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Annual Report & Accounts 2023 Big Yellow Group PLC
The Big Yellow Difference
02 Highlights
04 Big on Security
06 Big on Innovation
08 Big on Space
10 Big on Sustainability
12 Big on Location
14 Chairman’s Statement
016 Strategic Report
16 Chief Executive’s Statement
20 Our Strategy
22 Our Investment Case
24 Our Key Performance Indicators
26 Operating Review
32 Portfolio Summary
38 Financial Review
44 Principal Risks and Uncertainties
49 Managing Environmental and Climate Change
Risksand Opportunities
55 Section 172 Statement
56 Environmental, Social and Governance Report
73 SGS Assurance Statement on the ESG Report
076 Governance Report
76 Executive Chairman’s Introduction
77 How We Are Structured
78 Directors, Officers and Advisers
81 Corporate Governance Report
88 Nominations Committee Report
91 Sustainability Committee Report
92 Remuneration Committee Report
116 Audit Committee Report
120 Directors’ Report
125 Statement of Directors’ Responsibilities in Respect
ofthe Annual Report and The Financial Statements
126 Financial Statements
126 Independent Auditor’s Report to the
Members ofBigYellow Group PLC
134 Consolidated Statement of Comprehensive Income
135 Consolidated Balance Sheet
136 Consolidated Statement of Changes in Equity
137 Consolidated Cash Flow Statement
138 Notes to the Financial Statements
171 Company Balance Sheet
172 Company Statement of Changes in Equity
173 Notes to the Financial Statements
178 Glossary
180 Ten Year Summary
This report was approved by the Board of Directors on22 May 2023
andsigned onits behalf by:
Jim Gibson
Chief Executive Officer
John Trotman
Chief Financial Officer
Contents
Operating a responsible
and sustainable business
we are
BIG on
SUSTAINABILITY
10
Delivering state-of-the-art
facilities
we are
BIG on
SPACE
08
Protecting our customers’
possessions is paramount
towhat we do
we are
BIG on
SECURITY
04
Constantly improving
thecustomer experience
we are
BIG on
INNOVATION
06
Big Yellow
is the UK’s brand leader
in self storage.
We put the customer at the heart of
everything we do and believe in getting the
small things right to make the biggest impact.
We continually evolve how we interact with
our customers, utilising systems and
technology to make their self storage
experience simple and effortless whilst
ensuring we continue to operate
asa sustainablebe business.
Annual Report and Accounts 2023 Big Yellow Group PLC 1
Highlight metrics
Profit before tax
£75.3m (89%)
£698.9m
Cash flow from
operating activities
(3)
£109.2m +10%
£99.3m
Basic earnings per share
40.1p (90%)
385.4p
Statutory metrics
2023 2022
Adjusted prot before tax up 10%,
EPRA earnings per share up 8%.
Revenue
£188.8m +10%
£171.3m
Store revenue
(1)
£186.7m +10%
£169.3m
Like-for-like store revenue
(1,2)
£162.9m +7%
£151.8m
Store EBITDA
(1)
£134 .0m +11%
£12 0.9m
Financial metrics
Adjusted profit before tax
(1)
£106.0m +10%
£96.8m
EPRA earnings per share
(1)
56.5p +8%
52.5p
Dividend final
22.9p +7%
21.4p
Dividend total
45.2p +8%
42.0p
Highlights
Against the backdrop of a challenging macro and
geopolitical environment, we have delivered another
year of growth, with revenue up 10% and adjusted
profit before tax up 10% year-on-year.
Annual Report and Accounts 2023 Big Yellow Group PLC2
Store metrics
Highlights
– Revenue growth of 10%, reflecting new stores and an additional three
months of Armadillo (acquired 1 July 2021)
– Like-for-like store revenue is up 7%, mainly from increases in average
achieved rents
– Like-for-like occupancy decrease of 2.0 ppts to 84.0% (March 2022:
86.0%). Closing occupancy, reflecting the additional capacity from
five recently opened stores, is down 2.8 ppts
– Like-for-like average achieved net rent per sq ft increased by 10%
year on year, like-for-like closing net rent up 9% from March 2022
– Overall store EBITDA margin increased to 71.8% (2022: 71.1%)
– Cash flow from operating activities (after net finance costs and
pre-working capital movements) increased by 10% to £109.2 million
– Adjusted profit before tax up 10% to £106.0 million, EPRA earnings
pershare up 8% to 56.5p
– 45.2 pence per share full year dividend, an increase of 8%
– Statutory profit before tax of £75.3 million, down from £698.9 million
in the prior year, which included a revaluation surplus of £597 million.
This year open store valuations were up 1%, oset by write-downs
ondevelopment assets, resulting in a deficit of £30 million
– Refinancing of £120 million seven-year M&G loan and new longer-term
$225 million shelf facility with Pricoa Private Capital
– SBTi targets externally verified, £4.7 million invested in solar retro-fit,
53 stores now have solar with a 94% increase in capacity in the year
to 4.5 Megawatts
Store Maximum Lettable Area
(“ M LA”)
(1)
6,292,000 +3%
6,098,000
Closing occupancy (sq ft)
(1)
5,088,000 (0.4%)
5,107,000
Closing occupancy
(1)
80.9% (2.8 ppts)
83.7%
Occupancy –
like-for-like stores (%)
(1,2)
84.0% (2.0 ppts)
86.0%
Average occupancy
(1)
83.7% (3.0 ppts)
86.7%
Closing net rent per sq ft
(1)
£32.48 +9%
£29.92
Like-for-like average net achieved
rent per sq ft
(1,2)
£33.31 +10%
£30.35
Like-for-like closing net rent
per sq ft
(1,2)
£34.60 +9%
£31.80
Investment in new capacity
– 193,000 sq ft of capacity added in the year, with two new stores
opened in London (Harrow and Kingston North), and an operating
store acquired in Aberdeen
– Acquisition of freehold property on Old Kent Road, London taking the
pipeline to 11 development sites of approximately 0.9 million sq ft
(15% of current MLA), of which nine are in London, and 1.2 million
offully built unlet space available
– Further progress to reduce our short leasehold exposure on a few
remaining stores. Acquisition of freehold sites at Farnham Road,
Slough and Staples Corner, London to build replacement stores,
andwe acquired the freehold of our Oxford store
– Planning consent granted for new stores in Staines (West London)
and Farnham Road, Slough; we now have seven pipeline stores
withplanning
– Initial tenders on our proposed Slough Farnham Road facility have
been encouraging and hence we will be commencing on site at Slough
this Summer, with further construction starts to follow later in the
year, subject to planning and vacant possession
(1)
See note 33 for glossary of terms.
(2)
The like-for-like metrics exclude stores opened and acquired in the current and preceding financial years, and the Armadillo stores.
(3)
See reconciliation in Financial Review.
Annual Report and Accounts 2023 Big Yellow Group PLC 3
We have invested in
state-of-the-art security,
toprovide our customers
with peace of mind
andto reduce our
operational risk.
Security checks and
oursystems mean we
always know who is in
our buildings. Every Big
Yellow storage room is
individually alarmed,
and we have staff on
siteseven days a week
with CCTV monitored
around the clock.
Protecting our customers’ possessions is paramount
to what we do
we are
BIG on
SECURITY
Annual Report and Accounts 2023 Big Yellow Group PLC4
Customer
SecurityChecks
We carry out identity checks on everyone
whostores with us.
Using our Check-in Online digital platform,
customers can eortlessly upload security
documents and a photo of themselves using
their mobile phones at home. This is used by
over 90% of our move-ins.
Check-in Online also enables customers
toeasily submit an inventory of their goods.
This assists our teams to ensure possessions
are adequately covered with contents
protection and prevents any prohibited
itemsbeing stored.
24/7 externally
monitoredCCTV
Individually alarmed rooms
Customer ID checks
Vigilant staff on site seven
days a week
Perimeter fencing
Electronic coded gates
Fire and smoke detection
Prohibited goods list enforced
The level of security
put me at ease and
Ifeel assured that
mybelongings will
be safe whilst they
are in store.
(Customer at Big Yellow Watford)
Annual Report and Accounts 2023 Big Yellow Group PLC 5
The online check-in
system is so user
friendly and takes the
stress out oftheprocess.
(Big Yellow Balham Customer)
Investing in time-saving
technology throughout
the customer journey
enables us to deliver
exceptional service.
Constantly improving the customer experience
we are
BIG on
INNOVATION
Annual Report and Accounts 2023 Big Yellow Group PLC6
Making storage easy
We understand people often need self storage
when going through a stressful life event like
moving home, house renovations, going
through a separation or starting a business.
We lighten the load for our customers
wherever we can. This runs through every part
of our business from how we design our digital
user experience to how we build our stores.
Step 1
We know how dicult it can be to decide how
much storage space is needed. Our online size
estimator makes it easy for our customers to
select the right space, obtain a quote and
reserve online.
Step 2
Our digital platform has been designed to
enable the customer to check-in online
from home, in minutes. Engaging animations
hand-hold customers through the storage
license and how the service works. We
make itquick and easy to upload identity
documents, take a security selfie and create
a storage inventory.
Step 3
Customers can enjoy a stress-free arrival with
our large car parks, loading bays and free use
of trolleys to help move their possessions.
Easy PIN access and friendly store teams
complete a smooth move-in experience.
A stress-free experience
Online room estimator
to help customers choose the
rightspace
Quote and reserve online
at a click of a button
Packing made easy
with Click and Collect or home
delivered boxes and packing materials
Fast onboarding at home
using our Check-in Online platform
Stress free unloading
andloading
with our large car parks and trolleys
The online tutorial
video and electronic
signing-in make
themoving in
process seamless.
(Big Yellow Camberwell Customer)
Annual Report and Accounts 2023 Big Yellow Group PLC 7
We are continuing with
our strategy to deliver
anunrivalled portfolio
oflarge, purpose-built
freehold self storage
centres focused on
London, the South
Eastand other large
urbanconurbations.
Ourcustomers like our
modern, brightly lit
storesand the fact they
are situated in visible
locations, easily
accessible from
mainroads.
Delivering state-of-the-art facilities
we are
BIG on
SPACE
Annual Report and Accounts 2023 Big Yellow Group PLC8
Investing in
our pipeline
Big Yellow now has a pipeline comprising 11
development sites with a cost to complete
ofapproximately £186 million.
These store openings are expected to add
approximately 0.9 million sq ft of storage
space to the portfolio, an increase of 15% from
the current maximum lettable area of the
Group’s portfolio.
Our current estimate of net operating income
at stabilisation, at today’s prices for the 11
store pipeline is approximately £31.5 million,
representing an 8.6% return on cost.
Continuing our strategy to reduce our
leasehold exposure we have acquired freehold
sites at Farnham Road, Slough and Staples
Corner in London for replacement stores. We
also acquired the freehold of our Oxford store.
Seven of the 13 total new stores (including the
replacement stores) have planning and eight
are in London.
Our buildings are
purpose-built
We believe in
bright spaces
Stress-free
large lifts and wide corridors
Storage rooms to
suiteveryone
from wardrobe to warehouse
sizedspaces
Great facilities,
clean and safe with
easy access and
modern security.
(Big Yellow Uxbridge Customer)
Annual Report and Accounts 2023 Big Yellow Group PLC 9
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
andincrease shareholder
and customer value.
Operating a responsible and sustainable business
we are
BIG on
SUSTAINABILITY
Annual Report and Accounts 2023 Big Yellow Group PLC10
2022 2023 2024 2025 2026 2027 2028 2029 2030
53
66
78
90
102
114
32
108
109
111
113
115
117
105
119
121
119
121
No of stores No of stores with solar
Projected number of stores with solar by 2030
Generating
SolarEnergy
We use the extensive roof space on our
storesto generate on-site renewable energy
through solar PVs. During the year, we installed
solarpanels on 25 of the Group’s stores.
Wehave invested £4.7 million on our retrofit
programme this year and now have 53of our
buildings with solar PVs installed. Wehave
committed a further £3 million investment
over the next 12 months to retrofitsolar PVs
across a further 12 stores.
We are currently trialling battery technology to
help further maximise the use of solar energy
to power our buildings.
Big Yellow Foundation
Our Foundation supports charities who work
with vulnerable adults to help find them
sustainable employment. We raise money
from our generous customers who are invited
to donate when they move-in and move-out
from our stores as well as from our own
employee fundraising. Big Yellow Group PLC
matches every £1 donated.
£204,000 was raised for the Foundation in
the year, with £193,000 paid out in grants to
the charities.
Local Community
andCharity Support
We have a long-term commitment to help the
communities we operate in through the
donation of storage space. We supplied
£267,000 of discounted storage space to
200charities, of which £255,000 was
freeofcharge.
We currently
generate our own
solar energy at
53stores.
Annual Report and Accounts 2023 Big Yellow Group PLC 11
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
Birmingham
Stoke-on-Trent
Chester
Macclesfield
Sheeld Parkway
Sheeld Westbar
Sheeld Hillsborough
Hull
Grimsby
Stockport
Manchester
Leeds
Liverpool South
Liverpool
Liverpool Aintree
Liverpool North
Morecambe
Edinburgh
Dundee
Newcastle
Canterbury
Cardi
Gloucester
Bristol
Central
Bristol
Ashton Gate
Portsmouth
Exeter
Torquay
Hove
Stockton Central
Stockton South
Newcastle
London
Aberdeen
Plymouth
Daventry
Sheeld Bramall Lane
Gateshead
Warrington
With 108 stores nationwide,
we want to keep expanding
our national reach and
nowhave 11 stores
in the development
pipeline.
In the year we
op ene d H a r row,
witha maximum
lettable area
of82,000 sq ft,
Kingston North
(56,000 sq ft) and
acquired an operating
store in Aberdeen
(53,000 sq ft).
Romford
Ilford
Dagenham
Barking
West Norwood
Balham
New Cross
Byfleet
Croydon
Orpington
Beckenham
Bromley
Sutton
Kingston
New Malden
Battersea
Kingston North
Kennington
Sheen
Fulham
Richmond
Twickenham x2
Hounslow
Chiswick
East Finchley
Bow
Edmonton
Enfield
Hanger Lane
Ealing
Gypsy Corner
West Molesey
Nine Elms
Camberwell
Kings Cross
Wembley
Harrow
Staines
West Kensington
Uxbridge
Hayes
Epsom
Kentish Town
Eltham
Wapping
Old Kent Road
North Finchley
Queensbury
Wandsworth
Tolworth
Watford
North Kensington
Staples Corner
Merton
we are
BIG on
LOCATION
London
Annual Report and Accounts 2023 Big Yellow Group PLC12
New 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
Birmingham
Stoke-on-Trent
Chester
Macclesfield
Sheeld Parkway
Sheeld Westbar
Sheeld Hillsborough
Hull
Grimsby
Stockport
Manchester
Leeds
Liverpool South
Liverpool
Liverpool Aintree
Liverpool North
Morecambe
Edinburgh
Dundee
Newcastle
Canterbury
Cardi
Gloucester
Bristol
Central
Bristol
Ashton Gate
Portsmouth
Exeter
Torquay
Hove
Stockton Central
Stockton South
Newcastle
London
Aberdeen
Plymouth
Daventry
Sheeld Bramall Lane
Gateshead
Warrington
KEY
84 Big Yellow stores (46 in London)
12 Big Yellow stores under
development (9 in London)
24 Armadillo stores (1 in London)
Harrow,
September 2022
Kingston North,
September 2022
Aberdeen,
June 2022
Annual Report and Accounts 2023 Big Yellow Group PLC 13
Chairman’s Statement
Big Yellow Group PLC (“Big Yellow”, “the Group” or “the Company”), the UK’s
brand leader in self storage, is pleased to announce its results for the year
ended 31 March 2023.
We are pleased to have delivered these results despite an increasingly
familiar year of macroeconomic, political and geopolitical volatility.
Ourpricing models to new and existing customers have successfully
mitigated the impacts of higher inflation, delivering improved average
achieved rents, which have been the main driver of revenue growth.
Underpinning our resilience is our core strategy to invest significantly
inthe London market, which has seen the strongest performance, driven
by both domestic and business customers, over the last year. We have
also been successful in controlling overall increases in store operating
expenses to 4% on a like-for-like basis, resulting in improved
operatingmargins.
We have also continued to invest in our business with the acquisition
ofan operating store in Aberdeen, a property in a strategic location
ontheOld Kent Road, London, and have opened a further two stores in
Harrow and North Kingston. Since the onset of the pandemic, the Group
has opened eight new stores, which, coupled with the acquisitions
ofAberdeen and the remaining 80% interest in Armadillo have increased
the Group’s MLA by 1.6 million sq ft, or 34%. These new stores have been
animportant contributor to our overall revenue growth of 10% for the
yearand we have 1.2 million sq ft of fully built unlet space in the
existingportfolio.
Financial results
Revenue for the year was £188.8 million (2022: £171.3 million),
anincrease of 10%. Like-for-like store revenue growth (see note 33)
was7%driven by improvements in average net rent. Like-for-like store
revenue excludes new store openings and acquired stores (including
theremaining interest of Armadillo portfolio which we acquired in July
2021, and Aberdeen acquired in June 2022).
Store revenue for the fourth quarter was £46.1 million, an increase
of6%from £43.6 million for the same quarter last year.
The business continues to be highly cash generative, with operating
cashflow (after net finance costs and pre-working capital movements)
increasing by £9.9 million (10%) to £109.2 million for the year
(2022:£99.3 million).
We are very proud to have delivered adjusted profits in excess of £100
million for the first time since the business was founded nearly 25 years
ago. The adjusted profit before tax in the year was £106.0 million up 10%
from £96.8 million in 2022. EPRA earnings per share increased by 8%
to56.5p (2022: 52.5p) with an equivalent 8% increase in the dividend
pershare for the year.
The Group’s statutory profit before tax was £75.3 million, a decrease
of89% from £698.9 million in the prior year. There was a very significant
increase in the valuation of our investment portfolio last year, and this
year the valuations have remained relatively flat, with an increase of
1%on the open store portfolio. However, the overall portfolio valuation
isdown by £30 million, as a result of a £57.5 million reduction in the value
ofour industrial property and land without self storage planning in the
development pipeline, reflective of the new financing conditions and
wider market environment for land. The Financial Review and note 15
contains further details on the Group’s investment property valuation.
Investment in new capacity
In June 2022 the Group acquired an existing self storage centre in
Aberdeen for £10 million, and this together with the new stores opened
inHarrow and Kingston North (both in London) added 191,000 sq ft
totheGroup’s capacity.
A key aspect of the Big Yellow strategy is that our portfolio is to build
oracquire high quality freehold stores to drive higher operating margins,
with the business not subject to continual increases in industrial rent
liabilities, and to have control of all aspects of our estate. We are therefore
pleased to have continued this with the following three additional
investments in the last year as follows:
– we acquired a prime site on Farnham Road in Slough, which now
hasplanning for a 62,000 sq ft self storage centre. As part of this
transaction, the Group has also agreed to the surrender of the lease
on its existing similar capacity Slough store. We are currently out
totender, and expect to start construction this Summer, with an
opening in 2024, at which point customers from the existing store
willbe transferred and the lease surrendered;
– in December we acquired a 2.1 acre freehold site in Staples Corner,
London for £13.25 million. The site is located close to our existing
leasehold 112,000 sq ft store at Staples Corner and is currently let
ona short-term basis. Our intention is to seek planning consent for
a130,000 sq ft store on the new site. Following construction of the
new store, we will transfer the customers from the existing store
tothe new location, and then seek to assign the lease; and
– we acquired the freehold of our Oxford store for £13.5 million in
September. The 1.8 acre site includes two small industrial trade units,
which will provide vacant possession in 2030 and the opportunity
tointensify the use.
Annual Report and Accounts 2023 Big Yellow Group PLC14
After a 15 year search, the Group acquired a freehold property on Old Kent
Road, London. The property, currently let to Iceland Foods, has a passing
rent of £388,000 with six years remaining on their lease. We will be
seeking planning consent for a 75,000 sq ft self storage centre on the
site. This is a medium-term strategic opportunity in an area of London
going through significant regeneration. The timing of construction and
opening is dependent on planning and vacant possession.
On the planning front, we have secured a resolution to grant planning
consent for an approximately 65,000 sq ft self storage centre and
approximately 100,000 sq ft of capacity across nine industrial units,
atour site in Staines.
We are currently on site constructing our new store in Kings Cross which
opens in June 2023. In May 2022, we decided to put on hold any future
construction commitments, given the uncertainties around pricing in
theconstruction market and our need to secure fixed price contracts.
Thatdecision appears to have been opportune; conditions in the
construction market are improving to our benefit, labour shortages
persist, but steel, cladding and other materials are sharply down in cost
(albeit from significant increases between 2020 and 2022). Preliminaries
and contractor margins have additionally reduced. Therecent tender on
one of our Slough development sites is encouraging. The Slough store will
commence on site this Summer and we will be restarting the roll-out of
projects with planning, some of which are subject to vacant possession,
later this year.
We now have a pipeline of 11 proposed self storage facilities. These store
openings are expected to add approximately 0.9 million sq ft of storage
space to the portfolio, an increased capacity of 15%.
The total development cost of these 11 new stores is £366 million,
withcosts incurred to date of £180 million, and cost to complete of
approximately £186 million. We estimate they will generate net operating
income at stabilisation of £31.5 million at today’s prices, representing
an8.6% return on cost. The replacement stores for Slough and Staples
Corner will cost a further £31 million, with Slough Farnham Road starting
construction this year, and Staples Corner subject to planning.
Harrow
Much less helpfully, in May 2022 we announced the conditional sale
ofthe industrial scheme at Harrow. The project has been plagued with
setbacks including the main contractor falling into administration.
Theconditions necessary to eect the sale to the prospective purchaser
have not been met and therefore the sale will not proceed.
We intend now to retain the asset, complete the outstanding construction
works with a newly appointed contractor, with an anticipated completion
in August of this year, and proceed with the lettings of the 11 industrial
units ourselves. The project shows a healthy surplus value despite it having
been a frustrating and costly process, but that said, newly built multi-let
industrial unit schemes in London are relatively scarce and we are
confident it will therefore generate further value over the next few years.
Capital structure
Net debt is £486.6 million at 31 March 2023, with an average of cost
of4.7%, and interest cover of 7.7 times (2022: 10.5 times). The clear
strategy has been to have low relative levels of debt, and reflective
ofthat, a flexible hedging structure, which we will continue.
Dividends
The Group’s dividend policy is to distribute a minimum of 80% of full year
adjusted earnings per share. The final distribution of PID declared is 22.9
pence per share. This brings the total distribution declared for the year
to45.2 pence per share representing an increase of 8% from 42.0 pence
per share last year.
Our people
We continue to believe that any successful business requires the creation
of a fully engaged employee culture and this has always been a key focus
within Big Yellow. As mentioned earlier, this has been a challenging year,
with continued uncertainty, and we know that to deliver such a resilient
performance requires highly engaged and motivated people throughout
the business.
Customer service and feedback is also a fundamental success factor.
Ourcustomer net promoter scores (“NPS”) were an average of 78.9 over
the year. NPS scores at these levels are highly unusual and a good reflection
of the culture of this business.
I would like to thank all of our people for their eorts in contributing to
another year of growth.
Outlook
The central question facing Boards, particularly in capital intensive
businesses such as real estate, is: does the business model work in a
higher interest rate environment? Big Yellow’s business model has been
built on the assumption of interest rates being higher than the very low
levels that persisted following the Global Financial Crisis until last year.
The commitment to relatively low levels of debt and the established
flexible debt management strategy remains precisely the same.
Thefloating portion of our debt has proved more costly in recent months
but has previously worked to our advantage. Over the cycle, we remain
confident that it strikes the right balance.
We will create incremental income through the building of new stores
togenerate cash on cash returns of 8% or more and the acquisition
ofexisting assets to generate returns of 9% or more.
As always, we make no comment on likely outcomes for the economy,
weleave that to the experts. We are, however, confident that the existing
platform of stores will continue to provide a resilient stream of income,
with scope for increase including from the pipeline of new stores.
Mostimportantly, we believe the business model is fit for purpose
inthisnew environment.
Nicholas Vetch CBE
Executive Chairman
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 15
Chief Executive’s Statement
We are pleased to have delivered a set of results that are
testament to the underlying resilience of our business.
Trading
We are pleased to have delivered a set of results that are testament to the
underlying resilience of our business. The significant increase in interest
rates to tackle higher inflation and tighter mortgage borrowing conditions
following the Russian invasion ofUkraine, added to by the negative
headlines and volatility around the UK economy last Autumn, does,
aswe’ve said in the past, have an impact on our demand at the margin,
particularly for those making bigger ticketdecisions.
Over the year there has been a significant increase in the cost of living,
driven by energy, fuel and food inflation, which is having a disproportionate
impact on those with lower incomes. However, we have not seen that
distress come through to our customer base, where bad debts have
notincreased from last year, and our aged debtors remain below their
pre-Covid levels. Unemployment remains at very low levels and our
customers on the whole are storing goods or individual possessions that
are of value to them, and our customer base is largely comprised of those
from higher income groups.
Self storage is not immune to these external shocks and resultant
uncertainty, but this performance alongside our track record since the
Global Financial Crisis, demonstrates our ability to navigate these
headwinds. Finally, as with last year, we are seeing a return to occupancy
growth in May, with an improving demand picture.
People
As ever, our progress reflects the steadfast commitment of our people
who have worked extremely hard this year.
After seeing elevated levels of sta turnover post-Covid in the second half
of 2021 and the first half of 2022, we have seen a consistent improvement
and overall our levels of sta turnover are now in line with the pre-Covid
period. Very pleasingly, the level of vacancies in the business is at historic
lows, with a significant drop in leavers in the final quarter.
Salary increases last year were on average 5.3%, with average bonuses
of10%, and we have recently awarded an average salary increase from
1April of 5.6%. Recognising that our employees at the lower end of our pay
scales have seen a disproportionate impact from rising prices, we made
two cost of living payments over the Winter, principally in Customer
Service and the stores. This was very well received.
Given the investment we have made in recent years in the automation of
our store operations, particularly in relation to interaction with prospects
and customers, we continue to review every vacancy before making
adecision to recruit with a view to achieving savings this year through
thesalary line. Automation is also relevant to many other aspects
ofourbusiness, including head oce functions and we currently have
amoratorium in place on any further recruitment with the bias being
towards technological advance. As with the stores, we will continue to
review stang levels at our Bagshot headquarters.
Our brand is now our biggest recruitment tool, with direct recruitment
through various digital channels now representing 80%, with 20% through
more traditional agencies.
In addition to gender, we have made significant improvements to our
culture and practices in respect of diversity, and these are set out in
ourGender and Inclusivity Report, which is available on our corporate
website, and has been formally filed for 2022. Inclusivity and Diversity
inour business is very much driven by a committee of colleagues from
throughout the business and is something that will remain a focus, as
webelieve diversity has a positive impact on culture and performance.
We continue to invest in development, as this has benefits, not just
around performance, but also around retention. We moved much of our
training to a new learning and development platform over the Covid period
and this has had significant improvements to eciency of delivery,
monitoring, and control and hence outcomes. Other new initiatives such
as “Meet our Experts” using internal talent, and a new updated mystery
shopping programme following feedback from the stores are further
examples. In addition, following our 2021 engagement survey, we have
taken 19 actions covering areas such as rotas, store bonus metrics,
internal communication, store cover, store feedback, development,
training, benefits, and others. The next survey is taking place currently
and hopefully this response will result in continued high levels of
engagement with the survey.
Investment in our operating
platform and systems
The march of automation in business continues, and we have focused on
investing in technology to improve eciency right from when Big Yellow
was founded. We have always invested in the security and automation
ofour stores, allowing access out of opening hours, and this is something
we continue to upgrade and improve as security is always very high up
inthe considerations of anyone looking to use self storage.
Annual Report and Accounts 2023 Big Yellow Group PLC16
Strategic Report
The arrival of search and smartphones, along with investments we
havemade in software development and external SaaS programmes
means that our prospect and customer interactions and experience are
unrecognisable from twenty years ago. Our stores have been paperless
since 2020 and we continue to invest in automating certain repetitive
tasks to improve productivity in our day-to-day store operations.
Examples of this currently in process are credit card payments and
prospect handling, the latter to allow our digital platforms to do more
around prospect and customer interaction.
The improvements to our Big Yellow mobile and desktop platforms are
incremental and continuous and now allow a prospect to determine the
unit size required, get a quote, and reserve a room in a matter of minutes.
Customers can now check-in online before arriving at the store, and this
process has reduced significantly the time taken to process a move-in,
with a simple ID check, discussion around contents cover, and then
payment. As previously mentioned, we will always look to optimise the
use of our resource at stores, however, we will always need someone on
site for a certain number of hours in the day principally to carry out key
tasks, one of the most important being the security and protection of our
assets, which cannot be done just by using CCTV cameras, particularly
inlarge, busy stores. At the same time, when on site, our store team
members provide customer service, particularly to our business
customers who are more regular visitors; carry out the necessary due
diligence around security and health and safety; keep the stores clean
and presentable; drive ancillary sales; and follow up on prospects,
particularly for those who have reserved. Although IDs are uploaded
during the check-in online process, it is our policy to see the original and
ensure the customer moving-in is the same person. This is not just about
the security of our assets, it is also important for our customers when
visiting our stores, often alone, that those in the building have been
vetted in some way.
Automation and the use of SaaS programmes are also something we
invest in to improve eciency of many of our centralised functions, and
by way of example, the progress we have made in our finance function
has allowed us to maintain control of headcount, despite the significant
increase in the size of the business.
Generative AI is the current hot topic, and we are reviewing how it can help
us improve eciency, particularly in relation to some of our head oce
functions, such as people and development and, marketing. We will
continue to monitor, review and adopt where it makes commercial sense
and improves eciency within the business.
The cyber threat remains, and we continue to invest in our digital security,
and review the eectiveness of all the tools we deploy.
In relation to our estate, we have invested around £3 million over the last
two to three years upgrading the security across the portfolio, including
improving monitoring of our stores centrally overnight. We consider
security to be fundamental to our customer oering both to the customer
and in relation to their goods, equipment or personal possessions.
Maintaining our estate is something we also believe strongly in and have
invested £4.7 million this year on the repair and maintenance of our
stores, all of which is expensed through the Income Statement.
Thinking ahead
The march of automation in business
continues, and we have focused on investing
in technology to improve eciency right from
when Big Yellow was founded. We have always
invested in the security and automation
ofourstores.
Generative AI is the current hot topic, and we
are reviewing how it can help us improve
eciency, particularly in relation to some of
our head oce functions, such as people and
development and marketing. We will continue
to monitor, review and adopt where it makes
commercial sense and improves eciency
within the business.
Over 90% of our
customers use
check-in online.
Annual Report and Accounts 2023 Big Yellow Group PLC 17
Strategic Report Governance Report Financial Statements
ESG
One of our key strategic objectives is around sustainability and the ESG
framework. As part of this, a key objective is to be Net Renewable Energy
Positive by 2030. This will be achieved through the investment in solar
across our estate and we have completed 23 of the initial 36 retrofit solar
installations to date with a total of 53 stores now having solar. In addition,
we are looking to put solar on our Armadillo stores with surveys currently
taking place. The investment in solar, not only being good for the planet,
isreducing our reliance on external energy supply. Our current installed
solar capacity is 4.5 Megawatts, an increase of 94% over the year.
Weestimate that this is currently saving the business £0.5 million per
year. This will continue to increase as we make further progress towards
our objective of being self-sucient in energy.
We have completed a rigorous process with the Science Based Targets
initiative to have our targets certified by them, and these are reported
inmore detail in the ESG section. Our focus will now be working towards
achieving these over the coming seven years. Scope 1 and Scope 2 are
within our control, and for the Scope 3 targets, we will need to engage
significantly with our supplier network.
There is an important requirement in relation to the energy eciency of
commercial real estate with a deadline in 2027 for all buildings to have
Ato C EPC certification. This is increasingly becoming relevant for valuers
and indeed purchasers of existing self storage centres. We have recently
had all of our buildings assessed and 98% comply, with two Armadillo
stores rated D. We have planned investment in these stores, including
solar, which we believe will improve their energy eciency ratings.
Thisisa pleasing result, and reflective of the fact that most of our
portfolio is developed from scratch and is largely purpose-built.
Given the human rights concerns we had around the supplier of our solar
panels, with a move to a new Norwegian supplier at the end of 2021, we
have this year carried out a Supply Chain Risk assessment and engaged
with the top 80% of our value chain. Key areas for consideration were
around slavery and human rights more generally. We believe that it
isimportant to have a like-minded supply change consistent with the
BigYellow culture, and this is something we will continue to progress
overthe coming years.
I am delighted to be able to announce that since its formation in 2017,
theBig Yellow Foundation has made grants to our charity partners of
£762,000, all of whom focus on the rehabilitation of vulnerable people
into work. Following a review, our relationship with two of these seven
charities has come to an end after five years and we are in the process
ofreplacing them. Working Chance is the first of our new charity partners
and is the only UK charity working to help women with convictions find
employment. We are also in discussions with Supporting Wounded
Veterans, a charity focussing on those who are physically and mentally
wounded to move forward with rehabilitation into employment.
Wecontinue to run work placements and were very pleased over the
yearto have candidates coming into our business for job experience
recommended by Street League, Breaking Barriers, and the Down’s
Syndrome Association.
Finally, and very importantly, we have always tried to provide free
anddiscounted space to charities serving local communities to our
stores, and our community investment over the last year has been
approximately £271,000.
Chief Executive’s Statement continued
Our current installed
solar capacity
is4.5Megawatts,
anincrease of 94%
overthe year.
Annual Report and Accounts 2023 Big Yellow Group PLC18
Strategic Report
Summary
Our investment case remains to provide consistent compounding returns
from both income and growth from a secure capital structure, and the key
constituents of our business model developed over the last twenty plus
years are set out below:
– a high quality and growing portfolio of freehold properties delivering
higher operating margins;
– a focus on London and the South East and other large urban
conurbations, where the drivers in the self storage market are at their
strongest and the barriers to competition are at their highest;
– continuing innovation and automation;
– an inclusive and non-hierarchical culture with a highly engaged team;
– a focus on delivering the highest levels of customer service;
– delivering on our strong ESG commitments;
– the UK’s leading self storage brand, with high and growing public
awareness and online strength; and
– strong cash flow generation from a secure capital structure.
Jim Gibson
Chief Executive Officer
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 19
Strategic Report Governance Report Financial Statements
Real estate
The other main plank of our strategy has been to build a portfolio of large
purpose-built freehold self storage centres, focused on London, the
SouthEast and other large urban conurbations. We believe that by owning
a predominantly freehold estate we are insulating ourselves against:
economic downturns as we operate at higher margins; adverse rent
reviews; and in the long-term possible redevelopment of key stores by the
landlord. It also provides us financing flexibility as rent is a form of gearing.
Approximately 60% of our current annualised store revenue derives from
within the M25; for London and the South East, the proportion of current
annualised store revenue is 75%. With our store development pipeline
largely in London and the South East, we would expect these proportions
to increase over the medium term.
New supply and competition is a key risk to our business model, hence
our focus on London and its commuter towns, where barriers to entry in
terms of competition for land and diculty 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 2022, there have
been only five store openings in London (including three Big Yellow stores),
and we anticipate seven new stores in London in 2023, including one
BigYellow store opening.
