RESULTS FOR THE YEAR ENDED 31 MARCH 2023

Big Yellow Group PLC

22 May 2023

Big Yellow Group PLC

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

Results for the YEAR ended 31 MARCH 2023

HIGHLIGHTS

Resilient results against the backdrop of a challenging macroeconomic and geopolitical environment

Financial metrics	Year ended 31 March 2023	Year ended 31 March 2022	Change
Revenue	£188.8m	£171.3m	10%
Store revenue⁽¹⁾	£186.7m	£169.3m	10%
Like-for-like store revenue^(1,2)	£162.9m	£151.8m	7%
Store EBITDA⁽¹⁾	£134.0m	£120.9m	11%
Adjusted profit before tax⁽¹⁾	£106.0m	£96.8m	10%
EPRA earnings per share⁽¹⁾	56.5p	52.5p	8%
Dividend - final - total	22.9p 45.2p	21.4p 42.0p	7% 8%
Statutory metrics
Profit before tax	£75.3m	£698.9m	(89%)
Cash flow from operating activities (after net finance costs and pre-working capital movements)⁽³⁾	£109.2m	£99.3m	10%
Basic earnings per share	40.1p	385.4p	(90%)
Store metrics
Store Maximum Lettable Area ("MLA")⁽¹⁾	6,292,000	6,098,000	3%
Closing occupancy (sq ft)⁽¹⁾	5,088,000	5,107,000	(0.4%)
Closing occupancy⁽¹⁾	80.9%	83.7%	(2.8 ppts)
Occupancy - like-for-like stores (%)^(1,2)	84.0%	86.0%	(2.0 ppts)
Average occupancy⁽¹⁾	83.7%	86.7%	(3.0 ppts)
Closing net rent per sq ft⁽¹⁾	£32.48	£29.92	9%
Like-for-like average net achieved rent per sq ft^(1,2)	£33.31	£30.35	10%
Like-for-like closing net rent per sq ft^(1,2)	£34.60	£31.80	9%

¹ See note 28 for glossary of terms

² The like-for-like metrics exclude stores opened and acquired in the current and preceding financial years, and the Armadillo stores

³ See reconciliation in Financial Review

Highlights

•	Revenue growth of 10%, reflecting new stores and an additional three months of Armadillo (acquired 1 July 2021)
•	Like-for-like store revenue is up 7%, mainly from increases in average achieved rents
•	Like-for-like occupancy decrease of 2.0 ppts to 84.0% (March 2022: 86.0%). Closing occupancy, reflecting the additional capacity from five recently opened stores, is down 2.8 ppts
•	Like-for-like average achieved net rent per sq ft increased by 10% year on year, like-for-like closing net rent up 9% from March 2022
•	Overall store EBITDA margin increased to 71.8% (2022: 71.1%)
•	Cash flow from operating activities (after net finance costs and pre-working capital movements) increased by 10% to £109.2 million
•	Adjusted profit before tax up 10% to £106.0 million, EPRA earnings per share up 8% to 56.5p
•	45.2 pence per share full year dividend, an increase of 8%
•	Statutory profit before tax of £75.3 million, down from £698.9 million in the prior year, which included a revaluation surplus of £597 million. This year open store valuations were up 1%, offset by write-downs on development assets, resulting in a deficit of £30 million
•	Refinancing of £120 million seven-year M&G loan and new longer-term $225 million shelf facility with Pricoa Private Capital
•	SBTi targets externally verified, £4.7 million invested in solar retro-fit, 53 stores now have solar with a 94% increase in capacity in the year to 4.5 Megawatts

Investment in new capacity

•	193,000 sq ft of capacity added in the year, with two new stores opened in London (Harrow and Kingston North), and an operating store acquired in Aberdeen
•	Acquisition of freehold property on Old Kent Road, London taking the pipeline to 11 development sites of approximately 0.9 million sq ft (15% of current MLA), of which nine are in London, and 1.2 million of fully built unlet space available
•	Further progress to reduce our short leasehold exposure on a few remaining stores. Acquisition of freehold sites at Farnham Road, Slough and Staples Corner, London to build replacement stores, and we acquired the freehold of our Oxford store
•	Planning consent granted for new stores in Staines (West London) and Farnham Road, Slough; we now have seven pipeline stores with planning
•	Initial tenders on our proposed Slough Farnham Road facility have been encouraging and hence we will be commencing on site at Slough this Summer, with further construction starts to follow later in the year, subject to planning and vacant possession

Nicholas Vetch CBE, Executive Chairman of Big Yellow, commented:

"We are pleased to have delivered these results despite an increasingly familiar year of macroeconomic, political and geopolitical volatility. Our pricing models to new and existing customers have successfully mitigated the impacts of higher inflation, delivering improved average achieved rents, which have been the main driver of revenue growth. Underpinning our resilience is our core strategy to invest significantly in the London market, which has seen the strongest performance, driven by both domestic and business customers, over the last year. We have also been successful in controlling overall increases in store operating expenses to 4% on a like-for-like basis, resulting in improved operating margins.

Big Yellow's business model has been built on the assumption of interest rates being higher than the very low levels that persisted following the Global Financial Crisis until last year.

We will create incremental income through the building of new stores to generate cash on cash returns of 8% or more and the acquisition of existing assets to generate returns of 9% or more.

We are confident that the existing platform of stores will continue to provide a resilient stream of income, with scope for increase including from the pipeline of new stores. Most importantly, we believe the business model is fit for purpose in this new environment."

ABOUT US

Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 108 stores, including 24 stores branded as Armadillo Self Storage. We have a pipeline of 0.9 million sq ft comprising 11 proposed Big Yellow self storage facilities. The current maximum lettable area of the existing platform (including Armadillo) is 6.3 million sq ft. When fully built out the portfolio will provide approximately 7.2 million sq ft of flexible storage space. 99% of our stores and sites by value are held freehold and long leasehold, with the remaining 1% 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 stores, with excellent customer service, a market-leading online platform, and significant and increasing investment in sustainability, has created in Big Yellow the most recognised brand name in the UK self storage industry.

CHAIRMAN'S STATEMENT

Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's brand leader in self storage, is pleased to announce its results for the year ended 31 March 2023.

We are pleased to have delivered these results despite an increasingly familiar year of macroeconomic, political and geopolitical volatility. Our pricing models to new and existing customers have successfully mitigated the impacts of higher inflation, delivering improved average achieved rents, which have been the main driver of revenue growth. Underpinning our resilience is our core strategy to invest significantly in the London market, which has seen the strongest performance, driven by both domestic and business customers, over the last year. We have also been successful in controlling overall increases in store operating expenses to 4% on a like-for-like basis, resulting in improved operating margins.

We have also continued to invest in our business with the acquisition of an operating store in Aberdeen, a property in a strategic location on the Old Kent Road, London, and have opened a further two stores in Harrow and North Kingston. Since the onset of the pandemic, the Group has opened seven new stores, which, coupled with the acquisitions of Aberdeen and the remaining 80% interest in Armadillo, increase the Group's MLA by 1.6 million sq ft, or 34%. These new stores have been an important contributor to our overall revenue growth of 10% for the year and we have 1.2 million sq ft of fully built unlet space in the existing portfolio.

Financial results

Revenue for the year was £188.8 million (2022: £171.3 million), an increase of 10%. Like-for-like store revenue growth (see note 28) was 7% driven by improvements in average net rent. Like-for-like store revenue excludes new store openings and acquired stores (including the remaining interest of Armadillo portfolio which we acquired in July 2021, and Aberdeen acquired in June 2022).

Store revenue for the fourth quarter was £46.1 million, an increase of 6% from £43.6 million for the same quarter last year.

The business continues to be highly cash generative, with operating cash flow (after net finance costs and pre-working capital movements) increasing by £9.9 million (10%) to £109.2 million for the year (2022: £99.3 million).

We are very proud to have delivered adjusted profits in excess of £100 million for the first time since the business was founded nearly 25 years ago. The adjusted profit before tax in the year was £106.0 million up 10% from £96.8 million in 2022. EPRA earnings per share increased by 8% to 56.5p (2022: 52.5p) with an equivalent 8% increase in the dividend per share for the year.

The Group's statutory profit before tax was £75.3 million, a decrease of 89% from £698.9 million in the prior year. There was a very significant increase in the valuation of our investment portfolio last year, and this year the valuations have remained relatively flat, with an increase of 1% on the open store portfolio. However, the overall portfolio valuation is down by £30 million, as a result of a £57.5 million reduction in the value of our industrial property and land without self storage planning in the development pipeline, reflective of the new financing conditions and wider market environment for land. The Financial Review and note 15 contains further details on the Group's investment property valuation.

Investment in new capacity

In June 2022 the Group acquired an existing self storage centre in Aberdeen for £10 million, and this together with the new stores opened in Harrow and Kingston North (both in London) added 193,000 sq ft to the Group's capacity.

A key aspect of the Big Yellow strategy is that our portfolio is to build or acquire high quality freehold stores to drive higher operating margins, with the business not subject to continual increases in industrial rent liabilities, and to have control of all aspects of our estate. We are therefore pleased to have continued this with the following three additional investments in the last year as follows:

‑	we acquired a prime site on Farnham Road in Slough, which now has planning for a 62,000 sq ft self storage centre. As part of this transaction, the Group has also agreed to the surrender of the lease on its existing similar capacity Slough store. We are currently out to tender, and expect to start construction this Summer, with an opening in 2024, at which point customers from the existing store will be transferred and the lease surrendered;
‑	in December we acquired a 2.1 acre freehold site in Staples Corner, London for £13.25 million. The site is located close to our existing leasehold 112,000 sq ft store at Staples Corner and is currently let on a short-term basis. Our intention is to seek planning consent for a 130,000 sq ft store on the new site. Following construction of the new store, we will transfer the customers from the existing store to the new location, and then seek to assign the lease; and
‑	we acquired the freehold of our Oxford store for £13.5 million in September. The 1.8 acre site includes two small industrial trade units, which will provide vacant possession in 2030 and the opportunity to intensify the use.

After a 15 year search, the Group acquired a freehold property on Old Kent Road, London. The property, currently let to Iceland Foods, has a passing rent of £388,000 with six years remaining on their lease. We will be seeking planning consent for a 75,000 sq ft self storage centre on the site. This is a medium-term strategic opportunity in an area of London going through significant regeneration. The timing of construction and opening is dependent on planning and vacant possession.

On the planning front, we have secured a resolution to grant planning consent for an approximately 65,000 sq ft self storage centre and approximately 100,000 sq ft of capacity across nine industrial units, at our site in Staines.

We are currently on site constructing our new store in Kings Cross which opens in June 2023. In May 2022, we decided to put on hold any future construction commitments, given the uncertainties around pricing in the construction market and our need to secure fixed price contracts. That decision appears to have been opportune; conditions in the construction market are improving to our benefit, labour shortages persist, but steel, cladding and other materials are sharply down in cost (albeit from significant increases between 2020 and 2022). Preliminaries and contractor margins have additionally reduced. The recent tender on one of our Slough development sites is encouraging. The Slough store will commence on site this Summer and we will be restarting the roll-out of projects with planning, some of which are subject to vacant possession, later this year.

We now have a pipeline of 11 proposed self storage facilities. These store openings are expected to add approximately 0.9 million sq ft of storage space to the portfolio, an increased capacity of 15%.

The total development cost of these 11 new stores is £366 million, with costs incurred to date of £180 million, and cost to complete of approximately £186 million. We estimate they will generate net operating income at stabilisation of £31.5 million at today's prices, representing an 8.6% return on cost. The replacement stores for Slough and Staples Corner will cost a further £31 million, with Slough Farnham Road starting construction this year, and Staples Corner subject to planning.

Harrow

Much less helpfully, in May 2022 we announced the conditional sale of the industrial scheme at Harrow. The project has been plagued with setbacks including the main contractor falling into administration. The conditions necessary to effect the sale to the prospective purchaser have not been met and therefore the sale will not proceed.

We intend now to retain the asset, complete the outstanding construction works with a newly appointed contractor, with an anticipated completion in August of this year, and proceed with the lettings of the 11 industrial units ourselves. The project shows a healthy surplus value despite it having been a frustrating and costly process, but that said, newly built multi-let industrial unit schemes in London are relatively scarce and we are confident it will therefore generate further value over the next few years.

Capital structure

Net debt is £486.6 million at 31 March 2023, with an average of cost of 4.7%, and interest cover of 7.7 times (2022: 10.5 times). The clear strategy has been to have low relative levels of debt, and reflective of that, a flexible hedging structure, which we will continue.

Dividends

The Group's dividend policy is to distribute a minimum of 80% of full year adjusted earnings per share. The final distribution of PID declared is 22.9 pence per share. This brings the total distribution declared for the year to 45.2 pence per share representing an increase of 8% from 42.0 pence per share last year.

Our people

We continue to believe that any successful business requires the creation of a fully engaged employee culture and this has always been a key focus within Big Yellow. As mentioned earlier, this has been a challenging year, with continued uncertainty, and we know that to deliver such a resilient performance requires highly engaged and motivated people throughout the business.

Customer service and feedback is also a fundamental success factor. Our customer net promoter scores ("NPS") were an average of 78.9 over the year. NPS scores at these levels are highly unusual and a good reflection of the culture of this business.

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

Outlook

The central question facing Boards, particularly in capital intensive businesses such as real estate, is: does the business model work in a higher interest rate environment? Big Yellow's business model has been built on the assumption of interest rates being higher than the very low levels that persisted following the Global Financial Crisis until last year.

The commitment to relatively low levels of debt and the established flexible debt management strategy remains precisely the same. The floating portion of our debt has proved more costly in recent months but has previously worked to our advantage. Over the cycle, we remain confident that it strikes the right balance.

We will create incremental income through the building of new stores to generate cash on cash returns of 8% or more and the acquisition of existing assets to generate returns of 9% or more.

As always, we make no comment on likely outcomes for the economy, we leave that to the experts. We are, however, confident that the existing platform of stores will continue to provide a resilient stream of income, with scope for increase including from the pipeline of new stores. Most importantly, we believe the business model is fit for purpose in this new environment.

Nicholas Vetch CBE

Executive Chairman
22 May 2023

CHIEF EXECUTIVE'S STATEMENT

Trading

We are pleased to have delivered a set of results that are testament to the underlying resilience of our business. The significant increase in interest rates to tackle higher inflation and tighter mortgage borrowing conditions following the Russian invasion of Ukraine, added to by the negative headlines and volatility around the UK economy last Autumn, does, as we've said in the past, have an impact on our demand at the margin, particularly for those making bigger ticket decisions.

Over the year there has been a significant increase in the cost of living, driven by energy, fuel and food inflation, which is having a disproportionate impact on those with lower incomes. However, we have not seen that distress come through to our customer base, where bad debts have not increased from last year, and our aged debtors remain below their pre-Covid levels. Unemployment remains at very low levels and our customers on the whole are storing goods or individual possessions that are of value to them, and our customer base is largely comprised of those from higher income groups.

Self storage is not immune to these external shocks and resultant uncertainty, but this performance alongside our track record since the Global Financial Crisis, demonstrates our ability to navigate these headwinds. Finally, as with last year, we are seeing a return to occupancy growth in May, with an improving demand picture.

People

As ever, our progress reflects the steadfast commitment of our people who have worked extremely hard this year.

After seeing elevated levels of staff turnover post-Covid in the second half of 2021 and the first half of 2022, we have seen a consistent improvement and overall our levels of staff turnover are now in line with the pre-Covid period. Very pleasingly, the level of vacancies in the business is at historic lows, with a significant drop in leavers in the final quarter.

Salary increases last year were on average 5.3%, with average bonuses of 10%, and we have recently awarded an average salary increase from 1 April of 5.6%. Recognising that our employees at the lower end of our pay scales have seen a disproportionate impact from rising prices, we made two cost of living payments over the Winter, principally in Customer Service and the stores. This was very well received.

Given the investment we have made in recent years in the automation of our store operations, particularly in relation to interaction with prospects and customers, we continue to review every vacancy before making a decision to recruit with a view to achieving savings this year through the salary line. Automation is also relevant to many other aspects of our business, including head office functions and we currently have a moratorium in place on any further recruitment with the bias being towards technological advance. As with the stores, we will continue to review staffing levels at our Bagshot headquarters.

Our brand is now our biggest recruitment tool, with direct recruitment through various digital channels now representing 80%, with 20% through more traditional agencies.

