22 November 2021

 

Big Yellow Group PLC

("Big Yellow", "the Group" or "the Company")

Results for the Six Months ended 30 September 2021

Strong first half results driven by a combination of occupancy and rate growth

Financial metrics	Six months ended  30 September 2021	Six months ended 30 September 2020	Change
Revenue	£81.8 million	£65.8 million	24%
Store revenue (1)	£80.8 million	£64.4 million	25%
Like-for-like store revenue (1,2)	£73.7 million	£64.3 million	15%
Store EBITDA (1)	£57.7 million	£44.5 million	30%
Adjusted profit before tax (1)	£46.9 million	£36.5 million	28%
EPRA earnings per share (1)	25.7 pence	20.9 pence	23%
Interim dividend per share	20.6 pence	17.0 pence	21%
Statutory metrics
Profit before tax	£254.9 million	£59.9 million	326%
Cash flow from operating activities (after net finance costs)	£51.8 million	£42.3 million	22%
Basic earnings per share	142.0 pence	34.4 pence	313%
Store metrics - Big Yellow stores Store Maximum Lettable Area ("MLA") (1)	4,984,000	4,822,000	3%
Closing occupancy (sq ft) (1)	4,472,000	4,106,000	9%
Occupancy growth in the period (sq ft) (1)	271,000	325,000	(54,000 sq ft)
Closing occupancy (1)	89.7%	85.2%	4.5 ppts
Occupancy - like-for-like stores (1,2)	91.3%	87.3%	4.0 ppts
Average achieved net rent per sq ft (1)	£29.52	£28.01	5.4%
Closing net rent per sq ft (1)	£30.43	£27.75	9.7%
Store metrics - Armadillo stores
Store Maximum Lettable Area ("MLA") (1)	1,078,000	1,081,000	-
Closing occupancy (sq ft) (1)	955,000	868,000	10%
Occupancy growth in the period (sq ft) (1)	47,000	69,000	(22,000 sq ft)
Closing occupancy (1)	88.6%	80.3%	8.3 ppts
Average achieved net rent per sq ft (1)	£19.14	£17.71	8.1%
Closing net rent per sq ft (1)	£19.85	£17.50	13.4%

¹ See note 19 for glossary of terms

² The like-for-like metrics exclude stores opened in the current and preceding financial years, and the Armadillo stores

 

First Half Highlights

·     Like-for-like occupancy increase of 3.9 ppts from 1 April 2021 and up 4.0 ppts from same time last year to 91.3% (September 2020: 87.3%)

·     Big Yellow stores average achieved net rent per sq ft increased by 5.4% period on period, closing net rent up by 9.7% from September 2020

·     Revenue growth for the period was 24%, with like-for-like store revenue up by 15%, driven by gains in occupancy and the improvement in average rate

·     Cash flow from operating activities (after net finance costs) increased by 22% to £51.8 million

·     Adjusted profit before tax up 28% to £46.9 million, with EPRA earnings per share up 23%

·     20.6 pence per share interim dividend declared, an increase of 21%

·     Our 54,000 sq ft MLA Uxbridge store opened at the end of June 2021, and has had a strong start with current occupancy of 52% 

·     Acquisition of new development sites in Kentish Town and West Kensington taking pipeline to 14 development sites of approximately 1.12 million sq ft (18.5% of current MLA)

·     Planning consent granted for new stores in Slough (90,000 sq ft MLA) and Newcastle (60,000 sq ft MLA).  Nine of the 14 sites now have planning, representing approximately 60% of the storage capacity of the pipeline

·     Placing of 7.8 million shares in June 2021 raising £97.6 million (net of expenses) to fund strategic acquisitions of remaining interest in Armadillo and development site in West Kensington.  The combined transactions are earnings accretive

·     Increase of £100 million in Aviva and M&G loans, increasing our total debt capacity to £576.1 million.  Current net debt is £397.4 million, with available headroom of £178.7 million

 

Commenting, Nicholas Vetch, Executive Chairman, said:

"This first half performance has been very strong, which should flow through into the full year results, absent any material external factors.  The self storage sector more generally, and Big Yellow specifically, has benefited from significant occupancy growth since the end of the first lockdown in late May 2020, with the sector now at historically high levels of occupancy.  These levels of occupancy have been a key factor in driving earnings and increasing growth in net achieved rents.  As we look towards our next financial year, we expect the market to return to a more normalised trading environment. 

The increased capacity from the development programme is having a tangible positive impact on profitability, which we expect will continue as we grow our platform."  

- Ends -

 

ABOUT US

Big Yellow is the UK's brand leader in self storage.  Big Yellow now operates from a platform of 104 stores, including 25 stores branded as Armadillo Self Storage.  We own a further 14 Big Yellow self storage development sites of which nine have planning consent.  The current maximum lettable area of the existing platform (including Armadillo) is 6.1 million sq ft.  When fully built out the portfolio will provide approximately 7.2 million sq ft of flexible storage space.  98% of our stores and sites by value are held freehold and long leasehold, with the remaining 2% short leasehold.

The Group has pioneered the development of the latest generation of self storage facilities, which utilise state of the art technology and are located in high profile, accessible, main road locations.  Our focus on the location and visibility of our stores, with excellent customer service, a market-leading online platform, and significant and increasing investment in sustainability, has created in Big Yellow the most recognised brand name in the UK self storage industry.

 

For further information, please contact:

 

Big Yellow Group PLC                                                                                                                                   01276 477811

Nicholas Vetch, Executive Chairman

Jim Gibson, Chief Executive Officer

John Trotman, Chief Financial Officer

 

Teneo                                                                                                                                                                 020 7260 2700

Ben Foster          

Matthew Denham

 

 

 

Big Yellow Group PLC

("Big Yellow", "the Group" or "the Company")

Results for the Six Months ended 30 September 2021

 

Chairman's Statement

 

Big Yellow Group PLC, the UK's brand leader in self storage, is pleased to announce its results for the six months ended 30 September 2021. 

This first half has seen strong revenue growth, driving earnings growth from a combination of occupancy and improvements in average net rent driven by our yield management systems. 

