Big Yellow Regulatory News (BYG)

audited Results for the YEAR and FOURTH Quarter ended 31 MARCH 2011

Big Yellow Group PLC, the UK's leading self storage brand, is pleased to announce results for the year and for the fourth quarter ended 31 March 2011.

Financial highlights

·; Occupancy growth of 215,000 sq ft across all stores (2010: growth of 140,000 sq ft)

·; Store revenue for the year up 8% to £59.6 million (2010: £55.1 million)

·; Store revenue for the fourth quarter increased by 7% to £14.6 million from £13.7 million for the same quarter last year

·; Store revenue for the second half of the year of £29.7 million up 7% compared to the second half of the prior year of £27.7 million

·; Revenue of £61.9 million, an increase of £3.9 million (7%) compared to £58.0 million for the prior year

·; Store EBITDA up 13% to £37.1 million from £32.7 million in 2010

·; Adjusted profit before tax1 of £20.2 million up 22% (2010: £16.5 million)

·; Diluted EPRA earnings per share2 up 19% to 15.49 pence (2010: 12.99 pence)

·; Cash inflows from operating activities (after interest) increased by 23% to £23.5 million (2010: £19.1 million)

·; Group net debt reduced by £3.4 million to £266.0 million from £269.4 million at 31 March 2010

·; Adjusted net assets per share3 down 1% to 449.8 pence from 453.3 pence as at 31 March 2010 

·; Final dividend of 5 pence per share declared (2010: 4 pence per share), full year dividend of 9 pence per share (2010: 4 pence per share)

1 See note 10 2 See note 12 3 See notes 12 and 14  

Other statutory measures

·; Profit before tax for the year £6.9 million (2010: £10.2 million)

·; Basic earnings per share 5.34 pence (2010: 8.11 pence)

·; Basic net assets per share 421.9 pence (2010: 424.0 pence) 2

Nicholas Vetch, Chairman of Big Yellow commenting said:

"I reported last year that the Group was enjoying a recovery in line with the slowly improving economic picture. This recovery has continued in the current year, and I am pleased to report that occupancy across all of our 62 stores increased by 215,000 sq ft during the financial year, compared to an increase of 140,000 sq ft across 60 stores in the prior year. 

It is of no surprise to us that the recovery in the UK economy is so muted, given the combined effects of the fiscal consolidation, the pressure on disposable incomes, and the constrained lending to businesses and individuals. The next step change in the recovery of the wider economy and hence self storage is unlikely to occur until some of these pressures are alleviated.

We therefore expect that the performance of this business will continue to show steady progress, however at some point we would anticipate seeing a change in economic pace which will feed directly into the growth rate of our business.

In the meantime, our exposure to London, dominant brand, innovative marketing, internet presence, quality of stores and customer service, coupled with our strong balance sheet and financial position, gives us a significant advantage."

For further information, please contact:

Big Yellow Group PLC 01276 477811

Nicholas Vetch, Executive Chairman

James Gibson, Chief Executive Officer

John Trotman, Chief Financial Officer

Weber Shandwick Financial 020 7067 0700

Nick Oborne, John Moriarty

Notes to Editors

Big Yellow Group PLC is the best known and one of the most dynamic self storage groups in the UK. It was founded in September 1998 by Nicholas Vetch, Philip Burks, and James Gibson and listed on AIM in May 2000, moving to the Official List of the London Stock Exchange in June 2002. 

Big Yellow has expanded rapidly and now operates from 63 stores, 56 in London and the South, two in Sheffield, and one each in Birmingham, Edinburgh, Leeds, Liverpool, and Nottingham. There are a further seven stores in development. Of the 70 total stores and sites, 59 are held freehold and four long leasehold (together representing approximately 94% by value of the total property assets); seven stores are held short leasehold. All the stores have distinct yellow branding, with the majority being within the M25 or in strong urban conurbations. When fully built out the portfolio will provide approximately 4.4 million sq ft of flexible storage space. 

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. Its focus on the location and visibility of its buildings, coupled with excellent customer service, has created the most recognised brand name in the UK self storage industry.

Big Yellow Group PLC

Chairman's Statement

Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the UK's leading self storage brand, is pleased to announce results for the fourth quarter and year ended 31 March 2011.

I reported last year that the Group was enjoying a recovery in line with the slowly improving economic picture. This recovery has continued in the current year, and I am pleased to report that occupancy across all of our 62 stores increased by 215,000 sq ft during the financial year, compared to an increase of 140,000 sq ft across 60 stores in the prior year. The occupancy of our 51 wholly owned stores at 31 March 2011 has grown by 117,000 sq ft to 59.3% from 55.7% at the same time last year.

The average net rent per sq ft achieved during the year, after all discounts and promotional offers, increased by 2% to £26.82. This is consistent with our strategy for the next couple of years of focussing on growing occupancy in the stores with a lower expectation of average rental rate growth compared to historically achieved rates of growth.

We are pleased with the performance of our stores, particularly given the backdrop of the level of housing transactions and mortgage approvals to owner occupiers which, whilst improved from the trough in 2009, averaged 47,000 per month for the financial year, against a twenty year average of 89,000 per month. The demand for self storage, which is driven by changing circumstances for individuals and businesses, has also benefited from the slowly improving UK economy. 

Financial Results

Revenue for the year was £61.9 million (2010: £58.0 million), an increase of 7%; store revenue increased by 8% to £59.6 million (2010: £55.1 million). EBITDA for the 51 wholly owned stores increased by £4.4 million to £37.1 million. 

Store revenue for the fourth quarter increased by 7% to £14.6 million from £13.7 million for the same quarter last year. Store revenue in the second half of the year was £29.7 million, up 7% from £27.7 million for the second half of the year ended 31 March 2010. 

Cash inflows from operating activities (after finance costs) increased by £4.4 million (23%) to £23.5 million for the year (2010: £19.1 million). 

The Group made an adjusted profit before tax in the period of £20.2 million (2010: £16.5 million). This translated into a 19% increase in adjusted earnings per share to 15.49 pence (2010: 12.99p). 

