Big Yellow Group Annual Report 2014

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FY2014 Annual Report · Big Yellow Group

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Big Yellow Group PLC

2 The Deans, Bridge Road,
Bagshot, Surrey GU19 5AT

Tel: 01276 470190
Fax: 01276 470191
e-mail: info@bigyellow.co.uk

Big Yellow Group PLC
Annual Report & Accounts 2014

people

service

security

locations

innovation

growth

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delivering for our customers
and stakeholders

Get some space in your life.™

Big Yellow Group PLC is the UK’s brand leader in self storage. Big Yellow now
operates from a platform of 77 stores, including 10 stores branded as Armadillo
Self Storage. We own a further three Big Yellow self storage development sites,
of which two have planning consent. Of the 80 total stores and sites, 91% are held
freehold and long leasehold; with the remaining 9% short leasehold. The maximum
lettable area of this platform is 4.6 million sq ft. When fully built out the portfolio will
provide approximately 4.8 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. 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.

We are the innovative leaders in the UK self storage
industry providing individuals and businesses with an
unrivalled product – the best locations, the best quality

facilities and the strongest brand. We have great people

who deliver the best customer service. We achieve this

because we encourage a culture of partnership within

the business and reward our people for their contribution.

Contents

ifc

10
12
14

Big on satisfaction
Big on business
Big on security
Big on location

Introduction
02
04
06
08
Highlights
Chairman’s Statement
Strategic Report
14
17
20
21
25

Our Strategy and Business Model
Operational and Marketing Review
Portfolio Summary – Wholly Owned Stores
Our Stores
Portfolio Summary – Big Yellow Limited
Partnership stores
Store Performance
Financial Review
Risks and Uncertainties
Corporate Social Responsibility Report
Assurance Statement on the Corporate
Social Responsibility Report

26
28
33
35
44

46
47
50
54
56
76
79
80

83
84
85
86
86

Directors, Officers and Advisors
Directors’ Report
Corporate Governance Report
Report on the Nominations Committee
Remuneration Report
Audit Committee Report
Statement of Directors’ Responsibilities
Independent Auditors' Report to the Members of
Big Yellow Group PLC
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Reconciliation of Net Cash Flow to Movement in
Net Debt
Notes to the Financial Statements

87
112 Company Balance Sheet
113 Company Cash Flow Statement
114 Company Statement of Changes in Equity
115 Notes to the Financial Statements
118 Ten Year Summary

We have delivered against our principal financial
aims of growing cash flow, earnings and dividend.”

“

Over the following pages
we outline the core qualities

of our business. We invite you to

take a closer look and learn exactly

why we are recognised as

Britain’s favourite
self storage company.

“ I would definitely

recommend using
Big Yellow. The manager,
who checked me in
was friendly and very
professional and made the
whole process very easy.
The facility is very easy to
navigate around, and the
security set up made me
feel at ease about storing
my belongings. All in all,
a great experience with
no stress or fuss.”

Emily / customer at Big Yellow Byfleet

Bigon…

satisfaction

Whatever the storage requirement, we
will find the best solution with unrivalled
customer service. Our friendly and helpful
staff are one of the main reasons why
customers choose Big Yellow.

9,600 online reviews of our customer service
are testament to this.

The customer is at the heart
of everything we do

t a i n ’ s
i
B r
t e
i
f a v o u r
s t o r a g e
f
s e l
c o m p a n y

Bigon…

– Archiving

– Warehousing

– Multi-site storage

– E-tail storage

– Offices

– Lock ups

– Industrial units

– Flexible storage

business

bigyellow.co.uk/business

We give businesses the flexibility to grow because our
storage services are tailored to their exact requirements.

Big Yellow offers a secure, local and low risk option for
businesses to rent as much or as little space as they
need and the flexibility to change room size easily
as their business stock and activity fluctuates.

Businesses like the low risk approach offered by Big
Yellow. They can try us out from as little as seven days
without being tied into long term contracts.

Business+ is our range of additional business services
that we offer. We can provide business customers with
flexible office space, meeting rooms, a forklift service,
even a virtual assistant. We’ll accept deliveries, arrange
couriers and help out with photocopying, scanning and
faxing. It all adds up to a valuable additional pair of
hands for any business.

“ I originally went in search

of some extra space, but
Big Yellow has almost
become a partner, enabling
me to grow the business.”

Helen Cockle / The Little Legs Company

Businesses across the UK choose Big Yellow
because we offer:

> Flexible space ranging from 10 sq ft to 5,000 sq ft

> No business rates, utility charges or additional

overheads to pay

> Store from as little as seven days

> No complex leases to sign

> Out of hours access

> Secure storage with perimeter fencing, PIN code
access, individually alarmed rooms and 24 hour
digital CCTV

> Easily accessible locations on main roads

> Large loading bays, trolleys, pallet trucks and

fork lifts

> Staff on hand 7 days a week

> National accounts for easier management

“ I walked away feeling

very happy about leaving
my belongings in a safe
and secure location. But
the very best thing was
the level of service from
the manager and her staff.
10 out of 10. Sorry to repeat
myself again, but your staff
have the customer service
levels that any company
should be envious of.”

Katharina / customer at Big Yellow Poole

Bigon…

security

We provide the highest levels of security in
the UK self storage industry. We have invested
significantly to ensure our customers enjoy
peace of mind.

We are the only major UK operator where every
room in every store is individually alarmed.

Secure perimeter fencing, electronic coded
gates, intruder alarms, PIN code entry and
CCTV which is externally monitored 24 hours
a day, provide additional levels of security
for our customers.

The importance of security and the need for
vigilance is communicated to all store staff
and reinforced through regular training.

DUNDEE

Bigon…

EDINBURGH

location

> Outside London

– 42 stores and sites

STOCKTON

KEY

LEEDS

HULL

55 Wholly owned stores

3 Wholly owned stores under development

12 Big Yellow Limited Partnership stores

10 Armadillo stores

LIVERPOOL NORTH
LIVERPOOL
LIVERPOOL SOUTH

MANCHESTER

STOCKPORT

SHEFFIELD HILLSBOROUGH
SHEFFIELD WESTBAR
SHEFFIELD PARKWAY
SHEFFIELD BRAMALL LANE

> London

– 38 stores and sites

STOKE-ON-TRENT

NOTTINGHAM

DERBY

NORWICH

BIRMINGHAM

PETERBOROUGH

MILTON KEYNES

LUTON

COLCHESTER

CHELMSFORD

OXFORD

HIGH WYCOMBE

CHELTENHAM

GLOUCESTER

CARDIFF

BRISTOL CENTRAL

SWINDON

READING

SLOUGH

London
London

SOUTHEND

BRISTOL
ASHTON GATE

CAMBERLEY

GUILDFORD
GUILDFORD CENTRAL

TUNBRIDGE WELLS

WATFORD

ENFIELD

NORTH FINCHLEY

EDMONTON

A1(M)
STAPLES CORNER

EAST FINCHLEY

HANGER LANE

EALING

GYPSY CORNER

ROMFORD

ILFORD
BARKING

BOW

DAGENHAM

M40

HOUNSLOW

CHISWICK

NORTH KENSINGTON

FULHAM

KENNINGTON

RICHMOND

TWICKENHAM

SHEEN

BATTERSEA

NEW CROSS

KINGSTON
NEW MALDEN

TOLWORTH

WANDSWORTH

MERTON

BALHAM

ELTHAM

WEST NORWOOD

BECKENHAM

BROMLEY

BYFLEET

SUTTON

CROYDON

ORPINGTON

PORTSMOUTH

BRIGHTON

POOLE

> 67 easy to find, high
profile locations
provide convenience
for customers and
unmissable exposure
for the Big Yellow brand.

M20

> 10 Armadillo store

locations further broaden
our national coverage.

“ Everything was perfect.

The price, location,
tidiness, security and
customer service were
exceptionally good.”

Carlos / customer at Big Yellow Balham

Our customers like our modern, highly visible,
purpose built stores which are situated in safe
and easily accessible locations.

In April 2014, we opened our Gypsy Corner
store situated next to the A40 in London.
This and our other high profile store locations
contribute to the growing awareness of self
storage and our brand.

We have an unrivalled portfolio across London,
the South East and large metropolitan cities
with a network of 77 stores.

Another year of

cash flow, earnings
& dividend growth

Financial metrics

Revenue
Adjusted profit before tax(1)
Adjusted EPRA earnings per share(2)
Dividend – final
– total
Adjusted NAV per share(3)
Cash flow from operating activities (after net finance costs)

Store metrics

Occupancy growth – all stores
Occupancy growth – wholly owned stores
Occupancy – wholly owned stores
Net achieved rent per sq ft
Revenue per available foot (“REVPAF”)(4)

Statutory metrics

Profit before tax
Basic earnings per share

Highlights

> Growth in all our key store metrics

Year ended

31 March

2014

£72.2m
£29.2m
20.5p
8.4p
16.4p
446.5p
£32.8m

Year ended

31 March

2013

£69.7m
£25.5m
19.3p
6.0p
11.0p
419.2p
£30.2m

200,000 sq ft
165,000 sq ft
69.8%
£26.15
£20.64

174,000 sq ft
90,000 sq ft
64.8%
£24.65
£19.94

£59.8m
42.5p

£31.9m
24.4p

Growth

4
15
6
40
49
7
9

15
83
8
6
4

87
74

> Year-on-year fourth quarter store revenue increased by 11% to £17.7 million (same quarter

last year: £16.0 million)

> Cash flows from operating activities (after net finance costs) increased by 9% to

£32.8 million

> 49% increase in the total dividend for the year to 16.4p

> Reduction of Group net debt(5) by £4.4 million to £226.1 million

> Opening of our prominent store at Gypsy Corner, West London, on the A40 in April 2014

> Acquisition of ten store Armadillo Self Storage portfolio through a joint venture with an

Australian consortium in April 2014

> Big Yellow’s national brand leadership confirmed by 2014 YouGov survey

1 See note 10 2 See note 12 3 See notes 12 and 14 4 See Portfolio Summary 5 See note 18

“ We have delivered occupancy, cash flow and

earnings growth for the fifth year in a row
following the deep recession in 2008 and 2009.”

Occupancy (%)

Net rent (per sq ft)

69.8

64.8

63.5

59.3

55.7

75%

70%

65%

60%

55%

50%

26.85 26.78

26.49

26.15

24.65

£28.00

£27.00

£26.00

£25.00

£24.00

£23.00

£22.00

£21.00

£20.00

2010 2011 2012

2013 2014

2010 2011 2012

2013 2014

Revenue (£m)

72.2

69.7

65.7

61.9

75.0

70.0

65.0

60.0

58.0

55.0

50.0

Adjusted profit

before tax (£m)

29.2

25.5

23.6

20.2

16.5

2010 2011 2012

2013 2014

2010 2011 2012

2013 2014

Adjusted earnings

per share (pence)

Dividend per share

(pence)

20.5

19.3

18.2

15.5

13.0

16.4

11.0

10.0

9.0

4.0

2010 2011 2012

2013 2014

2010 2011 2012

2013 2014

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Chairman’s Statement

We are the market leading brand, the operating platform
with the largest online market share and focus on London,
the South East and large metropolitan cities, where barriers
to entry are at their highest.

Revenue and earnings Growth

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 2014.

We have delivered occupancy, cash flow and earnings growth for the
fifth year in a row following the deep recession in 2008 and 2009.
This performance illustrates the resilience of the Big Yellow business
model and the self storage market more generally.

We had a strong summer’s trading with occupancy growth of 5.7%
in the first six months of the year in the wholly owned stores.
As reported in January, we had our expected seasonal loss in
occupancy of 2.8% in the third quarter. Again, as expected, we
returned to growth in the final quarter to March and have increased
occupancy in the wholly owned stores by 2.1%. Overall closing
occupancy was 69.8%, slightly down from September’s occupancy
of 70.5%.

The introduction of VAT on self storage sales on 1 October 2012 led to
a reduction in our achieved net rents over the year to March 2013 by
6.9%, as we did not pass all of the VAT onto our domestic customers.
In the year since 1 April 2013, we have been looking to grow rents in
line with occupancy and have successfully increased our net rent
per sq ft over the year by 6.1% to £26.15 (2013: £24.65).

The recently published 2014 Self Storage Association UK Survey
showed that only 38% of those surveyed had a reasonable or good
awareness of self storage, in line with our findings. There are no
magic bullets to growing this awareness as it is not a commoditised
product, but increasing use, referrals, and marketing by us and other
operators should drive awareness in the coming years. The survey
also indicated that new self storage facility openings had slowed
dramatically in the last four years in the UK as a whole. In London in
2013, there has been a net reduction in stores and the forecast for
the year ahead was a further contraction in self storage space.

While we believe that any improvement in the demand fundamentals
for our product will be incremental, Big Yellow is well placed to benefit
from any improvement. We are the market leading brand, the
operating platform with the largest online market share and focus on
London, the South East and large metropolitan cities, where barriers
to entry are at their highest.

Financial results
Revenue for the year was £72.2 million (2013: £69.7 million), an
increase of 4%. Store EBITDA for the wholly owned portfolio increased
by £1.6 million (4%) to £45.7 million. The 54 wholly owned stores
have grown in occupancy from 64.8% to 69.8% at 31 March 2014.

Cash inflows from operating activities (after finance costs)
increased by £2.6 million (9%) to £32.8 million for the year
(2013: £30.2 million).

The Group made an adjusted profit before tax in the year of
£29.2 million (2013: £25.5 million), up 15%. This translated into a
6% increase in adjusted earnings per share to 20.5p (2013: 19.3p);
the percentage increase is lower due to the full year impact of the
placing in January 2013.

The Group made a statutory profit before tax for the year of
£59.8 million, compared to a profit of £31.9 million last year. The
revaluation gain on the investment property portfolio is £28.4 million
for the year, reflecting the operating performance of the business
and some yield compression, particularly in our London stores.

The Group has reduced its gearing further this year and now has net
bank debt of £226.1 million at 31 March 2014 (2013: £230.5 million).
This represents approximately 28% (2013: 30%) of the Group’s gross
property assets totalling £804.8 million (2013: £767.5 million)
and 36% (2013: 39%) of the adjusted net assets of £634.4 million
(2013: £594.5 million).

The Group’s income cover for the year (expressed as the ratio of
cash generated from operations against interest paid) was 4.1 times
(2013: 3.5 times).

Dividends
At the time of the placing in January 2013, the Board committed to
pay a dividend of 80% of full year adjusted earnings per share from
this financial year. The final dividend declared is 8.4 pence per share.
The interim dividend was 8 pence per share, so the full year dividend
is 16.4 pence per share, representing an increase of 49% from
11 pence per share last year.

“ The business is performing well and

we have high confidence in our core
markets as we believe that a number
of factors will be helpful to our
continued growth.”

Our people
I believe that we have a unique culture 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
Increasing political uncertainty and interference, combined with an
exuberant housing market in London and the South East, gives scope
for some trading volatility in the short term. That said, the business
is performing well and we have high confidence in our core markets
as we believe that a number of factors will be helpful to our
continued growth.

We consider that a large part of the anticipated net immigration and
population growth in the UK will continue to concentrate in London
and the South East.

We also note that new housing developments in London are at a
multi-decade high and as completions increase this should translate
into more housing transactions. Land in London and the South East
continues to be increasingly scarce for non-residential development
which should benefit Big Yellow as the new supply of self storage
facilities will remain constrained.

We are therefore confident about the demand and supply
characteristics of our business.

Nicholas Vetch
Chairman
19 May 2014

Strategic Report

Our Strategy and Business Model

The Strategic Report
discusses the following areas:

> Our Strategy and Business Model

> Operational and Marketing Review

> Store Performance

> Financial Review

> Going Concern

> Principal Risks and Uncertainties

> Corporate Social Responsibility

Approval
This report was approved by the Board of Directors on 19 May 2014 and signed on its behalf by:

James Gibson
Chief Executive Officer

John Trotman
Chief Financial Officer

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 brand awareness of five times that of our nearest
competitor in London, and ten times for the rest of the UK. 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 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 15 years we have created a portfolio of 67 purpose built
prime Big Yellow self storage centres, largely freehold and focussed
on London, the South East and large metropolitan cities. 55 of these
stores are wholly owned, with 12 owned in Big Yellow Limited
Partnership, of which the Group owns a third. 74% of our current store
revenue derives from within the M25; with the South East, the
proportion of current store revenue rises to 89%. The REVPAF
performance of our stores in London has been 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 42,000 sq ft (source: The Self Storage

Association 2014 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 current focus is to:

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

> focus on training, selling skills, and customer satisfaction to

maximise prospect conversion and referrals;

> grow occupancy and net rent so as to drive revenue optimally

at each store;

> maintain a focus on cost control, so revenue growth is

transmitted through to earnings growth;

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

> produce sustainable returns for shareholders through a low

leverage, low volatility, high distribution REIT.

In the fourteen years since flotation in May 2000, Big Yellow has
delivered a Total Shareholder Return (“TSR”), including dividends
reinvested, of 14.8% per annum, in aggregate 585.1% at the closing
price of 546.5p on 31 March 2014. This compares to 6.8% per annum
for the FTSE Real Estate Index and 4.7% 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

Attractive market dynamics

Our competitive advantage

Evergreen income streams

Strong growth opportunities

. UK self storage penetration in key urban conurbations remains relatively low
. Very limited new supply coming onto the market
. Resilient through the downturn
. Sector growth is positive, with increasing domestic demand

. Industry’s most recognised brand
. Prominent stores on arterial or main roads, with extensive frontage and

high visibility

. Largest share of web traffic from mobile and desktop platforms
. Excellent customer service, customer feedback programme with store level

customer satisfaction surveys

. Largest UK self storage footprint by Maximum Lettable Area (“MLA”) capacity
. Primarily freehold estate concentrated in London and South East and other

large metropolitan cities

. Larger average store capacity – economies of scale, higher operating

margins

. Secure financing structure with strong balance sheet

. 42,000 customers (36,000 in wholly owned stores)
. Average length of stay for existing customers of 23 months
. 34% of customers in established stores > three year length of stay
. Low bad debt expense (0.10% of revenue in the year)

. Driving REVPAF with a focus on occupancy growth
. Yield management as occupancy increases
. Domestic demand increasing
. Growth in national accounts and business customer base
. Site development out of free cash flow

Conversion into
quality earnings

. Freehold assets for high operating margins and operational advantage
. Low technology & obsolescence product, maintenance capex fully expensed
. Annual compound eps growth of 16% over the last ten years
. Annual compound cash flow growth of 15% over the last ten years

Strategic Report (continued)

Our Strategy and Business Model (continued)

The self storage market
In the recently published 2014 Self Storage Association UK Survey,
only 38% of those surveyed had a reasonable or good awareness of
self storage, in line with findings from our own research. Furthermore,
2% of the 2,138 adults surveyed were currently using self storage
and 5% 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 no new openings last year and indeed capacity is
expected to fall in the next twelve months with the closures of stores
for redevelopment. Between 2010 and 2013 average industry
openings have been approximately nine per year, which compares
to an average of 34 per year in the preceding four years.

79% of respondents to the survey expected an improvement in
profits this year, compared to 35% last year, and 87% expect rents
for new customers to rise in 2014 compared to 79% last year.

The Self Storage Association (“SSA”) estimate that the UK industry
is made up of approximately 975 self storage facilities (of which
141 are purely container operations), providing 34.4 million sq ft of
self storage space, equating to 0.5 sq ft per person in the UK. This
compares to 7.3 sq ft per person in the US, 1.4 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: The Self Storage
Association 2014 UK Annual Survey). 339 self storage facilities in
the UK are held by large operators (defined as those managing
10 facilities or more) which represents 35% of the total number,
but we would estimate approximately 50% 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.

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 the 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, but has increased this year by 6.1% to
closer to the 2012 level. 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 12% over the past five years, and compound
dividend growth of 42% over the same period. Compound eps growth
over the past ten years is 16%.

We have illustrated the Group’s performance in these measures over
the past five years on page 11.

Capital structure
During the year 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 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 debt 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 debt for Big Yellow is 20% to 30%
with a target of mid 20s from the current level of 28%. Given the
subjective nature of valuation we prefer to express this target as net
operating income over debt costs.

89%

of revenue from London

and the South East

14.8%

per annum TSR

since floatation

16%

compound EPS growth

over the last ten years

Operational and Marketing Review

For unprompted brand awareness, our recall in
London is 56%, five times that of our nearest competitor
and for the rest of the UK it is 21%, ten times that of our
nearest competitor.

Overview
We now have a portfolio of 70 Big Yellow stores and sites of which
67 are currently open. In addition, we operate from 10 Armadillo
Self Storage centres which are located in northern cities. We have
committed to start construction at Enfield, which will open in April
2015. Our site at Guildford Central has planning consent, and
planning negotiations are ongoing at our site in central Manchester.

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. 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 with our freehold property assets and
with the proven ability to access funding when the opportunity
presents itself.

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 70% to 80% plus occupancy in the current economic
environment. 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 68 sq ft in line with the prior 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 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.

We have a team of Area Managers in place who have on average
worked for Big Yellow for ten 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 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 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 four years, at a cost
of approximately £15,000 to £20,000 per store.

Demand
Of the customers moving into our stores in the last year, surveys
undertaken indicate approximately 50% are linked to the housing
market, either customers renting storage space whilst using the
rental sector or those moving within the owner occupied sector.
During the year 11% of our customers who moved in took storage
space as a spare room for decluttering and approximately 29% 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, 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.

Strategic Report (continued)

Operational and Marketing Review (continued)

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 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. In smaller towns where we do not have
representation, we have negotiated sub-contract arrangements with
other operators who meet certain operating standards.

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 33% of the space in our
stores. The average room size occupied by business customers is
125 sq ft, against 55 sq ft for domestic customers. This compares
with the SSA Survey result for the industry as a whole which had 60%
of space occupied by domestic customers and 40% of space by
businesses, and furthermore it noted an increase in demand for self
storage coming from domestic customers. 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 that space to drive
business prospects.

The net rent per sq ft for domestic customers is approximately 40%
higher than for business customers, reflecting the smaller average
unit size occupied for domestic customers.

Marketing and eCommerce
Our marketing strategy continues to focus on driving customer
response through multiple digital platforms whilst keeping customer
service at the heart of the business.

Our YouGov surveys, which we have commissioned every year for
the last eight years, allow us to monitor our brand awareness. Our
most recent survey conducted in April 2014, used a statistically
robust sample size of 1,523 respondents in London and 2,360 for the
rest of the UK. The survey showed our prompted awareness to be at
80% in London and 41% for the rest of the UK, both approximately
three times higher than our nearest competitor.

For unprompted brand awareness, our recall in London is 56%,
five times that of our nearest competitor and for the rest of the UK
it is 21%, ten times that of our nearest competitor. These surveys
continue to prove we are the UK’s brand leader in self storage
(source: YouGov, April 2014).

Online
The 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 2014, where details are
first recorded on our operating system. 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 by far the largest online market share of web visits to
self storage company websites in the UK. Across the year ended
31 March 2014, our online market share of web visits ranged from
35% to 40%. Our nearest competitor ranged from 13% to 16% online
market share for the same period (source: Experian Hitwise 37
largest UK operators).

We continually monitor and improve the user journey through the
website to make the experience as easy as possible. Of all web visits,
whether to the Big Yellow mobile or desktop websites, 42% come
from tablets and smartphones. Specifically, smartphones accounted
for 26% of web visits in April 2014, up from 20% in April 2013.

Whether it is through desktop, tablet or mobile usage, our customers
can enjoy a seamless experience whichever digital route they
choose to interact with us. We are continually developing useful
online tools, like check in online, detailed online FAQs, video guides
and online chat. These save our customers time and provide easy to
find answers and information about self storage at Big Yellow.

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 nearly
10,000 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 in 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 9.3 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.

> The website, whether accessed by desktop,

tablet or smartphone receives the largest
share of prospects, accounting for 86% of
all sales leads.

> Of all web visits, whether to the Big Yellow

mobile or desktop websites, 42% come from
tablets and smartphones.

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 number one 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 2015, 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. We are very active on Twitter which also allows
us to join relevant conversations around self storage and related
trends. With over 23,000 ‘likes’, our Facebook channel allows us to
keep the brand front of mind and provides an avenue for customer
feedback. The Big Yellow YouTube channel is being 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 small businesses and a more light-hearted look at the
concept and trends of “man caves” in the home. These stories have
generated both national and regional media coverage online and
offline and are supported by radio interviews which allow us to talk
about the benefits of Big Yellow.

Budget
During the year the Group spent approximately £2.95 million on
marketing (4.1% of revenue), a slight increase on the previous year.
We have increased the budget for the year ahead to £3.1 million with
a focus on driving our revenue through delivering more prospects to
the website.

56%

Unprompted brand

awareness in London

21%

Unprompted brand
awareness in the rest
of the UK

35-40%

Online market share

Strategic Report (continued)

Portfolio Summary – Wholly Owned Stores

Number of stores

At 31 March
Total capacity (sq ft)(2)
Occupied space (sq ft)
Percentage occupied
Net rent per sq ft

For the year
REVPAF(3)
Average occupancy
Average annual rent per sq ft

Established(1)

2014
Lease-up

Total

Established

2013
Lease-up

Total

1,930,000
1,452,000
75.2%
£26.23

1,491,000
936,000
62.8%
£26.02

3,421,000
2,388,000
69.8%
£26.15

1,941,000
1,413,000
72.8%
£24.72

1,491,000
810,000
54.3%
£24.51

3,432,000
2,223,000
64.8%
£24.65

£22.54
75.5%
£25.59

£18.16
59.8%
£25.46

£20.64
68.7%
£25.54

£22.74
74.9%
£26.10

£16.29
51.8%
£26.16

£19.94
64.8%
£26.12

£000

Self storage income
Other storage related income(4)
Ancillary store rental income

Total store revenue
Direct store operating costs (excluding depreciation)
Short and long leasehold rent(5)

Store EBITDA(6)
Store EBITDA margin(7)

Deemed cost

To 31 March 2014
Capex to complete

Total

37,280
6,244
95

43,619
(13,087)
(1,961)

28,571
65.5%

£m

162.7
–

162.7

22,714
4,231
142

27,087
(9,942)
(44)

17,101
63.1%

£m

234.3
1.6

235.9

59,994
10,475
237

70,706
(23,029)
(2,005)

45,672
64.6%

£m

397.0
1.6

398.6

37,926
6,123
86

44,135
(12,835)
(1,803)

29,497
66.8%

20,186
3,873
140

24,199
(9,520)
(44)

14,635
60.5%

58,112
9,996
226

68,334
(22,355)
(1,847)

44,132
64.6%

(1) The 32 established stores are those that had reached stabilisation as a portfolio in 2007 prior to the economic downturn. Of the 22 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 seven have opened since 1 April 2008.

(2) The capacity of the established stores has fallen as space at one store has been earmarked for redevelopment.
(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 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.
(6) Store earnings before interest, tax, depreciation and amortisation.
(7) Of the established stores, the seven leasehold stores achieved a store EBITDA of £5.1 million and EBITDA margin of 50%. The 25 freehold stores achieved a store EBITDA of

£23.5 million and EBITDA margin of 70%.

Our Stores

An Unrivalled Portfolio

An unrivalled portfolio of stores across London, the South East and
other large metropolitan cities.

Gypsy Corner, April 2014
MLA – 70,000 sq ft

Chiswick, April 2012
MLA – 75,000 sq ft

New Cross, February 2012
MLA – 60,000 sq ft

Stockport, September 2011
MLA – 60,000 sq ft

Eltham, April 2011
MLA – 70,000 sq ft

Camberley, January 2011
MLA – 68,000 sq ft

High Wycombe, June 2010
MLA – 60,000 sq ft

An Unrivalled Portfolio (continued)

Reading, December 2009
MLA – 62,000 sq ft

Sheffield Bramall Lane,
September 2009 MLA – 60,000 sq ft

Poole, August 2009
MLA – 55,000 sq ft

Nottingham, August 2009
MLA – 65,000 sq ft

Edinburgh, July 2009
MLA – 63,000 sq ft

Twickenham, May 2009
MLA – 76,000 sq ft

Liverpool, March 2009
MLA – 60,000 sq ft

Bromley, March 2009
MLA – 71,000 sq ft

Birmingham, February 2009
MLA – 60,000 sq ft

Sheen, December 2008
MLA – 64,000 sq ft

Sheffield Hillsborough,
October 2008 MLA – 60,000 sq ft

Kennington, May 2008
MLA – 66,000 sq ft

Merton, March 2008
MLA – 70,000 sq ft

Fulham, March 2008
MLA – 139,000 sq ft

Balham, March 2008
MLA – 61,000 sq ft

Barking, November 2007
MLA – 64,000 sq ft

Ealing Southall, November 2007
MLA – 57,000 sq ft

Sutton, July 2007
MLA – 70,000 sq ft

Gloucester, December 2006
MLA – 50,000 sq ft

Edmonton, October 2006
MLA – 75,000 sq ft

Kingston, August 2006
MLA – 62,000 sq ft

Bristol Ashton Gate, July 2006
MLA – 61,000 sq ft

Finchley East, May 2006
MLA – 54,000 sq ft

Tunbridge Wells, April 2006
MLA – 57,000 sq ft

Bristol Central, March 2006
MLA – 64,000 sq ft

North Kensington,
December 2005 MLA – 51,000 sq ft

Leeds, July 2005
MLA – 76,000 sq ft

Beckenham, May 2005
MLA – 71,000 sq ft

Tolworth, November 2004
MLA – 56,000 sq ft

Watford, August 2004
MLA – 64,000 sq ft

Swindon, April 2004
MLA – 53,000 sq ft

Orpington, December 2003
MLA – 64,000 sq ft

Byfleet, November 2003
MLA – 48,000 sq ft

Chelmsford, April 2003
MLA – 54 ,000 sq ft

Finchley North, March 2003
MLA – 62,000 sq ft

West Norwood, January 2003
MLA – 57,000 sq ft

Colchester, December 2002
MLA – 54,000 sq ft

Bow, November 2002
MLA – 129,000 sq ft

Brighton, October 2002
MLA – 59,000 sq ft

Guildford, June 2002
MLA – 55,000 sq ft

An Unrivalled Portfolio (continued)

New Malden, May 2002
MLA – 81,000 sq ft

Hounslow, December 2001
MLA – 54,000 sq ft

Battersea, December 2001
MLA – 34,000 sq ft

Ilford, November 2001
MLA – 58,000 sq ft

Cardiff, October 2001
MLA – 74,000 sq ft

Portsmouth, October 2001
MLA – 61,000 sq ft

Norwich, September 2001
MLA – 47,000 sq ft

Dagenham, July 2001
MLA – 51,000 sq ft

Wandsworth, April 2001
MLA – 57,000 sq ft

Luton, March 2001
MLA – 41,000 sq ft

Southend, March 2001
MLA – 57,000 sq ft

Staples Corner, March 2001
MLA – 112,000 sq ft

Romford, November 2000
MLA – 70,000 sq ft

Milton Keynes, September 2000
MLA – 61,000 sq ft

Cheltenham, April 2000
MLA – 50,000 sq ft

Slough, February 2000
MLA – 67,000 sq ft

Hanger Lane, October 1999
MLA – 66,000 sq ft

Oxford, August 1999
MLA – 33,000 sq ft

Croydon, July 1999
MLA – 80,000 sq ft

Richmond, May 1999
MLA – 35,000 sq ft

Strategic Report (continued)

Portfolio Summary – Big Yellow Limited Partnership Stores

Number of stores

At 31 March
Total capacity (sq ft)
Occupied space (sq ft)
Percentage occupied
Net rent per sq ft

For the year
REVPAF
Average occupancy
Average annual rent per sq ft

Self storage income
Other storage related income
Ancillary store rental income

Total store revenue
Direct store operating costs (excluding depreciation)

Store EBITDA
Store EBITDA margin

Deemed cost

To 31 March 2014
Capex to complete

Total

March
2013

749,000
409,000
54.6%
£16.72

£11.14
49.0%
£18.29

£000

6,704
1,556
29

8,289
(4,023)

4,266
51.5%

March
2014

749,000
444,000
59.3%
£18.01

£12.72
58.4%
£17.70

£000

7,737
1,758
34

9,529
(4,049)

5,480
57.5%

£m

99.5
0.7

100.2

P
O
R
T
F
O
L
I
O
S
U
M
M
A
R
Y

Strategic Report (continued)

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
significant 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 wholly owned stores by 73,000 sq ft. The table
below illustrates the move-in performance in the year.

Wholly owned store move-ins

April to June
July to September
October to December
January to March

Total

Store revenue for the year grew by 3.5%, feeding through
to a 15% improvement in adjusted profit and a 9% increase
in operating cash flow.

