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Big Yellow Group PLC Annual Report & Accounts 2022
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Big Yellow Group PLC
Annual Report & Accounts 2022
2 Highlights
4 Well positioned for the future
6 How we operate a secure business
8 Our culture and staff
10 Building a responsible business
12 Our national reach
14 Chairman’s Statement
18 STRATEGIC REPORT
18 CEO introduction
20 Our investment case
22 Our strategy
24 Our key performance indicators
26 Marketing and Operational Review
31 Store performance
34 Portfolio summary
35 Our Big Yellow stores
40 Financial Review
46 Principal risks and uncertainties
51 Climate change risks and opportunities
55 Section 172 Statement
56 Corporate Social Responsibility Report
75 SGS United Kingdom Ltd’s assurance opinion on selected sustainability KPIs
in Big Yellow’s corporate social responsibility report 2021/22
78 GOVERNANCE REPORT
78 Executive Chairman’s introduction
79 How we are structured
80 Directors, Officers and Advisers
83 Corporate Governance Report
89 Report of the Nominations Committee
92 Sustainability Committee Report
94 Remuneration Report
118 Audit Committee Report
122 Directors’ Report
128 Statement of Directors’ Responsibilities
129 Independent Auditor’s Report to the Members of Big Yellow Group PLC
138 FINANCIAL STATEMENTS
138 Consolidated Statement of Comprehensive Income
139 Consolidated Balance Sheet
140 Consolidated Statement of Changes in Equity
141 Consolidated Cash Flow Statement
142 Notes to the Financial Statements
178 Company Balance Sheet
179 Company Statement of Changes in Equity
180 Notes to the Financial Statements
184 Glossary
186 Ten Year Summary
This report was approved by the Board of Directors on 23 May 2022 and signed on its behalf by:
Jim Gibson
Chief Executive Officer
John Trotman
Chief Financial Officer
Contents
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
1
How we operate a
secure business
page 6
Our culture and staff
page 8
Well positioned for
the future
page 4
Building a responsible
business
page 10
This year’s report highlights how our business is driven
by our new store development pipeline, a focus on
security and customer service, our staff and culture,
and a commitment to CSR.
Annual Report and Accounts 2022 Big Yellow Group PLC
2
Highlights
Revenue
£171.3m +27%
£135.2m
Store revenue
(1)
£169.3m +28%
£132.5m
Like-for-like store revenue
(1,2)
£148.1m +13%
£131.1m
Store EBITDA
(1)
£120.9m +32%
£91.9m
Adjusted profit before tax
(1)
£96.8m +30%
£74.6m
EPRA earnings per share
(1)
52.5p +24%
42.4p
Dividend final
21.4p +26%
17.0p
Dividend total
42.0p +24%
34.0p
Financial metrics
Profit before tax
£698.9m +163%
£265.8m
Cash flow from
operating activities
£107.1m +40%
£76.7m
Basic earnings per share
385.4p +153%
152.3p
Statutory metrics Store metrics
Store Maximum Lettable Area
(“MLA”)
(1)
6,098,000 +24%
4,930,000
Closing occupancy (sq ft)
(1)
5,107,000 +22%
4,201,000
Occupancy growth in the period
(1)
906,000 sq ft +116%
420,000 sq ft
Closing occupancy
(1)
83.7% (1.5 ppts)
85.2%
Occupancy – like-for-like
stores (%)
(1,2)
86.7% (0.7 ppts)
87.4%
Average occupancy
(1)
86.7% +3.5 ppts
83.2%
Closing net rent per sq ft
(1,3)
£29.92 +4%
£28.71
Like-for-like average net
achieved rent per sq ft
(1,2)
£30.51 +8%
£28.20
Like-for-like closing net rent
per sq ft
(1,2)
£31.91 +11%
£28.84
(1)
See note 33 for glossary of terms
(2)
The like-for-like metrics exclude stores opened in the current and preceding financial years, and the Armadillo stores
(3)
The increase in closing net rent per sq ft is lower than the like-for-like increase in closing net rent per sq ft due to the inclusion of the regional Armadillo stores which were acquired on 1 July 2021
■ 2022 ■ 2021
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
3
• Revenue growth for the year was 27%, which includes nine months of revenue from the acquired Armadillo
stores. Like-for-like store revenue is up 13%, driven by gains in average occupancy and the improvement
in average net rent
• Average occupancy increase of 3.5 ppts, with like-for-like closing occupancy at 86.7%
• Like-for-like average achieved net rent per sq ft increased by 8% year on year, like-for-like closing net rent
up 11% from March 2021
• Store revenue for the fourth quarter was £43.9 million, an increase of 30% from £33.8 million for the same
quarter last year, with like-for-like store revenue for the fourth quarter up 10% compared to the same
quarter last year
• Cash flow from operating activities increased by 40% to £107.1 million
• Adjusted profit before tax up 30% to £96.8 million, EPRA earnings per share up 24% to 52.5p
• 42.0 pence per share full year dividend, an increase of 24%
• Statutory profit before tax of £698.9 million, up 163% from prior year due to a higher revaluation gain on
investment properties
• Three new stores opened in the year in Uxbridge, Hayes (both London) and Hove, adding 185,000 sq ft
of capacity
• Acquisition of new development sites in Kentish Town and West Kensington (both London) taking pipeline
to 12 development sites of approximately 1.0 million sq ft (16% of current MLA), of which ten are in London
• Planning consent granted for new stores in Slough (90,000 sq ft MLA) and Newcastle (60,000 sq ft MLA).
Seven of the 12 pipeline stores now have planning
• Placing of 7.8 million shares in June 2021 raising £97.6 million (net of expenses) to fund strategic
acquisitions of remaining interest in Armadillo and development site in West Kensington. The combined
transactions are earnings accretive
• Increase of £100 million in Aviva and M&G loans, increasing our total debt capacity to £575 million.
Current net debt is £412 million, with available headroom of £163 million, and over £100 million of surplus
land and property to be sold over the medium term
Highlights
Hove, March 2022
MLA – 58,000 sq ft
Annual Report and Accounts 2022 Big Yellow Group PLC
4
We have a varied customer base, an extensive portfolio
of 105 stores and a development pipeline of 12 new stores.
In addition, our market-leading brand and digital
platforms plus our excellent customer service, all help
to provide us with income security and resilience,
even during challenging times.
Our strong capital structure provides an extra layer
of stability as we look forward to future growth.
Secure financing
structure with a strong
balance sheet
future
positioned
well
for the
Interest cover for
the year
10.5 times
Net Debt to Adjusted
Net Assets
18%
Annual compound
adjusted eps growth of
14% since 2004/05
Dividend pay-out ratio
of a minimum of
80%
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
5
New store
development
pipeline
• 12 stores in the development pipeline
• Adding 1.0 million sq ft of storage space
• 7 of the 12 new stores have planning
• 10 of the new stores are in London
• Our current estimate of net operating income at
stabilisation, at today’s prices, for the 12 store
pipeline is approximately £30 million
• Additionally, there is available capacity for growth
in the current store portfolio of 1.0 million sq ft
Our diverse customer base
13%
12%
6%
27%
14%
14%
9%
5%
Business
storage
Decluttering
Home
improvements
Moving owner
occupied
Moving
rental sector
Other
Student storage
Travelling
Reasons people used our storage during
the year
180 sq ft
59 sq ft
Domestic
Businesses
Average space occupied
by customer type
21%
79%
Domestic
Businesses
% of customer numbers
by type
37%
63%
Domestic
Businesses
% of storage space occupied
by customer type
Harrow, opening Summer 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
6
The security of our customers’ possessions
is our number one priority.
With staff on site seven days a week,
our security checks and balances reduce
operational risk and we always know
who is in our buildings.
secure
how we
operate
a
business
CCTV externally
monitored
24 hours
a day
All individually
alarmed
storage rooms
Customer
PIN codes
to gain access
Staff on site
7 days
a week
during trading hours
Perimeter
fencing
at every site
Electronic
security
gates
Fire and smoke
detection
systems
Vigilant
teams
in store
Prohibited list
enforced
of high-risk goods
Security and
ID checks
for all new customers
Limited and
controlled use
of extended hours access
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
7
Customer
Security Checks
We conduct security and identity checks for
everyone who stores with us. Each customer is
photographed and security documents supplied.
These can be easily uploaded by the customer,
at home, via our Check-in Online platform,
saving the customer valuable time when they
arrive at the store. Over 90% of our customers
use Check-in Online.
A customer’s emergency contacts can also be
uploaded and the customer must also submit an
inventory of everything they are storing. This helps
prevent any prohibited items being stored and
assists the store teams to check all possessions
are adequately covered with contents protection.
Annual Report and Accounts 2022 Big Yellow Group PLC
8
Our strategy from the outset has been to
deliver excellent customer service through
a great working culture and highly
motivated employees.
Delivering exceptional
customer service
We recruit on personality over someone’s
CV and have a strong culture of inclusivity
and diversity within the company.
This is a customer-facing business with our users often new to
self storage and going through stressful key life events. Fantastic
service starts with a warm and empathetic personality, which is
what we look for when recruiting. We then invest significantly in the
training and development of our teams to maintain high customer
service standards. This is monitored through customer feedback
and a mystery shopping programme and we are proud of our
exceptionally high Net Promoter Scores of 78.9.
staff
culture
our
and
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
9
Our Staff
Our people are at the heart of Big Yellow and we
believe a strong culture helps keep our people
actively engaged in the business.
We encourage a culture of partnership coupled
with a flat management structure. Our staff
participate in corporate performance through
bonus schemes and share incentives. We recognise
and reward exceptional service and all staff have a
range of additional benefits including an extra day’s
holiday for their birthday.
We also provide a wide range of offline and online
training and development programmes for our staff,
whatever stage of their Big Yellow career they are at.
We ensure we listen to our people, not only for
innovative new ideas but also how they feel Big Yellow
fits into their work-life balance. Employee feedback
surveys and store tours by the Directors help to
keep all of us in close partnership and with open
communication.
We don’t just listen – we act too, making real
changes to how we do things in order to support
our staff further.
Progress in the year
− Continued the work of our fully represented Inclusivity and Diversity Committee.
− Achieved an engagement score of 86% in our Employee Engagement Survey (2019: 87%).
− Enrolled 95 people onto a virtual British Sign Language training course.
− Rolled out a Working From Home Policy for our Head Office Employees which has
enabled all team members to achieve a better work-life balance.
− Reduced our store opening hours to support the wellbeing of our teams.
− Offered advice and support to a total of 122 people across the year, via our
Wellbeing Experts.
− Appointed and trained 12 Recruitment Experts to support the recruitment process
across our stores.
− Launched over 300 new personal development videos within our Learning
Management System.
− Achieved a Performance Review completion rate of 94% across the Company.
− Continued to include a selection of ‘People’ KPIs to be assured by SGS.
Annual Report and Accounts 2022 Big Yellow Group PLC
10
Big Yellow is committed to responsible and
sustainable business practices. We recognise
that corporate social responsibility, when
linked to clear commercial objectives, will
create a more sustainable business and
increase shareholder and customer value.
responsible
building
a
business
Net Renewable Energy
Positive by
2030
Net Zero Scope 1 & 2
Emissions by
2030
Net Zero Scope 3
Emissions by
2032
View our full Net Renewable
Energy Positive Strategy at
corporate.bigyellow.co.uk/sustainability
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
11
Big Yellow Foundation
Our Foundation supports seven charities who work with vulnerable adults to help find them
sustainable employment. We raised £172,000 through donations from our generous
customers and paid £198,000 in Foundation grants during the year. Big Yellow matches
every £1 donated.
During the year, we have also created work placements for two adults with Down’s syndrome
at our Swindon store and our distribution centre. We are looking to extend this programme
into 2022/23.
Supporting Local Communities
We continue to support local charities in the communities where we operate through the
donation of storage space. We supplied over £300,000 of discounted storage space to
over 200 charities, of which £284,000 was free of charge.
Support for Ukraine
In February and March we supported the efforts of charitable and community groups around
the UK who were collecting supplies to distribute to the Ukrainian borders.
We were able to support over 70 requests for assistance through the donation of 1,300 boxes
and over 2,200 sq ft of free storage space. Big Yellow also donated £50,000 to the Ukrainian
Sponsorship Pathway UK charity, who help Ukrainians displaced by the war to travel to the UK,
as part of the Homes for Ukraine scheme. £1,000 was also donated to The Dnipro Kids Charity
whose efforts helped many Ukrainian orphans get out of the country.
Using our extensive roof space
to generate solar energy
We already use roof top Solar PVs on 32 of our buildings to generate on-site renewable energy. We have committed a further £10 million
investment over the next three years to retrofit solar PVs across many more of our stores.
Projected number of stores with solar by 2030
2022 2023 2024 2025 2026 2027 2028 2029 2030
46
60
74
78
82
86
90
32
94
107
109
111
113
115
117
105
119
121
No of stores No of stores with solar
We currently
generate our own
solar energy at
32
of our stores
POOLE
OXFORD X2
SWINDON
GUILDFORD SLYFIELD
GUILDFORD CENTRAL
CAMBERLEY
READING
SLOUGH
HIGH WYCOMBE
BRACKNELL
NOTTINGHAM
COLCHESTER
NORWICH
PETERBOROUGH
DERBY
CAMBRIDGE
BRIGHTON
TUNBRIDGE WELLS
CHELTENHAM
SOUTHEND
CHELMSFORD
LUTON
MILTON KEYNES
SHEFFIELD BRAMALL LANE
BIRMINGHAM
STOKE-ON-TRENT
CHESTER
CHEADLE
MACCLESFIELD
SHEFFIELD PARKWAY
SHEFFIELD WESTBAR
SHEFFIELD HILLSBOROUGH
HULL
GRIMSBY
STOCKPORT
WARRINGTON
MANCHESTER
LEEDS
LIVERPOOL SOUTH
LIVERPOOL
LIVERPOOL AINTREE
LIVERPOOL NORTH
MORECAMBE
EDINBURGH
DUNDEE
NEWCASTLE
CANTERBURY
CARDIFF
GLOUCESTER
BRISTOL
CENTRAL
BRISTOL
ASHTON GATE
PORTSMOUTH
EXETER
TORQUAY
PLYMOUTH
HOVE
STOCKTON CENTRAL
GATESHEAD
STOCKTON SOUTH
NEWCASTLE
DAVENTRY
Annual Report and Accounts 2022 Big Yellow Group PLC
12
Our national reach
We have locations right across the UK with 81 Big Yellow stores
and 24 Armadillo stores. Our customers like our modern,
easily accessible and highly visible stores.
Armadillo
Self Storage
In July 2021, we acquired the remaining 80%
interest in the Armadillo portfolio which now
consists of 24 stores, totalling approximately
1.0 million sq ft. Located regionally, these
stores have an average size of 41,000 sq ft
compared to 63,000 sq ft for Big Yellow stores.
Armadillo will be retained as a regional brand
within the business. They are managed in
exactly the same way as the Big Yellow stores
and have allowed us to expand our store
network into parts of the country where we
were unlikely to build a Big Yellow but are
in reasonably sized urban conurbations.
This network has allowed us to improve the
efficiency of our central overhead, particularly
marketing, service our national customers
more efficiently, and to provide an opportunity
for our people to move around the business
with more opportunity for promotion.
We want to keep expanding and have now grown our development
pipeline to 12 more sites to develop into Big Yellow stores.
The current maximum lettable area of the existing platform is
6.1 million sq ft. When fully built out the portfolio will provide
approximately 7.1 million sq ft of flexible storage space.
98% of our stores by value are held freehold and long leasehold with
the remaining short leasehold.
Hayes, January 2022
MLA – 73,000 sq ft
The Hayes store, already
21% occupied, is part of our
portfolio expansion across
West and North West London,
along with Uxbridge, Harrow
and Queensbury.
Uxbridge, June 2021
MLA – 54,000 sq ft
Uxbridge has reached 75%
occupancy within a year of
opening and has a range of
sustainability features such as
solar PVs, electric car charging
pods, low flow taps and
LED lighting. We have planted
29 new trees and installed bird
nesting boxes and insect hotels
to help protect the biodiversity
of the area.
Hove, March 2022
MLA – 58,000 sq ft
Already 22% occupied, this
new store hosts a squirrel art
installation which we
commissioned from local
artist Kerry Lemon, following
a competition run by us,
for local artists in the area.
Kings Cross, Summer 2023
MLA – 106,000 sq ft
Prominently located on
York Way in Kings Cross,
this new Big Yellow will have
106,000 sq ft of flexible
storage space when it opens
in the Summer of 2023.
ROMFORD
ILFORD
DAGENHAM
BARKING
WEST NORWOOD
BALHAM
ELTHAM
NEW CROSS
BYFLEET
CROYDON
ORPINGTON
BECKENHAM
BROMLEY
SUTTON
KINGSTON
NEW MALDEN
TOLWORTH
MERTON
WANDSWORTH
BATTERSEA
NORTH KINGSTON
KENNINGTON
SHEEN
FULHAM
NORTH KENSINGTON
RICHMOND
TWICKENHAM x2
HOUNSLOW
CHISWICK
NORTH FINCHLEY
EAST FINCHLEY
BOW
EDMONTON
ENFIELD
WATFORD
STAPLES CORNER
HANGER LANE
EALING
GYPSY CORNER
WEST MOLESEY
NINE ELMS
CAMBERWELL
KINGS CROSS
WEMBLEY
HARROW
WAPPING
STAINES
UXBRIDGE
QUEENSBURY
HAYES
EPSOM
KENTISH TOWN
WEST KENSINGTON
WAPPING 2
London
55 stores and sites
Outside London
63 stores and sites
KEY
● 81 Big Yellow stores (44 in London)
● 12 Big Yellow stores under development
(10 in London)
● 24 Armadillo stores (1 in London,
and Cheadle to be redeveloped)
POOLE
OXFORD X2
SWINDON
GUILDFORD SLYFIELD
GUILDFORD CENTRAL
CAMBERLEY
READING
SLOUGH
HIGH WYCOMBE
BRACKNELL
NOTTINGHAM
COLCHESTER
NORWICH
PETERBOROUGH
DERBY
CAMBRIDGE
BRIGHTON
TUNBRIDGE WELLS
CHELTENHAM
SOUTHEND
CHELMSFORD
LUTON
MILTON KEYNES
SHEFFIELD BRAMALL LANE
BIRMINGHAM
STOKE-ON-TRENT
CHESTER
CHEADLE
MACCLESFIELD
SHEFFIELD PARKWAY
SHEFFIELD WESTBAR
SHEFFIELD HILLSBOROUGH
HULL
GRIMSBY
STOCKPORT
WARRINGTON
MANCHESTER
LEEDS
LIVERPOOL SOUTH
LIVERPOOL
LIVERPOOL AINTREE
LIVERPOOL NORTH
MORECAMBE
EDINBURGH
DUNDEE
NEWCASTLE
CANTERBURY
CARDIFF
GLOUCESTER
BRISTOL
CENTRAL
BRISTOL
ASHTON GATE
PORTSMOUTH
EXETER
TORQUAY
PLYMOUTH
HOVE
STOCKTON CENTRAL
GATESHEAD
STOCKTON SOUTH
NEWCASTLE
DAVENTRY
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
13
London
Annual Report and Accounts 2022 Big Yellow Group PLC
14
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 2022.
We acquired the 80% of the Armadillo store portfolio that we did not
previously own on 1 July 2021, and these results therefore benefit
from consolidating the Armadillo business for nine months of the year.
The Armadillo portfolio has been managed as part of our operating
platform and has therefore been fully integrated for many years. In these
results we have separated out the Armadillo performance in the portfolio
summary to provide a transparent understanding of the performance of
the business.
The Group has delivered strong revenue growth, driving earnings growth
from a combination of occupancy, improvements in average net rent
driven by our yield management systems, and the accretive acquisition
of Armadillo.
The business delivered very strong occupancy growth from the end of
the first lockdown in 2020 through to last summer, benefiting from an
acceleration in certain structural trends around housing, working from
home, the move to online trading and the like. These trends, combined
with the shortage of quality flexible mini-warehousing space, from which
to operate small scale storage and e-fulfilment is helping to drive our
demand. We believe these are long-term trends.
As expected, we did see a return to our more normal seasonal fall in
occupancy in the third quarter of the financial year, accentuated by a
very strong early summer which in itself was partially influenced by
distortions caused by the stamp duty holiday coming to an end.
In the fourth quarter, we would normally see increasing occupancy
growth from mid-February to the end of March. We have experienced
some softness in demand since the tragic events began to unfold in
Ukraine, following the Russian invasion. As a consequence, our
occupancy performance was largely flat in the fourth quarter with a small
gain, with year-on-year like-for-like revenue growth of 10% largely driven
by increases in net achieved rents. This is a needs-driven business with
many of our customers making significant decisions around moving,
business start-ups, extensions and the like, and at times of significant
uncertainty there can be some hesitancy; although, based on previous
experience, these decisions are often only deferred. We are now some
weeks on, and we are seeing an improvement in the demand picture with
prospects and move-ins up on last year in April. We can also state that the
trading patterns in our business in terms of move-ins and move-outs have
now normalised, following two years of pandemic related distortions.
Chairman’s
Statement
Revenue
£171.3m +27%
£135.2m
Store revenue
(1)
£169.3m +28%
£132.5m
Like-for-like store revenue
(1,2)
£148.1m +13%
£131.1m
Store EBITDA
(1)
£120.9m +32%
£91.9m
(1)
See note 33 for glossary of terms
(2)
The like-for-like metrics exclude stores opened in the current and preceding financial years, and the Armadillo stores
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
15
Financial results
Revenue for the year was £171.3 million (2021: £135.2 million),
an increase of 27%. Like-for-like store revenue growth (see note 33)
was 13% driven by a combination of increases in average occupancy
and average net rent. Like-for-like store revenue excludes new store
openings, and the impact of the acquisition of the remaining interest in
Armadillo. Armadillo was previously equity accounted as an associate,
and from 1 July 2021 is consolidated, as we now own 100%.
Store revenue for the fourth quarter was £43.9 million, an increase of 30%
from £33.8 million for the same quarter last year.
Operating cash flow (after net finance costs) increased by £30.4 million
(40%) to £107.1 million for the year (2021: £76.7 million).
The Group made an adjusted profit before tax in the year of £96.8 million
up 30% from £74.6 million in 2021. EPRA earnings per share increased
by 24% to 52.5p (2021: 42.4p) with an equivalent 24% increase in the
dividend per share for the year.
The Group’s statutory profit before tax was £698.9 million, an increase
of 163% from £265.8 million in the prior year with a higher revaluation
gain on our investment properties in the year, reflecting the growth in
cash flow and some improvement in cap rates. The Financial Review and
note 15 contains further details on the Group’s valuation, which has this
year been carried out for the first time by Jones Lang LaSalle.
Acquisition of Armadillo
On 1 July, the Group acquired the remaining 80% interest in Armadillo
which it did not previously own from its JV partners. The total
consideration was £119 million, including underlying debt of £50.9 million
for a Year One net operating income (“NOI”) yield of 7.7% (based on a
projected NOI of £10.9 million). The acquisition was funded by a
combination of equity from last summer’s placing and the pre-existing
debt and is, and continues to be, earnings enhancing.
The Armadillo portfolio is more regional and as a result the proportion
of our revenue derived from London and the South East reduced from
82% to 74%, albeit we expect this weighting to revert over the medium
term to over 80%, given our development pipeline is focused largely on
London and the South East. Armadillo represents 11% of the Group’s
total combined EBITDA and 12% of revenue.
We continue to look to acquire existing assets into the business which
meet our requirements in terms of location, quality of build,
environmental rating, and capacity.
Investment in new capacity
We opened three new stores in the year adding 185,000 sq ft to
our platform. Initial trading has been encouraging, with Uxbridge
(opened June 2021) at 75% occupancy at the date of these results,
Hayes (opened January 2022) at 21% occupancy and Hove (opened
mid-March 2022) at 22% occupancy. Uxbridge broke even at the EBITDA
level within four months of opening, and we expect the other two stores
to start making a positive contribution to earnings this year. We will
continue to open our pipeline stores and are now seeing the benefit of
several years building up the development pipeline and successfully
gaining planning consents.
Site acquisitions
In our core area of operation, being London and its commuter towns,
we continue to see increased competition for sites from urban logistics
and the industrial sector alongside mixed use residential and other uses.
Opportunities are scarce and well-bid when they do come along,
particularly in London.
In April the Group acquired a prime Zone 2 0.9 acre site on Regis Road in
Kentish Town, North London for £16.5 million. We will be seeking planning
permission for a 68,000 sq ft self storage centre on the site.
In June the Group acquired 66 Hammersmith Road, West Kensington,
in London for £26 million. This is a strategic acquisition adjacent to the
Olympia conference centre, a short distance from one of the wealthiest
and densest enclaves in London. Subject to planning, the store is
currently estimated to open in 2025, and will provide approximately
175,000 sq ft of space, including 7,000 sq ft of SME space.
Planning
The planning system remains complex and a time-consuming process.
During the year we were pleased to be granted planning consents for
new stores in Slough and Newcastle. Seven of the 12 stores in our
development pipeline now have planning consent, with the balance at
various stages of planning.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
16
Development pipeline
Big Yellow now has a pipeline comprising 12 development sites with a cost
to complete of approximately £190 million, which will be phased over the
next five years as we build out stores. As a result of the well-documented
supply chain, Covid-related issues, and rising energy, labour, and raw
materials costs, we are experiencing higher than normal inflation in
construction costs. We have reflected this in the projected costing of our
pipeline and will continue to keep it under review.
These store openings are expected to add approximately 1.0 million sq ft
of storage space to the portfolio, an increase of 16% from the current
maximum lettable area of the Group’s portfolio. There is also available
capacity for growth in the open store portfolio of a further 1.0 million sq ft.
Our current estimate of net operating income at stabilisation, at today’s
prices, for the 12 store pipeline is approximately £30 million. The total
development cost is estimated to be approximately £353 million implying
an 8.5% net operating income return on cost.
Capital Structure
The Group’s interest cover for the period (expressed as the ratio of
cash generated from operations pre-interest against interest paid pre
working capital movements) was 10.5 times (2021: 9.8 times). This is
comfortably ahead of our internal minimum interest cover requirement
of five times.
Net debt is £411.8 million at 31 March 2022, and we have available
liquidity of £162.8 million and the business continues to generate
positive post-dividend cash flow both of which we will use to fund future
growth. The average cost of debt on drawn facilities is now 3.1% and the
marginal cost of RCF bank debt is currently 2.25%.
In addition, the Group has property surplus to its needs which will be
sold over the medium term, generating net cash proceeds estimated
currently at over £100 million. We were therefore very pleased to
announce this morning the exchange of contracts on the sale of our
industrial warehouse scheme at Harrow for gross sales proceeds of
£61 million. Completion of the sale is conditional, inter alia, on practical
completion of the development, and is expected to occur in August of
this year. At 31 March 2022 the cost to complete the development
was £4.5 million.
Dividends
The Group’s dividend policy is to distribute a minimum of 80% of full year
adjusted earnings per share. The final distribution of PID declared is
21.4 pence per share. This brings the total distribution declared for the
year to 42.0 pence per share representing an increase of 24% from
34.0 pence per share last year.
Chairman’s Statement (continued)
A selection of stores in our
development pipeline
North Kingston
Queensbury
Wembley
Newcastle
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
17
Our people
The last two years has been very challenging for everyone with significant
and continuing uncertainty and against all of that we have managed,
not only to remain open for business, but also to improve our operations
with many enhancements, continue to expand, and deliver what are
excellent results.
This can only be achieved when our colleagues feel valued in a culture
which is inclusive with high levels of employee engagement – one of the
key planks of our business strategy from day one. I would like to thank
all of the team for their continued efforts over the last year.
Board
Michael O’Donnell joined the Board as a Non-Executive Director with
effect from 1 September 2021. Michael is a former Managing Director
of LGV Capital, a private equity firm, and has significant corporate
experience, with a focus on high-growth companies.
Richard Cotton will be stepping down from the Board at the Annual
General Meeting in July 2022, after serving his full term as a
Non-Executive. I have worked with Richard for nearly thirty years:
he advised on the flotations of Edge Properties and in 2000 that of
Big Yellow and a short while after his departure from investment
banking joined our Board. In that time few days have passed when
I have not sought his advice and the best of counsel it has been.
Whatever successes this Company has enjoyed it is in good part
due to his involvement, for which I thank him.
Outlook
Since our last results, the events in Ukraine have added to
macroeconomic uncertainty. We spend considerable time planning
for such situations, having successfully navigated two crises since
the Global Financial Crisis.
We enjoy over 10 times interest cover from cash flows that may not
be immune to adversity but have proven themselves to be resilient
for over twenty years.
Our task is not only to defend well, but also to find new advantage and
opportunity at times like this, which we are in a position to do given
the strength of our capital structure and business model.
Nicholas Vetch
Executive Chairman
23 May 2022
Adjusted profit
before tax
(1)
£96.8m +30%
£74.6m
EPRA earnings
per share
(1)
52.5p +24%
42.4p
Final
Dividend
21.4p +26%
17.0p
Total
Dividend
42.0p +24%
34.0p
(1)
See note 33 for glossary of terms
Strategic Report
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
18
When we reported our results at the interim
stage and in January for the third quarter,
we were looking forward to a normalisation
of our trading as the economy fully reopened
with Covid risks receding.
CEO introduction
The 24th of February Russian invasion of Ukraine and the tragic events
that have been unfolding are not only a humanitarian crisis, but have also
increased uncertainty and stoked inflation. Once again, I was impressed
by how our teams around the country responded to requests from local
community groups for packing materials and storage to support their
collection of vital goods prior to being transported to Poland and other
EU border countries. The support for local charities through the provision
of free storage space is something we have done for many years and
there are currently over 200 local charities across the business
receiving free or discounted storage. In the year ended 31 March 2022,
the total cost of free or discounted storage and packing materials was
over £300,000.
Nick Vetch has recently, with others, founded a charity called Ukrainian
Sponsorship Pathway UK (“USPUK”) to help Ukrainians displaced by
the war to travel to the UK as part of the “Homes for Ukraine” scheme.
The charity has set up offices in Warsaw and Krakow and is one of the
few that has been recognised for this purpose by the UK Government.
We are proud to be financial supporters of this new charity and the Board
approved a donation in May 2022 of £50,000. Nick, Richard Cotton and
myself have all made personal donations and Heather Savory has kindly
volunteered as a Trustee of the charity.
Over the two year pandemic period, we have remained open for trading
thanks to the loyalty, determination, and conscientiousness of our teams,
providing our services to businesses, individuals, and charities.
Furthermore, we have made significant progress on a number of fronts
in developing and growing our business.
In response to feedback from our colleagues and some of the learnings
of trading through the pandemic, we have increased our investment in,
and focus on, inclusivity, diversity, and wellbeing. We do believe that we
have a highly engaged and positive culture. We carry out externally
facilitated surveys of our colleagues every two years and responded to last
Autumn’s with some key changes to improve work/life balance as follows:
• we have a fairer flexible working policy for all employees at our
Bagshot head office – employees have the option to work from home
two days a week;
• we have reduced our store reception opening hours across the week
by five and a half hours, which we were able to do as our stores are
fully automated to existing customers; and
• there are times when our stores have only one team member working
on a given day, and in recognition of that we have increased pay for
any such lone trading.
Our Foundation continues to grow and over the last two years we have
donated some £345,000 to our seven charity partners, St Giles Trust,
Bounce Back, Back-up Trust, Street League, Down’s Syndrome Association,
Breaking Barriers, and Hire a Hero, all of whom are focussed on the
rehabilitation of those needing specialist support back into work.
Over the pandemic period, we continued to innovate and invest in
our business to improve efficiency. Examples include a significantly
improved check-in online system which was launched in the Spring of
last year; our Learn digital training platform; paperless interaction with
customers at stores; and a new digital facilities management system,
which was launched recently. In addition, we have made further
investment into our digital infrastructure, comms, and cyber security.
We have always, and will continue to, invest in technology which can
improve the customer experience and productivity and efficiency of
all aspects of our business.
Since the first lockdown in the Spring of 2020, we have seen the benefit
of the hard work our property team put into building our store pipeline,
with the opening of six stores with a total storage space of 389,000 sq ft.
All are performing well and making an increasing contribution to our
growth in cash flow and earnings. This is illustrated in our portfolio
summary on page 34, with the Big Yellow stores which are less than
three years old increasing their EBITDA by £3.0 million during the year
to £3.7 million, with their EBITDA margin increasing from 28.0% to 51.9%.
Having opened these stores it is important that we continue to acquire
new sites, and in the last year we have acquired two development sites
in Kentish Town and West Kensington in addition to the three acquired
the year before. Our current pipeline consists of 12 development sites
with the potential to add 1.0 million sq ft. Seven of these have planning
consents, following the grant of planning consents for Slough and
Newcastle during the year, with the planning applications on Wapping
and Staines currently submitted pending a decision this Summer.
We started managing the first ten Armadillo stores in 2009 and were
successful in acquiring them in joint venture with our Australian partners
five years later when they were put up for sale. Our strategy at the time
was to grow this regional brand through acquisition of existing stores
that met key requirements for us around the location, the quality of the
building and a minimum size. We would then rebrand these new stores
and add them seamlessly to our digital platforms alongside the Big Yellow
store portfolio. They are managed in exactly the same way and have
allowed us to expand our store network into parts of the country where
we were unlikely to build a Big Yellow but were still reasonably sized
urban conurbations. This network has allowed us to improve the
efficiency of our central overhead, particularly marketing, service our
national customers more efficiently, and also to provide an opportunity
for our people to move around the business with more opportunity for
promotion. Following discussions with our JV partner, we successfully
acquired the 80% of the Partnership we did not own, funded by a placing
and the assimilation onto our balance sheet of the existing bank debt.
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
19
This transaction is earnings enhancing and very importantly has been
well received by all the staff within Armadillo who are now firmly part of
the Big Yellow family. There are no changes into how the portfolio has
been operated since the acquisition and we will run it as a regional brand
alongside Big Yellow. We intend to make existing store acquisitions in the
future, alongside our new-build development programme, however finding
product of the right quality, particularly around environmental standards,
remains difficult.
Sustainability remains a key focus and during the year we were pleased
to publish our Net Renewable Energy Positive and Net Zero Strategy.
We have installed solar PVs on all new stores since 2008 and will continue
to do so. However, we have commenced a £10 million programme to
retro-fit solar PV across 36 existing Big Yellow stores to maximise their
solar energy generation, with the first 12 completing by this Autumn.
We also in the process of reviewing the Armadillo portfolio with a view
to increasing this investment and adding them to the programme.
The Sustainability Committee has approved stretching science-based
targets which will be published as part of our full 2022 CSR report. I am
fully aware that getting to Net Zero is a challenge for all businesses and
we as a Board are committed to meeting that challenge in the coming
years. Battery technology will be a key aspect of any carbon reduction
strategy and we have recently commenced a battery pilot study at our
Guildford Central store, the aim being to improve our energy management
at stores. Battery technology will doubtless develop further, and I am
excited at the possibility of retaining self-generated electricity for use
at our stores rather than sending it to the grid.
Turning to our results, this has been a strong performance and over the
last year reflecting a significant increase in occupancy over the summer
and consequent increase in average rents. Self storage has a very broad
and diverse customer base with demand largely driven by need, with the
average customer moving out in a year staying some 8 months with over
half of our customers staying more than 12 months and some 40% more
than two years. Our customer licence provides flexibility to the customer
in that they stay for as long as they need the space and can leave with a
week’s notice, but it does allow us to move pricing regularly with 30 days’
notice. As a consequence, we can deploy strategies to increase our
pricing in a higher inflationary environment, so as to protect our operating
margins. In October last year we increased our scheduled rents to reflect
projected levels of inflation and our yield management systems have
been adjusted to deliver higher levels of rental growth. Our aim is to
achieve sustainable rental growth over the long term.
From mid-April we are seeing an improvement in demand after the initial
shock of the Ukraine conflict. We remain confident in our business model
and are looking forward to our seasonally stronger summer trading period
in an economy that has fully reopened.
Jim Gibson
Chief Executive Officer
23 May 2022
UK’s brand
leader in
self storage
Self storage is a consumer facing product.
Done right, brand sits at the heart of a business
and drives its performance. Self storage is an
immature market with 70% first time users so the
interaction at the prospect stage, through all
brand communications, is therefore critical.
Location is important, as are all other touchpoints
such as our digital platform, written and verbal
communication and the consistency of our
product and service throughout all our stores.
An unknown new operator can achieve a certain
level of operational performance, as can a gym or
hotel. However to drive higher performance with
occupancy levels to 90% plus and sustainable
rental growth requires a strong brand to drive
more market share online and more enquiries.
The brand experience leads to an emotive
response from customers – it builds trust,
aids conversion, encourages repeat use and
recommendation to others.
31 of the top 100 search terms driving traffic
to self storage operator websites feature
brands and 35% of these branded terms are
Big Yellow variations.
A YouGov commissioned survey by the UK Self
Storage Association in January 2022 measures
unprompted brand awareness and showed once
again, Big Yellow has the highest unprompted
brand awareness, five times higher than the
next operator. This is partly driven 24/7 by our
highly visible, prominent stores.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
20
In the twenty two years since flotation in May 2000, Big Yellow has delivered a
Total Shareholder Return (“TSR”), including dividends reinvested, of 15.8% per annum,
in aggregate 2,401% at the closing price of 1536p on 31 March 2022. This compares
to 6.2% per annum for the FTSE Real Estate Index and 5.1% per annum for the
FTSE All Share index over the same period. We feel this illustrates the power
of compounding of consistent incremental returns over the longer term.
Our investment case
Our values How we deliver value
Helpfulness
Big Yellow exists to help people out
and relieve pressure in their lives.
We constantly strive to make our
customers’ lives easier.
Empathy
We always listen and put ourselves
in the position of the individual we are
serving, understanding how exactly
we can lighten their load.
Flexibility
We are always flexible and adapt our
service to best suit the needs and the
desires of our customers.
Innovativeness
We strive to innovate to help drive our
business forward and we never accept
the status quo.
Integrity
We approach everything we do with a
commitment to doing right. This goes
beyond our customers to include our people,
local communities and environments.
Attractive market dynamics
• UK self storage penetration in key urban
conurbations remains relatively low
• Limited new supply coming onto
the market
• Resilient through the last economic
downturn and performed well during
the pandemic
• Self storage is more part of the
ecosystem today than it was in 2008
with increased domestic and
business awareness
Our competitive advantage
• UK industry’s most recognised brand
with over 90% of enquiries now online
• Prominent stores on arterial or main
roads, with extensive frontage and
high visibility
• Continuous innovation and
investment into our mobile and
desktop digital channels
• Strong customer satisfaction and
NPS scores reflecting excellent
customer service
• 6.1 million sq ft UK footprint,
with development pipeline of
1.0 million sq ft
• Primarily freehold estate concentrated
in London and South East and other
larger urban conurbations
• Larger average store capacity –
economies of scale, higher
operating margins
• Secure financing structure with
strong balance sheet
• Continued significant investment in
sustainability and our culture
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
21
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Our returns
Conversion into quality returns
High margins
Freehold assets for high operating margins
and operational advantage
Sustainable
Low technology and obsolescence product,
maintenance capex fully expensed
Annual compound adjusted eps
14%
Annual compound adjusted eps growth
of 14% since 2004/5 (IFRS adoption)
Cash flow
15%
Annual compound cash flow growth
of 15% since 2004/5
Dividend pay-out
80%
Dividend pay-out ratio of a minimum
80% of adjusted eps
Evergreen income streams
• 73,000 occupied rooms, with customers
from a diverse base – individuals, SMEs,
and national customers
• Average length of stay for existing
customers of 29 months
• 37% of customers in stores greater than
two-year length of stay, a further 17%
for one to two years
• Low bad debt expense (0.1% of store
revenue in the year), no deterioration
over the pandemic
Strong growth opportunities
• Opportunities to drive further
occupancy growth
• Yield management as occupancy
increases
• Densification of living and scarcity
of flexible business warehouse space
drives demand
• Growth in national customers and
business customer base
• Increasing the platform with a
conservative capital structure
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
22
Our strategy from the outset has been to develop Big Yellow into the market-leading
self storage brand, delivering excellent customer service, investing in sustainability
and our market-leading operating platform and digital channels, with a great
culture and highly motivated employees. We concentrate on developing our stores
in main road locations with high visibility, where our distinctive branding
generates high awareness of Big Yellow.
Creating shareholder value
We continue to believe that the medium-term opportunity to create shareholder value consists of driving revenue and cash flow from
our existing portfolio through continued investment in sustainability, our people, culture, and digital operating and marketing platforms.
In addition, we aim to deliver external growth as new stores open through continued investment in our development pipeline. As a REIT our
key financial objective is to produce sustainable returns for shareholders through a relatively low leverage, low volatility, high distribution
business. In addition, any successful business must have an effective sustainability strategy, particularly around climate change, and this
continues to be a key strategic focus for our business.
We focus on the following key areas:
Our Strategy
Through our
corporate social
responsibility initiatives,
aim to create a more
sustainable business which will
increase shareholder and
customer value in both the
medium and long-term
Maintaining a focus
on cost control, so
revenue growth is
transmitted through
to earnings growth
Leveraging our
market-leading brand
position to generate new
prospects, principally from
our digital, mobile and
desktop platforms
Maintaining a
conservative capital
structure in the business
with Group interest
cover of a minimum
of five times
Selectively acquiring
existing self storage
assets into the
Armadillo platform
Growing occupancy
and net rent to drive
revenue optimally
at each store
Maintaining
Big Yellow’s culture as
an accessible, apolitical,
inclusive, non-hierarchical,
socially responsible,
and enjoyable place
to work
Increasing
the footprint of the
Big Yellow platform
principally through new site
development and where
possible existing prime
freehold stores that meet
our quality criteria
Focusing on
training, selling skills,
and customer
satisfaction to maximise
prospect conversion
and referrals
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
23
Real estate
The other main plank of our strategy has been to build a portfolio of
large purpose-built freehold self storage centres, focussed on London,
the South East and large metropolitan cities. We believe that by owning
a predominantly freehold estate we are insulating ourselves against:
economic downturns as we operate at higher margins; adverse rent
reviews; and in the long-term possible redevelopment of key stores
by the landlord. It also provides us financing flexibility as rent is a
form of gearing.
Approximately 58% 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 74%. These proportions reduced
in the current year following the acquisition of the remaining interest
in Armadillo which we did not previously own, however with our store
development pipeline largely in London and the South East, we would
expect these proportions to increase over the medium term.
New supply and competition is a key risk to our business model, hence
our focus on London and its commuter towns, where barriers to entry in
terms of competition for land and difficulty around obtaining planning are
highest. We continue to see limited new supply growth in our key areas
of operation. Looking back over the last five years, we estimate capacity
growth in London of approximately 2-3% per annum. In 2021, there have
been only seven store openings in London (including one Big Yellow
store), and we anticipate five new stores in London in 2022, including
three Big Yellow store openings.
Since April 2021, we have acquired development sites in Kentish Town
and West Kensington. This increases our pipeline to 12 freehold
development opportunities, totalling approximately 1.0 million sq ft
(16% of MLA).
Our stores are on average 60,000 sq ft, compared to an industry average
of approximately 45,000 sq ft (source: UK Self Storage Association 2022
Annual Survey). The upside from filling our larger than average sized
stores is, in our view, only possible in large metropolitan markets. As our
operating costs are relatively fixed, larger stores in bigger urban
conurbations, particularly London, drive higher revenues and higher
operating margins.
Capital structure
Following the Global Financial Crisis and the ensuing economic recession,
we have materially reduced the financial risk within the business and
diversified our sources of debt, whilst at the same time, increasing our
store platform by deploying significant capital investment. We measure
leverage by looking at our interest cover and that has increased from
1.9 times in 2008 to 10.5 times for the year ended 31 March 2022. Our
objective is to not let this fall below 5 times, compared to the consolidated
EBITDA covenant of 1.5 times. We manage this business on the basis that
an external economic shock could potentially happen at any time. This is
reinforced by the performance of the business through the pandemic,
where we have delivered a strong trading performance whilst at the same
time continuing to invest and expand.
Self storage demand drivers
Economic activity and change are key drivers of self storage demand and
are greatest in the larger urban conurbations, and in particular London
and the South East. The structural changes consisting of the conversion
of ex-industrial brownfield land to other uses, in particular residential; the
reduction in home ownership and increased proportion of those choosing
to rent; increasing density of living with new properties being built with
optimised living space and very little provision for storage; will continue
and are resulting in increased demand for our product. These changes
have resulted in a significant shortage of available warehousing space,
particularly in London, which has been accentuated by the current crisis.
Self storage provides a convenient flexible solution to businesses such as
online retailers, importers and exporters, service providers, the public
sector, and marketing companies looking for mini-warehousing space.
In addition to domestic customers taking space to declutter their homes,
our largest customer base is those using us short-term around an event,
such as moving home, refurbishment, inheritance, household formation,
separation, relocation, and students.
Resilience
The location of our stores, brand, security, and most importantly
customer service, together with the diversity of use in our 73,000
occupied rooms, serve better than any lease contract in providing
income security.
The business proved to be relatively resilient, but not immune during the
Global Financial Crisis and recession of 2007 to 2009, with London and
the South East proving to be less volatile. During the current crisis the
business has performed strongly with like-for-like occupancy growth of
6.2 ppts since 31 March 2020.
81% of our customers pay by direct debit, and our cash collection has
remained robust throughout the pandemic.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
24
Over the course of the past five years, both occupancy and revenue have
grown significantly, with Armadillo included in our consolidated results
from 1 July 2021. We saw particularly strong growth in 2021 and 2022,
after a weaker 2020 following the Brexit uncertainty and the initial impact
of the UK lockdown in response to Covid-19.
In 2018 closing net rent per sq ft increased by 3%, by 2% in 2019, by 3% in
2020, by 2% in 2021 and by 4% in the year to March 2022. The like-for-like
growth in the current year was 11%, with the acquired Armadillo stores
at a lower average net rent reducing the reported growth for this year.
As the stores are at higher levels of occupancy, we expect revenue growth
to be driven by a combination of occupancy increases and growth in net
achieved rent per sq ft.
Adjusted profit before tax, adjusted earnings per share (“eps”) which
drive the distributions to shareholders (as our dividend policy is to pay
a minimum of 80% of adjusted earnings as dividends) are also KPIs.
The Group focuses on adjusted profit and earnings measures as they
give a clearer picture of the Group’s trading performance without
distortion from external factors such as property valuations and the
fair value of derivatives. We have delivered compound adjusted eps and
dividend growth of 8% over the past five years. Compound adjusted eps
growth since 2004/5 is 14%. We have illustrated the Group’s performance
in these measures over the past five years on page 25. The growth in
adjusted eps and dividends per share has been impacted by two equity
placings in September 2018 and April 2020 to fund our investment in
future external growth. The placings of 4.5% in 2018 (raising £65.3 million)
and 4.99% equity in 2020 (raising £79.9 million) were dilutive to earnings
over the period 2019 to 2021.
Our non-financial KPIs are the net promoter scores we receive from
our customers and the carbon intensity of the Group’s business.
The Group’s net promoter score received from its customers during
the year was 78.9. We believe this overall score compares very favourably
with other consumer facing businesses.
The Group has reduced its carbon intensity (our carbon emissions
divided by our average occupied space) by 44% over the past five years.
This has been achieved through investment in renewable technology,
roof mounted solar photo-voltaic systems, and LED lighting across the
Group’s portfolio.
The Group’s KPIs are shown in the charts on page 25. The key performance
indicators of our stores are occupancy and net rent per sq ft, which together
drive the revenue of the business. These are three key measures which are
focused on by the Board and are reported on a weekly basis.
Our key
performance
indicators
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
25
Closing Occupancy
(000 sq ft)
5,107,000 sq ft
+37% over 5 years
Revenue
(£m)
£171.3m
+47% over 5 years
Adjusted earnings per share
(pence)
52.5 pence
+36% over 5 years
Net Promoter Score
78.9
(1%) over 5 years
Closing net rent per sq ft
(£)
£29.92
+12% over 5 years
Adjusted profit before tax
(£m)
£96.8m
+58% over 5 years
Dividend per share
(pence)
42.0 pence
+36% over 5 years
Carbon intensity
(per sq m)
5.4 sq m
(45%) over 5 years
3,000
3,500
4,000
4,500
5,000
5,500
2018 2019 2020 2021 2022
3,730
3,810
3,781
4,201
5,107
50
70
90
110
130
150
170
190
2018 2019 2020 2021 2022
116.7
125.4
129.3
135.2
171.3
30.0
35.0
40.0
45.0
50.0
55.0
2018 2019 2020 2021 2022
38.5
41.4
42.1
42.4
52.5
50
55
60
65
70
75
80
85
2018 2019 2020 2021 2022
80.1
79.1
81.9
82.9
78.9
25
26
27
28
29
30
31
2018 2019 2020 2021 2022
26.74
27.28
28.15
28.71
29.92
15.0
25.0
35.0
45.0
55.0
65.0
75.0
85.0
95.0
105.0
2018 2019 2020 2021 2022
61.4
67.5
71.0
74.6
96.8
0
5
10
15
20
25
30
35
40
45
2018 2019 2020 2021 2022
30.8
33.2
33.8
34.0
42.0
0
2
4
6
8
10
12
2018 2019 2020 2021 2022
9.7
7.4
7.2
6.6
5.4
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
26
Our marketing strategy focuses on building our
market-leading brand awareness further and
using it to maximise the cost-efficient generation
of enquiries, customer move-ins and user satisfaction
through our digital platforms.
Marketing and ecommerce
Our strong brand and continued digital investment and innovation has
helped us create a market-leading website which delivers over 90% of
our enquiries.
Our annual YouGov survey (published April 2022) again confirmed that
the brand awareness of Big Yellow remained ahead of other UK operators
in the sector. The survey shows our unprompted brand awareness to be
nearly six times higher than our nearest competitor across the UK.
The Big Yellow website allows users to browse different room sizes,
obtain a price, reserve online and check-in online.
The online customer experience also allows customers to communicate
with us in real-time via Live Chat, WhatsApp, or Facebook Messenger.
The comprehensive online FAQs provide our users with another way to
ask questions they may have about the service without needing to call
us directly.
The seamless digital experience continues with our online check-in
platform. This allows customers to complete the majority of their move-in
process remotely. They can upload their photo and identity documents,
sign the full customer licence, set up authorised persons, complete their
storage inventory and set up a paperless Direct Debit – all done remotely.
This check-in online capability has significantly cut down the time our
customers need to spend in our receptions when they move-in. The final
process is completed through our in-store digital signature pads.
We also offer the ability to purchase boxes and packing materials through
our online BoxShop store. These items can be home delivered or made
available for our Click and Collect service from stores.
Driving online traffic
Self storage is a consumer-facing business, and the development of a
strong and sustainable brand is multi-layered and requires a consistency
of product, customer service and interaction at all touch points,
particularly online.
Search engines are the most important acquisition tool for us, accounting
for the majority of traffic to our website. Our focus for a competitive
advantage on search continues and search engine optimisation (“SEO”)
work has helped us to maintain high organic listings for popular generic
and local self storage related search terms. This in turn drives the growth
and cost efficiencies of acquiring new prospects.
Brand search terms are also a valuable driver of enquiries for Big Yellow
and help improve the efficiencies of our cost per enquiry. 37% of all traffic
generated from search engines to our website originated from “Big Yellow”
brand searches in the year.
This clearly indicates, that although self storage is a relatively immature
industry with approximately 70% of customers using it for the first time,
brand is important in driving higher levels of prospects and customer
referrals, leading to improved operational efficiencies.
We have demonstrated this through significant improvements in the
performance of existing storage centres following their acquisition,
re-branding, and assimilation into our business.
Search engine marketing remains our largest source of paid for web
traffic. Ongoing website optimisation and an engaging user experience
through our digital platforms helps ensure we maximise the conversion
of these web visits into enquiries and then customers.
Marketing and
Operational
Review
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
27
Digital display advertising enables us to regionally target audiences in
the market for self storage, raising consideration of the service and the
Big Yellow brand through engaging creatives.
Online customer reviews and social media
Supporting our values of putting the customer at the heart of our
business, our online customer reviews generate real-time feedback from
customers and provide positive word of mouth referral to our website
visitors. Through our ‘Big Impressions’ customer feedback programme,
we ask our new customers to rate our service. With the users’ permission,
we then publish these independent customer reviews on the Big Yellow
website which currently total over 42,000, averaging 4.8 out of 5.
Unprompted brand awareness for the UK (%)
Check-in Online:
Making life
easy for our
customers
We know customers will often use self storage
when going through a potentially stressful
event like a house move or a building project.
Where possible, we innovate to make our
customers’ lives as easy as possible when using
our services. Central to this is speeding up the
customers’ move in experience, without
compromising on our security or operational
checks and balances.
Our Check-in Online platform is used by 90%
of our customers to complete the majority of
their move-in process at home.
Every feature has been designed to remove
stress. The terms and conditions have been
written in a more playful language, avoiding
confusing legalese. An engaging animation takes
the customers through the main parts of their
contract and what they need to know about
storing with us. Customers can upload their own
identity photos and security documents straight
into our database. Check-in Online also enables
the customer to set up their emergency contacts,
personal details and set up a direct debit. They
can even input an inventory of what they are
storing straight into the platform – a huge time
saving feature for the customer by the time
they get to the store.
Source: YouGov commissioned survey by the UK Self Storage Association January 2022
0
5
10
15
20
25
Access
Lok n Store
Shurgard
Safestore
Big Yellow
1% 1%
2%
4%
20%
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
28
The Big Impressions programme also generates customer feedback on
their move-out experience and from prospects who decided not to store
with us. These customer reviews and mystery shop results are
transparently accessible across the business and helps reinforce our
focus on outstanding customer service.
We also gain real-time customer feedback from over 15,500 Google
Reviews averaging 4.6 out of 5. These help to enhance our visibility within
local search listings conveying trust in the Big Yellow brand. Additionally,
we have over 3,200 reviews from the independent review site TrustPilot.
These reviews average a 4.7 out of 5-star rating, labelled as “Excellent”
on the TrustPilot ratings scale.
We monitor our customer reviews and respond where necessary for
customer service reasons or to manage our online reputation and improve
our service offering.
Social media continues to be complementary to our existing marketing
channels. Big Yellow actively posts content across Twitter, Facebook and
Instagram which help to raise awareness of our CSR activities. These
social channels are also used by customers to connect with us and are
monitored in real-time, enabling us to respond promptly to any enquiries.
The Big Yellow LinkedIn platform is used to communicate company
achievements, CSR initiatives and company culture.
The Big Yellow YouTube channel is used to allow web prospects to experience
our stores online through our video guides to self storage. The online blog
is updated regularly with tips and advice for homeowners and businesses,
as well as summaries of our charitable and CSR initiatives.
Sustainability
We have developed a new long-term strategy to become Net Renewable
Energy Positive and deliver Net Zero Scope 1 and 2 Emissions targets,
which will be funded with significant investment from the Group over the
next few years. The main delivery vehicle for this new strategy will be the
installation of solar generation capacity onto our existing store estate.
By 2025, we expect to have completed a multi-million pound investment
in renewable energy generation both on the roofs of our estate and also
at other locations.
During the year we published our Strategy document that sets out our
Commitments, Actions and Timelines to become 100% Renewable Energy
Positive and Net Zero Scope 1 and 2 Emissions by 2030.
The sustainability performance highlights for the year are:
• we have set our first science-based targets;
• we have maintained our inclusion in the FTSE4Good indices;
maintained our GRESB Green Star rating and achieved a B award
from CDP;
• we obtained our second EPRA sBPR Gold award;
• we have donated £316,000 in Community Investment. This consists
of free and discounted space and BoxShop products donated and the
funds raised by our employees that go to the Big Yellow Foundation;
• we have refreshed our emissions footprint to include Armadillo; and
• delivered three successful work placements in conjunction with our
charity partners.
