REG - Big Yellow Group PLC - RESULTS FOR THE YEAR ENDED 31 MARCH 2024
20/05/2024 16:45
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RNS Number : 1480P Big Yellow Group PLC 20 May 2024
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the YEAR ended 31 MARCH 2024
HIGHLIGHTS
Financial metrics Year ended Year ended
31 March 2024
31 March 2023
Change
Revenue £199.6m £188.8m 6%
Store revenue((1)) £197.1m £186.7m 6%
Like-for-like store revenue((1,2)) £193.5m £185.6m 4%
Store EBITDA((1)) £143.0m £134.0m 7%
Adjusted profit before tax((1)) £107.3m £106.0m 1%
Adjusted earnings per share((1)) 55.9p 56.5p (1%)
Dividend - final 22.6p 22.9p (1%)
- total 45.2p 45.2p -
Statutory metrics
Profit before tax £241.0m £75.3m 220%
Cash flow from operating activities (after net finance costs and pre-working
capital movements)((3))
£110.1m £109.2m 1%
Basic earnings per share 127.1p 40.1p 217%
Store metrics
Store Maximum Lettable Area ("MLA")((1)) 6,419,000 6,292,000 2%
Closing occupancy (sq ft)((1)) 5,029,000 5,088,000 (1%)
Closing occupancy((1)) 78.3% 80.9% (2.6 ppts)
Closing occupancy - Big Yellow like-for-like stores (%)((1,4)) 80.9% 83.2% (2.3 ppts)
Average net rent per sq ft £33.64 £31.28 8%
Closing net rent per sq ft((1)) £34.14 £32.48 5%
(1) See note 28 for glossary of terms
(2) Excluding Aberdeen (acquired June 2022), Harrow and Kingston North (both
opened September 2022) and Kings Cross (opened June 2023)
(3) See reconciliation in Financial Review
(4) As per (2), additionally excluding the Armadillo stores
Highlights
• Revenue growth of 6%, with like-for-like store revenue up by 4%, driven by
increases in average achieved rents
• Big Yellow store like-for-like occupancy decrease of 2.3 ppts to 80.9% (March
2023: 83.2%). Closing occupancy, reflecting the additional capacity from
recently opened stores, is down 2.6 ppts
• Average achieved net rent per sq ft increased by 7.5% year on year, closing
net rent up 5.1% from March 2023
• Overall store EBITDA margin increased to 72.5% (2023: 71.8%)
• Cash flow from operating activities (after net finance costs and pre-working
capital movements) increased by 1% to £110.1 million
• Adjusted profit before tax up 1% to £107.3 million, adjusted earnings per
share down 1% to 55.9p
• 45.2 pence per share full year dividend, in line with prior year
• Statutory profit before tax of £241.0 million, up from £75.3 million in the
prior year, due to a revaluation gain of £131.2 million in the current year
• £300 million sustainability-linked revolving credit facility put in place
during the year
• £6 million invested in the year on solar retro-fit, 68 stores now have solar
with a 47% increase in capacity in the year to 6.6 Megawatts
Investment in new capacity
• £107 million (net of expenses) raised by way of a placing of 6.3% of the
Company's issued share capital to fund the build out of the development
pipeline
• Kings Cross opening and one extension added 127,000 sq ft of space; we have
committed to build a further seven stores (MLA of 448,000 sq ft) with all due
to open by Summer 2026
• Acquisition of freehold properties in Leicester and Leamington Spa (the latter
post year-end), taking the pipeline to 12 development sites and two
replacement stores of approximately 1.0 million sq ft (15% of current MLA), of
which 11 are in London or within close proximity. 1.4 million sq ft of fully
built vacant space is currently available for future growth
• Planning consent granted for new store in Wapping (London) and Epsom (London);
we now have eight of our 14 pipeline stores with planning
Nicholas Vetch CBE, Executive Chairman of Big Yellow, commented:
"The transition to higher interest rates has had the impact intended by
policymakers of subduing activity and Big Yellow has not been immune, although
it has again proved itself to be resilient with a healthy revenue increase and
EBITDA growth of 7%. The driver of this performance has been an increase in
net rents, partially offset by a decline in occupancy. As usual we caution
that we have limited visibility beyond a few weeks, but the period since the
year end has seen an encouraging pick-up in occupancy growth, closing the gap
with the prior year like-for-like occupancy to 0.7 ppts, and we expect
occupancy to continue to grow into our seasonally stronger summer trading
period.
The increase in revenue and EBITDA did not translate into a commensurate
growth in earnings as we absorbed a significant increase in interest expense,
but we believe that this impact is now behind us and indeed may well turn from
a head to a tailwind.
When we first conceived this business, now over 25 years ago, we were clear
that we would piece together a store portfolio of unparalleled quality,
largely focused on London and the South East. The performance of our
recently opened Kings Cross store, which has achieved 40,000 sq ft of
occupancy growth and was cashflow positive after 4 months, exemplifies the
benefit of this strategy.
The successful placing last October has given us the balance sheet strength to
commit to building out our pipeline. We now have an opportunity to generate
in excess of £50 million of net operating income from a combination of
delivering the income from our pipeline stores and leasing up the existing
fully built 1.4 million sq ft of vacant space to previously achieved levels of
occupancy, the majority of which would flow through to earnings.
We are entirely cognisant that delivering this growth will take time and is to
some degree subject to external forces, but we believe that it is achievable
and will be our predominant focus over the next few years."
ABOUT US
Big Yellow is the UK's brand leader in self storage. Big Yellow now operates
from a platform of 109 stores, including 24 stores branded as Armadillo Self
Storage. We have a pipeline of 1.0 million sq ft comprising 14 proposed Big
Yellow self storage facilities. The current maximum lettable area of the
existing platform (including Armadillo) is 6.4 million sq ft. When fully
built out the portfolio will provide approximately 7.4 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 2024.
The transition to higher interest rates has had the impact intended by
policymakers of subduing activity and Big Yellow has not been immune, although
it has again proved itself to be resilient with a healthy revenue increase and
EBITDA growth of 7%. The driver of this performance has been an increase in
net rents, partially offset by a decline in occupancy. As usual we caution
that we have limited visibility beyond a few weeks, but the period since the
year end has seen an encouraging pick-up in occupancy growth, closing the gap
with the prior year like-for-like occupancy to 0.7 ppts, and we expect
occupancy to continue to grow into our seasonally stronger summer trading
period.
The increase in revenue and EBITDA did not translate into a commensurate
growth in earnings as we absorbed a significant increase in interest expense,
but we believe that this impact is now behind us and indeed may well turn from
a head to a tailwind.
When we first conceived this business, now over 25 years ago, we were clear
that we would piece together a store portfolio of unparalleled quality,
largely focused on London and the South East. The performance of our
recently opened Kings Cross store, which has achieved 40,000 sq ft of
occupancy growth and was cashflow positive after 4 months, exemplifies the
benefit of this strategy.
Financial results
Revenue for the year was £199.6 million (2023: £188.8 million), an increase
of 6%. Like-for-like store revenue growth (see note 28) was 4% driven by
improvements in average net rent. Like-for-like store revenue excludes new
store openings and acquired stores. Store EBITDA was £143.0 million, an
increase of 7% from the prior year (2023: £134.0 million).
Store revenue for the fourth quarter was £48.9 million, an increase of 5.4%
from £46.4 million for the same quarter last year, with one additional day's
trading.
The Group's cash flow from operating activities (after net finance costs and
pre-working capital movements) increased by £0.9 million (1%) to £110.1
million for the year (2023: £109.2 million). The adjusted profit before tax
in the year was £107.3 million up 1% from £106.0 million in 2023. Adjusted
earnings per share decreased by 1% to 55.9p (2023: 56.5p).
The Group's statutory profit before tax was £241.0 million, an increase from
£75.3 million in the prior year. There was a revaluation surplus for the
current year of £131.2 million, compared to a deficit of £29.9 million in
the prior year. The surplus in the current year arises from an improvement
in cap rates, reflecting recent transactions in the sector, and operating cash
flow growth. The prior year deficit was due to a £57.5 million reduction in
the value of our industrial property and land without self storage planning in
the development pipeline, reflective of changed financing conditions and the
wider market environment for land.
Development pipeline
The pursuit of building first rate stores in first rate locations,
particularly in London, is a long and complex process. It has required a good
deal of persistence and patience and of course has created a significant drag
on earnings as we have held land for redevelopment sometimes for many years.
We now have planning consents for eight stores and have started the
construction process on seven of those. We have four large London sites in the
later stages of planning (including two at appeal) and although the vagaries
of the planning system mean we cannot be certain of positive outcomes, we
expect clarity by the Autumn.
In May 2022, we suspended construction on all projects that were not already
on site because conditions in the construction market were unfavourable.
Those conditions have improved considerably with steelwork and cladding
prices falling, and other material prices stabilising. In addition, we are
seeing on recent tenders that main contractors and specialist sub-contractors
are pricing new projects more competitively.
This is the most significant expansion of the Company's footprint for many
years, which is largely tangible and deliverable, with the new pipeline
stores, even by the high standards of our portfolio, improving the overall
quality.
Although we are not out of risk both in terms of planning and construction on
the existing pipeline we will increasingly turn our attention to acquiring new
sites and to that end have purchased in May 2024 for £3 million a first-class
property in Leamington Spa, that will also serve the university town of
Warwick.
In June, the Group acquired a 0.8 acre property for development on Belgrave
Gate, central Leicester for £1.85 million. We will be seeking planning
permission for a 58,000 sq ft self storage centre on the site.
Capital structure
It is our view that elevated levels of debt over cycles destroys value and so
it remains our long-term strategy to keep debt at modest levels. We believe
it is therefore optimal that future capital expenditure on new sites and the
£224 million of construction spend should be funded from cash flow, surplus
property sales and equity.
In October 2023 we raised £107 million (net of expenses) by way of a placing
of 6.3% of the Company's share capital. The net proceeds will be used to
expand capacity in London, our strongest market, and monetise land that we
already own. The placing has been marginally accretive to earnings in the
short term, and we expect it to be significantly so over the medium to long
term.
Net debt was £385.4 million at 31 March 2024 (2023: £486.6 million), and the
Group has undrawn committed facilities of £181 million. Approximately 50%
of our debt is fixed, with the balance floating, in line with our hedging
policy, and our current average cost of drawn debt is 5.4%.
The Group's interest cover for the year (expressed as the ratio of cash
generated from operations pre-working capital movements against interest paid)
was 5.6 times (2023: 7.7 times). This is currently approximately 6 times,
and the Group's net debt to EBITDA ratio is currently 3x.
The Group owns its assets largely freehold, representing some 99% by value of
our portfolio which has shielded us from the significant rise in industrial
and warehouse rents that has occurred over the last decade or more. We view
rent liabilities as quasi-debt. Following the relocation of Farnham Road,
Slough this summer and Staples Corner in due course (subject to planning) to
new freehold stores we expect our total rent liability to fall to
approximately £1 million per annum.
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 22.6
pence per share. This brings the total distribution declared for the year to
45.2 pence per share in line with the prior year.
Our people
Adrian Lee, who joined the business soon after its founding in early 1999,
retired from Big Yellow at the end of March. We had limited knowledge of
operational businesses at that time, and Adrian was key in establishing what
over the years has become a market leading self storage platform in the UK.
After 25 years, any statement is insufficient, but we are grateful for all his
efforts and successes over the last quarter of a century, and we have no doubt
he will remain in the Big Yellow orbit in the years to come.
We commenced a search to replace Adrian last year, and I am delighted to
announce that John Hunter has recently joined the business as our new Chief
Operating Officer. John started out in finance, and then moved into more
commercial roles, most recently as COO at Homeserve plc. Prior to that he
spent several years in operational roles at Dixons Carphone plc. We all look
forward to working with John and feel sure that he will make a positive
contribution to the continued success of Big Yellow.
Any successful business requires a fully engaged workforce, and our recent
engagement survey, with an average score of 88% across the business was very
pleasing, although improvement is a perpetual quest.
I would like to thank all of our people for their dedication and support in
what for many has been a personally difficult year with the impact of rises in
the cost of living and higher interest rates.
Outlook
The successful placing last October has given us the balance sheet strength to
commit to building out our pipeline. We now have an opportunity to
additionally generate in excess of £50 million of net operating income from a
combination of delivering the income from our pipeline stores and leasing up
the existing fully built 1.4 million sq ft of vacant space to previously
achieved levels of occupancy, the majority of which would flow through to
earnings.
