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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Big Yellow Group Plc | LSE:BYG | London | Ordinary Share | GB0002869419 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 6.00 | 0.53% | 1,144.00 | 1,142.00 | 1,144.00 | 1,150.00 | 1,140.00 | 1,146.00 | 6,113 | 10:50:55 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Special Whse & Storage, Nec | 188.83M | 73.33M | 0.3738 | 30.60 | 2.24B |
From May 2019 to May 2024
TIDMBYG
RNS Number : 7923O
Big Yellow Group PLC
22 May 2018
Big Yellow Group PLC
("Big Yellow", "the Group" or "the Company")
Results for the YEAR ended 31 MARCH 2018
CONTINUED GROWTH IN ALL KEY METRICS
Hot Features
Premium
Year ended Year ended Growth
Financial metrics 31 March 31 March
2018 2017
Revenue GBP116.7m GBP109.1m 7%
Like-for-like revenue(1) GBP114.7m GBP107.3m 7%
Store EBITDA(1) GBP79.5m GBP73.5m 8%
Adjusted profit before tax(1) GBP61.4m GBP54.6m 12%
EPRA earnings per share(1) 38.5p 34.5p 12%
Dividend - final 15.5p 14.1p 10%
- total 30.8p 27.6p 12%
Statutory metrics
Profit before tax GBP134.1m GBP99.8m 34%
Cash flow from operating activities
(after net finance costs) GBP63.0m GBP56.0m 13%
Basic earnings per share 85.0p 63.6p 34%
Store metrics 179,000 sq 112,000 sq 67,000
Occupancy growth(1) ft ft sq ft
Closing occupancy(1) 81.0% 78.0% 3 ppts
Occupancy - like-for-like stores
(%)(1) 81.9% 78.0% 3.9 ppts
Average net achieved rent per sq
ft(1) GBP26.37 GBP26.16 0.8%
Closing net rent per sq ft(1) GBP26.74 GBP26.03 2.7%
(1) See note 28 for glossary of terms
Highlights
-- Strong occupancy performance driving 7% revenue growth
-- Closing net rent up 2.7% from 31 March 2017, average rate up 0.8% year on year and up 1.5% in the second half;
-- Cash flow from operating activities (after net finance costs) increased by 13% to GBP63.0 million
-- Adjusted profit before tax up 12% to GBP61.4 million -- 12% increase in total dividend to 30.8 pence per share
-- Acquisition of new development sites in Wapping (London), Uxbridge (London), Bracknell, Hove and Slough taking pipeline to approximately 640,000 sq ft (14% of current MLA)
-- Planning consent obtained at Manchester for a landmark city centre store of 60,000 sq ft -- Planning consent obtained at Camberwell, London for a 72,000 sq ft store -- Refinancing extending the term of the Group's debt and reducing the average cost
Nicholas Vetch, Executive Chairman of Big Yellow, commented:
"We remain focussed on our core objective of increasing occupancy to 90%. As we have previously indicated, higher levels of occupancy deliver more traction on pricing and drive rate growth and indeed we have seen that materialise in the second half of the year.
As our vacant capacity has reduced we have been more aggressively pursuing an expansion strategy. There are very few existing stores that are of sufficient quality available to purchase and brand as Big Yellow. We continue therefore to acquire raw land and develop our own stores, and are pleased to have secured a number of quality sites during the year. The development process however, of which we have unparalleled experience, remains long, does carry risk, and is increasingly complex.
Risks external to our business remain, and there will no doubt be setbacks in economic growth. It is for that reason that we keep the business very conservatively financed thus enabling us to plan and execute the next phase of growth."
ABOUT US
Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 96 stores, including 22 stores branded as Armadillo Self Storage, in which the Group has a 20% interest. We own a further ten Big Yellow self storage development sites (including one extension site), of which three have planning consent. The current maximum lettable area of the existing platform (including Armadillo) is 5.6 million sq ft. When fully built out the portfolio will provide approximately 6.2 million sq ft of flexible storage space. Of the Big Yellow stores and sites, 97% by value are held freehold and long leasehold, with the remaining 3% 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 Big Yellow stores, coupled with our excellent customer service and our market leading online platform, has created 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 James Gibson, Chief Executive Officer John Trotman, Chief Financial Officer Teneo Blue Rubicon 020 7260 2700 Ben Foster Matthew Denham
Chairman's Statement
Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's brand leader in self storage, is pleased to announce its results for the year ended 31 March 2018.
We have delivered another year of occupancy, revenue and earnings growth. In May 2017, along with our year end results, we set out our ambition to see material growth in occupancy towards our long held target of 85%. In November, with our interim results, we adjusted our occupancy target for the business as a whole to 90%. We are therefore pleased to be reporting significant progress in occupancy with these results. Like-for-like closing Group occupancy is up 3.9 percentage points to 81.9% compared to 78.0% at 31 March 2017. Closing net rent was GBP26.74, an increase of 2.7% from the same time last year. Average rental growth was up 0.8% year-on-year and up 1.5% in the second half.
We would expect to see further growth in occupancy over the summer, peaking at or above 85%, providing there are no significant external shocks. It remains our firm belief that occupancy gains are hard won and are of significant value to drive long term increases in average rent. As our occupancy rises, rate growth will come through driven by our yield management systems, and we have seen that in the second half of the year, and expect to see more of a contribution to revenue from rate growth in the current year.
Financial results
Revenue for the year was GBP116.7 million (2017: GBP109.1 million), an increase of 7%. Like-for-like revenue growth (excluding Nine Elms and Twickenham 2 acquired in April 2016 and Guildford Central opened in March 2018) was 7%.
Operating cash flow increased by GBP7.0 million (13%) to GBP63.0 million for the year (2017: GBP56.0 million). During the year we spent GBP42.0 million on growth capital expenditure, more than double the GBP20.6 million in 2017. The Group's operating profit before property revaluations increased by GBP5.6 million (9%) to GBP70.9 million. The Group's statutory profit before tax was GBP134.1 million, an increase of 34% from GBP99.8 million in the prior year due to the increase in operating profit and an increased revaluation gain on our investment properties in the year.
Given that our central overhead and operating expense is largely embedded in the business, this revenue growth has delivered an increase of 12% in the adjusted profit before tax in the year of GBP61.4 million (2017: GBP54.6 million). Adjusted earnings per share increased by 12% to 38.5p (2017: 34.5p) with an equivalent 12% increase in the dividend per share for the year.
The Group has net debt of GBP323.7 million at 31 March 2018 (2017: GBP298.0 million). This represents approximately 25% (2017: 25%) of the Group's gross property assets totalling GBP1,303.3 million (2017: GBP1,190.5 million) and 31% (2017: 31%) of the adjusted net assets of GBP1,059.1 million (2017: GBP963.4 million). The Group's interest cover for the year, expressed as the ratio of cash generated from operations against interest paid was 7.6 times (2017: 6.1 times). This is comfortably ahead of our internal minimum interest cover target of 5 times.
Investment in new capacity
Our 55,000 sq ft Guildford Central store on Woodbridge Meadows opened in March 2018, and after its first two months it is 12% occupied. The 25,000 sq ft extension to our Wandsworth store has just opened.
We have acquired five freehold development sites since 1 April 2017, increasing our pipeline to nine new stores and one extension, with a total capacity (subject to planning) of approximately 640,000 sq ft (14% of current MLA). The acquisitions in Wapping (just east of Tower Bridge), Uxbridge (West London), Hove, Bath Road in Slough, and Bracknell are all in London and the South East, and we believe when developed will be quality additions to the portfolio.
We continue to look for land and existing storage centres in large urban conurbations, with a focus on London and the South East, and should the current uncertainties throw up new opportunities, we will pursue them aggressively. That said, developing stores in these areas remains challenging given the competition for land, an increasingly long, expensive and complex planning process and the understandable pressure to produce more housing.
We have successfully acquired four of the six long leasehold interests within the Wapping building and are currently fitting out the available vacant space to create a self storage centre of approximately 25,000 sq ft, which will open in late summer.
As reported in our interims, we have obtained planning consent for a landmark Manchester city centre store of 60,000 sq ft on Water Street, which is currently under construction with a scheduled opening in spring 2019. We have also recently obtained planning consent for a 72,000 sq ft store in Camberwell, London, with the store scheduled to open in spring 2020. After lengthy consultations, we have made good progress on planning at Kings Cross and Battersea and anticipate submitting applications for both schemes later this year.
We are working up the planning applications on the recently acquired schemes in Bracknell, Slough, Hove and Uxbridge and will submit them in due course following negotiations with the relevant councils. As always, this process is subject to the vagaries of the planning system. At 31 March 2018, the future cost of the current pipeline of ten development sites and extensions, seven of which are subject to planning, is estimated to be GBP110 million.
Dividends
The Group's dividend policy is to distribute 80% of full year adjusted earnings per share. The final dividend declared is 15.5 pence per share. The dividend declared for the year of 30.8 pence per share represents an increase of 12% from 27.6 pence per share last year.
Our people
A business will only succeed if it has a fully motivated and engaged team. From the start we have always aimed to create a culture which is accessible, apolitical, non-hierarchical, socially responsible, and very importantly, a fun and enjoyable place to work. Some of you may have seen that we formally launched The Big Yellow Foundation in February, supporting six charities who focus on the rehabilitation of adults through work. This is a further step in the evolution of Big Yellow as a business, which has received very positive feedback and support from our people and customers. More details on the Foundation can be found online and in the CSR report.
In addition, we focus on customer service and engagement, measuring and responding to their feedback. There has been a further improvement in our customer net promoter scores ("NPS") to an average of 80.1 over the year. NPS scores at these levels are highly unusual and a good reflection of the culture of this business.
I would like to thank all our people for their efforts in contributing to another year of growth.
Board
Tim Clark has announced that he is stepping down as a Non-Executive Director at the Group's next AGM. He joined the Company in 2008 and over the past ten years has been a valuable Senior Independent Director, and Chair of the Remuneration and Nomination Committees. I will miss his sound advice, judgement, and considerable brainpower and along with the Board, would like to thank him for his significant contribution to Big Yellow's success.
Vince Niblett joined the Board as a Non-Executive Director and Chairman of the Audit Committee in June 2017. Vince was previously the Global Managing Partner Audit for Deloitte, and held a number of senior leadership roles there before his retirement in May 2015.
Anna Keay joined the Board as a Non-Executive Director in March 2018. Anna has been the CEO of the Landmark Trust since 2012, having started her career at Historic Royal Palaces, and then from 2002 to 2012 she was Curatorial Director of English Heritage.
I am delighted to welcome Vince and Anna. I consider it a plaudit that we can attract such high quality people to our Board.
Outlook
We remain focussed on our core objective of increasing occupancy to 90%. As we have previously indicated, higher levels of occupancy deliver more traction on pricing and drive rate growth and indeed we have seen that materialise in the second half of the year.
As our vacant capacity has reduced we have been more aggressively pursuing an expansion strategy. There are very few existing stores that are of sufficient quality available to purchase and brand as Big Yellow. We continue therefore to acquire raw land and develop our own stores, and are pleased to have secured a number of quality sites during the year. The development process however, of which we have unparalleled experience, remains long, does carry risk, and is increasingly complex.
Risks external to our business remain, and there will no doubt be setbacks in economic growth. It is for that reason that we keep the business very conservatively financed thus enabling us to plan and execute the next phase of growth.
Nicholas Vetch, Executive Chairman
21 May 2018
Strategic Report
OUR STRATEGY AND BUSINESS MODEL
Our Strategy
Our strategy from the outset has been to develop Big Yellow into the market leading self storage brand, delivering excellent customer service, with a great culture and highly motivated employees. We continue to be the market leading brand, with unprompted awareness of seven times that of our nearest competitor (source: YouGov survey, April 2018). We concentrate on developing our stores in main road locations with high visibility, where our distinctive branding generates high awareness of Big Yellow. Our accreditation in 2016 for the Best 100 Companies to work for was pleasing as an independent assessment of our employee engagement, and our customer satisfaction survey scores remain very high, with an average customer net promoter score of 80 in the year, and average Trustpilot scores of 9.5 out of 10.
Self storage demand from businesses and individuals at any given store is linked in part to local economic activity, consumer and business confidence, all of which are inter-related. Fluctuations in housing activity whether in the rented or owner occupied sector, are also a factor and in our view influence the top slice of demand over and above a core occupancy. The performance of our stores was relatively resilient during the collapse in housing activity and GDP over the period 2007 to 2009, with London and the South East proving to be less volatile.
Local GDP and hence business and housing activity are greatest in the larger urban conurbations and in particular London and the South East. Furthermore, people and businesses are space constrained in these more densely populated areas. Barriers to entry in terms of competition for land and difficulty around obtaining planning are also highest in more urbanised locations.
Over the last 19 years we have built a portfolio of 74 Big Yellow self storage centres, largely freehold, purpose-built and focussed on London, the South East and large metropolitan cities. We believe that by owning a predominantly freehold estate we are insulating ourselves against adverse rent reviews and in the long term possible redevelopment of key stores by the landlord. We currently have a pipeline of ten freehold development opportunities (including one extension) and are looking to expand that pipeline with a view to growing the Big Yellow platform to 100 stores.
65% of our current annualised store revenue derives from within the M25; for London and the South East, the proportion of current annualised store revenue is 83%. Any future external growth will be executed in a way that is likely to maintain a balance of 80% in London and the South East and 20% in regional cities.
Our Big Yellow stores are on average 62,000 sq ft, compared to an industry average of approximately 46,000 sq ft (source: The Self Storage Association 2018 UK Annual Survey). The upside from filling our larger than average sized stores is, in our view, only possible in large metropolitan markets, where self storage demand from domestic and business customers is the highest. As the operating costs of our assets are relatively fixed, larger stores in bigger urban conurbations, particularly London, drive higher revenues and higher operating margins.
We continue to believe that the medium term opportunity to create shareholder value will be achieved principally by increasing occupancy and net rent per sq ft in our existing platform to drive revenue, the majority of which flows through to the bottom line. Our key objectives remain:
- leveraging our market leading brand position to generate new prospects, principally from our digital, mobile and desktop platforms;
- focusing on training, selling skills, and customer satisfaction to maximise prospect conversion and referrals;
- growing occupancy and net rent so as to drive revenue optimally at each store;
- maintaining a focus on cost control, so revenue growth is transmitted through to earnings growth;
- increasing the footprint of the Big Yellow platform to 100 stores principally through new site development and where possible existing prime freehold stores that meet our quality criteria;
- selectively acquiring existing self storage assets into the Armadillo platform;
- maintaining a conservative capital structure in the business with Group interest cover of a minimum of five times; and
- producing sustainable returns for shareholders through a low leverage, low volatility, high distribution REIT.
In the eighteen years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 15.0% per annum, in aggregate 1,128% at the closing price of 853p on 31 March 2018. This compares to 6.5% per annum for the FTSE Real Estate Index and 5.0% per annum for the FTSE All Share index over the same period. This demonstrates the power of compounding over the longer term.
Our business model
Attractive market
dynamics * UK self storage penetration in key urban conurbations
remains relatively low
* Limited new supply coming onto the market
* Resilient through the downturn
* Sector growth is positive, with increasing domestic
demand
Our competitive
advantage * UK industry's most recognised brand
* Prominent stores on arterial or main roads, with
extensive frontage and high visibility
* Largest share of web traffic from mobile and desktop
platforms
* Strong customer satisfaction and NPS scores
reflecting excellent customer service
* 5.6 million sq ft UK footprint (Big Yellow and
Armadillo combined)
* Primarily freehold estate concentrated in London and
South East and other large metropolitan cities
* Larger average store capacity - economies of scale,
higher operating margins
* Secure financing structure with strong balance sheet
------------------------------------------------------------------
Evergreen income
streams * 55,000 customers from a diverse base - individuals,
SMEs and national accounts
* Average length of stay for existing customers of 26
months
* 30% of customers in stores greater than two year
length of stay
* Low bad debt expense (0.2% of revenue in the year)
------------------------------------------------------------------
Strong growth
opportunities * Opportunities to drive further occupancy growth
* Yield management as occupancy increases
* Densification of living and scarcity of flexible
business space drives demand
* Growth in national accounts and business customer
base
* Increasing the platform financed from internal
resources
* Growth in our Armadillo joint venture platform
------------------------------------------------------------------
Conversion into
quality returns * Freehold assets for high operating margins and
operational advantage
* Low technology and obsolescence product, maintenance
capex fully expensed
* Annual compound adjusted eps growth of 16% since
2004/5 (IFRS adoption year)
* Annual compound cash flow growth of 16% since 2004/5
* Dividend payout ratio of 80% of adjusted eps
------------------------------------------------------------------
The self storage market
In the recently published 2018 Self Storage Association UK Survey, only 46% of those surveyed had a reasonable or good awareness of self storage. Furthermore, only 6% of the 2,083 adults surveyed were currently using self storage, or were thinking of using self storage, in the next year. This indicates a continued opportunity for growth and with increasing use of self storage, together with the ongoing marketing efforts of everyone in the industry, we anticipate awareness will grow.
