Results for the year ended 31 March 2022

RNS Number : 4873M

Big Yellow Group PLC

23 May 2022

Big Yellow Group PLC

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

Results for the YEAR ended 31 MARCH 2022

Strong full year results driven by rate and occupancy

Financial metrics	Year ended 31 March 2022	Year ended 31 March 2021	Change
Revenue	£171.3m	£135.2m	27%
Store revenue⁽¹⁾	£169.3m	£132.5m	28%
Like-for-like store revenue^(1,2)	£148.1m	£131.1m	13%
Store EBITDA⁽¹⁾	£120.9m	£91.9m	32%
Adjusted profit before tax⁽¹⁾	£96.8m	£74.6m	30%
EPRA earnings per share⁽¹⁾	52.5p	42.4p	24%
Dividend - final - total	21.4p 42.0p	17.0p 34.0p	26% 24%
Statutory metrics
Profit before tax	£698.9m	£265.8m	163%
Cash flow from operating activities	£107.1m	£76.7m	40%
Basic earnings per share	385.4p	152.3p	153%
Store metrics
Store Maximum Lettable Area ("MLA")⁽¹⁾	6,098,000	4,930,000	24%
Closing occupancy (sq ft)⁽¹⁾	5,107,000	4,201,000	22%
Occupancy growth in the period⁽¹⁾	906,000 sq ft	420,000 sq ft	116%
Closing occupancy⁽¹⁾	83.7%	85.2%	(1.5 ppts)
Occupancy - like-for-like stores (%)^(1,2)	86.7%	87.4%	(0.7 ppts)
Average occupancy⁽¹⁾	86.7%	83.2%	3.5 ppts
Closing net rent per sq ft^(1,3)	£29.92	£28.71	4%
Like-for-like average net achieved rent per sq ft^(1,2)	£30.51	£28.20	8%
Like-for-like closing net rent per sq ft^(1,2)	£31.91	£28.84	11%

¹ See note 28 for glossary of terms

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

³ The increase in closing net rent per sq ft is lower than the like-for-like increase in closing net rent per sq ft due to the inclusion of the regional Armadillo stores which were acquired on 1 July 2021

Highlights

•	Revenue growth for the year was 27%, which includes nine months of revenue from the acquired Armadillo stores. Like-for-like store revenue is up 13%, driven by gains in average occupancy and the improvement in average net rent
•	Average occupancy increase of 3.5 ppts, with like-for-like closing occupancy at 86.7%
•	Like-for-like average achieved net rent per sq ft increased by 8% year on year, like-for-like closing net rent up 11% from March 2021
•	Store revenue for the fourth quarter was £43.9 million, an increase of 30% from £33.8 million for the same quarter last year, with like-for-like store revenue for the fourth quarter up 10% compared to the same quarter last year
•	Cash flow from operating activities increased by 40% to £107.1 million
•	Adjusted profit before tax up 30% to £96.8 million, EPRA earnings per share up 24% to 52.5p
•	42.0 pence per share full year dividend, an increase of 24%
•	Statutory profit before tax of £698.9 million, up 163% from prior year due to a higher revaluation gain on investment properties
•	Three new stores opened in the year in Uxbridge, Hayes (both London) and Hove, adding 185,000 sq ft of capacity
•	Acquisition of new development sites in Kentish Town and West Kensington (both London) taking pipeline to 12 development sites of approximately 1.0 million sq ft (16% of current MLA), of which ten are in London
•	Planning consent granted for new stores in Slough (90,000 sq ft MLA) and Newcastle (60,000 sq ft MLA). Seven of the 12 pipeline stores now have planning
•	Placing of 7.8 million shares in June 2021 raising £97.6 million (net of expenses) to fund strategic acquisitions of remaining interest in Armadillo and development site in West Kensington. The combined transactions are earnings accretive
•	Increase of £100 million in Aviva and M&G loans, increasing our total debt capacity to £575 million. Current net debt is £412 million, with available headroom of £163 million, and over £100 million of surplus land and property to be sold over the medium term

Nicholas Vetch, Executive Chairman of Big Yellow, commented:

"The Group has delivered strong revenue growth, driving earnings growth from a combination of occupancy, improvements in average net rent driven by our yield management systems, and the accretive acquisition of Armadillo.

The business delivered very strong occupancy growth from the end of the first lockdown in 2020 through to last summer, benefiting from an acceleration in certain structural trends around housing, working from home, the move to online trading and the like. These trends, combined with the shortage of quality flexible mini-warehousing space, from which to operate small scale storage and e-fulfilment is helping to drive our demand. We believe these are long-term trends.

Since our last results, the events in Ukraine have added to macroeconomic uncertainty. We spend considerable time planning for such situations, having successfully navigated two crises since the Global Financial Crisis.

We enjoy over 10 times interest cover from cash flows that may not be immune to adversity but have proven themselves to be resilient for over twenty years.

Our task is not only to defend well, but also to find new advantage and opportunity at times like this, which we are in a position to do given the strength of our capital structure and business model."

ABOUT US

Big Yellow is the UK's brand leader in self storage. Big Yellow now operates from a platform of 105 stores, including 24 stores branded as Armadillo Self Storage. We own a further 12 self storage development sites of which seven have planning consent. The current maximum lettable area of the existing platform is 6.1 million sq ft. When fully built out the portfolio will provide approximately 7.1 million sq ft of flexible storage space. 98% of our stores and sites by value are held freehold and long leasehold, with the remaining 2% 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 2022.

We acquired the 80% of the Armadillo store portfolio that we did not previously own on 1 July 2021, and these results therefore benefit from consolidating the Armadillo business for nine months of the year. The Armadillo portfolio has been managed as part of our operating platform and has therefore been fully integrated for many years. In these results we have separated out the Armadillo performance in the portfolio summary to provide a transparent understanding of the performance of the business.

The Group has delivered strong revenue growth, driving earnings growth from a combination of occupancy, improvements in average net rent driven by our yield management systems, and the accretive acquisition of Armadillo.

As expected, we did see a return to our more normal seasonal fall in occupancy in the third quarter of the financial year, accentuated by a very strong early summer which in itself was partially influenced by distortions caused by the stamp duty holiday coming to an end.

In the fourth quarter, we would normally see increasing occupancy growth from mid-February to the end of March. We have experienced some softness in demand since the tragic events began to unfold in Ukraine, following the Russian invasion. As a consequence, our occupancy performance was largely flat in the fourth quarter with a small gain, with year-on-year like-for-like revenue growth of 10% largely driven by increases in net achieved rents. This is a needs-driven business with many of our customers making significant decisions around moving, business start-ups, extensions and the like, and at times of significant uncertainty there can be some hesitancy; although, based on previous experience, these decisions are often only deferred. We are now some weeks on, and we are seeing an improvement in the demand picture with prospects and move-ins up on last year in April. We can also state that the trading patterns in our business in terms of move-ins and move-outs have now normalised, following two years of pandemic related distortions.

Financial results

Revenue for the year was £171.3 million (2021: £135.2 million), an increase of 27%. Like-for-like store revenue growth (see note 28 ) was 13% driven by a combination of increases in average occupancy and average net rent . Like-for-like store revenue excludes new store openings, and the impact of the acquisition of the remaining interest in Armadillo. Armadillo was previously equity accounted as an associate, and from 1 July 2021 is consolidated, as we now own 100%.

Store revenue for the fourth quarter was £43.9 million, an increase of 30% from £33.8 million for the same quarter last year.

Operating cash flow (after net finance costs) increased by £30.4 million (40%) to £107.1 million for the year ( 2021 : £76.7 million).

The Group made an adjusted profit before tax in the year of £96.8 million up 30% from £74.6 million in 2021. EPRA earnings per share increased by 24% to 52.5p (2021: 42.4p) with an equivalent 24% increase in the dividend per share for the year.

The Group's statutory profit before tax was £698.9 million, an increase of 163% from £265.8 million in the prior year with a higher revaluation gain on our investment properties in the year, reflecting the growth in cash flow and some improvement in cap rates. The Financial Review and note 15 contains further details on the Group's valuation, which has this year been carried out for the first time by Jones Lang Lasalle.

Acquisition of Armadillo

On 1 July, the Group acquired the remaining 80% interest in Armadillo which it did not previously own from its JV partners. The total consideration was £119 million, including underlying debt of £50.9 million for a Year One net operating income ("NOI") yield of 7.7% (based on a projected NOI of £10.9 million). The acquisition was funded by a combination of equity from last summer's placing and the pre-existing debt and is, and continues to be, earnings enhancing.

The Armadillo portfolio is more regional and as a result the proportion of our revenue derived from London and the South East reduced from 82% to 74%, albeit we expect this weighting to revert over the medium term to over 80%, given our development pipeline is focused largely on London and the South East. Armadillo represents 11% of the Group's total combined EBITDA and 12% of revenue.

We continue to look to acquire existing assets into the business which meet our requirements in terms of location, quality of build, environmental rating, and capacity.

Investment in new capacity

We opened three new stores in the year adding 185,000 sq ft to our platform. Initial trading has been encouraging, with Uxbridge (opened June 2021) at 75% occupancy at the date of these results, Hayes (opened January 2022) at 21% occupancy and Hove (opened mid-March 2022) at 22% occupancy. Uxbridge broke even at the EBITDA level within four months of opening, and we expect the other two stores to start making a positive contribution to earnings this year. We will continue to open our pipeline stores and are now seeing the benefit of several years building up the development pipeline and successfully gaining planning consents.

Site acquisitions

In our core area of operation, being London and its commuter towns, we continue to see increased competition for sites from urban logistics and the industrial sector alongside mixed use residential and other uses. Opportunities are scarce and well-bid when they do come along, particularly in London.

In April the Group acquired a prime Zone 2 0.9 acre site on Regis Road in Kentish Town, North London for £16.5 million. We will be seeking planning permission for a 68,000 sq ft self storage centre on the site.

In June the Group acquired 66 Hammersmith Road, West Kensington, in London for £26 million. This is a strategic acquisition adjacent to the Olympia conference centre, a short distance from one of the wealthiest and densest enclaves in London. Subject to planning, the store is currently estimated to open in 2025, and will provide approximately 175,000 sq ft of space, including 7,000 sq ft of SME space.

Planning

The planning system remains complex and a time-consuming process. During the year we were pleased to be granted planning consents for new stores in Slough and Newcastle. Seven of the 12 stores in our development pipeline now have planning consent, with the balance at various stages of planning.

Development pipeline

Big Yellow now has a pipeline comprising 12 development sites with a cost to complete of approximately £190 million, which will be phased over the next five years as we build out stores. As a result of the well-documented supply chain, Covid-related issues, and rising energy, labour, and raw materials costs, we are experiencing higher than normal inflation in construction costs. We have reflected this in the projected costing of our pipeline and will continue to keep it under review.

These store openings are expected to add approximately 1.0 million sq ft of storage space to the portfolio, an increase of 16% from the current maximum lettable area of the Group's portfolio. There is also available capacity for growth in the open store portfolio of a further 1.0 million sq ft.

Our current estimate of net operating income at stabilisation, at today's prices, for the 12 store pipeline is approximately £30 million. The total development cost is estimated to be approximately £353 million implying an 8.5% net operating income return on cost.

Capital Structure

The Group's interest cover for the period (expressed as the ratio of cash generated from operations pre-interest against interest paid pre working capital movements) was 10.5 times (2021: 9.8 times). This is comfortably ahead of our internal minimum interest cover requirement of five times.

Net debt is £411.8 million at 31 March 2022, and we have available liquidity of £162.8 million and the business continues to generate positive post-dividend cash flow both of which we will use to fund future growth. The average cost of debt on drawn facilities is now 3.1% and the marginal cost of RCF bank debt is currently 2.25%.

In addition, the Group has property surplus to its needs which will be sold over the medium term, generating net cash proceeds estimated currently at over £100 million. We were therefore very pleased to announce this morning the exchange of contracts on the sale of our industrial warehouse scheme at Harrow for gross sales proceeds of £61 million. Completion of the sale is conditional, inter alia, on practical completion of the development, and is expected to occur in August of this year. At 31 March 2022 the cost to complete the development was £4.5 million.

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 21.4 pence per share. This brings the total distribution declared for the year to 42.0 pence per share representing an increase of 24 % from 34.0 pence per share last year.

Our people

The last two years has been very challenging for everyone with significant and continuing uncertainty and against all of that we have managed, not only to remain open for business, but also to improve our operations with many enhancements, continue to expand, and deliver what are excellent results.

This can only be achieved when our colleagues feel valued in a culture which is inclusive with high levels of employee engagement - one of the key planks of our business strategy from day one. I would like to thank all of the team for their continued efforts over the last year.

Board

Michael O'Donnell joined the Board as a Non-Executive Director with effect from 1 September 2021. Michael is a former Managing Director of LGV Capital, a private equity firm, and has significant corporate experience, with a focus on high-growth companies.

Richard Cotton will be stepping down from the Board at the Annual General Meeting in July 2022, after serving his full term as a Non-Executive. I have worked with Richard for nearly thirty years: he advised on the flotations of Edge Properties and in 2000 that of Big Yellow and a short while after his departure from investment banking joined our Board. In that time few days have passed when I have not sought his advice and the best of counsel it has been. Whatever successes this Company has enjoyed it is in good part due to his involvement, for which I thank him.

