REG - Big Yellow Group PLC - Results for the Six Months ended 30 September 2021
22/11/2021 16:30
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RNS Number : 1672T Big Yellow Group PLC 22 November 2021
22 November 2021
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the Six Months ended 30 September 2021
Strong first half results driven by a combination of occupancy and rate growth
Financial metrics Six months ended Six months ended
30 September 2021
30 September 2020
Change
Revenue £81.8 million £65.8 million 24%
Store revenue ((1)) £80.8 million £64.4 million 25%
Like-for-like store revenue ((1,2)) £73.7 million £64.3 million 15%
Store EBITDA ((1)) £57.7 million £44.5 million 30%
Adjusted profit before tax ((1)) £46.9 million £36.5 million 28%
EPRA earnings per share ((1)) 25.7 pence 20.9 pence 23%
Interim dividend per share 20.6 pence 17.0 pence 21%
Statutory metrics
Profit before tax £254.9 million £59.9 million 326%
Cash flow from operating activities (after net finance costs) £51.8 million £42.3 million 22%
Basic earnings per share 142.0 pence 34.4 pence 313%
Store metrics - Big Yellow stores 4,984,000 4,822,000 3%
Store Maximum Lettable Area ("MLA") ((1))
Closing occupancy (sq ft) ((1)) 4,472,000 4,106,000 9%
Occupancy growth in the period (sq ft) ((1)) 271,000 325,000 (54,000 sq ft)
Closing occupancy ((1)) 89.7% 85.2% 4.5 ppts
Occupancy - like-for-like stores ((1,2)) 91.3% 87.3% 4.0 ppts
Average achieved net rent per sq ft ((1)) £29.52 £28.01 5.4%
Closing net rent per sq ft ((1)) £30.43 £27.75 9.7%
Store metrics - Armadillo stores
Store Maximum Lettable Area ("MLA") ((1)) 1,078,000 1,081,000 -
Closing occupancy (sq ft) ((1)) 955,000 868,000 10%
Occupancy growth in the period (sq ft) ((1)) 47,000 69,000 (22,000 sq ft)
Closing occupancy ((1)) 88.6% 80.3% 8.3 ppts
Average achieved net rent per sq ft ((1)) £19.14 £17.71 8.1%
Closing net rent per sq ft ((1)) £19.85 £17.50 13.4%
(1 )See note 19 for glossary of terms
(2 )The like-for-like metrics exclude stores opened in the current and
preceding financial years, and the Armadillo stores
First Half Highlights
· Like-for-like occupancy increase of 3.9 ppts from 1 April 2021 and
up 4.0 ppts from same time last year to 91.3% (September 2020: 87.3%)
· Big Yellow stores average achieved net rent per sq ft increased by
5.4% period on period, closing net rent up by 9.7% from September 2020
· Revenue growth for the period was 24%, with like-for-like store
revenue up by 15%, driven by gains in occupancy and the improvement in average
rate
· Cash flow from operating activities (after net finance costs)
increased by 22% to £51.8 million
· Adjusted profit before tax up 28% to £46.9 million, with EPRA
earnings per share up 23%
· 20.6 pence per share interim dividend declared, an increase of 21%
· Our 54,000 sq ft MLA Uxbridge store opened at the end of June 2021,
and has had a strong start with current occupancy of 52%
· Acquisition of new development sites in Kentish Town and West
Kensington taking pipeline to 14 development sites of approximately 1.12
million sq ft (18.5% of current MLA)
· Planning consent granted for new stores in Slough (90,000 sq ft
MLA) and Newcastle (60,000 sq ft MLA). Nine of the 14 sites now have
planning, representing approximately 60% of the storage capacity of the
pipeline
· Placing of 7.8 million shares in June 2021 raising £97.6 million
(net of expenses) to fund strategic acquisitions of remaining interest in
Armadillo and development site in West Kensington. The combined transactions
are earnings accretive
· Increase of £100 million in Aviva and M&G loans, increasing
our total debt capacity to £576.1 million. Current net debt is £397.4
million, with available headroom of £178.7 million
Commenting, Nicholas Vetch, Executive Chairman, said:
"This first half performance has been very strong, which should flow through
into the full year results, absent any material external factors. The self
storage sector more generally, and Big Yellow specifically, has benefited from
significant occupancy growth since the end of the first lockdown in late May
2020, with the sector now at historically high levels of occupancy. These
levels of occupancy have been a key factor in driving earnings and increasing
growth in net achieved rents. As we look towards our next financial year, we
expect the market to return to a more normalised trading environment.
The increased capacity from the development programme is having a tangible
positive impact on profitability, which we expect will continue as we grow our
platform."
- Ends -
ABOUT US
Big Yellow is the UK's brand leader in self storage. Big Yellow now operates
from a platform of 104 stores, including 25 stores branded as Armadillo Self
Storage. We own a further 14 Big Yellow self storage development sites of
which nine have planning consent. The current maximum lettable area of the
existing platform (including Armadillo) is 6.1 million sq ft. When fully
built out the portfolio will provide approximately 7.2 million sq ft of
flexible storage space. 98% of our stores and sites 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 stores, with excellent customer service, a
market-leading online platform, and significant and increasing investment in
sustainability, has created in Big Yellow the most recognised brand name in
the UK self storage industry.
For further information, please contact:
Big Yellow Group
PLC
01276 477811
Nicholas Vetch, Executive Chairman
Jim Gibson, Chief Executive Officer
John Trotman, Chief Financial Officer
Teneo
020
7260 2700
Ben Foster
Matthew Denham
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the Six Months ended 30 September 2021
Chairman's Statement
Big Yellow Group PLC, the UK's brand leader in self storage, is pleased to
announce its results for the six months ended 30 September 2021.
This first half has seen strong revenue growth, driving earnings growth from a
combination of occupancy and improvements in average net rent driven by our
yield management systems.
In the quarter to June, we saw excellent occupancy increases, with a record
performance in the month of June, attributable in part to the stamp duty
holiday. The second quarter and in to October was mixed with short-term
customers exiting the business. We expect to see the historical pattern of
seasonal occupancy losses in the third quarter, driven by domestic and student
short-term customers moving out, before we see a return to growth in the final
quarter of the year.
We acquired the 80% of Armadillo that we did not previously own on 1 July
2021, and these results therefore benefit from consolidating the Armadillo
business in the second quarter. The Armadillo portfolio has also had a
strong performance over the six months in all key metrics. In these results
we have separated out the Armadillo performance in the portfolio summary and
in the highlights and will also do so at the year end to provide a transparent
understanding of the underlying performance of the business.
Financial results
Like-for-like occupancy increased to 91.3% (up 4.0 percentage points from
87.3% at 30 September 2020, and up 3.9 ppts from 1 April 2021). We are
pleased to have achieved our long-held target of 90% occupancy.
Revenue for the period was £81.8 million (2020: £65.8 million), an increase
of 24%, with like-for-like store revenue up 15%, driven by a combination of
increases in occupancy and average net rent. Like-for-like store revenue
excludes new store openings, and the impact of the acquisition of the
remaining interest in Armadillo. Armadillo was previously equity accounted
as an associate, and from 1 July 2021 is consolidated, as we now own 100%.
We have seen growth in cash flow from operating activities (after net finance
costs) of 22% to £51.8 million for the period (2020: £42.3 million).
The Group's central overhead and operating expense is largely embedded in the
business, and therefore increases in revenue should deliver higher growth in
earnings. The Group made an adjusted profit before tax in the period of
£46.9 million, up 28% from £36.5 million for the same period last year (see
note 6).
Adjusted diluted EPRA earnings per share were 25.7 pence (2020: 20.9 pence),
an increase of 23%. The Group's statutory profit before tax for the period
was £254.9 million, an increase of 326% from £59.9 million for the same
period last year, due to a higher revaluation gain in the period, reflecting
the strong operating performance of the stores.
Dividends
The Group's dividend policy is to distribute 80% of full year adjusted
earnings per share. We have declared an interim dividend of 20.6 pence per
share, which is an increase of 21% on last year. This has all been declared
as Property Income Distribution ("PID").
Acquisition of Armadillo
On 1 July, the Group acquired the remaining 80% interest in Armadillo which it
did not previously own from its JV partners. The total consideration was
£119 million, including underlying debt of £50.9 million for a Year One net
operating income ("NOI") yield of 7.7% (based on a projected NOI of £10.9
million).
The Armadillo portfolio is more regional and as a result the proportion of our
revenue derived from London and the South East reduced from 82% to 74%, albeit
we expect this weighting to revert over the medium term to over 80%, given our
development pipeline is focused largely on London and the South East.
The Armadillo Self Storage brand has been part of the Big Yellow family since
2009 and has 25 stores and 1.1 million sq ft of maximum lettable area. The
portfolio is 93% freehold by valuation with an average capacity of 43,000 sq
ft (lower than the 63,000 sq ft average for Big Yellow stores). We invested
significantly with our joint venture partners in upgrading these stores and
improving their day-to-day operations.
We intend to continue to acquire existing freehold regional stores which are
of the appropriate quality and size to add to this brand alongside our
development of new build Big Yellow stores.
Investment in new capacity
In April, the Group acquired a prime Zone 2 0.9 acre site on Regis Road in
Kentish Town, North London for £16.5 million. We will be seeking planning
permission for a 68,000 sq ft self storage centre on the site.
In June the Group acquired 66 Hammersmith Road, West Kensington, in London for
£26 million. This is a strategic acquisition adjacent to the Olympia
conference centre, a short distance from one of the wealthiest and densest
enclaves in London. Subject to planning, the store is currently estimated to
open in early 2025, and will provide approximately 175,000 sq ft of space,
including 7,000 sq ft of SME space. The total development cost, including
land acquisition, is estimated to be £73 million, with an expected NOI at
stabilisation of £5.8 million or 7.9% on cost. West Kensington, when fully
constructed and opened, will represent our largest capital investment in an
individual store to date.
We opened our 54,000 sq ft store in Uxbridge at the end of June, and initial
trading has been strong, with the store's occupancy 52% at the date of these
results.
The Group is currently on site at Hayes (anticipated opening January 2022),
Hove (Spring 2022), North Kingston (Summer 2022), Harrow (Summer 2022) and
Kings Cross (Summer 2023). At Harrow, in addition to the Big Yellow store,
we are constructing 104,000 sq ft across 11 industrial units.
Big Yellow now has a pipeline of 14 development sites, nine of which have
planning consent. These store openings are expected to add approximately 1.1
million sq ft of storage space to the portfolio, an increased capacity of
18.5%.
The total development cost of these new stores is £354 million, including
cost incurred to date of £182 million, and cost to complete of approximately
£172 million, with an expected net operating income of £31 million, or 8.8%
on cost.
Capital structure
The Group's interest cover for the period (expressed as the ratio of cash
generated from operations pre working capital movements against interest paid)
was 10.6 times (2020: 9.7 times). This is comfortably ahead of our internal
minimum interest cover requirement of five times.
