Big Yellow Group PLC · LSE:BYG
Big Yellow — H1 2014 Earnings Presentation
63 slides from Big Yellow's earnings presentation, Nov 19, 2013
Slide 1: Results for the six months ended 30 September 2013
Big Yellow Group PLC Results for the six months ended 30 September 2013 19 November 2013
Slide 2: Proven Model
Proven Model • UK self storage penetration remains relatively low Attractive Market Dynamics • Very limited new supply coming onto the market • Resilient through the downturn • Industry’s most recognised brand • Prominent stores on arterial or main roads, with extensive frontage & high visibility •
Slide 3: VAT Impact Offset By Underlying Growth
VAT Impact Offset By Underlying Growth • Period on period revenue down 1% (£0.3 million) as a result of VAT introduction on 1 October 2012 • Revenue in October 2013 up 5.1% from October 2012 • Net rent per sq ft increased by 2.9% from 1 April 2013 • Adjusted profit before tax up 2% to £14.2 million
Slide 4: Key Metrics
Key Metrics 2013 2012 Closing Occupancy – Wholly Owned Stores 70.5% 67.3% 5% Occupancy Growth – All Stores 232,000 sq ft 243,000 sq ft (5)% Occupancy Growth – Wholly Owned Stores 188,000 sq ft 177,000 sq ft 6% Revenue £35.9 million £36.2 million (1)% Like-For-Like Revenue Per Available Foot (REVPAF)
Slide 5: Portfolio Summary
Portfolio Summary • Wholly owned store occupancy increase of 188,000 sq ft in the period to 70.5% • Established store closing occupancy 77.1% (March 2013: 72.8%) • Closing net rent £25.36 psf, down 5.9% from 30 September 2012, up by 2.9% since 1 April 2013 • Store revenue down 1% and like-for-like R
Slide 6: Portfolio Summary
Portfolio Summary Sept Sept Sept Sept Sept Sept Wholly Owned Stores 2013 2013 2013 2012 2012 2012 Established Lease-Up Total Established Lease-Up Total Number Of Stores 32 22 54 32 22 54 At 30 September: Total Capacity (Sq Ft) 1,930,000 1,491,000 3,421,000 1,941,000 1,491,000 3,432,000 Occupied Spac
Slide 7: Established Store REVPAF vs Rolling GDP
Established Store REVPAF vs 12 Month Rolling GDP VAT Impact 7
Slide 8: Established Store REVPAF vs Mortgage Approvals
Established Store REVPAF vs Mortgage Approvals VAT Impact 8
Slide 9: Capital Structure
CAPITAL STRUCTURE 9
Slide 10: Does Leverage Affect Share Price?
Does Leverage Affect Share Price? Changing Correlations Over Time Positive Correlation Global Financial Crisis: Lehman Bros Leverage has a positive effect on share price Net Debt / Market Cap Net Debt / Total Equity Net Debt / Total Capital Zero Correlation Net Debt / Common Equity Leverage has no e
Slide 11: Leverage Effect: Impact Of Deleverage on Share Price
Leverage Effect: Impact Of Deleverage on Share Price: Non-Linear At the peak of the credit boom 43% leverage was optimal Leverage = Net Debt / Total Assets Note: Sample for this analysis includes UK companies only Post-Crisis 23% leverage is optimal 10% leverage is optimal during GFC Increment or De
Slide 12: Big Yellow TSR Since IPO
Big Yellow TSR Since IPO 800 5 =———Big Yellow -=—=FTSEAIl Share -==FTSE 350 RESS 700 + 600 + 479.5% (13.9% p.a.) 500 + 400 + 300 + 130.8% (6.4% p.a.) 87.1% (4.7% p.a) 200 + 100 0 r T T r T T r T 1 5-May-00 11-Sep-01 18-Jan-03 26-May-04 2-Oct-05 8-Feb-07 16-Jun-08 23-Oct-09 = 11-Mar-11 7-Jul-12 14-No
Slide 13: Dividend
Dividend • Half year total Dividend of 8p per share (2012: 5p) • Property Income Dividend (PID) element of 8p • Interim Dividend to be 80% of interim adjusted eps • Pay out for full year to be 80% of adjusted eps 13
Slide 14: Financial Review
FINANCIAL REVIEW FINANCIAL REVIEW 14
Slide 15: Consolidated Income Statement
Consolidated Income Statement Six months ended: • Established store revenue down 30.09.13 30.09.12 5.8%. Lease-up store revenue up £m £m 7.2% Revenue 35.9 36.2 • Cost of sales reduction due to Cost Of Sales (12.2) (12.3) VAT saving offset by property Admin Expenses (4.1) (4.4) rates Underlying Opera
Slide 16: Adjusted PBT Bridge
Adjusted PBT Bridge Reduction Reduction Reduction in in net in gross administrative interest profit expenses payable (0.3) 0.2 0.4 £13.9m £14.2m Adjusted Adjusted PBT PBT 30 Sep 30 Sep 2012 2013 16
Slide 17: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Six Months ended: 30.09.13 30.09.12 £m £m Opening Net Debt (230.5) (273.9) Cash From Operations 19.3 21.0 • 6% reduction in free cash flow, Interest (Net) (5.3) (6.1) largely working capital timing differences Free Cash Flow 14.0 14.9 Non-Recurring Finance Costs - (10