Outlook

We enjoy over 10 times interest cover from cash flows that may not be immune to adversity but have proven themselves to be resilient for over twenty years.

Nicholas Vetch

Executive Chairman
23 May 2022

CEO introduction

When we reported our results at the interim stage and in January for the third quarter, we were looking forward to a normalisation of our trading as the economy fully reopened with Covid risks receding. The 24^th of February Russian invasion of Ukraine and the tragic events that have been unfolding are not only a humanitarian crisis, but have also increased uncertainty and stoked inflation. Once again, I was impressed by how our teams around the country responded to requests from local community groups for packing materials and storage to support their collection of vital goods prior to being transported to Poland and other EU border countries. The support for local charities through the provision of free storage space is something we have done for many years and there are currently over 200 local charities across the business receiving free or discounted storage. In the year ended 31 March 2022, the total cost of free or discounted storage and packing materials was over £300,000.

Nick Vetch has recently, with others, founded 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 in May 2022 of £50,000. Nick, Richard Cotton and myself have all made personal donations and Heather Savory has kindly volunteered as a Trustee of the charity.

Over the two year pandemic period, we have remained open for trading thanks to the loyalty, determination, and conscientiousness of our teams, providing our services to businesses, individuals, and charities. Furthermore, we have made significant progress on a number of fronts in developing and growing our business.

In response to feedback from our colleagues and some of the learnings of trading through the pandemic, we have increased our investment in, and focus on, inclusivity, diversity, and wellbeing. We do believe that we have a highly engaged and positive culture. We carry out externally facilitated surveys of our colleagues every two years and responded to last Autumn's with some key changes to improve work/life balance as follows:

‑	we have a fairer flexible working policy for all employees at our Bagshot head office - employees have the option to work from home two days a week;
‑	we have reduced our store reception opening hours across the week by five and a half hours, which we were able to do as our stores are fully automated to existing customers; and
‑	there are times when our stores have only one team member working on a given day, and in recognition of that we have increased pay for any such lone trading.

Our Foundation continues to grow and over the last two years we have donated some £345,000 to our seven charity partners, St Giles Trust, Bounce Back, Back-up Trust, Street League, Down Syndrome Association, Breaking Barriers, and Hire a Hero, all of whom are focussed on the rehabilitation of those needing specialist support back into work.

Over the pandemic period, we continued to innovate and invest in our business to improve efficiency. Examples include a significantly improved check-in online system which was launched in the Spring of last year; our Learn digital training platform; paperless interaction with customers at stores; and a new digital facilities management system, which was launched recently. In addition, we have made further investment into our digital infrastructure, comms, and cyber security. We have always, and will continue to, invest in technology which can improve the customer experience and productivity and efficiency of all aspects of our business.

Since the first lockdown in the Spring of 2020, we have seen the benefit of the hard work our property team put into building our store pipeline, with the opening of six stores with a total storage space of 389,000 sq ft. All are performing well and making an increasing contribution to our growth in cash flow and earnings. This is illustrated in our portfolio summary, with the Big Yellow stores which are less than three years old increasing their EBITDA by £3.0 million during the year to £3.7 million, with their EBITDA margin increasing from 28.0% to 51.9%. Having opened these stores it is important that we continue to acquire new sites, and in the last year we have acquired two development sites in Kentish Town and West Kensington in addition to the three acquired the year before. Our current pipeline consists of 12 development sites with the potential to add 1.0 million sq ft. Seven of these have planning consents, following the grant of planning consents for Slough and Newcastle during the year, with the planning applications on Wapping and Staines currently submitted pending a decision this Summer.

We started managing the first ten Armadillo stores in 2009 and were successful in acquiring them in joint venture with our Australian partners five years later when they were put up for sale. Our strategy at the time was to grow this regional brand through acquisition of existing stores that met key requirements for us around the location, the quality of the building and a minimum size. We would then rebrand these new stores and add them seamlessly to our digital platforms alongside the Big Yellow store portfolio. They are managed in exactly the same way and have allowed us to expand our store network into parts of the country where we were unlikely to build a Big Yellow but were still reasonably sized urban conurbations. This network has allowed us to improve the efficiency of our central overhead, particularly marketing, service our national customers more efficiently, and also to provide an opportunity for our people to move around the business with more opportunity for promotion. Following discussions with our JV partner, we successfully acquired the 80% of the Partnership we did not own, funded by a placing and the assimilation onto our balance sheet of the existing bank debt. This transaction is earnings enhancing and very importantly has been well received by all the staff within Armadillo who are now firmly part of the Big Yellow family. There are no changes into how the portfolio has been operated since the acquisition and we will run it as a regional brand alongside Big Yellow. We intend to make existing store acquisitions in the future, alongside our new-build development programme, however finding product of the right quality, particularly around environmental standards, remains difficult.

Sustainability remains a key focus and during the year we were pleased to publish our Net Renewable Energy Positive and Net Zero Strategy. We have installed solar PVs on all new stores since 2008 and will continue to do so. However, we have commenced a £10 million programme to retro-fit solar PV across 36 existing Big Yellow stores to maximise their solar energy generation, with the first 12 completing by this Autumn. We also in the process of reviewing the Armadillo portfolio with a view to increasing this investment and adding them to the programme.

T he Sustainability Committee has approved stretching Science Based Targets which will be published as part of our full 2022 CSR report. I am fully aware that getting to Net Zero is a challenge for all businesses and we as a Board are committed to meeting that challenge in the coming years. Battery technology will be a key aspect of any carbon reduction strategy and we have recently commenced a battery pilot study at our Guilford Central store, the aim being to improve our energy management at stores. Battery technology will doubtless develop further, and I am excited at the possibility of retaining self-generated electricity for use at our stores rather than sending it to the grid.

Turning to our results, this has been a strong performance and over the last year reflecting a significant increase in occupancy over the summer and consequent increase in average rents. Self storage has a very broad and diverse customer base with demand largely driven by need, with the average customer moving out in a year staying some 8 months with over half of our customers staying more than 12 months and some 40% more than two years. Our customer licence provides flexibility to the customer in that they stay for as long as they need the space and can leave with a week's notice, but it does allow us to move pricing regularly with 30 days' notice. As a consequence, we can deploy strategies to increase our pricing in a higher inflationary environment, so as to protect our operating margins. In October last year we increased our scheduled rents to reflect projected levels of inflation and our yield management systems have been adjusted to deliver higher levels of rental growth. Our aim is to achieve sustainable rental growth over the long term.

From mid-April we are seeing an improvement in demand after the initial shock of the Ukraine conflict. We remain confident in our business model and are looking forward to our seasonally stronger summer trading period in an economy that has fully reopened.

Jim Gibson, Chief Executive Officer

Marketing and Operational Review

The store platform

We now have a portfolio of 105 open and trading stores, with a further 12 development sites. The current maximum lettable area of the 105 stores is 6.1 million sq ft. When fully built out the portfolio will provide approximately 7.1 million sq ft of flexible storage space.

Activity

The tables below show the quarterly move-in and move-out activity over the year for the 81 Big Yellow stores, as we acquired the remaining interest in Armadillo during the year:

	Total move-ins Year ended 31 March 2022	Total move-ins Year ended 31 March 2021	%	Total move-ins Year ended 31 March 2020	%
April to June	20,419	13,560	51	18,950	8
July to September	21,525	20,867	3	20,570	5
October to December	16,541	16,323	1	14,643	13
January to March	15,916	15,616	2	16,498	(4)
Total	74,401	66,366	12	70,661	5

	Total move-outs Year ended 31 March 2022	Total move-outs Year ended 31 March 2021	%	Total move-outs Year ended 31 March 2020	%
April to June	15,226	10,047	52	14,742	3
July to September	22,914	19,128	20	22,520	2
October to December	19,467	17,287	13	17,424	12
January to March	15,840	14,223	11	15,286	4
Total	73,447	60,685	21	69,972	5

The first quarter in the prior year saw a significant decrease in activity caused by the Spring 2020 lockdown. Move-ins and move-outs in the first quarter this year are therefore showing a significant increase on last year, with a more normalised move-in picture in the second quarter. We saw strong demand from domestic customers in the first quarter of this year in part due to the stamp duty holiday tapering off from 1 July. This resulted in an acceleration of housing-related demand in June. We also saw the return of student demand in June as universities looked to re-open their campuses for conferences. Some of this occupancy growth from both the housing and student sectors was relatively short-term, impacting occupancy performance in the second quarter. In the quarter to March activity levels were impacted in the latter part of the quarter by some consumer hesitancy following the invasion of Ukraine. In April 2022, average move-ins per store were up 11% on April 2021, with move-outs up 5%.

In the prior year, move-outs took longer to normalise, hence we are showing an increase in move-outs compared to the year ended 31 March 2021. We have also included the data for the year ended 31 March 2020, which shows more normalised levels of move-ins and move-outs this year compared to that year.

We did see an increase in move-outs in July and October 2021, some of which was related to the gradual tapering off of the stamp duty holiday with key dates being 30 June and 30 September when it ended. Move outs normalised in the fourth quarter compared to 2020.

Move-ins for the Armadillo stores for the year were up 12% on the prior year, and up 12% on 2020, with move-outs up 25% on 2021, and up 12% on 2020.

The average space occupied by business customers at the period end has remained at 180 sq ft. Domestic customers occupy on average 59 sq ft (up from 57 sq ft last year) and pay on average 21% more in rent per sq ft (2021: 22%), however business customers do stay longer and take more space and represent around 32% of revenue (2021: 31%).

In all Big Yellow stores, occupancy for the year increased by 91,000 sq ft, against an increase of 420,000 sq ft in 2021 and a fall of 29,000 sq ft in 2020. The quarterly movement is shown in the table below:

Quarterly net occupancy movement	Net sq ft year ended 31 March 2022	Net sq ft year ended 31 March 2021	Net sq ft year ended 31 March 2020
April to June	289,000	138,000	125,000
July to September	(18,000)	187,000	(25,000)
October to December	(198,000)	(32,000)	(165,000)
January to March	18,000	127,000	36,000
Total	91,000	420,000	(29,000)

The occupancy performance in the prior year was very strong with the pandemic accelerating 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. In addition, move-outs were below normal levels with customers on average staying longer. These developments, combined with the shortage of quality flexible mini-warehousing space, from which to operate small scale storage and e-fulfilment have been driving our demand. 2020 was impacted by the uncertainty around Brexit, and in the run up to the general election, with the final quarter impacted in March by the onset of the first lockdown. Nevertheless, this demand was largely deferred, and we have delivered significant occupancy growth over the last two years.

During the current year, we saw record occupancy growth in our first quarter, driven in part by the stamp duty holiday tapering off from 1 July. This resulted in an acceleration of housing-related demand in June, which in turn led to a small loss in occupancy in our second quarter, as we saw some short-term users vacate. The quarter to December saw a return to more normal seasonal losses, with the quarter to March impacted by the uncertainty triggered by the Russian invasion of Ukraine.

The 73 established Big Yellow stores are 86.8% occupied compared to 87.7% at the same time last year. The eight developing Big Yellow stores added 129,000 sq ft of occupancy over the year to reach closing occupancy of 55.4%. The 24 Armadillo stores are 83.1% occupied, compared to 83.8% at this time last year. The occupancy loss for the Armadillo stores includes the impact of the fire at Cheadle (see Financial Review for further detail). Excluding this, the occupancy gain for the Armadillo stores for the year was 2,000 sq ft. Overall store occupancy was 83.7%.

	Occupancy 31 March 2022 %	Occupancy change in year 000 sq ft	Occupancy 31 March 2022 000 sq ft	Occupancy 31 March 2021 000 sq ft
73 established Big Yellow stores	86.8%	(38)	4,027	4,065
8 developing Big Yellow stores	55.4%	129	265	136
All 81 Big Yellow stores	83.9%	91	4,292	4,201
24 Armadillo stores	83.1%	(93)	815	908
All 105 stores	83.7%	(2)	5,107	5,109

With the exception of our recently opened stores at Hayes and Hove, all stores are trading profitably at the EBITDA level. The table below shows the average per store key metrics across the store portfolio (from the Portfolio Summary) for the year ended 31 March 2022:

	Established stores	Developing stores	Armadillo stores	All stores
Average store capacity	63,550	59,750	40,875	58,075
Average sq ft occupied at 31 March 2022	55,165	33,125	33,960	48,640
Average % occupancy	86.8%	55.4%	83.1%	83.7%
Average revenue (£000)	2,000	887	849	1,645
Average EBITDA store (£000)	1,468	460	522	1,169
Average EBITDA margin	73.4%	51.9%	61.5%	71.1%

Pricing and net rent per sq ft

We offer a headline opening promotion of 50% off for up to the first 8 weeks, and we continue to manage pricing dynamically, taking account of room availability, customer demand and local competition. Our pricing model reduces promotions and increases asking prices where individual units are in scarce supply. This lowering of promotions, coupled with price increases to existing and new customers, leads to an increase in net achieved rents. Rental growth can also be driven through sub-dividing larger rooms into smaller rooms, which yield a higher net rent per sq ft. We have increased our scheduled rents in line with current inflation.

