TIDMBYG
RNS Number : 2419A
Big Yellow Group PLC
22 May 2023
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the YEAR ended 31 MARCH 2023
HIGHLIGHTS
Resilient results against the backdrop of a challenging
macroeconomic and geopolitical environment
Year ended Year ended
Financial metrics 31 March 31 March Change
2023 2022
Revenue GBP188.8m GBP171.3m 10%
Store revenue(1) GBP186.7m GBP169.3m 10%
Like-for-like store revenue(1,2) GBP162.9m GBP151.8m 7%
Store EBITDA(1) GBP134.0m GBP120.9m 11%
Adjusted profit before tax(1) GBP106.0m GBP96.8m 10%
EPRA earnings per share(1) 56.5p 52.5p 8%
Dividend - final 22.9p 21.4p 7%
- total 45.2p 42.0p 8%
Statutory metrics
Profit before tax GBP75.3m GBP698.9m (89%)
Cash flow from operating activities
(after net finance costs and pre-working
capital movements)(3) GBP109.2m GBP99.3m 10%
Basic earnings per share 40.1p 385.4p (90%)
Store metrics
Store Maximum Lettable Area ("MLA")(1) 6,292,000 6,098,000 3%
Closing occupancy (sq ft)(1) 5,088,000 5,107,000 (0.4%)
Closing occupancy(1) 80.9% 83.7% (2.8 ppts)
Occupancy - like-for-like stores
(%)(1,2) 84.0% 86.0% (2.0 ppts)
Average occupancy(1) 83.7% 86.7% (3.0 ppts)
Closing net rent per sq ft(1) GBP32.48 GBP29.92 9%
Like-for-like average net achieved
rent per sq ft(1,2) GBP33.31 GBP30.35 10%
Like-for-like closing net rent
per sq ft(1,2) GBP34.60 GBP31.80 9%
------------------------------------------- ------------ ----------- -----------
(1) See note 28 for glossary of terms
(2) The like-for-like metrics exclude stores opened and acquired
in the current and preceding financial years, and the Armadillo
stores
(3) See reconciliation in Financial Review
Highlights
-- Revenue growth of 10%, reflecting new stores and an additional three months of Armadillo (acquired
1 July 2021)
-- Like-for-like store revenue is up 7%, mainly from increases in average achieved rents
-- Like-for-like occupancy decrease of 2.0 ppts to 84.0% (March 2022: 86.0%). Closing occupancy,
reflecting the additional capacity from five recently opened stores, is down 2.8 ppts
-- Like-for-like average achieved net rent per sq ft increased by 10% year on year, like-for-like
closing net rent up 9% from March 2022
-- Overall store EBITDA margin increased to 71.8% (2022: 71.1%)
-- Cash flow from operating activities (after net finance costs and pre-working capital movements)
increased by 10% to GBP109.2 million
-- Adjusted profit before tax up 10% to GBP106.0 million, EPRA earnings per share up 8% to 56.5p
-- 45.2 pence per share full year dividend, an increase of 8%
-- Statutory profit before tax of GBP75.3 million, down from GBP698.9 million in the prior year,
which included a revaluation surplus of GBP597 million. This year open store valuations were
up 1%, offset by write-downs on development assets, resulting in a deficit of GBP30 million
-- Refinancing of GBP120 million seven-year M&G loan and new longer-term $225 million shelf facility
with Pricoa Private Capital
-- SBTi targets externally verified, GBP4.7 million invested in solar retro-fit, 53 stores now
have solar with a 94% increase in capacity in the year to 4.5 Megawatts
Investment in new capacity
-- 193,000 sq ft of capacity added in the year, with two new stores opened in London (Harrow
and Kingston North), and an operating store acquired in Aberdeen
-- Acquisition of freehold property on Old Kent Road, London taking the pipeline to 11 development
sites of approximately 0.9 million sq ft (15% of current MLA), of which nine are in London,
and 1.2 million of fully built unlet space available
-- Further progress to reduce our short leasehold exposure on a few remaining stores. Acquisition
of freehold sites at Farnham Road, Slough and Staples Corner, London to build replacement
stores, and we acquired the freehold of our Oxford store
-- Planning consent granted for new stores in Staines (West London) and Farnham Road, Slough;
we now have seven pipeline stores with planning
-- Initial tenders on our proposed Slough Farnham Road facility have been encouraging and hence
we will be commencing on site at Slough this Summer, with further construction starts to follow
later in the year, subject to planning and vacant possession
Nicholas Vetch CBE, Executive Chairman of Big Yellow,
commented:
"We are pleased to have delivered these results despite an
increasingly familiar year of macroeconomic, political and
geopolitical volatility. Our pricing models to new and existing
customers have successfully mitigated the impacts of higher
inflation, delivering improved average achieved rents, which have
been the main driver of revenue growth. Underpinning our resilience
is our core strategy to invest significantly in the London market,
which has seen the strongest performance, driven by both domestic
and business customers, over the last year. We have also been
successful in controlling overall increases in store operating
expenses to 4% on a like-for-like basis, resulting in improved
operating margins.
Big Yellow's business model has been built on the assumption of
interest rates being higher than the very low levels that persisted
following the Global Financial Crisis until last year.
We will create incremental income through the building of new
stores to generate cash on cash returns of 8% or more and the
acquisition of existing assets to generate returns of 9% or
more.
We are confident that the existing platform of stores will
continue to provide a resilient stream of income, with scope for
increase including from the pipeline of new stores. Most
importantly, we believe the business model is fit for purpose in
this new environment. "
ABOUT US
Big Yellow is the UK's brand leader in self storage. Big Yellow
now operates from a platform of 108 stores, including 24 stores
branded as Armadillo Self Storage. We have a pipeline of 0.9
million sq ft comprising 11 proposed Big Yellow self storage
facilities. The current maximum lettable area of the existing
platform (including Armadillo) is 6.3 million sq ft. When fully
built out the portfolio will provide approximately 7.2 million sq
ft of flexible storage space. 99% of our stores and sites by value
are held freehold and long leasehold, with the remaining 1% short
leasehold.
The Group has pioneered the development of the latest generation
of self storage facilities, which utilise state of the art
technology and are located in high profile, accessible, main road
locations. Our focus on the location and visibility of our stores,
with excellent customer service, a market-leading online platform,
and significant and increasing investment in sustainability, has
created in Big Yellow the most recognised brand name in the UK self
storage industry.
CHAIRMAN'S STATEMENT
Big Yellow Group PLC ("Big Yellow", "the Group" or "the
Company"), the UK's brand leader in self storage, is pleased to
announce its results for the year ended 31 March 2023.
We are pleased to have delivered these results despite an
increasingly familiar year of macroeconomic, political and
geopolitical volatility. Our pricing models to new and existing
customers have successfully mitigated the impacts of higher
inflation, delivering improved average achieved rents, which have
been the main driver of revenue growth. Underpinning our resilience
is our core strategy to invest significantly in the London market,
which has seen the strongest performance, driven by both domestic
and business customers, over the last year. We have also been
successful in controlling overall increases in store operating
expenses to 4% on a like-for-like basis, resulting in improved
operating margins.
We have also continued to invest in our business with the
acquisition of an operating store in Aberdeen, a property in a
strategic location on the Old Kent Road, London, and have opened a
further two stores in Harrow and North Kingston. Since the onset of
the pandemic, the Group has opened seven new stores, which, coupled
with the acquisitions of Aberdeen and the remaining 80% interest in
Armadillo, increase the Group's MLA by 1.6 million sq ft, or 34%.
These new stores have been an important contributor to our overall
revenue growth of 10% for the year and we have 1.2 million sq ft of
fully built unlet space in the existing portfolio.
Financial results
Revenue for the year was GBP188.8 million (2022: GBP171.3
million), an increase of 10%. Like-for-like store revenue growth
(see note 28 ) was 7% driven by improvements in average net rent .
Like-for-like store revenue excludes new store openings and
acquired stores (including the remaining interest of Armadillo
portfolio which we acquired in July 2021, and Aberdeen acquired in
June 2022).
Store revenue for the fourth quarter was GBP46.1 million, an
increase of 6% from GBP43.6 million for the same quarter last
year.
The business continues to be highly cash generative, with
operating cash flow (after net finance costs and pre-working
capital movements) increasing by GBP9.9 million (10%) to GBP109.2
million for the year ( 2022 : GBP99.3 million).
We are very proud to have delivered adjusted profits in excess
of GBP100 million for the first time since the business was founded
nearly 25 years ago. The adjusted profit before tax in the year was
GBP106.0 million up 10% from GBP96.8 million in 2022. EPRA earnings
per share increased by 8% to 56.5p (2022: 52.5p) with an equivalent
8% increase in the dividend per share for the year.
The Group's statutory profit before tax was GBP75.3 million, a
decrease of 89% from GBP698.9 million in the prior year. There was
a very significant increase in the valuation of our investment
portfolio last year, and this year the valuations have remained
relatively flat, with an increase of 1% on the open store
portfolio. However, the overall portfolio valuation is down by
GBP30 million, as a result of a GBP57.5 million reduction in the
value of our industrial property and land without self storage
planning in the development pipeline, reflective of the new
financing conditions and wider market environment for land. The
Financial Review and note 15 contains further details on the
Group's investment property valuation.
Investment in new capacity
In June 2022 the Group acquired an existing self storage centre
in Aberdeen for GBP10 million, and this together with the new
stores opened in Harrow and Kingston North (both in London) added
193,000 sq ft to the Group's capacity.
A key aspect of the Big Yellow strategy is that our portfolio is
to build or acquire high quality freehold stores to drive higher
operating margins, with the business not subject to continual
increases in industrial rent liabilities, and to have control of
all aspects of our estate. We are therefore pleased to have
continued this with the following three additional investments in
the last year as follows:
-- we acquired a prime site on Farnham Road in Slough, which now has planning for a 62,000 sq
ft self storage centre. As part of this transaction, the Group has also agreed to the surrender
of the lease on its existing similar capacity Slough store. We are currently out to tender,
and expect to start construction this Summer, with an opening in 2024, at which point customers
from the existing store will be transferred and the lease surrendered;
-- in December we acquired a 2.1 acre freehold site in Staples Corner, London for GBP13.25 million.
The site is located close to our existing leasehold 112,000 sq ft store at Staples Corner
and is currently let on a short-term basis. Our intention is to seek planning consent for
a 130,000 sq ft store on the new site. Following construction of the new store, we will transfer
the customers from the existing store to the new location, and then seek to assign the lease;
and
-- we acquired the freehold of our Oxford store for GBP13.5 million in September. The 1.8 acre
site includes two small industrial trade units, which will provide vacant possession in 2030
and the opportunity to intensify the use.
After a 15 year search, the Group acquired a freehold property
on Old Kent Road, London. The property, currently let to Iceland
Foods, has a passing rent of GBP388,000 with six years remaining on
their lease. We will be seeking planning consent for a 75,000 sq ft
self storage centre on the site. This is a medium-term strategic
opportunity in an area of London going through significant
regeneration. The timing of construction and opening is dependent
on planning and vacant possession.
On the planning front, we have secured a resolution to grant
planning consent for an approximately 65,000 sq ft self storage
centre and approximately 100,000 sq ft of capacity across nine
industrial units, at our site in Staines.
We are currently on site constructing our new store in Kings
Cross which opens in June 2023. In May 2022, we decided to put on
hold any future construction commitments, given the uncertainties
around pricing in the construction market and our need to secure
fixed price contracts. That decision appears to have been
opportune; conditions in the construction market are improving to
our benefit, labour shortages persist, but steel, cladding and
other materials are sharply down in cost (albeit from significant
increases between 2020 and 2022).
Preliminaries and contractor margins have additionally reduced.
The recent tender on one of our Slough development sites is
encouraging. The Slough store will commence on site this Summer and
we will be restarting the roll-out of projects with planning, some
of which are subject to vacant possession, later this year.
We now have a pipeline of 11 proposed self storage facilities.
These store openings are expected to add approximately 0.9 million
sq ft of storage space to the portfolio, an increased capacity of
15%.
The total development cost of these 11 new stores is GBP366
million, with costs incurred to date of GBP180 million, and cost to
complete of approximately GBP186 million. We estimate they will
generate net operating income at stabilisation of GBP31.5 million
at today's prices, representing an 8.6% return on cost. The
replacement stores for Slough and Staples Corner will cost a
further GBP31 million, with Slough Farnham Road starting
construction this year, and Staples Corner subject to planning.
Harrow
Much less helpfully, in May 2022 we announced the conditional
sale of the industrial scheme at Harrow. The project has been
plagued with setbacks including the main contractor falling into
administration. The conditions necessary to effect the sale to the
prospective purchaser have not been met and therefore the sale will
not proceed.
We intend now to retain the asset, complete the outstanding
construction works with a newly appointed contractor, with an
anticipated completion in August of this year, and proceed with the
lettings of the 11 industrial units ourselves. The project shows a
healthy surplus value despite it having been a frustrating and
costly process, but that said, newly built multi-let industrial
unit schemes in London are relatively scarce and we are confident
it will therefore generate further value over the next few
years.
Capital structure
Net debt is GBP486.6 million at 31 March 2023, with an average
of cost of 4.7%, and interest cover of 7.7 times (2022: 10.5
times). The clear strategy has been to have low relative levels of
debt, and reflective of that, a flexible hedging structure, which
we will continue.
Dividends
The Group's dividend policy is to distribute a minimum of 80% of
full year adjusted earnings per share. The final distribution of
PID declared is 22.9 pence per share. This brings the total
distribution declared for the year to 45.2 pence per share
representing an increase of 8 % from 42.0 pence per share last
year.
Our people
We continue to believe that any successful business requires the
creation of a fully engaged employee culture and this has always
been a key focus within Big Yellow. As mentioned earlier, this has
been a challenging year, with continued uncertainty, and we know
that to deliver such a resilient performance requires highly
engaged and motivated people throughout the business.
Customer service and feedback is also a fundamental success
factor. Our customer net promoter scores ("NPS") were an average of
78.9 over the year. NPS scores at these levels are highly unusual
and a good reflection of the culture of this business.
I would like to thank all of our people for their efforts in
contributing to another year of growth.
Outlook
The central question facing Boards, particularly in capital
intensive businesses such as real estate, is: does the business
model work in a higher interest rate environment? Big Yellow's
business model has been built on the assumption of interest rates
being higher than the very low levels that persisted following the
Global Financial Crisis until last year.
The commitment to relatively low levels of debt and the
established flexible debt management strategy remains precisely the
same. The floating portion of our debt has proved more costly in
recent months but has previously worked to our advantage. Over the
cycle, we remain confident that it strikes the right balance.
We will create incremental income through the building of new
stores to generate cash on cash returns of 8% or more and the
acquisition of existing assets to generate returns of 9% or
more.
As always, we make no comment on likely outcomes for the
economy, we leave that to the experts. We are, however, confident
that the existing platform of stores will continue to provide a
resilient stream of income, with scope for increase including from
the pipeline of new stores. Most importantly, we believe the
business model is fit for purpose in this new environment.
Nicholas Vetch CBE
Executive Chairman
22 May 2023
CHIEF EXECUTIVE'S STATEMENT
Trading
We are pleased to have delivered a set of results that are
testament to the underlying resilience of our business. The
significant increase in interest rates to tackle higher inflation
and tighter mortgage borrowing conditions following the Russian
invasion of Ukraine, added to by the negative headlines and
volatility around the UK economy last Autumn, does, as we've said
in the past, have an impact on our demand at the margin,
particularly for those making bigger ticket decisions.
Over the year there has been a significant increase in the cost
of living, driven by energy, fuel and food inflation, which is
having a disproportionate impact on those with lower incomes.
However, we have not seen that distress come through to our
customer base, where bad debts have not increased from last year,
and our aged debtors remain below their pre-Covid levels.
Unemployment remains at very low levels and our customers on the
whole are storing goods or individual possessions that are of value
to them, and our customer base is largely comprised of those from
higher income groups.
Self storage is not immune to these external shocks and
resultant uncertainty, but this performance alongside our track
record since the Global Financial Crisis, demonstrates our ability
to navigate these headwinds. Finally, as with last year, we are
seeing a return to occupancy growth in May, with an improving
demand picture.
People
As ever, our progress reflects the steadfast commitment of our
people who have worked extremely hard this year.
After seeing elevated levels of staff turnover post-Covid in the
second half of 2021 and the first half of 2022, we have seen a
consistent improvement and overall our levels of staff turnover are
now in line with the pre-Covid period. Very pleasingly, the level
of vacancies in the business is at historic lows, with a
significant drop in leavers in the final quarter.
Salary increases last year were on average 5.3%, with average
bonuses of 10%, and we have recently awarded an average salary
increase from 1 April of 5.6%. Recognising that our employees at
the lower end of our pay scales have seen a disproportionate impact
from rising prices, we made two cost of living payments over the
Winter, principally in Customer Service and the stores. This was
very well received.
Given the investment we have made in recent years in the
automation of our store operations, particularly in relation to
interaction with prospects and customers, we continue to review
every vacancy before making a decision to recruit with a view to
achieving savings this year through the salary line. Automation is
also relevant to many other aspects of our business, including head
office functions and we currently have a moratorium in place on any
further recruitment with the bias being towards technological
advance. As with the stores, we will continue to review staffing
levels at our Bagshot headquarters.
Our brand is now our biggest recruitment tool, with direct
recruitment through various digital channels now representing 80%,
with 20% through more traditional agencies.
In addition to gender, we have made significant improvements to
our culture and practices in respect of diversity, and these are
set out in our Gender and Inclusivity Report, which is available on
our corporate website, and has been formally filed for 2022.
Inclusivity and Diversity in our business is very much driven by a
committee of colleagues from throughout the business and is
something that will remain a focus, as we believe diversity has a
positive impact on culture and performance.
We continue to invest in development, as this has benefits, not
just around performance, but also around retention. We moved much
of our training to a new learning and development platform over the
Covid period and this has had significant improvements to
efficiency of delivery, monitoring, and control and hence outcomes.
Other new initiatives such as "Meet our Experts" using internal
talent, and a new updated mystery shopping programme following
feedback from the stores are further examples. In addition,
following our 2021 engagement survey, we have taken 19 actions
covering areas such as rotas, store bonus metrics, internal
communication, store cover, store feedback, development, training,
benefits, and others. The next survey is taking place currently and
hopefully this response will result in continued high levels of
engagement with the survey.
Investment in our operating platform and systems
The march of automation in business continues, and we have
focussed on investing in technology to improve efficiency right
from when Big Yellow was founded. We have always invested in the
security and automation of our stores, allowing access out of
opening hours, and this is something we continue to upgrade and
improve as security is always very high up in the considerations of
anyone looking to use self storage.
The arrival of search and smartphones, along with investments we
have made in software development and external SaaS programmes
means that our prospect and customer interactions and experience
are unrecognisable from twenty years ago. Our stores have been
paperless since 2020 and we continue to invest in automating
certain repetitive tasks to improve productivity in our day-to-day
store operations. Examples of this currently in process are credit
card payments and prospect handling, the latter to allow our
digital platforms to do more around prospect and customer
interaction.
The improvements to our Big Yellow mobile and desktop platforms
are incremental and continuous and now allow a prospect to
determine the unit size required, get a quote, and reserve a room
in a matter of minutes. Customers can now check-in online before
arriving at the store, and this process has reduced significantly
the time taken to process a move-in, with a simple ID check,
discussion around contents cover, and then payment. As previously
mentioned, we will always look to optimise the use of our resource
at stores, however, we will always need someone on site for a
certain number of hours in the day principally to carry out key
tasks, one of the most important being the security and protection
of our assets, which cannot be done just by using CCTV cameras,
particularly in large, busy stores. At the same time, when on site,
our store team members provide customer service, particularly to
our business customers who are more regular visitors; carry out the
necessary due diligence around security and health and safety; keep
the stores clean and presentable; drive ancillary sales; and follow
up on prospects, particularly for those who have reserved. Although
IDs are uploaded during the check-in online process, it is our
policy to see the original and ensure the customer moving-in is the
same person. This is not just about the security of our assets, it
is also important for our customers when visiting our stores, often
alone, that those in the building have been vetted in some way.
Automation and the use of SaaS programmes are also something we
invest in to improve efficiency of many of our centralised
functions, and by way of example, the progress we have made in our
finance function has allowed us to maintain control of headcount,
despite the significant increase in the size of the business.
Generative AI is the current hot topic, and we are reviewing how
it can help us improve efficiency, particularly in relation to some
of our head office functions, such as people and development and,
marketing. We will continue to monitor, review and adopt where it
makes commercial sense and improves efficiency within the
business.
The cyber threat remains, and we continue to invest in our
digital security, and review the effectiveness of all the tools we
deploy.
In relation to our estate, we have invested around GBP3 million
over the last two to three years upgrading the security across the
portfolio, including improving monitoring of our stores centrally
overnight. We consider security to be fundamental to our customer
offering both to the customer and in relation to their goods,
equipment or personal possessions. Maintaining our estate is
something we also believe strongly in and have invested GBP4.7
million this year on the repair and maintenance of our stores, all
of which is expensed through the Income Statement.
