REG - Big Yellow Group PLC - Results for the Six Months ended 30 September 2022
21/11/2022 16:45
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RNS Number : 0840H Big Yellow Group PLC 21 November 2022
21 November 2022
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the Six Months ended 30 September 2022
Solid first half results against the backdrop of a challenging macro and
geopolitical environment
Six months ended Six months ended
30 September 2022
30 September 2021
Financial metrics Change
Revenue £93.8 million £81.8 million 15%
Store revenue ((1)) £92.8 million £80.8 million 15%
Like-for-like store revenue ((1,2)) £81.3 million £75.1 million 8%
Store EBITDA ((1)) £66.8 million £57.7 million 16%
Adjusted profit before tax ((1)) £54.6 million £46.9 million 16%
EPRA earnings per share ((1)) 29.3 pence 25.7 pence 14%
Interim dividend per share 22.3 pence 20.6 pence 8%
Statutory metrics
Profit before tax £6.8 million £254.9 million (97%)
Cash flow from operating activities (after net finance costs and pre-working 16%
capital movements)((3))
£55.2 million £47.4 million
Basic earnings per share 3.3 pence 142.0 pence (98%)
Store metrics 6,295,000 6,062,000 4%
Store Maximum Lettable Area ("MLA") ((1))
Closing occupancy (sq ft) ((1)) 5,300,000 5,427,000 (2%)
Occupancy growth in the period (sq ft) ((1)) 193,000 318,000 (39%)
Closing occupancy ((1)) 84.2% 89.5% (5.3 ppts)
Occupancy - like-for-like stores ((1,2)) 88.0% 90.2% (2.2 ppts)
Average achieved net rent per sq ft ((1)) £30.55 £27.73 10%
Closing net rent per sq ft ((1)) £31.44 £28.46 10%
Like-for-like average net achieved rent per sq ft ((1,2)) £32.64 £29.53 11%
Like-for-like closing net rent per sq ft ((1,2)) £33.53 £30.48 10%
(1) See note 19 for glossary of terms
(2) The like-for-like metrics exclude stores opened and acquired in the
current and preceding financial years, and the Armadillo stores
(3) See reconciliation in Financial Review
First Half Highlights
• Revenue growth for the period was 15%, which includes new stores and an
additional three months of Armadillo (acquired 1 July 2021)
• Like-for-like store revenue up by 8%, mainly from increases in average
achieved rents
• Like-for-like occupancy increase of 2.0 ppts from 1 April 2022 and down 2.2
ppts from same time last year to 88.0% (September 2021: 90.2%. Closing
occupancy, reflecting the additional capacity from five recently opened
stores, is down 5.3 ppts
• Like-for-like average achieved net rent per sq ft increased by 11% period on
period, like-for-like closing net rent up by 10% from September 2021
• Overall store operating margin increased over the six months to 72.0% (2021:
70.7%), the mature portfolio increased to 74.1% (2021: 72.8%) with closing
occupancy of 88.3%
• Cash flow from operating activities (after net finance costs and pre-working
capital movements) increased by 16% to £55.2 million
• Adjusted profit before tax up 16% to £54.6 million, with EPRA earnings per
share up 14%
• Statutory profit before tax of £6.8 million down 97% from prior period due to
a revaluation loss compared to a gain in the prior period
• Interim dividend of 22.3 pence per share declared, an increase of 8%
• 191,000 sq ft of capacity added in the period with two new stores opened in
Harrow and Kingston North (both London), and an existing store acquired in
Aberdeen
• Acquisition of freehold property on Old Kent Road, London taking the pipeline
to 11 development sites of approximately 0.9 million sq ft (14% of current
MLA), of which nine are in London, and 1.0 million of fully built unlet space
available
• Acquisition of freehold site at Farnham Road, Slough to build a replacement
store for our existing nearby 67,000 sq ft leasehold store. The customers
will be transferred on opening of the new store
• Planning consent granted for new stores in Staines (West London) and Farnham
Road, Slough; we now have seven pipeline stores with planning
• Refinancing of £120 million M&G loan and new $225 million shelf facility
with Pricoa Private Capital
Commenting, Nicholas Vetch, Executive Chairman, said:
"Over the six months we have traded the business through what has been a
challenging macro and geo-political environment, against a strong comparator
period in 2021 and are pleased to have delivered solid growth in revenue,
earnings and cash flow. Our management of pricing to new and existing
customers has resulted in improved average achieved rents, which have been the
main driver of revenue growth. It is pleasing to note that we have seen a
strong recovery in our more central London stores in this half year as
activity levels normalise, post pandemic and this is being driven by both
domestic and business customers. We have also been successful in controlling
overall increases in store operating expenses to 4%, resulting in improved
operating margins.
The current geo-political, monetary, and fiscal travails need no further
amplification from us. We are confident in the resilience of our financial
and business model.
We are currently seeing evidence of a correction to land prices and the
concerns we have around construction are showing some signs of improvement.
For the time being we will continue to focus on the day-to-day running of
the business over the winter."
- Ends -
ABOUT US
Big Yellow is the UK's brand leader in self storage. Big Yellow now operates
from a platform of 108 stores, including 24 stores branded as Armadillo Self
Storage. We have a pipeline of 0.9 million sq ft comprising 11 proposed Big
Yellow self storage facilities. The current maximum lettable area of the
existing platform (including Armadillo) is 6.3 million sq ft. When fully
built out the portfolio will provide approximately 7.2 million sq ft of
flexible storage space. 99% of our stores and sites by value are held
freehold and long leasehold, with the remaining 1% 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
Oliver Bell
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the Six Months ended 30 September 2022
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 2022.
Over the six months we have traded the business through what has been a
challenging macro and geo-political environment, against a strong comparator
period in 2021 and are pleased to have delivered solid growth in revenue,
earnings and cash flow. Our management of pricing to new and existing
customers has resulted in improved average achieved rents, which have been the
main driver of revenue growth. It is pleasing to note that we have seen a
strong recovery in our more central London stores in this half year as
activity levels normalise post pandemic, and this is being driven by both
domestic and business customers. We have also been successful in controlling
overall increases in store operating expenses to 4%, resulting in improved
operating margins.
We have also continued to invest in our business with the acquisition of an
existing store in Aberdeen and a property in a strategic location on the Old
Kent Road, London, and have opened a further two stores in Harrow and North
Kingston. Since the onset of the pandemic, the Group has opened seven new
stores, which, coupled with the acquisitions of Aberdeen and the remaining 80%
interest in Armadillo, increase the Group's MLA by 1.6 million sq ft, or 34%.
These new stores have been an important contributor to our overall revenue
growth of 15% for the period and we have 1.0 million sq ft of fully built
unlet space in the existing portfolio.
Financial results
Like-for-like occupancy increased by 2.0 ppts to 88.0% from 86.0% at 31 March
2022 but was down 2.2 percentage points from 90.2% at 30 September 2021.
This compares with the position at 30 June 2022 where like-for-like occupancy
was down 2.7 ppts given what was an unusually strong June quarter in 2021,
impacted by the distortive effects of stamp duty changes.
Revenue for the period was £93.8 million (2021: £81.8 million), an increase
of 15%, with like-for-like store revenue up 8%, driven mainly by an increase
in the average achieved net rent, offset by a slight fall in average occupancy
given the very strong comparator period. Like-for-like store revenue
excludes new store openings and acquired stores (including the remaining
interest of Armadillo portfolio which we acquired in July 2021, and Aberdeen
acquired in June 2022).
We have seen growth in cash flow from operating activities (after net finance
costs and pre-working capital movements) of 16% to £55.2 million for the
period (2021: £47.4 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
£54.6 million, up 16% from £46.9 million for the same period last year (see
note 6).