Net debt is £397.4 million at 30 September 2021, and we have available
liquidity of £178.7 million and the business continues to generate positive
post-dividend cash flow both of which we will use to fund future growth. In
addition, the Group has land surplus to its needs which will be realised over
the medium term, generating net cash proceeds estimated currently at over
£100 million. The average cost of debt on drawn facilities is now 2.8% and
the marginal cost of RCF bank debt is currently 1.35%.
Outlook
This first half performance has been very strong, which should flow through
into the full year results, absent any material external factors. The self
storage sector more generally, and Big Yellow specifically, has benefited from
significant occupancy growth since the end of the first lockdown in late May
2020, with the sector now at historically high levels of occupancy. These
levels of occupancy have been a key factor in driving earnings and increasing
growth in net achieved rents. As we look towards our next financial year, we
expect the market to return to a more normalised trading environment.
The increased capacity from the development programme is having a tangible
positive impact on profitability, which we expect will continue as we grow our
platform.
Nicholas
Vetch
Executive Chairman
22 November 2021
Business and Financial Review
Operations under Covid-19
At Big Yellow, the health and safety of our team members and customers is our
principal priority. Our stores have continued to trade during the pandemic
and following the full re-opening in July, we made the decision to retain our
protocols around physical barriers, sanitiser use and cleaning in our stores
and at head office. Our approach to vaccination has been one of
encouragement, particularly given the relatively small teams that we have in
our stores, and we believe that a significant proportion of our people are
double vaccinated. We are not currently seeing a significant incidence of
positive tests within the business, although we were impacted for a short
period during the first quarter by the so-called "Pingdemic". We will
continue to remain vigilant over the winter months.
Armadillo
As explained above, the Group acquired the remaining interest in Armadillo
which it did not previously own on 1 July 2021. Armadillo consists of 25
stores with a maximum lettable area of 1.08 million sq ft. The occupancy of
the Armadillo stores on acquisition was 974,000 sq ft (90.2% of MLA).
Store occupancy
Like-for-like occupancy increased by 3.9 ppts from 1 April 2021, and
like-for-like store revenue growth for the half year was 15%.
The tables below show the monthly move-in and move-out activity over the half
year for the 79 Big Yellow stores:
Move-ins period ended 30 September 2021 Move-ins period ended 30 % Move-ins period ended 30 September 2019 %
September 2020
April 4,821 2,578 87 5,016 (4)
May 5,698 4,121 38 5,798 (2)
June 9,900 6,861 44 8,136 22
July 6,897 6,689 3 6,883 0
August 7,212 7,213 - 7,143 1
September 7,416 6,965 6 6,544 13
Total 41,944 34,427 22 39,520 6
October 6,153 6,339 (3) 5,356 15
Move-outs period ended 30 September 2021 Move-outs period ended 30 September 2020 % Move-outs period ended 30 September 2019 %
April 5,082 2,693 89 4,982 2
May 4,901 3,194 53 4,870 1
June 5,243 4,160 26 4,890 7
July 7,118 5,363 33 6,366 12
August 6,684 5,815 15 6,579 2
September 9,112 7,950 15 9,575 (5)
Total 38,140 29,175 31 37,262 2
October 7,830 6,789 15 6,714 17
The first quarter last year saw a significant decrease in the usual level of
activity caused by the Spring 2020 lockdown. Move-ins and move-outs are
therefore showing a significant increase on last year, with a more normalised
move-in picture in the second quarter. In 2020, move-outs took longer to
normalise, hence we are showing an increase in move-outs in the second quarter
compared to the prior year. We have included the data for 2019 as well,
which shows more normalised levels of move-in and move-out growth this year
compared to that year.
We saw strong demand from domestic customers in the first quarter in part due
to the stamp duty holiday tapering off from 1 July. This resulted in an
acceleration of housing-related demand in June. We also saw the return of
student demand in June as universities looked to re-open their campuses for
conferences. Some of this occupancy growth from both the housing and student
sectors was relatively short-term, impacting occupancy performance in the
second quarter.
The above table shows an increase in move-outs in July and October, some of
which must be related to the gradual tapering off of the stamp duty holiday
with key dates being 30 June and 30 September when it ended.
Move-ins for the 25 Armadillo stores for the six months were up 31% on the
same period last year, and up 4% on 2019, with move-outs up 40% on 2020, and
up 11% on 2019.
The Big Yellow stores grew in occupancy over the six months by 271,000 sq
ft. The table below shows the change in occupancy by customer type over the
six-month period for the Big Yellow stores:
Customer type Net sq ft change in period ended 30 September 2021 Net sq ft change in period ended 30 September 2020 Net sq ft change in period ended 30 September 2019
Domestic 158,000 sq ft 193,000 sq ft 94,000 sq ft
Business 99,000 sq ft 108,000 sq ft (14,000 sq ft)
Student 14,000 sq ft 24,000 sq ft 20,000 sq ft
Total 271,000 sq ft 325,000 sq ft 100,000 sq ft
We started the period from a higher occupancy level, and whilst the growth in
occupancy for the six months is lower than last year, which was a record six
months, it is significantly ahead of 2019, a period affected by political
uncertainty around Brexit.
Our business demand has remained robust, driven by online retailers, B2B
traders looking for flexible mini-warehousing for e-fulfilment, the shortening
of supply chains, and businesses looking to rationalise their other fixed
costs of accommodation. Domestic demand has been more volatile, impacted by
the stamp duty holiday as already discussed.
Over the six months to 30 September 2021, the Armadillo stores grew in
occupancy by 47,000 sq ft, of which 44,000 sq ft of growth was from domestic
customers, with small increases in both business and student occupancy.
The average space occupied by business customers at the period end has
increased to 185 sq ft (2020: 180 sq ft). Domestic customers occupy on
average 60 sq ft (2020: 57 sq ft) and pay on average 22% more in rent per sq
ft, however business customers do stay longer and take more space, so
represent around 32% of revenue.
The Group's like-for-like store revenue increased by 15% compared to the same
period last year, driven by a combination of gains in occupancy and average
net rent growth.
Our third quarter is historically the weakest trading quarter where we see a
loss in occupancy with a return to growth in the fourth quarter. In the
current year, we have lost 149,000 sq ft (2.5% of maximum lettable area "MLA",
including Armadillo) since the end of September, compared to a loss of 16,000
sq ft (0.3% of MLA) at the same stage last year, which was unusual and
impacted by the timing of Covid lockdowns, and we are now returning to more
normal seasonal trading activity.
The 73 established Big Yellow stores are 91.5% occupied compared to 87.7% at
the same time last year. The 6 developing Big Yellow stores added 94,000 sq
ft of occupancy in the past six months to reach closing occupancy of 66.1%.
The 25 Armadillo stores are 88.6% occupied, compared to 80.3% at this time
last year. Overall store occupancy was 89.5%.
Occupancy Occupancy growth from 30 September 2020
30 September 2021 Occupancy growth from 31 March 2021 000 sq ft Occupancy Occupancy
% 000 sq ft 30 September 2021 Occupancy 30 September 2020
000 sq ft 31 March 000 sq ft
2021
000 sq ft
73 established Big Yellow stores 91.5% 177 207 4,242 4,065 4,035
6 developing Big Yellow stores 66.1% 94 159 230 136 71
All 79 Big Yellow stores 89.7% 271 366 4,472 4,201 4,106
25 Armadillo stores 88.6% 47 87 955 908 868
All 104 stores 89.5% 318 453 5,427 5,109 4,974
Cash collection
Over 80% of our customers pay by direct debit, and as of the date of these
results, the Group has collected 99.8% of its revenue for the first half of
the financial year, which compares to 99.6% at this time last year. The bad
debt write-off (including costs of disposal) in the period was 0.2% of revenue
(2020: 0.2%).
Pricing and rental yield
We offer a headline opening promotion of 50% off for up to the first 8 weeks,
and we continue to manage pricing dynamically, taking account of room
availability, customer demand and local competition. Our pricing model
reduces promotions and increases asking prices where individual units are in
scarce supply. This lowering of promotions, coupled with price increases to
existing and new customers, leads to an increase in net achieved rents.
As the stores are now at higher levels of occupancy, we are seeing improving
growth in net rent per sq ft. The average achieved net rent per sq ft
increased for Big Yellow stores by 5.4% compared to the same period last year,
with closing net rent up 9.7% compared to 30 September 2020, and up 6.0% from
31 March 2021. The achieved net rent per sq ft grew by 8.1% from last year
in the Armadillo stores and closing net rent per sq ft increased by 13.4% from
30 September 2020 and by 8.0% from 31 March 2021.
The table below shows the change in net rent per sq ft for the combined Big
Yellow and Armadillo portfolio by average occupancy over the six months (on a
non-weighted basis). The analysis excludes our most recent store openings in
Camberwell, Bracknell, Battersea, and Uxbridge.
Average occupancy in Number of stores Net rent per sq ft change from 1 April to 30 September 2021 Net rent per sq ft change from 1 April to 30 September 2020
the six months
75% to 85% 19 6.3% (3.3%)
85 to 90% 37 6.9% (1.1%)
Above 90% 44 8.4% 0.2%
Security of income
We believe that self storage income is essentially evergreen income with
highly defensive characteristics driven from buildings with very low
obsolescence risk. Although our contract with our customers is in theory as
short as a week, we do not need to rely on contracts for our income
security. At 30 September 2021 the average length of stay for existing
customers was 27 months (2020: 27 months). For all customers, including
those who have moved out of the business throughout the life of the portfolio,
the average length of stay increased to 8.9 months (2020: 8.8 months). Most
notably, we have seen a significant decrease in the length of stay of
customers who moved out over the six months, which decreased to 7.6 months
from 9.6 months for the same period last year. This is likely to have been
the result of customers delaying move-outs during the prior year Spring full
lockdown, amplified by short-term users in the current period as a result of
the stamp duty changes. This clearly illustrates some normalisation of our
activity which has started to occur in this six month period, and the 7.6
months is more in line with pre-pandemic levels.
35% of our customers by occupied space have been storing with us for over two
years (2020: 34%), and a further 18% of customers have been in the business
for between one and two years (2020: 17%).
We have a diverse base of domestic and business customers currently occupying
77,000 rooms. This, together with the location and quality of our stores,
limited growth in new supply, digital operating systems, customer service, and
brand recognition, all contribute to the resilience and security of our
income.
Supply
New supply and competition is a key risk to our business model, hence our
weighting to London and its commuter towns, where barriers to entry in terms
of competition for land and difficulty around obtaining planning are
highest. Growth in new self storage centre openings, excluding container
operators, over the last five years has averaged 2% to 3% of total capacity
per annum, down significantly from the previous decade. We continue to see
limited new supply growth in our key areas of operation, with only six store
openings in London in 2021 (including our Uxbridge store), and we anticipate
seven new facilities in London in 2022 (including our planned stores at Hayes,
Harrow, and North Kingston).