In the quarter to June, we saw excellent occupancy increases, with a record performance in the month of June, attributable in part to the stamp duty holiday.  The second quarter and in to October was mixed with short-term customers exiting the business.  We expect to see the historical pattern of seasonal occupancy losses in the third quarter, driven by domestic and student short-term customers moving out, before we see a return to growth in the final quarter of the year.

We acquired the 80% of Armadillo that we did not previously own on 1 July 2021, and these results therefore benefit from consolidating the Armadillo business in the second quarter.  The Armadillo portfolio has also had a strong performance over the six months in all key metrics.  In these results we have separated out the Armadillo performance in the portfolio summary and in the highlights and will also do so at the year end to provide a transparent understanding of the underlying performance of the business. 

Financial results

Like-for-like occupancy increased to 91.3% (up 4.0 percentage points from 87.3% at 30 September 2020, and up 3.9 ppts from 1 April 2021).  We are pleased to have achieved our long-held target of 90% occupancy. 

Revenue for the period was £81.8 million (2020: £65.8 million), an increase of 24%, with like-for-like store revenue up 15%, driven by a combination of increases in occupancy and average net rent.  Like-for-like store revenue excludes new store openings, and the impact of the acquisition of the remaining interest in Armadillo.  Armadillo was previously equity accounted as an associate, and from 1 July 2021 is consolidated, as we now own 100%. 

We have seen growth in cash flow from operating activities (after net finance costs) of 22% to £51.8 million for the period (2020: £42.3 million). 

The Group's central overhead and operating expense is largely embedded in the business, and therefore increases in revenue should deliver higher growth in earnings.  The Group made an adjusted profit before tax in the period of £46.9 million, up 28% from £36.5 million for the same period last year (see note 6). 

Adjusted diluted EPRA earnings per share were 25.7 pence (2020: 20.9 pence), an increase of 23%.  The Group's statutory profit before tax for the period was £254.9 million, an increase of 326% from £59.9 million for the same period last year, due to a higher revaluation gain in the period, reflecting the strong operating performance of the stores.  

Dividends

The Group's dividend policy is to distribute 80% of full year adjusted earnings per share.  We have declared an interim dividend of 20.6 pence per share, which is an increase of 21% on last year.  This has all been declared as Property Income Distribution ("PID").   

Acquisition of Armadillo

On 1 July, the Group acquired the remaining 80% interest in Armadillo which it did not previously own from its JV partners.  The total consideration was £119 million, including underlying debt of £50.9 million for a Year One net operating income ("NOI") yield of 7.7% (based on a projected NOI of £10.9 million).

The Armadillo portfolio is more regional and as a result the proportion of our revenue derived from London and the South East reduced from 82% to 74%, albeit we expect this weighting to revert over the medium term to over 80%, given our development pipeline is focused largely on London and the South East. 

The Armadillo Self Storage brand has been part of the Big Yellow family since 2009 and has 25 stores and 1.1 million sq ft of maximum lettable area. The portfolio is 93% freehold by valuation with an average capacity of 43,000 sq ft (lower than the 63,000 sq ft average for Big Yellow stores).  We invested significantly with our joint venture partners in upgrading these stores and improving their day-to-day operations. 

We intend to continue to acquire existing freehold regional stores which are of the appropriate quality and size to add to this brand alongside our development of new build Big Yellow stores. 

Investment in new capacity

In April, the Group acquired a prime Zone 2 0.9 acre site on Regis Road in Kentish Town, North London for £16.5 million.  We will be seeking planning permission for a 68,000 sq ft self storage centre on the site. 

In June the Group acquired 66 Hammersmith Road, West Kensington, in London for £26 million.  This is a strategic acquisition adjacent to the Olympia conference centre, a short distance from one of the wealthiest and densest enclaves in London.  Subject to planning, the store is currently estimated to open in early 2025, and will provide approximately 175,000 sq ft of space, including 7,000 sq ft of SME space.  The total development cost, including land acquisition, is estimated to be £73 million, with an expected NOI at stabilisation of £5.8 million or 7.9% on cost.  West Kensington, when fully constructed and opened, will represent our largest capital investment in an individual store to date. 

We opened our 54,000 sq ft store in Uxbridge at the end of June, and initial trading has been strong, with the store's occupancy 52% at the date of these results.

The Group is currently on site at Hayes (anticipated opening January 2022), Hove (Spring 2022), North Kingston (Summer 2022), Harrow (Summer 2022) and Kings Cross (Summer 2023).  At Harrow, in addition to the Big Yellow store, we are constructing 104,000 sq ft across 11 industrial units. 

Big Yellow now has a pipeline of 14 development sites, nine of which have planning consent.  These store openings are expected to add approximately 1.1 million sq ft of storage space to the portfolio, an increased capacity of 18.5%.

The total development cost of these new stores is £354 million, including cost incurred to date of £182 million, and cost to complete of approximately £172 million, with an expected net operating income of £31 million, or 8.8% on cost.

Capital structure

The Group's interest cover for the period (expressed as the ratio of cash generated from operations pre working capital movements against interest paid) was 10.6 times (2020: 9.7 times).  This is comfortably ahead of our internal minimum interest cover requirement of five times.

Net debt is £397.4 million at 30 September 2021, and we have available liquidity of £178.7 million and the business continues to generate positive post-dividend cash flow both of which we will use to fund future growth.  In addition, the Group has land surplus to its needs which will be realised over the medium term, generating net cash proceeds estimated currently at over £100 million.  The average cost of debt on drawn facilities is now 2.8% and the marginal cost of RCF bank debt is currently 1.35%.

Outlook

This first half performance has been very strong, which should flow through into the full year results, absent any material external factors.  The self storage sector more generally, and Big Yellow specifically, has benefited from significant occupancy growth since the end of the first lockdown in late May 2020, with the sector now at historically high levels of occupancy.  These levels of occupancy have been a key factor in driving earnings and increasing growth in net achieved rents.  As we look towards our next financial year, we expect the market to return to a more normalised trading environment.

The increased capacity from the development programme is having a tangible positive impact on profitability, which we expect will continue as we grow our platform.

