Big Yellow Group Plc · LSE:BYG
Big Yellow — FY2014 Earnings Presentation
65 slides from Big Yellow's earnings presentation, May 20, 2014
Slide 1: Big Yellow Group PLC Results for the Year ended 31 March 2014
Big Yellow Group PLC Results for the Year ended 31 March 2014 20 May 2014
Slide 2: Proven Model
Proven Model • UK self storage penetration remains relatively low • Very limited new supply in key urban conurbations coming onto the market Attractive Market Dynamics • Resilient through the downturn • Sector growth is positive, with increasing domestic demand • Industry’s most recognised brand • P
Slide 3: Key Metrics
Key Metrics 2014 2013 Occupancy – Wholly Owned Stores 69.8% 64.8% 8% Occupancy Growth – All Stores 200,000 sq ft 174,000 sq ft 15% Occupancy Growth – Wholly Owned Stores 165,000 sq ft 90,000 sq ft 83% Net Achieved Rent Per Sq Ft £26.15 £24.65 6% Revenue £72.2 million £69.7 million 4% Revenue Per Ava
Slide 4: Highlights
Highlights • Growth in all our key store metrics • Year-on-year fourth quarter store revenue increased by 11% to £17.7 million (same quarter last year: £16.0 million) • Cash flows from operating activities (after finance costs) increased by 9% to £32.8 million • 49% increase in the total dividend fo
Slide 5: Dividend
Dividend • Payout increased in year to 80% of adjusted eps • Final Dividend of 8.4p per share (2013: 6p) • Property Income Dividend (PID) element of 13p • Total Dividend of 16.4p per share (2013: 11p), up 49% • The total dividend declared represents 70% of free cash flow for the year 5
Slide 6: Financial Review
FINANCIAL REVIEW Appendix 6 6
Slide 7: Portfolio Summary
Portfolio Summary • Wholly owned store occupancy increase of 73,000 sq ft in Q4 to 69.8% • Closing net rent £26.15 psf, up 6.1% from prior year end • Average net rent for the year £25.54, down 2% from prior year (VAT impact) • Store revenue up 4% and REVPAF up 4% on the year • Store operating expens
Slide 8: Portfolio Summary
Portfolio Summary March March March March March March Wholly Owned Stores 2014 2014 2014 2013 2013 2013 Established Lease-Up Total Established Lease-Up Total Number Of Stores 32 22 54 32 22 54 At 31 March: Total Capacity (Sq Ft) 1,930,000 1,491,000 3,421,000 1,941,000 1,491,000 3,432,000 Occupied Sp
Slide 9: Consolidated Income Statement
Consolidated Income Statement Year Ended: 31.03.14 31.03.13 £m £m Revenue 72.2 69.7 • Established store revenue down Cost Of Sales (25.1) (24.5) 1% Lease-up store revenue up 12% Admin Expenses (7.6) (7.7) Underlying Operating Profit 39.5 37.5 • Cost of sales increase due to Revaluation Gain 28.3 9.5
Slide 10: Adjusted PBT Bridge
Adjusted PBT Bridge Reduction in net Increase in Increase in interest Increase in administrative capitalised share of payable Increase expenses interest recurring in gross profit of JV profit £1.1m £(0.1)m £0.2m £0.5m £29.2m £2.0m Adjusted PBT 31 March £25.5m 2014 Adjusted PBT 31 March 2013 10
Slide 11: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year Ended: Year Ended: 31.03.14 31.03.13 £m £m Opening Net Debt (230.5) (273.9) • 9% growth in free cash flow Cash From Operations 43.3 42.0 Interest (Net) (10.5) (11.8) • Interest 4.1x covered by cash Free Cash Flow 32.8 30.2 from operations Non-Recurring Finance Co
Slide 12: Capital Structure
Capital Structure 31.03.14 31.03.13 Net Debt / Gross Property Assets 28% 30% Net Debt / Adjusted Net Assets 36% 39% Pre-Interest Operating Cash Flow Cover 4.1x 3.5x Amount of Debt Weighted Average £m Interest Cost Aviva Fixed Rate Loan – Expiry April 2027 96.4 4.9% Fixed Rate Bank Debt – Expiry Sept
Slide 13: Movement in Investment Property
Movement in Investment Property £m Investment Property At 1 April 2013 745.6 Additions 1.7 Capital Goods Scheme Receivable 1.2 Transfer To Surplus Land (1.3) Gain On Revaluation 29.2 Investment Property At 31 March 2014 776.4 13
