Results for the year ended 31 March 2019

RNS Number : 6214Z

Big Yellow Group PLC

21 May 2019

Big Yellow Group PLC

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

Results for the YEAR ended 31 MARCH 2019

Highlights

STRONG PERFORMANCE DRIVEN BY OCCUPANCY AND RATE GROWTH

Financial metrics	Year ended 31 March 2019	Year ended 31 March 2018	Growth
Revenue	£125.4m	£116.7m	7%
Like-for-like revenue⁽¹⁾	£123.2m	£114.9m	7%
Store EBITDA⁽¹⁾	£84.1m	£79.5m	6%
Adjusted profit before tax⁽¹⁾	£67.5m	£61.4m	10%
EPRA earnings per share⁽¹⁾	41.4p	38.5p	8%
Dividend - final - total	16.5p 33.2p	15.5p 30.8p	6% 8%
Statutory metrics
Profit before tax	£126.9m	£134.1m	(5%)
Cash flow from operating activities (after net finance costs)	£71.8m	£63.0m	14%
Basic earnings per share	78.3p	85.0p	(8%)
Store metrics Occupancy growth⁽¹⁾	80,000 sq ft	179,000 sq ft	(99,000 sq ft)
Closing occupancy⁽¹⁾	82.4%	80.5%	1.9 ppts
Occupancy - like-for-like stores (%)⁽¹⁾	82.7%	80.5%	2.2 ppts
Average net achieved rent per sq ft⁽¹⁾	£27.14	£26.37	2.9%
Closing net rent per sq ft⁽¹⁾	£27.28	£26.74	2.0%

¹See note 28 for glossary of terms

Highlights

Occupancy and rate growth driving 7% revenue increase
Average rate up 2.9% year-on-year. Like-for-like closing store occupancy 82.7% (2018: 80.5%)
Cash flow from operating activities (after net finance costs) increased by 14% to £71.8 million
Adjusted profit before tax up 10% to £67.5 million
8% increase in total dividend to 33.2 pence per share
Acquisition of 7 new development sites in London and the South East taking the pipeline to 12 sites totalling approximately 820,000 sq ft (18% of current MLA)
Acquisition of freehold of 81,000 sq ft New Malden store
Placing of 7.2 million shares in September 2018 raising £65.3 million (net of expenses) to fund development of new stores

Nicholas Vetch, Executive Chairman of Big Yellow, commented:

"We have delivered another year of growth, with revenue up 7% and adjusted profit before tax up 10% year-on-year. Although activity levels in the final quarter were impacted by consumer uncertainty in the build-up to the UK's original proposed exit date from the EU, we are pleased to have delivered further improvements in rate and occupancy over the year as a whole.

This performance has been delivered alongside the continued delivery of our expansion strategy. In addition to opening an extension at our Wandsworth store, and new stores in Wapping and Manchester, we have acquired a further seven development sites.

It has taken us time to build a sustainable pipeline of new stores. That is now accomplished and will provide a steady increase in capacity over the next few years. We will continue to add to this pipeline as sites become available, albeit the supply of appropriate property is limited. These new stores will make a significant contribution to future revenue growth, enhancing the performance we anticipate being generated by the existing operating platform.

Looking ahead, we remain focussed on our core objective of increasing occupancy to 90%, which in turn should drive traction on pricing and further rate growth. We have a proven strategy and remain confident about the long-term prospects for the Group."

ABOUT US

Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 99 stores, including 24 stores branded as Armadillo Self Storage, in which the Group has a 20% interest. We own a further 12 Big Yellow self storage development sites of which three have planning consent. The current maximum lettable area of the existing platform (including Armadillo) is 5.7 million sq ft. When fully built out the portfolio will provide approximately 6.5 million sq ft of flexible storage space. Of the Big Yellow stores and sites, 97% by value are held freehold and long leasehold, with the remaining 3% 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	020 7260 2700
Ben Foster
Matthew Denham

Chairman's Statement

Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's brand leader in self storage, is pleased to announce its results for the year ended 31 March 2019.

This has been another year of revenue, cash flow and adjusted earnings growth, driven by a combination of improvements in occupancy and rate. Following our seasonally weaker third quarter, we continued to grow occupancy in the final quarter, but this growth was more muted than in recent years, with prospect numbers and move-ins slightly lower year-on-year. This in someways was not surprising given the heightened uncertainty in the run up to 29 March, the UK's original proposed exit date from the EU, which has now been delayed until 31 October. Since the year end our book of reservations has grown to similar levels seen last year and we anticipate further growth in occupancy over our seasonally stronger summer period.

Like-for-like closing Group occupancy is up 2.2 percentage points to 82.7% compared to 80.5% at 31 March 2018. Average rental growth was up 2.9% year-on-year compared to 0.8% last year. Although our closing occupancy was at the lower end of our expectations at the start of the year, we delivered better than anticipated rate growth.

We expect to see occupancy growth over our seasonally stronger summer trading period, providing there are no significant external shocks, and we should peak at over 85%. The key risk to our business is supply, and this remains constrained, particularly in London and the South East, with four store openings in the year offset by three store closures. We remain focussed on our core objective of 90% occupancy across the portfolio, and as we further reduce vacant capacity, our pricing model will continue to deliver improved rental growth.

Financial results

Revenue for the year was £125.4 million (2018: £116.7 million), an increase of 7%. Like-for-like revenue growth (see note 28) was 7%.

Operating cash flow increased by £8.8 million (14%) to £71.8 million for the year (2018: £63.0 million). During the year we spent £83.0 million on growth capital expenditure, compared to £42.0 million in 2018. The Group's operating profit before property revaluations increased by £5.7 million (8%) to £76.7 million. The Group's statutory profit before tax was £126.9 million, a decrease of 5% from £134.1 million in the prior year with the increase in operating profit offset by a slightly lower revaluation gain on our investment properties in the year.

Given that our central overhead and operating expense is largely embedded in the business, this revenue growth has delivered an increase of 10% in the adjusted profit before tax in the year of £67.5 million (2018: £61.4 million). Adjusted earnings per share increased by 8% to 41.4p (2018: 38.5p) with an equivalent 8% increase in the dividend per share for the year. The increase in earnings per share is lower than that reported for adjusted profit before tax as a result of the dilution from the equity placing in September 2018.

The Group has net debt of £319.7 million at 31 March 2019 (2018: £323.7 million). This represents approximately 22% (2018: 25%) of the Group's gross property assets totalling £1,445.5 million (2018: £1,303.3 million) and 26% (2018: 31%) of the adjusted net assets of £1,209.8 million (2018: £1,059.1 million). The Group's interest cover for the year, expressed as the ratio of cash generated from operations against interest paid was 8.2 times (2018: 7.6 times). This is comfortably ahead of our internal minimum interest cover of 5 times.

Investment in new capacity

In September, the Group issued 7.2 million shares (4.5% of the issued share capital prior to the placing) at a price of 930 pence per share, raising £65.3 million (net of expenses). The proceeds are being used to acquire new development sites in attractive locations that will allow the Company to continue to deliver a contribution to earnings from external growth whilst maintaining a strong capital structure.

We are therefore pleased to report progress in this regard with the acquisition of seven high quality development sites since March 2018. Five of the sites were in London, in Uxbridge (West London), Queensbury (North West London), Hayes (West London), Wembley (North West London), and North Kingston (South West London). The remaining two were in Slough (just outside the M25, west of London) and Hove (west of Brighton).

The 25,000 sq ft extension to our Wandsworth store completed in May 2018, we opened a 25,000 sq ft store in Wapping in July 2018, and in May 2019 we opened our 60,000 sq ft store on Water Street, central Manchester.

We have commenced construction of our Camberwell store which we anticipate will open in Spring 2020. We also received planning consent for our Battersea scheme which will provide a new 72,000 sq ft net Big Yellow store, 168 flats and 18,500 sq ft of offices, retail and artists' studios. Our existing 34,000 sq ft Battersea store was closed in March 2019 for demolition, and we anticipate the new store will re-open in Summer 2020. The 57,000 sq ft proposed store at Bracknell received planning consent in January 2019, and we hope to be on site shortly, with a view to opening in Summer 2020.

After lengthy consultations, we submitted a planning application on our Kings Cross development in July 2018, which is now the subject of an appeal due to be determined this summer. We have commenced our planning discussions on the recently acquired sites and will report back on our progress in due course.

Big Yellow now has a pipeline comprising 12 development sites with a cost to complete of approximately £109 million. These store openings are expected to add approximately 820,000 sq ft of storage space to the portfolio, an increase of 18% from the current maximum lettable area of the Group's portfolio.

Our current estimate of net operating income at stabilisation, at today's prices, for this increase in capacity is in excess of £19 million per annum. The total development cost including cost incurred to date is estimated to be approximately £212 million implying a 9.0% net operating income return on cost.

During the year, the Group acquired the Wyvern Industrial Estate in New Malden, London for £28 million excluding purchaser's costs. Big Yellow occupies approximately half of the estate, with an 81,000 sq ft net lettable area store, on an occupational lease which expired in 2026. The acquisition removed two material risks; there was no certainty that the lease would have been renewed at its expiry, and the liability of future rent increases on this property could have been significant given its prime location in London. We intend to sell the remainder of the estate in due course.

We continue to look for land and existing storage centres in large urban conurbations, focussing as previously stated on London and the South East. Should the current uncertainties throw up new opportunities, we will continue as we have been to pursue them aggressively. However, developing stores in these target areas remains challenging given the competition for land and the pressure to produce more housing.

Dividends

The Group's dividend policy is to distribute 80% of full year adjusted earnings per share. The final dividend declared is 16.5 pence per share. The dividend declared for the year of 33.2 pence per share represents an increase of 8% from 30.8 pence per share last year.

Our people

We continue to believe that any successful business requires a motivated and engaged workforce, and the creation of a fully engaged culture has always been a key focus within Big Yellow. An increasingly important aspect of this is social responsibility, particularly as it relates to local communities around our stores. This has been the first full year of operation of The Big Yellow Foundation, supporting six charities which focus on the rehabilitation of vulnerable adults into work. I am delighted that in its first year we have succeeded in raising some £160,000, with the strong support and help of our employees.

In February 2019, we were named as one of the Sunday Times 100 Best Companies to Work For, which is a pleasing testament to the culture of the business given that it is based entirely on the views of our employees.

In addition, we focus on customer service and engagement, measuring and responding to their feedback. Our customer net promoter scores ("NPS") were an average of 79.1 over the year (2018: 80.1). Although marginally lower than last year, NPS scores at these levels are highly unusual and reflect our efforts to deliver excellent and consistent customer service.

I would like to thank all our people for their efforts in contributing to another year of growth.

Outlook

It has taken us time to build a sustainable pipeline of new stores. That is now accomplished and will provide a steady increase in capacity over the next few years. We will continue to add to this as sites become available but the supply of appropriate property is limited. These new stores will make a significant contribution to future revenue growth, enhancing the performance we anticipate being generated by the existing operating platform.

Nicholas Vetch, Executive Chairman
20 May 2019

Strategic Report

OUR STRATEGY AND INVESTMENT CASE

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 six times that of our nearest competitor (source: YouGov survey, April 2019). We concentrate on developing our stores in main road locations with high visibility, where our distinctive branding generates high awareness of Big Yellow. Our accreditation in the year for The 100 Best Companies to Work For was pleasing as an independent assessment of our employee engagement, and our customer satisfaction survey scores remain very high, with an average customer net promoter score of 79.1 in the year, and average Trustpilot scores of 9.6 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. The performance of our stores was relatively resilient during the collapse in housing activity and GDP over the period 2007 to 2009, with London and the South East proving to be less volatile. In the last 12 years since April 2007, we have added 2.1 million sq ft of capacity and 2.0 million sq ft of occupancy.

Local GDP and hence business and housing activity are greatest in the larger urban conurbations and in particular London and the South East. Furthermore, people and businesses are space constrained in these more 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 20 years we have built a portfolio of 75 Big Yellow self storage centres, largely freehold, purpose-built and focussed on London, the South East and large metropolitan cities. We believe that by owning a predominantly freehold estate we are insulating ourselves against adverse rent reviews and in the long term possible redevelopment of key stores by the landlord. We currently have a pipeline of twelve freehold development opportunities and are looking to expand that pipeline with a view to growing the Big Yellow platform to 100 stores over the next seven to ten years.

66% of our current annualised store revenue derives from within the M25; for London and the South East, the proportion of current annualised store revenue is 83%. Any future external growth will be executed in a way so as to maintain a proportion of 80% or more in London and the South East with the balance in regional cities.

Our Big Yellow stores are on average 62,000 sq ft, compared to an industry average of approximately 44,000 sq ft (source: The Self Storage Association 2019 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 achieved principally by increasing occupancy and net rent per sq ft 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;
increasing the footprint of the Big Yellow platform principally through new site development and where possible existing prime freehold stores that meet our quality criteria;
selectively acquiring existing self storage assets into the Armadillo platform;
through our corporate social responsibility initiatives, aim to create a more sustainable business which will increase shareholder and customer value in both the medium and long term;
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 nineteen years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 15.3% per annum, in aggregate 1,380% at the closing price of 991.5p on 31 March 2019. This compares to 6.1% per annum for the FTSE Real Estate Index and 5.1% per annum for the FTSE All Share index over the same period. We feel this illustrates the power of compounding of consistent incremental returns over the longer term.

