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Big Yellow Group Plc LSE:BYG London Ordinary Share GB0002869419 ORD 10P
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  12.00 0.99% 1,221.00 1,218.00 1,222.00 1,225.00 1,208.00 1,208.00 10,896 08:53:38
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trusts 135.2 265.8 152.3 8.0 2,247

Big Yellow Group PLC Results for the Six Months ended 30 September 2022

21/11/2022 4:35pm

UK Regulatory (RNS & others)


Big Yellow (LSE:BYG)
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TIDMBYG

RNS Number : 0840H

Big Yellow Group PLC

21 November 2022

 
 
 
 

21 November 2022

Big Yellow Group PLC

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

Results for the Six Months ended 30 September 2022

Solid first half results against the backdrop of a challenging macro and geopolitical environment

 
                                               Six months          Six months 
   Financial metrics                                ended               ended       Change 
                                             30 September        30 September 
                                                     2022                2021 
 Revenue                                  GBP93.8 million     GBP81.8 million          15% 
 Store revenue (1)                        GBP92.8 million     GBP80.8 million          15% 
 Like-for-like store revenue 
  (1,2)                                   GBP81.3 million     GBP75.1 million           8% 
 Store EBITDA (1)                         GBP66.8 million     GBP57.7 million          16% 
 Adjusted profit before tax 
  (1)                                     GBP54.6 million     GBP46.9 million          16% 
 EPRA earnings per share (1)                   29.3 pence          25.7 pence          14% 
 Interim dividend per share                    22.3 pence          20.6 pence           8% 
 Statutory metrics 
 Profit before tax                         GBP6.8 million    GBP254.9 million        (97%) 
 Cash flow from operating activities 
  (after net finance costs and 
  pre-working capital movements)(3)       GBP55.2 million     GBP47.4 million          16% 
 Basic earnings per share                       3.3 pence         142.0 pence        (98%) 
 Store metrics 
  Store Maximum Lettable Area 
  ("MLA") (1)                                   6,295,000           6,062,000           4% 
 Closing occupancy (sq ft) (1)                  5,300,000           5,427,000         (2%) 
 Occupancy growth in the period 
  (sq ft) (1)                                     193,000             318,000        (39%) 
 Closing occupancy (1)                              84.2%               89.5%   (5.3 ppts) 
 Occupancy - like-for-like stores 
  (1,2)                                             88.0%               90.2%   (2.2 ppts) 
 Average achieved net rent per 
  sq ft (1)                                      GBP30.55            GBP27.73          10% 
 Closing net rent per sq ft 
  (1)                                            GBP31.44            GBP28.46          10% 
 Like-for-like average net achieved 
  rent per sq ft (1,2)                           GBP32.64            GBP29.53          11% 
 Like-for-like closing net rent 
  per sq ft (1,2)                                GBP33.53            GBP30.48          10% 
-------------------------------------  ------------------  ------------------  ----------- 
 

(1) See note 19 for glossary of terms

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

(3) See reconciliation in Financial Review

First Half Highlights

 
 --   Revenue growth for the period was 15%, which includes new stores and an additional three months 
       of Armadillo (acquired 1 July 2021) 
 --   Like-for-like store revenue up by 8%, mainly from increases in average achieved rents 
 --   Like-for-like occupancy increase of 2.0 ppts from 1 April 2022 and down 2.2 ppts from same 
       time last year to 88.0% (September 2021: 90.2%. Closing occupancy, reflecting the additional 
       capacity from five recently opened stores, is down 5.3 ppts 
 --   Like-for-like average achieved net rent per sq ft increased by 11% period on period, like-for-like 
       closing net rent up by 10% from September 2021 
 --   Overall store operating margin increased over the six months to 72.0% (2021: 70.7%), the mature 
       portfolio increased to 74.1% (2021: 72.8%) with closing occupancy of 88.3% 
 --   Cash flow from operating activities (after net finance costs and pre-working capital movements) 
       increased by 16% to GBP55.2 million 
 --   Adjusted profit before tax up 16% to GBP54.6 million, with EPRA earnings per share up 14% 
 --   Statutory profit before tax of GBP6.8 million down 97% from prior period due to a revaluation 
       loss compared to a gain in the prior period 
 --   Interim dividend of 22.3 pence per share declared, an increase of 8% 
 --   191,000 sq ft of capacity added in the period with two new stores opened in Harrow and Kingston 
       North (both London), and an existing store acquired in Aberdeen 
 --   Acquisition of freehold property on Old Kent Road, London taking the pipeline to 11 development 
       sites of approximately 0.9 million sq ft (14% of current MLA), of which nine are in London, 
       and 1.0 million of fully built unlet space available 
 --   Acquisition of freehold site at Farnham Road, Slough to build a replacement store for our 
       existing nearby 67,000 sq ft leasehold store. The customers will be transferred on opening 
       of the new store 
 --   Planning consent granted for new stores in Staines (West London) and Farnham Road, Slough; 
       we now have seven pipeline stores with planning 
 --   Refinancing of GBP120 million M&G loan and new $225 million shelf facility with Pricoa Private 
       Capital 
 

Commenting, Nicholas Vetch, Executive Chairman, said:

"Over the six months we have traded the business through what has been a challenging macro and geo-political environment, against a strong comparator period in 2021 and are pleased to have delivered solid growth in revenue, earnings and cash flow. Our management of pricing to new and existing customers has resulted in improved average achieved rents, which have been the main driver of revenue growth. It is pleasing to note that we have seen a strong recovery in our more central London stores in this half year as activity levels normalise, post pandemic and this is being driven by both domestic and business customers. We have also been successful in controlling overall increases in store operating expenses to 4%, resulting in improved operating margins.

The current geo-political, monetary, and fiscal travails need no further amplification from us. We are confident in the resilience of our financial and business model.

We are currently seeing evidence of a correction to land prices and the concerns we have around construction are showing some signs of improvement. For the time being we will continue to focus on the day-to-day running of the business over the winter."

- Ends -

ABOUT US

Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 108 stores, including 24 stores branded as Armadillo Self Storage. We have a pipeline of 0.9 million sq ft comprising 11 proposed Big Yellow self storage facilities. The current maximum lettable area of the existing platform (including Armadillo) is 6.3 million sq ft. When fully built out the portfolio will provide approximately 7.2 million sq ft of flexible storage space. 99% of our stores and sites by value are held freehold and long leasehold, with the remaining 1% short leasehold.

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

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 
 Oliver Bell 
 

Big Yellow Group PLC

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

Results for the Six Months ended 30 September 2022

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 2022.

Over the six months we have traded the business through what has been a challenging macro and geo-political environment, against a strong comparator period in 2021 and are pleased to have delivered solid growth in revenue, earnings and cash flow. Our management of pricing to new and existing customers has resulted in improved average achieved rents, which have been the main driver of revenue growth. It is pleasing to note that we have seen a strong recovery in our more central London stores in this half year as activity levels normalise post pandemic, and this is being driven by both domestic and business customers. We have also been successful in controlling overall increases in store operating expenses to 4%, resulting in improved operating margins.

We have also continued to invest in our business with the acquisition of an existing store in Aberdeen and a property in a strategic location on the Old Kent Road, London, and have opened a further two stores in Harrow and North Kingston. Since the onset of the pandemic, the Group has opened seven new stores, which, coupled with the acquisitions of Aberdeen and the remaining 80% interest in Armadillo, increase the Group's MLA by 1.6 million sq ft, or 34%. These new stores have been an important contributor to our overall revenue growth of 15% for the period and we have 1.0 million sq ft of fully built unlet space in the existing portfolio.

Financial results

Like-for-like occupancy increased by 2.0 ppts to 88.0% from 86.0% at 31 March 2022 but was down 2.2 percentage points from 90.2% at 30 September 2021. This compares with the position at 30 June 2022 where like-for-like occupancy was down 2.7 ppts given what was an unusually strong June quarter in 2021, impacted by the distortive effects of stamp duty changes.

Revenue for the period was GBP93.8 million (2021: GBP81.8 million), an increase of 15%, with like-for-like store revenue up 8%, driven mainly by an increase in the average achieved net rent, offset by a slight fall in average occupancy given the very strong comparator period. Like-for-like store revenue excludes new store openings and acquired stores (including the remaining interest of Armadillo portfolio which we acquired in July 2021, and Aberdeen acquired in June 2022).

We have seen growth in cash flow from operating activities (after net finance costs and pre-working capital movements) of 16% to GBP55.2 million for the period (2021: GBP47.4 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 GBP54.6 million, up 16% from GBP46.9 million for the same period last year (see note 6).

Adjusted diluted EPRA earnings per share were 29.3 pence (2021: 25.7 pence), an increase of 14%. The Group's statutory profit before tax for the period was GBP6.8 million, a decrease from GBP254.9 million for the same period last year, due to a revaluation deficit of GBP47.7 million (2%) in the period (2021: gain of GBP204.7 million), reflecting an outward movement in cap rates at the end of September, partly offset by the growth in cash flow from the stores.

Dividends

The Group's dividend policy is to distribute 80% of full year adjusted earnings per share. The second half of the year has historically delivered at the operating level a similar outturn to the first half, however we are likely to see a further increase in our borrowing costs in the second half of the year. We have therefore declared an interim dividend of 22.3 pence per share representing an 8% increase. This first half dividend has all been declared as Property Income Distribution ("PID").

Investment in new capacity

In June 2022 the Group acquired an existing 53,000 sq ft self storage centre in Aberdeen for GBP10 million. The store is the only purpose-built self storage centre in Aberdeen. The purchase price represented a starting 6% net initial year one yield which should grow to 9% within two years as the store benefits from being added to our digital platform. There is also surplus land which provides the opportunity for expansion.

The Group opened new stores in Harrow and Kingston North (both in London) in September 2022, adding 138,000 sq ft of capacity.

As previously announced, we acquired a prime site on Farnham Road in Slough from Segro plc. The site falls within the Slough Trading Estate Simplified Planning Zone ("SPZ") Scheme. The SPZ sets out a series of conditions and provided that a development fully complies with these conditions then we do not need to secure a full planning permission to develop our proposed 62,000 sq ft store on the site. We have now received confirmation that these conditions have been met.

As part of this transaction, the Group has also agreed to the surrender of the lease on its existing Slough store on Whitby Road, which is leased from Segro. The lease surrender will take effect six months after the completion of the construction of our new store, which is anticipated to open in 2024.

After a 15 year search, the Group has acquired a freehold property on Old Kent Road, London. The property, currently let to Iceland Foods, has a passing rent of GBP388,000 with seven years remaining on their lease. We will be seeking planning consent for a 75,000 sq ft self storage centre on the site. This is a medium-term strategic opportunity in an area of London going through significant regeneration. The timing of construction and opening is dependent on planning and vacant possession.

We were also successful in acquiring the freehold of our Oxford store for GBP13.5 million in September. The 1.8 acre site includes two separately let buildings, which will provide vacant possession in 2030 and the opportunity to intensify the use. This acquisition was a continuation of our strategy of acquiring freehold interests to reduce our rental liability and also importantly to ensure our long-term occupation.

