REG - Big Yellow Group PLC - RESULTS FOR THE YEAR ENDED 31 MARCH 2023
22/05/2023 16:45
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RNS Number : 2419A Big Yellow Group PLC 22 May 2023
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the YEAR ended 31 MARCH 2023
HIGHLIGHTS
Resilient results against the backdrop of a challenging macroeconomic and
geopolitical environment
Financial metrics Year ended Year ended
31 March 2023
31 March 2022
Change
Revenue £188.8m £171.3m 10%
Store revenue((1)) £186.7m £169.3m 10%
Like-for-like store revenue((1,2)) £162.9m £151.8m 7%
Store EBITDA((1)) £134.0m £120.9m 11%
Adjusted profit before tax((1)) £106.0m £96.8m 10%
EPRA earnings per share((1)) 56.5p 52.5p 8%
Dividend - final 22.9p 21.4p 7%
- total 45.2p 42.0p 8%
Statutory metrics
Profit before tax £75.3m £698.9m (89%)
Cash flow from operating activities (after net finance costs and pre-working
capital movements)((3))
£109.2m £99.3m 10%
Basic earnings per share 40.1p 385.4p (90%)
Store metrics
Store Maximum Lettable Area ("MLA")((1)) 6,292,000 6,098,000 3%
Closing occupancy (sq ft)((1)) 5,088,000 5,107,000 (0.4%)
Closing occupancy((1)) 80.9% 83.7% (2.8 ppts)
Occupancy - like-for-like stores (%)((1,2)) 84.0% 86.0% (2.0 ppts)
Average occupancy((1)) 83.7% 86.7% (3.0 ppts)
Closing net rent per sq ft((1)) £32.48 £29.92 9%
Like-for-like average net achieved rent per sq ft((1,2)) £33.31 £30.35 10%
Like-for-like closing net rent per sq ft((1,2)) £34.60 £31.80 9%
(1) See note 28 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
Highlights
• Revenue growth of 10%, reflecting new stores and an additional three months of
Armadillo (acquired 1 July 2021)
• Like-for-like store revenue is up 7%, mainly from increases in average
achieved rents
• Like-for-like occupancy decrease of 2.0 ppts to 84.0% (March 2022: 86.0%).
Closing occupancy, reflecting the additional capacity from five recently
opened stores, is down 2.8 ppts
• Like-for-like average achieved net rent per sq ft increased by 10% year on
year, like-for-like closing net rent up 9% from March 2022
• Overall store EBITDA margin increased to 71.8% (2022: 71.1%)
• Cash flow from operating activities (after net finance costs and pre-working
capital movements) increased by 10% to £109.2 million
• Adjusted profit before tax up 10% to £106.0 million, EPRA earnings per share
up 8% to 56.5p
• 45.2 pence per share full year dividend, an increase of 8%
• Statutory profit before tax of £75.3 million, down from £698.9 million in
the prior year, which included a revaluation surplus of £597 million. This
year open store valuations were up 1%, offset by write-downs on development
assets, resulting in a deficit of £30 million
• Refinancing of £120 million seven-year M&G loan and new longer-term $225
million shelf facility with Pricoa Private Capital
• SBTi targets externally verified, £4.7 million invested in solar retro-fit,
53 stores now have solar with a 94% increase in capacity in the year to 4.5
Megawatts
Investment in new capacity
• 193,000 sq ft of capacity added in the year, with two new stores opened in
London (Harrow and Kingston North), and an operating 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 (15% of current
MLA), of which nine are in London, and 1.2 million of fully built unlet space
available
• Further progress to reduce our short leasehold exposure on a few remaining
stores. Acquisition of freehold sites at Farnham Road, Slough and Staples
Corner, London to build replacement stores, and we acquired the freehold of
our Oxford store
• Planning consent granted for new stores in Staines (West London) and Farnham
Road, Slough; we now have seven pipeline stores with planning
• Initial tenders on our proposed Slough Farnham Road facility have been
encouraging and hence we will be commencing on site at Slough this Summer,
with further construction starts to follow later in the year, subject to
planning and vacant possession
Nicholas Vetch CBE, Executive Chairman of Big Yellow, commented:
"We are pleased to have delivered these results despite an increasingly
familiar year of macroeconomic, political and geopolitical volatility. Our
pricing models to new and existing customers have successfully mitigated the
impacts of higher inflation, delivering improved average achieved rents, which
have been the main driver of revenue growth. Underpinning our resilience is
our core strategy to invest significantly in the London market, which has seen
the strongest performance, driven by both domestic and business customers,
over the last year. We have also been successful in controlling overall
increases in store operating expenses to 4% on a like-for-like basis,
resulting in improved operating margins.
Big Yellow's business model has been built on the assumption of interest rates
being higher than the very low levels that persisted following the Global
Financial Crisis until last year.
We will create incremental income through the building of new stores to
generate cash on cash returns of 8% or more and the acquisition of existing
assets to generate returns of 9% or more.
We are confident that the existing platform of stores will continue to provide
a resilient stream of income, with scope for increase including from the
pipeline of new stores. Most importantly, we believe the business model is
fit for purpose in this new environment."
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.
CHAIRMAN'S STATEMENT
Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's
brand leader in self storage, is pleased to announce its results for the year
ended 31 March 2023.
We are pleased to have delivered these results despite an increasingly
familiar year of macroeconomic, political and geopolitical volatility. Our
pricing models to new and existing customers have successfully mitigated the
impacts of higher inflation, delivering improved average achieved rents, which
have been the main driver of revenue growth. Underpinning our resilience is
our core strategy to invest significantly in the London market, which has seen
the strongest performance, driven by both domestic and business customers,
over the last year. We have also been successful in controlling overall
increases in store operating expenses to 4% on a like-for-like basis,
resulting in improved operating margins.
We have also continued to invest in our business with the acquisition of an
operating store in Aberdeen, 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 10% for the year and we have 1.2 million sq ft of fully
built unlet space in the existing portfolio.
Financial results
Revenue for the year was £188.8 million (2022: £171.3 million), an increase
of 10%. Like-for-like store revenue growth (see note 28) was 7% driven by
improvements in average net rent. 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).
Store revenue for the fourth quarter was £46.1 million, an increase of 6%
from £43.6 million for the same quarter last year.
The business continues to be highly cash generative, with operating cash flow
(after net finance costs and pre-working capital movements) increasing by
£9.9 million (10%) to £109.2 million for the year (2022: £99.3 million).
We are very proud to have delivered adjusted profits in excess of £100
million for the first time since the business was founded nearly 25 years
ago. The adjusted profit before tax in the year was £106.0 million up 10%
from £96.8 million in 2022. EPRA earnings per share increased by 8% to
56.5p (2022: 52.5p) with an equivalent 8% increase in the dividend per share
for the year.
The Group's statutory profit before tax was £75.3 million, a decrease of 89%
from £698.9 million in the prior year. There was a very significant
increase in the valuation of our investment portfolio last year, and this year
the valuations have remained relatively flat, with an increase of 1% on the
open store portfolio. However, the overall portfolio valuation is down by
£30 million, as a result of a £57.5 million reduction in the value of our
industrial property and land without self storage planning in the development
pipeline, reflective of the new financing conditions and wider market
environment for land. The Financial Review and note 15 contains further
details on the Group's investment property valuation.
Investment in new capacity
In June 2022 the Group acquired an existing self storage centre in Aberdeen
for £10 million, and this together with the new stores opened in Harrow and
Kingston North (both in London) added 193,000 sq ft to the Group's capacity.
A key aspect of the Big Yellow strategy is that our portfolio is to build or
acquire high quality freehold stores to drive higher operating margins, with
the business not subject to continual increases in industrial rent
liabilities, and to have control of all aspects of our estate. We are
therefore pleased to have continued this with the following three additional
investments in the last year as follows:
‑ we acquired a prime site on Farnham Road in Slough, which now has planning for
a 62,000 sq ft self storage centre. As part of this transaction, the Group
has also agreed to the surrender of the lease on its existing similar capacity
Slough store. We are currently out to tender, and expect to start
construction this Summer, with an opening in 2024, at which point customers
from the existing store will be transferred and the lease surrendered;
‑ in December we acquired a 2.1 acre freehold site in Staples
Corner, London for £13.25 million. The site is located close to our
existing leasehold 112,000 sq ft store at Staples Corner and is currently let
on a short-term basis. Our intention is to seek planning consent for a
130,000 sq ft store on the new site. Following construction of the new
store, we will transfer the customers from the existing store to the new
location, and then seek to assign the lease; and
‑ we acquired the freehold of our Oxford store for £13.5 million in
September. The 1.8 acre site includes two small industrial trade units,
which will provide vacant possession in 2030 and the opportunity to intensify
the use.
After a 15 year search, the Group acquired a freehold property on Old Kent
Road, London. The property, currently let to Iceland Foods, has a passing
rent of £388,000 with six 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.
On the planning front, we have secured a resolution to grant planning consent
for an approximately 65,000 sq ft self storage centre and approximately
100,000 sq ft of capacity across nine industrial units, at our site in
Staines.
We are currently on site constructing our new store in Kings Cross which opens
in June 2023. In May 2022, 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. That decision appears to have
been opportune; conditions in the construction market are improving to our
benefit, labour shortages persist, but steel, cladding and other materials are
sharply down in cost (albeit from significant increases between 2020 and
2022). Preliminaries and contractor margins have additionally reduced.
The recent tender on one of our Slough development sites is encouraging. The
Slough store will commence on site this Summer and we will be restarting the
roll-out of projects with planning, some of which are subject to vacant
possession, later this year.
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 15%.
The total development cost of these 11 new stores is £366 million, with costs
incurred to date of £180 million, and cost to complete of approximately £186
million. We estimate they will generate net operating income at
stabilisation of £31.5 million at today's prices, representing an 8.6% return
on cost. The replacement stores for Slough and Staples Corner will cost a
further £31 million, with Slough Farnham Road starting construction this
year, and Staples Corner subject to planning.
Harrow
Much less helpfully, in May 2022 we announced the conditional sale of the
industrial scheme at Harrow. The project has been plagued with setbacks
including the main contractor falling into administration. The conditions
necessary to effect the sale to the prospective purchaser have not been met
and therefore the sale will not proceed.
We intend now to retain the asset, complete the outstanding construction works
with a newly appointed contractor, with an anticipated completion in August of
this year, and proceed with the lettings of the 11 industrial units ourselves.
The project shows a healthy surplus value despite it having been a frustrating
and costly process, but that said, newly built multi-let industrial unit
schemes in London are relatively scarce and we are confident it will therefore
generate further value over the next few years.
Capital structure
Net debt is £486.6 million at 31 March 2023, with an average of cost of 4.7%,
and interest cover of 7.7 times (2022: 10.5 times). The clear strategy has
been to have low relative levels of debt, and reflective of that, a flexible
hedging structure, which we will continue.
Dividends
The Group's dividend policy is to distribute a minimum of 80% of full year
adjusted earnings per share. The final distribution of PID declared is 22.9
pence per share. This brings the total distribution declared for the year to
45.2 pence per share representing an increase of 8% from 42.0 pence per share
last year.
Our people
We continue to believe that any successful business requires the creation of a
fully engaged employee culture and this has always been a key focus within Big
Yellow. As mentioned earlier, this has been a challenging year, with
continued uncertainty, and we know that to deliver such a resilient
performance requires highly engaged and motivated people throughout the
business.
Customer service and feedback is also a fundamental success factor. Our
customer net promoter scores ("NPS") were an average of 78.9 over the year.
NPS scores at these levels are highly unusual and a good reflection of the
culture of this business.
I would like to thank all of our people for their efforts in contributing to
another year of growth.
Outlook
The central question facing Boards, particularly in capital intensive
businesses such as real estate, is: does the business model work in a higher
interest rate environment? Big Yellow's business model has been built on the
assumption of interest rates being higher than the very low levels that
persisted following the Global Financial Crisis until last year.
The commitment to relatively low levels of debt and the established flexible
debt management strategy remains precisely the same. The floating portion of
our debt has proved more costly in recent months but has previously worked to
our advantage. Over the cycle, we remain confident that it strikes the right
balance.
We will create incremental income through the building of new stores to
generate cash on cash returns of 8% or more and the acquisition of existing
assets to generate returns of 9% or more.
As always, we make no comment on likely outcomes for the economy, we leave
that to the experts. We are, however, confident that the existing platform
of stores will continue to provide a resilient stream of income, with scope
for increase including from the pipeline of new stores. Most importantly, we
believe the business model is fit for purpose in this new environment.
Nicholas Vetch CBE
Executive Chairman
22 May 2023
CHIEF EXECUTIVE'S STATEMENT
Trading
We are pleased to have delivered a set of results that are testament to the
underlying resilience of our business. The significant increase in interest
rates to tackle higher inflation and tighter mortgage borrowing conditions
following the Russian invasion of Ukraine, added to by the negative headlines
and volatility around the UK economy last Autumn, does, as we've said in the
past, have an impact on our demand at the margin, particularly for those
making bigger ticket decisions.
Over the year there has been a significant increase in the cost of living,
driven by energy, fuel and food inflation, which is having a disproportionate
impact on those with lower incomes. However, we have not seen that distress
come through to our customer base, where bad debts have not increased from
last year, and our aged debtors remain below their pre-Covid levels.
Unemployment remains at very low levels and our customers on the whole are
storing goods or individual possessions that are of value to them, and our
customer base is largely comprised of those from higher income groups.
Self storage is not immune to these external shocks and resultant uncertainty,
but this performance alongside our track record since the Global Financial
Crisis, demonstrates our ability to navigate these headwinds. Finally, as
with last year, we are seeing a return to occupancy growth in May, with an
improving demand picture.
People
As ever, our progress reflects the steadfast commitment of our people who have
worked extremely hard this year.
After seeing elevated levels of staff turnover post-Covid in the second half
of 2021 and the first half of 2022, we have seen a consistent improvement and
overall our levels of staff turnover are now in line with the pre-Covid
period. Very pleasingly, the level of vacancies in the business is at
historic lows, with a significant drop in leavers in the final quarter.
Salary increases last year were on average 5.3%, with average bonuses of 10%,
and we have recently awarded an average salary increase from 1 April of
5.6%. Recognising that our employees at the lower end of our pay scales have
seen a disproportionate impact from rising prices, we made two cost of living
payments over the Winter, principally in Customer Service and the stores.
This was very well received.
Given the investment we have made in recent years in the automation of our
store operations, particularly in relation to interaction with prospects and
customers, we continue to review every vacancy before making a decision to
recruit with a view to achieving savings this year through the salary line.
Automation is also relevant to many other aspects of our business, including
head office functions and we currently have a moratorium in place on any
further recruitment with the bias being towards technological advance. As
with the stores, we will continue to review staffing levels at our Bagshot
headquarters.
Our brand is now our biggest recruitment tool, with direct recruitment through
various digital channels now representing 80%, with 20% through more
traditional agencies.
In addition to gender, we have made significant improvements to our culture
and practices in respect of diversity, and these are set out in our Gender and
Inclusivity Report, which is available on our corporate website, and has been
formally filed for 2022. Inclusivity and Diversity in our business is very
much driven by a committee of colleagues from throughout the business and is
something that will remain a focus, as we believe diversity has a positive
impact on culture and performance.
We continue to invest in development, as this has benefits, not just around
performance, but also around retention. We moved much of our training to a
new learning and development platform over the Covid period and this has had
significant improvements to efficiency of delivery, monitoring, and control
and hence outcomes. Other new initiatives such as "Meet our Experts" using
internal talent, and a new updated mystery shopping programme following
feedback from the stores are further examples. In addition, following our
2021 engagement survey, we have taken 19 actions covering areas such as rotas,
store bonus metrics, internal communication, store cover, store feedback,
development, training, benefits, and others. The next survey is taking place
currently and hopefully this response will result in continued high levels of
engagement with the survey.
Investment in our operating platform and systems
The march of automation in business continues, and we have focussed on
investing in technology to improve efficiency right from when Big Yellow was
founded. We have always invested in the security and automation of our
stores, allowing access out of opening hours, and this is something we
continue to upgrade and improve as security is always very high up in the
considerations of anyone looking to use self storage.
The arrival of search and smartphones, along with investments we have made in
software development and external SaaS programmes means that our prospect and
customer interactions and experience are unrecognisable from twenty years
ago. Our stores have been paperless since 2020 and we continue to invest in
automating certain repetitive tasks to improve productivity in our day-to-day
store operations. Examples of this currently in process are credit card
payments and prospect handling, the latter to allow our digital platforms to
do more around prospect and customer interaction.
The improvements to our Big Yellow mobile and desktop platforms are
incremental and continuous and now allow a prospect to determine the unit size
required, get a quote, and reserve a room in a matter of minutes. Customers
can now check-in online before arriving at the store, and this process has
reduced significantly the time taken to process a move-in, with a simple ID
check, discussion around contents cover, and then payment. As previously
mentioned, we will always look to optimise the use of our resource at stores,
however, we will always need someone on site for a certain number of hours in
the day principally to carry out key tasks, one of the most important being
the security and protection of our assets, which cannot be done just by using
CCTV cameras, particularly in large, busy stores. At the same time, when on
site, our store team members provide customer service, particularly to our
business customers who are more regular visitors; carry out the necessary due
diligence around security and health and safety; keep the stores clean and
presentable; drive ancillary sales; and follow up on prospects, particularly
for those who have reserved. Although IDs are uploaded during the check-in
online process, it is our policy to see the original and ensure the customer
moving-in is the same person. This is not just about the security of our
assets, it is also important for our customers when visiting our stores, often
alone, that those in the building have been vetted in some way.
Automation and the use of SaaS programmes are also something we invest in to
improve efficiency of many of our centralised functions, and by way of
example, the progress we have made in our finance function has allowed us to
maintain control of headcount, despite the significant increase in the size of
the business.
Generative AI is the current hot topic, and we are reviewing how it can help
us improve efficiency, particularly in relation to some of our head office
functions, such as people and development and, marketing. We will continue
to monitor, review and adopt where it makes commercial sense and improves
efficiency within the business.
The cyber threat remains, and we continue to invest in our digital security,
and review the effectiveness of all the tools we deploy.
In relation to our estate, we have invested around £3 million over the last
two to three years upgrading the security across the portfolio, including
improving monitoring of our stores centrally overnight. We consider security
to be fundamental to our customer offering both to the customer and in
relation to their goods, equipment or personal possessions. Maintaining our
estate is something we also believe strongly in and have invested £4.7
million this year on the repair and maintenance of our stores, all of which is
expensed through the Income Statement.
ESG
One of our key strategic objectives is around sustainability and the ESG
framework. As part of this, a key objective is to be Net Renewable Energy
Positive by 2030. This will be achieved through the investment in solar
across our estate and we have completed 23 of the initial 36 retrofit solar
installations to date with a total of 53 stores now having solar. In
addition, we are looking to put solar on our Armadillo stores with surveys
currently taking place. The investment in solar, not only being good for the
planet, is reducing our reliance on external energy supply. Our current
installed solar capacity is 4.5 Megawatts, an increase of 94% over the year.
We estimate that this is currently saving the business £0.5 million per
year. This will continue to increase as we make further progress towards our
objective of being self-sufficient in energy.
We have completed a rigorous process with the Science Based Targets initiative
to have our targets certified by them, and these are reported in more detail
in the ESG section. Our focus will now be working towards achieving these over
the coming seven years. Scope 1 and Scope 2 are within our control, and for
the Scope 3 targets, we will need to engage significantly with our supplier
network.
There is an important requirement in relation to the energy efficiency of
commercial real estate with a deadline in 2025 for all buildings to have A to
C EPC certification. This is increasingly becoming relevant for valuers and
indeed purchasers of existing self storage centres. We have recently had all
of our buildings assessed and 98% comply, with two Armadillo stores rated D.
