U.K. Self-Storage Operator Big Yellow Releases Financial Results for the First Half of Fiscal 2014

U.K. self-storage operator Big Yellow Group PLC released its operating-performance results for the first six months of its fiscal year, following the quarter ending Sept. 30. The company reported revenue of £35.9 million, down 1 percent from the same six-month period a year ago but in line with expectations following the 20 percent value-added tax (VAT) imposed by the government in October 2012. Self-storage facility revenue was up 7 percent compared to the previous six-month period, which ended March 31.

Occupancy for Big Yellows 54 wholly owned locations was 70.5 percent during the six-month period, up 5 percent from a year ago. The result was encouraging to company officials who believe Big Yellow has absorbed the negative effects of the VAT.

"We have delivered a good performance with occupancy growth across the wholly owned portfolio in line with the same period last year. This occupancy growth, combined with an improvement in yield, has offset the adverse impactparticularly within the established portfoliofrom the introduction of VAT in the second half of last year, said Nicholas Vetch, executive chairman. We achieved like-for-like revenue growth of 5.1 percent in October (the first month following the anniversary of the VAT introduction), demonstrating that the VAT impact is firmly in the past, and we are now returning to more normal growth.

Net rent per square foot increased 2.9 percent during the period, and the companys adjusted profit before tax increased 2 percent to £14.2 million. The company also reduced net group debt by £1.8 million to £228.6 million.

Since the end of September, Big Yellow has experienced what it called a seasonal loss in occupancy of 32,000 square feet, but the move-outs are substantially better than a year ago when it lost 91,000 square feet of occupancy during the same period. The move-outs have been in line with our expectations following the strong summer trading, company officials said. This improved performance is largely driven by an increase in move-ins of 14 percent compared to the same period last year, coupled with the impact of VAT in the prior year.

In our final statement earlier this year, we expressed some cautious grounds for optimism which currently looks justified, given the improving economic picture and current trading, Vetch said.

Big Yellow Group operates 66 self-storage locations in the United Kingdom under the Big Yellow Self Storage brand name, with most concentrated in Greater London. The portfolio comprises 4.2 million square feet.