Our Strategy
Brand, platform, and
customerservice
Our strategy from the outset has
beentodevelop Big Yellow into the
market-leading self storage brand,
delivering excellent customer service,
investing insustainability and our
market-leading operating platform
anddigital channels, with a great
cultureand highly motivated employees.
Weconcentrate ondeveloping our
storesin main road locations with high
visibility, where our distinctive branding
generateshigh awarenessofBigYellow.
We focus on the following nine key areas:
1. New prospects
Leveraging our market-leading
brand position to generate
newprospects, principally from
our digital, mobile and
desktopplatforms
2. Customer
satisfaction
Focusing on training, selling
skills, and customer
satisfaction to maximise
prospect conversion
andreferrals
We continue to believe that the medium-term opportunity to create
shareholder value consists of driving revenue and cash flow from
ourexisting portfolio through continued investment in sustainability,
ourpeople, culture, and digital operating and marketing platforms.
Inaddition, we aim to deliver external growth as new stores open
throughcontinued investment in our development pipeline, and
selectively acquiring existing storage centres from smaller operators.
Creating shareholder value
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eective sustainability strategy, particularly around climate change,
and this continues to be akeystrategic focus for our business.
3. Driving
revenue
Growing occupancy and net
rent to drive revenue optimally
at each store
Annual Report and Accounts 2023 Big Yellow Group PLC20
Strategic Report
Our stores are on average 58,000 sq ft, compared to an industry average
of approximately 44,000 sq ft (source: UK Self Storage Association 2023
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 7.7 times for the year ended 31 March 2023.
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 during
the pandemic, where we delivered a strong trading performance whilst
atthe same timecontinuing to invest and expand.
Self storage demand drivers
Economic activity and change are key drivers of self storage demand and
are greatest in the larger urban conurbations, and in particular London
and the South East. The structural changes consisting of the conversion
of ex-industrial brownfield land to other uses, in particular residential;
thereduction in home ownership and increased proportion of those
choosing to rent; increasing density of living with new properties being
built with optimised living space and very little provision for storage;
willcontinue and are resulting in increased demand for our product.
Thesechanges have resulted in a significant shortage of available
warehousing space, particularly in London, which has been accentuated
by the current crisis.
Self storage provides a convenient flexible solution to businesses such
asonline retailers, importers and exporters, service providers, the public
sector, and marketing companies looking for mini-warehousing space.
In addition to domestic customers taking space to declutter their homes,
our largest customer base is those using us short-term around an event,
such as moving home, refurbishment, inheritance, household formation,
separation, relocation, and students.
Resilience
The location of our stores, brand, security, and most importantly customer
service, together with the diversity of use in our 73,000 occupied rooms,
serve better than any lease contract in providing income security.
The business proved to be relatively resilient, but not immune during the
Global Financial Crisis and recession of 2007 to 2009, with London and
the South East proving to be less volatile. Since 2020, the Group has
grown its revenue by 46%.
80% of our customers pay by direct debit, and our cash collection has
remained robust over recent years.
We focus on the following nine key areas:
4. Cost control
Maintaining a focus on cost
control, so revenue growth
istransmitted through to
earnings growth
5. Increasing
footprint
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
6. Expanding
Armadillo
Selectively acquiring existing
self storage assets into the
Armadillo platform
9. Capital
Maintaining a conservative
capital structure in the
business with Group interest
cover of a minimum
offivetimes
8. Sustainability
Maintaining Big Yellow’s culture
as an accessible, apolitical,
inclusive, non-hierarchical,
socially responsible, and
enjoyable place to work
7. Culture
Through our ESG initiatives,
aimto create a more
sustainable business which
willincrease shareholder and
customer value in both the
medium and long-term
Annual Report and Accounts 2023 Big Yellow Group PLC 21
Strategic Report Governance Report Financial Statements
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
the environment.
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 Investment Case
In the twenty three years since flotation in May 2000, Big Yellow has delivered
aTotalShareholder Return (“TSR”), including dividends reinvested, of 13.9% per
annum, in aggregate 1,871.5% at the closing price of 1,169p on 31 March 2023.
Thiscompares to 4.4% per annum for the FTSE Real Estate Index and 5.0% 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 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
– 6.3 million sq ft UK footprint, with
development pipeline of 0.9 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
Our values How we deliver value
Annual Report and Accounts 2023 Big Yellow Group PLC22
Strategic Report
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 31 months
– 38% of customers in stores greater
than two-year length of stay,
afurther16% for one to two years
– Low bad debt expense
(0.2%ofrevenue in the year)
Strong growth
opportunities
– Opportunities to drive further
occupancy growth
– Yield management as occupancy
increases
– Densification of living and scarcity
offlexible business warehouse space
drives demand
– Growth in National Customers
andbusiness customer base
– Increasing the platform with a
conservative capital structure
Conversion into
quality returns
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Annual Report and Accounts 2023 Big Yellow Group PLC 23
Strategic Report Governance Report Financial Statements
Our Key Performance Indicators
The Group’s KPIs are shown in the charts below. 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 the key measures which are
focused on by the Board and are reported on a weekly basis.
Closing Occupancy
5,088,000 sq ft
+34% over 5 years
Revenue
£188.8m
+51% over 5 years
Closing net rent per sq ft
£32.48
+19% over 5 years
Adjusted profit before tax
£106.0m
+57% over 5 years
3,000
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4,000
4,500
5,000
5,500
2019 2020 2021 2022 2023
3,810
3,781
4,201
5,107
5,088
50
70
90
110
130
150
170
190
210
2019 2020 2021 2022 2023
125.4
129.3
135.2
171.3
188.8
25
26
27
28
29
30
31
32
33
2019 2020 2021 2022 2023
27.28
28.15
28.71
29.92
32.48
15.0
25.0
35.0
45.0
55.0
65.0
75.0
85.0
95.0
105.0
115.0
2019 2020 2021 2022 2023
67.5
71.0
74.6
96.8
106.0
(000 sq ft)
(£)
(£m)(£m)
Annual Report and Accounts 2023 Big Yellow Group PLC24
Strategic Report
Over the course of the past five years, revenue has 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. The current year has seen a reduction
in occupancy, but revenue has grown by 10%, with improvements
inaverage rate, and the full year benefit of the Armadillo acquisition.
In 2019 closing net rent per sq ft increased by 2%, by 3% in 2020,
by2%in2021 by 4% in 2022 and by 9% in the year to 31 March 2023.
Thelike-for-like growth in the prior year was 11%, with the acquired
Armadillo stores at a lower average net rent reducing the reported growth
for that year. We expect revenue growth to be driven by a combination
ofoccupancy increases and growth in net achieved rent per sq ft.
Adjusted earnings per share
56.5 pence
+36% over 5 years
Dividend per share
45.2 pence
+36% over 5 years
30.0
35.0
40.0
45.0
50.0
55.0
60.0
2019 2020 2021 2022 2023
41.4
42.1
42.4
52.5
56.5
0
5
10
15
20
25
30
35
40
45
50
2019 2020 2021 2022 2023
33.2
33.8
34.0
42.0
45.2
Net Promoter Score
78.9
(0.2%) over 5 years
Carbon intensity
5.0 sq m
(32%) over 5 years
50
55
60
65
70
75
80
85
90
2019 2020 2021 2022 2023
79.1
81.9
82.9
78.9 78.9
0
2
4
6
8
10
2019 2020 2021 2022 2023
7.4
7.2
6.3
5.4
5.0
Adjusted profit before tax and adjusted earnings per share (“eps”),
asdefined in note 33, 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%.
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(2022: 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 32% 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.
(pence) (pence)
(per sq m)
Annual Report and Accounts 2023 Big Yellow Group PLC 25
Strategic Report Governance Report Financial Statements
Operating Review
Self storage demand is spread across a diverse set of drivers, andis largely
driven by need, with security, convenience, qualityof product, service
andlocation being key factors.
Annual Report and Accounts 2023 Big Yellow Group PLC26
Strategic Report
The store platform and demand
We now have a portfolio of 108 open and trading stores, with a current
maximum lettable area of 6.3 million sq ft.
Self storage demand is spread across a diverse set of drivers, and is
largely driven by need, with security, convenience, quality of product,
service and location being key factors. Awareness remains relatively
lowcompared to commoditised products, such as hotel rooms or airline
seats, albeit it is increasing slowly year-on-year with increased supply,
marketing expenditure and customer use.
– customers renting storage space whilst moving represented 41% of
move-ins during the year (2022: 41%), with homeowners representing
27% and renters 14%. The rental market was impacted during the
pandemic, and we do expect the proportion of renters to increase
tomore normal levels osetting some of the slowdown in the
owner-occupied market as we adjust to higher costs of mortgages;
– 11% of our customers who moved in took storage space as a spare
room for decluttering (2022: 12%);
– 37% of our customers used the product because some event had
occurred in their lives generating the need for storage; they may be
moving abroad for a job, have inherited possessions, are getting
together, or separating, are students who need storage during the
holidays, or homeowners developing into their lofts or basements
(2022: 34%);
– the balance of 11% of our new customer demand during the year
camefrom businesses (2022: 13%), who stay longer and represent
around 20% of our customers in store at any one time, occupying
37%ofthespace.
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.
The average space occupied by business customers at the year-end
is179 sq ft (2022: 180 sq ft). Domestic customers occupy on average
59sqft (2022: 59 sq ft) and pay on average 18% more in rent per sq ft
(2022:21%), however business customers do stay longer and take more
space and represent around 33% of revenue (2022: 32%).
The pandemic accelerated many structural changes that were already
occurring, such as the move to online retailing and an increase in working
from home facilitated by technological advances. The deindustrialisation
of big cities with the conversion of commercial space into residential
andother uses, has led to a shortage of suitable flexible mini-warehouse
space from which to operate small scale storage and e-fulfilment,
particularly in London. These developments, along with businesses
increasingly seeking flexible oce and storage space rather than longer
inflexible leases, have been driving our demand. We believe these are
long-term structural trends, which will benefit our business going forward.
From research we have previously carried out, a typical small business
using storage employs around three people and 60% of them are
early-stage businesses and for 50% of them this is their only space.
In addition, we have a dedicated national customers team for businesses
who wish to occupy space in multiple stores. These customers on average
occupy approximately 900 sq ft, paying £25,000 per annum, and are
billed and managed centrally. This area has performed strongly in the
year with revenue up 16% compared to the prior year, making up 4% to 5%
of occupied space.
Activity
The table below shows the quarterly move-in and move-out activity over the year for all of our stores:
Total move-ins
Year ended
31 March 2023
Total move-ins
Year ended
31 March 2022 %
Total move-outs
Year ended
31 March 2023
Total move-outs
Year ended
31 March 2022 %
April to June 23,427 24,401 (4) 18,620 18,023 3
July to September 27,12 6 25 ,712 5 28,867 27, 4 25 5
October to December 19,368 19,428 – 23,302 22,890 2
January to March 18,878 18,553 2 18,519 18,451 –
Total 88,799 88,094 1 89,308 86,789 3
Annual Report and Accounts 2023 Big Yellow Group PLC 27
Strategic Report Governance Report Financial Statements
The table on the previous page is indicative of what we have experienced
over the year, which is more muted trading conditions, with activity levels
broadly flat. The first quarter last year benefited from the tapering o of
the stamp duty holiday on 1 July 2021 which accelerated housing-related
demand. The year-on-year fall would have been greater had we not seen
arecord performance from students in June this year, following the
reopening of all campuses in the last academic year. The Group’s
move-outs increased in the second quarter by 5% compared to last year,
largely as a result of these students moving out. Move-ins and move-outs
over the second half of the year were broadly in line with the prior year.
The occupancy of the stores fell over the year by 58,000 sq ft (2022: fall
of 69,000 sq ft). Additionally, the Group acquired a 53,000 sq ft store in
Aberdeen, which had occupancy of 39,000 sq ft at the date of acquisition.
The overall decrease in the Group’s occupancy over the year was
therefore 19,000 sq ft.
The Group grew occupancy over the first six months of the financial
year,with the gains principally coming from our domestic and student
customers. In our seasonally weakest third quarter, we lost 3.8 ppts of
occupancy, similar to the prior year. Our fourth quarter started well with
astrong January, but has been relatively muted since. We believe this to
be partially as a result of the uncertainty caused by the US regional bank
crisis and customers continuing to acclimatise to a higher cost of debt
environment. We can say that move-out levels are also subdued at the
moment, and as mentioned previously, we are not seeing stress amongst
our customers. We saw a similar hesitancy in demand in the prior year
following the Russian invasion of Ukraine, with activity levels returning
tomore normal levels by the end of May 2022.
The 75 established Big Yellow stores are 84.2% occupied compared to
86.8% at the same time last year. The 9 developing Big Yellow stores
added 113,000 sq ft of occupancy over the year to reach closing
occupancy of 60.4%. The 24 Armadillo stores are 76.9% occupied,
compared to 83.1% at this time last year. Overall store occupancy was
80.9% (2022: 83.7%).
Operating Review continued
Occupancy
31 March 2023
%
Occupancy
change in year
000 sq ft
Occupancy
31 March 2023
000 sq ft
Occupancy
31 March 2022
000 sq ft
75 established Big Yellow stores 84.2% (74) 3,979 4,053
9 developing Big Yellow stores 60.4% 113 352 239
All 84 Big Yellow stores 81.6% 39 4,331 4,292
24 Armadillo stores 76.9% (58) 757 815
All 108 stores 80.9% (19) 5,088 5,107
All stores are trading profitably at the EBITDA level, with our most recent openings Harrow and Kingston North reaching break even in April 2023.
Yield management
We oer a headline opening promotion of 50% o 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. Rental growth can also be driven through
sub-dividing larger rooms into smaller rooms, which yield a higher net
rentper sq ft.
In the more muted trading environment against the backdrop of higher
inflation, we have been increasing promotions to new customers, and
achieving higher average rate growth from existing customers who stay
with us longer term. Many customers move-in and out of our business
over relatively short periods and don’t receive any price increases.
The average achieved net rent per sq ft increased by 10% compared to
theprior year, with closing net rent up 9% compared to 31 March 2022.
The table below shows the change in net rent per sq ft for the portfolio by
average occupancy over the year (on a non-weighted basis). The analysis
excludes our most recent store openings.
Average occupancy
in the year
Number of
stores
Net rent per sq ft
growth from April
2022to March 2023
Net rent per sq ft
growth from April
2021to March 2022
70% to 85% 47 8.3% 10.8%
85% to 90% 47 8.7% 11.7%
Above 90% 7 9.7% 13.0%
The self storage market
In the recently published 2023 Self Storage Association UK Survey,
only44% of those surveyed had a reasonable or good awareness of self
storage. Furthermore, only 9% of the 2,102 adults surveyed were currently
using self storage or were thinking of using self storage in the next year.
Our research has this figure of awareness at around 56%, compared
to51% for the SSA survey last year. Self storage is therefore not a
commoditised product, such as hotels, taxis, cinemas etc, and it will
takemany years of use and growing awareness before it becomes so,
particularly given the subdued growth in new supply.
Annual Report and Accounts 2023 Big Yellow Group PLC28
Strategic Report
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
dicult, with high land values driven by competing uses such as residential
and urban industrial. In London in the year to 31 December 2022, there
were five new store openings, including three Big Yellow stores. We are
aware of seven planned store openings in London in the calendar year
2023, including our landmark 103,000 sq ft Kings Cross store.
The Self Storage Association (“SSA”) estimates that the UK industry is
made up of approximately 1,492 self storage facilities and 739 purely
container operations, providing 55.5 million sq ft of self storage space,
equating to 0.82 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 0.17 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 2023 and FEDESSA European Self Storage Annual Survey 2022).
Marketing and operations
Our marketing strategy focuses on building our market-leading brand
awareness further and using it to maximise the cost-ecient generation
of enquiries, customer move-ins and user satisfaction through our digital
platforms. Our strong brand and continued digital investment and
innovation has helped us create a market-leading website which delivers
over 90% of our enquiries.
Our annual YouGov survey (published April 2023) 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 five times higher than our nearest competitor across the UK.
The Big Yellow website allows users to browse dierent room sizes, obtain
a price, reserve online and check-in online prior to arriving at the stores
which are automated in terms of access once a customer moves-in.
The online customer experience also allows customers to communicate
with us in real-time via Live Chat, WhatsApp, or Facebook Messenger.
Thecomprehensive online FAQs provide our users with another way to
askquestions they may have about the service without needing to call us
directly. This is critical because approximately 70% of our new customers
have not used self storage before.
The seamless digital experience continues with our online check-in
platform. This allows customers to complete the majority of their move-in
process remotely. They can upload their photo and identity documents,
sign the full customer licence, set up authorised persons, complete their
storage inventory and set up a paperless Direct Debit – all done remotely.
This check-in online capability has significantly cut down the time our
customers need to spend in our receptions when they move-in. The final
process is completed through our in-store digital signature pads.
We also oer 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.
Our brand
awareness is
ve times higher
than our nearest
competitor.
Market leading
brandawareness
Our YouGov survey (published April 2023) and
the Self Storage Association’s You Gov survey
(published January 2023) again confirmed
Big Yellow's brand awareness remained
significantly ahead of our competitors.
The SSA commissioned survey showed our
brand awareness to be over five times higher
than our nearest competitor.
Annual Report and Accounts 2023 Big Yellow Group PLC 29
Strategic Report Governance Report Financial Statements
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 trac 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 eciencies of acquiring new prospects.
Brand search terms are also a valuable driver of enquiries for Big Yellow
and help improve the eciencies of our cost per enquiry. 34% of all trac
generated from search engines to our website originated from “Big Yellow”
brand searches in the year. This clearly indicates that brand is important
in driving higher levels of prospects and customer referrals, leading to
improved operational eciencies. 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
trac. Ongoing website optimisation and an engaging user experience
through our digital platforms helps ensure we maximise the conversion
ofthese web visits into enquiries and then customers. Digital display
advertising enables us to regionally target audiences in the market for
self storage, raising consideration of the service and the Big Yellow brand
through engaging creatives.
Online customer reviews and
social media
Supporting our values of putting the customer at the heart of our
business, our online customer reviews generate real-time feedback from
customers and provide positive word of mouth referral to our website
visitors. Through our ‘Big Impressions’ customer feedback programme,
weask our new customers to rate our service. With the users’ permission,
we then publish these independent customer reviews on the Big Yellow
website which currently total over 44,000 averaging 4.8 out of 5.
The Big Impressions programme also generates customer feedback
ontheir move-in and move-out experience. These customer reviews and
mystery shop results are transparently accessible across the business
and helps reinforce our focus on outstanding customer service. Over the
year, we have achieved an average net promoter score of 78.9, which
isavery strong consumer-facing benchmark result.
We also gain real-time customer feedback from over 19,000 Google
Reviews averaging 4.7 out of 5. These help to enhance our visibility within
local search listings conveying trust in the Big Yellow brand. Additionally,
we have over 3,700 reviews from the independent review site TrustPilot.
These reviews average a 4.6 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 oering.
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 ESG activities. These
social channels are also used by customers to connect with us and are
monitored in real-time, enabling us to respond promptly to any enquiries.
The Big Yellow LinkedIn platform is used to communicate company
achievements, ESG initiatives and our company culture and the Big Yellow
YouTube channel is used to allow web prospects to experience our stores
online through our video guides to self storage.
We will continue to invest in improving the customer experience and
userjourney across all our digital marketing channels and also in-store
operations to achieve higher levels of automation and hence eciencies
in the business.
ESG
Last year we developed a long-term strategy to become Net Renewable
Energy Positive and deliver Net Zero Scope 1 and 2 Emissions targets,
which will be funded with significant investment from the Group over the
next few years. The main delivery vehicle for this new strategy will be the
installation of solar generation capacity onto our existing store estate.
By 2028, we expect to have completed a multi-million pound investment
in renewable energy generation both on the roofs of our estate and also
atother locations. We published last year 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 had our Science Based Targets externally verified;
– we have invested £4.7 million in our solar programme over the year
and now have 53 stores with solar and have expanded the
programme to all stores. Our current peak capacity has increased
over the past two years from 0.9 Megawatts to 4.5 Megawatts;
– we have donated £271,000 in Community Investment. This consists
of a combination of free and discounted space to worthy local
charitable organisations and not-for-profits and we house dierent
organisations, from foodbanks to small community groups to NHS
partners and also BoxShop products donated;
– £204,000 has been raised for the Foundation from customer
donations and employee fundraising including the matched
contributions from the Company. These funds allowed us to make
grants of £193,000 to our partner charities in the year;
– we have delivered five successful and all-round enriching work
placements with Breaking Barriers, Street League and the Down’s
Syndrome Association;
– we have maintained our GRESB Green Star rating, achieved a B award
from CDP and maintained our ISS indices rating; and
– we obtained our second EPRA sBPR Gold Award.
Operating Review continued
Annual Report and Accounts 2023 Big Yellow Group PLC30
Strategic Report
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 maintained our 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 Ocer 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 sta to complete both for Information Security
and Data Protection. Our Infrastructure and Development teams continue
to drive innovation and eciencies throughout the Group.
Development pipeline
An important aspect of our external growth is the development of new stores, particularly in London, where there are very few existing assets
suitableto be acquired. Over the last year, we added 193,000 sq ft of capacity through opening new stores in Harrow and Kingston North (both London)
and acquiring an existing freehold store in Aberdeen. We are looking forward to opening our landmark Kings Cross store in June, which we expect to
performstrongly.
The status of the Group’s development pipeline is summarised in the table below:
Site Location Status Anticipated capacity
Kings Cross, London Prominent location on York Way Store opening in June 2023. 103,000 sq ft
Wembley, London Prominent location on Towers
BusinessPark
Site acquired in October 2018. Planning consent granted. Discussions ongoing
tosecure vacant possession. 70,000 sq ft
Queensbury, London Prominent location o Honeypot Lane Site acquired in November 2018. Planning consent granted. 70,000 sq ft
Slough Bath Road Prominent location on Bath Road Site acquired in April 2019. Planning consent granted. 90,000 sq ft
Slough Farnham Road Prominent location on Farnham Road Site acquired in June 2022. Planning consent granted. Demolition completed
and construction to commence in Summer 2023 with a view to opening
inSummer2024.
Replacement for
existing leasehold
store of a similar size
Wapping, London Prominent location on the Highway,
adjacent to existing Big Yellow
Site acquired in July 2020. Planning application refused. Appeal submitted with
public inquiry set for July 2023 with decision likely in August 2023.
Additional 95,000
sq ft
Staines, London Prominent location on the Causeway Site acquired in December 2020. Planning consent granted. In addition, consent
was received to develop 9 industrial units totalling 99,000 sq ft. 65,000 sq ft
Epsom, London Prominent location on East Street Site acquired in March 2021. Planning application submitted in September 2022.
Application likely to be refused and an appeal submitted. 58,000 sq ft
Kentish Town, London Prominent location on Regis Road Site acquired in April 2021. Planning application submitted in December 2022.
Application likely to be refused and an appeal submitted. 68,000 sq ft
West Kensington, London Prominent location on
HammersmithRoad
Site acquired in June 2021. Planning application submitted in February 2023.
175,000 sq ft
Old Kent Road, London Prominent location on Old Kent Road Site acquired in June 2022. Planning discussions underway with the local Council. 75,000 sq ft
Staples Corner, London Prominent location on North
CircularRoad
Site acquired in December 2022. Planning discussions underway with the
localCouncil.
Replacement for
existing leasehold
store, additional
18,000 sq ft
Newcastle Prominent location on Scotswood Road Planning consent granted. 60,000 sq ft
Total 947,000 sq ft
Annual Report and Accounts 2023 Big Yellow Group PLC 31
Strategic Report Governance Report Financial Statements
March 2023 March 2022
(5)
Big Yellow
Established
(1)
Big Yellow
Developing
Total
Big Yellow Armadillo Total
Big Yellow
Established
Big Yellow
Developing
Total
Big Yellow Armadillo
(2)
Total
Number of stores 75 9 84 24 108 74 7 81 24 105
At 31 March:
Total capacity (sq ft) 4,724,000 584,000 5,308,000 984,000 6,292,000 4,670,000 447,000 5,117,000 981,000 6,098,000
Occupied space (sq ft) 3,979,000 352,000 4,331,000 757,000 5,088,000 4,053,000 239,000 4,292,000 815,000 5,107,000
Percentage occupied 84.2% 60.4% 81.6% 76.9% 80.9% 86.8% 53.5% 83.9% 83.1% 83.7%
Net rent per sq ft £34.66 £29.93 £34.28 £22.20 £32.48 £32.04 £26.26 £ 31.71 £20.45 £29.92
For the year:
REVPAF
(3)
£33.19 £19.76 £31.84 £20.27 £30.02 £31.61 £16.75 £30.64 £19.83 £28.73
Average occupancy 87.0% 57.7 % 84.0% 82.1% 83.7% 89.0% 56.8% 86.9% 86.0% 86.7%
Average annual net rent psf £33.39 £29.10 £33.10 £21.33 £31.28 £30.63 £23.94 £30.35 £19.69 £28.48
£000 £000 £000 £000 £000
£000 £000 £000 £000 £000
Self storage income 136,925 8,809 145,734 17,177 162,911 127, 313 4,426 131,739 18,137 149,876
Other storage related income
(3)
18,523 1,401 19,924 2,691 22,615 19 ,474 949 20,423 3,080 23,503
Ancillary store rental income 1,028 165 1,193 20 1,213 840 83 923 19 942
Total store revenue 156,476 10,375 166,851 19,888 186,739 14 7, 627 5,458 153,085 21, 23 6 174, 321
Direct store operating costs
(excluding depreciation) (38,644) (4,482) (43,126) (7,437) (50,563) (37,422) (2,896) (40,318) (7,614) (47,932)
Short and long leasehold rent
(4)
(1,983) – (1,983) (170) (2,153) (1,934) – (1,934) (564) (2,498)
Store EBITDA
(3,5)
115,849 5,893 121,742 12,281 134,023 108,271 2,562 110,833 13,058 123,891
Store EBITDA margin 74.0% 56.8% 73.0% 61.8% 71.8% 73.3% 46.9% 72.4% 61.5% 71.1 %
Deemed cost £m £m £m £m £m
To 31 March 2023 714.6 142.0 856.6 142.0 998.6
Capex to complete – 0.8 0.8 – 0.8
Total 714.6 142.8 857. 4 142.0 999.4
(1)
The Big Yellow established stores have been open for more than three years at 1 April 2022, and the developing stores have been open for fewer than three years at 1 April 2022.
(2)
Armadillo’s Cheadle store was destroyed by fire in February 2022. It is excluded from the closing occupancy and capacity figures in the prior year, 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 six short leasehold properties accounted for as investment properties and right-of-use assets under IFRS.
(5)
The Group acquired the 80% of the Armadillo Partnerships that it did not previously own on 1 July 2021. The results of the stores in the Partnerships have been included in the results above for both
years to give a clearer understanding of the performance of all stores. The table below shows the results excluding the period when the stores were not wholly owned:
Portfolio Summary
Annual Report and Accounts 2023 Big Yellow Group PLC32
Strategic Report
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
Eneld, 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
Shefeld 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
Shefeld Hillsborough,
October 2008
MLA – 60,000 sq ft
34 Annual Report and Accounts 2023 Big Yellow Group PLC
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
Byeet, November 2003
MLA – 48,000 sq ft
Chelmsford, April 2003
MLA – 54,000 sq ft
Finchley North, March 2003
MLA – 62,000 sq ft
35Annual Report and Accounts 2023 Big Yellow Group PLC
Our Big Yellow Stores
An unrivalled portfolio of stores across London, the South East
and other large metropolitan cities.
Kingston North, September 2022
MLA – 56,000 sq ft
Annual Report and Accounts 2023 Big Yellow Group PLC
33
Hove, March 2022
MLA – 58,000 sq ft
Hayes, January 2022
MLA – 73,000 sq ft
Uxbridge, June 2021
MLA – 54,000 sq ft
Battersea, November 2020
MLA – 70,000 sq ft
Bracknell, September 2020
MLA – 59,000 sq ft
Camberwell, July 2020
MLA – 75,000 sq ft
Manchester, May 2019
MLA – 60,000 sq ft
Wapping, July 2018
MLA – 26,000 sq ft
Guildford Central, March 2018
MLA – 55,000 sq ft
Harrow, September 2022
MLA – 82,000 sq ft
Aberdeen, June 2022
MLA – 54,000 sq ft
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 Slyeld, 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
Annual Report and Accounts 2023 Big Yellow Group PLC
36
Year ended 31 March 2023 Year ended 31 March 2022
Per above
£000
Armadillo
results as an
associate
£000
Statutory
£000
Per above
£000
Armadillo
results as an
associate
£000
Statutory
£000
Store revenue 186,739 – 186,739 174 ,321 (5,046) 169,275
Direct store operating costs (50,563) – (50,563) (47,932) 1,908 (46,024)
Rent (2,153) – (2,153) (2,498) 150 (2,348)
Store EBITDA 134,023 – 134,023 123,891 (2,988) 120,903
The table below reconciles Store EBITDA to gross profit in the statement of comprehensive income.
Year ended 31 March 2023
£000
Year ended 31 March 2022
£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)
186,739 2,090 188,829 169,275 2,043 171,318
Cost of sales
(7)
(50,563) (3,744) (54,307) (46,024) (4,359) (50,383)
Rent
(8)
(2,153) 2,153 – (2,348) 2,348 –
134,023 499 134,522 120,903 32 120,935
(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 39.
(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.
Reconciliation of APMs
The table below reconciles the reported figures above to the like-for-like metrics the Group reports:
Like-for-like revenue
Year ended 31 March 2023
£000
Year ended 31 March 2022
£000
Store revenue
(9)
186,739 169,275
Less revenue from non like-for-like stores
(9)
(23,889) (17,475)
Like-for-like revenue
(9)
162,850 151,800
Like-for-like occupancy
Year ended 31 March 2023 Year ended 31 March 2022
Store MLA (sq ft)
(9)
6,292,000 6,098,000
Less MLA from non like-for-like stores (sq ft)
(9)
(1,359,000) (1,165,000)
Like-for-like MLA (sq ft)
(9)
4,933,000 4,933,000
Store occupancy (sq ft)
(9)
5,088,000 5,107,000
Less occupancy from non like-for-like (sq ft)
(9)
(944,000) (865,000)
Like-for-like occupancy (sq ft)
(9)
4,144,000 4,242,000
Like-for-like occupancy (%)
(9)
84.0% 86.0%
(9)
See glossary in note 33.
Portfolio Summary continued
Annual Report and Accounts 2023 Big Yellow Group PLC 37
Strategic Report Governance Report Financial Statements
Financial Review
Revenue
Total revenue for the year was £188.8 million, an increase of £17.5 million
(10%) from £171.3 million in the prior year. Like-for-like store revenue
forthe year was £162.9 million, an increase of 7% from the prior year
(2022: £151.8 million). Like-for-like revenue excludes stores opened and
acquired in the last two financial years, including the Armadillo stores,
which the Group acquired in July 2021.
Included in store revenue is other storage related income, from the sale
ofpacking materials, insurance/enhanced liability service (“ELS”), and
storage related charges. This amounted to £22.6 million in the year
(2022: £23.5 million).
The Group changed the way it sold contents protections to its customers
on 1 June 2022 to an ELS, which is subject to VAT and not Insurance
Premium Tax (“IPT”). Prior to 1 June 2022, IPT at 12% was paid to our
insurance provider based on our total insurance revenue.
Store operating costs have increased by £2.6 million (5%). The one-o items
in both years are principally rates rebates where we have successfully
appealed against the 2017 rating list. Store operating costs before these
one-o items have increased by £2.5 million (5%) compared to the prior
year. New stores accounted for £2.1 million of operating expense increase
in the year. Cost of sales has decreased by £1.7 million following the
moveto selling an ELS rather than insurance (see explanation in revenue
above). The remaining increase of £2.1 million (4%), is a pleasing result
inthe current inflationary environment. Morespecifically, we would
comment as follows:
– Sta costs have increased by £1.1 million (8%) with store numbers
and the salary review of on average 5% (including a 7% increase to
those at the lower end of the pay scale).
Wedecidednotto pass on the entirety of the 20% VAT on the new ELS to
our customers, and hence gross ELS revenue from 1 June is lower by 8%.
However, because we can recover VAT and are no longer paying IPT,
ourcost of sales has also reduced. On a net basis, our profits from
insurance/ELS remain largely unchanged.
The other revenue earned by the Group is tenant income on sites where
we have not started development.
Operating costs
Cost of sales principally comprise the direct store operating costs,
including store sta 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:
– Marketing is in line with the prior year with continued eciencies
being achieved from our digital campaigns.
– Utilities has reduced by 10%, with our investment in solar, and during
the year we have benefited from a fixed rate contract on energy which
is due to expire on 30 September 2023.
– Insurance has increased by £1.3 million (86%). We saw a significant
increase in our insurance premiums this year, from a combination
ofhigher pricing in the insurance market, and the impact on our
premiums of the fire at our Cheadle store in February 2022.
– The Group’s bad debt expense for the year was 0.2%, in line with the
prior year. The Group has not seen any deterioration in its aged
debtors’ profile over recent months.
Category
Year ended
31 March
2023
£000
Year ended
31 March
2022
£000 Change
% of store
operating
costs in
2023
Cost of sales (ELS and packing materials) 2,202 3,896 (43%) 4%
Sta costs 14,415 13,303 8% 28%
General & admin 2,032 1,776 14% 4%
Utilities 2,056 2,274 (10%) 4%
Property rates 15,221 14,036 8% 30%
Marketing 6,504 6,494 0% 13%
Repairs & maintenance 4,685 4,198 12% 9%
Insurance 2,757 1,479 86% 6%
Computer costs 1,001 929 8% 2%
Total before one-o items 50,873 48,385 5%
One-o items (310) (453)
Total per portfolio summary 50,563 47, 93 2 5%
Annual Report and Accounts 2023 Big Yellow Group PLC38
Strategic Report
However, looking to the year ending 31 March 2024, we are anticipating
astep-up in operating costs, principally as a result of:
– the Group’s property rates bill will increase by 19% (£3 million) on
alike-for-like basis for the year ending 31 March 2024, following the
Rating Revaluation published in November 2022;
– our store salary review for the year ending 31 March 2024 averaged
5.5%, with the lower paid sta seeing increases of on average 6%; and
– the Group has benefited from a fixed price energy contract since
October 2020, which expires in September 2023. Energy costs have
moderated significantly from their peak in 2022, but we still expect
tosee an increase from our current contracted pricing when we
placethe new contract over the Summer. As mentioned above, the
significant acceleration in our solar retrofit programme will help over
the medium term to significantly reduce our reliance on external
energy supply and mitigate the volatility that can sometimes occur
inthe market. We have increased our renewable electricity
generation by 94% from the prior year.
As highlighted in the Chief Executive’s Statement, given the investment
we have made in recent years in the automation of our store operations,
particularly in relation to interaction with prospects and customers,
wecontinue to review every vacancy before making a decision to recruit
with a view to achieving savings this year through the salary line.