We have planned investment in these stores, including solar, which we believe
will improve their energy efficiency ratings. This is a pleasing result, and
reflective of the fact that most of our portfolio is developed from scratch
and is largely purpose-built.
Given the human rights concerns we had around the supplier of our solar
panels, with a move to a new Norwegian supplier at the end of 2021, we have
this year carried out a Supply Chain Risk assessment and engaged with the top
80% of our value chain. Key areas for consideration were around slavery and
human rights more generally. We believe that it is important to have a
like-minded supply change consistent with the Big Yellow culture, and this is
something we will continue to progress over the coming years.
I am delighted to be able to announce that since its formation in 2017, the
Big Yellow Foundation has made grants to our charity partners of £762,000,
all of whom focus on the rehabilitation of vulnerable people into work.
Following a review, our relationship with two of these seven charities has
come to an end after five years and we are in the process of replacing them.
Working Chance is the first of our new charity partners and is the only UK
charity working to help women with convictions find employment. We are also
in discussions with Supporting Wounded Veterans, a charity focussing on those
who are physically and mentally wounded to move forward with rehabilitation
into employment. We continue to run work placements and were very pleased
over the year to have candidates coming into our business for job experience
recommended by Street League, Breaking Barriers, and the Down's Syndrome
Association.
Finally, and very importantly, we have always tried to provide free and
discounted space to charities serving local communities to our stores, and our
community investment over the last year has been approximately £271,000.
Summary
Our investment case remains to provide consistent compounding returns from
both income and growth from a secure capital structure, and the key
constituents of our business model developed over the last twenty plus years
are set out below:
‑ a high quality and growing portfolio of freehold properties delivering higher
operating margins;
‑ a focus on London and the South East and other large urban conurbations, where
the drivers in the self storage market are at their strongest and the barriers
to competition are at their highest;
‑ continuing innovation and automation;
‑ an inclusive and non-hierarchical culture with a highly engaged team;
‑ a focus on delivering the highest levels of customer service;
‑ delivering on our strong ESG commitments;
‑ the UK's leading self storage brand, with high and growing public awareness
and online strength; and
‑ strong cash flow generation from a secure capital structure.
Jim Gibson
Chief Executive Officer
22 May 2023
OPERATING REVIEW
The store platform and demand
We now have a portfolio of 108 open and trading stores, with a current maximum
lettable area of 6.3 million sq ft.
Self storage demand is spread across a diverse set of drivers, and is largely
driven by need, with security, convenience, quality of product, service and
location being key factors. Awareness remains relatively low compared to
commoditised products, such as hotel rooms or airline seats, albeit it is
increasing slowly year-on-year with increased supply, marketing expenditure
and customer use.
‑ customers renting storage space whilst moving represented 41% of move-ins
during the year (2022: 41%), with homeowners representing 27% and renters
14%. The rental market was impacted during the pandemic, and we do expect
the proportion of renters to increase to more normal levels offsetting some of
the slowdown in the owner-occupied market as we adjust to higher costs of
mortgages;
‑ 11% of our customers who moved in took storage space as a spare room for
decluttering (2022: 12%);
‑ 37% of our customers used the product because some event had occurred in their
lives generating the need for storage; they may be moving abroad for a job,
have inherited possessions, are getting together, or separating, are students
who need storage during the holidays, or homeowners developing into their
lofts or basements (2022: 34%);
‑ the balance of 11% of our new customer demand during the year came from
businesses (2022: 13%), who stay longer and represent around 20% of our
customers in store at any one time, occupying 37% of the space.
Of our overall occupied space today, customers who are longer stay lifestyle
users, decluttering into small rooms as an extension to their accommodation,
occupy 10% to 15% of our space; approximately 50% of the space is customers
using it for less than 12 months, for reasons which are largely event driven,
which could be inheritance, moving in the owner occupied or rental sector,
home improvements, travelling; the balance of 37% of our space is
businesses.
The average space occupied by business customers at the year-end is 179 sq ft
(2022: 180 sq ft). Domestic customers occupy on average 59 sq ft (2022: 59
sq ft) and pay on average 18% more in rent per sq ft (2022: 21%), however
business customers do stay longer and take more space and represent around 33%
of revenue (2022: 32%).
The pandemic accelerated many structural changes that were already occurring,
such as the move to online retailing and an increase in working from home
facilitated by technological advances. The deindustrialisation of big cities
with the conversion of commercial space into residential and other uses, has
led to a shortage of suitable flexible mini-warehouse space from which to
operate small scale storage and e-fulfilment, particularly in London. These
developments, along with businesses increasingly seeking flexible office and
storage space rather than longer inflexible leases, have been driving our
demand. We believe these are long-term structural trends, which will benefit
our business going forward.
From research we have previously carried out, a typical small business using
storage employs around three people and 60% of them are early-stage businesses
and for 50% of them this is their only space.
In addition, we have a dedicated national customers team for businesses who
wish to occupy space in multiple stores. These customers on average occupy
approximately 900 sq ft, paying £25,000 per annum, and are billed and managed
centrally. This area has performed strongly in the year with revenue up 16%
compared to the prior year, making up 4% to 5% of occupied space.
Activity
The table below shows the quarterly move-in and move-out activity over the
year for all of our stores:
Total move-outs Total move-outs
Year ended 31 March 2022
Total move-ins Total move-ins Year ended %
Year ended Year ended % 31 March 2023
31 March 2023
31 March 2022
April to June 23,427 24,401 (4) 18,620 18,023 3
July to September 27,126 25,712 5 28,867 27,425 5
October to December 19,368 19,428 - 23,302 22,890 2
January to March 18,878 18,553 2 18,519 18,451 -
Total 88,799 88,094 1 89,308 86,789 3
The table above is indicative of what we have experienced over the year, which
is more muted trading conditions, with activity levels broadly flat. The
first quarter 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 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. The Group's move-outs increased in the second
quarter by 5% compared to last year, largely as a result of these students
moving out. Move-ins and move-outs over the second half of the year were
broadly in line with the prior year.
The occupancy of the stores fell over the year by 58,000 sq ft (2022: fall of
69,000 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 decrease in the Group's occupancy over the year was therefore
19,000 sq ft.
The Group grew occupancy over the first six months of the financial year, with
the gains principally coming from our domestic and student customers. In our
seasonally weakest third quarter, we lost 3.8 ppts of occupancy, similar to
the prior year. Our fourth quarter started well with a strong January, but
has been relatively muted since. We believe this to be partially as a result
of the uncertainty caused by the US regional bank crisis and customers
continuing to acclimatise to a higher cost of debt environment. We can say
that move-out levels are also subdued at the moment, and as mentioned
previously, we are not seeing stress amongst our customers. We saw a similar
hesitancy in demand in the prior year following the Russian invasion of
Ukraine, with activity levels returning to more normal levels by the end of
May 2022.
The 75 established Big Yellow stores are 84.2% occupied compared to 86.8% at
the same time last year. The 9 developing Big Yellow stores added 113,000 sq
ft of occupancy over the year to reach closing occupancy of 60.4%. The 24
Armadillo stores are 76.9% occupied, compared to 83.1% at this time last
year. Overall store occupancy was 80.9% (2022: 83.7%).
Occupancy Occupancy change in year Occupancy Occupancy
31 March 2023 000 sq ft 31 March 2023 31 March 2022
% 000 sq ft 000 sq ft
75 established Big Yellow stores 84.2% (74) 3,979 4,053
9 developing Big Yellow stores 60.4% 113 352 239
All 84 Big Yellow stores 81.6% 39 4,331 4,292
24 Armadillo stores 76.9% (58) 757 815
All 108 stores 80.9% (19) 5,088 5,107
All stores are trading profitably at the EBITDA level, with our most recent
openings Harrow and Kingston North reaching break even in April 2023.
Yield management
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. Rental growth can also be driven through sub-dividing larger
rooms into smaller rooms, which yield a higher net rent per sq ft.
In the more muted trading environment against the backdrop of higher
inflation, we have been increasing promotions to new customers, and achieving
higher average rate growth from existing customers who stay with us longer
term. Many customers move-in and out of our business over relatively short
periods and don't receive any price increases.
The average achieved net rent per sq ft increased by 10% compared to the prior
year, with closing net rent up 9% compared to 31 March 2022. The table below
shows the change in net rent per sq ft for the portfolio by average occupancy
over the year (on a non-weighted basis). The analysis excludes our most
recent store openings.
Average occupancy in the year Number of stores Net rent per sq ft growth from April 2022 to March 2023 Net rent per sq ft growth from April 2021 to March 2022
70% to 85% 47 8.3% 10.8%
85% to 90% 47 8.7% 11.7%
Above 90% 7 9.7% 13.0%
The self storage market
In the recently published 2023 Self Storage Association UK Survey, only 44% of
those surveyed had a reasonable or good awareness of self storage.
Furthermore, only 9% of the 2,102 adults surveyed were currently using self
storage or were thinking of using self storage in the next year. Our
research has this figure of awareness at around 56%, compared to 51% for the
SSA survey last year. Self storage is therefore not a commoditised product,
such as hotels, taxis, cinemas etc, and it will take many years of use and
growing awareness before it becomes so, particularly given the subdued growth
in new supply.
Growth in new facilities across the industry has been largely in regional
areas of the UK and particularly in smaller towns. Historically, new supply
creation in our core markets in London and the South East, has been difficult,
with high land values driven by competing uses such as residential and urban
industrial. In London in the year to 31 December 2022, there were five new
store openings, including three Big Yellow stores. We are aware of seven
planned store openings in London in calendar year 2023, including our landmark
103,000 sq ft Kings Cross store.
The Self Storage Association ("SSA") estimates that the UK industry is made up
of approximately 1,492 self storage facilities and 739 purely container
operations, providing 55.5 million sq ft of self storage space, equating to
0.82 sq ft per person in the UK. This compares to 9.4 sq ft per person in
the US, 1.9 sq ft per person in Australia and 0.17 sq ft for mainland Europe,
where the roll-out of self storage is a more recent phenomenon (sources: UK
Self Storage Association Surveys, May 2020, and May 2023 and FEDESSA European
Self Storage Annual Survey 2022).
Marketing and operations
Our marketing strategy focuses on building our market-leading brand awareness
further and using it to maximise the cost-efficient generation of enquiries,
customer move-ins and user satisfaction through our digital platforms. Our
strong brand and continued digital investment and innovation has helped us
create a market-leading website which delivers over 90% of our enquiries.
Our annual YouGov survey (published April 2023) again confirmed that the brand
awareness of Big Yellow remained ahead of other UK operators in the sector.
The survey shows our unprompted brand awareness to be nearly five times higher
than our nearest competitor across the UK.
The Big Yellow website allows users to browse different room sizes, obtain a
price, reserve online and check-in online prior to arriving at the stores
which are automated in terms of access once a customer moves-in.
The online customer experience also allows customers to communicate with us in
real-time via Live Chat, WhatsApp, or Facebook Messenger. The comprehensive
online FAQs provide our users with another way to ask questions they may have
about the service without needing to call us directly. This is critical
because approximately 70% of our new customers have not used self storage
before.
The seamless digital experience continues with our online check-in
platform. This allows customers to complete the majority of their move-in
process remotely. They can upload their photo and identity documents, sign
the full customer licence, set up authorised persons, complete their storage
inventory and set up a paperless Direct Debit - all done remotely. This
check-in online capability has significantly cut down the time our customers
need to spend in our receptions when they move-in. The final process is
completed through our in-store digital signature pads.
We also offer the ability to purchase boxes and packing materials through our
online BoxShop store. These items can be home delivered or made available
for our Click and Collect service from stores.
Driving online traffic
Self storage is a consumer-facing business, and the development of a strong
and sustainable brand is multi-layered and requires a consistency of product,
customer service and interaction at all touch points, particularly online.
Search engines are the most important acquisition tool for us, accounting for
the majority of traffic to our website. Our focus for a competitive
advantage on search continues and search engine optimisation ("SEO") work has
helped us to maintain high organic listings for popular generic and local self
storage related search terms. This in turn drives the growth and cost
efficiencies of acquiring new prospects.
Brand search terms are also a valuable driver of enquiries for Big Yellow and
help improve the efficiencies of our cost per enquiry. 34% of all traffic
generated from search engines to our website originated from "Big Yellow"
brand searches in the year. This clearly indicates that brand is important
in driving higher levels of prospects and customer referrals, leading to
improved operational efficiencies. We have demonstrated this through
significant improvements in the performance of existing storage centres
following their acquisition, re-branding, and assimilation into our
business.
Search engine marketing remains our largest source of paid for web traffic.
Ongoing website optimisation and an engaging user experience through our
digital platforms helps ensure we maximise the conversion of these web visits
into enquiries and then customers. Digital display advertising enables us to
regionally target audiences in the market for self storage, raising
consideration of the service and the Big Yellow brand through engaging
creatives.
Online customer reviews and social media
Supporting our values of putting the customer at the heart of our business,
our online customer reviews generate real-time feedback from customers and
provide positive word of mouth referral to our website visitors. Through our
'Big Impressions' customer feedback programme, we ask our new customers to
rate our service. With the users' permission, we then publish these
independent customer reviews on the Big Yellow website which currently total
over 44,000 averaging 4.8 out of 5.
The Big Impressions programme also generates customer feedback on their
move-in and move-out experience. These customer reviews and mystery shop
results are transparently accessible across the business and helps reinforce
our focus on outstanding customer service. Over the year, we have achieved
an average net promoter score of 78.9, which is a very strong consumer-facing
benchmark result.
We also gain real-time customer feedback from over 19,000 Google Reviews
averaging 4.7 out of 5. These help to enhance our visibility within local
search listings conveying trust in the Big Yellow brand. Additionally, we
have over 3,700 reviews from the independent review site TrustPilot. These
reviews average a 4.6 out of 5-star rating, labelled as "Excellent" on the
TrustPilot ratings scale. We monitor our customer reviews and respond where
necessary for customer service reasons or to manage our online reputation and
improve our service offering.
Social media continues to be complementary to our existing marketing
channels. Big Yellow actively posts content across Twitter, Facebook and
Instagram which help to raise awareness of our ESG activities. These social
channels are also used by customers to connect with us and are monitored in
real-time, enabling us to respond promptly to any enquiries. The Big Yellow
LinkedIn platform is used to communicate company achievements, ESG initiatives
and our company culture and the Big Yellow YouTube channel is used to allow
web prospects to experience our stores online through our video guides to self
storage.
We will continue to invest in improving the customer experience and user
journey across all our digital marketing channels and also in-store operations
to achieve higher levels of automation and hence efficiencies in the business.
ESG
Last year we developed a long-term strategy to become Net Renewable Energy
Positive and deliver Net Zero Scope 1 and 2 Emissions targets, which will be
funded with significant investment from the Group over the next few years.
The main delivery vehicle for this new strategy will be the installation of
solar generation capacity onto our existing store estate.
By 2025, we expect to have completed a multi-million pound investment in
renewable energy generation both on the roofs of our estate and also at other
locations. We published last year our Strategy document that sets out our
Commitments, Actions and Timelines to become 100% Renewable Energy Positive
and Net Zero Scope 1 and 2 Emissions by 2030.
The sustainability performance highlights for the year are:
‑ we have had our Science Based Targets externally verified;
‑ we have invested £4.7 million in our solar programme over the year and now
have 53 stores with solar and have expanded the programme to all stores. Our
current peak capacity has increased over the past two years from 0.9 Megawatts
to 4.5 Megawatts;
‑ we have donated £271,000 in Community Investment. This consists of a
combination of free and discounted space to worthy local charitable
organisations and not-for-profits and we house different organisations, from
foodbanks to small community groups to NHS partners and also BoxShop products
donated;
‑ £204,000 has been raised for the Foundation from customer donations and
employee fundraising including the matched contributions from the Company.
These funds allowed us to make grants of £193,000 to our partner charities in
the year;
‑ we have delivered five successful and all-round enriching work placements with
Breaking Barriers, Street League and the Down's Syndrome Association;
‑ we have maintained our GRESB Green Star rating, achieved a B award from CDP
and maintained our ISS indices rating; and
‑ we obtained our second EPRA sBPR Gold Award.
Cyber security and IT infrastructure
Cyber security remains high on the agenda within the Group, and we make
investment where required in response to the ever-changing threat landscape.
Using both external specialists and in-house knowledge we perform regular
reviews of our cyber risk and security posture. Testing of both systems and
people is carried out on a regular basis, including penetration testing and
phishing simulations. During the year the Group's systems were subject to an
external audit and maintained our IASME Gold certification. This also
incorporates Cyber Essentials. The Board receives bi-monthly reports on the
Group's IT infrastructure and information security. The Group has not
experienced an information security breach in the past three years and has
cyber insurance in place in the event that a breach should occur in the
future.
Our Data Compliance Officer oversees our ongoing compliance with GDPR and PCI
DSS. The role also includes Business Continuity and Crisis Communication
management. Policies and procedures are under regular review and benchmarked
against industry best practice. There are mandatory courses for all staff to
complete both for Information Security and Data Protection. Our
Infrastructure and Development teams continue to drive innovation and
efficiencies throughout the Group.
Development pipeline
An important aspect of our external growth is the development of new stores,
particularly in London, where there are very few existing assets suitable to
be acquired. Over the last year, we added 193,000 sq ft of capacity through
opening new stores in Harrow and Kingston North (both London) and acquiring an
existing freehold store in Aberdeen. We are looking forward to opening our
landmark Kings Cross store in June, which we expect to perform strongly.
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 Store opening in June 2023. 103,000 sq ft
Wembley, London Prominent location on Towers Business Park Site acquired in October 2018. Planning consent granted. Discussions 70,000 sq ft
ongoing to secure vacant possession.
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. Demolition completed Replacement for existing leasehold store of a similar size
and construction to commence in Summer 2023 with a view to opening in Summer
2024.
Wapping, London Prominent location on the Highway, adjacent to existing Big Yellow Site acquired in July 2020. Planning application refused. Appeal submitted Additional 95,000 sq ft
with public inquiry set for July 2023 with decision likely in August 2023.
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. Application likely to be refused and an appeal submitted.
Kentish Town, London Prominent location on Regis Road Site acquired in April 2021. Planning application submitted in December 68,000 sq ft
2022. Application likely to be refused and an appeal submitted.
West Kensington, London Prominent location on Hammersmith Road Site acquired in June 2021. Planning application submitted in February 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.
Staples Corner, London Prominent location on North Circular Road Site acquired in December 2022. Planning discussions underway with the local Replacement for existing leasehold store, additional 18,000 sq ft
Council.