We are entirely cognisant that delivering this growth will take time and is to
some degree subject to external forces, but we believe that it is achievable
and will be our predominant focus over the next few years.
Nicholas Vetch CBE
Executive Chairman
20 May 2024
CHIEF EXECUTIVE'S STATEMENT
Trading
We are pleased to have delivered another year of revenue and EBITDA growth
against a weaker demand environment, demonstrating the resilience of our
business model. Although activity levels were subdued in the first three
quarters of the year, we have seen a recovery in the fourth quarter, which has
continued into the current year.
Given this weaker demand environment, we continued to use rental growth, both
to new and existing customers, to drive revenue, and over the year our average
rate growth was 7.5% down from 9.8% in 2023. In addition, we have also
reduced our increases to existing customers in the fourth quarter, reflective
of a moderating inflationary environment.
Our principal objective in the current year, in an improving demand
environment, is to drive occupancy and have it make a meaningful contribution
to revenue growth which has not been the case over the last two years. Since
the year end, we have seen continued growth in occupancy, and our total
occupied space today is now broadly in line with last year, with current
like-for-like occupancy now down 0.7 ppts compared to the same period last
year.
The main driver in this current improvement in demand is from domestic
customers, who currently represent 68% of revenue and 63% of occupied space.
We believe this to be from a combination of improving consumer confidence in a
lower inflationary environment with real wage growth and improving activity
levels in the housing market since the new year; one barometer being mortgage
approvals to the owner-occupied market, which have recovered; in essence more
decisions are being made. Our business occupancy is largely flat since the
half year, but again we are beginning to see more demand, with prospects
largely flat, but move-ins up 2% since the start of January. Demand from
national customers (4% of our total revenue) continues to be robust, with
revenue growth year-on-year of 13%. Businesses currently occupy 37% of
space, unchanged from last year.
Over the year, revenue growth from our London and South East stores (75% of
our business) has outperformed the regions, however we saw an improved
performance in the regions in the fourth quarter which has continued into the
current year.
Investment in our operating platform and systems
Self storage operators are providers of secure storage, and in adopting
automation it is important not to lose sight of keeping our customers and
their possessions safe and secure. This requires an investment in technology
and automation, physical security, and in our view most importantly having
team members present in the centre during normal retail hours.
We will continue to invest in the security of our stores through providing
individually alarmed rooms/24 hours CCTV, monitoring of our stores overnight
and most importantly restricting which of our customers have access to our
stores when there are no team members present. About 15% of our customers -
typically businesses providing services and online traders - use and pay for
out of hours access, the balance of our customers are happy to use the centres
during normal trading hours, and all our feedback indicates that they
appreciate having team members present at the store.
Our store operating model is analogous to the car rental market. New
customers can select and reserve rooms and check-in online, including
uploading ID, all prior to arriving at a store. In essence the onboarding
process is online, however, our team members double check the customer ID,
review insurance, and take payment in store. In addition to dealing with any
issues and providing customer service, store team members are also required to
carry out due diligence tasks, prepare vacated rooms for new customers, accept
deliveries for our business customers, optimise contents cover and packing
material sales, follow up on prospects and reservations, and importantly to
identify and refuse custom to suspicious prospects.
AI is a technology that enables machines to learn from data and perform tasks
that normally require human intelligence. AI can be classified into two types:
rules-based and machine learning systems. The rules-based manipulation of
data to, for example, manage our dynamic pricing, is something that we have
done for several years in our business and will continue to invest in and
improve. Other examples would include the manipulation of data to provide
reporting and alerts to speed up and improve decision making, leading to
efficiencies, and we use this across the business. An example in the stores
is the automatic tracking of competitor pricing using an external data
supplier providing alerts to both stores and operational management. We are
also using the significant data from customer use of stores to provide alerts
to us on unusual behaviours that require attention to our overnight monitoring
centre and store teams, so improving security.
Generative AI is used throughout the business, particularly in relation to
content and ideas creation, examples being in marketing or the development of
procedures and training modules. What always must be remembered is that
those using these models are still required to be the editor to achieve
optimal results, but of no doubt there is the potential for significant and
continuing efficiency gains. A more detailed summary of how AI is used
within the business is included in the Operating Review.
We continue to invest in improving our web journey, with more automation of
prospect handling through to reservation and check-in, with regular
communication both by email and text. 93% of our prospects come through our
digital channels (we still have customers whose first contact is at the store
or over the phone). 66% of visits are from mobile devices, and the balance
is portable and desktop computers. Interestingly, this has remained stable
in recent years, and we have not seen the continued drive to smart phones as
was expected, which is possibly a reflection of prospects searching using
desktop computers or portables either while working from home or during the
day while at work.
The cyber threat remains, and we continue to invest in our digital security,
and review the effectiveness of all the tools we deploy.
People
Our progress this year once again reflects the steadfast commitment and hard
work of our people.
Since January 2023, the level of staff turnover and vacancies in the business
started to decline, with a reduction in leavers. Our current staff turnover
and level of vacancies continues to be at relatively low levels, which is
encouraging.
We have also carried out a review of our store staffing structure and have not
been replacing certain positions, reducing our average headcount in stores,
with an annualised saving including on-costs of £0.4 million - a benefit of
the improved automation in the business. As mentioned above, the delivery of
customer service and the security of our stores is paramount, and hence having
team members in our stores for part of the day will always be required.
We carried out an employee engagement survey using external consultants last
summer and were very pleased with the results. The engagement score across
the business was a record 88%, with a significantly improved participation
rate of 92% from the previous survey in 2021. This was an excellent result,
reflective of a key priority for the business, which is its culture.
We continue to believe that the customer experience and the service delivered
by our store teams is a critical and differentiating success factor,
particularly with those customers who are regular users of our facilities. A
retail measure is a net promoter score, and our average over the year for
move-ins and move-outs was 80.5 (2023: 78.9), a very creditable result.
We continue to make 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 2023.
We formalised a Diversity and Inclusivity Committee in 2020, with
representation from colleagues from throughout the business, and I am also a
standing member of the Committee, as I believe diversity has a positive impact
on our culture and performance.
ESG
The Big Yellow Foundation, which was launched in 2018 is our principal vehicle
for delivering social good, with the cause being the rehabilitation of
vulnerable people into work. The Company matches all money raised from
customers at move-in and move-out and from fundraising from our team
members. In the year we have raised a record £298,000 for the Foundation,
and we provided £256,000 of funding to our seven charity partners, with the
total to date now over £1.0 million.
We have an initiative of providing 12 week work placements to candidates from
some of our partner charities, and over the year 12 placements were carried
out at several of our stores. This can be life changing for some in
improving their confidence and work chances, and we have also found it to be
particularly rewarding to our store teams.
We have also over the years provided space to local charities and community
groups in each of our stores; at present we support on average two charities
per store this way. The recent refinancing of our bank facility is aligned
with this strategy and includes social targets for both the Foundation and the
provision of space to local charities.
I mentioned the solar retro-fit programme last year, which is a £25 million
investment, of which £13.6 million has been spent to date. Progress has
been very good, and as of now we have completed the retro-fit of 35 stores.
Our current installed solar capacity is 6.6 Megawatts, an increase of 47% over
the year. We estimate that this is currently saving the business £0.6
million per year. This will continue to increase as we make further progress
towards our objective of being self-sufficient in renewable energy.
We will be trialling a new battery at our Slough Farnham Road store, using the
electricity that we generate at our stores more efficiently, with less being
sold to the grid. If this is successful we will then look to adopt this in
new stores, which will see further battery improvement and reduction in
costs. We will also be looking at how we can retro-fit it into existing
stores, all designed to improve the efficiency of our energy usage. Energy
costs represent 5% of operating costs (c. £25,000 per store), and we aim to
continue to reduce this.
The investment in solar improves the EPC rating in our stores. There is a
requirement to have all stores with an EPC rating of A to C by 2025 and A to B
by 2030. At present all bar one of our stores is A to C, and we have plans
in place to install solar at that store to meet the 2025 requirement. For
the 2030 requirement, the majority of stores already meet it, and there are
plans for all stores to be A or B rated by 2028. Much of the improvement is
being driven by the investment in solar and also through removing gas
boilers.
Further detail, including progress on our Science Based Targets, is included
in the ESG Report.
Summary
Our business model, market-leading brand and operating platform has delivered
a resilient performance over recent years, and we remain confident that it
will continue to deliver attractive and sustainable returns over the medium to
long term. As we enter our historically stronger summer trading period, we
are looking forward to another year of growth.
Jim Gibson
Chief Executive Officer
20 May 2024
OPERATING REVIEW
The store platform and demand
We now have a portfolio of 109 open and trading stores, with a current maximum
lettable area of 6.4 million sq ft (2023: 108 stores, MLA 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. Over 70% of our domestic customers are in the top 3 ACORN
categories: Affluent Achievers, Rising Prosperity, and Comfortable
Communities. The largest element of demand into our business each year is
customers who use us for relatively short periods driven by a need.
Of our move-ins during the year:
- customers renting storage space whilst moving represented 41% of move-ins
during the year (2023: 41%), with homeowners representing 26% and renters
15%. The proportion of renters increased during the year, offsetting some of
the slowdown in the owner-occupied market;
- 12% of our customers who moved in took storage space as a spare room for
decluttering (2023: 11%);
- 36% 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 (2023: 37%);
- the balance of 11% of our new customer demand during the year came from
businesses (2023: 11%), who stay longer and represent around 20% of our
customers in store at any one time, occupying 37% of the space at 31 March
2024.
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.
Our business customer base is comprised of online retailers, B2B traders
looking for flexible mini-warehousing for e-fulfilment, service providers,
those looking to shorten supply chains, and businesses looking to rationalise
their other fixed costs of accommodation. For these customers, who typically
are looking for rooms which could be from 50 sq ft to 500 sq ft in facilities
that meet their operational requirements, the only supply in big cities is
from self storage providers. The average space occupied by business
customers at the year-end is 177 sq ft (2023: 179 sq ft).
Domestic customers occupy on average 58 sq ft (2023: 59 sq ft) and pay on
average 17% more in rent per sq ft (2023: 18%), however business customers do
stay longer, take more space and represent around 32% of revenue (2023:
33%).
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 1,000 sq ft, paying £30,000 per annum, and are billed and
managed centrally. This area has performed strongly in the year with revenue
up 13% compared to the prior year, making up 5% of occupied space.
Activity
Prospect numbers are more in-line with the pre-Covid period on a like-for-like
basis, and activity levels within the business have consequently been a little
bit slower than last year, with move-ins down 6%, and move-outs also down 6%
over the year, reflecting less churn. Our conversion rates over the period
have increased, which is indicative of more needs-driven demand. Since the
year end we have seen an increase in move-in activity, with move-ins up 5%
compared to the same period last year.
Occupancy across all 109 stores fell over the year by 59,000 sq ft (2023: fall
of 58,000 sq ft, with an additional 39,000 sq ft of occupancy acquired with
Aberdeen in June 2022). Business occupancy dropped by 2.6% or 50,000 sq ft
on 1.9 million sq ft occupied at the beginning of the year. Our larger
rooms, which are occupied in the main by businesses, remain highly occupied,
particularly in London. Domestic occupied space was in line with the prior
year.
As we have experienced over the years, there are businesses who outgrow us and
move to their own accommodation, others cease operations, some are seasonal,
and we continue to replace any vacated space with new move-ins from online
traders, e-tailers and service providers. We are not seeing any noticeable
further softening in demand from businesses, particularly in London.
The 76 established Big Yellow stores are 81.6% occupied compared to 84.2% at
the same time last year. The nine developing Big Yellow stores added 73,000
sq ft of occupancy over the year to reach closing occupancy of 59.8%. The 24
Armadillo stores, representing 10% of the Group's revenue are 74.3% occupied,
compared to 76.9% at this time last year (including an additional 20,000 sq ft
of capacity added during the year at Stockton South). Overall store
occupancy was 78.3% (2023: 80.9%).
Occupancy Occupancy change in year Occupancy Occupancy
31 March 2024 000 sq ft 31 March 2024 31 March 2023
% 000 sq ft 000 sq ft
76 established Big Yellow stores 81.6% (124) 3,905 4,029
9 developing Big Yellow stores 59.8% 73 375 302
All 85 Big Yellow stores 79.1% (51) 4,280 4,331
24 Armadillo stores 74.3% (8) 749 757
All 109 stores 78.3% (59) 5,029 5,088
All stores are trading profitably at the EBITDA level, with our most recent
opening in Kings Cross reaching break even in September 2023, four months
after opening.
