Big Yellow Group PLC
("Big Yellow", "the Group" or
"the Company")
Results for the YEAR ended 31 MARCH
2024
HIGHLIGHTS
Financial metrics
|
Year ended
31 March 2024
|
Year ended
31 March 2023
|
Change
|
Revenue
|
£199.6m
|
£188.8m
|
6%
|
Store revenue(1)
|
£197.1m
|
£186.7m
|
6%
|
Like-for-like store
revenue(1,2)
|
£193.5m
|
£185.6m
|
4%
|
Store EBITDA(1)
|
£143.0m
|
£134.0m
|
7%
|
Adjusted profit before
tax(1)
|
£107.3m
|
£106.0m
|
1%
|
Adjusted earnings per
share(1)
|
55.9p
|
56.5p
|
(1%)
|
Dividend -
final
- total
|
22.6p
45.2p
|
22.9p
45.2p
|
(1%)
-
|
Statutory
metrics
|
|
|
|
Profit before tax
|
£241.0m
|
£75.3m
|
220%
|
Cash flow from operating activities (after net
finance costs and pre-working capital
movements)(3)
|
£110.1m
|
£109.2m
|
1%
|
Basic earnings per share
|
127.1p
|
40.1p
|
217%
|
Store
metrics
|
|
|
|
Store Maximum Lettable Area
("MLA")(1)
|
6,419,000
|
6,292,000
|
2%
|
Closing occupancy (sq
ft)(1)
|
5,029,000
|
5,088,000
|
(1%)
|
Closing occupancy(1)
|
78.3%
|
80.9%
|
(2.6
ppts)
|
Closing occupancy - Big Yellow like-for-like
stores (%)(1,4)
|
80.9%
|
83.2%
|
(2.3
ppts)
|
Average net rent per sq ft
|
£33.64
|
£31.28
|
8%
|
Closing net rent per sq
ft(1)
|
£34.14
|
£32.48
|
5%
|
1 See note 28 for glossary of terms
2 Excluding Aberdeen (acquired June 2022), Harrow and Kingston
North (both opened September 2022) and Kings Cross (opened June
2023)
3 See reconciliation in Financial Review
4 As per (2), additionally excluding the Armadillo
stores
Highlights
•
|
Revenue growth of 6%, with like-for-like store
revenue up by 4%, driven by increases in average achieved
rents
|
•
|
Big Yellow store like-for-like occupancy
decrease of 2.3 ppts to 80.9% (March 2023: 83.2%). Closing
occupancy, reflecting the additional capacity from recently opened
stores, is down 2.6 ppts
|
•
|
Average achieved net rent per sq ft increased
by 7.5% year on year, closing net rent up 5.1% from March
2023
|
•
|
Overall store EBITDA margin increased to 72.5%
(2023: 71.8%)
|
•
|
Cash flow from operating activities (after net
finance costs and pre-working capital movements) increased by 1% to
£110.1 million
|
•
|
Adjusted profit before tax up 1% to £107.3
million, adjusted earnings per share down 1% to 55.9p
|
•
|
45.2 pence per share full year dividend, in
line with prior year
|
•
|
Statutory profit before tax of £241.0 million,
up from £75.3 million in the prior year, due to a revaluation gain
of £131.2 million in the current year
|
•
|
£300 million sustainability-linked revolving
credit facility put in place during the year
|
•
|
£6 million invested in the year on solar
retro-fit, 68 stores now have solar with a 47% increase in capacity
in the year to 6.6 Megawatts
|
Investment in
new capacity
•
|
£107 million (net of expenses) raised by way
of a placing of 6.3% of the Company's issued share capital to fund
the build out of the development pipeline
|
•
|
Kings Cross opening and one extension added
127,000 sq ft of space; we have committed to build a further seven
stores (MLA of 448,000 sq ft) with all due to open by Summer
2026
|
•
|
Acquisition of freehold properties in
Leicester and Leamington Spa (the latter post year-end), taking the
pipeline to 12 development sites and two replacement stores of
approximately 1.0 million sq ft (15% of current MLA), of which 11
are in London or within close proximity. 1.4 million sq ft of
fully built vacant space is currently available for future
growth
|
•
|
Planning consent granted for new store in
Wapping (London) and Epsom (London); we now have eight of our 14
pipeline stores with planning
|
Nicholas
Vetch CBE, Executive Chairman of Big Yellow,
commented:
"The transition to higher interest rates has
had the impact intended by policymakers of subduing activity and
Big Yellow has not been immune, although it has again proved itself
to be resilient with a healthy revenue increase and EBITDA growth
of 7%. The driver of this performance has been an increase in
net rents, partially offset by a decline in occupancy. As
usual we caution that we have limited visibility beyond a few
weeks, but the period since the year end has seen an encouraging
pick-up in occupancy growth, closing the gap with the prior year
like-for-like occupancy to 0.7 ppts, and we expect occupancy to
continue to grow into our seasonally stronger summer trading
period.
The increase in revenue and EBITDA did not
translate into a commensurate growth in earnings as we absorbed a
significant increase in interest expense, but we believe that this
impact is now behind us and indeed may well turn from a head to a
tailwind.
When we first conceived this business, now
over 25 years ago, we were clear that we would piece together a
store portfolio of unparalleled quality, largely focused on London
and the South East. The performance of our recently opened
Kings Cross store, which has achieved 40,000 sq ft of occupancy
growth and was cashflow positive after 4 months, exemplifies the
benefit of this strategy.
The successful placing last October has given
us the balance sheet strength to commit to building out our
pipeline. We now have an opportunity to generate in excess of
£50 million of net operating income from a combination of
delivering the income from our pipeline stores and leasing up the
existing fully built 1.4 million sq ft of vacant space to
previously achieved levels of occupancy, the majority of which
would flow through to earnings.
We are entirely cognisant that delivering this
growth will take time and is to some degree subject to external
forces, but we believe that it is achievable and will be our
predominant focus over the next few years."
ABOUT
US
Big Yellow is the UK's brand leader in self
storage. Big Yellow now operates from a platform of 109
stores, including 24 stores branded as Armadillo Self
Storage. We have a pipeline of 1.0 million sq ft comprising
14 proposed Big Yellow self storage facilities. The current
maximum lettable area of the existing platform (including
Armadillo) is 6.4 million sq ft. When fully built out the
portfolio will provide approximately 7.4 million sq ft of flexible
storage space. 99% of our stores and sites by value are held
freehold and long leasehold, with the remaining 1% short
leasehold.
The Group has pioneered the development of the
latest generation of self storage facilities, which utilise state
of the art technology and are located in high profile, accessible,
main road locations. Our focus on the location and visibility
of our stores, with excellent customer service, a market-leading
online platform, and significant and increasing investment in
sustainability, has created in Big Yellow the most recognised brand
name in the UK self storage industry.
CHAIRMAN'S STATEMENT
Big Yellow Group PLC ("Big Yellow", "the
Group" or "the Company"), the UK's brand leader in self storage, is
pleased to announce its results for the year ended 31 March
2024.
The transition to higher interest rates has
had the impact intended by policymakers of subduing activity and
Big Yellow has not been immune, although it has again proved itself
to be resilient with a healthy revenue increase and EBITDA growth
of 7%. The driver of this performance has been an increase in
net rents, partially offset by a decline in occupancy. As
usual we caution that we have limited visibility beyond a few
weeks, but the period since the year end has seen an encouraging
pick-up in occupancy growth, closing the gap with the prior year
like-for-like occupancy to 0.7 ppts, and we expect occupancy to
continue to grow into our seasonally stronger summer trading
period.
The increase in revenue and EBITDA did not
translate into a commensurate growth in earnings as we absorbed a
significant increase in interest expense, but we believe that this
impact is now behind us and indeed may well turn from a head to a
tailwind.
When we first conceived this business, now
over 25 years ago, we were clear that we would piece together a
store portfolio of unparalleled quality, largely focused on London
and the South East. The performance of our recently opened
Kings Cross store, which has achieved 40,000 sq ft of occupancy
growth and was cashflow positive after 4 months, exemplifies the
benefit of this strategy.
Financial
results
Revenue for the year was £199.6 million (2023:
£188.8 million), an increase of 6%.
Like-for-like store revenue growth (see note
28) was 4% driven by improvements in
average net rent. Like-for-like
store revenue excludes new store openings and acquired stores.
Store EBITDA was £143.0 million, an increase of 7% from the prior
year (2023: £134.0 million).
Store revenue for the fourth quarter was £48.9
million, an increase of 5.4% from £46.4 million for the same
quarter last year, with one additional day's trading.
The Group's cash flow from operating
activities (after net finance costs and pre-working capital
movements) increased by £0.9 million (1%) to £110.1 million for the
year (2023: £109.2 million).
The adjusted profit before tax in the year was £107.3 million
up 1% from £106.0 million in 2023. Adjusted earnings per
share decreased by 1% to 55.9p (2023: 56.5p).
The Group's statutory profit before tax was
£241.0 million, an increase from £75.3 million in the prior
year. There was a revaluation surplus for the current year of
£131.2 million, compared to a deficit of £29.9 million in the prior
year. The surplus in the current year arises from an
improvement in cap rates, reflecting recent transactions in the
sector, and operating cash flow growth. The prior year
deficit was due to a £57.5 million reduction in the value of our
industrial property and land without self storage planning in the
development pipeline, reflective of changed financing conditions
and the wider market environment for land.
Development
pipeline
The pursuit of building first rate stores in
first rate locations, particularly in London, is a long and complex
process. It has required a good deal of persistence and patience
and of course has created a significant drag on earnings as we have
held land for redevelopment sometimes for many years. We now
have planning consents for eight stores and have started the
construction process on seven of those. We have four large London
sites in the later stages of planning (including two at appeal) and
although the vagaries of the planning system mean we cannot be
certain of positive outcomes, we expect clarity by the
Autumn.
In May 2022, we suspended construction on all
projects that were not already on site because conditions in the
construction market were unfavourable. Those conditions have
improved considerably with steelwork and cladding prices falling,
and other material prices stabilising. In addition, we are
seeing on recent tenders that main contractors and specialist
sub-contractors are pricing new projects more
competitively.
This is the most significant expansion of the
Company's footprint for many years, which is largely tangible and
deliverable, with the new pipeline stores, even by the high
standards of our portfolio, improving the overall
quality.
Although we are not out of risk both in terms
of planning and construction on the existing pipeline we will
increasingly turn our attention to acquiring new sites and to that
end have purchased in May 2024 for £3 million a first-class
property in Leamington Spa, that will also serve the university
town of Warwick.
In June, the Group acquired a 0.8 acre
property for development on Belgrave Gate, central Leicester for
£1.85 million. We will be seeking planning permission for a
58,000 sq ft self storage centre on the site.
Capital
structure
It is our view that elevated levels of debt
over cycles destroys value and so it remains our long-term strategy
to keep debt at modest levels. We believe it is therefore
optimal that future capital expenditure on new sites and the £224
million of construction spend should be funded from cash flow,
surplus property sales and equity.
In October 2023 we raised £107 million (net of
expenses) by way of a placing of 6.3% of the Company's share
capital. The net proceeds will be used to expand capacity in
London, our strongest market, and monetise land that we already
own. The placing has been marginally accretive to earnings in
the short term, and we expect it to be significantly so over the
medium to long term.
Net debt was £385.4 million at 31 March 2024
(2023: £486.6 million), and the Group has undrawn committed
facilities of £181 million. Approximately 50% of our
debt is fixed, with the balance floating, in line with our hedging
policy, and our current average cost of drawn debt is
5.4%.
The Group's interest cover for the year
(expressed as the ratio of cash generated from operations
pre-working capital movements against interest paid) was 5.6 times
(2023: 7.7 times). This is currently approximately 6 times,
and the Group's net debt to EBITDA ratio is currently
3x.
The Group owns its assets largely freehold,
representing some 99% by value of our portfolio which has shielded
us from the significant rise in industrial and warehouse rents that
has occurred over the last decade or more. We view rent
liabilities as quasi-debt. Following the relocation of
Farnham Road, Slough this summer and Staples Corner in due course
(subject to planning) to new freehold stores we expect our total
rent liability to fall to approximately £1 million per
annum.
Dividends
The Group's dividend policy is to distribute a
minimum of 80% of full year adjusted earnings per share. The
final distribution of PID declared is 22.6 pence per share.
This brings the total distribution declared for the year to 45.2
pence per share in line with the prior year.
Our
people
Adrian Lee, who joined the business soon after
its founding in early 1999, retired from Big Yellow at the end of
March. We had limited knowledge of operational businesses at
that time, and Adrian was key in establishing what over the years
has become a market leading self storage platform in the UK.
After 25 years, any statement is insufficient, but we are grateful
for all his efforts and successes over the last quarter of a
century, and we have no doubt he will remain in the Big Yellow
orbit in the years to come.
We commenced a search to replace Adrian last
year, and I am delighted to announce that John Hunter has recently
joined the business as our new Chief Operating Officer. John
started out in finance, and then moved into more commercial roles,
most recently as COO at Homeserve plc. Prior to that he spent
several years in operational roles at Dixons Carphone plc. We
all look forward to working with John and feel sure that he will
make a positive contribution to the continued success of Big
Yellow.
Any successful business requires a fully
engaged workforce, and our recent engagement survey, with an
average score of 88% across the business was very pleasing,
although improvement is a perpetual quest.
I would like to thank all of our people for
their dedication and support in what for many has been a personally
difficult year with the impact of rises in the cost of living and
higher interest rates.
Outlook
The successful placing last October has given
us the balance sheet strength to commit to building out our
pipeline. We now have an opportunity to additionally generate
in excess of £50 million of net operating income from a combination
of delivering the income from our pipeline stores and leasing up
the existing fully built 1.4 million sq ft of vacant space to
previously achieved levels of occupancy, the majority of which
would flow through to earnings.
We are entirely cognisant that delivering this
growth will take time and is to some degree subject to external
forces, but we believe that it is achievable and will be our
predominant focus over the next few years.
Nicholas
Vetch CBE
Executive
Chairman
20 May 2024
CHIEF EXECUTIVE'S STATEMENT
Trading
We are pleased to have delivered another year
of revenue and EBITDA growth against a weaker demand environment,
demonstrating the resilience of our business model. Although
activity levels were subdued in the first three quarters of the
year, we have seen a recovery in the fourth quarter, which has
continued into the current year.
Given this weaker demand environment, we
continued to use rental growth, both to new and existing customers,
to drive revenue, and over the year our average rate growth was
7.5% down from 9.8% in 2023. In addition, we have also
reduced our increases to existing customers in the fourth quarter,
reflective of a moderating inflationary
environment.
Our principal objective in the current year,
in an improving demand environment, is to drive occupancy and have
it make a meaningful contribution to revenue growth which has not
been the case over the last two years. Since the year end, we
have seen continued growth in occupancy, and our total occupied
space today is now broadly in line with last year, with current
like-for-like occupancy now down 0.7 ppts compared to the same
period last year.
The main driver in this current improvement in
demand is from domestic customers, who currently represent 68% of
revenue and 63% of occupied space. We believe this to be from
a combination of improving consumer confidence in a lower
inflationary environment with real wage growth and improving
activity levels in the housing market since the new year; one
barometer being mortgage approvals to the owner-occupied market,
which have recovered; in essence more decisions are being
made. Our business occupancy is largely flat since the half
year, but again we are beginning to see more demand, with prospects
largely flat, but move-ins up 2% since the start of January.
Demand from national customers (4% of our total revenue) continues
to be robust, with revenue growth year-on-year of 13%.
Businesses currently occupy 37% of space, unchanged from last
year.
Over the year, revenue growth from our London
and South East stores (75% of our business) has outperformed the
regions, however we saw an improved performance in the regions in
the fourth quarter which has continued into the current
year.
Investment in
our operating platform and systems
Self storage operators are providers of secure
storage, and in adopting automation it is important not to lose
sight of keeping our customers and their possessions safe and
secure. This requires an investment in technology and
automation, physical security, and in our view most importantly
having team members present in the centre during normal retail
hours.
We will continue to invest in the security of
our stores through providing individually alarmed rooms/24 hours
CCTV, monitoring of our stores overnight and most importantly
restricting which of our customers have access to our stores when
there are no team members present. About 15% of our customers
- typically businesses providing services and online traders - use
and pay for out of hours access, the balance of our customers are
happy to use the centres during normal trading hours, and all our
feedback indicates that they appreciate having team members present
at the store.
Our store operating model is analogous to the
car rental market. New customers can select and reserve rooms
and check-in online, including uploading ID, all prior to arriving
at a store. In essence the onboarding process is online,
however, our team members double check the customer ID, review
insurance, and take payment in store. In addition to dealing
with any issues and providing customer service, store team members
are also required to carry out due diligence tasks, prepare vacated
rooms for new customers, accept deliveries for our business
customers, optimise contents cover and packing material sales,
follow up on prospects and reservations, and importantly to
identify and refuse custom to suspicious
prospects.
AI is a technology that enables machines to
learn from data and perform tasks that normally require human
intelligence. AI can be classified into two types: rules-based and
machine learning systems. The rules-based manipulation of
data to, for example, manage our dynamic pricing, is something that
we have done for several years in our business and will continue to
invest in and improve. Other examples would include the
manipulation of data to provide reporting and alerts to speed up
and improve decision making, leading to efficiencies, and we use
this across the business. An example in the stores is the
automatic tracking of competitor pricing using an external data
supplier providing alerts to both stores and operational
management. We are also using the significant data from
customer use of stores to provide alerts to us on unusual
behaviours that require attention to our overnight monitoring
centre and store teams, so improving security.
Generative AI is used throughout the business,
particularly in relation to content and ideas creation, examples
being in marketing or the development of procedures and training
modules. What always must be remembered is that those using
these models are still required to be the editor to achieve optimal
results, but of no doubt there is the potential for significant and
continuing efficiency gains. A more detailed summary of how
AI is used within the business is included in the Operating
Review.
We continue to invest in improving our web
journey, with more automation of prospect handling through to
reservation and check-in, with regular communication both by email
and text. 93% of our prospects come through our digital
channels (we still have customers whose first contact is at the
store or over the phone). 66% of visits are from mobile
devices, and the balance is portable and desktop computers.
Interestingly, this has remained stable in recent years, and we
have not seen the continued drive to smart phones as was expected,
which is possibly a reflection of prospects searching using desktop
computers or portables either while working from home or during the
day while at work.
The cyber threat remains, and we continue to
invest in our digital security, and review the effectiveness of all
the tools we deploy.
People
Our progress this year once again reflects the
steadfast commitment and hard work of our people.
Since January 2023, the level of staff
turnover and vacancies in the business started to decline, with a
reduction in leavers. Our current staff turnover and level of
vacancies continues to be at relatively low levels, which is
encouraging.
We have also carried out a review of our store
staffing structure and have not been replacing certain positions,
reducing our average headcount in stores, with an annualised saving
including on-costs of £0.4 million - a benefit of the improved
automation in the business. As mentioned above, the delivery
of customer service and the security of our stores is paramount,
and hence having team members in our stores for part of the day
will always be required.
We carried out an employee engagement survey
using external consultants last summer and were very pleased with
the results. The engagement score across the business was a
record 88%, with a significantly improved participation rate of 92%
from the previous survey in 2021. This was an excellent
result, reflective of a key priority for the business, which is its
culture.
We continue to believe that the customer
experience and the service delivered by our store teams is a
critical and differentiating success factor, particularly with
those customers who are regular users of our facilities. A
retail measure is a net promoter score, and our average over the
year for move-ins and move-outs was 80.5 (2023: 78.9), a very
creditable result.
We continue to make improvements to our
culture and practices in respect of diversity, and these are set
out in our Gender and Inclusivity Report, which is available on our
corporate website, and has been formally filed for 2023. We
formalised a Diversity and Inclusivity Committee in 2020, with
representation from colleagues from throughout the business, and I
am also a standing member of the Committee, as I believe diversity
has a positive impact on our culture and performance.
ESG
The Big Yellow Foundation, which was launched
in 2018 is our principal vehicle for delivering social good, with
the cause being the rehabilitation of vulnerable people into
work. The Company matches all money raised from customers at
move-in and move-out and from fundraising from our team
members. In the year we have raised a record £298,000 for the
Foundation, and we provided £256,000 of funding to our seven
charity partners, with the total to date now over £1.0
million.
We have an initiative of providing 12 week
work placements to candidates from some of our partner charities,
and over the year 12 placements were carried out at several of our
stores. This can be life changing for some in improving their
confidence and work chances, and we have also found it to be
particularly rewarding to our store teams.
We have also over the years provided space to
local charities and community groups in each of our stores; at
present we support on average two charities per store this
way. The recent refinancing of our bank facility is aligned
with this strategy and includes social targets for both the
Foundation and the provision of space to local
charities.
I mentioned the solar retro-fit programme last
year, which is a £25 million investment, of which £13.6 million has
been spent to date. Progress has been very good, and as of
now we have completed the retro-fit of 35 stores. Our current
installed solar capacity is 6.6 Megawatts, an increase of 47% over
the year. We estimate that this is currently saving the
business £0.6 million per year. This will continue to
increase as we make further progress towards our objective of being
self-sufficient in renewable energy.
We will be trialling a new battery at our
Slough Farnham Road store, using the electricity that we generate
at our stores more efficiently, with less being sold to the
grid. If this is successful we will then look to adopt this
in new stores, which will see further battery improvement and
reduction in costs. We will also be looking at how we can
retro-fit it into existing stores, all designed to improve the
efficiency of our energy usage. Energy costs represent 5% of
operating costs (c. £25,000 per store), and we aim to continue to
reduce this.
The investment in solar improves the EPC
rating in our stores. There is a requirement to have all
stores with an EPC rating of A to C by 2025 and A to B by
2030. At present all bar one of our stores is A to C, and we
have plans in place to install solar at that store to meet the 2025
requirement. For the 2030 requirement, the majority of stores
already meet it, and there are plans for all stores to be A or B
rated by 2028. Much of the improvement is being driven by the
investment in solar and also through removing gas
boilers.
Further detail, including progress on our
Science Based Targets, is included in the ESG Report.
Summary
Our business model, market-leading brand and
operating platform has delivered a resilient performance over
recent years, and we remain confident that it will continue to
deliver attractive and sustainable returns over the medium to long
term. As we enter our historically stronger summer trading
period, we are looking forward to another year of
growth.
Jim
Gibson
Chief
Executive Officer
20 May 2024
OPERATING REVIEW
The store platform and demand
We now have a portfolio of 109 open and
trading stores, with a current maximum lettable area
of 6.4 million sq ft (2023: 108 stores, MLA of 6.3 million sq
ft).
Self storage demand is spread across a diverse
set of drivers, and is largely driven by need, with security,
convenience, quality of product, service and location being key
factors. Awareness remains relatively low compared to
commoditised products, such as hotel rooms or airline seats, albeit
it is increasing slowly year-on-year with increased supply,
marketing expenditure and customer use. Over 70% of our
domestic customers are in the top 3 ACORN categories: Affluent
Achievers, Rising Prosperity, and Comfortable Communities.
