Final Results

RNS Number : 1624F

Big Yellow Group PLC

21 May 2013

BIG YELLOW GROUP PLC

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

audited Results for the YEAR and FOURTH Quarter ended 31 MARCH 2013

Highlights

Another year of earnings growth - VAT impact absorbed

Financial metrics	Year ended 31 March 2013	Year ended 31 March 2012	%
Revenue	£69.7m	£65.7m	6
Adjusted profit before tax⁽¹⁾	£25.5m	£23.6m	8
Adjusted EPRA earnings per share⁽²⁾	19.3p	18.2p	6
Dividend - final - total	6p 11p	5.5p 10p	9 10
Adjusted NAV per share⁽³⁾	419.2p	422.7p	(1)
Cash flow from operating activities (after finance costs)	£30.2m	£27.4m	10
Store metrics Occupancy growth - all stores	174,000 sq ft	328,000 sq ft
Occupancy growth - wholly owned stores	90,000 sq ft	218,000 sq ft
Occupancy - like for like wholly owned stores	65.6%	63.5%
Like-for-like revenue per available foot⁽⁴⁾	£20.25	£19.43	4
Statutory metrics
Profit/(loss) before tax	£31.9m	(£35.6m)
Basic earnings/(loss) per share	24.4p	(27.7p)

Highlights

· Revenue up 6% and VAT impact absorbed

· Another year of cash flow, earnings and dividend growth

· Successful completion of refinancing coupled with placing improves group capital structure

· Reduction of Group net debt⁽⁵⁾ by £43.5 million to £230.5 million

· Opening of our iconic store in Chiswick, West London, with high visibility from the M4 flyover

· Disposal of surplus sites for combined £15.8 million

· Survey confirms national brand leadership

¹See note 10 ² See note 12 ³See notes 12 and 14 ⁴See Portfolio Summary ⁵See note 18

Nicholas Vetch, Executive Chairman of Big Yellow, commenting said:

"We achieved a solid level of revenue growth, despite the imposition of VAT, and have also delivered against our principal financial aims of growing cash flow, earnings and dividend. This is testament to our successful operating model with a strong brand, market-leading digital platform and our focus on large metropolitan areas, particularly in London and the South East.

Much has been achieved since 2007; 23 new purpose-built stores have been opened, significant operational improvements have been made, and the brand has emerged as the unquestionable market leader.

This makes us confident that, on a medium to long term view, we will deliver substantially more of our full potential as we build occupancy and yield in our stores. The pace at which this will be achieved will depend in part on external factors, including the wider economy, housing transactions, new business formation and investment. Whilst there remain challenges around these factors, we allow ourselves for the first time in a few years, to enjoy a little more optimism."

- Ends -

For further information, please contact:

Big Yellow Group PLC 01276 477811

Nicholas Vetch, Executive Chairman

James Gibson, Chief Executive Officer

John Trotman, Chief Financial Officer

Pendomer Communications 020 3603 5220

Ben Foster

Rosie Oddy

Notes to Editors

Big Yellow Group PLC is the best known and one of the most dynamic self storage groups in the UK. It was founded in September 1998 by Nicholas Vetch, Philip Burks, and James Gibson and listed on AIM in May 2000, moving to the Official List of the London Stock Exchange in June 2002.

Big Yellow has expanded rapidly and now operates from 66 stores, 58 in London and the South, two in Sheffield, and one each in Birmingham, Edinburgh, Leeds, Liverpool, Nottingham and Stockport. We own a further four development sites, of which three have planning. Of the 70 total stores and sites, 59 are held freehold and four long leasehold (together representing approximately 94% by value of the total property assets); seven stores are held short leasehold. All the stores have distinct yellow branding, with the majority being within the M25 or in strong urban conurbations. The Group currently operates from a platform of 4.2 million sq ft. When fully built out the portfolio will provide approximately 4.4 million sq ft of flexible storage space.

The Group has pioneered the development of the latest generation of self storage facilities, which utilise state of the art technology and are located in high profile, accessible, main road locations. Our focus on the location and visibility of our buildings, coupled with our excellent customer service, has created the most recognised brand name in the UK self storage industry.

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 results for the fourth quarter and the year ended 31 March 2013.

We achieved a solid level of revenue growth, despite the imposition of VAT, and have also delivered against our principal financial aims of growing cash flow, earnings and dividend. This is testament to our successful operating model with a strong brand, market-leading digital platform and our focus on large metropolitan areas, particularly in London and the South East.

We made a strong start to the year with significant occupancy growth in the first half (our seasonally strongest period), as we additionally benefited from the increased business and consumer confidence in the lead-up to the Olympics.

The seasonally weaker quarter to December was further impacted by a combination of a softening in the macroeconomy in the period after the Olympics, and price increases to our domestic customers of 10% or 12.5% as a result of the imposition of VAT on our storage rents from 1 October. By the beginning of the fourth quarter, the environment had stabilised and we saw a return to growth in net occupancy.

The Big Yellow model has proved to be relatively resilient and we have now successfully embedded VAT into our business. As we only partially passed VAT onto our domestic customers there was an anticipated impact in the second half on our net achieved rents. We are now focused on rebuilding the yield and growing occupancy in the year ahead.

Financial results

Revenue for the year was £69.7 million (2012: £65.7 million), an increase of 6%; store revenue increased by 6% to £68.3 million (2012: £64.3 million). EBITDA for the 54 wholly owned stores increased by £3.4 million (8%) to £44.1 million. The 53 wholly owned stores open at 1 April 2012 have grown in occupancy from 63.5% to 65.6% at 31 March 2013.

Store revenue for the fourth quarter decreased by 1% to £15.9 million from £16.1 million for the same quarter last year. Store revenue in the second half of the year was £32.8 million, up 1% from £32.4 million for the second half of the year ended 31 March 2012.

Cash inflows from operating activities (after finance costs) increased by £2.8 million (10%) to £30.2 million for the year (2012: £27.4 million).

The Group made an adjusted profit before tax in the year of £25.5 million (2012: £23.6 million). This translated into a 6% increase in adjusted earnings per share to 19.3p (2012: 18.2p).

The Group made a statutory profit before tax for the year of £31.9 million, compared to a loss of £35.6 million last year. The prior year loss reflected the decrease in the valuation of the Group's open stores principally caused by the valuer's assessment of the impact of the imposition of VAT on self storage from 1 October 2012. The valuation of the investment property portfolio in the year is broadly in line with the prior year.

The Group has reduced its gearing further this year and now has net bank debt of £230.5 million at 31 March 2013 (2012: £273.9 million). This represents approximately 30% (2012: 35%) of the Group's gross property assets totalling £767.5 million (2012: £778.3 million) and 39% (2012: 49%) of the adjusted net assets of £594.5 million (2012: £559.0 million).

The Group's income cover for the year expressed as the ratio of Group's adjusted EBITDA post administrative expenses to net interest payable was 3.3 times (2012: 3.1 times).

Placing

For some time, the Company has set out a clear financial strategy to reduce debt and achieve pre-interest cash flow cover of at least four times the annual interest cost. The placing of 10 million shares in January at £3.70, raising £35.8 million (net of expenses), has allowed us to accelerate this plan. We have committed to increasing the dividend payout to 80% of adjusted earnings per share commencing with the next interim dividend. In addition, it has given us flexibility to expand our portfolio of stores, and we intend to open our prominent Gypsy Corner site on the A40 in West London in April 2014.

Refinancing

We are pleased to have successfully concluded the refinancing of the Group's debt facilities with a new 15 year £100 million facility with Aviva and the four year £190 million refinancing to September 2016 with our existing senior debt providers, Lloyds TSB, HSBC and Santander. As part of this refinancing we cancelled £120 million of interest rate derivatives at a cost of £10.5 million (£9.2 million of this cost was in the first half of the year, with the balance incurred in October). Since the placing we have repaid £43 million of debt, and cancelled £35 million of our bank facilities, saving £0.3 million per annum in non-utilisation fees. Our weighted average cost of debt for the second half of the year increased from 3.8% to approximately 4.25%. In October 2012 the expiry of the £60 million Big Yellow Limited Partnership bank facility was extended to September 2016.

Property

Our landmark store on the A4 in Chiswick, West London opened in April 2012. We have a pipeline of four wholly owned development sites; all have planning consent, bar our site in Central Manchester.

The three development sites with planning consent at Enfield, Guildford Central and Gypsy Corner, have an estimated cost to complete of £14.3 million excluding VAT. We have committed to the construction of Gypsy Corner, which we anticipate opening in April 2014. The remaining two sites with planning will be constructed on a phased basis.

During the year we sold our surplus one acre site adjacent to our new flagship Chiswick store for £4.8 million. We also sold our surplus site at South Bow for £3.6 million, and received the further consideration of £7.4 million from the disposal of the Premier Inn hotel we developed at Richmond. The proceeds were deployed to reduce the Group's debt. These sales have largely completed our surplus asset disposals, with the Group owning £4.6 million of land surplus to our requirements across two sites at 31 March 2013. We aim to sell this remaining surplus land once we have maximised its value through planning.

We continue to monitor site acquisition opportunities, principally focused on London.

Dividend

The Board is recommending the payment of a final dividend of 6 pence per share, taking the total dividend declared for the year to 11 pence per share (31 March 2012: 10 pence per share).

The cash dividend payment is two times covered by our free cash flow.

Our people

Our strong performance during the year was driven by the continued efforts and loyalty of the Big Yellow team, both at head office and in the stores, and they remain pivotal to the achievement of our key medium term objectives of driving occupancy, revenue, and cash flow growth.

Board

Philip Burks, a co-founder of the business in September 1998, will be retiring from his current role as a Non-Executive Director at the Group's next Annual General Meeting on 19 July 2013. Georgina Harvey will be appointed to the Board as an independent Non-Executive Director from 1 July 2013.

Philip and I started work together in 1986 and have been in partnership now for over 25 years. It has been the best of partnerships. Without Philip's property skills and tenacity, Big Yellow could not have achieved a fraction of its successes. The Board joins me in wishing him the best for the future.

We are delighted to welcome Georgina to the Board. Georgina brings extensive and diverse experience from the worlds of traditional and digital media, retail and leisure. As Big Yellow's fortunes increasingly lie with the internet, her experience will be of great value.

Outlook

We believe that REITs should enjoy similar characteristics to property as an investment medium, with the defensive qualities of fixed income, and the upside benefits of equity. Those intrinsic features of property have been distorted in the recent past by excessive debt, which by definition has over-accentuated the equity characteristics, the cause of much of the volatility in the direct and indirect property market.

It is clear to us that lower geared businesses, both operationally and financially, outperform over the longer term. Accordingly, one of the key tasks for your management since 2007 has been to create a capital structure reflective of those views.

Although we think that ideally Big Yellow would benefit from still lower proportionate levels of debt, we are satisfied that as a minimum our core ambition in this respect has been achieved, following the growth in cash flows, the two refinancings, and the equity raise.

This improved capital structure allows us to fully focus on the upside potential in our business. In that respect much has been achieved since 2007; 23 new purpose-built stores have been opened, significant operational improvements have been made, and the brand has emerged as the unquestionable market leader.

Nicholas Vetch

Chairman

20 May 2013

Business Review

Introduction

Given the continued muted economic background, the 6% revenue growth achieved year on year is a creditable performance, particularly as we faced the additional headwind of absorbing VAT into our business in the second half of the year.

We continue to believe that the medium term opportunity to create shareholder value will be principally achieved by leasing up stores to drive revenue, the majority of which flows through to the bottom line given that our operating and central overhead costs are already largely embedded.

The location of our stores, strong brand, unrivalled security, and, most importantly, excellent customer service attracts and retains a loyal and diverse customer base.

Self storage income is largely evergreen with highly defensive characteristics driven from buildings with very low obsolescence. Although our contract with customers is in theory as short as a week, we do not need to rely on contract length for income security. At 31 March 2013 the average length of stay for existing customers was 18.9 months in line with the prior year. For the stores open more than five years, the average length of stay increases to 21.3 months. For all customers, including those who have moved out of the business, the average length of stay has remained at 8.4 months. This translates into a loyal customer base. In our 32 established store portfolio, 36% of our customers by occupied space have been storing with us for over three years. A further 15% of customers in these stores have been in the business for between one and three years.

Awareness of self storage will continue to grow as more businesses and individuals use the product at a time when the supply side is restricted, with very few store openings expected in the calendar year.

Store performance

Self storage is a dynamic business, and in any month, customers move in and out at the margin resulting in changes in occupancy. We had a very strong quarter to June with good net move-in growth. The second quarter peaks in August and then we see many of our students and short term house moves start to vacate in September, leading to a relatively flat quarter. The third quarter saw a fall in the pace of move-in growth of 5% compared to the prior year, whilst move outs were up 13% reflecting continuing student and house move vacations, coupled with some impact from the imposition of VAT, leading to a significant net loss in units occupied and sq ft. In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the wholly owned stores by 52,000 sq ft. The table below illustrates the occupancy growth performance in the year.

Wholly owned store move-ins	Year ended 31 March 2013	Year ended 31 March 2012	%	Net move-ins
April to June	13,844	11,081	25%	3,445
July to September	14,973	12,661	18%	(410)
October to December	10,738	10,195	5%	(2,354)
January to March	11,047	10,149	9%	544
Total	50,602	44,086	15%	1,225

Store revenue for the year grew by 6%, feeding through to an 8% improvement in adjusted profit and a 10% increase in operating cash flow. This improvement in earnings has been achieved after absorbing the impact of VAT and a higher interest cost in the second half following the completion of the Group's refinancing in October.

In all Big Yellow stores, the occupancy growth in the current year was 174,000 sq ft, against an increase of 328,000 sq ft in the prior year. This growth across the 54 wholly owned and 12 stores in the Partnership represents an average of 2,636 sq ft per store (2012: 5,046 sq ft per store).

During the year we opened our wholly owned flagship store in Chiswick, West London. The store has started encouragingly, with over 25,000 sq ft of occupancy already added. This opening brings the number now trading in the Group and the Partnership to 66 stores.