The Group made a statutory profit before tax for the year of £6.9 million, compared to £10.2 million last year. This reduction reflects the decrease in the valuation of the Group's open stores, partially offset by the improved recurring profit. The Operating and Financial Review contains more detail on the operating assumptions underpinning the ten year cash flow which have led to a 2% reduction in value of the store portfolio from the same time last year.

The Group remains relatively conservatively geared with net bank debt of £266.0 million at 31 March 2011 (2010: £269.4 million). This represents approximately 33% (2010: 33%) of the Group's gross property assets totalling £809.7 million (2010: £815.8 million) and 45% (2010: 45%) of the adjusted net assets of £591.4 million (2010: £593.8 million).

The Group's income cover for the year expressed as the ratio of Group EBITDA post admin expenses to net interest payable was 2.8 times.

Property

Our store in Eltham opened shortly after the year end. We now have a pipeline of six wholly owned development sites; all bar our site in Central Manchester have planning consent. We are constructing our stores in Chiswick and New Cross; both of which are due to open in Spring 2012.

The three development sites with planning consent at Enfield, Guildford Central and Gypsy Corner have an estimated cost to complete of £17 million, and will be developed over the next three years, subject to trading conditions. 

During the year we sold our surplus site at Clapham North to a social housing developer for £3.3 million. We have exchanged a contract to sell our surplus land at Blackheath to a social housing developer, conditional on planning and grant funding. We have also obtained planning consent for a 92 bedroom hotel on our surplus site at Richmond and have entered into a pre-let with Premier Inn and started construction shortly after the year end. We have agreed terms and solicitors have been instructed to sell the completed hotel investment as a forward commitment. At 31 March 2011, the Group owned approximately a further £17.6 million of land surplus to our requirements. We aim to sell the remaining surplus land once we have maximised its value through planning.

Since September 2007 we have only acquired three sites given the level of uncertainty following the onset of the financial crisis. At the time we had a significant development pipeline of 24 sites, of which 11 had planning consent. In the past three and a half years we have obtained a further 15 planning consents and built out twenty stores (ten in the Partnership and ten in the wholly owned group), adding 1.3 million sq ft of self storage capacity. We continue to monitor site acquisition opportunities, principally focused on London.

Growth Opportunity

We have spent the last decade developing the market leading Big Yellow brand with a current store network of 63 stores, largely focused on London and the South East, where the drivers for self storage are strongest and barriers to entry are at their highest. We believe that this is the most resilient and dynamic part of the economy and will be less affected by the proposed public spending cuts. Our stores outside London and the South East are in the larger metropolitan cities in the South West, Midlands and the North, where similar characteristics can be found. One outcome from the recent economic downturn has been a significant slowdown in self storage openings, with very few stores expected to open in 2011, particularly in these large urban conurbations. Indeed in some of our markets, capacity has reduced marginally as smaller operators have closed down and sold their customer base to other operators.

71% of our current revenue derives from within the M25; for London and the South East, the proportion of current revenue rises to 89%. We would expect the proportion of revenue from London to increase over time as 72% of the current available vacant capacity in the wholly owned stores is in London, where the average net rent per sq ft is also higher.

We believe that the value creation opportunity in this business for shareholders will in the medium term be driven mainly from leasing up stores to drive revenue, the vast majority of which flows through to the bottom line given that our operating costs are already largely embedded. We have increased occupancy of the wholly owned stores from 55.7% to 59.3% in the year, and this has translated into a £4.0 million increase in our annualised store revenue and a £4.4 million increase in the Group's operating cash flow after finance costs.

Dividend

REIT regulatory requirements determine the level of Property Income Dividend ("PID") payable by the Group. On the basis of the distributable reserves for PID purposes, a PID of 4 pence per share is payable for the year, of which 2 pence per share will be paid as part of the final dividend in addition to the 2 pence per share paid in December 2010 (31 March 2010: PID of nil pence per share). 

The Board has reviewed our anticipated capital expenditure over the medium term, our forecast operating cash flow and the resultant levels of debt, balance sheet gearing and income cover. Following this review the Board is recommending the payment of a discretionary ordinary final dividend of 3 pence per share, taking the proposed final dividend to 5 pence per share and the total dividend declared for the year to 9 pence per share. 

The cash dividend payment is two times covered by our free cash flow.

Banking

Santander have joined our core banking syndicate during the year, taking £25 million of the £325 million facility. HSBC have increased their participation in the year from £25 million to £50 million of the facility. We have a supportive group of banks who understand the self storage sector; Lloyds, HSBC, Santander and HSH Nordbank. I would like to thank them for their support. 

Our People

The efforts of the Big Yellow team, both at head office and in the stores, have delivered this performance and they remain pivotal to the achievement of our key medium term objectives of driving occupancy, revenue, and cash flow growth. Thank you.

Board

We have strengthened the Board during the year with the appointment of Steve Johnson as a Non-Executive Director. Steve has significant experience in marketing and retail and I believe he will add considerable value to the Board.

Outlook

It is of no surprise to us that the recovery in the UK economy is so muted, given the combined effects of the fiscal consolidation, the pressure on disposable incomes, and the constrained lending to businesses and individuals. The next step change in the recovery of the wider economy and hence self storage is unlikely to occur until some of these pressures are alleviated.

We therefore expect that the performance of this business will continue to show steady progress, however at some point we would anticipate seeing a change in economic pace which will feed directly into the growth rate of our business.

In the meantime, our exposure to London, dominant brand, innovative marketing, internet presence, quality of stores and customer service, coupled with our strong balance sheet and financial position, gives us a significant advantage.

Nicholas Vetch

Chairman

23 May 2011

Big Yellow Group PLC

Business Review

Introduction

In January 2010 we saw an improvement in a number of our key self storage demand indicators, coinciding with the economy coming out of recession. This led to year on year improvements in occupancy and revenue within our business. Store revenue for the year grew by 8%, feeding through to a 22% improvement in recurring profit and a 23% increase in operating cash flow.