ESG
One of our key strategic objectives is around sustainability and
the ESG framework. As part of this, a key objective is to be Net
Renewable Energy Positive by 2030. This will be achieved through
the investment in solar across our estate and we have completed 23
of the initial 36 retrofit solar installations to date with a total
of 53 stores now having solar. In addition, we are looking to put
solar on our Armadillo stores with surveys currently taking place.
The investment in solar, not only being good for the planet, is
reducing our reliance on external energy supply. Our current
installed solar capacity is 4.5 Megawatts, an increase of 94% over
the year. We estimate that this is currently saving the business
GBP0.5 million per year. This will continue to increase as we make
further progress towards our objective of being self-sufficient in
energy.
We have completed a rigorous process with the Science Based
Targets initiative to have our targets certified by them, and these
are reported in more detail in the ESG section. Our focus will now
be working towards achieving these over the coming seven years.
Scope 1 and Scope 2 are within our control, and for the Scope 3
targets, we will need to engage significantly with our supplier
network.
There is an important requirement in relation to the energy
efficiency of commercial real estate with a deadline in 2025 for
all buildings to have A to C EPC certification. This is
increasingly becoming relevant for valuers and indeed purchasers of
existing self storage centres. We have recently had all of our
buildings assessed and 98% comply, with two Armadillo stores rated
D. We have planned investment in these stores, including solar,
which we believe will improve their energy efficiency ratings. This
is a pleasing result, and reflective of the fact that most of our
portfolio is developed from scratch and is largely
purpose-built.
Given the human rights concerns we had around the supplier of
our solar panels, with a move to a new Norwegian supplier at the
end of 2021, we have this year carried out a Supply Chain Risk
assessment and engaged with the top 80% of our value chain. Key
areas for consideration were around slavery and human rights more
generally. We believe that it is important to have a like-minded
supply change consistent with the Big Yellow culture, and this is
something we will continue to progress over the coming years.
I am delighted to be able to announce that since its formation
in 2017, the Big Yellow Foundation has made grants to our charity
partners of GBP762,000, all of whom focus on the rehabilitation of
vulnerable people into work. Following a review, our relationship
with two of these seven charities has come to an end after five
years and we are in the process of replacing them. Working Chance
is the first of our new charity partners and is the only UK charity
working to help women with convictions find employment. We are also
in discussions with Supporting Wounded Veterans, a charity
focussing on those who are physically and mentally wounded to move
forward with rehabilitation into employment. We continue to run
work placements and were very pleased over the year to have
candidates coming into our business for job experience recommended
by Street League, Breaking Barriers, and the Down's Syndrome
Association.
Finally, and very importantly, we have always tried to provide
free and discounted space to charities serving local communities to
our stores, and our community investment over the last year has
been approximately GBP271,000.
Summary
Our investment case remains to provide consistent compounding
returns from both income and growth from a secure capital
structure, and the key constituents of our business model developed
over the last twenty plus years are set out below:
-- a high quality and growing portfolio of freehold properties delivering higher operating margins;
-- a focus on London and the South East and other large urban conurbations, where the drivers
in the self storage market are at their strongest and the barriers to competition are at their
highest;
-- continuing innovation and automation;
-- an inclusive and non-hierarchical culture with a highly engaged team;
-- a focus on delivering the highest levels of customer service;
-- delivering on our strong ESG commitments;
-- the UK's leading self storage brand, with high and growing public awareness and online strength;
and
-- strong cash flow generation from a secure capital structure.
Jim Gibson
Chief Executive Officer
22 May 2023
OPERATING REVIEW
The store platform and demand
We now have a portfolio of 108 open and trading stores, with a
current maximum lettable area of 6.3 million sq ft.
Self storage demand is spread across a diverse set of drivers,
and is largely driven by need, with security, convenience, quality
of product, service and location being key factors. Awareness
remains relatively low compared to commoditised products, such as
hotel rooms or airline seats, albeit it is increasing slowly
year-on-year with increased supply, marketing expenditure and
customer use.
-- customers renting storage space whilst moving represented 41% of move-ins during the year
(2022: 41%), with homeowners representing 27% and renters 14%. The rental market was impacted
during the pandemic, and we do expect the proportion of renters to increase to more normal
levels offsetting some of the slowdown in the owner-occupied market as we adjust to higher
costs of mortgages;
-- 11% of our customers who moved in took storage space as a spare room for decluttering (2022:
12%);
-- 37% of our customers used the product because some event had occurred in their lives generating
the need for storage; they may be moving abroad for a job, have inherited possessions, are
getting together, or separating, are students who need storage during the holidays, or homeowners
developing into their lofts or basements (2022: 34%);
-- the balance of 11% of our new customer demand during the year came from businesses (2022:
13%), who stay longer and represent around 20% of our customers in store at any one time,
occupying 37% of the space.
Of our overall occupied space today, customers who are longer
stay lifestyle users, decluttering into small rooms as an extension
to their accommodation, occupy 10% to 15% of our space;
approximately 50% of the space is customers using it for less than
12 months, for reasons which are largely event driven, which could
be inheritance, moving in the owner occupied or rental sector, home
improvements, travelling; the balance of 37% of our space is
businesses.
The average space occupied by business customers at the year-end
is 179 sq ft (2022: 180 sq ft). Domestic customers occupy on
average 59 sq ft (2022: 59 sq ft) and pay on average 18% more in
rent per sq ft (2022: 21%), however business customers do stay
longer and take more space and represent around 33% of revenue
(2022: 32%).
The pandemic accelerated many structural changes that were
already occurring, such as the move to online retailing and an
increase in working from home facilitated by technological
advances. The deindustrialisation of big cities with the conversion
of commercial space into residential and other uses, has led to a
shortage of suitable flexible mini-warehouse space from which to
operate small scale storage and e-fulfilment, particularly in
London. These developments, along with businesses increasingly
seeking flexible office and storage space rather than longer
inflexible leases, have been driving our demand. We believe these
are long-term structural trends, which will benefit our business
going forward.
From research we have previously carried out, a typical small
business using storage employs around three people and 60% of them
are early-stage businesses and for 50% of them this is their only
space.
In addition, we have a dedicated national customers team for
businesses who wish to occupy space in multiple stores. These
customers on average occupy approximately 900 sq ft, paying
GBP25,000 per annum, and are billed and managed centrally. This
area has performed strongly in the year with revenue up 16%
compared to the prior year, making up 4% to 5% of occupied
space.
Activity
The table below shows the quarterly move-in and move-out
activity over the year for all of our stores:
Total move-outs Total move-outs
Total move-ins Total move-ins Year ended Year ended
Year ended Year ended 31 March 31 March %
31 March 31 March % 2023 2022
2023 2022
April to June 23,427 24,401 (4) 18,620 18,023 3
July to September 27,126 25,712 5 28,867 27,425 5
October to
December 19,368 19,428 - 23,302 22,890 2
January to
March 18,878 18,553 2 18,519 18,451 -
------------------- ----------------- ----------------- ---- ---------------- ---------------- ----
Total 88,799 88,094 1 89,308 86,789 3
The table above is indicative of what we have experienced over
the year, which is more muted trading conditions, with activity
levels broadly flat. The first quarter last year benefited from the
tapering off of the stamp duty holiday on 1 July 2021 which
accelerated housing-related demand. The year-on-year fall would
have been greater had we not seen a record performance from
students in June this year, following the reopening of all campuses
in the last academic year. The Group's move-outs increased in the
second quarter by 5% compared to last year, largely as a result of
these students moving out. Move-ins and move-outs over the second
half of the year were broadly in line with the prior year.
The occupancy of the stores fell over the year by 58,000 sq ft
(2022: fall of 69,000 sq ft). Additionally, the Group acquired a
53,000 sq ft store in Aberdeen, which had occupancy of 39,000 sq ft
at the date of acquisition. The overall decrease in the Group's
occupancy over the year was therefore 19,000 sq ft.
The Group grew occupancy over the first six months of the
financial year, with the gains principally coming from our domestic
and student customers. In our seasonally weakest third quarter, we
lost 3.8 ppts of occupancy, similar to the prior year. Our fourth
quarter started well with a strong January, but has been relatively
muted since. We believe this to be partially as a result of the
uncertainty caused by the US regional bank crisis and customers
continuing to acclimatise to a higher cost of debt environment. We
can say that move-out levels are also subdued at the moment, and as
mentioned previously, we are not seeing stress amongst our
customers. We saw a similar hesitancy in demand in the prior year
following the Russian invasion of Ukraine, with activity levels
returning to more normal levels by the end of May 2022.
The 75 established Big Yellow stores are 84.2% occupied compared
to 86.8% at the same time last year. The 9 developing Big Yellow
stores added 113,000 sq ft of occupancy over the year to reach
closing occupancy of 60.4%. The 24 Armadillo stores are 76.9%
occupied, compared to 83.1% at this time last year. Overall store
occupancy was 80.9% (2022: 83.7%).
Occupancy Occupancy Occupancy
change in
Occupancy year
31 March 2023 000 sq ft 31 March 2023 31 March 2022
% 000 sq ft 000 sq ft
-------------- ---------- -------------- --------------
75 established Big
Yellow stores 84.2% (74) 3,979 4,053
9 developing Big Yellow
stores 60.4% 113 352 239
All 84 Big Yellow
stores 81.6% 39 4,331 4,292
-------------- ---------- --------------
24 Armadillo stores 76.9% (58) 757 815
-------------- ---------- -------------- --------------
All 108 stores 80.9% (19) 5,088 5,107
All stores are trading profitably at the EBITDA level, with our
most recent openings Harrow and Kingston North reaching break even
in April 2023.
Yield management
We offer a headline opening promotion of 50% off for up to the
first 8 weeks, and we continue to manage pricing dynamically,
taking account of room availability, customer demand and local
competition. Our pricing model reduces promotions and increases
asking prices where individual units are in scarce supply. Rental
growth can also be driven through sub-dividing larger rooms into
smaller rooms, which yield a higher net rent per sq ft.
In the more muted trading environment against the backdrop of
higher inflation, we have been increasing promotions to new
customers, and achieving higher average rate growth from existing
customers who stay with us longer term. Many customers move-in and
out of our business over relatively short periods and don't receive
any price increases.
The average achieved net rent per sq ft increased by 10%
compared to the prior year, with closing net rent up 9% compared to
31 March 2022. The table below shows the change in net rent per sq
ft for the portfolio by average occupancy over the year (on a
non-weighted basis). The analysis excludes our most recent store
openings.
Average occupancy Number Net rent per sq ft Net rent per sq ft
in the year of stores growth from April 2022 growth from April
to March 2023 2021 to March 2022
------------------ ----------- ------------------------ --------------------
70% to 85% 47 8.3% 10.8%
85% to 90% 47 8.7% 11.7%
Above 90% 7 9.7% 13.0%
The self storage market
In the recently published 2023 Self Storage Association UK
Survey, only 44% of those surveyed had a reasonable or good
awareness of self storage. Furthermore, only 9% of the 2,102 adults
surveyed were currently using self storage or were thinking of
using self storage in the next year. Our research has this figure
of awareness at around 56%, compared to 51% for the SSA survey last
year. Self storage is therefore not a commoditised product, such as
hotels, taxis, cinemas etc, and it will take many years of use and
growing awareness before it becomes so, particularly given the
subdued growth in new supply.
Growth in new facilities across the industry has been largely in
regional areas of the UK and particularly in smaller towns.
Historically, new supply creation in our core markets in London and
the South East, has been difficult, with high land values driven by
competing uses such as residential and urban industrial. In London
in the year to 31 December 2022, there were five new store
openings, including three Big Yellow stores. We are aware of seven
planned store openings in London in calendar year 2023, including
our landmark 103,000 sq ft Kings Cross store.
The Self Storage Association ("SSA") estimates that the UK
industry is made up of approximately 1,492 self storage facilities
and 739 purely container operations, providing 55.5 million sq ft
of self storage space, equating to 0.82 sq ft per person in the UK.
This compares to 9.4 sq ft per person in the US, 1.9 sq ft per
person in Australia and 0.17 sq ft for mainland Europe, where the
roll-out of self storage is a more recent phenomenon (sources: UK
Self Storage Association Surveys, May 2020, and May 2023 and
FEDESSA European Self Storage Annual Survey 2022).
Marketing and operations
Our marketing strategy focuses on building our market-leading
brand awareness further and using it to maximise the cost-efficient
generation of enquiries, customer move-ins and user satisfaction
through our digital platforms. Our strong brand and continued
digital investment and innovation has helped us create a
market-leading website which delivers over 90% of our
enquiries.
Our annual YouGov survey (published April 2023) again confirmed
that the brand awareness of Big Yellow remained ahead of other UK
operators in the sector. The survey shows our unprompted brand
awareness to be nearly five times higher than our nearest
competitor across the UK.
The Big Yellow website allows users to browse different room
sizes, obtain a price, reserve online and check-in online prior to
arriving at the stores which are automated in terms of access once
a customer moves-in.
The online customer experience also allows customers to
communicate with us in real-time via Live Chat, WhatsApp, or
Facebook Messenger. The comprehensive online FAQs provide our users
with another way to ask questions they may have about the service
without needing to call us directly. This is critical because a
pproximately 70% of our new customers have not used self storage
before.
The seamless digital experience continues with our online
check-in platform. This allows customers to complete the majority
of their move-in process remotely. They can upload their photo and
identity documents, sign the full customer licence, set up
authorised persons, complete their storage inventory and set up a
paperless Direct Debit - all done remotely. This check-in online
capability has significantly cut down the time our customers need
to spend in our receptions when they move-in. The final process is
completed through our in-store digital signature pads.
We also offer the ability to purchase boxes and packing
materials through our online BoxShop store. These items can be home
delivered or made available for our Click and Collect service from
stores.
Driving online traffic
Self storage is a consumer-facing business, and the development
of a strong and sustainable brand is multi-layered and requires a
consistency of product, customer service and interaction at all
touch points, particularly online.
Search engines are the most important acquisition tool for us,
accounting for the majority of traffic to our website. Our focus
for a competitive advantage on search continues and search engine
optimisation ("SEO") work has helped us to maintain high organic
listings for popular generic and local self storage related search
terms. This in turn drives the growth and cost efficiencies of
acquiring new prospects.
Brand search terms are also a valuable driver of enquiries for
Big Yellow and help improve the efficiencies of our cost per
enquiry. 34% of all traffic generated from search engines to our
website originated from "Big Yellow" brand searches in the year.
This clearly indicates that brand is important in driving higher
levels of prospects and customer referrals, leading to improved
operational efficiencies. We have demonstrated this through
significant improvements in the performance of existing storage
centres following their acquisition, re-branding, and assimilation
into our business.
Search engine marketing remains our largest source of paid for
web traffic. Ongoing website optimisation and an engaging user
experience through our digital platforms helps ensure we maximise
the conversion of these web visits into enquiries and then
customers. Digital display advertising enables us to regionally
target audiences in the market for self storage, raising
consideration of the service and the Big Yellow brand through
engaging creatives.
Online customer reviews and social media
Supporting our values of putting the customer at the heart of
our business, our online customer reviews generate real-time
feedback from customers and provide positive word of mouth referral
to our website visitors. Through our 'Big Impressions' customer
feedback programme, we ask our new customers to rate our service.
With the users' permission, we then publish these independent
customer reviews on the Big Yellow website which currently total
over 44,000 averaging 4.8 out of 5.
The Big Impressions programme also generates customer feedback
on their move-in and move-out experience. These customer reviews
and mystery shop results are transparently accessible across the
business and helps reinforce our focus on outstanding customer
service. Over the year, we have achieved an average net promoter
score of 78.9, which is a very strong consumer-facing benchmark
result.
We also gain real-time customer feedback from over 19,000 Google
Reviews averaging 4.7 out of 5. These help to enhance our
visibility within local search listings conveying trust in the Big
Yellow brand. Additionally, we have over 3,700 reviews from the
independent review site TrustPilot. These reviews average a 4.6 out
of 5-star rating, labelled as "Excellent" on the TrustPilot ratings
scale. We monitor our customer reviews and respond where necessary
for customer service reasons or to manage our online reputation and
improve our service offering.
Social media continues to be complementary to our existing
marketing channels. Big Yellow actively posts content across
Twitter, Facebook and Instagram which help to raise awareness of
our ESG activities. These social channels are also used by
customers to connect with us and are monitored in real-time,
enabling us to respond promptly to any enquiries. The Big Yellow
LinkedIn platform is used to communicate company achievements, ESG
initiatives and our company culture and the Big Yellow YouTube
channel is used to allow web prospects to experience our stores
online through our video guides to self storage.
We will continue to invest in improving the customer experience
and user journey across all our digital marketing channels and also
in-store operations to achieve higher levels of automation and
hence efficiencies in the business.
ESG
Last year we developed a long-term strategy to become Net
Renewable Energy Positive and deliver Net Zero Scope 1 and 2
Emissions targets, which will be funded with significant investment
from the Group over the next few years. The main delivery vehicle
for this new strategy will be the installation of solar generation
capacity onto our existing store estate.
By 2025, we expect to have completed a multi-million pound
investment in renewable energy generation both on the roofs of our
estate and also at other locations. We published last year our
Strategy document that sets out our Commitments, Actions and
Timelines to become 100% Renewable Energy Positive and Net Zero
Scope 1 and 2 Emissions by 2030.
The sustainability performance highlights for the year are:
-- we have had our Science Based Targets externally verified;
-- we have invested GBP4.7 million in our solar programme over the year and now have 53 stores
with solar and have expanded the programme to all stores. Our current peak capacity has increased
over the past two years from 0.9 Megawatts to 4.5 Megawatts;
-- we have donated GBP271,000 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;
-- GBP204,000 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 GBP193,000 to our partner charities in the year;
-- we have delivered five successful and all-round enriching work placements with Breaking Barriers,
Street League and the Down's Syndrome Association;
-- we have maintained our GRESB Green Star rating, achieved a B award from CDP and maintained
our ISS indices rating; and
-- we obtained our second EPRA sBPR Gold Award.
Cyber security and IT infrastructure
Cyber security remains high on the agenda within the Group, and
we make investment where required in response to the ever-changing
threat landscape. Using both external specialists and in-house
knowledge we perform regular reviews of our cyber risk and security
posture. Testing of both systems and people is carried out on a
regular basis, including penetration testing and phishing
simulations. During the year the Group's systems were subject to an
external audit and maintained our IASME Gold certification. This
also incorporates Cyber Essentials. The Board receives bi-monthly
reports on the Group's IT infrastructure and information security.
The Group has not experienced an information security breach in the
past three years and has cyber insurance in place in the event that
a breach should occur in the future.
Our Data Compliance Officer oversees our ongoing compliance with
GDPR and PCI DSS. The role also includes Business Continuity and
Crisis Communication management. Policies and procedures are under
regular review and benchmarked against industry best practice.
There are mandatory courses for all staff to complete both for
Information Security and Data Protection. Our Infrastructure and
Development teams continue to drive innovation and efficiencies
throughout the Group.
Development pipeline
An important aspect of our external growth is the development of
new stores, particularly in London, where there are very few
existing assets suitable to be acquired. Over the last year, we
added 193,000 sq ft of capacity through opening new stores in
Harrow and Kingston North (both London) and acquiring an existing
freehold store in Aberdeen. We are looking forward to opening our
landmark Kings Cross store in June, which we expect to perform
strongly.
The status of the Group's development pipeline is summarised in
the table below:
Site Location Status Anticipated
capacity
Kings Cross, Prominent location Store opening in June 2023. 103,000
London on York Way sq ft
-------------------- ---------------------------------- -------------------
Wembley, London Prominent location Site acquired in October 70,000 sq
on Towers Business 2018. Planning consent granted. ft
Park Discussions ongoing to secure
vacant possession.
-------------------- ---------------------------------- -------------------
Queensbury, London Prominent location Site acquired in November 70,000 sq
off Honeypot 2018. Planning consent granted. ft
Lane
-------------------- ---------------------------------- -------------------
Slough Bath Road Prominent location Site acquired in April 2019. 90,000 sq
on Bath Road Planning consent granted. ft
-------------------- ---------------------------------- -------------------
Slough Farnham Prominent location Site acquired in June 2022. Replacement
Road on Farnham Planning consent granted. for existing
Road Demolition completed and leasehold
construction to commence store of
in Summer 2023 with a view a similar
to opening in Summer 2024. size
-------------------- ---------------------------------- -------------------
Wapping, London Prominent location Site acquired in July 2020. Additional
on the Highway, Planning application refused. 95,000 sq
adjacent to Appeal submitted with public ft
existing Big inquiry set for July 2023
Yellow with decision likely in August
2023.
-------------------- ---------------------------------- -------------------
Staines, London Prominent location Site acquired in December 65,000 sq
on the Causeway 2020. Planning consent granted. ft
In addition, consent was
received to develop 9 industrial
units totalling 99,000 sq
ft.
-------------------- ---------------------------------- -------------------
Epsom, London Prominent location Site acquired in March 2021. 58,000 sq
on East Street Planning application submitted ft
in September 2022. Application
likely to be refused and
an appeal submitted.
-------------------- ---------------------------------- -------------------
Kentish Town, Prominent location Site acquired in April 2021. 68,000 sq
London on Regis Road Planning application submitted ft
in December 2022. Application
likely to be refused and
an appeal submitted.