Newcastle Prominent location on Scotswood Road Planning consent granted. 60,000 sq ft
Total 947,000 sq ft
PORTFOLIO SUMMARY
March 2023 March 2022((5))
Big Yellow Established Big Yellow Developing Armadillo Big Yellow Established Big Yellow Developing Armadillo
((1))
((2))
Total Big Yellow Total Big Yellow
Total Total
Number of stores 75 9 84 24 108 74 7 81 24 105
At 31 March:
Total capacity (sq ft) 4,724,000 584,000 5,308,000 984,000 6,292,000 4,670,000 447,000 5,117,000 981,000 6,098,000
Occupied space (sq ft) 3,979,000 352,000 4,331,000 757,000 5,088,000 4,053,000 239,000 4,292,000 815,000 5,107,000
Percentage occupied 84.2% 60.4% 81.6% 76.9% 80.9% 86.8% 53.5% 83.9% 83.1% 83.7%
Net rent per sq ft £34.66 £29.93 £34.28 £22.20 £32.48 £32.04 £26.26 £31.71 £20.45 £29.92
For the year:
REVPAF((3)) £33.19 £19.76 £31.84 £20.27 £30.02 £31.61 £16.75 £30.64 £19.83 £28.73
Average occupancy 87.0% 57.7% 84.0% 82.1% 83.7% 89.0% 56.8% 86.9% 86.0% 86.7%
Average annual net rent psf £33.39 £29.10 £33.10 £21.33 £31.28 £30.63 £23.94 £30.35 £19.69 £28.48
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Self storage income 136,925 8,809 145,734 17,177 162,911 127,313 4,426 131,739 18,137 149,876
Other storage related 18,523 1,401 19,924 2,691 22,615 19,474 949 20,423 3,080 23,503
income ((3))
Ancillary store rental 1,028 165 1,193 20 1,213 840 83 923 19 942
income
Total store revenue 156,476 10,375 166,851 19,888 186,739 147,627 5,458 153,085 21,236 174,321
Direct store operating (38,644) (4,482) (43,126) (7,437) (50,563) (37,422) (2,896) (40,318) (7,614) (47,932)
costs (excluding
depreciation)
Short and long (1,983) - (1,983) (170) (2,153) (1,934) - (1,934) (564) (2,498)
leasehold rent((4))
Store EBITDA((3,5)) 115,849 5,893 121,742 12,281 134,023 108,271 2,562 110,833 13,058 123,891
Store EBITDA margin 74.0% 56.8% 73.0% 61.8% 71.8% 73.3% 46.9% 72.4% 61.5% 71.1%
Deemed cost £m £m £m £m £m
To 31 March 2023 714.6 142.0 856.6 142.0 998.6
Capex to complete - 0.8 0.8 - 0.8
Total 714.6 142.8 857.4 142.0 999.4
(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 excluded from the closing occupancy and capacity figures in the prior year,
however its average occupancy, average net rent per sq ft, revenue and
operating costs are included in the portfolio summary up to the date of the
fire.
(3) See glossary in note 28.
(4) Rent under IFRS 16 for six 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:
Year ended 31 March 2023 Year ended 31 March 2022
Per above Armadillo results as an associate Statutory Per above Armadillo results as an associate Statutory
£000
£000
£000
£000
£000
£000
Store revenue 186,739 - 186,739 174,321 (5,046) 169,275
Direct store operating costs (50,563) - (50,563) (47,932) 1,908 (46,024)
Rent (2,153) - (2,153) (2,498) 150 (2,348)
Store EBITDA 134,023 - 134,023 123,891 (2,988) 120,903
The table below reconciles Store EBITDA to gross profit in the statement of
comprehensive income.
Year ended 31 March 2023 Year ended 31 March 2022
£000 £000
Store EBITDA Reconciling items Gross profit per statement of comprehensive income Store EBITDA Reconciling items Gross profit per statement of comprehensive income
Store revenue/Revenue((6)) 186,739 2,090 169,275 2,043
188,829 171,318
Cost of sales((7)) (50,563) (3,744) (54,307) (46,024) (4,359) (50,383)
Rent((8)) (2,153) 2,153 - (2,348) 2,348 -
134,023 499 134,522 120,903 32 120,935
(6) See note 3 of the financial statements, reconciling items are
management fees and non-storage income.
(7) See reconciliation in cost of sales section in Financial Review.
(8) The rent shown above is the cost associated with leasehold stores,
only part of which is recognised within gross profit in line with right-of-use
asset accounting principles. The amount included in gross profit is shown in
the reconciling items in cost of sales.
Reconciliation of APMs
The table below reconciles the reported figures above to the like-for-like
metrics the Group reports:
Like-for-like revenue
Year ended 31 March 2023 Year ended 31 March 2022
£000 £000
Store revenue (9) 186,739 169,275
Less revenue from non like-for-like stores (9) (23,889) (17,475)
Like-for-like revenue (9) 162,850 151,800
Like-for-like occupancy
Year ended 31 March 2023 Year ended 31 March 2022
Store MLA (sq ft) (9) 6,292,000 6,098,000
Less MLA from non like-for-like stores (sq ft) (9) (1,359,000) (1,165,000)
Like-for-like MLA (sq ft) (9) 4,933,000 4,933,000
Store occupancy (sq ft) (9) 5,088,000 5,107,000
Less occupancy from non like-for-like (sq ft) (9) (944,000) (865,000)
Like-for-like occupancy (sq ft) (9) 4,144,000 4,242,000
Like-for-like occupancy (%) (9) 84.0% 86.0%
(9) See glossary in note 28
FINANCIAL REVIEW
Revenue
Total revenue for the year was £188.8 million, an increase of £17.5 million
(10%) from £171.3 million in the prior year. Like-for-like store revenue
for the year was £162.9 million, an increase of 7% from the prior year (2022:
£151.8 million). Like-for-like revenue excludes stores opened and acquired
in the last two financial years, including the Armadillo stores, which the
Group acquired in July 2021.
Included in store revenue is other storage related income, from the sale of
packing materials, insurance/enhanced liability service ("ELS"), and storage
related charges. This amounted to £22.6 million in the year (2022: £23.5
million).
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 by the Group is tenant income on sites where we have
not started development.
Operating costs
Cost of sales principally comprise the direct store operating costs, including
store staff salaries, utilities, business rates, insurance, a full allocation
of the central marketing budget and repairs and maintenance.
The table below shows the breakdown of both Big Yellow's and Armadillo's store
operating costs compared to the prior year, with Armadillo's costs included in
full in both years:
Year ended 31 March 2023 Year ended 31 March 2022 % of store operating costs in 2023
£000 £000
Category Change
Cost of sales (ELS and packing materials) 2,202 3,896 (43%) 4%
Staff costs 14,415 13,303 8% 28%
General & admin 2,032 1,776 14% 4%
Utilities 2,056 2,274 (10%) 4%
Property rates 15,221 14,036 8% 30%
Marketing 6,504 6,494 0% 13%
Repairs & maintenance 4,685 4,198 12% 9%
Insurance 2,757 1,479 86% 6%
Computer costs 1,001 929 8% 2%
Total before one-off items 50,873 48,385 5%
One-off items (310) (453)
Total per portfolio summary 50,563 47,932 5%
Store operating costs have increased by £2.6 million (5%). The one-off
items in both years 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 £2.5 million (5%) compared to the prior
year. New stores accounted for £2.1 million of operating expense increase
in the year. Cost of sales has decreased by £1.7 million following the move
to selling an ELS rather than insurance (see explanation in revenue above).
The remaining increase of £2.1 million (4%), is a pleasing result in the
current inflationary environment. More specifically, we would comment as
follows:
‑ Staff costs have increased by £1.1 million (8%) 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).
‑ Marketing is in line with the prior year with continued efficiencies being
achieved from our digital campaigns.
‑ Utilities has reduced by 10%, with our investment in solar, and during the
year we have benefited from a fixed rate contract on energy which is due to
expire on 30 September 2023
‑ Insurance has increased by £1.3 million (86%). We saw a significant
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 bad debt expense for the year was 0.2%, in line with the prior
year. The Group has not seen any deterioration in its aged debtors' profile
over recent months.
However, looking to the year ending 31 March 2024, we are anticipating a
step-up in operating costs, principally as a result of:
‑ the Group's property rates bill will increase by 19% (£3 million) on a
like-for-like basis for the year ending 31 March 2024, following the Rating
Revaluation published in November 2022;
‑ our store salary review for the year ending 31 March 2024 averaged 5.5%, with
the lower paid staff seeing increases of on average 6%; and
‑ the Group has benefited from a fixed price energy contract since October 2020,
which expires in September 2023. Energy costs have moderated significantly
from their peak in 2022, but we still expect to see an increase from our
current contracted pricing when we place the new contract over the Summer.
As mentioned above, the significant acceleration in our solar retrofit
programme will help over the medium term to significantly reduce our reliance
on external energy supply and mitigate the volatility that can sometimes occur
in the market. We have increased our renewable electricity generation by 94%
from the prior year.
As highlighted in the Chief Executive's Statement, given the investment we
have made in recent years in the automation of our store operations,
particularly in relation to interaction with prospects and customers, we
continue to review every vacancy before making a decision to recruit with a
view to achieving savings this year through the salary line.
The table below reconciles store operating costs per the portfolio summary to
cost of sales in the statement of comprehensive income:
Year ended 31 March 2023 Year ended 31 March 2022
£000 £000
Direct store operating costs per portfolio summary (excluding rent) 50,563 47,932
Rent included in cost of sales (total rent payable is included in portfolio 1,551 1,633
summary)
Rent review accruals - 607
Depreciation charged to cost of sales 496 378
Head office and other operational management costs charged to cost of sales 1,697 1,741
Armadillo cost of sales pre acquisition of remaining interest - (1,908)
Cost of sales per statement of comprehensive income 54,307 50,383
Store EBITDA
Store EBITDA for the year was £134.0 million, an increase of £13.1 million
(11%) from £120.9 million for the prior year (see Portfolio Summary). The
overall EBITDA margin for during the year was 71.8%, up from 71.1% in 2022.
All stores are currently trading profitably at the Store EBITDA level. Our
stores at Hayes and Hove, which opened in the first quarter of 2022, reached
break even in six and four months respectively, and our stores at Harrow and
Kingston North, which both opened in September 2022 reached break even in
seven months.
Administrative expenses
Administrative expenses in the statement of comprehensive income of £14.5
million were up £0.2 million compared to the prior year. The prior period
expense contained £0.4 million due to the write-off of acquisition costs in
relation to the purchase of the remaining interest in Armadillo in accordance
with IFRS 3.
The normalised increase was therefore £0.6 million (4%), which is a below
inflationary increase, following our focus on cost control during the year.
The non-cash share-based payments charge represents £3.7 million of the
overall £14.5 million expense (2022: £3.4 million of £14.4 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 financial year was £1.4 million, which
is included in other operating income.
In June 2021, the Group experienced a fire in the wine storage area of our
Fulham store, which was isolated to a single section of the basement
floor. During the year, the Group received full settlement from our
insurers for the loss of income as a result of this fire, which amounted to
£0.6 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 year.
Interest expense on bank borrowings
The gross bank interest expense for the year was £18.2 million, an increase
of £6.4 million from the prior year, due to higher average debt levels in the
year, coupled with the Group's higher average cost of debt following the
increase in interest rates. The average cost of borrowing during the year
was 4.2% compared to 2.8% in the prior year.
Capitalised interest on our construction programme was £2.8 million, up from
£2.1 million in the prior year, with interest capitalised on our developments
at Harrow, Kingston North and Kings Cross during the year.
Total finance costs in the statement of comprehensive income increased to
£16.9 million from £10.6 million in the prior year.
Profit before tax
The Group made a profit before tax in the year of £75.3 million, compared to
a profit of £698.9 million in the prior year. After adjusting for the gain
on the revaluation of investment properties and other matters shown in the
table below, the Group made an adjusted profit before tax in the year of
£106.0 million, up 10% from £96.8 million in 2022.
Profit before tax analysis 2023 2022
£000 £000
Profit before tax 75,309 698,876
Loss/(gain) on revaluation of investment properties 29,861 (597,224)
Gain on disposal of investment property - (584)
Acquisition costs written off - 416
Movement in fair value on interest rate derivatives 133 (1,389)
Refinancing costs 732 -
Share of associate fair value gains and losses - (3,293)
Adjusted profit before tax 106,035 96,802
The adjustments made to the Group's profit before tax are in line with
guidance issued by EPRA. The gain on disposal of investment property in the
prior year relates to an overage received from the previous sale of land
adjacent to our Guildford Central store.
The movement in the adjusted profit before tax from the prior year is
illustrated in the table below:
£m
Adjusted profit before tax - year ended 31 March 2022 96.8
Increase in gross profit 13.6
Increase in administrative expenses (0.6)
Increase in other operating income 2.2
Increase in net interest payable (6.3)
Increase in capitalised interest 0.7
Reduction in share of adjusted profit of associates (0.4)
Adjusted profit before tax - year ended 31 March 2023 106.0
Basic earnings per share for the year was 40.1p (2022: 385.4p) and diluted
earnings per share was 39.8p (2022: 384.2p). Diluted EPRA earnings per
share based on adjusted profit after tax was up 8% to 56.5p (2022: 52.5p)
(see note 12). EPRA earnings per share equates to the Company's adjusted
earnings per share in the current year.
REIT status
The Group converted to a Real Estate Investment Trust ("REIT") in January
2007. Since then, the Group has benefited from a zero tax rate on the
Group's qualifying self storage earnings. The Group only pays tax on the
profits attributable to our residual business, comprising primarily of the
sale of packing materials and insurance.
REIT status gives the Group exemption from UK corporation tax on profits and
gains from its qualifying portfolio of UK stores. Revaluation gains on
developments and our existing open stores are exempt from corporation tax on
chargeable gains, provided certain criteria are met. The Armadillo stores
joined our REIT group on acquisition of the remaining interest, allowing us to
write back the deferred tax that had been provided on previous revaluation
uplifts.
The Group has a rigorous internal system in place for monitoring compliance
with criteria set out in the REIT regulations. On a monthly basis, a report
on compliance with these criteria is issued to the Executive. To date, the
Group has complied with all REIT regulations, including forward looking
tests.
Taxation
There is a tax charge in the current year of £2.0 million. This compares to
a charge in the prior year of £1.6 million. The increase in the current
year tax charge reflects the increase in the Group's non-exempt taxable
profits from the sale of insurance and packing materials over the year.
Dividends
The Board is recommending the payment of a final dividend of 22.9 pence per
share in addition to the interim dividend of 22.3 pence, giving a total
dividend for the year of 45.2 pence, an increase of 8% from the prior year, in
line with our policy to distribute a minimum of 80% of our adjusted earnings
per share in each reporting period.
REIT regulatory requirements determine the level of Property Income
Distribution ("PID") payable by the Group. On the basis of the full year
distributable reserves for PID purposes, a PID of 45.2p pence per share is
payable (31 March 2022: 42.0 pence). The PID for the year to 31 March 2023
accounts for all of the declared dividend. The table below summarises the
declared dividend for the year:
Dividend (pence per share) 31 March 2023 31 March 2022
Interim dividend 22.3p 20.6p
Final dividend 22.9p 21.4p
Total dividend 45.2p 42.0p
Subject to approval by shareholders at the Annual General Meeting to be held
on 20 July 2023, the final dividend will be paid on 28 July 2023. The ex-div
date is 6 July 2023 and the record date is 7 July 2023.
Cash flow growth
The Group is strongly cash generative and draws down from its longer term
committed facilities as required to meet its obligations. The Group's cash
flow from operating activities pre-working capital movements for the year was
£109.2 million, an increase of 10% from £99.3 million in the prior year.
This reflects the Group's increase in profitability in the year.
These operating cash flows are after the ongoing maintenance costs of the
stores, which were on average approximately £43,000 per store (2022:
£40,000).
The Group's net debt has increased over the year to £486.6 million (March
2022: £411.8 million).
Year ended Year ended
31 March 2023
31 March 2022
£m £m
Cash generated from operations pre-working capital movements 126.2 112.5
Net finance costs (16.5) (10.8)
Interest on obligations under lease liabilities (0.7) (0.8)
Loss of income insurance proceeds 2.0 -
Tax (1.8) (1.6)
Cash flow from operating activities pre-working capital movements 109.2 99.3
Working capital movements 2.8 7.9
Cash flow from operating activities 112.0 107.2
Capital expenditure (106.4) (105.2)
Acquisition of Armadillo - (66.7)
Disposal of investment property - 0.6
Investment - (0.1)
Receipt from Capital Goods Scheme 0.2 0.4
Dividends received from associates - 0.4
Cash flow after investing activities 5.8 (63.4)
Ordinary dividends (79.2) (68.7)
Issue of share capital 1.0 98.5
Payment of lease liabilities (1.3) (1.4)
Receipt from termination of interest rate derivatives 0.4 -
Loan arrangement fees paid (1.5) (0.9)
Increase in borrowings 74.5 32.2
Net cash outflow (0.3) (3.7)
Opening cash and cash equivalents 8.6 12.3
Closing cash and cash equivalents 8.3 8.6
Closing debt (494.9) (420.4)
Closing net debt (486.6) (411.8)
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 7.7 times (2022: 10.5 times). This is calculated per below:
31 March 2023 31 March 2022
Cash generated from operations pre working capital movements (see note 26) 126,195 112,489
Interest paid per cash flow statement (16,486) (10,763)
Interest cover 7.7x 10.5x
In the year capital expenditure outflows were £106.4 million, up slightly
from £105.2 million in the prior year. Of the capital expenditure in the
year £62.4 million is for the acquisition of sites at Staples Corner, Old
Kent Road and Slough Farnham Road, the freehold of our Oxford store, and an
existing storage centre in Aberdeen (including acquisition costs), with £44.0
million principally relating to build costs of the new stores, the Harrow
industrial scheme and the investment in our solar retrofit programme.
The cash flow after investing activities was a net inflow of £5.8 million in
the year, compared to a net outflow of £63.4 million in 2022, with the prior
year also including the acquisition of Armadillo.
Balance sheet
Property
The Group's open stores and stores under development owned at 31 March 2023,
which are classified as investment properties, have all been valued
individually by JLL.
The external valuation has resulted in an investment property asset value of
£2.71 billion, comprising £2.42 billion (89%) for the freehold (including
nine long leaseholds) open stores, £31.0 million (1%) for the short leasehold
open stores and £260.7 million (9%) for the freehold investment properties
under construction.
Investment property
There was a very significant increase in the valuation of our investment
portfolio last year, and this year the valuations have remained relatively
flat, with an increase of 1% on the open store portfolio (£27.6 million) -
see note 15 for the detailed valuation methodology. This revaluation gain
has been driven by an improvement in the cash flow of the stores, partly
offset by an increase in the cap rates used in the valuation. 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 weighted average exit capitalisation rate used in the valuations was 5.6%
in the current year, compared to 5.5% in the prior year.
Analysis of property portfolio Value at 31 March 2023 Revaluation movement in the year
£m £m
Investment property £2,449.6m £27.6m
Investment property under construction £260.7m (£57.5m)
Investment property total £2,710.3m (£29.9m)
The table below provides a further breakdown of the open store valuations:
Established Developing Armadillo
Freehold Leasehold Freehold Largely Freehold Total
Number of stores 70 5 9 24 108
MLA capacity (sq ft) 4,413,000 311,000 584,000 984,000 6,292,000
Valuation at 31 March 2023 (£m)
£1,990.7m £31.0m £277.3m £150.6m £2,449.6m
Value per sq ft £451 £100 £475 £153 £389
Occupancy at 31 March 2023 84.3% 83.0% 60.4% 76.9% 80.9%
Stabilised occupancy assumed 89% 87% 86% 86% 88%
Net initial year one NOI yield 5.2% 16.4% 3.4% 7.2% 5.3%
The net initial year one NOI yield is 5.3% (2022: 5.2%). Note 15 contains
more detail on the assumptions underpinning the valuations.
Investment property under construction
The Group spent £72.1 million on investment property under construction in
the year, notably on the site purchases of Old Kent Road, Staples Corner and
Slough, and construction expenditure, principally on Harrow, Kingston North,
and Kings Cross. Harrow and Kingston North have transferred to investment
property during the year as the stores opened.
The valuation movement on the investment property under construction is a
deficit of £57.5 million with a reduction in the value of our industrial
property and land without self storage planning in the development pipeline of
around 19% in total, reflective of the new financing conditions and wider
market environment for land.
In the prior year there was a gain on investment property under construction
of £67.5 million, so the movement in the current year is largely a reversal
of that increase. The investment property under construction is still valued
above its historic cost.
Purchaser's cost adjustment
As in prior years, we have instructed an alternative valuation on our assets
using a purchaser's cost assumption of 2.75% (see note 15 for further details)
to be used in the calculation of our adjusted diluted net asset value. This
Red Book valuation on the basis of the special assumption of 2.75% purchaser's
costs, results in a higher property valuation at 31 March 2023 of £2.815
billion (£104.6 million higher than the value recorded in the financial
statements). This translates to 56.5 pence per share. This revised
valuation translates into an adjusted net asset value per share of 1,237.3
pence (2022: 1,239.7 pence) after the dilutive effect of outstanding share
options.