Self storage is not a commoditised product and awareness is driven largely by businesses and individuals using self storage. Consequently, the increase in awareness over time has been relatively slow, with good awareness of self storage increasing from 38% in 2014 to 46% in 2018 across the UK (source: UK SSA Survey 2018). Our YouGov Survey carried out in April 2018 showed higher levels of awareness in London of 63%, up from 58% in 2014.
Growth in new facilities across the industry has been largely in regional areas of the UK and in particular in smaller towns. In London in the year to 31 March 2018, we believe there were five new store openings offset by three closures.
The Self Storage Association ("SSA") estimates that the UK industry is made up of approximately 1,504 self storage facilities (of which 345 are purely container operations), providing 44.6 million sq ft of self storage space, equating to 0.7 sq ft per person in the UK. This compares to 9.5 sq ft per person in the US, 1.8 sq ft per person in Australia and 0.1 sq ft for mainland Europe, where the roll-out of self storage is a more recent phenomenon (source: FEDESSA European Self Storage Annual Survey 2017). 393 self storage facilities in the UK are held by large operators (defined as those managing 10 facilities or more), which represents 34% of the total number of self storage centres (excluding container operations), but the SSA estimate over 40% of total capacity. Given the dominance of the larger brands in the South East, we would expect the proportion of revenue earned by the top five operators to be in excess of 40% of the annual industry turnover of GBP750 million.
Big Yellow is well placed to benefit from the growing self storage market, given the strength of our brand, and our online platform which delivers 88% of our prospect enquiries. Our portfolio is strategically focussed on London, the South East and large metropolitan cities, where barriers to entry and economic activity are at their highest.
Operational and Marketing Review
Overview
We now have a portfolio of 74 open and trading Big Yellow stores, with a further ten development sites including one extension opportunity. The current maximum lettable area of the 74 stores is 4.6 million sq ft. When fully built out the portfolio will provide approximately 5.3 million sq ft of flexible storage space.
In addition we part-own and manage 22 Armadillo stores which are principally located in northern UK towns and cities, and operate from a platform of 1.0 million sq ft.
Growth in new self storage centre openings, excluding container operators, over the last six years has averaged 1% to 2% of total capacity per annum, down significantly from the previous decade. Additionally, in our core markets in London and the South East, high land values driven by competing uses such as residential, and complex planning rules, are making the creation of new supply very difficult for all operators. We believe that we are in a relatively strong position given the strength of our balance sheet and our proven property development expertise, together with our ability to access funding to exploit the right opportunities.
Operations
The Big Yellow store model is well established. The "typical" store has 60,000 sq ft of MLA and takes some three to four years to achieve 85% plus occupancy. The average room size occupied in the portfolio is currently 68 sq ft, in line with last year. The store is open seven days a week and is initially run by three staff, with a part time member of staff added once the store occupancy justifies the need for the extra administrative and sales workload.
The drive to improve store operating standards and consistency across the portfolio remains a key focus for the Group. Excellent customer service is at the heart of our business objectives, as a satisfied customer is our best marketing tool. We measure customer service standards through a programme of mystery shopping and online customer reviews, which are externally managed. Over the year, we have achieved an average net promoter score of 80.
We have a team of nine area managers in place who have on average worked for Big Yellow for 13 years. They develop and support the stores to drive the growth of the business.
The store bonus structure rewards occupancy performance, sales growth and cost control through quarterly targets based on occupancy and store profitability, including the contribution from ancillary sales of insurance and packing materials. Information on bonus build up is circulated monthly and stores are consulted in preparing their own targets and budgets each quarter, leading to improved visibility, a better understanding of sales lines and control of operating costs.
We believe, that as a consumer-facing branded business, it is paramount to maintain the quality of our estate and customer offering. We therefore continue to invest in preventative maintenance, store cleaning and the repair and replacement of essential equipment, such as lifts and gates. The ongoing annual expenditure is approximately GBP35,000 per store, which is included within cost of sales. This excludes our rolling programme of store makeovers, which typically take place every five years, at a cost of approximately GBP20,000 per store. Over the last five years we have invested GBP12 million in the upkeep and maintenance of our stores, all of which has been expensed in the income statement.
Demand
Demand for self storage is largely driven by need, with security, convenience, quality of product, service and location being key drivers. Awareness remains relatively low compared to commoditised products, such as hotel rooms or airline seats, albeit it is increasing slowly year on year with increased supply, marketing spend and customer use.
We are confident that Big Yellow benefits disproportionately from this improving market for our product, due to our market-leading brand and operating platform with our focus on London, the South East and large metropolitan cities. Our digital platform now accounts for 88% of our prospects, of which over half come through our mobile site.
Customers renting storage space whilst moving within the rental or owner occupied sectors represent 42% of move-ins during the year (2017: 43%). 11% of our customers who moved in took storage space as a spare room for decluttering (2017: 11%). 35% of our customers used the product because some event has occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited possessions, are getting married or divorced, are students who need storage during the holidays, or homeowners developing into their lofts or basements (2017: 34%). The balance of 12% of our customer demand during the year came from businesses (2017: 12%).
There is a growing trend towards self-employment and smaller business start-ups in the UK, dynamics that are positive for self storage. Additionally, businesses in the UK are increasingly seeking flexible office and storage space rather than longer inflexible leases. The deindustrialisation of big cities with the conversion of commercial space into residential and other uses, is also a driver for demand from the SME market seeking flexible warehouse space.
During the year, the Group commissioned an external survey to assess the impact the average Big Yellow store generates for its local economy. 35% of the Group's space is occupied by business customers, and the average store is home to 105 different businesses who between them employ 300 people as a direct result of their occupation. 60% of the businesses that occupy our stores are start-ups who have never rented space anywhere else before. For over half of the businesses, this is the only space they rent, for others this complements their other space. The report estimated that across Big Yellow over 23,000 jobs are created working for over 7,700 businesses. In addition, average local Gross Value Added generated by Big Yellow's business customers in each store is approximately GBP17 million per annum, or over GBP1 billion nationally.
Of our occupied space today, customers who are longer stay lifestyle users, decluttering into small rooms as an extension to their accommodation, occupy 10% to 15%; 50% to 55% are using it for less than 12 months largely event driven, which could be inheritance, moving in the owner occupied or rental sector, home improvements, travelling; and the balance of 35% are businesses.
We have a dedicated national accounts team for business customers who wish to occupy space in multiple stores. These accounts are billed and managed centrally. We have four full time members of staff working on growing and managing our national account customers. The national accounts team can arrange storage at short notice at any location for our customers. In smaller towns where we do not have representation, we have negotiated sub-contract arrangements with other operators who meet certain operating standards.
Marketing and ecommerce
Our marketing strategy focuses on driving enquiries and customer satisfaction through our digital platforms.
For the last 12 years, we have commissioned a YouGov survey to help us monitor our brand awareness. In our most recent survey conducted in April 2018, we used a statistically robust sample size of 1,000 respondents in London and 2,003 for the rest of the UK. The survey has shown our prompted awareness to be at 71% in London, over two and a half times higher than our nearest competitor and 46% for the rest of the UK, over three times higher than our nearest competitor.
For unprompted brand awareness, our recall in London is 46%, six and a half times higher than our nearest competitor and for the rest of the UK it is 23%, nearly eight times higher than our nearest competitor. The UK Self Storage Association ("SSA") has also conducted a brand awareness survey with similar results. According to their YouGov survey conducted in January 2018, Big Yellow's unprompted brand awareness across the UK is seven times higher than our nearest competitor. These surveys continue to prove we are the UK's brand leader in self storage.
The Big Yellow website, whether accessed by desktop, tablet or smartphone, delivers the largest share of our prospects, accounting for 88% of all sales leads across the year ended 31 March 2018. Telephone is the first point of contact for 8% of our prospects and walk in enquiries, where we have had no previous contact with a prospect, represent 4%.
We have the largest online market share of web visits to self storage company websites in the UK. Across the year ended 31 March 2018, our online market share of web visits ranged from 28% to 34%. Our nearest competitor ranged from 18% to 24% online market share for the same period (source: Connexity Hitwise 35 largest UK self storage operators).
We monitor and improve the website user journeys on an ongoing basis. We are committed to making the experience as easy, intuitive and informative as possible for our customers. Both the mobile specific website and our desktop site are designed with helpful and time saving online tools such as Check-in Online, online FAQs, video store tours, online chat, BoxShop and a Click and Collect service for packing materials. These all help the customer to make an informed choice about their self storage requirements.
Online customer reviews
Consistent with our strategy of putting the customer at the heart of our business, our online customer reviews generate real-time feedback from customers as well as providing positive word of mouth referral to our web visitors. Through our 'Big Impressions' customer feedback programme, we ask our new customers to rate our service. With the users' permission, we then publish these independent reviews on the Big Yellow website. There are currently over 23,000 of these customer reviews published averaging 4.8 out of 5.
The Big Impressions programme also generates customer feedback on their experience when they move out of a Big Yellow store and also from those prospects who decided not to store with us. This programme reinforces best practice of customer service at our stores where customer reviews and mystery shop results are transparently accessible at all levels.
We also gain real-time customer insight from over 3,800 Google Reviews averaging 4.5 out of 5 and 1,100 TrustPilot Reviews currently averaging 9.5 out of 10.
We regularly monitor any mentions of Big Yellow within all customer reviews, on social media, external blogs, news sites and across the web generally. We use this insight to monitor our brand and continually improve our service offering.
Driving online traffic
Self storage is a consumer facing business and the development of strong, sustainable brands is multi-layered and requires a consistency of product, customer service and interaction at all touch points, particularly online, which represents 88% of our total enquiries.
Search engines are the most important acquisition tool for us, accounting for the majority of traffic to our website. We continue to invest in search engine optimisation ("SEO") techniques both on and off the site. This helps us to maintain high positions for the most popular and most searched for self storage related search terms in the organic listings on Google. Of the top 100 self storage search terms, 47 feature brands, representing approximately 50% of the search traffic (source: Connexity Hitwise, 12 weeks ended 12 May 2018). This clearly indicates, that although self storage is a relatively immature industry with 70% to 75% of customers using it for the first time, brand is important in driving higher levels of prospects and customer referrals, leading to improved operational performance. We have demonstrated this through significant improvements in performance of existing storage centres following their acquisition, rebranding and assimilation into our business.
The sponsored search listings remain the largest source of paid for traffic and we ensure our prominence in these listings is balanced with effective landing pages to maximise website conversion.
Efficiencies in online spend are continuing into the year ending 31 March 2019, ensuring the return on investment is maximised from all of our different online traffic sources. Online marketing budgets will continue to remain focussed on the media with the best return on investment.
Social media
Social media continues to be complementary to our existing marketing channels. Our activity is most focussed on Twitter and Facebook, not only monitoring and answering queries regarding self storage, but also publishing our own creative posts, advice, news and CSR initiatives.
The Big Yellow YouTube channel is used to showcase our stores to web prospects through a video store tour. We use both domestic and business versions to help prospects experience the quality of the product without the need for them to visit the store in person. Our online blog is updated regularly with tips and advice for homeowners and businesses, as well as summaries of our charitable and CSR initiatives. We have also developed our LinkedIn profile to help promote Big Yellow as an inviting and engaging place to work and as a direct recruitment channel.
PR
We have been developing regional PR stories throughout the year to help raise the awareness of Big Yellow and the benefits of self storage across the UK. We have been highlighting newsworthy stories of charitable endeavours from Big Yellow staff or the support we provide to the local charities through offering free storage.
Budget
During the year the Group spent approximately GBP4.7 million on marketing (4% of total store revenue). We have increased the budget for the year ahead to GBP5.3 million with a focus on delivering and converting more prospects to our stores from our digital channels.
Cyber security
The Group receives specialist advice and consultancy in respect of cyber security and we have dedicated in-house monitoring. We continue to invest in and review our security systems and we limit the retention of customer data to the minimum requirement. Some of the changes include more frequent penetration testing of internet facing systems, adding components such as anti-ransomware as well as the maintenance and replacement of components (such as firewalls) to the latest technology and specification. Policies and procedures are under regular review and benchmarked against industry best practice by our consultants. These policies also include defend, detect and response policies. We have aligned our policies and procedures to ensure our compliance with the new EU General Data Protection Regulation ("GDPR") which comes into effect on 25 May 2018.
Store Performance
PORTFOLIO SUMMARY - BIG YELLOW STORES
2018 2017
Mature(1) Established Developing Total Mature Established Developing Total
Number of stores 67 4 3 74 67 4 2 73
--------- ----------- ---------- --------- --------- ----------- ---------- ---------
At 31 March:
Total capacity
(sq ft) 4,157,000 271,000 178,000 4,606,000 4,157,000 271,000 123,000 4,551,000
Occupied space
(sq ft) 3,417,000 223,000 90,000 3,730,000 3,271,000 213,000 67,000 3,551,000
Percentage occupied 82.2% 82.3% 50.6% 81.0% 78.7% 78.6% 54.5% 78.0%
Net rent per
sq ft GBP26.96 GBP26.08 GBP19.88 GBP26.74 GBP26.16 GBP25.29 GBP18.63 GBP26.03
For the year:
REVPAF(2) GBP25.55 GBP24.71 GBP14.51 GBP25.19 GBP24.11 GBP22.47 GBP9.45 GBP23.62
Average occupancy 82.0% 80.8% 43.6% 81.4% 78.2% 75.6% 40.7% 77.1%
Average annual
rent psf GBP26.55 GBP26.00 GBP19.59 GBP26.37 GBP26.33 GBP25.27 GBP19.03 GBP26.16
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Self storage
income 90,495 5,694 1,528 97,717 85,469 5,179 952 91,600
Other storage
related
income (3) 15,243 918 333 16,494 14,162 822 205 15,189
Ancillary store
rental
Income 435 84 5 524 432 88 6 526
-------------------- --------- ----------- ---------- --------- --------- ----------- ---------- ---------
Total store
revenue 106,173 6,696 1,866 114,735 100,063 6,089 1,163 107,315
Direct store
operating
costs (excluding
depreciation) (30,451) (1,948) (760) (33,159) (29,088) (1,885) (744) (31,717)
Short and long
leasehold rent(4) (2,101) - - (2,101) (2,126) - - (2,126)
-------------------- --------- ----------- ---------- --------- --------- ----------- ---------- ---------
Store EBITDA(5) 73,621 4,748 1,106 79,475 68,849 4,204 419 73,472
Store EBITDA
margin 69.3% 70.9% 59.3% 69.3% 68.8% 69.0% 36.0% 68.5%
Deemed cost GBP000 GBP000 GBP000 GBP000
To 31 March
2018 531,198 55,300 32,919 619,417
Capex to complete 1,700 - 800 2,500
-------------------- --------- ----------- ---------- ---------
Total 532,898 55,300 33,719 621,917
(1) The mature stores have been open for more than six years at 1 April 2017. The established stores have been open for between three and six years at 1 April 2017 and the developing stores have been open for fewer than three years at 1 April 2017.
(2) See glossary in note 28. (3) Packing materials, insurance and other storage related fees.
(4) Rent for seven mature short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 420,000 sq ft, and a long leasehold lease-up store with a capacity of 64,000 sq ft. The EBITDA margin for the 60 freehold mature stores is 72%, and 49% for the seven leasehold mature stores.
(5) The table below reconciles Store EBITDA to gross profit in the income statement.
Year ended 31 March 2018 Year ended 31 March 2017
GBP000 GBP000
Gross profit Gross profit
Store Reconciling per income Reconciling per income
EBITDA items statement Store EBITDA items statement
Store revenue/Revenue(1) 114,735 1,925 116,660 107,315 1,755 109,070
Cost of sales(2) (33,159) (2,515) (35,674) (31,717) (2,358) (34,075)
Rent(3) (2,101) 2,101 - (2,126) 2,126 -
--------- ------------ ------------- ------------- ------------ -------------
79,475 1,511 80,986 73,472 1,523 74,995
(1) See note 3 of the financial statements, reconciling items are management fees and non-storage income.
(2) See reconciliation in cost of sales section in 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.
PORTFOLIO SUMMARY - ARMADILLO STORES
2018 2017
Number of stores(1) 22 16
At 31 March:
Total capacity (sq ft) 963,000 738,000
Occupied space (sq ft) 712,000 551,000
Percentage occupied 73.9% 74.7%
Net rent per sq ft GBP16.97 GBP16.51
For the year:
REVPAF GBP15.09 GBP14.31
Average occupancy 76.0% 73.3%
Average annual rent psf GBP16.61 GBP16.36
GBP000 GBP000
Self storage income 10,677 8,781
Other storage related income 2,015 1,659
Ancillary store rental income 72 43
Total store revenue 12,764 10,483
Direct store operating costs (excluding
depreciation) (5,003) (4,222)
Leasehold rent (497) (411)
Store EBITDA(2) 7,264 5,850
Store EBITDA margin 56.9% 55.8%
Cumulative capital expenditure
GBPm
To 31 March 2018 69.1
To complete 0.5
Total capital expenditure 69.6
(1) Armadillo acquired three stores in April 2017 from Quickstore in Exeter, Torquay and Plymouth, one store in December 2017 from Store it 4U in Stockton, and two stores in March 2018 from 1(st) Storage Centres in Newcastle and Gateshead.