Slide 14: Movement in Adjusted EPRA NAV
Movement in Adjusted EPRA NAV £m EPRA Adjusted NAV Per Share 1 April 2013 594.5 419.2 Adjusted Profit 29.2 20.6 Equity Dividends Paid (19.6) (13.8) Revaluation Movements (Including Share Of BYLP) 27.7 19.5 Movement In Purchaser’s Cost Adjustment 1.4 1.0 Other Movements (e.g. Share Schemes) 1.2 - 31
Slide 15: Per Store Analysis
Per Store Analysis Year Ended 31 March 2014 Established Lease-up BYLP Stores Stores Stores Number Of Stores 32 22 12 Average Store Capacity 60,312 67,773 62,417 Closing Sq Ft Occupied Per Store 45,375 42,545 37,000 % Occupancy 75.2% 62.8% 59.3% Average Revenue Per Store £1,363,000 £1,231,000 £794,00
Slide 16: Portfolio Summary - BYLP
Portfolio Summary - BYLP March March 2014 2013 Number Of Stores 12 12 As At 31 March: Total Capacity (Sq Ft) 749,000 749,000 Occupied Space (Sq Ft) 444,000 409,000 9% Percentage Occupied 59.3% 54.6% Closing Net Rent Per Sq Ft £18.01 £16.72 8% For The Year: REVPAF £12.72 £11.14 14% Average Annual Net
Slide 17: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33.3% Interest £000 Investment At 1 April 2013 17,681 Share Of Operating Profit 1,524 Net Interest Payable (940) Fair Value Of Derivatives 258 Loss On Revaluation (662) Share Of Partnership Net Assets At 31 March 2014 17,861 17
Slide 18: Operations Review
OPERATIONS REVIEW Appendix 18 18
Slide 19: Overview
Overview • SSA survey confirms domestic demand growth in 2013 • 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, mobi
Slide 20: Armadillo
Armadillo • Portfolio put up for sale in year – Big Yellow managed since 2009 • Forms part of our operating platform and valuable fee income • Acquired in April 2014 with an Australian consortium • Price paid by JV £19.75m, with bank debt of £11m from Lloyds Bank • Group initially invested £3.6m (38
Slide 21: 11% Improved Move-in Activity Over Year
11% Improved Move-in Activity Over Year Year ended Year ended Increase Net Move-ins In Wholly 31 March 31 March Move-ins Owned Stores 2014 2013 Q1 April-June 14,752 13,844 7% 3,609 Q2 July-September 16,129 14,973 8% (168) Q3 October-December 12,247 10,738 14% (1,680) Q4 January-March 12,873 11,047 1
Slide 22: Rental Growth Analysis – Wholly Owned Stores
Rental Growth Analysis – Wholly Owned Stores Average Net rent per sq ft growth occupancy over the year in the year 0 to 60% 4.4% 60 to 70% 4.7% 70 to 80% 6.4% Above 80% 8.2% • Price increases to domestic customers reinstated in March 2013 (suspended July 2012 with VAT applying from 1 October 2012) •
Slide 23: Industry Market Research
INDUSTRY MARKET RESEARCH Appendix 23 Source: Deloitte/SSA UK 2014 Annual Survey, YouGov Market Research 23
Slide 24: Thinking about the next 12 months, which best applies to you?
Thinking about the next 12 months, which, if any of the following, best applies to you? I am not using / considering using self storage in the next 12 months I am considering using self storage in the next 12 months I am currently using self storage Don’t know Source: YouGov Survey of 2,138 adults r
Slide 25: Which one of the following best applies to you?
Which one, if any, of the following do you think best applies to you? 39% 31% 18% 7% 5% I have I have never heard IIhave never haveheard heardof I Ihave have heard heard of I Ihave haveheard heardof Don’t know Don't know heard of self of self storage of self storage of self storage of self self stor
Slide 26: How many self storage businesses can you think of locally?
How many self storage businesses can you think of in your local area? 31% 30% 28% 29% 22% 18% 17% 11% 4% 5% 3% 1% 1% 1% 0% 0% Don't 0 - none 1 2 3 4 5 More than know/ 5 can't recall UK London Source: YouGov Survey of 2,138 adults reported in Deloitte/SSA UK 2014 Annual Survey
Slide 27: Which self storage brands can you think of?
