Big Yellow Group PLC · LSE:BYG
Big Yellow — FY2010 Earnings Presentation
64 slides from Big Yellow's earnings presentation, May 17, 2010
Slide 1: Results for the Year ended 31 March 2010
Big Yellow Group PLC Results for the Year ended 31 March 2010 17 May 2010 1
Slide 2: Highlights
Highlights 2
Slide 3: Financial Highlights
Financial Highlights ● Occupancy growth of 140,000 sq ft across all stores (2009: occupancy fall of 75,000 sq ft) ● Storage revenue for the fourth quarter increased by 5% to £13.7 million from £13.0 million for the same quarter last year ● Storage revenue for the second half of the year of £27.7 mil
Slide 4: Achievements
Achievements ● Successful placing of 11.5 million shares in May 2009 raising £31.5 million net of expenses ● In the December and March quarters, the Group has returned to delivering revenue, store EBITDA and cash flow growth year on year ● Lloyds TSB Bank plc and HSBC Bank plc have joined the core b
Slide 5: Financial Review
Financial Review 5
Slide 6: Consolidated Income Statement
Consolidated Income Statement Year ended: 31.03.10 31.03.09 £m £m Revenue 58.0 58.5 (1%) Cost of Sales (22.1) (21.8) Admin Costs (6.8) (5.8) Underlying Operating Profit 29.1 30.9 (6%) Revaluation Deficit (3.6) (52.8) Loss on Property Assets (2.1) (11.6) Net Finance Costs (11.9) (17.1) Non-Recurring
Slide 7: Movement in Adjusted Profit Before Tax
Movement in Adjusted Profit Before Tax £m Adjusted PBT – March 2009 13.8 Reduction in gross profit (0.8) Increase in administrative expenses (non-cash IFRS 2 charge) (1.1) Reduction in interest payable 6.9 Reduction in capitalised interest (1.7) Increase in share of recurring loss in BYLP (0.6) Adju
Slide 8: Cashflow and Net Debt Movement
Cashflow and Net Debt Movement Year ended: 31.03.10 31.03.09 £m £m Opening Net Debt (308.1) (282.3) Cash from Operations 31.3 32.1 Interest (Net) (12.2) (21.9) Non recurring finance costs - (16.2) REIT conversion charge - (0.1) Dividends Paid - (6.3) Capital Expenditure (14.4) (34.6) Surplus Land Sa
Slide 9: Revaluation Movement in the Year
Revaluation Movement in the Year £m (1) 51 open stores at 31 Mar 2010 Value increase 26.5 Capex in year (16.8) 9.7 (2) 7 sites – investment property Value 33.9 under construction Cost (47.2) (13.3) (3.6) 9
Slide 10: Movement in Adjusted Diluted NAV per Share
Movement in Adjusted Diluted NAV per Share Equity No of EPRA Shareholders’ Shares Adjusted funds NAV per share 1 April 2009 543,816 119.0 457.0 Equity raising 31,534 11.5 (16.3) 1 April 2009 (proforma) 575,350 130.5 440.7 Revaluation movements (including share of BYLP) (1,522) (1.2) Movement in purc
Slide 11: Cost of Funding
Cost of Funding Amount of Debt Weighted Amount of Weighted 31 March 2010 Average Debt Average Interest Cost 31 March 2009 Interest Cost At 31 March 2010 At 31 March 2009 £m % £m % Fixed Rate 190.0 4.5 190.0 4.5 Debt Floating Debt 110.0 1.7 121.3 2.3 Total Debt 300.0 3.5 311.3 3.7 The core banking fa
Slide 12: Banking Covenants
Banking Covenants • The Group was comfortably in compliance with its banking covenants at 31 March 2010: Covenant 31 March 2010 Position Minimum income cover on Tranche B 1.4 x 3.75 x properties* Minimum net assets £250 million £547.3 million Maximum gross loan to net assets 1.3:1 0.55:1 gearing * T
Slide 13: Financial Gearing Levels
Financial Gearing Levels 31.03.10 31.03.09 Net Debt / Gross Property Assets 33% 38% Net Debt / Adjusted Net Assets 45% 57% Interest Cover Quarter ended 31 3.75 2.1 March 2010* Group EBITDA cover for the year 2.5 1.7 * Based on the interest cover covenant of the core bank facility 13