Marketing and
Operational Review
(continued)
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
29
Foundation and charitable activities
The Foundation has continued to support our seven established charity
partners during the year. The Foundation has raised funds of £172,000
during the year and has paid out £198,000 in grants, in response to
requests for additional funding from some of our charity partners.
Big Yellow’s community investment for the year, delivered via discounted
space, was £306,000, £284,000 of which was given free of charge. Our
stores allocate this space to worthy local charitable organisations and
not-for-profits and we house different organisations, from foodbanks to
small community groups to NHS partners.
Cyber security and IT infrastructure
Cyber security remains high on the agenda within the Group, and we
make investment where required in response to the ever-changing threat
landscape. Using both external specialists and in-house knowledge we
perform regular reviews of our cyber risk and security posture. Testing
of both systems and people is carried out on a regular basis, including
penetration testing and phishing simulations. During the year the Group’s
systems were subject to an external audit and achieved IASME Gold
certification. This also incorporates Cyber Essentials. The Board receives
bi-monthly reports on the Group’s IT infrastructure and information
security. The Group has not experienced an information security breach
in the past three years and has cyber insurance in place in the event that
a breach should occur in the future.
Our Data Compliance Officer oversees our ongoing compliance with
GDPR and PCI DSS. The role also includes Business Continuity and Crisis
Communication management. Policies and procedures are under regular
review and benchmarked against industry best practice. There are
mandatory courses for all staff to complete both for Information Security
and Data Protection. Our Infrastructure and Development teams continue
to drive innovation and efficiencies throughout the Group.
The self storage market opportunity
In the recently published 2022 Self Storage Association UK Survey,
only 51% of those surveyed had a reasonable or good awareness of
self storage. Furthermore, only 8.5% of the 2,057 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
continue to 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 51% in 2022
across the UK (source: UK SSA Survey 2022). Our YouGov Survey carried
out in April 2022 showed higher levels of awareness in London of 63%.
Occupancy rates across the UK industry at 31 December 2021 of built
space was 83.3%, compared with approximately 60% in December 2008.
This has increased from 76.2% at the start of the pandemic.
Growth in new facilities across the industry has been largely in regional
areas of the UK and particularly in smaller towns. Historically, new
supply creation in our core markets in London and the South East, has
been difficult, with high land values driven by competing uses such as
residential and urban industrial. In London in the year to 31 December
2021, there were seven new store openings, including one Big Yellow
store. We are aware of five planned store openings in London in calendar
year 2022, including three Big Yellow stores.
The Self Storage Association (“SSA”) estimates that the UK industry is
made up of approximately 1,429 self storage facilities and 621 purely
container operations, providing 52 million sq ft of self storage space,
equating to 0.76 sq ft per person in the UK. This compares to 9.4 sq ft
per person in the US, 1.9 sq ft per person in Australia and 0.16 sq ft for
mainland Europe, where the roll-out of self storage is a more recent
phenomenon (sources: UK Self Storage Association Surveys, May 2020,
and May 2022 and FEDESSA European Self Storage Annual Survey 2021).
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
over 90% 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.
Store operating model
Our 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 69 sq ft
compared to 67 sq ft 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 support.
There has been some debate in the self storage industry around fully
automated stores. It is very important for us to maintain a physical,
face-to-face interaction with our customers when they arrive at our
stores to move-in or move-out. This is imperative to help us achieve our
company values of helpfulness, empathy, and flexibility towards our
customers. It is also critical for us to monitor and operate a safe working
environment for everyone, including our staff. This is akin to renting a car
but with some final checks and balances, which require our staff in store.
70% of our new customers have not used self storage before, and they
will want to see the storage room for themselves before moving in.
We want to be on hand to ensure they are satisfied with their choice
and to accommodate them if they are not.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
30
Face-to-face interactions also allow us to check the individual customer
moving in matches the identity documents they have uploaded when
checking-in online. From a health and safety perspective, we need our
teams at the store to ensure the stores and customers are operating
safely. They carry out fire-risk assessments, provide additional business
services such as accepting deliveries on behalf of our business
customers, manage occupancy levels and deliver ancillary sales of
insurance and packing materials.
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 78.9 from customers who moved in and
moved out 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 £40,000 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 £20,000 per store.
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 expenditure and customer use.
We are confident that we benefit 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.
Customers renting storage space whilst moving within the rental or
owner-occupied sectors represent 41% of move-ins during the year
(2021: 39%), split approximately 65/35 between homeowners and
renters (2021: 60/40). 12% of our customers who moved in took storage
space as a spare room for decluttering (2021: 13%). 34% 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 together, or separating, are
students who need storage during the holidays, or homeowners
developing into their lofts or basements (2021: 34%). The balance of 13%
of our new customer demand during the year came from businesses
(2021: 14%).
Of our overall occupied space today, customers who are longer stay
lifestyle users, decluttering into small rooms as an extension to their
accommodation, occupy 10% to 15% of our space; approximately 50%
of the space is customers using it for less than 12 months, for reasons
which are largely event driven, which could be inheritance, moving in
the owner occupied or rental sector, home improvements, travelling;
the balance of 37% of our space is businesses. Businesses occupy
larger rooms on average than domestic customers and, despite being
in 37% of the occupied space only represent 21% of customer numbers.
Over the past few years, there has been 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 have
been increasingly seeking flexible office and storage space rather than
longer inflexible leases. The current crisis has accelerated the structural
changes in retail that were already occurring, resulting in more demand
from online retailers looking to trade without a physical high street
presence. 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. We believe that
these long-term trends will continue to drive demand for our product.
The Group has previously commissioned an external survey to assess the
value the average Big Yellow store generates for its local economy to assist
our discussion with local authorities around planning. Key highlights were:
• 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; and
• For over half of the businesses, this is the only space they rent,
for others this complements their other space.
Given the growth in homeworking over the past two years, this trend of
businesses choosing to operate without needing the expense of office
space may increase. Furthermore, increased homeworking in general
may result in domestic customers taking small rooms to declutter and
create space for home offices.
We have a dedicated national customers team for businesses who wish
to occupy space in multiple stores. These customers are billed and
managed centrally. We have four full time members of staff working on
growing and managing our national customers. The national customers
team can arrange storage at short notice at any location. 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 Operational Review (continued)
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
31
The store platform
We now have a portfolio of 105 open and trading stores, with a further 12 development sites. The current maximum lettable area of the 105 stores is
6.1 million sq ft. When fully built out the portfolio will provide approximately 7.1 million sq ft of flexible storage space.
Activity
The tables below show the quarterly move-in and move-out activity over the year for the 81 Big Yellow stores, as we acquired the remaining interest in
Armadillo during the year:
Total move-ins
Year ended
31 March 2022
Total move-ins
Year ended
31 March 2021 %
Total move-ins
Year ended
31 March 2020 %
April to June 20,419 13,560 51 18,950 8
July to September 21,525 20,867 3 20,570 5
October to December 16,541 16,323 1 14,643 13
January to March 15,916 15,616 2 16,498 (4)
Total 74,401 66,366 12 70,661 5
Total move-outs
Year ended
31 March 2022
Total move-outs
Year ended
31 March 2021 %
Total move-outs
Year ended
31 March 2020 %
April to June 15,226 10,047 52 14,742 3
July to September 22,914 19,128 20 22,520 2
October to December 19,467 17, 287 13 17, 4 24 12
January to March 15,840 14,223 11 15,286 4
Total 73,447 60,685 21 69,972 5
The first quarter in the prior year saw a significant decrease in activity
caused by the Spring 2020 lockdown. Move-ins and move-outs in the
first quarter this year are therefore showing a significant increase on
last year, with a more normalised move-in picture in the second quarter.
We saw strong demand from domestic customers in the first quarter of
this year in part due to the stamp duty holiday tapering off from 1 July.
This resulted in an acceleration of housing-related demand in June.
We also saw the return of student demand in June as universities looked
to re-open their campuses for conferences. Some of this occupancy
growth from both the housing and student sectors was relatively
short-term, impacting occupancy performance in the second quarter.
In the quarter to March activity levels were impacted in the latter part
of the quarter by some consumer hesitancy following the invasion of
Ukraine. In April 2022, average move-ins per store were up 11% on
April 2021, with move-outs up 5%.
In the prior year, move-outs took longer to normalise, hence we are
showing an increase in move-outs compared to the year ended 31 March
2021. We have also included the data for the year ended 31 March 2020,
which shows more normalised levels of move-ins and move-outs this year
compared to that year.
We did see an increase in move-outs in July and October 2021, some of
which was related to the gradual tapering off of the stamp duty holiday
with key dates being 30 June and 30 September when it ended. Move outs
normalised in the fourth quarter compared to 2020.
Move-ins for the Armadillo stores for the year were up 12% on the prior year,
and up 12% on 2020, with move-outs up 25% on 2021, and up 12% on 2020.
The average space occupied by business customers at the period end has
remained at 180 sq ft. Domestic customers occupy on average 59 sq ft
(up from 57 sq ft last year) and pay on average 21% more in rent per sq ft
(2021: 22%), however business customers do stay longer and take more
space and represent around 32% of revenue (2021: 31%).
Store
performance
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
32
In all Big Yellow stores, occupancy for the year increased by 91,000 sq ft,
against an increase of 420,000 sq ft in 2021 and a fall of 29,000 sq ft
in 2020. The quarterly movement is shown in the table below:
Quarterly net
occupancy movement
Net sq ft
year ended
31 March 2022
Net sq ft
year ended
31 March 2021
Net sq ft
year ended
31 March 2020
April to June 289,000 138,000 125,000
July to September (18,000) 187,000 (25,000)
October to December (198,000) (32,000) (165,000)
January to March 18,000 127,000 36,000
Total 91,000 420,000 (29,000)
The occupancy performance in the prior year was very strong with the
pandemic accelerating many structural changes that were already
occurring, such as the move to online retailing and an increase in working
from home facilitated by technological advances. In addition, move-outs
were below normal levels with customers on average staying longer.
These developments, combined with the shortage of quality flexible
mini-warehousing space, from which to operate small scale storage and
e-fulfilment have been driving our demand. 2020 was impacted by the
uncertainty around Brexit, and in the run up to the general election, with
the final quarter impacted in March by the onset of the first lockdown.
Pricing and net rent per sq ft
We offer a headline opening promotion of 50% off for up to the first 8 weeks,
and we continue to manage pricing dynamically, taking account of room
availability, customer demand and local competition. Our pricing model
reduces promotions and increases asking prices where individual units
are in scarce supply. This lowering of promotions, coupled with price
increases to existing and new customers, leads to an increase in net
achieved rents. Rental growth can also be driven through sub-dividing
larger rooms into smaller rooms, which yield a higher net rent per sq ft.
We have increased our scheduled rents in line with current inflation.
Nevertheless, this demand was largely deferred, and we have delivered
significant occupancy growth over the last two years.
During the current year, we saw record occupancy growth in our first
quarter, driven in part by the stamp duty holiday tapering off from 1 July.
This resulted in an acceleration of housing-related demand in June, which
in turn led to a small loss in occupancy in our second quarter, as we saw
some short-term users vacate. The quarter to December saw a return to
more normal seasonal losses, with the quarter to March impacted by the
uncertainty triggered by the Russian invasion of Ukraine.
The 73 established Big Yellow stores are 86.8% occupied compared to
87.7% at the same time last year. The eight developing Big Yellow stores
added 129,000 sq ft of occupancy over the year to reach closing
occupancy of 55.4%. The 24 Armadillo stores are 83.1% occupied,
compared to 83.8% at this time last year. The occupancy loss for the
Armadillo stores includes the impact of the fire at Cheadle (see Financial
Review for further detail). Excluding this, the occupancy gain for the
Armadillo stores for the year was 2,000 sq ft. Overall store occupancy
was 83.7%.
As a result of these changes, given our higher levels of occupancy, we
are seeing improving growth in net rent per sq ft. The average achieved
net rent per sq ft increased for Big Yellow stores by 8% compared to the
prior year, with closing net rent up 10% compared to 31 March 2021.
The average achieved net rent per sq ft grew by 10% from last year in
the Armadillo stores and closing net rent per sq ft increased by 11% from
31 March 2021.
Store performance (continued)
Occupancy
31 March 2022
%
Occupancy
change in year
000 sq ft
Occupancy
31 March 2022
000 sq ft
Occupancy
31 March 2021
000 sq ft
73 established Big Yellow stores 86.8% (38) 4,027 4,065
8 developing Big Yellow stores 55.4% 129 265 136
All 81 Big Yellow stores 83.9% 91 4,292 4,201
24 Armadillo stores 83.1% (93) 815 908
All 105 stores 83.7% (2) 5,107 5,109
With the exception of our recently opened stores at Hayes and Hove, all stores are trading profitably at the EBITDA level. The table below shows the
average per store key metrics across the store portfolio (from the portfolio summary on page 34) for the year ended 31 March 2022:
Established
stores
Developing
stores
Armadillo
stores All stores
Average store capacity 63,550 59,750 40,875 58,075
Average sq ft occupied at 31 March 2022 55,165 33,125 33,960 48,640
Average % occupancy 86.8% 55.4% 83.1% 83.7%
Average revenue (£000) 2,000 887 849 1,645
Average EBITDA store (£000) 1,468 460 522 1,169
Average EBITDA margin 73.4% 51.9% 61.5% 71.1 %
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
33
The table below shows the change in net rent per sq ft for the combined Big Yellow and Armadillo portfolio by average occupancy over the six months
(on a non-weighted basis). The analysis excludes our most recent store openings.
Average occupancy
in the year
Number
of stores
Net rent per sq ft growth from
April 2021 to March 2022
Net rent per sq ft growth from
April 2020 to March 2021
75% to 85% 24 10.8% 1.3%
85% to 90% 49 11.7% 2.5%
Above 90% 24 13.0% 4.4%
Development pipeline
We own 12 development sites, seven of which have planning consent. The status of the Group’s development pipeline is summarised in the table below:
Site Location Status
Anticipated
capacity
Harrow, London Prominent location on
Harrow View
Planning consent granted in November 2020. Construction commenced in
May 2021 with a view to opening in Summer 2022.
82,000 sq ft
North Kingston, London Prominent location on
Richmond Road, Ham
Planning consent granted in September 2020. Construction commenced in
June 2021 with a view to opening in Summer 2022.
56,000 sq ft
Kings Cross, London Prominent location on
York Way
Planning consent granted in October 2020. Demolition commenced in
January 2021 with a view to opening in Summer 2023.
106,000 sq ft
Wembley, London Prominent location on
Towers Business Park
Planning consent granted in August 2020. Discussions ongoing to secure
vacant possession, unlikely to be before July 2023.
70,000 sq ft
Queensbury, London Prominent location off
Honeypot Lane
Site acquired in November 2018. Planning consent granted in November 2019
for 58,000 sq ft store. Planning application submitted in 2021 to increase floor
area by 12,000 sq ft. Planning consent granted in January 2022. Our current
intention is to open the store in Summer 2024.
70,000 sq ft
Slough Prominent location on
Bath Road
Site acquired in April 2019. Planning consent granted in October 2021.
Our current intention is to open this store in Summer 2024.
90,000 sq ft
Wapping, London Prominent location on
the Highway, adjacent
to existing Big Yellow
Site acquired in July 2020. Planning application submitted in November 2021. Additional
95,000 sq ft
Staines, London Prominent location on
the Causeway
Site acquired in December 2020. Planning application submitted in January 2022. 65,000 sq ft
Epsom, London Prominent location on
East Street
Site acquired in March 2021. Planning application to be submitted in Summer 2022. 56,000 sq ft
Kentish Town, London Prominent location on
Regis Road
Site acquired in April 2021. Planning application to be submitted in Summer 2022. 68,000 sq ft
West Kensington, London Prominent location on
Hammersmith Road
Site acquired in June 2021. Planning application to be submitted in Summer 2022. 175,000 sq ft
Newcastle Prominent location on
Scotswood Road
Planning consent granted in October 2021. 60,000 sq ft
Total 993,000 sq ft
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.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
34
Portfolio summary
March 2022 March 2021
(5)
Big Yellow
Established
(1)
Big Yellow
Developing
Total
Big Yellow Armadillo
(2)
Total
Big Yellow
Established
Big Yellow
Developing
Total
Big Yellow Armadillo Total
Number of stores 73 8 81 24 105 73 5 78 25 103
At 31 March:
Total capacity (sq ft) 4,639,000 478,000 5,117,000 981,000 6,098,000 4,636,000 294,000 4,930,000 1,083,000 6,013,000
Occupied space (sq ft) 4,027,000 265,000 4,292,000 815,000 5,107,000 4,065,000 136,000 4,201,000 908,000 5,109,000
Percentage occupied 86.8% 55.4% 83.9% 83.1% 83.7% 87. 7% 46.3% 85.2% 83.8% 85.0%
Net rent per sq ft £31.91 £28.76 £31.71 £20.45 £29.92 £28.83 £25.06 £28.71 £18.38 £26.88
For the year:
REVPAF
(3)
£31.47 £19.90 £30.64 £19.83 £28.73 £28.47 £9.75 £ 27. 4 4 £16.75 £25.50
Average occupancy 89.0% 58.9% 86.9% 86.0% 86.7% 86.4% 28.6% 83.2% 79.5% 82.6%
Average annual net rent psf £30.51 £ 27.16 £30.35 £19.69 £28.48 £28.20 £25.78 £28.16 £17.85 £26.35
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Self storage income 126,022 5,717 131,739 18,137 149,876 111,190 1,929 113,119 15,263 128,382
Other storage related income
(3)
19,266 1,157 20,423 3,080 23,503 18,075 488 18,563 2,680 21 , 243
Ancillary store rental Income 698 225 923 19 942 667 119 786 59 845
Total store revenue 145,986 7,099 153,085 21,236 174,321 129,932 2,536 132,468 18,002 150,470
Direct store operating costs
(excluding depreciation)
(36,900) (3,418) (40,318) (7,614) (47,932) (36,817) (1,826) (38,643) (7,000) (45,643)
Short and long leasehold rent
(4)
(1,934) – (1,934) (564) (2,498) (1,944) – (1,944) (554) (2,498)
Store EBITDA
(3,5)
107, 15 2 3,681 110,833 13,058 123,891 91 ,171 710 91,881 10,448 102,329
Store EBITDA margin 73.4% 51.9% 72.4% 61.5% 71.1% 70.2% 28.0% 69.4% 58.0% 68.0%
Deemed cost
£m £m £m £m £m
To 31 March 2022 626.3 134.3 760.6 134.3 894.9
Capex to complete – 0.9 0.9 2.5 3.4
Total 626.3 135.2 761.5 136.8 898.3
(1)
The Big Yellow established stores have been open for more than three years at 1 April 2021, and the developing stores have been open for fewer than three years at 1 April 2021.
(2)
Armadillo’s Cheadle store was destroyed by fire in February 2022. It is excluded from the closing occupancy and capacity figures, however its average occupancy, average net rent per sq ft, revenue
and operating costs are included in the portfolio summary up to the date of the fire.
(3)
See glossary in note 33.
(4)
Rent under IFRS 16 for eight short leasehold properties accounted for as investment properties and right-of-use assets under IFRS.
35
Annual Report and Accounts 2022 Big Yellow Group PLC
Uxbridge, June 2021
MLA – 54,000 sq ft
Hayes, January 2022
MLA – 73,000 sq ft
Hove, March 2022
MLA – 58,000 sq ft
Manchester, May 2019
MLA – 60,000 sq ft
Wapping, July 2018
MLA – 30,000 sq ft
Guildford Central, March 2018
MLA – 55,000 sq ft
Camberwell, July 2020
MLA – 75,000 sq ft
Bracknell, September 2020
MLA – 59,000 sq ft
Battersea, November 2020
MLA – 70,000 sq ft
Our Big Yellow stores
An unrivalled portfolio of stores across London,
the South East and other large metropolitan cities.
Big Yellow Group PLC Annual Report and Accounts 2022
36
Twickenham 2, April 2016
MLA – 22,000 sq ft
Nine Elms, April 2016
MLA – 65,000 sq ft
Cambridge, January 2016
MLA – 60,000 sq ft
Enfield, April 2015
MLA – 60,000 sq ft
Chester, February 2015
MLA – 69,000 sq ft
Oxford 2, July 2014
MLA – 35,000 sq ft
Gypsy Corner, April 2014
MLA – 70,000 sq ft
Chiswick, April 2012
MLA – 73,000 sq ft
New Cross, February 2012
MLA – 61,000 sq ft
Stockport, September 2011
MLA – 65,000 sq ft
Eltham, April 2011
MLA – 70,000 sq ft
Camberley, January 2011
MLA – 67,000 sq ft
High Wycombe, June 2010
MLA – 60,000 sq ft
Reading, December 2009
MLA – 62,000 sq ft
Sheffield Bramall Lane,
September 2009
MLA – 60,000 sq ft
Poole, August 2009
MLA – 55,000 sq ft
Nottingham, August 2009
MLA – 67,000 sq ft
Edinburgh, July 2009
MLA – 63,000 sq ft
Twickenham, May 2009
MLA – 73,000 sq ft
Liverpool, March 2009
MLA – 60,000 sq ft
Bromley, March 2009
MLA – 71,000 sq ft
Birmingham, February 2009
MLA – 60,000 sq ft
Sheen, December 2008
MLA – 64,000 sq ft
Sheffield Hillsborough,
October 2008
MLA – 60,000 sq ft
Big Yellow Group PLC Annual Report and Accounts 2022
37
Kennington, May 2008
MLA – 66,000 sq ft
Merton, March 2008
MLA – 70,000 sq ft
Fulham, March 2008
MLA – 138,000 sq ft
Balham, March 2008
MLA – 61,000 sq ft
Barking, November 2007
MLA – 64,000 sq ft
Ealing Southall, November 2007
MLA – 57,000 sq ft
Sutton, July 2007
MLA – 70,000 sq ft
Gloucester, December 2006
MLA – 50,000 sq ft
Edmonton, October 2006
MLA – 75,000 sq ft
Kingston, August 2006
MLA – 62,000 sq ft
Bristol Ashton Gate, July 2006
MLA – 61,000 sq ft
Finchley East, May 2006
MLA – 54,000 sq ft
Tunbridge Wells, April 2006
MLA – 57,000 sq ft
Bristol Central, March 2006
MLA – 64,000 sq ft
North Kensington, December 2005
MLA – 50,000 sq ft
Leeds, July 2005
MLA – 76,000 sq ft
Beckenham, May 2005
MLA – 71,000 sq ft
Tolworth, November 2004
MLA – 56,000 sq ft
Watford, August 2004
MLA – 64,000 sq ft
Swindon, April 2004
MLA – 53,000 sq ft
Orpington, December 2003
MLA – 64,000 sq ft
Byfleet, November 2003
MLA – 48,000 sq ft
Chelmsford, April 2003
MLA – 54,000 sq ft
Finchley North, March 2003
MLA – 62,000 sq ft
38
Annual Report and Accounts 2022 Big Yellow Group PLC
Cardiff, October 2001
MLA – 74,000 sq ft
Portsmouth, October 2001
MLA – 61,000 sq ft
Norwich, September 2001
MLA – 47,000 sq ft
Dagenham, July 2001
MLA – 51,000 sq ft
Wandsworth, April 2001
MLA – 72,000 sq ft
Luton, March 2001
MLA – 41,000 sq ft
Southend, March 2001
MLA – 57,000 sq ft
Staples Corner, March 2001
MLA – 112,000 sq ft
Romford, November 2000
MLA – 70,000 sq ft
Milton Keynes, September 2000
MLA – 60,000 sq ft
Cheltenham, April 2000
MLA – 50,000 sq ft
Slough, February 2000
MLA – 67,000 sq ft
Hanger Lane, October 1999
MLA – 66,000 sq ft
Oxford, August 1999
MLA – 33,000 sq ft
Croydon, July 1999
MLA – 79,000 sq ft
Richmond, May 1999
MLA – 35,000 sq ft
New Malden, May 2002
MLA – 81,000 sq ft
Hounslow, December 2001
MLA – 54,000 sq ft
Ilford, November 2001
MLA – 58,000 sq ft
Guildford Slyfield, June 2002
MLA – 55,000 sq ft
Brighton, October 2002
MLA – 59,000 sq ft
Bow, November 2002
MLA – 132,000 sq ft
Colchester, December 2002
MLA – 54,000 sq ft
West Norwood, January 2003
MLA – 57,000 sq ft
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
39
(5)
The Group acquired the 80% of the Armadillo Partnerships that it did not previously own on 1 July 2021. The results of the stores in the Partnerships have been included in the results above for both
years to give a clearer understanding of the performance of all stores. The table below shows the results excluding the period when the stores were not wholly owned:
2022 20 21
Per above
£000
Armadillo
results as an
associate
£000
Statutory
£000
Per above
£000
Armadillo
results as an
associate
£000
Statutory
£000
Store revenue 174,321 (5,046) 169,275 150,470 (18,002) 132,468
Direct store operating costs (47,932) 1,908 (46,024) (45,643) 7,000 (38,643)
Rent (2,498) 150 (2,348) (2,498) 554 (1,944)
Store EBITDA 123,891 (2,988) 120,903 102,329 (10,448) 91,881
The table below reconciles Store EBITDA to gross profit in the statement of comprehensive income.
Year ended 31 March 2022
£000
Year ended 31 March 2021
£000
Store EBITDA Reconciling items
Gross profit per
statement of
comprehensive
income Store EBITDA Reconciling items
Gross profit per
statement of
comprehensive
income
Store revenue/Revenue
(6)
169,275 2,043 171,318 132,468 2,773 135,241
Cost of sales
(7)
(46,024) (4,359)
(50,383)
(38,643) (2,946)
(41,589)
Rent
(8)
(2,348) 2,348 – (1,944) 1,944 –
120,903 32 120,935 91,881 1,771 93,652
(6)
See note 3 of the financial statements, reconciling items are management fees and non-storage income.
(7)
See reconciliation in cost of sales section in Financial Review on page 41.
(8)
The rent shown above is the cost associated with leasehold stores, only part of which is recognised within gross profit in line with right-of-use asset accounting principles. The amount included in gross
profit is shown in the reconciling items in cost of sales.
Portfolio summary (continued)
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
40
Financial results
Armadillo
As explained above, the Group acquired the remaining interest in
Armadillo which it did not previously own on 1 July 2021. Armadillo
currently consists of 24 stores with a maximum lettable area of
1.0 million sq ft.
Revenue
Total revenue for the year was £171.3 million, an increase of £36.1 million
(27%) from £135.2 million in the prior year. Like-for-like store revenue
for the year was £148.1 million, an increase of 13% from the prior year
(2021: £131.1 million). Like-for-like revenue excludes our six most recent
Big Yellow store openings and the Armadillo stores. The revenue from the
Armadillo stores for the nine months from acquisition of the remaining
interest on 1 July 2021 to 31 March 2022 was £16.2 million.
Store operating costs have increased by £2.3 million (5%). The one-off
items in the current year relate to rates rebate on a number of stores,
totalling £0.8 million, following appeals of the 2017 rating list assessment.
Store operating costs before these one-off items have increased by
£3.1 million (7%) compared to the prior year, of which £1.4 million (3%)
is in relation to recently opened stores. The remaining increase of
£1.7 million (4%) can be explained as follows:
• Cost of sales have increased in line with the proportionate increase
in ancillary sales in the year.
• General and admin expenses have increased as 2021 had
significantly less travel expense during the lockdown period.
Other sales comprise the selling of packing materials, insurance, and
storage related charges. We saw growth of 13% in packing material sales
during the year, with the prior year’s sales impacted by the Spring
lockdown. Insurance sales have also seen strong year-on-year growth,
with improvements made to the average value insured.
The other revenue earned by the Group is management fee income from
Armadillo (up to 30 June 2021) 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 table below shows the breakdown of both Big Yellow’s and Armadillo’s
store operating costs compared to the prior year, with Armadillo’s costs
included in full in both years:
• The utilities expenditure has principally increased due to new stores.
• Marketing has increased by £0.2 million, with the 2021 cost reflecting
lower search costs and traffic levels during the Spring lockdown.
• The repairs and maintenance expenditure has increased by £0.5 million,
partly due to the increase in store numbers, increased investment
in CCTV monitoring security overnight, and we carried out less
maintenance work during the 2020 Spring lockdown.
• The insurance cost has increased due to an increase in the amounts
insured for loss of income and reinstatement values and new stores.
Financial
Review
Category
Year ended
31 March
2022
£000
Year ended
31 March
2021
£000 Change
% of store
operating
costs in
2022
Cost of sales (insurance and packing materials) 3,896 3,549 10% 8%
Staff costs 14,133 13,575 4% 29%
General & admin 1,992 1,541 29% 4%
Utilities 2,274 1, 9 61 16% 5%
Property rates 13,775 13,318 3% 28%
Marketing 6,632 6,433 3% 14%
Repairs & maintenance 4,200 3,687 14% 9%
Insurance 1,211 1,049 15% 2%
Computer costs 618 530 17% 1%
Total before one-off items 48,731 45,643 7%
One-off items (799) –
Total per portfolio summary 47,932 45,643 5%
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
41
Looking forward, we do see some inflationary pressures on our costs.
Our store salary review for the year ending 31 March 2023 averaged 5%,
with the lower paid staff seeing increases of on average 7%. The Rating
Revaluation in 2023 is likely to result in an above inflationary increase to
the Group’s property rates for the year ending 31 March 2024, given the
increase in industrial rents over the past few years.
The table below reconciles store operating costs per the portfolio
summary to cost of sales in the statement of comprehensive income:
Year ended
31 March
2022
£000
Year ended
31 March
2021
£000
Direct store operating costs per portfolio
summary (excluding rent)
47,932 45,643
Rent included in cost of sales (total rent payable
is included in portfolio summary)
1,633 1,272
Rent review accruals 607 445
Depreciation charged to cost of sales 378 320
Head office and other operational management
costs charged to cost of sales
1,741 909
Armadillo cost of sales pre acquisition of
remaining interest
(1,908) (7,000)
Cost of sales per statement of comprehensive income 50,383 41,589
Store EBITDA
Store EBITDA for the Big Yellow stores for the year was £110.8 million,
an increase of £18.9 million (21%) from £91.9 million for the prior year
(see portfolio summary). The overall EBITDA margin for all Big Yellow
stores during the year was 72.4%, up from 69.4% in 2021.
The EBITDA for the Armadillo stores for the year was £13.1 million, an
increase of £2.7 million (26%) from £10.4 million in 2021, with the margin
increasing to 61.5% from 58.0%.
The store EBITDA in the year for Big Yellow stores and for the Armadillo
stores from 1 July 2021 to 31 March 2022 was £120.9 million.
All stores are currently trading profitably at the Store EBITDA level, except
for our recently opened stores in Hayes and Hove.
Administrative expenses
Administrative expenses in the statement of comprehensive income of
£14.4 million were up £2.2 million compared to the prior year. £0.4 million
of this increase is due to the write-off of acquisition costs in relation to
the purchase of the remaining interest in Armadillo in accordance with
IFRS 3. This is an adjusting item in the calculation of the Group’s adjusted
profit before tax.
The remaining increase of £1.8 million is principally due an increase in
the share-based payments charge (£0.5 million), an increase in national
insurance on LTIPs (£0.5 million), both up due to the increase in the
Company’s share price during the year, with the balance of £0.8 million
due to an increase in travel costs (with 2021’s expense reduced by
lockdowns), increased investment in IT, with the balance inflationary.
The non-cash share-based payments charge represents £3.4 million of the
overall £14.4 million expense (2021: £2.9 million of £12.2 million expense).
Interest expense on bank borrowings
The gross bank interest expense for the year was £11.8 million, an
increase of £2.4 million from the prior year, due to higher average debt
levels in the year, in part due to the acquisition of Armadillo and the
consolidation of its debt from 1 July 2021. The average cost of borrowing
during the year was 2.8% compared to 2.9% in the prior year.
Capitalised interest on our construction programme was broadly in line
with the prior year at £2.1 million.
Total finance costs in the statement of comprehensive income increased
to £10.6 million from £8.2 million in the prior year.
Profit before tax
The Group made a profit before tax in the year of £698.9 million, compared
to a profit of £265.8 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
£96.8 million, up 30% from £74.6 million in 2021.
Profit before tax analysis
2022
£000
2021
£000
Profit before tax 698,876 265,822
Gain on revaluation of investment properties (597,224) (189,277)
Gain on disposal of investment property (584) –
Acquisition costs written off 416 –
Movement in fair value on interest rate derivatives (1,389) 148
Share of associate fair value gains and losses (3,293) (2,068)
Adjusted profit before tax 96,802 74,625
The gain on disposal of investment property relates to an overage received
from the previous sale of land adjacent to our Guildford Central store.
The movement in the adjusted profit before tax from the prior year is
illustrated in the table below:
£m
Adjusted profit before tax – year ended 31 March 2021 74.6
Increase in gross profit 27. 3
Increase in administrative expenses (1.8)
Increase in net interest payable (2.6)
Reduction in capitalised interest (0.1)
Reduction in share of adjusted profit of associates (0.6)
Adjusted profit before tax – year ended 31 March 2022 96.8
Basic earnings per share for the year was 385.4p (2021: 152.3p) and fully
diluted earnings per share was 384.2p (2021: 151.8p). Diluted EPRA
earnings per share based on adjusted profit after tax was up 24% to 52.5p
(2021: 42.4p) (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.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
42
REIT status gives the Group exemption from UK corporation tax on profits
and gains from its qualifying portfolio of UK stores. Revaluation gains on
developments and our existing open stores are exempt from corporation
tax on chargeable gains, provided certain criteria are met. The Armadillo
stores joined our REIT group on acquisition of the remaining interest,
allowing us to write back the deferred tax that had been provided on
previous revaluation uplifts.
The Group has a rigorous internal system in place for monitoring
compliance with criteria set out in the REIT regulations. On a monthly
basis, a report on compliance with these criteria is issued to the
Executive. To date, the Group has complied with all REIT regulations,
including forward looking tests.
Taxation
There is a tax charge in the current year of £1.6 million. This compares to a
charge in the prior year of £0.6 million. The increase in the current year tax
charge reflects the significant increase in the Group’s non-exempt taxable
profits from the sale of insurance and packing materials over the year.
Dividends
The Board is recommending the payment of a final dividend of 21.4 pence
per share in addition to the interim dividend of 20.6 pence, giving a total
dividend for the year of 42.0 pence, an increase of 24% from the prior year,
in line with our policy to distribute a minimum of 80% of our adjusted
earnings per share in each reporting period.
REIT regulatory requirements determine the level of Property Income
Distribution (“PID”) payable by the Group. On the basis of the full year
distributable reserves for PID purposes, a PID of 42.0p pence per share
is payable (31 March 2021: 32.0 pence). The PID for the year to
31 March 2022 accounts for all of the declared dividend. The table below
summarises the declared dividend for the year:
Dividend (pence per share)
31 March
2022
31 March
2021
Interim dividend – PID 20.6p 17.0p
– discretionary nil p nil p
– total 20.6p 17.0p
Final dividend – PID 21.4p 15.0p
– discretionary nil p 2.0p
– total 21.4p 17.0p
Total dividend – PID 42.0p 32.0p
– discretionary nil p 2.0p
– total 42.0p 34.0p
Subject to approval by shareholders at the Annual General Meeting to be
held on 21 July 2022, the final dividend will be paid on 29 July 2022. The
ex-div date is 7 July 2022 and the record date is 8 July 2022.
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 £107.1 million, an
increase of 40% from £76.7 million in the prior year. This reflects the
Group’s increase in profitability and also some favourable working capital
movements in the year.
These operating cash flows are after the ongoing maintenance costs of
the stores, which for were on average approximately £40,000 per store.
The Group’s net debt has increased over the period to £411.8 million
(March 2021: £325.0 million), with the majority of the increase due to the
debt within Armadillo now being consolidated.
Year ended
31 March
2022
£000
Year ended
31 March
2021
£000
Cash generated from operations 120,390 87,131
Net finance costs (10,761) (8,824)
Interest on obligations under lease liabilities (843) (772)
Tax (1,649) (823)
Cash flow from operating activities 10 7,137 76 ,712
Capital expenditure (105,151) (73,010)
Acquisition of Armadillo (66,679) –
Disposal of investment property 584 –
Investment (138) (450)
Receipt from Capital Goods Scheme 381 737
Dividends received from associates 435 688
Cash flow after investing activities (63,431) 4,677
Ordinary dividends (68,698) (58,808)
Issue of share capital 98,514 80,772
Payment of lease liabilities (1,384) (1,009)
Loan arrangement fees paid (953) –
Increase/(decrease) in borrowings 32,235 (64,728)
Net cash outflow (3,717) (39,096)
Opening cash and cash equivalents 12,322 51,418
Closing cash and cash equivalents 8,605 12,322
Closing debt (420,435) (337,300)
Closing net debt (411,830) (324,978)
The Group’s interest cover for the period (expressed as the ratio of cash
generated from operations pre-working capital movements against
interest paid) was 10.5 times (2021: 9.8 times).
In the year capital expenditure outflows were £105.2 million, up from
£73.0 million in the prior year. Of the capital expenditure in the year
£51.0 million is for the acquisition of West Kensington, Kentish Town,
and Epsom (including acquisition costs), with £54.2 million principally
relating to build costs of the new stores.
The cash flow after investing activities was a net outflow of £63.4 million
in the year, compared to an inflow of £4.7 million in 2021, with the
difference largely explained by the purchase of the remaining interest
in Armadillo during the year.
Financial Review (continued)
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
43
Balance sheet
Property
The Group’s open stores and stores under development owned at
31 March 2022, which are classified as investment properties, have
been valued individually by JLL. JLL were appointed as valuers during
the year, with the Board taking heed of the recommendations of the
Gray report, with the previous valuer having acted for the Group for more
than the recommended nine-year term. JLL have previously been valuing
the Armadillo stores prior to acquisition.
The external valuation has resulted in an investment property asset
value of £2.628 billion, comprising £2.301 billion (87%) for the freehold
(including nine long leaseholds) open stores, £41.2 million (2%) for the
short leasehold open stores and £285.4 million (11%) for the freehold
investment properties under construction.
Investment property under construction
The investment property under construction valuation has increased by
£121.9 million in the year. Capital expenditure accounts for £95.5 million
of this increase, notably on the site purchases of West Kensington and
Kentish Town, and construction expenditure, principally on Uxbridge,
Hayes, Hove, Harrow, Kingston North, and Kings Cross. This has been
offset by Uxbridge, Hayes and Hove transferring to open stores.
The valuation movement on the investment property under construction
is a surplus of £67.5 million, driven by an improvement in the market view
of development assets, coupled with a significant valuation uplift on the
industrial units being developed adjacent to our Harrow store, which is
due to open this Summer.
Investment property
The valuations in the current year have increased significantly from
the prior year, with a revaluation surplus of £529.7 million arising on
the open stores (see note 15 for the detailed valuation methodology).
This revaluation gain has been driven by a combination of cap rate
compression and an improvement in the cash flow and operating
metrics used in the valuation. This is reflective of the performance of
both self storage generally and Big Yellow during the past 12 months.
The average exit capitalisation rate used in the valuations was 5.5% in
the current year, compared to 5.7% in the prior year.
Analysis of property portfolio
Value at
31 March
2022
£m
Revaluation
movement
in the year
£m
Investment property – Big Yellow stores 2,186.8 514.6
Investment property – Armadillo stores 155.4 15.1
Investment property – Big Yellow and Armadillo stores 2,342.2 529.7
Investment property under construction 285.4 67. 5
Investment property total 2,627.6 59 7. 2
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 2022 of £2,728.2 million (£100.6 million higher
than the value recorded in the financial statements). This translates
to 54.6 pence per share. This revised valuation translates into an
adjusted net asset value per share of 1,239.7 pence (2021: 904.7 pence
after adjusting for the placing) after the dilutive effect of outstanding
share options.
The table below provides a further breakdown of the valuations:
Established Developing Armadillo
Freehold Leasehold Freehold Largely Freehold Total
Number of stores 67 6 8 24 105
MLA capacity (sq ft) 4,295,000 344,000 478,000 981,000 6,098,000
Valuation at 31 March 2022 (£m) £1,872.8 £36.9 £236.6 £155.0 £2,301.3
Value per sq ft £436 £107 £495 £158 £377
Occupancy at 31 March 2022 86.8% 86.6% 55.4% 83.1% 83.7%
Stabilised occupancy assumed 89.0% 88.1% 86.9% 87.2% 88.3%
Net initial year one yield 5.1% 13.4% 3.2% 8.0% 5.2%
The net initial year one yield is 5.2% (2021: 5.9%). Note 15 contains more detail on the assumptions underpinning the valuations. The difference between
the valuation in the table above and the investment property valuation in the balance sheet is the valuation of non-self storage investment property at
certain of the Group’s sites.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
44
Cheadle fire
In February 2022 we experienced a fire at our Cheadle store, which
resulted in a total loss to the store. The cause of the fire was arson.
This was a very difficult time for all our affected customers and some
of the possessions stored with us can never be replaced, and we are
very saddened that this incident occurred.
The store was a leasehold with five years remaining on the lease, and
the balance sheet cost of this store was £4.3 million. Buildings all risk
insurance is in place for the full reinstatement value with the landlord.
We also have insurance cover in place for both our fit-out and four years
loss of income. The first month’s loss of income insurance has been
recognised in revenue at the year end.
The lease liability and right-of-use asset have been written off reflecting
the lack of certainty as to when the Group’s obligations to pay rent under
the lease will resume. The balance sheet value of the store has also been
impaired to nil.
Receivables
The Group’s bad debt expense in the year represented 0.1% of store
revenue compared to 0.1% in the prior year, with 81% of our customer base
paying by direct debit.
At 31 March 2022 we have a receivable of £0.2 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 Group has received £15.6 million to date
under the Scheme, of which £0.4 million was received in the year.
Net asset value
The adjusted net asset value is 1,239.7 pence per share (see note 13),
up 37% from 904.7 pence per share at 31 March 2021 (after adjusting for
the June 2021 share placing). The table below reconciles the movement:
Movement in adjusted net asset value £m
Adjusted
NAV pence
per share
31 March 2021 1,566.6 889.2
Share placing 97. 6 15.5
31 March 2021 (rebased) 1,664.2 904.7
Adjusted profit after tax 95.2 51.8
Equity dividends paid (68.7) (37.3)
Revaluation movements (including share of associate to
30 June 2021)
598.8 325.0
Movement in purchaser’s cost adjustment (9.8) (5.3)
Other movements (e.g. share schemes) 4.5 0.8
31 March 2022 2,284.2 1,239.7
Despite the significant revaluation gain during the year, the movement
in the purchaser’s cost adjustment is negative. This is due to a different
treatment of purchaser’s costs in the valuation model of JLL, who were
appointed valuers in the year compared to that of their predecessor CBRE
(see notes 13 and 15 for further detail).
Financial Review (continued)
Borrowings
Our financing policy is to fund our current needs through a mix of debt, equity, and cash flow to allow us to build out, and add to, our development
pipeline and achieve our strategic growth objectives, which we believe improve returns for shareholders. We aim to ensure that there are sufficient
medium-term facilities in place to finance our committed development programme, secured against the freehold portfolio, with debt serviced by our
strong operational cash flows. We maintain a keen watch on medium and long-term rates and the Group’s policy in respect of interest rates is to
maintain a balance between flexibility and hedging of interest rate risk.
The table below summarises the Group’s debt facilities at 31 March 2022. The average cost of debt is 3.1% (March 2021: 2.6%).
Debt Expiry Facility Drawn
Average
interest cost
Aviva Loan September 2028 £161.9 million £161.9 million 3.5%
M&G loan June 2023 £120 million £120 million 2.9%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland) October 2024 £240 million £99 million 2.7%
Armadillo bank loans (Lloyds) April 2023 £52.7 million £39.5 million 3.1%
Total Average term 3.4 years £574.6 million £420.4 million 3.1%
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
45
During the year, the Group signed an additional £50 million seven year
debt facility with Aviva. As part of this refinancing the expiry of the
existing loan was extended from April 2027 to September 2028. This
reduced the fixed cost of the total Aviva loan facility from 4.0% to 3.5%.
Sustainability KPIs have been incorporated into this additional borrowing.
These include the continued installation of solar panels across the
security stores which will reduce emissions and running costs, and the
business being on-track to achieve ‘Net Renewable Energy Positive’
status by 2030. The Group will benefit from a margin reduction on the
new £50 million loan, conditional on achieving these targets.
The total debt facilities from Aviva are now £161.9 million of which
£16.9 million amortises to nil by April 2027.
The Group also increased the facilities of its M&G loan by £50 million to a
total facility of £120 million. £35 million of the total M&G loan is fixed by a
way of swap, with the balance floating. The average cost of the M&G loan
is now 2.9%, with the loan expiring in June 2023. The Group intends to
refinance this loan with M&G during the summer of 2022.
The Group has credit approval from a new insurance lender to provide
additional longer term debt facilities. These facilities would be used to
repay the Armadillo bank loans which expire next year, and thereafter to
increase the Group’s overall debt capacity.
The Group has committed undrawn bank facilities of £154 million, which if
drawn would carry a current marginal cost of debt of approximately 2.25%.
The Group was comfortably in compliance with its banking covenants at
31 March 2022. Further details of the Group’s covenants are provided in
note 19 of the accounts. The Group’s key financial ratios are shown in the
table below:
Metric
31 March
2022
31 March
2021
Net Debt / Gross Property Assets 16% 18%
Net Debt / Adjusted Net Assets 18% 21 %
Net Debt / Market Capitalisation 15% 17%
Pre-Interest Operating Cash Flow Cover 10.5x 9.9x
At 31 March 2022, the fair value on the Group’s interest rate derivatives
was an asset of £0.9 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 £18.4 million at 31 March 2022
(2021: £17.6 million), consisting of 183,967,378 ordinary shares of
10p each (2021: 175,880,470 shares). 7.8 million shares were issued in
June 2021 in a placing to fund the strategic Armadillo and West Kensington
acquisitions. 0.3 million shares were issued for the exercise of options
during the year at an average exercise price of £14.84 (2021: 0.4 million
shares at an average price of £10.64).
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.
2022
No.
2021
No.
Opening shares
175,880,470 167, 13 8 , 5 27
Shares issued in placing
7,751,938 8,335,043
Shares issued for the exercise of options
334,970 406,900
Closing shares in issue
183,967,378 175,880,470
Shares held in EBT
(1,122,907) (1,122,907)
Closing shares for NAV purposes
182,844,471 174,757,563
85.4 million shares were traded in the market during the year ended
31 March 2022 (2021: 86.8 million). The average mid-market price of
shares traded during the year was £14.37 with a high of £17.24 and a
low of £11.34.
Manchester, May 2019
MLA – 60,000 sq ft
Annual Report and Accounts 2022 Big Yellow Group PLC
46
Strategic Report
The Directors have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business
model, future performance, solvency, or liquidity. The Group maintains
a low appetite to risk, in line with our strategic objectives of providing a
low volatility, high distribution business.
The section below details the 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.
Principal risks
and uncertainties
Risk and impact Mitigation Change during the year and outlook
Self storage market risk
There is a risk to the business that the
self storage market does not grow in
line with our projections, and that
economic growth in the UK is below
expectations, which could result in
falling demand and a loss of income.
Self storage is a relatively immature market in the UK compared to other
self storage markets such as the United States and Australia, and we
believe has further opportunity for growth. Awareness of self storage
and how it can be used by domestic and business customers is relatively
low throughout the UK, although higher in London, and awareness has
increased during the past two years of the pandemic.
The rate of growth of branded self storage on main roads in good
locations has historically been limited by the difficulty of acquiring sites
at affordable prices and obtaining planning consent. New store openings
in London and other large metropolitan cities within the sector have
slowed significantly over the past few years.
Our performance during the past two years of the pandemic has been
strong. We believe that this performance is due to a combination of
factors including:
• a prime portfolio of freehold properties;
• a focus on London and the South East and other large metropolitan
cities, 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;
• delivering on our strong ESG commitments;
• the UK’s leading self storage brand, with high and growing public
awareness and online strength; and
• strong cash flow generation and high operating margins, from a
secure capital structure.
We have a large current storage customer base occupying
approximately 73,000 rooms spread across the portfolio of stores and
hundreds of thousands more who have used our stores over the years.
In any month, customers move in and out at the margin resulting in
changes in occupancy. This is a seasonal business and typically we see
growth over the spring and the summer months, with the seasonally
weaker period being the winter months.
The UK economy rebounded in 2021 following
the pandemic-induced economic contraction
in 2020.
The lifting of restrictions and the roll-out of
vaccines led to more normal economic
conditions, however risks around new variants
remain. Governments around the world have
taken on significant additional debt to fund the
policy responses to the pandemic, and this
may result in higher taxation rates in the future.
The Russian invasion of Ukraine has caused
significant global uncertainty and the impact
this will have on economic growth is unclear.
The invasion has also added more weight to
inflationary pressures from the reopening
of the economy and rising energy prices,
which may impact consumer spending.
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
47
Strategic Report
Risk and impact Mitigation Change during the year and outlook
Property risk
There is a risk that we will be unable
to acquire new development sites
which meet management’s criteria.
This would impact on our ability to
grow the overall store platform.
Changing climate and resulting likely
changes to planning restrictions
will narrow choice of available
sites further.
The Group is also subject to the risk
of failing to obtain planning consents
on its development sites, and the risk
of a rising cost of development.
Planning approval is increasingly
dependent on Social or Environmental
enhanced features (e.g. social
enterprise at Battersea, BREEAM
standards, local planners demands
for green spaces) – adding cost
and complexity.
Our management has significant experience in the property industry
generated over many years and in particular acquiring property on
main roads in high profile locations and obtaining planning consents.
We do take planning risk where necessary, although the availability
of land, and competition for it makes acquiring new sites challenging.
Our in-house development team and our professional advisers have
significant experience in obtaining planning consents for self storage
centres.
We manage the construction of our properties very tightly. The building
of each site is handled through a design and build contract, with the
fit-out project managed in-house using an established professional
team of external advisers and sub-contractors who have worked with us
for many years to our Big Yellow specification. We carried out an external
benchmarking of our construction costs and tendering programme
three years ago, which had satisfactory results. We have recently
commissioned a new benchmarking exercise on our construction costs
and will report on the results next year.
The Group has acquired eight sites over the past
three years, taking its total pipeline to 12 sites
which, when opened, would expand the Group’s
current MLA by 16%.
The planning process remains difficult and to
achieve a planning consent can take anything
from eighteen months to three years. Local
planning policy is favouring residential
development over other uses, and we don’t
expect this to change given the shortage of
housing in the UK.
We currently have planning consent on seven
of the 12 development sites.
Valuation risk
The valuation of the Group’s
investment properties may fall due
to external pressures or the impact
of performance.
Lack of transactional evidence in the
self storage sector leads to more
subjective valuations.
The valuations are carried out by independent, qualified external valuers
who have significant experience in the UK self storage industry.
The portfolio is diverse with approximately 73,000 rooms currently
occupied in our stores for a wide variety of reasons.
There is significant headroom on our loan to value banking covenants.
The revaluation surplus on the Group’s open
store investment properties was £530 million
in the year (an uplift of 29%), due to an
improvement in underlying cash flows used
in the valuations, coupled with cap rate
improvement.
There have been a number of larger portfolio
transactions across Europe over the past two
years, and there is a weight of institutional
money looking to invest in self storage. This
has led to the reduction in cap rates across
the sector.
Annual Report and Accounts 2022 Big Yellow Group PLC
48
Strategic Report
Risk and impact Mitigation Change during the year and outlook
Treasury risk
The Group may face increased
costs from adverse interest
rate movements.
Our financing policy is to fund our current needs through a mix of debt,
equity, and cash flow to allow us to selectively build out the remaining
development pipeline and achieve our strategic growth objectives,
which we believe improve returns for shareholders. We have made it
clear that we believe optimal leverage for a business such as ours should
be LTV in the range 20% to 30% and this informs our management of
treasury risk.
We aim to ensure that there are sufficient medium-term facilities in
place to finance our committed development programme, secured
against the freehold portfolio, with debt serviced by our strong
operational cash flows.
We have a fixed rate loan in place from Aviva Commercial Finance
Limited, with 6 and half years remaining. This loan was increased by
£50 million in September 2021. Our on-site solar generation plans
helped us in securing a lower margin on this tranche of debt.
The Group has a £120 million loan from M&G Investments, which is
repayable in 2023. The Group intends to refinance this loan with M&G
during Summer 2022. For our 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 2022 53% of the Group’s total drawn borrowings
were fixed or subject to interest rate derivatives. The Group reviews its
current and forecast projections of cash flow, borrowing and interest
cover as part of its monthly management accounts. In addition, an
analysis of the impact of significant transactions is carried out regularly,
as well as a sensitivity analysis assuming movements in interest rates
and store occupancy on gearing and interest cover. This sensitivity
testing underpins the viability statement below.
The Group regularly monitors its counterparty risk. The Group monitors
compliance with its banking covenants closely. During the year it
complied with all its covenants and is forecast to do so for the
foreseeable future.
The Bank of England base rate has been
increased four times in recent months, with it
currently at 100bps, up from 10bps. The
long-term forecast is for rates to rise from these
levels, with rising inflation. 47% of the Group’s
drawn debt is floating, and hence the Group has
experienced additional cost from these recent
increases in the base rate.
Debt providers currently remain supportive to
companies with a strong capital structure, as
evidenced by the Group adding additional debt
from Aviva and M&G over the year. That said,
the current environment has put pressure on
banks’ margins, with a potential future increase
in cost to the Group.
The Group’s interest cover ratio for the year
ended 31 March 2022 was 10.5 times,
comfortably ahead of our internal target of
5 times and ahead of our banking covenants,
as disclosed in note 19.
Tax and regulatory risk
The Group is exposed to changes in
the tax regime affecting the cost of
corporation tax, property rates, VAT,
Stamp Duty and Stamp Duty Land
Tax (“SDLT”), for example the
imposition of VAT on self storage
from 1 October 2012.
The Group is exposed to potential
tax penalties or loss of its REIT
status by failing to comply with
the REIT legislation.
We regularly monitor proposed and actual changes in legislation with the
help of our professional advisers, through direct liaison with HMRC, and
through trade bodies to understand and, if possible, mitigate or benefit
from their impact.
HMRC have designated the Group as having a low-risk tax status, and we
hold regular meetings with them. We carry out detailed planning ahead
of any future regulatory and tax changes using our expert advisers.
The Group has internal monitoring procedures in place to ensure that the
appropriate REIT rules and legislation are complied with. To date all REIT
regulations have been complied with, including projected tests.
The Group experienced an increase in cost in
2017 following the Government’s review of
business rates, and the next rating review due
in 2023 is likely to bring additional cost to the
Group, given the rise in industrial rents over the
past few years.
The corporation tax rate was increased in the
March 2021 budget, to take effect from April
2023, and there is a risk that tax rates will rise
further in the medium-term to fund the
increased government deficits that have arisen
from the policy response to the pandemic.
Principal risks and uncertainties (continued)
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
49
Strategic Report
Risk and impact Mitigation Change during the year and outlook
Human resources risk
Our people are key to our success and
as such we are exposed to a risk of
high staff turnover, and a risk of the
loss of key personnel.
We have developed a professional, lively, and enjoyable working
environment and believe our success stems from attracting and
retaining the right people. We encourage all our staff to build on their
skills through appropriate training and regular performance reviews.
We believe in an accessible and open culture and everyone at all levels
is encouraged to review, and challenge accepted norms, to contribute
to the performance of the Group.
The Group carried out an engagement survey of
its employees during the year, which showed
very pleasing results of the level of engagement
of our teams.
We have listened to the feedback from our
employees raised during our engagement
survey and made a number of changes to the
Group’s operations, including two days a week
working from home for our head office team,
reducing our store opening hours and the
payment of a lone trading bonus for store staff.
Brand and
reputation risk
The Group is exposed to the risk of a
single serious incident materially
affecting our customers, people,
financial performance and hence our
brand and reputation, including the
risk of a data breach.
