Big Yellow Group PLC · LSE:BYG
Big Yellow — FY2019 Earnings Presentation
55 slides from Big Yellow's earnings presentation, May 2019
Slide 1: Big Yellow Group PLC Results for the Year ended 31 March 2019
Big Yellow Group PLC Results for the Year ended 31 March 2019
Slide 2: Our Investment Case
Our Investment Case • UK self storage penetration in key urban conurbations remains relatively low • Limited new supply coming onto the market Attractive Market Dynamics • Resilient through the downturn • Sector growth is positive, with increasing domestic awareness and demand • UK industry’s most r
Slide 3: Key Metrics
Key Metrics 2019 2018 Closing Like-for-Like Occupancy 82.7% 80.5% 2.2ppts Average Achieved Net Rent Per Sq Ft £27.14 £26.37 3% Revenue £125.4 million £116.7 million 7% Like-For-Like Revenue £123.2 million £114.9 million 6% Cash Flow From Operating Activities £71.8 million £63.0 million 14% (After Ne
Slide 4: Highlights
Highlights • Occupancy and rate growth driving 7% revenue increase • Average rate up 2.9% year on year. Like-for-like closing store occupancy 82.7% (2018: 80.5%) • Cash flow from operating activities (after net finance costs) increased by 14% to £71.8 million • Adjusted profit before tax up 10% to £
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Portfolio Summary
Portfolio Summary • Like-for-Like closing occupancy 82.7%, an increase of 2.2 ppts • Closing net rent up 2% from 31 March 2018, average rate up 2.9% year on year • Like-for-like revenue up 7% on the year • Store operating expenses up £2.5 million (7%) – see slide 8 • Store EBITDA margin 69.1% (2018:
Slide 7: Portfolio Summary – Big Yellow Stores
Portfolio Summary – Big Yellow Stores March March March March March March March March 2019 2019 2019 2019 2018 2018 2018 2018 Mature Established Developing Total Mature Established Developing Total Store Age at 1 April 2018 >6 years 3-6 years <3 years >6 years 3-6 years <3 years Number Of Stores 68
Slide 8: Store Operating Expenses
Store Operating Expenses • Cost of sales varies with revenue Category Year Ended Year Ended % % of store • New stores account for 31.03.19 31.03.18 change operating £0.6m of the increase £000 £000 costs in 2019 • Utilities £0.1m lower following investment in Cost of Sales 2,866 2,663 8% 8% LED light
Slide 9: Consolidated Income Statement
Consolidated Income Statement Year Ended 31.03.19 31.03.18 £m £m Revenue 125.4 116.7 • Revenue up 7% Cost Of Sales (38.1) (35.7) • Revaluation gain due to Admin Expenses (10.6) (10.1) growth in cash flow and Underlying Operating Profit 76.7 70.9 cap rate improvement Revaluation Gain 58.9 71.6 • Aver
Slide 10: Adjusted PBT Bridge
Adjusted PBT Bridge Increase Increase in Increase in Increase in net administrative capitalised in gross interest \ expenses profit interest payable £6.3m £0.1m £0.5m £0.4m £67.5m Adjusted PBT 31 March £61.4m 2019 Adjusted PBT 31 March 2018 • Non recurring items and revaluation movements are not inc
Slide 11: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year Ended 31.03.19 31.03.18 £m £m • 14% growth in free cash flow Opening Net Debt (323.7) (298.0) due to growth in EBDAT and Operating Cash Flow 82.0 73.5 favourable working capital Interest (Net) (10.0) (9.7) movements Tax (0.2) (0.8) • Capex is broken down as Free
Slide 12: Capital Structure
Capital Structure 31.03.19 31.03.18 Net Debt / Gross Property Assets 22% 25% Net Debt / Adjusted Net Assets 26% 31% Pre-Interest Operating Cash Flow Cover 8.2x 7.6x 31 March 2019 Debt Expiry Facility Drawn Average Interest Cost Aviva Loan April 2027 £85.1 million £85.1 million 4.9% M&G Loan June 202
Slide 13: Armadillo Portfolio Performance
Armadillo Portfolio Performance 2019 2018 Number Of Stores 22 22 At 31 March: Total Capacity (Sq Ft) 963,000 963,000 • Two stores acquired post year end (Grimsby Occupied Space (Sq Ft) 723,000 712,000 and Daventry) Percentage Occupied 75.1% 73.9% • Like-for-like revenue Net Rent Per Sq Ft £17.50 £16
Slide 14: Marketing and Operational Review