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
2023
£000
Year ended
31 March
2022
£000
Direct store operating costs per portfolio
summary(excluding rent) 50,563 47, 93 2
Rent included in cost of sales (total rent payable
isincluded in portfolio summary) 1,551 1,633
Rent review accruals – 607
Depreciation charged to cost of sales 496 378
Head oce and other operational management
costs charged to cost of sales 1,697 1,741
Armadillo cost of sales pre acquisition
of remaining interest – (1,908)
Cost of sales per statement ofcomprehensiveincome 54,307 50,383
Store EBITDA
Store EBITDA for the year was £134.0 million, an increase of £13.1 million
(11%) from £120.9 million for the prior year (see Portfolio Summary).
Theoverall EBITDA margin for during the year was 71.8%, up from
71.1%in2022.
All stores are currently trading profitably at the Store EBITDA level.
Ourstores at Hayes and Hove, which opened in the first quarter of 2022,
reached break even in six and four months respectively, and our stores
atHarrow and Kingston North, which both opened in September 2022
reached break even in seven months.
Administrative expenses
Administrative expenses in the statement of comprehensive income
of£14.5 million were up £0.2 million compared to the prior year. The prior
period expense contained £0.4 million due to the write-o of acquisition
costs in relation to the purchase of the remaining interest in Armadillo
inaccordance with IFRS 3.
The normalised increase was therefore £0.6 million (4%), which is a below
inflationary increase, following our focus on cost control during the year.
The non-cash share-based payments charge represents £3.7 million
ofthe overall £14.5 million expense (2022: £3.4 million of £14.4
millionexpense).
Other operating income
In February 2022 the Group experienced a fire at our Cheadle store, which
resulted in a total loss to the store. Buildings all risk insurance is in place
for the full reinstatement value with the landlord. We also have insurance
cover in place for both our fit-out and four years loss of income. The loss
ofincome received during the financial year was £1.4 million, which
isincluded in other operating income.
In June 2021, the Group experienced a fire in the wine storage area of
ourFulham store, which was isolated to a single section of the basement
floor. During the year, the Group received full settlement from our insurers
for the loss of income as a result of this fire, which amounted to £0.6
million, which is included in other operating income.
The Group acquired the freehold of its Oxford store in September 2022,
thus extinguishing the right of use asset and liability in relation to the
lease from the previous landlord. This extinguishment gave rise to a gain
of £0.2 million, which is included in other operating income for the year.
Interest expense on bank borrowings
The gross bank interest expense for the year was £18.2 million, an
increase of £6.4 million from the prior year, due to higher average debt
levels in the year, coupled with the Group’s higher average cost of debt
following the increase in interest rates. The average cost of borrowing
during the year was 4.2% compared to 2.8% in the prior year.
Capitalised interest on our construction programme was £2.8 million,
upfrom £2.1 million in the prior year, with interest capitalised on our
developments at Harrow, Kingston North and Kings Cross during the year.
Total finance costs in the statement of comprehensive income increased
to £16.9 million from £10.6 million in the prior year.
Annual Report and Accounts 2023 Big Yellow Group PLC 39
Strategic Report Governance Report Financial Statements
Profit before tax
The Group made a profit before tax in the year of £75.3 million, compared
to a profit of £698.9 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 £106.0 million, up 10% from £96.8 million in 2022.
Profit before tax analysis
2023
£000
2022
£000
Profit before tax 75,309 698,876
Loss/(gain) on revaluation of investment properties 29,861 (597,224)
Gain on disposal of investment property – (584)
Acquisition costs written o – 416
Movement in fair value on interest rate derivatives 133 (1,389)
Refinancing costs 732 –
Share of associate fair value gains and losses – (3,293)
Adjusted profit before tax 106,035 96,802
The adjustments made to the Group’s profit before tax are in line with
guidance issued by EPRA. The gain on disposal of investment property
inthe prior year 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 2022 96.8
Increase in gross profit 13.6
Increase in administrative expenses (0.6)
Increase in other operating income 2.2
Increase in net interest payable (6.3)
Increase in capitalised interest 0.7
Reduction in share of adjusted profit of associates (0.4)
Adjusted profit before tax – year ended 31 March 2023 106.0
Basic earnings per share for the year was 40.1p (2022: 385.4p) and
diluted earnings per share was 39.8p (2022: 384.2p). Diluted EPRA
earnings per share based on adjusted profit after tax was up 8% to 56.5p
(2022: 52.5p) (see note 12). EPRA earnings per share equates to the
Company’s adjusted earnings per share in the current year.
REIT status
The Group converted to a Real Estate Investment Trust (“REIT”) in January
2007. Since then, the Group has benefited from a zero tax rate on the
Group’s qualifying self storage earnings. The Group only pays tax on the
profits attributable to our residual business, comprising primarily of the
sale of packing materials and insurance.
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 £2.0 million. This compares to
acharge in the prior year of £1.6 million. The increase in the current year
tax charge reflects the 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 22.9 pence
per share in addition to the interim dividend of 22.3 pence, giving a total
dividend for the year of 45.2 pence, an increase of 8% 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 45.2p pence per share
ispayable (31 March 2022: 42.0 pence). The PID for the year to 31 March
2023 accounts for all of the declared dividend. The table below
summarises the declared dividend for the year:
Dividend (pence per share)
31 March
2023
31 March
2022
Interim dividend 22.3p 20.6p
Final dividend 22.9p 21.4 p
Total dividend 45.2p 42.0p
Subject to approval by shareholders at the Annual General Meeting to
beheld on 20 July 2023, the final dividend will be paid on 28 July 2023.
Theex-div date is 6 July 2023 and the record date is 7 July 2023.
Cash flow growth
The Group is strongly cash generative and draws down from its longer
term committed facilities as required to meet its obligations. The Group’s
cash flow from operating activities pre-working capital movements for
the year was £109.2 million, an increase of 10% from £99.3 million in the
prior year. This reflects the Group’s increase in profitability in the year.
These operating cash flows are after the ongoing maintenance costs
ofthe stores, which were on average approximately £43,000 per store
(2022: £40,000).
Financial Review continued
Annual Report and Accounts 2023 Big Yellow Group PLC40
Strategic Report
The Group’s net debt has increased over the year to £486.6 million (March 2022: £411.8 million).
Year ended
31 March 2023
£m
Year ended
31 March 2022
£m
Cash generated from operations pre-working capital movements 126.2 112.5
Net finance costs (16.5) (10.8)
Interest on obligations under lease liabilities (0.7) (0.8)
Loss of income insurance proceeds 2.0 –
Tax (1.8) (1.6)
Cash flow from operating activities pre-working capital movements 109.2 99.3
Working capital movements
2.8
7. 9
Cash flow from operating activities 112.0 107. 2
Capital expenditure (106.4) (105.2)
Acquisition of Armadillo – (66.7)
Disposal of investment property – 0.6
Investment – (0.1)
Receipt from Capital Goods Scheme 0.2 0.4
Dividends received from associates – 0.4
Cash flow after investing activities 5.8 (63.4)
Ordinary dividends (79.2) (68.7)
Issue of share capital 1.0 98.5
Payment of lease liabilities (1.3) (1.4)
Receipt from termination of interest rate derivatives 0.4 –
Loan arrangement fees paid (1.5) (0.9)
Increase in borrowings 74.5 32.2
Net cash outflow (0.3) (3.7)
Opening cash and cash equivalents 8.6 12.3
Closing cash and cash equivalents 8.3 8.6
Closing debt (494.9) (420.4)
Closing net debt (486.6) (411.8)
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 7.7 times (2022: 10.5 times). This is calculated per below:
31 March
2023
31 March
2022
Cash generated from operations pre working capital
movements (see note 26) 126,195 112,489
Interest paid per cash flow statement (16,486) (10,763)
Interest cover 7.7 x 10.5x
In the year capital expenditure outflows were £106.4 million, up slightly
from £105.2 million in the prior year. Of the capital expenditure in the
year£62.4 million is for the acquisition of sites at Staples Corner, Old Kent
Road and Slough Farnham Road, the freehold of our Oxford store, and an
existing storage centre in Aberdeen (including acquisition costs), with
£44.0 million principally relating to build costs of the new stores, the Harrow
industrial scheme and the investment in our solar retrofit programme.
The cash flow after investing activities was a net inflow of £5.8 million in
the year, compared to a net outflow of £63.4 million in 2022, with the prior
year also including the acquisition of Armadillo.
Balance sheet
Property
The Group’s open stores and stores under development owned at 31
March 2023, which are classified as investment properties, have all been
valued individually by JLL.
The external valuation has resulted in an investment property asset value
of £2.71 billion, comprising £2.42 billion (89%) for the freehold (including
nine long leaseholds) open stores, £31.0 million (1%) for the short
leasehold open stores and £260.7 million (9%) for the freehold
investment properties under construction.
Annual Report and Accounts 2023 Big Yellow Group PLC 41
Strategic Report Governance Report Financial Statements
Financial Review continued
Investment property
There was a very significant increase in the valuation of our investment
portfolio last year, and this year the valuations have remained relatively
flat, with an increase of 1% on the open store portfolio (£27.6 million)
– see note 15 for the detailed valuation methodology. This revaluation
gain has been driven by an improvement in the cash flow of the stores,
partly oset by an increase in the cap rates used in the valuation.
Primecapitalisation rates have increased by on average 30 bps since the
start of the financial year. The increase in cap rates applied was 12.5 bps
for stores in London, 25 bps for stores in the South East and 50 bps for
regional stores. Additionally, a further 25 bps was added to the cap rates
for immature stores.
The weighted average exit capitalisation rate used in the valuations was
5.6% in the current year, compared to 5.5% in the prior year.
Analysis of property portfolio
Value at
31 March
2023
£m
Revaluation
movement in
the year
£m
Investment property £2,449.6m £27.6m
Investment property under construction £260.7m (£57.5m)
Investment property total £2,710.3m (£29.9m)
The table below provides a further breakdown of the open store valuations:
Established Developing Armadillo
Freehold Leasehold Freehold Largely Freehold Total
Number of stores 70 5 9 24 108
MLA capacity (sq ft) 4,413,000 311,000 584,000 984,000 6,292,000
Valuation at 31 March 2023 (£m) £1,990.7m £31.0m £277.3m £150.6m £2,449.6m
Value per sq ft £451 £100 £475 £153 £389
Occupancy at 31 March 2023 84.3% 83.0% 60.4% 76.9% 80.9%
Stabilised occupancy assumed 89% 87% 86% 86% 88%
Net initial year one NOI yield 5.2% 16.4% 3.4% 7.2% 5.3%
The net initial year one NOI yield is 5.3% (2022: 5.2%). Note 15 contains
more detail on the assumptions underpinning the valuations.
Investment property under construction
The Group spent £72.1 million on investment property under construction
in the year, notably on the site purchases of Old Kent Road, Staples
Cornerand Slough, and construction expenditure, principally on Harrow,
Kingston North, and Kings Cross. Harrow and Kingston North have
transferred to investment property during the year as the stores opened.
The valuation movement on the investment property under construction
is a deficit of £57.5 million with a reduction in the value of our industrial
property and land without self storage planning in the development
pipeline of around 19% in total, reflective of the new financing conditions
and wider market environment for land.
In the prior year there was a gain on investment property under
construction of £67.5 million, so the movement in the current year
islargely a reversal of that increase. The investment property under
construction is still valued above its historic cost.
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 2023 of £2.815 billion (£104.6 million higher than
the value recorded in the financial statements). This translates to 56.5
pence per share. This revised valuation translates into an adjusted net
asset value per share of 1,237.3 pence (2022: 1,239.7 pence) after the
dilutive eect of outstanding share options.
Receivables
The Group’s bad debt expense in the year represented 0.2% of revenue
compared to 0.2% in the prior year, with 80% of our customer base paying
by direct debit.
The Group received its final instalment during the year under the Capital
Goods Scheme, as a consequence of the introduction of VAT on self storage
from 1 October 2012. The receivable related to VAT to be recovered on
historic store development expenditure. The Group received £15.8 million
under the Scheme, of which £0.2 million was received in the year.
Net asset value
The adjusted net asset value is 1,237.3 pence per share (see note 13),
compared to 1,239.7 pence per share at 31 March 2022. The table below
reconciles the movement:
Movement in adjusted net asset value £m
Adjusted NAV
pence per
share
31 March 2022 2,284.2 1,239.7
Adjusted profit after tax 104.1 56.5
Equity dividends paid (80.0) (43.4)
Revaluation movements (29.9) (16.2)
Movement in purchaser’s cost adjustment 4.0 2.2
Other movements (e.g. share schemes) 4.8 (1.5)
31 March 2023 2,287.2 1,237.3
Annual Report and Accounts 2023 Big Yellow Group PLC42
Strategic Report
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 sucient 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 2023. The average cost of debt is 4.7% (March 2022: 3.1%).
Debt Expiry Facility Drawn
Average
interest cost
Aviva Loan September 2028 £158.9 million £158.9 million 3.4%
M&G loan September 2029 £120 million £120 million 5.2%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland) October 2024 £240 million £216 million 5.5%
Total Average term 3.9 years £518.9 million £494.9 million 4.7%
In addition to the facilities above, during the year, the Group signed
a$225million credit approved shelf facility with Pricoa Private Capital
(“Pricoa”), to be drawn in fixed sterling notes. The Group can draw the debt
in minimum tranches of £10 million over the next two and half years with
terms of between 7 and 15 years at short notice, typically 10 days.
The Group’s revolving credit facility of £240 million with Lloyds, HSBC and
Bank of Ireland expires in October 2024. The Group intends to refinance
this loan with the banks this year.
During the year, the Group refinanced its £120 million debt facility with
M&GInvestments (“M&G”) for a seven-year term, with the new loan expiring
inSeptember 2029, secured against a portfolio of 15 assets. The existing
facility was due to expire in June 2023. £35 million of this facility is
currently fixed by way of a swap until June 2023, and the balance is variable.
The margin on the facility was reduced by 20bps from the expiring facility,
reflective of improved portfolio performance, and the sustainability
investments that Big Yellow has made over the past few years, and our
planned investment in solar over the coming years as part of our Net
Renewable Energy Positive Strategy.
The Group repaid the two Armadillo bank facilities during the year using
the revolving bank facility. The Group also cancelled the two interest
ratederivatives in place on the Armadillo facilities, which resulted in a
payment to the Group of £0.4 million as the swaps were in-the-money.
The Group was comfortably in compliance with its banking covenants
at31 March 2023. 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
2023
31 March
2022
Net Debt / Gross Property Assets 18% 16%
Net Debt / Adjusted Net Assets 21% 18%
Net Debt / Market Capitalisation 23% 15%
Cash generated from operations pre-working capital
movements against interest paid 7.7 x 10.5x
At 31 March 2023, the fair value on the Group’s interest rate derivatives
was an asset of £0.3 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 2023
(2022: £18.4 million), consisting of 184,265,973 ordinary shares of 10p
each (2022: 183,967,378 shares). 0.3 million shares were issued for the
exercise of options during the year at an average exercise price of £13.13
(2022: 0.3 million shares at an average price of £14.84).
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.
Metric 31 March 2023 31 March 2022
Opening shares 183,967,378 175,880,470
Shares issued in placing – 7,751 , 93 8
Shares issued for the exercise of options 298,595 334,970
Closing shares in issue 184,265,973 183,967,378
Shares held in EBT (1,122,907) (1,122,907)
Closing shares for NAV purposes 183,143,066 182,844,471
116.3 million shares were traded in the market during the year ended
31March 2023 (2022: 85.4 million). The average mid-market price
ofshares traded during the year was £12.41 with a high of £15.53
andalowof £9.87.
Annual Report and Accounts 2023 Big Yellow Group PLC 43
Strategic Report Governance Report Financial Statements
The Directors have carried out a robust assessment of the emerging and
principal risks facing the Group, including those that would threaten its
business model, future performance, solvency, or liquidity. The Group
maintains a low appetite to risk, in line with our strategic objectives
ofproviding a low volatility, high distribution business.
The section below details the emerging and principal risks and
uncertainties that are considered to have the most material impact
ontheGroup’s strategy and objectives. These key risks are monitored
onan ongoing basis by the Executive Directors and considered fully by
the Board in its annual risk review.
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, awareness
increased during the pandemic.
The rate of growth of branded self storage on main roads in good
locations has historically been limited by the difficulty of acquiring sites
at affordable prices and obtaining planning consent. New store openings
in London and other large urban conurbations within the sector have
slowed significantly over the past few years.
Our performance during the past three years has been strong with
revenue growing by 46% from £129.3 million in the year ended 31 March
2020 to £188.8 million for this year. We believe that this performance
isdue to a combination of factors including:
– a high quality and growing portfolio of freehold properties delivering
higher operating margins;
– a focus on London and the South East and other large urban
conurbations, where the drivers in the self storage market are at
their strongest and the barriers to competition are at their highest;
– continuing innovation and automation;
– an inclusive and non-hierarchical culture with a highly engaged team;
– a focus on delivering the highest levels of customer service;
– delivering on our strong ESG commitments;
– the UK’s leading self storage brand, with high and growing public
awareness and online strength; and
– strong cash flow generation from a secure capital structure.
We have a large current storage customer base occupying
approximately 73,000 rooms spread across the portfolio of stores and
hundreds of thousands more who have used our stores over the years.
Inany month, customers move in and out at the margin resulting in
changes in occupancy. This is a seasonal business and typically we
seegrowth over the spring and the summer months, with the seasonally
weaker period being the winter months.
The Russian invasion of Ukraine in February
2022 caused significant global uncertainty and
has provided a more challenging macroeconomic
backdrop, with significant levels of inflation seen
in the UK economy since the invasion, largely
driven by food and energy, resulting in increased
interest rates. This has impacted the cost
ofliving in the UK, and the level of housing
transactions has fallen as the cost of mortgages
has increased.
In the final quarter of the year, we also had the
impact of the regional banking crisis in the US
and the collapse of Credit Suisse, which can also
impact demand in our market at the margin.
Inflation is forecast to moderate over the next
12 months, with relatively flat economic growth
projected for the UK economy.
Governments around the world took on
significant additional debt to fund the policy
responses to the pandemic, and this may result
in higher taxation rates in the future.
Annual Report and Accounts 2023 Big Yellow Group PLC44
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 during the year, which has reinforced our current
approach, but also given some areas where further efficiencies and cost
savings can be achieved.
The Group has acquired eleven sites over
thepast four years, taking its total pipeline to
13sites which, when opened, would expand
theGroup’s current MLA by 15%.
The planning process remains difficult and to
achieve a planning consent can take anything
from eighteen months to three years.
Localplanning policy is favouring residential
development over other uses, and we don’t
expect this to change given the shortage
ofhousing in the UK.
We currently have planning consent on seven
ofthe 13 development sites.
Our latest tender for our store in Farnham Road
Slough has come in within our underwriting as
aresult of moderating steel and other materials
costs and reduced contractor margins since
wesuspended new construction last May.
Itistherefore our intention to restart our
construction programme from this Summer.
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 £27.6 million in the
year (an uplift of 1%), due to an improvement
inunderlying cash flows used in the valuations,
partly offset by an outward shift in cap rates.
There have been a number of larger portfolio
transactions across Europe over the past three
years, and there is a weight of institutional
money looking to invest in self storage.
Notwithstanding the above, the increase in
interest rates over the year led to the outward
shift in cap rates, which was more pronounced
inmore regional markets.
Annual Report and Accounts 2023 Big Yellow Group PLC 45
Strategic Report Governance Report Financial Statements
Principal Risks and Uncertainties continued
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 5 and half years remaining. The Group has a £120 million
loan from M&G Investments, which is repayable in 2029. For our bank
debt, we borrow at floating rates of interest.
During the year, the Group signed a $225 million credit approved shelf
facility with Pricoa Private Capital (“Pricoa”), to be drawn in fixed sterling
notes. The Group can draw the debt in minimum tranches of £10 million
over the next two and a half years with terms of between 7 and 15 years
at short notice, typically 10 days.
Our policy is to maintain a flexible borrowing structure, with a long-term
average of approximately 50% of our total borrowings fixed, with the
balance floating. At 31 March 2023 39% 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 significantly during the year, with it
currently at 4.5%, up from 1% at the start of our
financial year.
The long-term forecast is for rates to gradually
fall from these levels. 61% 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 refinancing the M&G loan
during the year, and the Pricoa shelf facility that
we put in place.
The Group’s interest cover ratio for the year
ended 31 March 2023 was 7.7 times, comfortably
ahead of our internal target of 5 times and ahead
of our banking covenants, as disclosed in note
19. The ratio fell during the year, due to the rise
ininterest costs.
Tax and
regulatory risk
The Group is exposed to changes
inthe tax regime affecting the cost
ofcorporation tax, property rates,
VAT, Stamp Duty and Stamp Duty
LandTax(“SDLT”), for example the
imposition of VAT on self storage from
1October2012.
The Group is exposed to potential
taxpenalties or loss of its REIT
statusby failing to comply with
theREITlegislation.
We regularly monitor proposed and actual changes in legislation with the
help of our professional advisers, through direct liaison with HMRC, and
through trade bodies to understand and, if possible, mitigate or benefit
from their impact.
HMRC have designated the Group as having a low-risk tax status, and we
hold regular meetings with them. We carry out detailed planning ahead
of any future regulatory and tax changes using our expert advisers.
The Group has internal monitoring procedures in place to ensure that the
appropriate REIT rules and legislation are complied with. To date all REIT
regulations have been complied with, including projected tests.
The Group’s like-for-like property rates bill for the
year ending 31 March 2024 has increased by 19%
from the prior year, with the 2023 rating list
reflecting 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.
Annual Report and Accounts 2023 Big Yellow Group PLC46
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 prior year, which
showed very pleasing results of the level
ofengagement of our teams.
We have listened to the feedback from our
employees raised during our engagement survey
and made a number of changes to the Group’s
operations, 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. We are carrying out
a further survey of our staff in May 2023.
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.
The Group has a crisis response plan which
wasdeveloped in conjunction with external
consultants to ensure the Group is well placed
toeffectively deal with a major incident.
We experienced a fire caused by arson at our
Armadillo Cheadle store 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 2023 Big Yellow Group PLC 47
Strategic Report Governance Report Financial Statements
Principal Risks and Uncertainties continued
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, has delivered
anambitious strategic plan to 2032.
We appreciate that both physical and transition
risks are expected to materialise to lesser or
greater extents over the coming years and costs
may go up gradually, hidden within what may be
perceived as ‘natural variations’. Our focus and
strong governance will allow us to continue to
mitigate the effects
Internal audit
The Group employs a Head of Store Compliance responsible for reviewing
store operational and financial controls. He reports to the Chief Financial
Ocer, and also meets with the Audit Committee at least once a year.
Thisrole is supported by three other team members, enabling additional
work and support to be carried out across the Group’s store portfolio.
TheStore Compliance team visits each operational store twice per year
tocarry out a detailed store audit. These audits are unannounced, and the
Store Compliance team carry out detailed tests on financial management,
administrative standards, and operational standards within the stores.
Part of the store sta’s bonus is based on the scores they achieve in these
audits. The results of each audit are reviewed by the Chief Financial Ocer,
the Financial Controller, and the Regional Operations Managers. This is the
equivalent of an internal audit function for the Group’s store operations.
For the key business cycles conducted at the Group’s head oce, 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 aect 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 2023 the Group had available liquidity of approximately
£32million, from a combination of cash and undrawn bank debt facilities.
The Group additionally has a $225 million credit approved shelf facility
with Pricoa Private Capital to be drawn in fixed sterling notes. The Group
can draw the debt in minimum tranches of £10 million over the next two
and half years with terms of between 7 and 15 years at short notice,
typically 10 days. The Group is cash generative and for the year ended
31March 2023, had operational cash flow of £112.0 million, with capital
commitments at the balance sheet date of £6.1 million.
Annual Report and Accounts 2023 Big Yellow Group PLC48
Strategic Report
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 2024 and projections contained in the longer-term business
plan which cover the 18 month period. After reviewing these projected
cash flows together with the Group’s and Company’s cash balances,
borrowing facilities and covenant requirements, and potential property
valuation movements over that period, the Directors believe that, taking
account of severe but plausible downsides, the Group and Company will
have sucient funds to meet their liabilities as they fall due for that period.
The Group’s revolving credit facility of £240 million with Lloyds, HSBC and
Bank of Ireland expires in October 2024. The Group intends to refinance
this loan with the banks this year, but does not rely on the refinancing
ofthe loan to reach its conclusion on going concern.
In making their assessment, the Directors have carefully considered
theoutlook for the Group’s trading performance and cash flows as
aresultof the current economic environment, taking into account
thetrading performance of the Group over the recent dislocations in
theglobal economy from Covid-19 and the Russian invasion of Ukraine.
TheDirectors have also considered the performance of the business
during the Global Financial Crisis. The Directors modelled several dierent
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 sucient liquidity to meet its financial
obligations asthey fall due.
Consequently, the Directors continue to adopt the going concern basis
inpreparing the Group and Company financial statements.
Viability statement
The Directors have assessed the Group’s viability over a four-year period
to March 2027. 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 dierent scenarios on the Group’s future prospects.
In making their assessment, the Directors took account of the Group’s
current financial position, including committed capital expenditure.
TheDirectors carried out a robust assessment of the emerging and
principal risks and uncertainties facing the business, their potential
financial impact on the Group’s cash flows, REIT compliance and financial
covenants and the likely eectiveness 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 2027.
Managing Environmental and
Climate Change Risks and
Opportunities
TCFD compliance statement
The Board is pleased to confirm that for the year ended 31 March 2023,
Big Yellow’s climate related risks and opportunities disclosures are
reported under the TCFD framework. We have continued the journey to
Net Zero this year with the delivery of our Net Renewable Energy Positive
(“NREP”) and Net Zero Strategy. With the support of our external partner,
EcoAct we have published science-based mid-term targets, which have
been verified by the Science Based Target initiative.
We have made good progress on our strategy to decarbonise our business
by continuing to remove gas boilers and we have extended our three-year
retrofit solar programme from the original 36 stores to the whole of the
estate, where it is reasonably practicable to install solar PVs.
We 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.
Thisyear, we have refreshed the temperature projections for our
Armadillo stores to deliver a holistic view of the risks to our whole
business. Wehavestarted to work with our suppliers to better quantify
and jointly tackle embodied emissions in our buildings. For our specific
actions on Scope 1 and Scope 2 initiatives, please refer to our strategy
document https://corporate.bigyellow.co.uk/sustainability/strategy
(seepage 13).
On pages 49 to 54 of this report we summarise material climate related
disclosures consistent with the four pillars and 11 disclosures proposed
by the TCFD, including the “Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures” released in October
2021. We also reference links to further information which can befound in
our Annual Report, ESG Report and online factsheets to support compliance.
We cross refer to other documents and reports inthis TCFD section as it
oers us additional space to explain our strategic climate commitments,
illustrate this through case studies and explain our targets, metrics and
progress in more detail.
We are not currently in full compliance with TCFD in the following two
areas; our Scope 3 construction emissions are currently calculated by
spend rather than more granular data sets, using best practice estimation
and we are still assessing the likely cost implication of transition risks.
Weanticipate being in compliance with TCFD on these area within three
years. Moving forward, we intend to evolve our reporting under the TCFD
recommendations and recommended disclosures, as we journey
towardsnet zero.
Annual Report and Accounts 2023 Big Yellow Group PLC 49
Strategic Report Governance Report Financial Statements
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, as we believe these to be potentially significant in the future.
After the acquisition of Armadillo Self Storage in 2021, we have now
integrated the Armadillo stores into the Big Yellow risk management
framework and the NREP and Net Zero Emissions Strategy. The Armadillo
portfolio has been brought under the umbrella strategy, which resulted
ina re-baselining activity of 2019-20 that we now report against.
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 Sustainability and the
Executive Directors. The Sustainability Committee meets twice yearly.
The Board is updated on relevant aspects of our sustainability strategy
ateach meeting. In addition, climate-related risk has been defined as a
‘principal risk’ and managed as part of our standard business risk process.
In order to condense information in our sustainability statement we have
a separate document detailing our internal process and risk management
“Our ‘Managing Climate Related Risks and Opportunities’.
This can be found on the following link: https://corporate.bigyellow.co.
uk/download_file/view/1043/236 (see pages 1 to 5).
For more detail on our governance structure and management’s role
inassessing and managing climate-related risks and opportunities,
please follow the link: https://corporate.bigyellow.co.uk/download_file/
view/996/236 (see pages 1 to 4).
This is kept as an independent document as this is of interest to some
ofour stakeholders separately from our annual report and accounts.
Strategy
Worth noting
– We are already at 1.0 degree warming
– To minimise global warming to 1.5/2.0 degrees we are 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
As a UK real estate company our business is exposed to both physical
andtransitional risks – and opportunities from climate change. 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 Oce, 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 likely outcomes, which varies
from business to business. Big Yellow chose a scenario that related most
strongly to our 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 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 our science-based targets and have had these
externally verified by the SBTi. The science-based targets are published
here (see pages 1 and 2).
https://corporate.bigyellow.co.uk/download_file/view/1140/234
Managing Environmental andClimate Change
Risks andOpportunities
continued
Annual Report and Accounts 2023 Big Yellow Group PLC50
Strategic Report
Materiality
We undertake materiality reviews of ESG risks, and our approach to materiality is documented at https://corporate.bigyellow.co.uk/application/
files/6916/2188/3747/Materiality_Assessment_May_2021.pdf (see page 1 for definition of materiality and page 5 for our internal process
onassessingmateriality).
Climate related risks
Big Yellow has assessed the 10 main risk themes defined by the TCFD framework in our ‘Managing Climate Risk and Opportunities’ document.
UsingCDPterminology, seven of the TCFD climate-related risk themes are assessed as ‘relevant, always included’; two are assessed as ‘relevant,
sometimes included’; and one is assessed as ‘not relevant, included’.
Climate-related risks are broken down into Physical and Transitional Risks and are prioritised based on the potential severity of their impact on the
business. The below table illustrates time periods and the importance of the risks identified by the ESG department and Environmental Committee.
Risk Type Risk Theme
Potential Materiality
Short-Term
(1)
Medium-Term Long-Term
Physical Risks
Heat Stress Chronic physical
Flooding
(2)
Acute physical
Transition Risks
Stranded Assets Market
Reputational Risk Reputation
An increase in carbon/emission taxation and fines
(unlikely that there will be significant incentives)
Current regulation
An increase in standards, especially for buildings Emerging regulation
A significantly higher financial reporting burden including Scope 3 Emerging regulation
Introduction of a carbon price Market
Importance:
Low Medium High
(1)
Short-term is determined to be less than five years, Medium-term between five to ten years and Long-term above ten years.
(2)
A +2°C scenario was used for identifying Physical risk and has been determined to have a medium-long-term timeline, using IPPC report (SPP3-7.0).
Physical risks
Impacts from both flooding and increased heat stress will be likely
havesome financial impact on us. It may also have a reputational impact
if stored goods are aected and an indirect financial impact through
risinginsurance costs.
Heat stress
Assuming a +2°C scenario, 42 of our 108 stores may experience heat
stress, both as an increase in ‘hottest summer day temperature’ of 5%
points or more and from at least a doubling in the number of summer
daysper month that exceed 25°C.
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 retrofitting of air conditioning
units, detrimental impact on immediate neighbourhoods through urban
island heat eects and community pressure to address heat issues.
Flooding
This year this work has been extended to include the Armadillo stores we
acquired in July 2021. We have three stores that are in Flood Zone 3 and
that have an at least medium to high risk of surface water flooding from
rivers or the sea – all three stores contain measures to minimise impacts,
such as flood defences. We anticipate that we will be monitoring the
adequacies of these measures going forward.
Assuming a +2°C scenario, 87 of our 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.
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 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 51
Strategic Report Governance Report Financial Statements
Transition risks
There are a number of consequences of changing climate that the
Sustainability Committee deem likely to occur:
– A focus on electrification and decarbonisation.
– An increase in carbon / emission taxation & fines (unlikely that there
will be significant incentives).
– An increase in standards, especially for buildings.
– A significantly higher financial reporting burden including Scope 3.
– The introduction of a price of carbon.
These are likely to have a financial impact on the Group, however, we are
still assessing the likely cost implication. 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 / oering real
customer solutions, such as only using renewable energy at our
stores and providing EV charging pods for our sta and customers.
Climate-related opportunities
Opportunities, arising from risks explored above, are also identified where possible and how these will be integrated within the Company’s strategy and
financial planning. Our internal processes and scenario analysis also identify possible climate-related opportunities, these are listed in the table below:
Climate-related Opportunity Company Response
Potential Materiality
Short-Term
(3)
Medium-Term Long-Term
Growth in demand for renewable energy Investment into retrofitting existing stores with PV systems
Aim for all new stores to be fitted with optimal solar capacity
intherange of 50kWp-200kWp subject to suitability of store roofs
Purchasing 100% renewable energy
Growth in solar and battery markets
drivenbydecarbonisation
Investing in solar battery pilot projects to combat export limitations
Transition away from fossil fuelled
heatingandNatural Gas
Investing into retrofitting existing gas boilers with Heat pumps.
Growth of EV transport market Deploying electric vehicle charges for all new stores
Importance: Low Medium High
(3)
Short-term is defined as up to 5yrs, Medium-term is between 5yrs to 10yrs and Long-term isabove 10yrs.
The risk of ‘stranded assets’ is a focus for 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boilers is currently being undertaken for Armadillo and Big Yellow,
witheight stores having had their gas boilers removed this year; and the
remaining 11 stores having their heating swapped to electric over the
next two financial years.
We assess that our business will remain resilient to the climate-related
risks identified despite the scale of adjustment needed to transition to a
low-carbon economy, across a range of warming scenarios, including one
where warming is limited to 1.5
o
C.
Managing Environmental andClimate Change
Risks andOpportunities
continued
Annual Report and Accounts 2023 Big Yellow Group PLC52
Strategic Report
Internal processes
Both physical and transition risks are expected to materialise to a lesser
or greater extents over the coming years and costs may go up gradually,
hidden within what may be perceived as ‘natural variations’.
The initial view was to establish a ‘trigger’ metric that will prompt the
Company to review current measures taken and therefore 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 sucient 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 Executive Directors 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 vs historic 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. The Group’s long-term forecast
incorporates the currently expected costs to the Group of the solar
PVinstallations, changes to energy usage and cost, and other planned
sustainability measures. In the budgeting process for new-build stores,
we consider the financial impact of the mitigation costs for future heat
stress and flooding potential.
This is particularly useful for physical risks.
Process 2 – identifying issues via our internal and
external Sustainability community
The Head of Sustainability 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 those connected to Planning for our future store opening
program, 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 done to date
– Flood Risk assessments for each store; now including the
Armadillostores.
– Localised climate change projections – using the Met Oce climate
projection modelling; +2°C and a +4°C scenario for every store.
– Scope 3 footprint for combined Armadillo and Big Yellow.
– Setting science-based targets for the entire business. Published
within our Benchmarking and Standards section of the Full ESG
Report 2023.
Work going forward
The following next steps are in place:
– Having identified the number of stores that may experience an
increase in total number of “hot days” and a temperature increase
ofthe hottest day, to then 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oces.
– 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 2023 Big Yellow Group PLC 53
Strategic Report Governance Report Financial Statements
Metrics
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, and for the first year (2023) the physical and transition risks are scored.