We have always aimed to run this business in a professional way,
which has involved strict adherence with all regulations that affect our
business, such as health and safety legislation, building regulations in
relation to the construction of our buildings, anti-slavery, anti-bribery,
and data regulations.
We also invest in cyber security (discussed below), and make an
ongoing investment in staff training, facilities management, and the
maintenance of our stores.
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.
During 2018, we developed a crisis response
plan with external consultants to ensure the
Group is well placed to effectively deal with a
major incident.
As mentioned previously, we experienced a fire
caused by arson at our Armadillo Cheadle store
in February 2022. Our crisis response team
worked effectively in managing the incident.
Security risk
The Group is exposed to the risk of the
damage or loss of a store due to
vandalism, fire, or natural incidents
such as flooding. This may also cause
reputational damage.
The safety and security of our customers, their belongings, stores,
and our staff remains a key priority. To achieve this, we invest in
state-of-the-art access control systems, individual room alarms,
digital CCTV systems, intruder and fire alarm systems and the remote
monitoring of all our stores outside of our trading hours. We are the
only major operator in the UK self storage industry that has every room
in every Big Yellow store individually alarmed.
We have implemented customer security procedures in line with
advice from the Police and continue to work with the regulatory
authorities on issues of security, reviewing our operational procedures
regularly. The importance of security and the need for vigilance is
communicated to all store staff and reinforced through training and
routine operational procedures.
We have continued to run courses for all our
staff to enhance the awareness and
effectiveness of our procedures in relation
to security.
We have further invested in security
improvements in our stores during the year.
We regularly review and implement
improvements to our security processes
and procedures.
Annual Report and Accounts 2022 Big Yellow Group PLC
50
Strategic Report
Risk and impact Mitigation Change during the year and outlook
Cyber risk
High profile cyber-attacks and data
breaches are a regular staple in
today’s news. The results of any
breach may result in reputational
damage, fines, or customer
compensation, causing a loss of
market share and income.
The Group receives specialist advice and consultancy in respect of cyber
security, and we have dedicated in-house monitoring and regular review
of our security systems, we also limit the retention of customer data to
the minimum requirement.
Policies and procedures are under regular review and benchmarked
against industry best practice by our consultants. These policies also
include defend, detect and response policies.
We don’t consider the risk to have increased
more for the Group than any other business;
however, we consider that the threats in the
entire digital landscape do continue to increase
and evolve. As such we have continued to invest
in cyber security upgrading or replacing
components as required.
Climate change
related risk
The Group is exposed to
climate-change related transition and
physical risks. Physical risks may
affect the Group’s stores and may
result in higher maintenance and
repair costs. Failing to transition to a
low carbon economy may cause an
increase in taxation, decrease in
access to loan facilities and
reputational damage
The good working order of our stores is of critical importance to our
business model.
We visually inspect each of our stores at least once per annum and
planned and unplanned work is discussed immediately.
Maintenance requirements are discussed at budget reviews; proposals
are made to raise climate change related issues to the Board, who may
request more holistic adaptation work to be carried out.
The key mitigation strategy to address transitional risks is the delivery of
our Net Renewable Energy Positive Strategy and the Net Zero Scope 1 and
Scope 2 Emissions Strategy. Our investment to decarbonise our business
over the next eight years is expected to mitigate fully against taxation
(carbon tax) risk and reputational risks (both investors and customers).
Our Sustainability Committee, chaired by a
Non-Executive Director, last year delivered an
ambitious strategic plan to 2030.
We appreciate that both physical and transition
risks are expected to materialise to lesser or
greater extents over the coming years and costs
may go up gradually, hidden within what may be
perceived as ‘natural variations’. Our focus and
strong governance will allow us to continue to
mitigate the effects.
Principal risks and uncertainties (continued)
Internal audit
The Group employs a Head of Store Compliance responsible for
reviewing store operational and financial controls. He reports to the
Chief Financial Officer, and also meets with the Audit Committee at
least once a year. This role is supported by three other team members,
enabling additional work and support to be carried out across the
Group’s store portfolio. The Store Compliance team will visit each
operational store twice per year to carry out a detailed store audit.
These audits are unannounced, and the Store Compliance team carry
out detailed tests on financial management, administrative standards,
and operational standards within the stores. Part of the store staff’s
bonus is based on the scores they achieve in these audits. The results
of each audit are reviewed by the Chief Financial Officer, the Financial
Controller, and the Head of Store Operations. This is the equivalent of
an internal audit function for the Group’s store operations.
For the key business cycles conducted at the Group’s head office,
external consultants are used to review the Group’s controls on a
rotational basis. The consultants produce a report with
recommendations which is discussed with management and
reviewed by the Audit Committee. The cycles covered by this
activity include construction expenditure, treasury, taxation, and
facilities management.
With the combination of the store internal audit process and the
external assessment of the key business cycles, the Audit Committee
considers that this provides a robust internal audit assessment for
the Group.
Going concern
A review of the Group’s business activities, together with the factors likely
to affect its future development, performance and position are set out
in the Strategic Report. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are shown in the balance sheet,
cash flow statement and accompanying notes to the financial statements.
Further information concerning the Group’s objectives, policies, and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposures to credit risk and liquidity risk can be found in this
Report and in the notes to the financial statements.
At 31 March 2022 the Group had available liquidity of approximately
£163 million, from a combination of cash and undrawn bank debt facilities.
The Group is cash generative and for the year ended 31 March 2022,
had operational cash flow of £107.1 million, with capital commitments
at the balance sheet date of £20.9 million.
The Directors have prepared cash flow forecasts for a period of 18 months
from the date of approval of these financial statements, taking into
account the Group’s operating plan and budget for the year ending
31 March 2023 and projections contained in the longer-term business
plan which cover the period to March 2026. After reviewing these
projected cash flows together with the Group’s and Company’s cash
balances, borrowing facilities and covenant requirements, and potential
property valuation movements over that period, the Directors believe
that, taking account of severe but plausible downsides, the Group and
Company will have sufficient funds to meet their liabilities as they fall
due for that period.
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
51
Strategic Report
Climate change risks
and opportunities
TCFD compliance statement
The Board is pleased to confirm that, for the year ended
31 March 2022, Big Yellow’s climate related risks and
opportunities disclosures are reported in a TCFD framework.
We have started the journey to net zero last year with the launch
of our Net Renewable Energy Positive (“NREP”) and Net Zero
Strategy. With the support of our external partner, Atos, we have
published science-based near- and mid-term targets, which we
will submit to the SBTi in July 2022.
We have made good progress on our strategy to decarbonise our
business by removing gas boilers and have commenced our 3 year
programme to retrofit solar panels on our existing stores.
We had conducted an assessment of risks and opportunities and
their potential financial impacts; the output of this assessment
informed our NREP and Net Zero strategies.
With the acquisition of the remaining interest in Armadillo on
1 July 2021 we refreshed our flood risk assessment for our
combined estate. Moving forward, we will want to also refresh
the temperature projections for our Armadillo stores to deliver a
holistic view of the risks to our business. We also intend to work
closely with our suppliers to better quantify and jointly tackle
embodied emissions in our buildings. For specific actions on
Scope 1 and 2 initiatives, please refer to our strategy document
https://corporate.bigyellow.co.uk/sustainability/strategy.
We also intend to evolve our reporting under the TCFD
recommendations and recommended disclosures.
Task Force on Climate-Related Financial
Disclosure (“TCFD”) – Risks and Opportunities
During the year, the Sustainability Committee met twice to review
the Group’s sustainability framework and strategy; to monitor its
sustainability performance; and to provide guidance on emerging
environmental issues, including environmental risks, and their
impact on the Group’s business.
Our Net Renewable Energy Positive Strategy and Net Zero
Emissions Strategy aim to deliver the opportunities we have
identified through the TCFD assessments and mitigate the risks,
in particular our Transition Risks.
With the acquisition of Armadillo in July 2021 we are now
integrating the Armadillo stores into the Big Yellow risk
management framework and the NREP and Net Zero Emissions
Strategy, and expect to complete that within the next 12 months.
The Armadillo portfolio is being brought under the umbrella
strategy, which has resulted in a re-baselining activity that we
will report against in future years.
The Group has total facilities of £52.7 million secured on the Armadillo
portfolios with Lloyds Bank plc. These facilities expire in April 2023. The
Group has received credit approval from a new insurance debt provider to
refinance these loans and provide additional headroom on our facilities
with longer duration fixed debt; this is currently being documented.
The Group has a £120 million loan with M&G Investments Limited, with a
bullet repayment in June 2023. The Group intends to refinance this loan
with M&G this summer.
In making their assessment, the Directors have carefully considered the
outlook for the Group’s trading performance and cash flows as a result of
the current economic environment, taking into account the trading
performance of the Group from the onset of the Covid-19 pandemic to the
date of these financial statements. The Directors have also taken into
account the performance of the business during the Global Financial
Crisis. The Directors modelled a number of different scenarios, including
material reductions in the Group’s occupancy rates and property
valuations, and assessed the impact of these scenarios against the
Group’s liquidity and the Group’s banking covenants. The scenarios
considered did not lead to breaching any of the banking covenants, and
the Group retained sufficient liquidity to meet its financial obligations
as they fall due.
Consequently, the Directors continue to adopt the going concern basis
in preparing the financial statements.
Viability statement
The Directors have assessed the Group’s viability over a four-year period
to March 2026. This period is selected based on the Group’s long-term
strategic plan to give greater certainty over the forecasting assumptions
used. As in the assessment of going concern, the Directors have modelled
a number of different scenarios on the Group’s future prospects.
In making their assessment, the Directors took account of the Group’s
current financial position, including committed capital expenditure. The
Directors carried out a robust assessment of the principal risks and
uncertainties facing the business, their potential financial impact on the
Group’s cash flows, REIT compliance and financial covenants and the
likely effectiveness of the mitigating options detailed. The Directors have
assumed that funding for the business in the form of equity, bank and
insurance company debt will be available in all reasonably plausible
market conditions. Whilst the eventual impact of the current economic
environment on the Group is uncertain, and may not be known for some
time, the Group has a highly cash generative business, good liquidity and
has proved resilient in its trading since the onset of the pandemic.
Based on this assessment the Directors have a reasonable expectation
that the Company and the Group will be able to continue operating and
meeting all their liabilities as they fall due to March 2026.
Annual Report and Accounts 2022 Big Yellow Group PLC
52
Strategic Report
Climate change risks and opportunities (continued)
Governance
Our Chief Executive has overall responsibility for climate-related risks and opportunities. Ongoing oversight of climate-related issues is carried out
by our Sustainability Committee, chaired by our Non-Executive Director for Sustainability, and attended by our Head of CSR and the Executive
Leadership Team. The Sustainability Committee meets twice yearly. The Board is updated on relevant aspects of our sustainability strategy
bi-monthly. In addition, climate-related risk has been defined as a principal risk and managed as part of our standard business risk process.
Worth noting:
• We are already at 1.0 degree warming.
• To minimise global warming to 1.5/2.0 degrees is likely to require policy and technical changes.
• Physical risks and transition risks are inversely related, meaning physical risks increase in significance if a transition to a low carbon
economy does not occur and vice versa.
• Companies who have already undertaken scenario analyses have found it helpful to produce scenarios for (a) physical changes and
(b) transition risks.
Our Managing Climate Related Risks and Opportunities document sets out our internal processes:
https://corporate.bigyellow.co.uk/application/files/9616/5235/3338/Managing_Climate_Related_Risks_and_Opportunities_2022.pdf
For more on governance, please see:
https://corporate.bigyellow.co.uk/application/files/4016/1522/7105/Big-Yellow-ESG-Governance-2021.pdf
Physical Risks
Impacts from both flooding and rising temperatures will likely have a
financial impact on us. It may also have a reputational impact if stored
goods are affected and an indirect financial impact through rising
insurance costs.
Assuming a 2°C increase scenario, 27 of our Big Yellow stores may
experience both an increase in ‘hottest summer day temperature’ of 5%
or more and at least a doubling in the number of summer days per month
that exceed 25°C.
Assuming a 2°C increase scenario, 34 of our Big Yellow stores may
experience both a reduction in the number of rainy summer days per
month and an increase in mm of rainfall on the wettest summer day.
13 Big Yellow stores may experience both.
The financial impact of flooding could come from a range of impacts,
such as damage to goods stored on the ground and basement floors,
unblocking drains, clearing up after large scale flooding, more frequent
maintenance of the building infrastructure that is exposed to a large
amount of rain falling over shorter time frames, such as roofs, gutters,
signage, etc.
The financial impact for longer periods of hot weather could come from
a range of impacts, such as heat damage to goods being stored, increase
in use of ventilation / cooling, potentially retro-fitting of temperature
control systems, detrimental impact on immediate neighbourhoods
through urban island heat effects and community pressure to address
heat issues.
We also have three Big Yellow stores that are in Flood Zone 3 and have
an at least medium to high risk of surface water flooding – all contain
measures to minimise impacts, such as flood defences. We anticipate that
we will be monitoring the adequacies of these measures going forward.
Strategy
As a real estate company, our business is exposed to both physical
and transitional risks and opportunities from climate change in the UK.
We’re committed to assessing and mitigating physical and financial
climate change adaptation risks that are material to our portfolio.
The Company considered the various potential impacts a changing
climate has on our Business within the TCFD framework. The discussion
was guided by a range of scenarios published by external agencies,
such as the UK Met Office, the IPCC, International Energy Agency, and
others – and looked at both physical and transitional risks under two
climate warming scenarios; one within 1.5 to 2.0 degrees centigrade;
and one up to 4.0 degrees centigrade. A scenario allows a company to
plan for what it considers to be the material impacts of global warming
and the likely outcomes – this is going to vary from business to
business. Broadly, the Company agrees that we should expect some
physical risks from global warming to have an impact on our business.
The impacts from localised flooding and from a rising UK temperature
are deemed as material. We also agree that the transition to a low
carbon economy might pose a risk; however, if we are able to position
ourselves well, this may also pose an opportunity.
During the year, we have publicly committed to the ‘Race to Zero’
campaign, which commits to science-based targets that aim to limit
global warming to 1.5°C.
We have established science-based targets and will seek to have
these externally verified during 2022. The science-based targets are
published here:
https://corporate.bigyellow.co.uk/application/
files/8316/5305/0098/BY_FY2021_22_Science_based_Targets.pdf
Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
53
Strategic Report
With the acquisition of Armadillo in July 2021, we have investigated
flooding risks for the 24 Armadillo stores currently operational: four stores
are in Flood Zone 3; only two stores are at high risk of surface water
flooding; all other water related risks are at a maximum of medium risk.
We will be assessing the risk of rising temperatures for Armadillo stores
in the coming months.
Transition Risks
There are a number of aspects of changing climate that the Sustainability
Committee deem likely to occur:
• a focus on electrification and decarbonisation;
• an increase in carbon / emission taxation and fines (unlikely that
there will be significant incentives);
• an increase in standards, especially for buildings;
• a significantly higher financial reporting burden, including Scope 3; and
• the introduction of a price of carbon.
The Environmental Committee has proposed, and the Sustainability
Committee agrees, that decarbonising our business is important to
allow us to:
(a) avoid the risk of “stranded assets”;
(b) maximise the opportunity to invest at the right time, optimising costs;
(c) minimise carbon/emission taxation; and
(d) become an even stronger consumer preference / offering real
customer solutions, such as only using renewable energy at our
stores and providing EV charging pods for our staff and customers.
The risk of ‘stranded assets’ is a concern from our investors, and so
becomes a material concern to us.
Our Net Zero Emission strategy sets out how we intend to deliver a
decarbonised business. Please note that the work to move away from
gas is currently being undertaken for Armadillo and Big Yellow, with
the majority of Armadillo stores due to be operated with electricity
exclusively by 2023. Feasibility assessment for the eight Big Yellow
stores where gas is still used (for office central heating systems) are
currently underway.
Internal Processes
Both physical and transition risks are expected to materialise to lesser
or greater extents over the coming years and costs may go up gradually,
hidden within what may be perceived as ‘natural variations’.
Our initial view was to establish a ‘trigger’ metric that will prompt the
Company to review current measures taken and allow for strategic
decision-making if thresholds are exceeded.
On discussing how this may work on an operational level, we felt that our
current processes in place are sufficient to maintain a close watch on
increasing costs driven by climate change.
We deem our current understanding of the inherent physical risks to our
assets and the unique features of each of our stores to be more than
enough to manage future changes.
Process 1 – identifying emerging issues through visual
inspection and half yearly budget reviews
The Directors (CEO, Operations Director and CFO) visually inspect each
of our stores at least once per annum; they are usually accompanied
by the Head of Estates and Facilities and planned and unplanned work
is discussed immediately.
The budgeting process then allows the Operations Director and the
Head of Estates and Facilities to prioritise both planned and unplanned
maintenance. The budget review by the CFO and Financial Controller
looks at planned costs compared to previous years and where costs
are changing year on year. This is the point at which trends may be
identified and proposals are made to raise climate change related
issues to the Board, who may request a more holistic solution and who
may charge the Environmental Committee to identify such a solution.
This is particularly useful for physical risks.
Process 2 – identifying issues via our internal and
external Sustainability community
The Head of CSR or the Environmental Committee or the Non-Executive
Director for Sustainability may identify aspects that could pose a risk
to the Group, and they may raise these either at the Environmental
Committee or at the Sustainability Committee. Specific risks, such as
connected to Planning, may be integrated into the standard Business
Risk process.
Where we identify that a larger scale change needs to be considered,
such as replacing gas heating with electric or renewable energy
heating, depending on the budget implications this will be assessed
either by the Environmental Committee or if significant extra budget is
required, at the Board level Sustainability Committee.
This is particularly useful for transition risks.
Work going forward
With the acquisition of Armadillo, the focus for the year was on the
integration of the Armadillo stores into the operational Big Yellow
framework; flood risk assessment for the 24 Armadillo stores have
been conducted. The following next steps have been agreed:
• Using the 27 Big Yellow stores that may experience an increase in
total number of “hot days” and a temperature increase of hottest
day, model potential increase in energy costs for cooling.
• Understand better the suitability of external tools, such as
CRREM tool methodology. Please note the CRREM tool at present
only covers offices.
• External reporting – we agree that reporting transparently
will help our investors to feel assured that we are taking
appropriate steps to ensure our Company’s ability to thrive in
a changing environment.
Annual Report and Accounts 2022 Big Yellow Group PLC
54
Strategic Report
Work done to date
• Flood Risk Assessments for each store; these now include
Armadillo stores.
• Localised climate change projections – using the Met Office climate
projection modelling; 2°C and a 4°C scenario for each store;
Armadillo stores assessments to be done.
• Scope 3 footprint for combined Armadillo and Big Yellow.
Published here:
https://corporate.bigyellow.co.uk/download_file/1007/237
• Setting science-based targets for the entire business. Published
within our Benchmarking and Standards section of the full CSR
Report 2022.
Please note, whatever we have not published is considered by us to be
commercially sensitive information.
Metrics
We hope our TCFD related metrics will provide a snapshot for all
interested readers.
We have been taking part in voluntary ‘Resilience’ modules as part of
GRESB and have submitted more details to the CDP risk questions; the
GRESB Resilience module has now been integrated into the overall list
of questions, but unfortunately is not scored and therefore is likely to
be only of limited use to external readers.
We aim to achieve a good balance between disclosing our risks and any
mitigating actions we are taking and protecting commercially sensitive
information. We trust this section achieves this balance; for any further
questions, please contact csr@bigyellow.co.uk.
Climate-related Risks and Opportunities
Climate-related Risks
Aspect KPI 2020 2021 2022 Target
Regulation No EPCs rated F or G 0 0 2
(1)
maintain
Extreme
Weather
% of current lettable
area (sq ft) located in
Planning flood Zone 3
and at least medium to
high risk of surface
water flooding
(2)
New for
2020/21
0.87 0.70 n/a
% of at risk current
lettable area protected
by adaptive measures,
such as raised floors
or SUDs
(3)
100% 100% 100% 100%
Climate-related Opportunities
Aspect KPI 2020 2021 2022 Target
Transitioning
to a low
carbon
economy
% of electricity from
renewable energy
generation
(4)
6.1% 7.1 % 7.8%
(5)
100% +
by 2030
Investment in
retro-fitting activities
to drive decarbonisation
(approx.)
£100k £600k £15k
(6)
£10.0m
to 2025
% of electricity
purchased from
renewable sources
(market-based)
n/a 100% 100% 100%
Greenhouse Gas (GHG)
emissions intensity
from building energy
consumption (Scope 1
& 2) – tCO
2
e/CLA (m
2
)
5.5 4.8 4.7* As per
our
NREP &
Net Zero
Strategy
Market
opportunities
Deploy electric vehicle
charging pods for
customers and
employees at each
newly built store
(total installed)
(7)
2 5 8 All new
stores
Targets
We have set out our full pathway for all Scope 1, 2 and 3 Emissions by
2032 in our Net Renewable Energy Positive (“NREP”) Strategy and
Net Zero Emissions Strategy.
We have set science-based targets – please refer to our Benchmarks
and Standards section in the full CSR Report.
Breakdown of EPCs
83% of EPCs for our combined store portfolio is in the ‘Green’ range,
i.e. an A, B or C rating.
EPCs by CLA (sq m)
C
37%
B
42%
A
10%
without
EPC
6%
F
1%
E
1%
D
3%
(1)
Two of our acquired Armadillo stores have ‘F’ ratings
(2)
Sq ft from ground and below ground level floors
(3)
SUDs stands for Sustainable Urban Drainage
(4)
Please note, this now includes Armadillo and Big Yellow
(5)
Despite adding 28 stores to our portfolio and only adding 3 new solar installations the total percentage has increased. This target will be re-assessed due to the Armadillo acquisition.
(6)
Removal of gas boilers. The retrofitting of solar installations has been slightly delayed due to supply chain issues, but are scheduled to be completed by September 2022
(7)
2019: Oxford only. 2020: Oxford and Manchester. 2021: Oxford, Manchester, Camberwell, Bracknell, and Battersea. 2022: additionally: Uxbridge, Hayes and Hove
Climate change risks and opportunities (continued)
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
55
Section 172
Statement
Section 172 of the Companies Act 2006 requires a Director of a company
to act in the way they consider, in good faith, would be the most likely to
promote the success of the company for the benefit of its members as a
whole. In performing this Section 172 requires a Director to have regards
among other matters to:
• the likely consequences of any decision in the long-term;
• the interests of the company’s employees;
• the need to foster the company’s business relationships with
suppliers, customers and others;
• the impact of the company’s operations on the community and
the environment;
• the desirability of the company maintaining a reputation for
high standards of business conduct; and
• the need to act fairly with members of the company.
The Directors give careful consideration to the factors set out above in
discharging their duties under section 172. The Board’s obligations under
Section 172 are considered at Board meetings within each relevant
section of the Board pack. The stakeholders we consider in this regard are
our employees, our customers, our shareholders, our suppliers, and the
environment. The Board recognises that building strong relationships
with our stakeholders will help us to deliver our strategy in line with our
long-term values and operate the business in a sustainable way.
The Board regularly receives reports from management on issues
concerning customers, the environment, suppliers, employees, and
investors, which it takes into account in its discussions and in its
decision-making process under Section 172.
Stakeholder engagement
The Board is committed to effective engagement with all of our key
stakeholders. The importance of each matter may differ to each
stakeholder group, and hence the Group seeks to understand the relevant
interests and priorities of each stakeholder Group, and to have regard to
these in its decision making. The Board does acknowledge that not every
decision that it makes will necessarily result in a positive outcome for
all stakeholders.
Information on interaction with our key stakeholders is included in the
Corporate Governance Report on pages 83 to 88.
Further information
You can read further information on stakeholder engagement and our
approach to S172 in the following places:
Employees
CEO introduction (page 18)
Marketing and Operational Review (page 26)
Governance (page 86)
Customers
CEO introduction (page 18)
Marketing and Operational Review (page 26)
Governance (page 87)
Suppliers
CSR report (page 56)
Governance (page 87)
Investors
Chairman’s Statement (page 14)
CEO introduction (page 18)
Financial Review (page 40)
Governance (page 87)
Environment
CEO introduction (page 18)
Marketing and Operational Review (page 26)
CSR Report (page 56)
Long term
Chairman’s Statement (page 14)
CEO introduction (page 18)
Our investment case (page 20)
Financial Review (page 40)
Risk Management (page 46)
Viability Statement (page 51)
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
56
1. Introduction
Big Yellow Group PLC (“Big Yellow”) is committed to responsible and
sustainable business practices. The Big Yellow Board recognises that
corporate social responsibility (“CSR”) – when linked to clear commercial
objectives will create a more sustainable business and increase
shareholder and customer value, in both the medium and long term.
People, Planet and Profit need to be aligned to make a sustainable business.
Big Yellow seeks to meet the demand for self storage from businesses
and private individuals by providing the storage space for their
commercial and/or domestic needs, whilst aiding local employment and
contributing to the local community.
Our CSR Policy covers all of Big Yellow’s operation, which now includes
24 Armadillo stores, as both an operator of self storage facilities and a
developer of new self storage facilities. We recognise that our operations
can have significant economic, environmental, and social impacts. We
are therefore committed to assessing our CSR risks and opportunities,
and taking appropriate steps to mitigate negative impacts and, where
possible, enhance positive impacts for the benefit of our business,
our stakeholders, and our local environment.
The governance of our sustainability activities is delivered by the
Sustainability Committee, chaired by Heather Savory. For an update on
the activities of the Committee please see the Sustainability Committee
section in this report.
The Big Yellow Board also receives regular direct updates on sustainability
topics both from the Environmental Committee and from the Head of CSR.
The outcome of operating responsibly is the social value that we create
and the long-term resilience of our business when faced with external
pressures and changes, such as a changing climate and a changing
political and legislative environment.
The acquisition of the remaining 80% of Armadillo in July 2021
represented a material change in our environmental data which triggered
a re-baselining activity. We have included as much of current and
historical year data for Armadillo as possible.
Our full CSR Report and the relevant sections within our Annual Reports
and Accounts (the Directors’ Report and the CSR section) have been
prepared in accordance with the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report) Regulations
2018 implementing the Streamlined Energy and Carbon Reporting
(“SECR”) requirements. The Greenhouse Gas (“GHG”) section of the CSR
report has been reported in accordance with the WRI/WBCSD GHG
Protocol – a Corporate Accounting and Reporting Standard.
Our health and safety reporting is stated in accordance with the UK Health
and Safety Executive guidance.
You can read more about our business model on pages 14 to 30 of the
Annual Report.
Corporate Social
Responsibility Report
2. CSR executive summary
We have all been shocked and saddened to see the tragic events
unfolding in Ukraine. Once again, I was impressed by how local
communities and individuals sprung to action to support refugees
arriving in Poland, Romania, Slovakia, Hungary, and Moldova: we are
pleased to say that we have been able to play a small part by helping
many of these through either the donation of boxes or the donation
of storage space to hold supplies temporarily before they were being
driven to the relevant borders. In total, Big Yellow has provided free or
discounted space and boxes of just over £308,000 to all charitable
organisations, including support to the Ukraine relief effort.
Additionally, one of the Big Yellow Foundation’s permanent charity
partners is Breaking Barriers, who support refugees here in the UK.
Our thoughts are with everyone caught up in this war.
Our relationships with Breaking Barriers and the Down’s Syndrome
Association this year have furthermore strengthened with the
implementation of work placements. This is an important aspect of our
community activities, and I am pleased at the positive impact these
placements have not just on the individuals being placed, but also on
our store teams.
In terms of our broader sustainability agenda, this has been the first
year of our new Net Renewable Energy Positive (“NREP”) and Net Zero
Strategy. We had initially planned to retrofit 12 stores this year with
solar PV installations but halted the work when we became aware of
potential human rights issues in our supply chain. We have since
identified and engaged with an alternative supplier of solar panels
and expect to install these between May and September 2022.
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
57
We have used the holding time well by continuing to execute the works
necessary to prepare our stores for the solar panel installations and
we expect to be making good progress from now on. We have a target
of completing the retrofit of 36 stores within the next three years.
Our board level Sustainability Committee, chaired by Heather Savory
has met twice during the year and has been effective at guiding our
discussions and making responsible and ambitious decisions. The entire
Board and I take our responsibility for CSR to the heart of our business,
and we are very pleased to have Heather assisting us with our ongoing
Sustainability Agenda.
This year, the Sustainability Committee has approved stretching
science-based targets, but I am aware that getting to Net Zero is a
challenge all businesses need to face up to, to plan for, and to invest in.
It will not be easy. We have the great advantage of owning the large
majority of our buildings; most of which have been assessed as suitable
to proceed with the retrofitting of solar energy generating installations.
We are, furthermore, an entrepreneurial company and we intent to remain
flexible and open to further innovation. This is particularly pertinent as
sustainable technologies continue to develop. During the year we have
made progress on our battery pilot project at Guildford Central and we
look forward to evaluating how batteries can play their part in delivering
our future commitments.
Jim Gibson
Chief Executive Officer
2.1 Highlights
• We have set our first science-based targets.
• We have maintained our inclusion in the FTSE4Good indices;
maintained our GRESB Green Star rating and achieved a
B award from CDP.
• We obtained our second EPRA sBPR Gold Award.
• We have donated £316,120 in Community Investment.
This consists of a combination of free and discounted space
and BoxShop products donated, and the moneys raised by
our employees that go to the Big Yellow Foundation.
• We have refreshed our Emissions footprint to include Armadillo.
• Delivered three successful work placements in conjunction
with our charity partners.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
58
2.2 Climate Change and our Business – our Strategy
We are aligned with the Intergovernmental Panel on Climate Change (“IPCC”)
position that the world needs to limit any environmental temperature rise
to no more than 1.5 degrees Celsius above pre-industrial levels.
Aligning our strategy to achieve this goal meets the needs and views of
our stakeholders and this report sets out how we intend to achieve that.
Corporate Social Responsibility Report (continued)
Although the IPCC Net Zero Emissions target due date is 2050, our new
strategy plans to deliver significant aspects of our reduction in emissions
by 2030. We will focus on our most material emissions – carbon – and
look forward to updating you on the progress we are making in each
future CSR Report.
We have set science-based targets for our Scope 1, Scope 2 and Scope 3
emissions. These will be submitted to the Science-Based Target Initiative
(SBTi) during Summer 2022.
(1)
Big Yellow Foundation year ended 31 March 2022 is due by January 2023. The numbers provided here are unaudited.
2.3 Sustainability Performance Overview
The table below is of all our commitments, the progress we have made against them during the financial year ended 31 March 2022 and our (amended)
plans going forwards. They are aligned to our three corporate strategic themes.
Provide the place and space to make lives easier
The table below shows the Group’s performance against Sustainable Development Goals (“SDG”).
Achieved On track Behind target Not achieved New
SDG where
applicable Target / Commitment
By Year
ending
31 March
Progress during
the year Status Update to plans
To raise £150,000 Foundation donations
from our customers, Employee fundraising
contributions and Big Yellow matched amounts
Annual Raised
£172,000
(1)
Maintain target
Grants allocated to Big Yellow Foundation
Charity partners: 75% of income allocated
to charity partners
Annual Allocated 115%
(£198,000)
We have decided to distribute more of
our reserves
100% of stores with volunteering opportunities Annual 100%
10% of volunteering days taken up by our teams 2023 6%
We were able to create some online
opportunities – target remains in place
Four individuals on work placement
contract provided and supported by a
BYF charity partner
Annual 3
We have placed three individuals on
12 week placements; two of these
placements were extended by a further
12 weeks
Number of individuals offered a permanent
position from the above cohort – 100% of
yearly cohort
2022 0
Target to be reviewed
Maintain Customer Engagement as measured
by engagement with the Big Yellow Foundation:
Monitor move-in and move-out donations –
aim for maintaining performance
Annual Achieved
Monitored and included in Director Store
Visit Discussion
Target will remain in place
Business Customers and National Customers:
Assess needs and define engagement approach
2021 Not achieved
Target to be reviewed. Current strategy
of reacting to request may be appropriate
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
59
Plan and act for a Sustainable Future
Achieved On track Behind target Not achieved New
SDG where
applicable Target / Commitment
By Year
ending
31 March
Progress during
the year Status Update to plans
‘Net zero’ Store Scope 1 and 2 Carbon
Emissions by 2030
2030 Market-based:
100% net zero
Below the specific programmes for this
and next year
Retro-fit 36 stores with solar installations 2025 Preparatory work on
12 stores complete
Deliver solar installations on prepared
stores and ready the next 12 stores
Set science-based targets 2022 Science-based
targets set
Submit to the SBTi during 2022
Deliver a battery pilot 2023 Battery installed
Develop and delivery battery
management process
Replace gas boilers 2025 Four removed during
the year
A further six planned for the year ending
31 March 2023
Sustainable construction commitments:
minimum solar installation
Annual Hove, Hayes and
Uxbridge have a
combined installation
capacity of c. 150kWp
New commitment: from Kingston North
onwards, all new stores will have 85kWp
solar capacity installed
Sustainable construction commitments:
BREEAM Standard of Very good
Annual Exceeded: Hove,
Hayes and Uxbridge
are all Excellent
New commitment: stores from Slough
Bath Road onwards will be built to
BREEAM Very Good standard and certified
Sustainable construction commitments:
EV charging pods at all newly built stores
(where space allows)
Annual Met. Hove, Hayes
and Uxbridge have
Electric Vehicle
pods installed
Planned at sites to be opened during the
year ended 31 March 2023
Generate renewable energy to meet at
least 100% of our energy needs
2030 Preparatory work on
12 stores complete
Deliver solar installations on prepared
stores and ready the next 12 stores
Achieve 0 tCO
2
e per m
2
occupied Intensity metric 2030
n/a
Energy Intensity target: 60% decrease from our
2011 baseline
2030 Armadillo acquisition
means that this
target needs to
be reviewed
Target to be reset for the new, combined
store portfolio. Baseline year is the year
ended 31 March 2020
Increase total Solar PV generation capacity by
at least 10%
Annual Achieved – 3 new
stores with 150kWp
represents a 15%
increase
Target has been superseded by the NREP
strategy and will not be carried forward
100% CLA (Current Lettable Area) covered
by Green aspects (%)
(1)
Annual Achieved 83%
This is due to the
newly acquired
Armadillo portfolio –
like-for-like remains
at 100%
Review EPCs for Armadillo
(1)
We included EPC A to C rated stores only.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
60
SDG where
applicable Target / Commitment
By Year
ending
31 March
Progress during
the year Status Update to plans
Review in-store water consumption against
self storage benchmark
Annual We remain above
BBP benchmark
Contractors signing up to CCS scheme with
a target score of 35 points for both fit-out
and shell
Annual 38 for Hove
40 for Hayes
36 for Uxbridge
Educate and engage store teams to improve
recycling performance – send zero waste
to landfill
2025 12% to landfill
Treat everyone fairly and respectfully, as a partner
SDG where
applicable Target / Commitment
By Year
ending
31 March
Progress during
the year Status Update to plans
Report on ‘prompt payment’ statistics Annual Complete Maintain reporting
% of invoices received & paid within 30 days Annual 88% – improved
from 58% last year
Maintain reporting and performance
Actual paid statistics Annual Set out in the ‘Our
Suppliers’ section
Maintain reporting
n/a We will continue to reference and meet our
most relevant standard: EPRA
Annual EPRA sBPR
‘Gold’ Award
Continue as is
We continue to submit to all relevant
Benchmarks, namely
GRESB, CDP, and FTSE ESG
Annual Most recent scores:
GRESB: 84%
CDP: B
FTSE4Good:
Included in index (3.1)
Continue as is
It is our aim to keep everyone safe when
visiting or working at our stores
Annual No fatalities –
accident statistics
are published in
the H&S section
of this report
Continue as is
Any accident or incident is investigated
and – where within our control – efforts
are made to learn from the incident so
that there are no repeats
n/a Supply Chain Risks: We intend to conduct
further supplier assessments
2022 We have engaged
SGS to design a
framework and
approach, which
we hope to deliver
during 2022
This is a new initiative which was set up
at the end of 2021
(1)
Corporate Social Responsibility Report (continued)
Plan and act for a Sustainable Future (continued)
Achieved On track Behind target Not achieved New
(1)
A more formal supply chain risk project was set up partially in response to the experience we made with the solar panel human rights issues and the wish by the Company to have a proactive approach.
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61
3.1 Highlights
• Continued to report on our Gender Pay Gap.
• Published our first Ethnicity Pay Gap Report.
• Continued the work of our Inclusivity and Diversity Committee,
changing the scope and constitution of the committee to
ensure that all protected characteristics are fully represented.
• Achieved an engagement score of 86% in our Employee
Engagement Survey (2019: 87%).
• Enrolled 95 people on to a virtual British Sign Language
training course.
• Rolled out a Working From Home Policy for our Head Office
Employees which has enabled all team members to achieve
a better work-life balance.
• Reduced our store opening hours to support the wellbeing
of our teams.
• Offered advice and support to a total of 122 people across
the year, via our Wellbeing Experts.
• Appointed and trained 12 Recruitment Experts to support the
recruitment process across our stores.
• Launched over 300 new personal development videos within
our Learning Management System.
• Achieved a Performance Review completion rate of 94%
across the Company.
• Continued to include a selection of ‘People’ KPIs to be
assured by SGS.
3. Our people
Our people are at the heart of Big Yellow’s business, bringing our values
to life through the service they provide and through the energy and
passion that drives us to become an ever more responsible and
sustainable business.
We continue to encourage a culture of partnership within the business
and believe in staff participating in corporate performance through
benefits such as customer feedback rewards, bonus schemes and share
incentives. We recognise and reward the exceptional performance,
achievements, and ideas of our people through a Recognition Points
Scheme and allocated points with a value of just under £65,700 for the
year ended 31 March 2022.
We remain committed to our values and ethics, as well as recruiting,
retaining and motivating individuals with talent and integrity and
ensuring that we listen to our people and maximise their skills and
performance. These factors are all key to the continued success of
our Company.
As Covid-19 continued to have an impact during the financial year, we
remained supportive of our employees throughout the year, with regular
operational updates and advice, assistance from our Wellbeing Experts,
paid flu jabs for all team members and working from home where
appropriate in our Head Office.
In September 2021, we carried out our fourth externally run employee
engagement survey. We were very pleased to have achieved an
engagement score across the Company of 86%, which despite the
challenges our teams faced during this period, reflects very favourably
when compared to our score of 87% in 2019. Our highest scoring areas
were inclusion and diversity 90% (2019: 94%), our values 90% (2019: 88%)
leadership 89%, management style 89% and organisational integrity 88%,
all of which scored the same result as in 2019.
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Corporate Social Responsibility Report (continued)
4. Our communities
Our communities are made up of all the people who work and store in our
facilities and everyone who lives around us.
Despite continued partial restrictions due to Covid-19 during the year,
aspects of our daily lives have returned to pre-lockdown levels. Our
customers are visiting our stores and meetings and interactions are
often back to an in-person setting. We believe we have been conducting
our business with integrity and compassion and hope we have been able
to make lives easier, especially for those individuals and organisations
that have been tirelessly working to feed communities and help keep
health workers and carers safe.
4.1 Highlights
• Big Yellow’s community investment for the year, delivered via
discounted space, was £306,389.
• We partnered with OpenOrchard at West Norwood to plant
and maintain native shrubs.
• Our employees raised £4,127, £3,370 of which qualified for
matching by Big Yellow.
• Delivered three successful and all-round enriching work
placements with Breaking Barriers and the Down’s
Syndrome Association.
• Delivered another successful year for our Big Yellow Foundation.
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4.2 Community Investments
Free Space donated for community or charity use (£) £283,627*
Discounted Space of up to 90% £22,762*
Payments to Social Enterprise organisations (£) £0.00
Total employee Big Yellow Foundation fundraising & Big Yellow
matched funds (£)
£7,497*
One-off donations £2,234*
Total Community Investment £316,120*
* Indicates data reviewed by SGS
4.3 Big Yellow Foundation
Big Yellow Foundation is working with seven, permanent charity partners:
Street League, Bounce Back, Breaking Barriers, the Back Up Trust, the
Down’s Syndrome Association, Hire a Hero and St Giles Trust.
The Foundation has posted its annual report and accounts, which can be
found on the charity commission website.
You can find out more about all of our partners and the Big Yellow
Foundation on our website https://www.bigyellow.co.uk/foundation/
Big Yellow and our customers and employees provide the income to the
Big Yellow Foundation. Our Big Yellow Foundation Steering Committee,
who meet on a quarterly basis, determines how best to raise funds, and
promote the Foundation to our employees, customers, and suppliers.
The Foundation is Big Yellow’s main vehicle to deliver a consistent
customer and employee facing community programme.
Big Yellow and the Big Yellow Steering Committee has an annual
fundraising target of £150,000. The income for the year ended
31 March 2022 was £172,000.
The Foundation paid out £198,000 to its seven charity partners in the
year to 31 March 2022. Most of the grants made are unrestricted funds,
helping our charity partners to pay for everyday necessities to keep
their organisations going.
In addition to the Trustees’ time and the Steering Committee’s time,
Big Yellow furthermore supports the Big Yellow Foundation with
donations in kind, by providing financial and accountancy services
plus the secretariat to the Big Yellow Foundation Board of Trustees.
5. Our customers
Our most material commitment to all of our customers is a safe, secure,
welcoming, and friendly environment.
At Big Yellow, the health and safety of our team members and customers
is our principal priority, and this has never been more so than during the
pandemic. Our storage facilities are large buildings - but not crowded
places - and generally we have a low intensity of use.
At the beginning of the pandemic, we provided PPE appropriate for our
team members to use and carried out risk assessments to confirm our
stores remain Covid-19 compliant, with appropriate measures put in
place. With the easing of measures, we have recently reverted to some
of our pre-pandemic work practices.
5.1 Highlights
• Our NPS (Net Promoter Score) for combined move-in and
move-out responses was 78.9 over the last 12 months.
• During the year we have strengthened our Customer
Engagement activities with:
– strong social media content ‘Big Yellow and Green’
https://www.bigyellow.co.uk/green/
– engaging customer journey content;
– visibility of our commitment to using renewable energy
through in-store displays, as well as a centralised solar
generation display on our corporate site.
• Delivered continued engagement with our Big Yellow
Foundation: 34% of customers donated at move-in stage,
40% at move-out stage.
£172,000
Income raised for
the Foundation
£198,000
Paid out to Foundation
charity partners
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64
Corporate Social Responsibility Report (continued)
6. Our suppliers
Big Yellow recognises that it can have a significant impact on its
suppliers and that its suppliers can represent an important aspect to help
Big Yellow to deliver its own environmental and social responsibilities.
How we manage our suppliers
We manage our suppliers on a decentralised basis, with each Department
Head overseeing the onboarding, contracting and in-life management of
their suppliers. Many of our suppliers have become trusted partners,
having worked with us for many years.
In addition, our construction partners source a broad variety of materials
from companies all over the world on our behalf. Whilst these goods are
not sourced directly by us, some may be specified by us. We place great
value on using recycled materials in our construction process and these
are procured in accordance with our guidelines.
During the year, serious and credible concerns were raised about the
potential of human rights breaches within our solar panel supply chain.
After engaging with the supplier and the manufacturer to assess the
likelihood of a swift remedy, we concluded that the response provided
by the manufacturer did not allay our concerns.
We determined to select a different supplier whose supply chain
transparency, coupled with the production location itself provided us
with the necessary confidence to move ahead.
This decision had a material impact on our solar panel retrofit program;
the new panels, although more expensive are more efficient and long
lasting, which has helped defray some of the original cost impact over
the medium to long term. Identifying and engaging a new supplier also
delayed us by a few months.
We know this was the right decision to take and are grateful to research
institutions and various organisations who work tirelessly to shine a light
on human rights issues.
This issue with our solar panel manufacturer has emphasised the need
for us to understand our supply chain even better. We have engaged SGS
to work with us on a Supply Chain Risk framework and assess a number
of our key suppliers.
We will report regularly on progress.
6.2 Supplier Payment Performance
April 2021 - September 2021 October 2021 - March 2022 Total
<30 6,007 88% 7, 28 9 88% 13,296 88%
30-60 759 11% 974 12% 1,733 11%
>60 53 1% 36 0% 89 1%
6,819 8,299 15,118
Average time to pay an invoice: 25 days
6.1 Highlights
• We are happy to report that we have been able to retain our
Prompt Payment Code (“PPC”) performance certificate due to
our continued strong payment performance:
– We paid 88% of invoices within 30 days and a further 11%
between 30 and 60 days, a significant improvement
from the prior year (58% within 30 days and 39% between
30 and 60 days).
– Our average time to pay an invoice was 25 days
(2021: 32 days).
– We measure our payment performance to our suppliers
on a quarterly basis. Prompt payment is especially
important to our smaller suppliers, who may not have
the cash flow to do well with very long payment terms.
• We have been recognised as a Supplier Engagement Leader
by the Carbon Disclosure project for the second year.
• No issues were raised via our confidential Whistleblowing
Helpline.
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65
6.3 Supply chain risk
Supply chain risk – highlights
Our approach differentiates between suppliers who provide services here
in the UK and others who may provide products or materials from further
afield. For suppliers and their employees working in the UK, especially the
ones who provide us with Construction or Facilities services, we provide
an anonymous whistleblowing helpline, and no issues were reported
during the year.
Our construction partners have been displaying the poster in our
construction site offices; our Facilities contractors in our store
communal areas.
The poster is kept unbranded on purpose to re-enforce the message that
any calls are treated in confidence.
For a deeper, supply chain review we have engaged SGS. The deliverables
of that work are:
• To jointly with Big Yellow create a framework to assess our suppliers’
risk priorities; and
• Conduct in-depth desk top assessment on a short list of suppliers
through supplier questionnaires to flag any potential issues within
our material supply chain.
We have identified approximately 25 key Construction, Facilities and
Stock suppliers who will be part of this structured Supply Chain Risk review.
A first joint workshop took place in April 2022. We intend to provide
updates as part of our UK Modern Slavery Act Statement later during 2022.
Supply chain emissions engagement
Supply chain emissions engagement – highlights
• We have been recognized as a Supplier Engagement Leader by the
Carbon Disclosure project for the second year.
• With the acquisition of Armadillo, we have refreshed our spend-based
Scope 3 Footprint assessment – results are published in our case
study section of our Corporate Website.
Scope 3 Footprint
Understanding our Scope 3 Footprint is a necessary first step to
understanding material aspects of our extended value chain and with it
lead to better preparedness to meet future opportunities and challenges.
We conducted and published our Big Yellow footprint last year and, as the
acquisition of Armadillo in July 2021 represented a material change to our
business, we therefore repeated our footprint work to include the new,
larger portfolio.
This has delayed our science-based target work somewhat, however,
we have set science-based targets during the year.
Please see our ‘Performance’ section on our corporate site here:
https://corporate.bigyellow.co.uk/application/files/8316/5305/0098/
BY_FY2021_22_Science_based_Targets.pdf
CDP Supplier Engagement Rating (“SER”)
Background to the SER: Following CDP’s 2021 global score release,
companies responding to the full version of the CDP climate change
questionnaire also receive a SER in addition to their climate change score.
The companies with the best SER are celebrated as Supplier Engagement
Leaders – which this year is the top 8% (up by 1% point from 2020) of
companies who disclosed to the full climate questionnaire.
The SER provides a rating for how effectively companies are engaging
their suppliers on climate change.
CDP assesses performance on supplier engagement using a company’s
response to selected questions on governance, targets, scope 3
emissions, and value chain engagement in the CDP climate change
questionnaire. The SER Introduction and SER methodology 2021 is
available on CDP’s guidance page for more information. An organisation’s
average upstream emissions are around 11.4 times greater than their
direct operations – which shows how vital supplier engagement is to
achieve ambitious climate goals, such as science-based targets.
We are very pleased to have been recognised as a Supplier
Engagement Leader.
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66
7. Our health & safety
Big Yellow Self Storage recognises the importance of maintaining high
standards of Health & Safety for our customers, staff, contractors, and
any visitors to our stores. Our Health & Safety Committee reviews
Policies, Risk Assessments, performance, and records on a quarterly
basis. The Policies cover two distinct areas – our routine store operations
and our fit-out construction activities.
In line with the latest Government Covid-19 guidelines, we have gradually
eased restrictions and special measures in our stores and at Bagshot.
Throughout the Pandemic we continued to do our utmost to protect our
staff, our customers, and our visitors as much as possible by, amongst
other measures:
• issuing specific guidance on relevant controls, restrictions, and rules;
amongst other areas on (additional) cleaning procedures; and
• making available extra cleaning products and protective equipment,
such as hand sanitiser gel, facemasks, and gloves, available to
customers and staff.
We encourage our staff to be considerate when interacting with
colleagues and wear masks when asked; we have also encouraged staff
to stay out of the business if they exhibit flu-like symptoms to ensure
we minimise the spread of Covid-19.
In this section we also recognise two specific incidents that affected out
stores and customers in the last year:
Fulham Fire – 11 June 2021
A fire was started in a customer’s room in the basement of our Fulham
store. The fire did not spread to any other parts of the store and was
isolated to a single section of the basement floor (out of three sections),
which included our dedicated wine storage area. No staff or customers
were injured.
Our in-store fire and smoke detection systems – plus our external
security monitoring centre – kicked in immediately to detect the fire
and alerted the fire services. The London Fire Brigade were on the
scene quickly to control the fire and then monitor it to ensure it was
extinguished. The Fulham store remained closed in full or in part for
three days for the Fire Brigade to extinguish the fire and for the Police
to conclude their investigations. The store has now been fully repaired
and the affected wine area reopened for customers in January 2022.
Cheadle Fire – 26 February 2022
A fire was deliberately started in a customer’s room at our Cheadle store
early in the morning of 26 February 2022. The fire was started with an
accelerant and its rapid spread led to the total loss of the store and
customers’ contents. There were no staff members or customers on site
at that time and therefore no injuries reported. Greater Manchester Fire
& Rescue were quickly in attendance, but the scale of the fire meant they
were unable to save the property or the customers’ contents inside. This
was a hugely disruptive incident, and we are truly sorry for the losses our
customers have had to suffer as a result. Our priority has been to support all
the customers affected and to ensure the insurance obligations have
been delivered to the customers as efficiently as possible. We continue to
work with the freeholder and our insurers on the rebuilding of the facility.
Corporate Social Responsibility Report (continued)
7.1 Highlights
Covid-19: We do not usually report on sickness and absence
during our year and do not intend to do so this year. We have had
a number of staff self-isolating over the last year and some have
reported Covid-19 symptoms. We are asking staff with symptoms
to stay at home / work from home in order to protect themselves,
their colleagues and our customers.
Furthermore, we can report our H&S highlights this year as follows:
• There were no “Fatal Injuries, Notices or Prosecutions” in any
part of our operations during the year ended 31 March 2022.
• We have regularly reviewed our Store and Head Office
working policies in conjunction with the Government’s advice
for Covid-19.
• Out of the 27 minor injuries to our customers, contractors,
and visitors, 17 were the result of minor cuts. All of these
could have been avoided by wearing protective gloves.
• Our staff suffered 16 minor injuries, for a variety of reasons,
including cuts and trips.
• There were 6,626 ‘Person Days’ worked on new store
construction ‘Fit-out’ projects in 2021/22. This work was on
our new store developments in Uxbridge, Hove, and Hayes.
There were no reportable accidents from these projects for
our Construction Fit-Out activities.
• During the year, we opened our new stores in Uxbridge, Hove,
and Hayes. The Considerate Constructor Schemes (“CCS”) for
the three newly opened stores were as follows: Hayes 40/50;
Hove 38/50 ; and Uxbridge 36/50.
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7.2 KPIs
Please note, on 1 July 2021 Big Yellow Group acquired the 80% of Armadillo Self Storage it did not already own. From the year ended 31 March 2022
we report on the combined store portfolio – reported data for the prior year and earlier is exclusively for Big Yellow stores.
Despite the fact that the scope of our reporting has increased, absolute numbers of minor injuries have reduced. This is very pleasing; however,
we intend to review the reporting process to ensure that all incidents are captured.
Store Customer, Contractor and Visitor Health & Safety
Year ended 31 March 2019 2020 20 21 2022
Number of Customer Move-ins
1
73,293 70,661 66,366 88,094
Number of Minor Injuries
55 56 37 27*
Number of Reportable Injuries (RIDDOR)
4 0 2 1*
RIDDOR per 100,000 Customer Move-ins
5.5 0.0 3.0 1.1*
Indicates data reviewed by SGS as part of their assurance work
Notes : RIDDOR = Reporting of Injuries, Diseases and Dangerous Occurrences.
Big Yellow Staff Health & Safety (Stores & Head Office)
Year ended 31 March 2019 2020 20 21 2022
Average Number of Staff
2
347 3 61 370 427
Number of Minor Injuries
14 10 6 16*
Number of Reportable Injuries (“RIDDOR”)
0 0 0 0*
AIIR per 100,000 staff
0 0 0 0*
* Indicates data reviewed by SGS as part of their assurance work.
Notes: Annual Injury Incident Rate = the number of staff reportable injuries / average number of staff (x100,000).
Big Yellow Construction ‘Fit Out’ Health & Safety
Year ended 31 March 2019 2020 20 21 2022
Number of Total Person Days worked
2,473 2,667 7,111 6,626
Number of Minor Injuries
2 1 7 3*
Number of Reportable Injuries (RIDDOR)
0 0 0 0*
* Indicates data reviewed by SGS as part of their assurance work.
Notes: RIDDOR = Reporting of Injuries, Diseases and Dangerous Occurrences.
1
Please note this number is provided by the central finance team and audited as part of our third-party financial audit. Any normalising data is not assured by SGS.
2
Average FTE at 31st March 2022 has been used.
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68
8. Our environment
Environmental Responsibilities
Our CSR Policy sets out the aspects of what we manage. Our CSR Policy
Standard and our web content provide further information on how we
manage the impact of our business on society and the local
environment, to control our risks and manage our opportunities in
a sustainable manner.
Environmental compliance
Our full CSR Report and the relevant sections within this report have
been prepared in accordance with the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 implementing the Streamlined Energy and Carbon
Reporting (“SECR”) requirements. The GHG section of the CSR report
has been reported in accordance with the WRI/WBCSD GHG Protocol –
A Corporate Accounting and Reporting Standard.
Approach
We have provided a specific section on energy, emissions, water, and
waste, reporting against all environmental European Public Real Estate
Association (“EPRA”) indicators (and GRI where relevant). Having
achieved ‘ Gold’ status in terms of transparency and quality of our
reporting for the financial years ended 31 March 2020 and 2021,
we continue to present our data in this format.
Where we feel further KPIs may be insightful, we have provided these
in each subsection too, including a brief narrative to explain variances
where applicable.
Any changes we make to our reporting are tabled in our Basis of
Reporting document.
Benchmarking and Standards
We use the detail in this CSR Report to participate in external/industry
benchmarks, such as the annual Carbon Disclosure Project (“CDP”), the
Global Real Estate Sustainability Benchmark (“GRESB”) and FTSE4Good
to engage with our other Ethical Investors.
The GRESB and CDP benchmarks inform our investor community of our
general ESG performance, our governance approach, risk management
protocols and a range of other indicators that give reassurance that our
business is ‘sustainable’.
We consider GRESB and FTSE4Good to be particularly relevant to the
nature of our business and our continued inclusion forms part of select
Big Yellow’s senior managers performance conversations.
We are aware of the limitations we face with taking part in benchmarks
designed for traditional Real Estate organisations rather than self storage
but value the opportunity to be transparent and are committed to
continued participation.
Assurance of Data
We have commissioned SGS United Kingdom Ltd to carry out independent
assurance of our Greenhouse Gas emissions disclosures and other select
voluntary disclosures, at a limited level of assurance according to the
International Organization for Standardization’s (2006) ISO 14064-3.
Their assurance statement is below.
Corporate Social Responsibility Report (continued)
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8.1 Big Yellow Net Renewable Energy Positive (NREP)
Strategy and Net Zero Emissions Strategy
The Company’s NREP Strategy and Net Zero Emissions Strategy, which
was launched during the year ended 31 March 2022 is undergoing two
material reviews at present:
• the acquisition of Armadillo prompted a recalculation of the
Company’s energy consumption and resulting emissions; and
• the commitment to setting science-based targets prompted an
adjustment of our emission targets.