The largest element of demand into our business each year is
customers who use us for relatively short periods driven by a
need.
Of our move-ins during the year:
-
|
customers renting storage space whilst moving
represented 41% of move-ins during the year (2023: 41%), with
homeowners representing 26% and renters 15%. The proportion
of renters increased during the year, offsetting some of the
slowdown in the owner-occupied market;
|
-
|
12% of our customers who moved in took storage
space as a spare room for decluttering (2023: 11%);
|
-
|
36% of our customers used the product because
some event had occurred in their lives generating the need for
storage; they may be moving abroad for a job, have inherited
possessions, are getting together, or separating, are students who
need storage during the holidays, or homeowners developing into
their lofts or basements (2023: 37%);
|
-
|
the balance of 11% of our new customer demand
during the year came from businesses (2023: 11%), who stay longer
and represent around 20% of our customers in store at any one time,
occupying 37% of the space at 31 March 2024.
|
Of our overall occupied space today, customers
who are longer stay lifestyle users, decluttering into small rooms
as an extension to their accommodation, occupy 10% to 15% of our
space; approximately 50% of the space is customers using it for
less than 12 months, for reasons which are largely event driven,
which could be inheritance, moving in the owner occupied or rental
sector, home improvements, travelling; the balance of 37% of our
space is businesses.
Our business customer base is comprised of
online retailers, B2B traders looking for flexible mini-warehousing
for e-fulfilment, service providers, those looking to shorten
supply chains, and businesses looking to rationalise their other
fixed costs of accommodation. For these customers, who
typically are looking for rooms which could be from 50 sq ft to 500
sq ft in facilities that meet their operational requirements, the
only supply in big cities is from self storage
providers. The average space occupied by business
customers at the year-end is 177 sq ft (2023: 179 sq
ft).
Domestic customers occupy on average 58 sq ft
(2023: 59 sq ft) and pay on average 17% more in rent per sq ft
(2023: 18%), however business customers do stay longer, take more
space and represent around 32% of revenue (2023:
33%).
The pandemic accelerated many structural
changes that were already occurring, such as the move to online
retailing and an increase in working from home facilitated by
technological advances. The deindustrialisation of big cities
with the conversion of commercial space into residential and other
uses, has led to a shortage of suitable flexible mini-warehouse
space from which to operate small scale storage and e-fulfilment,
particularly in London. These developments, along with
businesses increasingly seeking flexible office and storage space
rather than longer inflexible leases, have been driving our
demand. We believe these are long-term structural trends,
which will benefit our business going forward.
From research we have previously carried out,
a typical small business using storage employs around three people
and 60% of them are early-stage businesses and for 50% of them this
is their only space.
In addition, we have a dedicated
national customers team for businesses who wish to occupy space in
multiple stores. These customers on average occupy
approximately 1,000 sq ft, paying £30,000 per annum, and are billed
and managed centrally. This area has performed strongly in
the year with revenue up 13% compared to the prior year, making up
5% of occupied space.
Activity
Prospect numbers are more in-line with the
pre-Covid period on a like-for-like basis, and activity levels
within the business have consequently been a little bit slower than
last year, with move-ins down 6%, and move-outs also down 6% over
the year, reflecting less churn. Our conversion rates over the
period have increased, which is indicative of more needs-driven
demand. Since the year end we have seen an increase in move-in
activity, with move-ins up 5% compared to the same period last
year.
Occupancy across all 109 stores fell over the
year by 59,000 sq ft (2023: fall of 58,000 sq ft, with an
additional 39,000 sq ft of occupancy acquired with Aberdeen in June
2022). Business occupancy dropped by 2.6% or 50,000 sq ft on
1.9 million sq ft occupied at the beginning of the year. Our
larger rooms, which are occupied in the main by businesses, remain
highly occupied, particularly in London. Domestic occupied
space was in line with the prior year.
As we have experienced over the years, there
are businesses who outgrow us and move to their own accommodation,
others cease operations, some are seasonal, and we continue to
replace any vacated space with new move-ins from online traders,
e-tailers and service providers. We are not seeing any
noticeable further softening in demand from businesses,
particularly in London.
The 76 established Big Yellow stores are 81.6%
occupied compared to 84.2% at the same time last year. The
nine developing Big Yellow stores added 73,000 sq ft of occupancy
over the year to reach closing occupancy of 59.8%. The 24
Armadillo stores, representing 10% of the Group's revenue are 74.3%
occupied, compared to 76.9% at this time last year (including an
additional 20,000 sq ft of capacity added during the year at
Stockton South). Overall store occupancy was 78.3% (2023:
80.9%).
|
Occupancy
31 March 2024
%
|
Occupancy change in year
000 sq ft
|
Occupancy
31 March 2024
000 sq ft
|
Occupancy
31 March 2023
000 sq ft
|
76 established Big Yellow
stores
|
81.6%
|
(124)
|
3,905
|
4,029
|
9 developing Big Yellow
stores
|
59.8%
|
73
|
375
|
302
|
All 85 Big Yellow stores
|
79.1%
|
(51)
|
4,280
|
4,331
|
24 Armadillo stores
|
74.3%
|
(8)
|
749
|
757
|
All 109 stores
|
78.3%
|
(59)
|
5,029
|
5,088
|
All stores are trading profitably at the
EBITDA level, with our most recent opening in Kings Cross reaching
break even in September 2023, four months after opening.
Rental
growth
We continue to manage pricing dynamically,
taking account of room availability, customer demand and local
competition, with our pricing model reducing promotions and
increasing asking prices where individual units are in scarce
supply.
We continue to price competitively to win new
customers and have moderated our existing customer price increases
over the year with the fall in inflation. It must be
remembered that some 60% to 70% of our customers move-out within
six months, and therefore do not receive any price
increases.
The average achieved net rent per sq ft
increased by 7.5% compared to the prior year, with closing net rent
up 5.1% compared to 31 March 2023. The table below shows the
change in net rent per sq ft for the portfolio by average occupancy
over the year (on a non-weighted basis). The analysis
excludes our most recent store openings.
Average
occupancy in the year
|
Net rent per sq ft growth from April
2023 to March 2024
|
Net rent per sq ft growth from April
2022 to March 2023
|
70% to 85%
|
5.4%
|
8.3%
|
85% to 90%
|
5.5%
|
8.7%
|
Above 90%
|
6.9%
|
9.7%
|
The self
storage market
In the recently published 2024 Self Storage
Association UK Survey, only 43% of those surveyed had a reasonable
or good awareness of self storage. Furthermore, only 12% of
the 2,076 adults surveyed were currently using self storage or were
thinking of using self storage in the next year, which was an
improvement from 9% in the survey last year. Self storage is
therefore not a commoditised product, such as hotels, taxis,
cinemas etc, and it will take many years of use and growing
awareness before it becomes so, particularly given the subdued
growth in new supply.
Growth in new facilities across the industry
has been largely in regional areas of the UK and particularly in
smaller towns. Historically, new supply creation
in our core markets in London and the South East, has been
difficult, with high land values driven by competing uses such as
residential and urban industrial. In London in
the year to 31 December 2023, there were eight new store openings,
including one Big Yellow store. We are aware of four planned
store openings in London in calendar year 2024.
The Self Storage Association ("SSA") estimates
that the UK industry is made up of approximately 1,700 self storage
facilities and 1,000 purely container operations, providing 60
million sq ft of self storage space, equating to 0.9 sq ft per
person in the UK. This compares to 12 sq ft per person in the
US, 2.2 sq ft per person in Australia and 0.2 sq ft for mainland
Europe, where the roll-out of self storage is a more recent
phenomenon (sources: UK Self Storage Association Survey May 2024
and FEDESSA European Self Storage Annual Survey 2023).
Marketing and operations
Our marketing strategy focuses on building our
market-leading brand awareness further and using it to maximise the
cost-efficient generation of enquiries, customer move-ins and user
satisfaction through our digital platforms. Our strong brand
and continued digital investment and innovation has helped us
create a market-leading website which delivers over 90% of our
enquiries.
Our annual YouGov survey (published May 2024)
again confirmed that the brand awareness of Big Yellow remained
significantly ahead of other UK operators in the sector. The
survey shows our unprompted brand awareness to be 4.1 times higher
than our nearest competitor across the UK (2023: 4.4 times
higher).
The Big Yellow website allows users to browse
different room sizes, obtain a price, reserve online and check-in
online prior to arriving at the stores which are automated in terms
of access once a customer moves-in.
The online customer experience also allows
customers to communicate with us in real-time via Live Chat,
WhatsApp, or Facebook Messenger. The comprehensive online
FAQs provide our users with another way to ask questions they may
have about the service without needing to call us directly.
This is critical because approximately
60% of our new prospects have not used self
storage before.
The seamless digital experience continues with
our online check-in platform. This allows customers to
complete the majority of their move-in process remotely. They
can upload their photo and identity documents, sign the full
customer licence, set up authorised persons, complete their storage
inventory and set up a paperless Direct Debit - all done
remotely. This check-in online capability has significantly
cut down the time our customers need to spend in our receptions
when they move-in. The process is completed with our in-store
digital signature pads.
We also offer the ability to purchase boxes
and packing materials through our online BoxShop store. These
items can be home delivered or made available for our Click and
Collect service from stores, which represents 80% of BoxShop
transactions.
Driving
online traffic
Self storage is a consumer-facing business,
and the development of a strong and sustainable brand is
multi-layered and requires a consistency of product, customer
service and interaction at all touch points, particularly
online.
Search engines are the most important
acquisition tool for us, accounting for the majority of traffic to
our website. Our focus for a competitive advantage on
search continues and search engine optimisation ("SEO") work has
helped us to maintain high organic listings for popular generic and
local self storage related search terms. This in turn drives
the growth and cost efficiencies of acquiring new
prospects.
Brand search terms are also a valuable driver
of enquiries for Big Yellow and help improve the efficiencies of
our cost per enquiry. 41% of all traffic generated from
search engines to our website originated from "Big Yellow" brand
searches in the year. This clearly indicates that brand is
important in driving higher levels of prospects and customer
referrals, leading to improved operational efficiencies. We
have demonstrated this through significant improvements in the
performance of existing storage centres following their
acquisition, re-branding, and assimilation into our
business.
Search engine marketing remains our largest
source of paid for web traffic. Ongoing website optimisation
and an engaging user experience through our digital platforms helps
ensure we maximise the conversion of these web visits into
enquiries and then customers. Digital display advertising
enables us to regionally target audiences in the market for self
storage, raising consideration of the service and the Big Yellow
brand through engaging creatives.
Online
customer reviews and social media
Supporting our values of putting the customer
at the heart of our business, our online customer reviews generate
real-time feedback from customers and provide positive word of
mouth referral to our website visitors. Through our 'Big
Impressions' customer feedback programme, we ask our new customers
to rate our service. With the users' permission, we then
publish these independent customer reviews on the Big Yellow
website which currently total over 52,000 averaging 4.7 out of
5.
The Big Impressions programme also generates
customer feedback on their move-in and move-out experience. These
customer reviews and mystery shop results are transparently
accessible across the business and helps reinforce our focus on
outstanding customer service. Over the year, we
have achieved an average net promoter score of 80.5
which is a very strong consumer-facing benchmark
result.
We also gain real-time customer feedback from
over 23,500 Google Reviews averaging 4.7 out of 5. These help to
enhance our visibility within local search listings conveying trust
in the Big Yellow brand. Additionally, we have over 4,200
reviews from the independent review site TrustPilot. These
reviews average 4.8 out of 5-star rating, labelled as "Excellent"
on the TrustPilot ratings scale. We monitor our customer
reviews and respond where necessary for customer service reasons or
to manage our online reputation and improve our service
offering.
Social media continues to be complementary to
our existing marketing channels. Big Yellow actively posts
content across Twitter, Facebook and Instagram which help to raise
awareness of our services and ESG activities. These social
channels are also used by customers to connect with us and are
monitored in real-time, enabling us to respond promptly to any
enquiries. The Big Yellow LinkedIn platform is used to
communicate company achievements, ESG initiatives and our company
culture and the Big Yellow YouTube channel is used to allow web
prospects to experience our stores online through our video guides
to self storage.
We will continue to invest in improving the
customer experience and user journey across all our digital
marketing channels and also in-store operations to achieve higher
levels of automation and hence efficiencies in the
business.
AI
Generative AI is now used throughout the
business and has been adopted quickly since its launch. We
have a variety of tools available including Canva, ChatGPT, Google
Gemini and Microsoft 365 CoPilot. These are used to generate
content and ideas across social media, SEO, responses to customer
reviews, drafting emails, developing training modules, policies,
procedures and creating visuals in our communications. We see
these large language models continuing to improve and allowing us
to increase our productivity and efficiency, particularly at our
head office.
Rules-based data manipulation and automation
is also something that we have used within Big Yellow for some time
and continue to improve. Examples of this include our dynamic
pricing system, prospect management, check-in online, digital
automation of all customer communications, access control reporting
and alerts based on the significant data we have at stores,
exception reporting for our store audit processes. Other
examples in marketing would be translation AI, optimisation of paid
search and targeting of prospects. Although provided by third
parties, machine learning AI is the core of all our cyber security
and defence, across anti-malware, firewalls, email management,
vulnerability testing and Security Information and Event
Monitoring. A further example is that we have just
invested in a SaaS recruitment platform, which manages the workflow
for all recruitment and interaction with candidates through
automation. Our CAFM platform in facilities which was
implemented three years ago to manage all our interactions between
the stores, the facilities team and the various contractors has
made a significant difference to productivity and control in that
area.
The above is by no means a complete summary of
how AI is making a difference to our business, but hopefully
provides an insight and it is something that we will continue to
invest in.
Cyber
security and IT infrastructure
Cyber security and IT infrastructure are vital
for the Group's strategy and operations. The Group has a robust
cyber security and IT infrastructure framework that covers risk,
security, compliance, innovation, and efficiency. The Group has
achieved significant results and progress in the past year, but
also faces challenges and opportunities in the future. The Group is
committed to investing and improving its cyber security and IT
infrastructure capabilities, and to maintaining its competitive
edge.
We regularly evaluate cyber risk and security
status with the help of both internal experts and external
consultants and conduct frequent tests on our systems and people,
such as penetration tests and phishing simulations. The Group's
systems underwent an external audit during the year and retained
the IASME Gold certification which includes Cyber Essentials.
The Group has cyber insurance in place should a breach
occur.
Our Data Compliance Officer oversees our
ongoing compliance with GDPR and PCI DSS. The role also
includes Business Continuity and Crisis Communication management.
Policies and procedures are under regular review and are
benchmarked against industry best practice. There are mandatory
courses for all staff to complete both for Information Security and
Data Protection. Our Infrastructure and Development teams
continue to drive innovation and efficiencies throughout the Group.
ESG
We have a long-term strategy to become Net
Renewable Energy Positive and deliver Net Zero Scope 1 and 2
Emissions targets, which will be funded with significant investment
from the Group over the next few years. The main delivery
vehicle for this new strategy will be the installation of solar
generation capacity onto our existing store estate.
By 2025, we expect to have completed a
multi-million pound investment in renewable energy generation both
on the roofs of our estate and also at other locations. We
published in 2022 our Strategy document that sets out our
Commitments, Actions and Timelines to become 100% Renewable Energy
Positive and Net Zero Scope 1 and 2 Emissions by 2030.
The sustainability performance highlights for
the year are:
-
|
we have invested £6 million in our solar
programme over the year and now have 68 stores with solar and have
expanded the programme to all stores. Our current peak
capacity has increased over the past three years from 0.9 Megawatts
to 6.6 Megawatts;
|
-
|
we have donated £796,000 in Community
Investment. This consists of a combination of free and
discounted space to worthy local charitable
organisations and not-for-profits and we house different
organisations, from foodbanks to small community groups to NHS
partners and also BoxShop products donated;
|
-
|
£298,000 has been raised for the Foundation
from customer donations and employee fundraising including the
matched contributions from the Company. These funds allowed
us to make grants of £256,000 to our partner charities in the
year;
|
-
|
we have delivered 12 successful and all-round
enriching work placements with Breaking Barriers, Street League and
the Down's Syndrome Association;
|
-
|
increased our GRESB Green Star rating from 4
to 5, improved from a B to an A- award from CDP and maintained our
ISS indices; and
|
-
|
we obtained our third EPRA sBPR Gold
Award.
|
Development
pipeline
An important aspect of our external growth is
the development of new stores, particularly in London, where there
are very few existing assets suitable to be acquired. Over
the last year, we added 127,000 sq ft of capacity through opening a
new store in Kings Cross (London) and extending our Armadillo store
in Stockton South.
Current
development pipeline - with planning
Site
|
Location
|
Status
|
Anticipated
capacity
|
Slough Farnham Road
|
Prominent location on Farnham Road
|
Store opening in July 2024.
|
Replacement for existing leasehold store of a
similar size
|
Staines, London
|
Prominent location on the Causeway
|
Construction to commence in June 2024 with a
view to opening in Summer 2025. We also have consent on the
site to develop 9 industrial units totalling 99,000 sq
ft.
|
65,000 sq ft
|
Queensbury, London
|
Prominent location off Honeypot
Lane
|
Construction to commence in July 2024 with a
view to opening in Autumn 2025.
|
70,000 sq ft
|
Wembley, London
|
Prominent location on Towers Business
Park
|
Construction to commence in late 2024 with a
view to opening in late 2025.
|
70,000 sq ft
|
Slough Bath Road
|
Prominent location on Bath Road
|
Construction to commence in Autumn 2024 with a
view to opening in early 2026.
|
90,000 sq ft
|
Epsom, London
|
Prominent location on East Street
|
Construction to commence in late 2024 with a
view to opening in Spring 2026.
|
58,000 sq ft
|
Wapping, London
|
Prominent location on the Highway, adjacent to
existing Big Yellow
|
Demolition of existing building in progress,
construction expected to commence in Autumn 2024 with a view to
opening in Summer 2026
|
Additional 95,000 sq ft
|
Newcastle
|
Scotswood Road
|
Planning consent granted, vacant possession
awaited
|
60,000 sq ft
|
Current
development pipeline - without planning
Kentish Town, London
|
Prominent location on Regis Road
|
Site acquired in April 2021. Planning
appeal submitted and due to be heard in May 2024.
|
68,000 sq ft
|
West Kensington, London
|
Prominent location on Hammersmith
Road
|
Site acquired in June 2021. Planning
appeal submitted, and due to be heard in July 2024.
|
175,000 sq ft
|
Old Kent Road, London
|
Prominent location on Old Kent Road
|
Site acquired in June 2022. Planning
application submitted in October 2023.
|
75,000 sq ft
|
Staples Corner, London
|
Prominent location on North
Circular Road
|
Site acquired in December
2022. Planning application submitted in December
2023.
|
Replacement for existing leasehold
store, additional 18,000 sq ft
|
Leicester
|
Prominent location on Belgrave Gate, Central
Leicester
|
Site acquired in June 2023. Planning
discussions underway with Leicester City Council.
|
58,000 sq ft
|
Leamington Spa
|
Prominent location on Queensway
|
Site acquired in May 2024.
|
55,000 sq ft
|
Total - all
sites
|
|
|
957,000 sq
ft
|
PORTFOLIO
SUMMARY
|
March
2024
|
March
2023
|
|
Big Yellow
Established(1)
|
Big Yellow Developing
|
Total Big Yellow
|
Armadillo
|
Total
|
Big Yellow Established
|
Big Yellow Developing
|
Total Big Yellow
|
Armadillo
|
Total
|
Number of stores
|
76
|
9
|
85
|
24
|
109
|
76
|
8
|
84
|
24
|
108
|
At 31 March:
|
|
|
|
|
|
|
|
|
|
|
Total capacity (sq ft)
|
4,784,000
|
627,000
|
5,411,000
|
1,008,000
|
6,419,000
|
4,784,000
|
524,000
|
5,308,000
|
984,000
|
6,292,000
|
Occupied space (sq ft)
|
3,905,000
|
375,000
|
4,280,000
|
749,000
|
5,029,000
|
4,029,000
|
302,000
|
4,331,000
|
757,000
|
5,088,000
|
Percentage occupied
|
81.6%
|
59.8%
|
79.1%
|
74.3%
|
78.3%
|
84.2%
|
57.6%
|
81.6%
|
76.9%
|
80.9%
|
Net rent per sq ft
|
£36.38
|
£33.06
|
£36.09
|
£22.98
|
£34.14
|
£34.55
|
£30.70
|
£34.28
|
£22.20
|
£32.48
|
For the year:
|
|
|
|
|
|
|
|
|
|
|
REVPAF(2)
|
£34.16
|
£21.30
|
£32.70
|
£20.02
|
£30.71
|
£32.68
|
£22.20
|
£31.84
|
£20.27
|
£30.02
|
Average occupancy
|
84.0%
|
56.2%
|
80.9%
|
76.4%
|
80.2%
|
86.9%
|
54.1%
|
84.0%
|
82.1%
|
83.7%
|
Average annual net rent
psf
|
£35.83
|
£32.46
|
£35.56
|
£22.75
|
£33.64
|
£33.28
|
£30.10
|
£33.10
|
£21.33
|
£31.28
|
|
|
|
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Self storage income
|
144,418
|
11,167
|
155,585
|
17,562
|
173,147
|
136,925
|
8,809
|
145,734
|
17,177
|
162,911
|
Other storage related
income (2)
|
18,332
|
1,571
|
19,903
|
2,651
|
22,554
|
18,523
|
1,401
|
19,924
|
2,691
|
22,615
|
Ancillary store rental
income
|
1,108
|
284
|
1,392
|
19
|
1,411
|
1,028
|
165
|
1,193
|
20
|
1,213
|
Total store revenue
|
163,858
|
13,022
|
176,880
|
20,232
|
197,112
|
156,476
|
10,375
|
166,851
|
19,888
|
186,739
|
Direct store operating
costs
|
(38,979)
|
(5,334)
|
(44,313)
|
(7,517)
|
(51,830)
|
(38,644)
|
(4,482)
|
(43,126)
|
(7,437)
|
(50,563)
|
Short and long
leasehold
rent(3)
|
(2,112)
|
-
|
(2,112)
|
(169)
|
(2,281)
|
(1,983)
|
-
|
(1,983)
|
(170)
|
(2,153)
|
Store
EBITDA(2)
|
122,767
|
7,688
|
130,455
|
12,546
|
143,001
|
115,849
|
5,893
|
121,742
|
12,281
|
134,023
|
Store EBITDA margin
|
74.9%
|
59.0%
|
73.8%
|
62.0%
|
72.5%
|
74.0%
|
56.8%
|
73.0%
|
61.8%
|
71.8%
|
|
|
|
|
|
|
|
|
|
|
|
Deemed cost
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
To 31 March 2024
|
739.0
|
188.0
|
927.0
|
145.3
|
1,072.3
|
|
|
|
|
|
Capex to complete
|
-
|
1.0
|
1.0
|
0.1
|
1.1
|
|
|
|
|
|
Total
|
739.0
|
189.0
|
928.0
|
145.4
|
1,073.4
|
|
|
|
|
|
(1) The Big Yellow established
stores have been open for more than three years at 1 April 2023,
and the developing stores have been open for fewer than three years
at 1 April 2023.
