Final Results

RNS Number : 5666N

Big Yellow Group PLC

19 May 2015

 

Big Yellow Group PLC

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

audited Results for the YEAR ended 31 MARCH 2015

ABOUT US

Big Yellow Group PLC is the UK's brand leader in self storage.  Big Yellow now operates from a platform of 84 stores, including 14 stores branded as Armadillo Self Storage, in which the Group has a 20% interest.  We own a further five Big Yellow self storage development sites, of which two have planning consent. The current maximum lettable area of this platform is 5.1 million sq ft.  When fully built out the portfolio will provide approximately 5.4 million sq ft of flexible storage space.  Of the Big Yellow stores and sites, 96% are held freehold and long leasehold (by value); with the remaining 4% short leasehold. 

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

STRONG OPERATING PERFORMANCE DELIVERS 32% EARNINGS GROWTH⁽²⁾

Financial metrics	Year ended  31 March 2015	Year ended 31 March 2014	% Growth
Revenue	£84.3m	£72.2m	17
Adjusted profit before tax(1)	£39.4m	£29.2m	35
Adjusted diluted EPRA earnings per share(2)	27.1p	20.5p	32
Dividend         - final                          - total	11.3p 21.7p	8.4p 16.4p	35 32
Adjusted NAV per share(3)	510.4p	446.5p	14
Cash flow from operating activities (after net finance costs)	£42.4m	£32.8m	29
Store metrics Occupancy growth(4)	267,000 sq ft	200,000 sq ft	34
Occupancy (%)(4)	73.2%	67.9%	8
Average net achieved rent per sq ft(4)	£24.95	£24.32	3
Statutory metrics
Profit before tax	£105.2m	£59.8m	76
Basic earnings per share	72.5p	42.5p	71

¹ See note 10   ² See note 12   ³See notes 12 and 14   ⁴See Portfolio Summary and Operating and Financial Review  

Highlights

•   Increased demand throughout UK

•   Growth in all our key store metrics

•   32% increase in adjusted earnings per share and total dividend

•   Acquisition of remaining two thirds of Big Yellow Limited Partnership and £76.4m placing

•   Platform expanded by 234,000 sq ft:

-    Two new freehold stores constructed at Gypsy Corner and Enfield

-    Two existing freehold stores acquired in Oxford and Chester

•   Acquisition of freehold building in Cambridge for conversion

•   Acquisition of freehold interest in existing store in Battersea

•   Debt refinanced - diversified pool, extended maturity, lower cost

•   Two Armadillo joint ventures with Australian consortium

-    April 2014: Acquisition of ten store portfolio totalling 401,000 sq ft

-    February 2015: Acquisition of four store portfolio totalling 270,000 sq ft

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

"We are pleased to report very strong results, with demand growth across our network reflecting improved economic growth not just in London, but within the UK as a whole.  To deliver this performance we continue to innovate and maintain an unerring focus on all aspects of our business, such that we grow our market share and monetise the strength of our brand.

We make no attempt to judge the economic cycle as it is a fruitless task and never more than now.  We have now positioned the Group for the long-term so that we can enjoy the benefits of a strong economy and also adequately accommodate any reverses.

The most important contribution to performance will be growing the occupancy and increasing rental rates in the existing platform of stores.  In addition, there is scope to add more stores but the availability of land, and competition for it, makes this challenging.  That said, there will be opportunities and we are well positioned to exploit them.

The objective is very simple; to grow earnings and dividend at a compelling, but sustainable rate over a long period of time, without taking undue risk."

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 2015.

We are pleased to report very strong results, with demand growth across our network reflecting improved economic growth not just in London, but within the UK as a whole.  To deliver this performance we continue to innovate and maintain an unerring focus on all aspects of our business, such that we grow our market share and monetise the strength of our brand.

Financial results

Revenue for the year was £84.3 million (2014: £72.2 million), an increase of 17%.  Excluding the Partnership stores consolidated from 1 December 2014, revenue was £80.6 million, an increase of 12% from the prior year.  The stores have grown in occupancy over the year from 67.9% to 73.2% at 31 March 2015.

Cash inflows from operating activities (after finance costs) increased by £9.6 million (29%) to £42.4 million for the year (2014: £32.8 million).

The Group made an adjusted profit before tax in the year of £39.4 million (2014: £29.2 million), up 35%. This translated into a 32% increase in adjusted earnings per share to 27.1p (2014: 20.5p). 

The Group made a statutory profit before tax for the year of £105.2 million, compared to a profit of £59.8 million last year.  The revaluation gain on the investment property portfolio is £64.5 million for the year, reflecting the improved operating performance of the business and yield compression.

The Group has net bank debt of £277.1 million at 31 March 2015 (2014: £226.1 million).  This represents approximately 27% (2014: 28%) of the Group's gross property assets totalling £1,022.8 million (2014: £804.8 million) and 35% (2014: 36%) of the adjusted net assets of £801.4 million (2014: £634.4 million).

The Group's income cover for the year (expressed as the ratio of cash generated from operations against interest paid) was 5.4 times (2014: 4.1 times).  On an annualised basis at March the ratio was 5.9 times. 

Placing and acquisition of Big Yellow Limited Partnership

We set up Big Yellow Limited Partnership with Pramerica Real Estate Investors in November 2007 to build out our regional portfolio, allowing us to focus the Group's resources on developing our London sites.  The Partnership had a limited life, with Big Yellow having a call option over Pramerica's equity interest crystallising from the March 2015 balance sheet.

We were therefore very pleased to have come to an agreement with Pramerica to accelerate this process and on 1 December 2014 acquired their 66.67% share for £39.25 million and the underlying Partnership debt (£57 million) totalling £96.25 million.  This was largely funded by a successful placing raising £76.4 million (net of expenses) in November 2014.

The acquisition represented an opportunity to employ more capital into prime Big Yellow branded assets and consolidate the Group's position as the leading UK self storage brand, where the Company has detailed knowledge and visibility over the assets acquired.

Investment in new capacity

In the year we have made some progress in growing our self storage platform in key target locations, although competition for land remains high, particularly in London.

In July we acquired a freehold store in Oxford from Fort Box Self Storage for £4.1 million.  The store has been rebranded as a Big Yellow, and has a current lettable area of 35,000 sq ft, with expansion space for a further 10,000 sq ft.  Our existing 33,000 sq ft Oxford store averages over 85% occupied and this acquisition will allow us to drive growth in occupancy and rental yield from our larger operating platform.

We acquired the freehold of a former Royal Mail depot in Cambridge adjacent to the Cambridge Retail Park, Newmarket Road, completing in April 2015, which we intend to refurbish and convert into a 55,000 sq ft self storage centre, opening in late 2015.  We expect the total investment including refurbishment to be approximately £9.3 million.

This is our first new site acquisition for construction in seven years.  The acquisition is testament to our confidence in both Cambridge and our business model.  It should be noted, however, that the opportunity took 14 years to present itself, despite continual searching over that time.

We opened our 60,000 sq ft store in Enfield on 1 April 2015, on a prominent location on the A10.  We intend to construct our store in Central Guildford over the course of the year, and anticipate it opening in Autumn 2016.

We have acquired the freehold interest of our existing 34,000 sq ft store in Battersea, which had 12 years remaining on the occupational lease together with a 14,100 sq ft retail unit let to Halfords on an annual rent of £458,000 with 7 years unexpired, part of which is sublet to Pets at Home.  The next rent review date is January 2017.  The total consideration paid was £23 million.  This increases the freehold ownership of our portfolio and protects our position in this important central London location.  In the medium term, we will redevelop the 1.5 acre site to include a larger Big Yellow store together with other uses.

In April 2014 we acquired the Armadillo portfolio in a joint venture with an Australian consortium for a property value of £19.75 million.  Our equity invested in this joint venture is £1.9 million, representing a 20% stake.  The business has traded ahead of expectations since acquisition, and, in addition to the management fees earned, we have received a first year dividend of £178,000, representing a 9.3% yield.

In January 2015, the Group acquired the entire share capital of Big Storage Limited, a self storage company with five stores in the North West of England, for a property value of £24.9 million.  The Group retained the store in Chester, which will be rebranded as Big Yellow.  The Group subsequently sold the company with the remaining four stores to a joint venture company for a property value of £19.3 million, of which the Group owns 20% and an Australian consortium the remaining 80%.   These four stores will be rebranded as Armadillos.  This brings our Armadillo brand to 14 stores with a total capacity of 671,000 sq ft, and blended occupancy of 69.0% at 31 March 2015.

Dividends

The Group's dividend policy is to distribute 80% of full year adjusted earnings per share.  The final dividend declared is 11.3 pence per share.  The dividend declared for the year of 21.7 pence per share represents an increase of 32% from 16.4 pence per share last year.

Our people

Success in any business is ultimately driven from within and with all making a contribution.  I believe that we have a unique culture in the business with accessible management and a non-hierarchical structure which values and endeavours to reward everyone in the organisation for their contribution to our success.  Our strong performance during the year was driven as always by the efforts and loyalty of our Big Yellow team, and our people remain pivotal to the achievement of our key medium term objectives of driving occupancy, revenue, and cash flow growth. 

Outlook

We make no attempt to judge the economic cycle as it is a fruitless task and never more than now.  We have now positioned the Group for the long-term so that we can enjoy the benefits of a strong economy and also adequately accommodate any reverses.

The most important contribution to performance will be growing the occupancy and increasing rental rates in the existing platform of stores.  In addition, there is scope to add more stores but the availability of land, and competition for it, makes this challenging.  That said, there will be opportunities and we are well positioned to exploit them.

The objective is very simple; to grow earnings and dividend at a compelling, but sustainable rate over a long period of time, without taking undue risk.

Nicholas Vetch

Chairman
18 May 2015

OUR STRATEGY AND BUSINESS MODEL

Our Strategy

Our strategy from the outset has been to develop Big Yellow into the market leading self storage brand, which we have achieved with unprompted awareness of over seven times that of our nearest competitor (source: YouGov survey, May 2015).  We concentrate on developing our stores in main road locations with high visibility, where our distinctive branding generates high awareness of Big Yellow.

Self storage demand from businesses and individuals at any given store is linked in part to local economic activity, consumer and business confidence, all of which are inter-related.  Fluctuations in housing activity whether in the rented or owner occupied sector are also a factor and in our view influence the top slice of demand over and above a core occupancy.  This has been demonstrated by the resilience of our like-for-like stores since September 2007 despite a collapse in housing activity and GDP over the period 2007 to 2009.

Local GDP and hence business and housing activity are greatest in the larger urban conurbations and in particular London and the South East.  Furthermore, people and businesses are space constrained in these more expensive areas.  Barriers to entry in terms of competition for land and difficulty around obtaining planning are also highest in more urbanised locations.

Over the last 16 years we have created a portfolio of 70 purpose built prime Big Yellow self storage centres, largely freehold and focussed on London, the South East and large metropolitan cities.  61% of our current store revenue derives from within the M25; for London and the South East, the proportion of current store revenue is 80%.  The REVPAF performance of our stores in London was more resilient over the downturn than in the regions.

Our Big Yellow stores are on average 63,000 sq ft, compared to an industry average of 41,000 sq ft (source: The Self Storage Association 2015 UK Annual Survey).   The upside from filling our larger than average sized stores is, in our view, only possible in large metropolitan markets, where self storage demand from domestic and business customers is the highest.  As the operating costs of our assets are relatively fixed, larger stores in bigger urban conurbations, particularly London, drive higher revenues and higher operating margins.

We continue to believe that the medium term opportunity to create shareholder value will be principally achieved by leasing up existing 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 fixed and embedded.

Our key objectives remain:

-     leveraging our market leading brand position to generate new prospects, principally from our online mobile and desktop platforms;

-     focusing on training, selling skills, and customer satisfaction to maximise prospect conversion and referrals;

-     growing occupancy and net rent so as to drive revenue optimally at each store;

-     maintaining a focus on cost control, so revenue growth is transmitted through to earnings growth;

-     maintaining a conservative capital structure in the business with Group pre-interest cash flow cover of a minimum of five times annual interest expense; and

-     producing sustainable returns for shareholders through a low leverage, low volatility, high distribution REIT.

In the fifteen years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 15.2% per annum, in aggregate 740% at the closing price of 647.5p on 31 March 2015.  This compares to 7.8% per annum for the FTSE Real Estate Index and 4.8% per annum for the FTSE All Share index over the same period.  This demonstrates the power of compounding over the longer term.