Receivables
The Group's bad debt expense in the year represented 0.2% of revenue compared
to 0.2% in the prior year, with 80% of our customer base paying by direct
debit.
The Group received its final instalment during the year under the Capital
Goods Scheme, as a consequence of the introduction of VAT on self storage from
1 October 2012. The receivable related to VAT to be recovered on historic
store development expenditure. The Group received £15.8 million under the
Scheme, of which £0.2 million was received in the year.
Net asset value
The adjusted net asset value is 1,237.3 pence per share (see note 13),
compared to 1,239.7 pence per share at 31 March 2022. The table below
reconciles the movement:
Adjusted NAV pence per share
Movement in adjusted net asset value £m
31 March 2022 2,284.2 1,239.7
Adjusted profit after tax 104.1 56.5
Equity dividends paid (80.0) (43.4)
Revaluation movements (29.9) (16.2)
Movement in purchaser's cost adjustment 4.0 2.2
Other movements (e.g. share schemes) 4.8 (1.5)
31 March 2023 2,287.2 1,237.3
Borrowings
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 summarises the Group's debt facilities at 31 March 2023. The
average cost of debt is 4.7% (March 2022: 3.1%).
Debt Expiry Facility Drawn Average interest cost
Aviva Loan September 2028 £158.9 million £158.9 million 3.4%
M&G loan September 2029 £120 million £120 million 5.2%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland)
October 2024 £240 million £216 million 5.5%
Total Average term 3.9 years £518.9 million £494.9 million 4.7%
In addition to the facilities above, during the year, 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 two and half years with terms of
between 7 and 15 years at short notice, typically 10 days.
The Group's revolving credit facility of £240 million with Lloyds, HSBC and
Bank of Ireland expires in October 2024. The Group intends to refinance this
loan with the banks this year.
During the year, 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 fixed by way of a swap until June 2023, and the balance
is variable.
The margin on the facility was reduced by 20bps from the expiring facility,
reflective of improved portfolio performance, and 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 Group repaid the two Armadillo bank facilities during the year 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 £0.4 million as the swaps were in-the-money.
The Group was comfortably in compliance with its banking covenants at 31 March
2023. Further details of the Group's covenants are provided in note 19 of
the accounts.
The Group's key financial ratios are shown in the table below:
Metric 31 March 2023 31 March 2022
Net Debt / Gross Property Assets 18% 16%
Net Debt / Adjusted Net Assets 21% 18%
Net Debt / Market Capitalisation 23% 15%
Cash generated from operations pre-working capital movements against interest
paid
7.7x 10.5x
At 31 March 2023, the fair value on the Group's interest rate derivatives was
an asset of £0.3 million. The Group does not hedge account its interest
rate derivatives. As recommended by EPRA, the fair value movements are
eliminated from adjusted profit before tax, diluted EPRA earnings per share,
and adjusted net assets per share.
Cash deposits are only placed with approved financial institutions in
accordance with the Group's Treasury policy.
Share capital
The share capital of the Company totalled £18.4 million at 31 March 2023
(2022: £18.4 million), consisting of 184,265,973 ordinary shares of 10p each
(2022: 183,967,378 shares). 0.3 million shares were issued for the exercise
of options during the year at an average exercise price of £13.13 (2022: 0.3
million shares at an average price of £14.84).
The Group holds 1.1 million shares within an Employee Benefit Trust ("EBT").
These shares are shown as a debit in reserves and are not included in
calculating net asset value per share.
2023 2022
No. No.
Opening shares 183,967,378 175,880,470
Shares issued in placing - 7,751,938
Shares issued for the exercise of options 298,595 334,970
Closing shares in issue 184,265,973 183,967,378
Shares held in EBT (1,122,907) (1,122,907)
Closing shares for NAV purposes 183,143,066 182,844,471
116.3 million shares were traded in the market during the year ended 31 March
2023 (2022: 85.4 million). The average mid-market price of shares traded
during the year was £12.41 with a high of £15.53 and a low of £9.87.
Principal risks and uncertainties
The Directors have carried out a robust assessment of the emerging and
principal risks facing the Group, including those that would threaten its
business model, future performance, solvency, or liquidity. The Group
maintains a low appetite to risk, in line with our strategic objectives of
providing a low volatility, high distribution business.
The section below details the emerging and principal risks and uncertainties
that are considered to have the most material impact on the Group's strategy
and objectives. These key risks are monitored on an ongoing basis by the
Executive Directors and considered fully by the Board in its annual risk
review.
Risk and impact Mitigation Change during the year and outlook
Self storage market risk
There is a risk to the business that the self storage market does not grow in Self storage is a relatively immature market in the UK compared to other self The Russian invasion of Ukraine in February 2022 caused significant global
line with our projections, and that economic growth in the UK is below storage markets such as the United States and Australia, and we believe has uncertainty and has provided a more challenging macroeconomic backdrop, with
expectations, which could result in falling demand and a loss of income. further opportunity for growth. Awareness of self storage and how it can be significant levels of inflation seen in the UK economy since the invasion,
used by domestic and business customers is relatively low throughout the UK, largely driven by food and energy, resulting in increased interest rates.
although higher in London, awareness increased during the pandemic. This has impacted the cost of living in the UK, and the level of housing
transactions has fallen as the cost of mortgages has increased.
The rate of growth of branded self storage on main roads in good locations has
historically been limited by the difficulty of acquiring sites at affordable In the final quarter of the year, we also had the impact of the regional
prices and obtaining planning consent. New store openings in London and other banking crisis in the US and the collapse of Credit Suisse, which can also
large urban conurbations within the sector have slowed significantly over the impact demand in our market at the margin.
past few years.
Inflation is forecast to moderate over the next 12 months, with relatively
Our performance during the past three years has been strong with revenue flat economic growth projected for the UK economy.
growing by 46% from £129.3 million in the year ended 31 March 2020 to £188.8
million for this year. We believe that this performance is due to a Governments around the world took on significant additional debt to fund the
combination of factors including: policy responses to the pandemic, and this may result in higher taxation rates
‑ a high quality and growing portfolio of freehold properties delivering higher in the future.
operating margins;
‑ a focus on London and the South East and other large urban conurbations, where
the drivers in the self storage market are at their strongest and the barriers
to competition are at their highest;
‑ continuing innovation and automation;
‑ an inclusive and non-hierarchical culture with a highly engaged team;
‑ a focus on delivering the highest levels of customer service;
‑ delivering on our strong ESG commitments;
‑ the UK's leading self storage brand, with high and growing public awareness
and online strength; and
‑ strong cash flow generation from a secure capital structure.
We have a large current storage customer base occupying approximately 73,000
rooms spread across the portfolio of stores and hundreds of thousands more who
have used our stores over the years. In any month, customers move in and out
at the margin resulting in changes in occupancy. This is a seasonal business
and typically we see growth over the spring and the summer months, with the
seasonally weaker period being the winter months.
Property risk
There is a risk that we will be unable to acquire new development sites which Our management has significant experience in the property industry generated The Group has acquired eleven sites over the past four years, taking its total
meet management's criteria. This would impact on our ability to grow the over many years and in particular acquiring property on main roads in high pipeline to 13 sites which, when opened, would expand the Group's current MLA
overall store platform. profile locations and obtaining planning consents. We do take planning risk by 15%.
where necessary, although the availability of land, and competition for it
Changing climate and resulting likely changes to planning restrictions will makes acquiring new sites challenging. The planning process remains difficult and to achieve a planning consent can
narrow choice of available sites further.
take anything from eighteen months to three years. Local planning policy is
Our in-house development team and our professional advisers have significant favouring residential development over other uses, and we don't expect this to
The Group is also subject to the risk of failing to obtain planning consents experience in obtaining planning consents for self storage centres. change given the shortage of housing in the UK.
on its development sites, and the risk of a rising cost of development.
We manage the construction of our properties very tightly. The building of We currently have planning consent on seven of the 13 development sites.
Planning approval is increasingly dependent on Social or Environmental each site is handled through a design and build contract, with the fit-out
enhanced features (e.g. social enterprise at Battersea, BREEAM standards, project managed in-house using an established professional team of external Our latest tender for our store in Farnham Road Slough has come in within our
local planners demands for green spaces) - adding cost and complexity. advisers and sub-contractors who have worked with us for many years to our Big underwriting as a result of moderating steel and other materials costs and
Yellow specification. reduced contractor margins since we suspended new construction last May. It
is therefore our intention to restart our construction programme from this
We carried out an external benchmarking of our construction costs and Summer.
tendering programme during the year, which has reinforced our current
approach, but also given some areas where further efficiencies and cost
savings can be achieved.
Valuation risk
The valuation of the Group's investment properties may fall due to external The valuations are carried out by independent, qualified external valuers who The revaluation surplus on the Group's open store investment properties was
pressures or the impact of performance. have significant experience in the UK self storage industry. £27.6 million in the year (an uplift of 1%), due to an improvement in
underlying cash flows used in the valuations, partly offset by an outward
Lack of transactional evidence in the self storage sector leads to more The portfolio is diverse with approximately 73,000 rooms currently occupied in shift in cap rates.
subjective valuations. our stores for a wide variety of reasons.
There have been a number of larger portfolio transactions across Europe over
There is significant headroom on our loan to value banking covenants. the past three years, and there is a weight of institutional money looking to
invest in self storage. Notwithstanding the above, the increase in interest
rates over the year led to the outward shift in cap rates, which was more
pronounced in more regional markets.
Treasury risk
The Group may face increased costs from adverse interest rate movements. Our financing policy is to fund our current needs through a mix of debt, The Bank of England base rate has been increased significantly during the
equity, and cash flow to allow us to selectively build out the remaining year, with it currently at 4.5%, up from 1% at the start of our financial
development pipeline and achieve our strategic growth objectives, which we year.
believe improve returns for shareholders. We have made it clear that we
believe optimal leverage for a business such as ours should be LTV in the The long-term forecast is for rates to gradually fall from these levels. 61%
range 20% to 30% and this informs our management of treasury risk. of the Group's drawn debt is floating, and hence the Group has experienced
additional cost from these recent increases in the base rate.
We aim to ensure that there are sufficient medium-term facilities in place to
finance our committed development programme, secured against the freehold Debt providers currently remain supportive to companies with a strong capital
portfolio, with debt serviced by our strong operational cash flows. structure, as evidenced by the Group refinancing the M&G loan during the
year, and the Pricoa shelf facility that we put in place.
We have a fixed rate loan in place from Aviva Commercial Finance Limited, with
5 and half years remaining. The Group has a £120 million loan from M&G The Group's interest cover ratio for the year ended 31 March 2023 was 7.7
Investments, which is repayable in 2029. For our bank debt, we borrow at times, comfortably ahead of our internal target of 5 times and ahead of our
floating rates of interest. banking covenants, as disclosed in note 19. The ratio fell during the year,
due to the rise in interest costs.
During the year, 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 two and a half years with terms of between 7 and 15 years at short
notice, typically 10 days.
Our policy is to maintain a flexible borrowing structure, with a long-term
average of approximately 50% of our total borrowings fixed, with the balance
floating. At 31 March 2023 39% of the Group's total drawn borrowings were
fixed or subject to interest rate derivatives. The Group reviews its current
and forecast projections of cash flow, borrowing and interest cover as part of
its monthly management accounts. In addition, an analysis of the impact of
significant transactions is carried out regularly, as well as a sensitivity
analysis assuming movements in interest rates and store occupancy on gearing
and interest cover. This sensitivity testing underpins the viability
statement below.
The Group regularly monitors its counterparty risk. The Group monitors
compliance with its banking covenants closely. During the year it complied
with all its covenants and is forecast to do so for the foreseeable future.
Tax and regulatory risk
The Group is exposed to changes in the tax regime affecting the cost of We regularly monitor proposed and actual changes in legislation with the help The Group's like-for-like property rates bill for the year ending 31 March
corporation tax, property rates, VAT, Stamp Duty and Stamp Duty Land Tax of our professional advisers, through direct liaison with HMRC, and through 2024 has increased by 19% from the prior year, with the 2023 rating list
("SDLT"), for example the imposition of VAT on self storage from 1 October trade bodies to understand and, if possible, mitigate or benefit from their reflecting the rise in industrial rents over the past few years.
2012. impact.
The corporation tax rate was increased in the March 2021 budget, to take
The Group is exposed to potential tax penalties or loss of its REIT status by HMRC have designated the Group as having a low-risk tax status, and we hold effect from April 2023, and there is a risk that tax rates will rise further
failing to comply with the REIT legislation. regular meetings with them. We carry out detailed planning ahead of any in the medium-term to fund the increased government deficits that have arisen
future regulatory and tax changes using our expert advisers. from the policy response to the pandemic.
The Group has internal monitoring procedures in place to ensure that the
appropriate REIT rules and legislation are complied with. To date all REIT
regulations have been complied with, including projected tests.
Human resources risk
Our people are key to our success and as such we are exposed to a risk of high We have developed a professional, lively, and enjoyable working environment The Group carried out an engagement survey of its employees during the prior
staff turnover, and a risk of the loss of key personnel. and believe our success stems from attracting and retaining the right people. year, which showed very pleasing results of the level of engagement of our
We encourage all our staff to build on their skills through appropriate teams.
training and regular performance reviews. We believe in an accessible and open
culture and everyone at all levels is encouraged to review, and challenge We have listened to the feedback from our employees raised during our
accepted norms, to contribute to the performance of the Group. engagement survey and made a number of changes to the Group's operations,
including two days a week working from home for our head office team, reducing
our store opening hours and the payment of a lone trading bonus for store
staff. We are carrying out a further survey of our staff in May 2023.
Brand and reputation risk
The Group is exposed to the risk of a single serious incident materially We have always aimed to run this business in a professional way, which has The Group has a crisis response plan which was developed in conjunction with
affecting our customers, people, financial performance and hence our brand and involved strict adherence with all regulations that affect our business, such external consultants to ensure the Group is well placed to effectively deal
reputation, including the risk of a data breach. as health and safety legislation, building regulations in relation to the with a major incident.
construction of our buildings, anti-slavery, anti-bribery, and data
regulations. We experienced a fire caused by arson at our Armadillo Cheadle store in
February 2022. Our crisis response team worked effectively in managing the
We also invest in cyber security (discussed below), and make an ongoing incident.
investment in staff training, facilities management, and the maintenance of
our stores.
To ensure consistency of service and to understand the needs of our customers,
we send surveys to every customer who moves in and moves out of the
business. The results of the surveys and mystery shops are reviewed to
continuously improve and deliver consistent performance throughout the
business.
We maintain regular communication with our key stakeholders, customers,
employees, shareholders, and debt providers.
Security risk
The Group is exposed to the risk of the damage or loss of a store due to The safety and security of our customers, their belongings, stores, and our We have continued to run courses for all our staff to enhance the awareness
vandalism, fire, or natural incidents such as flooding. This may also cause staff remains a key priority. To achieve this, we invest in state-of-the-art and effectiveness of our procedures in relation to security.
reputational damage. access control systems, individual room alarms, digital CCTV systems, intruder
and fire alarm systems and the remote monitoring of all our stores outside of We have further invested in security improvements in our stores during the
our trading hours. We are the only major operator in the UK self storage year.
industry that has every room in every Big Yellow store individually alarmed.
We regularly review and implement improvements to our security processes and
We have implemented customer security procedures in line with advice from the procedures.
Police and continue to work with the regulatory authorities on issues of
security, reviewing our operational procedures regularly. The importance of
security and the need for vigilance is communicated to all store staff and
reinforced through training and routine operational procedures.
Cyber risk
High profile cyber-attacks and data breaches are a regular staple in today's The Group receives specialist advice and consultancy in respect of cyber We don't consider the risk to have increased more for the Group than any other
news. The results of any breach may result in reputational damage, fines, or security, and we have dedicated in-house monitoring and regular review of our business; however, we consider that the threats in the entire digital
customer compensation, causing a loss of market share and income. security systems, we also limit the retention of customer data to the minimum landscape do continue to increase and evolve. As such we have continued to
requirement. invest in cyber security upgrading or replacing components as required.
Policies and procedures are under regular review and benchmarked against
industry best practice by our consultants. These policies also include
defend, detect and response policies.
Climate change related risk
The Group is exposed to climate-change related transition and physical risks. The good working order of our stores is of critical importance to our business Our Sustainability Committee, chaired by a Non-Executive Director, has
Physical risks may affect the Group's stores and may result in higher model. delivered an ambitious strategic plan to 2032.
maintenance and repair costs. Failing to transition to a low carbon economy
may cause an increase in taxation, decrease in access to loan facilities and We visually inspect each of our stores at least once per annum and planned and We appreciate that both physical and transition risks are expected to
reputational damage unplanned work is discussed immediately. materialise to lesser or greater extents over the coming years and costs may
go up gradually, hidden within what may be perceived as 'natural variations'.
Maintenance requirements are discussed at budget reviews; proposals are made Our focus and strong governance will allow us to continue to mitigate the
to raise climate change related issues to the Board, who may request more effects.
holistic adaptation work to be carried out.
The key mitigation strategy to address transitional risks is the delivery of
our Net Renewable Energy Positive Strategy and the Net Zero Scope 1 and Scope
2 Emissions Strategy. Our investment to decarbonise our business over the next
eight years is expected to mitigate fully against taxation (carbon tax) risk
and reputational risks (both investors and customers).
We have a large current storage customer base occupying approximately 73,000
rooms spread across the portfolio of stores and hundreds of thousands more who
have used our stores over the years. In any month, customers move in and out
at the margin resulting in changes in occupancy. This is a seasonal business
and typically we see growth over the spring and the summer months, with the
seasonally weaker period being the winter months.
The Russian invasion of Ukraine in February 2022 caused significant global
uncertainty and has provided a more challenging macroeconomic backdrop, with
significant levels of inflation seen in the UK economy since the invasion,
largely driven by food and energy, resulting in increased interest rates.
This has impacted the cost of living in the UK, and the level of housing
transactions has fallen as the cost of mortgages has increased.
In the final quarter of the year, we also had the impact of the regional
banking crisis in the US and the collapse of Credit Suisse, which can also
impact demand in our market at the margin.
Inflation is forecast to moderate over the next 12 months, with relatively
flat economic growth projected for the UK economy.
Governments around the world took on significant additional debt to fund the
policy responses to the pandemic, and this may result in higher taxation rates
in the future.
Property risk
There is a risk that we will be unable to acquire new development sites which
meet management's criteria. This would impact on our ability to grow the
overall store platform.
Changing climate and resulting likely changes to planning restrictions will
narrow choice of available sites further.
The Group is also subject to the risk of failing to obtain planning consents
on its development sites, and the risk of a rising cost of development.
Planning approval is increasingly dependent on Social or Environmental
enhanced features (e.g. social enterprise at Battersea, BREEAM standards,
local planners demands for green spaces) - adding cost and complexity.
Our management has significant experience in the property industry generated
over many years and in particular acquiring property on main roads in high
profile locations and obtaining planning consents. We do take planning risk
where necessary, although the availability of land, and competition for it
makes acquiring new sites challenging.
Our in-house development team and our professional advisers have significant
experience in obtaining planning consents for self storage centres.
We manage the construction of our properties very tightly. The building of
each site is handled through a design and build contract, with the fit-out
project managed in-house using an established professional team of external
advisers and sub-contractors who have worked with us for many years to our Big
Yellow specification.
We carried out an external benchmarking of our construction costs and
tendering programme during the year, which has reinforced our current
approach, but also given some areas where further efficiencies and cost
savings can be achieved.
The Group has acquired eleven sites over the past four years, taking its total
pipeline to 13 sites which, when opened, would expand the Group's current MLA
by 15%.
