Big Yellow Group PLC · LSE:BYG
Big Yellow — FY2013 Earnings Presentation
58 slides from Big Yellow's earnings presentation, May 21, 2013
Slide 1: Results for the Year ended 31 March 2013
Big Yellow Group PLC Results for the Year ended 31 March 2013 21 May 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: Highlights
Highlights • Revenue up 6% and VAT impact absorbed • Another year of cash flow, earnings and dividend growth • Successful completion of refinancing coupled with placing improves group capital structure • Reduction of Group net debt by £43.5 million to £230.5 million • Opening of our iconic store in
Slide 4: Key Metrics
Key Metrics 2013 2012 Like-For-Like Occupancy 65.6% 63.5% Occupancy Growth – All Stores 174,000 sq ft 328,000 sq ft Occupancy Growth – Wholly Owned Stores 90,000 sq ft 218,000 sq ft Revenue £69.7 million £65.7 million 6% Like-For-Like Revenue Per Available Foot (REVPAF) £20.25 £19.43 4% Adjusted Pro
Slide 5: Improving Our Financial Strength
Improving Our Financial Strength Completion of Refinancing • New £100 million 15 year loan facility secured with Aviva • Refinanced £190 million bank facility in October 2012 to September 2016 • Extended £60 million Big Yellow Limited Partnership bank facility in October 2012 to September 2016 Placi
Slide 6: Dividend
Dividend • Final Dividend of 6p per share (2012: 5.5p) • Property Income Dividend (PID) element of 8p • Total Dividend of 11p per share (2012: 10p) Dividend Cover Year To 31 March 2013 On EPRA Earnings Per Share 1.75x On Operating Cash Flow After Finance Costs 1.96x 6
Slide 7: Portfolio Summary
Portfolio Summary • Wholly owned store occupancy increase of 52,000 sq ft in Q4 to 64.8% • Closing net rent £24.65 psf, down 6.9% from prior year end. Net rent has increased by 2.5% since 1 April 2013 • Average net rent for the year £26.12, down 2.6% from prior year • Store revenue up 6% and like-fo
Slide 8: Portfolio Summary
Portfolio Summary March March March March March March Wholly Owned Stores 2013 2013 2013 2012 2012 2012 Established Lease-Up Total Established Lease-Up Total Number Of Stores 32 22 54 32 21 53 At 31 March: Total Capacity (Sq Ft) 1,941,000 1,491,000 3,432,000 1,941,000 1,417,000 3,358,000 Occupied Sp
Slide 9: Financial Review
FINANCIAL REVIEW FINANCIAL REVIEW 9
Slide 10: Consolidated Income Statement
Consolidated Income Statement Year Ended: 31.03.13 31.03.12 £m £m Revenue 69.7 65.7 Cost Of Sales (24.5) (23.5) • Established store revenue up 1% Lease-up store revenue up 18% Admin Expenses (7.7) (7.1) Underlying Operating Profit 37.5 35.1 • Cost of sales increase due to impact of 2 new stores Reva
Slide 11: Adjusted PBT Bridge
Adjusted PBT Bridge Increase in Increase share of in net Increase recurring interest Increase in in gross profit of JV payable Decrease in administrative profit expenses capitalised interest 0.4 3.0 (0.3) (0.4) (0.8) £25.5m £23.6m Adjusted PBT Adjusted 31 March PBT 2013 31 March 2012 11
Slide 12: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year Ended: Year Ended: • 10% growth in free cash flow 31.03.13 31.03.12 • Non-recurring finance costs are £m £m made up of £5.1m debt Opening Net Debt (273.9) (266.0) arrangement fees and £10.5m Cash From Operations 42.0 38.9 of swap cancellation fees Interest (Net)
Slide 13: Capital Structure Significantly Strengthened
Capital Structure Significantly Strengthened 31.03.13 31.03.12 Net Debt / Gross Property Assets 30% 35% Net Debt / Adjusted Net Assets 39% 49% Group EBITDA Cover 3.3x 3.1x Amount of Debt Weighted Average Interest Cost £m Aviva Fixed Rate Loan – Expiry April 2027 98.3 4.9% Fixed Rate Bank Debt – Expi
Slide 14: Movement in Investment Property
Movement in Investment Property £m Investment Property At 1 April 2012 726.4 Additions 3.4 Capital Goods Scheme Receivable (10.6) Transfer From IPUC 16.3 Gain On Revaluation 10.1 Investment Property At 31 March 2013 745.6 14
Slide 15: Movement in Adjusted EPRA NAV
