Detailed Financial Analysis: Big Yellow Group PLC Cash Flow (2019)

This report offers a detailed analysis of Big Yellow Group PLC's financial performance, focusing on its cash flow statement for the year ending March 31, 2019. The analysis examines the company's operating, investing, and financing activities, providing insights into its financial health and investment suitability. The report delves into the specifics of cash inflows and outflows within each activity, comparing them to the previous year's figures. It highlights key financial metrics, such as operating profit, depreciation, employee share options, trade receivables and payables, interest paid, and tax payments. Furthermore, the report assesses the company's capital expenditures, including property purchases and investments in associates, as well as dividend receipts. The analysis concludes with an evaluation of Big Yellow Group PLC's overall financial position, liquidity, and profitability to determine its suitability as an investment, based on the provided financial data.

Contents
Introduction......................................................................................................................................
Big Yellow Group PLC Background...............................................................................................
Analysis of financial information of Big Yellow Group PLC (Statement of Cash Flows):............
Operating Activities.........................................................................................................................
Investing Activities..........................................................................................................................
Financing activities..........................................................................................................................
Suitability for investment...............................................................................................................
Conclusion.....................................................................................................................................
Bibliography..................................................................................................................................
APPENDIX....................................................................................................................................

Introduction
The report will focus on the Big Yellow Group PLC, which is a brand leader in self-storage
in the UK. This report will concentrate on the business activities of Big Yellow Group PLC
from the information obtained through their financial annual report and accounts in 2019.
Our main aim is to analyse the company cash flow statement for the year ending 31st March
2019 and examine how well the business has been doing financially through its main
transactions and its ability of handling cash in short and long-term. It will explain in detail
where the business is spending its money, if they are selling off their assets or buying more
assets. It will also show if the company paid their interest and dividend, made some
borrowing and repaying of loans on short term or long term.
A statement of cash flows is included as part of annual financial statements that corporate
business entities make available to shareholders and other users of that information. It is
divided into three different, which are operating, investing and financing. Along these three
categories, any major movements and net cash in or out flows in each activity are scrutinised,
evaluated and compared with its previous year.
Moreover, suitability for the investment in Big Yellow Group PLC is analysed to understand
the broader view of the company and whether investors should have confidence in liquidity
and profitability of the company.
Big Yellow Group PLC Background
Big Yellow Group Plc is self storage company which provide storage space on renting and it
is United Kingdom based organizations. Its headquarter based in Bagshot, England and this
company ranked as largest self storage entity in UK. Big Yellow Group Plc was founded in
1998 by Nicholas Vetch, and other people. In this organization, Philip Burks work as
property director from the duration of 1998 to 2007. After that, in 2007 organization
converted into real estate investment business and later entered in partnership with Pramerica
Real Estates Investors in order to open 25 new stores in Midlands, Scotland and England.
Currently Big Yellow Group Plc have more than 50,000 customers and they all are operate
from 99 storage facilities which included 25 proprietaries as Armadillo Self Storage where
Group has around 20% interest. In 2002, company listed in AIM but after that it listed in
FTSE 250 London Stock Exchange on 2002 where more than 450 people employs. After

some time, Big Yellow Group Plc own 12 new self- storage sites in which out of three have
planning consent and settable area for active platform which includes Armadillo that is 5.7
million sq feet. Fully construct building will supply around 6.5 million sq ft storage capacity.
Around 97 % hold by long leasehold or freehold and remain 3 % space for short leasehold.
Company's subsidiary such as Big Yellow Self Storage Company Limited is general partner
with Big Yellow Construction Company Limited which further engaged in construction
management. Holding Company of Big Yellow is engaged in property management and
another subsidiary Big Yellow (Battersea) Limited is occupied in self -storage.
Company's stores are very larger in comparison to its competitors and they are in profits
because of reachable location on main road. This largely contributed to their growth and
dominance of the local markets. Their main competitors are Bizspace Limited, Safestore
Holdings PLC and Lok’N Store Group PLC.
The Group's like-for- like revenue was up 4.2 % in comparison to previous year. Average rate
growth over the period was 1.6%, and at the date of these results net rent per sq ft is up 3.1%
since 1 April 2019.
For Big Yellow Group Plc, customer’s security is very essential because it is the only
organization of UK which placed alarm in every single room and each of one have unique
PIN code to access.
Desire of firm is to offer best services to their customers and also contributed to make their
organization one of the strongest brand in self -storage industry. Overall revenue of the
company from previous years was £ 125.4 million which further raise from £ 8.7 million and
£ 116.7 million.
Analysis of financial information of Big Yellow Group PLC
(Statement of Cash Flows):
The cash flow statement shows the cash outflows and the cash inflows over a period. It
measures how well the company generates cash to pay its debt obligations and fund its
operating expenses. It is vital to the survival of a business entity both in the long and the short
term.
The statement of cash flow used for Big Yellow Group PLC is based on the annual report
2019, where it shows that the company has £17.902m cash equivalent, which has increased
by £11.049m compared to 2018 (£68.53m). The main reason for this increase is enhanced
cash inflow from operating and financing activities.