On the planning front, we have secured a resolution to grant planning consent for an approximately 65,000 sq ft store and nine industrial units totalling 99,000 sq ft, at our site on the Causeway in Staines.

As announced in May, the Group conditionally sold its industrial warehouse scheme at Harrow, London for gross sales proceeds of GBP61 million. Completion of the sale is conditional, inter alia, on practical completion of the development, and is expected to occur in January 2023.

We are currently on site constructing our new store in Kings Cross which is expected to open in Summer 2023. As stated in May, we decided to put on hold any future construction commitments, given the uncertainties around pricing in the construction market and our need to secure fixed price contracts. We fully intend to build out all our pipeline stores and will continue to monitor the construction market and will decide on timing in early 2023.

We now have a pipeline of 11 proposed self storage facilities. These store openings are expected to add approximately 0.9 million sq ft of storage space to the portfolio, an increased capacity of 14%.

The total development cost of these 11 new stores is GBP357 million, including cost incurred to date of GBP167 million, and cost to complete of approximately GBP190 million, with an estimated net operating income of GBP30.6 million, or 8.6% on cost. The replacement store in Slough will cost a further GBP11 million and we would expect to commence construction on this in 2023, notwithstanding our comments above.

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 9.3 times (2021: 10.6 times). This has reduced since the prior period due to the increase in interest rates, however, is still comfortably ahead of our internal minimum interest cover requirement of five times, and covenant level of 1.5 times. At 30 September 2022, 41% of our debt is fixed, with the balance floating, however we expect the fixed element to rise to around 50% following the disposal of the industrial units at Harrow which is expected to complete in the second half. Our policy of keeping our debt half fixed and half variable remains.

Net debt is GBP469.8 million at 30 September 2022, and we have undrawn facilities of GBP50.6 million and in addition the $225 million bilateral shelf facility with Pricoa. We continue to generate operating cash flow post dividends and are looking to realise GBP100 million in disposals by March 2024, Harrow (GBP61 million) being the first.

At 30 September 2022, our average cost of debt was 3.6%, however following the recent Bank of England interest rate decision, it has increased to 4.0% and the marginal cost of our RCF bank debt is currently 4.25%.

Outlook

The current geo-political, monetary, and fiscal travails need no further amplification from us. We are confident in the resilience of our financial and business model.

We are currently seeing evidence of a correction to land prices and the concerns we have around construction are showing some signs of improvement. For the time being we will continue to focus on the day-to-day running of the business over the winter.

Nicholas Vetch

Executive Chairman

21 November 2022

Business and Financial Review

Store occupancy

We now have a portfolio of 108 open and trading stores, with a current maximum lettable area of 6.3 million sq ft.

Like-for-like occupancy increased by 2.0 ppts from 1 April 2022 but was down 2.2 ppts from the same time last year. Like-for-like store revenue growth for the half year was 8%, driven by improvements in average achieved net rent per sq ft.

Prospect numbers over the six months have been slightly ahead of the prior year despite a strong comparator period, and the table below shows the monthly move-in and move-out activity of all our stores:

 
                   Move-ins        Move-ins       %       Move-outs       Move-outs      % 
               period ended    period ended            period ended    period ended 
               30 September              30            30 September    30 September 
                       2022       September                    2022            2021 
                                       2021 
 April                6,381           5,711     12%           6,338           6,007     6% 
 May                  7,139           6,804      5%           6,212           5,753     8% 
 June                 9,907          11,886   (17%)           6,070           6,263   (3%) 
 July                 8,991           8,207     10%           8,541           8,535     0% 
 August               9,212           8,501      8%           8,188           7,944     3% 
 September            8,923           8,773      2%          12,138          10,946    11% 
-----------  --------------  --------------  ------  --------------  --------------  ----- 
 Total               50,553          49,882      1%          47,487          45,448     4% 
 October              7,220           7,243       -           9,339           9,231     1% 
 

The Group saw growth in move-ins during the majority of the period, except for June where last year benefited from the tapering off of the stamp duty holiday on 1 July 2021 which accelerated housing-related demand. The year-on-year fall in June would have been greater had we not seen a record performance from students in June this year, following the reopening of all campuses in the last academic year.

Since 1 October, move-ins and move-outs have been broadly in line with the same period last year, with the loss in occupied space lower than in the prior year.

The Group's move-outs have increased by 4% compared to the same period last year, largely as a result of student move-outs following a record number moving in during June, as evidenced by the September figures.

The stores grew in occupancy over the six months by 154,000 sq ft. Additionally, the Group acquired a 53,000 sq ft store in Aberdeen, which had occupancy of 39,000 sq ft at the date of acquisition. The overall increase in the Group's occupancy over the period was therefore 193,000 sq ft. This growth has been driven in the main by domestic customers and secondly by students, with our overall space occupied by businesses remaining broadly the same.

Whilst the growth in occupancy for the six months is lower than last year, which was a record six months, it is ahead of 2019.

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 141,000 sq ft (2.2% of maximum lettable area "MLA") since the end of September, compared to a loss of 155,000 sq ft (2.6% of MLA) at the same stage last year.

 
                                                    Occupancy 
                                                       change 
                                                      from 30 
                                                    September 
                                                         2021 
                                        Occupancy      000 sq       Occupancy                   Occupancy 
                                           change          ft 
                                          from 31 
                                       March 2022 
                                           000 sq                30 September   Occupancy    30 September 
                                               ft                        2022                        2021 
                                                                       000 sq    31 March          000 sq 
                          Occupancy                                        ft                          ft 
                       30 September                                                  2022 
                               2022 
                                                                                   000 sq 
                                  %                                                    ft 
                      -------------  ------------  ----------  --------------  ----------  -------------- 
75 established 
 Big Yellow stores            88.3%           116        (99)           4,169       4,053           4,268 
9 developing Big 
 Yellow stores                54.3%            78         113             317         239             204 
All 84 Big Yellow 
 stores                       84.5%           194          14           4,486       4,292           4,472 
                      -------------  ------------              --------------  ----------  -------------- 
24 Armadillo stores           82.5%           (1)       (141)             814         815             955 
                      -------------  ------------  ----------  --------------  ----------  -------------- 
All 108 stores                84.2%           193       (127)           5,300       5,107           5,427 
 

The 75 established Big Yellow stores are 88.3% occupied compared to 91.4% at the same time last year. The nine developing Big Yellow stores added 78,000 sq ft of occupancy in the past six months to reach closing occupancy of 54.3%.

The 24 Armadillo stores are 82.5% occupied, compared to 88.6% at this time last year. The occupancy change for the Armadillo stores since 30 September 2021 includes the closure of the Cheadle store following the fire in February 2022 (with occupancy of 95,000 sq ft). Overall store occupancy was 84.2%.

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.

In an inflationary environment such as this, self storage benefits from the fact that we can move our asking prices to new customers at short notice and give inflationary increases to our existing customers on an annual basis. The average achieved net rent per sq ft increased by 10% compared to the same period last year, with closing net rent up 10% compared to 30 September 2021, and up 5% from 31 March 2022.

The table below shows the change in net rent per sq ft for the portfolio by average occupancy over the six months (on a non-weighted basis). The analysis excludes stores opened and acquired in the past two financial years.

 
 Average occupancy       Number      Net rent per sq ft      Net rent per sq ft 
  in                  of stores     growth from 1 April     growth from 1 April 
  the six months                   to 30 September 2022    to 30 September 2021 
------------------  -----------  ----------------------  ---------------------- 
 75% to 85%                  30                    4.9%                    6.3% 
 85 to 90%                   52                    5.0%                    6.9% 
 Above 90%                   17                    5.9%                    8.4% 
 

Security of income

We believe that self storage income is essentially evergreen income with highly defensive characteristics driven from buildings with very low obsolescence and relatively low maintenance requirements. Although our contract with our customers is in theory as short as a week, we do not rely on any one contract for our income security. At 30 September 2022 the average length of stay for existing customers was 29 months (March 2022: 29 months). For all customers, including those who have moved out of the business throughout the life of the portfolio, the average length of stay remained at 8.6 months (March 2022: 8.6 months). We have seen an increase in the length of stay of customers who moved out over the six months, which increased to 8.6 months from 7.6 months for the same period last year. This is likely to have been the result of short-term users in the prior period as a result of the distortions from the stamp duty changes.

38% of our customers by occupied space have been storing with us for over two years (2021: 35%), and a further 16% of customers have been in the business for between one and two years (2021: 18%).

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.

We saw continued growth in occupancy from our domestic customer base, with demand across a broad spectrum of uses. 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.

We therefore have a very 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, market-leading brand and digital platform, and customer service, 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 five store openings in London in 2022 (including our Hayes, Harrow, and Kingston North stores), and we anticipate six new facilities in London in 2023 (including our planned store at Kings Cross).

Revenue

Total revenue for the six-month period was GBP93.8 million, an increase of GBP12.0 million (15%) from GBP81.8 million in the same period last year. Of the total store revenue of GBP92.8 million in the period, like-for-like store revenue (see glossary in note 19) was GBP81.3 million, an increase of 8% from the 2021 figure of GBP75.1 million.

Other sales comprise the selling of packing materials, insurance/enhanced liability service ("ELS"), and storage related charges. The Group changed the way it sold contents protections to its customers on 1 June 2022 to an ELS, which is subject to VAT and not Insurance Premium Tax ("IPT"). Prior to 1 June 2022, IPT at 12% was paid to our insurance provider based on our total insurance revenue. We decided not to pass on the entirety of the 20% VAT on the new ELS to our customers, and hence gross ELS revenue from 1 June is lower by 8%. However, because we can recover VAT and are no longer paying IPT, our cost of sales has also reduced. On a net basis, our profits from insurance/ELS remain largely unchanged.

The other revenue earned is tenant income on sites where we have not started development.

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 store operating costs compared to the same period last year, with Armadillo's costs included in full in both periods:

 
                                     Period    Period ended              % of store 
                                   ended 30    30 September               operating 
   Category                       September            2021     Change        costs 
                                       2022          GBP000               in period 
                                     GBP000 
 Cost of sales (insurance/ELS 
  and packing materials)              1,428           2,034      (30%)           6% 
 Staff costs                          6,999           6,806         3%          28% 
 General & admin                        841             808         4%           3% 
 Utilities                              959           1,044       (8%)           4% 
 Property rates                       7,521           7,304         3%          30% 
 Marketing                            3,292           3,356       (2%)          13% 
 Repairs and maintenance              2,314           2,200         5%           9% 
 Insurance                            1,290             744        73%           5% 
 Computer costs                         509             464        10%           2% 
                                -----------  --------------  ---------  ----------- 
 Total before one-off items          25,153          24,760         2% 
 One-off items                        (266)           (862)      (69%) 
 Total per portfolio summary         24,887          23,898         4% 
                                -----------  --------------  ---------  ----------- 
 

Store operating costs have increased by GBP1.0 million (4%). The one-off items in both periods are principally rates rebates where we have successfully appealed against the 2017 rating list. Store operating costs before these one-off items have increased by GBP0.4 million (2%) compared to the same period last year. New stores accounted for GBP0.7 million of operating expenses in the period. Cost of sales have decreased by GBP0.6 million following the move to selling an ELS rather than insurance (see explanation in revenue above). The remaining increase is GBP0.3 million (1%, which is a pleasing result in the current inflationary environment), with commentary below:

 
   -   Staff costs have increased by GBP0.2 million (3%) with store numbers and the salary review 
        of on average 5% (including a 7% increase to those at the lower end of the pay scale), which 
        has been partly offset by lower bonuses for the six months, which have averaged 11% compared 
        to 15% in the prior period. 
   -   Marketing has decreased by GBP0.1 million (2%), with continued efficiencies being achieved 
        from our digital campaigns. 
   -   Insurance has increased by GBP0.5 million (73%). We saw an increase in our insurance premiums 
        this year, from a combination of higher pricing in the insurance market, and the impact on 
        our premiums of the fire at our Cheadle store in February 2022. 
 

