Big Yellow Group Plc · LSE:BYG
Big Yellow — FY2011 Earnings Presentation
64 slides from Big Yellow's earnings presentation, May 24, 2011
Slide 1: Results for the Year ended 31 March 2011
Big Yellow Group PLC Results for the Year ended 31 March 2011 24 May 2011 1
Slide 2: Financial Highlights
Financial Highlights ● Occupancy growth of 215,000 sq ft across all stores (2010: growth of 140,000 sq ft) ● Store revenue for the year up 8% to £59.6m (2010: £55.1m) ● Store revenue for the fourth quarter increased by 7% to £14.6 million from £13.7 million for the same quarter last year ● Store rev
Slide 3: Portfolio Summary
Portfolio Summary Steadily improving occupancy, revenue, cash flow and margins March March March March March March 2011 2011 2011 2010 2010 2010 Established Lease-Up Total Established Lease-Up Total Number of stores 32 19 51 32 19 51 At 31 March: Total capacity (sq ft) 1,941,000 1,288,000 3,229,000
Slide 4: Per Store Analysis
Per Store Analysis Established Lease-up Total Number of Stores 32 19 51 Capacity 60,656 67,789 63,314 Business Occupancy 15,105 9,555 13,142 Domestic Occupancy 28,051 18,550 24,407 All Occupancy 43,156 28,105 37,549 Business Revenue £359,000 £243,000 £316,000 Domestic Revenue £971,000 £655,000 £853,
Slide 5: Portfolio Summary - BYLP
Portfolio Summary - BYLP March March 2011 2010 Number of stores 11 9 At 31 March: Total capacity (sq ft) 683,000 556,000 Occupied space (sq ft) 215,000 117,000 Percentage occupied 31.5% 21.0% Net rent per sq ft £18.70 £18.99 Annualised revenue (£000) 5,066 2,823 For the year: Average annual rent psf
Slide 6: Financial Review
Financial Review 6
Slide 7: Consolidated Income Statement
Consolidated Income Statement Year ended: 31.03.11 31.03.10 £m £m Revenue 61.9 58.0 7% Cost of Sales (22.7) (22.1) Admin Expenses (7.1) (6.8) Underlying Operating Profit 32.1 29.1 10% Revaluation Deficit (16.0) (3.6) Gains / (Losses) on Surplus Land 0.1 (2.1) Net Finance Costs (11.3) (11.9) Fair Val
Slide 8: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – March 2010 16.5 Increase in gross profit 3.3 Increase in administrative expenses (0.3) Reduction in net interest payable 0.1 Increase in capitalised interest 0.6 Adjusted PBT – March 2011 20.2 8
Slide 9: Cost of Funding
Cost of Funding Amount of Weighted Amount of Weighted Debt Average Debt Average 31 March 2011 Interest Cost 31 March 2010 Interest Cost At 31 March 2011 At 31 March 2010 £m % £m % Fixed to 190.0 4.5 190.0 4.5 September 2015 Floating 85.0 1.7 110.0 1.7 Total 275.0 3.6 300.0 3.5 The core banking facil
Slide 10: Cash Flow and Net Debt Movement
Cash Flow and Net Debt Movement Year ended: 31.03.11 31.03.10 £m £m Opening Net Debt (269.4) (308.1) Cash from Operations 34.9 31.3 Interest (Net) (11.4) (12.2) Free Cash Flow 23.5 19.1 Total Capital Expenditure (13.3) (14.4) Surplus Land Sales 4.5 1.9 Investment in Partnership (1.0) (1.5) Dividends
Slide 11: Revaluation Movement in the Year
Revaluation Movement in the Year £m (1) 51 open stores at 31 Mar 2011 Value decrease (15.7) Capex in year (1.6) (17.3) (2) 7 sites – investment property under Value increase 12.3 construction Capex in year (11.0) 1.3 (16.0) The value decrease of the open store portfolio was principally caused by cha
Slide 12: Movement in Adjusted Diluted NAV per Share
Movement in Adjusted Diluted NAV per Share £m EPRA adjusted NAV Per Share Adjusted NAV at 1 April 2010 593.8 453.3 Adjusted profit 20.2 15.4 Equity dividends paid (10.3) (7.9) Revaluation movements (including share of BYLP) (13.8) (10.5) Movement in purchasers’ cost adjustment 0.4 0.3 Other movement
Slide 13: Banking Covenants
Banking Covenants • The Group was comfortably in compliance with its banking covenants at 31 March 2011: Covenant At 31 March 2011 Minimum income cover on Tranche B properties* 1.4 x 3.88 x Minimum net assets £250 million £544.9 million Maximum gross loan to net assets gearing 1.3:1 0.50:1 * The min
Slide 14: 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 1,000 Share of operating profit 74 Net interest payable and fair value of derivatives (522) Gain on revaluation 2,241 Gain on the disposal of surplus land 33 Share of P
Slide 15: Five Year Track Record
Five Year Track Record 2011 2010 2009 2008 2007 £m £m £m £m £m Results Revenue 61.9 58.0 58.5 56.9 51.2 Operating profit before gains and losses on property assets 32.1 29.1 30.9 29.3 27.1 Operating cash flow 23.5 19.1 11.4 14.4 16.7 Adjusted profit before taxation 20.2 16.5 13.8 15.0 14.2 EPRA earn