In addition to gender, we have made significant improvements to our culture and practices in respect of diversity, and these are set out in our Gender and Inclusivity Report, which is available on our corporate website, and has been formally filed for 2022. Inclusivity and Diversity in our business is very much driven by a committee of colleagues from throughout the business and is something that will remain a focus, as we believe diversity has a positive impact on culture and performance.

We continue to invest in development, as this has benefits, not just around performance, but also around retention. We moved much of our training to a new learning and development platform over the Covid period and this has had significant improvements to efficiency of delivery, monitoring, and control and hence outcomes. Other new initiatives such as "Meet our Experts" using internal talent, and a new updated mystery shopping programme following feedback from the stores are further examples. In addition, following our 2021 engagement survey, we have taken 19 actions covering areas such as rotas, store bonus metrics, internal communication, store cover, store feedback, development, training, benefits, and others. The next survey is taking place currently and hopefully this response will result in continued high levels of engagement with the survey.

Investment in our operating platform and systems

The march of automation in business continues, and we have focussed on investing in technology to improve efficiency right from when Big Yellow was founded. We have always invested in the security and automation of our stores, allowing access out of opening hours, and this is something we continue to upgrade and improve as security is always very high up in the considerations of anyone looking to use self storage.

The arrival of search and smartphones, along with investments we have made in software development and external SaaS programmes means that our prospect and customer interactions and experience are unrecognisable from twenty years ago. Our stores have been paperless since 2020 and we continue to invest in automating certain repetitive tasks to improve productivity in our day-to-day store operations. Examples of this currently in process are credit card payments and prospect handling, the latter to allow our digital platforms to do more around prospect and customer interaction.

The improvements to our Big Yellow mobile and desktop platforms are incremental and continuous and now allow a prospect to determine the unit size required, get a quote, and reserve a room in a matter of minutes. Customers can now check-in online before arriving at the store, and this process has reduced significantly the time taken to process a move-in, with a simple ID check, discussion around contents cover, and then payment. As previously mentioned, we will always look to optimise the use of our resource at stores, however, we will always need someone on site for a certain number of hours in the day principally to carry out key tasks, one of the most important being the security and protection of our assets, which cannot be done just by using CCTV cameras, particularly in large, busy stores. At the same time, when on site, our store team members provide customer service, particularly to our business customers who are more regular visitors; carry out the necessary due diligence around security and health and safety; keep the stores clean and presentable; drive ancillary sales; and follow up on prospects, particularly for those who have reserved. Although IDs are uploaded during the check-in online process, it is our policy to see the original and ensure the customer moving-in is the same person. This is not just about the security of our assets, it is also important for our customers when visiting our stores, often alone, that those in the building have been vetted in some way.

Automation and the use of SaaS programmes are also something we invest in to improve efficiency of many of our centralised functions, and by way of example, the progress we have made in our finance function has allowed us to maintain control of headcount, despite the significant increase in the size of the business.

Generative AI is the current hot topic, and we are reviewing how it can help us improve efficiency, particularly in relation to some of our head office functions, such as people and development and, marketing. We will continue to monitor, review and adopt where it makes commercial sense and improves efficiency within the business.

The cyber threat remains, and we continue to invest in our digital security, and review the effectiveness of all the tools we deploy.

In relation to our estate, we have invested around £3 million over the last two to three years upgrading the security across the portfolio, including improving monitoring of our stores centrally overnight. We consider security to be fundamental to our customer offering both to the customer and in relation to their goods, equipment or personal possessions. Maintaining our estate is something we also believe strongly in and have invested £4.7 million this year on the repair and maintenance of our stores, all of which is expensed through the Income Statement.

ESG

One of our key strategic objectives is around sustainability and the ESG framework. As part of this, a key objective is to be Net Renewable Energy Positive by 2030. This will be achieved through the investment in solar across our estate and we have completed 23 of the initial 36 retrofit solar installations to date with a total of 53 stores now having solar. In addition, we are looking to put solar on our Armadillo stores with surveys currently taking place. The investment in solar, not only being good for the planet, is reducing our reliance on external energy supply. Our current installed solar capacity is 4.5 Megawatts, an increase of 94% over the year. We estimate that this is currently saving the business £0.5 million per year. This will continue to increase as we make further progress towards our objective of being self-sufficient in energy.

We have completed a rigorous process with the Science Based Targets initiative to have our targets certified by them, and these are reported in more detail in the ESG section. Our focus will now be working towards achieving these over the coming seven years. Scope 1 and Scope 2 are within our control, and for the Scope 3 targets, we will need to engage significantly with our supplier network.

There is an important requirement in relation to the energy efficiency of commercial real estate with a deadline in 2025 for all buildings to have A to C EPC certification. This is increasingly becoming relevant for valuers and indeed purchasers of existing self storage centres. We have recently had all of our buildings assessed and 98% comply, with two Armadillo stores rated D. We have planned investment in these stores, including solar, which we believe will improve their energy efficiency ratings. This is a pleasing result, and reflective of the fact that most of our portfolio is developed from scratch and is largely purpose-built.

Given the human rights concerns we had around the supplier of our solar panels, with a move to a new Norwegian supplier at the end of 2021, we have this year carried out a Supply Chain Risk assessment and engaged with the top 80% of our value chain. Key areas for consideration were around slavery and human rights more generally. We believe that it is important to have a like-minded supply change consistent with the Big Yellow culture, and this is something we will continue to progress over the coming years.

I am delighted to be able to announce that since its formation in 2017, the Big Yellow Foundation has made grants to our charity partners of £762,000, all of whom focus on the rehabilitation of vulnerable people into work. Following a review, our relationship with two of these seven charities has come to an end after five years and we are in the process of replacing them. Working Chance is the first of our new charity partners and is the only UK charity working to help women with convictions find employment. We are also in discussions with Supporting Wounded Veterans, a charity focussing on those who are physically and mentally wounded to move forward with rehabilitation into employment. We continue to run work placements and were very pleased over the year to have candidates coming into our business for job experience recommended by Street League, Breaking Barriers, and the Down's Syndrome Association.

Finally, and very importantly, we have always tried to provide free and discounted space to charities serving local communities to our stores, and our community investment over the last year has been approximately £271,000.

Summary

Our investment case remains to provide consistent compounding returns from both income and growth from a secure capital structure, and the key constituents of our business model developed over the last twenty plus years are set out below:

‑	a high quality and growing portfolio of freehold properties delivering higher operating margins;
‑	a focus on London and the South East and other large urban conurbations, where the drivers in the self storage market are at their strongest and the barriers to competition are at their highest;
‑	continuing innovation and automation;
‑	an inclusive and non-hierarchical culture with a highly engaged team;
‑	a focus on delivering the highest levels of customer service;
‑	delivering on our strong ESG commitments;
‑	the UK's leading self storage brand, with high and growing public awareness and online strength; and
‑	strong cash flow generation from a secure capital structure.

Jim Gibson

Chief Executive Officer

22 May 2023

OPERATING REVIEW

The store platform and demand

We now have a portfolio of 108 open and trading stores, with a current maximum lettable area of 6.3 million sq ft.

Self storage demand is spread across a diverse set of drivers, and is largely driven by need, with security, convenience, quality of product, service and location being key factors. 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 expenditure and customer use.

‑	customers renting storage space whilst moving represented 41% of move-ins during the year (2022: 41%), with homeowners representing 27% and renters 14%. The rental market was impacted during the pandemic, and we do expect the proportion of renters to increase to more normal levels offsetting some of the slowdown in the owner-occupied market as we adjust to higher costs of mortgages;
‑	11% of our customers who moved in took storage space as a spare room for decluttering (2022: 12%);
‑	37% of our customers used the product because some event had occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited possessions, are getting together, or separating, are students who need storage during the holidays, or homeowners developing into their lofts or basements (2022: 34%);
‑	the balance of 11% of our new customer demand during the year came from businesses (2022: 13%), who stay longer and represent around 20% of our customers in store at any one time, occupying 37% of the space.

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 37% of our space is businesses.

The average space occupied by business customers at the year-end is 179 sq ft (2022: 180 sq ft). Domestic customers occupy on average 59 sq ft (2022: 59 sq ft) and pay on average 18% more in rent per sq ft (2022: 21%), however business customers do stay longer and take more space and represent around 33% of revenue (2022: 32%).

The pandemic accelerated many structural changes that were already occurring, such as the move to online retailing and an increase in working from home facilitated by technological advances. The deindustrialisation of big cities with the conversion of commercial space into residential and other uses, has led to a shortage of suitable flexible mini-warehouse space from which to operate small scale storage and e-fulfilment, particularly in London. These developments, along with businesses increasingly seeking flexible office and storage space rather than longer inflexible leases, have been driving our demand. We believe these are long-term structural trends, which will benefit our business going forward.

From research we have previously carried out, a typical small business using storage employs around three people and 60% of them are early-stage businesses and for 50% of them this is their only space.

In addition, we have a dedicated national customers team for businesses who wish to occupy space in multiple stores. These customers on average occupy approximately 900 sq ft, paying £25,000 per annum, and are billed and managed centrally. This area has performed strongly in the year with revenue up 16% compared to the prior year, making up 4% to 5% of occupied space.

Activity

The table below shows the quarterly move-in and move-out activity over the year for all of our stores:

	Total move-ins Year ended 31 March 2023	Total move-ins Year ended 31 March 2022	%	Total move-outs Year ended 31 March 2023	Total move-outs Year ended 31 March 2022	%
April to June	23,427	24,401	(4)	18,620	18,023	3
July to September	27,126	25,712	5	28,867	27,425	5
October to December	19,368	19,428	-	23,302	22,890	2
January to March	18,878	18,553	2	18,519	18,451	-
Total	88,799	88,094	1	89,308	86,789	3

The table above is indicative of what we have experienced over the year, which is more muted trading conditions, with activity levels broadly flat. The first quarter last year benefited from the tapering off of the stamp duty holiday on 1 July 2021 which accelerated housing-related demand. The year-on-year fall would have been greater had we not seen a record performance from students in June this year, following the reopening of all campuses in the last academic year. The Group's move-outs increased in the second quarter by 5% compared to last year, largely as a result of these students moving out. Move-ins and move-outs over the second half of the year were broadly in line with the prior year.

The occupancy of the stores fell over the year by 58,000 sq ft (2022: fall of 69,000 sq ft). Additionally, the Group acquired a 53,000 sq ft store in Aberdeen, which had occupancy of 39,000 sq ft at the date of acquisition. The overall decrease in the Group's occupancy over the year was therefore 19,000 sq ft.

The Group grew occupancy over the first six months of the financial year, with the gains principally coming from our domestic and student customers. In our seasonally weakest third quarter, we lost 3.8 ppts of occupancy, similar to the prior year. Our fourth quarter started well with a strong January, but has been relatively muted since. We believe this to be partially as a result of the uncertainty caused by the US regional bank crisis and customers continuing to acclimatise to a higher cost of debt environment. We can say that move-out levels are also subdued at the moment, and as mentioned previously, we are not seeing stress amongst our customers. We saw a similar hesitancy in demand in the prior year following the Russian invasion of Ukraine, with activity levels returning to more normal levels by the end of May 2022.

The 75 established Big Yellow stores are 84.2% occupied compared to 86.8% at the same time last year. The 9 developing Big Yellow stores added 113,000 sq ft of occupancy over the year to reach closing occupancy of 60.4%. The 24 Armadillo stores are 76.9% occupied, compared to 83.1% at this time last year. Overall store occupancy was 80.9% (2022: 83.7%).

	Occupancy 31 March 2023 %	Occupancy change in year 000 sq ft	Occupancy 31 March 2023 000 sq ft	Occupancy 31 March 2022 000 sq ft
75 established Big Yellow stores	84.2%	(74)	3,979	4,053
9 developing Big Yellow stores	60.4%	113	352	239
All 84 Big Yellow stores	81.6%	39	4,331	4,292
24 Armadillo stores	76.9%	(58)	757	815
All 108 stores	80.9%	(19)	5,088	5,107

All stores are trading profitably at the EBITDA level, with our most recent openings Harrow and Kingston North reaching break even in April 2023.

Yield management

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. Rental growth can also be driven through sub-dividing larger rooms into smaller rooms, which yield a higher net rent per sq ft.

In the more muted trading environment against the backdrop of higher inflation, we have been increasing promotions to new customers, and achieving higher average rate growth from existing customers who stay with us longer term. Many customers move-in and out of our business over relatively short periods and don't receive any price increases.

The average achieved net rent per sq ft increased by 10% compared to the prior year, with closing net rent up 9% compared to 31 March 2022. The table below shows the change in net rent per sq ft for the portfolio by average occupancy over the year (on a non-weighted basis). The analysis excludes our most recent store openings.

Average occupancy in the year	Number of stores	Net rent per sq ft growth from April 2022 to March 2023	Net rent per sq ft growth from April 2021 to March 2022
70% to 85%	47	8.3%	10.8%
85% to 90%	47	8.7%	11.7%
Above 90%	7	9.7%	13.0%

The self storage market

In the recently published 2023 Self Storage Association UK Survey, only 44% of those surveyed had a reasonable or good awareness of self storage. Furthermore, only 9% of the 2,102 adults surveyed were currently using self storage or were thinking of using self storage in the next year. Our research has this figure of awareness at around 56%, compared to 51% for the SSA survey last year. Self storage is therefore not a commoditised product, such as hotels, taxis, cinemas etc, and it will take many years of use and growing awareness before it becomes so, particularly given the subdued growth in new supply.

Growth in new facilities across the industry has been largely in regional areas of the UK and particularly in smaller towns. Historically, new supply creation in our core markets in London and the South East, has been difficult, with high land values driven by competing uses such as residential and urban industrial. In London in the year to 31 December 2022, there were five new store openings, including three Big Yellow stores. We are aware of seven planned store openings in London in calendar year 2023, including our landmark 103,000 sq ft Kings Cross store.

The Self Storage Association ("SSA") estimates that the UK industry is made up of approximately 1,492 self storage facilities and 739 purely container operations, providing 55.5 million sq ft of self storage space, equating to 0.82 sq ft per person in the UK. This compares to 9.4 sq ft per person in the US, 1.9 sq ft per person in Australia and 0.17 sq ft for mainland Europe, where the roll-out of self storage is a more recent phenomenon (sources: UK Self Storage Association Surveys, May 2020, and May 2023 and FEDESSA European Self Storage Annual Survey 2022).

Marketing and operations

Our marketing strategy focuses on building our market-leading brand awareness further and using it to maximise the cost-efficient generation of enquiries, customer move-ins and user satisfaction through our digital platforms. Our strong brand and continued digital investment and innovation has helped us create a market-leading website which delivers over 90% of our enquiries.

Our annual YouGov survey (published April 2023) again confirmed that the brand awareness of Big Yellow remained ahead of other UK operators in the sector. The survey shows our unprompted brand awareness to be nearly five times higher than our nearest competitor across the UK.

The Big Yellow website allows users to browse different room sizes, obtain a price, reserve online and check-in online prior to arriving at the stores which are automated in terms of access once a customer moves-in.

The online customer experience also allows customers to communicate with us in real-time via Live Chat, WhatsApp, or Facebook Messenger. The comprehensive online FAQs provide our users with another way to ask questions they may have about the service without needing to call us directly. This is critical because approximately 70% of our new customers have not used self storage before.

The seamless digital experience continues with our online check-in platform. This allows customers to complete the majority of their move-in process remotely. They can upload their photo and identity documents, sign the full customer licence, set up authorised persons, complete their storage inventory and set up a paperless Direct Debit - all done remotely. This check-in online capability has significantly cut down the time our customers need to spend in our receptions when they move-in. The final process is completed through our in-store digital signature pads.

We also offer the ability to purchase boxes and packing materials through our online BoxShop store. These items can be home delivered or made available for our Click and Collect service from stores.

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.

Search engines are the most important acquisition tool for us, accounting for the majority of traffic to our website. Our focus for a competitive advantage on search continues and search engine optimisation ("SEO") work has helped us to maintain high organic listings for popular generic and local self storage related search terms. This in turn drives the growth and cost efficiencies of acquiring new prospects.

Brand search terms are also a valuable driver of enquiries for Big Yellow and help improve the efficiencies of our cost per enquiry. 34% of all traffic generated from search engines to our website originated from "Big Yellow" brand searches in the year. This clearly indicates that brand is important in driving higher levels of prospects and customer referrals, leading to improved operational efficiencies. We have demonstrated this through significant improvements in the performance of existing storage centres following their acquisition, re-branding, and assimilation into our business.

