Revenue
| Six months to 30 September 2013 £000 |
Six months to 31 March 2013 £000 |
Six months to 30 September 2012 £000 |
|
|---|---|---|---|
| Established stores | 21,843 | 20,952 | 23,183 |
| Lease-up stores | 13,237 | 11,852 | 12,347 |
| Total revenue | 35,080 | 32,804 | 35,530 |
Revenue for the established stores decreased 5.8% compared to the same period last year, but was up 4.3% compared to the six months to 31 March 2013. The fall compared to the same period last year was due to the decrease in average occupancy and the 5.8% decrease in the average net rent achieved over the period, offset by an increase in other storage related income. The revenue for the 32 established stores in October 2013 was up 0.3% on October 2012. EBITDA margins for the 32 established stores decreased from 67.4% for the period to 30 September 2012 to 66.0% for the current period.
The lease-up stores have grown in occupancy by 108,000 sq ft from the same time last year, and by 113,000 sq ft in the six months from 31 March 2013. Revenue growth in the lease-up portfolio was 7.2% compared to the same period last year and up 11.6% from the six months to 31 March 2013. The revenue for the 22 lease-up stores in October 2013 was up 14% on October 2012. The EBITDA margin on the lease-up stores has increased from 61.7% for the period to 30 September 2012 to 63.7% for the current period. The overall store EBITDA margin decreased from 65.4% to 65.2%.
Like-for-like revenue per available foot (“REVPAF”) was £20.39 for the six months, a decrease of 1.9% from £20.78 for the six months to 30 September 2012 and an increase of 6.4% from £19.17 for the six months ended 31 March 2013.
We continue to improve sales of insurance, packing materials and other ancillary items, with revenue from these areas growing by 3.4% to £5.5 million in the period (2012: £5.3 million).
Operating costs
Store operating costs have reduced by £0.2 million from the prior period, due to the increased recoverability of VAT compared to the prior year, in part offset by an increase in operating costs, notably property rates.
Total cost of sales in the income statement are in line with the prior period, with the reduction in store costs offset by the prior period containing a write back of an accrual for a rental uplift at one of our leasehold stores, which was settled lower than budgeted.
Administrative expenses in the income statement have decreased by £0.3 million. The prior year contained a couple of one-off items including the costs incurred in challenging and implementing the imposition of VAT on self storage, which was adjusted from the Group’s recurring profit for that six month period. The administrative expenses in the current period has also reduced due to the increased recoverability of input VAT.
Interest
Following the placing in January of this year and land sales in the last financial year, we repaid £45 million of variable bank debt, at a lower all in cost of 2.9%. This coupled with the refinancing during the prior year at higher margins, has led to an increase in the Group’s average cost of borrowing during the period to 30 September 2013 of 4.5%, compared to 3.8% for the six months to 30 September 2012. The loan interest expense during the period was £0.1 million lower than the same period last year, due to the lower average debt levels in part offset by the higher average cost of debt. Capitalised interest in the period was £0.2 million, in line with the same period last year, as a result of capital expenditure on Gypsy Corner.
Results
The 2% increase in adjusted profit before tax to £14.2 million is reconciled in the table below:
| Movement in adjusted profit before tax | £m |
|---|---|
| Adjusted profit before tax for the six months to 30 September 2012 | 13.9 |
| Reduction in gross profit | (0.3) |
| Reduction in administrative expenses | 0.2 |
| Reduction in net interest payable | 0.4 |
| Adjusted profit before tax for the six months to 30 September 2013 | 14.2 |
The share of the Partnership’s recurring profit was in line with the same period last year.
The table below reconciles the statutory profit before tax to the adjusted profit before tax:
Profit before tax analysis
| Six months ended 30 September 2013 £m |
Six months to 30 September 2012 £m |
Year ended 31 March 2013 £m |
|
|---|---|---|---|
| Profit before tax | 34.5 | 27.2 | 31.9 |
| Adjusted for: | |||
| Gain on revaluation of investment properties | (17.8) | (11.5) | (9.5) |
| Change in fair value of interest rate derivatives | (1.8) | – | 0.2 |
| Gains on surplus land | – | (0.2) | (1.0) |
| Refinancing costs | – | – | 4.3 |
| VAT implementation costs | – | 0.1 | 0.2 |
| Share of non-recurring gains in associate | (0.7) | (1.7) | (0.6) |
| Adjusted profit before tax | 14.2 | 13.9 | 25.5 |
Diluted EPRA earnings per share was 10.1 pence (2012: 10.7 pence), a decrease of 6% from the same period last year, and an increase of 17% from the six months to 31 March 2013 (8.6 pence).
