Big Yellow Group Plc · LSE:BYG
Big Yellow — H1 2018 Earnings Presentation
50 slides from Big Yellow's earnings presentation, November 2017
Slide 1: Big Yellow Group PLC
Big Yellow Group PLC Results for the six months ended 30 September 2017
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 Six Months Six Months Ended Ended 30.09.17 30.09.16 Closing Occupancy 83.8% 78.5% 5.3 ppts Average Achieved Net Rent Per Sq Ft £26.02 £26.05 - Revenue £58.1 million £54.8 million 6% Like-For-Like Revenue £57.1 million £54.0 million 6% Free Cash Flow (Post Interest and Pre Working Capital
Slide 4: First Half Highlights
First Half Highlights • Strong occupancy performance driving 6% revenue growth • Average rate flat period on period; closing net rent up 1% from 31 March 2017, up 1.6% to date • Continued growth in EBITDA, adjusted earnings and dividend • Cash flow from operating activities (after finance costs and
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Portfolio Summary
Portfolio Summary • Closing occupancy 83.8%, an increase of 5.8 ppts from 1 April • Occupancy growth of 265,000 sq ft in the period (2016: 134,000 sq ft) • Average net rent in line with the same period last year • Net rent from 31 March 2017 up 1% at 30 September and up 1.6% to date • Like-for-like
Slide 7: Portfolio Summary – Big Yellow Stores
Portfolio Summary – Big Yellow Stores Sept Sept Sept Sept Sept Sept Sept Sept 2017 2017 2017 2017 2016 2016 2016 2016 Mature Established Developing Total Mature Established Developing Total Store Age at 1 April 2017 >6 years 3-6 years <3 years >6 years 3-6 years <3 years Number Of Stores 67 4 2 73 6
Slide 8: Store Operating Expenses
Store Operating Expenses • Cost of sales varies with revenue Category Six Months Six Months % % of store Ended Ended operating • Utilities reduced 30.09.17 30.09.16 costs in £000 £000 period following investment in LED lighting Cost of Sales 1,341 1,237 8% 8% Staff Costs 4,510 4,434 2% 28% • Rates i
Slide 9: Consolidated Income Statement
Consolidated Income Statement Six Months Ended 30.09.17 30.09.16 £m £m Revenue 58.1 54.8 • Revenue up 6% Cost Of Sales (17.6) (17.0) • Increased revaluation Admin Expenses (5.1) (5.2) gain due to growth in Underlying Operating Profit 35.4 32.6 cash flow and cap rate Revaluation Gain 47.5 31.6 improv
Slide 10: Adjusted PBT Bridge
Adjusted PBT Bridge Reduction Decrease in in net share of Increase in interest Increase in associates’ capitalised Increase payable \ administrative recurring interest in gross expenses profit profit £0.7m £0.2m £0.1m £0.2m £3.0m £30.6m Adjusted PBT 30 £27.0m September Adjusted 2017 PBT 30 September
Slide 11: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Six Months Ended • 12% growth in free cash flow 30.09.17 30.09.16 due to growth in EBDAT and reduction in interest £m £m Opening Net Debt (298.0) (295.0) • Capex is principally the acquisition of Wapping and the Operating Cash Flow (pre working capital) 37.4 34.6 cons
Slide 12: Capital Structure
Capital Structure 30.09.17 30.09.16 Net Debt / Gross Property Assets 24% 26% Net Debt / Adjusted Net Assets 30% 32% Pre-Interest Operating Cash Flow Cover 7.6x 6.1x 30 September 2017 Debt Expiry Facility Drawn Average Interest Cost Aviva Loan April 2027 £88.8 million £88.8 million 4.9% M&G Loan June
Slide 13: Armadillo Portfolio Performance
Armadillo Portfolio Performance Sept Sept 2017 2016 Number Of Stores 19 16 At 30 September: Total Capacity (Sq Ft) 829,000 736,000 Occupied Space (Sq Ft) 649,000 536,000 Percentage Occupied 78.3% 72.8% Net Rent Per Sq Ft £16.51 £16.59 For the 6 month period: REVPAF £15.11 £14.30 Average Annual Net R
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. Seven times higher unprompted awareness of nearest competitor across UK (Source: YouGov Survey April 2017) • Awareness continues to grow with increased use. 15% in our recent YouGov survey had used self storage (11% in 2014) • Driving s
Slide 16: Operations Overview
