Big Yellow Group Plc · LSE:BYG
Big Yellow — FY2016 Earnings Presentation
53 slides from Big Yellow's earnings presentation, May 2016
Slide 1: Results for the Year ended 31 March 2016
Big Yellow Group PLC Results for the Year ended 31 March 2016
Slide 2: Proven Model
Proven Model • UK self storage penetration in key urban conurbations remains relatively low • Very limited new supply coming onto the market Attractive Market Dynamics • Resilient through the downturn • Sector growth is positive, with increasing domestic demand • UK industry’s most recognised brand
Slide 3: Key Metrics
Key Metrics 2016 2015 Like-For-Like Closing Occupancy 76.7% 73.2% 3.5ppts Average Achieved Net Rent Per Sq Ft £25.73 £25.10 3% Revenue £101.4 million £84.3 million 20% Like-For-Like Revenue £87.6 million £79.9 million 10% Cash Flows From Operating Activities (Post Interest) £55.5 million £42.4 milli
Slide 4: Highlights
Highlights • Another year of growth in all our key operating metrics • Strong revenue performance driving 15% increase in adjusted earnings per share and total dividend • Store platform expanded by 282,000 sq ft: – Two new freehold stores opened at Enfield and Cambridge – Acquisition of four store L
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Portfolio Summary
Portfolio Summary • Like-for-like occupancy 76.7%, an increase of 3.5ppts • Occupancy growth of 185,000 sq ft for the year (2015: 267,000 sq ft) • Occupancy growth of 123,000 sq ft in Q4 to 75.3% (2015: 82,000 sq ft, 73.2%) • Closing net rent £25.90 psf, up 2.7% from prior year end • Average net ren
Slide 7: Proforma Portfolio Summary – Big Yellow Stores
Proforma Portfolio Summary – Big Yellow Stores March March March March March March March March 2016 2016 2016 2016 2015 2015 2015 2015 Mature Established Developing Total Mature Established Developing Total Store Age at 1 April 2015 >6 years 3-6 years <3 years >6 years 3-6 years <3 years Number Of S
Slide 8: Cost Breakdown
Cost Breakdown Category Year Year % of ended 31 ended 31 store • £0.8 million of the March March operating £1.7 million increase 2016 2015 costs in £000 £000 % 2016 due to new stores Cost of Sales 2,149 2,035 6% 7% • Increase excluding Staff Costs 8,001 7,512 7% 27% new stores is 3% General & Admin
Slide 9: Consolidated Income Statement
Consolidated Income Statement Year Ended: 31.03.16 31.03.15 £m £m Revenue 101.4 84.3 • Revenue up 20%, like-for-like revenue up 10% Cost Of Sales (32.6) (27.4) Admin Expenses (8.9) (8.5) • Cost of sales increase due to full year of Partnership stores (£2.9 Underlying Operating Profit 59.9 48.4 milli
Slide 10: Adjusted PBT Bridge
Adjusted PBT Bridge Decrease in Increase share of Decrease in Increase in net capitalised associates’ Increase in in gross interest recurring administrative interest profit payable profit expenses £11.8m £(1.1)m £(0.5)m £(0.4)m £(0.2)m £49.0m Adjusted £39.4m PBT 31 March Adjusted 2016 PBT 31 March 2
Slide 11: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year Ended: 31.03.16 31.03.15 • 31% growth in free cash flow, £m £m due to EBDAT growth, coupled Opening Net Debt (277.1) (226.1) with favourable working capital Cash From Operations 66.2 51.8 movements Interest (Net) (10.7) (9.5) • Capex comprises acquisition of Free
Slide 12: Capital Structure
Capital Structure 31.03.16 31.03.15 Net Debt / Gross Property Assets 26% 27% Net Debt / Adjusted Net Assets 33% 35% Pre-Interest Operating Cash Flow Cover 6.2x 5.4x 31 March 2016 Debt Expiry Facility Drawn Average Aviva Loan April 2027 £92.2 million £92.2 million 4.9% M&G Loan June 2022 £70 million
Slide 13: Armadillo
Armadillo Big Yellow 20% Interest Armadillo 1 Armadillo 2 £000 £000 Investment At 1 April 2015 3,638 1,934 Share Of Operating Profit 439 418 Net Interest Payable (103) (138) Fair Value Of Derivatives (2) (21) Gain On Revaluation 468 222 Deferred and Current Tax (84) (95) Share Of Associates’ Profit
Slide 14: Marketing and Operational Review
MARKETING AND OPERATIONAL REVIEW
Slide 15: Marketing Overview
Marketing Overview • Big Yellow brand has six times higher unprompted awareness of nearest competitor (Source: YouGov survey April 2016) • Leveraging this market leading brand to drive growth through digital channels • Strong traction from new improved mobile site – 50% of web traffic from mobile de
Slide 16: Operations Overview
Operations Overview • Prospects up 5% on last year, demand mix broadly unchanged • Ongoing investment in digital customer satisfaction programme and training – NPS, mystery shops etc. • Sunday Times Best 100 Companies to Work for accreditation • Enfield started strongly – 24,000 sq ft let in the fir
