Big Yellow Group PLC · LSE:BYG
Big Yellow — H1 2010 Earnings Presentation
57 slides from Big Yellow's earnings presentation, November 2010
Slide 1: Big Yellow Group PLC Results for the Six Months ended 30 September 2010
Big Yellow Group PLC Results for the Six Months ended 30 September 2010 November 2010 1
Slide 2: Highlights
Highlights ● Occupancy growth 209,000 sq ft across all stores in the period (2009: 96,000 sq ft), 3,400 sq ft growth per store ● Wholly owned occupancy growth of 151,000 sq ft (2009: 62,000 sq ft) ● Revenue £31.1 million, up 8% v. the six months to 31 March 2010 (£28.8 million) and up 7% year on yea
Slide 3: Highlights
Highlights ● High Wycombe opened in Big Yellow Limited Partnership. 61 stores now open (3.8 million sq ft). Nine in the pipeline (0.6 million sq ft) ● Planning consent granted for a 75,000 sq ft store in Chiswick, fronting the A4, with high visibility from the M4 flyover. Of our nine development sit
Slide 4: Portfolio Summary
Portfolio Summary Sept Sept Sept Sept Sept Sept 2010 2010 2010 2009 2009 2009 Established Lease-Up Total Established Lease-Up Total Number of stores 32 19 51 32 19 51 At 30 September: Total capacity (sq ft) 1,941,000 1,288,000 3,229,000 1,944,000 1,284,000 3,228,000 Occupied space (sq ft) 1,427,000
Slide 5: Portfolio Summary - BYLP
Portfolio Summary - BYLP September 2010 September 2009 Number of stores 10 8 As at 30 September: Total capacity (sq ft) 616,000 494,000 Occupied space (sq ft) 175,000 77,000 Percentage occupied 28% 16% Net rent per sq ft £18.87 £17.73 Annualised revenue (£000) 4,294 1,408 For the 6 month period: Ave
Slide 6: Financial Review
Financial Review November 2010 6
Slide 7: Consolidated Income Statement
Consolidated Income Statement Year ended: Six months ended: 31.03.10 30.09.10 30.09.09 £m £m £m 58.0 Revenue 31.1 29.2 (22.1) Cost of Sales (11.9) (11.8) (6.8) Admin Expenses (3.4) (3.4) 29.1 Underlying Operating Profit 15.8 14.0 (3.6) Revaluation Surplus / (Deficit) 4.3 (14.2) (2.1) Losses on Prope
Slide 8: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – six months ended 30.09.09 7.7 Gross profit increase 1.8 Interest expense saving (net) 0.1 Increase in capitalised interest 0.2 Increase in share of BYLP recurring loss (0.1) Adjusted PBT - six months ended 30.09.10 9.7 8
Slide 9: Cost of Funding
Cost of Funding Amount of Debt Weighted Amount of Debt Weighted At Sept 2010 Average At Sept 2009 Average Interest Cost Interest Cost At Sept 2010 At Sept 2009 £m % £m % Fixed Rate Debt 190.0 4.5 190.0 4.5 Floating Debt 90.0 1.7 121.3 1.7 Total Debt 280.0 3.6 311.3 3.4 The core banking facility expi
Slide 10: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Six Months ended: Year ended: 30.09.10 30.09.09 31.03.10 £m £m £m Opening Net Debt (269.4) (308.1) (308.1) Cash from Operations 17.5 14.2 31.3 Interest (Net) (5.6) (6.3) (12.2) Dividends Paid (5.2) - - Total Capital Expenditure (6.5) (4.3) (14.4) Surplus Land Sales - -
Slide 11: Revaluation Movement in the Period
Revaluation Movement in the Period £m (1) 51 open stores at 30 Sept 2010 Value increase 4.6 Capex in year (0.8) 3.8 (2) 7 sites – investment property Value increase 5.0 under construction Capex in year (4.5) 0.5 4.3 11
Slide 12: Property Accounts Valuation
Property Accounts Valuation Freehold – 44 – 10 year DCF assuming notional sale at year ten – Initial yield of 5.2% going to stabilised yield pre-admin expense assuming no growth of 8.3% (March 2010: 8.4%) – Weighted average occupancy 83.7% (March 2010: 84.2%) at maturity – Purchaser’s costs – 5.75%
Slide 13: Movement in Adjusted Diluted NAV per Share
Movement in Adjusted Diluted NAV per Share £m No of Diluted Shares Pence Per Share Adjusted NAV at 31 March 2010 593.8 131.0 453.3 Revaluation movements (including share of BYLP) 6.7 5.1 Purchaser’s Costs adjustment (net movement) 0.3 0.2 Adjusted Profit 9.7 7.4 Dividend (5.2) (4.0) Other movements
Slide 14: Banking Covenants
Banking Covenants • The Group was comfortably in compliance with its banking covenants at 30 September 2010: At Covenant 30 September 2010 Minimum income cover on Tranche B properties 1.4 x 3.98x Minimum net assets £250 million £551 million Maximum gross loan to net assets gearing 1.3:1 0.51:1 • The
