# Safestore Holdings Deliver solid financial performance and significant strategic progress

- Link: https://www.directorstalkinterviews.com/safestore-holdings-deliver-solid-financial-performance-and-significant-strategic-progress/412802024
- Published: 2020-01-07T07:39:23+00:00
- Author: Giles Arbor

**Key measures**

|   | Year Ended 31 October 2019 | Year Ended 31 October 2018 | Change |  **Change-CER**^(1) | 
| Underlying and Operating Metrics- total |   |   |   |   | 
| Revenue | £151.8m | £143.9m | 5.5% | 5.6% | 
| Underlying EBITDA^(2) | £87.5m | £82.9m | 5.5% | 5.4% | 
| Closing Occupancy (let sq ft- million)^(3) | 4.98 | 4.69 | 6.2% | n/a | 
| Closing Occupancy (% of MLA)^(4) | 77.0% | 73.6% | +3.4ppts | n/a | 
| Average Storage Rate^(5) | £26.09 | £25.90 | 0.7% | 0.8% | 
| Adjusted Diluted EPRA Earnings per Share^(6) | 28.5p | 26.8p | 6.3% | n/a | 
| Free Cash Flow^(7) | £61.2m | £55.4m | 10.5% | n/a | 
| EPRA Basic NAV per Share^(13) | £4.52 | £4.02 | 12.4% | n/a |

| **Underlying and Operating Metrics- like-for-like**^(8) |   |   |   |   | 
| Revenue | £149.2m | £142.3m | 4.8% | 4.8% | 
| Underlying EBITDA^(2) | £87.1m | £82.2m | 6.0% | 6.0% | 
| Closing Occupancy (let sq ft- million)^(3) | 4.86 | 4.65 | 4.5% | n/a | 
| Closing Occupancy (% of MLA)^(4) | 78.5% | 75.1% | +3.4ppts | n/a | 
| Average Occupancy (let sq ft- million)^(3) | 4.70 | 4.54 | 3.5% | n/a | 
| Average Storage Rate^(5) | £26.04 | £25.78 | 1.0% | 1.0% |

| Statutory Metrics |   |   |   |   | 
| Operating profit^(9) | £163.7m | £197.6m | (17.2%) | n/a | 
| Profit before tax^(9) | £147.3m | £185.3m | (20.5%) | n/a | 
| Diluted Earnings per Share | 62.6p | 84.2p | (25.7%) | n/a | 
| Dividend per Share | 17.5p | 16.25p | 7.7% | n/a | 
| Cash inflow from operating activities | £66.6m | £60.6m | 9.9% | n/a |

**Highlights**

Solid Financial Performance

· Group revenue for the year up 5.5% (up 5.6% in CER)

· Like-for-like8 Group revenue for the year in CER up 4.8%:

o UK up 4.7%

o Paris up 5.6%

· Underlying EBITDA2 up 5.4% in CER1 which, combined with a reduced gain on investment
properties of £84.2m (FY2018: £122.1m), resulted in statutory operating profit9 
of £163.7m (FY2018: £197.6m)

· Adjusted Diluted EPRA Earnings per Share6 up 6.3% at 28.5 pence (FY2018: 26.8 
pence). Diluted Earnings per Share was 62.6 pence (FY2018: 84.2 pence) largely due
to the lower property valuation gain in FY2019

· 7.6% increase in the final dividend to 12.0 pence (FY2018: 11.15 pence) giving
a total for the year of 17.5 pence (FY2018: 16.25 pence)

Operational Focus

· Continued balanced approach to revenue management drives returns:

o Like-for-like8 closing occupancy of 78.5% up 3.4ppts on 2018 (FY2018: 75.1%)

o Like-for-like8 average occupancy for the year up 3.5%

o Like-for-like8 average storage rate5 for the year up 1.0% in CER

o Total average storage rate5 up 0.8% in CER reflecting dilutive impact of new store
openings

· New stores trading well and in line with business plans

Strategic Progress

· Established joint venture with Carlyle, which acquired M3 Self Storage (“M3”) 
in the Netherlands (six stores in Amsterdam and Haarlem)