(2) See glossary in note
28.
(3) Rent paid for six short
leasehold properties and one long leasehold property
The table below reconciles Store EBITDA to
gross profit in the statement of comprehensive income.
|
Year ended 31 March
2024
£000
|
Year ended 31 March
2023
£000
|
|
Store
EBITDA
|
Reconciling items
|
Gross
profit per statement of comprehensive income
|
Store
EBITDA
|
Reconciling items
|
Gross
profit per statement of comprehensive income
|
Store revenue/Revenue(4)
|
197,112
|
2,507
|
199,619
|
186,739
|
2,090
|
188,829
|
Cost of sales(5)
|
(51,830)
|
(4,164)
|
(55,994)
|
(50,563)
|
(3,744)
|
(54,307)
|
Rent(3)
|
(2,281)
|
2,281
|
-
|
(2,153)
|
2,153
|
-
|
|
143,001
|
624
|
143,625
|
134,023
|
499
|
134,522
|
(4) See note 3 of the financial
statements, reconciling items are management fees and non-storage
income.
(5) See reconciliation in cost of
sales section in Financial Review.
Reconciliation of APMs
The table below reconciles the reported
figures above to the like-for-like metrics the Group
reports:
Like-for-like
revenue
|
Year ended 31 March
2024
£000
|
Year ended 31 March
2023
£000
|
Store revenue 6
|
197,112
|
186,739
|
Less revenue from non like-for-like stores
6
|
(3,657)
|
(1,133)
|
Like-for-like revenue 6
|
193,455
|
185,606
|
Like-for-like
Big Yellow store occupancy
|
Year ended 31 March
2024
|
Year ended 31 March
2023
|
Store MLA (sq ft) 6
|
6,419,000
|
6,292,000
|
Less MLA from non like-for-like stores (sq ft)
6
|
(1,304,000)
|
(1,178,000)
|
Like-for-like MLA (sq ft)
6
|
5,115,000
|
5,114,000
|
|
|
|
Store occupancy (sq ft)
6
|
5,029,000
|
5,088,000
|
Less occupancy from non like-for-like (sq ft)
6
|
(890,000)
|
(835,000)
|
Like-for-like occupancy (sq ft)
6
|
4,139,000
|
4,253,000
|
|
|
|
Like-for-like occupancy (%)
6
|
80.9%
|
83.2%
|
(6) See glossary in note
28
FINANCIAL REVIEW
Revenue
Total revenue for the year was £199.6 million,
an increase of £10.8 million (6%) from £188.8 million in the prior
year. Like-for-like store revenue (see glossary
in note 28) for the year was £193.5 million, an increase of 4% from
the prior year (2023: £185.6 million).
Revenue growth for the year in our London
stores was 7%, our south east commuter stores 5% and our regional
stores 3%.
Included in store revenue is other storage
related income, from the sale of packing materials,
insurance/enhanced liability service ("ELS"), and storage related
charges. This amounted to £22.6 million in the year (2023:
£22.6 million).
The Group changed the way it sold its contents
protection cover to its customers on 1 June 2022 to an Enhanced
Liability Service, which is subject to VAT at 20% and not Insurance
Premium Tax ("IPT") at 12%, the latter being included in
revenue. We estimate the impact of this on the total revenue
and like-for-like revenue for the year is 0.2%.
The other revenue earned by the Group is
tenant income on sites where we have not started
development.
Operating
costs
Cost of sales principally comprise the direct
store operating costs, including store staff salaries, utilities,
business rates, insurance, a full allocation of the central
marketing budget and repairs and maintenance.
The table below shows the breakdown of our
store operating costs compared to the prior year:
Category
|
Year ended 31 March
2024
£000
|
Year ended 31 March
2023
£000
|
Change
|
% of store operating costs in
2024
|
Cost of sales
|
1,519
|
2,202
|
-31%
|
3%
|
Staff costs
|
14,721
|
14,415
|
2%
|
27%
|
General & admin
|
1,434
|
1,691
|
-15%
|
2%
|
Utilities
|
2,670
|
2,056
|
30%
|
5%
|
Property rates
|
18,153
|
15,498
|
17%
|
33%
|
Marketing
|
6,438
|
6,504
|
-1%
|
12%
|
Repairs &
maintenance
|
5,336
|
4,685
|
14%
|
10%
|
Insurance
|
3,323
|
2,757
|
21%
|
6%
|
Computer costs
|
1,031
|
1,001
|
3%
|
2%
|
Total before
one-off items
|
54,625
|
50,809
|
8%
|
|
One-off items
|
(2,795)
|
(246)
|
|
|
Total per
portfolio summary
|
51,830
|
50,563
|
3%
|
|
Store operating costs have increased by £1.3
million (3%). The one-off items in the current year relate to
the release of a provision for property rates from the 2017 rating
list (£2.3 million), and a reassessment of the Group's bad debt
provision (£0.5 million). Store operating costs before these
one-off items have increased by £3.8 million (8%) compared to the
prior year. New stores accounted for £1.5 million of
operating expense increase in the year. Cost of sales has
decreased by £0.7 million following the move to selling an ELS
rather than insurance (see explanation in revenue above), and also
due to a decline in packing material sales during the
year.
The remaining increase of £3 million
represents an increase of 6%. More specifically, we would
comment as follows:
-
|
Staff costs have increased by £0.3 million
(2%). The average salary review in the year was 5.6%, which
has been partly offset by a reduction in staffing in stores as we
continue to invest in automation, and lower bonuses in the
year.
|
-
|
General and admin expenses are down by £0.3
million (15%), following a reassessment of the Group's bad debt
provision in the year.
|
-
|
Marketing is 1% down on the prior year with
continued efficiencies being achieved from our digital
campaigns.
|
-
|
Utilities has increased by 30%, with a new
fixed rate electricity contract starting on 1 October 2023, which
was at a 74% higher rate than our expiring contract. This
increased rate has been partly mitigated by our investment in
solar.
|
-
|
Property rates have increased by £2.7 million
(17%), following the Rating Revaluation published in November 2022,
effective 1 April 2023.
|
-
|
Insurance has increased by £0.6 million
(21%). Overall buildings and loss of income insurance
premiums increased from 1 April 2023 by 16%, due to market
conditions and higher insured values. In addition, we now
insure our customers contents for catastrophe risk, with a Lloyds
underwriter, and as a result are responsible for paying for claims
up to £250,000 in any one loss. During the year £348,000 was
paid in claims (2023: £128,000), with higher claims this year due
to the very wet winter.
|
-
|
The repairs and maintenance expense has
increased due to higher store numbers, and an increase in solar
panel maintenance costs, with higher numbers of stores now with
solar PVs.
|
-
|
The Group's bad debt expense for the year was
0.2% of revenue, in line with the prior year. The Group has
not seen any deterioration in its aged debtors' profile over recent
months.
|
The table below reconciles store operating
costs per the portfolio summary to cost of sales in the statement
of comprehensive income:
|
Year ended 31 March
2024
£000
|
Year ended 31 March
2023
£000
|
Direct store operating costs per
portfolio summary (excluding rent)
|
51,830
|
50,563
|
Rent included in cost of sales
(total rent payable is included in portfolio summary)
|
1,784
|
1,551
|
Depreciation charged to cost of
sales
|
569
|
496
|
Head office and other operational
management costs charged to cost of sales
|
1,811
|
1,697
|
Cost of sales per statement of comprehensive
income
|
55,994
|
54,307
|
Store
EBITDA
Store EBITDA for the year was £143.0 million,
an increase of £9.0 million (7%) from £134.0 million for the prior
year (see Portfolio Summary). The
overall EBITDA margin for during the year was 72.5%, up from 71.8%
in 2023.
All stores are currently trading profitably at
the Store EBITDA level. Our store in Kings Cross, which
opened in June 2023, reached break even after four months of
trading.
Administrative
expenses
Administrative expenses in the statement of
comprehensive income of £15.2 million were up £0.7 million (5%)
compared to the prior year, including increased legal and
professional fees and COO recruitment costs. The non-cash
share-based payments charge represents £4.0 million of the overall
£15.2 million expense (2023: £3.7 million of £14.5 million
expense).
Other
income
In February 2022 the Group experienced a fire
at our Cheadle store, which resulted in a total loss to the store.
We have insurance cover in place for both the fit-out and four
years loss of income. The loss of income received during the
financial year was £1.8 million, which is included in other income
(2023: £1.4 million).
The Group also received £4.7 million in the
year which was the insurance proceeds for the fit-out of the
Cheadle store. This amount is shown in other income but has
not been included in the Group's adjusted earnings for the
year.
Interest
expense on bank borrowings
The gross bank interest expense for the year
was £25.6 million, an increase of £7.5 million from the prior year,
due to higher average debt levels in the first half of the year,
coupled with the Group's higher average cost of debt following the
increase in interest rates. The average cost of borrowing
during the year was 5.5% compared to 4.2% in the prior year.
Capitalised interest on our construction programme was £3.3
million, up from £2.8 million in the prior year.
Total finance costs in the statement of
comprehensive income increased to £22.9 million from £16.9 million
in the prior year.
Profit before
tax
The Group made a profit before tax in the year
of £241.0 million, compared to a profit of £75.3 million in the
prior year. After adjusting for the gain on the revaluation
of investment properties and other matters shown in the table
below, the Group made an adjusted profit before tax in the year of
£107.3 million, up 1% from £106.0 million in
2023.
Profit before
tax analysis
|
2024
£000
|
2023
£000
|
Profit before tax
|
241,035
|
75,309
|
(Gain)/loss on revaluation of investment
properties
|
(131,159)
|
29,861
|
Movement in fair value on interest rate
derivatives
|
2,146
|
133
|
Cheadle fit-out insurance proceeds
|
(4,723)
|
-
|
Refinancing costs
|
-
|
732
|
Adjusted profit before tax
|
107,299
|
106,035
|
The adjustments made to the Group's profit
before tax follow guidance issued by EPRA, with additional Company
specific adjustments made to give readers a clearer underlying
picture of the Group's performance. EPRA profit before tax is
disclosed in note 10.
The movement in the adjusted profit before tax
from the prior year is illustrated in the table below:
|
£m
|
Adjusted profit before tax - year ended 31
March 2023
|
106.0
|
Increase in gross profit
|
9.1
|
Increase in administrative expenses
|
(0.7)
|
Decrease in other income
|
(0.4)
|
Increase in net interest payable
|
(7.2)
|
Increase in capitalised interest
|
0.5
|
Adjusted profit before tax - year ended 31
March 2024
|
107.3
|
Basic earnings per share for the year was
127.1p (2023: 40.1p) and diluted earnings per share was 126.4p
(2023: 39.8p). Diluted adjusted earnings per share
based on adjusted profit after tax was down 1% to 55.9p (2023:
56.5p) (see note 12).
REIT
status
The Group converted to a Real Estate
Investment Trust ("REIT") in January 2007. Since then, the
Group has benefited from a zero tax rate on the Group's qualifying
self storage earnings. The Group only pays tax on the profits
attributable to our residual business, comprising primarily of the
sale of packing materials and insurance.
REIT status gives the Group exemption from UK
corporation tax on profits and gains from its qualifying portfolio
of UK stores. Revaluation gains on developments and our
existing open stores are exempt from corporation tax on chargeable
gains, provided certain criteria are met. The Armadillo
stores joined our REIT group on acquisition of the remaining
interest, allowing us to write back the deferred tax that had been
provided on previous revaluation uplifts.
The Group has a rigorous internal system in
place for monitoring compliance with criteria set out in the REIT
regulations. On a monthly basis, a report on compliance with
these criteria is issued to the Executive. To date, the Group
has complied with all REIT regulations, including forward looking
tests.
Taxation
There is a £2.3 million tax charge in the
residual business for the year ended 31 March 2024 (2023: £2.3
million). The current year tax charge is partly offset in the
income statement by an adjustment to the prior year tax
estimate.
Dividends
The Board is recommending the payment of a
final dividend of 22.6 pence per share in addition to the interim
dividend of 22.6 pence, giving a total dividend for the year of
45.2 pence, in line with the prior year. The Group's policy
is to distribute a minimum of 80% of our adjusted earnings per
share in each reporting period.
REIT regulatory requirements determine the
level of Property Income Distribution ("PID") payable by the
Group. On the basis of the full year distributable reserves
for PID purposes, a PID of 45.2p pence per share is payable
(31 March 2023: 45.2 pence). The PID for the year to 31
March 2024 accounts for all of the declared dividend. The
table below summarises the declared dividend for the
year:
Dividend
(pence per share)
|
31 March 2024
|
31 March 2023
|
Interim dividend
|
22.6p
|
22.3p
|
|
|
|
Final
dividend
|
22.6p
|
22.9p
|
|
|
|
Total
dividend
|
45.2p
|
45.2p
|
Subject to approval by shareholders at the
Annual General Meeting to be held on 18 July 2024, the final
dividend will be paid on 26 July 2024. The ex-div date is 4
July 2024 and the record date is 5 July 2024.
Cash flow
growth
The Group is strongly cash generative and
draws down from its longer term committed facilities as required to
meet its obligations. The Group's cash flow from operating
activities pre-working capital movements for the year was £110.1
million, an increase of 1% from £109.2 million in the prior year,
with the growth in line with the increase in the Group's
profitability in the year.
These operating cash flows are after the
ongoing maintenance costs of the stores, which were on average
approximately £49,000 per store (2023:
£43,000).
The Group's net debt has decreased over the
year to £385.4 million (March 2023: £486.6 million).
There are distortive working capital items in
the current period, and therefore the summary cash flow below sets
out the free cash flow pre-working capital movements
|
Year ended
31 March 2024
£m
|
Year ended
31 March 2023
£m
|
Cash generated from operations pre-working
capital movements
|
135.1
|
126.2
|
Net finance costs
|
(24.0)
|
(16.5)
|
Interest on obligations under lease
liabilities
|
(0.6)
|
(0.7)
|
Loss of income insurance proceeds
|
1.6
|
2.0
|
Tax
|
(2.0)
|
(1.8)
|
Cash flow
from operating activities pre-working capital
movements
|
110.1
|
109.2
|
Working capital movements
|
(5.3)
|
2.8
|
Cash flow
from operating activities
|
104.8
|
112.0
|
Capital expenditure
|
(30.9)
|
(106.4)
|
Disposal of non-current asset
|
5.4
|
-
|
Insurance proceeds on fit-out
|
4.7
|
-
|
Receipt from Capital Goods Scheme
|
-
|
0.2
|
Cash flow
after investing activities
|
84.0
|
5.8
|
Ordinary dividends
|
(85.2)
|
(79.2)
|
Issue of share capital
|
108.0
|
1.0
|
Payment of lease liabilities
|
(1.8)
|
(1.3)
|
Receipt from termination of interest rate
derivatives
|
-
|
0.4
|
Loan arrangement fees paid
|
(3.7)
|
(1.5)
|
(Decrease)/increase in borrowings
|
(100.2)
|
74.5
|
Net cash
inflow/(outflow)
|
1.1
|
(0.3)
|
Opening cash and cash equivalents
|
8.3
|
8.6
|
Closing cash and cash equivalents
|
9.4
|
8.3
|
Closing debt
|
(394.8)
|
(494.9)
|
Closing net debt
|
(385.4)
|
(486.6)
|
The Group's interest cover for the period
(expressed as the ratio of cash generated from operations
pre-working capital movements against interest paid) was 5.6 times
(2023: 7.7 times). This is calculated per below:
|
31 March 2024
£000
|
31 March 2023
£000
|
Cash generated from operations pre working
capital movements (see note 26)
|
135,086
|
126,195
|
Interest paid per cash flow
statement
|
(24,069)
|
(16,486)
|
Interest cover
|
5.6x
|
7.7x
|
In the year capital expenditure outflows were
£30.9 million, down from £106.4 million in the prior year.
This capital expenditure was principally on the construction of new
stores, and the continued roll-out of our solar retro-fit
programme. We expect the amount of capital expenditure to
increase next year, as we build out our seven sites with planning
consent and vacant possession. The disposal of non-current
asset of £5.4 million relates to the proceeds from a land swap at
Kings Cross.
The cash flow after investing activities was a
net inflow of £84.0 million in the year, compared to a net inflow
of £5.8 million in 2023.
Balance
sheet
Property
The Group's open stores and stores under
development owned at 31 March 2024, which are classified as
investment properties, have all been valued individually by
JLL.
The external valuation has resulted in an
investment property asset value of £2.865 billion, comprising
£2.686 billion (94%) for the freehold (including nine long
leaseholds) open stores, £32.2 million (1%) for the short leasehold
open stores and £146.5 million (5%) for the freehold investment
properties under construction.
Investment
property
The open store portfolio has increased in
value by £145.4 million (5.3%). This increase in value arises
from an improvement in cap rates, reflecting recent transactions in
the sector, and operating cash flow growth.
The weighted average exit capitalisation rate
used in the valuations was 5.4% in the current year, compared to
5.6% in the prior year.
Analysis of
property portfolio
|
Value at 31 March 2024
£m
|
Revaluation movement in the
year
£m
|
Investment property
|
2,718.5
|
145.4
|
Investment property under
construction
|
146.5
|
(14.2)
|
Investment
property total
|
2,865.0
|
131.2
|
The table below provides a further breakdown
of the open store valuations:
|
Established
|
Developing
|
Armadillo
|
|
|
Freehold
|
Leasehold
|
Freehold
|
Largely Freehold
|
Total
|
Number of stores
|
71
|
5
|
9
|
24
|
109
|
MLA capacity (sq ft)
|
4,473,000
|
311,000
|
627,000
|
1,008,000
|
6,419,000
|
Valuation at 31 March 2024 (£m)
|
£2,082.6m
|
£27.4m
|
£343.1m
|
£173.8m
|
£2,626.9m
|
Value per sq ft
|
£466
|
£88
|
£547
|
£172
|
£409
|
Occupancy at 31 March 2024
|
81.7%
|
80.2%
|
59.8%
|
74.3%
|
78.3%
|
Stabilised occupancy assumed
|
88.6%
|
87.3%
|
86.1%
|
86.4%
|
87.8%
|
Net initial year one NOI yield
|
5.3%
|
18.2%
|
3.2%
|
6.2%
|
5.2%
|
The total store valuation in this table
differs to the balance sheet due to the non-self storage investment
property that the Group owns, such as the Harrow Industrial
Scheme. The net initial year one NOI yield is 5.2% (2023:
5.3%). Note 15 contains more detail on the assumptions
underpinning the valuations.
Investment
property under construction
The Group spent £15.1 million on investment
property under construction in the year, the majority of which was
construction expenditure, principally on Kings Cross and Slough
Farnham Road. This spend also includes the site purchase of
Leicester. Kings Cross transferred to investment property
during the year as the store opened, and the Harrow Industrial
Scheme has also been transferred to investment property during the
year, following the completion of its
construction.
The revaluation deficit of £14.2 million on
the investment property under construction is largely as a result
of a reduction in the value of our land without self storage
planning - this deficit all occurred in the first half of the year,
with values stable in the second half of the year.
The projected net operating income of the
increase in our total capacity of 957,000 sq ft when stabilised is
£30.4 million representing an approximate 13.5% return on the
incremental capital deployed. On a proforma basis at
stabilisation, the projected net operating income for the 12 new
stores and two replacement stores is £35.9 million, a return of
approximately 8.7% on the total development cost of £412 million,
including land already acquired.
Purchaser's
cost adjustment
As in prior years, we have instructed an
alternative valuation on our assets using a purchaser's cost
assumption of 2.75% (see note 15 for further details) to be used in
the calculation of our adjusted diluted net asset value. This
Red Book valuation on the basis of the special assumption of 2.75%
purchaser's costs, results in a higher property valuation at
31 March 2024 of £2.976 billion (£111.1 million higher than
the value recorded in the financial statements). This
translates to 56.2 pence per share. This revised valuation
translates into an adjusted net asset value per share of 1,296.4
pence (2023: 1,237.3 pence) after the dilutive effect of
outstanding share options.
Receivables
The Group's bad debt expense in the year
represented 0.2% of revenue compared to 0.2% in the prior year,
with 80% of our customer base paying by direct debit.
Net asset
value
The adjusted net asset value is
1,296.4 pence per share (see note 13), compared
to 1,218.5 pence per share at 31 March 2023 (after adjusting for
the impact of the placing in October 2023). The table below
reconciles the movement:
Movement in
adjusted net asset value
|
£m
|
Adjusted NAV pence per
share
|
31 March 2023
|
2,287.2
|
1,237.3
|
Adjusted for placing
|
107.0
|
(18.8)
|
31 March 2023 (adjusted)
|
2,394.2
|
1,218.5
|
Adjusted profit after tax
|
106.1
|
54.0
|
Equity dividends paid
|
(86.0)
|
(43.8)
|
Revaluation movements
|
131.2
|
66.8
|
Movement in purchaser's cost
adjustment
|
6.5
|
3.3
|
Other movements (e.g. share schemes, insurance
fit-out receipt)
|
9.9
|
(2.4)
|
31 March 2024
|
2,561.9
|
1,296.4
|
Borrowings
Our financing policy is to fund our current
needs through a mix of debt, equity, and cash flow to allow us to
build out, and add to, our development pipeline and achieve our
strategic growth objectives, which we believe improve returns for
shareholders. We aim to ensure that there are sufficient
medium-term facilities in place to finance our committed
development programme, secured against the freehold portfolio, with
debt serviced by our strong operational cash flows. We
maintain a keen watch on medium and long-term rates and the Group's
policy in respect of interest rates is to maintain a balance
between flexibility and hedging of interest rate risk.
The table below summarises the Group's debt
facilities at 31 March 2024, with a current average cost of debt of
5.4% (March 2023: 4.7%).
Debt
|
Expiry
|
Facility
|
Drawn
|
Cost
|
Aviva Loan
|
September 2028
|
£155.8m
|
£155.8m
|
3.3%
|
M&G loan (£35 million fixed at 4.5%, £85
million floating)
|
September 2029
|
£120m
|
£120m
|
6.9%
|
Revolving bank facility (Lloyds, HSBC,
Barclays and Bank of Ireland, floating)
|
December 2026 (option to extend for two
further years)
|
£300m
|
£119m
|
6.4%
|
Total
|
Average term 4.2 years
|
£575.8m
|
£394.8m
|
5.4%
|
In addition to the facilities above, the Group
has a $225 million credit approved shelf facility with Pricoa
Private Capital ("Pricoa"), to be drawn in fixed sterling
notes. The Group can draw the debt in minimum tranches of £10
million over the next two and half years with terms of between 7
and 15 years at short notice, typically 10 days.