Store occupancy summary	Occupancy 31 March 2013 000 sq ft	Occupancy 31 March 2012 000 sq ft	Growth for year to 31 March 2013 000 sq ft	Growth for year to 31 March 2012 000 sq ft

32 established stores	1,413	1,442	(29)	61

22 lease-up stores	810	691	119	157

Total - 54 wholly owned stores	2,223	2,133	90	218

12 Partnership lease-up stores	409	325	84	110

Total - all 66 stores	2,632	2,458	174	328

The 54 wholly owned stores had a net gain in occupancy of 90,000 sq ft, representing an average of 1,666 sq ft per store. This compares to an overall gain in the wholly owned stores of 218,000 sq ft in the year to 31 March 2012, and a gain of 117,000 sq ft in the year to 31 March 2011. The 12 stores in the Partnership, which are at an earlier stage of lease-up, increased their occupancy by 84,000 sq ft, representing average growth of 7,000 sq ft per store.

The 32 established stores are 72.8% occupied compared to 74.3% at the same time last year. The 22 lease-up stores have grown in occupancy from 48.8% to 54.3%, and overall store occupancy has increased in the year from 63.5% to 64.8%. Like for like occupancy, excluding Chiswick which opened in the year, increased from 63.5% to 65.6%.

The established stores grew in occupancy to 77.0% at September 2012, which was higher than in September 2011. The fall in occupancy over the second half of the year was higher than in prior years, which reflects the same factors as mentioned above for the portfolio as a whole, but in addition, this portfolio may have been impacted by the imposition of VAT, which is likely to have caused some longer stay customers to re-evaluate their storage requirements.

All 54 wholly owned stores, and all twelve stores within Big Yellow Limited Partnership, open at the year end are trading profitably at the EBITDA level.

74% of our current store revenue derives from within the M25; for the South East, the proportion of current store revenue rises to 90%. REVPAF performance of our stores in London has been more resilient over the downturn than in the regions.

Pricing and rental yield

In anticipation of the introduction of VAT, we successfully increased our yield in the first half of the year by 1.8% from 31 March 2012. However, given the decision not to pass all of the VAT on to our domestic customers the Group's achieved net rent fell by 5.6% at the beginning of October. Over the second half of the year net rent fell by a further 3% to £24.65 at 31 March 2013 as industry asking prices adjusted to VAT, and we had suspended our rolling prices increase programme to existing domestic customers.

Average rents were therefore lower in the second half of the financial year. At the end of March we increased the standard rates in all stores, and recommenced our existing customer price increase programme. Since the year end the Group's net achieved rent per sq ft has increased by 2.5%.

Our key focus over the next two to three years remains to drive occupancy and hence revenue in the stores. As the stores lease-up, and the number of vacant rooms reduce, our pricing model will automatically reduce the level of discounts offered, leading to an increase in net achieved rents. In our higher occupancy stores, we have historically seen net rental growth of 4 to 5% in a year. This year was affected by the introduction of VAT as previously explained.

Store operations

The Big Yellow store model is well established. The "typical" store has 60,000 sq ft of net lettable storage area and takes some 3 to 5 years to achieve 70% to 80% plus occupancy in the current economic environment. Some stores have taken longer than this given they opened just before or during the downturn. The average room size occupied in the portfolio is currently 68 sq ft, an increase from 66 sq ft in the prior year.

The store is open seven days a week and is initially run by three staff, with a part time member of staff added once the store occupancy justifies the need for the extra administrative and sales workload.

Given that the operating costs of these assets are relatively fixed, larger stores in bigger urban conurbations, particularly London, drive higher revenues and higher operating margins. The table below illustrates the average key metrics across the store portfolio for the year ended 31 March 2013:

	32 Established stores	22 Lease-up stores
Store capacity	60,656	67,773
Sq ft occupied per store at 31 March 2013	44,156	36,818
% occupancy	72.8%	54.3%
Revenue per store	£1,379,000	£1,100,000
EBITDA per store	£922,000	£665,000
EBITDA margin	66.8%	60.5%

Like-for-like revenue per available square foot ("REVPAF") across the wholly owned portfolio, excluding the 75,000 sq ft store at Chiswick, which opened in April 2012, increased from the last year by 4.2% to £20.25 (2012: £19.43).

The average store size in the UK market is approximately 40,000 sq ft according to the 2013 Self Storage Association Survey. The upside from filling our larger than average sized stores is, in our view, only possible in large metropolitan markets, where self storage demand from domestic and business customers is highest.

Of the customers moving into our stores in the last year, surveys undertaken indicate approximately 50% are linked to the housing market, of which 11% are customers renting storage space whilst using the rental sector, and 39% moving within the owner occupied sector. During the year 12% of our customers who moved in took storage space as a spare room for decluttering and approximately 25% of our customers used the product because some event has occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited furniture, are getting married or divorced, are students who need storage during the holidays, or homeowners developing into their lofts or basements. The balance of 13% of our customer demand in the year came from businesses. There has been an increased in demand in the current year from businesses and students.

Our business customers range across a number of industry types, such as retailers, professional service companies, hospitality companies and importers/exporters. These businesses store stock, documents, equipment, or promotional materials all requiring a convenient flexible solution to their storage, either to get started or to free up more expensive space.

We have a dedicated national accounts team for business customers who wish to occupy space in multiple stores. These accounts are billed and managed centrally. We have three full time members of staff working on growing and managing our national account customers. The national accounts team can arrange storage at short notice at any location for our customers.

Business customers typically stay longer than domestic customers, and also on average occupy larger rooms. Whilst only representing 13% of new customers during the year, businesses represent 18% of our overall customer numbers, occupying 34% of the space in our stores. The average room size occupied by business customers is 125 sq ft, against 55 sq ft for domestic customers.

We have seen solid demand from business customers, as they seek a cost effective, flexible solution to their storage requirements, preferring self storage to the commitment of a long lease. We believe there is an opportunity to grow business occupancy and national accounts in the coming year, and we have improved our business offer further, we have increased the resource of our national accounts team, and are increasing our marketing to that space to drive business prospects.

The split between business and domestic customers for the 54 wholly owned stores is as follows:

	Sq ft occupied at 31 March 2013	%	No of customers at 31 March 2013	%	% of storage revenue at 31 March 2013

Business customers	747,000	34%	6,046	18%	27%
Domestic customers	1,476,000	66%	27,487	82%	73%
Total	2,223,000		33,533		100%

The net rent per sq ft for domestic customers is approximately 33% higher than for business customers, reflecting the smaller average unit size occupied for domestic customers.

For the 32 established stores, the average split between business and domestic customers is shown in the table below.

	Domestic	Business	Total

% of occupied space	66.1%	33.9%	100%
Sq ft occupied per store at 31 March 2013	29,187	14,969	44,156

The drive to improve store operating standards and consistency across the portfolio remains a key focus for the Group. Excellent customer service is at the heart of our business objectives, as a satisfied customer is our best marketing tool. We measure customer service standards through a programme of mystery shoppers and online customer reviews, which give an average customer service score of 4.8 out of 5. We have recently launched a new improved customer-experience programme which combines the feedback from mystery shopping and customer reviews into the reinforcement of customer focus in our store operations.

We have a team of Area Managers in place who have on average worked for Big Yellow for ten years. They develop and support the stores to drive the growth of the business. Adrian Lee, Operations Director, is the Board member responsible for dealing with all customer issues.

The store bonus structure rewards occupancy growth, sales growth and cost control through setting quarterly targets based on occupancy and store profitability, including the contribution from ancillary sales of insurance and packing materials. Information on bonus build up is circulated monthly and stores are consulted in preparing their own targets and budgets each quarter, leading to improved visibility, a better understanding of sales lines and control of operating costs.

We believe that as a customer-facing branded business it is paramount to maintain the quality of our estate and customer offering. We therefore continue to invest in a rolling programme of store makeovers, preventative maintenance, store cleaning and the repair and replacement of essential equipment, such as lifts and gates. The ongoing annual expenditure is approximately £30,000 per store, which is included within cost of sales. This excludes makeovers, which typically take place every four years, at a cost of approximately £15,000 to £20,000 per store.

We have continued to manage the ten freehold stores branded as Armadillo Self Storage alongside our Big Yellow stores using the same operating model. The management contract expires in February 2014 and our key objective within the Armadillo portfolio remains driving occupancy, revenue and cash flow.

Sales and marketing

This year our strategy continues to focus on driving customer response through our online platforms, whilst keeping the customer at the heart of the business.

Our YouGov surveys, which we have commissioned every year for the last seven years allows us to monitor our brand awareness. Our most recent survey conducted in April 2013 used a larger, more statistically robust sample size of 1,312 respondents in London and 2,140 for the rest of the UK. The survey showed our prompted awareness to be at 80% in London and 41% for the rest of the UK, both nearly three times the level of our nearest competitor.

For unprompted brand awareness our recall was 55%, which is six times higher than our nearest competitor in London and 20% for the rest of the UK which is over six times higher than our nearest competitor. These surveys continue to prove we are the UK's brand leader in self storage, (Source: YouGov, April 2013).

Online

The website continues to grow in strength, with online prospects now accounting for 83% of all sales leads where details are first recorded on our operating system. Telephone is the first point of contact for 10% of prospects and walk-in enquiries, where we have had no previous contact with a prospect, represent 7%.

We have by far the largest online market share of web visits to all self storage company websites in the UK. In April 2013, our online market share of web visits was at 38.7% and the next nearest competitor was at 14.5% (source: Experian Hitwise).

The Big Yellow website continues to evolve and we are constantly improving the user journey and prospect conversion throughout the site. Web analytics allow us to remove barriers to conversion in the web journey and to test new web page designs which can help increase conversion.

Mobile

Web traffic from mobile devices accounted for 35% of our total web traffic in March 2013. This is a significant increase from 19% in March 2012. Mobile devices include both smart phones and the growing use of tablets and we ensure our website and email communications are optimised for, and are well presented on, all of these devices.

Green Page

We have created a unique, interactive web section which tells the story of our "big green commitment" to our web visitors and existing consumers. This online page highlights the initiatives we have taken with our buildings and operations to ensure we remain an environmentally sustainable company.

Online customer reviews

Consistent with our strategy of putting the customer at the heart of our business, our online customer reviews generate real-time feedback from customers as well as providing positive word of mouth referral to prospective customers. We ask our new customers to rate our product and service and these reviews are then published on the website.

Although we are currently improving our platform of prospect and customer survey processes, the customer reviews published on the Big Yellow website to date indicate we are consistently delivering a very high standard of service:

· over 8,100 reviews have been published;

· over 62% have awarded a score of 5 out of 5;

· our average overall rating is 4.7 out of 5; and

· our average customer service score is 4.8 out of 5.

In our view, real time customer reviews which have been independently and externally obtained are much more persuasive to prospects than scripted testimonials. In addition, we also gain real time insight from customers who feedback by publishing Google reviews and from monitoring mentions of Big Yellow with the social mediums of Twitter and general online forums. We use this feedback to continually improve our service offering, for example longer opening hours on Sundays. In addition, this programme reinforces best practice in customer service at our stores where customer reviews and mystery shop results are transparently accessible at all levels.

Driving online traffic

Search engines are the most important acquisition tool for us, accounting for nearly 73% of all traffic to the website. We continue to invest in search engine optimisation ("SEO") techniques both on and off the site. This helps us maintain our number one positions for the most popular and most searched for terms such as "storage" and "self storage" in the organic listings on Google.

The sponsored search listings remain the largest source of paid for traffic and we ensure our prominence in these listings is balanced with effective landing pages to maximise site conversion.

This year, we have also continued with online display advertising on websites which are contextually and geographically targeted to our core audience groups. This activity performs both a direct response and branding role.

Efficiencies in all online spend are continuing into the year ending 31 March 2014, ensuring the return on investment is maximised from all our different online traffic sources. Online marketing budgets will continue to remain fluid and be directed towards the media with the best return on investment.

Social media

Social media continues to be complementary to our existing marketing channels. With over 23,000 'likes', our Facebook channel allows us to keep engaged with our target audiences, keeping the brand front of mind and allowing a forum for their feedback and dialogue. Twitter is used to get our marketing messages talked about by different audiences and also allows us a further avenue for our customers or prospects to get in contact with us. The Big Yellow You Tube channel is being used to showcase our stores to web prospects through a video store tour. We use both domestic and business versions to help prospects experience the quality of the product without the need for them to visit the store in person.

We have also used PR stories in the year to help raise the awareness of Big Yellow and the benefits of self storage generally. PR surveys and stories based around renting your spare room out during the Olympics, storing fashion collectables and dealing with house guests at Christmas have allowed us to communicate the virtues of using self storage in an interesting way within press, online media and through radio interviews nationwide.

Sales promotion

We have continued our sales promotion offer throughout the year of "50% off for up to your first 8 weeks storage". Our Price Promise is also used to match competitor's prices if the product is comparable. Pricing is dynamically generated and takes into account customer demand and local competition.

Budget

During the year the Group spent approximately £2.8 million on marketing (4.0% of revenue), the same amount as the previous year. We have increased the budget for the year ahead to £3.0 million with a focus on driving our revenue through delivering more prospects to the website.

People

At Big Yellow we aim to provide a lively, fun and enjoyable working environment, without losing our commitment to delivering the very best standards of customer service.

We encourage a culture of partnership within the business and believe in staff participating in corporate performance through bonus schemes and share incentives. Many employees benefit from an HMRC approved Sharesave Scheme, which provides an opportunity to invest in the future success of Big Yellow at a discount to the prevailing share price at the date of each invitation. Our stakeholder pension scheme has been taken up by over two thirds of employees eligible to join and a voucher awards scheme is used extensively across the business to recognise and reward our staff's efforts and achievements.

We aim to promote employee wellbeing through a range of flexible working options which include flexitime, staggered hours, home working and sabbaticals. We provide a comprehensive range of medical support and advice though our occupational health providers and have arranged corporate gym membership on a national basis, as well as a Cycle to Work Scheme.