-------------------- ---------------------------------- -------------------
West Kensington, Prominent location Site acquired in June 2021. 175,000
London on Hammersmith Planning application submitted sq ft
Road in February 2023.
-------------------- ---------------------------------- -------------------
Old Kent Road, Prominent location Site acquired in June 2022. 75,000 sq
London on Old Kent Planning discussions underway ft
Road with the local Council.
-------------------- ---------------------------------- -------------------
Staples Corner, Prominent location Site acquired in December Replacement
London on North Circular 2022. Planning discussions for existing
Road underway with the local Council. leasehold
store, additional
18,000 sq
ft
-------------------- ---------------------------------- -------------------
Newcastle Prominent location Planning consent granted. 60,000 sq
on Scotswood ft
Road
-------------------- ---------------------------------- -------------------
Total 947,000
sq ft
-------------------- ---------------------------------- -------------------
PORTFOLIO SUMMARY
March 2023 March 2022(5)
Big Yellow
Established Total Total
(1) Big Yellow Big Total Big Yellow Big Yellow Big Armadillo Total
Developing Yellow Armadillo Established Developing Yellow (2)
Number of
stores 75 9 84 24 108 74 7 81 24 105
----------- ---------- --------- --------- --------- ----------- ---------- --------- --------- ---------
At 31 March:
Total capacity
(sq ft) 4,724,000 584,000 5,308,000 984,000 6,292,000 4,670,000 447,000 5,117,000 981,000 6,098,000
Occupied
space (sq
ft) 3,979,000 352,000 4,331,000 757,000 5,088,000 4,053,000 239,000 4,292,000 815,000 5,107,000
Percentage
occupied 84.2% 60.4% 81.6% 76.9% 80.9% 86.8% 53.5% 83.9% 83.1% 83.7%
Net rent
per sq ft GBP34.66 GBP29.93 GBP34.28 GBP22.20 GBP32.48 GBP32.04 GBP26.26 GBP31.71 GBP20.45 GBP29.92
For the
year:
REVPAF(3) GBP33.19 GBP19.76 GBP31.84 GBP20.27 GBP30.02 GBP31.61 GBP16.75 GBP30.64 GBP19.83 GBP28.73
Average
occupancy 87.0% 57.7% 84.0% 82.1% 83.7% 89.0% 56.8% 86.9% 86.0% 86.7%
Average
annual net
rent psf GBP33.39 GBP29.10 GBP33.10 GBP21.33 GBP31.28 GBP30.63 GBP23.94 GBP30.35 GBP19.69 GBP28.48
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Self storage
income 136,925 8,809 145,734 17,177 162,911 127,313 4,426 131,739 18,137 149,876
Other storage
related
income (3) 18,523 1,401 19,924 2,691 22,615 19,474 949 20,423 3,080 23,503
Ancillary
store rental
income 1,028 165 1,193 20 1,213 840 83 923 19 942
---------------- ----------- ---------- --------- --------- --------- ----------- ---------- --------- --------- ---------
Total store
revenue 156,476 10,375 166,851 19,888 186,739 147,627 5,458 153,085 21,236 174,321
Direct store
operating
costs
(excluding
depreciation) (38,644) (4,482) (43,126) (7,437) (50,563) (37,422) (2,896) (40,318) (7,614) (47,932)
Short and
long
leasehold
rent(4) (1,983) - (1,983) (170) (2,153) (1,934) - (1,934) (564) (2,498)
---------------- ----------- ---------- --------- --------- --------- ----------- ---------- --------- --------- ---------
Store
EBITDA(3,5) 115,849 5,893 121,742 12,281 134,023 108,271 2,562 110,833 13,058 123,891
Store EBITDA
margin 74.0% 56.8% 73.0% 61.8% 71.8% 73.3% 46.9% 72.4% 61.5% 71.1%
Deemed GBPm
cost GBPm GBPm GBPm GBPm
To 31 March
2023 714.6 142.0 856.6 142.0 998.6
Capex to
complete - 0.8 0.8 - 0.8
---------------- ----------- ---------- --------- --------- ---------
Total 714.6 142.8 857.4 142.0 999.4
--------- --------- --------- ---------
(1) The Big Yellow established stores have been open for more
than three years at 1 April 2022, and the developing stores have
been open for fewer than three years at 1 April 2022.
(2) Armadillo's Cheadle store was destroyed by fire in February
2022. It is excluded from the closing occupancy and capacity
figures in the prior year, however its average occupancy, average
net rent per sq ft, revenue and operating costs are included in the
portfolio summary up to the date of the fire.
(3) See glossary in note 28.
(4) Rent under IFRS 16 for six short leasehold properties
accounted for as investment properties and right-of-use assets
under IFRS.
(5) The Group acquired the 80% of the Armadillo Partnerships
that it did not previously own on 1 July 2021. The results of the
stores in the Partnerships have been included in the results above
for both years to give a clearer understanding of the performance
of all stores. The table below shows the results excluding the
period when the stores were not wholly owned:
Year ended 31 March 2023 Year ended 31 March 2022
Armadillo Armadillo
results results
Per above as an associate Statutory Per above as an associate Statutory
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------- ----------------- ----------- ----------- ----------------- -----------
Store revenue 186,739 - 186,739 174,321 (5,046) 169,275
Direct store
operating
costs (50,563) - (50,563) (47,932) 1,908 (46,024)
Rent (2,153) - (2,153) (2,498) 150 (2,348)
----------- ----------------- ----------- ----------- ----------------- -----------
Store EBITDA 134,023 - 134,023 123,891 (2,988) 120,903
----------- ----------------- ----------- ----------- ----------------- -----------
The table below reconciles Store EBITDA to gross profit in the
statement of comprehensive income.
Year ended 31 March 2023 Year ended 31 March 2022
GBP000 GBP000
Gross profit Gross profit
per statement per statement
Store Reconciling of comprehensive Reconciling of comprehensive
EBITDA items income Store EBITDA items income
Store
revenue/Revenue(6) 186,739 2,090 188,829 169,275 2,043 171,318
Cost of sales(7) (50,563) (3,744) (54,307) (46,024) (4,359) (50,383)
Rent(8) (2,153) 2,153 - (2,348) 2,348 -
--------- ------------ ------------------ ------------- ------------ ------------------
134,023 499 134,522 120,903 32 120,935
(6) See note 3 of the financial statements, reconciling items
are management fees and non-storage income.
(7) See reconciliation in cost of sales section in Financial Review.
(8) The rent shown above is the cost associated with leasehold
stores, only part of which is recognised within gross profit in
line with right-of-use asset accounting principles. The amount
included in gross profit is shown in the reconciling items in cost
of sales.
Reconciliation of APMs
The table below reconciles the reported figures above to the
like-for-like metrics the Group reports:
Like-for-like revenue
Year ended 31 Year ended 31 March
March 2023 2022
GBP000 GBP000
Store revenue (9) 186,739 169,275
Less revenue from non like-for-like
stores (9) (23,889) (17,475)
-------------- --------------------
Like-for-like revenue (9) 162,850 151,800
-------------- --------------------
Like-for-like occupancy
Year ended 31 Year ended 31 March
March 2023 2022
Store MLA (sq ft) (9) 6,292,000 6,098,000
Less MLA from non like-for-like
stores (sq ft) (9) (1,359,000) (1,165,000)
-------------- --------------------
Like-for-like MLA (sq ft)
(9) 4,933,000 4,933,000
Store occupancy (sq ft) (9) 5,088,000 5,107,000
Less occupancy from non like-for-like
(sq ft) (9) (944,000) (865,000)
-------------- --------------------
Like-for-like occupancy (sq
ft) (9) 4,144,000 4,242,000
Like-for-like occupancy (%)
(9) 84.0% 86.0%
(9) See glossary in note 28
FINANCIAL REVIEW
Revenue
Total revenue for the year was GBP188.8 million, an increase of
GBP17.5 million (10%) from GBP171.3 million in the prior year.
Like-for-like store revenue for the year was GBP162.9 million, an
increase of 7% from the prior year (2022: GBP151.8 million).
Like-for-like revenue excludes stores opened and acquired in the
last two financial years, including the Armadillo stores, which the
Group acquired in July 2021.
Included in store revenue is other storage related income, from
the sale of packing materials, insurance/enhanced liability service
("ELS"), and storage related charges. This amounted to GBP22.6
million in the year (2022: GBP23.5 million).
The Group changed the way it sold contents protections to its
customers on 1 June 2022 to an ELS, which is subject to VAT and not
Insurance Premium Tax ("IPT"). Prior to 1 June 2022, IPT at 12% was
paid to our insurance provider based on our total insurance
revenue. We decided not to pass on the entirety of the 20% VAT on
the new ELS to our customers, and hence gross ELS revenue from 1
June is lower by 8%. However, because we can recover VAT and are no
longer paying IPT, our cost of sales has also reduced. On a net
basis, our profits from insurance/ELS remain largely unchanged.
The other revenue earned by the Group is tenant income on sites
where we have not started development.
Operating costs
Cost of sales principally comprise the direct store operating
costs, including store staff salaries, utilities, business rates,
insurance, a full allocation of the central marketing budget and
repairs and maintenance.
The table below shows the breakdown of both Big Yellow's and
Armadillo's store operating costs compared to the prior year, with
Armadillo's costs included in full in both years:
Year ended Year ended % of store
31 March 31 March operating
Category 2023 2022 Change costs in
GBP000 GBP000 2023
Cost of sales (ELS and packing
materials) 2,202 3,896 (43%) 4%
Staff costs 14,415 13,303 8% 28%
General & admin 2,032 1,776 14% 4%
Utilities 2,056 2,274 (10%) 4%
Property rates 15,221 14,036 8% 30%
Marketing 6,504 6,494 0% 13%
Repairs & maintenance 4,685 4,198 12% 9%
Insurance 2,757 1,479 86% 6%
Computer costs 1,001 929 8% 2%
Total before one-off items 50,873 48,385 5%
One-off items (310) (453)
----------- -------------- --------- -----------
Total per portfolio summary 50,563 47,932 5%
Store operating costs have increased by GBP2.6 million (5%). The
one-off items in both years are principally rates rebates where we
have successfully appealed against the 2017 rating list. Store
operating costs before these one-off items have increased by GBP2.5
million (5%) compared to the prior year. New stores accounted for
GBP2.1 million of operating expense increase in the year. Cost of
sales has decreased by GBP1.7 million following the move to selling
an ELS rather than insurance (see explanation in revenue above).
The remaining increase of GBP2.1 million (4%), is a pleasing result
in the current inflationary environment. More specifically, we
would comment as follows:
-- Staff costs have increased by GBP1.1 million (8%) with store numbers and the salary review
of on average 5% (including a 7% increase to those at the lower end of the pay scale).
-- Marketing is in line with the prior year with continued efficiencies being achieved from our
digital campaigns.
-- Utilities has reduced by 10%, with our investment in solar, and during the year we have benefited
from a fixed rate contract on energy which is due to expire on 30 September 2023
-- Insurance has increased by GBP1.3 million (86%). We saw a significant increase in our insurance
premiums this year, from a combination of higher pricing in the insurance market, and the
impact on our premiums of the fire at our Cheadle store in February 2022.
-- The Group's bad debt expense for the year was 0.2%, in line with the prior year. The Group
has not seen any deterioration in its aged debtors' profile over recent months.
However, looking to the year ending 31 March 2024, we are
anticipating a step-up in operating costs, principally as a result
of:
-- the Group's property rates bill will increase by 19% (GBP3 million) on a like-for-like basis
for the year ending 31 March 2024, following the Rating Revaluation published in November
2022;
-- our store salary review for the year ending 31 March 2024 averaged 5.5%, with the lower paid
staff seeing increases of on average 6%; and
-- the Group has benefited from a fixed price energy contract since October 2020, which expires
in September 2023. Energy costs have moderated significantly from their peak in 2022, but
we still expect to see an increase from our current contracted pricing when we place the new
contract over the Summer. As mentioned above, the significant acceleration in our solar retrofit
programme will help over the medium term to significantly reduce our reliance on external
energy supply and mitigate the volatility that can sometimes occur in the market. We have
increased our renewable electricity generation by 94% from the prior year.
As highlighted in the Chief Executive's Statement, given the
investment we have made in recent years in the automation of our
store operations, particularly in relation to interaction with
prospects and customers, we continue to review every vacancy before
making a decision to recruit with a view to achieving savings this
year through the salary line.
The table below reconciles store operating costs per the
portfolio summary to cost of sales in the statement of
comprehensive income:
Year Year
ended ended
31 March 31 March
2023 2022
GBP000 GBP000
Direct store operating costs per portfolio
summary (excluding rent) 50,563 47,932
Rent included in cost of sales (total rent
payable is included in portfolio summary) 1,551 1,633
Rent review accruals - 607
Depreciation charged to cost of sales 496 378
Head office and other operational management
costs charged to cost of sales 1,697 1,741
Armadillo cost of sales pre acquisition of
remaining interest - ( 1,908)
Cost of sales per statement of comprehensive
income 54,307 50,383
Store EBITDA
Store EBITDA for the year was GBP134.0 million, an increase of
GBP13.1 million (11%) from GBP120.9 million for the prior year (see
Portfolio Summary). The overall EBITDA margin for during the year
was 71.8%, up from 71.1% in 2022.
All stores are currently trading profitably at the Store EBITDA
level. Our stores at Hayes and Hove, which opened in the first
quarter of 2022, reached break even in six and four months
respectively, and our stores at Harrow and Kingston North, which
both opened in September 2022 reached break even in seven
months.
Administrative expenses
Administrative expenses in the statement of comprehensive income
of GBP14.5 million were up GBP0.2 million compared to the prior
year. The prior period expense contained GBP0.4 million due to the
write-off of acquisition costs in relation to the purchase of the
remaining interest in Armadillo in accordance with IFRS 3.
The normalised increase was therefore GBP0.6 million (4%), which
is a below inflationary increase, following our focus on cost
control during the year. The non-cash share-based payments charge
represents GBP3.7 million of the overall GBP14.5 million expense
(2022: GBP3.4 million of GBP14.4 million expense).
Other operating income
In February 2022 the Group experienced a fire at our Cheadle
store, which resulted in a total loss to the store. Buildings all
risk insurance is in place for the full reinstatement value with
the landlord. We also have insurance cover in place for both our
fit-out and four years loss of income. The loss of income received
during the financial year was GBP1.4 million, which is included in
other operating income.
In June 2021, the Group experienced a fire in the wine storage
area of our Fulham store, which was isolated to a single section of
the basement floor. During the year, the Group received full
settlement from our insurers for the loss of income as a result of
this fire, which amounted to GBP0.6 million, which is included in
other operating income.
The Group acquired the freehold of its Oxford store in September
2022, thus extinguishing the right of use asset and liability in
relation to the lease from the previous landlord. This
extinguishment gave rise to a gain of GBP0.2 million, which is
included in other operating income for the year.
Interest expense on bank borrowings
The gross bank interest expense for the year was GBP18.2
million, an increase of GBP6.4 million from the prior year, due to
higher average debt levels in the year, coupled with the Group's
higher average cost of debt following the increase in interest
rates. The average cost of borrowing during the year was 4.2%
compared to 2.8% in the prior year.
Capitalised interest on our construction programme was GBP2.8
million, up from GBP2.1 million in the prior year, with interest
capitalised on our developments at Harrow, Kingston North and Kings
Cross during the year.
Total finance costs in the statement of comprehensive income
increased to GBP16.9 million from GBP10.6 million in the prior
year.
Profit before tax
The Group made a profit before tax in the year of GBP75.3
million, compared to a profit of GBP698.9 million in the prior
year. After adjusting for the gain on the revaluation of investment
properties and other matters shown in the table below, the Group
made an adjusted profit before tax in the year of GBP106.0 million,
up 10% from GBP96.8 million in 2022.
Profit before tax analysis 2023 2022
GBP000 GBP000
------------------------------------------ -------- ----------
Profit before tax 75,309 698,876
Loss/(gain) on revaluation of investment
properties 29,861 (597,224)
Gain on disposal of investment property - (584)
Acquisition costs written off - 416
Movement in fair value on interest
rate derivatives 133 (1,389)
Refinancing costs 732 -
Share of associate fair value gains
and losses - (3,293)
Adjusted profit before tax 106,035 96,802
------------------------------------------ -------- ----------
The adjustments made to the Group's profit before tax are in
line with guidance issued by EPRA. The gain on disposal of
investment property in the prior year relates to an overage
received from the previous sale of land adjacent to our Guildford
Central store.
The movement in the adjusted profit before tax from the prior
year is illustrated in the table below:
GBPm
----------------------------------------- ------
Adjusted profit before tax - year ended
31 March 2022 96.8
Increase in gross profit 13.6
Increase in administrative expenses (0.6)
Increase in other operating income 2.2
Increase in net interest payable (6.3)
Increase in capitalised interest 0.7
Reduction in share of adjusted profit
of associates (0.4)
Adjusted profit before tax - year ended
31 March 2023 106.0
------------------------------------------ ------
Basic earnings per share for the year was 40.1p (2022: 385.4p)
and diluted earnings per share was 39.8p (2022: 384.2p). Diluted
EPRA earnings per share based on adjusted profit after tax was up
8% to 56.5p (2022: 52.5p) (see note 12). EPRA earnings per share
equates to the Company's adjusted earnings per share i n the
current year.
REIT status
The Group converted to a Real Estate Investment Trust ("REIT")
in January 2007. Since then, the Group has benefited from a zero
tax rate on the Group's qualifying self storage earnings. The Group
only pays tax on the profits attributable to our residual business,
comprising primarily of the sale of packing materials and
insurance.
REIT status gives the Group exemption from UK corporation tax on
profits and gains from its qualifying portfolio of UK stores.
Revaluation gains on developments and our existing open stores are
exempt from corporation tax on chargeable gains, provided certain
criteria are met. The Armadillo stores joined our REIT group on
acquisition of the remaining interest, allowing us to write back
the deferred tax that had been provided on previous revaluation
uplifts.
The Group has a rigorous internal system in place for monitoring
compliance with criteria set out in the REIT regulations. On a
monthly basis, a report on compliance with these criteria is issued
to the Executive. To date, the Group has complied with all REIT
regulations, including forward looking tests.
Taxation
There is a tax charge in the current year of GBP2.0 million.
This compares to a charge in the prior year of GBP1.6 million. The
increase in the current year tax charge reflects the increase in
the Group's non-exempt taxable profits from the sale of insurance
and packing materials over the year.
Dividends
The Board is recommending the payment of a final dividend of
22.9 pence per share in addition to the interim dividend of 22.3
pence, giving a total dividend for the year of 45.2 pence, an
increase of 8% from the prior year, in line with our policy to
distribute a minimum of 80% of our adjusted earnings per share in
each reporting period.
REIT regulatory requirements determine the level of Property
Income Distribution ("PID") payable by the Group. On the basis of
the full year distributable reserves for PID purposes, a PID of
45.2p pence per share is payable (31 March 2022: 42.0 pence). The
PID for the year to 31 March 2023 accounts for all of the declared
dividend. The table below summarises the declared dividend for the
year:
Dividend (pence per share) 31 March 31 March
2023 2022
---------------------------- --------- ---------
Interim dividend 22.3p 20.6p
Final dividend 22.9p 21.4p
Total dividend 45.2p 42.0p
Subject to approval by shareholders at the Annual General
Meeting to be held on 20 July 2023, the final dividend will be paid
on 28 July 2023. The ex-div date is 6 July 2023 and the record date
is 7 July 2023.
Cash flow growth
The Group is strongly cash generative and draws down from its
longer term committed facilities as required to meet its
obligations. The Group's cash flow from operating activities
pre-working capital movements for the year was GBP109.2 million, an
increase of 10% from GBP99.3 million in the prior year. This
reflects the Group's increase in profitability in the year.
These operating cash flows are after the ongoing maintenance
costs of the stores, which were on average approximately GBP 43,000
per store (2022: GBP40,000).
The Group's net debt has increased over the year to GBP486.6
million (March 2022: GBP411.8 million).
Year ended Year ended
31 March 31 March
2023 2022
GBPm GBPm
Cash generated from operations pre-working
capital movements 126.2 112.5
Net finance costs (16.5) (10.8)
Interest on obligations under lease liabilities (0.7) (0.8)
Loss of income insurance proceeds 2.0 -
Tax (1.8) (1.6)
----------- -----------
Cash flow from operating activities pre-working
capital movements 109.2 99.3
Working capital movements 2.8 7.9
----------- -----------
Cash flow from operating activities 112.0 107.2
Capital expenditure (106.4) (105.2)
Acquisition of Armadillo - (66.7)
Disposal of investment property - 0.6
Investment - (0.1)
Receipt from Capital Goods Scheme 0.2 0.4
Dividends received from associates - 0.4
----------- -----------
Cash flow after investing activities 5.8 (63.4)
Ordinary dividends (79.2) (68.7)
Issue of share capital 1.0 98.5
Payment of lease liabilities (1.3) (1.4)
Receipt from termination of interest rate 0.4 -
derivatives
Loan arrangement fees paid (1.5) (0.9)
Increase in borrowings 74.5 32.2
Net cash outflow (0.3) (3.7)
Opening cash and cash equivalents 8.6 12.3
----------- -----------
Closing cash and cash equivalents 8.3 8.6
Closing debt (494.9) (420.4)
----------- -----------
Closing net debt (486.6) (411.8)
The Group's interest cover for the period (expressed as the
ratio of cash generated from operations pre-working capital
movements against interest paid) was 7.7 times (2022: 10.5 times).
