Big Yellow Regulatory News (BYG)

audited Results for the YEAR ended 31 MARCH 2015

ABOUT US

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

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

STRONG OPERATING PERFORMANCE DELIVERS 32% EARNINGS GROWTH(2)

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

Highlights

• Increased demand throughout UK

• Growth in all our key store metrics

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

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

• Platform expanded by 234,000 sq ft:

- Two new freehold stores constructed at Gypsy Corner and Enfield

- Two existing freehold stores acquired in Oxford and Chester

• Acquisition of freehold building in Cambridge for conversion

• Acquisition of freehold interest in existing store in Battersea

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

• Two Armadillo joint ventures with Australian consortium

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

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

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

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

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

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

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

Chairman's Statement

Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's brand leader in self storage, is pleased to announce results for the fourth quarter and the year ended 31 March 2015.

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

Financial results

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

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

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

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

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

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

Placing and acquisition of Big Yellow Limited Partnership

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

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

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

Investment in new capacity

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

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

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

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

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

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

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

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

Dividends

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

Our people

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

Outlook

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

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

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

Nicholas Vetch

Chairman18 May 2015

OUR STRATEGY AND BUSINESS MODEL

Our Strategy

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

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

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

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

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

We continue to believe that the medium term opportunity to create shareholder value will be principally achieved by leasing up existing stores to drive revenue, the majority of which flows through to the bottom line given that our operating and central overhead costs are already largely fixed and embedded.

Our key objectives remain:

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

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

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

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

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

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

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

Our business model

The self storage market

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

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

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

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

Awareness of self storage will continue to grow as more businesses and individuals use the product at a time when the supply side is restricted, with very few store openings expected in the calendar year.

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

KPIs

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

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

Capital structure

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

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

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

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

Operational and Marketing Review

Overview

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

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

Operations

The Big Yellow store model is well established. The "typical" store has 60,000 sq ft of net lettable storage area and takes some three to five years to achieve 80% plus occupancy. Some stores have taken longer than this given they opened just before or during the downturn. The average room size occupied in the portfolio is currently 67 sq ft, compared to 68 sq ft last year.

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

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

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

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

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

Demand

Of the customers moving into our stores in the last year, surveys undertaken indicate approximately 45% are linked to the housing market, either customers renting storage space whilst moving within the rental sector or the owner occupied sector. During the year 12% of our customers who moved in took storage space as a spare room for decluttering and approximately 33% of our customers used the product because some event has occurred in their lives generating the need for storage; they may be moving abroad for a job, have inherited possessions, are getting married or divorced, are students who need storage during the holidays, or homeowners developing into their lofts or basements. The balance of 10% of our customer demand during the year came from businesses. 

Our business customers range across a number of industry types, such as retailers, e-tailers, professional service companies, hospitality companies and importers/exporters. These businesses store stock, documents, equipment, or promotional materials all requiring a convenient flexible solution to their storage, either to get started or to free up more expensive space.

We have a dedicated national accounts team for business customers who wish to occupy space in multiple stores. These accounts are billed and managed centrally. We have four full time members of staff working on growing and managing our national account customers. The national accounts team can arrange storage at short notice at any location for our customers. In smaller towns where we do not have representation, we have negotiated sub-contract arrangements with other operators who meet certain operating standards. Revenue from our national accounts increased by 48% compared to the prior year.

Business customers typically stay longer than domestic customers, and also on average occupy larger rooms. Whilst only representing 10% of new customers during the year, businesses represent 18% of our overall customer numbers, occupying 34% of the space in our stores. The average room size occupied by business customers is 125 sq ft, against 54 sq ft for domestic customers. This compares with the SSA Survey result for the industry as a whole which had 59% of space occupied by domestic customers and 41% of space by businesses. We would expect to have a higher proportion of domestic customers given our focus on London and other large metropolitan cities.

We have seen solid demand from business customers, as they seek a cost effective, flexible solution to their storage requirements, preferring self storage to the commitment of a long lease. We believe there is an opportunity to grow business occupancy and national accounts in the coming year. We have improved our business offer further, we have increased the resource of our national accounts team, and we are increasing our marketing to drive business prospects.

Marketing and eCommerce

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

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

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

Online

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

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

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

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

Online customer reviews

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

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

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

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

Driving online traffic

Search engines are the most important acquisition tool for us, accounting for the majority of all traffic to the website. We continue to invest in search engine optimisation ("SEO") techniques both on and off the site. This helps us to maintain our high positions for the most popular and most searched for terms such as "storage" and "self storage" in the organic listings on Google.