Store occupancy summary

32 established stores
22 lease-up stores

Total – 54 wholly owned stores
12 Partnership lease-up stores

Total – all 66 stores

The 54 wholly owned stores had a net gain in occupancy of
165,000 sq ft, representing an average of 3,056 sq ft per store.
This compares to an overall gain in the wholly owned stores of
90,000 sq ft in the year to 31 March 2013. The 12 stores in the
Partnership increased their occupancy by 35,000 sq ft, representing
average growth of 2,917 sq ft per store.

The 32 established stores are 75.2% occupied compared to 72.8%
at the same time last year. The 22 lease-up stores have grown in
occupancy from 54.3% to 62.8%, and overall store occupancy has
increased in the year from 64.8% to 69.8%.

All 54 wholly owned stores, and all 12 stores within Big Yellow Limited
Partnership, 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.

Year ended
31 March 2014

Year ended
31 March 2013

Net move-ins
% 31 March 2014

14,752
16,129
12,247
12,873

56,001

13,844
14,973
10,738
11,047

50,602

7%
8%
14%
17%

11%

3,609
(168)
(1,680)
962

2,723

In all Big Yellow stores, the occupancy growth in the current year was
200,000 sq ft, against an increase of 174,000 sq ft in the prior year.
This growth across the 54 wholly owned and 12 stores in the
Partnership represents an average of 3,030 sq ft per store (2013:
2,636 sq ft per store).

Occupancy
31 March 2014
000 sq ft

Occupancy
31 March 2013
000 sq ft

Growth for
year to
31 March 2014
000 sq ft

Growth for
year to
31 March 2013
000 sq ft

1,452
936

2,388
444

2,832

1,413
810

2,223
409

2,632

39
126

165
35

200

(29)
119

90
84

174

In the year ended 31 March 2014, net rent in the wholly owned stores
grew by 6.1%. This has been a combination of reducing discounts to
new customers and retaining price increases from existing
customers; overall scheduled rents remained broadly unchanged.
This growth has recouped the majority of the fall in net rent suffered
following the introduction of VAT. We would expect rental growth to be
lower in the forthcoming financial year given our focus remains on
growing occupancy.

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.

Average occupancy in the year

Net rent per sq ft growth over the year

0 to 60%
60 to 70%
70 to 80%
Above 80%

4.4%
4.7%
6.4%
8.2%

The table below shows the average key metrics across the store portfolio for the year ended 31 March 2014:

Store capacity
Sq ft occupied per store at 31 March 2014
% occupancy
Revenue per store
EBITDA per store

EBITDA margin

32 Established stores

22 Lease-up stores

60,312
45,375
75.2%
£1,363,000
£893,000

65.5%

67,773
42,545
62.8%
£1,231,000
£777,000

63.1%

Like-for-like revenue per available square foot (“REVPAF") across the wholly owned portfolio increased from the last year by 4% to £20.64
(2013: £19.94).

Armadillo
During the year we continued to manage the ten freehold stores
branded as Armadillo Self Storage alongside our Big Yellow stores
using the same operating model.

The portfolio forms part of our operating platform, and in order to
safeguard our management fee income and to receive an earnings
enhancing dividend yield, we acquired the portfolio in April 2014
in a joint venture with an Australian consortium for a total price of
£19.75 million. The Group has invested £3.6 million representing
an initial stake of 38% in the business. Our joint venture partners
have a right to increase their share from 62% to 80%, which expires
in July 2014.

We have agreed a new five year management contract. The portfolio
is currently 60% occupied and our aim is to maximise occupancy and
revenue over the coming years.

The first year dividend yield is estimated at 6.7% which together,
with our management fees of £400,000 per annum, will give a cash
return of approximately 17% on the initial investment.

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

Wholly owned sites

Location

Status

Enfield, North
London

Prominent site on the A10 Great
Cambridge Road, London

Construction due to start shortly,
planned opening April 2015

Anticipated capacity

60,000 sq ft

Guildford
Central

Prime location in centre of Guildford
on Woodbridge Meadows

Manchester
Central

Prime location on Water Street in
central Manchester

Consent granted

56,000 sq ft

Planning under negotiation

50,000 sq ft to 70,000 sq ft

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

Strategic Report (continued)

Financial Review

Revenue for the year was £72.2 million, an increase
of £2.5 million (4%) from £69.7 million in the prior year.

Delivering… Results

Financial results
Revenue for the year was £72.2 million, an increase of £2.5 million
(4%) from £69.7 million in the prior year. Store revenue increased by
3.5% in the year to £70.7 million (2013: £68.3 million). The other
revenue is fee income earned from Big Yellow Limited Partnership
and Armadillo 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 17.5% of storage income for the year (2013: 17.2%)
and generated revenue of £10.5 million for the year, up 5% from
£10.0 million in 2013.

Store revenue for the fourth quarter increased by 11% to £17.7 million
from £16.0 million for the same quarter last year. Store revenue in
the seasonally weaker second half of the year was £35.6 million,
up 8% from £32.9 million for the second half of the year ended
31 March 2013, and up 1% from £35.1 million for the six months
ended 30 September 2013.

There was a decrease in revenue of 1% for the 32 established stores
and an increase of 12% for the 22 lease-up stores. The EBITDA margin
for the 32 established stores was 66% (2013: 67%); the EBITDA
margin for the 22 lease-up stores was 63% (2013: 60%). The table
below shows the performance of the 32 established stores and the
22 lease-up stores during the year.

Wholly owned store performance

32 established stores
22 lease-up stores

Total

Capacity

Occupancy

Revenue

EBITDA

000 sq ft

31 March 2014
000 sq ft

31 March 2013
000 sq ft

31 March 2014
£000

31 March 2013
£000

31 March 2014
£000

31 March 2013
£000

1,930
1,491

3,421

1,452
936

2,388

1,413
810

2,223

43,619
27,087

44,135
24,199

28,571
17,101

29,497
14,635

70,706

68,334

45,672

44,132

The Group made a profit before tax in the year of £59.8 million,
compared to a profit of £31.9 million in the prior year.

After adjusting for the gain on the revaluation of investment
properties and other matters shown in the table below, the Group
made an adjusted profit before tax in the year of £29.2 million,
up 15% from £25.5 million in 2013.

Diluted EPRA earnings per share based on adjusted profit after tax
was up 6% to 20.5p (2013: 19.3p) (see note 12). Basic earnings
per share for the year was 42.5p (2013: 24.4p) and fully diluted
earnings per share was 42.2p (2013: 24.1p).

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

Profit before tax analysis

Profit before tax
Gain on revaluation of

investment properties
Movement in fair value on
interest rate derivatives

Gains on surplus land
Refinancing costs
VAT implementation costs
Share of non-recurring

losses/(gains) in associate

Adjusted profit before tax

2014
£m

59.8

(28.3)

(2.7)
–
–
–

0.4

29.2

2013
£m

31.9

(9.5)

0.2
(1.0)
4.3
0.2

(0.6)

25.5

Adjusted profit before tax – year ended 31 March 2013
Increase in gross profit
Reduction in net interest payable
Increase in administrative expenses
Increase in share of recurring profit of associate
Increase in capitalised interest

Adjusted profit before tax – year ended 31 March 2014

£m

25.5
2.0
1.1
(0.1)
0.5
0.2

29.2

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 charge for the year of £0.3 million. There was no charge
in the prior year due to tax relief arising from the restructuring of
interest rate derivatives in 2009 and in the year.

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 13 pence per share
is payable (31 March 2013: 8 pence per share PID).

The Board is recommending the payment of a final dividend of 8.4
pence per share. The table below summarises the declared dividend
for the year:

Dividend (pence per share)

Interim dividend – PID

Final dividend

Total dividend

– discretionary
– total

– PID
– discretionary
– total

31 March
2014
£m

31 March
2013
£m

8.0p
nil p
8.0p

5.0p
3.4p
8.4p

13.0p
3.4p
16.4p

5.0p
nil p
5.0p

3.0p
3.0p
6.0p

8.0p
3.0p
11.0p

Subject to approval by shareholders at the Annual General Meeting to
be held on 16 July 2014, the final dividend will be paid on 24 July 2014.
The ex-div date is 11 June 2014 and the record date is 13 June 2014.

Operating costs
We have continued with our programme of cost control in the Group.

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.

Direct store operating costs for the portfolio have increased by 3%
reflecting general inflationary pressures and an increase in business
rates, particularly with an unfavourable assessment at one store
backdated to 2010. This is partially offset by the increased
recoverability of VAT on our operating costs compared to the first six
months of the prior year.

Administrative expenses in the income statement have reduced by
£0.1 million compared to the prior year. In the prior year there was a
charge of £0.2 million in respect of costs incurred challenging and
implementing the imposition of VAT on self storage, which was added
back in calculating the Group’s adjusted profit for that year. £1.4 million
of the £7.6 million administrative expense is non-cash IFRS 2 share-
based payment charges.

Interest expense on bank borrowings
The gross bank interest expense for the year was £10.8 million,
a decrease of £0.7 million from the prior year. This reflects the
reduction in debt in January 2013 following the placing in that
month. The average cost of borrowing during the year was 4.5%,
compared to 4.0% in the prior year.

Total interest payable has decreased in the statement of comprehensive
income from £12.3 million to £11.3 million in part due to the decrease
in the gross bank interest expense. Additionally, capitalised interest
increased by £0.2 million from the prior year, with the Group
constructing its store at Gypsy Corner throughout the year, compared
with limited construction activity taking place during the prior year.

The prior year refinancing costs of £4.3 million relate to the
unamortised loan arrangement costs of the previous facility, and the
write-off of the costs of the new bank facility in accordance with IAS 39.
This was adjusted from the Group’s recurring profit for that year.

VAT
VAT was introduced on self storage rents with effect from 1 October
2012, following the announcement in the March 2012 budget.

We are now able to recover the majority of VAT on our ongoing operating
expenses, and are also entitled to a refund of previously irrecoverable
VAT on capital expenditure under the Capital Goods Scheme.

We have a receivable of £9.0 million in respect of payments due back
to the Group under the Capital Goods Scheme as a consequence of the
introduction of VAT on self storage from 1 October 2012. The debtor has
been reduced in the year by £1.2 million following the identification
of some trapped Capital Goods Scheme recovery. We have also made
revisions to the timing of the payments due back to the Group. The
final amount is subject to agreement with HMRC. 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 £0.4 million of the discount being unwound through interest
receivable in the period. The gross value of the debtor before
discounting is £10.2 million. The first payment under the Capital
Goods Scheme of £0.8 million was received in October 2013.

Strategic Report (continued)

Financial Review (continued)

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:

Year ended
31 March 2014
£000

Year ended
31 March 2013
£000

Cash generated from operations
Finance costs (net)

43,290
(10,538)

42,025
(11,839)

Analysis of property portfolio

No of
locations

Investment property
Investment property

under construction

Investment property total
Surplus land

Value at
31 March
2014
£m

776.4

22.3

798.7
6.1

804.8

Revaluation
movement
in year
£m

29.2

(0.8)

28.4
–

28.4

58
3

Free cash flow
Capital expenditure (including
finance lease payments)

Asset sales
Receipt from Capital Goods Scheme
Investment in associate

Cash flow after investing activities
Ordinary dividends
Issue of share capital
Non-recurring finance costs
Decrease in borrowings

Net cash outflow
Opening cash and cash equivalents

32,752

30,186

Total

(9,570)
–
756
–

23,938
(19,591)
42
–
(8,938)

(4,549)
7,850

(8,647)
15,864
–
(1,567)

35,836
(13,543)
36,764
(15,573)
(45,694)

(2,210)
10,060

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 valuations in the current year have grown from the prior year,
with a revaluation surplus of £30.4 million on the open stores, before
adjusting for the Capital Goods Scheme.

The valuation is based on an average occupancy over the 10 year
cash flow period of 79.2% across the whole portfolio. Between April
2004 and March 2008, the 32 established stores had an average
occupancy of 83%.

Closing cash and cash equivalents
Debt

3,301
(229,368)

7,850
(238,306)

Net debt

(226,067)

(230,456)

Free cash flow pre-capital expenditure increased by 9% to £32.8 million
for the year (2013: £30.2 million). In the year capital expenditure
outflows were £9.6 million, up from £8.6 million in the prior year.
During the year we constructed our Gypsy Corner store, invested in
Phase 2 fit outs, and continued our programme of LED roll-out across
the portfolio. The cash flow after investing activities was a net inflow
of £23.9 million in the year, compared to an inflow of £35.8 million
in 2013; the reduction being due to receipts in the prior year of
£15.9 million from the sale of surplus land. The non-recurring finance
costs in the prior year relate to £10.5 million of payments made to
cancel interest rate derivatives and £5.1 million relating to
arrangement fees paid for the Aviva and senior debt loans.

Balance sheet
Property
The Group’s 54 wholly owned stores and four stores under
development at 31 March 2014, 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
£798.7 million, comprising £726.4 million (91%) for the 47 freehold
(including one long leasehold) open stores, £50.0 million (6%) for
the seven short leasehold open stores and £22.3 million (3%) for the
four investment properties under construction.

Established
store
portfolio

Lease-up
store
portfolio

All wholly
owned
stores

Valuation at

31 March 2014

£416.4m

£360.0m

£776.4m

Occupancy at

31 March 2014
Stabilised occupancy

75.2%

62.8%

69.8%

assumed in valuations

81.5%

80.5%

81.1%

Net initial yield

pre-admin expenses
Stabilised yield assuming

7.0%

5.5%

6.3%

no rental growth

7.8%

The initial yield pre-administration expenses assuming no rental
growth is 6.3% (2013: 5.9%) rising to a stabilised yield of 7.8% (2013:
8.2%). The 32 established stores that were mature in 2007 are
assumed to return to stabilised occupancy in 29 months on average.
The 22 lease-up stores are assumed to reach stabilised occupancy
in 36 months on average from 1 April 2014. Note 14 contains more
detail on the assumptions underpinning the valuations.

Investment property under construction
The four wholly owned development sites have increased in value
by £5.0 million, £5.8 million relating to capital expenditure incurred,
with the balance of £0.8 million a revaluation deficit. C&W’s forecast
valuations for when the assets have reached stabilised occupancy,
including assumptions in relation to revenue and operating cost
growth, are currently pointing to a revaluation surplus on total
development cost of £30.3 million on the three wholly owned
development sites with planning consent.

In their report to us, our valuers, Cushman & 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.

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
2014 of £834.2 million (£35.5 million higher than the value recorded
in the financial statements). The valuations in Big Yellow Limited
Partnership are £4.8 million higher than the value recorded in the
financial statements, of which the Group’s share is £1.6 million. The
sum of these is £37.1 million and translates to 26.0 pence per share.

The revised valuation translates into an adjusted net asset value per
share of 446.5 pence (2013: 419.2 pence) after the dilutive effect of
outstanding share options.

Surplus land
At 31 March 2014 the Group owned £6.1 million of land surplus to our
requirements across three sites. We aim to sell this surplus land
once we have maximised its realisable value through planning
improvements. In the year a tenant vacated an office attached to one
of our stores. We are looking at the options for redeveloping this
office for sale, which has been transferred to surplus land from
investment property. The sites are held at the lower of cost and net
realisable value and have not been externally valued.

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

Movement in adjusted net asset value

1 April 2013
Adjusted profit
Equity dividends paid
Revaluation movements

(including share of associate)

Movement in purchaser’s cost adjustment
Other movements (eg share schemes)

Equity
shareholders’
funds
£m

594.5
29.2
(19.6)

27.7
1.4
1.2

EPRA
adjusted
NAV per
share
pence

419.2
20.6
(13.8)

19.5
1.0
–

31 March 2014

634.4

446.5

Borrowings
We focus on improving our cash flows and for the year we had
healthy Group interest cover of 4.1 times (2013: 3.5 times) based
on cash generated from operations against interest paid, allied to a
relatively conservative debt structure secured principally against
the freehold estate.

In April 2012, we completed a £100 million 15 year fixed rate loan
with Aviva Commercial Finance Limited. The loan is secured over
a portfolio of 15 freehold self storage centres which were valued
at £242.1 million at 29 February 2012 for the purposes of the
drawdown. The annual fixed interest rate on the loan is 4.90%.

The loan amortises to £60 million over the course of the 15 years.
The debt service is payable monthly based on fixed annual amounts.
The loan outstanding on the fifth anniversary will be £89.8 million;
£76.7 million will be outstanding on the tenth anniversary, with
£60 million remaining at expiry in April 2027.

The Group has a £155 million four year bank facility with Lloyds,
HSBC and Santander, expiring in September 2016. £120 million of the
facility is term loan with the balance of £35 million revolving. The
facilities attract a ratcheted margin over LIBOR based on interest
cover. The Group is currently paying a blended 2.4% margin, the
lowest margin on the ratchet, which is effective for asset income
cover of greater than three times.

The Group has a £70 million interest rate derivative to September
2016 at a fixed rate of 2.8% plus margin. The balance of the bank debt
drawn accrues interest at variable rates based on one month LIBOR
plus margin.

The Group's average cost of debt at 31 March 2014 is shown in the
table below.

Aviva loan
Fixed bank debt
Variable bank debt

Total

Amount
of debt
£m

Weighted
average
interest cost

96.4
70.0
63.0

229.4

4.9%
5.3%
2.9%

4.5%

The Group was in compliance with its banking covenants at 31 March
2014; see note 19 for details.

The Group has £25.3 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 28%, and a net debt to
adjusted net assets ratio of 36%.

At 31 March 2014, the fair value on the Group’s interest rate
derivatives was a liability of £2.8 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 £14.3 million at 31 March
2014 (2013: £14.3 million), consisting of 143,061,147 ordinary
shares of 10p each (2013: 142,639,647 shares).

Shares issued for the exercise of options during the year amounted
to 0.4 million at an average exercise 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.

Strategic Report (continued)

Financial Review (continued)

Opening shares
Shares issued for the placing
Shares issued to EBT
Shares issued for the
exercise of options

Closing shares in issue
Shares held in EBT
Shares held in treasury

2014
No.

2013
No.

142,639,647 131,393,041
10,000,000
876,671

–
–

421,500

369,935

143,061,147 142,639,647
(1,500,000)
(1,418,750)

(1,500,000)
(1,418,750)

Closing shares for NAV purposes

140,142,397 139,720,897

54,249,527 shares were traded in the market during the year ended
31 March 2014 (2013: 45,430,167). The average mid-market price of
shares traded during the year was 452.1p with a high of 571.5p and a
low of 355.3p.

Big Yellow Limited Partnership
Big Yellow Limited Partnership, a joint venture with Pramerica Real
Estate Investors Limited (“Pramerica”), owns self storage centres in
the Midlands, the North, Scotland and four locations 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, and detail on Big Yellow’s option to acquire the assets of
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 Partners have resolved not to develop any further stores. No
further equity contributions are forecast.

The Group earns certain construction and operational fees from the
Partnership. For the year to 31 March 2014, these fees amounted to
£0.6 million (2013: £0.6 million).

Funding
The Partnership has a £60 million bank facility with RBS and HSBC
expiring in September 2016. £2 million of this facility has been repaid
and cancelled during the year, leaving drawn debt at £58 million at
31 March 2014. The average cost of the facility at 31 March 2014 is
4.3%. Interest rate derivatives are in place covering 50% of the drawn
debt at a pre-margin cost of 1.05%. There is a margin ratchet based
on the Partnership’s income cover which ranges between 250 bps
and 400 bps; the margin is currently 350 bps.

Results
For the year ended 31 March 2014, the operating profit of the
Partnership was £4.6 million (2013: £3.4 million), with all 12 stores
being profitable at the operating level.

The Partnership made a profit before tax of £0.5 million (2013:
£1.9 million). Big Yellow’s share of this profit was £0.2 million
(2013: £0.6 million).

After adjusting for non-recurring items of a revaluation loss of
£2.0 million (principally due to a reduction in the stable occupancy
assumptions used in the valuations), and fair value gain on interest
rate derivatives of £0.8 million, the Partnership made an adjusted
profit of £1.8 million (2013: adjusted profit of £0.3 million), of which
the Group’s share is £0.6 million (2013: £0.1 million). The
Partnership is tax transparent, so the limited partners are taxed on
any profits.

We recognised a receivable of £4.3 million in the prior year in respect
of payments due back to the Partnership under the Capital Goods
Scheme. These amounts are subject to agreement with HMRC. The
receivable has been discounted; the gross value of the receivable
before discounting is £4.9 million. The first payment under the
Capital Goods Scheme of £0.4 million was received in October 2013.

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 2015 and
projections contained in the longer-term business plan which covers
the period to March 2019. 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.

Risks and Uncertainties

Principal risks and uncertainties

Self storage market risk
The UK economy is projected to grow at approximately 3% in 2014,
and is expected to return to the level of output last achieved in 2007
before the global financial crisis. Self storage has proved relatively
resilient through the crisis, with our revenues and earnings increasing
over the last four years. As the economy has recovered in the past
year, the market risk has fallen in line with increasing occupancy.

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, and over the last three or
so years new store openings within the sector have slowed to an
average of nine stores per year over the past four years, down from
a peak of 34 per year in 2005-2009.

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 focus on London and the South East and other large

metropolitan cities, which has proved more resilient during the
downturn and where the drivers in the self storage market are
at their strongest and the barriers to competition are at their
highest;

> the strength of operational and sales management;
> continuing innovation to deliver the highest levels of customer

service;

> the UK’s leading self storage brand, with high public awareness

and online strength; and

> strong cash flow generation and high operating margins, from

a secure capital structure.

We have a large current storage customer base of over 42,000
spread across the portfolio of 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 on page 20.

Property risk
Our management has significant experience in the property industry
generated over many years and in particular in acquiring property on
main roads in high profile locations and obtaining planning consents.
We do take planning risk where necessary. 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 advisers and sub-contractors who have
worked with us for many years to our Big Yellow specification.

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

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

We have a fixed rate loan in place from Aviva Commercial Finance
Limited, with 13 years remaining. For our bank debt, we borrow at
floating rates of interest and use swaps to hedge our interest rate
exposure. Our policy is to have at least 60% of our total borrowings
fixed, with the balance floating paying margin over LIBOR. At
31 March 2014 we had fixed rate swaps in place over 53% of our
outstanding bank borrowings, coupled with the loan from Aviva,
resulting in 73% of the Group’s total borrowings being fixed.

The Group does not hedge account its interest rate derivatives,
all movements in fair value are taken through the statement of
comprehensive income. The Group regularly monitors its
counterparty risk. The Group monitors compliance with its banking
covenants closely. During the year it complied with all its covenants,
and is forecast to do so for the foreseeable future.

Interest 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.

Strategic Report (continued)

Risks and Uncertainties (continued)

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. 79% of our current customers pay by direct
debit; however of new customers moving into the business in the last
year 85% have paid by direct debit. Businesses often prefer to pay by
cheque or BACS. Since the start of the downturn in economic activity,
we have not seen an increase in the levels of bad debts and arrears.
In the year to 31 March 2014 our bad debt expense represented
0.10% of revenue in the year (2013: 0.17%).

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”), for example
the change in the prior year of the imposition of VAT on self storage
from 1 October 2012. We regularly monitor proposed and actual
changes in legislation with the help of our professional advisers,
through direct liaison with HMRC, and through trade bodies to
understand and, if possible, mitigate or benefit from their impact.

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, including projected tests.

Human resources risk
Our people are key to our success and as such we are exposed to a
risk of high staff turnover, and a risk of the loss of key personnel.
We have developed a professional, lively and enjoyable working
environment and believe our success stems from attracting and
retaining the right people. We encourage all our staff to build on their
skills through appropriate training and regular performance reviews.
We believe in an accessible and open culture and everyone at all
levels is encouraged to review and challenge accepted norms, so as
to contribute to the performance of the Group. With the economy
improving, the risk of higher staff turnover and difficulty in finding
the right employees does increase.

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, their belongings, 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 outside of our trading hours. We are the only major
operator in the UK self storage industry that has every room in every
store individually alarmed.

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

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

Corporate Social Responsibility Report

At Big Yellow, we know the most important space of all is the
environment that surrounds us. That’s why we continue to
work hard to create an environmentally friendly business.

A big green… Commitment

1.0 INTRODUCTION

Big Yellow recognises that high levels of Corporate Social Responsibility (“CSR”), linked to clear commercial objectives, will create a more
sustainable business and increase shareholder and customer value. This policy covers all of our operations, as a self storage provider,
a real estate developer, an employer and a participant in our local communities.

Big Yellow seeks to meet the demand for self storage from businesses and private individuals providing the storage space for their
commercial and/or domestic needs, whilst aiding local employment creation and contributing to local community regeneration.

2.0 SOCIAL RESPONSIBILITY

2.1 OUR PEOPLE
Our people are at the heart of Big Yellow’s business, bringing our values to life through the service that they provide, to the energy and
passion that drives us to become an ever more responsible and sustainable business.

We recognise that recruiting, retaining and motivating individuals with talent and integrity – and ensuring that we listen to our people and
maximise their skills and performance – is key to the continued success of our Company.

We encourage a culture of partnership within the business and believe in staff participating in corporate performance through benefits,
such as bonus schemes and share incentives. We recognise and reward the exceptional performance, achievements and ideas of our
people through a Points Recognition Scheme, and allocated £42,000 of points for the year ended 31 March 2014.

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

Communication and Engagement
We continue to recognise the importance of communication and consultation with an annual spring conference, regular formal and
informal meetings, 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. A bi-annual Employee Engagement Survey provides
management with key feedback and guidance as to where to focus their attention to further improve the working environment.

Training and Development
We continue to promote the development of staff through ongoing training and regular performance appraisals. For the year ended
31 March 2014 a total of 789 days training was provided across the Company, comprising both sales and operational training and
personal and management development.

Our Big Impressions customer experience programme was launched in April 2013, the aim of which was to further support our people to
become more in touch with our customers. The feedback from this programme formed a key focus for the coaching of our sales teams
throughout the last year.

A personal development programme designed specifically for Assistant Store Managers was introduced at the start of the year, with
14 Assistant Store Managers having completed or currently participating in the programme, to prepare them for their future progression
within the Company store network.

Strategic Report (continued)

Corporate Social Responsibility Report (continued)

2.0 SOCIAL RESPONSIBILITY (continued)

Community
We recognise the importance of contributing within the local community and we encourage our people to develop close links with
charities, schools and other institutions, both locally and nationally, to help to build more economically sustainable environments.

For the year ended 31 March 2014 we recognised and supported ten different Company charities which were elected by our store and head
office teams. Our people undertook a variety of activities for both these and other charities, with donations also being made by the Company.

Throughout the year a total of £30,000 was raised for our Company charities and £9,000 was raised for other charities.

Examples of our fundraising activities have included:

The Royal Marsden March
Fifteen people from our London stores took part in the Royal Marsden March, a 14 mile sponsored walk between The Royal Marsden’s
hospitals in Chelsea and Sutton. The team raised £1,615 to support cancer diagnosis, treatment, research and care.

British Heart Foundation
10 of our stores have acted as Donation Stations for the British Heart Foundation, raising a total of £7,684 from bags of unwanted clothes
and household goods, which will support the charity’s pioneering heart research, as well as the care of people living with heart disease.

“The British Heart Foundation is thrilled with Big Yellow’s support over the past few months from donations of money and unwanted goods.

The charity truly values this amazing support from Big Yellow’s customers and staff and we look forward to continuing the good work
with them. It’s great to think that someone’s unwanted goods can literally save lives and help to keep hearts beating.”

Heather Hunt, Community Fundraising Manager, British Heart Foundation

The Three Peaks Challenge
This gruelling challenge, which involved climbing Ben Nevis, Scafell Pike and Snowdon in twenty four hours, was completed by one of our
team members and they raised just under £2,700 for Abigail’s Footsteps, a charity which provides support to parents who suffer the loss
of a child from a still birth.

Our construction team for new stores always subscribes to the ‘Considerate Constructors Scheme’ on a voluntary basis to maintain high
standards for ‘Respect in the Community’. This was achieved for our new store ‘fit out’ construction at Gypsy Corner. They applied the
principles of ‘performance beyond compliance’ and were certified for caring about site: safety, security, appearance, environmental
protection and workforce values, both on and off-site.

Free Storage
In addition to our fundraising activities, we have also provided charities with free storage. During the year the space occupied by charities
in Big Yellow and Armadillo stores on this basis was 44,000 sq ft, worth approximately £806,000 at standard rents. Some of the many
charities that have benefited from this storage include the National Childbirth Trust, Read International, British Heart Foundation, a
number of Food bank charities, and local community charities.

Young Enterprise
Fourteen people at Big Yellow are currently supporting students in schools or colleges within their local communities in conjunction with
Young Enterprise, a charitable organisation that creates and develops programmes that complement the school experience and
encourages young people to realise the extent of their own talents. Our volunteering has taken the form of providing classroom support,
mentoring students to create their own businesses and participating in Young Enterprise regional board meetings.

“Big Yellow Self Storage volunteers supported me and my Young Enterprise teams at a couple of “Learn to Earn” programmes in schools
in South London. Their wholehearted commitment to the day was much appreciated by Young Enterprise staff, as well as the school
staff and students.

The Big Yellow Self Storage volunteers fully immersed themselves in the days, mentoring student groups, and drawing on their own
experience to stress to students how education is key to future success and happiness in work and life.”

Bracey Parish, Area Manager, Young Enterprise

> We recognise the importance of

contributing within the local community
to help build more economically
sustainable environments.

> During the year the space occupied
by charities in our stores was worth
approximately £806,000 at standard rents.

2.2 HEALTH & SAFETY
Big Yellow recognises the importance of maintaining high standards of health and safety for everyone who may be affected by our
business. The Group’s Health and Safety policy (for Big Yellow Self Storage and Armadillo Self Storage) is reviewed on an ongoing basis. It is
applied in two distinct areas – Construction and Operations. The policy states that all employees have a responsibility for health and safety,
but that managers have special responsibilities. Additional duties are placed on Adrian Lee, Operations Director, to keep the Board advised
on health and safety issues and compliance with the Policy in respect of construction activity and store operations respectively.

The Group has a Health and Safety Committee, which meets quarterly and comprises Adrian Lee and appointed Department Heads and
relevant Managers. They meet to discuss any issues that have been reported from meetings held at head office, Maidenhead (our
distribution warehouse), the stores and any construction sites.

In addition, the Group has appointed an external consultant to review our Policy and to perform audits of stores on a rolling programme, to
ensure the implementation of the Group’s Health and Safety policies. Health and Safety audits are also carried out by external consultants
on each construction site prior to the opening of a store.

Our Health and Safety Policy covers all of our stores, our head office, Maidenhead and our ‘Fit-out’ construction sites. Incidents are
recorded for staff, customers, contractors and visitors. The Board receives bi-monthly reports which monitor Health and Safety
performance in all these areas. Annual Store Health and Safety Meetings take place for all stores and Maidenhead. Agendas are provided
for these meetings via the Intranet from Facilities Management files and the minutes are reviewed by Area Managers to raise any issues
with Facilities Management or Human Resources where necessary.

Health and safety performance and incidents are reported and are displayed in the tables below.

2.2.1 Big Yellow Self Storage customers, contractors and visitors
The total number of health and safety incidents for the Group was 50, of which 46 were minor injuries and four were reportable. The minor
injuries comprised 31 customers, visitors and contractors and 15 staff. There were four reportable injuries, which comprised three for
customers, visitors and contractors and one staff injury. There were also two minor injuries within Big Yellow Construction Company Limited.

Store customer, contractor and visitor health and safety

2011

2012

2013

2014

Total number of customers move-ins during the year
Number of minor injuries
Number of reportable injuries (RIDDOR)
RIDDOR* per 100,000

51,049
41
–
–

57,604
43
–
–

65,807
34
3
4.6

72,772
31+
3+
5.5

+
*

Indicates data reviewed by Deloitte as part of their assurance work. See page 44 for the independent assurance report
RIDDOR – Reporting of Injuries, Diseases and Dangerous Occurrences Regulation 1995

There were no ‘fatal injuries’, ‘notices+’ or ‘prosecutions’ during the year ended 31 March 2014. Reportable injuries were due to an increase
in customer ‘move-ins’, tripping and personal disabilities. Minor injuries were predominantly related to the handling of personal or
business possessions by our customers or their removers.