Rental growth
We continue to manage pricing dynamically, taking account of room
availability, customer demand and local competition, with our pricing model
reducing promotions and increasing asking prices where individual units are in
scarce supply.
We continue to price competitively to win new customers and have moderated our
existing customer price increases over the year with the fall in inflation.
It must be remembered that some 60% to 70% of our customers move-out within
six months, and therefore do not receive any price increases.
The average achieved net rent per sq ft increased by 7.5% compared to the
prior year, with closing net rent up 5.1% compared to 31 March 2023. 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 Net rent per sq ft growth from April 2023 to March 2024 Net rent per sq ft growth from April 2022 to March 2023
70% to 85% 5.4% 8.3%
85% to 90% 5.5% 8.7%
Above 90% 6.9% 9.7%
The self storage market
In the recently published 2024 Self Storage Association UK Survey, only 43% of
those surveyed had a reasonable or good awareness of self storage.
Furthermore, only 12% of the 2,076 adults surveyed were currently using self
storage or were thinking of using self storage in the next year, which was an
improvement from 9% in the 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 2023, there were eight new
store openings, including one Big Yellow store. We are aware of four planned
store openings in London in calendar year 2024.
The Self Storage Association ("SSA") estimates that the UK industry is made up
of approximately 1,700 self storage facilities and 1,000 purely container
operations, providing 60 million sq ft of self storage space, equating to 0.9
sq ft per person in the UK. This compares to 12 sq ft per person in the US,
2.2 sq ft per person in Australia and 0.2 sq ft for mainland Europe, where the
roll-out of self storage is a more recent phenomenon (sources: UK Self Storage
Association Survey May 2024 and FEDESSA European Self Storage Annual Survey
2023).
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 May 2024) again confirmed that the brand
awareness of Big Yellow remained significantly ahead of other UK operators in
the sector. The survey shows our unprompted brand awareness to be 4.1 times
higher than our nearest competitor across the UK (2023: 4.4 times higher).
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 60% of our new prospects 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 process is completed
with 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, which represents 80% of BoxShop
transactions.
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. 41% 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 52,000 averaging 4.7 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 80.5 which is a very strong consumer-facing
benchmark result.
We also gain real-time customer feedback from over 23,500 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 4,200 reviews from the independent review site TrustPilot. These
reviews average 4.8 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 services and 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.
AI
Generative AI is now used throughout the business and has been adopted quickly
since its launch. We have a variety of tools available including Canva,
ChatGPT, Google Gemini and Microsoft 365 CoPilot. These are used to generate
content and ideas across social media, SEO, responses to customer reviews,
drafting emails, developing training modules, policies, procedures and
creating visuals in our communications. We see these large language models
continuing to improve and allowing us to increase our productivity and
efficiency, particularly at our head office.
Rules-based data manipulation and automation is also something that we have
used within Big Yellow for some time and continue to improve. Examples of
this include our dynamic pricing system, prospect management, check-in online,
digital automation of all customer communications, access control reporting
and alerts based on the significant data we have at stores, exception
reporting for our store audit processes. Other examples in marketing would
be translation AI, optimisation of paid search and targeting of prospects.
Although provided by third parties, machine learning AI is the core of all our
cyber security and defence, across anti-malware, firewalls, email management,
vulnerability testing and Security Information and Event Monitoring. A
further example is that we have just invested in a SaaS recruitment platform,
which manages the workflow for all recruitment and interaction with candidates
through automation. Our CAFM platform in facilities which was implemented
three years ago to manage all our interactions between the stores, the
facilities team and the various contractors has made a significant difference
to productivity and control in that area.
The above is by no means a complete summary of how AI is making a difference
to our business, but hopefully provides an insight and it is something that we
will continue to invest in.
Cyber security and IT infrastructure
Cyber security and IT infrastructure are vital for the Group's strategy and
operations. The Group has a robust cyber security and IT infrastructure
framework that covers risk, security, compliance, innovation, and efficiency.
The Group has achieved significant results and progress in the past year, but
also faces challenges and opportunities in the future. The Group is committed
to investing and improving its cyber security and IT infrastructure
capabilities, and to maintaining its competitive edge.
We regularly evaluate cyber risk and security status with the help of both
internal experts and external consultants and conduct frequent tests on our
systems and people, such as penetration tests and phishing simulations. The
Group's systems underwent an external audit during the year and retained the
IASME Gold certification which includes Cyber Essentials. The Group has
cyber insurance in place should a breach occur.
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 are
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.
ESG
We have 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 in 2022 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 invested £6 million in our solar programme over the year and now have
68 stores with solar and have expanded the programme to all stores. Our
current peak capacity has increased over the past three years from 0.9
Megawatts to 6.6 Megawatts;
- we have donated £796,000 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;
- £298,000 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 £256,000 to our partner charities in
the year;
- we have delivered 12 successful and all-round enriching work placements with
Breaking Barriers, Street League and the Down's Syndrome Association;
- increased our GRESB Green Star rating from 4 to 5, improved from a B to an A-
award from CDP and maintained our ISS indices; and
- we obtained our third EPRA sBPR Gold Award.
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 127,000 sq ft of capacity through
opening a new store in Kings Cross (London) and extending our Armadillo store
in Stockton South.
Current development pipeline - with planning
Site Location Status Anticipated capacity
Slough Farnham Road Prominent location on Farnham Road Store opening in July 2024. Replacement for existing leasehold store of a similar size
Staines, London Prominent location on the Causeway Construction to commence in June 2024 with a view to opening in Summer 2025. 65,000 sq ft
We also have consent on the site to develop 9 industrial units totalling
99,000 sq ft.
Queensbury, London Prominent location off Honeypot Lane Construction to commence in July 2024 with a view to opening in Autumn 2025. 70,000 sq ft
Wembley, London Prominent location on Towers Business Park Construction to commence in late 2024 with a view to opening in late 2025. 70,000 sq ft
Slough Bath Road Prominent location on Bath Road Construction to commence in Autumn 2024 with a view to opening in early 90,000 sq ft
2026.
Epsom, London Prominent location on East Street Construction to commence in late 2024 with a view to opening in Spring 2026. 58,000 sq ft
Wapping, London Prominent location on the Highway, adjacent to existing Big Yellow Demolition of existing building in progress, construction expected to commence Additional 95,000 sq ft
in Autumn 2024 with a view to opening in Summer 2026
Newcastle Scotswood Road Planning consent granted, vacant possession awaited 60,000 sq ft
Current development pipeline - without planning
Kentish Town, London Prominent location on Regis Road Site acquired in April 2021. Planning appeal submitted and due to be heard 68,000 sq ft
in May 2024.
West Kensington, London Prominent location on Hammersmith Road Site acquired in June 2021. Planning appeal submitted, and due to be heard 175,000 sq ft
in July 2024.
Old Kent Road, London Prominent location on Old Kent Road Site acquired in June 2022. Planning application submitted in October 2023. 75,000 sq ft
Staples Corner, London Prominent location on North Circular Road Site acquired in December 2022. Planning application submitted in December Replacement for existing leasehold store, additional 18,000 sq ft
2023.
Leicester Prominent location on Belgrave Gate, Central Leicester Site acquired in June 2023. Planning discussions underway with Leicester 58,000 sq ft
City Council.
Leamington Spa Prominent location on Queensway Site acquired in May 2024. 55,000 sq ft
Total - all sites 957,000 sq ft
PORTFOLIO SUMMARY
March 2024 March 2023
Big Yellow Developing Armadillo Big Yellow Established Big Yellow Developing Armadillo
Big Yellow Established((1)) Total Big Yellow Total Big Yellow
Total Total
Number of stores 76 9 85 24 109 76 8 84 24 108
At 31 March:
Total capacity (sq ft) 4,784,000 627,000 5,411,000 1,008,000 6,419,000 4,784,000 524,000 5,308,000 984,000 6,292,000
Occupied space (sq ft) 3,905,000 375,000 4,280,000 749,000 5,029,000 4,029,000 302,000 4,331,000 757,000 5,088,000
Percentage occupied 81.6% 59.8% 79.1% 74.3% 78.3% 84.2% 57.6% 81.6% 76.9% 80.9%
Net rent per sq ft £36.38 £33.06 £36.09 £22.98 £34.14 £34.55 £30.70 £34.28 £22.20 £32.48
For the year:
REVPAF((2)) £34.16 £21.30 £32.70 £20.02 £30.71 £32.68 £22.20 £31.84 £20.27 £30.02
Average occupancy 84.0% 56.2% 80.9% 76.4% 80.2% 86.9% 54.1% 84.0% 82.1% 83.7%
Average annual net rent psf £35.83 £32.46 £35.56 £22.75 £33.64 £33.28 £30.10 £33.10 £21.33 £31.28
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Self storage income 144,418 11,167 155,585 17,562 173,147 136,925 8,809 145,734 17,177 162,911
Other storage related 18,332 1,571 19,903 2,651 22,554 18,523 1,401 19,924 2,691 22,615
income ((2))
Ancillary store rental 1,108 284 1,392 19 1,411 1,028 165 1,193 20 1,213
income
Total store revenue 163,858 13,022 176,880 20,232 197,112 156,476 10,375 166,851 19,888 186,739
Direct store operating costs (38,979) (5,334) (44,313) (7,517) (51,830) (38,644) (4,482) (43,126) (7,437) (50,563)
Short and long (2,112) - (2,112) (169) (2,281) (1,983) - (1,983) (170) (2,153)
leasehold rent((3))
Store EBITDA((2)) 122,767 7,688 130,455 12,546 143,001 115,849 5,893 121,742 12,281 134,023
Store EBITDA margin 74.9% 59.0% 73.8% 62.0% 72.5% 74.0% 56.8% 73.0% 61.8% 71.8%
Deemed cost £m £m £m £m £m
To 31 March 2024 739.0 188.0 927.0 145.3 1,072.3
Capex to complete - 1.0 1.0 0.1 1.1
Total 739.0 189.0 928.0 145.4 1,073.4
(1) The Big Yellow established stores have been open for more than three
years at 1 April 2023, and the developing stores have been open for fewer than
three years at 1 April 2023.
(2) See glossary in note 28.
(3) Rent paid for six short leasehold properties and one long leasehold
property
The table below reconciles Store EBITDA to gross profit in the statement of
comprehensive income.
Year ended 31 March 2024 Year ended 31 March 2023
£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((4)) 197,112 2,507 186,739 2,090
199,619 188,829
Cost of sales((5)) (51,830) (4,164) (55,994) (50,563) (3,744) (54,307)
Rent((3)) (2,281) 2,281 - (2,153) 2,153 -
143,001 624 143,625 134,023 499 134,522
(4) See note 3 of the financial statements, reconciling items are
management fees and non-storage income.
(5) See reconciliation in cost of sales section in Financial Review.
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 2024 Year ended 31 March 2023
£000 £000
Store revenue (6) 197,112 186,739
Less revenue from non like-for-like stores (6) (3,657) (1,133)
Like-for-like revenue (6) 193,455 185,606
Like-for-like Big Yellow store occupancy
Year ended 31 March 2024 Year ended 31 March 2023
Store MLA (sq ft) (6) 6,419,000 6,292,000
Less MLA from non like-for-like stores (sq ft) (6) (1,304,000) (1,178,000)
Like-for-like MLA (sq ft) (6) 5,115,000 5,114,000
Store occupancy (sq ft) (6) 5,029,000 5,088,000
Less occupancy from non like-for-like (sq ft) (6) (890,000) (835,000)
Like-for-like occupancy (sq ft) (6) 4,139,000 4,253,000
Like-for-like occupancy (%) (6) 80.9% 83.2%
(6) See glossary in note 28
FINANCIAL REVIEW
Revenue
Total revenue for the year was £199.6 million, an increase of £10.8 million
(6%) from £188.8 million in the prior year. Like-for-like store revenue
(see glossary in note 28) for the year was £193.5 million, an increase of 4%
from the prior year (2023: £185.6 million).
Revenue growth for the year in our London stores was 7%, our south east
commuter stores 5% and our regional stores 3%.
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 (2023: £22.6
million).