Slide 16: Stores and Operations
Stores and Operations 16
Slide 17: Improving Move-in Activity
Improving Move-in Activity Year ended Year ended 31 March 31 March Move-ins 2011 2010 10,991 9,357 17% April to June 11,981 9,919 21% July to September 8,845 8,042 10% October to December 8,685 8,279 5% January to March 40,502 35,597 14% Total The table above shows move-ins to the 51 like for like w
Slide 18: High Wycombe, Camberley, Eltham
High Wycombe, 60,000 sq ft Camberley, 65,000 sq ft Eltham, 70,000 sq ft 18
Slide 19: Big Yellow Self Storage Users
Big Yellow Self Storage Users Overall Occupied Space Demand Profile of Move-ins During the Year 19
Slide 20: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers - Established Stores By Length Of Stay In The Business Existing customers in stores >5 years old have stayed on average 22 months 20
Slide 21: Average Length of Stay of Customers Moving Out
Average Length of Stay of Customers Moving Out Financial Year 2011 7.59 2010 8.11 2009 8.63 2008 7.41 0 1 2 3 4 5 6 7 8 9 10 Months 21
Slide 22: 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 • Existing Customer Price Increases 22
Slide 23: Marketing and the Brand
Marketing and the Brand 23
Slide 24: Latest Research Demonstrates Why Customers Like Us
Latest Research Demonstrates Why Customers Like Us • Visible stores, easily accessible and safe locations • People trust us to be safe, secure and professional • They like our modern, purpose built buildings “ I feared a dingy old lock up…but was blown away by how modern, clean and efficient Big Yel
Slide 25: Marketing Focus Is Now On Driving Response and Generating ROI
The Marketing Focus Is Now On Driving Response and Generating ROI • Driving occupancy through online marketing – 100% accountable – Fluid budgets allows us to maximise ROI – Able to target key audiences when they need storage – Efficient marketing spend 25
Slide 26: Paid Search
Paid Search • Harvesting prospects when they need storage • Search accounts for circa 70% of Big Yellow’s online visitors • 50:50 Paid search:organic search • Continuously making paid search even more efficient 26
Slide 27: Position 1 In Google's Organic Results
Position 1 In Google’s Organic Results For The Most Popular Generic Search Terms “storage” and “self storage” • Ongoing investment into search engine optimisation to reduce spend on paid search • Screen shot as at 9.30 am Monday 23 May 2011 27
Slide 28: Local Search
Local Search • We have optimised our presence for local searches for storage • Search results now pulling in our customer reviews 28
Slide 29: Improving The Website Journey For Customers
Improving The Website Journey For Customers • 163 site improvements made in the last 6 months • Making the user journey easier to get a quote & reserve • Addition of engaging video and store tours on site 29
Slide 30: New Tools To Communicate Benefits To Businesses
New Tools To Communicate The Benefits Of Big Yellow To Prospective Businesses New business web section launched April 2011 Customer videos and testimonials New business marketing, communications and advertising On store, in store, online 30
Slide 31: Talking to businesses who have not considered self storage
We’re talking to businesses who previously have not considered self storage as a solution Big Yellow staff are trained on how to communicate benefits to businesses - No business rates or service charges - No long term commitments - Flexible space - Security Wide range of storage spaces Catering for
Slide 32: National Accounts
National Accounts Helping businesses to store at multiple locations Dedicated account manager One contract One invoice Increasing resources to develop the service further 32
Slide 33: Cross Marketing Opportunities Help Us Widen Our Audience Reach
Cross Marketing Opportunities Help Us Widen Our Audience Reach Streetvan advertising campaign 4,500 Tube cards May-July 2011 33
Slide 34: Cross Marketing Opportunities Help Us Widen Our Audience Reach
Cross Marketing Opportunities Help Us Widen Our Audience Reach Nationwide’s “Get Britain Moving” In-store communications Mail out to customers 34
Slide 35: Our Online Customer Reviews
Our Online Customer Reviews Continue To Give Real Time Feedback And Positive Word Of Mouth To Others Over 4,300 reviews 55% score 5 out of 5 Average customer service score is 4.7 out of 5 35
Slide 36: Self Storage & Big Yellow Awareness – London
