Trading Statement

RNS Number : 0195A

Big Yellow Group PLC

26 March 2012

 



26 March 2012

Big Yellow Group PLC

("Big Yellow" or "the Company")

Pre-close statement for the year ended 31 March 2012

Following last week's budget announcement on the proposed changes to the VAT status of self storage from 1 October 2012, the Board of Big Yellow Group PLC (the "Group") believes it is appropriate to update shareholders on the Group's progress by way of a pre-close statement this year.  As we stated in last week's announcement, it is our intention to actively engage in the consultation process with HMRC.

The Group is pleased to announce, with six trading days remaining in the final quarter of its financial year, that for the first time since the onset of the economic downturn in 2007, the occupancy in the Group's wholly owned store portfolio is above the high enjoyed in the previous September, thus recouping all the normal seasonal occupancy losses incurred in the December quarter. We now look forward to our traditionally busiest trading period from a new all-time high of occupied space.

Growth in the quarter to date across our 53 wholly owned stores is 86,000 sq ft, compared to 41,000 sq ft for the same quarter last year.  The occupancy of our 32 established store portfolio is currently 74.0%, and, excluding our newly opened store at New Cross, wholly owned store occupancy is 64.0%, compared to 63.4% at 30 September 2011 and 59.3% at 31 March 2011. The 12 stores within Big Yellow Limited Partnership have grown in occupancy by 21,000 sq ft in the quarter to date, and are now 42.6% occupied.

We expect full year earnings to be in line with market expectations.

The proposed changes to the VAT status is an industry wide issue and this, together with the current levels of demand we are experiencing, gives us increased confidence that our previously articulated strategy of wholly or substantially mitigating the impact of those changes has a reasonable chance of success.

In our half year statement for the period ended 30 September 2011 the Board indicated that following the completion of our Chiswick store in May this year, capital expenditure would be largely suspended for the time being.  That decision is now under review for the reasons set out below.

The proposed VAT change would see a significant reduction in the cost of construction of new stores given that VAT on the construction costs would be recoverable.  Furthermore the Group would be entitled to a repayment of previously unrecovered VAT on past construction expenditure, which we believe would be sufficient to fund the £14.3 million construction cost of new stores on the three sites that the Group currently owns at Gypsy Corner and Enfield (both in London), and in central Guildford.  This would have the desirable effect of turning fallow assets into income producing contributors to the Group.  This is particularly relevant on these London/London proximate stores which we believe would break even at circa 25% occupancy and be cash flow contributors within a year of opening.

Notwithstanding the fact that the Group's debt is relatively low, we believe a further modest reduction is appropriate and that therefore remains our core ambition in the short term.  The phased construction of these stores partially financed from the reimbursement of VAT would not significantly change the pace of the debt reduction programme.

For further information, please contact:

Big Yellow Group PLC                                                                                                                                      01276 477811

Nicholas Vetch, Executive Chairman

James Gibson, Chief Executive Officer

John Trotman, Chief Financial Officer

Weber Shandwick Financial                                                                                                                           020 7067 0700

Nick Oborne, John Moriarty

Notes to Editors

Big Yellow Group PLC is the best known and one of the most dynamic self storage groups in the UK.  It was founded in September 1998 by Nicholas Vetch, Philip Burks, and James Gibson and listed on AIM in May 2000, moving to the Official List of the London Stock Exchange in June 2002. 

Big Yellow has expanded rapidly and now operates from 65 stores, 57 in London and the South, two in Sheffield, and one each in Birmingham, Edinburgh, Leeds, Liverpool, Nottingham and Stockport. There are a further five stores in development. Of the 70 total stores and sites, 59 are held freehold and four long leasehold (together representing approximately 94% by value of the total property assets); seven stores are held short leasehold.  All the stores have distinct yellow branding, with the majority being within the M25 or in strong urban conurbations.  When fully built out the portfolio will provide approximately 4.4 million sq ft of flexible storage space. 

The Group has pioneered the development of the latest generation of self storage facilities, which utilise state of the art technology and are located in high profile, accessible, main road locations.  Its focus on the location and visibility of its buildings, coupled with excellent customer service, has created the most recognised brand name in the UK self storage industry.

 

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