The Group changed the way it sold its contents protection cover to its
customers on 1 June 2022 to an Enhanced Liability Service, which is subject to
VAT at 20% and not Insurance Premium Tax ("IPT") at 12%, the latter being
included in revenue. We estimate the impact of this on the total revenue and
like-for-like revenue for the year is 0.2%.
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 our store operating costs compared to
the prior year:
Year ended 31 March 2024 Year ended 31 March 2023 % of store operating costs in 2024
£000 £000
Category Change
Cost of sales 1,519 2,202 -31% 3%
Staff costs 14,721 14,415 2% 27%
General & admin 1,434 1,691 -15% 2%
Utilities 2,670 2,056 30% 5%
Property rates 18,153 15,498 17% 33%
Marketing 6,438 6,504 -1% 12%
Repairs & maintenance 5,336 4,685 14% 10%
Insurance 3,323 2,757 21% 6%
Computer costs 1,031 1,001 3% 2%
Total before one-off items 54,625 50,809 8%
One-off items (2,795) (246)
Total per portfolio summary 51,830 50,563 3%
Store operating costs have increased by £1.3 million (3%). The one-off
items in the current year relate to the release of a provision for property
rates from the 2017 rating list (£2.3 million), and a reassessment of the
Group's bad debt provision (£0.5 million). Store operating costs before
these one-off items have increased by £3.8 million (8%) compared to the prior
year. New stores accounted for £1.5 million of operating expense increase
in the year. Cost of sales has decreased by £0.7 million following the move
to selling an ELS rather than insurance (see explanation in revenue above),
and also due to a decline in packing material sales during the year.
The remaining increase of £3 million represents an increase of 6%. More
specifically, we would comment as follows:
- Staff costs have increased by £0.3 million (2%). The average salary review
in the year was 5.6%, which has been partly offset by a reduction in staffing
in stores as we continue to invest in automation, and lower bonuses in the
year.
- General and admin expenses are down by £0.3 million (15%), following a
reassessment of the Group's bad debt provision in the year.
- Marketing is 1% down on the prior year with continued efficiencies being
achieved from our digital campaigns.
- Utilities has increased by 30%, with a new fixed rate electricity contract
starting on 1 October 2023, which was at a 74% higher rate than our expiring
contract. This increased rate has been partly mitigated by our investment in
solar.
- Property rates have increased by £2.7 million (17%), following the Rating
Revaluation published in November 2022, effective 1 April 2023.
- Insurance has increased by £0.6 million (21%). Overall buildings and loss
of income insurance premiums increased from 1 April 2023 by 16%, due to market
conditions and higher insured values. In addition, we now insure our
customers contents for catastrophe risk, with a Lloyds underwriter, and as a
result are responsible for paying for claims up to £250,000 in any one
loss. During the year £348,000 was paid in claims (2023: £128,000), with
higher claims this year due to the very wet winter.
- The repairs and maintenance expense has increased due to higher store numbers,
and an increase in solar panel maintenance costs, with higher numbers of
stores now with solar PVs.
- The Group's bad debt expense for the year was 0.2% of revenue, in line with
the prior year. The Group has not seen any deterioration in its aged
debtors' profile over recent months.
The table below reconciles store operating costs per the portfolio summary to
cost of sales in the statement of comprehensive income:
Year ended 31 March 2024 Year ended 31 March 2023
£000 £000
Direct store operating costs per portfolio summary (excluding rent) 51,830 50,563
Rent included in cost of sales (total rent payable is included in portfolio 1,784 1,551
summary)
Depreciation charged to cost of sales 569 496
Head office and other operational management costs charged to cost of sales 1,811 1,697
Cost of sales per statement of comprehensive income 55,994 54,307
Store EBITDA
Store EBITDA for the year was £143.0 million, an increase of £9.0 million
(7%) from £134.0 million for the prior year (see Portfolio Summary). The
overall EBITDA margin for during the year was 72.5%, up from 71.8% in 2023.
All stores are currently trading profitably at the Store EBITDA level. Our
store in Kings Cross, which opened in June 2023, reached break even after four
months of trading.
Administrative expenses
Administrative expenses in the statement of comprehensive income of £15.2
million were up £0.7 million (5%) compared to the prior year, including
increased legal and professional fees and COO recruitment costs. The
non-cash share-based payments charge represents £4.0 million of the overall
£15.2 million expense (2023: £3.7 million of £14.5 million expense).
Other income
In February 2022 the Group experienced a fire at our Cheadle store, which
resulted in a total loss to the store. We have insurance cover in place for
both the fit-out and four years loss of income. The loss of income received
during the financial year was £1.8 million, which is included in other income
(2023: £1.4 million).
The Group also received £4.7 million in the year which was the insurance
proceeds for the fit-out of the Cheadle store. This amount is shown in other
income but has not been included in the Group's adjusted earnings for the
year.
Interest expense on bank borrowings
The gross bank interest expense for the year was £25.6 million, an increase
of £7.5 million from the prior year, due to higher average debt levels in the
first half of 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 5.5% compared to 4.2% in the prior year. Capitalised
interest on our construction programme was £3.3 million, up from £2.8
million in the prior year.
Total finance costs in the statement of comprehensive income increased to
£22.9 million from £16.9 million in the prior year.
Profit before tax
The Group made a profit before tax in the year of £241.0 million, compared to
a profit of £75.3 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
£107.3 million, up 1% from £106.0 million in 2023.
Profit before tax analysis 2024 2023
£000 £000
Profit before tax 241,035 75,309
(Gain)/loss on revaluation of investment properties (131,159) 29,861
Movement in fair value on interest rate derivatives 2,146 133
Cheadle fit-out insurance proceeds (4,723) -
Refinancing costs - 732
Adjusted profit before tax 107,299 106,035
The adjustments made to the Group's profit before tax follow guidance issued
by EPRA, with additional Company specific adjustments made to give readers a
clearer underlying picture of the Group's performance. EPRA profit before
tax is disclosed in note 10.
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 2023 106.0
Increase in gross profit 9.1
Increase in administrative expenses (0.7)
Decrease in other income (0.4)
Increase in net interest payable (7.2)
Increase in capitalised interest 0.5
Adjusted profit before tax - year ended 31 March 2024 107.3
Basic earnings per share for the year was 127.1p (2023: 40.1p) and diluted
earnings per share was 126.4p (2023: 39.8p). Diluted adjusted earnings per
share based on adjusted profit after tax was down 1% to 55.9p (2023: 56.5p)
(see note 12).
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 £2.3 million tax charge in the residual business for the year
ended 31 March 2024 (2023: £2.3 million). The current year tax charge is
partly offset in the income statement by an adjustment to the prior year tax
estimate.
Dividends
The Board is recommending the payment of a final dividend of 22.6 pence per
share in addition to the interim dividend of 22.6 pence, giving a total
dividend for the year of 45.2 pence, in line with the prior year. The
Group's policy is 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 2023: 45.2 pence). The PID for the year to 31 March 2024
accounts for all of the declared dividend. The table below summarises the
declared dividend for the year:
Dividend (pence per share) 31 March 2024 31 March 2023
Interim dividend 22.6p 22.3p
Final dividend 22.6p 22.9p
Total dividend 45.2p 45.2p
Subject to approval by shareholders at the Annual General Meeting to be held
on 18 July 2024, the final dividend will be paid on 26 July 2024. The ex-div
date is 4 July 2024 and the record date is 5 July 2024.
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
£110.1 million, an increase of 1% from £109.2 million in the prior year,
with the growth in line with the increase in the Group's profitability in the
year.
These operating cash flows are after the ongoing maintenance costs of the
stores, which were on average approximately £49,000 per store (2023:
£43,000).
The Group's net debt has decreased over the year to £385.4 million (March
2023: £486.6 million).
There are distortive working capital items in the current period, and
therefore the summary cash flow below sets out the free cash flow pre-working
capital movements
Year ended Year ended
31 March 2024
31 March 2023
£m £m
Cash generated from operations pre-working capital movements 135.1 126.2
Net finance costs (24.0) (16.5)
Interest on obligations under lease liabilities (0.6) (0.7)
Loss of income insurance proceeds 1.6 2.0
Tax (2.0) (1.8)
Cash flow from operating activities pre-working capital movements 110.1 109.2
Working capital movements (5.3) 2.8
Cash flow from operating activities 104.8 112.0
Capital expenditure (30.9) (106.4)
Disposal of non-current asset 5.4 -
Insurance proceeds on fit-out 4.7 -
Receipt from Capital Goods Scheme - 0.2
Cash flow after investing activities 84.0 5.8
Ordinary dividends (85.2) (79.2)
Issue of share capital 108.0 1.0
Payment of lease liabilities (1.8) (1.3)
Receipt from termination of interest rate derivatives - 0.4
Loan arrangement fees paid (3.7) (1.5)
(Decrease)/increase in borrowings (100.2) 74.5
Net cash inflow/(outflow) 1.1 (0.3)
Opening cash and cash equivalents 8.3 8.6
Closing cash and cash equivalents 9.4 8.3
Closing debt (394.8) (494.9)
Closing net debt (385.4) (486.6)
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 5.6 times (2023: 7.7 times). This is calculated per below:
31 March 2024 31 March 2023
£000 £000
Cash generated from operations pre working capital movements (see note 26) 135,086
126,195
Interest paid per cash flow statement (24,069) (16,486)
Interest cover 5.6x 7.7x
In the year capital expenditure outflows were £30.9 million, down from
£106.4 million in the prior year. This capital expenditure was principally
on the construction of new stores, and the continued roll-out of our solar
retro-fit programme. We expect the amount of capital expenditure to increase
next year, as we build out our seven sites with planning consent and vacant
possession. The disposal of non-current asset of £5.4 million relates to
the proceeds from a land swap at Kings Cross.
The cash flow after investing activities was a net inflow of £84.0 million in
the year, compared to a net inflow of £5.8 million in 2023.
Balance sheet
Property
The Group's open stores and stores under development owned at 31 March 2024,
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
£2.865 billion, comprising £2.686 billion (94%) for the freehold (including
nine long leaseholds) open stores, £32.2 million (1%) for the short leasehold
open stores and £146.5 million (5%) for the freehold investment properties
under construction.
Investment property
The open store portfolio has increased in value by £145.4 million (5.3%).
This increase in value arises from an improvement in cap rates, reflecting
recent transactions in the sector, and operating cash flow growth.
The weighted average exit capitalisation rate used in the valuations was 5.4%
in the current year, compared to 5.6% in the prior year.
Analysis of property portfolio Value at 31 March 2024 Revaluation movement in the year
£m £m
Investment property 2,718.5 145.4
Investment property under construction 146.5 (14.2)
Investment property total 2,865.0 131.2
The table below provides a further breakdown of the open store valuations:
Established Developing Armadillo
Freehold Leasehold Freehold Largely Freehold Total
Number of stores 71 5 9 24 109
MLA capacity (sq ft) 4,473,000 311,000 627,000 1,008,000 6,419,000
Valuation at 31 March 2024 (£m)
£2,082.6m £27.4m £343.1m £173.8m £2,626.9m
Value per sq ft £466 £88 £547 £172 £409
Occupancy at 31 March 2024 81.7% 80.2% 59.8% 74.3% 78.3%
Stabilised occupancy assumed
88.6% 87.3% 86.1% 86.4% 87.8%
Net initial year one NOI yield
5.3% 18.2% 3.2% 6.2% 5.2%
The total store valuation in this table differs to the balance sheet due to
the non-self storage investment property that the Group owns, such as the
Harrow Industrial Scheme. The net initial year one NOI yield is 5.2% (2023:
5.3%). Note 15 contains more detail on the assumptions underpinning the
valuations.
Investment property under construction
The Group spent £15.1 million on investment property under construction in
the year, the majority of which was construction expenditure, principally on
Kings Cross and Slough Farnham Road. This spend also includes the site
purchase of Leicester. Kings Cross transferred to investment property during
the year as the store opened, and the Harrow Industrial Scheme has also been
transferred to investment property during the year, following the completion
of its construction.
The revaluation deficit of £14.2 million on the investment property under
construction is largely as a result of a reduction in the value of our land
without self storage planning - this deficit all occurred in the first half of
the year, with values stable in the second half of the year.
The projected net operating income of the increase in our total capacity of
957,000 sq ft when stabilised is £30.4 million representing an approximate
13.5% return on the incremental capital deployed. On a proforma basis at
stabilisation, the projected net operating income for the 12 new stores and
two replacement stores is £35.9 million, a return of approximately 8.7% on
the total development cost of £412 million, including land already acquired.