Revenue
Total revenue for the six-month period was £81.8 million, an increase of
£16.0 million (24%) from £65.8 million in the same period last year. Of
the total store revenue of £80.8 million in the period, like-for-like store
revenue (see glossary in note 19) was £73.7 million, an increase of 15% from
the 2020 figure of £64.3 million. The revenue from the Armadillo stores for
the three months from acquisition of the remaining interest on 1 July 2021 to
30 September 2021 was £5.6 million.
Other sales comprise the selling of packing materials, insurance, and storage
related charges. We saw strong growth in packing material sales during the
period, with 2020's sales impacted by the Spring lockdown. Insurance sales
have also seen strong year-on-year growth, with improvements made to the
average value insured and higher customer numbers.
The other revenue earned is management fee income from the Armadillo
Partnerships and tenant income on sites where we have not started
development. Following the acquisition of the remaining interest in the
Armadillo Partnerships in July, the Group is not entitled to any further
management fee income from Armadillo.
Operating costs
Cost of sales comprises principally direct store operating costs, including
store staff salaries, utilities, business rates, insurance, a full allocation
of the central marketing budget, and repairs and maintenance.
The table below shows the breakdown of both Big Yellow's and Armadillo's store
operating costs compared to the same period last year, with Armadillo's costs
included in full in both periods:
Period ended 30 September 2021 Period ended % of store operating costs in period
£000 30 September
Category 2020 % change
£000
Cost of sales (insurance and packing materials) 2,034 1,692 20% 8%
Staff costs 7,283 6,591 10% 30%
General & Admin 921 762 21% 4%
Utilities 1,044 985 6% 4%
Property Rates 6,642 6,574 1% 27%
Marketing 3,393 3,170 7% 14%
Repairs and maintenance 2,200 1,763 25% 9%
Insurance 480 454 6% 2%
Computer Costs 324 287 13% 2%
Total before one-off items 24,321 22,278 9%
One-off items (423) -
Total per portfolio summary 23,898 22,278 7%
Store operating costs have increased by £1.6 million (7%). The one-off
items in the current year relate to rates rebate on three stores, totalling
£0.4 million, following appeals of the 2017 rating list assessment. Store
operating costs pre these one-off items have increased by £2.0 million (9%)
compared to the same period last year, of which £0.9 million is in relation
to recently opened stores. The remaining increase of £1.1 million (5%) can
be explained as follows:
- Cost of sales have increased in line with the proportionate
increase in ancillary sales in the period.
- Staff costs have increased partly due to the increase in store
numbers, but also due to higher store bonuses being paid over the six
months compared to the same period last year due to the strong operating
performance of the business.
- The repairs and maintenance expenditure has increased by £0.4
million, partly due to the increase in store numbers, increased investment
in CCTV monitoring security overnight, and we carried out less maintenance
work during the 2020 Spring lockdown.
- Marketing has increased by £0.2 million, returning to 2019's
level, with the 2020 cost reflecting lower search costs and traffic levels
during the Spring lockdown.
- General and admin expenses have increased as 2020 had
significantly less travel expense during the lockdown period.
The table below reconciles store operating costs per the portfolio summary to
cost of sales in the income statement:
Period ended 30 September 2021 Period
£000 ended 30 September 2020
£000
Direct store operating costs per portfolio summary (excluding rent) 23,898 22,278
Rent included in cost of sales (total rent payable is included in portfolio 1,047 636
summary)
Depreciation charged to cost of sales 188 195
Head office operational management costs charged to cost of sales 543 357
Armadillo cost of sales pre acquisition of remaining interest (1,908) (3,407)
Cost of sales per income statement 23,768 20,059
Store EBITDA
Store EBITDA for the Big Yellow stores for the period was £54.0 million, an
increase of £9.5 million (21%) from £44.5 million for the period ended 30
September 2020 (see Portfolio Summary). The overall EBITDA margin for all
Big Yellow stores during the period was 71.8%, up from 69.2% in 2020.
The EBITDA for the Armadillo stores for the period was £6.7 million, an
increase of £1.7 million (34%) from £5.0 million in 2020, with the margin
increasing to 62.8% from 57.4%.
The store EBITDA in the six months for Big Yellow stores and for the Armadillo
stores from 1 July 2021 to 30 September was £57.7 million.
All stores are currently trading profitably at the Store EBITDA level, with
our new store at Uxbridge breaking even in September 2021, three months after
opening.
Administrative expenses
Administrative expenses in the income statement have increased by £1.7
million. £0.4 million of this increase is due to the write-off of
acquisition costs in relation to the purchase of the remaining interest in
Armadillo in accordance with IFRS 3. This is an adjusting item in the
calculation of the Group's adjusted profit before tax.
The remaining increase of £1.3 million is due to a £0.5 million increase in
the IFRS 2 share based payments charge, national insurance charges on the
exercise of share options (both up due to the increase in the Company's share
price), with the balance inflationary. The non-cash share-based payments
charge represents £1.7 million of the overall £7.3 million expense.
Interest
Interest on bank borrowings during the period was £5.2 million, £0.5 million
higher than the same period last year, due to higher average debt levels in
the period.
Interest capitalised in the period amounted to £1.0 million (2020: £1.0
million), arising on the Group's construction programme.
Results
The Group's statutory profit before tax for the period was £254.9 million, an
increase of 326% from £59.9 million for the same period last year. The
increase is principally due to a higher revaluation surplus in the period,
which is discussed further below.
After adjusting for the gain on the revaluation of investment properties and
other matters shown in the table below, the Group made an adjusted profit
before tax in the period of £46.9 million, up 28% from £36.5 million in
2020.
Six months ended 30 September 2021 Six months ended 30 September 2020
£m £m
Profit before tax analysis
Profit before tax 254.9 59.9
Gain on revaluation of investment properties (204.6) (23.5)
Change in fair value of interest rate derivatives (0.5) 0.5
Acquisition costs written off 0.4 -
Share of non-recurring gains in associates (3.3) (0.4)
Adjusted profit before tax 46.9 36.5
Tax (0.8) (0.2)
Adjusted profit after tax 46.1 36.3
The movement in the adjusted profit before tax from the prior year is shown in
the table below:
Movement in adjusted profit before tax £m
Adjusted profit before tax for the six months to 30 September 2020 36.5
Increase in gross profit 12.3
Increase in administrative expenses (1.3)
Increase in net interest payable (0.5)
Reduction in share of associates' recurring profit (0.1)
Adjusted profit before tax for the six months to 30 September 2021 46.9
Diluted EPRA earnings per share was 25.7 pence (2020: 20.9 pence), an increase
of 23% from the same period last year.
Cash flow
Cash flows from operating activities (after net finance costs) have increased
by 22% to £51.8 million for the period (2020: £42.3 million).
These operating cash flows are after the ongoing maintenance costs of the
stores, which for this first half were on average approximately £20,000 per
store. The Group's net debt has increased over the period to £397.4 million
(March 2021: £325.0 million), with the majority of the increase due to the
debt within Armadillo now being consolidated.
Six months ended 30 September 2021 Six months ended 30 September 2020
£m £m
Cash generated from operations 57.9 47.6
Net finance costs (5.0) (4.4)
Interest on obligations under lease liabilities (0.4) (0.4)
Tax (0.7) (0.5)
Cash flow from operating activities 51.8 42.3
Acquisition of Armadillo (66.7) -
Capital expenditure (74.3) (34.0)
Receipt from Capital Goods Scheme 0.4 0.7
Dividend received from associates 0.4 0.3
Cash flow after investing activities (88.4) 9.3
Dividends (31.0) (29.1)
Payment of finance lease liabilities (0.6) (0.5)
Issue of share capital 98.5 80.6
Debt acquired with Armadillo (50.9) -
Increase/(decrease) in borrowings 70.0 (105.3)
Net cash outflow (2.4) (45.0)
The Group's interest cover for the period (expressed as the ratio of cash
generated from operations pre-working capital movements against interest paid)
was 10.6 times (2020: 9.7 times).
Of the capital expenditure in the period £51 million related to site
acquisitions of Epsom, Kentish Town and West Kensington, with the balance of
£23.3 million principally construction capital expenditure.
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. The Armadillo stores joined the Big Yellow REIT group on
acquisition in July 2021.
There is a £0.8 million tax charge in the residual business for the period
ended 30 September 2021 (six months to 30 September 2020: £0.2 million).
The increase in the tax charge in the period is due to the increase in taxable
profits in the period following our recent strong trading, coupled with an
increase in the period in disallowable expenses.
Dividends
REIT regulatory requirements determine the level of Property Income
Distribution ("PID") payable by the Group. A PID of 20.6 pence per share is
proposed as the total interim dividend, an increase of 21% from 17.0 pence per
share for the same period last year.
The interim dividend will be paid on 7 January 2022. The ex-div date is 2
December 2021 and the record date is 3 December 2021.
Financing and treasury
Our financing policy is to fund our current needs through a mix of debt,
equity and cash flow to allow us to build out, and add to, our development
pipeline and achieve our strategic growth objectives, which we believe improve
returns for shareholders. We aim to ensure that there are sufficient
medium-term facilities in place to finance our committed development
programme, secured against the freehold portfolio, with debt serviced by our
strong operational cash flows. We maintain a keen watch on medium and
long-term rates and the Group's policy in respect of interest rates is to
maintain a balance between flexibility and hedging of interest rate risk.
During the period, the Group signed an additional £50 million seven year debt
facility with Aviva. As part of this refinancing the expiry of the existing
loan has been extended from April 2027 to September 2028. This has reduced
the fixed cost of the total Aviva loan facility from 4.0% to 3.5%.
Sustainability KPIs have been incorporated into this additional borrowing.
These include the continued installation of solar panels across the security
stores which will reduce emissions and running costs, and the business being
on-track to achieve 'Net Renewable Energy Positive' status by 2030. The
Group will benefit from a margin reduction on the new £50 million loan,
conditional on achieving these targets.
The total debt facilities from Aviva are now £163.4 million of which £18.4
million amortises to nil by April 2027.
The Group has also increased the facilities of its M&G loan by £50
million to a total facility of £120 million. £35 million of the total
M&G loan is fixed by a way of swap, with the balance floating. The
average cost of the M&G loan is now 2.4%, with the loan expiring in June
2023. The Group intends to commence discussions on refinancing this loan
next year.
These two new loans were funded in October 2021 and used to repay revolving
bank debt. The table below shows the Group's proforma debt position at 30
September 2021 with these new loans in place:
Debt Expiry Facility Drawn Cost
Aviva Loan September 2028 £163.4m £163.4m 3.5%
M&G loan June 2023 £120m £120m 2.4%
Revolving bank facility (Lloyds, HSBC and Bank of Ireland)
October 2024 £240m £76.0m 1.4%
Armadillo bank loans (Lloyds) April 2023 £52.7m £47.9m 2.9%
Total Average term 3.9 years £576.1m £407.3m 2.8%
The Group has undrawn committed bank facilities of £168.8 million, which if
drawn would carry a current marginal cost of debt of approximately 1.35%.
The Group was comfortably in compliance with its banking covenants at 30
September 2021.