Our business model

Attractive market dynamics	•    UK self storage penetration in key urban conurbations remains relatively low •    Very limited new supply coming onto the market •    Resilient through the downturn •    Sector growth is positive, with increasing domestic demand
Our competitive advantage	•    Industry's most recognised brand •    Prominent stores on arterial or main roads, with extensive frontage and high visibility •    Largest share of web traffic from mobile and desktop platforms •    Excellent customer service, customer feedback programme with store level customer satisfaction surveys •    Largest UK self storage footprint by Maximum Lettable Area ("MLA") capacity •    Primarily freehold estate concentrated in London and South East and other large metropolitan cities •    Larger average store capacity - economies of scale, higher operating margins •    Secure financing structure with strong balance sheet
Evergreen income streams	•    47,250 customers •    Average length of stay for existing customers of 22 months •    29% of customers in stores > two year length of stay •    Low bad debt expense (0.15% of revenue in the year)
Strong growth opportunities	•    Driving REVPAF with a focus on occupancy growth •    Yield management as occupancy increases •    Demand increasing with improving economic activity •    Growth in national accounts and business customer base •    Increasing the platform from the Group's resources •    Continuing investment in our 20% Armadillo joint ventures
Conversion into quality earnings	•    Freehold assets for high operating margins and operational advantage •    Low technology & obsolescence product, maintenance capex fully expensed •    Annual compound adjusted eps growth of 17% since 2004/5 •    Annual compound cash flow growth of 16% since 2004/5

The self storage market

In the recently published 2015 Self Storage Association UK Survey, only 45% of those surveyed had a reasonable or good awareness of self storage, in line with findings from our own research.  Furthermore, only 6% of the 2,151 adults surveyed were currently using self storage or were thinking of using self storage in the next year.  This indicates a continued opportunity for growth and with increasing use, together with the ongoing marketing efforts of everyone in the industry, we anticipate awareness to grow.

Growth in new facilities across the industry has been limited to regional areas of the UK, particularly in the north, whereas in London, there were very few new openings last year and indeed capacity is expected to fall in the next twelve months with the closures of stores for redevelopment into alternative uses.  Between 2010 and 2014 average industry openings have been approximately nine per year, which compares to an average of 34 per year in the preceding four years.

78% of respondents to the survey expected an improvement in profits this year, compared to 79% last year, and 84% expect rents for new customers to rise in 2015 compared to 87% last year.

The Self Storage Association ("SSA") estimate that the UK industry is made up of approximately 1,022 self storage facilities (of which 159 are purely container operations), providing 35.7 million sq ft of self storage space, equating to 0.56 sq ft per person in the UK.  This compares to 7.3 sq ft per person in the US, 1.6 sq ft per person in Australia and 0.1 sq ft for mainland Europe, where the roll-out of self storage is a more recent phenomenon (source: Self Storage Association 2015 UK Annual Survey).  346 self storage facilities in the UK are held by large operators (defined as those managing 10 facilities or more) which represents 40% of the total number of self storage centres, but we would estimate approximately 50 to 60% of total capacity.

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.

Big Yellow is well placed to benefit from the growing self storage market, given the strength of our brand, and online platform which delivers approximately 86% of our prospect enquiries.  Our portfolio is strategically focussed on London, the South East and large metropolitan cities, where barriers to entry and economic activity are at their highest.

KPIs

The key performance indicators of our stores are occupancy and rental yield, which together drive the revenue of the business.  These are three key measures which are focussed on by the Board, and are reported on a weekly basis.  Over the course of past five years, both occupancy and revenue have grown significantly.  Rental yield was relatively stable between 2010 and 2012, reduced following the introduction of VAT in 2013 and grew by 6.1% in the year to 31 March 2014.  It has decreased this year by 3.5%, principally reflecting the acquisition of the Big Yellow Limited Partnership stores at a lower average net rent per sq ft, being a regional portfolio.  On a like for like basis, net rent has grown by 2.4% this year.  Our key focus is on continuing to grow occupancy, with rental yield growth following once the stores have reached higher occupancy levels.

Adjusted profit before tax, adjusted earnings per share and distributions to shareholders are our other KPIs.  We have delivered compound eps growth of 15% over the past five years, and compound dividend growth of 24% over the same period. Compound adjusted eps growth since 2004/5 is 17%.

Capital structure

In November 2013, the Company carried out a study of debt leverage and its impact on the long-term share performance of businesses, with the help of an external consultant.  The study covered 40 quoted companies in the REIT space together with other consumer facing businesses for the period from 2000 to 2013.  The main objective was to see if the results supported our long held view that lower geared businesses outperform in the long-term.

Different business models with varying operating margins might, at the margin, have different optimum levels of debt.  However a consistent theme emerged that excessive levels of debt have been universally value destructive.  In a narrow window between 2003 and 2006 higher levels of debt would have delivered higher returns, but even during that period optimum levels of debt were lower than might be expected, and would have required pinpoint accuracy in timing.  Transmission of this value destruction did result in significant underperformance and marked increases in share price volatility.

Optimum levels of LTV gearing (expressed as net debt to gross asset value) ranged from 10% in moments of extreme fear (2008 to 2009) to 43% in periods of exuberance (2003 to 2006).  Using 2009 to 2013 as a base, which is more representative of the long-term norm, albeit on a conservative basis, the optimum level of LTV was found to be 23%.

We have previously said that we believe that the Group would benefit from lower leverage and the Board has a long-term target of Group income cover of over 5 times.  The relationship of this metric to capital leverage is not perfectly correlated but making long-term assumptions on values and interest is reasonably correlated.  We believe that the optimum level of LTV is 20% to 30% with a target of mid 20s from the current level of 27%.  Given the subjective nature of valuations we prefer to express this target as net operating income over debt costs.

Operational and Marketing Review

Overview

We now have a portfolio of 73 Big Yellow stores and sites of which 70 are currently open (Enfield opened on 1 April 2015).  In addition we operate from 14 Armadillo Self Storage centres which are located in northern cities.  Our store in Cambridge is expected to open in late 2015, and our store at Guildford Central is expected to open in Summer 2016.  Planning negotiations are ongoing at our site in central Manchester.

Access to capital and bank facilities has improved in the last year for real estate businesses, including self storage, however this is mainly for larger well-capitalised groups, rather than necessarily the smaller, independent operators.  Growth in new openings over the last four years has averaged 1% of total capacity per annum, down significantly from the previous decade.  Additionally, in our core markets in London and the South East, very high land values will render the opportunity for creating new self storage centres difficult.  We believe that we are in a relatively strong position given the strength of our balance sheet and our proven property development expertise together with our  ability to access funding to exploit the right opportunity.

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 three to five years to achieve 80% plus occupancy.  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 67 sq ft, compared to 68 sq ft last year.

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

The drive to improve store operating standards and consistency across the portfolio remains a key focus for the Group. Excellent customer service is at the heart of our business objectives, as a satisfied customer is our best marketing tool. We measure customer service standards through a programme of mystery shoppers and online customer reviews, which give an average customer service score of 4.8 out of 5.  At the start of the prior year we launched a new customer-experience programme which combines the feedback from mystery shopping and customer reviews into the reinforcement of customer focus in our store operations.   Our net promoter scores from this programme have increased over the year with part of the store teams' bonus linked to the scores they achieve.

We have a team of eight Area Managers in place who have on average worked for Big Yellow for eleven years.  They develop and support the stores to drive the growth of the business.

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

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

Demand

Of the customers moving into our stores in the last year, surveys undertaken indicate approximately 45% are linked to the housing market, either customers renting storage space whilst moving within the rental sector or 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 33% of our customers used the product because some event has occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited possessions, are getting married or divorced, are students who need storage during the holidays, or homeowners developing into their lofts or basements. The balance of 10% of our customer demand during the year came from businesses. 

Our business customers range across a number of industry types, such as retailers, e-tailers, 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 four full time members of staff working on growing and managing our national account customers.  The national accounts team can arrange storage at short notice at any location for our customers.  In smaller towns where we do not have representation, we have negotiated sub-contract arrangements with other operators who meet certain operating standards.  Revenue from our national accounts increased by 48% compared to the prior year.

Business customers typically stay longer than domestic customers, and also on average occupy larger rooms.  Whilst only representing 10% 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 54 sq ft for domestic customers.  This compares with the SSA Survey result for the industry as a whole which had 59% of space occupied by domestic customers and 41% of space by businesses.  We would expect to have a higher proportion of domestic customers given our focus on London and other large metropolitan cities.

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.  We have improved our business offer further, we have increased the resource of our national accounts team, and we are increasing our marketing to drive business prospects.

Marketing and eCommerce

Our marketing strategy continues to focus on driving customer satisfaction and response through our multiple digital platforms.

For the last nine years, we have commissioned a YouGov survey to help us monitor our brand awareness. In our most recent survey, conducted in May 2015, we used a statistically robust sample size of 1,035 respondents in London and 2,040 for the rest of the UK.  The survey has shown our prompted awareness to be at 75% in London, two and a half times our nearest competitor and 44% for the rest of the UK, over three times higher than our nearest competitor.

For unprompted brand awareness, our recall in London is 52% and for the rest of the UK it is 22%, both more than seven times higher than our nearest competitor.  These surveys continue to prove we are the UK's brand leader in self storage (source: YouGov, May 2015).

Online

The Big Yellow website, whether accessed by desktop, tablet or smartphone, receives the largest share of prospects, accounting for 86% of all sales leads across the year ended 31 March 2015.  Telephone is the first point of contact for 9% of prospects and walk-in enquiries, where we have had no previous contact with a prospect, represent 5%.

We have the largest online market share of web visits to self storage company websites in the UK.  Across the year ended 31 March 2015, our online market share of web visits ranged from 33% to 39%.  Our nearest competitor ranged from 14% to 19% online market share, for the same period (source: Experian Hitwise 44 largest UK operators).

We continually monitor and improve the website user journey to make the experience as informative, customer focussed and intuitive as possible.  Our mobile strategy is central to this.  By the end of March 2015, smartphones and tablets accounted for 48% of all web visits.  Specifically, smartphones alone accounted for 32% of web visits in March 2015, up from 27% in March 2014.

Whether it is through desktop, tablet or mobile, our customers enjoy a seamless experience whichever digital route they choose.  We are continually developing helpful and time saving online tools such as check-in online, online FAQs, video store tours and online chat.  These all help the customer to make an informed choice about their self storage requirements.

Online customer reviews

Consistent with our strategy of putting the customer at the heart of our business, our online customer reviews generate real-time feedback from customers as well as providing positive word of mouth referral to our web visitors.  Through our 'Big Impressions' customer feedback programme, we ask our new customers to rate our product and service and with the users permission, we then publish these independent reviews on the website. There are currently over 11,500 reviews published. 

The Big Impressions programme also generates customer feedback on their experience when they move out of a Big Yellow store and also from those prospects who decided not to store with us.  In addition, this programme reinforces best practice of customer service at our stores where customer reviews and mystery shop results are transparently accessible at all levels.

In addition, we also gain real-time insight from customers who submit reviews to a third party customer review site. These reviews are currently averaging 9.5 out of 10.

We also regularly monitor Google reviews and mentions of Big Yellow within the social mediums of Twitter, online forums and blogs.  We use this insight to continually improve our service offering.

Driving online traffic

Search engines are the most important acquisition tool for us, accounting for the majority 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 to maintain our high 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 targeted to our core audience groups.  This activity performs both a direct response and branding role.

Efficiencies in online spend are continuing into the year ending 31 March 2016, ensuring the return on investment is maximised from all of 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.  Our activity is most focussed on Twitter, not only monitoring and answering queries regarding self storage, but also posting our own creative tweets, tips and advice. The Big Yellow YouTube channel is used to showcase our stores to web prospects through a video store tour.  We use both domestic and business versions to help prospects experience the quality of the product without the need for them to visit the store in person.  Our recently revamped online blog is updated regularly with tips and advice for homeowners and businesses as well as summaries of our charitable and CSR initiatives.

PR

We have used PR stories in the year to help raise the awareness of Big Yellow and the benefits of self storage to different audience groups. These have focussed on the flexible benefits of using self storage for when you are looking to sell your home, an intriguing insight into how household clutter can damage relationships, plus research into the growing demographic trend of the Boomerang Generation who are returning home to live back with their parents after having flown the nest.  These stories help to promote the wider uses of Big Yellow Self Storage against everyday issues and have generated both national and regional media coverage online and offline. They are also supported by radio interviews which allow us to talk about the benefits of Big Yellow.

Budget

During the year the Group spent approximately £3.6 million on marketing (4% of total store revenue). We have increased the budget for the year ahead to £4 million with a focus on driving our revenue through delivering more prospects to the website.