 

 

Nicholas Vetch                                   

Executive Chairman          
22 November 2021

 

Business and Financial Review

Operations under Covid-19

At Big Yellow, the health and safety of our team members and customers is our principal priority.  Our stores have continued to trade during the pandemic and following the full re-opening in July, we made the decision to retain our protocols around physical barriers, sanitiser use and cleaning in our stores and at head office.  Our approach to vaccination has been one of encouragement, particularly given the relatively small teams that we have in our stores, and we believe that a significant proportion of our people are double vaccinated.  We are not currently seeing a significant incidence of positive tests within the business, although we were impacted for a short period during the first quarter by the so-called "Pingdemic".  We will continue to remain vigilant over the winter months. 

Armadillo

As explained above, the Group acquired the remaining interest in Armadillo which it did not previously own on 1 July 2021.  Armadillo consists of 25 stores with a maximum lettable area of 1.08 million sq ft.  The occupancy of the Armadillo stores on acquisition was 974,000 sq ft (90.2% of MLA).

Store occupancy

Like-for-like occupancy increased by 3.9 ppts from 1 April 2021, and like-for-like store revenue growth for the half year was 15%. 

The tables below show the monthly move-in and move-out activity over the half year for the 79 Big Yellow stores:

	Move-ins period ended 30 September 2021	Move-ins period ended 30 September 2020	%	Move-ins period ended 30 September 2019	%
April	4,821	2,578	87	5,016	(4)
May	5,698	4,121	38	5,798	(2)
June	9,900	6,861	44	8,136	22
July	6,897	6,689	3	6,883	0
August	7,212	7,213	-	7,143	1
September	7,416	6,965	6	6,544	13
Total	41,944	34,427	22	39,520	6
October	6,153	6,339	(3)	5,356	15

 

	Move-outs period ended 30 September 2021	Move-outs period ended 30 September 2020	%	Move-outs period ended 30 September 2019	%
April	5,082	2,693	89	4,982	2
May	4,901	3,194	53	4,870	1
June	5,243	4,160	26	4,890	7
July	7,118	5,363	33	6,366	12
August	6,684	5,815	15	6,579	2
September	9,112	7,950	15	9,575	(5)
Total	38,140	29,175	31	37,262	2
October	7,830	6,789	15	6,714	17

The first quarter last year saw a significant decrease in the usual level of activity caused by the Spring 2020 lockdown.  Move-ins and move-outs are therefore showing a significant increase on last year, with a more normalised move-in picture in the second quarter.  In 2020, move-outs took longer to normalise, hence we are showing an increase in move-outs in the second quarter compared to the prior year.  We have included the data for 2019 as well, which shows more normalised levels of move-in and move-out growth this year compared to that year.

We saw strong demand from domestic customers in the first quarter in part due to the stamp duty holiday tapering off from 1 July.  This resulted in an acceleration of housing-related demand in June.  We also saw the return of student demand in June as universities looked to re-open their campuses for conferences.  Some of this occupancy growth from both the housing and student sectors was relatively short-term, impacting occupancy performance in the second quarter. 

The above table shows an increase in move-outs in July and October, some of which must be related to the gradual tapering off of the stamp duty holiday with key dates being 30 June and 30 September when it ended. 

Move-ins for the 25 Armadillo stores for the six months were up 31% on the same period last year, and up 4% on 2019, with move-outs up 40% on 2020, and up 11% on 2019.

The Big Yellow stores grew in occupancy over the six months by 271,000 sq ft.  The table below shows the change in occupancy by customer type over the six-month period for the Big Yellow stores:

Customer type	Net sq ft change in period ended 30 September 2021	Net sq ft change in period ended 30 September 2020	Net sq ft change in period ended 30 September 2019
Domestic	158,000 sq ft	193,000 sq ft	94,000 sq ft
Business	99,000 sq ft	108,000 sq ft	(14,000 sq ft)
Student	14,000 sq ft	24,000 sq ft	20,000 sq ft
Total	271,000 sq ft	325,000 sq ft	100,000 sq ft

We started the period from a higher occupancy level, and whilst the growth in occupancy for the six months is lower than last year, which was a record six months, it is significantly ahead of 2019, a period affected by political uncertainty around Brexit. 

Our business demand has remained robust, driven by online retailers, B2B traders looking for flexible mini-warehousing for e-fulfilment, the shortening of supply chains, and businesses looking to rationalise their other fixed costs of accommodation.  Domestic demand has been more volatile, impacted by the stamp duty holiday as already discussed.

Over the six months to 30 September 2021, the Armadillo stores grew in occupancy by 47,000 sq ft, of which 44,000 sq ft of growth was from domestic customers, with small increases in both business and student occupancy.

The average space occupied by business customers at the period end has increased to 185 sq ft (2020: 180 sq ft).  Domestic customers occupy on average 60 sq ft (2020: 57 sq ft) and pay on average 22% more in rent per sq ft, however business customers do stay longer and take more space, so represent around 32% of revenue. 

The Group's like-for-like store revenue increased by 15% compared to the same period last year, driven by a combination of gains in occupancy and average net rent growth. 

Our third quarter is historically the weakest trading quarter where we see a loss in occupancy with a return to growth in the fourth quarter.  In the current year, we have lost 149,000 sq ft (2.5% of maximum lettable area "MLA", including Armadillo) since the end of September, compared to a loss of 16,000 sq ft (0.3% of MLA) at the same stage last year, which was unusual and impacted by the timing of Covid lockdowns, and we are now returning to more normal seasonal trading activity.    

The 73 established Big Yellow stores are 91.5% occupied compared to 87.7% at the same time last year.  The 6 developing Big Yellow stores added 94,000 sq ft of occupancy in the past six months to reach closing occupancy of 66.1%.  The 25 Armadillo stores are 88.6% occupied, compared to 80.3% at this time last year.  Overall store occupancy was 89.5%.