Our investment case

Attractive market dynamics	UK self storage penetration in key urban conurbations remains relatively low Limited new supply coming onto the market Resilient through the downturn Sector growth is positive, with increasing domestic awareness and demand
Our competitive advantage	UK industry's most recognised brand with 90% of enquiries now online Prominent stores on arterial or main roads, with extensive frontage and high visibility Continuous innovation and investment into our mobile and desktop digital channels Strong customer satisfaction and NPS scores reflecting excellent customer service 5.7 million sq ft UK footprint (Big Yellow and Armadillo combined) 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	56,000 customers from a diverse base - individuals, SMEs and national accounts Average length of stay for existing customers of 25 months 33% of customers in stores greater than two year length of stay Low bad debt expense (0.2% of revenue in the year)
Strong growth opportunities	Opportunities to drive further occupancy growth Yield management as occupancy increases Densification of living and scarcity of flexible business space drives demand Growth in national accounts and business customer base Increasing the platform with a conservative capital structure Growth in our Armadillo joint venture platform
Conversion into quality returns	Freehold assets for high operating margins and operational advantage Low technology and obsolescence product, maintenance capex fully expensed Annual compound adjusted eps growth of 15% since 2004/5 Annual compound cash flow growth of 15% since 2004/5 Dividend pay-out ratio of 80% of adjusted eps

The self storage market

In the recently published 2019 Self Storage Association UK Survey, only 48% of those surveyed had a reasonable or good awareness of self storage. Furthermore, only 9% of the 2,170 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 of self storage, together with the ongoing marketing efforts of everyone in the industry, we anticipate awareness will grow.

Self storage is not a commoditised product and awareness is driven largely by businesses and individuals using self storage. Consequently, the increase in awareness over time has been relatively slow, with good awareness of self storage increasing from 38% in 2014 to 48% in 2019 across the UK (source: UK SSA Survey 2019). Our YouGov Survey carried out in April 2019 showed higher levels of awareness in London of 65%, up from 58% in 2014.

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 the year to 31 December 2018, there were four new store openings offset by three closures. We are aware of only two planned store openings in London in 2019.

The Self Storage Association ("SSA") estimates that the UK industry is made up of approximately 1,582 self storage facilities (of which 381 are purely container operations), providing 45.6 million sq ft of self storage space, equating to 0.68 sq ft per person in the UK. This compares to 9.4 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 2018). 30% of the self storage facilities in the UK are held by large operators (defined as those managing 10 facilities or more), but the SSA estimate over 40% of total capacity. Given the dominance of the larger brands in the South East, we would expect the proportion of revenue earned by the top five operators to be approximately 50% of the annual industry turnover of £720 million.

Big Yellow is well placed to benefit from the growing self storage market, given the strength of our brand, and our online platform which delivers approximately 90% 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.

Operational and Marketing Review

Overview

We now have a portfolio of 75 open and trading Big Yellow stores (with Manchester having opened in May 2019), with a further 12 development sites. The current maximum lettable area of the 75 stores is 4.7 million sq ft. When fully built out the portfolio will provide approximately 5.5 million sq ft of flexible storage space.

In addition we part-own and manage 24 Armadillo stores which are principally located in northern UK towns and cities, and operate from a platform of 1.0 million sq ft.

Growth in new self storage centre openings, excluding container operators, over the last five years has averaged 2% to 3% of total capacity per annum, down significantly from the previous decade. Additionally, in our core markets in London and the South East, high land values driven by competing uses such as residential, and complex planning rules, are 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 opportunities.

Operations

The Big Yellow store model is well established. The "typical" store has 60,000 sq ft of MLA and takes some three to four years to achieve 85% plus occupancy. The average room size occupied in the portfolio is currently 68 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 support.

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, which are externally managed. Over the year, we have achieved an average net promoter score of 79.1.

We have a team of ten area managers in place who have on average worked for Big Yellow for 12 years. They develop and support the stores to drive the growth of the business.

The store bonus structure rewards occupancy performance, 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 £37,000 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. Over the last five years we have invested £12 million in the upkeep and maintenance of our stores, all of which has been expensed in the statement of comprehensive income.

Demand

Demand for self storage is largely driven by need, with security, convenience, quality of product, service and location being key drivers. Awareness remains relatively low compared to commoditised products, such as hotel rooms or airline seats, albeit it is increasing slowly year-on-year with increased supply, marketing spend and customer use.

We are confident that Big Yellow benefits disproportionately from this improving market for our product, due to our market-leading brand and operating platform with our focus on London, the South East and large metropolitan cities. Our digital platform now accounts for 90% of our prospects, of which over half come through our mobile site.

Customers renting storage space whilst moving within the rental or owner occupied sectors represent 41% of move-ins during the year (2018: 42%), split evenly between the homeowners and renters. 12% of our customers who moved in took storage space as a spare room for decluttering (2018: 11%). 35% 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 (2018: 35%). The balance of 12% of our new customer demand during the year came from businesses (2018: 12%).

There is a growing trend towards self-employment and smaller business start-ups in the UK, dynamics that are positive for self storage. Additionally, businesses in the UK are increasingly seeking flexible office and storage space rather than longer inflexible leases. The deindustrialisation of big cities with the conversion of commercial space into residential and other uses, is also a driver for demand from the SME market seeking flexible warehouse space.

During the prior year, the Group commissioned an external survey to assess the value the average Big Yellow store generates for its local economy. 36% of the Group's space is occupied by business customers, and the average store is home to 105 different businesses who between them employ 300 people as a direct result of their occupation. 60% of the businesses that occupy our stores are start-ups who have never rented space anywhere else before. For over half of the businesses, this is the only space they rent, for others this complements their other space. The report estimated that across Big Yellow over 23,000 jobs are created working for over 7,700 businesses. In addition, average local Gross Value Added generated by Big Yellow's business customers in each store is approximately £17 million per annum, or over £1 billion nationally.

Of our overall occupied space today, customers who are longer stay lifestyle users, decluttering into small rooms as an extension to their accommodation, occupy 10% to 15% of our space; approximately 50% of the space is customers using it for less than 12 months, for reasons which are largely event driven, which could be inheritance, moving in the owner occupied or rental sector, home improvements, travelling; the balance of 36% of our space is businesses. Businesses occupy larger rooms on average than domestic customers and, despite being in 36% of the occupied space only represent 21% of customer numbers.

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 focuses on driving enquiries and customer satisfaction through our digital platforms.

For the last 13 years, we have commissioned a YouGov survey to help us monitor our brand awareness. In our most recent survey conducted in April 2019, we used a statistically robust sample size of 1,008 respondents in London and 3,806 for the rest of the UK. The survey has shown our prompted awareness to be at 72% in London, nearly two and a half times higher than our nearest competitor and 41% for the rest of the UK, nearly three times higher than our nearest competitor.

For unprompted brand awareness, our recall in London is 48%, five and a half times higher than our nearest competitor and for the rest of the UK it is 20%, nearly six times higher than our nearest competitor. The UK Self Storage Association ("SSA") has also conducted a brand awareness survey with similar results. According to their YouGov survey conducted in January 2019, Big Yellow's unprompted brand awareness across the UK is over five times higher than our nearest competitor. These surveys continue to confirm our brand leading position in self storage.

The Big Yellow website, whether accessed by desktop, tablet or smartphone, delivers the largest share of our prospects, accounting for 90% of all sales leads across the year ended 31 March 2019, with the balance coming from telephone or walk-in enquiries as the first point of contact.

Across the year ended 31 March 2019, our online market share of weekly web visits remained strong, ranging from 22% to 32% (source: Connexity Hitwise recording visits to 59 UK self storage operators). This results from our continued investment and innovation across our mobile and desktop digital platforms driving both paid and SEO search.

We monitor and improve the website user journeys on an ongoing basis. We are committed to making the experience as easy, intuitive and informative as possible for our customers. Both the mobile specific website and our desktop site are designed with helpful and time saving online tools such as Check-in Online, online FAQs, video store tours, online chat, BoxShop and a Click and Collect service for packing materials. 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 service. With the users' permission, we then publish these independent reviews on the Big Yellow website. There are currently over 28,000 of these customer reviews published averaging 4.8 out of 5.

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

We also gain real-time customer insight from over 5,800 Google Reviews averaging 4.6 out of 5 and 1,354 TrustPilot Reviews currently averaging 9.6 out of 10.

We regularly monitor our customer reviews plus any online mentions of Big Yellow on social media, news sites and across the web generally. We use this insight to monitor our brand and improve our service offering.

Driving online traffic

Self storage is a consumer facing business and the development of a strong and sustainable brand is multi-layered and requires a consistency of product, customer service and interaction at all touch points, particularly online, which represents 90% of our total enquiries.

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 which helps us achieve high positions for the most popular self storage related search terms in the organic listings on Google. Of the top 100 self storage search terms, 32 feature brands, representing approximately 42% of the search traffic (source: Connexity Hitwise, 12 weeks ended 30 March 2019).

This clearly indicates that, although self storage is a relatively immature industry with 70% to 75% of customers using it for the first time, brand is important in driving higher levels of prospects and customer referrals, leading to improved operational performance. We have demonstrated this through significant improvements in performance of existing storage centres following their acquisition, rebranding and assimilation into our business.

The sponsored search listings remain our largest source of paid for web traffic. Ongoing website optimisation helps ensure we maximise the conversion of this web traffic into prospects.

We continue to drive efficiencies so as to maximise the return on investment from all of our different online traffic sources. Online marketing budgets will continue to remain focussed on the media with the best return on investment.

Social media

Social media continues to be complementary to our existing marketing channels and Big Yellow can be found across Twitter, Facebook and Instagram. LinkedIn is also being used to communicate company achievements, CSR initiatives and to present an honest and engaging picture of what it is like to work for Big Yellow. LinkedIn is central in our drive towards more direct recruitment.

The Big Yellow YouTube channel is used to allow web prospects to experience our stores online through our video guides to self storage. The online blog is updated regularly with tips and advice for homeowners and businesses, as well as summaries of our charitable and CSR initiatives.

We have continued to produce regional press stories throughout the year to help raise awareness of Big Yellow in the local communities where we operate. These will often highlight the charitable endeavours of our team members or the support we provide to local charities and organisations through the donation of free storage space.

Budget

During the year the Group spent approximately £5.3 million on marketing (4.2% of total revenue). We have increased the budget for the year ahead to £5.5 million with a focus on delivering and converting more prospects 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. We continue to invest in and review our security systems and we limit the retention of customer data to the minimum requirement. We carry out frequent penetration testing of internet facing systems, use components such as anti-ransomware as well maintaining and replacing components (such as firewalls) with the latest technology and specification. Policies and procedures are under regular review and benchmarked against industry best practice by our consultants. These policies also include defend, detect and response policies. We aligned our policies and procedures to ensure our ongoing compliance with the new EU General Data Protection Regulation ("GDPR") which came into effect in May 2018.

Store Performance

PORTFOLIO SUMMARY - BIG YELLOW STORES

	2019				2018
	Mature⁽¹⁾	Established	Developing	Total	Mature	Established	Developing	Total

Number of stores	68	3	3	74	69	3	2	74
At 31 March:
Total capacity (sq ft)	4,274,000	206,000	142,000	4,622,000	4,308,000	206,000	117,000	4,631,000
Occupied space (sq ft)	3,557,000	177,000	76,000	3,810,000	3,516,000	171,000	43,000	3,730,000
Percentage occupied	83.2%	85.9%	53.5%	82.4%	81.6%	83.0%	36.8%	80.5%
Net rent per sq ft	£27.32	£28.64	£22.31	£27.28	£26.87	£26.33	£17.63	£26.74
For the year:
REVPAF⁽²⁾	£26.61	£26.95	£11.58	£26.19	£25.32	£23.67	£11.65	£25.05
Average occupancy	83.6%	83.1%	45.7%	82.5%	81.4%	79.2%	30.8%	80.9%
Average annual rent psf	£27.21	£28.08	£20.59	£27.14	£26.48	£25.93	£17.46	£26.37

	£000	£000	£000	£000	£000	£000	£000	£000
Self storage income	97,957	4,836	1,279	104,072	92,836	4,252	629	97,717
Other storage related income ⁽³⁾	16,150	704	292	17,146	15,726	621	147	16,494
Ancillary store rental Income	452	39	1	492	499	25	-	524
Total store revenue	114,559	5,579	1,572	121,710	109,061	4,898	776	114,735
Direct store operating costs (excluding depreciation)	(33,278)	(1,315)	(1,035)	(35,628)	(31,333)	(1,414)	(412)	(33,159)
Short and long leasehold rent⁽⁴⁾	(1,990)	-	-	(1,990)	(2,101)	-	-	(2,101)
Store EBITDA⁽⁵⁾	79,291	4,264	537	84,092	75,627	3,484	364	79,475
Store EBITDA margin	69.2%	76.4%	34.2%	69.1%	69.3%	71.1%	46.9%	69.3%

Deemed cost	£000	£000	£000	£000
To 31 March 2019	585.5	46.8	41.7	674.0
Capex to complete	-	-	0.5	0.5
Total	585.5	46.8	42.2	674.5

(1) The mature stores have been open for more than six years at 1 April 2018. The established stores have been open for between three and six years at 1 April 2018 and the developing stores have been open for fewer than three years at 1 April 2018. The Group's mature Battersea store was closed for redevelopment in the year. It is excluded from occupancy, but its revenue and costs up to the date of closure are included in the above.

(2) See glossary in note 28.

(3) Insurance, packing materials and other storage related fees.

(4) Rent for six mature short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 339,000 sq ft, and a long leasehold lease-up store with a capacity of 64,000 sq ft. The EBITDA margin for the 62 freehold mature stores is 71%, and 52% for the six leasehold mature stores. During the year the Group acquired the freehold of its mature New Malden store.

(5) The table below reconciles Store EBITDA to gross profit in the statement of comprehensive income.

	Year ended 31 March 2019 £000			Year ended 31 March 2018 £000
	Store EBITDA	Reconciling items	Gross profit per statement of comprehensive income	Store EBITDA	Reconciling items	Gross profit per statement of comprehensive income
Store revenue/Revenue⁽⁶⁾	121,710	3,704	125,414	114,735	1,925	116,660
Cost of sales⁽⁷⁾	(35,628)	(2,517)	(38,145)	(33,159)	(2,515)	(35,674)
Rent⁽⁸⁾	(1,990)	1,990	-	(2,101)	2,101	-
	84,092	3,177	87,269	79,475	1,511	80,986

(6) See note 3 of the financial statements, reconciling items are management fees and non-storage income.