Search engine marketing remains our largest source of paid for web traffic. Ongoing website optimisation and an engaging user experience through our digital platforms helps ensure we maximise the conversion of these web visits into enquiries and then customers. Digital display advertising enables us to regionally target audiences in the market for self storage, raising consideration of the service and the Big Yellow brand through engaging creatives.

Online customer reviews and social media

Supporting our values of putting the customer at the heart of our business, our online customer reviews generate real-time feedback from customers and provide positive word of mouth referral to our website 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 customer reviews on the Big Yellow website which currently total over 44,000 averaging 4.8 out of 5.

The Big Impressions programme also generates customer feedback on their move-in and move-out experience. These customer reviews and mystery shop results are transparently accessible across the business and helps reinforce our focus on outstanding customer service. Over the year, we have achieved an average net promoter score of 78.9, which is a very strong consumer-facing benchmark result.

We also gain real-time customer feedback from over 19,000 Google Reviews averaging 4.7 out of 5. These help to enhance our visibility within local search listings conveying trust in the Big Yellow brand. Additionally, we have over 3,700 reviews from the independent review site TrustPilot. These reviews average a 4.6 out of 5-star rating, labelled as "Excellent" on the TrustPilot ratings scale. We monitor our customer reviews and respond where necessary for customer service reasons or to manage our online reputation and improve our service offering.

Social media continues to be complementary to our existing marketing channels. Big Yellow actively posts content across Twitter, Facebook and Instagram which help to raise awareness of our ESG activities. These social channels are also used by customers to connect with us and are monitored in real-time, enabling us to respond promptly to any enquiries. The Big Yellow LinkedIn platform is used to communicate company achievements, ESG initiatives and our company culture and the Big Yellow YouTube channel is used to allow web prospects to experience our stores online through our video guides to self storage.

We will continue to invest in improving the customer experience and user journey across all our digital marketing channels and also in-store operations to achieve higher levels of automation and hence efficiencies in the business.

ESG

Last year we developed a long-term strategy to become Net Renewable Energy Positive and deliver Net Zero Scope 1 and 2 Emissions targets, which will be funded with significant investment from the Group over the next few years. The main delivery vehicle for this new strategy will be the installation of solar generation capacity onto our existing store estate.

By 2025, we expect to have completed a multi-million pound investment in renewable energy generation both on the roofs of our estate and also at other locations. We published last year our Strategy document that sets out our Commitments, Actions and Timelines to become 100% Renewable Energy Positive and Net Zero Scope 1 and 2 Emissions by 2030.

The sustainability performance highlights for the year are:

‑	we have had our Science Based Targets externally verified;
‑	we have invested £4.7 million in our solar programme over the year and now have 53 stores with solar and have expanded the programme to all stores. Our current peak capacity has increased over the past two years from 0.9 Megawatts to 4.5 Megawatts;
‑	we have donated £271,000 in Community Investment. This consists of a combination of free and discounted space to worthy local charitable organisations and not-for-profits and we house different organisations, from foodbanks to small community groups to NHS partners and also BoxShop products donated;
‑	£204,000 has been raised for the Foundation from customer donations and employee fundraising including the matched contributions from the Company. These funds allowed us to make grants of £193,000 to our partner charities in the year;
‑	we have delivered five successful and all-round enriching work placements with Breaking Barriers, Street League and the Down's Syndrome Association;
‑	we have maintained our GRESB Green Star rating, achieved a B award from CDP and maintained our ISS indices rating; and
‑	we obtained our second EPRA sBPR Gold Award.

Cyber security and IT infrastructure

Cyber security remains high on the agenda within the Group, and we make investment where required in response to the ever-changing threat landscape. Using both external specialists and in-house knowledge we perform regular reviews of our cyber risk and security posture. Testing of both systems and people is carried out on a regular basis, including penetration testing and phishing simulations. During the year the Group's systems were subject to an external audit and maintained our IASME Gold certification. This also incorporates Cyber Essentials. The Board receives bi-monthly reports on the Group's IT infrastructure and information security. The Group has not experienced an information security breach in the past three years and has cyber insurance in place in the event that a breach should occur in the future.

Our Data Compliance Officer oversees our ongoing compliance with GDPR and PCI DSS. The role also includes Business Continuity and Crisis Communication management. Policies and procedures are under regular review and benchmarked against industry best practice. There are mandatory courses for all staff to complete both for Information Security and Data Protection. Our Infrastructure and Development teams continue to drive innovation and efficiencies throughout the Group.

Development pipeline

An important aspect of our external growth is the development of new stores, particularly in London, where there are very few existing assets suitable to be acquired. Over the last year, we added 193,000 sq ft of capacity through opening new stores in Harrow and Kingston North (both London) and acquiring an existing freehold store in Aberdeen. We are looking forward to opening our landmark Kings Cross store in June, which we expect to perform strongly.

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

Site	Location	Status	Anticipated capacity
Kings Cross, London	Prominent location on York Way	Store opening in June 2023.	103,000 sq ft
Wembley, London	Prominent location on Towers Business Park	Site acquired in October 2018. Planning consent granted. Discussions ongoing to secure vacant possession.	70,000 sq ft
Queensbury, London	Prominent location off Honeypot Lane	Site acquired in November 2018. Planning consent granted.	70,000 sq ft
Slough Bath Road	Prominent location on Bath Road	Site acquired in April 2019. Planning consent granted.	90,000 sq ft
Slough Farnham Road	Prominent location on Farnham Road	Site acquired in June 2022. Planning consent granted. Demolition completed and construction to commence in Summer 2023 with a view to opening in Summer 2024.	Replacement for existing leasehold store of a similar size
Wapping, London	Prominent location on the Highway, adjacent to existing Big Yellow	Site acquired in July 2020. Planning application refused. Appeal submitted with public inquiry set for July 2023 with decision likely in August 2023.	Additional 95,000 sq ft
Staines, London	Prominent location on the Causeway	Site acquired in December 2020. Planning consent granted. In addition, consent was received to develop 9 industrial units totalling 99,000 sq ft.	65,000 sq ft
Epsom, London	Prominent location on East Street	Site acquired in March 2021. Planning application submitted in September 2022. Application likely to be refused and an appeal submitted.	58,000 sq ft
Kentish Town, London	Prominent location on Regis Road	Site acquired in April 2021. Planning application submitted in December 2022. Application likely to be refused and an appeal submitted.	68,000 sq ft
West Kensington, London	Prominent location on Hammersmith Road	Site acquired in June 2021. Planning application submitted in February 2023.	175,000 sq ft
Old Kent Road, London	Prominent location on Old Kent Road	Site acquired in June 2022. Planning discussions underway with the local Council.	75,000 sq ft
Staples Corner, London	Prominent location on North Circular Road	Site acquired in December 2022. Planning discussions underway with the local Council.	Replacement for existing leasehold store, additional 18,000 sq ft
Newcastle	Prominent location on Scotswood Road	Planning consent granted.	60,000 sq ft
Total			947,000 sq ft

PORTFOLIO SUMMARY

	March 2023					March 2022⁽⁵⁾
	Big Yellow Established ⁽¹⁾	Big Yellow Developing	Total Big Yellow	Armadillo	Total	Big Yellow Established	Big Yellow Developing	Total Big Yellow	Armadillo ⁽²⁾	Total
Number of stores	75	9	84	24	108	74	7	81	24	105
At 31 March:
Total capacity (sq ft)	4,724,000	584,000	5,308,000	984,000	6,292,000	4,670,000	447,000	5,117,000	981,000	6,098,000
Occupied space (sq ft)	3,979,000	352,000	4,331,000	757,000	5,088,000	4,053,000	239,000	4,292,000	815,000	5,107,000
Percentage occupied	84.2%	60.4%	81.6%	76.9%	80.9%	86.8%	53.5%	83.9%	83.1%	83.7%
Net rent per sq ft	£34.66	£29.93	£34.28	£22.20	£32.48	£32.04	£26.26	£31.71	£20.45	£29.92
For the year:
REVPAF⁽³⁾	£33.19	£19.76	£31.84	£20.27	£30.02	£31.61	£16.75	£30.64	£19.83	£28.73
Average occupancy	87.0%	57.7%	84.0%	82.1%	83.7%	89.0%	56.8%	86.9%	86.0%	86.7%
Average annual net rent psf	£33.39	£29.10	£33.10	£21.33	£31.28	£30.63	£23.94	£30.35	£19.69	£28.48

	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Self storage income	136,925	8,809	145,734	17,177	162,911	127,313	4,426	131,739	18,137	149,876
Other storage related income ⁽³⁾	18,523	1,401	19,924	2,691	22,615	19,474	949	20,423	3,080	23,503
Ancillary store rental income	1,028	165	1,193	20	1,213	840	83	923	19	942
Total store revenue	156,476	10,375	166,851	19,888	186,739	147,627	5,458	153,085	21,236	174,321
Direct store operating costs (excluding depreciation)	(38,644)	(4,482)	(43,126)	(7,437)	(50,563)	(37,422)	(2,896)	(40,318)	(7,614)	(47,932)
Short and long leasehold rent⁽⁴⁾	(1,983)	-	(1,983)	(170)	(2,153)	(1,934)	-	(1,934)	(564)	(2,498)
Store EBITDA^(3,5)	115,849	5,893	121,742	12,281	134,023	108,271	2,562	110,833	13,058	123,891
Store EBITDA margin	74.0%	56.8%	73.0%	61.8%	71.8%	73.3%	46.9%	72.4%	61.5%	71.1%

Deemed cost	£m	£m	£m	£m	£m
To 31 March 2023	714.6	142.0	856.6	142.0	998.6
Capex to complete	-	0.8	0.8	-	0.8
Total	714.6	142.8	857.4	142.0	999.4

(1) The Big Yellow established stores have been open for more than three years at 1 April 2022, and the developing stores have been open for fewer than three years at 1 April 2022.

(2) Armadillo's Cheadle store was destroyed by fire in February 2022. It is excluded from the closing occupancy and capacity figures in the prior year, however its average occupancy, average net rent per sq ft, revenue and operating costs are included in the portfolio summary up to the date of the fire.

(3) See glossary in note 28.

(4) Rent under IFRS 16 for six short leasehold properties accounted for as investment properties and right-of-use assets under IFRS.

(5) The Group acquired the 80% of the Armadillo Partnerships that it did not previously own on 1 July 2021. The results of the stores in the Partnerships have been included in the results above for both years to give a clearer understanding of the performance of all stores. The table below shows the results excluding the period when the stores were not wholly owned:

	Year ended 31 March 2023			Year ended 31 March 2022
	Per above £000	Armadillo results as an associate £000	Statutory £000	Per above £000	Armadillo results as an associate £000	Statutory £000
Store revenue	186,739	-	186,739	174,321	(5,046)	169,275
Direct store operating costs	(50,563)	-	(50,563)	(47,932)	1,908	(46,024)
Rent	(2,153)	-	(2,153)	(2,498)	150	(2,348)
Store EBITDA	134,023	-	134,023	123,891	(2,988)	120,903

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

	Year ended 31 March 2023 £000			Year ended 31 March 2022 £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⁾	186,739	2,090	188,829	169,275	2,043	171,318
Cost of sales⁽⁷⁾	(50,563)	(3,744)	(54,307)	(46,024)	(4,359)	(50,383)
Rent⁽⁸⁾	(2,153)	2,153	-	(2,348)	2,348	-
	134,023	499	134,522	120,903	32	120,935

(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 right-of-use asset accounting principles. The amount included in gross profit is shown in the reconciling items in cost of sales.

Reconciliation of APMs

The table below reconciles the reported figures above to the like-for-like metrics the Group reports:

Like-for-like revenue

	Year ended 31 March 2023 £000	Year ended 31 March 2022 £000
Store revenue ⁹	186,739	169,275
Less revenue from non like-for-like stores ⁹	(23,889)	(17,475)
Like-for-like revenue ⁹	162,850	151,800

Like-for-like occupancy

	Year ended 31 March 2023	Year ended 31 March 2022
Store MLA (sq ft) ⁹	6,292,000	6,098,000
Less MLA from non like-for-like stores (sq ft) ⁹	(1,359,000)	(1,165,000)
Like-for-like MLA (sq ft) ⁹	4,933,000	4,933,000

Store occupancy (sq ft) ⁹	5,088,000	5,107,000
Less occupancy from non like-for-like (sq ft) ⁹	(944,000)	(865,000)
Like-for-like occupancy (sq ft) ⁹	4,144,000	4,242,000

Like-for-like occupancy (%) ⁹	84.0%	86.0%

(9) See glossary in note 28

FINANCIAL REVIEW

Revenue

Total revenue for the year was £188.8 million, an increase of £17.5 million (10%) from £171.3 million in the prior year. Like-for-like store revenue for the year was £162.9 million, an increase of 7% from the prior year (2022: £151.8 million). Like-for-like revenue excludes stores opened and acquired in the last two financial years, including the Armadillo stores, which the Group acquired in July 2021.

Included in store revenue is other storage related income, from the sale of packing materials, insurance/enhanced liability service ("ELS"), and storage related charges. This amounted to £22.6 million in the year (2022: £23.5 million).

The Group changed the way it sold contents protections to its customers on 1 June 2022 to an ELS, which is subject to VAT and not Insurance Premium Tax ("IPT"). Prior to 1 June 2022, IPT at 12% was paid to our insurance provider based on our total insurance revenue. We decided not to pass on the entirety of the 20% VAT on the new ELS to our customers, and hence gross ELS revenue from 1 June is lower by 8%. However, because we can recover VAT and are no longer paying IPT, our cost of sales has also reduced. On a net basis, our profits from insurance/ELS remain largely unchanged.

The other revenue earned by the Group is tenant income on sites where we have not started development.

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 table below shows the breakdown of both Big Yellow's and Armadillo's store operating costs compared to the prior year, with Armadillo's costs included in full in both years:

Category	Year ended 31 March 2023 £000	Year ended 31 March 2022 £000	Change	% of store operating costs in 2023
Cost of sales (ELS and packing materials)	2,202	3,896	(43%)	4%
Staff costs	14,415	13,303	8%	28%
General & admin	2,032	1,776	14%	4%
Utilities	2,056	2,274	(10%)	4%
Property rates	15,221	14,036	8%	30%
Marketing	6,504	6,494	0%	13%
Repairs & maintenance	4,685	4,198	12%	9%
Insurance	2,757	1,479	86%	6%
Computer costs	1,001	929	8%	2%
Total before one-off items	50,873	48,385	5%
One-off items	(310)	(453)
Total per portfolio summary	50,563	47,932	5%

Store operating costs have increased by £2.6 million (5%). The one-off items in both years are principally rates rebates where we have successfully appealed against the 2017 rating list. Store operating costs before these one-off items have increased by £2.5 million (5%) compared to the prior year. New stores accounted for £2.1 million of operating expense increase in the year. Cost of sales has decreased by £1.7 million following the move to selling an ELS rather than insurance (see explanation in revenue above). The remaining increase of £2.1 million (4%), is a pleasing result in the current inflationary environment. More specifically, we would comment as follows:

‑	Staff costs have increased by £1.1 million (8%) with store numbers and the salary review of on average 5% (including a 7% increase to those at the lower end of the pay scale).
‑	Marketing is in line with the prior year with continued efficiencies being achieved from our digital campaigns.
‑	Utilities has reduced by 10%, with our investment in solar, and during the year we have benefited from a fixed rate contract on energy which is due to expire on 30 September 2023
‑	Insurance has increased by £1.3 million (86%). We saw a significant increase in our insurance premiums this year, from a combination of higher pricing in the insurance market, and the impact on our premiums of the fire at our Cheadle store in February 2022.
‑	The Group's bad debt expense for the year was 0.2%, in line with the prior year. The Group has not seen any deterioration in its aged debtors' profile over recent months.

However, looking to the year ending 31 March 2024, we are anticipating a step-up in operating costs, principally as a result of:

‑	the Group's property rates bill will increase by 19% (£3 million) on a like-for-like basis for the year ending 31 March 2024, following the Rating Revaluation published in November 2022;
‑	our store salary review for the year ending 31 March 2024 averaged 5.5%, with the lower paid staff seeing increases of on average 6%; and
‑	the Group has benefited from a fixed price energy contract since October 2020, which expires in September 2023. Energy costs have moderated significantly from their peak in 2022, but we still expect to see an increase from our current contracted pricing when we place the new contract over the Summer. As mentioned above, the significant acceleration in our solar retrofit programme will help over the medium term to significantly reduce our reliance on external energy supply and mitigate the volatility that can sometimes occur in the market. We have increased our renewable electricity generation by 94% from the prior year.

