Big Yellow Group Plc · LSE:BYG
Big Yellow — FY2018 Earnings Presentation
52 slides from Big Yellow's earnings presentation, 2018
Slide 1: Big Yellow Group PLC Results for the Year ended 31 March 2018
Big Yellow Group PLC Results for the Year ended 31 March 2018
Slide 2: Proven Model
Proven Model • UK self storage penetration in key urban conurbations remains relatively low • 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 • Pro
Slide 3: Key Metrics
Key Metrics 2018 2017 Closing Like-for-Like Occupancy 81.9% 78.0% 3.9ppts Average Achieved Net Rent Per Sq Ft £26.37 £26.16 1% Revenue £116.7 million £109.1 million 7% Like-For-Like Revenue £114.7 million £107.3 million 7% Cash Flow From Operating Activities £63.0 million £56.0 million 13% (After Ne
Slide 4: Highlights
Highlights • Strong occupancy performance driving 7% revenue growth • Closing net rent up 2.7% from 31 March 2017, average rate up 0.8% year on year and up 1.5% in the second half • Cash flow from operating activities (after finance costs) increased by 13% to £63.0 million • Acquisition of new devel
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Portfolio Summary
Portfolio Summary • Like-for-Like closing occupancy 81.9%, an increase of 3.9 ppts • Occupancy growth of 179,000 sq ft for the year (2017: 112,000 sq ft) • Closing net rent up 2.7% from 31 March 2017, average rate up 0.8% year on year and up 1.5% in the second half • Like-for-like revenue up 7% on t
Slide 7: Portfolio Summary – Big Yellow Stores
Portfolio Summary – Big Yellow Stores March March March March March March March March 2018 2018 2018 2018 2017 2017 2017 2017 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
Slide 8: Store Operating Expenses
Store Operating Expenses • Cost of sales varies with revenue Category Year Ended Year Ended % % of store 31.03.18 31.03.17 operating • Utilities reduced £000 £000 costs in year following investment in LED lighting Cost of Sales 2,663 2,391 11% 8% Staff Costs 8,740 8,572 2% 26% • Rates increase partl
Slide 9: Consolidated Income Statement
Consolidated Income Statement Year Ended 31.03.18 31.03.17 £m £m Revenue 116.7 109.1 • Revenue up 7% Cost Of Sales (35.7) (34.1) • Increased revaluation Admin Expenses (10.1) (9.7) gain due to growth in Underlying Operating Profit 70.9 65.3 cash flow and cap rate Revaluation Gain 71.6 43.7 improveme
Slide 10: Adjusted PBT Bridge
Adjusted PBT Bridge Reduction Increase in Increase in in net Increase administrative \ capitalised interest in gross expenses interest payable profit £1.0m £0.6m £0.2m £6.2m £61.4m Adjusted PBT 31 £54.6m March Adjusted 2018 PBT 31 March 2017 • Non recurring items and revaluation movements are not in
Slide 11: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year Ended 31.03.18 31.03.17 £m £m Opening Net Debt (298.0) (295.0) • 13% growth in free cash flow Operating Cash Flow 73.5 67.2 due to growth in EBDAT and Interest (Net) (9.7) (10.9) reduction in interest Tax (0.8) (0.3) • Capex is principally the Free Cash Flow 63.0
Slide 12: Capital Structure
Capital Structure 31.03.18 31.03.17 Net Debt / Gross Property Assets 25% 25% Net Debt / Adjusted Net Assets 31% 31% Pre-Interest Operating Cash Flow Cover 7.6x 6.1x 31 March 2018 Debt Expiry Facility Drawn Average Interest Cost Aviva Loan April 2027 £87.6 million £87.6 million 4.9% M&G Loan June 202
Slide 13: Armadillo – Update
Armadillo – Update • Acquisition of six stores in the year. Exeter, Plymouth and Torquay from Quickstore in April 2017. Stockton South from Store it 4U in December 2017. Gateshead and Newcastle from 1st Storage Centres in March 2018. • Rebranding and investing in stores • Capital spend of £1.5 milli
Slide 14: Armadillo Portfolio Performance
Armadillo Portfolio Performance 2018 2017 Number Of Stores 22 16 At 31 March: Total Capacity (Sq Ft) 963,000 738,000 Occupied Space (Sq Ft) 712,000 551,000 Percentage Occupied 73.9% 74.7% Net Rent Per Sq Ft £16.97 £16.51 For the year: REVPAF £15.09 £14.31 Average Annual Net Rent psf £16.61 £16.36 £0
Slide 15: Marketing and Operational Review
MARKETING AND OPERATIONAL REVIEW
Slide 16: Marketing and Sales Overview