As part of the NREP Strategy and Net Zero Emissions Strategy, the
Sustainability Committee approved budgets to deliver a number of
key programmes.
The Company is tracking five initiatives to ensure the delivery of the
strategy is on track; they are:
a. Progress on solar generation: deliver retrofitting of overall
36 Big Yellow stores that currently do not have solar. Progress
has been slightly delayed due to supply chain issues – overall
timelines expected to be met.
b. Progress on developing and setting science-based targets:
science-based targets set and published this year. Submission
to SBTi expected in July 2022.
c. Progress on battery pilot project: battery and site selected and
installation work in progress. Partners and systems selected to
manage the battery. On track
d. Progress on decarbonisation – first step gas boiler replacement
programme: four gas boilers replaced with electric boilers; a further
six scheduled for the year ending 31 March 2023. On track
e. Sustainability investment during construction phase: the
Sustainability Committee was particularly keen to review the upfront
investment the Company made to ensure newly constructed stores
were aligned with the retrofitted stores. From our Kingston North
development onwards, all new stores will be equipped with 85kWp
solar installations.
These specific deliverables have been included in our Performance
Overview section and will be reported on annually.
There are a number of variables we are faced with in delivering the NREP
Strategy and Net Zero Emissions Strategy through to 2030; we intend to
report on progress on an annual basis as part of our CSR Report. We may
also update the strategy document from time to time, as the progression
of the work will indicate new options becoming available to us to also
consider and as we understand the impact the Armadillo stores have on
our strategy.
Highlights
• We have set science-based targets during the year, please
see the ‘Benchmarks and Standards’ section of this report
for more information.
• We have opened three new stores with 50kWp solar
installations each. We now have an estate with 32 Solar PV
installations – this has increased our renewable electricity
generation by 27% from the prior year.
• Our stores with Solar PV Installations of 50kWp or larger
generated 25.8% of their electricity need.
• Despite the opening of three new stores, our absolute
electricity (grid bought electricity plus solar energy used)
has remained static; our like-for-like store portfolio
electricity use has a decrease of 3.5%.
• As of October 2019, we purchase REGO-backed 100%
renewable electricity from Opus Energy, which allows us
to report our market-based electricity as ‘zero carbon’.
That contract covers both Big Yellow and Armadillo stores.
• After the acquisition of Armadillo, we refreshed our Scope 3
Footprint assessment to further our understanding of our
wider impacts. Please access the year ended 31 March 2020
outcomes at corporate.bigyellow.co.uk.
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8.2 Energy
The chart shows how grid bought electricity plus solar energy generated
and used in our stores between 2008 and 2022 has changed over time.
Please note, as we move to meeting our electricity needs increasingly
from solar, the chart includes, from the year ended 31 March 2020, the
used solar energy in the total MWh number.
With increasing stores, our long-term electricity use is remaining
pleasingly stable. This is because new stores coming on board are built
even more efficiently, using best technology available and come ready
equipped with solar installations.
Some of our stores rent out roof space to a company that installs and
operates telecoms mast. The telecom masts are powered via our stores’
electricity supply, increasing the total store energy consumption. This
additional energy became a material percentage of our emissions during
2018/19 and, as the masts are not within our control, their electricity
consumption has been removed from our total Scope 2 and reported as
part of Scope 3.
Corporate Social Responsibility Report (continued)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
13,899
12,866
12,730
13,925
13,674 13,846
11,688
9,643
9,376
9,571
9,494
8,991
11,902
11,585
11,751
MWh solar and grid Number of stores
0
100
200
300
400
500
600
700
800
900
1,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
41
94
113
134
209
286
314
358
343
329
450
578
665
865
Portfolio Long Term Solar Electricity Generation (2009 to 2022)
Store Portfolio Long Term Solar Electricity Generation (2009 to 2022)
Our portfolio of stores with roof-mounted solar PV installations generates low carbon electricity that is monitored for performance and receives
financial payments from energy companies we export to. We now have 32 stores that generate renewable solar electricity.
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8.3 Emissions
Highlights
• Absolute Scope 1 and Scope 2 Store and non-Store portfolio saw
a decrease of 4.9%. There are two main causes for this decrease:
a favourable UK fuel mix and our investment in on-site
renewables with three new solar PV installations during the year.
• We have repeated our spend based assessment of our Scope 3
Footprint including our new total estate including Armadillo.
• Our market-based emissions (from electricity) are now 0 tCO
2
e
thanks to our REGO-backed 100% renewable electricity contract.
Scope 1 and 2 GHG Emission Intensity / Occupancy,
Revenue & CLA (GHG-Int.)
Year Ended 31 March
2020
Including
Armadillo
2021
Including
Armadillo
2022
Including
Armadillo
Total GHG Scope 1& 2 Emissions
location-based (t CO
2
e)
3,159 2,805 2,664*
Total GHG scope 2 Emissions market-
based (t CO
2
e)
1,410 253 309
Electricity Transmission Losses and
Employee Business travel (t CO
2
)
251 224 209
Telecoms emissions on our sites (t CO
2
) 14 4 174 179
Employee Business travel (t CO
2
e) 72 76 93
Total (t CO
2
e) Scope 3 467 474 480
tCO
2
e/ revenue (£000s) – location-based
store and none store portfolio
17. 9 18.3 15.1
tCO
2
e/ revenue (£000s – market-based
store and none store portfolio
9.7 1.7 1.8
kgCO
2
e/ Occupied space store
portfolio only
7. 2 6.2 5.4
kgCO
2
e/ CLA (m
2
) store portfolio only 5.9 5.0 4.7
Please note from the year ended 31 March 2020 onwards the data
includes our Armadillo portfolio.
Store carbon intensity (per CLA sq m)
0
5
10
15
20
25
2014 2015 2016 2017 2018 2019
restated
2020
restated
2020 2021
restated
2022
22.6
17.3
14.6
12.7
9.7
7.4
7.2
5.9
5.0
4.7
8.4 Water
We have been working on improving our data collection for water and have
documented our approach in this year’s Basis of Reporting document.
We benchmark our water consumption against the Better Building
Partnership’s (“BBP”) Real Estate Environmental Benchmarks (Water).
We have selected: ‘Water Benchmarks – Enclosed Shopping Centres’ –
‘Water Intensity’ – Water Intensity by space (litres/m
2
CPA / year).
At ‘73’ (76,904m
3
of water / 488,794m
2
occupied space), we’re very
pleased to share that our water consumption remains significantly lower
than BBP ‘Good Practice’.
We have asked our auditors to conduct an assurance gap analysis for
‘Water’. This should allow us to identify further opportunities for data
collection. We will review the findings of our auditors and establish a plan
of action accordingly.
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
72
8.5 Waste
During the year, we have had increased demand from our business
customers for waste services. In several instances, we facilitated the
separate collection of customers’ waste (which is not reported in our
figures) but understand some stores are likely to have permitted
Big Yellow bins to be used. This has impacted on our performance.
We are working with our waste contractors to better understand our
waste data – we have included ‘waste’ in our assurance work with SGS
and hope to improve on data and subsequently recycling performance.
8.6 Resources Use
As we are looking towards other potential opportunities, we are likely to
focus our efforts on other areas of our business, such as paper use and
will report on individual initiatives over time.
Packaging: The eight product lines we had identified for modification by
2022 have all now had their single use plastic packaging removed.
Paper-free customer move-ins went live in our stores in the prior year,
saving approximately 800,000 pieces of paper each year.
Internal ‘weekly bulletin’ sign off process was moved online, saving
approximately 60,000 pieces of paper each year.
Avoidance of unnecessary waste helps to reduce carbon emissions,
minimise waste going to landfill and demonstrates a commitment to
sustainability. We have identified 20 processes that involve the printing
of paper, totalling around 1.5 million pieces of paper. We have graded each
process into difficulty in terms of finding an alternative solution and
intend to work our way through these over the next few years to reduce
as much as possible.
8.7 Green Store Portfolio
There are a number of measures we can use to demonstrate that at
Big Yellow environmental considerations are part of how we operate.
The overwhelming majority of our stores are in the green banding
for energy efficiency and several of our stores have other features,
such as solar PV and green roofs or wall.
With the acquisition of Armadillo, the overall EPC coverage has dropped
a little, however, we still have 83% of stores rated A, B or C. We have
commissioned a review of Armadillo EPCs which will start during the year
ending 31 March 2023.
• 89 % CLA (Current Lettable Area) covered by Green aspects (%).
• We added to our solar PV estate by equipping our three newest
stores – Hove, Hayes, and Uxbridge – with 50kWp installations.
• 94% of our estate is covered by an Energy Performance Certificate.
• Electric Vehicle Charging pods now as standard for all new stores.
Corporate Social Responsibility Report (continued)
Watch our animation www.bigyellow.co.uk/green
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
73
9. Benchmarks and standards 10. Legislation
Big Yellow has obligations under several regimes and regulations, namely:
• The Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018 (‘SECR’);
• EU Energy Efficiency Directive, The UK Energy Savings Opportunities
Scheme (‘ESOS’); and
• Energy Performance Certificate (‘EPCs’) – please see ‘asset list &
green store portfolio’ section in this report for more information.
9.1 Highlights
• For the second year, we achieved a “Gold” standard for EPRA
sBPR (sustainable best practice reporting).
• We achieved a GRESB score of 84% (4 stars) – despite a
tougher scoring approach by GRESB.
• We achieved a ‘B’ (Management) rating from CDP 2021.
• We maintained our MSCI score of ‘AA’.
• We maintained our FTSE4Good scores.
• We have developed a risk and opportunities assessment
process as part of our commitment to implement the TCFD
recommendations – for more information, please see
Managing Climate related Risks and Opportunities document
on our corporate site https://corporate.bigyellow.co.uk/
application/files/9616/5235/3338/Managing_Climate_
Related_Risks_and_Opportunities_2022.pdf the ‘Managing
Risks and Opportunities’ section.
• For Construction activities, we sign up to BREAAM standards
and the Considerate Constructor Scheme (‘CCS’); Hayes
achieved an outstanding CCS score of 40.
9.2 Science-Based Targets
Our Commitment
Big Yellow Group PLC commits to reduce absolute Scope 1 and 2 GHG
emissions 70% by 2032 from a 2019/2020 base year. Big Yellow Group PLC
commits to reduce Scope 3 GHG emissions, covering Purchased Goods
and Services, Capital Goods (Shell – Construction), and Downstream
Transportation by 55% by 2032 from a 2019/20 on a physical
intensity basis.
Science-Based Targets
Scope of emission coverage Type of target 2019/2020 actual 2032 target % 2032 target amount
Scope 1 & 2 100% absolute 3,160 tCO
2
e -70% 948 tCO
2
e
Scope 3 Aim for 75%
Required 67% intensity 4.5 (kgCO
2
/sq ft) - 61 % 1.8 (kgCO
2
/sq ft)
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
74
Corporate Social Responsibility Report (continued)
11. Our stakeholders
This year, the Board of Directors has set out in the Governance section
of our Annual Report and Accounts an overview of engagement
activities with our key stakeholder groups. These are identified as
(1) our employees, (2) our shareholders, (3) our customers, (4) our
suppliers and (5) our communities. Please note that in our CSR
Stakeholder assessment we also name ‘the Environment’ as well as
local and national Government as further stakeholder groups, and their
needs and our engagement activities are set out here.
Our key stakeholders are closely aligned to our material impacts –
it is important to us to make sure we understand what matters to them
so we can meet their needs. We also set out how we engage with them,
how we obtain their thoughts and opinions and how we report on
progress where appropriate.
Investors
The GRESB and CDP benchmarks inform our investor community of our
general ESG performance, our governance approach, risk management
protocols and a range of other indicators that give reassurance that our
business is ‘sustainable’.
For more information on these benchmarks, please see the ‘Benchmarks,
Legislation and Standards’ section.
Our Directors run a programme of face-to face investor engagement
activities by holding roadshows following annual and interim reporting
cycles and attend investor conferences, both in the UK and
internationally.
We also provide specific information on request to other investor
benchmarks, where available.
CDP
B
EPRA sBPR
Gold Standard
GRESB
84 points
4 Green Stars
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
75
Nature, scope and purpose of the assurance
SGS United Kingdom Ltd was commissioned by Big Yellow Group PLC
(Big Yellow) to conduct an independent assurance of selected
sustainability KPI data in their Corporate Social Responsibility Report
2021/22 (‘the Report’). The scope of the assurance included FY2022
data only for the following KPIs:
Carbon footprint (Scope 1 & 2) data:
• Store electricity emissions (tCO
2
e)
• Store flexi-office gas emissions (tCO
2
e)
• Refrigerant emissions (tCO
2
e)
• Absolute carbon dioxide emissions (tCO
2
e)
• Store electricity use (kWh)
• Like-for-like electricity use (tCO
2
e)
• Absolute carbon emissions (tCO
2
e)
• Carbon intensity (kgCO
2
e/m
2
current lettable area)
• Carbon intensity (kgCO
2
e/m
2
occupied space)
• Carbon intensity (tCO
2
e/£000s revenue)
• Total renewable energy generated(kWh)
• Solar generation % of grid use in large Solar PV stores
Carbon footprint Scope 3 data:
• Water supply and water treatment (tCO
2
e)
• Store waste disposal (tCO
2
e)
Health & Safety data:
• Staff, customer, and visitor minor injuries
• Staff, customer, and visitor reportable injuries (RIDDOR)
• Staff, customer, and visitor annual injury incidence rate (AIR)
per 100,000 staff
• Staff, customer, and visitor notices
• Construction ‘fit-out’ minor injuries
• Construction ‘fit-out’ reportable injuries (RIDDOR)
Community investment data:
• Free space donated for community or charity use (£)
• Charity discounts of up to 90% (£)
• Payments to social enterprise organisations (£)
• Total employee Big Yellow Foundation fundraising &
Big Yellow matched funds (£)
• One-off donations (£)
• Total community investment (£)
People data:
• Total number of employees
• % female employees at each management level
• Number of new starters: stores, head office, and total
• Proportion of new starters
• Number of leavers: stores, head office, and total
• Proportion of leavers
• Training hours: total, and average hours by gender
Financial data and other data drawn directly from independently
audited financial accounts has not been checked back to source as
part of this assurance process. This includes data used to normalize
figures: revenue; average number of employees; current lettable area;
occupied space.
The purpose of this assurance exercise was, by review of objective
evidence, to independently review whether the KPI data as declared
by Big Yellow, and reported in the Report, is accurate, complete,
consistent, transparent, and free of material error or omission.
The Report has been assured at a limited level of assurance according
to ISAE3000 (Revised), Assurance Engagements Other than Audits
or Reviews of Historical Financial Information, to evaluate veracity
of specific KPIs as described above using SGS Sustainability Report
Assurance protocols, including the Global Reporting Initiative (GRI)
Principles for Report Content and Quality to enable robust evaluation
of data subject to verification.
SGS United Kingdom Ltd’s
assurance opinion
on selected sustainability KPIs in Big Yellow’s
corporate social responsibility report 2021/22
Strategic Report
Annual Report and Accounts 2022 Big Yellow Group PLC
76
SGS United Kingdom Ltd’s assurance opinion
on selected sustainability KPIs in Big Yellow’s
corporate social responsibility report 2021/22 (continued)
Greenhouse gas (GHG) data
CO
2
emissions from own operations were verified at a limited level of
assurance according to standard EN ISO14064-3:2006 Specification
With Guidance For The Validation And Verification Of Greenhouse Gas
Assertions, to establish conformance with the requirements of Big
Yellow’s reporting methodology as stated in its ‘Basis of Reporting
2021/22’ and the WRI/WBCSD GHG Protocol – A Corporate Accounting
and Reporting Standard (‘The WRI/WBCSD GHG Protocol’), within the
scope of the verification. The materiality required of the verification
was considered by SGS to be below 10%, based on the needs of the
intended user.
The engagement included verification of emissions from anthropogenic
sources of greenhouse gases included within the organisation’s boundary
and meeting the requirements of Big Yellow’s ‘Basis of reporting
2021/22’, and the WRI/WBCSD GHG Protocol. The organisational boundary
was established following the operational control approach.
• Description of activities: Self-Storage services
• Location/boundary of the activities: United Kingdom
• Physical infrastructure, activities, technologies and processes of the
organisation: Self-storage stores and administrative offices
• GHG sources, sinks and/or reservoirs included:
– Scope 1 – stationary combustion, mobile and fugitive emissions;
– Scope 2 – purchased electricity and solar generation;
– Scope 3 – Store Water and waste
• Types of GHGs included: CO
2
, N2O, CH4 (HFCs, PFCs, SF6 and NF3
are excluded)
• Directed actions: none
Methodology
The assurance comprised a combination of pre-assurance research,
interviews with relevant management representatives and external
data management providers, documentation, and record review.
Verification was conducted upon all KPIs within the verification scope
as an evaluation of historical data and information to determine whether
the reported KPI data is materially correct and conforms to criteria
described above.
SGS’ approach is risk-based, drawing on an understanding of the risks
associated with modelling GHG emission and other KPI information and
the controls in place to mitigate these risks. Our examination included
assessment, on a sample basis, of evidence relevant to the voluntary
reporting of KPIs, including emission information.
Statement of responsibilities, independence
and competence
The information in the Report and its presentation, including the
underlying systems, procedures, and records, are the responsibility of
the Directors and the management of Big Yellow. SGS United Kingdom
Ltd has not been involved in the preparation of any of the material
included in the Report. Our responsibility is to express an opinion on
the data within the scope of verification with the intention to inform
Big Yellow’s stakeholders.
The SGS Group of companies is the world leader in inspection, testing
and verification, operating in more than 140 countries and providing
services including management systems and service certification;
quality, environmental, social, and ethical auditing and training;
environmental, social and sustainability report assurance. SGS United
Kingdom Ltd affirm our independence from Big Yellow, being free from
bias and conflicts of interest with the organisation, its subsidiaries,
and stakeholders. The assurance team was assembled based on their
knowledge, experience and qualifications for this assignment and
conducted the assurance in accordance with the SGS Code of Integrity.
Assurance opinion and conclusion
On the basis of the methodology described and the verification work
performed, nothing has come to our attention that causes us to believe
that the KPI data within the scope of our verification as reported by
Big Yellow in the Report is not, in all material respects, fairly stated.
We believe that the organisation has chosen an appropriate level of
assurance for this stage in their reporting.
Greenhouse gas (GHG) data
SGS concludes with limited assurance that there is no evidence to
suggest that the presented CO
2
equivalent assertion is not materially
correct and is not a fair representation of the CO
2
equivalent data
and information and is not prepared following the requirements of
Big Yellow’s ‘Basis of reporting 2021/22’, and the WRI/WBCSD
GHG Protocol.
We planned and performed our work to obtain the information,
explanations, and evidence that we considered necessary to provide
a limited level of assurance that the CO
2
equivalent emissions for the
period 01/04/2021 – 31/03/2022 are fairly stated. This statement
shall be interpreted with the CO
2
equivalent assertion of Big Yellow
as a whole.
Strategic Report Governance Report Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
77
Big Yellow provided the GHG assertion based on the requirements
of its ‘Basis of reporting 2021/22’ and the WRI/WBCSD GHG Protocol.
The GHG information for the period 01/04/2021 – 31/03/2022
disclosing gross scope 1 and 2 emissions of 2,665 metric tonnes of CO
2
equivalent (Location-Based) and 309 metric tonnes of CO
2
equivalent
(Market Based) are verified by SGS to a limited level of assurance,
consistent with the agreed verification scope, objectives, and criteria.
Verified emissions by scope are as follows:
Scope 1 (Direct): 309 tCO
2
e
Scope 2 – Location based (Indirect): 2,356 tCO
2
e
Scope 2 – Market-based (Indirect): 0 tCO
2
e
Scope 3 – Water – 14 tCO
2
e
Scope 3 – Waste (excludes non store facilities)– 39 tCO
2
e
Health & safety, people and community investment data
SGS concludes with limited assurance that there is no evidence to
suggest that the reported data is not materially correct and is not a
fair representation of data and information, and is not prepared
following the requirements of Big Yellow’s ‘Basis of reporting 2021/22’,
and the GRI Report Quality principles of Accuracy, Balance, Clarity,
Comparability, Reliability, and Timeliness.
Good practice and opportunities for improvement
During the verification process some examples of good practice as well
as some opportunities for improvement in underlying processes were
identified and reported to Big Yellow with the aim of enabling a process
of continual improvement in collection and reporting KPI data. It may
be possible to roll out examples of good practice to other KPIs, or parts
of the business and the opportunities for improvement identified may
be considered for implementation during future reporting cycles:
Good Practice
• People and Community data is generated from well managed
systems, using clear and consistent reporting parameters.
• Big Yellow operates a robust data collection process and the
GHG data reporting platform used was found to be robust enough
to provide accurate and consistent data reporting when tested.
Opportunities for Improvement
• Consider using an online reporting database for managing health
and safety reports at stores and fit-out sites.
• Continue efforts with obtaining detailed waste data and water data
based on actual rather than estimated data.
• We encourage Big Yellow to continue to extend the scope of data
assurance to additional People and Community KPIs in future years.
Signed:
H. Crick
UK Business Manager
For and on behalf of SGS United Kingdom Ltd
Rossmore Business Park, Ellesmere Port, Cheshire CH65 3EN
Date: 11 May 2022
Note: This Statement is issued, on behalf of Big Yellow, by SGS United Kingdom Ltd, Rossmore Business Park, Inward Way, Ellesmere Port, Cheshire, CH65 3EN (“SGS”) under its General Conditions for GHG
Validation and Verification Services. The findings recorded hereon are based upon an audit performed by SGS. A full copy of this statement and the supporting GHG Assertion may be consulted at Big Yellow
and address. This Statement does not relieve Big Yellow from compliance with any bylaws, federal, national or regional acts and regulations or with any guidelines issued pursuant to such regulations.
Stipulations to the contrary are not binding on SGS and SGS shall have no responsibility vis-à-vis parties other than its Big Yellow.
Annual Report and Accounts 2022 Big Yellow Group PLC
78
Governance Report
Dear Shareholder,
I am pleased to present the Corporate Governance Report for 2022. This
report should be read in conjunction with the report on pages 83 to 88,
which set out how we have complied with the UK Corporate Governance
Code in 2022.
As outlined in my report on pages 14 to 17, 2022 has been a year of
growth for the Company, with revenue, cash flow and dividends all up on
the prior year, an increase in our development pipeline to help drive the
future growth of the Company, and the acquisition of the remaining 80%
of Armadillo that we did not previously own.
Governance
The Board believes that the effective delivery of the Company’s strategy
requires the underpinning of strong corporate governance. The
governance of the Group is supported by a robust structure which allows
for constructive debate and challenge by its members. This allows the
Directors to make effective decisions.
Engagement with our stakeholders
The Board is conscious that there are a number of stakeholders in our
business and considers the interests of each of our stakeholder groups
in its discussions.
We have a comprehensive investor relations programme in place, with the
Executive team carrying out a significant number of meetings with our
shareholders during the year. The Non-Executive Directors engage with
our shareholders as appropriate. Independent feedback on presentations
by the Executive Board Directors to major shareholders is provided to the
Non-Executive Directors on a regular basis.
The culture of the business is a key part of our success. In the year to
31 March 2022, the Executive Board Directors have continued to visit
each of the Group’s stores and maintain a flat, apolitical, non-hierarchical
culture within the business.
We continue to monitor the Net Promoter Score that we receive from our
customers, which remains at a very high level of 78.9 (2021: 82.9).
Looking ahead
Following our performance this year, our attention for the coming year
is focussed on continuing to drive the operating performance of the
business to deliver shareholder value. We will continue to invest in our
Big Yellow Foundation and its partner charities and also work with local
charities throughout our network assisting with space which they need
to deliver their programmes.
We will continue to focus on delivering attractive long-term shareholder
returns, behaving responsibly to our stakeholders including employees,
customers, suppliers, and the community, and appropriately
managing risk.
Nicholas Vetch
Executive Chairman
23 May 2022
Executive Chairman’s introduction
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
79
Strategic Report Governance Report
How we are structured
The Board
Nicholas Vetch
Executive Chairman
The Board is responsible for:
− setting the strategic direction of the business
− setting the culture and the values of the Big Yellow
− overseeing the internal control system of the
Group and its risk management
− approving the annual business plan for the Group
− approving site and store acquisitions and major
items of capital expenditure
− approving the Group’s financing structure
− ensuring a positive dialogue with our stakeholders
is maintained
Executive Directors
The Executive Directors are responsible for:
− implementing the Group’s business plan and strategy
− managing the risk of the business
− focussing on financial performance
Audit Committee
The Audit Committee is responsible for:
− overseeing the Group’s financial reporting
− overseeing the Group’s internal control framework and risk
management process
− overseeing the relationship with the external auditor and
monitoring their independence
Sustainability Committee
The Sustainability Committee is responsible for:
− overseeing the Group’s sustainability framework and strategy
− monitoring sustainability performance
− providing guidance on emerging environmental issues,
including environmental risks, and their impact on the
Group’s business
− overseeing the Group’s CSR reporting, including external
audit/assurance mechanisms
Nomination Committee
The Nominations Committee is responsible for:
− reviewing the structure, size and composition of the Board
− succession planning for Directors and other senior Executives
− promoting diversity
Remuneration Committee
The Remuneration Committee is responsible for:
− setting, reviewing and recommending the policy on
the remuneration of the Executive Directors
− overseeing the senior management team and general
workforce remuneration approach
− monitoring the implementation of the Remuneration policy
− overseeing the alignment of reward, incentives and culture
Turn to page 83 for more information
Turn to pages 118 to 121 for more information
Turn to pages 92 to 93 for more information
Turn to pages 89 to 91 for more information
Turn to pages 94 to 117 for more information
The Board has overall responsibility
for the manner in which the Company
runs its affairs.
Annual Report and Accounts 2022 Big Yellow Group PLC
80
Governance Report
Nicholas Vetch
Executive Chairman
Appointment to the Board
Nicholas was a co-founder of Big Yellow in
September 1998 and held the position of
CEO until July 2003, when he became
Executive Chairman.
Background and relevant experience
Prior to Big Yellow, Nicholas was joint Chief
Executive of Edge Properties plc, which he
co-founded in 1989, was subsequently listed
on the Official List of the London Stock
Exchange in 1996 and then sold to
Grantchester Properties plc in 1998.
Other appointments
Nicholas is a Trustee of Global Human Rights,
Global Human Rights UK and the Ukrainian
Sponsorship Pathway UK.
Committee Membership
None
Skills and contribution
The Company under Nicholas Vetch’s leadership
has an outstanding track record for delivering
consistently strong returns and share price
outperformance. Nicholas, along with his
co-founder Jim Gibson, developed the strategy
of the business and this continues to this day.
He is also responsible for leading the property
team and has over 35 years’ experience
working within the UK property sector. Further
details on Nicholas’ contribution to the
business is included in the annual report on
page 83.
Jim Gibson
Chief Executive Officer
Appointment to the Board
Jim was a co-founder of Big Yellow in September
1998, initially as Finance Director and he was
subsequently appointed Chief Executive in
July 2003.
Background and relevant experience
Jim is a Chartered Accountant by background
having trained with Arthur Andersen & Co.
where he specialised in the property and
construction sectors, before leaving in 1989.
He was Finance Director of Heron Property
Corporation Limited and then Edge Properties
plc which he joined in 1994. Edge Properties
was listed on the Official List of the London
Stock Exchange in 1996 and then sold to
Grantchester Properties plc in 1998.
Other appointments
Jim is a Non-Executive Director and shareholder
of AnyJunk Limited, a Non-Executive Director
and shareholder of CityStasher Limited, a
Non-Executive Director and investor in Moby
Self Storage, a Brazilian Self Storage business,
and is the Chairman of Trustees of the London
Children’s Ballet.
Committee Membership
None
Skills and contribution
Jim has been with Big Yellow since its
formation, and along with his co-founder
Nicholas Vetch, has been instrumental in
developing the strategy of the business. He
leads the day-to-day running of the business
and brings substantial knowledge of self
storage to the Board, which is invaluable to
Big Yellow as it continues to grow. As CEO,
the Board believes Jim has demonstrated
outstanding leadership and drive, notably
in managing the business through the
uncertainty caused by Covid-19. He will
continue to be instrumental in maintaining
Big Yellow’s market-leading position.
Adrian Lee
Operations Director
Appointment to the Board
Adrian joined Big Yellow in January 1999 was
appointed to the Board in May 2000.
Background and relevant experience
Adrian was previously a Senior Executive at
Edge Properties plc, which he joined in 1996.
Prior to that he was a corporate financier at
Lazard for five years, having previously
qualified as a surveyor at Knight Frank.
Other appointments
Adrian is on the Board of the UK Self Storage
Association.
Committee Membership
None
Skills and contribution
Adrian has twenty three years of operational
experience in the self storage sector. He has
responsibility for Operations and Construction.
His experience has proved invaluable as we
have navigated the uncertainties caused by
Covid-19.
John Trotman
Chief Financial Officer
Appointment to the Board
John joined Big Yellow in June 2007 and was
appointed to the Board in September 2007.
Background and relevant experience
John is a Chartered Accountant having trained
with Deloitte LLP, where he specialised in the
real estate sector and self storage. On leaving
Deloitte in 2005, John worked for a subsidiary
of the Kajima Corporation until he joined
Big Yellow.
Other appointments
None
Committee Membership
None
Skills and contribution
John brings strong financial experience to the
Group from his 15 years with Big Yellow and
prior to that in his previous roles. As CFO, in
addition to dealing with the traditional aspects
of the role, John is involved in strategy, and in
particular all aspects of the day-to-day
operations of the business, working alongside
Adrian Lee. He has extensive knowledge of the
self storage sector.
Directors, Officers and Advisers
Executive Directors
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
81
Strategic Report Governance Report
Richard Cotton
N
A
R S
Non-Executive Director
Appointment to the Board
Richard joined the Board in July 2012
Background and relevant experience
Richard headed the real estate corporate
finance team at JP Morgan Cazenove until
April 2009, and subsequent to that was a
Managing Director of Forum Partners.
Other appointments
Richard is currently the Senior Independent
Director of Helical plc as well as a Member of
the Commercial Development Advisory Group
of Transport for London.
Committee Membership
Chair of Nominations Committee (until July
2021), Chair of Remuneration Committee
(from August 2020) and Member of Audit,
Nominations and Sustainability Committees.
Skills and contribution
Richard has extensive knowledge of the
property sector and corporate finance.
Richard’s leadership of the Nominations
Committee has ensured that retiring
Non-Executive Directors have been replaced
with equally high calibre individuals and further
improving the gender balance on the Board.
He has also led consultations with shareholders
in the year on the new Remuneration Policy.
Dr Anna Keay
N
A
R S
Non-Executive Director
Appointment to the Board
Anna joined the Board in March 2018.
Background and relevant experience
Anna has been CEO of the Landmark Trust since
2012, operating a portfolio of 200 historic
buildings let for holidays. She has a PhD from
London University, starting her career at
Historic Royal Palaces and from 2002 to 2012
she was Curatorial Director of English Heritage.
She was a trustee of Leeds Castle Foundation
from 2009 to 2016 and was a Governor and
Chair of the Buildings and Projects Committee
at Bedales School until November 2021.
She writes and broadcasts widely, presenting
on history and buildings for Channel 4.
Other appointments
Anna is a Trustee of the Royal Collection Trust,
a Director of Architrave Historical Services and
of the Lundy Company.
Committee Membership
Member of Audit, Nominations, Remuneration
and Sustainability Committees. Anna is also the
designated Non-Executive Director for
workforce engagement
Skills and contribution
Anna, as a historian, and with significant
experience in the third sector, adds another
dimension to the Board alongside her
operational experience from her current role
as CEO of the Landmark Trust. In her role as
the designated Non-Executive Director for
workforce engagement, she has worked closely
with the HR team in all aspects of employee
engagement reporting back to the Board on a
regular basis.
Vince Niblett
N A R S
Senior Independent Non-Executive
Director
Appointment to the Board
Vince was appointed to the Board in June 2017
Background and relevant experience
Vince was the Global Managing Partner Audit for
Deloitte. He previously held a number of senior
leadership roles within Deloitte including as a
member of the UK Board of Partners and of the
Global Executive Group and the UK Executive
Group before his retirement from Deloitte in
May 2015.
Other appointments
Vince is also a Non-Executive Director and Chair
of the Audit Committee of Forterra plc, and a
Non-Executive Director of Target Healthcare
REIT plc.
Committee Membership
Senior Independent Non-Executive Director,
Chair of the Nominations Committee (from July
2021), Chair of the Audit Committee (until July
2021) and Member of the Audit, Remuneration
and Sustainability Committees.
Skills and contribution
Vince has many years of financial and
commercial experience gained from his
leadership roles at Deloitte. He worked closely
with Richard Cotton on the Remuneration
consultation in the current year.
Non-Executive Directors
N
Nomination Committee
A
Audit Committee
R
Remuneration Committee
S
Sustainability Committee Committee Chair
Committee key
Annual Report and Accounts 2022 Big Yellow Group PLC
82
Governance Report
Directors, Officers and Advisers (continued)
Laela Pakpour Tabrizi
N
A
R
S
Non-Executive Director
Appointment to the Board
Laela was appointed to the Board in July 2020.
Background and relevant experience
Laela has 16 years’ experience in corporate
finance, and is currently the Chief Financial
Officer of OpenClassrooms, an online platform
offering top quality, education-to-employment
programs, and career coaching services for
students worldwide. She was previously the
Group Chief Financial Officer of MotorK, a
venture-backed software as a service tech
scale-up, the Group CFO of VistaJet, the global
private jet operator, and before that worked
in Structured Finance for BNP Paribas. She is
a graduate of the Institut d’Etudes Politiques
de Paris (Sciences-Po) and the London School
of Economics.
Other appointments
Laela also currently serves as a Non-Executive
Director of an award-winning East London
women’s refuge charity called Ashiana Network
and as a Trustee of the British Library, where
she sits on the audit Committee and
Remuneration Committee.
Committee Membership
Chair of Audit Committee (from July 2021)
and Member of Nominations, Remuneration
and Sustainability Committees.
Skills and contribution
Laela has significant corporate and financial
experience in high growth businesses, adds to
the diversity of the Board and brings her own
perspective to Board discussions. She has
overseen the work of the audit committee, which
included monitoring KPMG LLP as auditors to
the Company, and meeting with the external
valuers of the Company. She has maintained
close dialogue with the external auditors and
the senior finance team throughout the year.
Heather Savory
N
A
R
S
Non-Executive Director
Appointment to the Board
Heather joined the board of the Big Yellow
in March 2021.
Background and relevant experience
Heather was Vice President of Engineering and
Operations for 3Dlabs, a high-tech start-up
delivering the world’s first semiconductor
3D-graphics accelerators for consumer devices
and moved on into leadership and advisory
roles for high-tech UK SMEs. Heather then
worked in various senior government roles
including as Director General for Data Capability
at the Office for National Statistics which she
modernised through a cross-organisation
digital, data and workforce transformation.
She was also co-Chair of the United Nations
Global Working Group on Big Data, developing
innovative global data solutions to assist with
the measurement and delivery of the United
Nations 2030 Agenda for Sustainable
Development.
Other appointments
Heather serves as a Non-Executive Director
of the UK House of Lords Information Authority,
as a Non-Executive Director and Chair of the
Audit and Risk Assurance Committee for Her
Majesty’s Prison and Probation Service
(HMPPS), as a Trustee of the Ukrainian
Sponsorship Pathway Charity (USPUK) and
on several Not-for-Profit Advisory Boards.
Committee Membership
Chair of the Sustainability Committee, Member
of Audit, Nominations and Remuneration
Committees
Skills and contribution
Heather brings a track record on sustainability
to Big Yellow, following her work with the UN.
She has a wealth of experience in the private
and public sectors.
Michael O’Donnell
N
A
R
S
Non-Executive Director
Appointment to the Board
Michael joined the board of the Big Yellow
in September 2021.
Background and relevant experience
Michael is a former Managing Director of
LGV Capital, a private equity firm. He has
a particular focus on the healthcare and
business services sectors. Past roles include
as a Non-Executive Director, and chair of the
Remuneration Committee, of Helical plc.
Other appointments
Through his company, Ebbtide Partners,
which he started in 2009, Michael acts as
a consultant/director to, and investor in,
private companies.
Committee Membership
Chair of the Remuneration Committee
(from July 2022) and Member of Audit,
Nominations, and Sustainability Committees
Skills and contribution
Michael has a wealth of experience in the
private equity sector, with a focus on
high growth businesses. His previous
Non-Executive role with Helical plc also
provides relevant experience.
Company Secretary and
Registered office
Shauna Beavis
2 The Deans
Bridge Road
Bagshot
Surrey
GU19 5AT
Company Registration No. 03625199
Bankers
Lloyds Bank plc
HSBC Bank plc
Bank of Ireland
Aviva Commercial Finance Limited
M&G Investments Limited
Solicitors
CMS Cameron McKenna Nabarro Olswang LLP
Lester Aldridge LLP
Slaughter and May
Financial advisers and stockbrokers
J P Morgan Cazenove
Barclays Bank plc
Statutory Auditor
KPMG LLP
Chartered Accountant and Statutory Auditors
Valuers
Jones Lang LaSalle
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
83
Strategic Report Governance Report
Corporate Governance Report
Introduction
The Company is committed to the principles of corporate governance
contained in the UK Corporate Governance Code issued by the Financial
Reporting Council in 2018. The Board also takes account of the Corporate
Governance guidelines of institutional shareholders and their
representative bodies.
At Big Yellow, we aim to create a culture in which integrity, openness and
fairness are rewarded.
We continue to review the composition of the Board to ensure that it has
the appropriate skills, knowledge, and balance for the effective
stewardship of the Company. The Board has overall responsibility for the
manner in which the Company runs its affairs.
Statement of compliance with the Code
Throughout the year ended 31 March 2022, the Company has been in
compliance with the Code provisions set out in section 1 of the 2018 UK
Corporate Governance Code, with the exception of Provision 19 in that the
Executive Chairman of the Company has served in position for longer than
the recommended period of nine years, and with Provisions 40 and 41
(see Remuneration Report).
Chairman’s position
During the year ended 31 March 2020, which was the Company’s first
operating under the principals of the new Combined Code, Richard Cotton
and Vince Niblett consulted with a number of the Company’s largest
shareholders about the length of Nicholas Vetch’s tenure as Executive
Chairman (19 years), which is in contravention of the Combined Code.
It is now advised as governance best practice that the Chairman should
serve for a maximum of 9 years. It is the view of the Board that it is in the
Company’s best interest for Nicholas Vetch to continue as Executive
Chairman for the foreseeable future.
In arriving at this conclusion, the Non-Executive Directors have carefully
considered the leadership position that Nicholas Vetch fulfils in the
Company and also his leadership of the property team. Moreover, they
looked at the governance checks and balances, which are, in their opinion,
strong and effective. It is recognised that having a founder Director in
post as Chairman for considerably longer than advised, needs
justification and the reasons detailed below should inform shareholders
that this has been given very thorough scrutiny.
1. The Company under Nicholas Vetch’s leadership has an outstanding
track record for delivering consistently strong returns and share
price outperformance. In the twenty two years since flotation in May
2000, Big Yellow has delivered a Total Shareholder Return (“TSR”),
including dividends reinvested, of 15.8% per annum, in aggregate
2,401% at the closing price of £15.36 on 31 March 2022. This
compares to 6.2% per annum for the FTSE Real Estate Index and 5.1%
per annum for the FTSE All Share index over the same period. He has
been an integral part of the business since inception.
2. Big Yellow has a strong culture, which has benefited from stable and
consistent leadership of the business.
3. The Board has six independent NEDs, four of whom have been
appointed within the past four years, providing fresh perspective and
challenge. The NEDs have a wide range of corporate experience and
provide effective challenge to the Chairman and the other Executive
Directors, which was endorsed by the external appraisal undertaken
by Simon Robertson Associates in 2020.
4. The Board has separate committees for Audit, Nomination,
Remuneration and Sustainability, each of which are chaired by a
Non-Executive Director, and we have a Senior Independent Director
who is considered important in sharing the role of Chairman’s duties.
Specific examples of the board discussion include examination and
engagement in the acquisition of new sites, funding decisions, and
the Group’s net zero carbon plan.
5. As a Board, we have contingency plans in place in the event one of the
Executive Directors cannot fulfil their responsibilities, with a matrix of
who would step in to cover their roles. Considerable thought has been
given by the Board to succession, which has been approached in the
context of a very successful senior team of whom the majority have
been in post since the Company was listed in 2000. More detail is
provided in the Nominations Committee Report.
The Board has been encouraged by the support of its major independent
shareholders as it chose to explain rather than comply with the Code on
this issue.
Statement about applying the principles of the Code
The Company has applied the principles set out in the Code, including both
the main principles and the supporting principles, by complying with the
Code as reported above. Further explanation of how the principles and
supporting principles have been applied is set out below and in the
Nominations Committee Report, the Remuneration Report, and the Audit
Committee Report.
Leadership
The Board’s role is to provide entrepreneurial leadership of the Company
within a framework of prudent and effective controls which enables risk
to be assessed and managed.
Chairman and Chief Executive
The division of responsibilities between the Chairman and the Chief
Executive has been agreed by the Board and encompasses the following
parameters:
• the Chairman’s role is to provide continuity, experience, governance,
and strategic advice, while the Chief Executive provides leadership,
drives the day-to-day operations of the business, and works with the
Chairman on overall strategy;
• the Chairman, working with the Senior Independent Non-Executive
Director, is viewed by investors as the ultimate steward of the
business and the guardian of the interests of all the shareholders;
Annual Report and Accounts 2022 Big Yellow Group PLC
84
Governance Report
• the Board believes that the Chairman and the Chief Executive work
together to provide effective and complementary stewardship;
• the Chairman:
− takes overall responsibility for the composition and capability
of the Board;
− takes overall executive responsibility for the property
development team; and
− consults regularly with the Chief Executive and is available on
a flexible basis for providing advice, counsel, and support to
the Chief Executive.
• the Chief Executive:
− manages the CFO and Operations Director and the Group’s
day-to-day activities;
− prepares and presents to the Board strategic options for growth
in shareholder value;
− sets the operating plans and budgets required to deliver agreed
strategy; and
− ensures that the Group has in place appropriate risk management
and control mechanisms.
The Directors believe it is essential for the Group to be led and controlled
by an effective Board that provides entrepreneurial leadership within a
framework of sound controls which enables risk to be assessed and
managed. The Board is responsible for setting the Group’s strategic aims,
its values and standards and ensuring the necessary financial and human
resources are in place to achieve its goals. The Board ensures that its
obligations to shareholders and other stakeholders are understood and
met. The Board also regularly reviews the performance of management.
Effectiveness
Composition of the Board
The Nominations Committee is responsible for reviewing the Board
Composition and makes recommendations to the Board on the
appointment of Directors. There are presently six independent Non-
Executive Directors on the Board, with Vince Niblett being the Senior
Independent Director. The Company complies with the UK Corporate
Governance Code in that at least half of The Board is comprised of
independent Non-Executive Directors.
All of the Non-Executive Directors bring considerable knowledge,
judgement, and experience to Board deliberations. Non-Executive
Directors do not participate in any of the Company’s share option or
bonus schemes and their service is non-pensionable. The Non-Executive
Directors are encouraged to communicate directly with Executive Board
Directors between formal Board meetings. The Non-Executive Directors
meet at least once a year without the Executive Board Directors being
present.
The Non-Executive Directors scrutinise the performance of management
in meeting agreed goals and objectives and monitor the reporting of
performance. They are required to satisfy themselves on the integrity of
the financial information and that financial controls and systems of risk
management are robust and defensible. They are responsible for
determining appropriate levels of remuneration for Executive Board
Directors and have a prime role in appointing and, where necessary,
removing Executive Board Directors, and in succession planning.
The tenure of the independent Non-Executive Directors at 31 March 2022
is set out below:
Corporate Governance Report (continued)
Changes to the Board and its Committees
Michael O’Donnell joined the Board as an independent Non-Executive
Director on 1 September 2021.
At the 2021 Annual General Meeting, Vince Niblett succeeded Richard
Cotton as the Senior Independent Director and Chair of the Nominations
Committee. Laela Pakpour Tabrizi succeeded Vince Niblett as the Chair of
the Audit Committee with effect from the 2021 Annual General Meeting.
Richard Cotton is retiring from the Board with effect from the 2022 Annual
General Meeting. Michael O’Donnell will succeed Richard Cotton as the
Chair of the Remuneration Committee with effect from the 2022 Annual
General Meeting.
The board and its committees
Standing committees of the Board
The Board has Audit, Remuneration, Nominations and Sustainability
Committees, each of which has written terms of reference. They deal
clearly with the authorities and duties of each Committee and are
formally reviewed annually. Copies of these terms of reference are
available on the Company’s website. Each of these Committees is
comprised of Independent Non-Executive Directors of the Company who
are appointed by the Board on the recommendation of the Nominations
Committee.
All the Committees are authorised to obtain legal or other professional
advice as necessary; to secure, where appropriate, the attendance of
external advisers at its meetings and to seek information required from
any employee of the Company in order to perform its duties.
The Chair of each Committee reports the outcome of the meetings to the
Board. The Company Secretary is secretary to each Committee.
1.1
0.6
1.7
4.1
4.8
9.8
0 1 2 3 4 5 6 7 8 9 10
Heather Savory
Michael O’Donnell
Laela Pakpour Tabrizi
Anna Keay
Vince Niblett
Richard Cotton
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
85
Strategic Report Governance Report
Attendance at meetings of the individual Directors at the Board Meetings that they were eligible to attend is shown in the table below:
Director Position Number of meetings attended
Richard Cotton Non-Executive Director
Jim Gibson Chief Executive Officer
Anna Keay Non-Executive Director
Adrian Lee Operations Director
Vince Niblett Non-Executive Director
Michael O’Donnell Non-Executive Director
Laela Pakpour Tabrizi Non-Executive Director
Heather Savory Non-Executive Director
John Trotman Chief Financial Officer
Nicholas Vetch Executive Chairman
attended
absent
not applicable
Accountability
Risk management and internal control
The Group operates a rigorous system of risk management and internal
control, which is designed to ensure that the possibility of misstatement
or loss is kept to a minimum. There is a comprehensive system in place
for financial reporting and the Board receives a number of reports to
enable it to carry out these functions in the most efficient manner. These
procedures include the preparation of management accounts, forecast
variance analysis and other ad hoc reports. There are clearly defined
authority limits throughout the Group, including those matters which are
reserved specifically for the Board.
The Board has established a continuous process for identifying,
evaluating, and managing the significant risks the Group faces and for
determining the nature and extent of the significant risks it is willing to
take in achieving its strategic objectives. The Board regularly reviews the
process, which has been in place from the start of the year to the date of
approval of this report and which is in accordance with revised guidance
on internal control published in October 2005 (the Turnbull Guidance).
The Board is also responsible for the Group’s system of internal control
and for reviewing its effectiveness. Such a system is designed to manage
rather than eliminate the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against material
misstatement or loss.
The Board regularly reviews the effectiveness of the Group’s risk
management and internal control systems. The Board’s monitoring
covers all controls, including financial, operational and compliance
controls and risk management. It is based principally on reviewing
reports from management to consider whether significant risks are
identified, evaluated, managed, and controlled and whether any
significant weaknesses are promptly remedied and indicate a need for
more extensive monitoring. The Board has also performed a specific
assessment for the purpose of this annual report. This assessment
considers all significant aspects of risk management and internal control
arising during the period covered by the report, including the work carried
out by the Group’s Store Compliance team. The Audit Committee assists
the Board in discharging its review responsibilities.
The Board meets approximately once every two months to discuss a
whole range of significant matters including strategic decisions, major
asset acquisitions and performance. A procedure to enable Directors to
take independent professional advice if required has been agreed by the
Board and formally confirmed by all Directors.
There is a formal schedule of matters reserved for the Board’s attention
including the approval of Group strategy and policies; major acquisitions
and disposals, major capital projects and financing, Group budgets and
material contracts other than in the normal course of business. The Board
also considers matters such as cyber security, reputational risks, and
other non-financial risks as part of its review of the Group’s risk register.
At each Board meeting, the latest available financial information is
produced which consists of detailed management accounts with the
relevant comparisons to budget. A current trading appraisal is given by
the Executive Board Directors.
Information and professional development
All Directors are provided with detailed financial information throughout
the year. On a weekly basis they receive a detailed occupancy report
showing the performance of each of the Group’s open stores.
Management accounts are circulated to the Executive monthly and a
detailed Board pack is distributed a week prior to each Board meeting.
All Directors are kept informed of changes in relevant legislation and
changing commercial risks with the assistance of the Company’s legal
advisers and auditor where appropriate. All Directors have access to the
advice of the Company Secretary on governance matters.
The professional development requirements of Executive Board Directors
are identified and progressed as part of each individual’s annual
appraisal. All new Directors are provided with a full induction programme
on joining the Board.
Non-Executive Directors are encouraged to attend seminars and
undertake external training at the Company’s expense in areas they
consider to be appropriate for their own professional development.
Each year, the programme of senior management meetings is tailored
to enable meetings to be held at the Company’s stores. During the year,
the Executive Board Directors made visits to all of the Group’s stores.
Annual Report and Accounts 2022 Big Yellow Group PLC
86
Governance Report
A formal risk identification and assessment exercise has been carried
out resulting in a risk framework document summarising the key risks,
potential impact and the mitigating factors or controls in place. The key
risks the Group faces are detailed on pages 46 to 50 in the Operating and
Financial Review. The Board has a stated policy of reviewing this risk
framework at least once a year or in the event of a material change. The
risk identification process also considered significant non-financial risks.
During the reviews in the year, the Directors:
• challenged the framework to ensure that the list of significant risks
to business objectives is still valid and complete;
• considered new and emerging risks to business objectives and
included them in the framework if significant;
• ensured that any changes in the impact or likelihood of the risks are
reflected in the risk framework; and
• ensured that there are appropriate action plans in place to address
unacceptable risks.
The results of this exercise have been communicated to the Board and the
Audit Committee. This was in the form of a summary report which included:
• a prioritised summary of the key risks and their significance;
• any changes in the list of significant risks or their impact and
likelihood since the last assessment;
• new or emerging risks that may become significant to business
objectives in the future;
• progress on action plans to address significant risks; and
• any actual or potential control failures or weaknesses during the
period (including “near misses”).
During the course of its review of the risk management and internal
control systems, the Board has not identified, nor been advised of any
failings or weaknesses which it has determined to be significant,
consistent with the prior year. Therefore, a confirmation in respect of
necessary actions has not been considered appropriate.
All management are encouraged to stay abreast of all technical and other
competitive advances that could impact the business.
Going concern
The Group’s activities, and a fair review of the business, are included in
the Strategic Report on pages 14 to 33. The financial position of the Group,
including its cash flow, liquidity, and committed debt facilities are
discussed in the Financial Review on pages 40 to 45.
The Directors have a reasonable expectation that the Group and Company
have adequate resources to continue operations for the foreseeable
future. They have therefore continued to adopt the going concern basis
in preparing the financial statements.
Engagement with stakeholders
The long-term success of our business is dependent on the way we work
with our various stakeholders. The table below shows our key stakeholder
groups, how we engage with them, and how the results of this
engagement are reported up to the Board and influence the decision
making with the business. Not all the information is reported directly to
the Board, however it informs business-level decisions with an overview
of developments being reported on a regular basis to the Board.
The Board has identified a number of key stakeholders which it seeks to
engage with on a regular basis. The key stakeholders are our employees,
our shareholders, our customers, our suppliers, and our communities.
Corporate Governance Report (continued)
Stakeholder Group Form of engagement How this influenced the Board during the year
Our employees
During the year we carried out our fourth externally run
employee engagement survey. We were very pleased to have
achieved an engagement score across the Company of 86%,
which despite the challenges our teams faced during this
period, reflects very favourably when compared to our score
of 87% in 2019. Our highest scoring areas were inclusion and
diversity 90% (2019: 94%) leadership 89%, management style
89% and organisational integrity 88%, all of which scored the
same result as in 2019.
The Executive Directors have continued to actively engage
with our teams on working practices and ensuring our team
members and our customers are in a safe environment.
The Directors have continued to visit every store in the
portfolio over the course of the year.
Further detail is provided below on how Anna Keay, the
designated Workforce Engagement Director has carried out
her role during the year.
The survey has provided us with the opportunity to review
areas such as communication, wellbeing and employee
voice, albeit that these areas still scored well with results
in the mid to late 70s. Our actions resulting from the survey
have been incorporated into Implementation Plans which
have been communicated across the business, with progress
reviews and updates being issued on an ongoing basis.
Actions taken in response to the feedback from the
employee engagement survey include a reduction in store
opening hours, and the introduction of a lone trading bonus.
Store teams have been encouraged to email the Directors
directly with any recommendations or observations to
improve our working protocols.
The Directors have responded directly to all these emails,
and changes have been made to the Group’s practices
where applicable.
There is further detail on how the Board engage with our
people on page 88.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
87
Strategic Report Governance Report
Stakeholder Group Form of engagement How this influenced the Board during the year
Our shareholders
The Company has an active dialogue with its shareholders
through a programme of investor meetings which include
formal presentation of the full and half year results. The
Executive Board Directors have participated in a number of
virtual, and more latterly face-to-face, investor conferences
and meetings during the year. During the year ended
31 March 2022, the Chief Executive and other Executive Board
Directors carried out 206 meetings with UK and overseas
institutional shareholders and potential investors. These
meetings comprised group and individual presentations.
The Board also welcomes the interest of private investors and
believes that, in addition to the Annual Report and the
Company’s website, the Annual General Meeting is an ideal
forum at which to communicate with investors and the Board
encourages their participation.
The Board receives regular feedback on investor perceptions
about the Company. After each set of results, key investors
are interviewed on their perceptions of the performance of
the business and management. The findings are reviewed by
the Board. At each Board Meeting, the Board is updated on
any shareholder meetings that have taken place, and any
views expressed, or issues raised by the shareholders in
these meetings.
The Senior Independent Non-Executive Director Vince
Niblett, and the Chair of the Remuneration Committee
Richard Cotton, engaged with a number of our investors
during the year. Meetings mainly focussed on the proposed
new Remuneration Policy.
Our customers
The Group sends surveys to all customers who have moved in
and moved out of the business. A high response rate is
received to these surveys, which show a net promoter score
of 78.9.
The net promoter scores are reported to the Board at each
Board meeting and any recurring themes highlighted to allow
discussion around the approach to our customers.
The Directors discuss net promoter scores and customer
feedback with store teams on their regular visits to the
Group’s stores.
The net promoter scores achieved from our customers are
used as one of the metrics in the bonus plan of the Executive
Board Directors.
Our suppliers
Regular meetings are held between suppliers and their
Big Yellow contact. Appropriate external tendering is carried
out for any new suppliers.
On anti-corruption and anti-bribery matters, we expect all
our suppliers to be compliant with the Modern Slavery Act and
we work closely with our suppliers to promote best practice.
During the year this included engaging with suppliers we had
identified as being within potentially high-risk categories and
carrying out audits of their compliance with these regulations
and providing support to them.
The Board annually approves the Group’s Modern Slavery
statement.
The Group is a member of the Prompt Payment Code,
supporting our smaller suppliers with on time payments.
During the year the Group appointed a specialist consultancy
to carry out a review of its supply chain ethics. This work is
ongoing, and we will report on its results next year.
Our communities
We demonstrate Big Yellow’s culture and commitment to our
communities through the work of the Big Yellow Foundation
which aims to help vulnerable people lead better lives,
working in partnership with several charities.
Big Yellow matches any donations from our customers at
move-in and move-out. We also match any funds raised by
our employees and allow each member of our team one paid
day per year for volunteering.
We also support over 200 local charities with free or
discounted space throughout our network.