The Group's store bad debt expense for the period was 0.1%, in line with the prior period. 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 income statement:

 
                                                             Period       Period 
                                                           ended 30     ended 30 
                                                          September    September 
                                                               2022         2021 
                                                             GBP000       GBP000 
 Direct store operating costs per portfolio summary 
  (excluding rent)                                           24,887       23,898 
 Rent included in cost of sales (total rent payable 
  is included in portfolio summary)                             718        1,047 
 Depreciation charged to cost of sales                          235          188 
 Head office operational management costs charged 
  to cost of sales                                              610          543 
 Armadillo cost of sales pre acquisition of remaining 
  interest                                                        -      (1,908) 
 Cost of sales per income statement                          26,450       23,768 
 

Store EBITDA

Store EBITDA for the period was GBP66.8 million, an increase of GBP9.1 million (16%) from GBP57.7 million for the period ended 30 September 2021 (see Portfolio Summary). The overall EBITDA margin for all stores during the period was 72.0%, up from 70.7% in 2021.

All stores are currently trading profitably at the Store EBITDA level, except for our recently opened stores in Harrow and Kingston North. Our stores at Hayes and Hove, which opened in the first quarter of 2022, reached break even in six and four months respectively.

Administrative expenses

Administrative expenses in the income statement have decreased by GBP0.2 million. In the prior period, the Group incurred GBP0.4 million of acquisition costs in relation to the purchase of the remaining interest in Armadillo which were written off in accordance with IFRS 3.

After excluding this one-off item in the prior period, administrative expenses have increased by GBP0.2 million, an inflationary increase. The non-cash share-based payments charge represents GBP1.7 million of the overall GBP7.1 million expense (2021: GBP1.7 million of GBP7.3 million expense).

Other operating income

In February 2022 the Group experienced a fire at our Cheadle store, which resulted in a total loss to the store. Buildings all risk insurance is in place for the full reinstatement value with the landlord. We also have insurance cover in place for both our fit-out and four years loss of income. The loss of income received during the first six months of the financial year was GBP0.7 million, which is included in other operating income.

The Group acquired the freehold of its Oxford store in September 2022, thus extinguishing the right of use asset and liability in relation to the lease from the previous landlord. This extinguishment gave rise to a gain of GBP0.2 million, which is included in other operating income for the period.

Interest

Interest on bank borrowings during the period was GBP7.8 million, GBP 2.6 million higher than the same period last year, due to higher average debt levels in the period, coupled with a higher average cost of debt following the increase in interest rates.

Interest capitalised in the period amounted to GBP1.6 million (2021: GBP1.0 million), arising on the Group's construction programme.

Results

The Group's statutory profit before tax for the period was GBP6.8 million, compared to GBP254.9 million for the same period last year. The decrease is due to the revaluation loss in the in the period compared to a gain in the prior period.

After adjusting for the revaluation movement of investment properties and other matters shown in the table below, the Group made an adjusted profit before tax in the period of GBP54.6 million, up 16% from GBP46.9 million in 2021.

 
                                     Six months ended   Six months ended 
                                         30 September       30 September 
   Profit before tax analysis                    2022               2021 
                                                 GBPm               GBPm 
----------------------------------  -----------------  ----------------- 
 Profit before tax                                6.8              254.9 
 Loss/(gain) on revaluation of 
  investment properties                          47.7            (204.6) 
 Change in fair value of interest 
  rate derivatives                              (0.6)              (0.5) 
 Refinancing costs                                0.7                  - 
 Acquisition costs written off                      -                0.4 
 Share of non-recurring gains 
  in associates                                     -              (3.3) 
 Adjusted profit before tax                      54.6               46.9 
 Tax                                            (0.7)              (0.8) 
----------------------------------  -----------------  ----------------- 
 Adjusted profit after tax                       53.9               46.1 
----------------------------------  -----------------  ----------------- 
 

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

 
 Movement in adjusted profit before tax            GBPm 
-----------------------------------------------  ------ 
 Adjusted profit before tax for the six months 
  to 30 September 2021                             46.9 
 Increase in gross profit                           9.3 
 Increase in administrative expenses              (0.2) 
 Increase in other operating income                 0.9 
 Increase in net interest payable                 (2.6) 
 Increase in capitalised interest                   0.7 
 Reduction in share of associates' recurring 
  profit                                          (0.4) 
 Adjusted profit before tax for the six months 
  to 30 September 2022                             54.6 
 

The reduction in share of associates' recurring profit is following the acquisition of the remaining interest in Armadillo in July 2021. Diluted EPRA earnings per share was 29.3 pence (2021: 25.7 pence), an increase of 14 % from the same period last year.

Cash flow

Cash flows from operating activities (after net finance costs and pre-working capital movements) have increased by 16 % to GBP 55.2 million for the period (2021: GBP47.4 million). These operating cash flows are after the ongoing maintenance costs of the stores, which for this first half were on average approximately GBP 21,000 per store. The Group's net debt has increased over the period to GBP469.8 million (March 2022: GBP411.8 million), following the capital expenditure in the period.

There are distortive working capital items in the prior period, and therefore the summary cash flow below sets out the free cash flow pre-working capital movements

 
                                                    Six months   Six months 
                                                      ended 30     ended 30 
                                                     September    September 
                                                          2022         2021 
                                                          GBPm         GBPm 
 Cash generated from operations pre-working 
  capital movements                                       64.0         53.5 
 Net finance costs                                       (6.9)        (5.0) 
 Interest on obligations under lease liabilities         (0.4)        (0.4) 
 Tax                                                     (1.5)        (0.7) 
                                                   -----------  ----------- 
 Cash flow from operating activities pre-working 
  capital movements                                       55.2         47.4 
 Working capital movements                               (0.6)          4.4 
                                                   -----------  ----------- 
 Cash flow from operating activities                      54.6         51.8 
 Acquisition of Armadillo                                    -       (66.7) 
 Capital expenditure                                    (73.5)       (74.3) 
 Receipt from Capital Goods Scheme                         0.2          0.4 
 Dividend received from associates                           -          0.4 
 Cash flow after investing activities                   (18.7)       (88.4) 
 Dividends                                              (38.7)       (31.0) 
 Payment of finance lease liabilities                    (0.7)        (0.6) 
 Issue of share capital                                    0.9         98.5 
 Debt acquired with Armadillo                                -       (50.9) 
 Receipt from termination of interest rate                 0.4            - 
  derivatives 
 Loan arrangement fees paid                              (1.2)            - 
 Increase in borrowings                                   58.0         70.0 
                                                   -----------  ----------- 
 Net cash outflow                                            -        (2.4) 
                                                   -----------  ----------- 
 

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 9.3 times (2021: 10.6 times), with the reduction caused by the increase in the interest expense over the period following the rise in borrowing costs and a higher average debt level.

Of the capital expenditure in the period GBP35.3 million related to the acquisitions of Old Kent Road, Slough Farnham Road, and the freehold of our Oxford store, with the balance of GBP38.2 million principally construction capital expenditure on our new stores in Harrow, Kingston North and Kings Cross, and investment in the retrofitting of solar panels across our estate.

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.

There is a GBP0.7 million tax charge in the residual business for the period ended 30 September 2022 (six months to 30 September 2021: GBP0.8 million).

Dividends

REIT regulatory requirements determine the level of Property Income Distribution ("PID") payable by the Group. A PID of 22.3 pence per share is proposed as the total interim dividend, an increase of 8% from 20.6 pence per share for the same period last year.

The interim dividend will be paid on 26 January 2023. The ex-dividend date is 5 January 2023, and the record date is 6 January 2023 .

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.

The table below shows the Group's debt position at 30 September 2022:

 
 Debt                                Expiry              Facility        Drawn     Cost 
----------------------------------  ----------------  -----------  -----------  ------- 
 Aviva Loan                          September 2028     GBP160.4m    GBP160.4m     3.4% 
 M&G loan                            September 2029       GBP120m      GBP120m     3.8% 
 Revolving bank facility (Lloyds, 
  HSBC, and Bank of Ireland)           October 2024       GBP240m      GBP198m     3.6% 
                                     Average term 
 Total                                4.5 years         GBP520.4m    GBP478.4m     3.6% 
 

In addition to the facilities above, during the period, the Group signed a $225 million credit approved shelf facility with Pricoa Private Capital ("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of GBP10 million over the next three years with terms of between 7 and 15 years at short notice, typically 10 days.

We intend to use this facility to partially replace and reduce the bank revolving credit facility which expires in October 2024. This facility increases our potential debt capacity to approximately GBP600 to GBP625 million and extends the average maturities.

The optionality built into the facility allows us to choose the timing of that transition and hence the opportunity to optimise our average cost of debt.

During the period, the Group refinanced its GBP120 million debt facility with M&G Investments ("M&G") for a seven year term, with the new loan expiring in September 2029, secured against a portfolio of 15 assets. The existing facility was due to expire in June 2023. GBP35 million of this facility is currently hedged until June 2023, and the balance is variable.

The pricing on the facility agreement was reflective of the sustainability investments that Big Yellow has made over the past few years, and our planned investment in solar over the coming years as part of our Net Renewable Energy Positive Strategy. The margin on the facility was reduced by 20bps from the expiring facility, reflective of improved portfolio performance.

The Group repaid the two Armadillo bank facilities during the period using the revolving bank facility. The Group also cancelled the two interest rate derivatives in place on the Armadillo facilities, which resulted in a payment to the Group of GBP436,000 as the swaps were in-the-money.

The Group was comfortably in compliance with its banking covenants at 30 September 2022 and is forecast to be for the period covered by the going concern statement.

The net debt to gross property assets ratio is 18% (2021: 18%) and the net debt to adjusted net assets ratio (see net asset value section below) is 21 % (2021: 21%). Our net debt to the Group's market capitalisation at 30 September 2022 was 24% (2021: 15%).

Property

Investment property

The Group's investment properties are carried at the half year at Directors' valuation. They are valued externally by 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 JLL on the capitalisation rates used in the valuations. The Directors, as advised by the valuers, consider that the prime capitalisation rates have increased by on average 30 bps since the start of the financial year. The increase in cap rates applied was 12.5 bps for stores in London, 25 bps for stores in the South East and 50 bps for regional stores. Additionally, a further 25 bps was added to the cap rates for immature stores.