Store Performance

PROFORMA PORTFOLIO SUMMARY - BIG YELLOW STORES

	2015				2014
	Mature(1)	Established	Developing	Total		Mature	Established	Developing	Total
Number of stores(2)	50	14	5	69		48	14	4	66
At 31 March
Total capacity (sq ft)	3,121,000	883,000	340,000	4,344,000		3,017,000	883,000	270,000	4,170,000
Occupied space (sq ft)	2,350,000	613,000	215,000	3,178,000		2,146,000	536,000	150,000	2,832,000
Percentage occupied	75.3%	69.4%	63.2%	73.2%		71.1%	60.7%	55.6%	67.9%
Net rent per sq ft	£25.89	£22.73	£25.05	£25.23		£25.62	£22.09	£23.83	£24.85
For the year
REVPAF(3)	£22.49	£18.04	£16.40	£21.09		£21.03	£15.43	£14.37	£19.41
Average occupancy	74.7%	67.7%	58.1%	71.9%		70.6%	58.7%	51.1%	66.8%
Average annual rent psf	£25.73	£22.33	£23.80	£24.95		£25.05	£21.63	£22.85	£24.32
	£000	£000	£000	£000		£000	£000	£000	£000
Self storage income	58,695	13,355	4,701	76,751		53,367	11,211	3,153	67,731
Other storage related income (4)	9,871	2,519	790	13,180		9,272	2,329	632	12,233
Ancillary store rental income	136	54	86	276		91	85	95	271
Total store revenue	68,702	15,928	5,577	90,207		62,730	13,625	3,880	80,235
Direct store operating costs (excluding depreciation)	(20,596)	(5,573)	(2,187)	(28,356)		(19,973)	(5,373)	(1,732)	(27,078)
Short and long leasehold rent(5)	(1,941)	-	-	(1,941)		(2,005)	-	-	(2,005)
Store EBITDA(6)	46,165	10,355	3,390	59,910		40,752	8,252	2,148	51,152
Store EBITDA margin	67.2%	65.0%	60.8%	66.4%		65.0%	60.6%	55.4%	63.8%
Deemed cost	£m	£m	£m	£m
To 31 March 2015	311.0	145.4	74.0	530.4
Capex to complete	-	1.7	0.2	1.9
Total	311.0	147.1	74.2	532.3

(1)   The mature stores have been open for more than six years at 1 April 2014. The established stores have been open for between three and six years at 1 April 2014 and the developing stores have been open for fewer three years at 1 April 2014.  The Group acquired two stores during the year in Chester and Oxford.  These are shown within mature stores in the current year as they have been open for more than six years.

(2)   The Group acquired the 66.7% of Big Yellow Limited Partnership that it did not previously own on 1 December 2014.  The results of the stores in the Partnership have been included in the results above for both years to give a clearer understanding of the underlying performance of all Big Yellow stores.  The table below shows the results excluding the period when the stores were not wholly owned.

	2015			2014
	Per above £000	Partnership results as an associate £000	Statutory £000	Per above £000	Partnership results as an associate £000	Statutory £000
Store revenue	90,207	(7,476)	82,731	80,235	(9,529)	70,706
Store EBITDA	59,910	(4,659)	55,251	51,152	(5,480)	45,672

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

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

(5)   Rent for six mature short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 398,000 sq ft, and a long leasehold lease-up store with a capacity of 64,000 sq ft.  The Group acquired the freehold of its Battersea store in December 2014.

(6)   Store earnings before interest, tax, depreciation, amortisation, and an allocation of central overhead.

PORTFOLIO SUMMARY - ARMADILLO STORES

			ARMADILLO 1 (1)
			March 2015	March 2014
Number of stores			10	10
At 30 September:
Total capacity (sq ft)			401,000	401,000
Occupied space (sq ft)			253,000	240,000
Percentage occupied			63.1%	59.9%
Net rent per sq ft			£14.66	£14.31
For the 6 month period:
REVPAF			£11.20	£10.03
Average occupancy			62.9%	58.9%
Average annual rent psf			£14.53	£13.84
			£000	£000
Self storage income			3,665	3,273
Other storage related income			817	738
Ancillary store rental income			10	12
Total store revenue			4,492	4,023
Direct store operating costs (excluding depreciation)			(2,035)	(2,016)
Store EBITDA			2,457	2,007
Store EBITDA margin			54.7%	49.9%
Cumulative capital expenditure
			£m
To 31 March 2015			19.8
To complete			0.2
Total capital expenditure			20.0

(1)   The Group acquired an interest in Armadillo 1 on 16 April 2014. The results shown here are to provide readers with a clearer understanding of the performance of the portfolio. Please see note 13d for the Group's share of Armadillo 1's results since ownership.

(2)   The Group acquired an interest in Armadillo 2, a portfolio of four stores in the North West on 3 February 2015. The four stores were 77.8% occupied of their 270,000 sq ft capacity at 31 March 2015.  The trading figures for this portfolio will be presented from next year. Please see note 13d for the Group's share of Armadillo 2's results since ownership.

Store Performance

We had a very strong quarter to June with good net move-in growth.  The second quarter peaked in August and then we saw many of our students and short term house moves starting to vacate in September, leading to a relatively flat quarter.  The third quarter saw student and house move vacations leading to a 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 stores by 82,000 sq ft. The table below illustrates the move-in performance in the year.

Store move-ins	Year ended 31 March 2015	Year ended 31 March 2014	%	Net move-ins 31 March 2015
April to June	20,196	18,685	8	5,613
July to September	21,873	19,946	10	(704)
October to December	16,897	14,848	14	(1,410)
January to March	16,131	15,464	4	1,126
Total	75,097	68,943	9	4,625

In all Big Yellow stores, the occupancy growth in the current year was 346,000 sq ft, against an increase of 200,000 sq ft in the prior year.  This growth includes 24,000 sq ft of occupancy acquired with the acquisition of Fort Box Self Storage in Oxford ("Oxford 2"), and 55,000 sq ft of occupancy acquired with the acquisition of Big Storage Chester.  The net occupancy growth in the year was therefore 267,000 sq ft. This growth represents an average of 3,870 sq ft per store (2014: 3,030 sq ft per store).

Store occupancy summary	Occupancy 31 March 2015 000 sq ft	Occupancy 31 March 2014 000 sq ft	Growth for year to 31 March 2015 000 sq ft	Growth for year to 31 March 2014 000 sq ft
50 mature stores	2,350	2,146	204	109
14 established stores	613	536	77	51
5 developing stores	215	150	65	40
Total - all 69 stores	3,178	2,832	346	200

The 50 mature stores are 75.3% occupied compared to 71.1% at the same time last year. The 14 established stores have grown in occupancy from 60.7% to 69.4%.  The five developing stores added 65,000 sq ft of occupancy in the year to reach closing occupancy of 63.2%.  Overall store occupancy has increased in the year from 67.9% to 73.2%.

All 69 stores open at the year end are trading profitably at the EBITDA level.

Pricing and rental yield

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 competitors' prices, if the product is comparable. Pricing is dynamically generated and takes into account customer demand and local competition.

In the year ended 31 March 2015, net rent in the like for like stores grew by 2.4%.  This has been a combination of reducing discounts to new customers and retaining price increases from existing customers.  

As the stores lease-up, our pricing model reduces the level of promotional discounts offered in individual stores. This squeezing out of promotions leads to an increase in net achieved rents.  The table below illustrates this, showing the growth in net rent per sq ft for the portfolio over the year.

Average occupancy in the year	Net rent per sq ft growth over the year
0 to 60%	1.1%
60 to 70%	1.4%
70 to 80%	2.0%
Above 80%	5.9%

The table below shows the average key metrics across the store portfolio for the year ended 31 March 2015:

	Mature stores	Established stores	Developing stores
Store capacity	62,420	63,071	68,000
Sq ft occupied per store at 31 March 2015	47,000	43,786	43,000
% occupancy	75.3%	69.4%	63.2%
Revenue per store	£1,374,000	£1,138,000	£1,115,000
EBITDA per store	£923,000	£740,000	£678,000
EBITDA margin	67.2%	65.0%	60.8%

Armadillo Self Storage

In April 2014 we acquired the Armadillo portfolio of 10 stores, which we have been managing since 2009, with an Australian consortium. The Armadillo platform was added to in February 2015 with the acquisition of a further four stores following the purchase of Big Storage by the Group and its subsequent disposal to a company in which the Group has a 20% interest, with the balance held by an Australian consortium.

The Armadillo stores are lower-frills, but good quality, largely freehold assets in towns where we would not typically locate a Big Yellow store.  Armadillo provides a number of operational advantages to the Group, such as a wider platform to sell to national accounts, more promotional opportunities for staff, more efficient use of the Company's overhead and benefits online. The Group will consider other opportunities to add to the Armadillo platform if the right stores or portfolio become available.

Development pipeline

There are two 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. 

We have acquired the freehold interest of our existing 34,000 sq ft store in Battersea, which had 12 years remaining on the occupational lease together with a 14,100 sq ft retail unit let to Halfords on an annual rent of £458,000 with 7 years unexpired, part of which is sublet to Pets at Home.  The next rent review date is January 2017.  The total consideration paid was £23 million.  This increases the freehold ownership of our portfolio and protects our position in this important central London location.  In the medium term, we will redevelop the 1.5 acre site to include a larger Big Yellow store together with other uses. 

The Group also owns an office building adjacent to our Wandsworth store which we are seeking planning permission to convert to self storage, adding approximately 30,000 sq ft of net storage space to the store.

The status of the development pipeline is summarised in the table below:

City	Location	Status	Anticipated capacity
Battersea	Potential redevelopment of Big Yellow store and adjoining retail in a mixed use residential scheme to increase our self storage capacity	Early design discussions with the Borough Council	Up to an additional 60,000 sq ft
Cambridge	Adjacent to the Cambridge Retail Park, Newmarket Road	Existing B8 consent, detailed signage consent required	55,000 sq ft
Guildford	Prime location in centre of Guildford on Woodbridge Meadows	Consent granted	56,000 sq ft
Manchester	Prime location on Water Street in central Manchester	Planning under negotiation	50,000 sq ft to 70,000 sq ft
Wandsworth	Possible extension of 30,000 sq ft to existing 47,000 store	Planning under negotiation	Additional 30,000 sq ft

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

Financial Review

Financial results

Placing and acquisition of Big Yellow Limited Partnership

In November 2014 the Group issued 14.35 million new ordinary shares at 547.5 pence per share raising £76.4 million (net of expenses).

Following the Placing the Group completed the buy-out of its partner Pramerica Real Estate Investors from its existing joint venture, Big Yellow Limited Partnership (accelerated from the option date of 31 March 2015). The purchase price was £39.25 million, close to the book value at 30 September 2014 and was paid in cash.  

Big Yellow Limited Partnership was created in November 2007 and the portfolio consisted of 12 stores located in Birmingham, Camberley, Edinburgh, High Wycombe, Leeds, Liverpool, Nottingham, Poole, Reading, Sheffield (two stores) and Stockport.  At the price paid the portfolio had an implied first year pre-admin net operating income yield of 6.8%, rising to 8.1% if the stores achieve 85% occupancy at today's rental levels. 

Revenue

Total revenue for the year was £84.3 million, an increase of £12.1 million (17%) from £72.2 million in the prior year.   The revenue excluding the Partnership stores consolidated from 1 December was £80.6 million for the year, representing an increase of 12% from last year.  The other revenue is fee income earned from Big Yellow Limited Partnership (until 30 November), management fee income from the Armadillo Partnerships, 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 16.8% of storage income for the year (2014: 17.5%) and generated revenue of £11.8 million for the year, up 13% from £10.5 million in 2014.

The table below reconciles the quarterly store revenue compared to the prior year, showing the impact on revenue of the Partnership stores acquired on 1 December 2014.

Quarter	Same stores* 2015 £m	Same stores 2014 £m	%	BYLP stores consolidated £m	2015 total £m	% increase on 2014
April to June	18.6	16.7	11%	-	18.6	11%
July to September	20.5	18.4	11%	-	20.5	11%
October to December	20.3	17.9	13%	1.0	21.3	19%
January to March	19.6	17.7	11%	2.7	22.3	26%
Total	79.0	70.7	12%	3.7	82.7	17%

* - the same stores are the Big Yellow stores excluding the BYLP stores.

Operating costs

Cost of sales comprises 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. 

Cost of sales in the income statement has increased by £2.4 million (9%) to £27.4 million (2014: £25.0 million).  Of this increase £1.4 million relates to the operating costs of the Partnership stores from 1 December 2014.  The operating costs of the new stores at Gypsy Corner, Oxford 2 and Chester account for £0.7 million of the increase, with the remaining increase of £0.3 million due to general inflationary pressures in part offset by rates rebates received at a couple of stores. 