We continue to recognise the importance of communication and consultation with an annual spring conference, regular formal and informal meetings, quarterly newsletters and weekly operational updates. In addition, the Directors and senior management spend a significant amount of time in the stores and are accessible to employees at all levels. A bi-annual Employee Attitude Survey provides management with key feedback and guidance as to where to focus their attention to improve further the working environment.

In March 2012 we were delighted to have been recognised as one of the Sunday Times 100 Best Companies to Work For and also to have achieved "Two Star Status" for the Best Companies Accreditation.

We had 319 full-time, part-time and casual employees in the business at the year end (2012: 310 employees) and recruiting and retaining the right calibre people remains critical to the continued success of the Company.

We promote the individual development of staff through training and regular performance appraisals and delivered just over 920 days training to employees in the last year, equating to an average of just under 3.0 days training per employee. In the stores, over half of the managerial posts have been filled by internal promotions.

Property and development

We believe the continuing difficulties in the banking and capital markets make access to capital required to fund growth more difficult and will slow down the growth in self storage store openings in the market generally. We believe that we are in a relatively strong position with our freehold property assets and with the proven ability to access funding when the opportunity presents itself.

We now have a portfolio of 70 stores and sites of which 66 are currently open, one under construction and a further two have planning consents, with planning negotiations ongoing at our site in central Manchester.

Development pipeline

There are three freehold sites with planning for Big Yellow stores to be developed. We also own a 4.5 acre development site in central Manchester where we are in planning discussions for a mixed use scheme incorporating a new Big Yellow store. The status of the development pipeline is summarised in the table below:

Wholly owned sites	Location	Status	Anticipated capacity
Gypsy Corner, West London	Highly visible site on A40 in Acton, West London	Under construction, planned opening April 2014	70,000 sq ft
Enfield, North London	Prominent site on the A10 Great Cambridge Road, London	Consent granted	60,000 sq ft
Guildford Central	Prime location in centre of Guildford on Woodbridge Meadows	Consent granted	56,000 sq ft
Manchester Central	Prime location on Water Street in central Manchester	Planning under negotiation	50,000 sq ft to 70,000 sq ft

Our landmark wholly owned store at Chiswick, with strong visibility from the M4 flyover, opened in April 2012. We have commenced the construction of our Gypsy Corner store, which we anticipate will open in April 2014.

The Group manages the construction and fit-out of its stores in-house, as we believe it provides both better control and quality, and we have an excellent record of building stores on time and within budget.

Corporate Social Responsibility

The Company has now employed a Corporate Social Responsibility ("CSR") Manager for over 5 years. The CSR Manager reports to the Board through the Operations Director.

Our key CSR achievements in the year were:

Our continued reduction in Scope 2 electricity use and carbon emissions for a "same store" portfolio. Scope 2 emissions are from National Grid electricity use and constitute some 94% of our annual energy consumption. These reductions have been achieved by the continued investment in our energy efficiency programmes such as motion sensor lighting, energy efficient lamps, power-saver adaptors and zoned motion sensor lighting in both new and existing stores.
The income generated from our solar PV installations has increased by 126% in 2013 from the average achieved in 2011 and 2012, mainly due to the contribution from our three new larger capacity installations at New Cross, Chiswick and Barking. These PV installations contribute about 20% of each stores' annual electricity needs.
Measurement of our Scope 1 and Scope 3 emissions. Scope 1 emissions are our 'Direct' or 'On Site' emissions and make up just 5% of our total carbon footprint. They are mainly from the natural gas heating in eight of our twelve flexi-office stores and also from coolant replacement in air conditioned areas. Our Scope 3 emissions are emissions from our waste and water supply chains.
The Queen's Award for "Innovation and Sustainable Development" was presented to Big Yellow in April 2012. The Award is only presented to a limited number of the companies who apply each year. We were very proud to have our CSR initiatives recognised by The Queen's Award in 2012.
Achieving a "Green Star" rating by the Global Real Estate Sustainability Benchmark ("GRESB") report. We were recognised as a pan European "sector leader in sustainable development" by GRESB, with a global ranking of 9 out of 455 participating companies.

Financial Review

Financial results

Revenue for the year was £69.7 million, an increase of £4.0 million (6%) from £65.7 million in the prior year. Store revenue increased by 6% in the year to £68.3 million (2012: £64.3 million). The other revenue earned is from fee income earned from Big Yellow Limited Partnership and Armadillo and tenant income on sites where we have not started development. Other sales (included within the above), comprising the selling of packing materials, insurance and storage related charges, represented 17.2% of storage income for the year (2012: 17.1%) and generated revenue of £10.0 million for the year, up 7% from £9.4 million in 2012.

Store revenue for the fourth quarter decreased by 1% to £15.9 million from £16.1 million for the same quarter last year. Store revenue in the seasonally weaker second half of the year was £32.7 million, up 1% from £32.4 million for the second half of the year ended 31 March 2012.

There was an increase in revenue of 1% for the 32 established stores and 18% for the 22 lease-up stores. The EBITDA margin for the 32 established stores was 67% (2012: 65%), the EBITDA margin for the 22 lease-up remained at 60%. The table below shows the performance of the 32 established stores and the 22 lease-up stores during the year.

Wholly owned store performance	Capacity	Occupancy		Revenue		EBITDA
	000 sq ft	31 Mar 13 000 sq ft	31 Mar 12 000 sq ft	31 Mar 13 £000	31 Mar 12 £000	31 Mar 13 £000	31 Mar 12 £000
32 established stores	1,941	1,413	1,442	44,135	43,793	29,497	28,388
22 lease-up stores	1,491	810	691	24,199	20,480	14,635	12,371
Total	3,432	2,223	2,133	68,334	64,273	44,132	40,759

The Group made a profit before tax in the year of £31.9 million, compared to a loss of £35.6 million in the prior year. The prior year loss reflected the decrease in the valuation of the Group's open stores following the valuer's assessment of the impact of VAT. The valuation of the stores in the current year is broadly in line with 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 £25.5 million, up 8% from £23.6 million in 2012.

Profit/(loss) before tax analysis	2013 £m	2012 £m
Profit/(loss) before tax	31.9	(35.6)
(Gain)/loss on revaluation of investment properties	(9.5)	51.4
Movement in fair value on interest rate derivatives	0.2	8.0
Gains on surplus land	(1.0)	(0.5)
Refinancing costs	4.3	-
VAT implementation costs	0.2	-
Share of non-recurring (gains)/losses in associate	(0.6)	0.3
Adjusted profit before tax	25.5	23.6

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 2012	23.6
Increase in gross profit	3.0
Increase in net interest payable	(0.3)
Increase in administrative expenses	(0.4)
Increase in share of recurring profit of associate	0.4
Decrease in capitalised interest	(0.8)
Adjusted profit before tax - year ended 31 March 2013	25.5

Diluted EPRA earnings per share based on adjusted profit after tax was up 6% to 19.3p (2012: 18.2p) (see note 12). Basic earnings per share for the year was 24.4p (2012: loss per share of 27.7p) and fully diluted earnings per share was 24.1p (2012: loss per share of 27.4p).

Operating costs

We have continued with our programme of cost control in the Group.

Cost of sales comprise principally of the direct store operating costs, including store staff salaries, utilities, business rates, insurance, a full allocation of the central marketing budget, and repairs and maintenance.

Direct store operating costs for the established portfolio have fallen by 4% reflecting the increased recoverability of VAT on our operating costs in the second half of the year. The operating costs in the lease-up stores have increased due to the additional operating costs of New Cross and Chiswick, additionally by general inflationary pressures, notably from business rates, offset by the improved VAT recovery. Additionally, the prior year costs included a rates rebate on two stores.

Administrative expenses in the income statement have increased by £0.6 million compared to the prior year. £1.4 million of the £7.7 million administrative expense is non-cash IFRS 2 share based payment charges. The increase in administrative expenses was largely due to an expense of £0.6 million in respect of Employer's National Insurance on the vesting of the Company's long term bonus plan for the period 2009 to 2012. This has been offset by a reduction in irrecoverable VAT in the second half of the year. There was also a cost of £0.2 million in respect of costs incurred challenging and implementing the imposition of VAT on self storage, which has been added back in calculating the Group's adjusted profit for the year.

Interest expense on bank borrowings

The gross bank interest expense for the year was £11.5 million, an increase of £0.4 million from the prior year. This reflects a higher average cost of debt in the year following the Aviva refinancing in April and the bank refinancing in October, offset in part by the reduction in debt in February following the placing. The average cost of borrowing during the year was 4.0%, compared to 3.7% in the prior year.

Total interest payable has increased in the statement of comprehensive income from £11.2 million to £12.3 million in part due to the increase in the gross bank interest expense. Additionally, capitalised interest decreased by £0.8 million from the prior year, with limited construction activity taking place during the year, compared to construction on three sites in the prior year.

The refinancing costs of £4.3 million relate to the unamortised loan arrangement costs of the previous facility, and the write-off of the costs of the new bank facility in accordance with IAS 39. This has been adjusted from the Group's recurring profit for the year.

REIT status

The Group converted to a Real Estate Investment Trust ("REIT") in January 2007. Since then the Group has benefited from a zero tax rate on the Group's qualifying self storage earnings. The Group only pays tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and fees earned from Big Yellow Limited Partnership and from the management of the Armadillo portfolio.

REIT status gives the Group exemption from UK corporation tax on profits and gains from its qualifying portfolio of UK stores. Future revaluation gains on these developments and our existing open stores will be exempt from corporation tax on capital gains, provided certain criteria are met.

The Group has a rigorous internal system in place for monitoring compliance with criteria set out in the REIT regulations. On a monthly basis, a report to the Executive on compliance with these criteria is carried out. To date, the Group has complied with all REIT regulations, including forward looking tests.

VAT

VAT was introduced on self storage rents with effect from 1 October 2012, following the announcement in the March 2012 budget. During the consultation period we worked with other members of the industry to lobby against this change. We took legal advice over the summer and, based on that advice, decided not to proceed with a legal challenge.

Our existing customers were notified of the introduction of VAT on self storage rents in August, and the impact this would have on the cost of their storage. VAT has been passed on in full to our business customers, and in part to our existing domestic customers, with most receiving increases in their four-weekly invoices of 10% to 12.5%. Whilst the change to VAT will have had some impact on our existing domestic customer base, we believe this has not been material.

We are now able to recover the majority of VAT on our ongoing operating expenses, and are also entitled to a refund of previously irrecoverable VAT on capital expenditure under the Capital Goods Scheme, amounting to a gross amount of £11.8 million in the Group and £4.9 million in the Partnership (of which the Group's share is £1.6 million).

Taxation

There is no cash tax payable for the year, due to tax relief arising from the restructuring of interest rate derivatives in 2009 and in the year. There is no tax charge for the year ended 31 March 2013 (2012: £nil).

Dividends

REIT regulatory requirements determine the level of Property Income Dividend ("PID") payable by the Group. On the basis of the full year distributable reserves for PID purposes, a PID of 8 pence per share is payable (31 March 2012: 9 pence per share PID).

The Board is recommending the payment of a final dividend of 6 pence per share. The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2013	31 March 2012
Interim dividend - PID	5p	4.5p
- discretionary	nil p	nil p
- total	5p	4.5p

Final dividend - PID	3p	4.5p
- discretionary	3p	1p
- total	6p	5.5p

Total dividend - PID	8p	9p
- discretionary	3p	1p
- total	11p	10p

Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2013, the final dividend will be paid on 24 July 2013. The ex-div date is 12 June 2013 and the record date is 14 June 2013.

Cash flow growth

The Group is strongly cash generative and draws down from its longer term committed facilities as required to meet obligations.

A summary of the cash flow for the year is set out in the table below:

	Year ended 31 March 2013 £000	Year ended 31 March 2012 £000

Cash generated from operations	42,025	38,877
Finance costs (net)	(11,839)	(11,489)
Free cash flow	30,186	27,388
Capital expenditure	(8,647)	(23,630)
Asset sales	15,864	5,404
Investment in associate	(1,567)	(1,167)
Cash flow after investing activities	35,836	7,995

Ordinary dividends	(13,543)	(12,223)
Share buy back	-	(3,727)
Issue of share capital	36,764	61
Non-recurring finance costs	(15,573)	-
(Decrease)/increase in borrowings	(45,694)	9,000

Net cash (outflow)/inflow	(2,210)	1,106

Opening cash and cash equivalents	10,060	8,954
Closing cash and cash equivalents	7,850	10,060
Debt	(238,306)	(284,000)
Net debt	(230,456)	(273,940)

Free cash flow pre-capital expenditure increased by 10% to £30.2 million for the year (2012: £27.4 million). In the year capital expenditure outflows were £8.6 million, down from £23.6 million in the prior year, with construction activity largely limited to completing the store at Chiswick and the hotel development at Richmond. The cash flow after investing activities was a net inflow of £35.8 million in the year, compared to an inflow of £8.0 million in 2012. The non-recurring finance costs relate to £10.5 million of payments made to cancel interest rate derivatives and £5.1 million relating to arrangement fees paid for the Aviva and senior debt loans. The placing proceeds and surplus land sales enabled us to reduce debt by £45.7 million in the year.

Balance sheet

Property

The Group's 54 wholly owned stores and four stores under development at 31 March 2013, which are classified as investment properties, have been revalued by Cushman & Wakefield ("C&W") and this has resulted in an investment property asset value of £762.9 million, comprising £700.5 million (92%) for the 47 freehold (including one long leasehold) open stores, £45.1 million (6%) for the seven short leasehold open stores and £17.3 million (2%) for the four investment properties under construction.