(7) See reconciliation in cost of sales section in Financial Review.

(8) The rent shown above is the cost associated with leasehold stores, only part of which is recognised within gross profit in line with finance lease accounting principles. The amount included in gross profit is shown in the reconciling items in cost of sales.

PORTFOLIO SUMMARY - ARMADILLO STORES

	2019	2018

Number of stores	22	22

At 31 March:
Total capacity (sq ft)	963,000	963,000
Occupied space (sq ft)	723,000	712,000
Percentage occupied	75.1%	73.9%
Net rent per sq ft	£17.50	£16.97

For the year:
REVPAF	£15.63	£15.09
Average occupancy	75.7%	76.0%
Average annual rent psf	£17.33	£16.61

	£000	£000
Self storage income	12,645	10,677
Other storage related income	2,349	2,015
Ancillary store rental income	63	72
Total store revenue	15,057	12,764
Direct store operating costs (excluding depreciation)	(5,949)	(5,003)
Leasehold rent	(483)	(497)
Store EBITDA⁽¹⁾	8,625	7,264
Store EBITDA margin	57.3%	56.9%
Cumulative capital expenditure
	£m
To 31 March 2019	71.4
To complete	0.4

Total capital expenditure	71.8

(1) Store earnings before interest, tax, depreciation, amortisation, and management fees charged by Big Yellow to the Armadillo portfolios (see note 27).

(2) The Group has a 20% interest in Armadillo. The figures shown above represent 100% of Armadillo's performance.

Prospects for the year were slightly down on last year. The table below shows the quarterly move-in and move-out activity over the year.

	Total move-ins Year ended 31 March 2019	Total move-ins Year ended 31 March 2018	%	Total move-outs Year ended 31 March 2019	Total move-outs Year ended 31 March 2018	%
April to June	19,784	20,332	(3)	15,499	15,112	3
July to September	21,565	21,463	-	22,742	22,952	(1)
October to December	16,058	16,000	-	18,137	18,190	-
January to March	15,885	16,133	(2)	15,954	15,273	4
Total	73,292	73,928	(1)	72,332	71,527	1

The performance in the prior year was a strong comparator, and hence move-ins were down 1% on last year, although up 2% on the year to 31 March 2017. Activity levels in the quarter to March were affected by consumer uncertainty in the run-up to the UK's original proposed exit date from the EU. Across the year move-outs were up 1% on the prior year; partly as a result of closing our Battersea store for redevelopment in the fourth quarter.

In all Big Yellow stores, the occupancy growth in the current year was 80,000 sq ft, against an increase of 179,000 sq ft in the prior year.

Quarterly net occupancy movement	Net sq ft Year ended 31 March 2019	Net sq ft Year ended 31 March 2018	Net move-ins Year ended 31 March 2019	Net move-ins Year ended 31 March 2018
April to June	131,000	183,000	4,285	5,220
July to September	43,000	82,000	(1,177)	(1,489)
October to December	(126,000)	(170,000)	(2,079)	(2,190)
January to March	32,000	84,000	(69)	860
Total	80,000	179,000	960	2,401

We had a good quarter to June with an increase in occupancy of 131,000 sq ft, albeit lower growth than the prior year. The second quarter peaked in August and then many of our students and short term house movers vacated in September and October, leading to a net loss in occupied rooms and sq ft occupancy. In our seasonally weakest third quarter the occupancy loss represented 2.7% of MLA, compared to 3.7% of the MLA in the prior year, which had had a stronger summer trading period. In the final quarter we have seen a return to growth in occupancy in the stores of 32,000 sq ft, which was softer than the prior year given the consumer uncertainty referred to above.

The 68 mature stores are 83.2% occupied compared to 81.6% at the same time last year. The 3 established stores have grown in occupancy from 83.0% to 85.9%. The three developing stores added 33,000 sq ft of occupancy in the year to reach closing occupancy of 53.5%. Overall store occupancy has increased in the year from 80.5% to 82.4%. On a like-for-like basis, excluding Wapping, which opened July 2018, and Battersea which closed in March 2019, closing occupancy was 82.7%, an increase of 2.2 percentage points.

All of the stores open at the year end are trading profitably at the EBITDA level. The table below shows the average key metrics across the store portfolio (from the Portfolio Summary) for the year ended 31 March 2019:

	Mature stores	Established stores	Developing stores	All stores
Average store capacity	62,850	68,670	47,330	62,460
Average sq ft occupied per store at 31 March 2019	52,300	59,000	25,330	51,490
Average % occupancy	83.6%	83.1%	45.7%	82.5%
Average revenue per store (£000)	1,660	1,860	524	1,623
Average EBITDA per store (£000)	1,149	1,421	179	1,121
Average EBITDA margin	69.2%	76.4%	34.2%	69.1%

Pricing and net rent per sq ft

Our core proposition remains a high quality product, competitively priced, with excellent customer service, providing value for money to our customers. We offer a headline opening promotion of 50% off for up to the first 8 weeks, and we continue to manage pricing dynamically, taking account of room availability, customer demand and local competition.

Our pricing model reduces promotions and increases asking prices where individual units are in scarce supply. This lowering of promotions, coupled with price increases to existing and new customers, leads to an increase in achieved net rents. Rental growth can also be driven through sub-dividing larger rooms into smaller rooms, which yield a higher net rent per sq ft.

The average rate growth in the year was 2.9%. Net achieved rent per sq ft at 31 March 2019 grew by 2.0% over the financial year. The table below shows the growth in net rent per sq ft for the portfolio over the year (excluding Battersea, Guildford Central and Wapping).

Average occupancy in the year	Number of stores	Net rent per sq ft growth from 1 April 2018 to 31 March 2019
0 to 75%	5	(0.9%)
75 to 85%	47	2.4%
Above 85%	20	3.1%

Armadillo Self Storage

The Group has a 20% investment in Armadillo Self Storage, with the balance of 80% held by an Australian consortium. Subsequent to the year end Armadillo acquired two stores in Daventry and Grimsby.

This takes the Armadillo platform to 24 stores and 1.0 million sq ft of MLA. As with the other existing store acquisitions, the intention will be to upgrade and reconfigure the stores through additional investment to drive cash flow growth. In the year to 31 March 2019, £2.2 million of capital expenditure has been invested to upgrade and fit-out additional capacity in the Armadillo stores.

Armadillo is a lower-frills brand, with largely freehold conversions of existing buildings. They are located in towns where we would not typically locate a Big Yellow, and have an average capacity of 43,000 sq ft (lower than the 62,000 sq ft average for Big Yellow stores). 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 continues to look for opportunities to add to the Armadillo platform.

Development pipeline

We opened the 25,000 sq ft extension to our Wandsworth store in May 2018 and our 25,000 sq ft store in Wapping in July 2018. Our new 60,000 sq ft store in Manchester opened on 1 May 2019. We own a further 12 development sites, of which three have planning consent. The status of the Group's development pipeline is summarised in the table below:

Site	Location	Status	Anticipated capacity
Camberwell, London	Prominent location on Southampton Way	Planning consent granted in April 2018. Construction started in November 2018 with a view to opening in Spring 2020.	77,000 sq ft
Kings Cross, London	Prominent location on York Way	Planning application has been appealed, with a decision expected in the Summer.	115,000 to 120,000 sq ft
Bracknell	Prime location on Ellesfield Avenue	Site acquired in February 2018. Planning consent granted in January 2019 for self storage and other trade uses. Construction to commence in August 2019 with a view to opening Summer 2020.	57,000 sq ft
Slough	Prominent location on Bath Road	Site acquired in April 2019. Planning application to be submitted to Slough Borough Council in Autumn 2019.	65,000 to 70,000 sq ft
Battersea, London	Prominent location on junction of Lombard Road and York Road (South Circular)	Planning granted for redevelopment of original 34,000 sq ft store and of adjoining retail into a mixed use residential led scheme. Demolition has started on the Big Yellow storage facility with construction to commence July 2019 with a view to store re-opening Summer 2020.	70,000 to 75,000 sq ft
Uxbridge, London	Prominent location on Oxford Road	Site acquired in April 2018. Planning application submitted to South Bucks DC December 2018 with a decision anticipated in June 2019.	50,000 to 55,000 sq ft
Queensbury, London	Prominent location off Honeypot Lane	Site acquired in November 2018, planning discussions ongoing with a view to submitting an application in Summer 2019.	55,000 sq ft to 60,000 sq ft
North Kingston, London	Prominent location on Richmond Road, Ham.	Site acquired in February 2019, planning discussions ongoing with a view to submitting an application in Summer 2019.	55,000 sq ft to 60,000 sq ft
Wembley, London	Prominent location on Towers Business Park	Site acquired in February 2019. Discussions ongoing to secure vacant possession prior to commencing planning discussions.	65,000 sq ft to 70,000 sq ft.
Hayes, London	Prominent location on Hayes Road.	Site acquired in April 2019, planning application to be submitted in Summer 2019.	70,000 sq ft to 75,000 sq ft
Hove	Prominent location on Old Shoreham Road	Site acquired in April 2018. Planning application submitted in February 2019 with a decision anticipated in June 2019.	55,000 sq ft to 60,000 sq ft
Newcastle	Prime location on Scotswood Road	Planning application to be submitted in Summer 2019.	60,000 sq ft
Total			794,000 sq ft to 839,000 sq ft

The capital expenditure currently committed for the financial year ended 31 March 2020 is approximately £33 million, which includes the completion of the acquisitions of Hayes and Slough, and construction expenditure on Camberwell, Battersea and Bracknell.

The Group acquired a site in Slough in October 2017 for future development. The Group subsequently acquired a more prominent and usable site opposite in April 2019 and simultaneously sold the original site acquired.

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 on budget.

Financial Review

Financial results

Revenue

Total revenue for the year was £125.4 million, an increase of £8.7 million (7.5%) from £116.7 million in the prior year. Like-for-like revenue for the year was £123.2 million, an increase of 7.2% from the prior year (2018: £114.9 million), driven by a combination of an increase in the average occupancy of the Group's stores and an increase in net achieved rent per sq ft. Like-for-like revenue excludes Guildford Central and Wapping, which opened in March 2018 and July 2018 respectively, and Battersea, which was closed for redevelopment in the year.

Other sales (included within the above), comprising the selling of insurance, packing materials and storage related charges, represented 14.1% of total store revenue for the year (2018: 14.4%) and generated revenue of £17.1 million for the year, up 4% from £16.5 million in 2018.

The other revenue earned by the Group is management fee income from the Armadillo Partnerships, and tenant income on sites where we have not started development. During the year, the Group recognised in revenue a £1 million performance fee due from Armadillo Storage Holding Company Limited, for the performance of the fund over its initial five year term. This fee was paid in May 2019.

Operating costs

Cost of sales principally comprise 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 compared to the prior year is shown in the table below:

Category	Year ended 31 March 2019 £000	Year ended 31 March 2018 £000	% change	% of store operating costs in 2019
Cost of sales (insurance and packing materials)	2,866	2,663	8%	8%
Staff costs	9,240	8,740	6%	26%
General & Admin	1,262	1,187	6%	4%
Utilities	1,373	1,447	(5%)	4%
Property rates	11,311	10,438	8%	32%
Marketing	5,294	4,656	14%	15%
Repairs / Maintenance	2,741	2,595	6%	8%
Insurance	934	921	1%	3%
Computer costs	587	494	19%	2%
Irrecoverable VAT	20	18	11%	0%
Total per portfolio summary	35,628	33,159	7%

Store operating costs have increased by £2.5 million (7%) compared to the same period last year. Of this increase £0.6 million relates to our new stores at Guildford Central and Wapping. The Group's property rates have increased by £0.9 million from the prior year, with the Group receiving significant rates rebates on two stores in the prior year, which reduced last year's expense, coupled with the reduction of transitional arrangements for the new rates listing. We have increased our investment in marketing by £0.6 million to maintain the Group's online market share and enquiry levels.

Our investment in LED lighting has contributed to a reduction in our utility expenditure of £0.1 million. We have increased our investment in our IT systems and cyber security by £0.1 million. The other increases in store operating costs of £0.4 million are largely inflationary.

The table below reconciles store operating costs per the portfolio summary to cost of sales in the statement of comprehensive income:

	Year ended 31 March 2019 £000	Year ended 31 March 2018 £000
Direct store operating costs per portfolio summary (excluding rent)	35,628	33,159
Rent included in cost of sales (total rent payable is included in portfolio summary)	1,075	1,109
Depreciation charged to cost of sales	393	439
Head office and other operational management costs charged to cost of sales	1,049	967
Cost of sales per statement of comprehensive income	38,145	35,674

Store EBITDA

Store EBITDA for the year was £84.1 million, an increase of £4.6 million (6%) from £79.5 million for the year ended 31 March 2018 (see Portfolio Summary). The overall EBITDA margin for all Big Yellow stores during the year was 69.1%.

Administrative expenses

Administrative expenses in the statement of comprehensive income have increased by £542,000. The increase is due to a number of factors; an increase of £250,000 in salaries, which includes the annual salary review to head office employees and the increase to Directors' pay as approved at the last AGM. We have also increased staffing levels in IT, marketing and HR (£150,000), there has been an increase in donations to the Big Yellow Foundation (£50,000), increased investment in CSR (£35,000). These increases have been partly offset by a reduction in the share based payments charge of £125,000 with the balance of the increase of £182,000 due to inflationary increases.

The non-cash share based payments charge represents £2.3 million of the overall £10.6 million expense.

Interest expense on bank borrowings

The gross bank interest expense for the year was £9.9 million, an increase of £0.1 million from the prior year. The average cost of borrowing during the year was 2.9% in line with the prior year, with the change in base rate in August 2018 being offset by a higher proportion of the drawn debt being variable rate bank debt, which is lower cost. Average debt levels were slightly higher than in the prior year.

