Final Results

RNS Number : 0631Z

Big Yellow Group PLC

24 May 2016

 

Highlights

 Big Yellow Group PLC

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

Results for the YEAR ended 31 MARCH 2016

STRONG OPERATING PERFORMANCE DELIVERS 15% EARNINGS GROWTH⁽²⁾
 

Financial metrics	Year ended  31 March 2016	Year ended 31 March 2015	% Growth
Revenue	£101.4m	£84.3m	20
Like-for-like revenue(1)	£87.6m	£79.9m	10
Adjusted profit before tax(2)	£49.0m	£39.4m	24
Adjusted diluted EPRA earnings per share(3)	31.1p	27.1p	15
Dividend         - final                           - total	12.8p 24.9p	11.3p 21.7p	13 15
Cash flow from operating activities (after net finance costs)	£55.5m	£42.4m	31
Store metrics Occupancy growth(4)	185,000 sq ft	267,000 sq ft	(31)
Occupancy - like-for-like stores (%)(4)	76.7%	73.2%	3.5ppts
Average net achieved rent per sq ft(4)	£25.73	£25.10	3
Statutory metrics
Profit before tax	£112.2m	£105.2m	7
Basic earnings per share	71.9p	72.5p	(1)

¹Like-for-like revenue excludes the 12 Partnership stores (acquired December 2014), Chester (acquired January 2015), Enfield (opened April 2015) and Cambridge (opened January 2016), and management fees earned from the Partnership in the prior year. ²See note 10   ³Adjusted earnings per share - see note 12   ⁴See Portfolio Summary and Operating and Financial Review  

Highlights

•     Another year of growth in all our key operating metrics  

•     Strong revenue performance driving 15% increase in adjusted earnings per share and total dividend

•     Store platform expanded by 282,000 sq ft:

o  Two new freehold stores opened at Enfield and Cambridge

o  Acquisition of four store Lock and Leave portfolio in April 2016 for £21 million

-       Nine Elms and Twickenham acquired by Big Yellow

-       Canterbury and West Molesey acquired by Armadillo

•     Acquisition of prime London development sites in Kings Cross and Camberwell

Nicholas Vetch, Executive Chairman of Big Yellow, commented:

"Against a backdrop of slower economic activity compared to the prior year, we are pleased to have delivered another year of occupancy, revenue and earnings growth.   Our main focus remains on driving earnings through occupancy growth over the next few years as we target our next goal of 85% across the portfolio.

We will continue to innovate, by improving our digital platform and operations to grow our market share and leverage our market leading brand.  In addition, our focus will remain on London and the South East (80% of revenue) and large regional cities where barriers to entry are at their highest, and supply remains very constrained. 

The Big Yellow investment proposition is simple; sustainable earnings and dividend growth from a secure capital structure.  There will inevitably be setbacks but as management we will continue to focus on the long term achievement of these objectives whilst managing risk to minimise mistakes.  The much-overlooked power of compounding should do the rest." 

ABOUT US

Big Yellow Group PLC is the UK's brand leader in self storage.  Big Yellow now operates from a platform of 89 stores, including 16 stores branded as Armadillo Self Storage, in which the Group has a 20% interest.  We own a further seven Big Yellow self storage development sites (including two extensions sites), of which two have planning consent. The current maximum lettable area of this platform is 5.3 million sq ft.  When fully built out the portfolio will provide approximately 5.7 million sq ft of flexible storage space.  Of the Big Yellow stores and sites, 96% by value are held freehold and long leasehold; 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.

For further information, please contact:

Big Yellow Group PLC                                                                                                                                      01276 477811

Nicholas Vetch, Executive Chairman

James Gibson, Chief Executive Officer

John Trotman, Chief Financial Officer

Teneo Strategy                                                                                                                                                      020 7240 2486

Ben Foster

Chloe Maier

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 year ended 31 March 2016.

Against a backdrop of slower economic activity compared to the prior year, we are pleased to have delivered another year of occupancy, revenue and earnings growth.   Our main focus remains on driving earnings through occupancy growth over the next few years as we target our next goal of 85% across the portfolio.

Like-for-like closing Group occupancy is up 3.5 percentage points to 76.7% compared to 73.2% at 31 March 2015, in line with the guidance given in May 2015. 

Average rental growth over the year was 2.5% with closing net rent of £25.90, representing an increase of 2.7% from the same time last year.  The like-for-like revenue growth in the Group was 10% compared to last year, this excludes the 12 Partnership stores, existing store acquisitions made last year and new store openings in the year.  Given that our central overhead and operating expense is largely embedded in the business, this revenue growth has dropped through into a 15% increase in adjusted earnings per share and in the dividend per share for the year.

Awareness of self storage and the market generally is growing year on year, as more people use the product, and with continued marketing from all industry players; we are seeing improving levels of referral and repeat use.

We will continue to innovate, by improving our digital platform and operations to grow our market share and leverage our market leading brand.  In addition, our focus will remain on London and the South East (80% of revenue) and large regional cities where barriers to entry are highest, and supply remains very constrained. 

Financial results

Revenue for the year was £101.4 million (2015: £84.3 million), an increase of 20%.  Cash inflows from operating activities (after interest costs) increased by £13.1 million (31%) to £55.5 million for the year (2015: £42.4 million). 

The Group made an adjusted profit before tax in the year of £49.0 million (2015: £39.4 million), up 24%. This translated into a 15% increase in adjusted earnings per share to 31.1p (2015: 27.1p), the growth of which is lower as a result of the placing of an additional 14.4 million shares in November 2014 to part fund the acquisition of the remaining interest in the 12 Big Yellow Limited Partnership stores.  

The Group has net bank debt of £295.0 million at 31 March 2016 (2015: £277.1 million).  This represents approximately 26% (2015: 27%) of the Group's gross property assets totalling £1,126.2 million (2015: £1,022.8 million) and 33% (2015: 35%) of the adjusted net assets of £899.0 million (2015: £801.4 million).

The Group's interest cover for the year, expressed as the ratio of cash generated from operations against interest paid (per the cash flow statement) was 6.2 times (2015: 5.4 times). 

Investment in new capacity

Creating new capacity in our core area of London and the South East is increasingly challenging.  Sites are scarce, and faced with a housing emergency, policy makers are focussed on residential provision at the expense of commercial. As London's population grows, these pressures are likely to intensify.  The bad news is that it makes it difficult to build new stores for Big Yellow, but conversely leaves our existing platform near irreplaceable.

We opened our 60,000 sq ft store in Enfield in April 2015, on a prominent location on the A10.  Our 60,000 sq ft store in central Cambridge opened in January 2016.   We intend to commence construction of our store in central Guildford in the second half of the year, and anticipate it opening in Autumn 2017.

Given the competition for land in central London we are very pleased to have acquired two prime sites at Kings Cross and Camberwell.   Kings Cross is a one acre site on which we intend to develop a new build store of in excess of 90,000 sq ft, subject to planning.  Camberwell is in Zone 2 to the south of London Bridge, and we intend to develop a new build store of 65,000 to 70,000 sq ft, subject to planning.  There is interim rental income on these two sites while we pursue planning, which will mitigate the increase in our variable rate interest expense.

These sites, together with Guildford Central, extensions at our existing Battersea and Wandsworth stores, and development sites in Newcastle and Manchester (the last four all subject to planning) will provide in excess of an additional 400,000 sq ft of capacity. 

During the year we have successfully re-geared our existing 125 year, long leasehold interest on our proposed self storage site at Water Street, Manchester to 250 years, and in addition sold the surplus industrial land to Manchester City Council for £8 million.

At 31 March 2016, the future cost of the current pipeline of seven development sites and extensions, six of which are subject to planning, is provisionally estimated to be approximately £55 million.  This excludes any net proceeds that may be received on the redevelopment of our Battersea store and adjoining retail units into a mixed use scheme of residential, retail and self storage.

In April 2016, we acquired the Lock and Leave portfolio.  Big Yellow acquired two stores in London, at Nine Elms (65,000 sq ft MLA freehold) and Twickenham (25,000 sq ft MLA, 19 years unexpired leasehold), for £13.5 million and £1.1 million respectively, totalling £14.6 million.   The Nine Elms store is approximately 85% occupied and sits neatly between our strong performing Kennington and Battersea stores, and our aim will be to drive revenue and cash flow through yield management.  The Twickenham store is adjacent to our existing freehold 73,000 sq ft highly occupied store.  The freehold stores in Canterbury (37,000 sq ft MLA) and West Molesey (35,000 sq ft MLA) were acquired by Armadillo for £6.4 million, and again we expect to drive operational performance under our management. 

Dividends                                                                                                                                                                                

The Group's dividend policy is to distribute 80% of full year adjusted earnings per share.  The final dividend declared is 12.8 pence per share.  The dividend declared for the year of 24.9 pence per share represents an increase of 15% from 21.7 pence per share last year. 

Our people

In February of this year, we were included in the Sunday Times Best 100 Companies to work for in the mid-size category, an independent assessment of our employee engagement and culture.  This is particularly pleasing, as from the inception of the business we have tried to create a culture which is accessible, apolitical, non-hierarchical, socially responsible, and very importantly a fun and enjoyable place to work.  No business can succeed without motivated and hardworking people.

Outlook

External forces are complex and are unlikely to be assisted by comment from us, so we concentrate on matters that we can influence. 

The Big Yellow investment proposition is simple; sustainable earnings and dividend growth from a secure capital structure.  There will inevitably be setbacks but as management we will continue to focus on the long term achievement of these objectives whilst managing risk to minimise mistakes.  The much-overlooked power of compounding should do the rest.

Nicholas Vetch

Chairman

23 May 2016

Strategic Report

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, delivering excellent customer service, with a great culture and highly motivated employees.  We continue to be the market leading brand, with unprompted awareness of over six times that of our nearest competitor (source: YouGov survey, April 2016).  We concentrate on developing our stores in main road locations with high visibility, where our distinctive branding generates high awareness of Big Yellow.  Our recent accreditation in the Best 100 Companies to work for is pleasing as an independent assessment of our employee engagement, and our customer satisfaction survey scores remain very high, with an average net promoter score of over 70%, and average customer satisfaction scores of 9.2 out of 10. 

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.  As can be seen from the ten year summary, the performance of our stores was relatively resilient during the downturn, and within that London and the South East proved to be less volatile.

Local GDP and hence business and housing activity are greatest in the larger urban conurbations and in particular London and the South East, from where we derive 80% of our revenue.  Furthermore, people and businesses are space constrained in these more densely populated 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 17 years we have built a portfolio of 73 Big Yellow self storage centres, largely freehold, purpose-built and focussed on London, the South East and large metropolitan cities.  63% of our current store revenue derives from within the M25; for London and the South East, the proportion of current store revenue is 80%. 