Adjusted diluted EPRA earnings per share were 29.3 pence (2021: 25.7 pence),
an increase of 14%. The Group's statutory profit before tax for the period
was £6.8 million, a decrease from £254.9 million for the same period last
year, due to a revaluation deficit of £47.7 million (2%) in the period (2021:
gain of £204.7 million), reflecting an outward movement in cap rates at the
end of September, partly offset by the growth in cash flow from the stores.
Dividends
The Group's dividend policy is to distribute 80% of full year adjusted
earnings per share. The second half of the year has historically delivered
at the operating level a similar outturn to the first half, however we are
likely to see a further increase in our borrowing costs in the second half of
the year. We have therefore declared an interim dividend of 22.3 pence per
share representing an 8% increase. This first half dividend has all been
declared as Property Income Distribution ("PID").
Investment in new capacity
In June 2022 the Group acquired an existing 53,000 sq ft self storage centre
in Aberdeen for £10 million. The store is the only purpose-built self
storage centre in Aberdeen. The purchase price represented a starting 6% net
initial year one yield which should grow to 9% within two years as the store
benefits from being added to our digital platform. There is also surplus
land which provides the opportunity for expansion.
The Group opened new stores in Harrow and Kingston North (both in London) in
September 2022, adding 138,000 sq ft of capacity.
As previously announced, we acquired a prime site on Farnham Road in Slough
from Segro plc. The site falls within the Slough Trading Estate Simplified
Planning Zone ("SPZ") Scheme. The SPZ sets out a series of conditions and
provided that a development fully complies with these conditions then we do
not need to secure a full planning permission to develop our proposed 62,000
sq ft store on the site. We have now received confirmation that these
conditions have been met.
As part of this transaction, the Group has also agreed to the surrender of the
lease on its existing Slough store on Whitby Road, which is leased from
Segro. The lease surrender will take effect six months after the completion
of the construction of our new store, which is anticipated to open in 2024.
After a 15 year search, the Group has acquired a freehold property on Old Kent
Road, London. The property, currently let to Iceland Foods, has a passing
rent of £388,000 with seven years remaining on their lease. We will be
seeking planning consent for a 75,000 sq ft self storage centre on the site.
This is a medium-term strategic opportunity in an area of London going through
significant regeneration. The timing of construction and opening is
dependent on planning and vacant possession.
We were also successful in acquiring the freehold of our Oxford store for
£13.5 million in September. The 1.8 acre site includes two separately let
buildings, which will provide vacant possession in 2030 and the opportunity to
intensify the use. This acquisition was a continuation of our strategy of
acquiring freehold interests to reduce our rental liability and also
importantly to ensure our long-term occupation.
On the planning front, we have secured a resolution to grant planning consent
for an approximately 65,000 sq ft store and nine industrial units totalling
99,000 sq ft, at our site on the Causeway in Staines.
As announced in May, the Group conditionally sold its industrial warehouse
scheme at Harrow, London for gross sales proceeds of £61 million.
Completion of the sale is conditional, inter alia, on practical completion of
the development, and is expected to occur in January 2023.
We are currently on site constructing our new store in Kings Cross which is
expected to open in Summer 2023. As stated in May, we decided to put on hold
any future construction commitments, given the uncertainties around pricing in
the construction market and our need to secure fixed price contracts. We
fully intend to build out all our pipeline stores and will continue to monitor
the construction market and will decide on timing in early 2023.
We now have a pipeline of 11 proposed self storage facilities. These store
openings are expected to add approximately 0.9 million sq ft of storage space
to the portfolio, an increased capacity of 14%.
The total development cost of these 11 new stores is £357 million, including
cost incurred to date of £167 million, and cost to complete of approximately
£190 million, with an estimated net operating income of £30.6 million, or
8.6% on cost. The replacement store in Slough will cost a further £11
million and we would expect to commence construction on this in 2023,
notwithstanding our comments above.
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 9.3 times (2021: 10.6 times). This has reduced since the prior period
due to the increase in interest rates, however, is still comfortably ahead of
our internal minimum interest cover requirement of five times, and covenant
level of 1.5 times. At 30 September 2022, 41% of our debt is fixed, with the
balance floating, however we expect the fixed element to rise to around 50%
following the disposal of the industrial units at Harrow which is expected to
complete in the second half. Our policy of keeping our debt half fixed and
half variable remains.
Net debt is £469.8 million at 30 September 2022, and we have undrawn
facilities of £50.6 million and in addition the $225 million bilateral shelf
facility with Pricoa. We continue to generate operating cash flow post
dividends and are looking to realise £100 million in disposals by March 2024,
Harrow (£61 million) being the first.
At 30 September 2022, our average cost of debt was 3.6%, however following the
recent Bank of England interest rate decision, it has increased to 4.0% and
the marginal cost of our RCF bank debt is currently 4.25%.
Outlook
The current geo-political, monetary, and fiscal travails need no further
amplification from us. We are confident in the resilience of our financial
and business model.
We are currently seeing evidence of a correction to land prices and the
concerns we have around construction are showing some signs of improvement.
For the time being we will continue to focus on the day-to-day running of
the business over the winter.
Nicholas
Vetch
Executive Chairman
21 November 2022
Business and Financial Review
Store occupancy
We now have a portfolio of 108 open and trading stores, with a current maximum
lettable area of 6.3 million sq ft.
Like-for-like occupancy increased by 2.0 ppts from 1 April 2022 but was down
2.2 ppts from the same time last year. Like-for-like store revenue growth
for the half year was 8%, driven by improvements in average achieved net rent
per sq ft.
Prospect numbers over the six months have been slightly ahead of the prior
year despite a strong comparator period, and the table below shows the monthly
move-in and move-out activity of all our stores:
Move-ins period ended 30 September 2022 Move-ins period ended 30 % Move-outs period ended 30 September 2022 Move-outs period ended 30 September 2021 %
September 2021
April 6,381 5,711 12% 6,338 6,007 6%
May 7,139 6,804 5% 6,212 5,753 8%
June 9,907 11,886 (17%) 6,070 6,263 (3%)
July 8,991 8,207 10% 8,541 8,535 0%
August 9,212 8,501 8% 8,188 7,944 3%
September 8,923 8,773 2% 12,138 10,946 11%
Total 50,553 49,882 1% 47,487 45,448 4%
October 7,220 7,243 - 9,339 9,231 1%
The Group saw growth in move-ins during the majority of the period, except for
June where last year benefited from the tapering off of the stamp duty holiday
on 1 July 2021 which accelerated housing-related demand. The year-on-year
fall in June would have been greater had we not seen a record performance from
students in June this year, following the reopening of all campuses in the
last academic year.
Since 1 October, move-ins and move-outs have been broadly in line with the
same period last year, with the loss in occupied space lower than in the prior
year.
The Group's move-outs have increased by 4% compared to the same period last
year, largely as a result of student move-outs following a record number
moving in during June, as evidenced by the September figures.
The stores grew in occupancy over the six months by 154,000 sq ft.
Additionally, the Group acquired a 53,000 sq ft store in Aberdeen, which had
occupancy of 39,000 sq ft at the date of acquisition. The overall increase
in the Group's occupancy over the period was therefore 193,000 sq ft. This
growth has been driven in the main by domestic customers and secondly by
students, with our overall space occupied by businesses remaining broadly the
same.
Whilst the growth in occupancy for the six months is lower than last year,
which was a record six months, it is ahead of 2019.
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 141,000 sq ft (2.2% of maximum lettable area "MLA")
since the end of September, compared to a loss of 155,000 sq ft (2.6% of MLA)
at the same stage last year.