As highlighted in the Chief Executive's Statement, given the investment we have made in recent years in the automation of our store operations, particularly in relation to interaction with prospects and customers, we continue to review every vacancy before making a decision to recruit with a view to achieving savings this year through the salary line.

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 2023 £000	Year ended 31 March 2022 £000
Direct store operating costs per portfolio summary (excluding rent)	50,563	47,932
Rent included in cost of sales (total rent payable is included in portfolio summary)	1,551	1,633
Rent review accruals	-	607
Depreciation charged to cost of sales	496	378
Head office and other operational management costs charged to cost of sales	1,697	1,741
Armadillo cost of sales pre acquisition of remaining interest	-	(1,908)
Cost of sales per statement of comprehensive income	54,307	50,383

Store EBITDA

Store EBITDA for the year was £134.0 million, an increase of £13.1 million (11%) from £120.9 million for the prior year (see Portfolio Summary). The overall EBITDA margin for during the year was 71.8%, up from 71.1% in 2022.

All stores are currently trading profitably at the Store EBITDA level. Our stores at Hayes and Hove, which opened in the first quarter of 2022, reached break even in six and four months respectively, and our stores at Harrow and Kingston North, which both opened in September 2022 reached break even in seven months.

Administrative expenses

Administrative expenses in the statement of comprehensive income of £14.5 million were up £0.2 million compared to the prior year. The prior period expense contained £0.4 million due to the write-off of acquisition costs in relation to the purchase of the remaining interest in Armadillo in accordance with IFRS 3.

The normalised increase was therefore £0.6 million (4%), which is a below inflationary increase, following our focus on cost control during the year. The non-cash share-based payments charge represents £3.7 million of the overall £14.5 million expense (2022: £3.4 million of £14.4 million expense).

Other operating income

In February 2022 the Group experienced a fire at our Cheadle store, which resulted in a total loss to the store. Buildings all risk insurance is in place for the full reinstatement value with the landlord. We also have insurance cover in place for both our fit-out and four years loss of income. The loss of income received during the financial year was £1.4 million, which is included in other operating income.

In June 2021, the Group experienced a fire in the wine storage area of our Fulham store, which was isolated to a single section of the basement floor. During the year, the Group received full settlement from our insurers for the loss of income as a result of this fire, which amounted to £0.6 million, which is included in other operating income.

The Group acquired the freehold of its Oxford store in September 2022, thus extinguishing the right of use asset and liability in relation to the lease from the previous landlord. This extinguishment gave rise to a gain of £0.2 million, which is included in other operating income for the year.

Interest expense on bank borrowings

The gross bank interest expense for the year was £18.2 million, an increase of £6.4 million from the prior year, due to higher average debt levels in the year, coupled with the Group's higher average cost of debt following the increase in interest rates. The average cost of borrowing during the year was 4.2% compared to 2.8% in the prior year.

Capitalised interest on our construction programme was £2.8 million, up from £2.1 million in the prior year, with interest capitalised on our developments at Harrow, Kingston North and Kings Cross during the year.

Total finance costs in the statement of comprehensive income increased to £16.9 million from £10.6 million in the prior year.

Profit before tax

The Group made a profit before tax in the year of £75.3 million, compared to a profit of £698.9 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 £106.0 million, up 10% from £96.8 million in 2022.

Profit before tax analysis	2023 £000	2022 £000
Profit before tax	75,309	698,876
Loss/(gain) on revaluation of investment properties	29,861	(597,224)
Gain on disposal of investment property	-	(584)
Acquisition costs written off	-	416
Movement in fair value on interest rate derivatives	133	(1,389)
Refinancing costs	732	-
Share of associate fair value gains and losses	-	(3,293)
Adjusted profit before tax	106,035	96,802

The adjustments made to the Group's profit before tax are in line with guidance issued by EPRA. The gain on disposal of investment property in the prior year relates to an overage received from the previous sale of land adjacent to our Guildford Central store.

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 2022		96.8
Increase in gross profit		13.6
Increase in administrative expenses		(0.6)
Increase in other operating income		2.2
Increase in net interest payable		(6.3)
Increase in capitalised interest		0.7
Reduction in share of adjusted profit of associates		(0.4)
Adjusted profit before tax - year ended 31 March 2023		106.0

Basic earnings per share for the year was 40.1p (2022: 385.4p) and diluted earnings per share was 39.8p (2022: 384.2p). Diluted EPRA earnings per share based on adjusted profit after tax was up 8% to 56.5p (2022: 52.5p) (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.

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 are exempt from corporation tax on chargeable gains, provided certain criteria are met. The Armadillo stores joined our REIT group on acquisition of the remaining interest, allowing us to write back the deferred tax that had been provided on previous revaluation uplifts.

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 £2.0 million. This compares to a charge in the prior year of £1.6 million. The increase in the current year tax charge reflects the increase in the Group's non-exempt taxable profits from the sale of insurance and packing materials over the year.

Dividends

The Board is recommending the payment of a final dividend of 22.9 pence per share in addition to the interim dividend of 22.3 pence, giving a total dividend for the year of 45.2 pence, an increase of 8% from the prior year, in line with our policy to distribute a minimum of 80% of our adjusted earnings per share in each reporting period.

REIT regulatory requirements determine the level of Property Income Distribution ("PID") payable by the Group. On the basis of the full year distributable reserves for PID purposes, a PID of 45.2p pence per share is payable (31 March 2022: 42.0 pence). The PID for the year to 31 March 2023 accounts for all of the declared dividend. The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2023	31 March 2022
Interim dividend	22.3p	20.6p

Final dividend	22.9p	21.4p

Total dividend	45.2p	42.0p

Subject to approval by shareholders at the Annual General Meeting to be held on 20 July 2023, the final dividend will be paid on 28 July 2023. The ex-div date is 6 July 2023 and the record date is 7 July 2023.

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 pre-working capital movements for the year was £109.2 million, an increase of 10% from £99.3 million in the prior year. This reflects the Group's increase in profitability in the year.

These operating cash flows are after the ongoing maintenance costs of the stores, which were on average approximately £43,000 per store (2022: £40,000).

The Group's net debt has increased over the year to £486.6 million (March 2022: £411.8 million).

	Year ended 31 March 2023 £m	Year ended 31 March 2022 £m
Cash generated from operations pre-working capital movements	126.2	112.5
Net finance costs	(16.5)	(10.8)
Interest on obligations under lease liabilities	(0.7)	(0.8)
Loss of income insurance proceeds	2.0	-
Tax	(1.8)	(1.6)
Cash flow from operating activities pre-working capital movements	109.2	99.3
Working capital movements	2.8	7.9
Cash flow from operating activities	112.0	107.2
Capital expenditure	(106.4)	(105.2)
Acquisition of Armadillo	-	(66.7)
Disposal of investment property	-	0.6
Investment	-	(0.1)
Receipt from Capital Goods Scheme	0.2	0.4
Dividends received from associates	-	0.4
Cash flow after investing activities	5.8	(63.4)
Ordinary dividends	(79.2)	(68.7)
Issue of share capital	1.0	98.5
Payment of lease liabilities	(1.3)	(1.4)
Receipt from termination of interest rate derivatives	0.4	-
Loan arrangement fees paid	(1.5)	(0.9)
Increase in borrowings	74.5	32.2
Net cash outflow	(0.3)	(3.7)
Opening cash and cash equivalents	8.6	12.3
Closing cash and cash equivalents	8.3	8.6
Closing debt	(494.9)	(420.4)
Closing net debt	(486.6)	(411.8)

The Group's interest cover for the period (expressed as the ratio of cash generated from operations pre-working capital movements against interest paid) was 7.7 times (2022: 10.5 times). This is calculated per below:

	31 March 2023	31 March 2022
Cash generated from operations pre working capital movements (see note 26)	126,195	112,489
Interest paid per cash flow statement	(16,486)	(10,763)
Interest cover	7.7x	10.5x

In the year capital expenditure outflows were £106.4 million, up slightly from £105.2 million in the prior year. Of the capital expenditure in the year £62.4 million is for the acquisition of sites at Staples Corner, Old Kent Road and Slough Farnham Road, the freehold of our Oxford store, and an existing storage centre in Aberdeen (including acquisition costs), with £44.0 million principally relating to build costs of the new stores, the Harrow industrial scheme and the investment in our solar retrofit programme.

The cash flow after investing activities was a net inflow of £5.8 million in the year, compared to a net outflow of £63.4 million in 2022, with the prior year also including the acquisition of Armadillo.

Balance sheet

Property

The Group's open stores and stores under development owned at 31 March 2023, which are classified as investment properties, have all been valued individually by JLL.

The external valuation has resulted in an investment property asset value of £2.71 billion, comprising £2.42 billion (89%) for the freehold (including nine long leaseholds) open stores, £31.0 million (1%) for the short leasehold open stores and £260.7 million (9%) for the freehold investment properties under construction.

Investment property

There was a very significant increase in the valuation of our investment portfolio last year, and this year the valuations have remained relatively flat, with an increase of 1% on the open store portfolio (£27.6 million) - see note 15 for the detailed valuation methodology. This revaluation gain has been driven by an improvement in the cash flow of the stores, partly offset by an increase in the cap rates used in the valuation. Prime capitalisation rates have increased by on average 30 bps since the start of the financial year. The increase in cap rates applied was 12.5 bps for stores in London, 25 bps for stores in the South East and 50 bps for regional stores. Additionally, a further 25 bps was added to the cap rates for immature stores.

The weighted average exit capitalisation rate used in the valuations was 5.6% in the current year, compared to 5.5% in the prior year.

Analysis of property portfolio	Value at 31 March 2023 £m	Revaluation movement in the year £m
Investment property	£2,449.6m	£27.6m
Investment property under construction	£260.7m	(£57.5m)
Investment property total	£2,710.3m	(£29.9m)

The table below provides a further breakdown of the open store valuations:

	Established		Developing	Armadillo
	Freehold	Leasehold	Freehold	Largely Freehold	Total
Number of stores	70	5	9	24	108
MLA capacity (sq ft)	4,413,000	311,000	584,000	984,000	6,292,000
Valuation at 31 March 2023 (£m)	£1,990.7m	£31.0m	£277.3m	£150.6m	£2,449.6m
Value per sq ft	£451	£100	£475	£153	£389
Occupancy at 31 March 2023	84.3%	83.0%	60.4%	76.9%	80.9%
Stabilised occupancy assumed	89%	87%	86%	86%	88%
Net initial year one NOI yield	5.2%	16.4%	3.4%	7.2%	5.3%

The net initial year one NOI yield is 5.3% (2022: 5.2%). Note 15 contains more detail on the assumptions underpinning the valuations.

Investment property under construction

The Group spent £72.1 million on investment property under construction in the year, notably on the site purchases of Old Kent Road, Staples Corner and Slough, and construction expenditure, principally on Harrow, Kingston North, and Kings Cross. Harrow and Kingston North have transferred to investment property during the year as the stores opened.

The valuation movement on the investment property under construction is a deficit of £57.5 million with a reduction in the value of our industrial property and land without self storage planning in the development pipeline of around 19% in total, reflective of the new financing conditions and wider market environment for land.

In the prior year there was a gain on investment property under construction of £67.5 million, so the movement in the current year is largely a reversal of that increase. The investment property under construction is still valued above its historic cost.

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 2023 of £2.815 billion (£104.6 million higher than the value recorded in the financial statements). This translates to 56.5 pence per share. This revised valuation translates into an adjusted net asset value per share of 1,237.3 pence (2022: 1,239.7 pence) after the dilutive effect of outstanding share options.

Receivables

The Group's bad debt expense in the year represented 0.2% of revenue compared to 0.2% in the prior year, with 80% of our customer base paying by direct debit.

The Group received its final instalment during the year under the Capital Goods Scheme, as a consequence of the introduction of VAT on self storage from 1 October 2012. The receivable related to VAT to be recovered on historic store development expenditure. The Group received £15.8 million under the Scheme, of which £0.2 million was received in the year.

Net asset value

The adjusted net asset value is 1,237.3 pence per share (see note 13), compared to 1,239.7 pence per share at 31 March 2022. The table below reconciles the movement:

Movement in adjusted net asset value	£m	Adjusted NAV pence per share
31 March 2022	2,284.2	1,239.7
Adjusted profit after tax	104.1	56.5
Equity dividends paid	(80.0)	(43.4)
Revaluation movements	(29.9)	(16.2)
Movement in purchaser's cost adjustment	4.0	2.2
Other movements (e.g. share schemes)	4.8	(1.5)
31 March 2023	2,287.2	1,237.3

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.

The table below summarises the Group's debt facilities at 31 March 2023. The average cost of debt is 4.7% (March 2022: 3.1%).

Debt	Expiry	Facility	Drawn	Average interest cost
Aviva Loan	September 2028	£158.9 million	£158.9 million	3.4%
M&G loan	September 2029	£120 million	£120 million	5.2%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland)	October 2024	£240 million	£216 million	5.5%
Total	Average term 3.9 years	£518.9 million	£494.9 million	4.7%

In addition to the facilities above, during the year, the Group signed a $225 million credit approved shelf facility with Pricoa Private Capital ("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of £10 million over the next two and half years with terms of between 7 and 15 years at short notice, typically 10 days.

The Group's revolving credit facility of £240 million with Lloyds, HSBC and Bank of Ireland expires in October 2024. The Group intends to refinance this loan with the banks this year.

During the year, the Group refinanced its £120 million debt facility with M&G Investments ("M&G") for a seven-year term, with the new loan expiring in September 2029, secured against a portfolio of 15 assets. The existing facility was due to expire in June 2023. £35 million of this facility is currently fixed by way of a swap until June 2023, and the balance is variable.

The margin on the facility was reduced by 20bps from the expiring facility, reflective of improved portfolio performance, and the sustainability investments that Big Yellow has made over the past few years, and our planned investment in solar over the coming years as part of our Net Renewable Energy Positive Strategy.

The Group repaid the two Armadillo bank facilities during the year using the revolving bank facility. The Group also cancelled the two interest rate derivatives in place on the Armadillo facilities, which resulted in a payment to the Group of £0.4 million as the swaps were in-the-money.

The Group was comfortably in compliance with its banking covenants at 31 March 2023. Further details of the Group's covenants are provided in note 19 of the accounts.

The Group's key financial ratios are shown in the table below:

Metric	31 March 2023	31 March 2022
Net Debt / Gross Property Assets	18%	16%
Net Debt / Adjusted Net Assets	21%	18%
Net Debt / Market Capitalisation	23%	15%
Cash generated from operations pre-working capital movements against interest paid	7.7x	10.5x

At 31 March 2023, the fair value on the Group's interest rate derivatives was an asset of £0.3 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 £18.4 million at 31 March 2023 (2022: £18.4 million), consisting of 184,265,973 ordinary shares of 10p each (2022: 183,967,378 shares). 0.3 million shares were issued for the exercise of options during the year at an average exercise price of £13.13 (2022: 0.3 million shares at an average price of £14.84).

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.

	2023 No.	2022 No.
Opening shares	183,967,378	175,880,470
Shares issued in placing	-	7,751,938
Shares issued for the exercise of options	298,595	334,970
Closing shares in issue	184,265,973	183,967,378
Shares held in EBT	(1,122,907)	(1,122,907)
Closing shares for NAV purposes	183,143,066	182,844,471

116.3 million shares were traded in the market during the year ended 31 March 2023 (2022: 85.4 million). The average mid-market price of shares traded during the year was £12.41 with a high of £15.53 and a low of £9.87.

Principal risks and uncertainties

The Directors have carried out a robust assessment of the emerging and 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 emerging and 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, awareness increased during the pandemic.

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 urban conurbations within the sector have slowed significantly over the past few years.

Our performance during the past three years has been strong with revenue growing by 46% from £129.3 million in the year ended 31 March 2020 to £188.8 million for this year. We believe that this performance is due to a combination of factors including:

‑	a high quality and growing portfolio of freehold properties delivering higher operating margins;
‑	a focus on London and the South East and other large urban conurbations, where the drivers in the self storage market are at their strongest and the barriers to competition are at their highest;
‑	continuing innovation and automation;
‑	an inclusive and non-hierarchical culture with a highly engaged team;
‑	a focus on delivering the highest levels of customer service;
‑	delivering on our strong ESG commitments;
‑	the UK's leading self storage brand, with high and growing public awareness and online strength; and
‑	strong cash flow generation from a secure capital structure.