Strategic Report (continued)

Corporate Social Responsibility Report (continued)

2.2.2 Big Yellow Self Storage staff

Store and head office staff health and safety

Average number of staff
Number of minor injuries
Number of reportable injuries (RIDDOR)
Annual injury incidence rate (AIIR)* per 100,000 staff

2011

273
19
1
366

2012

279
12
–
–

2013

316
16
3
949

2014

321+
15+
1+
311.5+

+
*

Indicates data reviewed by Deloitte. See page 44 for their independent assurance report
From 2013 we included Armadillo staff, and corrected and restated the AIIR (Annual Injury Incidence Rate)

There were no ‘fatal injuries’, ‘notices+’ or ‘prosecutions’ in the year ended 31 March 2014 at any of our stores. Our annual injury incidence
rate for staff decreased mainly due to increased health and safety awareness, even though we had increased numbers of staff (2%) and
an increase in the number of customer move-ins (11%). One member of staff had a reportable injury due to a fall.

2.2.3 Big Yellow Construction Company Limited

Construction fit-out contractors and visitor health and safety

Number of total man days
Number of minor injuries
Number of reportable injuries (RIDDOR)

2011

6,431
1
1

2012

6,511
1
–

2013

610
–
–

2014

3,315
2
–

During the year, our Gypsy Corner ‘fit out works’ took place and high safety standards were maintained. Only two minor injuries
occurred. No ‘fatal injuries’, ‘notices’, ‘reportable injuries’ or ‘prosecutions’ occurred indicating a well controlled environment for staff,
contractors and visitors on-site. Health and safety performance continues to be reviewed in preparation for a new store development
at Enfield in the year ending 31 March 2015.

3.0 ENVIRONMENTAL RESPONSIBILITY

Our CSR Policy sets out how we manage the impact of our business on society and the environment, to control our risks and manage our
opportunities in a sustainable way. Big Yellow has been classified as having a “low environmental impact” by the Ethical Investment
Research Index Series (“EIRIS”) because it is involved in Support Services (FTSE4Good Index Series, Environmental, Social and
Governance Rating Assessment). Notwithstanding this, and in order to maintain an efficient and sustainable business for its
Stakeholders, Big Yellow has continued to commit significant resources to the environmental and social aspects of its storage operations,
real estate portfolio, new store developments and acquisitions.

This year we report in compliance with the Companies Act, Climate Change Regulation on Reporting Greenhouse Gas (“GHG”) Emissions
for listed companies. For detailed application see our Basis of Reporting at: http://corporate.bigyellow.co.uk/csr.aspx. We therefore
provide a summary in the Directors’ Report of Scope 1 and 2 carbon dioxide equivalent (CO2e) emissions. We also use the recently
published DEFRA/DECC conversion factors, revised from five year, to one year, rolling averages, which show annual GHG emissions
reductions more accurately.

Mandatory Greenhouse Gas Emissions
Statement Summary

Scope 1 Site Gas and Coolant GHG Carbon Equivalent Emissions (tCO2e)

Total Scope 1

2011 *

121.5

2012

140.6

2013

419.0

2014

474.8+

Scope 2 ‘Supplied’ Electricity GHG Emissions (tCO2e)

Electricity tCO2e

2011 *

6,758

2012

6,143

2013

6,051

2014

5,207+

Scope 1 + 2 GHG Emissions (tCO2e)

2011

2012

2013

2014

% change
from
2011

(23.0%)

% change
from
2011

Total (tCO2e)

6,879.5*

6,283.6

6,470.0

5,681.8+

(17.4%)

Scope 1 + 2 GHG Intensity GHG Emissions (tCO2e)

kgCO2e/Occupancy

2011 *

32.0

2012

26.0

2013

26.5

2014

22.0+

% change
from
2011

(31.3%)

+
*

Indicates data reviewed by Deloitte. See page 44 for their independent assurance report
Peak energy use and benchmark year for medium term performance assessment

We have restated annual emissions back to 2011, a peak energy use and carbon emission benchmark year, to present information on the
most comparable basis. Our future four year carbon reduction programme for the years to March 2018 is to continue with our programmes
of energy efficiency and investment in low carbon solar electricity generation. Our main carbon intensity measure is kg CO2e/customer
occupied space (m2), as this reflects new store openings and customer service use.

Our materiality threshold for energy use is 5%, and for carbon emissions is > 1%. A limited level of assurance is provided for our Scope 1
and 2 energy use, GHG emissions and health and safety data. This assurance was undertaken by Deloitte LLP in accordance with the
International Standards on Assurance Engagements 3000 (ISAE 3000).

For 12 stores, Big Yellow only has a 33% financial interest, however we manage the buildings and utilities at these sites. We have opted
to capture their operational footprint and have reported this in our consolidated emissions reporting. We have not opted for equity share
reporting for these sites.

The ISAE 3000 Standard provides an evaluation of both quantitative and qualitative aspects of our CSR management and reporting. We
report our energy use for our owned and joint venture stores; our head office in Bagshot, Surrey; and our packing materials warehouse
in Maidenhead. Our environmental report does not include any of the 10 managed Armadillo stores.

Energy use and Scope 1 (on-site) and Scope 2 (off-site) carbon emissions are major operational costs and have a significant
environmental impact. Peak energy demand in 2011 was chosen as our benchmark year, due to a previous period of increased business
growth through new store openings and increased customer occupancy.

Strategic Report (continued)

Corporate Social Responsibility Report (continued)

4.0 MANDATORY CSR REPORTING – EXECUTIVE SUMMARY

Scope 1 Direct On-site Gas and Coolant GHG Emissions (tCO2e)

2011

2012

2013

2014

Natural Gas (kWh)
Coolant Use (Kg)
Total Scope 1 (tCO2e)

656,017
0
121.5

742,086
2.8
140.6

716,508
66.5
419.0

652,181
112.4*
474.8+

+
*

Indicates data reviewed by Deloitte. See page 44 for their independent assurance report
Peak coolant replacement air conditioners.

Scope 1 emissions are from natural gas use for heating flexi-offices, and from coolant replacement in air conditioning units. These
emissions represent only 8.4% of our combined scope 1 and 2 emissions that are under our control. Coolant replacement increased, as a
consequence of regular service maintenance checks. Natural gas use for heating offices has increased in the colder winters. Company
van diesel and construction fit out gas oil use emissions are less than 0.1% of total Scope 1 and 2 emissions, and are therefore not a
material impact.

Scope 1 Direct On-site Solar Electricity Generation

2011

2012

2013

2014

Solar Generation (kWh)
Solar Electricity % of Total Electricity Use

107,074
0.8

134,297
1.0

208,807
1.6

285,832+
2.4+

+ Indicates data reviewed by Deloitte. See page 44 for their independent assurance report

We have been investing in the generation of renewable energy since 2008 and our solar electricity generation has been increasing, due
to more recent investments in larger 50 kWp capacity installations. Annual solar electricity generation has been increasing by on average
39% since 2011. Solar electricity has saved 138+ tonnes of Greenhouse Gas (“GHG”) emissions in the year ended 31 March 2014, and has
saved 363 tonnes since 2011.

Scope 2 Off-site Supplied Electricity and GHG Emissions (tCO2e)

2011 *

2012

2013

2014

Electric Use (kWh)

tCO2e (emissions)

13,925,217

13,588,703

13,153,960

11,688,629+

6,758

6,143

6,051

5,207+

% change
from
2011

(16.1%)

(23.0%)

+ Indicates data reviewed by Deloitte. See page 44 for their independent assurance report
* Peak energy use and benchmark year for future reductions

Electricity from ‘off-site’ power station emissions account for some 94.7% of our annual energy consumption in the year ended 31 March
2014, compared to 96.0% in 2011. GHG emissions have reduced by 23.0%, including Gypsy Corner fit out construction, since 2011, due
to our continued investment in energy efficiency programmes such as installing motion sensor lighting and LED re-lamping. Our energy
efficiency investments prior to 2011 included motion sensor lighting, new store solar PV installations, wind turbines and ground source
heat pump technologies.

Scope 2 Long –
Term GHG Emission
Reduction Targets (%)

tCO2e
% reductions

2011*

6,758
–

2012

6,143
–9%

2013

2014

6,051
–10.5%

5,207
–23.4%

2015

5,069
–25%

2016

4,731
–30%

2017

4,393
–35%

2018

4,055
–40%

Our future programmes for re-lamping stores internally and externally with energy efficient LED lighting is to be continued during the year
ending 31 March 2015 and beyond. Additional investment in solar PV installations at our existing highest energy using stores will also be
implemented in the year ending 31 March 2015. The long term target is to reduce our GHG emissions from peak energy use in 2011, by
40% in 2018.

> Annual solar electricity generation has

been increasing by on average 39%
since 2011.

> Solar electricity has saved 138+ tonnes

of Greenhouse Gas (“GHG”) emissions
in the year ended 31 March 2014, and
has saved 363 tonnes since 2011.

Scope 1 + 2 Total GHG Emissions and Intensity

kg CO2e/m2 Occupied Space
kg CO2e/£ Revenue
kg CO2e/m2 Gross Internal Area

2011

32.0
0.11
12.6

2012

26.0
0.10
11.0

2013

26.5
0.09
11.1

% change
from
2011

(31.3%)
(27.3%)
(23.8%)

2014

22.0+
0.08+
9.6+

+ Indicates data reviewed by Deloitte. See page 44 for their independent assurance report

We have achieved a 31.3% reduction in Scope 1 and Scope 2 emissions per customer occupied space from 2011 to 2014. We have continued
our investment in energy efficient and low carbon programmes to displace our dependence on power station supplied electricity.

5.0 SCOPE 3 VOLUNTARY SUPPLY CHAIN EMISSIONS

Greenhouse Gas (GHG) Emissions
Scope 3 supply chain emissions represent GHG emission losses during electricity supplier transmission and distribution to our stores.

Scope 3 Supply Chain Electricity Supply and Distribution
GHG Emission Losses (tCO2e)

Electricity Supply (kWh)
Supply Losses (tCO2e)
Scope 2+3 Emissions

* Peak energy use and benchmark year

2011

2012

2013

2014

13,925,217*

13,588,703

13,153,960

11,688,629

544

7,302

525

6,668

501

6,552

445

5,652

% change
from
2011

(16.1%)

(18.2%)

(22.6%)

Our energy efficiency programmes have reduced electricity use within our stores and also the associated transmission and distribution
losses by 18.2% since 2011.

Scope 3 Supply Chain Waste Recycling and Landfill GHG Emissions

Waste Recycling (t)
Landfill waste (t)
Landfill GHG tCO2e

2011

266
37.3
10.8

2012

263
36.8
10.7

2013

259
34.6
10.0

2014

265
37.0
10.7

Strategic Report (continued)

Corporate Social Responsibility Report (continued)

5.0 SCOPE 3 VOLUNTARY SUPPLY CHAIN EMISSIONS (continued)

Waste generation in self storage is assessed as a “low environmental impact”. The majority of non-hazardous bulk office waste is
segregated by staff and recycled by our waste contractor. Landfill recycling reduces waste on average to 36.4 tonnes per year. Our
average supply chain landfill gas emissions are 10.6 tCO2e. These emissions represent less than 0.2% of combined Scope 1 and 2
emissions, which is below the materiality threshold for carbon emissions. Construction contractors completed the ‘fit-out’ of our new
Gypsy Corner store which opened on 1 April 2014. This generated residual construction waste, also below the materiality threshold.

Construction ‘Fit-Out’ Contractors Waste Management Performance

Tonnage
Waste Recycled (%)
Plasterboard Recycled (%)

2011

147.5
93.2
100

2012

152.3
96.0
34.0

2013

12.9
100
–

2014

78.9
95
100

Gypsy Corner used 14 skips for waste (448 tonnes) and recycled 95% including cardboard, plastics and metals which are in demand from
supplier ‘take back’ schemes. Six skips of waste plasterboard (61.2 tonnes) were also recycled. We achieved the highest resource
efficiency benchmark in the Building Research Establishment Methodology for new commercial buildings. One new store development at
Enfield is planned in 2015.

Scope 3 Water Supply and Waste Water Treatment GHG Emissions

2011

2012

Supply tCO2e
Treatment tCO2e
Total tCO2e emissions

–
–
–

2013

3.5
7.2
10.7

2014

9.8
20.0
29.8

Water use has been assessed as a “low environmental impact” for self storage (28,486 m3) and fit out construction (388 m3). Monitoring
water invoices has helped detect leaks for repair in stores. Our data has provided an average of 20.3 tCO2e emissions per year. This
represents less than 0.4% of combined Scope 1 and 2 emissions, which is below the materiality threshold for carbon emissions. Water use
monitoring will be continued in order to review water use efficiency and losses.

6.0 STAKEHOLDERS

Big Yellow engages with its main stakeholders to provide information and gain useful feedback from a variety of groups, as described below.

6.1 Government Legislation and Standards:
The Carbon Reduction Commitment (“CRC”)
The Department of Energy and Climate Change and Environment Agency are two of the stakeholders in the policy for reducing demand for
energy from industry, businesses and the public sector. The CRC Energy Efficiency Scheme is designed to cut emissions in large private
sector organisations. This legislation started in 2011 with a broad assessment of energy uses including electricity and gas. The scheme
uses a carbon dioxide conversion factor, and so is not directly comparable to the Companies Act GHG equivalent reporting. The current
CRC tax is £12 per ton of CO2 and this will rise to £13 per ton in the year ending 31 March 2015. This year, our CRC taxation will reduce in
line with our Scope 2 electricity carbon emission reduction.

6.2 Investor Communications
The Carbon Disclosure Project (CDP)
The Carbon Disclosure Project is a global investor-backed initiative designed to encourage companies and their suppliers to publish
information on their carbon emissions and climate change strategies. The CDP acts on behalf of an increasing number of institutional
investors to send annual information requests to many of the world's largest listed companies. It has secured publicly disclosed climate
change data from over 1,500 firms globally, including Big Yellow.

Carbon Disclosure Project FTSE 350

Disclosure Score
Performance Score
Number of Investors

2010

65
B
534

2011

–
–
–

2012

67
C
655

2013

71
D
722

Big Yellow’s carbon disclosure scores have continually improved from 2010 to 2013 by 9%, with improving internal data management
practices for GHG emissions. Our data responses have become more comprehensive with ‘clearer consideration of business specific
risks’ and ‘potential opportunities related to climate change’. The ‘B’ to ‘D’ ratings represents our relative performance on ‘transparent
climate change mitigation’ scoring within the 50+ range. Disclosure standards are rising rapidly and Big Yellow maintains its position
in the ‘A to E’ range.

The Global Real Estate Sustainability Benchmark (“GRESB”)
GRESB collects information regarding the sustainability performance of property companies and funds. This includes information on
performance indicators, such as energy, GHG emissions, water and waste. The Survey also covers broader issues such as sustainability
risk assessments, performance improvement, and engagement with employees, tenants, suppliers and the community. GRESB continued
to rate Big Yellow with a ‘Green Star Status’ in 2013. In Europe and globally we were ranked with sustainability scores in the top quartile of
‘management and policy’ and ‘implementation and measurement’. The benchmark results allow us to identify the areas we can improve,
both in absolute terms and relative to our peers. We are able to provide our existing and potential investors with information regarding our
ESG performance, in the current real estate investment market.

7.0 CSR PROGRAMME FOR THE YEAR ENDING 31 MARCH 2015

The CSR programme will continue to focus on energy efficiency, carbon reduction, renewable energy generation and waste reduction. This
year our programmes, objectives and targets are highlighted in the table below:

Strategy

Programmes

Objectives / Targets

Carbon Emissions and
Investor Communications

Submit reported carbon performance data
to the Carbon Disclosure Project–FTSE4
Good 2013 Index Series, to improve annual
emission ratings.

Improve upon 2013 score (71) for total scope
1 and 2 emissions.

Sustainable Development Investor
Communications

Submit CSR performance data to the annual
Global Real Estate Sustainability Benchmark
(“GRESB”) survey data.

Strengthen and maintain the leading Green
Star position of our sustainable real estate
portfolio.

The Carbon Reduction
Commitment (“CRC”)

Energy Efficiency

Increase Solar Energy
Generation and Revenues

Submit reported carbon performance data
to the Carbon Reduction Commitment
(“CRC”) Energy Efficiency Scheme by July
2014.

Continue the energy efficient LED re-
lamping programme for store lighting in the
year to 31 March 2015.

Increase investment in solar PV remote
monitoring and retrofit investment to
optimise electricity generation.

Reduce carbon emissions by 10% and
taxation by a proportional amount.

Reduce absolute lighting kWh use and tCO2e
emissions by 12% over the next three years.

Increase solar electricity generation as a
percentage of the whole store portfolio to 5%
and to > 10% for the solar stores, over the
next three years. Increase Feed in Tariff
revenues by 10% over the next year.

Store Water Use

Acquire more complete and accurate water
volume data from our suppliers.

Reduce our supply chain water use and water
treatment emissions by 1%.

More details of CSR policies, previous reports and awards can be found on our investor relations web site at
bigyellow.hsprod.investis.com/csr.

Strategic Report (continued)

Corporate Social Responsibility Report (continued)

Assurance statement
Independent assurance statement by Deloitte LLP (‘Deloitte’) to Big Yellow Group PLC (‘Big Yellow’) on their Corporate
Social Responsibility Report 2014 (“Report”)

What we looked at: scope of our work
Big Yellow engaged us to perform limited assurance procedures on selected corporate social responsibility (CSR) performance
indicators for the year ended 31 March 2014. The assured data are indicated by the + symbol in the Report.

Carbon footprint indicators:
> Store electricity (tCO2e)
> Store flexi-office gas emissions (tCO2e)
> Refrigerant emissions (tCO2e)
> Absolute carbon dioxide emissions (tCO2e)
Store electricity use, CO2 emissions and carbon intensity:
> Electricity use (kWh)
> Absolute carbon emissions (tCO2e)
> Carbon intensity (kgCO2e/m2 gross internal area)
> Carbon intensity (kgCO2e/m2 occupied space)
> Carbon intensity (kgCO2e/£ revenue)
Renewable energy generation and CO2 emissions reductions:
> Total renewable energy (kWh)
> Carbon dioxide saved by renewable energy (tCO2e)
> Renewable energy percentage of total store use (%)

Staff health and safety:
> Average number of employees
> Minor Injuries
> Reportable injuries (RIDDOR)
> Annual Injury Incidence rate (AIIR) per 100,000 staff
> Notices

What we found: our assurance opinion
Based on the assurance work we performed, nothing has come to our attention that causes us to believe that the selected CSR
performance indicators, as noted above, are materially misstated.

What standards we used: basis of our work and level of assurance
We carried out limited assurance in accordance with the International Standards on Assurance Engagements 3000 (ISAE 3000). To
achieve limited assurance ISAE 3000 requires that we review the processes and systems used to compile the areas on which we
provide assurance. It does not include detailed testing of source data or the operating effectiveness of processes and internal
controls. This is designed to give a similar level of assurance to that obtained in the review of interim financial information.

The evaluation criteria used for our assurance are the Big Yellow definitions and basis of reporting as described at:
corporate.bigyellow.co.uk/csr.aspx

What we did: our key assurance procedures
Considering the risk of material error, our multi-disciplinary team of CSR assurance specialists planned and performed our work to
obtain all the information and explanations we considered necessary to provide sufficient evidence to support our assurance
conclusion. Our work was planned to mirror Big Yellow’s own group level compilation processes, tracing how data for each indicator
within our assurance scope was collected, collated and validated by corporate head office and included in the Report.

Key procedures we carried out included:

> gaining an understanding of Big Yellow’s systems through interview with management responsible for CSR management and

reporting systems at corporate head office;

> reviewing the systems and procedures to capture, collate, validate and process data for the assured performance data included

in the Report. We did not test back to source data; and

> reviewing the content of the 2014 CSR Report against the findings of our work and making recommendations for improvement

where necessary.

Big Yellow’s responsibilities
The Directors are responsible for the preparation of the Report and for the information and statements contained within it. They are
responsible for determining the CSR goals, performance and for establishing and maintaining appropriate performance
management and internal control systems from which the reported information is derived.

Deloitte’s responsibilities, independence and team competencies
Our responsibility is to independently express a conclusion on the performance data for the year ended 31 March 2014. We
performed the engagement in accordance with Deloitte’s independence policies, which cover all of the requirements of the
International Federation of Accountants Code of Ethics and in some cases are more restrictive. We confirm to Big Yellow that we have
maintained our independence and objectivity throughout the year, including the fact that there were no events or prohibited
services provided which could impair that independence and objectivity in the provision of this engagement.

This report is made solely to Big Yellow in accordance with our engagement letter. Our work has been undertaken so that we might
state to the company those matters we are required to state to them in an assurance report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than Big Yellow for our work, for this report, or
for the conclusions we have formed.

Deloitte LLP
London, United Kingdom
19 May 2014

Governance

Directors, Officers and Advisors

Executive Directors
Nicholas Vetch, aged 53, Executive Chairman, is a co-founder of Big Yellow in September 1998. Prior to that, he was joint Chief Executive of Edge Properties plc,
which he co-founded in 1989 which was subsequently listed on the Official List of the London Stock Exchange in 1996 and then taken over by Grantchester
Properties plc in 1998. He is also a Non-Executive Director of Blue Self Storage S.L, a self storage operation in Spain, and a Non-Executive Director of Local
Shopping REIT plc.

James Gibson, aged 53, Chief Executive Officer, is a co-founder of Big Yellow in September 1998. He is a Chartered Accountant having trained with Arthur
Andersen & Co. where he specialised in the property and construction sectors, before leaving in 1989. He was Finance Director of Heron Property Corporation
Limited and then Edge Properties plc which he joined in 1994. Edge Properties was listed on the Official List of the London Stock Exchange in 1996 and then
taken over by Grantchester Properties plc in 1998. He is also a Non-Executive Director and shareholder of AnyJunk Limited, and a member of the
Development Board of the London Children’s Ballet.

Adrian Lee, aged 48, Operations Director, was previously a senior Executive at Edge Properties plc, which he joined in 1996. Prior to that he was a corporate
financier at Lazard for five years, having previously qualified as a surveyor at Knight Frank. He was appointed to the Board in May 2000.

John Trotman, aged 36, Chief Financial Officer, is a Chartered Accountant having trained with Deloitte LLP, where he specialised in the real estate sector and
self storage. On leaving Deloitte in 2005, John worked for a subsidiary of the Kajima Corporation. He joined Big Yellow in June 2007, and was appointed to the
Board in September 2007.

Non-Executive Directors
Tim Clark, aged 63, Non-Executive Director. He was a partner in Slaughter and May, one of the leading international law firms in the world, for 25 years;
initially working as a corporate and M&A adviser to a range of companies and institutions and then for the last seven years as senior partner (before retiring
in April 2008). He is the Chair of Water Aid UK, and a Senior Adviser to G3, and to Chatham House. He is also a member of the International Chamber of
Commerce UK Governing Body, the Advisory Board of Uria Menendez, the Board of the Royal National Theatre and the Development Committee of the National
Gallery. He is Chairman of the trustees of the Economist Trust and a member of the Audit Committee of the Wellcome Trust. He was appointed to the Board
in August 2008.

Richard Cotton, aged 58, Non-Executive Director, headed the real estate corporate finance team at JP Morgan Cazenove until April 2009. Richard is currently
a Managing Director of Forum Partners and a Non-Executive Director of Hansteen Holdings plc. Richard joined the Board in July 2012.

Georgina Harvey, aged 49, Non-Executive Director, started her media career at Express Newspapers plc where she was appointed Advertising Director in
1994. She joined IPC Media Ltd in 1995 and went on to form IPC Advertising in 1998, where she was Managing Director. She was a member of the Board of
IPC Media from 2000 and was Managing Director of the Regionals division of Trinity Mirror from 2005 to 2012, overseeing its transition to a digital platform.
She is currently a Non-Executive Director of William Hill plc and McColl's Retail Group plc. She joined the Board in July 2013.

Steve Johnson, aged 50, Non-Executive Director, started his career at Bain in the 1980s before joining Asda in 1993, where he carried out a number of roles,
culminating in Marketing Director. He left Asda in 2000, to join GUS as a Sales & Marketing Director, departing in 2002 to take up his first CEO role at Focus DIY,
where he remained until 2007. He joined Woolworths as part of the final turnaround team in late 2008. He has most recently been working as an operating
executive for Texas Pacific Group, and was also the Executive Chairman of Dreams plc between July 2011 and October 2012. He joined the Board in
September 2010.

Mark Richardson, aged 57, Non-Executive Director, retired from Deloitte in 2008 after a career there of 29 years, the last 19 as an audit partner specialising
in clients in the Real Estate and Construction sectors. Mark is a co-opted member of the Audit and Risk Committee of the Natural History Museum, a Trustee
of the Natural History Museum Development Trust, and he is also a trustee and treasurer of the children’s communication charity ICAN. He was appointed to
the Board in July 2008 and is chairman of the Audit Committee.

Secretary and Registered office
Shauna Beavis
2 The Deans
Bridge Road
Bagshot
Surrey
GU19 5AT

Company Registration No. 03625199

Bankers
Lloyds TSB Bank plc
Aviva Commercial Finance Limited
Santander UK plc
HSBC Bank plc
The Royal Bank of Scotland plc

Solicitors
CMS Cameron McKenna LLP
Lester Aldridge LLP

Financial advisors and stockbrokers
J P Morgan Cazenove

Independent Auditor
Deloitte LLP
Chartered Accountant and Statutory Auditors

Valuers
Cushman & Wakefield LLP

Directors’ Report

The Directors present their annual report on the affairs of the Group, together with the audited financial statements and auditor’s report for the year ended
31 March 2014. The Report on Corporate Governance on pages 50 to 53 forms part of this report.

Details of significant events since the balance sheet date are included in note 25 to the financial statements. An indication of likely future developments in
the business of the Company is included in the strategic report.

Information about the use of financial instruments by the Company and its subsidiaries is given in note 18 to the financial statements.

Dividends
The Directors are recommending the payment of a final dividend of 8.4 pence per share for the year (2013: 6 pence per ordinary share). An interim dividend
of 8 pence per share was paid in the year (2013: 4.5 pence per share).

A property income dividend of 13 pence is payable for the year, of which 8 pence per share was paid with the interim dividend, and 5 pence per share was
proposed for the final dividend.

Subject to approval by shareholders at the Annual General Meeting to be held on 16 July 2014, the final dividend will be paid on 24 July 2014. The Ex-div date
is 11 June 2014 and the Record date is 13 June 2014.

Disclosure of Greenhouse Gas (“GHG”) Emissions
Companies Act 2006; Climate Change, the GHG Emissions Director’s Reports Regulations 2013
From October 2013, all listed companies are required to report annual quantities of GHG emissions (measured as Carbon Dioxide Equivalent (CO2e)) as
follows:

> Scope 1 – significant direct emission sources, such as our flexi-office gas heating and air conditioner coolant replacement – currently fit out ‘gas oil’

use emissions and one Company van diesel fuel use emissions are assessed as ‘not material’*;
> Scope 2 – significant indirect or off-site power station electricity supply emissions to our stores; and
> Scope 3 – Electricity supplier ‘transmission and distribution’ emissions – currently, voluntary GHG emissions, from our waste and water supply chains

are not assessed as material.

Summary of Scope 1 and 2 Total Carbon Footprint (GHG carbon equivalent emissions (tCO2e))
Including store electricity, gas, coolant, generator gas oil and van diesel

2011**

2012

2013

2014

Total Scope 1 and 2 GHG Emissions (tCO2e)
Scope 3 Electricity Supplier Losses
Scope 1, 2 and 3 GHG Emissions Total
Kg CO2e/Annual Revenue (£)
Kg CO2e/Customer Occupancy (m2)

6,879.5
544
7,424
0.11
32.0

6,283.6
525
6,809
0.10
26.0

6,470.0
501
6,971
0.09
26.5

5,681.8
445
6,127
0.08
22.0

*
**

Our materiality threshold for carbon emissions is > 1%
Reductions of GHG emissions following the Peak Energy Use/Baseline year (2011) have been restated using the more accurate DEFRA/DECC conversion factors, revised from 5
year, to 1 year, rolling averages.

Further information on GHG emissions and on other sustainability initiatives at Big Yellow is provided in our Corporate Social Responsibility Report.

Capital structure
Details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital during the year are shown
in note 22. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings
of the Company.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of
Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in
restrictions on the transfer of securities or on voting rights.

Details of employee share schemes are set out in note 23, and details of shares held in treasury and by the Company’s Employee Benefit Trust are set out
in note 22.

No person has any special rights of control over the Company's share capital and all issued shares are fully paid.

With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Corporate Governance Code, the
Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of Directors are
described in the Report on Corporate Governance on page 50.

There are a number of agreements that take effect, alter or terminate upon a change of control of the Company such as commercial contracts, bank loan
agreements, property lease arrangements and employees' share plans. Furthermore, the Directors are not aware of any agreements between the Company
and its Directors or employees that provide for compensation for loss of office or employment that occurs because of a takeover bid.

During the year the Company issued 421,500 shares to satisfy the exercise of share options (2013: 369,935).

Directors’ Report (continued)

Directors
The Directors of the Company who served throughout the year and to the date of approval, except as noted of the financial statements were as follows:

Philip Burks, Non-Executive Director (resigned 19 July 2013)
Tim Clark, Senior Independent Director
Richard Cotton, Non-Executive Director
James Gibson, Chief Executive Officer
Georgina Harvey, Non-Executive Director (appointed 1 July 2013)
Steve Johnson, Non-Executive Director
Adrian Lee, Operations Director
Mark Richardson, Non-Executive Director
John Trotman, Chief Financial Officer
Nicholas Vetch, Executive Chairman

Biographical details of the Executive and Non-Executive Directors standing for re-election are set out on page 46

Directors’ indemnities
The Company purchases liability insurance covering the Directors and officers of the Company and its subsidiaries.

Political contributions
No political donations were made by the Company in either the current or preceding financial year.

Substantial shareholdings
The Company had been notified, in accordance with Chapter 5 of the Disclosure and Transparency rules, of the following voting rights as a shareholder of the
Company at 31 March 2014 and 19 May 2014.

Blackrock inc
Cohen & Steers Inc
Nicholas Vetch
Old Mutual PLC
Standard Life Investments Limited
State Street Global Advisors Limited
PGGM Investments

interest below notifiable level

No. of
ordinary shares
31 March 2014

15,597,512
11,139,992
9,166,219
8,789,612
4,755,696
*
*

Percentage of
voting rights
and issued
share capital
31 March 2014

No. of
ordinary shares
19 May 2014

11.01% 15,630,434
7.87% 12,446,270
9,166,219
6.47%
8,448,344
6.21%
6,068,064
3.36%
4,637,535
*
4,371,121
*

Percentage of
voting rights
and issued
share capital
19 May 2014

11.04%
8.78%
6.47%
5.96%
4.28%
3.27%
3.08%

Purchase of own shares
The Company was granted authority at the AGM in 2013 to purchase its own shares up to a total aggregate value of 10% of the issued nominal capital. That
authority expires at this year’s AGM and a resolution will be proposed for its renewal. During the year the Company made no purchases of its own shares.

Employee consultation
The Group seeks to ensure employee commitment to its objectives in a number of ways. Strategic changes are communicated directly to all staff who
are encouraged to address queries to the Executive Directors. The Directors’ executive meetings are frequently held in stores and in addition Directors
and senior management visit the stores on a regular basis. Furthermore, there are regular team briefings at store level to provide employees with
information about the performance of and initiatives in their store. A wide range of information is also communicated across the Group’s Intranet,
including the e-publication of the Group’s financial results and all press releases, the publication of a quarterly newsletter, and the publication of a weekly
operations bulletin.

Employees are encouraged to participate in the Group’s performance through Employee Share Schemes and performance related bonuses. 34% of eligible
employees participate in the Group’s Sharesave Scheme.

The Group’s recruitment policy is committed to promote equality, judging neither by race, nationality, religion, age, gender, disability, sexual orientation,
nor political opinion and to treat all stakeholders fairly.

Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of
members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is
arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that
of other employees.

Human Rights
Big Yellow respects Human Rights and aims to provide assurance to internal and external stakeholders that we are committed to human rights and the
principles of the Universal Declaration of Human Rights.

We are committed to creating and maintaining a positive and professional work environment that reflects and respects the basic rights of freedom to lead a
dignified life, free from fear or want, and where stakeholders are free to express their independent beliefs. Our employment policies and practices reflect a
culture where decisions are made solely on the basis of individual capability and potential in relation to the needs of the business.

Auditor
In respect of each Director of the Company, at the date when this report was approved, to the best of their knowledge and belief:

> so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
> each Director has taken all the steps that he might have reasonably been expected to take as a Director in order to make himself aware of any relevant

audit information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with s418 of the Companies Act 2006.

The auditor, Deloitte LLP has expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the
forthcoming Annual General Meeting.