Administrative expenses in the income statement have increased by £0.9 million compared to the prior year, largely due to an increase of £0.6 million in the share based payment charge and associated national insurance on the vesting of share incentives.  £2.1 million of the £8.5 million administrative expense is non-cash IFRS 2 share-based payment charges. 

Store EBITDA

Store EBITDA for the year was £55.3 million, an increase of £9.6 million (21%) from £45.7 million for the year ended 31 March 2014.  Of this increase £2.3 million relates to the Partnership stores from 1 December 2014.  The EBITDA after adjusting for this is £53.0 million, an increase of 16% from the prior year.

The overall EBITDA margin for all Big Yellow stores during the year was 66.4%, compared to 63.8% last year.

Interest expense on bank borrowings

The gross bank interest expense for the year was £10.1 million, a decrease of £0.7 million from the prior year.  This reflects the reduction in debt costs after the refinancing during the year, partly offset by the increase in debt in December 2014 following the acquisition of Big Yellow Limited Partnership and the acquisition of the freehold of our Battersea store.  The average cost of borrowing during the year was 3.9%, compared to 4.5% in the prior year.

Total interest payable has decreased in the statement of comprehensive income from £11.3 million to £10.7 million principally due to the decrease in the gross bank interest expense.  Capitalised interest decreased by £0.1 million from the prior year, with the Group constructing its store at Enfield in the current year, compared with constructing Gypsy Corner during the prior year. 

Profit before tax

The Group made a profit before tax in the year of £105.2 million, compared to a profit of £59.8 million in the prior year. 

After adjusting for the gain on the revaluation of investment properties and other matters shown in the table below, the Group made an adjusted profit before tax in the year of £39.4 million, up 35% from £29.2 million in 2014. 

Profit before tax analysis	2015 £m	2014 £m
Profit before tax	105.2	59.8
Gain on revaluation of investment properties	(64.5)	(28.3)
Movement in fair value on interest rate derivatives	2.3	(2.7)
Gains on surplus land	(1.3)	-
Share of non-recurring (gains)/losses in associates	(2.3)	0.4
Adjusted profit before tax	39.4	29.2

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 2014	29.2
Increase in gross profit	9.8
Reduction in net interest payable	0.8
Increase in administrative expenses	(0.9)
Increase in share of recurring profit of associates	0.6
Decrease in capitalised interest	(0.1)
Adjusted profit before tax - year ended 31 March 2015	39.4

Diluted EPRA earnings per share based on adjusted profit after tax was up 32% to 27.1p (2014: 20.5p) (see note 12).  Basic earnings per share for the year was 72.5p (2014: 42.5p) and fully diluted earnings per share was 71.9p (2014: 42.2p).

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 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. 

Taxation

There is a tax credit in the current year of £0.4 million.  This compares to a tax charge in the prior year of £0.3 million. 

We received a refund of £0.2 million in the year in respect of the conversion charge paid when the Group converted to a REIT in January 2007.  This was in respect of two properties which did not provide REITable supplies prior to their disposal.  The balance of the credit relates to a release of part of the prior year tax charge offset by the current year tax provision.

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 16.1 pence per share is payable (31 March 2014: 13 pence per share PID).

The Board is recommending the payment of a final dividend of 11.3 pence per share.  The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2015	31 March 2014
Interim dividend - PID	10.4p	8.0p
- discretionary	nil p	nil p
- total	10.4p	8.0p
Final dividend     - PID	5.7p	5.0p
- discretionary	5.6p	3.4p
- total	11.3p	8.4p
Total dividend     - PID	16.1p	13.0p
- discretionary	5.6p	3.4p
- total	21.7p	16.4p

Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2015, the final dividend will be paid on 23 July 2015.  The ex-div date is 11 June 2015 and the record date is 12 June 2015.

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 2015 £000	Year ended 31 March 2014 £000
Cash generated from operations	51,875	43,290
Net finance costs (including tax)	(9,478)	(10,538)
Free cash flow	42,397	32,752
Capital expenditure (including finance lease payments)	(43,704)	(9,570)
Acquisition of Big Yellow Limited Partnership	(37,406)	-
Acquisition of Big Storage Limited	(15,114)	-
Asset sales (including Big Storage Limited)	10,429	-
Receipt from Capital Goods Scheme	3,557	756
Investment in associates (net of dividends received)	(3,620)	-
Cash flow after investing activities	(43,461)	23,938
Ordinary dividends	(27,890)	(19,591)
Issue of share capital	77,094	42
Non-recurring finance costs	(4,057)	-
Net movement on Big Storage loans	4,241	-
Repayment of Partnership loan	(57,000)	-
Increase/(decrease) in borrowings	55,966	(8,938)
Net cash inflow/(outflow)	4,893	(4,549)
Opening cash and cash equivalents	3,301	7,850
Closing cash and cash equivalents	8,194	3,301
Debt	(285,334)	(229,368)
Net debt	(277,140)	(226,067)

Free cash flow pre-capital expenditure increased by 29% to £42.4 million for the year (2014: £32.8 million). In the year capital expenditure outflows were £43.7 million, up from £9.6 million in the prior year.  During the year we acquired an existing store in Oxford, the freehold of Chester, the freehold of our store in Battersea and paid the deposit on acquiring a site in Cambridge. We also constructed our Enfield store and invested in Phase 2 fit outs.  Additionally, as discussed elsewhere in this report, we acquired the two thirds share of Big Yellow Limited Partnership and acquired, and subsequently disposed of the share capital of Big Storage Limited with four stores excluding the leasehold interest in Chester.

The cash flow after investing activities was a net outflow of £43.5 million in the year, compared to an inflow of £23.9 million in 2014; the reduction being due to the increase in capital expenditure in the year. The non-recurring finance costs in the year relate to £1.4 million of payments made to cancel interest rate derivatives and £2.6 million relating to arrangement fees paid for the M&G and senior debt loans. 

Balance sheet

Property

The Group's 69 stores and four stores under development at 31 March 2015, which are classified as investment properties, have been valued by Cushman & Wakefield ("C&W") and this has resulted in an investment property asset value of £1,022.8 million, comprising £965.5 million (94.4%) for the 63 freehold (including two long leaseholds) open stores, £41.6 million (4.1%) for the six short leasehold open stores and £15.7 million (1.5%) for the four investment properties under construction.

Analysis of property portfolio	Value at 31 March 2015 £m	Revaluation movement in year £m
Investment property	1,007.1	63.6
Investment property under construction	15.7	0.9
Total	1,022.8	64.5

Investment property

Each Big Yellow store is reviewed and valued individually by Cushman & Wakefield LLP ("C&W").  The Armadillo stores have been valued by Jones Lang LaSalle.

The valuations in the current year have grown from the prior year, with a revaluation surplus of £63.6 million on the open Big Yellow stores.  Of this increase 75% is due to an improvement in the cap rate used in the valuations, reflecting transactional evidence and a wider shift in the UK real estate market in the last six months.  The balance of the increase (25%) is due to the growth in cash flow from the assets.

The valuation is based on an average occupancy over the 10 year cash flow period of 79.9% across the whole portfolio. 

	Mature		Established		Developing
	Leasehold	Freehold	Freehold	Freehold			Total
Number of stores	6	44	14	5			69
MLA capacity (sq ft)	398,000	2,723,000	883,000	340,000			4,344,000
Valuation at 31 March 2015 (£m)	41.6	689.6	183.9	92.0			1,007.1
Value per sq ft (£)	105	253	208	271			232
Occupancy at 31 March 2015	78.1%	74.9%	69.4%	63.2%			73.2%
Stabilised occupancy assumed	81.2%	80.2%	82.3%	84.8%			81.1%
Net initial yield pre-admin expenses	11.2%	6.4%	6.1%	4.7%			6.4%
Stabilised yield assuming no rental growth	12.0%	7.0%	7.6%	7.7%			7.4%

The initial yield pre-administration expenses assuming no rental growth is 6.4% (2014: 6.3%) rising to a stabilised yield of 7.4% (2014: 7.8%).  The stores are assumed to grow to stabilised occupancy in 26 months on average.   Note 14 contains more detail on the assumptions underpinning the valuations.

There is very little transaction activity in the prime self storage market, although there has been some activity for secondary assets.   As referenced in note 14, C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio was to be sold as a single lot or in selected groups of properties, the total value could differ significantly. C&W state that in current market conditions they are of the view that there could be a material portfolio premium.

Investment property under construction

The three wholly owned development sites (excluding Gypsy Corner which was transferred to investment property in the year) have increased in value by £6.0 million, £5.1 million relating to capital expenditure incurred, with the balance of £0.9 million a revaluation surplus.

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 2015 of £1,068.4 million (£45.6 million higher than the value recorded in the financial statements).  With the share of uplift on the revaluation of the Armadillo stores, this translates to 29.3 pence per share. 

The revised valuation translates into an adjusted net asset value per share of 510.4 pence (2014: 446.5 pence) after the dilutive effect of outstanding share options. 

Surplus land

At 31 March 2015 the Group owned £3.3 million of land surplus to our requirements at one site.  We aim to sell this surplus land once we have maximised its realisable value through planning improvements.  The site is held at the lower of cost and net realisable value and has not been externally valued. 

In September, the Group sold its surplus site at Guildford Central for £2.8 million, representing a profit over book value of £1.3 million. 

Receivables

At 31 March 2015 we have a receivable of £9.2 million in respect of payments due back to the Group under the Capital Goods Scheme as a consequence of the introduction of VAT on self storage from 1 October 2012. 

On acquisition of the remaining 66.7% of Big Yellow Limited Partnership, the Group's receivable under the Capital Goods Scheme increased by £3.4 million.

The debtor has been discounted in accordance with International Accounting Standards to the net present value using the Group's average cost of debt, with £0.5 million of the discount being unwound through interest receivable in the period.  The gross value of the debtor before discounting is £10.3 million. 

The Group received £3.6 million under the Capital Goods Scheme during the year, with the October 2015 receipt accelerated to January 2015 following the merger of the Group's two VAT groups. 

Movement in adjusted NAV

The year on year movement in adjusted net asset value (see note 12) is illustrated in the table below:

Movement in adjusted net asset value	Equity shareholders' funds £m	EPRA adjusted NAV per share (pence)
1 April 2014	634.4	446.5
Share placing	76.4	7.9
1 April 2014 (restated)	710.8	454.4
Adjusted profit	39.4	25.1
Equity dividends paid	(27.9)	(17.8)
Revaluation movements (including share of associate)	67.6	43.2
Movement in purchaser's cost adjustment	8.9	5.7
Other movements (eg share schemes)	2.6	(0.2)
31 March 2015	801.4	510.4

Borrowings

We focus on improving our cash flows and for the year we had healthy Group interest cover of 5.4 times (2014: 4.1 times) based on cash generated from operations against interest paid, allied to a relatively conservative debt structure secured principally against the freehold estate.

During the year we completed the refinancing of our £145 million bank facility with Lloyds and HSBC, extending the maturity to August 2019.  50% of the bank facility is term and 50% is revolving.  The term loan attracts a margin of 175 bps and the revolving loan a margin of 150 bps, reflecting a reduction of 75bps for both tranches from the previous facility.  This facility was increased to £170 million in December 2014.  The Group bank facility contains a covenant requiring us to have 50% of all borrowings fixed. 

In addition, the Group has further diversified its pool of lenders by signing a new £70 million facility with M&G Investments Limited, the term of which will be seven years from the date of drawdown which can occur at any time in the period up to 29 June 2015.  The loan will be secured over a portfolio of 15 freehold self storage centres.  50% of the seven year loan is fixed by way of a forward start interest rate derivative, the balance of the loan is variable based on three month LIBOR plus margin.  The average cost of the M&G loan at the current rate of LIBOR will be 3.75%.

The Group agreed a short term bridging facility of £70 million with Lloyds Bank plc, which is repayable immediately on the drawdown of the M&G loan.

The Group has a £100 million 15 year loan with Aviva Commercial Finance Limited.  The loan has a fixed interest rate of 4.9% and amortises to £60 million over the course of the 15 years.  The loan outstanding at 31 March 2015 was £94.3 million.

During the year the Group cancelled £40 million of its existing interest rate derivatives at a cash cost of £1.4 million, leaving £30 million fixed at 2.8% plus applicable margin.  

