Big Yellow Group PLC (“Big Yellow”, “the Group” or “the Company”), the UK’s brand leader in self storage, is pleased to announce results for the fourth quarter and the year ended 31 March 2013.
We achieved a solid level of revenue growth, despite the imposition of VAT, and have also delivered against our principal financial aims of growing cash flow, earnings and dividend. This is testament to our successful operating model with a strong brand, market-leading digital platform and our focus on large metropolitan areas, particularly in London and the South East.
We made a strong start to the year with significant occupancy growth in the first half (our seasonally strongest period), as we additionally benefited from the increased business and consumer confidence in the lead-up to the Olympics.
The seasonally weaker quarter to December was further impacted by a combination of a softening in the macroeconomy in the period after the Olympics, and price increases to our domestic customers of 10% or 12.5% as a result of the imposition of VAT on our storage rents from 1 October. By the beginning of the fourth quarter, the environment had stabilised and we saw a return to growth in net occupancy.
The Big Yellow model has proved to be relatively resilient and we have now successfully embedded VAT into our business. As we only partially passed VAT onto our domestic customers there was an anticipated impact in the second half on our net achieved rents. We are now focused on rebuilding the yield and growing occupancy in the year ahead.
Financial results
Revenue for the year was £69.7 million (2012: £65.7 million), an increase of 6%; store revenue increased by 6% to £68.3 million (2012: £64.3 million). EBITDA for the 54 wholly owned stores increased by £3.4 million (8%) to £44.1 million. The 53 wholly owned stores open at 1 April 2012 have grown in occupancy from 63.5% to 65.6% at 31 March 2013.
Store revenue for the fourth quarter decreased by 1% to £15.9 million from £16.1 million for the same quarter last year. Store revenue in the second half of the year was £32.8 million, up 1% from £32.4 million for the second half of the year ended 31 March 2012.
Cash inflows from operating activities (after finance costs) increased by £2.8 million (10%) to £30.2 million for the year (2012: £27.4 million).
The Group made an adjusted profit before tax in the year of £25.5 million (2012: £23.6 million). This translated into a 6% increase in adjusted earnings per share to 19.3p (2012: 18.2p).
The Group made a statutory profit before tax for the year of £31.9 million, compared to a loss of £35.6 million last year. The prior year loss reflected the decrease in the valuation of the Group’s open stores principally caused by the valuer’s assessment of the impact of the imposition of VAT on self storage from 1 October 2012. The valuation of the investment property portfolio in the year is broadly in line with the prior year.
The Group has reduced its gearing further this year and now has net bank debt of £230.5 million at 31 March 2013 (2012: £273.9 million). This represents approximately 30% (2012: 35%) of the Group’s gross property assets totalling £767.5 million (2012: £778.3 million) and 39% (2012: 49%) of the adjusted net assets of £594.5 million (2012: £559.0 million).
The Group’s income cover for the year expressed as the ratio of Group’s adjusted EBITDA post administrative expenses to net interest payable was 3.3 times (2012: 3.1 times).
Placing
For some time, the Company has set out a clear financial strategy to reduce debt and achieve pre-interest cash flow cover of at least four times the annual interest cost. The placing of 10 million shares in January at £3.70, raising £35.8 million (net of expenses), has allowed us to accelerate this plan. We have committed to increasing the dividend payout to 80% of adjusted earnings per share commencing with the next interim dividend. In addition, it has given us flexibility to expand our portfolio of stores, and we intend to open our prominent Gypsy Corner site on the A40 in West London in April 2014.
Refinancing
We are pleased to have successfully concluded the refinancing of the Group’s debt facilities with a new 15 year £100 million facility with Aviva and the four year £190 million refinancing to September 2016 with our existing senior debt providers, Lloyds TSB, HSBC and Santander. As part of this refinancing we cancelled £120 million of interest rate derivatives at a cost of £10.5 million (£9.2 million of this cost was in the first half of the year, with the balance incurred in October). Since the placing we have repaid £43 million of debt, and cancelled £35 million of our bank facilities, saving £0.3 million per annum in non-utilisation fees. Our weighted average cost of debt for the second half of the year increased from 3.8% to approximately 4.25%. In October 2012 the expiry of the £60 million Big Yellow Limited Partnership bank facility was extended to September 2016.
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