Possibly boosted by a one-off Olympics effect, Big Yellow Group (BYG) enjoyed a very strong summer. Store revenue for the first half was up 11.5 per cent to £35.5m, driven by a 10.1 per cent increase in revenue per available square foot (Revpaf) - a crucial metric for self-storage companies that adjusts rental rates for occupancy. Because a high proportion of the company's costs are fixed, profit growth was even faster, rising 20 per cent to £13.9m, excluding property and hedge revaluations.
The fly in the ointment is that a tax change announced in March, which made VAT chargeable on self-storage, only came into effect in October. Big Yellow has passed the entire cost on to business customers, who can claim it back, and half of the cost on to others, who received rate hikes of 10-12.5 per cent in their four-weekly invoices. The group's net rent is now 3.8 per cent lower than at 1 April, which will cut Revpaf for the current period.
Some of this lost income will be reclaimed via VAT rebates, for which Big Yellow now qualifies. But more income may also be lost if customers are squeezed out of the market by the higher prices. Whether or not that effect is at play, chairman Nick Vetch says it "feels quieter now" - although that's partly just the usual seasonal lull as students move out and the housing market slows down.
Broker Investec expects recurring pre-tax profits of £25.8m this year, giving EPS of 19.8p (from £23.9m and 18.2p in March 2012).
BIG YELLOW GROUP (BYG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 326p | MARKET VALUE: | £425m | |
| TOUCH: | 324-326p | 12-MONTH HIGH: | 355p | 218p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 397p | NET DEBT: | 52% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 32.6 | 6.5 | 5.0 | 4.50 |
| 2012 | 36.2 | 27.2 | 21.2 | 5.00 |
| % change | +11 | +321 | +324 | +11 |
Ex-div: 5 Dec Payment: 4 Jan | ||||
