Big Yellow Group PLC · LSE:BYG
Big Yellow — H1 2008 Earnings Presentation
35 slides from Big Yellow's earnings presentation, November 2007
Slide 1: Big Yellow Group PLC Results for the Six Months and Second Quarter
Big Yellow Group PLC Results for the Six Months and Second Quarter ended 30 September 2007 November 2007 1
Slide 2: Financial Review
Financial Review November 2007 2
Slide 3: Financial Highlights
Financial Highlights 2nd quarter Six months ended ended 30.09.07 30.09.07 Annualised Revenue £57.8m +5% £57.8m +16% Revenue £15.1m +12% £28.6m +17% Profit before tax £46.3m -21% Adjusted profit before tax 1 £7.2m +3% Basic earnings per share 40.10p +5% Adjusted earnings per share 2 5.89p +32% Adjust
Slide 4: Consolidated Income Statement
Consolidated Income Statement Year ended: Six months ended: 31.03.07 30.09.07 30.09.06 £’m £’m £’m 51.2 Revenue 28.6 24.4 (18.5) Cost of Sales (11.1) (9.0) (5.6) Admin Costs (3.0) (2.6) 27.1 Underlying Operating Profit 14.5 12.8 138.3 Revaluation Surplus 39.8 51.4 (1.1) Gain on sale of Assets 0.1 -
Slide 5: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT - 7.0 six months ended 30.09.06 Gross profit improvement 2.4 Interest expense (net) (1.9) Administration expense (0.3) Adjusted PBT - six months ended 30.09.07 7.2 5
Slide 6: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Six Months ended: Year ended: 30.09.07 30.09.06 31.03.07 £m £m £m Opening Net Debt (187.9) (142.1) (142.1) Adjusted cash from Operations 16.4 14.2 30.2 Share option movements (0.4) 2.7 - Interest (Net) (8.0) (5.2) (13.4) REIT conversion charge (12.0) - - Dividends Paid
Slide 7: Gearing Levels
Gearing Levels 30.09.07 31.03.07 30.09.06 Net Debt / Gross Property Assets 32% 27% 29% Net Debt / Adjusted Net Assets 45% 36% 36% Interest Cover based on NOI* 2.3 2.5 2.6 • Conservative balance sheet and healthy income cover • Partnership with Pramerica is anticipated to improve interest cover * Bas
Slide 8: Cost of Debt
Cost of Debt Weighted Average Weighted average Amount of debt Interest Cost Interest cost September 2007 September 2007 March 2007 £’m % % Fixed Rate Debt 150 6.17 6.04 Floating Debt 101 6.77 6.38 Total Debt 251 6.41 6.34 • Two swaps entered into during the period, fixing a total of £80 million at 6
Slide 9: Portfolio Summary
Portfolio Summary Years since opening as at 1 Sept Sept Sept Sept Sept Sept April 2007 2007 2007 2007 2006 2006 2006 >2 years <2 years Total >2 years <2 years Total Number of stores 32 11 43 32 9 41 As at 30 Sept 2007: Total capacity (sq ft) 1,949,000 684,000 2,633,000 1,949,000 503,000 2,452,000 Oc
Slide 10: Capex Summary
Capex Summary Sept Sept Sept 2007 2007 2007 > 2 years < 2 years Total No of Stores 32 11 43 £’m £’m £’m To 30 September 2007 158.4 77.1 235.5 To complete - 2.4 2.4 Total Cost 158.4 79.5 237.9 Freehold 141.3 79.5 220.8 Leasehold (8 stores) 17.1 - 17.1 158.4 79.5 237.9 10
Slide 11: Store Trading Performance
Store Trading Performance • 43 stores (2006: 41) trading at period end. Total capacity 2.63 million sq ft (2006: 2.45 million sq ft) • Occupancy increased by 126,000 sq ft (2006: 1,792,000 sq ft) to 1,918,000 sq ft, up 7% • 32 stores open more than 2 years at beginning of period: − Average occupancy
Slide 12: REITs and Taxation
REITs and Taxation • Conversion confirmed effective 15 January 2007 • Conversion charge – Paid £12 million in full in July 2007 – Subject to final agreement with HMRC • Approximately 87% of our business currently tax exempt, vs 75% test • Comfortably meets the 75% gross asset test at 30 September 20
Slide 13: Formation of partnership with Pramerica
Formation of partnership with Pramerica • Established partnership with Pramerica to develop stores in the midlands, north of England and Scotland • £25 million of equity from Big Yellow, £50 million of equity from Pramerica in partnership • £75 million development loan secured from Royal Bank of Sco
Slide 14: Funding Strategy
Funding Strategy • Capex Funding − Debt – given increased dividend payment − Partnership with Pramerica • Bank Facilities − Current Facilities • RBS / Bank of Ireland / Barclays - £275 million • Committed facility extension from Lloyds TSB for a further £50 million • Net Debt at 30 September £250.1
Slide 15: Property Review
Property Review November 2007 15
Slide 16: Property Accounts Valuation
Property Accounts Valuation As at 30 September 2007 Freehold – 10 year DCF assuming notional sale at year ten – Cap yield of year one NOI @ 5.39% (March 2007: 5.24%), rising to 6.75% (March 2007: 6.80%) in year after final stabilisation – Weighted average occupancy 86% (Sept 2006: 86%) at maturity –
Slide 17: Investment Property Valuation
Investment Property Valuation £’000 Deemed Revaluation Valuation Cost on deemed cost 36 Freehold Centres As at 1 April 2007 192,951 328,469 521,420 Movement in Period 19,392 38,578 57,970 Transfer on purchase of freehold 1,649 2,401 4,050 213,992 As at 30 Sept 2007 369,448 581,790 8 Leasehold Centre
Slide 18: Revaluation Movement in the Period
Revaluation Movement in the Period £m (1) 43 storage centres at 31 March 2007 Value Increase 40.5 Capex in period (8.5) 32 (2) 1 new storage centre opened – Sutton Value 18.8 Cost (11.0) 7.8 39.8 6% increase in gross valuation of existing 43 storage centres was 0.5% capital growth and 5.5% operating
Slide 19: 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 2007 517.1 118.1 437.8 Other items (including option exercises) (1.5) 0.4 515.6 118.5 435.0 Revaluation Surplus – Investment Properties 39.8 33.6 Purchaser’s Costs adjustment (net movement) 2.