Our Big Yellow stores are on average 63,000 sq ft, compared to an industry average of approximately 43,000 sq ft (source: The Self Storage Association 2016 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 increasing occupancy and rental yield in our existing platform to drive revenue, the majority of which flows through to the bottom line. 

Our key objectives remain:

-   leveraging our market leading brand position to generate new prospects, principally from our digital, 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;

-   selectively adding to the portfolio through new site development and existing store acquisitions;

-   maintaining a conservative capital structure in the business with Group interest cover of a minimum of five times; and

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

In the sixteen years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 15.9% per annum, in aggregate 938% at the closing price of 774.5p on 31 March 2016.  This compares to 6.9% per annum for the FTSE Real Estate Index and 4.3% 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	•   UK 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	•   50,000 customers from a diverse base - individuals, SMEs and national accounts •   Average length of stay for existing customers of 22 months •   27% of customers in stores greater than two year length of stay •   Low bad debt expense (0.08% of revenue in the year)
Strong growth opportunities	•   Driving revenue 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 financed from internal resources •   Growth in our Armadillo joint venture platform
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 17% since 2004/5

The self storage market

In the recently published 2016 Self Storage Association UK Survey, only 41% of those surveyed had a reasonable or good awareness of self storage, in line with findings from our own research.  Furthermore, only 7% of the 2,075 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 will grow.

Growth in new facilities across the industry has been largely in regional areas of the UK and in particular in smaller towns.  In London in 2015, we believe there were six new store openings last year (including our Enfield store), and three closures of stores for redevelopment into alternative uses.  Between 2010 and 2015 average industry openings have been approximately 11 per year, which compares to an average of 34 per year in the preceding four years.

The Self Storage Association ("SSA") estimates that the UK industry is made up of approximately 1,077 self storage facilities (of which 195 are purely container operations), providing 37.6 million sq ft of self storage space, equating to 0.6 sq ft per person in the UK.  This compares to 7.8 sq ft per person in the US, 1.8 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: Fedessa European Self Storage Annual Survey 2015).  357 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.

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 2011 and 2012, reduced following the introduction of VAT in 2013, grew by 6.1% in the year to 31 March 2014, and decreased by 3.5% in 2015 principally reflecting the acquisition of the Big Yellow Limited Partnership stores, a regional portfolio, at a lower average net rent per sq ft.  In the current year, net rent has increased by 2.7%.  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 14% over the past five years, and compound dividend growth of 26% over the same period.  Compound adjusted eps growth since 2004/5 is 17%. 

Operational and Marketing Review

Overview

We now have a portfolio of 73 open and trading Big Yellow stores, with a further five development sites and two extension opportunities.  The current maximum lettable area of this platform is 4.6 million sq ft.  When fully built out the portfolio will provide approximately 5.0 million sq ft of flexible storage space.

In addition we operate from 16 Armadillo stores which are principally located in northern towns and cities, and operate from a platform of 0.7 million sq ft.  

Access to capital and bank facilities has improved in the last couple of years, however this is mainly for larger well-capitalised groups, rather than necessarily the smaller, independent operators.  Growth in new openings over the last five years has averaged just over 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 driven by competing uses such as residential, is making the creation of new supply very difficult for all operators.  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, in line with 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 shopping and online customer reviews, all externally managed.  Over the year, we have achieved an average net promoter score of over 70%, and average customer satisfaction scores of 9.2 out of 10. 

We have a team of nine Area Managers in place who have on average worked for Big Yellow for twelve 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 46% are house move related, either customers renting storage space whilst moving within the rental sector or the owner occupied sector.  During the year 11% of our customers who moved in took storage space as a spare room for decluttering and approximately 32% 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 11% 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 seen solid demand from business customers, as they seek a cost effective, flexible, convenient solution to their storage requirements, preferring self storage to the commitment of a longer lease, and given the difficulty of renting alternative mini-warehousing space in urban areas, particularly London. 

Business customers typically stay longer than domestic customers, and also on average occupy larger rooms.  Whilst only representing 11% of new customers during the year, businesses represent 19% of our overall customer numbers, occupying 35% of the space in our stores at 31 March 2016, domestic customers occupy 65%.  The average room size occupied by business customers is 121 sq ft, compared to 54 sq ft for domestic customers.  This compares with the 2016 SSA UK Annual 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 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. 

Marketing and eCommerce

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

For the last ten years, we have commissioned a YouGov survey to help us monitor our brand awareness. In our most recent survey, conducted in April 2016, we used a statistically robust sample size of 1,044 respondents in London and 2,084 for the rest of the UK.  The survey has shown our prompted awareness to be at 74% in London, two and half times higher than our nearest competitor and 38% for the rest of the UK, over three times higher than our nearest competitor.

For unprompted brand awareness, our recall in London is 49%, more than five times higher than our nearest competitor and for the rest of the UK it is 20%, more than six times higher than our nearest competitor; across the UK as a whole it is more than six times our nearest competitor.  These surveys continue to prove we are the UK's brand leader in self storage (source: YouGov, April 2016).  The UK Self Storage Association has also conducted a brand awareness survey with similar results. 

Online

The Big Yellow website, whether accessed by desktop, tablet or smartphone, delivers the largest share of prospects, accounting for 86% of all sales leads across the year ended 31 March 2016.  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 2016, our online market share of web visits ranged from 34% to 40%. Our nearest competitor ranged from 14% to 19% online market share for the same period (source: Connexity Hitwise 36 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 2016, smartphones and tablets accounted for 50% of all web visits.  Specifically, smartphones alone accounted for 35% of web visits in March 2016, up from 32% in March 2015.  The rate of growth in the use of mobiles and tablets is slowing, which may be an indication of a maturing market for these devices, and many of our customers continue to access our digital platforms through desktop computers and laptops.

Whether it is through desktop, tablet or mobile, our customers enjoy a seamless experience whichever digital route they choose.  Our latest mobile optimised website was launched in May 2015 with enhanced usability and features. 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 13,200 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 TrustPilot, the well-known third party customer review site.  These reviews are currently averaging 9.2 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 traffic to our 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 2017, 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 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 at different key life events such as having a baby and dealing with divorce and separation.  These stories help to promote the wider uses of Big Yellow Self Storage 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 £4.0 million on marketing (4% of total store revenue). We have increased the budget for the year ahead to £4.2 million with a focus on delivering more prospects to our stores from our digital channels.

Cyber security

The Group receives specialist advice and consultancy in respect of cyber security and we have dedicated in-house monitoring and regular review of our security systems, we also limit the retention of customer data to the minimum requirement. 

During the year we have continued to invest in digital security, implementing new intrusion detection systems as well as replacement of existing systems such as firewalls.  Policies and procedures are under regular review and benchmarked against industry best practice by our consultants.  These policies also include defend, detect and response policies.

PROFORMA PORTFOLIO SUMMARY - BIG YELLOW STORES

	2016				2015
	Mature(1)	Established	Developing	Total	Mature	Established	Developing	Total
Number of stores(2)	56	11	4	71	56	11	2	69
At 31 March
Total capacity (sq ft)	3,495,000	704,000	265,000	4,464,000	3,495,000	704,000	145,000	4,344,000
Occupied space (sq ft)	2,689,000	538,000	136,000	3,363,000	2,589,000	503,000	86,000	3,178,000
Percentage occupied	76.9%	76.4%	51.3%	75.3%	74.1%	71.4%	59.3%	73.2%
Net rent per sq ft	£26.78	£21.73	£24.32	£25.90	£25.97	£21.44	£24.19	£25.23
For the year
REVPAF(3)	£23.78	£19.20	£14.48	£22.59	£22.21	£17.18	£13.48	£21.09
Average occupancy	76.3%	73.4%	51.9%	74.7%	73.1%	68.0%	49.1%	71.5%
Average annual rent psf	£26.55	£21.88	£24.05	£25.73	£25.92	£21.04	£23.37	£25.10
	£000	£000	£000	£000	£000	£000	£000	£000
Self storage income	70,853	11,302	2,745	84,900	65,017	10,068	1,666	76,751
Other storage related income (4)	12,036	2,116	416	14,568	10,990	1,923	267	13,180
Ancillary store rental Income	228	102	24	354	153	102	21	276
Total store revenue	83,117	13,520	3,185	99,822	76,160	12,093	1,954	90,207
Direct store operating costs (excluding depreciation)	(24,202)	(4,353)	(1,531)	(30,086)	(23,041)	(4,269)	(1,046)	(28,356)
Short and long leasehold rent(5)	(1,893)	-	-	(1,893)	(1,941)	-	-	(1,941)
Store EBITDA(6)	57,022	9,167	1,654	67,843	51,178	7,824	908	59,910
Store EBITDA margin	68.6%	67.8%	51.9%	68.0%	67.2%	64.7%	46.5%	66.4%
Deemed cost	£m	£m	£m	£m
To 31 March 2016	364.0	130.9	56.6	551.5
Capex to complete	0.8	0.1	0.3	1.2
Total	364.8	131.0	56.9	552.7

(1)   The mature stores have been open for more than six years at 1 April 2015. The established stores have been open for between three and six years at 1 April 2015 and the developing stores have been open for fewer three years at 1 April 2015. 

(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 in full for the prior year to give a clearer understanding of the underlying performance of all Big Yellow stores.  The table below shows the results for the prior year excluding the period when the stores were not wholly owned, reconciled with the reported statutory results for the year ended 31 March 2015.

	2015
	Proforma above £000	Partnership results as an associate £000	Statutory £000
Store revenue	90,207	(7,476)	82,731
Store EBITDA	59,910	(4,659)	55,251

(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. 

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

PORTFOLIO SUMMARY - ARMADILLO STORES ⁽¹⁾

			March 2016	March 2015
Number of stores			14	14
At 31 March:
Total capacity (sq ft)			673,000	673,000
Occupied space (sq ft)			477,000	463,000
Percentage occupied			70.9%	68.8%
Net rent per sq ft			£15.59	£15.09
For the year:
REVPAF			£13.33	£12.73
Average occupancy			70.7%	68.9%
Average annual rent psf			£15.64	£15.44
			£000	£000
Self storage income			7,428	7,146
Other storage related income			1,531	1,408
Ancillary store rental income			9	10
Total store revenue			8,968	8,564
Direct store operating costs (excluding depreciation)			(3,681)	(3,616)
Leasehold rent			(411)	(411)
Store EBITDA(2)			4,876	4,537
Store EBITDA margin			54.4%	53.0%
Cumulative capital expenditure
			£m
To 31 March 2016			43.5
To complete			0.6
Total capital expenditure			44.1

(1)   Please note the Group acquired an interest in Armadillo 1 on 16 April 2014 and in Armadillo 2 on 3 February 2015.  The results shown for the comparative period are to provide readers with a clearer understanding of the performance of the portfolios.  Please see note 13d for further details. 