Cash flow growth
Cash flows from operating activities (after net finance costs) have decreased by 6% to £14.0 million for the period (2012: £14.9 million), largely due to working capital movements. These operating cash flows are after the ongoing maintenance costs of the stores, which are on average £35,000 per store per annum.
| Six months ended 30 September 2013 £000 |
Six months ended 30 September 2012 £000 |
|
|---|---|---|
| Cash generated from operations | 19,330 | 21,004 |
| Finance costs (net) (see below) | (5,345) | (6,067) |
| Free cash flow | 13,985 | 14,937 |
| Non-recurring finance costs (see below) | – | (10,650) |
| Capital expenditure | (3,818) | (7,040) |
| Surplus land sales | – | 12,335 |
| VAT received on surplus land sales (adjusted from movement in creditors) |
– | 2,430 |
| Investment in associate | – | (1,000) |
| Cash flow after investing activities | 10,167 | 11,012 |
| Dividends | (8,384) | (7,057) |
| Issue of share capital | 33 | 976 |
| Decrease in borrowings | (7,957) | (6,761) |
| Net cash outflow | (6,141) | (1,830) |
The capital expenditure in the period principally relates to the construction costs of our Gypsy Corner store.
The non-recurring finance costs incurred in the prior period relate to the cancellation of interest rate swaps (£9.2 million) and arrangement fees and costs incurred in completing the loan from Aviva (£1.5 million).
Taxation
The Group is a Real Estate Investment Trust (“REIT”). We benefit from a zero tax rate on our qualifying self storage earnings. We only pay corporation tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and management fees earned by the Group.
There is a nil tax charge in the non-exempt residual business for the period ended 30 September 2013 (2012: £nil), due to tax relief in relation to the restructuring of interest rate derivatives in prior periods and the utilisation of other brought forward tax losses.
Dividends
REIT regulatory requirements determine the level of Property Income Dividend (“PID”) payable by the Group. A PID of 8 pence per share is proposed as the total interim dividend, an increase of 60% from 5 pence per share PID for the same period last year.
The interim dividend will be paid on 9 January 2014, the ex-div date is 11 December 2013 and the record date is 13 December 2013.
Financing and treasury
In April 2012 the Group agreed a £100 million 15 year loan with Aviva Commercial Finance Limited, secured over a portfolio of 15 freehold self storage centres. The annual fixed interest rate on the loan is 4.9%. The loan amortises to £60 million over the course of the 15 years, consistent with the Group’s medium term debt reduction strategy. The debt service is payable monthly based on fixed annual amounts. The loan outstanding on the fifth anniversary will be £89.8 million; £76.7 million on the tenth anniversary, with £60 million at expiry in April 2027.
The Group also has a £155 million 4 year bank facility with Lloyds, HSBC and Santander, expiring in September 2016. £120 million of the facility is term loan with the balance of £35 million revolving. £70 million of this debt is fixed through an interest rate swap expiring in September 2016 at a fixed rate of 2.8% plus margin. The £63 million balance of the bank debt drawn accrues interest at variable rates based on one month LIBOR plus margin.
The facilities attract a ratcheted margin over LIBOR based on interest cover. The Group is currently paying a blended 2.4% margin, the lowest margin on the ratchet, which is effective for income cover of greater than 3 times.
The Group’s cost of funding is summarised in the table below:
| Weighted of debt (£m) |
Amount average interest cost (%) |
|
|---|---|---|
| Aviva debt | 97.3 | 4.9 |
| Fixed rate bank debt | 70.0 | 5.3 |
| Floating rate bank debt | 63.0 | 2.9 |
| Total debt | 230.3 | 4.5 |
The Group was comfortably in compliance with its banking covenants at 30 September 2013.
Group net debt was reduced in the period by £1.8 million to £228.6 million. The net debt to gross property assets ratio is 29% and the net debt to equity ratio is 39%.
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- Trading performance
- Store occupancy
- Pricing and rental yield
- Security of income
- Revenue
- Operating costs
- Interest
- Results
- Profit before tax analysis
- Cash flow growth
- Taxation
- Dividends
- Financing and treasury
- Property
- Capital Goods Scheme receivable
- Net asset value
- Big Yellow Limited Partnership