Capitalised interest increased by £0.4 million from the prior year. The interest capitalised in the year is principally on our Manchester and Camberwell developments.

Total finance costs in the statement of comprehensive income decreased to £11.2 million from £12.0 million in the prior year. Refinancing costs of £1.5 million were incurred in the prior year.

Profit before tax

The Group made a profit before tax in the year of £126.9 million, compared to a profit of £134.1 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 £67.5 million, up 10% from £61.4 million in 2018.

Profit before tax analysis	2019 £m	2018 £m
Profit before tax	126.9	134.1
Gain on revaluation of investment properties	(58.9)	(71.6)
Movement in fair value on interest rate derivatives	1.1	(1.3)
Gain on part disposal of investment property	-	(0.6)
Refinancing costs	-	1.5
Share of non-recurring gains and losses in associates	(1.6)	(0.7)
Adjusted profit before tax	67.5	61.4

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 2018	61.4
Increase in gross profit	6.3
Increase in net interest payable	(0.1)
Increase in administrative expenses	(0.5)
Increase in capitalised interest	0.4
Adjusted profit before tax - year ended 31 March 2019	67.5

Basic earnings per share for the year was 78.3p (2018: 85.0p) and fully diluted earnings per share was 78.0p (2018: 84.4p). Diluted EPRA earnings per share based on adjusted profit after tax was up 8% to 41.4p (2018: 38.5p) (see note 12). EPRA earnings per share equates to the Company's adjusted earnings per share in the current year.

REIT status

The Group converted to a Real Estate Investment Trust ("REIT") in January 2007. Since then the Group has benefited from a zero tax rate on the Group's qualifying self storage earnings. The Group only pays tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, 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 chargeable 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 on compliance with these criteria is issued to the Executive. To date, the Group has complied with all REIT regulations, including forward looking tests.

Taxation

There is a tax charge in the current year of £0.4 million. This compares to a charge in the prior year of £0.6 million. The current year tax charge reflects an increase in profits in our residual business, which has been more than 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 16.5 pence per share in addition to the interim dividend of 16.7 pence, giving a total dividend for the year of 33.2 pence, an increase of 8% 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 29.2 pence per share is payable (31 March 2018: 27.5 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 PID for the year to 31 March 2019 accounts for 88% of the total dividend. The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2019	31 March 2018
Interim dividend - PID	16.7p	15.3p
- discretionary	nil p	nil p
- total	16.7p	15.3p

Final dividend - PID	12.5p	12.2p
- discretionary	4.0p	3.3p
- total	16.5p	15.5p

Total dividend - PID	29.2p	27.5p
- discretionary	4.0p	3.3p
- total	33.2p	30.8p

Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2019, the final dividend will be paid on 26 July 2019. The ex-div date is 20 June 2019 and the record date is 21 June 2019.

Cash flow growth

The Group is strongly cash generative and draws down from its longer term committed facilities as required to meet its obligations. The Group's cash flow from operating activities for the year was £71.8 million, an increase of 14% from £63.0 million in the prior year.

	Year ended 31 March 2019 £000	Year ended 31 March 2018 £000
Cash generated from operations	81,997	73,457
Net finance costs	(9,996)	(9,711)
Tax	(195)	(769)
Cash flow from operating activities	71,806	62,977
Capital expenditure	(83,038)	(41,959)
Asset sales	-	650
Receipt from Capital Goods Scheme	1,876	2,786
Investment in associate	-	(900)
Dividends received from associates	550	446
Cash flow after investing activities	(8,806)	24,000
Ordinary dividends	(52,058)	(46,183)
Issue of share capital	65,962	969
Finance lease payments	(1,075)	(1,109)
Payment to cancel interest rate derivatives	-	(3,374)
Increase in borrowings	7,026	25,644
Net cash inflow/(outflow)	11,049	(53)
Opening cash and cash equivalents	6,853	6,906
Closing cash and cash equivalents	17,902	6,853
Closing debt	(337,625)	(330,599)
Closing net debt	(319,723)	(323,746)

In the year capital expenditure outflows were £83.0 million, up from £42.0 million in the prior year. The capital expenditure during the year principally relates to the acquisition of the freehold of our New Malden store and adjoining industrial estate (£29 million including costs), the purchase of land for new stores (£35 million), and construction capital expenditure (£19 million).

The cash flow after investing activities was a net outflow of £8.8 million in the year, down from an inflow of £24.0 million in 2018, with the growth in operating cash flow being more than offset by the increased investment in capital expenditure.

Balance sheet

Property

The Group's open stores and stores under development owned at 31 March 2019, 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 £1,445.5 million, comprising £1,317.1 million (91%) for the freehold (including three long leaseholds) open stores, £37.3 million (3%) for the short leasehold open stores and £91.1 million (6%) for the freehold investment properties under construction.

Investment property

The valuations in the current year have grown from the prior year, with a revaluation surplus of £59.0 million arising on the open Big Yellow stores (see note 15 for the detailed valuation methodology). Of this increase 27% is due to an improvement in the cap rate used in the valuations. The average exit capitalisation rate used in the valuations was 6.2% in the current year, compared to 6.3% in the prior year, with the discount rate adopted also reducing from 9.4% to 9.3%. The remaining 73% of the increase in value is due to the growth in cash flow from the assets and changes to the operating assumptions adopted in the valuations.

The valuation is based on an average occupancy over the 10 year cash flow period of 84.3% across the whole portfolio.

	Mature		Established	Developing
	Leasehold	Freehold	Freehold		Freehold	Total
Number of stores	6	62	3		3	74⁽¹⁾
MLA capacity (sq ft)	339,000	3,935,000	206,000		142,000	4,622,000
Valuation at 31 March 2019 (£m)	37.3	1,176.0	70.1		41.8	1,325.2
Value per sq ft	£110	£299	£340		£294	£287
Occupancy at 31 March 2019	83.5%	83.2%	85.9%		53.5%	82.4%
Stabilised occupancy assumed	85.5%	84.5%	87.1%		86.1%	84.7%
Net initial yield pre-admin expenses	12.3%	6.4%	5.9%		3.2%	6.4%
Stabilised yield assuming no rental growth	12.5%	6.5%	5.9%		9.2%	6.7%

(1) Excluding Battersea which was closed in the year for redevelopment, but in line with the Group's accounting policy has been shown in investment property at the year end.

The initial yield pre-administration expenses assuming no rental growth is 6.4% (2018: 6.5%) rising to a stabilised yield of 6.7% (2018: 6.9%). The stores are assumed to grow to stabilised occupancy in 16 months on average. Note 15 contains more detail on the assumptions underpinning the valuations.

As referred to in note 15 C&W observe that there is less transaction activity in the prime self storage market compared to other property markets, although there has been some activity for secondary assets. The capitalisation rates are therefore subject to higher levels of uncertainty than for other property sectors.

C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio were 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 valuation has increased by £33.0 million in the year. Capital expenditure accounts for £47.6 million of this increase, notably on the site purchases discussed above, and construction expenditure, principally on Manchester and Camberwell. This has been partly offset by Wapping transferring to open stores. The valuation movement on the investment property under construction was flat year-on-year.

Purchaser's cost adjustment

As in prior years, we have instructed an alternative valuation on our assets using a purchaser's cost assumption of 2.75% (see note 15 for further details) to be used in the calculation of our adjusted diluted net asset value. This Red Book valuation on the basis of the special assumption of 2.75% purchaser's costs, results in a higher property valuation at 31 March 2019 of £1,528.6 million (£83.1 million higher than the value recorded in the financial statements). With the share of uplift on the revaluation of the Armadillo stores (£0.7 million), this translates to 50.2 pence per share.

This revised valuation translates into an adjusted net asset value per share of 724.4 pence (2018: 665.0 pence) after the dilutive effect of outstanding share options.

Receivables

At 31 March 2019 we have a receivable of £2.5 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 receivable relates to VAT to be recovered on historic store development expenditure.

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 £0.1 million of the discount being unwound through interest receivable in the year. The Group has received £13.2 million to date under the Scheme, of which £1.9 million was received in the year.

Net asset value

The adjusted net asset value is 724.4 pence per share (see note 13), up 7% from 675.5 pence per share at 31 March 2018 (rebased for the impact of the placing). The table below reconciles the movement from 31 March 2018:

Movement in adjusted net asset value	£m	Adjusted NAV pence per share
31 March 2018	1,059.1	665.0
Share placing	65.3	10.5
31 March 2018 (rebased)	1,124.4	675.5
Adjusted profit after tax	67.1	40.2
Equity dividends paid	(52.1)	(31.2)
Revaluation movements (including share of associate)	60.5	36.2
Movement in purchaser's cost adjustment	6.1	3.7
Other movements (e.g. share schemes)	3.8	-
31 March 2019	1,209.8	724.4

Borrowings

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

During the year the Group extended the term of its bank loan by a further year, and retains an option to extend the loan by a further year. The Group also has an option to increase the amount of revolving loan by a further £60 million during the course of the loan's term.

The table below summarises the Group's debt facilities. The average cost at 31 March 2019 is 2.9% (March 2018: 2.9%) with a higher proportion of lower cost variable rate bank debt drawn at March 2019, offset by the increase in base rate in August 2018.

Debt	Expiry	Facility	Drawn	Average interest cost
Aviva Loan	April 2027	£85.1 million	£85.1 million	4.9%
M&G loan	June 2023	£70 million	£70 million	3.0%
Bank loan (Lloyds & HSBC)	October 2023	£210 million	£182.5 million	2.0%
Total	Average term 5.2 years	£365.1 million	£337.6 million	2.9%

The refinancing costs of £1.5 million shown in the prior year statement of comprehensive income relate to the unamortised loan arrangement costs of the previous bank facility, and the write-off of the costs of the new bank facility in accordance with IAS 39. This was eliminated from the Group's adjusted profit for that year. In the prior year, the Group cancelled an interest rate derivative that was in place over half of the M&G loan (2.64% expiring in June 2022) at a cost of £3.4 million and replaced it with a new derivative until June 2023 at a pre margin rate of 0.76%.

The Group was comfortably in compliance with its banking covenants at 31 March 2019. For the year we had Group interest cover of 8.2 times (2018: 7.6 times) based on pre-interest operating cash flow against interest paid. The net debt to gross property assets ratio is 22% (2018: 25%) and the net debt to adjusted net assets ratio (see net asset value section above) is 26% (2018: 31%).

At 31 March 2019, the fair value on the Group's interest rate derivatives was an asset of £0.6 million. The Group does not hedge account its interest rate derivatives. As recommended by EPRA, the fair value movements are eliminated from adjusted profit before tax, diluted EPRA earnings per share, and adjusted net assets per share.

Cash deposits are only placed with approved financial institutions in accordance with the Group's Treasury policy.

Share capital

The share capital of the Company totalled £16.7 million at 31 March 2019 (2018: £15.9 million), consisting of 166,665,158 ordinary shares of 10p each (2018: 158,570,574 shares). In September, the Group issued 7.2 million shares (4.5% of the issued share capital prior to the placing) at a price of 930 pence per share, raising £65.3 million (net of expenses). 0.9 million shares were issued for the exercise of options during the year at an average exercise price of 910p (2018: 0.7 million shares at an average price of 725p).

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.

	2019 No.	2018 No.
Opening shares	158,570,574	157,882,867
Shares issued in placing	7,204,301	-
Shares issued for the exercise of options	890,283	687,707
Closing shares in issue	166,665,158	158,570,574
Shares held in EBT	(1,122,907)	(1,122,907)
Closing shares for NAV purposes	165,542,251	157,447,667

79.2 million shares were traded in the market during the year ended 31 March 2019 (2018: 77.4 million). The average mid-market price of shares traded during the year was 929.5p with a high of 998.5p and a low of 852.5p.

Investment in Armadillo

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 occupancy of the Armadillo stores at 31 March 2019 was 75.1% (31 March 2018: 73.9%). The occupancy growth in the year was 11,000 sq ft. The net rent achieved at 31 March 2019 by the Armadillo stores is £17.50 per sq ft, an increase of 3.1% from the same time last year. Revenue increased by 18% to £15.1 million for the year to 31 March 2019 (2018: £12.8 million); the like-for-like increase in revenue was 6%.

Included within administrative expenses in Armadillo 1 is a £1 million accrual for a performance fee paid to Big Yellow in April 2019. The fee calculation has been based on the 31 March 2019 external property valuation for the Armadillo 1 portfolio.

The Armadillo Partnerships made a combined operating profit of £6.1 million in the year, of which Big Yellow's share is £1.2 million. After net interest costs, the revaluation of investment properties (valued by Jones Lang LaSalle), deferred tax on the revaluation surplus and movement in interest rate derivatives, the profit for the year was £11.6 million, of which the Group's share was £2.3 million.

Big Yellow has a five year management contract in place in each Partnership. For the year to 31 March 2019 the Group earned management fees of £2.1 million, including the performance fee referred to above. The Group's share of the declared dividend for the year is £0.6 million, representing a 13% yield on our equity invested.

Principal risks and uncertainties

The Directors have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. The Group maintains a low appetite to risk, in line with our strategic objectives of providing a low volatility, high distribution, business.

The section below details the principal risks and uncertainties that are considered to have the most material impact on the Group's strategy and objectives. These key risks are monitored on an ongoing basis by the Executive Directors, and considered fully by the Board in its annual risk review.

Risk and impact

Mitigation

Change during the year and outlook

Self storage market risk

There is a risk to the business that the self storage market does not grow in line with our projections, and that economic growth in the UK is below expectations, which could result in falling demand and a loss of income.

Self storage is a relatively immature market in the UK compared to other self storage markets such as the United States and Australia, and we believe has further opportunity for growth. Awareness of self storage and how it can be used by domestic and business customers is relatively low throughout the UK, although higher in London. The rate of growth of branded self storage on main roads in good locations has historically been limited by the difficulty of acquiring sites at affordable prices and obtaining planning consent. New store openings in London and other large metropolitan cities within the sector have slowed significantly over the past few years.

