Big Yellow Group Plc · LSE:BYG
Big Yellow — H1 2012 Earnings Presentation
67 slides from Big Yellow's earnings presentation, Nov 22, 2011
Slide 1: Results for the Six Months ended 30 September 2011
Big Yellow Group PLC Big B YellowGroup ig Yellow GroupPLC PLC Results for the Six Months ended 30 September 2010 November 2010 Results for the six months ended 30 September 2011 1 22 November 2011
Slide 2: Highlights
Highlights • Occupancy growth 250,000 sq ft across all stores in the period (2010: 209,000 sq ft), an average of 3,900 sq ft growth per store (2010: 3,400 sq ft per store) • Wholly owned store occupancy growth of 176,000 sq ft in the period (2010: 151,000 sq ft) • Store revenue for the six months £3
Slide 3: Portfolio Summary
Portfolio Summary Sept Sept Sept Sept Sept Sept Wholly Owned Stores 2011 2011 2011 2010 2010 2010 Established Lease-Up Total Established Lease-Up Total Number of stores 32 20 52 32 19 51 At 30 September: Total capacity (sq ft) 1,941,000 1,356,000 3,297,000 1,941,000 1,288,000 3,229,000 Occupied spac
Slide 4: REVPAF vs GDP
REVPAFE Established store REVPAF vs 12 month rolling GDP —— REVPAF —— Annual GDP growth 12 month rolling GDP %
Slide 5: REVPAF vs house purchase mortgage approvals
REVPAF £ Established store REVPAF vs house purchase mortgage approvals 450,000 Quarterly mortgage approvals 400,000 —— 18 year average of mortgage approvals 300,000 250,000 Quarterly mortgage approvals 200,000 150,000 100,000
Slide 6: Demonstrating Resilience
Demonstrating Resilience 6 months to 6 months to % September September 2011 2007 Total Store Revenue (£000) 31,867 27,883 14% Total Occupied Space (sq ft) 2,091k 1,918k 9% Free cash flow (£000) 13,485 7,937 70% Adjusted EPS 8.93p 5.89p 52% Interim dividend 4.5p 4p 13% In the seven weeks since 1 Octo
Slide 7: Financial Review
Financial Review November 2011 7
Slide 8: Consolidated Income Statement
Consolidated Income Statement Year ended: Six months ended: 31.03.11 30.09.11 30.09.10 £m £m £m 61.9 Revenue 32.6 31.1 (22.7) Cost of Sales (11.7) (11.9) (7.1) Admin Expenses (3.6) (3.4) 32.1 Underlying Operating Profit 17.3 15.8 (16.0) Revaluation Surplus / (Deficit) 2.6 4.3 0.1 Gains on Surplus La
Slide 9: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – six months ended 30.09.10 9.7 Gross profit increase 1.6 Increase in admin expenses (0.1) Interest expense saving (net) 0.1 Increase in capitalised interest 0.1 Reduction in share of BYLP recurring loss 0.2 Adjusted PBT - six months ended 30.09
Slide 10: Cost of Funding
Cost of Funding Amount of Debt Weighted Amount of Debt Weighted At Sept 2011 Average At Sept 2010 Average Interest Cost Interest Cost At Sept 2011 At Sept 2010 £m % £m % Fixed Rate Debt 190 4.5 190 4.5 Floating Debt 94 1.8 90 1.7 Total Debt 284 3.7 280 3.6 10
Slide 11: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Six Months ended: Year ended: 30.09.11 30.09.10 31.03.11 £m £m £m Opening Net Debt (266.0) (269.4) (269.4) Cash from Operations 19.2 17.5 34.9 Interest (Net) (5.7) (5.6) (11.4) Free Cash Flow 13.5 11.9 23.5 Dividends Paid (6.5) (5.2) (10.3) Total Capital Expenditure (1
Slide 12: Revaluation Movement in the Period
Revaluation Movement in the Period £m (1) 52 open stores at 30 Sept 2011 Value increase 19.4 (Including Eltham) Capex in period (16.4) 3.0 (2) 6 sites – investment property Value increase 7.7 under construction Capex in period (8.1) (0.4) 2.6 12
Slide 13: Movement in Adjusted EPRA NAV per Share
Movement in Adjusted EPRA NAV per Share £m EPRA Adjusted NAV Per Share Adjusted NAV at 31 March 2011 591.4 449.8 Revaluation movements (including share of BYLP) 4.4 3.4 Purchaser’s Costs adjustment (net movement) 0.5 0.4 Adjusted Profit 11.6 8.9 Dividend (6.5) (4.9) Share buyback (3.7) 2.0 Other mov
Slide 14: Banking Covenants
Banking Covenants • The Group was comfortably in compliance with its banking covenants at 30 September 2011: At Covenant 30 September 2011 Minimum income cover on Tranche B properties 1.5 x 3.66x Minimum net assets (excluding goodwill) £250 million £540.3 million Maximum gross loan to net assets gea
Slide 15: Big Yellow Limited Partnership
Big Yellow Limited Partnership Big Yellow 33.3% Interest £000 Investment at 1 April 2011 14,931 Subscription for capital and advances 1,000 Share of operating profit 272 Net interest payable and fair value of derivatives (449) Gain on revaluation 1,725 Share of Partnership net assets at 30 September
Slide 16: Portfolio Summary - BYLP
Portfolio Summary - BYLP September September 2011 2010 Number of stores 12 10 As at 30 September: Total capacity (sq ft) 743,000 616,000 Occupied space (sq ft) 289,000 175,000 Percentage occupied 38.9% 28.4% Net rent per sq ft £18.34 £18.87 Annualised revenue (£000) 6,729 4,294 For the 6 month perio