Occupancy Occupancy change from 30 September 2021
30 September 2022 Occupancy change from 31 March 2022 000 sq ft Occupancy Occupancy
% 000 sq ft 30 September 2022 Occupancy 30 September 2021
000 sq ft 31 March 000 sq ft
2022
000 sq ft
75 established Big Yellow stores 88.3% 116 (99) 4,169 4,053 4,268
9 developing Big Yellow stores 54.3% 78 113 317 239 204
All 84 Big Yellow stores 84.5% 194 14 4,486 4,292 4,472
24 Armadillo stores 82.5% (1) (141) 814 815 955
All 108 stores 84.2% 193 (127) 5,300 5,107 5,427
The 75 established Big Yellow stores are 88.3% occupied compared to 91.4% at
the same time last year. The nine developing Big Yellow stores added 78,000
sq ft of occupancy in the past six months to reach closing occupancy of
54.3%.
The 24 Armadillo stores are 82.5% occupied, compared to 88.6% at this time
last year. The occupancy change for the Armadillo stores since 30 September
2021 includes the closure of the Cheadle store following the fire in February
2022 (with occupancy of 95,000 sq ft). Overall store occupancy was 84.2%.
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.
In an inflationary environment such as this, self storage benefits from the
fact that we can move our asking prices to new customers at short notice and
give inflationary increases to our existing customers on an annual basis.
The average achieved net rent per sq ft increased by 10% compared to the
same period last year, with closing net rent up 10% compared to 30 September
2021, and up 5% from 31 March 2022.
The table below shows the change in net rent per sq ft for the portfolio by
average occupancy over the six months (on a non-weighted basis). The
analysis excludes stores opened and acquired in the past two financial years.
Average occupancy in Number of stores Net rent per sq ft growth from 1 April to 30 September 2022 Net rent per sq ft growth from 1 April to 30 September 2021
the six months
75% to 85% 30 4.9% 6.3%
85 to 90% 52 5.0% 6.9%
Above 90% 17 5.9% 8.4%
Security of income
We believe that self storage income is essentially evergreen income with
highly defensive characteristics driven from buildings with very low
obsolescence and relatively low maintenance requirements. Although our
contract with our customers is in theory as short as a week, we do not rely on
any one contract for our income security. At 30 September 2022 the average
length of stay for existing customers was 29 months (March 2022: 29 months).
For all customers, including those who have moved out of the business
throughout the life of the portfolio, the average length of stay remained at
8.6 months (March 2022: 8.6 months). We have seen an increase in the length
of stay of customers who moved out over the six months, which increased to 8.6
months from 7.6 months for the same period last year. This is likely to have
been the result of short-term users in the prior period as a result of the
distortions from the stamp duty changes.
38% of our customers by occupied space have been storing with us for over two
years (2021: 35%), and a further 16% of customers have been in the business
for between one and two years (2021: 18%).
Our business customer base is comprised of online retailers, B2B traders
looking for flexible mini-warehousing for e-fulfilment, service providers,
those looking to shorten supply chains, and businesses looking to rationalise
their other fixed costs of accommodation. For these customers, who typically
are looking for rooms which could be from 50 sq ft to 500 sq ft in facilities
that meet their operational requirements, the only supply in big cities is
from self storage providers.
We saw continued growth in occupancy from our domestic customer base, with
demand across a broad spectrum of uses. Over 70% of our domestic customers
are in the top 3 ACORN categories: Affluent Achievers, Rising Prosperity, and
Comfortable Communities. The largest element of demand into our business
each year is customers who use us for relatively short periods driven by a
need.
We therefore have a very 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, market-leading brand and
digital platform, and customer service, 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 five store
openings in London in 2022 (including our Hayes, Harrow, and Kingston North
stores), and we anticipate six new facilities in London in 2023 (including our
planned store at Kings Cross).
Revenue
Total revenue for the six-month period was £93.8 million, an increase of
£12.0 million (15%) from £81.8 million in the same period last year. Of
the total store revenue of £92.8 million in the period, like-for-like store
revenue (see glossary in note 19) was £81.3 million, an increase of 8% from
the 2021 figure of £75.1 million.
Other sales comprise the selling of packing materials, insurance/enhanced
liability service ("ELS"), and storage related charges. The Group changed
the way it sold contents protections to its customers on 1 June 2022 to an
ELS, which is subject to VAT and not Insurance Premium Tax ("IPT"). Prior to
1 June 2022, IPT at 12% was paid to our insurance provider based on our total
insurance revenue. We decided not to pass on the entirety of the 20% VAT on
the new ELS to our customers, and hence gross ELS revenue from 1 June is lower
by 8%. However, because we can recover VAT and are no longer paying IPT, our
cost of sales has also reduced. On a net basis, our profits from
insurance/ELS remain largely unchanged.
The other revenue earned is tenant income on sites where we have not started
development.
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 store operating costs compared to the
same period last year, with Armadillo's costs included in full in both
periods:
Period ended 30 September 2022 Period ended % of store operating costs in period
£000 30 September
Category 2021 Change
£000
Cost of sales (insurance/ELS and packing materials) 1,428 2,034 (30%) 6%
Staff costs 6,999 6,806 3% 28%
General & admin 841 808 4% 3%
Utilities 959 1,044 (8%) 4%
Property rates 7,521 7,304 3% 30%
Marketing 3,292 3,356 (2%) 13%
Repairs and maintenance 2,314 2,200 5% 9%
Insurance 1,290 744 73% 5%
Computer costs 509 464 10% 2%
Total before one-off items 25,153 24,760 2%
One-off items (266) (862) (69%)
Total per portfolio summary 24,887 23,898 4%
Store operating costs have increased by £1.0 million (4%). The one-off
items in both periods are principally rates rebates where we have successfully
appealed against the 2017 rating list. Store operating costs before these
one-off items have increased by £0.4 million (2%) compared to the same period
last year. New stores accounted for £0.7 million of operating expenses in
the period. Cost of sales have decreased by £0.6 million following the
move to selling an ELS rather than insurance (see explanation in revenue
above). The remaining increase is £0.3 million (1%, which is a pleasing
result in the current inflationary environment), with commentary below:
- Staff costs have increased by £0.2 million (3%) with store numbers and the
salary review of on average 5% (including a 7% increase to those at the lower
end of the pay scale), which has been partly offset by lower bonuses for the
six months, which have averaged 11% compared to 15% in the prior period.
- Marketing has decreased by £0.1 million (2%), with continued efficiencies
being achieved from our digital campaigns.
- Insurance has increased by £0.5 million (73%). We saw an increase in our
insurance premiums this year, from a combination of higher pricing in the
insurance market, and the impact on our premiums of the fire at our Cheadle
store in February 2022.
The Group's store bad debt expense for the period was 0.1%, in line with the
prior period. The Group has not seen any deterioration in its aged debtors'
profile over recent months.
The table below reconciles store operating costs per the portfolio summary to
cost of sales in the income statement:
Period ended 30 September 2022 Period
£000 ended 30 September 2021
£000
Direct store operating costs per portfolio summary (excluding rent) 24,887 23,898
Rent included in cost of sales (total rent payable is included in portfolio 718 1,047
summary)
Depreciation charged to cost of sales 235 188
Head office operational management costs charged to cost of sales 610 543
Armadillo cost of sales pre acquisition of remaining interest - (1,908)
Cost of sales per income statement 26,450 23,768
Store EBITDA
Store EBITDA for the period was £66.8 million, an increase of £9.1 million
(16%) from £57.7 million for the period ended 30 September 2021 (see
Portfolio Summary). The overall EBITDA margin for all stores during the
period was 72.0%, up from 70.7% in 2021.