Marketing and Sales Overview • Big Yellow brand remains strong. Nearly eight times higher unprompted awareness of nearest competitor across UK (Source: YouGov Survey April 2018) • 63% of people in London have heard of self storage and know the service. Across the UK this is 58%. (Source: YouGov Surv
Slide 17: Operations Overview
Operations Overview • Prospects in line with last year – demand segments broadly unchanged but improved conversions saw move ins grow by 3% on last year • Operational target is to drive occupancy to 90% • Focus on NPS scores and customer satisfaction – satisfied customers as referrers are a key sale
Slide 18: Local Economy Value of Business Customers
Local Economy Value of Business Customers • External business survey commissioned to assess impact of average Big Yellow store on the local economy • 35% of the Group’s space is occupied by business customers • The average store has over 100 different businesses who between them employ 300 people •
Slide 19: Monthly Activity Levels
Monthly Activity Levels Monthly move ins Monthly move outs 9,000 8,500 10,000 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 Monthly changes in occupancy • Prospects for
Slide 20: 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 1.9m increase in occupied sq ft since March 2007 • Revenue for the year has more than doubled from £56.9m (2008) to £116.7m • More than threefold increase in adjusted EPS from 11.2p (200
Slide 21: Rental Growth Analysis
Rental Growth Analysis Average Number of Average net rent occupancy stores per sq ft growth in the year over the year 0 to 75% 10 0.8% 75 to 80% 20 3.2% 80 to 85% 29 3.5% Above 85% 14 3.5% • The above analysis is a straight average rather than a weighted average • Focus remains on driving occupancy
Slide 22: Property Review
Ar UMN Oe es 2 | | PROPERTY REVIEW > a
Slide 23: New Site Development
New Site Development • Guildford Central opened March 2018, Wandsworth extension in May 2018 • Portfolio approaching 85% occupancy - increased focus on new development • Acquisition of prime sites in Wapping (East London), Bracknell, Slough, Hove and Uxbridge • Development pipeline of approximately
Slide 24: Development Pipeline – London
Development Pipeline – London Site Location Status Anticipated Capacity Camberwell Prominent location on Planning consent recently granted. Construction due to 72,000 sq ft Southampton Way start in November 2018, with a view to opening in Spring 2020. Kings Cross Prominent location on York Planning
Slide 25: Development Pipeline – Outside London
Development Pipeline – Outside London Site Location Status Anticipated Capacity Manchester Prime location on Water Planning consent granted in September 2017. Store 60,000 sq ft Street, central Manchester construction started in March 2018, with a view to opening in Spring 2019. Bracknell Prime loca
Slide 26: Our Portfolio May 2018
O U r Po rtfol | O , suns 9 - 74 Big Yellow stores (40 in London) May 2018 ve under development (4 in London) > v 9 New Big Yellow stores EDINBURGH * 22 Armadillo stores (1 in London) Reverie A putwcions caresnean | \ STOCKTON CENTRAL srocxron sou) Ai(M) ( MORECAMBE gan aes”) Geoonron ( JNORTH FINCH
Slide 27: 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 • Supply remains constrained, particularly in London and other large conurbations • Looking to
Slide 28: Appendix
APPENDIX Additional Financial Information Marketing Review Operations Store Portfolio
Slide 29: Per Store Analysis
Per Store Analysis Year Ended 31 March 2018 67 4 3 All Mature Established Developing 74 Stores Stores Stores Stores Average Store Capacity 62,040 67,750 59,330 62,240 Average Sq Ft Occupied Per Store 51,000 55,750 30,000 50,400 Average % Occupancy 82.2% 82.3% 50.6% 81.0% Average Revenue Per Store (£
Slide 30: 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 31: Big Yellow Relative TSR Performance
Big Yellow Relative TSR Performance Big Yellow FTSE All Share FTSE 350 Real Estate 1,400 1,128.3% 1,200 (15.0% p.a.) 1,000 800 600 400 209.1% (6.5% p.a.) 139.6% 200 (5.0% p.a.) 0 2000 2002 2003 2005 2007 2009 2011 2012 2014 2016 2018 Source: Datastream as 31 March 2018 31
Slide 32: 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 33: The Importance of the Brand