The Board receives regular updates regarding the
Foundation’s activities. The Board endorses the culture of
giving back time to support these charities and the financial
commitment made by Big Yellow.
Jim Gibson, CEO, is the Chair of the Trustees of the Big Yellow
Foundation.
Our environment
We engage relevant subject matter experts to assess the
impact our business has in the first instance as part of the
planning and construction process. Our partners perform
detailed assessment on likely impacts on land, water,
biodiversity, air quality and other key aspects. It is our aim
to not just minimize any negative aspects, but also ‘listen’
carefully and enhance where possible, through the
installation of green roofs or bird or bat nesting boxes for
example. We extensively report on our Operational impacts,
such as energy consumption, carbon emissions, waste we
create and water we use as part of our full CSR Report and
have systems and processes in place to manage material
aspects, such as energy.
The Board receives regular updates on our environmental
performance and activities.
The Board endorses the Group’s commitment to investing at
all stages of our stores’ lifespan to ensure our impact on the
Environment is minimised. It signs off on the budgets to
deliver solar installations and electric vehicle charging pods
for example.
The Board established a formal Sustainability Committee
last year chaired by Non-Executive Director Heather Savory.
Annual Report and Accounts 2022 Big Yellow Group PLC
88
Governance Report
Employee relations and company culture
Our teams are a key resource of the business. From the start we have
always aimed to create a culture which is accessible, apolitical, inclusive,
non-hierarchical, socially responsible, and very importantly, an enjoyable
place to work. We believe in the employees benefiting from the success
of the business. All staff are eligible for an annual bonus; a Sharesave
scheme is open to all employees; and the Company’s Long Term Incentive
Plan is provided to a significant number of employees.
The Executive Board Directors spend a considerable amount of time
meeting with the Group’s employees and visit every store at least once
a year. We recognise the value of the culture of the business and these
visits create an opportunity for it to be cascaded from the boardroom.
The Group’s Non-Executive Directors also participate in some of these
visits, allowing them to develop and maintain a greater insight into the
business, producing an informed and higher quality Board discussion on
employee matters.
The Group carries out regular engagement surveys of its staff, including
a full survey during the current financial year (see Our Employees above).
These surveys tell us what our staff value about the business and the
importance of continued personal development. Detailed action plans are
created following these engagement surveys and a number of changes
to the way we operate have been made as a result of these surveys.
The level of employee engagement evidenced by these surveys remained
very high.
Regular training is provided to the Group’s employees, and detailed
courses are provided to allow employees to further their careers and seek
promotion opportunities within the business.
The Board has, in conjunction with the work of the Audit Committee,
reviewed the whistleblowing policies that are in place for the Group’s
employees. There have been no significant issues raised under the Group’s
whistleblowing arrangements during the course of the financial year.
Workforce Engagement Director
The Code requires that the Board should understand the views of its key
stakeholders, with a particular reference to engagement with the
workforce. Specifically, it states that for engagement with the workforce,
one or a combination of the following methods should be used:
• a Director to the main Board should be appointed from the workforce;
• a formal workforce advisory panel should report to the Board; and / or
• a designated Non-Executive Director should sit on the workforce
advisory panel.
A designated Non-Executive Director, Anna Keay, has been chosen as the
primary method of workforce engagement for Big Yellow.
She oversees and is responsible for the following:
• involvement in the Workforce Engagement Group discussions and
occasional attendance at Workforce Engagement Group meetings;
• involvement in key employee project groups where for example
employee views are sought on the business or policy and procedural
changes;
• maintaining an awareness of the suggestions made under the
Company’s Bright Ideas Scheme to include key trends and awards
made;
• along with all the Company’s Non-Executive Directors, participation
on store tours (pre-planned visits to individual stores);
• along with all the Company’s Non-Executive Directors attending the
Annual Sales Conference;
• provision of feedback to the Board on the annual employee
engagement survey, with assistance from the Human Resources
team and our survey partner;
• receiving detailed feedback from the Executive Board Directors
on their interaction with employees;
• regular meetings with the Head of HR to discuss employee relations
and issues;
• annual face-to-face sessions with groups of employees in different
areas of the business to hear views and concerns;
• acting as an alternative contact to whom employees can report
confidential matters and raise concerns under the Company’s
Whistleblowing Policy; and
• reporting back to the Board and Non-Executive Directors on
the above.
Corporate Governance Report (continued)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
89
Strategic Report Governance Report
Report of the Nominations Committee
Introduction
The Committee is responsible for reviewing the Composition of the Board.
It also makes recommendations for membership of the Board and
considers succession planning for Directors. The Committee is also
responsible for evaluating Board and Committee performance.
The Nominations Committee is responsible for reviewing the structure,
size and composition of the Board and giving consideration to succession
planning for Directors and other senior Executives. Where changes are
required, it is also responsible for the identification, selection and
proposal to the Board for approval of persons suitable for appointment
or reappointment to the Board, whether as Executive or Non-Executive
Directors and to seek approval from the Remuneration Committee of the
remuneration and terms and conditions of service of any proposed
Executive Director appointment. The Chair of the Committee reports to
the Board as appropriate to enable the Board as a whole to agree the
appointments of new Directors. The Committee meets at least once a year
and otherwise as required and as determined by its members.
The terms and conditions of appointment for the Non-Executive Directors
are available for inspection at the Company’s Head Office during normal
working hours. They are also available for inspection at the Company’s AGM.
Board performance evaluation
During 2020, the effectiveness of the Board and its Committees was
evaluated by Simon Robertson Associates LLP (“SRA”). Simon Robertson
Associates have no other business relationship with the Group or any
of the Company’s Directors. SRA met each Director individually, the
Company Secretary, many of the senior management team and certain
external advisers to the Company. They also attended Board and
Committee meetings, with the results of the evaluation presented to
the full Board.
Outcome
Overall, SRA’s evaluation was complimentary of the high standards of
performance and governance set by the Board. SRA commented on the
culture and strategic coherence of the Board and the strong balance
between process and governance on the one hand and long-term
strategic planning on the other. SRA gained comfort that the Board
provides an environment where robust debate is encouraged, and a
good level of challenge and diversity of thought exists. The Board is
appropriately structured to provide the right balance of internal scrutiny,
taking account of its own particular construct.
SRA made a number of recommendations including:
• continuing to develop the Board’s existing succession plans to cover
the Board as a whole, executive and non-executive;
• maximising the opportunity and education around Board debate
on long-term strategic and financial planning; and
• increasing the interaction of the entire Board with the wider
executive team.
Committee members and attendance
Member
Number
of meetings
attended
Vince Niblett – Chair and Senior
Independent Director (from 22 July 2021)
Richard Cotton – Chair and Senior
Independent Director (until 22 July 2021),
Member from 22 July 2021
Anna Keay – Member
Michael O’Donnell – Member
Laela Pakpour Tabrizi – Member
Heather Savory – Member
attended
absent
not applicable
Annual Report and Accounts 2022 Big Yellow Group PLC
90
Governance Report
During the current year, the Senior Independent Director led an internal
evaluation of the Board’s performance. This consisted of a review with
each Director of their assessment of the effectiveness of the Board and
its discussions. The Senior Independent Director provided a summary of
these discussions to the Board. It was considered that the Board was
operating effectively, with some minor areas identified for improvement.
The Board intends to commission an externally facilitated review of the
Board in the year ending 31 March 2023.
Director evaluation
During the current year, the Executive Chairman evaluated the
performance of the other Executive Board Directors, and the performance
of the Chairman was evaluated by the Senior Independent Non-Executive
Director. It was considered that the individuals were operating effectively,
with appropriate procedures put in place for minor areas identified for
improvement.
Succession planning
It is a key responsibility of the Committee to advise the Board on
succession planning. The Committee ensures that any future changes in
the Board’s composition are foreseen and effectively managed.
The Board comprises a team of four Executive Board Directors, two of
whom were co-founders of the Company, complemented by Non-Executive
Directors who have wide business experience and skills as well as a
detailed understanding of the Group’s philosophy and strategy. The
Executive Board Directors have worked together for a significant length
of time, with no change in composition since John Trotman joined in 2007.
Continuity of experience and knowledge, particularly of self storage,
within the executive team is important in a long-term focussed business
such as Big Yellow.
The team have confirmed individually and collectively that they all remain
committed to the business for the foreseeable future. Each Executive has
a significant personal financial interest in the Company. The risk of
unforced succession within the business is therefore low.
Given the financial interest of each member of the team in the Company,
any planned change in the team in the medium-term (e.g. upon retirement)
will be staggered to ensure there is not significant disruption to the
overall team. This will be in a similar way to how the Company has managed
the replacement of the Non-Executive Directors over recent years.
The Directors work closely together across the various departments that
each manages, and so each carries knowledge of the way the whole
business operates and would be able to take over the running of that
department in the short-term should a vacancy arise. Equally important
is the strength of the Senior Management team within the business.
The majority of the department heads have worked for the business
for a substantial period of time and are highly capable individuals.
We have confidence that they would be able to step up if there is a gap
in the Executive Director team at any point.
In the event of unforeseen changes, the Committee ensures that
management and oversight of the Group’s business and long-term
strategy will not be affected.
The Committee also addresses the development and continuity of the
Senior Management team below Board level and has considered
succession planning for this team during the year.
Report of the Nominations Committee (continued)
Board and Company
gender diversity
Board
Total: 10
7
Male
3
Female
70:30
Male / female ratio
Key Executives
Total: 8
3
Male
5
Female
38:62
Male / female ratio
Board and Key Executives
Total: 18
10
Male
8
Female
56:44
Male / female ratio
All employees
Total: 495
272
Male
223
Female
55:45
Male / female ratio
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
91
Strategic Report Governance Report
Big Yellow Executive team
Big Yellow operates with a leadership team of twelve, comprising of four
Executive Board Directors, supported by eight key executives within the
business. The Group does not have a formal Executive Committee or
formal Operating Board, as we use a more flexible approach to the
day-to-day management of the business within a relatively flat
management structure.
In addition to the four Executive Board Directors, the other members of
the Executive team cover finance, sales and marketing, operations,
facilities, construction, human resources, information technology and
digital security, and CSR.
We run the business through small sub-groups of decision-making
committees, which meet regularly throughout the year around particular
key delivery areas which contribute to our growth and success. These
committees are attended by members across the leadership team and
other employees as required. All of these meetings are also attended by
at least one of the Executive Board Directors, and in many cases more
than one Executive Director. All strategic and acquisition decisions are
made at the PLC Board level and then the Committees implement and take
the detailed decisions to drive operational performance and deliver
growth. There are also specific thematic executive committees, such as
an Environmental Committee and a Health and Safety Committee.
Policy on diversity
All aspects of diversity, including gender are considered at every level of
recruitment. All appointments to the Board are made on merit. The Board’s
policy states that the Board seeks a composition with the right balance of
skills and diversity to meet the demands of the business. The Company
meets the 30% current recommended minimum proportion of women on
the Board. Two members of the Board are from ethnic minority
backgrounds, representing 20% of the Board (which increases to 25%
following Richard Cotton and Adrian Lee’s retirement from the Board at
the AGM).
Gender diversity of the Board, Key Executives and Company is set out
below:
External appointments
On making new appointments, the Board takes into account the other
demands on a Director’s time. Prior to any appointment, significant
commitments are disclosed with an indication of the time involved. Any
additional external appointments are only undertaken with prior approval
of the Board. The Group’s Executive Board Directors may not take on more
than one non-executive Directorship within a FTSE 350 company or other
significant and time-consuming appointment.
Directors standing for re-election
All of the Directors will retire in accordance with the UK Corporate
Governance Code and will offer themselves for re-election at the Annual
General Meeting, with the exception of Richard Cotton, who is stepping
down as a Non-Executive Director after serving his full term, and Adrian
Lee, who is stepping down from the PLC board, but continuing in his role
as Operations Director on the Board of the trading business.
Following a performance appraisal process, the Board has concluded that
the Directors retiring are effective, committed to their roles and operate
as effective members of the Board.
The Board, on the advice of the Committee, therefore recommends the
re-election of each Director standing for re-election. Full biographical
details of each Director are available on page 80.
Vince Niblett
Nominations Committee Chair
23 May 2022
100
70
80
90
60
30
40
50
20
0
10
Board Key
Executives
Board
and Key
Executives
All
employees
30%
70%
62%
38%
44%
56%
45%
55%
Female
Male
Annual Report and Accounts 2022 Big Yellow Group PLC
92
Governance Report
Sustainability Committee Report
Introduction
The Sustainability Committee is responsible for:
• overseeing the Group’s sustainability framework and strategy;
• monitoring sustainability performance;
• providing guidance on emerging environmental issues, including
environmental risks, and their impact on the Group’s business; and
• overseeing the Group’s CSR reporting, including external audit and
assurance mechanisms.
The Sustainability Committee has determined its scope as:
• material, covering all environmental aspects of Big Yellow’s business,
i.e. the ‘E’ in ESG; and
• comprehensive, from energy to waste, considered in order of their
impact on the business.
The scope of the Sustainability Committee excludes:
• social and personnel aspects of ESG, which the Big Yellow Board
considers elsewhere, under the guidance of Non-Executive Director
Anna Keay; and
• governance aspects of ESG which are considered directly by the
Big Yellow Board.
Overview
The Sustainability Committee meets twice a year: in September and in
March, attended by all Big Yellow Board Members and the Head of CSR.
External experts may be called to the Sustainability Committee on an
ad hoc basis, as determined by the meeting agenda.
The Head of CSR and Big Yellow’s Sustainability Strategy are supported
and delivered within the business through an executive level,
cross-disciplinary Environmental Committee. Big Yellow staff form
this committee.
The Sustainability Committee has reviewed progress against the agreed
Sustainability Strategy. Progress is positive for the year, despite some
challenges with the initially selected solar panel supply chain. The
Committee has supported the business’s decision to move to a solar
panel supplier with fewer supply chain issues, at a material increase to
the costs of the solar refit programme.
Committee members and attendance
Member
Number
of meetings
attended
Heather Savory – Chair
Richard Cotton – Member
Anna Keay – Member
Vince Niblett – Member
Michael O’Donnell – Member
Laela Pakpour Tabrizi – Member
attended
absent
not applicable
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
93
Strategic Report Governance Report
The Head of CSR has informed the Committee that progress on the battery
pilot, although slow initially due to external delays in the delivery of the
battery, is on track. Battery installation commenced at the end of March
2022 and the proof of concept phase with external partners commenced
1 April 2022.
During the year, the Sustainability Committee agreed that the Company
would commit to the ‘Race to Zero’ campaign, which commits to Science-
Based Targets that aim to limit global warming to 1.5°C.
Big Yellow has subsequently confirmed its commitment to the Science
Based Targets initiative (SBTi) and approved a framework presented at
the Sustainability Committee meeting in March 2022. The Committee has
requested that the Science-Based Targets are published in the year ended
31 March 2022 full CSR report, with the work to gain approval from the
SBTi taking place in parallel.
The Sustainability Committee also considered the adoption of a
commitment to fully certified BREEAM Very Good standards for all new
builds, even where local planning does not demand such a high standard,
and has agreed that Very Good, certified, should be the minimum BREEAM
requirement for all new builds.
Accessing the Sustainability strategy: The detail of the Net Renewable
Energy Positive Strategy and the plans for the Net Zero Scope 1 and 2
Emissions targets can be accessed at https://corporate.bigyellow.co.uk/
sustainability/strategy.
Heather Savory
Sustainability Committee Chair
23 May 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
94
Governance Report
Remuneration Report
Introduction
This report has been prepared by the Remuneration Committee and
approved by the Board. It has been prepared in accordance with Schedule
8 of the Large and Medium-size Companies and Groups (Accounts and
Report) (Amendment) Regulations 2013 (the “Regulations”).
The report is divided into three main sections:
• The Annual Statement – which summarises the remuneration
outcomes in the year ended 31 March 2022 and how, subject to
shareholder approval, the new Remuneration Policy will be operated
in the year ending 31 March 2023;
• The Remuneration Policy Report – which sets out the proposed
Remuneration Policy to be approved by shareholders at the 2022
AGM; and
• The Annual Report on Remuneration – which sets out how the
Committee intends to operate the Remuneration Policy for the year
ending 31 March 2023, the link between Company performance and
remuneration and payments and awards made to the Directors in
respect of the year just ended.
The Companies Act 2006 requires the auditor to report to the
shareholders on certain parts of the Remuneration Report and to state
whether, in their opinion, those parts of the report have been properly
prepared in accordance with the Regulations. The parts of the Annual
Report on Remuneration that are subject to audit are indicated in
the report.
Committee members and attendance
Member
Number
of meetings
attended
Richard Cotton – Chair
Anna Keay – Member
Vince Niblett – Member
Michael O’Donnell – Member
Laela Pakpour Tabrizi – Member
Heather Savory – Member
attended
absent
not applicable
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
95
Strategic Report Governance Report
The Committee and its Work During the Year
Committee Chair: Richard Cotton
Current Committee members: Vince Niblett, Anna Keay, Michael O’Donnell, Laela Pakpour Tabrizi and Heather Savory
Terms of Reference: https://corporate.bigyellow.co.uk/investors/corporate-governance
The Committee met four times during the year under review. The Committee’s main activities during the year ended 31 March 2022 (full details
are set out in the relevant sections of this report) included:
• Agreeing Executive Director base salary increases from 1 April 2022;
• Agreeing the cash annual bonus awards for the year ended 31 March 2021 and setting the targets for the year ended 31 March 2022;
• Agreeing the deferred annual bonus plan awards for the year ended 31 March 2021 and setting the targets for the year ended
31 March 2022;
• Reviewing the EPS and Total Shareholder Return (“TSR”) performance targets and determining the percentage vesting for the 2018
LTIP awards which vested in 2021;
• Reviewing the CEO Pay Ratio calculations and disclosures;
• Reviewing the Company’s Gender Pay calculations and disclosures;
• Reviewing the Company’s Ethnicity Pay calculations and disclosures; and
• Reviewing the 2021 AGM voting results, considering shareholder feedback received and consulting with major shareholders on a revised
Remuneration Policy for the 2022 AGM.
In addition, the Committee has considered how the current and proposed Policy and practices are consistent with the six factors set out in
Provision 40 of the UK Corporate Governance Code:
Clarity – Our Policy is understood by our senior executive team and is clearly articulated to our shareholders and representative bodies
(both on an ongoing basis and when changes are proposed).
Simplicity – The Committee is mindful of the need to avoid overly complex remuneration structures which can be misunderstood and deliver
unintended outcomes. Therefore, a key objective of the Committee is to ensure that our executive remuneration policies and practices continue
to be straightforward to communicate and operate.
Risk – Our Policy has been designed to ensure that inappropriate risk-taking is discouraged and will not be rewarded via: (i) the balanced use
of annual and long-term pay which employ a blend of financial, non-financial and shareholder return targets; (ii) the significant role played by
equity in our incentive plans; and (iii) malus/clawback provisions.
Predictability – Our incentive plans are subject to individual caps, our share plans are also subject to market standard dilution limits.
Proportionality – There is a clear link between individual awards, delivery of strategy and our long-term performance. In addition, the significant
role played by incentive/‘at-risk’ pay, together with the structure of the Executive Board Directors’ service contracts, ensures that poor
performance is not rewarded.
Alignment to culture – Our executive pay policies are fully aligned to Big Yellow’s culture through the use of metrics in both the annual bonus,
deferred bonus and LTIP that measure how we perform against our KPIs.
Annual Report and Accounts 2022 Big Yellow Group PLC
96
Governance Report
Remuneration Report (continued)
Annual statement
Dear Shareholder
I am pleased to present the Directors’ Remuneration Report for the year
ended 31 March 2022.
Performance, Decisions and Reward Outcomes for the
year ended 31 March 2022
The business conditions and performance of the Group in the year ended
31 March 2022 are described more fully in the Chairman’s Statement and
the Operating and Financial Review of this Annual Report. In summary:
• The business of the Group performed strongly despite the continued
impact of the pandemic throughout the financial year;
• Big Yellow remains the clear UK brand leader in self storage and
delivered growth in revenue, cash flow and earnings for the thirteenth
year in a row;
• Revenue, operating cash flow and adjusted profit before tax
increased 27%, 40% and 30% respectively; and
• Dividends are being increased by 24%.
Payments made to the Executive Board Directors under the cash annual
bonus plan for the year ended 31 March 2022 amounted to 10.3% of
salary (out of a maximum of 25% of salary), based on performance
against pre-set targets for occupancy, store profitability, store audits and
customer satisfaction. The targets set, and the out-turn, were identical to
the average bonus awarded across the stores and head office.
Awards made to the Executive Board Directors under the deferred annual
bonus plan for the year ended 31 March 2022 amounted to 119.25% of
salary (out of a maximum of 125% of salary), based on performance
against financial and non-financial performance targets linked to the
business plan.
In respect of the Long Term Incentive Plan (“LTIP”) awards granted in
2018, which vested in July 2021, three-year EPS and TSR performance
resulted in 62% of awards vesting.
Further details of the targets, and performance against the targets, for
cash and deferred annual bonus plans and share award vesting levels are
set out in the Annual Report on Remuneration.
Operation of the Policy and use of discretion
The Remuneration Policy operated as intended for the year ended
31 March 2022, and no discretion was applied.
Policy review
Following shareholder approval of the rolled forward Policy at the 2021
AGM, and after giving further consideration to feedback received in
respect of the structure and quantum of remuneration, the Committee
has concluded that it wishes to make two changes to the Remuneration
Policy at the 2022 AGM.
• LTIP potential is currently capped at 100% of salary and awards have
been granted at this level since the annual LTIP grant policy was
introduced in 2010. Subject to shareholder approval, the Committee
wishes to increase LTIP award potential to 200% of salary. The
proposed change will enable LTIP awards to be granted over shares
with a value equal to 200% of salary which will align LTIP potential to
market levels in % of salary terms, albeit it will remain below market in
£ terms given the below market salary levels; and
• Where an Executive Director has not met the 200% of salary ‘in
employment’ shareholding guideline, the current Policy requires at
least 50% of the net of tax shares which vest under any discretionary
share award to be retained. From the 2022 AGM, rather than 50%,
the Committee will require 100% of the net of tax discretionary share
awards which vest to be retained until the shareholding guideline is met.
Major shareholders were consulted, and the majority were able to confirm
that they were supportive of the proposals.
Implementing the Policy for the Year Ending 31 March 2023
Base salary
The Committee has operated a policy of targeting base salaries
“close to (but generally just below) median” for some time. However,
notwithstanding that Executive Director base salary levels are currently
well below the market level for a FTSE 250 company of Big Yellow’s size
and complexity, salary levels were increased by 4% in line with the general
workforce increase from 1 April 2022:
Chief Executive
(Jim Gibson)
Executive
Chairman
(Nicholas Vetch)
Chief Financial
Officer
(John Trotman)
Operations
Director
(Adrian Lee)
From 1 April 2021 £448,800 £382,500 £331,500 £290,700
From 1 April 2022 £466,750 £397,800 £344,750 £302,325
% increase 4% 4% 4% 4%
Pension & benefits
Pension provision for the Executive Directors will continue at 6% of salary,
which is in line with the pension offered to the general workforce. Benefit
provision will remain unchanged (private fuel, private medical insurance,
permanent health insurance, life assurance and relocation allowances,
where relevant).
Annual bonus
Annual bonus potential will continue to be capped at 150% of salary for the
year ending 31 March 2023.
Up to 25% of salary will continue to be aligned to the workforce annual
bonus (measured against store performance, through occupancy growth,
store profitability, store audits and customer satisfaction scores). Any
bonus earned under this part will be payable in cash, following the year
ending 31 March 2023.
The remaining 125% of salary will continue to be measured against
financial, operational, real estate and strategic targets measured over the
financial year ending 31 March 2023. Any award under this part will be
deferred into Big Yellow shares for three years (with vesting subject to
continued employment).
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
97
Strategic Report Governance Report
LTIP
The LTIP will continue to operate in its current form following the Policy
review, albeit with two changes. The Committee:
• wishes to increase award potential from 100% to 200% of salary
(albeit award levels will remain below market in value terms given the
below market salary levels). Subject to shareholder approval, LTIP
awards will be granted up to 200% of salary to Executive Directors
shortly following the 2022 AGM; and
• will introduce ESG related performance metrics for 20% of LTIP awards
from 2022 onwards. The remaining 80% of awards will be measured
against Earnings Per Share (“EPS”) and relative Total Shareholder
Return (“TSR”) although reflecting the increased quantum, the EPS
and relative TSR performance targets will be increased at the
maximum. Details of the proposed targets for the 2022 LTIP awards
are set out in the Annual Report on Remuneration.
Shareholding guidelines – in employment
The guideline to build and maintain a holding of at least 200% of salary in
shares of the Company will continue to apply and has been met by all of
the current Executive Board Directors. Where a newly appointed
Executive Director does not meet the 200% of salary ‘in employment’
shareholding guideline in the future, the current Policy requires at least
50% of the net of tax shares which vest under any discretionary share
award to be retained. From the 2022 AGM, rather than 50%, the Committee
will require 100% of the net of tax discretionary share awards which vest
to be retained until the shareholding guideline is met.
Shareholding guidelines – post employment
The post-cessation shareholding guideline whereby Executive Directors
will need to retain shares equal to 100% of the shareholding guideline (or
the actual number of shares held against the guideline if the guideline is
not met at cessation) up until the second anniversary of cessation will
continue to apply.
Conclusion
I hope that, at the AGM on 21 July 2022, you will support the resolutions
on: (i) the remuneration paid to the Directors in the last financial year, and
the implementation of the new Remuneration Policy for the forthcoming
year; and (ii) the new Directors’ Remuneration Policy. No resolution is
being tabled in respect of the LTIP as the shareholder approved LTIP
already has an authority to grant up to 200% of salary.
Finally, I retire from the Board at the upcoming AGM, and Michael O’Donnell
will be taking over as the Chair of the Committee, and I wish him well in the
role. I would like to extend my thanks to my fellow colleagues on the
Committee for their support and work in 2021/22 and throughout my
tenure as Chair of the Committee.
Richard Cotton
Chair of the Remuneration Committee
23 May 2022
Directors’ remuneration policy
This section of the Remuneration Report contains details of the
Company’s Directors’ Remuneration Policy (the “Policy”) which governs
the Company’s approach to remuneration.
It is the policy of the Company to ensure that the executive remuneration
packages are designed to attract, motivate, and retain Directors of a high
calibre and reward the executives for enhancing value to shareholders.
As a result, a substantial element of the remuneration of the Executive
Board Directors is structured to be dependent on the performance of
the Company. The policy aims to support a performance culture where
there is appropriate reward for the achievement of strong Company
performance without creating incentives which will encourage excessive
risk-taking or unsustainable Company performance.
Policy Scope
The Policy applies to the Executive Board Directors and Non-Executive
Directors.
Policy Duration
The current Directors’ Remuneration Policy Report was approved by
a binding shareholder vote at the AGM on 22 July 2021. A new
Remuneration Policy is being put to shareholders for approval at the
forthcoming AGM.
Policy Changes
Following a consultation exercise with Big Yellow’s major shareholders
and the main shareholder representatives, the Committee is proposing
two changes to the current Remuneration Policy as follows:
• Increase to LTIP Potential – LTIP potential is currently capped at
100% of salary and awards have been granted at this level since the
annual LTIP grant policy was introduced in 2010. Subject to
shareholder approval, the Committee wishes to increase LTIP award
potential to 200% of salary. The proposed change will enable LTIP
awards to be granted over shares with a value up to 200% of salary;
and
• Strengthening of Shareholder Guidelines – Where an Executive
Director has not met the 200% of salary ‘in employment’ shareholding
guideline, the current Policy requires at least 50% of the net of tax
shares which vest under any discretionary share award to be
retained. From the 2022 AGM, rather than 50%, the Committee will
require 100% of the net of tax discretionary share awards which vest
to be retained until the shareholding guideline is met.
Annual Report and Accounts 2022 Big Yellow Group PLC
98
Governance Report
Summary Policy table (Executive Board Directors)
The main components of the Directors’ Remuneration Policy, and how they are linked to and support the Company’s business strategy, which will be
presented to shareholders for approval at the 2022 AGM, are summarised below:
Executive Board Directors
Purpose and link
to strategy Operation Maximum potential value
Performance conditions
and assessment
Base salary
To provide
competitive fixed
remuneration that
will attract and
retain key
employees and
reflect their
experience and
position in the
Company.
Base salary is normally set annually on 1 April.
When considering any increases to base salaries in
the normal course (as opposed to a change in role
or responsibility), the Committee will take into
consideration:
• level of skill, experience, scope of
responsibilities and performance;
• business performance, economic climate, and
market conditions;
• pay and employment conditions of employees
throughout the Group, including increases
provided to staff;
• inflation; and
• increases provided to Executive Board
Directors in comparable companies (although
such data would be used with caution).
Salaries are typically set after
considering the salary levels in
companies of a similar size and
complexity in the FTSE 250.
Our overall policy is normally to
target salaries at close to (but
generally just below) median
levels.
Base salaries are intended to
increase in line with inflation
and general employee
increases in salary.
Higher increases may apply if
there is a change in role, level
of responsibility or experience
or if the individual is new to the
role.
There is no maximum salary
cap in place.
None
Annual bonus
The annual bonus
aligns reward to
key Group strategic
objectives and
drives short-term
performance.
Executive Board Directors participate in an annual
performance-related bonus scheme.
Up to 25% of salary will be paid in cash. Up to 125%
of salary will be deferred into shares for three
years.
Dividend equivalents may be payable on deferred
share awards.
The annual bonus plan rules contain clawback and
malus provisions.
150% of salary. Assessed annually
and determined by
the Committee
based on financial,
strategic and/or
personal
performance
against the Group’s
business plan for
each financial year.
Long Term
Incentive Plan
The Long Term
Incentive Plan
aligns Executive
Director interests
with those of
shareholders and
rewards value
creation.
Awards are made annually to the Executive Board
Directors (and certain senior managers who are in a
position to significantly influence the performance
of the Group) in the form of nil-paid options.
The awards granted under the Long Term Incentive
Plan are subject to performance conditions to be
met over a performance period of three years.
Dividend equivalents may be payable on LTIP
awards during the vesting period, to the extent
awards vest.
The LTIP contains malus and clawback provisions.
A two year post vesting holding period applies to
LTIP awards granted to Executive Directors
following the 2018 AGM.
200% of salary, albeit actual
award levels may be lower.
Vesting under the
LTIP will be based
on financial,
share-price,
strategic and/or
ESG related
performance
measures.
Remuneration Report (continued)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
99
Strategic Report Governance Report
Purpose and link
to strategy Operation Maximum potential value
Performance conditions
and assessment
Pension
To provide
competitive levels
of retirement
benefit.
Contribution made into Executive Director’s
personal pension plan, or a cash supplement
of equivalent value paid in lieu of pension
contribution.
Workforce aligned (currently
6% of salary)
None
Other benefits
To provide
competitive levels
of employment
benefits.
Benefits include:
• Private fuel;
• Private medical insurance;
• Permanent health insurance;
• Life assurance of four times base salary; and
• Relocation allowances (where relevant).
Other benefits may be provided where appropriate.
The type and level of benefits provided is reviewed
annually to ensure they remain market
competitive.
Maximum opportunity is the
total cost of providing the
benefits. There is no monetary
cap on benefits.
None
Shareholding
policy – in
employment
To ensure that
Executive Board
Directors’ interests
are aligned with
those of
shareholders over a
longer time horizon.
Requirement to build and maintain a holding of
shares in the Company, through retaining at
least 100% of shares vesting in discretionary
share-based incentive plans if this guideline
has not been met.
200% of salary. N/A
Shareholding
policy – post
employment
Requirement to retain shares equal to 100% of the
shareholding guideline (or the actual number of
shares held against the guideline if the guideline
is not met at cessation) up until the second
anniversary of cessation.
Own shares purchased and share awards granted
prior to the 2021 AGM are excluded from the
post-cessation guideline.
All Employee
Scheme
To encourage share
ownership by all
employees. This
allows them to align
their interests with
those of investors
and to share in the
long-term success
of the Company.
Executive Board Directors may participate in any
HMRC tax favoured all employee arrangements.
In line with the prevailing
HMRC limits.
None
Annual Report and Accounts 2022 Big Yellow Group PLC
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Governance Report
Notes to the policy table
The key principle for the short and long-term incentives is to provide a strong link between reward and individual and Group performance to align the
interests of Executive Board Directors with those of shareholders.
1. Annual bonus performance measures and targets
Annual bonuses for the Executive Board Directors are based on:
• 25% of salary cash bonus: the average of the stores’ performance against their quarterly targets providing direct alignment of the Directors’
bonuses to performance (and the bonus levels) of the staff. The four Key Performance Indicators used to assess store performance are occupancy
growth, store profitability, store audits and customer satisfaction. Store targets are set every quarter and an average of the four quarters is taken.
• 125% of salary deferred share bonus: measured against pre-set financial, operational, real estate, strategic and ESG-related targets.
2. Long Term Incentive Plan performance measures and targets
Performance metrics and targets for LTIP awards will provide a direct link between the incentive for the Executive Board Directors and the long-term
value created for shareholders. The main two performance metrics, which may be supplemented by strategic and/or ESG-related metrics are:
• Relative TSR against the constituents of the FTSE Real Estate Index, given that Big Yellow’s historic performance has been closely aligned to the
performance of this Index.
• Adjusted EPS figure as reported in the audited results of the Group for the last complete financial year ending before the start of the performance
period and the last complete financial year ending before the end of the performance period.
3. Malus and clawback
The cash annual bonus, deferred annual bonus plan and LTIP include malus and clawback provisions.
Malus is the adjustment of outstanding deferred bonus and LTIP awards as a result of the occurrence of one or more of the circumstances listed below.
The adjustment may result in the value being reduced to zero. Malus will apply for the three year period from grant to vesting for the deferred bonus and
LTIP awards.
Clawback is the recovery of payments/vestings under the cash bonus and LTIP as a result of the occurrence of one or more circumstances listed below.
Clawback will apply for three years post payment of a cash bonus/grant of deferred share awards and three years post vesting for LTIP awards.
The circumstances in which malus and clawback could apply are as follows:
• discovery of a material misstatement resulting in an adjustment in the audited consolidated accounts of the Company;
• the assessment of any performance target or condition in respect of an award was based on error, or inaccurate or misleading information;
• the discovery that any information used to determine the amount of an award was based on error, or inaccurate or misleading information;
• corporate failure or the occurrence of an insolvency event;
• action or conduct of an award holder which, in the reasonable opinion of the Board, amounts to fraud or gross misconduct; and
• events or behaviour which have led to the censure of the Company by a regulatory authority or have had a significant detrimental impact on the
reputation of any Group Company.
4. Discretion
The Committee has discretion in several areas of policy as set out in this report. The Committee may also exercise operational and administrative
discretion under relevant plan rules approved by shareholders as set out in those rules. In addition, the Committee has the discretion to amend policy
with regard to minor or administrative matters where it would be, in the opinion of the Committee, disproportionate to seek or await shareholder approval.
In certain circumstances, the Committee will be required to exercise its discretion, taking into consideration the particular circumstances of an
Executive Director’s departure and/or the recent performance of the Company in determining the specific level of payments to be made.
In addition to the discretion under the terms of the annual bonus plan (both cash and deferred shares) and LTIP, the Committee has discretion to
determine whether an individual is classified as a “good leaver”.
It should be noted that it is the Committee’s policy to only apply its discretion if the circumstances at the time are, in its opinion, sufficiently exceptional,
and to provide a full explanation to shareholders where discretion is exercised. The Committee does not currently intend to amend or waive any
performance conditions.
Remuneration Report (continued)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
101
Strategic Report Governance Report
5. Differences in remuneration policy for all employees
All employees are currently entitled to base salary, benefits, pensions, and the Sharesave Scheme. Additionally, all employees are eligible for annual
bonuses with the maximum opportunity available based on the seniority and responsibility of the role held.
The Company’s LTIPs are granted to a number of key team members within Head Office, the area manager team and also to store managers.
Illustrations of application of Remuneration Policy
The graphs below seek to demonstrate how pay varies with performance for the Executive Board Directors based on the current Remuneration Policy.
The assumptions used in determining the level of pay out under given scenarios are as follows:
Scenario Description
Fixed Pay
Chief Executive Executive Chairman Chief Financial Officer Operations Director
Base salary (from 1 April 2022) £466,750 £397,800 £344,750 £302,325
Estimated Benefits £5,000 £5,000 £2,000 £5,000
Pension (% of salary) 6% 6% 6% 6%
On-target
50% of annual bonus award being paid and 50% vesting of the LTIP.
Maximum
100% of annual bonus award being paid (i.e. 150% of salary) and 100% vesting of the LTIP
(i.e. 200% of salary, albeit actual awards levels may be lower).
Maximum Plus 50%
share price growth
As per the Maximum scenario but assuming 50% share price growth on LTIP awards.
Chief Executive Officer Executive Chairman Chief Financial Officer Operations Director
Minimum Target Maximum Maximum
with share
price growth
£426,668
£1,138,730
£1,834,880
£2,232,680
26%
33% 27%
35%
43% 36%
17%
100%
39% 24% 20%
Minimum Target Maximum Maximum
with share
price growth
£367,435
£970,748
£1,574,060
£1,918,810
27%
33% 26%
36%
44% 36%
19%
100% 37% 23% 19%
Minimum Target Maximum Maximum
with share
price growth
£325,465
£854,533
£1,383,602
£1,685,927
27%
33% 27%
35%
44% 36%
18%
100% 38% 24% 19%
£3,000
£2,500
£2,000
£1,000
£1,500
£0
£500
Minimum Target Maximum Maximum
with share
price growth
£499,755
£1,316,568
£2,133,380
£2,600,130
28%
33% 27%
35%
44% 36%
18%
100%
37% 23% 19%
Share price growth
LTIP
Annual Bonus
Fixed Pay
Annual Report and Accounts 2022 Big Yellow Group PLC
102
Governance Report
Remuneration Report (continued)
Summary Policy table (Non-Executive Directors)
Objective and link
to the strategy Operation Maximum potential value
Performance conditions
and assessment
Fees
To attract
Non-Executive
Directors with the
requisite skills and
experience.
Fee levels are normally reviewed annually in March.
The Non-Executive Director fee structure is a
matter for the full Board.
Non-Executive Directors may be entitled to
benefits relating to travel and office support and
such other benefits as may be considered
appropriate.
The fees may be paid in the form of shares.
Fee levels are normally set at
broadly median levels for
comparable roles at companies
of a similar size and complexity
within the FTSE 250.
Fees are normally intended to
increase in line with inflation.
N/A
Non-Executive Directors’ fees comprise of a base fee, with an additional fee for Committee Chairs, the Senior Independent Non-Executive Director and
the Employee Representative Director.
Approach to recruitment remuneration
The table below summarises our key policies with respect to recruitment remuneration:
Salary and
benefits
• Set by reference to market and taking account of individual experience and expertise in the context of the role.
• Salary would also be set with reference to the salary of any departing Executive Director and the remaining Executive Board
Directors.
• The Executive Director would be eligible to receive benefits in line with Big Yellow Group’s benefits policy as set out in the
remuneration policy table – this includes either a contribution to a personal pension scheme or cash allowance in lieu
of pension benefits in line with the policies set out in the policy table.
Maximum
variable
incentive
• Annual bonus of up to 150% of base salary.
• Long term incentive plan award of equivalent to 200% of base salary.
Sign-on
payments
• The Company does not provide sign-on payments to Executive Board Directors.
Share buy-outs
• Any previous outstanding share awards which the Executive Director holds which would be forfeited on cessation of his
or her previous employment may be compensated.
• Where this is the case, the general principle is that the outstanding award will be valued based on the consideration of the
following factors:
− The proportion of the performance period completed on the date of the Director’s cessation of employment;
− The performance conditions attached to the vesting of the incentives and the likelihood of them being satisfied; and
− Any other terms and conditions having a material impact on their value.
• The valuation will be conducted using a recognised valuation methodology by an independent party and the equivalent ‘fair
value’ may be awarded as a one-off LTIP on date of joining under the Company’s existing long-term incentive plan. To the
extent that this is not possible, a bespoke arrangement will be used.
• To ensure effective retention of the Executive Director upon recruitment, any new award will be granted subject to
performance conditions and vesting may be over the same period as those forfeited from the previous employer or a new
three year period.
• The exact terms will be determined by the Remuneration Committee on a case-by-case basis taking into account all relevant
factors.
Relocation
policies
• In instances where the new Executive Director is relocating from one work location to another, the Company may provide,
as a one-off or otherwise, a relocation allowance as part of the Director’s relocation benefits.
• The level of the relocation package will be assessed on a case-by-case basis but will take into consideration any cost of
living differences, housing allowance and schooling.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
103
Strategic Report Governance Report
Service contracts
The Company’s policy on Directors’ service contracts is that they should be on a rolling basis without a specific end-date providing for one year’s notice.
All Executive Board Directors have contracts which reflect this policy.
The Non-Executive Directors do not have service contracts with the Company. Their appointments are governed by letters of appointment which are
available for inspection on request at the Company’s registered office and which will be available for inspection at the Company’s AGM. Each
appointment is for a period of up to three years, although the continued appointment of all Directors is put to shareholders at the AGM on an annual
basis. In addition, the appointment is terminable by either party giving notice of three months.
Payments for loss of office
Element Approach
Salary and
benefits
Salary and benefits may be paid in lieu of notice. In cases where a contract is terminated other than on the terms of the service
contract, the Company will seek to mitigate any damages payable.
There will be no compensation for normal resignation or in the event of termination by the Company due to misconduct.
Annual bonus
If the individual is a good leaver, any bonus will be paid/awarded on a pro-rata basis in respect of the period from the start of the
financial year.
Deferred share awards would normally vest at the normal vesting date (although may vest at the date of cessation).
A good leaver is defined as an individual ceasing employment due to ill-health, disability, redundancy, or retirement or in any
other circumstances which the Committee permits.
A bad leaver is an Executive Director who does not fall within the category of “good leaver” and bad leavers will forfeit any
entitlement to a bonus payment in respect of the current financial year or any completed financial year in respect of which the
bonus has not been paid at the cessation date.
Long term
incentives
(LTIP)
A proportion of the LTIP awards held by good leavers will vest at the Committee’s discretion determined by taking into account
whether, and to what extent, any performance conditions have been satisfied and the length of time the LTIP award has been
held at the date of cessation of employment.
The LTIP awards will not normally vest until the end of the performance period with performance tested at that time, although
exceptionally such awards may, at the discretion of the Committee, vest at cessation of employment.
A good leaver is defined as an individual ceasing employment as a result of ill-health, injury, disability, redundancy, retirement,
or the sale out of the Group of his employing business or any other reason which the Committee in its absolute discretion
permits.
A bad leaver is an Executive Director who does not fall within the category of good leaver, and bad leavers will forfeit any
unvested awards.
Other
The Group may meet relocation and other incidental expenses on termination of employment, the fees of legal or other
professional advisers, outplacement, compensation in respect of statutory rights under relevant employment protection
legislation and accrued but untaken holiday. It may also elect to continue to provide certain benefits rather than making
payment in lieu of the benefit in question.
Statement of consideration of shareholders’ views
The views of our shareholders are very important to the Committee and we actively consulted with our major shareholders and the main representative
bodies to help formulate the proposed new Remuneration Policy.
Any consultations on remuneration with shareholders and representative bodies will usually be led by the Chair of the Remuneration Committee.
The Remuneration Committee also considers shareholder feedback received in relation to the AGM each year at its first meeting following the relevant
AGM. This feedback, as well as any additional feedback received during any other meetings with shareholders throughout the year, is then considered as
part of the Company’s annual review of remuneration policy.
The Remuneration Committee notes that shareholders do not speak with a single voice, but we engage with our largest shareholders to ensure we
understand the range of views which exist on remuneration issues. When any material changes are proposed to the Remuneration Policy, the
Remuneration Committee Chair will consult major shareholders in advance and will offer a meeting to discuss these.
Annual Report and Accounts 2022 Big Yellow Group PLC
104
Governance Report
Remuneration Report (continued)
Shareholder voting
The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against
resolutions in relation to Directors’ remuneration, the reasons for that voting will be sought and any actions in response will be detailed here. There have
been no significant issues raised by shareholders in respect of remuneration in the year.
The table below shows the advisory vote on the 2021 Remuneration Report and the binding vote on the Remuneration Policy at the AGM held on
22 July 2021.
Votes for % Votes Against % Votes withheld
2021 Remuneration Report 139,401,352 93.3% 10,014,714 6.7% 838,691
2021 Remuneration Policy 142,929,739 96.2% 5,673,310 3.8% 1,651,708
Annual report on remuneration
This section of the Remuneration Report contains details of how the Directors’ Remuneration Policy will be implemented for the year ending 31 March
2023 and how it was implemented during the year ended 31 March 2022.
Implementing the Policy for the Year Ending 31 March 2023
Base salary
While the Committee has operated a policy of targeting base salaries “close to (but generally just below) median” for some time, actual salaries have
been set significantly below median levels.
Notwithstanding that Executive Director base salary levels are well below the market level for a FTSE 250 company of Big Yellow’s size and complexity,
salary levels were increased by 4% in line with the general workforce increase from 1 April 2022:
Chief Executive
(Jim Gibson)
Executive
Chairman
(Nicholas Vetch)
Chief Financial
Officer
(John Trotman)
Operations
Director
(Adrian Lee)
From 1 April 2021 £448,800 £382,500 £331,500 £290,700
From 1 April 2022 £466,750 £397,800 £344,750 £302,325
% increase 4% 4% 4% 4%
Pension & benefits
Pension provision for the Executive Directors will continue at 6% of salary, which is in line with the pension offered to the general workforce. Benefit
provision will remain unchanged (private fuel, private medical insurance, permanent health insurance, life assurance and relocation allowances,
where relevant).
Annual bonus
Annual bonus potential will continue to be capped at 150% of salary for the year ending 31 March 2023.
Up to 25% of salary will continue to be aligned to the workforce annual bonus (measured against store performance, through occupancy growth,
store profitability, store audits and customer satisfaction scores). Any bonus earned under this part will be payable in cash, following the year ending
31 March 2023.
The remaining 125% of salary will be measured against financial, operational, real estate and strategic targets measured over the financial year ending
31 March 2023. Any award under this part will be deferred into Big Yellow shares for three years (with vesting subject to continued employment).
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
105
Strategic Report Governance Report
LTIP
The LTIP will continue to operate in its current form following the Policy review, albeit with two changes:
• Subject to shareholder approval, award potential will be increased from 100% to 200% of salary. Reflecting the proposed increase to LTIP quantum,
the performance conditions will be increased at the top end:
− Rather than EPS growth of 8% p.a. as used for the 2021 LTIP awards, EPS growth of 9% p.a. will be required for full vesting of this part of the
awards; and
− Rather than upper quartile relative TSR performance, upper quintile relative TSR performance will be required for full vesting of this part of the
awards.
• ESG related performance metrics will be introduced for 20% of LTIP awards. The remaining 80% of awards will be measured against Earnings Per
Share (EPS) and relative Total Shareholder Return (TSR).
The targets for the 2022 LTIP awards, which will be granted shortly after the 2022 AGM, are as follows:
Weighting
Threshold
(25% of this part of an award vests)
Maximum
(100% of this part of an award vests)
Adjusted EPS 50% 4% p.a. 9% p.a.
Relative TSR 30% Median Upper Quintile
Retro-fitting of solar panels on the Group’s estate 10% Retro-fitting of solar panels
on 30 of the Group’s stores
Retro-fitting of solar panels
on 40 of the Group’s stores
Proportion of Group’s external debt facilities that are green loans 10% 30% of the Group’s total debt
facilities being green loans
50% of the Group’s total debt
facilities being green loans
Shareholding guidelines – in employment
The guideline to build and maintain a holding of at least 200% of salary in shares of the Company will continue to apply and has been met by all of the
current Executive Board Directors. Where an Executive Director has not met the 200% of salary ‘in employment’ shareholding guideline, the current
Policy requires at least 50% of the net of tax shares which vest under any discretionary share award to be retained. From the 2022 AGM, rather than 50%,
the Committee will require 100% of the net of tax discretionary share awards which vest to be retained until the shareholding guideline is met.
Shareholding guidelines – post employment
Executive Directors are required to retain shares equal to 100% of the shareholding guideline (or the actual number of shares held against the guideline
if the guideline is not met at cessation) up until the second anniversary of cessation.
Non-Executive Directors
Non-Executive Director base fees for the year ending 31 March 2023 have been increased by 4% (in line with the general workforce increase) to
£44,075. The increment for Committee Chairs and additional responsibilities has also been increased by 4% to £10,933 for the year ending
31 March 2023. These increases took effect from 1 April 2022.
Annual Report and Accounts 2022 Big Yellow Group PLC
106
Governance Report
Remuneration Report (continued)
Single total figure of remuneration (Audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director paid in the year ended 31 March 2022.
Year ended 31 March 2022
Fixed pay
Salary
£
Taxable benefits
1
£
Pensions
2
£
Total fixed pay
£
2022 20 21 2022 2021 2022 2021 2022 2021
Nicholas Vetch 382,500 368,750 5,094 4,930 22,950 36,875 410,544 410,555
Jim Gibson 448,800 430,000 6,526 6,130 26,928 43,000 482,254 479,130
Adrian Lee 290,700 281,250 5,739 5,167 17, 4 42 28,125 313,881 314,542
John Trotman 331,500 318,750 1,913 1,620 19,890 31,875 353,303 352,245
Total 1,453,500 1,398,750 19,272 17, 84 7 8 7, 210 139,875 1,559,982 1,556,472
Variable pay Total pay
Annual bonus – cash
£
Annual bonus – deferred
£
Long term incentives
3
£
Total variable pay
£ £
2022 20 21 2022 2021 2022 2021 2022 2021 2022 2021
Nicholas Vetch 39,398 57, 8 9 4 456,131 437, 891 295,550 301,057 791,079 796,842 1,201,623 1,207,397
Jim Gibson 46,226 67,510 535,194 510,625 316,858 336,225 898,278 914,360 1,380,532 1,393,490
Adrian Lee 29,942 44,156 346,660 333,984 238,445 24 4 ,717 615,047 622,857 928,928 937,399
John Trotman 34,145 50,044 395,314 378,516 228,376 256,432 6 57, 835 684,992 1,011,138 1,037,237
Total 149,711 219,604 1,733,299 1,661,016 1,079,229 1,138,431 2,962,239 3,019,051 4,522,221 4,575,523
1. Taxable benefits comprise medical cover, permanent health insurance, life insurance and private fuel usage.
2. Nicholas Vetch, Jim Gibson and Adrian Lee receive a cash supplement in lieu of their full pension contributions. John Trotman receives a cash supplement in lieu of pension contributions to the extent
that they exceed the prevailing individual allowance.
3. The values shown in long-term incentives in the current year are the LTIP award granted in 2018 which vested on 19 July 2021 to 61.6% of its maximum value and is valued using the share price on that
date of £13.81. The award granted for 2022 is 100% of salary for each Executive Director. For Nicholas Vetch, Jim Gibson and Adrian Lee, the value also includes a gain on Sharesave Scheme awards
which vested on 31 March 2022.
The average salary increase across the Group in the year was 2%.
Cash Annual Bonus Plan awards – cash (25% of salary maximum)
The policy of the Company is that the cash bonus paid to the Executive Board Directors is the same as the average of the bonus awards (as a % of salary)
paid to all the Group’s stores on achieving their targets during the course of the year. It is an important part of the Group’s culture that the Executive
team are rewarded with the same level of annual bonus as the average for all staff.
In respect of the year under review, and in line with the average bonus as a percentage of salary paid across the stores the Executive Board Directors
received a cash bonus of 10.3% of salary (out of a maximum of 25% of salary).
Overview of the staff (and Executive Director) cash bonus scheme
The staff bonus scheme is designed, on a quarterly basis, to reward each store with a bonus of up to 25% of their quarterly salary, made up of the
following four key elements set out below:
Occupancy performance against target
Each store is set a quarterly target for occupancy growth. The weighting of the contribution of these metrics to the bonus varies based on store
occupancy, with higher occupied stores having a lower weighting towards their performance against their occupancy target.
The bonus awarded to each store increases as the store moves further ahead of target. No bonus is awarded if the store fails to meet its target. The
individual store targets have not been disclosed as it would be impractical and commercially sensitive to disclose the targets for every one of our stores
in this report.
However following feedback received from our shareholders on previous remuneration reports to increase the disclosure around the annual bonus, we
have shown the average annual distribution of performance against target for each of the bonus measures across our stores and the corresponding
average pay-out as a percentage of salary which directly corresponds to the bonus percentage pay-out for the Executive Board Directors.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
107
Strategic Report Governance Report
The average performance against the four key targets and the associated reward for the stores were as follows:
1. Occupancy
Performance against target Below target
0 to 10% ahead
of target
10 to 20% ahead
of target
20 to 30% ahead
of target
30 to 40% ahead
of target
> 40% ahead
of target Total
No of stores 66 4 2 3 3 27 105
Average bonus paid 0.0% 0.6% 1.6% 2.9% 3.0% 6.1% 1.8%
Additionally, stores averaging above certain levels of occupancy throughout the year received additional bonus, which amounted to 0.7% of salary.
The weighted average bonus paid to stores for performance against occupancy targets is therefore 2.5% of salary for the year.
2. Profitability
Each store is set a quarterly target for profitability. The weighting of the contribution of these metrics to the bonus varies based on store occupancy,
with higher occupied stores having a higher weighting towards their performance against their profitability target.
The bonus awarded to each store increases as the store moves further ahead of target. No bonus is awarded if the store fails to meet its target.
The performance distribution of the store’s performance against their individual targets are provided below.
Performance against target Below target
0 to 1% ahead
of target
1 to 2% ahead
of target
2 to 3% ahead
of target
>3% ahead
of target Total
No of stores 43 18 17 11 16 105
Average bonus paid 0.3% 3.3% 7. 7% 12.5% 12.7% 5.1%
The weighted average bonus paid to stores for performance against profitability targets is therefore 5.1% of salary for the year.
3. Store audits
Stores receive a bonus if they receive a certain audit score based on visits carried out by the Group’s store compliance team. There were 53 instances of
stores receiving an audit bonus score across the year, leading to a weighted average bonus paid to the stores of 1.4% of salary.
4. Customer satisfaction
Stores are rewarded based on two elements of customer satisfaction, net promoter scores and individual customer service awards. The awards based
on net promoter scores are summarised in the table below.
NPS score <75 >75 Total
No of stores 35 70 105
Average bonus paid 0% 2% 1.3%
The weighted average bonus paid to stores for performance against net promoter scores is therefore 1.3% of salary for the year.
Summary
The bonus received by the stores against their targets in the year is summarised as follows.
Category
Actual %
weighting for
category
Average % of
salary bonus
paid across
stores
1. Occupancy 2.5% 24.3%
2. Profitability 5.1% 49.5%
3. Store audits 1.4% 13.6%
4. Customer satisfaction 1.3% 12.6%
Total 10.3% 100%
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108
Governance Report
Remuneration Report (continued)
In line with the Remuneration Policy an award of 10.3% of salary has therefore also been paid to the Executive Board Directors for the year, which
equated to the following payments:
Nicholas Vetch £39,398
Jim Gibson £46,226
Adrian Lee £29,942
John Trotman £34,145
Deferred Annual Bonus Plan awards – deferred shares (125% of salary maximum)
This is the fourth year of operation of the Group’s deferred annual bonus plan. The Remuneration Committee sets targets at the start of the financial year
across a broad range of financial and non-financial targets. Targets are either on a sliding scale or binary. The targets and the performance against them
in the year is shown in the table below:
Sliding scale targets (50% weighting):
Pay-out 0% 100% Performance Pay-out
1. Revenue
Weight: 22.5% <£157.0m >£162.0m The Group’s revenue for the year was £171.3 million. 100%
2. Adjusted Earnings per share
Weight: 22.5% <46.0p >49.0p The Group’s adjusted earnings per share for the year was 52.5p. 100%
3. Staff Turnover
Weight: 5% >35 <28 The Group’s staff turnover for the year was 34.2%. 11.4%
Binary targets (25% weighting):
Pay-out
Fail Pass
Actual performance Pay-out0% 100%
4. Property Acquisitions
Weight: 10% Seek to acquire at least two sites for new stores in the year, which
complement the existing portfolio and which are consistent with
the Group’s strategy and long-term plans.