We have a large current storage customer base occupying approximately 73,000 rooms spread across the portfolio of stores and hundreds of thousands more who have used our stores 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 Russian invasion of Ukraine in February 2022 caused significant global uncertainty and has provided a more challenging macroeconomic backdrop, with significant levels of inflation seen in the UK economy since the invasion, largely driven by food and energy, resulting in increased interest rates. This has impacted the cost of living in the UK, and the level of housing transactions has fallen as the cost of mortgages has increased.

In the final quarter of the year, we also had the impact of the regional banking crisis in the US and the collapse of Credit Suisse, which can also impact demand in our market at the margin.

Inflation is forecast to moderate over the next 12 months, with relatively flat economic growth projected for the UK economy.

Governments around the world took on significant additional debt to fund the policy responses to the pandemic, and this may result in higher taxation rates in the future.

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.

Changing climate and resulting likely changes to planning restrictions will narrow choice of available sites further.

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.

Planning approval is increasingly dependent on Social or Environmental enhanced features (e.g. social enterprise at Battersea, BREEAM standards, local planners demands for green spaces) - adding cost and complexity.

Our management has significant experience in the property industry generated over many years and in particular 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 during the year, which has reinforced our current approach, but also given some areas where further efficiencies and cost savings can be achieved.

The Group has acquired eleven sites over the past four years, taking its total pipeline to 13 sites which, when opened, would expand the Group's current MLA by 15%.

The planning process remains difficult and to achieve a planning consent can take anything from eighteen months to three years. Local planning policy is 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 seven of the 13 development sites.

Our latest tender for our store in Farnham Road Slough has come in within our underwriting as a result of moderating steel and other materials costs and reduced contractor margins since we suspended new construction last May. It is therefore our intention to restart our construction programme from this Summer.

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 have significant experience in the UK self storage industry.

The portfolio is diverse with approximately 73,000 rooms currently occupied in 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 store investment properties was £27.6 million in the year (an uplift of 1%), due to an improvement in underlying cash flows used in the valuations, partly offset by an outward shift in cap rates.

There have been a number of larger portfolio transactions across Europe over the past three years, and there is a weight of institutional money looking to invest in self storage. Notwithstanding the above, the increase in interest rates over the year led to the outward shift in cap rates, which was more pronounced in more regional markets.

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 5 and half years remaining. The Group has a £120 million loan from M&G Investments, which is repayable in 2029. For our bank debt, we borrow at floating rates of interest.

During the year, the Group signed a $225 million credit approved shelf facility with Pricoa Private Capital ("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of £10 million over the next two and a half years with terms of between 7 and 15 years at short notice, typically 10 days.

Our policy is to maintain a flexible borrowing structure, with a long-term average of approximately 50% of our total borrowings fixed, with the balance floating. At 31 March 2023 39% of the Group's total drawn 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.

The Bank of England base rate has been increased significantly during the year, with it currently at 4.5%, up from 1% at the start of our financial year.

The long-term forecast is for rates to gradually fall from these levels. 61% of the Group's drawn debt is floating, and hence the Group has experienced additional cost from these recent increases in the base rate.

Debt providers currently remain supportive to companies with a strong capital structure, as evidenced by the Group refinancing the M&G loan during the year, and the Pricoa shelf facility that we put in place.

The Group's interest cover ratio for the year ended 31 March 2023 was 7.7 times, comfortably ahead of our internal target of 5 times and ahead of our banking covenants, as disclosed in note 19. The ratio fell during the year, due to the rise in interest costs.

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 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.

The Group's like-for-like property rates bill for the year ending 31 March 2024 has increased by 19% from the prior year, with the 2023 rating list reflecting the rise in industrial rents over the past few years.

The corporation tax rate was increased in the March 2021 budget, to take effect from April 2023, and there is a risk that tax rates will rise further in the medium-term to fund the increased government deficits that have arisen from the policy response to the pandemic.

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.

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, to contribute to the performance of the Group.

The Group carried out an engagement survey of its employees during the prior year, which showed very pleasing results of the level of engagement of our teams.

We have listened to the feedback from our employees raised during our engagement survey and made a number of changes to the Group's operations, including two days a week working from home for our head office team, reducing our store opening hours and the payment of a lone trading bonus for store staff. We are carrying out a further survey of our staff in May 2023.

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, including the risk of a data breach.

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.

The Group has a crisis response plan which was developed in conjunction with external consultants to ensure the Group is well placed to effectively deal with a major incident.

We experienced a fire caused by arson at our Armadillo Cheadle store in February 2022. Our crisis response team worked effectively in managing the incident.

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 Big Yellow 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 have further invested in security improvements in our stores during the year.

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 more for the Group than any other business; however, we consider that the threats in the entire digital landscape do continue to increase and evolve. As such we have continued to invest in cyber security upgrading or replacing components as required.

Climate change related risk

The Group is exposed to climate-change related transition and physical risks. Physical risks may affect the Group's stores and may result in higher maintenance and repair costs. Failing to transition to a low carbon economy may cause an increase in taxation, decrease in access to loan facilities and reputational damage

The good working order of our stores is of critical importance to our business model.

We visually inspect each of our stores at least once per annum and planned and unplanned work is discussed immediately.

Maintenance requirements are discussed at budget reviews; proposals are made to raise climate change related issues to the Board, who may request more holistic adaptation work to be carried out.

The key mitigation strategy to address transitional risks is the delivery of our Net Renewable Energy Positive Strategy and the Net Zero Scope 1 and Scope 2 Emissions Strategy. Our investment to decarbonise our business over the next eight years is expected to mitigate fully against taxation (carbon tax) risk and reputational risks (both investors and customers).

Our Sustainability Committee, chaired by a Non-Executive Director, has delivered an ambitious strategic plan to 2032.

We appreciate that both physical and transition risks are expected to materialise to lesser or greater extents over the coming years and costs may go up gradually, hidden within what may be perceived as 'natural variations'. Our focus and strong governance will allow us to continue to mitigate the effects.

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 this Report and in the notes to the financial statements.

At 31 March 2023 the Group had available liquidity of approximately £32 million, from a combination of cash and undrawn bank debt facilities. The Group additionally has a $225 million credit approved shelf facility with Pricoa Private Capital to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of £10 million over the next two and half years with terms of between 7 and 15 years at short notice, typically 10 days. The Group is cash generative and for the year ended 31 March 2023, had operational cash flow of £112.0 million, with capital commitments at the balance sheet date of £6.1 million.

The Directors have prepared cash flow forecasts for a period of 18 months from the date of approval of these financial statements, taking into account the Group's operating plan and budget for the year ending 31 March 2024 and projections contained in the longer-term business plan which cover the 18 month period. After reviewing these projected cash flows together with the Group's and Company's cash balances, borrowing facilities and covenant requirements, and potential property valuation movements over that period, the Directors believe that, taking account of severe but plausible downsides, the Group and Company will have sufficient funds to meet their liabilities as they fall due for that period.

The Group's revolving credit facility of £240 million with Lloyds, HSBC and Bank of Ireland expires in October 2024. The Group intends to refinance this loan with the banks this year, but does not rely on the refinancing of the loan to reach its conclusion on going concern.

In making their assessment, the Directors have carefully considered the outlook for the Group's trading performance and cash flows as a result of the current economic environment, taking into account the trading performance of the Group over the recent dislocations in the global economy from Covid-19 and the Russian invasion of Ukraine. The Directors have also considered the performance of the business during the Global Financial Crisis. The Directors modelled several different scenarios, including material reductions in the Group's occupancy rates and property valuations, and assessed the impact of these scenarios against the Group's liquidity and the Group's banking covenants. The scenarios considered did not lead to breaching any of the banking covenants, and the Group retained sufficient liquidity to meet its financial obligations as they fall due.

Consequently, the Directors continue to adopt the going concern basis in preparing the Group and Company financial statements.

VIABILITY STATEMENT

The Directors have assessed the Group's viability over a four-year period to March 2027. This period is selected based on the Group's long-term strategic plan to give greater certainty over the forecasting assumptions used. As in the assessment of going concern, the Directors have modelled a number of different scenarios on the Group's future prospects.

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 emerging and 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. Whilst the eventual impact of the current economic environment on the Group is uncertain, and may not be known for some time, the Group has a highly cash generative business, good liquidity and has proved resilient in its trading since the onset of the pandemic.

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 2027.

STRATEGY AND INVESTMENT CASE

Our Strategy

Brand, platform, and customer service

Our strategy from the outset has been to develop Big Yellow into the market-leading self storage brand, delivering excellent customer service, investing in sustainability and our market-leading operating platform and digital channels, with a great culture and highly motivated employees. We concentrate on developing our stores in main road locations with high visibility, where our distinctive branding generates high awareness of Big Yellow.

Creating shareholder value

We continue to believe that the medium-term opportunity to create shareholder value consists of driving revenue and cash flow from our existing portfolio through continued investment in sustainability, our people, culture, and digital operating and marketing platforms. In addition, we aim to deliver external growth as new stores open through continued investment in our development pipeline, and selectively acquiring existing storage centres from smaller operators. As a REIT our key financial objective is to produce sustainable returns for shareholders through a relatively low leverage, low volatility, high distribution business. In addition, any successful business must have an effective sustainability strategy, particularly around climate change, and this continues to be a key strategic focus for our business.

We focus on the following key areas:

‑	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 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 ESG initiatives, aim to create a more sustainable business which will increase shareholder and customer value in both the medium and long-term;
‑	maintaining Big Yellow's culture as an accessible, apolitical, inclusive, non-hierarchical, socially responsible, and enjoyable place to work; and
‑	maintaining a conservative capital structure in the business with Group interest cover of a minimum of five times.

Real estate

The other main plank of our strategy has been to build a portfolio of large purpose-built freehold self storage centres, focussed on London, the South East and other large urban conurbations. We believe that by owning a predominantly freehold estate we are insulating ourselves against: economic downturns as we operate at higher margins; adverse rent reviews; and in the long-term possible redevelopment of key stores by the landlord. It also provides us financing flexibility as rent is a form of gearing.

Approximately 60% 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 75%. With our store development pipeline largely in London and the South East, we would expect these proportions to increase over the medium term.

New supply and competition is a key risk to our business model, hence our focus on London and its commuter towns, where barriers to entry in terms of competition for land and difficulty around obtaining planning are highest. We continue to see limited new supply growth in our key areas of operation. Looking back over the last five years, we estimate capacity growth in London of approximately 2-3% per annum. In 2022, there have been only five store openings in London (including three Big Yellow stores), and we anticipate seven new stores in London in 2023, including one Big Yellow store opening.

Our stores are on average 58,000 sq ft, compared to an industry average of approximately 44,000 sq ft (source: UK Self Storage Association 2023 Annual Survey). The upside from filling our larger than average sized stores is, in our view, only possible in large metropolitan markets. As our operating costs are relatively fixed, larger stores in bigger urban conurbations, particularly London, drive higher revenues and higher operating margins.

Capital structure

Following the Global Financial Crisis and the ensuing economic recession, we have materially reduced the financial risk within the business and diversified our sources of debt, whilst at the same time, increasing our store platform by deploying significant capital investment. We measure leverage by looking at our interest cover and that has increased from 1.9 times in 2008 to 7.7 times for the year ended 31 March 2023. Our objective is to not let this fall below 5 times, compared to the consolidated EBITDA covenant of 1.5 times. We manage this business on the basis that an external economic shock could potentially happen at any time. This is reinforced by the performance of the business during the pandemic, where we delivered a strong trading performance whilst at the same time continuing to invest and expand.

Self storage demand drivers

Economic activity and change are key drivers of self storage demand and are greatest in the larger urban conurbations, and in particular London and the South East. The structural changes consisting of the conversion of ex-industrial brownfield land to other uses, in particular residential; the reduction in home ownership and increased proportion of those choosing to rent; increasing density of living with new properties being built with optimised living space and very little provision for storage; will continue and are resulting in increased demand for our product. These changes have resulted in a significant shortage of available warehousing space, particularly in London, which has been accentuated by the current crisis. Self storage provides a convenient flexible solution to businesses such as online retailers, importers and exporters, service providers, the public sector, and marketing companies looking for mini-warehousing space.

In addition to domestic customers taking space to declutter their homes, our largest customer base is those using us short-term around an event, such as moving home, refurbishment, inheritance, household formation, separation, relocation, and students.

Resilience

The location of our stores, brand, security, and most importantly customer service, together with the diversity of use in our 73,000 occupied rooms, serve better than any lease contract in providing income security.

The business proved to be relatively resilient, but not immune during the Global Financial Crisis and recession of 2007 to 2009, with London and the South East proving to be less volatile. Since 2020, the Group has grown its revenue by 46%.

80% of our customers pay by direct debit, and our cash collection has remained robust over recent years.

Total shareholder return

In the twenty three years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 13.9% per annum, in aggregate 1,871.5% at the closing price of 1,169p on 31 March 2023. This compares to 4.4% per annum for the FTSE Real Estate Index and 5.0% 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 last economic downturn and performed well during the pandemic
	•	Self storage is more part of the ecosystem today than it was in 2008 with increased domestic and business awareness
Our competitive advantage	•	UK industry's most recognised brand with over 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
	•	6.3 million sq ft UK footprint, with development pipeline of 0.9 million sq ft
	•	Primarily freehold estate concentrated in London and South East and other larger urban conurbations
	•	Larger average store capacity - economies of scale, higher operating margins
	•	Secure financing structure with strong balance sheet
	•	Continued significant investment in sustainability and our culture
Evergreen income streams	•	73,000 occupied rooms, with customers from a diverse base - individuals, SMEs, and national customers
	•	Average length of stay for existing customers of 31 months
	•	38% of customers in stores greater than two-year length of stay, a further 16% for one to two years
	•	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 warehouse space drives demand
	•	Growth in National Customers and business customer base
	•	Increasing the platform with a conservative capital structure
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 14% since 2004/5 (IFRS adoption)
	•	Annual compound cash flow growth of 15% since 2004/5
	•	Dividend pay-out ratio of a minimum of 80% of adjusted eps

Consolidated Statement of Comprehensive Income

Year ended 31 March 2023

	Note	2023 £000	2022 £000

Revenue	3	188,829	171,318
Cost of sales		(54,307)	(50,383)

Gross profit		134,522	120,935

Administrative expenses		(14,519)	(14,352)

Operating profit before gains on property assets		120,003	106,583
(Loss)/gain on the revaluation of investment properties	14a,15	(29,861)	597,224
Gain on disposal of investment property		-	584

Operating profit		90,142	704,391
Other operating income	3	2,185	-
Share of profit of associates	14e	-	3,677
Investment income - interest receivable	7	9	23
- fair value movement on derivatives	7	-	1,389
Finance costs - interest payable	8	(16,894)	(10,604)
- fair value movement on derivatives	8	(133)	-

Profit before taxation		75,309	698,876
Taxation	9	(1,977)	(1,602)

Profit for the year (attributable to equity shareholders)	5	73,332	697,274

Total comprehensive income for the year (attributable to equity shareholders)		73,332	697,274

Basic earnings per share	12	40.1p	385.4p

Diluted earnings per share	12	39.8p	384.2p

EPRA earnings per share are shown in Note 12.

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

The accompanying notes form part of the financial statements.

Consolidated Balance Sheet

31 March 2023

	Note	2023 £000	2022 £000
Non-current assets
Investment property	14a	2,449,640	2,342,199
Investment property under construction	14a	260,720	285,400
Right-of-use assets	14a	18,148	19,174
Plant, equipment, and owner-occupied property	14b	4,003	3,857
Intangible assets	14c	1,433	1,433
Investment	14d	588	588
Derivative financial instruments	18c	-	885

		2,734,532	2,653,536
Current assets
Derivative financial instruments	18c	316	-
Inventories		496	483
Trade and other receivables	16	8,314	7,756
Cash and cash equivalents		8,329	8,605

		17,455	16,844

Total assets		2,751,987	2,670,380

Current liabilities
Trade and other payables	17	(57,275)	(47,349)
Borrowings	19	(3,159)	(3,008)
Obligations under lease liabilities	21	(2,020)	(1,958)

		(62,454)	(52,315)
Non-current liabilities
Borrowings	19	(489,411)	(414,972)
Obligations under lease liabilities	21	(17,676)	(18,718)

		(507,087)	(433,690)

Total liabilities		(569,541)	(486,005)

Net assets		2,182,446	2,184,375

Equity
Share capital	22	18,427	18,397
Share premium account		290,857	289,923
Reserves		1,873,162	1,876,055

Equity shareholders' funds		2,182,446	2,184,375

The financial statements were approved by the Board of Directors and authorised for issue on 22 May 2023. They were signed on its behalf by:

Jim Gibson, Director John Trotman, Director

Company Registration No. 03625199

The accompanying notes form part of the financial statements.