Our performance during the Global Financial Crisis ("GFC") was relatively resilient, although not immune. We believe that the resilience of our performance is due to a combination of factors including:

a prime portfolio of freehold properties;
a focus on London and the South East and other large metropolitan cities, which proved more resilient during the GFC and where the drivers in the self storage market are at their strongest and the barriers to competition are at their highest;
the strength of operational and sales management;
continuing innovation to deliver the highest levels of customer service;
the UK's leading self storage brand, with high public awareness and online strength; and
strong cash flow generation and high operating margins, from a secure capital structure.

We have a large current storage customer base of approximately 56,000 spread across the portfolio of stores and hundreds of thousands more who have used Big Yellow over the years. In any month, customers move in and out at the margin resulting in changes in occupancy. This is a seasonal business and typically we see growth over the spring and the summer months, with the seasonally weaker period being the winter months.

The UK economy is projected to grow at approximately 1.2% in 2019. Self storage proved relatively resilient through the GFC, with our revenue and earnings increasing over the last nine years. As the economy has recovered in the past few years, the market risk has fallen in line with increasing occupancy.

There is increased macroeconomic uncertainty associated with the UK's future exit from the EU, and this has resulted in a broad range of opinions on the UK's future economic performance. The uncertainty has impacted consumer behaviour, which caused lower occupancy growth for the Group in the quarter to March 2019.

The Group's like-for-like occupancy has increased by 2.2 percentage points in the year from 80.5% to 82.7%.

Property risk

There is a risk that we will be unable to acquire new development sites which meet management's criteria. This would impact on our ability to grow the overall store platform. The Group is also subject to the risk of failing to obtain planning consents on its development sites, and the risk of a rising cost of development.

Our management has significant experience in the property industry generated over many years and in particular in acquiring property on main roads in high profile locations and obtaining planning consents. We do take planning risk where necessary, although the availability of land, and competition for it makes acquiring new sites challenging.

Our in-house development team and our professional advisers have significant experience in obtaining planning consents for self storage centres.

We manage the construction of our properties very tightly. The building of each site is handled through a design and build contract, with the fit-out project managed in-house using an established professional team of external advisers and sub-contractors who have worked with us for many years to our Big Yellow specification. We carried out an external benchmarking of our construction costs and tendering programme a couple of years ago, which had satisfactory results.

The Group has acquired seven sites since 1 April 2018, taking its total pipeline to 12 sites which, when opened, would expand the Group's current MLA by 18%.

The planning process remains difficult and to achieve a planning consent can take anything from eighteen months to three years. Local planning policy is increasingly favouring residential development over other uses, and we don't expect this to change given the shortage of housing in the UK.

We currently have planning consent on three of the 12 development sites.

Valuation risk

The valuation of the Group's investment properties may fall due to external pressures or the impact of performance.

Lack of transactional evidence in the self storage sector leads to more subjective valuations.

The valuations are carried out by independent, qualified external valuers who value a significant proportion of the UK self storage industry.

The portfolio is diverse with approximately 56,000 customers currently using our stores for a wide variety of reasons.

There is significant headroom on our loan to value banking covenants.

The revaluation surplus on the Group's open stores investment properties was £59.0 million in the year (an uplift of 5%), due to an improvement in cash flows and the capitalisation rates used in the valuations.

There continues to be transactional evidence in the sector, with a number of portfolio transactions taking place in the current year.

Treasury risk

The Group may face increased costs from adverse interest rate movements.

Our financing policy is to fund our current needs through a mix of debt, equity and cash flow to allow us to selectively build out the remaining development pipeline and achieve our strategic growth objectives, which we believe improve returns for shareholders. We have made it clear that we believe optimal leverage for a business such as ours should be LTV in the range 20% to 30% and this informs our management of treasury risk.

We aim to ensure that there are sufficient medium-term facilities in place to finance our committed development programme, secured against the freehold portfolio, with debt serviced by our strong operational cash flows.

We have a fixed rate loan in place from Aviva Commercial Finance Limited, with eight years remaining. The Group has a £70 million loan from M&G Investments, which is 50% fixed and 50% floating, repayable in 2023. For our bank debt, we borrow at floating rates of interest and use swaps to hedge our interest rate exposure. Our policy is to have at least 40% of our total borrowings fixed, with the balance floating. At 31 March 2019 44% of the Group's total borrowings were fixed or subject to interest rate derivatives. The Group reviews its current and forecast projections of cash flow, borrowing and interest cover as part of its monthly management accounts. In addition, an analysis of the impact of significant transactions is carried out regularly, as well as a sensitivity analysis assuming movements in interest rates and store occupancy on gearing and interest cover. This sensitivity testing underpins the viability statement below.

The Group regularly monitors its counterparty risk. The Group monitors compliance with its banking covenants closely. During the year it complied with all its covenants, and is forecast to do so for the foreseeable future.

Interest rates were increased during the year, but the forecast is for rates to remain at relatively low levels for the foreseeable future. UK inflation reached 2.7% in 2018, but is forecast to fall to closer to 2% in 2019.

Debt providers currently remain supportive to companies with a strong capital structure. That said, a weaker macro-economic performance by the UK economy could adversely affect liquidity and pricing.

The Group's interest cover ratio for the year ended 31 March 2019 was 8.2 times, comfortably ahead of our internal target of 5 times.

Tax and regulatory risk

The Group is exposed to changes in the tax regime affecting the cost of corporation tax, property rates, VAT, Stamp Duty and Stamp Duty Land Tax ("SDLT"), for example the imposition of VAT on self storage from 1 October 2012.

The UK's future exit from the EU creates uncertainty over the future UK tax and regulatory environment.

The Group is exposed to potential tax penalties or loss of its REIT status by failing to comply with the REIT legislation.

We regularly monitor proposed and actual changes in legislation with the help of our professional advisers, through direct liaison with HMRC, and through trade bodies to understand and, if possible, mitigate or benefit from their impact.

HMRC have designated the Group as having a low-risk tax status, and we hold regular meetings with them. We carry out detailed planning ahead of any future regulatory and tax changes using our expert advisers.

The Group has internal monitoring procedures in place to ensure that the appropriate REIT rules and legislation are complied with. To date all REIT regulations have been complied with, including projected tests.

In addition to the regulatory and tax uncertainty linked to the UK's future exit from the EU, the Group experienced an increase in cost in the prior year following the Government's review of business rates.

Human resources risk

Our people are key to our success and as such we are exposed to a risk of high staff turnover, and a risk of the loss of key personnel.

With low unemployment, and a risk of higher staff turnover, difficulty in finding the right employees increases.

We have developed a professional, lively and enjoyable working environment and believe our success stems from attracting and retaining the right people. We encourage all our staff to build on their skills through appropriate training and regular performance reviews. We believe in an accessible and open culture and everyone at all levels is encouraged to review and challenge accepted norms, so as to contribute to the performance of the Group.

We were ranked in the Sunday Times 100 Best Companies to Work For survey in February 2019, showing strong levels of engagement from our employees.

In the current financial year, we intend to commission an employee consultancy to conduct an engagement survey of our employees. This survey was last carried out in 2017.

Brand and reputation risk

The Group is exposed to the risk of a single serious incident materially affecting our customers, people, financial performance and hence our brand and reputation.

We have always aimed to run this business in a professional way, which has involved strict adherence with all regulations that affect our business, such as health and safety legislation, building regulations in relation to the construction of our buildings, anti-slavery, anti-bribery and data regulations.

We also invest in cyber security (discussed below), and make an ongoing investment in staff training, facilities management and the maintenance of our stores.

To ensure consistency of service and to understand the needs of our customers, we send surveys to every customer who moves in and moves out of the business. The results of the surveys and mystery shops are reviewed to continuously improve and deliver consistent performance throughout the business.

We maintain regular communication with our key stakeholders, customers, employees, shareholders and debt providers.

During the prior year, we developed a crisis response plan with external consultants to ensure the Group is well placed to deal with a major incident more effectively.

We have also revisited our detailed disaster recovery procedures during the year, particularly in light of a high-profile fire at a Shurgard store in Croydon.

Security risk

The Group is exposed to the risk of the damage or loss of a store due to vandalism, fire, or natural incidents such as flooding. This may also cause reputational damage.

The safety and security of our customers, their belongings, stores and our staff remains a key priority. To achieve this we invest in state of the art access control systems, individual room alarms, digital CCTV systems, intruder and fire alarm systems and the remote monitoring of all our stores outside of our trading hours. We are the only major operator in the UK self storage industry that has every room in every store individually alarmed.

We have implemented customer security procedures in line with advice from the Police and continue to work with the regulatory authorities on issues of security, reviewing our operational procedures regularly. The importance of security and the need for vigilance is communicated to all store staff and reinforced through training and routine operational procedures.

We have continued to run courses for all our staff to enhance the awareness and effectiveness of our procedures in relation to security.

We regularly review and implement improvements to our security processes and procedures.

Cyber risk

High profile cyber-attacks and data breaches are a regular staple in today's news. The results of any breach may result in reputational damage, fines, or customer compensation, causing a loss of market share and income.

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

Policies and procedures are under regular review and benchmarked against industry best practice by our consultants. These policies also include defend, detect and response policies.

We don't consider the risk to have increased any faster for the Group than anyone else; however we consider that the threats in the entire digital landscape do continue to increase.

During the year we have continued to invest in digital security. Some of the changes include more frequent penetration testing of internet facing systems, adding components such as anti-ransomware as well as the maintenance replacement of components such as firewalls to the latest technology and specification.

Internal audit

The Group does not have a formal internal audit function because the Board has concluded that the internal controls systems are sufficient for the Group at this time. However, the Group employs a Store Compliance Manager responsible for reviewing store operational and financial controls. He reports to the Chief Financial Officer, and also meets with the Audit Committee at least once a year. This role is supported by an Assistant Store Compliance Manager, enabling additional work and support to be carried out across the Group's store portfolio. The Store Compliance team will visit each operational store once to twice per year to carry out a detailed store audit. These audits are unannounced and the Store Compliance team carry out detailed tests on financial management, administrative standards, and operational standards within the stores. Part of the store staff's bonus is based on the scores they achieve in these audits. The results of each audit are reviewed by the Chief Financial Officer, the Financial Controller and the Head of Store Operations.

GOING CONCERN

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

After reviewing Group and Company cash balances, borrowing facilities, forecast valuation movements and projected cash flows, the Directors believe that the Group and Company have adequate resources to continue operations for the foreseeable future. In reaching this conclusion the Directors have had regard to the Group's operating plan and budget for the year ending 31 March 2020 and projections contained in the longer-term business plan which covers the period to March 2023. The Directors have carefully considered 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.

VIABILITY STATEMENT

The Directors have assessed the Group's viability over a four year period to March 2023. This period is selected based on the Group's long term strategic plan to give greater certainty over the forecasting assumptions used.

In making their assessment, the Directors took account of the Group's current financial position, including committed capital expenditure. The Directors carried out a robust assessment of the principal risks and uncertainties facing the business, their potential financial impact on the Group's cash flows, REIT compliance and financial covenants and the likely effectiveness of the mitigating options detailed. The Directors have assumed that funding for the business in the form of equity, bank and insurance company debt will be available in all reasonably plausible market conditions.

Based on this assessment the Directors have a reasonable expectation that the Company and the Group will be able to continue operating and meeting all their liabilities as they fall due to March 2023.

Consolidated Statement of Comprehensive Income Year ended 31 March 2019
	Note	2019 £000	2018 £000

Revenue	3	125,414	116,660
Cost of sales		(38,145)	(35,674)

Gross profit		87,269	80,986

Administrative expenses		(10,607)	(10,065)

Operating profit before gains on property assets		76,662	70,921
Gain on the revaluation of investment properties	14a,15	58,898	71,635
Gain on part disposal of investment property	14a	-	650

Operating profit		135,560	143,206
Share of profit of associates	14d	2,327	1,370
Investment income - interest receivable	7	167	244
- fair value movement on derivatives	7, 18	-	1,294
Finance costs - interest payable	8	(10,076)	(11,975)
- fair value movement on derivatives	8	(1,123)	-

Profit before taxation		126,855	134,139
Taxation	9	(355)	(597)

Profit for the year (attributable to equity shareholders)	5	126,500	133,542

Total comprehensive income for the year (attributable to equity shareholders)		126,500	133,542

Basic earnings per share	12	78.3p	85.0p

Diluted earnings per share	12	78.0p	84.4p

EPRA earnings per share are shown in Note 12.

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

Consolidated Balance Sheet 31 March 2019
	Note	2019 £000	2018 £000
Non-current assets
Investment property	14a	1,354,430	1,245,142
Investment property under construction	14a	91,115	58,157
Interests in leasehold property	14a	18,774	22,929
Plant, equipment and owner-occupied property	14b	2,939	3,092
Intangible assets	14c	1,433	1,433
Investment in associates	14d	11,053	9,276
Capital Goods Scheme receivable	16	1,332	2,385
Derivative financial instruments	18c	581	1,704

		1,481,657	1,344,118
Current assets
Inventories		282	283
Trade and other receivables	16	20,356	18,586
Cash and cash equivalents		17,902	6,853

		38,540	25,722

Total assets		1,520,197	1,369,840

Current liabilities
Trade and other payables	17	(41,649)	(36,828)
Borrowings	19	(2,598)	(2,474)
Obligations under finance leases	21	(1,625)	(2,061)

		(45,872)	(41,363)

Non-current liabilities
Borrowings	19	(333,279)	(326,461)
Obligations under finance leases	21	(17,149)	(20,868)

		(350,428)	(347,329)

Total liabilities		(396,300)	(388,692)

Net assets		1,123,897	981,148

Equity
Share capital	22	16,667	15,857
Share premium account		111,514	46,362
Reserves		995,716	918,929

Equity shareholders' funds		1,123,897	981,148

The financial statements were approved by the Board of Directors and authorised for issue on 20 May 2019. 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 2019

	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 2018	15,857	46,362	74,950	1,795	843,203	(1,019)	981,148
Total comprehensive income for the year	-	-	-	-	126,500	-	126,500
Issue of share capital	810	65,152	-	-	-	-	65,962
Dividend	-	-	-	-	(52,058)	-	(52,058)
Credit to equity for equity-settled share based payments	-	-	-	-	2,345	-	2,345

At 31 March 2019	16,667	111,514	74,950	1,795	919,990	(1,019)	1,123,897

The other non-distributable reserve arose in the year ended 31 March 2015 following the placing of 14.35 million ordinary shares.