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 risk metrics
Aspect KPI 19-20 20-21 21-22 22-23 Target
Regulation No of EPCs ratedFor G 0 0 2
(4)
0 maintain
Extreme Weather % of current lettable area (sqft) located in Planning flood Zone3
&atleast medium to high risk of surface water flooding
(5)
New for
2020/21
0.87 0.87
(6)
0.56 n/a
% of at risk current lettable area protected by adaptive measures,
suchas raised floors orSUDs
(7)
100% 100% 100% 100% 100%
Climate-related opportunities metrics
Aspect KPI 19-20 20-21 21-22 22-23 Target
Transitioning to a low
carbon economy
% of electricity from renewable energy generation 6.1% 7.1 % 7.8% 15.4% 100% + by 2030
Investment in retrofitting activities to drive decarbonisation (approx.)
(8)
£0.1m £0.6m £15k £5.5m £5.5m planned spend
over the next two years
% of electricity purchased from renewable sources (‘market based) n/a 100% 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 4.0 As per our NREP
&NetZero Strategy
(4)
Two of the acquired armadillo stores had ‘F’ ratings in the prior year.
(5)
Sq ft from ground and below ground level floors.
(6)
Unchanged from the prior year.
(7)
SUDs stands for Sustainable Urban Drainage.
(8)
Figure includes removal of gas boilers, retrofitting of solar installations all energy eciency
related projects.
EPC % by No. of 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. https://corporate.bigyellow.co.uk/
application/files/5616/5579/7452/Sustainability_strategy_2022.pdf
In order to achieve our main Net Zero commitments, detailed in the
‘building a responsible business’ part of this document on page 9 we
haveset a number of sub targets that need to be achieved along our
pathways. These are summarised in our annual ESG report, as well as
inthe Directors’ report and in more detail in our full ESG report.
In order to set out our science-based targets, that have been verified
bythe SBTi; we have had to conduct wider scope 3 foot-printing work.
Formore information on this please refer to our Benchmarks and
Standards section in the Full ESG Report.
Energy Performance Certificates (“EPCs”)
98% of EPCs for our store portfolio are in the ‘Green’ range, i.e. an A, B
orCrating. The final 2 Armadillo stores with an EPC rating of D are due for
renovation before the end of 2024-25; once those works are completed
we hope tobeable to say the whole estate isratedCor above. 100% of our
stores are covered by an Energy Performance Certificate.
C
38%
B
54%
A
14%
F
0%
G
0%
E
0%
D
2%
Managing Environmental andClimate Change
Risks andOpportunities
continued
Annual Report and Accounts 2023 Big Yellow Group PLC54
Strategic Report
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 eective engagement with all of our key
stakeholders. The importance of each matter may dier 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 85 to 86.
Further information
You can read further information on stakeholder engagement and our
approach to S172 in the following places:
Employees
Chief Executive’s Statement (page 16)
Governance (pages 85 to 87)
Customers
Chief Executive’s Statement (page 17)
Operating Review (page 30)
Governance (page 85)
Suppliers
ESG report (page 68)
Governance (page 85)
Investors
Chairman’s Statement (page 14)
Chief Executive’s Statement (page 16)
Our Strategy (page 20)
Our Investment Case (page 22)
Governance (page 85)
Environment
Chief Executive’s Statement (page 18)
Operating Review (page 31)
ESG Report (pages 56 to 72)
Long term
Chairman’s Statement (page 14)
Chief Executive’s Statement (page 18)
Our Strategy (page 20)
Our Investment Case (page 22)
Risk Management (page 44)
Viability Statement (page 49)
Annual Report and Accounts 2023 Big Yellow Group PLC 55
Strategic Report Governance Report Financial Statements
Environmental, Social
andGovernance Report
Big Yellow Group PLC (“Big Yellow”) is committed to responsible
andsustainable business practices.
1. Introduction
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 and 84 Big Yellow 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 ESG 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
Report on page 91. Heather, along with the Board, oversee the
sustainability agenda of the Environmental Committee and the Head
ofSustainability.
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 changing climate and a changing political
and legislative environment.
Annual Report and Accounts 2023 Big Yellow Group PLC56
Strategic Report
Our full ESG Report and the relevant sections within our Annual Reports
and Accounts (the Directors’ Report and the ESG 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
ESG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 page 20 of the Annual Report.
2. ESG executive summary
This has been a year of continuity for Big Yellow, building on our strategy
commitments and our journey towards net zero. After the challenges we
faced last year with our supply chain, we have secured a new solar panel
provider which we are completely satisfied sources their components
inaway we are comfortable with; and have then continued on to complete
23 of the initial 36 solar retrofit of our stores to date.
The evaluation of our solar panel journey has in turn prompted us to
consider our wider supply chain. We have engaged with the top 80%
ofourvalue chain this year as part of our first steps into ensuring
wehavea safe, like-minded supply chain to work with. We have set out
aprogramme of work to continue this journey over the coming years.
At board level, our Sustainability Committee, chaired by Heather Savory,
made the decision to push forward with the solar retrofit programme
andto extend it from the 36 originally identified stores to the whole estate
so that, where possible, every store can benefit from renewable onsite
power in the future. This further drives our pursuit to be Net Renewable
Energy Positive by 2030 and together with our ongoing battery pilot,
should put us in good stead to achieve our goal.
We have completed a rigorous process this year with the Science Based
Targets initiative and our targets have now been certified. Our focus will now
be working towards meeting these targets over the coming seven years.
The Foundation has had a busy year with £193,000 donated to our
charitypartners all of whom are focused on the cause of helping
vulnerable people back into work. We have added a new charity partner,
Working Chance, the UK's only employment charity focused entirely
onhelping women with criminal convictions back into paid employment.
Wehope that there will be opportunities for our team members to
volunteer with our Charity Partners and also for work placements from
ourCharity Partners hopefully leading to employment. This should build
on the success we have already had this year with our work placements.
We have had five successful placements into the business with individuals
who have come to us through our partners Breaking Barriers, Street League
and the Downs Syndrome Association.
Focusing on both the Environmental and Social aspects of our ESG
isofparamount importance to us. We believe that the progress towards
ourNet Zero targets, the work of The Big Yellow Foundation and our
donations of space to local charities go hand-in-hand in doing our bit for
the environment and for the communities local to our stores.
Jim Gibson
Chief Executive Officer
2.1 Highlights
– we have had our Science Based Targets externally verified.
Big Yellow commits to:
– reduce absolute scope 1 and 2 GHG emissions 70%
byFY2032 from a FY2019 base year; and
– reduce scope 3 GHG emissions from purchased goods
and services, capital goods, and fuel and energy related
activities 61.1% per square foot within the same
timeframe.
– we have invested £4.7 million in our solar programme over
the year and now have 53 stores with solar and have
expanded the programme to all stores. Our current peak
capacity has increased over the past two years from
0.9 Megawatts to 4.5 Megawatts;
– we have donated £271,000 in Community Investment. This
consists of a combination of free and discounted space to
worthy local charitable organisations and not-for-profits and
we house dierent organisations, from foodbanks to small
community groups to NHS partners and also BoxShop
products donated;
– £204,000 has been raised for the Foundation from customer
donations and employee fundraising including the matched
contributions from the Company. These funds allowed us to
make grants of £193,000 to our partner charities in the year;
– we have maintained our GRESB Green Star rating, achieved
aB award from CDP and maintained our ISS indices rating;
and we obtained our second EPRA sBPR Gold Award.
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.
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 2032. We will focus on our most material emissions – carbon – and
look forward to updating you on the progress we are making in each
futureESG Report.
We have set science-based targets for our Scope 1, Scope 2 and Scope 3
emissions. These have now been fully verified by the Science Based
Target Initiative.
Further information on them can be found here https://corporate.
bigyellow.co.uk/download_file/view/1140/234.
Annual Report and Accounts 2023 Big Yellow Group PLC 57
Strategic Report Governance Report Financial Statements
Environmental, Social andGovernance Report continued
2.3 Sustainability performance overview
The tables below are of all our commitments, the progress we have made
against them during the financial year ended 31 March 2023 and our
(amended) plans going forwards. They are aligned to our three corporate
strategic themes:
– Provide the place and space to make lives easier
– Treat everyone fairly and respectfully, as a partner
– Plan and act for a Sustainable Future
SDG where
applicable Target / Commitment
By financial
year
Progress during
the year Status Other information
‘Net zero’ Store Scope 1 and 2 Carbon
Emissions by2030
2029/30 Location-based: 100%
netzero
Retro-fit 36 stores with solar installations 2024/25 23 stores retrofitted
withsolar
Set science-based targets 2022/23 Targets externally verified
bySBTi
Progress against targets to be KPI
from23/24
Deliver a battery pilot 2023/24 Battery installed,
management process under
development.
Replace gas boilers 2024/25 8 stores fully removed, with
2stores partially removed
Sustainable construction commitments:
allnew stores will be equipped with
theoptimal capacity in the range of
50kWp-200kWp subject to suitability
ofstore roofs.
Annual Harrow fitted with 50kWp
constructed before Kingston
North, Kingston North fitted
with 85kWp.
UPDATED: capacities updated to reflect
the drive for solar across the estate.
Sustainable construction commitments:
BREEAM Standard of Very good
Annual Both Kingston North and
Harrow built to BREEAM
Excellent standards
The tables below show the Group’s performance against Sustainable Development Goals (“SDG”).
Exceeded Achieved On track Behind target Not achieved New or modified target
Annual Report and Accounts 2023 Big Yellow Group PLC58
Strategic Report
SDG where
applicable Target / Commitment
By financial
year
Progress during
the year Status Other information
Sustainable construction commitments:
EVcharging pods at all newly-built stores
(wherespace allows)
Annual Both Kingston North and
Harrow have been installed
with semi-rapid 7kWh
charges. Head office also had
two chargers installed
Generate renewable energy to meet
atleast 100% ofour energy needs
2029/30 This year we generated
enough solar to displace 15%
of our grid bought power
Achieve 0 tCO
2
e per m
2
occupied
Intensitymetric
2029/30 5.0 kgCO
2
e /m
2
Occupied
Space – a 31% reduction from
the baseline year
Energy Intensity target: 20% decrease from
our 2019/20 baseline
2029/30 This year we have made
a7%reduction from our
baseline year
100% CLA (Current Lettable Area) covered
by EPCs
Annual 100% of stores now have
EPCof which 98% are A-C
Review in-store water consumption against
self storage benchmark
Annual Continue to remain atabove
benchmark
Contractors signing up to CCS scheme
witha target score of 35 points for both
fit-out and shell
Annual Harrow – 41 Kingston
North–39
Educate and engage store teams to
improve recycling performance – send zero
waste tolandfill
2024/25 8% to landfill – this is a 33%
improvement on last year
To raise £150,000 Foundation
donationsfrom our customers, Employee
fundraisingcontributions and Big Yellow
matchedamounts
Annual £204,000 Raised
Grants allocated to Big Yellow Foundation
Charitypartners: 75% of income allocated
to charity partners
Annual 94%
100% of stores with volunteering
opportunities
Annual 100%
10% of volunteering days taken up
byourteams
2023/24 4%
(1)
IMPROVEMENT PLAN: Formalised
volunteering events to be organised with
new reporting structure in place to
capture volunteer day information.
Exceeded Achieved On track Behind target Not achieved New or modified target
(1)
17 days taken out of 445 full time employees.
Annual Report and Accounts 2023 Big Yellow Group PLC 59
Strategic Report Governance Report Financial Statements
(2)
3 work placements had contracts extended by between 3 and 12 months from the initial 12 week placement.
(3)
Please note, the placements at Cardi and the existing placement at Maidenhead were extended by a combined total of 56 weeks; the equivalent of an extra 4.6 work placements.
(4)
When reviewed it was decided these placements are about job experience and building confidence rather than long-term employment so extension to the initial placement and a lower conversion
areboth more appropriate.
Exceeded Achieved On track Behind target Not achieved New or modified target
SDG where
applicable Target / Commitment
By financial
year
Progress during
the year Status Other information
Four individuals on paid 12 week work
placementssupported by a Big Yellow
Foundation charitypartner
Annual 5
UPDATED: on review including a
timeframe for initial placement was
deemed sensible. 4 initial placements
through Big Yellow Foundation connections
and a 5
th
with a college local to a store.
Number of individuals offered an extension
toplacement from the above cohort – 50%
ofyearlycohort
Annual 3
(2,3)
REVIEWED
(4)
: time frame and details
reviewed. Extensions are defined as
contract placements extended beyond
12 weeks either part-time or full-time.
Maintain store engagement with the
BigYellow Foundation: Monitor move-in
move-out donations – aim for a conversion
rate of greater than 30%
Annual 36.9% conversion achieved
with average donation
of£1.78
Foundation KPIs are monitored
throughout the year by area managers
and included annually in Director store
tourdiscussions.
Report on ‘prompt payment’ statistics Annual Maintain current reporting
standards
>80% of invoices received & paid within
30days
Annual 89%
UPDATED: target set. Previously
reporting.
n/a Supply Chain Risks: We intend to
conductfurther supplier assessments
beyond human rights and anti-slavery,
inrelationtoESG
2025/26 We have worked with SGS
toproduce a method of
collecting ESG performance
information from our
suppliers.
This has then been analysed
and a long-term delivery
plancreated.
NEW: Continue to make progress
onlong-term supplier plan
It is our aim to keep everyone safe when
visiting orworking at our stores.
Annual No fatalities and two
reportable, none staff,
incidences – accident
statistics are published in
theHealth and Safety section
ofthis report.
n/a We will continue to reference and meet
ourmost relevant standard: EPRA
Annual Gold
n/a We continue to submit to all relevant
Benchmarks, namely GRESB, CDP and
FTSEESG
Annual Most recent scores: CDP: B
FTSE4Good: included
inindex(3.1)
GRESB: 84%
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC60
Strategic Report
3. 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 ESG Report and the relevant sections within our Annual Reports
and Accounts (Directors’ Report and ESG 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 GHG section of the ESG 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 during
2021/22 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 https://corporate.bigyellow.co.uk/application/
files/2716/8605/1568/Basis_of_Reporting_2022-23.pdf.
Benchmarking and standards
We use the detail in this ESG 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.
Thefull assurance statement is published in our ESG Report 2022-23.
Annual Report and Accounts 2023 Big Yellow Group PLC 61
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3.2 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 republished during the year ended 31 March 2022 as it underwent
two material reviews:
– 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.
3.1 Highlights
– We have had our science-based targets verified. Big Yellow
commits to:
– reduce absolute scope 1 and 2 GHG emissions 70%
byFY2032 from a FY2019 base year; and
– reduce scope 3 GHG emissions from purchased goods
and services, capital goods, and fuel and energy related
activities 61.1% per square foot within the same
timeframe.
– We have opened two new stores; Harrow with 50kWp of solar
and Kingston North with 85kWp. With the new stores and the
retrofit programme in full swing we now have an estate with
53 Solar PV installations – this has increased our renewable
electricity generation by 94% from the prior year.
– Our stores with Solar PV Installations of 50kWp or larger
generated 3% more of their electricity need compared
tolastyear.
– Despite the opening and acquisition of three new stores
andelectrification of store heat in eight stores, our absolute
electricity (grid bought electricity plus solar energy used)
has remained almost static; our like-for-like store portfolio
electricity use has had a slight increase of 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.
The company is tracking six 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. This commitment has been
further extended to cover all suitable roofs on the estate. On track
b. Progress on developing and setting science-based targets: our
Science Based Targets have been set and externally verified by the
SBTi. Complete
c. Progress on battery pilot: battery installed. We continue to work with
our battery operator partner and to manage the battery. On track
d. Progress on decarbonisation – first and second steps gas boiler
replacement programme: nine gas boilers replaced with electric
boilers; a further eight scheduled for FY2023/24. 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 the
optimal capacity in the range 50kWp-200kWp subject to suitability
ofstore roofs. On track
f. The embodied carbon of our construction projects is now being
considered and assessed on a project by project basis. In progress
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 ESG 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.
3.3 Energy
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
53stores that generate renewable solar electricity.
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC62
Strategic Report
Store portfolio long term solar electricity generation (2009 to 2023)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
41
94
113
134
209
286
314
358
343
329
450
578
665
865
1,681
Having generated over 1.5million kWh of power on our stores this year
means that we have saved over £200,000 in grid electricity bills. Once an
export connection is established, which takes some time after the panel
installation is complete we are also able to sell any unused power back
tothe grid. Below is a summary of this year’s financial benefits from our
solar generation.
Financial benefits of solar generation*
Year ended 31 March 2021 2022 2023
Solar Generation (MWh) 681 865 1,681*
Store solar use (MWh) 391 557 1,521
Displaced grid energy savings (£) £93,116 £121,065 £235,385
FiT & PPA payments (£) £108,951 £115,735 £134,841
Total savings (£) £202,068 £236,800 £370,226
* Indicates data reviewed by SGS. See page 73 for their independent assurance report.
Notes:
– Total Grid Savings: Solar Payments from Energy Companies = Feed in Tari + PPA payments.
March 23 FiT payments have been estimated using March 22 data as current year not
availableuntil Q2.
– Supplied UK Network displaced electricity savings = solar generated kWh x 14p Grid kWh charges.
Store portfolio long-term electricity use
The chart below shows how grid bought electricity plus solar energy used in our stores between 2008 and 2023 has changed over time. Please note, as
we move to meeting our electricity needs increasingly from solar, the following chart shows the used solar energy from the year ended 31 March 2020
included in the total MWh number.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
20
40
60
80
100
120
12,866
13,899
12,730
13,925
13,674
13,846
11,688
9,643
9,376
9,571
9,494
8,991
11,902
11,585
11,558
12,420
MWh solar and grid Number of stores
2008/09 2007/08 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Note: chart shows the used solar energy from the year ended 31 March 2020 included 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 eciently, 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 masts. 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.
Long-term store electricity
Annual Report and Accounts 2023 Big Yellow Group PLC 63
Strategic Report Governance Report Financial Statements
Highlights
– Absolute Scope 1 and Scope 2 Store and non-Store portfolio
saw a decrease of 11%. There are two main causes for this
decrease: a favourable UK fuel mix; and our investment
inon-site renewables with 23 new solar PV installations
duringthe year.
– We have set and had validated our Science-Based Targets.
– Our market-based emissions (from electricity) are still
zerotCO
2
e thanks to our REGO-backed 100% renewable
electricitycontract.
3.4 Emissions
Scope 1 and 2 GHG Emission Intensity / Occupancy, Revenue & CLA (GHG-Int.)
Year ended 31 March 2020 2021 2022 Restated 2023
Total GHG Scope 1& 2 Emissions location based (t CO
2
e) 3,159 2,805 2,610 2,366*
Total GHG Scope 2 Emissions market based (t CO
2
e) 1,410 253 352 242*
Electricity transmission (t CO
2
) 251 224 204 193
Telecoms emissions on our sites (t CO
2
) 144 174 174 177
Employee business travel (t CO
2
e) 72 76 93 141
Total (t CO
2
e) Scope 3 467 474 471 511
kgCO
2
e / revenue (£000s) – location-based store and non store portfolio 17. 9 18.3 15.0 12.5*
kgCO
2
e / revenue (£000s) – market based store and non store portfolio 9.7 1.7 2.0 1.3*
kgCO
2
e / occupied space 7. 2 6.2 5.4 5.0*
kgCO
2
e / CLA (m
2
) 5.9 5.0 4.7 4.0*
* Indicates data reviewed by SGS.
Carbon intensity of stores and non stores against CLA m
2
0
5
10
15
20
25
2012/13 2013/14 2015/16 2016/17 2017/18 2018/19 2020/212019/20 2021/22 2022/23
22.6
17.3
14.6
12.7
9.7
7.4
5.9
5.0
4.7
4.0
Environmental, Social andGovernance Report continued
Note: Armadillo included from 2019/20.
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Strategic Report
3.5 Water
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 ‘57’ (26,896m
3
of water / 472,692m
2
occupied space), we are very
pleased to share that our water consumption remains significantly lower
than BBP ‘Good Practice’.
We have instructed our utilities consultants to undertake a
comprehensive review of our water suppliers/meters and billing
processes. Once this is complete we hope this will give us an actionable
plan to improve our water data.
3.6 Waste
Our main source of waste is from the operational activities of our stores.
Our store sta apply best practice waste segregation for general and
mixed dry recyclable materials. Please note, our waste contractor provides
further waste segregation and recycling services post collection. We report
waste for our Big Yellow store portfolio; our occupied oce space at our
head oce site is excluded as waste collection data falls to our landlord.
During the year, we have changed waste contractors. We hope this
change will bring a better level of reporting information about the waste
collected from our stores and we will have a better understanding of how
the waste is processed once it leaves site. This in turn should improve our
data and recycling performance.
3.7 Resources use
As we are looking towards other potential opportunities, we are likely
tofocus our eorts 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.
We have swapped out our previous bubble wrap with a product that has
30% recycled content. This product still delivers the protective qualities
needed by our customers whilst using a lower content of virgin materials
which is better for the environment.
Paper-free customer move-ins went live in our stores in 2021, saving
approximately 800,000 pieces of paper each year.
We have continued to move more paper-based processes to online
processes, including putting in place an automated delivery system;
creating generic posters for Bank Holidays and seasonal trading instead
of new posters annually; and, removing the requirement for our stores
toprint the store equipment handbook by making it available online.
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 diculty 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.
3.8 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 eciency and several of our stores have other features, such
assolar PV and green roofs or wall.
After the acquisition of Armadillo, the overall EPC coverage dropped a
little, however, this past year we have worked hard on improvements to
increase this and can now say we have 98% of stores are rated A, B or C.
The final 2 Armadillo stores with an EPC rating of D are due for renovation
in the next two year; we hope to be able to say the whole estate is C
orabove after they are complete.
– 100% of our stores are covered by an Energy Performance Certificate.
– 100% CLA (Current Lettable Area) covered by Green aspects.
– We have significantly added to our solar PV estate by equipping our
two newest stores – Harrow and Kingston North, acquiring Aberdeen,
which has solar and retrofitting solar across 23 other stores. Totalling
3,464 kWp of capacity.
– Electric Vehicle Charging pods now as standard for all new stores
andhave been retrofitted in 16 existing stores.
Annual Report and Accounts 2023 Big Yellow Group PLC 65
Strategic Report Governance Report Financial Statements
4.1 Highlights
– Published our first combined Inclusivity and Diversity Report,
to include our Gender and Ethnicity Pay Gaps.
– Launched a new on-line ShareSave Scheme with Global Shares.
– Introduced an on-boarding platform for new team members
which professionalises the on-boarding process and oers
time eciencies for both the individual and the People
andTalent Team.
– Launched a Transgender Policy to support transgender team
members and prevent discrimination within the workplace.
– Two cost-of-living bonuses were paid to our Sales Advisors,
Assistant Managers and Customer Support team members
toassist them financially in the current economic climate.
– Held Retention Forums with over 100 Sales Advisors,
Assistant Managers and Customer Support team members
toidentify opportunities to improve retention.
– Introduced a Domestic Abuse Support Policy, to support
teammembers who are experiencing, or have experienced
domestic abuse and promote their health, safety and
wellbeing at work.
– Arranged a Mindfulness Mental Health Development Day for
our Wellbeing Experts which focused on techniques that they
can use for both themselves and those they are supporting.
– Conducted an extensive salary benchmarking exercise
forSales Advisor and Assistant Manager positions across
ourstores.
– Continued to include a selection of ‘People’ KPIs to be
assured by SGS.
4. Our people
We have a strong culture of inclusivity and diversity within the Company
and recruit based on personality over CV. We invest significantly in the
training of our team members to ensure that they deliver our high customer
service standards and have the opportunity to progress their career.
We continue to encourage a culture of partnership within the business
and believe in sta 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 over £67,300 for the
yearended 31 March 2023.
Over the past year, we have continued to act on the feedback that
weobtained from our 2021 bi-annual employee engagement survey.
Theresulting changes have included Area Managers, Operations Managers
and Head Oce Customer Support team members working regularly in
ourstores. They have also included reviewing our Bright Ideas Suggestion
Scheme, improving recognition across the business and launching a
newIntranet and an Electric Vehicles Salary Sacrifice Scheme. Our next
engagement survey will take place in May 2023 and further improvements
will be introduced, based upon the feedback that we receive.
In order to improve retention within the Company, we held a number
ofRetention Forums with over 100 Sales Advisors, Assistant Managers
and Customer Support team members. The results of the feedback that
we received have been formulated into improvement plans to facilitate
the appropriate changes.
We have been very aware of the eect of the current economic climate
onour team members, as a result of which we paid our Sales Assistants,
Assistant Managers and Customer Support team members a cost of living
bonus in November 2022 and February 2023 totalling £500. In addition,
we have taken a more flexible approach where team members have
applied for loans or advances, to provide them with additional financial
support during this time.
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC66
Strategic Report
5.1 Highlights
– Big Yellow’s community investment for the year, delivered
viadiscounted space, was £267,083.
– We have continued our partnership with Open Orchard at
West Norwood to plant and maintain native shrubs.
– Our employees raised £1,779, £1,710 of which qualified
formatching by Big Yellow.
– Delivered 5 successful and all-round enriching work
placements with Breaking Barriers, Street League and
theDown Syndrome Association.
– Continued our financial support of The Big Yellow Inner City
Schools Rugby Programme in South London. This initiative,
which started in 2017, in partnership with Southwark Rugby
Club aims to get local children, many from disadvantaged
backgrounds, playing rugby from local urban schools who
donot oer the sport as part of their P.E curriculum.
Theprogramme now consists of players from 11 local
secondary schools and oers the benefits of team building,
fitness and healthy competition.
5. Our communities
Our communities are made up of all the people who work and store
inourfacilities and everyone who lives around us.
This is the first full year 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 though our operations. Our aim
isto positively contribute to the local communities of our stores through
community investments and engagement as well as with our Big Yellow
Foundation. We do this in a number of ways, through discounted and
freespace provided at each store to local charities to fundraising by our
employees, matching the funds raised by their endeavours and
partnering with the foundations charity partners.
5.2 Community investments
Free space donated for community or charity use (£) £255,435*
Discounted space of up to 90% £11,648*
Total employee Big Yellow Foundation fundraising &Big Yellow
matched funds (£) £3,488*
One-o donations £799*
Total community investment £271,370*
* Indicates data reviewed by SGS.
5.3 Big Yellow Foundation
We are excited to announce that we have a new charity partner,
WorkingChance, the UK’s only employment charity solely for women with
convictions and are currently working to take on a new charity partner
supporting ex-military personnel. Our aim when setting up the Big Yellow
Foundation was both to develop a strong level of engagement with our
charity partners and to review our partnerships after five years. As we
bring new charity partners on board, we have taken the dicult decision
to end our partnership with two of our inaugural partners: Bounce Back
and Hire a Hero. Since the Foundation’s launch in 2017, we are proud to
have donated £190,000 to these two charities.
During 2022-23 we continued to work with our seven permanent charity
partners: Bounce Back, Hire a Hero, Street League, Breaking Barriers,
theBack Up Trust, the Down’s Syndrome Association, 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£203,778.
The Foundation paid out £192,500 to its seven charity partners in the
year ended 31 March 2023. Most of the grants made are unrestricted
funds, helping our charity partners to pay for every day necessities to
keep the organisation 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.
£204,000
Income raised for
the Foundation
£192,500
Paid out to Foundation
Charity partners
Annual Report and Accounts 2023 Big Yellow Group PLC 67
Strategic Report Governance Report Financial Statements
6. Our customers
Our most material commitment to all of our customers is a safe, secure,
welcoming and friendly environment.
We provide self storage facilities at all our stores, and oce space at
29stores. The vast majority of our lettable area (98.6%) are self storage
units, with 1.4% of our current lettable area used as oce space. In terms
of numbers, out of our 73,000 customers, less than 0.5% rent oces.
Our reporting therefore focusses on our self storage customers and any
reference to ‘customer’ should be taken to mean ‘self storage customer’.
Furthermore, we provide our customers with easy access to relevant
environmental and broader ESG information and actively engage with
them through our Big Yellow Foundation. We have increased our solar
installations significantly this year. Each store with a Solar PV (Photo
Voltaic) energy supply has a display in either the reception or loading
bayareas indicating how much energy has been generated; all our stores
have EPCs (Energy Performance Certificates) with most of the estate
achieving a C rating or above.
7. 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.
7.2 Supplier payment performance
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.
Year ended 31 March 2021 2022 2023
Within 30 days 58% 88% 89%
Between 30 and 60 days 39% 11% 10%
Over 60 days 3% 1% 1%
Average time to pay an invoice 32 days 25 days 24 days
6.1 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’www.bigyellow.co.uk/green/.
– engaging customer web journey ESG related content
andthe continued use of our customer facing animation
telling our environmental story.
– 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: 36.9% of customers donated at move-in stage,
38.4% at move-out stage.
7.1 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 continue to deliver strong payment performance:
– We paid 89% of invoices within 30 days and a further
10%between 30 and 60 days, a continued improvement
fromthe prior year (88% within 30 days and 11% between
30and 60 days).
– Our average time to pay an invoice was 24 days
(2022:25 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.
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC68
Strategic Report
7.3 Supply chain risk
No issues were raised to us via our confidential Whistleblowing Helpline
inthe last financial year.
Following the successful solution found for last year’s serious and
credible concerns raised about the potential of human rights breaches
within our solar panel supply chain. We have engaged SGS to work with
uson a Supply Chain Risk framework and assess a number of our key
suppliers. We have focused on the top 80% of our value chain. Engaging
with them on topics including their approach to ESG, environmental
management, health and safety and general governance and succession
planning. We have set out a plan to work with our suppliers in more detail
across some of these areas going forward.
We are delighted to share that no further large issues have come to light.
We have a plan in place to work with those suppliers that have not yet
formalised some of their internal processes to a standard we would like
tosee. We also plan to standardise our supplier onboarding process for
new suppliers in the future.
Our approach dierentiates 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/Maintenance
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 oces; 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.
Scope 3 Footprint
Understanding our Scope 3 Footprint is a necessary first step to
understand 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 including
that of the newly acquired Armadillo stores, this can be read at
https://corporate.bigyellow.co.uk/download_file/1007/237.
The work highlighted several main areas that our scope 3 footprint falls
into, these include embodied carbon of our newly built stores and carbon
associated with our suppliers or goods and services. We have started
looking at these areas this year and plan to work with our suppliers
moving forward to reduce these areas of emissions.
We have had our Science Based Targets fully verified by the Science
Based Target initiative. The targets are as follows:
– Big Yellow commits to reduce absolute scope 1 and 2 GHG emissions
by 70% by FY2032 from a FY2019 base year.
– Big Yellow also commits to reduce scope 3 GHG emissions from
purchased goods and services, capital goods, and fuel and energy
related activities by 61.1% per square foot within the same time frame.
This work will now be repeated annually as part of our monitoring process
to track our progress against our Science Based Targets. Please see our
Benchmark and Standards section in our ESG report for further information.
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 Supplier Engagement Rating (SER)
inaddition to their climate change score.
The SER provides a rating for how eectively 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 pleased to confirm we have achieved a B rating in the Supper
Engagement Rating.
Annual Report and Accounts 2023 Big Yellow Group PLC 69
Strategic Report Governance Report Financial Statements
8. Our health and safety
Big Yellow Self Storage recognises the importance of maintaining high
standards of health and safety for our customers, sta, contractors,
andany visitors to our stores.
Our Health and 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.
The Health and Safety Committee discuss and review any issues reported
from our regular meetings held at Bagshot (our head oce), Maidenhead
(our distribution warehouse), the stores and our construction sites.
OurHealth and Safety Policy states that all employees have a
responsibility for health and safety, but that managers have special
responsibilities. Theresponsibilities of our Operations Director are to keep
the Board advised on health and safety issues and to ensure compliance
with the Policy in respect of Construction (via the Construction Director)
and store operations (via the Head of Facilities and Store Operations
Managers). Externally, other interested stakeholders include the
Health and Safety Executive (HSE) and Local Government Authorities.
8.1 Highlights
Our health and safety 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 2023.
– Out of the 34 minor injuries to our customers, contractors
and visitors, 16 were the result of minor cuts. All of these
could have been avoided by wearing protective gloves.
– Our sta suered 7 minor injuries, for a variety of reasons,
including cuts and trips.
– There were 10,615 ‘Person Days’ worked on new store
construction ‘Fit-out’ projects in 2022/23. This work was on
our new store developments in Hove, Harrow, Kingston North
and Kings Cross. There were 0 reportable accidents from
these projects for our Construction Fit-Out activities.
– During the year, we opened our new stores in Harrow and
Kingston North. The Considerate Constructor Scheme (“CCS”)
scores for the two newly opened stores were as follows:
Harrow 41; Kingston North 39.
8.2 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 construction work has increased, absolute numbers of injuries have reduced.
Store customer, contractor and visitor health and safety
Year Ended 31 March 2020 2021 2022 2023
Number of customer move-ins
(5)
70,661 66,366 88,094 88,799
Number of minor injuries 56 37 27 34*
Number of reportable injuries (RIDDOR) 0 2 1 2*
RIDDOR per 100,000 customer move-ins 0.0 3.0 1.1 2.3*
* Indicates data reviewed by SGS as part of their assurance work.
Notes:
– RIDDOR = Reporting of Injuries, Diseases and Dangerous Occurrences.
– Annual Injury Incident Rate = the number of sta reportable injuries / average number of sta (x100,000).
Big Yellow staff health and safety (Stores and Head Office)
Year Ended 31 March 2020 2021 2022 2023
Average number of sta
(6)
361 370 427 465
Number of minor injuries 10 6 16 7*
Number of reportable injuries (“RIDDOR”) 0 0 0 0*
AIIR per 100,000 sta 0 0 0 0*
* Indicates data reviewed by SGS as part of their assurance work.
(5)
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.
(6)
Average FTE at 31 March 2023 has been used.
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC70
Strategic Report
Big Yellow construction ‘fit-out’ health and safety
Year Ended 31 March 2020 2021 2022 2023
Number of total person days worked 2,667 7,111 6,626 10,615*
Number of minor injuries 1 7 3 1*
Number of reportable injuries (RIDDOR) 0 0 0 0*
* Indicates data reviewed by SGS as part of their assurance work.
9. Benchmarks and standards
9.1 Highlights
– For the third year, we achieved a “Gold” standard for EPRA
sBPR (sustainable best practice reporting).
– We achieved a GRESB score of 86% (4 stars) – despite the
inclusion of our Armadillo stores.
– We achieved a ‘B’ (Management) rating from CDP 2021.
– We have maintained:
– Our ISS score of C – Prime status.
– Our FTSE4Good scores of 3.1 and inclusion in the index.
– We have updated our risk and opportunities assessment
aspart of our commitment to implement the TCFD
recommendations – for more information, please see the
‘Managing Risks and Opportunities’ section.
– For Construction activities, we also sign up to BREAAM
standards and the Considerate Constructor Scheme (‘CCS’);
Harrow and Kingston achieving a score of 41 and 39.
9.2 Science-based targets
Science-based targets have increased in popularity as a way of
businesses showing genuine commitment to reducing their emissions
and impact on the wider world. The process of target verification is a
rigorous one, completed by qualified individuals at the Science Based
Targets initiative. The process has multiple stages of scrutiny with each
calculation and target pathway considered. We have now had our targets
externally verified. Our public commitment is as follows.
Our commitment
Big Yellow Group PLC commits to:
– reduce absolute scope 1 and 2 GHG emissions 70% by FY2032 from
aFY2019 base year.
– reduce scope 3 GHG emissions from purchased goods and services,
capital goods, and fuel and energy related activities 61.1% per square
foot within the same time frame.