Which, if any, self storage brands can you think of? Don't know, Big Yellow, 20% 22% Access, 1% Self Store, 2% Other, 6% Pickfords, 1% Lok’n Store, 1% Shurgard, 1% Armadillo, 1% Safestore, 3% None, 47% Source: YouGov Survey of 2,138 adults reported in Deloitte/SSA UK 2014 Annual Survey
Slide 28: Facilities In The Survey By Year Opened
Facilities In The Survey By Year Opened All facilities: year opened 45 40 35 30 25 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year opened Source: YouGov Survey of 2,138 adults reported in Deloitte/SSA UK 2014 Annual Survey
Slide 29: Conclusion
Conclusion • Solid results for the year • Operational focus on driving occupancy, revenue and cash flow growth • Group capital structure provides strong foundation for future growth • First full year of dividend payout of 80% of eps, 16.4p per share • Q4 momentum continues into current year • Lookin
Slide 30: Appendix: Store Portfolio, Marketing Review
APPENDIX Store Portfolio Marketing Review Operations 30 Additional Financial Information
Slide 31: Big Yellow Stores May 2014
Big Yellow Stores May 2014 Wholly Owned Stores Wholly owned stores under development Stores trading in Big Yellow Limited Partnership Armadillo Stores London 38 stores and sites Outside London 42 stores and sites 31
Slide 32: Property Summary
Property Summary • Since September 2007, we have opened 24 stores, 13 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 in the wholly owned Group is within the M25 • 74% of revenue from London, 89% from London and the So
Slide 33: Property Summary
Property Summary VALUATION METRICS Established Lease-Up All Wholly Store Store Owned Stores Portfolio Portfolio Valuation At 31 March 2014 £416.4m £360.0m £776.4m Occupancy At 31 March 2014 75.2% 62.8% 69.8% Stabilised Occupancy Assumed In Valuations 81.5% 80.5% 81.1% Initial Yield Pre-Admin Expense
Slide 34: Gypsy Corner – 70,000 sq ft
Gypsy Corner – 70,000 sq ft 34
Slide 35: Chiswick, New Cross, Stockport and other stores
Chiswick, April 2012 New Cross, February 2012 MLA - 75,000 sq ft MLA - 60,000 sq ft Stockport, September 2011 MLA - 60,000 sq ft Gypsy Comer, April 2014 Eltham, April 2011 Camberley, January 2011 High Wycombe, June 2010 MLA -70,000 sqft MLA ~70,000 sq ft MLA ~ 68000 sq ft MLA - 60,000 sq ft
Slide 36: Reading, Sheffield, Poole and other stores
Reading, December 2009 Sheffield Bramall Lane, Poole, August 2009 Nottingham, August 2009 Edinburgh, July 2009 MLA - 62,000 sq ft September 2009 MLA -60,000sqft MLA~-53,000sq ft MLA ~ 65,000 sq ft MLA ~- 63,000 sq ft LL. me a Twickenham, May 2009 : Bromley, March 2009 Birmingham, February 2009 Sheen
Slide 37: Bristol, Finchley, Tunbridge Wells and other stores
Bristol Ashton Gate, July 2006 Finchley East, May 2006 Tunbridge Wells, April 2006 Bristol Central, March 2006 MLA - 62000 sa ft MLA - 61000 sq ft MLA ~ 54000 sq ft MLA - 57,000 sq ft MLA - 64,000 sq ft Kingston, August 2006 ifs BE i = North Kensington, Leeds, July 2005 Beckenham, May 2005 Tolworth,
Slide 38: New Malden, Hounslow, Battersea and other stores
New Malden, May 2002 Hounslow, December 2001 Battersea, December 2001 Ilford, November 2001 Cardiff, October 2001 MLA - 81000 sq ft MLA - 54,000sq ft MLA - 34,000 sq ft MLA - 58,000 sq ft MLA -74,000 sq ft Taw i Portsmouth, October 2001 Norwich, September 2001 MLA - 61000 sq ft MLA - 47,000 sq ft Wa
Slide 39: Slide 39
Slide 40: 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 41: Research of Brand and Market Awareness
Research of Brand and Market Awareness • YouGov commissioned survey run annually for the last 8 years • Monitors our brand awareness • Statistically robust based on omnibus survey across all adult demographic groups - 1,523 sample size London - 2,360 sample size for the rest of the UK 41
Slide 42: 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 60% 56% 25% 21% 50% 20% 40% 15% 30% 20% 10% 10% 10% 6% 4% 1% 5% 2% 1% 1% 0.52% 0% 0% Big Yellow Safestore Access Big Yellow Safestore Access Shurgard Big Box Lok n Store Armad
Slide 43: High Brand Awareness = High Online Market Share
High Brand Awareness = High Online Market Share • A significant proportion of web visits 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 generic terms e.g. “self storage”