(2) Store earnings before interest, tax, depreciation, amortisation, and management fees charged by Big Yellow to the Armadillo portfolios (see note 27).
Prospects for the year were broadly in line with last year, but we converted a higher proportion of those prospects into customers, with move-ins up 3% on the prior year. This reflects the occupancy focus over the period, with continued innovation and investment in our digital platform and operations.
The table below shows the quarterly move-in and move-out activity over the year.
Total move-ins Total move-ins % Total move-outs Total move-outs %
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
April to June 20,332 19,509 4 15,112 15,625 (3)
July to September 21,463 20,702 4 22,952 22,239 3
October to
December 16,000 15,409 4 18,190 17,679 3
January to
March 16,133 16,095 - 15,273 14,468 6
------------------- --------------- --------------- --- ---------------- ---------------- ----
Total 73,928 71,715 3 71,527 70,011 2
In the quarter to June, we saw a solid increase in move-in activity of 4%. Move-outs were down year on year, following lower activity levels in the second half of the year ended 31 March 2017. Move-ins continued to outperform year-on-year in the second and third quarters, although move-outs also increased following the earlier improvement in move-in activity, with a high volume of student move-outs in September and October. In the fourth quarter, move-in activity was impacted by the poor weather coupled with an early Easter delaying some activity into April.
In all Big Yellow stores, the occupancy growth in the current year was 179,000 sq ft, against an increase of 112,000 sq ft in the prior year.
Quarterly net occupancy Net sq ft Net sq ft Net move-ins Net move-ins
movement Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
April to June 183,000 110,000 5,220 3,884
July to September 82,000 24,000 (1,489) (1,537)
October to December (170,000) (137,000) (2,190) (2,350)
January to March 84,000 115,000 860 1,547
------------------------- ------------ ------------ ------------- -------------
Total 179,000 112,000 2,401 1,544
We had a strong quarter to June with an increase in occupancy of 183,000 sq ft, significantly up on the prior year, which had been affected by uncertainty in the run-up to the Brexit referendum. The second quarter peaked in August and then many of our students and short term house movers vacated in September and October, leading to a net loss in occupied rooms and sq ft occupancy. The third quarter showed a higher loss in occupancy than the prior year due to the strong summer's trading which led to an increase in move-out numbers. In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the stores by 84,000 sq ft, which was slightly softer than the prior year for the reasons explained above.
The 67 mature stores are 82.2% occupied compared to 78.7% at the same time last year. The four established stores have grown in occupancy from 78.6% to 82.3%. The three developing stores added 23,000 sq ft of occupancy in the year to reach closing occupancy of 50.6%. Overall store occupancy has increased in the year from 78.0% to 81.0%. On a like-for-like basis, excluding Guildford Central, which opened in March 2018, closing occupancy was 81.9%, an increase of 3.9 percentage points.
With the exception of Guildford Central (which opened in March 2018), all of the stores open at the year end are trading profitably at the EBITDA level. The table below shows the average key metrics across the store portfolio (from the Portfolio Summary) for the year ended 31 March 2018:
Mature Established Developing All
stores stores stores stores
Average store capacity 62,040 67,750 59,330 62,240
Average sq ft occupied per
store at 31 March 2018 51,000 55,750 30,000 50,400
Average % occupancy 82.2% 82.3% 50.6% 81.0%
Average revenue per store (GBP000) 1,585 1,674 622 1,550
Average EBITDA per store (GBP000) 1,099 1,187 369 1,074
------- ----------- ---------- -------
Average EBITDA margin 69.3% 70.9% 59.3% 69.3%
Pricing and net rent per sq ft
Our core proposition remains a high quality product, competitively priced, with excellent customer service, providing value for money to our customers. 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.
Over the past eighteen months we have been more aggressive with our pricing strategy to drive occupancy growth, which led to a reduction in net achieved rent per sq ft in the second half of the prior financial year. Following this fall in the period to March 2017, and hence a lower starting point in this financial year, rate stabilised in the first half of the financial year with no average rate growth. In the second half, we achieved period on period average rate growth of 1.5% and as a result the average increase for the financial year was 0.8%. Net achieved rent per sq ft at 31 March 2018 grew by 2.7% over the financial year.
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 achieved net rents. Rental growth can also be driven through sub-dividing larger rooms into smaller rooms, which yield a higher net rent per sq ft. The table below shows the growth in net rent per sq ft for the portfolio over the year (excluding Guildford Central).
Average occupancy Net rent per
in sq ft growth
the year Number of stores from 1 April
to 31 March
2018
------------------- ------------------- --------------
0 to 75% 10 0.8%
75 to 80% 20 3.2%
80 to 85% 29 3.5%
Above 85% 14 3.5%
Armadillo Self Storage
The Group has a 20% investment in Armadillo Self Storage, with the balance of 80% held by an Australian consortium. During the year Armadillo acquired six stores, three stores in April 2017 from Quickstore in Exeter, Torquay and Plymouth, one store in December 2017 from Store it 4U in Stockton, and two stores in March 2018 from 1(st) Storage Centres in Newcastle and Gateshead.
This takes the Armadillo platform to 22 stores and 963,000 sq ft of MLA. As with the other existing store acquisitions, the intention will be to upgrade and reconfigure the stores through additional investment to drive cash flow growth. In the year to 31 March 2018, GBP1.5 million of capital expenditure has been invested to upgrade and fit out additional capacity in the Armadillo stores.
Armadillo is a lower-frills brand, with largely freehold conversions of existing buildings. They are located in towns where we would not typically locate a Big Yellow, and have an average capacity of 44,000 sq ft (lower than the 62,000 sq ft average for Big Yellow stores). Armadillo provides a number of operational advantages to the Group, such as a wider platform to sell to national accounts, more opportunities for staff promotion, and more efficient use of the Company's marketing and central overhead costs. The Group continues to look for opportunities to add to the Armadillo platform.
Development pipeline
We opened our 55,000 sq ft Guildford Central store in March 2018, and the 25,000 sq ft extension to our Wandsworth store has recently opened. We own a further ten development sites for which planning is to be negotiated, including an existing store where planning is being sought to extend and redevelop. The status of the Group's development pipeline is summarised in the table below:
Site Location Status Anticipated
capacity
------------------- ---------------------- ------------------------------ --------------
Manchester Prime location Planning consent granted 60,000 sq
on Water Street, in September 2017. Store ft
central Manchester construction started
in March 2018, with a
view to opening in Spring
2019.
Camberwell, London Prominent location Planning consent recently 72,000 sq
on Southampton granted. Construction ft
Way due to start in November
2018 with a view to opening
in Spring 2020.
Kings Cross, Prominent location Planning application 115,000
London on York Way currently being prepared to 120,000
to be submitted in Summer sq ft
2018.
Bracknell Prime location Site acquired in February 60,000 to
on Ellesfield Avenue 2018. Application to 65,000 sq
be submitted in late ft
summer to incorporate
self storage and other
occupiers.
Slough Prominent location Site acquired in November 50,000 sq
on Bath Road 2017. Planning application ft
to be submitted in late
2018.
Battersea, London Prominent location Potential redevelopment Up to an
on junction of to increase size of existing additional
Lombard Road and 34,000 sq ft Big Yellow 40,000 sq
York Road (South store. Redevelopment ft
Circular) of adjoining retail into
a mixed use residential
led scheme. Ongoing detailed
planning discussions
with the Borough Council
with the aim of submitting
an application later
this year.
Wapping, London Prominent location Site acquired in May 50,000 to
on The Highway 2017. We are currently 75,000 sq
converting the vacant ft
units into a 25,000 sq
ft self storage centre,
and collecting income
from the remaining short-let
tenancies. The store
will open in summer 2018.
Uxbridge, London Prominent location Site acquired in April 55,000 sq
on Oxford Road 2018. Planning application ft
to be submitted in Autumn
2018.
Hove Prominent location Site acquired in April 55,000 sq
on Old Shoreham 2018. Planning application ft to 60,000
Road to be submitted in 2019. sq ft
Newcastle Prime location Planning application 60,000 sq
on Scotswood Road to be submitted in Autumn ft
2019.
Total 617,000
sq ft to
657,000
sq ft
------------------- ---------------------- ------------------------------ --------------
The capital expenditure currently committed for the financial year ended 31 March 2019 is approximately GBP22 million, which includes the completion of the acquisitions of Hove and Uxbridge, and construction costs on Manchester, Camberwell and Wapping.
The Group manages the construction and fit-out of its stores in-house, as we believe it provides both better control and quality, and we have an excellent record of building stores on time and within budget.
Financial Review
Financial results
Revenue
Total revenue for the year was GBP116.7 million, an increase of GBP7.6 million (7%) from GBP109.1 million in the prior year. Like-for-like revenue for the year was GBP114.7 million, an increase of 7% from the prior year (2017: GBP107.3 million), principally driven by an increase in the average occupancy of the Group's stores. Like-for-like revenue excludes Nine Elms and Twickenham 2, which were acquired in April 2016 and Guildford Central, which opened in March 2018.
Other sales (included within the above), comprising the selling of packing materials, insurance and storage related charges, represented 16.9% of storage income for the year (2017: 16.6%) and generated revenue of GBP16.5 million for the year, up 9% from GBP15.2 million in 2017.
The other revenue earned by the Group is management fee income from the Armadillo Partnerships, and tenant income on sites where we have not started development.
Operating costs
Cost of sales principally comprise the direct store operating costs, including store staff salaries, utilities, business rates, insurance, a full allocation of the central marketing budget and repairs and maintenance.
The breakdown of the portfolio's operating costs compared to the prior year is shown in the table below:
Category Year ended Year ended % change % of store
31 March 31 March operating
2018 2017 costs in
GBP000 GBP000 2018
Cost of sales (insurance
and packing materials) 2,663 2,391 11% 8%
Staff costs 8,740 8,572 2% 26%
General & Admin 1,187 1,196 -1% 4%
Utilities 1,447 1,470 -2% 4%
Property rates 10,438 10,044 4% 32%
Marketing 4,656 4,152 12% 14%
Repairs / Maintenance 2,595 2,539 2% 8%
Insurance 921 893 3% 3%
Computer costs 494 443 12% 1%
Irrecoverable VAT 18 17 6% 0%
Total per portfolio summary 33,159 31,717 5%
Operating costs per the portfolio summary have increased by GBP1.4 million (5%), GBP0.5 million of which relates to our continued investment in marketing to maintain the Group's online market share and enquiry levels. Following the 2017 rating review, we calculated in May 2017 that the impact on the Group's rates bill for the year ending 31 March 2018 would be an increase of 9% (GBP0.9 million). The actual increase for the year at 4% is lower as a result of rates rebates received at two of our stores in respect of the previous rating period to March 2017.
The cost of insurance and packing materials varies with sales and has increased by 11%, 9% of which is the increase in sales volume, with the balance due to an increase in IPT, and some cost inflation. Our investment in LED lighting has contributed to a reduction in our utility expenditure. The other increases in store operating costs are inflationary.
The table below reconciles store operating costs per the portfolio summary to cost of sales in the income statement:
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Direct store operating costs per portfolio summary
(excluding rent) 33,159 31,717
Rent included in cost of sales (total rent payable
is included in portfolio summary) 1,109 1,196
Depreciation charged to cost of sales 439 489
Prior year VAT recovery - (278)
Head office and other operational management
costs charged to cost of sales 967 951
Cost of sales per income statement 35,674 34,075
Store EBITDA
Store EBITDA for the year was GBP79.5 million, an increase of GBP6.0 million (8%) from GBP73.5 million for the year ended 31 March 2017 (see Portfolio Summary). The overall EBITDA margin for all Big Yellow stores during the year was 69.3%, an improvement from 68.5% last year.
Administrative expenses
Administrative expenses in the income statement have increased by GBP0.4 million compared to the prior year. The prior year administrative expenses contained non-recurring costs of GBP0.2 million (the write-off of the Group's acquisition costs for the purchase of Lock and Leave in part offset by prior year VAT recovery), hence the like-for-like increase is GBP0.6 million. GBP0.4 million of this increase relates to an increase in the share based payments charge and an increase in national insurance contributions on the vesting of share options (following the increase in the Company's share price). The remaining difference is due principally to an increased investment in IT and other inflationary increases. Of our total GBP10.1 million administrative expense for the year, GBP2.5 million relates to the non-cash share based payments charge.
Interest expense on bank borrowings
The gross bank interest expense for the year was GBP9.8 million, a reduction of GBP1.1 million from the prior year. This reflects the Group's lower average cost of debt for the year, following an amendment to the bank loan to change the term debt to variable debt at a lower margin, coupled with the cancellation of an interest rate derivative over half of the M&G loan, which was extended during the year, and its subsequent re-hedging at a lower cost. The lower average cost was in part offset by slightly higher average debt levels. The average cost of borrowing during the year was 2.9% compared to 3.3% in the prior year.
Capitalised interest increased by GBP0.2 million from the prior year. The interest capitalised in the year is on our Guildford Central store and the Wandsworth extension. In the prior year interest was only capitalised on these developments in the final quarter.
Total finance costs in the income statement increased to GBP12.0 million from GBP11.8 million in the prior year, despite the reduction in interest payable, with refinancing costs incurred in the year of GBP1.5 million (see Borrowings section below).
Profit before tax
The Group made a profit before tax in the year of GBP134.1 million, compared to a profit of GBP99.8 million in the prior year.
After adjusting for the gain on the revaluation of investment properties and other matters shown in the table below, the Group made an adjusted profit before tax in the year of GBP61.4 million, up 12% from GBP54.6 million in 2017.
Profit before tax analysis 2018 2017
GBPm GBPm
----------------------------------------- ------- -------
Profit before tax 134.1 99.8
Gain on revaluation of investment
properties (71.6) (43.7)
Movement in fair value on interest
rate derivatives (1.3) (0.7)
Acquisition costs written off - 0.3
Prior year VAT recovery - (0.3)
Gain on part disposal of investment (0.6) -
property
Refinancing costs 1.5 -
Share of non-recurring gains and losses
in associates (0.7) (0.8)
Adjusted profit before tax 61.4 54.6
----------------------------------------- ------- -------
The movement in the adjusted profit before tax from the prior year is illustrated in the table below:
GBPm
-------------------------------------------- ------
Adjusted profit before tax - year ended 31
March 2017 54.6
Increase in gross profit 6.2
Decrease in net interest payable 1.0
Increase in administrative expenses (0.6)
Increase in capitalised interest 0.2
Adjusted profit before tax - year ended 31
March 2018 61.4
-------------------------------------------- ------
The share of adjusted profit in the associates was in line with the prior year. The Group's share of adjusted profit before tax of the associates was up GBP0.2 million, however there was an increase in the current tax charge as tax losses have now been fully utilised.
Basic earnings per share for the year was 85.0p (2017: 63.6p) and fully diluted earnings per share was 84.4p (2017: 63.1p). Diluted EPRA earnings per share based on adjusted profit after tax was up 12% to 38.5p (2017: 34.5p) (see note 12). EPRA earnings per share equates to the Company's adjusted earnings per share in the current year.
REIT status
The Group converted to a Real Estate Investment Trust ("REIT") in January 2007. Since then the Group has benefited from a zero tax rate on the Group's qualifying self storage earnings. The Group only pays tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and fees earned from the management of the Armadillo portfolio.
REIT status gives the Group exemption from UK corporation tax on profits and gains from its qualifying portfolio of UK stores. Revaluation gains on developments and our existing open stores will be exempt from corporation tax on chargeable gains, provided certain criteria are met.
The Group has a rigorous internal system in place for monitoring compliance with criteria set out in the REIT regulations. On a monthly basis, a report on compliance with these criteria is issued to the Executive. To date, the Group has complied with all REIT regulations, including forward looking tests.
Taxation
There is a tax charge in the current year of GBP0.6 million. This compares to a charge in the prior year of GBP0.3 million. The current year tax charge reflects an increase in profits in our residual business, in part offset by deductions allowed for tax purposes from the exercise of share options.
Dividends
The Board is recommending the payment of a final dividend of 15.5 pence per share in addition to the interim dividend of 15.3 pence, giving a total dividend for the year of 30.8 pence, an increase of 12% from the prior year.
REIT regulatory requirements determine the level of Property Income Dividend ("PID") payable by the Group. On the basis of the full year distributable reserves for PID purposes, a PID of 27.5 pence per share is payable (31 March 2017: 24.0 pence). The balance of the total annual dividend represents an ordinary dividend declared at the discretion of the Board, in line with our policy to distribute 80% of our adjusted earnings per share in each reporting period. The PID for the year to 31 March 2018 accounts for 89% of the total dividend, up from 87% in the prior year. The table below summarises the declared dividend for the year:
Dividend (pence per share) 31 March 31 March
2018 2017
------------------------------------------------- --------- ---------
Interim dividend - PID 15.3p 13.5p
nil p nil p
* discretionary
* total 15.3p 13.5p
Final dividend - PID 12.2p 10.5p
* discretionary 3.3p 3.6p
* total 15.5p 14.1p
Total dividend - PID 27.5p 24.0p
- discretionary 3.3p 3.6p
--------- ---------
- total 30.8p 27.6p
------------------------------------------------- --------- ---------
Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2018, the final dividend will be paid on 27 July 2018. The ex-div date is 21 June 2018 and the record date is 22 June 2018.