During the year the Group put in place a new
£300 million Sustainability-linked facility for an initial term of
three years, with the option to extend the facility by two
additional one-year terms through to December 2028, subject to
lender approval. The loan is provided by Lloyds Bank plc,
HSBC UK Bank plc, Bank of Ireland, and Barclays Bank plc, with
Barclays joining the existing three bank syndicate. The
margin of 1.25% was unchanged from the existing
facility.
The Group has incorporated
Sustainability-linked KPIs into the loan, which include annual
pre-agreed targets and are based on:
-
reductions in Scope 1 and 2 emissions;
-
increase in solar generation capacity;
-
total annual grants to Big Yellow Foundation charity partners;
and
-
the value of storage space provided free of charge to local
charities in our stores.
Performance against the KPIs will be measured
annually, and a margin decrease or increase will be applied to the
headline margin on the basis of this performance.
The Group was comfortably in compliance with
its banking covenants at 31 March 2024. Further details of
the Group's covenants are provided in note 19 of the
accounts.
The Group's key financial ratios are shown in
the table below:
Metric
|
31 March 2024
|
31 March
2023
|
Net Debt / Gross Property
Assets
|
13%
|
18%
|
Net Debt / Adjusted Net
Assets
|
15%
|
21%
|
Net Debt / Market
Capitalisation
|
18%
|
23%
|
Net debt to Group EBITDA
ratio
|
3.0x
|
4.1x
|
Cash generated from operations
pre-working capital movements against interest paid
|
5.6x
|
7.7x
|
At 31 March 2024, the fair value on the
Group's interest rate derivatives was a liability of £1.8
million. The Group does not hedge account its interest rate
derivatives. The fair value movements are eliminated from
adjusted profit before tax, adjusted earnings per share, and
adjusted net assets per share.
Cash deposits are only placed with approved
financial institutions in accordance with the Group's Treasury
policy.
Share
capital
The share capital of the Company totalled
£19.6 million at 31 March 2024 (2023: £18.4 million), consisting of
196,195,287 ordinary shares of 10p each (2023: 184,265,973
shares). 11.6 million shares were issued in October 2023 for
a placing, raising £107 million (net of expenses). 0.3
million shares were issued for the exercise of options during the
year at an average exercise price of £10.77 (2023: 0.3 million
shares at an average price of £13.13).
The Group holds 1.1 million shares within an
Employee Benefit Trust ("EBT"). These shares are shown as a
debit in reserves and are not included in calculating net asset
value per share.
|
2024
No.
|
2023
No.
|
Opening shares
|
184,265,973
|
183,967,378
|
Shares issued in
placing
|
11,640,212
|
-
|
Shares issued for the exercise of
options
|
289,102
|
298,595
|
Closing shares in issue
|
196,195,287
|
184,265,973
|
Shares held in EBT
|
(1,098,686)
|
(1,122,907)
|
Closing shares for NAV
purposes
|
195,096,601
|
183,143,066
|
111.2 million shares were traded in the market
during the year ended 31 March 2024 (2023: 116.3 million).
The average mid-market price of shares traded during the year
was £10.84 with a high of £12.39 and a low of
£9.10.
Principal
risks and uncertainties
The Directors have carried out a
robust assessment of the emerging and principal risks facing the
Group, including those that would threaten its business model,
future performance, solvency, or liquidity. The Group
maintains a low appetite to risk, in line with our strategic
objectives of providing a low volatility, high distribution
business.
The section below details the
emerging and principal risks and uncertainties that are considered
to have the most material impact on the Group's strategy and
objectives. These key risks are monitored on an ongoing basis
by the Executive Directors and considered fully by the Board in its
annual risk review.
Risk and impact
|
Mitigation
|
Change during the year and outlook
|
Self storage market risk
There is a risk to the business
that the self storage market does not grow in line with our
projections, and that economic growth in the UK is below
expectations, which could result in falling demand and a loss of
income.
|
Self storage is a relatively
immature market in the UK compared to other self storage markets
such as the United States and Australia, and we believe has further
opportunity for growth. Awareness of self storage and how it can be
used by domestic and business customers is relatively low
throughout the UK, although higher in London; awareness increased
during the pandemic.
The rate of growth of branded self
storage on main roads in good locations has historically been
limited by the difficulty of acquiring sites at affordable prices
and obtaining planning consent. New store openings in London and
other large urban conurbations within the sector have slowed
significantly over the past few years.
Our performance during the past four years has
been strong with revenue growing by 54% from £129.3 million in the
year ended 31 March 2020 to £199.6 million for this year. We
believe that this performance is due to a combination of factors
including:
-
|
a high quality and growing portfolio of
freehold properties delivering higher operating margins;
|
-
|
a focus on London and the South East and other
large urban conurbations, where the drivers in the self storage
market are at their strongest and the barriers to competition are
at their highest;
|
-
|
continuing innovation and
automation;
|
-
|
an inclusive and non-hierarchical culture with
a highly engaged team;
|
-
|
a focus on delivering the highest levels of
customer service;
|
-
|
delivering on our strong ESG
commitments;
|
-
|
the UK's leading self storage brand, with high
and growing public awareness and online strength; and
|
-
|
strong cash flow generation from a secure
capital structure.
|
We have a large current storage
customer base occupying approximately 73,000 rooms spread across
the portfolio of stores and hundreds of thousands more who have
used our stores over the years. In any month, customers move in and
out at the margin resulting in changes in occupancy. This is
a seasonal business and typically we see growth over the spring and
the summer months, with the seasonally weaker period being the
winter months.
|
The past two financial years have
seen a challenging geopolitical and macroeconomic backdrop, with
the Russian invasion of Ukraine in February 2022, the US regional
banking crisis and the collapse of Credit Suisse, the conflict in
the Middle East, and the impact of rising inflation and interest
rates. The latter has impacted the cost of living in the UK,
and the level of housing transactions has fallen as the cost of
mortgages has increased. The UK economy briefly entered a
recession in the second half of 2023.
The Group's move-in activity
levels were impacted by this backdrop during the year and were down
6% compared to the prior year. However, since the year end,
activity levels have improved and move-ins are up 5% compared to
the same period last year.
Inflation has moderated over
recent months, and most commentators consider that interest rates
have peaked and will start to fall towards the end of the year,
subject to inflation remaining on its current
trajectory.
|
Property risk
There is a risk that we will be
unable to acquire new development sites which meet management's
criteria. This would impact on our ability to grow the
overall store platform.
Changing climate and resulting
likely changes to planning restrictions will narrow choice of
available sites further.
The Group is also subject to the
risk of failing to obtain planning consents on its development
sites, and the risk of a rising cost of development.
Planning approval is increasingly
dependent on Social or Environmental enhanced features (e.g. social
enterprise at Battersea, BREEAM standards, local planners demands
for green spaces) - adding cost and complexity.
|
Our management has significant
experience in the property industry generated over many years and
in particular acquiring property on main roads in high profile
locations and obtaining planning consents. We do take
planning risk where necessary, although the
availability of land, and competition for it makes acquiring new
sites challenging.
Our in-house development team and
our professional advisers have significant experience in obtaining
planning consents for self storage centres.
We manage the construction of our
properties very tightly. The building of each site is handled
through a design and build contract, with the fit-out project
managed in-house using an established professional team of external
advisers and sub-contractors who have worked with us for many years
to our Big Yellow specification.
We carried out an external
benchmarking of our construction costs and tendering programme
during the prior year, which reinforced our current approach, but
also gave some areas where further efficiencies and cost savings
can be achieved, which we have been implementing this
year.
|
The Group has acquired thirteen
sites over the past five years, taking its total pipeline to 14
sites which, when opened, would expand the Group's current MLA by
15%.
The planning process remains
difficult and to achieve a planning consent can take anything from
eighteen months to three years. Local planning policy is
favouring residential development over other uses, and we don't
expect this to change given the shortage of housing in the
UK.
We currently have planning consent
on eight of the 14 development sites.
In May 2022, we suspended
construction on all projects that were not already on site because
conditions in the construction market were unfavourable. Those
conditions have improved considerably with steelwork and cladding
prices falling, and other material prices stabilising. In
addition, we are seeing on recent tenders that main contractors and
specialist sub-contractors are pricing new projects more
competitively. We are therefore proceeding with the
build-out of our sites with planning and vacant
possession.
|
Valuation risk
The valuation of the Group's
investment properties may fall due to external pressures or the
impact of performance.
Lack of transactional evidence in
the self storage sector leads to more subjective
valuations.
|
The portfolio is diverse with
approximately 73,000 rooms currently occupied in our stores for a
wide variety of reasons.
The valuations are carried out by
independent, qualified external valuers who have significant
experience in the UK self storage industry.
|
The revaluation surplus on the
Group's open store investment properties was £145.4 million in the
year (an uplift of 5%), due to an improvement in cap rates
following recent transactions in the sector and growth in
underlying cash flows used in the valuations.
There have been a number of larger
portfolio transactions across Europe over the past four years,
notably including the proposed acquisition of Lok 'n Store by
Shurgard, and there is a weight of institutional money looking to
invest in self storage.
There is significant headroom on
our loan to value banking covenants.
|
Treasury risk
The Group may face increased costs
from adverse interest rate movements.
|
Our financing policy is to fund
our current needs through a mix of debt, equity, and cash flow to
allow us to selectively build out the remaining development
pipeline and achieve our strategic growth objectives, which we
believe improve returns for shareholders. We have made it
clear that we believe optimal leverage for a business such as ours
should be a debt to EBITDA ratio in the range of 3 to 4 times and
this informs our management of treasury risk.
We aim to ensure that there are
sufficient medium-term facilities in place to finance our committed
development programme, secured against the freehold portfolio, with
debt serviced by our strong operational cash flows.
We have a fixed rate loan in place
from Aviva Commercial Finance Limited, with 4 and half years
remaining. The Group has a £120 million loan from M&G
Investments, which is repayable in 2029. For our revolving
credit facility, we borrow at floating rates of
interest.
The Group has a $225 million credit approved
shelf facility with Pricoa Private Capital ("Pricoa"), to be drawn
in fixed sterling notes. The Group can draw the debt in
minimum tranches of £10 million over the next two and a half years
with terms of between 7 and 15 years at short notice, typically 10
days.
Our policy is to maintain a
flexible borrowing structure, with a long-term average of
approximately 50% of our total borrowings fixed, with the balance
floating. At 31 March 2024 48% of the Group's total drawn
borrowings were fixed or subject to interest rate
derivatives. The Group reviews its current and forecast
projections of cash flow, borrowing and interest cover as part of
its monthly management accounts. In addition, an analysis of the
impact of significant transactions is carried out regularly, as
well as a sensitivity analysis assuming movements in interest rates
and store occupancy on gearing and interest cover. This
sensitivity testing underpins the viability statement
below.
The Group regularly monitors its
counterparty risk. The Group monitors compliance with its banking
covenants closely. During the year it complied with all its
covenants and is forecast to do so for the foreseeable
future.
|
The Bank of England base rate has
been increased further during the year, with it currently at 5.25%,
up from 4.25% at the start of our financial year, and 0.75% the
year before.
52% of the Group's drawn debt is
floating, and hence the Group will benefit from any reductions in
the base rate.
Debt providers currently remain
supportive to companies with a strong capital structure, as
evidenced by the Group refinancing the RCF during the year at an
unchanged margin.
The Group's interest cover ratio
for the year ended 31 March 2024 was 5.6 times, comfortably ahead
of our banking covenants, as disclosed in note 19.
We keep our hedging arrangements
under review and if the long term cost of borrowing for durations
of ten to twelve year falls, we will consider taking out more
longer term debt, which would increase the weighting of the fixed
element.
|
Tax and regulatory risk
The Group is exposed to changes in
the tax regime affecting the cost of corporation tax, property
rates, VAT, Stamp Duty and Stamp Duty Land Tax ("SDLT"), for
example the imposition of VAT on self storage from 1 October
2012.
The Group is exposed to potential
tax penalties or loss of its REIT status by failing to comply with
the REIT legislation.
|
We regularly monitor proposed and
actual changes in legislation with the help of our professional
advisers, through direct liaison with HMRC, and through trade
bodies to understand and, if possible, mitigate or benefit from
their impact.
HMRC have designated the Group as
having a low-risk tax status, and we hold regular meetings
with them. We carry out detailed planning ahead of any future
regulatory and tax changes using our expert advisers.
The Group has internal monitoring
procedures in place to ensure that the appropriate REIT rules and
legislation are complied with. To date all REIT regulations
have been complied with, including projected tests.
|
The Group's property rates bill
for the year ended 31 March 2024 has increased by 17% from the
prior year, with the 2023 rating list reflecting the rise in
industrial rents over the past few years.
The corporation tax rate increased
with effect from April 2023, and there is a risk that tax rates
will rise further in the medium-term to fund the increased
government deficits that have arisen from the policy response to
the pandemic.
|
Human resources risk
Our people are key to our success
and as such we are exposed to a risk of high staff turnover, and a
risk of the loss of key personnel.
|
We have developed a professional,
lively, and enjoyable working environment and believe our success
stems from attracting and retaining the right people. We encourage
all our staff to build on their skills through appropriate training
and regular performance reviews. We believe in an accessible and
open culture and everyone at all levels is encouraged to review,
and challenge accepted norms, to contribute to the performance of
the Group.
|
The Group carried out an
engagement survey of its employees during the prior year, which
showed very pleasing results of the level of engagement of our
teams.
We have listened to the feedback
from our employees raised during our engagement survey and made a
number of changes to the Group's operations, included
reviewing and relaunching our Bright Ideas Suggestion Scheme,
reviewing our salary bands for Store employees, and personal safety
training having been provided for all team members within our
stores. We also introduced a new Employee Assistance Programme,
re-trained our Wellbeing Experts and set up a specific Wellbeing
sub-site on our Intranet.
|
Brand and reputation risk
The Group is exposed to the risk
of a single serious incident materially affecting our customers,
people, financial performance and hence our brand and reputation,
including the risk of a data breach.
|
We have always aimed to run this
business in a professional way, which has involved strict adherence
with all regulations that affect our business, such as health and
safety legislation, building regulations in relation to the
construction of our buildings, anti-slavery, anti-bribery, and data
regulations.
We also invest in cyber security
(discussed below), and make an ongoing investment in staff
training, facilities management, and the maintenance of our
stores.
We work closely with our key
suppliers to ensure a consistency of service from them.
To ensure consistency of service
and to understand the needs of our customers, we send surveys to
every customer who moves in and moves out of the business.
The results of the surveys and mystery shops are reviewed to
continuously improve and deliver consistent performance throughout
the business.
We maintain regular communication
with our key stakeholders, customers, employees, shareholders, and
debt providers.
|
The Group has a crisis response
plan which was developed in conjunction with external consultants
to ensure the Group is well placed to effectively deal with a major
incident.
We experienced a fire caused by
arson at our Armadillo Cheadle store a couple of years ago.
Our crisis response team worked effectively in managing the
incident.
|
Security risk
The Group is exposed to the risk
of the damage or loss of a store due to vandalism, fire, or natural
incidents such as flooding. This may also cause reputational
damage.
|
The safety and security of our
customers, their belongings, stores, and our staff remains a key
priority. To achieve this, we invest in state-of-the-art access
control systems, individual room alarms, digital CCTV systems,
intruder and fire alarm systems and the remote monitoring of all
our stores outside of our trading hours. We are the only
major operator in the UK self storage industry that has every room
in every Big Yellow store individually alarmed.
We have implemented customer
security procedures in line with advice from the Police and
continue to work with the regulatory authorities on issues of
security, reviewing our operational procedures regularly. The
importance of security and the need for vigilance is communicated
to all store staff and reinforced through training and routine
operational procedures.
|
We have continued to run courses
for all our staff to enhance the awareness and effectiveness of our
procedures in relation to security.
We have further invested in
security improvements in our stores during the year. We have
also invested in additional automated reports and alerts which
notify our overnight monitoring station and the operating team of
suspicious customer activity.
We regularly review and implement
improvements to our security processes and procedures.
|
Cyber risk
High profile cyber-attacks and data breaches
are a regular staple in today's news. The results of any
breach may result in reputational damage, fines, or customer
compensation, causing a loss of market share and income.
|
The Group receives specialist advice and
consultancy in respect of cyber security, and we have dedicated
in-house monitoring and regular review of our security systems.
We also limit the retention of customer data to the minimum
requirement.
Policies and procedures are under regular
review and benchmarked against industry best practice by our
consultants. These policies also include defend, detect and
response policies.
|
We don't consider the risk to have increased
more for the Group than any other business; however, we consider
that the threats in the entire digital landscape do continue to
increase and evolve. As such we have continued to invest in
cyber security upgrading or replacing components as
required.
|
Climate
change related risk
The Group is exposed to climate-change related
transition and physical risks. Physical risks may affect the
Group's stores and may result in higher maintenance and repair
costs. Failing to transition to a low carbon economy may
cause an increase in taxation, decrease in access to loan
facilities and reputational damage.
|
The good working order of our stores is of
critical importance to our business model.
We visually inspect each of our stores at
least once per annum and planned and unplanned work is discussed
immediately.
Maintenance requirements are discussed at
budget reviews; proposals are made to raise climate change related
issues to the Board, who may request more holistic adaptation work
to be carried out.
The key mitigation strategy to address
transitional risks is the delivery of our Net Renewable Energy
Positive Strategy and the Net Zero Scope 1 and Scope 2 Emissions
Strategy. Our investment to decarbonise our business over the next
eight years is expected to mitigate fully against taxation (carbon
tax) risk and reputational risks (both investors and
customers).
|
Our Sustainability Committee, chaired by a
Non-Executive Director, has delivered an ambitious strategic plan
to 2032.
We appreciate that both physical and
transition risks are expected to materialise to lesser or greater
extents over the coming years and costs may go up gradually, hidden
within what may be perceived as 'natural variations'. Our focus and
strong governance will allow us to continue to mitigate the
effects.
|
Internal audit
The Group employs a Head of Store Compliance
responsible for reviewing store operational and financial
controls. He reports to the Chief Financial Officer, and also
meets with the Audit Committee at least once a year. This
role is supported by three other team members, enabling additional
work and support to be carried out across the Group's store
portfolio. The Store Compliance team visits each operational
store twice per year to carry out a detailed store audit.
These audits are unannounced, and the Store Compliance team carry
out detailed tests on financial management, administrative
standards, and operational standards within the stores. Part
of the store staff's bonus is based on the scores they achieve in
these audits. The results of each audit are reviewed by the
Chief Financial Officer, the Financial Controller, and the Regional
Operations Managers. This is the equivalent of an internal
audit function for the Group's store operations.
For the key business cycles conducted at the
Group's head office, external consultants are used to review the
Group's controls on a rotational basis. The consultants
produce a report with recommendations which is discussed with
management and reviewed by the Audit Committee. The cycles
covered by this activity include construction expenditure,
treasury, taxation, and facilities management.
During the year, the Group implemented new
software to enable us to better capture risks and controls and
implement a formal testing cycle ahead of the new Corporate
Governance Code. With the assistance of external consultants,
we performed a detailed walk through of key processes. We
have developed a detailed Risk and Controls Matrix in these areas
and documented the workflows. These are being embedded in the
software, and with reference to best practice will highlight any
risks we can further develop controls around, or any controls that
could be improved.
With the combination of the store internal
audit process and the external assessment of the key business
cycles, the Audit Committee considers that this provides a robust
internal audit assessment for the Group.
GOING
CONCERN
A review of the Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report. The
financial position of the Group, its cash flows, liquidity position
and borrowing facilities are shown in the balance sheet, cash flow
statement and accompanying notes to the financial statements.
Further information concerning the Group's objectives, policies,
and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity
risk can be found in this Report and in the notes to the financial
statements.
At 31 March 2024 the Group had available
liquidity of approximately £190 million, from a combination of cash
and undrawn bank debt facilities. The Group additionally has
a $225 million credit approved shelf facility with Pricoa Private
Capital to be drawn in fixed sterling notes. The Group can
draw the debt in minimum tranches of £10 million over the next two
and half years with terms of between 7 and 15 years at short
notice, typically 10 days. The Group is cash generative and
for the year ended 31 March 2024, had operational cash flow of
£110.1 million, with capital commitments at the balance sheet date
of £3.9 million.
The Directors have prepared cash flow
forecasts for a period of 18 months from the date of approval of
these financial statements, taking into account the Group's
operating plan and budget for the year ending 31 March 2025 and
projections contained in the longer-term business plan which cover
the 18 month going concern assessment period. After reviewing
these projected cash flows together with the Group's and Company's
cash balances, borrowing facilities and covenant requirements, and
potential property valuation movements over that period, the
Directors believe that, taking account of severe but plausible
downsides, the Group and Company will have sufficient funds to meet
their liabilities as they fall due for that period.
In making their assessment, the Directors have
carefully considered the outlook for the Group's trading
performance and cash flows as a result of the current economic
environment, taking into account the trading performance of the
Group over the recent dislocations in the global economy from
Covid-19, the Russian invasion of Ukraine and the cost of living
crisis. The Directors have also considered the performance of
the business during the Global Financial Crisis. The
Directors modelled several different scenarios, including material
reductions in the Group's occupancy rates and property valuations,
and assessed the impact of these scenarios against the Group's
liquidity and the Group's banking covenants. The scenarios
considered did not lead to breaching any of the banking covenants,
and the Group retained sufficient liquidity to meet its financial
obligations as they fall due.
Consequently, the Directors continue to adopt
the going concern basis in preparing the Group and Company
financial statements.
VIABILITY
STATEMENT
The Directors have assessed the Group's
viability over a four-year period to March 2028. This period
is selected based on the Group's long-term strategic plan to give
greater certainty over the forecasting assumptions used. As
in the assessment of going concern, the Directors have modelled a
number of different scenarios on the Group's future
prospects.
In making their assessment, the Directors took
account of the Group's current financial position, including
committed capital expenditure. The Directors carried out a
robust assessment of the emerging and principal risks and
uncertainties facing the business, their potential financial impact
on the Group's cash flows, REIT compliance and financial covenants
and the likely effectiveness of the mitigating options
detailed. The Directors have assumed that funding for the
business in the form of equity, bank and insurance company debt
will be available in all reasonably plausible market
conditions. Whilst the eventual impact of the current
economic environment on the Group is uncertain, and may not be
known for some time, the Group has a highly cash generative
business, good liquidity and has proved resilient in its trading in
recent years.
Based on this assessment the Directors have a
reasonable expectation that the Company and the Group will be able
to continue operating and meeting all their liabilities as they
fall due to March 2028.
STRATEGY AND INVESTMENT CASE
Our
Strategy
Brand,
platform, and customer service
Our strategy from the outset has been to
develop Big Yellow into the market-leading self storage brand,
delivering excellent customer service, investing in sustainability
and our market-leading operating platform and digital channels,
with a great culture and highly motivated employees. We
concentrate on developing our stores in main road locations with
high visibility, where our distinctive branding generates high
awareness of Big Yellow.