This company is holding a considerable amount of cash which can be used by them to easily
fulfil their financial obligations. In the financial review section of strategic report, it has been
said that “The Group is strongly cash generative and draws down from its longer term
committed facilities as required to meet its obligations”.
Operating Activities
Operating activities are the principal revenue-producing activities of the entity. It begins with
profit before tax and is adjusted for various items which have been taken into account in
arriving at profit before tax, but which do not involve the movement of cash to arrive at cash
generated from operations. It is further adjusted to deduct interest paid and tax paid in the
year to arrive at net cash flow operations.
Operating Profit:
The table above shows the extract of operating activities from consolidated financial
statement for financial year 2018 & 2019.
The operating profit generated by Big Yellow Group Plc. in the year 2018 was 143206
thousand pounds which decreased in the year 2019 as 135560 thousand pounds. The reason
behind this decreasing profit is the increased maintenance cost of the organisational stores.
Depreciation has decreased by £17.0m compared to the previous year due to write off of
various assets such as fixtures, fittings and office equipment. The depreciation of finance
lease capital obligations has decreased by £34.0m due to an extinguishment of the acquired
freehold on its new Malden store.

As it can be seen from above table, employee share options are reduced in the year 2019. The
group makes payments to their employees in the form of shares as performance-based
incentives. These payments have reduced by £125.0m, the reason behind this reduction was
the variation of organisational policies and the change in number of full time employees.
The cash generated from operating activities after subtracting the non-cash items is £81,997m
in 2019.
Due to nature of the business, Big Yellow Group does not hold significant number of
inventories, there is a decrease of investments of £1m in 2019 due to the purchase of Malden
store.
Increase in Trade receivables for the year 2019 is £1874 thousand and this figure has been
enhanced from 2018 as in this year a total of £1352 thousand was increased against trade
receivables.
Trade payables in the year 2019 increased by £3.1m but due to increase in payments of
interest and tax payables this amount was decreased by 420 thousand pounds in 2018.
From the operating activities section of cash flow statement, it has been observed that interest
paid by the group in the year 2019 is £10021 thousand which was increased from the last year
as Big Yellow Group Plc. only paid £9724 thousand in 2018 against their interest obligations
This increase is principally due to their Manchester and Camberwell developments.
Cash flow of Big Yellow Group Plc for the year 2019 from operating activities was £ 71.8
million which further increases around 14% that is £ 63.0 million in comparison to previous
year.
Overall finance cost of company reduces around £ 7.76 million from £ 12.0 million in last
year. After that re-financing costs was £ 1.5 million incurred in prior year. Tax amount in
current year is £ 0.4 million and previous year company pay £ 0.6 million tax. Tax value of
current year indicate the increase in profits margin in residuary business. It has been more
than the value which is offset by deducting amount for tax purposes.
Investing Activities
The investing activities will include the acquisition and disposal of non-current assets from a
company’s investment. The marketable securities and buying and selling of property are
included in the investing cash flows and thus any changes in cash from investing are known
as “cash out” items (Investopedia, 2019). The investing activities of a business will depend
on the nature of the business.