Scope of emission coverage Type of target 2020 baseline 2032 target % 2032 target
Scope 1 & 2 100% absolute 3,160 tCO
2
e -70% 948 tCO
2
e
Scope 3 61.10% intensity 3.3 kgCO
2
e /sq ft - 61.1% 1.3 kgCO
2
e /sq ft
Annual Report and Accounts 2023 Big Yellow Group PLC 71
Strategic Report Governance Report Financial Statements
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 Eciency Directive, The UK Energy Savings Opportunities
Scheme (‘ESOS’); and
– Energy Performance Certificate (‘EPCs’) – please see
‘asset list &green store portfolio’ section in the full ESG report
for more information.
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 ESG 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’.
2019/20 2020/21 2021/22
CDP A- B B
GRESB 80 – 4 Green Stars 84 – 4 Green Stars 86 – 4 Green Stars
FTSE4Good Included – 3.1 Included – 3.1 Included – 3.1
For more information on these benchmarks, please see the ‘Benchmarks,
Legislation and Standards section of the full ESG report.
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 and other ad-hoc meetings with
investors, both in the UK and internationally.
We also provide specific information on request to other investor
benchmarks, where available.
Environmental, Social andGovernance Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC72
Strategic Report
Nature and purpose of the assurance
SGS United Kingdom Ltd (hereinafter referred to as SGS) was
commissioned by Big Yellow Group PLC (‘Big Yellow’) to conduct an
independent assurance of selected KPI data in their Environmental, Social
and Governance Report 2022/23 (‘the Report’).
The purpose of this assurance exercise was, by review of objective
evidence, to independently review whether the KPI data is as declared by
Big Yellow, and reported in the Report, is accurate, complete, consistent,
transparent and free of material error or omission.
Intended users of this assurance statement
This Assurance Statement is provided with the intention of informing
allBig Yellow’s Stakeholders.
Responsibilities
The information in the Report and its presentation are the responsibility
of the directors and the management of Big Yellow. SGS 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 text, data, graphs and
statements within the scope of verification with the intention to inform
allBig Yellow’s stakeholders.
Assurance standards, type and level
ofassurance
The SGS ESG & Sustainability Report Assurance protocols used to
conductassurance are based upon internationally recognised assurance
guidance and standards including the principles of reporting process
contained within the Global Reporting Initiative Sustainability Reporting
Standards (GRI Standards) GRI 1: Foundation 2021 for report quality,
GRI2 General Disclosure 2021 for organisation’s reporting practices
andother organizational detail, GRI 3 2021 for organisation’s process
ofdetermining material topics, its list of material topics and how to
manageseach topic, and the guidance on levels of assurance contained
within ISAE3000.
The assurance has been conducted 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 below using SGS Sustainability Report
Assurance protocols.
Assurance Statement
SGS United Kingdom Ltd’s assurance opinion on selected KPI data in
theBigYellow Environmental, Social and Governance report 2022/23
Scope of assurance
The scope of the assurance included FY2022/23 data only for the
following KPIs:
Carbon footprint scope 1 & 2 data:
– Store electricity emissions (tCO
2
e)
– Store flexi-oce gas emissions (tCO
2
e)
– Refrigerant emissions (tCO
2
e)
– Absolute operational carbon dioxide emissions (tCO
2
e)
– Store electricity use (MWh)
– Like-for-like electricity use (tCO
2
e)
– Absolute carbon emissions (tCO
2
e) – location-based
– Absolute carbon emissions (tCO
2
e) – market-based
– 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) – location-based
– Carbon intensity (tCO
2
e/£000s revenue) – market-based
– Total renewable energy generated (kWh)
– Renewable energy percentage of total store use (%)
Carbon footprint scope 3 data:
– Store water supply and treatment (tCO
2
e)
– Store waste disposal (tCO
2
e)
Safety data:
– Sta, customer, contractor and visitor minor injuries
– Sta, customer, contractor and visitor reportable injuries (RIDDOR)
– Sta, customer, contractor, and visitor annual injury incidence rate
(AIIR) per 100,000 sta
– Sta, customer, contractor, and visitor health and safety notices or fines
– Construction ‘fit-out’ minor injuries
– Construction ‘fit-out’ reportable injuries (RIDDOR)
Annual Report and Accounts 2023 Big Yellow Group PLC 73
Strategic Report Governance Report Financial Statements
Assurance Statement continued
Community investment data:
– Free space donated for community or charity use (£)
– Charity discounts of up to 90% (£)
– Total employee Big Yellow Foundation fundraising & Big Yellow
matched funds (£)
– One-o donations (£)
– Total community investment (£)
People data:
– Total number of employees
– % female employees at each management level
– Number of new starters: stores, head oce, and total
– Proportion of new starters
– Number of leavers: stores, head oce, and total
– Proportion of leavers
– Training hours: total, and average hours by gender
Greenhouse gas (ghg) data
CO
2
emissions from own operations were verified at a limited level
ofassurance according to standard EN ISO14064- 3:2019 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 2022/23’ 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
2022/23’, 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 oces
– GHG sources, sinks and/or reservoirs included:
– Scope 1 – stationary combustion, mobile combustion 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.
Assurance methodology
The assurance comprised a combination of:
– Pre-assurance research
– Management interviews, including the ESG Manager, Senior
Managersand Directors with responsibility for performance in the
areas within scope
– Interview with managers responsible for internal data collection
andreporting databases
– Interview with the external provider managing GHG emissions
reporting and analysis
– Document review of relevant management systems, policies
andprocedures
– Understanding, analysing and sample testing the key data collection,
aggregation, validation and reporting systems, processes,
procedures, and controls
– Reviewing Report content against our findings and making
recommendations for improvement.
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.
The procedures performed in a limited assurance engagement vary
innature and timing from, and are less in extent than for, a reasonable
assurance engagement. Consequently, the level of assurance obtained
ina limited assurance engagement is substantially lower than the
assurance that would have been obtained had a reasonable assurance
engagement been performed.
Limitations and mitigations
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 lettable area, occupied space, and
revenue data used to normalise figures.
Normalising data was provided to SGS by the Big Yellow central finance
team in April 2023. This represents their final data prior to formal final sign
o from the auditors in June 2023. This data has not been verified by SGS
and this has been made clear in the report. For normalised KPIs, we have
confirmed that the calculation method is correct and that the correct
numerator has been used.
Annual Report and Accounts 2023 Big Yellow Group PLC74
Strategic Report
Statement of independence
andcompetence
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 arm
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.
Findings and conclusions
Assurance opinion
On the basis of the methodology described and the verification work
performed, SGS concludes with limited assurance that there is no
evidence 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, a fair representation of data and information.
Overall, the communication and presentation of information is
appropriate to the size of the business, and its ESG impacts, risks and
opportunities. We believe that the organisation has chosen an appropriate
level and scope of assurance for this stage in their reporting.
Specific opinion on 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 2022/23’, 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
01/04/2022 – 31/03/2023 are fairly stated. This statement shall be
interpreted with the CO
2
equivalent assertion of Big Yellow as a whole.
Big Yellow provided the GHG assertion based on the requirements of its
‘Basis of reporting 2022/23’ and the WRI/WBCSD GHG Protocol. The GHG
information for the period 01/04/2022 – 31/03/2023 disclosing gross
scope 1 and scope 2 emissions of 2,366 metric tonnes of CO
2
equivalent
(Location-Based) and 242 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): 242 tCO
2
e
– Scope 2 – Location-based (Indirect): 2,124 tCO
2
e Scope 2
–Market-based (Indirect): 0 tCO
2
e
– Scope 3 – Water (excludes non store facilities) – 11 tCO
2
– Scope 3 –Waste (excludes non store facilities) – 31 tCO
2
e
Health and 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 2022/23’.
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
– 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.
– People and Community data is generated from well managed
systems, using clear and consistent reporting parameters.
Opportunities for improvement
– Continue eorts with obtaining detailed water data based on actual
rather than estimated data.
– Consider using an online system for managing health and safety
reports at stores and fit-out sites.
– Consider a more formalized system for managing and reporting value
of donation of materials to charities.
– Consider reporting People data using Gender Identity categories,
inline with evolving industry best practice.
– Continue to expand the scope of assurance to cover other reported
community and people KPIs.
– Review report content – including KPIs – against evolving
sustainability and ESG reporting standards, and the changing
information needs of customers, investors and other stakeholders.
– Consider formal review of material ESG issues, to demonstrate that
the strategy addresses the issues that are of core concern to
shareholders and other key stakeholders.
Signed:
For and on behalf of SGS United Kingdom Ltd
Jonathan Hall
Global Head, Certification Services
12th May, 2023
www.sgs.com
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 2023 Big Yellow Group PLC 75
Strategic Report Governance Report Financial Statements
Executive Chairman’s Introduction
Dear Shareholder,
I am pleased to present the Corporate Governance Report for
2023. This report should be read in conjunction with the report on
pages 81 to 87, which set out how we have complied with the UK
Corporate Governance Code in 2023.
As outlined in my report on pages 14 to 15, 2023 has been ayear
of growth for the Company, with revenue, cash flow and dividends
all up on the prior year and an increase in our development pipeline
to help drive the future growth of the Company.
Governance
The Board believes that the eective 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
eective 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 2023, 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(2022: 78.9).
Looking ahead
Following our performance this year, our attention for the
comingyear is focused 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 CBE
Executive Chairman
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC76
Governace Report
How We Are Structured
The Board has overall responsibility for the manner in which
the Company runs its affairs.
Position: Responsible for: More information:
The Board
Nicholas Vetch
Executive Chairman
− 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
− implementing the Group’s business plan and strategy
− managing the risk of the business
− focussing on financial performance
> See page 82 for more info.
Nomination Committee
− reviewing the structure, size and composition of the Board
− succession planning for Directors and other senior Executives
− promoting diversity
> See pages 88 to 90 for more info.
Audit Committee
− 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
> See pages 116 to 119 for more info.
Remuneration Committee
− 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
> See pages 92 to 115 for more info.
Sustainability Committee
− 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 ESG reporting, including external
audit/assurance mechanisms
> See page 91 for more info.
Annual Report and Accounts 2023 Big Yellow Group PLC 77
Strategic Report Governance Report Financial Statements
Directors, Officers and Advisers
Executive Directors
Nicholas Vetch CBE
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.
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.
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
Prior to Big Yellow, Nicholas was joint
Chief Executive of Edge Properties plc,
which he co-founded in 1989, was
subsequently listed on the Ocial List
of the London Stock Exchange in
1996and then sold to Grantchester
Properties plc in 1998. Nicholas was
appointed a Commander of the British
Empire (“CBE”) in the 2023 New Year’s
Honours List.
Other appointments
Nicholas is a Trustee of Global Human
Rights, Global Human Rights UK, the
Royal Drawing School, and the Ukrainian
Sponsorship Pathway UK, and a
Non-Executive Director of Conduit
Holdco Limited.
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 81.
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 Ocial 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, an investor
inMoby Self Storage, a Brazilian Self
Storage business, and is the Chairman
of Trustees of the London Children’s
Ballet, and a Trustee of the Bede’s
Development Foundation.
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 recent uncertainties
caused by Covid-19 and the Russian
invasion of Ukraine. He will continue
tobe instrumental in maintaining
BigYellow’s market-leading position.
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 16 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.
Annual Report and Accounts 2023 Big Yellow Group PLC78
Governace Report
N
Nominations Committee
A
Audit Committee
R
Remuneration Committee
S
Sustainability Committee Committee Chair
Committee key
Non-Executive Directors
Dr Anna Keay OBE
Non-Executive Director
N A R S
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 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.
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, a Non-Executive Director
ofTarget Healthcare REIT plc, and a
Trustee of the Ruth Strauss Foundation.
Committee Membership
Senior Independent Non-Executive
Director, Chair of the Nominations
Committee 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prioryear.
Vince Niblett
Senior Independent
Non-Executive Director
N A R S
Appointment to the Board
Vince was appointed to the Board
inJune 2017.
Background and relevant experience
Laela has 16 years’ experience in
corporate finance and is currently
theFinance Director of Consumer
Converged at Virgin Media O2. She was
previously the Chief Financial Ocer of
OpenClassrooms, an online educational
platform, the Group Chief Financial
Ocer 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 and Member
ofNominations, Remuneration and
Sustainability Committees.
Skills and contribution
Laela has significant corporate and
financial experience in high growth
businesses. She is the Chair of the audit
committee, which involved 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.
Laela Pakpour Tabrizi
Non-Executive Director
N A R S
Appointment to the Board
Laela was appointed to the Board
inJuly 2020.
Annual Report and Accounts 2023 Big Yellow Group PLC 79
Strategic Report Governance Report Financial Statements
Directors, Officers and Advisers continued
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.
Michael O’Donnell
Non-Executive Director
N
A
R
S
Appointment to the Board
Michael joined the board of the
BigYellow in September 2021.
Company Secretary
and Registeredoffice
Shauna Beavis
2 The Deans
Bridge Road
Bagshot
Surrey
GU19 5AT
Company Registration No.
03625199
Bankers
Aviva Commercial Finance
Limited
Bank of Ireland
HSBC Bank plc
Lloyds Bank plc
M&G Investments Limited
Pricoa Private Capital
Solicitors
CMS Cameron McKenna Nabarro Olswang LLP
Lester Aldridge LLP
Slaughter and May
Financial advisers
and stockbrokers
Barclays Bank plc
J P Morgan Cazenove
Statutory Auditor
KPMG LLP
Chartered Accountant and Statutory Auditors
Valuers
Jones Lang LaSalle
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 Oce 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 Non-Executive Director
on the Ministry of Justice Audit and Risk
Assurance Committee, 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.
Heather Savory
Non-Executive Director
N
A
R
S
Appointment to the Board
Heather joined the board of the
BigYellow in March 2021.
Annual Report and Accounts 2023 Big Yellow Group PLC80
Governace Report
Introduction
The Board 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 eective
stewardship of the Company. The Board has overall responsibility for
themanner in which the Company runs its aairs.
Statement of compliance with the Code
Throughout the year ended 31 March 2023, 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.
Chairman’s position
During the year ended 31 March 2020, which was the Company’s first
operating under the principals of the new UK Corporate Governance Code,
Richard Cotton (then Senior Independent Non-Executive Director) and
Vince Niblett consulted with a number of the Company’s largest
shareholders about the length of Nicholas Vetch’s tenure as Executive
Chairman (20 years), which is in contravention of the UK Corporate
Governance Code. It is 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 eective. 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 three years since flotation
inMay 2000, Big Yellow has delivered a Total Shareholder Return
(“TSR”), including dividends reinvested, of 13.9% per annum, in
aggregate 1,871.5% at the closing price of £11.69 on 31 March 2023.
This compares to 4.4% per annum for the FTSE Real Estate Index and
5.0% 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 five independent NEDs, three of whom have been
appointed within the past three years, providing fresh perspective
and challenge. The NEDs have a wide range of corporate experience
and provide eective challenge to the Chairman and the other
Executive Directors, which was endorsed by the external appraisal
undertaken by Simon Robertson Associates in the year.
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 chooses 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.
Corporate Governance Report
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.
Annual Report and Accounts 2023 Big Yellow Group PLC 81
Strategic Report Governance Report Financial Statements
1.6
2.1
2.7
5.1
5.8
0 1 2 3 4 5 6
Michael O’Donnell
Heather Savory
Laela Pakpour Tabrizi
Anna Keay
Vince Niblett
Corporate Governance Report continued
Leadership
The Board’s role is to provide entrepreneurial leadership of the Company
within a framework of prudent and eective 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;
– the Board believes that the Chairman and the Chief Executive work
together to provide eective 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 eective 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 five 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, excluding the Chair,
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 2023
is set out below:
Changes to the Board and its Committees
At the 2022 Annual General Meeting, Richard Cotton retired from the
Board. Richard was considered an independent Non-Executive, even
though he had served on the Board for ten years, exceeding the Code
recommended limit. This was concluded after considering his integrity
and the eectiveness with which he carries out his responsibilities to
theCompany. Michael O’Donnell succeeded Richard Cotton as the Chair
ofthe Remuneration Committee with eect from the 2022 Annual General
Meeting. Adrian Lee stepped down from the Board at the 2022 Annual
General Meeting but continues in his role as Operations Director.
Annual Report and Accounts 2023 Big Yellow Group PLC82
Governace Report
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.
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 Ocer
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 Ocer
Nicholas Vetch Executive Chairman
attended absent not applicable
Other members of the senior leadership team attend Board meetings
oninvitation.
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 2023 Big Yellow Group PLC 83
Strategic Report Governance Report Financial Statements
Corporate Governance Report continued
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 ecient 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 the FRC’s guidance
on risk management, internal control and related reporting that was
issued in September 2014. The Board is also responsible for the Group’s
system of internal control and for reviewing its eectiveness. 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 eectiveness 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.
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 44 to 48 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 16 to 31. The financial position of the Group,
including its cash flow, liquidity, and committed debt facilities are
discussed in the Financial Review on pages 38 to 43.
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.
Annual Report and Accounts 2023 Big Yellow Group PLC84
Governace Report
Stakeholder Group Form of engagement How this influenced the Board during the year
Our employees
Over the past year, we have continued to act on the feedback
that we obtained from our 2021 bi-annual employee
engagementsurvey.
Our next engagement survey will take place in May 2023
andfurther improvements will be introduced, based upon the
feedback that we receive.
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 changes implemented in the year have included Area
Managers, Operations Managers and Head Office Customer
Support team members working regularly in our stores. They have
also included reviewing our Bright Ideas Suggestion Scheme,
improving recognition across the business and launching a
newIntranet and an Electric Vehicles Salary Sacrifice Scheme.
There is further detail on how the Board engage with our people
onpages 86 to 87.
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 investor
conferences and meetings during the year. During the year
ended 31 March 2023, the Chief Executive and other Executive
Board Directors carried out 209 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.
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 prior year the Group appointed a specialist consultancy
to carry out a review of our supply chain ethics. During the current
year we worked with 27 of our suppliers, representing 80% of our
supply chain value, on this. No material issues were noted, albeit
we will be working with them to improve standards further.
Annual Report and Accounts 2023 Big Yellow Group PLC 85
Strategic Report Governance Report Financial Statements
Stakeholder Group Form of engagement How this influenced the Board during the 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 approximately 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ESG 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 in2020
chaired by Non-Executive Director Heather Savory.
Corporate Governance Report continued
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 sta 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 sta, and is
carrying out the next survey in May 2023. These surveys tell us what
oursta 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.
Annual Report and Accounts 2023 Big Yellow Group PLC86
Governace Report
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 bi-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 dierent
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.
Annual Report and Accounts 2023 Big Yellow Group PLC 87
Strategic Report Governance Report Financial Statements
Committee members
and attendance
Member
Number
of meetings
attended
Vince Niblett – Chair and Senior
IndependentDirector
Richard Cotton – Member (until 21 July 2022)
Anna Keay – Member
Michael O’Donnell – Member
Laela Pakpour Tabrizi – Member
Heather Savory – Member
attended
absent
not applicable
Nominations Committee Report
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.
Introduction
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 Oce during normal
working hours. They are also available for inspection at the Company’s AGM.
Board performance evaluation
In keeping with the three-yearly evaluation cycle, the eectiveness of the
Board and its Committees was externally reviewed by Simon Robertson
Associates LLP (“SRA”) this year. Simon Robertson Associates have
noother business relationship with the Group or any of the Company’s
Directors. An overview of the process is outlined below:
January
2023
SRA appointed to undertake evaluation. Scope, process
andtimetable agreed with Chairman and Senior Independent
Director(“SID”)
February
toMarch
2023
SRA provided with requested information (including board papers,
investor feedback and broker research) and spoke individually
with each Director, the Company Secretary and anumber
ofother non-Board members who attend or support theBoard
anditsCommittees
March
2023
Preliminary findings discussed with both the Chairman and the
SID. SRA attended and observed the scheduled Board meeting
where it presented its findings
April
2023
SRA finalised its report and produced a summary document
forinclusion in the Company’s 2023 Annual Report
Annual Report and Accounts 2023 Big Yellow Group PLC88
Governace Report
Context of evaluation
This is the second consecutive external Board evaluation that SRA has
undertaken for the Company. The decision to use SRA again was to
provide continuity and context for their observations given material
changes to the Board in recent years. There have been three new NED
appointments and a new SID. Consequently, the dynamics of the Board
have altered but SRA noted that it operates just as eectively, with the
new NEDs strengthening skills and experience, particularly around the
ESG agenda. SRA was positive about the implementation of
recommendations made following the last review.
Findings
The overall conclusion was that the Board operates with a high degree
ofeciency, with a good level of leadership and in a way that promotes
honest discussion and healthy debate. High-priority business is
unanimously recognised and given the appropriate allocation of time for
detailed discussion. This does not detract from other tabled business
which is well covered; conversations are straightforward and substantive.
SRA was complimentary of the comprehensive approach to governance,
noting that the Board is appropriately structured and balanced, with its
Committees both well-defined and purpose-driven. SRA noted that a
distinct entrepreneurial culture and set of values are evident at Board
level, a sentiment echoed by others who were part of the review process.
SRA’s main recommendations were:
– consider internal deep-dive exercises on risk management systems
and financial controls to test the robustness of current processes;
– continue open dialogue around Board evolution to help with
succession planning;
– nurture board dynamics through opportunities for the Board to meet
independently of main meetings; and
– restructure the NEDs induction process to allow for a more extensive
introduction to senior management and continue the NEDs education
and visibility around the business.
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 eectively,
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 eectively managed.
The Board comprises a team of three 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. Continuity of experience and knowledge, particularly
ofself storage, within the executive team is important in a long-term
focused business such as Big Yellow.
The team has 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 department heads have worked for the business for a
substantial period of time and are highly capable individuals. The Committee
has 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 aected.
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.
Big Yellow Executive team
Big Yellow operates with a leadership team of fourteen, comprising of
three Executive Board Directors, supported by eleven key executives
within the business. The Group does not have a formal Executive
Committee or formal Operating Board, as a more flexible approach to
theday-to-day management of the business is used within a relatively
flat management structure.
In addition to the three Executive Board Directors, the other members
ofthe Executive team cover finance, sales and marketing, operations,
facilities, construction, property acquisitions, human resources,
information technology and digital security, and ESG.
Annual Report and Accounts 2023 Big Yellow Group PLC 89
Strategic Report Governance Report Financial Statements
The business is run 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 listing rules
set out a target of 40% representation of the Board as women. The
Company at 31 March 2023 had 38% of the Board as women. The listing
rules also target Boards to have at least one woman in the roles of Chair,
Senior Independent Director (“SID”) and/or as CEO or CFO. It is our
intention to have at least one woman in one of the defined roles above by
2025. Two members of the Board are from a minority ethnic background.
Gender diversity of the Board, Key Executives and Company at 31 March
2023 is set out below:
Male Female Total
Male/female
ratio
Board 5 3 8 62:38
Key Executives 6 5 11 55:45
Board and Key Executives 11 8 19 58:42
All employees 283 232 515 55:45
Nominations Committee Report continued
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 oer themselves for re-election at the Annual
General Meeting.
Following a performance appraisal process, the Board has concluded that
the Directors retiring are eective, committed to their roles and operate
as eective 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 pages 78 to 80.
Vince Niblett
Nominations Committee Chair
22 May 2023
100
70
80
90
60
30
40
50
20
0
10
Board Key
Executives
Board
and Key
Executives
All
employees
37.5%
62.5%
45%
55%
42%
58%
45%
55%
Female
Male
Annual Report and Accounts 2023 Big Yellow Group PLC90
Governace Report
Committee members
and attendance
Member
Number
of meetings
attended
Heather Savory – Chair
Richard Cotton – Member (until 21 July 2022)
Anna Keay – Member
Vince Niblett – Member
Michael O’Donnell – Member
Laela Pakpour Tabrizi – Member
attended
absent
not applicable
Sustainability Committee Report
Introduction
The Sustainability Committee is responsible for:
– overseeing the Group’s sustainability framework and strategy;
– monitoring the sustainability performance;
– providing guidance on emerging environmental issues, including
environmental risks, and their impact on the Group’s business; and
– overseeing the Group’s ESG 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Sustainability.
The Head of Sustainability and the delivery of Big Yellow’s Sustainability
Strategy are supported through an executive-level, cross-disciplinary
Environmental Committee of Big Yellow sta, with external experts called
in to assist as and when required.
Big Yellow’s Sustainability Strategy, setting out pathways to become
NetRenewable Energy Positive by 2030 and Net Zero Emissions by 2032,
remains unchanged since it was updated in 2022 to include full
Science-Based Targets.
The Sustainability Committee commends the excellent progress made
against the Sustainability Strategy during 2022-23.
In light of external developments in the rapidly evolving sustainability
arena, the business has worked to refine its Science-Based Targets this
year, and we are pleased to be able to confirm that Big Yellow’s emissions
reduction targets are now formally verified by the Science-Based Target
initiative (SBTi).
In addition to the work to gain formal approval for the Science-Based
Targets we have also seen:
– The full integration of Armadillo-acquired properties into the core
Sustainability Programme
– Strong progress on the Solar Retrofit programme – now standing at
23 installations, with a total generating capacity of over 4 Megawatts
– Successful completion of the Battery Pilot – delivering important
learning to be taken forward to the next phase of this project
– The recent achievement of reaching the standard of BREEAM
“excellent” for both new stores
To achieve its Net Zero ambition Big Yellow will need to find ways to oset
some carbon emissions. Early work has started in this area, which we
expect to be developed further throughout 2023-24.
The team is also looking in detail at embodied carbon across the Big Yellow
property portfolio, with a focus on options to reduce the carbon footprint
of new construction. This theme will also develop further in the year ahead.
I am pleased to confirm that Big Yellow is continuing to deliver well
againstits Sustainability Strategy, whilst maintaining a flexible approach
in light of new developments in the sustainability space. The business
iscontinually seeking to innovate and make the best of new opportunities
as they arise, in its work to meet the long-term targets of the strategy.
Heather Savory
Sustainability Committee Chair
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 91
Strategic Report Governance Report Financial Statements
Attendance at Remuneration
Committee meetings
Attendance at meetings of the individual Directors at the
Remuneration Committee Meetings that they were eligible
toattend is shown in the table below:
Committee members
and attendance
Member
Number
of meetings
attended
Michael O’Donnell – Chair (from 21 July 2022),
Member (until 21 July 2022)
Richard Cotton – Chair (until retirement from
theBoard on 21 July 2022)
Anna Keay – Member
Vince Niblett – Member
Laela Pakpour Tabrizi – Member
Heather Savory – Member
attended
absent
not applicable
Remuneration Committee Report
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”).
Introduction
The report is divided into three main sections:
– The Annual Statement – which summarises the remuneration
outcomes in the year ended 31 March 2023 and how the Remuneration
Policy will be operated in the year ending 31 March 2024;
– The Remuneration Policy Report – which sets out a summary of the
current Remuneration Policy which was 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 2024, 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.
Annual Report and Accounts 2023 Big Yellow Group PLC92
Governace Report
The Committee and its work during the year
Committee Chair: Michael O’Donnell
Current Committee members: Vince Niblett, Anna Keay, Laela Pakpour Tabrizi and Heather Savory
Terms of Reference: https://corporate.bigyellow.co.uk/investors/corporate-governance
The Committee met three times during the year under review. The Committee’s main activities during the year ended 31 March 2023
(full details are set out in the relevant sections of this report) included:
– Agreeing Executive Director base salary increases from 1 April 2023;
– Agreeing the cash annual bonus awards for the year ended 31 March 2022 and setting the targets for the year ended 31 March 2023;
– Agreeing the deferred annual bonus plan awards for the year ended 31 March 2022 and setting the targets for the year ended
31 March 2023;
– Reviewing the EPS and Total Shareholder Return (“TSR”) performance targets and determining the percentage vesting for the
2019LTIP awards which vested in 2022;
– 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 2022 AGM voting results and considering shareholder feedback received following consultation with major
shareholders on the revised Remuneration Policy (“Policy”) put to vote at the 2022 AGM.
In addition, during the year ended 31 March 2023, the Committee has considered how the 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 2023 Big Yellow Group PLC 93
Strategic Report Governance Report Financial Statements
Annual statement
Dear Shareholder
I am pleased to present the Directors’ Remuneration Report for the
yearended 31 March 2023, which is my first as Chair of the
RemunerationCommittee.
Performance, Decisions and Reward
Outcomes for the year ended 31March 2023
The business conditions and performance of the Group in the year ended
31 March 2023 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 current
economic headwinds;
– Big Yellow remains the clear UK brand leader in self storage and
delivered growth in revenue, cash flow and earnings for the
fourteenth year in a row;
– Revenue, operating cash flow and adjusted profit before tax
increased 10%, 5% and 10% respectively; and
– Dividends are being increased by 8%.
Payments made to the Executive Board Directors under the cash annual
bonus plan for the year ended 31 March 2023 amounted to 9.9% 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 oce.
Awards made to the Executive Board Directors under the deferred annual
bonus plan for the year ended 31 March 2023 amounted to 110.6%
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
2019, which vested in July 2022, three-year EPS and TSR performance
resulted in 90% 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 2023, and no discretion was applied.
Implementing the Policy
for the Year Ending 31 March 2024
Base salary
The Committee continues to operate a policy of targeting base salaries
“close to (but generally just below) median” although current base
salarylevels are well below the market level for a FTSE 250 company
ofBigYellow’s size and complexity.
From 1 April 2023, Executive Director salary levels were increased by
5%which was in line with the increase across the wider workforce
(albeitaproportion of lower paid team members received a 6% increase).
Chief Executive
(Jim Gibson)
Executive Chairman
(Nicholas Vetch)
Chief Financial
Ocer
(John Trotman)
From 1 April 2022 £466,750 £397,800 £344,750
From 1 April 2023 £490,100 £417,700 £362,000
% increase 5% 5% 5%
Pension & benefits
Pension provision for the Executive Directors will continue at 6% of salary,
which is in line with the pension oered 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 2024.
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 2024.
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 2024. Any award under this part will be
deferred into Big Yellow shares for three years (with vesting subject to
continued employment).
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC94
Governace Report
LTIP
The LTIP will continue to operate in its current form with the award
potential at up to 200% of salary (albeit award levels will remain below
market in value terms given the below market salary levels). As per
the2022 LTIP awards, 80% of awards will be measured against Earnings
PerShare (“EPS”) and relative Total Shareholder Return (“TSR”) and
20%will be based on ESG related performance metrics. Details of the
proposed targets for the 2023 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, 100% of the net of tax shares which
vest under any discretionary share award are to be retained.
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 20 July 2023, you will support the resolution on
the remuneration paid to the Directors in the last financial year, and the
implementation of the new Remuneration Policy for the forthcoming year.
I would like to extend my thanks to my fellow colleagues on the
Committee for their support and work in 2022/23.
Michael O’Donnell
Chair of the Remuneration Committee
22 May 2023
Directors’ Remuneration Policy
This section of the Remuneration Report contains a summary of the
Company’s Directors’ Remuneration Policy (the “Policy”) which governs
the Company’s approach to remuneration. The full Policy as approved
byshareholders is set out in the Annual Report and Accounts 2022.
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 21 July 2022.
Annual Report and Accounts 2023 Big Yellow Group PLC 95
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Remuneration Committee Report continued
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 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.
Annual Report and Accounts 2023 Big Yellow Group PLC96
Governace 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 2023 Big Yellow Group PLC 97
Strategic Report Governance Report Financial Statements
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 sta. 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, suciently 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 Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC98
Governace 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 Oce, 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 Ocer
Base salary (from 1 April 2023) £490,100 £417,700 £362,000
Estimated Benefits £5,000 £5,000 £2,000
Pension (% of salary) 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 Executive Chairman Chief Financial Officer
£3,000
£2,500
£2,000
£1,000
£1,500
£0
£500
Minimum Target Maximum Maximum
with share
price growth
£524,506
£1,382,181
£2,239,856
£2,729,956
28%
33% 27%
35%
44% 36%
18%
100% 37% 23% 19%
Share price growth
LTIP
Annual Bonus
Fixed Pay
Minimum Target Maximum Maximum
with share
price growth
£385,720
£1,019,220
£1,652,720
£2,014,720
27%
33% 26%
36%
44% 36%
19%
100% 37% 23% 19%
Minimum Target Maximum Maximum
with share
price growth
£447,762
£1,195,445
£1,926,420
£2,344,120
26%
33% 27%
36%
43% 36%
17%
100%
38% 24% 20%
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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.
Remuneration Committee Report continued
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Governace 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 oce 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 oer a meeting to discuss these.
Annual Report and Accounts 2023 Big Yellow Group PLC 101
Strategic Report Governance Report Financial Statements
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 2022 Remuneration Report and the binding vote on the Remuneration Policy at the AGM held
on21July2022.
Votes for % Votes Against % Votes withheld
2022 Remuneration Report 143,869,369 95.3% 7,090,817 4.7% 1,448,655
2022 Remuneration Policy 146,535,231 97. 9 % 3,210,946 2.1% 2,662,664
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2024 and how it was implemented during the year ended 31 March 2023.
Implementing the policy for the year ending 31 March 2024
Base salary
The Committee continues to operate a policy of targeting base salaries “close to (but generally just below) median” although current base salary
levelsare well below the market level for a FTSE 250 company of Big Yellow’s size and complexity.
From 1 April 2023, Executive Director salary levels were increased by 5% which was in line with the increase across the wider workforce
(albeitaproportion of lower paid team members received a 6% increase).
Chief Executive
(Jim Gibson)
Executive Chairman
(Nicholas Vetch)
Chief Financial
Ocer
(John Trotman)
From 1 April 2022 £466,750 £397,800 £344,750
From 1 April 2023 £490,100 £417,7 0 0 £362,000
% increase 5% 5% 5%
Pension and benefits
Pension provision for the Executive Directors will continue at 6% of salary, which is in line with the pension oered 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 2024.
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 2024.
The remaining 125% of salary will be measured against financial, operational, real estate and strategic targets measured over the financial year ending
31 March 2024. Any award under this part will be deferred into Big Yellow shares for three years (with vesting subject to continued employment).
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC102
Governace Report
LTIP
The LTIP will continue to operate in its current form and the targets for the 2023 LTIP awards 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
Retrofitting of solar panels on the Group’s estate 10% Retrofitting of solar panels on
30ofthe Group’s stores
Retrofitting 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 Committee
requires 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 2024 have been increased by 5% (in line with the general workforce increase) to£46,275.
The increment for Committee Chairs and additional responsibilities has also been increased by 5% to £11,475 for the year ending 31 March 2024.
Theseincreases took eect from 1 April 2023.
Annual Report and Accounts 2023 Big Yellow Group PLC 103
Strategic Report Governance Report Financial Statements
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 2023.