Slide 44: The Growth Opportunity
The Growth Opportunity • Only 12% of those surveyed have used self storage before or are currently using storage • Low historic use with 75% 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 w
Slide 45: 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 46: The Big Yellow Mobile Site
The Big Yellow Mobile Site • 42% of our web traffic in April 2014 came from mobile devices (including tablets and smartphones) • Up from 34% last April • Store locater, online prices, reservation and check-in online • Ongoing mobile developments 46
Slide 47: Ongoing Consumer PR
Ongoing Consumer PR • Our regular PR stories allow us to talk about self storage and its benefits − Mancave: Lifestyle trends for men to have their own space in the home − SME Growth: A look at the benefits and risk free flexibility of SMEs using self storage to grow their businesses • Radio intervi
Slide 48: Customer Support Centre
Customer Support Centre • Over 130,000 calls answered in the year to 31 March 2014 • Reservations taken were up 27% on the prior year • Over 750,000 sq ft of space moved in during the year was reserved by the Customer Support Centre • Focus on call quality increased prospect conversion by 30% 48
Slide 49: National Accounts
National Accounts • 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 provide a range of business services, including accepting deliveries so customers need not be o
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: Self Storage Market
Self Storage Market – US Market (2013 Self Storage Almanac) – 52,500 self storage centres – 2.52 billion sq ft – 7.3 sq ft per person – Population 345 million – Australian Market (2013 Self Storage Almanac) – 1,282 self storage centres – 32.9 million sq ft – 1.5 sq ft per person – Population 22.5 mi
Slide 52: 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 53: Big Yellow Self Storage Users
Big Yellow Self Storage Users • Domestic − 67% by space, 82% by number − Urbanites, professionals, families, students • Business − 33% by space, 18% by number − National Accounts, SMEs, Home Office, e-tailers, start ups • Length of Stay − 34% customers in established stores > three years − A further
Slide 54: Reasons For Using Self Storage
Reasons For Using Self Storage Overall Occupied Space at 31 March 2014 Demand Profile of Move-ins - April to March 2014 April to March 2013 Moving 50% Business storage 13% Decluttering 12% Other 8% Student storage 8% Home improvements 5% Travelling 4% 54
Slide 55: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 55
Slide 56: Length of Stay of Customers Vacating in Financial Year
Length of Stay of Customers Vacating in Financial Year 56
Slide 57: Customer Average Length of Stay
Customer Average Length of Stay As at 1-2 Years 2-5 Years >5 Years Portfolio 31/03/2014 No of Stores 1 10 55 66 Domestic Existing 6.6 10.3 23.1 21.2 Vacated 3.2 4.0 6.9 6.7 Total 4.1 4.9 7.8 7.6 Business Existing 8.4 14.8 31.1 28.2 Vacated 3.2 6.1 11.1 10.8 Total 5.5 8.4 13.2 12.9 All Existing 7.0 1
Slide 58: 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 58
Slide 59: Established Store REVPAF vs 12 Month Rolling GDP
Established Store REVPAF vs 12 Month Rolling GDP VAT Impact VAT Impact 59
Slide 60: Established Store REVPAF vs Mortgage Approvals
Established Store REVPAF vs Mortgage Approvals VAT Impact 60
Slide 61: Changing Correlations Over Time
Does Leverage Affect Share Price? Changing Correlations Over Time Positive Correlation Global Financial Crisis: Lehman Bros Leverage has a positive effect on share price Net Debt / Market Cap Net Debt / Total Equity Net Debt / Total Capital Zero Correlation Net Debt / Common Equity Leverage has no e
Slide 62: Leverage Effect: Impact Of Deleverage on Share Price
Leverage Effect: Impact Of Deleverage on Share Price: Non-Linear At the peak of the credit boom 43% leverage was optimal Leverage = Net Debt / Total Assets Note: Sample for this analysis includes UK companies only Post-Crisis 23% leverage is optimal 10% leverage is optimal during GFC Increment or De
Slide 63: 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 64: 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
Slide 65: Appendix
Appendix 65 65