Approved by the Board of Directors and signed on behalf of the Board

Shauna Beavis
Secretary
19 May 2014

Corporate Governance Report

INTRODUCTION
The Company is committed to the principles of corporate governance contained in the UK Corporate Governance Code that was issued in 2010 by the
Financial Reporting Council (‘the Code’) for which the Board is accountable to shareholders. The Board also takes account of the corporate governance
guidelines of institutional shareholders and their representative bodies.

At Big Yellow, we aim to create a culture in which integrity, openness and fairness are rewarded.

We continue to review the composition of the Board to ensure that it has the appropriate skills, knowledge and balance for the effective stewardship of the
Company.

In the year, Georgina Harvey joined the Board as a Non-Executive Director. Her skill set complements the existing Non-Executive Directors’ experience. Philip
Burks retired as a Non-Executive Director after 15 years with the Company, the first eight as an Executive Director.

The Board has overall responsibility for the manner in which your Company runs its affairs. The Board has sought an external evaluation of its own
effectiveness. In the year, Lomond Consulting carried out a comprehensive review of the Board’s performance. Their findings are summarised on page 54.

Statement of compliance with the Code
Throughout the year ended 31 March 2014, the Company has been in compliance with the Code provisions set out in section 1 of the 2010 UK Corporate
Governance Code.

Statement about applying the principles of the Code
The Company has applied the principles set out in the Code, including both the main principles and the supporting principles, by complying with the Code as
reported above. Further explanation of how the principles and supporting principles have been applied is set out below and in the Nominations Committee
Report, the Remuneration Report and the Audit Committee Report.

LEADERSHIP
The Board’s role is to provide entrepreneurial leadership of the Company within a framework of prudent and effective controls which enables risk to be
assessed and managed.

Chairman and Chief Executive
The division of responsibilities between the Chairman and the Chief Executive has been agreed by the Board and encompasses the following parameters:

> the Chairman’s role is to provide continuity, experience, governance and strategic advice, while the Chief Executive provides leadership, drives the day-

to-day operations of the business, and works with the Chairman on overall strategy;

> the Chairman, working with the Senior Independent Non-Executive Director, is viewed by investors as the ultimate steward of the business and the

guardian of the interests of all the shareholders;

> the Board believes that the Chairman and the Chief Executive work together to provide effective and complementary stewardship;
> the Chairman:

> takes overall responsibility for the composition and capability of the Board; and
> consults regularly with the Chief Executive and is available on a flexible basis for providing advice, counsel and support to the Chief Executive.

> the Chief Executive:

> manages the Executive Directors and the Group’s day-to-day activities;
> prepares and presents to the Board strategic options for growth in shareholder value;
> sets the operating plans and budgets required to deliver agreed strategy; and
> ensures that the Group has in place appropriate risk management and control mechanisms.

The Directors believe it is essential for the Group to be led and controlled by an effective Board that provides entrepreneurial leadership within a framework
of sound controls which enables risk to be assessed and managed. The Board is responsible for setting the Group’s strategic aims, its values and standards
and ensuring the necessary financial and human resources are in place to achieve its goals. The Board ensures that its obligations to shareholders and
other stakeholders are understood and met. The Board also regularly reviews the performance of management.

EFFECTIVENESS
Composition of the Board
The Nominations Committee is responsible for reviewing the Board Composition, and makes recommendations to the Board on the appointment of
Directors. There are five independent Non-Executive Directors on the Board, with Tim Clark being the Senior Independent Director. The Company complies
with the Combined Code in that at least half of The Board is comprised of independent Non-Executive Directors.

All of the Non-Executive Directors bring considerable knowledge, judgement and experience to Board deliberations. Non-Executive Directors do not
participate in any of the Company’s share option or bonus schemes and their service is non-pensionable. The Non-Executive Directors are encouraged to
communicate directly with Executive Directors between formal Board meetings. The Non-Executive Directors meet at least once a year without the
Executive Directors being present.

The Non-Executive Directors scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.
They are required to satisfy themselves on the integrity of the financial information and that financial controls and systems of risk management are robust
and defensible. They are responsible for determining appropriate levels of remuneration for Executive Directors and have a prime role in appointing and,
where necessary, removing Executive Directors, and in succession planning.

The tenure of independent Non-Executive Directors at 31 March 2014 is set out below:

Georgina Harvey

0.7

Richard Cotton

Steve Johnson

Tim Clark

Mark Richardson

1.7

3.6

5.7

5.8

3
years

THE BOARD AND ITS COMMITTEES
Standing committees of the Board
The Board has Audit, Remuneration and Nominations Committees, each of which has written terms of reference. They deal clearly with the authorities and
duties of each Committee and are formally reviewed annually. Copies of these terms of reference are available on the Company’s website. Each of these
Committees is comprised of Independent Non-Executive Directors of the Company who are appointed by the Board on the recommendation of the
Nominations Committee.

All of the Committees are authorised to obtain legal or other professional advice as necessary; to secure, where appropriate, the attendance of external
advisers at its meetings and to seek information required from any employee of the Company in order to perform its duties.

The Chairman of each Committee reports the outcome of the meetings to the Board. The Company Secretary is secretary to each Committee.

Attendance at meetings of the individual Directors at the Board Meetings that they were eligible to attend is shown in the table below:

Director

Philip Burks
Tim Clark
Richard Cotton
James Gibson
Georgina Harvey
Steve Johnson
Adrian Lee
Mark Richardson
John Trotman
Nicholas Vetch

Position

Number of meetings attended

Non-Executive Director (to 19 July 2013)
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Non-Executive Director (from 1 July 2013)
Non-Executive Director
Operations Director
Non-Executive Director
Chief Financial Officer
Executive Chairman

attended
absent. Nicholas Vetch and Adrian Lee missed one meeting each due to unavoidable diary conflicts.

The Board meets approximately once every two months to discuss a whole range of significant matters including strategic decisions, major asset
acquisitions and performance. A procedure to enable Directors to take independent professional advice if required has been agreed by the Board and
formally confirmed by all Directors.

There is a formal schedule of matters reserved for the Board’s attention including the approval of Group strategy and policies; major acquisitions and
disposals, major capital projects and financing, Group budgets and material contracts entered into other than in the normal course of business. The Board
also considers matters of non-financial risk as part of its review of the Group’s risk register.

At each Board meeting, the latest available financial information is produced which consists of detailed management accounts with the relevant
comparisons to budget. A current trading appraisal is given by the Executive Directors.

Information and professional development
All Directors are provided with detailed financial information throughout the year. On a weekly basis they receive a detailed occupancy report showing the
performance of each of the Group’s open stores. Management accounts are circulated to the Executive monthly and a detailed Board pack is distributed a
week prior to each Board meeting.

All Directors are kept informed of changes in relevant legislation and changing commercial risks with the assistance of the Company’s legal advisers and
auditors where appropriate. The professional development requirements of Executive Directors are identified and progressed as part of each individual’s
annual appraisal. All new Directors are provided with a full induction programme on joining the Board.

Non-Executive Directors are encouraged to attend seminars and undertake external training at the Company’s expense in areas they consider to be
appropriate for their own professional development. Each year, the programme of senior management meetings is tailored to enable meetings to be held at
the Company’s properties. During the year, the senior management team made visits to all of the Group’s open stores.

Corporate Governance Report (continued)

Evaluation
The Board conducts an annual review of its performance and of its Committees to ensure they are operating effectively. During the year an external
evaluation of the Board was carried out. This is discussed further in the Nominations Committee Report.

ACCOUNTABILITY
Risk management and internal control
The Group operates a rigorous system of risk management and internal control, which is designed to ensure that the possibility of misstatement or loss is
kept to a minimum. There is a comprehensive system in place for financial reporting and the Board receives a number of reports to enable it to carry out
these functions in the most efficient manner. These procedures include the preparation of management accounts, forecast variance analysis and other
ad hoc reports. There are clearly defined authority limits throughout the Group, including those matters which are reserved specifically for the Board.

The Board has applied principle C.2 of the UK Corporate Governance Code by establishing a continuous process for identifying, evaluating and managing the
significant risks the Group faces and for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives.
The Board regularly reviews the process, which has been in place from the start of the year to the date of approval of this report and which is in accordance
with revised guidance on internal control published in October 2005 (the Turnbull Guidance). The Board is also responsible for the Group's system of
internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

In compliance with provision C.2.1 of the Code, the Board regularly reviews the effectiveness of the Group's risk management and internal control systems.
The Board's monitoring covers all controls, including financial, operational and compliance controls and risk management. It is based principally on
reviewing reports from management to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant
weaknesses are promptly remedied and indicate a need for more extensive monitoring. The Board has also performed a specific assessment for the purpose
of this annual report. This assessment considers all significant aspects of risk management and internal control arising during the period covered by the
report, including the work carried out by the Group’s Store Compliance team. The Audit Committee assists the Board in discharging its review responsibilities.

A formal risk identification and assessment exercise has been carried out resulting in a risk framework document summarising the key risks, potential
impact and the mitigating factors or controls in place. The Board have a stated policy of reviewing this risk framework at least once a year or in the event
of a material change. The risk identification process also considered significant non-financial risks.

During the reviews, the Directors:

> challenged the framework to ensure that the list of significant risks to business objectives is still valid and complete;
> considered new and emerging risks to business objectives and included them in the framework if significant;
> ensured that any changes in the impact or likelihood of the risks are reflected in the risk framework; and
> ensured that there are appropriate action plans in place to address unacceptable risks.

The results of the exercise have been communicated to the Board and the Audit Committee. This was in the form of a summary report which included:

> a prioritised summary of the key risks and their significance;
> any changes in the list of significant risks or their impact and likelihood since the last assessment;
> new or emerging risks that may become significant objectives in the future;
> progress on action plans to address significant risks; and
> any actual or potential control failures or weaknesses during the period (including “near misses”).

During the course of its review of the risk management and internal control systems, the Board has not identified, nor been advised of any failings or
weaknesses which it has determined to be significant, consistent with the prior year. Therefore, a confirmation in respect of necessary actions has not been
considered appropriate.

GOING CONCERN
The Group’s activities, and a fair review of the business, are included in the Strategic Report on pages 14 to 34. The financial position of the Group, including
its cash flow, liquidity, and committed debt facilities are discussed in the Financial Review on pages 28 to 32.

The Directors have a reasonable expectation that the Group and Company have adequate resources to continue operations for the foreseeable future.
They have therefore continued to adopt the going concern basis in preparing the financial statements.

REMUNERATION
The information on remuneration is included in the Remuneration Reports on pages 56 to 75.

AUDIT COMMITTEE AND AUDITORS
A separate Audit Committee Report is set on page 76 and provides details of the role and activities of the Committee and its relationship with the external auditors.

SHAREHOLDER RELATIONS
The Board aims to achieve clear reporting of financial performance to all shareholders and acknowledges the importance of an open dialogue by both
Executive and Non-Executive Directors with its institutional shareholders. The Board believes that the Annual Report and Accounts play an important part
in presenting all shareholders with an assessment of the Group’s position and prospects.

The Company has an active dialogue with its shareholders through a programme of investor meetings which include formal presentation of the full
and half year results. The Executive Directors have participated in investor conferences and meetings during the year, throughout the United Kingdom,
and also in the United States and the Netherlands. During the year ended 31 March 2014, the Chief Executive and other Executive Directors carried out
138 meetings with UK and overseas institutional shareholders and potential investors. These meetings comprised group and individual presentations
and tours of our stores.

The Board also welcomes the interest of private investors and believes that, in addition to the Annual Report and the Company’s website, the Annual General
Meeting is an ideal forum at which to communicate with investors and the Board encourages their participation. At each Board Meeting, the Board is
updated on any shareholding meetings that have taken place, and any views expressed or issues raised by the shareholders in these meetings.

Any queries raised by a shareholder, either verbally or in writing, are answered immediately by whoever is best placed on the Board to do so. Directors are
introduced to shareholders at the AGM, including the identification of Non-Executive Directors and Committee Chairmen. The number of proxy votes cast in
the resolution is announced at the AGM.

SHARE CAPITAL
Detail on the share capital structure is provided in the Directors’ Report on page 47.

Report of the Nominations Committee

Introduction
The Committee is responsible for reviewing the Composition of the Board. It also makes recommendations for membership of the Board and considering
succession planning for Directors. The Committee is also responsible for evaluating Board and Committee performance.

Committee members and attendance

Member

Tim Clark
Richard Cotton
Georgina Harvey
Steve Johnson
Mark Richardson

attended
absent

Position

Number of meetings attended

Chairman and Senior Independent Director
Member
Member (from 1 July 2013)
Member
Member

The Nominations Committee is responsible for regularly reviewing the structure, size and composition of the Board and giving consideration to succession
planning for Directors and other senior Executives. Where changes are required, it is also responsible for the identification, selection and proposal to the
Board for approval of persons suitable for appointment or reappointment to the Board, whether as Executive or Non-Executive Directors and to seek
approval from the Remuneration Committee to the remuneration and terms and conditions of service of any proposed Executive Director appointment.
The Chairman of the Committee presents reports to the Board as appropriate to enable the Board as a whole to agree the appointments of new Directors.
The Committee meets at least once a year and otherwise as required and as determined by its members.

The terms and conditions of appointment for the Non-Executive Directors is available for inspection at the Company’s Head Office during normal working
hours. They are also available for inspection at the Company’s AGM.

Georgina Harvey’s appointment to the Board was approved by the Nominations Committee in the prior year, albeit her appointment commenced
in July 2013.

Board performance evaluation
The Board engaged Lomond Consulting to undertake an evaluation of the performance of the Board and its Committees. The aim was to seek to identify
areas where the performance and the procedures of the Board may be improved. The scope of the review was agreed between the Chairman of the
Committee and the Chief Executive.

Each Director completed a questionnaire on the performance of the Board, its Committees and the Chairman. The responses were anonymous to enable
an open and honest sharing of views. Lomond Consulting then produced a reporting showing the results of the review.

The key topic discussed as part of the review was succession planning, which is further discussed in the section below, albeit the Committee considered
no further action was necessary.

Succession planning
The Board comprises a team of four Executive Directors, two of whom were co-founders of the Company, complemented by Non-Executive Directors who
have wide business experience and skills as well as a detailed understanding of the Group’s philosophy and strategy. Continuity of experience and
knowledge, particularly of self storage, within the executive team is particularly important in a focused long term business such as Big Yellow.

It is a key responsibility of the Committee to advise the Board on succession planning. The Committee ensures that any future changes in the Board’s
composition are foreseen and effectively managed. In the event of unforeseen changes, the Committee ensures that management and oversight of the
Group’s business and long term strategy will not be affected.

The Committee also addresses the development and continuity of the Senior Management team below Board level.

Report of the Nominations Committee (continued)

Policy on diversity
All aspects of diversity, including gender are considered at every level of recruitment. All appointments to the Board are made on merit. The Board’s policy
states that the Board seeks a composition with the right balance of skills and diversity to meet the demands of the business. The Board does not consider
that quotas are appropriate for its representation and has therefore chosen not to set targets. Gender diversity of the Board and Company is set out below:

100%

11%

90%

80%

70%

60%

50%

40%

30%

20%

10%

45%

89%

55%

Female

Male

Board

Senior
Management

All
employees

Directors standing for re-election
All of the Directors will retire in accordance with the UK Corporate Governance Code and will offer themselves for re-election at the Annual General Meeting.

Following a performance appraisal process, the Board has concluded that the Directors retiring by rotation are effective, committed to their roles and
operate as effective members of the Board.

The Board, on the advice of the Committee, therefore recommends the re-election of each Director standing for re-election. Full biographical details of each
Director are available on page 46.

Tim Clark
Nominations Committee Chairman

Remuneration Report
For the year ended 31 March 2014

INTRODUCTION
This report is on the activities of the Remuneration Committee for the period from 1 April 2013 to 31 March 2014. It sets out the remuneration policy and
remuneration details for the Executive and Non-Executive Directors of the Company. It has been prepared in accordance with Schedule 8 of the Large and
Medium-size Companies and Groups (Accounts and Report) Regulations 2008 (the “Regulations”) as amended in August 2013. This is the first time the
Group has prepared the report in accordance with the amended Regulations.

The report is split into three main areas:

> the annual statement by the Remuneration Committee Chairman;
> the report on Directors’ remuneration policy; and
> the annual report on Directors’ remuneration.

The Companies Act 2006 requires the auditor to report to the shareholders on certain parts of the Remuneration Report and to state whether, in their
opinion, those parts of the report have been properly prepared in accordance with the Regulations. The parts of the annual report on Directors’ remuneration
that are subject to audit are indicated in the report. The annual statement by the Remuneration Committee Chairman and the Directors’ remuneration policy
report are not subject to audit.

ANNUAL STATEMENT BY THE REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholder,

I am very pleased to present the Directors’ Remuneration Report for the year ended 31 March 2014. This report – the first one in the form required
by the remuneration reporting regulations introduced last year – has been prepared by the Remuneration Committee and approved by the Board.

Structure of the report
In accordance with these regulations, the report is divided into three sections:

> this letter;
> the Remuneration Policy Report – which sets out the Committee’s policy and framework for the remuneration of the Executive Directors. This

section will be proposed for approval by a binding vote of shareholders at the AGM in July 2014; and

> the Annual Remuneration Report – which sets out how the Group has remunerated the Directors during the year. This section will be proposed

for an advisory vote by shareholders at the 2014 AGM.

Business conditions and Group performance in the year ended 31 March 2014
The business conditions and performance of the Group in the year ended 31 March 2014 are described more fully in the Chairman's Statement on
page 12 of this Annual Report. In summary:

> the business of the Group performed strongly;
> in an improving economic environment, Big Yellow remained the clear UK brand leader in self storage and delivered occupancy, cash flow and

earnings growth for the fifth year in a row;

> revenue, cash flow and adjusted profit before tax increased by 4%, 9% and 15% respectively;
> net rent per sq ft increased by 6%;
> gearing was reduced to 36% of adjusted net assets; and
> dividends are being increased by 49%.

Policy on executive remuneration
As in the previous financial year, the policy of the Company is to ensure that the executive remuneration packages are designed to attract, motivate
and retain Directors of high calibre and reward the Executive Directors for protecting and enhancing value for shareholders.

As a result, a substantial element of the remuneration of the Executive Directors – up to 80% of their potential total remuneration for the next
financial year – is structured to be dependent on the performance of the Company.

The Company aims to provide remuneration to the Directors which is fair to the Directors both generally and in the context of the remuneration of
other staff of the Company and the returns to shareholders. Remuneration consists of a balance of short and long term incentives which provide a
strong link between reward and individual and Group performance to align the interests of the Executive Directors with the interests of shareholders.

The Remuneration Committee is also concerned to ensure that the Executive Directors have significant interests in the shares of the Company.
Each Executive Director has an interest in shares with a value in excess of his base salary and, together, and including share incentives, the
Executive Directors are interested in shares comprising approximately 10.5% of the share capital of the Company.

ANNUAL STATEMENT BY THE REMUNERATION COMMITTEE CHAIRMAN (continued)
In the view of the Remuneration Committee, the success of the remuneration policy has been reflected in the length of service and stability of the
Executive Director team and the progress of the Company over a number of years, including the recent years of significant economic slowdown. Two of
the Executive Directors were founders of the Company while the other two have been Executive Directors for 15 years and seven years respectively.

Looking ahead, the Remuneration Committee is concerned that the total remuneration of the Executive Directors remains within range of, but
slightly below the median for comparable companies and FTSE 250 companies. In the light of this, and the expiry of the Long Term Bonus
Performance Plan in 2015, the Remuneration Committee plans to review executive remuneration during the year ending 31 March 2015. While this
may lead to changes in the component elements of executive remuneration, it is unlikely to result in any significant changes in policy. Having said
that, any changes in policy which are proposed, will only take effect if they are approved by shareholders at the AGM in July 2015.

Finally, we will seek approval from our shareholders at the 2014 AGM approval for the renewal of the Long Term Incentive Plan (“LTIP”) and the
Sharesave Scheme which both expire in 2014.

The LTIP and the Sharesave Scheme have been operated by the Company since they were approved by shareholders at the 2004 AGM. The Sharesave
Scheme is an all-employee share plan under HMRC provisions, the terms of the 2014 Sharesave Scheme are unchanged from the 2004 Plan other
than minor drafting updates, and shareholders are being asked to approve a further ten year period for the operation of the Sharesave Scheme.

The LTIP is used to make awards to senior management. The full terms of the proposed 2014 LTIP are included in the Notice of Annual General
Meeting. Although the main terms are unchanged other than drafting updates, we have taken the opportunity to bring some features more in line
with current best practice. In particular, the 2014 LTIP includes clawback provisions which may require award holders to forfeit unvested options if
it should transpire that, for example, the Company’s results had been misstated for earlier years. It is also proposed that the individual limit within
the 2014 LTIP rules with respect to the maximum value of shares over which awards may be made in any financial year will be amended to 200% of
the individual’s base salary (the previous limit was 100% of base salary, other than in exceptional circumstances) to increase the Company’s
flexibility to incentivise senior management.

This change to the individual limit under the plan also provides the Committee with a framework to facilitate any changes to the executive
remuneration policy post the review of executive remuneration arrangements during the year ending 31 March 2015, as the current 100% limit is
now falling below common practice in listed companies. However, the Committee wishes to stress that any changes in Executive Directors’
remuneration policy, such as increasing the individual’s award limit under LTIP, will only take effect if they are approved by shareholders following
the proposed remuneration review.

The views of the Company’s shareholders are very important to the Remuneration Committee and the Board. The Committee is happy to receive
constructive feedback on the remuneration policy or structure of the Company and takes this feedback into account in considering the
remuneration arrangements of the Company.

Full details of the remuneration policy for the Directors of the Company are set out in the Directors Remuneration Policy section of the Directors’
Remuneration Report.

Remuneration changes during the year
During the year ended 31 March 2014, the aggregate remuneration of the Executive Directors (calculated on the basis of the remuneration
regulations introduced in 2013) increased from £1,091,000 to £1,751,000 – an increase of 60%. The increase is due to the partial vesting of the
2010 LTIP during the year which produced a gain to the Executive Directors of £623,000. The 2009 LTIP, tested in the prior year, lapsed. This
increase compares with significant increases in the year in adjusted profit before tax (15%), EPS (6%) and declared dividends (49%).

In the same period, the aggregate remuneration of the Non-Executive Directors increased from £182,000 to £190,000 – an increase of 4%. The
increase resulted from a review by the Board during the year which concluded that the previous fee structure required revision. The new structure
provides for a base fee of £36,000 for each non-Executive Director with an additional £2,500 for a Committee Chairman, the Senior Independent
Director and a Non-Executive Director who provides significant specialist advice.

Remuneration Report (continued)
For the year ended 31 March 2014

ANNUAL STATEMENT BY THE REMUNERATION COMMITTEE CHAIRMAN (continued)
Within the overall figure for Executive Director remuneration, the detailed changes were:

> Base salary: increased by £30,000 (3.3%) – of which the main change was an increase to the salary of one Director to reflect his

progress in the role

> Taxable benefits: reduced by £9,000 (37%) – the prior year figure included benefit-in-kind interest from the previous LTBP scheme.
> Annual bonus: remained at 10% of base salary (the average for all staff of the Company) and increased, as a result of the increase in base

salaries, by £3,000 (3.3%).

> Pension contributions: remained at 10% of base salary and increased, as a result of the increase in base salaries, by £3,000 (3.3%).
> Sharesave Scheme: one Director’s Sharesave scheme vested in the year, producing a gain of £10,000 (2013: nil)
> Long term incentives: following the application of the performance conditions (EPS growth compared to RPI and relative TSR), the 2010 award

of shares granted under the Long Term Incentive Plan vested as to 53% (representing a total gain of £623,000). As in the previous year, each
of the Executive Directors was granted an award equal to 100% of his base salary (or average salary) subject to performance conditions. The
value of these awards was £919,400 – an increase of £29,600 (3.3%) No awards under the Long Term Bonus Performance Plan were made in
the year (2013: £3,000,000). The Remuneration Committee reviewed the performance targets for the year and concluded that the awards
under the Plan granted in 2012 have provisionally vested as to 100% in respect of the year ended 31 March 2014. The final determination
of the vesting for the whole three year period of the 2012/13 awards will be determined against performance conditions in the period 2012
to 2015.

In considering the relative importance of the spend on pay (see page 73):

> Total employee pay: increased by 1% (and amounted to £11.1 million)
> Profit distributed by way of dividend: increased by 45% (and amounted to £19.6 million)
> Retained profit for the year: increased by 118% (and amounted to £40.0 million)

More details of the changes in the remuneration of the Directors in the year ended 31 March 2014 are set out in the Annual Report on Remuneration
section of the Remuneration Report.

Recommendation
The Remuneration Committee has carefully considered the policy on executive remuneration and the implementation of the approach underlying
that policy during the year ended 31 March 2014 and recommends this Remuneration Report to you.

I hope that, at the Annual General meeting in July, you will support both:

> the binding resolution on the remuneration policy set out in the Remuneration Policy Report section of this Remuneration Report; and
> the advisory resolution on the remuneration paid to the Directors in the last financial year set out in the Annual Remuneration Report section

of this Remuneration Report.

Tim Clark
Chairman of the Remuneration Committee

REPORT ON DIRECTORS’ REMUNERATION POLICY
This section of the Remuneration Report contains details of the Company’s Directors’ Remuneration Policy which will govern the Company’s approach to
remuneration.

The policy described is subject to approval by shareholders at the Company’s AGM on 16 July 2014, and if approved, will be applicable from that date for a
period of three years, unless shareholder approval is sought within that period to amend the policy.

It is the policy of the Company to ensure that the executive remuneration packages are designed to attract, motivate and retain Directors of a high calibre
and reward the executives for enhancing value to shareholders.

As a result, a substantial element of the remuneration of the Executive Directors is structured to be dependent on the performance of the Company. The
policy aims to support a performance culture where there is appropriate reward for the achievement of strong Company performance without creating
incentives which will encourage excessive risk-taking or unsustainable Company performance.

The Committee’s aim is to design a total package that rewards the Executive Directors to a median level that is appropriate for the size and nature of the
business, and its business strategy.

Policy table
The main components of the Directors’ Remuneration Policy, and how they are linked to and support the Company’s business strategy, are summarised below:

Performance conditions
and assessment

None

Executive Directors

Purpose and link to strategy

Operation

Maximum potential value

Base salary

To provide competitive
fixed remuneration that
will attract and retain
key employees and
reflect their experience
and position in the
Company.

Salaries are typically set after
considering the salary levels in
companies of a similar size and
complexity in the FTSE 250.

Our overall policy is normally to target
salaries at close to (but generally just
below) median levels.

Base salaries are intended to increase in
line with inflation and general employee
increases in salary.

Higher increases may apply if there is a
change in role, level of responsibility or
experience or if the individual is new to
the role.

There is no maximum salary cap in place.

Base salary is normally set annually on
1 April.

When considering any increases to base
salaries in the normal course (as
opposed to a change in role or
responsibility), the Committee will take
into consideration:

> level of skill, experience, scope of
responsibilities of individual and
individual performance;

> business performance, economic
climate and market conditions;
> reference to the increases provided

to Executive Directors in
comparable companies; and
> Pay and employment conditions of
employees throughout the Group,
including increases provided to
staff; and inflation.

Salaries for the Executive Directors for
the year ending 31 March 2015 are as
follows:

> Nicholas Vetch – £259,300
> James Gibson – £284,400
> Adrian Lee – £210,600
> John Trotman – £200,000

The salaries for Nicholas Vetch, James
Gibson and Adrian Lee have been
increased by 2% from the prior year.
John Trotman’s salary has been
increased by 11% from the prior year.

The Committee’s policy for John
Trotman is to bring his salary in line
with that of Adrian Lee over the short
to medium term.

Remuneration Report (continued)
For the year ended 31 March 2014

Executive Directors (continued)

Purpose and link to strategy

Operation

Annual bonus

The annual bonus
aligns reward to key
Group strategic
objectives and drives
short term
performance.

Cash payments.

Executive Directors participate in an
annual performance-related bonus
scheme.

Maximum potential value

Bonus potential:

Maximum: 25% of base salary.

Target: 10% of base salary

Threshold performance: 0% of base
salary.

Long Term
Incentive Plan

The Long Term Incentive
Plan aligns Executive
Director interests with
those of shareholders
and rewards value
creation.

Awards are made annually to the
Executive Directors (and certain senior
managers who are in a position to
influence significantly the performance
of the Group) in the form of nil-paid
options.

Maximum annual grant is 100% of base
salary.

Minimum vesting is 25% of salary
assuming achievement of threshold TSR
performance, and the maximum vesting
is 100% of salary.

The awards granted under the Long Term
Incentive Plan are subject to
performance conditions to be met over a
performance period of three years.

The performance conditions have been
chosen to align the LTIP with the
performance of the business.

Awards granted prior to the 2014 AGM
will vest in accordance with the
provisions of the LTIP rules, as approved
by shareholders.

Awards made under the 2014 LTIP
(subject to its approval by shareholders
at the 2014 AGM), will be subject to
clawback provisions as set out in the
Notice of the Annual General Meeting.

Performance conditions
and assessment

Assessed annually
and determined by
the Committee based
on corporate
performance against
the Group’s business
plan for each
financial year.

The bonuses are
directly linked to the
Group’s profit and
operating cash flow
performance in the
stores (see note 1).

Vesting under the
LTIP is based on
earnings per share
(“EPS”) growth
compared to inflation
and Relative Total
Shareholder Return
(‘TSR’) against the
FTSE Real Estate
Index.

The EPS hurdle
growth must be
satisfied before any
part of the LTIP award
can vest.

Vesting will be as
follows if the EPS
hurdle is met:

25% vesting for
median TSR
performance and
100% vesting for
upper quartile
performance.
Straight-line vesting
between these
points. (Note 2)

Executive Directors (continued)

Purpose and link to strategy

Operation

Maximum potential value

The maximum payment in shares and
cash to Executive Directors at the end of
the current three year period is 330% of
salary (110% of base salary for each
performance year).

Performance conditions
and assessment

Please see page 74
for the review of the
performance
conditions in the
financial year.
(Note 3)

Long Term
Bonus
Performance
Plan

To ensure that the total
remuneration package
is more competitive and
supports the
Company’s strategy
and its ability to react to
changing economic and
business
circumstances.

To retain key individuals
in the medium term and
align rewards with
shareholder returns.

Pension

To provide competitive
levels of retirement
benefit.

Other
benefits

To provide competitive
levels of employment
benefits.

Participants are awarded a restricted
interest in ordinary shares. They are
entitled to benefit from the growth in
value of these shares, subject to a cap
of £2 per share.

The awards to the Executive Directors
under the plan are made every three
years, although the Committee has
discretion to make awards to new
Directors outside of this period.

Vesting depends on an annual
assessment of performance (over three
years but reviewed annually) against a
series of financial and non-financial
targets aligned with the annual business
plan.

The value accrued to participants may
be subject to clawback if subsequent
performance reflects adversely on
achievement of the targets.

50% of the payout will be released at the
end of the three year performance
period, a further 25% will be released
one year after the end of the
performance period, and the remaining
25% will be released two years after the
end of the performance period.

Contribution of 10% of salary made into
Executive Directors personal pension
plan, or a cash supplement of equivalent
value paid in lieu of pension
contribution.

Benefits include:

> Private fuel
> Private medical insurance
> Permanent health insurance
> Life assurance of four times

base salary

> Relocation allowances

The level of benefits provided is
reviewed annually to ensure they
remain market competitive.

10% of salary

None

Maximum opportunity is the total cost of
providing the benefits. There is no
monetary cap on benefits.

None

Shareholding
policy

To ensure that
Executive Directors’
interests are aligned
with those of
shareholders over a
longer time horizon.

Vested shares cannot be sold until the
shareholding requirement has been met.

There is no time requirement in relation
to this policy.

N/A

Requirement to build and maintain a
holding of at least 100% of salary in
shares of the Company, through
retaining at least 50% of shares vesting
in Executive incentive plans if this
guideline has not been met.

Remuneration Report (continued)
For the year ended 31 March 2014

Executive Directors (continued)

Sharesave
Scheme

Purpose and link to strategy

Operation

Maximum potential value

To encourage share
ownership by all
employees. This allows
them to align their
interests with those of
investors and also to
share in the long term
success of the
Company.

Executive Directors may participate in
the Big Yellow Group Sharesave Scheme,
which is an all-employee HMRC
approved share plan open to employees
based in the UK. Sharesave Scheme
saving periods are in line with HMRC
guidance as three year contracts.

Executive Directors are able to
participate in an all-employee share
plan on the same terms as other
employees in line with the HMRC
approved monthly contribution limits.

The figures shown in the remuneration
table relate to the gains on exercise of
the SAYE options against the option price.