Slide 14: 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 1,500 Share of operating loss (280) Interest payable and fair value of derivatives (466) Gain on revaluation 2,066 Share of Partnership net assets at 31 March 2010 12,10
Slide 15: Stores
Stores 15
Slide 16: Improving Move-in Activity
Improving Move-in Activity Year ended Year ended 31 March 31 March Move-ins 2010 2009 9,357 9,413 (1%) April to June 9,919 9,289 7% July to September 8,042 7,493 7% October to December 8,279 6,962 19% January to March 35,597 33,157 7% Total The table above shows move-ins to the 50 wholly owned store
Slide 17: Store Performance
Store Performance • 6 openings in the year, creating 380,000 sq ft additional capacity • 60 stores (2009: 54) trading at year end. Total capacity 3.8 million sq ft (2009: 3.4 million sq ft) • 39,000 move-ins taking 2.4m sq ft (2009: 34,000 in 2.1m sq ft) • 140,000 sq ft occupancy growth in the year
Slide 18: Portfolio Summary
Portfolio Summary March March March March 2010 2009 2010 2009 Number of stores Wholly Owned Wholly Owned Big Yellow LP Big Yellow LP Number of stores 51 50 9 4 As at 31 March 2010: Total capacity (sq ft) 3,227,000 3,152,000 556,000 251,000 Occupied space (sq ft) 1,798,000 1,732,000 117,000 43,000 Pe
Slide 19: Lease-Up Store Analysis
Lease-Up Store Analysis Wholly Owned Capacity Occupancy Revenue EBITDA Store Performance 31 Mar 10 31 Mar 09 31 Mar 10 31 Mar 09 31 Mar 10 31 Mar 09 000 sq ft 000 sq ft 000 sq ft £000 £000 £000 £000 32 Same store portfolio 1,942 1,350 1,379 41,346 44,555 26,649 28,887 15 Lease-up stores opened 1,008
Slide 20: Twickenham, 76,000 sq ft
Twickenham, 76,000 sq ft 20
Slide 21: Edinburgh, 60,000 sq ft
Edinburgh, 60,000 sq ft 21
Slide 22: Nottingham, 65,000 sq ft
Nottingham, 65,000 sq ft 22
Slide 23: Poole, 53,000 sq ft
Poole, 53,000 sq ft 23
Slide 24: Sheffield Bramall Lane, 60,000 sq ft
Sheffield Bramall Lane, 60,000 sq ft 24
Slide 25: Reading, 60,000 sq ft
Reading, 60,000 sq ft 25
Slide 26: Big Yellow Self Storage Users
Big Yellow Self Storage Users Demand April - Sep Demand October - March 26
Slide 27: Big Yellow Self Storage Users
Big Yellow Self Storage Users 27
Slide 28: Proportion Of Current Customers By Length Of Stay
Proportion Of Current Customers - Same Stores By Length Of Stay In The Business 36% 3 years or more 40% March 2009 19% March 2010 1-3 years 17% 45% Less than 1 year 43% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 28
Slide 29: Customer Average Length of Stay
Customer Average Length of Stay Stores (No of Months) As at 31 March 2010 < 1 Year 1-2 Years 2-5 Years >5 Years Portfolio 31 March 2009 No of Stores 6 8 14 32 60 Domestic Existing 3.4 7.2 12.1 21.1 18.1 17.6 Vacated 1.9 3.1 4.7 6.7 6.4 6.2 Total 2.7 4.5 6.1 8.3 7.9 7.8 Business Existing 3.3 7.3 14.0
Slide 30: Length of Stay of Customers Move-Outs in Financial Year
Length of Stay of Customers Move-Outs in Financial Year Year 2010 8.11 2009 8.63 2008 7.41 0 1 2 3 4 5 6 7 8 9 10 Months 30
Slide 31: Marketing and the Brand
Marketing and the Brand 31
Slide 32: Marketing Strategy
Marketing Strategy • Leveraging the Big Yellow Brand • Focus on hard working media − ROI • Online innovation • Improving the customer experience • Improving information systems 32
Slide 33: Online Innovation
Online Innovation • Improving the customer experience • Quote, reserve and check in online • Price transparency • Check in online − Customer benefit − Greater operational efficiency 33
Slide 34: Online Innovation
Online Innovation • Spreading word of mouth • Online customer reviews − Over 2,500 reviews have been published − Over 50% of reviews awarded an overall score of 5 stars out of 5 − Our average score across the board is 4.6 out of 5 − Our customer service score is 4.6 out of 5 − Real time customer fee