Year ended 31 March 2018

	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 2017	15,788	45,462	74,950	1,795	753,374	(1,019)	890,350
Total comprehensive income for the year	-	-	-	-	133,542	-	133,542
Issue of share capital	69	900	-	-	-	-	969
Dividend	-	-	-	-	(46,183)	-	(46,183)
Credit to equity for equity-settled share based payments	-	-	-	-	2,470	-	2,470

At 31 March 2018	15,857	46,362	74,950	1,795	843,203	(1,019)	981,148

Consolidated Cash Flow Statement Year ended 31 March 2019
	Note	2019 £000	2018 £000
Cash generated from operations	26	81,997	73,457
Interest paid		(10,021)	(9,724)
Interest received		25	13
Tax paid		(195)	(769)

Cash flows from operating activities		71,806	62,977

Investing activities
Purchase of non-current assets		(83,038)	(41,959)
Proceeds on part disposal of investment property		-	650
Receipts from Capital Goods Scheme		1,876	2,786
Investment in associate	14d	-	(900)
Dividend received from associates	14d	550	446

Cash flows from investing activities		(80,612)	(38,977)

Financing activities
Issue of share capital		65,962	969
Payment of finance lease liabilities		(1,075)	(1,109)
Equity dividends paid	11	(52,058)	(46,183)
Payment to cancel interest rate derivative		-	(3,374)
Increase in borrowings		7,026	25,644

Cash flows from financing activities		19,855	(24,053)

Net increase/(decrease) in cash and cash equivalents		11,049	(53)

Opening cash and cash equivalents		6,853	6,906

Closing cash and cash equivalents		17,902	6,853

Notes to the financial statements

Year ended 31 March 2019

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 financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2019 or 2018 but is derived from those accounts. Statutory accounts for 2018 have been delivered to the registrar of companies, and those for 2019 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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 2018. The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2018 have been applied in this condensed set of financial statements, with the exception of the adoption of IFRS 9, IFRS 15 and Amendments to IFRS 2 and IAS 40. The adoption of these standards has not had a material impact on the Group's financial statements.

Going concern

A review of the Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the 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 2020 and projections contained in the longer term business plan which covers the period to March 2023. The Directors have carefully considered 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.

	2019 £000	2018 £000
Open stores
Self storage income	104,072	97,717
Insurance income	13,019	12,418
Packing materials income	2,707	2,716
Other income from storage customers	1,420	1,360
Ancillary store rental income	492	524
	121,710	114,735
Other revenue
Non-storage income	1,561	950
Management fees earned	2,143	975
Total revenue	125,414	116,660

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):

	Note	2019 £000	2018 £000
	N
Depreciation of plant, equipment and owner-occupied property		712	729
Depreciation of interest in leasehold properties	14a	1,075	1,109
Gain on the revaluation of investment property		(58,898)	(71,635)
Profit on part disposal of investment property		-	(650)
Cost of inventories recognised as an expense		1,057	1,043
Employee costs (see note 6)		16,910	16,306
Operating lease rentals		144	127

b) Analysis of auditor's remuneration:

	2019 £000	2018 £000

Fees payable to the Company's auditor for the audit of the Company's annual accounts	188	156
Fess payable to the Company's auditor for the subsidiaries' annual accounts	27	32

Total audit fees	215	188

Audit related assurance services - interim review	33	30

Total non-audit fees	33	30

Fees payable to KPMG 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 KPMG LLP to the Group's associates, Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited in the year amounted to £51,000 (2018: £45,000) which all related to audit services.

6. Employee costs

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

	2019 Number	2018 Number

Sales	292	284
Administration	55	51

	347	335

At 31 March 2019 the total number of Group employees was 395 (2018: 375).
	2019 £000	2018 £000
Their aggregate remuneration comprised:
Wages and salaries	12,009	11,377
Social security costs	2,025	1,913
Other pension costs	531	546
Share-based payments	2,345	2,470

	16,910	16,306

7. INVESTMENT income

	2019 £000	2018 £000

Bank interest receivable	25	13
Unwinding of discount on Capital Goods Scheme receivable	142	231
Total interest receivable	167	244

Change in fair value of interest rate derivatives	-	1,294
Total investment income	167	1,538

8. Finance costs

	2019 £000	2018 £000

Interest on bank borrowings	9,926	9,817
Capitalised interest	(765)	(360)
Interest on obligations under finance leases	915	992

Total interest payable	10,076	10,449

Refinancing costs	-	1,526
Fair value movement on derivatives	1,123	-
Total finance costs	11,199	11,975

The refinancing costs in the prior year related to the unamortised loan arrangement costs of the previous bank facility which was extinguished, and the write-off of the costs of the new bank facility per IAS 39.

9. TaxATION

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

Finance (No.2) Bill 2015 provided that the rate of corporation tax for the 2017 Financial Year (commencing 1 April 2017) would be 19% and that the rate from 1 April 2020 will 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%. This rate was incorporated in Finance Act 2016 which was fully enacted on 15 September 2016.

UK current tax	2019 £000	2018 £000
- Current year	318	546
- Prior year	37	51
	355	597

A reconciliation of the tax charge is shown below:

	2019 £000	2018 £000

Profit before tax	126,855	134,139
Tax charge at 19% (2018 - 19%) thereon	24,102	25,486
Effects of:
Revaluation of investment properties	(11,191)	(13,734)
Share of profit of associates	(338)	(260)
Other permanent differences	(1,645)	(1,374)
Profits from the tax exempt business	(10,025)	(9,176)
Utilisation of brought forward losses	-	(11)
Movement on other unrecognised deferred tax assets	(585)	(385)
Current year tax charge	318	546
Prior year adjustment	37	51
Total tax charge	355	597

At 31 March 2019 the Group has unutilised tax losses of £34.2 million (2018: £34.2 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10. Adjusted Profit

	2019 £000	2018 £000

Profit before tax	126,855	134,139
Gain on revaluation of investment properties - wholly owned	(58,898)	(71,635)
- in associate (net of deferred tax)	(1,605)	(724)
Change in fair value of interest rate derivatives - Group	1,123	(1,294)
- in associate	(10)	(60)
Gain on part disposal of investment property	-	(650)
Refinancing costs	-	1,526
Share of associate acquisition costs written off	-	120

Adjusted profit before tax	67,465	61,422
Tax	(355)	(597)
Adjusted profit after tax	67,110	60,825

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 disposal of investment property, and non-recurring items of income and expenditure have been disclosed as, in the Board's view, this provides a clearer understanding of the Group's underlying trading performance.

11. Dividends

	2019 £000	2018 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2018 of 15.5p (2017: 14.1p) per share.	24,417	22,107
Interim dividend for the year ended 31 March 2019 of 16.7p (2018: 15.3p) per share.	27,641	24,076
	52,058	46,183
Proposed final dividend for the year ended 31 March 2019 of 16.5p (2018: 15.5p) per share.	27,319	24,417

Subject to approval by shareholders at the Annual General Meeting to be held on 19 July 2019, the final dividend will be paid on 26 July 2019. The ex-div date is 20 June 2019 and the record date is 21 June 2019.

The Property Income Dividend ("PID") payable for the year is 29.2 pence per share (2018: 27.5 pence per share).

12. Earnings per share

	Year ended 31 March 2019			Year ended 31 March 2018
	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic	126.5	161.5	78.3	133.5	157.1	85.0
Dilutive share options	-	0.6	(0.3)	-	1.0	(0.6)

Diluted	126.5	162.1	78.0	133.5	158.1	84.4
Adjustments:
Gain on revaluation of investment properties	(58.9)	-	(36.3)	(71.6)	-	(45.3)
Change in fair value of interest rate derivatives	1.1	-	0.7	(1.3)	-	(0.8)
Gain on part disposal of investment property	-	-	-	(0.6)	-	(0.4)
Refinancing costs	-	-	-	1.5	-	1.0
Share of associate non-recurring gains and losses	(1.6)	-	(1.0)	(0.7)	-	(0.4)

EPRA - diluted	67.1	162.1	41.4	60.8	158.1	38.5

EPRA - basic	67.1	161.5	41.5	60.8	157.1	38.7

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

EPRA earnings and earnings per ordinary share have been disclosed to give a clearer understanding of the Group's underlying trading performance.

13. NET ASSETS PER SHARE

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 2019 £000	31 March 2018 £000
Basic net asset value	1,123,897	981,148
Exercise of share options	1,609	1,105
EPRA NNNAV	1,125,506	982,253

Adjustments:
Fair value of derivatives	(581)	(1,704)
Fair value of derivatives - share of associate	7	17
Share of deferred tax in associates	1,120	794

EPRA NAV	1,126,052	981,360

Basic net assets per share (pence)	678.9	623.2
EPRA NNNAV per share (pence)	673.9	616.8
EPRA NAV per share (pence)	674.2	616.2

EPRA NAV (as above) (£000)	1,126,052	981,360
Valuation methodology assumption (see note 15) (£000)	83,784	77,706

Adjusted net asset value (£000)	1,209,836	1,059,066
Adjusted net assets per share (pence)	724.4	665.0

	No. of shares	No. of shares
Shares in issue	166,665,158	158,570,574
Own shares held in EBT	(1,122,907)	(1,122,907)
Basic shares in issue used for calculation	165,542,251	157,447,667
Exercise of share options	1,468,145	1,798,494
Diluted shares used for calculation	167,010,396	159,246,161

Net assets per share are equity shareholders' funds divided by the number of shares at the year end. The shares currently held in the Group's Employee Benefit Trust are excluded from both net assets and the number of shares. Adjusted net assets per share include the effect of those shares issuable under employee share option schemes and the effect of alternative valuation methodology assumptions (see note 15).

14. 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 2017	1,154,390	36,115	23,601	1,214,106
Additions	8,147	33,012	-	41,159
Adjustment to present value	-	-	437	437
Transfer on opening of store	9,710	(9,710)	-	-
Revaluation (see note 15)	72,895	(1,260)	-	71,635
Depreciation	-	-	(1,109)	(1,109)

At 31 March 2018	1,245,142	58,157	22,929	1,326,228
Additions	35,785	47,563	-	83,348
Acquisition of freehold	-	-	(3,130)	(3,130)
Adjustment to present value	-	-	50	50
Transfer on opening of store	14,545	(14,545)	-	-
Revaluation (see note 15)	58,958	(60)	-	58,898
Depreciation	-	-	(1,075)	(1,075)

At 31 March 2019	1,354,430	91,115	18,774	1,464,319

The interest in leasehold properties represents the present value of minimum lease payments for leasehold properties - see note 21 for further details of the finance lease creditor.

During the year, the Group acquired the freehold of its New Malden store. The acquisition of the freehold causes an extinguishment of the interest in leasehold property which is shown as a credit in the table above.

During the prior year the Group sold land at its Richmond store to an adjoining landowner for £650,000. The valuation of the store was not impacted by this disposal, hence the full proceeds were recorded as profit on part disposal of investment property. This was eliminated from the Group's adjusted profit for the prior year.

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 £0.8 million of capitalised interest (2018: £0.4 million), calculated at the Group's average borrowing cost for the year of 2.9%. 56 of the Group's investment properties are pledged as security for loans, with a total external value of £1,111.2 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 2017	2,189	97	649	32	1,431	4,398
Retirement of fully depreciated assets	-	(30)	(79)	-	(584)	(693)
Additions	8	7	121	-	469	605

At 31 March 2018	2,197	74	691	32	1,316	4,310
Retirement of fully depreciated assets	-	-	(100)	-	(838)	(938)
Additions	38	-	81	-	440	559

At 31 March 2019	2,235	74	672	32	918	3,931

Depreciation
At 31 March 2017	(409)	(50)	(265)	(7)	(451)	(1,182)
Retirement of fully depreciated assets	-	30	79	-	584	693
Charge for the year	(42)	(2)	(123)	(7)	(555)	(729)

At 31 March 2018	(451)	(22)	(309)	(14)	(422)	(1,218)
Retirement of fully depreciated assets	-	-	100	-	838	938
Charge for the year	(43)	(2)	(139)	(7)	(521)	(712)

At 31 March 2019	(494)	(24)	(348)	(21)	(105)	(992)

Net book value
At 31 March 2019	1,741	50	324	11	813	2,939

At 31 March 2018	1,746	52	382	18	894	3,092

c) Intangible assets

The intangible asset relates to the Big Yellow brand, which was acquired through the acquisition of Big Yellow Self Storage Company Limited in 1999. The carrying value remains unchanged from the prior year as there is considered to be no impairment in the value of the asset. The asset has an indefinite life and is tested annually for impairment or more frequently if there are indicators of impairment.

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. Both companies are incorporated, registered and operate in England and Wales. Their registered office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT.

	Armadillo 1		Armadillo 2		Total
	31 March 2019 £000	31 March 2018 £000	31 March 2019 £000	31 March 2018 £000	31 March 2019 £000	31 March 2018 £000
At the beginning of the year	5,730	5,048	3,546	2,404	9,276	7,452
Subscription for capital	-	-	-	900	-	900
Share of results (see below)	1,364	937	963	433	2,327	1,370
Dividends	(290)	(255)	(260)	(191)	(550)	(446)

Share of net assets	6,804	5,730	4,249	3,546	11,053	9,276

The Group's total subscription for partnership capital and advances in Armadillo 1 is £1,920,000 and £2,689,000 in Armadillo 2.