As a result of these changes, given our higher levels of occupancy, we are seeing improving growth in net rent per sq ft. The average achieved net rent per sq ft increased for Big Yellow stores by 8% compared to the prior year, with closing net rent up 10% compared to 31 March 2021. The average achieved net rent per sq ft grew by 10% from last year in the Armadillo stores and closing net rent per sq ft increased by 11% from 31 March 2021.

The table below shows the change in net rent per sq ft for the combined Big Yellow and Armadillo portfolio by average occupancy over the six months (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 2021 to March 2022	Net rent per sq ft growth from April 2020 to March 2021
75% to 85%	24	10.8%	1.3%
85% to 90%	49	11.7%	2.5%
Above 90%	24	13.0%	4.4%

Development pipeline

We own 12 development sites, seven of which have planning consent. The status of the Group's development pipeline is summarised in the table below:

Site	Location	Status	Anticipated capacity
Harrow, London	Prominent location on Harrow View	Planning consent granted in November 2020. Construction commenced in May 2021 with a view to opening in Summer 2022.	82,000 sq ft
North Kingston, London	Prominent location on Richmond Road, Ham	Planning consent granted in September 2020. Construction commenced in June 2021 with a view to opening in Summer 2022.	56,000 sq ft
Kings Cross, London	Prominent location on York Way	Planning consent granted in October 2020. Demolition commenced in January 2021 with a view to opening in Summer 2023.	106,000 sq ft
Wembley, London	Prominent location on Towers Business Park	Planning consent granted in August 2020. Discussions ongoing to secure vacant possession, unlikely to be before July 2023.	70,000 sq ft
Queensbury, London	Prominent location off Honeypot Lane	Site acquired in November 2018. Planning consent granted in November 2019 for 58,000 sq ft store. Planning application submitted in 2021 to increase floor area by 12,000 sq ft. Planning consent granted in January 2022. Our current intention is to open the store in Summer 2024.	70,000 sq ft
Slough	Prominent location on Bath Road	Site acquired in April 2019. Planning consent granted in October 2021. Our current intention is to open this store in Summer 2024.	90,000 sq ft
Wapping, London	Prominent location on the Highway, adjacent to existing Big Yellow	Site acquired in July 2020. Planning application submitted in November 2021.	Additional 95,000 sq ft
Staines, London	Prominent location on the Causeway	Site acquired in December 2020. Planning application submitted in January 2022.	65,000 sq ft
Epsom, London	Prominent location on East Street	Site acquired in March 2021. Planning application to be submitted in Summer 2022.	56,000 sq ft
Kentish Town, London	Prominent location on Regis Road	Site acquired in April 2021. Planning application to be submitted in Summer 2022.	68,000 sq ft
West Kensington, London	Prominent location on Hammersmith Road	Site acquired in June 2021. Planning application to be submitted in Summer 2022.	175,000 sq ft
Newcastle	Prominent location on Scotswood Road	Planning consent granted in October 2021.	60,000 sq ft
Total			993,000 sq ft

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

Marketing and ecommerce

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 2022) 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 six 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.

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.

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. 37% of all traffic generated from search engines to our website originated from "Big Yellow" brand searches in the year.

This clearly indicates, that although self storage is a relatively immature industry with approximately 70% of customers using it for the first time, 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 42,000, averaging 4.8 out of 5.

The Big Impressions programme also generates customer feedback on their move-out experience and from prospects who decided not to store with us. These customer reviews and mystery shop results are transparently accessible across the business and helps reinforce our focus on outstanding customer service.

We also gain real-time customer feedback from over 15,500 Google Reviews averaging 4.6 out of 5. These help to enhance our visibility within local search listings conveying trust in the Big Yellow brand. Additionally, we have over 3,200 reviews from the independent review site TrustPilot. These reviews average a 4.7 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 CSR 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, CSR initiatives and company culture.

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

Sustainability

We have developed a new 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.

During the year we published 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 set our first Science Based Targets;
•	we have maintained our inclusion in the FTSE4Good indices; maintained our GRESB Green Star rating and achieved a B award from CDP;
•	we obtained our second EPRA GOLD Award;
•	we have donated £316,000 in Community Investment. This consists of free and discounted space and BoxShop products donated and the funds raised by our employees that go to the Big Yellow Foundation;
•	we have refreshed our emissions footprint to include Armadillo; and
•	delivered three successful work placements in conjunction with our charity partners.

Foundation and charitable activities

The Foundation has continued to support our seven established charity partners during the year. The Foundation has raised funds of £172,000 during the year and has paid out £198,000 in grants, in response to requests for additional funding from some of our charity partners.

Big Yellow's community investment for the year, delivered via discounted space, was £306,000, £284,000 of which was given free of charge. Our stores allocate this space to worthy local charitable organisations and not-for-profits and we house different organisations, from foodbanks to small community groups to NHS partners.

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 achieved 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.

The self storage market opportunity

In the recently published 2022 Self Storage Association UK Survey, only 51% of those surveyed had a reasonable or good awareness of self storage. Furthermore, only 8.5% of the 2,057 adults surveyed were currently using self storage or were thinking of using self storage in the next year. This indicates a continued opportunity for growth and with increasing use of self storage, together with the ongoing marketing efforts of everyone in the industry, we anticipate awareness will continue to grow.

Self storage is not a commoditised product and awareness is driven largely by businesses and individuals using self storage. Consequently, the increase in awareness over time has been relatively slow, with good awareness of self storage increasing from 38% in 2014 to 51% in 2022 across the UK (source: UK SSA Survey 2022). Our YouGov Survey carried out in April 2022 showed higher levels of awareness in London of 63%.

Occupancy rates across the UK industry at 31 December 2021 of built space was 83.3%, compared with approximately 60% in December 2008. This has increased from 76.2% at the start of the pandemic.

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 2021, there were seven new store openings, including one Big Yellow store. We are aware of five planned store openings in London in calendar year 2022, including three Big Yellow stores.

The Self Storage Association ("SSA") estimates that the UK industry is made up of approximately 1,429 self storage facilities and 621 purely container operations, providing 52 million sq ft of self storage space, equating to 0.76 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 0.16 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 2022 and FEDESSA European Self Storage Annual Survey 2021).

Big Yellow is well placed to benefit from the growing self storage market, given the strength of our brand, and our online platform which delivers over 90% of our prospect enquiries. Our portfolio is strategically focussed on London, the South East and large metropolitan cities, where barriers to entry and economic activity are at their highest.

Store operating model

Our store model is well established. The "typical" store has 60,000 sq ft of MLA and takes some three to four years to achieve 85% plus occupancy. The average room size occupied in the portfolio is currently 69 sq ft compared to 67 sq ft last year. The store is open seven days a week and is initially run by three staff, with a part time member of staff added once the store occupancy justifies the need for the extra administrative and sales support.

There has been some debate in the self storage industry around fully automated stores. It is very important for us to maintain a physical, face-to-face interaction with our customers when they arrive at our stores to move-in or move-out. This is imperative to help us achieve our company values of helpfulness, empathy, and flexibility towards our customers. It is also critical for us to monitor and operate a safe working environment for everyone, including our staff. This is akin to renting a car but with some final checks and balances, which require our staff in store.

70% of our new customers have not used self storage before, and they will want to see the storage room for themselves before moving in. We want to be on hand to ensure they are satisfied with their choice and to accommodate them if they are not.

Face-to-face interactions also allow us to check the individual customer moving in matches the identity documents they have uploaded when checking-in online. From a health and safety perspective, we need our teams at the store to ensure the stores and customers are operating safely. They carry out fire-risk assessments, provide additional business services such as accepting deliveries on behalf of our business customers, manage occupancy levels and deliver ancillary sales of insurance and packing materials.

The drive to improve store operating standards and consistency across the portfolio remains a key focus for the Group. Excellent customer service is at the heart of our business objectives, as a satisfied customer is our best marketing tool. We measure customer service standards through a programme of mystery shopping and online customer reviews, which are externally managed. Over the year, we have achieved an average net promoter score of 78.9 from customers who moved in and moved out of the business.

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

We believe that, as a consumer-facing branded business, it is paramount to maintain the quality of our estate and customer offering. We therefore continue to invest in preventative maintenance, store cleaning and the repair and replacement of essential equipment, such as lifts and gates. The ongoing annual expenditure is approximately £40,000 per store, which is included within cost of sales. This excludes our rolling programme of store makeovers, which typically take place every five years, at a cost of approximately £20,000 per store.

Demand

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

We are confident that we benefit disproportionately from this improving market for our product, due to our market-leading brand and operating platform with our focus on London, the South East and large metropolitan cities.

Customers renting storage space whilst moving within the rental or owner-occupied sectors represent 41% of move-ins during the year (2021: 39%), split approximately 65/35 between homeowners and renters (2021: 60/40). 12% of our customers who moved in took storage space as a spare room for decluttering (2021: 13%). 34% of our customers used the product because some event has occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited possessions, are getting together, or separating, are students who need storage during the holidays, or homeowners developing into their lofts or basements (2021: 34%). The balance of 13% of our new customer demand during the year came from businesses (2021: 14%).

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. Businesses occupy larger rooms on average than domestic customers and, despite being in 37% of the occupied space only represent 21% of customer numbers.

Over the past few years, there has been a growing trend towards self-employment and smaller business start-ups in the UK, dynamics that are positive for self storage. Additionally, businesses in the UK have been increasingly seeking flexible office and storage space rather than longer inflexible leases. The current crisis has accelerated the structural changes in retail that were already occurring, resulting in more demand from online retailers looking to trade without a physical high street presence. The deindustrialisation of big cities with the conversion of commercial space into residential and other uses, is also a driver for demand from the SME market seeking flexible warehouse space. We believe that these long-term trends will continue to drive demand for our product.

The Group has previously commissioned an external survey to assess the value the average Big Yellow store generates for its local economy to assist our discussion with local authorities around planning. Key highlights were:

‑	the average store is home to 105 different businesses who between them employ 300 people as a direct result of their occupation;
‑	60% of the businesses that occupy our stores are start-ups who have never rented space anywhere else before; and
‑	For over half of the businesses, this is the only space they rent, for others this complements their other space.

Given the growth in homeworking over the past two years, this trend of businesses choosing to operate without needing the expense of office space may increase. Furthermore, increased homeworking in general may result in domestic customers taking small rooms to declutter and create space for home offices.

We have a dedicated national customers team for businesses who wish to occupy space in multiple stores. These customers are billed and managed centrally. We have four full time members of staff working on growing and managing our national customers. The national customers team can arrange storage at short notice at any location. In smaller towns where we do not have representation, we have negotiated sub-contract arrangements with other operators who meet certain operating standards.

PORTFOLIO SUMMARY

	March 2022					March 2021
	Big Yellow Established⁽¹⁾	Big Yellow Developing	Total Big Yellow	Armadillo ⁽²⁾	Total	Big Yellow Established	Big Yellow Developing	Total Big Yellow	Armadillo	Total
Number of stores	73	8	81	24	105	73	5	78	25	103
At 31 March:
Total capacity (sq ft)	4,639,000	478,000	5,117,000	981,000	6,098,000	4,636,000	294,000	4,930,000	1,083,000	6,013,000
Occupied space (sq ft)	4,027,000	265,000	4,292,000	815,000	5,107,000	4,065,000	136,000	4,201,000	908,000	5,109,000
Percentage occupied	86.8%	55.4%	83.9%	83.1%	83.7%	87.7%	46.3%	85.2%	83.8%	85.0%
Net rent per sq ft	£31.91	£28.76	£31.71	£20.45	£29.92	£28.83	£25.06	£28.71	£18.38	£26.88
For the year:
REVPAF⁽³⁾	£31.47	£19.90	£30.64	£19.83	£28.73	£28.47	£9.75	£27.44	£16.75	£25.50
Average occupancy	89.0%	58.9%	86.9%	86.0%	86.7%	86.4%	28.6%	83.2%	79.5%	82.6%
Average annual net rent psf	£30.51	£27.16	£30.35	£19.69	£28.48	£28.20	£25.78	£28.16	£17.85	£26.35

	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Self storage income	126,022	5,717	131,739	18,137	149,876	111,190	1,929	113,119	15,263	128,382
Other storage related income ⁽³⁾	19,266	1,157	20,423	3,080	23,503	18,075	488	18,563	2,680	21,243
Ancillary store rental Income	698	225	923	19	942	667	119	786	59	845
Total store revenue	145,986	7,099	153,085	21,236	174,321	129,932	2,536	132,468	18,002	150,470
Direct store operating costs (excluding depreciation)	(36,900)	(3,418)	(40,318)	(7,614)	(47,932)	(36,817)	(1,826)	(38,643)	(7,000)	(45,643)
Short and long leasehold rent⁽⁴⁾	(1,934)	-	(1,934)	(564)	(2,498)	(1,944)	-	(1,944)	(554)	(2,498)
Store EBITDA^(3,5)	107,152	3,681	110,833	13,058	123,891	91,171	710	91,881	10,448	102,329
Store EBITDA margin	73.4%	51.9%	72.4%	61.5%	71.1%	70.2%	28.0%	69.4%	58.0%	68.0%

Deemed cost	£m	£m	£m	£m	£m
To 31 March 2022	626.3	134.3	760.6	134.3	894.9
Capex to complete	-	0.9	0.9	2.5	3.4
Total	626.3	135.2	761.5	136.8	898.3

(1) The Big Yellow established stores have been open for more than three years at 1 April 2021, and the developing stores have been open for fewer than three years at 1 April 2021.