Consolidated Company Cash Flow Statement
The group will need to spend money on assets to grow or maintain the business in the long
run so the negative balance is very much positive in its effect. The table above shows the
extract of investing activities from consolidated cash flow statement for financial year 2018
&2019.
Purchase or proceeds from sales of property plan and equipment (purchase of non-
current asset):
The capital expenditure and investment made are recorded as cash outflow. While, the sales
of investments are accounted as a positive cash flow.
The purchase of non-current assets (capital expenditure outflows) is £83 million in financial
year 2019.
From the financial review under strategic report of annual report 2019, it has been observed
that the major capital expenditure in 2019 was mainly due to construction capital expenditure
(£19 million), purchase of land for the new upcoming stores (£35 million), and acquisition of
the New Malden store and industrial estate (£ 29 million).
The table above reflects that the non-current assets are divided into three different categories;
interest in a leasehold property, investment property under construction, and investment on

property. Usually, the investing activities of the cash flow does not include investment on
property, but the big yellow group consider it as a purchase of non-current assets as a cash
out flow.
The table above shows that the cost of “investment property” and “investment property under
construction” is £35.78 million and £47.56 million respectively.
As the Group acquired freehold of Malden store it led to the annulment of interest in
leasehold property which is reflected in the table above as a credit of £31.3 million. When
evaluating cash flow, the revaluation of properties should be ignored because this amount
does impact the cash inflow or outflow of the company.
Proceeds on part disposal of investment property:
In the year 2019, there is no value against the disposal of investment property.
Capital good scheme:
Under the Capital Goods Scheme the Group has a receivable of £2.5 million receivable on
31st March 2019 in respect of payments as the VAT on self-storage was introduced on 1st
October 2012. As per the International Accounting Standards, using the Group’s average cost
of debt the debtor has been discounted to the net present value with £0.1 million of discount
unwounded through interest receivable. The Group has received £1.9 million in 2019 against
the receipts from Capital Goods Scheme but this amount has been decreased when compared
to the receipts from last year. The receivable is related to VAT recovery on store
development expenditure.
Investment in associates and dividend from associates:
As it can be seen from below table, the Big Yellow Group Plc. has made an investment in
Armadillo 1 and Armadillo 2 in 2019. The cost for the group is £900,000 as can be seen in
the consolidated cash flow statement.
As compared to the last year the dividend has increased by £104,000 that is received from the
associates. This is because of the fact that the Armadillo 1 and Armadillo 2 has paid £290,000
and £260,000 to the group respectively as dividends.

As a consolidated adjustment, the subsidiary dividend will be cancelled which is required to
be paid to the parent company. It is a good clue that the group reports a negative amount of
cash flow from investing activities, it means the business is investing in capital assets. There
is a major difference between the cash outflows of 2018 and 2019 because more non-current
assets were purchased. The investment strategy of the group does not indicate the strength or
weakness in the cash flow of the company. The main thing is how the company invests in
purchases that could help it in the future to increase its cash flow. The cash flow for 2018 and
2019 cannot be compared in this section but the increase in dividend from the association
reflects growth and a positive sign for the group.
Financing activities
The section of financing activities in a cash flow statement represents net amount of funding
which an organisation generates in a year (Baik and et.al., 2016). The amount generated from
these activities are used to finance the business. Financing activities are the operations which
an organisation undertake to achieve their economic goals and objectives; such activities
include issue of share capital, sale of shares, dividend payment and many more. In the present
case of Big Yellow Group Plc., which is a self-storing organisation is accompanying various
financing activities for their business operations. These activities include issue of share
capital, equity dividend payment etc. All these activities are analysed in this question.
Consolidated Company Cash Flow Statement (Financing)
In the table above, we have a consolidated cash flow statement for two years (2018 & 2019).
As we can see from the above table that there is huge difference in the cash inflows and
outflows between 2018 and 2019. The major reason behind this difference is the capital
which has been raised by this company by issuing share capital to the public. It is evident that
growth cannot be judged only on the basis of financing activities but this company can be
considered as an effectively growing enterprise as they are generating more capital and
paying high dividends.
ISSUE OF SHARE CAPITAL