(2)   Store earnings before interest, tax, depreciation, amortisation, and management fees charged by Big Yellow to the Armadillo portfolios (see note 26).

Store Performance

We had a strong quarter to June with good net move-in growth.  The second quarter peaked in August and then many of our students and short term house moves vacate in September and October, leading to a net loss in occupied rooms and sq ft occupancy.  In the final quarter we have seen a return to growth in net occupied rooms and increased occupancy in the stores by 123,000 sq ft.  The table below illustrates the move-in performance in the year.  Given the weaker economic backdrop to deliver broadly the same number of move-ins was a satisfactory performance.

Store move-ins	Total move-ins Year ended 31 March 2016	Total move-ins Year ended 31 March 2015	%	Net move-ins Year ended 31 March 2016	Net sq ft Year ended 31 March 2016
April to June	20,112	20,196	0%	4,460	146,000
July to September	21,763	21,873	(1%)	(1,183)	54,000
October to December	16,643	16,897	(2%)	(1,998)	(138,000)
January to March	16,920	16,131	5%	1,420	123,000
Total	75,438	75,097	0%	2,699	185,000

In all Big Yellow stores, the occupancy growth in the current year was 185,000 sq ft, against an increase of 267,000 sq ft in the prior year (the prior year figure excludes 79,000 sq ft of occupancy acquired with the acquisitions of Chester and Oxford 2). This growth represents an average of 2,606 sq ft per store (2015: 3,870 sq ft per store).  The prior year increase included a one-off short term national account move-in of 25,000 sq ft who vacated in April 2015. Adjusting this out of both years would show current year occupancy growth of 210,000 sq ft compared to 242,000 sq ft in the prior year.

Store occupancy summary	Occupancy 31 March 2016 000 sq ft	Occupancy 31 March 2015 000 sq ft	Growth for year to 31 March 2016 000 sq ft	Growth for year to 31 March 2015 000 sq ft
56 mature stores	2,689	2,589	100	141
11 established stores	538	503	35	84
4 developing stores	136	86	50	42
Total - all 71 stores	3,363	3,178	185	267

The 56 mature stores are 76.9% occupied compared to 74.1% at the same time last year.  The 11 established stores have grown in occupancy from 71.4% to 76.4%.  The four developing stores added 50,000 sq ft of occupancy in the year to reach closing occupancy of 51.3%.  Overall store occupancy has increased in the year from 73.2% to 75.3%.    On a like-for-like basis, closing occupancy was 76.7%, an increase of 3.5 percentage points.

70 of the stores open at the year end are trading profitably at the EBITDA level, with Cambridge the exception, having opened in January 2016, and expected to break even in summer 2016.

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 2016, the average growth in the net achieved rent per sq ft was 2.5% compared to 2.6% in the prior year.  We remain focussed on occupancy and the outcome on portfolio average rental growth is merely a by-product of the yield management at each store.

As our portfolio is now at a higher level of occupancy, our pricing model is increasingly reducing promotions and is raising asking prices where individual units are in scarce supply.  This lowering of promotions, coupled with price increases to existing and new customers, leads to an increase in net achieved rents.  The table below illustrates this, showing the growth in net rent per sq ft for the portfolio over the period (the table below excludes Enfield and Cambridge which opened in the year).

Average occupancy in the year	Number of stores	Net rent per sq ft growth over the year
0 to 60%	4	(1.9%)
60 to 70%	13	1.6%
70 to 80%	28	2.3%
Above 80%	24	4.1%

The table below shows the average key metrics across the store portfolio for the year ended 31 March 2016:

	Mature stores	Established stores	Developing stores
Store capacity	62,400	64,000	66,250
Sq ft occupied per store at 31 March 2016	48,000	48,900	34,000
% occupancy	76.9%	76.4%	51.3%
Revenue per store (£000)	1,484	1,229	796
EBITDA per store (£000)	1,018	833	414
EBITDA margin	68.6%	67.8%	51.9%

Armadillo Self Storage

In April 2014 we acquired the portfolio of 10 Armadillo stores, which we have been managing since 2009, with an Australian consortium.   The Armadillo platform was grown 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.

In April 2016 we acquired a further two stores into the Armadillo platform in Canterbury and West Molesey, for £6.4 million.  This takes the Armadillo platform to 16 stores and 745,000 sq ft of MLA.

Armadillo is a lower-frills brand, with largely freehold conversions of existing buildings, with a minimum capacity of 30,000 sq ft, in towns where we would not typically locate a Big Yellow.  Armadillo provides a number of operational advantages to the Group, such as a wider platform to sell to national accounts, more opportunities for staff promotion, and more efficient use of the Company's marketing and central overhead costs.  The Group will consider other opportunities to add to the Armadillo platform if the right stores or portfolios become available.

Development pipeline

We have planning consent to construct a new store in central Guildford, which we anticipate opening in Autumn 2017.  We own a further six development sites for which planning is to be negotiated, including two existing stores where planning is being sought to extend and redevelop.  

We recently surrendered our 125 year lease in Manchester to the City Council for £8 million and took a new 250 year lease on a site of 0.8 acres for which planning for a self storage centre will be sought. We also have an option to re-acquire an additional 0.7 acres if our planning application is unsuccessful.

Included within our development programme are London sites at Kings Cross and Camberwell, acquired during the year.  Kings Cross is a one acre site on which we intend to develop a new build store of in excess of 90,000 sq ft, subject to planning.  Camberwell is in Zone 2 to the south of London Bridge, and we intend to develop a new build store of 65,000 to 70,000 sq ft, subject to planning. 

In December 2014 we 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 6 years unexpired, part of which is sublet to Pets at Home.  This increased the freehold ownership of our portfolio and protected 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 status of the Group's development pipeline is summarised in the table below:

Site	Location	Status	Anticipated capacity
Guildford	Prime location in centre of Guildford on Woodbridge Meadows	Minor amendments to existing planning consent being sought. Store due to open in Autumn 2017, cost to complete of £5.5 million	56,000 sq ft
Wandsworth, London	Possible extension of 27,000 sq ft to existing 47,000 sq ft store	Planning under negotiation	Additional 27,000 sq ft
Camberwell, London	Located in prominent location on Southampton Way	Site recently acquired, planning application to be prepared	65,000 to 70,000 sq ft
Kings Cross, London	Prominent location on York Way	Site recently acquired, planning application to be prepared	In excess of 90,000 sq ft
Battersea, London	Prominent location on junction of  Lombard Road and York Road (South Circular)	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 50,000 sq ft
Newcastle	Prime location on Scotswood Road	Negotiations ongoing with existing long leasehold tenant to obtain vacant possession	50,000 sq ft to 60,000 sq ft
Manchester	Prime location on Water Street in central Manchester	Planning under negotiation	60,000 sq ft

The Group acquired trading stores from Lock and Leave at Nine Elms and Twickenham in April 2016 for £14.6 million.  Beyond this acquisition, there is currently no committed capital expenditure for the next financial year, although the Group intends to start the construction of Guildford in the second half of the year. 

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

Revenue

Total revenue for the year was £101.4 million, an increase of £17.1 million (20%) from £84.3 million in the prior year.   Like-for-like revenue for the year was £87.6 million, an increase of 10% from the prior year (2015: £79.9 million).  Like-for-like revenue excludes the 12 Partnership stores (acquired December 2014), Chester (acquired January 2015), Enfield (opened April 2015) and Cambridge (opened January 2016); the prior period figure also excludes management fees earned from Big Yellow Limited Partnership.    

Other sales (included within the above), comprising the selling of packing materials, insurance and storage related charges, represented 17.2% of storage income for the year (2015: 16.8%) and generated revenue of £14.6 million for the year, up 24% from £11.8 million in 2015.   On a like-for-like basis, the increase in other sales was 9%.

The other revenue earned by the Group is management fee income, largely from the Armadillo Partnerships, and tenant income on sites where we have not started development.

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. 

The breakdown of the portfolio's operating costs on a proforma basis (with the Partnership stores in full in both years) compared to the prior year is shown in the table below (see Portfolio Summary):

Category	Year ended 31 March 2016 £000	Year ended 31 March 2015 £000	% increase	% of store operating costs in 2016
Cost of sales (insurance and packing materials)	2,149	2,035	6%	7%
Staff costs	8,001	7,512	7%	27%
General & Admin	1,183	1,134	4%	4%
Utilities	1,406	1,431	(2%)	5%
Property Rates	9,544	9,144	4%	32%
Marketing	3,865	3,431	13%	13%
Repairs / Maintenance	2,240	2,088	7%	7%
Insurance	992	912	9%	3%
Computer Costs	440	442	0%	1%
Irrecoverable VAT	266	227	17%	1%
Total	30,086	28,356	6%

Cost of sales in the income statement has increased by £5.2 million (19%) to £32.6 million (2015: £27.4 million).  Of this increase £2.9 million arises as a result of including a full year of the operating costs of the Partnership stores acquired on 1 December 2014.

In the table above which shows the Partnership stores as if they had been owned for a full year, the operating costs have increased by £1.7 million.  £0.8 million of this increase is due to new stores at Enfield, Cambridge and the full year impact of Chester.  The remaining increase of £0.9 million (representing a 3% increase on the prior year on a like for like basis) is due to an increased investment in marketing, inflationary increases, coupled with the prior year figure being reduced by rates rebates at couple of stores. 

Administrative expenses in the income statement have increased by £0.4 million compared to the prior year.  This is due principally to an increase of £0.5 million in the share based payment charge offset by a reduction in legal and professional fees.  In addition, it is important to note that of our total £8.9 million administrative expense for the year, £2.5 million relates to the non-cash share based payments charge. 

Store EBITDA

Store EBITDA for the year included in the income statement was £67.8 million, an increase of £12.5 million (23%) from £55.3 million for the year ended 31 March 2015.  The increase including the Partnership stores on a proforma basis in the prior year is 13% (2015: £59.9 million) (see Portfolio Summary).

The overall EBITDA margin for all Big Yellow stores during the year was 68.0%, compared to 66.4% last year.