As a result of this refinancing, and prior to the drawing of the M&G facility, our average cost of debt has decreased from 4.6% to 3.3% at the end of the financial year.  Following the M&G facility being drawn and the Lloyds bridging loan being repaid we would expect the average cost to be approximately 3.8% based on the current levels of LIBOR and current levels of drawn debt.

The Group was in compliance with its banking covenants at 31 March 2015.  The Group currently has a net debt to gross property assets ratio of 27%, and a net debt to adjusted net assets ratio of 35%.

At 31 March 2015, the fair value on the Group's interest rate derivatives was a liability of £3.7 million.  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 £15.8 million at 31 March 2015 (2014: £14.3 million), consisting of 158,055,735 ordinary shares of 10p each (2014: 143,061,147 shares). 

The Group placed 14.35 million shares in the year at 547.5 pence per share.

Shares issued for the exercise of options during the year amounted to 0.6 million at an average exercise price of 540p (2014: 421,500 shares at an average price of 450p).

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.

				2015 No.	2014 No.
Opening shares				143,061,147	142,639,647
Shares issued for the placing				14,352,711	-
Shares issued for the exercise of options				641,877	421,500
Closing shares in issue				158,055,735	143,061,147
Shares held in EBT				(1,500,000)	(1,500,000)
Shares held in treasury				(1,418,750)	(1,418,750)
Closing shares for NAV purposes				155,136,985	140,142,397

73,136,757 shares were traded in the market during the year ended 31 March 2015 (2014: 54,249,527).  The average mid-market price of shares traded during the year was 553.4p with a high of 667.0p and a low of 460.6p.

Big Yellow Limited Partnership

The Group acquired the remaining two thirds of Big Yellow Limited Partnership that it did not previously own on 1 December.  In the consolidated accounts of Big Yellow Group PLC, up to the date of acquisition the Partnership is treated as an associate.  We have provided in note 13d the balance sheet and income statement of the Partnership up to the date of acquisition, along with the Group's share of the income statement captions. 

The Group earned certain construction and operational fees from the Partnership.  For the year to 31 March 2015, these fees amounted to £0.5 million (2014: £0.6 million).  The Partnership bank facility was repaid immediately following completion of the acquisition by the Group.

Armadillo Self Storage

In April 2014 we acquired the Armadillo portfolio with an Australian consortium for a total property value of £19.75 million.  The Group initially invested £3.6 million representing a stake of 38% in the business ("Armadillo 1").  Our partners had a right to increase their share from 62% to 80% at par, which they exercised in July 2014, reducing the Group's investment to £1.9 million (20% of the business).  In the consolidated accounts of Big Yellow Group PLC, our investment in the vehicle is treated as an associate using the equity accounting method.  Armadillo 1 has an £11 million loan from Lloyds Bank which expires in April 2019.

The occupancy of the stores is 253,000 sq ft, against a total capacity of 401,000 sq ft, with growth of 13,000 sq ft over the year.  The stores' occupancy at 31 March 2015 was 63.1% (31 March 2014: 59.9%).  The net rent achieved at 31 March 2015 by the Armadillo 1 stores is £14.66 per sq ft, an increase of 2.4% from the same time last year.  The revenue of the portfolio increased by 12% to £4.5 million for the year to 31 March 2015 compared to £4.0 million last year.  

Armadillo 1 made an operating profit of £2.0 million in the period from acquisition, of which Big Yellow's share is £0.5 million (representing 38% until July and 20% thereafter).  After net interest costs, the revaluation of investment properties, deferred tax on the revaluation surplus and interest rate derivatives, the profit for the period from acquisition for Armadillo 1 was £9.0 million, of which the Group's share was £1.8 million.  There has been a significant increase in the valuation of the portfolio due to the growth in cash flow and additionally cap rate compression in the valuation of secondary assets following transactional evidence in the year.

Big Yellow has a five year management contract in place.  For the period from acquisition to 31 March 2015 fees amounted to £0.6 million (including fees in relation to due diligence carried out on acquisition). 

The Group's share of the dividend declared for the year is £178,000, representing a 9.3% yield on our investment, which together, with our ongoing management fees of £400,000 per annum, gives a first year cash return of approximately 30% on the investment.

Big Storage

In January 2015 the Group acquired the entire share capital of Big Storage Limited for a property value of £24.9 million.  The net consideration was £15.1 million, taking into account the existing bank debt in the company and adjusted for working capital.  The Group repaid the bank debt through a £13.9 million loan from Lloyds Bank, which expires in January 2020.

The company owned five self storage centres in North West England.  The Group transferred the store at Chester to another subsidiary company of the Group, and the store will be rebranded as a Big Yellow.  The Group has subsequently acquired the freehold of the store in Chester.

In February 2015, the Group subsequently sold the share capital of Big Storage Limited to a company ("Armadillo 2") in which it has a 20% interest, with the balance of the equity owned by an Australian consortium, for a net consideration of £7.6 million.  This represents a property value of £19.3 million less the £13.9 million Lloyds loan and adjusted for working capital. 

In the consolidated accounts of Big Yellow Group PLC, our investment in Armadillo 2 is treated as an associate using the equity accounting method.  The four stores will be rebranded as Armadillo stores.  The occupancy of the stores is 210,000 sq ft, against a total capacity of 270,000 sq ft, with growth of 13,000 sq ft over the year.  The stores' occupancy at 31 March 2015 was 77.8% and the net rent achieved at 31 March 2015 is £15.90 per sq ft. 

Armadillo 2 made an operating profit of £0.2 million in the period, of which Big Yellow's share is £0.04 million.  After net interest costs, the revaluation of investment properties, deferred tax on the revaluation surplus and interest rate derivatives, the profit for the period from acquisition for Armadillo 2 was £0.7 million, of which the Group's share was £0.1 million.

Big Yellow has a five year management contract in place.  For the period from acquisition to 31 March 2015 fees amounted to £0.2 million (including fees in relation to due diligence carried out on acquisition). 

GOING CONCERN

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

After reviewing Group and Company cash balances, borrowing facilities, forecast valuation movements and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ending 31 March 2016 and projections contained in the longer-term business plan which covers the period to March 2022. 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 and are satisfied with the Group's positioning.  For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Consolidated Statement of Comprehensive Income

Year ended 31 March 2015

	Note		2015 £000	2014 £000
Revenue	3		84,276	72,196
Cost of sales			(27,351)	(25,040)
Gross profit			56,925	47,156
Administrative expenses			(8,505)	(7,619)
Operating profit before gains and losses on property assets			48,420	39,537
Gain on the revaluation of investment properties	13a,14		64,465	28,350
Profit on disposal of surplus land	15		1,318	-
Operating profit			114,203	67,887
Share of profit of associates	13d		3,516	180
Investment income - interest receivable	7		495	415
- fair value movement of derivatives	7		-	2,681
Finance costs - interest payable	8		(10,704)	(11,315)
- fair value movement of derivatives	8, 18		(2,274)	-
Profit before taxation			105,236	59,848
Taxation	9		351	(300)
Profit for the year (attributable to equity shareholders)	5		105,587	59,548
Total comprehensive income for the year (attributable to equity shareholders)			105,587	59,548
Basic earnings per share	12		72.5p	42.5p
Diluted earnings per share	12		71.9p	42.2p

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 2015

	Note		2015 £000	2014 £000
Non-current assets
Investment property	13a		1,007,110	776,390
Investment property under construction	13a		15,681	22,303
Interests in leasehold property	13a		20,829	23,814
Plant, equipment and owner-occupied property	13b		3,050	2,985
Goodwill	13c		1,433	1,433
Investment in associates	13d		5,572	17,861
Capital Goods Scheme Receivable	16		9,039	7,620
			1,062,714	852,406
Current assets
Surplus land	15		3,315	6,059
Inventories			304	290
Trade and other receivables	16		16,379	13,531
Cash and cash equivalents			8,194	3,301
			28,192	23,181
Total assets			1,090,906	875,587
Current liabilities
Trade and other payables	17		(32,612)	(26,818)
Borrowings	19		(72,136)	(2,034)
Obligations under finance leases	21		(1,705)	(1,615)
			(106,453)	(30,467)
Non-current liabilities
Derivative financial instruments	18c		(3,679)	(2,813)
Borrowings	19		(210,736)	(226,044)
Obligations under finance leases	21		(19,124)	(22,199)
			(233,539)	(251,056)
Total liabilities			(339,992)	(281,523)
Net assets			750,914	594,064
Equity
Called up share capital	22		15,806	14,306
Share premium account			44,922	44,278
Reserves			690,186	535,480
Equity shareholders' funds			750,914	594,064

The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2015. 

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 2015

	Share capital £000	Share premium account £000	Other non-distributable reserve £000	Capital redemption reserve £000	Retained earnings £000	Own shares £000	Total £000
At 1 April 2014	14,306	44,278	-	1,653	539,450	(5,623)	594,064
Total comprehensive gain for the year	-	-	-	-	105,587	-	105,587
Issue of share capital	1,500	644	74,950	-		-	77,094
Dividend	-	-	-	-	(27,890)	-	(27,890)
Credit to equity for equity-settled share based payments	-	-	-	-	2,059	-	2,059
At 31 March 2015	15,806	44,922	74,950	1,653	619,206	(5,623)	750,914

The other non-distributable reserve arose in the year following the placing of 14.35 million ordinary shares.

Year ended 31 March 2014

	Share capital £000	Share premium account £000	Capital redemption reserve £000	Retained earnings £000	Own shares £000	Total £000
At 1 April 2013	14,264	44,278	1,653	498,056	(5,623)	552,628
Total comprehensive gain for the year	-	-	-	59,548	-	59,548
Issue of share capital	42	-	-	-	-	42
Dividend	-	-	-	(19,591)	-	(19,591)
Credit to equity for equity-settled share based payments	-	-	-	1,437	-	1,437
At 31 March 2014	14,306	44,278	1,653	539,450	(5,623)	594,064

Consolidated Cash Flow Statement

Year ended 31 March 2015

		Note	2015 £000	2014 £000
Operating profit			114,203	67,887
Gain on the revaluation of investment properties		13a, 14	(64,465)	(28,350)
Profit on disposal of surplus land		15	(1,318)	-
Depreciation		13b	566	526
Depreciation of finance lease capital obligations		13a	918	974
Employee share options		6	2,059	1,437
(Increase)/decrease in inventories			(14)	10
Increase in receivables			(1,172)	(1,652)
Increase in payables			1,098	2,458
Cash generated from operations			51,875	43,290
Interest paid			(9,692)	(10,558)
Interest received			27	20
Tax credit received			187	-
Cash flows from operating activities			42,397	32,752
Investing activities
Sale of surplus land			2,815	-
Purchase of non-current assets			(42,555)	(8,460)
Additions to surplus land			(231)	(136)
Receipts from Capital Goods Scheme			3,557	756
Acquisition of Big Yellow Limited Partnership (net of cash acquired)		13d	(37,406)	-
Acquisition of Big Storage Limited		13a	(15,114)	-
Disposal of Big Storage Limited		13a	7,614	-
Net investment in associates		13d	(3,709)	-
Dividend received from associate		13d	89	-
Cash flows from investing activities			(84,940)	(7,840)
Financing activities
Issue of share capital			77,094	42
Payment of finance lease liabilities		13a	(918)	(974)
Equity dividends paid		11	(27,890)	(19,591)
Payments to cancel interest rate derivatives			(1,408)	-
Refinancing fees			(2,649)	-
Repayment of Big Yellow Limited Partnership loan			(57,000)	-
Repayment of Big Storage AIB loan			(9,659)	-
Drawing of Big Storage Lloyds loan			13,900	-
Increase/(reduction) in borrowings			55,966	(8,938)
Cash flows from financing activities			47,436	(29,461)
Net increase/(decrease) in cash and cash equivalents			4,893	(4,549)
Opening cash and cash equivalents			3,301	7,850
Closing cash and cash equivalents			8,194	3,301

Reconciliation of Net Cash Flow to Movement in Net Debt

Year ended 31 March 2015

		Note		2015 £000	2014 £000
Net increase/(decrease) in cash and cash equivalents in the year				4,893	(4,549)
Cash flow from (increase)/decrease in debt financing				(55,966)	8,938
Change in net debt resulting from cash flows				(51,073)	4,389
Movement in net debt in the year				(51,073)	4,389
Net debt at the start of the year				(226,067)	(230,456)
Net debt at the end of the year		18		(277,140)	(226,067)

Notes to the financial statements       

Year ended 31 March 2015

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 Strategic Report.