The 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 JLL in the March 2022 valuations are still appropriate at the September valuation date.

At 30 September 2022 the total value of the Group's properties is shown in the table below:

 
 Analysis of property portfolio                 Value at        Revaluation 
                                            30 September    movement in the 
                                                    2022             period 
                                                    GBPm               GBPm 
----------------------------------------  --------------  ----------------- 
 Investment property                             2,386.2             (27.1) 
 Investment property under construction            268.0             (20.6) 
----------------------------------------  --------------  ----------------- 
 Investment property total                       2,654.2             (47.7) 
----------------------------------------  --------------  ----------------- 
 

The revaluation deficit for the open stores in the period was GBP27.1 million, reflecting the increase in cap rates referred to above, partly offset by the growth in operating cash flow. There is a revaluation deficit of GBP20.6 million on the investment property under construction, due to the outward shift in cap rates and increased projected development costs.

The initial yield on the portfolio is 5.9% (31 March 2022: 5.2%). The Group's annual report and accounts for the year ended 31 March 2022 contains a detailed explanation of the valuation methodology.

Development pipeline

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

 
 Site                 Location                Status                           Anticipated 
                                                                                capacity 
 Kings Cross,         Prominent location      Planning consent granted.        103,000 
  London               on York Way             Demolition commenced in          sq ft 
                                               January 2021 with a view 
                                               to opening in Summer 2023. 
                     ----------------------  -------------------------------  -------------- 
 Wembley, London      Prominent location      Planning consent granted.        70,000 sq 
                       on Towers Business      Discussions ongoing to           ft 
                       Park                    secure vacant possession. 
                     ----------------------  -------------------------------  -------------- 
 Queensbury, London   Prominent location      Site acquired in November        70,000 sq 
                       off Honeypot            2018. Planning consent           ft 
                       Lane                    granted. 
                     ----------------------  -------------------------------  -------------- 
 Slough Bath Road     Prominent location      Site acquired in April           90,000 sq 
                       on Bath Road            2019. Planning consent           ft 
                                               granted. 
                     ----------------------  -------------------------------  -------------- 
 Slough Farnham       Prominent location      Site acquired in June 2022.      Replacement 
  Road                 on Farnham Road         Planning consent granted         for existing 
                                               under the Slough Trading         leasehold 
                                               Estate Simplified Planning       store 
                                               Zone ("SPZ") Scheme. 
                     ----------------------  -------------------------------  -------------- 
 Wapping, London      Prominent location      Site acquired in July 2020.      Additional 
                       on the Highway,         Planning application refusal     95,000 sq 
                       adjacent to existing    likely to be appealed.           ft 
                       Big Yellow 
                     ----------------------  -------------------------------  -------------- 
 Staines, London      Prominent location      Site acquired in December        65,000 sq 
                       on the Causeway         2020. Planning consent           ft 
                                               granted. In addition, consent 
                                               was received to develop 
                                               9 industrial units totalling 
                                               99,000 sq ft. 
                     ----------------------  -------------------------------  -------------- 
 Epsom, London        Prominent location      Site acquired in March           58,000 sq 
                       on East Street          2021. Planning application       ft 
                                               submitted in September 
                                               2022. 
                     ----------------------  -------------------------------  -------------- 
 Kentish Town,        Prominent location      Site acquired in April           68,000 sq 
  London               on Regis Road           2021. Planning application       ft 
                                               to be submitted in Q1 2023. 
                     ----------------------  -------------------------------  -------------- 
 West Kensington,     Prominent location      Site acquired in June 2021.      175,000 
  London               on Hammersmith          Planning application to          sq ft 
                       Road                    be submitted in Q1 2023. 
                     ----------------------  -------------------------------  -------------- 
 Old Kent Road,       Prominent location      Site acquired in June 2022.      75,000 sq 
  London               on Old Kent Road        Planning discussions underway    ft 
                                               with the local Council. 
                     ----------------------  -------------------------------  -------------- 
 Newcastle            Prominent location      Planning consent granted.        60,000 sq 
                       on Scotswood                                             ft 
                       Road 
                     ----------------------  -------------------------------  -------------- 
 Total                                                                         929,000 
                                                                                sq ft 
                     ----------------------  -------------------------------  -------------- 
 

The capital expenditure forecast for the remainder of the financial year (excluding any new site acquisitions) is approximately GBP17.7 million, which principally relates to construction costs on our development sites at Kings Cross, and the continued retrofitting of solar panels across the Group's estate.

Net asset value

The adjusted net asset value per share is 1,220.1 pence (see note 13), down 2% from 1,239.7 pence per share at 31 March 2022. The table below reconciles the movement from 31 March 2022:

 
                                Equity shareholders'    EPRA adjusted 
                                               funds    NAV pence per 
   Movement in adjusted net                     GBPm            share 
   asset value 
-----------------------------  ---------------------  --------------- 
 31 March 2022                               2,284.2          1,239.7 
 Adjusted profit after tax                      53.9             29.2 
 Equity dividends paid                        (39.1)           (21.2) 
 Revaluation movements                        (47.7)           (25.9) 
 Movement in purchaser's 
  cost adjustment                                1.5              0.8 
 Other movements (e.g. share 
  schemes)                                       1.9            (2.5) 
 30 September 2022                           2,254.7          1,220.1 
-----------------------------  ---------------------  --------------- 
 
   Jim Gibson                                                            John Trotman 
   Chief Executive Officer                                     Chief Financial Officer 

21 November 2022

PORTFOLIO SUMMARY

 
                                       September 2022                                             September 2021 
                          Big         Big      Total                                                       Total 
                       Yellow      Yellow        Big  Armadillo      Total   Big Yellow  Big Yellow   Big Yellow                 Total 
                  Established  Developing     Yellow        (2)             Established  Developing               Armadillo 
  Number 
   of stores               75           9         84         24        108           74           5           79         25        104 
                  -----------  ----------  ---------  ---------  ---------  -----------  ----------  -----------  ---------  --------- 
  At 30 
   September: 
  Total capacity 
   (sq ft)          4,724,000     584,000  5,308,000    987,000  6,295,000    4,669,000     315,000    4,984,000  1,078,000  6,062,000 
  Occupied 
   space (sq 
   ft)              4,169,000     317,000  4,486,000    814,000  5,300,000    4,268,000     204,000    4,472,000    955,000  5,427,000 
  Percentage 
   occupied             88.3%       54.3%      84.5%      82.5%      84.2%        91.4%       64.8%        89.7%      88.6%      89.5% 
  Net rent 
   per sq 
   ft                GBP33.60    GBP28.71   GBP33.26   GBP21.40   GBP31.44     GBP30.75    GBP23.45     GBP30.43   GBP19.85   GBP28.46 
  For the 
   period: 
  REVPAF(3)          GBP33.08    GBP19.88   GBP31.88   GBP20.46   GBP30.05     GBP31.22    GBP14.75     GBP30.27   GBP19.61   GBP28.36 
  Average 
   occupancy            88.2%       59.9%      85.7%      83.7%      85.4%        89.9%       52.4%        87.6%      87.0%      87.5% 
  Average 
   annual 
   net rent 
   psf               GBP32.64    GBP27.75   GBP32.33   GBP20.98   GBP30.55     GBP29.79    GBP22.04     GBP29.52   GBP19.14   GBP27.73 
 
                       GBP000      GBP000     GBP000     GBP000     GBP000       GBP000      GBP000       GBP000     GBP000     GBP000 
  Self storage 
   income              67,963       3,908     71,871      8,684     80,555       62,698       1,674       64,372      9,003     73,375 
  Other storage 
   related 
   income 
   (3)                  9,660         681     10,341      1,432     11,773        9,998         425       10,423      1,585     12,008 
  Ancillary 
   store rental 
   Income                 429          85        514          7        521          396          33          429         10        439 
----------------  -----------  ----------  ---------  ---------  ---------  -----------  ----------  -----------  ---------  --------- 
  Total store 
   revenue             78,052       4,674     82,726     10,123     92,849       73,092       2,132       75,224     10,598     85,822 
  Direct 
   store 
   operating 
   costs 
   (excluding 
   depreciation)     (19,146)     (2,000)   (21,146)    (3,741)   (24,887)     (18,895)     (1,360)     (20,255)    (3,643)   (23,898) 
  Short and 
   long 
   leasehold 
   rent(4)            (1,063)           -    (1,063)       (85)    (1,148)        (955)           -        (955)      (301)    (1,256) 
----------------  -----------  ----------  ---------  ---------  ---------  -----------  ----------  -----------  ---------  --------- 
  Store 
   EBITDA(3,5)         57,843       2,674     60,517      6,297     66,814       53,242         772       54,014      6,654     60,668 
  Store EBITDA 
   margin               74.1%       57.2%      73.2%      62.2%      72.0%        72.8%       36.2%        71.8%      62.8%      70.7% 
 
  Deemed                                        GBPm 
   cost                  GBPm        GBPm                  GBPm       GBPm 
  To 30 
   September 
   2022                 708.5       127.9      836.4      135.9      972.3 
  Capex to 
   complete                 -         0.6        0.6        0.9        1.5 
----------------  -----------  ----------  ---------  ---------  --------- 
  Total                 708.5       128.5      837.0      136.8      973.8 
                                           ---------             ---------                           -----------             --------- 
 
 
 (1)   The Big Yellow established stores have been open for more than three years at 1 April 2022, 
        and the developing stores have been open for fewer than three years at 1 April 2022. 
 (2)   Armadillo's Cheadle store was destroyed by fire in February 2022. It is included in the prior 
        period comparatives, but not in the current period figures. 
 (3)   See glossary in note 19. 
 (4)   Rent under IFRS 16 for seven short leasehold properties accounted for as investment properties 
        and right-of-use assets under IFRS. 
 (5)   The Group acquired the 80% of the Armadillo Partnerships that it did not previously own on 
        1 July 2021. The results of the stores in the Partnerships have been included in the results 
        above for both years to give a clearer understanding of the performance of all stores. The 
        table below shows the results excluding the period when the stores were not wholly owned: 
 
 
                                     2022                                         2021 
                                      Armadillo                                    Armadillo 
                                        results                                      results 
                   Per above    as an associate    Statutory    Per above    as an associate    Statutory 
                      GBP000             GBP000       GBP000       GBP000             GBP000       GBP000 
                 -----------  -----------------  -----------  -----------  -----------------  ----------- 
 Store revenue        92,849                  -       92,849       85,822            (5,046)       80,776 
 Direct store 
  operating 
  costs             (24,887)                  -     (24,887)     (23,898)              1,908     (21,990) 
 Rent                (1,148)                  -      (1,148)      (1,256)                150      (1,106) 
                 -----------  -----------------  -----------  -----------  -----------------  ----------- 
 Store EBITDA         66,814                  -       66,814       60,668            (2,988)       57,680 
                 -----------  -----------------  -----------  -----------  -----------------  ----------- 
 

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

 
                                    Period ended 30 September                  Period ended 30 September 
                                               2022                                       2021 
                                              GBP000                                     GBP000 
                                Store 
                               EBITDA                   Gross profit        Store                   Gross profit 
                                 (per                     per income       EBITDA                     per income 
                                 note   Reconciling        statement    (per note   Reconciling        statement 
                                 (3))         items                          (3))         items 
 