Creating
shareholder value
We continue to believe that the medium-term
opportunity to create shareholder value consists of driving revenue
and cash flow from our existing portfolio through continued
investment in sustainability, our people, culture, and digital
operating and marketing platforms. In addition, we aim to
deliver external growth as new stores open through continued
investment in our development pipeline, and selectively acquiring
existing storage centres from smaller operators. As a REIT
our key financial objective is to produce sustainable returns for
shareholders through a relatively low leverage, low volatility,
high distribution business. In addition, any successful
business must have an effective sustainability strategy,
particularly around climate change, and this continues to be a key
strategic focus for our business.
We focus on the following key
areas:
-
|
leveraging our market-leading brand position
to generate new prospects, principally from our digital, mobile and
desktop platforms;
|
-
|
focusing on training, selling skills, and
customer satisfaction to maximise prospect conversion and
referrals;
|
-
|
growing occupancy and net rent to drive
revenue optimally at each store;
|
-
|
maintaining a focus on cost control, so
revenue growth is transmitted through to earnings
growth;
|
-
|
increasing the footprint of the Big Yellow
platform principally through new site development and where
possible existing prime freehold stores that meet our quality
criteria;
|
-
|
selectively acquiring existing self storage
assets into the Armadillo platform;
|
-
|
through our environmental initiatives, aim to
create a more sustainable business which will increase shareholder
and customer value in both the medium and long-term;
|
-
|
through our social initiatives, we support
local charities with free storage space and help vulnerable get
back into the workplace through the Big Yellow
Foundation;
|
-
|
maintaining Big Yellow's culture
as an accessible, apolitical, inclusive, non-hierarchical,
socially responsible, and enjoyable place to work; and
|
-
|
maintaining a conservative capital structure
in the business with Group debt to EBITDA in the range of three to
four times.
|
Real
estate
The other main plank of our strategy has been
to build a portfolio of large purpose-built freehold self storage
centres, focussed on London, the South East and other large urban
conurbations. We believe that by owning a predominantly
freehold estate we are insulating ourselves against: economic
downturns as we operate at higher margins; adverse rent reviews;
and in the long-term possible redevelopment of key stores by the
landlord. It also provides us financing flexibility as rent
is a form of gearing.
Approximately 60% of our current annualised
store revenue derives from within the M25; for London and the South
East, the proportion of current annualised store revenue is
75%. With our store development pipeline largely in London
and the South East, we would expect these proportions to increase
over the medium term.
New supply and competition is a key risk to
our business model, hence our weighting to London and its commuter
towns, where barriers to entry in terms of competition for land and
difficulty around obtaining planning are highest. We continue
to see limited new supply growth in our key areas of
operation. Looking back over the last five years, we estimate
capacity growth in London of approximately 2-3% per annum.
In 2023, there have been eight store openings in London
(including our Kings Cross store), and we anticipate four new
stores in London in 2024.
Our stores are on average 59,000 sq ft,
compared to an industry average of approximately 30,000 sq ft
(source: UK Self Storage Association 2024 Annual Survey).
The upside from filling our larger than average sized
stores is, in our view, only possible in large metropolitan
markets. As our operating costs are relatively fixed, larger
stores in bigger urban conurbations, particularly London, drive
higher revenues and higher operating margins.
Capital
structure
Following the Global Financial Crisis and the
ensuing economic recession, we have materially reduced the
financial risk within the business and diversified our sources of
debt, whilst at the same time, increasing our store platform by
deploying significant capital investment. We measure leverage
by looking at our interest cover and that has increased from 1.9
times in 2008 to 5.6 times for the year ended 31 March 2024, and
our objective is to not let this fall below 5 times, compared to
the consolidated EBITDA covenant of 1.5 times. We also look
at our debt to EBITDA ratio, which is currently 3 times, and we
seek to maintain this in the range of three to four times. We
manage this business on the basis that an external economic shock
could potentially happen at any time. This is reinforced by
the performance of the business during the pandemic, where we
delivered a strong trading performance whilst at the same time
continuing to invest and expand.
Self storage
demand drivers
Economic activity and change are key drivers
of self storage demand and are greatest in the larger urban
conurbations, and in particular London and the South East.
The structural changes consisting of the conversion of
ex-industrial brownfield land to other uses, in particular
residential; the reduction in home ownership and increased
proportion of those choosing to rent; increasing density of living
with new properties being built with optimised living space and
very little provision for storage; will continue and are resulting
in increased demand for our product. These changes have
resulted in a significant shortage of available warehousing space,
particularly in London, which has been accentuated by the current
crisis. Self storage provides a convenient flexible solution
to businesses such as online retailers, importers and exporters,
service providers, the public sector, and marketing companies
looking for mini-warehousing space.
In addition to domestic customers taking space
to declutter their homes, our largest customer base is those using
us short-term around an event, such as moving home, refurbishment,
inheritance, household formation, separation, relocation, and
students.
Resilience
The location of our stores, brand, security,
and most importantly customer service, together with the diversity
of use in our 73,000 occupied rooms, serve better than any lease
contract in providing income security.
The business proved to be relatively
resilient, but not immune during the Global Financial Crisis and
recession of 2007 to 2009, with London and the South
East proving to be less volatile. Since 2020, the Group has
grown its revenue by 54%.
80% of our customers pay by direct debit, and
our cash collection has remained robust over recent
years.
Total
shareholder return
In the twenty four years since flotation in
May 2000, Big Yellow has delivered a Total Shareholder Return
("TSR"), including dividends reinvested, of 13.6% per annum, in
aggregate 1,770.4% at the closing price of 1,064p on 31 March
2024. This compares to 4.8% per annum for the FTSE Real
Estate Index and 5.4% per annum for the FTSE All Share index over
the same period. We feel this illustrates the power of
compounding of consistent incremental returns over the longer
term.
Our investment case
Attractive
market dynamics
|
•
|
UK self storage penetration in key urban
conurbations remains relatively low
|
•
|
Limited new supply coming onto the
market
|
•
|
Resilient through the last economic downturn
and performed well during the pandemic
|
•
|
Awareness still remains relatively low, with
only 40% to 50% having reasonable or good knowledge of self
storage
|
Our
competitive advantage
|
•
|
UK self storage industry's most recognised
brand with 93% of enquiries now online
|
•
|
Prominent stores on arterial or main roads,
with extensive frontage and high visibility
|
•
|
Continuous innovation and investment into our
mobile and desktop digital channels
|
•
|
Strong customer satisfaction and NPS scores
reflecting excellent customer service
|
•
|
6.4 million sq ft UK footprint, with
development pipeline of 1.0 million sq ft
|
•
|
Primarily freehold estate concentrated in
London and South East and other larger urban
conurbations
|
•
|
Larger average store capacity - economies of
scale, higher operating margins
|
•
|
Secure financing structure with strong balance
sheet
|
•
|
Continued significant investment in
sustainability and our culture
|
Evergreen
income streams
|
•
|
73,000 occupied rooms, with customers from a
diverse base - individuals, SMEs, and national customers
|
•
|
38% of customers in stores greater than
two-year length of stay, a further 16% for one to two
years
|
•
|
Average length of stay for existing customers
of 31 months, for the 54% of customers that have stayed for more
than one year, the average length of stay is 53 months
|
•
|
Low bad debt expense (0.2% of revenue in the
year)
|
Strong growth
opportunities
|
•
|
Opportunities to drive further occupancy
growth
|
•
|
Yield management as occupancy
increases
|
•
|
Densification of living and scarcity of
flexible business warehouse space drives demand
|
•
|
Growth in National Customers and business
customer base
|
•
|
Increasing the platform with a conservative
capital structure
|
Conversion
into
quality
returns
|
•
|
Freehold assets for high operating margins and
operational advantage
|
•
|
Low technology and obsolescence product,
maintenance capex fully expensed
|
•
|
Annual compound adjusted eps growth of 13%
since 2004/5
|
•
|
Annual compound cash flow growth of 13% since
2004/5
|
•
|
Dividend pay-out ratio of a minimum of 80% of
adjusted eps
|
Consolidated Statement of Comprehensive
Income
Year ended 31 March 2024
|
Note
|
2024
£000
|
2023
£000
|
|
|
|
|
Revenue
|
3
|
199,619
|
188,829
|
Cost of sales
|
|
(55,994)
|
(54,307)
|
|
|
|
|
Gross profit
|
|
143,625
|
134,522
|
|
|
|
|
Administrative expenses
|
|
(15,219)
|
(14,519)
|
|
|
|
|
Operating profit before fair value changes on property
assets
|
|
128,406
|
120,003
|
Gain/(loss) on the revaluation of
investment properties
|
14a,15
|
131,159
|
(29,861)
|
|
|
|
|
Operating profit
|
|
259,565
|
90,142
|
Other income
|
3
|
6,517
|
2,185
|
Investment income - interest
receivable
|
7
|
45
|
9
|
Finance
costs - interest
payable
|
8
|
(22,946)
|
(16,894)
|
- fair value movement on derivatives
|
8
|
(2,146)
|
(133)
|
|
|
|
|
Profit before taxation
|
|
241,035
|
75,309
|
Taxation
|
9
|
(1,202)
|
(1,977)
|
|
|
|
|
Profit for the year (attributable to equity
shareholders)
|
5
|
239,833
|
73,332
|
|
|
|
|
Total comprehensive income for the year (attributable to
equity shareholders)
|
|
239,833
|
73,332
|
|
|
|
|
Basic earnings per share
|
12
|
127.1p
|
40.1p
|
|
|
|
|
Diluted earnings per share
|
12
|
126.4p
|
39.8p
|
Adjusted earnings per share are shown in Note
12.
All items in the statement of comprehensive
income relate to continuing operations.
Consolidated Balance Sheet
31 March 2024
|
Note
|
2024
£000
|
2023
£000
|
Non-current assets
|
|
|
|
Investment property
|
14a
|
2,718,525
|
2,449,640
|
Investment property under
construction
|
14a
|
146,485
|
260,720
|
Right-of-use assets
|
14a
|
17,152
|
18,148
|
Plant, equipment, and
owner-occupied property
|
14b
|
3,870
|
4,003
|
Intangible assets
|
14c
|
1,433
|
1,433
|
Investment
|
14d
|
588
|
588
|
|
|
|
|
|
|
2,888,053
|
2,734,532
|
Current assets
|
|
|
|
Derivative financial
instruments
|
18c
|
-
|
316
|
Inventories
|
|
486
|
496
|
Trade and other
receivables
|
16
|
10,116
|
8,314
|
Cash and cash
equivalents
|
|
9,356
|
8,329
|
|
|
|
|
|
|
19,958
|
17,455
|
|
|
|
|
Total assets
|
|
2,908,011
|
2,751,987
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
17
|
(49,396)
|
(57,275)
|
Borrowings
|
19
|
(3,317)
|
(3,159)
|
Obligations under lease
liabilities
|
21
|
(2,253)
|
(2,020)
|
|
|
|
|
|
|
(54,966)
|
(62,454)
|
Non-current liabilities
|
|
|
|
Borrowings
|
19
|
(386,371)
|
(489,411)
|
Obligations under lease
liabilities
|
21
|
(16,474)
|
(17,676)
|
Derivative financial
instruments
|
18c
|
(1,830)
|
-
|
|
|
|
|
|
|
(404,675)
|
(507,087)
|
|
|
|
|
Total liabilities
|
|
(459,641)
|
(569,541)
|
|
|
|
|
Net assets
|
|
2,448,370
|
2,182,446
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
22
|
19,620
|
18,427
|
Share premium account
|
|
397,686
|
290,857
|
Reserves
|
|
2,031,064
|
1,873,162
|
|
|
|
|
Equity shareholders' funds
|
|
2,448,370
|
2,182,446
|
The financial statements were approved by the
Board of Directors and authorised for issue on 20 May 2024.
They were signed on its behalf
by
Jim Gibson,
Director
John Trotman, Director
Company
Registration No. 03625199
Consolidated Statement of Changes
in Equity
Year ended 31
March 2024
|
Share capital
£000
|
Share premium account
£000
|
Other non-distributable
reserve
£000
|
Capital redemption reserve
£000
|
Retained earnings
£000
|
Own shares
£000
|
Total
£000
|
|
|
|
|
|
|
|
|
At 1 April 2023
|
18,427
|
290,857
|
74,950
|
1,795
|
1,797,436
|
(1,019)
|
2,182,446
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
239,833
|
-
|
239,833
|
Issue of share capital
|
1,193
|
106,829
|
-
|
-
|
-
|
-
|
108,022
|
Dividend
|
-
|
-
|
-
|
-
|
(86,013)
|
-
|
(86,013)
|
Use of own shares to satisfy share
options
|
-
|
-
|
-
|
-
|
(22)
|
22
|
-
|
Credit to equity for
equity-settled share-based payments
|
-
|
-
|
-
|
-
|
4,082
|
-
|
4,082
|
|
|
|
|
|
|
|
|
At 31 March 2024
|
19,620
|
397,686
|
74,950
|
1,795
|
1,955,316
|
(997)
|
2,448,370
|
The other non-distributable reserve arose in
the year ended 31 March 2015 following the placing of 14.35 million
ordinary shares.
The issue of share capital is net of
expenses.
Year ended 31
March 2023
|
Share capital
£000
|
Share premium account
£000
|
Other non-distributable
reserve
£000
|
Capital redemption reserve
£000
|
Retained earnings
£000
|
Own shares
£000
|
Total
£000
|
|
|
|
|
|
|
|
|
At 1 April 2022
|
18,397
|
289,923
|
74,950
|
1,795
|
1,800,329
|
(1,019)
|
2,184,375
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
73,332
|
-
|
73,332
|
Issue of share capital
|
30
|
934
|
-
|
-
|
-
|
-
|
964
|
Dividend
|
-
|
-
|
-
|
-
|
(79,960)
|
-
|
(79,960)
|
Credit to equity for
equity-settled share-based payments
|
-
|
-
|
-
|
-
|
3,735
|
-
|
3,735
|
|
|
|
|
|
|
|
|
At 31 March 2023
|
18,427
|
290,857
|
74,950
|
1,795
|
1,797,436
|
(1,019)
|
2,182,446
|
Consolidated Cash Flow Statement
Year ended 31 March 2024
|
Note
|
2024
£000
|
2023
£000
|
Cash generated from operations
|
26
|
129,826
|
128,973
|
Bank interest paid
|
|
(24,069)
|
(16,486)
|
Interest on obligations under lease
liabilities
|
|
(575)
|
(706)
|
Interest received
|
|
45
|
8
|
Loss of income insurance
proceeds
|
|
1,561
|
2,032
|
Tax paid
|
|
(1,996)
|
(1,844)
|
|
|
|
|
Cash flows from operating activities
|
|
104,792
|
111,977
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of non-current
assets
|
|
(30,910)
|
(106,413)
|
Disposal of non-current
asset
|
|
5,400
|
-
|
Insurance proceeds on
fit-out
|
|
4,722
|
-
|
Receipts from Capital Goods
Scheme
|
|
-
|
182
|
|
|
|
|
Cash flows from investing
activities
|
|
(20,788)
|
(106,231)
|
|
|
|
|
Financing activities
|
|
|
|
Issue of share capital
|
|
108,022
|
964
|
Payment of lease
liabilities
|
|
(1,829)
|
(1,267)
|
Equity dividends paid
|
|
(85,259)
|
(79,140)
|
Receipt from termination of
interest rate derivatives
|
|
-
|
436
|
Loan arrangement fees
paid
|
|
(3,752)
|
(1,507)
|
(Decrease)/increase in
borrowings
|
26B
|
(100,159)
|
74,492
|
|
|
|
|
Cash flows used in financing activities
|
|
(82,977)
|
(6,022)
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
|
1,027
|
(276)
|
|
|
|
|
Opening cash and cash equivalents
|
|
8,329
|
8,605
|
|
|
|
|
Closing cash and cash equivalents
|
|
9,356
|
8,329
|
Notes to the financial statements
Year ended 31 March 2024
1.
GENERAL INFORMATION
Big Yellow Group PLC is a Company incorporated
in the United Kingdom under the Companies Act 2006, with
registration number 03625199, and limited by shares. The
address of the registered office is 2 The Deans, Bridge Road,
Bagshot, Surrey, GU19 5AT. The nature of the Group's operations and
its principal activities are set out in note 4 and in the Strategic
Report.
2.
BASIS OF PREPARATION
The financial information set out above does
not constitute the Group and Company's statutory accounts for the
years ended 31 March 2024 or 2023 but is derived from those
accounts. Statutory accounts for 2023 have been delivered to the
registrar of companies, and those for 2024 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The Group's financial statements
have been prepared in accordance with UK-adopted international
accounting standards ("IFRS Standards") and in relation to the
parent company financial statements have been properly prepared in
accordance with UK Generally Accepted Accounting Practice
(including FRS 101). The financial statements have been prepared in
accordance with the requirements of the Companies Act 2006. The
Group has applied all relevant accounting standards which have been
endorsed by the International Accounting Standards Board and have
been applied consistently year on year.
The Group uses a number of APMs to
monitor the performance of the business. Adjusted profit before tax
and adjusted earnings per share are the Group's primary profit
measures and reflect underlying profit by excluding capital and
non-recurring items such as revaluation movements, gains or losses
on the disposal of properties and the fair value movement of
interest derivatives in accordance with EPRA guidelines. In
addition, the Group adjusts for items such as the write off of
acquisition costs, and fair value movements on the stepped
acquisition of associates. These adjusted measures should not be
considered in isolation from, or as substitutes for, or superior to
the financial measures prepared in accordance with IFRS.
3.
REVENUE
Analysis of the Group's operating revenue can
be found below and in the Portfolio Summary.
|
2024
£000
|
2023
£000
|
|
|
|
Open stores
|
|
|
Self storage income
|
173,147
|
162,911
|
Insurance income
|
-
|
3,047
|
Enhanced liability service
income
|
17,649
|
14,272
|
Packing materials income
|
2,854
|
3,286
|
Other income from storage
customers
|
2,051
|
2,010
|
Ancillary store rental
income
|
1,411
|
1,213
|
|
197,112
|
186,739
|
Other revenue
|
|
|
Non-storage income
|
2,507
|
2,090
|
|
|
|
Total revenue
|
199,619
|
188,829
|
Please see the commentary in the Financial
Review on insurance income and enhanced liability service
income.
Non-storage income derives principally from
rental income earned from tenants of properties awaiting
development.
The Group has also earned other income of £6.5
million in the year (2023: £2.2 million). £1.8 million
relates to insurance proceeds for loss of income following the
destruction of the Group's Cheadle store by fire in 2022 (2023:
£1.4 million). The balance of £4.7 million in the current
year is the insurance proceeds for the fit-out of the Cheadle
store.
The prior year amount also included £0.6
million relating to insurance proceeds for loss of income following
a fire at the Group's Fulham store wine storage area in 2021 and
£0.2 million following the extinguishment of the right-of-use asset
and liability following the acquisition of the freehold of our
Oxford store.
4.
SEGMENTAL INFORMATION
IFRS 8 requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Executive to
allocate resources to the segments and to assess their performance.
Given the nature of the Group's business, there is one
segment, which is the provision of self storage and related
services.
Revenue represents amounts derived from the
provision of self storage and related services which fall within
the Group's ordinary activities after deduction of trade discounts
and value added tax. The Group's non-current assets, revenue
and profit before tax are attributable to one activity, the
provision of self storage and related services. These all
arise in the United Kingdom in the current year and prior
year.
5.
PROFIT FOR THE YEAR
a) Profit for the year has been arrived at after
charging/(crediting):
|
Note
|
2024
£000
|
2023
£000
|
|
|
|
|
Depreciation of plant, equipment,
and owner-occupied property
|
14b
|
864
|
888
|
Depreciation of interest in
leasehold properties
|
|
1,707
|
1,542
|
(Gain)/loss on the revaluation of
investment property
|
|
(131,159)
|
29,861
|
Cost of inventories recognised as
an expense
|
|
1,411
|
1,643
|
Employee costs
|
6
|
25,250
|
24,709
|
b) Analysis of auditor's
remuneration:
|
2024
£000
|
2023
£000
|
|
|
|
Fees payable to the Company's
auditor for the audit of the Company's annual accounts
|
539
|
487
|
Fess payable to the Company's
auditor for the subsidiaries' annual accounts
|
54
|
50
|
|
|
|
Total audit fees
|
593
|
537
|
|
|
|
Audit related assurance services -
interim review
|
64
|
60
|
|
|
|
Total non-audit fees
|
64
|
60
|
|
|
|
Total audit and non-audit fees paid
to KPMG LLP
|
657
|
597
|
6.
EMPLOYEE COSTS
The average monthly number of full-time
equivalent employees (including Executive Directors)
was:
|
2024
Number
|
2023
Number
|
|
|
|
Sales
|
402
|
403
|
Administration
|
62
|
62
|
|
|
|
|
464
|
465
|
At 31 March 2024 the total number of Group
employees was 503 (2023: 515).
|
2024
£000
|
2023
£000
|
Their aggregate remuneration
comprised:
|
|
|
Wages and salaries
|
18,647
|
17,475
|
Social security costs
|
1,692
|
2,759
|
Other pension costs
|
829
|
740
|
Share-based payments
|
4,082
|
3,735
|
|
|
|
|
25,250
|
24,709
|
7.
INVESTMENT INCOME
|
2024
£000
|
2023
£000
|
|
|
|
Bank interest receivable
|
45
|
8
|
Unwinding of discount on Capital
Goods Scheme receivable
|
-
|
1
|
Total investment income
|
45
|
9
|
8.
FINANCE COSTS
|
2024
£000
|
2023
£000
|
|
|
|
Interest on bank
borrowings
|
25,624
|
18,156
|
Capitalised interest
|
(3,254)
|
(2,761)
|
Interest on obligations under lease
liabilities
|
575
|
706
|
Other interest payable
|
1
|
61
|
Loan refinancing costs
|
-
|
732
|
|
|
|
Total interest payable
|
22,946
|
16,894
|
|
|
|
Fair value movement on
derivatives
|
2,146
|
133
|
Total finance costs
|
25,092
|
17,027
|
9.
TAXATION
As a REIT, the Group does not pay UK
corporation tax on the profits and gains from its qualifying rental
business in the UK provided that it meets certain conditions.
Non-qualifying profits and gains of the Group are subject to
corporation tax as normal. The Group monitors its compliance
with the REIT conditions. There have been no breaches of the
conditions to date.
The main rate of corporation tax has increased
to 25% from 1 April 2023.