Self Storage & Big Yellow Awareness – London Brand awareness for Big Yellow remains high at 80% - the clear brand leader Source: YouGov, August 2010. Figures are for prompted awareness. 36
Slide 37: Self Storage & Big Yellow Awareness - UK
Self Storage & Big Yellow Awareness - UK Brand awareness for Big Yellow is still 3x nearest competitor Source: YouGov, August 2010. Figures are for prompted awareness. 37
Slide 38: Property
Property 38
Slide 39: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Status Anticipated Capacity New Cross, Prominent location on Lewisham Way (A20) Under construction, planned 60,000 sq ft South East London opening April 2012 Chiswick, West On the A4, high visibility from M4 flyover Under construction, planned 75,000 sq
Slide 40: Chiswick New Cross
Chiswick New Cross 40
Slide 41: Cost to Complete
Cost to Complete New Cross & Chiswick Enfield, Gypsy & Guildford Total Book value £14.9m £14.4m £29.3m Cost to complete* £13.5m £17.2m £30.7m Total cost £28.4m £31.6m £60.0m Sq ft provided 135,000 186,000 321,000 Cost per sq ft £210 £170 £187 *Cost to complete includes irrecoverable VAT at 20% This
Slide 42: Property Summary
Property Summary • Since September 2007, we have opened 20 stores, 10 in the wholly owned Group and 10 in the Partnership, adding 1.3m sq ft of self storage capacity • 68% of total built-out capacity within the M25 in the wholly owned Group • 71% of revenue from London, 89% from London and the South
Slide 43: Financial Gearing Levels
Financial Gearing Levels Conservative balance sheet with strong income cover 31.03.11 31.03.10 Net Debt / Gross Property Assets 33% 33% Net Debt / Adjusted Net Assets 45% 45% Group EBITDA cover for the year 2.8 2.5 43
Slide 44: Dividend
Dividend ● Proposed final dividend of 5p per share ● Property Income Dividend (PID) element of 2p ● Total dividend of 9p declared for year, 4p PID ● Focus on growing sustainable dividend Dividend Cover Year to 31 March 2011 On EPRA earnings per share 1.7x On Operating cash flow after finance costs 2
Slide 45: Funding Strategy
Funding Strategy ● Operating Cash Flow ● Cash and Available Undrawn Bank Facilities ● Land Sales ● Debt Refinancing 45
Slide 46: Conclusion
Conclusion • Steady growth in a sub-optimal economic environment • Focus on occupancy, revenue and cash flow growth from existing platform • Winning market share through: − Dominant brand − Innovative on-line marketing − Excellent customer service − Purpose built, modern, secure stores − A focus on
Slide 47: Appendix
Appendix 47
Slide 48: Big Yellow Stores May 2011
Big Yellow Stores May 2011 London - 38 stores and sites Outside London - 42 stores and sites 48
Slide 49: London Stores
London Stores WATFORD ° ENFIELD NORTH FINCHLEY OEDMONTON ° STAPLES CORNER ° O EAST FINCHLEY ROMFORD ° ILFORDO HANGER LANE EALINGG O powo PARKINGO ODAGENHAM OACTON . CHISWICK OTH NTI) Oy I~ | HOUNSLOW OQ FULHAI OKENNINGTON RICHMONDS © OBATTERSEA TWICKENAAMO Coal ° WANDSWORTH O ALAM OELTHAM KINGSTON O
Slide 50: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 31/03/2011 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 31 March 2010 No of Stores 2 6 18 36 62 60 Domestic Existing 3.7 6.2 11.3 21.8 18.8 18.1 Vacated 2.3 2.9 4.4 6.7 6.5 6.4 Total 3.1 3.9 5.9 8.3 7.9 7.9 Business Existing 5.0 7.2 12.5
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Slide 52: f petoes
52 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
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Slide 54: CCTV and individually alarmed rooms
54 24 hour CCTV and individually alarmed rooms
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Slide 57: 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 58: 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 59: 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 60: 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 61: REITs
REITs • Approximately 86% of our revenue currently tax exempt • Comfortably meets the 75% gross asset test at 31 March 2011 • PID of 4p per share payable in the year • Shadow capital allowances offset part of the tax exempt profits • All REIT tests met to date 61
Slide 62: 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 – £68 million development loan facility from RBS and HSBC • Fees earned by Big Yellow from venture site
Slide 63: 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 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