The planning process remains difficult and to achieve a planning consent can
take anything from eighteen months to three years. Local planning policy is
favouring residential development over other uses, and we don't expect this to
change given the shortage of housing in the UK.
We currently have planning consent on seven of the 13 development sites.
Our latest tender for our store in Farnham Road Slough has come in within our
underwriting as a result of moderating steel and other materials costs and
reduced contractor margins since we suspended new construction last May. It
is therefore our intention to restart our construction programme from this
Summer.
Valuation risk
The valuation of the Group's investment properties may fall due to external
pressures or the impact of performance.
Lack of transactional evidence in the self storage sector leads to more
subjective valuations.
The valuations are carried out by independent, qualified external valuers who
have significant experience in the UK self storage industry.
The portfolio is diverse with approximately 73,000 rooms currently occupied in
our stores for a wide variety of reasons.
There is significant headroom on our loan to value banking covenants.
The revaluation surplus on the Group's open store investment properties was
£27.6 million in the year (an uplift of 1%), due to an improvement in
underlying cash flows used in the valuations, partly offset by an outward
shift in cap rates.
There have been a number of larger portfolio transactions across Europe over
the past three years, and there is a weight of institutional money looking to
invest in self storage. Notwithstanding the above, the increase in interest
rates over the year led to the outward shift in cap rates, which was more
pronounced in more regional markets.
Treasury risk
The Group may face increased costs from adverse interest rate movements.
Our financing policy is to fund our current needs through a mix of debt,
equity, and cash flow to allow us to selectively build out the remaining
development pipeline and achieve our strategic growth objectives, which we
believe improve returns for shareholders. We have made it clear that we
believe optimal leverage for a business such as ours should be LTV in the
range 20% to 30% and this informs our management of treasury risk.
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 have a fixed rate loan in place from Aviva Commercial Finance Limited, with
5 and half years remaining. The Group has a £120 million loan from M&G
Investments, which is repayable in 2029. For our bank debt, we borrow at
floating rates of interest.
During the year, 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 two and a half years with terms of between 7 and 15 years at short
notice, typically 10 days.
Our policy is to maintain a flexible borrowing structure, with a long-term
average of approximately 50% of our total borrowings fixed, with the balance
floating. At 31 March 2023 39% of the Group's total drawn borrowings were
fixed or subject to interest rate derivatives. The Group reviews its current
and forecast projections of cash flow, borrowing and interest cover as part of
its monthly management accounts. In addition, an analysis of the impact of
significant transactions is carried out regularly, as well as a sensitivity
analysis assuming movements in interest rates and store occupancy on gearing
and interest cover. This sensitivity testing underpins the viability
statement below.
The Group regularly monitors its counterparty risk. The Group monitors
compliance with its banking covenants closely. During the year it complied
with all its covenants and is forecast to do so for the foreseeable future.
The Bank of England base rate has been increased significantly during the
year, with it currently at 4.5%, up from 1% at the start of our financial
year.
The long-term forecast is for rates to gradually fall from these levels. 61%
of the Group's drawn debt is floating, and hence the Group has experienced
additional cost from these recent increases in the base rate.
Debt providers currently remain supportive to companies with a strong capital
structure, as evidenced by the Group refinancing the M&G loan during the
year, and the Pricoa shelf facility that we put in place.
The Group's interest cover ratio for the year ended 31 March 2023 was 7.7
times, comfortably ahead of our internal target of 5 times and ahead of our
banking covenants, as disclosed in note 19. The ratio fell during the year,
due to the rise in interest costs.
Tax and regulatory risk
The Group is exposed to changes in the tax regime affecting the cost of
corporation tax, property rates, VAT, Stamp Duty and Stamp Duty Land Tax
("SDLT"), for example the imposition of VAT on self storage from 1 October
2012.
The Group is exposed to potential tax penalties or loss of its REIT status by
failing to comply with the REIT legislation.
We regularly monitor proposed and actual changes in legislation with the help
of our professional advisers, through direct liaison with HMRC, and through
trade bodies to understand and, if possible, mitigate or benefit from their
impact.
HMRC have designated the Group as having a low-risk tax status, and we hold
regular meetings with them. We carry out detailed planning ahead of any
future regulatory and tax changes using our expert advisers.
The Group has internal monitoring procedures in place to ensure that the
appropriate REIT rules and legislation are complied with. To date all REIT
regulations have been complied with, including projected tests.
The Group's like-for-like property rates bill for the year ending 31 March
2024 has increased by 19% from the prior year, with the 2023 rating list
reflecting the rise in industrial rents over the past few years.
The corporation tax rate was increased in the March 2021 budget, to take
effect from April 2023, and there is a risk that tax rates will rise further
in the medium-term to fund the increased government deficits that have arisen
from the policy response to the pandemic.
Human resources risk
Our people are key to our success and as such we are exposed to a risk of high
staff turnover, and a risk of the loss of key personnel.
We have developed a professional, lively, and enjoyable working environment
and believe our success stems from attracting and retaining the right people.
We encourage all our staff to build on their skills through appropriate
training and regular performance reviews. We believe in an accessible and open
culture and everyone at all levels is encouraged to review, and challenge
accepted norms, to contribute to the performance of the Group.
The Group carried out an engagement survey of its employees during the prior
year, which showed very pleasing results of the level of engagement of our
teams.
We have listened to the feedback from our employees raised during our
engagement survey and made a number of changes to the Group's operations,
including two days a week working from home for our head office team, reducing
our store opening hours and the payment of a lone trading bonus for store
staff. We are carrying out a further survey of our staff in May 2023.
Brand and reputation risk
The Group is exposed to the risk of a single serious incident materially
affecting our customers, people, financial performance and hence our brand and
reputation, including the risk of a data breach.
We have always aimed to run this business in a professional way, which has
involved strict adherence with all regulations that affect our business, such
as health and safety legislation, building regulations in relation to the
construction of our buildings, anti-slavery, anti-bribery, and data
regulations.
We also invest in cyber security (discussed below), and make an ongoing
investment in staff training, facilities management, and the maintenance of
our stores.
To ensure consistency of service and to understand the needs of our customers,
we send surveys to every customer who moves in and moves out of the
business. The results of the surveys and mystery shops are reviewed to
continuously improve and deliver consistent performance throughout the
business.
We maintain regular communication with our key stakeholders, customers,
employees, shareholders, and debt providers.
The Group has a crisis response plan which was developed in conjunction with
external consultants to ensure the Group is well placed to effectively deal
with a major incident.
We experienced a fire caused by arson at our Armadillo Cheadle store in
February 2022. Our crisis response team worked effectively in managing the
incident.
Security risk
The Group is exposed to the risk of the damage or loss of a store due to
vandalism, fire, or natural incidents such as flooding. This may also cause
reputational damage.
The safety and security of our customers, their belongings, stores, and our
staff remains a key priority. To achieve this, we invest in state-of-the-art
access control systems, individual room alarms, digital CCTV systems, intruder
and fire alarm systems and the remote monitoring of all our stores outside of
our trading hours. We are the only major operator in the UK self storage
industry that has every room in every Big Yellow store individually alarmed.
We have implemented customer security procedures in line with advice from the
Police and continue to work with the regulatory authorities on issues of
security, reviewing our operational procedures regularly. The importance of
security and the need for vigilance is communicated to all store staff and
reinforced through training and routine operational procedures.
We have continued to run courses for all our staff to enhance the awareness
and effectiveness of our procedures in relation to security.
We have further invested in security improvements in our stores during the
year.
We regularly review and implement improvements to our security processes and
procedures.
Cyber risk
High profile cyber-attacks and data breaches are a regular staple in today's
news. The results of any breach may result in reputational damage, fines, or
customer compensation, causing a loss of market share and income.
The Group receives specialist advice and consultancy in respect of cyber
security, and we have dedicated in-house monitoring and regular review of our
security systems, we also limit the retention of customer data to the minimum
requirement.
Policies and procedures are under regular review and benchmarked against
industry best practice by our consultants. These policies also include
defend, detect and response policies.
We don't consider the risk to have increased more for the Group than any other
business; however, we consider that the threats in the entire digital
landscape do continue to increase and evolve. As such we have continued to
invest in cyber security upgrading or replacing components as required.
Climate change related risk
The Group is exposed to climate-change related transition and physical risks.
Physical risks may affect the Group's stores and may result in higher
maintenance and repair costs. Failing to transition to a low carbon economy
may cause an increase in taxation, decrease in access to loan facilities and
reputational damage
The good working order of our stores is of critical importance to our business
model.
We visually inspect each of our stores at least once per annum and planned and
unplanned work is discussed immediately.
Maintenance requirements are discussed at budget reviews; proposals are made
to raise climate change related issues to the Board, who may request more
holistic adaptation work to be carried out.
The key mitigation strategy to address transitional risks is the delivery of
our Net Renewable Energy Positive Strategy and the Net Zero Scope 1 and Scope
2 Emissions Strategy. Our investment to decarbonise our business over the next
eight years is expected to mitigate fully against taxation (carbon tax) risk
and reputational risks (both investors and customers).
Our Sustainability Committee, chaired by a Non-Executive Director, has
delivered an ambitious strategic plan to 2032.
We appreciate that both physical and transition risks are expected to
materialise to lesser or greater extents over the coming years and costs may
go up gradually, hidden within what may be perceived as 'natural variations'.
Our focus and strong governance will allow us to continue to mitigate the
effects.
GOING CONCERN
A review of the Group's business activities, together with the factors likely
to affect its future development, performance and position are set out in the
Strategic Report. 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 financial statements.
Further information concerning the Group's objectives, policies, and processes
for managing its capital; its financial risk management objectives; details of
its financial instruments and hedging activities; and its exposures to credit
risk and liquidity risk can be found in this Report and in the notes to the
financial statements.
At 31 March 2023 the Group had available liquidity of approximately £32
million, from a combination of cash and undrawn bank debt facilities. The
Group additionally has a $225 million credit approved shelf facility 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 two and half
years with terms of between 7 and 15 years at short notice, typically 10
days. The Group is cash generative and for the year ended 31 March 2023, had
operational cash flow of £112.0 million, with capital commitments at the
balance sheet date of £6.1 million.
The Directors have prepared cash flow forecasts for a period of 18 months from
the date of approval of these financial statements, taking into account the
Group's operating plan and budget for the year ending 31 March 2024 and
projections contained in the longer-term business plan which cover the 18
month period. 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.
The Group's revolving credit facility of £240 million with Lloyds, HSBC and
Bank of Ireland expires in October 2024. The Group intends to refinance this
loan with the banks this year, but does not rely on the refinancing of the
loan to reach its conclusion on going concern.
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
current economic environment, taking into account the trading performance of
the Group over the recent dislocations in the global economy from Covid-19 and
the Russian invasion of Ukraine. The Directors have also considered the
performance of the business during the Global Financial Crisis. The
Directors modelled several 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 Group and Company financial statements.
VIABILITY STATEMENT
The Directors have assessed the Group's viability over a four-year period to
March 2027. This period is selected based on the Group's long-term strategic
plan to give greater certainty over the forecasting assumptions used. As in
the assessment of going concern, the Directors have modelled a number of
different scenarios on the Group's future prospects.
In making their assessment, the Directors took account of the Group's current
financial position, including committed capital expenditure. The Directors
carried out a robust assessment of the emerging and principal risks and
uncertainties facing the business, their potential financial impact on the
Group's cash flows, REIT compliance and financial covenants and the likely
effectiveness of the mitigating options detailed. The Directors have assumed
that funding for the business in the form of equity, bank and insurance
company debt will be available in all reasonably plausible market
conditions. Whilst the eventual impact of the current economic environment
on the Group is uncertain, and may not be known for some time, the Group has a
highly cash generative business, good liquidity and has proved resilient in
its trading since the onset of the pandemic.
Based on this assessment the Directors have a reasonable expectation that the
Company and the Group will be able to continue operating and meeting all their
liabilities as they fall due to March 2027.
STRATEGY AND INVESTMENT CASE
Our Strategy
Brand, platform, and customer service
Our strategy from the outset has been to develop Big Yellow into the
market-leading self storage brand, delivering excellent customer service,
investing in sustainability and our market-leading operating platform and
digital channels, with a great culture and highly motivated employees. We
concentrate on developing our stores in main road locations with high
visibility, where our distinctive branding generates high awareness of Big
Yellow.
Creating shareholder value
We continue to believe that the medium-term opportunity to create shareholder
value consists of driving revenue and cash flow from our existing portfolio
through continued investment in sustainability, our people, culture, and
digital operating and marketing platforms. In addition, we aim to deliver
external growth as new stores open through continued investment in our
development pipeline, and selectively acquiring existing storage centres from
smaller operators. As a REIT our key financial objective is to produce
sustainable returns for shareholders through a relatively low leverage, low
volatility, high distribution business. In addition, any successful business
must have an effective sustainability strategy, particularly around climate
change, and this continues to be a key strategic focus for our business.
We focus on the following key areas:
‑ leveraging our market-leading brand position to generate new prospects,
principally from our digital, mobile and desktop platforms;
‑ focusing on training, selling skills, and customer satisfaction to maximise
prospect conversion and referrals;
‑ growing occupancy and net rent to drive revenue optimally at each store;
‑ maintaining a focus on cost control, so revenue growth is transmitted through
to earnings growth;
‑ increasing the footprint of the Big Yellow platform principally through new
site development and where possible existing prime freehold stores that meet
our quality criteria;
‑ selectively acquiring existing self storage assets into the Armadillo
platform;
‑ through our ESG initiatives, aim to create a more sustainable business which
will increase shareholder and customer value in both the medium and long-term;
‑ maintaining Big Yellow's culture as an accessible, apolitical, inclusive,
non-hierarchical, socially responsible, and enjoyable place to work; and
‑ maintaining a conservative capital structure in the business with Group
interest cover of a minimum of five times.
Real estate
The other main plank of our strategy has been to build a portfolio of large
purpose-built freehold self storage centres, focussed on London, the South
East and other large urban conurbations. We believe that by owning a
predominantly freehold estate we are insulating ourselves against: economic
downturns as we operate at higher margins; adverse rent reviews; and in the
long-term possible redevelopment of key stores by the landlord. It also
provides us financing flexibility as rent is a form of gearing.
Approximately 60% of our current annualised store revenue derives from within
the M25; for London and the South East, the proportion of current annualised
store revenue is 75%. With our store development pipeline largely in London
and the South East, we would expect these proportions to increase over the
medium term.
New supply and competition is a key risk to our business model, hence our
focus on London and its commuter towns, where barriers to entry in terms of
competition for land and difficulty around obtaining planning are highest.
We continue to see limited new supply growth in our key areas of operation.
Looking back over the last five years, we estimate capacity growth in London
of approximately 2-3% per annum. In 2022, there have been only five store
openings in London (including three Big Yellow stores), and we anticipate
seven new stores in London in 2023, including one Big Yellow store opening.
Our stores are on average 58,000 sq ft, compared to an industry average of
approximately 44,000 sq ft (source: UK Self Storage Association 2023 Annual
Survey). The upside from filling our larger than average sized stores is, in
our view, only possible in large metropolitan markets. As our operating
costs are relatively fixed, larger stores in bigger urban conurbations,
particularly London, drive higher revenues and higher operating margins.
Capital structure
Following the Global Financial Crisis and the ensuing economic recession, we
have materially reduced the financial risk within the business and diversified
our sources of debt, whilst at the same time, increasing our store platform by
deploying significant capital investment. We measure leverage by looking at
our interest cover and that has increased from 1.9 times in 2008 to 7.7 times
for the year ended 31 March 2023. Our objective is to not let this fall
below 5 times, compared to the consolidated EBITDA covenant of 1.5 times. We
manage this business on the basis that an external economic shock could
potentially happen at any time. This is reinforced by the performance of the
business during the pandemic, where we delivered a strong trading performance
whilst at the same time continuing to invest and expand.
Self storage demand drivers
Economic activity and change are key drivers of self storage demand and are
greatest in the larger urban conurbations, and in particular London and the
South East. The structural changes consisting of the conversion of
ex-industrial brownfield land to other uses, in particular residential; the
reduction in home ownership and increased proportion of those choosing to
rent; increasing density of living with new properties being built with
optimised living space and very little provision for storage; will continue
and are resulting in increased demand for our product. These changes have
resulted in a significant shortage of available warehousing space,
particularly in London, which has been accentuated by the current crisis.
Self storage provides a convenient flexible solution to businesses such as
online retailers, importers and exporters, service providers, the public
sector, and marketing companies looking for mini-warehousing space.
In addition to domestic customers taking space to declutter their homes, our
largest customer base is those using us short-term around an event, such as
moving home, refurbishment, inheritance, household formation, separation,
relocation, and students.
Resilience
The location of our stores, brand, security, and most importantly customer
service, together with the diversity of use in our 73,000 occupied rooms,
serve better than any lease contract in providing income security.
The business proved to be relatively resilient, but not immune during the
Global Financial Crisis and recession of 2007 to 2009, with London and the
South East proving to be less volatile. Since 2020, the Group has grown its
revenue by 46%.
80% of our customers pay by direct debit, and our cash collection has remained
robust over recent years.
Total shareholder return
In the twenty three years since flotation in May 2000, Big Yellow has
delivered a Total Shareholder Return ("TSR"), including dividends reinvested,
of 13.9% per annum, in aggregate 1,871.5% at the closing price of 1,169p on 31
March 2023. This compares to 4.4% per annum for the FTSE Real Estate Index
and 5.0% per annum for the FTSE All Share index over the same period. We
feel this illustrates the power of compounding of consistent incremental
returns over the longer term.
Our investment case
Attractive market dynamics • UK self storage penetration in key urban conurbations remains relatively low
• Limited new supply coming onto the market
• Resilient through the last economic downturn and performed well during the
pandemic
• Self storage is more part of the ecosystem today than it was in 2008 with
increased domestic and business awareness
Our competitive advantage • UK industry's most recognised brand with over 90% of enquiries now online
• Prominent stores on arterial or main roads, with extensive frontage and high
visibility
• Continuous innovation and investment into our mobile and desktop digital
channels
• Strong customer satisfaction and NPS scores reflecting excellent customer
service
• 6.3 million sq ft UK footprint, with development pipeline of 0.9 million sq ft
• Primarily freehold estate concentrated in London and South East and other
larger urban conurbations
• Larger average store capacity - economies of scale, higher operating margins
• Secure financing structure with strong balance sheet
• Continued significant investment in sustainability and our culture
Evergreen income streams • 73,000 occupied rooms, with customers from a diverse base - individuals, SMEs,
and national customers
• Average length of stay for existing customers of 31 months
• 38% of customers in stores greater than two-year length of stay, a further 16%
for one to two years
• Low bad debt expense (0.2% of revenue in the year)
Strong growth opportunities • Opportunities to drive further occupancy growth
• Yield management as occupancy increases
• Densification of living and scarcity of flexible business warehouse space
drives demand
• Growth in National Customers and business customer base
• Increasing the platform with a conservative capital structure
Conversion into • Freehold assets for high operating margins and operational advantage
quality returns
• Low technology and obsolescence product, maintenance capex fully expensed
• Annual compound adjusted eps growth of 14% since 2004/5 (IFRS adoption)
• Annual compound cash flow growth of 15% since 2004/5
• Dividend pay-out ratio of a minimum of 80% of adjusted eps
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
Note 2023 2022
£000 £000
Revenue 3 188,829 171,318
Cost of sales (54,307) (50,383)
Gross profit 134,522 120,935
Administrative expenses (14,519) (14,352)
Operating profit before gains on property assets 120,003 106,583
(Loss)/gain on the revaluation of investment properties 14a,15 (29,861) 597,224
Gain on disposal of investment property - 584
Operating profit 90,142 704,391
Other operating income 3 2,185 -
Share of profit of associates 14e - 3,677
Investment income - interest receivable 7 9 23
- fair value 7 - 1,389
movement on derivatives
Finance costs - interest payable 8 (16,894) (10,604)
- fair value 8 (133) -
movement on derivatives
Profit before taxation 75,309 698,876
Taxation 9 (1,977) (1,602)
Profit for the year (attributable to equity shareholders) 5 73,332 697,274
Total comprehensive income for the year (attributable to equity shareholders) 73,332 697,274
Basic earnings per share 12 40.1p 385.4p
Diluted earnings per share 12 39.8p 384.2p
EPRA earnings per share are shown in Note 12.