UK
current tax
|
2024
£000
|
2023
£000
|
- Current year
|
2,270
|
2,296
|
- Prior year
|
(1,068)
|
(319)
|
|
1,202
|
1,977
|
A reconciliation of the tax charge is shown
below:
|
2024
£000
|
2023
£000
|
Profit before tax
|
241,035
|
75,309
|
Tax charge at 25% (2023 - 19%)
thereon
|
60,259
|
14,309
|
Effects of:
|
|
|
Revaluation of investment
properties
|
(32,790)
|
5,674
|
Other permanent
differences
|
111
|
626
|
Utilisation of brought forward
losses
|
(284)
|
(76)
|
Profits from the tax-exempt
business
|
(25,026)
|
(18,237)
|
Current year tax charge
|
2,270
|
2,296
|
Prior year adjustment
|
(1,068)
|
(319)
|
Total tax charge
|
1,202
|
1,977
|
The prior year adjustment arose
due to prudent assumptions made during the assessment of the
corporation tax provision for the prior year accounts. On
completion of the tax computations for the year, the actual charge
for the year ended 31 March 2023 was £1.1 million lower than had
been provided in the accounts (2023: £0.3 million
lower).
At 31 March 2024 the Group has
unutilised tax losses from the non-REIT taxable business of £33.1
million (2023: £33.8 million) available for offset against certain
types of future taxable profits. All losses can be carried forward
indefinitely.
10.
ADJUSTED PROFIT
|
2024
£000
|
2023
£000
|
|
|
|
Profit before tax
|
241,035
|
75,309
|
(Gain)/loss on revaluation of
investment properties
|
(131,159)
|
29,861
|
Change in fair value of interest
rate derivatives
|
2,146
|
133
|
EPRA adjusted profit before
tax
|
112,022
|
105,303
|
Cheadle fit-out insurance
proceeds
|
(4,723)
|
-
|
Refinancing fees
|
-
|
732
|
Adjusted profit before
tax
|
107,299
|
106,035
|
Tax
|
(1,202)
|
(1,977)
|
Adjusted profit after
tax
|
106,097
|
104,058
|
Adjusted profit before tax which excludes
gains and losses on the revaluation of investment properties,
changes in fair value of interest rate derivatives, refinancing
fees, fit-out insurance proceeds receipts, and net gains and losses
on disposal of investment property has been disclosed to give
readers a clear picture of the underlying performance of the
business.
11.
DIVIDENDS
|
2024
£000
|
2023
£000
|
Amounts recognised as distributions
to equity holders in the year:
|
|
|
Final dividend for the year ended
31 March 2023 of 22.9p
(2022: 21.4p) per share.
|
41,939
|
39,136
|
Interim dividend for the year
ended 31 March 2024 of 22.6p
(2023: 22.3p) per
share.
|
44,074
|
40,824
|
|
86,013
|
79,960
|
Proposed final dividend for the
year ended 31 March 2024 of
22.6p (2023: 22.9p) per share.
|
44,104
|
41,939
|
Subject to approval by
shareholders at the Annual General Meeting to be held on 18 July
2024, the final dividend will be paid on 26 July 2024. The
ex-div date is 4 July 2024 and the record date is 5 July
2024.
The Property Income Distribution ("PID")
payable for the year is 45.2 pence per share (2023: 45.2 pence per
share).
12.
EARNINGS PER SHARE
|
Year ended 31 March
2024
|
Year ended 31 March
2023
|
|
Earnings
£m
|
Shares
million
|
Pence per
share
|
Earnings
£m
|
Shares
million
|
Pence per
share
|
Basic
|
239.8
|
188.7
|
127.1
|
73.3
|
183.0
|
40.1
|
Dilutive share options
|
-
|
1.1
|
(0.7)
|
-
|
1.1
|
(0.3)
|
Diluted
|
239.8
|
189.8
|
126.4
|
73.3
|
184.1
|
39.8
|
Adjustments:
|
|
|
|
|
|
|
(Gain)/loss on revaluation of
investment properties
|
(131.2)
|
-
|
(69.1)
|
30.0
|
-
|
16.2
|
Change in fair value of interest
rate derivatives
|
2.2
|
-
|
1.1
|
0.1
|
-
|
0.1
|
EPRA earnings
|
110.8
|
189.8
|
58.4
|
103.4
|
184.1
|
56.1
|
|
|
|
|
|
|
|
Cheadle fit-out insurance
proceeds
|
(4.7)
|
-
|
(2.5)
|
-
|
-
|
-
|
Refinancing fees
|
-
|
-
|
-
|
0.7
|
-
|
0.4
|
Adjusted - diluted
|
106.1
|
189.8
|
55.9
|
104.1
|
184.1
|
56.5
|
|
|
|
|
|
|
|
Adjusted - basic
|
106.1
|
188.7
|
56.2
|
104.1
|
183.0
|
56.9
|
The calculation of basic earnings is based on
profit after tax for the year. The weighted average number of
shares used to calculate diluted earnings per share has been
adjusted for the conversion of share options.
13.
NET ASSETS PER SHARE
EPRA's Best Practices Recommendations
guidelines for Net Asset Value (NAV) metrics are EPRA Net Tangible
Assets (NTA), EPRA Net Reinstatement Value (NRV) and EPRA Net
Disposal Value (NDV).
EPRA NTA is considered to be most consistent
with the nature of Big Yellow's business which provides sustainable
long-term progressive returns. EPRA NTA is shown in the table
below. This measure is further adjusted by the adjustment the
Group makes for purchaser's costs, which is the Group's Adjusted
Net Asset Value (or Adjusted NAV).
Net assets per share are equity shareholders'
funds divided by the number of shares at the year end. The
shares currently held in the Group's Employee Benefit Trust are
excluded from both net assets and the number of shares.
Adjusted net assets per share include the effect of those shares
issuable under employee share option schemes and the effect of
alternative valuation methodology assumptions (see note
15).
|
Year ended 31 March
2024
|
Year ended 31 March
2023
|
|
Equity attributable to
ordinary shareholders
£000
|
Shares
|
Pence per
share
|
Equity attributable to
ordinary shareholders
£000
|
Shares
|
Pence per
share
|
Basic NAV
|
2,448,370
|
195,096,601
|
1,255.0
|
2,182,446
|
183,143,066
|
1,191.7
|
Share and save as you earn
schemes
|
2,019
|
2,515,556
|
(15.0)
|
1,909
|
1,705,121
|
(10.0)
|
Diluted NAV
|
2,450,389
|
197,612,157
|
1,240.0
|
2,184,355
|
184,848,187
|
1,181.7
|
Fair value of
derivatives
|
1,830
|
-
|
0.9
|
(316)
|
-
|
(0.2)
|
Intangible assets
|
(1,433)
|
-
|
(0.7)
|
(1,433)
|
-
|
(0.7)
|
EPRA NTA
|
2,450,786
|
197,612,157
|
1,240.2
|
2,182,606
|
184,848,187
|
1,180.8
|
Valuation methodology assumption
(see note 15) (£000)
|
111,095
|
-
|
56.2
|
104,605
|
-
|
56.5
|
Adjusted NAV
|
2,561,881
|
197,612,157
|
1,296.4
|
2,287,211
|
184,848,187
|
1,237.3
|
14.
NON-CURRENT ASSETS
a) Investment
property, investment property under construction and right-of-use
assets
|
Investment
property
£000
|
Investment property under
construction
£000
|
Right-of-use assets
£000
|
Total
£000
|
|
|
|
|
|
At 31 March 2022
|
2,342,199
|
285,400
|
19,174
|
2,646,773
|
Additions
|
40,559
|
72,063
|
2,034
|
114,656
|
Transfer on opening
|
39,288
|
(39,288)
|
-
|
-
|
Acquisition of Oxford
freehold
|
-
|
-
|
(1,597)
|
(1,597)
|
Revaluation (see note
15)
|
27,594
|
(57,455)
|
-
|
(29,861)
|
Depreciation
|
-
|
-
|
(1,463)
|
(1,463)
|
|
|
|
|
|
At 31 March 2023
|
2,449,640
|
260,720
|
18,148
|
2,728,508
|
Additions
|
13,705
|
15,126
|
604
|
29,435
|
Transfer on opening
|
115,166
|
(115,166)
|
-
|
-
|
Reclassification from plant,
equipment and owner-occupied property
|
-
|
60
|
-
|
60
|
Disposal
|
(5,400)
|
-
|
-
|
(5,400)
|
Revaluation (see note
15)
|
145,414
|
(14,255)
|
-
|
131,159
|
Depreciation
|
-
|
-
|
(1,600)
|
(1,600)
|
|
|
|
|
|
At 31 March 2024
|
2,718,525
|
146,485
|
17,152
|
2,882,162
|
The right-of-use assets represent the present
value of minimum lease payments for leasehold properties that meet
the definition of IAS 40 and are accounted for as investment
properties - see note 21 for further details of the obligations
under lease liabilities. The fair value of the leasehold properties
(including long leaseholds), on which the Group pays rent, of £78.4
million (2023: £74.6 million) is included within the investment
property total.
The credit to right-of-use assets in the prior
year of £1.6 million is due to the acquisition of the freehold of
our Oxford store, and hence the extinguishment of the lease
liability and associated right-of-use asset.
The transfer on opening during the year is the
Kings Cross store and the Harrow Industrial Estate moving from
investment property under construction to investment property at
valuation on completion of the developments.
The disposal in the year is the proceeds from
a land swap transaction at our Kings Cross store realising the
Group £5.4 million.
The income from self storage accommodation
earned by the Group from its investment property is disclosed in
note 3. Direct operating expenses, which are all applied to
generating rental income, arising on the investment property in the
year are disclosed in the Portfolio Summary. Included within
additions is £3.3 million of capitalised interest (2023: £2.8
million), calculated at the Group's average borrowing cost for the
year of 5.5%. 97 of the Group's investment properties are
pledged as security for loans, with a total external value of £2.35
billion.
b) Plant,
equipment, and owner-occupied property
|
Freehold property
£000
|
Leasehold improve-ments
£000
|
Plant and machinery
£000
|
Motor vehicles
£000
|
Fixtures, fittings
& office equipment
£000
|
Right of use assets
£000
|
Total
£000
|
Cost
|
|
|
|
|
|
|
|
At 31 March 2022
|
2,290
|
59
|
447
|
32
|
1,640
|
872
|
5,340
|
Retirement of fully depreciated
assets
|
-
|
-
|
(83)
|
-
|
(687)
|
-
|
(770)
|
Additions
|
116
|
-
|
283
|
-
|
738
|
3
|
1,140
|
|
|
|
|
|
|
|
|
At 31 March 2023
|
2,406
|
59
|
647
|
32
|
1,691
|
875
|
5,710
|
Reclassification to investment
property under construction
|
(60)
|
-
|
-
|
-
|
-
|
-
|
(60)
|
Retirement of fully depreciated
assets
|
-
|
-
|
(133)
|
-
|
(686)
|
-
|
(819)
|
Additions
|
23
|
-
|
255
|
-
|
516
|
131
|
925
|
|
|
|
|
|
|
|
|
At 31 March 2024
|
2,369
|
59
|
769
|
32
|
1,521
|
1,006
|
5,756
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
At 31 March 2022
|
(636)
|
(16)
|
(135)
|
(32)
|
(347)
|
(317)
|
(1,483)
|
Retirement of fully depreciated
assets
|
-
|
-
|
83
|
-
|
687
|
-
|
770
|
Charge for the year
|
(46)
|
(4)
|
(158)
|
-
|
(680)
|
(106)
|
(994)
|
|
|
|
|
|
|
|
|
At 31 March 2023
|
(682)
|
(20)
|
(210)
|
(32)
|
(340)
|
(423)
|
(1,707)
|
Retirement of fully depreciated
assets
|
-
|
-
|
133
|
-
|
686
|
-
|
819
|
Charge for the year
|
(50)
|
(4)
|
(181)
|
-
|
(629)
|
(134)
|
(998)
|
|
|
|
|
|
|
|
|
At 31 March 2024
|
(732)
|
(24)
|
(258)
|
(32)
|
(283)
|
(557)
|
(1,886)
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
At 31 March 2024
|
1,637
|
35
|
511
|
-
|
1,238
|
449
|
3,870
|
|
|
|
|
|
|
|
|
At 31 March 2023
|
1,724
|
39
|
437
|
-
|
1,351
|
452
|
4,003
|
c) Intangible
assets
The intangible asset relates to the Big Yellow
brand, which was acquired through the acquisition of Big Yellow
Self Storage Company Limited in 1999. The carrying value
remains unchanged from the prior year as there is considered to be
no impairment in the value of the asset. The asset has an
indefinite life and is tested annually for impairment or more
frequently if there are indicators of impairment.
d)
Investment
The Group has a £0.6 million investment in
Doncaster Security Operations Centre Limited, a company which
provides out-of-hours monitoring and alarm receiving services,
including for the Group's stores. The investment is carried
at cost and tested annually for impairment.
15.
VALUATION OF INVESTMENT PROPERTY
|
Deemed cost
£000
|
Revaluation on deemed
cost
£000
|
Valuation
£000
|
Freehold (including long leasehold)
|
|
|
|
At 31 March 2023
|
977,874
|
1,440,741
|
2,418,615
|
Transfer from investment property
under construction
|
92,200
|
22,966
|
115,166
|
Disposals
|
(5,400)
|
-
|
(5,400)
|
Movement in year
|
13,631
|
144,338
|
157,969
|
At 31 March 2024
|
1,078,305
|
1,608,045
|
2,686,350
|
|
|
|
|
Leasehold
|
|
|
|
At 31 March 2023
|
20,824
|
10,201
|
31,025
|
Movement in year
|
74
|
1,076
|
1,150
|
At 31 March 2024
|
20,898
|
11,277
|
32,175
|
|
|
|
|
Total investment property
|
|
|
|
At 31 March 2023
|
998,698
|
1,450,942
|
2,449,640
|
Transfer from investment property
under construction
|
92,200
|
22,966
|
115,166
|
Disposals
|
(5,400)
|
-
|
(5,400)
|
Movement in year
|
13,705
|
145,414
|
159,119
|
At 31 March 2024
|
1,099,203
|
1,619,322
|
2,718,525
|
|
|
|
|
Investment property under construction
|
|
|
|
At 31 March 2023
|
255,775
|
4,945
|
260,720
|
Transfer to investment
property
|
(92,200)
|
(22,966)
|
(115,166)
|
Movement in year
|
15,186
|
(14,255)
|
931
|
At 31 March 2024
|
178,761
|
(32,276)
|
146,485
|
|
|
|
|
Valuation of all investment property
|
|
|
|
At 31 March 2023
|
1,254,473
|
1,455,887
|
2,710,360
|
Disposals
|
(5,400)
|
-
|
(5,400)
|
Movement in year
|
28,891
|
131,159
|
160,050
|
At 31 March 2024
|
1,277,964
|
1,587,046
|
2,865,010
|
The Group has classified the fair value
investment property and the investment property under construction
within Level 3 of the fair value hierarchy. There has been no
transfer to or from Level 3 in the year.
The Group's freehold and leasehold investment
properties have been valued at 31 March 2024 by external valuers,
Jones Lang Lasalle ("JLL"). The Valuation has been prepared
in accordance with the version of the RICS Valuation - Global
Standards (incorporating the International Valuation Standards) and
the UK national supplement ("the Red Book") current as at the
valuation date. The valuation of each of the investment
properties and the investment properties under construction has
been prepared on the basis of either Fair Value or Fair Value as a
fully equipped operational entity, having regard to trading
potential, as appropriate.
The valuation has been provided for financial
reporting purposes and as such, is a Regulated Purpose Valuation as
defined in the Red Book. In compliance with the disclosure
requirements of the Red Book, JLL have confirmed
that:
•
|
this is JLL's third annual valuation for these
purposes on behalf of the Group;
|
•
|
JLL do not provide other significant
professional or agency services to the Group;
|
•
|
in relation to the preceding financial year of
JLL, the proportion of the total fees payable by the Group to the
total fee income of the firm is less than 5%; and
|
•
|
the fee payable to JLL is a fixed amount per
asset and is not contingent on the appraised value.
|
The self storage properties have been valued
on the basis of Fair Value as fully equipped operational entities,
having regard to trading potential. Due to the specialised
nature and use of the buildings the approach is to adopt a profits
method of valuation in an explicit Discounted Cash Flow calculation
and then consider the results in the context of recent comparable
evidence of transactions in the sector.
The profits method requires an estimate of the
future cash flow that can be generated from the use of the building
as a self storage facility, assuming a reasonably efficient
operator. Judgements are made as to the trading potential and
likely long term sustainable occupancy. Stable occupancy
depends upon the nature of demand, size of property and nearby
competition, and allows for a reasonable vacancy rate to enable the
operator to sell units to new customers. The cash flow runs for an
explicit period of 10 years, after which it is capitalised at an
all risks yield which reflects the implicit future growth of the
business, or a hypothetical sale. This is a valuer's
shortcut: maintaining the cash flow into perpetuity would provide
the same result. The comparison with recent transactions
requires the evidence to be considered in terms of the multiple on
net operating profit (or EBITDA/EBITDAR), value per square foot,
yield profile etc and then adjusted to reflect differences in
location, building factors, tenure, trading maturity and trading
risk.
This mirrors the typical approach of
purchasers in the self storage market. However, in view of the
relatively limited availability of comparable market evidence this
requires a degree of valuer judgment. In particular, most of the
transactions have comprised share sales due to the nature of the
asset class and the terms of those transactions have mostly been
kept confidential between the parties.
Portfolio
Premium
JLL's valuation report confirms that the
properties have been valued individually but that if the portfolio
was to be sold as a single lot or in selected groups of properties,
the total value could differ. JLL state that in current
market conditions they are of the view that there could be a
portfolio premium.
Assumptions
A
|
Net operating income is based on projected
revenue received less projected operating costs, which include a
management fee to take account of central/head office costs. The
initial net operating income is calculated by estimating the net
operating income in the first 12 months following the valuation
date.
|
B
|
The net operating income in future years is
calculated assuming either straight-line absorption from day one
actual occupancy or variable absorption over years one to five of
the cash flow period, to an estimated stabilised/mature occupancy
level. In the valuation the assumed stabilised occupancy level for
the 109 trading stores (both freeholds and leaseholds) open at 31
March 2024 averages 88% (31 March 2023: 88%). The projected
revenues and costs have been adjusted for estimated cost inflation
and revenue growth.
|
C
|
The future rental growth incorporated into the
valuation averages 2.5% per annum (2023: 2.6% per annum)
|
D
|
The capitalisation rates applied to existing
and future net cash flow have been estimated by reference to
underlying yields for asset types such as industrial, distribution
and retail warehousing, yields for other trading property types
such as student housing and hotels, bank base rates, ten-year money
rates, inflation and the available evidence of transactions in the
sector. The valuation included in the accounts assumes rental
growth in future periods. The net initial yield for the 109
stores is 5.2% (31 March 2023: 5.3%). The weighted average
exit capitalisation rate adopted (for both freeholds and
leaseholds) is 5.4% (31 March 2023: 5.6%).
|
E
|
The future net cash flow projections
(including revenue growth and cost inflation) have been discounted
at a rate that reflects the risk associated with each asset. The
weighted average annual discount rate adopted (for both freeholds
and leaseholds) is 7.1% (31 March 2023: 7.1%).
|
F
|
Purchaser's costs of 6.8% have been adopted
reflecting current progressive Stamp Duty Land Tax
rates.
|
Short
leasehold
The same methodology has been used as for
freeholds, but the exit capitalisation rate is adjusted to reflect
the unexpired lease term at exit. The average unexpired term of the
Group's six short leasehold properties is 10.4 years (31 March
2023: 11.4 years unexpired).
Sensitivities
Self storage valuations are complex, derived
from data which is not widely publicly available and involve a
degree of judgement. For these reasons we have classified the
valuations of our property portfolio as Level 3 as defined by IFRS
13. Inputs to the valuations, some of which are
'unobservable' as defined by IFRS 13, include capitalisation
yields, stable occupancy rates, and rental growth rates. The
existence of an increase of more than one unobservable input would
augment the impact on valuation. The impact on the valuation
would be mitigated by the inter-relationship between unobservable
inputs moving in opposite directions. For example, an
increase in stable occupancy may be offset by an increase in yield,
resulting in no net impact on the valuation. A sensitivity
analysis showing the impact on the investment property valuation of
changes in yields and stable occupancy is shown
below:
|
Impact of a change in capitalisation
rates
|
Impact of a change in stabilised
occupancy assumption
|
|
25 bps decrease
|
25 bps increase
|
1% increase
|
1% decrease
|
2024
|
4.8%
|
(4.4%)
|
0.9%
|
(1.0%)
|
2023
|
4.7%
|
(4.3%)
|
1.1%
|
(1.2%)
|
A sensitivity analysis has not been provided
for a change in the rental growth rate adopted as there is a
relationship between this measure and the discount rate adopted.
So, in theory, an increase in the rental growth rate would
give rise to a corresponding increase in the discount rate and the
resulting value impact would be limited.
Investment
properties under construction
JLL have valued the stores in development
adopting the same methodology as set out above but on the basis of
the cash flow projection expected for the store at opening and
after allowing for the outstanding costs to take each scheme from
its current state to completion and full fit-out. JLL have
allowed for holding costs and construction contingency, as
appropriate. Five of the schemes valued do not yet have
planning consent and JLL have reflected the planning risk in their
valuation. The cost to complete for the investment property
under construction amounts to £214.4 million (2023: £217
million).
Valuation
assumption for purchaser's costs
The Group's investment property assets have
been valued for the purposes of the financial statements after
deducting notional weighted average purchaser's cost of 6.8% on the
net value, as if they were sold directly as property assets. The
valuation is an asset valuation which is entirely linked to the
operating performance of the business. The assets would have to be
sold with the benefit of operational contracts, employment
contracts and customer contracts, which would be very difficult to
achieve except in a corporate structure. This approach
follows the logic of the valuation methodology in that the
valuation is based on a capitalisation of the net operating income
after allowing a deduction for operational cost and an allowance
for central administration costs. Sale in a corporate structure
would result in a reduction in the assumed Stamp Duty Land Tax but
an increase in other transaction costs reflecting additional due
diligence resulting in a reduced notional purchaser's cost of 2.75%
of gross value. All the significant sized transactions that
have been concluded in the UK in recent years were completed in a
corporate structure. The Group therefore instructed JLL to
carry out an additional valuation on the above basis, and this
results in a higher property valuation at 31 March 2024 of £2,976.1
million (£111.1 million higher than the value recorded in the
financial statements) translating to 56.2 pence per share. We
have included this revised valuation in the adjusted diluted net
asset calculation (see note 13).
16.
TRADE AND OTHER RECEIVABLES
|
31 March
2024
£000
|
31 March
2023
£000
|
Current
|
|
|
Trade receivables
|
6,250
|
5,181
|
Other receivables
|
312
|
209
|
Prepayments and accrued
income
|
3,554
|
2,924
|
|
|
|
|
10,116
|
8,314
|
Trade receivables are net of a bad debt
provision of £579,000 (2023: £1,070,000). The Directors
consider that the carrying amount of trade and other receivables
approximates their fair value.