	Occupancy 30 September 2021 %	Occupancy growth from 31 March 2021 000 sq ft	Occupancy growth from 30 September 2020 000 sq ft	Occupancy 30 September 2021 000 sq ft	Occupancy 31 March 2021 000 sq ft	Occupancy 30 September 2020 000 sq ft
73 established Big Yellow stores	91.5%	177	207	4,242	4,065	4,035
6 developing Big Yellow stores	66.1%	94	159	230	136	71
All 79 Big Yellow stores	89.7%	271	366	4,472	4,201	4,106
25 Armadillo stores	88.6%	47	87	955	908	868
All 104 stores	89.5%	318	453	5,427	5,109	4,974

Cash collection

Over 80% of our customers pay by direct debit, and as of the date of these results, the Group has collected 99.8% of its revenue for the first half of the financial year, which compares to 99.6% at this time last year.  The bad debt write-off (including costs of disposal) in the period was 0.2% of revenue (2020: 0.2%).

Pricing and rental yield

We offer a headline opening promotion of 50% off for up to the first 8 weeks, and we continue to manage pricing dynamically, taking account of room availability, customer demand and local competition.  Our pricing model reduces promotions and increases asking prices where individual units are in scarce supply.  This lowering of promotions, coupled with price increases to existing and new customers, leads to an increase in net achieved rents. 

As the stores are now at higher levels of occupancy, we are seeing improving growth in net rent per sq ft.  The  average achieved net rent per sq ft increased for Big Yellow stores by 5.4% compared to the same period last year, with closing net rent up 9.7% compared to 30 September 2020, and up 6.0% from 31 March 2021.  The achieved net rent per sq ft grew by 8.1% from last year in the Armadillo stores and closing net rent per sq ft increased by 13.4% from 30 September 2020 and by 8.0% from 31 March 2021.

The table below shows the change in net rent per sq ft for the combined Big Yellow and Armadillo portfolio by average occupancy over the six months (on a non-weighted basis).  The analysis excludes our most recent store openings in Camberwell, Bracknell, Battersea, and Uxbridge.

Average occupancy in the six months	Number of stores	Net rent per sq ft change from 1 April to 30 September 2021	Net rent per sq ft change from 1 April to 30 September 2020
75% to 85%	19	6.3%	(3.3%)
85 to 90%	37	6.9%	(1.1%)
Above 90%	44	8.4%	0.2%

Security of income

We believe that self storage income is essentially evergreen income with highly defensive characteristics driven from buildings with very low obsolescence risk.  Although our contract with our customers is in theory as short as a week, we do not need to rely on contracts for our income security.  At 30 September 2021 the average length of stay for existing customers was 27 months (2020: 27 months).  For all customers, including those who have moved out of the business throughout the life of the portfolio, the average length of stay increased to 8.9 months (2020: 8.8 months).  Most notably, we have seen a significant decrease in the length of stay of customers who moved out over the six months, which decreased to 7.6 months from 9.6 months for the same period last year.  This is likely to have been the result of customers delaying move-outs during the prior year Spring full lockdown, amplified by short-term users in the current period as a result of the stamp duty changes.  This clearly illustrates some normalisation of our activity which has started to occur in this six month period, and the 7.6 months is more in line with pre-pandemic levels.

35% of our customers by occupied space have been storing with us for over two years (2020: 34%), and a further 18% of customers have been in the business for between one and two years (2020: 17%). 

We have a diverse base of domestic and business customers currently occupying 77,000 rooms.  This, together with the location and quality of our stores, limited growth in new supply, digital operating systems, customer service, and brand recognition, all contribute to the resilience and security of our income.

Supply

New supply and competition is a key risk to our business model, hence our weighting to London and its commuter towns, where barriers to entry in terms of competition for land and difficulty around obtaining planning are highest.  Growth in new self storage centre openings, excluding container operators, over the last five years has averaged 2% to 3% of total capacity per annum, down significantly from the previous decade.  We continue to see limited new supply growth in our key areas of operation, with only six store openings in London in 2021 (including our Uxbridge store), and we anticipate seven new facilities in London in 2022 (including our planned stores at Hayes, Harrow, and North Kingston).

Revenue

Total revenue for the six-month period was £81.8 million, an increase of £16.0 million (24%) from £65.8 million in the same period last year.  Of the total store revenue of £80.8 million in the period, like-for-like store revenue (see glossary in note 19) was £73.7 million, an increase of 15% from the 2020 figure of £64.3 million.  The revenue from the Armadillo stores for the three months from acquisition of the remaining interest on 1 July 2021 to 30 September 2021 was £5.6 million.   

Other sales comprise the selling of packing materials, insurance, and storage related charges.  We saw strong growth in packing material sales during the period, with 2020's sales impacted by the Spring lockdown.  Insurance sales have also seen strong year-on-year growth, with improvements made to the average value insured and higher customer numbers.       

The other revenue earned is management fee income from the Armadillo Partnerships and tenant income on sites where we have not started development.  Following the acquisition of the remaining interest in the Armadillo Partnerships in July, the Group is not entitled to any further management fee income from Armadillo.

Operating costs

Cost of sales comprises principally direct store operating costs, including store staff salaries, utilities, business rates, insurance, a full allocation of the central marketing budget, and repairs and maintenance. 

The table below shows the breakdown of both Big Yellow's and Armadillo's store operating costs compared to the same period last year, with Armadillo's costs included in full in both periods:

Category	Period ended 30 September 2021 £000	Period ended 30 September 2020 £000	% change	% of store operating costs in period
Cost of sales (insurance and packing materials)	2,034	1,692	20%	8%
Staff costs	7,283	6,591	10%	30%
General & Admin	921	762	21%	4%
Utilities	1,044	985	6%	4%
Property Rates	6,642	6,574	1%	27%
Marketing	3,393	3,170	7%	14%
Repairs and maintenance	2,200	1,763	25%	9%
Insurance	480	454	6%	2%
Computer Costs	324	287	13%	2%
Total before one-off items	24,321	22,278	9%
One-off items	(423)	-
Total per portfolio summary	23,898	22,278	7%

Store operating costs have increased by £1.6 million (7%).  The one-off items in the current year relate to rates rebate on three stores, totalling £0.4 million, following appeals of the 2017 rating list assessment.  Store operating costs pre these one-off items have increased by £2.0 million (9%) compared to the same period last year, of which £0.9 million is in relation to recently opened stores.  The remaining increase of £1.1 million (5%) can be explained as follows:

-       Cost of sales have increased in line with the proportionate increase in ancillary sales in the period. 