All items in the statement of comprehensive income relate to continuing
operations.
The accompanying notes form part of the financial statements.
Consolidated Balance Sheet
31 March 2023
Note 2023 2022
£000
£000
Non-current assets
Investment property 14a 2,449,640 2,342,199
Investment property under construction 14a 260,720 285,400
Right-of-use assets 14a 18,148 19,174
Plant, equipment, and owner-occupied property 14b 4,003 3,857
Intangible assets 14c 1,433 1,433
Investment 14d 588 588
Derivative financial instruments 18c - 885
2,734,532 2,653,536
Current assets
Derivative financial instruments 18c 316 -
Inventories 496 483
Trade and other receivables 16 8,314 7,756
Cash and cash equivalents 8,329 8,605
17,455 16,844
Total assets 2,751,987 2,670,380
Current liabilities
Trade and other payables 17 (57,275) (47,349)
Borrowings 19 (3,159) (3,008)
Obligations under lease liabilities 21 (2,020) (1,958)
(62,454) (52,315)
Non-current liabilities
Borrowings 19 (489,411) (414,972)
Obligations under lease liabilities 21 (17,676) (18,718)
(507,087) (433,690)
Total liabilities (569,541) (486,005)
Net assets 2,182,446 2,184,375
Equity
Share capital 22 18,427 18,397
Share premium account 290,857 289,923
Reserves 1,873,162 1,876,055
Equity shareholders' funds 2,182,446 2,184,375
The financial statements were approved by the Board of Directors and
authorised for issue on 22 May 2023. They were signed on its behalf by:
Jim Gibson,
Director
John Trotman, Director
Company Registration No. 03625199
The accompanying notes form part of the financial statements.
Consolidated Statement of Changes in Equity
Year ended 31 March 2023
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 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
Total comprehensive income for the year - - 73,332 73,332
- - -
Issue of share capital 30 934 - - - - 964
Dividend - - - - (79,960) - (79,960)
Credit to equity for equity-settled share-based payments - - 3,735 3,735
- - -
At 31 March 2023 18,427 290,857 74,950 1,795 1,797,436 (1,019) 2,182,446
The other non-distributable reserve arose in the year ended 31 March 2015
following the placing of 14.35 million ordinary shares.
The issue of share capital is net of expenses.
Year ended 31 March 2022
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
Dividend - - - - (68,698) - (68,698)
Credit to equity for equity-settled share-based payments - - 3,390 3,390
- - -
At 31 March 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
The accompanying notes form part of the financial statements.
Consolidated Cash Flow Statement
Year ended 31 March 2023
Note 2023 2022
£000
£000
Cash generated from operations 26 128,973 120,390
Bank interest paid (16,486) (10,763)
Interest on obligations under lease liabilities (706) (843)
Interest received 8 2
Loss of income insurance proceeds 2,032 -
Tax paid (1,844) (1,649)
Cash flows from operating activities 111,977 107,137
Investing activities
Purchase of non-current assets (106,413) (105,151)
Disposal of investment property - 584
Acquisition of Armadillo (net of cash acquired) - (66,679)
Investment 14d - (138)
Receipts from Capital Goods Scheme 182 381
Dividend received from associates 14e - 435
Cash flows from investing activities (106,231) (170,568)
Financing activities
Issue of share capital 964 98,514
Payment of lease liabilities (1,267) (1,384)
Equity dividends paid 11 (79,140) (68,698)
Receipt from termination of interest rate derivatives 436 -
Loan arrangement fees paid (1,507) (953)
Increase in borrowings 74,492 32,235
Cash flows from financing activities (6,022) 59,714
Net decrease in cash and cash equivalents (276) (3,717)
Opening cash and cash equivalents 8,605 12,322
Closing cash and cash equivalents 8,329 8,605
The accompanying notes form part of the financial statements.
Notes to the financial statements
Year ended 31 March 2023
1. GENERAL INFORMATION
Big Yellow Group PLC is a Company incorporated in the United Kingdom under the
Companies Act 2006, with registration number 03625199, and limited by shares.
The address of the registered office is 2 The Deans, Bridge Road, Bagshot,
Surrey, GU19 5AT. The nature of the Group's operations and its principal
activities are set out in note 4 and in the Strategic Report.
2. BASIS OF PREPARATION
The financial information set out above does not constitute the Group and
Company's statutory accounts for the years ended 31 March 2023 or 2022 but is
derived from those accounts. Statutory accounts for 2022 have been delivered
to the registrar of companies, and those for 2023 will be delivered in due
course. The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The Group's financial statements have been prepared in accordance with
UK-adopted international accounting standards ("IFRS Standards") and in
relation to the parent company financial statements have been properly
prepared in accordance with UK Generally Accepted Accounting Practice
(including FRS 101). The financial statements have been prepared in accordance
with the requirements of the Companies Act 2006. The Group has applied all
relevant accounting standards which have been endorsed by the International
Accounting Standards Board and have been applied consistently year on year.
The Group uses a number of APMs to monitor the performance of the business.
Adjusted profit before tax and adjusted earnings per share are the Group's
primary profit measures and reflect underlying profit by excluding capital and
non-recurring items such as revaluation movements, gains or losses on the
disposal of properties and the fair value movement of interest derivatives in
accordance with EPRA guidelines. In addition, the Group adjusts for items
such as the write off of acquisition costs, and fair value movements on the
stepped acquisition of associates. These adjusted measures should not be
considered in isolation from, or as substitutes for, or superior to the
financial measures prepared in accordance with IFRS.
3. REVENUE
Analysis of the Group's operating revenue can be found below and in the
Portfolio Summary.
2023 2022
£000
£000
Open stores
Self storage income 162,911 145,592
Insurance income 3,047 17,783
Enhanced liability service income 14,272 -
Packing materials income 3,286 3,142
Other income from storage customers 2,010 1,821
Ancillary store rental income 1,213 937
186,739 169,275
Other revenue
Non-storage income 2,090 1,718
Management fees earned - 325
Total revenue 188,829 171,318
Please see the commentary in the Financial Review on insurance income and
enhanced liability service income.
Non-storage income derives principally from rental income earned from tenants
of properties awaiting development.
The Group has also earned other operating income of £2.2 million in the year
as follows:
‑ £1.4 million relates to insurance proceeds for loss of income following the
destruction of the Group's Cheadle store by fire in 2022;
‑ £0.6 million relates to insurance proceeds for loss of income following a
fire at the Group's Fulham store wine storage area in 2021; and
‑ £0.2 million is following extinguishing the right-of-use asset and liability
following the acquisition of the freehold of our Oxford store.
4. SEGMENTAL INFORMATION
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Executive to allocate resources to the segments and to assess their
performance. Given the nature of the Group's business, there is one segment,
which is the provision of self storage and related services.
Revenue represents amounts derived from the provision of self storage and
related services which fall within the Group's ordinary activities after
deduction of trade discounts and value added tax. The Group's non-current
assets, revenue and profit before tax are attributable to one activity, the
provision of self storage and related services. These all arise in the
United Kingdom in the current year and prior year.
5. PROFIT FOR THE YEAR
a) Profit for the year has been arrived at after charging/(crediting):
Note 2023 2022
£000
£000
N
Depreciation of plant, equipment, and owner-occupied property 14b 888 857
Depreciation of interest in leasehold properties 1,542 1,601
Loss/(gain) on the revaluation of investment property 29,861 (597,224)
Gains on disposal of investment property - (584)
Cost of inventories recognised as an expense 1,643 1,405
Employee costs 6 24,709 23,181
b) Analysis of auditor's remuneration:
2023 2022
£000
£000
Fees payable to the Company's auditor for the audit of the Company's annual 487 390
accounts
Fess payable to the Company's auditor for the subsidiaries' annual accounts 50 50
Total audit fees 537 440
Audit related assurance services - interim review 60 60
Total non-audit fees 60 60
Total audit and non-audit fees paid to KPMG LLP 597 500
6. EMPLOYEE COSTS
The average monthly number of full-time equivalent employees (including
Executive Directors) was:
2023 2022
Number
Number
Sales 403 365
Administration 62 62
465 427
At 31 March 2023 the total number of Group employees was 515 (2022: 495).
2023 2022
£000 £000
Their aggregate remuneration comprised:
Wages and salaries 17,475 16,086
Social security costs 2,759 3,014
Other pension costs 740 691
Share-based payments 3,735 3,390
24,709 23,181
The Directors and the Director of our trading subsidiaries are the employees
assessed as key management personnel.
7. INVESTMENT INCOME
2023 2022
£000
£000
Bank interest receivable 8 2
Unwinding of discount on Capital Goods Scheme receivable 1 21
Total interest receivable 9 23
Fair value movement on derivatives - 1,389
Total investment income 9 1,412
8. FINANCE COSTS
2023 2022
£000
£000
Interest on bank borrowings 18,156 11,772
Capitalised interest (2,761) (2,072)
Interest on obligations under lease liabilities 706 843
Other interest payable 61 61
Loan refinancing costs 732 -
Total interest payable 16,894 10,604
Fair value movement on derivatives 133 -
Total finance costs 17,027 10,604
9. TAXATION
As a REIT, the Group does not pay UK corporation tax on the profits and gains
from its qualifying rental business in the UK provided that 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.
A UK corporation tax rate of 19% (effective 1 April 2020) was substantively
enacted on 17 March 2020, reversing the previously enacted reduction in the
rate from 19% to 17%. Finance (No.2) Bill 2021 announced that the main rate
of corporation tax was going to increase to 25% from 1 April 2023 and this was
substantively enacted on 24 May 2021. This will increase the Company's future
current tax charge accordingly.
UK current tax 2023 2022
£000
£000
- Current year 2,296 1,725
- Prior year (319) (123)
1,977 1,602
A reconciliation of the tax charge is shown below:
2023 2022
£000
£000
Profit before tax 75,309 698,876
Tax charge at 19% (2022 - 19%) thereon 14,309 132,786
Effects of:
Revaluation of investment properties 5,674 (113,472)
Share of profit of associates - (699)
Other permanent differences 626 (2,031)
Utilisation of brought forward losses (76) -
Profits from the tax-exempt business (18,237) (14,859)
Current year tax charge 2,296 1,725
Prior year adjustment (319) (123)
Total tax charge 1,977 1,602
At 31 March 2023 the Group has unutilised tax losses from the non-REIT taxable business of £33.8 million (2022: £34.2 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.
10. ADJUSTED PROFIT
2023 2022
£000
£000
Profit before tax 75,309 698,876
(Loss)/gain on revaluation of investment properties - Group 29,861 (597,224)
-associates (net of deferred tax) to 30 June 2021 - (1,537)
Change in fair value of interest rate derivatives 133 (1,389)
Armadillo fair value adjustments on acquisition - (1,756)
Gain on disposal of investment property - (584)
Refinancing fees 732 -
Acquisition costs written off - 416
Adjusted profit before tax 106,035 96,802
Tax (1,977) (1,602)
Adjusted profit after tax 104,058 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,
acquisition costs written off in accordance with IFRS 3, refinancing fees,
fair value adjustments on acquisitions, and net gains and losses on disposal
of investment property have been disclosed in line with EPRA performance
measures.
11. DIVIDENDS
2023 2022
£000
£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2022 of 21.4p 39,136 31,039
(2021: 17.0p) per share.
Interim dividend for the year ended 31 March 2023 of 22.3p 40,824 37,659
(2022: 20.6p) per share.
79,960 68,698
Proposed final dividend for the year ended 31 March 2023 of 41,947 39,136
22.9p (2022: 21.4p) per share.
Subject to approval by shareholders at the Annual General Meeting to be held on 20 July 2023, the final dividend will be paid on 28 July 2023. The ex-div date is 6 July 2023 and the record date is 7 July 2023.
The Property Income Distribution ("PID") payable for the year is 45.2 pence
per share (2022: 42.0 pence per share).
12. EARNINGS PER SHARE
Year ended 31 March 2023 Year ended 31 March 2022
Earnings Shares Pence per share Earnings Shares Pence per share
£m million £m million
Basic 73.3 183.0 40.1 697.3 180.9 385.4
Dilutive share options - 1.1 (0.3) - 0.6 (1.2)
Diluted 73.3 184.1 39.8 697.3 181.5 384.2
Adjustments:
Loss/(gain) on revaluation of investment properties 30.0 - 16.2 (597.2) - (329.0)
Acquisition costs written off - - - 0.4 - 0.2
Change in fair value of interest rate derivatives 0.1 - 0.1 (1.4) - (0.8)
Gain on disposal of investment property
- - - (0.6) - (0.3)
Refinancing fees 0.7 - 0.4 - - -
Share of associate fair value gains and losses
- - - (3.3) - (1.8)
EPRA - diluted 104.1 184.1 56.5 95.2 181.5 52.5
EPRA - basic 104.1 183.0 56.9 95.2 180.9 52.6
The calculation of basic earnings is based on profit after tax for the year.
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 in line with
EPRA recommendations.
13. NET ASSETS PER SHARE
EPRA's Best Practices Recommendations guidelines for Net Asset Value (NAV)
metrics are 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).
Net assets per share are equity shareholders' funds divided by the number of
shares at the year end. The 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 15).
Year ended 31 March 2023 Year ended 31 March 2022
Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders
£000 £000
Pence per share
Pence per share
Shares Shares
Basic NAV 2,182,446 183,143,066 1,191.7 2,184,375 182,844,471 1,194.7
Share and save as you earn schemes
1,909 1,705,121 (10.0) 1,592 1,409,649 (8.3)
Diluted NAV 2,184,355 184,848,187 1,181.7 2,185,967 184,254,120 1,186.4
Fair value of derivatives - Group (316) - (0.2) (885) - (0.5)
Intangible assets (1,433) - (0.7) (1,433) - (0.8)
EPRA NTA 2,182,606 184,848,187 1,180.8 2,183,649 184,254,120 1,185.1
Valuation methodology assumption (see note 15) (£000)
104,605 - 56.5 100,600 - 54.6
Adjusted NAV 2,287,211 184,848,187 1,237.3 2,284,249 184,254,120 1,239.7
14. NON-CURRENT ASSETS
a) Investment property, investment property under construction and
right-of-use assets
Investment property under construction
£000
Investment Right-of-use assets
property £000 Total
£000 £000
At 31 March 2021 1,621,990 163,537 16,644 1,802,171
Additions 10,921 95,509 1,084 107,514
Acquisition of Armadillo 138,418 - 4,862 143,280
Transfer on opening of stores 41,182 (41,182) - -
Revaluation (see note 15) 529,688 67,536 - 597,224
Depreciation - - (1,553) (1,553)
Impairment of Cheadle lease - - (1,863) (1,863)
At 31 March 2022 2,342,199 285,400 19,174 2,646,773
Additions 40,559 72,063 2,034 114,656
Transfer on opening of stores 39,288 (39,288) - -
Acquisition of Oxford freehold - - (1,597) (1,597)
Revaluation (see note 15) 27,594 (57,455) - (29,861)
Depreciation - - (1,463) (1,463)
At 31 March 2023 2,449,640 260,720 18,148 2,728,508
The right-of-use assets represent the present value of minimum lease payments
for leasehold properties that meet the definition of IAS 40 and are accounted
for as investment properties - see note 21 for further details of the
obligations under lease liabilities. The fair value of the leasehold
properties (including long leaseholds), on which the Group pays rent, of
£74.6 million (2022: £80.2 million) is included within the investment
property total.
Included within the revaluation gain on investment property in the prior year
is an impairment of £4.3 million in relation to the fire at Cheadle.
The credit to right-of-use assets in the current year of £1.6 million is due
to the acquisition of the freehold of our Oxford store, and hence the
extinguishment of the lease liability and associated right-of-use asset.
The income from self storage accommodation earned by the Group from its
investment property is disclosed in note 3. Direct operating expenses, which
are all applied to generating rental income, arising on the investment
property in the year are disclosed in the Portfolio Summary. Included within
additions is £2.8 million of capitalised interest (2022: £2.1 million),
calculated at the Group's average borrowing cost for the year of 4.2%. 85 of
the Group's investment properties are pledged as security for loans, with a
total external value of £1.99 billion.
b) Plant, equipment, and owner-occupied property
Freehold property Leasehold improve-ments Plant and machinery Fixtures, fittings Total
£000 £000 £000 & office equipment Right of use assets £000
Motor vehicles £000 £000
£000
Cost
At 31 March 2021 2,275 59 439 32 1,262 872 4,939
Retirement of fully depreciated assets (107) (402)
- - - - (509)
Additions 15 - 115 - 780 - 910
At 31 March 2022 2,290 59 447 32 1,640 872 5,340
Retirement of fully depreciated assets (83) (687)
- - - - (770)
Additions 116 - 283 - 738 3 1,140
At 31 March 2023 2,406 59 647 32 1,691 875 5,710
Depreciation
At 31 March 2021 (593) (12) (129) (32) (52) (211) (1,029)
Retirement of fully depreciated assets 107 402
- - - - 509
Charge for the year (43) (4) (113) - (697) (106) (963)
At 31 March 2022 (636) (16) (135) (32) (347) (317) (1,483)
Retirement of fully depreciated assets 83 687
- - - - 770
Charge for the year (46) (4) (158) - (680) (106) (994)
At 31 March 2023 (682) (20) (210) - (340) (423) (1,707)
Net book value
At 31 March 2023 1,724 39 437 - 1,351 452 4,003
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 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 Doncaster Security 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 Total
31 March 2023 31 March 2022 31 March 2023 31 March 2022 31 March 2023 31 March 2022
£000 £000 £000 £000 £000 £000
At the beginning of the year - 8,698 - 5,022 - 13,720
Share of results (see below) - 2,413 - 1,264 - 3,677
Dividends - (211) - (224) - (435)
Acquisition of remaining interest - - -
(10,900) (6,062) (16,962)
Share of net assets - - - - - -
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
£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 - -
Please see the accounts for the year ended 31 March 2022 for full disclosure
of the acquisition.
15. VALUATION OF INVESTMENT PROPERTY
Deemed cost Revaluation on deemed cost Valuation
£000 £000 £000
Freehold stores
At 31 March 2022 908,266 1,392,733 2,300,999
Transfer from investment property under construction 28,141 11,147 39,288
Transfer from leasehold stores 1,182 2,843 4,025
Movement in year 40,285 34,018 74,303
At 31 March 2023 977,874 1,440,741 2,418,615
Leasehold stores
At 31 March 2022 21,732 19,468 41,200
Transfer to freehold stores (1,182) (2,843) (4,025)
Movement in year 274 (6,424) (6,150)
At 31 March 2023 20,824 10,201 31,025
Total of open stores
At 31 March 2022 929,998 1,412,201 2,342,199
Transfer from investment property under construction 28,141 11,147 39,288
Movement in year 40,559 27,594 68,153
At 31 March 2023 998,698 1,450,942 2,449,640
Investment property under construction
At 31 March 2022 211,853 73,547 285,400
Transfer to investment property (28,141) (11,147) (39,288)
Movement in year 72,063 (57,455) 14,608
At 31 March 2023 255,775 4,945 260,720
Valuation of all investment property
At 31 March 2022 1,141,851 1,485,748 2,627,599
Movement in year 112,622 (29,861) 82,761
At 31 March 2023 1,254,473 1,455,887 2,710,360
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 year.