The investment properties owned by Armadillo 1 and Armadillo 2 have been valued at 31 March 2019 and 31 March 2018 by Jones Lang LaSalle.

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 1		Armadillo 2
	Year ended 31 March 2019 £000	Year ended 31 March 2018 £000	Year ended 31 March 2019 £000	Year ended 31 March 2018 £000
Statement of comprehensive income (100%)
Revenue	9,178	8,188	5,879	4,576
Cost of sales	(4,751)	(4,247)	(2,781)	(1,919)
Administrative expenses	(1,272)	(282)	(144)	(136)
Operating profit	3,155	3,659	2,954	2,521
Gain on the revaluation of investment properties	5,926	3,264	3,727	1,196
Net interest payable	(996)	(938)	(964)	(813)
Acquisition costs written off	-	(375)	-	(227)
Fair value movement of interest rate derivatives	48	147	2	154
Deferred and current tax	(1,314)	(1,074)	(904)	(664)
Profit attributable to shareholders	6,819	4,683	4,815	2,167
Dividends paid	(1,451)	(1,275)	(1,301)	(957)
Retained profit	5,368	3,408	3,514	1,210
Balance sheet (100%)
Investment property	60,450	53,176	42,500	38,205
Interest in leasehold properties	1,385	1,403	2,929	3,233
Other non-current assets	1,196	1,149	2,051	1,989
Current assets	1,547	1,177	1,101	1,480
Current liabilities	(4,088)	(2,842)	(2,538)	(2,367)
Derivative financial instruments	(4)	(52)	(32)	(34)
Non-current liabilities	(26,468)	(25,361)	(24,769)	(24,778)
Net assets (100%)	34,018	28,650	21,242	17,728

Group share
Operating profit	631	732	591	504
Gain on the revaluation of investment properties	1,185	653	746	239
Net interest payable	(199)	(187)	(193)	(163)
Acquisition costs written off	-	(75)	-	(45)
Fair value movement of interest rate derivatives	10	29	-	31
Deferred and current tax	(263)	(215)	(181)	(133)
Profit attributable to shareholders	1,364	937	963	433
Dividends paid	(290)	(255)	(260)	(191)
Retained profit	1,074	682	703	242
Associates' net assets	6,804	5,730	4,249	3,546

Included within administrative expenses in Armadillo 1 in the current year is a performance fee payable to Big Yellow of £1 million.

15. VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000	Revaluation on deemed cost £000	Valuation £000
Freehold stores
At 31 March 2018	602,840	599,012	1,201,852
Transfer from investment property under construction	18,806	(4,261)	14,545
Transfer from leasehold stores	4,008	2,232	6,240
Movement in year	35,604	58,849	94,453
At 31 March 2019	661,258	655,832	1,317,090

Leasehold stores
At 31 March 2018	16,577	26,713	43,290
Transfer to freehold stores	(4,008)	(2,232)	(6,240)
Movement in year	181	109	290
At 31 March 2019	12,750	24,590	37,340

Total of open stores
At 31 March 2018	619,417	625,725	1,245,142
Transfer from investment property under construction	18,806	(4,261)	14,545
Movement in year	35,785	58,958	94,743
At 31 March 2019	674,008	680,422	1,354,430

Investment property under construction
At 31 March 2018	66,726	(8,569)	58,157
Transfer to investment property	(18,806)	4,261	(14,545)
Movement in year	47,563	(60)	47,503
At 31 March 2019	95,483	(4,368)	91,115

Valuation of all investment property
At 31 March 2018	686,143	617,156	1,303,299
Movement in year	83,348	58,898	142,246
At 31 March 2019	769,491	676,054	1,445,545

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 2019 by external valuers, Cushman & Wakefield ("C&W"). The valuation has been carried out in accordance with the RICS Valuation - Global 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 third 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 2015 there have only been fifteen transactions involving multiple assets and a further fifteen single asset transactions. C&W state that due to the lack of comparable market information in the self storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during more active market conditions.

Portfolio Premium

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

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 74 trading stores (both freeholds and leaseholds) open at 31 March 2019 averages 84.7% (31 March 2018: 83.6%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. The average time assumed for the 74 stores to trade at their maturity levels is 17 months (31 March 2018: 16 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 74 stores is 6.4% (31 March 2018: 6.5%) rising to a stabilised net yield pre-administration expenses of 6.7% (31 March 2018: 6.9%). The weighted average exit capitalisation rate adopted (for both freeholds and leaseholds) is 6.2% (31 March 2018: 6.3%).

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 9.3% (31 March 2018: 9.4%).

E. Purchaser's costs in the range of circa 6.1% to circa 6.8% (see below) have been assumed initially, reflecting the 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 and long leasehold 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 13.9 years (31 March 2018: 14.0 years unexpired).

Sensitivities

As noted in 'Significant judgements and key estimates', self storage valuations are complex, derived from data which is not widely publicly available and involve a degree of judgement. For these reasons we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. Inputs to the valuations, some of which are 'unobservable' as defined by IFRS 13, include capitalisation yields, stable occupancy rates, and rental growth rates. The existence of an increase of more than one unobservable input would augment the impact on valuation. The impact on the valuation would be mitigated by the inter-relationship between unobservable inputs moving in opposite directions. For example, an increase in stable occupancy may be offset by an increase in yield, resulting in no net impact on the valuation. A sensitivity analysis showing the impact on valuations of changes in yields and stable occupancy is shown below.

	Impact of a change in capitalisation rates		Impact of a change in stabilised occupancy assumption
	25 bps decrease	25 bps increase	1% increase	1% decrease
Reported Group	£52.5m	(£48.3m)	£19.2m	(£19.8m)

A sensitivity analysis has not been provided for a change in the rental growth rate adopted as there is a relationship between this measure and the discount rate adopted. So, in theory, an increase in the rental growth rate would give rise to a corresponding increase in the discount rate and the resulting value impact would be limited.

Investment properties under construction

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. Eight 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, three 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. 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 have been transactions where immature low cash flow stores have been traded as part of a group or portfolio transaction. Please note C&W's comments above 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 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 an additional valuation on the above basis, and this results in a higher property valuation at 31 March 2019 of £1,528.6 million (£83.1 million higher than the value recorded in the financial statements). The total valuations in the two Armadillo Partnerships performed by Jones Lang LaSalle are £3.6 million higher than the value recorded in the financial statements, of which the Group's share is £0.7 million. The sum of these is £83.8 million and translates to 50.2 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation (see note 13).

16. TRADE AND OTHER RECEIVABLES

	31 March 2019 £000	31 March 2018 £000
Current
Trade receivables	4,528	3,684
Capital Goods Scheme receivable	1,195	1,876
Other receivables	307	287
Prepayments and accrued income	14,326	12,739

	20,356	18,586
Non-current
Capital Goods Scheme receivable	1,332	2,385

Trade receivables are net of a bad debt provision of £30,000 (2018: £14,000). 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 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 £302,000 (2018: £329,000) 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 20 days past due (2018: 21 days past due).

Ageing of past due but not impaired receivables

	2019 £000	2018 £000
1 - 30 days	241	264
30 - 60 days	33	30
60 + days	28	35

Total	302	329

Movement in the allowance for doubtful debts

	2019 £000	2018 £000
Balance at the beginning of the year	14	7
Amounts provided in year	140	114
Amounts written off as uncollectible	(124)	(107)

Balance at the end of the year	30	14

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

	2019 £000	2018 £000
1 - 30 days	8	-
30 - 60 days	4	2
60 + days	18	12

Total	30	14

17. TRADE AND OTHER PAYABLES

	31 March 2019 £000	31 March 2018 £000
Current
Trade payables	15,522	12,739
Other payables	9,319	7,710
Accruals and deferred income	16,808	16,379

	41,649	36,828

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

18. Financial Instruments

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group's debt facilities require 40% 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 statement of comprehensive income ("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:

	2019 £000	2018 £000

Debt	(337,625)	(330,599)
Cash and cash equivalents	17,902	6,853
Net debt	(319,723)	(323,746)
Balance sheet equity	1,123,897	981,148
Net debt to equity ratio	28.4%	33.0%

B. Debt management

The Group currently borrows through a senior term loan, secured on 26 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 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 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 2019 the Group had two interest rate derivatives in place; £30 million fixed at 0.4% (excluding the margin on the underlying debt instrument) until October 2021, and £35 million fixed at 0.76% (excluding the margin on the underlying debt instrument) until June 2023.

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. A reconciliation of the movement in derivatives is provided in the table below:

	2019 £000	2018 £000

At 1 April	1,704	(2,964)
Fair value movement in the year	(1,123)	1,294
Cancellation of interest rate derivative	-	3,374
At 31 March	581	1,704

The table below reconciles the opening and closing balances of the Group's finance related liabilities for the current and prior year.

	Loans	Finance leases	Interest rate derivatives	Total

At 1 April 2018	(330,599)	(22,929)	1,704	(351,824)
Cash movement in the year	(7,026)	1,075	-	(5,951)
Non-cash movements	-	3,080	(1,123)	1,957
At 31 March 2019	(337,625)	(18,774)	581	(355,818)

	Loans	Finance leases	Interest rate derivatives	Total

At 1 April 2017	(304,955)	(23,601)	(2,964)	(331,520)
Cash movement in the year	(25,644)	1,109	3,374	(21,161)
Non-cash movements	-	(437)	1,294	857
At 31 March 2018	(330,599)	(22,929)	1,704	(351,824)

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 2019, it is estimated that an increase of 0.25 percentage points in interest rates would have reduced the Group's adjusted profit before tax and net equity by £469,000 (2018: reduced adjusted profit before tax by £445,000) and a decrease of 0.25 percentage points in interest rates would have increased the Group's adjusted profit before tax and net equity by £469,000 (2018: increased adjusted profit before tax by £445,000). The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings, net of interest rate swaps, at the year end.

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

E. Cash management and liquidity

Ultimate responsibility for liquidity risk management rests with the Board of Directors, 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 56,000 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.

2019 Maturity
	Total £000	Less than one year £000	One to two years £000	Two to five years £000	More than five years £000

Debt
Aviva loan	85,125	2,598	2,728	9,032	70,767
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	152,500	-	-	152,500	-
Debt fixed by interest rate derivatives	30,000	-	-	30,000	-
Total	337,625	2,598	2,728	261,532	70,767

2018 Maturity
	Total £000	Less than one year £000	One to two years £000	Two to five years £000	More than five years £000

Debt
Aviva loan	87,599	2,474	2,598	8,601	73,926
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	143,000	-	-	143,000	-
Debt fixed by interest rate derivatives	30,000	-	-	30,000	-
Total	330,599	2,474	2,598	181,601	143,926

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 present 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 derivatives, as detailed in note 18C, have been estimated by calculating the present value of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as defined by IFRS 7. There are no financial instruments which have been categorised as Level 1 or Level 3. The fair value of the Group's debt equates to its book value.

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:

2019	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000

From five to twenty years	-	-	82,110	20,394	102,504
From two to five years	-	(307)	286,926	4,959	291,578
From one to two years	-	(168)	12,453	1,653	13,938

Due after more than one year	-	(475)	381,489	27,006	408,020
Due within one year	24,841	(132)	12,453	1,653	38,815

Total	24,841	(607)	393,942	28,659	446,835

2018	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Finance leases £000	Total £000

From five to twenty years	-	(63)	159,548	23,709	183,194
From two to five years	-	(1,139)	207,092	6,285	212,238
From one to two years	-	(381)	11,855	2,095	13,569

Due after more than one year	-	(1,583)	378,495	32,089	409,001
Due within one year	20,449	(195)	11,855	2,095	34,204

Total	20,449	(1,778)	390,350	34,184	443,205

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.

2019	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years	70,767	9,922	1,421	82,110
From two to five years	261,532	25,067	327	286,926
From one to two years	2,728	9,725	-	12,453

Due after more than one year	335,027	44,714	1,748	381,489
Due within one year	2,598	9,855	-	12,453

Total	337,625	54,569	1,748	393,942

2018	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000

From five to twenty years	143,926	13,958	1,664	159,548
From two to five years	181,601	25,491	-	207,092
From one to two years	2,598	9,257	-	11,855

Due after more than one year	328,125	48,706	1,664	378,495
Due within one year	2,474	9,381	-	11,855

Total	330,599	58,087	1,664	390,350

19. BORROWINGS

Secured borrowings at amortised cost	31 March 2019 £000	31 March 2018 £000

Current liabilities
Aviva loan	2,598	2,474
	2,598	2,474
Non-current liabilities
Bank borrowings	182,500	173,000
Aviva loan	82,527	85,125
M&G loan	70,000	70,000
Unamortised loan arrangement costs	(1,748)	(1,664)

Total non-current borrowings	333,279	326,461

Total borrowings	335,877	328,935

The weighted average interest rate paid on the borrowings during the year was 2.9% (2018: 2.9%).

The Group has £27,500,000 in undrawn committed bank borrowing facilities at 31 March 2019, which expire between four and five years (2018: £37,000,000 expiring between four and five years).

The Group has a £100 million 15 year fixed rate loan with Aviva Commercial Finance Limited, expiring in April 2027. 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 Group has a secured £210 million five year revolving bank facility with Lloyds and HSBC expiring in October 2023, with a margin of 1.25%. The Group has an option to increase the amount of the loan facility by a further £60 million during the course of the loan's term, and an option to increase the term of the loan by a further year.

The Group has a £70 million seven year loan with M&G Investments Limited, with a bullet repayment in June 2023. 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.

The movement in the Group's loans are shown net in the cash flow statement as the bank loan is a revolving facility and is repaid and redrawn each month.