Interest expense on bank borrowings

The gross bank interest expense for the year was £11.2 million, an increase of £1.1 million from the prior year.  This reflects the higher debt levels following the acquisition of the Partnership stores in December 2014 and capital expenditure in the current year, partly offset by a reduction in the Group's average cost of debt.  The average cost of borrowing during the year was 3.6% compared to 3.9% in the prior year.

Total interest payable has increased in the statement of comprehensive income from £10.7 million to £11.9 million principally due to the increase in the gross bank interest expense mentioned above.  Capitalised interest decreased by £0.2 million from the prior year.  The interest capitalised in the year is principally on our Cambridge development. 

Profit before tax

The Group made a profit before tax in the year of £112.2 million, compared to a profit of £105.2 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 £49.0 million, up 24% from £39.4 million in 2015. 

Profit before tax analysis	2016 £m	2015 £m
Profit before tax	112.2	105.2
Gain on revaluation of investment properties	(58.0)	(64.5)
Movement in fair value on interest rate derivatives	-	2.3
Gains on surplus land	(4.8)	(1.3)
Share of non-recurring gains in associates	(0.4)	(2.3)
Adjusted profit before tax	49.0	39.4

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 2015	39.4
Increase in gross profit	11.8
Increase in net interest payable	(1.1)
Increase in administrative expenses	(0.4)
Decrease in share of recurring profit of associates	(0.5)
Decrease in capitalised interest	(0.2)
Adjusted profit before tax - year ended 31 March 2016	49.0

Basic earnings per share for the year was 71.9p (2015: 72.5p) and fully diluted earnings per share was 71.6 p (2015: 71.9p).   Diluted EPRA earnings per share based on adjusted profit after tax was up 15% to 31.1p (2015: 27.1p) (see note 12).  The percentage increase is lower than that reported for adjusted profit before tax due to the impact of placing an additional 14.4 million shares on 19 November 2014 to part fund the acquisition of the Big Yellow Limited Partnership stores.

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 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.  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 charge in the current year of £0.2 million.  This compares to a tax credit in the prior year of £0.4 million.  In the prior year the Group received a refund of £0.2 million in relation to the REIT conversion charge for two properties and there was a £0.3 million credit due to a favourable difference between the tax provision and actual tax liability. 

The current year tax charge reflects an increase in profits in our residual business, in part offset by deductions allowed for tax purposes from the exercise of share options.

Dividends

The Board is recommending the payment of a final dividend of 12.8 pence per share in addition to the interim dividend of 12.1 pence, giving a total dividend for the year of 24.9 pence, an increase of 15% from the prior year. 

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 18.1 pence per share is payable (31 March 2015: 16.1 pence).  The balance of the total annual dividend represents an ordinary dividend declared at the discretion of the Board, in line with our policy to distribute 80% of our adjusted earnings per share in each reporting period.

The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2016	31 March 2015
Interim dividend - PID	12.1p	10.4p
- discretionary	nil p	nil p
- total	12.1p	10.4p
Final dividend     - PID	6.0p	5.7p
- discretionary	6.8p	5.6p
- total	12.8p	11.3p
Total dividend     - PID	18.1p	16.1p
- discretionary	6.8p	5.6p
- total	24.9p	21.7p

Subject to approval by shareholders at the Annual General Meeting to be held on 22 July 2016, the final dividend will be paid on 28 July 2016.  The ex-div date is 16 June 2016 and the record date is 17 June 2016.

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 2016 £000	Year ended 31 March 2015 £000
Cash generated from operations	66,215	51,875
Net finance costs (including tax)	(10,748)	(9,478)
Free cash flow	55,467	42,397
Capital expenditure	(44,575)	(42,786)
Finance lease payments	(967)	(918)
Acquisition of Big Yellow Limited Partnership	-	(37,406)
Acquisition of Big Storage Limited	-	(15,114)
Asset sales (including Big Storage Limited)	7,835	10,429
Receipt from Capital Goods Scheme	184	3,557
Investment in associates (net of dividends received)	270	(3,620)
Cash flow after investing activities	18,214	(43,461)
Ordinary dividends	(36,443)	(27,890)
Issue of share capital	378	77,094
Non-recurring finance costs	-	(4,057)
Net movement on Big Storage loans	-	4,241
Repayment of Partnership loan	-	(57,000)
Increase in borrowings	26,864	55,966
Net cash inflow	9,013	4,893
Opening cash and cash equivalents	8,194	3,301
Closing cash and cash equivalents	17,207	8,194
Closing debt	(312,198)	(285,334)
Closing net debt	(294,991)	(277,140)

Free cash flow pre-capital expenditure increased by 31% to £55.5 million for the year (2015: £42.4 million).   In the year capital expenditure outflows were £44.6 million, down from £95.3 million in the prior year (including acquisitions). 

The capital expenditure during the year principally relates to the acquisition and construction of our new store in Cambridge and the acquisition of development sites at Kings Cross and Camberwell.  We have also continued to invest in fitting out further Phase 2 space at our existing stores.

During the prior 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, 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 inflow of £18.2 million in the year, compared to an outflow of £43.5 million in 2015; the improvement being due to one off acquisitions in the prior year as explained above.   The non-recurring finance costs in the prior 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 71 stores and 5 stores under development at 31 March 2016, which are classified as investment properties, have been valued individually by Cushman & Wakefield ("C&W") and this has resulted in an investment property asset value of £1,126.2 million, comprising £1,050.3 million (93%) for the 65 freehold (including two long leaseholds) open stores, £41.9 million (4%) for the six short leasehold open stores and £34.0 million (3%) for the five freehold investment properties under construction.

Analysis of property portfolio	Value at 31 March 2016	Revaluation movement in year
Investment property	£1,092.2m	£62.0m
Investment property under construction	£34.0m	(£4.0m)
Total	£1,126.2m	£58.0m

Investment property

The valuations in the current year have grown from the prior year, with a revaluation surplus of £62.0 million on the open Big Yellow stores.  Of this increase £12.4 million is due to an improvement in the cap rate used in the valuations.  £64.0 million of the increase in value is due to the growth in cash flow from the assets and the operating assumptions adopted in the valuations.  These factors are in part offset by an increase in the purchasers' costs assumed in the valuation from 5.8% to a range of 6.1% to 6.8% reflecting the new progressive SDLT rates brought into force in March 2016, which reduced the valuation by £14.4 million.

The valuation is based on an average occupancy over the 10 year cash flow period of 80.9% across the whole portfolio. 

	Mature		Established	Developing
	Leasehold	Freehold	Freehold		Freehold		Total
Number of stores	6	50	11		4		71
MLA capacity (sq ft)	398,000	3,097,000	704,000		265,000		4,464,000
Valuation at 31 March 2016	£41.9m	£835.6m	£150.4m		£64.3m		£1,092.2m
Value per sq ft	£105	£270	£214		£243		£245
Occupancy at 31 March 2016	81.1%	76.4%	76.4%		51.3%		75.3%
Stabilised occupancy assumed	83.1%	80.9%	84.1%		85.0%		81.9%
Net initial yield pre-admin expenses	11.9%	6.4%	6.5%		3.9%		6.5%
Stabilised yield assuming no rental growth	12.6%	6.9%	7.5%		7.5%		7.2%

The initial yield pre-administration expenses assuming no rental growth is 6.5% (2015: 6.4%) rising to a stabilised yield of 7.2% (2015: 7.4%).  The stores are assumed to grow to stabilised occupancy in 20 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 investment property under construction has increased significantly since the prior year, with the acquisitions of development sites at Kings Cross and Camberwell.  This has been offset by the transfers of Enfield and Cambridge to investment property on the opening of the stores.  There is a revaluation deficit of £4.0 million in relation to the investment property under construction in the year.  This in part relates to Manchester, where the projected construction costs have increased; additionally, the valuation of Kings Cross does not reflect the larger scheme being planned on site, as the proposed land exchange to facilitate this has not yet been contracted.  

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 2016 of £1,190.4 million (£64.2 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 40.8 pence per share. 

The revised valuation translates into an adjusted net asset value per share of 569.1 pence (2015: 510.4 pence) after the dilutive effect of outstanding share options. 

Surplus land

During the year, the Group sold its surplus site in Central Manchester for £8 million.  This represented a profit over book value, after selling costs, of £4.8 million, which included the release of a provision previously made against the land of £2.3 million.  In the prior year, the Group sold its surplus site at Guildford Central for £2.8 million, representing a profit over book value of £1.3 million. 

At 31 March 2016 the Group owned £0.3 million of land surplus to our requirements at one site.  The site is held at the lower of cost and net realisable value and has not been externally valued; it is contracted to be sold for £0.3 million in the year ended 31 March 2017. 

Receivables

At 31 March 2016 we have a receivable of £9.4 million in respect of payments due back to the Group under the Capital Goods Scheme as a consequence of the introduction of VAT on self storage from 1 October 2012. 

The debtor has been discounted in accordance with International Accounting Standards to the net present value using the Group's average cost of debt, with £0.4 million of the discount being unwound through interest receivable in the period.  The gross value of the debtor before discounting is £10.1 million. 

The Group received £0.2 million under the Scheme in the year, with £3.6 million received during the prior year, with the majority of 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 2015	801.4	510.4
Adjusted profit	49.0	31.0
Equity dividends paid	(36.4)	(23.0)
Revaluation movements (including share of associate)	58.7	37.2
Movement in purchaser's cost adjustment	18.6	11.8
Profit on disposal of surplus land	4.8	3.0
Other movements (eg share schemes)	2.9	(1.3)
31 March 2016	899.0	569.1

Borrowings

We focus on improving our cash flows allied to a relatively conservative debt structure secured principally against the freehold estate.  For the year we had healthy Group interest cover of 6.2 times (2015: 5.4 times) based on cash generated from operations against interest paid.

Our financing policy is to fund our current needs through a mix of debt, equity and cash flow to allow us to selectively build out our development pipeline and achieve our strategic growth objectives, which we believe improve returns for shareholders.  We aim to ensure that there are sufficient medium-term facilities in place to finance our committed development programme, secured against the freehold portfolio, with debt serviced by our strong operational cash flows.

The table below summarises the Group's debt facilities:

Debt	Expiry	Facility	Drawn at 31 March 2016	Average cost
Aviva Loan	April 2027	£92.2 million	£92.2 million	4.9%
M&G loan	June 2022	£70 million	£70 million	3.8%
Bank loan (Lloyds & HSBC)	October 2020, with option for an additional year	£170 million	£150 million	2.4%
Total	Average term 6.3 years	£332.2 million	£312.2 million	3.5%

The Group's loan with Aviva is at a fixed rate and amortises to £60 million over the course of its 15 year term. 