The Group acquired two high quality
London sites during the year in
Kentish Town and West Kensington.
100%
5. Planning
Weight: 10% Obtain planning consent on at least two of the Group’s development
sites during the year, consistent with the strategy to continue to
add high quality capacity to the Group’s existing open store portfolio.
The Group obtained planning on two
development sites during the year at
Slough and Newcastle.
100%
6. Net Promoter Score
Weight: 5% Based on move-ins and move-outs. Achieve an NPS score of 75,
which represents exceptional levels of customer service.
The Group’s net promoter score for
move-ins and move-outs during the
year was 78.9.
100%
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
109
Strategic Report Governance Report
ESG targets (25% weighting):
Pay-out
Fail Pass
Actual performance Pay-out
0% 100%
7. Battery pilot
Weight: 10% Invest in a pilot project to assess the feasibility of battery
technology in at least one solar store by the end of the
financial year.
Battery project installed at Guildford
Central and commercial
arrangement for management and
monitoring of battery by Drax Power
in place.
100%
8. Solar panel retro-fit
Weight: 5% Retro-fit or upgrade solar PV systems during the year,
pay-out as follows:
• 2.5% for 8 stores upgraded or retro-fitted
• 3.75% for 9 stores
• 5% for 10 stores
We had committed to retrofit 12
stores with solar PV installations; but
work was halted when we became
aware of potential human rights
issues in our supply chain. We have
since identified and engaged with an
alternative supplier of solar panels
and expect to complete the
installation of these 12 stores by
September 22. We used the holding
time to complete the roof
preparation works necessary to our
stores for the solar panel
installations; these works are all
completed. We aim to complete
36 stores by end of 23/24.
Please see
below.
9. Gas boiler replacement
Weight: 5% Replace at least one gas boiler installation with electric alternative. Four gas boilers replaced with
electric boilers in 21/22; a further
five scheduled for 22/23.
100%
10. BREEAM ratings
Weight: 5% To build all stores to an equivalent standard of BREEAM “Very Good”
or better; and to certify a store with BREEAM where required to
do so by the planning authorities.
Hove, Hayes, and Uxbridge all
achieved “Excellent” standard. From
Slough Bath Road onwards all stores
will be built to BREEAM Very Good
standard and certified.
100%
11. Science-based targets
Weight: 5% To prepare the Big Yellow & Armadillo portfolios for SBTi analysis
as soon as the data can be assembled.
Science-based target set and
published this year. Submission
to SBTi will be in July 2022 using
Year End data.
100%
Solar panel retro-fit
The Board made an ethical decision to delay the installation of solar panels in its stores once it discovered a human rights issue in the supply chain
of the solar panel manufacturing. The project is still being delivered, but with a new supplier, and the panels will be installed by September 2022. In light
of the Board’s decision, which the Committee fully supported, the Committee has decided to remove this target for the year, and re-weight the vesting
for the other targets out of 95%.
Annual Report and Accounts 2022 Big Yellow Group PLC
110
Governance Report
Remuneration Report (continued)
Summary table
The performance against each target, and its contribution to the deferred bonus payable is summarised in the table below:
Target % achieved Weighting
Contribution to
plan vesting (%)
Revenue
100% 22.5% 22.5%
Earnings per share
100% 22.5% 22.5%
Staff turnover
11.4% 5% 0.6%
Property acquisitions
100% 10% 10%
Planning
100% 10% 10%
Net promoter score
100% 5% 5%
Battery pilot
100% 5% 5%
Solar panel fit-out
n/a n/a n/a
Gas boiler replacement
100% 5% 5%
BREEAM ratings
100% 5% 5%
Science-based targets
100% 5% 5%
Total
95% 90.6%
The above performance assessment of 90.6% against 95% weighting translates into a 95.4% award, of the 125% maximum potential. In addition to
performance against the targets detailed above, the Committee has also reviewed the stakeholder experience and health and safety performance in
respect of the year ended 31 March 2022. Based on this review, the Committee considers the 95.4% of maximum award level to be appropriate.
The value of award for each of the Executive Board Directors is shown below:
Director Value of award
Nicholas Vetch £456,131
Jim Gibson £535,194
Adrian Lee £346,660
John Trotman £395,314
The number of shares will be calculated by reference to the closing share price on the date of grant, which will be after the Company’s Preliminary
Announcement in May 2022. The awards will vest three years after the date of grant of each award.
Long Term Incentive Plan (“LTIP”) awards (Audited)
The awards granted under the LTIP are subject to performance conditions to be met over a performance period of three years. There is no retesting of
performance conditions and, if they are not satisfied, the awards will lapse.
The performance conditions applicable to the LTIP which vested in the year, which relate to EPS and TSR, are set out below. The Committee assessed the
extent to which the EPS and TSR performance condition has been satisfied for the 2018 award which vested in 2021, with the following results:
Condition Weighting
Threshold Performance
required
Maximum Performance
Required
LTIP value for meeting
threshold and maximum
performance (% salary) Performance achieved Vesting %
Adjusted eps growth 70% Adjusted EPS growth
of RPI + 3% per annum
Adjusted EPS growth
of RPI + 8% per annum
25% to 100% 6.8% adjusted EPS growth, compared to 5.45%
(RPI +3%), and 10.45% (RPI plus 8%). Adjusted
EPS has been normalised for the impact of the
placings in September 2018 and April 2020.
45.2%
Relative TSR 30% Median of comparator
group of real estate
companies
Upper quartile of the
comparator group
25% to 100% 5 out of 43 in comparator group of companies
in the FTSE Real Estate Index
100%
Total 100% 61.6%
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
111
Strategic Report Governance Report
The vesting of the 2018 LTIP award in 2021, equated to the following value for the Executive Board Directors based on the share price at the date of vesting:
Director
Shares
Awarded
Shares Vested
(based on
61.6% vesting)
Value at
Vesting
Nicholas Vetch 32,525 20,035 £276,683
Jim Gibson 36,138 22,261 £307,424
Adrian Lee 25,813 15,900 £219,579
John Trotman 26,846 16,537 £228,376
LTIP awards granted in year ended 31 March 2022 (Audited)
The table below sets out the details of the long-term incentive awards granted in the year ended 31 March 2022 where vesting will be determined
according to the achievement of performance conditions that will be tested in future reporting periods.
Director Award Type
Awards as a
% of salary
Face value
of award
1
Percentage of award
vesting at threshold
performance
Maximum percentage
of face value that
could vest
Performance
Period end date
Performance
conditions
Nicholas Vetch
Annual cycle of
awards over nil
cost options
100% of salary
£382,500
25% 100% 22 July 2024
Adjusted EPS growth
and relative TSR
Jim Gibson £448,800
Adrian Lee £290,700
John Trotman £331,500
1. The face value of the award is calculated using the average share price three days prior to the grant date of 22 July 2021 (average share price of £13.85).
The performance conditions applicable to the awards granted in July 2021 are set out below:
Condition Weighting
Threshold Performance
required
Maximum Performance
Required
LTIP value for meeting
threshold and max
performance (% salary) Basis for measurement
Relative TSR 50% Median of comparator
group of real estate
companies
Upper quartile of the
comparator group
25% to 100% The average of the Group’s closing mid-market share price over the
three months preceding the start of the performance period and
preceding the end of the performance period will be used, including
dividends re-invested.
Adjusted EPS 50% Adjusted average
annual compound EPS
growth of 4%
Adjusted average
annual compound EPS
growth of 8%
25% to 100% The adjusted EPS figure reported in the audited results of the Group
for the last complete financial year ending before the start of the
performance period and the last complete financial year ending
before the end of the performance period will be used.
Whilst the Committee originally intended to have a proportion of the award vesting based on ESG, this has been delayed until 2022 to ensure targets are
appropriately robust.
Sharesave Scheme
The Group’s Sharesave Scheme is open to all UK employees (including Executive Board Directors) with a minimum of six months’ service and meets UK
HMRC requirements, thus giving all eligible employees the opportunity to acquire shares in the Company in a tax efficient manner. All of the Executive
Board Directors participated in the scheme during the financial year. The details of the Sharesave scheme options are shown on page 175.
Pension entitlements
The Company pays pension contributions into the Executive Board Directors’ personal pension plans or makes a cash contribution in lieu of pension
contributions. They do not participate in any defined benefit scheme. For the year ended 31 March 2022, the Company contribution was 6% of salary
for the Executive Board Directors, in line with the contribution for the Company’s employees.
Payments to past Directors (Audited)
No payments of money or any other assets were made to any former Director of the Company in the financial year ended 31 March 2022
(2021: no payments).
Annual Report and Accounts 2022 Big Yellow Group PLC
112
Governance Report
Remuneration Report (continued)
Payments on loss of office (Audited)
No payments were made to any Director in respect of loss of office during the financial year ended 31 March 2022 (2021: no payments).
Non-Executive Directors (Audited)
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director paid in the year ended 31 March 2022.
2022
£
2021
£
Richard Cotton
64,210 59,129
Georgina Harvey
1
– 17, 9 6 8
Julia Hailes
2
– 54,282
Steve Johnson
1
– 14,452
Anna Keay
53,705 52,263
Vince Niblett
53,705 52,263
Michael O’Donnell
5
25,200 –
Laela Pakpour Tabrizi
3
50,486 31,763
Heather Savory
4
53,705 4,388
Total
301,011 286,508
1. until retirement from the Board on 5 August 2020
2. until stepping down from the Board on 14 January 2021
3. from appointment on 1 July 2020
4. from appointment on 1 March 2021
5. from appointment on 1 September 2021
Non-Executive Directors received no taxable benefits for the year ended 31 March 2022.
Statement of Directors’ shareholding (Audited)
The Executive Board Directors are required to build and maintain a holding of two times base salary. These requirements have been met by all Executive
Board Directors throughout the year. Non-Executive Directors are not subject to a shareholding requirement. Details of the Directors’ interests in shares
are set out below (all interests are beneficial interests).
The table below shows, in relation to each Director, the total number of shares and share options in which they have an interest at 31 March 2022:
Executive Director
Share
ownership
requirement
(multiple of
salary)
Share
ownership
requirements
met
Holding as
multiple of
March 2022
salary
Beneficially
owned shares
LTIP awards
subject to
performance
conditions
Deferred
bonus plan
awards
Unexercised
LTIP options
Unexercised
Sharesave
options
Options
exercised in the
financial year
Nicholas Vetch 2x Yes 250x 6,229,004 98,468 82,826 20,035 2,400 29,749
Jim Gibson 2x Yes 60x 1,766,271 114,502 94,425 22,261 2,196 1,332
Adrian Lee 2x Yes 46x 874,735 75,223 64,297 15,900 2,400 –
John Trotman 2x Yes 11x 238,788 85,016 70,254 16,537 1,992 2,665
Non-Executive Directors’ shareholdings (Audited)
Non-Executive
Beneficially
owned shares
Richard Cotton 96,317
Michael O’Donnell 4,000
Vince Niblett 3,000
Anna Keay –
Laela Pakpour Tabrizi –
Heather Savory –
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
113
Strategic Report Governance Report
Directors’ share awards (Audited)
To provide further context on the shareholding of the Executive Board Directors, options in respect of ordinary shares for Directors who served in the
year are as below:
Name
Date option
granted Scheme
No. of shares
under option
at 31 March
2021
Granted
during
the year
Exercised
during
the year
Lapsed
during
the year
No. of shares
under option
at 31 March
2022
Exercise
price
Market
price at
date of
exercise
Date from
which first
exercisable Expiry Date
Nicholas Vetch 3 August 2017 LTIP 29,749 – (29,749) – – nil p 1493p 3 August 2020 2 August 2027
19 July 2018 LTIP 32,525 – – (12,490) 20,035 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 2,400 – – – 2,400 749.9p – 1 April 2022 1 October 2022
23 May 2019 DBP 30,519 – – – 30,519 nil p – 23 May 2022 22 May 2029
19 July 2019 LTIP 33,905 – – – 33,905 nil p – 19 July 2022 18 July 2029
15 June 2020 DBP 20,691 – – – 20,691 nil p – 15 June 2023 14 June 2030
5 August 2020 LTIP 36,946 – – – 36,946 nil p – 5 August 2023 4 August 2030
22 July 2021 DBP – 31,616 – – 31,616 nil p – 22 July 2024 21 July 2031
22 July 2021 LTIP – 27, 617 – – 27, 617 nil p – 22 July 2024 21 July 2031
Jim Gibson 12 March 2018 SAYE 1,332 – (1,332) – – 675.4p 1307p 31 March 2021 1 October 2021
19 July 2018 LTIP 36,138 – – (13,877) 22,261 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 1,200 – – – 1,200 749.9p – 1 April 2022 1 October 2022
23 May 2019 DBP 33,910 – – – 33,910 nil p – 23 May 2022 22 May 2029
19 July 2019 LTIP 38,748 – – – 38,748 nil p – 19 July 2022 18 July 2029
15 June 2020 DBP 23,647 – – – 23,647 nil p – 15 June 2023 14 June 2030
5 August 2020 LTIP 43,350 – – – 43,350 nil p – 5 August 2023 4 August 2030
1 March 2021 SAYE 996 – – – 996 903.2p – 1 April 2024 1 October 2024
22 July 2021 DBP – 36,868 – – 36,868 nil p – 22 July 2024 21 July 2031
22 July 2021 LTIP – 32,404 – – 32,404 nil p – 22 July 2024 21 July 2031
Adrian Lee 19 July 2018 LTIP 25,813 – – (9,913) 15,900 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 2,400 – – – 2,400 749.9p – 1 April 2022 1 October 2022
23 May 2019 DBP 24,221 – – – 24,221 nil p – 23 May 2022 22 May 2029
19 July 2019 LTIP 26,155 – – – 26,155 nil p – 19 July 2022 18 July 2029
15 June 2020 DBP 15,962 – – – 15,962 nil p – 15 June 2023 14 June 2030
5 August 2020 LTIP 28,079 – – – 28,079 nil p – 5 August 2023 4 August 2030
22 July 2021 DBP – 24,114 – – 24,114 nil p – 22 July 2024 21 July 2031
22 July 2021 LTIP – 20,989 – – 20,989 nil p – 22 July 2024 21 July 2031
John Trotman 12 March 2018 SAYE 2,665 – (2,665) – – 675.4p 1307p 1 April 2021 1 October 2021
19 July 2018 LTIP 26,846 – – (10,309) 16,537 nil p – 19 July 2021 18 July 2028
23 May 2019 DBP 25,190 – – – 25,190 nil p – 23 May 2022 22 May 2029
19 July 2019 LTIP 29,061 – – – 29,061 nil p – 19 July 2022 18 July 2029
15 June 2020 DBP 17, 73 5 – – – 17, 735 nil p – 15 June 2023 14 June 2030
5 August 2020 LTIP 32,020 – – – 32,020 nil p – 5 August 2023 4 August 2030
1 March 2021 SAYE 1,992 – – – 1,992 903.2p – 1 April 2024 1 October 2024
22 July 2021 DBP – 2 7, 32 9 – – 27, 32 9 nil p – 22 July 2024 21 July 2031
22 July 2021 LTIP – 23,935 – – 23,935 nil p – 22 July 2024 21 July 2031
Annual Report and Accounts 2022 Big Yellow Group PLC
114
Governance Report
Remuneration Report (continued)
Performance and pay
The graph below shows the Group’s performance, measured by TSR, compared with the performance of the FTSE All Share Real Estate Index and the
FTSE All Share Index for the period since flotation. The FTSE All Share Real Estate Index is used for the assessment of the Company’s LTIP.
FTSE All Share Index
Big Yellow Group
FTSE 350 Real Estate Index
Source: Datastream
at 31 March 2022
2,401.0%
(15.8% p.a.)
197.6%
(5.1% p.a.)
276.9%
(6.2% p.a.)
0
500
1,000
1,500
3,000
2,000
2,500
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 20222020
CEO Remuneration
The table below sets out the details of remuneration of the CEO over the past ten financial years.
Year
CEO single figure of
total remuneration
(£)
Annual bonus (cash)
pay-out % against maximum of
25% of salary
Annual bonus (deferred)
pay-out % against maximum of
125% of salary
Long term incentive
weighted average vesting rates against
maximum opportunity
%
2022 1,380,532 41.2% (10.3% of salary) 95.4% (119.25% of salary) 61.6%
2021 1,393,490 62.8% (15.7% of salary) 95% (118.75% of salary) 83.6%
2020 1,136,633 37.2% (9.3% of salary) 47.5% (59.4% of salary) 100%
2019 1,182,482 40.8% (10.2% of salary) 81.875% (102.3% of salary) 100%
2018 2,178,066 51.6% (12.9% of salary) n/a 95%
2017 850,619 40% (10% of salary) n/a 100%
2016 988,811 48% (12% of salary) n/a 100%
2015 1,756,290 50% (12.5% of salary) n/a 98%
2014 536,262 40% (10% of salary) n/a 53%
2013 335,891 40% (10% of salary) n/a 0%
The single figure of remuneration for 2015 and 2018 are higher than in other years due to the vesting of the three year Long Term Bonus Performance Plan
in those years delivering a reward of £945,750 (97% vesting) and £1,343,995 (93.33% vesting) respectively for the three year period ended in that year.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
115
Strategic Report Governance Report
Percentage change in the Director remuneration
The table below compares the percentage change in each Director’s annual remuneration (i.e. salary/fees, benefits, and annual bonus) with the
remuneration of Big Yellow Group employees.
% Change from 2019/2020 to 2020/2021 % Change from 2020/2021 to 2021/2022
Salary/Fee Benefits Bonus Salary/Fee Benefits Bonus
Nicholas Vetch 5% (13%) 78% 4% 3% (30%)
Jim Gibson 8% 9% 81% 4% 6% (30%)
Adrian Lee 4% 9% 76% 3% 11% (30%)
John Trotman 6% (26%) 79% 4% 18% (30%)
Richard Cotton 16% n/a n/a 3% n/a n/a
Anna Keay 2% n/a n/a 3% n/a n/a
Vince Niblett 2% n/a n/a 3% n/a n/a
Michael O’Donnell n/a n/a n/a n/a n/a n/a
Laela Pakpour Tabrizi n/a n/a n/a 3% n/a n/a
Heather Savory n/a n/a n/a 3% n/a n/a
Average employees 3% 2% 74% 2% 2% (29%)
Where a Director has not served on the Board for the full financial year, “n/a” is shown in the salary/fee column of the above table.
CEO pay ratio
The data shows how the CEO’s single figure remuneration for the year ended 31 March 2022 (as taken from the single figure remuneration table)
compares to equivalent single figure remuneration for full-time equivalent UK employees, on a Group basis, ranked at the 25th, 50th and 75th percentile.
Year Method
25th percentile
pay ratio Median pay ratio
75th percentile
pay ratio
2022 Option A 46 to 1 40 to 1 28 to 1
2021 Option A 58 to 1 47 to 1 30 to 1
No components of pay and benefits have been omitted for the purpose of the above calculations. Option A was selected given that this method
of calculation was considered to be the robust approach in respect of gathering the required data. The underlying quartiles for salary and total
remuneration numbers for full-time equivalent UK employees are set out below.
Year
Salary Total pay and benefits
25th %tile Median 75th %tile 25th %tile Median 75th %tile
2022 £23,535 £27,286 £38,098 £23,535 £27,286 £38,098
2021 £20,862 £24,190 £34,008 £24,109 £29,406 £46,162
Statement of consideration of employment conditions elsewhere in the Group
The Committee reviews the reward and retention of the whole employee population periodically throughout the year to ensure that it can attract and
retain top talent. Consideration is given to the general basic salary increase, remuneration arrangements and employment conditions. Furthermore,
the annual cash bonus awarded to Executive Board Directors is directly linked to the bonuses awarded to all staff.
The Directors are invited to be present at this review of the proposals for salary increase for the employee population generally and on any other
changes to remuneration policy within the Company. The information presented at this review is taken into consideration when setting the pay levels
of the executive population. Additionally, the Committee has guidelines for the grant of all LTIP awards across the Company and responsibility for
approving the total annual bonus cost of the Company.
The Company did not invite employees to comment on the remuneration of Directors during the year and has not engaged with the workforce to explain
how executive remuneration aligns with the wider company pay policy which does not comply with the relevant sections of Provisions 40 and 41 of the
Code. However, when considering remuneration levels to apply, the Committee takes into account base pay increases, bonus payments and share
awards made to the Company’s employees generally. From next year the Company to intends to communicate in line with these Provisions through the
Workforce Engagement Director.
Annual Report and Accounts 2022 Big Yellow Group PLC
116
Governance Report
Remuneration Report (continued)
Relative importance of spend on pay
The graph below sets out the relative importance of spend on pay in the year ended 31 March 2022 and 31 March 2021 compared with other
disbursements from profit, being the distributions to shareholders and retained earnings (comprehensive gain for the year less dividends).
700,000
£000s
300,000
400,000
500,000
600,000
200,000
100,000
0
Total employee
pay (including
Directors)
Profit distributed
by way of
dividend
Retained
earnings
+17%
+17%
+205%
2021
2022
Gender and ethnicity pay
The Group has reported on its gender pay gap for April 2021. The full report can be found on our investor relations website http://corporate.bigyellow.
co.uk/investors.aspx. The Group’s mean gender pay gap was 25% (2020: 26%), with a median gap of 7% (2020: 10%). Excluding Executive Board Directors
(three of whom were founders of the business), the mean gender pay gap falls to 9% (2020: 10%) with a median gap of 5% (2020: 8%). All staff are paid
equally according to job role.
It is pleasing to see that our Mean Gender Pay Gap has decreased to 25% from 26% in April 2020. This reduction from 26% was due to increase in female
representation in the Upper Quartile from 25% in April 2020 to 27% in April 2021.
The Group has also analysed its ethnicity pay for April 2021. The Group’s mean ethnicity pay gap was 1% (2020: 6%), with a median gap of 4% (2020: 9%).
All staff are paid equally according to job role.
We believe that diversity and inclusion are key to a successful and sustainable business, and we are committed to creating a culture where all team
members can be themselves, feel empowered to succeed and deliver a customer experience that is second to none. We encourage and enable all
employees, regardless of their gender, race, background, or any other characteristics, to reach their full potential as we believe that having a diverse
workforce with fair representation is strategically important and generates value to our stakeholders.
Over the past 12 months we have continued our focus on diversity and inclusion across the business and our key achievements during this period are
outlined below:
Policy and Strategy
• We have continued the work of our Inclusivity and Diversity Committee, changing the scope and constitution of the committee to ensure that all
protected characteristics are fully represented
• The work of the Diversity and Inclusivity Committee has been better communicated across the business via our Intranet and through our quarterly
CSR newsletter
• Our Equal Opportunities Policy was updated with a new Inclusivity, Diversity and Equality Policy which reflects our current Inclusivity and Diversity
practices, the work of the Inclusivity and Diversity Committee and manager and team member responsibilities
• The introduction of a Working from Home Policy within our head office has enabled all team members to achieve a better work life balance
• A Menopause Policy was introduced to increase awareness of the menopause across the business, including clarification of individual
responsibilities and the support that is offered by the Company
• We have held regular meetings between line managers and the People, Talent and Development Team to review Inclusion and Diversity and identify
on going opportunities for improvement across the different areas of the business
• The questions that we used on our Employee Engagement Survey were updated to ensure that we received feedback on inclusivity and diversity
within the business. The overall result from our survey for 2021 was a very high score of 90% of team members scoring positively in this area.
Financial Statements
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Strategic Report Governance Report
Recruitment / Talent
• We appointed two dedicated recruitment consultancies who specifically represent female applicants and diverse minority groups and successfully
recruited two females into senior management / management positions, replacing male leavers
• Our job advertisements, benefits and working practices were reviewed so that they have a greater appeal to female applicants, based upon
feedback from new team members
• We focussed on attracting more female candidates through developing the careers pages on our Company website, including adding additional
career reviews to help promote diversity and inclusion
• Alongside our marketing agency, we reviewed and amended all of our external job advertisements to remove any gender bias
• The proportion of our female Store Managers continues to increase steadily from 33% in March 2021 to 34% in March 2022
• Female representation within our senior leadership team has increased from 38% in March 2021 to 46% in March 2022.
Learning and Development
• Diversity and Inclusivity Training was provided for all management employees virtually, with the training being recorded and made available via our
learning and development platform for non-management and new team members
• e-learning opportunities were further increased to include video e-learning relating to wellbeing for parents and women in leadership
• Our investments in e-learning have resulted in 25% more females in stores taking up this training than males (20% more in 2020) and 47% more
females in head office taking up this training than males (15% more in 2020)
• We have continued to encourage more women to take part in our management development programmes with 25% of Store Manager delegates
currently female (12.5% for the 2019 graduation) and 50% of Assistant Manager delegates currently female (31% for the 2021 graduation)
• Our Inclusivity and Diversity Survey reported that 86% of team members felt that they are encouraged to participate in learning and development
opportunities to assist their progression (84% in 2019) of which 91% of females (91% in 2019) and 92% of males (87% in 2019) gave a positive score
• The number of females promoted internally has increased to 49% in 2022 (39% in 2021).
Whilst our Gender Pay Gap is reducing on a gradual basis and we will continue to work to reduce it further, we recognise that it would be unrealistic to
close this gap quickly, given that all four of the Executive Directors are male and three of them were founders of the business more than 20 years ago.
We have however, made significant progress in relation to inclusion and diversity initiatives over the last 12 months and will continue to challenge our
thinking around how we recruit new skills and manage and develop existing talent going forward.
In addition to the initiatives that we already have in place, we will also be considering the following:
• Working with a newly formed diversity recruitment team via one of our preferred suppliers to see how they may be able to assist us in developing
our brand to better recognise us as an employer of different diverse groups, as well as advising on how we can further the work of our Inclusivity
and Diversity Committee
• Continuing to appeal to all diverse groups including female applicants, thorough targeted advertisements, social media posts and producing a new
recruitment video
• Increasing lines of communication through a new on boarding process, via live chat, with the aim of encouraging applicants from less represented
groups to make more informal contact with us. We hope that this will then provide us with the opportunity to increase applications from these groups
• Two members of the People team will be training as Menopause Champions to further support team members within the business who are
experiencing the menopause.
Advisers to the Remuneration Committee
In undertaking its responsibilities, the Committee seeks independent external advice as necessary. FIT Remuneration Consultants LLP have been
advisers to the Committee since 2017. The Committee is comfortable that the FIT team provides independent remuneration advice to the Committee
and does not have any other connections with Big Yellow that may impair their independence. FIT is a founding member and signatory of the Code
of Conduct for Remuneration Consultants, details of which can be found at www.remunerationconsultantsgroup.com.
During the year, FIT provided independent advice on a wide range of remuneration matters including the proposed new Remuneration Policy.
FIT provides no other services to the Company. The fees paid to FIT in respect of work carried out for the year under review were £20,000 (ex VAT).
Approval
This policy report was approved by the Board of Directors on 23 May 2022 and signed on its behalf by
Richard Cotton
Remuneration Committee Chair
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Governance Report
Audit Committee Report
Introduction
The Audit Committee is appointed by the Board from the Non-Executive
Directors of the Company. The Audit Committee’s terms of reference
include all matters indicated by Disclosure and Transparency Rule 7.1, the
UK Corporate Governance Code, and the new FRC ethical standard. The
terms of reference are considered annually by the Audit Committee and
are then referred to the Board for approval. The terms of reference are
available on the Company’s website. https://corporate.bigyellow.co.uk/
investors/corporate-governance
The Audit Committee is responsible for:
• monitoring the integrity of the financial statements of the Group and
any formal announcements relating to the Group’s financial
performance and reviewing significant financial reporting
judgements contained therein;
• reviewing the Group’s internal financial controls and the Group’s
internal control and risk management systems, including
consideration of the need for an internal audit function;
• making recommendations to the Board, for a resolution to be put to
the shareholders for their approval in general meetings, on the
appointment of the external auditor, and the approval of the
remuneration and terms of engagement of the external auditor;
• assessing and challenging estimates and judgements included within
the financial statements;
• reviewing and monitoring the external auditor’s independence and
objectivity and the effectiveness of the audit process, taking into
consideration relevant UK professional and regulatory requirements;
and
• ensuring the external auditor only provides those services permitted
by the Ethical Standard of the FRC.
The Audit Committee is required to report its findings to the Board,
identifying any matters on which it considers that action or improvement
is needed, and make recommendations on the steps to be taken.
This year the Committee has continued to focus on the narrative reporting
and corporate governance disclosures in the Annual Report. The
Committee was asked by the Board to review the statement by the
Directors that the Annual Report presents a fair, balanced, and
understandable view of the Group’s performance, strategy, and business
model. The Committee also reviewed the Group’s going concern and
viability statements.
All Audit Committee members are expected to be financially literate.
Furthermore, the Audit Committee structure requires the inclusion of one
financially qualified member (as recognised by the Consultative
Committee of Accountancy Bodies). Currently Vince Niblett, as a Fellow of
the Institute of Chartered Accountants of England and Wales fulfils this
requirement and Laela Pakpour Tabrizi is an experienced CFO, currently
carrying out that role at OpenClassrooms.
Committee members and attendance
Member
Number
of meetings
attended
Laela Pakpour Tabrizi – Chair
(from 22 July 2021), Member to 22 July 2021
Vince Niblett – Chair (until 22 July 2021),
Member from 22 July 2021
Richard Cotton – Member
Anna Keay – Member
Michael O’Donnell – Member
Heather Savory – Member
attended
absent
not applicable
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
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Strategic Report Governance Report
The Group provides an induction programme for new Audit Committee
members and ongoing training to enable all of the Committee members to
carry out their duties. The induction programme covers the role of the
Audit Committee, its terms of reference and expected time commitment
by members and an overview of the Group’s business, including the main
business and financial dynamics and risks. New Committee members
also meet some of the Group’s staff. Ongoing training includes attendance
at formal conferences, internal company seminars and briefings by
external advisers.
Meetings
The Audit Committee is required to meet three times per year and has an
agenda linked to events in the Group’s financial calendar. The agenda is
predominantly cyclical and is therefore approved by the Audit Committee
Chair on behalf of his fellow members. Each Audit Committee member has
the right to require reports on matters of interest in addition to the
cyclical items.
The Audit Committee invites the Chief Executive, Chief Financial Officer,
Financial Controller, and senior representatives of the external auditor to
attend its meetings in full, although it reserves the right to request any of
these individuals to withdraw. The Committee meets as required with the
external auditor without the Executive Board Directors or senior
management present. Other senior management are invited to present
such reports as are required for the Committee to discharge its duties.
Overview of the actions taken by the Audit Committee
to discharge its duties
Since the beginning of the financial year the Audit Committee has:
• reviewed published financial information including the year end
results, Annual Report, half year results and the Quarterly Trading
Statements, including review of Alternative Performance Measures
used by the Group;
• considered whether the Annual Report provides a fair, balanced, and
understandable view of the Group’s performance, strategy, and
business model;
• assessed and concluded on the Group’s viability statement and the
going concern assessment for the annual and half yearly financial
statements;
• considered the output from the Group-wide process used to identify,
evaluate, and mitigate risks;
• reviewed the effectiveness of the Group’s internal controls and
disclosures made in the annual report and financial statements on
this matter;
• reviewed and agreed the scope of the audit work to be undertaken by
the external auditor;
• agreed the fees to be paid to the external auditor for their audit of the
financial statements and half-yearly report;
• considered and agreed the approach of performing Directors’
valuations of investment properties for the half-year report;
• undertaken an assessment of the qualification, expertise and
resources, and independence of the external auditor and the
effectiveness of the audit process;
• considered the audit partner and audit firm rotation including
meeting and approving the proposed new audit partner for the 2022
audit;
• undertaken an evaluation of the performance of the external auditor
and assessed their effectiveness;
• held discussions with the auditors on key judgements;
• considered the need for an internal audit function;
• considered the FRC ethical standard governing non-audit services
and audit committees;
• reviewed the arrangements for “whistleblowing” by employees to
ensure that there is a consistent policy in the Group to enable
employees to voice concerns particularly in respect of possible
financial reporting improprieties. A whistleblowing policy is included
in the employee handbook and there is an external whistleblowing
monitoring service;
• reviewed the Gray report on reform of the valuation industry, and
subsequently recommended rotation of the Group’s external valuers;
• overseen the appointment of the Group’s new external valuer;
• met the Group’s external valuers and considered their competence
and independence;
• met the Group’s Store Compliance Manager;
• reviewed the Audit Committee’s Report; and
• reviewed its own effectiveness.
Annual Report and Accounts 2022 Big Yellow Group PLC
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Governance Report
Audit Committee Report (continued)
Financial reporting and significant financial judgements
The Committee reviews all financial information published by the Group in
year end and half-year financial statements, including the presentation
and disclosure of the financial information. It also considers the
appropriateness of the accounting policies adopted by the Group and the
accounting judgements made by management in the preparation of the
financial information.
The Committee has considered whether the Annual Report for the year
ended 31 March 2022 provides a fair, balanced, and understandable view
of the Group’s performance, strategy, and business model and whether
it provides the necessary information to enable shareholders and
prospective shareholders to assess the Group’s performance, strategy,
and business model. The Committee is satisfied that the Annual Report
for the year ended 31 March 2022 provides a fair, balanced, and
understandable view and includes the necessary information as set out
above. The Committee has confirmed this to the Board, whose statement
is included in the Statement of Directors’ Responsibilities on page 128.
The Committee focuses on matters it considers important in their impact
on the reported results of the Group, and on matters where there is a high
degree of complexity and/or judgement.
The key area of judgement that the Committee focuses on at the reporting
date is the valuation of the investment property portfolio. This is carried
out by independent external valuers, but by its nature it is subjective,
with significant judgement applied to the valuation, particularly given the
lack of transactional evidence for prime self storage assets. The Chair of
the Committee met the external valuers to discuss the valuations, review
the key judgements, and discussed whether there were any
disagreements with management. This year the Committee reviewed and
challenged the valuers on the cap rates, rental growth assumptions and
stabilised occupancy levels, to agree on the appropriateness of the
assumptions adopted. The Committee also challenged the valuers and
satisfied itself on their independence, their quality control processes
(including peer partner review) and qualifications to carry out the
valuations. Management also have processes in place to review the
external valuations. In addition, the external auditors use valuation
specialists to review the valuations and report their findings and
conclusions to the Audit Committee.
The Committee has also considered a number of other judgements made
by management in the preparation of the financial statements, notably in
respect of the accounting for the acquisition of the remaining interest in
Armadillo during the year. The Committee reviewed the accounting for the
acquisition, in particular reviewing the judgements made on the fair value
accounting of the balance sheet at the acquisition date in accordance
with IFRS 3. The Committee was satisfied that the adjustments made
reflected the appropriate fair value.
The Committee has concluded that there are not significant levels
of judgements involved, other than the valuation and acquisition
described above.
There has been no change to the other key judgement included in the
financial statements, which is that the Group’s stores should be
accounted for as Investment Property.
Management have reported to the Audit Committee that they are satisfied
that they are not aware of any material misstatements in the financial
statements. The external auditors confirmed in their report to the Audit
Committee that they had not found any material misstatements during
their audit work.
Based on the above, the Committee concluded that the financial
statements appropriately apply the key estimates and critical
judgements, in respect of the disclosures and the amounts reported.
The Committee also concluded that the annual report and financial
statements, taken as a whole, are fair, balanced, and understandable
and provide the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
External auditor
The Audit Committee is responsible for the development, implementation,
and monitoring of the Group’s policy on external audit. The policy assigns
oversight responsibility for monitoring the independence, objectivity, and
compliance with ethical and regulatory requirements to the Audit
Committee, and day-to-day responsibility to the Chief Financial Officer.
The policy states that the external auditor is jointly responsible to the
Board and the Audit Committee and that the Audit Committee is the
primary contact.
To fulfil its responsibility regarding the independence of the external
auditor, the Audit Committee reviewed:
• the external auditor’s plan for the current year, noting the role of the
senior statutory audit partner, who signs the audit report and who, in
accordance with professional rules, has not held office for more than
five years, and any changes in the key audit staff;
• the arrangements for day-to-day management of the audit
relationship;
• a report from the external auditor describing their arrangements to
identify, report and manage any conflicts of interest; and
• the overall extent of non-audit services provided by the external
auditor, in addition to its case-by-case approval of the position of
non-audit services by the external auditor.
Audit rotation
During 2016 following a robust tender process, the Committee appointed
KPMG LLP as auditors. As part of the tender process, the Committee
reviewed KPMG’s proposals for the audit and determined that they had an
appropriate plan in place to carry out an effective audit. KPMG confirmed
to the Committee that it maintained appropriate internal safeguards to
ensure its independence and objectivity. Anna Jones is the current audit
partner, and this is the first year that she has been the signatory to the
Group’s financial statements.
The Company is in compliance with the requirements of the Statutory
Audit Services for Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee Responsibilities)
Order 2014 and the Code.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
121
Strategic Report Governance Report
Annual auditor assessment
The Audit Committee has adopted a formal framework in its review of the
effectiveness of the external audit process and audit quality which
include the following areas:
• the arrangements for ensuring the external auditor’s independence
and objectivity;
• the senior statutory auditor and the audit team;
• the external auditor’s fulfilment of the agreed audit plan and
variations from the plan;
• the quality of the formal audit report to shareholders;
• the effectiveness of the external audit process, taking into
consideration relevant UK professional and regulatory requirements;
• the robustness and perceptiveness of the auditor in his handling of
the key accounting and audit judgements; and
• the content of the external auditor’s comments on control
improvement recommendations.
Regard is paid to the nature of, and remuneration received, for other
services provided by KPMG LLP to the Group and, inter alia, confirmation
is sought from them that the fee payable for the annual audit is adequate
to enable them to perform their obligations in accordance with the scope
of the audit. The only non-audit service provided is the auditors’ review of
the half year report.
Non-audit work
The Group’s policy on external audit sets out the categories of non-audit
services which the external auditor will and will not be allowed to provide
to the Group, including those that are pre-approved by the Audit
Committee and those which require specific approval before they are
contracted for, subject to de minimis levels. The Group’s non-audit policy
reflects the Ethical Standard on Non-Audit Services which came into
effect on 15 March 2020. The Committee’s policy is that the auditors will
not be asked to carry out non-audit work with the exception of the half
year review and regulatory and bank required reporting.
More generally, the auditors may not provide a service which places
them in a position where they may be required to audit their own work.
Specifically, they are precluded from providing services relating to
bookkeeping, financial information system design and implementation,
appraisal or evaluation services, actuarial services, any management
functions, taxation advisory services, investment banking services,
legal services unrelated to the audit or advocacy services.
In respect of the year ended 31 March 2022, the auditor’s remuneration
comprised £415,000 for audit work and £60,000 for other work, solely
relating to the interim review. Over a three year rolling period, the level of
non-audit fees is below the audit fee, with non-audit fees representing
10% of audit fees in 2021 and 14% in 2020.
Risk management and internal control
The Committee and the Board reviewed the internal control processes of
the business and the Group’s risk register during the year. The risks and
uncertainties facing the Group, and its internal control processes are
considered in the Strategic Report on page 46.
Internal audit
The Committee has considered the Board’s view that, given the relatively
straightforward nature of the Group’s business and the control
environment in place, no formal internal audit function is required. The
Group has a store compliance team, which effectively carries out an
internal audit role for the Group’s stores, visiting each store twice a year.
This provides the Committee comfort over the store related aspects of the
Group’s business. The Committee meets with the Store Compliance
Manager as required, and at least once a year.
Additionally, on a regular cycle, the Board appoints external consultants
to assess specific business areas of risk and provide a report to the Board
and the Committee on this area. The cycles covered by this activity
include construction expenditure, treasury, taxation, and facilities
management. This gives the Committee comfort over the controls over
key business cycles within the Company.
With the combination of the store internal audit and the external
assessment of the key business cycles, the Committee considers that
this provides a robust internal audit assessment for the Group.
Overview
As a result of its work during the year, the Audit Committee has concluded
that it has acted in accordance with its terms of reference and has
ensured the independence and objectivity of the external auditor.
The Chair of the Audit Committee will be available at the Annual General
Meeting to answer any questions about the work of the Committee.
Approved by the Audit Committee and signed on its behalf by:
Laela Pakpour Tabrizi
Audit Committee Chair
23 May 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
122
Governance Report
Directors’ Report
The Directors present their annual report on the affairs of the Group, together with the audited financial statements and auditor’s report for the year
ended 31 March 2022. The Report on Corporate Governance on pages 83 to 88 forms part of this report.
Details of significant events since the balance sheet date are included in note 25 to the financial statements. An indication of likely future developments
in the business of the Company is included in the strategic report.
Information about the use of financial instruments by the Company and its subsidiaries is given in note 18 to the financial statements.
Dividends
The Directors are recommending the payment of a final dividend of 21.4 pence per share for the year (2021: 17.0 pence per ordinary share). An interim
dividend of 20.6 pence per share was paid in the year (2021: 17.0 pence per share).
All of the 42.0 pence per share payable for the year is a Property Income Distribution.
Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2022, the final dividend will be paid on 29 July 2022. The Ex-div
date is 7 July 2022 and the Record date is 8 July 2022.
From April 2018 dividend tax credits have been replaced by an annual £2,000 tax-free allowance on dividend income across an individual’s entire share
portfolio. Above this amount, individuals will pay tax on their dividend income at a rate dependent on their income tax bracket and personal
circumstances. The Company will continue to provide registered shareholders with a confirmation of the dividends paid by Big Yellow Group PLC, and
this should be included with any other dividend income received when calculating and reporting total dividend income received. It is the shareholder’s
responsibility to include all dividend income when calculating any tax liability.
SECR and Mandatory GHG Reporting
The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (‘SECR’) came into force on
1 April 2019 and applies to companies with financial years starting on or after 1 April 2019.
The 2018 Regulations define what must be included in the Directors’ Report, namely:
• Annual GHG emissions from activities for which the company is responsible including combustion of fuel and operation of any facility, such as such
as our flexi-office gas heating, air conditioner coolant replacement, one Company van diesel fuel use emissions and fit-out ‘diesel’ use emissions
(assuming qualifying fit-out activities have taken place during the year);
• Annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use, such as electricity for our stores and
fit-out activities;
• Underlying global energy use;
• Previous year’s figures for energy use and GHG;
• At least one intensity ratio;
• Energy efficiency action taken; and
• Methodology used.
We will also continue to report on our Scope 3 emissions: Electricity supplier ‘transmission and distribution’ emissions and ‘employee business travel
(from car mileage claims only). This year for the first time we have included grid bought electricity used and measured by third party telecoms masts.
Consumption is reported bi-annually and deducted from Big Yellow’s Scope 2 data. The standard grid bought electricity conversion factors are applied.
Voluntary GHG emissions, from our waste and water supply chains are assessed as ‘not material’. We will also retain the practice of reporting our
previous few years to show longer term trends.
With the acquisition of the remaining 80% of Armadillo that we did not previously own, we have included the full year data for both Armadillo and Big
Yellow and restated two years’ worth of data for the combined portfolio.
The ‘Market based emission’ reported here reflect the emissions associated with the electricity tariff we have purchased; whereas ‘Location-based
emissions’ are emissions associated with the UK grid and applies the required DEFRA conversion factors. Where we have not indicated market-based or
location-based figures, location-based can be assumed.
Please note, our operations are solely based in the UK, and we therefore will be reporting a single geographical scope – UK and offshore area only.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
123
Strategic Report Governance Report
a) Data
Year ended 31 March
2020 TOTAL
Restated to
include Armadillo
2021 TOTAL
Restated to
include Armadillo 2022 TOTAL
GHG Scope 1 total tonnes CO
2
e Total Scope 1 Emissions (location-based) 248.4 279.8 294.9
GHG Scope 2 total tonnes CO
2
e Total Scope 2 Emissions (location-based) 2,911.5 2,563.8 2,368.3
GHG Scope 2 total tonnes CO
2
e Total Scope 2 Emissions market-based 1,411.1 0.0 0.0
Total GHG Scope 1 & 2
Total tonnes CO
2
e Total Scope 1&2 Emissions (location-based) 3,159.9 2,843.6 2,663.2
Total GHG Scope 1 & 2
Total tonnes CO
2
e Total Scope 1&2 Emissions (market-based) 1,659.5 279.8 294.9
Scope 3
total tonnes CO
2
e Electricity Transmission Losses 251.1 224.0 208.6
Telecoms emissions on our sites 144.0 174. 0 178.1
Employee Business travel 72.3 76.1 92.8
TOTAL Scope 3
total tonnes CO
2
e Electricity Transmission Losses, Telecom emissions,
Employee Bus Travel
4 67. 4 474.1 479.5
tCO
2
e/ revenue (£000s) – location-based Greenhouse Gas (GHG) emissions intensity
from building energy consumption
21. 6 18.6 15.1
tCO
2
e/ revenue (£000s) – market-based Greenhouse Gas (GHG) emissions intensity
from building energy consumption
11.4 1.8 1.7
tCO
2
e/ Occupied space Greenhouse Gas (GHG) emissions intensity from building
energy consumption (Scope 1 and 2 location-based)
7. 3 6.3 5.4
tCO
2
e/ CLA (1,000m
2
) Greenhouse Gas (GHG) emissions intensity from building
energy consumption (Scope 1 and 2 location-based)
6.0 5.1 4.7
Energy data underpinning Scope 1 and 2 emissions data (kWh) not restated 12,777,915.1 12,750,155.2
Notes to the data table: Regarding restating, in addition to restating to include Armadillo data, each year, the last 3 months of our emissions data is
reported using prior year’s conversion factors, due to an emission factor publication lag – we operate on a ‘best available data’ principle and will
therefore restate each year.
Regarding Market based emissions, as of 1 October 2019 we purchase Rego backed 100% renewable energy from Opus Energy, so are able to provide
both location-based and market- based CO
2
e emissions.
The three location-based intensity metrics are calculated from the location-based Scope 1&2 totals. The one market-based intensity metric is
calculated from the market-based Scope 1 & 2 totals.
b) Methodology for Calculating Emissions
Scope 1, Gas
Data collection: Big Yellow and some of our Armadillo gas data is metered and automatically transmitted into our energy and emission reporting
platform, Envizi. Gas for the remaining stores with gas is obtained from supplier invoices and manually uploaded onto Envizi. This process is part of the
assurance work undertaken by SGS. Any gaps are accrued.
Calculations: Our software platform, Envizi, contains our consumption data as well as the current BEIS emission factors. These are used to calculate
emissions automatically when reports are produced. Our annual data straddles two emission factor years; as soon as the latest factors are released,
our partners ensure Envizi contains the most up to date set and this is applied against the relevant data set.
Scope 1, Van
Data collection: our maintenance person records miles driven to service our stores. The data is collected quarterly and sent to our partners for uploading
into Envizi. Envizi commutes the mileage data into emissions.
Calculations: km travelled x emission conversion factor for a diesel average van (up to 3.5 tonnes) in km/kgCO
2
e / 1000 to convert to tCO
2
e.
Scope 1, Fit-out diesel
Data collection: diesel consumption is collected manually by the construction team and reported weekly in the Construction Fit-Out report. The final
report for the financial year is used to assess the overall diesel consumption during the year.
Calculation: the total diesel consumption in litres converted to kWh using the gross CV kWh/litre for Diesel (average biofuel blend) x emission conversion
factor in kWh (Gross CV)/kgCO
2
e for a Diesel (average biofuel blend) / 1000 to convert to tCO
2
e.
Annual Report and Accounts 2022 Big Yellow Group PLC
124
Governance Report
Directors’ Report (continued)
Scope 2, Location-based, electricity
Data collection: Big Yellow and some of our Armadillo electricity data is metered and automatically transmitted into our energy and emission reporting
platform, Envizi. Electricity for the remaining stores is obtained from supplier invoices and manually uploaded onto Envizi. This process is part of the
assurance work undertaken by SGS. Any gaps are accrued.
Calculations: Our software platform, Envizi, contains our consumption data as well as the current DEFRA emission factors. These are used to calculate
emissions automatically when reports are produced. Our annual data straddles two emission factor years; as soon as the latest factors are released,
our partners ensure Envizi contains the most up to date set and this is applied against the relevant data set.
Scope 2, Market-based, electricity
Data collection: the same as for location-based electricity
Calculations: instead of applying the location-based emission factors, we manually set electricity emissions at 0 as we have been purchasing 100%
Rego backed electricity since 1st October 2019. For total Scope 1 & 2 emissions, market-based, we set Scope 2 at 0 and Scope 1 the same as per above.
Scope 3, Electricity Transmission and Distribution losses
Data collection: we use data collected for the location-based grid bought electricity data.
Calculation: the total grid supplied electrical consumption in kWh x T&D emission conversion factor in kWh/kgCO
2
e / 1000 to convert to tCO
2
e.
Scope 3, Telecoms masts
Data collection: we use the data collected by the company who installs and operates 3rd party telecoms masts on 12 of our stores. The consumption for
these masts is reported bi-annually via spreadsheet and manually uploaded into our software platform, Envizi.
Calculations: The standard grid bought electricity conversion factors are applied.
Please note, when the consumption data is uploaded into Envizi it is posted as a negative amount to ensure it is deducted from our own, grid bought
electricity consumption.
Scope 3, Employee business travel
Data collection: we use employee expenses reimbursement data held in our Finance system to calculate miles travelled.
Calculation: using ‘cars (by size) Average car’ conversion factors, we multiply the miles travelled reimbursed with the BEIS/DEFRA factor to arrive at the
emissions, for business travel.
Please note that we produce a yearly Basis of Reporting document which sets out the methodology we use for all of our KPIs, including GHG emissions.
We have included a special section for the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
c) Energy Efficiency Measures
Background
We have a long-standing strategy of pro-actively managing our energy consumption and becoming an ever more efficient business. We have reported
progress over the years both in our Annual Reports as well as our standalone annual CSR Reports, all available online in our Investor and Sustainability
sections respectively.
Between 2012 and 2017 we undertook a company-wide upgrade of our lighting to LED and to install motion sensor controls to ensure lights are only
turned on when customers need them; plus a small amount of permanent emergency lighting was improved to LED.
Although most of that work has been completed, a small number of ‘mop-up’ activities continue to take place, especially where we have not been able to
gain access to customers’ units to execute the changeover.
With the acquisition of the remaining 80% of Armadillo, we have identified several Armadillo stores for upgrading to HH automatic meter reading. This
work has been commissioned during the year and is ongoing.
All other stores’ electricity and gas meters are fitted with HH automatic meter readers; the data is available to us via an externally hosted platform and
used by the internal Environmental Committee (formally the CSR Steering Committee) to review our performance on a quarterly basis.
During the year, we commenced on a programme to remove gas boilers at a number of our Armadillo stores with the aim of decarbonising our business
by 2030.
We also prepared 12 stores for solar panel retrofitting; the actual retro-fit work is due to commence in May 2022 and completed in September 2022.
The three new stores that were opened during the year (Hove, Hayes, and Uxbridge) were all fitted with 50.3kWp solar installations.
Financial Statements
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Strategic Report Governance Report
Most recent ESOS assessment findings & resulting actions
Our ESOS Phase 2 assessment has emphasised the fact that due to the non-complex nature of our stores, we are limited by the amount of energy saving
measures we are able to undertake.
Our independent ESOS assessor’s recommendations therefore focussed on increasing our existing Solar PV estate. This recommendation is in alignment
with our broader Sustainability Strategy.
During the year, we have opened 3 new stores:
• in Old Shoreham Road, Hove, which was fitted out with a 50kWh solar installation;
• in Hayes Road, Hayes, which was fitted out with a 50kWh solar installation; and
• in Oxford Road, Denham, Uxbridge which was fitted out with a 50kWh solar installation.
During the year, we have generated 864,748.4kWh of solar energy (an increase of 27% from the previous year), thereby a) reducing our energy demand
from the grid by the kWh we are using on site and b) increasing the grid’s renewable mix by exporting part of our energy as the size of our solar
installations exceed our demand.
During the year, we have set science-based targets. We aim to have these verified by the SBTi during 2022.
Capital structure
Details of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year are
shown in note 22. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general
meetings of the Company.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles
of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
Details of employee share schemes are set out in note 23, and details of shares held by the Company’s Employee Benefit Trust are set out in note 22.
No person has any special rights of control over the Company’s share capital and all issued shares are fully paid.
With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Corporate Governance Code,
the Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of Directors
are described in the Report on Corporate Governance on page 83.
There are a number of agreements that take effect, alter, or terminate upon a change of control of the Company such as commercial contracts, bank loan
agreements, property lease arrangements and employee share plans. The Directors are not aware of any agreements between the Company and its
Directors or employees that provide for compensation for loss of office or employment that occurs because of a takeover bid.
During the year the Company issued 334,970 shares to satisfy the exercise of share options (2021: 406,900).
Directors
The Directors of the Company who served throughout the year and to the date of approval of the financial statements, except as noted below, were
as follows:
Richard Cotton Non-Executive Director
Jim Gibson Chief Executive Officer
Anna Keay Non-Executive Director
Adrian Lee Operations Director
Vince Niblett Senior Independent Director
Michael O’Donnell Non-Executive Director (appointed 1 September 2021)
Heather Savory Non-Executive Director
Laela Pakpour Tabrizi Non-Executive Director
John Trotman Chief Financial Officer
Nicholas Vetch Executive Chairman
Biographical details of the Executive and Non-Executive Directors standing for re-election are set out on page 80.
Annual Report and Accounts 2022 Big Yellow Group PLC
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Governance Report
Directors’ indemnities
The Company purchases liability insurance covering the Directors and officers of the Company and its subsidiaries.
Political contributions
No political donations were made by the Company in either the current or preceding financial year.
Substantial shareholdings
The Company had been notified, in accordance with Chapter 5 of the Disclosure and Transparency rules, of the following voting rights as a shareholder
of the Company at 31 March 2022 and 23 May 2022.
No. of ordinary
shares
31 March 2022
Percentage of
voting rights
and issued
share capital
31 March 2022
No. of ordinary
shares
23 May 2022
Percentage of
voting rights
and issued
share capital
23 May 2022
BlackRock Inc 17,841,855 9.7% 17, 4 67, 09 6 9.5%
Resolution Capital 8,673,210 4.7% 8,698,670 4.7%
The Vanguard Group Inc 8,582,729 4.7% 8,618,232 4.7%
FMR LLC 7,318,056 4.0% 6,905,938 3.8%
MFS Investment Management 6,462,256 3.5% 6,630,055 3.6%
Jupiter Asset Management Limited 5,653,482 3.1% n/d n/d
n/d – interest not disclosable at the applicable date.
The interest of the Directors in the share capital of the Company is shown on page 112 of the Remuneration Report.
Purchase of own shares
The Company was granted authority at the AGM in 2021 to purchase its own shares up to a total aggregate value of 10% of the issued nominal capital.
That authority expires at this year’s AGM and a resolution will be proposed for its renewal. During the year the Company made no purchases of its
own shares.
Employee consultation
The Group seeks to ensure employee commitment to its objectives in a number of ways. Strategic changes are communicated directly to all staff who
are encouraged to address queries to the Executive Directors. The Directors’ executive meetings are frequently held in stores and in addition Directors
and senior management visit the stores on a regular basis. Furthermore, there are regular team briefings at store level to provide employees with
information about the performance of and initiatives in their store. A wide range of information is also communicated across the Group’s Intranet,
including the e-publication of the Group’s financial results and all press releases, the publication of a quarterly newsletter, and the publication of a
weekly operations bulletin.
As discussed in the Corporate Governance Report, the Board has appointed a designated Non-Executive Director, Anna Keay, to act as the primary
method of workforce engagement for Big Yellow in accordance with the new Corporate Governance Code.
Employees are encouraged to participate in the Group’s performance through Employee Share Schemes and performance related bonuses. 47% of
eligible employees participate in the Group’s Sharesave Scheme.
