Stores and the market
We have included Portfolio Summaries showing the trading performance of our stores in the Group and in the Partnership over the period.
The level of enquiries across all our stores increased by 20% compared to the same six months last year. Conversion rates of these enquiries have also improved, meaning total move-ins, including the stores in Big Yellow Limited Partnership, were up 22% on the same period last year. We are experiencing a higher level of churn in the business, with move-outs increasing by a similar amount when compared to the same period last year.
We achieved occupancy growth of 243,000 sq ft across all stores in the period (2011: occupancy growth of 250,000 sq ft).
Like-for-like revenue per available foot (“REVPAF”) was £21.28 for the six months, an increase of 10.1% from £19.33 for the six months ended 30 September 2011.
Store occupancy summary
| Portfolio at 30 September 2012 | Occupancy growth from March 2012 000 sq ft |
30 September 2012 000 sq ft |
31 March 2012 000 sq ft |
30 September 2011 000 sq ft |
|---|---|---|---|---|
| Established stores | 53 | 1,495 | 1,442 | 1,452 |
| Lease-up stores | 124 | 815 | 691 | 639 |
| Total – wholly owned stores | 177 | 2,310 | 2,133 | 2,091 |
| Partnership lease-up stores | 66 | 391 | 325 | 289 |
| Total – all stores | 243 | 2,701 | 2,458 | 2,380 |
At the period end, wholly owned store occupied space was 2,310,000 sq ft, up 10.5% from 2,091,000 sq ft at the same time last year and up 177,000 sq ft from 31 March 2012. We saw encouraging growth from domestic, student and business customers during the six month period, with the overall split by space being 67% domestic and 33% business at 30 September 2012.
The 32 established stores are those that had reached stabilisation as a portfolio in 2007 prior to the economic downturn. 18 of these stores are in London, with the other 14 in large metropolitan cities in the South. This portfolio of stores (with an average net lettable area of 60,656 sq ft) was 77.0% occupied at the end of the period (an average of 46,719 sq ft occupied per store), with an average occupancy during the period of 76.3%, up from 73.3% for the same period last year. The closing occupancy of the 18 established stores inside London was 78.4% (an average of 51,100 sq ft occupied per store); for the 14 established stores outside London, occupancy was 74.7% (an average of 41,100 sq ft occupied per store).
Revenue for these 32 stores increased 5.6% compared to the same period last year. This was due to an increase in average occupancy referred to above, and a 1.8% increase in the average rent achieved over the period. EBITDA margins for the 32 established stores increased from 64.3% for the period to 30 September 2011 to 67.4% for the current period.
The lease-up stores have grown in occupancy by 176,000 sq ft from the same time last year, with 124,000 sq ft of this growth in the six months from 31 March 2012. Revenue growth in the lease-up portfolio was 24% compared to the same period last year. The EBITDA margin on the lease-up stores has increased from 57.6% for the period to 30 September 2011 to 61.7% for the current period. The overall store EBITDA margin increased from 62.2% to 65.4%.
Our core proposition remains a high quality product, competitively priced, with excellent customer service, providing value for money to our customers. Our stores offer a headline opening promotion of 50% off for up to the first 8 weeks, and we continue to manage pricing dynamically, taking account of customer demand and local competition.
Net rent at 30 September 2012 was up 1.8% from 31 March 2012, with established store net rent up 2.1% over the same period. Our key aim over the next two to three years is to drive occupancy in the stores. As the stores lease-up, our pricing model reduces the level of promotional discounts offered in individual stores. This squeezing out of promotions leads to an increase in net achieved rents.
The table below illustrates this, showing the growth in net rent per sq ft for the established store portfolio over the six month period.
| Average occupancy in the six months | Net rent per sq ft growth 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% |
We continue to improve sales of insurance, packing materials and other ancillary items, with revenue from these areas growing by 10% to £5.3 million in the period (2011: £4.8 million).
Operating costs
Store operating costs have been held flat from the prior period, excluding the additional operating costs of New Cross and Chiswick, which opened in February and April respectively. Including New Cross and Chiswick, store operating costs rose by 3.7% from the same period last year.
Total cost of sales in the income statement increased by 4.5%, in part due to the increase in store operating costs above; additionally the prior period contained rates rebates which reduced the comparable costs.
Administrative expenses in the income statement have increased by £0.8 million. The increase was largely due to an expense of £0.6 million in respect of Employers’ National Insurance on the vesting of the Company’s long term bonus plan for the period 2009 to 2012. There was also a cost of £0.1 million in respect of costs incurred challenging and implementing the imposition of VAT on self storage, which has been adjusted from the Group’s recurring profit for the six month period.
Interest
The Group’s average cost of borrowing during the period to 30 September 2012 was 3.8%, compared to 3.7% for the six months to 30 September 2011. The loan interest expense during the period was £0.1 million higher compared to the same period last year, due to the higher average cost of debt. Capitalised interest in the period was £0.2 million, £0.3 million lower than the same period last year, as a result of reduced capital expenditure. We do not expect that there will be any further capitalised interest in the second half of the year.
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