Final Results - Part 2

Big Yellow Group PLC 4 May 2001 PART 2 Notes to the Preliminary Announcement 1. Accounting policies Basis of preparation The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2001 or 31 March 2000, but is derived from those accounts. The statutory accounts for the year ended 31 March 2000 have been filed with the Registrar of Companies and those for 2001 will be filed following the company's annual general meeting. The auditors have reported on those accounts. Their reports were unqualified and did not contain a statement under Section 237(2) or 237(3) of the Companies Act 1985. The financial information has been prepared in accordance with applicable United Kingdom accounting standards. The particular accounting policies adopted are described below. Accounting convention The financial information has been prepared under the historical cost convention. Basis of consolidation The financial information consolidates the accounts of Big Yellow Group Plc and all its subsidiaries at the year end using acquisition accounting principles. Goodwill and intangible assets Purchased goodwill is capitalised in the year in which it arises and amortised over 20 years. The directors regard 20 years as a reasonable maximum for the estimated useful life of goodwill since it is difficult to make projections exceeding this period. Capitalised purchased goodwill in respect of subsidiaries is included within intangible fixed assets. Tangible fixed assets No depreciation is provided on land and assets in the course of construction. Interest, overhead and pre-opening launch costs are not capitalised. Depreciation is provided on cost in equal annual instalments over the estimated useful lives of the assets. The useful economic lives of the assets are as follows: Freehold property 50 years Mezzanine flooring and staircases 25 years Leasehold property Over period of the lease Plant and machinery 10 years Motor vehicles 4 years Fixtures and fittings 5 years Computer equipment 3 years In the accounts for the year ended 31 March 2000 depreciation of £308,915 was charged to administrative expenses. In the current year depreciation of £790,882 relating to the group's stores has been charged to cost of sales. In order to ensure consistency with this presentation, depreciation of £285,603 has been reclassified to cost of sales for the year ended 31 March 2000. Investments Investments held as fixed assets are stated at cost less provision for any impairment. Stocks Stocks represent goods held for resale and are held at the lower of cost and net realisable value. Pension contributions Pension contributions represent payments to defined contribution schemes, the assets of which are held separately from those of the group. Deferred taxation Deferred taxation is provided on timing differences, arising from the different treatment of items for accounts and taxation purposes, which are expected to reverse in the future, calculated at rates at which it is estimated that tax will arise. Leases Operating lease rentals are charged to income in equal annual amounts over the lease term. 2. Segmental information Turnover represents amounts derived from the provision of services which fall within the group's ordinary activities after deduction of trade discounts and value added tax. The group's net assets, turnover and loss before tax, all of which arises in the United Kingdom, are attributable to one activity, the provision of self storage and related services. 