 Store revenue/Revenue(1)      92,849           967           93,816       80,776         1,025           81,801 
 Cost of sales(2)            (24,887)       (1,563)         (26,450)     (21,990)       (1,778)         (23,768) 
 Rent(3)                      (1,148)         1,148                -      (1,106)         1,106                - 
                            ---------  ------------  ---------------  -----------  ------------  --------------- 
                               66,814           552           67,366       57,680           353           58,033 
 

(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 for use in the UK; 
 -   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 
 
21 November 2022 
 
 
 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 Six months ended 30 September 2022 
 
                                                                        Six months     Six months 
                                                                             ended          ended 
                                                                                                    Year ended 
                                                                      30 September   30 September     31 March 
                                                                              2022           2021         2022 
                                                                       (unaudited)    (unaudited)    (audited) 
                                                               Note         GBP000         GBP000       GBP000 
 
Revenue                                                           2         93,816         81,801      171,318 
Cost of sales                                                             (26,450)       (23,768)     (50,383) 
 
Gross profit                                                                67,366         58,033      120,935 
 
Administrative expenses                                                    (7,091)        (7,341)     (14,352) 
 
Operating profit before gains 
 and losses on property assets                                              60,275         50,692      106,583 
(Loss)/gain on the revaluation 
 of investment properties                                        9a       (47,673)        204,662      597,224 
Gain on disposal of investment 
 property                                                                        -              -          584 
 
Operating profit                                                            12,602        255,354      704,391 
Other operating income                                            2            899              -            - 
Share of profit of associates                                    9e              -          3,677        3,677 
Investment income - interest 
 receivable                                                       3              1             15           23 
                        - fair value movement of derivatives      3            564            477        1,389 
Finance costs                                                     4        (7,313)        (4,655)     (10,604) 
 
Profit before taxation                                                       6,753        254,868      698,876 
                                                                     -------------  -------------  ----------- 
Taxation                                                          5          (710)          (794)      (1,602) 
 
Profit for the period (attributable 
 to equity shareholders)                                                     6,043        254,074      697,274 
                                                                     -------------  -------------  ----------- 
 
Total comprehensive income 
 for the period attributable 
 to equity shareholders                                                      6,043        254,074      697,274 
                                                                     -------------  -------------  ----------- 
 
Basic earnings per share                                          8           3.3p         142.0p       385.4p 
 
Diluted earnings per share                                        8           3.3p         141.6p       384.2p 
 
 

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 2022 
                                                         30 September   30 September 
                                                                 2022           2021   31 March 2022 
                                                          (unaudited)    (unaudited)       (audited) 
                                                  Note         GBP000         GBP000          GBP000 
Non-current assets 
Investment property                                 9a      2,386,246      1,969,730       2,342,199 
Investment property under construction              9a        268,012        234,542         285,400 
Right-of-use assets                                 9a         18,849         20,804          19,174 
Plant, equipment, and owner-occupied property       9b          3,882          4,011           3,857 
Intangible assets                                   9c          1,433          1,433           1,433 
Investment                                          9d            588            450             588 
Derivative financial instruments                    12              -              -             885 
 
                                                            2,679,010      2,230,970       2,653,536 
Current assets 
Derivative financial instruments                    12          1,013              -               - 
Inventories                                                       480            404             483 
Trade and other receivables                         10          8,506          8,994           7,756 
Cash and cash equivalents                                       8,604          9,911           8,605 
 
                                                               18,603         19,309          16,844 
 
Total assets                                                2,697,613      2,250,279       2,670,380 
 
Current liabilities 
 Trade and other payables                           11       (47,399)       (45,572)        (47,349) 
Borrowings                                          12        (3,083)        (2,935)         (3,008) 
Obligations under lease liabilities                           (1,805)        (2,298)         (1,958) 
 
                                                             (52,287)       (50,805)        (52,315) 
Non-current liabilities 
Borrowings                                          12      (473,056)      (402,362)       (414,972) 
Obligations under lease liabilities                          (18,386)       (20,009)        (18,718) 
Derivative financial instruments                    12              -           (27)               - 
 
                                                            (491,442)      (422,398)       (433,690) 
 
Total liabilities                                           (543,729)      (473,203)       (486,005) 
 
Net assets                                                  2,153,884      1,777,076       2,184,375 
                                                        -------------  -------------  -------------- 
 
Equity 
Called up share capital                                        18,422         18,397          18,397 
Share premium account                                         290,771        289,885         289,923 
Reserves                                                    1,844,691      1,468,794       1,876,055 
 
Equity shareholders' funds                                  2,153,884      1,777,076       2,184,375 
                                                        -------------  -------------  -------------- 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2022 (unaudited)

 
                                       Share  Other non-distributable      Capital 
                             Share   premium                  reserve   redemption    Retained      Own 
                           capital   account                   GBP000      reserve    earnings   shares      Total 
                            GBP000    GBP000                                GBP000      GBP000   GBP000     GBP000 
 
At 1 April 2022             18,397   289,923                   74,950        1,795   1,800,329  (1,019)  2,184,375 
Total comprehensive 
 income for the period           -         -                        -            -       6,043        -      6,043 
Issue of share capital          25       848                        -            -           -        -        873 
Credit to equity 
 for equity-settled 
 share-based payments            -         -                        -            -       1,730        -      1,730 
Dividends                        -         -                        -            -    (39,137)        -   (39,137) 
 
At 30 September 
 2022                       18,422   290,771                   74,950        1,795   1,768,965  (1,019)  2,153,884 
 

Six months ended 30 September 2021 (unaudited)

 
                                       Share  Other non-distributable      Capital 
                             Share   premium                  reserve   redemption    Retained      Own 
                           capital   account                   GBP000      reserve    earnings   shares      Total 
                            GBP000    GBP000                                GBP000      GBP000   GBP000     GBP000 
 
At 1 April 2021             17,588   192,218                   74,950        1,795   1,168,363  (1,019)  1,453,895 
Total comprehensive 
 income for the period           -         -                        -            -     254,074        -    254,074 
Issue of share capital         809    97,667                        -            -           -        -     98,476 
Credit to equity 
 for equity-settled 
 share-based payments            -         -                        -            -       1,670        -      1,670 
Dividends                        -         -                        -            -    (31,039)        -   (31,039) 
 
At 30 September 2021        18,397   289,885                   74,950        1,795   1,393,068  (1,019)  1,777,076 
 

Year ended 31 March 2022 (audited)

 
                                      Share  Other non-distributable      Capital 
                            Share   premium                  reserve   redemption    Retained       Own 
                          capital   account                   GBP000      reserve    earnings    shares      Total 
                           GBP000    GBP000                                GBP000      GBP000    GBP000     GBP000 
 
At 1 April 2021            17,588   192,218                   74,950        1,795   1,168,363   (1,019)  1,453,895 
Total comprehensive 
 income for the year            -         -                        -            -     697,274         -    697,274 
Issue of share capital        809    97,705                        -            -           -         -     98,514 
Credit to equity 
 for equity-settled 
 share-based payments           -         -                        -            -       3,390         -      3,390 
Dividends                       -         -                        -            -    (68,698)         -   (68,698) 
 
At 31 March 2022           18,397   289,923                   74,950        1,795   1,800,329   (1,019)  2,184,375 
 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Six months ended 30 September 2022

 
                                                                                     Six months        Year 
                                                                Six months ended          ended       ended 
                                                                    30 September   30 September    31 March 
                                                                            2022           2021        2022 
                                                                     (unaudited)    (unaudited)   (audited) 
                                                          Note            GBP000         GBP000      GBP000 
Cash generated from operations                              17            63,405         57,863     120,390 
Bank interest paid                                                       (6,907)        (5,042)    (10,763) 
Interest on obligations under lease liabilities                            (394)          (413)       (843) 
Interest received                                                              -              1           2 
Tax paid                                                                 (1,517)          (655)     (1,649) 
 
Cash flows from operating activities                                      54,587         51,754     107,137 
 
Investing activities 
Purchase of non-current assets                                          (73,462)       (74,260)   (105,151) 
Disposal of investment property                                                -              -         584 
Acquisition of Armadillo (net of cash acquired)                                -       (66,679)    (66,679) 
Investment                                                                     -              -       (138) 
Receipt from Capital Goods Scheme                                            173            381         381 
Dividend received from associates                           9e                 -            435         435 
 
Cash flows from investing activities                                    (73,289)      (140,123)   (170,568) 
 
Financing activities 
Issue of share capital                                                       873         98,476      98,514 
Payment of finance lease liabilities                                       (706)          (614)     (1,384) 
Equity dividends paid                                                   (38,731)       (31,039)    (68,698) 
Receipt from termination of interest rate derivatives                        436              -           - 
Loan arrangement fees paid                                               (1,155)              -       (953) 
Increase in borrowings                                                    57,984         19,135      32,235 
 
Cash flows from financing activities                                      18,701         85,958      59,714 
 
Net decrease in cash and cash equivalents                                    (1)        (2,411)     (3,717) 
 
Opening cash and cash equivalents                                          8,605         12,322      12,322 
 
Closing cash and cash equivalents                                          8,604          9,911       8,605 
                                                                ----------------  -------------  ---------- 
 

Notes to the Interim Review

   1.             ACCOUNTING POLICIES 

Basis of preparation

The results for the period ended 30 September 2022 are unaudited and were approved by the Board on 21 November 2022. The financial information contained in this report in respect of the year ended 31 March 2022 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK.

The annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 March 2022.

Valuation of assets and liabilities held at fair value

For those financial instruments held at fair value, 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 13. 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 derivative has 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 13. Investment Property and Investment Property under Construction have been classified as Level 3. This is discussed further in note 14.

Going concern

A review of the Group's business activities, together with the factors likely to affect its future development, performance, and position, is set out in the Chairman's Statement and the Business and Financial Review. 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 interim statement. 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 remain the same and can be found in the Strategic Report within the Group's Annual Report for the year ended 31 March 2022.

At 30 September 2022 the Group had available liquidity of GBP50.6 million, from a combination of cash and undrawn debt facilities. In addition, the Group has a $225 million shelf facility in place with Pricoa Private Capital to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of GBP10 million over the next three years with terms of between 7 and 15 years at short notice, typically 10 days. The Group also has land surplus to its needs which will be realised over the medium term, generating net cash proceeds estimated currently at over GBP100 million. The Group is cash generative and for the six months ended 30 September 2022, had operational cash flow of GBP54.6 million, with capital commitments at the balance sheet date of GBP10.6 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 2023 and projections contained in the longer-term business plan which covers the period to March 2026. 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 dislocations to the economy caused by the Russian invasion of Ukraine, taking into account the recent trading performance of the Group. The Directors have also taken into account the performance of the business during the Global Financial Crisis and the Covid-19 pandemic. The Directors modelled a number of 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 half year report.