Operations Overview • Prospects in line with last year – demand segments broadly unchanged but improved conversions saw move ins grow by 4% on same period last year • Operational target is to drive occupancy to 90% • Focus on NPS scores and customer satisfaction – satisfied customers as referrers ar
Slide 17: Monthly Activity Levels
Monthly Activity Levels Number of monthly move ins Number of monthly move outs 9,000 10,000 8,500 8,000 9,000 7,500 8,000 7,000 6,500 7,000 6,000 6,000 5,500 5,000 5,000 4,500 4,000 4,000 Move outs 2018 Move outs 2017 Move outs 2016 Move ins 2018 Move ins 2017 Move ins 2016 • Prospects for the 6 mon
Slide 18: Consistent Delivery Through The Cycle
Consistent Delivery Through The Cycle MLA and occupancy from March 2007 • 2.0m sq ft increase in MLA capacity and 2.0m increase in occupied sq ft since March 2007 • Revenue for the six months has more than doubled from £28.6m (2007) to £58.1m • Threefold increase in adjusted EPS from 5.9p (2007) to
Slide 19: Rental Growth Analysis
Rental Growth Analysis Average Number of Net rent occupancy stores per sq ft growth in the six months from 1 April to 30 September 2017 0 to 75% 12 (0.3)% 75 to 80% 18 0.8% 80 to 85% 27 2.1% Above 85% 16 2.2% • The above analysis is a straight average rather than a weighted average • Focus remains o
Slide 20: Armadillo – Impact of Big Yellow Management
Armadillo – Impact of Big Yellow Management • Rebranding and investing in stores • Capital spend of £1.5 million over the last 18 months in Armadillo - Fitting out additional space - Large space reconfiguration into smaller, higher yielding units - Upgrading of stores • Big Yellow digital platform l
Slide 21: Property Review
Ar UMN Oe es 2 | | PROPERTY REVIEW > a
Slide 22: New Site Development
New Site Development • Portfolio approaching 85% occupancy - increased focus on new development • Acquisition of prime sites in Wapping (East London), Bracknell and Slough • Development pipeline of approximately 575,000 sq ft with estimated cost to complete of £90 million • Planning consent granted
Slide 23: Development Pipeline – London
Development Pipeline – London Site Location Status Anticipated Capacity Wandsworth Extension to existing Construction commenced, extension due to open in April Additional 25,000 47,000 sq ft store 2018, cost to complete of £3.6 million. sq ft Camberwell Prominent location on Initial planning applica
Slide 24: Development Pipeline – Outside London
Development Pipeline – Outside London Site Location Status Anticipated Capacity Guildford Prime location in centre of Construction commenced, store due to open in March 56,000 sq ft Guildford on Woodbridge 2018, cost to complete of £2.9 million. Meadows Manchester Prime location on Water Planning co
Slide 25: Our Portfolio November 2017
Our Portfolio November 2017 25
Slide 26: 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 • Secure capital structure, high interest cover - business well placed to cope with current un
Slide 27: Appendix
APPENDIX Additional Financial Information Marketing Review Operations Store Portfolio
Slide 28: Per Store Analysis
Per Store Analysis Six Months Ended Mature Established Developing All 30 September 2017 Stores Stores Stores Stores Number of Stores 67 4 2 73 Average Store Capacity 62,000 67,750 61,500 62,300 Closing Sq Ft Occupied Per Store 52,300 57,000 42,500 52,300 % Occupancy 84.3% 84.1% 69.1% 83.8% Annualise
Slide 29: 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 30: Big Yellow Relative TSR Performance
Big Yellow Relative TSR Performance Index Big Yellow FTSE All Share FTSE 350 RE 1200 1100 970.6% 1000 (14.6% p.a.) 900 800 700 600 500 400 193.6% 300 (6.4% p.a.) 145.1% 200 (5.3% p.a.) 100 0 08-May-00 02-Feb-02 30-Oct-03 27-Jul-05 23-Apr-07 18-Jan-09 15-Oct-10 11-Jul-12 08-Apr-14 03-Jan-16 30-Sep-17
Slide 31: 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 32: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey by Big Yellow run annually for the last 10 years • Monitors our brand awareness • Statistically robust based on omnibus survey across all adult demographic groups - 1,043 sample size London - 2,028 sample size for the rest of the UK