Performance conditions
and assessment

None

Notes to the policy table

1. Annual bonus performance measures and targets

Annual bonuses for the Executive Directors are based on the average of the store performances against their quarterly targets providing direct
alignment of the Directors’ bonuses to performance (and the bonus levels of the staff). The four Key Performance Indicators used to assess store
performance are occupancy growth, net contribution, customer satisfaction and store standards. Store targets are set every quarter and an average of
the four quarters is taken.

2. Long Term Incentive Plan performance measures and targets

The Committee selected the performance conditions on the LTIP as they provide a direct link between the incentive for the Executive Directors and the
value created for shareholders. Relative TSR against the FTSE Real Estate Index has been chosen, as Big Yellow Group’s historic performance has been
closely aligned to the performance of this Index. The adjusted EPS figure is as reported in the audited results of the Group for the last complete financial
year ending before the start of the performance period and the last complete financial year ending before the end of the performance period.

3. Long Term Bonus Performance Plan performance measures and targets

The Long Term Bonus Performance Plan was first introduced in 2009 to bring overall levels of remuneration towards mid-market levels but maintaining
the desire to ensure there was a strong performance based culture within the organisation. Since the inception of the plan, the scheme has helped to
align the Executive Directors to the performance of the stores and value created to shareholders as participants are entitled to the benefit from any
growth in the value of the shares from the date of award to vesting (capped at £2 per share). Assuming performance conditions are met, shares are
transferred to the Executive Director equal to the growth in value of the shares under award, subject to the £2 cap. If there is insufficient value in these
share interests to deliver the required payout, the Director will be entitled to exercise an option to acquire further shares to make up the shortfall, and if
this is still insufficient to deliver the required payout, a top-up cash payment will be made. Any cash payment cannot exceed 50% of the overall
payment due.

The plan was re-adopted by shareholders in 2012 and the Committee believes that the plan remains effective in aligning the Executive Directors to the
long term performance of the business.

In the year ended 31 March 2012, the Committee received external benchmarking advice from PricewaterhouseCoopers, which indicated total Executive
Directors’ remuneration was still significantly below market levels. The Committee gave careful consideration to the operation of the LTBPP and its
support for the Company’s strategy through its focus on achieving a range of KPIs. The Committee remained of the view that the most appropriate way
to ensure that Executive Directors’ remuneration remained competitive, provided incentive and lock-in and minimised cost to the Company was to
make a further round of awards under the LTBPP. The Committee therefore proposed that new awards covering the three year period to 2015 were made
to the Executive Directors in 2012. Unlike for the 2009 awards, no loans were made to the Executive Directors for the new awards; the option value was
paid in full up front by each Executive Director. The new awards were approved at the Company’s AGM held in July 2012.

The Committee sets the performance targets annually, on the basis of business objectives and priorities which it has identified. The performance
conditions are not disclosed for the year ahead, given the commercially sensitive nature of a number of the targets. A report on performance targets for
the year under review (other than those which remain commercially sensitive) is provided in the Annual Report relating to that year.

4. Adoption of the 2014 Long Term Incentive Plan

We will seek approval from our shareholders at the 2014 AGM approval for the adoption of the 2014 Long Term Incentive Plan (2014 LTIP) to replace the
existing LTIP which expires on 24 June 2014, on broadly similar terms. The main changes relevant to Executive Directors are the inclusion of clawback
provisions in respect of unvested awards, in line with emerging best practice.

Shareholders will note that the proposed individual limit under the plan will increase from 100% to 200% of base salary. The Committee has determined
that this increased limit will not form part of the Directors’ remuneration policy to be adopted at the 2014 AGM.

For further details and the main provisions of the 2014 Long Term Incentive Plan, please see the Notice of Annual General Meeting.

5. Renewal of the Sharesave Scheme

The Committee will seek approval from our shareholders at the 2014 AGM approval for the renewal of Sharesave Scheme which expires on 24 June 2014.
The Sharesave Scheme is substantially similar to the existing Sharesave Scheme.

For further details and the main provisions of the Sharesave Scheme, please see the Notice of Annual General Meeting.

6. Discretion

The Committee has discretion in several areas of policy as set out in this report. The Committee may also exercise operational and administrative
discretions under relevant plan rules approved by shareholders as set out in those rules. In addition, the Committee has the discretion to amend policy
with regard to minor or administrative matters where it would be, in the opinion of the Committee, disproportionate to seek or await shareholder approval.

7. Differences in remuneration policy for all employees

All employees are entitled to base salary, benefits, pensions and the Sharesave Scheme. Additionally, all employees are eligible for annual bonuses with
the maximum opportunity available based on the seniority and responsibility of the role held.

8. Changes made to the remuneration policy from previous policy

Other than the addition of clawback provisions in respect of awards under the proposed 2014 LTIP, there have been no substantive changes to the
operation, maximum or performance measures in relation to the salary, annual bonus, Long Term Incentive Plan, Long Term Bonus Performance Plan,
pension or other benefits. Increases in salary levels of Executive Directors are provided on page 59.

Non-Executive Directors

Fees

Objective and link
to the strategy

To attract Non-
Executive Directors
with the requisite skills
and experience

Performance conditions
and assessment

N/A

Operation

Maximum potential value

Fee levels are set at broadly median
levels for comparable roles at
companies of a similar size and
complexity within the FTSE 250.

Fees are intended to increase in line
with inflation.

Fee levels are normally reviewed
annually in March.

The Non-Executive Director fee structure
is a matter for the full Board.

The fees may be paid in the form of
shares.

The fees have been increased by 2%
from the prior year and for the year
ending 31 March 2015 are as follows:

Richard Cotton – £39,300

Tim Clark – £41,900

Georgina Harvey – £36,800

Mark Richardson – £39,300

Steve Johnson – £36,800

For year ending 31 March 2015, fees
include an additional £2,500 for a
Committee Chairman, and an additional
£2,500 for the Senior Independent Non-
Executive Director. Where a
Non-Executive Director provides
significant specialist advice to the
Group, an additional fee of £2,500 is
paid.

Remuneration Report (continued)
For the year ended 31 March 2014

Approach to recruitment remuneration
Our principle is to attract, motivate and retain Executive Directors of the high calibre required and to reward them for enhancing value to shareholders.

The table below summarises our key policies with respect to recruitment remuneration:

Salary and
benefits

> Set by reference to market and taking into account individual experience and expertise in the context of the role.
> Salary would also be set with reference to the salary of the departing Executive Director and the remaining Executive

Directors.

> The Executive Director would be eligible to receive benefits in line with Big Yellow Group’s benefits policy as set out in the
remuneration policy table – this includes either a contribution to a personal pension scheme or cash allowance in lieu of
pension benefits in line with the policies set out in the policy table.

Maximum
variable
incentive

Sign-on
payments

> Annual bonus of up to 25% of base salary in line with our current policy for Executive Directors.
> Long term incentive plan award of equivalent to 100% of base salary in line with our current policy for Executive Directors.
> An award under the Long Term Bonus Performance Plan (which equates to an annual maximum opportunity of 110% of salary
over the life of the plan) may also be made on appointment, recognising that the Company’s basic remuneration is below
median.

> The Company does not provide sign-on payments to Executive Directors.

Share buy-outs

> Any previous outstanding share awards which the Executive Director holds which would be forfeited on cessation of his or her

previous employment may be compensated.

> Where this is the case, the general principle is that the outstanding award will be valued based on the consideration of the

following factors:
> The proportion of the performance period completed on the date of the Director’s cessation of employment;
> The performance conditions attached to the vesting of the incentives and the likelihood of them being satisfied; and
> Any other terms and conditions having a material impact on their value.

> The valuation will be conducted using a recognised valuation methodology by an independent party and the equivalent ‘fair
value’ may be awarded as a one-off LTIP on date of joining under the Company’s existing long term incentive plan. To the
extent that this is not possible, a bespoke arrangement will be used.

> To ensure effective retention of the Executive Director upon recruitment, any new award will be granted subject to

performance conditions and vesting may be over the same period as those forfeited from the previous employer or a new
three year period.

> The exact terms will be determined by the Remuneration Committee on a case-by-case basis taking into account all relevant

factors.

Relocation
policies

> In instances where the new Executive Director is relocating from one work location to another, the Company may provide, as a

one-off or otherwise, a relocation allowance as part of the Director’s relocation benefits.

> The level of the relocation package will be assessed on a case-by-case basis but will take into consideration any cost of living

differences, housing allowance and schooling.

Service contracts
The Company’s policy on Directors’ service contracts is that they should be on a rolling basis without a specific end date providing for one year’s notice. All
Executive Directors have contracts which reflect this policy.

The Non-Executive Directors do not have service contracts with the Company. Their appointments are governed by letters of appointment which are
available for inspection on request at the Company’s registered office and which will be available for inspection at the Company’s AGM. Each appointment is
for a period of up to three years, although the continued appointment of all Directors is put to shareholders at the AGM on an annual basis. In addition, the
appointment is terminable by either party giving notice of three months.

Payments for loss of office

Element

Approach

Salary and
benefits

Salary and benefits may be paid in lieu of notice. In cases where a contract is terminated other than on the terms of the service
contract, the Company will seek to mitigate any damages payable.

There will be no compensation for normal resignation or in the event of termination by the Company due to misconduct.

Annual bonus

If the individual is a good leaver, bonus will be paid on a pro-rata basis in respect of the period from the start of the financial year.

Good leaver is defined as an individual ceasing employment as a result of ill-health, disability, redundancy or retirement or in any
other circumstances which the Committee permits.

A bad leaver is an Executive Director who does not fall within the category of “good leaver” and bad leavers will forfeit any
entitlement to a bonus payment in respect of the current financial year or any completed financial year in respect of which the
bonus has not been paid at the cessation date.

Long term
incentives
(LTIP and
LTBPP)

A proportion of the LTIP or LTBPP awards held by good leavers shall vest at the Committee’s discretion determined by taking into
account whether and to what extent any performance conditions have been satisfied and the length of time the LTIP or the LTBPP
Award has been held at the date of cessation of employment.

The 2014 LTIP awards will not normally vest until the end of the performance period with performance tested at that time,
although exceptionally such awards may, at the discretion of the Committee, vest at cessation of employment.

Under the 2004 LTIP and LTBPP, awards vest at cessation of employment.

Good leaver is defined as an individual ceasing employment as a result of ill-health, injury, disability, redundancy, retirement, the
sale out of the Group of his employing business for any other reason which the Committee in its absolute discretion permits.

A bad leaver is an Executive Director who does not fall within the category of good leaver and bad leavers will forfeit any unvested
awards.

Other
contractual
obligations

None.

Payments for Change of Control

Element

Annual
bonus
plan

Long term
incentives
(LTIP and
LTBPP)

Other
contractual
obligations

Approach

On a change of control, the Executive Director may receive a bonus payment based on performance level achieved during the
performance period and up to the date of change of control.

The Committee will take into account such factors as it consider relevant in relation to the bonus plan payment for the year in
which the event occurs, including the proportion of the bonus plan year elapsed at the date of the event.

On a change of control, a proportion of LTIP or LTBPP Awards will vest at the time of the relevant event.

The proportion of LTIP or LTBPP Awards which vest on a change of control event shall be determined by the Committee taking into
account any relevant factors, including whether and to what extent any performance conditions have been satisfied.

For the 2014 LTIP, the amount of time the LTIP Awards have been held on the date of the relevant change of control event will also
be considered to determine the final vesting of the Awards.

None.

Remuneration Report (continued)
For the year ended 31 March 2014

Other Committee discretion
In certain circumstances, the Committee will be required to exercise its discretion, taking into consideration the particular circumstances of the Executive
Director’s departure and/or the recent performance of the Company in determining the specific level of payments to be made.

Further to the discretions set out in the tables above, under the terms of the annual bonus plan, Long Term Incentive Plan and the Long Term Bonus
Performance Plan, the Committee has discretion to determine whether an individual is classified as a “good leaver”.

It should be noted that it is the Committee’s policy to only apply its discretion if the circumstances at the time are, in its opinion, sufficiently exceptional,
and to provide a full explanation to shareholders where discretion is exercised. The Committee does not currently intend to amend or waive any
performance conditions.

Illustrations of application of Remuneration Policy
The graph below seeks to demonstrate how pay varies with performance for the Executive Directors based on our stated Remuneration Policy.

Element

Fixed

Annual variable

Description

Total amount of salary, pension and benefits.

Money or other assets received or receivable for the reporting period as a result of the achievement of performance conditions
that relate to that period (i.e. annual bonus payments).

Maximum annual bonus opportunity is 25% of base salary for Executive Directors.

Multiple period
variable

Money or other assets received or receivable for multiple reporting periods as a result of the achievement of performance
conditions over a given period which for the year ending 31 March 2015 includes the LTIP and the vesting of the three year LTBPP,
based on performance to 31 March 2015.

Maximum LTIP opportunity is 100% of base salary for Executive Directors.

Assumptions used in determining the level of pay out under given scenarios are as follows:

Scenario

Minimum

On-target

Maximum

Description

Fixed pay only (no variable payments under annual bonus and Company’s LTIP or LTBPP).

This has been based on 40% of annual bonus award being paid (ie 10% of basic salary), 50% vesting of the LTIP and 50% vesting of
the three year LTBPP.

This has been based on 100% of annual bonus award being paid (ie 25% of basic salary) and 100% vesting of the LTIP and 100%
vesting of the three year LTBPP.

Executive Chairman

CEO

£1,400,000

£1,200,000

£1,000,000

£800,000

£600,000

£400,000

£293,000

£200,000

£0

100%

£1,292,000

£934,000

72%

23%

59%

37%

Multi-period variable

Annual variable

Fixed elements

£1,652,000

£980,000

£321,000

100%

64%

33%

76%

20%

Multi-period variable

Annual variable

Fixed elements

£1,800,000

£1,600,000

£1,400,000

£1,200,000

£1,000,000

£800,000

£600,000

£400,000

£200,000

£0

Minimum

Median

Maximum

Minimum

Median

Maximum

Operations Director

CFO

£1,400,000

£1,200,000

£1,000,000

£800,000

£600,000

£400,000

£238,000

£200,000

£0

100%

£1,176,000

£702,000

75%

63%

34%

21%

Multi-period variable

Annual variable

Fixed elements

£1,400,000

£1,200,000

£1,000,000

£800,000

£600,000

£400,000

£226,000

£200,000

£0

100%

£1,151,000

£683,000

76%

20%

64%

33%

Multi-period variable

Annual variable

Fixed elements

Minimum

Median

Maximum

Minimum

Median

Maximum

Statement of consideration of employment conditions elsewhere in the Group
The Committee reviews the reward and retention of the whole employee population periodically throughout the year to ensure that it can attract and retain
top talent. Particular consideration is given to the general basic salary increase, remuneration arrangements and employment conditions. Furthermore, the
Annual Bonus Plan award for Executive Directors is directly linked to the bonuses award to all staff.

The Directors are invited to be present at this meeting on the proposals for salary increase for the employee population generally and on any other changes
to remuneration policy within the Company. The information presented at this meeting is taken into consideration when setting the pay levels of the
executive population. Additionally the Committee has guidelines for the grant of all LTIP awards across the Company and responsibility for approving the
total annual bonus cost of the Company. The Company does not invite employees to comment on the Directors’ remuneration policy.

Statement of shareholders’ views
The views of our shareholders are very important to us and the Committee is happy to receive constructive feedback with respect to our remuneration
policies or structure which we take on board to formulate our arrangements.

Any consultations on remuneration with shareholders and institutional investors will usually be led by the Chair of the Remuneration Committee.

The Remuneration Committee considers shareholder feedback received in relation to the AGM each year at its first meeting following the AGM. This feedback,
as well as any additional feedback received during any other meetings with shareholders throughout the year, is then considered as part of the Company’s
annual review of remuneration policy.

The Remuneration Committee notes that shareholders do not speak with a single voice, but we engage with our largest shareholders to ensure we
understand the range of views which exist on remuneration issues. When any material changes are proposed to the Remuneration Policy, the Remuneration
Committee chairman will inform major shareholders in advance, and will offer a meeting to discuss these.

Approval
This policy report was approved by the Board of Directors on 19 May 2014 and signed on its behalf by

Tim Clark
Remuneration Committee Chairman

Remuneration Report (continued)
For the year ended 31 March 2014

ANNUAL REPORT ON REMUNERATION
This section of the Remuneration Report contains details of how the Remuneration Policy for Directors was implemented during the financial year ended
31 March 2014. This section is subject to an external audit.

Single total figure of remuneration
Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Executive Director paid in the year ended 31 March 2014.
Comparative figures for 2013 have also been provided. Figures shown below have been calculated in accordance with the new remuneration disclosure
regulations (The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013).

Year ended
31 March 2014

Nicholas Vetch

James Gibson

Adrian Lee

John Trotman

Salary
£

Taxable benefits
£

Annual bonus
£

Long term incentives
£

Pensions
£

Sharesave Scheme
£

Total
£

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

254,200

249,200

278,800

273,300

206,400

202,300

180,000

165,000

3,853

4,840

3,859

2,066

6,296

7,931

5,463

3,495

25,420

27,880

20,640

18,000

24,920

179,509

27,330

196,862

20,230

145,736

16,500

101,205

–

25,420

27,880

20,640

18,000

24,920

27,330

20,230

16,500

9,821

–

498,223

305,336

536,262

335,891

397,275

248,223

319,271

201,495

91,940

88,980

9,821

– 1,751,031 1,090,945

Total

919,400

889,800

14,618

23,185

91,940

88,980

623,312

Taxable benefits comprise medical cover, permanent health insurance, life insurance and private fuel usage. The prior year figure included benefit-in-kind
interest from the previous LTBP scheme.

The value shown in long term incentives is the LTIP award granted in 2010 which vested on 12 July 2013 to 53.1% of its maximum value and is valued using
the share price on that date of 428.8p. The award granted for 2014 is 100% of salary for each Executive Director.

The average salary increase across the Group in the year was 2%. The salary increase for John Trotman reflects his progress in his role, although it should be
noted that his salary is still, in the view of the Committee, below market levels.

Additional details on variable pay in single figure table
In order to execute its business strategy, the Company needs high-quality Executive Directors and the remuneration packages need to be able to attract,
retain and motivate such individuals. The annual bonus, the LTIP and the LTBPP are used to ensure that, when merited by performance, an opportunity is
offered to earn competitive total remuneration.

The Committee considers that performance conditions for all incentives are suitably demanding, having regard to the business strategy, shareholder
expectations and external advice regarding the market benchmarks. To the extent that any performance condition is not met, the relevant part of the award
will lapse. There is no retesting of performance.

The main components of the Remuneration Policy, and how they are linked to and support the Company’s business strategy, are summarised in each of the
following sections.

Annual Bonus Plan awards
In respect of the year under review, the Executive Directors’ performance was carefully reviewed by the Committee, in consultation with the Executive
Chairman in respect of the other Executive Directors. The bonus paid to the Executive Directors of 10% of salary in the year is directly linked to the awards
paid to the stores on achieving their targets during the course of the year. The weighting of each target to the bonus paid in the year is: occupancy and net
contribution (68%), customer satisfaction (24%) and store standards (8%).

Long Term Incentive Plan (“LTIP”) awards
The awards granted under the LTIP are subject to performance conditions to be met over a performance period of three years.

At the end of the performance period, the awards will vest to the extent the performance conditions have been satisfied. There is no retesting of
performance conditions and if they are not satisfied, the awards will lapse.

The performance conditions applicable to the LTIP which vested in the year are set out below. Vesting is conditional on the achievement of an underpin EPS
growth of an average of 3% above RPI per annum. This hurdle was met for the 2010 awards.

The Committee assessed the extent to which the performance conditions have been satisfied for the 2010 award which vested in 2013, with the following results:

Condition

Relative TSR

Weighting

100%

Total

100%

Threshold
performance
required

Median of
comparator group
of real estate
companies

Maximum
performance
required

Upper quartile of
the comparator
group

LTIP value for meeting
threshold and maximum
performance (% salary)

Performance
achieved

25% – 100%

13th out of 31 in
comparator group

Vesting %

53%

Between threshold and maximum, vesting will take place on a straight-line basis.

Sharesave Scheme
The Group’s Sharesave Scheme is open to all UK employees (including Executive Directors) with a minimum of six months’ service and meets UK HMRC
approval requirements, thus enabling all eligible employees the opportunity to acquire shares in the Company in a tax efficient manner. The four Executive
Directors all participated in the scheme during the financial year.

Pension entitlements
The Company pays pension contributions into the Executive Directors’ personal pension plans or makes a cash contribution in lieu of pension contributions.
They do not participate in any defined benefit scheme. For the year ended 31 March 2014, the Company contribution was 10% of salary for the Executive Directors.

Non-Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director paid in the year ended 31 March 2014.
Comparative figures for 2013 have also been provided.

Year ended 31 March 2014

2014

2013

2014

2013

2014

2013

Fees
£

Taxable benefits
£

Total
£

Philip Burks (to 19 July 2013)
Tim Clark
Richard Cotton (from 1 June 2012)
Georgina Harvey (from 1 July 2013)
Steve Johnson
Mark Richardson
Jonathan Short (to 19 July 2012)

9,000
41,000
38,500
27,000
36,000
38,500
–

34,500
39,800
28,750
–
34,500
34,500
9,554

Total

190,000

181,604

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–

–

9,000
41,000
38,500
27,000
36,000
38,500
–

34,500
39,800
28,750
–
34,500
34,500
9,554

190,000

181,604

The structure of the Non-Executive Directors’ fees was reviewed in 2013. The Board concluded that the fee structure in place was outdated and required
revision, with the current fees now broadly in line with median for comparable companies and FTSE 250. It has implemented a new structure of Non-
Executive Directors’ fees for the year ended 31 March 2014, comprising of a base fee of £36,000 per annum, with an additional £2,500 for a Committee
Chairman, and an additional £2,500 for the Senior Independent Non-Executive Director. Where a Non-Executive Director provides significant specialist
advice to the Group, and hence additional time commitment to the Group, an additional fee of £2,500 may be paid.

Remuneration Report (continued)
For the year ended 31 March 2014

Long term incentives awarded in year ended 31 March 2014
The table below sets out the details of the long term incentive awards granted in the year ended 31 March 2014 where vesting will be determined according
to the achievement of performance conditions that will be tested in future reporting periods.

Director

Award type

LTIP awarded

Nicholas V etch

James Gibson

Adrian Lee

John Trotman

LTIP – annual
cycle of awards

100% of salary

100% of average
2013/14 base
salary

Face value
of award(1)

£254,200

£278,800

£193,200

Percentage of award
vesting at threshold
performance

Maximum
percentage of face
value that could vest

Performance
period end date

Performance
conditions

25%

100%

22 July 2016

EPS growth and
relative TSR (see
below for further
details of the
2014 conditions)

Note:
1.

The face value of the award is calculated using the average share price three days prior to the 2014 AGM (grant date).

The performance conditions applicable to awards granted in the year ended 31 March 2014 are set out below:

Condition

Relative TSR

Weighting

100%

Total

100%

Threshold
performance
required

Median of
comparator group
of real estate
companies

Maximum
performance
required

Upper quartile of
the comparator
group

LTIP value for meeting
threshold and maximum
performance (% salary)

25% - 100%

Basis for measurement

Average of the Group’s closing mid-market
share price over the three months
preceding the start of the performance
period and preceding the end of the
performance period will be used.

Between threshold and maximum performance, vesting will take place on a straight-line basis.

In respect of the EPS underpin, the adjusted EPS figure reported in the audited results of the Group for the last complete financial year ending before the
start of the performance period and the last complete financial year ending before the end of the performance period will be used.

Payments to past Directors
No payments of money or any other assets were made to any former Director of Big Yellow Group in the financial year ended 31 March 2014.

Payments on loss of office
No payments were made to any Directors in respect of loss of office during the financial year ended 31 March 2014 (2013: no payments).

Consideration by the Directors of matters relating to Directors’ remuneration
This Committee deals with all aspects of remuneration of the Executive Directors including:

> setting salaries;
> agreeing conditions and coverage of annual incentive schemes and long term incentives;
> policy and scope for pension arrangements;
> determining targets for performance related schemes;
> scope and content of service contracts; and
> deciding extent of compensation (if any) on termination of service contracts.

The Committee’s members are currently Tim Clark (Committee Chairman), Richard Cotton, Georgina Harvey (from 1 July 2013), Steve Johnson and
Mark Richardson.

The Remuneration Committee’s Terms of Reference are available on the Company website. The Committee met four times during the year.

Advisers to the Remuneration Committee
The Committee consults with the Executive Chairman, Nicholas Vetch, about proposals on a range of matters relating to the remuneration of the Executive
Directors including the levels of overall remuneration, salary and bonus, and awards and distributions under the share incentive and bonus plans.

The Committee relies upon remuneration data provided by a number of third party providers, including PwC. In addition, PwC has provided advice to the
Committee on the preparation of this report as well as on market practice and trends. PwC is a member of the Remuneration Consultants’ Group and, as
such, voluntarily operates under the Code of Conduct in relation to executive remuneration consulting in the UK.

PwC also provided advisory work during the year around pensions auto-enrolment and VAT advice. The Committee is satisfied that advice received from PwC
during the year was objective and independent.

Adviser

PwC

Appointed by

Services provided to the Committee in 2013/14

Remuneration
Committee in 2008

Advice on executive remuneration market practice and trends.

Advice on new reporting requirements.

Fees in relation to
remuneration advice

£10,500

Support with regards to the preparation of the 2014 Remuneration Report.

Drafting of scheme rules for the renewal of the Sharesave scheme.

Statement of Directors’ shareholding
The Executive Directors are required to build and maintain a holding of 100% of base salary. These requirements have been met by all Executive Directors
during the year. Non-Executive Directors are not subject to a shareholding requirement. Details of the Directors’ interests in shares are set out below
(all interests are beneficial interests, except where noted specifically below).

No changes took place in the interests of the Directors in the shares of the Company between 31 March 2014 and the date of this report.

The table below shows, in relation to each Director, the total number of shares and share options in which they are interested:

Director

Nicholas Vetch
James Gibson
Adrian Lee
John Trotman
Richard Cotton
Mark Richardson
Tim Clark
Steve Johnson
Georgina Harvey

Share
ownership
requirement
(% of salary)

Share
ownership
requirements
met

100%
100%
100%
100%
N/a
N/a
N/a
N/a
N/a

Yes
Yes
Yes
Yes
N/a
N/a
N/a
N/a
N/a

Beneficially
owned
shares

9,165,020
2,529,226
776,323
76,489
58,919
24,668
15,000
10,000
10,000

LTIP
awards
subject to
performance
conditions

224,556
246,267
164,949
164,949
–
–
–
–
–

LTBPP
awards
subject to
performance
conditions

337,500
487,500
337,500
337,500
–
–
–
–
–

Unexercised
sharesave
options

Sharesave
options
exercised in the
financial year

–
2,965
3,745
3,745
–
–
–
–
–

3,428
–
–
–
–
–
–
–
–

Remuneration Report (continued)
For the year ended 31 March 2014

Directors’ share options
To provide further context on the shareholding of Directors, Options in respect of ordinary shares for Directors who served in the year are as below:

Name

Nicholas Vetch

James Gibson

Adrian Lee

John Trotman

No. of
shares
under
option at
31 March
2013

78,801
80,072
84,218
–

86,419
87,807
92,362
–

63,975
57,080
62,065
–

44,427
57,080
62,065
–

Date option
granted

12 July 2010
19 July 2011
11 July 2012
22 July 2013

Granted
during the
year

–
–
–
60,266

–
–
–
66,098

–
–
–
45,804

Exercised
during the
year

(41,863)
–
–
–

(45,910)
–
–
–

(33,987)
–
–
–

(23,602)
–
–
–

No. of
shares
under
option at
31 March Exercise
price

2014

–
80,072
84,218
60,266

–
87,807
92,362
66,098

–
57,080
62,065
45,804

nil p
nil p
nil p
nil p

Market
price at
date of
exercise

405.1p
–
–
–

500.0p
–
–
–

406.0p
–
–
–

407.8p
–
–
–

Lapsed
during the
year

(36,938)
–
–
–

(40,509)
–
–
–

(29,988)
–
–
–

(20,825)
–
–
–

Date from
which first
exercisable

12 July 2013
19 July 2014
11 July 2015
22 July 2016

Expiry date

12 July 2020
18 July 2021
10 July 2022
21 July 2023

Performance and pay
The graph below shows the Group’s performance, measured by TSR, compared with the performance of the FTSE 350 Real Estate Index and the FTSE All
Share Index over the last ten years. The Group is a member of the FTSE 350 Real Estate Index.

TSR Performance from 1 April 2004

600

500

400

300

200

100

0
2004

Big Yellow Group

FTSE 350 Real Estate Index

FTSE All Share Index

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Thomson Reuters Datastream

CEO Remuneration
The table below sets out the details of remuneration of the CEO over the past five financial years.

Year

2014
2013
2012
2011
2010

CEO single figure of
total remuneration
(£)

Annual bonus pay out
% against maximum
of 25% of salary

Long term incentive vesting rates
against maximum opportunity
%

536,262
335,891
1,400,570
325,968
875,593

40% (10% of salary)
40% (10% of salary)
40% (10% of salary)
40% (10% of salary)
40% (10% of salary)

53%
0%
89%
0%
100%

The single figure of remuneration for 2012 is higher than in previous years due to the vesting of the three year Long Term Bonus Performance Plan in this
year delivering a reward of £900,000.

Percentage increase in the CEO’s remuneration
The table below compares the percentage increase in the CEO’s remuneration (including salary, fees, benefits and annual bonus) with the remuneration of
Big Yellow Group employees.

Salary and fees
All taxable benefits
Annual bonuses

Total

% increase in remuneration in
2014 compared with 2013

CEO

Employees

2%
(39%)
2%

2%
2%
2%

Relative importance of spend on pay
The graph below sets out the relative importance of spend on pay in the year ended 31 March 2014 and 31 March 2013 compared with other disbursements
from profit, being the distributions to shareholders and retained earnings (comprehensive gain for the year less dividends).

+118%

+45%

+1%

2013

2014

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0
Total employee pay
(including Directors)

Profit distributed
by way of dividend

Retained
earnings

Remuneration Report (continued)
For the year ended 31 March 2014

Implementation of policy in coming year
The Directors’ Remuneration Policy and its implementation for the forthcoming financial year is summarised below:

Package
structure

The main elements of Executive Director remuneration effective from 16 July 2014 (being the date of the AGM at which
shareholder approval for this report will be sought) are:

> Base salary.
> Annual bonus plan with maximum opportunity of 25% of base salary based on the stores’ average performance against
targets over the four quarters of the year which is then taken and applied to calculate the head office bonus percentage.
Performance in the stores is assessed on four Key Performance Indicators of occupancy, growth, net contribution, and store
standards. For the 2014 financial year, occupancy and net contribution together represent 68% of bonus with the weighting
between the two dependent on stores’ occupancy levels, and therefore their sales focus. Customer satisfaction makes up
24% of bonus and store standards the balance of 8%. The Committee is of the opinion that further disclosure of the
performance targets for the bonus plan are commercially sensitive and that it would be detrimental to the interests of the
Company to disclose them before the start of the financial year. Actual targets, performance achieved and awards made will
be disclosed at the end of the performance period.

> Long Term Incentive Plan with maximum opportunity of 100% of base salary delivered in shares based on relative Total
Shareholder Return against the FTSE Real Estate Index. An EPS underpin target of growth ahead of RPI must be satisfied
before any part of the LTIP award can vest.

> Long Term Bonus Performance Plan to ensure that the total remuneration package is more competitive and supports the
Company’s strategy and its ability to react to changing economic and business circumstances. Under the Plan, Executive
Directors have been awarded restricted interests in ordinary shares in the Company which entitles a participant to benefit
from the growth in the value of a number of ordinary shares over which the interest is acquired. The Committee sets the
performance targets annually, but is of the opinion that the disclosure of the performance targets for the year ahead is
commercially sensitive and will not be made but the performance targets for the year under review (except for those which
remain commercially sensitive) are provided in the table below:

Pay for
performance

The key principle for the short and long term incentives is to provide a strong link between reward and individual and Group
performance to align the interests of Executive Directors with those of shareholders.

When merited by performance, an opportunity is offered to earn total remuneration approaching the median level against
companies of a similar market capitalisation and with similar revenues to the Company.

Long Term Bonus Performance Plan review
The performance targets for the LTBPP are not disclosed for the year ahead, given the commercially sensitive nature of a number of the targets (which are
derived from the Group’s business plan). Shortly after the end of each year, the Committee assesses the key targets and the extent to which management
has been able to meet these targets for that year and reports on this assessment (excluding any that are still commercially sensitive). The targets are only
adjusted during the year if material events occur that necessitate a change to the business plan. The report on the targets for the year ended 31 March 2013
was included in the annual report for that year. The report on the targets for the year ended 31 March 2014 is summarised in the table below:

Objective

Committee comment

Maintain the Group’s annual free cash flow for the year to 31 March 2014
at £30.2 million which was achieved in the year to 31 March 2013.