Cash flow growth
The Group is strongly cash generative and draws down from its longer term committed facilities as required to meet its obligations. The Group's cash flow from operating activities for the year was GBP63.0 million, an increase of 13% from GBP56.0 million in the prior year.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Cash generated from operations 73,457 67,209
Net finance costs (9,711) (10,964)
Tax (769) (271)
----------- -----------
Cash flow from operating activities 62,977 55,974
Capital expenditure (41,959) (20,577)
Asset sales 650 300
Receipt from Capital Goods Scheme 2,786 2,917
Investment in associate (900) -
Dividends received from associates 446 396
----------- -----------
Cash flow after investing activities 24,000 39,010
Ordinary dividends (46,183) (41,158)
Issue of share capital 969 286
Finance lease payments (1,109) (1,196)
Payment to cancel interest rate derivatives (3,374) -
Increase/(decrease) in borrowings 25,644 (7,243)
Net cash outflow (53) (10,301)
Opening cash and cash equivalents 6,906 17,207
----------- -----------
Closing cash and cash equivalents 6,853 6,906
Closing debt (330,599) (304,955)
----------- -----------
Closing net debt (323,746) (298,049)
In the year capital expenditure outflows were GBP42.0 million, up from GBP20.6 million in the prior year. The capital expenditure during the year principally relates to the acquisition of sites in Wapping, Bracknell and Slough, coupled with construction costs on Guildford Central and the extension to our existing Wandsworth store.
The cash flow after investing activities was a net inflow of GBP24.0 million in the year, down from an inflow of GBP39.0 million in 2017, with the growth in operating cash flow being more than offset by the increased investment in capital expenditure.
Balance sheet
Property
The Group's 74 stores and seven stores under development owned at 31 March 2018, which are classified as investment properties, have been valued individually by Cushman & Wakefield ("C&W") and this has resulted in an investment property asset value of GBP1,303.3 million, comprising GBP1,201.8 million (92%) for the 67 freehold (including three long leaseholds) open stores, GBP43.3 million (3%) for the seven short leasehold open stores and GBP58.2 million (5%) for the seven freehold investment properties under construction.
Analysis of property portfolio Value at Revaluation
31 March 2018 movement in
year
--------------------------------------- --------------- -------------
Investment property GBP1,245.1m GBP72.9m
Investment property under construction GBP58.2m (GBP1.3m)
--------------------------------------- --------------- -------------
Total GBP1,303.3m GBP71.6m
Investment property
The valuations in the current year have grown from the prior year, with a revaluation surplus of GBP72.9 million arising on the open Big Yellow stores (see note 15 for the detailed valuation methodology). Of this increase 69% is due to an improvement in the cap rate used in the valuations. The average exit capitalisation rate used in the valuations was 6.3% in the current year, compared to 6.6% in the prior year, with the discount rate adopted also reducing from 9.7% to 9.4%. The remaining 31% of the increase in value is due to the growth in cash flow from the assets and changes to the operating assumptions adopted in the valuations.
The valuation is based on an average occupancy over the 10 year cash flow period of 83.1% across the whole portfolio.
Mature Established Developing
Leasehold Freehold Freehold Freehold Total
------------------------------ ---------- ------------ ------------ ----------- ------------
Number of stores 7 60 4 3 74
MLA capacity (sq ft) 420,000 3,737,000 271,000 178,000 4,606,000
Valuation at 31 March GBP43.3m GBP1,080.8m GBP82.9m GBP38.1m GBP1,245.1m
2018
Value per sq ft GBP103 GBP289 GBP306 GBP214 GBP270
Occupancy at 31 March
2018 83.8% 82.0% 82.3% 50.6% 81.0%
Stabilised occupancy assumed 84.9% 83.3% 85.4% 85.0% 83.6%
Net initial yield pre-admin
expenses 12.9% 6.4% 5.9% 3.5% 6.5%
Stabilised yield assuming
no rental growth 13.2% 6.7% 6.4% 8.5% 6.9%
------------------------------ ---------- ------------ ------------ ----------- ------------
The initial yield pre-administration expenses assuming no rental growth is 6.5% (2017: 6.5%) rising to a stabilised yield of 6.9% (2017: 7.2%). The stores are assumed to grow to stabilised occupancy in 16 months on
average. Note 15 contains more detail on the assumptions underpinning the valuations.
As referred to in note 15 C&W observe that there is less transaction activity in the prime self storage market compared to other property markets, although there has been some activity for secondary assets. The capitalisation rates are therefore subject to higher levels of uncertainty than for other property sectors.
C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio were to be sold as a single lot or in selected groups of properties, the total value could differ significantly. C&W state that in current market conditions they are of the view that there could be a material portfolio premium.
Investment property under construction
The investment property under construction valuation has increased by GBP22.0 million in the year. Capital expenditure accounts for GBP33.0 million of this increase, notably on Bracknell, Slough, Wapping and Hove. This has been partly offset by Guildford Central transferring to open stores and a revaluation deficit of GBP1.3 million, where our projected construction costs have increased due to a change in the planned schemes on a couple of sites which are subject to planning.
Purchaser's cost adjustment
As in prior years, we have instructed an alternative valuation on our assets using a purchaser's cost assumption of 2.75% (see note 15 for further details) to be used in the calculation of our adjusted diluted net asset value. This Red Book valuation on the basis of the special assumption of 2.75% purchaser's costs, results in a higher property valuation at 31 March 2018 of GBP1,380.3 million (GBP77.0 million higher than the value recorded in the financial statements). With the share of uplift on the revaluation of the Armadillo stores (GBP0.7 million), this translates to 48.8 pence per share.
This revised valuation translates into an adjusted net asset value per share of 665.0 pence (2017: 607.6 pence) after the dilutive effect of outstanding share options.
Receivables
At 31 March 2018 we have a receivable of GBP4.3 million in respect of payments due back to the Group under the Capital Goods Scheme, as a consequence of the introduction of VAT on self storage from 1 October 2012. The receivable relates to VAT to be recovered on historic store development expenditure.
The debtor has been discounted in accordance with International Accounting Standards to the net present value using the Group's average cost of debt, with GBP0.2 million of the discount being unwound through interest receivable in the period. The gross value of the debtor before discounting is GBP4.6 million.
The Group received has received GBP11.3 million to date under the Scheme, of which GBP2.8 million was received in the year.
Net asset value
The adjusted net asset value is 665.0 pence per share (see note 13), up 9% from 607.6 pence per share at 31 March 2017. The table below reconciles the movement from 31 March 2017:
Movement in adjusted net asset value GBPm EPRA adjusted
NAV pence
per share
------------------------------------------ -------- --------------
1 April 2017 963.4 607.6
Adjusted profit after tax 60.8 38.4
Equity dividends paid (46.2) (29.1)
Cancellation of interest rate derivative (3.4) (2.1)
Revaluation movements (including share
of associate) 72.4 45.6
Movement in purchaser's cost adjustment 9.2 5.8
Other movements (e.g. share schemes) 2.9 (1.2)
31 March 2018 1,059.1 665.0
------------------------------------------ -------- --------------
Borrowings
Our financing policy is to fund our current needs through a mix of debt, equity and cash flow to allow us to build out our development pipeline and achieve our strategic growth objectives, which we believe improve returns for shareholders. We aim to ensure that there are sufficient medium-term facilities in place to finance our committed development programme, secured against the freehold portfolio, with debt serviced by our strong operational cash flows. We maintain a keen watch on medium and long-term rates and the Group's policy in respect of interest rates is to maintain a balance between flexibility and hedging of interest rate risk.
During the year, the Group further reduced its average cost of debt, whilst increasing the available facilities and extending the average term of its debt.
The Group extended its GBP70 million loan with M&G by a year, pushing its expiry out to June 2023. All other terms and conditions of the loan remained the same, hence it was not a material modification of the loan under IAS 39. At the same time, the Group cancelled the existing interest rate derivative that was in place over half of the M&G loan (2.64% expiring in June 2022) at a cost of GBP3.4 million and replaced it with a new derivative until June 2023 at a pre-margin rate of 0.76%.
The Group also amended the terms of its existing GBP190 million bank facility, which was treated as an extinguishment of the loan under IAS 39. The GBP85 million term loan, which attracted a margin of 150bps, was converted to revolving loan at a lower margin of 125 bps. The term of the loan was extended to October 2022 with an option in place to extend the loan by a further two years. The Group also has an option to increase the amount of revolving loan by a further GBP80 million during the course of the loan's term. The Group exercised its option over GBP20 million of this debt in March 2018, resulting in the overall bank facility being GBP210 million at the balance sheet date.
The refinancing costs of GBP1.5 million shown in the income statement relate to the unamortised loan arrangement costs of the previous bank facility, and the write-off of the costs of the new bank facility in accordance with IAS 39.
The table below summarises the Group's debt facilities at 31 March 2018. The average cost of debt has reduced to 2.9% from 3.2% at 31 March 2017:
Debt Expiry Facility Drawn Average interest
cost
------------------- -------------- ----------------- ---------------- -----------------
GBP87.6
Aviva Loan April 2027 GBP87.6 million million 4.9%
M&G loan June 2023 GBP70 million GBP70 million 2.8%
Bank loan (Lloyds
& HSBC) October 2022 GBP210 million GBP173 million 1.8%
------------------- -------------- ----------------- ---------------- -----------------
Average term GBP367.6 GBP330.6
Total 5.5 years million million 2.9%
The Group was comfortably in compliance with its banking covenants at 31 March 2018. For the year we had Group interest cover of 7.6 times (2017: 6.1 times) based on pre-interest operating cash flow against interest paid. The net debt to gross property assets ratio is 25% (2017: 25%) and the net debt to adjusted net assets ratio (see net asset value section above) is 31% (2017: 31%).
At 31 March 2018, the fair value on the Group's interest rate derivatives was an asset of GBP1.7 million. The Group does not hedge account its interest rate derivatives. As recommended by EPRA, the fair value movements are eliminated from adjusted profit before tax, diluted EPRA earnings per share, and adjusted net assets per share.
Cash deposits are only placed with approved financial institutions in accordance with the Group's Treasury policy.
Share capital
The share capital of the Company totalled GBP15.9 million at 31 March 2018 (2017: GBP15.8 million), consisting of 158,570,574 ordinary shares of 10p each (2017: 157,882,867 shares). 0.7 million shares were issued for the exercise of options during the year at an average exercise price of 725p (2017: 0.5 million shares at an average price of 738p).
The Group holds 1.1 million shares within an Employee Benefit Trust ("EBT"). These shares are shown as a debit in reserves and are not included in calculating net asset value per share.
2018 2017
No. No.
-------------------------------- ----------- -----------
Opening shares 157,882,867 157,369,287
Shares issued for the exercise
of options 687,707 513,580
----------------------------------- ----------- -----------
Closing shares in issue 158,570,574 157,882,867
Shares held in EBT (1,122,907) (1,122,907)
Closing shares for NAV purposes 157,447,667 156,759,960
----------------------------------- ----------- -----------
77.4 million shares were traded in the market during the year ended 31 March 2018 (2017: 74.9 million). The average mid-market price of shares traded during the year was 801.5p with a high of 900p and a low of 722p.
Investment in Armadillo
The Group has a 20% investment in Armadillo Storage Holding Company Limited and a 20% investment in Armadillo Storage Holding Company 2 Limited. In the consolidated accounts of Big Yellow Group PLC, our investments in the vehicles are treated as associates using the equity accounting method. In March 2018, Armadillo 2 raised GBP4.5 million of equity, which alongside additional debt from Lloyds, funded the acquisition of 1(st) Storage Centres. Big Yellow's equity invested was GBP0.9 million (20% of the total raised), with the balance funded by our partners.
The occupancy of the Armadillo stores at 31 March 2018 was 73.9% (31 March 2017: 74.7%). The occupancy growth in the year was 161,000 sq ft, including 141,000 sq ft of occupancy acquired in the six store purchases made in the year. The net rent achieved at 31 March 2018 by the Armadillo stores is GBP16.97 per sq ft, an increase of 2.8% from the same time last year. Revenue increased by 22% to GBP12.8 million for the year to 31 March 2018 (2017: GBP10.5 million); the like-for-like increase in revenue was 10%.
The Armadillo Partnerships made a combined operating profit of GBP6.2 million in the year, of which Big Yellow's share is GBP1.2 million. After net interest costs, the revaluation of investment properties (valued by Jones Lang LaSalle), deferred tax on the revaluation surplus and movement in interest rate derivatives, the profit for the year was GBP4.6 million, of which the Group's share was GBP0.9 million.
Big Yellow has a five year management contract in place in each Partnership. For the year to 31 March 2018 the Group earned management fees of GBP1.0 million. The Group's share of the declared dividend for the year is GBP0.4 million, representing a 12% yield on our original equity invested.
Principal risks and uncertainties
The Directors have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
The section below details the principal risks and uncertainties that are considered to have the most material impact on the Group's strategy and objectives. These key risks are monitored on an ongoing basis by the Executive Directors, and considered fully by the Board in its annual risk review.
Risk and impact Mitigation Change during the
year and outlook
Self storage market
risk Self storage is a relatively The UK economy is
There is a risk immature market in the UK projected to grow
to the business compared to other self storage at approximately
that the self markets such as the United 1.5% in 2018. Self
storage market States and Australia, and storage proved relatively
does not grow we believe has further opportunity resilient through
in line with our for growth. Awareness of the GFC, with our
projections, and self storage and how it can revenue and earnings
that economic be used by domestic and business increasing over
growth in the customers is relatively low the last eight years.
UK is below expectations, throughout the UK, although As the economy has
which could result higher in London. The rate recovered in the
in falling demand of growth of branded self past few years,
and a loss of storage on main roads in the market risk
income. good locations has historically has fallen in line
been limited by the difficulty with increasing
of acquiring sites at affordable occupancy.
prices and obtaining planning There is increased
consent. New store openings macroeconomic uncertainty
within the sector have slowed associated with
significantly over the past the UK's future
few years. exit from the EU,
Our performance during the and this has resulted
Global Financial Crisis ("GFC") in a broad range
was relatively resilient, of opinions on the
although not immune. We believe UK's future economic
that the resilience of our performance.
performance is due to a combination The Group's like-for-like
of factors including: occupancy has increased
* a prime portfolio of freehold properties; by 3.9 percentage
points in the year
from 78.0% to 81.9%.
* a focus on London and the South East and other large
metropolitan cities, which proved more resilient
during the GFC and where the drivers in the self
storage market are at their strongest and the
barriers to competition are at their highest;
* the strength of operational and sales management;
* continuing innovation to deliver the highest levels
of customer service;
* the UK's leading self storage brand, with high publi
c
awareness and online strength; and
* strong cash flow generation and high operating
margins, from a secure capital structure.
We have a large current storage
customer base of approximately
55,000 spread across the
portfolio of stores and hundreds
of thousands more who have
used Big Yellow over the
years. In any month, customers
move in and out at the margin
resulting in changes in occupancy.
This is a seasonal business
and typically we see growth
over the spring and the summer
months, with the seasonally
weaker periods being the
winter months.
Property risk
There is a risk Our management has significant The planning process
that we will be experience in the property remains difficult
unable to acquire industry generated over many and to achieve a
new development years and in particular in planning consent
sites which meet acquiring property on main can take anything
management's criteria. roads in high profile locations from eighteen months
This would impact and obtaining planning consents. to three years.
on our ability We do take planning risk Local planning policy
to grow the overall where necessary, although is increasingly
store platform. the availability of land, favouring residential
The Group is also and competition for it makes development over
subject to the acquiring new sites challenging. other uses, and
risk of failing Our in-house development we don't expect
to obtain planning team and our professional this to change given
consents on its advisers have significant the shortage of
development sites, experience in obtaining planning housing in the UK.
and the risk of consents for self storage
a rising cost centres.
of development. We manage the construction
of our properties very tightly.
The building of each site
is handled through a design
and build contract, with
the fit out project managed
in-house using an established
professional team of external
advisers and sub-contractors
who have worked with us for
many years to our Big Yellow
specification. We carried
out an external benchmarking
of our construction costs
and tendering programme in
2016, which had satisfactory
results.
Valuation risk
The valuations The valuations are carried The revaluation
of the Group's out by independent, qualified surplus on the Group's
investment properties external valuers who value open stores investment
may fall due to a significant proportion properties was GBP72.9
external pressures of the UK self storage industry. million in the year
or the impact The portfolio is diverse (an uplift of 6%),
of performance. with approximately 55,000 due to an improvement
Lack of transactional customers currently using in cash flows and
evidence in the our stores for a wide variety the capitalisation
self storage sector of reasons. rates used in the
leads to more There is significant headroom valuations.
subjective valuations. on our loan to value banking There continues
covenants. to be an increase
in transactional
evidence in the
sector, with a number
of portfolio transactions
taking place in
the current year.