The net debt to gross property assets ratio is 18% (2020: 18%) and the net
debt to adjusted net assets ratio (see net asset value section below) is 21%
(2020: 21%). Our net debt to the Group's market capitalisation at 30
September 2021 was 15% (2020: 16%). Our balance sheet capital gearing ratios
post the acquisition of Armadillo remain broadly in line with the prior year,
albeit with higher absolute levels of debt.
Property
Investment property
The Group's investment properties are carried at the half year at Directors'
valuation. They are valued externally by CBRE LLP ("CBRE") and Jones Lang
Lasalle ("JLL") at the year end. The Directors' valuations reflect the
latest cash flows derived from each of the stores at the end of September.
In performing the valuations, the Directors consulted with CBRE and JLL on the
capitalisation rates used in the valuations. The Directors, as advised by
the valuers, consider that the prime capitalisation rates have reduced by 12.5
bps since the start of the financial year.
The Directors have also made some minor amendments to a couple of the
valuation assumptions, namely the adjustment of stable occupancy levels on
certain stores that are consistently trading ahead of the previously used
assumptions and to certain assumptions on net achieved rents within the
valuations. Other than the above, the Directors believe the core
assumptions used by CBRE and JLL in the March 2021 valuations are still
appropriate at the September valuation date. See the Group's annual report
for the year ended 31 March 2021 for the full detail of the valuation
methodology.
At 30 September 2021 the total value of the Group's properties is shown in the
table below:
Analysis of property portfolio Value at 30 September 2021 Revaluation movement in the period
£m £m
Investment property - Big Yellow stores 1,827.6 192.3
Investment property - Armadillo stores 142.1 3.4
Investment property - Big Yellow and Armadillo stores 1,969.7 195.7
Investment property under construction 234.5 8.9
Investment property total 2,204.2 204.6
The revaluation surplus for the open stores in the period was £195.7 million,
reflecting significant operating cash flow growth, and a reduction of 12.5bps
in prime cap rates. There is a revaluation surplus of £8.9 million on the
investment property under construction, due to an increase in the projected
net rents on the stores, partly offset by increased development costs on a
couple of schemes.
The revaluation gain for the Armadillo stores shown above is only from 1 July
- the date the Group acquired the remaining interest it did not previously
own. The revaluation gain in the three months to 30 June 2021 for Armadillo
was £7.7 million, giving a total gain of £11.1 million for the six months.
The initial yield on the Big Yellow stores before administration expenses and
assuming no rental growth, is 5.9% rising to a stabilised yield of 6.1% (31
March 2021: 5.9% rising to 6.2%). For the Armadillo stores, the initial
yield on this basis is 9.5%, rising to a stabilised yield of 10.3%.
Development pipeline
The Group has opened Uxbridge during the financial year to date, adding 54,000
sq ft of capacity. The Group acquired development sites in Kentish Town and
West Kensington during the period. These acquisitions take the total
pipeline to approximately 1.12 million sq ft, representing 18.5% of current
MLA, with an estimated future cost to complete of approximately £172
million.
The status of the Group's development pipeline is summarised in the table
below:
Site Location Status Anticipated capacity
Hayes, London Prominent location on Hayes Road Planning consent granted in July 2020. Construction commenced in January 73,000 sq ft
2021 with a view to opening in January 2022.
Hove Prominent location on Old Shoreham Road Planning consent granted in October 2019. Construction commenced in Autumn 58,000 sq ft
2020 with a view to opening in Spring 2022.
Harrow, London Prominent location on Harrow View Planning consent granted in November 2020. Construction commenced in May 82,000 sq ft
2021 with a view to opening in Summer 2022.
North Kingston, London Prominent location on Richmond Road, Ham Planning consent granted in September 2020. Construction commenced in June 56,000 sq ft
2021 with a view to opening in Summer 2022.
Kings Cross, London Prominent location on York Way Planning consent granted in October 2020. Demolition commenced in January 106,000 sq ft
2021 with a view to opening in Summer 2023.
Wembley, London Prominent location on Towers Business Park Planning consent granted in August 2020. Discussions ongoing to secure 70,000 sq ft
vacant possession.
Queensbury, London Prominent location off Honeypot Lane Site acquired in November 2018. Planning consent granted in November 2019 for 70,000 sq ft
58,000 sq ft store. Planning application submitted in 2021 to increase floor
area by 12,000 sq ft. Decision anticipated Q1 2022.
Slough Prominent location on Bath Road Site acquired in April 2019. Planning consent granted in October 2021. 90,000 sq ft
Construction to commence in Summer 2022 with a view to the store opening in
Winter 2023.
Wapping, London Prominent location on the Highway, adjacent to existing Big Yellow Site acquired in July 2020. Planning application submitted in November 2021. Additional 95,000 sq ft
Staines, London Prominent location on the Causeway Site acquired in December 2020. Planning application to be submitted in 65,000 sq ft
December 2021.
Epsom, London Prominent location on East Street Site acquired in March 2021. Planning application to be submitted in Q1 56,000 sq ft
2022.
Kentish Town, London Prominent location on Regis Road Site acquired in April 2021. Planning application to be submitted in Spring 68,000 sq ft
2022.
West Kensington, London Prominent location on Hammersmith Road Site acquired in June 2021. Planning application to be submitted in Summer 175,000 sq ft
2022.
Newcastle Prominent location on Scotswood Road Planning consent granted in October 2021. 60,000 sq ft
Total 1,124,000 sq ft
The capital expenditure forecast for the remainder of the financial year
(excluding any new site acquisitions) is approximately £29 million, which
principally relates to construction costs on our development sites at Hayes,
North Kingston, Hove, Harrow and Kings Cross.
The Group manages the construction and fit-out of its stores in-house, as we
believe it provides both better control and quality, and we have an excellent
record of building stores on time and within budget. As a result of the
well-documented supply chain and Covid-related issues, we are experiencing
higher than normal inflation in construction costs, notably in the
availability of labour and certain materials. We have reflected this in the
projected costing of our pipeline and would anticipate seeing some moderation
over the next 12 to 18 months.
Net asset value
The adjusted net asset value per share is 1,034.6 pence (see note 13), up 14%
from 904.7 pence per share at 31 March 2021 (after adjusting the opening NAV
for the June 2021 placing). The table below reconciles the movement from 31
March 2021:
Equity shareholders' funds EPRA adjusted NAV pence per share
£m
Movement in adjusted net asset value
31 March 2021 1,566.6 889.2
Share placing 97.6 15.5
31 March 2021 (rebased) 1,664.2 904.7
Adjusted profit after tax 46.1 25.0
Equity dividends paid (31.0) (16.9)
Revaluation movements (including share of associates to 30 June 2021) 206.2 112.1
Movement in purchaser's cost adjustment 19.1 10.4
Other movements (e.g. share schemes) 2.2 (0.7)
30 September 2021 1,906.8 1,034.6
Jim Gibson
John Trotman
Chief Executive Officer
Chief Financial Officer
22 November
2021
PORTFOLIO SUMMARY
September 2021 September 2020
Big Yellow Established((1)) Big Yellow Developing Total Big Yellow Armadillo Big Yellow Established Big Yellow Developing Total Big Yellow Armadillo
Total Total
Number of stores 73 6 79 25 104 73 4 77 25 102
At 30 September:
Total capacity (sq ft) 4,636,000 348,000 4,984,000 1,078,000 6,062,000 4,599,000 223,000 4,822,000 1,081,000 5,903,000
Occupied space (sq ft) 4,242,000 230,000 955,000 5,427,000 4,035,000 71,000 4,106,000 4,974,000
4,472,000 868,000
Percentage occupied 91.5% 66.1% 89.7% 88.6% 89.5% 87.7% 31.8% 85.2% 80.3% 84.3%
Net rent per sq ft £30.63 £26.62 £30.43 £19.85 £28.46 £27.77 £24.69 £27.75 £17.50 £25.97
For the period:
REVPAF((2)) £31.10 £18.17 £30.27 £19.61 £28.36 £27.54 £12.93 £27.11 £16.20 £25.10
Average occupancy 90.0% 52.9% 87.6% 87.0% 87.5% 84.1% 36.0% 82.7% 77.6% 81.7%
Average annual net rent psf £29.67 £26.02 £19.14 £27.73 £28.10 £27.35 £28.01 £17.71 £26.07
£29.52
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Self storage income 62,055 2,317 64,372 9,003 73,375 54,305 685 54,990 7,335 62,325
Other storage related 9,893 530 10,423 1,585 12,008 8,851 180 9,031 1,288 10,319
income ((2))
Ancillary store rental 348 81 10 439 317 36 353 21 374
Income 429
Total store revenue 72,296 2,928 75,224 10,598 85,822 63,473 901 64,374 8,644 73,018
Direct store operating (18,607) (1,648) (3,643) (23,898) (18,283) (588) (18,871) (22,278)
costs (excluding
depreciation) (20,255) (3,407)
Short and long (955) - (301) (1,256) (978) - (978) (1,257)
leasehold rent((3)) (955) (279)
Store EBITDA((2,4)) 52,734 1,280 54,014 6,654 60,668 44,212 313 44,525 4,958 49,483
Store EBITDA margin 72.9% 43.7% 62.8% 70.7% 69.7% 34.7% 69.2% 57.4% 67.8%
71.8%
Deemed cost £m £m £m £m £m
To 30 September 2021 616.5 82.9 138.4 837.8
699.4
Capex to complete 0.6 0.6 3.8 4.4
Total 616.5 83.5 700.0 142.2 842.2
(1) The Big Yellow established stores have been open for more than three
years at 1 April 2021, and the developing stores have been open for fewer than
three years at 1 April 2021.
(2) See glossary in note 19.
(3) The Group acquired the 80% of the Armadillo Partnerships that it did
not previously own on 1 July 2021. The results of the stores in the
Partnerships have been included in the results above for both years to give a
clearer understanding of the underlying performance of all stores. The table
below shows the results excluding the period when the stores were not wholly
owned:
2021 2020
Per above Armadillo results as an associate Statutory Per above Armadillo results as an associate Statutory
£000
£000
£000
£000
£000
£000
Store revenue 85,822 (5,046) 80,776 73,018 (8,644) 64,374
Direct store operating costs (23,898) 1,908 (21,990) (22,278) 3,407 (18,871)
Rent (1,256) 150 (1,106) (1,257) 279 (978)
Store EBITDA 60,668 (2,988) 57,680 49,483 (4,958) 44,525
(4) Rent under IFRS 16 for eight short leasehold properties accounted for
as investment properties and finance leases under IFRS. The EBITDA margin
for the 96 freehold stores is 72.3%, and 51.4% for the eight short leasehold
stores.
(5) The table below reconciles Store EBITDA to gross profit in the income
statement:
Period ended 30 September 2021 Period ended 30 September 2020
£000 £000
Store EBITDA (per note (3)) Reconciling items Store EBITDA (per note (3)) Reconciling items
Gross profit per income statement Gross profit per income statement
Store revenue/Revenue((1)) 80,776 1,025 64,374 1,439
81,801 65,813
Cost of sales((2)) (21,990) (1,778) (23,768) (18,871) (1,188) (20,059)
Rent((3)) (1,106) 1,106 - (978) 978 -
57,680 353 58,033 44,525 1,229 45,754
(1) See note 2 of the interim statement, reconciling items are management
fees and non-storage income.
