SEGRO plc · LSE:SGRO
SEGRO — Debt Investor Presentation (September 2013)
27 slides from SEGRO's debt investor presentation, Sep 19, 2013
Slide 1: Bank and Bondholder presentation
Bank and Bondholder presentation 19 September 2013 0 Geopost, Enfield
Slide 2: Agenda
Agenda Welcome and strategic overview (David Sleath, CEO) Operational and financial performance (Justin Read, Group Finance Director) Funding overview (Andrew Pilsworth, Head of Corporate Finance) Wrap-up (David Sleath, CEO) and Q&A Appendices 1
Slide 3: SEGRO attendees
SEGRO attendees Andrew Pilsworth David Sleath Justin Read Head of Corporate Finance CEO Group Finance Director Octavia Peters Shilpa Mandalia Simon Clubbs Head of Tax & Corporate Treasury Dealer Group Tax Manager Finance Manager 2
Slide 4: Strategic Overview
Strategic Overview 3 Selig, Slough Trading Estate
Slide 5: A clear strategy to create a successful income-focused REIT
A clear strategy to create a successful income-focused REIT GOAL THE BEST OWNER-MANAGER AND DEVELOPER OF ‘INDUSTRIAL’ PROPERTIES AND A LEADING INCOME-FOCUSED REIT OUR STRATEGY DISCIPLINED OPERATIONAL CAPITAL ALLOCATION EXCELLENCE ALLOCATE CAPITAL TO THE DELIVER GREAT CUSTOMER MARKETS AND ASSETS LIKE
Slide 6: Progress against strategic priorities
Progress against strategic priorities Strategic Priorities Achievements 1. Recycle capital out of non-core assets: £1.6bn £985m of disposals, including 4 of the “Big Six” non-strategic - Older property or management intensive characteristics assets - Weaker or sub-scale markets Average exit yiel
Slide 7: Key trends supporting our strategy
Key trends supporting our strategy Attractive structural demand drivers Limited supply of modern warehouse assets Growth in internet retailing, convenience shopping and B2B UK supply (millions sq ft) distribution requiring local delivery/fulfilment solutions 30 On-going supply chain improvements
Slide 8: Land bank well located to capitalise on the favourable demand/supply dynamics
Land bank well located to capitalise on the favourable demand/supply dynamics Current land holdings by value (as at 30 June 2013) Residual land bank £86m (231 ha) Potential Current development projects projects £49m £200m (310 ha) (31 ha) Potential development projects £77m of potential future ann
Slide 9: €1bn Continental European logistics JV to take advantage of growth opportunities
€1bn Continental European logistics JV to take advantage of growth opportunities 50/50 JV with PSP to create a leading Continental Europe logistics platform Seeded with SEGRO’s €1 billion Continental European logistics portfolio, including 84 hectares of development land Provides access to lon
Slide 10: Summary
Summary Strong operational performance Significant progress with strategic portfolio repositioning Investment market strengthening Well positioned for future growth Creating the best owner-manager and developer of industrial properties and a leading income-focused REIT 9
Slide 11: Operational Performance
Operational Performance Justin Read Finance Director 10
Slide 12: Strong operational performance
Strong operational performance Interim results for the 6 months to 30 June 2013 122 new lettings generating £16.7m of new rental income (up 30%) - £2.6m additional rental income in solicitors’ hands 53 lease re-gears and renewals, securing £7.5m of rental income - Retention rate of 75% (H1 2012:
Slide 13: Financial highlights
Financial highlights Interim results for the 6 months to 30 June 2013 EPRA PBT down £5.9m despite £26.6m NRI impact of disposals/ Neckermann Further reduction in central costs and in cost ratio adjusted for Neckermann Dividend maintained Stable asset values Balance sheet strength – signifi