Store Performance

In all Big Yellow stores, the occupancy growth in the current year was 215,000 sq ft, against an increase of 140,000 sq ft in the prior year. This growth across the 51 wholly owned and 11 stores in the Partnership represents an average of 3,468 sq ft per store (2010: 2,333 sq ft per store). 

The 51 wholly owned stores had a net gain in occupancy of 117,000 sq ft, representing an average of 2,294 sq ft per store. This compares to an overall gain in the wholly owned stores of 66,000 sq ft in the year to 31 March 2010, and a loss of 85,000 sq ft in the year to 31 March 2009. The 11 stores in the Partnership, which are at much earlier stages of lease-up, with two openings in the year, increased their occupancy by 98,000 sq ft, representing average growth of 8,909 sq ft per store.

During the year we opened two stores, in High Wycombe and Camberley, both within Big Yellow Limited Partnership. Since the year end, we have opened a wholly owned store in Eltham, South East London. These store openings bring the number now trading in the Group and the Partnership to 63.

We saw an increase in move-in activity during the year, moving in over 47,000 customers into all stores (including those in the Partnership) taking 2.95 million sq ft compared to 39,000 customers taking 2.37 million sq ft last year. Move-out activity also increased in the year, reflecting a higher level of churn in the business, with 45,000 customers moving out from 2.73 million sq ft compared to 38,000 customers moving out from 2.23 million sq ft last year.

The table below illustrates the seasonality of the business with move-ins to the like-for-like portfolio of 51 wholly owned stores, which were up 14% on the prior year. 

As stated earlier the recovery started in January 2010, therefore the comparators have become more challenging, and hence the January to March year on year increase in activity growth was lower than in previous quarters. However, we are pleased to report that move-ins in April 2011 were 13% up on April 2010.

Of the 51 wholly owned stores open at the year end all are trading profitably at the EBITDA level. Ten of the eleven stores within Big Yellow Limited Partnership are trading profitably at the EBITDA level, with the exception being Camberley which opened in January 2011.

71% of our current revenue derives from within the M25; for London and the South East, the proportion of current revenue rises to 89%. The performance of our stores in London has been more resilient over the past four years than those outside London. 

The average net rental achieved last year across the 51 wholly owned stores was £26.82 per sq ft per annum (the average rent in London is higher at £28.76 per sq ft per annum). The stores in lease-up achieved a higher average rental (£28.22 per sq ft) than the 32 established stores (£26.32 per sq ft), reflecting the greater London weighting of the lease-up stores.

Our key aim over the next two to three years is to drive occupancy and hence revenue in the stores. During the downturn we increased the level of promotional offers in the business, resulting in more muted rental growth over the past couple of years. As the stores lease-up, and the number of vacant rooms in particular sizes reduce, our pricing model will automatically reduce the level of discounts offered, leading to an increase in net achieved rents. We have a rolling programme of price increases to existing storage customers, in most cases providing an annual increase in storage rents of 6%. Over the last seven years, average net storage rental growth has been over 4% per annum.

Store 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 3 to 5 years to achieve 85% occupancy. Some stores may take longer than this given they opened shortly prior to the downturn. The average room size occupied in the portfolio is currently 64 sq ft.

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

Given that the operating costs of these assets are relatively fixed, larger stores in bigger urban conurbations, particularly London, drive higher revenues and higher operating margins. The table below illustrates the average key metrics across the 32 established store portfolio for the year ended 31 March 2011:

The average store size in the UK market is approximately 40,000 sq ft according to the Self Storage Association. Clearly the upside from filling our larger than average sized stores is in our view only possible in large metropolitan markets, where self storage drivers from domestic and business customers are highest.

Of the customers moving into the business in the last year, our surveys indicate approximately 57% are linked to the housing market, of which 19% are customers renting storage space whilst moving within the rental sector, and 38% moving within the owner occupied sector. We have seen a small increase in demand during the year from customers within the owner occupied sector, consistent with the slowly improving picture for mortgage approvals and housing transactions. During the last year 11% of our customers who moved in took storage space as a spare room for lifestyle purposes and approximately 23% 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 furniture, are getting married or divorced, are students who need storage during the holidays, or homeowners developing into their lofts or basements. The balance of 9% of our customer demand in the year came from businesses.

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 grown the team during the year, so we now have three 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. 

Business customers typically stay longer than domestic customers, and also on average occupy larger rooms. Whilst only representing 9% of new customers during the year, businesses represent 19% of our overall customer numbers, occupying 35% of the space in our stores. The average room size occupied by business customers is 117 sq ft, against 51 sq ft for domestic customers.

Our business customers range across a number of industry types, such as retailers, 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. 

The demand from business customers, who typically occupy larger rooms, has been relatively robust, as they seek a cost effective, flexible solution to their storage requirements, preferring self storage to the commitment of a long lease.

The split between business and domestic customers for the 51 wholly owned stores is as follows:

The net rent per sq ft for domestic customers is approximately 45% higher than for business customers, reflecting the smaller average unit size occupied for domestic customers.

For the 32 established stores, the average split between business and domestic customers is shown in the table below.

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 ex-customer surveys and have introduced online customer reviews during the year, which give an average customer service score of 4.7 out of 5. We have in place a team of Area Managers who have on average worked for Big Yellow for eight years. They develop and support the stores to drive the growth of the business. Adrian Lee, Operations Director, is the Board member responsible for dealing with all customer issues.

Our core proposition remains a high quality product, competitively priced, with excellent customer service, providing value for money to our customers. Our stores 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 customer demand and local competition. 

The store bonus structure rewards occupancy growth, sales growth and cost control through setting 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 customer-facing branded business it is paramount to maintain the quality of our estate and customer offering. We therefore continue to invest in a rolling programme of store makeovers, 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 the income statement in cost of sales. This excludes makeovers, which typically take place every four years, at a cost of approximately £15,000 to £20,000 per store.

