17th Jan 2007 07:00
Big Yellow Group PLC17 January 2007 17 January 2007 Big Yellow Group PLC ("Big Yellow" or "the Company") Quarterly Trading Update The Board of Big Yellow Group PLC, the FTSE 250 self storage company, is pleasedto provide the following update on trading for the quarter ending 31 December2006. Conversion to REIT status • As we noted in our Interim Statement in November, Big Yellow has been seeking clarification from HM Revenue and Customs ("HMRC") of one material point outstanding in relation to conversion to Real Estate Investment Trust ("REIT") status. The point in issue is the change of tax treatment of Big Yellow's self storage rental income from Schedule D to Schedule A, necessary for qualification as a REIT. Whilst management has not yet been able to reach agreement with HMRC it has nevertheless decided to make the election for REIT status to preserve the expected benefits from the earliest date. As expected, HMRC have objected to the notification whilst at the same time agreeing to continue discussions with the Company. The Board is firmly of the view that conversion to REIT status should be ultimately successful, although not guaranteed, for the following reasons: - extensive and robust advice from its professional advisers including leading Counsel; - varying treatment in the self storage industry by HMRC in relation to the classification of self storage rental income; - HMRC's own guidance published in November 2006 recognising that the borderline between Schedule A and D had become less distinct and indicating that provided that there is no loss of tax as a result of transition they would not object in marginal cases; - HMRC's historical VAT treatment of self storage rental income as deriving from a licence to occupy land and hence as income from property; and - the Group's open storage centres are accounted for under IAS 40 as investment properties and not as owner occupied properties, and are held in the balance sheet at open market value. • As noted in our interim statement, the Company intends in due course to convene an EGM to seek shareholder approval for certain amendments to the Company's Articles of Association in connection with its intended conversion to REIT status. The EGM circular will contain full details of the proposed amendments and the reasons for them. Quarterly highlights • Revenue for the quarter was £12.9 million - Up 19% from £10.8 million for the same quarter last year - Up 1% from £12.8 million for the quarter to 30 September 2006 • Annualised revenue at 31 December was £48.9 million - Up 15% from £42.5 million at the same time last year - Down 2% from £50.0 million at 30 September 2006 • 1,748,000 sq ft occupied at the quarter end - Up 6% from 1,642,000 sq ft at the same time last year - Down 2% from 1,792,000 sq ft occupied at 30 September 2006 • Average annual rent per sq ft over the first 9 months is £24.01, up 7% from £22.46 achieved for year ending 31 March 2006 following price increases in May 2006. • We have opened two storage centres in the quarter, an 80,000 sq ft centre in Edmonton (October) and a 50,000 sq ft centre in Gloucester (December). We now have 43 storage centres open with a total self storage capacity of 2.57 million sq ft. • Since the announcement of our interim results we have acquired a site in Nottingham to develop a 60,000 sq ft storage centre. This brings the total sites acquired in the year to eight. • The number of stores open and sites in planning/under development now total 62. Three planning consents were granted in the quarter at Ealing, Kennington and Barking Central and of the 19 sites in development, five have planning permissions. The total capacity of the 62 stores and sites when fully developed will be 3.79 million sq ft. James Gibson, Chief Executive, commented: "In the event that we succeed in our ambitions we believe the conversion to REITstatus will be of significant benefit to shareholders creating an enhancedlevel of future dividends in a more tax efficient and transparent structure. Inaddition we believe that the self storage industry as a whole will benefit fromthe creation of a growing specialist REIT sector, with improved access tocapital, driving further development of this relatively young market. "December is historically our weakest month and this year there was a higherloss of occupancy than we have seen previously. We are pleased that we areseeing the usual pick-up in activity as we move to our seasonally strongerspring/summer trading period. However, we remain cautious in relation to therisks to the consumer and this will not have been helped by the recent rise ininterest rates. "We continue to make steady progress on planning consents, with two grantedsince the interim results in November, and are looking to achieve furtherconsents over the remainder of the year." - Ends - For further information, please contact: Big Yellow Group PLC 01276 477 811Nick Vetch, ChairmanJimmy Gibson, Chief Executive Weber Shandwick Square Mile 020 7067 0700Louise Robson or John Moriarty Notes to Editors Big Yellow Group PLC is one of the leading and most dynamic self-storage groupsin the UK. It was founded in 1998 by Nicholas Vetch, Philip Burks and JamesGibson and listed on AIM in May 2000, moving to the Official List of the LondonStock Exchange in 2002. Big Yellow has expanded rapidly and now operates from 43 stores in London andthe South, and one in Leeds, with a further 19 stores in development and of the62, 51 are held freehold and two long leasehold. All the stores have thedistinct yellow branding, in accessible main road locations, with the majoritybeing within the M25 or in strong urban conurbations. When fully built out theportfolio will provide approximately 3.79 million sq ft of flexible storagespace. The Group has pioneered the development of the latest generation of self-storagefacilities, which utilise state of the art technology and are located in highprofile, main road locations. Its focus on the location and visibility of itsbuildings, coupled with excellent customer service, has created the mostrecognised brand name in the UK self-storage industry. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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