Analysis of property portfolio	No of locations	Value at 31 March 2013 £m	Revaluation movement in year £m
Investment property	54	745.6	10.2
Investment property under construction	4	17.3	(0.7)
Investment property total	58	762.9	9.5
Surplus land	2	4.6	-
Total	60	767.5	9.5

We have recognised a receivable of £10.3 million in the year in respect of payments due back to the Group under the Capital Goods Scheme as a consequence of the introduction of VAT on self storage from 1 October. The final amount is subject to agreement with HMRC. The Group had an historic creditor in respect of Capital Goods Scheme payments due to HMRC; this has been reduced by £0.3 million in the year, representing amounts that we are no longer required to pay. The recognition of the receivable and the write back of the creditor reduces the book cost of the investment properties, and has produced a revaluation surplus in the year. The debtor has been discounted in accordance with International Accounting Standards to the net present value using the Group's average cost of debt. The gross value of the debtor before discounting is £11.8 million.

Investment property

Each store is reviewed and valued individually by Cushman & Wakefield LLP, who are the valuers to a significant proportion of the UK and European self storage market.

In the prior year the valuer took into account its estimate of the proposed introduction of VAT from 1 October 2012 on the asset valuation. This led to a revaluation fall of the investment property portfolio in the prior year of £51.4 million.

The valuations in the current year are broadly in line with the prior year, with a revaluation deficit of £0.4 million on the open stores, before adjusting for the Capital Goods Scheme.

The valuation is based on an average occupancy over the 10 year cash flow period of 78.4% across the whole portfolio. Between April 2004 and March 2008, the 32 established stores had an average occupancy of 83%.

	Established store portfolio	Lease-up store portfolio	All wholly owned stores
Valuation at 31 March 2013	£406.3m	£339.3m	£745.6m
Occupancy at 31 March 2013	72.8%	54.3%	64.8%
Stabilised occupancy assumed in valuations	82.0%	80.9%	81.5%
Net initial yield pre-admin expenses	6.8%	4.9%	5.9%
Stabilised yield assuming no rental growth	8.1%	8.4%	8.2%

The initial yield pre-administration expenses assuming no rental growth is 5.9% (2012: 5.7%) rising to a stabilised yield of 8.2% (2012: 8.3%). The 32 established stores that were mature in 2007 are assumed to return to stabilised occupancy in 35 months on average. The 22 lease-up stores are assumed to reach stabilised occupancy in 44 months on average from 1 April 2013. Note 14 contains more detail on the assumptions underpinning the valuations.

Investment property under construction

Chiswick was transferred to investment property in the year. The remaining four wholly owned development sites have reduced in value by £0.4 million, £0.3 million relating to capital expenditure incurred, with the balance of £0.7 million a revaluation deficit. C&W's forecast valuations for when the assets have reached stabilised occupancy, including assumptions in relation to revenue and operating cost growth, are currently pointing to a revaluation surplus on total development cost of £28 million on the three wholly owned development sites with planning consent.

In their report to us, our valuers, Cushman and Wakefield have drawn attention to valuation uncertainty resulting from a lack of transactions in the self storage investment market. Please see note 14 for further details.

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 14 for further details) to be used in the calculation of our adjusted diluted net asset value. This Red Book valuation on the basis of 2.75% purchaser's costs, results in a higher property valuation at 31 March 2013 of £796.9 million (£34.0 million higher than the value recorded in the financial statements). The valuations in Big Yellow Limited Partnership are £4.8 million higher than the value recorded in the financial statements, of which the Group's share is £1.6 million. The sum of these is £35.6 million and translates to 25.1 pence per share.

The revised valuation translates into an adjusted net asset value per share of 419.2 pence (2012: 422.7 pence, restated - see note 12) after the dilutive effect of outstanding share options.

Surplus land

These are sites which the Directors do not intend to develop into self storage centres. The sites are held at the lower of cost and net realisable value and have not been externally valued. The Directors have assessed the carrying value of these sites. The Group received £15.8 million gross sales proceeds during the year from the disposal of surplus land; £4.8 million from the disposal of our surplus site in Chiswick; £7.4 million from the disposal of the hotel in Richmond and £3.6 million from the disposal of our site in South Bow.

Movement in adjusted NAV

The year on year movement is illustrated in the table below:

Movement in adjusted net asset value	Equity shareholders' funds £m	EPRA adjusted NAV per share
1 April 2012	559.0	427.7
Equity raising	35.8	(5.0)
1 April 2012 (proforma)	594.8	422.7
Adjusted profit	25.5	18.0
Equity dividends paid	(13.5)	(9.5)
Revaluation movements (including share of BYLP)	(1.7)	(1.2)
Refinancing costs (including swap cancellations)	(14.8)	(10.4)
Movement in purchaser's cost adjustment	0.1	0.1
Other movements (eg share schemes)	4.1	(0.5)
31 March 2013	594.5	419.2

Borrowings

We focus on improving our cash flows and we currently have healthy Group interest cover of 3.3 times (2012: 3.1 times) based on adjusted Group EBITDA against existing interest costs, allied to a relatively conservative debt structure secured principally against the freehold estate.

In April 2012, we completed a £100 million 15 year fixed rate loan with Aviva Commercial Finance Limited. The loan is secured over a portfolio of 15 freehold self storage centres which were valued at £242.1 million at 29 February 2012 for the purposes of the drawdown. The annual fixed interest rate on the loan is 4.90%.

The loan amortises to £60 million over the course of the 15 years, consistent with the Group's medium term debt reduction strategy. The debt service is payable monthly based on fixed annual amounts. The loan outstanding on the fifth anniversary will be £89.8 million; £76.7 million outstanding on the tenth anniversary, with £60 million remaining at expiry in April 2027.

The new 15 year term loan was deployed to repay and cancel £100 million of the Group's core bank debt facility. At the same time as repaying the bank debt, we cancelled £100 million of interest rate derivatives at a cost of £9.2 million.

On 5 October 2012 the Group entered into a new £190 million 4 year bank facility with Lloyds TSB, HSBC and Santander, expiring in September 2016. £140 million of the facility is term loan with the balance of £50 million revolving. In February 2013, the Group repaid and cancelled £35 million of the bank facility following the placing carried out in January 2013, providing a facility amount of £155 million. £120 million of this facility is term loan with the balance of £35 million revolving.

This facility replaced the Group's existing £225 million facility, expiring in September 2013, which was provided by the same three banks and HSH Nordbank, who have been fully repaid following completion of this refinancing.

The facilities attract a ratcheted margin over LIBOR based on interest cover. The Group is currently paying a blended 2.4% margin, the lowest margin on the ratchet, which is effective for asset income cover of greater than 3 times.

The Group had an historic interest rate derivative of £90 million fixed at 2.99% plus margin until September 2015. As part of the bank refinancing in October 2012, we cancelled £20 million of this interest rate derivative at a cost of £1.3 million. The remaining £70 million interest rate derivative was extended to September 2016 at a fixed rate of 2.8% plus margin. The balance of the bank debt drawn accrues interest at variable rates based on one month LIBOR plus margin.

The Group's average cost of debt at 31 March 2013 is shown in the table below.

	Amount of debt £m	Weighted average interest cost

Aviva loan	98.3	4.9%
Fixed bank debt	70.0	5.3%
Variable bank debt	70.0	2.8%
Total	238.3	4.4%

The Group was in compliance with its banking covenants at 31 March 2013; see note 19 for details.

The Group has £22.9 million of cash and undrawn bank facilities and relatively conservative levels of gearing. The Group currently has a net debt to gross property assets ratio of 30%, and a net debt to adjusted net assets ratio of 39%.

At 31 March 2013, the fair value on the Group's interest rate derivatives was a liability of £5.5 million. There is no charge in respect of the cost of cancelling the derivatives in the current year income statement, as it had been recognised in prior years through the fair value movement on derivatives. The Group does not hedge account its interest rate derivatives. As recommended by EPRA (European Public Real Estate Association), the fair value movements are eliminated from adjusted profit before tax, diluted EPRA earnings per share, and adjusted net assets per share.

Treasury continues to be closely monitored and its policy approved by the Board. 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.

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 £14.3 million at 31 March 2013 (2012: £13.1 million), consisting of 142,639,647 ordinary shares of 10p each (2012: 131,393,041 shares).

Shares issued for the exercise of options during the year amounted to 0.4 million at an average exercise price of 319p.

The Group holds 1.4 million shares in treasury and 1.5 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.

	2013 No.	2012 No.

Opening shares	131,393,041	131,060,522
Shares issued for the placing	10,000,000	-
Shares issued to EBT	876,671	-
Shares issued for the exercise of options	369,935	332,519

Closing shares in issue	142,639,647	131,393,041
Shares held in EBT	(1,500,000)	(1,885,117)
Shares held in treasury	(1,418,750)	(1,418,750)

Closing shares for NAV purposes	139,720,897	128,089,174

45,430,167 shares were traded in the market during the year ended 31 March 2013 (2012: 63,054,535). The average mid-market price of shares traded during the year was 326.1p with a high of 387.5p and a low of 274.5p.

Big Yellow Limited Partnership

Big Yellow Limited Partnership, a joint venture with Pramerica Real Estate Investors Limited, owns self storage centres and development sites in the Midlands, the North, Scotland and four locations in the South. In the consolidated accounts of Big Yellow Group PLC, the Partnership is treated as an associate. We have adopted equity accounting for the Partnership, so that our share of the Partnership's results are disclosed in operating profit and our net investment is shown in the balance sheet within "Investment in Associate". We have provided in note 13d the balance sheet and income statement of the Partnership, along with the Group's share of the income statement captions.

Structure

The Group and Pramerica have committed equity in a one third, two thirds split respectively. The Board of the Partnership comprises two representatives of both Pramerica and Big Yellow. Pramerica have the casting vote over the approval of the Partnership's annual business plan.

The Partners have resolved not to develop any further stores. No further equity contributions are forecast.

The Group earns certain property acquisition, planning, construction and operational fees from the Partnership. For the year to 31 March 2013, these fees amounted to £0.6 million (2012: £0.7 million).

Funding

In October 2012, the £60 million Partnership bank facility with RBS and HSBC was extended to September 2016 from its previous expiry date of September 2013. The new facility has an initial higher average cost of debt of approximately 6.4%. We expect this to reduce to 4.8% from July 2013, when existing hedging arrangements expire, with forward start swaps covering 50% of the drawn debt at a pre-margin cost of 1.05% starting from that date. There is a margin ratchet based on the Partnership's income cover which ranges between 250 bps and 400 bps.

Results

For the year ended 31 March 2013, the operating profit of the Partnership was £3.4 million (2012: £1.8 million), with all 12 stores being profitable at the operating level.

The Partnership made a profit before tax of £1.9 million (2012: loss of £1.8 million). Big Yellow's share of this profit was £0.6 million (2012: share of loss of £0.6 million).

After adjusting for non-recurring items (revaluation gains of £2.5 million, non-recurring refinancing costs of £1.5 million, and fair value gain on interest rate derivatives of £0.6 million), the Partnership made an adjusted profit of £0.3 million (2012: adjusted loss of £0.8 million), of which the Group's share is £0.1 million (2012: share of loss of £0.3 million). The Partnership is tax transparent, so the limited partners are taxed on any profits.

We have recognised a receivable of £4.3 million in the year in respect of payments due back to the Partnership under the Capital Goods Scheme. These amounts are subject to agreement with HMRC. The receivable has been discounted; the gross value of the receivable before discounting is £4.9 million.

Big Yellow has an option to purchase the assets contained within the Partnership or the interest in the Partnership which it does not own exercisable from 31 March 2013. The option has been deferred this year, and is next exercisable in March 2014 and again in March 2015. On exit, whether by way of exercise of the option or a sale to a third party, Big Yellow is entitled to certain promotes, which could result in Big Yellow sharing in the surplus created in the Partnership ahead of its equity participation.

Portfolio Summary - wholly owned stores

	2013			2012
Wholly owned stores	Established ⁽¹⁾	Lease-up	Total	Established ⁽¹⁾	Lease-up	Total

Number of stores	32	22	54	32	21	53
At 31 March
Total capacity (sq ft)	1,941,000	1,491,000	3,432,000	1,941,000	1,417,000	3,358,000
Occupied space (sq ft)	1,413,000	810,000	2,223,000	1,442,000	691,000	2,133,000
Percentage occupied	72.8%	54.3%	64.8%	74.3%	48.8%	63.5%
Net rent per sq ft	£24.72	£24.51	£24.65	£26.44	£26.78	£26.49
For the year
REVPAF⁽²⁾	£22.74	£16.29	£19.94	£22.56	£14.99	£19.43
Average occupancy	74.9%	51.8%	64.8%	73.3%	43.7%	60.8%
Average annual rent psf	£26.10	£26.16	£26.12	£26.52	£27.49	£26.81

	£000	£000	£000	£000	£000	£000

Self storage income	37,926	20,186	58,112	37,729	17,005	54,734
Other storage related income ⁽³⁾	6,123	3,873	9,996	5,995	3,368	9,363
Ancillary store rental income	86	140	226	69	107	176
Total store revenue	44,135	24,199	68,334	43,793	20,480	64,273
Direct store operating costs (excluding depreciation)	(12,835)	(9,520)	(22,355)	(13,366)	(8,064)	(21,430)
Short and long leasehold rent⁽⁴⁾	(1,803)	(44)	(1,847)	(2,039)	(45)	(2,084)
Store EBITDA⁽⁵⁾	29,497	14,635	44,132	28,388	12,371	40,759
Store EBITDA margin⁽⁶⁾	66.8%	60.5%	64.6%	64.8%	60.4%	63.4%

Deemed cost	£m	£m	£m

To 31 March 2013	163.1	232.0	395.1
Capex to complete	-	3.0	3.0
Total	163.1	235.0	398.1

(1) The 32 established stores are those that had reached stabilisation as a portfolio in 2007 prior to the economic downturn. The lease-up stores have yet to trade at their stabilised occupancy levels. Of the 22 lease-up stores, three stores opened before 31 March 2006, six stores opened in the year ended 31 March 2007, six stores opened in the year ended 31 March 2008 and seven have opened since 1 April 2008.

(2) Total store revenue divided by the average maximum lettable area in the year.