Slide 17: Quarterly Occupancy Patterns
Quarterly Occupancy Patterns All Stores Move-ins Move-ins Increase Net Move-Ins Net Sq Ft year ended year ended 31 March 31 March 31 March 31 March 2016 2016 2016 2015 Q1 April - June 20,112 20,196 0% 4,460 146,000 Q2 July - September 21,763 21,873 (1)% (1,183) 54,000 Q3 October - December 16,643 16
Slide 18: Rental Growth Analysis
Rental Growth Analysis Average Number of Net rent occupancy Stores per sq ft growth in the year over the year 0 to 60% 4 (1.9)% 60 to 70% 13 1.6% 70 to 80% 28 2.3% Above 80% 24 4.1% • Focus remains on driving occupancy with rate a by-product of yield management • Higher occupancy drives better renta
Slide 19: Acquisition of Lock & Leave
Acquisition of Lock & Leave • Acquisition of four store Lock and Leave portfolio in April 2016 • Big Yellow acquired for £14.6 million: • Nine Elms freehold store (65,000 sq ft MLA) • Twickenham 19 years unexpired leasehold store (25,000 sq ft MLA) • Armadillo acquired for £6.4 million: • Canterbury
Slide 20: Property Review
PROPERTY REVIEW
Slide 21: New Site Development
New Site Development • Portfolio approaching 80% occupancy (current target 85%) - increased focus on new development • Seven year plan to invest on average £25 to £35 million per year in new capacity to increase platform by approximately 750,000 sq ft • Kings Cross and Camberwell acquisitions taking
Slide 22: Development Pipeline
Development Pipeline Site Location Status Anticipated Capacity Guildford Prime location in centre of Minor amendments to existing planning consent being sought. Store 56,000 sq ft Guildford on Woodbridge due to open in Autumn 2017, cost to complete of £5.5 million Meadows Wandsworth, Possible extens
Slide 23: Our Portfolio May 2016
London 43 stores and sites Our Portfolio Outside London 51 stores and sites May 2016 23
Slide 24: Strategic Summary
Strategic Summary • Strong revenue performance driving earnings and dividend growth • Focus on driving occupancy, revenue and cash flow growth • Group capital structure provides strong foundation for future growth • Looking to selectively acquire Big Yellow development sites and existing stores to g
Slide 25: Appendix
APPENDIX Additional Financial Information Marketing Review Operations Store Portfolio
Slide 26: Property Valuation
Property Valuation VALUATION METRICS Mature Established Developing Leasehold Freehold Freehold Freehold Total Number of Stores 6 50 11 4 71 MLA Capacity (sq ft) 398,000 3,097,000 704,000 265,000 4,464,000 Valuation at 31 March 2016 £41.9m £835.6m £150.4m £64.3m £1092.2m Value Per Sq Ft (£) £105 £270
Slide 27: Per Store Analysis
Per Store Analysis Year Ended 31 March 2016 Mature Established Developing Stores Stores Stores Average Store Capacity 62,400 64,000 66,250 Closing Sq Ft Occupied Per Store 48,000 48,900 34,000 % Occupancy 76.9% 76.4% 51.3% Average Revenue Per Store (£000) 1,484 1,229 796 Average Operating Cost Per S
Slide 28: Big Yellow Relative TSR Performance
Big Yellow Relative TSR Performance 28
Slide 29: Armadillo Self Storage
Armadillo Self Storage • A lower frills brand in smaller towns and cities – 20% joint ventures • Intention to grow portfolio through acquisition of existing stores • Consolidated into Big Yellow operating platform – improving efficiency and national coverage • 10 store Armadillo platform acquired in
Slide 30: Facilities In The SSA 2016 Survey By Year Opened
Facilities In The SSA 2016 Survey By Year Opened All facilities: year opened 50 45 40 35 30 25 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year opened • 6 new stores opened in London, however 3 stores closed in the year 30
Slide 31: 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 32: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey run annually for the last 10 years • Monitors our brand awareness • Statistically robust based on omnibus survey across all adult demographic groups - 1,044 sample size London - 2,084 sample size for the rest of the UK 32
Slide 33: Unprompted and Prompted Awareness
Unprompted Awareness “What are the names of any self storage companies you can think of?” London Rest of the UK excluding NI 60% 25% 49% 50% 20% 20% 40% 15% 30% 10% 20% 9% 8% 7% 5% 10% 3% 2% 1% 0% 0% Big Yellow Shurgard Safestore Access Big Yellow Safestore Lok n Store Access Prompted Awareness “Whi
Slide 34: High Brand Awareness = High Online Market Share
High Brand Awareness = High Online Market Share • 86% of our prospects came from the Big Yellow website in the year • A significant proportion of these web visits come from people searching for our brand - Lower cost of acquisition - More likely to convert • High brand awareness leads to more clicks