Treasury risk
The Group may Our financing policy is to Interest rates were
face increased fund our current needs through increased during
costs from adverse a mix of debt, equity and the year, and the
interest rate cash flow to allow us to forecast is for
movements. selectively build out the further moderate
remaining development pipeline increases, albeit
and achieve our strategic they are expected
growth objectives, which to remain at relatively
we believe improve returns low levels for the
for shareholders. We have foreseeable future.
made it clear that we believe UK inflation reached
optimal leverage for a business 3% in 2017, but
such as ours should be LTV is forecast to moderate
in the range 20% to 30% and slightly in 2018.
this informs our management Debt providers currently
of treasury risk. remain supportive
We aim to ensure that there to companies with
are sufficient medium-term a strong capital
facilities in place to finance structure. That
our committed development said, a weaker
programme, secured against macro-economic
the freehold portfolio, with performance by the
debt serviced by our strong UK economy could
operational cash flows. adversely affect
We have a fixed rate loan liquidity and pricing.
in place from Aviva Commercial The Group's interest
Finance Limited, with nine cover ratio for
years remaining. The Group the year to 31 March
has a GBP70 million loan 2018 was 7.6 times,
from M&G Investments, which comfortably ahead
is 50% fixed and 50% floating, of our internal
repayable in 2023. For our target of 5 times.
bank debt, we borrow at floating
rates of interest and use
swaps to hedge our interest
rate exposure. Our policy
is to have at least 40% of
our total borrowings fixed,
with the balance floating.
At 31 March 2018 46% of the
Group's total borrowings
were fixed or subject to
interest rate derivatives.
The Group reviews its current
and forecast projections
of cash flow, borrowing and
interest cover as part of
its monthly management accounts.
In addition, an analysis
of the impact of significant
transactions is carried out
regularly, as well as a sensitivity
analysis assuming movements
in interest rates and store
occupancy on gearing and
interest cover. This sensitivity
testing underpins the viability
statement below.
The Group regularly monitors
its counterparty risk. The
Group monitors compliance
with its banking covenants
closely. During the year
it complied with all its
covenants, and is forecast
to do so for the foreseeable
future.
Tax and regulatory
risk We regularly monitor proposed In addition to the
The Group is exposed and actual changes in legislation regulatory and tax
to changes in with the help of our professional uncertainty linked
the tax regime advisers, through direct to the UK's future
affecting the liaison with HMRC, and through exit from the EU,
cost of corporation trade bodies to understand the Group has experienced
tax, VAT Stamp and, if possible, mitigate an increase in cost
Duty and Stamp or benefit from their impact. in the year following
Duty Land Tax HMRC have designated the the Government's
("SDLT"), for Group as having a low-risk review of business
example the imposition tax status, and we hold regular rates.
of VAT on self meetings with them. We carry
storage from 1 out detailed planning ahead
October 2012. of any future regulatory
The UK's future and tax changes using our
exit from the expert advisers.
EU creates uncertainty The Group has internal monitoring
over the future procedures in place to ensure
UK tax and regulatory that the appropriate REIT
environment. rules and legislation are
The Group is exposed complied with. To date all
to potential tax REIT regulations have been
penalties or loss complied with, including
of its REIT status projected tests.
by failing to
comply with the
REIT legislation.
Human resources
risk We have developed a professional, During the prior
Our people are lively and enjoyable working year, an employee
key to our success environment and believe our consultancy conducted
and as such we success stems from attracting an engagement survey
are exposed to and retaining the right people. of our employees.
a risk of high We encourage all our staff The survey results
staff turnover, to build on their skills showed very high
and a risk of through appropriate training levels of employee
the loss of key and regular performance reviews. engagement (90%),
personnel. We believe in an accessible which was an increase
With low unemployment, and open culture and everyone from 86% from our
and a risk of at all levels is encouraged previous survey
higher staff turnover, to review and challenge accepted in 2014.
difficulty in norms, so as to contribute
finding the right to the performance of the
employees increases. Group.
We were ranked 80(th) in
the Sunday Times Best 100
Companies to Work For survey
in February 2016.
Brand and reputation
risk
The Group is exposed We have always aimed to During the year,
to the risk of run this business in a professional we developed a crisis
a single serious way, which has involved strict response plan with
incident materially adherence with all regulations external consultants
affecting our that affect our business, to ensure the Group
customers, people, such as health and safety is well placed to
financial performance legislation, building regulations deal with a major
and hence our in relation to the construction incident more
brand and reputation. of our buildings, anti-slavery, effectively.
anti-bribery and data regulations.
We also invest in cyber security
(discussed below), and make
an ongoing investment in
staff training, facilities
management and the maintenance
of our stores.
To ensure consistency of
service and to understand
the needs of our customers,
we send surveys to every
customer who moves in and
moves out of the business.
The results of the surveys
and mystery shops are reviewed
to continuously improve and
deliver consistent performance
throughout the business.
We maintain regular communication
with our key stakeholders,
customers, employees, shareholders
and debt providers.
Security risk
The Group is exposed The safety and security of We have continued
to the risk of our customers, their belongings, to run courses for
the damage or and stores remains a key all our staff to
loss of store priority. To achieve this enhance the awareness
due to vandalism, we invest in state of the and effectiveness
fire, or natural art access control systems, of our procedures
incidents such individual room alarms, digital in relation to security.
as flooding. This CCTV systems, intruder and We regularly review
may also cause fire alarm systems and the and implement
reputational damage. remote monitoring of all improvements
our stores outside of our to our security
trading hours. We are the processes and procedures.
only major operator in the
UK self storage industry
that has every room in every
store individually alarmed.
We have implemented customer
security procedures in line
with advice from the Police
and continue to work with
the regulatory authorities
on issues of security, reviewing
our operational procedures
regularly. The importance
of security and the need
for vigilance is communicated
to all store staff and reinforced
through training and routine
operational procedures.
Cyber risk The Group receives specialist We don't consider
High profile cyber-attacks advice and consultancy in the risk to have
and data breaches respect of cyber security increased any faster
are a regular and we have dedicated in-house for the Group than
staple in today's monitoring and regular review anyone else; however
news. The results of our security systems, we consider that
of any breach we also limit the retention the threats in the
may result in of customer data to the minimum entire digital landscape
reputational damage, requirement. do continue to increase.
fines, or customer Policies and procedures are During the year
compensation, under regular review and we have continued
causing a loss benchmarked against industry to invest in digital
of market share best practice by our consultants. security. Some of
and income. These policies also include the changes include
defend, detect and response more frequent penetration
policies. testing of internet
We have also instigated a facing systems,
new working group for compliance adding components
with the new EU General Data such as anti-ransomware
Protection Regulation ("GDPR") as well as the
which comes into effect on maintenance
25 May 2018. replacement of components
such as firewalls
to the latest technology
and specification.
The introduction
of GDPR legislation
from May 2018 places
additional regulatory
burdens onto the
Group and carries
significant penalties
for non-compliance.
GOING CONCERN
A review of the Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are shown in the balance sheet, cash flow statement and accompanying notes in the financial statements. Further information concerning the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk can be found in this Report and in the notes to the financial statements.
After reviewing Group and Company cash balances, borrowing facilities, forecast valuation movements and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ending 31 March 2019 and projections contained in the longer-term business plan which covers the period to March 2022. The Directors have carefully considered the Group's trading performance and cash flows as a result of the uncertain global economic environment and the other principal risks to the Group's performance and are satisfied with the Group's positioning. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
VIABILITY STATEMENT
The Directors have assessed the Group's viability over a four year period to March 2022. This period is selected based on the Group's long term strategic plan to give greater certainty over the forecasting assumptions used.
In making their assessment, the Directors took account of the Group's current financial position, including committed capital expenditure. The Directors carried out a robust assessment of the principal risks and uncertainties facing the business and their potential financial impact on the Group's cash flows, REIT compliance and financial covenants and the likely effectiveness of the mitigating options detailed. The Directors have assumed that funding for the business in the form of equity, bank and insurance debt will be available in all reasonably plausible market conditions.
Based on this assessment the Directors have a reasonable expectation that the Company and the Group will be able to continue operating and meeting all their liabilities as they fall due to March 2022.
Statement of Directors' Responsibilities
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable, relevant and reliable; -- state whether they have been prepared in accordance with IFRSs as adopted by the EU;
-- assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
-- use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on 21 May 2018 and is signed on its behalf by:
James Gibson John Trotman Chief Executive Officer Chief Financial Officer
Consolidated Statement of Comprehensive Income
Year ended 31 March 2018
2018 2017
Note GBP000 GBP000
Revenue 3 116,660 109,070
Cost of sales (35,674) (34,075)
Gross profit 80,986 74,995
Administrative expenses (10,065) (9,679)
Operating profit before gains on property
assets 70,921 65,316
Gain on the revaluation of investment
properties 14a,15 71,635 43,706
Gain on part disposal of investment property 14a 650 -
Operating profit 143,206 109,022
Share of profit of associates 14d 1,370 1,442
Investment income - interest receivable 7 244 356
- fair value movement on derivatives 7, 18 1,294 719
Finance costs 8 (11,975) (11,756)
Profit before taxation 134,139 99,783
Taxation 9 (597) (272)
Profit for the year (attributable to equity
shareholders) 5 133,542 99,511
--------- ---------
Total comprehensive income for the year
(attributable to equity shareholders) 133,542 99,511
--------- ---------
Basic earnings per share 12 85.0p 63.6p
--------- ---------
Diluted earnings per share 12 84.4p 63.1p
--------- ---------
EPRA earnings per share are shown in Note 12.
All items in the consolidated statement of comprehensive income relate to continuing operations.
Consolidated Balance Sheet
31 March 2018
2018 2017
Note GBP000 GBP000
Non-current assets
Investment property 14a 1,245,142 1,154,390
Investment property under construction 14a 58,157 36,115
Interests in leasehold property 14a 22,929 23,601
Plant, equipment and owner-occupied
property 14b 3,092 3,216
Intangible assets 14c 1,433 1,433
Investment in associates 14d 9,276 7,452
Capital Goods Scheme receivable 16 2,385 4,091
Derivative financial instruments 18c 1,704 -
1,344,118 1,230,298
--------- ---------
Current assets
Inventories 283 283
Trade and other receivables 16 18,586 18,042
Cash and cash equivalents 6,853 6,906
25,722 25,231
--------- ---------
Total assets 1,369,840 1,255,529
--------- ---------
Current liabilities
Trade and other payables 17 (36,828) (36,935)
Borrowings 19 (2,474) (2,356)
Obligations under finance leases 21 (2,061) (2,005)
(41,363) (41,296)
--------- ---------
Non-current liabilities
Derivative financial instruments 18c - (2,964)
Borrowings 19 (326,461) (299,323)
Obligations under finance leases 21 (20,868) (21,596)
(347,329) (323,883)
--------- ---------
Total liabilities (388,692) (365,179)
Net assets 981,148 890,350
--------- ---------
Equity
Share capital 22 15,857 15,788
Share premium account 46,362 45,462
Reserves 918,929 829,100
Equity shareholders' funds 981,148 890,350
--------- ---------
The financial statements were approved by the Board of Directors and authorised for issue on 21 May 2018. They were signed on its behalf by:
James Gibson, Director John Trotman, Director
Company Registration No. 03625199
Consolidated Statement of Changes in Equity
Year ended 31 March 2018
Other Capital Own shares
Share premium non-distributable redemption Retained GBP000
Share capital account reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2017 15,788 45,462 74,950 1,795 753,374 (1,019) 890,350
Total comprehensive
income for the
year - - - - 133,542 - 133,542
Issue of share
capital 69 900 - - - - 969
Dividend - - - - (46,183) - (46,183)
Credit to equity
for equity-settled
share based
payments - - - - 2,470 - 2,470
At 31 March 2018 15,857 46,362 74,950 1,795 843,203 (1,019) 981,148
------------- ------------- ------------------ ----------- ---------- ----------- --------
The other non-distributable reserve arose in the year ended 31 March 2015 following the placing of 14.35 million ordinary shares.
Year ended 31 March 2017
Other Capital Own shares
Share premium non-distributable redemption Retained GBP000
Share capital account reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2016 15,737 45,227 74,950 1,795 692,697 (1,019) 829,387
Total comprehensive
income for the
year - - - - 99,511 - 99,511
Issue of share
capital 51 235 - - - - 286
Dividend - - - - (41,158) - (41,158)
Credit to equity
for equity-settled
share based
payments - - - - 2,324 - 2,324
At 31 March 2017 15,788 45,462 74,950 1,795 753,374 (1,019) 890,350
------------- ------------- ------------------ ----------- ---------- ----------- --------
Consolidated Cash Flow Statement
Year ended 31 March 2018
2018 2017
Note GBP000 GBP000
Cash generated from operations 26 73,457 67,209
Interest paid (9,724) (10,980)
Interest received 13 16
Tax paid (769) (271)
Cash flows from operating activities 62,977 55,974
----------- --------
Investing activities
Sale of surplus land - 300
Acquisition of Lock and Leave (net of
cash acquired) - (14,239)
Purchase of non-current assets (41,959) (6,338)
Proceeds on part disposal of investment
property 650 -
Receipts from Capital Goods Scheme 2,786 2,917
Investment in associate 14d (900) -
Dividend received from associates 14d 446 396
Cash flows from investing activities (38,977) (16,964)
----------- --------
Financing activities
Issue of share capital 969 286
Payment of finance lease liabilities (1,109) (1,196)
Equity dividends paid 11 (46,183) (41,158)
Payment to cancel interest rate derivative (3,374) -
Increase/(decrease) in borrowings 25,644 (7,243)
Cash flows from financing activities (24,053) (49,311)
----------- --------
Net decrease in cash and cash equivalents (53) (10,301)
Opening cash and cash equivalents 6,906 17,207
Closing cash and cash equivalents 6,853 6,906
----------- --------
Notes to the financial statements
Year ended 31 March 2018
1. General information
Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. The nature of the Group's operations and its principal activities are set out in note 4.
2. BASIS OF PREPARATIOn
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2018 or 2017 but is derived from those accounts. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The statutory accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied all accounting standards and interpretations issued by the International Accounting Standards Board and International Financial Reporting Interpretations Committee relevant to its operations and effective for accounting periods beginning on 1 April 2017. The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2017 have been applied in this condensed set of financial statements.
Going concern
A review of the Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operating 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 financial statements. Further information concerning the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk can be found in the Strategic Report and in the notes to the financial statements.
After reviewing Group and Company cash balances, borrowing facilities, forecast valuation movements and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ending 31 March 2019 and projections contained in the longer term business plan which covers the period to March 2022. The Directors have carefully considered the Group's trading performance and cash flows as a result of the uncertain global economic environment and the other principal risks to the Group's performance, and are satisfied with the Group's positioning. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
3. Revenue
Analysis of the Group's operating revenue can be found below and in the Portfolio Summary.
2018 2017
GBP000 GBP000
Open stores
Self storage income 97,717 91,600
Other storage related income 16,494 15,189
Ancillary store rental income 524 526
------- -------
114,735 107,315
Other revenue
Non-storage income 950 885
Management fees earned 975 870
Total revenue 116,660 109,070
------- -------
Non-storage income derives principally from rental income earned from tenants of properties awaiting development.
4. Segmental Information
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. Given the nature of the Group's business, there is one segment, which is the provision of self storage and related services.
Revenue represents amounts derived from the provision of self storage and related services which fall within the Group's ordinary activities after deduction of trade discounts and value added tax. The Group's net assets, revenue and profit before tax are attributable to one activity, the provision of self storage and related services. These all arise in the United Kingdom in the current year and prior year.
5. PROFIT for the year
a) Profit for the year has been arrived at after charging/(crediting):
2018 2017
GBP000 GBP000
Depreciation of plant, equipment and owner-occupied
property 729 738
Depreciation of finance lease capital obligations 1,109 1,196
Gain on the revaluation of investment property (71,635) (43,706)
Profit on part disposal of investment property (650) -
Cost of inventories recognised as an expense 1,043 1,035
Employee costs (see note 6) 16,306 15,622
Operating lease rentals 127 133
-------- --------
b) Analysis of auditor's remuneration:
2018 2017
GBP000 GBP000
Fees payable to the Company's auditor
for the audit of the Company's annual
accounts 156 156
Fess payable to the Company's auditor
for the subsidiaries' annual accounts 32 30
Total audit fees 188 186
------- -------
Audit related assurance services
- interim review 30 31
Tax advisory services - 19
Other assurance services - assurance
of CSR report - 22
Other services - planning consultancy - 11
Other services - 2
Total non-audit fees 30 85
------- -------
Fees payable to KPMG LLP and their associates for non-audit services to the Company are not required to be disclosed because the consolidated financial statements are required to disclose such fees on a consolidated basis. Fees charged by KPMG LLP to the Group's associates, Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited in the year amounted to GBP45,000 which all related to audit services. The prior year audit fees and non-audit fees disclosed were payable to Deloitte LLP.