The Importance of the Brand • Self storage is a consumer facing business for both domestic and small businesses markets • Done right, brand sits at the heart of a business and drives its performance • Self storage is an immature market with 70-75% first time users - the interaction at the prospects
Slide 34: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey by Big Yellow run annually for the last 11 years • Monitors our brand awareness • Statistically robust based on omnibus survey across all adult demographic groups - 1,000 sample size London - 2,003 sample size for the rest of the UK
Slide 35: 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?” 35 Source: YouGov Survey April 2018
Slide 36: 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 year 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 br
Slide 37: The Growth Opportunity
The Growth Opportunity • 15% of those surveyed have previously used or are currently using self storage (source: YouGov Survey April 2018) compared to 12% in 2014 • Only 2% of those surveyed were currently using self storage and 9% were thinking of using self storage in the next year (source: YouGov
Slide 38: 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 • 70% are aged 25-54 • 58% of those using Big Yellow because they are moving, own the property they ar
Slide 39: PR and Social Media
PR and Social Media • Generating local PR through store network, based on charitable giving and customer and staff activities • Facebook: Advertising targeting domestics and small businesses • YouTube: We use videos to demonstrate both the product and service Big Yellow provides • Twitter: Listening
Slide 40: Customer Support Centre
Customer Support Centre • Just under 120,000 calls answered in the year ended 31 March 2018 • Over 1,000,000 sq ft reserved by the Customer Support Centre • Customer Support Centre service levels remain high ‒ Average mystery shop score of 96% over the year ‒ Average net promoter score (“NPS”) of 82
Slide 41: 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 42: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space 31 March 2018 Demand Profile of Move-ins only April 2017 to March 2018 April 2016 to March 2017 Moving 43% Business storage 12% Other 12% Decluttering 11% Student storage 10% Home improvements 6% Travelling 6% 42
Slide 43: Length of Stay of Customers Vacating in Financial Year
Length of Stay of Customers Vacating in Financial Year 43
Slide 44: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 31/03/2018 0-3 Years 3-6 Years >6 Years Portfolio 31/03/17 No of Stores 2 3 69 74 73 Business Existing 9.8 19.9 31.3 30.6 29.2 Vacated 4.2 6.6 11.3 11.2 11.1 Total 6.5 10.2 13.4 13.4 13.2 Domestic Existing 7.0 15.6 25.0 24.6 23.2 Vacated 3.
Slide 45: 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 46: Self Storage Market
Self Storage Market – US Market (2017 Fedessa/JLL Report) – Population 324 million – 54,100 self storage centres – 3.1 billion sq ft – 9.5 sq ft per person – Australian Market (2017 Fedessa/JLL Report) – Population 24.5 million – 1,300 self storage centres – 43.6 million sq ft – 1.8 sq ft per person
Slide 47: Store openings: Guildford Central to Chiswick and others
S ——— Guildford Central, March 2018 Twickenham 2, April 2016 Nine Elms, April 2016 Cambridge, January 2016 MLA - 55,000 sq ft MLA ~ 22,000 sq ft MLA - 65,000 sq ft MLA - 60,000 sq ft & a ——a Enfield, April 2015 Chester, February 2015 Oxford 2, July 2014 Gypsy Comer, April 2014 Chiswick, April 2012 M
Slide 48: Store openings: Reading to Barking and others
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 49: Store openings: Kingston to Tolworth and others
[oree re2ne2 | [ ens eronsos} ol = a Zz _EL mw Kingston, August 2006 Bristol Ashton Gate, July 2006 Finchley East, May 2006 Tunbridge Wells, April 2006 Bristol Central, March 2006 MLA -62000sq ft MLA -61000sq ft MLA - 54,000sq ft MLA -57000sq{ft MLA - 64,000sq tt North Kensington, ; Beckenham, May 2
Slide 50: Store openings: New Malden to Richmond and others
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
Slide 51: “4
“4
Slide 52: 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