Slide 35: Big Yellow on Mobile
Big Yellow on Mobile • 50% of our web traffic in March 2016 (March 2015: 48%) came from mobile devices (including tablets and smartphones) • 35% from smartphones (March 2015: 32%) • New mobile site – Enhanced finger friendly usability – Clean design – More features including; business, wine, student
Slide 36: The Growth Opportunity
The Growth Opportunity • Only 13% of those surveyed have used self storage before or are currently using storage (source: YouGov Survey April 2016) • Only 7% of those surveyed were currently using self storage or were thinking of using self storage in the next year (source: SSA survey 2016) • Low hi
Slide 37: Staying Ahead Of The Game
Staying Ahead Of The Game • Prospect Acquisition − Projected £4.2m investment in marketing in 2016/17 (2015/16: £4m) − Search (paid & organic), online display advertising, social media − Business development & partnerships − PR and press coverage • Prospect Conversion − Continually improving the web
Slide 38: PR and Social Media
PR and Social Media • Our consumer PR stories allow us to talk about self storage and its benefits against key life events – Press, online and radio coverage • YouTube: We use video to demonstrate both the product and service Big Yellow provides • Twitter: Listening and conversational tool when peop
Slide 39: Customer Support Centre
Customer Support Centre • 133,000 calls answered in the year ended 31 March 2016 • Over 800,000 sq ft of the 5.4 million sq ft moved in across both brands reserved by the Customer Support Centre • 95% of calls answered within 20 seconds • Average mystery shop score of 95% over the year • Achieved an
Slide 40: 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 41: 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 42: Self Storage Market
Self Storage Market – US Market (2015 Fedessa Report) – Population 321 million – 52,500 self storage centres – 2.5 billion sq ft – 7.8 sq ft per person – Australian Market (2015 Fedessa Report) – Population 23.9 million – 1,300 self storage centres – 43.6 million sq ft – 1.8 sq ft per person – UK Ma
Slide 43: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space 31 March 2016 Demand Profile of Move-ins only April 2015 to March 2016 In the owner occupied and rental sectors April 2014 to March 2015 Moving 45% Other 12% Decluttering 11% Business storage 10% Student storage 10% Travelling 6% Home improvement
Slide 44: Length of Stay of Customers Vacating in Financial Year
Length of Stay of Customers Vacating in Financial Year 44
Slide 45: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 31/03/2016 0-3 Years 3-6 Years >6 Years Portfolio 31/03/15 No of Stores 3 6 62 71 69 Business Existing 8.5 17.5 29.2 27.8 27.6 Vacated 3.9 7.0 11.2 11.1 10.9 Total 6.2 10.0 13.2 13.1 12.9 Domestic Existing 6.1 12.1 22.1 21.0 20.9 Vacated 2.
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 maximising our revenue through yie
Slide 47: Corporate History
Corporate History • 1998 – Market research and formation of Cubic Self Storage in October • 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 raising £23 million • J
Slide 48: Cambridge, January 2016
Cambridge, January 2016 MLA - 60000 sq ft. Stockport, September 2011 MLA - 65,000 Enfield, April 2015 MLA- 60,000 sq ft Perce Eltham, April 2011 MLA - 79000 sq ——— Chester, February 2015 MLA - 69,000sq ft Chiswick, April 2012 MLA -75000 sqft Camberley, January 2011 MLA - 680005q ft New Cross, Februa
Slide 49: Store Portfolio
Se Z Reading, December 2009 Sheffield Bramall Lane, Poole, August 2009 Nottingham, August 2009 Edinburgh, July 2009 MLA -62000sq tt September 2009 MLA -60000sqit MLA-55000sqit MLA -67000 sqit MLA - 63000 sqit Twickenham, May 2009 MLA -73000 sq tt Bromley, March 2009 MLA -71000 sq ft Birmingham, Febr
Slide 50: Store Portfolio
mh i i] Kingston, August 2006 Bristol Ashton Gate, July 2006 Finchley East, May 2006 7 Tunbridge Wells, April 2006 Bristol Central, March 2006 MLA - 62,000 sq ft MLA - 61000 sqft MLA - 54000 sq tt MLA - 57,000 sqft MLA - 64000 sq ft North Kensington, Leeds, July 2005 Beckenham, May 2005 Watford, Aug
Slide 51: New Malden, May 2002
New Malden, May 2002 MLA - 81000 sqft MLA - 54,000sqit MLA - 34000 sqft MLA - 58000 sq ft Hounslow, December 2001 Battersea, December 2001 Ilford, November 2001 ie ae Portsmouth, October 2001 Dagenham, July 2001 Wandsworth, April 2001 Luton, March 2001 MLA - 61,000 sq tt MLA - 51,000 sq ft MLA -47,0
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Slide 53: 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