-       Staff costs have increased partly due to the increase in store numbers, but also due to higher store bonuses being paid     over the six months compared to the same period last year due to the strong operating performance of the business. 

-       The repairs and maintenance expenditure has increased by £0.4 million, partly due to the increase in store numbers,   increased investment in CCTV monitoring security overnight, and we carried out less maintenance work during the   2020 Spring lockdown. 

-       Marketing has increased by £0.2 million, returning to 2019's level, with the 2020 cost reflecting lower search costs and   traffic levels during the Spring lockdown. 

-       General and admin expenses have increased as 2020 had significantly less travel expense during the lockdown period. 

The table below reconciles store operating costs per the portfolio summary to cost of sales in the income statement:

	Period ended 30 September 2021 £000	Period ended 30 September 2020 £000
Direct store operating costs per portfolio summary (excluding rent)	23,898	22,278
Rent included in cost of sales (total rent payable is included in portfolio summary)	1,047	636
Depreciation charged to cost of sales	188	195
Head office operational management costs charged to cost of sales	543	357
Armadillo cost of sales pre acquisition of remaining interest	(1,908)	(3,407)
Cost of sales per income statement	23,768	20,059

Store EBITDA

Store EBITDA for the Big Yellow stores for the period was £54.0 million, an increase of £9.5 million (21%) from £44.5 million for the period ended 30 September 2020 (see Portfolio Summary).  The overall EBITDA margin for all Big Yellow stores during the period was 71.8%, up from 69.2% in 2020. 

The EBITDA for the Armadillo stores for the period was £6.7 million, an increase of £1.7 million (34%) from £5.0 million in 2020, with the margin increasing to 62.8% from 57.4%.

The store EBITDA in the six months for Big Yellow stores and for the Armadillo stores from 1 July 2021 to 30 September was £57.7 million.

All stores are currently trading profitably at the Store EBITDA level, with our new store at Uxbridge breaking even in September 2021, three months after opening.

Administrative expenses

Administrative expenses in the income statement have increased by £1.7 million.  £0.4 million of this increase is due to the write-off of acquisition costs in relation to the purchase of the remaining interest in Armadillo in accordance with IFRS 3.  This is an adjusting item in the calculation of the Group's adjusted profit before tax.

The remaining increase of £1.3 million is due to a £0.5 million increase in the IFRS 2 share based payments charge, national insurance charges on the exercise of share options (both up due to the increase in the Company's share price), with the balance inflationary.  The non-cash share-based payments charge represents £1.7 million of the overall £7.3 million expense. 

Interest

Interest on bank borrowings during the period was £5.2 million, £0.5 million higher than the same period last year, due to higher average debt levels in the period. 

Interest capitalised in the period amounted to £1.0 million (2020: £1.0 million), arising on the Group's construction programme.

Results

The Group's statutory profit before tax for the period was £254.9 million, an increase of 326% from £59.9 million for the same period last year.  The increase is principally due to a higher revaluation surplus in the period, which is discussed further below.

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 period of £46.9 million, up 28% from £36.5 million in 2020.

Profit before tax analysis	Six months ended 30 September 2021 £m	Six months ended 30 September 2020 £m
Profit before tax	254.9	59.9
Gain on revaluation of investment properties	(204.6)	(23.5)
Change in fair value of interest rate derivatives	(0.5)	0.5
Acquisition costs written off	0.4	-
Share of non-recurring gains in associates	(3.3)	(0.4)
Adjusted profit before tax	46.9	36.5
Tax	(0.8)	(0.2)
Adjusted profit after tax	46.1	36.3

The movement in the adjusted profit before tax from the prior year is shown in the table below:

Movement in adjusted profit before tax	£m
Adjusted profit before tax for the six months to 30 September 2020	36.5
Increase in gross profit	12.3
Increase in administrative expenses	(1.3)
Increase in net interest payable	(0.5)
Reduction in share of associates' recurring profit	(0.1)
Adjusted profit before tax for the six months to 30 September 2021	46.9

Diluted EPRA earnings per share was 25.7 pence (2020: 20.9 pence), an increase of 23% from the same period last year. 

 

Cash flow

Cash flows from operating activities (after net finance costs) have increased by 22% to £51.8 million for the period (2020: £42.3 million). 

These operating cash flows are after the ongoing maintenance costs of the stores, which for this first half were on average approximately £20,000 per store.  The Group's net debt has increased over the period to £397.4 million (March 2021: £325.0 million), with the majority of the increase due to the debt within Armadillo now being consolidated.

	Six months ended 30 September 2021 £m	Six months ended 30 September 2020 £m
Cash generated from operations	57.9	47.6
Net finance costs	(5.0)	(4.4)
Interest on obligations under lease liabilities	(0.4)	(0.4)
Tax	(0.7)	(0.5)
Cash flow from operating activities	51.8	42.3
Acquisition of Armadillo	(66.7)	-
Capital expenditure	(74.3)	(34.0)
Receipt from Capital Goods Scheme	0.4	0.7
Dividend received from associates	0.4	0.3
Cash flow after investing activities	(88.4)	9.3
Dividends	(31.0)	(29.1)
Payment of finance lease liabilities	(0.6)	(0.5)
Issue of share capital	98.5	80.6
Debt acquired with Armadillo	(50.9)	-
Increase/(decrease) in borrowings	70.0	(105.3)
Net cash outflow	(2.4)	(45.0)

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 10.6 times (2020: 9.7 times). 

Of the capital expenditure in the period £51 million related to site acquisitions of Epsom, Kentish Town and West Kensington, with the balance of £23.3 million principally construction capital expenditure.

Taxation

The Group is a Real Estate Investment Trust ("REIT").  We benefit from a zero tax rate on our qualifying self storage earnings.  We only pay corporation tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and management fees earned by the Group.  The Armadillo stores joined the Big Yellow REIT group on acquisition in July 2021.