6. Employee costs
The average monthly number of full-time equivalent employees (including Executive Directors) was:
2018 2017
Number Number
Sales 284 279
Administration 51 50
335 329
-------- -------
At 31 March 2018 the total number of Group employees was 375 (2017:
361).
2018 2017
GBP000 GBP000
Their aggregate remuneration comprised:
Wages and salaries 11,377 10,990
Social security costs 1,913 1,783
Other pension costs 546 525
Share-based payments 2,470 2,324
16,306 15,622
-------- -------
7. INVESTMENT income
2018 2017
GBP000 GBP000
Bank interest receivable 13 16
Unwinding of discount on Capital Goods Scheme
receivable 231 340
------- -------
Total interest receivable 244 356
------- -------
Change in fair value of interest rate derivatives 1,294 719
------- -------
Total investment income 1,538 1,075
------- -------
8. Finance costs
2018 2017
GBP000 GBP000
Interest on bank borrowings 9,817 10,953
Capitalised interest (360) (128)
Interest on obligations under finance leases 992 931
Total interest payable 10,449 11,756
------- -------
Refinancing costs 1,526 -
Total finance costs 11,975 11,756
------- -------
The refinancing costs relate to the unamortised loan arrangement costs of the previous bank facility which was extinguished, and the write-off of the costs of the new bank facility in accordance with IAS 39.
9. TaxATION
The Group converted to a REIT in January 2007. As a result the Group does not pay UK corporation tax on the profits and gains from its qualifying rental business in the UK provided that it meets certain conditions. Non-qualifying profits and gains of the Group are subject to corporation tax as normal. The Group monitors its compliance with the REIT conditions. There have been no breaches of the conditions to date.
Finance (No.2) Bill 2015 provides that the rate of corporation tax for the 2017 Financial Year (commencing 1 April 2017) would be 19% and that the rate from 1 April 2020 will be 18%. At Budget 2016, the government announced a further reduction to the Corporation Tax main rate (for all profits except ring fence profits) for the year starting 1 April 2020, setting the rate at 17%. This rate was incorporated in Finance Act 2016 which was fully enacted on 15 September 2016.
2018 2017
UK current tax GBP000 GBP000
Current tax:
* Current year 546 417
* Prior year 51 (145)
597 272
------- -------
A reconciliation of the tax charge is shown below:
2018 2017
GBP000 GBP000
Profit before tax 134,139 99,783
Tax charge at 19% (2017 - 20%) thereon 25,486 19,957
Effects of:
Revaluation of investment properties (13,734) (8,741)
Share of profit of associates (260) (288)
Other permanent differences (1,374) (1,242)
Profits from the tax exempt business (9,176) (8,791)
Utilisation of brought forward losses (11) -
Movement on other unrecognised deferred
tax assets (385) (478)
-------- -------
Current year tax charge 546 417
Prior year adjustment 51 (145)
Total tax charge 597 272
-------- -------
At 31 March 2018 the Group has unutilised tax losses of GBP32.1 million (2017: GBP32.6 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.
10. Adjusted Profit
2018 2017
GBP000 GBP000
Profit before tax 134,139 99,783
Gain on revaluation of investment properties
- wholly owned (71,635) (43,706)
- in associate (net of deferred tax) (724) (756)
Change in fair value of interest rate derivatives
- Group (1,294) (719)
- in associate (60) 8
Gain on part disposal of investment property (650) -
Prior period VAT recovery - (328)
Acquisition costs written off - 296
Refinancing costs 1,526 -
Share of associate acquisition costs written
off 120 63
Adjusted profit before tax 61,422 54,641
Tax (597) (272)
-------- --------
Adjusted profit after tax 60,825 54,369
-------- --------
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 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.
The refinancing costs of GBP1.5 million relate to the unamortised loan arrangement costs of the previous bank facility, and the write-off of the costs of the new bank facility in accordance with IAS 39.
11. Dividends
2018 2017
GBP000 GBP000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 March
2017 of 14.1p
(2016: 12.8p) per share. 22,107 20,003
Interim dividend for the year ended 31 March
2018 of 15.3p
(2017: 13.5p) per share. 24,076 21,155
46,183 41,158
------- -------
Proposed final dividend for the year ended
31 March 2018 of
15.5p (2017: 14.1p) per share. 24,417 22,107
------- -------
Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2018, the final dividend will be paid on 27 July 2018. The ex-div date is 21 June 2018 and the record date is 22 June 2018.
The Property Income Dividend ("PID") payable for the year is 27.5 pence per share (2017: 24.0 pence per share).
12. Earnings per share
Year ended 31 March 2018 Year ended 31 March 2017
Earnings Shares Pence per Earnings Shares Pence per
GBPm million share GBPm million share
Basic 133.5 157.1 85.0 99.5 156.5 63.6
Dilutive share options - 1.0 (0.6) - 1.2 (0.5)
Diluted 133.5 158.1 84.4 99.5 157.7 63.1
-------- -------- --------- -------- -------- ---------
Adjustments:
Gain on revaluation
of investment properties (71.6) - (45.3) (43.7) - (27.7)
Change in fair value
of interest rate derivatives (1.3) - (0.8) (0.7) - (0.4)
Gain on part disposal
of investment property (0.6) - (0.4) - - -
Acquisition costs written
off - - - 0.3 - 0.2
Prior period VAT recovery - - - (0.3) - (0.2)
Refinancing costs 1.5 - 1.0 - - -
Share of associate
non-recurring gains
and losses (0.7) - (0.4) (0.7) - (0.5)
EPRA - diluted 60.8 158.1 38.5 54.4 157.7 34.5
-------- -------- --------- -------- -------- ---------
EPRA - basic 60.8 157.1 38.7 54.4 156.5 34.8
-------- -------- --------- -------- -------- ---------
The calculation of basic earnings is based on profit after tax for the year. The weighted average number of shares used to calculate diluted earnings per share has been adjusted for the conversion of share options.
EPRA earnings and earnings per ordinary share have been disclosed to give a clearer understanding of the Group's underlying trading performance.
13. NET ASSETS PER SHARE
The European Public Real Estate Association ("EPRA") has issued recommended bases for the calculation of net assets per share information and this is shown in the table below:
31 March 2018 31 March 2017
GBP000 GBP000
Basic net asset value 981,148 890,350
Exercise of share options 1,105 820
EPRA NNNAV 982,253 891,170
Adjustments:
Fair value of derivatives (1,704) 2,964
Fair value of derivatives - share of
associate 17 77
Share of deferred tax in associates 794 626
EPRA NAV 981,360 894,837
-------------- --------------
Basic net assets per share (pence) 623.2 568.0
EPRA NNNAV per share (pence) 616.8 562.1
EPRA NAV per share (pence) 616.2 564.4
EPRA NAV (as above) (GBP000) 981,360 894,837
Valuation methodology assumption (see
note 15) (GBP000) 77,706 68,530
Adjusted net asset value (GBP000) 1,059,066 963,367
Adjusted net assets per share (pence) 665.0 607.6
No. of shares No. of shares
Shares in issue 158,570,574 157,882,867
Own shares held in EBT (1,122,907) (1,122,907)
-------------- --------------
Basic shares in issue used for calculation 157,447,667 156,759,960
Exercise of share options 1,798,494 1,781,652
-------------- --------------
Diluted shares used for calculation 159,246,161 158,541,612
Net assets per share are equity shareholders' funds divided by the number of shares at the year end. The shares currently held in the Group's Employee Benefit Trust are excluded from both net assets and the number of shares. Adjusted net assets per share include the effect of those shares issuable under employee share option schemes and the effect of alternative valuation methodology assumptions (see note 15).
14. Non-Current Assets
a) Investment property, investment property under construction and interests in leasehold property
Investment Investment Interests Total
property property in leasehold GBP000
GBP000 under construction property
GBP000 GBP000
At 31 March 2016 1,092,210 33,945 20,165 1,146,320
Additions 17,817 2,827 1,871 22,515
Adjustment to present value - - 2,761 2,761
Revaluation (see note 15) 44,363 (657) - 43,706
Depreciation - - (1,196) (1,196)
At 31 March 2017 1,154,390 36,115 23,601 1,214,106
Additions 8,147 33,012 - 41,159
Adjustment to present value - - 437 437
Transfer on opening of store 9,710 (9,710) - -
Revaluation (see note 15) 72,895 (1,260) - 71,635
Depreciation - - (1,109) (1,109)
At 31 March 2018 1,245,142 58,157 22,929 1,326,228
----------- ------------------- -------------- ---------
During the year the Group sold land at its Richmond store to an adjoining landowner for GBP650,000. The valuation of the store was not impacted by this disposal, hence the full proceeds have been recorded as profit on part disposal of investment property. This has been eliminated from the Group's adjusted profit for the year.
Additions to the interests in leasehold properties in the prior year relate to the lease at Twickenham 2, acquired from Lock and Leave in April 2016.
The income from self storage accommodation earned by the Group from its investment property is disclosed in note 3. Direct operating expenses, which are all applied to generating rental income, arising on the investment property in the year are disclosed in the Portfolio Summary. Included within additions is GBP0.4 million of capitalised interest (2017: GBP0.1 million), calculated at the Group's average borrowing cost for the year of 2.9%. 55 of the Group's investment properties are pledged as security for loans, with a total external value of GBP1,076.2 million.
b) Plant, equipment and owner occupied property
Motor vehicles Fixtures,
GBP000 fittings
Freehold Leasehold Plant and & office
property improve-ments machinery equipment Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 31 March 2016 2,183 101 592 25 1,498 4,399
Retirement of fully
depreciated assets - (4) (34) - (489) (527)
Additions 6 - 91 30 422 549
Disposals - - - (23) - (23)
At 31 March 2017 2,189 97 649 32 1,431 4,398
Retirement of fully
depreciated assets - (30) (79) - (584) (693)
Additions 8 7 121 - 469 605
At 31 March 2018 2,197 74 691 32 1,316 4,310
--------- -------------- ---------- --------------- ---------- -------
Depreciation
At 31 March 2016 (367) (52) (197) (25) (353) (994)
Retirement of fully
depreciated assets - 4 34 - 489 527
Charge for the year (42) (2) (102) (5) (587) (738)
Disposals - - - 23 - 23
At 31 March 2017 (409) (50) (265) (7) (451) (1,182)
Retirement of fully
depreciated assets - 30 79 - 584 693
Charge for the year (42) (2) (123) (7) (555) (729)
At 31 March 2018 (451) (22) (309) (14) (422) (1,218)
--------- -------------- ---------- --------------- ---------- -------
Net book value
--------- -------------- ---------- --------------- ---------- -------
At 31 March 2018 1,746 52 382 18 894 3,092
--------- -------------- ---------- --------------- ---------- -------
At 31 March 2017 1,780 47 384 25 980 3,216
--------- -------------- ---------- --------------- ---------- -------
c) Intangible assets
The intangible asset relates to the Big Yellow brand, which was acquired through the acquisition of Big Yellow Self Storage Company Limited in 1999. The carrying value remains unchanged from the prior year as there is considered to be no impairment in the value of the asset. The asset has an indefinite life and is tested annually for impairment or more frequently if there are indicators of impairment.
This was shown as goodwill in the prior year, but this has been restated to treat it as an intangible asset in both years, as this more fairly reflects the nature of the asset.
d) Investment in associates
Armadillo
The Group has 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 are accounted for as associates, using the equity method of accounting. Both companies are incorporated, registered and operate in England and Wales.
Armadillo 1 Armadillo 2 Total
31 March 2018 31 March 2017 31 March 2018 31 March 2017 31 March 2018 31 March 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At the beginning of
the year 5,048 4,173 2,404 2,233 7,452 6,406
Subscription for
capital - - 900 - 900 -
Share of results
(see below) 937 1,093 433 349 1,370 1,442
Dividends (255) (218) (191) (178) (446) (396)
Share of net assets 5,730 5,048 3,546 2,404 9,276 7,452
------------- ------------- ------------- ------------- ------------- -------------
In March 2018, Armadillo 2 raised GBP4.5 million of equity, which alongside additional debt from Lloyds, funded the acquisition of 1st Storage Centres. Big Yellow's equity invested was GBP0.9 million (20% of the total raised), with the balance funded by our partners. The Group's total subscription for partnership capital and advances in Armadillo 1 is GBP1,920,000 and GBP2,689,000 in Armadillo 2.
The investment properties owned by Armadillo 1 and Armadillo 2 have been valued at 31 March 2018 by Jones Lang LaSalle.
The figures below show the trading results of the Armadillo Partnerships, and the Group's share of the results and the net assets of the Armadillo Partnerships.
Armadillo 1 Armadillo 2
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 2017
2018 2017 2018 GBP000
GBP000 GBP000 GBP000
Income statement (100%)
Revenue 8,188 6,324 4,576 4,159
Cost of sales (4,247) (3,270) (1,919) (1,763)
Administrative expenses (282) (207) (136) (88)
Operating profit 3,659 2,847 2,521 2,308
Gain on the revaluation of investment properties 3,264 3,725 1,196 322
Net interest payable (938) (718) (813) (729)
Acquisition costs written off (375) (316) (227) -
Fair value movement of interest rate derivatives 147 8 154 (49)
Deferred and current tax (1,074) (78) (664) (109)
---------- ---------- ---------- --------------
Profit attributable to shareholders 4,683 5,468 2,167 1,743
Dividends paid (1,275) (1,091) (957) (890)
---------- ---------- ---------- --------------
Retained profit 3,408 4,377 1,210 853
---------- ---------- ---------- --------------
Balance sheet (100%)
Investment property 53,176 43,375 38,205 25,900
Interest in leasehold properties 1,403 - 3,233 3,526
Other non-current assets 1,149 1,125 1,989 1,487
Current assets 1,177 1,177 1,480 867
Current liabilities (2,842) (1,895) (2,367) (1,821)
Derivative financial instruments (52) (199) (34) (188)
Non-current liabilities (25,361) (18,341) (24,778) (17,753)
Net assets (100%) 28,650 25,242 17,728 12,018
---------- ---------- ---------- --------------
Group share
Operating profit 732 569 504 462
Gain on the revaluation of investment properties 653 745 239 64
Net interest payable (187) (144) (163) (146)
Acquisition costs written off (75) (63) (45) -
Fair value movement of interest rate derivatives 29 2 31 (10)
Deferred and current tax (215) (16) (133) (21)
---------- ---------- ---------- --------------
Profit attributable to shareholders 937 1,093 433 349
Dividends paid (255) (218) (191) (178)
---------- ---------- ---------- --------------
Retained profit 682 875 242 171
Associates' net assets 5,730 5,048 3,546 2,404
15. VALUATION OF INVESTMENT PROPERTY
Revaluation
on deemed
Deemed cost cost Valuation
GBP000 GBP000 GBP000
Freehold stores
At 31 March 2017 583,297 527,613 1,110,910
Transfer from investment property
under construction 11,763 (2,053) 9,710
Movement in year 7,780 73,452 81,232
------------ ------------ -----------
At 31 March 2018 602,840 599,012 1,201,852
Leasehold stores
At 31 March 2017 16,210 27,270 43,480
Movement in year 367 (557) (190)
At 31 March 2018 16,577 26,713 43,290
Total of open stores
At 31 March 2017 599,507 554,883 1,154,390
Transfer from investment property
under construction 11,763 (2,053) 9,710
Movement in year 8,147 72,895 81,042
------------ ------------ -----------
At 31 March 2018 619,417 625,725 1,245,142
Investment property under construction
At 31 March 2017 45,477 (9,362) 36,115
Transfer to investment property (11,763) 2,053 (9,710)
Movement in year 33,012 (1,260) 31,752
------------ ------------ -----------
At 31 March 2018 66,726 (8,569) 58,157
Valuation of all investment property
At 31 March 2017 644,984 545,521 1,190,505
Movement in year 41,159 71,635 112,794
At 31 March 2018 686,143 617,156 1,303,299
The Group has classified the fair value investment property and the investment property under construction within Level 3 of the fair value hierarchy. There has been no transfer to or from Level 3 in the year.
The wholly owned freehold and leasehold investment properties have been valued at 31 March 2018 by external valuers, Cushman & Wakefield ("C&W"). The valuation has been carried out in accordance with the RICS Valuation - Global Standards, published by The Royal Institution of Chartered Surveyors ("the Red Book"). The valuation of each of the investment properties and the investment properties under construction has been prepared on the basis of either Fair Value or Fair Value as a fully equipped operational entity, having regard to trading potential, as appropriate.