MARKETING AND OPERATIONAL REVIEW
Slide 15: Marketing and Sales Overview
Marketing and Sales Overview • Big Yellow brand remains strong. Nearly six times higher unprompted awareness of nearest competitor across UK (Source: YouGov Survey April 2019) • 65% of people in London have heard of self storage and know the service. Across the UK this is 53% (Source: YouGov Survey
Slide 16: Operations Overview
Operations Overview • Prospects slightly down on last year – demand segments broadly unchanged, move ins down by 1% on a strong prior year comparator • Operational target is to drive occupancy to 90% • Focus on NPS scores and customer satisfaction – satisfied customers as referrers are a key sales t
Slide 17: Monthly Activity Levels
Monthly Activity Levels Monthly move ins Monthly move outs 9,000 10,000 8,000 9,000 8,000 7,000 7,000 6,000 6,000 5,000 5,000 4,000 4,000 Move ins 2017 Move ins 2018 Move ins 2019 Move outs 2017 Move outs 2018 Move outs 2019 Monthly changes in occupancy • Prospects for the year slightly down on last
Slide 18: Rental Growth Analysis
Rental Growth Analysis Average occupancy Number of Net rent per sq ft in the year stores growth from 1 April to 31 March 2019 0 to 75% 5 (0.9%) 75 to 85% 47 2.4% Above 85% 20 3.1% • The above analysis is a straight average rather than a weighted average, and excludes Battersea, Guildford Central and
Slide 19: Reasons for Using Self Storage By Personal Customers
Reasons for Using Self Storage By Personal Customers Source: SSA Annual Industry Report 2019 19
Slide 20: How Many Stores Were Contacted Before Purchasing
How Many Stores Were Contacted Before Purchasing Source: SSA Annual Industry Report 2019 20
Slide 21: Other Options Considered
Other Options Considered Source: SSA Annual Industry Report 2019 21
Slide 22: UK New Space and Stores by Region
UK New Space and Stores by Region New Internal New container New supply fit out stores based stores added East Midlands 4 3 100,100 East of England 4 5 112,900 London 4 2 127,600 North 7 4 154,700 Northern Ireland 1 1 12,900 Scotland 5 1 77,800 South East 7 4 186,500 South West 5 3 83,000 West Midla
Slide 23: Property Review
PROPERTY REVIEW
Slide 24: New Site Development
New Site Development • Wandsworth extension opened in May 2018, Wapping opened in July 2018 and Manchester opened in May 2019 • Battersea closed for redevelopment in March 2019, demolition has commenced • Like-for-like portfolio at 83% occupancy - increased focus on new development • Acquisition of
Slide 25: Development Pipeline – London
Development Pipeline – London Site Location Status Anticipated Capacity Sq Ft Camberwell Prominent location on Planning consent granted in April 2018. Construction 77,000 Southampton Way started in November 2018 with a view to opening in Spring 2020. Kings Cross Prominent location on Planning applic
Slide 26: Development Pipeline – Outside London
Development Pipeline – Outside London Site Location Status Anticipated Capacity Sq Ft Bracknell Prime location on Site acquired in February 2018. Planning consent 57,000 Ellesfield Avenue granted in January 2019 for self storage and other trade uses. Construction to commence in August 2019 with a vi
Slide 27: Our Portfolio May 2019
KEY O u r Po rtfo | | O 75 Big Yellow stores (40 in London) > 12 New Big Yellow stores under development (8 in London) May 2 019 a, NEWCASTLE vv cA GATESHE 20 STOCKTON CENTRAL TOCKTON SOUTH: AI(M) Qe aan) y MORECAMBE 9 EDMONTON QUEENSBURY, NORTH FINCHLEY i f°) °] UVERPOOL NORTH tees HL Mac LIVERPOOL
Slide 28: Strategic Summary
Strategic Summary • Focus on driving occupancy (target 90%), revenue and cash flow growth • Key to achieving this is continued innovation and investment in our brand, digital platforms and store operations • Supply remains constrained, particularly in London and other large conurbations • The develo
Slide 29: Appendix
APPENDIX Additional Financial Information Marketing Review Operations Store Portfolio