Consolidated Statement of Changes in Equity

Year ended 31 March 2023

	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 2022	18,397	289,923	74,950	1,795	1,800,329	(1,019)	2,184,375
Total comprehensive income for the year	-	-	-	-	73,332	-	73,332
Issue of share capital	30	934	-	-	-	-	964
Dividend	-	-	-	-	(79,960)	-	(79,960)
Credit to equity for equity-settled share-based payments	-	-	-	-	3,735	-	3,735

At 31 March 2023	18,427	290,857	74,950	1,795	1,797,436	(1,019)	2,182,446

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

The issue of share capital is net of expenses.

Year ended 31 March 2022

	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 2021	17,588	192,218	74,950	1,795	1,168,363	(1,019)	1,453,895
Total comprehensive income for the year	-	-	-	-	697,274	-	697,274
Issue of share capital	809	97,705	-	-	-	-	98,514
Dividend	-	-	-	-	(68,698)	-	(68,698)
Credit to equity for equity-settled share-based payments	-	-	-	-	3,390	-	3,390

At 31 March 2022	18,397	289,923	74,950	1,795	1,800,329	(1,019)	2,184,375

The accompanying notes form part of the financial statements.

Consolidated Cash Flow Statement

Year ended 31 March 2023

	Note	2023 £000	2022 £000
Cash generated from operations	26	128,973	120,390
Bank interest paid		(16,486)	(10,763)
Interest on obligations under lease liabilities		(706)	(843)
Interest received		8	2
Loss of income insurance proceeds		2,032	-
Tax paid		(1,844)	(1,649)

Cash flows from operating activities		111,977	107,137

Investing activities
Purchase of non-current assets		(106,413)	(105,151)
Disposal of investment property		-	584
Acquisition of Armadillo (net of cash acquired)		-	(66,679)
Investment	14d	-	(138)
Receipts from Capital Goods Scheme		182	381
Dividend received from associates	14e	-	435

Cash flows from investing activities		(106,231)	(170,568)

Financing activities
Issue of share capital		964	98,514
Payment of lease liabilities		(1,267)	(1,384)
Equity dividends paid	11	(79,140)	(68,698)
Receipt from termination of interest rate derivatives		436	-
Loan arrangement fees paid		(1,507)	(953)
Increase in borrowings		74,492	32,235

Cash flows from financing activities		(6,022)	59,714

Net decrease in cash and cash equivalents		(276)	(3,717)

Opening cash and cash equivalents		8,605	12,322

Closing cash and cash equivalents		8,329	8,605

The accompanying notes form part of the financial statements.

Notes to the financial statements

Year ended 31 March 2023

1. GENERAL INFORMATION

Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006, with registration number 03625199, and limited by shares. 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 Group and Company's statutory accounts for the years ended 31 March 2023 or 2022 but is derived from those accounts. Statutory accounts for 2022 have been delivered to the registrar of companies, and those for 2023 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 Group's financial statements have been prepared in accordance with UK-adopted international accounting standards ("IFRS Standards") and in relation to the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice (including FRS 101). The financial statements have been prepared in accordance with the requirements of the Companies Act 2006. The Group has applied all relevant accounting standards which have been endorsed by the International Accounting Standards Board and have been applied consistently year on year.

The Group uses a number of APMs to monitor the performance of the business. Adjusted profit before tax and adjusted earnings per share are the Group's primary profit measures and reflect underlying profit by excluding capital and non-recurring items such as revaluation movements, gains or losses on the disposal of properties and the fair value movement of interest derivatives in accordance with EPRA guidelines. In addition, the Group adjusts for items such as the write off of acquisition costs, and fair value movements on the stepped acquisition of associates. These adjusted measures should not be considered in isolation from, or as substitutes for, or superior to the financial measures prepared in accordance with IFRS.

3. REVENUE

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

	2023 £000	2022 £000

Open stores
Self storage income	162,911	145,592
Insurance income	3,047	17,783
Enhanced liability service income	14,272	-
Packing materials income	3,286	3,142
Other income from storage customers	2,010	1,821
Ancillary store rental income	1,213	937
	186,739	169,275
Other revenue
Non-storage income	2,090	1,718
Management fees earned	-	325

Total revenue	188,829	171,318

Please see the commentary in the Financial Review on insurance income and enhanced liability service income.

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

The Group has also earned other operating income of £2.2 million in the year as follows:

‑	£1.4 million relates to insurance proceeds for loss of income following the destruction of the Group's Cheadle store by fire in 2022;
‑	£0.6 million relates to insurance proceeds for loss of income following a fire at the Group's Fulham store wine storage area in 2021; and
‑	£0.2 million is following extinguishing the right-of-use asset and liability following the acquisition of the freehold of our Oxford store.

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 non-current 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	2023 £000	2022 £000
	N
Depreciation of plant, equipment, and owner-occupied property	14b	888	857
Depreciation of interest in leasehold properties		1,542	1,601
Loss/(gain) on the revaluation of investment property		29,861	(597,224)
Gains on disposal of investment property		-	(584)
Cost of inventories recognised as an expense		1,643	1,405
Employee costs	6	24,709	23,181

b) Analysis of auditor's remuneration:

	2023 £000	2022 £000

Fees payable to the Company's auditor for the audit of the Company's annual accounts	487	390
Fess payable to the Company's auditor for the subsidiaries' annual accounts	50	50

Total audit fees	537	440

Audit related assurance services - interim review	60	60

Total non-audit fees	60	60

Total audit and non-audit fees paid to KPMG LLP	597	500

6. EMPLOYEE COSTS

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

	2023 Number	2022 Number

Sales	403	365
Administration	62	62

	465	427

At 31 March 2023 the total number of Group employees was 515 (2022: 495).

	2023 £000	2022 £000
Their aggregate remuneration comprised:
Wages and salaries	17,475	16,086
Social security costs	2,759	3,014
Other pension costs	740	691
Share-based payments	3,735	3,390

	24,709	23,181

The Directors and the Director of our trading subsidiaries are the employees assessed as key management personnel.

7. INVESTMENT INCOME

	2023 £000	2022 £000

Bank interest receivable	8	2
Unwinding of discount on Capital Goods Scheme receivable	1	21
Total interest receivable	9	23

Fair value movement on derivatives	-	1,389
Total investment income	9	1,412

8. FINANCE COSTS

	2023 £000	2022 £000

Interest on bank borrowings	18,156	11,772
Capitalised interest	(2,761)	(2,072)
Interest on obligations under lease liabilities	706	843
Other interest payable	61	61
Loan refinancing costs	732	-

Total interest payable	16,894	10,604

Fair value movement on derivatives	133	-
Total finance costs	17,027	10,604

9. TAXATION

As a REIT, 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.

A UK corporation tax rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020, reversing the previously enacted reduction in the rate from 19% to 17%. Finance (No.2) Bill 2021 announced that the main rate of corporation tax was going to increase to 25% from 1 April 2023 and this was substantively enacted on 24 May 2021. This will increase the Company's future current tax charge accordingly.

UK current tax	2023 £000	2022 £000
- Current year	2,296	1,725
- Prior year	(319)	(123)
	1,977	1,602

A reconciliation of the tax charge is shown below:

	2023 £000	2022 £000
Profit before tax	75,309	698,876
Tax charge at 19% (2022 - 19%) thereon	14,309	132,786
Effects of:
Revaluation of investment properties	5,674	(113,472)
Share of profit of associates	-	(699)
Other permanent differences	626	(2,031)
Utilisation of brought forward losses	(76)	-
Profits from the tax-exempt business	(18,237)	(14,859)
Current year tax charge	2,296	1,725
Prior year adjustment	(319)	(123)
Total tax charge	1,977	1,602

At 31 March 2023 the Group has unutilised tax losses from the non-REIT taxable business of £33.8 million (2022: £34.2 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10. ADJUSTED PROFIT

	2023 £000	2022 £000

Profit before tax	75,309	698,876
(Loss)/gain on revaluation of investment properties - Group	29,861	(597,224)
-associates (net of deferred tax) to 30 June 2021	-	(1,537)
Change in fair value of interest rate derivatives	133	(1,389)
Armadillo fair value adjustments on acquisition	-	(1,756)
Gain on disposal of investment property	-	(584)
Refinancing fees	732	-
Acquisition costs written off	-	416
Adjusted profit before tax	106,035	96,802
Tax	(1,977)	(1,602)
Adjusted profit after tax	104,058	95,200

Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate derivatives, acquisition costs written off in accordance with IFRS 3, refinancing fees, fair value adjustments on acquisitions, and net gains and losses on disposal of investment property have been disclosed in line with EPRA performance measures.

11. DIVIDENDS

	2023 £000	2022 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2022 of 21.4p (2021: 17.0p) per share.	39,136	31,039
Interim dividend for the year ended 31 March 2023 of 22.3p (2022: 20.6p) per share.	40,824	37,659
	79,960	68,698
Proposed final dividend for the year ended 31 March 2023 of 22.9p (2022: 21.4p) per share.	41,947	39,136

Subject to approval by shareholders at the Annual General Meeting to be held on 20 July 2023, the final dividend will be paid on 28 July 2023. The ex-div date is 6 July 2023 and the record date is 7 July 2023.

The Property Income Distribution ("PID") payable for the year is 45.2 pence per share (2022: 42.0 pence per share).

12. EARNINGS PER SHARE

	Year ended 31 March 2023			Year ended 31 March 2022
	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic	73.3	183.0	40.1	697.3	180.9	385.4
Dilutive share options	-	1.1	(0.3)	-	0.6	(1.2)
Diluted	73.3	184.1	39.8	697.3	181.5	384.2
Adjustments:
Loss/(gain) on revaluation of investment properties	30.0	-	16.2	(597.2)	-	(329.0)
Acquisition costs written off	-	-	-	0.4	-	0.2
Change in fair value of interest rate derivatives	0.1	-	0.1	(1.4)	-	(0.8)
Gain on disposal of investment property	-	-	-	(0.6)	-	(0.3)
Refinancing fees	0.7	-	0.4	-	-	-
Share of associate fair value gains and losses	-	-	-	(3.3)	-	(1.8)
EPRA - diluted	104.1	184.1	56.5	95.2	181.5	52.5

EPRA - basic	104.1	183.0	56.9	95.2	180.9	52.6

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 in line with EPRA recommendations.

13. NET ASSETS PER SHARE

EPRA's Best Practices Recommendations guidelines for Net Asset Value (NAV) metrics are EPRA Net Tangible Assets (NTA), EPRA Net Reinstatement Value (NRV) and EPRA Net Disposal Value (NDV).

EPRA NTA is considered to be most consistent with the nature of Big Yellow's business which provides sustainable long-term progressive returns. EPRA NTA is shown in the table below. This measure is further adjusted by the adjustment the Group makes for purchaser's costs, which is the Group's Adjusted Net Asset Value (or Adjusted NAV).

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).

	Year ended 31 March 2023			Year ended 31 March 2022
	Equity attributable to ordinary shareholders £000	Shares	Pence per share	Equity attributable to ordinary shareholders £000	Shares	Pence per share
Basic NAV	2,182,446	183,143,066	1,191.7	2,184,375	182,844,471	1,194.7
Share and save as you earn schemes	1,909	1,705,121	(10.0)	1,592	1,409,649	(8.3)
Diluted NAV	2,184,355	184,848,187	1,181.7	2,185,967	184,254,120	1,186.4
Fair value of derivatives - Group	(316)	-	(0.2)	(885)	-	(0.5)
Intangible assets	(1,433)	-	(0.7)	(1,433)	-	(0.8)
EPRA NTA	2,182,606	184,848,187	1,180.8	2,183,649	184,254,120	1,185.1
Valuation methodology assumption (see note 15) (£000)	104,605	-	56.5	100,600	-	54.6
Adjusted NAV	2,287,211	184,848,187	1,237.3	2,284,249	184,254,120	1,239.7

14. NON-CURRENT ASSETS

a) Investment property, investment property under construction and right-of-use assets

	Investment property £000	Investment property under construction £000	Right-of-use assets £000	Total £000

At 31 March 2021	1,621,990	163,537	16,644	1,802,171
Additions	10,921	95,509	1,084	107,514
Acquisition of Armadillo	138,418	-	4,862	143,280
Transfer on opening of stores	41,182	(41,182)	-	-
Revaluation (see note 15)	529,688	67,536	-	597,224
Depreciation	-	-	(1,553)	(1,553)
Impairment of Cheadle lease	-	-	(1,863)	(1,863)

At 31 March 2022	2,342,199	285,400	19,174	2,646,773
Additions	40,559	72,063	2,034	114,656
Transfer on opening of stores	39,288	(39,288)	-	-
Acquisition of Oxford freehold	-	-	(1,597)	(1,597)
Revaluation (see note 15)	27,594	(57,455)	-	(29,861)
Depreciation	-	-	(1,463)	(1,463)

At 31 March 2023	2,449,640	260,720	18,148	2,728,508

The right-of-use assets represent the present value of minimum lease payments for leasehold properties that meet the definition of IAS 40 and are accounted for as investment properties - see note 21 for further details of the obligations under lease liabilities. The fair value of the leasehold properties (including long leaseholds), on which the Group pays rent, of £74.6 million (2022: £80.2 million) is included within the investment property total.

Included within the revaluation gain on investment property in the prior year is an impairment of £4.3 million in relation to the fire at Cheadle.

The credit to right-of-use assets in the current year of £1.6 million is due to the acquisition of the freehold of our Oxford store, and hence the extinguishment of the lease liability and associated right-of-use asset.

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 £2.8 million of capitalised interest (2022: £2.1 million), calculated at the Group's average borrowing cost for the year of 4.2%. 85 of the Group's investment properties are pledged as security for loans, with a total external value of £1.99 billion.

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	Right of use assets £000	Total £000
Cost
At 31 March 2021	2,275	59	439	32	1,262	872	4,939
Retirement of fully depreciated assets	-	-	(107)	-	(402)	-	(509)
Additions	15	-	115	-	780	-	910

At 31 March 2022	2,290	59	447	32	1,640	872	5,340
Retirement of fully depreciated assets	-	-	(83)	-	(687)	-	(770)
Additions	116	-	283	-	738	3	1,140

At 31 March 2023	2,406	59	647	32	1,691	875	5,710

Depreciation
At 31 March 2021	(593)	(12)	(129)	(32)	(52)	(211)	(1,029)
Retirement of fully depreciated assets	-	-	107	-	402	-	509
Charge for the year	(43)	(4)	(113)	-	(697)	(106)	(963)

At 31 March 2022	(636)	(16)	(135)	(32)	(347)	(317)	(1,483)
Retirement of fully depreciated assets	-	-	83	-	687	-	770
Charge for the year	(46)	(4)	(158)	-	(680)	(106)	(994)

At 31 March 2023	(682)	(20)	(210)	-	(340)	(423)	(1,707)

Net book value
At 31 March 2023	1,724	39	437	-	1,351	452	4,003

At 31 March 2022	1,654	43	312	-	1,293	555	3,857

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

The Group has an £0.6 million investment in Doncaster Security Operations Centre Limited, a company which provides out-of-hours monitoring and alarm receiving services, including for the Group's stores. The investment is carried at cost and tested annually for impairment.

e) Investment in associates

Armadillo

The Group had 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 were accounted for as associates, using the equity method of accounting. On 1 July 2021 the Group acquired the remaining interest in Armadillo 1 and Armadillo 2 that it did not previously own. From this date, Armadillo 1 and Armadillo 2 are accounted for as a wholly owned subsidiaries of the Group. The results up to this date are equity accounted as shown in the note below:

	Armadillo 1		Armadillo 2		Total
	31 March 2023 £000	31 March 2022 £000	31 March 2023 £000	31 March 2022 £000	31 March 2023 £000	31 March 2022 £000
At the beginning of the year	-	8,698	-	5,022	-	13,720
Share of results (see below)	-	2,413	-	1,264	-	3,677
Dividends	-	(211)	-	(224)	-	(435)
Acquisition of remaining interest	-	(10,900)	-	(6,062)	-	(16,962)

Share of net assets	-	-	-	-	-	-

The figures below show the trading results of Armadillo, and the Group's share of the results up to the point of acquisition of the remaining interest in the Partnerships on 1 July 2021.