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 18 May 2015) 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 2014 and 31 March 2015, 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 2014 have been filed with the Registrar of Companies.  The Company's statutory accounts for the year ended 31 March 2015 will be filed with the Registrar of Companies following the Annual General Meeting.  The auditors' reports on both the 2014 and 2015 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 2014.   The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2014 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 on in the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are shown in the balance sheet, cash flow statement and accompanying notes to the financial statements. Further information concerning the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk can be found in the Strategic Report and in the notes to the financial statements.

After reviewing Group and Company cash balances, borrowing facilities, forecast valuation movements and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ending 31 March 2016 and projections contained in the longer term business plan which covers the period to March 2022. 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, and are satisfied with the Group's positioning. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

3.         Revenue

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

			2015 £000	2014 £000
Open stores
Self storage income			70,631	59,994
Other storage related income			11,849	10,475
Ancillary store rental income			251	237
			82,731	70,706
Other revenue
Non-storage income			268	420
Fees earned from Big Yellow Limited Partnership			458	640
Other management fees earned			819	430
Revenue per statement of comprehensive income			84,276	72,196
Interest receivable on bank deposits (see note 7)			27	20
Total revenue per IAS 18			84,303	72,216

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

4.         Segmental Information

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

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

5.         PROFIT for the year

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

		2015 £000	2014 £000
Depreciation of plant, equipment and owner-occupied property		566	526
Leasehold property depreciation		918	974
Gain on the revaluation of investment property		(64,465)	(28,350)
Profit on disposal of surplus land		(1,318)	-
Cost of inventories recognised as an expense		977	923
Employee costs (see note 6)		13,084	11,075
Operating lease rentals		95	188
Auditor's remuneration for audit services (see below)		213	197

b) Analysis of auditor's remuneration:

			2015 £000	2014 £000
Fees payable to the Company's auditor for the audit of the Company's annual accounts			160	140
Other services - audit of the Company's subsidiaries' annual accounts			31	27
Total audit fees			191	167
Interim review			34	33
Tax services - advisory			131	21
Assurance of CSR report			22	20
Other services			80	21
Real estate advice (planning)			-	1
Total non-audit fees			267	96

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.  Fees charged by Deloitte LLP to Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited in the year amounted to £211,000, of which £156,000 related to non-audit services.

6.         Employee costs

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

			2015 Number	2014 Number
Sales			256	246
Administration			44	43
			300	289
At 31 March 2015 the total number of Group employees was 337 (2014: 325).
			2015 £000	2014 £000
Their aggregate remuneration comprised:
Wages and salaries			8,982	8,007
Social security costs			1,655	1,275
Other pension costs			388	356
Share-based payments			2,059	1,437
			13,084	11,075

7.         INVESTMENT income

		2015 £000	2014 £000
Bank interest receivable		27	20
Unwinding of discount on Capital Goods Scheme receivable		468	395
Total interest receivable		495	415
Fair value movement on interest rate derivatives		-	2,681
Total investment income		495	3,096

8.         Finance costs

		2015 £000	2014 £000
Interest on bank borrowings		10,080	10,768
Capitalised interest		(399)	(484)
Interest on obligations under finance leases		1,023	1,031
Total interest payable		10,704	11,315
Change in fair value of interest rate derivatives		2,274	-
Total finance costs		12,978	11,315

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			2015 £000	2014 £000
Current tax:
- Current year			90	300
- Prior year			(254)	-
- Conversion charge refund			(187)	-
			(351)	300

A reconciliation of the tax (credit)/charge is shown below:

			2015 £000	2014 £000
Profit before tax			105,236	59,848
Tax charge at 21% (2014 - 23%) thereon			22,100	13,765
Effects of:
Revaluation of investment properties			(12,109)	(6,368)
Share of results of associates			(739)	-
Permanent differences			(1,475)	147
Profits from the tax exempt business			(7,234)	(6,386)
Gain on disposal of surplus land			(278)	-
Utilisation of brought forward losses			(438)	(41)
Movement on other unrecognised deferred tax assets			263	(817)
Current year tax charge			90	300
Prior year adjustment			(441)	-
Total tax (credit)/charge			(351)	300

At 31 March 2015 the Group has unutilised tax losses of £32.8 million (2014: £36.5 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

		2015 £000	2014 £000
Profit before tax		105,236	59,848
(Gain)/loss on revaluation of investment properties - wholly owned		(64,465)	(28,350)
- in associate (net of deferred tax)		(2,731)	662
Change in fair value of interest rate derivatives - Group		2,274	(2,681)
- in associate		124	(258)
Profit on disposal of surplus land		(1,318)	-
Share of non-recurring losses in associate		285	-
Adjusted profit before tax		39,405	29,221
Net bank interest		9,654	10,264
Depreciation (see note 13b)		566	526
Adjusted EBITDA		49,625	40,011

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.  EPRA earnings are £39,756,000 for the year after the tax credit of £351,000 (2014: £28,921,000 after a tax charge of £300,000). 

11.       Dividends

		2015 £000	2014 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2014 of 8.4p (2013: 6.0p) per share.		11,774	8,384
Interim dividend for the year ended 31 March 2015 of 10.4p    (2014: 8.0p) per share.		16,116	11,207
		27,890	19,591
Proposed final dividend for the year ended 31 March 2015 of 11.3p (2014: 8.4p) per share.		17,541	11,774

Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2015, the final dividend will be paid on 23 July 2015.  The ex-div date is 11 June 2015 and the record date is 12 June 2015.

The Property Income Dividend ("PID") payable for the year is 16.1 pence per share (2014: 13 pence per share). 

12.       Earnings AND NET ASSETS per share

Earnings per ordinary share

	Year ended 31 March 2015			Year ended 31 March 2014
	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic	105.6	145.7	72.5	59.5	139.9	42.5
Dilutive share options	-	1.2	(0.6)	-	1.2	(0.3)
Diluted	105.6	146.9	71.9	59.5	141.1	42.2
Adjustments:
Gain on revaluation of investment properties	(64.5)	-	(43.9)	(28.3)	-	(20.1)
Change in fair value of interest rate derivatives	2.3	-	1.6	(2.7)	-	(1.9)
Profit on disposal of surplus land	(1.3)	-	(0.9)	-	-	-
Share of associate non-recurring (gains)/losses	(2.3)	-	(1.6)	0.4	-	0.3
EPRA - diluted	39.8	146.9	27.1	28.9	141.1	20.5
EPRA - basic	39.8	145.7	27.3	28.9	139.9	20.7

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

EPRA earnings and earnings per ordinary share 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 (including deferred tax on revaluation surpluses) 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 2015 £000	31 March 2014 £000
Basic net asset value	750,914	594,064
Exercise of share options	452	483
EPRA NNNAV	751,366	594,547
Adjustments:
Fair value of derivatives	3,679	2,813
Fair value of derivatives - share of associate	46	(26)
Share of deferred tax in associates	425	-
EPRA NAV	755,516	597,334
Basic net assets per share (pence)	484.0	423.9
EPRA NNNAV per share (pence)	478.5	418.5
EPRA NAV per share (pence)	481.1	420.5
EPRA NAV (as above) (£000)	755,516	597,334
Valuation methodology assumption (see note 14) (£000)	45,927	37,057
Adjusted net asset value (£000)	801,443	634,391
Adjusted net assets per share (pence)	510.4	446.5
	No. of shares	No. of shares
Shares in issue	158,055,735	143,061,147
Own shares held in treasury	(1,418,750)	(1,418,750)
Own shares held in EBT	(1,500,000)	(1,500,000)
Basic shares in issue used for calculation	155,136,985	140,142,397
Exercise of share options	1,896,437	1,926,527
Diluted shares used for calculation	157,033,422	142,068,924

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).  

13.       Non-Current Assets

a)     Investment property, investment property under construction and interests in leasehold property

	Investment property £000	Investment property under construction £000	Interests in leasehold property £000	Total £000
At 31 March 2013	745,605	17,277	21,803	784,685
Additions	1,745	5,860	-	7,605
Capital Goods Scheme adjustment	1,186	-	-	1,186
Transfer to surplus land	(1,330)	-	-	(1,330)
Adjustment to present value	-	-	2,985	2,985
Revaluation (see note 14)	29,184	(834)	-	28,350
Depreciation	-	-	(974)	(974)
At 31 March 2014	776,390	22,303	23,814	822,507
Additions	36,343	5,157	-	41,500
Acquisition of Partnership stores	111,055	-	-	111,055
Transfer from surplus land	1,478	-		1,478
Reclassification	12,650	(12,650)	-	-
Adjustment to present value	-	-	(2,067)	(2,067)
Acquisition of Big Storage	24,900	-	-	24,900
Disposals	(19,300)	-	-	(19,300)
Revaluation (see note 14)	63,594	871		64,465
Depreciation	-	-	(918)	(918)
At 31 March 2015	1,007,110	15,681	20,829	1,043,620

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 £0.4 million of capitalised interest (2014: £0.5 million), calculated at the Group's average borrowing cost for the year of 3.9%.  55 of the Group's investment properties are pledged as security for loans, with a total external value of £861.0 million.

The adjustment to present value in leasehold properties in the year arises due to the acquisition of the freehold of the Battersea store and extinguishment of the lease liability.

Accounting for the acquisition of Big Storage Limited

In January 2015 the Group acquired the entire share capital of Big Storage Limited for a property value of £24.9 million.  The net consideration is shown below.  The company owned five self storage centres in North West England.  The Group subsequently transferred the store at Chester to another subsidiary company of the Group.  This store will be rebranded as a Big Yellow. 

To determine the assets and liabilities acquired at the date of completion of Big Storage Limited the Group have used the balance sheet at the date of acquisition.   The following provides a breakdown of the fair value of the assets and liabilities acquired. 

		£000
Investment property		24,900
Other non-current assets		17
Current assets		1,701
Current liabilities		(1,619)
Non-current liabilities		(9,885)
Net assets (100%)		15,114

		£000
Net assets acquired (100%)		15,114
Satisfied by cash consideration		(15,114)
		-

 

In February 2015, the Group sold the share capital of Big Storage Limited to a company ("Armadillo 2") in which it has a 20% interest, with the balance of the equity owned by an Australian consortium.  The disposal was at book and fair value, so there was no profit or loss recorded on disposal.  The following provides a breakdown of the assets and liabilities disposed of.  Between transactions the Group controlled Big Storage Limited and contractually controlled the assets.

		£000
Investment property		19,300
Other non-current assets		17
Current assets		3,942
Current liabilities		(1,519)
Non-current liabilities		(14,126)
Net assets (100%)		7,614

 

		£000
Net assets disposed (100%)		7,614
Satisfied by cash consideration		(7,614)
		-

On a net basis, the Group acquired property of £5.6 million, cash of £1.9 million and invested £1.8 million into Armadillo 2.

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 2013		1,867	44	826	25	6,958	9,720
Reclassification		(9)	9	-	-	-	-
Retirement of fully depreciated assets		(15)	-	(418)	-	(5,813)	(6,246)
Additions		-	-	17	-	744	761
At 31 March 2014		1,843	53	425	25	1,889	4,235
Retirement of fully depreciated assets		-	-	(52)	-	(891)	(943)
Additions		42	-	171	-	418	631
At 31 March 2015		1,885	53	544	25	1,416	3,923
Depreciation
At 31 March 2013		(261)	(44)	(609)	(15)	(6,041)	(6,970)
Reclassification		2	(2)	-	-	-	-
Retirement of fully depreciated assets		15	-	418	-	5,813	6,246
Charge for the year		(49)	(3)	(27)	(7)	(440)	(526)
At 31 March 2014		(293)	(49)	(218)	(22)	(668)	(1,250)
Retirement of fully depreciated assets		-	-	52	-	891	943
Charge for the year		(35)	(1)	(53)	(3)	(474)	(566)
At 31 March 2015		(328)	(50)	(219)	(25)	(251)	(873)
Net book value
At 31 March 2015		1,557	3	325	-	1,165	3,050
At 31 March 2014		1,550	4	207	3	1,221	2,985

 

c) Goodwill

The 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 remains unchanged from the prior year as there is considered to be no impairment in the value of the asset.

d) Investment in associates

The table below shows the movement for all associates in the period and reconciles to the income statement and the balance sheet.