During the year, the Group drew down the seven year £70 million M&G loan, repaying simultaneously a £70 million bridging loan that had been provided by Lloyds.  The M&G loan is 50% fixed and 50% floating.

In October 2015, the Group extended the term of its bank loan from August 2019 to October 2020, with an option to extend for a further year to October 2021.  The margin payable on the interest cover ratchet was also reduced by 25 bps on both the term and the revolving debt.  The revolving debt now pays a margin of 125 bps and the term debt 150 bps.  Were the term and the revolver to be fully drawn, the weighted average margin would be 137.5 bps.  The Group has an option to increase the amount of the revolving loan facility by a further £80 million during the course of the loan's term.  £20 million of this option was taken up subsequent to the year end, and hence at the date of signing the Group's bank loan facility was £190 million, and total facilities were £352 million.

The Group has an interest rate derivative of £30 million expiring in September 2016 at a pre-margin cost of 2.8%.  The bank loan currently requires 45% of all drawn debt to be hedged or fixed. 

The Group was in compliance with its banking covenants at 31 March 2016.  The Group currently has a net debt to gross property assets ratio of 26%, and a net debt to adjusted net assets ratio of 33%.

At 31 March 2016, 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 £15.7 million at 31 March 2016 (2015: £15.8 million), consisting of 157,369,287 ordinary shares of 10p each (2015: 158,055,735 shares).  During the period, the Group cancelled the 1.4 million treasury shares in issue. 

Shares issued for the exercise of options during the year amounted to 0.7 million at an average exercise price of 704p (2015: 0.6 million shares at an average price of 540p).

The Group holds 1.1 million shares within an Employee Benefit Trust ("EBT").  These shares are shown as a debit in reserves and are not included in calculating net asset value per share.

				2016 No.	2015 No.
Opening shares				158,055,735	143,061,147
Cancellation of treasury shares				(1,418,750)	-
Shares issued for the placing				-	14,352,711
Shares issued for the exercise of options				732,302	641,877
Closing shares in issue				157,369,287	158,055,735
Shares held in EBT				(1,122,907)	(1,500,000)
Shares held in treasury				-	(1,418,750)
Closing shares for NAV purposes				156,246,380	155,136,985

56.9 million shares were traded in the market during the year ended 31 March 2016 (2015: 73.1 million).  The average mid-market price of shares traded during the year was 716.3p with a high of 847.0p and a low of 618.5p.

Armadillo Self Storage

The Group has a 20% investment in Armadillo Storage Holding Company Limited and a 20% investment in Armadillo Storage Holding Company 2 Limited.  In the consolidated accounts of Big Yellow Group PLC, our investments in the vehicles are treated as associates using the equity accounting method. 

The combined occupancy of the portfolios is 477,000 sq ft, against a total capacity of 673,000 sq ft, with growth of 14,000 sq ft over the year.  The stores' occupancy at 31 March 2016 was 70.9% (31 March 2015: 68.8%).  The net rent achieved at 31 March 2016 by the Armadillo stores is £15.59 per sq ft, an increase of 3% from the same time last year.  Revenue increased by 5% to £9.0 million for the year to 31 March 2016 (2015: £8.6 million).  

The Armadillo Partnerships made a combined operating profit of £4.3 million in the year, of which Big Yellow's share is £0.9 million.  After net interest costs, the revaluation of investment properties (valued by Jones Lang Lasalle), deferred tax on the revaluation surplus and interest rate derivatives, the profit for the year was £5.6 million, of which the Group's share was £1.1 million. 

Big Yellow has a five year management contract in place in each Partnership.  For the year to 31 March 2016, the Group earned management fees of £0.7 million.  The Group's share of the declared dividend for the year is £0.4 million, representing a 10% yield on our investment for the year.

Responsibility statement of the Directors on the annual report 

The responsibility statement below has been prepared in connection with the Company's full annual report for the year ended 31 March 2016.  Certain parts thereof are not included within this announcement.

We confirm to the best of our knowledge:

·      the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole;

·      the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face; and

·      the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

This responsibility statement was approved by the board of Directors on 23 May 2016 and is signed on its behalf by:

James Gibson	John Trotman
Chief Executive Officer	Chief Financial Officer

Independent auditors' report to the shareholders of Big Yellow Group PLC on the Preliminary Announcement of Big Yellow Group PLC

We confirm that we have issued an unqualified opinion on the full financial statements of Big Yellow Group PLC.

Our audit report on the full financial statements sets out the following risks of material misstatement which had the greatest effect on our audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team, together with how our audit responded to this risk and the key observations arising from our work:

Investment property valuation
Risk description	See also note 14 to the financial statements. As at 31 March 2016, the Group held wholly-owned investment properties and investment properties under construction valued at £1,126.2 million (2015: £1,022.8 million) all located within the United Kingdom. The Group also has minority investments in two associate entities (Armadillo Storage Holding Company Limited and Armadillo Storage Company 2 Limited), together 'the Associates' for which equity accounting is applied. The Associates control a combined gross value of £57.7 million (2015: £53.3 million) in self storage assets, of which 20% is recognised by the Group. Investment properties are held at fair value on the Group Consolidated Balance Sheet. The net valuation gain in the year relating to Group held wholly-owned investment properties was £58.0 million (2015: £64.5 million), which was recognised through the Consolidated Statement of Comprehensive Income. The net valuation gain, included within the share of profit of associates, relating to the properties held by the Associates was £3.5 million (2015: £11.5 million) on a gross basis and therefore £0.7 million (2015: £2.3million) on a Group share basis. Fair values are calculated using actual and forecast inputs such as: occupancy, capitalisation rates, maximum lettable area, operating expenses and net rent per square foot by property as at 31 March 2016. In addition, external valuers apply professional judgement concerning market conditions and factors impacting individual properties. We consider investment property valuation to be at significant risk of material misstatement as the valuation process is subjective and inherently judgemental in nature. The investment market for prime self-storage, in particular, is subject to market uncertainty due to the low volume of transactions.
How the scope of our audit responded to the risk	·   We assessed the design and implementation of the key internal controls around the property valuation process; ·    We tested the integrity of the information provided to the external valuers by management by agreeing key inputs such as actual occupancy and net rent per square foot to underlying records and source evidence; ·  We modelled nine years of valuations and key valuation inputs of the investment properties subject to audit, to understand the historical trends of key inputs and compared these against the key forecast assumptions included in the property valuation; ·   We met with the external valuers covering both the Group and Associate portfolios and assessed their independence, the scope of the work they were requested to perform by management, quality control procedures in place internally and the valuation methodology applied; ·   We challenged the external valuers on the key assumptions applied and focussed on properties we identified as having significant or unusual valuation movements (compared to market data or previous periods). Our challenge was informed by input from our internal valuation specialists, utilising their knowledge and expertise in the market at a macro level and the relevant geographies to challenge the key judgmental inputs. We also researched comparable transactions and understood trends in analogous industries and utilised this information in our audit challenge.  We understood the rationale for outlying valuations or movements and obtained sufficient evidence. We also assessed the valuations for a sample of other properties; and ·   We visited a sample of properties to assess the condition of the buildings and validate a sample of occupancy data inputs.
Key observations	Management have recognised a £58.0 million uplift in the valuation as at 31 March 2016. During the course of the audit of the investment property valuation, we noted the following key observations: ·     A portfolio wide reduction was applied to the capitalisation rate of each store in the valuation reflecting an improvement in investor appetite for self storage assets; and ·     An increase in the average stabilised occupancy rate has been applied to the portfolio. This reflects the increasing number of stores reaching occupancy levels above 80%. We found the assumptions adopted by management in the valuation were reasonable and the methodology applied was appropriate in all material respects.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we did not provide a separate opinion on these matters.

Our liability for this report, and for our full audit report on the financial statements is to the company's members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for our audit report or this report, or for the opinions we have formed.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Consolidated Statement of Comprehensive Income

Year ended 31 March 2016

	Note		2016 £000	2015 £000
Revenue	3		101,382	84,276
Cost of sales			(32,632)	(27,351)
Gross profit			68,750	56,925
Administrative expenses			(8,896)	(8,505)
Operating profit before gains on property assets			59,854	48,420
Gain on the revaluation of investment properties	13a,14		58,001	64,465
Profit on disposal of surplus land	15		4,754	1,318
Operating profit			122,609	114,203
Share of profit of associates	13d		1,104	3,516
Investment income	7		403	495
Finance costs - interest payable	8		(11,866)	(10,704)
- fair value movement of derivatives	8, 18		(4)	(2,274)
Profit before taxation			112,246	105,236
Taxation	9		(247)	351
Profit for the year (attributable to equity shareholders)	5		111,999	105,587
Total comprehensive income for the year (attributable to equity shareholders)			111,999	105,587
Basic earnings per share	12		71.9p	72.5p
Diluted earnings per share	12		71.6p	71.9p

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 2016

	Note		2016 £000	2015 £000
Non-current assets
Investment property	13a		1,092,210	1,007,110
Investment property under construction	13a		33,945	15,681
Interests in leasehold property	13a		20,165	20,829
Plant, equipment and owner-occupied property	13b		3,405	3,050
Goodwill	13c		1,433	1,433
Investment in associates	13d		6,406	5,572
Capital Goods Scheme receivable	16		6,561	9,039
			1,164,125	1,062,714
Current assets
Surplus land	15		300	3,315
Inventories			266	304
Trade and other receivables	16		16,222	16,379
Cash and cash equivalents			17,207	8,194
			33,995	28,192
Total assets			1,198,120	1,090,906
Current liabilities
Trade and other payables	17		(36,122)	(32,612)
Borrowings	19		(2,243)	(72,136)
Obligations under finance leases	21		(1,722)	(1,705)
			(40,087)	(106,453)
Non-current liabilities
Derivative financial instruments	18c		(3,683)	(3,679)
Borrowings	19		(306,520)	(210,736)
Obligations under finance leases	21		(18,443)	(19,124)
			(328,646)	(233,539)
Total liabilities			(368,733)	(339,992)
Net assets			829,387	750,914
Equity
Share capital	22		15,737	15,806
Share premium account			45,227	44,922
Reserves			768,423	690,186
Equity shareholders' funds			829,387	750,914

The financial statements were approved by the Board of Directors and authorised for issue on 23 May 2016.  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 2016

	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 2015	15,806	44,922	74,950	1,653	619,206	(5,623)	750,914
Total comprehensive gain for the year	-	-	-	-	111,999		111,999
Issue of share capital	73	305	-	-	-	-	378
Cancellation of treasury shares	(142)	-	-	142	(3,727)	3,727	-
Use of own shares to satisfy share options	-	-	-	-	(877)	877
Dividend	-	-	-	-	(36,443)	-	(36,443)
Credit to equity for equity-settled share based payments	-	-	-	-	2,539	-	2,539
At 31 March 2016	15,737	45,227	74,950	1,795	692,697	(1,019)	829,387

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 ended 31 March 2015 following the placing of 14.35 million ordinary shares.