(2) See reconciliation in cost of sales section in Business and Financial
Review.
(3) The rent shown above is the cost associated with leasehold stores,
only part of which is recognised within gross profit in line with finance
lease accounting principles. The amount included in gross profit is shown in
the reconciling items in cost of sales.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
- the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
By order of the Board
Jim Gibson
John Trotman
Chief Executive
Officer
Chief Financial Officer
22 November 2021
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 September 2021
Six months ended Six months ended
30 September 2021 30 September 2020
(unaudited) (unaudited) Year ended 31 March 2021
(audited)
Note £000 £000 £000
Revenue 2 81,801 65,813 135,241
Cost of sales (23,768) (20,059) (41,589)
Gross profit 58,033 45,754 93,652
Administrative expenses (7,341) (5,683) (12,159)
Operating profit before gains and losses on property assets 50,692 40,071 81,493
Gain on the revaluation of investment properties 9a 204,662 23,554 189,277
Operating profit 255,354 63,625 270,770
Share of profit of associates 9e 3,677 888 3,148
Investment income - interest receivable 3 15 54 69
- fair value movement of 3 477 - -
derivatives
Finance costs - interest payable 4 (4,655) (4,149) (8,017)
- fair value movement of derivatives 4 - (502) (148)
Profit before taxation 254,868 59,916 265,822
Taxation 5 (794) (180) (636)
Profit for the period (attributable to equity shareholders) 254,074 59,736 265,186
Total comprehensive income for the period attributable to equity shareholders 254,074 59,736 265,186
Basic earnings per share 8 142.0p 34.4p 152.3p
Diluted earnings per share 8 141.6p 34.3p 151.8p
Adjusted profit before taxation is shown in note 6 and EPRA earnings per share
is shown in note 8.
All items in the income statement relate to continuing operations.
CONDENSED CONSOLIDATED BALANCE SHEET
30 September 2021
30 September 30 September
2021 2020 31 March 2021
(unaudited)
(unaudited)
(audited)
£000 £000
Note £000
Non-current assets
Investment property 9a 1,969,730 1,450,580 1,621,990
Investment property under construction 9a 234,542 128,047 163,537
Right-of-use assets 9a 20,804 17,240 16,644
Plant, equipment and owner-occupied property 9b 4,011 4,137 3,910
Intangible assets 9c 1,433 1,433 1,433
Investment 9d 450 - 450
Investment in associates 9e - 11,804 13,720
Capital Goods Scheme receivable 10 - 159 163
2,230,970 1,613,400 1,821,847
Current assets
Inventories 404 381 366
Trade and other receivables 10 8,994 7,568 7,764
Cash and cash equivalents 9,911 6,417 12,322
19,309 14,366 20,452
Total assets 2,250,279 1,627,766 1,842,299
Current liabilities (45,572) (37,638) (34,563)
Trade and other payables 11
Borrowings 12 (2,935) (2,795) (2,865)
Obligations under lease liabilities (2,298) (1,751) (1,751)
(50,805) (42,184) (39,179)
Non-current liabilities
Borrowings 12 (402,362) (291,787) (332,573)
Obligations under lease liabilities (20,009) (16,688) (16,177)
Derivative financial instruments 12 (27) (829) (475)
(422,398) (309,304) (349,225)
Total liabilities (473,203) (351,488) (388,404)
Net assets 1,777,076 1,276,278 1,453,895
Equity
Called up share capital 18,397 17,578 17,588
Share premium account 289,885 192,064 192,218
Reserves 1,468,794 1,066,636 1,244,089
Equity shareholders' funds 1,777,076 1,276,278 1,453,895
INDEPENDENT REVIEW REPORT TO BIG YELLOW GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2021 (unaudited)
Share premium account Other non-distributable reserve Capital redemption reserve Own shares
Share £000 £000 £000 Retained earnings £000 Total
capital £000 £000
£000
At 1 April 2021 17,588 192,218 74,950 1,795 1,168,363 (1,019) 1,453,895
Total comprehensive income for the period - -
- - 254,074 - 254,074
Issue of share capital 809 97,667 - - - - 98,476
Credit to equity for equity-settled share-based payments - -
- - 1,670 - 1,670
Dividends - - - - (31,039) - (31,039)
At 30 September 2021 18,397 289,885 74,950 1,795 1,393,068 (1,019) 1,777,076
Six months ended 30 September 2020 (unaudited)
Share premium account Other non-distributable reserve Capital redemption reserve Own shares
Share £000 £000 £000 Retained earnings £000 Total
capital £000 £000
£000
At 1 April 2020 16,714 112,320 74,950 1,795 959,116 (1,019) 1,163,876
Total comprehensive income for the period - -
- - 59,736 - 59,736
Issue of share capital 864 79,744 - - - - 80,608
Credit to equity for equity-settled share-based payments - -
- - 1,182 - 1,182
Dividends - - - - (29,124) - (29,124)
At 30 September 2020 17,578 192,064 74,950 1,795 990,910 (1,019) 1,276,278
Year ended 31 March 2021 (audited)
Share capital Share premium account Other non-distributable reserve Capital redemption reserve Retained earnings Total
£000 £000 £000 £000 £000 Own shares £000
£000
At 1 April 2020 16,714 112,320 74,950 1,795 959,116 (1,019) 1,163,876
Total comprehensive income for the year - - 265,186 265,186
- - -
Issue of share capital 874 79,898 - - - - 80,772
Credit to equity for equity-settled share-based payments - - 2,869 2,869
- - -
Dividend - - - - (58,808) - (58,808)
At 31 March 2021 17,588 192,218 74,950 1,795 1,168,363 (1,019) 1,453,895
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 September 2021
Six months ended Six months Year
30 September ended ended
2021
30 September 31 March
(unaudited)
2020
2021
£000 (unaudited)
(audited)
£000
Note £000
Cash generated from operations 17 57,863 47,560 87,131
Bank interest paid (5,042) (4,382) (8,850)
Interest on obligations under lease liabilities (413) (391) (772)
Interest received 1 25 26
Tax paid (655) (481) (823)
Cash flows from operating activities 51,754 42,331 76,712
Investing activities
Purchase of non-current assets (74,260) (34,052) (73,010)
Acquisition of Armadillo (net of cash acquired) (66,679) - -
Investment - - (450)
Receipt from Capital Goods Scheme 381 738 737
Dividend received from associates 9e 435 344 688
Cash flows from investing activities (140,123) (32,970) (72,035)
Financing activities
Issue of share capital 98,476 80,608 80,772
Payment of finance lease liabilities (614) (498) (1,009)
Equity dividends paid (31,039) (29,124) (58,808)
Drawing of Armadillo loans (50,900) - -
Increase/(decrease) in borrowings 70,035 (105,348) (64,728)
Cash flows from financing activities 85,958 (54,362) (43,773)
Net decrease in cash and cash equivalents (2,411) (45,001) (39,096)
Opening cash and cash equivalents 12,322 51,418 51,418
Closing cash and cash equivalents 9,911 6,417 12,322
1. ACCOUNTING POLICIES
Basis of preparation
The results for the period ended 30 September 2021 are unaudited and were
approved by the Board on 22 November 2021. The financial information
contained in this report in respect of the year ended 31 March 2021 does not
constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor's report on those
accounts was not qualified and did not contain statements under section 498
(2) or (3) of the Companies Act 2006.
The annual financial statements of Big Yellow Group PLC are prepared in
accordance with International Financial Reporting Standards as adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
and in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and the next annual financial
statements will be prepared in accordance with UK-adopted international
accounting standards. The condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance with
International Accounting Standards 34 "Interim Financial Reporting", as
adopted by the European Union.
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as were applied in the
Group's latest annual audited financial statements.
Valuation of assets and liabilities held at fair value
For those financial instruments held at fair value, the Group has categorised
them into a three-level fair value hierarchy based on the priority of the
inputs to the valuation technique in accordance with IFRS 13. The hierarchy
gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure fair value fall within different
levels of the hierarchy, the category level is based on the lowest priority
level input that is significant to the fair value measurement of the
instrument in its entirety. The fair value of the Group's outstanding
interest rate derivatives has been estimated by calculating the present value
of future cash flows, using appropriate market discount rates, representing
Level 2 fair value measurements as defined by IFRS 13. Investment Property
and Investment Property under Construction have been classified as Level 3.
This is discussed further in note 14.
Going concern
A review of the Group's business activities, together with the factors likely
to affect its future development, performance and position, is set out in the
Chairman's Statement and the Business and Financial Review. The financial
position of the Group, its cash flows, liquidity position and borrowing
facilities are shown in the balance sheet, cash flow statement and
accompanying notes to the interim statement. Further information concerning
the Group's objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity risk can be
found in the Strategic Report within the Group's Annual Report for the year
ended 31 March 2021.
At 30 September 2021 the Group had available liquidity of £178.7 million,
from a combination of cash and undrawn bank debt facilities. The Group is
cash generative and for the six months ended 30 September 2021, had
operational cash flow of £51.8 million, with capital commitments at the
balance sheet date of £19.1 million.
The Directors have prepared cash flow forecasts for a period of 18 months from
the date of approval of these financial statements, taking into account the
Group's operating plan and budget for the year ending 31 March 2022 and
projections contained in the longer-term business plan which covers the period
to March 2025. After reviewing these projected cash flows together with the
Group's and Company's cash balances, borrowing facilities and covenant
requirements, and potential property valuation movements over that period, the
Directors believe that, taking account of severe but plausible downsides, the
Group and Company will have sufficient funds to meet their liabilities as they
fall due for that period.
In making their assessment, the Directors have carefully considered the
outlook for the Group's trading performance and cash flows as a result of the
dislocations to the economy caused by the Covid-19 pandemic, taking into
account the trading performance of the Group from the onset of the pandemic to
the date of this statement. The Directors have also taken into account the
performance of the business during the Global Financial Crisis. The
Directors modelled a number of different scenarios, including material
reductions in the Group's occupancy rates and property valuations, and
assessed the impact of these scenarios against the Group's liquidity and the
Group's banking covenants. The scenarios considered did not lead to
breaching any of the banking covenants, and the Group retained sufficient
liquidity to meet its financial obligations as they fall due.
Consequently, the Directors continue to adopt the going concern basis in
preparing the half year report.
2. SEGMENTAL INFORMATION
Revenue represents amounts derived from the provision of self storage
accommodation and related services which fall within the Group's ordinary
activities after deduction of trade discounts and value added tax. The
Group's net assets, revenue and profit before tax are attributable to one
activity, the provision of self storage accommodation and related services.
These all arise in the United Kingdom.