Slide 20: Property Review
Property Review • Sites acquired for development – 9 in the year to date (3 in London plus Reading, Birmingham, Camberley, Sheffield, Edinburgh and Guildford) • 6 planning consents since April 2007 • Development pipeline of 29 sites, 1.87 million net lettable space, 61% by net lettable space is in L
Slide 21: Planning Status
Planning Status No Stores Stage 1 5 Recently acquired / early design / feasibility review Stage 2 10 Pre-application consultation with planners Stage 3 1 Detailed application submitted after detailed and positive pre-application discussions Stage 4 1 Appeal Stage 5 12* Consents received as at 27 Nov
Slide 22: Big Yellow Stores
Big Yellow Stores November 2007 London - 41 stores and sites Outside London - 31 stores and sites 22
Slide 23: ; Bibel Hn
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Slide 24: Conclusion
Conclusion • Strong Development Pipeline • Valuation • Partnership with Pramerica • Current Trading • Outlook 24
Slide 25: Appendix
Appendix 25
Slide 26: History
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 million • June
Slide 27: Self Storage Market
Self Storage Market The Market – US market (2007 Self Storage Almanac) – 43,000 self-storage centres – 2 billion sq ft – 6.5 sq ft per person – Occupancy range of 82-89% since 1990 – Population 300 million – 4 to 5% of US REIT Market – UK market – 680 self-storage centres (excluding containers) – 25
Slide 28: 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 – Growth in housing demand, divo
Slide 29: UK Market Potential
UK Market Potential • Awareness of self-storage (2007 Ipsos Mori Market Research) – Currently 30-35% approximately in London with reasonable knowledge of product – Lower in other major cities – 58% brand awareness Big Yellow in London • Significant advertising and promotion raising awareness • Bette
Slide 30: Big Yellow Model
Big Yellow Model • Premium Brand – attractive modern premises – prominent main road frontages – high quality fit out – broad client base - B2B and B2C – ancillary packing materials and insurance sales • Customer Focus – customer service/loyalty – safe/secure – easy access 7 days a week, 24 hours per
Slide 31: Marketing
Marketing • Strategic review in 2006/7 with CHI & Partners • Customer / Prospect quantitative / qualitative research – Big Yellow brand awareness up to 58% in London (2006: 44%) – Self storage awareness – still relatively low – Market leading brand – awareness over three times nearest competitor – 8
Slide 32: International Franchise
International Franchise • Dubai site opens in Spring 2008 providing 280,000 sq ft lettable space • Kingdom of Bahrain Development Agreement signed – May 2007 • No equity risk, up front fee and share of revenue • Trademark protection in EU and other selected territories • Experienced International Fr
Slide 33: % Occupied
Average Occupancy % of Stores Open >2 Years 95% 90% % Occupied 85% 80% 75% Average Occupancy % 70% Closing Occupancy % 65% 60% Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- 04 04 04 05 05 06 06 07 07 13 13 19 19 27 27 30 30 32 Stores Stores Stores Stores Stores Stores Stores Stores Stores 33
Slide 34: Customer Average Length of Stay
Customer Average Length of Stay As at 30 Stores (No of Months) September 2007 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio No of Stores 6 5 13 19 43 Domestic Existing 3.7 6.0 12.2 15.7 13.4 Vacated 2.0 3.2 5.1 6.0 5.7 Total 2.9 4.2 6.7 7.6 7.2 Business Existing 4.2 6.8 12.8 17.4 15.2 Vacated 2.2
Slide 35: 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