Slide 17: Stores and Operations
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Slide 18: Improved Year-on-Year Move-in Activity
Improved Year-on-Year Move-in Activity Move-ins 2011 2010 % 2009 3,090 2,783 11.0 2,553 April 3,423 3,502 (2.3) 2,904 May 4,568 4,706 (2.9) 3,900 June 4,509 4,399 2.5 3,446 July 4,238 4,006 5.8 3,454 Aug 3,914 3,576 9.5 3,019 Sep 23,742 22,972 3.4 19,276 Total Note: This analysis is for the 51 wholl
Slide 19: Eltham and Stockport stores
Eltham, 68,000 sq ft Stockport, 60,000 sq ft 19
Slide 20: Big Yellow Self Storage Users
Big Yellow Self Storage Users Overall Occupied Space at September 2011 Demand Profile of Move-ins During April to September 2011 April to September 2010 Moving - owned sector 37.22% Moving - rental sector 17.88% Student storage 10.55% Decluttering 10.18% Business storage 7.31% Other 5.97% Home impro
Slide 21: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers – Established Stores By Length Of Stay In The Business 21
Slide 22: Length of Stay of Customers Move-Outs
Length of Stay of Customers Move-Outs in Calendar Year 22
Slide 23: Pricing Strategy
Pricing Strategy • All major operators now provide online prices • 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 23
Slide 24: Marketing and the Brand
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Slide 25: Driving Online Response
Driving Online Response • Awareness of Big Yellow remains high, generated through our highly visible stores and their prime locations • The website provides 80% of our prospects • Use online display, PR and local marketing to keep Big Yellow front of mind for those most likely to need storage • Incr
Slide 26: Online Targeting
Online Targeting • Effective online targeting has improved the quality of prospects and reduced the cost per reservation • Established higher presence on all Google local searches e.g. Storage in Romford, Storage in Bristol etc. • Acquired more relevant visitors from better targeted online advertisi
Slide 27: Improving Web Prospect Conversion
Improving Web Prospect Conversion • Video store tour emails show-off the quality of the product to a prospect • Online messages provide visitors with reasons to use Big Yellow; all rooms individually alarmed, change room size without penalty, check in-online, read customer reviews, brightly lit/purp
Slide 28: The Big Yellow Mobile Site
The Big Yellow Mobile Site • Mobile devices now account for over 15% of all Google searches • Big Yellow are capitalising on this growth with the launch of the Big Yellow mobile site in September 2011 • Cost of mobile search marketing is 37% cheaper than desktop • Self Storage Google queries on mobi
Slide 29: National PR
National PR • Released our survey findings on the number of London homes with a spare room and how much households could earn by letting them out to Olympic visitors on a short term basis • Radio interviews with 20 stations including BBC London, BBC Bristol, BBC Asian Network, British Forces Broadca
Slide 30: Peer Group Recommendations Drive Customer Behaviour
Peer Group Recommendations Drive Customer Behaviour User generated customer reviews have increased by 20% in volume from 2010 with no fall in overall ratings 5,500 reviews Average rating is 4.5 out of 5 30
Slide 31: Promoting Business Storage Online
Promoting Business Storage Online • Launch of Big Yellow’s business storage brand in April online • Increased investment in search and online display for business storage • Banners advertising “business and home storage” on store exteriors • Visitors to the website’s business pages have increased by
Slide 32: National Accounts
National Accounts Helping businesses to store at multiple locations Easy set up for new recruits and new locations One contract, one invoice, one point of contact Reps on the road needing storage for POS and samples Increased resource 32
Slide 33: The Big Yellow Customer Support Team
The Big Yellow Customer Support Team • Increased investment in customer support team at Head Office • Now open Sundays and late on weekday evenings • Calls up 27% on 2010 (Apr-Sep) • Customer Support Team have reserved 14% of the space moved in this year 33
Slide 34: Property
Property 34
Slide 35: Valuations
Valuations 32 20 All 52 Established Lease-Up wholly store store owned portfolio portfolio stores Valuation at 30 September 2011 £427.9m £337.3m £765.2m Occupancy at 30 September 2011 74.8% 47.1% 63.4% Stabilised occupancy assumed in valuations 83.5% 81.8% 82.8% Initial yield pre admin expenses 6.7%