We have continued to manage the ten freehold stores for HSBC Bank plc branded as Armadillo Self Storage alongside our Big Yellow stores using the same operating model. The management contract expires in February 2014 and our key objective within the Armadillo portfolio remains driving occupancy, revenue and cash flow. During the year Armadillo acquired customers in Stoke and Hull from a self storage operation which was closing down and transferred these customers to their own stores. The retention rate of the transferred customers to date has been encouraging. 

Sales and Marketing

This year our strategy has continued to focus on leveraging the Big Yellow brand. Our annual You Gov survey puts our national brand awareness at three times the level of our nearest competitor. We have maintained brand awareness of 80% in London and 47% outside of London. Although Big Yellow leads the industry in terms of brand preference, there is still an opportunity to improve our brand awareness, in particular in regional cities outside London where we have recently opened stores.  (Source YouGov: September 2010)

Online Innovation

The website and our e-commerce proposition continue to grow in strength, with online prospects now accounting for 80% of all sales leads where details are first recorded on our operating system. Telephone is the first point of contact for 11% of prospects and walk-in enquiries, where we have had no previous contact with a prospect, represent 9%.

The Big Yellow website continues to evolve, and we are constantly improving the user journey and prospect conversion throughout the site.

This year we have developed and launched a dedicated business section of the website, communicating the benefits of Big Yellow Self Storage to this target audience. It is supported by more in-depth information, online videos demonstrating the business services available and testimonials from existing business customers.

Online Customer Reviews

Consistent with our strategy of putting the customer at the heart of our business, our online customer reviews continue to generate real-time feedback from customers as well as providing positive word of mouth to prospective customers. These customer reviews are now being pulled into Google's local search results and continue to be a powerful marketing asset to us.

The reviews indicate we are consistently delivering a very high standard of service:

·; Over 4,300 reviews have been published

·; Over 55% have awarded a score of 5 out of 5

·; Our average rating is 4.5 out of 5

·; Our average customer service score is 4.7 out of 5

In our view, real time customer reviews which have been independently and externally obtained are much more persuasive to prospects than scripted testimonials.

Search Engines

Search Engines continue to be the most important acquisition tool for us, accounting for nearly 70% of all traffic to the website. More investment has also been made in search engine optimisation ("SEO") techniques both on and off the site. This has enabled us to maintain the number one position for the popular search terms "storage" and "self storage" in the organic listings on Google. We will continue with this strategy targeting a wider range of relevant search terms for the business.

All stores have also been optimised within Google's local search functionality Google Places, allowing the relevant local Big Yellow stores to appear on a web user's search.

Social Media

Social media continues to be complementary to our existing marketing channels and we maintain a significant presence on all the major social media sites.

Over the past year the strategy for Facebook was to build a volume of interested fans which has now reached over 24,000. Facebook allows us to keep engaged with our target audiences, keeping the brand front of mind and to gather customer feedback. In addition, the Big Yellow You Tube channel is now being used to showcase our domestic and business store tours and customer testimonials.

We have also developed a substantial amount of online blog content aimed at anyone considering self storage. Advice and tips for packing, storage and de-cluttering are published weekly on the site and posted through our Facebook and Twitter channels. This provides useful and engaging content for visitors.

Driving online traffic

This year, we have continued online display advertising on sites visited by our target audiences. This activity performs both a direct response and branding role. Efficiencies in all online spend are continuing into 2011/12, ensuring return on investment is maximised from all our different online traffic sources.

Online targeting opportunities are now more sophisticated enabling us to target our core target audiences more effectively. Online marketing budgets will remain fluid and be directed towards the media with the best return on investment.

Sales Promotion

We have continued our sales promotion offer throughout the year of "50% off your first 8 weeks storage" across all stores, coupled with a Price Promise for comparable local competition. These two offers, managed alongside dynamic pricing, will remain our pricing policy for the year ahead.

Budget

During the year the Group spent approximately £2.8 million (4.5% of revenue) on marketing, up from £2.6 million in the previous year. We have increased the budget for the year ended 31 March 2012 to £2.9 million with a focus on driving our revenue through delivering more prospects to the website.

 People

At Big Yellow we aim to provide a lively, fun and enjoyable working environment, without losing our commitment to delivering the very best standards of customer service.

We encourage a culture of partnership within the business and believe in staff participating in corporate performance through bonus schemes and share incentives. Many employees benefit from an HMRC approved Sharesave Scheme, which provides an opportunity to invest in the future success of Big Yellow at a discount to the prevailing share price at the date of each invitation. Our stakeholder pension scheme has been taken up by over two thirds of employees eligible to join and a voucher awards scheme is used extensively across the business to recognise and reward our staff's efforts and achievements.

We aim to promote employee wellbeing through a range of flexible working options which include flexitime, staggered hours, home working and sabbaticals. We provide a comprehensive range of medical support and advice though our occupational health providers and have arranged corporate gym membership on a national basis, as well as a Cycle to Work Scheme.

We continue to recognise the importance of communication and consultation with an annual spring conference, regular formal and informal meetings and quarterly newsletters and weekly operational updates. In addition, the Directors and senior management spend a significant amount of time in the stores and are accessible to employees at all levels. An annual Employee Attitude Survey provides management with key feedback and guidance as to where to focus their attention to further improve the working environment.

We had 301 full-time, part-time and casual employees in the business at the year end (2010: 287 employees) and recruiting and retaining the right calibre people remains critical to the continued success of the Company.

We promote the individual development of staff through training and regular performance appraisals and delivered just over 830 days training to employees in the last year, equating to an average of approximately 2.8 days training per employee. In the stores, nearly two thirds of the managerial posts have been filled by internal promotions.

Property and Development

During the year our property team has focused on obtaining the remaining self storage planning consents, building out selected sites within our development pipeline, and selling surplus land held in our balance sheet. 

We believe the continuing difficulties in the banking and capital markets make access to capital required to fund growth more difficult and will slow down the growth in self storage store openings in the market generally. We believe that we are in a relatively strong position with our freehold property assets, with the proven ability to access more funding when the opportunity presents itself.

We now have a portfolio of 70 stores and sites of which 63 are currently open and a further 6 have planning consents, with planning negotiations ongoing at our site in central Manchester. 