The sponsored search listings remain the largest source of paid for traffic and we ensure our prominence in these listings is balanced with effective landing pages to maximise site conversion.

This year, we have also continued with online display advertising on websites which are targeted to our core audience groups. This activity performs both a direct response and branding role.

Efficiencies in online spend are continuing into the year ending 31 March 2016, ensuring the return on investment is maximised from all of our different online traffic sources. Online marketing budgets will continue to remain fluid and be directed towards the media with the best return on investment.

Social media

Social media continues to be complementary to our existing marketing channels. Our activity is most focussed on Twitter, not only monitoring and answering queries regarding self storage, but also posting our own creative tweets, tips and advice. The Big Yellow YouTube channel is used to showcase our stores to web prospects through a video store tour. We use both domestic and business versions to help prospects experience the quality of the product without the need for them to visit the store in person. Our recently revamped online blog is updated regularly with tips and advice for homeowners and businesses as well as summaries of our charitable and CSR initiatives.

PR

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

Budget

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

Store Performance

PROFORMA PORTFOLIO SUMMARY - BIG YELLOW STORES

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

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

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

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

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

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

PORTFOLIO SUMMARY - ARMADILLO STORES

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

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

Store Performance

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

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

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

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

Pricing and rental yield

We have continued our sales promotion offer throughout the year of "50% off for up to your first 8 weeks storage". Our Price Promise is also used to match competitors' prices, if the product is comparable. Pricing is dynamically generated and takes into account customer demand and local competition.

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

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

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

Armadillo Self Storage

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

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

Development pipeline

There are two freehold sites with planning for Big Yellow stores to be developed. We also own a 4.5 acre development site in central Manchester where we are in planning discussions for a mixed use scheme incorporating a new Big Yellow store. 

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

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

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

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

Financial Review

Financial results

Placing and acquisition of Big Yellow Limited Partnership

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

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

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

Revenue

Total revenue for the year was £84.3 million, an increase of £12.1 million (17%) from £72.2 million in the prior year. The revenue excluding the Partnership stores consolidated from 1 December was £80.6 million for the year, representing an increase of 12% from last year. The other revenue is fee income earned from Big Yellow Limited Partnership (until 30 November), management fee income from the Armadillo Partnerships, and tenant income on sites where we have not started development.

Other sales (included within the above), comprising the selling of packing materials, insurance and storage related charges, represented 16.8% of storage income for the year (2014: 17.5%) and generated revenue of £11.8 million for the year, up 13% from £10.5 million in 2014.

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

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

Operating costs

Cost of sales comprises principally of the direct store operating costs, including store staff salaries, utilities, business rates, insurance, a full allocation of the central marketing budget, and repairs and maintenance. 

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

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

Store EBITDA

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

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

Interest expense on bank borrowings

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

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

Profit before tax

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

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

The movement in the adjusted profit before tax from the prior year is illustrated in the table below:

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

REIT status

The Group converted to a Real Estate Investment Trust ("REIT") in January 2007. Since then the Group has benefited from a zero tax rate on the Group's qualifying self storage earnings. The Group only pays tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and fees earned from Big Yellow Limited Partnership and from the management of the Armadillo portfolio.

REIT status gives the Group exemption from UK corporation tax on profits and gains from its qualifying portfolio of UK stores. Future revaluation gains on developments and our existing open stores will be exempt from corporation tax on capital gains, provided certain criteria are met.

The Group has a rigorous internal system in place for monitoring compliance with criteria set out in the REIT regulations. On a monthly basis, a report to the Executive on compliance with these criteria is carried out. To date, the Group has complied with all REIT regulations, including forward looking tests. 

Taxation

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

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

Dividends

REIT regulatory requirements determine the level of Property Income Dividend ("PID") payable by the Group. On the basis of the full year distributable reserves for PID purposes, a PID of 16.1 pence per share is payable (31 March 2014: 13 pence per share PID).

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

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

Cash flow growth

The Group is strongly cash generative and draws down from its longer term committed facilities as required to meet obligations.

A summary of the cash flow for the year is set out in the table below:

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

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

Balance sheet

Property

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

Investment property

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

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

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

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

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

Investment property under construction

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

Purchaser's cost adjustment

As in prior years, we have instructed an alternative valuation on our assets using a purchaser's cost assumption of 2.75% (see note 14 for further details) to be used in the calculation of our adjusted diluted net asset value. This Red Book valuation on the basis of 2.75% purchaser's costs, results in a higher property valuation at 31 March 2015 of £1,068.4 million (£45.6 million higher than the value recorded in the financial statements). With the share of uplift on the revaluation of the Armadillo stores, this translates to 29.3 pence per share. 