The Group’s free cash flow for the year to 31 March 2014 was £32.8 million,
an increase of 9% from the prior year.

Maintain the Group’s net debt below £235 million.

At 31 March 2014 the Group’s net debt was £226.1 million.

Comply with all banking covenants and maintain a net worth in excess
of £550 million.

All banking covenants were complied with during the year. Net worth has
grown by £41.4 million to £594.1 million.

Grow established store occupancy over the summer to 78% and 75% at
March 2014 following the normal winter slowdown.

Established store occupancy peaked at 78.3%. At 31 March 2014 established
store occupancy was 75.2% compared to 72.8% occupied at 31 March 2013.

Grow the occupancy of the wholly owned stores from 64.8% at 31 March
2013 to 68% by 31 March 2014.

Grow the occupancy of the Partnership stores to 64% at 31 March 2014
from 54.6% occupied at the start of the year.

The occupancy of the wholly owned stores was 69.8% at 31 March 2014,
representing growth of 165,000 sq ft over the year (2013: growth of
90,000 sq ft).

The Partnership stores peaked at 62.4% occupancy during the summer;
however, following seasonal occupancy losses these stores were 59.3%
occupied at 31 March 2014. The net achieved rent per sq ft within the
Partnership stores grew by 7.7% during the year.

Grow the average net rent per square foot across the wholly owned stores
from £24.65 per square foot by 3% to £25.40 by 31 March 2014.

The net rent per sq ft of the wholly owned stores was £26.15 at 31 March
2014, an increase of 6.1% from the prior year.

Long Term Bonus Performance Plan review (continued)

Objective

Committee comment

Meet budgeted revenue (£70.3 million) and adjusted profit (£27.7 million)
targets.

Revenue for the year was £72.2 million, 2.7% ahead of budget. Adjusted
profit for the year was £29.2 million, 5.4% ahead of budget.

Maintain the Group’s online market share measured against the top 35 self
storage operators by Experian Hitwise, at 35% to 38%.

The Group’s average market share over the course of the financial year was
37%. Our nearest competitor had a market share of 14% for the year.

Construct Gypsy Corner on time and on budget, with the store due to open in
April 2014

The store was constructed on budget, and opened as planned on 1 April
2014.

Obtain planning consent for the change of use of the surplus site at Guildford
Central to a restricted retail usage.

Reduce the carbon intensity for the year to 31 March 2014 (KgCO2/m2 of
occupied space) by 5% from the year to 31 March 2013.

The planning application was submitted in July 2013 for this scheme and
consent was granted in November 2013. Contracts to sell the site have been
exchanged, with completion due in summer 2014.

Carbon intensity was reduced by 17% for the year to 31 March 2014.

The other targets, covering areas such as real estate, staffing and certain financial targets, were met in all material respects.

Following careful consideration of the performance targets and actual performance of the Group and the Executive Directors, the Committee has considered
that the award in respect of the financial year ended 31 March 2014 has provisionally vested as to 100% of its potential amount for the year. The Committee
assessed 85% vesting in the year to 31 March 2013. The provisional vesting percentage will be reviewed by the Committee at the end of the three year plan
in March 2015, and the final vesting level covering the three year period determined then.

Fees retained for external non-executive directorships
The Executive Directors’ contracts do not allow them to engage in any other business outside the Group except where prior written consent from the Board is
received. The Company recognises that Executive Directors may be invited to become Non-Executive Directors of other companies and that this can help
broaden the skills and experience of a Director. Executive Directors are normally permitted to accept external appointments with the approval of the Board
and may retain the fees for the appointment.

Nicholas Vetch is a Non-Executive Director of Blue Self Storage S.L, a Spanish self storage business, and The Local Shopping REIT plc. He receives a Non-
Executive fee of €38,000 per annum from Blue Self Storage S.L and £30,000 per annum from The Local Shopping REIT plc. James Gibson is a Non-Executive
Director of AnyJunk Limited; he does not receive any fees for his services.

Shareholder voting
The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against
resolutions in relation to Directors’ remuneration, the reasons for any such vote will be sought and any actions in response will be detailed here. There have
been no significant issues raised by shareholders in respect of remuneration in the year.

The table below shows the advisory vote on the 2013 Remuneration Report at the AGM held on 19 July 2013.

Votes for

Votes against

Votes withheld

2013 Remuneration Report

105,815,530

97.3%

2,924,155

2.7%

29,378

Audit Committee Report

INTRODUCTION
The Audit Committee is appointed by the Board from the Non-Executive Directors of the Group. The Audit Committee’s terms of reference include all matters
indicated by Disclosure and Transparency Rule 7.1 and the UK Corporate Governance Code. The terms of reference are considered annually by the Audit
Committee and are then referred to the Board for approval.

The Audit Committee is responsible for:

> monitoring the integrity of the financial statements of the Group and any formal announcements relating to the Group’s financial performance and

reviewing significant financial reporting judgements contained therein;

> reviewing the Group’s internal financial controls and the Group’s internal control and risk management systems, including consideration of the need for

an internal audit function;

> making recommendations to the Board for a resolution to be put to the shareholders for their approval in general meetings, on the appointment of the

external auditor and the approval of the remuneration and terms of engagement of the external auditor;

> reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration

relevant UK professional and regulatory requirements; and

> developing and implementing a policy on the engagement of the external auditor to supply non-audit services, taking into account relevant guidance

regarding the provision of non-audit services by the external audit firm.

The Audit Committee is required to report its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and
make recommendations on the steps to be taken.

This year, the Committee has focussed on the new narrative reporting and corporate governance disclosures in the Annual Report. The Committee was
asked by the Board to review the statement by the Directors that the Annual report presents a fair, balance and understandable view of the Group’s
performance, strategy and business model.

Mark Richardson
Audit Committee Chairman

Committee Members and Attendance

Director

Tim Clark
Richard Cotton
Georgina Harvey
Steve Johnson
Mark Richardson

attended
absent

Position

Number of meetings attended

Member
Member
Member (from 1 July 2013)
Member
Chairman

The Audit Committee structure requires the inclusion of one financially qualified member (as recognised by the Consultative Committee of Accountancy
Bodies). Currently Mark Richardson, as a Fellow of the Institute of Chartered Accountants of England and Wales, fulfils this requirement. All Audit Committee
members are expected to be financially literate.

The Group provides an induction programme for new Audit Committee members and ongoing training to enable all of the Committee members to carry out
their duties. The induction programme covers the role of the Audit Committee, its terms of reference and expected time commitment by members and an
overview of the Group’s business, including the main business and financial dynamics and risks. New Committee members also meet some of the Group’s
staff. Ongoing training includes attendance at formal conferences, internal company seminars and briefings by external advisers.

Meetings
The Audit Committee is required to meet three times per year and has an agenda linked to events in the Group’s financial calendar. The agenda is
predominantly cyclical and is therefore approved by the Audit Committee Chairman on behalf of his fellow members. Each Audit Committee member has
the right to require reports on matters of interest in addition to the cyclical items.

The Audit Committee invites the Chief Executive, Chief Financial Officer, Financial Controller, and senior representatives of the external auditor to attend all
of its meetings in full, although it reserves the right to request any of these individuals to withdraw. Other senior management are invited to present such
reports as are required for the Committee to discharge its duties.

Overview of the actions taken by the Audit Committee to discharge its duties
Since the beginning of the financial year the Audit Committee has:

> reviewed published financial information including the year end results, Annual Report, half year results and the Interim Management Statements;
> considered whether the Annual Report provides a fair, balanced and understandable view of the Group’s performance, strategy and business model;
> considered the output from the Group-wide process used to identify, evaluate and mitigate risks;
> reviewed the effectiveness of the Group’s internal controls and disclosures made in the annual report and financial statements on this matter;
> reviewed and agreed the scope of the audit work to be undertaken by the external auditor;

Overview of the actions taken by the Audit Committee to discharge its duties (continued)
> agreed the fees to be paid to the external auditor for their audit of the March 2014 financial statements and September half-yearly report;
> undertaken an assessment of the qualification, expertise and resources, and independence of the external auditor and the effectiveness of the

audit process;

> considered the audit partner and audit firm rotation;
> undertaken an evaluation of the performance of the external auditor;
> considered the need for an internal audit function;
> reviewed the arrangements for “whistleblowing” by employees to ensure that there is a consistent policy in the Group to enable employees to voice

concerns particularly in respect of possible financial reporting improprieties. A whistleblowing policy is included in the employee handbook;

> met the Group’s external valuers;
> met the Group’s Store Compliance Manager;
> reviewed the Audit Committee’s Report; and
> reviewed its own effectiveness.

Financial reporting and significant financial judgements
The Committee reviews all financial information published by the Group in year end and half-year financial statements, including the presentation and
disclosure of the financial information. It also considers the appropriateness of the accounting policies adopted by the Group and the accounting
judgements made by management in the preparation of the financial information.

The Committee has considered whether the Annual Report for the year ended 31 March 2014 provides a fair, balance and understandable view of the Group’s
performance, strategy and business model and whether it provides the necessary information to enable shareholders and prospective shareholders to
assess the Group’s performance, strategy and business model. The Committee is satisfied that the Annual Report for the year ended 31 March 2014
provides a fair, balanced and understandable view and included the necessary information as set out above. The Committee has confirmed this to the
Board, whose statement is included in the Statement of Directors’ Responsibilities on page 79.

The Committee focuses on matters it considers important in their impact on the reported results of the Group, and on matters where there is a high degree
of complexity and/or judgement.

The key area of judgement that the Committee focuses on at the reporting date is the valuation of the investment property portfolio. This is carried out by
independent external valuers, but by its nature it is subjective, with significant judgement applied to the valuation, particularly given the lack of
transactional evidence for prime self storage assets. Members of the Committee met the external valuers to discuss the valuations, review the key
judgements and discussed whether there were any disagreements with management. This year the Committee reviewed and challenged the valuer on the
cap rates, rental growth assumptions and stabilised occupancy levels, to agree on the appropriateness of the assumptions adopted. The Committee also
challenged the valuer, and satisfied itself on, their independence, their quality control processes (including peer partner review) and qualifications to carry
out the valuations. Management also have processes in place to review the external valuations. In addition, the external auditors use specialists to review
the valuation and report their findings and conclusions to the Audit Committee.

The Committee has also considered a number of other judgements made by management in the preparation of the financial statements. It has concluded
that none of these judgements have a material impact on the Group’s results. The judgements reviewed include the recognition of the receivable due to the
Group under the Capital Goods Scheme.

Management have reported to the Audit Committee that they are satisfied that they are not aware of any material misstatements in the financial
statements. The auditors confirmed in their report to the Audit Committee that they had not found any material misstatements during their audit work.

Based on the above, the Committee concluded that the financial statements appropriately apply the key estimates and critical judgements, in respect of the
disclosures and the amounts reported. The Committee also concluded that the annual report and financial statements, taken as a whole, are fair, balanced
and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy.

External auditor
The Audit Committee is responsible for the development, implementation and monitoring of the Group’s policy on external audit. The policy assigns oversight
responsibility for monitoring the independence, objectivity and compliance with ethical and regulatory requirements to the Audit Committee, and day-to-day
responsibility to the Chief Financial Officer. The policy states that the external auditor is jointly responsible to the Board and the Audit Committee and that
the Audit Committee is the primary contact.

To fulfil its responsibility regarding the independence of the external auditor, the Audit Committee reviewed:

> the external auditor’s plan for the current year, noting the role of the senior statutory audit partner, who signs the audit report and who, in accordance

with professional rules, has not held office for more than five years, and any changes in the key audit staff;

> the arrangements for day-to-day management of the audit relationship;
> a report identifying the number of former external audit staff now employed by the Group and their positions within the Group;
> a report from the external auditor describing their arrangements to identify, report and manage any conflicts of interest;
> the overall extent of non-audit services provided by the external auditor, in addition to its case-by-case approval of the position of non-audit services

by the external auditor; and

> the past service of the auditor who was first appointed in 2000.

Audit Committee Report (continued)

Annual auditor assessment
The Audit Committee has adopted a formal framework in its review of the effectiveness of the external audit process and audit quality which include the
following areas:

> the arrangements for ensuring the external auditor’s independence and objectivity;
> the lead audit engagement partner and the audit team;
> the external auditor’s fulfilment of the agreed audit plan and variations from the plan;
> the quality of the formal audit report to shareholders;
> the robustness and perceptiveness of the auditor in his handling of the key accounting and audit judgements; and
> the content of the external auditor’s comments on control improvement recommendations.

Regard is paid to the nature of, and remuneration received, for other services provided by Deloitte LLP to the Group and, inter alia, confirmation is sought
from them that the fee payable for the annual audit is adequate to enable them to perform their obligations in accordance with the scope of the audit. Where
non-audit services are provided, the fees are based on the work undertaken and are not success related.

The Committee considers that the relationship with the auditor is working well, and that they are effective in their role. As a consequence of its satisfaction
with the results of the activities outlined above, the Audit Committee has recommended to the Board that the external auditor is re-appointed.

Non-audit work
The Group’s policy on external audit sets out the categories of non-audit services which the external auditor will and will not be allowed to provide to the
Group, including those that are pre-approved by the Audit Committee and those which require specific approval before they are contracted for, subject to
de minimis levels. They may not provide a service which places them in a position where they may be required to audit their own work. Specifically, they
are precluded from providing services relating to bookkeeping, financial information system design and implementation, appraisal or evaluation services,
actuarial services, any management functions, investment banking services, legal services unrelated to the audit or advocacy services.

In respect of the year ended 31 March 2014, the auditor’s remuneration comprised £167,000 for audit work and £96,000 for other work, principally relating
to tax work.

Audit rotation
The auditor, Deloitte LLP, has been in tenure since 2000 and the current audit partner has been in place since the audit of the prior year financial
statements.

The Committee is supportive of the new provision in the UK Code requiring FTSE 350 companies to put the provision of external audit services out to tender
at least every ten years. The Committee has reviewed the performance of the external auditor and is satisfied that currently Deloitte LLP provides an
appropriate level of service delivered by a team with an in-depth understanding of our business and the broader real estate sector. The Committee’s present
intention therefore is that they will tender the external audit by 2017 when the audit partner next rotates. There are no contractual obligations that act to
restrict the Audit Committee’s choice of external auditor.

Risk management and internal control
The Committee and the Board reviewed the internal control processes of the business and the Group’s risk register during the year. The risks and
uncertainties facing the Group, and its internal control processes are considered in the Strategic Report on page 33.

Internal audit
The Committee has considered the Board’s view that, given the relatively straightforward nature of the Group’s business and the control environment in
place, no formal internal audit function is required. The Committee concurs with management’s view.

Overview
As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its terms of reference and has ensured the
independence and objectivity of the external auditor.

The Chairman of the Audit Committee will be available at the Annual General Meeting to answer any questions about the work of the Committee.

Approved by the Audit Committee and signed on its behalf by:

Mark Richardson
Audit Committee Chairman
19 May 2014

Statement of Directors’ Responsibilities

Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare such financial statements for each financial year. Under that law the Directors are required to prepare the
Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare the parent Company financial statements under IFRSs as adopted by the European Union. Under Company law
the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that the Directors:

> properly select and apply accounting policies;
> present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
> provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of

particular transactions, other events and conditions on the entity’s financial position and financial performance; and

> make an assessment of the Company’s ability to continue as a going concern.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in
the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement
We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with International Financial Reporting Standards give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company’s performance, business model and strategy.

By order of the Board

James Gibson
Chief Executive Officer
19 May 2014

John Trotman
Chief Financial Officer
19 May 2014

Independent Auditors’ Report to the Members of Big Yellow Group PLC

Opinion on financial
statements of
Big Yellow Group PLC

In our opinion the financial statements:

> give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March

2014 and of the Group’s profit for the year then ended;

> the Group financial statements have been properly prepared in accordance with International Financial

Reporting Standards (IFRSs) as adopted by the European Union;

> the Parent Company financial statements have been properly prepared in accordance with IFRSs as

adopted by the European Union and as applied in accordance with the provisions of the Companies Act
2006; and

> the financial statements have been prepared in accordance with the requirements of the Companies Act

2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The financial statements comprise the Consolidated Statement of Comprehensive Income, the Consolidated
and Company Balance Sheets, the Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Cash Flow Statements and the related notes 1 to 34. The financial reporting
framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European
Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions
of the Companies Act 2006.

Going concern

As required by the Listing Rules we have reviewed the Directors’ statement contained within the Strategic
Report that the Group is a going concern. We confirm that:

> we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of

the financial statements is appropriate; and

> we have not identified any material uncertainties that may cast significant doubt on the Group’s ability to

continue as a going concern.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to
the Group’s ability to continue as a going concern.

Our assessment of risks
of material misstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our
audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team:

Risk

How the scope of our audit responded to the risk

Valuation of investment properties and investment properties under
construction (“IPUC”)

We assessed the appropriateness of the valuers’ scope and assessed
whether the third party valuers had sufficient expertise and resource.

Investment properties are held at £776.4m at 31 March 2014. This is the
most quantitatively material balance in the financial statements. These
investment properties are held at market value on the balance sheet.
Market value is by its nature subjective with significant judgement
applied to the valuation.

The key judgements about individual properties are cap rates, rental
growth and stabilised occupancy levels. These judgements drive a cash
flow model that is used as the basis of the valuation of each individual
property.

VAT capital goods scheme (CGS) receivable

The Group has a VAT CGS receivable at 31 March 2014 of £9.0m reflecting
the right to reclaim VAT from HMRC, which it incurred in acquiring or
developing assets subsequently used for generating taxable supplies.
We have identified the following key considerations:

> the valuation of the asset is dependent on the VAT structure of the

group, including the underlying leases; and

> the discount rate used in determining the net present value of the

asset is inherently judgemental.

We obtained the source information provided by management (e.g. historical
revenue on a store by store basis) to the third party valuers and tested the
integrity of such information. We met with the third party valuers to discuss
the key judgements included within their valuations and analysed the key
judgements, namely cap rates, rental growth and stabilised occupancy on a
property by property basis. This analysis was undertaken at both a portfolio
and individual store level.

We also provided the valuations to our own internal real estate specialists
who performed an independent assessment of the assumptions that
underpin the valuations based on their knowledge of the self-storage
industry and wider real estate market.

We have involved VAT specialists in our audit team. We have reviewed the VAT
structure of the group including a sample of the underlying leases. We agreed
that a sum of £0.8m was recovered during the year ended 31 March 2014 by
deduction against the Group’s VAT return.

We compared the discount rate applied by management against the Group’s
cost of debt given the capital expenditure was funded through bank financing.
We tested the cost of debt through agreement to supporting documentation
(e.g. loan agreements).

We performed sensitivity analysis on the discount rate by calculating the
impact on the value of the VAT CGS receivable of using the Group weighted
average cost of capital (WACC) obtained from an independent source and the
interest rate on 10 year UK gilts given the discount rate incorporates the risk
of default by the counterparty, namely HMRC.

The Audit Committee’s consideration of these risks is set out on page 77.

Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an
opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks described above, and
we do not express an opinion on these individual matters.

Our application
of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that
the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the Group to be £4.2 million. This figure was determined as 0.5% of non-
current assets. We consider non-current assets to be a critical financial performance measure for the group
on the basis that it is a key metric used by management and is the basis of the discussion of net asset value
in the Strategic Report. This figure is below 1% of total equity.

In addition to total equity, we also consider the account balances contained within adjusted profit before tax,
which exclude the gain on revaluation of investment properties, movement in fair value interest rate derivatives
and share of non-recurring losses/(gains) in associate, to be critical financial performance measures for the
group. We applied a lower threshold of £1.4 million for testing all balances impacting these financial
performance measures, which has been determined as 5% of adjusted profit before tax.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
£80,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also reported to the Audit Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.

An overview of the
scope of our audit

Our audit was scoped by obtaining an understanding of the Group and its environment, including group-wide
controls, and assessing the risks of material misstatement.

The Group audit team performed the audits of all entities within the Group given they are all located in the United
Kingdom and operate from the same office with the same financial system. In addition, the Group team also
tested the consolidation process.

The Group audit team continued to follow a programme of planned site visits that has been designed so that
either the Senior Statutory Auditor or another member of the Group audit team visits each of the Group’s stores
at least once every six years. At each site visited we undertook a stock count, tested occupancy, tested controls
around cash, agreed cash balances to bank reconciliations and held discussions with store staff.

In our opinion:

> the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006; and

> the information given in the Strategic Report and the Directors’ Report for the financial year for which the

financial statements are prepared is consistent with the financial statements.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

> we have not received all the information and explanations we require for our audit; or
> adequate accounting records have not been kept by the Parent Company, or returns adequate for our

audit have not been received from branches not visited by us; or

> the Parent Company financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
Directors’ remuneration have not been made or the part of the Directors’ Remuneration Report to be
audited is not in agreement with the accounting records and returns. We have nothing to report arising
from these matters.

Opinion on other matters
prescribed by the
Companies Act 2006

Matters on which we are required
to report by exception

Adequacy of explanations
received and accounting records

Directors’ remuneration

Corporate Governance
Statement

Under the Listing Rules we are also required to review the part of the Corporate Governance Statement
relating to the Company’s compliance with nine provisions of the UK Corporate Governance Code. We have
nothing to report arising from our review.

Independent Auditors’ Report to the Members of Big Yellow Group PLC (continued)

Our duty to read other
information in the
Annual Report

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion,
information in the annual report is:

> materially inconsistent with the information in the audited financial statements; or
> apparently materially incorrect based on, or materially inconsistent with, our knowledge of the group

Respective responsibilities
of directors and auditor

Scope of the audit of the
financial statements

acquired in the course of performing our audit; or

> otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our
knowledge acquired during the audit and the Directors’ statement that they consider the annual report is fair,
balanced and understandable and whether the annual report appropriately discloses those matters that we
communicated to the audit committee which we consider should have been disclosed. We confirm that we
have not identified any such inconsistencies or misleading statements.

As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors. We also comply with International Standard on Quality
Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures
are effective, understood and applied. Our quality controls and systems include our dedicated professional
standards review team, strategically focused second partner reviews and independent partner reviews.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to
the Group’s and the Parent Company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in
the annual report to identify material inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.

Darren Longley FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom
19 May 2014

Consolidated Statement of Comprehensive Income
Year ended 31 March 2014

Revenue
Cost of sales

Gross profit
Administrative expenses

Operating profit before gains and losses on property assets
Gain on the revaluation of investment properties
Gains on surplus land

Operating profit
Share of profit of associate
Investment income – interest receivable

Finance costs

– fair value movement of derivatives
– interest payable
– fair value movement of derivatives
– refinancing costs

Profit before taxation
Taxation

Profit for the year (attributable to equity shareholders)

Total comprehensive income for the year (attributable to equity shareholders)

Basic earnings per share

Diluted earnings per share

EPRA earnings per share are shown in Note 12.

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

Note

13a,14
15

13d
7
7
8
8, 18
8

2014
£000

72,196
(25,040)

47,156
(7,619)

39,537
28,350
–

67,887
180
415
2,681
(11,315)
–
–

59,848
(300)

59,548

2013
£000

69,671
(24,493)

45,178
(7,724)

37,454
9,535
1,039

48,028
618
33
–
(12,280)
(223)
(4,300)

31,876
–

31,876

59,548

31,876

42.5p

24.4p

42.2p

24.1p

Consolidated Balance Sheet
Year ended 31 March 2014

Non-current assets
Investment property
Investment property under construction
Interests in leasehold property
Plant, equipment and owner-occupied property
Goodwill
Investment in associate
Capital Goods Scheme receivable

Current assets
Surplus land
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Borrowings
Obligations under finance leases

Non-current liabilities
Derivative financial instruments
Borrowings
Obligations under finance leases
Other payables

Total liabilities

Net assets

Equity
Called up share capital
Share premium account
Reserves

Equity shareholders’ funds

Note

13a
13a
13a
13b
13c
13d
16

17
19
21

18c
19
21
17

2014
£000

2013
£000

776,390
22,303
23,814
2,985
1,433
17,861
7,620

745,605
17,277
21,803
2,750
1,433
17,681
7,501

852,406

814,050

6,059
290
13,531
3,301

23,181

4,593
300
14,450
7,850

27,193

875,587

841,243

(26,818)
(2,034)
(1,615)

(24,421)
(1,937)
(1,952)

(30,467)

(28,310)

(2,813)
(226,044)
(22,199)
–

(5,494)
(234,948)
(19,851)
(12)

(251,056)

(260,305)

(281,523)

(288,615)

594,064

552,628

14,306
44,278
535,480

14,264
44,278
494,086

594,064

552,628

The financial statements were approved by the Board of Directors and authorised for issue on 19 May 2014. They were signed on its behalf by:

James Gibson
Director

John Trotman
Director

Company Registration No. 03625199

Consolidated Statement of Changes in Equity
Year ended 31 March 2014

At 1 April 2013
Total comprehensive gain for the year
Issue of share capital
Dividend
Credit to equity for equity-settled
share based payments

Share
capital
£000

14,264
–
42
–

Share
premium
account
£000

44,278
–
–
–

Capital
redemption
reserve
£000

1,653
–
–
–

Retained
earnings
£000

463,263
59,548
–
(19,591)

Other
distributable
reserve
£000

34,793
–
–
–

Own
shares
£000

(5,623)
–
–
–

Total
£000

552,628
59,548
42
(19,591)

–

1,437

–

1,437

At 31 March 2014

14,306

44,278

1,653

504,657

34,793

(5,623)

594,064

Year ended 31 March 2013

At 1 April 2012
Total comprehensive gain for the year
Issue of share capital
Dividend
Credit to equity for equity-settled
share based payments

Share
capital
£000

13,139
–
1,125
–

Share
premium
account
£000

43,432
–
846
–

Capital
redemption
reserve
£000

1,653
–
–
–

Retained
earnings
£000

441,899
31,876
–
(13,543)

Other
distributable
reserve
£000

–
–
34,793
–

Own
shares
£000

(5,623)
–
–
–

Total
£000

494,500
31,876
36,764
(13,543)

–

3,031

–

3,031

At 31 March 2013

14,264

44,278

1,653

463,263

34,793

(5,623)

552,628

The other distributable reserve arose from merger relief under S612 of Companies Act 2006, following the Group’s placing of 10 million shares in January 2013.

Consolidated Cash Flow Statement
Year ended 31 March 2014

Operating profit
Gain on the revaluation of investment properties
Gains on surplus land
Depreciation
Depreciation of finance lease capital obligations
Employee share options
Decrease/(increase) in inventories
Increase in receivables
Increase in payables

Cash generated from operations
Interest paid
Interest received

Cash flows from operating activities

Investing activities
Sale of surplus land
Purchase of non-current assets
Additions to surplus land
Receipt from Capital Goods Scheme
Investment in associate

Cash flows from investing activities

Financing activities
Issue of share capital
Payment of finance lease liabilities
Equity dividends paid
Refinancing fees
Payments to cancel interest rate derivatives
Reduction in borrowings

Cash flows from financing activities

Net decrease in cash and cash equivalents
Opening cash and cash equivalents

Closing cash and cash equivalents

Reconciliation of Net Cash Flow to Movement in Net Debt
Year ended 31 March 2014

Net decrease in cash and cash equivalents in the year
Cash outflow from decrease in debt financing

Change in net debt resulting from cash flows

Movement in net debt in the year
Net debt at the start of the year

Net debt at the end of the year

Note

13a, 14
15
13b
13a
6

13d

13a
11

Note

2014
£000

67,887
(28,350)
–
526
974
1,437
10
(1,652)
2,458

43,290
(10,558)
20

2013
£000

48,028
(9,535)
(1,039)
583
933
1,376
(1)
(1,016)
2,696

42,025
(11,873)
34

32,752

30,186

–
(8,460)
(136)
756
–

(7,840)

42
(974)
(19,591)
–
–
(8,938)

15,864
(5,745)
(1,969)
–
(1,567)

6,583

36,764
(933)
(13,543)
(5,096)
(10,477)
(45,694)

(29,461)

(38,979)

(4,549)
7,850

3,301

(2,210)
10,060

7,850

2014
£000

(4,549)
8,938

2013
£000

(2,210)
45,694

4,389

43,484

4,389
(230,456)

43,484
(273,940)

(226,067)

(230,456)

Notes to the Financial Statements
Year ended 31 March 2014

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 on pages 14 to 32.

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

2. SIGNIFICANT ACCOUNTING POLICIES

Adoption of new and revised standards
The following new and revised Standards and Interpretations have been adopted in the current year:

> IFRS 10 Consolidated Financial Statements
> IFRS 11 Joint Arrangements
> IFRS 12 Disclosure of Interests in Other Entities
> IFRS 13 Fair Value Measurement
> IAS 19 Employee Benefits
> IAS 27 Separate Financial Statements (2011)
> IAS 28 Investments in Associates and Joint Ventures (2011)
> Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
> Amendments to IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities
> Annual Improvements 2009-2011 Cycle
> Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
> Amendments to IAS 32 Offsetting Financial Assets and Financial
> Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets

With the exception of IFRS 13, their adoption has not had any significant impact on the amounts reported in these financial statements but may impact
the accounting for future transactions and arrangements.

Under IFRS 13 the Group’s derivative financial instruments are now subject to a credit value adjustment (“CVA”). The CVA takes into account the credit
worthiness of the respective counterparties.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

> IFRS 2 Share-based Payment Amendments resulting from Annual Improvements 2010-2012 Cycle (definition of 'vesting condition')
> IFRS 3 Business Combinations Amendments resulting from Annual Improvements 2010-2012 Cycle (accounting for contingent consideration)
> IFRS 3 Business Combinations Amendments resulting from Annual Improvements 2011-2013 Cycle (scope exception for joint ventures)
> IFRS 7 Financial Instruments: Disclosures Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures
> IFRS 8 Operating Segments Amendments resulting from Annual Improvements 2010-2012 Cycle (aggregation of segments, reconciliation of

segment assets)

> IFRS 9 Financial Instruments Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures
> IFRS 13 Fair Value Measurement Amendments resulting from Annual Improvements 2011-2013 Cycle (scope of the portfolio exception in paragraph 52)
> IAS 16 Property, Plant and Equipment Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of

accumulated depreciation on revaluation)

> IAS 19 Employee Benefits Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to

service should be attributed to periods of service

> IAS 24 Related Party Disclosures Amendments resulting from Annual Improvements 2010-2012 Cycle (management entities)
> IAS 32 Financial Instruments: Presentation Amendments relating to the offsetting of assets and liabilities
> IAS 36 Impairment of Assets Amendments arising from Recoverable Amount Disclosures for Non-Financial Assets
> IAS 38 Intangible Assets Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of accumulated

depreciation on revaluation)

> IAS 40 Investment Property Amendments resulting from Annual Improvements 2011-2013 Cycle (interrelationship between IFRS 3 and IAS 40)

We do not expect there to be a material impact from the adoption of these standards.

Notes to the Financial Statements (continued)
Year ended 31 March 2014

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have
also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the
EU IAS Regulation.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments.
Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted,
which have been applied consistently to the results, other gains and losses, assets, liabilities and cash flows of entities included in the consolidated
financial statements in the current and preceding year, are set out below:

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 ended 31 March 2015 and projections contained in the longer term business plan which
covers the period to March 2019. 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.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to
31 March each year. Control is achieved where the Company has the power to direct the relevant activities of an investee entity so as to obtain
benefits from its activities.

The Group accounts consolidate the accounts of Big Yellow Group PLC and all of its subsidiaries at the year end using acquisition accounting principles.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in line with those used by the Group. The results of subsidiaries acquired or disposed
of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date
of disposal, as appropriate.

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values,
at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the
acquiree. Any costs directly attributable to the business combination are recognised in the income statement. The acquiree’s identifiable assets,
liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except
for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations, which are recognised and measured at the lower of their carrying amount and fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s
interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the
excess is recognised immediately in the statement of comprehensive income.

Investment in subsidiaries
These are recognised at cost less provision for any impairment.

Investment in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in
the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except when
classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s
share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s
interest in that associate (which includes any long term interests that, in substance, form part of the Group’s net investment in the associate) are
recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant
associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and
liabilities of a subsidiary at the date of acquisition.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the statement of
comprehensive income and is not subsequently reversed. The goodwill in the balance sheet has an indefinite useful economic life.

Revenue recognition
Revenue represents amounts derived from the provision of services which fall within the Group’s ordinary activities after deduction of trade discounts
and any applicable value added tax. Income is recognised over the period for which the storage room is occupied by the customer on a straight-line
basis. The Group recognises non-storage income on a straight-line basis over the period in which it is earned.

Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Management fees earned are recognised on a straight-line basis over the period for which the services are provided.

Operating leases
Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the term of the relevant
lease. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit
of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of
the time pattern in which economic benefits from the leased asset are consumed.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Borrowings
Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Premiums payable on settlement or redemption
and direct issue costs are accounted for on an accruals basis in the statement of comprehensive income using the effective interest rate method and
are added to the carrying value amount of the instrument to the extent that they are not settled in the period in which they arise.

Finance costs
All borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred, unless the costs are incurred
as part of the development of a qualifying asset, when they will be capitalised. Commencement of capitalisation is the date when the Group incurs
expenditure for the qualifying asset, incurs borrowing costs and undertakes activities that are necessary to prepare the assets for their intended use
when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. In the case of suspension of
activities during extended periods, the Group suspends capitalisation. The Group ceases capitalisation of borrowing costs when substantially all of the
activities necessary to prepare the asset for use are complete.

Operating profit
Operating profit is stated after gains and losses on surplus land, movements on the revaluation of investment properties and before the share of results
of associates, investment income and finance costs.

Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from the net profit as reported in the statement of comprehensive
income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates except where the Group
is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates substantively enacted at the balance sheet date that are expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Notes to the Financial Statements (continued)
Year ended 31 March 2014

2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Plant, equipment and owner occupied property
All property, plant and equipment, not classified as investment property, are carried at historic cost less depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and investment properties, over their estimated useful lives,
using the straight-line method, on the following bases:

Freehold property
Leasehold improvements
Plant and machinery
Motor vehicles
Fixtures and fittings
Computer equipment

50 years
Over period of the lease
10 years
4 years
5 years
3 years

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised in income.

Investment property
The criteria used to distinguish investment property from owner-occupied property is to consider whether the property is held for rental income and for
capital appreciation. Where this is the case, the Group recognises these owned or leased properties as investment properties. Investment property is
initially recognised at cost and revalued at the balance sheet date to fair value as determined by professionally qualified external valuers. In
accordance with IAS 40, investment property held as a leasehold is stated gross of the recognised finance lease liability.

Gains or losses arising from the changes in fair value of investment property are included in the statement of comprehensive income of the period in
which they arise. In accordance with IAS 40, as the Group uses the fair value model, no depreciation is provided in respect of investment properties
including integral plant.

Leasehold properties that are leased under operating leases are classified as investment properties and included in the balance sheet at fair value. The
obligation to the lessor for the buildings element of the leasehold is included in the balance sheet at the present value of the minimum lease payments
at inception, and is shown within note 21. Lease payments are apportioned between finance charges and a reduction of the outstanding lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.

Investment property under construction
Investment property under construction is initially recognised at cost and revalued at the balance sheet date to fair value as determined by
professionally qualified external valuers.

Gains or losses arising from the changes in fair value of investment property under construction are included in the statement of comprehensive
income in the period in which they arise.

Surplus land
Surplus land, which can include assets held for development and future sale, is recognised at the lower of cost and net realisable value. Any gains and
losses on surplus land are recognised through the statement of comprehensive income.

Impairment of assets
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). The recoverable amount is the higher of an asset’s net selling price and its value-in-use (ie the net present value of its future
cash flows discounted at the Group’s average pre-tax interest rate that reflects the borrowing costs and risk for the asset).

Inventories
Inventories, representing the cost of packing materials, are stated at the lower of cost and net realisable value.

Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of
the instrument. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and
losses’ line item in the income statement.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

A – Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of interest rates. The Group uses interest rate swap contracts to hedge these exposures.
The Group does not use derivative financial instruments for speculative purposes. The use of financial derivatives is governed by the Group’s policies
approved by the Board of Directors. The policy in respect of interest rates is to maintain a balance between flexibility and the hedging of interest rate risk.

Derivatives are initially recognised at fair value and are subsequently reviewed at each balance sheet date. The fair value of interest rate derivatives
at the reporting date is determined by discounting the future cash flows using the forward curves at the reporting date and the credit risk inherent
in the contract.

Changes in the fair value of derivative financial instruments are recognised in the statement of comprehensive income as they arise. The Group has not
adopted hedge accounting. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or
losses reported in the statement of comprehensive income.

B – Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans
and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is
recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.

C – Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment
have been impacted.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables,
where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off
against the allowance account.

Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.

D – Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes in value. The carrying amounts of these assets approximates to the fair value.

E – Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

F – Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

G – Trade payables
Trade payables are not interest bearing and are stated at their nominal value.

Retirement benefit costs
Pension costs represent contributions payable to defined contribution schemes and are charged as an expense to the statement of comprehensive
income as they fall due. The assets of the schemes are held separately from those of the Group.

Share-based payments
The Group issues equity-settled share-based payments to certain employees. These are measured at fair value at the date of grant. The fair value
determined at the grant date of the share-based payment is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
shares that will eventually vest.

Fair value is measured by use of the Black-Scholes model and excludes the effect of non-market based vesting conditions. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect
of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recovered in profit and loss such that the
cumulative expenses reflects the revised estimate with a corresponding adjustment to equity reserves.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability.
At each balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in
fair value recognised in profit or loss for the year.

Notes to the Financial Statements (continued)
Year ended 31 March 2014

2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Critical accounting estimates and judgements
In the application of the Group’s accounting policies, which are described above, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and
future periods.

a) Estimate of fair value of Investment Properties and Investment Property Under Construction

The Group’s self storage centres and stores under development are valued using a discounted cash flow methodology which is based on
projections of net operating income. The Group employs expert external valuers, Cushman & Wakefield LLP, who report on the values of the Group’s
stores on a biannual basis. Principal assumptions underlying the estimation of the fair value are those related to: stabilised occupancy levels; the
absorption period to these stabilised levels; expected future growth in storage rents and operating costs; maintenance requirements; capitalisation
rates and discount rates. A more detailed explanation of the background and methodology adopted in the valuation of the Group’s investment
properties is set out in note 14 to the accounts.

b) Capital Goods Scheme receivable

The Group has a receivable in respect of amounts due back from HMRC under the Capital Goods Scheme following the imposition of VAT on self
storage from 1 October 2012. The amount recognised has been calculated in accordance with the relevant legislation, but is subject to confirmation
by HMRC. The amount is payable over up to ten years and has been discounted at the Group’s average cost of debt.

3. REVENUE

Analysis of the Group’s operating revenue can be found below and in the Portfolio Summary on page 20.

Open stores
Self storage income
Other storage related income
Ancillary store rental income

Other revenue
Non-storage income
Fees earned from Big Yellow Limited Partnership
Other management fees earned

Revenue per statement of comprehensive income

Interest receivable on bank deposits (see note 7)

Total revenue per IAS 18

2014
£000

2013
£000

59,994
10,475
237

70,706

420
640
430

58,112
9,996
226

68,334

298
639
400

72,196

69,671

72,216

69,704

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):

Depreciation of plant, equipment and owner-occupied property
Leasehold property depreciation
Gain on the revaluation of investment property
Gains on surplus land
Cost of inventories recognised as an expense
Employee costs (see note 6)
Operating lease rentals
Auditor’s remuneration for audit services (see below)

b) Analysis of auditor’s remuneration:

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Other services – audit of the Company’s subsidiaries’ annual accounts

Total audit fees

Tax services – compliance
Tax services – advisory
Other services
Real estate advice (planning)

Total non-audit fees

2014
£000

526
974
(28,350)
–
923
11,075
188
167

2014
£000

160
7

167

–
54
41
1

2013
£000

583
933
(9,535)
(1,039)
908
10,947
154
167

2013
£000

160
7

167

32
60
34
11

137

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.

6. EMPLOYEE COSTS

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

Sales
Administration

At 31 March 2014 the total number of Group employees was 325 (2013: 319).

Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based payments

Details of Directors’ Remuneration is given on pages 56 to 75.

2014
Number

2013
Number

246
43

289

2014
£000

8,007
1,275
356
1,437

243
43

286

2013
£000

7,763
1,472
336
1,376

11,075

10,947

Notes to the Financial Statements (continued)
Year ended 31 March 2014

INVESTMENT INCOME

Bank interest receivable
Unwinding of discount on Capital Goods Scheme receivable

Total interest receivable

Fair value movement on interest rate derivatives

Total investment income

8. FINANCE COSTS

Interest on bank borrowings
Capitalised interest
Interest on obligations under finance leases
Other interest payable

Total interest payable

Change in fair value of interest rate derivatives
Refinancing costs

Total finance costs

2014
£000

20
395

415

2,681

3,096

2014
£000

10,768
(484)
1,031
–

2013
£000

33
–

–

2013
£000

11,458
(236)
1,057
1

11,315

12,280

–
–

223
4,300

11,315

16,803

The refinancing costs in the prior year relate to the unamortised loan arrangement costs of the previous bank facility, and the write-off of the set-up
costs of the new bank facility in accordance with IAS 39.

9. TAXATION

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

UK current tax

Current tax:
– Current year
Deferred tax (see note 20):
– Current year

A reconciliation of the tax charge is shown below:

Profit before tax

Tax charge at 23% (2013 – 24%) thereon
Effects of:
Revaluation of investment properties
Permanent differences
Profits from the tax exempt business
Losses not utilised in the year
Utilisation of brought forward losses
Movement on other unrecognised deferred tax assets

Total tax charge

2014
£000

300

–

300

2014
£000

59,848

13,765

(6,368)
147
(6,386)
–
(41)
(817)

300

2013
£000

–

2013
£000

31,876

7,650

493
(3,155)
(5,313)
4,663
–
(4,338)

–

At 31 March 2014 the Group has unutilised tax losses of £36.5 million (2013: £37.5 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

Profit before tax
(Gain)/loss on revaluation of investment properties – wholly owned

– in associate

Change in fair value of interest rate derivatives – Group

– in associate

VAT implementation costs
Refinancing costs
Share of refinancing costs in associate
Gains on surplus land

Adjusted profit before tax

Net bank interest
Depreciation (see note 13b)

Adjusted EBITDA

2014
£000

59,848
(28,350)
662
(2,681)
(258)
–
–
–
–

29,221

10,264
526

40,011

2013
£000

31,876
(9,535)
(821)
223
(211)
179
4,300
499
(1,039)

25,471

11,190
583

37,244

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 £28,921,000 for the year after the tax charge of £300,000 (2013: £25,471,000 after no
tax charge).

11. DIVIDENDS

Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2013 of 6.0p
(2012: 5.5p) per share.
Interim dividend for the year ended 31 March 2014 of 8.0p
(2013: 5.0p) per share.

Proposed final dividend for the year ended 31 March 2014 of
8.4p (2013: 6.0p) per share.

2014
£000

2013
£000

8,384

7,057

11,207

19,591

6,486

13,543

11,774

8,384

Subject to approval by shareholders at the Annual General Meeting to be held on 16 July 2014, the final dividend will be paid on 24 July 2014. The ex-div
date is 11 June 2014 and the record date is 13 June 2014.

The Property Income Dividend (“PID”) payable for the year is 13 pence per share (2013: 8 pence per share).

Notes to the Financial Statements (continued)
Year ended 31 March 2014

12. EARNINGS AND NET ASSETS PER SHARE

Year ended 31 March 2014

Year ended 31 March 2013

Basic
Dilutive share options

Diluted

Adjustments:
Gain on revaluation of investment properties
Change in fair value of interest rate derivatives
Gains on surplus land
VAT implementation costs
Refinancing costs
Share of associate non-recurring losses/(gains)

EPRA – diluted

EPRA – basic

Earnings
£m

59.5
–

59.5

(28.3)
(2.7)
–
–
–
0.4

28.9

Shares
million

139.9
1.2

141.1

–
–
–
–
–
–

141.1

139.9

Pence per
share

Earnings
£m

42.5
(0.3)

42.2

(20.1)
(1.9)
–
–
–
0.3

20.5

20.7

31.9
–

31.9

(9.5)
0.2
(1.0)
0.2
4.3
(0.6)

25.5

Shares
million

130.9
1.3

132.2

–
–
–
–
–
–

132.2

130.9

Pence per
share

24.4
(0.3)

24.1

(7.2)
0.2
(0.8)
0.1
3.3
(0.4)

19.3

19.5

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

EPRA earnings and earnings per ordinary share before non-recurring items, movements on revaluation of investment properties, gains on surplus land,
the change in fair value of interest rate derivatives, and share of associate non-recurring gains and losses have been disclosed to give a clearer
understanding of the Group’s underlying trading performance.

The European Public Real Estate Association (“EPRA”) has issued recommended bases for the calculation of net assets per share information and this is
shown in the table below:

Basic net asset value
Exercise of share options

EPRA NNNAV
Adjustments:
Fair value of derivatives
Fair value of derivatives – share of associate

EPRA NAV

Basic net assets per share (pence)
EPRA NNNAV per share (pence)
EPRA NAV per share (pence)
EPRA NAV (as above) (£000)
Valuation methodology assumption (see note 14) (£000)

Adjusted net asset value (£000)
Adjusted net assets per share (pence)

Shares in issue
Own shares held in treasury
Own shares held in EBT

Basic shares in issue used for calculation
Exercise of share options

Diluted shares used for calculation

31 March
2014
£000

594,064
483

31 March
2013
£000

552,628
555

594,547

553,183

2,813
(26)

5,494
232

597,334

558,909

423.9
418.5
420.5
597,334
37,057

634,391
446.5

395.5
390.0
394.1
558,909
35,621

594,530
419.2

No. of shares

143,061,147 142,639,647
(1,418,750)
(1,500,000)

(1,418,750)
(1,500,000)

140,142,397 139,720,897
2,110,396

1,926,527

142,068,924 141,831,293

Net assets per share are shareholders’ funds divided by the number of shares at the year end. The shares currently held in the Group’s Employee
Benefit Trust and in treasury are excluded from both net assets and the number of shares. Adjusted net assets per share include the effect of those
shares issuable under employee share option schemes and the effect of alternative valuation methodology assumptions (see note 14).

13. NON-CURRENT ASSETS

a) Investment property, investment property under construction and interests in leasehold property

At 31 March 2012
Additions
Capital Goods Scheme adjustment*
Reclassification
Adjustment to present value
Revaluation
Depreciation

At 31 March 2013
Additions
Capital Goods Scheme adjustment**
Transfer to surplus land
Adjustment to present value
Revaluation (see note 14)
Depreciation

At 31 March 2014

Investment
property
under
construction
£000

Interests in
leasehold
property
£000

33,905
305
–
(16,260)
–
(673)
–

17,277
5,860
–
–
–
(834)
–

22,394
–
–
–
342
–
(933)

21,803
–
–
–
2,985
–
(974)

Investment
property
£000

726,390
3,376
(10,629)
16,260
–
10,208
–

745,605
1,745
1,186
(1,330)
–
29,184
–

Total
£000

782,689
3,681
(10,629)
–
342
9,535
(933)

784,685
7,605
1,186
(1,330)
2,985
28,350
(974)

776,390

22,303

23,814

822,507

* The Capital Goods Scheme adjustment in the prior year includes the discounted debtor receivable of £10,346,000, and a reduction in the creditor payable of £283,000.
** The Capital Goods Scheme receivable has been reduced in the year by £1.2 million following the identification of some trapped Capital Goods Scheme recovery.

The income from self storage accommodation earned by the Group from its investment property is disclosed in note 3. Direct operating expenses,
which are all applied to generating rental income, arising on the investment property in the year are disclosed in the Portfolio Summary on page 20.

Included within additions is £0.5 million of capitalised interest (2013: £0.2 million), calculated at the Group’s average borrowing cost for the year of 4.5%.

55 of the Group’s investment properties are pledged as security for loans, with a total external value of £770,140,000.

b) Plant, equipment and owner occupied property

Freehold
property
£000

Leasehold
improvements
£000

Plant and
machinery
£000

Motor
vehicles
£000

Fixtures,
fittings & office
equipment
£000

Cost
At 31 March 2012
Additions

At 31 March 2013
Reclassification
Retirement of fully depreciated assets
Additions

At 31 March 2014

Depreciation
At 31 March 2012
Charge for the year

At 31 March 2013
Reclassification
Retirement of fully depreciated assets
Charge for the year

At 31 March 2014

Net book value
At 31 March 2014

At 31 March 2013

1,867
–

1,867
(9)
(15)
–

1,843

(226)
(35)

(261)
2
15
(49)

(293)

1,550

1,606

44
–

44
9
–
–

(44)
–

(44)
(2)
–
(3)

(49)

–

780
46

826
–
(418)
17

425

(563)
(46)

(609)
–
418
(27)

(218)

207

217

25
–

25
–
–
–

(9)
(6)

(15)
–
–
(7)

(22)

Total
£000

9,024
696

9,720
–
(6,246)
761

4,235

(6,387)
(583)

(6,970)
–
6,246
(526)

6,308
650

6,958
–
(5,813)
744

1,889

(5,545)
(496)

(6,041)
–
5,813
(440)

(668)

(1,250)

1,221

917

2,985

2,750

Notes to the Financial Statements (continued)
Year ended 31 March 2014

13. NON-CURRENT ASSETS (continued)

c) Goodwill

Goodwill relates to the purchase of Big Yellow Self Storage Company Limited in 1999. The asset is tested bi-annually for impairment. The carrying
value of £1,433,000 remains unchanged from the prior year as there is considered to be no impairment in the value of the asset.

d) Investment in associate

The Group has a 33.3% interest in Big Yellow Limited Partnership. This interest is accounted for as an associate, using equity accounting. The
Partnership commenced trading on 1 December 2007.

At the beginning of the year
Subscription for partnership capital and advances
Share of results (see below)

31 March
2014
£000

17,681
–
180

17,861

31 March
2013
£000

15,496
1,567
618

17,681

The Group has subscribed for cumulative partnership capital and advances of £16,366,000 to 31 March 2014 (2013: £16,366,000).

The figures below show the trading results of Big Yellow Limited Partnership, and the Group’s share of the results and the net assets of the
Partnership.

Big Yellow Limited Partnership

Income statement (100%)
Revenue
Cost of sales
Administrative expenses

Operating profit
(Loss)/gain on the revaluation of investment properties
Net interest payable
Refinancing costs
Fair value movement of interest rate derivatives

Profit before and after tax

Balance sheet (100%)
Investment property
Other non-current assets
Current assets
Current liabilities
Derivative financial instruments
Non-current liabilities

Net assets (100%)

Group share of (33.3%)

Operating profit
(Loss)/gain on the revaluation of investment properties
Net interest payable
Refinancing costs
Fair value movement of interest rate derivatives

Profit for the year

Associate net assets

Year ended
31 March
2014
£000

Year ended
31 March
2013
£000

9,529
(4,846)
(112)

4,571
(1,985)
(2,820)
–
774

540

8,289
(4,845)
(76)

3,368
2,462
(3,111)
(1,497)
633

1,855

108,110
3,588
3,009
(3,201)
77
(58,000)

109,480
3,598
3,422
(2,759)
(697)
(60,000)

53,583

53,044

Year ended
31 March
2014
£000

Year ended
31 March
2013
£000

1,524
(662)
(940)
–
258

180

1,122
821
(1,037)
(499)
211

618

17,861

17,681

13. NON-CURRENT ASSETS (continued)

The Partnership has a £60 million bank facility with RBS and HSBC expiring in September 2016. £2 million of this facility has been voluntarily repaid and
cancelled during the year, leaving drawn debt at £58 million at 31 March 2014. The loan amortises to £51.1 million by September 2016, with
amortisation starting in June 2014.

The average cost of debt of the facility in the year was 5.1%. Interest rate derivatives are in place covering 50% of the drawn debt at a pre-margin cost of
1.05%. There is a margin ratchet based on the Partnership’s income cover which ranges between 250 bps and 400 bps.

The Partnership loan has a loan to value covenant which requires the gross loan to the value of the Partnership’s investment property assets to be no
more than 55%. The loan is non-recourse to the Group.

The Group has an option to acquire the property assets within the Partnership exercisable at 31 March 2014 (subject to an IRR hurdle being achieved)
and at 31 March 2015 (with no IRR hurdle). The option has been deferred at 31 March 2014, and has been assessed to have nil value at 31 March 2014.
The Directors have considered the rights the option bestows on the Group and have concluded that as at 31 March 2014, the option does not allow the
Group to direct the relevant activities of the Partnership and accordingly continues to account for its investment in the Partnership on an equity
accounting basis.

14. VALUATION OF INVESTMENT PROPERTY

Freehold stores*
At 31 March 2013
Transfer to surplus land
Capital Goods Scheme adjustment
Movement in year

At 31 March 2014

Leasehold stores
At 31 March 2013
Movement in year

At 31 March 2014

Total of open stores
At 31 March 2013
Transfer to surplus land
Capital Goods Scheme adjustment
Movement in year

At 31 March 2014

Investment property under construction
At 31 March 2013
Movement in year

At 31 March 2014

Valuation of all investment property
At 31 March 2013
Transfer to surplus land
Capital Goods Scheme adjustment
Movement in year

At 31 March 2014

* Includes one long leasehold property

Deemed cost
£000

Revaluation on
deemed cost
£000

372,190
(1,330)
1,186
1,457

328,315
–
(1,186)
25,728

Valuation
£000

700,505
(1,330)
–
27,185

373,503

352,857

726,360

15,911
288

16,199

29,189
4,642

33,831

45,100
4,930

50,030

388,101
(1,330)
1,186
1,745

357,504
–
(1,186)
30,370

745,605
(1,330)
–
32,115

389,702

386,688

776,390

23,782
5,860

29,642

(6,505)
(834)

17,277
5,026

(7,339)

22,303

411,883
(1,330)
1,186
7,605

350,999
–
(1,186)
29,536

762,882
(1,330)
–
37,141

419,344

379,349

798,693

Notes to the Financial Statements (continued)
Year ended 31 March 2014

14. VALUATION OF INVESTMENT PROPERTY (continued)

The Group has classified the fair value investment property and the investment property under construction within Level 3 of the fair value hierarchy.
There has been no transfer to or from Level 3 in the year.

The freehold and leasehold investment properties have been valued at 31 March 2014 by external valuers, Cushman & Wakefield LLP ("C&W"). The
valuation has been carried out in accordance with the RICS Valuation – Professional Standards, published by The Royal Institution of Chartered
Surveyors ("the Red Book"). The valuation of each of the investment properties and the investment properties under construction has been prepared
on the basis of either Fair Value or Fair Value as a fully equipped operational entity, having regard to trading potential, as appropriate.

The valuation has been provided for accounts purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book. In compliance with
the disclosure requirements of the Red Book, C&W have confirmed that:

> The members of the RICS who have been the signatories to the valuations provided to the Group for the same purposes as this valuation have done

so since September 2004;

> C&W have been carrying out this bi-annual valuation for the same purposes as this valuation on behalf of the Group since September 2004;
> C&W do not provide other significant professional or agency services to the Group;
> In relation to the preceding financial year of C&W, the proportion of the total fees payable by the Group to the total fee income of the firm is less

than 5%; and

> The fee payable to C&W is a fixed amount per store, and is not contingent on the appraised value.

Market uncertainty
C&W’s valuation report comments on valuation uncertainty resulting from low liquidity in the market for self storage property. C&W note that, although
there were a number of self storage transactions in 2007, the only significant transactions since 2007 are:

The sale of a 51% share in Shurgard Europe which was announced in January 2008 and completed on 31 March 2008;

The sale of the former Keepsafe portfolio by Macquarie to Alligator Self Storage which was completed in January 2010;

The purchase by Shurgard Europe of the 80% interests held by its joint venture partner (Arcapita) in its two European joint venture vehicles, First
Shurgard and Second Shurgard. The price paid was 172 million Euros and the transaction was announced in March 2011. The two joint ventures
owned 72 self storage properties; and

The purchase of Selstor, Sweden, by Pelican Self Storage/M3 Capital in the fourth quarter of 2012.

There have been ten single store market transactions in the UK since 2010. C&W state that due to the lack of comparable market information in the self
storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during more active market conditions.

Valuation methodology
C&W have adopted different approaches for the valuation of the leasehold and freehold assets as follows:

Freehold and long leasehold
The valuation is based on a discounted cash flow of the net operating income over a ten year period and notional sale of the asset at the end of the
tenth year.

Assumptions
A) Net operating income is based on projected revenue received less projected operating costs together with a central administration charge of 6% of
the estimated annual revenue subject to a cap and a collar. The initial net operating income is calculated by estimating the net operating income in
the first 12 months following the valuation date.

B) The net operating income in future years is calculated assuming either straight-line absorption from day one actual occupancy or variable
absorption over years one to four of the cash flow period to an estimated stabilised/mature occupancy level. In the valuation the assumed
stabilised occupancy level for the 54 trading stores (both freeholds and leaseholds) open at 31 March 2014 averages 81.1% (31 March 2013:
81.5%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. The average time assumed for the
32 established stores to trade at their maturity levels is 29 months (31 March 2013: 32 months); for the 22 lease-up stores, the period to maturity
is 36 months (31 March 2013: 43 months).

C) The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for industrial and retail

warehouse property, yields for other trading property types such as student housing and hotels, bank base rates, ten year money rates, inflation and
the available evidence of transactions in the sector. The valuation included in the accounts assumes rental growth in future periods. If an assumption of
no rental growth is applied to the external valuation, the net initial yield pre-administration expenses for the 32 established stores is 7.0% (31 March
2013: 6.8%) rising to a stabilised net yield pre-administration expenses of 7.8% (31 March 2013: 8.1%). Also on a no growth and pre-administration
expenses basis the 22 lease-up stores have a net initial yield of 5.5% (31 March 2013: 4.9%) rising to 7.8% (31 March 2013: 8.4%) on stabilisation.

D) The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that reflects the risk associated

with each asset. The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 11.0% (31 March 2013: 11.2%).

E) Purchaser’s costs of 5.8% (see below) have been assumed initially and sale plus purchaser’s costs totalling 6.8% are assumed on the notional sales

in the tenth year in relation to the freehold stores.

100

14. VALUATION OF INVESTMENT PROPERTY (continued)

Short leasehold
The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted cash flow is
extended to the expiry of the lease. The average unexpired term of the Group’s seven short leasehold properties is 16.8 years (31 March 2013: 15.7 years).

Investment properties under construction
C&W have valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection expected for
the store at opening and after allowing for the outstanding costs to take each scheme from its current state to completion and full fit-out. C&W have
allowed for holding costs and construction contingency, as appropriate. One scheme does not yet have planning consent and C&W have reflected the
planning risk in their valuation.

Immature stores: value uncertainty
C&W have assessed the value of each property individually. However, two of the stores in the portfolio are relatively immature and have low initial cash
flow. C&W have endeavoured to reflect the nature of the cash flow profile for these properties in their valuation, and the higher associated risks relating
to the as yet unproven future cash flow, by adjustment to the capitalisation rates and discount rates adopted. However, immature low cash flow stores
of this nature are rarely, if ever, traded individually in the market, unless as part of a distressed sale or similar situation. Although, there is more
evidence of immature low cash flow stores being traded as part of a group or portfolio transaction.

Please note C&W’s comments in relation to market uncertainty in the self storage sector due to the lack of comparable market transactions and
information. The degree of uncertainty relating to the two immature stores is greater than in relation to the balance of the properties due to there being
even less market evidence that might be available for more mature properties and portfolios.

C&W state that in practice, if an actual sale of the properties were to be contemplated then any immature low cash flow stores would normally be
presented to the market for sale lotted or grouped with other more mature assets owned by the same entity, in order to alleviate the issue of negative
or low short term cash flow. This approach would enhance the marketability of the group of assets and assist in achieving the best price available in the
market by diluting the cash flow risk.

C&W have not adjusted their opinion of fair value to reflect such a grouping of the immature assets with other properties in the portfolio and all stores
have been valued individually. However, they highlight the matter to alert the Group to the manner in which the properties might be grouped or lotted
in order maximise their attractiveness to the market place.

C&W consider this approach to be a valuation assumption but not a Special Assumption, the latter being an assumption that assumes facts that differ
from the actual facts existing at the valuation date – and which, if not adopted, could produce a material difference in value.

C&W have not assumed that the entire portfolio of properties owned by the entity would be sold as a single lot and the value for the whole portfolio in
the context of a sale as a single lot may differ significantly (either higher or lower) from the aggregate of the individual values for each property in the
portfolio, reflecting the lotting assumption described above.

Valuation assumption for purchaser’s costs
The Group’s investment property assets have been valued for the purposes of the financial statements after deducting notional purchaser’s cost of 5.8%
of gross value, being the maximum amount for notional purchaser’s costs as if they were sold directly as property assets. The valuation is an asset
valuation which is entirely linked to the operating performance of the business. They would have to be sold with the benefit of operational contracts,
employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure.

This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing
a deduction for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the
assumed Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser’s
cost of 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years were completed in a corporate
structure. The Group therefore instructed C&W to carry out a Red Book valuation on the above basis, and this results in a higher property valuation
at 31 March 2014 of £834.2 million (£35.5 million higher than the value recorded in the financial statements). The valuations in Big Yellow Limited
Partnership are £4.8 million higher than the value recorded in the financial statements, of which the Group’s share is £1.6 million. The sum of these
is £37.1 million and translates to 26.0 pence per share. We have included this revised valuation in the adjusted diluted net asset calculation
(see note 12).

101

Notes to the Financial Statements (continued)
Year ended 31 March 2014

15. SURPLUS LAND

At 31 March 2013
Transfer from investment property
Additions

At 31 March 2014

In the prior year a gain of £1,039,000 was recognised following the disposal of three sites.

16. TRADE AND OTHER RECEIVABLES

Current
Trade receivables
Capital Goods Scheme receivable
Other receivables
Prepayments and accrued income

Non-current
Capital Goods Scheme receivable

£000

4,593
1,330
136

6,059

31 March
2014
£000

31 March
2013
£000

2,594
1,344
384
9,209

2,373
2,845
887
8,345

13,531

14,450

7,620

7,501

Trade receivables are net of a bad debt provision of £42,000 (2013: £45,000). The Directors consider that the carrying amount of trade and other
receivables approximates their fair value.

The Financial Review contains commentary on the Capital Goods Scheme receivable.

Trade receivables
The Group does not typically offer credit terms to its customers, requiring them to pay in advance of their storage period and hence the Group is not
exposed to significant credit risk. A late charge of 10% is applied to a customer’s account if they are greater than 10 days overdue in their payment. The
Group provides for receivables on a specific basis. There is a right of lien over the customers’ goods, so if they have not paid within a certain time frame,
we have the right to sell the items they store to recoup the debt owed by the customer. Trade receivables that are overdue are provided for based on
estimated irrecoverable amounts determined by reference to past default experience.

For individual storage customers, the Group does not perform credit checks, however this is mitigated by the fact that these customers are required to
pay in advance, and also to pay a deposit ranging from between one week to four weeks’ storage income. Before accepting a new business customer
who wishes to use a number of the Group’s stores, the Group uses an external credit rating to assess the potential customer’s credit quality and defines
credit limits by customer. There are no customers who represent more than 5% of the total balance of trade receivables.

Included in the Group’s trade receivable balance are debtors with a carrying amount of £285,000 (2013: £384,000) which are past due at the reporting
date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable.
The average age of these receivables is 37 days past due (2013: 34 days past due).

Ageing of past due but not impaired receivables

1 – 30 days
30 – 60 days
60 + days

Total

2014
£000

136
52
97

285

2013
£000

299
37
48

384

The aged debtors relate principally to tenants at sites awaiting development, rather than storage customers. The majority of these amounts have been
collected since the year end.

102

16. TRADE AND OTHER RECEIVABLES (continued)

Movement in the allowance for doubtful debts

Balance at the beginning of the year
Amounts provided in year
Amounts written off as uncollectible

Balance at the end of the year

2014
£000

45
73
(76)

2013
£000

24
116
(95)

The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further
credit provision required in excess of the allowance for doubtful debts.

Ageing of impaired trade receivables

1 – 30 days
30 – 60 days
60 + days

Total

17. TRADE AND OTHER PAYABLES

Current
Trade payables
Other payables
Accruals and deferred income
Amounts owed to associate
VAT repayable under Capital Goods Scheme

Non-current
VAT repayable under Capital Goods Scheme

2014
£000

–
5
37

31 March
2014
£000

10,758
5,647
10,330
2
81

26,818

2013
£000

–
3
42

31 March
2013
£000

8,454
5,445
10,500
2
20

24,421

–

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

The Directors estimate the fair value of the Group’s VAT payable under the Capital Goods Scheme as follows:

VAT payable under the Capital Goods Scheme

2014

2013

Carrying
amount
£000

Estimated
fair value
£000

Carrying
amount
£000

Estimated
fair value
£000

The fair values have been calculated by discounting expected cash flows at interest rates prevailing at the year end.