The valuation has been provided for accounts purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book. In compliance with the disclosure requirements of the Red Book, C&W have confirmed that:
-- one of the members of the RICS who has been a signatory to the valuations provided to the Group for the same purposes as this valuation, has done so since September 2004. This is the third occasion on which the other member has been a signatory;
-- C&W have been carrying out this annual valuation for the same purposes as this valuation on behalf of the Group since September 2004;
-- C&W do not provide other significant professional or agency services to the Group;
-- in relation to the preceding financial year of C&W, the proportion of the total fees payable by the Group to the total fee income of the firm is less than 5%; and
-- the fee payable to C&W is a fixed amount per store, and is not contingent on the appraised value.
Market uncertainty
C&W's valuation report comments on valuation uncertainty resulting from low liquidity in the market for self storage property. C&W note that in the UK since Q1 2015 there have only been thirteen transactions involving multiple assets and ten single asset transactions. C&W state that due to the lack of comparable market information in the self storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during more active market conditions.
Portfolio Premium
C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio was to be sold as a single lot or in selected groups of properties, the total value could differ significantly. C&W state that in current market conditions they are of the view that there could be a material portfolio premium.
Assumptions
A. Net operating income is based on projected revenue received less projected operating costs together with a central administration charge of 6% of the estimated annual revenue subject to a cap and a collar. The initial net operating income is calculated by estimating the net operating income in the first 12 months following the valuation date.
B. The net operating income in future years is calculated assuming either straight-line absorption from day one actual occupancy or variable absorption over years one to four of the cash flow period, to an estimated stabilised/mature occupancy level. In the valuation the assumed stabilised occupancy level for the 74 trading stores (both freeholds and leaseholds) open at 31 March 2018 averages 83.6% (31 March 2017: 82.8%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. The average time assumed for the 74 stores to trade at their maturity levels is 16 months (31 March 2017: 22 months).
C. The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for industrial and retail warehouse property, yields for other trading property types such as student housing and hotels, bank base rates, ten-year money rates, inflation and the available evidence of transactions in the sector. The valuation included in the accounts assumes rental growth in future periods. If an assumption of no rental growth is applied to the external valuation, the net initial yield pre-administration expenses for the 74 stores is 6.5% (31 March 2017: 6.5%) rising to a stabilised net yield pre-administration expenses of 6.9% (31 March 2017: 7.2%). The weighted average exit capitalisation rate adopted (for both freeholds and leaseholds) is 6.3% (31 March 2017: 6.6%).
D. The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that reflects the risk associated with each asset. The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 9.4% (31 March 2017: 9.7%).
E. Purchaser's costs in the range of circa 6.1% to circa 6.8% (see below) have been assumed initially, reflecting the progressive SLDT rates brought into force in March 2016 and sale plus purchaser's costs totalling circa 7.1% to 7.8% are assumed on the notional sales in the tenth year in relation to the freehold and long leasehold stores.
Short leasehold
The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted cash flow is extended to the expiry of the lease. The average unexpired term of the Group's seven short leasehold properties is 14.0 years (31 March 2017: 15.0 years unexpired).
Sensitivities
Self storage valuations are complex, derived from data which is not widely publicly available and involve a degree of judgement. For these reasons we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. Inputs to the valuations, some of which are 'unobservable' as defined by IFRS 13, include capitalisation yields, stable occupancy rates, and rental growth rates. The existence of an increase of more than one unobservable input would augment the impact on valuation. The impact on the valuation would be mitigated by the inter-relationship between unobservable inputs moving in opposite directions. For example, an increase in stable occupancy may be offset by an increase in yield, resulting in no net impact on the valuation. A sensitivity analysis showing the impact on valuations of changes in yields and stable occupancy is shown below.
Impact of a change in Impact of a change
capitalisation rates in stabilised occupancy
assumption
25 bps decrease 25 bps increase 1% increase 1% decrease
Reported GBP48.6m (GBP44.9m) GBP18.3m (GBP19.1m)
Group
A sensitivity analysis has not been provided for a change in the rental growth rate adopted as there is a relationship between this measure and the discount rate adopted. So, in theory, an increase in the rental growth rate would give rise to a corresponding increase in the discount rate and the resulting value impact would be limited.
Investment properties under construction
C&W have valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection expected for the store at opening and after allowing for the outstanding costs to take each scheme from its current state to completion and full fit-out. C&W have allowed for holding costs and construction contingency, as appropriate. Four schemes do not yet have planning consent and C&W have reflected the planning risk in their valuation.
Immature stores: value uncertainty
C&W have assessed the value of each property individually. However, two of the Group's stores are relatively immature and have low initial cash flows. C&W have endeavoured to reflect the nature of the cash flow profile for these properties in their valuation, and the higher associated risks relating to the as yet unproven future cash flows, by adjustment to the capitalisation rates and discount rates adopted. However, immature low cash flow stores of this nature are rarely, if ever, traded individually in the market, unless as part of a distressed sale or similar situation. Although, there is more evidence of immature low cash flow stores being traded as part of a group or portfolio transaction. Please note C&W's comments in relation to market uncertainty in the self storage sector due to the lack of comparable market transactions and information. The degree of uncertainty relating to the immature stores is greater than in relation to the balance of the properties due to there being even less market evidence that might be available for more mature properties and portfolios. C&W state that in practice, if an actual sale of the properties were to be contemplated then any immature low cash flow stores would normally be presented to the market for sale lotted or grouped with other more mature assets owned by the same entity, in order to alleviate the issue of negative or low short-term cash flow. This approach would enhance the marketability of the group of assets and assist in achieving the best price available in the market by diluting the cash flow risk.
C&W have not adjusted their opinion of Fair Value to reflect such a grouping of the immature assets with other properties in the portfolio and all stores have been valued individually. However, they highlight the matter to alert the Group to the manner in which the properties might be grouped or lotted in order to maximise their attractiveness to the market place. C&W consider this approach to be a valuation assumption but not a Special Assumption, the latter being an assumption that assumes facts that differ from the actual facts existing at the valuation date and which, if not adopted, could produce a material difference in value. As noted above, C&W have not assumed that the entire portfolio of properties owned by the entity would be sold as a single lot and the value for the whole portfolio in the context of a sale as a single lot may differ significantly from the aggregate of the individual values for each property in the portfolio, reflecting the lotting assumption described above.
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 purchaser's cost of circa 6.1% to 6.8% of gross value, as if they were sold directly as property assets. The valuation is an asset valuation which is entirely linked to the operating performance of the business. The assets would have to be sold with the benefit of operational contracts, employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure. This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing a deduction for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the assumed Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser's cost of 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years were completed in a corporate structure. The Group therefore instructed C&W to carry out an additional valuation on the above basis, and this results in a higher property valuation at 31 March 2018 of GBP1,380.3 million (GBP77.0 million higher than the value recorded in the financial statements). The total valuations in the two Armadillo Partnerships performed by Jones Lang LaSalle are GBP3.3 million higher than the value recorded in the financial statements, of which the Group's share is GBP0.7 million. The sum of these is GBP77.7 million and translates to 48.8 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 13).
16. TRADE AND OTHER RECEIVABLES
31 March 31 March
2018 2017
GBP000 GBP000
Current
Trade receivables 3,684 3,174
Capital Goods Scheme receivable 1,876 2,725
Other receivables 287 266
Prepayments and accrued income 12,739 11,877
18,586 18,042
-------- --------
Non-current
-------- --------
Capital Goods Scheme receivable 2,385 4,091
-------- --------
Trade receivables are net of a bad debt provision of GBP14,000 (2017: GBP7,000). The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The Financial Review contains commentary on the Capital Goods Scheme receivable.
Trade receivables
The Group does not typically offer credit terms to its customers, requiring them to pay in advance of their storage period and hence the Group is not exposed to significant credit risk. A late charge of 10% is applied to a customer's account if they are greater than 10 days overdue in their payment. The Group provides for receivables on a specific basis. There is a right of lien over the customers' goods, so if they have not paid within a certain time frame, we have the right to sell the items they store to recoup the debt owed. Trade receivables that are overdue are provided for based on estimated irrecoverable amounts determined by reference to past default experience.
For individual storage customers, the Group does not perform credit checks, however this is mitigated by the fact that these customers are required to pay in advance, and also to pay a deposit ranging between one week to four weeks' storage income. Before accepting a new business customer who wishes to use a number of the Group's stores, the Group uses an external credit rating to assess the potential customer's credit quality and defines credit limits by customer. There are no customers who represent more than 5% of the total balance of trade receivables.
Included in the Group's trade receivable balance are debtors with a carrying amount of GBP329,000 (2017: GBP250,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The average age of these receivables is 21 days past due (2017: 19 days past due).
Ageing of past due but not impaired receivables
2018 2017
GBP000 GBP000
1 - 30 days 264 214
30 - 60 days 30 23
60 + days 35 13
Total 329 250
------- -------
Movement in the allowance for doubtful debts
2018 2017
GBP000 GBP000
Balance at the beginning of the
year 7 11
Amounts provided in year 114 63
Amounts written off as uncollectible (107) (67)
Balance at the end of the year 14 7
------- -------
The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
Ageing of impaired trade receivables
2018 2017
GBP000 GBP000
1 - 30 days - -
30 - 60 days 2 2
60 + days 12 5
Total 14 7
------- -------
17. TRADE AND OTHER PAYABLES
31 March 31 March
2018 2017
GBP000 GBP000
Current
Trade payables 12,739 13,279
Other payables 7,710 8,352
Accruals and deferred income 16,379 15,304
36,828 36,935
-------- --------
The Group has financial risk management policies in place to ensure that all payables are paid within the credit terms. The Directors consider the carrying amount of trade and other payables and accruals and deferred income approximates fair value.
18. Financial Instruments
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group's debt facilities require 40% of total drawn debt to be fixed. The Group has complied with this during the year.
With the exception of derivative instruments which are classified as a financial liability at fair value through the income statement ("FVTPL"), financial liabilities are categorised under amortised cost. All financial assets are categorised as loans and receivables.
Exposure to credit, interest rate and currency risks arises in the normal course of the Group's business. Derivative financial instruments are used to manage exposure to fluctuations in interest rates, but are not employed for speculative purposes.
A. Balance sheet management
The Group's Board reviews the capital structure on an ongoing basis. As part of this review, the Board considers the cost of capital and the risks associated with each class of capital. The Group seeks to have a conservative gearing ratio (the proportion of net debt to equity). The Board considers at each review the appropriateness of the current ratio in light of the above. The Board is currently satisfied with the Group's gearing ratio.
The gearing ratio at the year end is as follows:
2018 2017
GBP000 GBP000
Debt (330,599) (304,955)
Cash and cash equivalents 6,853 6,906
Net debt (323,746) (298,049)
Balance sheet equity 981,148 890,350
Net debt to equity ratio 33.0% 33.5%
--------- ---------
B. Debt management
The Group currently borrows through a senior term loan, secured on 25 self storage assets and sites, a 15 year loan with Aviva Commercial Finance Limited secured on a portfolio of 15 self storage assets, and a GBP70 million seven year loan from M&G Investments Limited secured on a portfolio of 15 self storage assets. Borrowings are arranged to ensure an appropriate maturity profile and to maintain short term liquidity. Funding is arranged through banks and financial institutions with whom the Group has a strong working relationship.
C. Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies are applied, by either positioning the balance sheet or protecting interest expense through different interest rate cycles.
At 31 March 2018 the Group had two interest rate derivatives in place; GBP30 million fixed at 0.4% (excluding the margin on the underlying debt instrument) until October 2021, and GBP35 million fixed at 0.76% (excluding the margin on the underlying debt instrument) until June 2023.
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year.
The GBP30 million interest rate swap settles on a monthly basis. The floating rate on the interest rate swap is one month LIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.
The GBP35 million interest rate swap settles on a three-monthly basis. The floating rate on the interest rate swap is three month LIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.
The Group does not hedge account for its interest rate swaps and states them at fair value, with changes in fair value included in the statement of comprehensive income. A reconciliation of the movement in derivatives is provided in the table below:
2018 2017
GBP000 GBP000
At 1 April (2,964) (3,683)
Fair value movement in the year 1,294 719
Cancellation of interest rate derivative 3,374 -
------- -------
At 31 March 1,704 (2,964)
------- -------
The table below reconciles the opening and closing balances of the Group's finance related liabilities.
Finance Interest Total
Loans leases rate derivatives
At 1 April 2017 (304,955) (23,601) (2,964) (331,520)
Cash movement in the year (25,644) 1,109 3,374 (21,161)
Non-cash movements - (437) 1,294 857
--------- -------- ----------------- ---------
At 31 March 2018 (330,599) (22,929) 1,704 (351,824)
--------- -------- ----------------- ---------
D. Interest rate sensitivity analysis
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group's earnings, without jeopardising its flexibility. Over the longer term, permanent changes in interest rates may have an impact on consolidated earnings.
At 31 March 2018, it is estimated that an increase of 0.25 percentage points in interest rates would have reduced the Group's adjusted profit before tax and net equity by GBP445,000 (2017: reduced adjusted profit before tax by GBP375,000) and a decrease of 0.25 percentage points in interest rates would have increased the Group's adjusted profit before tax and net equity by GBP445,000 (2017: increased adjusted profit before tax by GBP375,000). The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings, net of interest rate swaps, at the year end.
The Group's sensitivity to interest rates has increased during the year, following the increase in the amount of floating rate debt. The Board monitors closely the exposure to the floating rate element of our debt.
E. Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 19 is a description of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
Short term money market deposits are used to manage liquidity whilst maximising the rate of return on cash resources, giving due consideration to risk.
F. Foreign currency management
The Group does not have any foreign currency exposure.
G. Credit risk
The credit risk management policies of the Group with respect to trade receivables are discussed in note 16. The Group has no significant concentration of credit risk, with exposure spread over 55,000 customers in our stores.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
H. Financial maturity analysis
In respect of interest-bearing financial liabilities, the following table provides a maturity analysis for individual elements.
2018 Maturity
Total Less than One to Two to More than
GBP000 one year two years five years five years
GBP000 GBP000 GBP000 GBP000
Debt
Aviva loan 87,599 2,474 2,598 8,601 73,926
M&G loan payable at variable
rate 35,000 - - - 35,000
M&G loan fixed by interest
rate derivatives 35,000 - - - 35,000
Bank loan payable at variable
rate 143,000 - - 143,000 -
Debt fixed by interest
rate derivatives 30,000 - - 30,000 -
Total 330,599 2,474 2,598 181,601 143,926
-------- --------- ---------- ----------- -----------
2017 Maturity
Total Less than One to Two to More than
GBP000 one year two years five years five years
GBP000 GBP000 GBP000 GBP000
Debt
Aviva loan 89,955 2,356 2,474 8,190 76,935
M&G loan payable at variable
rate 35,000 - - - 35,000
M&G loan fixed by interest
rate derivatives 35,000 - - - 35,000
Bank loan payable at variable
rate 115,000 - - 115,000 -
Debt fixed by interest
rate derivatives 30,000 - - 30,000 -
Total 304,955 2,356 2,474 153,190 146,935
-------- --------- ---------- ----------- -----------
I. Fair values of financial instruments
The fair values of the Group's cash and short term deposits and those of other financial assets equate to their book values. Details of the Group's receivables at amortised cost are set out in note 16. The amounts are presented net of provisions for doubtful receivables, and allowances for impairment are made where appropriate. Trade and other payables, including bank borrowings, are carried at amortised cost. Finance lease liabilities are included at the fair value of their minimum lease payments. Derivatives are carried at fair value.
For those financial instruments held at valuation, the Group has categorised them into a three level fair value hierarchy based on the priority of the inputs to the valuation technique in accordance with IFRS 7. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. The fair value of the Group's outstanding interest rate derivative, as detailed in note 18C, 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 7. There are no financial instruments which have been categorised as Level 1 or Level 3. The fair value of the Group's debt equates to its book value.
J. Maturity analysis of financial liabilities
The contractual maturities based on market conditions and expected yield curves prevailing at the year end date are as follows:
Trade and Interest Borrowings
other payables rate swaps and Finance
GBP000 GBP000 interest leases Total
2018 GBP000 GBP000 GBP000
From five to twenty years - (63) 159,548 23,709 183,194
From two to five years - (1,139) 207,092 6,285 212,238
From one to two years - (381) 11,855 2,095 13,569
Due after more than one
year - (1,583) 378,495 32,089 409,001
Due within one year 20,449 (195) 11,855 2,095 34,204
Total 20,449 (1,778) 390,350 34,184 443,205
--------------- ------------ ---------- ------- -------
Trade and Interest Borrowings
other payables rate swaps and Finance
GBP000 GBP000 interest leases Total
2017 GBP000 GBP000 GBP000
From five to twenty years - 127 166,652 25,556 192,335
From two to five years - 1,493 180,928 6,116 188,537
From one to two years - 692 11,930 2,039 14,661
Due after more than one
year - 2,312 359,510 33,711 395,533
Due within one year 21,631 816 11,930 2,039 36,416
Total 21,631 3,128 371,440 35,750 431,949
--------------- ------------ ---------- ------- -------
K. Reconciliation of maturity analyses
The maturity analysis in note 18J shows non-discounted cash flows for all financial liabilities including interest payments. The table below reconciles the borrowings column in note 19 with the borrowings and interest column in the maturity analysis presented in note 18J.