Trade
receivables
The Group does not typically offer credit
terms to its customers, requiring them to pay in advance of their
storage period and hence the Group is not exposed to significant
credit risk. A late charge of 10% is applied to a customer's
account if they are more than 10 days overdue in their
payment. The Group provides for receivables on a specific
basis. There is a right of lien over the customers' goods, so if
they have not paid within a certain time frame, we have the right
to sell the items they store to recoup the debt owed. Trade
receivables that are overdue are provided for based on estimated
irrecoverable amounts determined by reference to past default
experience.
For individual storage customers,
the Group does not perform credit checks, however this is mitigated
by the fact that these customers are required to pay in advance,
and also to pay a deposit ranging from one week to four weeks'
storage income. Before accepting a new business customer who
wishes to use a number of the Group's stores, the Group uses an
external credit rating to assess the potential customer's credit
quality and defines credit limits by customer. There are no
customers who represent more than 5% of the total balance of trade
receivables.
Included in the Group's trade
receivables balance are debtors with a carrying amount of £782,000
(2023: £779,000) which are past due at the reporting date for which
the Group has not provided as there has not been a significant
change in credit quality and the amounts are still considered
recoverable. The average age of these receivables is 18 days past
due (2023: 16 days past due).
The creation and release of credit
loss allowances have been included in cost of sales in the income
statement.
The Group measures the loss
allowance for the trade receivables at an amount equal to lifetime
expected credit loss. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to
past default experience of the debtor. The Group has reviewed
its assessment of the ECL provision for debtors over 45 days in the
year from 100% provision to 53% provision, reflecting the actual
loss experience.
The Group writes off a trade
receivable when there is information indicating that the debtors
are in severe financial difficulty and there is no realistic
prospect of recovery, e.g. when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings.
The following table details the
risk profile of trade receivables based on the Group's provision
matrix:
Year ended 31 March 2024
|
Not past
due
|
<31
days
|
31-45 days
|
>45
days
|
Total
|
Expected credit loss rate
(%)
|
0.3%
|
7.5%
|
25.4%
|
52.8%
|
8.5%
|
Gross carrying amount
(£000)
|
4,963
|
892
|
63
|
911
|
6,829
|
Lifetime ECL (£000)
|
(15)
|
(67)
|
(16)
|
(481)
|
(579)
|
|
|
|
|
|
|
Net trade receivables at 31 March
2024
|
4,948
|
825
|
47
|
430
|
6,250
|
Year ended 31 March 2023
|
Not past
due
|
<31
days
|
31-45 days
|
>45
days
|
Total
|
Expected credit loss rate
(%)
|
0.2%
|
16.2%
|
19.9%
|
100%
|
17.1%
|
Gross carrying amount
(£000)
|
4,413
|
850
|
84
|
904
|
6,251
|
Lifetime ECL (£000)
|
(11)
|
(138)
|
(17)
|
(904)
|
(1,070)
|
|
|
|
|
|
|
Net trade receivables at 31 March
2023
|
4,402
|
712
|
67
|
-
|
5,181
|
The above balances are short term
and therefore the difference between the book value and the fair
value is not significant. Consequently, these have not been
discounted.
Movement in
the credit loss allowance
|
2024
£000
|
2023
£000
|
Balance at the beginning of the
year
|
1,070
|
563
|
Amounts (released)/provided in
year
|
(192)
|
826
|
Amounts written off as
uncollectible
|
(299)
|
(319)
|
|
|
|
Balance at the end of the
year
|
579
|
1,070
|
The concentration of credit risk is limited
due to the customer base being large and unrelated.
Accordingly, the Directors believe that there is no further
credit provision required in excess of the credit loss
allowance.
17.
TRADE AND OTHER PAYABLES
|
31 March
2024
£000
|
31 March
2023
£000
|
Current
|
|
|
Trade payables
|
2,437
|
4,208
|
Other payables
|
18,166
|
18,199
|
Accruals and deferred
income
|
28,793
|
34,868
|
|
|
|
|
49,396
|
57,275
|
The Group has financial risk management
policies in place to ensure that all payables are paid within the
credit terms. The Directors consider the carrying amount of
trade and other payables and accruals and deferred income
approximates fair value. The main items within other payables
are VAT, customer deposits and withholding tax on the
PID.
The Group invoices its customers in advance,
and hence any deferred income balance primarily relates to amounts
paid by customers for rental periods beyond the balance sheet
date. The Groups' deferred income balance at 31 March 2024
was £17.7 million, an increase of 2% from 31 March 2023 (£17.3
million).
18.
FINANCIAL INSTRUMENTS
The Group manages its capital to
ensure that entities in the Group will be able to continue as going
concerns while maximising the return to stakeholders through the
optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which
includes the borrowings disclosed in note 19, cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained
earnings.
With the exception of derivative instruments
which are classified as a financial liability at fair value through
the statement of comprehensive income, financial liabilities are
categorised under amortised cost. The Group has the following
classes of financial assets:
·
Trade and other receivables - trade receivables
are initially recognised at transaction price. Other
receivables are initially recognised at fair value.
Subsequently these assets are measured at amortised cost using the
effective interest method, less provision for expected credit
losses.
·
Cash and cash equivalents - cash and cash
equivalents represent only liquid assets with maturity of 90 days
or less. Bank overdrafts that cannot be offset against
other cash balances are shown with borrowings in current
liabilities on the balance sheet. Cash and cash equivalents
are also classified as amortised cost. They are subsequently
measured at amortised cost. Cash and cash equivalents include
cash in hand, deposits at call with banks, and other short term
highly liquid investments with original maturities of three months
or less.
Exposure to credit and interest
rate risks arise in the normal course of the Group's
business. Derivative financial instruments are used to manage
exposure to fluctuations in interest rates but are not employed for
speculative purposes.
A. Balance sheet
management
The Group's Board reviews the
capital structure on an ongoing basis. As part of this review, the
Board considers the cost of capital and the risks associated with
each class of capital. The Group seeks to have a conservative
gearing ratio (the proportion of net debt to equity). The
Board considers at each review the appropriateness of the current
ratio in light of the above. The Board is currently satisfied
with the Group's gearing ratio.
The gearing ratio at the year-end
is as follows:
|
2024
£000
|
2023
£000
|
Debt
|
(394,768)
|
(494,927)
|
Cash and cash
equivalents
|
9,356
|
8,329
|
Net debt
|
(385,412)
|
(486,598)
|
Balance sheet equity
|
2,448,370
|
2,182,446
|
Net debt to equity ratio
|
15.7%
|
22.3%
|
B. Debt
management
The Group currently borrows through a senior
term loan, secured on 62 self storage assets, a loan with Aviva
Commercial Finance Limited secured on a portfolio of 20 self
storage assets, a £120 million loan from M&G Investments
Limited secured on a portfolio of 15 self storage assets. The
Group also has a $225 million shelf facility available from Pricoa
Private Capital (see note 19). Borrowings are arranged to
ensure an appropriate maturity profile and to maintain short-term
liquidity. Funding is arranged through banks and financial
institutions with whom the Group has a strong working
relationship.
C.
Interest rate risk management
The Group is exposed to interest
rate risk as entities in the Group borrow funds at both fixed and
floating interest rates. The risk is managed by the Group by
maintaining an appropriate mix between fixed and floating rate
borrowings, and by the use of interest rate swap contracts. Hedging
activities are evaluated regularly to align with interest rate
views and defined risk appetite; ensuring optimal hedging
strategies are applied, by either positioning the balance sheet or
protecting interest expense through different interest rate
cycles.
At 31 March 2024 the Group had one
interest rate derivative in place - £35 million fixed at 4.5%
(excluding the margin on the underlying debt instrument) until
September 2029.
Under interest rate swap contracts,
the Group agrees to exchange the difference between fixed and
floating rate interest amounts calculated on agreed notional
principal amounts. Such contracts enable the Group to mitigate the
risk of changing interest rates on the fair value of issued fixed
rate debt held and the cash flow exposures on the issued variable
rate debt held. The fair value of interest rate swaps at the
reporting date is determined by discounting the future cash flows
using the curves at the reporting date and the credit risk inherent
in the contract and is disclosed below. The average interest rate
is based on the outstanding balances at the end of the financial
year.
The £35 million interest rate swap
settles on a three-monthly basis. The floating rate on the interest
rate swap is three month SONIA. The Group settles the difference
between the fixed and floating interest rate on a net
basis.
The Group does not hedge account
for its interest rate swaps and states them at fair value, with
changes in fair value included in the statement of comprehensive
income. A reconciliation of the movement in derivatives
is provided in the table below:
|
2024
£000
|
2023
£000
|
At 1 April
|
316
|
885
|
Receipt from cancellation of
interest rate derivatives
|
-
|
(436)
|
Fair value movement in the
year
|
(2,146)
|
(133)
|
At 31 March
|
(1,830)
|
316
|
The interest rate derivative liability is
shown within non-current liabilities at the year end, as the
interest rate derivative expires in 2029. The tables below
reconcile the opening and closing balances of the Group's finance
related liabilities for the current and prior year:
|
Financial
liabilities measured at amortised cost
|
Financial liabilities measured at fair
value
|
|
|
Loans
£000
|
Obligations under lease liabilities
£000
|
Interest rate derivatives
£000
|
Total
£000
|
At 1 April 2023
|
(494,927)
|
(19,696)
|
316
|
(514,307)
|
Cash movement in the
year
|
100,159
|
1,829
|
-
|
101,988
|
Lease variations
|
-
|
(860)
|
-
|
(860)
|
Fair value movement
|
-
|
-
|
(2,146)
|
(2,146)
|
At 31 March 2024
|
(394,768)
|
(18,727)
|
(1,830)
|
(415,325)
|
The difference between the loans balance above
and the balance sheet is loan arrangement fees of
£5,080,000.
|
Financial
liabilities measured at amortised cost
|
Financial liabilities measured at fair
value
|
|
|
Loans
£000
|
Obligations under lease liabilities
£000
|
Interest rate derivatives
£000
|
Total
£000
|
At 1 April 2022
|
(420,435)
|
(20,676)
|
885
|
(440,226)
|
Acquisition of Oxford
freehold
|
-
|
1,671
|
-
|
1,671
|
Cash movement in the
year
|
(74,492)
|
1,267
|
(436)
|
(73,661)
|
Lease variations
|
-
|
(1,958)
|
-
|
(1,958)
|
Fair value movement
|
-
|
-
|
(133)
|
(133)
|
At 31 March 2023
|
(494,927)
|
(19,696)
|
316
|
(514,307)
|
The difference between the loans balance above
and the balance sheet is loan arrangement fees of
£2,357,000
D.
Interest rate sensitivity analysis
In managing interest rate risks the
Group aims to reduce the impact of short-term fluctuations on the
Group's earnings, without jeopardising its flexibility. Over
the longer term, permanent changes in interest rates may have an
impact on consolidated earnings. At 31 March 2024, it is
estimated that an increase of 0.25 percentage points in interest
rates would have reduced the Group's adjusted profit before tax and
net equity by £510,000 (2023: reduced adjusted profit before tax by
£753,000) and a decrease of 0.25 percentage points in interest
rates would have increased the Group's adjusted profit before tax
and net equity by £510,000 (2023: increased adjusted profit before
tax by £753,000). The sensitivity has been calculated by
applying the interest rate change to the variable rate borrowings,
net of interest rate swaps, at the year end.
The Group's sensitivity to interest
rates has reduced during the year, following the reduction in the
amount of floating rate debt. The Board monitors closely the
exposure to the floating rate element of our debt.
E. Cash
management and liquidity
Ultimate responsibility for liquidity risk
management rests with the Board of Directors, who have built an
appropriate liquidity risk management framework for the management
of the Group's short, medium, and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual
cash flows and matching the maturity profiles of financial assets
and liabilities. Included in note 19 is a description of
additional undrawn facilities that the Group has at its disposal to
further reduce liquidity risk.
Short term money market deposits are used to
manage liquidity whilst maximising the rate of return on cash
resources, giving due consideration to risk.
F. Foreign currency
management
The Group does not have any foreign currency
exposure.
G.
Credit risk
The credit risk management policies
of the Group with respect to trade receivables are discussed in
note 16. The Group has no significant concentration of
credit risk, with exposure spread over 73,000 occupied rooms in our
stores.
The credit risk on liquid funds is
limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating
agencies.
H.
Financial maturity analysis
In respect of interest-bearing financial
liabilities, the following table provides a maturity analysis for
individual elements.
2024
Maturity
|
Total
£000
|
Less than one year
£000
|
One to two years
£000
|
Two to five years
£000
|
More than five years
£000
|
Debt
|
|
|
|
|
|
Aviva loan
|
155,768
|
3,317
|
3,483
|
148,968
|
-
|
M&G loan payable at variable
rate
|
85,000
|
-
|
-
|
-
|
85,000
|
M&G loan fixed by interest
rate derivatives
|
35,000
|
-
|
-
|
-
|
35,000
|
Bank loan payable at variable
rate
|
119,000
|
-
|
-
|
119,000
|
-
|
Total
|
394,768
|
3,317
|
3,483
|
267,968
|
120,000
|
2023 Maturity
|
Total
£000
|
Less than one year
£000
|
One to two years
£000
|
Two to five years
£000
|
More than five years
£000
|
Debt
|
|
|
|
|
|
Aviva loan
|
158,927
|
3,159
|
3,317
|
7,451
|
145,000
|
M&G loan payable at variable
rate
|
85,000
|
-
|
-
|
-
|
85,000
|
M&G loan fixed by interest rate
derivatives
|
35,000
|
-
|
-
|
-
|
35,000
|
Bank loan payable at variable
rate
|
216,000
|
-
|
216,000
|
-
|
-
|
Total
|
494,927
|
3,159
|
219,317
|
7,451
|
265,000
|
I. Fair values of financial
instruments
The fair values of the Group's cash and
short-term deposits and those of other financial assets equate to
their book values. Details of the Group's receivables at
amortised cost are set out in note 16. The amounts are
presented net of provisions for doubtful receivables, and
allowances for impairment are made where appropriate. Trade
and other payables, including bank borrowings, are carried at
amortised cost. Obligations under lease liabilities are
included at the present value of their minimum lease payments.
Derivatives are carried at fair value.
For those financial instruments held at
valuation, the Group has categorised them into a three-level fair
value hierarchy based on the priority of the inputs to the
valuation technique in accordance with IFRS 7. The hierarchy
gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). If the inputs used to
measure fair value fall within different levels of the hierarchy,
the category level is based on the lowest priority level input that
is significant to the fair value measurement of the instrument in
its entirety. The fair value of the Group's outstanding
interest rate derivatives, as detailed in note 18C, have been
estimated by calculating the present value of future cash flows,
using appropriate market discount rates, representing Level 2 fair
value measurements as defined by IFRS 7. There are no
financial instruments which have been categorised as Level 1 or
Level 3. The fair value of the Group's debt equates to its
book value.
J. Maturity analysis of financial
liabilities
The contractual maturities based on
market conditions and expected yield curves prevailing at the
year-end date are as follows:
2024
|
Trade and other payables
£000
|
Interest rate swaps
£000
|
Borrowings and
interest
£000
|
Obligations under lease liabilities
£000
|
Total
£000
|
From five to twenty
years
|
-
|
(98)
|
124,225
|
20,784
|
144,911
|
From two to five years
|
-
|
(1,089)
|
309,503
|
3,247
|
311,661
|
From one to two years
|
-
|
(195)
|
30,000
|
2,279
|
32,084
|
|
|
|
|
|
|
Due after more than one
year
|
-
|
(1,382)
|
463,728
|
26,310
|
488,656
|
Due within one year
|
20,603
|
106
|
24,520
|
2,279
|
47,508
|
|
|
|
|
|
|
Total
|
20,603
|
(1,276)
|
488,248
|
28,589
|
536,164
|
2023
|
Trade and other payables
£000
|
Interest rate swaps
£000
|
Borrowings and
interest
£000
|
Obligations under lease liabilities
£000
|
Total
£000
|
From five to twenty
years
|
-
|
-
|
278,104
|
21,766
|
299,870
|
From two to five years
|
-
|
-
|
40,726
|
4,101
|
44,827
|
From one to two years
|
-
|
-
|
237,652
|
2,048
|
239,700
|
|
|
|
|
|
|
Due after more than one
year
|
-
|
-
|
556,482
|
27,915
|
584,397
|
Due within one year
|
22,407
|
(289)
|
26,566
|
2,048
|
50,732
|
|
|
|
|
|
|
Total
|
22,407
|
(289)
|
583,048
|
29,963
|
635,129
|
K. Reconciliation of maturity
analyses
The maturity analysis in note 18J
shows non-discounted cash flows for all financial liabilities
including interest payments. The table below reconciles the
borrowings column in note 19 with the borrowings and interest
column in the maturity analysis presented in note 18J.
2024
|
Borrowings
£000
|
Interest
£000
|
Unamortised borrowing costs
£000
|
Borrowings and
interest
£000
|
From five to twenty
years
|
120,000
|
3,673
|
552
|
124,225
|
From two to five years
|
267,968
|
37,007
|
4,528
|
309,503
|
From one to two years
|
3,483
|
26,517
|
-
|
30,000
|
|
|
|
|
|
Due after more than one
year
|
391,451
|
67,197
|
5,080
|
463,728
|
Due within one year
|
3,317
|
21,203
|
-
|
24,520
|
|
|
|
|
|
|
394,768
|
88,400
|
5,080
|
488,248
|
2023
|
Borrowings
£000
|
Interest
£000
|
Unamortised borrowing costs
£000
|
Borrowings and
interest
£000
|
From five to twenty
years
|
265,000
|
11,316
|
1,788
|
278,104
|
From two to five years
|
7,451
|
33,275
|
-
|
40,726
|
From one to two years
|
219,317
|
17,766
|
569
|
237,652
|
|
|
|
|
|
Due after more than one
year
|
491,768
|
62,357
|
2,357
|
556,482
|
Due within one year
|
3,159
|
23,407
|
-
|
26,566
|
|
|
|
|
|
Total
|
494,927
|
85,764
|
2,357
|
583,048
|
19.
BORROWINGS
Secured borrowings at amortised cost
|
31 March
2024
£000
|
31 March
2023
£000
|
Current liabilities
|
|
|
Aviva loan
|
3,317
|
3,159
|
|
3,317
|
3,159
|
Non-current liabilities
|
|
|
Bank borrowings
|
119,000
|
216,000
|
Aviva loan
|
152,451
|
155,768
|
M&G loan
|
120,000
|
120,000
|
Unamortised loan arrangement
costs
|
(5,080)
|
(2,357)
|
|
|
|
Total non-current borrowings
|
386,371
|
489,411
|
|
|
|
Total borrowings
|
389,688
|
492,570
|
The weighted average interest rate paid on the
borrowings during the year was 5.5% (2023: 4.2%).
The Group has £181 million in undrawn
committed bank borrowing facilities at 31 March 2024, which expire
after between two and three years (2023: £24 million expiring
after between one and two years).
The Group has a £155.8 million fixed rate loan
with Aviva Commercial Finance Limited, expiring in September 2028.
The loan is secured over a portfolio of 20
freehold self storage centres. The annual fixed interest rate
on the loan is 3.3%. The loan has an amortising element
of £10.8 million which runs to April 2027.
The Group has a secured £300
million Sustainability-linked three year revolving bank
facility with Lloyds, HSBC, Barclays and Bank of Ireland expiring
in December 2026, with a margin of 1.25%. The Group has the
option to extend the facility by two additional one-year terms
through to December 2028, subject to lender approval
The Group has a £120 million loan with M&G
Investments Limited, with a bullet repayment in September
2029. The loan is secured over a portfolio
of 15 freehold self storage centres.
In addition to the facilities above the Group
has a $225 million credit approved shelf facility with Pricoa
Private Capital ("Pricoa"), to be drawn in fixed sterling
notes. The Group can draw the debt in minimum tranches of £10
million over the next year and a half with terms of between 7 and
15 years at short notice.
The movement in the Group's loans are shown
net in the cash flow statement as the bank loan is a revolving
facility and is repaid and redrawn each month. The movement
has been shown net in the cash flow statement. The other
Group loans are not revolving, and any movements in those loans are
disclosed in a footnote to note 26B.
The Group was in compliance with its banking
covenants at 31 March 2024 and throughout the year. The
principal covenants are summarised in the table below:
Covenant
|
Covenant
level
|
At 31 March 2024
|
Consolidated EBITDA to net finance
costs
|
Minimum 1.5x
|
5.4x
|
Consolidated net tangible assets
|
Minimum £500m
|
£2,448.4m
|
Bank loan interest cover
|
Minimum 1.75x
|
6.6x
|
Net debt to EBITDA ratio
|
Maximum 8x
|
3.0x
|
Aviva loan interest service cover
ratio
|
Minimum 1.5x
|
6.4x
|
Aviva loan debt service cover ratio
|
Minimum 1.2x
|
4.0x
|
M&G interest cover
|
Minimum 1.5x
|
2.9x
|
The Consolidated EBITDA covenant
is calculated by dividing the consolidated EBITDA generated by the
Group's stores by the Group's consolidated net finance
costs.
The bank loan interest cover, the
Aviva loan interest service cover ratio and the M&G interest
cover covenants are calculated by dividing the EBITDA generated by
each loan's security pool by the interest payable for each loan for
each defined time period. The Aviva loan debt service
cover ratio is calculated by taking the EBITDA generated by the
Aviva security pool and dividing by the Aviva loan interest payable
and facility amortisation. The Aviva and M&G loans
consolidated net tangible assets covenant is a minimum of £250
million.
Interest rate profile of financial
liabilities
|
Total
£000
|
Floating rate
£000
|
Fixed rate
£000
|
Weighted average interest rate
|
Period for which the rate is fixed
|
Weighted average period until
maturity
|
At 31 March 2024
|
|
|
|
|
|
|
Gross financial
liabilities
|
394,768
|
204,000
|
190,768
|
5.4%
|
4.6
years
|
4.2
years
|
|
|
|
|
|
|
|
At 31 March 2023
|
|
|
|
|
|
|
Gross financial
liabilities
|
494,927
|
301,000
|
193,927
|
4.7%
|
4.8
years
|
3.9
years
|
All monetary liabilities, including short-term
receivables and payables are denominated in sterling. The
weighted average interest rate includes the effect of the Group's
interest rate derivatives. The Directors have concluded that the
carrying value of borrowings approximates to its fair
value.
Narrative disclosures on the Group's policy
for financial instruments are included within the Strategic Report
and in note 18.
20.
DEFERRED TAX
Deferred tax assets in respect of share based
payments £0.1 million (2023: £0.1 million), corporation tax losses
£6.2 million (2023: £6.3 million), capital allowances in excess of
depreciation £0.1 million (2023: £0.2 million) and capital losses
£2.1 million (2023: £2.1 million) in respect of the non-REIT
taxable business have not been recognised as it is not considered
probable that sufficient taxable profits will arise in the relevant
taxable entity. The unused tax losses can be carried forward
indefinitely.