Slide 15: Financial Gearing Levels
Financial Gearing Levels 30.09.10 30.09.09 Net Debt / Gross Property Assets 33% 34% Net Debt / Adjusted Net Assets 44% 48% Group EBITDA Interest Cover for the six month period 2.76x 2.45x 15
Slide 16: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33% Interest £000 Investment at 1 April 2010 12,105 Subscription for capital and advances 333 Share of operating loss (3) Net interest payable and fair value of derivatives (437) Gain on revaluation 2,344 Gain on the disposal of surplus land 33 Share of Part
Slide 17: Stores
Stores 17
Slide 18: Improved Year-on-Year Move-in Activity
Improved Year-on-Year Move-in Activity Move-ins 2010 2009 % 2,783 2,553 9 April 3,502 2,904 21 May 4,706 3,900 21 June 4,399 3,446 28 July 4,006 3,454 16 Aug 3,576 3,019 18 Sep 22,972 19,276 19 Total Note: This analysis is for wholly owned stores and is the same 51 stores in each year 18
Slide 19: Store Performance
Store Performance • Opened a 60,000 sq ft store in High Wycombe (within BYLP) • 61 stores (2009: 59) trading at period end. Total capacity 3.8 million sq ft (2009: 3.7 million sq ft) • 209,000 sq ft occupancy growth in the period, 3,400 sq ft per store • All wholly owned stores: − Closing occupancy
Slide 20: High Wycombe, 60,000 sq ft
High Wycombe, 60,000 sq ft 20
Slide 21: Big Yellow Self Storage Users
Big Yellow Self Storage Users 21
Slide 22: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 22
Slide 23: Length of Stay of Customers Move-Outs in Calendar Year
Length of Stay of Customers Move-Outs in Calendar Year 23
Slide 24: Customer Average Length of Stay
Customer Average Length of Stay At 30 Sep Stores - Number of Months 2010 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 30 Sept 2009 No of Stores 2 10 15 34 61 59 Domestic Existing 2.7 5.3 10.6 20.4 17.2 16.8 Vacated 1.9 2.8 4.5 6.7 6.4 6.3 Total 2.4 3.6 5.9 8.2 7.8 7.8 Business Existing 3.5 6.9 12
Slide 25: Marketing and the Brand
Marketing and the Brand 25
Slide 26: Prospect Source
Prospect Source • Conversion rates differ between the three channels 26
Slide 27: Search
Search • Search delivers 80% of online sales leads • Dominant position in natural listings on Google • Benefit of SEO (free listings) is the cost per prospect is minimal • Managing the balance of paid for listings and SEO 27
Slide 28: Self Storage & Big Yellow – London
Self Storage & Big Yellow – London Source: YouGov, September 2010. Figures are for prompted awareness. 28
Slide 29: Self Storage & Big Yellow - UK
Self Storage & Big Yellow - UK Source: YouGov, September 2010. Figures are for prompted awareness. 29
Slide 30: Marketing Strategy
Marketing Strategy • Leveraging the Big Yellow Brand with focus on the internet • Ongoing website development to improve the customer experience • Research has shown that our buildings are a significant contributor to Brand awareness • This, combined with strong online presence, gives us a competiti
Slide 31: Online
Online • Quote, reserve and check in online • Price transparency • Check in online − 35% of new customers use the service at present − Greater operational efficiency • Live online customer reviews (independently managed) − Over 3,400 reviews have been published − Over 50% of reviews awarded an overa
Slide 32: Online Innovation
Online Innovation • Objective is to create a growing Big Yellow online community • Social Media − Committed to engaging with social media − Customer profiling − We see social media as complementary to existing online marketing • Online PR 32
Slide 33: Pricing Strategy
Pricing Strategy • Transparency online • Standard offer across all stores − 50% off for up to your first 8 weeks • Dynamic Pricing – positive and negative • Price Promise • Focus on Value • Existing Customer Price Increases 33
Slide 34: Property
Property 34
Slide 35: Big Yellow Stores September 2010
Big Yellow Stores September 2010 London - 38 stores and sites Outside London - 42 stores and sites 35
Slide 36: London Stores
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Slide 37: Property Review