(2) Armadillo's Cheadle store was destroyed by fire in February 2022. It is excluded from the closing occupancy and capacity figures, 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 eight 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:

	2022			2021
	Per above £000	Armadillo results as an associate £000	Statutory £000	Per above £000	Armadillo results as an associate £000	Statutory £000
Store revenue	174,321	(5,046)	169,275	150,470	(18,002)	132,468
Direct store operating costs	(47,932)	1,908	(46,024)	(45,643)	7,000	(38,643)
Rent	(2,498)	150	(2,348)	(2,498)	554	(1,944)
Store EBITDA	123,891	(2,988)	120,903	102,329	(10,448)	91,881

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

	Year ended 31 March 2022 £000			Year ended 31 March 2021 £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⁾	169,275	2,043	171,318	132,468	2,773	135,241
Cost of sales⁽⁷⁾	(46,024)	(4,359)	(50,383)	(38,643)	(2,946)	(41,589)
Rent⁽⁸⁾	(2,348)	2,348	-	(1,944)	1,944	-
	120,903	32	120,935	91,881	1,771	93,652

(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.

Financial Review

Financial results

Armadillo

As explained above, the Group acquired the remaining interest in Armadillo which it did not previously own on 1 July 2021. Armadillo currently consists of 24 stores with a maximum lettable area of 1.0 million sq ft.

Revenue

Total revenue for the year was £171.3 million, an increase of £36.1 million (27%) from £135.2 million in the prior year. Like-for-like store revenue for the year was £148.1 million, an increase of 13% from the prior year (2021: £131.1 million). Like-for-like revenue excludes our six most recent Big Yellow store openings and the Armadillo stores. The revenue from the Armadillo stores for the nine months from acquisition of the remaining interest on 1 July 2021 to 31 March 2022 was £16.2 million.

Other sales comprise the selling of packing materials, insurance, and storage related charges. We saw growth of 13% in packing material sales during the year, with the prior year's sales impacted by the Spring lockdown. Insurance sales have also seen strong year-on-year growth, with improvements made to the average value insured.

The other revenue earned by the Group is management fee income from Armadillo (up to 30 June 2021) and 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 2022 £000	Year ended 31 March 2021 £000	Change	% of store operating costs in 2022
Cost of sales (insurance and packing materials)	3,896	3,549	10%	8%
Staff costs	14,133	13,575	4%	29%
General & admin	1,992	1,541	29%	4%
Utilities	2,274	1,961	16%	5%
Property rates	13,775	13,318	3%	28%
Marketing	6,632	6,433	3%	14%
Repairs & maintenance	4,200	3,687	14%	9%
Insurance	1,211	1,049	15%	2%
Computer costs	618	530	17%	1%
Total before one-off items	48,731	45,643	7%
One-off items	(799)	-
Total per portfolio summary	47,932	45,643	5%

Store operating costs have increased by £2.3 million (5%). The one-off items in the current year relate to rates rebate on a number of stores, totalling £0.8 million, following appeals of the 2017 rating list assessment. Store operating costs before these one-off items have increased by £3.1 million (7%) compared to the prior year, of which £1.4 million (3%) is in relation to recently opened stores. The remaining increase of £1.7 million (4%) can be explained as follows:

‑	Cost of sales have increased in line with the proportionate increase in ancillary sales in the year.
‑	General and admin expenses have increased as 2021 had significantly less travel expense during the lockdown period.
‑	The utilities expenditure has principally increased due to new stores.
‑	Marketing has increased by £0.2 million, with the 2021 cost reflecting lower search costs and traffic levels during the Spring lockdown.
‑	The repairs and maintenance expenditure has increased by £0.5 million, partly due to the increase in store numbers, increased investment in CCTV monitoring security overnight, and we carried out less maintenance work during the 2020 Spring lockdown.
‑	The insurance cost has increased due to an increase in the amounts insured for loss of income and reinstatement values and new stores.

Looking forward, we do see some inflationary pressures on our costs. Our store salary review for the year ending 31 March 2023 averaged 5%, with the lower paid staff seeing increases of on average 7%. The Rating Revaluation in 2023 is likely to result in an above inflationary increase to the Group's property rates for the year ending 31 March 2024, given the increase in industrial rents over the past few years.

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 2022 £000	Year ended 31 March 2021 £000
Direct store operating costs per portfolio summary (excluding rent)	47,932	45,643
Rent included in cost of sales (total rent payable is included in portfolio summary)	1,633	1,272
Rent review accruals	607	445
Depreciation charged to cost of sales	378	320
Head office and other operational management costs charged to cost of sales	1,741	909
Armadillo cost of sales pre acquisition of remaining interest	( 1,908)	(7,000)
Cost of sales per statement of comprehensive income	50,383	41,589

Store EBITDA

Store EBITDA for the Big Yellow stores for the year was £110.8 million, an increase of £18.9 million (21%) from £91.9 million for the prior year (see Portfolio Summary). The overall EBITDA margin for all Big Yellow stores during the year was 72.4%, up from 69.4% in 2021.

The EBITDA for the Armadillo stores for the year was £13.1 million, an increase of £2.7 million (26%) from £10.4 million in 2021, with the margin increasing to 61.5% from 58.0%.

The store EBITDA in the year for Big Yellow stores and for the Armadillo stores from 1 July 2021 to 31 March 2022 was £120.9 million.

All stores are currently trading profitably at the Store EBITDA level, except for our recently opened stores in Hayes and Hove.

Administrative expenses

Administrative expenses in the statement of comprehensive income of £14.4 million were up £2.2 million compared to the prior year. £0.4 million of this increase is due to the write-off of acquisition costs in relation to the purchase of the remaining interest in Armadillo in accordance with IFRS 3. This is an adjusting item in the calculation of the Group's adjusted profit before tax.

The remaining increase of £1.8 million is principally due an increase in the share-based payments charge (£0.5 million), an increase in national insurance on LTIPs (£0.5 million), both up due to the increase in the Company's share price during the year, with the balance of £0.8 million due to an increase in travel costs (with 2021's expense reduced by lockdowns), increased investment in IT, with the balance inflationary.

The non-cash share-based payments charge represents £3.4 million of the overall £14.4 million expense (2021: £2.9 million of £12.2 million expense).

Interest expense on bank borrowings

The gross bank interest expense for the year was £11.8 million, an increase of £2.4 million from the prior year, due to higher average debt levels in the year, in part due to the acquisition of Armadillo and the consolidation of its debt from 1 July 2021. The average cost of borrowing during the year was 2.8% compared to 2.9% in the prior year.

Capitalised interest on our construction programme was broadly in line with the prior year at £2.1 million.

Total finance costs in the statement of comprehensive income increased to £10.6 million from £8.2 million in the prior year.

Profit before tax

The Group made a profit before tax in the year of £698.9 million, compared to a profit of £265.8 million in the prior year. After adjusting for the gain on the revaluation of investment properties and other matters shown in the table below, the Group made an adjusted profit before tax in the year of £96.8 million, up 30% from £74.6 million in 2021.

Profit before tax analysis	2022 £000	2021 £000
Profit before tax	698,876	265,822
Gain on revaluation of investment properties	(597,224)	(189,277)
Gain on disposal of investment property	(584)	-
Acquisition costs written off	416	-
Movement in fair value on interest rate derivatives	(1,389)	148
Share of associate fair value gains and losses	(3,293)	(2,068)
Adjusted profit before tax	96,802	74,625

The gain on disposal of investment property 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 2021	74.6
Increase in gross profit	27.3
Increase in administrative expenses	(1.8)
Increase in net interest payable	(2.6)
Reduction in capitalised interest	(0.1)
Reduction in share of adjusted profit of associates	(0.6)
Adjusted profit before tax - year ended 31 March 2022	96.8

Basic earnings per share for the year was 385.4p (2021: 152.3p) and fully diluted earnings per share was 384.2p (2021: 151.8p). Diluted EPRA earnings per share based on adjusted profit after tax was up 24% to 52.5p (2021: 42.4p) (see note 12). EPRA earnings per share equates to the Company's adjusted earnings per share i n 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 £1.6 million. This compares to a charge in the prior year of £0.6 million. The increase in the current year tax charge reflects the significant 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 21.4 pence per share in addition to the interim dividend of 20.6 pence, giving a total dividend for the year of 42.0 pence, an increase of 24% 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 42.0p pence per share is payable (31 March 2021: 32.0 pence). The PID for the year to 31 March 2022 accounts for all of the declared dividend. The table below summarises the declared dividend for the year:

Dividend (pence per share)	31 March 2022	31 March 2021
Interim dividend - PID	20.6p	17.0p
- discretionary	nil p	nil p
- total	20.6p	17.0p

Final dividend - PID	21.4p	15.0p
- discretionary	nil p	2.0p
- total	21.4p	17.0p

Total dividend - PID	42.0p	32.0p
- discretionary	nil p	2.0p
- total	42.0p	34.0p

Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2022, the final dividend will be paid on 29 July 2022. The ex-div date is 7 July 2022 and the record date is 8 July 2022.

Cash flow growth

The Group is strongly cash generative and draws down from its longer term committed facilities as required to meet its obligations. The Group's cash flow from operating activities for the year was £107.1 million, an increase of 40% from £76.7 million in the prior year. This reflects the Group's increase in profitability and also some favourable working capital movements in the year.

These operating cash flows are after the ongoing maintenance costs of the stores, which for were on average approximately £ 40,000 per store. The Group's net debt has increased over the period to £411.8 million (March 2021: £325.0 million), with the majority of the increase due to the debt within Armadillo now being consolidated.

	Year ended 31 March 2022 £000	Year ended 31 March 2021 £000
Cash generated from operations	120,390	87,131
Net finance costs	(10,761)	(8,824)
Interest on obligations under lease liabilities	(843)	(772)
Tax	(1,649)	(823)
Cash flow from operating activities	107,137	76,712
Capital expenditure	(105,151)	(73,010)
Acquisition of Armadillo	(66,679)	-
Disposal of investment property	584	-
Investment	(138)	(450)
Receipt from Capital Goods Scheme	381	737
Dividends received from associates	435	688
Cash flow after investing activities	(63,431)	4,677
Ordinary dividends	(68,698)	(58,808)
Issue of share capital	98,514	80,772
Payment of lease liabilities	(1,384)	(1,009)
Loan arrangement fees paid	(953)	-
Increase/(decrease) in borrowings	32,235	(64,728)
Net cash outflow	(3,717)	(39,096)
Opening cash and cash equivalents	12,322	51,418
Closing cash and cash equivalents	8,605	12,322
Closing debt	(420,435)	(337,300)
Closing net debt	(411,830)	(324,978)

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 10.5 times (2021: 9.8 times).

In the year capital expenditure outflows were £105.2 million, up from £73.0 million in the prior year. Of the capital expenditure in the year £51.0 million is for the acquisition of West Kensington, Kentish Town, and Epsom (including acquisition costs), with £54.2 million principally relating to build costs of the new stores.

The cash flow after investing activities was a net outflow of £63.4 million in the year, compared to an inflow of £4.7 million in 2021, with the difference largely explained by the purchase of the remaining interest in Armadillo during the year.

Balance sheet

Property

The Group's open stores and stores under development owned at 31 March 2022, which are classified as investment properties, have been valued individually by JLL. JLL were appointed as valuers during the year, with the Board taking heed of the recommendations of the Gray report, with the previous valuer having acted for the Group for more than the recommended nine-year term. JLL have previously been valuing the Armadillo stores prior to acquisition.

The external valuation has resulted in an investment property asset value of £2.628 billion, comprising £2.301 billion (87%) for the freehold (including nine long leaseholds) open stores, £41.2 million (2%) for the short leasehold open stores and £285.4 million (11%) for the freehold investment properties under construction.

Investment property

The valuations in the current year have increased significantly from the prior year, with a revaluation surplus of £529.7 million arising on the open stores (see note 15 for the detailed valuation methodology). This revaluation gain has been driven by a combination of cap rate compression and an improvement in the cash flow and operating metrics used in the valuation. This is reflective of the performance of both self storage generally and Big Yellow during the past 12 months.

The average exit capitalisation rate used in the valuations was 5.5% in the current year, compared to 5.7% in the prior year.