   2.             SEGMENTAL INFORMATION 

Revenue represents amounts derived from the provision of self storage accommodation and related services which fall within the Group's ordinary activities after deduction of trade discounts and value added tax. The Group's net assets, revenue and profit before tax are attributable to one activity, the provision of self storage accommodation and related services. These all arise in the United Kingdom.

 
                                            Six months 
                                                 ended                        Year ended 
                                          30 September           Six months     31 March 
                                                  2022                ended         2022 
                                                               30 September 
                                           (unaudited)     2021 (unaudited)    (audited) 
                                                GBP000               GBP000       GBP000 
 Open stores 
 Self storage income                            80,555               69,091      145,592 
 Insurance income                                3,043                8,681       17,783 
 Enhanced liability service income               5,906                    -            - 
 Packing materials income                        1,822                1,708        3,142 
 Other income from storage customers             1,002                  863        1,821 
 Ancillary store rental income                     521                  433          937 
                                                92,849               80,776      169,275 
 Other revenue 
 Non-storage income                                967                  700        1,718 
 Management fees                                     -                  325          325 
 
 Total revenue                                  93,816               81,801      171,318 
                                       ---------------  -------------------  ----------- 
 

Non-storage income derives principally from rental income earned from tenants of properties awaiting development.

The Group has also earned other operating income of GBP0.9 million in the period, of which GBP0.7 million relates to insurance proceeds for loss of income following the destruction of the Group's Cheadle store by fire in 2022, and GBP0.2 million is following extinguishing the right-of-use asset and liability following the acquisition of the freehold of our Oxford store.

Further analysis of the Group's operating revenue and costs are in the Portfolio Summary and the Business and Financial Review. The seasonality of the business is discussed in note 18.

   3.             INVESTMENT INCOME 
 
                                                    Six months  Year ended 
                                     Six months 
                                       ended 30       ended 30 
                                      September      September    31 March 
                                           2022           2021        2022 
                                    (unaudited)    (unaudited)   (audited) 
                                         GBP000         GBP000      GBP000 
Bank interest receivable                      -              1           2 
Unwinding of discount on Capital 
 Goods Scheme receivable                      1             14          21 
Total                                         1             15          23 
                                   ------------  -------------  ---------- 
Change in fair value of interest 
 rate derivatives                           564            477       1,389 
                                   ------------  -------------  ---------- 
Total investment income                     565            492       1,412 
                                   ------------  -------------  ---------- 
 
   4.             FINANCE COSTS 
 
                                                                      Six months  Year ended 
                                                 Six months 
                                         ended 30 September   ended 30 September    31 March 
                                                       2022                 2021        2022 
                                                (unaudited)          (unaudited)   (audited) 
                                                     GBP000               GBP000      GBP000 
 
Interest on bank borrowings                           7,836                5,202      11,772 
Capitalised interest                                (1,649)                (960)     (2,072) 
Interest on finance lease obligations                   394                  413         843 
Other interest payable                                    -                    -          61 
Loan refinancing costs                                  732                    -           - 
                                        -------------------  -------------------  ---------- 
Total finance costs                                   7,313                4,655      10,604 
 
   5.             TAXATION 

The Group is a REIT. As a result, the Group does not pay UK corporation tax on the profits and gains from its qualifying rental business in the UK if 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.

 
                                  Six months  Year ended 
                   Six months 
                     ended 30       ended 30 
                    September      September    31 March 
                         2022           2021        2022 
                  (unaudited)    (unaudited)   (audited) 
                       GBP000         GBP000      GBP000 
Current tax: 
- Current year            895            704       1,725 
- Prior year            (185)             90       (123) 
                 ------------ 
                          710            794       1,602 
                 ------------  -------------  ---------- 
 
   6.             ADJUSTED PROFIT 
 
                                                                                 Six months 
                                                                                      ended  Year ended 
                                                                  Six months 
                                                                       ended   30 September    31 March 
                                                                30 September 
                                                                        2022           2021        2022 
                                                                 (unaudited)    (unaudited)   (audited) 
                                                                      GBP000         GBP000      GBP000 
Profit before tax                                                      6,753        254,868     698,876 
Loss/(gain) on revaluation of investment 
 properties - Group                                                   47,673      (204,662)   (597,224) 
                         - associates (net of deferred tax) 
                          to 30 June 2021                                  -        (1,537)     (1,537) 
Change in fair value of interest rate 
 derivatives                                                           (564)          (477)     (1,389) 
Armadillo fair value adjustments on 
 acquisition                                                               -        (1,756)     (1,756) 
Gain on disposal of investment property                                    -              -       (584) 
Refinancing fees                                                         732              -           - 
Acquisition costs written off                                              -            416         416 
Adjusted profit before tax                                            54,594         46,852      96,802 
Tax                                                                    (710)          (794)     (1,602) 
                                                              --------------  -------------  ---------- 
Adjusted profit after tax (EPRA earnings)                             53,884         46,058      95,200 
                                                              --------------  -------------  ---------- 
 

Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate derivatives, net gains and losses on disposal of investment property, and material non-recurring items of income and expenditure have been disclosed as, in the Board's view, this provides a clearer understanding of the Group's underlying trading performance.

   7.             DIVIDS 
 
                                                   Six months     Six months 
                                                        ended          ended 
                                                 30 September   30 September 
                                                         2022           2021 
                                                  (unaudited)    (unaudited) 
                                                       GBP000         GBP000 
Amounts recognised as distributions to equity 
 holders in the period: 
Final dividend for the year ended 31 March 
 2022 of 21.4 p (2021: 17.0p) per share                39,137         31,039 
 
Proposed interim dividend for the year ending 
 31 March 2023 of 22.3p (2022: 20.6p) per 
 share                                                 40,830         37,666 
                                                -------------  ------------- 
 

The proposed interim dividend of 22.3 pence per ordinary share will be paid to shareholders on 26 January 2023. The ex-dividend date is 5 January 2023, and the record date is 6 January 2023. The interim dividend is all Property Income Distribution.

   8.             EARNINGS PER ORDINARY SHARE 

The European Public Real Estate Association ("EPRA") has issued recommended bases for the calculation of certain per share information and these are included in the following table:

 
                               Six months ended              Six months ended 
                               30 September 2022             30 September 2021                 Year ended 
                                  (unaudited)                   (unaudited)              31 March 2022 (audited) 
                         Earnings   Shares      Pence   Earnings   Shares      Pence   Earnings   Shares      Pence 
                           GBP000  million  per share     GBP000  million  per share     GBP000  million  per share 
 
Basic                       6,043    182.9        3.3    254,074    178.9      142.0    697,274    180.9      385.4 
Dilutive share 
 options                        -      1.0          -          -      0.5      (0.4)          -      0.6      (1.2) 
 
Diluted                     6,043    183.9        3.3    254,074    179.4      141.6    697,274    181.5      384.2 
Adjustments: 
Loss/(gain) on 
 revaluation of 
 investment properties     47,673        -       25.9  (204,662)        -    (114.0)  (597,224)        -    (329.0) 
Acquisition costs 
 written off                    -        -          -        416        -        0.2        416        -        0.2 
Change in fair 
 value of interest 
 rate derivatives           (564)        -      (0.3)      (477)        -      (0.3)    (1,389)        -      (0.8) 
Gain on disposal 
 of investment 
 property                       -        -          -          -        -          -      (584)        -      (0.3) 
Refinancing fees              732        -        0.4          -        -          -          -        -          - 
Share of associates' 
 non-recurring 
 gains and losses               -        -          -    (3,293)        -      (1.8)    (3,293)        -      (1.8) 
EPRA - diluted             53,884    183.9       29.3     46,058    179.4       25.7     95,200    181.5       52.5 
 
EPRA - basic               53,884    182.9       29.5     46,058    178.9       25.7     95,200    180.9       52.6 
                         --------  -------  ---------  ---------  -------  ---------  ---------  -------  --------- 
 

The calculation of basic earnings is based on profit after tax for the period. The weighted average number of shares used to calculate diluted earnings per share has been adjusted for the conversion of share options.

EPRA earnings and earnings per ordinary share have been disclosed to give a clearer understanding of the Group's underlying trading performance.

   9.             NON-CURRENT ASSETS 

a) Investment property

 
                                                 Investment 
                                Investment   property under  Right-of-use 
                                  property     construction        assets      Total 
                                    GBP000           GBP000        GBP000     GBP000 
At 1 April 2022                  2,342,199          285,400        19,174  2,646,773 
Additions                           31,881           42,451             -     74,332 
Adjustment to present value              -                -         2,035      2,035 
Reclassification                    39,288         (39,288)             -          - 
Acquisition of freehold                  -                -       (1,598)    (1,598) 
Revaluation                       (27,122)         (20,551)             -   (47,673) 
Depreciation                             -                -         (762)      (762) 
 
At 30 September 2022             2,386,246          268,012        18,849  2,673,107 
                              ------------  ---------------  ------------  --------- 
 

Capital commitments at 30 September 2022 were GBP 10.6 million (31 March 2022: GBP20.9 million).

b) Plant, equipment, and owner-occupied property

 
                                                                                   Fixtures, 
                                      Leasehold                                fittings, and    Right of use 
                       Freehold   improve-ments    Plant and                          office          assets 
                       property          GBP000    machinery  Motor vehicles       equipment          GBP000     Total 
                         GBP000                       GBP000          GBP000          GBP000                    GBP000 
Cost 
At 1 April 2022           2,290              59          447              32           1,640             872     5,340 
Additions                    57               -          129               -             357               -       543 
Retirement of 
 fully 
 depreciated 
 assets                       -               -         (50)               -           (352)               -     (402) 
At 30 September 
 2022                     2,347              59          526              32           1,645             872     5,481 
 
Accumulated 
depreciation 
At 1 April 2022           (636)            (16)        (135)            (32)           (347)           (317)   (1,483) 
Charge for the 
 period                    (22)             (2)         (75)               -           (366)            (53)     (518) 
Retirement of 
 fully 
 depreciated 
 assets                       -               -           50               -             352               -       402 
                 --------------  --------------  -----------  --------------  --------------  --------------  -------- 
At 30 September 
 2022                     (658)            (18)        (160)            (32)           (361)           (370)   (1,599) 
 
Net book value 
                 --------------  --------------  -----------  --------------  --------------  --------------  -------- 
At 30 September 
 2022                     1,689              41          366               -           1,284             502     3,882 
 
At 31 March 
 2022                     1,654              43          312               -           1,293             555     3,857 
 

c) Intangible assets

The intangible asset relates to the Big Yellow brand, which was acquired through the acquisition of Big Yellow Self Storage Company Limited in 1999. The carrying value of GBP1.4 million remains unchanged from the prior year as there is considered to be no impairment in the value of the asset. The asset has an indefinite life and is tested annually for impairment or more frequently if there are indicators of impairment.

d) Investment

The Group has an GBP0.6 million investment in DS Operations Centre Limited, a company which provides out-of-hours monitoring and alarm receiving services, including for the Group's stores. The investment is carried at cost and tested annually for impairment.

e) Investment in associates

Armadillo

The Group had a 20% interest in Armadillo Storage Holding Company Limited ("Armadillo 1") and a 20% interest in Armadillo Storage Holding Company 2 Limited ("Armadillo 2"). Both interests were accounted for as associates, using the equity method of accounting. On 1 July 2021 the Group acquired the remaining interest in Armadillo 1 and Armadillo 2 that it did not previously own. From this date, Armadillo 1 and Armadillo 2 are accounted for as a wholly owned subsidiaries of the Group. The results up to this date are equity accounted as shown in the note below:

 
                                       Armadillo 1                                        Armadillo 2 
                    30 September 2022  30 September 2021               30 September 2022  30 September 2021 
                          (unaudited)        (unaudited)     31 March        (unaudited)        (unaudited)     31 March 
                               GBP000             GBP000         2022             GBP000             GBP000         2022 
                                                            (audited)                                          (audited) 
                                                               GBP000                                             GBP000 
At the beginning 
 of the period                      -              8,698        8,698                  -              5,022        5,022 
Share of results 
 (see below)                        -              2,413        2,413                  -              1,264        1,264 
Dividends                           -              (211)        (211)                  -              (224)        (224) 
Acquisition of 
 remaining 
 interest                           -           (10,900)     (10,900)                  -            (6,062)      (6,062) 
 
           At the                   -                  -            -                  -                  -            - 
            end of 
            the 
            period 
                    -----------------  -----------------  -----------  -----------------  -----------------  ----------- 
 

The figures below show the trading results of Armadillo, and the Group's share of the results up to the point of acquisition of the remaining interest in the Partnerships on 1 July 2021.