Movement in Adjusted EPRA NAV £m EPRA Adjusted NAV Per Share 1 April 2012 559.0 427.7 Equity Raising January 2013 35.8 (5.0) 1 April 2012 (Proforma) 594.8 422.7 Adjusted Profit 25.5 18.0 Equity Dividends Paid (13.5) (9.5) Revaluation Movements (Including Share Of BYLP) (1.7) (1.2) Refinancing Costs
Slide 16: Per Store Analysis
Per Store Analysis Year Ended 31 March 2013 Established Lease-up Stores Stores Number Of Stores 32 22 Average Store Capacity 60,656 67,773 Closing Sq Ft Occupied Per Store 44,156 36,818 % Occupancy 72.8% 54.3% Average Revenue Per Store £1,379,000 £1,100,000 Average EBITDA Per Store £922,000 £665,000
Slide 17: Portfolio Summary - BYLP
Portfolio Summary - BYLP March March 2013 2012 Number Of Stores 12 12 As At 31 March: Total Capacity (Sq Ft) 749,000 743,000 Occupied Space (Sq Ft) 409,000 325,000 26% Percentage Occupied 54.6% 43.7% Closing Net Rent Per Sq Ft £16.72 £18.12 (8)% For The Year: REVPAF £11.14 £9.11 22% Average Annual N
Slide 18: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33.3% Interest £000 Investment At 1 April 2012 15,496 Subscription For Capital And Advances 1,567 Share Of Operating Profit 1,122 Net Interest Payable And Fair Value Of Derivatives (826) Refinancing Costs (499) Gain On Revaluation 821 Share Of Partnership Ne
Slide 19: Business Review
BUSINESS REVIEW Appendix 19 19
Slide 20: 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 21: 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 22: 15% Improved Move-in Activity Over Year
15% Improved Move-in Activity Over Year Year ended Year ended Increase Net Move-ins In Wholly 31 March 31 March Move-ins Owned Stores 2013 2012 Q1 April-June 13,844 11,081 25% 3,445 Q2 July-September 14,973 12,661 18% (410) Q3 October-December 10,738 10,195 5% (2,534) Q4 January-March 11,047 10,149
Slide 23: 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 24: 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 25: 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 26: High Brand Awareness = High Online Market Share
High Brand Awareness = High Online Market Share • Search engines deliver 73% of our web visits • A significant proportion come from people searching for our brand - Lower cost of acquisition - More likely to convert • High brand recognition leads to more clicks and web visits when people search for
Slide 27: 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 28: 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 29: 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 30: The Big Yellow Mobile Site
The Big Yellow Mobile Site • 35% of our web traffic in March 2013 came from mobile devices (including tablets and smartphones) • Up from 19% last March • Our mobile friendly site is being developed further with online reservation and check in 30
Slide 31: Ongoing Consumer PR
Ongoing Consumer PR • Our regular PR stories allow us to talk about self storage and its benefits − Fashion: Use smaller self storage units storage as a solution to a cluttered bedroom /wardrobe − Christmas House Shame: Using short term storage at Christmas to create space for your staying guests •
Slide 32: Customer Support Centre
Customer Support Centre • New phone / call recording system installed in May 2012 • Over 600,000 sq ft of space moved in was reserved by Customer Support Centre in the last year • Reservations taken in the 6 months to March 2013 were up 19% on the same period last year • Focus on call quality increa
Slide 33: National Accounts
National Accounts • Strengthened 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
Slide 34: Conclusion
Conclusion • Solid results for 2012/13 and VAT now fully embedded • Operational focus on driving occupancy, revenue and cash flow growth • Group capital structure provides strong foundation for future growth • Dividend step up to 80% of eps, commencing Interim 2013/14 • Q4 momentum continues into cu
Slide 35: Appendix
35 APPENDIX
Slide 36: Big Yellow Stores May 2013
Big Yellow Stores May 2013 London - 38 stores and sites Outside London - 42 stores and sites 36