Slide 30: Per Store Analysis
Per Store Analysis Year Ended 31 March 2019 68 3 3 All Mature Established Developing 74 Stores Stores Stores Stores Average Store Capacity 62,850 68,670 47,330 62,460 Average Sq Ft Occupied Per Store 52,300 59,000 25,330 51,490 Average % Occupancy 83.6% 83.1% 45.7% 82.5% Average Revenue Per Store (£
Slide 31: Resilient Positioning
Resilient Positioning • Supportive Trends ‒ Growing awareness of self storage ‒ Densification of metropolitan living expected to continue ‒ Trend towards self-employment and start-ups ‒ Mortgage availability and low interest rates ‒ Low unemployment and healthy employment levels • High Barriers to E
Slide 32: Consistent Delivery Through The Cycle
Consistent Delivery Through The Cycle MLA and occupancy from March 2007 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 MLA Occupancy • 2.1m sq ft increase in MLA capacity and 2.0m increase in occupied sq ft since March 2007 • Revenue for the year has more than double
Slide 33: Big Yellow Relative TSR Performance
Big Yellow Relative TSR Performance Big Yellow FTSE All Share FTSE 350 Real Estate 1,600 1,379.7% 1,400 (15.3% p.a.) 1,200 1,000 800 600 400 208.3% (6.1% p.a.) 154.8% 200 (5.1% p.a.) 0 2000 2002 2004 2006 2007 2009 2011 2013 2015 2017 2019 Source: Datastream as at 31 March 2019 33
Slide 34: Armadillo Self Storage
Armadillo Self Storage • A lower frills brand in smaller towns and cities – 20% joint ventures • 10 store Armadillo platform acquired in April 2014, an additional 4 stores acquired in January 2015, a further 2 stores acquired in April 2016, a further 3 stores acquired in April 2017, 1 store in Decem
Slide 35: The Importance of the Brand
The Importance of the Brand • Self storage is a consumer facing business for both domestic and small business markets • Done right, brand sits at the heart of a business and drives its performance • Self storage is an immature market with 70-75% first time users - the interaction at the prospect sta
Slide 36: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey by Big Yellow run annually for the last 12 years • Monitors our brand awareness • Statistically robust based on omnibus survey across all adult demographic groups - 1,008 sample size London - 3,806 sample size for the rest of the UK
Slide 37: Unprompted Awareness Prompted Awareness
Unprompted Awareness Source: YouGov Survey April 2019 “What are the names of any self storage companies you can think of?” London Rest of the UK excluding NI Prompted Awareness “Which, if any, of the following self storage companies have you heard of?” 37
Slide 38: High Brand Awareness = High Online Market Share
High Brand Awareness = High Online Market Share • 90% of our prospects came from our digital platforms in the year with over half from mobile devices • A significant proportion of these web visits come from people searching for our brand - Lower cost of acquisition - More likely to convert • High br
Slide 39: The Growth Opportunity
The Growth Opportunity • 16% of those surveyed have previously used or are currently using self storage (source: YouGov Survey April 2019) compared to 12% in 2014 • Only 2% of those surveyed were currently using self storage and 8% were thinking of using self storage in the next year (source: YouGov
Slide 40: Customer Insights
Customer Insights • Wide ranging demographic and customer base; extended families, couples, singles, renters, students, downsizers, business customers, space constrained home and apartment dwellers • 69% are aged 25-54 • 52% of those using Big Yellow because they are moving, own the property they ar
Slide 41: PR and Social Media
PR and Social Media • Generating local PR through store network, based on charitable giving and customer and staff activities • Facebook: Advertising targeting domestics and small businesses in need of self storage, plus branded Facebook page • Twitter: Listening and conversational tool when people
Slide 42: Local Economy Value of Business Customers