(3) Packing materials, insurance and other storage related fees.

(4) Rent for seven established short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 431,000 sq ft, and a long leasehold lease-up store with a capacity of 64,000 sq ft.

(5) Earnings before interest, tax, depreciation and amortisation.

(6) Of the established stores, the seven leasehold stores achieved a store EBITDA of £5.3 million and EBITDA margin of 51%. The 25 freehold stores achieved a store EBITDA of £24.2 million and EBITDA margin of 72%.

Portfolio Summary - Big Yellow Limited Partnership stores

	March 2013	March 2012

Number of stores	12	12

At 31 March
Total capacity (sq ft)	749,000	743,000
Occupied space (sq ft)	409,000	325,000
Percentage occupied	54.6%	43.7%
Net rent per sq ft	£16.72	£18.12
For the year
REVPAF	£11.14	£9.11
Average occupancy	49%	38%
Average annual rent psf	£18.29	£18.42

	£000	£000
Self storage income	6,704	5,189
Other storage related income	1,556	1,315
Ancillary store rental income	29	35

Total store revenue	8,289	6,539
Direct store operating costs (excluding depreciation)	(4,023)	(3,937)

Store EBITDA	4,266	2,602
Store EBITDA Margin	51.5%	39.8%

Deemed cost ⁽¹⁾	£m
To 31 March 2013	98.8
Capex to complete	1.7
Total	100.5

(1) This cost includes Leeds which was acquired by the Partnership as an open store in November 2007.

Consolidated Statement of Comprehensive Income

Year ended 31 March 2013

	Note	2013 £000	2012 £000

Revenue	3	69,671	65,663
Cost of sales		(24,493)	(23,436)

Gross profit		45,178	42,227

Administrative expenses		(7,724)	(7,148)

Operating profit before gains and losses on property assets		37,454	35,079
Gain/(loss) on the revaluation of investment properties	13a,14	9,535	(51,381)
Gains on surplus land	15	1,039	497

Operating profit/(loss)		48,028	(15,805)
Share of profit/(loss) of associate	13d	618	(602)
Investment income - interest receivable	7	33	20
Finance costs - interest payable	8	(12,280)	(11,199)
- fair value movement of derivatives	8, 18	(223)	(7,965)
- refinancing costs	8	(4,300)	-

Profit/(loss) before taxation		31,876	(35,551)
Taxation	9	-	-

Profit/(loss) for the year (attributable to equity shareholders)	5	31,876	(35,551)

Total comprehensive income/(loss) for the year (attributable to equity shareholders)		31,876	(35,551)

Basic earnings/(loss) per share	12	24.4p	(27.7)p

Diluted earnings/(loss) per share	12	24.1p	(27.4)p

EPRA earnings per share are shown in Note 12.

All items in the consolidated statement of comprehensive income relate to continuing operations.

Consolidated Balance Sheet

31 March 2013

	Note	2013 £000	2012 £000

Non-current assets
Investment property	13a	745,605	726,390
Investment property under construction	13a	17,277	33,905
Interests in leasehold property	13a	21,803	22,394
Plant, equipment and owner-occupied property	13b	2,750	2,637
Goodwill	13c	1,433	1,433
Investment in associate	13d	17,681	15,496
Capital Goods Scheme receivable	16	7,501	-

		814,050	802,255
Current assets
Surplus land	15	4,593	18,035
Inventories		300	299
Trade and other receivables	16	14,450	10,943
Cash and cash equivalents		7,850	10,060

		27,193	39,337

Total assets		841,243	841,592

Current liabilities
Trade and other payables	17	(24,421)	(25,675)
Borrowings	19	(1,937)	-
Obligations under finance leases	21	(1,952)	(1,946)

		(28,310)	(27,621)

Non-current liabilities
Derivative financial instruments	18c	(5,494)	(15,748)
Borrowings	19	(234,948)	(282,960)
Obligations under finance leases	21	(19,851)	(20,448)
Other payables	17	(12)	(315)

		(260,305)	(319,471)

Total liabilities		(288,615)	(347,092)

Net assets		552,628	494,500

Equity
Called up share capital	22	14,264	13,139
Share premium account		44,278	43,432
Reserves		494,086	437,929

Equity shareholders' funds		552,628	494,500

The financial statements were approved by the Board of Directors and authorised for issue on 20 May 2013. They were signed on its behalf by:

James Gibson, Director John Trotman, Director

Company Registration No. 03625199

Consolidated Statement of Changes in Equity

Year ended 31 March 2013

	Share capital £000	Share premium account £000	Capital redemption reserve £000	Retained earnings £000	Other distributable reserves £000	Own shares £000	Total £000

At 1 April 2012	13,139	43,432	1,653	441,899	-	(5,623)	494,500
Total comprehensive gain for the year	-	-	-	31,876	-	-	31,876
Issue of share capital	1,125	846	-	-	34,793	-	36,764
Dividend	-	-	-	(13,543)	-	-	(13,543)
Credit to equity for equity-settled share based payments	-	-	-	3,031	-	-	3,031

At 31 March 2013	14,264	44,278	1,653	463,263	34,793	(5,623)	552,628

The other distributable reserve arose from merger relief under S612 of Companies Act 2006, following the Group's placing of 10 million shares in the year.

Year ended 31 March 2012

	Share capital £000	Share premium account £000	Capital redemption reserve £000	Retained earnings £000	Other distributable reserves £000	Own shares £000	Total £000

At 1 April 2011	13,106	43,404	1,653	488,682	-	(1,896)	544,949
Total comprehensive loss for the year	-	-	-	(35,551)	-	-	(35,551)
Issue of share capital	33	28	-	-	-	-	61
Dividend	-	-	-	(12,223)	-	-	(12,223)
Purchase of own shares	-	-	-	-	-	(3,727)	(3,727)
Credit to equity for equity-settled share based payments	-	-	-	991	-	-	991

At 31 March 2012	13,139	43,432	1,653	441,899	-	(5,623)	494,500

Consolidated Cash Flow Statement

Year ended 31 March 2013

	Note	2013 £000	2012 £000
Operating profit/(loss)		48,028	(15,805)
(Gain)/loss on the revaluation of investment properties	13a, 14	(9,535)	51,381
Gains on surplus land	15	(1,039)	(497)
Depreciation	13b	583	550
Depreciation of finance lease capital obligations	13a	933	853
Employee share options	6	1,376	1,532
(Increase)/decrease in inventories		(1)	20
(Increase)/decrease in receivables		(1,016)	887
Increase/(decrease) in payables		2,696	(44)

Cash generated from operations		42,025	38,877

Interest paid		(11,873)	(11,508)
Interest received		34	19

Cash flows from operating activities		30,186	27,388

Investing activities

Sale of surplus land		15,864	5,404
Purchase of non-current assets		(5,745)	(18,130)
Additions to surplus land		(1,969)	(4,647)
Investment in associate	13d	(1,567)	(1,167)

Cash flows from investing activities		6,583	(18,540)

Financing activities
Issue of share capital		36,764	61
Purchase of own shares		-	(3,727)
Payment of finance lease liabilities	13a	(933)	(853)
Equity dividends paid	11	(13,543)	(12,223)
Refinancing fees		(5,096)	-
Payments to cancel interest rate derivatives		(10,477)	-
(Reduction)/increase in borrowings		(45,694)	9,000

Cash flows from financing activities		(38,979)	(7,742)

Net (decrease)/increase in cash and cash equivalents		(2,210)	1,106

Opening cash and cash equivalents		10,060	8,954

Closing cash and cash equivalents		7,850	10,060

Reconciliation of Net Cash Flow to Movement in Net Debt

Year ended 31 March 2013

	Note	2013 £000	2012 £000

Net (decrease)/increase in cash and cash equivalents in the year		(2,210)	1,106
Cash outflow/(inflow) from decrease/(increase) in debt financing		45,694	(9,000)

Change in net debt resulting from cash flows		43,484	(7,894)

Movement in net debt in the year		43,484	(7,894)
Net debt at the start of the year		(273,940)	(266,046)

Net debt at the end of the year	18	(230,456)	(273,940)

Notes to the financial statements

Year ended 31 March 2013

1. General information

Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. The nature of the Group's operations and its principal activities are set out in note 4 and in the Business Review.

These financial statements are presented in pounds sterling because that is the currency of the economic environment in which the Group operates.

2. BASIS OF PREPARATION

The condensed set of financial statements set out above (which was approved by the Board on 20 May 2013) has been compiled in accordance with IFRS, but does not contain sufficient information to constitute a full set of IFRS financial statements. This financial information does not constitute the Company's statutory accounts for the years ended 31 March 2012 and 31 March 2013, but is derived from those accounts. Those accounts give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole. The Company's statutory accounts for the year ended 31 March 2012 have been filed with the Registrar of Companies. The Company's statutory accounts for the year ended 31 March 2013 will be filed with the Registrar of Companies following the Annual General Meeting. The auditors' reports on both the 2012 and 2013 accounts were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under s498(2) or (3) Companies Act 2006 or preceding legislation.

The statutory accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied all accounting standards and interpretations issued by the International Accounting Standards Board and International Financial Reporting Interpretations Committee relevant to its operations and effective for accounting periods beginning on 1 April 2012. The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2012 have been applied in this condensed set of financial statements.

Going concern

A review of the Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business and Financial Reviews. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are shown in the balance sheet, cash flow statement and accompanying notes to the financial statements. Further information concerning the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk can be found in the Business and Financial Reviews, and in the Report on Corporate Governance.

After reviewing Group and Company cash balances, borrowing facilities and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ended 31 March 2014 and projections contained in the longer term business plan which covers the period to March 2018. The Directors have considered carefully the Group's trading performance and cash flows as a result of the uncertain global economic environment and the other principal risks to the Group's performance. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

3. Revenue

Analysis of the Group's operating revenue can be found below and in the Portfolio Summary.

	2013 £000	2013 £000	2012 £000	2012 £000

Open stores
Self storage income	58,112		54,734
Other storage related income	9,996		9,363
Ancillary store rental income	226		176

		68,334		64,273
Stores under development
Non-storage income	298		270

		298		270
Fee income
Fees earned from Big Yellow Limited Partnership	639		720
Other management fees earned	400		400

		1,039		1,120

Revenue per statement of comprehensive income		69,671		65,663

Interest receivable on bank deposits (see note 7)		33		20

Total revenue per IAS 18		69,704		65,683

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

4. Segmental Information

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. Given the nature of the Group's business, there is one segment, which is the provision of self storage and related services.

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

5. PROFIT/(LOSS) for the year

a) Profit/(loss) for the year has been arrived at after charging/(crediting):

	2013 £000	2012 £000

Depreciation of plant, equipment and owner-occupied property	583	550
Leasehold property depreciation	933	853
(Increase)/decrease in fair value of investment property	(9,535)	51,381
Gains on surplus land	(1,039)	(497)
Cost of inventories recognised as an expense	908	914
Employee costs (see note 6)	10,947	10,255
Operating lease rentals	154	164
Auditor's remuneration for audit services (see below)	167	167

b) Analysis of auditor's remuneration:

	2013 £000	2012 £000

Fees payable to the Company's auditor for the audit of the Company's annual accounts	160	160
Other services - audit of the Company's subsidiaries' annual accounts	7	7

Total audit fees	167	167

Tax services - compliance	32	30
Tax services - advisory	60	60
Other services	34	50
Real estate advice (planning)	11	12

Total non-audit fees	137	152

Fees payable to Deloitte LLP and their associates for non-audit services to the Company are not required to be disclosed because the consolidated financial statements are required to disclose such fees on a consolidated basis.

6. Employee costs

The average monthly number of full-time equivalent employees (including Executive Directors) was:

	2013 Number	2012 Number

Sales	243	235
Administration	43	44

	286	279

At 31 March 2013 the total number of Group employees was 319 (2012: 310).
	2013 £000	2012 £000
Their aggregate remuneration comprised:
Wages and salaries	7,763	7,605
Social security costs	1,472	791
Other pension costs	336	327
Share-based payments	1,376	1,532

	10,947	10,255

The increase in social security costs is a result of employers' national insurance payable on the vesting of the Long Term Bonus Performance Plan in the year.

7. INVESTMENT income

	2013 £000	2012 £000

Interest receivable on bank deposits	33	20

	33	20

8. Finance costs

	2013 £000	2012 £000

Interest on bank borrowings	11,458	11,097
Capitalised interest	(236)	(1,035)
Interest on obligations under finance leases	1,057	1,130
Other interest payable	1	7

Total interest payable	12,280	11,199

Change in fair value of interest rate derivatives	223	7,965
Refinancing costs	4,300	-

Total finance costs	16,803	19,164

The refinancing costs relate to the unamortised loan arrangement costs of the previous facility, and the write-off of the costs of the new bank facility in accordance with IAS 39.

9. TaxATION

The Group converted to a REIT in January 2007. As a result the Group does not pay UK corporation tax on the profits and gains from its qualifying rental business in the UK provided that it meets certain conditions. Non-qualifying profits and gains of the Group are subject to corporation tax as normal. The Group monitors its compliance with the REIT conditions. There have been no breaches of the conditions to date.

UK current tax	2013 £000	2012 £000

Current tax:
- Current year	-	-

Deferred tax (see note 20):
- Current year	-	-

	-	-

A reconciliation of the tax charge is shown below:

	2013 £000	2012 £000

Profit/(loss) before tax	31,876	(35,551)

Tax charge/(credit) at 24% (2012 - 26%) thereon	7,650	(9,243)

Effects of:
Revaluation of investment properties	493	13,484
Permanent differences	(3,155)	37
Profits from the tax exempt business	(5,313)	(5,759)
Losses not utilised in the year	4,663	685
Utilisation of brought forward losses	-	(370)
Movement on other unrecognised deferred tax assets	(4,338)	1,166

Total tax charge	-	-

At 31 March 2013 the Group has unutilised tax losses of £37.5 million (2012: £13.8 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10. Adjusted Profit before tax AND ADJUSTED EBITDA

	2013 £000	2012 £000

Profit/(loss) before tax	31,876	(35,551)
(Gain)/loss on revaluation of investment properties - wholly owned	(9,535)	51,381
- in associate	(821)	480
Change in fair value of interest rate derivatives - Group	223	7,965
- in associate	(211)	(135)
VAT implementation costs	179	-
Refinancing costs	4,300	-
Share of refinancing costs in associate	499	-
Gains on surplus land	(1,039)	(497)

Adjusted profit before tax	25,471	23,643

Net bank and other interest	11,190	10,049
Depreciation	583	550

Adjusted EBITDA	37,244	34,242

Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate derivatives, net gains and losses on surplus land, and non-recurring items of income and expenditure have been disclosed to give a clearer understanding of the Group's underlying trading performance. The adjusted profit before tax of £25,471,000 (2012: £23,643,000) equates to EPRA earnings, as there is no tax charge in the year.