Consolidated Cash Flow Statement

Year ended 31 March 2016

		Note	2016 £000	2015  £000
Operating profit			122,609	114,203
Gain on the revaluation of investment properties		13a, 14	(58,001)	(64,465)
Profit on disposal of surplus land		15	(4,754)	(1,318)
Depreciation		13b	663	566
Depreciation of finance lease capital obligations		13a	967	918
Employee share options		6	2,539	2,059
Decrease/(increase) in inventories			38	(14)
Decrease/(increase) in receivables			369	(1,172)
Increase in payables			1,785	1,098
Cash generated from operations			66,215	51,875
Interest paid			(10,763)	(9,692)
Interest received			15	27
Tax credit received			-	187
Cash flows from operating activities			55,467	42,397
Investing activities
Sale of surplus land			7,835	2,815
Purchase of non-current assets			(44,509)	(42,555)
Additions to surplus land			(66)	(231)
Receipts from Capital Goods Scheme			184	3,557
Acquisition of Big Yellow Limited Partnership (net of cash acquired)			-	(37,406)
Acquisition of Big Storage Limited			-	(15,114)
Disposal of Big Storage Limited			-	7,614
Net investment in associates		13d	-	(3,709)
Dividend received from associates		13d	270	89
Cash flows from investing activities			(36,286)	(84,940)
Financing activities
Issue of share capital			378	77,094
Payment of finance lease liabilities		13a	(967)	(918)
Equity dividends paid		11	(36,443)	(27,890)
Payments to cancel interest rate derivatives			-	(1,408)
Refinancing fees			-	(2,649)
Drawing of M&G loan			70,000	-
(Repayment)/borrowing of Lloyds short term loan			(70,000)	70,000
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/(decrease) in borrowings			26,864	(14,034)
Cash flows from financing activities			(10,168)	47,436
Net increase in cash and cash equivalents			9,013	4,893
Opening cash and cash equivalents			8,194	3,301
Closing cash and cash equivalents			17,207	8,194

Reconciliation of Net Cash Flow to Movement in Net Debt

Year ended 31 March 2016

		Note	2016 £000	2015 £000
Net increase in cash and cash equivalents in the year			9,013	4,893
Cash flow from increase in debt financing			(26,864)	(55,966)
Change in net debt resulting from cash flows			(17,851)	(51,073)
Movement in net debt in the year			(17,851)	(51,073)
Net debt at the start of the year			(277,140)	(226,067)
Net debt at the end of the year		18	(294,991)	(277,140)

Notes to the financial statements       

Year ended 31 March 2016

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.

2.         BASIS OF PREPARATIOn

The condensed set of financial statements set out above (which was approved by the Board on 23 May 2016) 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 2015 and 31 March 2016, 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 2015 have been filed with the Registrar of Companies.  The Company's statutory accounts for the year ended 31 March 2016 will be filed with the Registrar of Companies following the Annual General Meeting.  The auditors' reports on both the 2015 and 2016 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 2015.   The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2015 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 2017 and projections contained in the longer term business plan which covers the period to March 2020. 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.

			2016 £000	2015 £000
Open stores
Self storage income			84,900	70,631
Other storage related income			14,568	11,849
Ancillary store rental income			354	251
			99,822	82,731
Other revenue
Non-storage income			808	268
Fees earned from Big Yellow Limited Partnership			-	458
Other management fees earned			752	819
Revenue per statement of comprehensive income			101,382	84,276
Interest receivable on bank deposits (see note 7)			15	27
Total revenue per IAS 18			101,397	84,303

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):

		2016 £000	2015 £000
Depreciation of plant, equipment and owner-occupied property		663	566
Leasehold property depreciation		967	918
Gain on the revaluation of investment property		(58,001)	(64,465)
Profit on disposal of surplus land		(4,754)	(1,318)
Cost of inventories recognised as an expense		1,095	977
Employee costs (see note 6)		15,094	13,084
Operating lease rentals		78	95
Auditor's remuneration for audit services (see below)		186	191

b) Analysis of auditor's remuneration:

			2016 £000	2015 £000
Fees payable to the Company's auditor for the audit of the Company's annual accounts			156	160
Other services - audit of the Company's subsidiaries' annual accounts			30	31
Total audit fees			186	191
Interim review			31	34
Tax services - advisory			60	131
Assurance of CSR report			22	22
Other services			-	80
Total non-audit fees			113	267

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 £43,000, which all related to audit services.

6.         Employee costs

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

			2016 Number	2015 Number
Sales			271	256
Administration			47	44
			318	300
At 31 March 2016 the total number of Group employees was 358 (2015: 337).
			2016 £000	2015 £000
Their aggregate remuneration comprised:
Wages and salaries			10,443	8,982
Social security costs			1,634	1,655
Other pension costs			478	388
Share-based payments			2,539	2,059
			15,094	13,084

7.         INVESTMENT income

		2016 £000	2015 £000
Bank interest receivable		15	27
Unwinding of discount on Capital Goods Scheme receivable		388	468
Total investment income		403	495

8.         Finance costs

		2016 £000	2015 £000
Interest on bank borrowings		11,187	10,080
Capitalised interest		(247)	(399)
Interest on obligations under finance leases		926	1,023
Total interest payable		11,866	10,704
Change in fair value of interest rate derivatives		4	2,274
Total finance costs		11,870	12,978

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.

Finance (No.2) Bill 2015 provides that the rate of corporation tax for the 2017 Financial Year (commencing 1 April 2017) will be 19% and that the rate from 1 April 2020 would be 18%. At Budget 2016, the government announced a further reduction to the Corporation Tax main rate (for all profits except ring fence profits) for the year starting 1 April 2020, setting the rate at 17%, however this rate is yet to be substantially enacted.

UK current tax			2016 £000	2015 £000
Current tax:
- Current year			247	90
- Prior year			-	(254)
- Conversion charge refund			-	(187)
			247	(351)

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

			2016 £000	2015 £000
Profit before tax			112,246	105,236
Tax charge at 20% (2015 - 21%) thereon			22,449	22,100
Effects of:
Revaluation of investment properties			(11,600)	(12,109)
Share of profit of associates			(220)	(739)
Other permanent differences			(930)	(1,475)
Profits from the tax exempt business			(7,725)	(7,234)
Profit on disposal of surplus land			(951)	(278)
Utilisation of brought forward losses			(51)	(438)
Movement on other unrecognised deferred tax assets			(725)	263
Current year tax charge			247	90
Prior year adjustment			-	(441)
Total tax charge/(credit)			247	(351)

At 31 March 2016 the Group has unutilised tax losses of £32.4 million (2015: £32.8 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10.       Adjusted Profit before tax AND ADJUSTED EBITDA

		2016 £000	2015 £000
Profit before tax		112,246	105,236
Gain on revaluation of investment properties - wholly owned		(58,001)	(64,465)
- in associate (net of deferred tax)		(566)	(2,731)
Change in fair value of interest rate derivatives - Group		4	2,274
- in associate		23	124
Profit on disposal of surplus land		(4,754)	(1,318)
Share of non-recurring losses in associate		-	285
Adjusted profit before tax		48,952	39,405
Net bank interest		10,925	9,654
Depreciation (see note 13b)		663	566
Adjusted EBITDA		60,540	49,625

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 £48,705,000 for the year after the tax charge of £247,000 (2015: £39,756,000 after a tax credit of £351,000). 

11.       Dividends

		2016 £000	2015 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2015 of 11.3p (2014: 8.4p) per share.		17,541	11,774
Interim dividend for the year ended 31 March 2016 of 12.1p    (2015: 10.4p) per share.		18,902	16,116
		36,443	27,890
Proposed final dividend for the year ended 31 March 2016 of 12.8p (2015: 11.3p) per share.		20,003	17,541

Subject to approval by shareholders at the Annual General Meeting to be held on 22 July 2016, the final dividend will be paid on 28 July 2016.  The ex-div date is 16 June 2016 and the record date is 17 June 2016.

The Property Income Dividend ("PID") payable for the year is 18.1 pence per share (2015: 16.1 pence per share). 

12.       Earnings AND NET ASSETS per share

Earnings per ordinary share

	Year ended 31 March 2016			Year ended 31 March 2015
	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic	112.0	155.8	71.9	105.6	145.7	72.5
Dilutive share options	-	0.7	(0.3)	-	1.2	(0.6)
Diluted	112.0	156.5	71.6	105.6	146.9	71.9
Adjustments:
Gain on revaluation of investment properties	(58.0)	-	(37.1)	(64.5)	-	(43.9)
Change in fair value of interest rate derivatives	-	-	-	2.3	-	1.6
Profit on disposal of surplus land	(4.8)	-	(3.1)	(1.3)	-	(0.9)
Share of associate non-recurring gains	(0.5)	-	(0.3)	(2.3)	-	(1.6)
EPRA - diluted	48.7	156.5	31.1	39.8	146.9	27.1
EPRA - basic	48.7	155.8	31.3	39.8	145.7	27.3

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 2016 £000	31 March 2015 £000
Basic net asset value	829,387	750,914
Exercise of share options	700	452
EPRA NNNAV	830,087	751,366
Adjustments:
Fair value of derivatives	3,683	3,679
Fair value of derivatives - share of associate	69	46
Share of deferred tax in associates	573	425
EPRA NAV	834,412	755,516
Basic net assets per share (pence)	530.8	484.0
EPRA NNNAV per share (pence)	525.5	478.5
EPRA NAV per share (pence)	528.3	481.1
EPRA NAV (as above) (£000)	834,412	755,516
Valuation methodology assumption (see note 14) (£000)	64,560	45,927
Adjusted net asset value (£000)	898,972	801,443
Adjusted net assets per share (pence)	569.1	510.4
	No. of shares	No. of shares
Shares in issue	157,369,287	158,055,735
Own shares held in treasury	-	(1,418,750)
Own shares held in EBT	(1,122,907)	(1,500,000)
Basic shares in issue used for calculation	156,246,380	155,136,985
Exercise of share options	1,707,743	1,896,437
Diluted shares used for calculation	157,954,123	157,033,422

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

The shares held in treasury were cancelled during the year.