Analysis of property portfolio	Value at 31 March 2022 £m	Revaluation movement in the year £m
Investment property - Big Yellow stores	2,186.8	514.6
Investment property - Armadillo stores	155.4	15.1
Investment property - Big Yellow and Armadillo stores	2,342.2	529.7
Investment property under construction	285.4	67.5
Investment property total	2,627.6	597.2

The table below provides a further breakdown of the valuations:

	Established		Developing	Armadillo
	Freehold	Leasehold	Freehold		Largely Freehold	Total
Number of stores	67	6	8		24	105
MLA capacity (sq ft)	4,295,000	344,000	478,000		981,000	6,098,000
Valuation at 31 March 2022 (£m)	£1,872.8	£36.9	£236.6		£155.0	£2,301.3
Value per sq ft	£436	£107	£495		£158	£377
Occupancy at 31 March 2022	86.8%	86.6%	55.4%		83.1%	83.7%
Stabilised occupancy assumed	89.0%	88.1%	86.9%		87.2%	88.3%
Net initial year one yield	5.1%	13.4%	3.2%		8.0%	5.2%

The net initial year one yield is 5.2% (2021: 5.9%). Note 15 contains more detail on the assumptions underpinning the valuations. The difference between the valuation in the table above and the investment property valuation in the balance sheet is the valuation of non-self storage investment property at certain of the Group's sites.

Investment property under construction

The investment property under construction valuation has increased by £121.9 million in the year. Capital expenditure accounts for £95.5 million of this increase, notably on the site purchases of West Kensington and Kentish Town, and construction expenditure, principally on Uxbridge, Hayes, Hove, Harrow, Kingston North, and Kings Cross. This has been offset by Uxbridge, Hayes and Hove transferring to open stores.

The valuation movement on the investment property under construction is a surplus of £67.5 million, driven by an improvement in the market view of development assets, coupled with a significant valuation uplift on the industrial units being developed adjacent to our Harrow store, which is due to open this Summer.

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 2022 of £2,728.2 million (£100.6 million higher than the value recorded in the financial statements). This translates to 54.6 pence per share. This revised valuation translates into an adjusted net asset value per share of 1,239.7 pence (2021: 904.7 pence after adjusting for the placing) after the dilutive effect of outstanding share options.

Cheadle fire

In February 2022 we experienced a fire at our Cheadle store, which resulted in a total loss to the store. The cause of the fire was arson. This was a very difficult time for all our affected customers and some of the possessions stored with us can never be replaced, and we are very saddened that this incident occurred.

The store was a leasehold with five years remaining on the lease, and the balance sheet cost of this store was £4.3 million. 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 first month's loss of income insurance has been recognised in revenue at the year end.

The lease liability and right-of-use asset have been written off reflecting the lack of certainty as to when the Group's obligations to pay rent under the lease will resume. The balance sheet value of the store has also been impaired to nil.

Receivables

The Group's bad debt expense in the year represented 0.1% of store revenue compared to 0.1% in the prior year, with 81% of our customer base paying by direct debit.

At 31 March 2022 we have a receivable of £0.2 million in respect of payments due back to the Group under the Capital Goods Scheme, as a consequence of the introduction of VAT on self storage from 1 October 2012. The receivable relates to VAT to be recovered on historic store development expenditure. The Group has received £15.6 million to date under the Scheme, of which £0.4 million was received in the year.

Net asset value

The adjusted net asset value is 1,239.7 pence per share (see note 13), up 37% from 904.7 pence per share at 31 March 2021 (after adjusting for the June 2021 share placing). The table below reconciles the movement:

Movement in adjusted net asset value	£m	Adjusted NAV pence per share
31 March 2021	1,566.6	889.2
Share placing	97.6	15.5
31 March 2021 (rebased)	1,664.2	904.7
Adjusted profit after tax	95.2	51.8
Equity dividends paid	(68.7)	(37.3)
Revaluation movements (including share of associate to 30 June 2021)	598.8	325.0
Movement in purchaser's cost adjustment	(9.8)	(5.3)
Other movements (e.g. share schemes)	4.5	0.8
31 March 2022	2,284.2	1,239.7

Despite the significant revaluation gain during the year, the movement in the purchaser's cost adjustment is negative. This is due to a different treatment of purchaser's costs in the valuation model of JLL, who were appointed valuers in the year compared to that of their predecessor CBRE (see notes 13 and 15 for further detail).

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 2022. The average cost of debt is 3.1% (March 2021: 2.6%).

Debt	Expiry	Facility	Drawn	Average interest cost
Aviva Loan	September 2028	£161.9 million	£161.9 million	3.5%
M&G loan	June 2023	£120 million	£120 million	2.9%
Revolving bank facility (Lloyds, HSBC, and Bank of Ireland)	October 2024	£240 million	£99 million	2.7%
Armadillo bank loans (Lloyds)	April 2023	£52.7 million	£39.5 million	3.1%
Total	Average term 3.4 years	£574.6 million	£420.4 million	3.1%

During the year, the Group signed an additional £50 million seven year debt facility with Aviva. As part of this refinancing the expiry of the existing loan was extended from April 2027 to September 2028. This reduced the fixed cost of the total Aviva loan facility from 4.0% to 3.5%.

Sustainability KPIs have been incorporated into this additional borrowing. These include the continued installation of solar panels across the security stores which will reduce emissions and running costs, and the business being on-track to achieve 'Net Renewable Energy Positive' status by 2030. The Group will benefit from a margin reduction on the new £50 million loan, conditional on achieving these targets.

The total debt facilities from Aviva are now £161.9 million of which £16.9 million amortises to nil by April 2027.

The Group also increased the facilities of its M&G loan by £50 million to a total facility of £120 million. £35 million of the total M&G loan is fixed by a way of swap, with the balance floating. The average cost of the M&G loan is now 2.9%, with the loan expiring in June 2023. The Group intends to refinance this loan with M&G during the summer of 2022.

The Group has credit approval from a new insurance lender to provide additional longer term debt facilities. These facilities would be used to repay the Armadillo bank loans which expire next year, and thereafter to increase the Group's overall debt capacity.

The Group has committed undrawn bank facilities of £154 million, which if drawn would carry a current marginal cost of debt of approximately 2.25%.

The Group was comfortably in compliance with its banking covenants at 31 March 2022. 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 2022	31 March 2021
Net Debt / Gross Property Assets	16%	18%
Net Debt / Adjusted Net Assets	18%	21%
Net Debt / Market Capitalisation	15%	17%
Pre-Interest Operating Cash Flow Cover	10.5x	9.9x

At 31 March 2022, the fair value on the Group's interest rate derivatives was an asset of £0.9 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 2022 (2021: £17.6 million), consisting of 183,967,378 ordinary shares of 10p each (2021: 175,880,470 shares). 7.8 million shares were issued in June 2021 in a placing to fund the strategic Armadillo and West Kensington acquisitions. 0.3 million shares were issued for the exercise of options during the year at an average exercise price of £14.84 (2021: 0.4 million shares at an average price of £10.64).

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.

	2022 No.	2021 No.
Opening shares	175,880,470	167,138,527
Shares issued in placing	7,751,938	8,335,043
Shares issued for the exercise of options	334,970	406,900
Closing shares in issue	183,967,378	175,880,470
Shares held in EBT	(1,122,907)	(1,122,907)
Closing shares for NAV purposes	182,844,471	174,757,563

85.4 million shares were traded in the market during the year ended 31 March 2022 (2021: 86.8 million). The average mid-market price of shares traded during the year was 14.37 with a high of £17.24 and a low of £11.34.

Principal risks and uncertainties

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

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

Risk and impact

Mitigation

Change during the year and outlook

Self storage market risk

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

Self storage is a relatively immature market in the UK compared to other self storage markets such as the United States and Australia, and we believe has further opportunity for growth. Awareness of self storage and how it can be used by domestic and business customers is relatively low throughout the UK, although higher in London, and awareness has increased during the past two years of 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 metropolitan cities within the sector have slowed significantly over the past few years.

Our performance during the past two years of the pandemic has been strong. We believe that this performance is due to a combination of factors including:

- a prime portfolio of freehold properties;

- a focus on London and the South East and other large metropolitan cities, where the drivers in the self storage market are at their strongest and the barriers to competition are at their highest;

- the strength of operational and sales management;

- continuing innovation to deliver the highest levels of customer service;

- 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 and high operating margins, 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 UK economy rebounded in 2021 following the pandemic-induced economic contraction in 2020.

The lifting of restrictions and the roll-out of vaccines led to more normal economic conditions, however risks around new variants remain. Governments around the world have taken on significant additional debt to fund the policy responses to the pandemic, and this may result in higher taxation rates in the future.

The Russian invasion of Ukraine has caused significant global uncertainty and the impact this will have on economic growth is unclear. The invasion has also added more weight to inflationary pressures from the reopening of the economy and rising energy prices, which may impact consumer spending.

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 three years ago, which had satisfactory results. We have recently commissioned a new benchmarking exercise on our construction costs and will report on the results next year.

The Group has acquired eight sites over the past three years, taking its total pipeline to 12 sites which, when opened, would expand the Group's current MLA by 16%.

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 12 development sites.

Valuation risk

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

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

The valuations are carried out by independent, qualified external valuers who 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 £530 million in the year (an uplift of 29%), due to an improvement in underlying cash flows used in the valuations, coupled with cap rate improvement.

There have been a number of larger portfolio transactions across Europe over the past two years, and there is a weight of institutional money looking to invest in self storage. This has led to the reduction in cap rates across the sector.

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 6 and half years remaining. This loan was increased by £50 million in September 2021. Our on-site solar generation plans helped us in securing a lower margin on this tranche of debt.

The Group has a £120 million loan from M&G Investments, which is repayable in 2023. The Group intends to refinance this loan with M&G during Summer 2022. For our bank debt, we borrow at floating rates of interest and use swaps to hedge our interest rate exposure. Our policy is to have at least 40% of our total borrowings fixed, with the balance floating. At 31 March 2022 53% 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 four times in recent months, with it currently at 100bps, up from 10bps. The long-term forecast is for rates to rise from these levels, with rising inflation. 47% 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 adding additional debt from Aviva and M&G over the year. That said, the current environment has put pressure on banks' margins, with a potential future increase in cost to the Group.

The Group's interest cover ratio for the year ended 31 March 2022 was 10.5 times, comfortably ahead of our internal target of 5 times and ahead of our banking covenants, as disclosed in note 19.

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 experienced an increase in cost in 2017 following the Government's review of business rates, and the next rating review due in 2023 is likely to bring additional cost to the Group, given 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 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.

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.

During 2018, we developed a crisis response plan with external consultants to ensure the Group is well placed to effectively deal with a major incident.

As mentioned previously, 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, last year delivered an ambitious strategic plan to 2030.

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.

Internal audit

The Group employs a Head of Store Compliance responsible for reviewing store operational and financial controls. He reports to the Chief Financial Officer, and also meets with the Audit Committee at least once a year. This role is supported by three other team members, enabling additional work and support to be carried out across the Group's store portfolio. The Store Compliance team will visit each operational store twice per year to carry out a detailed store audit. These audits are unannounced, and the Store Compliance team carry out detailed tests on financial management, administrative standards, and operational standards within the stores. Part of the store staff's bonus is based on the scores they achieve in these audits. The results of each audit are reviewed by the Chief Financial Officer, the Financial Controller, and the Head of Store Operations. This is the equivalent of an internal audit function for the Group's store operations.

For the key business cycles conducted at the Group's head office, external consultants are used to review the Group's controls on a rotational basis. The consultants produce a report with recommendations which is discussed with management and reviewed by the Audit Committee. The cycles covered by this activity include construction expenditure, treasury, taxation, and facilities management.

With the combination of the store internal audit process and the external assessment of the key business cycles, the Audit Committee considers that this provides a robust internal audit assessment for the Group.

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 2022 the Group had available liquidity of approximately £163 million, from a combination of cash and undrawn bank debt facilities. The Group is cash generative and for the year ended 31 March 2022, had operational cash flow of £107.1 million, with capital commitments at the balance sheet date of £20.9 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 2023 and projections contained in the longer-term business plan which cover the period to March 2026. 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 has total facilities of £52.7 million secured on the Armadillo portfolios with Lloyds Bank plc. These facilities expire in April 2023. The Group has received credit approval from a new insurance debt provider to refinance these loans and provide additional headroom on our facilities with longer duration fixed debt; this is currently being documented.

The Group has a £120 million loan with M&G Investments Limited, with a bullet repayment in June 2023. The Group intends to refinance this loan with M&G this summer.

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 from the onset of the Covid-19 pandemic to the date of these financial statements. The Directors have also taken into account the performance of the business during the Global Financial Crisis. The Directors modelled a number of 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 financial statements.

VIABILITY STATEMENT

The Directors have assessed the Group's viability over a four-year period to March 2026. 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 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 2026.

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. 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 corporate social responsibility initiatives, aim to create a more sustainable business which will increase shareholder and customer value in both the medium and long-term;

- maintaining 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 large metropolitan cities. 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 58% 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 74%. These proportions reduced in the current year following the acquisition of the remaining interest in Armadillo which we did not previously own, however 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 2021, there have been only seven store openings in London (including one Big Yellow store), and we anticipate five new stores in London in 2022, including three Big Yellow store openings.

Since April 2021, we have acquired development sites in Kentish Town and West Kensington. This increases our pipeline to 12 freehold development opportunities, totalling approximately 1.0 million sq ft (16% of MLA).