In a situation, when a public company intends to increase its capital, they consider issuance
of their share of ownership to the public; that situation is known as issue of share capital . If
an enterprise is willing to acquire funding for business activities, then it can share the
ownership with external parties for which shares are issued in the market. Big yellow Group
Plc has issued shares for the purpose of funding future operations.
From the financing cash flow table, it has been analysed that in 2019, total amount of issued
shares were £65962000. In order to raise the capital of the organisation, this entity has issued
shares in 2019 against which they have raised their issued capital by £65,962000. This
amount is the biggest reason of high cash flow from financing activities of this company.
The reason behind issuing such high value shares is the operational requirements. The
proceeds for the issued shares are utilised by the company to acquire new development sites
in attractive locations which can allow the business to continue deliver a contribution to
earnings from external growth along with maintaining a strong capital structure. It reflects
that Big Yellow company has reliable capital to effective work in market so it is a viable time
to invest in this company.
From the above table, it has been observed that ordinary shares of 16667are issued in 2019.
PAYMENT OF FINANCE LEASE LIABILITIES
For effective execution of all the operations different loans are taken by the organisations
which are paid later, these loans are referred as payment of finance lease liabilities. The
amount of this activity is recorded in financing activities of the organisation and resulted in
outflow of funds from the company. Loans are provided by the external stakeholders such as
banks which are required to be paid off after a certain period of time therefore it is paid by
the enterprise in current year as its duration was over.

It has been ascertained that in year of 2018, this group paid £1109000 against the finance
lease liabilities which increased to £1075000. This increased amount reflects that this
company is efficient when it comes to pay its debts which represents it as a reliable company.
From the cash flow statement of this company, apart from the new loans taken by the
company, there are few old loans which are now paid in the year of 2019. These loans are
repaid against the loan taken in precious years which are transacted as “Payment of finance
lease liabilities” in CFS of Big Yellow Group Plc. Total amount of these loans repaid is
£1075000 which has been resultant in lowering the amount of net cash flows from financing
activities.
Equity dividends paid
When external parties buy shares of an organisation then the enterprise is required to provide
them dividend on the basis of organisational profits. Main purpose of shareholders behind
their investment in the companies is generating dividend for a long period in future.
It can be seen from above image that Big Yellow Plc has paid dividend to its equity
shareholders amounting to £46183000 in 2018 which increased to £52058000 in 2019. This
increase shows that there is an increase in issue of equity shares due to which this company
has to pay more dividend. This also shows that this company takes the decisions in favour of
its shareholders and pay them reliable dividends. From the Chairman’s statement, it has been
observed that dividend per share has also been increased by 8%.
In the year of 2019, no interest against any security was paid but a high amount is paid as a
dividend against the old equity shares which were issued by Big Yellow Group Plc. The
equity dividend amount was transacted as £52058000 which is the greatest burden on the net
cash inflow for year 2019.
Payment to cancel interest rate derivative
When an organisation is allotting debentures in the market then the enterprise is required to
pay interest on it. If a company is not able to pay higher interest to the investors or debenture

holders, then it may result in decreased interest of them in the business which may affect
operational efficiency due to lack of funding.
In year 2019, no interest was received or paid by the company due to which the amount of
cancel the interest rate derivative is nil.
Increase in borrowings
Loans are taken for the purpose of financing the business activities so that all the operations
in future could be performed in systematic manner. There are various sources from where
loans could be acquired by the company. The main source of it is bank and the withdrawer is
required to pay a predetermined rate of interest on the amount which is being withdrawn. As
analysed from the cash flow statement, due to these new loans the total borrowings of the
organisation are increased.
From the cash flow statement, it has been assessed that total increase in the borrowings of
this company is £7026000 which is raised against the loans taken by the Big Yellow Group
Plc.
In year 2019, Big Yellow PLC had an increase in their borrowing amounting £7026000. This
amount has been decreased from the previous year which shows that this company is capable
of quickly paying their borrowed amount which is a positive sign for investors. Big Yellow
Group Plc. is a large scale company which is listed at London stock exchange. By reviewing
the cash flow statement from annual report 2019, it has been seen that few new loans have
been taken in 2019. These new loans are transacted as “increase in borrowings”.
From the above note, it can be seen that borrowings are increased from 328935 to 335877.
After considering all the above information and director’s report, financial review and
chairman’s statement, it is analysed that financing costs of this company are increasing
continuously which can affect the profitability and of the company but at the same time these
increased costs are beneficial as by this, shareholders will get high dividend (Kimmel and