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 2024 of £2.976
billion (£111.1 million higher than the value recorded in the financial
statements). This translates to 56.2 pence per share. This revised
valuation translates into an adjusted net asset value per share of 1,296.4
pence (2023: 1,237.3 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.
Net asset value
The adjusted net asset value is 1,296.4 pence per share (see note 13),
compared to 1,218.5 pence per share at 31 March 2023 (after adjusting for the
impact of the placing in October 2023). The table below reconciles the
movement:
Adjusted NAV pence per share
Movement in adjusted net asset value £m
31 March 2023 2,287.2 1,237.3
Adjusted for placing 107.0 (18.8)
31 March 2023 (adjusted) 2,394.2 1,218.5
Adjusted profit after tax 106.1 54.0
Equity dividends paid (86.0) (43.8)
Revaluation movements 131.2 66.8
Movement in purchaser's cost adjustment 6.5 3.3
Other movements (e.g. share schemes, insurance fit-out receipt) 9.9 (2.4)
31 March 2024 2,561.9 1,296.4
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 2024, with
a current average cost of debt of 5.4% (March 2023: 4.7%).
Debt Expiry Facility Drawn Cost
Aviva Loan September 2028 £155.8m £155.8m 3.3%
M&G loan (£35 million fixed at 4.5%, £85 million floating)
September 2029 £120m £120m 6.9%
Revolving bank facility (Lloyds, HSBC, Barclays and Bank of Ireland, floating) December 2026 (option to extend for two further years)
£300m £119m 6.4%
Total Average term 4.2 years £575.8m £394.8m 5.4%
In addition to the facilities above, the Group has 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.
During the year the Group put in place a new £300 million
Sustainability-linked facility for an initial term of three years, with the
option to extend the facility by two additional one-year terms through to
December 2028, subject to lender approval. The loan is provided by Lloyds
Bank plc, HSBC UK Bank plc, Bank of Ireland, and Barclays Bank plc, with
Barclays joining the existing three bank syndicate. The margin of 1.25% was
unchanged from the existing facility.
The Group has incorporated Sustainability-linked KPIs into the loan, which
include annual pre-agreed targets and are based on:
- reductions in Scope 1 and 2 emissions;
- increase in solar generation capacity;
- total annual grants to Big Yellow Foundation charity
partners; and
- the value of storage space provided free of charge to
local charities in our stores.
Performance against the KPIs will be measured annually, and a margin decrease
or increase will be applied to the headline margin on the basis of this
performance.
The Group was comfortably in compliance with its banking covenants at 31 March
2024. 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 2024 31 March 2023
Net Debt / Gross Property Assets 13% 18%
Net Debt / Adjusted Net Assets 15% 21%
Net Debt / Market Capitalisation 18% 23%
Net debt to Group EBITDA ratio 3.0x 4.1x
Cash generated from operations pre-working capital movements against interest
paid
5.6x 7.7x
At 31 March 2024, the fair value on the Group's interest rate derivatives was
a liability of £1.8 million. The Group does not hedge account its interest
rate derivatives. The fair value movements are eliminated from adjusted
profit before tax, adjusted 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 £19.6 million at 31 March 2024
(2023: £18.4 million), consisting of 196,195,287 ordinary shares of 10p each
(2023: 184,265,973 shares). 11.6 million shares were issued in October 2023
for a placing, raising £107 million (net of expenses). 0.3 million shares
were issued for the exercise of options during the year at an average exercise
price of £10.77 (2023: 0.3 million shares at an average price of £13.13).
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.
2024 2023
No. No.
Opening shares 184,265,973 183,967,378
Shares issued in placing 11,640,212 -
Shares issued for the exercise of options 289,102 298,595
Closing shares in issue 196,195,287 184,265,973
Shares held in EBT (1,098,686) (1,122,907)
Closing shares for NAV purposes 195,096,601 183,143,066
111.2 million shares were traded in the market during the year ended 31 March
2024 (2023: 116.3 million). The average mid-market price of shares traded
during the year was £10.84 with a high of £12.39 and a low of £9.10.
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 past two financial years have seen a challenging geopolitical and
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 macroeconomic backdrop, with the Russian invasion of Ukraine in February 2022,
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 the US regional banking crisis and the collapse of Credit Suisse, the conflict
used by domestic and business customers is relatively low throughout the UK, in the Middle East, and the impact of rising inflation and interest rates.
although higher in London; awareness increased during the pandemic. The latter 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 UK
The rate of growth of branded self storage on main roads in good locations has economy briefly entered a recession in the second half of 2023.
historically been limited by the difficulty of acquiring sites at affordable
prices and obtaining planning consent. New store openings in London and other The Group's move-in activity levels were impacted by this backdrop during the
large urban conurbations within the sector have slowed significantly over the year and were down 6% compared to the prior year. However, since the year
past few years. end, activity levels have improved and move-ins are up 5% compared to the same
period last year.
Our performance during the past four years has been strong with revenue
growing by 54% from £129.3 million in the year ended 31 March 2020 to £199.6 Inflation has moderated over recent months, and most commentators consider
million for this year. We believe that this performance is due to a that interest rates have peaked and will start to fall towards the end of the
combination of factors including: year, subject to inflation remaining on its current trajectory.
- 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.
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 thirteen sites over the past five years, taking its
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 total pipeline to 14 sites which, when opened, would expand the Group's
overall store platform. profile locations and obtaining planning consents. We do take planning risk current MLA 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 eight of the 14 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 In May 2022, we suspended construction on all projects that were not already
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 on site because conditions in the construction market were unfavourable. Those
Yellow specification. conditions have improved considerably with steelwork and cladding prices
falling, and other material prices stabilising. In addition, we are seeing
We carried out an external benchmarking of our construction costs and on recent tenders that main contractors and specialist sub-contractors are
tendering programme during the prior year, which reinforced our current pricing new projects more competitively. We are therefore proceeding with
approach, but also gave some areas where further efficiencies and cost savings the build-out of our sites with planning and vacant possession.
can be achieved, which we have been implementing this year.
Valuation risk
The valuation of the Group's investment properties may fall due to external The portfolio is diverse with approximately 73,000 rooms currently occupied in The revaluation surplus on the Group's open store investment properties was
pressures or the impact of performance. our stores for a wide variety of reasons. £145.4 million in the year (an uplift of 5%), due to an improvement in cap
rates following recent transactions in the sector and growth in underlying
Lack of transactional evidence in the self storage sector leads to more The valuations are carried out by independent, qualified external valuers who cash flows used in the valuations.
subjective valuations. have significant experience in the UK self storage industry.
There have been a number of larger portfolio transactions across Europe over
the past four years, notably including the proposed acquisition of Lok 'n
Store by Shurgard, and there is a weight of institutional money looking to
invest in self storage.
There is significant headroom on our loan to value banking covenants.
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 further during the year, with
equity, and cash flow to allow us to selectively build out the remaining it currently at 5.25%, up from 4.25% at the start of our financial year, and
development pipeline and achieve our strategic growth objectives, which we 0.75% the year before.
believe improve returns for shareholders. We have made it clear that we
believe optimal leverage for a business such as ours should be a debt to 52% of the Group's drawn debt is floating, and hence the Group will benefit
EBITDA ratio in the range of 3 to 4 times and this informs our management of from any reductions in the base rate.
treasury risk.
Debt providers currently remain supportive to companies with a strong capital
We aim to ensure that there are sufficient medium-term facilities in place to structure, as evidenced by the Group refinancing the RCF during the year at an
finance our committed development programme, secured against the freehold unchanged margin.
portfolio, with debt serviced by our strong operational cash flows.
The Group's interest cover ratio for the year ended 31 March 2024 was 5.6
We have a fixed rate loan in place from Aviva Commercial Finance Limited, with times, comfortably ahead of our banking covenants, as disclosed in note 19.
4 and half years remaining. The Group has a £120 million loan from M&G
Investments, which is repayable in 2029. For our revolving credit facility, We keep our hedging arrangements under review and if the long term cost of
we borrow at floating rates of interest. borrowing for durations of ten to twelve year falls, we will consider taking
out more longer term debt, which would increase the weighting of the fixed
The Group has a $225 million credit approved shelf facility with Pricoa element.
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 2024 48% 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 property rates bill for the year ended 31 March 2024 has increased
corporation tax, property rates, VAT, Stamp Duty and Stamp Duty Land Tax of our professional advisers, through direct liaison with HMRC, and through by 17% from the prior year, with the 2023 rating list reflecting the rise in
("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 industrial rents over the past few years.
2012. impact.
The corporation tax rate increased with effect from April 2023, and there is a
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 risk that tax rates will rise further in the medium-term to fund the increased
failing to comply with the REIT legislation. regular meetings with them. We carry out detailed planning ahead of any government deficits that have arisen from the policy response to the pandemic.
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.
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,
included reviewing and relaunching our Bright Ideas Suggestion Scheme,
reviewing our salary bands for Store employees, and personal safety training
having been provided for all team members within our stores. We also
introduced a new Employee Assistance Programme, re-trained our Wellbeing
Experts and set up a specific Wellbeing sub-site on our Intranet.
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 past two financial years have seen a challenging geopolitical and
macroeconomic backdrop, with the Russian invasion of Ukraine in February 2022,
the US regional banking crisis and the collapse of Credit Suisse, the conflict
in the Middle East, and the impact of rising inflation and interest rates.
The latter 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 UK
economy briefly entered a recession in the second half of 2023.
The Group's move-in activity levels were impacted by this backdrop during the
year and were down 6% compared to the prior year. However, since the year
end, activity levels have improved and move-ins are up 5% compared to the same
period last year.
Inflation has moderated over recent months, and most commentators consider
that interest rates have peaked and will start to fall towards the end of the
year, subject to inflation remaining on its current trajectory.
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 prior year, which reinforced our current
approach, but also gave some areas where further efficiencies and cost savings
can be achieved, which we have been implementing this year.
The Group has acquired thirteen sites over the past five years, taking its
total pipeline to 14 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 eight of the 14 development sites.
In May 2022, we suspended construction on all projects that were not already
on site because conditions in the construction market were unfavourable. Those
conditions have improved considerably with steelwork and cladding prices
falling, and other material prices stabilising. In addition, we are seeing
on recent tenders that main contractors and specialist sub-contractors are
pricing new projects more competitively. We are therefore proceeding with
the build-out of our sites with planning and vacant possession.
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 portfolio is diverse with approximately 73,000 rooms currently occupied in
our stores for a wide variety of reasons.
The valuations are carried out by independent, qualified external valuers who
have significant experience in the UK self storage industry.
The revaluation surplus on the Group's open store investment properties was
£145.4 million in the year (an uplift of 5%), due to an improvement in cap
rates following recent transactions in the sector and growth in underlying
cash flows used in the valuations.
There have been a number of larger portfolio transactions across Europe over
the past four years, notably including the proposed acquisition of Lok 'n
Store by Shurgard, and there is a weight of institutional money looking to
invest in self storage.
There is significant headroom on our loan to value banking covenants.
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 a debt to
EBITDA ratio in the range of 3 to 4 times 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
4 and half years remaining. The Group has a £120 million loan from M&G
Investments, which is repayable in 2029. For our revolving credit facility,
we borrow at floating rates of interest.
The Group has 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 2024 48% 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 further during the year, with
it currently at 5.25%, up from 4.25% at the start of our financial year, and
0.75% the year before.
52% of the Group's drawn debt is floating, and hence the Group will benefit
from any reductions in the base rate.
Debt providers currently remain supportive to companies with a strong capital
structure, as evidenced by the Group refinancing the RCF during the year at an
unchanged margin.
The Group's interest cover ratio for the year ended 31 March 2024 was 5.6
times, comfortably ahead of our banking covenants, as disclosed in note 19.
We keep our hedging arrangements under review and if the long term cost of
borrowing for durations of ten to twelve year falls, we will consider taking
out more longer term debt, which would increase the weighting of the fixed
element.
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 property rates bill for the year ended 31 March 2024 has increased
by 17% from the prior year, with the 2023 rating list reflecting the rise in
industrial rents over the past few years.
The corporation tax rate increased with 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,
included reviewing and relaunching our Bright Ideas Suggestion Scheme,
reviewing our salary bands for Store employees, and personal safety training
having been provided for all team members within our stores. We also
introduced a new Employee Assistance Programme, re-trained our Wellbeing
Experts and set up a specific Wellbeing sub-site on our Intranet.