Development Pipeline

There are a further six freehold sites with planning for Big Yellow stores (including Stockport within Big Yellow Limited Partnership) to be developed. We also have 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. The status of the development pipeline is summarised in the table below:

We expect to open two stores in the current financial year. Our wholly owned store at Eltham, on the junction roundabout of the South Circular and the A20, opened in April; the Partnership store at Stockport will open in September 2011.

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. The total construction spend in the year was £19.6 million, of which £11.2 million was in the wholly owned Group.

Corporate Social Responsibility

The Board employs a Corporate Social Responsibility Manager, who reports to the Board through the Operations Director. Our policy on Corporate Social Responsibility is set out on our website bigyellow.co.uk/csr.

Our CSR programme for 2011 committed to focus on our most significant environmental challenge of energy efficiency and carbon reduction. In order to achieve these objectives we:

- increased the roll-out of our store lighting energy efficiency re-lamping programmes to 41% of the estate;

- reduced store carbon intensity emissions by 2.1%;

- reduced Construction Fit Out carbon emissions by 63.5%;

- increased solar panel electricity generation by 20.6%;

- increased renewable energy generation by 11.5%; and

- generated 255 MWh of solar electricity and 398 MWh of cumulative renewable energy since 2008.

Business Objectives

Big Yellow is the leading self storage brand in the UK (YouGov Survey, September 2010), with national brand awareness of three times that of our nearest competitor. The Group continues to invest in developing quality assets at the premium end of the self storage market and to build on our brand leadership nationally. We intend to measure our progress by continuing to commission quantitative research each year. 

Our main strategic objective is to grow the occupancy in our stores from the current level of 59.3% to 85% over the medium term. We will achieve this through:

- an unwavering focus on customer service;

- excellent operational and financial management;

- innovative and creative marketing;

- recruiting and retaining quality people in the business;

- an entrepreneurial and passionate culture, with accessible senior management encouraging innovation and dialogue throughout all levels of the business; and

- having stores located in visible, convenient and accessible locations.

Our other key objectives are:

- the selective build out of freehold stores in major urban conurbations throughout the UK, but focused principally on London; and

- mortgage financing secured against our prime freehold portfolio, and our Partnership with Pramerica.

Financing Objectives

Big Yellow's financing policy is to fund its current needs through a mix of debt, equity and cash flow to allow us to build out the existing portfolio 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.

Risk Management 

The management of risk is a fundamental part of how we have controlled the development of Big Yellow since its formation in September 1998, and the opening of our first purpose-built store in Richmond, London in May 1999. The principal areas of risk that the Group faces are considered below.

Self Storage Market Risk

The UK economy has continued its slow recovery from the recession. The demand for self storage has slowed since the liquidity crisis began in August 2007, however we believe that the structural need for self storage remains. We saw an increase in demand in the financial year, with move-ins in our wholly owned portfolio up 14% on the prior year. 

Self storage is a relatively immature market in the UK compared to other self storage markets such as the United States and Australia, and we believe has further opportunity for growth. Awareness of self storage and how it can be used by domestic and business customers is relatively low throughout the UK, although higher in London. The rate of growth of branded self storage on main roads in good locations has historically been limited by the difficulty of acquiring sites at affordable prices and obtaining planning consent. The lack of availability of credit within the economy has further reduced this rate of growth since the start of the downturn. 

Our performance during the downturn has been relatively resilient, although not immune. We believe that the resilience of our performance is due to a combination of factors including:

- a prime portfolio of freehold self storage properties;

- a firm focus on London and the South East, which has proved more resilient during the downturn;

- the strength of operational and sales management;

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

- the UK's leading self storage brand, with high public awareness; and

- strong cash flow generation and high operating margins.

Big Yellow only invests in prime storage locations, developing high quality self storage centres in the large urban conurbations where the drivers in the self storage market are at their strongest and the barriers to competition are at their highest. We have focused the business on London and the South East, and other large metropolitan cities, where we believe the drivers for and resilience of the product are strongest.

We have a large current storage customer base of approximately 33,000 spread across the portfolio of open stores and many thousands more who have used Big Yellow over the years. In any month, customers move in and out at the margin resulting in changes in occupancy. Despite the current economic environment, this has remained a seasonal business and typically we see growth over the spring and the summer months, with the seasonally weaker periods being the winter months.

The performance in terms of occupancy, revenue and EBITDA of our stores can be seen from the Portfolio Summary.

At 31 March 2011 the average length of stay for existing customers was 18.8 months; an increase from 18.6 months in the prior year. For the stores that have been open more than five years, the average length of stay increases to 21.9 months. For all customers, including those who have moved out of the business, the average length of stay has remained at 8.5 months. This translates into a loyal customer base. In our 32 established store portfolio, 38% of our customers have been storing with us for over three years. A further 15% of customers in these stores have been in the business for between one and three years. 

That said, we have seen a small decline in the financial year of the length of stay of customers who moved out during the year. This fell to 7.6 months from 8.1 months for the year to 31 March 2010. This is consistent with the improving demand from customers using the product for relatively short periods of time, linked in the main to house moves and home improvements. 

Property Risk

Big Yellow's management has significant experience in the property industry generated over many years and in particular in acquiring property on main roads in high profile locations and obtaining planning consents.

We do take planning risk where necessary, although the more distressed property market will in our view provide more opportunity to buy sites on a conditional basis. The planning process remains difficult with some planning consents taking in excess of twelve months to achieve, although given we have planning consent on all bar one site, the risk to the Group has reduced significantly from prior years.

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 advisors and sub-contractors who have worked with us for many years to our Big Yellow specification.

Treasury Risk

The Group borrows in sterling at floating rates of interest and uses swaps to hedge its interest rate exposure. The Group has derivatives in place to ensure at least 50% of our bank borrowings are hedged, the balance is left floating paying margin over LIBOR. At 31 March 2011, we had fixed rate swaps in place over 69% of our outstanding bank borrowings, including hedging of at least 70% of the investment tranche of our senior debt facility, as required by our loan documentation. The hedging expires in September 2015, two years beyond the expiry of the facility, thus providing interest rate risk mitigation when the facility is refinanced. The Group does not hedge account its interest rate derivatives, all movements in fair value are taken through the income statement. 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.