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 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	63,594	871		64,465
Depreciation	-	-	(918)	(918)
At 31 March 2015	1,007,110	15,681	20,829	1,043,620
Additions	3,668	41,695	-	45,363
Reclassification	19,437	(19,437)	-	-
Adjustment to present value	-	-	303	303
Revaluation (see note 14)	61,995	(3,994)	-	58,001
Depreciation	-	-	(967)	(967)
At 31 March 2016	1,092,210	33,945	20,165	1,146,320

The income from self storage accommodation earned by the Group from its investment property is disclosed in note 3.  Direct operating expenses, which are all applied to generating rental income, arising on the investment property in the year are disclosed in the Portfolio Summary. Included within additions is £0.2  million of capitalised interest (2015: £0.4 million), calculated at the Group's average borrowing cost for the year of 3.6%.  55 of the Group's investment properties are pledged as security for loans, with a total external value of £918.9 million.

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 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
Retirement of fully depreciated assets		-	-	(103)	-	(439)	(542)
Additions		298	48	151	-	521	1,018
At 31 March 2016		2,183	101	592	25	1,498	4,399
Depreciation
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)
Retirement of fully depreciated assets		-	-	103	-	439	542
Charge for the year		(39)	(2)	(81)	-	(541)	(663)
At 31 March 2016		(367)	(52)	(197)	(25)	(353)	(994)
Net book value
At 31 March 2016		1,816	49	395	-	1,145	3,405
At 31 March 2015		1,557	3	325	-	1,165	3,050

 

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

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 2016 £000	31 March 2015 £000	31 March 2016 £000	31 March 2015 £000
At the beginning of the year	3,638	-	1,934	-
Subscription for partnership capital and advances	-	3,648	-	1,789
Part disposal of Partnership interest	-	(1,728)	-	-
Share of results (see below)	718	1,807	386	145
Dividends	(183)	(89)	(87)	-
	4,173	3,638	2,233	1,934

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 2016 by Jones Lang LaSalle.

Big Yellow Limited Partnership

At the start of the prior year the Group had a 33.3% interest in Big Yellow Limited Partnership.  This interest was accounted for as an associate, using equity accounting.  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 shown in the note below:

		31 March 2016 £000	31 March 2015 £000
At the beginning of the period		-	17,861
Share of results		-	1,564
Acquisition of remaining interest		-	(19,425)
At the end of the period		-	-

d) Investment in associates (continued)

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

	Armadillo Storage 1		Armadillo Storage 2
	Year ended 31 March 2016 £000	Period from 16 April 2014 to 31 March 2015 £000	Year ended 31 March 2016 £000	Period from 3 February 2015 to 31 March 2015 £000
Income statement (100%)
Revenue	4,829	4,321	4,139	627
Cost of sales	(2,560)	(2,258)	(1,954)	(225)
Administrative expenses	(77)	(100)	(97)	(75)
Operating profit	2,192	1,963	2,088	327
Gain on the revaluation of investment properties	2,340	10,078	1,111	1,449
Net interest payable	(514)	(504)	(688)	(183)
Acquisition costs written off	-	(467)	-	(540)
Fair value movement of interest rate derivatives	(9)	(197)	(104)	(35)
Deferred and current tax	(421)	(1,833)	(478)	(290)
Profit attributable to shareholders	3,588	9,040	1,929	728
Dividends paid	(916)	(447)	(434)	-
Retained profit	2,672	8,593	1,495	728
Balance sheet (100%)
Investment property	32,825	30,125	24,825	23,175
Interest in leasehold properties	-	-	3,809	4,083
Other non-current assets	1,015	1,005	1,490	1,465
Current assets	888	1,132	845	1,256
Current liabilities	(1,193)	(2,151)	(1,840)	(1,812)
Derivative financial instruments	(207)	(197)	(139)	(35)
Non-current liabilities	(12,463)	(11,721)	(17,825)	(18,462)
Net assets (100%)	20,865	18,193	11,165	9,670
Group share
Operating profit	439	471	418	65
Gain on the revaluation of investment properties	468	2,042	222	290
Net interest payable	(103)	(123)	(138)	(37)
Acquisition costs written off	-	(177)	-	(108)
Fair value movement of interest rate derivatives	(2)	(39)	(21)	(7)
Deferred and current tax	(84)	(367)	(95)	(58)
Profit attributable to shareholders	718	1,807	386	145
Dividends paid	(183)	(89)	(87)	-
Retained profit	535	1,718	299	145
Associates' net assets	4,173	3,638	2,233	1,934

The prior year balance sheet and income statement have been restated for Armadillo 2 to reflect finance lease accounting for the short leasehold property.  There is no change to the prior year net assets or profit.

14.       VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000		Revaluation on deemed cost £000		Valuation £000
Freehold stores
At 31 March 2015	542,466		423,074		965,540
Transfer from investment property under construction	20,854		(1,417)		19,437
Movement in year	3,593		61,710		65,303
At 31 March 2016	566,913		483,367		1,050,280
Leasehold stores
At 31 March 2015	14,702		26,868		41,570
Movement in year	75		285		360
At 31 March 2016	14,777		27,153		41,930
Total of open stores
At 31 March 2015	557,168		449,942		1,007,110
Transfer from investment property under construction	20,854		(1,417)		19,437
Movement in year	3,668		61,995		65,663
At 31 March 2016	581,690		510,520		1,092,210
Investment property under construction
At 31 March 2015	21,809		(6,128)		15,681
Transfer to investment property	(20,854)		1,417		(19,437)
Movement in year	41,695		(3,994)		37,701
At 31 March 2016	42,650		(8,705)		33,945
Valuation of all investment property
At 31 March 2015	578,977		443,814		1,022,791
Movement in year	45,363		58,001		103,364
At 31 March 2016	624,340		501,815		1,126,155

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 2016 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: 

·    One of the members of the RICS who has been a signatory to the valuations provided to the Group for the same purposes as this valuation, has done so since September 2004.  This is the first occasion on which the other member has been a signatory;

·    C&W have been carrying out this 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 six transactions involving multiple assets and 13 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.

Brexit Risk

The UK is set to hold a referendum on 23 June on whether or not to remain a member of the European Union.

C&W's valuation report comments on reduced transaction volumes in the real estate markets in the run up to the referendum date and, should the vote be for the UK to exit, then they expect there to be continued uncertainty in the real estate markets as the UK renegotiates its relationships with the EU and other nations.

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 71 trading stores (both freeholds and leaseholds) open at 31 March 2016 averages 81.9% (31 March 2015: 81.1%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.  The average time assumed for the 71 stores to trade at their maturity levels is 20 months (31 March 2015: 24 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 71 stores is 6.5% (31 March 2015: 6.4%) rising to a stabilised net yield pre-administration expenses of 7.2% (31 March 2015: 7.4%). 

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 9.9% (31 March 2015: 10.4%).

E.   Purchaser's costs in the range of 6.1% to circa 6.8% (see below) have been assumed initially, reflecting the new progressive SLDT rates brought into force in March 2016 and sale plus purchaser's costs totalling circa 7.1% to 7.8% 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 15.5 years (31 March 2015:  16.5 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.  Three schemes do 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 to 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 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 circa 6.1% to 6.8% 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. The assets would have to be sold with the benefit of operational contracts, employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure.

This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing a deduction for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the assumed Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser's cost of 2.75% of gross value.  All the significant sized transactions that have been concluded in the UK in recent years were completed in a corporate structure.  The Group therefore instructed C&W to carry out a Red Book valuation on the above basis, and this results in a higher property valuation at 31 March 2016 of £1,190.4 million (£64.2 million higher than the value recorded in the financial statements).  The total valuations in the two Armadillo Partnerships performed by Jones Lang LaSalle are £2.1 million higher than the value recorded in the financial statements, of which the Group's share is £0.4  million.  The sum of these is £64.6 million and translates to 40.8 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 2015			3,315
Additions			66
Release of impairment			2,300
Disposal			(5,381)
At 31 March 2016			300

A gain of £4,754,000 arose on the disposal of surplus land at one site during the year (including the release of a prior year impairment).  During the prior year a gain of £1,318,000 arose on the disposal of surplus land at one site.

16.       TRADE AND OTHER RECEIVABLES

Current			31 March  2016 £000	31 March 2015 £000
Trade receivables			3,050	3,062
Capital Goods Scheme receivable			2,866	184
Other receivables			241	371
Prepayments and accrued income			10,065	12,762
			16,222	16,379
Non-current
Capital Goods Scheme receivable			6,561	9,039

Trade receivables are net of a bad debt provision of £11,000 (2015: £19,000).  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.  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 £353,000 (2015: £210,000) 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 19 days past due (2015: 43 days past due).

Ageing of past due but not impaired receivables

			2016 £000	2015 £000
1 - 30 days			285	44
30 - 60 days			45	33
60 + days			23	133
Total			353	210

Movement in the allowance for doubtful debts

			2016 £000	2015 £000
Balance at the beginning of the year			19	42
Amounts provided in year			76	99
Amounts written off as uncollectible			(84)	(122)
Balance at the end of the year			11	19

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

			2016 £000	2015 £000
1 - 30 days			-	-
30 - 60 days			4	3
60 + days			7	16
Total			11	19

17.       TRADE AND OTHER PAYABLES

		31 March 2016 £000	31 March  2015 £000
Current
Trade payables		10,453	11,653
Other payables		10,592	7,286
Accruals and deferred income		15,077	13,640
VAT repayable under Capital Goods Scheme		-	33
		36,122	32,612

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 currently require 45% 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.

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:

	2016 £000	2015 £000
Debt	(312,198)	(285,334)
Cash and cash equivalents	17,207	8,194
Net debt	(294,991)	(277,140)
Balance sheet equity	829,387	750,914
Net debt to equity ratio	35.6%	36.9%

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 25 self storage assets and sites, a 15 year loan with Aviva Commercial Finance Limited secured on a portfolio of 15 self storage assets, and a £70 million seven year loan from M&G Investments Limited, 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 2016 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) until June 2022.

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 interest rate swap settles on a three-monthly basis. The floating rate on the interest rate swap is three month LIBOR. The Group settles the difference between the fixed and floating interest rate on a net basis.

The Group does not hedge account for its interest rate swaps and states them at fair value, with changes in fair value included in the statement of comprehensive income.  The loss in the statement of comprehensive income for the year on the fair value of interest rate derivatives was £4,000 (2015: loss of £2,274,000). 

The fair value of the above derivatives at 31 March 2016 was a liability of £3,683,000 (2015: liability of £3,679,000).