This is calculated per below:
31 March 31 March
2023 2022
--------- ---------
Cash generated from operations pre working
capital movements (see note 26) 126,195 112,489
Interest paid per cash flow statement (16,486) (10,763)
--------- ---------
Interest cover 7.7x 10.5x
In the year capital expenditure outflows were GBP106.4 million,
up slightly from GBP105.2 million in the prior year. Of the capital
expenditure in the year GBP62.4 million is for the acquisition of
sites at Staples Corner, Old Kent Road and Slough Farnham Road, the
freehold of our Oxford store, and an existing storage centre in
Aberdeen (including acquisition costs), with GBP44.0 million
principally relating to build costs of the new stores, the Harrow
industrial scheme and the investment in our solar retrofit
programme.
The cash flow after investing activities was a net inflow of
GBP5.8 million in the year, compared to a net outflow of GBP63.4
million in 2022, with the prior year also including the acquisition
of Armadillo.
Balance sheet
Property
The Group's open stores and stores under development owned at 31
March 2023, which are classified as investment properties, have all
been valued individually by JLL.
The external valuation has resulted in an investment property
asset value of GBP2.71 billion, comprising GBP2.42 billion (89%)
for the freehold (including nine long leaseholds) open stores,
GBP31.0 million (1%) for the short leasehold open stores and
GBP260.7 million (9%) for the freehold investment properties under
construction.
Investment property
There was a very significant increase in the valuation of our
investment portfolio last year, and this year the valuations have
remained relatively flat, with an increase of 1% on the open store
portfolio (GBP27.6 million) - see note 15 for the detailed
valuation methodology. This revaluation gain has been driven by an
improvement in the cash flow of the stores, partly offset by an
increase in the cap rates used in the valuation. Prime
capitalisation rates have increased by on average 30 bps since the
start of the financial year. The increase in cap rates applied was
12.5 bps for stores in London, 25 bps for stores in the South East
and 50 bps for regional stores. Additionally, a further 25 bps was
added to the cap rates for immature stores.
The weighted average exit capitalisation rate used in the
valuations was 5.6% in the current year, compared to 5.5% in the
prior year.
Analysis of property portfolio Value at Revaluation
31 March 2023 movement in the
GBPm year
GBPm
--------------------------------------- --------------- -----------------
Investment property GBP2,449.6m GBP27.6m
Investment property under construction GBP260.7m (GBP57.5m)
--------------------------------------- --------------- -----------------
Investment property total GBP2,710.3m (GBP29.9m)
--------------------------------------- --------------- -----------------
The table below provides a further breakdown of the open store
valuations:
Established Developing Armadillo
Freehold Leasehold Freehold Largely Total
Freehold
---------------------- -------------- ----------- ------------ ------------ --------------
Number of stores 70 5 9 24 108
MLA capacity (sq
ft) 4,413,000 311,000 584,000 984,000 6,292,000
Valuation at 31
March 2023 (GBPm) GBP1,990.7m GBP31.0m GBP277.3m GBP150.6m GBP2,449.6m
Value per sq ft GBP451 GBP100 GBP475 GBP153 GBP389
Occupancy at 31
March 2023 84.3% 83.0% 60.4% 76.9% 80.9%
Stabilised occupancy
assumed 89% 87% 86% 86% 88%
Net initial year
one NOI yield 5.2% 16.4% 3.4% 7.2% 5.3%
---------------------- -------------- ----------- ------------ ------------ --------------
The net initial year one NOI yield is 5.3% (2022: 5.2%). Note 15
contains more detail on the assumptions underpinning the
valuations.
Investment property under construction
The Group spent GBP72.1 million on investment property under
construction in the year, notably on the site purchases of Old Kent
Road, Staples Corner and Slough, and construction expenditure,
principally on Harrow, Kingston North, and Kings Cross. Harrow and
Kingston North have transferred to investment property during the
year as the stores opened.
The valuation movement on the investment property under
construction is a deficit of GBP57.5 million with a reduction in
the value of our industrial property and land without self storage
planning in the development pipeline of around 19% in total,
reflective of the new financing conditions and wider market
environment for land.
In the prior year there was a gain on investment property under
construction of GBP67.5 million, so the movement in the current
year is largely a reversal of that increase. The investment
property under construction is still valued above its historic
cost.
Purchaser's cost adjustment
As in prior years, we have instructed an alternative valuation
on our assets using a purchaser's cost assumption of 2.75% (see
note 15 for further details) to be used in the calculation of our
adjusted diluted net asset value. This Red Book valuation on the
basis of the special assumption of 2.75% purchaser's costs, results
in a higher property valuation at 31 March 2023 of GBP2.815 billion
(GBP104.6 million higher than the value recorded in the financial
statements). This translates to 56.5 pence per share. This revised
valuation translates into an adjusted net asset value per share of
1,237.3 pence (2022: 1,239.7 pence) after the dilutive effect of
outstanding share options.
Receivables
The Group's bad debt expense in the year represented 0.2% of
revenue compared to 0.2% in the prior year, with 80% of our
customer base paying by direct debit.
The Group received its final instalment during the year under
the Capital Goods Scheme, as a consequence of the introduction of
VAT on self storage from 1 October 2012. The receivable related to
VAT to be recovered on historic store development expenditure. The
Group received GBP15.8 million under the Scheme, of which GBP0.2
million was received in the year.
Net asset value
The adjusted net asset value is 1,237.3 pence per share (see
note 13), compared to 1,239.7 pence per share at 31 March 2022. The
table below reconciles the movement:
Adjusted
NAV pence
Movement in adjusted net asset value GBPm per share
----------------------------------------- ------------------- -----------
31 March 2022 2,284.2 1,239.7
Adjusted profit after tax 104.1 56.5
Equity dividends paid (80.0) (43.4)
Revaluation movements (29.9) (16.2)
Movement in purchaser's cost adjustment 4.0 2.2
Other movements (e.g. share schemes) 4.8 (1.5)
31 March 2023 2,287.2 1,237.3
----------------------------------------- ------------------- -----------
Borrowings
Our financing policy is to fund our current needs through a mix
of debt, equity, and cash flow to allow us to build out, and add
to, our development pipeline and achieve our strategic growth
objectives, which we believe improve returns for shareholders. We
aim to ensure that there are sufficient medium-term facilities in
place to finance our committed development programme, secured
against the freehold portfolio, with debt serviced by our strong
operational cash flows. We maintain a keen watch on medium and
long-term rates and the Group's policy in respect of interest rates
is to maintain a balance between flexibility and hedging of
interest rate risk.
The table below summarises the Group's debt facilities at 31
March 2023. The average cost of debt is 4.7% (March 2022:
3.1%).
Debt Expiry Facility Drawn Average
interest
cost
------------------------- ---------------- ------------------ ------------------ ----------
September GBP158.9 GBP158.9
Aviva Loan 2028 million million 3.4%
September
M&G loan 2029 GBP120 million GBP120 million 5.2%
Revolving bank facility
(Lloyds, HSBC, and
Bank of Ireland) October 2024 GBP240 million GBP216 million 5.5%
Average term GBP518.9 GBP494.9
Total 3.9 years million million 4.7%
In addition to the facilities above, during the year, the Group
signed a $225 million credit approved shelf facility with Pricoa
Private Capital ("Pricoa"), to be drawn in fixed sterling notes.
The Group can draw the debt in minimum tranches of GBP10 million
over the next two and half years with terms of between 7 and 15
years at short notice, typically 10 days.
The Group's revolving credit facility of GBP240 million with
Lloyds, HSBC and Bank of Ireland expires in October 2024. The Group
intends to refinance this loan with the banks this year.
During the year, the Group refinanced its GBP120 million debt
facility with M&G Investments ("M&G") for a seven-year
term, with the new loan expiring in September 2029, secured against
a portfolio of 15 assets. The existing facility was due to expire
in June 2023. GBP35 million of this facility is currently fixed by
way of a swap until June 2023, and the balance is variable.
The margin on the facility was reduced by 20bps from the
expiring facility, reflective of improved portfolio performance,
and the sustainability investments that Big Yellow has made over
the past few years, and our planned investment in solar over the
coming years as part of our Net Renewable Energy Positive
Strategy.
The Group repaid the two Armadillo bank facilities during the
year using the revolving bank facility. The Group also cancelled
the two interest rate derivatives in place on the Armadillo
facilities, which resulted in a payment to the Group of GBP0.4
million as the swaps were in-the-money.
The Group was comfortably in compliance with its banking
covenants at 31 March 2023. Further details of the Group's
covenants are provided in note 19 of the accounts.
The Group's key financial ratios are shown in the table
below:
Metric 31 March 31 March
2023 2022
-------------------------------------------- --------- ---------
Net Debt / Gross Property Assets 18% 16%
Net Debt / Adjusted Net Assets 21% 18%
Net Debt / Market Capitalisation 23% 15%
Cash generated from operations pre-working
capital movements against interest
paid 7.7x 10.5x
-------------------------------------------- --------- ---------
At 31 March 2023, the fair value on the Group's interest rate
derivatives was an asset of GBP0.3 million. The Group does not
hedge account its interest rate derivatives. As recommended by
EPRA, the fair value movements are eliminated from adjusted profit
before tax, diluted EPRA earnings per share, and adjusted net
assets per share.
Cash deposits are only placed with approved financial
institutions in accordance with the Group's Treasury policy.
Share capital
The share capital of the Company totalled GBP18.4 million at 31
March 2023 (2022: GBP18.4 million), consisting of 184,265,973
ordinary shares of 10p each (2022: 183,967,378 shares). 0.3 million
shares were issued for the exercise of options during the year at
an average exercise price of GBP13.13 (2022: 0.3 million shares at
an average price of GBP14.84).
The Group holds 1.1 million shares within an Employee Benefit
Trust ("EBT"). These shares are shown as a debit in reserves and
are not included in calculating net asset value per share.
2023 2022
No. No.
------------------------------------------ ----------- -----------
Opening shares 183,967,378 175,880,470
Shares issued in placing - 7,751,938
Shares issued for the exercise of options 298,595 334,970
------------------------------------------ ----------- -----------
Closing shares in issue 184,265,973 183,967,378
Shares held in EBT (1,122,907) (1,122,907)
Closing shares for NAV purposes 183,143,066 182,844,471
------------------------------------------ ----------- -----------
116.3 million shares were traded in the market during the year
ended 31 March 2023 (2022: 85.4 million). The average mid-market
price of shares traded during the year was GBP12.41 with a high of
GBP15.53 and a low of GBP9.87.
Principal risks and uncertainties
The Directors have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that
would threaten its business model, future performance, solvency, or
liquidity. The Group maintains a low appetite to risk, in line with
our strategic objectives of providing a low volatility, high
distribution business.
The section below details the emerging and principal risks and
uncertainties that are considered to have the most material impact
on the Group's strategy and objectives. These key risks are
monitored on an ongoing basis by the Executive Directors and
considered fully by the Board in its annual risk review.
Risk and Mitigation Change during
impact the year and
outlook
Self storage
market risk Self storage is a relatively immature market in the UK compared to other self storage markets The Russian
There is a such as the United States and Australia, and we believe has further opportunity for growth. invasion of
risk to the Awareness of self storage and how it can be used by domestic and business customers is relatively Ukraine in
business that low throughout the UK, although higher in London, awareness increased during the pandemic. February 2022
the self The rate of growth of branded self storage on main roads in good locations has historically caused
storage market been limited by the difficulty of acquiring sites at affordable prices and obtaining planning significant
does not grow consent. New store openings in London and other large urban conurbations within the sector global
in line with have slowed significantly over the past few years. uncertainty and
our Our performance during the past three years has been strong with revenue growing by 46% from has provided a
projections, GBP129.3 million in the year ended 31 March 2020 to GBP188.8 million for this year. We believe more
and that that this performance is due to a combination of factors including: -- a high quality and growing challenging
economic portfolio of freehold macroeconomic
growth in the properties delivering backdrop, with
UK is below higher operating margins; significant
expectations, -- a focus on London and levels of
which could the South East and other inflation
result large urban conurbations, seen in the UK
in falling where the drivers in the economy since
demand and a self storage market are the invasion,
loss of at their strongest and largely driven
income. the barriers to competition by food and
are at their highest; energy,
-- continuing innovation resulting in
and automation; increased
-- an inclusive and non-hierarchical interest rates.
culture with a highly This has
engaged team; impacted the
-- a focus on delivering cost of living
the highest levels of in the UK, and
customer service; the level of
-- delivering on our strong housing
ESG commitments; transactions
-- the UK's leading self has fallen as
storage brand, with high the cost of
and growing public awareness mortgages has
and online strength; and increased.
-- strong cash flow generation In the final
from a secure capital quarter of the
structure. year, we also
had the impact
We have a large current storage customer base occupying approximately 73,000 rooms spread of the regional
across the portfolio of stores and hundreds of thousands more who have used our stores over banking crisis
the years. In any month, customers move in and out at the margin resulting in changes in occupancy. in
This is a seasonal business and typically we see growth over the spring and the summer months, the US and the
with the seasonally weaker period being the winter months. collapse of
Credit Suisse,
which can also
impact demand
in our market
at the
margin.
Inflation is
forecast to
moderate over
the next 12
months, with
relatively flat
economic growth
projected for
the UK economy.
Governments
around the
world took on
significant
additional debt
to fund the
policy
responses
to the
pandemic, and
this may result
in higher
taxation rates
in the future.
Property risk
There is a Our management has significant experience in the property industry generated over many years The Group has
risk that we and in particular acquiring property on main roads in high profile locations and obtaining acquired eleven
will be unable planning consents. We do take planning risk where necessary, although the availability of sites over the
to acquire new land, and competition for it makes acquiring new sites challenging. past four
development Our in-house development team and our professional advisers have significant experience in years, taking
sites which obtaining planning consents for self storage centres. its total
meet We manage the construction of our properties very tightly. The building of each site is handled pipeline to
management's through a design and build contract, with the fit-out project managed in-house using an established 13 sites which,
criteria. This professional team of external advisers and sub-contractors who have worked with us for many when opened,
would impact years to our Big Yellow specification. would expand
on our ability We carried out an external benchmarking of our construction costs and tendering programme the Group's
to grow the during the year, which has reinforced our current approach, but also given some areas where current MLA by
overall store further efficiencies and cost savings can be achieved. 15%.
platform. The planning
Changing process remains
climate and difficult and
resulting to achieve a
likely changes planning
to planning consent can
restrictions take anything
will narrow from eighteen
choice months to three
of available years. Local
sites further. planning policy
The Group is is favouring
also subject residential
to the risk of development
failing to over other
obtain uses, and we
planning don't expect
consents on this to change
its given the
development shortage of
sites, and the housing in the
risk of a UK.
rising cost of We currently
development. have planning
Planning consent on
approval is seven of the 13
increasingly development
dependent on sites.
Social or Our latest
Environmental tender for our
enhanced store in
features (e.g. Farnham Road
social Slough has come
enterprise at in within our
Battersea, underwriting
BREEAM as a result of
standards, moderating
local planners steel and other
demands for materials costs
green spaces) and reduced
- adding cost contractor
and margins since
complexity. we suspended
new
construction
last May. It is
therefore our
intention to
restart our
construction
programme from
this Summer.
Valuation risk
The valuation The valuations are carried out by independent, qualified external valuers who have significant The revaluation
of the Group's experience in the UK self storage industry. surplus on the
investment The portfolio is diverse with approximately 73,000 rooms currently occupied in our stores Group's open
properties may for a wide variety of reasons. store
fall due to There is significant headroom on our loan to value banking covenants. investment
external properties was
pressures or GBP27.6 million
the in the year (an
impact of uplift of 1%),
performance. due to an
Lack of improvement in
transactional underlying cash
evidence in flows used in
the self the
storage sector valuations,
leads to more partly offset
subjective by an outward
valuations. shift in cap
rates.
There have been
a number of
larger
portfolio
transactions
across Europe
over the past
three
years, and
there is a
weight of
institutional
money looking
to invest in
self storage.
Notwithstanding
the above, the
increase in
interest rates
over the year
led to the
outward shift
in cap rates,
which was more
pronounced in
more regional
markets.
Treasury risk
The Group may Our financing policy is to fund our current needs through a mix of debt, equity, and cash The Bank of
face increased flow to allow us to selectively build out the remaining development pipeline and achieve our England base
costs from strategic growth objectives, which we believe improve returns for shareholders. We have made rate has been
adverse it clear that we believe optimal leverage for a business such as ours should be LTV in the increased
interest rate range 20% to 30% and this informs our management of treasury risk. significantly
movements. We aim to ensure that there are sufficient medium-term facilities in place to finance our during the
committed development programme, secured against the freehold portfolio, with debt serviced year, with it
by our strong operational cash flows. currently
We have a fixed rate loan in place from Aviva Commercial Finance Limited, with 5 and half at 4.5%, up
years remaining. The Group has a GBP120 million loan from M&G Investments, which is repayable from 1% at the
in 2029. For our bank debt, we borrow at floating rates of interest. start of our
During the year, the Group signed a $225 million credit approved shelf facility with Pricoa financial year.
Private Capital ("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt The long-term
in minimum tranches of GBP10 million over the next two and a half years with terms of between forecast is for
7 and 15 years at short notice, typically 10 days. rates to
Our policy is to maintain a flexible borrowing structure, with a long-term average of approximately gradually fall
50% of our total borrowings fixed, with the balance floating. At 31 March 2023 39% of the from these
Group's total drawn borrowings were fixed or subject to interest rate derivatives. The Group levels. 61% of
reviews its current and forecast projections of cash flow, borrowing and interest cover as the Group's
part of its monthly management accounts. In addition, an analysis of the impact of significant drawn debt is
transactions is carried out regularly, as well as a sensitivity analysis assuming movements floating, and
in interest rates and store occupancy on gearing and interest cover. This sensitivity testing hence the Group
underpins the viability statement below. has experienced
The Group regularly monitors its counterparty risk. The Group monitors compliance with its additional cost
banking covenants closely. During the year it complied with all its covenants and is forecast from these
to do so for the foreseeable future. recent
increases in
the base rate.
Debt providers
currently
remain
supportive to
companies with
a strong
capital
structure, as
evidenced by
the Group
refinancing the
M&G loan during
the year, and
the Pricoa
shelf facility
that we put in
place.
The Group's
interest cover
ratio for the
year ended 31
March 2023 was
7.7 times,
comfortably
ahead of our
internal target
of 5 times and
ahead of our
banking
covenants, as
disclosed in
note 19. The
ratio fell
during the
year, due to
the rise in
interest costs.
Tax and
regulatory We regularly monitor proposed and actual changes in legislation with the help of our professional The Group's
risk advisers, through direct liaison with HMRC, and through trade bodies to understand and, if like-for-like
The Group is possible, mitigate or benefit from their impact. property rates
exposed to HMRC have designated the Group as having a low-risk tax status, and we hold regular meetings bill for the
changes in the with them. We carry out detailed planning ahead of any future regulatory and tax changes using year ending 31
tax regime our expert advisers. March 2024 has
affecting the The Group has internal monitoring procedures in place to ensure that the appropriate REIT increased
cost of rules and legislation are complied with. To date all REIT regulations have been complied with, by 19% from the
corporation including projected tests. prior year,
tax, property with the 2023
rates, VAT, rating list
Stamp Duty and reflecting the
Stamp Duty rise in
Land Tax industrial
("SDLT"), for rents
example the over the past
imposition of few years.
VAT The corporation
on self tax rate was
storage from 1 increased in
October 2012. the March 2021
The Group is budget, to take
exposed to effect from
potential tax April
penalties or 2023, and there
loss of its is a risk that
REIT status by tax rates will
failing to rise further in
comply the medium-term
with the REIT to fund the
legislation. increased
government
deficits that
have arisen
from the policy
response to the
pandemic.
Human
resources risk We have developed a professional, lively, and enjoyable working environment and believe our The Group
Our people are success stems from attracting and retaining the right people. We encourage all our staff to carried out an
key to our build on their skills through appropriate training and regular performance reviews. We believe engagement
success and as in an accessible and open culture and everyone at all levels is encouraged to review, and survey of its
such we are challenge accepted norms, to contribute to the performance of the Group. employees
exposed to a during the
risk of high prior year,
staff which showed
turnover, very pleasing
and a risk of results of the
the loss of level of
key personnel. engagement of
our teams.
We have
listened to the
feedback from
our employees
raised during
our engagement
survey and
made a number
of changes to
the Group's
operations,
including two
days a week
working from
home for our
head office
team, reducing
our store
opening hours
and the payment
of a lone
trading bonus
for store
staff. We are
carrying out a
further survey
of our staff in
May 2023.