	Armadillo 1 1 April 2021 to 30 June 2021 £000	Armadillo 2 1 April 2021 to 30 June 2021 £000
Income statement (100%)
Revenue	3,170	1,876
Cost of sales	(1,601)	(793)
Administrative expenses	(126)	(45)
Operating profit	1,443	1,038
Goodwill write-off	(982)	(1,849)
Gain on the revaluation of investment properties	4,888	2,795
Net interest payable	(274)	(183)
Current and deferred tax	6,988	4,519
Profit attributable to shareholders	12,063	6,320
Dividends paid	(1,054)	(1,120)
Retained profit	11,009	5,200

Group share (20%)
Operating profit	289	208
Goodwill write-off	(196)	(370)
Gain on the revaluation of investment properties	978	559
Net interest payable	(55)	(37)
Current and deferred tax	1,397	904
Profit attributable to shareholders	2,413	1,264
Dividends paid	(211)	(224)
Retained profit	2,202	1,040
Associates' net assets	-	-

Please see the accounts for the year ended 31 March 2022 for full disclosure of the acquisition.

15. VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000	Revaluation on deemed cost £000	Valuation £000
Freehold stores
At 31 March 2022	908,266	1,392,733	2,300,999
Transfer from investment property under construction	28,141	11,147	39,288
Transfer from leasehold stores	1,182	2,843	4,025
Movement in year	40,285	34,018	74,303
At 31 March 2023	977,874	1,440,741	2,418,615

Leasehold stores
At 31 March 2022	21,732	19,468	41,200
Transfer to freehold stores	(1,182)	(2,843)	(4,025)
Movement in year	274	(6,424)	(6,150)
At 31 March 2023	20,824	10,201	31,025

Total of open stores
At 31 March 2022	929,998	1,412,201	2,342,199
Transfer from investment property under construction	28,141	11,147	39,288
Movement in year	40,559	27,594	68,153
At 31 March 2023	998,698	1,450,942	2,449,640

Investment property under construction
At 31 March 2022	211,853	73,547	285,400
Transfer to investment property	(28,141)	(11,147)	(39,288)
Movement in year	72,063	(57,455)	14,608
At 31 March 2023	255,775	4,945	260,720

Valuation of all investment property
At 31 March 2022	1,141,851	1,485,748	2,627,599
Movement in year	112,622	(29,861)	82,761
At 31 March 2023	1,254,473	1,455,887	2,710,360

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 Group's freehold and leasehold investment properties have been valued at 31 March 2023 by external valuers, Jones Lang Lasalle ("JLL"). The Valuation has been prepared in accordance with the version of the RICS Valuation - Global Standards (incorporating the International Valuation Standards) and the UK national supplement ("the Red Book") current as at the valuation date. 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 financial reporting 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, JLL have confirmed that:

•	this is JLL's second annual valuation for these purposes on behalf of the Group;
•	JLL do not provide other significant professional or agency services to the Group;
•	in relation to the preceding financial year of JLL, 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 JLL is a fixed amount per asset and is not contingent on the appraised value.

The self storage properties have been valued on the basis of Fair Value as fully equipped operational entities, having regard to trading potential. Due to the specialised nature and use of the buildings the approach is to adopt a profits method of valuation in an explicit Discounted Cash Flow calculation and then consider the results in the context of recent comparable evidence of transactions in the sector.

The profits method requires an estimate of the future cash flow that can be generated from the use of the building as a self storage facility, assuming a reasonably efficient operator. Judgements are made as to the trading potential and likely long term sustainable occupancy. Stable occupancy depends upon the nature of demand, size of property and nearby competition, and allows for a reasonable vacancy rate to enable the operator to sell units to new customers. The cash flow runs for an explicit period of 10 years, after which it is capitalised at an all risks yield which reflects the implicit future growth of the business, or a hypothetical sale. This is a valuer's shortcut: maintaining the cash flow into perpetuity would provide the same result. The comparison with recent transactions requires the evidence to be considered in terms of the multiple on net operating profit (or EBITDA/EBITDAR), value per square foot, yield profile etc and then adjusted to reflect differences in location, building factors, tenure, trading maturity and trading risk.

This mirrors the typical approach of purchasers in the self storage market. However, in view of the relatively limited availability of comparable market evidence this requires a degree of valuer judgment. In particular, most of the transactions have comprised share sales due to the nature of the asset class and the terms of those transactions have mostly been kept confidential between the parties.

Portfolio Premium

JLL's valuation report 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. JLL state that in current market conditions they are of the view that there could be a portfolio premium.

Assumptions

A.	Net operating income is based on projected revenue received less projected operating costs, which include a management fee to take account of central/head office costs. 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 five of the cash flow period, to an estimated stabilised/mature occupancy level. In the valuation the assumed stabilised occupancy level for the 108 trading stores (both freeholds and leaseholds) open at 31 March 2023 averages 88% (31 March 2022: 88%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.
C.	The future rental growth incorporated into the valuation averages 2.6% per annum (2022: 2.8% per annum)
D.	The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for asset types such as industrial, distribution and retail warehousing, 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. The net initial yield for the 108 stores is 5.3% (31 March 2022: 5.2%). The weighted average exit capitalisation rate adopted (for both freeholds and leaseholds) is 5.6% (31 March 2022: 5.5%).
E.	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 7.1% (31 March 2022: 7.1%).
F.	Purchaser's costs of 6.8% have been adopted reflecting current progressive Stamp Duty Land Tax rates.

Short leasehold

The same methodology has been used as for freeholds, but the exit capitalisation rate is adjusted to reflect the unexpired lease term at exit. The average unexpired term of the Group's six short leasehold properties is 12.2 years (31 March 2022: 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 the investment property valuation 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	4.7%	(4.3%)	1.1%	(1.2%)

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

JLL 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. JLL have allowed for holding costs and construction contingency, as appropriate. Five of the schemes valued do not yet have planning consent and JLL have reflected the planning risk in their valuation. The cost to complete for the investment property under construction amounts to £217 million.

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 weighted average purchaser's cost of 6.8% on the net 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 JLL to carry out an additional valuation on the above basis, and this results in a higher property valuation at 31 March 2023 of £2,815 million (£104.6 million higher than the value recorded in the financial statements) translating to 56.5 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 2023 £000	31 March 2022 £000
Current
Trade receivables	5,181	4,763
Other receivables	209	949
Prepayments and accrued income	2,924	2,044

	8,314	7,756

Trade receivables are net of a bad debt provision of £1,070,000 (2022: £563,000). 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 more 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 receivables balance are debtors with a carrying amount of £779,000 (2022: £713,000) 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 16 days past due (2022: 18 days past due).

The creation and release of credit loss allowances have been included in cost of sales in the income statement.

The Group measures the loss allowance for the trade receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor. The Group provides in full against all receivables due over 45 days past due because historical experience has indicated that these receivables are generally not recoverable.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Group writes off a trade receivable when there is information indicating that the debtors are in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings.

The following table details the risk profile of trade receivables based on the Group's provision matrix:

Year ended 31 March 2023	Not past due	<31 days	31-45 days	>45 days	Total
Expected credit loss rate (%)	0.2%	16.2%	19.9%	100%	17.1%
Gross carrying amount (£000)	4,413	850	84	904	6,251
Lifetime ECL (£000)	(11)	(138)	(17)	(904)	(1,070)

Net trade receivables at 31 March 2023	4,402	712	67	-	5,181

Year ended 31 March 2022	Not past due	<31 days	31-45 days	>45 days	Total
Expected credit loss rate (%)	0.2%	10.4%	20.5%	100%	10.6%
Gross carrying amount (£000)	4,058	733	71	464	5,326
Lifetime ECL (£000)	(8)	(77)	(14)	(464)	(563)

Net trade receivables at 31 March 2022	4,050	656	57	-	4,763

The above balances are short term and therefore the difference between the book value and the fair value is not significant. Consequently, these have not been discounted.

Movement in the credit loss allowance

	2023 £000	2022 £000
Balance at the beginning of the year	563	223
Credit loss allowance consolidated on Armadillo acquisition	-	41
Amounts provided in year	826	463
Amounts written off as uncollectible	(319)	(164)

Balance at the end of the year	1,070	563

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 credit loss allowance.

17. TRADE AND OTHER PAYABLES

	31 March 2023 £000	31 March 2022 £000
Current
Trade payables	4,208	5,705
Other payables	18,199	13,762
Accruals and deferred income	34,868	27,882

	57,275	47,349

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

The Group invoices its customers in advance, and hence any deferred income balance primarily relates to amounts paid by customers for rental periods beyond the balance sheet date. The Groups' deferred income balance at 31 March 2023 was £17.3 million, an increase of 9% from 31 March 2022 (£15.8 million). This reflects the growth in the Group's revenue during the year.

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.

With the exception of derivative instruments which are classified as a financial liability at fair value through the statement of comprehensive income, financial liabilities are categorised under amortised cost. The Group has the following classes of financial assets:

· Trade and other receivables - trade receivables are initially recognised at transaction price. Other receivables are initially recognised at fair value. Subsequently these assets are measured at amortised cost using the effective interest method, less provision for expected credit losses

· Cash and cash equivalents - cash and cash equivalents represent only liquid assets with maturity of 90 days or less. Bank overdrafts that cannot be offset against other cash balances are shown with borrowings in current liabilities on the balance sheet. Cash and cash equivalents are also classified as amortised cost. They are subsequently measured at amortised cost. Cash and cash equivalents include cash in hand, deposits at call with banks, and other short term highly liquid investments with original maturities of three months or less.

Exposure to credit and interest rate risks arise 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:

	2023 £000	2022 £000
Debt	(494,927)	(420,435)
Cash and cash equivalents	8,329	8,605
Net debt	(486,598)	(411,830)
Balance sheet equity	2,182,446	2,184,375
Net debt to equity ratio	22.3%	18.9%

B. Debt management

The Group currently borrows through a senior term loan, secured on 50 self storage assets, a loan with Aviva Commercial Finance Limited secured on a portfolio of 20 self storage assets, a £120 million loan from M&G Investments Limited secured on a portfolio of 15 self storage assets. The Group also has a $225 million shelf facility available from Pricoa Private Capital (see note 19). 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 2023 the Group had one interest rate derivative in place - £35 million fixed at 0.88% (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 £35 million interest rate swap settles on a three-monthly basis. The floating rate on the interest rate swap is three month SONIA. 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:

	2023 £000	2022 £000
At 1 April	885	(475)
Fair value of Armadillo derivatives on acquisition of remaining interest	-	(29)
Receipt from cancellation of interest rate derivatives	(436)
Fair value movement in the year	(133)	1,389
At 31 March	316	885

The interest rate derivative asset is shown within current assets at the year end, as the interest rate derivative expires within 12 months of the balance sheet date.

The tables below reconcile the opening and closing balances of the Group's finance related liabilities for the current and prior year:

	Financial liabilities measured at amortised cost		Financial liabilities measured at fair value
	Loans £000	Obligations under lease liabilities £000	Interest rate derivatives £000	Total £000
At 1 April 2022	(420,435)	(20,676)	885	(440,226)
Acquisition of Oxford freehold	-	1,671	-	1,671
Cash movement in the year	(74,492)	1,267	(436)	(73,661)
Lease variations	-	(1,958)	-	(1,958)
Fair value movement	-	-	(133)	(133)
At 31 March 2023	(494,927)	(19,696)	316	(514,307)

The difference between the loans balance above and the balance sheet is loan arrangement fees of £2,357,000.

	Financial liabilities measured at amortised cost		Financial liabilities measured at fair value
	Loans £000	Obligations under lease liabilities £000	Interest rate derivatives £000	Total £000
At 1 April 2021	(337,300)	(17,928)	(475)	(355,703)
Cash movement in the year	(32,235)	1,384	-	(30,851)
Acquisition of remaining interest in Armadillo	(50,900)	(4,862)	(29)	(55,791)
Impairment of Cheadle lease	-	1,944	-	1,944
Lease variations	-	(1,214)	-	(1,214)
Fair value movement	-	-	1,389	1,389
At 31 March 2022	(420,435)	(20,676)	885	(440,226)

The difference between the loans balance above and the balance sheet is loan arrangement fees of £2,455,000

D. Interest rate sensitivity analysis

In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group's earnings, without jeopardising its flexibility. Over the longer term, permanent changes in interest rates may have an impact on consolidated earnings. At 31 March 2023, 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 £753,000 (2022: reduced adjusted profit before tax by £493,000) 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 £753,000 (2022: increased adjusted profit before tax by £493,000). 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, who have 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 73,000 occupied rooms 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.

2023 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	158,927	3,159	3,317	7,451	145,000
M&G loan payable at variable rate	85,000	-	-	-	85,000
M&G loan fixed by interest rate derivatives	35,000	-	-	-	35,000
Bank loan payable at variable rate	216,000	-	216,000	-	-
Total	494,927	3,159	219,317	7,451	265,000

2022 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	161,935	3,008	3,159	10,459	145,309
M&G loan payable at variable rate	85,000	-	85,000	-	-
M&G loan fixed by interest rate derivatives	35,000	-	35,000	-	-
Bank loan payable at variable rate	99,000	-	-	99,000	-
Armadillo loan fixed by interest rate derivatives	26,350	-	26,350	-	-
Armadillo loan payable at variable rate	13,150	-	13,150	-	-
Total	420,435	3,008	162,659	109,459	145,309

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. Obligations under 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:

2023	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Obligations under lease liabilities £000	Total £000
From five to twenty years	-	-	278,104	21,766	299,870
From two to five years	-	-	40,726	4,101	44,827
From one to two years	-	-	237,652	2,048	239,700

Due after more than one year	-	-	556,482	27,915	584,397
Due within one year	22,407	(289)	26,566	2,048	50,732

Total	22,407	(289)	583,048	29,963	635,129

2022	Trade and other payables £000	Interest rate swaps £000	Borrowings and interest £000	Obligations under lease liabilities £000	Total £000
From five to twenty years	-	-	153,835	22,765	176,600
From two to five years	-	-	126,541	5,432	131,973
From one to two years	-	(174)	172,163	1,989	173,978

Due after more than one year	-	(174)	452,539	30,186	482,551
Due within one year	19,467	(608)	15,869	1,989	36,717

Total	19,467	(782)	468,408	32,175	519,268

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.

2023	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years	265,000	11,316	1,788	278,104
From two to five years	7,451	33,275	-	40,726
From one to two years	219,317	17,766	569	237,652

Due after more than one year	491,768	62,357	2,357	556,482
Due within one year	3,159	23,407	-	26,566

Total	494,927	85,764	2,357	583,048

2022	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000
From five to twenty years	145,309	7,156	1,370	153,835
From two to five years	109,459	16,533	549	126,541
From one to two years	162,659	8,968	536	172,163

Due after more than one year	417,427	32,657	2,455	452,539
Due within one year	3,008	12,861	-	15,869

Total	420,435	45,518	2,455	468,408

19. BORROWINGS

Secured borrowings at amortised cost	31 March 2023 £000	31 March 2022 £000
Current liabilities
Aviva loan	3,159	3,008
	3,159	3,008
Non-current liabilities
Bank borrowings	216,000	99,000
Armadillo loans	-	39,500
Aviva loan	155,768	158,927
M&G loan	120,000	120,000
Unamortised loan arrangement costs	(2,357)	(2,455)

Total non-current borrowings	489,411	414,972

Total borrowings	492,570	417,980

The weighted average interest rate paid on the borrowings during the year was 4.2% (2022: 2.8%).

The Group has £24 million in undrawn committed bank borrowing facilities at 31 March 2023, which expire after between one and two years (2022: £141 million expiring after between two and three years).

The Group has a £158.9 million fixed rate loan with Aviva Commercial Finance Limited, expiring in September 2028. The loan is secured over a portfolio of 20 freehold self storage centres. The annual fixed interest rate on the loan is 3.4%. The loan has an amortising element of £13.9 million which runs to April 2027.