The Group’s recruitment policy is committed to promote equality, judging neither by race, nationality, religion, age, gender, disability, sexual orientation,
nor political opinion and to treat all stakeholders fairly.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of
members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is
arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to
that of other employees.
Directors’ Report (continued)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
127
Strategic Report Governance Report
Human Rights
Big Yellow respects Human Rights and aims to provide assurance to internal and external stakeholders that we are committed to human rights and the
principles of the Universal Declaration of Human Rights.
We are committed to creating and maintaining a positive and professional work environment that reflects and respects the basic rights of freedom to
lead a dignified life, free from fear or want, and where stakeholders are free to express their independent beliefs. Our employment policies and practices
reflect a culture where decisions are made solely on the basis of individual capability and potential in relation to the needs of the business.
Modern Slavery Act
The Group is committed to ensuring that there is no modern slavery or human trafficking in our supply chains or in any part of our business. Our
Anti-slavery Policy reflects our commitment to acting ethically and with integrity in all our business relationships and to implementing and enforcing
effective systems and controls to ensure slavery and human trafficking is not taking place anywhere in our supply chains. Our policy is published in full
on our website.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company is to be
proposed at the forthcoming Annual General Meeting.
Disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company’s auditor is unaware; and each Director has taken all the steps that he/ she ought to have taken as a Director to make
himself/ herself aware of any relevant audit information and to establish that the Company’s auditors is aware of that information.
This confirmation is given and should be interpreted in accordance with s418 of the Companies Act 2006.
Approved by the Board of Directors and signed on behalf of the Board
Shauna Beavis
Company Secretary
23 May 2022
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Governance Report
Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities in respect
of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report and the
Group and parent Company financial statements in accordance with
applicable law 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
UK-adopted international accounting standards and applicable law and
have elected to prepare the parent Company financial statements in
accordance with UK accounting standards and applicable law, including
FRS 101 Reduced Disclosure Framework.
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
UK-adopted international accounting standards;
• 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.
In accordance with Disclosure Guidance and Transparency Rule 4.1.14R,
the financial statements will form part of the annual financial report
prepared using the single electronic reporting format under the TD ESEF
Regulation. The auditor’s report on these financial statements provides
no assurance over the ESEF format.
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
23 May 2022 and is signed on its behalf by:
Jim Gibson John Trotman
Chief Executive Officer Chief Financial Officer
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
129
Strategic Report Governance Report
Independent Auditor’s Report to the Members
of Big Yellow Group PLC
1. Our opinion is unmodified
We have audited the financial statements of Big Yellow Group PLC
(“the Company”) for the year ended 31 March 2022 which comprise
the Consolidated Statement of Comprehensive Income, Consolidated
Balance Sheet, Consolidated Statement of Changes in Equity,
Consolidated Cash Flow Statement, Company Balance Sheet,
Company Statement of Changes in Equity, and the related notes,
including the accounting policies in note 2 and 29.
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 31 March 2022 and
of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the UK-adopted international accounting
standards;
• the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) “ISAs (UK)” and applicable law. Our responsibilities
are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our
audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on 20 July
2017. The period of total uninterrupted engagement is for the five
financial years ended 31 March 2022. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview
Materiality:
group financial statements
as a whole
£19.8m (2021:£13.6m)
0.74% (2021: 0.74%)
of Total Assets
Coverage 99% (2021: 100%) of Total Assets
Key audit matters vs 2021
Recurring risks Valuation of Investment Property,
including Investment Property
Under Construction
Parent Company: Amounts owed
by Group Undertakings
2. Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit
matters (unchanged from 2021), in decreasing order of audit
significance, in arriving at our audit opinion above, together with our
key audit procedures to address those matters and, as required for
public interest entities, our results from those procedures. These
matters were addressed, and our results are based on procedures
undertaken, in the context of, and solely for the purpose of, our audit
of the financial statements as a whole, and in forming our opinion
thereon, and consequently are incidental to that opinion, and we do
not provide a separate opinion on these matters.
Annual Report and Accounts 2022 Big Yellow Group PLC
130
Governance Report
Risk Our response
Valuation of Investment
Property, including
Investment Property
under Construction
Investment Property
£2,342.2 million; 2021:
£1,622.0m)
Investment Property
Under Construction
£285.4 million; 2021:
£163.5m)
Refer to page 120
(Audit Committee
Report), page 147
(accounting policy)
and pages 162 to 164
(financial disclosures).
Subjective valuation:
Investment property valuation is subjective and
inherently judgmental in nature.
Investment property fair values are calculated
using actual and subjective assumptions inputs
such as store occupancy, future growth in net
rent, discount rates and exit capitalisation rates.
For investment property under construction
additional estimates include expected costs to
complete, allowances for development risk and
the risk of not obtaining planning permission for
non-consented sites.
The Group employs an external valuer to apply
professional judgment concerning market
conditions and factors impacting individual
properties.
The investment market for prime self storage is
subject to market uncertainty due to the low
volume of comparable transactions.
The effect of these matters is that, as part of our
risk assessment, we determined that the
valuation of investment properties including
investment property under construction has a
high degree of estimation uncertainty, with a
potential range of reasonable outcomes greater
than our materiality for the financial statements
as a whole, and possibly many times that amount.
Disclosure quality:
The financial statements (note 15) disclose the
sensitivity estimated by the Group.
The Directors’ assessment of the extent of the
disclosure is based on an evaluation of the
inherent risks to the valuation.
The risk for our audit is whether or not those
disclosures adequately address the uncertainties
within the valuation, and if so, whether those
uncertainties are fundamental to the users’
understanding of the financial statements.
Our procedures included:
• Review of accounting policy application: We assessed whether the
valuation, presentation and disclosure of Investment Properties and
Investment Property under Construction is in accordance with the
Group accounting policy and IAS40 Investment Property.
• Assessing valuer credentials: We assessed the external valuer
qualifications and expertise and read its terms of engagement with
the Group to determine whether there were any matters that might
have affected their independence and objectivity or may have
imposed scope limitations upon their work.
• Methodology choice: We read the external valuation report which
covers 100% of the investment properties and assessed whether
the valuation approach was in accordance with RICS standards and
suitable for use in determining the value for the purpose of the
financial statements.
• Personnel interview: We met with the external valuer, the Group’s
senior Management and the audit committee chair with our own
internal valuation specialists to discuss the valuation process, key
assumption inputs such as occupancy, capital expenditure
forecasts for investment property under construction and discount
rates, and the rationale behind significant or unusual valuation
movements during the year.
• Our sector experience: We used our knowledge of the entity, our
experience of the real estate industry and observed industry norms
when assessing the key assumptions and the significant or unusual
valuation movements and, for investment property under
construction, we considered the judgment made by the Directors
and external valuers for planning risk for non-consented sites.
• Data provided to the valuer: We performed property visits and
tested the current and historical accuracy of information used to
generate key inputs to the valuation such as maximum lettable area,
store occupancy and net rental income by physically inspecting a
sample of storage units and inspecting a sample of customer
storage licence agreements.
• Independent re-performance: Using our own internally produced
model and the external valuer and Directors’ inputs we assessed the
accuracy of the valuation as produced by the external valuer.
• Tests of detail: For investment property under construction we
compared the historical accuracy of Management’s forecast
construction costs to actual spend on similar construction projects
in the past three years. We checked that supporting information for
construction contracts and budgets such as original construction
cost reports, which was also supplied to the valuer, was consistent
with the Group’s records. We assessed whether externally available
pricing and inflation data inclusive of allowance for risk in
development valuations were appropriately factored into the costs
to complete forecast provided to the valuer. We also obtained
evidence that planning permission had been granted for those
development sites for which this was applicable.
Independent Auditor’s Report to the Members
of Big Yellow Group PLC (continued)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
131
Strategic Report Governance Report
Risk Our response
• Assessing transparency: We assessed whether the group’s
disclosures about the sensitivity of the valuation of investment
properties to changes in key assumptions adequately reflected the
related risks.
We performed the detailed tests above rather than seeking to rely on
any of the Group’s controls because our knowledge of the design of
these controls indicated that we would not be able to obtain the required
evidence to support reliance on controls.
Our results
We found the valuation of investment properties, and investment
properties under construction and the disclosure of the associated level
of uncertainty to be acceptable (2021 result: acceptable).
Amounts owed by
Group Undertakings
(Parent Company only)
£764.9 million; 2021:
£533.4m)
Refer to page 148
(accounting policy)
and page 183
(financial disclosures).
Low risk, high value:
The carrying amount of the intra-group debtor
balance represents 96% (2021: 95%) of the
Company’s total assets at 31 March 2022.
Their recoverability is not at a high risk of
significant misstatement or subject to significant
judgment. However, due to their materiality in the
context of the Company financial statements, this
is considered to be the area that had the greatest
effect on our overall parent Company audit.
Our procedures included:
• Test of details: We assessed 100% of Group debtors carrying
amounts to the net assets of the relevant subsidiary included within
their draft balance sheet, to identify whether the net asset values,
being an approximation of the minimum recoverable amount, were
in excess of their carrying amounts, as well as assessing whether
those subsidiary companies have historically been profit-making
• Assessing component audits: We considered the results of the work
performed on the component audits, including assessing the
liquidity of the assets and therefore the ability of the subsidiaries to
fund the repayment of the receivable.
• Assessing expected credit losses: For 100% of the Group debtors
we evaluated the expected credit losses determined by the
directors, in particular the likely risk of default with reference to the
credit worthiness of the counterparty and any recent evidence of
incurred credit losses.
We performed the tests above rather than seeking to rely on any of the
Group’s controls because the nature of the account balance meant that
detailed testing is inherently the most effective means of obtaining
audit evidence.
Our results
We found the Company’s assessment that the carrying amount
of the Group debtor balance is recoverable to be acceptable
(2021: acceptable).
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132
Governance Report
Independent Auditor’s Report to the Members
of Big Yellow Group PLC (continued)
3. Our application of materiality and an overview
of the scope of our audit
Materiality for the Group financial statements as a whole was set at
£19.8m (2021: £13.6m), determined with reference to a benchmark
of total assets (of which it represents 0.74% (2021: 0.74%).
In addition, we applied materiality of £4.4m (2021: £3.4m) to all
balances and classes of transactions impacting adjusted profit
before tax (as reconciled to profit before tax in note 10 of the financial
statements) for which we believe misstatements of lesser amounts
than materiality for the financial statements as a whole could be
reasonably expected to influence the Company’s members’
assessment of the financial performance of the Group.
Materiality for the parent Company financial statements as a whole
was set at £11.9m (2021: £6.1m), determined with reference to a
benchmark of Company total assets, of which it represents 1.5%
(2021: 1.1%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 75% (2021: 75%) of materiality
for the financial statements as a whole, which equates to £14.8m
(2021: £10.2m) for the Group and £8.9m (2021:£4.6m) for the parent
Company. We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £0.99m (2021:
£0.68m), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group’s 30 (2021: 20) reporting components, we subjected 7
(2021: 7) to full scope audits for group purposes and 2 (2021: 0) to
specified risk-focused audit procedures. The latter were not
individually financially significant enough to require a full scope audit
for group purposes, but did present specific individual risks that
needed to be addressed.
The components within the scope of our work accounted for the
percentages illustrated opposite.
The remaining 2% (2021: 0%) of total group revenue, 3% (2021: 0%) of
group profit before tax and 1% (2021: 0%) of total group assets is
represented by 20 (2021: 13) reporting components, none of which
individually represented more than 1% (2021: 0%) of any of total
group revenue, group profit before tax or total group assets. For the
residual components, we performed analysis at an aggregated group
level to re-examine our assessment that there were no significant
risks of material misstatement within these.
The work on all the components, including the audit of the parent
Company, was performed by the Group team.
The Group team used component materialities, which ranged from
£6.9m to £14.85m (2021: £0.9m to £10.9m), having regard to the mix
of size and risk profile of the Group across the components.
The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s internal
control over financial reporting.
£19.8m
Whole financial statements
materiality (2021: £13.6M)
£14.8m
Whole financial statements
performance materiality
(2021: £10.2m)
£14.8m
Range of materiality
at seven components
(£6.9m to £14.85m)
(2021: £0.9m to £10.9m)
£0.99m
Misstatements reported
to the audit committee
(2021: £0.68m)
Total assets
£2,670.4m (2021: £1,842.3m)
Group materiality
£19.8m (2021: £13.6m)
Total assets
Group materiality
Group revenue
100
98
98%
(2021: 100%)
Group profit before tax
100
96
97%
(2021: 100%)
Group total assets
Full scope for group audit purposes 2022
Specified risk-focused audit procedures 2022
Full scope for group audit purposes 2021
Residual components
99
96
99%
(2021: 99%)
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
133
Strategic Report Governance Report
4. The impact of climate change on our audit
In planning our audit, we have considered the potential impact of
risks arising from climate change on the Group’s business and its
financial statements. Further information is provided in the
Group’s strategic report (pages 51 to 54), the corporate social
responsibility report (pages 56 to 74) and the corporate governance
report (pages 78 to 88) which have been incorporated into the
2022 Annual Report.
Climate change risks and opportunities have had a limited impact on
the Group. There is enhanced narrative in the Annual Report on
climate matters.
As part of our audit we performed a risk assessment of the impact of
climate change risk on the Group’s Financial statements and our audit
approach. In doing this we performed the following:
• Understanding management’s processes: we made enquiries to
understand management’s assessment of the potential impact
of climate change risk on the Group’s Annual Report and Financial
statements and the Group’s preparedness for this. As a part of
this we made enquiries to understand management’s risk
assessment process as it relates to possible effects of climate
change on the Annual Report and Financial statements.
• Annual report narrative: We made enquiries of management to
understand the process by which climate related narrative is
developed including the primary sources of data used and the
governance process in place over the narrative. As a part of our
risk assessment, we read the climate related information in the
front half of the Annual Report and considered consistency with
the financial statements and our audit knowledge.
On the basis of the procedures performed above, we concluded that
the risk of climate change was not significant when we considered
the nature of the assets and relevant contractual terms. As a result,
there was no material impact from this on our key audit matters.
5. Going concern
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that this
is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Group’s and Company’s available
financial resources and metrics relevant to debt covenants over
this period were:
• The impact of macro economic trends on customer activity,
particularly customer occupancy rates.
• Increase in SONIA rates, increasing Group interest rates
We considered whether these risks could plausibly affect the liquidity
and covenant compliance in the going concern period by assessing
the directors sensitivities over the level of available financial
resources and covenant thresholds indicated by the Group’s financial
forecasts taking account of severe, but plausible adverse effects that
could arise from these risks individually and collectively.
Our procedures also included:
• Critically assessing assumptions in base case and downside
scenarios relevant to covenant metrics, in particular in relation to
customer performance (namely occupancy rates and net rent
levels) by comparing to historical trends in severe economic
situations and overlaying knowledge of the entity’s trading
performance to date and our knowledge of the entity and the
sector in which it operates.
• We also compared past budgets to actual results to assess the
directors’ track record of budgeting accurately.
• We inspected confirmations from the lender on the level of
committed financing, the associated covenant requirements and
restrictions on the use of funds.
• We have challenged the Directors’ assessment of the refinancing
of loans due for expiry within the going concern period and
considered the liquidity of the Group in a severe but plausible
downside should no new facilities be obtained.
• We inspected the loan agreements in order to confirm the nature
of the associated covenant requirements.
• We considered whether the going concern disclosure in note 2 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the
identified risks, dependencies, and related sensitivities.
• We assessed the completeness of the going concern disclosures.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that
we would expect to obtain audit evidence primarily through the
detailed procedures described.
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134
Governance Report
Independent Auditor’s Report to the Members
of Big Yellow Group PLC (continued)
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group or Company’s ability to continue as
a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to
the directors’ statement in note 2 to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
Company’s use of that basis for the going concern period, and we
found the going concern disclosure in note 2 to be acceptable;
and
• the related statement under the Listing Rules set out on page 50
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
6. Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, and the store
compliance function and inspection of policy documentation as
to the Group’s high-level policies and procedures to prevent and
detect fraud, including the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any actual, suspected
or alleged fraud.
• Inspecting Board and audit committee minutes.
• Considering remuneration incentive schemes and performance
targets for directors and management including the adjusted
EPS target.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, we perform procedures to address
the risk of management override of controls, in particular the risk that
Group management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates and
judgements such as the valuation of investment property and
investment property under construction. On this audit we do not
believe there is a fraud risk related to revenue recognition because
there are limited judgmental aspects to the Group’s low value, high
volume revenue streams.
We also identified a fraud risk related to valuation of investment
property and investment property under Construction in response
to the subjective and inherently judgmental nature of this area.
Further detail in respect of valuation of investment property,
including investment property under construction is set out in the
key audit matter disclosures in section 2 of this report.
We also performed procedures including:
• Identified journal entries to test based on high risk criteria and
obtained and corroborated supporting documentation for the
identified entries. These included those posted to the investment
property and investment property under construction account,
those posted to the cash suspense account and unexpected
revenue pairings.
• Evaluated the business purpose of significant unusual
transactions.
• Assessed significant accounting estimates for bias.
Identifying and responding to risks of material
misstatement due to non-compliance with laws
and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from
our general commercial and sector experience and through
discussion with the directors and other management (as required by
auditing standards), and discussed with the directors and other
management the policies and procedures regarding compliance with
laws and regulations.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
135
Strategic Report Governance Report
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, Real Estate Investment Trust (REIT) legislation and
taxation legislation, and we assessed the extent of compliance with
these laws and regulations as part of our procedures on the related
financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified the
following areas as those most likely to have such an effect: health
and safety, anti-bribery, employment law, data protection laws and
certain aspects of company legislation recognising the financial
nature of the Company’s activities and its legal form. Auditing
standards limit the required audit procedures to identify non-
compliance with these laws and regulations to enquiry of the
directors and inspection of regulatory and legal correspondence, if
any. Therefore, if a breach of operational regulations is not disclosed
to us or evident from relevant correspondence, an audit will not
detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. For
example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance
or fraud and cannot be expected to detect non-compliance with all
laws and regulations.
7. We have nothing to report on the other information
in the Annual Report
The directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our opinion
on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic
report and the directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Annual Report and Accounts 2022 Big Yellow Group PLC
136
Governance Report
Independent Auditor’s Report to the Members
of Big Yellow Group PLC (continued)
Disclosures of emerging and principal risks and
longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect
of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation within the Viability Statement on
page 51 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
• the Principal risks and uncertainties disclosures describing
these risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
• the directors’ explanation in the Viability Statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on
page 51 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only
the knowledge acquired during our financial statements audit. As we
cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee as to the
Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider that the annual
report and financial statements 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;
• the section of the annual report describing the work of the
Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements,
and how these issues were addressed; and
• the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of
the UK Corporate Governance Code specified by the Listing Rules for
our review, and to report to you if a corporate governance statement
has not been prepared by the company. We have nothing to report in
these respects.
Based solely on our work on the other information described above:
• with respect to the Corporate Governance Statement disclosures
about internal control and risk management systems in relation
to financial reporting processes and about share capital
structures:
− we have not identified material misstatements therein; and
− the information therein is consistent with the financial
statements; and
• in our opinion, the Corporate Governance Statement has been
prepared in accordance with relevant rules of the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority.
Financial Statements
Big Yellow Group PLC Annual Report and Accounts 2022
137
Strategic Report Governance Report
8. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
• We have nothing to report in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 128,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; 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; assessing the Group and
parent Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the
Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does
not guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an
annual financial report prepared using the single electronic reporting
format specified in the TD ESEF Regulation. This auditor’s report
provides no assurance over whether the annual financial report has
been prepared in accordance with that format.
10. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions
we have formed.
Anna Jones (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
2 Forbury Place
33 Forbury Road
Reading
RG1 3AD
23 May 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
138
Financial Statements
Note
2022
£000
2021
£000
Revenue 3 1 71 , 31 8 1 3 5,2 4 1
Cost of sales (50,383 ) (4 1,5 89 )
Gross profit 1 20,935 93,6 52
Administrative expenses (1 4,352 ) (1 2, 1 5 9 )
Operating profit before gains on property assets 1 0 6,58 3 81 , 4 9 3
Gain on the revaluation of investment properties 14a,15 597 ,22 4 1 89,2 77
Gain on disposal of investment property 584 –
Operating profit 704,39 1 270 ,770
Share of profit of associates 14e 3,6 77 3 , 14 8
Investment income – interest receivable 7 23 69
– fair value movement on derivatives 7 1,389 –
Finance costs – interest payable 8 (1 0,604 ) (8,0 1 7 )
– fair value movement on derivatives 8 – (1 48 )
Profit before taxation 69 8, 87 6 26 5,822
Taxation 9 (1,602 ) (6 36 )
Profit for the year (attributable to equity shareholders) 5 6 9 7, 2 74 2 65 ,18 6
Total comprehensive income for the year (attributable to equity shareholders) 6 9 7, 2 74 2 65 , 18 6
Basic earnings per share 12 385.4 p 1 52.3 p
Diluted earnings per share 12 384.2 p 1 5 1.8 p
EPRA earnings per share are shown in Note 12.
All items in the statement of comprehensive income relate to continuing operations.
The accompanying notes form part of the financial statements.
Consolidated Statement of Comprehensive Income
Year ended 31 March 2022
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
139
Strategic Report Financial Statements
Note
2022
£000
2021
£000
Non-current assets
Investment property 14a 2,34 2,1 99 1,6 2 1 ,990
Investment property under construction 14a 285,400 1 6 3,53 7
Right-of-use assets 14a 1 9 , 1 74 1 6,6 44
Plant, equipment, and owner-occupied property 14b 3,85 7 3,9 1 0
Intangible assets 14c 1, 433 1, 433
Investment 14d 588 450
Investment in associates 14e – 13 , 72 0
Capital Goods Scheme receivable 16 – 163
Derivative financial instruments 18c 8 85 –
Current assets
Inventories 483 366
Trade and other receivables 16 7, 75 6
Cash and cash equivalents 8,605 1 2,322
Total assets 2,6 70,380 1,8 42,2 99
Current liabilities
Trade and other payables 17 (47 ,3 49 ) (34,56 3 )
Borrowings 19 (3,00 8 ) (2,86 5 )
Obligations under lease liabilities 21 (1,958 ) (1, 7 5 1 )
(52,3 15 ) (3 9, 1 7 9 )
Non-current liabilities
Derivative financial instruments 18c – (47 5 )
Borrowings 19 (41 4,9 72 ) (33 2,5 7 3 )
Obligations under lease liabilities 21 (18 , 718 ) (1 6,1 7 7 )
(43 3,690 ) (34 9,22 5 )
Total liabilities (48 6,005 ) (388,404 )
Net assets 2,1 84,3 7 5 1, 4 53,8 95
Equity
Share capital 22 1 8,397 17, 5 8 8
Share premium account 289,92 3 1 9 2,2 1 8
Reserves 1,8 76,055 1 ,2 44,089
Equity shareholders’ funds 2,1 84,3 7 5 1, 4 53,8 95
The financial statements were approved by the Board of Directors and authorised for issue on 23 May 2022. They were signed on its behalf by:
Jim Gibson John Trotman
Director Director
Company Registration No. 03625199
The accompanying notes form part of the financial statements.
Consolidated Balance Sheet
31 March 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
140
Financial Statements
Share
capital
£000
Share
premium
account
£000
Other non-
distributable
reserve
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Own
shares
£000
Total
£000
At 1 April 2021 17, 5 8 8 1 9 2,2 1 8 7 4,950 1 ,79 5 1 ,16 8 , 3 6 3 (1,0 1 9 ) 1, 4 53,8 95
Total comprehensive income for the year – – – – 6 9 7, 2 74 – 6 97, 274
Issue of share capital 809 97,705 – – – – 98,5 1 4
Dividend – – – – (68,6 98 ) – (68 ,698 )
Credit to equity for equity-settled share-
based payments – – – – 3,3 90 – 3,39 0
At 31 March 2022 1 8,39 7 289,92 3 7 4,950 1, 79 5 1,800,329 (1,0 1 9 ) 2, 1 84,3 7 5
The other non-distributable reserve arose in the year ended 31 March 2015 following the placing of 14.35 million ordinary shares.
The issue of share capital is net of expenses.
Year ended 31 March 2021
Share
capital
£000
Share
premium
account
£000
Other non-
distributable
reserve
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Own
shares
£000
Total
£000
At 1 April 2020 1 6 , 71 4 1 1 2,3 20 7 4,950 1 ,79 5 9 5 9 , 116 (1 ,0 1 9 ) 1, 1 6 3,8 7 6
Total comprehensive income for the year – – – – 2 65 ,18 6 265 ,18 6
Issue of share capital 8 74 79,8 98 – – – – 80,7 7 2
Dividend – – – – (58 ,808 ) – (58 ,808 )
Credit to equity for equity-settled share-
based payments – – – – 2,86 9 – 2,869
At 31 March 2021 17, 5 8 8 1 92,2 1 8 7 4,950 1 ,79 5 1 ,16 8 , 3 63 (1,0 1 9 ) 1, 4 53,8 95
The accompanying notes form part of the financial statements.
Consolidated Statement of Changes in Equity
Year ended 31 March 2022
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
141
Strategic Report Financial Statements
Note
2022
£000
2021
£000
Cash generated from operations 26 1 20,390 8 7, 1 3 1
Bank interest paid (1 0,7 63 ) (8,8 50 )
Interest on obligations under lease liabilities (843 ) (7 7 2 )
Interest received 2 26
Tax paid (1,64 9 ) (82 3 )
Cash flows from operating activities 1 0 7, 13 7 76 ,712
Investing activities
Purchase of non-current assets (1 05,1 5 1 ) (7 3,0 1 0 )
Disposal of investment property 584 –
Acquisition of Armadillo (net of cash acquired) (66,6 7 9 ) –
Investment 14d (1 38 ) (4 50 )
Receipts from Capital Goods Scheme 3 81 737
Dividend received from associates 14e 435 688
Cash flows from investing activities (1 70,568 ) (7 2,03 5 )
Financing activities
Issue of share capital 9 8 , 51 4 80,7 7 2
Payment of lease liabilities (1,384 ) (1,009 )
Equity dividends paid 11 (68,698 ) (58,808 )
Loan arrangement fees paid (953 ) –
Increase/(decrease) in borrowings 32 ,23 5 (6 4, 7 28 )
Cash flows from financing activities 59,7 14 (43, 7 7 3 )
Net decrease in cash and cash equivalents (3,7 1 7 ) (39,0 96 )
Opening cash and cash equivalents 1 2,322 51 , 41 8
Closing cash and cash equivalents 8,605 1 2,3 22
The accompanying notes form part of the financial statements.
Consolidated Cash Flow Statement
Year ended 31 March 2022
Annual Report and Accounts 2022 Big Yellow Group PLC
142
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
1. General information
The address of the registered office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. The nature of the Group’s operations and its principal
activities are set out in note 4 and in the Strategic Report on pages 14 to 30.
2. Significant accounting policies
Basis of preparation of financial statements
The Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the UK-adopted international accounting standards.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The parent company
financial statements present information about the Company as a separate entity and not about its group.
The financial statements are presented in Sterling, being the currency of the primary economic environment in which the Group operates. Unless
otherwise stated, figures are rounded to the nearest thousand.
The accounting policies adopted are consistent with those of the previous financial year.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued
but are not yet effective:
Amendments to IFRS 3 Update to the Conceptual Framework for Financial Reporting
Amendments to IAS 16 Property, Plant and Equipment, Proceeds before Intended Use
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Amendments to IFRS 9 Financial Instruments
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
IFRS 17 Insurance contracts
Amendments to IAS 8 Definition of Accounting Estimate
IAS1 and IFRS Practice Statement 2 Disclosure of Accounting Policy
Amendments to IAS 12 Income Taxes
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group
in future periods.
There are no other Standards or Interpretations yet to be effective that would be expected to have a material impact on the financial statements
of the Group.
Basis of accounting
The financial statements have been prepared on the historical cost basis, except for the revaluation of investment properties and derivative
financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal
accounting policies adopted, which have been applied consistently to the results, other gains and losses, assets, liabilities, and cash flows
of entities included in the consolidated financial statements in the current and preceding year, are set out below:
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
143
Strategic Report Financial Statements
2. Significant accounting policies (continued)
Going concern
A review of the Group’s business activities, together with the factors likely to affect its future development, performance and position are set out
in the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are shown in the balance
sheet, cash flow statement and accompanying notes to the financial statements. Further information concerning the Group’s objectives, policies,
and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk can be found in this Report and in the notes to the financial statements.
At 31 March 2022 the Group had available liquidity of approximately £163 million, from a combination of cash and undrawn bank debt facilities.
The Group is cash generative and for the year ended 31 March 2022, had operational cash flow of £107.1 million, with capital commitments at the
balance sheet date of £20.9 million.
The Directors have prepared cash flow forecasts for a period of 18 months from the date of approval of these financial statements, taking into
account the Group’s operating plan and budget for the year ending 31 March 2023 and projections contained in the longer-term business plan
which cover the period to March 2026. After reviewing these projected cash flows together with the Group’s and Company’s cash balances,
borrowing facilities and covenant requirements, and potential property valuation movements over that period, the Directors believe that,
taking account of severe but plausible downsides, the Group and Company will have sufficient funds to meet their liabilities as they fall due
for that period.
The Group has total facilities of £52.7 million secured on the Armadillo portfolios with Lloyds Bank plc. These facilities expire in April 2023.
The Group has received credit approval from a new insurance debt provider to refinance these loans and provide additional headroom on our
facilities with longer duration fixed debt; this is currently being documented.
The Group has a £120 million loan with M&G Investments Limited, with a bullet repayment in June 2023. The Group intends to refinance this loan
with M&G this summer.
In making their assessment, the Directors have carefully considered the outlook for the Group’s trading performance and cash flows as a result
of the current economic environment, taking into account the trading performance of the Group from the onset of the Covid-19 pandemic to the
date of these financial statements. The Directors have also taken into account the performance of the business during the Global Financial Crisis.
The Directors modelled a number of different scenarios, including material reductions in the Group’s occupancy rates and property valuations,
and assessed the impact of these scenarios against the Group’s liquidity and the Group’s banking covenants. The scenarios considered did not
lead to breaching any of the banking covenants, and the Group retained sufficient liquidity to meet its financial obligations as they fall due.
Consequently, the Directors continue to adopt the going concern basis in preparing the financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to
31 March each year. Control is achieved where the Company has the power to direct the relevant activities of an investee entity so as to obtain
benefits from its activities.
The Group consolidates the financial results and balance sheets of Big Yellow Group PLC and all of its subsidiaries at the year end using acquisition
accounting principles. All intra-group transactions, balances, income, and expenses are eliminated on consolidation. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for
control of the acquiree. Any costs directly attributable to the business combination are recognised in the statement of comprehensive income.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their
fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5
Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at the lower of their carrying amount and fair
value less costs to sell (excluding investment property which is measured at fair value).
Annual Report and Accounts 2022 Big Yellow Group PLC
144
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
2. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at their
acquisition date (which is typically regarded as their cost). Subsequent to their initial recognition, intangible assets with indefinite useful lives
are carried at cost less accumulated impairment losses. Intangible assets with finite useful lives that are acquired separately are carried at cost
less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight line basis over their estimated
useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period with the effect of any changes
in estimate being accounted for on a prospective basis.
Investment in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through
participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except
when classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the
Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of
the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the
associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the
associate. Where necessary, adjustments are made to the financial statements of associates to bring the accounting policies used into line with
those used by the Group. Where a Group Company transacts with an associate of the Group, profits and losses are eliminated to the extent of the
Group’s interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate
provision is made for impairment.
Revenue recognition
Revenue represents amounts derived from the provision of services which fall within the Group’s ordinary activities after deduction of trade
discounts and any applicable value added tax. Self storage income is recognised over the period for which the storage room is occupied by the
customer on a straight-line basis. Any future revenue is recognised as deferred income at the balance sheet date. The opening offer discount
of 50% off for up to 8 weeks is spread evenly over the term of the discount period.
Other storage related income comprises:
• packing material sales are recognised at the point of sale, as there is no further ongoing performance obligation beyond the point of sale; and
• insurance income which is recognised on a straight-line basis over the period a customer occupies their room. The Group recognises
insurance income as a principal, as the insurance contract is between the Group and the customer. The Group is also responsible for setting
the pricing for the sale of insurance to customers.
The Group recognises non-storage income, which is principally rental income from tenants of properties awaiting development, on a straight-line
basis over the period in which it is earned.
Management fees earned are recognised on a straight-line basis over the period for which the services are provided. Fees earned from associates
are recognised in full in the statement of comprehensive income through revenue with the proportionate debit shown in the share of profit of
associate. Performance fees are earned from the Group’s management contract with the Armadillo associate. These fees are subject to
performance thresholds such that revenue is not recognised until the specific conditions have been met, and it is highly probable that no
significant reversal of amounts would occur.
Borrowings
Interest-bearing loans and overdrafts are initially measured at fair value, net of direct issue costs. Premiums payable on settlement or
redemption and direct issue costs are accounted for on an accruals basis in the statement of comprehensive income using the effective interest
rate method and are added to the carrying value amount of the instrument to the extent that they are not settled in the period in which they arise.
Borrowings are subsequently held at amortised cost.
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Strategic Report Financial Statements
2. Significant accounting policies (continued)
Finance costs and income
All borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred, unless the costs are
incurred as part of the development of a qualifying asset, when they will be capitalised. Commencement of capitalisation is the date when the
Group incurs expenditure for the qualifying asset, incurs borrowing costs and undertakes activities that are necessary to prepare the assets for
their intended use when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. In the
case of suspension of activities during extended periods, the Group suspends capitalisation. The Group ceases capitalisation of borrowing costs
when substantially all of the activities necessary to prepare the asset for use are complete, typically when a store opens.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
The Group classifies finance costs and income as operating cash flow in the cash flow statement.
Debt modification
A change in debt carried at amortised cost that is considered substantial is accounted for as an extinguishment, which means that the original
debt is derecognised, with any gain or loss recorded in the statement of comprehensive income, and a new financial liability recorded based on
the new terms. If the change is not considered to be substantial (substantial is defined as a change in the net present value of the cash flows of
more than 10%), the original debt remains on the books and there is no current statement of comprehensive income impact.
Operating profit
Operating profit is stated after gains and losses on surplus land, movements on the revaluation of investment properties and before the share
of results of associates, investment income and finance costs.
Taxation
The Group is a REIT and 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 tax expense
represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from the net profit as reported in the statement of
comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates substantively enacted at the balance sheet date that are expected to apply in the period when the
liability is settled, or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates
to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset as there is a legally enforceable right to set off current tax assets against current tax liabilities.
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Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
2. Significant accounting policies (continued)
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same
basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using
the interest rate implicit in the lease, or if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group
uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if
the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under
a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension, or termination option.
Where the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Alternative Performance Measures (APMs)
The Group uses a number of APMs to monitor the performance of the business. Adjusted profit before tax and adjusted earnings per share are the
Group’s primary profit measure and reflect underlying profit by excluding capital and non-recurring items such as revaluation movements, gains
or losses on the disposal of properties and the fair value movement of interest derivatives in accordance with EPRA guidelines. In addition, the
Group adjusts for items such as the write off of acquisition costs, and fair value movements on the stepped acquisition of associates.
This treatment presents more relevant and useful information to users of financial statements by excluding ‘exceptional’ costs which are unusual
in nature and size and therefore not reflective of the Group’s recurring earnings.
Plant, equipment, and owner occupied property
All property, plant, and equipment, not classified as investment property, is carried at historic cost less depreciation and any recognised
impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and investment properties, less any residual value over
their estimated useful lives, using the straight-line method, on the following bases:
Freehold property 50 years
Leasehold improvements over period of the lease
Plant and machinery 10 years
Motor vehicles 4 years
Fixtures and fittings 5 years
Computer equipment 3 to 5 years
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the statement of comprehensive income.
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Strategic Report Financial Statements
2. Significant accounting policies (continued)
Investment property
The criteria used to distinguish investment property from owner-occupied property is to consider whether the property is held for rental income
and/or for capital appreciation. Where this is the case, the Group recognises these owned or leased properties as investment properties.
Investment property is initially recognised at cost and revalued at the balance sheet date to fair value as determined by professionally qualified
external valuers. In accordance with IAS 40, investment property held as a leasehold is stated gross of the recognised right-of-use liability.
Gains or losses arising from the changes in fair value of investment property are included in the statement of comprehensive income for the
period in which they arise. In accordance with IAS 40, as the Group uses the fair value model, no depreciation is provided in respect of investment
properties including integral plant.
Leasehold properties are classified as investment properties and included in the balance sheet at fair value. The obligation to the lessor for the
buildings element of the leasehold is included in the balance sheet at the present value of the minimum lease payments at inception and is shown
within note 21. Note 21 does also include leases which are not classified as investment properties.
When the Group redevelops an existing investment property for continued future use as investment property, the property remains an
investment property measured at fair value and is not reclassified.
Investment property under construction
Investment property under construction is initially recognised at cost and revalued at the balance sheet date to fair value as determined
by professionally qualified external valuers.
Gains or losses arising from the changes in fair value of investment property under construction are included in the statement of comprehensive
income in the period in which they arise.
Impairment of assets
At each balance sheet date, the Group reviews the carrying amounts of its assets (excluding investment property and derivative financial
instruments which are carried at fair value) to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
The recoverable amount is the higher of an asset’s net selling price and its value-in-use (i.e. the net present value of its future cash flows
discounted at the Group’s average pre-tax interest rate that reflects the borrowing costs and risk for the asset).
Inventories
Inventories, representing the cost of packing materials, are stated at the lower of cost and net realisable value.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument. Financial assets at fair value through profit and loss (“FVTPL”) are stated at fair value, with any gains or losses
arising on re-measurement recognised in the statement of comprehensive income. The net gain or loss recognised in the statement of
comprehensive income incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item
in the statement of comprehensive income.
A – Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of interest rates. The Group uses interest rate swap contracts to hedge these
exposures. The Group does not use derivative financial instruments for speculative purposes. The use of financial derivatives is governed by
the Group’s policies approved by the Board of Directors. The policy in respect of interest rates is to maintain a balance between flexibility and the
hedging of interest rate risk.
Derivatives are initially recognised at fair value and are subsequently reviewed at each balance sheet date. The fair value of interest rate
derivatives at the reporting date is determined by discounting the future cash flows using the forward curves at the reporting date and the credit
risk inherent in the contract.
Changes in the fair value of derivative financial instruments are recognised in the statement of comprehensive income as they arise. The Group
has not adopted hedge accounting.
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148
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
2. Significant accounting policies (continued)
B – Financial assets
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are
initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value
plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant
financing component is initially measured at the transaction price.
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing
financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the
business model.
A financial asset is measured at amortised cost if it meets both of the following conditions:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions:
• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes
in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative
financial assets.
Subsequent measurement and gains and losses
Financial assets at FVTPL – these assets (other than derivatives designated as hedging instruments) are subsequently measured at fair value.
Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost – these assets are subsequently measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit
or loss. Any gain or loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI – these assets are subsequently measured at fair value. Interest income calculated using the effective interest
method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI.
On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI – these assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless
the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never
reclassified to profit or loss.
C – Impairment of financial assets
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses (“ECLs”). When determining
whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers
reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-
looking information. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the
Company in full.
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Strategic Report Financial Statements
2. Significant accounting policies (continued)
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the
difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Write-offs
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.
D – Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The carrying amounts of these assets
approximate to the fair value.
E – Financial liabilities and equity
Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially unfavourable to the Company; and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no obligation
to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company exchanging a fixed
amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes
the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium
account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at
amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in profit or loss.
Retirement benefit costs
Pension costs represent contributions payable to defined contribution schemes and are charged as an expense to the statement of
comprehensive income as they fall due. The assets of the schemes are held separately from those of the Group.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. These are measured at fair value at the date of grant. The fair value
determined at the grant date of the share-based payment is expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest.
Fair value is measured by use of the Black-Scholes model and excludes the effect of non-market-based vesting conditions. The expected life
used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and
behavioural considerations. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest
as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recovered in the
statement of comprehensive income such that the cumulative expense reflects the revised estimate with a corresponding adjustment to
equity reserves.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the
liability. At each balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is re-measured,
with any changes in fair value recognised in the statement of comprehensive income for the year.
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Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
2. Significant accounting policies (continued)
Critical accounting estimates and judgements
In the application of the Group’s accounting policies, which are described above, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Estimate of fair value of Investment Properties and Investment Property under Construction
(critical accounting estimate)
The Group’s self storage centres and stores under development are valued using a discounted cash flow methodology which is based on
projections of net operating income. The Group employs expert external valuers, JLL, who report on the values of the Group’s stores on an annual
basis. JLL were appointed as valuers in the year, replacing CBRE. The principal assumptions underlying the estimation of the fair value are those
related to: stabilised occupancy levels; expected future growth in storage rents; capitalisation rates; and discount rates. For investment
property under construction, the Group estimates the total costs to complete the construction of each store based on its latest assessment of
costs for each development, which is based off the most recent market evidence the Group obtains from tender returns and discussion with key
suppliers. JLL also consider climate change in their valuations, and the impacts that this could have on each of the Group’s investment properties.
A more detailed explanation of the background and methodology adopted in the valuation of the Group’s investment properties is set out in note 15
to the financial statements.
Judgement of business combinations
The Directors assess whether the acquisition of property through the purchase of a corporate vehicle should be accounted for as an asset
purchase or a business combination. Where the acquired corporate vehicle is an integrated set of activities and assets that is capable of being
conducted and managed to provide a return to investors, the transaction is accounted for as a business combination. Where there are no such
significant items, the transaction is treated as an asset purchase. The Directors assess when the risks and rewards associated with an
acquisition or disposal have transferred. During the year, the Group acquired the remaining interest in Armadillo Storage Holding Company and
Armadillo Storage Holding Company 2 Limited that it did not previously own. As this is a stepped acquisition, IFRS 3 requires that the previous
stake be remeasured at the acquisition date at its fair value, with a corresponding gain recorded in the income statement. The Group additionally
wrote off existing deferred tax and goodwill balances prior to the acquisition, as they had no ongoing value in the wider group.
3. Revenue
Analysis of the Group’s operating revenue can be found below and in the portfolio summary on page 34.
2022
£000
2021
£000
Open stores
Self storage income 145,592 113,119
Insurance income 17, 783 14,517
Packing materials income 3,142 2 ,771
Other income from storage customers 1,821 1,275
Ancillary store rental income 937 786
169,275 132,468
Other revenue
Non-storage income 1,598 1,420
Management fees earned 325 1,353
Business interruption insurance proceeds 120 –
Total revenue 171,318 135,241
Non-storage income derives principally from rental income earned from tenants of properties awaiting development.
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Strategic Report Financial Statements
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):
Note
2022
£000
2021
£000
Depreciation of plant, equipment, and owner-occupied property 14b 857 803
Depreciation of interest in leasehold properties 1,601 1,272
Gain on the revaluation of investment property (597,224) (189,277)
Gains on disposal of investment property (584) –
Cost of inventories recognised as an expense 1,405 1,189
Employee costs 6 23,181 19,769
Operating lease rentals – 4
b) Analysis of auditor’s remuneration:
2022
£000
2021
£000
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 365 227
Fess payable to the Company’s auditor for the subsidiaries’ annual accounts 50 36
Fees payable to the Company’s auditor for the audit of the Company’s associates – 98
Total audit fees 415 361
Audit related assurance services – interim review 60 42
Total non-audit fees 60 42
Total audit and non-audit fees paid to KPMG LLP 475 403
The associates (Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited) are now wholly owned, so
the fees are included in the overall Group fee.
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152
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
6. Employee costs
The average monthly number of full-time equivalent employees (including Executive Directors) was:
2022
Number
2021
Number
Sales 365 310
Administration 62 60
427 370
At 31 March 2022 the total number of Group employees was 495 (2021: 412).
2022
£000
2021
£000
Their aggregate remuneration comprised:
Wages and salaries 16,086 13,935
Social security costs 3,014 2,291
Other pension costs 691 674
Share-based payments 3,390 2,869
23,181 19,769
Details of Directors’ Remuneration is given on pages 94 to 117. The Directors are the only employees assessed as key management personnel.
7. Investment income
2022
£000
2021
£000
Bank interest receivable 2 26
Unwinding of discount on Capital Goods Scheme receivable 21 43
Total interest receivable 23 69
Fair value movement on derivatives 1,389 –
Total investment income 1,412 69
8. Finance costs
2022
£000
2021
£000
Interest on bank borrowings 11,772 9,380
Capitalised interest (2,072) (2,135)
Interest on obligations under lease liabilities 843 772
Other interest payable 61 –
Total interest payable 10,604 8,017
Fair value movement on derivatives – 148
Total finance costs 10,604 8,165
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Strategic Report Financial Statements
9. Taxation
As a REIT, the Group does not pay UK corporation tax on the profits and gains from its qualifying rental business in the UK provided that it meets
certain conditions. Non-qualifying profits and gains of the Group are subject to corporation tax as normal. The Group monitors its compliance with
the REIT conditions. There have been no breaches of the conditions to date.
A UK corporation tax rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020, reversing the previously enacted
reduction in the rate from 19% to 17%. Finance (No.2) Bill 2021 announced that the main rate of corporation tax was going to increase to 25% from
1 April 2023 and this was substantively enacted on 24 May 2021. This will increase the Company’s future current tax charge accordingly.
UK current tax
2022
£000
2021
£000
– Current year 1,725 798
– Prior year (123) (162)
1,602 636
A reconciliation of the tax charge is shown below:
2022
£000
2021
£000
Profit before tax 698,876 265,822
Tax charge at 19% (2021 – 19%) thereon 132,786 50,506
Effects of:
Revaluation of investment properties (113,472) (35,963)
Share of profit of associates (699) (598)
Other permanent differences (2,031) (1,921)
Profits from the tax-exempt business (14,859) (11,226)
Current year tax charge 1,725 798
Prior year adjustment (123) (162)
Total tax charge 1,602 636
At 31 March 2022 the Group has unutilised tax losses from the non-REIT taxable business of £34.2 million (2021: £34.2 million) available for
offset against certain types of future taxable profits. All losses can be carried forward indefinitely.
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154
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
10. Adjusted profit
2022
£000
2021
£000
Profit before tax 698,876 265,822
Gain on revaluation of investment properties – Group (597,224) (189,277)
– associates (net of deferred tax) to 30 June 2021 (1,537) (2,074)
Change in fair value of interest rate derivatives – Group (1,389) 148
– in associate – 6
Armadillo fair value adjustments on acquisition (1,756) –
Gain on disposal of investment property (584) –
Acquisition costs written off 416 –
Adjusted profit before tax 96,802 74,625
Tax (1,602) (636)
Adjusted profit after tax 95,200 73,989
Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate
derivatives, acquisition costs written off in accordance with IFRS 3, fair value adjustments on acquisitions, and net gains and losses on disposal
of investment property have been disclosed as, in the Board’s view, this provides a clearer understanding of the Group’s trading performance.
11. Dividends
2022
£000
2021
£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2021 of 17.0p (2020: 16.7p) per share. 31,039 29,124
Interim dividend for the year ended 31 March 2022 of 20.6p (2021: 17.0p) per share. 37,659 29,684
68,698 58,808
Proposed final dividend for the year ended 31 March 2022 of 21.4p (2021: 17.0p) per share. 39,137 29,716
Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2022, the final dividend will be paid on 29 July 2022.
The ex-div date is 7 July 2022 and the record date is 8 July 2022.
The Property Income Distribution (“PID”) payable for the year is 42.0 pence per share (2021: 32.0 pence per share).
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Strategic Report Financial Statements
12. Earnings per share
Year ended 31 March 2022 Year ended 31 March 2021
Earnings
£000
Shares
million
Pence
per share
Earnings
£000
Shares
million
Pence
per share
Basic 697, 274 180.9 385.4 265,186 174.1 152.3
Dilutive share options – 0.6 (1.2) – 0.6 (0.5)
Diluted 697, 2 74 181.5 384.2 265,186 174.7 151.8
Adjustments:
Gain on revaluation of investment properties (597,224) – (329.0) (189,277) – (108.3)
Acquisition costs written off 416 – 0.2 – – –
Change in fair value of interest rate derivatives (1,389) – (0.8) 148 – 0.1
Gain on disposal of investment property (584) – (0.3) – – –
Share of associate fair value gains and losses (3,293) – (1.8) (2,068) – (1.2)
EPRA – diluted 95,200 181.5 52.5 73,989 174.7 42.4
EPRA – basic 95,200 180.9 52.6 73,989 174.1 42.5
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 trading performance.
13. Net assets per share
EPRA’s Best Practices Recommendations guidelines for Net Asset Value (NAV) metrics are EPRA Net Tangible Assets (NTA), EPRA Net
Reinstatement Value (NRV) and EPRA Net Disposal Value (NDV).
EPRA NTA is considered to be most consistent with the nature of Big Yellow’s business which provides sustainable long-term progressive returns.
EPRA NTA is shown in the table below. This measure is further adjusted by the adjustment the Group makes for purchaser’s costs, which is the
Group’s Adjusted Net Asset Value (or Adjusted NAV).
Net assets per share are equity shareholders’ funds divided by the number of shares at the year end. The shares currently held in the Group’s
Employee Benefit Trust are excluded from both net assets and the number of shares. Adjusted net assets per share include the effect of those
shares issuable under employee share option schemes and the effect of alternative valuation methodology assumptions (see note 15).
Year ended 31 March 2022 Year ended 31 March 2021
Equity
attributable
to ordinary
shareholders
£000
Shares
million
Pence
per share
Equity
attributable
to ordinary
shareholders
£000
Shares
million
Pence
per share
Basic NAV 2,184,375 182,844,471 1,194.7 1,453,895 174,757,563 831.9
Share and save as you earn schemes 1,592 1,409,649 (8.3) 1,451 1,427,948 (5.9)
Diluted NAV 2,185,967 184,254,120 1,186.4 1,455,346 176,185,511 826.0
Fair value of derivatives – Group (885) – (0.5) 475 – 0.3
Fair value of derivatives – share of associate – – – 6 – –
Deferred tax in respect of valuation surpluses – associate – – – 1,818 – 1.0
Intangible assets (1,433) – (0.8) (1,433) – (0.8)
EPRA NTA 2,183,649 184,254,120 1,185.1 1,456,212 176,185,511 826.5
Valuation methodology assumption (see note 15) (£000) 100,600 – 54.6 110,393 – 62.7
Adjusted NAV 2,284,249 184,254,120 1,239.7 1,566,605 176,185,511 889.2
Annual Report and Accounts 2022 Big Yellow Group PLC
156
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
13. Net assets per share (continued)
JLL were appointed as the Group’s valuers during the year. Their valuation model differs from the previous valuer CBRE’s in that they do not
assume a sale of the asset in year 10 of the discounted cash flow, instead taking the cash flows on in perpetuity at an all risks yield which reflects
the implicit future growth of the business. This approach means purchaser’s costs are not deducted on this in perpetuity cash flow. CBRE’s model
assumed a sale in year 10, and deducted purchaser’s costs from this notional sale. This means the overall purchaser’s costs are lower in the JLL
model and explains why the valuation methodology assumption adjustment is lower in the current year compared to the prior year, despite the
significant increase in valuation of the Group’s investment properties.
14. Non-current assets
a) Investment property, investment property under construction and right-of-use assets
Investment
property
£000
Investment
property under
construction
£000
Right-of-use
assets
£000
Total
£000
At 31 March 2020 1,385,120 136,299 17, 82 9 1,539,248
Additions 11,657 63,174 – 74,831
Transfer on opening of stores 36,070 (36,070) – –
Revaluation (see note 15) 189,143 134 – 189,277
Depreciation – – (1,185) (1,185)
At 31 March 2021 1,621,990 163,537 16,644 1,802,171
Additions 10,921 95,509 1,084 107,514
Acquisition of Armadillo 138,418 – 4,862 143,280
Transfer on opening of stores 41,182 (41,182) – –
Revaluation (see note 15) 529,688 67, 53 6 – 597,224
Depreciation – – (1,553) (1,553)
Impairment of Cheadle lease – – (1,863) (1,863)
At 31 March 2022 2,342,199 285,400 19 ,174 2,646,773
The right-of-use assets represent the present value of minimum lease payments for leasehold properties – see note 21 for further details
of the obligations under lease liabilities.
Included within the revaluation gain on investment property is an impairment of £4.3 million in relation to the fire at Cheadle.
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 on page 34. Included within additions is £2.1 million of capitalised interest (2021: £2.1 million), calculated at the Group’s average
borrowing cost for the year of 2.8%. 86 of the Group’s investment properties are pledged as security for loans, with a total external value of
£1.9 billion.
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Strategic Report Financial Statements
14. Non-current assets (continued)
b) Plant, equipment, and owner-occupied property
Freehold
property
£000
Leasehold
improvements
£000
Plant and
machinery
£000
Motor
vehicles
£000
Fixtures,
fittings & office
equipment
£000
Right of use
assets
£000
Total
£000
Cost
At 31 March 2020 2,275 77 490 32 1,170 872 4,916
Retirement of fully depreciated assets – (18) (167) – (602) – (787)
Additions – – 116 – 694 – 810
At 31 March 2021 2,275 59 439 32 1,262 872 4,939
Retirement of fully depreciated assets – – (107) – (402) – (509)
Additions 15 – 115 – 780 – 910
At 31 March 2022 2,290 59 447 32 1,640 872 5,340
Depreciation
At 31 March 2020 (536) (26) (180) (28) (32) (106) (908)
Retirement of fully depreciated assets – 18 167 – 602 – 787
Charge for the year (57) (4) (116) (4) (622) (105) (908)
At 31 March 2021 (593) (12) (129) (32) (52) (211) (1,029)
Retirement of fully depreciated assets – – 107 – 402 – 509
Charge for the year (43) (4) (113) – (697) (106) (963)
At 31 March 2022 (636) (16) (135) (32) (347) (317) (1,483)
Net book value
At 31 March 2022 1,654 43 312 – 1,293 555 3,857
At 31 March 2021 1,682 47 310 – 1, 210 661 3,910
c) Intangible assets
The intangible asset relates to the Big Yellow brand, which was acquired through the acquisition of Big Yellow Self Storage Company Limited
in 1999. The carrying value remains unchanged from the prior year as there is considered to be no impairment in the value of the asset.
The asset has an indefinite life and is tested annually for impairment or more frequently if there are indicators of impairment.
d) Investment
During the prior year, the Group invested £450,000 in DS Operations Centre Limited (“DSOC”), a company which provides out-of-hours
monitoring and alarm receiving services, including for the Group’s stores. In December 2021, the Group invested a further £138,000
in DSOC. The investment is carried at cost and tested annually for impairment.
Annual Report and Accounts 2022 Big Yellow Group PLC
158
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
14. Non-current assets (continued)
e) Investment in associates
Armadillo
The Group had a 20% interest in Armadillo Storage Holding Company Limited (“Armadillo 1”) and a 20% interest in Armadillo Storage Holding
Company 2 Limited (“Armadillo 2”). Both interests were accounted for as associates, using the equity method of accounting. On 1 July
2021 the Group acquired the remaining interest in Armadillo 1 and Armadillo 2 that it did not previously own. From this date, Armadillo 1
and Armadillo 2 are accounted for as a wholly owned subsidiaries of the Group. The results up to this date are equity accounted as shown in
the note below:
Armadillo 1 Armadillo 2 Total
31 March 2022
£000
31 March 2021
£000
31 March 2022
£000
31 March 2021
£000
31 March 2022
£000
31 March 2021
£000
At the beginning of the year 8,698 7, 02 7 5,022 4,233 13,720 11,260
Share of results (see below) 2,413 2,013 1,264 1,135 3,677 3,148
Dividends (211) (342) (224) (346) (435) (688)
Acquisition of remaining interest (10,900) – (6,062) – (16,962) –
Share of net assets – 8,698 – 5,022 – 13 ,720
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Strategic Report Financial Statements
14. Non-current assets (continued)
e) Investment in associates (continued)
The figures below show the trading results of Armadillo, and the Group’s share of the results and the net assets up to the point of acquisition
of the remaining interest in the Partnerships on 1 July 2021.