Borrowings Interest Unamortised Borrowings
GBP000 GBP000 borrowing and
costs interest
2018 GBP000 GBP000
From five to twenty years 143,926 13,958 1,664 159,548
From two to five years 181,601 25,491 - 207,092
From one to two years 2,598 9,257 - 11,855
Due after more than one
year 328,125 48,706 1,664 378,495
Due within one year 2,474 9,381 - 11,855
Total 330,599 58,087 1,664 390,350
----------- --------- ----------- ----------
Borrowings Interest Unamortised Borrowings
GBP000 GBP000 borrowing and
costs interest
2017 GBP000 GBP000
From five to twenty years 146,935 17,806 1,911 166,652
From two to five years 153,190 26,373 1,365 180,928
From one to two years 2,474 9,456 - 11,930
Due after more than one
year 302,599 53,635 3,276 359,510
Due within one year 2,356 9,574 - 11,930
Total 304,955 63,209 3,276 371,440
----------- --------- ----------- ----------
19. BORROWINGS
31 March 31 March
2018 2017
Secured borrowings at amortised cost GBP000 GBP000
Current liabilities
Aviva loan 2,474 2,356
2,474 2,356
Non-current liabilities
Bank borrowings 173,000 145,000
Aviva loan 85,125 87,599
M&G loan 70,000 70,000
Unamortised loan arrangement
costs (1,664) (3,276)
Total non-current borrowings 326,461 299,323
-------- --------
Total borrowings 328,935 301,679
-------- --------
The weighted average interest rate paid on the borrowings during the year was 2.9% (2017: 3.3%).
The Group has GBP37,000,000 in undrawn committed bank borrowing facilities at 31 March 2018, which expire between four and five years (2017: GBP45,000,000 expiring between four and five years).
The Group has a GBP100 million 15 year fixed rate loan with Aviva Commercial Finance Limited. The loan is secured over a portfolio of 15 freehold self storage centres. The annual fixed interest rate on the loan is 4.9%. The loan amortises to GBP60 million over the course of the 15 years. The debt service is payable monthly based on fixed annual amounts.
The Group has a GBP210 million five year revolving bank facility with Lloyds and HSBC expiring in October 2022, with a margin of 1.25%. The Group has an option to increase the amount of the loan facility by a further GBP60 million during the course of the loan's term, and an option to increase the term of the loan by a further two years.
The Group has a GBP70 million seven year loan with M&G Investments Limited, with a bullet repayment in June 2023. The loan is secured over a portfolio of 15 freehold self storage centres. Half of the loan is variable and half is subject to an interest rate derivative.
The Group was in compliance with its banking covenants at 31 March 2018 and throughout the year. The main covenants are summarised in the table below:
Covenant Covenant level At 31 March 2018
Consolidated EBITDA Minimum 1.5x 7.9x
Consolidated net tangible assets Minimum GBP250m GBP981.1m
Bank loan income cover Minimum 1.75x 14.2x
Aviva loan interest service cover
ratio Minimum 1.5x 4.1x
Aviva loan debt service cover ratio Minimum 1.2x 2.7x
M&G income cover Minimum 1.5x 7.5x
Interest rate profile of financial liabilities
Weighted Period Weighted
Floating average for which average
Total rate Fixed rate interest the rate period
GBP000 GBP000 GBP000 rate is fixed until maturity
At 31 March 2018
Gross financial liabilities 330,599 178,000 152,599 2.9% 6.5 years 5.5 years
-------- -------- ----------- --------- ---------- ---------------
At 31 March 2017
Gross financial liabilities 304,955 150,000 154,955 3.2% 7.0 years 5.9 years
-------- -------- ----------- --------- ---------- ---------------
All monetary liabilities, including short term receivables and payables are denominated in sterling. The weighted average interest rate includes the effect of the Group's interest rate derivatives. The Directors have concluded that the carrying value of borrowings approximates to its fair value.
Narrative disclosures on the Group's policy for financial instruments are included within the Strategic Report and in note 18.
20. Deferred tax
Deferred tax assets in respect of share based payments (GBP0.1 million), corporation tax losses (GBP4.5 million), capital allowances in excess of depreciation (GBP0.3 million) and capital losses (GBP1.4 million) in respect of the non-REIT taxable business have not been recognised due to uncertainty over the projected tax liabilities arising in the short term within the non-REIT taxable business. A deferred tax liability in respect of interest rate swaps (GBP0.3 million) arising in the non-REIT taxable business has also not been recognised as the relevant entity has the legal right to settle the potential tax amounts on a net basis and these taxes are levied by the same taxing authority.
21. obligations under finance leases
Minimum lease Present value
payments minimum of lease
payments
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
Amounts payable under finance leases:
Within one year 2,095 2,039 2,061 2,005
Within two to five years inclusive 8,380 8,155 7,390 7,193
Greater than five years 23,709 25,556 13,478 14,403
34,184 35,750 22,929 23,601
-------- -------- --------- --------
Less: future finance charges (11,255) (12,149)
Present value of lease obligations 22,929 23,601
-------- --------
All lease obligations are denominated in sterling. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The carrying amount of the Group's lease obligations approximates their fair value.
22. Share capital
Called up, allotted
and fully paid
2018 2017
GBP000 GBP000
Ordinary shares of 10 pence each 15,857 15,788
-------- -----------
Movement in issued share capital
Number of shares at 31 March 2016 157,369,287
Exercise of share options - Share
option schemes 513,580
Number of shares at 31 March 2017 157,882,867
Exercise of share options - Share
option schemes 687,707
Number of shares at 31 March 2018 158,570,574
-----------
The Company has one class of ordinary shares which carry no right to fixed income.
At 31 March 2018 options in issue to Directors and employees were as follows:
Option Date on which Number of Number
price per the exercise ordinary of ordinary
Date option ordinary Date first period expires shares shares
Granted share exercisable 2018 2017
19 July 2011 nil p ** 19 July 2013 19 July 2021 - 2,400
11 July 2012 nil p ** 11 July 2015 10 July 2022 5,359 8,559
19 July 2013 nil p ** 19 July 2016 19 July 2023 7,059 78,469
25 February 2014 442.6p* 1 April 2017 1 October 2017 - 21,624
29 July 2014 nil p** 29 July 2017 29 July 2024 10,155 485,032
16 March 2015 494.6p* 1 April 2018 1 October 2018 94,654 95,016
21 July 2015 nil p** 21 July 2018 21 July 2025 373,093 379,293
14 March 2016 608.0p* 1 April 2019 1 October 2019 37,489 41,809
22 July 2016 nil p** 22 July 2019 21 July 2026 398,825 402,225
15 March 2017 580.0p* 1 April 2020 1 October 2020 59,550 65,374
2 August 2017 nil p** 2 August 2020 1 August 2027 407,311 -
13 March 2018 675.4p* 1 April 2021 1 October 2021 108,335 -
1,501,830 1,579,801
--------- ------------
* SAYE (see note 23) ** LTIP (see note 23)
Own shares
The own shares reserve represents the cost of shares in Big Yellow Group PLC purchased in the market, and held by the Big Yellow Group PLC Employee Benefit Trust, along with shares issued directly to the Employee Benefit Trust. 1,122,907 shares are held in the Employee Benefit Trust (2017: 1,122,907), and no shares are held in treasury.
23. Share-based payments
The Company has three equity share-based payment arrangements, namely an LTIP scheme (with approved and unapproved components), an Employee Share Save Scheme ("SAYE") and a Long Term Bonus Performance Plan. The Group recognised a total expense in the year related to equity-settled share-based payment transactions of GBP2,470,000 (2017: GBP2,324,000).
Equity-settled share option plans
Since 2004 the Group has operated an Employee Share Save Scheme ("SAYE") which allows any employee who has more than six months service to purchase shares at a 20% discount to the average quoted market price of the Group shares at the date of grant. The associated savings contracts are three years at which point the employee can exercise their option to purchase the shares or take the amount saved, including interest, in cash. The scheme is administered by Yorkshire Building Society.
On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group's Long Term Incentive Plan ("LTIP"). The awards are conditional on the achievement of challenging performance targets. The awards granted in 2004, 2005 and 2006 vested in full. The awards granted in 2007 and 2009 lapsed, and the awards granted in 2008 and 2010 partially vested. The awards granted in 2011, 2012, 2013 and 2014 fully vested. The weighted average share price at the date of exercise for options exercised in the year was GBP7.25 (2017: GBP7.38).
2018 2017
No. of No. of
LTIP scheme options options
Outstanding at beginning of year 1,355,978 1,444,221
Granted during the year 582,341 455,331
Lapsed during the year (70,434) (59,094)
Exercised during the year (666,083) (484,480)
Outstanding at the end of the year 1,201,802 1,355,978
--------- ---------
Exercisable at the end of the year 22,573 89,428
--------- ---------
The weighted average fair value of options granted during the year was GBP1,219,000 (2017: GBP1,017,000).
2018 2017
Weighted Weighted
average average
exercise exercise
2018 price 2017 price
Employee Share Save Scheme ("SAYE") No. of options (GBP) No of options (GBP)
Outstanding at beginning of
year 223,823 5.36 205,330 4.87
Granted during the year 108,335 6.75 65,374 5.80
Forfeited during the year (10,506) 5.89 (17,781) 5.07
Exercised during the year (21,624) 4.43 (29,100) 3.07
Outstanding at the end of the
year 300,028 5.91 223,823 5.36
--------------- --------- -------------- ---------
Exercisable at the end of the - -
year - -
--------------- --------- -------------- ---------
Options outstanding at 31 March 2018 had a weighted average contractual life of 2.0 years (2017: 2.1 years).
The inputs into the Black-Scholes model for the options granted during the year are as follows:
LTIP SAYE
Expected volatility n/a 27%
Expected life 3 years 3 years
Risk-free rate 0.1% 0.1%
Expected dividends 4.6% 4.6%
Expected volatility was determined by calculating the historical volatility of the Group's share price over the year prior to grant.
Long Term bonus performance plan
The Executive Directors receive awards under the Long Term Bonus Performance Plan. This is accounted for as an equity instrument. The plan was set up in July 2015. The vesting criteria and scheme mechanics are set out in the Directors' Remuneration Report. At 31 March 2018 the weighted average contractual life was 0.3 years.
24. capital commitments
At 31 March 2018 the Group had GBP13.7 million of amounts contracted but not provided in respect of the Group's properties (2017: GBP8.6 million of capital commitments).
25. Events after the balance sheet date
On 5 April 2018, the Group exchanged contracts to acquire a property in Uxbridge for a new 55,000 sq ft store.
26. CASH FLOW NOTES
a) Reconciliation of profit after tax to cash generated from operations
2018 2017
Note GBP000 GBP000
Profit after tax 133,542 99,511
Taxation 597 272
Share of profit of associates (1,370) (1,442)
Investment income (1,538) (1,075)
Finance costs 11,975 11,756
-------- --------
Operating profit 143,206 109,022
Gain on the revaluation of investment
properties 14a, 15 (71,635) (43,706)
Gain on part disposal of investment property (650) -
Depreciation of plant, equipment and
owner-occupied property 14b 729 738
Depreciation of finance lease capital
obligations 14a 1,109 1,196
Employee share options 6 2,470 2,324
-------- --------
Cash generated from operations pre working
capital movements 75,229 69,574
Increase in inventories - (17)
Increase in receivables (1,352) (1,456)
Decrease in payables (420) (892)
-------- --------
Cash generated from operations 73,457 67,209
-------- --------
b) Reconciliation of net cash flow movement to net debt
2018 2017
Note GBP000 GBP000
Net decrease in cash and cash equivalents
in the year (53) (10,301)
Cash flow from (increase)/decrease in
debt financing (25,644) 7,243
Change in net debt resulting from cash
flows (25,697) (3,058)
--------- ---------
Movement in net debt in the year (25,697) (3,058)
Net debt at the start of the year (298,049) (294,991)
Net debt at the end of the year 18A (323,746) (298,049)
--------- ---------
27. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Transactions with Armadillo Storage Holding Company Limited
As described in note 14, the Group has a 20% interest in Armadillo Storage Holding Company Limited ("Armadillo 1"), and entered into transactions with Armadillo 1 during the period on normal commercial terms as shown in the table below.
Transactions with Armadillo Storage Holding Company 2 Limited
As described in note 14, the Group has a 20% interest in Armadillo Storage Holding Company 2 Limited ("Armadillo 2"), and entered into transactions with Armadillo 2 during the year on normal commercial terms as shown in the table below.
31 March 2018 31 March 2017
GBP000 GBP000
Fees earned from Armadillo 1 705 574
Fees earned from Armadillo 2 270 253
Balance due from Armadillo 1 89 86
Balance due from Armadillo 2 33 48
------------- -------------
AnyJunk Limited
James Gibson is a Non-Executive Director and shareholder in AnyJunk Limited and Adrian Lee is a shareholder in AnyJunk Limited. During the year AnyJunk Limited provided waste disposal services to the Group on normal commercial terms, amounting to GBP37,000 (2017: GBP36,000).
No other related party transactions took place during the years ended 31 March 2018 and 31 March 2017.
28. GLOSSARY
Adjusted eps Adjusted profit after tax divided by the diluted
weighted average number of shares in issue during
the period.
Adjusted NAV EPRA NAV adjusted for an investment property valuation
carried out at purchasers' costs of 2.75%.
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 a defined 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 customers
per sq ft divided by occupied space at the balance sheet date.
Debt Long-term and short-term borrowings, as detailed
in note 19, excluding finance leases and debt issue
costs.
Earnings per share Profit for the period attributable to equity shareholders
(eps) divided by the average number of shares in issue
during the 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 shares
per share in issue during the period.
EPRA NAV per share EPRA NAV divided by the diluted number of shares
at the period end.
EPRA net asset IFRS net assets excluding the mark-to-market on
value interest rate derivatives effective cash flow as
deferred taxation on property valuations where it
arises. It is adjusted for the dilutive impact of
share options.
EPRA NNNAV The EPRA NAV adjusted to reflect the fair value
of debt and derivatives and to include deferred
taxation on revaluations.
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.
Income statement Statement of Comprehensive Income.
Interest cover The ratio of operating cash flow excluding working
capital movements 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 or opened in the current period.
Like-for-like Excludes the impact of new stores acquired or opened
revenue in the current or preceding financial year in both
the current year and comparative figures. This excludes
Nine Elms and Twickenham 2 (both acquired in April
2016) and Guildford Central (opened in March 2018).
LTV (loan to value) Net debt expressed as a percentage of the external
valuation of the Group's investment properties.
Maximum lettable The total square foot (sq ft) available to rent
area (MLA) to customers.
Move-ins The number of customers taking a storage room in
the defined period.
Move-outs The number of customers vacating a storage room
in the defined period.
NAV Net asset value.
Net debt Gross borrowings less cash and cash equivalents.
Net initial yield The forthcoming year's net operating income expressed
as a percentage of capital value, after adding notional
purchaser's costs.
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 of 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 %.
Occupied space The space occupied by customers in sq ft.
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.
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 year.
Store EBITDA Store earnings before interest, tax, depreciation
and amortisation.
Total shareholder The growth in value of a shareholding over a specified
return (TSR) period, assuming dividends are reinvested to purchase
additional units of shares.
Ten Year Summary
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Results
Revenue 116,660 109,070 101,382 84,276 72,196 69,671 65,663 61,885 57,995 58,487
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
Operating profit
before gains
and losses on
property assets 70,921 65,316 59,854 48,420 39,537 37,454 35,079 32,058 29,068 30,946
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
Cash flow from
operating
activities 62,977 55,974 55,467 42,397 32,752 30,186 27,388 23,534 19,063 10,203
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
Profit/(loss)
before taxation 134,139 99,783 112,246 105,236 59,848 31,876 (35,551) 6,901 10,209 (71,489)
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
Adjusted profit
before taxation 61,422 54,641 48,952 39,405 29,221 25,471 23,643 20,207 16,514 13,791
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
Net assets 981,148 890,350 829,387 750,914 594,064 552,628 494,500 544,949 547,285 502,317
-------- -------- -------- -------- -------- -------- -------- ------- ------- --------
EPRA earnings
per share 38.5p 34.5p 31.1p 27.1p 20.5p 19.3p 18.2p 15.5p 13.0p 11.9p
Declared total
dividend per
share 30.8p 27.6p 24.9p 21.7p 16.4p 11.0p 10.0p 9.0p 4.0p 0p
Key statistics
Number of stores
open 74 73 71 69 66 66 65 62 60 54
Sq ft occupied
(000) 3,730 3,551 3,363 3,178 2,832 2,632 2,458 2,130 1,915 1,775
Occupancy increase
in year 000
sq ft)* 179 188 185 346 200 174 328 215 140 (75)
Number of customers 55,000 52,500 50,000 47,250 41,800 38,500 36,300 32,800 30,500 28,500
Average number
of employees
during the year 335 329 318 300 289 286 279 273 252 239
* - the occupancy growth in 2015 and 2017 includes the acquisition of existing stores
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR ABMRTMBJTBAP
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