There is a £0.8 million tax charge in the residual business for the period ended 30 September 2021 (six months to 30 September 2020: £0.2 million).  The increase in the tax charge in the period is due to the increase in taxable profits in the period following our recent strong trading, coupled with an increase in the period in disallowable expenses.

Dividends

REIT regulatory requirements determine the level of Property Income Distribution ("PID") payable by the Group.  A PID of 20.6 pence per share is proposed as the total interim dividend, an increase of 21% from 17.0 pence per share for the same period last year. 

The interim dividend will be paid on 7 January 2022.  The ex-div date is 2 December 2021 and the record date is 3 December 2021.

Financing and treasury

Our financing policy is to fund our current needs through a mix of debt, equity and cash flow to allow us to build out, and add to, our development pipeline and achieve our strategic growth objectives, which we believe improve returns for shareholders.  We aim to ensure that there are sufficient medium-term facilities in place to finance our committed development programme, secured against the freehold portfolio, with debt serviced by our strong operational cash flows.  We maintain a keen watch on medium and long-term rates and the Group's policy in respect of interest rates is to maintain a balance between flexibility and hedging of interest rate risk.

During the period, the Group signed an additional £50 million seven year debt facility with Aviva.  As part of this refinancing the expiry of the existing loan has been extended from April 2027 to September 2028.  This has reduced the fixed cost of the total Aviva loan facility from 4.0% to 3.5%.

Sustainability KPIs have been incorporated into this additional borrowing.  These include the continued installation of solar panels across the security stores which will reduce emissions and running costs, and the business being on-track to achieve 'Net Renewable Energy Positive' status by 2030.  The Group will benefit from a margin reduction on the new £50 million loan, conditional on achieving these targets. 

The total debt facilities from Aviva are now £163.4 million of which £18.4 million amortises to nil by April 2027.

The Group has also increased the facilities of its M&G loan by £50 million to a total facility of £120 million.  £35 million of the total M&G loan is fixed by a way of swap, with the balance floating.  The average cost of the M&G loan is now 2.4%, with the loan expiring in June 2023.  The Group intends to commence discussions on refinancing this loan next year. 

These two new loans were funded in October 2021 and used to repay revolving bank debt. The table below shows the Group's proforma debt position at 30 September 2021 with these new loans in place:  

 

Debt	Expiry	Facility	Drawn	Cost
Aviva Loan	September 2028	£163.4m	£163.4m	3.5%
M&G loan	June 2023	£120m	£120m	2.4%
Revolving bank facility (Lloyds, HSBC and Bank of Ireland)	October 2024	£240m	£76.0m	1.4%
Armadillo bank loans (Lloyds)	April 2023	£52.7m	£47.9m	2.9%
Total	Average term 3.9 years	£576.1m	£407.3m	2.8%

The Group has undrawn committed bank facilities of £168.8 million, which if drawn would carry a current marginal cost of debt of approximately 1.35%. 

The Group was comfortably in compliance with its banking covenants at 30 September 2021. 

The net debt to gross property assets ratio is 18% (2020: 18%) and the net debt to adjusted net assets ratio (see net asset value section below) is 21% (2020: 21%).  Our net debt to the Group's market capitalisation at 30 September 2021 was 15% (2020: 16%).  Our balance sheet capital gearing ratios post the acquisition of Armadillo remain broadly in line with the prior year, albeit with higher absolute levels of debt.

Property

Investment property

The Group's investment properties are carried at the half year at Directors' valuation.  They are valued externally by CBRE LLP ("CBRE") and Jones Lang Lasalle ("JLL") at the year end.  The Directors' valuations reflect the latest cash flows derived from each of the stores at the end of September. 

In performing the valuations, the Directors consulted with CBRE and JLL on the capitalisation rates used in the valuations.  The Directors, as advised by the valuers, consider that the prime capitalisation rates have reduced by 12.5 bps since the start of the financial year. 

The Directors have also made some minor amendments to a couple of the valuation assumptions, namely the adjustment of stable occupancy levels on certain stores that are consistently trading ahead of the previously used assumptions and to certain assumptions on net achieved rents within the valuations.   Other than the above, the Directors believe the core assumptions used by CBRE and JLL in the March 2021 valuations are still appropriate at the September valuation date.  See the Group's annual report for the year ended 31 March 2021 for the full detail of the valuation methodology.   

At 30 September 2021 the total value of the Group's properties is shown in the table below:

 

Analysis of property portfolio	Value at 30 September 2021 £m	Revaluation movement in the period £m
Investment property - Big Yellow stores	1,827.6	192.3
Investment property - Armadillo stores	142.1	3.4
Investment property - Big Yellow and Armadillo stores	1,969.7	195.7
Investment property under construction	234.5	8.9
Investment property total	2,204.2	204.6

The revaluation surplus for the open stores in the period was £195.7 million, reflecting significant operating cash flow growth, and a reduction of 12.5bps in prime cap rates.  There is a revaluation surplus of £8.9 million on the investment property under construction, due to an increase in the projected net rents on the stores, partly offset by increased development costs on a couple of schemes. 

The revaluation gain for the Armadillo stores shown above is only from 1 July - the date the Group acquired the remaining interest it did not previously own.  The revaluation gain in the three months to 30 June 2021 for Armadillo was £7.7 million, giving a total gain of £11.1 million for the six months.

The initial yield on the Big Yellow stores before administration expenses and assuming no rental growth, is 5.9% rising to a stabilised yield of 6.1% (31 March 2021: 5.9% rising to 6.2%).  For the Armadillo stores, the initial yield on this basis is 9.5%, rising to a stabilised yield of 10.3%.

Development pipeline

The Group has opened Uxbridge during the financial year to date, adding 54,000 sq ft of capacity.  The Group acquired development sites in Kentish Town and West Kensington during the period.  These acquisitions take the total pipeline to approximately 1.12 million sq ft, representing 18.5% of current MLA, with an estimated future cost to complete of approximately £172 million. 