Slide 35: Simplifying Our Processes
Simplifying Our Processes • One offer across all stores − 50% off for up to your first 8 weeks • Price Promise • Focus on Value 35
Slide 36: Search
Search • Search delivers 80% of online sales leads • Highest volume, lowest cost • Power of the Brand to win business • Short term benefits of having strong Brand 36
Slide 37: 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 37
Slide 38: 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 38
Slide 39: Property
Property 39
Slide 40: Big Yellow Stores May 2010
Big Yellow Stores May 2010 London - 38 stores and sites Outside London - 42 stores and sites 40
Slide 41: London Stores
London Stores M4 M3 HOUNSLOW O 7 EULH AN A1(M) WATFORD ° ENFIELDG NORTH FINCHLEY, OEDMONTON STAPLES CORNER ro) O EAST FINCHLEY ROMFORD ILFORD O HANGER LANE EALINGG O BowO BARKING O O DAGENHAM OACTON CHISWICKO NORTH KENSINGTON. 2 OKENNINGTON RICHMONDY O ~_ OBATTERSEA ; TWICKENHAMO = “cueen fe) ONEW C
Slide 42: Property Review
Property Review • 5 planning consents since April 2009 • Development pipeline of 10 sites, 640,000 sq ft of net lettable space −Pramerica JV: 3 sites, 180,000 sq ft, all with planning −Wholly owned: 7 sites, 460,000 sq ft, 6 with planning • £20 million of surplus land • 58% of planned net lettable s
Slide 43: Property Accounts Valuation
Property Accounts Valuation Freehold – 44 – 10 year DCF assuming notional sale at year ten – Stabilised yield pre-admin expense assuming no growth 8.44% (Mar 2009: 8.55%) – Weighted average occupancy 84.2% (Mar 2009: 85.0%) at maturity – Purchaser’s costs – 5.75% assuming property sale Leasehold – 7
Slide 44: Wholly Owned Development Sites
Wholly Owned Development Sites Store Location Status Anticipated Capacity Chiswick, West On the A4, high visibility from M4 flyover, currently Consent for redevelopment as 75,000 sq ft London occupied by Sotheby’s purpose built store granted Eltham, Junction of A20 and A205, on busy South Circular U
Slide 45: Chiswick
45 Chiswick aA G X
Slide 46: Chiswick
Chiswick 46
Slide 47: Cost to Complete
Cost to Complete Wholly Owned Development Sites With Planning – Book Value £32.1m 5 in London, 1 in central Guildford* Estimated Cost to Complete the 6 stores (£5m committed) £44.0m Total Estimated Book Value £76.1m Estimated Net sq ft provided 395,000 Book Value per sq ft £193 Valuation March 2010:
Slide 48: Funding Strategy
Funding Strategy ● Operating Cash Flow ● Cash and Available Undrawn Bank Facilities ● Land Sales 48
Slide 49: Conclusion
Conclusion • Current trading and outlook • Opportunity to leverage off market leading brand • Growth potential from existing platform – 56% to 85% • Value creation of new stores • Dividend 49
Slide 50: Appendix
Appendix 50
Slide 51: 51
51
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
Slide 53: Poole, August
53 Poole, August MLA -53000 sqft
Slide 54: 24 hour CCTV & individually alarmed
54 24 hour CCTV & individually alarmed
Slide 55: 55
55
Slide 56: 56
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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 (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 61: 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 31 March 2010 • No PID payable in year due to shadow capital allowances offsetting tax exempt pro
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 – £75 million development loan facility from RBS/HSBC/HSH • 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