The Group's freehold and leasehold investment properties have been valued at
31 March 2023 by external valuers, Jones Lang Lasalle ("JLL"). The Valuation
has been prepared in accordance with the version of the RICS Valuation -
Global Standards (incorporating the International Valuation Standards) and the
UK national supplement ("the Red Book") current as at the valuation date.
The valuation of each of the investment properties and the investment
properties under construction has been prepared on the basis of either Fair
Value or Fair Value as a fully equipped operational entity, having regard to
trading potential, as appropriate.
The valuation has been provided for financial reporting purposes and as such,
is a Regulated Purpose Valuation as defined in the Red Book. In compliance
with the disclosure requirements of the Red Book, JLL have confirmed that:
• this is JLL's second annual valuation for these purposes on behalf of the
Group;
• JLL do not provide other significant professional or agency services to the
Group;
• in relation to the preceding financial year of JLL, the proportion of the
total fees payable by the Group to the total fee income of the firm is less
than 5%; and
• the fee payable to JLL is a fixed amount per asset and is not contingent on
the appraised value.
The self storage properties have been valued on the basis of Fair Value as
fully equipped operational entities, having regard to trading potential. Due
to the specialised nature and use of the buildings the approach is to adopt a
profits method of valuation in an explicit Discounted Cash Flow calculation
and then consider the results in the context of recent comparable evidence of
transactions in the sector.
The profits method requires an estimate of the future cash flow that can be
generated from the use of the building as a self storage facility, assuming a
reasonably efficient operator. Judgements are made as to the trading
potential and likely long term sustainable occupancy. Stable occupancy
depends upon the nature of demand, size of property and nearby competition,
and allows for a reasonable vacancy rate to enable the operator to sell units
to new customers. The cash flow runs for an explicit period of 10 years, after
which it is capitalised at an all risks yield which reflects the implicit
future growth of the business, or a hypothetical sale. This is a valuer's
shortcut: maintaining the cash flow into perpetuity would provide the same
result. The comparison with recent transactions requires the evidence to be
considered in terms of the multiple on net operating profit (or
EBITDA/EBITDAR), value per square foot, yield profile etc and then adjusted to
reflect differences in location, building factors, tenure, trading maturity
and trading risk.
This mirrors the typical approach of purchasers in the self storage market.
However, in view of the relatively limited availability of comparable market
evidence this requires a degree of valuer judgment. In particular, most of the
transactions have comprised share sales due to the nature of the asset class
and the terms of those transactions have mostly been kept confidential between
the parties.
Portfolio Premium
JLL's valuation report confirms that the properties have been valued
individually but that if the portfolio was to be sold as a single lot or in
selected groups of properties, the total value could differ. JLL state that
in current market conditions they are of the view that there could be a
portfolio premium.
Assumptions
A. Net operating income is based on projected revenue received less projected
operating costs, which include a management fee to take account of
central/head office costs. The initial net operating income is calculated by
estimating the net operating income in the first 12 months following the
valuation date.
B. The net operating income in future years is calculated assuming either
straight-line absorption from day one actual occupancy or variable absorption
over years one to five of the cash flow period, to an estimated
stabilised/mature occupancy level. In the valuation the assumed stabilised
occupancy level for the 108 trading stores (both freeholds and leaseholds)
open at 31 March 2023 averages 88% (31 March 2022: 88%). The projected
revenues and costs have been adjusted for estimated cost inflation and revenue
growth.
C. The future rental growth incorporated into the valuation averages 2.6% per
annum (2022: 2.8% per annum)
D. The capitalisation rates applied to existing and future net cash flow have
been estimated by reference to underlying yields for asset types such as
industrial, distribution and retail warehousing, yields for other trading
property types such as student housing and hotels, bank base rates, ten-year
money rates, inflation and the available evidence of transactions in the
sector. The valuation included in the accounts assumes rental growth in
future periods. The net initial yield for the 108 stores is 5.3% (31 March
2022: 5.2%). The weighted average exit capitalisation rate adopted (for both
freeholds and leaseholds) is 5.6% (31 March 2022: 5.5%).
E. The future net cash flow projections (including revenue growth and cost
inflation) have been discounted at a rate that reflects the risk associated
with each asset. The weighted average annual discount rate adopted (for both
freeholds and leaseholds) is 7.1% (31 March 2022: 7.1%).
F. Purchaser's costs of 6.8% have been adopted reflecting current progressive
Stamp Duty Land Tax rates.
Short leasehold
The same methodology has been used as for freeholds, but the exit
capitalisation rate is adjusted to reflect the unexpired lease term at exit.
The average unexpired term of the Group's six short leasehold properties is
12.2 years (31 March 2022: 14.0 years unexpired).
Sensitivities
As noted in 'Significant judgements and key estimates', 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 the investment
property valuation 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 4.7% (4.3%) 1.1% (1.2%)
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.
Investment properties under construction
JLL have valued the stores in development adopting the same methodology as set
out above but on the basis of the cash flow projection expected for the store
at opening and after allowing for the outstanding costs to take each scheme
from its current state to completion and full fit-out. JLL have allowed for
holding costs and construction contingency, as appropriate. Five of the
schemes valued do not yet have planning consent and JLL have reflected the
planning risk in their valuation. The cost to complete for the investment
property under construction amounts to £217 million.
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% on the net value, as if they were sold directly as property
assets. The valuation is an asset valuation which 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 a deduction for operational cost 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 Group therefore instructed JLL to carry out an
additional valuation on the above basis, and this results in a higher property
valuation at 31 March 2023 of £2,815 million (£104.6 million higher than the
value recorded in the financial statements) translating to 56.5 pence per
share. We have included this revised valuation in the adjusted diluted net
asset calculation (see note 13).
16. TRADE AND OTHER RECEIVABLES
31 March 31 March
2023 2022
£000 £000
Current
Trade receivables 5,181 4,763
Other receivables 209 949
Prepayments and accrued income 2,924 2,044
8,314 7,756
Trade receivables are net of a bad debt provision of £1,070,000 (2022:
£563,000). The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
The Financial Review contains commentary on the Capital Goods Scheme
receivable.
Trade receivables
The Group does not typically offer credit terms to its customers, requiring
them to pay in advance of their storage period and hence the Group is not
exposed to significant credit risk. A late charge of 10% is applied to a
customer's account if they are more than 10 days overdue in their payment.
The Group provides for receivables on a specific basis. There is a right of
lien over the customers' goods, so if they have not paid within a certain time
frame, we have the right to sell the items they store to recoup the debt
owed. Trade receivables that are overdue are provided for based on estimated
irrecoverable amounts determined by reference to past default experience.
For individual storage customers, the Group does not perform credit checks,
however this is mitigated by the fact that these customers are required to pay
in advance, and also to pay a deposit ranging from one week to four weeks'
storage income. Before accepting a new business customer who wishes to use a
number of the Group's stores, the Group uses an external credit rating to
assess the potential customer's credit quality and defines credit limits by
customer. There are no customers who represent more than 5% of the total
balance of trade receivables.
Included in the Group's trade receivables balance are debtors with a carrying
amount of £779,000 (2022: £713,000) which are past due at the reporting date
for which the Group has not provided as there has not been a significant
change in credit quality and the amounts are still considered recoverable. The
average age of these receivables is 16 days past due (2022: 18 days past due).
The creation and release of credit loss allowances have been included in cost
of sales in the income statement.
The Group measures the loss allowance for the trade receivables at an amount
equal to lifetime expected credit loss. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to past
default experience of the debtor. The Group provides in full against all
receivables due over 45 days past due because historical experience has
indicated that these receivables are generally not recoverable.
There has been no change in the estimation techniques or significant
assumptions made during the current reporting period.
The Group writes off a trade receivable when there is information indicating
that the debtors are in severe financial difficulty and there is no realistic
prospect of recovery, e.g. when the debtor has been placed under liquidation
or has entered into bankruptcy proceedings.
The following table details the risk profile of trade receivables based on the
Group's provision matrix:
Year ended 31 March 2023 Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.2% 16.2% 19.9% 100% 17.1%
Gross carrying amount (£000) 4,413 850 84 904 6,251
Lifetime ECL (£000) (11) (138) (17) (904) (1,070)
Net trade receivables at 31 March 2023 4,402 712 67 - 5,181
Year ended 31 March 2022 Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.2% 10.4% 20.5% 100% 10.6%
Gross carrying amount (£000) 4,058 733 71 464 5,326
Lifetime ECL (£000) (8) (77) (14) (464) (563)
Net trade receivables at 31 March 2022 4,050 656 57 - 4,763
The above balances are short term and therefore the difference between the
book value and the fair value is not significant. Consequently, these have not
been discounted.
Movement in the credit loss allowance
2023 2022
£000
£000
Balance at the beginning of the year 563 223
Credit loss allowance consolidated on Armadillo acquisition - 41
Amounts provided in year 826 463
Amounts written off as uncollectible (319) (164)
Balance at the end of the year 1,070 563
The concentration of credit risk is limited due to the customer base being
large and unrelated. Accordingly, the Directors believe that there is no
further credit provision required in excess of the credit loss allowance.
17. TRADE AND OTHER PAYABLES
31 March 31 March
2023 2022
£000 £000
Current
Trade payables 4,208 5,705
Other payables 18,199 13,762
Accruals and deferred income 34,868 27,882
57,275 47,349
The Group has financial risk management policies in place to ensure that all
payables are paid within the credit terms. The Directors consider the
carrying amount of trade and other payables and accruals and deferred income
approximates fair value.
The Group invoices its customers in advance, and hence any deferred income
balance primarily relates to amounts paid by customers for rental periods
beyond the balance sheet date. The Groups' deferred income balance at 31
March 2023 was £17.3 million, an increase of 9% from 31 March 2022 (£15.8
million). This reflects the growth in the Group's revenue during the year.
18. FINANCIAL INSTRUMENTS
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising the return to stakeholders
through the optimisation of the debt and equity balance. The capital structure
of the Group consists of debt, which includes the borrowings disclosed in note
19, cash and cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings.
With the exception of derivative instruments which are classified as a
financial liability at fair value through the statement of comprehensive
income, financial liabilities are categorised under amortised cost. The
Group has the following classes of financial assets:
· Trade and other receivables - trade receivables are initially
recognised at transaction price. Other receivables are initially recognised
at fair value. Subsequently these assets are measured at amortised cost
using the effective interest method, less provision for expected credit losses
· Cash and cash equivalents - cash and cash equivalents represent only
liquid assets with maturity of 90 days or less. Bank overdrafts that
cannot be offset against other cash balances are shown with borrowings in
current liabilities on the balance sheet. Cash and cash equivalents are also
classified as amortised cost. They are subsequently measured at amortised
cost. Cash and cash equivalents include cash in hand, deposits at call with
banks, and other short term highly liquid investments with original maturities
of three months or less.
Exposure to credit and interest rate risks arise in the normal course of the
Group's business. Derivative financial instruments are used to manage
exposure to fluctuations in interest rates but are not employed for
speculative purposes.
A. Balance sheet management
The Group's Board reviews the capital structure on an ongoing basis. As part
of this review, the Board considers the cost of capital and the risks
associated with each class of capital. The Group seeks to have a conservative
gearing ratio (the proportion of net debt to equity). The Board considers at
each review the appropriateness of the current ratio in light of the above.
The Board is currently satisfied with the Group's gearing ratio.
The gearing ratio at the year-end is as follows:
2023 2022
£000
£000
Debt (494,927) (420,435)
Cash and cash equivalents 8,329 8,605
Net debt (486,598) (411,830)
Balance sheet equity 2,182,446 2,184,375
Net debt to equity ratio 22.3% 18.9%
B. Debt management
The Group currently borrows through a senior term loan, secured on 50 self
storage assets, a loan with Aviva Commercial Finance Limited secured on a
portfolio of 20 self storage assets, a £120 million loan from M&G
Investments Limited secured on a portfolio of 15 self storage assets. The
Group also has a $225 million shelf facility available from Pricoa Private
Capital (see note 19). Borrowings are arranged to ensure an appropriate
maturity profile and to maintain short-term liquidity. Funding is arranged
through banks and financial institutions with whom the Group has a strong
working relationship.
C. Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow
funds at both fixed and floating interest rates. The risk is managed by the
Group by maintaining an appropriate mix between fixed and floating rate
borrowings, and by the use of interest rate swap contracts. Hedging activities
are evaluated regularly to align with interest rate views and defined risk
appetite; ensuring optimal hedging strategies are applied, by either
positioning the balance sheet or protecting interest expense through different
interest rate cycles.
At 31 March 2023 the Group had one interest rate derivative in place - £35
million fixed at 0.88% (excluding the margin on the underlying debt
instrument) until June 2023.
Under interest rate swap contracts, the Group agrees to exchange the
difference between fixed and floating rate interest amounts calculated on
agreed notional principal amounts. Such contracts enable the Group to mitigate
the risk of changing interest rates on the fair value of issued fixed rate
debt held and the cash flow exposures on the issued variable rate debt held.
The fair value of interest rate swaps at the reporting date is determined by
discounting the future cash flows using the curves at the reporting date and
the credit risk inherent in the contract and is disclosed below. The average
interest rate is based on the outstanding balances at the end of the financial
year.
The £35 million interest rate swap settles on a three-monthly basis. The
floating rate on the interest rate swap is three month SONIA. The Group
settles the difference between the fixed and floating interest rate on a net
basis.
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 statement of
comprehensive income. A reconciliation of the movement in derivatives is
provided in the table below:
2023 2022
£000
£000
At 1 April 885 (475)
Fair value of Armadillo derivatives on acquisition of remaining interest - (29)
Receipt from cancellation of interest rate derivatives (436)
Fair value movement in the year (133) 1,389
At 31 March 316 885
The interest rate derivative asset is shown within current assets at the year
end, as the interest rate derivative expires within 12 months of the balance
sheet date.
The tables below reconcile the opening and closing balances of the Group's
finance related liabilities for the current and prior year:
Financial liabilities measured at amortised cost Financial liabilities measured at fair value
Loans Obligations under lease liabilities
£000 £000 Interest rate derivatives
£000 Total
£000
At 1 April 2022 (420,435) (20,676) 885 (440,226)
Acquisition of Oxford freehold - 1,671 - 1,671
Cash movement in the year (74,492) 1,267 (436) (73,661)
Lease variations - (1,958) - (1,958)
Fair value movement - - (133) (133)
At 31 March 2023 (494,927) (19,696) 316 (514,307)
The difference between the loans balance above and the balance sheet is loan
arrangement fees of £2,357,000.
Financial liabilities measured at amortised cost Financial liabilities measured at fair value
Loans Obligations under lease liabilities
£000 £000 Interest rate derivatives
£000 Total
£000
At 1 April 2021 (337,300) (17,928) (475) (355,703)
Cash movement in the year (32,235) 1,384 - (30,851)
Acquisition of remaining interest in Armadillo (50,900) (4,862) (29) (55,791)
Impairment of Cheadle lease - 1,944 - 1,944
Lease variations - (1,214) - (1,214)
Fair value movement - - 1,389 1,389
At 31 March 2022 (420,435) (20,676) 885 (440,226)
The difference between the loans balance above and the balance sheet is loan
arrangement fees of £2,455,000
D. Interest rate sensitivity analysis
In managing interest rate risks the Group aims to reduce the impact of
short-term fluctuations on the Group's earnings, without jeopardising its
flexibility. Over the longer term, permanent changes in interest rates may
have an impact on consolidated earnings. At 31 March 2023, it is estimated
that an increase of 0.25 percentage points in interest rates would have
reduced the Group's adjusted profit before tax and net equity by £753,000
(2022: reduced adjusted profit before tax by £493,000) and a decrease of 0.25
percentage points in interest rates would have increased the Group's adjusted
profit before tax and net equity by £753,000 (2022: increased adjusted profit
before tax by £493,000). The sensitivity has been calculated by applying
the interest rate change to the variable rate borrowings, net of interest rate
swaps, at the year end.
The Group's sensitivity to interest rates has increased during the year,
following the increase in the amount of floating rate debt. The Board
monitors closely the exposure to the floating rate element of our debt.
E. Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, who have built an appropriate liquidity risk management framework
for the management of the Group's short, medium, and long-term funding and
liquidity management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities. Included
in note 19 is a description of additional undrawn facilities that the Group
has at its disposal to further reduce liquidity risk.
Short term money market deposits are used to manage liquidity whilst
maximising the rate of return on cash resources, giving due consideration to
risk.
F. Foreign currency management
The Group does not have any foreign currency exposure.
G. Credit risk
The credit risk management policies of the Group with respect to trade
receivables are discussed in note 16. The Group has no significant
concentration of credit risk, with exposure spread over 73,000 occupied rooms
in our stores.
The credit risk on liquid funds is limited because the counterparties are
banks with high credit-ratings assigned by international credit-rating
agencies.
H. Financial maturity analysis
In respect of interest-bearing financial liabilities, the following table
provides a maturity analysis for individual elements.
2023 Maturity
Less than one year One to two years Two to five years More than five years
Total £000 £000 £000 £000
£000
Debt
Aviva loan 158,927 3,159 3,317 7,451 145,000
M&G loan payable at variable rate 85,000 - - - 85,000
M&G loan fixed by interest rate derivatives 35,000 - - 35,000
-
Bank loan payable at variable rate 216,000 - 216,000 - -
Total 494,927 3,159 219,317 7,451 265,000
2022 Maturity
Less than one year One to two years Two to five years More than five years
Total £000 £000 £000 £000
£000
Debt
Aviva loan 161,935 3,008 3,159 10,459 145,309
M&G loan payable at variable rate 85,000 - 85,000 - -
M&G loan fixed by interest rate derivatives 35,000 35,000 - -
-
Bank loan payable at variable rate 99,000 - - 99,000 -
Armadillo loan fixed by interest rate derivatives 26,350 26,350 - -
-
Armadillo loan payable at variable rate 13,150 13,150 - -
-
Total 420,435 3,008 162,659 109,459 145,309
I. Fair values of financial instruments
The fair values of the Group's cash and short-term deposits and those of other
financial assets equate to their book values. Details of the Group's
receivables at amortised cost are set out in note 16. The amounts are
presented net of provisions for doubtful receivables, and allowances for
impairment are made where appropriate. Trade and other payables, including
bank borrowings, are carried at amortised cost. Obligations under lease
liabilities are included at the present value of their minimum lease payments.
Derivatives are carried at fair value.
For those financial instruments held at valuation, 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 7. The hierarchy
gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure fair value fall within different
levels of the hierarchy, the category level is based on the lowest priority
level input that is significant to the fair value measurement of the
instrument in its entirety. The fair value of the Group's outstanding
interest rate derivatives, as detailed in note 18C, have 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 7. There are no financial instruments which have been categorised as
Level 1 or Level 3. The fair value of the Group's debt equates to its book
value.
J. Maturity analysis of financial liabilities
The contractual maturities based on market conditions and expected yield
curves prevailing at the year-end date are as follows:
2023 Trade and other payables Borrowings and Obligations under lease liabilities Total
£000 Interest rate swaps interest £000 £000
£000 £000
From five to twenty years - - 278,104 21,766 299,870
From two to five years - - 40,726 4,101 44,827
From one to two years - - 237,652 2,048 239,700
Due after more than one year - - 556,482 27,915 584,397
Due within one year 22,407 (289) 26,566 2,048 50,732
Total 22,407 (289) 583,048 29,963 635,129
2022 Trade and other payables Borrowings and Obligations under lease liabilities Total
£000 Interest rate swaps interest £000 £000
£000 £000
From five to twenty years - - 153,835 22,765 176,600
From two to five years - - 126,541 5,432 131,973
From one to two years - (174) 172,163 1,989 173,978
Due after more than one year - (174) 452,539 30,186 482,551
Due within one year 19,467 (608) 15,869 1,989 36,717
Total 19,467 (782) 468,408 32,175 519,268
K. Reconciliation of maturity analyses
The maturity analysis in note 18J shows non-discounted cash flows for all
financial liabilities including interest payments. The table below
reconciles the borrowings column in note 19 with the borrowings and interest
column in the maturity analysis presented in note 18J.