The status of the Group's development pipeline is summarised in the table below:

 

Site	Location	Status	Anticipated capacity
Hayes, London	Prominent location on Hayes Road	Planning consent granted in July 2020.  Construction commenced in January 2021 with a view to opening in January 2022.	73,000 sq ft
Hove	Prominent location on Old Shoreham Road	Planning consent granted in October 2019. Construction commenced in Autumn 2020 with a view to opening in Spring 2022.	58,000 sq ft
Harrow, London	Prominent location on Harrow View	Planning consent granted in November 2020.  Construction commenced in May 2021 with a view to opening in Summer 2022.	82,000 sq ft
North Kingston, London	Prominent location on Richmond Road, Ham	Planning consent granted in September 2020.  Construction commenced in June 2021 with a view to opening in Summer 2022.	56,000 sq ft
Kings Cross, London	Prominent location on York Way	Planning consent granted in October 2020.  Demolition commenced in January 2021 with a view to opening in Summer 2023.	106,000 sq ft
Wembley, London	Prominent location on Towers Business Park	Planning consent granted in August 2020.  Discussions ongoing to secure vacant possession.	70,000 sq ft
Queensbury, London	Prominent location off Honeypot Lane	Site acquired in November 2018. Planning consent granted in November 2019 for 58,000 sq ft store. Planning application submitted in 2021 to increase floor area by 12,000 sq ft.  Decision anticipated Q1 2022.	70,000 sq ft
Slough	Prominent location on Bath Road	Site acquired in April 2019.  Planning consent granted in October 2021.  Construction to commence in Summer 2022 with a view to the store opening in Winter 2023.	90,000 sq ft
Wapping, London	Prominent location on the Highway, adjacent to existing Big Yellow	Site acquired in July 2020.  Planning application submitted in November 2021.	Additional 95,000 sq ft
Staines, London	Prominent location on the Causeway	Site acquired in December 2020. Planning application to be submitted in December 2021.	65,000 sq ft
Epsom, London	Prominent location on East Street	Site acquired in March 2021.  Planning application to be submitted in Q1 2022.	56,000 sq ft
Kentish Town, London	Prominent location on Regis Road	Site acquired in April 2021.  Planning application to be submitted in Spring 2022.	68,000 sq ft
West Kensington, London	Prominent location on Hammersmith Road	Site acquired in June 2021.  Planning application to be submitted in Summer 2022.	175,000 sq ft
Newcastle	Prominent location on Scotswood Road	Planning consent granted in October 2021.	60,000 sq ft
Total			1,124,000 sq ft

The capital expenditure forecast for the remainder of the financial year (excluding any new site acquisitions) is approximately £29 million, which principally relates to construction costs on our development sites at Hayes, North Kingston, Hove, Harrow and Kings Cross. 

The Group manages the construction and fit-out of its stores in-house, as we believe it provides both better control and quality, and we have an excellent record of building stores on time and within budget.  As a result of the well-documented supply chain and Covid-related issues, we are experiencing higher than normal inflation in construction costs, notably in the availability of labour and certain materials.  We have reflected this in the projected costing of our pipeline and would anticipate seeing some moderation over the next 12 to 18 months.               

Net asset value

The adjusted net asset value per share is 1,034.6 pence (see note 13), up 14% from 904.7 pence per share at 31 March 2021 (after adjusting the opening NAV for the June 2021 placing).  The table below reconciles the movement from 31 March 2021:

 

Movement in adjusted net asset value	Equity shareholders' funds £m	EPRA adjusted NAV pence per share
31 March 2021	1,566.6	889.2
Share placing	97.6	15.5
31 March 2021 (rebased)	1,664.2	904.7
Adjusted profit after tax	46.1	25.0
Equity dividends paid	(31.0)	(16.9)
Revaluation movements (including share of associates to 30 June 2021)	206.2	112.1
Movement in purchaser's cost adjustment	19.1	10.4
Other movements (e.g. share schemes)	2.2	(0.7)
30 September 2021	1,906.8	1,034.6

 

  

Jim Gibson                                                            John Trotman

Chief Executive Officer                                      Chief Financial Officer

 

22 November 2021                                                            

 

 

PORTFOLIO SUMMARY

	September 2021					September 2020
	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	73	6	79	25	104	73	4	77	25	102
At 30 September:
Total capacity (sq ft)	4,636,000	348,000	4,984,000	1,078,000	6,062,000	4,599,000	223,000	4,822,000	1,081,000	5,903,000
Occupied space (sq ft)	4,242,000	230,000	4,472,000	955,000	5,427,000	4,035,000	71,000	4,106,000	868,000	4,974,000
Percentage occupied	91.5%	66.1%	89.7%	88.6%	89.5%	87.7%	31.8%	85.2%	80.3%	84.3%
Net rent per sq ft	£30.63	£26.62	£30.43	£19.85	£28.46	£27.77	£24.69	£27.75	£17.50	£25.97
For the period:
REVPAF(2)	£31.10	£18.17	£30.27	£19.61	£28.36	£27.54	£12.93	£27.11	£16.20	£25.10
Average occupancy	90.0%	52.9%	87.6%	87.0%	87.5%	84.1%	36.0%	82.7%	77.6%	81.7%
Average annual net rent psf	£29.67	£26.02	£29.52	£19.14	£27.73	£28.10	£27.35	£28.01	£17.71	£26.07
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Self storage income	62,055	2,317	64,372	9,003	73,375	54,305	685	54,990	7,335	62,325
Other storage related income (2)	9,893	530	10,423	1,585	12,008	8,851	180	9,031	1,288	10,319
Ancillary store rental Income	348	81	429	10	439	317	36	353	21	374
Total store revenue	72,296	2,928	75,224	10,598	85,822	63,473	901	64,374	8,644	73,018
Direct store operating costs (excluding depreciation)	(18,607)	(1,648)	(20,255)	(3,643)	(23,898)	(18,283)	(588)	(18,871)	(3,407)	(22,278)
Short and long leasehold rent(3)	(955)	-	(955)	(301)	(1,256)	(978)	-	(978)	(279)	(1,257)
Store EBITDA(2,4)	52,734	1,280	54,014	6,654	60,668	44,212	313	44,525	4,958	49,483
Store EBITDA margin	72.9%	43.7%	71.8%	62.8%	70.7%	69.7%	34.7%	69.2%	57.4%	67.8%
Deemed cost	£m	£m	£m	£m	£m
To 30 September 2021	616.5	82.9	699.4	138.4	837.8
Capex to complete		0.6	0.6	3.8	4.4
Total	616.5	83.5	700.0	142.2	842.2

(1)   The Big Yellow established stores have been open for more than three years at 1 April 2021, and the developing stores have been open for fewer than three years at 1 April 2021.