Year ended 31 March 2023 Fixed pay
Salary
£
Taxable benefits
(3)
£
Pensions
(3)
£
Total fixed pay
£
2023 2022 2023 2022 2023 2022 2023 2022
Nicholas Vetch 397,800 382,500 4,693 5,094 23,868 22,950 426,361 410,544
Jim Gibson 466,750 448,800 7,643 6,526 28,005 26,928 502,398 482,254
Adrian Lee
(1)
92,768 290,700 2,054 5,739 5,566 17, 4 4 2 100,388 313,881
John Trotman 344,750 331,500 2,111 1,913 20,685 19,890 367,546 353,303
Total 1,302,068 1,453,500 16,501 19,272 78,124 87, 210 1,396,693 1,559,982
Variable pay Total pay
Annual bonus – cash
£
Annual bonus – deferred
£
Long term incentives
(4)
£
Total variable pay
£ £
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Nicholas Vetch 39,382 39,398 440,066 456,131 419,119 295,550 898,567 791,079 1,324,928 1,201,623
Jim Gibson 46,208 46,226 516,342 535,194 478,993 316,858 1,041,543 898,278 1,543,941 1,380,532
Adrian Lee
(1)
9,184 29,942 102,625 346,660 323,326 238,445 435,135 615,047 535,523 928,928
John Trotman 34,130 34,145 381,380 395,314 359,244 228,376 774,754 657, 835 1,142,300 1,011,138
Total 128,904 149 ,711 1,440,413 1,733,299 1,580,682 1,079,229 3,149,999 2,962,239 4,546,692 4,522,221
(1)
Adrian Lee stepped down from the Board on 21 July 2022. His remuneration is shown up to that date.
(2)
Taxable benefits comprise medical cover, permanent health insurance, life insurance and private fuel usage.
(3)
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.
(4)
The values shown in long-term incentives in the current year are the LTIP award granted in 2019 which vested on 19 July 2022 to 90.1% of its maximum value and is valued using the share price
onthatdate of £13.72.
The average salary increase across the Group in the year was 5.3%.
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 sta.
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 9.9% of salary (out of a maximum of 25% of salary).
Overview of the staff (and Executive Director) cash bonus scheme
The sta 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.
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. 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.
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC104
Governace Report
The average performance against the four key targets and the associated bonus reward for the stores totalling 9.9% were as follows:
1. Occupancy
Stores that have recently opened receive occupancy targets on a quarterly basis, and their performance against this occupancy target contributes to
their bonus. 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 significant majority of the Group’s stores are bonused solely on profitability. The weighted average bonus paid to the newly opened stores for
performance against occupancy targets was 0.2% 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 stores’ 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 55 20 15 8 10 108
Average bonus paid 0.5% 6.2% 13.9% 18.1% 18.9% 6.4%
The weighted average bonus paid to stores for performance against profitability targets is therefore 6.4% 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 85 instances of
stores receiving an audit bonus score across the year, leading to a weighted average bonus paid to the stores of 1.6% 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 33 75 108
Average bonus paid 0% 2.5% 1.7%
The weighted average bonus paid to stores for performance against net promoter scores is therefore 1.7% 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 0.2% 20%
2. Profitability 6.4% 65%
3. Store audits 1.6% 16%
4. Customer satisfaction 1.7% 17%
Total 9.9% 100%
In line with the Remuneration Policy an award of 9.9% of salary has therefore also been paid to the Executive Board Directors for the year, which equated
to the following payments:
Nicholas Vetch £39,382
Jim Gibson £46,208
Adrian Lee* £9,184
John Trotman £34,130
* Pro-rated to 21 July 2022 (the full year equivalent award was £29,930).
Annual Report and Accounts 2023 Big Yellow Group PLC 105
Strategic Report Governance Report Financial Statements
Deferred Annual Bonus Plan awards – deferred shares (125% of salary maximum)
The Group operates a 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 (55% weighting):
Pay-out 0% 100% Performance Pay-out
1. Revenue
Weight: 22.5% <£182.0m >£188.0m The Group’s revenue for the year was £188.8 million. 100%
2. Adjusted Earnings per share
Weight: 22.5% <53.5p >56.5p The Group’s adjusted earnings per share for the year was 56.5p. 100%
3. Sta Turnover
Weight: 5% >35 <28 The Group’s sta turnover for the year was 29.6%. 77%
4. Net promoter score
Weight: 5% >72.5 <77.5 The Group’s net promoter score for the year was 78.9. 100%
Binary targets (45% weighting):
Pay-out
Fail Pass
Actual performance Pay-out0% 100%
5. Property Acquisitions
Weight: 10% Acquire at least two new sites for the Group during the year,
either through new site acquisitions, or through the purchase
of existing self storage centres, which complement the existing
portfolio and which are consistent with the Group’s strategy
andlong-term plans
The Group acquired development sites at Staples
Corner, London, Farnham Road, Slough, Old
Kent Road, London during the year. The Group
also acquired an existing self storage centre
inAberdeen.
100%
6. 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 consent during the
year for its development sites at Slough Farnham
Road and Staines, London.
100%
7. Disposal of Harrow
Weight: 10% Complete the construction of, and sell the industrial
warehousescheme at Harrow during the year
As explained in the Chairman’s Statement,
thistarget has not been met.
0%
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC106
Governace Report
Pay-out
Fail Pass
Actual performance Pay-out0% 100%
8. Armadillo Sustainability
Weight: 5% Ensure all Armadillo have stores have obtained an EPC, remove
a further six gas boilers in the Armadillo stores and approve
a plan for upgrading the Armadillo stores to improve energy
performance
All Armadillo stores have an EPC rating. 99% of
the estate now has a green zone EPC rating of C
or above with two stores still rated D. These will
be recertified once they have undergone their
major reception renovations including energy
eciency upgrades. Eight Armadillo stores have
had gas boilers removed this year, with a further
five planned for 23/24. There is a plan in place
for the energy eciency improvements across
the Armadillo stores, predominately in the form
of upgrading lighting and installing solar PV.
Lighting upgrades have been completed as part
of the reception makeovers in seven Armadillo
stores this year.
100%
9. Foundation
Weight: 5% Raise sucient funds through our store network and matched
contributions from the Group sucient to provide grants
ofaminimum of £140,000 to our seven charities
The income raised through fundraising,
matching donations, customer donations, move
in donations and gift aid equals £204,000 this
year. This has enabled us to provide grants
of£192,500 to our seven charity partners over
the course of the year.
100%
10. Health and Safety
Weight: 5% For the Group’s three measures of RIDDOR (Store customer,
contractor and visitor health and safety, Big Yellow sta health
and safety, and Big Yellow construction fit out health and
safety), ensure none are above 2.5x
All three RIDDOR measures were below 2.5x
inthe year, with customer, contractor and visitor
at2.3x, sta at 0x and construction at 0x.
100%
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%
Sta turnover 77% 5% 3.85%
Net promoter score 100% 5% 5%
Property acquisitions 100% 10% 10%
Planning 100% 10% 10%
Disposal of Harrow 0% 10% 0%
Armadillo Sustainability 100% 5% 5%
Foundation 100% 5% 5%
Health and safety 100% 5% 5%
Total 100% 88.85%
The above performance assessment of 88.85% translates into a 110.6% award, of the 125% maximum potential. In addition to performance against the
targets detailed above, the Committee has also reviewed the stakeholder experience in respect of the year ended 31 March 2023. Based on this review,
the Committee considers the 110.6% of maximum award level to be appropriate.
Annual Report and Accounts 2023 Big Yellow Group PLC 107
Strategic Report Governance Report Financial Statements
The value of award for each of the Executive Board Directors is shown below:
Director Value of award
Nicholas Vetch £440,066
Jim Gibson £516,342
Adrian Lee* £102,625
John Trotman £381,380
* Pro-rated to 21 July 2022 (the full year equivalent award was £334,447).
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 2023. 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 2019 award which vested in 2022, 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% 10.9% adjusted EPS growth, compared to
6.9%(RPI +3%), and 11.9% (RPI plus 8%).
Adjusted EPS has been normalised for the
impact oftheplacing in April 2020.
85.8%
Relative TSR 30% Median of comparator
group of real
estate companies
Upper quartile ofthe
comparator group
25% to 100% 5 out of 47 in comparator group of companies
inthe FTSE Real Estate Index.
100%
Total 100% 90.1%
The vesting of the 2019 LTIP award in 2022, 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
90.1%vesting) Value at Vesting
Nicholas Vetch 33,905 30,548 £419,119
Jim Gibson 38,748 34,912 £478,993
Adrian Lee 26,155 23,566 £323,326
John Trotman 29,061 26,184 £359,244
LTIP awards granted in year ended 31 March 2023 (Audited)
The table below sets out the details of the long-term incentive awards granted in the year ended 31 March 2023 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
200% of salary £795,600
25% 100% 21 July 2025
Adjusted EPS growth,
relativeTSR, ESG
performance
Jim Gibson 200% of salary £933,500
John Trotman 150% of salary £ 517,125
(1)
The face value of the award is calculated using the average share price three days prior to the grant date of 21 July 2022 (average share price of £13.69).
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC108
Governace Report
The performance conditions applicable to the awards granted in July 2022 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 40% Median of comparator
group of real
estate companies
Upper quintile 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 9%
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.
Retrofitting of solar panels
on the Group’s estate
10% Retrofitting of solar
panels on 30 of the
Group’s stores
Retrofitting of solar
panels on 40 of the
Group’s stores
25% to 100% Based on the number of completed retrofits over
theaward period.
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
25% to 100% Based on the Group’s external debt facilities
at31March2025.
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 ecient 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 167.
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 2023, the Company contribution was 6% of salary
forthe Executive Board Directors, in line with the contribution for the Company’s employees.
Board changes (Audited)
As detailed in the Annual Report and Accounts 2022, at the 2022 AGM on 21 July 2022:
– Adrian Lee stepped down from the PLC board but continues to be employed in his role as Operations Director on the Board of the trading business.
His remuneration arrangements remain largely unchanged.
– Richard Cotton stepped down as Non-Executive Director after serving his full term.
No payments:
– of money or any other assets were made to any former Director of the Company in the financial year ended 31 March 2023 (2022: no payments); and
– were made to any Director in respect of loss of oce during the financial year ended 31 March 2023 (2022: no payments).
Annual Report and Accounts 2023 Big Yellow Group PLC 109
Strategic Report Governance Report Financial Statements
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 2023.
2023
£
2022
£
Richard Cotton
(1)
20,232 64 ,210
Anna Keay 55,000 53,705
Vince Niblett 65,935 53,705
Michael O’Donnell
(2)
55,000 25,200
Laela Pakpour Tabrizi 55,000 50,486
Heather Savory 55,000 53,705
Total 306,167 301,011
(1)
Until retirement from the Board on 21 July 2022.
(2)
From appointment on 1 September 2021.
Non-Executive Directors received no taxable benefits for the year ended 31 March 2023.
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 2023:
Executive Director
Share
ownership
requirement
(multiple
ofsalary)
Share
ownership
requirements
met
Holding as
multiple of
March 2023
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 184x 6,253,404 122,666 117, 26 8 50,583 1,697 2,400
Jim Gibson 2x Yes 45x 1,815,320 143,928 134,837 57, 17 3 1,844 1,200
John Trotman 2x Yes 8x 238,788 93 ,721 100,104 42,721 1,992 –
Non-Executive Directors’ shareholdings (Audited)
Non-Executive
Beneficially
ownedshares
Michael O’Donnell 6,000
Vince Niblett 3,000
Anna Keay –
Laela Pakpour Tabrizi –
Heather Savory –
Remuneration Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC110
Governace 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
2022
Granted
during
theyear
Exercised
during
theyear
(1)
Lapsed
during
the year
No. of shares
under option
at 31 March
2023
Exercise
price
Market
price at
date of
exercise
Date from
which first
exercisable Expiry Date
Nicholas Vetch 19 July 2018 LTIP 20,035 – – – 20,035 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 2,400 – (2,400) – – 749.9p 1402p 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 – – (3,357) 30,548 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
8 June 2022 DBP – 34,442 – – 34,442 nil p – 8 June 2025 7 June 2032
21 July 2022 LTIP – 58,103 – – 58,103 nil p – 21 July 2025 20 July 2032
8 August 2022 SAYE – 1,697 – – 1,697 1060.0p – 8 August 2025 8 February 2026
Jim Gibson 19 July 2018 LTIP 22,261 – – – 22,261 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 1,200 – (1,200) – – 749.9p 1402p 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 – – (3,836) 34,912 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
8 June 2022 DBP – 40,412 – – 40,412 nil p – 8 June 2025 7 June 2032
21 July 2022 LTIP – 68,174 – – 68,174 nil p – 21 July 2025 20 July 2032
8 August 2022 SAYE – 848 – – 848 1060.0p – 8 August 2025 8 February 2026
John Trotman 19 July 2018 LTIP 16,537 – – – 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 – – (2,877) 26,184 nil p – 19 July 2022 18 July 2029
15 June 2020 DBP 17,73 5 – – – 17, 73 5 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, 329 – – – 27, 329 nil p – 22 July 2024 21 July 2031
22 July 2021 LTIP 23,935 – – – 23,935 nil p – 22 July 2024 21 July 2031
8 June 2022 DBP – 29,850 – – 29,850 nil p – 8 June 2025 7 June 2032
21 July 2022 LTIP – 37, 76 6 – – 3 7,76 6 nil p – 21 July 2025 20 July 2032
Adrian Lee* 19 July 2018
LTIP 15,900 – – – 15,900 nil p – 19 July 2021 18 July 2028
11 March 2019 SAYE 2,400 – (2,400) – – 749.9p 1402p 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 – – (2,589) 23,566 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
8 June 2022 DBP – 26 ,176 – – 26,176 nil p – 8 June 2025 7 June 2032
* For Adrian Lee, the information is shown to 21 July 2022, the date he stepped down from the PLC Board.
(1)
The aggregate gains made by Directors for the year ended 31 March 2023 on share options totals £39,126 (2022: £469,398).
Annual Report and Accounts 2023 Big Yellow Group PLC 111
Strategic Report Governance Report Financial Statements
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.
Remuneration Committee Report continued
FTSE All Share Index
Big Yellow Group
FTSE 350 Real Estate Index
Source: Datastream
at 31 March 2023
1,871.5%
(13.9% p.a.)
206.3%
(5.0% p.a.)
166.3%
(4.4% p.a.)
0
500
1,000
1,500
3,000
2,000
2,500
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2022 20232020
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
%
2023 1,543,941 39.6% (9.9% of salary) 88.85% (110.6% of salary) 90.1%
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%
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.
Annual Report and Accounts 2023 Big Yellow Group PLC112
Governace 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 % Change from 2021/2022 to 2022/2023
Salary/Fee Benefits Bonus Salary/Fee Benefits Bonus Salary/Fee Benefits Bonus
Nicholas Vetch 5% (13%) 78% 4% 3% (30%) 4% (6%) 0%
Jim Gibson 8% 9% 81% 4% 6% (30%) 4% 17% 0%
John Trotman 6% (26%) 79% 4% 18% (30%) 4% 10% 0%
Anna Keay 2% n/a n/a 3% n/a n/a 4% n/a n/a
Vince Niblett 2% n/a n/a 3% n/a n/a 23% n/a n/a
Michael O’Donnell n/a n/a n/a 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 9% n/a n/a
Heather Savory n/a n/a n/a 3% n/a n/a 4% n/a n/a
Average employees 3% 2% 74% 2% 2% (29%) 5% 5% 1%
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 2023 (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
25
th
percentile
payratio
Median
pay ratio
75
th
percentile
payratio
2023 Option A 55 to 1 49 to 1 31 to 1
2022 Option A 58 to 1 50 to 1 36 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
25
th
%tile Median 75
th
%tile 25
th
%tile Median 75
th
%tile
2023 £23,005 £26,790 £ 37, 4 4 0 £28,148 £31,398 £48,746
2022 £21,278 £24,669 £34,445 £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 sta.
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, through the Workforce Engagement Non-Executive Director, invited employees to comment on the remuneration of Directors during
theyear, and has engaged with the workforce to explain how executive remuneration aligns with the wider company pay policy. 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 113
Strategic Report Governance Report Financial Statements
Remuneration Committee 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 2023 and 31 March 2022 compared with other
disbursements from profit, being the distributions to shareholders and
retained earnings (comprehensive gain for the year less dividends).
Gender and ethnicity pay
The Group has reported on its gender pay gap for April 2022. 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 24% (2021: 25%), with a median gap of 6% (2021: 7%). Excluding Executive Board Directors,
the mean gender pay gap falls to 13% (2021: 9%) with a median gap of 6% (2021: 5%). This increase resulted from buying the remaining 80% share
ofArmadillo Self Storage in July 2021, which added 72 relevant employees to our Company headcount, 37 of whom were female. Of these female
employees, 30 were at a more junior level and therefore included in the lower two pay quartiles. We continue to work to address this imbalance.
Allstaare paid equally according to job role.
It is pleasing to see that our Mean Gender Pay Gap has decreased to 24% from 25% in April 2021. This reduction from 25% was due to increase in female
representation in the Upper Quartile from 27% in April 2021 to 29% in April 2022.
The Group has also analysed its ethnicity pay for April 2021. The Group’s mean ethnicity pay gap was 0% (2021: 1%), with a median gap of 5% (2021: 4%).
All sta 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.
In the year we have continued to collect ethnicity data to better understand the ethnic mix of our workforce. To date, 98% of our team have volunteered
their ethnicity data. This data indicates that 20% of Big Yellow’s team members belong to a Black, Asian, Mixed or other ethnic group, compared with
18.3% of people who make up this group in the UK (2021 census data).
Over the last 12 months we have continued the work of our Inclusivity and Diversity Committee, actively listening to feedback from our colleagues
across the business to drive change and improve awareness. Here are just some of our key achievements during this time:
Policy and strategy
– Recognising that women may need additional consideration and support during the menopause, we introduced a Menopause Policy, as well as
training Menopause Champions to provide advice and support.
– We introduced a Transgender Equality Policy to support transgender and transitioning employees, raising knowledge and levels of awareness
across the business.
– We have improved our communication of the work of the Inclusivity and Diversity Committee and inclusivity and diversity matters generally,
through updates in our ESG newsletter and our blog and Intranet.
– We have utilised our Company blog to recognise key dates that matter to our employees such as religious festivals, national community
andhealth/wellbeing events.
– We have held regular meetings between line managers and the People, Talent and Development Team to review Inclusion and Diversity and identify
ongoing opportunities for improvement across the dierent areas of the business.
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
7%
16%
-101%
2022
2023
Annual Report and Accounts 2023 Big Yellow Group PLC114
Governace Report
Recruitment and talent
– Our Big Yellow Foundation supports seven charities who work with vulnerable adults to help find them sustainable employment. During the year
weoered work placements to four people within our Distribution Centre and stores.
– We have been working with a specialist consultancy to identify opportunities to improve our brand awareness and recognition as an employer
ofdierent diverse groups.
– We reviewed our job advertisements, benefits and working practices so that they have a greater appeal to female applicants, based upon feedback
received from new employees. We also reviewed and amended job advertisements to remove any gender bias.
– We focused 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.
– The proportion of our female Store Managers remains unchanged at 32% in March 2023 compared to March 2022.
– 36% of new starters in our stores in the year ended 31 March 2023 were of an ethnic minority group (2022: 34%).
– 14% of our team members in stores are over 50, an increase from 10% in 2022.
Learning and development
– We organised British Sign Language training for 95 employees, with the aim of improving diversity within our workforce, as well as oering
animproved service to any deaf or hard of hearing customers.
– We arranged for one of our Learning and Development team to train as a Dyslexia / Dyscalculia Assessor so that they are able to assess and support
employees who have / may have dyslexia.
– Our investments in e-learning have resulted in females completing 15% more hours per individual of eLearning.
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 three of the Executive Directors are male and two of them were founders of the business nearly 25 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.
We will continue to drive change via our Inclusivity and Diversity Committee and through listening to feedback from our people.
Our future initiatives include continuing to develop our family friendly policies, seeking feedback on inclusivity and diversity through our annual
employee engagement survey and further developing our brand recognition as a truly diverse and inclusive employer.
We will continue to provide opportunities for people of all abilities, expanding our Work Placement Programme to help people to find sustainable employment.
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 £11,000 (ex VAT).
Approval
This policy report was approved by the Board of Directors on 22 May 2023 and signed on its behalf by
Michael O’Donnell
Remuneration Committee Chair
Annual Report and Accounts 2023 Big Yellow Group PLC 115
Strategic Report Governance Report Financial Statements
Committee members
and attendance
Member
Number
of meetings
attended
Laela Pakpour Tabrizi – Chair
Richard Cotton – Member (until 21 July 2022)
Anna Keay – Member
Vince Niblett – Member
Michael O’Donnell – Member
Heather Savory – Member
attended
absent
not applicable
Audit Committee Report
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 Guidance and Transparency Rule 7.1,
theUK Corporate Governance Code, and the new FRC ethical standard.
Introduction
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 eectiveness 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 position and performance, strategy,
and business model. The Committee also reviewed the Group’s going
concern and viability statements.
Annual Report and Accounts 2023 Big Yellow Group PLC116
Governace Report
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). Vince Niblett, as a Fellow of the Institute of
Chartered Accountants of England and Wales and Laela Pakpour Tabrizi
asan experienced Finance Director, currently carrying out that role
atConsumer Converged at Virgin Media O2, fulfil that requirement.
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 sta. 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 her 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 Ocer,
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 position and 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 eectiveness of the Group’s internal controls and
disclosures made in the annual report and financial statements on
this matter, and considered the impact of the BEIS review on the Group;
– 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 review of the 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
eectiveness of the audit process;
– considered the audit partner and audit firm rotation;
– undertaken an evaluation of the performance of the external auditor
and assessed their eectiveness;
– 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;
– 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 eectiveness.
Financial Reporting
Council Correspondence
During 2022, correspondence was received from the Financial Reporting
Council (“FRC”) which confirmed that the FRC had conducted a review
ofthe Group’s Annual Report and Financial Statements for the year
ended31 March 2022. The FRC did not raise any formal comments which
required a response from the Company. Instead, the FRC noted certain
matters which the Company should consider in the preparation of its
Annual Report and Financial Statements for the year ended 31 March
2023. TheCompany has considered the matters noted by the FRC andhas
included certain additional information and disclosures, where material
and relevant, in the 2023 Annual Report and Financial Statements. The
Committee reviewed management’s response to the matters noted by
the FRC, and considers the additional information and disclosure included
in the 2023 Annual Report and Accounts to be appropriate. Itshould be
noted the correspondence from the FRC provides no assurance that the
annual report and accounts are correct in all material respects; the FRC’s
role is not to verify the information provided but toconsider compliance
with reporting requirements. The FRC accepts noliability for reliance on
this letter by the company or any third party, including but not limited to
investors and shareholders.
Annual Report and Accounts 2023 Big Yellow Group PLC 117
Strategic Report Governance Report Financial Statements
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 2023 provides a fair, balanced, and understandable view
of the Group’s position and performance, strategy, and business model
and whether it provides the necessary information to enable shareholders
and prospective shareholders to assess the Group’s position and
performance, strategy, and business model. The Committee is satisfied
that the Annual Report for the year ended 31 March 2023 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 125.
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 critical accounting estimate 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 met
with the external 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.
TheCommittee has concluded that there are not significant levels
ofjudgements involved, other than the valuation 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 has 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 Group’s position
and performance, strategy, and business model.
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 Ocer.
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 oce for more
than five years, and any changes in the key audit sta;
– 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 eective 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 second year that she has been the signatory to the
Group’s financial statements.
Audit Committee Report continued
Annual Report and Accounts 2023 Big Yellow Group PLC118
Governace Report
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. The Order became eective for financial
yearsbeginning on or after 1 January 2015 and applies to the Company
witheect from the financial year ended 31 March 2016. To comply
withthe Order the Company intends to conduct a formal tender process
for auditservices during the financial year ending 31 March 2027.
TheCommittee considers this timing to be in the best interests of
theCompany, asitallows for a new lead audit partner to be appointed
(inaccordance withthe Order) and conduct a full year audit ahead
oftheformal audit tenderprocess.
Annual auditor assessment
The Audit Committee has adopted a formal framework in its review of
theeectiveness 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 eectiveness 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
eect 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 2023, the auditor’s remuneration
comprised £537,000 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
14% of audit fees in 2022 and 10% in 2021.
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 pages 44 to 49.
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 eectively 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
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 119
Strategic Report Governance Report Financial Statements
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 2023. The Report on Corporate Governance
onpages81 to 87 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.
Included in note 18 are the Group’s financial risk management objectives
and policies and an indication of the Group’s exposure to certain risks.
Those elements of that note form part of this report and are incorporated
by reference.
Dividends
The Directors are recommending the payment of a final dividend of
22.9pence per share for the year (2022: 21.4 pence per ordinary share).
An interim dividend of 22.3 pence per share was paid in the year
(2022:20.6 pence per share).
All of the 45.2 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 20 July 2023, the final dividend will be paid on 28 July 2023.
TheEx-div date is 6 July 2023 and the Record date is 7 July 2023.
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 Greenhouse Gas (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-oce gas heating, reception
area 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 the electricity
forourstores and construction fit-out activities;
– Underlying global energy use;
– Previous year’s figures for energy use and GHG;
– At least one intensity ratio metric;
– Energy eciency 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 of performance
toshow longer term trends.
The ‘Market based emission’ reported here reflect the emissions
associated with the electricity tari 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 oshore area only.
Annual Report and Accounts 2023 Big Yellow Group PLC120
Governace Report
a) Data
Year ended 31 March
2021 Total
Restated to
include Armadillo 2022 Total 2023 Total
GHG Scope 1 total tCO
2
e Total Scope 1 Emissions (location-based)
279.8 294.9 232.8
GHG Scope 2 total tCO
2
e Total Scope 2 Emissions (location-based)
2,563.8 2,368.3 2,130.1
GHG Scope 2 total tCO
2
e Total Scope 2 Emissions market-based
0.0 0.0 0.0
Total GHG Scope 1 & 2
Total tCO
2
e
Total Scope 1&2 Emissions (location-based)
2,843.6 2,663.2 2,362.9
Total GHG Scope 1 & 2
Total tCO
2
e
Total Scope 1&2 Emissions (market-based)
279.8 294.9 232.8
Scope 3 total tCO
2
e Electricity transmission losses
224.0 208.6 192.8
Telecoms emissions on our sites
174.0 178.1 177. 0
Employee business travel
76.1 92.8 140.9
Total Scope 3 total tCO
2
e Electricity transmission losses, telecoms emissions, employee business travel
474.1 479.5 510.7
kgCO
2
e / revenue (£000s) – location-based Greenhouse Gas (GHG) emissions intensity from building energy consumption
18.6 15.1 12.5
kgCO
2
e / revenue (£000s) – market-based Greenhouse Gas (GHG) emissions intensity from building energy consumption
1.8 1.7 1.2
kgCO
2
e / Occupied space Greenhouse Gas (GHG) emissions intensity from building energy consumption
(Scope 1 and 2 location-based) 6.3 5.4 5.0
kgCO
2
e / CLA Greenhouse Gas (GHG) emissions intensity from building energy consumption
(Scope 1 and 2 location-based) 5.1 4.7 4.0
Energy data 4 Underpinning Scope 1 and 2 emissions data (kWh) 12,777,915.1 12,750,155.2 12,271,496
Notes to the data table: Regarding restating 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 gas data – and some of our Armadillo gas data
– is metered and automatically transmitted into our energy and emission
reporting platform, Envizi. Gas use 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 each year.
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 our 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 manager records any 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 used on our fit-out construction
projects 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.
Scope 2, Location-based, electricity
Data collection: Big Yellow electricity data – and most of our Armadillo
electricity data – is metered and automatically transmitted into our
energy and emission reporting platform, Envizi. Electricity used 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 each year. 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 121
Strategic Report Governance Report Financial Statements
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 at 17 of our store locations.
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 our employee expenses reimbursement data held
in our Finance system to calculate business 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 seeking to become an ever more ecient business.
Wehave reported progress over the years both in our Annual Reports
aswell as in our standalone annual ESG Reports; all these are 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 used when customers need them; plus a small amount of the
permanent emergency lighting was improved to LED.
Although most of that work has been completed, a small number of ‘mop-up’
LED 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 in 2021, we have
identified several Armadillo stores with the potential for upgrading to half
hour (“HH”) automatic meter reading. This work was commissioned last
year and is ongoing.
Directors’ Report continued
All other stores’ electricity meters 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 to
review our performance on a quarterly basis.
During last year, we commenced on a programme to remove the gas
central heating & hot water boilers at a number of our stores with the
aimof decarbonising our business by 2030. This programme is ongoing.
We have completed the preliminary phases of a solar retrofitting
programme. We have also committed to expanding this programme
tocover all stores that are able to hold solar. This year we have added
afurther 3,464kWp of capacity to 23 stores.
The two new stores that were opened during the year (Harrow and
Kingston North) were fitted with 50 & 85kWp solar installations.
Wealsoacquired a Store in Aberdeen during the year which had an
existing 50kWp installed.
Most recent ESOS assessment findings
and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potential energy saving measures we are able to undertake.
Our independent ESOS assessor’s recommendations therefore focused
on increasing our existing Solar PV estate. This recommendation is
inalignment with our broader Sustainability Strategy.
During the year, we have installed solar systems at 25 stores:
– Three newly build/acquired stores, with a total installed capacity
of185kWp amongst them
– 23 stores were retrofitted with solar totalling a capacity of 3,464kWp
During the year, we have generated 1,681,230kWh of solar energy
(anincrease of 94% 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 had our science-based targets verified by the SBTi.
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.
Annual Report and Accounts 2023 Big Yellow Group PLC122
Governace Report
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 82.
There are a number of agreements that take eect, 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 oce or employment that occurs because of a takeover bid.
During the year the Company issued 298,595 shares to satisfy the
exercise of share options (2022: 334,970).
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 (retired from the Board on 21 July 2022)
Jim Gibson Chief Executive Ocer
Anna Keay Non-Executive Director
Adrian Lee Operations Director (retired from the Board on 21 July 2022)
Vince Niblett Senior Independent Director
Michael O’Donnell Non-Executive Director
Heather Savory Non-Executive Director
Laela Pakpour Tabrizi Non-Executive Director
John Trotman Chief Financial Ocer
Nicholas Vetch Executive Chairman
Biographical details of the Executive and Non-Executive Directors standing for re-election are set out on pages 78 to 80.
Directors’ indemnities
The Company purchases liability insurance covering the Directors and
ocers 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 Guidance and Transparency rules, of the following voting rights
as a shareholder of the Company at 31 March 2023 and 22 May 2023.
No. of ordinary
shares
31 March 2023
Percentage of
voting rights
and issued
share capital
31 March 2023
No. of ordinary
shares
22 May 2023
Percentage of
votingrights
andissued
sharecapital
22 May 2023
Blackrock Inc 19,362,947 10.5% 19,511,737 10.6%
The Vanguard Group Inc 8,733,881 4.7% 8,776,322 4.8%
MFS Investment Management 7,893,045 4.3% 7,862,492 4.3%
FMR LLC 6,744,811 3.6% 7,091,693 3.8%
State Street Global Advisors 5,857,131 3.2% 5,938,215 3.2%
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 110 of the Remuneration Report.
Annual Report and Accounts 2023 Big Yellow Group PLC 123
Strategic Report Governance Report Financial Statements
Directors’ Report continued
Purchase of own shares
The Company was granted authority at the AGM in 2022 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
sta 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, and regular updates from
eachDepartment.
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 Corporate Governance Code.
Employees are encouraged to participate in the Group’s performance
through Employee Share Schemes and performance related bonuses.
53%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 sta becoming disabled every eort 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.
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 tracking 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 eective systems and controls to ensure slavery and human
tracking 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 oce 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
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC124
Governace Report
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 aairs of the Group and parent Company and of the Group’s
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,
reliable, and in respect of the parent Company financial statements
only, prudent;
– for the Group financial statements, state whether they have
beenprepared in accordance with UK-adopted international
accounting standards;
– for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
toany material departures disclosed and explained in the parent
Company financial statements;
– 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 sucient 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 dier 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
22 May 2023 and is signed on its behalf by:
Jim Gibson John Trotman
Chief Executive Officer Chief Financial Officer
Statement of Directors’ Responsibilities in respect
ofthe Annual Report and the Financial Statements
Annual Report and Accounts 2023 Big Yellow Group PLC 125
Strategic Report Governance Report Financial Statements
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 2023 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 aairs as at
31 March 2023 andof the Group’s profit for the year then ended;
– the Group financial statements have been properly
preparedinaccordance with 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 sucient 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 six
financial years ended 31 March 2023. 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
£20.3m (2022:£19.8m)
0.74% (2022: 0.74%)
of Total Assets
Coverage 100% (2022: 99%) of Total Assets
Key audit matters vs 2022
Recurring risks
Valuation of Investment Property,
including Investment Property
Under Construction
Parent Company: Recoverability of
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 eect on: the overall audit
strategy; the allocation of resources in the audit; and directing the
eorts of the engagement team. We summarise below the key audit
matters (unchanged from 2022), 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 2023 Big Yellow Group PLC126
Financial Statements
The Risk Our response
Valuation of Investment
Property, including
Investment Property
under Construction
Investment Property
£2,449.6 million;
(2022:£2,342.2 million)
Investment Property
Under Construction
£260.7 million;
(2022:£285.4 million)
Refer to page 118
(AuditCommittee
Report), page 143
(accounting policy)
andpages 151 to 156
(financial disclosures).
Subjective valuation:
Investment property valuation is subjective and
inherently judgemental in nature and therefore
results in a risk of error and fraud. We considered
in our risk assessment that there was an increased
risk compared to the prior year as a result of the
macroeconomic environment which could impact
the inputs into the valuations, particularly on
Investment Property Under Construction.
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 judgement 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 eect 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.
Our procedures included:
– Assessment 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 IAS 40 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 aected 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 (including those under
construction) 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 judgement 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 127
Strategic Report Governance Report Financial Statements
The 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 (2022 result: acceptable).
Recoverability of
amounts owed by
Groupundertakings
(Parent Company only)
£800.4million;
(2022:£764.7million)
Refer to page 144
(accounting policy)
andpage 176
(financialdisclosures).
Low risk, high value:
The carrying amount of the intra-group debtor
balance represents 96% (2022: 96%) of the
Company’s total assets at 31 March 2023.
Their recoverability is not at a high risk of
significant misstatement or subject to significant
judgement. However, due to their materiality in
the context of the Company financial statements,
this is considered to be the area that had
thegreatest eect on our overall parent
Companyaudit.
We performed the tests below rather than seeking to rely on any of the
Company’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our procedures included:
Tests of detail: We assessed 100% of Group debtors to identify, with
reference to the relevant debtors’ draft balance sheets, whether they
have a positive net asset value and therefore coverage of the debt owed,
as well as assessing whether those debtor companies have historically
been profit-making.
Our results
We found the conclusion that there is no impairment of the Group debtor
balances to be acceptable (2022: acceptable).
Independent Auditor’s Report to the Members
ofBigYellow Group PLC continued
Annual Report and Accounts 2023 Big Yellow Group PLC128
Financial Statements
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£20.3million (2022: £19.8million), determined with reference
toabenchmark of total assets of which it represents 0.74%
(2022:0.74%).
In addition, we applied materiality of £4.9million (2022: £4.4million)
to all balances and classes of transactions impacting adjusted profit
before tax of £106.0million (2022: £98.8million) (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 £8.8million (2022: £11.9million), determined
withreference to a benchmark of Company total assets, of which
itrepresents 1% (2022: 1.5%).