	Big Yellow Limited Partnership	Armadillo 1	Armadillo 2		Total associates
At the beginning of the year	17,861	-	-		17,861
Subscription for partnership capital and advances	-	3,648	1,789		5,437
Part disposal of Partnership interest		(1,728)	-		(1,728)
Share of results (see below)	1,564	1,807	145		3,516
Dividends	-	(89)	-		(89)
Acquisition of remaining interest	(19,425)	-	-		(19,425)
Investment at the end of year	-	3,638	1,934		5,572

Big Yellow Limited Partnership

At the start of the year the Group had a 33.3% interest in Big Yellow Limited Partnership.  This interest was accounted for as an associate, using equity accounting.  The Partnership commenced trading on 1 December 2007.  On 1 December 2014, the Group acquired the remaining 66.7% of the Partnership interest that it did not previously own.  From this date, the Partnership is accounted for as a wholly owned subsidiary of the Group.  The results up to this date are equity accounted as shown in the note below:

	31 March 2015 £000	31 March  2014 £000
At the beginning of the year	17,861	17,681
Share of results (see below)	1,564	180
Acquisition of remaining interest	(19,425)	-
	-	17,861

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		1 April 2014 to 30 November 2015 £000	Year ended 31 March 2014 £000
Income statement (100%)
Revenue		7,476	9,529
Cost of sales		(3,367)	(4,846)
Administrative expenses		(86)	(112)
Operating profit		4,023	4,571
Gain/(loss) on the revaluation of investment properties		2,473	(1,985)
Net interest payable		(1,569)	(2,820)
Fair value movement of interest rate derivatives		(233)	774
Profit before and after tax		4,694	540
Balance sheet (100%)		31 March 2015 £000	31 March 2014 £000
Investment property		-	108,110
Other non-current assets		-	3,588
Current assets		-	3,009
Current liabilities		-	(3,201)
Derivative financial instruments		-	77
Non-current liabilities		-	(58,000)
Net assets (100%)		-	53,583

Group share of (33.3%)		1 April 2014 to 30 November 2015 £000	Year ended 31 March 2014 £000
Operating profit		1,341	1,524
Gain/(loss) on the revaluation of investment properties		824	(662)
Net interest payable		(523)	(940)
Fair value movement of interest rate derivatives		(78)	258
Profit for the year		1,564	180
Associate net assets		-	17,861

Accounting for the acquisition

The following provides a breakdown of the fair value of the assets and liabilities acquired.  The investment properties have been valued by the Directors with regard to the September 2014 property valuations performed by Cushman & Wakefield LLP uplifted for the capital movement in the two month period to the Acquisition date.

		£000
Investment property		111,055
Other non-current assets		3,566
Current assets		3,312
Current liabilities		(2,058)
Non-current liabilities		(57,000)
Net assets (100%)		58,875

		£000
Net assets acquired (66.67% of £58.9 million)		39,250
Satisfied by cash consideration		(39,250)
		-

From the date of acquisition of the Partnership on 1 December 2014 to 31 March 2015, the revenue of the Partnership was £3.7 million, and the statutory profit before tax was £4.3 million.  The profit for the Partnership for the full year from 1 April 2014 was £9.0 million.  Excluding the share of results of the Partnership as an associate of £1.6 million, the combined statutory profit before tax of the Group and the Partnership for the full year would have been £112.6 million. 

Armadillo

The Group has a 20% interest in Armadillo Storage Holding Company Limited ("Armadillo 1") and a 20% interest in Armadillo Storage Holding Company 2 Limited ("Armadillo 2").  Both interests are accounted for as associates, using the equity method of accounting. 

	Armadillo 1		Armadillo 2
	31 March 2015 £000	31 March 2014 £000	31 March 2015 £000	31 March 2014 £000
At the beginning of the year	-	-	-	-
Subscription for partnership capital and advances	3,648	-	1,789	-
Part disposal of Partnership interest	(1,728)	-	-	-
Share of results (see below)	1,807	-	145	-
Dividends	(89)	-	-	-
	3,638	-	1,992	-

The Group's total subscription for partnership capital and advances in Armadillo Storage Holding Company Limited is £1,920,000 and £1,789,000 in Armadillo Storage Holding Company 2 Limited.

The investment properties owned by Armadillo 1 and Armadillo 2 have been valued at 31 March 2015 by Jones Lang LaSalle.

The figures below show the trading results of the Partnerships, and the Group's share of the results and the net assets of the Partnerships.

	Armadillo Storage 1	Armadillo Storage 2
	Period from 16 April 2014 to 31 March 2015 £000	Period from 3 February 2015 to 31 March 2015 £000
Income statement (100%)
Revenue	4,321	627
Cost of sales	(2,258)	(335)
Administrative expenses	(100)	(75)
Operating profit	1,963	217
Gain on the revaluation of investment properties	10,078	1,449
Net interest payable	(504)	(73)
Acquisition costs written off	(467)	(540)
Fair value movement of interest rate derivatives	(197)	(35)
Deferred tax	(1,833)	(290)
Profit attributable to shareholders	9,040	728
Dividends paid	(447)	-
Retained profit	8,593	728
Balance sheet (100%)
Investment property	30,125	23,175
Other non-current assets	1,005	1,465
Current assets	1,132	1,256
Current liabilities	(2,151)	(1,406)
Derivative financial instruments	(197)	(35)
Non-current liabilities	(11,721)	(14,785)
Net assets (100%)	18,193	9,670
Group share
Operating profit	471	43
Gain on the revaluation of investment properties	2,042	290
Net interest payable	(123)	(15)
Acquisition costs written off	(177)	(108)
Fair value movement of interest rate derivatives	(39)	(7)
Deferred tax	(367)	(58)
Profit attributable to shareholders	1,807	145
Dividends paid	(89)	-
Retained profit	1,718	145
Associates' net assets	3,638	1,934

14.       VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000		Revaluation on deemed cost £000		Valuation £000
Freehold stores
At 31 March 2014	373,503		352,857		726,360
Transfer from surplus land	1,478		-		1,478
Acquisition of Partnership stores	111,055		-		111,055
Transfer from investment property under construction	12,990		(340)		12,650
Transfer on freehold acquisition	1,762		6,948		8,710
Movement in year	41,678		63,609		105,287
At 31 March 2015	542,466		423,074		965,540
Leasehold stores
At 31 March 2014	16,199		33,831		50,030
Transfer on freehold acquisition	(1,762)		(6,948)		(8,710)
Movement in year	265		(15)		250
At 31 March 2015	14,702		26,868		41,570
Total of open stores
At 31 March 2014	389,702		386,688		776,390
Transfer from surplus land	1,478		-		1,478
Acquisition of Partnership stores	111,055		-		111,055
Transfer from investment property under construction	12,990		(340)		12,650
Movement in year	41,943		63,594		105,537
At 31 March 2015	557,168		449,942		1,007,110
Investment property under construction
At 31 March 2014	29,642		(7,339)		22,303
Transfer to investment property	(12,990)		340		(12,650)
Movement in year	5,157		871		6,028
At 31 March 2015	21,809		(6,128)		15,681
Valuation of all investment property
At 31 March 2014	419,344		379,349		798,693
Transfer from surplus land	1,478		-		1,478
Acquisition of Partnership stores	111,055		-		111,055
Movement in year	47,100		64,465		111,565
At 31 March 2015	578,977		443,814		1,022,791

The Group has classified the fair value investment property and the investment property under construction within Level 3 of the fair value hierarchy. There has been no transfer to or from Level 3 in the year.

The wholly owned freehold and leasehold investment properties have been valued at 31 March 2015 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: 

·      Of the members of the RICS who have been the signatories to the valuations provided to the Group for the same purposes as this valuation, one has done so since September 2004 and the other has done so since September 2014;

·      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%; and

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

Market uncertainty

C&W's valuation report comments on valuation uncertainty resulting from low liquidity in the market for self storage property.  C&W note that in the UK since Q1 2013 there have only been four transactions involving multiple assets and 8 single asset transactions. C&W state that due to the lack of comparable market information in the self storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during more active market conditions.

Portfolio Premium

C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio was to be sold as a single lot or in selected groups of properties, the total value could differ significantly. C&W state that in current market conditions they are of the view that there could be a material portfolio premium.

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 69 trading stores (both freeholds and leaseholds) open at 31 March 2015 averages 81.1% (31 March 2014: 81.1%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.  The average time assumed for the 69 stores to trade at their maturity levels is 24 months (31 March 2014: 31.5 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 69 stores is 6.4% (31 March 2014: 6.3%) rising to a stabilised net yield pre-administration expenses of 7.4% (31 March 2014: 7.8%). 

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 10.4% (31 March 2014: 11.0%).

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 six short leasehold properties is 16.5 years (31 March 2014: seven short leasehold properties with 16.8 years unexpired).

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

Please note C&W's comments in relation to market uncertainty in the self storage sector due to the lack of comparable market transactions and information.  The degree of uncertainty relating to the 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.

As noted above, C&W have not assumed that the entire portfolio of properties owned by the entity would be sold as a single lot and the value for the whole portfolio in the context of a sale as a single lot may differ significantly (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 2015 of £1,068.4 million (£45.6 million higher than the value recorded in the financial statements).  The total valuations in the two Armadillo Partnerships performed by Jones Lang LaSalle are £1.6 million higher than the value recorded in the financial statements, of which the Group's share is £0.3 million.  The sum of these is £45.9 million and translates to 29.3 pence per share.  We have included this revised valuation in the adjusted diluted net asset calculation (see note 14). 

15.       SURPLUS LAND

			£000
At 31 March 2014			6,059
Transfer to investment property			(1,478)
Disposal			(1,497)
Additions			231
At 31 March 2015			3,315

During the year a gain of £1,318,000 arose on the disposal of surplus land at one site (2014: no disposals).

16.       TRADE AND OTHER RECEIVABLES

Current			31 March  2015 £000	31 March 2014 £000
Trade receivables			3,062	2,594
Capital Goods Scheme receivable			184	1,344
Other receivables			371	384
Prepayments and accrued income			12,762	9,209
			16,379	13,531
Non-current
Capital Goods Scheme receivable			9,039	7,620

Trade receivables are net of a bad debt provision of £19,000 (2014: £42,000).  The Directors consider that the carrying amount of trade and other receivables approximates their fair value. 

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

Trade receivables

The Group does not typically offer credit terms to its customers, requiring them to pay in advance of their storage period and hence the Group is not exposed to significant credit risk. A late charge of 10% is applied to a customer's account if they are greater than 10 days overdue in their payment.  The Group provides for receivables on a specific basis. There is a right of lien over the customers' goods, so if they have not paid within a certain time frame, we have the right to sell the items they store to recoup the debt owed 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% of the total balance of trade receivables.

Included in the Group's trade receivable balance are debtors with a carrying amount of £210,000 (2014: £285,000) 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 43 days past due (2014: 37 days past due).

Ageing of past due but not impaired receivables

			2015 £000	2014 £000
1 - 30 days			44	136
30 - 60 days			33	52
60 + days			133	97
Total			210	285

Movement in the allowance for doubtful debts

			2015 £000	2014 £000
Balance at the beginning of the year			42	45
Amounts provided in year			99	73
Amounts written off as uncollectible			(122)	(76)
Balance at the end of the year			19	42

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

			2015 £000	2014 £000
1 - 30 days			-	-
30 - 60 days			3	5
60 + days			16	37
Total			19	42

17.       TRADE AND OTHER PAYABLES

		31 March 2015 £000	31 March  2014 £000
Current
Trade payables		11,653	10,758
Other payables		7,286	5,647
Accruals and deferred income		13,640	10,330
Amounts owed to associate		-	2
VAT repayable under Capital Goods Scheme		33	81
		32,612	26,818

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

18.       Financial Instruments

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.  The Group's debt facilities require 50% 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:

	2015 £000	2014 £000
Debt	(285,334)	(229,368)
Cash and cash equivalents	8,194	3,301
Net debt	(277,140)	(226,067)
Balance sheet equity	750,914	594,064
Net debt to equity ratio	36.9%	38.1%

Debt is defined as long-term and short-term borrowings, as detailed in note 19, excluding finance leases and debt issue costs.  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 currently 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.  The Group also has a short term bridging loan from Lloyds of £70 million, which is to be repaid through a £70 million seven year loan from M&G Investments Limited, which will be drawn in June 2015, and 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 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 2015 the Group had two interest rate derivatives in place; £30 million fixed at 2.80% (excluding the margin on the underlying debt instrument) until September 2016, and £35 million fixed at 2.635% (excluding the margin on the underlying debt instrument) with a forward start date of 29 June 2015.  This forward start swap is included in the total amount of fixed debt for the purposes of meeting the requirement to have at least 50% of debt fixed.

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 £30 million interest rate swap settles on a monthly basis. The floating rate on the interest rate swap is one month LIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.

The £35 million forward start interest rate swap settles on a three-monthly basis. The floating rate on the interest rate swap is three 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 £2,274,000 (2014: gain of £2,681,000). 

The fair value of the above derivatives at 31 March 2015 was a liability of £3,679,000 (2014: liability of £2,813,000).