(2)   See glossary in note 19.

(3)   The Group acquired the 80% of the Armadillo Partnerships that it did not previously own on 1 July 2021.  The results of the stores in the Partnerships have been included in the results above for both years to give a clearer understanding of the underlying performance of all stores.  The table below shows the results excluding the period when the stores were not wholly owned:

 

	2021			2020
	Per above £000	Armadillo results as an associate £000	Statutory £000	Per above £000	Armadillo results as an associate £000	Statutory £000
Store revenue	85,822	(5,046)	80,776	73,018	(8,644)	64,374
Direct store operating costs	(23,898)	1,908	(21,990)	(22,278)	3,407	(18,871)
Rent	(1,256)	150	(1,106)	(1,257)	279	(978)
Store EBITDA	60,668	(2,988)	57,680	49,483	(4,958)	44,525

(4)   Rent under IFRS 16 for eight short leasehold properties accounted for as investment properties and finance leases under IFRS.  The EBITDA margin for the 96 freehold stores is 72.3%, and 51.4% for the eight short leasehold stores.

(5)   The table below reconciles Store EBITDA to gross profit in the income statement:

	Period ended 30 September 2021 £000			Period ended 30 September 2020 £000
	Store EBITDA (per note (3))	Reconciling items	Gross profit per income statement	Store EBITDA (per note (3))	Reconciling items	Gross profit per income statement
Store revenue/Revenue(1)	80,776	1,025	81,801	64,374	1,439	65,813
Cost of sales(2)	(21,990)	(1,778)	(23,768)	(18,871)	(1,188)	(20,059)
Rent(3)	(1,106)	1,106	-	(978)	978	-
	57,680	353	58,033	44,525	1,229	45,754

(1)   See note 2 of the interim statement, reconciling items are management fees and non-storage income.

(2)   See reconciliation in cost of sales section in Business and Financial Review.

(3)   The rent shown above is the cost associated with leasehold stores, only part of which is recognised within gross profit in line with finance lease accounting principles.  The amount included in gross profit is shown in the reconciling items in cost of sales.

 

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

-       the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

-       the interim management report includes a fair review of the information required by:

a)    DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)    DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

 

By order of the Board

 

Jim Gibson                                                            John Trotman

Chief Executive Officer                                     Chief Financial Officer

 

22 November 2021

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Six months ended 30 September 2021
		Six months ended 30 September 2021 (unaudited)	Six months ended 30 September 2020 (unaudited)	Year ended 31 March 2021 (audited)
	Note	£000	£000	£000
Revenue	2	81,801	65,813	135,241
Cost of sales		(23,768)	(20,059)	(41,589)
Gross profit		58,033	45,754	93,652
Administrative expenses		(7,341)	(5,683)	(12,159)
Operating profit before gains and losses on property assets		50,692	40,071	81,493
Gain on the revaluation of investment properties	9a	204,662	23,554	189,277
Operating profit		255,354	63,625	270,770
Share of profit of associates	9e	3,677	888	3,148
Investment income - interest receivable	3	15	54	69
- fair value movement of derivatives	3	477	-	-
Finance costs    - interest payable	4	(4,655)	(4,149)	(8,017)
- fair value movement of derivatives	4	-	(502)	(148)
Profit before taxation		254,868	59,916	265,822
Taxation	5	(794)	(180)	(636)
Profit for the period (attributable to equity shareholders)		254,074	59,736	265,186
Total comprehensive income for the period attributable to equity shareholders		254,074	59,736	265,186
Basic earnings per share	8	142.0p	34.4p	152.3p
Diluted earnings per share	8	141.6p	34.3p	151.8p

Adjusted profit before taxation is shown in note 6 and EPRA earnings per share is shown in note 8. 

All items in the income statement relate to continuing operations.

 

CONDENSED CONSOLIDATED BALANCE SHEET 30 September 2021
	Note	30 September 2021 (unaudited) £000	30 September 2020 (unaudited) £000	31 March 2021 (audited) £000
Non-current assets
Investment property	9a	1,969,730	1,450,580	1,621,990
Investment property under construction	9a	234,542	128,047	163,537
Right-of-use assets	9a	20,804	17,240	16,644
Plant, equipment and owner-occupied property	9b	4,011	4,137	3,910
Intangible assets	9c	1,433	1,433	1,433
Investment	9d	450	-	450
Investment in associates	9e	-	11,804	13,720
Capital Goods Scheme receivable	10	-	159	163
		2,230,970	1,613,400	1,821,847
Current assets
Inventories		404	381	366
Trade and other receivables	10	8,994	7,568	7,764
Cash and cash equivalents		9,911	6,417	12,322
		19,309	14,366	20,452
Total assets		2,250,279	1,627,766	1,842,299
Current liabilities Trade and other payables	11	(45,572)	(37,638)	(34,563)
Borrowings	12	(2,935)	(2,795)	(2,865)
Obligations under lease liabilities		(2,298)	(1,751)	(1,751)
		(50,805)	(42,184)	(39,179)
Non-current liabilities
Borrowings	12	(402,362)	(291,787)	(332,573)
Obligations under lease liabilities		(20,009)	(16,688)	(16,177)
Derivative financial instruments	12	(27)	(829)	(475)
		(422,398)	(309,304)	(349,225)
Total liabilities		(473,203)	(351,488)	(388,404)
Net assets		1,777,076	1,276,278	1,453,895
Equity
Called up share capital		18,397	17,578	17,588
Share premium account		289,885	192,064	192,218
Reserves		1,468,794	1,066,636	1,244,089
Equity shareholders' funds		1,777,076	1,276,278	1,453,895