The Group has a secured £240 million five year revolving bank facility with Lloyds, HSBC and Bank of Ireland expiring in October 2024, with a margin of 1.25%.

The Armadillo loans were repaid during the year using the RCF bank facility.

The Group has a £120 million loan with M&G Investments Limited, with a bullet repayment in September 2029. The loan is secured over a portfolio of 15 freehold self storage centres.

In addition to the facilities above, during the year, the Group signed a $225 million credit approved shelf facility with Pricoa Private Capital ("Pricoa"), to be drawn in fixed sterling notes. The Group can draw the debt in minimum tranches of £10 million over the next two and a half years with terms of between 7 and 15 years at short notice, typically 10 days.

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 repaid the Armadillo debt facilities during the year (£39.5 million drawn). The movement has been shown net in the cash flow statement. The other Group loans are not revolving, and any movements in those loans are disclosed in a footnote to note 26B.

The Group was in compliance with its banking covenants at 31 March 2023 and throughout the year. The principal covenants are summarised in the table below:

Covenant	Covenant level	At 31 March 2023
Consolidated EBITDA	Minimum 1.5x	7.2x
Consolidated net tangible assets	Minimum £250m	£2,182.4m
Bank loan interest cover	Minimum 1.75x	9.1x
Aviva loan interest service cover ratio	Minimum 1.5x	5.9x
Aviva loan debt service cover ratio	Minimum 1.2x	3.8x
M&G interest cover	Minimum 1.5x	4.9x

The Consolidated EBITDA covenant is calculated by dividing the consolidated EBITDA generated by the Group's stores by the Group's consolidated net finance costs.

The bank loan interest cover, the Aviva loan interest service cover ratio and the M&G interest cover covenants are calculated by dividing the EBITDA generated by each loan's security pool by the interest payable for each loan for each defined time period. The Aviva loan debt service cover ratio is calculated by taking the EBITDA generated by the Aviva security pool and dividing by the Aviva loan interest payable and facility amortisation.

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 2023
Gross financial liabilities	494,927	301,000	193,927	4.7%	4.8 years	3.9 years

At 31 March 2022
Gross financial liabilities	420,435	197,150	223,285	3.1%	4.6 years	3.4 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 IFRS 2 £0.1 million (2022: £0.1 million), corporation tax losses £6.3 million (2022: £6.5 million), capital allowances in excess of depreciation £0.2 million (2022: £0.3 million) and capital losses £2.1 million (2022: £2.1 million) in respect of the non-REIT taxable business have not been recognised as it is not considered probable that sufficient taxable profits will arise in the relevant taxable entity. The unused tax losses can be carried forward indefinitely.

21. OBLIGATIONS UNDER LEASE LIABILITIES

	Minimum lease payments		Present value of minimum lease payments
	2023 £000	2022 £000	2023 £000	2022 £000
Amounts payable under lease liabilities:
Within one year	2,048	1,989	2,020	1,958
Within two to five years inclusive	6,149	7,421	5,652	6,651
Greater than five years	21,766	22,765	12,024	12,067

	29,963	32,175	19,696	20,676

Less: future finance charges	(10,267)	(11,499)

Present value of lease liabilities	19,696	20,676

All obligations under lease liabilities 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
	2023 £000	2022 £000

Ordinary shares of 10 pence each	18,427	18,397

Movement in issued share capital
Number of shares at 31 March 2021		175,880,470
Issue of shares - placing		7,751,938
Exercise of share options - Share option schemes		334,970
Number of shares at 31 March 2022		183,967,378
Exercise of share options - Share option schemes		298,595
Number of shares at 31 March 2023		184,265,973

The share capital of the Company consists only of fully paid ordinary shares with a nominal (par) value of £0.10 per share. There are no restrictions on the ability of shareholders to receive dividends, nor on the repayment of capital. All ordinary shares are equally eligible to receive dividends and the repayment of capital in accordance with the Company's Articles of Association and represent one vote at shareholders' meetings of the Company.

At 31 March 2023 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 2023	Number of ordinary shares 2022
29 July 2014	nil p**	29 July 2017	29 July 2024	-	830
21 July 2015	nil p**	21 July 2018	21 July 2025	989	1,989
22 July 2016	nil p**	22 July 2019	21 July 2026	1,944	2,944
2 August 2017	nil p**	2 August 2020	2 August 2027	5,809	5,809
13 March 2018	675.4p*	1 April 2021	1 April 2022	-	1,599
24 July 2018	nil p**	24 July 2021	24 July 2028	54,441	96,002
11 March 2019	749.9p*	1 April 2022	1 April 2023	-	46,996
19 July 2019	nil p **	19 July 2022	19 July 2029	170,545	353,920
2 March 2020	947.0p	1 April 2023	1 April 2024	43,016	48,241
5 August 2020	nil p **	5 August 2023	5 August 2030	372,757	398,146
1 March 2021	903.2p *	1 April 2024	1 April 2025	81,216	86,670
22 July 2021	nil p **	22 July 2024	22 July 2031	300,444	319,922
8 August 2022	1060.3p *	8 August 2025	8 February 2026	72,429	-
21 July 2022	nil p **	21 July 2025	21 July 2032	443,218	-

				1,546,808	1,363,068

* 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 (2022: 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 Deferred Bonus Plan. The Group recognised a total expense in the year related to equity-settled share-based payment transactions of £3,735,000 (2022: £3,390,000).

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 Globalshares.

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 2019 vested to 90.1% of their potential. The weighted average share price at the date of exercise for options exercised in the year was £13.13 (2022: £14.84).

LTIP scheme	2023 No. of options	2022 No. of options
Outstanding at beginning of year	1,179,562	1,223,533
Granted during the year	504,431	382,433
Lapsed during the year	(83,846)	(176,404)
Exercised during the year	(250,000)	(250,000)

Outstanding at the end of the year	1,350,147	1,179,562

Exercisable at the end of the year	107,656	124,901

The weighted average fair value of options granted during the year was £2,795,000 (2022: £1,742,000).

Participants pay the nominal value of the shares when exercising options under the LTIP scheme.

Options outstanding at 31 March 2023 had a weighted average contractual life of 7.9 years (2022: 8.1 years).

Employee Share Save Scheme ("SAYE")	2023 No. of options	2023 Weighted average exercise price (£)	2022 No of options	2022 Weighted average exercise price (£)
Outstanding at beginning of year	183,506	8.75	281,708	8.15
Granted during the year	72,715	10.60	-	-
Forfeited during the year	(10,965)	9.29	(13,232)	8.92
Exercised during the year	(48,595)	7.50	(84,970)	6.76
Outstanding at the end of the year	196,661	9.71	183,506	8.75

Exercisable at the end of the year	-	-

Options outstanding at 31 March 2023 had a weighted average contractual life of 1.7 years (2022: 1.6 years).

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

	LTIP	SAYE
Expected volatility	n/a	27%
Expected life	3 years	3 years
Risk-free rate	0.04%	0.04%
Expected dividends	2.6%	2.9%

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 Bonus 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.

24. CAPITAL COMMITMENTS

At 31 March 2023 the Group had £6.1 million of amounts contracted but not provided in respect of the Group's properties (2022: £20.9 million of capital commitments).

25. EVENTS AFTER THE BALANCE SHEET DATE

There are no reportable post balance sheet events.

26. CASH FLOW NOTES

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

	Note	2023 £000	2022 £000
Profit after tax		73,332	697,274
Taxation		1,977	1,602
Share of profit of associates		-	(3,677)
Other operating income	3	(2,185)	-
Investment income		(9)	(1,412)
Finance costs		17,027	10,604
Operating profit		90,142	704,391

Loss/(gain) on the revaluation of investment properties	14a, 15	29,861	(597,224)
Gain on disposal of investment property		-	(584)
Depreciation of plant, equipment, and owner-occupied property	14b	888	857
Depreciation of lease liability capital obligations	14a,14b	1,569	1,659
Employee share options	6	3,735	3,390
Cash generated from operations pre working capital movements		126,195	112,489

Increase in inventories		(13)	(71)
(Increase)/decrease in receivables		(740)	1,550
Increase in payables		3,531	6,422
Cash generated from operations		128,973	120,390

b) Reconciliation of net cash flow movement to net debt

	Note	2023 £000	2022 £000

Net decrease in cash and cash equivalents in the year		(276)	(3,717)
Cash flow from increase in debt financing¹		(74,492)	(32,235)
Change in net debt resulting from cash flows		(74,768)	(35,952)

Debt consolidated following Armadillo acquisition		-	(50,900)

Movement in net debt in the year		(74,768)	(86,852)
Net debt at the start of the year		(411,830)	(324,978)
Net debt at the end of the year	18A	(486,598)	(411,830)

¹ Made up of a net increase of £117.0 million in the RCF facility, repayment of the Armadillo loans of £39.5 million and repayments of the Aviva facility of £3.0 million (2022: made up of a net reduction of £53.5 million in the RCF facility, an increase of £50 million in the M&G facility, an increase of £50 million in the Aviva facility, repayments of the Aviva facility of £2.9 million, and repayments of the Armadillo loans of £11.4 million).

In line with IAS 1.41, this disclosure note has been represented to provide further detail and consistency in both years.

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

As described in note 14, the Group had a 20% interest in Armadillo Storage Holding Company Limited and a 20% interest in Armadillo Storage Holding Company 2 Limited. The Group acquired the remaining interest in both companies that it did not own on 1 July 2021. From this date, the Companies were wholly owned subsidiaries of the Group and hence the transactions subsequent to that date are not disclosable. Up to the date of acquisition in 2021, the Group entered into transactions with the Companies on normal commercial terms and earned management fees of £238,000 from Armadillo 1 and £87,000 from Armadillo 2.

AnyJunk Limited

Jim 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 £16,000 (2022: £10,000).

London Children's Ballet

The Group signed a Section 106 agreement with Wandsworth Council relating to the development of our Battersea store, which required the Group to provide cultural space to Wandsworth Borough Council. In 2021, the Group granted a twenty year lease over this space to London Children's Ballet at a peppercorn rent, who in turn have agreed to enter into a Social Agreement with Wandsworth Borough Council coterminous with the lease. Jim Gibson is the Chairman of Trustees of the London Children's Ballet. London Children's Ballet rent storage space from the Group on normal commercial terms, amounting to £3,000 during the year (2022: £3,000). The Group sponsored a performance of the London Children's Ballet during the year, amounting to £8,000 (2022: £nil).

Doncaster Security Operations Centre Limited ("DSOC")

The Group has invested £588,000 in DSOC. DSOC provided alarm and CCTV monitoring services to the Group under normal commercial terms during the year, amounting to £301,000 (2022: £281,000).

Treepoints Limited

Jim Gibson is a Non-Executive Director and an investor in City Stasher Limited, which in turn has a minority investment in Treepoints Limited. Treepoints Limited provided offsetting tree planting services in respect of our online packing material sales, under normal commercial terms during the period, amounting to £8,000 (2022: £3,000).

Ukrainian Sponsorship Pathway UK

Nicholas Vetch and Heather Savory are trustees of a charity called Ukrainian Sponsorship Pathway UK ("USPUK") to help Ukrainians displaced by the war to travel to the UK as part of the "Homes for Ukraine" scheme. The charity has set up offices in Warsaw and Krakow and is one of the few that has been recognised for this purpose by the UK Government. We are proud to be financial supporters of this new charity and the Board approved a donation which was made in May 2022 of £50,000 (2022: £nil).

No other related party transactions took place during the years ended 31 March 2023 and 31 March 2022.

28. GLOSSARY

Absorption	The rate of growth in occupancy assumed within the external property valuations from the current occupancy level to the assumed stable occupancy level.
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 NTA adjusted for an investment property valuation carried out at purchasers' costs of 2.75%, see note 13.
Adjusted Profit Before Tax	The Company's pre-tax EPRA earnings measure with additional Company adjustments, see note 10.
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.
Committed facilities	Available undrawn debt facilities plus cash and cash equivalents.
Consolidated EBITDA	Consolidated EBITDA calculated in accordance with the terms of the Group's Revolving Credit Facility Agreement.
Debt	Long-term and short-term borrowings, as detailed in note 19, excluding lease liabilities 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, see note 12.
EPRA NTA per share	EPRA NTA divided by the diluted number of shares at the year end.
EPRA net tangible asset value (EPRA NTA)	IFRS net assets excluding the mark-to-market on interest rate derivatives, deferred taxation on property valuations where it arises, and intangible assets. It is adjusted for the dilutive impact of share options.
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 working capital movements, 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 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and the Armadillo stores.
Like-for-like store 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. In 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and the Armadillo stores.

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.
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 year's net operating income expressed as a percentage of capital value, after adding notional purchaser's costs pre administrative expenses.
Net operating income	Store EBITDA after an allocation of central overhead.
Net operating income on stabilisation	The projected net operating income delivered by a store when it reaches a stable level of occupancy.
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 its move-ins and move-outs.
Net Renewable Energy Positive	Big Yellow's strategy is that by 2030 the Group will generate as much renewable energy as it is able to across its store portfolio and meet any remaining Scope 1 and Scope 2 emissions via the retirement of REGOs from offsite energy generation.
Net rent per sq ft	Storage revenue generated from in place customers divided by occupancy.
Net Zero Strategy	The Group's published strategy to have Net Zero Scope 1, 2 and 3 Emissions.
Non like-for-like stores	Stores excluded from like-for-like metrics, as they were acquired, opened or closed in the current or preceding financial year. In 2023 this excludes Aberdeen, Harrow, Hayes, Hove, Kingston North, Uxbridge, and the Armadillo stores.
Occupancy	The space occupied by customers divided by the MLA expressed as a %.
Occupied space	The space occupied by customers in sq ft.
Other storage related income	Packing materials, insurance, and other storage related fees.
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.
REGO	Renewable Energy Guarantees of Origin
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 period.
Store EBITDA	Store earnings before interest, tax, depreciation, and amortisation, see reconciliation in the portfolio summary.
Store revenue	Revenue earned from the Group's open self storage centres.
TCFD	Task Force on Climate Related Financial Disclosure.
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

	2023 £m	2022 £m	2021 £m	2020 £m	2019 £m	2018 £m	2017 £m	2016 £m	2015 £m	2014 £m
Results
Revenue	188.8	171.3	135.2	129.3	125.4	116.7	109.1	101.4	84.3	72.2

Operating profit before gains and losses on property assets	120.0	106.6	81.5	80.0	76.7	70.9	65.3	59.9	48.4	39.5

Cash flow from operating activities	112.0	107.1	76.7	73.6	72.2	63.0	56.0	55.5	42.4	32.8

Profit before taxation	75.3	698.9	265.8	93.4	126.9	134.1	99.8	112.2	105.2	59.8

Adjusted profit before taxation	106.0	96.8	74.6	71.0	67.5	61.4	54.6	49.0	39.4	29.2

Net assets	2,182.4	2,184.4	1,453.9	1,163.9	1,123.9	981.1	890.4	829.4	750.9	594.1

Diluted EPRA earnings per share	56.5p	52.5p	42.4p	42.1p	41.4p	38.5p	34.5p	31.1p	27.1p	20.5p
Declared total dividend per share	45.2p	42.0p	34.0p	33.8p	33.2p	30.8p	27.6p	24.9p	21.7p	16.4p

Key statistics
Number of stores open**	108	105	78	75	74	74	73	71	69	66
Store MLA (000 sq ft)	6,292	6,098	4,930	4,688	4,622	4,631	4,551	4,464	4,344	4,170
Sq ft occupied (000)**	5,088	5,107	4,201	3,781	3,810	3,730	3,551	3,363	3,178	2,832
Occupancy (decrease)/ increase in year (000 sq ft)*	(19)	906	420	(29)	80	179	188	185	346	200
Closing net rent per sq ft**	£32.48	£29.92	£28.71	£28.15	£27.28	£26.74	£26.03	£25,90	£25.23	£24.85
Number of occupied rooms**	73,000	73,000	62,000	56,500	56,000	55,000	52,500	50,000	47,250	41,800
Average number of employees during the year**	465	427	370	361	347	335	329	318	300	289

* - the occupancy growth in 2015, 2017, 2022 and 2023 includes the acquisition of existing stores

** - from 2022 this includes the Armadillo stores, which the Group acquired the remaining 80% of which it did not previously own on 1 July 2021

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Big Yellow Group (BYG)

Tuesday, 3rd December 2024

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