Slide 36: 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 February 2012 Chiswick, West On the A4, high visibility from M4 flyover Under construction, planned 75,000
Slide 37: Chiswick
Chiswick Artist’s impression Store under construction 37
Slide 38: New Cross
New Cross Artist’s impression Store under construction 38
Slide 39: Cost To Complete
Cost To Complete New Cross & Chiswick Enfield, Gypsy & Guildford Total Book value @ 30/9/11 £22.7m £14.2m £36.9m Cost to complete* £6.7m £17.2m £23.9m Total cost £29.4m £31.4m £60.8m Sq ft provided 135,000 186,000 321,000 *Cost to complete includes irrecoverable VAT at 20% This excludes our developm
Slide 40: Property Summary
Property Summary • Since September 2007, we have opened 21 stores, 10 in the wholly owned Group and 11 in the Partnership, adding 1.4m sq ft of self storage capacity • 68% of total built-out capacity within the M25 in the wholly owned Group • 72% of revenue from London, 88% from London and the South
Slide 41: Group Capital Structure
Group Capital Structure Conservative balance sheet with strong income cover 30.09.11 30.09.10 Net Debt / Gross Property Assets 33% 33% Net Debt / Adjusted Net Assets 46% 44% Group EBITDA cover for the period 3.08x 2.76x 41
Slide 42: Dividend
Dividend • Half year total dividend of 4.5p per share • Property Income Dividend (PID) element of 4.5p • Focus on growing sustainable dividend Dividend Cover Six months to 30 September 2011 On EPRA earnings per share 1.98x On Operating cash flow after finance costs 2.34x 42
Slide 43: Funding Strategy
Funding Strategy • Capital structure - medium and long term objectives • Operating cash flow – capex and dividend • Land sales to reduce bank debt • Investigating non-bank debt capital • Group facility £325m (net debt £275m) expires September 2013 43
Slide 44: 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 45: Questions?
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Slide 46: Appendix
Appendix 46
Slide 47: Big Yellow Stores September 2011
Big Yellow Stores September 2011 London - 38 stores and sites Outside London - 42 stores and sites 47
Slide 48: London Stores
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Slide 49: Customer Average Length of Stay
Customer Average Length of Stay As at Stores (No of Months) 30 September 2011 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 30 Sept 2010 No of Stores 3 2 19 40 64 61 Domestic Existing 2.7 5.7 8.7 20.4 17.4 17.2 Vacated 1.9 3.0 4.0 6.7 6.5 6.4 Total 2.4 4.0 5.1 8.2 7.8 7.8 Business Existing 3.9 8.8
Slide 50: Stockport, September 2011 and other stores
50 Stockport, September 2011 MLA - 4000 Reading, December 2009 MLA - 60000 sqft Edinburgh, July 2009 MLA - 60,000 sq ft Birmingham, February 2009 MLA - 60,0008q tt MLA ~ 64000 sqtt Camberley, January 2011 MLA - 63000 sq tt ih, October 2008 MLA - 60000 sq %t High Wycombe, June 2010 Bromley, March 200
Slide 51: Bristol Ashton Gate, July 2006 Finchley East, May 2006
51 Bristol Ashton Gate, July 2006 Finchley East, May 2006 MLA- 61000 sqft MLA -54000 sq ft
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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: 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 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 (2011 Drivers Jonas Deloitte/SSA Survey) – 800 self-storage centres (excluding containers) – 29.5 million sq ft – 0.5
Slide 59: Self Storage Market
Self Storage Market • Key Influencers – Public awareness – relatively low, but growing – 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
Slide 60: UK Market Potential
UK Market Potential • Prompted 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% prompted brand awareness of Big Yellow in London • Significant advertising and promotion raising aw
Slide 61: Self Storage & Big Yellow – London
Self Storage & Big Yellow – London Source: YouGov, September 2010. Figures are for prompted awareness. 61
Slide 62: Self Storage & Big Yellow - UK
Self Storage & Big Yellow - UK Source: YouGov, September 2010. Figures are for prompted awareness. 62
Slide 63: REITs
REITs • Approximately 86% of our revenue currently tax exempt • Comfortably meets the 75% gross asset test at 30 September 2011 • PID of 4.5 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 63
Slide 64: 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 – £63 million development loan from RBS and HSBC • Fees earned by Big Yellow from venture site acquisiti
Slide 65: 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 66: Five Year Track Record
Five Year Track Record Year Ended 31 March 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
Slide 67: 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