Slide 33: Unprompted Awareness Prompted Awareness
Unprompted Awareness “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?” 33 Source: YouGov Survey April 2017
Slide 34: High Brand Awareness = High Online Market Share
High Brand Awareness = High Online Market Share • 88% of our prospects came from our digital platforms in the period 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
Slide 35: The Growth Opportunity
The Growth Opportunity • 15% of those surveyed have used self storage before (source: YouGov Survey April 2017) compared to 11% 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 Survey April 2017) • Low h
Slide 36: 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 • 75% are aged 25-54 • 58% of those using Big Yellow because they are moving, own the property they ar
Slide 37: PR and Social Media
PR and Social Media • Generating local PR through store network, based on charitable giving and customer and staff activities • YouTube: We use videos to demonstrate both the product and service Big Yellow provides • Twitter: Listening and conversational tool when people have comments or questions a
Slide 38: Customer Support Centre
Customer Support Centre • Over 66,000 calls answered in the period • 560,000 sq ft reserved by the Customer Support Centre • Customer Support Centre service levels remain high ‒ Average mystery shop score of 96% over the period ‒ Average net promoter score (“NPS”) of 86 38
Slide 39: 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 40: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space 30 September 2017 Demand Profile of Move-ins only Businesses, April to September 2017 35% by space, 19% by Student storage, 15% Domestics, customer 65% by space, numbers Travelling, 6% 81% by Other, 11% customer numbers Business storage, 11% Decl
Slide 41: Length of Stay of Customers Vacating in Calendar Year To September
Length of Stay of Customers Vacating in Calendar Year To September 41
Slide 42: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 30/09/2017 0-3 Years 3-6 Years >6 Years Portfolio 30/09/16 No of Stores 2 4 67 73 73 Business Existing 8.7 20.7 30.0 28.9 27.7 Vacated 4.5 7.2 11.3 11.2 11.1 Total 6.3 10.5 13.4 13.2 13.1 Domestic Existing 6.2 14.3 23.3 22.4 21.7 Vacated 3.
Slide 43: 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 44: Self Storage Market
Self Storage Market – US Market (2017 Fedessa Report) – Population 324 million – 54,000 self storage centres – 3.1 billion sq ft – 9.5 sq ft per person – Australian Market (2017 Fedessa Report) – Population 24.5 million – 1,300 self storage centres – 43.6 million sq ft – 1.8 sq ft per person – UK Ma
Slide 45: Store Portfolio
——— i » a0 Twickenham 2, April 2016 Nine Elms, April 2016 MLA - 22,000 sq ft MLA - 65,000 sq ft Chester, February 2015 Oxtord 2, July 2014 MLA - 69,000 sq ft MLA - 35,000 sq ft New Cross, February 2012 Stockport, September 2011 MLA - 62,000 sq ft MLA - 65000 sa ft ™___ Cambridge, January 2016 Enfiel
Slide 46: Store Portfolio
Reading, December 2009 Sheffield Bramall Lane, Poole, August 2009 Nottingham, August 2009 Edinburgh, July 2009 MLA - 62000 sqft September 2009 MLA - 40000 sqft MLA-55000sqit MLA - 67000 sqft MLA -63000sq ft fl rer — al — Twickenham, May 2009 Liverpool, March 2009 Bromley, March 2009 Birmingham, Febr
Slide 47: Store Portfolio
—— ‘ | ee ti i bt aoe aati _ | Kingston, August 2006 Bristol Ashton Gate, July 2006 Finchley East, May 2006 Tunbridge Wells, April 2006 Bristol Central, March 2006 MLA - 62000 sq ft MLA - 61,000 sq ft MLA - 57,000 sq ft MLA - 64000 sq ft “=a hh North Kensington, Leeds, July 2005 Beckenham, May 2005
Slide 48: Store Portfolio
Now Malden, May 2002 Hounslow, December 2001 MLA - 81,000 sq ft MLA - 54000 sqft a i Portsmouth, October 2001 Staples Comer, March 2001 MLA - 112000 sqft Slough, February 2000 Hanger Lane, October 1999 MLA- 67,000 sqft MLA - 66,000 sq ft Seeman, ‘Dosoniber 2001 Dagenham, July 2001 Romford, November
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Slide 50: 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