Big Yellow Group PLC · LSE:BYG
Big Yellow — H1 2013 Earnings Presentation
59 slides from Big Yellow's earnings presentation, Nov 20, 2012
Slide 1: Results for the six months ended 30 September 2012
Big Yellow Group PLC Results for the six months ended 30 September 2012 20 November 2012 1
Slide 2: Strong Half Year Performance
Strong Half Year Performance • Occupancy growth 243,000 sq ft across all stores • Occupancy growth of 177,000 sq ft in the wholly owned stores • 53 wholly owned stores open at 1 April 2012 occupancy up 5% to 68.5% • Store revenue £35.5 million up 11.5% period-on-period • Q2 store revenue increased u
Slide 3: VAT
VAT • Self storage standard rated from 1 October 2012 • Our actions: − Business customers full VAT passed on − VAT burden shared with domestic customers − Yield management initiatives to mitigate potential impact • Second half impact − Average net rent per sq ft from 1 October down 3.8% vs. 1 April
Slide 4: Financing Strategy
Financing Strategy • Refinancing − Groundbreaking £100 million, 15 year loan secured from Aviva on a portfolio of 15 stores at a fixed cost of 4.9% − Completed refinancing of £190 million four year facility with Lloyds, HSBC and Santander − Extended £60 million Partnership bank facility to September
Slide 5: Dividend
Dividend • Half year total dividend of 5p per share • Property Income Dividend (PID) element of 5p • Focus on growing sustainable dividend Dividend Cover Six months to 30 September 2012 On EPRA earnings per share 2.1x On Operating cash flow after finance costs 2.3x 5
Slide 6: Portfolio Summary
Portfolio Summary Sept Sept Sept Sept Sept Sept Wholly Owned Stores 2012 2012 2012 2011 2011 2011 Established Lease-Up Total Established Lease-Up Total Number of stores 32 22 54 32 20 52 At 30 September: Total capacity (sq ft) 1,941,000 1,491,000 3,432,000 1,941,000 1,356,000 3,297,000 Occupied spac
Slide 7: Established Store REVPAF vs 12 Month Rolling GDP
Established Store REVPAF vs 12 Month Rolling GDP 7
Slide 8: Established Store REVPAF vs House Purchase Mortgage Approvals
Established Store REVPAF vs House Purchase Mortgage Approvals 8
Slide 9: Financial Review
Financial Review 9 9
Slide 10: Consolidated Income Statement
Consolidated Income Statement Year ended: Six months ended: 31.03.12 30.09.12 30.09.11 £m £m £m 65.7 Revenue 36.2 32.6 (23.5) Cost of Sales (12.3) (11.7) (7.1) Admin Expenses (4.4) (3.6) 35.1 Underlying Operating Profit 19.5 17.3 (51.4) Revaluation Surplus / (Deficit) 11.5 2.6 0.5 Gains on Surplus L
Slide 11: Per Store Analysis
Per Store Analysis Established Lease-Up Stores Stores Number of Stores 32 22 Average Store Capacity 60,656 67,727 Closing sq ft occupied per store 46,719 37,045 % Occupancy 77.0% 54.7% Annualised Revenue per store £1,449,000 £1,122,000 Annualised EBITDA per store £976,000 £692,000 EBITDA margin 67.4
Slide 12: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – six months ended 30.09.11 11.6 Gross profit increase 3.0 Increase in admin expenses (0.6) Increase in net interest payable (0.1) Decrease in capitalised interest (0.3) Increase in share of BYLP recurring profit 0.3 Adjusted PBT – six months en
Slide 13: Proforma Cost of Funding Post Refinancing
Proforma Cost of Funding Post Refinancing Amount of Debt Weighted Amount of Debt Weighted At Oct 2012 Average At Sept 2011 Average Interest Cost Interest Cost At Oct 2012 At Sept 2011 £m % £m % Aviva Debt 99.2 4.90 - - Fixed Rate Debt 70.0 5.30 190.0 4.54 Floating Debt 108.0 2.95 94.0 1.84 Total Deb
Slide 14: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Six Months ended: Year ended: 30.09.12 30.09.11 31.03.12 £m £m £m Opening Net Debt (273.9) (266.0) (266.0) Cash from Operations 21.0 19.2 38.9 Interest (Net) (6.1) (5.7) (11.5) Free Cash Flow 14.9 13.5 27.4 Non-Recurring Finance Costs (10.7) - - Dividends Paid (7.1) (6
Slide 15: Revaluation Movement in the Period
Revaluation Movement in the Period £m £m (1) 54 open stores at 30 September 2012 Value increase 18.9 Capital Goods Scheme adjustment 10.6 Capex (including full cost of Chiswick opening April 2012) (18.2) 11.3 (2) 4 sites – investment property under construction Value increase 0.3 Capex (0.1) 0.2 11.
Slide 16: Movement in Adjusted EPRA NAV per Share
Movement in Adjusted EPRA NAV per Share Equity EPRA Shareholders’ Adjusted NAV Funds Pence Per £m Share 1 April 2012 559.0 427.7 Adjusted profit before tax 13.9 10.6 Equity dividends paid (7.1) (5.4) Revaluation movements (including share of BYLP) 1.1 0.8 Movement in purchaser’s cost adjustment 0.2
Slide 17: Loan Covenants
Loan Covenants • The Group was comfortably in compliance with its loan covenants at 30 September 2012 • The principal covenants of the core bank facility are: − Consolidated EBITDA 1.5x (currently 3.86x) − Minimum net worth of £250 million (currently £518 million) − Maximum loan to value of charged
Slide 18: Group Capital Structure
Group Capital Structure Conservative balance sheet with strong income cover 30.09.12 31.03.12 30.09.11 Net Debt / Gross Property Assets 35% 35% 33% Net Debt / Adjusted Net Assets 48% 49% 46% Group EBITDA cover for the period 3.53x 3.10x 3.08x 18
Slide 19: Portfolio Summary - BYLP
Portfolio Summary - BYLP September September 2012 2011 Number of stores 12 12 As at 30 September: Total capacity (sq ft) 743,000 743,000 Occupied space (sq ft) 391,000 289,000 Percentage occupied 52.6% 38.9% Net rent per sq ft £18.17 £18.34 For the 6 month period: REVPAF £12.17 £9.04 Average annual
Slide 20: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33.3% Interest £000 Investment at 1 April 2012 15,496 Subscription for capital and advances 1,000 Share of operating profit 570 Net interest payable and fair value of derivatives (280) Gain on revaluation 1,594 Share of Partnership net assets at 30 September
Slide 21: Stores and Operations
EY WV Wg eeeeeen oes : seeeseee ooo ste
Slide 22: 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 − 50% off for up to 8 weeks • Dynamic Pricing – positive and negative • Focus on REVPAF continues 22
Slide 23: Established Store Rental Growth
Established Store Rental Growth Average occupancy in Net rent per sq ft growth the six months over the six months 60 to 70% (3.8%) 70 to 75% 1.3% 75 to 80% 1.4% 80 to 85% 2.4% Above 85% 6.6% • The table illustrates the ability to drive yield as the stores fill up through squeezing out promotions 23
Slide 24: Improved Move-in Activity
Improved Move-in Activity Move-ins 2012 2011 % 2010 3,604 3,090 16.6 2,783 April 4,266 3,423 24.6 3,502 May 5,972 4,568 30.7 4,706 June 5,241 4,509 16.2 4,399 July 4,898 4,238 15.6 4,006 Aug 4,834 3,914 23.5 3,576 Sep 28,815 23,742 21.4 22,972 Total Note: This analysis is for the 52 wholly owned sto
Slide 25: Big Yellow Self Storage Users
Big Yellow Self Storage Users Overall Occupied Space at September 2012 Demand Profile of Move-ins During April to September 2012 April to September 2011 Moving - owned sector 38.40% Moving - rental sector 17.75% Student storage 10.17% Decluttering 10.03% Business storage 7.57% Other 6.37% Home impro
Slide 26: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 26
Slide 27: Length of Stay of Customers Move-Outs
Length of Stay of Customers Move-Outs In Calendar Year 27
Slide 28: Marketing and the Brand
Marketing and the Brand 28
Slide 29: Driving Online Response
Driving Online Response • Multi-channel approach - online display, search, mobile, PR, radio and local marketing, keeping Big Yellow front-of-mind • We continue to have the largest share of web traffic in the UK self storage market - 35-40% (May-November 2012) • Website provides 83% of prospects • S
Slide 30: The Big Yellow Mobile Site
The Big Yellow Mobile Site • 20% of all self storage searches are now made on mobile devices including tablets (source: Google) • Self storage Google queries on mobiles are up 62% year-on-year from 2011 (July-September) • 24% of Big Yellow’s web traffic comes via mobile devices • Customer reviews no
Slide 31: Ongoing Consumer PR
Ongoing Consumer PR • To increase awareness of our smaller rooms, aimed at women • Using storage as a solution to a cluttered bedroom /wardrobe • TV fashion and collectable expert Tracey Martin provided tips on making money from high street fashion and storing collectable clothes • Over 16 radio int
Slide 32: National Accounts
National Accounts • Helping businesses to store at multiple locations • Easy set-up for new accounts and new locations • One contract, one invoice, one point of contact • New National Account Manager recruited in October 32
Slide 33: Customer Support Centre
Customer Support Centre • Continuing investment • New phone / call recording system installed in May 2012 • In the six month period to 30 September 2012: − Calls up 14% on the same period last year − Abandoned calls reduced by 40% on the same period last year − Customer Support Team have reserved 15
Slide 34: Property
Property 34
Slide 35: Property Summary
Property Summary • Since September 2007, we have opened 23 stores, 12 in the wholly owned Group and 11 in the Partnership, adding 1.7m sq ft of self storage capacity • 71% of total built-out capacity is within the M25 in the wholly owned Group • 74% of revenue derives from London, 90% from London an
Slide 36: Valuations
Valuations Established Lease-Up All wholly store store owned portfolio portfolio stores Valuation at 30 September 2012 £400.7m £344.8m £745.5m Occupancy at 30 September 2012 77.0% 54.7% 67.3% Stabilised occupancy assumed in valuations 82.9% 81.6% 82.3% Net initial yield pre-admin expenses 7.3% 5.0%
Slide 37: Conclusion
Conclusion • Refinancing now completed • Operational focus on mitigating the impact of VAT • Driving occupancy, revenue and cash flow growth from existing platform • Debt reduction programme for the next two to three years • Objective to achieve dividend step up to 80% of eps 37
Slide 38: Questions?
Questions? 38
Slide 39: Appendix
Appendix 39 39
Slide 40: Big Yellow Stores September 2012
Big Yellow Stores September 2012 London - 38 stores and sites Outside London - 42 stores and sites 40
Slide 41: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 30/09/2012 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 30/09/2011 No of Stores 2 3 18 43 66 64 Domestic Existing 3.7 5.9 9.9 20.8 17.9 17.4 Vacated 1.7 2.9 3.9 6.7 6.5 6.5 Total 2.7 4.0 5.3 8.2 7.8 7.8 Business Existing 3.7 7.6 12.1 23.
Slide 42: Store openings 2010-2012
Chiswick, April 2012 New Cross, February 2012 Stockport, September 2011 MLA-75,000sq ft MLA - 60,000sa ft MLA - 60000 sqft Eltham, April 2011 Camberley, January 2011 High Wycombe, June 2010 MLA-70000sq ft MLA - 63000 sq ft MLA - 60,000 sqft
Slide 43: Store openings 2008-2009
Steeda Reading, December 2009 Sheffield Bramall Lane, Poo! Nottingh Edinburgh, July 2009 MLA -60000sq ft September 2009 MLA - 60 yft MLA f MLA- sqf ML 0 Twickenham, May 2009 Liverpool, March 2009 Bromley, March 2009 Birmingham, February 2009 Sheen, December 2008 MLA -76000sq ft MLA -60000sq ft 71000
Slide 44: Store openings 2004-2007
Barking, November 2007 Ealing Southall, November 2007 Sutton, July 2007 Gloucester, December 2006 Edmonton, October 2006 MLA~-60000sq ft MLA ft MLA-70000sq ft MLA -50000 sqft MLA - 80,000 saift [| = Lena | A aa Kingston, August 2006 Bristol Ashton Gate, July 2006 Finchley East, May 2006 T Tunbridge
Slide 45: Store openings 2001-2004
Swindon, April 2004 Orpington, December 2003 Byfleet, November 2003 Chelmsford, April 2003 Finchley North, March 2003 MLA -53000sa ft MLA -48000sq ft MLA-54000sq ft MLA -6300sqft West Norwood, January 2003 Colchester, December 2002 Brighton, October 2002 Guildford, June 2002 MLA-57,000satt MLA-55,00
Slide 46: Store openings 1999-2001
= bai Portsmouth, October 2001 Norwich, September 2001 Dagenham, July 2001 April 2001 Luton, March 2001 MLA ~61000 sa ft MLA -~48000sq ft MLA~50000saft MLA -57000satt MLA~41000saft == Staples Comer, March 2001 Romford, November 2000 Milton Keynes, September 2000 Cheltenham, April 2000 MLA - 11000 sq
Slide 47: Ww rm
Ww rm ‘ia inn > lg
Slide 48: 48
48
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 (2012 Self Storage Almanac) – 50,000 self-storage centres – 2.55 billion sq ft – 7.41 sq ft per person – Population 345 million – UK Market (2012 Drivers Jonas Deloitte/SSA Survey) – 800 self-storage centres (excluding container operators) – 29.5 million sq
Slide 51: Self Storage Market
Self Storage Market • Key Influencers – Growing public awareness – Change in the economy 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, sing
Slide 52: UK Market Potential
UK Market Potential • Prompted awareness of self storage (2012 You Gov Market Research) – Currently 61% approximately in London with reasonable knowledge of product – Lower in other major cities – 81% prompted brand awareness of Big Yellow in London • Significant advertising and promotion raising aw
Slide 53: Self Storage & Big Yellow – London
Self Storage & Big Yellow – London 120% 100% 80% Big Yellow awareness 60% Never heard Heard but know nothing 40% Reasonable amount Very well 20% 0% Source: YouGov, November 2012. Figures are for prompted awareness. 53
Slide 54: Self Storage & Big Yellow - UK
Self Storage & Big Yellow - UK 120% 100% 80% Big Yellow awareness 60% Never heard Heard but know nothing 40% Reasonable amount Very well 20% 0% Source: YouGov, November 2012, Figures are for prompted awareness. 54
Slide 55: Quality of Earnings
Quality of Earnings • Operating branded store platform - not a recycler of assets • Own assets freehold for high operating margins and operational advantage • “Evergreen” income − 40,000 customers (35,000 in wholly owned stores) − Average length of stay for existing customers is 19 months − 35% of c
Slide 56: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Status Anticipated Capacity Gypsy Corner, Highly visible site on A40 in Acton Consent granted 70,000 sq ft West London Enfield, Prominent site on the A10, Great Cambridge Road Consent granted 60,000 sq ft North London Guildford Prime location in centre o
Slide 57: REIT Status
REIT Status • Approximately 86% of our revenue is currently tax exempt • Comfortably meets the 75% gross asset test at 30 September 2012 • PID of 5 pence per share payable for the six month period • Shadow capital allowances offset part of the tax exempt profits • All REIT tests met to date 57
Slide 58: Big Yellow Limited Partnership
Big Yellow Limited Partnership • Partnership with Pramerica to develop stores outside of the M25 – £16.5 million Big Yellow likely equity commitment – £33 million Pramerica likely equity commitment – £60 million development loan from RBS and HSBC, extended to 30 September 2016 in October 2012 • Fees
Slide 59: 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