Brand and
reputation
risk We have always aimed to run this business in a professional way, which has involved strict The Group has a
The Group is adherence with all regulations that affect our business, such as health and safety legislation, crisis response
exposed to the building regulations in relation to the construction of our buildings, anti-slavery, anti-bribery, plan which was
risk of a and data regulations. developed in
single serious We also invest in cyber security (discussed below), and make an ongoing investment in staff conjunction
incident training, facilities management, and the maintenance of our stores. with external
materially To ensure consistency of service and to understand the needs of our customers, we send surveys consultants
affecting our to every customer who moves in and moves out of the business. The results of the surveys and to ensure the
customers, mystery shops are reviewed to continuously improve and deliver consistent performance throughout Group is well
people, the business. placed to
financial We maintain regular communication with our key stakeholders, customers, employees, shareholders, effectively
performance and debt providers. deal with a
and hence our major incident.
brand and We experienced
reputation, a fire caused
including the by arson at our
risk of a Armadillo
data breach. Cheadle store
in February
2022. Our
crisis response
team worked
effectively in
managing the
incident.
Security risk
The Group is The safety and security of our customers, their belongings, stores, and our staff remains We have
exposed to the a key priority. To achieve this, we invest in state-of-the-art access control systems, individual continued to
risk of the room alarms, digital CCTV systems, intruder and fire alarm systems and the remote monitoring run courses for
damage or loss of all our stores outside of our trading hours. We are the only major operator in the UK self all our staff
of a store due storage industry that has every room in every Big Yellow store individually alarmed. to enhance the
to vandalism, We have implemented customer security procedures in line with advice from the Police and continue awareness and
fire, to work with the regulatory authorities on issues of security, reviewing our operational procedures effectiveness
or natural regularly. The importance of security and the need for vigilance is communicated to all store of our
incidents such staff and reinforced through training and routine operational procedures. procedures in
as flooding. relation to
This may also security.
cause We have further
reputational invested in
damage. security
improvements in
our stores
during the
year.
We regularly
review and
implement
improvements to
our security
processes and
procedures.
Cyber risk
High profile The Group receives specialist advice and consultancy in respect of cyber security, and we We don't
cyber-attacks have dedicated in-house monitoring and regular review of our security systems, we also limit consider the
and data the retention of customer data to the minimum requirement. risk to have
breaches are a Policies and procedures are under regular review and benchmarked against industry best practice increased more
regular staple by our consultants. These policies also include defend, detect and response policies. for the Group
in today's than any other
news. The business;
results however,
of any breach we consider
may result in that the
reputational threats in the
damage, fines, entire digital
or customer landscape do
compensation, continue to
causing increase and
a loss of evolve.
market share As such we have
and income. continued to
invest in cyber
security
upgrading or
replacing
components as
required.
Climate change
related risk The good working order of our stores is of critical importance to our business model. Our
The Group is We visually inspect each of our stores at least once per annum and planned and unplanned work Sustainability
exposed to is discussed immediately. Committee,
climate-change Maintenance requirements are discussed at budget reviews; proposals are made to raise climate chaired by a
related change related issues to the Board, who may request more holistic adaptation work to be carried Non-Executive
transition and out. Director, has
physical The key mitigation strategy to address transitional risks is the delivery of our Net Renewable delivered an
risks. Energy Positive Strategy and the Net Zero Scope 1 and Scope 2 Emissions Strategy. Our investment ambitious
Physical risks to decarbonise our business over the next eight years is expected to mitigate fully against strategic plan
may affect the taxation (carbon tax) risk and reputational risks (both investors and customers). to 2032.
Group's stores We appreciate
and may result that both
in higher physical and
maintenance transition
and repair risks are
costs. Failing expected to
to transition materialise to
to a low lesser
carbon economy or greater
may cause an extents over
increase in the coming
taxation, years and costs
decrease in may go up
access gradually,
to loan hidden within
facilities and what
reputational may be
damage perceived as
'natural
variations'.
Our focus and
strong
governance will
allow us to
continue to
mitigate the
effects.
GOING CONCERN
A review of the Group's business activities, together with the
factors likely to affect its future development, performance and
position are set out in the Strategic Report. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are shown in the balance sheet, cash flow
statement and accompanying notes to the financial statements.
Further information concerning the Group's objectives, policies,
and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity
risk can be found in this Report and in the notes to the financial
statements.
At 31 March 2023 the Group had available liquidity of
approximately GBP32 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 GBP10 million over the next two and half years
with terms of between 7 and 15 years at short notice, typically 10
days. The Group is cash generative and for the year ended 31 March
2023, had operational cash flow of GBP112.0 million, with capital
commitments at the balance sheet date of GBP6.1 million.
The Directors have prepared cash flow forecasts for a period of
18 months from the date of approval of these financial statements,
taking into account the Group's operating plan and budget for the
year ending 31 March 2024 and projections contained in the
longer-term business plan which cover the 18 month period. After
reviewing these projected cash flows together with the Group's and
Company's cash balances, borrowing facilities and covenant
requirements, and potential property valuation movements over that
period, the Directors believe that, taking account of severe but
plausible downsides, the Group and Company will have sufficient
funds to meet their liabilities as they fall due for that
period.
The Group's revolving credit facility of GBP240 million with
Lloyds, HSBC and Bank of Ireland expires in October 2024. The Group
intends to refinance this loan with the banks this year, but does
not rely on the refinancing of the loan to reach its conclusion on
going concern.
In making their assessment, the Directors have carefully
considered the outlook for the Group's trading performance and cash
flows as a result of the current economic environment, taking into
account the trading performance of the Group over the recent
dislocations in the global economy from Covid-19 and the Russian
invasion of Ukraine. The Directors have also considered the
performance of the business during the Global Financial Crisis. The
Directors modelled several different scenarios, including material
reductions in the Group's occupancy rates and property valuations,
and assessed the impact of these scenarios against the Group's
liquidity and the Group's banking covenants. The scenarios
considered did not lead to breaching any of the banking covenants,
and the Group retained sufficient liquidity to meet its financial
obligations as they fall due.
Consequently, the Directors continue to adopt the going concern
basis in preparing the Group and Company financial statements.
VIABILITY STATEMENT
The Directors have assessed the Group's viability over a
four-year period to March 2027. This period is selected based on
the Group's long-term strategic plan to give greater certainty over
the forecasting assumptions used. As in the assessment of going
concern, the Directors have modelled a number of different
scenarios on the Group's future prospects.
In making their assessment, the Directors took account of the
Group's current financial position, including committed capital
expenditure. The Directors carried out a robust assessment of the
emerging and principal risks and uncertainties facing the business,
their potential financial impact on the Group's cash flows, REIT
compliance and financial covenants and the likely effectiveness of
the mitigating options detailed. The Directors have assumed that
funding for the business in the form of equity, bank and insurance
company debt will be available in all reasonably plausible market
conditions. Whilst the eventual impact of the current economic
environment on the Group is uncertain, and may not be known for
some time, the Group has a highly cash generative business, good
liquidity and has proved resilient in its trading since the onset
of the pandemic.
Based on this assessment the Directors have a reasonable
expectation that the Company and the Group will be able to continue
operating and meeting all their liabilities as they fall due to
March 2027.
STRATEGY AND INVESTMENT CASE
Our Strategy
Brand, platform, and customer service
Our strategy from the outset has been to develop Big Yellow into
the market-leading self storage brand, delivering excellent
customer service, investing in sustainability and our
market-leading operating platform and digital channels, with a
great culture and highly motivated employees. We concentrate on
developing our stores in main road locations with high visibility,
where our distinctive branding generates high awareness of Big
Yellow.
Creating shareholder value
We continue to believe that the medium-term opportunity to
create shareholder value consists of driving revenue and cash flow
from our existing portfolio through continued investment in
sustainability, our people, culture, and digital operating and
marketing platforms. In addition, we aim to deliver external growth
as new stores open through continued investment in our development
pipeline, and selectively acquiring existing storage centres from
smaller operators. As a REIT our key financial objective is to
produce sustainable returns for shareholders through a relatively
low leverage, low volatility, high distribution business. In
addition, any successful business must have an effective
sustainability strategy, particularly around climate change, and
this continues to be a key strategic focus for our business.
We focus on the following key areas:
-- leveraging our market-leading brand position to generate new prospects, principally from our
digital, mobile and desktop platforms;
-- focusing on training, selling skills, and customer satisfaction to maximise prospect conversion
and referrals;
-- growing occupancy and net rent to drive revenue optimally at each store;
-- maintaining a focus on cost control, so revenue growth is transmitted through to earnings
growth;
-- increasing the footprint of the Big Yellow platform principally through new site development
and where possible existing prime freehold stores that meet our quality criteria;
-- selectively acquiring existing self storage assets into the Armadillo platform;
-- through our ESG initiatives, aim to create a more sustainable business which will increase
shareholder and customer value in both the medium and long-term;
-- maintaining Big Yellow's culture as an accessible, apolitical, inclusive, non-hierarchical,
socially responsible, and enjoyable place to work; and
-- maintaining a conservative capital structure in the business with Group interest cover of
a minimum of five times.
Real estate
The other main plank of our strategy has been to build a
portfolio of large purpose-built freehold self storage centres,
focussed on London, the South East and other large urban
conurbations. We believe that by owning a predominantly freehold
estate we are insulating ourselves against: economic downturns as
we operate at higher margins; adverse rent reviews; and in the
long-term possible redevelopment of key stores by the landlord. It
also provides us financing flexibility as rent is a form of
gearing.
Approximately 60% of our current annualised store revenue
derives from within the M25; for London and the South East, the
proportion of current annualised store revenue is 75%. With our
store development pipeline largely in London and the South East, we
would expect these proportions to increase over the medium
term.
New supply and competition is a key risk to our business model,
hence our focus on London and its commuter towns, where barriers to
entry in terms of competition for land and difficulty around
obtaining planning are highest. We continue to see limited new
supply growth in our key areas of operation. Looking back over the
last five years, we estimate capacity growth in London of
approximately 2-3% per annum. In 2022, there have been only five
store openings in London (including three Big Yellow stores), and
we anticipate seven new stores in London in 2023, including one Big
Yellow store opening.
Our stores are on average 58,000 sq ft, compared to an industry
average of approximately 44,000 sq ft (source: UK Self Storage
Association 2023 Annual Survey). The upside from filling our larger
than average sized stores is, in our view, only possible in large
metropolitan markets. As our operating costs are relatively fixed,
larger stores in bigger urban conurbations, particularly London,
drive higher revenues and higher operating margins.
Capital structure
Following the Global Financial Crisis and the ensuing economic
recession, we have materially reduced the financial risk within the
business and diversified our sources of debt, whilst at the same
time, increasing our store platform by deploying significant
capital investment. We measure leverage by looking at our interest
cover and that has increased from 1.9 times in 2008 to 7.7 times
for the year ended 31 March 2023. Our objective is to not let this
fall below 5 times, compared to the consolidated EBITDA covenant of
1.5 times. We manage this business on the basis that an external
economic shock could potentially happen at any time. This is
reinforced by the performance of the business during the pandemic,
where we delivered a strong trading performance whilst at the same
time continuing to invest and expand.
Self storage demand drivers
Economic activity and change are key drivers of self storage
demand and are greatest in the larger urban conurbations, and in
particular London and the South East. The structural changes
consisting of the conversion of ex-industrial brownfield land to
other uses, in particular residential; the reduction in home
ownership and increased proportion of those choosing to rent;
increasing density of living with new properties being built with
optimised living space and very little provision for storage; will
continue and are resulting in increased demand for our product.
These changes have resulted in a significant shortage of available
warehousing space, particularly in London, which has been
accentuated by the current crisis. Self storage provides a
convenient flexible solution to businesses such as online
retailers, importers and exporters, service providers, the public
sector, and marketing companies looking for mini-warehousing
space.
In addition to domestic customers taking space to declutter
their homes, our largest customer base is those using us short-term
around an event, such as moving home, refurbishment, inheritance,
household formation, separation, relocation, and students.
Resilience
The location of our stores, brand, security, and most
importantly customer service, together with the diversity of use in
our 73,000 occupied rooms, serve better than any lease contract in
providing income security.
The business proved to be relatively resilient, but not immune
during the Global Financial Crisis and recession of 2007 to 2009,
with London and the South East proving to be less volatile. Since
2020, the Group has grown its revenue by 46%.
80% of our customers pay by direct debit, and our cash
collection has remained robust over recent years.
Total shareholder return
In the twenty three years since flotation in May 2000, Big
Yellow has delivered a Total Shareholder Return ("TSR"), including
dividends reinvested, of 13.9% per annum, in aggregate 1,871.5% at
the closing price of 1,169p on 31 March 2023. This compares to 4.4%
per annum for the FTSE Real Estate Index and 5.0% per annum for the
FTSE All Share index over the same period. We feel this illustrates
the power of compounding of consistent incremental returns over the
longer term.
Our investment case
Attractive -- UK self storage penetration in key urban conurbations
market dynamics remains relatively low
-- Limited new supply coming onto the market
-- Resilient through the last economic downturn and
performed well during the pandemic
-- Self storage is more part of the ecosystem today
than it was in 2008 with increased domestic and
business awareness
--- -----------------------------------------------------------
Our competitive -- UK industry's most recognised brand with over 90%
advantage of enquiries now online
-----------------
-- Prominent stores on arterial or main roads, with
extensive frontage and high visibility
-----------------
-- Continuous innovation and investment into our mobile
and desktop digital channels
-- Strong customer satisfaction and NPS scores reflecting
excellent customer service
-- 6.3 million sq ft UK footprint, with development
pipeline of 0.9 million sq ft
-- Primarily freehold estate concentrated in London
and South East and other larger urban conurbations
-- Larger average store capacity - economies of scale,
higher operating margins
-- Secure financing structure with strong balance sheet
-- Continued significant investment in sustainability
and our culture
----------------- --- -----------------------------------------------------------
Evergreen income -- 73,000 occupied rooms, with customers from a diverse
streams base - individuals, SMEs, and national customers
-----------------
-- Average length of stay for existing customers of
31 months
-----------------
-- 38% of customers in stores greater than two-year
length of stay, a further 16% for one to two years
-- Low bad debt expense (0.2% of revenue in the year)
----------------- --- -----------------------------------------------------------
Strong growth -- Opportunities to drive further occupancy growth
opportunities
-----------------
-- 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 -- Freehold assets for high operating margins and operational
into advantage
quality returns
-----------------
-- Low technology and obsolescence product, maintenance
capex fully expensed
-----------------
-- Annual compound adjusted eps growth of 14% since
2004/5 (IFRS adoption)
-- Annual compound cash flow growth of 15% since 2004/5
-- Dividend pay-out ratio of a minimum of 80% of adjusted
eps
----------------- --- -----------------------------------------------------------
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
2023 2022
Note GBP000 GBP000
Revenue 3 188,829 171,318
Cost of sales (54,307) (50,383)
Gross profit 134,522 120,935
Administrative expenses (14,519) (14,352)
Operating profit before gains on property
assets 120,003 106,583
(Loss)/gain on the revaluation of investment
properties 14a,15 (29,861) 597,224
Gain on disposal of investment property - 584
Operating profit 90,142 704,391
Other operating income 3 2,185 -
Share of profit of associates 14e - 3,677
Investment income - interest receivable 7 9 23
- fair value movement on derivatives 7 - 1,389
Finance costs - interest payable 8 (16,894) (10,604)
- fair value movement on derivatives 8 (133) -
Profit before taxation 75,309 698,876
Taxation 9 (1,977) (1,602)
Profit for the year (attributable to
equity shareholders) 5 73,332 697,274
-------- --------
Total comprehensive income for the year
(attributable to equity shareholders) 73,332 697,274
-------- --------
Basic earnings per share 12 40.1p 385.4p
-------- --------
Diluted earnings per share 12 39.8p 384.2p
-------- --------
EPRA earnings per share are shown in Note 12.
All items in the statement of comprehensive income relate to
continuing operations.
The accompanying notes form part of the financial
statements.
Consolidated Balance Sheet
31 March 2023
2023 2022
Note GBP000 GBP000
Non-current assets
Investment property 14a 2,449,640 2,342,199
Investment property under construction 14a 260,720 285,400
Right-of-use assets 14a 18,148 19,174
Plant, equipment, and owner-occupied property 14b 4,003 3,857
Intangible assets 14c 1,433 1,433
Investment 14d 588 588
Derivative financial instruments 18c - 885
2,734,532 2,653,536
--------- ---------
Current assets
Derivative financial instruments 18c 316 -
Inventories 496 483
Trade and other receivables 16 8,314 7,756
Cash and cash equivalents 8,329 8,605
17,455 16,844
--------- ---------
Total assets 2,751,987 2,670,380
--------- ---------
Current liabilities
Trade and other payables 17 (57,275) (47,349)
Borrowings 19 (3,159) (3,008)
Obligations under lease liabilities 21 (2,020) (1,958)
(62,454) (52,315)
--------- ---------
Non-current liabilities
Borrowings 19 (489,411) (414,972)
Obligations under lease liabilities 21 (17,676) (18,718)
(507,087) (433,690)
--------- ---------
Total liabilities (569,541) (486,005)
Net assets 2,182,446 2,184,375
--------- ---------
Equity
Share capital 22 18,427 18,397
Share premium account 290,857 289,923
Reserves 1,873,162 1,876,055
Equity shareholders' funds 2,182,446 2,184,375
--------- ---------
The financial statements were approved by the Board of Directors
and authorised for issue on 22 May 2023. They were signed on its
behalf by:
Jim Gibson, Director John Trotman, Director
Company Registration No. 03625199
The accompanying notes form part of the financial
statements.
Consolidated Statement of Changes in Equity
Year ended 31 March 2023
Other Capital
Share premium non-distributable redemption Retained Own
Share capital account reserve reserve earnings shares Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
Total
comprehensive
income for the
year - - - - 73,332 - 73,332
Issue of share
capital 30 934 - - - - 964
Dividend - - - - (79,960) - (79,960)
Credit to equity
for
equity-settled
share-based
payments - - - - 3,735 - 3,735
At 31 March 2023 18,427 290,857 74,950 1,795 1,797,436 (1,019) 2,182,446
------------- ------------- -------------------- ----------- ---------- -------- ---------
The other non-distributable reserve arose in the year ended 31
March 2015 following the placing of 14.35 million ordinary
shares.
The issue of share capital is net of expenses.
Year ended 31 March 2022
Other Capital
Share premium non-distributable redemption Retained Own
Share capital account reserve reserve earnings shares Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2021 17,588 192,218 74,950 1,795 1,168,363 (1,019) 1,453,895
Total
comprehensive
income for the
year - - - - 697,274 - 697,274
Issue of share
capital 809 97,705 - - - - 98,514
Dividend - - - - (68,698) - (68,698)
Credit to equity
for
equity-settled
share-based
payments - - - - 3,390 - 3,390
At 31 March 2022 18,397 289,923 74,950 1,795 1,800,329 (1,019) 2,184,375
------------- ------------- -------------------- ----------- ---------- -------- ---------
The accompanying notes form part of the financial
statements.
Consolidated Cash Flow Statement
Year ended 31 March 2023
2023 2022
Note GBP000 GBP000
Cash generated from operations 26 128,973 120,390
Bank interest paid (16,486) (10,763)
Interest on obligations under lease liabilities (706) (843)
Interest received 8 2
Loss of income insurance proceeds 2,032 -
Tax paid (1,844) (1,649)
Cash flows from operating activities 111,977 107,137
--------- ---------
Investing activities
Purchase of non-current assets (106,413) (105,151)
Disposal of investment property - 584
Acquisition of Armadillo (net of cash acquired) - (66,679)
Investment 14d - (138)
Receipts from Capital Goods Scheme 182 381
Dividend received from associates 14e - 435
Cash flows from investing activities (106,231) (170,568)
--------- ---------
Financing activities
Issue of share capital 964 98,514
Payment of lease liabilities (1,267) (1,384)
Equity dividends paid 11 (79,140) (68,698)
Receipt from termination of interest rate
derivatives 436 -
Loan arrangement fees paid (1,507) (953)
Increase in borrowings 74,492 32,235
Cash flows from financing activities (6,022) 59,714
--------- ---------
Net decrease in cash and cash equivalents (276) (3,717)
Opening cash and cash equivalents 8,605 12,322
Closing cash and cash equivalents 8,329 8,605
--------- ---------
The accompanying notes form part of the financial
statements.
Notes to the financial statements
Year ended 31 March 2023
1. GENERAL INFORMATION
Big Yellow Group PLC is a Company incorporated in the United
Kingdom under the Companies Act 2006, with registration number
03625199, and limited by shares. The address of the registered
office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. The
nature of the Group's operations and its principal activities are
set out in note 4 and in the Strategic Report.
2. BASIS OF PREPARATION
The financial information set out above does not constitute the
Group and Company's statutory accounts for the years ended 31 March
2023 or 2022 but is derived from those accounts. Statutory accounts
for 2022 have been delivered to the registrar of companies, and
those for 2023 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
The Group's financial statements have been prepared in
accordance with UK-adopted international accounting standards
("IFRS Standards") and in relation to the parent company financial
statements have been properly prepared in accordance with UK
Generally Accepted Accounting Practice (including FRS 101). The
financial statements have been prepared in accordance with the
requirements of the Companies Act 2006. The Group has applied all
relevant accounting standards which have been endorsed by the
International Accounting Standards Board and have been applied
consistently year on year.