2023 Unamortised borrowing costs Borrowings and
£000 interest
Borrowings Interest £000
£000 £000
From five to twenty years 265,000 11,316 1,788 278,104
From two to five years 7,451 33,275 - 40,726
From one to two years 219,317 17,766 569 237,652
Due after more than one year 491,768 62,357 2,357 556,482
Due within one year 3,159 23,407 - 26,566
Total 494,927 85,764 2,357 583,048
2022 Unamortised borrowing costs Borrowings and
£000 interest
Borrowings Interest £000
£000 £000
From five to twenty years 145,309 7,156 1,370 153,835
From two to five years 109,459 16,533 549 126,541
From one to two years 162,659 8,968 536 172,163
Due after more than one year 417,427 32,657 2,455 452,539
Due within one year 3,008 12,861 - 15,869
Total 420,435 45,518 2,455 468,408
19. BORROWINGS
31 March 31 March
Secured borrowings at amortised cost 2023 2022
£000 £000
Current liabilities
Aviva loan 3,159 3,008
3,159 3,008
Non-current liabilities
Bank borrowings 216,000 99,000
Armadillo loans - 39,500
Aviva loan 155,768 158,927
M&G loan 120,000 120,000
Unamortised loan arrangement costs (2,357) (2,455)
Total non-current borrowings 489,411 414,972
Total borrowings 492,570 417,980
The weighted average interest rate paid on the borrowings during the year was
4.2% (2022: 2.8%).
The Group has £24 million in undrawn committed bank borrowing facilities at
31 March 2023, which expire after between one and two years (2022: £141
million expiring after between two and three years).
The Group has a £158.9 million fixed rate loan with Aviva Commercial Finance
Limited, expiring in September 2028. The loan is secured over a portfolio of
20 freehold self storage centres. The annual fixed interest rate on the loan
is 3.4%. The loan has an amortising element of £13.9 million which runs
to April 2027.
The Group has a secured £240 million five year revolving bank facility with
Lloyds, HSBC and Bank of Ireland expiring in October 2024, with a margin of
1.25%.
The Armadillo loans were repaid during the year using the RCF bank facility.
The Group has a £120 million loan with M&G Investments Limited, with a
bullet repayment in September 2029. The loan is secured over a portfolio of
15 freehold self storage centres.
In addition to the facilities above, during the year, 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 two and a half years with terms of
between 7 and 15 years at short notice, typically 10 days.
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.
The Group repaid the Armadillo debt facilities during the year (£39.5 million
drawn). The movement has been shown net in the cash flow statement. The
other Group loans are not revolving, and any movements in those loans are
disclosed in a footnote to note 26B.
The Group was in compliance with its banking covenants at 31 March 2023 and
throughout the year. The principal covenants are summarised in the table
below:
Covenant Covenant level At 31 March 2023
Consolidated EBITDA Minimum 1.5x 7.2x
Consolidated net tangible assets Minimum £250m £2,182.4m
Bank loan interest cover Minimum 1.75x 9.1x
Aviva loan interest service cover ratio Minimum 1.5x 5.9x
Aviva loan debt service cover ratio Minimum 1.2x 3.8x
M&G interest cover Minimum 1.5x 4.9x
The Consolidated EBITDA covenant is calculated by dividing the consolidated
EBITDA generated by the Group's stores by the Group's consolidated net finance
costs.
The bank loan interest cover, the Aviva loan interest service cover ratio and
the M&G interest cover covenants are calculated by dividing the EBITDA
generated by each loan's security pool by the interest payable for each loan
for each defined time period. The Aviva loan debt service cover ratio is
calculated by taking the EBITDA generated by the Aviva security pool and
dividing by the Aviva loan interest payable and facility amortisation.
Interest rate profile of financial liabilities
Floating rate Weighted average interest rate Period for which the rate is fixed Weighted average period until maturity
Total £000 Fixed rate
£000 £000
At 31 March 2023
Gross financial liabilities 494,927 301,000 193,927 4.7% 4.8 years 3.9 years
At 31 March 2022
Gross financial liabilities 420,435 197,150 223,285 3.1% 4.6 years 3.4 years
All monetary liabilities, including short-term receivables and payables are
denominated in sterling. The weighted average interest rate includes the
effect of the Group's interest rate derivatives. The Directors have concluded
that the carrying value of borrowings approximates to its fair value.
Narrative disclosures on the Group's policy for financial instruments are
included within the Strategic Report and in note 18.
20. DEFERRED TAX
Deferred tax assets in respect of IFRS 2 £0.1 million (2022: £0.1 million),
corporation tax losses £6.3 million (2022: £6.5 million), capital allowances
in excess of depreciation £0.2 million (2022: £0.3 million) and capital
losses £2.1 million (2022: £2.1 million) in respect of the non-REIT taxable
business have not been recognised as it is not considered probable that
sufficient taxable profits will arise in the relevant taxable entity. The
unused tax losses can be carried forward indefinitely.
21. OBLIGATIONS UNDER LEASE LIABILITIES
Minimum lease payments Present value of minimum lease payments
2023 2022 2023 2022
£000
£000
£000 £000
Amounts payable under lease liabilities:
Within one year 2,048 1,989 2,020 1,958
Within two to five years inclusive 6,149 7,421 5,652 6,651
Greater than five years 21,766 22,765 12,024 12,067
29,963 32,175 19,696 20,676
Less: future finance charges (10,267) (11,499)
Present value of lease liabilities 19,696 20,676
All obligations under lease liabilities are denominated in sterling.
Interest rates are fixed at the contract date. All leases are on a fixed
repayment basis and no arrangements have been entered into for contingent
rental payments. The carrying amount of the Group's lease obligations
approximates their fair value.
22. SHARE CAPITAL
Called up, allotted, and fully paid
2023 2022
£000
£000
Ordinary shares of 10 pence each 18,427 18,397
Movement in issued share capital
Number of shares at 31 March 2021 175,880,470
Issue of shares - placing 7,751,938
Exercise of share options - Share option schemes 334,970
Number of shares at 31 March 2022 183,967,378
Exercise of share options - Share option schemes 298,595
Number of shares at 31 March 2023 184,265,973
The share capital of the Company consists only of fully paid ordinary shares
with a nominal (par) value of £0.10 per share. There are no restrictions on
the ability of shareholders to receive dividends, nor on the repayment of
capital. All ordinary shares are equally eligible to receive dividends and
the repayment of capital in accordance with the Company's Articles of
Association and represent one vote at shareholders' meetings of the Company.
At 31 March 2023 options in issue to Directors and employees were as follows:
Option price per ordinary share Date first exercisable Number of ordinary shares Number of ordinary shares
2022
Date option Date on which the exercise period expires 2023
Granted
29 July 2014 nil p** 29 July 2017 29 July 2024 - 830
21 July 2015 nil p** 21 July 2018 21 July 2025 989 1,989
22 July 2016 nil p** 22 July 2019 21 July 2026 1,944 2,944
2 August 2017 nil p** 2 August 2020 2 August 2027 5,809 5,809
13 March 2018 675.4p* 1 April 2021 1 April 2022 - 1,599
24 July 2018 nil p** 24 July 2021 24 July 2028 54,441 96,002
11 March 2019 749.9p* 1 April 2022 1 April 2023 - 46,996
19 July 2019 nil p ** 19 July 2022 19 July 2029 170,545 353,920
2 March 2020 947.0p 1 April 2023 1 April 2024 43,016 48,241
5 August 2020 nil p ** 5 August 2023 5 August 2030 372,757 398,146
1 March 2021 903.2p * 1 April 2024 1 April 2025 81,216 86,670
22 July 2021 nil p ** 22 July 2024 22 July 2031 300,444 319,922
8 August 2022 1060.3p * 8 August 2025 8 February 2026 72,429 -
21 July 2022 nil p ** 21 July 2025 21 July 2032 443,218 -
1,546,808 1,363,068
* SAYE (see note 23) ** LTIP (see note 23)
Own shares
The own shares reserve represents the cost of shares in Big Yellow Group PLC
purchased in the market and held by the Big Yellow Group PLC Employee Benefit
Trust, along with shares issued directly to the Employee Benefit Trust.
1,122,907 shares are held in the Employee Benefit Trust (2022: 1,122,907),
and no shares are held in treasury.
23. SHARE-BASED PAYMENTS
The Company has three equity share-based payment arrangements, namely an LTIP
scheme (with approved and unapproved components), an Employee Share Save
Scheme ("SAYE") and a Deferred Bonus Plan. The Group recognised a total
expense in the year related to equity-settled share-based payment transactions
of £3,735,000 (2022: £3,390,000).
Equity-settled share option plans
Since 2004 the Group has operated an Employee Share Save Scheme ("SAYE") which
allows any employee who has more than six months service to purchase shares at
a 20% discount to the average quoted market price of the Group shares at the
date of grant. The associated savings contracts are three years at which
point the employee can exercise their option to purchase the shares or take
the amount saved, including interest, in cash. The scheme is administered by
Globalshares.
On an annual basis since 2004 the Group awarded nil-paid options to senior
management under the Group's Long Term Incentive Plan ("LTIP"). The awards
are conditional on the achievement of challenging performance targets as
described in the Remuneration Report. The awards granted in 2019 vested to
90.1% of their potential. The weighted average share price at the date of
exercise for options exercised in the year was £13.13 (2022: £14.84).
LTIP scheme 2023 2022
No. of options No. of options
Outstanding at beginning of year 1,179,562 1,223,533
Granted during the year 504,431 382,433
Lapsed during the year (83,846) (176,404)
Exercised during the year (250,000) (250,000)
Outstanding at the end of the year 1,350,147 1,179,562
Exercisable at the end of the year 107,656 124,901
The weighted average fair value of options granted during the year was
£2,795,000 (2022: £1,742,000).
Participants pay the nominal value of the shares when exercising options under
the LTIP scheme.
Options outstanding at 31 March 2023 had a weighted average contractual life
of 7.9 years (2022: 8.1 years).
Employee Share Save Scheme ("SAYE") 2023 2023 2022 2022
No. of options Weighted average exercise price No of options Weighted average exercise price
(£)
(£)
Outstanding at beginning of year 183,506 8.75 281,708 8.15
Granted during the year 72,715 10.60 - -
Forfeited during the year (10,965) 9.29 (13,232) 8.92
Exercised during the year (48,595) 7.50 (84,970) 6.76
Outstanding at the end of the year 196,661 9.71 183,506 8.75
Exercisable at the end of the year - -
Options outstanding at 31 March 2023 had a weighted average contractual life
of 1.7 years (2022: 1.6 years).
The inputs into the Black-Scholes model for the options granted during the
year are as follows:
LTIP SAYE
Expected volatility n/a 27%
Expected life 3 years 3 years
Risk-free rate 0.04% 0.04%
Expected dividends 2.6% 2.9%
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the year prior to grant.
Deferred bonus plan
The Executive Directors receive awards under the Deferred Bonus Plan. This
is accounted for as an equity instrument. The plan was set up in July
2018. The vesting criteria and scheme mechanics are set out in the
Directors' Remuneration Report.
24. CAPITAL COMMITMENTS
At 31 March 2023 the Group had £6.1 million of amounts contracted but not
provided in respect of the Group's properties (2022: £20.9 million of capital
commitments).
25. EVENTS AFTER THE BALANCE SHEET DATE
There are no reportable post balance sheet events.
26. CASH FLOW NOTES
a) Reconciliation of profit after tax to cash generated from operations
Note 2023 2022
£000
£000
Profit after tax 73,332 697,274
Taxation 1,977 1,602
Share of profit of associates - (3,677)
Other operating income 3 (2,185) -
Investment income (9) (1,412)
Finance costs 17,027 10,604
Operating profit 90,142 704,391
Loss/(gain) on the revaluation of investment properties 14a, 15 29,861 (597,224)
Gain on disposal of investment property - (584)
Depreciation of plant, equipment, and owner-occupied property 14b 888 857
Depreciation of lease liability capital obligations 14a,14b 1,569 1,659
Employee share options 6 3,735 3,390
Cash generated from operations pre working capital movements 126,195 112,489
Increase in inventories (13) (71)
(Increase)/decrease in receivables (740) 1,550
Increase in payables 3,531 6,422
Cash generated from operations 128,973 120,390
b) Reconciliation of net cash flow movement to net debt
Note 2023 2022
£000
£000
Net decrease in cash and cash equivalents in the year (276) (3,717)
Cash flow from increase in debt financing(1) (74,492) (32,235)
Change in net debt resulting from cash flows (74,768) (35,952)
Debt consolidated following Armadillo acquisition - (50,900)
Movement in net debt in the year (74,768) (86,852)
Net debt at the start of the year (411,830) (324,978)
Net debt at the end of the year 18A (486,598) (411,830)
(1) Made up of a net increase of £117.0 million in the RCF facility,
repayment of the Armadillo loans of £39.5 million and repayments of the Aviva
facility of £3.0 million (2022: made up of a net reduction of £53.5 million
in the RCF facility, an increase of £50 million in the M&G facility, an
increase of £50 million in the Aviva facility, repayments of the Aviva
facility of £2.9 million, and repayments of the Armadillo loans of £11.4
million).
In line with IAS 1.41, this disclosure note has been represented to provide
further detail and consistency in both years.
27. 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.
Transactions with Armadillo
As described in note 14, 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
in 2021, 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.
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 year AnyJunk
Limited provided waste disposal services to the Group on normal commercial
terms, amounting to £16,000 (2022: £10,000).
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. In 2021, 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 £3,000
during the year (2022: £3,000). The Group sponsored a performance of the
London Children's Ballet during the year, amounting to £8,000 (2022: £nil).
Doncaster Security Operations Centre Limited ("DSOC")
The Group has invested £588,000 in DSOC. DSOC provided alarm and CCTV
monitoring services to the Group under normal commercial terms during the
year, amounting to £301,000 (2022: £281,000).
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 £8,000 (2022: £3,000).
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 (2022: £nil).
No other related party transactions took place during the years ended 31 March
2023 and 31 March 2022.
28. GLOSSARY
Absorption The rate of growth in occupancy assumed within the external property
valuations from the current occupancy level to the assumed stable occupancy
level.
Adjusted earnings growth The increase in adjusted eps year-on-year.
Adjusted eps Adjusted profit after tax divided by the diluted weighted average number of
shares in issue during the financial year.
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, see note 10.
Average net achieved rent per sq ft Storage revenue divided by average occupied space over the financial year.
Average rental growth The growth in average net achieved rent per sq ft year-on-year.
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.
Consolidated EBITDA Consolidated EBITDA calculated in accordance with the terms of the Group's
Revolving Credit Facility Agreement.
Debt Long-term and short-term borrowings, as detailed in note 19, excluding lease
liabilities and debt issue costs.
Earnings per share (eps) Profit for the financial year attributable to equity shareholders divided by
the average number of shares in issue during the financial year.
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
financial year, see note 12.
EPRA NTA per share EPRA NTA divided by the diluted number of shares at the year end.
EPRA net tangible asset value (EPRA NTA) IFRS net assets excluding the mark-to-market on interest rate derivatives,
deferred taxation on property valuations where it arises, and intangible
assets. It is adjusted for the dilutive impact of share options.
Equity All capital and reserves of the Group attributable to equity holders of the
Company.
Gross property assets The sum of investment property and investment property under construction.
Gross value added The measure of the value of goods and services produced in an area, industry,
or sector of an economy.
Interest cover The ratio of operating cash flow divided by interest paid (before working
capital movements, 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 financial year in both the current financial year and comparative
figures. In 2023 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. In 2023 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.
Maximum lettable area (MLA) The total square foot (sq ft) available to rent to customers.
Move-ins The number of customers taking a storage room in the defined period.
Move-outs The number of customers vacating a storage room in the defined period.
NAV Net asset value.
Net debt Gross borrowings less cash and cash equivalents.
Net initial yield The forthcoming year's net operating income expressed as a percentage of
capital value, after adding notional purchaser's costs pre administrative
expenses.
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 (NPS) 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
others. The Company measures NPS based on surveys sent to all its move-ins
and move-outs.
Net Renewable Energy Positive Big Yellow's strategy is that by 2030 the Group will generate as much
renewable energy as it is able to across its store portfolio and meet any
remaining Scope 1 and Scope 2 emissions via the retirement of REGOs from
offsite energy generation.
Net rent per sq ft Storage revenue generated from in place customers divided by occupancy.
Net Zero Strategy The Group's published strategy to have Net Zero Scope 1, 2 and 3 Emissions.
Non like-for-like stores Stores excluded from like-for-like metrics, as they were acquired, opened or
closed in the current or preceding financial year. In 2023 this excludes
Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and the Armadillo
stores.
Occupancy The space occupied by customers divided by the MLA expressed as a %.
Occupied space The space occupied by customers in sq ft.
Other storage related income Packing materials, insurance, and other storage related fees.
Pipeline The Group's development sites.
Property Income Distribution (PID) A dividend, generally subject to withholding tax, that a UK REIT is required
to pay from its tax-exempt property rental business, and which is taxable for
UK-resident shareholders at their marginal tax rate.
REGO Renewable Energy Guarantees of Origin
REIT Real Estate Investment Trust. A tax regime which in the UK exempts
participants from corporation tax both on UK rental income and gains arising
on UK investment property sales, subject to certain conditions.
REVPAF Total store revenue divided by the average maximum lettable area in the
period.
Store EBITDA Store earnings before interest, tax, depreciation, and amortisation, see
reconciliation in the portfolio summary.
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.
Ten Year Summary
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
£m £m £m £m £m £m £m £m £m £m
Results
Revenue 188.8 171.3 135.2 129.3 125.4 116.7 109.1 101.4 84.3 72.2
Operating profit before gains and losses on property assets
120.0 106.6 81.5 80.0 76.7 70.9 65.3 59.9 48.4 39.5
Cash flow from operating activities
112.0 107.1 76.7 73.6 72.2 63.0 56.0 55.5 42.4 32.8
Profit before taxation 75.3 698.9 265.8 93.4 126.9 134.1 99.8 112.2 105.2 59.8
Adjusted profit before taxation
106.0 96.8 74.6 71.0 67.5 61.4 54.6 49.0 39.4 29.2
Net assets 2,182.4 2,184.4 1,453.9 1,163.9 1,123.9 981.1 890.4 829.4 750.9 594.1
Diluted EPRA earnings per share
56.5p 52.5p 42.4p 42.1p 41.4p 38.5p 34.5p 31.1p 27.1p 20.5p
Declared total dividend per share
45.2p 42.0p 34.0p 33.8p 33.2p 30.8p 27.6p 24.9p 21.7p 16.4p
Key statistics
Number of stores open** 108 105 78 75 74 74 73 71 69 66
Store MLA (000 sq ft) 6,292 6,098 4,930 4,688 4,622 4,631 4,551 4,464 4,344 4,170
Sq ft occupied (000)** 5,088 5,107 4,201 3,781 3,810 3,730 3,551 3,363 3,178 2,832
Occupancy (decrease)/ increase in year (000 sq ft)*
(19) 906 420 (29) 80 179 188 185 346 200
Closing net rent per sq ft** £32.48 £29.92 £28.71 £28.15 £27.28 £26.74 £26.03 £25,90 £25.23 £24.85
Number of occupied rooms** 73,000 73,000 62,000 56,500 56,000 55,000 52,500 50,000 47,250 41,800
Average number of employees during the year**
465 427 370 361 347 335 329 318 300 289
* - the occupancy growth in 2015, 2017, 2022 and 2023 includes the acquisition
of existing stores
** - from 2022 this includes the Armadillo stores, which the Group acquired
the remaining 80% of which it did not previously own on 1 July 2021
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