densest network of stores in 38 London and Paris Paris and London combined represent 68 stores – £73.1m of Revenue, £49.6m of Store EBITDA and 39% of currently unoccupied square feet
Slide 39: Property valuation movement
39 Property valuation movement (excluding investment properties under construction) Key assumptions Oct 2016 Oct 2015 Apr 2016* Average Self Storage rate per sq ft £26.17 £24.85 £26.02 Exit Cap rate (Freehold only) 7.2% 7.2% 7.2% Weighted average stabilised occupancy 80.2% 77.9% 79.7% Stabilised occ
Slide 40: New stores and Pipeline
40 New stores and Pipeline Total MLA Pipeline store / site Planning Estimated opening sq ft Stores opened in FY2016 London Chiswick (Nov 2016) 42,500 London Wandsworth 33,200 Birmingham 51,000 Altrincham 39,000 Paris Emerainville 60,000 Total sq ft added in FY2016 225,700 Development stores acquired
Slide 41: Development characteristics
41 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 29% of market* • Excluding container sto
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: Paris development characteristics
45 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 – no known projects London • Pric
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 62 46 108 25 133 Let Square Feet (m sq ft) 1.76 1.39 3.15 0.82 3.97 Maximum Lettable Area (m sq ft) 2.41 2.11 4.52 1.07 5.59 Let Square Feet per store (k sq ft) 28 30 29 33 30 Average Store Capac
Slide 48: Portfolio summary split by maturity
48 Portfolio summary split by maturity FY2016 FY2015 Developing Established Mature Total Developing Established Mature Total Number of stores 4 3 126 133 0 3 116 119 MLA self storage only (m) 0.183 0.413 4.998 5.594 0.000 0.413 4.521 4.935 Closing occupancy (m) 0.030 0.337 3.566 3.933 0.000 0.340 3.
Slide 49: Portfolio summary split between freehold and leasehold
49 Portfolio summary split between freehold and leasehold FY2016 FY2015 UK Paris Group UK Paris Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Freehold Leasehold Number of stores 72 36 14 11 86 47 65 30 13 11 78 41 MLA self-storage only (m) 3.086
Slide 50: Portfolio summary split by maturity (LFL CER)
50 Portfolio summary split by maturity (LFL CER) FY2016 FY2015 Established Mature Total Established Mature Total Number of stores 3 114 117 3 114 117 MLA self storage only (m) 0.413 4.487 4.900 0.413 4.486 4.899 Closing occupancy (m) 0.337 3.235 3.572 0.340 3.159 3.499 Occupancy (%) 81.6% 72.1% 72.9
Slide 51: Portfolio summary split between freehold and leasehold (LFL CER)
51 Portfolio summary split between freehold and leasehold (LFL CER) FY2016 FY2015 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 52: Resilient business model
Slide 53: Robust business model
53 Robust business model • 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 c. 0.5% of revenue) • Demand drivers are
Slide 54: Safestore UK historic performance
54 Safestore UK historic performance
Slide 55: Safestore UK historical performance
55 Safestore UK historical performance
Slide 56: Customers
Customers
Slide 57: Customer length of stay
57 Customer length of stay UK Paris Group FY2016 FY2015 FY2016 FY2015 FY2016 FY2015 (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) (wks) (mths) Business Existing 131 30.1 132 30.4 136 31.3 130 30.0 132 30.3 132 30.3 Vacated 55 12.6 42 9.6 55 12.7 53 12.3 55 12.6 43 9.9 Total 65 14.
Slide 58: Group customer split as at Oct 2016
58 Group customer split as at 31 Oct 2016
Slide 59: Personal and business numbers
59 Personal and business numbers Personal and Business Customers UK Paris Personal Customers Numbers (% of total) 72% 81% Square feet occupied (% of total) 51% 65% Average length of stay (months) 20.4 27.1 Business Customers Numbers (% of total) 28% 19% Square feet occupied (% of total) 49% 35% Aver