Six months ended Six months ended Year ended
30 September 2021 30 September 2020 (unaudited) 31 March 2021
(unaudited) £000 (audited)
£000
£000
Open stores
Self storage income 69,091 54,990 113,119
Insurance income 8,681 7,099 14,517
Packing materials income 1,708 1,298 2,771
Other income from storage customers 863 634 1,275
Ancillary store rental income 433 353 786
80,776 64,374 132,468
Other revenue
Non-storage income 700 750 1,420
Management fees 325 689 1,353
Total revenue 81,801 65,813 135,241
Non-storage income derives principally from rental income earned from tenants
of properties awaiting development.
Further analysis of the Group's operating revenue and costs are in the
Portfolio Summary and the Business and Financial Review. The seasonality of
the business is discussed in note 18.
3. INVESTMENT INCOME
Six months ended 30 September Six months Year ended
2021 ended 30 September 31 March
(unaudited) 2020 2021
£000 (unaudited) (audited)
£000 £000
Bank interest receivable 1 25 26
Unwinding of discount on Capital Goods Scheme receivable 14 29 43
Total 15 54 69
Change in fair value of interest rate derivatives 477 - -
Total investment income 492 54 69
4. FINANCE COSTS
Six months ended 30 September Six months Year ended
2021 ended 30 September 31 March
(unaudited) 2020 2021
£000 (unaudited) (audited)
£000 £000
Interest on bank borrowings 5,202 4,747 9,380
Capitalised interest (960) (989) (2,135)
Interest on finance lease obligations 413 391 772
Total interest payable 4,655 4,149 8,017
Change in fair value of interest rate derivatives - 502 148
Total finance costs 4,655 4,651 8,165
5. TAXATION
The Group converted to a REIT in January 2007. As a result, the Group does not
pay UK corporation tax on the profits and gains from its qualifying rental
business in the UK if it meets certain conditions. Non-qualifying profits
and gains of the Group are subject to corporation tax as normal. The Group
monitors its compliance with the REIT conditions. There have been no
breaches of the conditions to date.
Six months ended 30 September Six months Year ended
2021 ended 30 September 31 March
(unaudited) 2020 2021
£000 (unaudited) (audited)
£000 £000
Current tax:
- Current year 704 345 798
- Prior year 90 (165) (162)
794 180 636
6. ADJUSTED PROFIT
Six months ended Six months Year ended
30 September 2021 ended 31 March
(unaudited) 30 September 2021
£000 2020 (audited)
(unaudited) £000
£000
Profit before tax 254,868 59,916 265,822
Gain on revaluation of investment properties - Group (204,662) (23,554) (189,277)
- associates (net of (1,537) (411) (2,074)
deferred tax) to 30 June 2021
Change in fair value of interest rate derivatives - Group (477) 502 148
- associates - 32 6
Armadillo fair value adjustments on acquisition (1,756) - -
Acquisition costs written off 416 - -
Adjusted profit before tax 46,852 36,485 74,625
Tax (794) (180) (636)
Adjusted profit after tax (EPRA earnings) 46,058 36,305 73,989
Adjusted profit before tax which excludes gains and losses on the revaluation
of investment properties, changes in fair value of interest rate derivatives,
net gains and losses on disposal of investment property, and material
non-recurring items of income and expenditure have been disclosed as, in the
Board's view, this provides a clearer understanding of the Group's underlying
trading performance.
7. DIVIDENDS
Six months ended Six months
30 September 2021 ended
(unaudited) 30 September
£000 2020
(unaudited)
£000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2021 of 17.0p (2020: 16.7p) per 31,039 29,124
share
Proposed interim dividend for the year ending 31 March 2022 of 20.6p (2021: 37,666 29,692
17.0p) per share
The proposed interim dividend of 20.6 pence per ordinary share will be paid to
shareholders on 7 January 2022. The ex-div date is 2 December 2021 and the
record date is 3 December 2021. The interim dividend is all Property Income
Distribution.
8. EARNINGS PER ORDINARY SHARE
The European Public Real Estate Association ("EPRA") has issued recommended
bases for the calculation of certain per share information and these are
included in the following table:
Six months ended Six months ended Year ended
30 September 2021 (unaudited) 30 September 2020 (unaudited) 31 March 2021 (audited)
Earnings Shares Pence Earnings Shares Pence Earnings Shares Pence
£000 million per share £000 million per share £000 million per share
Basic 254,074 178.9 142.0 59,736 173.4 34.4 265,186 174.1 152.3
Dilutive share options - 0.5 (0.4) - 0.7 (0.1) - 0.6 (0.5)
Diluted 254,074 179.4 141.6 59,736 174.1 34.3 265,186 174.7 151.8
Adjustments:
Gain on revaluation of investment properties (204,662) - (114.0) (23,554) - (13.5) (189,277) - (108.3)
Acquisition costs written off 416 - 0.2 - - - - - -
Change in fair value of interest rate derivatives (477) - (0.3) 502 - 0.3 148 - 0.1
Share of associates' non-recurring gains and losses (3,293) - (1.8) (379) - (0.2)
(2,068) - (1.2)
EPRA - diluted 46,058 179.4 25.7 36,305 174.1 20.9 73,989 174.7 42.4
EPRA - basic 46,058 178.9 25.7 36,305 173.4 20.9 73,989 174.1 42.5
The calculation of basic earnings is based on profit after tax for the period.
The weighted average number of shares used to calculate diluted earnings per
share has been adjusted for the conversion of share options.
EPRA earnings and earnings per ordinary share have been disclosed to give a
clearer understanding of the Group's underlying trading performance.
9. NON-CURRENT ASSETS
a) Investment property
Investment property under construction Right-of-use assets
Investment £000 £000
property Total
£000 £000
At 1 April 2021 1,621,990 163,537 16,644 1,802,171
Additions 1,374 74,291 - 75,665
Acquisition of Armadillo 138,418 - 4,862 143,280
Reclassification 12,226 (12,226) - -
Revaluation 195,722 8,940 - 204,662
Depreciation - - (702) (702)
At 30 September 2021 1,969,730 234,542 20,804 2,225,076
Capital commitments at 30 September 2021 were £19.1 million (31 March 2021:
£17.3 million).
b) Plant, equipment and owner-occupied property
Motor vehicles Fixtures, fittings and office equipment
Freehold property Leasehold improve-ments Plant and £000 £000 Right of use assets
machinery
£000 £000
£000 Total
£000
£000
Cost
At 1 April 2021 2,275 59 439 32 1,262 872 4,939
Additions 2 - 113 - 480 - 595
Retirement of fully depreciated assets - (55) (32) (238)
- (151) -
At 30 September 2021 2,277 59 497 - 1,591 872 5,296
Accumulated depreciation
At 1 April 2021 (593) (12) (129) (32) (52) (211) (1,029)
Charge for the period (23) (86) - (494)
(2) (330) (53)
Retirement of fully depreciated assets - 55 32 238
- 151 -
At 30 September 2021 (616) (14) (160) - (231) (264) (1,285)
Net book value
At 30 September 2021 1,661 45 337 - 1,360 608 4,011
At 31 March 2021 1,682 47 310 - 1,210 661 3,910
c) Intangible assets
The intangible asset relates to the Big Yellow brand, which was acquired
through the acquisition of Big Yellow Self Storage Company Limited in 1999.
The carrying value of £1.4 million remains unchanged from the prior year as
there is considered to be no impairment in the value of the asset. The asset
has an indefinite life and is tested annually for impairment or more
frequently if there are indicators of impairment.
d) Investment
During the prior year, the Group invested £450,000 in DS Operations Centre
Limited, a company which provides out-of-hours monitoring and alarm receiving
services, including for the Group's stores. The investment is carried at
cost and tested annually for impairment.
e) Investment in associates
Armadillo
The Group had a 20% interest in Armadillo Storage Holding Company Limited
("Armadillo 1") and a 20% interest in Armadillo Storage Holding Company 2
Limited ("Armadillo 2"). Both interests were accounted for as associates,
using the equity method of accounting. On 1 July 2021 the Group acquired the
remaining interest in Armadillo 1 and Armadillo 2 that it did not previously
own. From this date, Armadillo 1 and Armadillo 2 are accounted for as a
wholly owned subsidiaries of the Group. The results up to this date are
equity accounted as shown in the note below:
Armadillo 1 Armadillo 2
30 September 2021 30 September 2020 30 September 2021 30 September 2020
(unaudited) (unaudited) 31 March (unaudited) (unaudited) 31 March
£000 £000 2021 £000 £000 2021
(audited) (audited)
£000 £000
At the beginning of the period 8,698 7,027 7,027 5,022 4,233 4,233
Share of results (see below) 2,413 529 2,013 1,264 359 1,135
Dividends (211) (171) (342) (224) (173) (346)
Acquisition of remaining interest (10,900) - - (6,062) - -
At the end of the period - 7,385 8,698 - 4,419 5,022
The figures below show the trading results of Armadillo, and the Group's share
of the results and the net assets up to the point of acquisition of the
remaining interest in the Partnerships on 1 July 2021.
Armadillo 1 Armadillo 2
Six months ended 30 September 2020 Six months ended 30 September 2020
1 April 2021 to 30 June 2021 (unaudited) Year ended 1 April 2021 to 30 June 2021 (unaudited) Year ended
(unaudited) £000 31 March (unaudited) £000 31 March
£000 2021 £000 2021
(audited) (audited)
£000 £000
Income statement (100%)
Revenue 3,170 5,477 11,338 1,876 3,167 6,664
Cost of sales (1,601) (2,834) (5,967) (793) (1,441) (2,953)
Administrative expenses (126) (205) (345) (45) (66) (161)
Operating profit 1,443 2,438 5,026 1,038 1,660 3,550
Goodwill write-off (982) - - (1,849) - -
Gain on the revaluation of investment properties
4,888 1,510 8,565 2,795 1,025 4,235
Net interest payable (274) (616) (1,177) (183) (387) (752)
Fair value movement of interest rate derivatives
- (97) (18) - (63) (11)
Current and deferred tax 6,988 (587) (2,330) 4,519 (441) (1,347)
Profit attributable to shareholders
12,063 2,648 10,066 6,320 1,794 5,675
Dividends paid (1,054) (854) (1,708) (1,120) (865) (1,730)
Retained profit 11,009 1,794 8,358 5,200 929 3,945
Group share (20%)
Operating profit 289 488 1,005 208 332 710
Goodwill write-off (196) - - (370) - -
Gain on the revaluation of investment properties
978 302 1,713 559 205 847
Net interest payable (55) (124) (235) (37) (77) (150)
Fair value movement of interest rate derivatives
- (19) (4) - (13) (2)
Current and deferred tax 1,397 (118) (466) 904 (88) (270)
Profit attributable to shareholders
2,413 529 2,013 1,264 359 1,135
Dividends paid (211) (171) (342) (224) (173) (346)
Retained profit 2,202 358 1,671 1,040 186 789
Associates' net assets - 7,385 8,698 - 4,419 5,022
30 September 2021 30 September 2020 30 September 2021 30 September 2020
(unaudited) (unaudited) 31 March 2021 (unaudited) (unaudited) 31 March 2021
£000 £000 (audited) £000 £000 (audited)
£000
£000
Balance sheet (100%)
Investment property - 73,416 81,075 - 44,960 48,425
Interest in leasehold properties
- 1,927 2,750 - 2,396 2,219
Other non-current assets - 1,213 1,204 - 2,021 2,004
Current assets - 1,195 1,169 - 605 339
Current liabilities - (3,175) (2,923) - (1,934) (1,946)
Derivative financial instruments
- (97) (18) - (63) (11)
Non-current liabilities - (37,553) (39,767) - (25,889) (25,918)
Net assets (100%) - 36,926 43,490 - 22,096 25,112
Accounting for the acquisition - Armadillo 1
The following provides a breakdown of the fair value of the assets and
liabilities acquired. The investment properties have been valued by the
Directors with regard to the March 2021 property valuations performed by JLL
uplifted for the capital movement in the three month period to the Acquisition
date.