3. Information regarding directors and employees Directors' remuneration 2001 2000 ---- Salary/ Bonus Taxable Sub Pension Total Total fees benefits total £ £ £ £ £ £ £ Nicholas 95,000 24,000 7,014 126,014 9,500 135,514 72,329 Vetch Philip 90,833(1) 21,500 2,227 114,560 8,500 123,060 73,016 Burks James 80,167(1) 19,000 1,811 100,978 7,500 108,478 72,429 Gibson Adrian 74,833(1) 17,500 1,898 94,231 7,000 101,231 - Lee Stephen 69,500(1) 16,500 2,107 88,107 6,500 94,607 - Homer David 25,000 - - 25,000 - 25,000 - White David 22,500 - - 22,500 - 22,500 - Ross Jonathan - - - - - - - Short Joanne - - - - - - - Elliot ---- ---- ---- ---- ---- ---- ---- 457,833 98,500 15,057 571,390 39,000 610,390 217,774 ======== ======== ======= ======= ======= ======= ======= (1) Includes car allowances Pension contributions represent amounts payable to directors' personal pension schemes. Directors' interests The beneficial interests of the directors in the ordinary share capital of the company are shown below: Ordinary shares of 10p each At 1 At 31 At 3 April 2000 March 2001 May 2001 No. No. No. Nicholas Vetch (including trusts) 12,500,000 12,500,000 12,500,000 Philip Burks (including trusts) 12,500,000 12,500,000 12,500,000 James Gibson 1,816,000 1,816,000 1,816,000 Adrian Lee 791,880 791,880 791,850 Stephen Homer 791,880 803,880 803,880 David White - 100,000 100,000 David Ross - 790,020 790,020 None of the directors had any direct interests in the share capital of any of the subsidiary undertakings of the company in the year. Share option scheme Options in respect of ordinary shares held by the directors at 31 March 2001 under the company's share option scheme are as follows: Name Date Option Date first Date on Number of option price per exercisable which the ordinary granted ordinary exercise shares share period expires Nicholas 5 May 2000 100p 5 May 2003 4 May 2010 1,000,000 Vetch Philip 5 May 2000 100p 5 May 2003 4 May 2010 1,000,000 Burks James 24 10p 24 September 23 1,000,000 Gibson September 2001 September 1998 2008 5 May 2000 100p 5 May 2003 4 May 2010 100,000 Stephen 18 January 13.3p 18 January 17 January 375,940 Homer 1999 2002 2009 5 May 2000 100p 5 May 2003 4 May 2010 150,000 Adrian Lee 18 January 13.3p 18 January 17 January 375,940 1999 2002 2009 5 March 25p 5 March 2002 4 March 125,000 1999 2009 5 May 2000 100p 5 May 2003 4 May 2010 100,000 The company was listed on the Alternative Investment Market on 8 May 2001 at 100p per share. The market price of the company's shares at 31 March 2001 was 134p per share and the highest market price during the year was 155p per share. Employees 2001 2000 £ £ Wages and salaries (including directors) 1,871,761 894,824 Social security costs 212,325 69,900 Other pension costs 68,930 32,530 ---- ---- 2,153,016 997,254 ======== ======== No. No. The average number of employees (including directors) employed by the group during the year: Sales 32 16 Administration 24 10 ---- ---- 56 26 ======== ======== 4. Operating loss 2001 2000 £ £ Operating loss is stated after charging/(crediting): Depreciation 849,558 308,915 Amortisation of goodwill 96,995 96,411 Auditors' remuneration -- group audit fees 40,000 30,000 -- non-audit services 12,000 6,000 Operating leases -- other 932,797 323,016 Loss of income insurance claim (230,622) - ======== ======== Included in group audit fees are £10,000 (2000: £10,000) in respect of the company. In addition to the amounts disclosed above, the auditors received remuneration of £120,000 in respect of the company's listing on the Alternative Investment Market, which has been charged to the share premium account. 5. Exceptional item The group opened a new store at Staples Corner in March 2001 and is transferring trading to that store from its existing store at Staples Corner. The exceptional costs of this transfer of £300,000, being the write off of redundant fixed assets, the cost of transferring customers' assets and lease break costs, have been provided for as at 31 March 2001. 6. Interest payable and similar charges 2001 2000 £ £ Loan stock (see note 25) 59,326 307,808 Bank overdraft and other borrowings 31,369 147,613 Option finance fee (see note 25) 96,159 323,212 ---- ---- 186,854 778,633 ======== ======== 7. Profit of parent company As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of these accounts. The consolidated loss for the financial year includes a profit of £34,408 (2000: profit of £160,146) which is dealt with in the accounts of the parent company. 8. Taxation No liability to corporation tax arises on the group's result for the year as the group made a taxable loss during the year. The group has unrelieved tax losses, which can be carried forward against future UK trading profits, estimated at £5.0 million (2000: £4.4 million). 