The Group was in compliance with its banking covenants at 31 March 2019 and throughout the year. The main covenants are summarised in the table below:

Covenant	Covenant level	At 31 March 2019
Consolidated EBITDA	Minimum 1.5x	8.3x
Consolidated net tangible assets	Minimum £250m	£1,124m
Bank loan income cover	Minimum 1.75x	12.9x
Aviva loan interest service cover ratio	Minimum 1.5x	4.4x
Aviva loan debt service cover ratio	Minimum 1.2x	2.8x
M&G income cover	Minimum 1.5x	8.2x

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 2019
Gross financial liabilities	337,625	187,500	150,125	2.9%	5.6 years	4.5 years

At 31 March 2018
Gross financial liabilities	330,599	178,000	152,599	2.9%	6.5 years	5.5 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 (£0.2 million), corporation tax losses (£4.4 million), capital allowances in excess of depreciation (£0.2 million) and capital losses (£1.4 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. A deferred tax liability in respect of interest rate swaps (£0.1 million) arising in the non-REIT taxable business has also not been recognised as the relevant entity has the legal right to settle the potential tax amounts on a net basis and these taxes are levied by the same taxing authority.

21. obligations under finance leases

	Minimum lease payments		Present value minimum of lease payments
	2019 £000	2018 £000	2019 £000	2018 £000

Amounts payable under finance leases:
Within one year	1,653	2,095	1,625	2,061
Within two to five years inclusive	6,612	8,380	5,796	7,390
Greater than five years	20,394	23,709	11,353	13,478

	28,659	34,184	18,774	22,929

Less: future finance charges	(9,885)	(11,255)

Present value of lease obligations	18,774	22,929

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

	Called up, allotted and fully paid
	2019 £000	2018 £000

Ordinary shares of 10 pence each	16,667	15,857

Movement in issued share capital
Number of shares at 31 March 2017		157,882,867
Exercise of share options - Share option schemes		687,707
Number of shares at 31 March 2018		158,570,574
Issue of shares - placing		7,204,301
Exercise of share options - Share option schemes		890,283
Number of shares at 31 March 2019		166,665,158

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

At 31 March 2019 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 2019	Number of ordinary shares 2018
11 July 2012	nil p **	11 July 2015	10 July 2022	5,359	5,359
19 July 2013	nil p **	19 July 2016	19 July 2023	7,059	7,059
29 July 2014	nil p**	29 July 2017	29 July 2024	2,400	10,155
16 March 2015	494.6p*	1 April 2018	1 October 2018	-	94,654
21 July 2015	nil p**	21 July 2018	21 July 2025	47,135	373,093
14 March 2016	608.0p*	1 April 2019	1 October 2019	36,075	37,489
22 July 2016	nil p**	22 July 2019	21 July 2026	392,262	398,825
15 March 2017	580.0p*	1 April 2020	1 October 2020	51,086	59,550
2 August 2017	nil p**	2 August 2020	1 August 2027	401,847	407,311
13 March 2018	675.4p*	1 April 2021	1 October 2021	98,852	108,335
24 July 2018	nil p**	24 July 2021	24 July 2028	356,703	-
11 March 2019	749.9p*	1 April 2022	1 October 2022	56,836	-

				1,455,614	1,501,830

* 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 (2018: 1,122,907), and no shares are held in treasury.

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 £2,345,000 (2018: £2,470,000).

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 as described in the Remuneration Report. The awards granted in 2004, 2005 and 2006 vested in full. The awards granted in 2007 and 2009 lapsed, and the awards granted in 2008 and 2010 partially vested. The awards granted in 2011, 2012, 2013, 2014 and 2015 fully vested. The weighted average share price at the date of exercise for options exercised in the year was £9.10 (2018: £7.25).

LTIP scheme	2019 No. of options	2018 No. of options

Outstanding at beginning of year	1,201,802	1,355,978
Granted during the year	410,340	582,341
Lapsed during the year	(27,504)	(70,434)
Exercised during the year	(371,873)	(666,083)

Outstanding at the end of the year	1,212,765	1,201,802

Exercisable at the end of the year	61,953	22,573

The weighted average fair value of options granted during the year was £1,365,000 (2018: £1,219,000).

Options outstanding at 31 March 2019 had a weighted average contractual life of 8.2 years (2018: 8.3 years).

Employee Share Save Scheme ("SAYE")	2019 No. of options	2019 Weighted average exercise price (£)	2018 No of options	2018 Weighted average exercise price (£)

Outstanding at beginning of year	300,028	5.91	223,823	5.36
Granted during the year	56,836	7.50	108,335	6.75
Forfeited during the year	(19,724)	6.26	(10,506)	5.89
Exercised during the year	(94,291)	4.95	(21,624)	4.43
Outstanding at the end of the year	242,849	6.63	300,028	5.91

Exercisable at the end of the year	-	-	-	-

Options outstanding at 31 March 2019 had a weighted average contractual life of 2.1 years (2018: 2.0 years).

The inputs into the Black-Scholes model for the options granted during the year are as follows:

	LTIP	SAYE
Expected volatility	n/a	19%
Expected life	3 years	3 years
Risk-free rate	0.7%	0.7%
Expected dividends	4.1%	3.9%

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

Deferred bonus plan

The Executive Directors receive awards under the Deferred Performance Plan. This is accounted for as an equity instrument. The plan was set up in July 2018. The vesting criteria and scheme mechanics are set out in the Directors' Remuneration Report. No awards over equity instruments had been made at 31 March 2019.

24. capital commitments

At 31 March 2019 the Group had £13.4 million of amounts contracted but not provided in respect of the Group's properties (2018: £13.7 million of capital commitments).

25. Events after the balance sheet date

In April 2019, the Group acquired a property in Slough for a new self storage centre. The Group also sold an existing plot of land in Slough on the same date.

In April 2019 the Group also completed on the acquisition of a property in Hayes.

26. CASH FLOW NOTES

a) Reconciliation of profit after tax to cash generated from operations

	Note	2019 £000	2018 £000
Profit after tax		126,500	133,542
Taxation		355	597
Share of profit of associates		(2,327)	(1,370)
Investment income		(167)	(1,538)
Finance costs		11,199	11,975
Operating profit		135,560	143,206

Gain on the revaluation of investment properties	14a, 15	(58,898)	(71,635)
Gain on part disposal of investment property		-	(650)
Depreciation of plant, equipment and owner-occupied property	14b	712	729
Depreciation of finance lease capital obligations	14a	1,075	1,109
Employee share options	6	2,345	2,470
Cash generated from operations pre working capital movements		80,794	75,229

Decrease in inventories		1	-
Increase in receivables		(1,874)	(1,352)
Increase/(decrease) in payables		3,076	(420)
Cash generated from operations		81,997	73,457

b) Reconciliation of net cash flow movement to net debt

	Note	2019 £000	2018 £000

Net increase/(decrease) in cash and cash equivalents in the year		11,049	(53)
Cash flow from increase in debt financing		(7,026)	(25,644)

Change in net debt resulting from cash flows		4,023	(25,697)

Movement in net debt in the year		4,023	(25,697)
Net debt at the start of the year		(323,746)	(298,049)

Net debt at the end of the year	18A	(319,723)	(323,746)

27. Related party transactions

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

Transactions with Armadillo Storage Holding Company Limited

As described in note 14, the Group has a 20% interest in Armadillo Storage Holding Company Limited ("Armadillo 1"), and entered into transactions with Armadillo 1 during the year on normal commercial terms as shown in the table below.

Transactions with Armadillo Storage Holding Company 2 Limited

As described in note 14, the Group has a 20% interest in Armadillo Storage Holding Company 2 Limited ("Armadillo 2"), and entered into transactions with Armadillo 2 during the year on normal commercial terms as shown in the table below.

	31 March 2019 £000	31 March 2018 £000
Fees earned from Armadillo 1	1,735	705
Fees earned from Armadillo 2	408	270
Balance due from Armadillo 1	124	89
Balance due from Armadillo 2	19	33

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 £33,000 (2018: £37,000).

No other related party transactions took place during the years ended 31 March 2019 and 31 March 2018.

28. GLOSSARY

Adjusted earnings growth	The increase in adjusted eps year-on-year
Adjusted eps	Adjusted profit after tax divided by the diluted weighted average number of shares in issue during the financial year.
Adjusted NAV	EPRA NAV adjusted for an investment property valuation carried out at purchasers' costs of 2.75%.
Adjusted Profit Before Tax	The Company's pre-tax EPRA earnings measure with additional Company adjustments.
Average net achieved rent per sq ft	Storage revenue divided by average occupied space over the financial year.
Average rental growth	The growth in average net achieved rent per sq ft year-on-year
BREEAM	An environmental rating assessed under the Building Research Establishment's Environmental Assessment Method.
Carbon intensity	Carbon emissions divided by the Group's average occupied space.
Closing net rent per sq ft	Annual storage revenue generated from in-place customers divided by occupied space at the balance sheet date.
Debt	Long-term and short-term borrowings, as detailed in note 19, excluding finance leases and debt issue costs.
Earnings per share (eps)	Profit for the financial year attributable to equity shareholders divided by the average number of shares in issue during the financial year.
EBITDA	Earnings before interest, tax, depreciation and amortisation.
EPRA	The European Public Real Estate Association, a real estate industry body. This organisation has issued Best Practice Recommendations with the intention of improving the transparency, comparability and relevance of the published results of listed real estate companies in Europe.
EPRA earnings	The IFRS profit after taxation attributable to shareholders of the Company excluding investment property revaluations, gains/losses on investment property disposals and changes in the fair value of financial instruments.
EPRA earnings per share	EPRA earnings divided by the average number of shares in issue during the financial year.
EPRA NAV per share	EPRA NAV divided by the diluted number of shares at the year end.
EPRA net asset value	IFRS net assets excluding the mark-to-market on interest rate derivatives effective cash flow as deferred taxation on property valuations where it arises. It is adjusted for the dilutive impact of share options.
EPRA NNNAV	The EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations.
Equity	All capital and reserves of the Group attributable to equity holders of the Company.
Gross property assets	The sum of investment property and investment property under construction.
Gross value added	The measure of the value of goods and services produced in an area, industry or sector of an economy.
Interest cover	The ratio of operating cash flow divided by interest paid (before exceptional finance costs, capitalised interest and changes in fair value of interest rate derivatives). This metric is provided to give readers a clear view of the Group's financial position.
Like-for-like occupancy	Excludes the closing occupancy of new stores acquired, opened or closed in the current financial year in both the current financial year and comparative figures. In 2019 this excludes Wapping (opened in July 2018) and Battersea (closed for redevelopment in March 2019).
Like-for-like revenue	Excludes the impact of new stores acquired, opened or stores closed in the current or preceding financial year in both the current year and comparative figures. This excludes Guildford Central (opened in March 2018), Wapping (opened in July 2018) and Battersea (closed for redevelopment in March 2019).
LTV (loan to value)	Net debt expressed as a percentage of the external valuation of the Group's investment properties.
Maximum lettable area (MLA)	The total square foot (sq ft) available to rent to customers. The prior year MLA has been restated for the 25,000 sq ft extension to the existing Wandsworth store, which came on-line in May 2018. The closing occupancy % has been recalculated on this basis.
Move-ins	The number of customers taking a storage room in the defined period.
Move-outs	The number of customers vacating a storage room in the defined period.
NAV	Net asset value.
Net debt	Gross borrowings less cash and cash equivalents.
Net initial yield	The forthcoming financial year's net operating income expressed as a percentage of capital value, after adding notional purchaser's costs.
Net promoter score (NPS)	The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others. The Company measures NPS based on surveys sent to all of its move-ins and move-outs.
Net rent per sq ft	Storage revenue generated from in place customers divided by occupancy.
Occupancy	The space occupied by customers divided by the MLA expressed as a %.
Occupied space	The space occupied by customers in sq ft.
Pipeline	The Group's development sites.
Property Income Distribution (PID)	A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax exempt property rental business and which is taxable for UK-resident shareholders at their marginal tax rate.
REIT	Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK rental income and gains arising on UK investment property sales, subject to certain conditions.
REVPAF	Total store revenue divided by the average maximum lettable area in the financial year.
Store EBITDA	Store earnings before interest, tax, depreciation and amortisation.
Total shareholder return (TSR)	The growth in value of a shareholding over a specified period, assuming dividends are reinvested to purchase additional units of shares.

Ten Year Summary

	2019 £000	2018 £000	2017 £000	2016 £000	2015 £000	2014 £000	2013 £000	2012 £000	2011 £000	2010 £000
Results
Revenue	125,414	116,660	109,070	101,382	84,276	72,196	69,671	65,663	61,885	57,995

Operating profit before gains and losses on property assets	76,662	70,921	65,316	59,854	48,420	39,537	37,454	35,079	32,058	29,068

Cash flow from operating activities	71,806	62,977	55,974	55,467	42,397	32,752	30,186	27,388	23,534	19,063

Profit/(loss) before taxation	126,855	134,139	99,783	112,246	105,236	59,848	31,876	(35,551)	6,901	10,209

Adjusted profit before taxation	67,465	61,422	54,641	48,952	39,405	29,221	25,471	23,643	20,207	16,514

Net assets	1,123,897	981,148	890,350	829,387	750,914	594,064	552,628	494,500	544,949	547,285

Diluted EPRA earnings per share	41.4p	38.5p	34.5p	31.1p	27.1p	20.5p	19.3p	18.2p	15.5p	13.0p
Declared total dividend per share	33.2p	30.8p	27.6p	24.9p	21.7p	16.4p	11.0p	10.0p	9.0p	4.0p

Key statistics
Number of stores open	74	74	73	71	69	66	66	65	62	60
Sq ft occupied (000)	3,810	3,730	3,551	3,363	3,178	2,832	2,632	2,458	2,130	1,915
Occupancy increase in year 000 sq ft)*	80	179	188	185	346	200	174	328	215	140
Number of customers	56,000	55,000	52,500	50,000	47,250	41,800	38,500	36,300	32,800	30,500
Average number of employees during the year	347	335	329	318	300	289	286	279	273	252

* - the occupancy growth in 2015 and 2017 includes the acquisition of existing stores

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR AMMRTMBATBRL

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