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 a couple
of years ago. 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.
We work closely with our key suppliers to ensure a consistency of service from
them.
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. We have also invested in additional automated reports and alerts which
industry that has every room in every Big Yellow store individually alarmed. notify our overnight monitoring station and the operating team of suspicious
customer activity.
We have implemented customer security procedures in line with advice from the
Police and continue to work with the regulatory authorities on issues of We regularly review and implement improvements to our security processes and
security, reviewing our operational procedures regularly. The importance of procedures.
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 landscape do continue to increase and evolve. As such we have continued to
minimum 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.
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 The good working order of our stores is of critical importance to our business Our Sustainability Committee, chaired by a Non-Executive Director, has
may cause an increase in taxation, decrease in access to loan facilities and model. delivered an ambitious strategic plan to 2032.
reputational damage.
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
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).
Internal audit
The Group employs a Head of Store Compliance responsible for reviewing store
operational and financial controls. He reports to the Chief Financial
Officer, and also meets with the Audit Committee at least once a year. This
role is supported by three other team members, enabling additional work and
support to be carried out across the Group's store portfolio. The Store
Compliance team visits each operational store twice per year to carry out a
detailed store audit. These audits are unannounced, and the Store Compliance
team carry out detailed tests on financial management, administrative
standards, and operational standards within the stores. Part of the store
staff's bonus is based on the scores they achieve in these audits. The
results of each audit are reviewed by the Chief Financial Officer, the
Financial Controller, and the Regional Operations Managers. This is the
equivalent of an internal audit function for the Group's store operations.
For the key business cycles conducted at the Group's head office, external
consultants are used to review the Group's controls on a rotational basis.
The consultants produce a report with recommendations which is discussed with
management and reviewed by the Audit Committee. The cycles covered by this
activity include construction expenditure, treasury, taxation, and facilities
management.
During the year, the Group implemented new software to enable us to better
capture risks and controls and implement a formal testing cycle ahead of the
new Corporate Governance Code. With the assistance of external consultants,
we performed a detailed walk through of key processes. We have developed a
detailed Risk and Controls Matrix in these areas and documented the
workflows. These are being embedded in the software, and with reference to
best practice will highlight any risks we can further develop controls around,
or any controls that could be improved.
With the combination of the store internal audit process and the external
assessment of the key business cycles, the Audit Committee considers that this
provides a robust internal audit assessment for the Group.
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 2024 the Group had available liquidity of approximately £190
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 2024, had
operational cash flow of £110.1 million, with capital commitments at the
balance sheet date of £3.9 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 2025 and
projections contained in the longer-term business plan which cover the 18
month going concern assessment 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.
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,
the Russian invasion of Ukraine and the cost of living crisis. 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 2028. 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 in recent years.
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 2028.
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 environmental initiatives, aim to create a more sustainable
business which will increase shareholder and customer value in both the medium
and long-term;
- through our social initiatives, we support local charities with free storage
space and help vulnerable get back into the workplace through the Big Yellow
Foundation;
- 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 debt
to EBITDA in the range of three to four 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
weighting to 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 2023, there have been
eight store openings in London (including our Kings Cross store), and we
anticipate four new stores in London in 2024.
Our stores are on average 59,000 sq ft, compared to an industry average of
approximately 30,000 sq ft (source: UK Self Storage Association 2024 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 5.6 times
for the year ended 31 March 2024, and our objective is to not let this fall
below 5 times, compared to the consolidated EBITDA covenant of 1.5 times. We
also look at our debt to EBITDA ratio, which is currently 3 times, and we seek
to maintain this in the range of three to four 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 54%.
80% of our customers pay by direct debit, and our cash collection has remained
robust over recent years.
Total shareholder return
In the twenty four years since flotation in May 2000, Big Yellow has delivered
a Total Shareholder Return ("TSR"), including dividends reinvested, of 13.6%
per annum, in aggregate 1,770.4% at the closing price of 1,064p on 31 March
2024. This compares to 4.8% per annum for the FTSE Real Estate Index and
5.4% 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
• Awareness still remains relatively low, with only 40% to 50% having reasonable
or good knowledge of self storage
Our competitive advantage • UK self storage industry's most recognised brand with 93% 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
• 6.4 million sq ft UK footprint, with development pipeline of 1.0 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
• 38% of customers in stores greater than two-year length of stay, a further 16%
for one to two years
• Average length of stay for existing customers of 31 months, for the 54% of
customers that have stayed for more than one year, the average length of stay
is 53 months
• 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 13% since 2004/5
• Annual compound cash flow growth of 13% since 2004/5
• Dividend pay-out ratio of a minimum of 80% of adjusted eps
Consolidated Statement of Comprehensive Income
Year ended 31 March 2024
Note 2024 2023
£000 £000
Revenue 3 199,619 188,829
Cost of sales (55,994) (54,307)
Gross profit 143,625 134,522
Administrative expenses (15,219) (14,519)
Operating profit before fair value changes on property assets 128,406 120,003
Gain/(loss) on the revaluation of investment properties 14a,15 131,159 (29,861)
Operating profit 259,565 90,142
Other income 3 6,517 2,185
Investment income - interest receivable 7 45 9
Finance costs - interest payable 8 (22,946) (16,894)
- fair value 8 (2,146) (133)
movement on derivatives
Profit before taxation 241,035 75,309
Taxation 9 (1,202) (1,977)
Profit for the year (attributable to equity shareholders) 5 239,833 73,332
Total comprehensive income for the year (attributable to equity shareholders) 239,833 73,332
Basic earnings per share 12 127.1p 40.1p
Diluted earnings per share 12 126.4p 39.8p
Adjusted earnings per share are shown in Note 12.
All items in the statement of comprehensive income relate to continuing
operations.
Consolidated Balance Sheet
31 March 2024
Note 2024 2023
£000
£000
Non-current assets
Investment property 14a 2,718,525 2,449,640
Investment property under construction 14a 146,485 260,720
Right-of-use assets 14a 17,152 18,148
Plant, equipment, and owner-occupied property 14b 3,870 4,003
Intangible assets 14c 1,433 1,433
Investment 14d 588 588
2,888,053 2,734,532
Current assets
Derivative financial instruments 18c - 316
Inventories 486 496
Trade and other receivables 16 10,116 8,314
Cash and cash equivalents 9,356 8,329
19,958 17,455
Total assets 2,908,011 2,751,987
Current liabilities
Trade and other payables 17 (49,396) (57,275)
Borrowings 19 (3,317) (3,159)
Obligations under lease liabilities 21 (2,253) (2,020)
(54,966) (62,454)
Non-current liabilities
Borrowings 19 (386,371) (489,411)
Obligations under lease liabilities 21 (16,474) (17,676)
Derivative financial instruments 18c (1,830) -
(404,675) (507,087)
Total liabilities (459,641) (569,541)
Net assets 2,448,370 2,182,446
Equity
Share capital 22 19,620 18,427
Share premium account 397,686 290,857
Reserves 2,031,064 1,873,162
Equity shareholders' funds 2,448,370 2,182,446
The financial statements were approved by the Board of Directors and
authorised for issue on 20 May 2024. They were signed on its behalf
by
Jim Gibson, Director John Trotman,
Director
Company Registration No. 03625199
Consolidated Statement of Changes in Equity
Year ended 31 March 2024
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 2023 18,427 290,857 74,950 1,795 1,797,436 (1,019) 2,182,446
Total comprehensive income for the year - - 239,833 239,833
- - -
Issue of share capital 1,193 106,829 - - - - 108,022
Dividend - - - - (86,013) - (86,013)
Use of own shares to satisfy share options - - (22) -
- - 22
Credit to equity for equity-settled share-based payments - - 4,082 4,082
- - -
At 31 March 2024 19,620 397,686 74,950 1,795 1,955,316 (997) 2,448,370
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 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
Consolidated Cash Flow Statement
Year ended 31 March 2024
Note 2024 2023
£000
£000
Cash generated from operations 26 129,826 128,973
Bank interest paid (24,069) (16,486)
Interest on obligations under lease liabilities (575) (706)
Interest received 45 8
Loss of income insurance proceeds 1,561 2,032
Tax paid (1,996) (1,844)
Cash flows from operating activities 104,792 111,977
Investing activities
Purchase of non-current assets (30,910) (106,413)
Disposal of non-current asset 5,400 -
Insurance proceeds on fit-out 4,722 -
Receipts from Capital Goods Scheme - 182
Cash flows from investing activities (20,788) (106,231)
Financing activities
Issue of share capital 108,022 964
Payment of lease liabilities (1,829) (1,267)
Equity dividends paid (85,259) (79,140)
Receipt from termination of interest rate derivatives - 436
Loan arrangement fees paid (3,752) (1,507)
(Decrease)/increase in borrowings 26B (100,159) 74,492
Cash flows used in financing activities (82,977) (6,022)
Net increase/(decrease) in cash and cash equivalents 1,027 (276)
Opening cash and cash equivalents 8,329 8,605
Closing cash and cash equivalents 9,356 8,329
Notes to the financial statements
Year ended 31 March 2024
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 2024 or 2023 but is
derived from those accounts. Statutory accounts for 2023 have been delivered
to the registrar of companies, and those for 2024 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.
2024 2023
£000
£000
Open stores
Self storage income 173,147 162,911
Insurance income - 3,047
Enhanced liability service income 17,649 14,272
Packing materials income 2,854 3,286
Other income from storage customers 2,051 2,010
Ancillary store rental income 1,411 1,213
197,112 186,739
Other revenue
Non-storage income 2,507 2,090
Total revenue 199,619 188,829
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 income of £6.5 million in the year (2023:
£2.2 million). £1.8 million relates to insurance proceeds for loss of
income following the destruction of the Group's Cheadle store by fire in 2022
(2023: £1.4 million). The balance of £4.7 million in the current year is
the insurance proceeds for the fit-out of the Cheadle store.
The prior year amount also included £0.6 million relating 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 following the extinguishment of 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 2024 2023
£000
£000
Depreciation of plant, equipment, and owner-occupied property 14b 864 888
Depreciation of interest in leasehold properties 1,707 1,542
(Gain)/loss on the revaluation of investment property (131,159) 29,861
Cost of inventories recognised as an expense 1,411 1,643
Employee costs 6 25,250 24,709
b) Analysis of auditor's remuneration:
2024 2023
£000
£000
Fees payable to the Company's auditor for the audit of the Company's annual 539 487
accounts
Fess payable to the Company's auditor for the subsidiaries' annual accounts 54 50
Total audit fees 593 537
Audit related assurance services - interim review 64 60
Total non-audit fees 64 60
Total audit and non-audit fees paid to KPMG LLP 657 597
6. EMPLOYEE COSTS
The average monthly number of full-time equivalent employees (including
Executive Directors) was:
2024 2023
Number
Number
Sales 402 403
Administration 62 62
464 465
At 31 March 2024 the total number of Group employees was 503 (2023: 515).
2024 2023
£000 £000
Their aggregate remuneration comprised:
Wages and salaries 18,647 17,475
Social security costs 1,692 2,759
Other pension costs 829 740
Share-based payments 4,082 3,735
25,250 24,709
7. INVESTMENT INCOME
2024 2023
£000
£000
Bank interest receivable 45 8
Unwinding of discount on Capital Goods Scheme receivable - 1
Total investment income 45 9
8. FINANCE COSTS
2024 2023
£000
£000
Interest on bank borrowings 25,624 18,156
Capitalised interest (3,254) (2,761)
Interest on obligations under lease liabilities 575 706
Other interest payable 1 61
Loan refinancing costs - 732
Total interest payable 22,946 16,894
Fair value movement on derivatives 2,146 133
Total finance costs 25,092 17,027
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.
The main rate of corporation tax has increased to 25% from 1 April 2023.
UK current tax 2024 2023
£000
£000
- Current year 2,270 2,296
- Prior year (1,068) (319)
1,202 1,977
A reconciliation of the tax charge is shown below:
2024 2023
£000
£000
Profit before tax 241,035 75,309
Tax charge at 25% (2023 - 19%) thereon 60,259 14,309
Effects of:
Revaluation of investment properties (32,790) 5,674
Other permanent differences 111 626
Utilisation of brought forward losses (284) (76)
Profits from the tax-exempt business (25,026) (18,237)
Current year tax charge 2,270 2,296
Prior year adjustment (1,068) (319)
Total tax charge 1,202 1,977
The prior year adjustment arose due to prudent assumptions made during the assessment of the corporation tax provision for the prior year accounts. On completion of the tax computations for the year, the actual charge for the year ended 31 March 2023 was £1.1 million lower than had been provided in the accounts (2023: £0.3 million lower).