All stores are currently trading profitably at the Store EBITDA level, except
for our recently opened stores in Harrow and Kingston North. Our stores at
Hayes and Hove, which opened in the first quarter of 2022, reached break even
in six and four months respectively.
Administrative expenses
Administrative expenses in the income statement have decreased by £0.2
million. In the prior period, the Group incurred £0.4 million of
acquisition costs in relation to the purchase of the remaining interest in
Armadillo which were written off in accordance with IFRS 3.
After excluding this one-off item in the prior period, administrative expenses
have increased by £0.2 million, an inflationary increase. The non-cash
share-based payments charge represents £1.7 million of the overall £7.1
million expense (2021: £1.7 million of £7.3 million expense).
Other operating income
In February 2022 the Group experienced a fire at our Cheadle store, which
resulted in a total loss to the store. Buildings all risk insurance is in
place for the full reinstatement value with the landlord. We also have
insurance cover in place for both our fit-out and four years loss of income.
The loss of income received during the first six months of the financial year
was £0.7 million, which is included in other operating income.
The Group acquired the freehold of its Oxford store in September 2022, thus
extinguishing the right of use asset and liability in relation to the lease
from the previous landlord. This extinguishment gave rise to a gain of £0.2
million, which is included in other operating income for the period.
Interest
Interest on bank borrowings during the period was £7.8 million, £2.6 million
higher than the same period last year, due to higher average debt levels in
the period, coupled with a higher average cost of debt following the increase
in interest rates.
Interest capitalised in the period amounted to £1.6 million (2021: £1.0
million), arising on the Group's construction programme.
Results
The Group's statutory profit before tax for the period was £6.8 million,
compared to £254.9 million for the same period last year. The decrease is
due to the revaluation loss in the in the period compared to a gain in the
prior period.
After adjusting for the revaluation movement of investment properties and
other matters shown in the table below, the Group made an adjusted profit
before tax in the period of £54.6 million, up 16% from £46.9 million in
2021.
Six months ended 30 September 2022 Six months ended 30 September 2021
£m £m
Profit before tax analysis
Profit before tax 6.8 254.9
Loss/(gain) on revaluation of investment properties 47.7 (204.6)
Change in fair value of interest rate derivatives (0.6) (0.5)
Refinancing costs 0.7 -
Acquisition costs written off - 0.4
Share of non-recurring gains in associates - (3.3)
Adjusted profit before tax 54.6 46.9
Tax (0.7) (0.8)
Adjusted profit after tax 53.9 46.1
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 2021 46.9
Increase in gross profit 9.3
Increase in administrative expenses (0.2)
Increase in other operating income 0.9
Increase in net interest payable (2.6)
Increase in capitalised interest 0.7
Reduction in share of associates' recurring profit (0.4)
Adjusted profit before tax for the six months to 30 September 2022 54.6
The reduction in share of associates' recurring profit is following the
acquisition of the remaining interest in Armadillo in July 2021. Diluted
EPRA earnings per share was 29.3 pence (2021: 25.7 pence), an increase of 14%
from the same period last year.
Cash flow
Cash flows from operating activities (after net finance costs and pre-working
capital movements) have increased by 16% to £55.2 million for the period
(2021: £47.4 million). These operating cash flows are after the ongoing
maintenance costs of the stores, which for this first half were on average
approximately £21,000 per store. The Group's net debt has increased over
the period to £469.8 million (March 2022: £411.8 million), following the
capital expenditure in the period.
There are distortive working capital items in the prior period, and therefore
the summary cash flow below sets out the free cash flow pre-working capital
movements
Six months ended 30 September 2022 Six months ended 30 September 2021
£m £m
Cash generated from operations pre-working capital movements 64.0 53.5
Net finance costs (6.9) (5.0)
Interest on obligations under lease liabilities (0.4) (0.4)
Tax (1.5) (0.7)
Cash flow from operating activities pre-working capital movements 55.2 47.4
Working capital movements (0.6) 4.4
Cash flow from operating activities 54.6 51.8
Acquisition of Armadillo - (66.7)
Capital expenditure (73.5) (74.3)
Receipt from Capital Goods Scheme 0.2 0.4
Dividend received from associates - 0.4
Cash flow after investing activities (18.7) (88.4)
Dividends (38.7) (31.0)
Payment of finance lease liabilities (0.7) (0.6)
Issue of share capital 0.9 98.5
Debt acquired with Armadillo - (50.9)
Receipt from termination of interest rate derivatives 0.4 -
Loan arrangement fees paid (1.2) -
Increase in borrowings 58.0 70.0
Net cash outflow - (2.4)
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 9.3 times (2021: 10.6 times), with the reduction caused by the increase in
the interest expense over the period following the rise in borrowing costs and
a higher average debt level.
Of the capital expenditure in the period £35.3 million related to the
acquisitions of Old Kent Road, Slough Farnham Road, and the freehold of our
Oxford store, with the balance of £38.2 million principally construction
capital expenditure on our new stores in Harrow, Kingston North and Kings
Cross, and investment in the retrofitting of solar panels across our estate.
Taxation
The Group is a Real Estate Investment Trust ("REIT"). We benefit from a zero
tax rate on our qualifying self storage earnings. We only pay corporation
tax on the profits attributable to our residual business, comprising primarily
of the sale of packing materials and insurance, and management fees earned by
the Group.
There is a £0.7 million tax charge in the residual business for the period
ended 30 September 2022 (six months to 30 September 2021: £0.8 million).
Dividends
REIT regulatory requirements determine the level of Property Income
Distribution ("PID") payable by the Group. A PID of 22.3 pence per share is
proposed as the total interim dividend, an increase of 8% from 20.6 pence per
share for the same period last year.
The interim dividend will be paid on 26 January 2023. The ex-dividend date
is 5 January 2023, and the record date is 6 January 2023.
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.
The table below shows the Group's debt position at 30 September 2022:
Debt Expiry Facility Drawn Cost
Aviva Loan September 2028 £160.4m £160.4m 3.4%
M&G loan September 2029 £120m £120m 3.8%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland)
October 2024 £240m £198m 3.6%
Total Average term 4.5 years £520.4m £478.4m 3.6%
In addition to the facilities above, during the period, the Group signed a
$225 million credit approved shelf facility with Pricoa Private Capital
("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt
in minimum tranches of £10 million over the next three years with terms of
between 7 and 15 years at short notice, typically 10 days.
We intend to use this facility to partially replace and reduce the bank
revolving credit facility which expires in October 2024. This facility
increases our potential debt capacity to approximately £600 to £625 million
and extends the average maturities.
The optionality built into the facility allows us to choose the timing of that
transition and hence the opportunity to optimise our average cost of debt.
During the period, the Group refinanced its £120 million debt facility with
M&G Investments ("M&G") for a seven year term, with the new loan
expiring in September 2029, secured against a portfolio of 15 assets. The
existing facility was due to expire in June 2023. £35 million of this
facility is currently hedged until June 2023, and the balance is variable.
The pricing on the facility agreement was reflective of the sustainability
investments that Big Yellow has made over the past few years, and our planned
investment in solar over the coming years as part of our Net Renewable Energy
Positive Strategy. The margin on the facility was reduced by 20bps from the
expiring facility, reflective of improved portfolio performance.
The Group repaid the two Armadillo bank facilities during the period using the
revolving bank facility. The Group also cancelled the two interest rate
derivatives in place on the Armadillo facilities, which resulted in a payment
to the Group of £436,000 as the swaps were in-the-money.
The Group was comfortably in compliance with its banking covenants at 30
September 2022 and is forecast to be for the period covered by the going
concern statement.