Property Review • All bar one site have planning consents • Development pipeline of 9 sites, 586,000 sq ft of net lettable space −Pramerica JV: 2 sites, 125,000 sq ft, both with planning −Wholly owned: 7 sites, 461,000 sq ft, 6 with planning − Manchester planning discussions are ongoing • £21 millio
Slide 38: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Status Anticipated Capacity Chiswick, West On the A4, high visibility from M4 flyover, currently Consent granted, vacant 75,000 sq ft London occupied by Sotheby’s possession granted early 2011 Eltham, Junction of A20 and A205, on busy South Circular Unde
Slide 39: Cost to Complete
Cost to Complete Eltham, New Cross & Enfield, Gypsy & Total Chiswick Guildford Book value £23.3m £13.7m £37.0m Cost to complete* £21.5m £18.9m £40.4m Total cost £44.8m £32.6m £77.4m Sq ft provided 205,000 186,000 391,000 Cost per sq ft £219 £175 £198 *cost to complete includes irrecoverable VAT at 2
Slide 40: Dividend
Dividend ● Half year total dividend of 4p per share ● Property Income Dividend (PID) element of 2p ● Focus on growing sustainable dividend Dividend Cover Six months to 30 September 2010 On EPRA earnings per share 1.86x On Operating cash flow after finance costs 2.30x 40
Slide 41: Conclusion
Conclusion • Current trading and outlook • Opportunity to leverage off market leading brand • Growth potential from existing platform – 60% to 85% • Value creation of new stores • Dividend 41
Slide 42: Appendix
Appendix 42
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Slide 44: Store photos
44 d f petoes oki em Fie ‘November 2003 Byfleet, MLA -48000 sqft Bristol Ashton Gate, July 2006 ‘Kingston, August 2006 MLA - 61000 sqft MLA - 61000 sx
Slide 45: Poole, August
45 Poole, August MLA -53000 sqft
Slide 46: CCTV and individually alarmed
46 24 hour CCTV & individually alarmed
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Slide 49: 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 50: Self Storage Market
Self Storage Market The Market – US Market (2010 Self Storage Almanac) – 48,700 self-storage centres – 2.6 billion sq ft – 7.26 sq ft per person – Population 307 million – UK Market (2009 Mintel/SSA Survey) – 750 self-storage centres (excluding containers) – 27 million sq ft – 0.45 sq ft per person
Slide 51: Self Storage Market
Self Storage Market • Key Influencers – Public awareness – low, new growing market – Population mobility and density – Physical planning and constraints, smaller homes – Focus on high density development on brownfield sites – Rising disposable incomes with GDP growth – Housing demand, divorce, singl
Slide 52: UK Market Potential
UK Market Potential • Awareness of self-storage (2010 You Gov Market Research) – Currently 54% approximately in London with reasonable knowledge of product – Lower in other major cities – 80% brand awareness of Big Yellow in London • Significant advertising and promotion raising awareness • Better l
Slide 53: Big Yellow Model
Big Yellow Model • Leading Brand – attractive modern premises – prominent main road frontages – high quality fit out – broad client base – ancillary packing materials and insurance sales • Customer Focus – customer service/loyalty – safe/secure – easy access 7 days a week, 24 hours per day • Financi
Slide 54: REITs
REITs • Conversion charge now agreed with HMRC with no further charge payable • Approximately 86% of our revenue currently tax exempt • Comfortably meets the 75% gross asset test at 30 September 2010 • PID of 2 pence per share payable for the six month period • All REIT tests met to date 54
Slide 55: Big Yellow Limited Partnership
Big Yellow Limited Partnership • Partnership with Pramerica to develop stores outside of the M25 – £16 million Big Yellow likely equity commitment – £32 million Pramerica likely equity commitment – £75 million development loan facility from RBS/HSBC/HSH • Fees earned by Big Yellow from venture site
Slide 56: Purchaser's Cost Assumption
Purchaser’s Cost Assumption • We believe 2.75% is more representative of the cost to be paid by a prospective purchaser for these assets • Business asset valuation • Precedent – self storage transactions • Why? – Operational assets – Novation of maintenance and supplier contracts – Management and st
Slide 57: 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