At 31 March 2024 the Group has unutilised tax losses from the non-REIT taxable business of £33.1 million (2023: £33.8 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.
10. ADJUSTED PROFIT
2024 2023
£000
£000
Profit before tax 241,035 75,309
(Gain)/loss on revaluation of investment properties (131,159) 29,861
Change in fair value of interest rate derivatives 2,146 133
EPRA adjusted profit before tax 112,022 105,303
Cheadle fit-out insurance proceeds (4,723) -
Refinancing fees - 732
Adjusted profit before tax 107,299 106,035
Tax (1,202) (1,977)
Adjusted profit after tax 106,097 104,058
Adjusted profit before tax which excludes gains and losses on the revaluation
of investment properties, changes in fair value of interest rate derivatives,
refinancing fees, fit-out insurance proceeds receipts, and net gains and
losses on disposal of investment property has been disclosed to give readers a
clear picture of the underlying performance of the business.
11. DIVIDENDS
2024 2023
£000
£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2023 of 22.9p 41,939 39,136
(2022: 21.4p) per share.
Interim dividend for the year ended 31 March 2024 of 22.6p 44,074 40,824
(2023: 22.3p) per share.
86,013 79,960
Proposed final dividend for the year ended 31 March 2024 of 44,104 41,939
22.6p (2023: 22.9p) per share.
Subject to approval by shareholders at the Annual General Meeting to be held on 18 July 2024, the final dividend will be paid on 26 July 2024. The ex-div date is 4 July 2024 and the record date is 5 July 2024.
The Property Income Distribution ("PID") payable for the year is 45.2 pence
per share (2023: 45.2 pence per share).
12. EARNINGS PER SHARE
Year ended 31 March 2024 Year ended 31 March 2023
Earnings Shares Pence per share Earnings Shares Pence per share
£m million £m million
Basic 239.8 188.7 127.1 73.3 183.0 40.1
Dilutive share options - 1.1 (0.7) - 1.1 (0.3)
Diluted 239.8 189.8 126.4 73.3 184.1 39.8
Adjustments:
(Gain)/loss on revaluation of investment properties (131.2) - (69.1) 30.0 - 16.2
Change in fair value of interest rate derivatives 2.2 - 1.1 0.1 - 0.1
EPRA earnings 110.8 189.8 58.4 103.4 184.1 56.1
Cheadle fit-out insurance proceeds (4.7) - (2.5) - - -
Refinancing fees - - - 0.7 - 0.4
Adjusted - diluted 106.1 189.8 55.9 104.1 184.1 56.5
Adjusted - basic 106.1 188.7 56.2 104.1 183.0 56.9
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.
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 2024 Year ended 31 March 2023
Equity attributable to ordinary shareholders Equity attributable to ordinary shareholders
£000 £000
Pence per share
Pence per share
Shares Shares
Basic NAV 2,448,370 195,096,601 1,255.0 2,182,446 183,143,066 1,191.7
Share and save as you earn schemes
2,019 2,515,556 (15.0) 1,909 1,705,121 (10.0)
Diluted NAV 2,450,389 197,612,157 1,240.0 2,184,355 184,848,187 1,181.7
Fair value of derivatives 1,830 - 0.9 (316) - (0.2)
Intangible assets (1,433) - (0.7) (1,433) - (0.7)
EPRA NTA 2,450,786 197,612,157 1,240.2 2,182,606 184,848,187 1,180.8
Valuation methodology assumption (see note 15) (£000)
111,095 - 56.2 104,605 - 56.5
Adjusted NAV 2,561,881 197,612,157 1,296.4 2,287,211 184,848,187 1,237.3
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 2022 2,342,199 285,400 19,174 2,646,773
Additions 40,559 72,063 2,034 114,656
Transfer on opening 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
Additions 13,705 15,126 604 29,435
Transfer on opening 115,166 (115,166) - -
Reclassification from plant, equipment and owner-occupied property
- 60 - 60
Disposal (5,400) - - (5,400)
Revaluation (see note 15) 145,414 (14,255) - 131,159
Depreciation - - (1,600) (1,600)
At 31 March 2024 2,718,525 146,485 17,152 2,882,162
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
£78.4 million (2023: £74.6 million) is included within the investment
property total.
The credit to right-of-use assets in the prior 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 transfer on opening during the year is the Kings Cross store and the
Harrow Industrial Estate moving from investment property under construction to
investment property at valuation on completion of the developments.
The disposal in the year is the proceeds from a land swap transaction at our
Kings Cross store realising the Group £5.4 million.
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 £3.3 million of capitalised interest (2023: £2.8 million),
calculated at the Group's average borrowing cost for the year of 5.5%. 97 of
the Group's investment properties are pledged as security for loans, with a
total external value of £2.35 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 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
Reclassification to investment property under construction - -
(60) - - - (60)
Retirement of fully depreciated assets (133) (686)
- - - - (819)
Additions 23 - 255 - 516 131 925
At 31 March 2024 2,369 59 769 32 1,521 1,006 5,756
Depreciation
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) (32) (340) (423) (1,707)
Retirement of fully depreciated assets 133 686
- - - - 819
Charge for the year (50) (4) (181) - (629) (134) (998)
At 31 March 2024 (732) (24) (258) (32) (283) (557) (1,886)
Net book value
At 31 March 2024 1,637 35 511 - 1,238 449 3,870
At 31 March 2023 1,724 39 437 - 1,351 452 4,003
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 a £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.
15. VALUATION OF INVESTMENT PROPERTY
Deemed cost Revaluation on deemed cost Valuation
£000 £000 £000
Freehold (including long leasehold)
At 31 March 2023 977,874 1,440,741 2,418,615
Transfer from investment property under construction 92,200 22,966 115,166
Disposals (5,400) - (5,400)
Movement in year 13,631 144,338 157,969
At 31 March 2024 1,078,305 1,608,045 2,686,350
Leasehold
At 31 March 2023 20,824 10,201 31,025
Movement in year 74 1,076 1,150
At 31 March 2024 20,898 11,277 32,175
Total investment property
At 31 March 2023 998,698 1,450,942 2,449,640
Transfer from investment property under construction 92,200 22,966 115,166
Disposals (5,400) - (5,400)
Movement in year 13,705 145,414 159,119
At 31 March 2024 1,099,203 1,619,322 2,718,525
Investment property under construction
At 31 March 2023 255,775 4,945 260,720
Transfer to investment property (92,200) (22,966) (115,166)
Movement in year 15,186 (14,255) 931
At 31 March 2024 178,761 (32,276) 146,485
Valuation of all investment property
At 31 March 2023 1,254,473 1,455,887 2,710,360
Disposals (5,400) - (5,400)
Movement in year 28,891 131,159 160,050
At 31 March 2024 1,277,964 1,587,046 2,865,010
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 2024 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 third 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 109 trading stores (both freeholds and leaseholds)
open at 31 March 2024 averages 88% (31 March 2023: 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 2.5% per
annum (2023: 2.6% 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 109 stores is 5.2% (31 March
2023: 5.3%). The weighted average exit capitalisation rate adopted (for both
freeholds and leaseholds) is 5.4% (31 March 2023: 5.6%).
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 2023: 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
10.4 years (31 March 2023: 11.4 years unexpired).
Sensitivities
Self storage valuations are complex, derived from data which is not widely
publicly available and involve a degree of judgement. For these reasons we
have classified the valuations of our property portfolio as Level 3 as defined
by IFRS 13. Inputs to the valuations, some of which are 'unobservable' as
defined by IFRS 13, include capitalisation yields, stable occupancy rates, and
rental growth rates. The existence of an increase of more than one
unobservable input would augment the impact on valuation. The impact on the
valuation would be mitigated by the inter-relationship between unobservable
inputs moving in opposite directions. For example, an increase in stable
occupancy may be offset by an increase in yield, resulting in no net impact on
the valuation. A sensitivity analysis showing the impact on 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
2024 4.8% (4.4%) 0.9% (1.0%)
2023 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 £214.4 million (2023: £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 2024 of £2,976.1 million (£111.1 million higher than
the value recorded in the financial statements) translating to 56.2 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
2024 2023
£000 £000
Current
Trade receivables 6,250 5,181
Other receivables 312 209
Prepayments and accrued income 3,554 2,924
10,116 8,314
Trade receivables are net of a bad debt provision of £579,000 (2023:
£1,070,000). The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
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 £782,000 (2023: £779,000) 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 18 days past due (2023: 16 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 has reviewed its assessment of
the ECL provision for debtors over 45 days in the year from 100% provision to
53% provision, reflecting the actual loss experience.
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 2024 Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.3% 7.5% 25.4% 52.8% 8.5%
Gross carrying amount (£000) 4,963 892 63 911 6,829
Lifetime ECL (£000) (15) (67) (16) (481) (579)
Net trade receivables at 31 March 2024 4,948 825 47 430 6,250
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
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
2024 2023
£000
£000
Balance at the beginning of the year 1,070 563
Amounts (released)/provided in year (192) 826
Amounts written off as uncollectible (299) (319)
Balance at the end of the year 579 1,070
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
2024 2023
£000 £000
Current
Trade payables 2,437 4,208
Other payables 18,166 18,199
Accruals and deferred income 28,793 34,868
49,396 57,275
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 main items within other payables are VAT,
customer deposits and withholding tax on the PID.
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 2024 was £17.7 million, an increase of 2% from 31 March 2023 (£17.3
million).
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:
2024 2023
£000
£000
Debt (394,768) (494,927)
Cash and cash equivalents 9,356 8,329
Net debt (385,412) (486,598)
Balance sheet equity 2,448,370 2,182,446
Net debt to equity ratio 15.7% 22.3%
B. Debt management
The Group currently borrows through a senior term loan, secured on 62 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 2024 the Group had one interest rate derivative in place - £35
million fixed at 4.5% (excluding the margin on the underlying debt instrument)
until September 2029.
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:
2024 2023
£000
£000
At 1 April 316 885
Receipt from cancellation of interest rate derivatives - (436)
Fair value movement in the year (2,146) (133)
At 31 March (1,830) 316
The interest rate derivative liability is shown within non-current liabilities
at the year end, as the interest rate derivative expires in 2029. 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 2023 (494,927) (19,696) 316 (514,307)
Cash movement in the year 100,159 1,829 - 101,988
Lease variations - (860) - (860)
Fair value movement - - (2,146) (2,146)
At 31 March 2024 (394,768) (18,727) (1,830) (415,325)
The difference between the loans balance above and the balance sheet is loan
arrangement fees of £5,080,000.
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 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
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 2024, 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 £510,000
(2023: reduced adjusted profit before tax by £753,000) 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 £510,000 (2023: increased adjusted profit
before tax by £753,000). 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 reduced during the year,
following the reduction 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.
2024 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 155,768 3,317 3,483 148,968 -
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 119,000 - - 119,000 -
Total 394,768 3,317 3,483 267,968 120,000
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
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:
2024 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 - (98) 124,225 20,784 144,911
From two to five years - (1,089) 309,503 3,247 311,661
From one to two years - (195) 30,000 2,279 32,084
Due after more than one year - (1,382) 463,728 26,310 488,656
Due within one year 20,603 106 24,520 2,279 47,508
Total 20,603 (1,276) 488,248 28,589 536,164
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
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.
2024 Unamortised borrowing costs Borrowings and
£000 interest
Borrowings Interest £000
£000 £000
From five to twenty years 120,000 3,673 552 124,225
From two to five years 267,968 37,007 4,528 309,503
From one to two years 3,483 26,517 - 30,000
Due after more than one year 391,451 67,197 5,080 463,728
Due within one year 3,317 21,203 - 24,520
394,768 88,400 5,080 488,248
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
19. BORROWINGS
31 March 31 March
Secured borrowings at amortised cost 2024 2023
£000 £000
Current liabilities
Aviva loan 3,317 3,159
3,317 3,159
Non-current liabilities
Bank borrowings 119,000 216,000
Aviva loan 152,451 155,768
M&G loan 120,000 120,000
Unamortised loan arrangement costs (5,080) (2,357)
Total non-current borrowings 386,371 489,411
Total borrowings 389,688 492,570
The weighted average interest rate paid on the borrowings during the year was
5.5% (2023: 4.2%).