The Group uses a number of APMs to monitor the performance of
the business. Adjusted profit before tax and adjusted earnings per
share are the Group's primary profit measures and reflect
underlying profit by excluding capital and non-recurring items such
as revaluation movements, gains or losses on the disposal of
properties and the fair value movement of interest derivatives in
accordance with EPRA guidelines. In addition, the Group adjusts for
items such as the write off of acquisition costs, and fair value
movements on the stepped acquisition of associates. These adjusted
measures should not be considered in isolation from, or as
substitutes for, or superior to the financial measures prepared in
accordance with IFRS.
3. REVENUE
Analysis of the Group's operating revenue can be found below and
in the Portfolio Summary.
2023 2022
GBP000 GBP000
Open stores
Self storage income 162,911 145,592
Insurance income 3,047 17,783
Enhanced liability service income 14,272 -
Packing materials income 3,286 3,142
Other income from storage customers 2,010 1,821
Ancillary store rental income 1,213 937
------- -------
186,739 169,275
Other revenue
Non-storage income 2,090 1,718
Management fees earned - 325
Total revenue 188,829 171,318
------- -------
Please see the commentary in the Financial Review on insurance
income and enhanced liability service income.
Non-storage income derives principally from rental income earned
from tenants of properties awaiting development.
The Group has also earned other operating income of GBP2.2
million in the year as follows:
-- GBP1.4 million relates to insurance proceeds for loss of income following the destruction
of the Group's Cheadle store by fire in 2022;
-- GBP0.6 million relates to insurance proceeds for loss of income following a fire at the Group's
Fulham store wine storage area in 2021; and
-- GBP0.2 million is following extinguishing the right-of-use asset and liability following the
acquisition of the freehold of our Oxford store.
4. SEGMENTAL INFORMATION
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Executive to allocate resources to
the segments and to assess their performance. Given the nature of
the Group's business, there is one segment, which is the provision
of self storage and related services.
Revenue represents amounts derived from the provision of self
storage and related services which fall within the Group's ordinary
activities after deduction of trade discounts and value added tax.
The Group's non-current assets, revenue and profit before tax are
attributable to one activity, the provision of self storage and
related services. These all arise in the United Kingdom in the
current year and prior year.
5. PROFIT FOR THE YEAR
a) Profit for the year has been arrived at after
charging/(crediting):
2023 2022
Note GBP000 GBP000
N
Depreciation of plant, equipment, and owner-occupied
property 14b 888 857
Depreciation of interest in leasehold properties 1,542 1,601
Loss/(gain) on the revaluation of investment
property 29,861 (597,224)
Gains on disposal of investment property - (584)
Cost of inventories recognised as an expense 1,643 1,405
Employee costs 6 24,709 23,181
------- ---------
b) Analysis of auditor's remuneration:
2023 2022
GBP000 GBP000
Fees payable to the Company's auditor for the audit
of the Company's annual accounts 487 390
Fess payable to the Company's auditor for the subsidiaries'
annual accounts 50 50
Total audit fees 537 440
------- -------
Audit related assurance services - interim review 60 60
Total non-audit fees 60 60
------- -------
Total audit and non-audit fees paid to KPMG LLP 597 500
------- -------
6. EMPLOYEE COSTS
The average monthly number of full-time equivalent employees
(including Executive Directors) was:
2023 2022
Number Number
Sales 403 365
Administration 62 62
465 427
------- -------
At 31 March 2023 the total number of Group employees was 515
(2022: 495).
2023 2022
GBP000 GBP000
Their aggregate remuneration comprised:
Wages and salaries 17,475 16,086
Social security costs 2,759 3,014
Other pension costs 740 691
Share-based payments 3,735 3,390
24,709 23,181
------- -------
The Directors and the Director of our trading subsidiaries are
the employees assessed as key management personnel.
7. INVESTMENT INCOME
2023 2022
GBP000 GBP000
Bank interest receivable 8 2
Unwinding of discount on Capital Goods Scheme
receivable 1 21
------- -------
Total interest receivable 9 23
Fair value movement on derivatives - 1,389
------- -------
Total investment income 9 1,412
------- -------
8. FINANCE COSTS
2023 2022
GBP000 GBP000
Interest on bank borrowings 18,156 11,772
Capitalised interest (2,761) (2,072)
Interest on obligations under lease liabilities 706 843
Other interest payable 61 61
Loan refinancing costs 732 -
Total interest payable 16,894 10,604
------- -------
Fair value movement on derivatives 133 -
Total finance costs 17,027 10,604
------- -------
9. TAXATION
As a REIT, the Group does not pay UK corporation tax on the
profits and gains from its qualifying rental business in the UK
provided that it meets certain conditions. Non-qualifying profits
and gains of the Group are subject to corporation tax as normal.
The Group monitors its compliance with the REIT conditions. There
have been no breaches of the conditions to date.
A UK corporation tax rate of 19% (effective 1 April 2020) was
substantively enacted on 17 March 2020, reversing the previously
enacted reduction in the rate from 19% to 17%. Finance (No.2) Bill
2021 announced that the main rate of corporation tax was going to
increase to 25% from 1 April 2023 and this was substantively
enacted on 24 May 2021. This will increase the Company's future
current tax charge accordingly.
2023 2022
UK current tax GBP000 GBP000
* Current year 2,296 1,725
* Prior year (319) (123)
1,977 1,602
------- -------
A reconciliation of the tax charge is shown below:
2023 2022
GBP000 GBP000
Profit before tax 75,309 698,876
Tax charge at 19% (2022 - 19%) thereon 14,309 132,786
Effects of:
Revaluation of investment properties 5,674 (113,472)
Share of profit of associates - (699)
Other permanent differences 626 (2,031)
Utilisation of brought forward losses (76) -
Profits from the tax-exempt business (18,237) (14,859)
Current year tax charge 2,296 1,725
Prior year adjustment (319) (123)
Total tax charge 1,977 1,602
-------- -----------
At 31 March 2023 the Group has unutilised tax losses from the
non-REIT taxable business of GBP33.8 million (2022: GBP34.2
million) available for offset against certain types of future
taxable profits. All losses can be carried forward
indefinitely.
10. ADJUSTED PROFIT
2023 2022
GBP000 GBP000
Profit before tax 75,309 698,876
(Loss)/gain on revaluation of investment properties
- Group 29,861 (597,224)
* associates (net of deferred tax) to 30 June 2021 - (1,537)
Change in fair value of interest rate derivatives 133 (1,389)
Armadillo fair value adjustments on acquisition - (1,756)
Gain on disposal of investment property - (584)
Refinancing fees 732 -
Acquisition costs written off - 416
------- ---------
Adjusted profit before tax 106,035 96,802
Tax (1,977) (1,602)
------- ---------
Adjusted profit after tax 104,058 95,200
------- ---------
Adjusted profit before tax which excludes gains and losses on
the revaluation of investment properties, changes in fair value of
interest rate derivatives, acquisition costs written off in
accordance with IFRS 3, refinancing fees, fair value adjustments on
acquisitions, and net gains and losses on disposal of investment
property have been disclosed in line with EPRA performance
measures.
11. DIVIDS
2023 2022
GBP000 GBP000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 March 2022
of 21.4p
(2021: 17.0p) per share. 39,136 31,039
Interim dividend for the year ended 31 March
2023 of 22.3p
(2022: 20.6p) per share. 40,824 37,659
79,960 68,698
------- -------
Proposed final dividend for the year ended 31
March 2023 of
22.9p (2022: 21.4p) per share. 41,947 39,136
------- -------
Subject to approval by shareholders at the Annual General
Meeting to be held on 20 July 2023, the final dividend will be paid
on 28 July 2023. The ex-div date is 6 July 2023 and the record date
is 7 July 2023.
The Property Income Distribution ("PID") payable for the year is
45.2 pence per share (2022: 42.0 pence per share).
12. EARNINGS PER SHARE
Year ended 31 March 2023 Year ended 31 March
2022
Earnings Shares Pence Earnings Shares Pence
GBPm million per share GBPm million per share
Basic 73.3 183.0 40.1 697.3 180.9 385.4
Dilutive share options - 1.1 (0.3) - 0.6 (1.2)
Diluted 73.3 184.1 39.8 697.3 181.5 384.2
-------- -------- ---------- -------- -------- ----------
Adjustments:
Loss/(gain) on revaluation
of investment properties 30.0 - 16.2 (597.2) - (329.0)
Acquisition costs
written off - - - 0.4 - 0.2
Change in fair value
of interest rate derivatives 0.1 - 0.1 (1.4) - (0.8)
Gain on disposal of
investment property - - - (0.6) - (0.3)
Refinancing fees 0.7 - 0.4 - - -
Share of associate
fair value gains and
losses - - - (3.3) - (1.8)
EPRA - diluted 104.1 184.1 56.5 95.2 181.5 52.5
-------- -------- ---------- -------- -------- ----------
EPRA - basic 104.1 183.0 56.9 95.2 180.9 52.6
-------- -------- ---------- -------- -------- ----------
The calculation of basic earnings is based on profit after tax
for the year. The weighted average number of shares used to
calculate diluted earnings per share has been adjusted for the
conversion of share options.
EPRA earnings and earnings per ordinary share have been
disclosed in line with EPRA recommendations.
13. NET ASSETS PER SHARE
EPRA's Best Practices Recommendations guidelines for Net Asset
Value (NAV) metrics are EPRA Net Tangible Assets (NTA), EPRA Net
Reinstatement Value (NRV) and EPRA Net Disposal Value (NDV).
EPRA NTA is considered to be most consistent with the nature of
Big Yellow's business which provides sustainable long-term
progressive returns. EPRA NTA is shown in the table below. This
measure is further adjusted by the adjustment the Group makes for
purchaser's costs, which is the Group's Adjusted Net Asset Value
(or Adjusted NAV).
Net assets per share are equity shareholders' funds divided by
the number of shares at the year end. The shares currently held in
the Group's Employee Benefit Trust are excluded from both net
assets and the number of shares. Adjusted net assets per share
include the effect of those shares issuable under employee share
option schemes and the effect of alternative valuation methodology
assumptions (see note 15).
Year ended 31 March 2023 Year ended 31 March
2022
Equity Equity
attributable attributable
to ordinary to ordinary Pence
shareholders Pence shareholders per
GBP000 Shares per share GBP000 Shares share
Basic NAV 2,182,446 183,143,066 1,191.7 2,184,375 182,844,471 1,194.7
Share and save as
you earn schemes 1,909 1,705,121 (10.0) 1,592 1,409,649 (8.3)
Diluted NAV 2,184,355 184,848,187 1,181.7 2,185,967 184,254,120 1,186.4
------------- ----------- ----------- ------------- ----------- -------
Fair value of derivatives
- Group (316) - (0.2) (885) - (0.5)
Intangible assets (1,433) - (0.7) (1,433) - (0.8)
EPRA NTA 2,182,606 184,848,187 1,180.8 2,183,649 184,254,120 1,185.1
------------- ----------- ----------- ------------- ----------- -------
Valuation methodology
assumption (see note
15) (GBP000) 104,605 - 56.5 100,600 - 54.6
------------- ----------- ----------- ------------- ----------- -------
Adjusted NAV 2,287,211 184,848,187 1,237.3 2,284,249 184,254,120 1,239.7
------------- ----------- ----------- ------------- ----------- -------
14. NON-CURRENT ASSETS
a) Investment property, investment property under construction and right-of-use assets
Investment
property
Investment under construction Right-of-use
property GBP000 assets Total
GBP000 GBP000 GBP000
At 31 March 2021 1,621,990 163,537 16,644 1,802,171
Additions 10,921 95,509 1,084 107,514
Acquisition of Armadillo 138,418 - 4,862 143,280
Transfer on opening of stores 41,182 (41,182) - -
Revaluation (see note 15) 529,688 67,536 - 597,224
Depreciation - - (1,553) (1,553)
Impairment of Cheadle lease - - (1,863) (1,863)
At 31 March 2022 2,342,199 285,400 19,174 2,646,773
Additions 40,559 72,063 2,034 114,656
Transfer on opening of stores 39,288 (39,288) - -
Acquisition of Oxford freehold - - (1,597) (1,597)
Revaluation (see note 15) 27,594 (57,455) - (29,861)
Depreciation - - (1,463) (1,463)
At 31 March 2023 2,449,640 260,720 18,148 2,728,508
------------ ------------------- -------------- ---------
The right-of-use assets represent the present value of minimum
lease payments for leasehold properties that meet the definition of
IAS 40 and are accounted for as investment properties - see note 21
for further details of the obligations under lease liabilities. The
fair value of the leasehold properties (including long leaseholds),
on which the Group pays rent, of GBP74.6 million (2022: GBP80.2
million) is included within the investment property total.
Included within the revaluation gain on investment property in
the prior year is an impairment of GBP4.3 million in relation to
the fire at Cheadle.
The credit to right-of-use assets in the current year of GBP1.6
million is due to the acquisition of the freehold of our Oxford
store, and hence the extinguishment of the lease liability and
associated right-of-use asset.
The income from self storage accommodation earned by the Group
from its investment property is disclosed in note 3. Direct
operating expenses, which are all applied to generating rental
income, arising on the investment property in the year are
disclosed in the Portfolio Summary. Included within additions is
GBP2.8 million of capitalised interest (2022: GBP2.1 million),
calculated at the Group's average borrowing cost for the year of
4.2%. 85 of the Group's investment properties are pledged as
security for loans, with a total external value of GBP1.99
billion.
b) Plant, equipment, and owner-occupied property
Fixtures,
fittings Right
Freehold Leasehold Plant Motor & office of use
property improve-ments and machinery vehicles equipment assets Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 31 March 2021 2,275 59 439 32 1,262 872 4,939
Retirement of fully
depreciated assets - - (107) - (402) - (509)
Additions 15 - 115 - 780 - 910
At 31 March 2022 2,290 59 447 32 1,640 872 5,340
Retirement of fully
depreciated assets - - (83) - (687) - (770)
Additions 116 - 283 - 738 3 1,140
At 31 March 2023 2,406 59 647 32 1,691 875 5,710
--------- -------------- -------------- ---------- ---------- -------- -------
Depreciation
At 31 March 2021 (593) (12) (129) (32) (52) (211) (1,029)
Retirement of fully
depreciated assets - - 107 - 402 - 509
Charge for the year (43) (4) (113) - (697) (106) (963)
At 31 March 2022 (636) (16) (135) (32) (347) (317) (1,483)
Retirement of fully
depreciated assets - - 83 - 687 - 770
Charge for the year (46) (4) (158) - (680) (106) (994)
At 31 March 2023 (682) (20) (210) - (340) (423) (1,707)
--------- -------------- -------------- ---------- ---------- -------- -------
Net book value
--------- -------------- -------------- ---------- ---------- -------- -------
At 31 March 2023 1,724 39 437 - 1,351 452 4,003
--------- -------------- -------------- ---------- ---------- -------- -------
At 31 March 2022 1,654 43 312 - 1,293 555 3,857
--------- -------------- -------------- ---------- ---------- -------- -------
c) Intangible assets
The intangible asset relates to the Big Yellow brand, which was
acquired through the acquisition of Big Yellow Self Storage Company
Limited in 1999. The carrying value remains unchanged from the
prior year as there is considered to be no impairment in the value
of the asset. The asset has an indefinite life and is tested
annually for impairment or more frequently if there are indicators
of impairment.
d) Investment
The Group has an GBP0.6 million investment in Doncaster Security
Operations Centre Limited, a company which provides out-of-hours
monitoring and alarm receiving services, including for the Group's
stores. The investment is carried at cost and tested annually for
impairment.
e) Investment in associates
Armadillo
The Group had a 20% interest in Armadillo Storage Holding
Company Limited ("Armadillo 1") and a 20% interest in Armadillo
Storage Holding Company 2 Limited ("Armadillo 2"). Both interests
were accounted for as associates, using the equity method of
accounting. On 1 July 2021 the Group acquired the remaining
interest in Armadillo 1 and Armadillo 2 that it did not previously
own. From this date, Armadillo 1 and Armadillo 2 are accounted for
as a wholly owned subsidiaries of the Group. The results up to this
date are equity accounted as shown in the note below:
Armadillo 1 Armadillo 2 Total
31 March 2023 31 March 2022 31 March 2023 31 March 2022 31 March 2023 31 March 2022
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At the beginning of
the year - 8,698 - 5,022 - 13,720
Share of results
(see below) - 2,413 - 1,264 - 3,677
Dividends - (211) - (224) - (435)
Acquisition of remaining
interest - (10,900) - (6,062) - (16,962)
Share of net assets - - - - - -
------------- ------------- ------------- ------------- ------------- -------------
The figures below show the trading results of Armadillo, and the
Group's share of the results up to the point of acquisition of the
remaining interest in the Partnerships on 1 July 2021.
Armadillo 1 Armadillo 2
1 April 2021 to 30 June 2021 1 April 2021 to 30 June 2021
GBP000 GBP000
Income statement (100%)
Revenue 3,170 1,876
Cost of sales (1,601) (793)
Administrative expenses (126) (45)
Operating profit 1,443 1,038
Goodwill write-off (982) (1,849)
Gain on the revaluation of investment
properties 4,888 2,795
Net interest payable (274) (183)
Current and deferred tax 6,988 4,519
-----------------------------
Profit attributable to shareholders 12,063 6,320
Dividends paid (1,054) (1,120)
Retained profit 11,009 5,200
-----------------------------
Group share (20%)
Operating profit 289 208
Goodwill write-off (196) (370)
Gain on the revaluation of investment
properties 978 559
Net interest payable (55) (37)
Current and deferred tax 1,397 904
-----------------------------
Profit attributable to shareholders 2,413 1,264
Dividends paid (211) (224)
-----------------------------
Retained profit 2,202 1,040
-----------------------------
Associates' net assets - -
-----------------------------
Please see the accounts for the year ended 31 March 2022 for
full disclosure of the acquisition.
15. VALUATION OF INVESTMENT PROPERTY
Revaluation
Deemed on deemed
cost cost Valuation
GBP000 GBP000 GBP000
Freehold stores
At 31 March 2022 908,266 1,392,733 2,300,999
Transfer from investment property
under construction 28,141 11,147 39,288
Transfer from leasehold stores 1,182 2,843 4,025
Movement in year 40,285 34,018 74,303
---------- ------------ -----------
At 31 March 2023 977,874 1,440,741 2,418,615
Leasehold stores
At 31 March 2022 21,732 19,468 41,200
Transfer to freehold stores (1,182) (2,843) (4,025)
Movement in year 274 (6,424) (6,150)
At 31 March 2023 20,824 10,201 31,025
Total of open stores
At 31 March 2022 929,998 1,412,201 2,342,199
Transfer from investment property
under construction 28,141 11,147 39,288
Movement in year 40,559 27,594 68,153
---------- ------------ -----------
At 31 March 2023 998,698 1,450,942 2,449,640
Investment property under construction
At 31 March 2022 211,853 73,547 285,400
Transfer to investment property (28,141) (11,147) (39,288)
Movement in year 72,063 (57,455) 14,608
---------- ------------ -----------
At 31 March 2023 255,775 4,945 260,720
Valuation of all investment
property
At 31 March 2022 1,141,851 1,485,748 2,627,599
Movement in year 112,622 (29,861) 82,761
At 31 March 2023 1,254,473 1,455,887 2,710,360
The Group has classified the fair value investment property and
the investment property under construction within Level 3 of the
fair value hierarchy. There has been no transfer to or from Level 3
in the year.
The Group's freehold and leasehold investment properties have
been valued at 31 March 2023 by external valuers, Jones Lang
Lasalle ("JLL"). The Valuation has been prepared in accordance with
the version of the RICS Valuation - Global Standards (incorporating
the International Valuation Standards) and the UK national
supplement ("the Red Book") current as at the valuation date. The
valuation of each of the investment properties and the investment
properties under construction has been prepared on the basis of
either Fair Value or Fair Value as a fully equipped operational
entity, having regard to trading potential, as appropriate.
The valuation has been provided for financial reporting purposes
and as such, is a Regulated Purpose Valuation as defined in the Red
Book. In compliance with the disclosure requirements of the Red
Book, JLL have confirmed that:
-- this is JLL's second annual valuation for these purposes on behalf of the Group;
-- JLL do not provide other significant professional or agency services to the Group;
-- in relation to the preceding financial year of JLL, the proportion of the total fees payable
by the Group to the total fee income of the firm is less than 5%; and
-- the fee payable to JLL is a fixed amount per asset and is not contingent on the appraised
value.
The self storage properties have been valued on the basis of
Fair Value as fully equipped operational entities, having regard to
trading potential. Due to the specialised nature and use of the
buildings the approach is to adopt a profits method of valuation in
an explicit Discounted Cash Flow calculation and then consider the
results in the context of recent comparable evidence of
transactions in the sector.
The profits method requires an estimate of the future cash flow
that can be generated from the use of the building as a self
storage facility, assuming a reasonably efficient operator.