Slide 18: Strong Capital Structure
Strong Capital Structure 30.09.13 30.09.12 Net Debt / Gross Property Assets 29% 35% Net Debt / Adjusted Net Assets 37% 48% Group EBITDA Cover 3.61x 3.53x Store EBITDA Cover 4.23x 4.18x Amount of Debt Weighted Average Interest Cost £m Aviva Fixed Rate Loan – Expiry April 2027 97.3 4.9% Fixed Rate Ban
Slide 19: Movement in Investment Property
Movement in Investment Property £m Investment Property At 1 April 2013 745.6 Additions 0.5 Capital Goods Scheme Receivable 0.8 Transfer To Surplus Land (1.3) Gain On Revaluation 18.1 Investment Property At 30 September 2013 763.7 19
Slide 20: Movement in Adjusted EPRA NAV
Movement in Adjusted EPRA NAV £m EPRA Adjusted NAV Per Share 1 April 2013 594.5 419.2 Adjusted Profit 14.2 10.0 Equity Dividends Paid (8.4) (5.9) Revaluation Movements (Including Share Of BYLP) 18.3 12.8 Movement In Purchaser’s Cost Adjustment 1.1 0.7 Other Movements (e.g. Share Schemes) 0.7 (0.5) 3
Slide 21: Per Store Analysis
Per Store Analysis Period Ended 30 September 2013 Established Lease-up BYLP Stores Stores Stores Number Of Stores 32 22 12 Average Store Capacity 60,313 67,773 62,417 Closing Sq Ft Occupied Per Store 46,500 41,955 37,750 % Occupancy 77.1% 61.9% 60.5% Closing Net Rent Per Sq Ft £25.32 £25.14 £17.31 A
Slide 22: Portfolio Summary - BYLP
Portfolio Summary - BYLP September September 2013 2012 Number Of Stores 12 12 As at 30 September: Total Capacity (Sq Ft) 749,000 743,000 Occupied Space (Sq Ft) 453,000 391,000 16% Percentage Occupied 60.5% 52.6% Closing Net Rent Per Sq Ft £17.31 £18.17 (5)% For the 6 month period: REVPAF £12.63 £11.
Slide 23: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33.3% Interest £000 Investment At 1 April 2013 17,681 Subscription For Capital And Advances - Share Of Operating Profit 753 Net Interest Payable (540) Fair Value Of Derivatives 224 Gain On Revaluation 413 Share Of Partnership Net Assets At 30 September 2013
Slide 24: Business Review
BUSINESS REVIEW Appendix 24 24
Slide 25: Strategic Overview
Strategic Overview • Continuing focus on occupancy and revenue growth from a secure capital structure • Keeping the customer at the heart of our business • Leveraging our market leading brand • Driving growth through digital channels – desktop, tablet, mobile • Phased development of Gypsy Corner, En
Slide 26: Improved Move-in Activity
Improved Move-in Activity Move-ins In Net Net Wholly Owned Move-ins Move-ins Move-ins Move-ins Stores 2013 2012 Increase 2013 2012 April 3,968 3,604 10% 327 242 May 4,579 4,266 7% 839 723 June 6,205 5,972 4% 2,443 2,480 July 5,344 5,241 2% 911 965 August 5,560 4,898 14% 590 399 September 5,225 4,834
Slide 27: Rental Growth Analysis – Wholly Owned Stores
Rental Growth Analysis – Wholly Owned Stores Net rent per sq ft Average occupancy growth in the six months over the six months 0 to 60% 1.0% 60 to 75% 1.8% 75 to 85% 2.6% Above 85% 5.4% 27
Slide 28: Marketing Online
Marketing Online • Our website accounts for 86% of all customer enquiries • Top three positions on relevant organic, paid and mobile searches • High brand awareness, with Big Yellow brand terms accounting for 37% of web searches which drive traffic to our website • 36% online market share of web vis
Slide 29: Developments In The Period
Developments In The Period • Customer focus group research conducted on domestic and business audiences has led to improvements in web usability and customer service online • Customer experience improved on mobile site with the addition of online reservation and online mobile check in • Business web
Slide 30: Conclusion
Conclusion • Dividend step up of 60% to 8p per share • VAT firmly in the past • Year on year revenue growth in October of 5.1% • Seasonal occupancy loss significantly lower than last year • Strong foundation to deliver attractive long term returns • Gypsy Corner on site • Looking to add selectively
Slide 31: Appendix: Store Portfolio, Additional Financial Information
APPENDIX: Store Portfolio Additional Financial Information Operations 31 Marketing
Slide 32: Big Yellow Stores
Big Yellow Stores London - 38 stores and sites Outside London - 42 stores and sites 32
Slide 33: Store openings