et.al., 2016). The financing cash flows show that the phase of acquiring capital for this
company has been completed and now this organisation is engaged in repaying all their loans
which implies that it is best time to invest in this company.
Suitability for investment
Introduction – Investment decision is a process of decision making regarding investing in a
specific project or an organisation (Levy, 2015). This decision is either taken by the investor
itself or by the investment consultor. Big Yellow Group Plc. is a progressive company which
publically trade their shares. Investment decision regarding investing in this company is taken
in this section.
Big Yellow Group Plc. is a large scale company which deals in self storing industry.
Operations of this company are unique and there are very less number of organisation which
are effectively engaged in this industry. Big Yellow Group Plc. not only is operating in this
sector but is a market leader of this sector. Various UK based and international companies are
clients of this organisation. Being a market leader, this organisation even enjoys monopoly
and the industry of self storing is one of the most growing sectors of all the time. This
background information of the company makes it highly evident for investors to invest in this
company as it has high scope for growth and development in future years.
The above analysis provides an evidence to prove that Big Yellow Group Plc. is an
appropriate choice for investments but only background and industry information cannot
effectively support the investment decision. For this, finance analysis is also essential. From
the above points of this report relating to cash position and operating, investing & financing
cash flows, a relevant decision can be taken. A positive free cash flow can evidently prove
that Big Yellow Group Plc. is a company which can effectively return capital invested by
investors. Free cash flow is the difference between net operating activities and capital
expenditures (Benaroch, 2018).
Free Cash Flow = Net Cash from Operating Activities – Capital Expenditures
= 71,806-83,038
= -11,232
The free cash flow for Big Yellow Group Plc. is negative which shows that investors are
gaining low dividend against their capital invested in organisation. By having negative free
cash flow means organisation is not having appropriate cash in their hands to distribute it
among shareholders as a dividend. This company cannot even pay the dividend against
borrowed funds. Big Yellow Group Plc. does not have enough free cash flow to pay dividend

to its shareholders so it is suggested to the audience to do not invest in securities of this
company as they will not get suitable returns.
Conclusion
Big Yellow Group PLC analysis of cash flow statement has a resilient and strong future
prospect for the investors. The company has steadily expanded for the last ten years. They are
cash generative and the demand for the self-storage by retail customer because of increased
housing cost, lack of storage space and moving properties, give the firm continued business
and the great trend of self -employment and deindustrialisation of big cities give further
opportunities by their business customers as well.
There was a significant amount of reduction in cash flow in 2019 due to increase in investing
activities in cash flow statement. However, it should be noted that the investing activities
impact the cash flow in the long term. The investment strategy taken with considerable care
and research can bring more cash inflow to the company in the future. As the company’s
history of investment reflects that higher investments generate more cash inflow for the
group. Thus, these investments are extremely important to develop the group and as an
investor its worth to invest in the group.

Bibliography
1. Big Yellow PLC. 2019, Background. Retrieved from
https://corporate.bigyellow.co.uk/application/files/7215/6085/0959/BY_AR2019.pdf.
[Accessed 10 December 2019].
2. ACCA Financial Accounting Kaplan Publishing 2019 Cash Flow Statements
3. Investopedia. (2019). Cash Flow from Operating Activities. Retrieved from
https://www.investopedia.com/terms/o/operating-activities.asp
4. Investopedia. (2019). Cash Flow From Investing Activities. [online] Available at:
https://www.investopedia.com/terms/c/cashflowfinvestingactivities.asp [Accessed 1 Dec.
2019].
5. Baik, B. and et.al., 2016. Who classifies interest payments as financing activities? An
analysis of classification shifting in the statement of cash flows at the adoption of IFRS.
Journal of Accounting and Public Policy. 35(4). pp.331-351.
6. Kimmel, P. D. and et.al., 2016. Financial Accounting. Wiley Custom Learning Solutions.

APPENDIX
Cash flow statement of Big Yellow Group Plc. for the year 2019