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% (2022: 75%) of materiality
for the financial statements as a whole, which equates to £15.2million
(2022: £14.8million) for the Group, £3.6million (2022:£3.5million)
forbalances audited to the lower materiality and £6.6million (2022:
£8.9million) 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 £1.0million
(2022:£0.99million) and those exceeding £245k (2022: £230k)
forthose impacting adjusted profit, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
For the current year the Group team performed the audit of the Group
as if it was a single aggregated set of financial information. The audit
was performed using the materiality and performance materiality
levels set out above.
For 2022 of the Group’s 30 reporting components, we subjected
7tofull scope audits for group purposes and 2 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% of total
group revenue, 3% of group profit before tax and 1% of total group
assets was represented by 21 reporting components, none of which
individually represented more than 1% 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 £6.9million to £14.85million, 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.
£20.3m
Whole financial statements
materiality
(2022: £19.8M)
£15.2m
Whole financial statements
performance materiality
(2022: £14.8m)
£1.0m
Misstatements reported
to the audit committee
(2022: £0.99m)
Total assets
£2,752.0m (2022: £2,670.4m)
Group materiality
£20.3m (2022: £19.8m)
Total assets
Group materiality
Group revenue
98
100
100%
(2022: 98%)
Group profit before tax
96
100
100%
(2022: 97%)
Group total assets
Full scope audit performed at Group level for 2023
Specified risk-focused audit procedures 2022
Full scope for group audit purposes 2022
Residual components 2022
96
100
100%
(2022: 99%)
Annual Report and Accounts 2023 Big Yellow Group PLC 129
Strategic Report Governance Report Financial Statements
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 49 to 54), the environment social and
governance report (pages 56 to 72) and the corporate governance
report (pages 81 to 87) which have been incorporated into the
2023AnnualReport.
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 eects 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. 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
parent Company or to cease their operations, and as they have
concluded that the Group’s and the parent 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
18months 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 and geopolitical environment to identify the inherent risks
to its business model and analysed how those risks might aect
theGroup’s and parent Company’s financial resources or ability to
continue operations over the going concern period. The risks that
weconsidered most likely to adversely aect the Group’s and parent
Company’s available financial resources and metrics relevant to
debt covenants over this period were:
– Increase in SONIA rates, increasing Group interest rates.
– The impact of macro economic trends on property valuations
andrevenue.
We considered whether these risks could plausibly aect 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 eects 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.
Independent Auditor’s Report to the Members
ofBigYellow Group PLC continued
Annual Report and Accounts 2023 Big Yellow Group PLC130
Financial Statements
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 parent 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 parent 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
pages48 to 49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
parent 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 judgemental 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 judgemental 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, seldom used accounts, those posted by
senior management and super users and unexpected cash and
borrowings, revenue and expense 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 eect 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.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential eect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
aect 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 131
Strategic Report Governance Report Financial Statements
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
eect 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 eect:
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.
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 49 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 49 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.
Independent Auditor’s Report to the Members
ofBigYellow Group PLC continued
Annual Report and Accounts 2023 Big Yellow Group PLC132
Financial Statements
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 parent 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
eectiveness 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.
We have nothing to report in this respect.
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 125,
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
22 May 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 133
Strategic Report Governance Report Financial Statements
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
Note
2023
£000
2022
£000
Revenue 3 18 8 , 8 2 9 171 , 318
Cost of sales (54,307) (50,38 3)
Gross profit 1 34,522 120,935
Administrative expenses (1 4,5 1 9) (1 4,3 5 2)
Operating profit before gains on property assets 120,003 1 06,58 3
(Loss)/gain on the revaluation of investment properties 14a,15 (29,86 1) 5 9 7 ,22 4
Gain on disposal of investment property – 584
Operating profit 90,1 42 70 4 , 391
Other operating income 3 2 , 18 5 –
Share of profit of associates 14e – 3,6 77
Investment income – interest receivable 7 9 23
– fair value movement on derivatives 7 – 1, 389
Finance costs
– interest payable 8 (1 6,894) (1 0,604)
– fair value movement on derivatives 8 (1 33) –
Profit before taxation 7 5,309 6 98 ,8 7 6
Taxation 9 (1,9 77) (1,60 2)
Profit for the year (attributable to equity shareholders) 5 73,33 2 6 9 7, 27 4
Total comprehensive income for the year (attributable to equity shareholders) 73,3 3 2 6 9 7, 2 7 4
Basic earnings per share 12 40. 1p 38 5. 4p
Diluted earnings per share 12 39.8p 3 84 .2p
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.
Annual Report and Accounts 2023 Big Yellow Group PLC134
Financial Statements
Consolidated Balance Sheet
31 March 2023
Note
2023
£000
2022
£000
Non-current assets
Investment property 14a 2,449,640 2,342, 1 99
Investment property under construction 14a 26 0 ,72 0 28 5,400
Right-of-use assets 14a 18 , 14 8 19 ,174
Plant, equipment, and owner-occupied property 14b 4,0 03 3,8 5 7
Intangible assets 14c 1, 433 1 ,433
Investment 14d 588 588
Derivative financial instruments 18c – 885
2,7 34,5 3 2 2,6 53,5 36
Current assets
Derivative financial instruments 18c 316 –
Inventories 49 6 4 83
Trade and other receivables 16 8 , 314
7,756
Cash and cash equivalents 8, 32 9 8,60 5
17, 4 5 5 1 6,8 44
Total assets 2,7 5 1,987 2,6 7 0,380
Current liabilities
Trade and other payables 17 (57 ,27 5) (4 7 ,34 9)
Borrowings 19 (3,1 59) (3,008)
Obligations under lease liabilities 21 (2,020) (1,95 8)
(62,454) (52,3 1 5)
Non-current liabilities
Borrowings 19 (489,4 1 1) (4 1 4,9 7 2)
Obligations under lease liabilities 21 (1 7 ,6 76) (18,7 18)
(507 ,087) (43 3,690)
Total liabilities (569,54 1) (486,005)
Net assets 2,1 82,446 2 ,18 4, 375
Equity
Share capital 22 18 , 4 27 18 , 3 97
Share premium account 290,8 5 7 2 89,9 2 3
Reserves 1,8 73, 1 62 1 ,8 7 6,05 5
Equity shareholders’ funds 2,1 82,446 2 ,18 4, 375
The financial statements were approved by the Board of Directors and authorised for issue on 22 May 2023. 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 135
Strategic Report Governance Report 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 2022 18 , 3 97 2 89,9 2 3 7 4,950 1, 795 1,800,3 2 9 (1 ,0 1 9) 2 , 184 , 375
Total comprehensive income for the year – – – – 73,3 32 – 7 3,33 2
Issue of share capital 30 934 – – – – 9 64
Dividend – – – – (79,960) – (7 9,960)
Credit to equity for equity-settled
share-basedpayments – – – – 3 ,735 – 3 ,73 5
At 31 March 2023 18 , 4 27 290,8 5 7 7 4,950 1 ,79 5 1,7 9 7 ,436 (1,0 1 9) 2,1 82,446
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 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 1 92,2 1 8 74,950 1 ,79 5 1 , 16 8 , 3 63 (1,0 1 9) 1, 4 53,8 95
Total comprehensive income for the year – – – – 6 9 7, 2 7 4 – 6 9 7, 27 4
Issue of share capital 8 09 97 ,705 – – – – 98,5 1 4
Dividend – – – – (68 ,698) – (6 8,6 98)
Credit to equity for equity-settled
share-basedpayments – – – – 3,3 90 – 3,39 0
At 31 March 2022 18, 39 7 289,9 2 3 7 4,950 1, 795 1,800,3 2 9 (1 ,0 1 9) 2 , 184 , 375
The accompanying notes form part of the financial statements.
Consolidated Statement of Changes in Equity
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC136
Financial Statements
Consolidated Cash Flow Statement
Year ended 31 March 2023
Note
2023
£000
2022
£000
Cash generated from operations 26 12 8 , 9 7 3 1 20,3 90
Bank interest paid (1 6,486) (1 0,7 6 3)
Interest on obligations under lease liabilities (706) (84 3)
Interest received 8 2
Loss of income insurance proceeds 2,032 –
Tax paid (1,844) (1,6 49)
Cash flows from operating activities 111 , 97 7 1 0 7, 13 7
Investing activities
Purchase of non-current assets (1 06,41 3) (1 05, 1 5 1)
Disposal of investment property – 584
Acquisition of Armadillo (net of cash acquired) – (66,6 7 9)
Investment 14d – (1 38)
Receipts from Capital Goods Scheme 18 2 3 81
Dividend received from associates 14e – 435
Cash flows from investing activities (1 06,23 1) (1 70,56 8)
Financing activities
Issue of share capital 964 98,5 1 4
Payment of lease liabilities (1,26 7) (1,3 84)
Equity dividends paid 11 (7 9,1 40) (68 ,6 98)
Receipt from termination of interest rate derivatives 436 –
Loan arrangement fees paid (1,50 7) (953)
Increase in borrowings 26b 7 4,492 3 2,2 35
Cash flows from financing activities (6,022) 5 9 , 71 4
Net decrease in cash and cash equivalents (2 76) (3,7 1 7)
Opening cash and cash equivalents 8,605 1 2,3 22
Closing cash and cash equivalents 8, 32 9 8,60 5
The accompanying notes form part of the financial statements.
Annual Report and Accounts 2023 Big Yellow Group PLC 137
Strategic Report Governance Report Financial Statements
Notes to the Financial Statements
Year ended 31 March 2023
1. General information
Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006, with registration number 03625199,
andlimand limited by shares. The address of the registered ocffice 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 16 to 31.
2. Signicant accounting policiesSignificant accounting policies
Basis of preparation of financial statements
The Group financial statements have been properly prepared in accordance with 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oss 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 adopted in year
The Group has applied the following new and revised IFRSs during the year:
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
Annual improvements – cycle 2018 – 2020 Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41
The impact of these standards has not been material on the financial statements of the Group.
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 eeffective:
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
IFRS 17 Insurance contracts
IFRS 17 and IFRS 9 Insurance contracts and financial assets
Amendments to IAS 8 Definition of Accounting Estimate
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
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fin future periods.
There are no other Standards or Interpretations yet to be eeffective that would be expected to have a material impact on the financial
statementsoents of the Group.
Annual Report and Accounts 2023 Big Yellow Group PLC138
Financial Statements
2. Signicant accounting policies continued
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entitieof entities included in the consolidated financial statements in the current and preceding year, are set out below:
Going concern
A review of the Group’s business activities, together with the factors likely to ao affect its future development, performance and position are set
outin the Stt 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 2023 the Group had available liquidity of approximately £32 million, from a combination of cash and undrawn bank debt facilities.
TheGroe Group additionally has a $225 million credit approved shelf facility with Pricoa Private Capital to be drawn in fixed sterling notes. The Group
can draw the debt in minimum tranches of £10 million over the next two and half years with terms of between 7 and 15 years at short notice,
typically 10 days. The Group is cash generative and for the year ended 31 March 2023, had operational cash flow of £112.0 million, with capital
commitments at the balance sheet date of £6.1 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 2024 and projections contained in the longer-term business plan
which cover the 18 month period. After reviewing these projected cash flows together with the Group’s and Company’s cash balances, borrowing
facilities and covenant requirements, and potential property valuation movements over that period, the Directors believe that, taking account
ofsof severe but plausible downsides, the Group and Company will have sucfficient funds to meet their liabilities as they fall due for that period.
The Group’s revolving credit facility of £240 million with Lloyds, HSBC and Bank of Ireland expires in October 2024. The Group intends to refinance
this loan with the banks this year, but does not rely on the refinancing of the loan to reach its conclusion on going concern.
In making their assessment, the Directors have carefully considered the outlook for the Group’s trading performance and cash flows as a result
ofthof the current economic environment, taking into account the trading performance of the Group over the recent dislocations in the global
economy from Covid-19 and the Russian invasion of Ukraine. The Directors have also considered the performance of the business during the
Global Financial Crisis. The Directors modelled several dieral 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 sutained sufficient liquidity to meet its financial obligations
astheas they fall due.
Consequently, the Directors continue to adopt the going concern basis in preparing the Group and Company 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 Marcto 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thby the Group. The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income from
theethe effective date of acquisition or up to the ee 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valr 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valr value less costs to sell (excluding investment property which is measured at fair value).
Annual Report and Accounts 2023 Big Yellow Group PLC 139
Strategic Report Governance Report Financial Statements
2. Signicant 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 ehe effect of any changes
inesin 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opand 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thof 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asthe 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Grthe 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 ong offer discount
of5of 50% o foff 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
– enhanced liability service income (previously insurance income) which is recognised on a straight-line basis over the period a customer
occupies their room. The Group recognises ELS income as a principal, as the ELS contract is between the Group and the customer.
Under the Group’s ELS policy, routine customer claims (with an individual customer limit of £100,000) under the policy are settled by the Group
directly, but in the event of a major loss, the Group has third party insurance in place which will pay the aggregate customer claims to the extent
that they exceed £250,000.
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.
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.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC140
Financial Statements
2. Signicant 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 ir 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 cIn 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 non 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rof 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 dit 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 diefferences 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 diary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary diery differences can be utilised. Such assets and liabilities
are not recognised if the temporary diy differences arise from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that at affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary diery differences arising on investments in subsidiaries and associates except where
theGrthe Group is able to control the reversal of the temporary difference and it is probable that the temporary diifference 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
sucifficient 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 o ct off current tax assets against current tax liabilities.
Annual Report and Accounts 2023 Big Yellow Group PLC 141
Strategic Report Governance Report Financial Statements
2. Signicant 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cat cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date,
lessany les 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usthe 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cerfor 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thif 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 ee 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rea 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ror 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Grthe Group’s primary profit measures and reflect underlying profit by excluding capital and non-recurring items such as revaluation movements,
gains or losses on the disposal of properties and the fair value movement of interest derivatives in accordance with EPRA guidelines. In addition,
the Group adjusts for items such as the write o ote off of acquisition costs, and fair value movements on the stepped acquisition of associates.
These adjusted measures should not be considered in isolation from, or as substitutes for, or superior to the financial measures prepared
inacin accordance with IFRS.
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 o the cff 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
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC142
Financial Statements
2. Signicant accounting policies continued
The gain or loss arising on the disposal or retirement of an asset is determined as the dierfference between the sales proceeds and the carrying
amount of the asset and is recognised in the statement of comprehensive income.
Investment property
The criteria used to distinguish investment property from owner-occupied property is to consider whether the property is held for rental
incomeandome 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profby 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 sue suffered an impairment loss.
Ifany sIf 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thby theGroe Group’s policies approved by the Board of Directors. The policy in respect of interest rates is to maintain a balance between flexibility
andthand thehedgie 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rist 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Groe Grouphas nup has not adopted hedge accounting.
Annual Report and Accounts 2023 Big Yellow Group PLC 143
Strategic Report Governance Report Financial Statements
2. Signicant 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 ae all affected financial assets are reclassified on the first day of the first reporting period following the change
inthebin 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ouamount 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 iin 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 ee effective interest method.
Theamore 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 ehe 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derOn 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 Cs to the Company in full.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC144
Financial Statements
2. Signicant 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
di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 o (ff (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fia 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 losnet gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at
amortised cost using the ee effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.
Anygain ony 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 ehe effect of non-market-based vesting conditions. The expected life
usedin the md in the model has been adjusted, based on management’s best estimate, for the eeffects of non-transferability, exercise restrictions,
andbeand behavioural considerations. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to
vestast asares a result of the ee effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recovered
inthesin the statement of comprehensive income such that the cumulative expense reflects the revised estimate with a corresponding adjustment
toequto equityrity 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liathe 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cth any changes in fair value recognised in the statement of comprehensive income for the year.
Annual Report and Accounts 2023 Big Yellow Group PLC 145
Strategic Report Governance Report Financial Statements
2. Signicant accounting policies continued
Climate change
In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the climate
change risks identified in the Sustainability section of the Strategic Report and the Group’s stated target of net zero carbon emissions by 2040.
These considerations did not have a material impact on the financial reporting judgements and estimates in the current year. This reflects
thecthe conclusion that climate change is not expected to have a significant impact on the Group’s short-term or medium-term cash flows including
thosecothose considered in the going concern and viability assessments, the valuation of the Group’s investment property portfolio, the carrying value
ofnoof non-current assets and the estimates of future profitability used in our assessment of the recoverability of deferred tax assets.
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win which the estimate is revised if the revision an 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)(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. 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 o the moff 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meand methodology adopted in the valuation of the Group’s investment properties is set out in note 15 to the financial statements.
3. Revenue
Analysis of the Group’s operating revenue can be found below and in the Portfolio Summary on page 32.
2023
£000
2022
£000
Open stores
Self storage income 162,911 145,592
Insurance income 3,047 17, 78 3
Enhanced liability service income 14,272 –
Packing materials income 3,286 3,142
Other income from storage customers 2,010 1, 821
Ancillary store rental income 1,213 937
186,739 169,275
Other revenue
Non-storage income 2,090 1,718
Management fees earned – 325
Total revenue 188,829 171,318
Please see the commentary in the Financial Review on insurance income and enhanced liability service income.
Non-storage income derives principally from rental income earned from tenants of properties awaiting development.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC146
Financial Statements
3. Revenue continued
The Group has also earned other operating income of £2.2 million in the year as follows:
– £1.4 million relates to insurance proceeds for loss of income following the destruction of the Group’s Cheadle store by fire in 2022;
– £0.6 million relates to insurance proceeds for loss of income following a fire at the Group’s Fulham store wine storage area in 2021; and
– £0.2 million is following extinguishing the right-of-use asset and liability following the acquisition of the freehold of our Oxford store.
4. Segmental information
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed
bythby the Chief Executive to allocate resources to the segments and to assess their performance. Given the nature of the Group’s business, there
isonis one segment, which is the provision of self storage and related services.
Revenue represents amounts derived from the provision of self storage and related services which fall within the Group’s ordinary activities after
deduction of trade discounts and value added tax. The Group’s non-current assets, revenue and profit before tax are attributable to one activity,
the provision of self storage and related services. These all arise in the United Kingdom in the current year and prior year.
5. Prot for the yearProfit for the year
a) Profit for the year has been arrived at after charging/(crediting):
Note
2023
£000
2022
£000
Depreciation of plant, equipment, and owner-occupied property 14b 888 857
Depreciation of interest in leasehold properties 1,542 1,601
Loss/(gain) on the revaluation of investment property 29,861 (597,224)
Gains on disposal of investment property – (584)
Cost of inventories recognised as an expense 1,643 1,405
Employee costs 6 24,709 23,181
b) Analysis of auditor’s remuneration:
2023
£000
2022
£000
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 487 390
Fess payable to the Company’s auditor for the subsidiaries’ annual accounts 50 50
Total audit fees 537 440
Audit related assurance services – interim review 60 60
Total non-audit fees 60 60
Total audit and non-audit fees paid to KPMG LLP 597 500
Annual Report and Accounts 2023 Big Yellow Group PLC 147
Strategic Report Governance Report Financial Statements
6. Employee costs
The average monthly number of full-time equivalent employees (including Executive Directors) was:
2023
Number
2022
Number
Sales 403 365
Administration 62 62
465 427
At 31 March 2023 the total number of Group employees was 515 (2022: 495).
2023
£000
2022
£000
Their aggregate remuneration comprised:
Wages and salaries 17, 475 16,086
Social security costs 2,759 3,014
Other pension costs 740 691
Share-based payments 3,735 3,390
24,709 23,181
Details of Directors’ Remuneration is given on pages 102 to 111. The Directors and the Director of our trading subsidiaries are the employees
assessed as key management personnel.
7. Investment income
2023
£000
2022
£000
Bank interest receivable 8 2
Unwinding of discount on Capital Goods Scheme receivable 1 21
Total interest receivable 9 23
Fair value movement on derivatives – 1,389
Total investment income 9 1,412
8. Finance costs
2023
£000
2022
£000
Interest on bank borrowings 18,156 11,772
Capitalised interest (2,761) (2,072)
Interest on obligations under lease liabilities 706 843
Other interest payable 61 61
Loan refinancing costs 732 –
Total interest payable 16,894 10,604
Fair value movement on derivatives 133 –
Total finance costs 17, 027 10,604
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC148
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% (e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 Aom 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
2023
£000
2022
£000
• Current year 2,296 1,725
• Prior year (319) (123)
1,977 1,602
A reconciliation of the tax charge is shown below:
2023
£000
2022
£000
Profit before tax 75,309 698,876
Tax charge at 19% (2022 – 19%) thereon 14,309 132,786
Eects of:Effects of:
Revaluation of investment properties 5,674 (113,472)
Share of profit of associates – (699)
Other permanent diet differences 626 (2,031)
Utilisation of brought forward losses (76) –
Profits from the tax-exempt business (18,237) (14,859)
Current year tax charge 2,296 1,725
Prior year adjustment (319) (123)
Total tax charge 1,977 1,602
At 31 March 2023 the Group has unutilised tax losses from the non-REIT taxable business of £33.8 million (2022: £34.2 million) available for
ooffset against certain types of future taxable profits. All losses can be carried forward indefinitely.
10. Adjusted protAdjusted profit
2023
£000
2022
£000
Profit before tax 75,309 698,876
(Loss)/gain on revaluation of investment properties – Group 29,861 (597,224)
– associates (net of deferred tax) to 30 June 2021 – (1,537)
Change in fair value of interest rate derivatives 133 (1,389)
Armadillo fair value adjustments on acquisition – (1,756)
Gain on disposal of investment property – (584)
Refinancing fees 732 –
Acquisition costs written on off – 416
Adjusted profit before tax 106,035 96,802
Tax (1,977) (1,602)
Adjusted profit after tax 104,058 95,200
Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate
derivatives, acquisition costs written o in aen off in accordance with IFRS 3, refinancing fees, fair value adjustments on acquisitions, and net gains
andloand losses on disposal of investment property have been disclosed in line with EPRA performance measures.
Annual Report and Accounts 2023 Big Yellow Group PLC 149
Strategic Report Governance Report Financial Statements
11. Dividends
2023
£000
2022
£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2022 of 21.4p (2021: 17.0p) per share. 39,136 31,039
Interim dividend for the year ended 31 March 2023 of 22.3p (2022: 20.6p) per share. 40,824 37,659
79,960 68,698
Proposed final dividend for the year ended 31 March 2023 of 22.9p (2022: 21.4p) per share. 41,947 39 ,136
Subject to approval by shareholders at the Annual General Meeting to be held on 20 July 2023, the final dividend will be paid on 28 July 2023.
Theex-e ex-div date is 6 July 2023 and the record date is 7 July 2023.
The Property Income Distribution (“PID”) payable for the year is 45.2 pence per share (2022: 42.0 pence per share).
12. Earnings per share
Year ended 31 March 2023 Year ended 31 March 2022
Earnings
£m
Shares
£m
Pence
per share
£m
Earnings
£m
Shares
£m
Pence
per share
£m
Basic 73.3 183.0 40.1 69 7. 3 180.9 385.4
Dilutive share options – 1.1 (0.3) – 0.6 (1.2)
Diluted 73.3 184.1 39.8 6 97. 3 181.5 384.2
Adjustments:
Loss/(gain) on revaluation of investment properties 30.0 – 16.2 (597.2) – (329.0)
Acquisition costs written on off – – – 0.4 – 0.2
Change in fair value of interest rate derivatives 0.1 – 0.1 (1.4) – (0.8)
Gain on disposal of investment property – – – (0.6) – (0.3)
Refinancing fees 0.7 – 0.4 – – –
Share of associate fair value gains and losses – – – (3.3) – (1.8)
EPRA – diluted 104.1 184.1 56.5 95.2 181.5 52.5
EPRA – basic 104.1 183.0 56.9 95.2 180.9 52.6
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 in line with EPRA recommendations.
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).
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC150
Financial Statements
13. Net assets per share continued
Year ended 31 March 2023 Year ended 31 March 2022
Equity
attributable
to ordinary
shareholders
£000
Shares
£000
Pence
per share
£000
Equity
attributable
to ordinary
shareholders
£000
Shares
£000
Pence
per share
£000
Basic NAV 2,182,446 183,143,066 1,191.7 2,184,375 182,844,471 1,194.7
Share and save as you earn schemes 1,909 1,705,121 (10.0) 1,592 1,409,649 (8.3)
Diluted NAV 2,184,355 184,848,187 1,181.7 2,185,967 184,254,120 1,186.4
Fair value of derivatives – Group (316) – (0.2) (885) – (0.5)
Intangible assets (1,433) – (0.7) (1,433) – (0.8)
EPRA NTA 2,182,606 184,848,187 1,180.8 2,183,649 184,254,120 1,185.1
Valuation methodology assumption (see note 15) (£000) 104,605 – 56.5 100,600 – 54.6
Adjusted NAV 2,287,211 184,848,187 1,237.3 2,284,249 184,254,120 1,239.7
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 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
Additions 40,559 72,063 2,034 114,656
Transfer on opening of stores 39,288 (39,288) – –
Acquisition of Oxford freehold – – (1,597) (1,597)
Revaluation (see note 15) 27, 59 4 (57,455) – (29,861)
Depreciation – – (1,463) (1,463)
At 31 March 2023 2,449,640 260,720 18,148 2,728,508
The right-of-use assets represent the present value of minimum lease payments for leasehold properties that meet the definition
ofIof IAS4S 40andar0 and are accounted for as investment properties – see note 21 for further details of the obligations under lease liabilities.
Thefaie fairvalur value of the leasehold properties (including long leaseholds), on which the Group pays rent, of £74.6 million (2022: £80.2 million)
isincis included within the investment property total.
Included within the revaluation gain on investment property in the prior year is an impairment of £4.3 million in relation to the fire at Cheadle.
The credit to right-of-use assets in the current year of £1.6 million is due to the acquisition of the freehold of our Oxford store, and hence
theexthe extinguishment of the lease liability and associated right-of-use asset.
Annual Report and Accounts 2023 Big Yellow Group PLC 151
Strategic Report Governance Report Financial Statements
14. Non-current assets continued
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 32. Included within additions is £2.8 million of capitalised interest (2022: £2.1 million), calculated at the Group’s
average borrowing cost for the year of 4.2%. 85 of the Group’s investment properties are pledged as security for loans, with a total external
value of £1.99 billion.
b) Plant, equipment, and owner-occupied property
Freehold
property
£000
Leasehold
improvements
£000
Plant and
machinery
£000
Motor
vehicles
£000
Fixtures,
fittings & oce fittings & office
equipment
£000
Right-of-use
assets
£000
Total
£000
Cost
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
Retirement of fully depreciated assets – – (83) – (687) – (770)
Additions 116 – 283 – 738 3 1,140
At 31 March 2023 2,406 59 647 32 1,691 875 5,710
Depreciation
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)
Retirement of fully depreciated assets – – 83 – 687 – 770
Charge for the year (46) (4) (158) – (680) (106) (994)
At 31 March 2023 (682) (20) (210) – (340) (423) (1,707)
Net book value
At 31 March 2023 1,724 39 437 – 1,351 452 4,003
At 31 March 2022 1,654 43 312 – 1,293 555 3,857
c) Intangible assets
The intangible asset relates to the Big Yellow brand, which was acquired through the acquisition of Big Yellow Self Storage Company Limited
in 1999. The carrying value remains unchanged from the prior year as there is considered to be no impairment in the value of the asset.
Theasse asset has an indefinite life and is tested annually for impairment or more frequently if there are indicators of impairment.
d) Investment
The Group has an £0.6 million investment in Doncaster Security Operations Centre Limited, a company which provides out-of-hours monitoring
and alarm receiving services, including for the Group’s stores. The investment is carried at cost and tested annually for impairment.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC152
Financial Statements
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G2021 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 nin the note below:
Armadillo 1 Armadillo 2 Total
31 March 2023
£000
31 March 2022
£000
31 March 2023
£000
31 March 2022
£000
31 March 2023
£000
31 March 2022
£000
At the beginning of the year – 8,698 – 5,022 – 13,720
Share of results (see below) – 2,413 – 1,264 – 3,677
Dividends – (211) – (224) – (435)
Acquisition of remaining interest – (10,900) – (6,062) – (16,962)
Share of net assets – – – – – –
The figures below show the trading results of Armadillo, and the Group’s share of the results up to the point of acquisition of the remaining
interest in the Partnerships on 1 July 2021.
Armadillo 1
1 April 2021 to 30
June 2021
£000
Armadillo 2
1 April 2021 to 30
June 2021
£000
Income statement (100%)
Revenue 3 ,170 1,876
Cost of sales (1,601) (793)
Administrative expenses (126) (45)
Operating profit 1,443 1,038
Goodwill write-o-off (982) (1,849)
Gain on the revaluation of investment properties 4,888 2,795
Net interest payable (274) (183)
Current and deferred tax 6,988 4,519
Profit attributable to shareholders 12,063 6,320
Dividends paid (1,054) (1,120)
Retained profit 11,009 5,200
Group share (20%)
Operating profit 289 208
Goodwill write-o-off (196) (370)
Gain on the revaluation of investment properties 978 559
Net interest payable (55) (37)
Current and deferred tax 1,397 904
Profit attributable to shareholders 2,413 1,264
Dividends paid (211) (224)
Retained profit 2,202 1,040
Associates’ net assets – –
Please see the accounts for the year ended 31 March 2022 for full disclosure of the acquisition.
Annual Report and Accounts 2023 Big Yellow Group PLC 153
Strategic Report Governance Report Financial Statements
15. Valuation of investment property
Deemed cost
£000
Revaluation on
deemed cost
£000
Valuation
£000
Freehold stores
At 31 March 2022 908,266 1,392,733 2,300,999
Transfer from investment property under construction 28,141 11,147 39,288
Transfer from leasehold stores 1,182 2,843 4,025
Movement in year 40,285 34,018 74,303
At 31 March 2023 977, 874 1,440,741 2,418,615
Leasehold stores
At 31 March 2022 21,732 19,468 41,200
Transfer to freehold stores (1,182) (2,843) (4,025)
Movement in year 274 (6,424) (6,150)
At 31 March 2023 20,824 10,201 31,025
Total of open stores
At 31 March 2022 929,998 1,412,201 2,342,199
Transfer from investment property under construction 28,141 11,147 39,288
Movement in year 40,559 27, 59 4 68,153
At 31 March 2023 998,698 1,450,942 2,449,640
Investment property under construction
At 31 March 2022 211, 853 73,547 285,400
Transfer to investment property (28,141) (11,147) (39,288)
Movement in year 72,063 (57,455) 14,608
At 31 March 2023 255,775 4,945 260,720
Valuation of all investment property
At 31 March 2022 1,141,851 1,485,748 2,627,599
Movement in year 112,622 (29,861) 82,761
At 31 March 2023 1,254,473 1,455,887 2,710,360
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 2023 by external valuers, Jones Lang Lasalle (“JLL”).
TheValuation haThe Valuation has been prepared in accordance with the version of the RICS Valuation – Global Standards (incorporating the International
Valuation Standards) and the UK national supplement (“the Red Book”) current as at the valuation date. The valuation of each of the investment
properties and the investment properties under construction has been prepared on the basis of either Fair Value or Fair Value as a fully equipped
operational entity, having regard to trading potential, as appropriate.
The valuation has been provided for financial reporting purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book.
IncoIn compliance with the disclosure requirements of the Red Book, JLL have confirmed that:
– this is JLL’s second 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leis lessthss than 5%; and
– the fee payable to JLL is a fixed amount per asset and is not contingent on the appraised value.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC154
Financial Statements
15. Valuation of investment property continued
The self storage properties have been valued on the basis of Fair Value as fully equipped operational entities, having regard to trading potential.
Due to the specialised nature and use of the buildings the approach is to adopt a profits method of valuation in an explicit Discounted Cash Flow
calculation and then consider the results in the context of recent comparable evidence of transactions in the sector.
The profits method requires an estimate of the future cash flow that can be generated from the use of the building as a self storage facility,
assuming a reasonably eonably efficient operator. Judgements are made as to the trading potential and likely long term sustainable occupancy.
Stableocle 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 diefferences 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 dild differ. JLL state that in current market conditions they are of the view that there could be
apora 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 od 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 108 trading stores (both freeholds and leaseholds) open at 31 March 2023 averages 88% (31 March 2022: 88%).
The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.
C. The future rental growth incorporated into the valuation averages 2.6% per annum (2022: 2.8% per annum)
D. The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for asset types such
as industrial, distribution and retail warehousing, yields for other trading property types such as student housing and hotels, bank base rates,
ten-year money rates, inflation and the available evidence of transactions in the sector. The valuation included in the accounts assumes rental
growth in future periods. The net initial yield for the 108 stores is 5.3% (31 March 2022: 5.2%). The weighted average exit capitalisation rate
adopted (for both freeholds and leaseholds) is 5.6% (31 March 2022: 5.5%).
E. The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that reflects the risk
associated with each asset. The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 7.1% (31 March 2022: 7.1%).
F. Purchaser’s costs of 6.8% have been adopted reflecting current progressive Stamp Duty Land Tax rates.
Short leasehold
The same methodology has been used as for freeholds, but the exit capitalisation rate is adjusted to reflect the unexpired lease term at exit.
Theavee average unexpired term of the Group’s six short leasehold properties is 12.2 years (31 March 2022: 14.0 years unexpired).
Annual Report and Accounts 2023 Big Yellow Group PLC 155
Strategic Report Governance Report Financial Statements
15. Valuation of investment property continued
Sensitivities
As noted in ‘Critical accounting estimates and judgements’ on page 146 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de3 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 oy be offset by an increase in yield, resulting in no net impact on the valuation. A sensitivity
analysis showing the impact on the investment property valuation of changes in yields and stable occupancy is shown below:
Impact of a change in
capitalisation rates
Impact of a change in
stabilised occupancy assumption
25 bps decrease 25 bps increase 1% increase 1% decrease
Reported Group 4.7% (4.3%) 1.1% (1.2%)
A sensitivity analysis has not been provided for a change in the rental growth rate adopted as there is a relationship between this measure and
the discount rate adopted. So, in theory, an increase in the rental growth rate would give rise to a corresponding increase in the discount rate and
the resulting value impact would be limited.
Investment properties under construction
JLL have valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection
expected for the store at opening and after allowing for the outstanding costs to take each scheme from its current state to completion and full
fit-out. JLL have allowed for holding costs and construction contingency, as appropriate. Five of the schemes valued do not yet have planning
consent and JLL have reflected the planning risk in their valuation. The cost to complete for the investment property under construction amounts
to £217 million.
Valuation assumption for purchaser’s costs
The Group’s investment property assets have been valued for the purposes of the financial statements after deducting notional weighted
average purchaser’s cost of 6.8% on the net value, as if they were sold directly as property assets. The valuation is an asset valuation which
isenis 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 dicfficult 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operr 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 2023 of £2,815 million (£104.6 million higher than the value recorded in the financial statements) translating
to56.to 56.5 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 13).