The net debt to gross property assets ratio is 18% (2021: 18%) and the net
debt to adjusted net assets ratio (see net asset value section below) is 21%
(2021: 21%). Our net debt to the Group's market capitalisation at 30
September 2022 was 24% (2021: 15%).
Property
Investment property
The Group's investment properties are carried at the half year at Directors'
valuation. They are valued externally by 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 JLL on the
capitalisation rates used in the valuations. The Directors, as advised by
the valuers, consider that the prime capitalisation rates have increased by on
average 30 bps since the start of the financial year. The increase in cap
rates applied was 12.5 bps for stores in London, 25 bps for stores in the
South East and 50 bps for regional stores. Additionally, a further 25 bps
was added to the cap rates for immature stores.
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 JLL in the March 2022 valuations are still appropriate at the
September valuation date.
At 30 September 2022 the total value of the Group's properties is shown in the
table below:
Analysis of property portfolio Value at 30 September 2022 Revaluation movement in the period
£m £m
Investment property 2,386.2 (27.1)
Investment property under construction 268.0 (20.6)
Investment property total 2,654.2 (47.7)
The revaluation deficit for the open stores in the period was £27.1 million,
reflecting the increase in cap rates referred to above, partly offset by the
growth in operating cash flow. There is a revaluation deficit of £20.6
million on the investment property under construction, due to the outward
shift in cap rates and increased projected development costs.
The initial yield on the portfolio is 5.9% (31 March 2022: 5.2%). The
Group's annual report and accounts for the year ended 31 March 2022 contains a
detailed explanation of the valuation methodology.
Development pipeline
The status of the Group's development pipeline is summarised in the table
below:
Site Location Status Anticipated capacity
Kings Cross, London Prominent location on York Way Planning consent granted. Demolition commenced in January 2021 with a view 103,000 sq ft
to opening in Summer 2023.
Wembley, London Prominent location on Towers Business Park Planning consent granted. Discussions ongoing to secure vacant possession. 70,000 sq ft
Queensbury, London Prominent location off Honeypot Lane Site acquired in November 2018. Planning consent granted. 70,000 sq ft
Slough Bath Road Prominent location on Bath Road Site acquired in April 2019. Planning consent granted. 90,000 sq ft
Slough Farnham Road Prominent location on Farnham Road Site acquired in June 2022. Planning consent granted under the Slough Replacement for existing leasehold store
Trading Estate Simplified Planning Zone ("SPZ") Scheme.
Wapping, London Prominent location on the Highway, adjacent to existing Big Yellow Site acquired in July 2020. Planning application refusal likely to be Additional 95,000 sq ft
appealed.
Staines, London Prominent location on the Causeway Site acquired in December 2020. Planning consent granted. In addition, 65,000 sq ft
consent was received to develop 9 industrial units totalling 99,000 sq ft.
Epsom, London Prominent location on East Street Site acquired in March 2021. Planning application submitted in September 58,000 sq ft
2022.
Kentish Town, London Prominent location on Regis Road Site acquired in April 2021. Planning application to be submitted in Q1 68,000 sq ft
2023.
West Kensington, London Prominent location on Hammersmith Road Site acquired in June 2021. Planning application to be submitted in Q1 2023. 175,000 sq ft
Old Kent Road, London Prominent location on Old Kent Road Site acquired in June 2022. Planning discussions underway with the local 75,000 sq ft
Council.
Newcastle Prominent location on Scotswood Road Planning consent granted. 60,000 sq ft
Total 929,000 sq ft
The capital expenditure forecast for the remainder of the financial year
(excluding any new site acquisitions) is approximately £17.7 million, which
principally relates to construction costs on our development sites at Kings
Cross, and the continued retrofitting of solar panels across the Group's
estate.
Net asset value
The adjusted net asset value per share is 1,220.1 pence (see note 13), down 2%
from 1,239.7 pence per share at 31 March 2022. The table below reconciles
the movement from 31 March 2022:
Equity shareholders' funds EPRA adjusted NAV pence per share
£m
Movement in adjusted net asset value
31 March 2022 2,284.2 1,239.7
Adjusted profit after tax 53.9 29.2
Equity dividends paid (39.1) (21.2)
Revaluation movements (47.7) (25.9)
Movement in purchaser's cost adjustment 1.5 0.8
Other movements (e.g. share schemes) 1.9 (2.5)
30 September 2022 2,254.7 1,220.1
Jim
Gibson
John Trotman
Chief Executive
Officer
Chief Financial Officer
21 November 2022
PORTFOLIO SUMMARY
September 2022 September 2021
Big Yellow Established Big Yellow Developing Total Big Yellow Armadillo ((2)) Big Yellow Established Big Yellow Developing Total Big Yellow Armadillo
Total Total
Number of stores 75 9 84 24 108 74 5 79 25 104
At 30 September:
Total capacity (sq ft) 4,724,000 584,000 5,308,000 987,000 6,295,000 4,669,000 315,000 4,984,000 1,078,000 6,062,000
Occupied space (sq ft) 4,169,000 317,000 4,486,000 814,000 5,300,000 4,268,000 204,000 955,000 5,427,000
4,472,000
Percentage occupied 88.3% 54.3% 84.5% 82.5% 84.2% 91.4% 64.8% 89.7% 88.6% 89.5%
Net rent per sq ft £33.60 £28.71 £33.26 £21.40 £31.44 £30.75 £23.45 £30.43 £19.85 £28.46
For the period:
REVPAF((3)) £33.08 £19.88 £31.88 £20.46 £30.05 £31.22 £14.75 £30.27 £19.61 £28.36
Average occupancy 88.2% 59.9% 85.7% 83.7% 85.4% 89.9% 52.4% 87.6% 87.0% 87.5%
Average annual net rent psf £32.64 £27.75 £32.33 £20.98 £30.55 £29.79 £22.04 £19.14 £27.73
£29.52
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Self storage income 67,963 3,908 71,871 8,684 80,555 62,698 1,674 64,372 9,003 73,375
Other storage related 9,660 681 10,341 1,432 11,773 9,998 425 10,423 1,585 12,008
income ((3))
Ancillary store rental 429 85 514 7 521 396 33 10 439
Income 429
Total store revenue 78,052 4,674 82,726 10,123 92,849 73,092 2,132 75,224 10,598 85,822
Direct store operating (19,146) (2,000) (21,146) (3,741) (24,887) (18,895) (1,360) (3,643) (23,898)
costs (excluding
depreciation) (20,255)
Short and long (1,063) - (1,063) (85) (1,148) (955) - (301) (1,256)
leasehold rent((4)) (955)
Store EBITDA((3,5)) 57,843 2,674 60,517 6,297 66,814 53,242 772 54,014 6,654 60,668
Store EBITDA margin 74.1% 57.2% 73.2% 62.2% 72.0% 72.8% 36.2% 62.8% 70.7%
71.8%
Deemed cost £m £m £m £m £m
To 30 September 2022 708.5 127.9 135.9 972.3
836.4
Capex to complete - 0.6 0.6 0.9 1.5
Total 708.5 128.5 837.0 136.8 973.8
(1) The Big Yellow established stores have been open for more than three years at
1 April 2022, and the developing stores have been open for fewer than three
years at 1 April 2022.
(2) Armadillo's Cheadle store was destroyed by fire in February 2022. It is
included in the prior period comparatives, but not in the current period
figures.
(3) See glossary in note 19.
(4) Rent under IFRS 16 for seven short leasehold properties accounted for as
investment properties and right-of-use assets under IFRS.