Armadillo 1 Armadillo 2
1 April 2021 to
30 June 2021
£000
Year ended
31 March 2021
£000
1 April 2021 to
30 June 2021
£000
Year ended
31 March 2021
£000
Statement of comprehensive income (100%)
Revenue 3,170 11,338 1,876 6,664
Cost of sales (1,601) (5,967) (793) (2,953)
Administrative expenses (126) (345) (45) (161)
Operating profit 1,443 5,026 1,038 3,550
Goodwill write-off (982) – (1,849) –
Gain on the revaluation of investment properties 4,888 8,565 2,795 4,235
Net interest payable (274) (1,177) (183) (752)
Fair value movement of interest rate derivatives – (18) – (11)
Deferred and current tax 6,988 (2,330) 4,519 (1,347)
Profit attributable to shareholders 12,063 10,066 6,320 5,675
Dividends paid (1,054) (1,708) (1,120) (1,730)
Retained profit 11,009 8,358 5,200 3,945
Group share (20%)
Operating profit 289 1,005 208 710
Goodwill write-off (196) – (370) –
Gain on the revaluation of investment properties 978 1,713 559 847
Net interest payable (55) (235) (37) (150)
Fair value movement of interest rate derivatives – (4) – (2)
Deferred and current tax 1,397 (466) 904 (270)
Profit attributable to shareholders 2,413 2,013 1,264 1,135
Dividends paid (211) (342) (224) (346)
Retained profit/(loss) 2,202 1, 671 1,040 789
Associates’ net assets – 8,698 – 5,022
31 March 2022
£000
31 March 2021
£000
31 March 2022
£000
31 March 2021
£000
Balance sheet (100%)
Investment property – 81,075 – 48,425
Interest in leasehold properties – 2,750 – 2,219
Other non-current assets – 1,204 – 2,004
Current assets – 1,169 – 339
Current liabilities – (2,923) – (1,946)
Derivative financial instruments – (18) – (11)
Non-current liabilities – (39,767) – (25,918)
Net assets (100%) – 43,490 – 25,112
Annual Report and Accounts 2022 Big Yellow Group PLC
160
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
14. Non-current assets (continued)
e) Investment in associates (continued)
Accounting for the acquisition – Armadillo 1
The following provides a breakdown of the fair value of the assets and liabilities acquired. The investment properties have been valued by
the Directors with regard to the March 2021 property valuations performed by JLL uplifted for the capital movement in the three month
period to the Acquisition date.
£000
Investment property 86,553
Other non-current assets 2,949
Current assets 1,981
Current liabilities (3,825)
Bank borrowings (30,444)
Obligations under lease liabilities due greater than one year (2,717)
Net assets (100%) 54,497
Net assets acquired (80% of £54.5 million) 43,598
Satisfied by cash consideration (43,598)
–
From the date of acquisition of the Partnership on 1 July 2021 to 31 March 2022, the revenue of the Partnership was £10.4 million, and the
statutory profit before tax was £12.8 million.
Accounting for the acquisition – Armadillo 2
The following provides a breakdown of the fair value of the assets and liabilities acquired. The investment properties have been valued by
the Directors with regard to the March 2021 property valuations performed by JLL uplifted for the capital movement in the three month
period to the Acquisition date.
£000
Investment property 51,865
Other non-current assets 2,285
Current assets 9 61
Current liabilities (2,969)
Bank borrowings (20,116)
Obligations under lease liabilities due greater than one year (1,707)
Net assets (100%) 30,319
Net assets acquired (80% of £30.3 million) 24,255
Satisfied by cash consideration (24,255)
–
From the date of acquisition of the Partnership on 1 July 2021 to 31 March 2022, the revenue of the Partnership was £5.9 million, and the
statutory profit before tax was £2.4 million.
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Strategic Report Financial Statements
14. Non-current assets (continued)
e) Investment in associates (continued)
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Assets acquired
Investment property External market valuation model: The Directors paid regard to JLL’s external valuation from
31 March 2021 and uplifted the valuations for the capital movement from that date.
Property, plant and equipment Market comparison technique and cost technique: The valuation model considers market prices
for similar items when they are available, and depreciated replacement cost when appropriate.
Depreciated replacement cost reflects adjustments for physical deterioration as well as functional
and economic obsolescence.
The trade receivables acquired across both companies comprise gross contractual amounts due of £0.5 million, of which £41,000 was
expected to be uncollectable at the date of the acquisition.
No amounts have been fair valued on a provisional basis.
The Directors considered whether there were any intangibles acquired, in particular customer lists and the Armadillo brand. The Directors
concluded that no material intangibles were acquired.
Cash
The amount of cash and cash equivalents over which control was obtained in the year from the acquisition of the two Armadillo
transactions was £1.2 million.
Fair value adjustments
On acquisition of the remaining interests in Armadillo, the Group made certain fair value adjustments to the Armadillo balance sheets.
These were:
• an increase in the investment property valuation, reflecting the fair value of the assets at 30 June 2021;
• the write off of goodwill contained in the Armadillo balance sheets; and
• the write back of deferred tax (principally on revaluation surpluses) contained in the Armadillo balance sheets, with Armadillo joining
the Big Yellow REIT on acquisition.
These fair value adjustments are shown in the share of profit of the associates in the period to 30 June 2021 and amounted to a gain
of £3.3 million.
Acquisition costs
The Group incurred acquisition-related costs of £0.4 million on legal fees and stamp duty. These costs have been included in
administrative expenses.
Proforma impact of acquisitions
For the nine months ended 31 March 2022, the Armadillo Partnerships contributed revenue of £16.3 million and statutory profit before tax
of £15.2 million. If the acquisition had occurred on 1 April 2021, management estimates that consolidated revenue would have been
£176.0 million for the year and consolidated profit before tax for the year would have been £712.0 million. In determining these amounts,
management has assessed that the fair value adjustments that arose on the date of acquisition would have been insignificantly different
if the acquisition had occurred on 1 April 2021, other than for investment property, whereby the 30 June 2021 valuations were different
compared to the valuations at 31 March 2021.
Annual Report and Accounts 2022 Big Yellow Group PLC
162
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
15. Valuation of investment property
Deemed cost
£000
Revaluation on
deemed cost
£000
Valuation
£000
Freehold stores
At 31 March 2021 721,121 869,769 1,590,890
Transfer from investment property under construction 46,248 (5,066) 41,182
Acquisition of Armadillo 130,281 – 130,281
Movement in year 10,616 528,030 538,646
At 31 March 2022 908,266 1,392,733 2,300,999
Leasehold stores
At 31 March 2021 13,290 17,810 31,100
Acquisition of Armadillo 8,137 – 8,137
Cheadle impairment – (4,349) (4,349)
Movement in year 305 6,007 6,312
At 31 March 2022 21,732 19,468 41,200
Total of open stores
At 31 March 2021 734,411 8 87, 579 1,621,990
Transfer from investment property under construction 46,248 (5,066) 41,182
Acquisition of Armadillo 138,418 – 138,418
Cheadle impairment – (4,349) (4,349)
Movement in year 10,921 534,037 544,958
At 31 March 2022 929,998 1,412,201 2,342,199
Investment property under construction
At 31 March 2021 162,592 945 163,537
Transfer to investment property (46,248) 5,066 (41,182)
Movement in year 95,509 67, 53 6 163,045
At 31 March 2022 211,853 73,547 285,400
Valuation of all investment property
At 31 March 2021 897,003 888,524 1,785,527
Acquisition of Armadillo 138,418 – 138,418
Cheadle impairment – (4,349) (4,349)
Movement in year 106,430 601,573 708,003
At 31 March 2022 1,141,851 1,485,748 2,627,599
The Group has classified the fair value investment property and the investment property under construction within Level 3 of the fair value
hierarchy. There has been no transfer to or from Level 3 in the year.
The Group’s freehold and leasehold investment properties have been valued at 31 March 2022 by external valuers, Jones Lang LaSalle (“JLL”).
The Valuation has been prepared in accordance with the version of the RICS Valuation – Global Standards (incorporating the International
Valuation Standards) and the UK national supplement (“the Red Book”) current as at the valuation date. The valuation of each of the investment
properties and the investment properties under construction has been prepared on the basis of either Fair Value or Fair Value as a fully equipped
operational entity, having regard to trading potential, as appropriate.
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Strategic Report Financial Statements
15. Valuation of investment property (continued)
The valuation has been provided for financial reporting purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book.
In compliance with the disclosure requirements of the Red Book, JLL have confirmed that:
• this is JLL’s first annual valuation for these purposes on behalf of the Group;
• JLL do not provide other significant professional or agency services to the Group;
• in relation to the preceding financial year of JLL, the proportion of the total fees payable by the Group to the total fee income of the firm is less
than 5%; and
• the fee payable to JLL is a fixed amount per asset and is not contingent on the appraised value.
The self storage properties have been valued on the basis of Fair Value as fully equipped operational entities, having regard to trading potential.
Due to the specialised nature and use of the buildings the approach is to adopt a profits method of valuation in an explicit Discounted Cash Flow
calculation and then consider the results in the context of recent comparable evidence of transactions in the sector.
The profits method requires an estimate of the future cashflow that can be generated from the use of the building as a self storage facility,
assuming a reasonably efficient operator. Judgements are made as to the trading potential and likely long term sustainable occupancy. Stable
occupancy depends upon the nature of demand, size of property and nearby competition, and allows for a reasonable vacancy rate to enable the
operator to sell units to new customers. The cash flow runs for an explicit period of 10 years, after which it is capitalised at an all risks yield which
reflects the implicit future growth of the business, or a hypothetical sale. This is a valuer’s shortcut: maintaining the cash flow into perpetuity
would provide the same result. The comparison with recent transactions requires the evidence to be considered in terms of the multiple on net
operating profit (or EBITDA/EBITDAR), value per square foot, yield profile etc and then adjusted to reflect differences in location, building factors,
tenure, trading maturity and trading risk.
This mirrors the typical approach of purchasers in the self storage market. However, in view of the relatively limited availability of comparable
market evidence this requires a degree of valuer judgment. In particular, most of the transactions have comprised share sales due to the nature
of the asset class and the terms of those transactions have mostly been kept confidential between the parties.
Portfolio Premium
JLL’s valuation report confirms that the properties have been valued individually but that if the portfolio was to be sold as a single lot or in
selected groups of properties, the total value could differ. JLL state that in current market conditions they are of the view that there could be
a portfolio premium.
Assumptions
A. Net operating income is based on projected revenue received less projected operating costs, which include a management fee to take
account of central/head office costs. The initial net operating income is calculated by estimating the net operating income in the first
12 months following the valuation date.
B. The net operating income in future years is calculated assuming either straight-line absorption from day one actual occupancy or variable
absorption over years one to five of the cash flow period, to an estimated stabilised/mature occupancy level. In the valuation the assumed
stabilised occupancy level for the 105 trading stores (both freeholds and leaseholds) open at 31 March 2022 averages 88% (31 March 2021:
78 stores averaging 87%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.
C. The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for asset types
such as industrial, distribution and retail warehousing, yields for other trading property types such as student housing and hotels, bank base
rates, ten-year money rates, inflation and the available evidence of transactions in the sector. The valuation included in the accounts
assumes rental growth in future periods. The net initial yield for the 105 stores is 5.2% (31 March 2021: 5.9%). The weighted average exit
capitalisation rate adopted (for both freeholds and leaseholds) is 5.5% (31 March 2021: 5.7%).
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 7.1% (31 March 2021: 8.7%).
E. Purchaser’s costs of 6.8% have been adopted reflecting current progressive Stamp Duty Land Tax rates.
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164
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
15. Valuation of investment property (continued)
Short leasehold
The same methodology has been used as for freeholds, but the exit capitalisation rate is adjusted to reflect the unexpired lease term at exit.
The average unexpired term of the Group’s eight short leasehold properties is 14.0 years (31 March 2021: 11.9 years unexpired).
Sensitivities
As noted in ‘Significant judgements and key estimates’ on page 150, 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
capitalisation rates
Impact of a change in
stabilised occupancy assumption
25 bps decrease 25 bps increase 1% increase 1% decrease
Reported Group 4.86% (4.43%) 1.32% (1.37%)
A sensitivity analysis has not been provided for a change in the rental growth rate adopted as there is a relationship between this measure and
the discount rate adopted. So, in theory, an increase in the rental growth rate would give rise to a corresponding increase in the discount rate and
the resulting value impact would be limited.
Investment properties under construction
JLL have valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection
expected for the store at opening and after allowing for the outstanding costs to take each scheme from its current state to completion and full
fit-out. JLL have allowed for holding costs and construction contingency, as appropriate. Five of the schemes valued do not yet have planning
consent and JLL have reflected the planning risk in their valuation.
Valuation assumption for purchaser’s costs
The Group’s investment property assets have been valued for the purposes of the financial statements after deducting notional weighted
average purchaser’s cost of 6.8% on the net value, as if they were sold directly as property assets. The valuation is an asset valuation which
is entirely linked to the operating performance of the business. The assets would have to be sold with the benefit of operational contracts,
employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure. This approach follows
the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing a deduction
for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the assumed
Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser’s
cost of 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years were completed in a
corporate structure. The Group therefore instructed JLL to carry out an additional valuation on the above basis, and this results in a higher
property valuation at 31 March 2022 of £2,728.2 million (£100.6 million higher than the value recorded in the financial statements) translating
to 54.7 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 13).
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165
Strategic Report Financial Statements
16. Trade and other receivables
31 March 2022
£000
31 March 2021
£000
Current
Trade receivables 4,763 3,562
Capital Goods Scheme receivable 234 525
Other receivables 715 1,474
Prepayments and accrued income 2,044 2,203
7,75 6 7,764
Non-current
Capital Goods Scheme receivable – 163
Trade receivables are net of a bad debt provision of £563,000 (2021: £223,000). The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
The Financial Review contains commentary on the Capital Goods Scheme receivable.
Trade receivables
The Group does not typically offer credit terms to its customers, requiring them to pay in advance of their storage period and hence the Group
is not exposed to significant credit risk. A late charge of 10% is applied to a customer’s account if they are more than 10 days overdue in their
payment. The Group provides for receivables on a specific basis. There is a right of lien over the customers’ goods, so if they have not paid within
a certain time frame, we have the right to sell the items they store to recoup the debt owed. Trade receivables that are overdue are provided for
based on estimated irrecoverable amounts determined by reference to past default experience.
For individual storage customers, the Group does not perform credit checks, however this is mitigated by the fact that these customers are
required to pay in advance, and also to pay a deposit ranging from one week to four weeks’ storage income. Before accepting a new business
customer who wishes to use a number of the Group’s stores, the Group uses an external credit rating to assess the potential customer’s credit
quality and defines credit limits by customer. There are no customers who represent more than 5% of the total balance of trade receivables.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £713,000 (2021: £465,000) which are past due at the
reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still
considered recoverable. The average age of these receivables is 18 days past due (2021: 25 days past due).
The creation and release of credit loss allowances have been included in cost of sales in the income statement.
The Group measures the loss allowance for the trade receivables at an amount equal to lifetime expected credit loss. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor. The Group provides
in full against all receivables due over 45 days past due because historical experience has indicated that these receivables are generally
not recoverable.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period.
The Group writes off a trade receivable when there is information indicating that the debtors are in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings.
Annual Report and Accounts 2022 Big Yellow Group PLC
166
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
16. Trade and other receivables (continued)
The following table details the risk profile of trade receivables based on the Group’s provision matrix:
Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.2% 10.4% 20.5% 100% 10.6%
Gross carrying amount (£000) 4,058 733 71 464 5,326
Lifetime ECL (£000) (8) (77) (14) (464) (563)
Net trade receivables at 31 March 2022 4,050 656 57 – 4,763
Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.2% 2.2% 10.6% 100% 5.9%
Gross carrying amount (£000) 3,103 456 21 205 3,785
Lifetime ECL (£000) (6) (10) (2) (205) (223)
Net trade receivables at 31 March 2021 3,097 446 19 – 3,562
The above balances are short term and therefore the difference between the book value and the fair value is not significant. Consequently, these
have not been discounted.
Movement in the credit loss allowance
2022
£000
2021
£000
Balance at the beginning of the year 223 176
Credit loss allowance consolidated on Armadillo acquisition 41 –
Amounts provided in year 463 239
Amounts written off as uncollectible (164) (192)
Balance at the end of the year 563 223
The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no
further credit provision required in excess of the credit loss allowance.
17. Trade and other payables
31 March 2022
£000
31 March 2021
£000
Current
Trade payables 5,705 4,052
Other payables 13,762 8,036
Accruals and deferred income 27, 8 8 2 22,475
47,34 9 34,563
The Group has financial risk management policies in place to ensure that all payables are paid within the credit terms. The Directors consider
the carrying amount of trade and other payables and accruals and deferred income approximates fair value.
The Group invoices its customers in advance, and hence any deferred income balance primarily relates to amounts paid by customers for rental
periods beyond the balance sheet date. The Groups’ deferred income balance at 31 March 2022 was £15.8 million, an increase of 22% from
31 March 2021 (£12.9 million). This reflects the growth in the Group’s revenue during the year, both on a like-for-like basis, and through the
acquisition of the remaining 80% interest in Armadillo.
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Strategic Report Financial Statements
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 statement of comprehensive
income (“FVOCI”), financial liabilities are categorised under amortised cost. All financial assets are categorised as fair value to profit and loss (“FVTPL”).
Exposure to credit and interest rate risks arise in the normal course of the Group’s business. Derivative financial instruments are used to manage
exposure to fluctuations in interest rates but are not employed for speculative purposes.
A. Balance sheet management
The Group’s Board reviews the capital structure on an ongoing basis. As part of this review, the Board considers the cost of capital and
the risks associated with each class of capital. The Group seeks to have a conservative gearing ratio (the proportion of net debt to equity).
The Board considers at each review the appropriateness of the current ratio in light of the above. The Board is currently satisfied with the
Group’s gearing ratio.
The gearing ratio at the year end is as follows:
2022
£000
2021
£000
Debt (420,435) (337,300)
Cash and cash equivalents 8,605 12,322
Net debt (411,830) (324,978)
Balance sheet equity 2,184,375 1,453,895
Net debt to equity ratio 18.9% 22.4%
B. Debt management
The Group currently borrows through a senior term loan, secured on 26 self storage assets, a loan with Aviva Commercial Finance Limited
secured on a portfolio of 20 self storage assets, a £120 million loan from M&G Investments Limited secured on a portfolio of 15 self
storage assets, and two loans secured on the Armadillo portfolios from Lloyds Bank amounting to £52.7 million. 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 2022 the Group had three interest rate derivatives in place – £35 million fixed at 0.88% (excluding the margin on the underlying
debt instrument) until June 2023, and two interest rate derivatives within the Armadillo loans, amounting to £26.4 million fixed at 0.24%
until April 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 £35 million interest rate swap settles on a three-monthly basis. The floating rate on the interest rate swap is three month SONIA.
The Group settles the difference between the fixed and floating interest rate on a net basis.
Annual Report and Accounts 2022 Big Yellow Group PLC
168
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
18. Financial instruments (continued)
C. Interest rate risk management (continued)
The £26.4 million interest rate swaps in the Armadillo loans settle on a monthly basis. The floating rate on the interest rate swap is one
month SONIA. The Group settles the difference between the fixed and floating interest rate on a net basis.
The Group does not hedge account for its interest rate swaps and states them at fair value, with changes in fair value included in the
statement of comprehensive income. A reconciliation of the movement in derivatives is provided in the table below:
2022
£000
2021
£000
At 1 April (475) (327)
Fair value of Armadillo derivatives on acquisition of remaining interest (29) –
Fair value movement in the year 1,389 (148)
At 31 March 885 (475)
The table below reconciles the opening and closing balances of the Group’s finance related liabilities for the current and prior year.
Loans
£000
Obligations under
lease liabilities
£000
Interest rate
derivatives
£000
Total
£000
At 1 April 2021 (337,300) (17,928) (475) (355,703)
Cash movement in the year (32,235) 1,384 – (30,851)
Acquisition of remaining interest in Armadillo (50,900) (4,862) (29) (55,791)
Impairment of Cheadle lease – 1,944 – 1,944
Fair value movement – (1,214) 1,389 175
At 31 March 2022 (420,435) (20,676) 885 (440,226)
The difference between the loans balance above and the balance sheet is loan arrangement fees of £2,455,000.
Loans
£000
Obligations under
lease liabilities
£000
Interest rate
derivatives
£000
Total
£000
At 1 April 2020 (402,028) (18,937) (327) (421,292)
Cash movement in the year 64,728 1,009 – 65,737
Non-cash movement – – (148) (148)
At 31 March 2021 (337,300) (17,928) (475) (355,703)
The difference between the loans balance above and the balance sheet is loan arrangement fees of £1,862,000.
D. Interest rate sensitivity analysis
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings, without
jeopardising its flexibility. Over the longer term, permanent changes in interest rates may have an impact on consolidated earnings.
At 31 March 2022, 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 £493,000 (2021: reduced adjusted profit before tax by £394,000) 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 £493,000 (2021: increased adjusted
profit before tax by £394,000). 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.
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Strategic Report Financial Statements
18. Financial instruments (continued)
E. Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium, and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in
note 19 is a description of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
Short term money market deposits are used to manage liquidity whilst maximising the rate of return on cash resources, giving due
consideration to risk.
F. Foreign currency management
The Group does not have any foreign currency exposure.
G. Credit risk
The credit risk management policies of the Group with respect to trade receivables are discussed in note 16. The Group has no significant
concentration of credit risk, with exposure spread over 73,000 occupied rooms in our stores.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-
rating agencies.
H. Financial maturity analysis
In respect of interest-bearing financial liabilities, the following table provides a maturity analysis for individual elements.
2022 Maturity
Total
£000
Less than
one year
£000
One to
two years
£000
Two to
five years
£000
More than
five years
£000
Debt
Aviva loan 161,935 3,008 3,159 10,459 145,309
M&G loan payable at variable rate 85,000 – 85,000 – –
M&G loan fixed by interest rate derivatives 35,000 – 35,000 – –
Bank loan payable at variable rate 99,000 – – 99,000 –
Armadillo loan fixed by interest rate derivatives 26,350 – 26,350 – –
Armadillo loan payable at variable rate 13,150 – 13,150 – –
Total 420,435 3,008 162,659 109,459 145,309
2021 Maturity
Total
£000
Less than
one year
£000
One to
two years
£000
Two to
five years
£000
More than
five years
£000
Debt
Aviva loan 114,800 2,865 3,008 9,959 98,968
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 122,500 – – 122,500 –
Debt fixed by interest rate derivatives 30,000 – – 30,000 –
Total 337,300 2,865 3,008 232,459 98,968
Annual Report and Accounts 2022 Big Yellow Group PLC
170
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
18. Financial instruments (continued)
I. Fair values of financial instruments
The fair values of the Group’s cash and short-term deposits and those of other financial assets equate to their book values. Details of the
Group’s receivables at amortised cost are set out in note 16. The amounts are presented net of provisions for doubtful receivables, and
allowances for impairment are made where appropriate. Trade and other payables, including bank borrowings, are carried at amortised cost.
Obligations under lease liabilities are included at the present value of their minimum lease payments. Derivatives are carried at fair value.
For those financial instruments held at valuation, the Group has categorised them into a three level fair value hierarchy based on the priority
of the inputs to the valuation technique in accordance with IFRS 7. The hierarchy gives the highest priority to quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value
fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value
measurement of the instrument in its entirety. The fair value of the Group’s outstanding interest rate derivatives, as detailed in note 18C,
have been estimated by calculating the present value of future cash flows, using appropriate market discount rates, representing Level 2
fair value measurements as defined by IFRS 7. There are no financial instruments which have been categorised as Level 1 or Level 3.
The fair value of the Group’s debt equates to its book value.
J. Maturity analysis of financial liabilities
The contractual maturities based on market conditions and expected yield curves prevailing at the year end date are as follows:
2022
Trade and other
payables
£000
Interest rate
swaps
£000
Borrowings and
interest
£000
Obligations under
lease liabilities
£000
Total
£000
From five to twenty years – – 153,835 22,765 176,600
From two to five years – – 126,541 5,432 131,973
From one to two years – (174) 172,163 1,989 173,978
Due after more than one year – (174) 452,539 30,186 482,551
Due within one year 19,467 (608) 15,869 1,989 36,717
Total 19,467 (782) 468,408 32,175 519,268
2021
Trade and other
payables
£000
Interest rate
swaps
£000
Borrowings and
interest
£000
Obligations under
lease liabilities
£000
Total
£000
From five to twenty years – – 104,576 18,274 122,850
From two to five years – 25 249,913 5,267 255,205
From one to two years – 162 11,638 1,780 13,580
Due after more than one year – 187 366,127 25,321 391,635
Due within one year 12,088 271 11,639 1,780 25,778
Total 12,088 458 37 7, 76 6 27,101 417,413
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Strategic Report Financial Statements
18. Financial instruments (continued)
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.
2022
Borrowings
£000
Interest
£000
Unamortised
borrowing costs
£000
Borrowings
and interest
£000
From five to twenty years 145,309 7, 15 6 1,370 153,835
From two to five years 109,459 16,533 549 126,541
From one to two years 162,659 8,968 536 172,163
Due after more than one year 417, 4 27 32,657 2,455 452,539
Due within one year 3,008 12,861 – 15,869
Total 420,435 45,518 2,455 468,408
2021
Borrowings
£000
Interest
£000
Unamortised
borrowing costs
£000
Borrowings
and interest
£000
From five to twenty years 98,968 4,703 905 104,576
From two to five years 232,459 16,497 957 249,913
From one to two years 3,008 8,630 – 11,638
Due after more than one year 334,435 29,830 1,862 366,127
Due within one year 2,865 8,774 – 11,639
Total 337,300 38,604 1,862 37 7,7 6 6
19. Borrowings
Secured borrowings at amortised cost
31 March 2022
£000
31 March 2021
£000
Current liabilities
Aviva loan 3,008 2,865
3,008 2,865
Non-current liabilities
Bank borrowings 99,000 152,500
Armadillo loans 39,500 –
Aviva loan 158,927 111,935
M&G loan 120,000 70,000
Unamortised loan arrangement costs (2,455) (1,862)
Total non-current borrowings 414,972 332,573
Total borrowings 417, 9 80 335,438
Annual Report and Accounts 2022 Big Yellow Group PLC
172
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
19. Borrowings (continued)
The weighted average interest rate paid on the borrowings during the year was 2.8% (2021: 2.9%).
The Group has £141 million in undrawn committed bank borrowing facilities at 31 March 2022, which expire after between two and three years
and £13.2 million in undrawn committed bank borrowing facilities which expire between one and two years (2021: £87.5 million expiring after
between three and four years).
The Group has a £161.9 million fixed rate loan with Aviva Commercial Finance Limited, expiring in September 2028. The loan is secured over a
portfolio of 20 freehold self storage centres. The annual fixed interest rate on the loan is 3.5%. The loan has an amortising element of £16.9 million
which runs to April 2027.
The Group has a secured £240 million five year revolving bank facility with Lloyds, HSBC and Bank of Ireland expiring in October 2024, with
a margin of 1.25%.
The Group has total facilities of £52.7 million secured on the Armadillo portfolios with Lloyds Bank plc. These facilities expire in April 2023.
The Group is currently in talks to refinance these loans with a new debt provider.
The Group has a £120 million 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. The Group intends to refinance this loan this summer.
The movement in the Group’s loans are shown net in the cash flow statement as the bank loan is a revolving facility and is repaid and redrawn
each month.
The Group was in compliance with its banking covenants at 31 March 2022 and throughout the year. The principal covenants are summarised
in the table below:
Covenant Covenant level At 31 March 2022
Consolidated EBITDA Minimum 1.5x 11.1x
Consolidated net tangible assets Minimum £250m £2,184.4m
Bank loan interest cover Minimum 1.75x 22.1x
Aviva loan interest service cover ratio Minimum 1.5x 5.3x
Aviva loan debt service cover ratio Minimum 1.2x 2.8x
M&G interest cover Minimum 1.5x 8.8x
Interest rate profile of financial liabilities
Total
£000
Floating rate
£000
Fixed rate
£000
Weighted
average
interest rate
Period for
which the
rate is fixed
Weighted
average period
until maturity
At 31 March 2022
Gross financial liabilities 420,435 197,15 0 223,285 3.1% 4.6 years 3.4 years
At 31 March 2021
Gross financial liabilities 337,300 157,500 179,800 2.6% 4.6 years 4.0 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.
All applicable borrowings were transitioned to SONIA during the year.
Narrative disclosures on the Group’s policy for financial instruments are included within the Strategic Report and in note 18.
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173
Strategic Report Financial Statements
20. Deferred tax
Deferred tax assets in respect of IFRS 2 £0.1 million (2021: £0.1 million), corporation tax losses £6.5 million (2021: £4.9 million), capital
allowances in excess of depreciation £0.3 million (2021: £0.2 million) and capital losses £2.1 million (2021: £1.6 million) in respect of the
non-REIT taxable business have not been recognised as it is not considered probable that sufficient taxable profits will arise in the relevant
taxable entity.
21. Obligations under lease liabilities
Minimum lease payments
Present value of minimum
lease payments
2022
£000
2021
£000
2022
£000
2021
£000
Amounts payable under lease liabilities:
Within one year 1,989 1,780 1,958 1,751
Within two to five years inclusive 7, 4 21 7, 0 47 6,651 6,208
Greater than five years 22,765 18,274 12,067 9,969
32,175 27,101 20,676 17, 9 2 8
Less: future finance charges (11,499) (9,173)
Present value of lease liabilities 20,676 17, 9 2 8
All obligations under lease liabilities are denominated in sterling. Interest rates are fixed at the contract date. All leases are on a fixed repayment
basis and no arrangements have been entered into for contingent rental payments. The carrying amount of the Group’s lease obligations
approximates their fair value.
22. Share capital
Called up, allotted, and fully paid
2022
£000
2021
£000
Ordinary shares of 10 pence each 18,397 17, 5 8 8
Movement in issued share capital
Number of shares at 31 March 2020 167,13 8, 52 7
Issue of shares – placing 8,335,043
Exercise of share options – Share option schemes 406,900
Number of shares at 31 March 2021 175,880,470
Issue of shares – placing 7,751 , 9 38
Exercise of share options – Share option schemes 334,970
Number of shares at 31 March 2022 183,967,378
The Company has one class of ordinary shares which carry no right to fixed income.
Annual Report and Accounts 2022 Big Yellow Group PLC
174
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
22. Share capital (continued)
At 31 March 2021 options in issue to Directors and employees were as follows:
Date option
Granted Option price per ordinary share Date first exercisable
Date on which the
exercise period expires
Number of
ordinary shares
2022
Number of
ordinary shares
2021
29 July 2014 nil p** 29 July 2017 29 July 2024 830 830
21 July 2015 nil p** 21 July 2018 21 July 2025 1,989 16,268
22 July 2016 nil p** 22 July 2019 21 July 2026 2,944 30,703
2 August 2017 nil p** 2 August 2020 2 August 2027 5,809 68,034
13 March 2018 675.4p* 1 April 2021 1 April 2022 1,599 87,000
24 July 2018 nil p** 24 July 2021 24 July 2028 96,002 334,201
11 March 2019 749.9p* 1 April 2022 1 April 2023 46,996 48,124
19 July 2019 nil p ** 19 July 2022 19 July 2029 353,920 362,730
2 March 2020 947.0p 1 April 2023 1 April 2024 48,241 51,889
5 August 2020 nil p ** 5 August 2023 5 August 2030 398,146 410,767
1 March 2021 903.2p * 1 April 2024 1 April 2025 86,670 94,695
22 July 2021 nil p ** 22 July 2024 22 July 2031 319,922 –
1,363,068 1,505,241
* 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
(2021: 1,122,907), and no shares are held in treasury.
23. Share-based payments
The Company has three equity share-based payment arrangements, namely an LTIP scheme (with approved and unapproved components),
an Employee Share Save Scheme (“SAYE”) and a Deferred Bonus Plan. The Group recognised a total expense in the year related to equity-settled
share-based payment transactions of £3,390,000 (2021: £2,869,000).
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 as described on page 105 of the Remuneration Report.
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, 2014, 2015 and 2016 fully vested. The award granted in 2017 vested to 83.6%
of its potential, and the award granted in 2018 vested to 62% of its potential. The weighted average share price at the date of exercise for options
exercised in the year was £14.84 (2021: £10.64).
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Strategic Report Financial Statements
23. Share-based payments (continued)
LTIP scheme
2022
No. of options
2021
No. of options
Outstanding at beginning of year 1,223,533 1,172,726
Granted during the year 382,433 508,878
Lapsed during the year (176,404) (98,071)
Exercised during the year (250,000) (360,000)
Outstanding at the end of the year 1,179,562 1,223,533
Exercisable at the end of the year 124,901 131,787
The weighted average fair value of options granted during the year was £1,742,000 (2021: £1,512,000).
Participants pay the nominal value of the shares when exercising options under the LTIP scheme.
Options outstanding at 31 March 2022 had a weighted average contractual life of 8.1 years (2021: 8.1 years).
Employee Share Save Scheme (“SAYE”)
2022
No. of options
2022
Weighted average
exercise price
(£)
2021
No of options
2021
Weighted average
exercise price
(£)
Outstanding at beginning of year 281,708 8.15 240,572 7. 32
Granted during the year – – 94,695 9.03
Forfeited during the year (13,232) 8.92 (6,659) 7. 4 0
Exercised during the year (84,970) 6.76 (46,900) 5.80
Outstanding at the end of the year 183,506 8.75 281,708 8.15
Exercisable at the end of the year 1,599 6.76 – –
Options outstanding at 31 March 2022 had a weighted average contractual life of 1.6 years (2021: 2.0 years).
The inputs into the Black-Scholes model for the options granted during the year are as follows:
LTIP SAYE
Expected volatility n/a 27%
Expected life 3 years 3 years
Risk-free rate 0.04% 0.04%
Expected dividends 2.6% 2.9%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the year prior to grant.
Deferred bonus plan
The Executive Directors receive awards under the Deferred Bonus Plan. This is accounted for as an equity instrument. The plan was set up
in July 2018. The vesting criteria and scheme mechanics are set out in the Remuneration Report.
24. Capital commitments
At 31 March 2022 the Group had £20.9 million of amounts contracted but not provided in respect of the Group’s properties (2021: £17.3 million
of capital commitments).
Annual Report and Accounts 2022 Big Yellow Group PLC
176
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
25. Events after the balance sheet date
On 20 May 2022, the Group exchanged contracts to sell its industrial warehouse scheme adjacent to its new Harrow store for gross sales
proceeds of £61 million. Completion of the sale is conditional, inter alia, on practical completion of the development, and is expected to occur
in August of this year.
26. Cash flow notes
a) Reconciliation of profit after tax to cash generated from operations
Note
2022
£000
2021
£000
Profit after tax 697, 2 74 265,186
Taxation 1,602 636
Share of profit of associates (3,677) (3,148)
Investment income (1,412) (69)
Finance costs 10,604 8,165
Operating profit 704,391 270,770
Gain on the revaluation of investment properties 14a, 15 (597,224) (189,277)
Gain on disposal of investment property (584) –
Depreciation of plant, equipment, and owner-occupied property 14b 857 803
Depreciation of lease liability capital obligations 14a, 14b 1,659 1,290
Employee share options 6 3,390 2,869
Cash generated from operations pre working capital movements 112,489 86,455
(Increase)/decrease in inventories (71) 46
Decrease in receivables 1,550 841
Increase/(decrease) in payables 6,422 (211)
Cash generated from operations 120,390 87,131
b) Reconciliation of net cash flow movement to net debt
Note
2022
£000
2021
£000
Net decrease in cash and cash equivalents in the year (3,717) (39,096)
Cash flow from (increase)/decrease in debt financing (83,135) 64,728
Change in net debt resulting from cash flows (86,852) 25,632
Movement in net debt in the year (86,852) 25,632
Net debt at the start of the year (324,978) (350,610)
Net debt at the end of the year 18A (411,830) (324,978)
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Strategic Report Financial Statements
27. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed
in this note.
Transactions with Armadillo
As described in note 14, the Group had a 20% interest in Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2
Limited. The Group acquired the remaining interest in both companies that it did not own on 1 July 2021. From this date, the Companies were
wholly owned subsidiaries of the Group and hence the transactions subsequent to that date are not disclosable. Up to the date of acquisition,
the Group entered into transactions with the Companies on normal commercial terms as shown in the table below:
31 March 2022
£000
31 March 2021
£000
Fees earned from Armadillo 1 238 977
Fees earned from Armadillo 2 87 376
Balance due from Armadillo 1 – 67
Balance due from Armadillo 2 – 27
Directors’ Remuneration
The remuneration of the Executive and Non-Executive Directors, who are the key management personnel of the Group, is set out below in aggregate.
Further information on the remuneration of individual Directors is found in the audited part of the Remuneration Report on pages 106 to 113.
31 March 2022
£000
31 March 2021
£000
Short term employee benefits 1,923 1,923
Post-employment benefits 87 140
Share-based payments 2,813 2,800
4,823 4,863
AnyJunk Limited
Jim Gibson is a Non-Executive Director and shareholder in AnyJunk Limited and Adrian Lee is a shareholder in AnyJunk Limited. During the year
AnyJunk Limited provided waste disposal services to the Group on normal commercial terms, amounting to £10,000 (2021: £25,000).
London Children’s Ballet
The Group signed a Section 106 agreement with Wandsworth Council relating to the development of our Battersea store, which required the Group
to provide cultural space to Wandsworth Borough Council. During the year the Group granted a twenty year lease over this space to London
Children’s Ballet at a peppercorn rent, who in turn have agreed to enter into a Social Agreement with Wandsworth Borough Council coterminous
with the lease. Jim Gibson is the Chairman of Trustees of the London Children’s Ballet. London Children’s Ballet rent storage space from the Group
on normal commercial terms, amounting to £3,000 during the year (2021: £nil).
DS Operations Centre Limited
In December 2020, the Group invested £450,000 in DS Operations Centre Limited (“DSOC”). In December 2021, the Group invested a further
£138,000 in DSOC. DSOC provided alarm and CCTV monitoring services to the Group under normal commercial terms during the year, amounting
to £281,000 (2021: £22,000).
Treepoints Limited
Jim Gibson is a Non-Executive Director and an investor in City Stasher Limited, which in turn has a minority investment in Treepoints Limited.
Treepoints Limited provided offsetting tree planting services in respect of our online packing material sales, under normal commercial terms
during the period, amounting to £3,000 (2021: £nil).
No other related party transactions took place during the years ended 31 March 2022 and 31 March 2021.
Annual Report and Accounts 2022 Big Yellow Group PLC
178
Financial Statements
Company Balance Sheet
Year ended 31 March 2022
Note
2022
£000
2021
(restated)
£000
Non-current assets
Plant, equipment, and owner-occupied property 30a 1,721 1,780
Investment in subsidiary companies 30b 31,350 27, 9 60
Amounts owed by Group undertakings 31 764,740 533,228
797, 811 562,968
Current assets
Trade and other receivables 31 148 124
Cash and cash equivalents 1 1
149 125
Total assets 797, 9 60 563,093
Current liabilities
Trade and other payables 32 (5,829) (9,457)
Obligations under lease liabilities (29) (29)
(5,858) (9,486)
Non-current liabilities
Derivative financial instruments – (59)
Obligations under lease liabilities (69) (95)
Bank borrowings (98,451) (151,874)
(98,520) (152,028)
Total liabilities (104,378) (161,514)
Net assets 693,582 401,579
Equity
Share capital 22 18,397 17, 58 8
Share premium account 289,923 192,218
Reserves 28 385,262 191,773
Equity shareholders’ funds 693,582 401,579
For details of the restatement, please see note 29.
The Company reported a gain for the financial year ended 31 March 2022 of £258.8 million (2021: loss of £1.4 million). The financial statements were
approved by the Board of Directors and authorised for issue on 23 May 2022. They were signed on its behalf by:
Jim Gibson John Trotman
Director Director
Company Registration No. 03625199
The accompanying notes form part of the financial statements.
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
179
Strategic Report Financial Statements
Company Statement of Changes in Equity
Year ended 31 March 2022
Share
capital
£000
Share
premium
account
£000
Other non-
distributable
reserve
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Own
shares
£000
Total
£000
At 1 April 2021 17, 58 8 192,218 74,950 1,795 116,047 (1,019) 401,579
Total comprehensive gain for the year – – – 258,797 – 258,797
Issue of share capital 809 97,705 – – – – 98,514
Dividend – – – – (68,698) – (68,698)
Credit to equity for equity-settled
share-based payments – – – – 3,390 – 3,390
At 31 March 2022 18,397 289,923 74,950 1,795 309,536 (1,019) 693,582
The Company’s share capital is disclosed in note 22.
The own shares balance represents amounts held by the Employee Benefit Trust (see note 22).
Year ended 31 March 2021
Share
capital
£000
Share
premium
account
£000
Other non-
distributable
reserve
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Own
shares
£000
Total
£000
At 1 April 2020 16 ,714 112,320 74,950 1,795 173,348 (1,019) 378,108
Total comprehensive income for the year – – – – (1,362) – (1,362)
Issue of share capital 874 79,898 – – – – 80,772
Dividend – – – – (58,808) – (58,808)
Credit to equity for equity-settled share-based
payments – – – – 2,869 – 2,869
At 31 March 2021 17, 5 8 8 192,218 74,950 1,795 116,047 (1,019) 401,579
The accompanying notes form part of the financial statements.
Annual Report and Accounts 2022 Big Yellow Group PLC
180
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
28. Profit for the year
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the Company is not presented as part
of these financial statements. The profit for the year attributable to equity shareholders dealt with in the financial statements of the Company
was £258.8 million (2021: loss of £1.4 million).
29. Basis of accounting
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted
international accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006
and has set out below where advantage of the FRS 101 disclosure exemptions has been taken:
• Cash Flow Statement and related notes;
• Comparative period reconciliations for plant, equipment and owner-occupied property and investment properties;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs; and
• Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:
• IFRS 2 Share-Based Payments in respect of group settled share-based payments; and
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
The financial statements have been prepared on the historic cost basis except that derivative financial instruments are stated at fair value.
The Company’s principal accounting policies are the same as those applied in the Group financial statements.
Prior year restatement
The prior year balance sheet as at 31 March 2021 has been restated. Within that balance sheet the amounts owed by group undertakings of
£533,228,000 have been reclassified from being shown as a current asset to a non-current asset. This restatement is due to a misclassification
in the prior year financial statements as despite being repayable on demand, there was no expectation to settle the balance within 12 months.
This restatement has no impact on the profit and loss, taxation or cash flows of the parent company.
Going concern
See note 2 for the review of going concern for the Group and the Company.
Investment in subsidiaries
These are recognised at cost less provision for any impairment.
IFRIC 11, IFRS 2 Group and Treasury Share Transactions
The Company makes equity settled share-based payments to certain employees of certain subsidiary undertakings. Equity settled share-based
payments that are made to the employees of the Company’s subsidiaries are treated as increases in equity over the vesting period of the award,
with a corresponding increase in the Company’s investments in subsidiaries, based on an estimate of the number of shares that will eventually
vest. This is the only addition to investment in subsidiaries in the current year.
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
181
Strategic Report Financial Statements
30. Non-current assets
a) Plant, equipment, and owner-occupied property
Freehold
property
£000
Leasehold
improvements
£000
Fixtures,
fittings & office
equipment
£000
IFRS 16
leases
£000
Total
£000
Cost
At 31 March 2021 2,204 46 12 174 2,436
Additions 8 – 6 – 14
Retirement of fully depreciated assets – – (9) – (9)
At 31 March 2022 2,212 46 9 174 2,441
Accumulated depreciation
At 31 March 2021 (592) (6) (6) (52) (656)
Charge for the year (43) (1) (3) (26) (73)
Retirement of fully depreciated assets – – 9 – 9
At 31 March 2022 (635) (7) – (78) (720)
Net book value
At 31 March 2022 1,577 39 9 96 1,721
At 31 March 2021 1, 612 40 6 122 1,780
b) Investments in subsidiary companies
Investment in
subsidiary
undertakings
£000
Cost
At 31 March 2021 27, 9 6 0
Additions 3,390
At 31 March 2022 31,350
The Directors assessed the carrying value of the investment in subsidiary undertakings for indicators of impairment. There were no
indications of impairment.
Annual Report and Accounts 2022 Big Yellow Group PLC
182
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
30. Non-current assets (continued)
The Group’s subsidiaries are all wholly-owned, the Group holds 100% of the voting power and the companies are incorporated, registered, and
operate in England and Wales. The registered office of all subsidiaries is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. All subsidiaries are
included in the consolidated accounts. The subsidiaries at 31 March 2022 are listed below:
Name of subsidiary Principal activity
1st Storage Centres Limited Dormant
Apollo Self Storage Limited Self storage
Armadillo Self Storage Limited Self storage
Armadillo Self Storage 2 Limited Self storage
Armadillo Storage Holding Company Limited Holding Company
Armadillo Storage Holding Company 2 Limited Holding Company
Armadillo Storage One Limited Holding Company
.Big Yellow Self Storage (GP) Limited General Partner
.Big Yellow Self Storage Company Limited Self storage
Big Yellow (Battersea) Limited Self storage
The Big Yellow Construction Company Limited Construction management
The Big Yellow Holding Company Limited Holding Company
Big Yellow Limited Partnership Self storage
Big Yellow Nominee No. 1 Limited Dormant
Big Yellow Nominee No. 2 Limited Dormant
Big Yellow Self Storage Company 1 Limited Dormant
Big Yellow Self Storage Company 2 Limited Dormant
Big Yellow Self Storage Company 3 Limited Dormant
Big Yellow Self Storage Company 4 Limited Dormant
Big Yellow Self Storage Company 8 Limited Self storage
Big Yellow Self Storage Company A Limited Self storage
Big Yellow Self Storage Company M Limited Self storage
Big Yellow (Wapping 2) Limited Self storage
BYRCo Limited Property management
BYSSCo A Limited Dormant
BYSSCo Limited Self storage
Kator Storage Limited Self storage
The Last Mile Company Limited Holding Company
Patrick Corporate Investment Limited Dormant
Quickstore Storage Limited Self storage
In addition, the Group has a 100% interest in Pirbright Holdings Limited, a company registered in the British Virgin Islands. The company was
acquired during the year, and is now dormant.
In addition, the Group has a 100% interest in Pramerica Bell Investment Trust Jersey, a trust registered in Jersey.
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
183
Strategic Report Financial Statements
30. Non-current assets (continued)
Audit exemption statement
For its most recent year end the companies listed below were entitled to exemption from audit under section 479A of the Companies Act 2006
relating to subsidiary companies. The members of these companies have not required them to obtain an audit of their financial statements for the
year ended 31 March 2022.
Name of subsidiary
Apollo Self Storage Limited Big Yellow Self Storage Company 1 Limited
Armadillo Self Storage Limited Big Yellow Self Storage Company 2 Limited
Armadillo Self Storage 2 Limited Big Yellow Self Storage Company 3 Limited
Armadillo Storage Holding Company Limited Big Yellow Self Storage Company 4 Limited
Armadillo Storage Holding Company 2 Limited Big Yellow Self Storage Company 8 Limited
Armadillo Storage One Limited Big Yellow (Wapping 2) Limited
.Big Yellow Self Storage (GP) Limited BYRCo Limited
Big Yellow (Battersea) Limited BYSSCo Limited
The Big Yellow Construction Company Limited BYSSCo A Limited
Big Yellow Holding Company Limited Kator Storage Limited
Big Yellow Limited Partnership The Last Mile Company Limited
Big Yellow Nominee No. 1 Limited Quickstore Storage Limited
Big Yellow Nominee No. 2 Limited
31. Trade and other receivables
31 March 2022
£000
31 March 2021
(Restated)
£000
Non-current
Amounts owed by Group undertakings 764,740 533,228
Current
Prepayments and accrued income 148 124
For details of restatement, please see note 29.
Amounts owed by Group undertakings are unsecured. The Company recharges its external interest cost to its subsidiaries. Amounts owed by
Group undertakings have historically had immaterial levels of bad debt and consequently the Company has not recognised any impairment
provision against them.
32. Trade and other payables
31 March 2022
£000
31 March 2021
£000
Current (all due within one year)
Other payables 5,530 9,245
Accruals and deferred income 299 212
5,829 9,457
Annual Report and Accounts 2022 Big Yellow Group PLC
184
Financial Statements
Notes to the Financial Statements
Year ended 31 March 2022
33. Glossary
Adjusted earnings growth The increase in adjusted eps year-on-year.
Adjusted eps Adjusted profit after tax divided by the diluted weighted average number of shares in issue during
the financial year.
Adjusted NAV EPRA NTA adjusted for an investment property valuation carried out at purchasers’ costs of 2.75%,
see note 13.
Adjusted Profit Before Tax The Company’s pre-tax EPRA earnings measure with additional Company adjustments, see note 10.
Average net achieved rent per sq ft Storage revenue divided by average occupied space over the financial year.
Average rental growth The growth in average net achieved rent per sq ft year-on-year.
BREEAM An environmental rating assessed under the Building Research Establishment’s Environmental
Assessment Method.
Carbon intensity Carbon emissions divided by the Group’s average occupied space.
Closing net rent per sq ft Annual storage revenue generated from in-place customers divided by occupied space at the
balance sheet date.
Committed facilities Available undrawn debt facilities plus cash and cash equivalents.
Debt Long-term and short-term borrowings, as detailed in note 19, excluding lease liabilities and debt
issue costs.
Earnings per share (eps) Profit for the financial year attributable to equity shareholders divided by the average number of
shares in issue during the financial year.
EBITDA Earnings before interest, tax, depreciation, and amortisation.
EPRA The European Public Real Estate Association, a real estate industry body. This organisation has issued
Best Practice Recommendations with the intention of improving the transparency, comparability,
and relevance of the published results of listed real estate companies in Europe.
EPRA earnings The IFRS profit after taxation attributable to shareholders of the Company excluding investment
property revaluations, gains/losses on investment property disposals and changes in the fair value
of financial instruments.
EPRA earnings per share EPRA earnings divided by the average number of shares in issue during the financial year, see note 12.
EPRA NTA per share EPRA NTA divided by the diluted number of shares at the year end.
EPRA net tangible asset value
(EPRA NTA)
IFRS net assets excluding the mark-to-market on interest rate derivatives, deferred taxation on
property valuations where it arises, and intangible assets. It is adjusted for the dilutive impact of
share options.
Equity All capital and reserves of the Group attributable to equity holders of the Company.
Gross property assets The sum of investment property and investment property under construction.
Gross value added The measure of the value of goods and services produced in an area, industry, or sector of an economy.
Interest cover The ratio of operating cash flow divided by interest paid (before exceptional finance costs, capitalised
interest, and changes in fair value of interest rate derivatives). This metric is provided to give readers
a clear view of the Group’s financial position.
Like-for-like occupancy Excludes the closing occupancy of new stores acquired, opened, or closed in the current financial year
in both the current financial year and comparative figures. In 2022 this excludes Camberwell, Bracknell,
Battersea, Uxbridge, Hayes, Hove and the Armadillo stores.
Like-for-like revenue Excludes the impact of new stores acquired, opened or stores closed in the current or preceding
financial year in both the current year and comparative figures. In 2022 this excludes Camberwell,
Bracknell, Battersea, Uxbridge, Hayes, Hove and the Armadillo stores.
Governance Report
Big Yellow Group PLC Annual Report and Accounts 2022
185
Strategic Report Financial Statements
33. Glossary (continued)
LTV (loan to value) Net debt expressed as a percentage of the external valuation of the Group’s investment properties.
Maximum lettable area (MLA) The total square foot (sq ft) available to rent to customers.
Move-ins The number of customers taking a storage room in the defined period.
Move-outs The number of customers vacating a storage room in the defined period.
NAV Net asset value.
Net debt Gross borrowings less cash and cash equivalents.
Net initial yield The forthcoming year’s net operating income expressed as a percentage of capital value, after adding
notional purchaser’s costs.
Net operating income on stabilisation The projected net operating income delivered by a store when it reaches a stable level of occupancy.
Net promoter score (NPS) The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of
customers to recommend a company’s products or services to others. The Company measures
NPS based on surveys sent to all its move-ins and move-outs.
Net rent per sq ft Storage revenue generated from in place customers 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.
Other storage related income Packing materials, insurance, and other storage related fees.
Pipeline The Group’s development sites.
Property Income Distribution (PID) A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt
property rental business, and which is taxable for UK-resident shareholders at their marginal tax rate.
REGO Renewable Energy Guarantees of Origin
REIT Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation
tax both on UK rental income and gains arising on UK investment property sales, subject to
certain conditions.
REVPAF Total store revenue divided by the average maximum lettable area in the period.
Store EBITDA Store earnings before interest, tax, depreciation, and amortisation, see reconciliation in the
portfolio summary.
TCFD Task Force on Climate Related Financial Disclosure
Total shareholder return (TSR) The growth in value of a shareholding over a specified period, assuming dividends are reinvested
to purchase additional units of shares.
Annual Report and Accounts 2022 Big Yellow Group PLC
186
Financial Statements
Ten Year Summary
2022
£000
2021
£000
2020
£000
2019
£000
2018
£000
2017
£000
2016
£000
2015
£000
2014
£000
2013
£000
Results
Revenue 171,318 135,241 129,313 125,414 116,660 109,070 101,382 84,276 72,196 69,671
Operating profit before
gains and losses on
property assets 106,583 81,493 79,978 76,662 70,921 65,316 59,854 48,420 39,537 37, 45 4
Cash flow from
operating activities 10 7,137 76 ,712 73,615 72 ,173 62,977 55,974 55,467 42,397 32,752 30,186
Profit before taxation 698,876 265,822 93,447 126,855 134,139 99,783 112,246 105,236 59,848 31,876
Adjusted profit before
taxation 96,802 74,625 70,998 67, 4 65 61,422 54,641 48,952 39,405 29,221 25 , 471
Net assets 2,184,375 1,453,895 1,163,876 1,123,897 981,148 890,350 829,387 750,914 594,064 552,628
Diluted EPRA earnings
per share 52.5p 42.4p 42.1p 41.4p 38.5p 34.5p 31.1p 27. 1 p 20.5p 19.3p
Declared total dividend
per share 42.0p 34.0p 33.8p 33.2p 30.8p 27.6p 24.9p 21.7p 16.4p 11.0p
Key statistics
Number of stores open** 105 78 75 74 74 73 71 69 66 66
Sq ft occupied (000)** 5,107 4,201 3,781 3,810 3,730 3,551 3,363 3,178 2,832 2,632
Occupancy increase/
(decrease) in year
(000 sq ft)* 906 420 (29) 80 179 188 185 346 200 174
Closing net rent per sq ft** £29.92 £ 28.71 £28.15 £27.28 £26.74 £26.03 £25,90 £25.23 £24.85 £24.65
Number of occupied rooms** 73,000 62,000 56,500 56,000 55,000 52,500 50,000 47, 25 0 41,800 38,500
Average number of
employees during the year** 427 370 361 347 335 329 318 300 289 286
* – the occupancy growth in 2015, 2017 and 2022 includes the acquisition of existing stores
** – from 2022 this includes the Armadillo stores, which the Group acquired the remaining 80% of which it did not previously own on 1 July 2021
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Pureprint Ltd aims to reduce at source the effect its operations have on the environment and is committed to continual
improvement, prevention of pollution and compliance with any legislation or industry standards.
Pureprint Ltd is a Carbon / Neutral® Printing Company.
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Big Yellow Group PLC
2 The Deans, Bridge Road,
Bagshot, Surrey GU19 5AT
Tel: 01276 470190
e-mail: info@bigyellow.co.uk
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more information
about us on our website
bigyellow.co.uk
Big Yellow Group PLC Annual Report & Accounts 2022