11. Dividends

	2013 £000	2012 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2012 of 5.5p (2011: 5p) per share.	7,057	6,460
Interim dividend for the year ended 31 March 2013 of 5p (2012: 4.5p) per share.	6,486	5,763

	13,543	12,223

Proposed final dividend for the year ended 31 March 2013 of 6p (2012: 5.5p) per share.	8,384	7,057

Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2013, the final dividend will be paid on 24 July 2013. The ex-div date is 12 June 2013 and the record date is 14 June 2013.

The Property Income Dividend ("PID") payable for the year is 8 pence per share.

12. Earnings/(LOSS) AND NET ASSETS per share

Earnings/(loss) per ordinary share

	Year ended 31 March 2013			Year ended 31 March 2012
	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic	31.9	130.9	24.4	(35.6)	128.4	(27.7)
Dilutive share options	-	1.3	(0.3)	-	1.3	0.3

Diluted	31.9	132.2	24.1	(35.6)	129.7	(27.4)

Adjustments:
(Gain)/loss on revaluation of investment properties	(9.5)	-	(7.2)	51.4	-	39.6
Change in fair value of interest rate derivatives	0.2	-	0.2	8.0	-	6.1
Gains on surplus land	(1.0)	-	(0.8)	(0.5)	-	(0.4)
VAT implementation costs	0.2	-	0.1	-	-	-
Refinancing costs	4.3	-	3.3	-	-	-
Share of associate non-recurring (gains)/losses	(0.6)	-	(0.4)	0.3	-	0.3

EPRA - diluted	25.5	132.2	19.3	23.6	129.7	18.2

EPRA - basic	25.5	130.9	19.5	23.6	128.4	18.4

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

EPRA earnings and earnings per ordinary share before non-recurring items, movements on revaluation of investment properties, gains on surplus land, the change in fair value of interest rate derivatives, and share of associate non-recurring gains and losses have been disclosed to give a clearer understanding of the Group's underlying trading performance.

The European Public Real Estate Association ("EPRA") has issued recommended bases for the calculation of net assets per share information and this is shown in the table below:

	31 March 2013 £000	31 March 2012 £000
Basic net asset value	552,628	494,500
Exercise of share options	555	746
EPRA NNNAV	553,183	495,246

Adjustments:
Fair value of derivatives	5,494	15,748
Fair value of derivatives - share of associate	232	443

EPRA NAV	558,909	511,437

Basic net assets per share (pence)	395.5	386.1
EPRA NNNAV per share (pence)	390.0	378.9
EPRA NAV per share (pence)	394.1	391.3

EPRA NAV (as above) (£000)	558,909	511,437
Valuation methodology assumption (see note 14) (£000)	35,621	35,514
Capital goods scheme adjustment (£000) (see below)	-	12,056

Adjusted net asset value (£000)	594,530	559,007
Adjusted net assets per share (pence)	419.2	427.7

	No. of shares	No. of shares
Shares in issue	142,639,647	131,393,041
Own shares held in treasury	(1,418,750)	(1,418,750)
Own shares held in EBT	(1,500,000)	(1,885,117)
Basic shares in issue used for calculation	139,720,897	128,089,174
Exercise of share options	2,110,396	2,623,172
Diluted shares used for calculation	141,831,293	130,712,346

Net assets per share are shareholders' funds divided by the number of shares at the year end. The shares currently held in the Group's Employee Benefit Trust and in treasury are excluded from both net assets and the number of shares. Adjusted net assets per share include the effect of those shares issuable under employee share option schemes and the effect of alternative valuation methodology assumptions (see note 14).

The adjusted net assets per share presented for the year ended 31 March 2012 has been restated to show the discounted Capital Goods Scheme receivable and the reduction in the creditor payable as recorded at 31 March 2013, which was lower than that disclosed in the accounts for the year ended 31 March 2012, to ensure comparability with the current period disclosure. This has reduced the adjusted net assets per share at 31 March 2012 from 429.2 pence to 427.7 pence.

Big Yellow issued 7.5% of its share capital in January 2013, raising £35.8 million (net of expenses). A proforma adjusted net assets per share has been produced below as if the placing had taken place on 31 March 2012. Applying the effects of the placing to basic net assets per share for the year ended 31 March 2012, the basic net asset value increases to £530,293,000, and basic shares in issue increases to 138,089,174, giving a basic net asset per share of 384.0p.

Adjustment for placing		No. of shares
Diluted shares at 31 March 2012		130,712,346
Shares issued in placing		10,000,000
Revised shares		140,712,346

		£000
Adjusted net assets at 31 March 2012		559,007
Placing proceeds (net)		35,793
Adjusted net assets at 31 March 2012 proforma post placing		594,800
Adjusted net assets per share at 31 March 2012 proforma post placing		422.7p

13. Non-Current Assets

a) Investment property, development property and interests in leasehold property

	Investment property £000	Investment property under construction £000	Interests in leasehold property £000	Total £000

At 31 March 2011	745,840	46,310	21,244	813,394
Additions	2,723	16,803	-	19,526
Reclassification	27,371	(27,371)	-	-
Adjustment to present value	-	-	2,003	2,003
Revaluation (see note 14)	(49,544)	(1,837)	-	(51,381)
Depreciation	-	-	(853)	(853)

At 31 March 2012	726,390	33,905	22,394	782,689
Additions	3,376	305	-	3,681
Capital Goods Scheme adjustment*	(10,629)	-	-	(10,629)
Reclassification	16,260	(16,260)	-	-
Adjustment to present value	-	-	342	342
Revaluation (see note 14)	10,208	(673)	-	9,535
Depreciation	-	-	(933)	(933)

At 31 March 2013	745,605	17,277	21,803	784,685

* The Capital Goods Scheme adjustment includes the discounted debtor receivable of £10,346,000, and a reduction in the creditor payable of £283,000.

The income from self storage accommodation earned by the Group from its investment property is disclosed in note 3. Direct operating expenses, which are all applied to generating rental income, arising on the investment property in the year are disclosed in the Portfolio Summary.

Included within additions is £0.2 million of capitalised interest (2012: £1.0 million), calculated at the Group's average borrowing cost of 4.0%.

55 of the Group's investment properties are pledged as security for loans, with a total value of £736,870,000.

b) Plant, equipment and owner occupied property

	Freehold property £000	Leasehold improve-ments £000	Plant and machinery £000	Motor vehicles £000	Fixtures, fittings & office equipment £000	Total £000
Cost
At 31 March 2011	1,867	44	744	25	5,831	8,511
Additions	-	-	36	-	477	513

At 31 March 2012	1,867	44	780	25	6,308	9,024
Additions	-	-	46	-	650	696

At 31 March 2013	1,867	44	826	25	6,958	9,720

Depreciation
At 31 March 2011	(191)	(41)	(515)	(3)	(5,087)	(5,837)
Charge for the year	(35)	(3)	(48)	(6)	(458)	(550)

At 31 March 2012	(226)	(44)	(563)	(9)	(5,545)	(6,387)
Charge for the year	(35)	-	(46)	(6)	(496)	(583)

At 31 March 2013	(261)	(44)	(609)	(15)	(6,041)	(6,970)

Net book value
At 31 March 2013	1,606	-	217	10	917	2,750

At 31 March 2012	1,641	-	217	16	763	2,637

c) Goodwill

Goodwill relates to the purchase of Big Yellow Self Storage Company Limited in 1999. The asset is tested bi-annually for impairment. The carrying value of £1,433,000 remains unchanged from the prior year as there is considered to be no impairment in the value of the asset.

d) Investment in associate

The Group has a 33.3% interest in Big Yellow Limited Partnership. This interest is accounted for as an associate, using equity accounting. The Partnership commenced trading on 1 December 2007.

	31 March 2013 £000	31 March 2012 £000
At the beginning of the year	15,496	14,931
Subscription for partnership capital and advances	1,567	1,167
Share of results (see below)	618	(602)

	17,681	15,496

The Group has subscribed for cumulative partnership capital and advances of £16,366,000 to 31 March 2013 (2012: £14,799,000).

The figures below show the trading results of Big Yellow Limited Partnership, and the Group's share of the results and the net assets of the Partnership.

Big Yellow Limited Partnership	Year ended 31 March 2013 £000	Year ended 31 March 2012 £000

Income statement (100%)
Revenue	8,289	6,539
Cost of sales	(4,845)	(4,660)
Administrative expenses	(76)	(77)

Operating profit	3,368	1,802
Gain/(loss) on the revaluation of investment properties	2,462	(1,441)
Net interest payable	(3,111)	(2,572)
Refinancing costs	(1,497)	-
Fair value movement of interest rate derivatives	633	406

Profit/(loss) before and after tax	1,855	(1,805)

Balance sheet (100%)
Investment property	109,480	110,460
Other non-current assets	3,598	641
Current assets	3,422	1,548
Current liabilities	(2,759)	(2,463)
Derivative financial instruments	(697)	(1,330)
Non-current liabilities	(60,000)	(62,367)

Net assets (100%)	53,044	46,489

Group share of (33.3%)	Year ended 31 March 2013 £000	Year ended 31 March 2012 £000
Operating profit	1,122	601
Gain/(loss) on the revaluation of investment properties	821	(480)
Net interest payable	(1,037)	(858)
Refinancing costs	(499)	-
Fair value movement of interest rate derivatives	211	135

Profit/(loss) for the year	618	(602)

Associate net assets	17,681	15,496

The Partnership has in place a fully drawn loan of £60 million, secured from Royal Bank of Scotland plc and HSBC Bank plc.

The loan has a four year term and expires in September 2016. £31.8 million of the £60 million drawn down at 31 March 2013 has been fixed to 30 June 2013 at a weighted average interest cost pre margin of 4.07%. The balance of the drawn debt is currently paying three month LIBOR plus applicable margin. Forward start fixed rate interest derivatives of £30 million have been put in place commencing on 1 July 2013 to run through to 30 September 2016, at a weighted average cost pre margin of 1.05%. The loan amortises to £51.1 million by September 2016, with the amortisation starting in June 2014.

The weighted average interest cost post margin at 31 March 2013 of the facility was 6.4%. On a proforma basis, the weighted average cost of the facility in July 2013 will be 4.9% following the commencement of the new interest rate derivatives.

The Partnership loan has a loan to value covenant which requires the gross loan to the value of the Partnership's investment property assets to be no more than 55%. The loan is non-recourse to the Group.

The Group has an option to acquire the assets within the Partnership or the remaining interest in the Partnership not held by the Group, which is first exercisable based on the 31 March 2013 balance sheet date, but can be deferred to March 2014 and March 2015, subject to Internal Rate of Return ("IRR") hurdles. The price payable is based on the market value of the Partnership's assets and liabilities, and is subject to certain promotes, dependent on the IRR achieved. The option has been deferred at 31 March 2013, and has been assessed to have nil value at 31 March 2013.

14. VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000	Revaluation on deemed cost £000	Valuation £000
Freehold stores*
At 31 March 2012	358,567	324,323	682,890
Transfer from investment property under construction	20,936	(4,676)	16,260
Capital Goods Scheme adjustment	(10,525)	10,525	-
Movement in year	3,212	(1,857)	1,355
At 31 March 2013	372,190	328,315	700,505

Leasehold stores
At 31 March 2012	15,851	27,649	43,500
Capital Goods Scheme adjustment	(104)	104	-
Movement in year	164	1,436	1,600
At 31 March 2013	15,911	29,189	45,100

Total of open stores
At 31 March 2012	374,418	351,972	726,390
Transfer from investment property under construction	20,936	(4,676)	16,260
Capital Goods Scheme adjustment	(10,629)	10,629	-
Movement in year	3,376	(421)	2,955
At 31 March 2013	388,101	357,504	745,605

Investment property under construction
At 31 March 2012	44,413	(10,508)	33,905
Transfer to investment property	(20,936)	4,676	(16,260)
Movement in year	305	(673)	(368)
At 31 March 2013	23,782	(6,505)	17,277

Valuation of all investment property
At 31 March 2012	418,831	341,464	760,295
Capital Goods Scheme adjustment**	(10,629)	10,629	-
Movement in year	3,681	(1,094)	2,587
At 31 March 2013	411,883	350,999	762,882

* Includes one long leasehold property

** The Capital Goods Scheme adjustment includes the discounted debtor receivable of £10,346,000 and a reduction in the creditor payable of £283,000.

The freehold and leasehold investment properties have been valued at 31 March 2013 by external valuers, Cushman & Wakefield LLP ("C&W"). The valuation has been carried out in accordance with the RICS Valuation - Professional Standards, published by The Royal Institution of Chartered Surveyors ("the Red Book"). The valuation of each of the investment properties and the investment properties under construction has been prepared on the basis of either Fair Value or Fair Value as a fully equipped operational entity, having regard to trading potential, as appropriate.

The valuation has been provided for accounts purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book. In compliance with the disclosure requirements of the Red Book, C&W have confirmed that:

• The members of the RICS who have been the signatories to the valuations provided to the Group for the same purposes as this valuation have done so since September 2004.

• C&W have been carrying out this bi-annual valuation for the same purposes as this valuation on behalf of the Group since September 2004.