£000
Investment property 86,553
Other non-current assets 2,949
Current assets 1,981
Current liabilities (3,825)
Bank borrowings (30,444)
Other non-current liabilities (2,717)
Net assets (100%) 54,497
£000
Net assets acquired (80% of £54.5 million) 43,598
Satisfied by cash consideration (43,598)
-
From the date of acquisition of the Partnership on 1 July 2021 to 30 September
2021, the revenue of the Partnership was £3.5 million, and the statutory
profit before tax was £4.7 million.
Accounting for the acquisition - Armadillo 2
The following provides a breakdown of the fair value of the assets and
liabilities acquired. The investment properties have been valued by the
Directors with regard to the March 2021 property valuations performed by JLL
uplifted for the capital movement in the three month period to the Acquisition
date.
£000
Investment property 51,865
Other non-current assets 2,285
Current assets 961
Current liabilities (2,969)
Bank borrowings (20,116)
Other non-current liabilities (1,707)
Net assets (100%) 30,319
£000
Net assets acquired (80% of £30.3 million) 24,255
Satisfied by cash consideration (24,255)
-
From the date of acquisition of the Partnership on 1 July 2021 to 30 September
2021, the revenue of the Partnership was £2.1 million, and the statutory
profit before tax was £1.5 million.
Fair value adjustments
On acquisition of the remaining interests in Armadillo, the Group made certain
fair value adjustments to the Armadillo balance sheets. These were:
- an increase in the investment property valuation, reflecting the
fair value of the assets at 30 June 2021;
- the write off of goodwill contained in the Armadillo balance
sheets; and
- the write back of deferred tax (principally on revaluation
surpluses) contained in the Armadillo balance sheets, with Armadillo joining
the Big Yellow REIT on acquisition.
These fair value adjustments are shown in the share of profit of the
associates in the period to 30 June 2021 and amounted to a gain of £3.3
million.
Acquisition costs
The Group incurred acquisition-related costs of £0.4 million on legal fees
and stamp duty. These costs have been included in administrative
expenses.
Proforma impact of acquisitions
For the three months ended 30 September 2021, the Armadillo Partnerships
contributed revenue of £5.6 million and statutory profit before tax of £6.2
million. If the acquisition had occurred on 1 April 2021, management
estimates that consolidated revenue would have been £86.5 million for the
period and consolidated profit before tax for the period would have been
£267.1 million. In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have
been the same if the acquisition had occurred on 1 April 2021, other than for
investment property, whereby the 30 June 2021 valuations were different
compared to the valuations at 31 March 2021.
10. TRADE AND OTHER RECEIVABLES
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Current
Trade receivables 4,767 4,173 3,562
Other receivables 646 1,176 1,999
Prepayments and accrued income 3,581 2,219 2,203
8,994 7,568 7,764
Non-current
Capital Goods Scheme receivable - 159 163
11. TRADE AND OTHER PAYABLES
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Current
Trade payables 4,997 4,177 4,052
Other payables 12,812 14,408 8,036
Accruals and deferred income 27,763 19,053 22,475
45,572 37,638 34,563
12. BORROWINGS
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Aviva loan 2,935 2,795 2,865
Current borrowings 2,935 2,795 2,865
Aviva loan 110,450 113,385 111,935
M&G loan 70,000 70,000 70,000
Armadillo bank loans 47,950 - -
Bank borrowings 176,000 110,500 152,500
Unamortised debt arrangement costs (2,038) (2,098) (1,862)
Non-current borrowings 402,362 291,787 332,573
Total borrowings 405,297 294,582 335,438
On 30 September 2021, the Group signed new loan facilities with Aviva and
M&G, adding £50 million to each loan. These loans were funded in early
October and used to repay revolving bank debt.
The Group does not hedge account for its interest rate swaps and states them
at fair value, with changes in fair value included in the income statement.
The gain in the income statement for the period of these interest rate swaps
was £477,000 (2020: loss of £502,000). The reconciliation of the balance
sheet position is shown below:
£000
Creditor at 31 March 2021 (475)
Change in fair value of derivatives during the period 477
Fair value of Armadillo derivatives on acquisition of remaining interest (29)
Creditor at 30 September 2021 (27)
At 30 September 2021 the Group was in compliance with all loan covenants.
The movement in the Group's loans are shown net in the cash flow statement as
the bank loan is a revolving facility and is repaid and redrawn each month.
13. ADJUSTED NET ASSETS PER SHARE
EPRA's Best Practices Recommendations guidelines contain three Net Asset Value
(NAV) metrics: EPRA Net Tangible Assets (NTA), EPRA Net Reinstatement Value
(NRV) and EPRA Net Disposal Value (NDV).
EPRA NTA is considered to be most consistent with the nature of Big Yellow's
business which provides sustainable long-term progressive returns. EPRA NTA
is shown in the table below. This measure is further adjusted by the
adjustment the Group makes for purchaser's costs, which is the Group's
Adjusted Net Asset Value (or Adjusted NAV).
Basic net assets per share are shareholders' funds divided by the number of
shares at the period end. Any shares currently held in the Group's Employee
Benefit Trust are excluded from both net assets and the number of shares.
Adjusted net assets per share include: the effect of those shares issuable
under employee share option schemes and the effect of alternative valuation
methodology assumptions (see note 14).
Six months ended 30 September 2021 Six months ended 30 September 2020 Year ended 31 March 2021
Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders
£000 £000 £000
Pence per share Pence per share Pence per share
Shares Shares Shares
million million million
Basic NAV 1,777,076 182.8 972.1 1,276,278 174.7 730.6 1,453,895 174.8 831.9
Share and save as you earn schemes
1,660 1.5 (7.0) 1,453 1.5 (5.4) 1,451 1.4 (5.9)
Diluted NAV 1,778,736 184.3 965.1 1,277,731 176.2 725.2 1,455,346 176.2 826.0
Fair value of derivatives - Group 27 - - 475 - 0.3
829 - 0.4
Fair value of derivatives - share of associate - - - 6 - -
32 - -
Deferred tax in respect of valuation surpluses - associate
- - - 1,428 - 0.8 1,818 - 1.0
Intangible assets (1,433) - (0.7) (1,433) - (0.8) (1,433) - (0.8)
EPRA NTA 1,777,330 184.3 964.4 1,278,587 176.2 725.6 1,456,212 176.2 826.5
Valuation methodology assumption (see note 15) (£000)
129,500 - 70.2 94,757 - 53.8 110,393 - 62.7
Adjusted NAV 1,906,830 184.3 1,034.6 1,373,344 176.2 779.4 1,566,605 176.2 889.2
14. VALUATIONS OF INVESTMENT PROPERTY
The Group has classified the fair value investment property and the investment
property under construction within Level 3 of the fair value hierarchy. There
has been no transfer to or from Level 3 in the period.
The freehold and leasehold investment properties have been valued at 30
September 2021 by the Directors. The valuation has been carried out in
accordance with the same methodology as the year end valuations prepared by
CBRE LLP ("CBRE") and Jones Lang Lasalle. Please see the accounts for the
year ended 31 March 2021 for details of this methodology.
The Directors' valuations reflect the latest cash flows derived from each of
the stores at 30 September 2021. In performing the valuations, the Directors
consulted with CBRE and JLL on the capitalisation rates used in the
valuations. The Directors, as advised by CBRE and JLL, consider that the
capitalisation rates for prime self storage stores have reduced by 12.5 bps
since the start of the financial year.
The Directors have also made some minor amendments to a couple of the
valuation assumptions, namely the adjustment of stable occupancy levels on
certain stores that are consistently trading ahead of the previously used
assumptions and to certain assumptions on net achieved rents within the
valuations. Other than the above, the Directors believe the core assumptions
used by CBRE and JLL in the March 2021 valuations are still appropriate at the
September valuation date. See the Group's annual report for the year ended
31 March 2021 for the full detail of the valuation methodology.
Sensitivities
Self storage valuations are complex, derived from data which is not widely
publicly available and involve a degree of judgement. For these reasons we
have classified the valuations of our property portfolio as Level 3 as defined
by IFRS 13. Inputs to the valuations, some of which are 'unobservable' as
defined by IFRS 13, include capitalisation yields, stable occupancy rates, and
rental growth rates. The existence of an increase of more than one
unobservable input would augment the impact on valuation. The impact on the
valuation would be mitigated by the inter-relationship between unobservable
inputs moving in opposite directions. For example, an increase in stable
occupancy may be offset by an increase in yield, resulting in no net impact on
the valuation. A sensitivity analysis showing the impact on valuations of
changes in yields and stable occupancy is shown below:
Impact of a change in capitalisation rates Impact of a change in stabilised occupancy assumption
25 bps decrease 25 bps increase 1% increase 1% decrease
Reported Group £84.0 million (£76.7 million) £29.6 million (£29.5 million)
A sensitivity analysis has not been provided for a change in the rental growth
rate adopted as there is a relationship between this measure and the discount
rate adopted. So, in theory, an increase in the rental growth rate would
give rise to a corresponding increase in the discount rate and the resulting
value impact would be limited.
Valuation assumption for purchaser's costs
The Group's investment property assets have been valued for the purposes of
the financial statements after deducting notional purchaser's cost of circa
6.0% to 6.8% of gross value, as if they were sold directly as property assets.
The valuation is an asset valuation that is entirely linked to the operating
performance of the business. The assets would have to be sold with the
benefit of operational contracts, employment contracts and customer contracts,
which would be very difficult to achieve except in a corporate structure.
This approach follows the logic of the valuation methodology in that the
valuation is based on a capitalisation of the net operating income after
allowing for the deduction of operational costs and an allowance for central
administration costs. Sale in a corporate structure would result in a
reduction in the assumed Stamp Duty Land Tax but an increase in other
transaction costs, reflecting additional due diligence, resulting in a reduced
notional purchaser's cost of 2.75% of gross value. All the significant sized
transactions that have been concluded in the UK in recent years were completed
in a corporate structure. The Directors have therefore carried out a
valuation on the above basis, and this results in a higher property valuation
at 30 September 2021 of £2,333.8 million (£129.5 million higher than the
value recorded in the balance sheet which translates to 70.2 pence per
share. We have included this revised valuation in the adjusted diluted net
asset calculation (see note 13).
15. FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURES
The table below sets out the categorisation of the financial instruments held
by the Group at 30 September 2021. Where the financial instruments are held
at fair value the valuation level indicates the priority of the inputs to the
valuation technique. The fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities (Level 1)
and the lowest priority to unobservable inputs (Level 3). Valuations
categorised as Level 2 are obtained from third parties. If the inputs used
to measure fair value fall within different levels of the hierarchy, the
category level is based on the lowest priority level input that is significant
to the fair value measurement of the instrument in its entirety.
Valuation level 30 September 2021 30 September 2020
(unaudited) (unaudited)
£000 £000
Interest rate derivatives 2 27 475
16. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
AnyJunk Limited
Jim Gibson is a Non-Executive Director and shareholder in AnyJunk Limited, and
Adrian Lee is a shareholder in AnyJunk Limited. During the period AnyJunk
Limited provided waste disposal services to the Group on normal commercial
terms amounting to £4,000 (2020: £11,000).
Transactions with Armadillo
As described in note 9e, the Group had a 20% interest in Armadillo Storage
Holding Company Limited and a 20% interest in Armadillo Storage Holding
Company 2 Limited. The Group acquired the remaining interest in both
companies that it did not own on 1 July 2021. From this date, the Companies
were wholly owned subsidiaries of the Group and hence the transactions
subsequent to that date are not disclosable. Up to the date of acquisition,
the Group entered into transactions with the Companies on normal commercial
terms as shown in the table below:
1 April 2021 to 30 June 2021 30 September 2020 31 March 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Fees earned from Armadillo 1 238 506 977
Fees earned from Armadillo 2 87 183 376
Balance due from Armadillo 1 - 151 67
Balance due from Armadillo 2 - 24 27
London Children's Ballet
The Group signed a Section 106 agreement with Wandsworth Council relating to
the development of our Battersea store, which required the Group to provide
cultural space to Wandsworth Borough Council. During the period the Group
granted a twenty year lease over this space to London Children's Ballet at a
peppercorn rent, who in turn have agreed to enter into a Social Agreement with
Wandsworth Borough Council coterminous with the lease. Jim Gibson is the
Chairman of Trustees of the London Children's Ballet.
DS Operations Centre Limited
In December 2020, the Group invested £450,000 in DS Operations Centre Limited
("DSOC"). DSOC provided alarm and CCTV monitoring services to the Group
under normal commercial terms during the period, amounting to £132,000 (2020:
£nil).
Treepoints Limited
Jim Gibson is a Non-Executive Director and an investor in City Stasher
Limited, which in turn has a minority investment in Treepoints Limited.
Treepoints Limited provided offsetting tree planting services in respect of
our online packing material sales, under normal commercial terms during the
period, amounting to £2,000 (2020: £nil).
17. CASH FLOW NOTES
a) Reconciliation of profit after tax to cash generated from operations
Note Six months Six months Year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Profit after tax 254,074 59,736 265,186
Taxation 794 180 636
Share of profit of associates (3,677) (888) (3,148)
Investment income (492) (54) (69)
Finance costs 4,655 4,651 8,165
Operating profit 255,354 63,625 270,770
Gain on the revaluation of investment properties 9a, 14 (204,662) (23,554) (189,277)
Depreciation of plant, equipment and owner-occupied property 9b 441 404 803
Depreciation of finance lease capital obligations 755 641 1,290
Employee share options 1,670 1,182 2,869
Cash generated from operations pre working capital movements 53,558 42,298 86,455
Decrease in inventories 10 31 46
Decrease in receivables 369 145 841
Increase/(decrease) in payables 3,926 5,086 (211)
Cash generated from operations 57,863 47,560 87,131
b) Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Net decrease in cash and cash equivalents (2,411) (45,001) (39,096)
Cash flow from movement in debt financing (70,035) 105,348 64,728
Change in net debt resulting from cash flows (72,446) 60,347 25,632
Movement in net debt in the period (72,446) 60,347 25,632
Net debt at start of period (324,978) (350,610) (350,610)
Net debt at end of period (397,424) (290,263) (324,978)
18. RISKS AND UNCERTAINTIES
The risks facing the Group for the remaining six months of the financial year
are consistent with those outlined in the Annual Report for the year ended 31
March 2021. The risk mitigating factors listed in the 2021 Annual Report are
still appropriate.
The Covid-19 pandemic continues to have an impact on economic activity, and
the risk of new variants evading vaccines remains. This may create economic
headwinds in the quarter to December 2021 and into 2022, which may have an
impact on the demand for self storage.
The value of Big Yellow's property portfolio is affected by the conditions
prevailing in the property investment market and the general economic
environment. Accordingly, the Group's net asset value can rise and fall due
to external factors beyond management's control. The pandemic and other
uncertainties in the global economy look set to continue. We have a
high-quality prime portfolio of assets that should help to mitigate the impact
of this on the Group.
Self storage is a seasonal business, and we typically lose occupancy in the
December quarter. The new year typically sees an increase in activity,
occupancy and revenue growth. The visibility we have in the business is
relatively limited at three to four weeks and is based on the net reservations
we have in hand, which are currently in line with our expectations.
There is a risk that our customers may default on their rent payments, however
we have not seen an increase in bad debts since the onset of the pandemic.
We have approximately 77,000 occupied rooms and this, coupled with the
diversity of our customers' reasons for using storage, mean the risk of
individual tenant default to Big Yellow is low. Over 80% of our customers
pay by direct debit and we take a deposit from all customers. Furthermore,
we have a right of lien over customers' goods, so in the ultimate event of
default, we are able to auction the goods to recover the debts.
19. GLOSSARY
Adjusted earnings growth The increase in adjusted eps period-on-period.
Adjusted eps Adjusted profit after tax divided by the diluted weighted average number of
shares in issue during the financial period.
Adjusted NAV EPRA NTA adjusted for an investment property valuation carried out at
purchasers' costs of 2.75%, see note 13.
Adjusted profit before tax The Company's pre-tax EPRA earnings measure with additional Company
adjustments.
Average net achieved rent per sq ft Storage revenue divided by average occupied space over the period.
Average rental growth The growth in average net achieved rent per sq ft period-on-period.
BREEAM An environmental rating assessed under the Building Research Establishment's
Environmental Assessment Method.
Carbon intensity Carbon emissions divided by the Group's average occupied space.
Closing net rent per sq ft Annual storage revenue generated from in-place customers divided by occupied
space at the balance sheet date.
Committed facilities Available undrawn debt facilities plus cash and cash equivalents.
Debt Long-term and short-term borrowings, as detailed in note 12, excluding finance
leases and debt issue costs.
Earnings per share (eps) Profit for the financial period attributable to equity shareholders divided by
the average number of shares in issue during the financial period.
EBITDA Earnings before interest, tax, depreciation and amortisation.
EPRA The European Public Real Estate Association, a real estate industry body. This
organisation has issued Best Practice Recommendations with the intention of
improving the transparency, comparability and relevance of the published
results of listed real estate companies in Europe.
EPRA earnings The IFRS profit after taxation attributable to shareholders of the Company
excluding investment property revaluations, gains/losses on investment
property disposals and changes in the fair value of financial instruments.
EPRA earnings per share EPRA earnings divided by the average number of shares in issue during the
period.
EPRA NTA per share EPRA NTA divided by the diluted number of shares at the year end.
EPRA net tangible asset value (EPRA NTA) IFRS net assets excluding the mark-to-market on interest rate derivatives,
deferred taxation on property valuations where it arises, and intangible
assets. It is adjusted for the dilutive impact of share options.
Equity All capital and reserves of the Group attributable to equity holders of the
Company.
Gross property assets The sum of investment property and investment property under construction.
Gross value added The measure of the value of goods and services produced in an area, industry
or sector of an economy.
Interest cover The ratio of operating cash flow divided by interest paid (before exceptional
finance costs, capitalised interest and changes in fair value of interest rate
derivatives). This metric is provided to give readers a clear view of the
Group's financial position.
Like-for-like occupancy Excludes the closing occupancy of new stores acquired, opened or closed in the
current or preceding financial year in both the current financial year and
comparative figures. This excludes Camberwell, Bracknell, Battersea,
Uxbridge and the Armadillo stores.
Like-for-like store revenue Excludes the impact of new stores acquired, opened or stores closed in the
current or preceding financial year in both the current year and comparative
figures. This excludes Camberwell, Bracknell, Battersea, Uxbridge and the
Armadillo stores.
19. GLOSSARY (CONTINUED)
LTV (loan to value) Net debt expressed as a percentage of the external valuation of the Group's
investment properties.
Maximum lettable area (MLA) The total square foot (sq ft) available to rent to customers.
Move-ins The number of customers taking a storage room in the defined period.
Move-outs The number of customers vacating a storage room in the defined period.
NAV Net asset value.
Net debt Gross borrowings less cash and cash equivalents.
Net initial yield The forthcoming year's net operating income expressed as a percentage of
capital value, after adding notional purchaser's costs.
Net operating income Store EBITDA after an allocation of central overhead
Net operating income on stabilisation The projected net operating income delivered by a store when it reaches a
stable level of occupancy.
Net promoter score The Net Promoter Score is an index ranging from -100 to 100 that measures the
willingness of customers to recommend a company's products or services to
(NPS) others. The Company measures NPS based on surveys sent to all of its
move-ins and move-outs.
Net rent per sq ft Storage revenue generated from in place customers divided by occupancy.
Occupancy The space occupied by customers divided by the MLA expressed as a %.
Occupied space The space occupied by customers in sq ft.
Other storage related income Packing materials, insurance and other storage related fees.
Pipeline The Group's development sites.
Property Income Distribution (PID) A dividend, generally subject to withholding tax, that a UK REIT is required
to pay from its tax-exempt property rental business and which is taxable for
UK-resident shareholders at their marginal tax rate.
REGO Renewable Energy Guarantees of Origin
REIT Real Estate Investment Trust. A tax regime which in the UK exempts
participants from corporation tax both on UK rental income and gains arising
on UK investment property sales, subject to certain conditions.
REVPAF Total store revenue divided by the average maximum lettable area in the
period.
Store EBITDA Store earnings before interest, tax, depreciation and amortisation.
TCFD Task Force on Climate Related Financial Disclosure
Total shareholder return (TSR) The growth in value of a shareholding over a specified period, assuming
dividends are reinvested to purchase additional units of shares.
INDEPENDENT REVIEW REPORT TO BIG YELLOW GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021 which comprises the Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed
Consolidated Statement of Changes in Equity and Condensed Consolidated Cash
Flow Statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the latest annual financial statements of the Group
were prepared in accordance with International Financial Reporting Standards
as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and the next annual
financial statements will be prepared in accordance with UK-adopted
international accounting standards. The Directors are responsible for
preparing the condensed set of financial statements included in the
half-yearly financial report in accordance with IAS 34 as adopted for use in
the UK.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Anna Jones
for and on behalf of KPMG LLP
Chartered Accountants
2 Forbury Place
33 Forbury Road
Reading
RG1 3AD
22 November 2021
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