Local Economy Value of Business Customers • External business survey commissioned in 2018 to assess impact of average Big Yellow store on the local economy • 36% of the Group’s space is occupied by business customers • The average store has over 100 different businesses who between them employ 300 p
Slide 43: Customer Support Centre
Customer Support Centre • Just under 115,000 calls answered in the year ended 31 March 2019 • Over 1,100,000 sq ft reserved by the Customer Support Centre • Customer Support Centre service levels remain high ‒ Average mystery shop score of 95% over the year ‒ Average net promoter score (“NPS”) of 82
Slide 44: National Accounts
National Accounts • Businesses can store at multiple locations nationwide through one dedicated point of contact • Our extended network of third party providers enables customers to have a single self storage supplier relationship • We provide a range of business services. These include accepting de
Slide 45: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space 31 March 2019 Demand Profile of Move-ins only April 2018 to March 2019 April 2017 to March 2018 Moving Owner Occupied 22% Moving Rental Sector 20% Other 12% Business storage 12% Student storage 11% Decluttering 11% Home improvements 6% Travelling
Slide 46: Length of Stay of Customers Vacating in Financial Year
Length of Stay of Customers Vacating in Financial Year 46
Slide 47: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No. of Months) 31/03/2019 0-3 Years 3-6 Years >6 Years Portfolio 31/03/18 No. of Stores 3 3 68 74 74 Business Existing 4.3 16.7 31.2 30.4 30.6 Vacated 3.6 6.5 11.5 11.4 11.2 Total 4.0 9.0 13.6 13.5 13.4 Domestic Existing 4.1 13.0 24.7 24.1 24.6 Vacated 2
Slide 48: Self Storage Market
Self Storage Market Key Influencers – Growing public awareness – Change in economic activity and GDP growth – Population mobility and investment in existing homes – Physical planning and constraints, smaller homes – Focus on high density development on brownfield sites – Housing demand, divorce, sin
Slide 49: Self Storage Market
Self Storage Market – US Market (2018 Fedessa/JLL Report) – Population 326.8 million – 54,100 self storage centres – 3.1 billion sq ft – 9.4 sq ft per person – Australian Market (2018 Fedessa/JLL Report) – Population 24.7 million – 1,300 self storage centres – 43.6 million sq ft – 1.8 sq ft per pers
Slide 50: Store Gallery: Manchester, Cambridge, Chiswick and others
Manchester, May 2019 MLA - 60000sq ft Cambridge, January 2016 MLA - 60000 sqft Chiswick, April 2012 MLA -73000sq ft Wapping, July 2018 MLA - 25000 sq ft Enfield, April 2015 MLA - 60000sq ft New Cross, February 2012 MLA - 61,000 sq ft Guildford Central, March 2018 MLA -55000sq ft Chester, February 20
Slide 51: Store Gallery: High Wycombe, Reading, Poole and others
——— - High Wycombe, June 2010 Reading, December 2009 Sheffield Bramall Lane, Poole, August 2009 Nottingham, August 2009 MLA - 60000 sqft MLA - 62,000 sqit September 2009 MLA-60000sq ft | MLA-55000 sqtt MLA -67000sq ft —s Edinburgh, July 2009 Twickenham, May 2009 Liverpool, March 2009 " Bromley, Marc
Slide 52: Store Gallery: Edmonton, Tunbridge Wells, Bristol and others
4 oe Edmonton, October 2006 " Tunbridge Wells, April 2006 MLA -75000 sq ft MLA - 57,000 sq ft — =< =.= oa Bristol Central, March 2006 North Kensington, Leeds, July 2005 Tolworth, November 2004 MLA-64000 sqft December 2005 MLA-50000sqft MLA-76000sq ft MLA ~ 56,000 sa tt Watford, August 2004 Orpington
Slide 53: Store Gallery: Guildford Slyfield, Portsmouth, Southend and others
Guildford Slyfield, June 2002 MLA-55000saft Portsmouth, October 2001 MLA 61000 sqft Southond, March 2001 MLA -57000 sqft hE!) Slough, February 2000 MLA - 67,000 sqft Norwich, September 2001 MLA - 47000 sq ft Staples Comer, March 2001 Hanger Lane, October 1999 MLA - 66000sq ft Dagenham, July 2001 MLA
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Slide 55: Disclaimer
Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or imp