· Acquisition of Fort Box Self Storage (two London stores) on 5 November 2019 for
£14.3m

· On 30 December 2019 the Group entered the Spanish self-storage market with the
acquisition of OMB Self Storage SL trading as OhMyBox (4 stores in Barcelona) for
€17.25m

· Acquisition of 34,000 sq ft freehold Heathrow store for £6.6m10 including acquisition
costs

· Freehold site acquired in Sheffield with 47,000 sq ft store to open in H1 2020

· New long leasehold site secured at Gateshead (Newcastle)

· Sites in Peterborough, Birmingham Merry Hill and Pontoise opened in the period

· Four new stores in the pipeline with 175,000 sq ft of new space scheduled to open
in London Carshalton, Gateshead, Sheffield and Paris Magenta opening in 2020

· Further development sites acquired in London Bermondsey and London Morden.

Strong and Flexible Balance Sheet

· £125m of new US Private Placement Notes issued to fund medium-term growth

· Effective average interest rate of 2.3% and average tenor increased to 6.3 years

· 11.1% increase in property valuation (including investment properties under construction)
in CER driven by the Heathrow acquisition, reduced exit cap rates and revised stabilised
occupancy assumptions

· Group loan-to-value ratio (“LTV”) at 31 October 2019 at 31% (31 October 2018: 
30%) and interest cover ratio (“ICR”) at 8.9x (31 October 2018: 8.6x)

**Succession**

· David Hearn joins the Board as Chairman replacing Alan Lewis who has retired after
more than 10 years with the Group.

> **Frederic Vecchioli, Safestore Holdings Chief Executive Officer, commented:**
> “I am pleased to report another strong performance for the year, with solid trading
> and significant strategic progress. The Group’s outright acquisition of OhMyBox
> and the investment in M3 through our joint venture with Carlyle represent excellent
> platforms for entry into the attractive Barcelona and Netherlands self storage
> markets. In addition to the acquisitions and integration of Fort Box and our Heathrow
> store, we have also opened new stores in Peterborough and Birmingham Merry Hill
> in the UK and Pontoise in Paris.
> “Further to our successful openings this year, we plan to open new stores in London
> Carshalton, Gateshead, Sheffield and Paris Magenta (subject to planning) during
> the 2019/2020 financial year, adding 175,000 sq ft of further capacity to our 
> estate.
> “We have extended our financing facilities with the issuance of a further £125m
> of seven and ten year US Private Placement notes, strengthening our balance sheet
> and providing us with further flexibility to target selected development and acquisition
> opportunities as they arise.
> “Over the last six years we have grown the occupancy of a same-store portfolio
> from 63% to 78%. As ever, our top priority remains the significant low cost organic
> growth opportunity represented by the 1.5m square feet of currently unlet space
> in our existing fully invested estate. The Company is in a very strong position
> and we are encouraged by early trading in the new 2019/20 financial year. Our 
> leading market positions in the UK and Paris combined with our resilient business
> model enable us to look forward to the future with confidence.”

**Outlook**

In the last four financial years, Safestore has strengthened its market-leading 
positions in the UK and Paris with the acquisitions of Space Maker, Alligator, Fort
Box and our store at Heathrow, as well as opening twelve new stores and establishing
a short term pipeline of a further four new stores. The Group has 1.5m sq ft of 
fully invested unlet space available, offering significant operational upside in
the existing portfolio. We remain focused on further optimising the Group’s operational
performance whilst our balance sheet strength and flexibility provides us with the
opportunity to actively consider further selective development and acquisition opportunities
in our key markets. In addition, our entry into the Netherlands market, via the 
joint venture with Carlyle, and our OhMyBox acquisition in Barcelona, provide us
with platforms for expansion into attractive new geographies.

The strong performance of the final quarter of 2018/19 has continued into the new
financial year with LFL Group revenue (CER1) up 5.7% for the first two months, and
we look forward with confidence to the 2019/20 financial year.

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