Chiswick, April 2012 New Cross, February 2012 Stockport, September 2011 MLA-75,000sq ft MLA - 60,000sa ft MLA - 60000 sqft Eltham, April 2011 Camberley, January 2011 High Wycombe, June 2010 MLA-70000sq ft MLA - 63000 sq ft MLA - 60,000 sqft
Slide 34: Store openings
Reading, December 2009 Sheffield Bramall Lane, Poo! Nottingh MLA- MLA -60000sq ft September 2009 MLA - 60 yft MLA f MLA Twickenham, May 2009 Liverpool, March 2009 Bromley, March 2009 Birmingham, February 2009 Sheen, December 2008 MLA -76000sq ft MLA -60000sq ft 71000 sq ft MLA-60000 sq ft MLA -64,00
Slide 35: Store openings
Barking, November 2007 Ealing Southall, November 2007 Sutton, July 2007 Gloucester, December 2006 Edmonton, October 2006 MLA~-60000sq ft MLA ft MLA-70000sq ft MLA~-50000 sqft MLA - 80,000 sat | =] Leal | LH BL) aa Kingston, August 2006 Bristol Ashton Gate, July 2006 Finchley East, May 2006 T Tunbrid
Slide 36: Store openings
Swindon, April 2004 Orpington, December 2003 Byfleet, November 2003 Chelmsford, April 2003 Finchley North, March 2003 MLA -53000 sa ft MLA -48000sq ft MLA-54000sq ft MLA-63000sqift = _ 4 = : West Norwood, January 2003 Colchester, December 2002 Bow, November 2002 Brighton, October 2002 Guildford, Jun
Slide 37: Store openings
= ve __ bili Portsmouth, October 2001 Norwich, September 2001 Dagenham, July 2001 April 2001 Luton, March 2001 MLA ~61000 sa ft MLA -~48000sq ft MLA~50000saft MLA -57000satt MLA-41000saft == Staples Comer, March 2001 Romford, November 2000 Milton Keynes, September 2000 Cheltenham, April 2000 MLA - 1
Slide 38: Solar Energy
iy: au / Solar Energy
Slide 39: Property Summary
Property Summary • Since September 2007, we have opened 23 stores, 12 in the wholly owned Group and 11 in the Partnership, adding 1.6m sq ft of self storage capacity • 71% of total built-out capacity is within the M25 in the wholly owned Group • 74% of revenue derives from London, 89% from London an
Slide 40: Valuations
Valuations Established Lease-Up All Wholly Store Store Owned Portfolio Portfolio Stores Number Of Stores 32 22 54 MLA Capacity (Sq Ft) 1,930,000 1,491,000 3,421,000 Valuation At 30 September 2013 £406.3m £357.4m £763.7m Value Per Sq Ft £211 £240 £223 Occupancy At 30 September 2013 77.1% 61.9% 70.5%
Slide 41: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Status Anticipated Capacity Gypsy Corner, Highly visible site on A40 in Acton Under construction, planned 70,000 sq ft West London opening in April 2014 Enfield, Prominent site on the A10, Great Cambridge Road Consent granted 60,000 sq ft North London Gu
Slide 42: Loan Covenants
Loan Covenants • The Group was comfortably in compliance with its loan covenants at 30 September 2013 • The principal covenants of the core bank facility are: − Consolidated EBITDA 1.5x (currently 3.45x) − Minimum net worth (less goodwill) of £250 million (currently £578 million) − Maximum loan to v
Slide 43: REIT Status
REIT Status • Approximately 84% of our revenue is currently tax exempt • Comfortably meets the 75% gross asset test at 30 September 2013 • PID of 8 pence per share payable for the six month period • Shadow capital allowances offset part of the tax exempt profits • All REIT tests met to date 43
Slide 44: Self Storage Market
Self Storage Market The Market – US Market (2013 Self Storage Almanac) – 52,500 self storage centres – 2.52 billion sq ft – 7.3 sq ft per person – Population 345 million – UK Market (2013 Drivers Jonas Deloitte/SSA Survey) – 850 self storage centres (excluding container operators) – 31 million sq ft
Slide 45: Self Storage Market
Self Storage Market Key Influencers – Growing public awareness – Change in economic activity and GDP growth – Population mobility and density – Physical planning and constraints, smaller homes – Focus on high density development on brownfield sites – Housing demand, divorce, single parent families,
Slide 46: Big Yellow Self Storage Users
Big Yellow Self Storage Users • Domestic − 68% by space, 83% by number − Urbanites, professionals, families, students • Business − 32% by space, 17% by number − National Accounts, SMEs, Home Office, e-tailers, start ups • Length of Stay − 34% customers > three years − A further 14% customers one to
Slide 47: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space at September 2013 Demand Profile of Move-ins - April to September 2013 47