21.
OBLIGATIONS UNDER LEASE LIABILITIES
|
Minimum lease
payments
|
Present value of
minimum lease payments
|
|
2024
£000
|
2023
£000
|
2024
£000
|
2023
£000
|
Amounts payable under lease liabilities:
|
|
|
|
|
Within one year
|
2,279
|
2,048
|
2,253
|
2,020
|
Between one and five years
inclusive
|
5,526
|
6,149
|
5,112
|
5,652
|
Greater than five years
|
20,784
|
21,766
|
11,362
|
12,024
|
|
|
|
|
|
|
28,589
|
29,963
|
18,727
|
19,696
|
|
|
|
|
|
Less: future finance
charges
|
(9,862)
|
(10,267)
|
|
|
|
|
|
|
|
Present value of lease
liabilities
|
18,727
|
19,696
|
|
|
All obligations under lease liabilities are
denominated in sterling. Interest rates are fixed at the
contract date. All leases are on a fixed repayment basis and
no arrangements have been entered into for contingent rental
payments. The carrying amount of the Group's lease
obligations approximates their fair value.
22.
SHARE CAPITAL
|
Called up,
allotted, and fully paid
|
|
2024
£000
|
2023
£000
|
|
|
|
Ordinary shares of 10 pence each
|
19,620
|
18,427
|
|
|
|
Movement in issued share capital
|
|
|
Number of shares at 31 March
2022
|
|
183,967,378
|
Exercise of share options - Share
option schemes
|
|
298,595
|
Number of shares at 31 March
2023
|
|
184,265,973
|
Issues of shares -
placing
|
|
11,640,212
|
Exercise of share options - Share
option schemes
|
|
289,102
|
Number of shares at 31 March
2024
|
|
196,195,287
|
The share capital of the Company consists only
of fully paid ordinary shares with a nominal (par) value of £0.10
per share. There are no restrictions on the ability of
shareholders to receive dividends, nor on the repayment of
capital. All ordinary shares are equally eligible to receive
dividends and the repayment of capital in accordance with the
Company's Articles of Association and represent one vote at
shareholders' meetings of the Company.
At 31 March 2024 options in issue to Directors
and employees were as follows:
Date
option
Granted
|
Option price per
ordinary share
|
Type of
option
|
Date first
exercisable
|
Date on which the
exercise period expires
|
Number of ordinary shares
2024
|
Number of ordinary shares
2023
|
21 July 2015
|
nil p
|
LTIP
|
21 July 2018
|
21 July 2025
|
989
|
989
|
22 July 2016
|
nil p
|
LTIP
|
22 July 2019
|
21 July 2026
|
1,415
|
1,944
|
2 August 2017
|
nil p
|
LTIP
|
2 August 2020
|
2 August 2027
|
9,217
|
5,809
|
24 July 2018
|
nil p
|
LTIP
|
24 July 2021
|
24 July 2028
|
53,697
|
54,441
|
19 July 2019
|
nil p
|
LTIP
|
19 July 2022
|
19 July 2029
|
148,587
|
170,545
|
2 March 2020
|
947.0p
|
SAYE
|
1 April 2023
|
1 October 2023
|
-
|
43,016
|
5 August 2020
|
nil p
|
LTIP
|
5 August 2023
|
5 August 2030
|
189,504
|
372,757
|
1 March 2021
|
903.2p
|
SAYE
|
1 April 2024
|
1 October 2024
|
77,395
|
81,216
|
22 July 2021
|
nil p
|
LTIP
|
22 July 2024
|
22 July 2031
|
285,440
|
300,444
|
21 July 2022
|
nil p
|
LTIP
|
21 July 2025
|
21 July 2032
|
425,523
|
443,218
|
8 August 2022
|
1060.3p
|
SAYE
|
1 September 2025
|
1 March 2026
|
57,665
|
72,429
|
20 July 2023
|
nil p
|
LTIP
|
20 July 2026
|
19 July 2033
|
590,931
|
-
|
1 August 2023
|
891.5p
|
SAYE
|
1 September 2026
|
1 March 2027
|
79,382
|
-
|
|
|
|
|
|
1,919,745
|
1,546,808
|
Own shares
The own shares reserve represents the cost of
shares in Big Yellow Group PLC purchased in the market and held by
the Big Yellow Group PLC Employee Benefit Trust, along with shares
issued directly to the Employee Benefit Trust. 1,098,686
shares are held in the Employee Benefit Trust (2023: 1,122,907),
and no shares are held in treasury.
23.
SHARE-BASED PAYMENTS
The Company has three equity share-based
payment arrangements, namely an LTIP scheme (with approved and
unapproved components), an Employee Share Save Scheme ("SAYE") and
a Deferred Bonus Plan. The Group recognised a total expense in the
year related to equity-settled share-based payment transactions of
£4,082,000 (2023: £3,735,000).
Equity-settled share option
plans
Since 2004 the Group has operated an Employee
Share Save Scheme ("SAYE") which allows any employee who has more
than six months service to purchase shares at a 20% discount to the
average quoted market price of the Group shares at the date of
grant. The associated savings contracts are three years at
which point the employee can exercise their option to purchase the
shares or take the amount saved, including interest, in cash. The
scheme is administered by Globalshares.
On an annual basis since 2004 the Group
awarded nil-paid options to senior management under the Group's
Long Term Incentive Plan ("LTIP"). The awards are conditional
on the achievement of challenging performance targets as described
in the Remuneration Report. The weighted average share price
at the date of exercise for options exercised in the year was
£10.77 (2023: £13.13).
LTIP scheme
|
2024
No. of options
|
2023
No. of options
|
Outstanding at beginning of
year
|
1,350,147
|
1,179,562
|
Granted during the year
|
678,088
|
504,431
|
Lapsed during the year
|
(72,932)
|
(83,846)
|
Exercised during the
year
|
(250,000)
|
(250,000)
|
|
|
|
Outstanding at the end of the
year
|
1,705,303
|
1,350,147
|
|
|
|
Exercisable at the end of the
year
|
403,409
|
107,656
|
The weighted average fair value of options
granted during the year was £3,230,000 (2023:
£2,795,000).
Participants pay the nominal value of the shares
when exercising options under the LTIP scheme.
Options outstanding at 31 March 2024 had a
weighted average contractual life of 7.8 years (2023: 7.9
years).
Employee Share Save Scheme ("SAYE")
|
2024
No. of options
|
2024
Weighted average exercise price
(£)
|
2023
No of options
|
2023
Weighted average exercise price
(£)
|
Outstanding at beginning of
year
|
196,661
|
9.71
|
183,506
|
8.75
|
Granted during the year
|
82,656
|
8.91
|
72,715
|
10.60
|
Forfeited during the
year
|
(25,773)
|
9.99
|
(10,965)
|
9.29
|
Exercised during the
year
|
(39,102)
|
9.47
|
(48,595)
|
7.50
|
Outstanding at the end of the
year
|
214,442
|
9.41
|
196,661
|
9.71
|
|
|
|
|
|
Exercisable at the end of the
year
|
-
|
-
|
|
|
Options outstanding at 31 March 2024 had a
weighted average contractual life of 1.7 years (2023: 1.7
years).
The inputs into the Black-Scholes
model for the options granted during the year are as
follows:
|
LTIP
|
SAYE
|
Expected volatility
|
n/a
|
27%
|
Expected life
|
3
years
|
3
years
|
Risk-free rate
|
0.04%
|
0.04%
|
Expected dividends
|
2.6%
|
2.9%
|
Expected volatility was determined by
calculating the historical volatility of the Group's share price
over the year prior to grant.
Deferred bonus
plan
The Executive Directors receive awards under
the Deferred Bonus Plan. This is accounted for as an equity
instrument. The plan was set up in July 2018. The
vesting criteria and scheme mechanics are set out in the Directors'
Remuneration Report.
24.
CAPITAL COMMITMENTS
At 31 March 2024 the Group had £3.9 million of
amounts contracted but not provided in respect of the Group's
properties (2023: £6.1 million of capital commitments).
25.
EVENTS AFTER THE BALANCE SHEET
DATE
In April 2024, the Group exchanged contracts
to acquire a development site in Leamington Spa for £3 million,
with completion having taken place on 13 May 2024.
26.
CASH FLOW NOTES
a)
Reconciliation of profit after tax to cash generated from
operations
|
Note
|
2024
£000
|
2023
£000
|
Profit after tax
|
|
239,833
|
73,332
|
Taxation
|
|
1,202
|
1,977
|
Other income
|
3
|
(6,517)
|
(2,185)
|
Investment income
|
|
(45)
|
(9)
|
Finance costs
|
|
25,092
|
17,027
|
Operating profit
|
|
259,565
|
90,142
|
|
|
|
|
(Gain)/loss on the revaluation of
investment properties
|
14a,
15
|
(131,159)
|
29,861
|
Depreciation of plant, equipment,
and owner-occupied property
|
14b
|
864
|
888
|
Depreciation of right-of-use
assets
|
14a,14b
|
1,734
|
1,569
|
Employee share options
|
6
|
4,082
|
3,735
|
Cash generated from operations pre working capital
movements
|
|
135,086
|
126,195
|
|
|
|
|
Decrease/(increase) in
inventories
|
|
10
|
(13)
|
Increase in receivables
|
|
(1,650)
|
(740)
|
(Decrease)/increase in
payables
|
|
(3,620)
|
3,531
|
Cash generated from operations
|
|
129,826
|
128,973
|
b)
Reconciliation of net cash flow movement to net
debt
|
Note
|
2024
£000
|
2023
£000
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents in the year
|
|
1,027
|
(276)
|
Cash flow from decrease/(increase)
in debt financing1
|
|
100,159
|
(74,492)
|
Change in net debt resulting from
cash flows
|
|
101,186
|
(74,768)
|
|
|
|
|
Movement in net debt in the year
|
|
101,186
|
(74,768)
|
Net debt at the start of the
year
|
|
(486,598)
|
(411,830)
|
Net debt at the end of the
year
|
18A
|
(385,412)
|
(486,598)
|
1 Made up of a net
decrease of £97.0 million in the RCF facility and repayments of the
Aviva facility of £3.2 million (2023: Made up of a net increase of
£117.0 million in the RCF facility, repayment of the Armadillo
loans of £39.5 million and repayments of the Aviva facility of £3.0
million).
27.
RELATED PARTY
TRANSACTIONS
Transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
AnyJunk
Limited
Jim Gibson is a Non-Executive Director and
shareholder in AnyJunk Limited. During the year AnyJunk
Limited provided waste disposal services to the Group on normal
commercial terms, amounting to £17,000 (2023:
£16,000).
London
Children's Ballet
The Group signed a Section 106 agreement with
Wandsworth Council relating to the development of our Battersea
store, which required the Group to provide cultural space to
Wandsworth Borough Council. In 2021, the Group granted a
twenty year lease over this space to London Children's Ballet at a
peppercorn rent, who in turn have agreed to enter into a Social
Agreement with Wandsworth Borough Council coterminous with the
lease. Jim Gibson is the Chairman of Trustees of the London
Children's Ballet. London Children's Ballet rent storage
space from the Group on normal commercial terms, amounting to
£4,000 during the year (2023: £3,000). The Group sponsored a
London Children's Ballet development programme during the year,
amounting to £8,000 (2023: £8,000).
Doncaster
Security Operations Centre Limited ("DSOC")
The Group has invested £588,000 in DSOC.
DSOC provided alarm and CCTV monitoring services to the Group under
normal commercial terms during the year, amounting to £319,000
(2023: £301,000).
Treepoints
Limited
Jim Gibson is a Non-Executive Director and an
investor in City Stasher Limited, which in turn has a minority
investment in Treepoints Limited. Treepoints Limited provided
offsetting tree planting services in respect of our online packing
material sales, under normal commercial terms during the period,
amounting to £2,000 (2023: £8,000).
Ukrainian
Sponsorship Pathway UK
Nicholas Vetch and Heather Savory are trustees
of the charity Ukrainian Sponsorship Pathway UK ("USPUK") to help
Ukrainians displaced by the war to travel to the UK as part of the
"Homes for Ukraine" scheme. The charity has set up offices in
Warsaw and Krakow and is one of the few that has been recognised
for this purpose by the UK Government. We are proud to be
financial supporters of this charity and the Board approved a
donation which was made in the year of £50,000 (2023:
£50,000).
No other related party transactions took place
during the years ended 31 March 2024 and 31 March 2023.
28.
GLOSSARY
Absorption
|
The rate of growth in occupancy
assumed within the external property valuations from the current
occupancy level to the assumed stable occupancy level.
|
Adjusted earnings
|
The IFRS profit after taxation
attributable to shareholders of the Company excluding investment
property revaluations, one-off items of income and costs,
gains/losses on investment property disposals and changes in the
fair value of financial instruments.
|
Adjusted earnings growth
|
The increase in adjusted eps
year-on-year.
|
Adjusted NAV
|
EPRA NTA adjusted for an investment
property valuation carried out at purchasers' costs of 2.75%, see
note 13.
|
Adjusted earnings per
share
|
Adjusted earnings divided by the
average number of shares in issue during the financial year, see
note 12.
|
Adjusted Profit Before
Tax
|
The Company's pre-tax EPRA earnings
measure with additional Company adjustments, see note
10.
|
APMs
|
Additional performance measures
that help financial statement users to better understand the
Group's performance and position
|
Average net achieved rent per sq
ft
|
Storage revenue divided by average
occupied space over the financial year.
|
Average occupancy
|
The average space occupied by
customers divided by the MLA expressed as a %.
|
Average rental growth
|
The growth in average net achieved
rent per sq ft year-on-year.
|
BREEAM
|
An environmental rating assessed
under the Building Research Establishment's Environmental
Assessment Method.
|
Cap rates
|
The exit capitalisation rates used
in the external investment property valuation.
|
Carbon intensity
|
Carbon emissions divided by the
Group's average occupied space.
|
Closing net rent per sq
ft
|
Annual storage revenue generated
from in-place customers divided by occupied space at the balance
sheet date.
|
Closing occupancy %
|
The space occupied by customers
divided by the MLA at the balance sheet date expressed as a
%.
|
Closing occupancy sq ft
|
The space occupied by customers at
the balance sheet date in sq ft.
|
Committed facilities
|
Available undrawn debt facilities
plus cash and cash equivalents.
|
Consolidated EBITDA
|
Consolidated EBITDA calculated in
accordance with the terms of the Group's Revolving Credit Facility
Agreement.
|
Debt
|
Long-term and short-term
borrowings, as detailed in note 19, excluding lease liabilities and
debt issue costs.
|
Earnings per share (eps)
|
Profit for the financial year
attributable to equity shareholders divided by the average number
of shares in issue during the financial year.
|
EBITDA
|
Earnings before interest, tax,
depreciation, and amortisation.
|
EPRA
|
The European Public Real Estate
Association, a real estate industry body. This organisation has
issued Best Practice Recommendations with the intention of
improving the transparency, comparability, and relevance of the
published results of listed real estate companies in
Europe.
|
EPRA earnings
|
The IFRS profit after taxation
attributable to shareholders of the Company excluding investment
property revaluations, gains/losses on investment property
disposals and changes in the fair value of financial
instruments.
|
EPRA earnings per share
|
EPRA earnings divided by the
average number of shares in issue during the financial year, see
note 12.
|
EPRA NTA per share
|
EPRA NTA divided by the diluted
number of shares at the year end.
|
EPRA net tangible asset value (EPRA
NTA)
|
IFRS net assets excluding the
mark-to-market on interest rate derivatives, deferred taxation on
property valuations where it arises, and intangible assets.
It is adjusted for the dilutive impact of share options.
|
Equity
|
All capital and reserves of the
Group attributable to equity holders of the Company.
|
Gross property assets
|
The sum of investment property and
investment property under construction.
|
Gross value added
|
The measure of the value of goods
and services produced in an area, industry, or sector of an
economy.
|
Interest cover
|
The ratio of operating cash flow
divided by interest paid (before working capital movements,
exceptional finance costs, capitalised interest, and changes in
fair value of interest rate derivatives). This metric is
provided to give readers a clear view of the Group's financial
position.
|
Like-for-like occupancy
|
Excludes the closing occupancy of
new stores acquired, opened, or closed in the current financial
year in both the current financial year and comparative
figures. In 2024 this excludes Aberdeen, Harrow, Kingston
North, and Kings Cross, and additionally the Armadillo stores for
the Big Yellow like-for-like occupancy.
|
Like-for-like store
revenue
|
Excludes the impact of new stores
acquired, opened or stores closed in the current or preceding
financial year in both the current year and comparative
figures. In 2024 this excludes Aberdeen, Harrow, Kingston
North, and Kings Cross.
|
LTV (loan to value)
|
Net debt expressed as a percentage
of the external valuation of the Group's investment
properties.
|
Maximum lettable area
(MLA)
|
The total square foot (sq ft)
available to rent to customers.
|
Move-ins
|
The number of customers taking a
storage room in the defined period.
|
Move-outs
|
The number of customers vacating a
storage room in the defined period.
|
NAV
|
Net asset value.
|
Net debt
|
Gross borrowings less cash and cash
equivalents.
|
Net initial yield
|
The forthcoming year's net
operating income expressed as a percentage of capital value, after
adding notional purchaser's costs pre administrative
expenses.
|
Net operating income
|
Store EBITDA after an allocation of
central overhead.
|
Net operating income on
stabilisation
|
The projected net operating income
delivered by a store when it reaches a stable level of
occupancy.
|
Net promoter score (NPS)
|
The Net Promoter Score is an index
ranging from -100 to 100 that measures the willingness of customers
to recommend a company's products or services to others. The
Company measures NPS based on surveys sent to all its move-ins and
move-outs.
|
Net Renewable Energy
Positive
|
Big Yellow's strategy is that by
2030 the Group will generate as much renewable energy as it is able
to across its store portfolio and meet any remaining Scope 1 and
Scope 2 emissions via the retirement of REGOs from offsite energy
generation.
|
Net rent per sq ft
|
Storage revenue generated from in
place customers divided by occupancy.
|
Net Zero Strategy
|
The Group's published strategy to
have Net Zero Scope 1, 2 and 3 Emissions.
|
Non like-for-like stores
|
Stores excluded from like-for-like
metrics, as they were acquired, opened or closed in the current or
preceding financial year. In 2024 this excludes Aberdeen,
Harrow, Kingston North, and Kings Cross, and additionally the
Armadillo stores for the Big Yellow like-for-like
occupancy.
|
Occupancy
|
The space occupied by customers
divided by the MLA expressed as a %.
|
Occupied space
|
The space occupied by customers in
sq ft.
|
Other storage related
income
|
Packing materials, insurance, and
other storage related fees.
|
Pipeline
|
The Group's development
sites.
|
Property Income Distribution
(PID)
|
A dividend, generally subject to
withholding tax, that a UK REIT is required to pay from its
tax-exempt property rental business, and which is taxable for
UK-resident shareholders at their marginal tax rate.
|
REGO
|
Renewable Energy Guarantees of
Origin
|
REIT
|
Real Estate Investment Trust. A tax
regime which in the UK exempts participants from corporation tax
both on UK rental income and gains arising on UK investment
property sales, subject to certain conditions.
|
REVPAF
|
Total store revenue divided by the
average maximum lettable area in the period.
|
Store EBITDA
|
Store earnings before interest,
tax, depreciation, and amortisation, see reconciliation in the
portfolio summary.
|
Store revenue
|
Revenue earned from the Group's
open self storage centres.
|
TCFD
|
Task Force on Climate Related
Financial Disclosure.
|
Total shareholder return
(TSR)
|
The growth in value of a
shareholding over a specified period, assuming dividends are
reinvested to purchase additional units of shares.
|
Ten
Year Summary
|
2024
£m
|
2023
£m
|
2022
£m
|
2021
£m
|
2020
£m
|
2019
£m
|
2018
£m
|
2017
£m
|
2016
£m
|
2015
£m
|
Results
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
199.6
|
188.8
|
171.3
|
135.2
|
129.3
|
125.4
|
116.7
|
109.1
|
101.4
|
84.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before gains and
losses on property assets
|
128.4
|
120.0
|
106.6
|
81.5
|
80.0
|
76.7
|
70.9
|
65.3
|
59.9
|
48.4
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating
activities
|
104.8
|
112.0
|
107.1
|
76.7
|
73.6
|
72.2
|
63.0
|
55.9
|
55.5
|
42.4
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
241.0
|
75.3
|
698.9
|
265.8
|
93.4
|
126.9
|
134.1
|
99.8
|
112.2
|
105.2
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted profit before
taxation
|
107.3
|
106.0
|
96.8
|
74.6
|
71.0
|
67.5
|
61.4
|
54.6
|
49.0
|
39.4
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
2,448.4
|
2,182.4
|
2,184.4
|
1,453.9
|
1,163.9
|
1,123.9
|
981.1
|
890.4
|
829.4
|
750.9
|
|
|
|
|
|
|
|
|
|
|
|
Diluted adjusted earnings per
share
|
55.9p
|
56.5p
|
52.5p
|
42.4p
|
42.1p
|
41.4p
|
38.5p
|
34.5p
|
31.1p
|
27.1p
|
Declared total dividend per
share
|
45.2p
|
45.2p
|
42.0p
|
34.0p
|
33.8p
|
33.2p
|
30.8p
|
27.6p
|
24.9p
|
21.7p
|
|
|
|
|
|
|
|
|
|
|
|
Key statistics
|
|
|
|
|
|
|
|
|
|
|
Number of stores open**
|
109
|
108
|
105
|
78
|
75
|
74
|
74
|
73
|
71
|
69
|
Store MLA (000 sq ft)
|
6,419
|
6,292
|
6,098
|
4,930
|
4,688
|
4,622
|
4,631
|
4,551
|
4,464
|
4,344
|
Sq ft occupied (000)**
|
5,029
|
5,088
|
5,107
|
4,201
|
3,781
|
3,810
|
3,730
|
3,551
|
3,363
|
3,178
|
Occupancy (decrease)/ increase in
year (000 sq ft)*
|
(59)
|
(19)
|
906
|
420
|
(29)
|
80
|
179
|
188
|
185
|
346
|
Closing net rent per sq
ft**
|
£34.14
|
£32.48
|
£29.92
|
£28.71
|
£28.15
|
£27.28
|
£26.74
|
£26.03
|
£25.90
|
£25.23
|
Number of occupied
rooms**
|
73,000
|
73,000
|
73,000
|
62,000
|
56,500
|
56,000
|
55,000
|
52,500
|
50,000
|
47,250
|
Average number of employees during
the year**
|
464
|
465
|
427
|
370
|
361
|
347
|
335
|
329
|
318
|
300
|
* - the
occupancy growth in 2015, 2017, 2022 and 2023 includes the
acquisition of existing stores
** - from 2022 this includes the
Armadillo stores, which the Group acquired the remaining 80% of
which it did not previously own on 1 July 2021