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

Surplus land

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

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

Receivables

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

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

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

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

Movement in adjusted NAV

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

Borrowings

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

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

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

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

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

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

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

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

At 31 March 2015, the fair value on the Group's interest rate derivatives was a liability of £3.7 million. The Group does not hedge account its interest rate derivatives. As recommended by EPRA (European Public Real Estate Association), the fair value movements are eliminated from adjusted profit before tax, diluted EPRA earnings per share, and adjusted net assets per share.

Treasury continues to be closely monitored and its policy approved by the Board. We maintain a keen watch on medium and long-term rates and the Group's policy in respect of interest rates is to maintain a balance between flexibility and hedging of interest rate risk.

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

Share capital

The share capital of the Company totalled £15.8 million at 31 March 2015 (2014: £14.3 million), consisting of 158,055,735 ordinary shares of 10p each (2014: 143,061,147 shares). 

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

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

The Group holds 1.4 million shares in treasury and 1.5 million shares within an Employee Benefit Trust ("EBT"). These shares are shown as a debit in reserves and are not included in calculating net asset value per share.

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

Big Yellow Limited Partnership

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

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

Armadillo Self Storage

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

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

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

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

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

Big Storage

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

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

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

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

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

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

GOING CONCERN

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

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

Consolidated Statement of Comprehensive Income

Year ended 31 March 2015

EPRA earnings per share are shown in Note 12.

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

Consolidated Balance Sheet

31 March 2015

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

They were signed on its behalf by:

Company Registration No. 03625199

Consolidated Statement of Changes in Equity

Year ended 31 March 2015

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

Year ended 31 March 2014

Consolidated Cash Flow Statement

Year ended 31 March 2015

Reconciliation of Net Cash Flow to Movement in Net Debt

Year ended 31 March 2015

Notes to the financial statements

Year ended 31 March 2015

1. General information

Big Yellow Group PLC is a Company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 2 The Deans, Bridge Road, Bagshot, Surrey, GU19 5AT. The nature of the Group's operations and its principal activities are set out in note 4 and in the Strategic Report.

These financial statements are presented in pounds sterling because that is the currency of the economic environment in which the Group operates. 

2. BASIS OF PREPARATION

The condensed set of financial statements set out above (which was approved by the Board on 18 May 2015) has been compiled in accordance with IFRS, but does not contain sufficient information to constitute a full set of IFRS financial statements. This financial information does not constitute the Company's statutory accounts for the years ended 31 March 2014 and 31 March 2015, but is derived from those accounts. Those accounts give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole. The Company's statutory accounts for the year ended 31 March 2014 have been filed with the Registrar of Companies. The Company's statutory accounts for the year ended 31 March 2015 will be filed with the Registrar of Companies following the Annual General Meeting. The auditors' reports on both the 2014 and 2015 accounts were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under s498(2) or (3) Companies Act 2006 or preceding legislation. 

The statutory accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied all accounting standards and interpretations issued by the International Accounting Standards Board and International Financial Reporting Interpretations Committee relevant to its operations and effective for accounting periods beginning on 1 April 2014. The same accounting policies as applied in the Group's statutory accounts for the year ended 31 March 2014 have been applied in this condensed set of financial statements. 

Going concern

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

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

3. Revenue

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

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):

b) Analysis of auditor's remuneration:

Fees payable to Deloitte LLP and their associates for non-audit services to the Company are not required to be disclosed because the consolidated financial statements are required to disclose such fees on a consolidated basis. Fees charged by Deloitte LLP to Armadillo Storage Holding Company Limited and Armadillo Storage Holding Company 2 Limited in the year amounted to £211,000, of which £156,000 related to non-audit services.

6. Employee costs

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

7. INVESTMENT income

8. Finance costs

9. TaxATION

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

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

At 31 March 2015 the Group has unutilised tax losses of £32.8 million (2014: £36.5 million) available for offset against certain types of future taxable profits. All losses can be carried forward indefinitely.

10. Adjusted Profit before tax AND ADJUSTED EBITDA

Adjusted profit before tax which excludes gains and losses on the revaluation of investment properties, changes in fair value of interest rate derivatives, net gains and losses on surplus land, and non-recurring items of income and expenditure have been disclosed to give a clearer understanding of the Group's underlying trading performance. EPRA earnings are £39,756,000 for the year after the tax credit of £351,000 (2014: £28,921,000 after a tax charge of £300,000). 

11. Dividends

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

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

12. Earnings AND NET ASSETS per share

Earnings per ordinary share