• C&W do not provide other significant professional or agency services to the Group.

• In relation to the preceding financial year of C&W, the proportion of the total fees payable by the Group to the total fee income of the firm is less than 5%.

• The fee payable to C&W is a fixed amount per store, and is not contingent on the appraised value.

Market Uncertainty

C&W's valuation report comments on valuation uncertainty resulting from low liquidity in the market for self storage property. C&W note that, although there were a number of self storage transactions in 2007, the only significant transactions since 2007 are:

1. The sale of a 51% share in Shurgard Europe which was announced in January 2008 and completed on 31 March 2008.

2. The sale of the former Keepsafe portfolio by Macquarie to Alligator Self Storage which was completed in January 2010; and

3. The purchase by Shurgard Europe of the 80% interests held by its joint venture partner (Arcapita) in its two European joint venture vehicles, First Shurgard and Second Shurgard. The price paid was 172 million Euros and the transaction was announced in March 2011. The two joint ventures owned 72 self storage properties.

4. The purchase of Selstor, Sweden, by Pelican Self Storage/M3 Capital in the fourth quarter of 2012.

There have been seven single store market transactions in the UK since 2010. C&W state that due to the lack of comparable market information in the self storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during more active market conditions.

Valuation methodology

C&W have adopted different approaches for the valuation of the leasehold and freehold assets as follows:

Freehold and long leasehold

The valuation is based on a discounted cash flow of the net operating income over a ten year period and notional sale of the asset at the end of the tenth year.

Assumptions

A. Net operating income is based on projected revenue received less projected operating costs together with a central administration charge of 6% of the estimated annual revenue subject to a cap and a collar. The initial net operating income is calculated by estimating the net operating income in the first 12 months following the valuation date.

B. The net operating income in future years is calculated assuming either straight-line absorption from day one actual occupancy or variable absorption over years one to four of the cash flow period to an estimated stabilised/mature occupancy level. In the valuation the assumed stabilised occupancy level for the 54 trading stores (both freeholds and leaseholds) open at 31 March 2013 averages 81.5% (31 March 2012: 82.4%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. The average time assumed for the 32 established stores to trade at their maturity levels is 32 months (31 March 2012: 32 months); for the 22 lease-up stores, the period to maturity is 43 months (31 March 2012: 44 months).

C. The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for industrial and retail warehouse property, yields for other trading property types such as student housing and hotels, bank base rates, ten year money rates, inflation and the available evidence of transactions in the sector. The valuation included in the accounts assumes rental growth in future periods. If an assumption of no rental growth is applied to the external valuation, the net initial yield pre-administration expenses for the 32 established stores is 6.8% (31 March 2012: 6.8%) rising to a stabilised net yield pre-administration expenses of 8.1% (31 March 2012: 8.1%). Also on a no growth and pre-administration expenses basis the 22 lease-up stores have a net initial yield of 4.9% (31 March 2012: 4.4%) rising to 8.4% (31 March 2012: 8.6%) on stabilisation.

D. The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that reflects the risk associated with each asset. The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 11.2% (31 March 2012: 11.2%).

E. Purchaser's costs of 5.8% (see below) have been assumed initially and sale plus purchaser's costs totalling 6.8% are assumed on the notional sales in the tenth year in relation to the freehold stores.

Short leasehold

The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted cash flow is extended to the expiry of the lease. The average unexpired term of the Group's seven short leasehold properties is 15.7 years (31 March 2012: 16.7 years).

Investment properties under construction

C&W have valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection expected for the store at opening and after allowing for the outstanding costs to take each scheme from its current state to completion and full fit-out. C&W have allowed for holding costs and construction contingency, as appropriate. One scheme does not yet have planning consent and C&W have reflected the planning risk in their valuation.

Immature stores: value uncertainty

C&W have assessed the value of each property individually. However, two of the stores in the portfolio are relatively immature and have low initial cash flow. C&W have endeavoured to reflect the nature of the cash flow profile for these properties in their valuation, and the higher associated risks relating to the as yet unproven future cash flow, by adjustment to the capitalisation rates and discount rates adopted. However, immature low cash flow stores of this nature are rarely, if ever, traded individually in the market, unless as part of a distressed sale or similar situation. Although, there is more evidence of immature low cash flow stores being traded as part of a group or portfolio transaction.

Please note C&W's comments in relation to market uncertainty in the self storage sector due to the lack of comparable market transactions and information. The degree of uncertainty relating to the two immature stores is greater than in relation to the balance of the properties due to there being even less market evidence that might be available for more mature properties and portfolios.

C&W state that in practice, if an actual sale of the properties were to be contemplated then any immature low cash flow stores would normally be presented to the market for sale lotted or grouped with other more mature assets owned by the same entity, in order to alleviate the issue of negative or low short term cash flow. This approach would enhance the marketability of the group of assets and assist in achieving the best price available in the market by diluting the cash flow risk.

C&W have not adjusted their opinion of Fair Value to reflect such a grouping of the immature assets with other properties in the portfolio and all stores have been valued individually. However, they highlight the matter to alert the Group to the manner in which the properties might be grouped or lotted in order maximise their attractiveness to the market place.

C&W consider this approach to be a valuation assumption but not a Special Assumption, the latter being an assumption that assumes facts that differ from the actual facts existing at the valuation date - and which, if not adopted, could produce a material difference in value.

C&W have not assumed that the entire portfolio of properties owned by the Entity would be sold as a single lot and the value for the whole portfolio in the context of a sale as a single lot may differ significantly (either higher or lower) from the aggregate of the individual values for each property in the portfolio, reflecting the lotting assumption described above.

Valuation assumption for purchaser's costs

The Group's investment property assets have been valued for the purposes of the financial statements after deducting notional purchaser's cost of 5.8% of gross value, as if they were sold directly as property assets. The valuation is an asset valuation which is entirely linked to the operating performance of the business. They would have to be sold with the benefit of operational contracts, employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure.

This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing a deduction for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the assumed Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser's cost of 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years were completed in a corporate structure. The Group therefore instructed C&W to carry out a Red Book valuation on the above basis, and this results in a higher property valuation at 31 March 2013 of £796,890,000 (£34,008,000 higher than the value recorded in the financial statements). The valuations in Big Yellow Limited Partnership are £4,840,000 higher than the value recorded in the financial statements, of which the Group's share is £1,613,000. The sum of these is £35,621,000 and translates to 25.1 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 12).

15. SURPLUS LAND

			£000

At 31 March 2012			18,035
Additions			2,277
Disposals			(15,719)

At 31 March 2013			4,593

In the current year, a gain of £1,039,000 was recorded following the disposal of three sites (2012: gain of £497,000 following the disposal of one site).

16. TRADE AND OTHER RECEIVABLES

Current	31 March 2013 £000	31 March 2012 £000

Trade receivables	2,373	1,559
Capital Goods Scheme receivable	2,845	-
Other receivables	887	1,316
Prepayments and accrued income	8,345	8,068

	14,450	10,943
Non-current
Capital Goods Scheme receivable	7,501	-

Trade receivables are net of a bad debt provision of £45,000 (2012: £24,000). The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

The Operating and Financial Review contains commentary on the Capital Goods Scheme receivable.

Trade receivables

The Group does not typically offer credit terms to its customers, requiring them to pay in advance of their storage period and hence the Group is not exposed to significant credit risk. A late charge of 10% is applied to a customer's account if they are greater than 10 days overdue in their payment. The Group provides for receivables on a specific basis. There is a right of lien over the customers' goods, so if they have not paid within a certain time frame, we have the right to sell the items they store to recoup the debt owed by the customer. 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 between one week to four weeks' storage income. Before accepting a new business customer who wishes to use a number of the Group's stores, the Group uses an external credit rating to assess the potential customer's credit quality and defines credit limits by customer. There are no customers who represent more than 5 per cent of the total balance of trade receivables.

Included in the Group's trade receivable balance are debtors with a carrying amount of £384,000 (2012: £173,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The average age of these receivables is 34 days past due (2012: 31 days past due).

Ageing of past due but not impaired receivables

	2013 £000	2012 £000
1 - 30 days	299	117
30 - 60 days	37	16
60 + days	48	40

Total	384	173

The increase in aged debtors from the prior year relates principally to tenants at sites awaiting development, rather than storage customers. The majority of these amounts have been collected since the year end.

Movement in the allowance for doubtful debts

	2013 £000	2012 £000
Balance at the beginning of the year	24	25
Amounts provided in year	116	39
Amounts written off as uncollectible	(95)	(40)

Balance at the end of the year	45	24

The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

Ageing of impaired trade receivables

	2013 £000	2012 £000
1 - 30 days	-	2
30 - 60 days	3	3
60 + days	42	19

Total	45	24

17. TRADE AND OTHER PAYABLES

	31 March 2013 £000	31 March 2012 £000
Current
Trade payables	8,454	9,159
Other payables	5,445	2,957
Accruals and deferred income	10,500	12,916
Amounts owed to associate	2	2
VAT repayable under Capital Goods Scheme	20	641

	24,421	25,675

Non-current
VAT repayable under Capital Goods Scheme	12	315

The Group has financial risk management policies in place to ensure that all payables are paid within the credit terms. The Directors consider the carrying amount of trade and other payables and accruals and deferred income approximates fair value.

The Directors estimate the fair value of the Group's VAT payable under the Capital Goods Scheme as follows:

	2013		2012
	Carrying amount £000	Estimated fair value £000	Carrying amount £000	Estimated fair value £000

VAT payable under the Capital Goods Scheme	32	31	956	913

The fair values have been calculated by discounting expected cash flows at interest rates prevailing at the year end.

18. Financial Instruments

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group's debt facilities require 60% of total drawn debt to be fixed. The Group has complied with this during the year.

With the exception of derivative instruments which are classified as a financial liability at fair value through the profit and loss ("FVTPL"), financial liabilities are categorised under amortised cost. All financial assets are categorised as loans and receivables.

Exposure to credit, interest rate and currency risks arises in the normal course of the Group's business. Derivative financial instruments are used to manage exposure to fluctuations in interest rates, but are not employed for speculative purposes.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

A. Balance sheet management

The Group's Board reviews the capital structure on an ongoing basis. As part of this review, the Board considers the cost of capital and the risks associated with each class of capital. The Group seeks to have a conservative gearing ratio (the proportion of net debt to equity). The Board considers at each review the appropriateness of the current ratio in light of the above. The Board is currently satisfied with the Group's gearing ratio.

The gearing ratio at the year end is as follows:

	2013 £000	2012 £000

Debt	(238,306)	(284,000)
Cash and cash equivalents	7,850	10,060

Net debt	(230,456)	(273,940)
Balance sheet equity	552,628	494,500
Net debt to equity ratio	41.7%	55.4%

Debt is defined as long-term and short-term bank borrowings, as detailed in note 19. Equity includes all capital and reserves of the Group attributable to equity holders of the Company. Net debt is defined as gross bank borrowings less cash and cash equivalents.

B. Debt management

The Group borrows through a senior term loan, secured on 40 self storage assets and sites, and through a 15 year loan with Aviva Commercial Finance Limited secured on a portfolio of 15 self storage assets. Borrowings are arranged to ensure an appropriate maturity profile and to maintain short term liquidity. Funding is arranged in the Group and in Big Yellow Limited Partnership through banks and financial institutions with whom the Group has a strong working relationship.

C. Interest rate risk management

The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies are applied, by either positioning the balance sheet or protecting interest expense through different interest rate cycles.

At 31 March 2013 the Group had one interest rate derivative in place; £70 million fixed at 2.80% (excluding the margin on the underlying debt instrument) until September 2016.

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year.

The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is one month LIBOR. The Group will settle the difference between the fixed and floating interest rate on a net basis.

The Group does not hedge account for its interest rate swaps and states them at fair value, with changes in fair value included in the statement of comprehensive income. The loss in the statement of comprehensive income for the year on the fair value of interest rate derivatives was £223,000 (2012: loss of £7,965,000).

The fair value of the above derivatives at 31 March 2013 was a liability of £5,494,000 (2012: liability of £15,748,000).

D. Interest rate sensitivity analysis

In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group's earnings, without jeopardising its flexibility. Over the longer term, permanent changes in interest rates may have an impact on consolidated earnings.

At 31 March 2013, it is estimated that an increase of 0.5 percentage points in interest rates would have reduced the Group's adjusted profit before tax by £350,000 (2012: reduced adjusted profit before tax by £470,000) and a decrease of 0.5 percentage points in interest rates would have increased the Group's adjusted profit before tax by £350,000 (2012: increased adjusted profit before tax by £470,000). There would have been no effect on amounts recognised directly in equity. 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 decreased during the year, following the repayment of floating rate debt from cash resources. The Board monitors closely the exposure to the floating rate element of our debt.

E. Cash management and liquidity

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 19 is a description of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.

Short term money market deposits are used to manage liquidity whilst maximising the rate of return on cash resources, giving due consideration to risk.

F. Foreign currency management

The Group does not have any foreign currency exposure.

G. Credit risk

The credit risk management policies of the Group with respect to trade receivables are discussed in note 16. The Group has no significant concentration of credit risk, with exposure spread over 38,000 customers in our stores.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

H. Financial maturity analysis

In respect of interest-bearing financial liabilities, the following table provides a maturity analysis for individual elements.

2013 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 mortgage	98,306	1,937	2,034	6,735	87,600
Bank loan payable at variable rate	70,000	-	-	70,000	-
Debt fixed by interest rate derivatives	70,000	-	-	70,000	-

Total	238,306	1,937	2,034	146,735	87,600

2012 Maturity
	Total £000	Less than one year £000	One to two years £000	Two to five years £000	More than five years £000

Debt
Bank loan payable at variable rate	94,000	-	94,000	-	-
Debt fixed by interest rate derivatives	190,000	-	190,000	-	-

Total	284,000	-	284,000	-	-

I. Fair values of financial instruments

The fair values of the Group's cash and short term deposits and those of other financial assets equate to their book values. Details of the Group's receivables at amortised cost are set out in note 16. The amounts are presented net of provisions for doubtful receivables, and allowances for impairment are made where appropriate. Trade and other payables, including bank borrowings, are carried at amortised cost. Finance lease liabilities are included at the fair value of their minimum lease payments. Derivatives are carried at fair value.