Slide 48: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 30/09/2013 0-2 Years 2-5 Years >5 Years Portfolio 30/09/12 No of Stores 2 15 49 66 66 Business Existing 7.0 13.8 30.2 27.5 27.1 Vacated 3.0 7.2 11.4 11.1 10.8 Total 5.1 9.2 13.6 13.3 13.1 Domestic Existing 4.9 9.8 21.3 18.9 19.2 Vacated 2.7
Slide 49: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 49
Slide 50: Length of Stay of Customers Vacating
Length of Stay of Customers Vacating in Calendar Year To September 50
Slide 51: The customer is at the heart of our business
Modern, Prominent, Quality Market Customer Stores Leading Reviews Security – and Every Room Feedback Individually Alarmed Operations Ongoing Investment Driving Standards in Stores and Technology The customer is Customer at the heart of our Customer Support Green Commitment business Centre Recruitmen
Slide 52: Pricing Strategy
Pricing Strategy • Industry fully transparent with pricing online • Rolling existing customer price increases after 6 months and annually thereafter • Standard offer across all stores of 50% off for up to 8 weeks • Dynamic Pricing – positive and negative • Focus on REVPAF continues 52
Slide 53: The Growth Opportunity
The Growth Opportunity • Only 10% of those surveyed have used self storage before • Low historic use with 70% of Big Yellow’s customers using self storage for the first time • Increasing customer repeat use and referrals • Self storage awareness will continue to grow with advertising and new first t
Slide 54: The Brand Leader
The Brand Leader • Highly branded, prominent stores on main roads, promoting the brand every minute of every day • 1999 - 2003 Radio advertising • 2003 - 2008 TV advertising • 2008 onwards Digital strategy: − Flexible, targeted, always on • High brand referral from word of mouth driven by excellent
Slide 55: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey run annually for the last 7 years • Monitors our brand awareness • This year we increased the sample size in London • Statistically robust based on omnibus survey across all adult demographic groups - 1,312 sample size London - 2,14
Slide 56: Unprompted Awareness > 0.5%
Unprompted Awareness > 0.5% London Rest of the UK excluding NI 60% 55% 25.0% 48% 20.3% 20.4% 50% 20.0% 40% 15.0% 30% 10.0% 20% 5.0% 10% 0% 0.0% 2011 2013 2011 2013 Big Yellow Safestore Access Shurgard Big Box Vanguard Big Yellow Safestore Access Shurgard Lok n Store Big Box “What are the names of an
Slide 57: Self Storage Awareness
London Self Storage Awareness 120% 100% 80% 60% • “Never heard” is down 40% significantly 20% 0% • Awareness in London has 2006 2007 2008 2009 2010 2011 2012 2013 grown from 25% to 62% Know a good or reasonable amount Heard but know nothing Never heard UK excluding London • Awareness outside London
Slide 58: Staying Ahead Of The Game
Staying Ahead Of The Game • Prospect Acquisition − £3 million investment in marketing this year − Search (paid & organic), display, social − Business development & partnerships − PR and press office • Prospect Conversion − Continually improving the website journey and usability − Mobile site develop
Slide 59: Ongoing Consumer PR
Ongoing Consumer PR • Our regular PR stories allow us to talk about self storage and its benefits − Mancaves: Use self storage to create space for such an area in your home − Fashion: Use smaller self storage units storage as a solution to a cluttered bedroom /wardrobe − Christmas House Shame: Using
Slide 60: Customer Support Centre
Customer Support Centre • New phone / call recording system installed in 2012 • Over 400,000 sq ft of space moved in was reserved by Customer Support Centre in the six months to September 2013 • Reservations taken in the 6 months to September 2013 were up 18% on the same period last year • Focus on
Slide 61: National Accounts
National Accounts • National Accounts Team proactively seeking new business • Businesses can store at multiple locations using our quality operating platform • Easy set up for new customers and new locations - one contract, one invoice, one point of contact • We take deliveries, saving the customers
Slide 62: Corporate History
Corporate History • Early 1998 – Market research commenced • October 1998 – Formed Cubic Self Storage • January 1999 – Acquisition of Big Yellow Self Storage Company • September 1999 – Pramerica investment • May 2000 – AIM listing - £40 million placing • May 2001 – Placing and Open Offer - £23 milli
Slide 63: 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