 
                                                                     Armadillo 1                    Armadillo 2 
                                                    1 April 2021 to 30 June 2021   1 April 2021 to 30 June 2021 
                                                                     (unaudited)                    (unaudited) 
                                                                          GBP000                         GBP000 
Income statement (100%) 
Revenue                                                                    3,170                          1,876 
Cost of sales                                                            (1,601)                          (793) 
Administrative expenses                                                    (126)                           (45) 
Operating profit                                                           1,443                          1,038 
Goodwill write-off                                                         (982)                        (1,849) 
Gain on the revaluation of investment properties                           4,888                          2,795 
Net interest payable                                                       (274)                          (183) 
Current and deferred tax                                                   6,988                          4,519 
                                                   ----------------------------- 
Profit attributable to shareholders                                       12,063                          6,320 
Dividends paid                                                           (1,054)                        (1,120) 
Retained profit                                                           11,009                          5,200 
                                                   ----------------------------- 
 
Group share (20%) 
Operating profit                                                             289                            208 
Goodwill write-off                                                         (196)                          (370) 
Gain on the revaluation of investment properties                             978                            559 
Net interest payable                                                        (55)                           (37) 
Current and deferred tax                                                   1,397                            904 
                                                   ----------------------------- 
Profit attributable to shareholders                                        2,413                          1,264 
Dividends paid                                                             (211)                          (224) 
                                                   ----------------------------- 
Retained profit                                                            2,202                          1,040 
                                                   ----------------------------- 
Associates' net assets                                                         -                              - 
                                                   ----------------------------- 
 
   10.          TRADE AND OTHER RECEIVABLES 
 
                                 30 September   30 September    31 March 
                                         2022           2021        2022 
                                  (unaudited)    (unaudited)   (audited) 
                                       GBP000         GBP000      GBP000 
Current 
Trade receivables                       5,184          4,767       4,763 
Other receivables                         310            646         949 
Prepayments and accrued income          3,012          3,581       2,044 
 
                                        8,506          8,994       7,756 
                                 ------------  -------------  ---------- 
 
   11.          TRADE AND OTHER PAYABLES 
 
                                30 September  30 September    31 March 
                                        2022          2021        2022 
                                 (unaudited)   (unaudited)   (audited) 
                                      GBP000        GBP000      GBP000 
Current 
Trade payables                         1,424         4,997       5,705 
Other payables                        15,612        12,812      13,762 
Accruals and deferred income          30,363        27,763      27,882 
 
                                      47,399        45,572      47,349 
                               -------------  ------------  ---------- 
 
   12.          BORROWINGS 
 
                                     30 September   30 September    31 March 
                                             2022           2021        2022 
                                      (unaudited)    (unaudited)   (audited) 
                                           GBP000         GBP000      GBP000 
Aviva loan                                  3,083          2,935       3,008 
Current borrowings                          3,083          2,935       3,008 
 
Aviva loan                                157,336        110,450     158,927 
M&G loan                                  120,000         70,000     120,000 
Armadillo bank loans                            -         47,950      39,500 
Bank borrowings                           198,000        176,000      99,000 
Unamortised debt arrangement costs        (2,280)        (2,038)     (2,455) 
Non-current borrowings                    473,056        402,362     414,972 
 
Total borrowings                          476,139        405,297     417,980 
                                     ------------  -------------  ---------- 
 

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 income statement. The Group cancelled the interest rate derivatives outstanding on the Armadillo loans when they were repaid in June 2022, receiving GBP436,000, their fair value at that date. The gain in the income statement for the period on its interest rate swaps was GBP564,000 (2021: gain of GBP477,000). The reconciliation of the balance sheet position is shown below:

 
                                                         GBP000 
Asset at 31 March 2022                                      885 
Change in fair value of derivatives during the period       564 
Receipt from cancellation of interest rate derivatives    (436) 
Asset at 30 September 2022                                1,013 
                                                         ------ 
 

The interest rate derivative asset is shown within current assets at the period end, as the interest rate derivative expires within 12 months of the balance sheet date.

At 30 September 2022 the Group was in compliance with all loan covenants. 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.

   13.          ADJUSTED NET ASSETS PER SHARE 

EPRA's Best Practices Recommendations guidelines contain three Net Asset Value (NAV) metrics: 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).

Basic net assets per share are shareholders' funds divided by the number of shares at the period end. Any 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 14).

 
                         Six months ended                  Six months ended                 Year ended 31 March 
                         30 September 2022                 30 September 2021                        2022 
                      Equity                             Equity                             Equity 
                attributable                       attributable                       attributable 
                 to ordinary                Pence   to ordinary                        to ordinary 
                shareholders     Shares       per  shareholders     Shares    Pence   shareholders     Shares    Pence 
                      GBP000    million     share        GBP000    million      per         GBP000    million      per 
                                                                              share                              share 
Basic NAV          2,153,884      183.1   1,176.3     1,777,076      182.8    972.1      2,184,375      182.8  1,194.7 
  Share and 
   save 
   as you earn 
   schemes             1,172        1.7    (10.1)         1,660        1.5    (7.0)          1,592        1.5    (8.3) 
Diluted NAV        2,155,056      184.8   1,166.2     1,778,736      184.3    965.1      2,185,967      184.3  1,186.4 
                ------------  ---------            ------------  ---------           -------------  --------- 
  Fair value 
   of 
   derivatives       (1,013)          -     (0.6)            27          -        -          (885)          -    (0.5) 
  Intangible 
   assets            (1,433)          -     (0.8)       (1,433)          -    (0.7)        (1,433)          -    (0.8) 
EPRA NTA           2,152,610      184.8   1,164.8     1,777,330      184.3    964.4      2,183,649      184.3  1,185.1 
                ------------  ---------            ------------  ---------           -------------  --------- 
  Valuation 
   methodology 
   assumption 
   (see 
   note 14) 
   (GBP000)          102,108          -      55.3       129,500          -     70.2        100,600          -     54.6 
                ------------  ---------  --------  ------------  ---------  -------  -------------  ---------  ------- 
Adjusted NAV       2,254,718      184.8   1,220.1     1,906,830      184.3  1,034.6      2,284,249      184.3  1,239.7 
                ------------  ---------  --------  ------------  ---------  -------  -------------  ---------  ------- 
 

JLL were appointed as the Group's valuers in March 2022. Their valuation model differs from the previous valuer CBRE's in that they do not assume a sale of the asset in year 10 of the discounted cash flow, instead taking the cash flows on in perpetuity at an all risks yield which reflects the implicit future growth of the business. This approach means purchaser's costs are not deducted on this in perpetuity cash flow. CBRE's model assumed a sale in year 10, and deducted purchaser's costs from this notional sale. This means the overall purchaser's costs are lower in the JLL model and explains why the valuation methodology assumption adjustment is lower in the current period and prior year compared to the prior period.

   14.          VALUATION OF INVESTMENT PROPERTY 

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 period.

The freehold and leasehold investment properties have been valued at 30 September 2022 by the Directors. The valuation has been carried out in accordance with the same methodology as the year end valuations prepared by Jones Lang Lasalle ("JLL").

The Directors' valuations reflect the latest cash flows derived from each of the stores at 30 September 2022. In performing the valuations, the Directors consulted with JLL on the capitalisation rates used in the valuations. The Directors, as advised by JLL, consider that the capitalisation rates for prime self storage stores have moved out by on average 30 bps across the portfolio since the start of the financial year, reflecting increased financing costs and macroeconomic uncertainty (see further commentary in the Financial Review).

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 JLL in the March 2022 valuations are still appropriate at the September valuation date. See the Group's annual report for the year ended 31 March 2022 for the full detail of the valuation methodology.

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 valuations of changes in yields and stable occupancy is shown below:

 
                        Impact of a change in           Impact of a change in stabilised 
                         capitalisation rates                  occupancy assumption 
                   25 bps decrease   25 bps increase       1% increase         1% decrease 
                 -----------------  ----------------  ----------------  ------------------ 
 Reported Group                            (GBP100.0 
                  GBP109.8 million          million)   GBP32.5 million   (GBP33.0 million) 
                 -----------------  ----------------  ----------------  ------------------ 
 

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.

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% of gross value, as if they were sold directly as property assets. The valuation is an asset valuation that 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 for the deduction of operational costs 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 Directors have therefore carried out a valuation on the above basis, and this results in a higher property valuation at 30 September 2022 of GBP2,756.4 million (GBP102.1 million higher than the value recorded in the balance sheet which translates to 55.3 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 13).

   15.          FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURES 

The table below sets out the categorisation of the financial instruments held by the Group at 30 September 2022. Where the financial instruments are held at fair value the valuation level indicates the priority of the inputs to the valuation technique. The fair value 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). Valuations categorised as Level 2 are obtained from third parties. 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.

 
                                                                  30 September  30 September 
                                                                          2022          2021 
                                                                   (unaudited)   (unaudited) 
                                                       Valuation 
                                                           level        GBP000        GBP000 
         Interest rate derivatives asset/(liability)           2         1,013          (27) 
 
   16.          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, and Adrian Lee is a shareholder in AnyJunk Limited. During the period AnyJunk Limited provided waste disposal services to the Group on normal commercial terms amounting to GBP8,000 (2021: GBP4,000).

Transactions with Armadillo

As described in note 9e, the Group had a 20% interest in Armadillo Storage Holding Company Limited and a 20% interest in Armadillo Storage Holding Company 2 Limited. The Group acquired the remaining interest in both companies that it did not own on 1 July 2021. From this date, the Companies were wholly owned subsidiaries of the Group and hence the transactions subsequent to that date are not disclosable. Up to the date of acquisition, the Group entered into transactions with the Companies on normal commercial terms and earned management fees of GBP238,000 from Armadillo 1 and GBP87,000 from Armadillo 2.