Our portfolio is relatively high yielding and we believe a flexible approach to our hedging is appropriate for our strategic aims, given our conservative balance sheet.

Interest Cover and Balance Sheet Risk

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 occupancy in the stores on gearing and interest cover.

Credit Risk

Our customers are required to pay a deposit when they start to rent a self storage room and are also required to pay in advance for their four-weekly storage charges. The Group is therefore not exposed to a significant credit risk. 77% of our current customers pay by direct debit; however of new customers moving into the business in the last year 84% have paid by direct debit. Businesses often prefer to pay by cheque or BACS. During the recession, we did not see an increase in the levels of bad debts and arrears. Our bad debt expense represents 0.12% of revenue in the year (2010: 0.17% of revenue).

Taxation Risk

The Group is exposed to changes in the tax regime affecting the cost of corporation tax, VAT and Stamp Duty Land Tax ("SDLT"). We regularly monitor proposed and actual changes in legislation with the help of our professional advisors, through direct liaison with HMRC, and through trade bodies to understand and, if possible, mitigate or benefit from their impact. 

Real Estate Investment Trust ("REIT") Risk

The Group converted to a REIT in January 2007. The Group is therefore exposed to potential tax penalties or loss of its REIT status by failing to comply with the REIT legislation. The Group has internal monitoring procedures in place to ensure that the appropriate rules and legislation are complied with. To date all REIT regulations have been complied with.

Human Resources Risk

Our staff are key to our success and 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, so as to contribute to the performance of the Group.

Reputational Risk

Big Yellow's reputation with all its stakeholders is something we value highly and will always look to protect and enhance. We aim to communicate clearly with our customers, suppliers, local authorities and communities, employees and shareholders and to listen to and take account of their views. Big Yellow's intranet and website are important avenues of communication for both employees and shareholders. 

Security Risk

The safety and security of our customers and stores 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 out of our trading hours.

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.

Big Yellow Group PLC

Financial Review

Financial Results

Revenue for the year was £61.9 million, an increase of £3.9 million (7%) from £58.0 million in the prior year. Revenue from our stores increased by 8% in the year. The overall increase in revenue was lower due to a fall in construction fees earned from Big Yellow Limited Partnership, and a reduction in tenant income on sites where we have started development. Other sales (included within the above), comprising the selling of packing materials, insurance and storage related charges, represented 17.4% of storage income for the year (2010: 17.7%) and generated revenue of £8.8 million for the year, up 7% from £8.3 million in 2010.

Store revenue for the fourth quarter increased by 7% to £14.7 million from £13.7 million for the same quarter last year. Store revenue in the seasonally weaker second half of the year was £29.7 million, compared to £29.9 million for the first half of the year, and up 7% from £27.7 million for the second half of the year ended 31 March 2010. Annualised store revenue at 31 March 2011 was £60.0 million, an increase of 7% from £56.0 million at 31 March 2010. 

The EBITDA margin for the 32 established stores was 65% (2010: 64%), the EBITDA margin for the 19 lease-up stores grew from 44% to 56%. There was an increase in revenue of 3% for the 32 established stores and 24% for the 19 lease-up stores. The table below illustrates the performance of the 32 established stores and the lease-up stores during the year. 

Of the 19 lease-up stores, three stores opened before 31 March 2006, six stores opened in the year ended 31 March 2007, six stores opened in the year ended 31 March 2008 and four have opened since 1 April 2008.

The Group made a profit before tax in the year of £6.9 million, compared to £10.2 million in the prior year. This reduction in Group profitability reflects the decrease in the valuation of the Group's open stores partially offset by the improved adjusted profit. 

After adjusting for the loss 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 £20.2 million, up 22% from £16.5 million in 2010. 

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

Basic earnings per share for the year were 5.34p (2010: 8.11p) and fully diluted earnings per share were 5.29p (2010: 8.03p). Diluted EPRA earnings per share based on adjusted profit after tax was up 19% to 15.49p (2010: 12.99p) (see note 12). 

Operating costs

Cost of sales comprise principally of the direct store operating costs, including store staff salaries, utilities, business rates, insurance, an allocation of the central marketing budget, and repairs and maintenance. We have continued with our programme of cost control in the Group; direct store operating costs, including leasehold rent, have increased by 1% reflecting wage restraint, a more efficient use of marketing costs and rates rebates. We saw an increase in business rates that were applied from the Rating Revaluation effective from April 2010, particularly in our London stores, where the Crossrail levy was applied. Our rates costs have increased by £0.4 million year on year, and we expect to see a similar increase in the forthcoming financial year. That said, the operating costs in the 19 lease-up stores have fallen in the year following rebates on a couple of stores where we have agreed an assessment with the Valuation Office below the original rateable value.

Administrative expenses were £7.2 million compared to £6.9 million in 2010, an increase of 4%. Salary increases at head office were held at 2%, however we have seen general inflationary pressures and additional one-off costs, including recruiting a replacement head of marketing, and an additional Non-Executive Director. 

Interest Expense on Bank Borrowings

The gross bank interest expense for the year reduced to £11.1 million from £11.4 million in 2010 reflecting a lower level of average drawn debt in the year. The average cost of borrowing during the year was 3.6%, in line with the prior year. 

Total interest payable has decreased in the income statement from £12.3 million to £11.3 million following the reduction in debt as above, and an increase in the level of capitalised interest in the year. Capitalised interest increased from £0.3 million in the prior year to £0.9 million in the current year, with construction taking place on three sites during the year, compared to only one site in the prior year.

REIT Status

The Group converted to a Real Estate Investment Trust ("REIT") in January 2007. Since then the Group has benefited from a zero tax rate on the Group's qualifying self storage earnings. The Group only pays tax on the profits attributable to our residual business, comprising primarily of the sale of packing materials and insurance, and fees earned from 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 these 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 Board 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 no cash tax payable for the year, due to tax relief arising from the restructuring of interest rate derivatives in 2009. There is no tax charge for the year ended 31 March 2011 (2010: £nil).