Our stores are on average 60,000 sq ft, compared to an industry average of approximately 45,000 sq ft (source: UK Self Storage Association 2022 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 10.5 times for the year ended 31 March 2022. 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 through the pandemic, where we have 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. During the current crisis the business has performed strongly with like-for-like occupancy growth of 6.2 ppts since 31 March 2020.

81% of our customers pay by direct debit, and our cash collection has remained robust throughout the pandemic.

Total shareholder return

In the twenty two years since flotation in May 2000, Big Yellow has delivered a Total Shareholder Return ("TSR"), including dividends reinvested, of 15.8% per annum, in aggregate 2,401% at the closing price of 1536p on 31 March 2022. This compares to 6.2% per annum for the FTSE Real Estate Index and 5.1% per annum for the FTSE All Share index over the same period. We feel this illustrates the power of compounding of consistent incremental returns over the longer term.

Our investment case

Attractive market dynamics	•	UK self storage penetration in key urban conurbations remains relatively low
	•	Limited new supply coming onto the market
	•	Resilient through the 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
	•	6.1 million sq ft UK footprint, with development pipeline of 1.0 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 29 months
	•	37% of customers in stores greater than two-year length of stay, a further 17% for one to two years
	•	Low bad debt expense (0.1% of store revenue in the year), no deterioration over the pandemic
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 2022

	Note	2022 £000	2021 £000

Revenue	3	171,318	135,241
Cost of sales		(50,383)	(41,589)

Gross profit		120,935	93,652

Administrative expenses		(14,352)	(12,159)

Operating profit before gains on property assets		106,583	81,493
Gain on the revaluation of investment properties	14a,15	597,224	189,277
Gain on disposal of investment property		584	-

Operating profit		704,391	270,770
Share of profit of associates	14e	3,677	3,148
Investment income - interest receivable	7	23	69
- fair value movement on derivatives	7	1,389	-
Finance costs - interest payable	8	(10,604)	(8,017)
- fair value movement on derivatives	8	-	(148)

Profit before taxation		698,876	265,822
Taxation	9	(1,602)	(636)

Profit for the year (attributable to equity shareholders)	5	697,274	265,186

Total comprehensive income for the year (attributable to equity shareholders)		697,274	265,186

Basic earnings per share	12	385.4p	152.3p

Diluted earnings per share	12	384.2p	151.8p

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 2022

	Note	2022 £000	2021 £000
Non-current assets
Investment property	14a	2,342,199	1,621,990
Investment property under construction	14a	285,400	163,537
Right-of-use assets	14a	19,174	16,644
Plant, equipment, and owner-occupied property	14b	3,857	3,910
Intangible assets	14c	1,433	1,433
Investment	14d	588	450
Investment in associates	14e	-	13,720
Capital Goods Scheme receivable	16	-	163
Derivative financial instruments	18c	885	-

		2,653,536	1,821,847
Current assets
Inventories		483	366
Trade and other receivables	16	7,756	7,764
Cash and cash equivalents		8,605	12,322

		16,844	20,452

Total assets		2,670,380	1,842,299

Current liabilities
Trade and other payables	17	(47,349)	(34,563)
Borrowings	19	(3,008)	(2,865)
Obligations under lease liabilities	21	(1,958)	(1,751)

		(52,315)	(39,179)

Non-current liabilities
Derivative financial instruments	18c	-	(475)
Borrowings	19	(414,972)	(332,573)
Obligations under lease liabilities	21	(18,718)	(16,177)

		(433,690)	(349,225)

Total liabilities		(486,005)	(388,404)

Net assets		2,184,375	1,453,895

Equity
Share capital	22	18,397	17,588
Share premium account		289,923	192,218
Reserves		1,876,055	1,244,089

Equity shareholders' funds		2,184,375	1,453,895

The financial statements were approved by the Board of Directors and authorised for issue on 23 May 2022. 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 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 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 2021

	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 2020	16,714	112,320	74,950	1,795	959,116	(1,019)	1,163,876
Total comprehensive income for the year	-	-	-	-	265,186	-	265,186
Issue of share capital	874	79,898	-	-	-	-	80,772
Dividend	-	-	-	-	(58,808)	-	(58,808)
Credit to equity for equity-settled share-based payments	-	-	-	-	2,869	-	2,869

At 31 March 2021	17,588	192,218	74,950	1,795	1,168,363	(1,019)	1,453,895

The accompanying notes form part of the financial statements.

Consolidated Cash Flow Statement Year ended 31 March 2022	Note	2022 £000	2021 £000
Cash generated from operations	26	120,390	87,131
Bank interest paid		(10,763)	(8,850)
Interest on obligations under lease liabilities		(843)	(772)
Interest received		2	26
Tax paid		(1,649)	(823)

Cash flows from operating activities		107,137	76,712

Investing activities
Purchase of non-current assets		(105,151)	(73,010)
Disposal of investment property		584	-
Acquisition of Armadillo (net of cash acquired)		(66,679)	-
Investment	14d	(138)	(450)
Receipts from Capital Goods Scheme		381	737
Dividend received from associates	14e	435	688

Cash flows from investing activities		(170,568)	(72,035)

Financing activities
Issue of share capital		98,514	80,772
Payment of lease liabilities		(1,384)	(1,009)
Equity dividends paid	11	(68,698)	(58,808)
Loan arrangement fees paid		(953)	-
Increase/(decrease) in borrowings		32,235	(64,728)

Cash flows from financing activities		59,714	(43,773)

Net decrease in cash and cash equivalents		(3,717)	(39,096)

Opening cash and cash equivalents		12,322	51,418

Closing cash and cash equivalents		8,605	12,322

The accompanying notes form part of the financial statements.

Notes to the financial statements

Year ended 31 March 2022

1. General information

Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006, with registration number 03625199. 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. Significant accounting policies

The financial information set out above does not constitute the Group and Company's statutory accounts for the years ended 31 March 2022 or 2021 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the registrar of companies, and those for 2022 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The statutory accounts have been prepared in accordance with international accounting standards in conformity with the requirements of the UK-adopted international accounting standards and 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.

3. Revenue

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

	2022 £000	2021 £000

Open stores
Self storage income	145,592	113,119
Insurance income	17,783	14,517
Packing materials income	3,142	2,771
Other income from storage customers	1,821	1,275
Ancillary store rental income	937	786
	169,275	132,468
Other revenue
Non-storage income	1,598	1,420
Management fees earned	325	1,353
Business interruption insurance proceeds	120	-

Total revenue	171,318	135,241

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

4. Segmental Information

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

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

5. PROFIT for the year

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

	Note	2022 £000	2021 £000

Depreciation of plant, equipment, and owner-occupied property	14b	857	803
Depreciation of interest in leasehold properties		1,601	1,272
Gain on the revaluation of investment property		(597,224)	(189,277)
Gains on disposal of investment property		(584)	-
Cost of inventories recognised as an expense		1,405	1,189
Employee costs	6	23,181	19,769
Operating lease rentals		-	4

b) Analysis of auditor's remuneration:

	2022 £000	2021 £000

Fees payable to the Company's auditor for the audit of the Company's annual accounts	365	227
Fess payable to the Company's auditor for the subsidiaries' annual accounts	50	36
Fees payable to the Company's auditor for the audit of the Company's associates	-	98

Total audit fees	415	361

Audit related assurance services - interim review	60	42

Total non-audit fees	60	42

Total audit and non-audit fees paid to KPMG LLP	475	403

The associates (Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited) are now wholly owned, so the fees are included in the overall Group fee.

6. Employee costs

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

	2022 Number	2021 Number

Sales	365	310
Administration	62	60

	427	370

At 31 March 2022 the total number of Group employees was 495 (2021: 412).
	2022 £000	2021 £000
Their aggregate remuneration comprised:
Wages and salaries	16,086	13,935
Social security costs	3,014	2,291
Other pension costs	691	674
Share-based payments	3,390	2,869

	23,181	19,769

7. INVESTMENT income

	2022 £000	2021 £000

Bank interest receivable	2	26
Unwinding of discount on Capital Goods Scheme receivable	21	43
Total interest receivable	23	69

Fair value movement on derivatives	1,389	-
Total investment income	1,412	69

8. Finance costs

	2022 £000	2021 £000

Interest on bank borrowings	11,772	9,380
Capitalised interest	(2,072)	(2,135)
Interest on obligations under lease liabilities	843	772
Other interest payable	61	-

Total interest payable	10,604	8,017

Fair value movement on derivatives	-	148
Total finance costs	10,604	8,165

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	2022 £000	2021 £000
- Current year	1,725	798
- Prior year	(123)	(162)
	1,602	636

A reconciliation of the tax charge is shown below:

	2022 £000	2021 £000

Profit before tax	698,876	265,822
Tax charge at 19% (2020 - 19%) thereon	132,786	50,506
Effects of:
Revaluation of investment properties	(113,472)	(35,963)
Share of profit of associates	(699)	(598)
Other permanent differences	(2,031)	(1,921)
Profits from the tax-exempt business	(14,859)	(11,226)
Current year tax charge	1,725	798
Prior year adjustment	(123)	(162)
Total tax charge	1,602	636

At 31 March 2022 the Group has unutilised tax losses from the non-REIT taxable business of £34.2 million (2021: £34.2 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10. Adjusted Profit

	2022 £000	2021 £000

Profit before tax	698,876	265,822
Gain on revaluation of investment properties - Group	(597,224)	(189,277)
-associates (net of deferred tax) to 30 June 2021	(1,537)	(2,074)
Change in fair value of interest rate derivatives - Group	(1,389)	148
- in associate	-	6
Armadillo fair value adjustments on acquisition	(1,756)	-
Gain on disposal of investment property	(584)	-
Acquisition costs written off	416	-
Adjusted profit before tax	96,802	74,625
Tax	(1,602)	(636)
Adjusted profit after tax	95,200	73,989

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, fair value adjustments on acquisitions, and net gains and losses on disposal of investment property have been disclosed as, in the Board's view, this provides a clearer understanding of the Group's trading performance.

11. Dividends

	2022 £000	2021 £000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2021 of 17.0p (2020: 16.7p) per share.	31,039	29,124
Interim dividend for the year ended 31 March 2022 of 20.6p (2021: 17.0p) per share.	37,659	29,684
	68,698	58,808
Proposed final dividend for the year ended 31 March 2022 of 21.4p (2021: 17.0p) per share.	39,137	29,716

Subject to approval by shareholders at the Annual General Meeting to be held on 21 July 2022, the final dividend will be paid on 29 July 2022. The ex-div date is 7 July 2022 and the record date is 8 July 2022.

The Property Income Distribution ("PID") payable for the year is 42.0 pence per share (2021: 32.0 pence per share).

12. Earnings per share

	Year ended 31 March 2022			Year ended 31 March 2021
	Earnings £000	Shares million	Pence per share	Earnings £000	Shares million	Pence per share
Basic	697,274	180.9	385.4	265,186	174.1	152.3
Dilutive share options	-	0.6	(1.2)	-	0.6	(0.5)

Diluted	697,274	181.5	384.2	265,186	174.7	151.8
Adjustments:
Gain on revaluation of investment properties	(597,224)	-	(329.0)	(189,277)	-	(108.3)
Acquisition costs written off	416	-	0.2	-	-	-
Change in fair value of interest rate derivatives	(1,389)	-	(0.8)	148	-	0.1
Gain on disposal of investment property	(584)	-	(0.3)	-	-	-
Share of associate fair value gains and losses	(3,293)	-	(1.8)	(2,068)		(1.2)
EPRA - diluted	95,200	181.5	52.5	73,989	174.7	42.4

EPRA - basic	95,200	180.9	52.6	73,989	174.1	42.5

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

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

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 2022			Year ended 31 March 2021
	Equity attributable to ordinary shareholders £000	Shares million	Pence per share	Equity attributable to ordinary shareholders £000	Shares million	Pence per share
Basic NAV	2,184,375	182,844,471	1,194.7	1,453,895	174,757,563	831.9
Share and save as you earn schemes	1,592	1,409,649	(8.3)	1,451	1,427,948	(5.9)
Diluted NAV	2,185,967	184,254,120	1,186.4	1,455,346	176,185,511	826.0
Fair value of derivatives - Group	(885)	-	(0.5)	475	-	0.3
Fair value of derivatives - share of associate	-	-	-	6	-	-
Deferred tax in respect of valuation surpluses - associate	-	-	-	1,818	-	1.0
Intangible assets	(1,433)	-	(0.8)	(1,433)	-	(0.8)
EPRA NTA	2,183,649	184,254,120	1,185.1	1,456,212	176,185,511	826.5
Valuation methodology assumption (see note 15) (£000)	100,600	-	54.6	110,393	-	62.7
Adjusted NAV	2,284,249	184,254,120	1,239.7	1,566,605	176,185,511	889.2

JLL were appointed as the Group's valuers during the year. Their valuation model differs from the previous valuer CBRE's in that they do not assume a sale of the asset in year 10 of the discounted cash flow, instead taking the cash flows on in perpetuity at an all risks yield which reflects the implicit future growth of the business. This approach means purchaser's costs are not deducted on this in perpetuity cash flow. CBRE's model assumed a sale in year 10, and deducted purchaser's costs from this notional sale. This means the overall purchaser's costs are lower in the JLL model and explains why the valuation methodology assumption adjustment is lower in the current year compared to the prior year, despite the significant increase in valuation of the Group's investment properties.