Judgements are made as to the trading potential and likely long
term sustainable occupancy. Stable occupancy depends upon the
nature of demand, size of property and nearby competition, and
allows for a reasonable vacancy rate to enable the operator to sell
units to new customers. The cash flow runs for an explicit period
of 10 years, after which it is capitalised at an all risks yield
which reflects the implicit future growth of the business, or a
hypothetical sale. This is a valuer's shortcut: maintaining the
cash flow into perpetuity would provide the same result. The
comparison with recent transactions requires the evidence to be
considered in terms of the multiple on net operating profit (or
EBITDA/EBITDAR), value per square foot, yield profile etc and then
adjusted to reflect differences in location, building factors,
tenure, trading maturity and trading risk.
This mirrors the typical approach of purchasers in the self
storage market. However, in view of the relatively limited
availability of comparable market evidence this requires a degree
of valuer judgment. In particular, most of the transactions have
comprised share sales due to the nature of the asset class and the
terms of those transactions have mostly been kept confidential
between the parties.
Portfolio Premium
JLL's valuation report confirms that the properties have been
valued individually but that if the portfolio was to be sold as a
single lot or in selected groups of properties, the total value
could differ. JLL state that in current market conditions they are
of the view that there could be a portfolio premium.
Assumptions
A. Net operating income is based on projected revenue received less projected operating costs,
which include a management fee to take account of central/head office costs. The initial net
operating income is calculated by estimating the net operating income in the first 12 months
following the valuation date.
B. The net operating income in future years is calculated assuming either straight-line absorption
from day one actual occupancy or variable absorption over years one to five of the cash flow
period, to an estimated stabilised/mature occupancy level. In the valuation the assumed stabilised
occupancy level for the 108 trading stores (both freeholds and leaseholds) open at 31 March
2023 averages 88% (31 March 2022: 88%). The projected revenues and costs have been adjusted
for estimated cost inflation and revenue growth.
C. The future rental growth incorporated into the valuation averages 2.6% per annum (2022: 2.8%
per annum)
D. The capitalisation rates applied to existing and future net cash flow have been estimated
by reference to underlying yields for asset types such as industrial, distribution and retail
warehousing, yields for other trading property types such as student housing and hotels, bank
base rates, ten-year money rates, inflation and the available evidence of transactions in
the sector. The valuation included in the accounts assumes rental growth in future periods.
The net initial yield for the 108 stores is 5.3% (31 March 2022: 5.2%). The weighted average
exit capitalisation rate adopted (for both freeholds and leaseholds) is 5.6% (31 March 2022:
5.5%).
E. The future net cash flow projections (including revenue growth and cost inflation) have been
discounted at a rate that reflects the risk associated with each asset. The weighted average
annual discount rate adopted (for both freeholds and leaseholds) is 7.1% (31 March 2022: 7.1%).
F. Purchaser's costs of 6.8% have been adopted reflecting current progressive Stamp Duty Land
Tax rates.
Short leasehold
The same methodology has been used as for freeholds, but the
exit capitalisation rate is adjusted to reflect the unexpired lease
term at exit. The average unexpired term of the Group's six short
leasehold properties is 12.2 years (31 March 2022: 14.0 years
unexpired).
Sensitivities
As noted in 'Significant judgements and key estimates', self
storage valuations are complex, derived from data which is not
widely publicly available and involve a degree of judgement. For
these reasons we have classified the valuations of our property
portfolio as Level 3 as defined by IFRS 13. Inputs to the
valuations, some of which are 'unobservable' as defined by IFRS 13,
include capitalisation yields, stable occupancy rates, and rental
growth rates. The existence of an increase of more than one
unobservable input would augment the impact on valuation. The
impact on the valuation would be mitigated by the
inter-relationship between unobservable inputs moving in opposite
directions. For example, an increase in stable occupancy may be
offset by an increase in yield, resulting in no net impact on the
valuation. A sensitivity analysis showing the impact on the
investment property valuation of changes in yields and stable
occupancy is shown below:
Impact of a change in Impact of a change
capitalisation rates in stabilised occupancy
assumption
25 bps decrease 25 bps increase 1% increase 1% decrease
---------------- ---------------- ------------- ------------
Reported
Group 4.7% (4.3%) 1.1% (1.2%)
---------------- ---------------- ------------- ------------
A sensitivity analysis has not been provided for a change in the
rental growth rate adopted as there is a relationship between this
measure and the discount rate adopted. So, in theory, an increase
in the rental growth rate would give rise to a corresponding
increase in the discount rate and the resulting value impact would
be limited.
Investment properties under construction
JLL have valued the stores in development adopting the same
methodology as set out above but on the basis of the cash flow
projection expected for the store at opening and after allowing for
the outstanding costs to take each scheme from its current state to
completion and full fit-out. JLL have allowed for holding costs and
construction contingency, as appropriate. Five of the schemes
valued do not yet have planning consent and JLL have reflected the
planning risk in their valuation. The cost to complete for the
investment property under construction amounts to GBP217
million.
Valuation assumption for purchaser's costs
The Group's investment property assets have been valued for the
purposes of the financial statements after deducting notional
weighted average purchaser's cost of 6.8% on the net value, as if
they were sold directly as property assets. The valuation is an
asset valuation which is entirely linked to the operating
performance of the business. The assets would have to be sold with
the benefit of operational contracts, employment contracts and
customer contracts, which would be very difficult to achieve except
in a corporate structure. This approach follows the logic of the
valuation methodology in that the valuation is based on a
capitalisation of the net operating income after allowing a
deduction for operational cost and an allowance for central
administration costs. Sale in a corporate structure would result in
a reduction in the assumed Stamp Duty Land Tax but an increase in
other transaction costs reflecting additional due diligence
resulting in a reduced notional purchaser's cost of 2.75% of gross
value. All the significant sized transactions that have been
concluded in the UK in recent years were completed in a corporate
structure. The Group therefore instructed JLL to carry out an
additional valuation on the above basis, and this results in a
higher property valuation at 31 March 2023 of GBP2,815 million
(GBP104.6 million higher than the value recorded in the financial
statements) translating to 56.5 pence per share. We have included
this revised valuation in the adjusted diluted net asset
calculation (see note 13).
16. TRADE AND OTHER RECEIVABLES
31 March 31 March
2023 2022
GBP000 GBP000
Current
Trade receivables 5,181 4,763
Other receivables 209 949
Prepayments and accrued income 2,924 2,044
8,314 7,756
-------- --------
Trade receivables are net of a bad debt provision of
GBP1,070,000 (2022: GBP563,000). The Directors consider that the
carrying amount of trade and other receivables approximates their
fair value.
The Financial Review contains commentary on the Capital Goods
Scheme receivable.
Trade receivables
The Group does not typically offer credit terms to its
customers, requiring them to pay in advance of their storage period
and hence the Group is not exposed to significant credit risk. A
late charge of 10% is applied to a customer's account if they are
more than 10 days overdue in their payment. The Group provides for
receivables on a specific basis. There is a right of lien over the
customers' goods, so if they have not paid within a certain time
frame, we have the right to sell the items they store to recoup the
debt owed. Trade receivables that are overdue are provided for
based on estimated irrecoverable amounts determined by reference to
past default experience.
For individual storage customers, the Group does not perform
credit checks, however this is mitigated by the fact that these
customers are required to pay in advance, and also to pay a deposit
ranging from one week to four weeks' storage income. Before
accepting a new business customer who wishes to use a number of the
Group's stores, the Group uses an external credit rating to assess
the potential customer's credit quality and defines credit limits
by customer. There are no customers who represent more than 5% of
the total balance of trade receivables.
Included in the Group's trade receivables balance are debtors
with a carrying amount of GBP779,000 (2022: GBP713,000) which are
past due at the reporting date for which the Group has not provided
as there has not been a significant change in credit quality and
the amounts are still considered recoverable. The average age of
these receivables is 16 days past due (2022: 18 days past due).
The creation and release of credit loss allowances have been
included in cost of sales in the income statement.
The Group measures the loss allowance for the trade receivables
at an amount equal to lifetime expected credit loss. The expected
credit losses on trade receivables are estimated using a provision
matrix by reference to past default experience of the debtor. The
Group provides in full against all receivables due over 45 days
past due because historical experience has indicated that these
receivables are generally not recoverable.
There has been no change in the estimation techniques or
significant assumptions made during the current reporting
period.
The Group writes off a trade receivable when there is
information indicating that the debtors are in severe financial
difficulty and there is no realistic prospect of recovery, e.g.
when the debtor has been placed under liquidation or has entered
into bankruptcy proceedings.
The following table details the risk profile of trade
receivables based on the Group's provision matrix:
Year ended 31 March 2023 Not past 31-45
due <31 days days >45 days Total
Expected credit loss rate (%) 0.2% 16.2% 19.9% 100% 17.1%
Gross carrying amount (GBP000) 4,413 850 84 904 6,251
Lifetime ECL (GBP000) (11) (138) (17) (904) (1,070)
Net trade receivables at 31
March 2023 4,402 712 67 - 5,181
-------- -------- ----- -------- -------
Year ended 31 March 2022 Not past 31-45
due <31 days days >45 days Total
Expected credit loss rate (%) 0.2% 10.4% 20.5% 100% 10.6%
Gross carrying amount (GBP000) 4,058 733 71 464 5,326
Lifetime ECL (GBP000) (8) (77) (14) (464) (563)
Net trade receivables at 31
March 2022 4,050 656 57 - 4,763
-------- -------- ----- -------- -----
The above balances are short term and therefore the difference
between the book value and the fair value is not significant.
Consequently, these have not been discounted.
Movement in the credit loss allowance
2023 2022
GBP000 GBP000
Balance at the beginning of the year 563 223
Credit loss allowance consolidated on Armadillo
acquisition - 41
Amounts provided in year 826 463
Amounts written off as uncollectible (319) (164)
Balance at the end of the year 1,070 563
------- -------
The concentration of credit risk is limited due to the customer
base being large and unrelated. Accordingly, the Directors believe
that there is no further credit provision required in excess of the
credit loss allowance.
17. TRADE AND OTHER PAYABLES
31 March 31 March
2023 2022
GBP000 GBP000
Current
Trade payables 4,208 5,705
Other payables 18,199 13,762
Accruals and deferred income 34,868 27,882
57,275 47,349
-------- --------
The Group has financial risk management policies in place to
ensure that all payables are paid within the credit terms. The
Directors consider the carrying amount of trade and other payables
and accruals and deferred income approximates fair value.
The Group invoices its customers in advance, and hence any
deferred income balance primarily relates to amounts paid by
customers for rental periods beyond the balance sheet date. The
Groups' deferred income balance at 31 March 2023 was GBP17.3
million, an increase of 9% from 31 March 2022 (GBP15.8 million).
This reflects the growth in the Group's revenue during the
year.
18. FINANCIAL INSTRUMENTS
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes the borrowings disclosed in note 19, cash and
cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained
earnings.
With the exception of derivative instruments which are
classified as a financial liability at fair value through the
statement of comprehensive income, financial liabilities are
categorised under amortised cost. The Group has the following
classes of financial assets:
-- Trade and other receivables - trade receivables are initially
recognised at transaction price. Other receivables are initially
recognised at fair value. Subsequently these assets are measured at
amortised cost using the effective interest method, less provision
for expected credit losses
-- Cash and cash equivalents - cash and cash equivalents
represent only liquid assets with maturity of 90 days or less. Bank
overdrafts that cannot be offset against other cash balances are
shown with borrowings in current liabilities on the balance sheet.
Cash and cash equivalents are also classified as amortised cost.
They are subsequently measured at amortised cost. Cash and cash
equivalents include cash in hand, deposits at call with banks, and
other short term highly liquid investments with original maturities
of three months or less.
Exposure to credit and interest rate risks arise in the normal
course of the Group's business. Derivative financial instruments
are used to manage exposure to fluctuations in interest rates but
are not employed for speculative purposes.
A. Balance sheet management
The Group's Board reviews the capital structure on an ongoing
basis. As part of this review, the Board considers the cost of
capital and the risks associated with each class of capital. The
Group seeks to have a conservative gearing ratio (the proportion of
net debt to equity). The Board considers at each review the
appropriateness of the current ratio in light of the above. The
Board is currently satisfied with the Group's gearing ratio.
The gearing ratio at the year-end is as follows:
2023 2022
GBP000 GBP000
Debt (494,927) (420,435)
Cash and cash equivalents 8,329 8,605
Net debt (486,598) (411,830)
Balance sheet equity 2,182,446 2,184,375
Net debt to equity ratio 22.3% 18.9%
--------- ---------
B. Debt management
The Group currently borrows through a senior term loan, secured
on 50 self storage assets, a loan with Aviva Commercial Finance
Limited secured on a portfolio of 20 self storage assets, a GBP120
million loan from M&G Investments Limited secured on a
portfolio of 15 self storage assets. The Group also has a $225
million shelf facility available from Pricoa Private Capital (see
note 19). Borrowings are arranged to ensure an appropriate maturity
profile and to maintain short-term liquidity. Funding is arranged
through banks and financial institutions with whom the Group has a
strong working relationship.
C. Interest rate risk management
The Group is exposed to interest rate risk as entities in the
Group borrow funds at both fixed and floating interest rates. The
risk is managed by the Group by maintaining an appropriate mix
between fixed and floating rate borrowings, and by the use of
interest rate swap contracts. Hedging activities are evaluated
regularly to align with interest rate views and defined risk
appetite; ensuring optimal hedging strategies are applied, by
either positioning the balance sheet or protecting interest expense
through different interest rate cycles.
At 31 March 2023 the Group had one interest rate derivative in
place - GBP35 million fixed at 0.88% (excluding the margin on the
underlying debt instrument) until June 2023.
Under interest rate swap contracts, the Group agrees to exchange
the difference between fixed and floating rate interest amounts
calculated on agreed notional principal amounts. Such contracts
enable the Group to mitigate the risk of changing interest rates on
the fair value of issued fixed rate debt held and the cash flow
exposures on the issued variable rate debt held. The fair value of
interest rate swaps at the reporting date is determined by
discounting the future cash flows using the curves at the reporting
date and the credit risk inherent in the contract and is disclosed
below. The average interest rate is based on the outstanding
balances at the end of the financial year.
The GBP35 million interest rate swap settles on a three-monthly
basis. The floating rate on the interest rate swap is three month
SONIA. The Group settles the difference between the fixed and
floating interest rate on a net basis.
The Group does not hedge account for its interest rate swaps and
states them at fair value, with changes in fair value included in
the statement of comprehensive income. A reconciliation of the
movement in derivatives is provided in the table below:
2023 2022
GBP000 GBP000
At 1 April 885 (475)
Fair value of Armadillo derivatives on acquisition
of remaining interest - (29)
Receipt from cancellation of interest rate derivatives (436)
Fair value movement in the year (133) 1,389
At 31 March 316 885
------- -------
The interest rate derivative asset is shown within current
assets at the year end, as the interest rate derivative expires
within 12 months of the balance sheet date.
The tables below reconcile the opening and closing balances of
the Group's finance related liabilities for the current and prior
year:
Financial liabilities Financial liabilities
measured at amortised measured at
cost fair value
Obligations
under lease Interest rate
Loans liabilities derivatives Total
GBP000 GBP000 GBP000 GBP000
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 GBP2,357,000.
Financial liabilities Financial liabilities
measured at amortised measured at
cost fair value
Obligations
under lease Interest rate
Loans liabilities derivatives Total
GBP000 GBP000 GBP000 GBP000
At 1 April 2021 (337,300) (17,928) (475) (355,703)
Cash movement in the
year (32,235) 1,384 - (30,851)
Acquisition of remaining
interest in Armadillo (50,900) (4,862) (29) (55,791)
Impairment of Cheadle
lease - 1,944 - 1,944
Lease variations - (1,214) - (1,214)
Fair value movement - - 1,389 1,389
At 31 March 2022 (420,435) (20,676) 885 (440,226)
---------- ------------ --------------------- ---------
The difference between the loans balance above and the balance
sheet is loan arrangement fees of GBP2,455,000
D. Interest rate sensitivity analysis
In managing interest rate risks the Group aims to reduce the
impact of short-term fluctuations on the Group's earnings, without
jeopardising its flexibility. Over the longer term, permanent
changes in interest rates may have an impact on consolidated
earnings. At 31 March 2023, it is estimated that an increase of
0.25 percentage points in interest rates would have reduced the
Group's adjusted profit before tax and net equity by GBP753,000
(2022: reduced adjusted profit before tax by GBP493,000) 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
GBP753,000 (2022: increased adjusted profit before tax by
GBP493,000). The sensitivity has been calculated by applying the
interest rate change to the variable rate borrowings, net of
interest rate swaps, at the year end.
The Group's sensitivity to interest rates has increased during
the year, following the increase in the amount of floating rate
debt. The Board monitors closely the exposure to the floating rate
element of our debt.
E. Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, who have built an appropriate liquidity
risk management framework for the management of the Group's short,
medium, and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. Included in note 19 is a description of additional
undrawn facilities that the Group has at its disposal to further
reduce liquidity risk.
Short term money market deposits are used to manage liquidity
whilst maximising the rate of return on cash resources, giving due
consideration to risk.
F. Foreign currency management
The Group does not have any foreign currency exposure.
G. Credit risk
The credit risk management policies of the Group with respect to
trade receivables are discussed in note 16. The Group has no
significant concentration of credit risk, with exposure spread over
73,000 occupied rooms in our stores.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-rating agencies.
H. Financial maturity analysis
In respect of interest-bearing financial liabilities, the
following table provides a maturity analysis for individual
elements.
2023 Maturity
Less than One to Two to More than
Total one year two years five years five years
GBP000 GBP000 GBP000 GBP000 GBP000
Debt
Aviva loan 158,927 3,159 3,317 7,451 145,000
M&G loan payable at variable
rate 85,000 - - - 85,000
M&G loan fixed by interest
rate derivatives 35,000 - - - 35,000
Bank loan payable at variable
rate 216,000 - 216,000 - -
Total 494,927 3,159 219,317 7,451 265,000
-------- --------- ---------- ----------- -----------
2022 Maturity
Less than One to Two to More than
Total one year two years five years five years
GBP000 GBP000 GBP000 GBP000 GBP000
Debt
Aviva loan 161,935 3,008 3,159 10,459 145,309
M&G loan payable at variable
rate 85,000 - 85,000 - -
M&G loan fixed by interest
rate derivatives 35,000 - 35,000 - -
Bank loan payable at variable
rate 99,000 - - 99,000 -
Armadillo loan fixed by
interest rate derivatives 26,350 - 26,350 - -
Armadillo loan payable
at variable rate 13,150 - 13,150 - -
Total 420,435 3,008 162,659 109,459 145,309
-------- --------- ---------- ----------- -----------
I. Fair values of financial instruments
The fair values of the Group's cash and short-term deposits and
those of other financial assets equate to their book values.
Details of the Group's receivables at amortised cost are set out in
note 16. The amounts are presented net of provisions for doubtful
receivables, and allowances for impairment are made where
appropriate. Trade and other payables, including bank borrowings,
are carried at amortised cost. Obligations under lease liabilities
are included at the present value of their minimum lease payments.
Derivatives are carried at fair value.
For those financial instruments held at valuation, the Group has
categorised them into a three-level fair value hierarchy based on
the priority of the inputs to the valuation technique in accordance
with IFRS 7. The hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level
1) and the lowest priority to unobservable inputs (Level 3). If the
inputs used to measure fair value fall within different levels of
the hierarchy, the category level is based on the lowest priority
level input that is significant to the fair value measurement of
the instrument in its entirety. The fair value of the Group's
outstanding interest rate derivatives, as detailed in note 18C,
have been estimated by calculating the present value of future cash
flows, using appropriate market discount rates, representing Level
2 fair value measurements as defined by IFRS 7. There are no
financial instruments which have been categorised as Level 1 or
Level 3. The fair value of the Group's debt equates to its book
value.
J. Maturity analysis of financial liabilities
The contractual maturities based on market conditions and
expected yield curves prevailing at the year-end date are as
follows:
Trade and Borrowings Obligations
other payables Interest and under lease
GBP000 rate swaps interest liabilities Total
2023 GBP000 GBP000 GBP000 GBP000
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
--------------- ------------ ---------- ------------ -------
Trade and Borrowings Obligations
other payables Interest and under lease
GBP000 rate swaps interest liabilities Total
2022 GBP000 GBP000 GBP000 GBP000
From five to twenty years - - 153,835 22,765 176,600
From two to five years - - 126,541 5,432 131,973
From one to two years - (174) 172,163 1,989 173,978
Due after more than one
year - (174) 452,539 30,186 482,551
Due within one year 19,467 (608) 15,869 1,989 36,717
Total 19,467 (782) 468,408 32,175 519,268
--------------- ------------ ---------- ------------ -------
K. Reconciliation of maturity analyses
The maturity analysis in note 18J shows non-discounted cash
flows for all financial liabilities including interest payments.
The table below reconciles the borrowings column in note 19 with
the borrowings and interest column in the maturity analysis
presented in note 18J.