(5) 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 performance of all stores. The table below shows the
results excluding the period when the stores were not wholly owned:
2022 2021
Per above Armadillo results as an associate Statutory Per above Armadillo results as an associate Statutory
£000
£000
£000
£000
£000
£000
Store revenue 92,849 - 92,849 85,822 (5,046) 80,776
Direct store operating costs (24,887) - (24,887) (23,898) 1,908 (21,990)
Rent (1,148) - (1,148) (1,256) 150 (1,106)
Store EBITDA 66,814 - 66,814 60,668 (2,988) 57,680
The table below reconciles Store EBITDA to gross profit in the income
statement:
Period ended 30 September 2022 Period ended 30 September 2021
£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)) 92,849 967 80,776 1,025
93,816 81,801
Cost of sales((2)) (24,887) (1,563) (26,450) (21,990) (1,778) (23,768)
Rent((3)) (1,148) 1,148 - (1,106) 1,106 -
66,814 552 67,366 57,680 353 58,033
(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 for use in the UK;
- 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
21 November 2022
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 September 2022
Six months ended Six months ended
30 September 2022 30 September 2021
(unaudited) (unaudited) Year ended 31 March 2022
(audited)
Note £000 £000 £000
Revenue 2 93,816 81,801 171,318
Cost of sales (26,450) (23,768) (50,383)
Gross profit 67,366 58,033 120,935
Administrative expenses (7,091) (7,341) (14,352)
Operating profit before gains and losses on property assets 60,275 50,692 106,583
(Loss)/gain on the revaluation of investment properties 9a (47,673) 204,662 597,224
Gain on disposal of investment property - - 584
Operating profit 12,602 255,354 704,391
Other operating income 2 899 - -
Share of profit of associates 9e - 3,677 3,677
Investment income - interest receivable 3 1 15 23
- fair value movement of 3 564 477 1,389
derivatives
Finance costs 4 (7,313) (4,655) (10,604)
Profit before taxation 6,753 254,868 698,876
Taxation 5 (710) (794) (1,602)
Profit for the period (attributable to equity shareholders) 6,043 254,074 697,274
Total comprehensive income for the period attributable to equity shareholders 6,043 254,074 697,274
Basic earnings per share 8 3.3p 142.0p 385.4p
Diluted earnings per share 8 3.3p 141.6p 384.2p
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 2022
30 September 30 September
2022 2021 31 March 2022
(unaudited)
(unaudited)
(audited)
£000 £000
Note £000
Non-current assets
Investment property 9a 2,386,246 1,969,730 2,342,199
Investment property under construction 9a 268,012 234,542 285,400
Right-of-use assets 9a 18,849 20,804 19,174
Plant, equipment, and owner-occupied property 9b 3,882 4,011 3,857
Intangible assets 9c 1,433 1,433 1,433
Investment 9d 588 450 588
Derivative financial instruments 12 - - 885
2,679,010 2,230,970 2,653,536
Current assets
Derivative financial instruments 12 1,013 - -
Inventories 480 404 483
Trade and other receivables 10 8,506 8,994 7,756
Cash and cash equivalents 8,604 9,911 8,605
18,603 19,309 16,844
Total assets 2,697,613 2,250,279 2,670,380
Current liabilities (47,399) (45,572) (47,349)
Trade and other payables 11
Borrowings 12 (3,083) (2,935) (3,008)
Obligations under lease liabilities (1,805) (2,298) (1,958)
(52,287) (50,805) (52,315)
Non-current liabilities
Borrowings 12 (473,056) (402,362) (414,972)
Obligations under lease liabilities (18,386) (20,009) (18,718)
Derivative financial instruments 12 - (27) -
(491,442) (422,398) (433,690)
Total liabilities (543,729) (473,203) (486,005)
Net assets 2,153,884 1,777,076 2,184,375
Equity
Called up share capital 18,422 18,397 18,397
Share premium account 290,771 289,885 289,923
Reserves 1,844,691 1,468,794 1,876,055
Equity shareholders' funds 2,153,884 1,777,076 2,184,375
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2022 (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 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
Total comprehensive income for the period - -
- - 6,043 - 6,043
Issue of share capital 25 848 - - - - 873
Credit to equity for equity-settled share-based payments - -
- - 1,730 - 1,730
Dividends - - - - (39,137) - (39,137)
At 30 September 2022 18,422 290,771 74,950 1,795 1,768,965 (1,019) 2,153,884
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
Year ended 31 March 2022 (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 2021 17,588 192,218 74,950 1,795 1,168,363 (1,019) 1,453,895
Total comprehensive income for the year - - 697,274 697,274
- - -
Issue of share capital 809 97,705 - - - - 98,514
Credit to equity for equity-settled share-based payments - - 3,390 3,390
- - -
Dividends - - - - (68,698) - (68,698)
At 31 March 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 September 2022
Six months ended Six months Year
30 September ended ended
2022 30 September 31 March
(unaudited) 2021 2022
£000 (unaudited) (audited)
Note £000 £000
Cash generated from operations 17 63,405 57,863 120,390
Bank interest paid (6,907) (5,042) (10,763)
Interest on obligations under lease liabilities (394) (413) (843)
Interest received - 1 2
Tax paid (1,517) (655) (1,649)
Cash flows from operating activities 54,587 51,754 107,137
Investing activities
Purchase of non-current assets (73,462) (74,260) (105,151)
Disposal of investment property - - 584
Acquisition of Armadillo (net of cash acquired) - (66,679) (66,679)
Investment - - (138)
Receipt from Capital Goods Scheme 173 381 381
Dividend received from associates 9e - 435 435
Cash flows from investing activities (73,289) (140,123) (170,568)
Financing activities
Issue of share capital 873 98,476 98,514
Payment of finance lease liabilities (706) (614) (1,384)
Equity dividends paid (38,731) (31,039) (68,698)
Receipt from termination of interest rate derivatives 436 - -
Loan arrangement fees paid (1,155) - (953)
Increase in borrowings 57,984 19,135 32,235
Cash flows from financing activities 18,701 85,958 59,714
Net decrease in cash and cash equivalents (1) (2,411) (3,717)
Opening cash and cash equivalents 8,605 12,322 12,322
Closing cash and cash equivalents 8,604 9,911 8,605
Notes to the Interim Review
1. ACCOUNTING POLICIES
Basis of preparation
The results for the period ended 30 September 2022 are unaudited and were
approved by the Board on 21 November 2022. The financial information
contained in this report in respect of the year ended 31 March 2022 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.
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK.
The annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards. As required by the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority, the
condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Group's published consolidated financial statements for the year ended 31
March 2022.
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 derivative 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 remain
the same and can be found in the Strategic Report within the Group's Annual
Report for the year ended 31 March 2022.
At 30 September 2022 the Group had available liquidity of £50.6 million, from
a combination of cash and undrawn debt facilities. In addition, the Group
has a $225 million shelf facility in place with Pricoa Private Capital to be
drawn in fixed sterling notes. The Group can draw the debt in minimum
tranches of £10 million over the next three years with terms of between 7 and
15 years at short notice, typically 10 days. The Group also 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 Group is cash
generative and for the six months ended 30 September 2022, had operational
cash flow of £54.6 million, with capital commitments at the balance sheet
date of £10.6 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 2023 and
projections contained in the longer-term business plan which covers the period
to March 2026. 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 Russian invasion of Ukraine, taking
into account the recent trading performance of the Group. The Directors have
also taken into account the performance of the business during the Global
Financial Crisis and the Covid-19 pandemic. 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 2022 30 September 2021 (unaudited) 31 March 2022
(unaudited) £000 (audited)
£000
£000
Open stores
Self storage income 80,555 69,091 145,592
Insurance income 3,043 8,681 17,783
Enhanced liability service income 5,906 - -
Packing materials income 1,822 1,708 3,142
Other income from storage customers 1,002 863 1,821
Ancillary store rental income 521 433 937
92,849 80,776 169,275
Other revenue
Non-storage income 967 700 1,718
Management fees - 325 325
Total revenue 93,816 81,801 171,318
Non-storage income derives principally from rental income earned from tenants
of properties awaiting development.