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 2020	1,385,120	136,299	17,829	1,539,248
Additions	11,657	63,174	-	74,831
Transfer on opening of stores	36,070	(36,070)	-	-
Revaluation (see note 15)	189,143	134	-	189,277
Depreciation	-	-	(1,185)	(1,185)

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

The right-of-use assets represent the present value of minimum lease payments for leasehold properties - see note 21 for further details of the obligations under lease liabilities.

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

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 £2.1 million of capitalised interest (2021: £2.1 million), calculated at the Group's average borrowing cost for the year of 2.8%. 86 of the Group's investment properties are pledged as security for loans, with a total external value of £1.9 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 2020	2,275	77	490	32	1,170	872	4,916
Retirement of fully depreciated assets	-	(18)	(167)	-	(602)	-	(787)
Additions	-	-	116	-	694	-	810

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

Depreciation
At 31 March 2020	(536)	(26)	(180)	(28)	(32)	(106)	(908)
Retirement of fully depreciated assets	-	18	167	-	602	-	787
Charge for the year	(57)	(4)	(116)	(4)	(622)	(105)	(908)

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)

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

At 31 March 2021	1,682	47	310	-	1,210	661	3,910

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

During the prior year, the Group invested £450,000 in DS Operations Centre Limited ("DSOC"), a company which provides out-of-hours monitoring and alarm receiving services, including for the Group's stores. In December 2021, the Group invested a further £138,000 in DSOC. 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 2022 £000	31 March 2021 £000	31 March 2022 £000	31 March 2021 £000	31 March 2022 £000	31 March 2021 £000
At the beginning of the year	8,698	7,027	5,022	4,233	13,720	11,260
Share of results (see below)	2,413	2,013	1,264	1,135	3,677	3,148
Dividends	(211)	(342)	(224)	(346)	(435)	(688)
Acquisition of remaining interest	(10,900)	-	(6,062)	-	(16,962)	-

Share of net assets	-	8,698	-	5,022	-	13,720

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

	Armadillo 1		Armadillo 2
	1 April 2021 to 30 June 2021 £000	Year ended 31 March 2021 £000	1 April 2021 to 30 June 2021 £000	Year ended 31 March 2021 £000
Statement of comprehensive income (100%)
Revenue	3,170	11,338	1,876	6,664
Cost of sales	(1,601)	(5,967)	(793)	(2,953)
Administrative expenses	(126)	(345)	(45)	(161)
Operating profit	1,443	5,026	1,038	3,550
Goodwill write-off	(982)	-	(1,849)	-
Gain on the revaluation of investment properties	4,888	8,565	2,795	4,235
Net interest payable	(274)	(1,177)	(183)	(752)
Fair value movement of interest rate derivatives	-	(18)	-	(11)
Deferred and current tax	6,988	(2,330)	4,519	(1,347)
Profit attributable to shareholders	12,063	10,066	6,320	5,675
Dividends paid	(1,054)	(1,708)	(1,120)	(1,730)
Retained profit	11,009	8,358	5,200	3,945

Group share (20%)
Operating profit	289	1,005	208	710
Goodwill write-off	(196)	-	(370)	-
Gain on the revaluation of investment properties	978	1,713	559	847
Net interest payable	(55)	(235)	(37)	(150)
Fair value movement of interest rate derivatives	-	(4)	-	(2)
Deferred and current tax	1,397	(466)	904	(270)
Profit attributable to shareholders	2,413	2,013	1,264	1,135
Dividends paid	(211)	(342)	(224)	(346)
Retained profit/(loss)	2,202	1,671	1,040	789
Associates' net assets	-	8,698	-	5,022

Balance sheet (100%)	31 March 2022 £000	31 March 2021 £000	31 March 2022 £000	31 March 2021 £000
Investment property	-	81,075	-	48,425
Interest in leasehold properties	-	2,750	-	2,219
Other non-current assets	-	1,204	-	2,004
Current assets	-	1,169	-	339
Current liabilities	-	(2,923)	-	(1,946)
Derivative financial instruments	-	(18)	-	(11)
Non-current liabilities	-	(39,767)	-	(25,918)
Net assets (100%)	-	43,490	-	25,112

Accounting for the acquisition - Armadillo 1

The following provides a breakdown of the fair value of the assets and liabilities acquired. The investment properties have been valued by the Directors with regard to the March 2021 property valuations performed by JLL uplifted for the capital movement in the three month period to the Acquisition date.

		£000
Investment property		86,553
Other non-current assets		2,949
Current assets		1,981
Current liabilities		(3,825)
Bank borrowings		(30,444)
Obligations under lease liabilities due greater than one year		(2,717)

Net assets (100%)		54,497

		£000
Net assets acquired (80% of £54.5 million)		43,598
Satisfied by cash consideration		(43,598)
		-

From the date of acquisition of the Partnership on 1 July 2021 to 31 March 2022, the revenue of the Partnership was £10.4 million, and the statutory profit before tax was £12.8 million.

Accounting for the acquisition - Armadillo 2

		£000
Investment property		51,865
Other non-current assets		2,285
Current assets		961
Current liabilities		(2,969)
Bank borrowings		(20,116)
Obligations under lease liabilities due greater than one year		(1,707)

Net assets (100%)		30,319

		£000
Net assets acquired (80% of £30.3 million)		24,255
Satisfied by cash consideration		(24,255)
		-

From the date of acquisition of the Partnership on 1 July 2021 to 31 March 2022, the revenue of the Partnership was £5.9 million, and the statutory profit before tax was £2.4 million.

Measurement of fair values

The valuation techniques used for measuring the fair value of material assets acquired were as follows:

Assets acquired
Investment property	External market valuation model : The Directors paid regard to JLL's external valuation from 31 March 2021 and uplifted the valuations for the capital movement from that date.
Property, plant and equipment	Market comparison technique and cost technique: The valuation model considers market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

The trade receivables acquired across both companies comprise gross contractual amounts due of £0.5 million, of which £41,000 was expected to be uncollectable at the date of the acquisition.

No amounts have been fair valued on a provisional basis.

The Directors considered whether there were any intangibles acquired, in particular customer lists and the Armadillo brand. The Directors concluded that no material intangibles were acquired.

Cash

The amount of cash and cash equivalents over which control was obtained in the year from the acquisition of the two Armadillo transactions was £1.2 million.

Fair value adjustments

On acquisition of the remaining interests in Armadillo, the Group made certain fair value adjustments to the Armadillo balance sheets. These were:

- an increase in the investment property valuation, reflecting the fair value of the assets at 30 June 2021;

- the write off of goodwill contained in the Armadillo balance sheets; and

- the write back of deferred tax (principally on revaluation surpluses) contained in the Armadillo balance sheets, with Armadillo joining the Big Yellow REIT on acquisition.

These fair value adjustments are shown in the share of profit of the associates in the period to 30 June 2021 and amounted to a gain of £3.3 million.

Acquisition costs

The Group incurred acquisition-related costs of £0.4 million on legal fees and stamp duty. These costs have been included in administrative expenses.

Proforma impact of acquisitions

For the nine months ended 31 March 2022, the Armadillo Partnerships contributed revenue of £16.3 million and statutory profit before tax of £15.2 million. If the acquisition had occurred on 1 April 2021, management estimates that consolidated revenue would have been £176.0 million for the year and consolidated profit before tax for the year would have been £712.0 million. In determining these amounts, management has assessed that the fair value adjustments that arose on the date of acquisition would have been insignificantly different if the acquisition had occurred on 1 April 2021, other than for investment property, whereby the 30 June 2021 valuations were different compared to the valuations at 31 March 2021.

15. VALUATION OF INVESTMENT PROPERTY

	Deemed cost £000	Revaluation on deemed cost £000	Valuation £000
Freehold stores
At 31 March 2021	721,121	869,769	1,590,890
Transfer from investment property under construction	46,248	(5,066)	41,182
Acquisition of Armadillo	130,281	-	130,281
Movement in year	10,616	528,030	538,646
At 31 March 2022	908,266	1,392,733	2,300,999

Leasehold stores
At 31 March 2021	13,290	17,810	31,100
Acquisition of Armadillo	8,137	-	8,137
Cheadle impairment	-	(4,349)	(4,349)
Movement in year	305	6,007	6,312
At 31 March 2022	21,732	19,468	41,200

Total of open stores
At 31 March 2021	734,411	887,579	1,621,990
Transfer from investment property under construction	46,248	(5,066)	41,182
Acquisition of Armadillo	138,418	-	138,418
Cheadle impairment	-	(4,349)	(4,349)
Movement in year	10,921	534,037	544,958
At 31 March 2022	929,998	1,412,201	2,342,199

Investment property under construction
At 31 March 2021	162,592	945	163,537
Transfer to investment property	(46,248)	5,066	(41,182)
Movement in year	95,509	67,536	163,045
At 31 March 2022	211,853	73,547	285,400

Valuation of all investment property
At 31 March 2021	897,003	888,524	1,785,527
Acquisition of Armadillo	138,418	-	138,418
Cheadle impairment	-	(4,349)	(4,349)
Movement in year	106,430	601,573	708,003
At 31 March 2022	1,141,851	1,485,748	2,627,599

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 2022 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 first 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 cashflow 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 105 trading stores (both freeholds and leaseholds) open at 31 March 2022 averages 88% (31 March 2021: 78 stores averaging 87%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth.

C. 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 105 stores is 5.2% (31 March 2021: 5.9%). The weighted average exit capitalisation rate adopted (for both freeholds and leaseholds) is 5.5% (31 March 2021: 5.7%).

D. The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that reflects the risk associated with each asset. The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 7.1% (31 March 2021: 8.7%).

E. 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 eight short leasehold properties is 14.0 years (31 March 2021: 11.9 years unexpired).

Sensitivities

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

	Impact of a change in capitalisation rates		Impact of a change in stabilised occupancy assumption
	25 bps decrease	25 bps increase	1% increase	1% decrease
Reported Group	4.86%	(4.43%)	1.32%	(1.37%)

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.

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 2022 of £2,728.2 million (£100.6 million higher than the value recorded in the financial statements) translating to 54.7 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 2022 £000	31 March 2021 £000
Current
Trade receivables	4,763	3,562
Capital Goods Scheme receivable	234	525
Other receivables	715	1,474
Prepayments and accrued income	2,044	2,203

	7,756	7,764
Non-current
Capital Goods Scheme receivable	-	163

Trade receivables are net of a bad debt provision of £563,000 (2021: £223,000). 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 £713,000 (2021: £465,000) 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 18 days past due (2021: 25 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:

	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

	Not past due	<31 days	31-45 days	>45 days	Total
Expected credit loss rate (%)	0.2%	2.2%	10.6%	100%	5.9%
Gross carrying amount (£000)	3,103	456	21	205	3,785
Lifetime ECL (£000)	(6)	(10)	(2)	(205)	(223)

Net trade receivables at 31 March 2021	3,097	446	19	-	3,562

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

	2022 £000	2021 £000
Balance at the beginning of the year	223	176
Credit loss allowance consolidated on Armadillo acquisition	41	-
Amounts provided in year	463	239
Amounts written off as uncollectible	(164)	(192)

Balance at the end of the year	563	223

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 2022 £000	31 March 2021 £000
Current
Trade payables	5,705	4,052
Other payables	13,762	8,036
Accruals and deferred income	27,882	22,475

	47,349	34,563

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 2022 was £15.8 million, an increase of 22% from 31 March 2021 (£12.9 million). This reflects the growth in the Group's revenue during the year, both on a like-for-like basis, and through the acquisition of the remaining 80% interest in Armadillo.

18. Financial Instruments

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group's debt facilities require 40% of total drawn debt to be fixed. The Group has complied with this during the year.

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

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:

	2022 £000	2021 £000

Debt	(420,435)	(337,300)
Cash and cash equivalents	8,605	12,322
Net debt	(411,830)	(324,978)
Balance sheet equity	2,184,375	1,453,895
Net debt to equity ratio	18.9%	22.4%

B. Debt management

The Group currently borrows through a senior term loan, secured on 26 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, and two loans secured on the Armadillo portfolios from Lloyds Bank amounting to £52.7 million. 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 2022 the Group had three interest rate derivatives in place - £35 million fixed at 0.88% (excluding the margin on the underlying debt instrument) until June 2023, and two interest rate derivatives within the Armadillo loans, amounting to £26.4 million fixed at 0.24% until April 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 £26.4 million interest rate swaps in the Armadillo loans settle on a monthly basis. The floating rate on the interest rate swap is one 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:

	2022 £000	2021 £000

At 1 April	(475)	(327)
Fair value of Armadillo derivatives on acquisition of remaining interest	(29)	-
Fair value movement in the year	1,389	(148)
At 31 March	885	(475)

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

	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
Fair value movement	-	(1,214)	1,389	175
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.