Slide 14: Net rental income lower due to net effect of capital recycling and Neckermann
Net rental income lower due to net effect of capital recycling and Neckermann £7.0m £(19.5)m £6.2m £2.1m £(7.1)m £(0.6)m £(0.3)m £130.9m £118.7m H1 2012 H1 2012 Currency Developments Acquisitions Disposals Neckermann Like for like net Surrender H1H12013 2013 translation impact rental income premiums
Slide 15: Further cost savings achieved
Further cost savings achieved (including vacant property costs) 35 EPRA total cost ratio1 (%) 30.4% 29.9% 30 28.1% 24.5% 25 22.9% 23.5% 20 22.4% Excluding Neckermann 15 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 H1 2013 H1 2013 H1 2012 Change £m £m % Gross rental income (inc. share of JVs) 165.3 176.5
Slide 16: EPRA NAV per share unchanged
EPRA NAV per share unchanged 9.2p 1.8p (9.9)p (1.1)p 294p 294p EPRA NAV per EPRA EPS FX movements Dividend Realised and EPRA NAV per share as at 31 unrealised share as at 30 December 2012 valuation June 2013 movements 15
Slide 17: Positive portfolio valuation movements
Positive portfolio valuation movements H1 2013 Core warehouse portfolio by asset type 2.5% 2.0% Core ‘industrial’ +0.8% 1.5% 1.0% 0.5% Offices 0.0% 0.0% -0.5% -1.0% -1.5% Non core (2.4)% Logistics Light industrial & urban distribution Data centres Other business space H1 2013 Core warehouse po
Slide 18: Significant reduction in pro forma look through LTV ratio
Significant reduction in pro forma look through LTV ratio £855 million of net proceeds receivable in H2 2013 Used to pay down net debt and pursue profitable reinvestment opportunities Pro forma on balance sheet net debt of £1.3bn2 at 30 June 2013 (3)% (4)% (1)% 52% 44% LTV ratio at IQ Winnersh
Slide 19: Funding strategy
Funding strategy Andrew Pilsworth Head of Corporate Finance 18 Geopost, Enfield
Slide 20: Strong financing metrics
Strong financing metrics 30 June 30 June 31 Dec 2013 2013 2012 Pro forma1 Group: Net borrowings (£m)4 2,132 1,313 2,090 On balance sheet unencumbered property assets 4033 2,964 3,993 LTV on balance sheet4 53% 44% 52% Available funds - cash & undrawn facilities (£m) 325 1,011 449 Gearing (%) 96 65 93
Slide 21: Treasury strategy and priorities
Treasury strategy and priorities Recently announced transactions have strengthened the balance sheet - Substantial increase in liquidity headroom; provides flexibility for future investment - May hold excess cash on balance sheet in the short-term; focus on security of capital - Will actively mana
Slide 22: Summary
Summary Clear strategy and substantial progress in delivering strategic priorities Strong growth drivers Positive operational and financial performance in 2013 to date Balance sheet strength – significantly greater financial flexibility to reinvest 21
Slide 23: Wrap-up and Q&A
Wrap-up and Q&A David Sleath Chief Executive 22
Slide 24: APPENDICES
APPENDICES 23
Slide 25: Pro forma earnings
Pro forma earnings EPRA PBIT £m Reported H1 2013 operating profit 120.0 Pro forma impact of significant H1 2013 transactions Disposals in H1 (1.1) Acquisitions in H1 0.8 Developments completed and let in H1 1.0 Net impact of Neckermann departure 0.9 121.6 Pro forma impact of significant H2 2013 tran
Slide 26: Group debt maturity profile
Group debt maturity profile £600m £500m £400m £300m £200m £100m £0m 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Bonds and Notes Bank debt drawn Cash Undrawn Facilities Average maturity of gross borrowings 7.8 years (31 December 2012: 8.3 years) 25
Slide 27: Forward-looking statements
Forward-looking statements This presentation may contain certain forward-looking statements with respect to SEGRO’s expectations and plans, strategy, management’s objectives, future performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty