Big Yellow Group PLC · LSE:BYG
Big Yellow — H1 2010 Earnings Presentation
50 slides from Big Yellow's earnings presentation, November 2009
Slide 1: Big Yellow Group PLC Results for the Six Months ended 30 September 2009
Big Yellow Group PLC Results for the Six Months ended 30 September 2009 November 2009 1
Slide 2: Financial Review
Financial Review November 2009 2
Slide 3: Financial Highlights
Financial Highlights • Revenue for the second quarter increased by 7% to £15.1 million from the first quarter (£14.1 million) • Revenue decrease of 3% to £29.2 million over same period last year (2008: £30.1 million) • Revenue for the six months up 3% compared to the six months to 31 March 2009 (£28
Slide 4: Achievements
Achievements • Successful placing of 11.5 million shares in May 2009 raising £31.5 million net of expenses • We opened 5 stores in the period: Twickenham in the wholly owned Group and Edinburgh, Nottingham, Poole and Sheffield Bramall Lane in Big Yellow Limited Partnership. 59 stores are now open wi
Slide 5: Consolidated Income Statement
Consolidated Income Statement Year ended: Six months ended: 31.03.09 30.09.09 30.09.08 £m £m £m 58.5 Revenue 29.2 30.1 (21.8) Cost of Sales (11.8) (11.2) (5.8) Admin Expenses (3.4) (3.1) 30.9 Underlying Operating Profit 14.0 15.8 (52.8) Revaluation Deficit (14.2) (53.4) (11.6) Losses on Other Assets
Slide 6: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – six months ended 30.09.08 6.9 Gross profit reduction (1.4) Interest expense saving (net) 3.5 Capitalised interest reduction (0.9) Administration expense (0.4) Adjusted PBT - six months ended 30.09.09 7.7 6
Slide 7: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Six Months ended: Year ended: 30.09.09 30.09.08 31.03.09 £m £m £m Opening Net Debt (308.1) (282.3) (282.3) Cash from Operations 14.2 16.5 33.3 Interest (Net) (6.3) (14.2) (21.9) Non recurring finance costs - - (16.2) REIT conversion charge - - (0.1) Dividends Paid - (6
Slide 8: 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 2009 543.8 119.0 457.0 Other items (including option exercises) 0.4 0.5 Placing 31.5 11.5 575.7 130.9 439.8 Reduction in value of land and investment (14.9) ( 11.4 ) properties (including shar
Slide 9: Cost of Funding
Cost of Funding Amount of Debt Weighted Amount of Debt Weighted Sept 2009 Average Sept 2008 Average Interest Cost Interest Cost At Sept 2009 At Sept 2008 £m % £m % Fixed Rate Debt 190.0 4.5 140.0 6.4 Floating Debt 121.3 1.7 157.0 6.7 Total Debt 311.3 3.4 297.0 6.6 The core banking facility expires i
Slide 10: Revised Banking Covenants
Revised Banking Covenants • The Group was comfortably in compliance with its banking covenants at 30 September 2009: Previous Revised At covenant Covenant 30 September 2009 Minimum income cover 1.25x 1.4 x 2.69x Minimum net assets £350 million £250 million £531.9 million Maximum gross loan to net as
Slide 11: Financial Gearing Levels
Financial Gearing Levels 30.09.09 30.09.08 Net Debt / Gross Property Assets 34% 36% Net Debt / Adjusted Net Assets 48% 53% Interest Cover Quarter ended 30 2.69 2.0 Sept 2009* Annualised at 30 Sept 2009* 3.97 * Based on the interest cover covenant of the core bank facility 11
Slide 12: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33% Interest £000 Investment at 1 April 2009 9,285 Subscription for capital and advances 1,000 Share of operating loss (142) Net interest payable and fair value of derivatives 21 Gain on revaluation 1,356 Share of Partnership net assets at 30 September 11,52
Slide 13: Operating Review
Operating Review November 2009 13
Slide 14: Store Operations
Store Operations • 5 openings in the period, creating 314,000 sq ft additional capacity • 51 wholly owned stores (2008: 48) trading at period end. Total capacity 3.23 million sq ft (2008: 3.02 million sq ft) • Occupancy at period end (including JV stores) 1,871k sq ft (2008: 1,841k sq ft) • 32 same
Slide 15: Portfolio Summary
Portfolio Summary Sept Sept Sept Sept Sept Sept 2009 2009 2009 2008 2008 2008 Number of stores Same Store Lease-Up Total Same Store Lease-Up Total Number of stores (2007) 32 19 51 32 16 48 As at 30 Sept 2009: Total capacity (sq ft) 1,944,000 1,284,000 3,228,000 1,944,000 1,073,000 3,017,000 Occupied
Slide 16: Lease-Up Store Analysis
Lease-Up Store Analysis Store Performance Occupancy Revenue EBITDA 30 Sep 09 30 Sep 08 30 Sep 09 30 Sep 08 30 Sep 09 30 Sep 08 000 sq ft 000 sq ft £000 £000 £000 £000 32 Same stores 1,371 1,471 20,892 23,335 13,309 15,198 16 Lease-up stores opened 391 336 6,196 5,123 2,848 1,761 pre 30 September 200
Slide 17: Twickenham, 76,000 sq ft
Twickenham, 76,000 sq ft 17
Slide 18: Edinburgh, 60,000 sq ft
Edinburgh, 60,000 sq ft 18
Slide 19: Nottingham, 65,000 sq ft
Nottingham, 65,000 sq ft 19
Slide 20: Poole, 53,000 sq ft
Poole, 53,000 sq ft 20
Slide 21: Sheffield Bramall Lane, 60,000 sq ft
Sheffield Bramall Lane, 60,000 sq ft 21
Slide 22: Big Yellow Self Storage Users
Big Yellow Self Storage Users Why customers who moved into Big Yellow's stores between April 2009 and September 2009 required storage Other, 6.83% Student storage, 10.07% Moving - rental sector, Travelling, 5.60% 21.84% Business storage, 7.95% Business storage Decluttering Decluttering, 9.85% Home i
Slide 23: Self Storage Awareness - UK
Self Storage Awareness - UK • Brand awareness still 3 x nearest competitor • Major operators have moved from above-the-line advertising to online marketing • Shifted focus from growing our Brand to leveraging our Brand Source: You Gov September 2009. Awareness Figures Quoted are prompted 23
Slide 24: Self Storage Awareness - London
Self Storage Awareness - London • Brand awareness in London 80% - the clear Brand leader • Higher awareness of self storage in London Source: You Gov September 2009. Awareness Figures Quoted are prompted 24
Slide 25: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers - Same Stores By Length Of Stay In The Business 3 years or more 1-3 years Less than 1 year 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 25
Slide 26: Length of Stay of Customers Move-Outs in Calendar Year
Length of Stay of Customers Move-Outs in Calendar Year 2009 2008 Months 2007 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 26
Slide 27: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 30/09/2009 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 30 Sept 2008 No of Stores 10 6 12 31 59 49 Domestic Existing 2.6 6.0 11.5 19.6 16.8 15.8 Vacated 2.0 3.0 4.7 6.6 6.3 6.1 Total 2.4 4.2 6.1 8.2 7.8 7.6 Business Existing 2.8 6.5 15.2
Slide 28: Property Review
Property Review November 2009 28
Slide 29: Big Yellow Stores Sept 2009
Big Yellow Stores Sept 2009 London - 38 stores and sites Outside London - 42 stores and sites 29
Slide 30: London Stores
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Slide 31: Property Review and Valuations
Property Review and Valuations • All bar 2 sites have planning consents • Development pipeline of 11 sites, 0.7 million net lettable space −Pramerica JV: 4 sites, 0.24m sq ft, all with planning −Wholly owned: 7 sites, 0.47m sq ft, 5 with planning • £24 million of surplus land; £3.2 million sold post
Slide 32: Property Accounts Valuation
Property Accounts Valuation As at 30 September 2009 Freehold – 44 – 10 year DCF assuming notional sale at year ten Leasehold – 7 – No sale of assets at year 10; DCF to lease expiry – Average unexpired term, 16.3 years (March 2009: 16.8 years) All Stores – 51 – Stabilised yield pre-admin expense (exc
Slide 33: Revaluation Movement in the Period
Revaluation Movement in the Period £m (1) 51 open stores at 30 Sept 2009 Value increase 14.8 Capex in year (16.0) (1.2) (2) 6 sites – investment property Value 25.0 under construction Cost (38.0) (13.0) (14.2) 33
Slide 34: Funding Strategy
Funding Strategy ● Placing ● Cash Flow ● Land Sales ● Available Undrawn Bank Facilities 34
Slide 35: Cost to Complete
Cost to Complete Wholly Owned Development Sites – cost to date £34.7m 5 in London and 1 in central Guildford* Estimated Cost to Complete the 6 stores (£5.8m committed) £51m Total Estimated Cost £85.7m Estimated Net sq ft provided 395,000 Cost per sq ft £217 Valuation September 2009: Comparable Londo
Slide 36: Conclusion
Conclusion • Current trading and outlook • Opportunity to leverage off market leading brand • Growth potential from existing platform – 55% to 85% • Value creation of new stores • Dividend 36
Slide 37: Appendix
Appendix 37
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Slide 39: am hour CCTV
39 am 24 hour CCTV & individually alarmed
Slide 40: 40
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Slide 41: 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 42: Self Storage Market
Self Storage Market The Market – US Market (2007 Self Storage Almanac) – 55,000 self-storage centres – 2 billion sq ft – 7.0 sq ft per person – Population 300 million – $15 billion market capitalisation in US REIT market – UK Market (2008 Mintel/SSA Survey) – 750 self-storage centres (excluding cont
Slide 43: 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 44: UK Market Potential
UK Market Potential • Awareness of self-storage (2009 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 45: 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 46: REITs
REITs • Conversion charge – £12.0 million paid in July 2007 – Subject to final agreement with HMRC • Approximately 86% of our revenue currently tax exempt • Comfortably meets the 75% gross asset test at 30 September 2009 • No PID payable in year due to shadow capital allowances offsetting tax exempt
Slide 47: Big Yellow Limited Partnership
Big Yellow Limited Partnership • £150m partnership with Pramerica to develop stores in the midlands, north of England and Scotland – £25 million Big Yellow – £50 million Pramerica – £75 million development loan RBS/HSBC/HSH • Fees earned by Big Yellow from venture site acquisition fees, planning suc
Slide 48: 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 49: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Planned Store Planning Status Capacity Chiswick On the A4, high visibility from M4 flyover, 75 - 100,000 sq ft Existing warehouse use currently the Sotheby’s building consent Eltham Junction of A20 and A205, prominent site on 70,000 sq ft Consent granted
Slide 50: 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