Slide 37: 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 within the M25 in the wholly owned Group • 74% of revenue from London, 90% from London and the South
Slide 38: Valuations
Valuations Established Lease-Up All Wholly Store Store Owned Portfolio Portfolio Stores Valuation At 31 March 2013 £406.3m £339.3m £745.6m Occupancy At 31 March 2013 72.8% 54.3% 64.8% Stabilised Occupancy Assumed In Valuations 82.0% 80.9% 81.5% Initial Yield Pre-Admin Expenses 6.8% 4.9% 5.9% Stabili
Slide 39: 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 40: Big Yellow Self Storage Users
Big Yellow Self Storage Users • Domestic − 66% by space, 82% by number − Urbanites, professionals, families, students • Business − 34% by space, 18% by number − National Accounts, SMEs, Home Office, e-tailers, start ups • Length of Stay − 36% customers > three years − A further 15% customers one to
Slide 41: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space at 31 March 2013 Demand Profile of Move-ins - April to March 2013 April to March 2012 Moving - owned sector 40% Moving - rental sector 18% Decluttering 11% Business storage 9% Other 7% Student storage 6% Home improvements 5% Travelling 4% 41
Slide 42: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 42
Slide 43: Length of Stay of Customers Vacating in Financial Year
Length of Stay of Customers Vacating in Financial Year 2013 7.02 2012 7.16 2011 7.14 Months 2010 8.11 2009 8.63 2008 7.41 0 1 2 3 4 5 6 7 8 9 10 43
Slide 44: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 31/03/2013 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 31/03/2012 No of Stores 1 3 16 46 66 65 Domestic Existing 3.9 5.1 10.4 20.7 18.3 18.6 Vacated 2.2 2.5 4.0 6.8 6.5 6.5 Total 3.0 3.4 5.3 8.1 7.8 7.9 Business Existing 4.8 6.3 12.9 23
Slide 45: Quality of Earnings
Quality of Earnings • Operating branded store platform - not a recycler of assets • Own assets freehold for high operating margins and operational advantage • “Evergreen” income − 38,500 customers (33,500 in wholly owned stores) − Average length of stay for existing customers is 19 months − 35% of c
Slide 46: 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 46
Slide 47: Loan Covenants
Loan Covenants • The Group was comfortably in compliance with its loan covenants at 31 March 2013 • The principal covenants of the core bank facility are: − Consolidated EBITDA 1.5x (currently 3.48x) − Minimum net worth (less goodwill) of £250 million (currently £551 million) − Maximum loan to value
Slide 48: REIT Status
REIT Status • Approximately 86% of our revenue is currently tax exempt • Comfortably meets the 75% gross asset test at 31 March 2013 • PID of 8 pence per share payable for the year • Shadow capital allowances offset part of the tax exempt profits • All REIT tests met to date 48
Slide 49: Self Storage Market
Self Storage Market The Market – US Market (2012 Self Storage Almanac) – 50,000 self storage centres – 2.55 billion sq ft – 7.4 sq ft per person – Population 345 million – UK Market (2013 Drivers Jonas Deloitte/SSA Survey) – 830 self storage centres (excluding container operators) – 30.1 million sq
Slide 50: 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 51: 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 52: Chiswick, April 2012 New Cross, February 2012 Stockport, September 2011
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 53: Reading, December 2009 Sheffield Bramall Lane, Twickenham
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 54: Barking, November 2007 Ealing Southall, Sutton, Gloucester
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 55: Swindon, April 2004 Orpington, Byfleet, Chelmsford
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 56: Portsmouth, October 2001 Norwich, Dagenham, Luton
= 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 57: Solar Energy
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Slide 58: 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