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 4 pence per share is payable (31 March 2010: nil PID).

The Board is recommending the payment of a final dividend of 5 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 18 July 2011, the final dividend will be paid on 20 July 2011 to shareholders on the Register on 10 June 2011.

Financing and Treasury

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 to £23.5 million for the year (2010: £19.1 million). In the year capital expenditure outflows were £13.4 million, down from £14.4 million in the prior year. The cash flow after investing activities was a net inflow of £13.6 million in the year, compared to an inflow of £5.1 million in 2010.

Balance Sheet

Property

The Group's 51 wholly owned stores and seven stores under development at 31 March 2011, which are classified as investment properties, have been revalued by Cushman & Wakefield ("C&W") and this has resulted in an investment property asset value of £792.1 million, comprising £698.5 million (88%) for the 44 freehold (including one long leasehold) open stores, £47.3 million (6%) for the seven short leasehold open stores and £46.3 million (6%) for the seven investment properties under construction.

Investment property

Each store is reviewed and valued individually by Cushman & Wakefield LLP, who are the valuers to a significant proportion of the UK and European self storage market. 

The value of the investment property portfolio at 31 March 2011 was £745.8 million, down £15.8 million from £761.6 million at 31 March 2010. The represents a 2.1% fall, of which we estimate 0.5% is a function of capital movements, including an increase in the purchaser's cost assumption to 5.80% from 5.75%. The balance of 1.6% is due to operational factors. This is principally caused by three reasons: there has been an increase in operating costs assumed in the cash flows, principally down to business rates; the long term rental growth assumptions have been reduced to reflect the current trading patterns and the stabilised occupancy level assumed in the valuations has fallen from 84.2% to 83.1%. The valuation is based on an average occupancy over the 10 year cash flow period of 78.2% across the whole portfolio. Between April 2004 and March 2008, the 32 established stores had an average occupancy of 83%.

The fall in valuation on the 44 freehold stores was 1.7%, with the seven short leasehold stores showing a fall in valuation of 7.6%. 

The initial yield pre-administration expenses assuming no rental growth is 5.2% rising to a stabilised yield of 8.4% (March 2010: 8.4%). The 32 established stores that were mature in 2007 are assumed to return to stabilised occupancy in 37 months on average. The 19 lease-up stores, the majority of which have opened in the past three years, are assumed to reach stabilised occupancy in 49 months on average.

Investment property under construction

The seven wholly owned development sites have increased in value by £12.3 million, £11.0 million relating to capital expenditure incurred, with the balance of £1.3 million a revaluation surplus. The valuation uplift of the development site in Big Yellow Limited Partnership was in line with capital expenditure incurred. C&W's forecast valuations for when the Group assets have reached stabilised occupancy, including assumptions in relation to revenue and operating cost growth within these assets, are currently pointing to a revaluation surplus on total development cost of £84.4 million on the six wholly owned development sites with planning consent and £7.4 million on the site within Big Yellow Limited Partnership.

In their report to us, our valuers, Cushman and Wakefield have drawn attention to valuation uncertainty resulting from a lack of transactions in the self storage investment market. Please see note 14 for further details.

Purchasers' 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 2011 of £827,970,000 million (£35,820,000 higher than the value recorded in the financial statements). The valuations in Big Yellow Limited Partnership are £4,990,000 higher than the value recorded in the financial statements, of which the Group's share is £1,663,000. The sum of these is £37,483,000 and translates to 28.5 pence per share. 

The revised valuation translates into an adjusted net asset value per share of 449.8 pence (2010: 453.3 pence) after the dilutive effect of outstanding share options. 

Surplus land

These are sites which the Directors do not intend to develop into self storage centres. The sites are held at the lower of cost and net realisable value and have not been externally valued. The Directors have assessed the carrying value of these sites. In prior years, a provision of £9.2 million was made against these sites, representing approximately a third of the cost of the land. The Group's received £4.5 million during the year from the disposal of surplus land; £3.3 million from the disposal of our surplus site in Clapham North; and the £1.2 million deferred consideration from the disposal of our surplus land in Twickenham.

Movement in adjusted NAV

The year on year movement is illustrated in the table below:

Borrowings

We focus on improving our cash flows and we currently have healthy Group interest cover of 2.8 times based on Group EBITDA against existing interest costs, allied to a relatively conservative debt structure secured principally against the freehold estate.

The Group has a £325 million senior debt facility in place until 15 September 2013, provided by a syndicate of four banks. 

The facility is divided into two tranches, Tranche A, up to a maximum of £50 million is used to finance non-stabilised properties within the Group and carries a margin of 150 bps. Tranche B is used to finance stabilised Group properties, and carries a margin of between 112.5 bps and 150 bps dependent on the Tranche B income cover. The Group is currently paying a margin of 112.5 bps on this Tranche. As the properties within Tranche A stabilise they may be transferred to Tranche B, reducing the margin payable. There is no loan to value covenant on the facility.

The Group was comfortably in compliance with its covenants at 31 March 2011, as illustrated in the table below. 

* The income cover covenant rises to 1.5x from September 2011

The Group has £59 million of cash and undrawn bank facilities and relatively conservative levels of gearing. The Group currently has a net debt to gross property assets ratio of 33%, and a net debt to adjusted net assets ratio of 45%.

£190 million of the Group's debt is hedged by way of interest rate swaps to September 2015, two years beyond the expiry of the current debt facility. £120 million of this is fixed at 2.99% (excluding margin). The remaining £70 million is fixed at 3.93% (excluding margin). At 31 March 2011 we had floating rate debt of £85 million, on which we are paying one month LIBOR plus applicable margin. The interest rate profile of the Group's debt is shown in the table below:

At 31 March 2011, the fair value on the Group's interest rate derivatives was a liability of £7.8 million. A gain of £0.2 million has been credited to the income statement to reflect the movement from the prior year. 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 policy.