103

Notes to the Financial Statements (continued)
Year ended 31 March 2014

18. FINANCIAL INSTRUMENTS

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to
stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves
and retained earnings. The Group’s debt facilities require 60% of total drawn debt to be fixed. The Group has complied with this during the year.

With the exception of derivative instruments which are classified as a financial liability at fair value through the profit and loss (“FVTPL”), financial
liabilities are categorised under amortised cost. All financial assets are categorised as loans and receivables.

Exposure to credit, interest rate and currency risks arises in the normal course of the Group’s business. Derivative financial instruments are used to
manage exposure to fluctuations in interest rates, but are not employed for speculative purposes.

Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2
to the financial statements.

A. Balance sheet management

The Group’s Board reviews the capital structure on an ongoing basis. As part of this review, the Board considers the cost of capital and the risks
associated with each class of capital. The Group seeks to have a conservative gearing ratio (the proportion of net debt to equity). The Board
considers at each review the appropriateness of the current ratio in light of the above. The Board is currently satisfied with the Group’s gearing ratio.

The gearing ratio at the year end is as follows:

Debt
Cash and cash equivalents

Net debt
Balance sheet equity
Net debt to equity ratio

2014
£000

(229,368)
3,301

(226,067)
594,064
38.1%

2013
£000

(238,306)
7,850

(230,456)
552,628
41.7%

Debt is defined as long term and short term borrowings, as detailed in note 19, excluding finance leases and debt issue costs. Equity includes all
capital and reserves of the Group attributable to equity holders of the Company. Net debt is defined as gross bank borrowings less cash and cash
equivalents.

B. Debt management

The Group borrows through a senior term loan, secured on 40 self storage assets and sites, and through a 15 year loan with Aviva Commercial
Finance Limited secured on a portfolio of 15 self storage assets. Borrowings are arranged to ensure an appropriate maturity profile and to maintain
short term liquidity. Funding is arranged in the Group and in Big Yellow Limited Partnership through banks and financial institutions with whom the
Group has a strong working relationship.

C. Interest rate risk management

The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the
Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging
activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies are applied, by
either positioning the balance sheet or protecting interest expense through different interest rate cycles.

At 31 March 2014 the Group had one interest rate derivative in place; £70 million fixed at 2.80% (excluding the margin on the underlying debt
instrument) until September 2016.

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on
agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed
rate debt held and the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting date is
determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and is disclosed
below. The average interest rate is based on the outstanding balances at the end of the financial year.

The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is one month LIBOR. The Group will settle the
difference between the fixed and floating interest rate on a net basis.

The Group does not hedge account for its interest rate swaps and states them at fair value, with changes in fair value included in the statement of
comprehensive income. The gain in the statement of comprehensive income for the year on the fair value of interest rate derivatives was
£2,681,000 (2013: loss of £223,000).

The fair value of the above derivatives at 31 March 2014 was a liability of £2,813,000 (2013: liability of £5,494,000).

104

18. FINANCIAL INSTRUMENTS (continued)
D. Interest rate sensitivity analysis

In managing interest rate risks the Group aims to reduce the impact of short term fluctuations on the Group’s earnings, without jeopardising its
flexibility. Over the longer term, permanent changes in interest rates may have an impact on consolidated earnings.

At 31 March 2014, it is estimated that an increase of 0.5 percentage points in interest rates would have reduced the Group’s adjusted profit before
tax by £315,000 (2013: reduced adjusted profit before tax by £350,000) and a decrease of 0.5 percentage points in interest rates would have
increased the Group’s adjusted profit before tax by £315,000 (2013: increased adjusted profit before tax by £350,000). There would have been no
effect on amounts recognised directly in equity. The sensitivity has been calculated by applying the interest rate change to the variable rate
borrowings, net of interest rate swaps, at the year end.

The Group’s sensitivity to interest rates has decreased during the year, following the repayment of floating rate debt from cash resources. The
Board monitors closely the exposure to the floating rate element of our debt.

E. Cash management and liquidity

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual
cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 19 is a description of additional undrawn facilities
that the Group has at its disposal to further reduce liquidity risk.

Short term money market deposits are used to manage liquidity whilst maximising the rate of return on cash resources, giving due consideration
to risk.

F. Foreign currency management

The Group does not have any foreign currency exposure.

G. Credit risk

The credit risk management policies of the Group with respect to trade receivables are discussed in note 16. The Group has no significant
concentration of credit risk, with exposure spread over 42,000 customers in our stores.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating
agencies.

H. Financial maturity analysis

In respect of interest-bearing financial liabilities, the following table provides a maturity analysis for individual elements.

2014 Maturity

Debt
Aviva mortgage
Bank loan payable at variable rate
Debt fixed by interest rate derivatives

Total

2013 Maturity

Debt
Aviva mortgage
Bank loan payable at variable rate
Debt fixed by interest rate derivatives

Total

Total
£000

Less than
one year
£000

One to
two years
£000

Two to
five years
£000

More than
five years
£000

96,368
63,000
70,000

229,368

2,034
–
–

2,034

2,136
–
–

2,136

7,073
63,000
70,000

140,073

85,125
–
–

85,125

Total
£000

Less than
one year
£000

One to
two years
£000

Two to
five years
£000

More than
five years
£000

98,306
70,000
70,000

238,306

1,937
–
–

1,937

2,034
–
–

2,034

6,735
70,000
70,000

146,735

87,600
–
–

87,600

105

Notes to the Financial Statements (continued)
Year ended 31 March 2014

18. FINANCIAL INSTRUMENTS (continued)
I. Fair values of financial instruments

The fair values of the Group’s cash and short term deposits and those of other financial assets equate to their book values. Details of the Group’s
receivables at amortised cost are set out in note 16. The amounts are presented net of provisions for doubtful receivables, and allowances for
impairment are made where appropriate. Trade and other payables, including bank borrowings, are carried at amortised cost. Finance lease
liabilities are included at the fair value of their minimum lease payments. Derivatives are carried at fair value.

For those financial instruments held at valuation, the Group has categorised them into a three level fair value hierarchy based on the priority of the
inputs to the valuation technique in accordance with IFRS 7. The hierarchy gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different
levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the
instrument in its entirety. The fair value of the Group’s outstanding interest rate derivative, as detailed in note 18C, has been estimated by
calculating the present value of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as
defined by IFRS 7. There are no financial instruments which have been categorised as Level 1 or Level 3.

J. Maturity analysis of financial liabilities

The contractual maturities based on market conditions and expected yield curves prevailing at the year end date are as follows:

Interest rate
swaps
£000

Borrowings
and interest
£000

2014

From five to twenty years
From two to five years
From one to two years

Due after more than one year
Due within one year

Total

2013

From five to twenty years
From two to five years
From one to two years

Due after more than one year
Due within one year

Total

Trade
and other
payables
£000

–
–
–

–
26,818

26,818

Trade
and other
payables
£000

–
–
12

12
24,421

24,433

–
306
1,062

1,368
1,558

2,926

Interest rate
swaps
£000

–
2,216
1,649

3,865
1,641

5,506

Finance
leases
£000

28,355
6,308
1,646

36,309
1,646

Total
£000

143,889
162,310
14,987

321,186
42,301

115,534
155,696
12,279

283,509
12,279

295,788

37,955

363,487

Borrowings
and interest
£000

122,377
168,561
12,472

303,410
12,472

Finance
leases
£000

23,489
5,965
1,989

31,443
1,989

Total
£000

145,866
176,742
16,122

338,730
40,523

315,882

33,432

379,253

K. Reconciliation of maturity analyses

The maturity analysis in note 18J shows non-discounted cash flows for all financial liabilities including interest payments. The table below
reconciles the borrowings column in note 19 with the borrowings and interest column in the maturity analysis presented in note 18J.

Borrowings
£000

85,125
140,073
2,136

227,334
2,034

229,368

Unamortised
borrowing
costs
£000

1,290
–
–

1,290
–

1,290

Interest
£000

29,119
15,623
10,143

54,885
10,245

65,130

Borrowings
and interest
£000

115,534
155,696
12,279

283,509
12,279

295,788

2014

From five to twenty years
From two to five years
From one to two years

Due after more than one year
Due within one year

Total

106

18. FINANCIAL INSTRUMENTS (continued)

2013

From five to twenty years
From two to five years
From one to two years

Due after more than one year
Due within one year

Total

19. BORROWINGS

Secured borrowings at amortised cost

Current liabilities
Aviva mortgage
Non-current liabilities
Bank borrowings
Aviva mortgage
Unamortised loan arrangement costs

Total non-current borrowings

Total borrowings

Borrowings
£000

87,600
146,735
2,034

236,369
1,937

238,306

Unamortised
borrowing
costs
£000

1,421
–
–

1,421
–

1,421

Interest
£000

33,356
21,826
10,438

65,620
10,535

76,155

Borrowings
and interest
£000

122,377
168,561
12,472

303,410
12,472

315,882

31 March
2014
£000

31 March
2013
£000

2,034

1,937

133,000
94,334
(1,290)

140,000
96,369
(1,421)

226,044

234,948

228,078

236,885

The weighted average interest rate paid on the borrowings during the year was 4.5% (2013: 4.2%).

The Group has £22,000,000 in undrawn committed borrowing facilities at 31 March 2014, which expire between two and three years (2013:
£15,000,000 expiring between three and four years).

In April 2012, the Group completed a £100 million 15 year fixed rate loan with Aviva Commercial Finance Limited. The loan is secured over a portfolio of
15 freehold self storage centres which were valued at £242.1 million at 29 February 2012 for the purposes of the drawdown. The annual fixed interest
rate on the loan is 4.90%.

The loan amortises to £60 million over the course of the 15 years, consistent with the Group's medium term debt reduction strategy. The debt service is
payable monthly based on fixed annual amounts. The loan outstanding on the fifth anniversary will be £89.8 million; £76.7 million outstanding on the
tenth anniversary, with £60 million remaining at expiry in April 2027.

The Group has a £155 million 4 year bank facility with Lloyds, HSBC and Santander, expiring in September 2016. £120 million of the facility is term loan
with the balance of £35 million revolving. The facilities attract a ratcheted margin over LIBOR based on interest cover. The Group is currently paying a
blended 2.4% margin, the lowest margin on the ratchet, which is effective for asset income cover of greater than 3 times.

The Group was comfortably in compliance with its banking covenants at 31 March 2014, as illustrated in the table below.

Covenant

Consolidated EBITDA
Consolidated net tangible assets (less goodwill)
Bank loan income cover
Aviva loan interest service cover ratio
Aviva loan debt service cover ratio

Covenant
level

Minimum 1.5x
Minimum £250m
Minimum 1.75x
Minimum 1.5x
Minimum 1.2x

At 31 March
2014

3.96x
£592.6 m
5.29x
2.64x
1.88x

The bank and Aviva loan income cover ratios are calculated by dividing the net operating income earned from the respective charged asset pools by the
interest charged on each loan over a rolling 12 month period. The Aviva debt service covenant additionally includes the capital repayment with the interest.

107

Notes to the Financial Statements (continued)
Year ended 31 March 2014

19. BORROWINGS (continued)

Interest rate profile of financial liabilities

At 31 March 2014
Gross financial liabilities

At 31 March 2013
Gross financial liabilities

Total
£000

Floating
rate
£000

Fixed
rate
£000

Weighted
average
interest
rate

Period for
which the
rate is
fixed

Weighted
average
period
until
maturity

229,368

63,000

166,368

4.5%

7.4 years

6.1 years

238,306

70,000

168,306

4.4%

8.3 years

6.9 years

The floating rate at 31 March 2014 was paying a margin of 2.4% above one month LIBOR, the fixed rate debt was paying a weighted average margin of
2.5%. All monetary liabilities, including short term receivables and payables are denominated in sterling. The weighted average interest rate includes
the effect of the Group’s interest rate derivatives. The Directors have concluded that the carrying value of borrowings equates to its fair value.

Narrative disclosures on the Group’s policy for financial instruments are included within the Report on Corporate Governance and in note 18.

20. DEFERRED TAX

Deferred tax assets in respect of share based payments (£0.1 million), interest rate swaps (£0.6 million), corporation tax losses (£5.3 million), capital
allowances in excess of depreciation (£0.4 million) and capital losses (£2.0 million) in respect of the non-REIT taxable business have not been
recognised due to uncertainty over the projected tax liabilities arising in the short term within the non-REIT taxable business.

21. OBLIGATIONS UNDER FINANCE LEASES

Amounts payable under finance leases:
Within one year
Within two to five years inclusive
Greater than five years

Less: future finance charges

Present value of lease obligations

Minimum lease payments

2014
£000

2013
£000

Present value
minimum of lease payments

2014
£000

2013
£000

1,646
7,954
28,355

37,955

1,989
7,954
23,489

33,432

1,615
6,973
15,226

23,814

1,952
6,917
12,934

21,803

(14,141)

(11,629)

23,814

21,803

All lease obligations are denominated in sterling. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no
arrangements have been entered into for contingent rental payments. The carrying amount of the Group’s lease obligations approximates their fair value.

22. SHARE CAPITAL

Authorised

2014
£000

2013
£000

Called up,
allotted and fully paid

2014
£000

2013
£000

Ordinary shares of 10 pence each

20,000

14,306

14,264

Movement in issued share capital
Number of shares at 31 March 2012
Exercise of share options – share option schemes
Issue of shares to Employee Benefit Trust
Placing of shares

Number of shares at 31 March 2013
Exercise of share options – share option schemes

Number of shares at 31 March 2014

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

131,393,041
369,935
876,671
10,000,000

142,639,647
421,500

143,061,147

108

22. SHARE CAPITAL (continued)

At 31 March 2014 options in issue to Directors and employees were as follows:

Date option
Granted

2 July 2003
11 November 2003
6 June 2005
9 June 2006
9 July 2008
3 August 2009
23 February 2010
12 July 2010
28 February 2011
19 July 2011
12 March 2012
11 July 2012
12 March 2013
19 July 2013
25 February 2014

Option
price per
ordinary
share

82.5p
96p
nil p**
nil p**
nil p**
nil p**
255p*
nil p **
263p *
nil p **
240p *
nil p **
305.5p *
nil p **
442.6p*

Date first
exercisable

2 July 2006
11 November 2006
6 June 2008
9 June 2009
9 July 2011
3 August 2012
1 April 2013
12 July 2013
28 February 2014
19 July 2013
1 April 2015
11 July 2015
1 April 2016
19 July 2016
1 April 2017

Date on which the
exercise period expires

1 July 2013
10 November 2013
5 June 2015
8 June 2016
8 July 2018
2 August 2019
1 October 2013
11 July 2020
29 August 2014
19 July 2021
1 October 2015
10 July 2022
1 October 2016
19 July 2023
1 October 2017

Number of
ordinary
shares
2014

–
–
–
–
7,320
5,625
–
14,049
24,471
485,582
99,088
621,977
38,954
514,821
25,686

Number of
ordinary
shares
2013

10,000
4,350
66,667
72,462
24,080
24,425
6,985
440,072
26,184
492,082
111,820
626,977
53,657
–
–

1,837,573

1,959,761

SAYE (see note 23) ** LTIP (see note 23)

OWN SHARES
The own shares reserve represents the cost of shares in Big Yellow Group PLC purchased in the market, and held by the Big Yellow Group PLC Employee
Benefit Trust, along with shares issued directly to the Employee Benefit Trust. 1,500,000 shares are held in the Employee Benefit Trust (2013:
1,500,000), and 1,418,750 shares are held in treasury (2013: 1,418,750).

23. SHARE-BASED PAYMENTS

The Company has four equity share-based payment arrangements, namely approved and unapproved share option schemes, an LTIP scheme, an
Employee Share Save Scheme (“SAYE”) and a Long Term Bonus Performance Plan. The Group recognised a total expense in the year related to equity-
settled share-based payment transactions of £1,437,000 (2013: £1,376,000).

Equity-settled share option plans
The Group granted options to employees under Approved and Unapproved HMRC Share option schemes between November 1999 and November 2003.
The Group’s schemes provided for a grant price equal to the average quoted market price of the Group shares on the date of grant. The vesting period is
three to ten years. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are
forfeited if the employee leaves the Group before the options vest.

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

On an annual basis since 2004 the Group awarded nil-paid options to senior management under the Group’s Long Term Incentive Plan (“LTIP”). The
awards are conditional on the achievement of challenging performance targets as described on page 60 of the Remuneration Report. The awards
granted in 2004, 2005 and 2006 vested in full. The awards granted in 2007 and 2009 lapsed, and the awards granted in 2008 and 2010 partially vested.

The weighted average share price at the date of exercise for options exercised in the year was £4.50 (2013: £3.19).

109

Notes to the Financial Statements (continued)
Year ended 31 March 2014

23. SHARE-BASED PAYMENTS (continued)

Share option scheme “ESO”

Outstanding at beginning of year
Exercised during the year
Lapsed during the year

Outstanding at the end of the year

Exercisable at the end of the year

2014
Weighted
average
exercise price
£

0.87
0.87
–

–

2014
No. of
options

14,350
(14,350)
–

–

2013
Weighted
average
exercise price
£

0.85
0.89
–

0.87

2013
No. of
options

42,413
(28,044)
(19)

14,350

There were no options outstanding at 31 March 2014 (31 March 2013: options outstanding had a weighted average contractual life of 0.3 years).

LTIP scheme

Outstanding at beginning of year
Granted during the year
Lapsed during the year
Exercised during the year

Outstanding at the end of the year

Exercisable at the end of the year

2014
No. of options

2013
No. of options

1,746,765
514,821
(213,310)
(398,902)

1,547,811
626,977
(308,350)
(119,673)

1,649,374

1,746,765

–

187,634

The weighted average fair value of options granted during the year was £759,000 (2013: £650,000).

Options outstanding at 31 March 2014 had a weighted average contractual life of 8.2 years (2013: 7.9 years).

Employee Share Save Scheme (“SAYE”)

Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year

Outstanding at the end of the year

Exercisable at the end of the year

2014
Weighted
average
exercise price
£

2.61
3.04
2.74
2.55

2.84

–

2014
No. of
options

198,646
25,686
(27,885)
(8,248)

188,199

–

2013
Weighted
average
exercise price
£

1.86
2.40
2.98
1.41

2.61

–

2013
No. of
options

380,675
53,657
(13,468)
(222,218)

198,646

–

Options outstanding at 31 March 2014 had a weighted average contractual life of 1.8 years (2013: 2.5 years).

The inputs into the Black-Scholes model are as follows:

Expected volatility
Expected life
Risk-free rate
Expected dividends

LTIP

SAYE

22%
3 years
0.7%
4.1%

24%
3 years
0.7%
4.1%

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

110

23. SHARE-BASED PAYMENTS (continued)

Long Term Bonus Performance Plan
The Group has a joint share ownership plan in place. This is accounted for as an equity instrument. The plan was set up in November 2012. Directors
have a partial interest in 1,500,000 shares with the Group’s Employee Benefit Trust. The fair value of each award is £2 subject to the vesting criteria
as set out in the Directors’ Remuneration Report. At 31 March 2014 the weighted average contractual life was 1.6 years.

24. CAPITAL COMMITMENTS

There were no amounts contracted but not provided in respect of the Group’s properties as at 31 March 2014 (2013: no capital commitments).

25. EVENTS AFTER THE BALANCE SHEET DATE

On 16 April 2014, the Group invested £3.6 million in a new joint venture with a consortium of investors to acquire the entire share capital of HSIL
Properties (Self Storage) UK Limited, which owns the 10 store Armadillo Self Storage portfolio. The Group has a 38% stake in the joint venture and has
agreed a five year contract to manage the portfolio.

26. RELATED PARTY TRANSACTIONS

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

Transactions with Big Yellow Limited Partnership
As described in note 13, the Group has a 33.3% interest in Big Yellow Limited Partnership (“the Partnership”), and entered into transactions with the
Partnership during the year on normal commercial terms.

In the current year the Group earned fees from the Partnership of £640,000 (2013: £639,000). At 31 March 2014, the Partnership owed £338,000
to the Group (2013: Partnership owed £526,000 to the Group).

The remuneration of the Executive and Non-Executive Directors, who are the key management personnel of the Group, is set out below in aggregate.
Further information on the remuneration of individual Directors can be found in the audited part of the Directors’ Remuneration Report on pages 68 to 75.

Short term employee benefits
Post-employment benefits
Share based payments

31 March
2014
£000

1,216
92
633

1,941

31 March
2013
£000

1,184
89
2,700

3,973

Dreams plc
Steve Johnson, a Non-Executive Director of the Group was the Executive Chairman of Dreams plc until 31 October 2012. During the prior year, the Group
leased a retail unit at its Eltham store to Dreams plc on normal commercial terms.

AnyJunk Limited
James Gibson is a Non-Executive Director and shareholder in AnyJunk Limited and Adrian Lee is a shareholder in AnyJunk Limited. During the year
AnyJunk Limited provided waste disposal services to the Group on normal commercial terms, amounting to £32,000 (2013: £19,000).

No other related party transactions took place during the years ended 31 March 2014 and 31 March 2013.

111

Company Balance Sheet
Year ended 31 March 2014

Non-current assets
Plant, equipment and owner-occupied property
Investment in subsidiary companies

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables

Non-current liabilities
Derivative financial instruments
Bank borrowings

Total liabilities

Net assets

Equity
Called up share capital
Share premium account
Reserves

Equity shareholders’ funds

Note

29a
29b

2014
£000

1,551
9,443

10,994

2013
£000

1,476
8,006

9,482

504,280
1,055

528,946
2,155

505,335

531,101

516,329

540,583

(2,096)

(1,463)

32
32

(2,813)
(133,000)

(5,494)
(140,000)

(135,813)

(145,494)

(137,909)

(146,957)

378,420

393,626

14,306
44,278
319,836

14,264
44,278
335,084

378,420

393,626

The financial statements were approved by the Board of Directors and authorised for issue on 19 May 2014. They were signed on its behalf by:

James Gibson
Director

John Trotman
Director

Company Registration No. 03625199

112

Company Cash Flow Statement
Year ended 31 March 2014

Operating loss
Depreciation
Decrease in receivables
Increase in payables

Cash generated by operations

Interest paid
Interest received

Cash flows from operating activities

Financing activities
Issue of share capital
Equity dividends paid
Reduction in borrowings

Cash flows from financing activities

Net decrease in cash and cash equivalents
Opening cash and cash equivalents

Closing cash and cash equivalents

2014
£000

(529)
34
31,097
623

2013
£000

(1,092)
35
132,920
6,848

31,225

138,711

(5,784)
8

(20,867)
34

25,449

117,878

42
(19,591)
(7,000)

36,764
(13,543)
(144,000)

(26,549)

(120,779)

(1,100)
2,155

1,055

(2,901)
5,056

2,155

113

Company Statement of Changes in Equity
Year ended 31 March 2014

At 1 April 2013
Total comprehensive gain for the year
Equity dividends paid
Issue of share capital
Credit to equity for equity-settled

share based payments

Share
capital
£000

14,264
–
–
42

Share
premium
account
£000

44,278
–
–
–

Capital
redemption
reserve
£000

1,653
–
–
–

Retained
earnings
£000

304,261
2,906
(19,591)
–

Other
distributable
reserve
£000

34,793
–
–
–

Own
shares
£000

(5,623)
–
–
–

Total
£000

393,626
2,906
(19,591)
42

–

1,437

–

1,437

At 31 March 2014

14,306

44,278

1,653

289,013

34,793

(5,623)

378,420

The Company’s share capital is disclosed in note 22.

The own shares balance represents amounts held in treasury and by the Employee Benefit Trust (see note 22).

Year ended 31 March 2013

At 1 April 2012
Total comprehensive loss for the year
Equity dividends paid
Issue of share capital
Credit to equity for equity-settled

share based payments

Share
capital
£000

13,139
–
–
1,125

Share
premium
account
£000

43,432
–
–
846

Capital
redemption
reserve
£000

1,653
–
–
–

Retained
earnings
£000

319,843
(5,070)
(13,543)
–

Other
distributable
reserve
£000

–
–
–
34,793

Own
shares
£000

(5,623)
–
–
–

Total
£000

372,444
(5,070)
(13,543)
36,764

–

3,031

–

3,031

At 31 March 2013

14,264

44,278

1,653

304,261

34,793

(5,623)

393,626

The other distributable reserve arose from merger relief under S612 of Companies Act 2006, following the Company’s placing of 10 million shares
in the prior year.

114

Notes to the Financial Statements (continued)
Year ended 31 March 2014

27. PROFIT FOR THE YEAR

As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the Company is not presented as part of these
financial statements. The profit for the year attributable to equity shareholders dealt with in the financial statements of the Company was £2.9 million
(2013: loss of £5.1 million).

28. BASIS OF ACCOUNTING

The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate
financial statements have been prepared in accordance with International Financial Reporting Standards.

The financial statements have been prepared on the historic cost basis except that derivative financial instruments are stated at their fair value.

The Company’s principal accounting policies are the same as those applied in the Group financial statements. See note 23 for details of share based
payments affecting the Company.

A non-current payable of £6.7m has been reclassified in the Company account comparatives to intercompany receivables, as it was a payable relating
to a fellow group company and there was a right of offset with the receivable.

Going concern
See note 2 for the review of going concern for the Group and the Company.

IFRIC 11, IFRS 2 Group and Treasury Share Transactions
The Company makes equity settled share based payments to certain employees of certain subsidiary undertakings. Equity settled share based
payments that are made to the employees of the Company’s subsidiaries are treated as increases in equity over the vesting period of the award, with a
corresponding increase in the Company’s investments in subsidiaries, based on an estimate of the number of shares that will eventually vest. This is
the only addition to investment in subsidiaries in the current year. The Company does not have any employees.

29. NON-CURRENT ASSETS

a) Plant, equipment and owner occupied property

Cost
At 31 March 2013
Transfer from other group company

At 31 March 2014

Accumulated depreciation
At 31 March 2013
Charge for the year

At 31 March 2014

Net book value
At 31 March 2014

At 31 March 2013

b) Investments in subsidiary companies

Cost
At 31 March 2013
Additions

At 31 March 2014

Freehold
property
£000

Leasehold
improvements
£000

1,735
109

1,844

(259)
(34)

(293)

1,551

1,476

17
–

(17)
–

(17)

–

Total
£000

1,752
109

1,861

(276)
(34)

(310)

1,551

1,476

Investment in
subsidiary
undertakings
£000

8,006
1,437

9,443

115

Notes to the Financial Statements (continued)
Year ended 31 March 2014

29. NON-CURRENT ASSETS (continued)

The Group comprises a large number of companies and therefore has taken advantage of the exemption under section 410(2) of the Companies Act
2006 in providing information only in relation to subsidiary undertakings whose results or financial position, in the opinion of Directors, principally
affect the financial statements. The principal subsidiaries, wholly-owned and, except where stated, registered and operating in England and Wales, are:

Name of subsidiary

Big Yellow Self Storage Company Limited
Big Yellow Self Storage Company A Limited
Big Yellow Self Storage Company 8 Limited
BYSSCo Limited
BYSSCo A Limited
BYRCo Limited
Big Yellow Construction Company Limited
.Big Yellow Self Storage (GP) Limited

Place of
incorporation
ownership
(or registration)
and operation

Proportion
of ownership
interest
%

Proportion
of voting
power held
%

Principal
activity

UK
UK
UK
UK
UK
UK
UK
UK

100
100
100
100
100
100
100
51

Self storage
100
Self storage
100
Self storage
100
Self storage
100
Self storage
100
Property management
100
100 Construction management
General Partner

Details of the Company’s only associate at 31 March 2014 and 31 March 2013 are as follows:

Name of associate

Big Yellow Limited Partnership

30. TRADE AND OTHER RECEIVABLES

Amounts owed by Group undertakings
Prepayments and accrued income

31. TRADE AND OTHER PAYABLES

Current
Other payables
Accruals and deferred income

Place of
incorporation
ownership
(or registration)
and operation

Proportion
of ownership
interest
%

Proportion
of voting
power held
%

Principal
activity

33.3

Self storage

31 March
2014
£000

504,174
106

31 March
2013
£000

531,027
74

504,280

531,101

31 March
2014
£000

31 March
2013
£000

1,631
465

2,096

1,041
422

1,463

116

32. BANK BORROWINGS AND FINANCIAL INSTRUMENTS

Interest rate derivatives
The Company has one interest rate swap in place at the year end; £70 million fixed at 2.80% (excluding the margin on the underlying debt instrument)
until September 2016. The floating rate at 31 March 2014 was paying a margin of 2.3% above one month LIBOR, the fixed rate debt was paying a
weighted average margin of 2.5%. The Group’s policy on risk management is set out in the Report on Corporate Governance on page 52 and in note 18.

Bank borrowings

Maturity profile of financial liabilities

Between one and two years
Between two and five years

Gross financial liabilities

31 March
2014
£000

31 March
2013
£000

133,000

140,000

133,000

140,000

2014
Financial
liabilities
£000

–
133,000

2013
Financial
liabilities
£000

–
140,000

133,000

140,000

The fair value of interest rate derivatives at 31 March 2014 was a liability of £2,813,000 (2013: liability of £5,494,000). See note 18 for detail of the
interest rate profile of financial liabilities.

33. FINANCIAL INSTRUMENTS

The disclosure relating to the Company’s financial instruments are disclosed in note 18 to the Group financial statements. These disclosures are
relevant to the Company’s bank borrowings and derivative financial instruments. In addition, the Company has trade and other payables of £2,096,000
in the current year (2013: £1,463,000), which are held at amortised cost in the financial statements.

34. RELATED PARTY TRANSACTIONS

Included within these financial statements are amounts owing from Group undertakings of £504,174,000 (2013: £531,027,000), including
intercompany interest receivable of £6,545,000 (2013: £7,824,000).

117

Ten Year Summary
Year ended 31 March 2014

Results

Revenue

Operating profit before
gains and losses
on property assets

Cash flow from

2014
£000

2013
£000

2012
£000

2011
£000

2010
£000

2009
£000

2008
£000

2007
£000

2006
£000

2005
£000

72,196

69,671

65,663

61,885

57,995

58,487

56,870

51,248

41,889

33,375

39,537

37,454

35,079

32,058

29,068

30,946

29,342

27,067

21,645

15,030

operating activities

32,752

30,186

27,388

23,534

19,063

10,203

14,388

16,726

16,125

9,664

Profit/(loss) before

taxation

Adjusted profit

59,848

31,876

(35,551)

6,901

10,209

(71,489)

102,618

152,837

118,547

42,836

before taxation

29,221

25,471

23,643

20,207

16,514

13,791

15,006

14,233

12,601

7,791

Net assets

594,064

552,628

494,500

544,949

547,285

502,317

580,886

487,979

244,139

159,168

EPRA earnings
per share

Declared total dividend

20.5p

19.3p

18.2p

15.5p

13.0p

11.9p

11.7p

10.0p

8.9p

5.5p

per share

16.4p

11.0p

10.0p

9.0p

4.0p

9.5p

9.0p

5.0p

2.0p

Key statistics
Number of stores open*
Sq ft occupied (000)*
Occupancy growth
in year 000 sq ft)*
Number of customers*
Average no.

of employees
during the year

66
2,832

66
2,632

65
2,458

62
2,130

60
1,915

54
1,775

48
1,850

43
1,835

37
1,672

32
1,470

200
41,800

174
38,500

328
36,300

215
32,800

140
30,500

(75)
28,500

15
30,500

163
30,100

202
27,800

202
24,600

289

286

279

273

252

239

218

191

178

160

includes stores operating in Big Yellow Limited Partnership

118

The paper used in this report is produced with FSC® mixed sources pulp which is partially recyclable, biodegradable,
pH Neutral, heavy metal absence and acid-free. It is manufactured within a mill which complies with the international
environmental ISO 14001 standard.

Pureprint Ltd is FSC certified, PEFC certified and ISO 14001 certified showing that it is committed to all round
excellence and improving environmental performance is an important part of this strategy. We aim to reduce
at source the effect our operations have on the environment, and are committed to continual improvement,
prevention of pollution and compliance with any legislation or industry standards.

Pureprint Ltd is a Carbon Neutral® Printing Company.

Designed and produced by MAGEE
www.magee.co.uk

Printed by Pureprint Ltd

You can access
more information
about us on our website
bigyellow.co.uk

Big Yellow Group PLC

2 The Deans, Bridge Road,
Bagshot, Surrey GU19 5AT

Tel: 01276 470190
Fax: 01276 470191
e-mail: info@bigyellow.co.uk

Big Yellow Group PLC
Annual Report & Accounts 2014

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