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 2015, it is estimated that an increase of 0.5 percentage points in interest rates would have reduced the Group's adjusted profit before tax and net equity by £805,000 (2014: reduced adjusted profit before tax by £315,000) and a decrease of 0.5 percentage points in interest rates would have increased the Group's adjusted profit before tax and net equity by £805,000 (2014: increased adjusted profit before tax by £315,000). The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings, net of interest rate swaps, at the year end. 

The Group's sensitivity to interest rates has increased during the year, following the drawing of further floating rate debt.  The Board monitors closely the exposure to the floating rate element of our debt.

E.  Cash management and liquidity

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

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

F.   Foreign currency management

The Group does not have any foreign currency exposure.

G.   Credit risk

The credit risk management policies of the Group with respect to trade receivables are discussed in note 16.   The Group has no significant concentration of credit risk, with exposure spread over 47,000 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.

2015 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	94,334	2,136	2,243	7,427	82,528
Bank loan payable at variable rate	161,000	70,000	-	91,000	-
Debt fixed by interest rate derivatives	30,000	-	-	30,000	-
Total	285,334	72,136	2,243	128,427	82,528

The £70 million loan showing as due within one year will be repaid through the drawing of the seven year £70 million facility from M&G Investments Limited in June 2015.

2014 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	96,368	2,034	2,136	7,073	85,125
Bank loan payable at variable rate	63,000	-	-	63,000	-
Debt fixed by interest rate derivatives	70,000	-	-	70,000	-
Total	229,368	2,034	2,136	140,073	85,125

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:

2015	Trade and other  payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000
From five to twenty years	-	885	114,628	24,529	140,042
From two to five years	-	1,213	158,166	5,207	164,586
From one to two years	-	916	12,655	1,735	15,306
Due after more than one year	-	3,014	285,449	31,471	319,934
Due within one year	32,612	1,175	82,267	1,735	117,789
Total	32,612	4,189	367,716	33,206	437,723

2014	Trade and other  payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000
From five to twenty years	-	-	115,534	28,355	143,889
From two to five years	-	306	155,696	6,308	162,310
From one to two years	-	1,062	12,279	1,646	14,987
Due after more than one year	-	1,368	283,509	36,309	321,186
Due within one year	26,818	1,558	12,279	1,646	42,301
Total	26,818	2,926	295,788	37,955	363,487

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.

2015		Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years		82,528	30,890	1,210	114,628
From two to five years		128,427	28,487	1,252	158,166
From one to two years		2,243	10,412	-	12,655
Due after more than one year		213,198	69,789	2,462	285,449
Due within one year		72,136	10,131	-	82,267
Total		285,334	79,920	2,462	367,716

2014		Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years		85,125	29,119	1,290	115,534
From two to five years		140,073	15,623	-	155,696
From one to two years		2,136	10,143	-	12,279
Due after more than one year		227,334	54,885	1,290	283,509
Due within one year		2,034	10,245	-	12,279
Total		229,368	65,130	1,290	295,788

19.       BORROWINGS

Secured borrowings at amortised cost			31 March  2015 £000	31 March 2014 £000
Current liabilities
Aviva mortgage			2,136	2,034
Bank borrowings			70,000	-
			72,136	2,034
Non-current liabilities
Bank borrowings			121,000	133,000
Aviva mortgage			92,198	94,334
Unamortised loan arrangement costs			(2,462)	(1,290)
Total non-current borrowings			210,736	226,044
Total borrowings			282,872	228,078

The weighted average interest rate paid on the borrowings during the year was 3.9% (2014: 4.5%). 

The Group has £49,000,000 in undrawn committed bank borrowing facilities at 31 March 2015, which expire between four and five years (2013: £22,000,000 expiring between two and three years).  Additionally, the Group has a £70 million committed facility from M&G Investments Limited which it intends to draw in June 2015 to repay the bridging facility from Lloyds.  The M&G facility expires in June 2022.

In April 2012, the Group 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.  The annual fixed interest rate on the loan is 4.9%. 

The loan amortises to £60 million over the course of the 15 years.  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 Group has a £170 million 5 year bank facility with Lloyds and HSBC expiring in August 2019.  £85 million of the facility is term loan with £85 million revolving.  The blended margin on the facility is 1.625%.

The Group was in compliance with its banking covenants at 31 March 2015 and throughout the year.

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 2015
Gross financial liabilities	285,334	161,000	124,334	3.3%	8.0 years	5.0 years
At  31 March 2014
Gross financial liabilities	229,368	63,000	166,368	4.5%	7.4 years	6.1 years

All monetary liabilities, including short term receivables and payables are denominated in sterling.  The weighted average interest rate includes the effect of the Group's interest rate derivatives. The Directors have concluded that the carrying value of borrowings equates to its fair value.

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

20.       Deferred tax

Deferred tax assets in respect of share based payments (£0.2 million), interest rate swaps (£0.7 million), corporation tax losses (£5.4 million), capital allowances in excess of depreciation (£0.4 million) and capital losses (£1.1 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
	2015 £000	2014 £000	2015 £000	2014 £000
Amounts payable under finance leases:
Within one year	1,735	1,646	1,705	1,615
Within two to five years inclusive	6,942	7,954	6,077	6,973
Greater than five years	24,529	28,355	13,047	15,226
	33,206	37,955	20,829	23,814
Less: future finance charges	(12,377)	(14,141)
Present value of lease obligations	20,829	23,814

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
	2015 £000	2014 £000	2015 £000	2014 £000
Ordinary shares of 10 pence each	20,000	20,000	15,806	14,306
Movement in issued share capital
Number of shares at 31 March 2013				142,639,647
Exercise of share options - Share option schemes				421,500
Number of shares at 31 March 2014				143,061,147
Exercise of share options - Share option schemes				641,877
Share placing				14,352,711
Number of shares at 31 March 2015				158,055,735

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

At 31 March 2015 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 2015	Number of ordinary shares 2014
9 July 2008	nil p**	9 July 2011	8 July 2018	-	7,320
3 August 2009	nil p**	3 August 2012	2 August 2019	2,075	5,625
12 July 2010	nil p **	12 July 2013	11 July 2020	5,807	14,049
28 February 2011	263p *	28 February 2014	29 August 2014	-	24,471
19 July 2011	nil p **	19 July 2013	19 July 2021	14,587	485,582
12 March 2012	240p *	1 April 2015	1 October 2015	92,347	99,088
11 July 2012	nil p **	11 July 2015	10 July 2022	616,977	621,977
12 March 2013	305.5p *	1 April 2016	1 October 2016	32,254	38,954
19 July 2013	nil p **	19 July 2016	19 July 2023	511,821	514,821
25 February 2014	442.6p*	1 April 2017	1 October 2017	24,711	25,686
29 July 2014	nil p**	29 July 2017	29 July 2024	511,091	-
16 March 2015	494.6p*	1 April 2018	1 October 2018	106,541	-
				1,918,211	1,837,573

* SAYE (see note 23) ** LTIP (see note 23)

             Own shares

The own shares reserve represents the cost of shares in Big Yellow Group PLC purchased in the market, and held by the Big Yellow Group PLC Employee Benefit Trust, along with shares issued directly to the Employee Benefit Trust.  1,500,000 shares are held in the Employee Benefit Trust (2014: 1,500,000), and 1,418,750 shares are held in treasury (2014: 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 £2,059,000 (2014: £1,437,000).

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.   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 and 2010 partially vested.  The awards granted in 2011 fully vested in the year.  The weighted average share price at the date of exercise for options exercised in the year was £5.40 (2014: £4.50).

14,350 options were exercised in the prior year for the "ESO" share option scheme.  These were the last options remaining under this scheme.

LTIP scheme	2015 No. of options	2014 No. of options
Outstanding at beginning of year	1,649,374	1,746,765
Granted during the year	724,345	514,821
Lapsed during the year	(93,955)	(213,310)
Exercised during the year	(617,406)	(398,902)
Outstanding at the end of the year	1,662,358	1,649,374
Exercisable at the end of the year	22,469	-

The weighted average fair value of options granted during the year was £907,000 (2014: £759,000).

Employee Share Save Scheme ("SAYE")	2015 No. of options	2015 Weighted average exercise price (£)	2014 No of options	2014 Weighted average exercise price (£)
Outstanding at beginning of year	188,199	2.84	198,646	2.61
Granted during the year	106,541	4.95	25,686	3.04
Forfeited during the year	(14,416)	2.83	(27,885)	2.74
Exercised during the year	(24,471)	2.63	(8,248)	2.55
Outstanding at the end of the year	255,853	3.74	188,199	2.84
Exercisable at the end of the year	-	-	-	-

Options outstanding at 31 March 2015 had a weighted average contractual life of 2 years (2014: 1.8 years).

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

	LTIP	SAYE
Expected volatility	22%	24%
Expected life	3 years	3 years
Risk-free rate	0.7%	0.7%
Expected dividends	4.1%	4.1%

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 2015 the weighted average contractual life was 0.6 years.  

24.       capital commitments

At 31 March 2015 the Group had capital commitments of £4.4 million in respect of the acquisition of a property in Cambridge, which completed on 1 April 2015.  There were no other amounts contracted but not provided in respect of the Group's properties as at 31 March 2015 (2014: no capital commitments).

25.       Events after the balance sheet date

There are no reportable post balance sheet events.

26.       Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions with Big Yellow Limited Partnership

As described in note 13, the Group had a 33.3% interest in Big Yellow Limited Partnership, and entered into transactions with the Partnership during the year on normal commercial terms as shown in the table below. From 1 December 2014 the Partnership was wholly owned by the Group and therefore from this date activity with the Partnership is no longer shown in this note.

Transactions with Armadillo Storage Holding Company Limited

As described in note 13, the Group has a 20% interest in Armadillo Storage Holding Company Limited, and entered into transactions with Armadillo during the period on normal commercial terms as shown in the table below.  In the prior year fees earned from Armadillo were not a related party transaction. 

Transactions with Armadillo Storage Holding Company 2 Limited

As described in note 13, the Group has a 20% interest in Armadillo Storage Holding Company 2 Limited, and entered into transactions with Armadillo during the period on normal commercial terms as shown in the table below. 

	31 March 2015 £000	31 March 2014 £000
Fees earned from Big Yellow Limited Partnership (to 30 November 2014)	458	640
Fees earned from Armadillo 1 (since 16 April 2014)	560	-
Fees earned from Armadillo 2	208	-
Balance due from the Partnership	-	338
Balance due from Armadillo 1	287	-
Balance due from Armadillo 2	71	-

AnyJunk Limited

James Gibson is a Non-Executive Director and shareholder in AnyJunk Limited and Adrian Lee is a shareholder in AnyJunk Limited.  During the year AnyJunk Limited provided waste disposal services to the Group on normal commercial terms, amounting to £24,000 (2014: £32,000). 

No other related party transactions took place during the years ended 31 March 2015 and 31 March 2014.

Ten Year Summary

	2015 £000	2014 £000	2013 £000	2012 £000	2011 £000	2010 £000	2009 £000	2008 £000	2007 £000	2006 £000
Results
Revenue	84,276	72,196	69,671	65,663	61,885	57,995	58,487	56,870	51,248	41,889
Operating profit before gains and losses on property assets	48,420	39,537	37,454	35,079	32,058	29,068	30,946	29,342	27,067	21,645
Cash flow from operating activities	42,397	32,752	30,186	27,388	23,534	19,063	10,203	14,388	16,726	16,125
Profit/(loss) before taxation	105,236	59,848	31,876	(35,551)	6,901	10,209	(71,489)	102,618	152,837	118,547
Adjusted profit before taxation	39,405	29,221	25,471	23,643	20,207	16,514	13,791	15,006	14,233	12,601
Net assets	750,914	594,064	552,628	494,500	544,949	547,285	502,317	580,886	487,979	244,139
EPRA earnings per share	27.1p	20.5p	19.3p	18.2p	15.5p	13.0p	11.9p	11.7p	10.0p	8.9p
Declared total dividend per share	21.7p	16.4p	11.0p	10.0p	9.0p	4.0p	0p	9.5p	9.0p	5.0p
Key statistics
Number of stores open	69	66	66	65	62	60	54	48	43	37
Sq ft occupied (000)	3,178	2,832	2,632	2,458	2,130	1,915	1,775	1,850	1,835	1,672
Occupancy increase in year 000 sq ft)	346	200	174	328	215	140	(75)	15	163	202
Number of customers	47,250	41,800	38,500	36,300	32,800	30,500	28,500	30,500	30,100	27,800
Average no. of employees during the year	300	289	286	279	273	252	239	218	191	178

 

END

 

 

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