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC156
Financial Statements
16. Trade and other receivables
31 March 2023
£000
31 March 2022
£000
Current
Trade receivables 5,181 4,763
Other receivables 209 949
Prepayments and accrued income 2,924 2,044
8,314 7,75 6
Trade receivables are net of a bad debt provision of £1,070,000 (2022: £563,000). The Directors consider that the carrying amount of trade
andother recand 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nois 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cera 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 £779,000 (2022: £713,000) which are past due at
therthe 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 16 days past due (2022: 18 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 o a traff a trade receivable when there is information indicating that the debtors are in severe financial dicfficulty and there
isnoris 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 2023 Big Yellow Group PLC 157
Strategic Report Governance Report Financial Statements
16. Trade and other receivables continued
The following table details the risk profile of trade receivables based on the Group’s provision matrix:
Year ended 31 March 2023 Not past due <31 days 31-45 days >45 days Total
Expected credit loss rate (%) 0.2% 16.2% 19.9% 100% 17.1 %
Gross carrying amount (£000) 4,413 850 84 904 6,251
Lifetime ECL (£000) (11) (138) (17) (904) (1,070)
Net trade receivables at 31 March 2023 4,402 712 67 – 5,181
Year ended 31 March 2022 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
The above balances are short term and therefore the diifference between the book value and the fair value is not significant. Consequently,
thesehase have not been discounted.
Movement in the credit loss allowance
2023
£000
2022
£000
Balance at the beginning of the year 563 223
Credit loss allowance consolidated on Armadillo acquisition – 41
Amounts provided in year 826 463
Amounts written o as uncoff as uncollectible (319) (164)
Balance at the end of the year 1,070 563
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 2023
£000
31 March 2022
£000
Current
Trade payables 4,208 5,705
Other payables 18,199 13,762
Accruals and deferred income 34,868 27, 88 2
57,2 75 47, 34 9
The Group has financial risk management policies in place to ensure that all payables are paid within the credit terms. The Directors consider
thecarrthe 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 2023 was £17.3 million, an increase of 9% from
31March 231 March 2022 (£15.8 million). This reflects the growth in the Group’s revenue during the year.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC158
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.
With the exception of derivative instruments which are classified as a financial liability at fair value through the statement of comprehensive
income, financial liabilities are categorised under amortised cost. The Group has the following classes of financial assets:
– Trade and other receivables – trade receivables are initially recognised at transaction price. Other receivables are initially recognised at
fair value. Subsequently these assets are measured at amortised cost using the eeffective interest method, less provision for expected
credit losses.
– Cash and cash equivalents – cash and cash equivalents represent only liquid assets with maturity of 90 days or less. Bank overdrafts that
cannot be oe offset against other cash balances are shown with borrowings in current liabilities on the balance sheet. Cash and cash
equivalents are also classified as amortised cost. They are subsequently measured at amortised cost. Cash and cash equivalents include
cash in hand, deposits at call with banks, and other short term highly liquid investments with original maturities of three months or less.
Exposure to credit and interest rate risks arise in the normal course of the Group’s business. Derivative financial instruments are used to manage
exposure to fluctuations in interest rates but are not employed for speculative purposes.
A. Balance sheet management
The Group’s Board reviews the capital structure on an ongoing basis. As part of this review, the Board considers the cost of capital and
therthe 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Grthe Group’s gearing ratio.
The gearing ratio at the year-end is as follows:
2023
£000
2022
£000
Debt (494,927) (420,435)
Cash and cash equivalents 8,329 8,605
Net debt (486,598) (411,830)
Balance sheet equity 2,182,446 2,184,375
Net debt to equity ratio 22.3% 18.9%
B. Debt management
The Group currently borrows through a senior term loan, secured on 50 self storage assets, a loan with Aviva Commercial Finance Limited
secured on a portfolio of 20 self storage assets, a £120 million loan from M&G Investments Limited secured on a portfolio of 15 self
storage assets. The Group also has a $225 million shelf facility available from Pricoa Private Capital (see note 19). Borrowings are arranged
to ensure an appropriate maturity profile and to maintain short-term liquidity. Funding is arranged through banks and financial institutions
with whom the Group has a strong working relationship.
C. Interest rate risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed
by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts.
Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies
are applied, by either positioning the balance sheet or protecting interest expense through dierough different interest rate cycles.
Annual Report and Accounts 2023 Big Yellow Group PLC 159
Strategic Report Governance Report Financial Statements
18. Financial instruments continued
At 31 March 2023 the Group had one interest rate derivative in place – £35 million fixed at 0.88% (excluding the margin on the underlying
debt instrument) until June 2023.
Under interest rate swap contracts, the Group agrees to exchange the diefference between fixed and floating rate interest amounts
calculated onated 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deate 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disd 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Groe Group settles the dihe 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compf comprehensive income. A reconciliation of the movement in derivatives is provided in the table below:
2023
£000
2022
£000
At 1 April 885 (475)
Fair value of Armadillo derivatives on acquisition of remaining interest – (29)
Receipt from cancellation of interest rate derivatives (436) –
Fair value movement in the year (133) 1,389
At 31 March 316 885
The interest rate derivative asset is shown within current assets at the year end, as the interest rate derivative expires within 12 months
of the balance sheet date.
The tables below reconcile the opening and closing balances of the Group’s finance related liabilities for the current and prior year:
Financial liabilities measured
atamortised costat amortised cost
Financial
liabilities
measured at
fairvfair value
Total
£000
Loans
£000
Obligations
under lease
liabilities
£000
Interest rate
derivatives
£000
At 1 April 2022 (420,435) (20,676) 885 (440,226)
Acquisition of Oxford freehold – 1, 671 – 1, 671
Cash movement in the year (74,492) 1,267 (436) (73,661)
Lease variations – (1,958) – (1,958)
Fair value movement – – (133) (133)
At 31 March 2023 (494,927) (19,696) 316 (514,307)
The die difference between the loans balance above and the balance sheet is loan arrangement fees of £2,357,000.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC160
Financial Statements
18. Financial instruments continued
Financial liabilities measured
atamat amortised cost
Financial
liabilities
measured at
fairvalueair value
Total
£000
Loans
£000
Obligations
underler lease
liabilities
£000
Interest rate
derivatives
£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
Lease variations – (1,214) – (1,214)
Fair value movement – – 1,389 1,389
At 31 March 2022 (420,435) (20,676) 885 (440,226)
The die difference between the loans balance above and the balance sheet is loan arrangement fees of £2,455,000.
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MarcAt 31 March 2023, 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 £753,000 (2022: reduced adjusted profit before tax by £493,000) 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 £753,000 (2022: increased adjusted
profit before tax by £493,000). The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings,
net of interest rate swaps, at the year end.
The Group’s sensitivity to interest rates has increased during the year, following the increase in the amount of floating rate debt. The Board
monitors closely the exposure to the floating rate element of our debt.
E. Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of Directors, 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deis 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 161
Strategic Report Governance Report Financial Statements
18. Financial instruments continued
H. Financial maturity analysis
In respect of interest-bearing financial liabilities, the following table provides a maturity analysis for individual elements.
2023 Maturity
Total
£000
Less than
one year
£000
One to
two years
£000
Two to
five years
£000
More than
five years
£000
Debt
Aviva loan 158,927 3,159 3,317 7, 451 145,000
M&G loan payable at variable rate 85,000 – – – 85,000
M&G loan fixed by interest rate derivatives 35,000 – – – 35,000
Bank loan payable at variable rate 216,000 – 216,000 – –
Total 494,927 3,159 219,317 7, 451 265,000
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
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Grthe Group’s receivables at amortised cost are set out in note 16. The amounts are presented net of provisions for doubtful receivables,
andallowancand 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carves 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prthe priority of the inputs to the valuation technique in accordance with IFRS 7. The hierarchy gives the highest priority to quoted prices
inacin active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used
tomeasto measure fair value fall within dierfferent levels of the hierarchy, the category level is based on the lowest priority level input that
issigis 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.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC162
Financial Statements
18. Financial instruments continued
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:
2023
Trade and
otherpayabother payables
£000
Interest
rateswrate swaps
£000
Borrowings
andintereand interest
£000
Obligations under
lease liabilities
£000
Total
£000
From five to twenty years – – 278,104 21,766 299,870
From two to five years – – 40,726 4,101 44,827
From one to two years – – 237,652 2,048 239,700
Due after more than one year – – 556,482 2 7,915 584,397
Due within one year 22,407 (289) 26,566 2,048 50,732
Total 22,407 (289) 583,048 29,963 635,129
2022
Trade and
otherpayable payables
£000
Interest
rateswape swaps
£000
Borrowings
andintand 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
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.
2023
Borrowings
£000
Interest
£000
Unamortised
borrowing costs
£000
Borrowings
andintereand interest
£000
From five to twenty years 265,000 11,316 1,788 278,104
From two to five years 7, 451 33,275 – 40,726
From one to two years 219,317 17, 76 6 569 237,652
Due after more than one year 491,768 62,357 2,357 556,482
Due within one year 3,159 23,407 – 26,566
Total 494,927 85,764 2,357 583,048
2022
Borrowings
£000
Interest
£000
Unamortised
borrowing costs
£000
Borrowings
andintand 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
Annual Report and Accounts 2023 Big Yellow Group PLC 163
Strategic Report Governance Report Financial Statements
19. Borrowings
Secured borrowings at amortised cost
31 March 2023
£000
31 March 2022
£000
Current liabilities
Aviva loan 3,159 3,008
3,159 3,008
Non-current liabilities
Bank borrowings 216,000 99,000
Armadillo loans – 39,500
Aviva loan 155,768 158,927
M&G loan 120,000 120,000
Unamortised loan arrangement costs (2,357) (2,455)
Total non-current borrowings 489,411 414,972
Total borrowings 492,570 417,980
The weighted average interest rate paid on the borrowings during the year was 4.2% (2022: 2.8%).
The Group has £24 million in undrawn committed bank borrowing facilities at 31 March 2023, which expire after between one and two years
(2022: £141 million expiring after between two and three years).
The Group has a £158.9 million fixed rate loan with Aviva Commercial Finance Limited, expiring in September 2028. The loan is secured over
apora portfolio of 20 freehold self storage centres. The annual fixed interest rate on the loan is 3.4%. The loan has an amortising element
of£13.9miof £13.9 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mara margin of 1.25%.
The Armadillo loans were repaid during the year using the RCF bank facility.
The Group has a £120 million loan with M&G Investments Limited, with a bullet repayment in September 2029. The loan is secured over a portfolio
of 15 freehold self storage centres.
In addition to the facilities above, during the year, the Group signed a $225 million credit approved shelf facility with Pricoa Private Capital
(“Pricoa”), to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of £10 million over the next two and a half years
with terms of between 7 and 15 years at short notice, typically 10 days.
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 repaid the Armadillo debt facilities during the year (£39.5 million drawn). The movement has been shown net in the cash
flow statement. The other Group loans are not revolving, and any movements in those loans are disclosed in a footnote to note 26b.
The Group was in compliance with its banking covenants at 31 March 2023 and throughout the year. The principal covenants are summarised
inthe tin the table below:
Covenant Covenant level At 31 March 2023
Consolidated EBITDA Minimum 1.5x 7.2x
Consolidated net tangible assets Minimum £250m £2,182.4m
Bank loan interest cover Minimum 1.75x 9.1x
Aviva loan interest service cover ratio Minimum 1.5x 5.9x
Aviva loan debt service cover ratio Minimum 1.2x 3.8x
M&G interest cover Minimum 1.5x 4.9x
The Consolidated EBITDA covenant is calculated by dividing the consolidated EBITDA generated by the Group’s stores by the Group’s consolidated
net finance costs.
The bank loan interest cover, the Aviva loan interest service cover ratio and the M&G interest cover covenants are calculated by dividing
theEthe EBITDA generated by each loan’s security pool by the interest payable for each loan for each defined time period. The Aviva loan debt
servicecoe cover ratio is calculated by taking the EBITDA generated by the Aviva security pool and dividing by the Aviva loan interest payable
andfaciliand facility amortisation.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC164
Financial Statements
19. Borrowings continued
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 2023
Gross financial liabilities 494,927 301,000 193,927 4.7% 4.8 years 3.9 years
At 31 March 2022
Gross financial liabilities 420,435 197, 15 0 223,285 3.1% 4.6 years 3.4 years
All monetary liabilities, including short-term receivables and payables are denominated in sterling. The weighted average interest rate includes
the effect of the Group’s interest rate derivatives. The Directors have concluded that the carrying value of borrowings approximates to its fair value.
Narrative disclosures on the Group’s policy for financial instruments are included within the Strategic Report and in note 18.
20. Deferred tax
Deferred tax assets in respect of IFRS 2 £0.1 million (2022: £0.1 million), corporation tax losses £6.3 million (2022: £6.5 million), capital
allowances in excess of depreciation £0.2 million (2022: £0.3 million) and capital losses £2.1 million (2022: £2.1 million) in respect of the
non-REIT taxable business have not been recognised as it is not considered probable that suufficient taxable profits will arise in the relevant
taxable entity. The unused tax losses can be carried forward indefinitely.
21. Obligations under lease liabilities
Minimum lease payments
Present value of minimum
leasepaymentlease payments
2023
£000
2022
£000
2023
£000
2022
£000
Amounts payable under lease liabilities:
Within one year 2,048 1,989 2,020 1,958
Within two to five years inclusive 6,149 7, 4 21 5,652 6,651
Greater than five years 21,766 22,765 12,024 12,067
29,963 32 ,175 19,696 20,676
Less: future finance charges (10,267) (11,499)
Present value of lease liabilities 19,696 20,676
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.
Annual Report and Accounts 2023 Big Yellow Group PLC 165
Strategic Report Governance Report Financial Statements
22. Share capital
Called up, allotted, and fully paid
2023
£000
2022
£000
Ordinary shares of 10 pence each 18,427 18,397
Movement in issued share capital
Number of shares at 31 March 2021 175,880,470
Issue of shares – placing 7, 751 , 93 8
Exercise of share options – Share option schemes 334,970
Number of shares at 31 March 2022 183,967,378
Exercise of share options – Share option schemes 298,595
Number of shares at 31 March 2023 184,265,973
The share capital of the Company consists only of fully paid ordinary shares with a nominal (par) value of £0.10 per share. There are no
restrictions on the ability of shareholders to receive dividends, nor on the repayment of capital. All ordinary shares are equally eligible to receive
dividends and the repayment of capital in accordance with the Company’s Articles of Association and represent one vote at shareholders’
meetings of the Company.
At 31 March 2023 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periise periodexpod expires
Number of
ordinary shares
2023
Number of
ordinary shares
2022
29 July 2014 nil p** 29 July 2017 29 July 2024 – 830
21 July 2015 nil p** 21 July 2018 21 July 2025 989 1,989
22 July 2016 nil p** 22 July 2019 21 July 2026 1,944 2,944
2 August 2017 nil p** 2 August 2020 2 August 2027 5,809 5,809
13 March 2018 675.4p* 1 April 2021 1 April 2022 – 1,599
24 July 2018 nil p** 24 July 2021 24 July 2028 54,441 96,002
11 March 2019 749.9p* 1 April 2022 1 April 2023 – 46,996
19 July 2019 nil p** 19 July 2022 19 July 2029 170,545 353,920
2 March 2020 947.0p 1 April 2023 1 April 2024 43,016 48,241
5 August 2020 nil p** 5 August 2023 5 August 2030 372,757 398,146
1 March 2021 903.2p* 1 April 2024 1 April 2025 81,216 86,670
22 July 2021 nil p** 22 July 2024 22 July 2031 300,444 319,922
8 August 2022 1060.3p* 8 August 2025 8 February 2026 72,429 –
21 July 2022 nil p** 21 July 2025 21 July 2032 443,218 –
1,546,808 1,363,068
* 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
(2022: 1,122,907), and no shares are held in treasury.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC166
Financial Statements
23. Share-based payments
The Company has three equity share-based payment arrangements, namely an LTIP scheme (with approved and unapproved components),
anEmpan 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 £3,735,000 (2022: £3,390,000).
Equity-settled share option plans
Since 2004 the Group has operated an Employee Share Save Scheme (“SAYE”) which allows any employee who has more than six months service
to purchase shares at a 20% discount to the average quoted market price of the Group shares at the date of grant. The associated savings
contracts are three years at which point the employee can exercise their option to purchase the shares or take the amount saved, including
interest, in cash. The scheme is administered by Globalshares.
On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group’s Long Term Incentive Plan (“LTIP”).
TheawThe awards are conditional on the achievement of challenging performance targets as described on page 103 of the Remuneration Report.
Theawae awards granted in 2019 vested to 90.1% of their potential. The weighted average share price at the date of exercise for options exercised
inthe yin the year was £13.13 (2022: £14.84).
LTIP scheme
2023
No. of options
2022
No. of options
Outstanding at beginning of year 1,179,562 1,223,533
Granted during the year 504,431 382,433
Lapsed during the year (83,846) (176,404)
Exercised during the year (250,000) (250,000)
Outstanding at the end of the year 1,350,147 1,179,562
Exercisable at the end of the year 107,656 124,901
The weighted average fair value of options granted during the year was £2,795,000 (2022: £1,742,000).
Participants pay the nominal value of the shares when exercising options under the LTIP scheme.
Options outstanding at 31 March 2023 had a weighted average contractual life of 7.9 years (2022: 8.1 years).
Employee Share Save Scheme (“SAYE”)
2023
No. of options
2023
Weighted average
exercise price
(£)
2022
No of options
2022
Weighted average
exercise price
(£)
Outstanding at beginning of year 183,506 8.75 281,708 8.15
Granted during the year 72,715 10.60 – –
Forfeited during the year (10,965) 9.29 (13,232) 8.92
Exercised during the year (48,595) 7.50 (84,970) 6.76
Outstanding at the end of the year 196,661 9.71 183,506 8.75
Exercisable at the end of the year – –
Options outstanding at 31 March 2023 had a weighted average contractual life of 1.7 years (2022: 1.6 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.
Annual Report and Accounts 2023 Big Yellow Group PLC 167
Strategic Report Governance Report Financial Statements
23. Share-based payments continued
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Julin July2018. Ty 2018. The vesting criteria and scheme mechanics are set out in the Directors’ Remuneration Report.
24. Capital commitments
At 31 March 2023 the Group had £6.1 million of amounts contracted but not provided in respect of the Group’s properties (2022: £20.9 million
ofcapiof capital commitments).
25. Events after the balance sheet date
There are no reportable post balance sheet events.
26. Cash ow notesCash flow notes
a) Reconciliation of profit after tax to cash generated from operations
Note
2023
£000
2022
£000
Profit after tax 73,332 69 7, 274
Taxation 1,977 1,602
Share of profit of associates – (3,677)
Other operating income 3 (2,185) –
Investment income (9) (1,412)
Finance costs 17, 027 10,604
Operating profit 90,142 704,391
Loss/(gain) on the revaluation of investment properties 14a, 15 29,861 (597,224)
Gain on disposal of investment property – (584)
Depreciation of plant, equipment, and owner-occupied property 14b 888 857
Depreciation of lease liability capital obligations 14a,14b 1,569 1,659
Employee share options 6 3,735 3,390
Cash generated from operations pre working capital movements 126,195 112,489
Increase in inventories (13) (71)
(Increase)/decrease in receivables (740) 1,550
Increase in payables 3,531 6,422
Cash generated from operations 128,973 120,390
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC168
Financial Statements
26. Cash ow notes continued
b) Reconciliation of net cash flow movement to net debt
Note
2023
£000
2022
£000
Net decrease in cash and cash equivalents in the year (276) (3,717)
Cash flow from increase in debt financing
(1)
(74,492) (32,235)
Change in net debt resulting from cash flows (74,768) (35,952)
Debt consolidated following Armadillo acquisition – (50,900)
Movement in net debt in the year (74,768) (86,852)
Net debt at the start of the year (411,830) (324,978)
Net debt at the end of the year 18A (486,598) (411,830)
(1)
Made up of a net increase of £117.0 million in the RCF facility, repayment of the Armadillo loans of £39.5 million and repayments of the
Aviva facility of £3.0 million (2022: made upofanep of a net reduction of £53.5 million in the RCF facility, an increase of £50 million in the M&G
facility, an increase of £50 million in the Aviva facility, repayments of the Aviva facility of£ty of £2.9 million, and repayments of the Armadillo
loans of £11.4 million).
In line with IAS 1.41, this disclosure note has been represented to provide further detail and consistency in both years.
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 tsed in this note.
Transactions with Armadillo
As described in note 14, the Group had a 20% interest in Armadillo Storage Holding Company Limited and a 20% interest in Armadillo Storage
Holding Company 2 Limited. The Group acquired the remaining interest in both companies that it did not own on 1 July 2021. From this date,
theCthe 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 in 2021, the Group entered into transactions with the Companies on normal commercial terms and earned management fees
of £238,000 from Armadillo 1 and £87,000 from Armadillo 2.
Key management personnel remuneration
Key management personnel are made up of our Executive and Non-Executive Directors, and in the current year following changes in the
composition of the Board, a key Director of our main trading subsidiaries. The remuneration of the key management personnel of the Group,
isseis setout out below in aggregate. Further information on the remuneration of individual Directors is found in the audited part of the Directors’
Remuneration Report on pages 104 to 111.
31 March 2023
£000
31 March 2022
£000
Short term employee benefits 1,989 1,923
Post-employment benefits 91 87
Share-based payments 3,253 2,813
5,333 4,823
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 £16,000 (2022: £10,000).
Annual Report and Accounts 2023 Big Yellow Group PLC 169
Strategic Report Governance Report Financial Statements
27. Related party transactions continued
London Children’s Ballet
The Group signed a Section 106 agreement with Wandsworth Council relating to the development of our Battersea store, which required the Group
to provide cultural space to Wandsworth Borough Council. In 2021, the Group granted a twenty year lease over this space to London Children’s
Ballet at a peppercorn rent, who in turn have agreed to enter into a Social Agreement with Wandsworth Borough Council coterminous with the
lease. Jim Gibson is the Chairman of Trustees of the London Children’s Ballet. London Children’s Ballet rent storage space from the Group on
normal commercial terms, amounting to £3,000 during the year (2022: £3,000). The Group sponsored a performance of the London Children’s
Ballet during the year, amounting to £8,000 (2022: £nil).
Doncaster Security Operations Centre Limited (“DSOC”)
The Group has invested £588,000 in DSOC. DSOC provided alarm and CCTV monitoring services to the Group under normal commercial terms
during the year, amounting to £301,000 (2022: £281,000).
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 oided offsetting tree planting services in respect of our online packing material sales, under normal commercial terms
during the period, amounting to £8,000 (2022: £3,000).
Ukrainian Sponsorship Pathway UK
Nicholas Vetch and Heather Savory are trustees of a charity called Ukrainian Sponsorship Pathway UK (“USPUK”) to help Ukrainians displaced
bythby the war to travel to the UK as part of the “Homes for Ukraine” scheme. The charity has set up ot up offices in Warsaw and Krakow and is one of the
fewthaw that has been recognised for this purpose by the UK Government. We are proud to be financial supporters of this new charity and the Board
approved a donation which was made in May 2022 of £50,000 (2022: £nil).
No other related party transactions took place during the years ended 31 March 2023 and 31 March 2022.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC170
Financial Statements
Note
2023
£000
2022
£000
Non-current assets
Plant, equipment, and owner-occupied property 30a 1,681 1,721
Investment in subsidiary companies 30b 35,085 31,350
Amounts owed by Group undertakings 31 800,436 764,740
837, 202 79 7, 811
Current assets
Trade and other receivables 31 853 148
Cash and cash equivalents 1 1
854 149
Total assets 838,056 79 7, 9 60
Current liabilities
Trade and other payables 32a (6,806) (5,829)
Obligations under lease liabilities (30) (29)
(6,836) (5,858)
Non-current liabilities
Obligations under lease liabilities (44) (69)
Bank borrowings 32b (215,431) (98,451)
(215,475) (98,520)
Total liabilities (222,311)
(104,378)
Net assets 615,745
693,582
Equity
Share capital 22 18,427 18,397
Share premium account 290,857 289,923
Reserves 28 306,461 385,262
Equity shareholders’ funds 615 ,745 693,582
The Company reported a loss for the financial year ended 31 March 2023 of £2.6 million (2022: profit of £258.8 million). The financial statements
andthe income statement were approved by the Board of Directors and authorised for issue on 22 May 2023. 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.
Company Balance Sheet
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 171
Strategic Report Governance Report 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 2022 18,397 289,923 74,950 1,795 309,536 (1,019) 693,582
Total comprehensive loss for the year – – – – (2,576) – (2,576)
Issue of share capital 30 934 – – – – 964
Dividend – – – – (79,960) – (79,960)
Credit to equity for equity-settled
share-basedpayments – – – – 3,735 – 3,735
At 31 March 2023 18,427 290,857 74,950 1,795 230,735 (1,019) 615 ,745
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 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 income 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 accompanying notes form part of the financial statements.
Company Statement of Changes in Equity
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC172
Financial Statements
28. (Loss)/prot 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 loss for the year attributable to equity shareholders dealt with in the financial statements of the Company
was£2.6 million (2022: profit of £258.8 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 eects of new but not yet eective 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.
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.
Bank borrowings
This is the Revolving Credit Facility Loan which is held by the Company. Please see note 19 for further information.
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.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC 173
Strategic Report Governance Report Financial Statements
30. Non-current assets
a) Plant, equipment, and owner-occupied property
Freehold
property
£000
Leasehold
improve-ments
£000
Fixtures,
fittings & oce
equipment
£000
IFRS 16
leases
£000
Total
£000
Cost
At 31 March 2022 2,212 46 9 174 2,441
Additions 29 – – 3 32
At 31 March 2023 2,241 46 9 177 2,473
Accumulated depreciation
At 31 March 2022 (635) (7) – (78) (720)
Charge for the year (43) (1) (2) (26) (72)
At 31 March 2023 (678) (8) (2) (104) (792)
Net book value
At 31 March 2023 1,563 38 7 73 1,681
At 31 March 2022 1,577 39 9 96 1,721
b) Investments in subsidiary companies
Investmentin
subsidiary
undertakings
£000
Cost
At 31 March 2022 31,350
Additions 3,735
At 31 March 2023 35,085
The Directors assessed the carrying value of the investment in subsidiary undertakings for indicators of impairment. There were
noindications ofimpairment.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC174
Financial Statements
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 oce 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 2023 are listed below:
Name of subsidiary Principal activity
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 1 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 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 Dormant
The Last Mile Company Limited Holding Company
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 prior year, and the Group is in the process of liquidating the company.
In addition, the Group has a 100% interest in Pramerica Bell Investment Trust Jersey, a trust registered in Jersey.
Annual Report and Accounts 2023 Big Yellow Group PLC 175
Strategic Report Governance Report Financial Statements
30. Non-current assets continued
Audit exemption statement
All subsidiary undertakings of Big Yellow Group PLC are included in the consolidated Financial Statements of the Group. The subsidiary
undertakings noted below are exempt from the Companies Act 2006 (the ‘Act’) requirements relating to the audit of their individual accounts
byvirtue of Section 479A of the Act, as Big Yellow Group PLC has guaranteed the liabilities of them under Section 479C of the Act. The members
ofthese companies have not required them to obtain an audit of their financial statements for the year ended 31 March 2023:
Name of subsidiary 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 (Wapping 2) Limited
Armadillo Storage One Limited BYRCo Limited
.Big Yellow Self Storage (GP) Limited BYSSCo Limited
Big Yellow (Battersea) Limited BYSSCo A Limited
The Big Yellow Construction Company Limited Kator Storage Limited
Big Yellow Holding Company Limited The Last Mile Company Limited
Big Yellow Nominee No. 1 Limited Quickstore Storage Limited
Big Yellow Nominee No. 2 Limited
Under paragraph 7 of SI 2008 No 569 Big Yellow Limited Partnership is exempt from the requirement under paragraph 4 of that SI to prepare their
annual accounts and reports, and have them audited, on the basis that the partnership is dealt with on a consolidated basis in the consolidated
financial statements of the Company.
31. Trade and other receivables
31 March
2023
£000
31 March
2022
£000
Non-current
Amounts owed by Group undertakings
800,436 764,740
Current
Prepayments and accrued income 853 148
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 the Directors have assessed for Expected Credit Losses and
concluded that it would be immaterial.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC176
Financial Statements
32. Creditors
a) Trade and other payables
31 March
2023
£000
31 March
2022
£000
Current (all due within one year)
Other payables 6,348 5,530
Accruals and deferred income 458 299
6,806 5,829
b) Bank borrowings
31 March
2023
£000
31 March
2022
£000
Bank loan 216,000 99,000
Unamortised loan arrangement costs (569) (549)
215,431 98,451
Annual Report and Accounts 2023 Big Yellow Group PLC 177
Strategic Report Governance Report Financial Statements
33. Glossary
Absorption The rate of growth in occupancy assumed within the external property valuations from the current occupancy level
totheassumed stable occupancy level.
Adjusted earnings 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.
Consolidated EBITDA Consolidated EBITDA calculated in accordance with the terms of the Group’s Revolving Credit Facility Agreement.
Debt Long-term and short-term borrowings, as detailed in note 19, excluding lease liabilities and debt issue costs.
Earnings per share (eps) Profit for the financial year attributable to equity shareholders divided by the average number of shares in issue during
thefinancial year.
EBITDA Earnings before interest, tax, depreciation, and amortisation.
EPRA The European Public Real Estate Association, a real estate industry body. This organisation has issued Best Practice
Recommendations with the intention of improving the transparency, comparability, and relevance of the published results
of listed real estate companies in Europe.
EPRA earnings The IFRS profit after taxation attributable to shareholders of the Company excluding investment property revaluations,
gains/losses on investment property disposals and changes in the fair value of financial instruments.
EPRA earnings per share EPRA earnings divided by the average number of shares in issue during the financial year, see note 12.
EPRA NTA per share EPRA NTA divided by the diluted number of shares at the year end.
EPRA net tangible asset value (EPRA NTA) IFRS net assets excluding the mark-to-market on interest rate derivatives, deferred taxation on property valuations where
itarises, and intangible assets. It is adjusted for the dilutive impact of share options.
Equity All capital and reserves of the Group attributable to equity holders of the Company.
Gross property assets The sum of investment property and investment property under construction.
Gross value added The measure of the value of goods and services produced in an area, industry, or sector of an economy.
Interest cover The ratio of operating cash flow divided by interest paid (before working capital movements, exceptional finance costs,
capitalised interest, and changes in fair value of interest rate derivatives). This metric is provided to give readers a clear
view of the Group’s financial position.
Like-for-like occupancy Excludes the closing occupancy of new stores acquired, opened, or closed in the current financial year in both the current
financial year and comparative figures. In 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and
the Armadillo stores.
Like-for-like store revenue Excludes the impact of new stores acquired, opened or stores closed in the current or preceding financial year in both
thecurrent year and comparative figures. In 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge,
andthe Armadillo stores.
LTV (loan to value) Net debt expressed as a percentage of the external valuation of the Group’s investment properties.
Maximum lettable area (MLA) The total square foot (sq ft) available to rent to customers.
Move-ins The number of customers taking a storage room in the defined period.
Move-outs The number of customers vacating a storage room in the defined period.
NAV Net asset value.
Net debt Gross borrowings less cash and cash equivalents.
Net initial yield The forthcoming year’s net operating income expressed as a percentage of capital value, after adding notional purchaser’s
costs pre administrative expenses.
Net operating income Store EBITDA after an allocation of central overhead.
Net operating income on stabilisation The projected net operating income delivered by a store when it reaches a stable level of occupancy.
Net promoter score (NPS) The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend
acompany’s products or services to others. The Company measures NPS based on surveys sent to all its move-ins
andmove-outs.
Notes to the Financial Statements continued
Year ended 31 March 2023
Annual Report and Accounts 2023 Big Yellow Group PLC178
Financial Statements
33. Glossary continued
Net Renewable Energy Positive Big Yellow’s strategy is that by 2030 the Group will generate as much renewable energy as it is able to across its store
portfolio and meet any remaining Scope 1 and Scope 2 emissions via the retirement of REGOs from osite energy generation.
Net rent per sq ft Storage revenue generated from in place customers divided by occupancy.
Net Zero Strategy The Group’s published strategy to have Net Zero Scope 1, 2 and 3 Emissions.
Non like-for-like stores Stores excluded from like-for-like metrics, as they were acquired, opened or closed in the current or preceding financial year.
In 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and the Armadillo stores.
Occupancy The space occupied by customers divided by the MLA expressed as a %.
Occupied space The space occupied by customers in sq ft.
Other storage related income Packing materials, insurance, and other storage related fees.
Pipeline The Group’s development sites.
Property Income Distribution (PID) A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt property rental
business, and which is taxable for UK-resident shareholders at their marginal tax rate.
REGO Renewable Energy Guarantees of Origin
REIT Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK rental
income and gains arising on UK investment property sales, subject to certain conditions.
REVPAF Total store revenue divided by the average maximum lettable area in the period.
Store EBITDA Store earnings before interest, tax, depreciation, and amortisation, see reconciliation in the portfolio summary.
Store revenue Revenue earned from the Group’s open self storage centres.
TCFD Task Force on Climate Related Financial Disclosure.
Total shareholder return (TSR) The growth in value of a shareholding over a specified period, assuming dividends are reinvested to purchase additional
units of shares.
Annual Report and Accounts 2023 Big Yellow Group PLC 179
Strategic Report Governance Report Financial Statements
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
2014
£m
Results
Revenue 188.8 171.3 135.2 129.3 125.4 116.7 109.1 101.4 84.3 72.2
Operating profit before gains
andlosses on property assets 120.0 106.6 81.5 80.0 76.7 70.9 65.3 59.9 48.4 39.5
Cash flow from operating activities 112.0 107. 1 76.7 73.6 72.2 63.0 56.0 55.5 42.4 32.8
Profit before taxation 75.3 698.9 265.8 93.4 126.9 134.1 99.8 112.2 105.2 59.8
Adjusted profit before taxation 106.0 96.8 74.6 71 .0 67. 5 61.4 54.6 49.0 39.4 29.2
Net assets 2,182.4 2,184.4 1,453.9 1,163.9 1,123.9 981.1 890.4 829.4 750.9 594.1
Diluted EPRA earnings pershare 56.5p 52.5p 42.4p 42.1p 41.4p 38.5p 34.5p 31.1p 27. 1 p 20.5p
Declared total dividend pershare 45.2p 42.0p 34.0p 33.8p 33.2p 30.8p 27.6p 24.9p 21.7 p 16.4p
Key statistics
Number of stores open** 108 105 78 75 74 74 73 71 69 66
Store MLA (000 sq ft) 6,292 6,098 4,930 4,688 4,622 4,631 4,551 4,464 4,344 4,170
Sq ft occupied (000)** 5,088 5,107 4,201 3,781 3,810 3,730 3,551 3,363 3,178 2,832
Occupancy (decrease)/ increase
inyear (000 sq ft)* (19) 906 420 (29) 80 179 188 185 346 200
Closing net rent per sq ft** £32.48 £29.92 £ 28.71 £28.15 £27.28 £26.74 £26.03 £25.90 £25.23 £24.85
Number of occupied rooms** 73,000 73,000 62,000 56,500 56,000 55,000 52,500 50,000 47, 25 0 41,800
Average number of employees
duringthe year** 465 427 370 361 347 335 329 318 300 289
* The occupancy growth in 2015, 2017, 2022 and 2023 includes the acquisition of existing stores.
** From 2022 this includes the Armadillo stores, which the Group acquired the remaining 80% of which it did not previously own on 1 July 2021.
Ten Year Summary
Annual Report and Accounts 2023 Big Yellow Group PLC180
Financial Statements
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Big Yellow Group PLC
2 The Deans, Bridge Road,
Bagshot, Surrey GU19 5AT
01276 470190
info@bigyellow.co.uk
Annual Report & Accounts 2023 Big Yellow Group PLC
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bigyellow.co.uk