The Group has £181 million in undrawn committed bank borrowing facilities at
31 March 2024, which expire after between two and three years (2023: £24
million expiring after between one and two years).
The Group has a £155.8 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 3.3%. The loan has an amortising element of £10.8 million which runs
to April 2027.
The Group has a secured £300 million Sustainability-linked three year
revolving bank facility with Lloyds, HSBC, Barclays and Bank of Ireland
expiring in December 2026, with a margin of 1.25%. The Group has the option
to extend the facility by two additional one-year terms through to December
2028, subject to lender approval
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 the Group has 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 year and a half with terms of between 7 and 15
years at short notice.
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 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 2024 and
throughout the year. The principal covenants are summarised in the table
below:
Covenant Covenant level At 31 March 2024
Consolidated EBITDA to net finance costs Minimum 1.5x 5.4x
Consolidated net tangible assets Minimum £500m £2,448.4m
Bank loan interest cover Minimum 1.75x 6.6x
Net debt to EBITDA ratio Maximum 8x 3.0x
Aviva loan interest service cover ratio Minimum 1.5x 6.4x
Aviva loan debt service cover ratio Minimum 1.2x 4.0x
M&G interest cover Minimum 1.5x 2.9x
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. The
Aviva and M&G loans consolidated net tangible assets covenant is a minimum
of £250 million.
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 2024
Gross financial liabilities 394,768 204,000 190,768 5.4% 4.6 years 4.2 years
At 31 March 2023
Gross financial liabilities 494,927 301,000 193,927 4.7% 4.8 years 3.9 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 share based payments £0.1 million (2023:
£0.1 million), corporation tax losses £6.2 million (2023: £6.3 million),
capital allowances in excess of depreciation £0.1 million (2023: £0.2
million) and capital losses £2.1 million (2023: £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
2024 2023 2024 2023
£000
£000 £000 £000
Amounts payable under lease liabilities:
Within one year 2,279 2,048 2,253 2,020
Between one and five years inclusive 5,526 6,149 5,112 5,652
Greater than five years 20,784 21,766 11,362 12,024
28,589 29,963 18,727 19,696
Less: future finance charges (9,862) (10,267)
Present value of lease liabilities 18,727 19,696
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
2024 2023
£000
£000
Ordinary shares of 10 pence each 19,620 18,427
Movement in issued share capital
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
Issues of shares - placing 11,640,212
Exercise of share options - Share option schemes 289,102
Number of shares at 31 March 2024 196,195,287
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 2024 options in issue to Directors and employees were as follows:
Option price per ordinary share Type of option Date first exercisable Number of ordinary shares Number of ordinary shares
2023
Date option Date on which the exercise period expires 2024
Granted
21 July 2015 nil p LTIP 21 July 2018 21 July 2025 989 989
22 July 2016 nil p LTIP 22 July 2019 21 July 2026 1,415 1,944
2 August 2017 nil p LTIP 2 August 2020 2 August 2027 9,217 5,809
24 July 2018 nil p LTIP 24 July 2021 24 July 2028 53,697 54,441
19 July 2019 nil p LTIP 19 July 2022 19 July 2029 148,587 170,545
2 March 2020 947.0p SAYE 1 April 2023 1 October 2023 - 43,016
5 August 2020 nil p LTIP 5 August 2023 5 August 2030 189,504 372,757
1 March 2021 903.2p SAYE 1 April 2024 1 October 2024 77,395 81,216
22 July 2021 nil p LTIP 22 July 2024 22 July 2031 285,440 300,444
21 July 2022 nil p LTIP 21 July 2025 21 July 2032 425,523 443,218
8 August 2022 1060.3p SAYE 1 September 2025 1 March 2026 57,665 72,429
20 July 2023 nil p LTIP 20 July 2026 19 July 2033 590,931 -
1 August 2023 891.5p SAYE 1 September 2026 1 March 2027 79,382 -
1,919,745 1,546,808
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.
1,098,686 shares are held in the Employee Benefit Trust (2023: 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 £4,082,000 (2023: £3,735,000).
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 weighted average share price at
the date of exercise for options exercised in the year was £10.77 (2023:
£13.13).
LTIP scheme 2024 2023
No. of options No. of options
Outstanding at beginning of year 1,350,147 1,179,562
Granted during the year 678,088 504,431
Lapsed during the year (72,932) (83,846)
Exercised during the year (250,000) (250,000)
Outstanding at the end of the year 1,705,303 1,350,147
Exercisable at the end of the year 403,409 107,656
The weighted average fair value of options granted during the year was
£3,230,000 (2023: £2,795,000).
Participants pay the nominal value of the shares when exercising options under
the LTIP scheme.
Options outstanding at 31 March 2024 had a weighted average contractual life
of 7.8 years (2023: 7.9 years).
Employee Share Save Scheme ("SAYE") 2024 2024 2023 2023
No. of options Weighted average exercise price No of options Weighted average exercise price
(£)
(£)
Outstanding at beginning of year 196,661 9.71 183,506 8.75
Granted during the year 82,656 8.91 72,715 10.60
Forfeited during the year (25,773) 9.99 (10,965) 9.29
Exercised during the year (39,102) 9.47 (48,595) 7.50
Outstanding at the end of the year 214,442 9.41 196,661 9.71
Exercisable at the end of the year - -
Options outstanding at 31 March 2024 had a weighted average contractual life
of 1.7 years (2023: 1.7 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 2024 the Group had £3.9 million of amounts contracted but not
provided in respect of the Group's properties (2023: £6.1 million of capital
commitments).
25. EVENTS AFTER THE BALANCE SHEET DATE
In April 2024, the Group exchanged contracts to acquire a development site in
Leamington Spa for £3 million, with completion having taken place on 13 May
2024.
26. CASH FLOW NOTES
a) Reconciliation of profit after tax to cash generated from operations
Note 2024 2023
£000
£000
Profit after tax 239,833 73,332
Taxation 1,202 1,977
Other income 3 (6,517) (2,185)
Investment income (45) (9)
Finance costs 25,092 17,027
Operating profit 259,565 90,142
(Gain)/loss on the revaluation of investment properties 14a, 15 (131,159) 29,861
Depreciation of plant, equipment, and owner-occupied property 14b 864 888
Depreciation of right-of-use assets 14a,14b 1,734 1,569
Employee share options 6 4,082 3,735
Cash generated from operations pre working capital movements 135,086 126,195
Decrease/(increase) in inventories 10 (13)
Increase in receivables (1,650) (740)
(Decrease)/increase in payables (3,620) 3,531
Cash generated from operations 129,826 128,973
b) Reconciliation of net cash flow movement to net debt
Note 2024 2023
£000
£000
Net increase/(decrease) in cash and cash equivalents in the year 1,027 (276)
Cash flow from decrease/(increase) in debt financing(1) 100,159 (74,492)
Change in net debt resulting from cash flows 101,186 (74,768)
Movement in net debt in the year 101,186 (74,768)
Net debt at the start of the year (486,598) (411,830)
Net debt at the end of the year 18A (385,412) (486,598)
(1) Made up of a net decrease of £97.0 million in the RCF facility and
repayments of the Aviva facility of £3.2 million (2023: 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).
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.
AnyJunk Limited
Jim Gibson is a Non-Executive Director and shareholder in AnyJunk Limited.
During the year AnyJunk Limited provided waste disposal services to the Group
on normal commercial terms, amounting to £17,000 (2023: £16,000).
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 £4,000
during the year (2023: £3,000). The Group sponsored a London Children's
Ballet development programme during the year, amounting to £8,000 (2023:
£8,000).
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 £319,000 (2023: £301,000).
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 £2,000 (2023: £8,000).
Ukrainian Sponsorship Pathway UK
Nicholas Vetch and Heather Savory are trustees of the charity 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 charity and the Board approved a donation which
was made in the year of £50,000 (2023: £50,000).
No other related party transactions took place during the years ended 31 March
2024 and 31 March 2023.
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 The IFRS profit after taxation attributable to shareholders of the Company
excluding investment property revaluations, one-off items of income and costs,
gains/losses on investment property disposals and changes in the fair value of
financial instruments.
Adjusted earnings growth The increase in adjusted eps year-on-year.
Adjusted NAV EPRA NTA adjusted for an investment property valuation carried out at
purchasers' costs of 2.75%, see note 13.
Adjusted earnings per share Adjusted earnings divided by the average number of shares in issue during the
financial year, see note 12.
Adjusted Profit Before Tax The Company's pre-tax EPRA earnings measure with additional Company
adjustments, see note 10.
APMs Additional performance measures that help financial statement users to better
understand the Group's performance and position
Average net achieved rent per sq ft Storage revenue divided by average occupied space over the financial year.
Average occupancy The average space occupied by customers divided by the MLA expressed as a %.
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.
Cap rates The exit capitalisation rates used in the external investment property
valuation.
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.
Closing occupancy % The space occupied by customers divided by the MLA at the balance sheet date
expressed as a %.
Closing occupancy sq ft The space occupied by customers at the balance sheet date in sq ft.
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 2024 this excludes Aberdeen, Harrow, Kingston North, and Kings
Cross, and additionally the Armadillo stores for the Big Yellow like-for-like
occupancy.
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 2024 this excludes Aberdeen, Harrow, Kingston North, and Kings
Cross.
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 2024 this excludes
Aberdeen, Harrow, Kingston North, and Kings Cross, and additionally the
Armadillo stores for the Big Yellow like-for-like occupancy.
Occupancy The space occupied by customers divided by the MLA expressed as a %.
Occupied space The space occupied by customers in sq ft.
Other storage related income Packing materials, insurance, and other storage related fees.
Pipeline The Group's development sites.
Property Income Distribution (PID) A dividend, generally subject to withholding tax, that a UK REIT is required
to pay from its tax-exempt property rental business, and which is taxable for
UK-resident shareholders at their marginal tax rate.
REGO Renewable Energy Guarantees of Origin
REIT Real Estate Investment Trust. A tax regime which in the UK exempts
participants from corporation tax both on UK rental income and gains arising
on UK investment property sales, subject to certain conditions.
REVPAF Total store revenue divided by the average maximum lettable area in the
period.
Store EBITDA Store earnings before interest, tax, depreciation, and amortisation, 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
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
£m £m £m £m £m £m £m £m £m £m
Results
Revenue 199.6 188.8 171.3 135.2 129.3 125.4 116.7 109.1 101.4 84.3
Operating profit before gains and losses on property assets
128.4 120.0 106.6 81.5 80.0 76.7 70.9 65.3 59.9 48.4
Cash flow from operating activities
104.8 112.0 107.1 76.7 73.6 72.2 63.0 55.9 55.5 42.4
Profit before taxation 241.0 75.3 698.9 265.8 93.4 126.9 134.1 99.8 112.2 105.2
Adjusted profit before taxation
107.3 106.0 96.8 74.6 71.0 67.5 61.4 54.6 49.0 39.4
Net assets 2,448.4 2,182.4 2,184.4 1,453.9 1,163.9 1,123.9 981.1 890.4 829.4 750.9
Diluted adjusted earnings per share
55.9p 56.5p 52.5p 42.4p 42.1p 41.4p 38.5p 34.5p 31.1p 27.1p
Declared total dividend per share
45.2p 45.2p 42.0p 34.0p 33.8p 33.2p 30.8p 27.6p 24.9p 21.7p
Key statistics
Number of stores open** 109 108 105 78 75 74 74 73 71 69
Store MLA (000 sq ft) 6,419 6,292 6,098 4,930 4,688 4,622 4,631 4,551 4,464 4,344
Sq ft occupied (000)** 5,029 5,088 5,107 4,201 3,781 3,810 3,730 3,551 3,363 3,178
Occupancy (decrease)/ increase in year (000 sq ft)*
(59) (19) 906 420 (29) 80 179 188 185 346
Closing net rent per sq ft** £34.14 £32.48 £29.92 £28.71 £28.15 £27.28 £26.74 £26.03 £25.90 £25.23
Number of occupied rooms** 73,000 73,000 73,000 62,000 56,500 56,000 55,000 52,500 50,000 47,250
Average number of employees during the year**
464 465 427 370 361 347 335 329 318 300
* - 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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