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 2016, 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 £775,000 (2015: reduced adjusted profit before tax by £805,000) 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 £775,000 (2015: increased adjusted profit before tax by £805,000).  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 decreased during the year, with a slight reduction in the amount of floating rate debt.  The Board monitors closely the exposure to the floating rate element of our debt.

E.  Cash management and liquidity

Ultimate responsibility for liquidity risk management rests with the Board of Directors, 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 50,000 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.

2016 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	92,198	2,243	2,356	7,799	79,800
M&G loan payable at variable rate	35,000	-	-	-	35,000
M&G loan fixed by interest rate derivatives	35,000	-	-	-	35,000
Bank loan payable at variable rate	120,000	-	-	120,000	-
Debt fixed by interest rate derivatives	30,000	-	-	30,000	-
Total	312,198	2,243	2,356	157,799	149,800

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

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:

2016	Trade and other  payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000
From five to twenty years	-	506	176,296	22,894	199,696
From two to five years	-	1,684	188,517	5,255	195,456
From one to two years	-	675	12,982	1,752	15,409
Due after more than one year	-	2,865	377,795	29,901	410,561
Due within one year	21,045	1,055	12,982	1,752	36,834
Total	21,045	3,920	390,777	31,653	447,395

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	18,939	1,175	82,267	1,735	104,116
Total	18,939	4,189	367,716	33,206	424,050

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.

2016		Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years		149,800	24,306	2,190	176,296
From two to five years		157,799	29,473	1,245	188,517
From one to two years		2,356	10,626	-	12,982
Due after more than one year		309,955	64,405	3,435	377,795
Due within one year		2,243	10,739	-	12,982
Total		312,198	75,144	3,435	390,777

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

19.       BORROWINGS

Secured borrowings at amortised cost			31 March  2016 £000	31 March 2015 £000
Current liabilities
Aviva mortgage			2,243	2,136
Bank borrowings			-	70,000
			2,243	72,136
Non-current liabilities
Bank borrowings			150,000	121,000
Aviva mortgage			89,955	92,198
M&G mortgage			70,000	-
Unamortised loan arrangement costs			(3,435)	(2,462)
Total non-current borrowings			306,520	210,736
Total borrowings			308,763	282,872

The weighted average interest rate paid on the borrowings during the year was 3.6% (2015: 3.9%). 

The Group has £20,000,000 in undrawn committed bank borrowing facilities at 31 March 2016, which expire between four and five years (2015: £49,000,000 expiring between four and five years). 

The Group has 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 1.375%.  The Group has an option to extend this loan for a further year.  The Group also has an option to increase the amount of the revolving loan facility by a further £80 million during the course of the loan's term.  £20 million of this option was taken up subsequent to the year end, and hence at the date of signing the Group's bank loan facility was £190 million.

In June 2015 the Group drew down a £70 million 7 year loan with M&G Investments Limited, simultaneously repaying a short term bank loan of the same amount.  The loan is secured over a portfolio of 15 freehold self storage centres.  Half of the loan is variable and half is subject to an interest rate derivative for the seven years.

The Group was in compliance with its banking covenants at 31 March 2016 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 2016
Gross financial liabilities	312,198	155,000	157,198	3.5%	7.3 years	6.3 years
At  31 March 2015
Gross financial liabilities	285,334	161,000	124,334	3.3%	8.0 years	5.0 years

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

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 (£0.3 million), interest rate swaps (£0.7 million), corporation tax losses (£4.8 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
	2016 £000	2015 £000	2016 £000	2015 £000
Amounts payable under finance leases:
Within one year	1,752	1,735	1,722	1,705
Within two to five years inclusive	7,007	6,942	6,136	6,077
Greater than five years	22,894	24,529	12,307	13,047
	31,653	33,206	20,165	20,829
Less: future finance charges	(11,488)	(12,377)
Present value of lease obligations	20,165	20,829

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
	2016 £000	2015 £000	2016 £000	2015 £000
Ordinary shares of 10 pence each	20,000	20,000	15,737	15,806
Movement in issued share capital
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
Cancellation of treasury shares				(1,418,750)
Exercise of share options - Share option schemes				732,302
Number of shares at 31 March 2016				157,369,287

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

At 31 March 2016 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 2016	Number of ordinary shares 2015
3 August 2009	nil p**	3 August 2012	2 August 2019	2,075	2,075
12 July 2010	nil p **	12 July 2013	11 July 2020	4,781	5,807
19 July 2011	nil p **	19 July 2013	19 July 2021	7,112	14,587
12 March 2012	240p *	1 April 2015	1 October 2015	-	92,347
11 July 2012	nil p **	11 July 2015	10 July 2022	15,724	616,977
12 March 2013	305.5p *	1 April 2016	1 October 2016	31,365	32,254
19 July 2013	nil p **	19 July 2016	19 July 2023	511,821	511,821
25 February 2014	442.6p*	1 April 2017	1 October 2017	23,655	24,711
29 July 2014	nil p**	29 July 2017	29 July 2024	503,591	511,091
16 March 2015	494.6p*	1 April 2018	1 October 2018	101,014	106,541
21 July 2015	nil p**	21 July 2018	21 July 2025	399,117	-
14 March 2016	608.0p*	1 April 2019	1 October 2019	49,296	-
				1,649,551	1,918,211

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

             Own shares

The own shares reserve represents the cost of shares in Big Yellow Group PLC purchased in the market, and held by the Big Yellow Group PLC Employee Benefit Trust, along with shares issued directly to the Employee Benefit Trust.  1,122,907 shares are held in the Employee Benefit Trust (2015: 1,500,000), and following the cancellation of shares in September 2015, no shares are held in treasury (2015: 1,418,750).

23.          Share-based payments

The Company has three equity share-based payment arrangements, namely an LTIP scheme (with approved and unapproved components), an Employee Share Save Scheme ("SAYE") and a Long Term Bonus Performance Plan. The Group recognised a total expense in the year related to equity-settled share-based payment transactions of £2,539,000 (2015: £2,059,000).

Equity-settled share option plans

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

On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group's Long Term Incentive Plan ("LTIP"). The awards are conditional on the achievement of challenging performance targets.  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 and 2012 fully vested.  The weighted average share price at the date of exercise for options exercised in the year was £7.04 (2015: £5.40).

LTIP scheme	2016 No. of options	2015 No. of options
Outstanding at beginning of year	1,662,358	1,649,374
Granted during the year	468,546	724,345
Lapsed during the year	(46,728)	(93,955)
Exercised during the year	(639,955)	(617,406)
Outstanding at the end of the year	1,444,221	1,662,358
Exercisable at the end of the year	29,692	22,469

The weighted average fair value of options granted during the year was £976,000 (2015: £907,000).

Employee Share Save Scheme ("SAYE")	2016 No. of options	2016 Weighted average exercise price (£)	2015 No of options	2015 Weighted average exercise price (£)
Outstanding at beginning of year	255,853	3.74	188,199	2.84
Granted during the year	49,296	6.08	106,541	4.95
Forfeited during the year	(7,472)	4.65	(14,416)	2.83
Exercised during the year	(92,347)	2.40	(24,471)	2.63
Outstanding at the end of the year	205,330	4.87	255,853	3.74
Exercisable at the end of the year	-	-	-	-

Options outstanding at 31 March 2016 had a weighted average contractual life of 2.2 years (2015: 2.0 years).

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

	LTIP	SAYE
Expected volatility	24%	25%
Expected life	3 years	3 years
Risk-free rate	0.8%	0.8%
Expected dividends	3.4%	3.4%

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 Executive Directors receive awards under the Long Term Bonus Performance Plan.  This is accounted for as an equity instrument. The plan was set up in July 2015.  The vesting criteria and scheme mechanics are set out in the Directors' Remuneration Report.  At 31 March 2016 the weighted average contractual life was 2.3 years.  

24.       capital commitments

At 31 March 2016 the Group had £0.4 million of amounts contracted but not provided in respect of the Group's properties (2015: £4.4 million of capital commitments).

25.       Events after the balance sheet date

In April 2016, the Group acquired the Lock and Leave portfolio.  Big Yellow acquired the stores in Nine Elms and Twickenham for £14.6 million.  The stores in Canterbury and West Molesey were acquired by Armadillo 1 for £6.4 million. 

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 prior 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 1 during the period on normal commercial terms as shown in the table below.    

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 2 during the period on normal commercial terms as shown in the table below. 

	31 March 2016 £000	31 March 2015 £000
Fees earned from Big Yellow Limited Partnership	-	458
Fees earned from Armadillo 1	414	560
Fees earned from Armadillo 2	291	208
Balance due from Armadillo 1	103	287
Balance due from Armadillo 2	89	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 (2015: £24,000). 

No other related party transactions took place during the years ended 31 March 2016 and 31 March 2015.

Ten Year Summary

	2016 £000	2015 £000	2014 £000	2013 £000	2012 £000	2011 £000	2010 £000	2009 £000	2008 £000	2007 £000
Results
Revenue	101,382	84,276	72,196	69,671	65,663	61,885	57,995	58,487	56,870	51,248
Operating profit before gains and losses on property assets	59,854	48,420	39,537	37,454	35,079	32,058	29,068	30,946	29,342	27,067
Cash flow from operating activities	55,467	42,397	32,752	30,186	27,388	23,534	19,063	10,203	14,388	16,726
Profit/(loss) before taxation	112,246	105,236	59,848	31,876	(35,551)	6,901	10,209	(71,489)	102,618	152,837
Adjusted profit before taxation	48,952	39,405	29,221	25,471	23,643	20,207	16,514	13,791	15,006	14,233
Net assets	829,387	750,914	594,064	552,628	494,500	544,949	547,285	502,317	580,886	487,979
EPRA earnings per share	31.1p	27.1p	20.5p	19.3p	18.2p	15.5p	13.0p	11.9p	11.7p	10.0p
Declared total dividend per share	24.9p	21.7p	16.4p	11.0p	10.0p	9.0p	4.0p	0p	9.5p	9.0p
Key statistics
Number of stores open	71	69	66	66	65	62	60	54	48	43
Sq ft occupied (000)	3,363	3,178	2,832	2,632	2,458	2,130	1,915	1,775	1,850	1,835
Occupancy increase in year 000 sq ft)	185	346	200	174	328	215	140	(75)	15	163
Number of customers	50,000	47,250	41,800	38,500	36,300	32,800	30,500	28,500	30,500	30,100
Average no. of employees during the year	318	300	289	286	279	273	252	239	218	191

 

END

 

 

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