The Group has also earned other operating income of £0.9 million in the
period, of which £0.7 million relates to insurance proceeds for loss of
income following the destruction of the Group's Cheadle store by fire in 2022,
and £0.2 million is following extinguishing the right-of-use asset and
liability following the acquisition of the freehold of our Oxford store.
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
2022 ended 30 September 31 March
(unaudited) 2021 2022
£000 (unaudited) (audited)
£000 £000
Bank interest receivable - 1 2
Unwinding of discount on Capital Goods Scheme receivable 1 14 21
Total 1 15 23
Change in fair value of interest rate derivatives 564 477 1,389
Total investment income 565 492 1,412
4. FINANCE COSTS
Six months ended 30 September Six months Year ended
2022 ended 30 September 31 March
(unaudited) 2021 2022
£000 (unaudited) (audited)
£000 £000
Interest on bank borrowings 7,836 5,202 11,772
Capitalised interest (1,649) (960) (2,072)
Interest on finance lease obligations 394 413 843
Other interest payable - - 61
Loan refinancing costs 732 - -
Total finance costs 7,313 4,655 10,604
5. TAXATION
The Group is a REIT. 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
2022 ended 30 September 31 March
(unaudited) 2021 2022
£000 (unaudited) (audited)
£000 £000
Current tax:
- Current year 895 704 1,725
- Prior year (185) 90 (123)
710 794 1,602
6. ADJUSTED PROFIT
Six months ended Six months Year ended
30 September 2022 ended 31 March
(unaudited) 30 September 2022
£000 2021 (audited)
(unaudited) £000
£000
Profit before tax 6,753 254,868 698,876
Loss/(gain) on revaluation of investment properties - Group 47,673 (204,662) (597,224)
- associates (net of - (1,537) (1,537)
deferred tax) to 30 June 2021
Change in fair value of interest rate derivatives (564) (477) (1,389)
Armadillo fair value adjustments on acquisition - (1,756) (1,756)
Gain on disposal of investment property - - (584)
Refinancing fees 732 - -
Acquisition costs written off - 416 416
Adjusted profit before tax 54,594 46,852 96,802
Tax (710) (794) (1,602)
Adjusted profit after tax (EPRA earnings) 53,884 46,058 95,200
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 2022 ended
(unaudited) 30 September
£000 2021
(unaudited)
£000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2022 of 21.4p (2021: 17.0p) per 39,137 31,039
share
Proposed interim dividend for the year ending 31 March 2023 of 22.3p (2022: 40,830 37,666
20.6p) per share
The proposed interim dividend of 22.3 pence per ordinary share will be paid to
shareholders on 26 January 2023. The ex-dividend date is 5 January 2023, and
the record date is 6 January 2023. 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 2022 (unaudited) 30 September 2021 (unaudited) 31 March 2022 (audited)
Earnings Shares Pence Earnings Shares Pence Earnings Shares Pence
£000 million per share £000 million per share £000 million per share
Basic 6,043 182.9 3.3 254,074 178.9 142.0 697,274 180.9 385.4
Dilutive share options - 1.0 - - 0.5 (0.4) - 0.6 (1.2)
Diluted 6,043 183.9 3.3 254,074 179.4 141.6 697,274 181.5 384.2
Adjustments:
Loss/(gain) on revaluation of investment properties 47,673 - 25.9 (204,662) - (114.0) (597,224) - (329.0)
Acquisition costs written off - - - 416 - 0.2 416 - 0.2
Change in fair value of interest rate derivatives (564) - (0.3) (477) - (0.3) (1,389) - (0.8)
Gain on disposal of investment property - - - - - -
(584) - (0.3)
Refinancing fees 732 - 0.4 - - - - - -
Share of associates' non-recurring gains and losses - - - (3,293) - (1.8)
(3,293) - (1.8)
EPRA - diluted 53,884 183.9 29.3 46,058 179.4 25.7 95,200 181.5 52.5
EPRA - basic 53,884 182.9 29.5 46,058 178.9 25.7 95,200 180.9 52.6
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 2022 2,342,199 285,400 19,174 2,646,773
Additions 31,881 42,451 - 74,332
Adjustment to present value - - 2,035 2,035
Reclassification 39,288 (39,288) - -
Acquisition of freehold - - (1,598) (1,598)
Revaluation (27,122) (20,551) - (47,673)
Depreciation - - (762) (762)
At 30 September 2022 2,386,246 268,012 18,849 2,673,107
Capital commitments at 30 September 2022 were £10.6 million (31 March 2022:
£20.9 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 2022 2,290 59 447 32 1,640 872 5,340
Additions 57 - 129 - 357 - 543
Retirement of fully depreciated assets - (50) - (402)
- (352) -
At 30 September 2022 2,347 59 526 32 1,645 872 5,481
Accumulated depreciation
At 1 April 2022 (636) (16) (135) (32) (347) (317) (1,483)
Charge for the period (22) (2) (75) - (366) (53) (518)
Retirement of fully depreciated assets - 50 - 402
- 352 -
At 30 September 2022 (658) (18) (160) (32) (361) (370) (1,599)
Net book value
At 30 September 2022 1,689 41 366 - 1,284 502 3,882
At 31 March 2022 1,654 43 312 - 1,293 555 3,857
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
The Group has an £0.6 million investment 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 2022 30 September 2021 30 September 2022 30 September 2021
(unaudited) (unaudited) 31 March (unaudited) (unaudited) 31 March
£000 £000 2022 £000 £000 2022
(audited) (audited)
£000 £000
At the beginning of the period - 8,698 8,698 - 5,022 5,022
Share of results (see below) - 2,413 2,413 - 1,264 1,264
Dividends - (211) (211) - (224) (224)
Acquisition of remaining interest - (10,900) (10,900) - (6,062) (6,062)
At the end of the period - - - - - -
The figures below show the trading results of Armadillo, and the Group's share
of the results up to the point of acquisition of the remaining interest in the
Partnerships on 1 July 2021.
Armadillo 1 Armadillo 2
1 April 2021 to 30 June 2021 1 April 2021 to 30 June 2021
(unaudited) (unaudited)
£000 £000
Income statement (100%)
Revenue 3,170 1,876
Cost of sales (1,601) (793)
Administrative expenses (126) (45)
Operating profit 1,443 1,038
Goodwill write-off (982) (1,849)
Gain on the revaluation of investment properties 4,888 2,795
Net interest payable (274) (183)
Current and deferred tax 6,988 4,519
Profit attributable to shareholders 12,063 6,320
Dividends paid (1,054) (1,120)
Retained profit 11,009 5,200
Group share (20%)
Operating profit 289 208
Goodwill write-off (196) (370)
Gain on the revaluation of investment properties 978 559
Net interest payable (55) (37)
Current and deferred tax 1,397 904
Profit attributable to shareholders 2,413 1,264
Dividends paid (211) (224)
Retained profit 2,202 1,040
Associates' net assets - -
10. TRADE AND OTHER RECEIVABLES
30 September 30 September 31 March
2022 2021 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Current
Trade receivables 5,184 4,767 4,763
Other receivables 310 646 949
Prepayments and accrued income 3,012 3,581 2,044
8,506 8,994 7,756
11. TRADE AND OTHER PAYABLES
30 September 30 September 31 March
2022 2021 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Current
Trade payables 1,424 4,997 5,705
Other payables 15,612 12,812 13,762
Accruals and deferred income 30,363 27,763 27,882
47,399 45,572 47,349
12. BORROWINGS
30 September 30 September 31 March
2022 2021 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Aviva loan 3,083 2,935 3,008
Current borrowings 3,083 2,935 3,008
Aviva loan 157,336 110,450 158,927
M&G loan 120,000 70,000 120,000
Armadillo bank loans - 47,950 39,500
Bank borrowings 198,000 176,000 99,000
Unamortised debt arrangement costs (2,280) (2,038) (2,455)
Non-current borrowings 473,056 402,362 414,972
Total borrowings 476,139 405,297 417,980
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 Group cancelled the interest rate derivatives outstanding on the Armadillo
loans when they were repaid in June 2022, receiving £436,000, their fair
value at that date. The gain in the income statement for the period on its
interest rate swaps was £564,000 (2021: gain of £477,000). The
reconciliation of the balance sheet position is shown below:
£000
Asset at 31 March 2022 885
Change in fair value of derivatives during the period 564
Receipt from cancellation of interest rate derivatives (436)
Asset at 30 September 2022 1,013
The interest rate derivative asset is shown within current assets at the
period end, as the interest rate derivative expires within 12 months of the
balance sheet date.
