Last checked at 16 Apr 2020 07:00
16 April 2020
Big Yellow Group PLC
("Big Yellow" or "the Group")
Fourth Quarter Trading Update
The Board of Big Yellow Group PLC, the UK's brand leader in self storage, today provides the following trading update for the fourth quarter ended 31 March 2020. This in anticipation of the likely delay of our preliminary announcement to a provisional date of 9 June 2020 as a result of the Covid-19 lockdown restrictions and the current FRC guidance.
Results
| Quarter ended 31 March 2020 | Quarter ended31 March 2019 | Change |
Store maximum lettable area ("MLA") | 4,688,000 | 4,622,000 | 1% |
Closing occupancy (sq ft) | 3,781,000 | 3,810,000 | (1%) |
Occupancy gain in the quarter (sq ft) | 36,000 | 32,000 | 13% |
Closing occupancy (% of MLA) | 80.7% | 82.4% | (1.7 ppts) |
Like-for-like closing occupancy(1) | 81.3% | 82.4% | (1.1 ppts) |
Revenue for the quarter | £32.8 million | £31.5 million | 4.1% |
Like-for-like revenue for the quarter(2) | £32.5 million | £31.3 million | 3.8% |
Revenue for the year | £129.3 million | £125.4 million | 3.1% |
Like-for-like revenue for the year(2) | £128.2 million | £123.5 million | 3.8% |
Average achieved net rent per sq ft | £28.29 | £27.46 | 3.0% |
Closing net achieved rent per sq ft | £28.12 | £27.28 | 3.1% |
(1) Excluding Manchester (opened May 2019).
(2) Excluding Wapping (opened July 2018), Manchester (opened May 2019) and Battersea (closed for redevelopment in March 2019).
In the fourth quarter occupancy increased by 36,000 sq ft compared to a gain of 32,000 sq ft in the same quarter last year.
Like-for-like closing occupancy was 81.3%, a decrease of 1.1 ppts from the same time last year, having been in line with last year at the end of February. Commentary on the March performance is outlined below. Overall closing occupancy was 80.7%, reflecting the opening of our 60,000 sq ft store in central Manchester in May 2019.
The Group's average achieved net rent per sq ft increased by 3.0% compared to the same quarter last year. Closing net achieved rent per sq ft was £28.12, an increase 3.1% from 31 March 2019.
The Group's like-for-like revenue increased by 3.8% in the quarter and is up 3.8% for the year.
Lockdown trading
At Big Yellow, the health and safety of our staff and customers is our principal priority. An update on the current status of the operational changes the Group has made to continue to meet Public Health guidelines can be found at https://www.bigyellow.co.uk/coronavirus/. The vast majority of our head office team have been working from home during the lockdown period.
The last two weeks in March are historically when we see relatively strong gains in occupancy. However, after the introduction of lockdown measures commencing in mid-March we saw heightened levels of activity both in and out of the business over the ensuing two week period to the end of March with a net overall loss of 23,000 sq ft in occupancy (2019: gain of 25,000 sq ft in the same two week period). Customer move-ins and move-outs in the business have reduced significantly in April. In addition, we have not as yet seen any notable impact on debtors and cash collection.
The Group's year-on-year revenue growth for April to date is 2.6%.
From 1 April to 15 April 2020 we have seen a higher loss of occupancy of 32,000 sq ft compared to a loss for the same period last year of 12,000 sq ft. That, however, has been partially offset by rate growth of 0.8%. Given the reduced number of move ins there are fewer customers with opening offers in the business than would normally be the case. On 23 March we suspended all rate increases to existing customers. This will be restarted following the initial lifting of lockdown measures.
We have seen a modest increase in costs principally attributable to staff travel (where we are paying for 57 employees to travel privately), sanitising and protective equipment. This has however been more than offset by a reduction of spend on "pay per click" and other marketing costs in the main. We anticipate therefore a reduction in overall operating costs whilst the lockdown persists. In addition, our interest costs have materially reduced as a significant amount of our debt is variable.
Development update
As previously announced, construction on our Battersea and Camberwell development sites has been halted, and limited fit-out work is continuing at our Bracknell store. We will recommence construction as appropriate following the relaxation of lockdown measures.
Of the thirteen stores in the development pipeline, six have planning consent, a further three have applications submitted and the remaining four will be submitted this year. The applications that are awaiting committee approval are subject to delay as a result of the lockdown.
Capital structure
On 31 March 2020 the Group completed a 7 year debt facility with Aviva of £35 million at an all-in cost of 1.96%, secured over the existing Aviva security pool of 15 stores. This cost reduces to 1.91% following the installation of 50 kWh capacity solar panels at three of the stores, as an environmental incentive.
The Group currently has headroom of cash and undrawn bank facilities of £76 million.
The average cost of debt on drawn facilities is now 2.6% and the marginal cost of RCF bank debt remains at 1.35%. The Group's current proforma interest cover is approximately 9 times. The Group banking covenants are set at 1.5 times.
The Board has over the last few years worked to ensure a spread of debt maturity dates and to procure debt from a range of providers. The Group's earliest maturity is on its £70 million M&G loan in June 2023 and the Group's debt has an average maturity of 4.9 years.
James Gibson, Chief Executive Officer, commented:
"Our investment in our digital platform in the last decade and our stores which allow automated access to existing customers, has enabled us to amend our operating practices to continue to provide secure storage services in this lockdown environment. Furthermore, we own 98% of our estate by value freehold, enjoy high operating margins, and we have a relatively flexible and conservative debt structure.
Given the levels of distress in the economy it is not possible to make accurate judgements about future trading until we have improved visibility. We are self-evidently not immune from this very challenging environment, however, we believe our business model will provide the Group with a good deal of resilience."
For further information, please contact:
Big Yellow Group PLC | 01276 477 811 |
Nicholas Vetch, Executive Chairman | |
James Gibson, Chief Executive Officer | |
John Trotman, Chief Financial Officer | |
Teneo | 0203 603 5221 |
Ben Foster | |
Matthew Denham |
Notes to Editors
Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 100 stores, including 25 stores branded as Armadillo Self Storage, in which the Group has a 20% interest. We own a further thirteen Big Yellow self storage development sites, of which six have planning consent. The current maximum lettable area of the existing platform (including Armadillo) is 5.7 million sq ft. When fully built out the portfolio will provide approximately 6.6 million sq ft of flexible storage space. Of the Big Yellow stores and sites, 98% by value are held freehold and long leasehold, with the remaining 2% short leasehold.
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. Our focus on the location and visibility of our Big Yellow stores, coupled with our excellent customer service and our market leading online platform, has created the most recognised brand name in the UK self storage industry.