	Loans £000	Obligations under lease liabilities £000	Interest rate derivatives £000	Total £000

At 1 April 2020	(402,028)	(18,937)	(327)	(421,292)
Cash movement in the year	64,728	1,009	-	65,737
Non-cash movement	-	-	(148)	(148)
At 31 March 2021	(337,300)	(17,928)	(475)	(355,703)

The difference between the loans balance above and the balance sheet is loan arrangement fees of £1,862,000

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 2022, 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 £493,000 (2021: reduced adjusted profit before tax by £394,000) 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 £493,000 (2021: increased adjusted profit before tax by £394,000). 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.

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

2021 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	114,800	2,865	3,008	9,959	98,968
M&G loan payable at variable rate	35,000	-	-	35,000	-
M&G loan fixed by interest rate derivatives	35,000	-	-	35,000	-
Bank loan payable at variable rate	122,500	-	-	122,500	-
Debt fixed by interest rate derivatives	30,000	-	-	30,000	-
Total	337,300	2,865	3,008	232,459	98,968

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:

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

2021	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	-	-	104,576	18,274	122,850
From two to five years	-	25	249,913	5,267	255,205
From one to two years	-	162	11,638	1,780	13,580

Due after more than one year	-	187	366,127	25,321	391,635
Due within one year	12,088	271	11,639	1,780	25,778

Total	12,088	458	377,766	27,101	417,413

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.

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

2021	Borrowings £000	Interest £000	Unamortised borrowing costs £000	Borrowings and interest £000

From five to twenty years	98,968	4,703	905	104,576
From two to five years	232,459	16,497	957	249,913
From one to two years	3,008	8,630	-	11,638

Due after more than one year	334,435	29,830	1,862	366,127
Due within one year	2,865	8,774	-	11,639

Total	337,300	38,604	1,862	377,766

19. BORROWINGS

Secured borrowings at amortised cost	31 March 2022 £000	31 March 2021 £000

Current liabilities
Aviva loan	3,008	2,865
	3,008	2,865
Non-current liabilities
Bank borrowings	99,000	152,500
Armadillo loans	39,500	-
Aviva loan	158,927	111,935
M&G loan	120,000	70,000
Unamortised loan arrangement costs	(2,455)	(1,862)

Total non-current borrowings	414,972	332,573

Total borrowings	417,980	335,438

The weighted average interest rate paid on the borrowings during the year was 2.8% (2021: 2.9%).

The Group has £141 million in undrawn committed bank borrowing facilities at 31 March 2022, which expire after between two and three years and £13.2 million in undrawn committed bank borrowing facilities which expire between one and two years (2021: £87.5 million expiring after between three and four years).

The Group has a £161.9 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 3.5%. The loan has an amortising element of £16.9 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 Group has total facilities of £52.7 million secured on the Armadillo portfolios with Lloyds Bank plc. These facilities expire in April 2023. The Group is currently in talks to refinance these loans with a new debt provider.

The Group has a £120 million loan with M&G Investments Limited, with a bullet repayment in June 2023. The loan is secured over a portfolio of 15 freehold self storage centres. The Group intends to refinance this loan this summer.

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

The Group was in compliance with its banking covenants at 31 March 2022 and throughout the year. The principal covenants are summarised in the table below:

Covenant	Covenant level	At 31 March 2022
Consolidated EBITDA	Minimum 1.5x	11.1x
Consolidated net tangible assets	Minimum £250m	£2,184.4m
Bank loan interest cover	Minimum 1.75x	22.1x
Aviva loan interest service cover ratio	Minimum 1.5x	5.3x
Aviva loan debt service cover ratio	Minimum 1.2x	2.8x
M&G interest cover	Minimum 1.5x	8.8x

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 2022
Gross financial liabilities	420,435	197,150	223,285	3.1%	4.6 years	3.4 years

At 31 March 2021
Gross financial liabilities	337,300	157,500	179,800	2.6%	4.6 years	4.0 years

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

All applicable borrowings were transitioned to SONIA during the year.

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 (2021: £0.1 million), corporation tax losses £6.5 million (2021: £4.9 million), capital allowances in excess of depreciation £0.3 million (2021: £0.2 million) and capital losses £2.1 million (2021: £1.6 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.

21. OBLIGATIONS UNDER LEASE LIABILITIES

	Minimum lease payments		Present value of minimum lease payments
	2022 £000	2021 £000	2022 £000	2021 £000

Amounts payable under lease liabilities:
Within one year	1,989	1,780	1,958	1,751
Within two to five years inclusive	7,421	7,047	6,651	6,208
Greater than five years	22,765	18,274	12,067	9,969

	32,175	27,101	20,676	17,928

Less: future finance charges	(11,499)	(9,173)

Present value of lease liabilities	20,676	17,928

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
	2022 £000	2021 £000

Ordinary shares of 10 pence each	18,397	17,588

Movement in issued share capital
Number of shares at 31 March 2020		167,138,527
Issue of shares - placing		8,335,043
Exercise of share options - Share option schemes		406,900
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

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

At 31 March 2021 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 2022	Number of ordinary shares 2021
29 July 2014	nil p**	29 July 2017	29 July 2024	830	830
21 July 2015	nil p**	21 July 2018	21 July 2025	1,989	16,268
22 July 2016	nil p**	22 July 2019	21 July 2026	2,944	30,703
2 August 2017	nil p**	2 August 2020	2 August 2027	5,809	68,034
13 March 2018	675.4p*	1 April 2021	1 April 2022	1,599	87,000
24 July 2018	nil p**	24 July 2021	24 July 2028	96,002	334,201
11 March 2019	749.9p*	1 April 2022	1 April 2023	46,996	48,124
19 July 2019	nil p **	19 July 2022	19 July 2029	353,920	362,730
2 March 2020	947.0p	1 April 2023	1 April 2024	48,241	51,889
5 August 2020	nil p **	5 August 2023	5 August 2030	398,146	410,767
1 March 2021	903.2p *	1 April 2024	1 April 2025	86,670	94,695
22 July 2021	nil p **	22 July 2024	22 July 2031	319,922	-

				1,363,068	1,505,241

* 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 (2021: 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 £3,390,000 (2021: £2,869,000).

Equity-settled share option plans

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

On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group's Long Term Incentive Plan ("LTIP"). The awards are conditional on the achievement of challenging performance targets as described in the Remuneration Report. The awards granted in 2004, 2005 and 2006 vested in full. The awards granted in 2007 and 2009 lapsed, and the awards granted in 2008 and 2010 partially vested. The awards granted in 2011, 2012, 2013, 2014, 2015 and 2016 fully vested. The award granted in 2017 vested to 83.6% of its potential, and the award granted in 2018 vested to 62% of its potential. The weighted average share price at the date of exercise for options exercised in the year was £14.84 (2021: £10.64).

LTIP scheme	2022 No. of options	2021 No. of options

Outstanding at beginning of year	1,223,533	1,172,726
Granted during the year	382,433	508,878
Lapsed during the year	(176,404)	(98,071)
Exercised during the year	(250,000)	(360,000)

Outstanding at the end of the year	1,179,562	1,223,533

Exercisable at the end of the year	124,901	131,787

The weighted average fair value of options granted during the year was £1,742,000 (2021: £1,512,000).

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

Options outstanding at 31 March 2022 had a weighted average contractual life of 8.1 years (2021: 8.1 years).

Employee Share Save Scheme ("SAYE")	2022 No. of options	2022 Weighted average exercise price (£)	2021 No of options	2021 Weighted average exercise price (£)

Outstanding at beginning of year	281,708	8.15	240,572	7.32
Granted during the year	-	-	94,695	9.03
Forfeited during the year	(13,232)	8.92	(6,659)	7.40
Exercised during the year	(84,970)	6.76	(46,900)	5.80
Outstanding at the end of the year	183,506	8.75	281,708	8.15

Exercisable at the end of the year	1,599	6.76	-	-

Options outstanding at 31 March 2022 had a weighted average contractual life of 1.6 years (2021: 2.0 years).

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

	LTIP	SAYE
Expected volatility	n/a	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 2022 the Group had £20.9 million of amounts contracted but not provided in respect of the Group's properties (2021: £17.3 million of capital commitments).

25. Events after the balance sheet date

On 20 May 2022, the Group exchanged contracts to sell its industrial warehouse scheme adjacent to its new Harrow store for gross sales proceeds of £61 million. Completion of the sale is conditional, inter alia, on practical completion of the development, and is expected to occur in August of this year.

26. CASH FLOW NOTES

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

	Note	2022 £000	2021 £000
Profit after tax		697,274	265,186
Taxation		1,602	636
Share of profit of associates		(3,677)	(3,148)
Investment income		(1,412)	(69)
Finance costs		10,604	8,165
Operating profit		704,391	270,770

Gain on the revaluation of investment properties	14a, 15	(597,224)	(189,277)
Gain on disposal of investment property		(584)	-
Depreciation of plant, equipment, and owner-occupied property	14b	857	803
Depreciation of lease liability capital obligations	14a, 14b	1,659	1,290
Employee share options	6	3,390	2,869
Cash generated from operations pre working capital movements		112,489	86,455

(Increase)/decrease in inventories		(71)	46
Decrease in receivables		1,550	841
Increase/(decrease) in payables		6,422	(211)
Cash generated from operations		120,390	87,131

b) Reconciliation of net cash flow movement to net debt

	Note	2022 £000	2021 £000

Net decrease in cash and cash equivalents in the year		(3,717)	(39,096)
Cash flow from (increase)/decrease in debt financing		(83,135)	64,728

Change in net debt resulting from cash flows		(86,852)	25,632

Movement in net debt in the year		(86,852)	25,632
Net debt at the start of the year		(324,978)	(350,610)

Net debt at the end of the year	18A	(411,830)	(324,978)

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 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, the Group entered into transactions with the Companies on normal commercial terms as shown in the table below:

	31 March 2022 £000	31 March 2021 £000
Fees earned from Armadillo 1	238	977
Fees earned from Armadillo 2	87	376
Balance due from Armadillo 1	-	67
Balance due from Armadillo 2	-	27

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 £10,000 (2021: £25,000).

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. During the year 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 (2021: £nil).

DS Operations Centre Limited

In December 2020, the Group invested £450,000 in DS Operations Centre Limited ("DSOC"). In December 2021, the Group invested a further £138,000 in DSOC. DSOC provided alarm and CCTV monitoring services to the Group under normal commercial terms during the year, amounting to £281,000 (2021: £22,000).

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 £3,000 (2021: £nil).

No other related party transactions took place during the years ended 31 March 2022 and 31 March 2021.

28. GLOSSARY

Adjusted earnings growth	The increase in adjusted eps year-on-year.
Adjusted eps	Adjusted profit after tax divided by the diluted weighted average number of shares in issue during the financial year.
Adjusted NAV	EPRA 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.
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 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 2022 this excludes Camberwell, Bracknell, Battersea, Uxbridge, Hayes, Hove and the Armadillo stores.
Like-for-like revenue	Excludes the impact of new stores acquired, opened or stores closed in the current or preceding financial year in both the current year and comparative figures. In 2022 this excludes Camberwell, Bracknell, Battersea, Uxbridge, Hayes, Hove 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 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 rent per sq ft	Storage revenue generated from in place customers divided by occupancy.
Occupancy	The space occupied by customers divided by the MLA expressed as a %.
Occupied space	The space occupied by customers in sq ft.
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.
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

	2022 £000	2021 £000	2020 £000	2019 £000	2018 £000	2017 £000	2016 £000	2015 £000	2014 £000	2013 £000
Results
Revenue	171,318	135,241	129,313	125,414	116,660	109,070	101,382	84,276	72,196	69,671

Operating profit before gains and losses on property assets	106,583	81,493	79,978	76,662	70,921	65,316	59,854	48,420	39,537	37,454

Cash flow from operating activities	107,137	76,712	73,615	72,173	62,977	55,974	55,467	42,397	32,752	30,186

Profit before taxation	698,876	265,822	93,447	126,855	134,139	99,783	112,246	105,236	59,848	31,876

Adjusted profit before taxation	96,802	74,625	70,998	67,465	61,422	54,641	48,952	39,405	29,221	25,471

Net assets	2,184,375	1,453,895	1,163,876	1,123,897	981,148	890,350	829,387	750,914	594,064	552,628

Diluted EPRA earnings per share	52.5p	42.4p	42.1p	41.4p	38.5p	34.5p	31.1p	27.1p	20.5p	19.3p
Declared total dividend per share	42.0p	34.0p	33.8p	33.2p	30.8p	27.6p	24.9p	21.7p	16.4p	11.0p

Key statistics
Number of stores open**	105	78	75	74	74	73	71	69	66	66
Sq ft occupied (000)**	5,107	4,201	3,781	3,810	3,730	3,551	3,363	3,178	2,832	2,632
Occupancy increase/ (decrease) in year (000 sq ft)*	906	420	(29)	80	179	188	185	346	200	174
Closing net rent per sq ft**	£29.92	£28.71	£28.15	£27.28	£26.74	£26.03	£25,90	£25.23	£24.85	£24.65
Number of occupied rooms**	73,000	62,000	56,500	56,000	55,000	52,500	50,000	47,250	41,800	38,500
Average number of employees during the year**	427	370	361	347	335	329	318	300	289	286

* - the occupancy growth in 2015, 2017 and 2022 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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