At 30 September 2022 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 2022 Six months ended 30 September 2021 Year ended 31 March 2022
Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders
£000 £000 £000
Pence per share
Shares Shares Pence per share Shares Pence per share
million million million
Basic NAV 2,153,884 183.1 1,176.3 1,777,076 182.8 972.1 2,184,375 182.8 1,194.7
Share and save as you earn schemes
1,172 1.7 (10.1) 1,660 1.5 (7.0) 1,592 1.5 (8.3)
Diluted NAV 2,155,056 184.8 1,166.2 1,778,736 184.3 965.1 2,185,967 184.3 1,186.4
Fair value of derivatives (1,013) - (0.6) 27 - - (885) - (0.5)
Intangible assets (1,433) - (0.8) (1,433) - (0.7) (1,433) - (0.8)
EPRA NTA 2,152,610 184.8 1,164.8 1,777,330 184.3 964.4 2,183,649 184.3 1,185.1
Valuation methodology assumption (see note 14) (£000)
102,108 - 55.3 129,500 - 70.2 100,600 - 54.6
Adjusted NAV 2,254,718 184.8 1,220.1 1,906,830 184.3 1,034.6 2,284,249 184.3 1,239.7
JLL were appointed as the Group's valuers in March 2022. Their valuation
model differs from the previous valuer CBRE's in that they do not assume a
sale of the asset in year 10 of the discounted cash flow, instead taking the
cash flows on in perpetuity at an all risks yield which reflects the implicit
future growth of the business. This approach means purchaser's costs are not
deducted on this in perpetuity cash flow. CBRE's model assumed a sale in
year 10, and deducted purchaser's costs from this notional sale. This means
the overall purchaser's costs are lower in the JLL model and explains why the
valuation methodology assumption adjustment is lower in the current period and
prior year compared to the prior period.
14. VALUATION 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 2022 by the Directors. The valuation has been carried out in
accordance with the same methodology as the year end valuations prepared by
Jones Lang Lasalle ("JLL").
The Directors' valuations reflect the latest cash flows derived from each of
the stores at 30 September 2022. In performing the valuations, the Directors
consulted with JLL on the capitalisation rates used in the valuations. The
Directors, as advised by JLL, consider that the capitalisation rates for prime
self storage stores have moved out by on average 30 bps across the portfolio
since the start of the financial year, reflecting increased financing costs
and macroeconomic uncertainty (see further commentary in the Financial
Review).
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 JLL in the March 2022 valuations are still appropriate at the
September valuation date. See the Group's annual report for the year ended
31 March 2022 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 £109.8 million (£100.0 million) £32.5 million (£33.0 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 weighted average purchaser's
cost of 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 2022 of £2,756.4 million (£102.1 million higher than the
value recorded in the balance sheet which translates to 55.3 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 2022. 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 2022 30 September 2021
(unaudited) (unaudited)
£000 £000
Interest rate derivatives asset/(liability) 2 1,013 (27)
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 £8,000 (2021: £4,000).
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 and earned management fees of £238,000 from Armadillo 1 and £87,000
from Armadillo 2.
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 prior year 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. London Children's
Ballet rent storage space from the Group on normal commercial terms, amounting
to £1,000 during the period (2021: £nil).
DS Operations Centre Limited
The Group has invested £588,000 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 £148,000 (2021: £132,000).
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 £6,000 (2021: £2,000).
Ukrainian Sponsorship Pathway UK
Nicholas Vetch and Heather Savory are trustees of a charity called Ukrainian
Sponsorship Pathway UK ("USPUK") to help Ukrainians displaced by the war to
travel to the UK as part of the "Homes for Ukraine" scheme. The charity has
set up offices in Warsaw and Krakow and is one of the few that has been
recognised for this purpose by the UK Government. We are proud to be
financial supporters of this new charity and the Board approved a donation
which was made in May 2022 of £50,000 (2021: £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
2022 2021 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Profit after tax 6,043 254,074 697,274
Taxation 710 794 1,602
Share of profit of associates - (3,677) (3,677)
Other operating income (899) - -
Investment income (565) (492) (1,412)
Finance costs 7,313 4,655 10,604
Operating profit 12,602 255,354 704,391
Loss/(gain) on the revaluation of investment properties 9a, 14 47,673 (204,662) (597,224)
Gain on disposal of investment property - - (584)
Loss of income insurance proceeds received 745 - -
Depreciation of plant, equipment, and owner-occupied property 9b 465 441 857
Depreciation of finance lease capital obligations 815 755 1,659
Employee share options 1,730 1,670 3,390
Cash generated from operations pre-working capital movements 64,030 53,558 112,489
Decrease in inventories 3 10 (71)
(Increase)/decrease in receivables (906) 369 1,550
Increase in payables 278 3,926 6,422
Cash generated from operations 63,405 57,863 120,390
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
2022 2021 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Net decrease in cash and cash equivalents (1) (2,411) (3,717)
Cash flow from movement in debt financing (57,984) (70,035) (83,135)
Change in net debt resulting from cash flows (57,985) (72,446) (86,852)
Movement in net debt in the period (57,985) (72,446) (86,852)
Net debt at start of period (411,830) (324,978) (324,978)
Net debt at end of period (469,815) (397,424) (411,830)
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 2022. The risk mitigating factors listed in the 2022 Annual Report are
still appropriate.
The economic outlook remains uncertain, with significant inflationary
pressures in the economy and an associated impact on the cost of living.
This may create economic headwinds in the quarter to December 2022 and into
2023, 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 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. 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 period 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 Aberdeen, Harrow, Hayes, Hove, Kingston
North, 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 Aberdeen, Harrow, Hayes, Hove, Kingston North,
Uxbridge, and the Armadillo stores.
LTV (loan to value) Net debt expressed as a percentage of the external valuation of the Group's
investment properties.
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 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 % or in sq
ft.
Occupied space The space occupied by customers in sq ft.
Other storage related income Packing materials, insurance/enhanced liability service 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.
Store maximum lettable area (MLA)
The total square foot (sq ft) available to rent to customers.
Store revenue Revenue earned from the Group's open self storage centres.
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 2022 which comprises the Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed
Consolidated Statement of Changes in Equity, 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 2022 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued 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.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention that causes us to believe that the Directors
have inappropriately adopted the going concern basis of accounting, or that
the Directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
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 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.
In preparing the condensed set of financial statements, the Directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
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. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
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
21 November 2022
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