For those financial instruments held at valuation, the Group has categorised them into a three level fair value hierarchy based on the priority of the inputs to the valuation technique in accordance with IFRS 7. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. The fair value of the Group's outstanding interest rate derivative, as detailed in note 18C, has been estimated by calculating the present value of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as defined by IFRS 7. There are no financial instruments which have been categorised as Level 1 or Level 3.

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:

2013	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000

From five to twenty years	-	-	122,377	23,489	145,866
From two to five years	-	2,216	168,561	5,965	176,742
From one to two years	12	1,649	12,472	1,989	16,122

Due after more than one year	12	3,865	303,410	31,443	338,730
Due within one year	24,421	1,641	12,472	1,989	40,523

Total	24,433	5,506	315,882	33,432	379,253

2012	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000

From five to twenty years	-	-	-	25,436	25,436
From two to five years	-	4,854	-	5,953	10,807
From one to two years	315	4,235	288,680	1,984	295,214

Due after more than one year	315	9,089	288,680	33,373	331,457
Due within one year	25,675	4,860	10,228	1,984	42,747

Total	25,990	13,949	298,908	35,357	374,204

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.

2013	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000

From five to twenty years	87,600	33,356	1,421	122,377
From two to five years	146,735	21,826	-	168,561
From one to two years	2,034	10,438	-	12,472

Due after more than one year	236,369	65,620	1,421	303,410
Due within one year	1,937	10,535	-	12,472

Total	238,306	76,155	1,421	315,882

2012	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000

From two to five years	-	-	-	-
From one to two years	282,960	4,680	1,040	288,680

Due after more than one year	282,960	4,680	1,040	288,680
Due within one year	-	10,228	-	10,228

Total	282,960	14,908	1,040	298,908

19. BORROWINGS

Secured borrowings at amortised cost	31 March 2013 £000	31 March 2012 £000

Current liabilities
Aviva mortgage	1,937	-

Non-current liabilities
Bank borrowings	140,000	284,000
Aviva mortgage	96,369	-
Unamortised loan arrangement costs	(1,421)	(1,040)

Total non-current borrowings	234,948	282,960

Total borrowings	236,885	282,960

The weighted average interest rate paid on the borrowings during the year was 4.0% (2012: 3.7%).

The Group has £15,000,000 in undrawn committed borrowing facilities at 31 March 2013, which expire between three and four years (2012: £41,000,000 expiring between one and two years).

On 26 April 2012, the Group announced the completion of a £100 million 15 year fixed rate loan with Aviva Commercial Finance Limited. The loan is secured over a portfolio of 15 freehold self storage centres which were valued at £242.1 million at 29 February 2012 for the purposes of the drawdown. The annual fixed interest rate on the loan is 4.9%.

In October 2012 the Group entered into a new £190 million four year bank facility with Lloyds TSB, HSBC and Santander, expiring in September 2016. The facility replaced the Group's existing £225 million facility, expiring in September 2013, which was provided by the same three banks and HSH Nordbank, who have been fully repaid following completion of this refinancing.

In February 2013, the Group repaid and cancelled £35 million of the bank facility following the placing carried out in January 2013, leaving a facility amount of £155 million. £120 million of the facility is term loan with the balance of £35 million revolving.

The Group was comfortably in compliance with its banking covenants at 31 March 2013, as illustrated in the table below.

Covenant	Covenant level	At 31 March 2013
Consolidated EBITDA	Minimum 1.5x	3.48x
Consolidated net tangible assets (less goodwill)	Minimum £250m	£551.2m
Bank loan income cover	Minimum 1.75x	4.55x
Aviva loan interest service cover ratio	Minimum 1.5x	2.54x
Aviva loan debt service cover ratio	Minimum 1.2x	1.85x

The bank and Aviva loan income cover ratios are calculated by dividing the net operating income earned from the respective charged asset pools by the interest charged on each loan over a rolling 12 month period. The Aviva debt service covenant additionally includes the capital repayment with the interest.

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 2013
Gross financial liabilities	238,306	70,000	168,306	4.4%	8.3 years	6.9 years

At 31 March 2012
Gross financial liabilities	284,000	94,000	190,000	3.7%	6.0 years	3.5 years

The floating rate at 31 March 2013 was paying a margin of 2.3% above one month LIBOR, the fixed rate debt was paying a weighted average margin of 2.5%. 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 equates to its fair value.

Narrative disclosures on the Group's policy for financial instruments are included within the Report on Corporate Governance and in note 18.

20. Deferred tax

Deferred tax assets in respect of share based payments (£0.2 million), interest rate swaps (£1.3 million), losses (£6.6 million), capital allowances in excess of depreciation (£0.4 million) and capital losses (£2.0 million) in respect of the non-REIT taxable business have not been recognised due to uncertainty over the projected tax liabilities arising in the short term within the non-REIT taxable business.

21. obligations under finance leases

	Minimum lease payments		Present value minimum of lease payments
	2013 £000	2012 £000	2013 £000	2012 £000

Amounts payable under finance leases:
Within one year	1,989	1,984	1,952	1,946
Within two to five years inclusive	7,954	7,937	6,917	6,857
Greater than five years	23,489	25,436	12,934	13,591

	33,432	35,357	21,803	22,394

Less: future finance charges	(11,629)	(12,963)

Present value of lease obligations	21,803	22,394

All lease obligations are denominated in sterling. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The carrying amount of the Group's lease obligations approximates their fair value.

22. Share capital

	Authorised		Called up, allotted and fully paid
	2013 £000	2012 £000	2013 £000	2012 £000

Ordinary shares of 10 pence each	20,000	20,000	20,000	20,000


Movement in issued share capital
Number of shares at 31 March 2011				131,060,522
Exercise of share options - Share option schemes				332,519

Number of shares at 31 March 2012				131,393,041
Issue of shares to Employee Benefit Trust				876,671
Exercise of share options - Share option schemes				369,935
Placing of shares				10,000,000

Number of shares at 31 March 2013				142,639,647

The Company has one class of ordinary shares which carry no right to fixed income.

At 31 March 2013 options in issue to Directors and employees were as follows:

Date option Granted	Option price per ordinary share	Date first exercisable	Date on which the exercise period expires	Number of ordinary shares 2013	Number of ordinary shares 2012

15 May 2002	102p	15 May 2005	14 May 2012	-	8,000
16 December 2002	81.5p	16 December 2005	15 December 2012	-	8,150
2 July 2003	82.5p	2 July 2006	1 July 2013	10,000	18,613
11 November 2003	96p	11 November 2006	10 November 2013	4,350	7,650
6 June 2005	nil p**	6 June 2008	5 June 2015	66,667	74,765
9 June 2006	nil p**	9 June 2009	8 June 2016	72,462	91,665
9 July 2008	nil p**	9 July 2011	8 July 2018	24,080	57,620
24 February 2009	141p*	1 April 2012	1 October 2012	-	215,650
3 August 2009	nil p**	3 August 2012	2 August 2019	24,425	372,967
23 February 2010	255p*	1 April 2013	1 October 2013	6,985	11,263
12 July 2010	nil p **	12 July 2013	11 July 2020	440,072	457,212
28 February 2011	263p *	28 February 2014	29 August 2014	26,184	29,060
19 July 2011	nil p **	19 July 2013	19 July 2021	492,082	493,582
12 March 2012	240p *	1 April 2015	1 October 2015	111,820	124,702
11 July 2012	nil p **	11 July 2015	10 July 2022	626,977	-
12 March 2013	305.5p *	1 April 2016	1 October 2016	53,657	-
				1,959,761	1,970,899

* 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, along with shares issued directly to the Employee Benefit Trust. 1,500,000 shares are held in the Employee Benefit Trust (2012: 1,885,117), and 1,418,750 shares are held in treasury (2012: 1,418,750).

23. Share based payments

The Company has four equity share-based payment arrangements, namely approved and unapproved share option schemes, an LTIP scheme, an Employee Share Save Scheme ("SAYE") and a Long Term Bonus Performance Plan. The Group recognised a total expense in the year related to equity-settled share-based payment transactions of £1,376,000 (2012: £1,532,000).

Equity-settled share option plans

The Group granted options to employees under Approved and Unapproved Inland Revenue Share option schemes between November 1999 and November 2003. The Group's schemes provided for a grant price equal to the average quoted market price of the Group shares on the date of grant. The vesting period is three to ten years. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest.

Since 2004 the Group has operated an Employee Share Save Scheme ("SAYE") which allows any employee who has more than six months service to purchase shares at a 20% discount to the average quoted market price of the Group shares at the date of grant. The associated savings contracts are three years at which point the employee can exercise their option to purchase the shares or take the amount saved, including interest, in cash. The scheme is administered by Yorkshire Building Society.

On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group's Long Term Incentive Plan ("LTIP"). The awards are conditional on the achievement of challenging performance targets as described in the Remuneration Report. The awards granted in 2004, 2005 and 2006 vested in full. The awards granted in 2007 and 2009 lapsed, and the awards granted in 2008 partially vested.

The weighted average share price at the date of exercise for options exercised in the year was £3.19 (2012: £2.87).

Share option scheme "ESO"	2013 No. of options	2013 Weighted average exercise price ( £)	2012 No. of options	2012 Weighted average exercise price (£)

Outstanding at beginning of year	42,413	0.85	86,351	0.92
Exercised during the year	(28,044)	0.89	(43,938)	0.95
Lapsed during the year	(19)	-	-	-

Outstanding at the end of the year	14,350	0.87	42,413	0.85

Exercisable at the end of the year	14,350	0.87	42,413	0.85

Options outstanding at 31 March 2013 had a weighted average contractual life of 0.3 years (2012: 1.2 years).

LTIP scheme	2013 No. of options	2012 No. of options

Outstanding at beginning of year	1,547,811	1,377,709
Granted during the year	626,977	495,582
Forfeited during the year	(308,350)	(48,300)
Exercised during the year	(119,673)	(277,180)

Outstanding at the end of the year	1,746,765	1,547,811

Exercisable at the end of the year	187,634	220,550

The weighted average fair value of options granted during the year was £650,000 (2012: £433,000).

Options outstanding at 31 March 2013 had a weighted average contractual life of 7.9 years (2012: 7.8 years).

Employee Share Save Scheme ("SAYE")	2013 No. of options	2013 Weighted average exercise price (£)	2012 No of options	2012 Weighted average exercise price (£)

Outstanding at beginning of year	380,675	1.86	302,599	1.73
Granted during the year	53,657	2.40	124,702	2.40
Forfeited during the year	(13,468)	2.98	(35,225)	2.38
Exercised during the year	(222,218)	1.41	(11,401)	2.66

Outstanding at the end of the year	198,646	2.61	380,675	1.86

Exercisable at the end of the year	-	-	-	-

Options outstanding at 31 March 2013 had a weighted average contractual life of 2.5 years (2012: 1.6 years).

The inputs into the Black-Scholes model are as follows:

	LTIP	SAYE

Expected volatility	30%	37%
Expected life	3 years	3 years
Risk-free rate	0.8%	1.4%
Expected dividends	4.4%	4.3%

Expected volatility was determined by calculating the historical volatility of the Group's share price over the year prior to grant.

Long term bonus performance plan

The Group has a joint share ownership plan in place. This is accounted for as an equity instrument. The plan was set up in November 2012. Directors have a partial interest in 1,500,000 shares with the Group's Employee Benefit Trust. The fair value of each award is £2 subject to the vesting criteria as set out in the Directors' Remuneration Report. At 31 March 2013 the weighted average contractual life was 2.6 years.

24. capital commitments

There were no amounts contracted but not provided in respect of the Group's properties as at 31 March 2013 (2012: £4.9 million).

25. Events after the balance sheet date

There are no reportable post balance sheet events.

Ten Year Summary

	2013 £000	2012 £000	2011 £000	2010 £000	2009 £000	2008 £000	2007 £000	2006 £000	2005 £000	2004 £000
Results
Revenue	69,671	65,663	61,885	57,995	58,487	56,870	51,248	41,889	33,375	23,830

Operating profit before gains and losses on property assets	37,454	35,079	32,058	29,068	30,946	29,342	27,067	21,645	15,030	4,719

Cash flow from operating activities	30,186	27,388	23,534	19,063	10,203	14,388	16,726	16,125	9,664	5,761

Profit/(loss) before taxation	31,876	(35,551)	6,901	10,209	(71,489)	102,618	152,837	118,547	42,836	1,243

Adjusted profit before taxation	25,471	23,643	20,207	16,514	13,791	15,006	14,233	12,601	7,791	n/d

Net assets	552,628	494,500	544,949	547,285	502,317	580,886	487,979	244,139	159,168	58,391

EPRA earnings per share	19.3p	18.2p	15.5p	13.0p	11. 9p	11.7p	10.0p	8.9p	5.5p	n/d
Declared total dividend per share	11.0p	10.0p	9.0p	4.0p	0p	9.5p	9.0p	5.0p	2.0p	1.05p

Key statistics
Number of stores open*	66	65	62	60	54	48	43	37	32	29
Sq ft occupied (000)*	2,632	2,458	2,130	1,915	1,775	1,850	1,835	1,672	1,470	1,268
Occupancy growth in year 000 sq ft)*	174	328	215	140	(75)	15	163	202	202	393
Number of customers*	38,500	36,300	32,800	30,500	28,500	30,500	30,100	27,800	24,600	20,400
Average no. of employees during the year	286	279	273	252	239	218	191	178	160	140

* - includes stores operating in Big Yellow Limited Partnership

Results to 2004 under UK GAAP, 2005 onwards under IFRS.
n/d - measure not disclosed in that year

This information is provided by RNS

The company news service from the London Stock Exchange

END

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