Unamortised Borrowings
borrowing and
Borrowings Interest costs interest
2023 GBP000 GBP000 GBP000 GBP000
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
------------ ---------- ----------- ----------
Unamortised Borrowings
borrowing and
Borrowings Interest costs interest
2022 GBP000 GBP000 GBP000 GBP000
From five to twenty years 145,309 7,156 1,370 153,835
From two to five years 109,459 16,533 549 126,541
From one to two years 162,659 8,968 536 172,163
Due after more than one year 417,427 32,657 2,455 452,539
Due within one year 3,008 12,861 - 15,869
Total 420,435 45,518 2,455 468,408
------------ ---------- ----------- ----------
19. BORROWINGS
31 March 31 March
2023 2022
Secured borrowings at amortised cost GBP000 GBP000
Current liabilities
Aviva loan 3,159 3,008
3,159 3,008
Non-current liabilities
Bank borrowings 216,000 99,000
Armadillo loans - 39,500
Aviva loan 155,768 158,927
M&G loan 120,000 120,000
Unamortised loan arrangement costs (2,357) (2,455)
Total non-current borrowings 489,411 414,972
-------- --------
Total borrowings 492,570 417,980
-------- --------
The weighted average interest rate paid on the borrowings during
the year was 4.2% (2022: 2.8%).
The Group has GBP24 million in undrawn committed bank borrowing
facilities at 31 March 2023, which expire after between one and two
years (2022: GBP141 million expiring after between two and three
years).
The Group has a GBP158.9 million fixed rate loan with Aviva
Commercial Finance Limited, expiring in September 2028. The loan is
secured over a portfolio of 20 freehold self storage centres. The
annual fixed interest rate on the loan is 3.4%. The loan has an
amortising element of GBP13.9 million which runs to April 2027.
The Group has a secured GBP240 million five year revolving bank
facility with Lloyds, HSBC and Bank of Ireland expiring in October
2024, with a margin of 1.25%.
The Armadillo loans were repaid during the year using the RCF
bank facility.
The Group has a GBP120 million loan with M&G Investments
Limited, with a bullet repayment in September 2029. The loan is
secured over a portfolio of 15 freehold self storage centres.
In addition to the facilities above, during the year, the Group
signed a $225 million credit approved shelf facility with Pricoa
Private Capital ("Pricoa"), to be drawn in fixed sterling notes.
The Group can draw the debt in minimum tranches of GBP10 million
over the next two and a half years with terms of between 7 and 15
years at short notice, typically 10 days.
The movement in the Group's loans are shown net in the cash flow
statement as the bank loan is a revolving facility and is repaid
and redrawn each month. The Group repaid the Armadillo debt
facilities during the year (GBP39.5 million drawn). The movement
has been shown net in the cash flow statement. The other Group
loans are not revolving, and any movements in those loans are
disclosed in a footnote to note 26B.
The Group was in compliance with its banking covenants at 31
March 2023 and throughout the year. The principal covenants are
summarised in the table below:
Covenant Covenant At 31 March
level 2023
Consolidated EBITDA Minimum 1.5x 7.2x
Consolidated net tangible assets Minimum GBP250m GBP2,182.4m
Bank loan interest cover Minimum 1.75x 9.1x
Aviva loan interest service cover
ratio Minimum 1.5x 5.9x
Aviva loan debt service cover ratio Minimum 1.2x 3.8x
M&G interest cover Minimum 1.5x 4.9x
The Consolidated EBITDA covenant is calculated by dividing the
consolidated EBITDA generated by the Group's stores by the Group's
consolidated net finance costs.
The bank loan interest cover, the Aviva loan interest service
cover ratio and the M&G interest cover covenants are calculated
by dividing the EBITDA generated by each loan's security pool by
the interest payable for each loan for each defined time period.
The Aviva loan debt service cover ratio is calculated by taking the
EBITDA generated by the Aviva security pool and dividing by the
Aviva loan interest payable and facility amortisation.
Interest rate profile of financial liabilities
Weighted Period Weighted
Floating average for which average
Total rate Fixed rate interest the rate period
GBP000 GBP000 GBP000 rate is fixed until maturity
At 31 March 2023
Gross financial liabilities 494,927 301,000 193,927 4.7% 4.8 years 3.9 years
-------- -------- ------------ --------- ---------- ---------------
At 31 March 2022
Gross financial liabilities 420,435 197,150 223,285 3.1% 4.6 years 3.4 years
-------- -------- ------------ --------- ---------- ---------------
All monetary liabilities, including short-term receivables and
payables are denominated in sterling. The weighted average interest
rate includes the effect of the Group's interest rate derivatives.
The Directors have concluded that the carrying value of borrowings
approximates to its fair value.
Narrative disclosures on the Group's policy for financial
instruments are included within the Strategic Report and in note
18.
20. DEFERRED TAX
Deferred tax assets in respect of IFRS 2 GBP0.1 million (2022:
GBP0.1 million), corporation tax losses GBP6.3 million (2022:
GBP6.5 million), capital allowances in excess of depreciation
GBP0.2 million (2022: GBP0.3 million) and capital losses GBP2.1
million (2022: GBP2.1 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 Present value
payments of minimum lease
payments
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Amounts payable under lease liabilities:
Within one year 2,048 1,989 2,020 1,958
Within two to five years inclusive 6,149 7,421 5,652 6,651
Greater than five years 21,766 22,765 12,024 12,067
29,963 32,175 19,696 20,676
-------- -------- --------- --------
Less: future finance charges (10,267) (11,499)
Present value of lease liabilities 19,696 20,676
-------- --------
All obligations under lease liabilities are denominated in
sterling. Interest rates are fixed at the contract date. All leases
are on a fixed repayment basis and no arrangements have been
entered into for contingent rental payments. The carrying amount of
the Group's lease obligations approximates their fair value.
22. SHARE CAPITAL
Called up, allotted,
and fully paid
2023 2022
GBP000 GBP000
Ordinary shares of 10 pence each 18,427 18,397
-------- ------------
Movement in issued share capital
Number of shares at 31 March 2021 175,880,470
Issue of shares - placing 7,751,938
Exercise of share options - Share option schemes 334,970
Number of shares at 31 March 2022 183,967,378
Exercise of share options - Share option schemes 298,595
------------
Number of shares at 31 March 2023 184,265,973
The share capital of the Company consists only of fully paid
ordinary shares with a nominal (par) value of GBP0.10 per share.
There are no restrictions on the ability of shareholders to receive
dividends, nor on the repayment of capital. All ordinary shares are
equally eligible to receive dividends and the repayment of capital
in accordance with the Company's Articles of Association and
represent one vote at shareholders' meetings of the Company.
At 31 March 2023 options in issue to Directors and employees
were as follows:
Option Number Number
price Date on which of ordinary of ordinary
Date option per ordinary Date first the exercise shares shares
Granted share exercisable period expires 2023 2022
29 July 2014 nil p** 29 July 2017 29 July 2024 - 830
21 July 2015 nil p** 21 July 2018 21 July 2025 989 1,989
22 July 2016 nil p** 22 July 2019 21 July 2026 1,944 2,944
2 August 2017 nil p** 2 August 2020 2 August 2027 5,809 5,809
13 March 2018 675.4p* 1 April 2021 1 April 2022 - 1,599
24 July 2018 nil p** 24 July 2021 24 July 2028 54,441 96,002
11 March 2019 749.9p* 1 April 2022 1 April 2023 - 46,996
nil p
19 July 2019 ** 19 July 2022 19 July 2029 170,545 353,920
2 March 2020 947.0p 1 April 2023 1 April 2024 43,016 48,241
nil p
5 August 2020 ** 5 August 2023 5 August 2030 372,757 398,146
903.2p
1 March 2021 * 1 April 2024 1 April 2025 81,216 86,670
nil p
22 July 2021 ** 22 July 2024 22 July 2031 300,444 319,922
1060.3p 8 February
8 August 2022 * 8 August 2025 2026 72,429 -
nil p
21 July 2022 ** 21 July 2025 21 July 2032 443,218 -
1,546,808 1,363,068
------------ ------------
* SAYE (see note 23) ** LTIP (see note 23)
Own shares
The own shares reserve represents the cost of shares in Big
Yellow Group PLC purchased in the market and held by the Big Yellow
Group PLC Employee Benefit Trust, along with shares issued directly
to the Employee Benefit Trust. 1,122,907 shares are held in the
Employee Benefit Trust (2022: 1,122,907), and no shares are held in
treasury.
23. SHARE-BASED PAYMENTS
The Company has three equity share-based payment arrangements,
namely an LTIP scheme (with approved and unapproved components), an
Employee Share Save Scheme ("SAYE") and a Deferred Bonus Plan. The
Group recognised a total expense in the year related to
equity-settled share-based payment transactions of GBP3,735,000
(2022: GBP3,390,000).
Equity-settled share option plans
Since 2004 the Group has operated an Employee Share Save Scheme
("SAYE") which allows any employee who has more than six months
service to purchase shares at a 20% discount to the average quoted
market price of the Group shares at the date of grant. The
associated savings contracts are three years at which point the
employee can exercise their option to purchase the shares or take
the amount saved, including interest, in cash. The scheme is
administered by Globalshares.
On an annual basis since 2004 the Group awarded nil-paid options
to senior management under the Group's Long Term Incentive Plan
("LTIP"). The awards are conditional on the achievement of
challenging performance targets as described in the Remuneration
Report. The awards granted in 2019 vested to 90.1% of their
potential. The weighted average share price at the date of exercise
for options exercised in the year was GBP13.13 (2022:
GBP14.84).
2023 2022
No. of No. of
LTIP scheme options options
Outstanding at beginning of year 1,179,562 1,223,533
Granted during the year 504,431 382,433
Lapsed during the year (83,846) (176,404)
Exercised during the year (250,000) (250,000)
Outstanding at the end of the year 1,350,147 1,179,562
--------- ---------
Exercisable at the end of the year 107,656 124,901
--------- ---------
The weighted average fair value of options granted during the
year was GBP2,795,000 (2022: GBP1,742,000).
Participants pay the nominal value of the shares when exercising
options under the LTIP scheme.
Options outstanding at 31 March 2023 had a weighted average
contractual life of 7.9 years (2022: 8.1 years).
2023 2022
Weighted Weighted
average average
exercise exercise
Employee Share Save Scheme 2023 price 2022 price
("SAYE") No. of options (GBP) No of options (GBP)
Outstanding at beginning of
year 183,506 8.75 281,708 8.15
Granted during the year 72,715 10.60 - -
Forfeited during the year (10,965) 9.29 (13,232) 8.92
Exercised during the year (48,595) 7.50 (84,970) 6.76
Outstanding at the end of the
year 196,661 9.71 183,506 8.75
--------------- --------- -------------- ---------
Exercisable at the end of the -
year -
--------------- --------- -------------- ---------
Options outstanding at 31 March 2023 had a weighted average
contractual life of 1.7 years (2022: 1.6 years).
The inputs into the Black-Scholes model for the options granted
during the year are as follows:
LTIP SAYE
Expected volatility n/a 27%
Expected life 3 years 3 years
Risk-free rate 0.04% 0.04%
Expected dividends 2.6% 2.9%
Expected volatility was determined by calculating the historical
volatility of the Group's share price over the year prior to
grant.
Deferred bonus plan
The Executive Directors receive awards under the Deferred Bonus
Plan. This is accounted for as an equity instrument. The plan was
set up in July 2018. The vesting criteria and scheme mechanics are
set out in the Directors' Remuneration Report.
24. CAPITAL COMMITMENTS
At 31 March 2023 the Group had GBP6.1 million of amounts
contracted but not provided in respect of the Group's properties
(2022: GBP20.9 million of capital commitments).
25. EVENTS AFTER THE BALANCE SHEET DATE
There are no reportable post balance sheet events.
26. CASH FLOW NOTES
a) Reconciliation of profit after tax to cash generated from
operations
2023 2022
Note GBP000 GBP000
Profit after tax 73,332 697,274
Taxation 1,977 1,602
Share of profit of associates - (3,677)
Other operating income 3 (2,185) -
Investment income (9) (1,412)
Finance costs 17,027 10,604
------- ---------
Operating profit 90,142 704,391
Loss/(gain) on the revaluation of investment 14a,
properties 15 29,861 (597,224)
Gain on disposal of investment property - (584)
Depreciation of plant, equipment, and owner-occupied
property 14b 888 857
Depreciation of lease liability capital obligations 14a,14b 1,569 1,659
Employee share options 6 3,735 3,390
------- ---------
Cash generated from operations pre working
capital movements 126,195 112,489
Increase in inventories (13) (71)
(Increase)/decrease in receivables (740) 1,550
Increase in payables 3,531 6,422
------- ---------
Cash generated from operations 128,973 120,390
------- ---------
b) Reconciliation of net cash flow movement to net debt
2023 2022
Note GBP000 GBP000
Net decrease in cash and cash equivalents
in the year (276) (3,717)
Cash flow from increase in debt financing(1) (74,492) (32,235)
Change in net debt resulting from cash flows (74,768) (35,952)
--------- ---------
Debt consolidated following Armadillo acquisition - (50,900)
Movement in net debt in the year (74,768) (86,852)
Net debt at the start of the year (411,830) (324,978)
Net debt at the end of the year 18A (486,598) (411,830)
--------- ---------
(1) Made up of a net increase of GBP117.0 million in the RCF
facility, repayment of the Armadillo loans of GBP39.5 million and
repayments of the Aviva facility of GBP3.0 million (2022: made up
of a net reduction of GBP53.5 million in the RCF facility, an
increase of GBP50 million in the M&G facility, an increase of
GBP50 million in the Aviva facility, repayments of the Aviva
facility of GBP2.9 million, and repayments of the Armadillo loans
of GBP11.4 million).
In line with IAS 1.41, this disclosure note has been represented
to provide further detail and consistency in both years.
27. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions with Armadillo
As described in note 14, the Group had a 20% interest in
Armadillo Storage Holding Company Limited and a 20% interest in
Armadillo Storage Holding Company 2 Limited. The Group acquired the
remaining interest in both companies that it did not own on 1 July
2021. From this date, the Companies were wholly owned subsidiaries
of the Group and hence the transactions subsequent to that date are
not disclosable. Up to the date of acquisition in 2021, the Group
entered into transactions with the Companies on normal commercial
terms and earned management fees of GBP238,000 from Armadillo 1 and
GBP87,000 from Armadillo 2.
AnyJunk Limited
Jim Gibson is a Non-Executive Director and shareholder in
AnyJunk Limited and Adrian Lee is a shareholder in AnyJunk Limited.
During the year AnyJunk Limited provided waste disposal services to
the Group on normal commercial terms, amounting to GBP16,000 (2022:
GBP10,000).
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 GBP3,000 during the year (2022: GBP3,000). The Group
sponsored a performance of the London Children's Ballet during the
year, amounting to GBP8,000 (2022: GBPnil).
Doncaster Security Operations Centre Limited ("DSOC")
The Group has invested GBP588,000 in DSOC. DSOC provided alarm
and CCTV monitoring services to the Group under normal commercial
terms during the year, amounting to GBP301,000 (2022:
GBP281,000).
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
GBP8,000 (2022: GBP3,000).
Ukrainian Sponsorship Pathway UK
Nicholas Vetch and Heather Savory are trustees of a charity
called Ukrainian Sponsorship Pathway UK ("USPUK") to help
Ukrainians displaced by the war to travel to the UK as part of the
"Homes for Ukraine" scheme. The charity has set up offices in
Warsaw and Krakow and is one of the few that has been recognised
for this purpose by the UK Government. We are proud to be financial
supporters of this new charity and the Board approved a donation
which was made in May 2022 of GBP50,000 (2022: GBPnil).
No other related party transactions took place during the years
ended 31 March 2023 and 31 March 2022.
28. GLOSSARY
Absorption The rate of growth in occupancy assumed within the
external property valuations from the current occupancy
level to the assumed stable occupancy level.
Adjusted earnings The increase in adjusted eps year-on-year.
growth
Adjusted eps Adjusted profit after tax divided by the diluted
weighted average number of shares in issue during
the financial year.
Adjusted NAV EPRA NTA adjusted for an investment property valuation
carried out at purchasers' costs of 2.75%, see note
13.
Adjusted Profit The Company's pre-tax EPRA earnings measure with
Before Tax additional Company adjustments, see note 10.
Average net achieved Storage revenue divided by average occupied space
rent per sq ft over the financial year.
Average rental The growth in average net achieved rent per sq ft
growth year-on-year.
BREEAM An environmental rating assessed under the Building
Research Establishment's Environmental Assessment
Method.
Carbon intensity Carbon emissions divided by the Group's average
occupied space.
Closing net rent Annual storage revenue generated from in-place customers
per sq ft divided by occupied space at the balance sheet date.
Committed facilities Available undrawn debt facilities plus cash and
cash equivalents.
Consolidated EBITDA Consolidated EBITDA calculated in accordance with
the terms of the Group's Revolving Credit Facility
Agreement.
Debt Long-term and short-term borrowings, as detailed
in note 19, excluding lease liabilities and debt
issue costs.
Earnings per share Profit for the financial year attributable to equity
(eps) 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 EPRA earnings divided by the average number of shares
per share 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 IFRS net assets excluding the mark-to-market on
asset value (EPRA interest rate derivatives, deferred taxation on
NTA) 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 The sum of investment property and investment property
assets 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 Excludes the closing occupancy of new stores acquired,
occupancy opened, or closed in the current financial year
in both the current financial year and comparative
figures. In 2023 this excludes Aberdeen, Harrow,
Hayes, Hove, Kingston North, Uxbridge, and the Armadillo
stores.
Like-for-like Excludes the impact of new stores acquired, opened
store revenue or stores closed in the current or preceding financial
year in both the current year and comparative figures.
In 2023 this excludes Aberdeen, Harrow, Hayes, Hove,
Kingston North, Uxbridge, and the Armadillo stores.
LTV (loan to value) Net debt expressed as a percentage of the external
valuation of the Group's investment properties.
Maximum lettable The total square foot (sq ft) available to rent
area (MLA) 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 Store EBITDA after an allocation of central overhead.
income
Net operating The projected net operating income delivered by
income on stabilisation a store when it reaches a stable level of occupancy.
Net promoter score The Net Promoter Score is an index ranging from
(NPS) -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 Big Yellow's strategy is that by 2030 the Group
Energy Positive 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 Storage revenue generated from in place customers
ft 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 excluded from like-for-like metrics, as they
stores were acquired, opened or closed in the current or
preceding financial year. In 2023 this excludes
Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge,
and the Armadillo stores.
Occupancy The space occupied by customers divided by the MLA
expressed as a %.
Occupied space The space occupied by customers in sq ft.
Other storage Packing materials, insurance, and other storage
related income related fees.
Pipeline The Group's development sites.
Property Income A dividend, generally subject to withholding tax,
Distribution (PID) 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 The growth in value of a shareholding over a specified
return (TSR) period, assuming dividends are reinvested to purchase
additional units of shares.
Ten Year Summary
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Results
Revenue 188.8 171.3 135.2 129.3 125.4 116.7 109.1 101.4 84.3 72.2
Operating profit
before gains
and losses on
property assets 120.0 106.6 81.5 80.0 76.7 70.9 65.3 59.9 48.4 39.5
Cash flow from
operating
activities 112.0 107.1 76.7 73.6 72.2 63.0 56.0 55.5 42.4 32.8
Profit before
taxation 75.3 698.9 265.8 93.4 126.9 134.1 99.8 112.2 105.2 59.8
Adjusted profit
before taxation 106.0 96.8 74.6 71.0 67.5 61.4 54.6 49.0 39.4 29.2
Net assets 2,182.4 2,184.4 1,453.9 1,163.9 1,123.9 981.1 890.4 829.4 750.9 594.1
Diluted EPRA
earnings per
share 56.5p 52.5p 42.4p 42.1p 41.4p 38.5p 34.5p 31.1p 27.1p 20.5p
Declared total
dividend per
share 45.2p 42.0p 34.0p 33.8p 33.2p 30.8p 27.6p 24.9p 21.7p 16.4p
Key statistics
Number of stores
open** 108 105 78 75 74 74 73 71 69 66
Store MLA (000
sq ft) 6,292 6,098 4,930 4,688 4,622 4,631 4,551 4,464 4,344 4,170
Sq ft occupied
(000)** 5,088 5,107 4,201 3,781 3,810 3,730 3,551 3,363 3,178 2,832
Occupancy
(decrease)/
increase in
year
(000 sq ft)* (19) 906 420 (29) 80 179 188 185 346 200
Closing net rent GBP32.48 GBP29.92 GBP28.71 GBP28.15 GBP27.28 GBP26.74 GBP26.03 GBP25,90 GBP25.23 GBP24.85
per sq ft**
Number of occupied
rooms** 73,000 73,000 62,000 56,500 56,000 55,000 52,500 50,000 47,250 41,800
Average number
of employees
during the
year** 465 427 370 361 347 335 329 318 300 289
* - the occupancy growth in 2015, 2017, 2022 and 2023 includes
the acquisition of existing stores
** - from 2022 this includes the Armadillo stores, which the
Group acquired the remaining 80% of which it did not previously own
on 1 July 2021
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END
FR ATMITMTATBMJ
(END) Dow Jones Newswires
May 22, 2023 11:35 ET (15:35 GMT)
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