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. During the prior year 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 GBP1,000 during the period (2021: GBPnil).

DS Operations Centre Limited

The Group has invested GBP588,000 in DS Operations Centre Limited ("DSOC"). DSOC provided alarm and CCTV monitoring services to the Group under normal commercial terms during the period, amounting to GBP148,000 (2021: GBP132,000).

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 GBP6,000 (2021: GBP2,000).

Ukrainian Sponsorship Pathway UK

Nicholas Vetch and Heather Savory are trustees of a charity called Ukrainian Sponsorship Pathway UK ("USPUK") to help Ukrainians displaced by the war to travel to the UK as part of the "Homes for Ukraine" scheme. The charity has set up offices in Warsaw and Krakow and is one of the few that has been recognised for this purpose by the UK Government. We are proud to be financial supporters of this new charity and the Board approved a donation which was made in May 2022 of GBP50,000 (2021: GBPnil).

   17.          CASH FLOW NOTES 

a) Reconciliation of profit after tax to cash generated from operations

 
                                                    Six months     Six months        Year 
                                                         ended          ended       ended 
                                                  30 September   30 September    31 March 
                                                          2022           2021        2022 
                                                   (unaudited)    (unaudited)   (audited) 
                                          Note          GBP000         GBP000      GBP000 
Profit after tax                                         6,043        254,074     697,274 
Taxation                                                   710            794       1,602 
Share of profit of associates                                -        (3,677)     (3,677) 
Other operating income                                   (899)              -           - 
Investment income                                        (565)          (492)     (1,412) 
Finance costs                                            7,313          4,655      10,604 
                                                --------------  -------------  ---------- 
Operating profit                                        12,602        255,354     704,391 
 
Loss/(gain) on the revaluation of          9a, 
 investment properties                      14          47,673      (204,662)   (597,224) 
Gain on disposal of investment property                      -              -       (584) 
Loss of income insurance proceeds 
 received                                                  745              -           - 
Depreciation of plant, equipment, 
 and owner-occupied property                9b             465            441         857 
Depreciation of finance lease capital 
 obligations                                               815            755       1,659 
Employee share options                                   1,730          1,670       3,390 
                                                --------------  -------------  ---------- 
Cash generated from operations pre-working 
 capital movements                                      64,030         53,558     112,489 
 
Decrease in inventories                                      3             10        (71) 
(Increase)/decrease in receivables                       (906)            369       1,550 
Increase in payables                                       278          3,926       6,422 
                                                --------------  -------------  ---------- 
Cash generated from operations                          63,405         57,863     120,390 
                                                --------------  -------------  ---------- 
 
   b)   Reconciliation of net cash flow to movement in net debt 
 
                                                Six months     Six months        Year 
                                                     ended          ended       ended 
                                              30 September   30 September    31 March 
                                                      2022           2021        2022 
                                               (unaudited)    (unaudited)   (audited) 
                                                    GBP000         GBP000      GBP000 
 
Net decrease in cash and cash equivalents              (1)        (2,411)     (3,717) 
Cash flow from movement in debt financing         (57,984)       (70,035)    (83,135) 
 
Change in net debt resulting from cash 
 flows                                            (57,985)       (72,446)    (86,852) 
                                            --------------  -------------  ---------- 
 
Movement in net debt in the period                (57,985)       (72,446)    (86,852) 
Net debt at start of period                      (411,830)      (324,978)   (324,978) 
 
Net debt at end of period                        (469,815)      (397,424)   (411,830) 
                                            --------------  -------------  ---------- 
 
   18.          RISKS AND UNCERTAINTIES 

The risks facing the Group for the remaining six months of the financial year are consistent with those outlined in the Annual Report for the year ended 31 March 2022. The risk mitigating factors listed in the 2022 Annual Report are still appropriate.

The economic outlook remains uncertain, with significant inflationary pressures in the economy and an associated impact on the cost of living. This may create economic headwinds in the quarter to December 2022 and into 2023, which may have an impact on the demand for self storage.

The value of Big Yellow's property portfolio is affected by the conditions prevailing in the property investment market and the general economic environment. Accordingly, the Group's net asset value can rise and fall due to external factors beyond management's control. The uncertainties in the global economy look set to continue. We have a high-quality prime portfolio of assets that should help to mitigate the impact of this on the Group.

Self storage is a seasonal business, and we typically lose occupancy in the December quarter. The new year typically sees an increase in activity, occupancy, and revenue growth. The visibility we have in the business is relatively limited at three to four weeks and is based on the net reservations we have in hand, which are currently in line with our expectations.

There is a risk that our customers may default on their rent payments, however we have not seen an increase in bad debts since the onset of the pandemic. We have approximately 77,000 occupied rooms and this, coupled with the diversity of our customers' reasons for using storage, mean the risk of individual tenant default to Big Yellow is low. 80% of our customers pay by direct debit and we take a deposit from all customers. Furthermore, we have a right of lien over customers' goods, so in the ultimate event of default, we are able to auction the goods to recover the debts.

   19.          GLOSSARY 
 
Adjusted earnings       The increase in adjusted eps period-on-period. 
 growth 
  Adjusted eps          Adjusted profit after tax divided by the diluted 
                         weighted average number of shares in issue during 
                         the financial period. 
  Adjusted NAV          EPRA NTA adjusted for an investment property valuation 
                         carried out at purchasers' costs of 2.75%, see 
                         note 13. 
  Adjusted profit       The Company's pre-tax EPRA earnings measure with 
   before tax            additional Company adjustments. 
  Average net achieved  Storage revenue divided by average occupied space 
   rent per sq ft        over the period. 
Average rental          The growth in average net achieved rent per sq 
 growth                  ft period-on-period. 
BREEAM                  An environmental rating assessed under the Building 
                         Research Establishment's Environmental Assessment 
                         Method. 
Carbon intensity        Carbon emissions divided by the Group's average 
                         occupied space. 
Closing net rent        Annual storage revenue generated from in-place 
 per sq ft               customers divided by occupied space at the balance 
                         sheet date. 
Committed facilities    Available undrawn debt facilities plus cash and 
                         cash equivalents. 
Debt                    Long-term and short-term borrowings, as detailed 
                         in note 12, excluding finance leases and debt issue 
                         costs. 
  Earnings per share    Profit for the financial period attributable to 
   (eps)                 equity shareholders divided by the average number 
                         of shares in issue during the financial period. 
EBITDA                  Earnings before interest, tax, depreciation, and 
                         amortisation. 
EPRA                    The European Public Real Estate Association, a 
                         real estate industry body. This organisation has 
                         issued Best Practice Recommendations with the intention 
                         of improving the transparency, comparability, and 
                         relevance of the published results of listed real 
                         estate companies in Europe. 
EPRA earnings           The IFRS profit after taxation attributable to 
                         shareholders of the Company excluding investment 
                         property revaluations, gains/losses on investment 
                         property disposals and changes in the fair value 
                         of financial instruments. 
EPRA earnings           EPRA earnings divided by the average number of 
 per share               shares in issue during the period. 
EPRA NTA per share      EPRA NTA divided by the diluted number of shares 
                         at the period end. 
  EPRA net tangible     IFRS net assets excluding the mark-to-market on 
   asset value (EPRA     interest rate derivatives, deferred taxation on 
   NTA)                  property valuations where it arises, and intangible 
                         assets. It is adjusted for the dilutive impact 
                         of share options. 
Equity                  All capital and reserves of the Group attributable 
                         to equity holders of the Company. 
Gross property          The sum of investment property and investment property 
 assets                  under construction. 
Gross value added       The measure of the value of goods and services 
                         produced in an area, industry, or sector of an 
                         economy. 
Interest cover          The ratio of operating cash flow divided by interest 
                         paid (before exceptional finance costs, capitalised 
                         interest, and changes in fair value of interest 
                         rate derivatives). This metric is provided to give 
                         readers a clear view of the Group's financial position. 
Like-for-like           Excludes the closing occupancy of new stores acquired, 
 occupancy               opened, or closed in the current or preceding financial 
                         year in both the current financial year and comparative 
                         figures. This excludes Aberdeen, Harrow, Hayes, 
                         Hove, Kingston North, Uxbridge, and the Armadillo 
                         stores. 
  Like-for-like         Excludes the impact of new stores acquired, opened 
   store revenue         or stores closed in the current or preceding financial 
                         year in both the current year and comparative figures. 
                         This excludes Aberdeen, Harrow, Hayes, Hove, Kingston 
                         North, Uxbridge, and the Armadillo stores. 
 
 
LTV (loan to value)         Net debt expressed as a percentage of the external 
                             valuation of the Group's investment properties. 
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. 
  Net operating             Store EBITDA after an allocation of central overhead. 
   income 
  Net operating             The projected net operating income delivered by 
   income on stabilisation   a store when it reaches a stable level of occupancy. 
Net promoter score          The Net Promoter Score is an index ranging from 
 (NPS)                       -100 to 100 that measures the willingness of customers 
                             to recommend a company's products or services to 
                             others. The Company measures NPS based on surveys 
                             sent to all its move-ins and move-outs. 
Net rent per sq             Storage revenue generated from in place customers 
 ft                          divided by occupancy. 
Occupancy                   The space occupied by customers divided by the 
                             MLA expressed as a % or in sq ft. 
Occupied space              The space occupied by customers in sq ft. 
  Other storage             Packing materials, insurance/enhanced liability 
   related income            service and other storage related fees. 
Pipeline                    The Group's development sites. 
  Property Income           A dividend, generally subject to withholding tax, 
   Distribution (PID)        that a UK REIT is required to pay from its tax-exempt 
                             property rental business, and which is taxable 
                             for UK-resident shareholders at their marginal 
                             tax rate. 
  REGO                      Renewable Energy Guarantees of Origin. 
  REIT                      Real Estate Investment Trust. A tax regime which 
                             in the UK exempts participants from corporation 
                             tax both on UK rental income and gains arising 
                             on UK investment property sales, subject to certain 
                             conditions. 
  REVPAF                    Total store revenue divided by the average maximum 
                             lettable area in the period. 
  Store EBITDA              Store earnings before interest, tax, depreciation, 
                             and amortisation. 
  Store maximum 
   lettable area              The total square foot (sq ft) available to rent 
   (MLA)                      to customers. 
  Store revenue             Revenue earned from the Group's open self storage 
                             centres. 
  TCFD                      Task Force on Climate Related Financial Disclosure. 
  Total shareholder         The growth in value of a shareholding over a specified 
   return (TSR)              period, assuming dividends are reinvested to purchase 
                             additional units of shares. 
 

INDEPENDENT REVIEW REPORT TO BIG YELLOW GROUP PLC

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2022 which comprises the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Cash Flow Statement, and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of conclusion section of this report, nothing has come to our attention that causes us to believe that the Directors have inappropriately adopted the going concern basis of accounting, or that the Directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the latest annual financial statements of the Group were prepared in accordance with UK-adopted international accounting standards.

The Directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Anna Jones

for and on behalf of KPMG LLP

Chartered Accountants

2 Forbury Place

33 Forbury Road

Reading

RG1 3AD

21 November 2022

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