Share Capital

The share capital of the Company totalled £13.1 million at 31 March 2011 (2010: £13.1 million), consisting of 131,060,522 ordinary shares of 10p each (2010: 130,990,837 shares). 

Shares issued for the exercise of options during the period amounted to 69,685 at an average exercise price of 34p.

The Group holds 1,905,000 of its 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.

71,869,364 shares were traded in the market during the year ended 31 March 2011 (2010: 113,703,496). In the prior year there were two significant placings totalling approximately 23 million shares. The average mid market price of shares traded during the year was 320.0p with a high of 353.3p and a low of 284.4p.

At 31 March 2011 there were 86,351 shares subject to share option awards to employees of the Group at a weighted average strike price of 92p. In addition there are 1,361,082 nil paid options, granted under the Group's LTIP scheme and 302,599 share options granted under the Group's SAYE scheme at a weighted average strike price of 173p.

Big Yellow Limited Partnership

Big Yellow Limited Partnership, a joint venture with Pramerica Real Estate Investors Limited, owns self storage centres and development sites in the Midlands, the North, Scotland and four towns in the South. In the consolidated accounts of Big Yellow Group PLC, the Partnership is treated as an associate. We have adopted equity accounting for the Partnership, so that our share of the Partnership's results are disclosed in operating profit and our net investment is shown in the balance sheet within "Investment in Associate". We have provided in note 13d the balance sheet and income statement of the Partnership, along with the Group's share of the income statement captions. 

The table below shows the split of stores and development sites between the Group and the Partnership:

Structure

The Group and Pramerica have committed equity in a one third, two thirds split respectively. The Board of the Partnership comprises two representatives of both Pramerica and Big Yellow. Pramerica have the casting vote over the approval of the Partnership's annual business plan. 

The anticipated remaining capital expenditure on the remaining site in the Joint Venture is £3.9 million. This will take the number of stores in the Partnership to 12 and the Partners have resolved not to develop any further stores. Our total further commitment required to fund both the outstanding capital expenditure and trading losses to break even is estimated at £2 million.

The Group earns certain property acquisition, planning, construction and operational fees from the Partnership. For the year to 31 March 2011, these fees amounted to £0.9 million (2010: £1.2 million).

Funding

A five year term development loan of £68 million is in place from the Royal Bank of Scotland plc and HSBC Bank plc to further fund the Partnership. The original loan available was £75 million, but this was reduced by £7 million in the year at the Partners' request, as projections showed the full amount of the loan would not be drawn. £62.7 million of this loan had been drawn at 31 March 2011.

The Partnership's policy is to fix at least 50% of drawn amounts to 30 June 2013 (as required in its facility agreement), and to leave the balance benefiting from the currently low levels of short term interest rates. £31.8 million of the £62.7 million drawn down at 31 March 2011 has been fixed to 30 June 2013 at a weighted average interest cost post margin of 5.5%. The weighted average interest cost of the overall facility at 31 March 2011 was 4.3% including margin.

Results

For the year ended 31 March 2011, the Partnership made a profit of £5.5 million (2010: £4.0 million), of which Big Yellow's share was £1.8 million (2010: £1.3 million). The operating profit of the Partnership was £0.2 million (2010: operating loss of £0.8 million), with the majority of the stores being profitable at the operating level. After adjusting for non-recurring items (revaluation gains of £6.7 million, and fair value gain on interest rate derivatives of £0.6 million), the Partnership made an adjusted loss of £1.9 million (2010: adjusted loss of £2.0 million), of which the Group's share is £0.6 million (2010: share of loss of £0.7 million). The Partnership is tax transparent, so the limited partners are taxed on any profits. 

Big Yellow has an option to purchase the assets contained within the Partnership or the interest in the Partnership which it does not own exercisable from 31 March 2013. On exit whether by way of exercise of the option or a sale to a third party, Big Yellow is entitled to certain promotes, which could result in Big Yellow sharing in the surplus created in the Partnership ahead of its equity participation. 

PORTFOLIO SUMMARY - WHOLLY OWNED STORES

(1) The 32 established stores are those that had reached stabilisation as a portfolio in 2007 prior to the economic downturn. The lease-up stores have yet to trade at their stabilised occupancy levels. Of the 19 lease-up stores, three stores opened before 31 March 2006, six stores opened in the year ended 31 March 2007, six stores opened in the year ended 31 March 2008 and four have opened since 1 April 2008.

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

(3) Includes direct marketing costs and customer support centre costs allocated across the portfolio of Big Yellow stores

(4) Rent for seven established short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 431,000 sq ft, and a long leasehold lease-up store with a capacity of 64,000 sq ft.

(5) Earnings before interest, tax, depreciation and amortisation.

(6) Of the established stores, the seven leasehold stores achieved a store EBITDA of £4.5 million and EBITDA margin of 45%. The 25 freehold stores achieved a store EBITDA of £23.0 million and EBITDA margin of 71%.

PORTFOLIO SUMMARY - BIG YELLOW LIMITED PARTNERSHIP STORES

(1) This cost includes Leeds which was acquired by the Partnership as an open store in November 2007.

Big Yellow Group PLC

Consolidated Statement of Comprehensive Income

Year ended 31 March 2011

EPRA earnings per share are shown in Note 12.

All items in the income statement relate to continuing operations.

Big Yellow Group PLC

Consolidated Balance Sheet

31 March 2011

The financial statements were approved by the Board of Directors and authorised for issue on 23 May 2011. They were signed on its behalf by:

James Gibson, Director John Trotman, Director

Company Registration No. 03625199

Big Yellow Group PLC

Consolidated Statement of Changes in Equity

Year ended 31 March 2011

The other distributable reserve arose from merger relief under S612 of Companies Act 2006, following the Group's placing of 11.5 million shares in the prior year.

Year ended 31 March 2010

Big Yellow Group PLC

Consolidated Cash Flow Statement

Year ended 31 March 2011

Big Yellow Group PLC

Reconciliation of Net Cash Flow to Movement in Net Debt

Year ended 31 March 2011