9. Non-equity dividends 2001 2000 £ £ 7.5% preference shares (36,750) 36,750 ======== ======== An accrual was made as at 31 March 2000 for a dividend of £36,750 payable on the preference shares in issue at that date. On 8 May 2000, the preference shares were redeemed by way of a share buy-back financed from the issue of new ordinary shares for consideration of £1,044,110. The dividend is no longer payable. It has therefore been credited to the profit and loss account for the year. Dividends have not been paid in respect of the ordinary shares of the company in any of the periods reported upon and no dividend is proposed. 10. Loss per ordinary share Loss per ordinary share has been calculated on the retained loss for the financial year of £1,799,371 (2000: £2,159,454) and on the weighted average number of shares in issue during the year of 91,794,721 (2000: 46,250,504). There is no dilutive effect from the conversion of share options. 11. Intangible fixed assets Goodwill The group £ Cost At 1 April 2000 and 31 March 2001 1,940,729 ---- Amortisation At 1 April 2000 120,255 Charge for the year 96,995 ---- At 31 March 2001 217,250 ---- Net book value At 31 March 2001 1,723,479 ======== At 31 March 2000 1,820,474 ======== 12. Tangible fixed assets The group Freehold Short Assets Plant Motor Fixtures, Total land lease- in the and vehic- and hold course machi- les fittings buildings property of nery and develop- computer ment equipment Cost £ £ £ £ £ £ £ At 1 April 9,691,036 2,360,891 3,385,186 2,395,973 8,000 521,132 18,362,218 2000 Additions 9,004,351 4,510,516 9,297,847 2,952,890 62,041 424,574 26,252,219 Reclassi fications 1,129,484 372,722(1,502,206) --- --- --- --- ---- ---- ---- ---- ---- ---- ---- At 31 March 19,824,871 7,244,129 11,180,827 5,348,863 70,041 945,706 44,614,437 2001 ---- ---- ---- ---- ---- ---- ---- Accumulated depreciation At 1 April 143,731 52,839 --- 782,415 5,234 83,189 1,067,408 2000 Charge for 137,805 275,300 --- 276,033 9,392 151,028 849,558 the year ---- ---- ---- ---- ---- ---- ---- At 31 March 281,536 328,139 --- 1,058,448 14,626 234,217 1,916,966 2001 ---- ---- ---- ---- ---- ---- ---- Net book value At 31 March 19,543,335 6,915,990 11,180,827 4,290,415 55,415 711,489 42,697,471 2001 ======= ====== ======== ====== ====== ======= ======== At 31 March 9,547,305 2,308,052 3,385,186 1,613,558 2,766 437,943 17,294,810 2000 ======= ====== ======== ====== ====== ======= ======== Included within freehold property at 31 March 2000 were properties with a net book value of £4,720,681 which were subject to the financing transaction described in note 25. The beneficial ownership of these properties was unaffected by this transaction. The company Fixtures, fittings and Motor Total computer equipment vehicles £ £ £ Cost At 1 April 2000 173,956 - 173,956 Additions 55,280 56,861 112,141 ---- ---- ---- At 31 March 2001 229,236 56,861 286,097 ---- ---- ---- Accumulated depreciation At 1 April 2000 24,904 - 24,904 Charge for the year 52,142 6,535 58,677 ---- ---- ---- At 31 March 2001 77,046 6,535 83,581 ---- ---- ---- Net book value At 31 March 2001 152,190 50,326 202,516 ======== ======== ======== At 31 March 2000 149,052 - 149,052 ======== ======== ======== 13. Investments held as fixed assets £ Cost At 1 April 2000 2,029,027 Additions 12,162 ---- At 31 March 2001 2,041,189 ======== The investments relate to the 100% ownership of the ordinary share capital of the group's subsidiaries. The additions in the year relate to the acquisition of The Big Yellow Holding Company Limited and Big Yellow Self Stockage Company SAS. Details of the group's principal subsidiaries are shown below: .Big Yellow Self Storage Company Limited is registered in England and Wales and provides self storage services to private individuals and businesses. The Big Yellow Property Company Limited is registered in England and Wales and its principal activity is property management and ownership. The Big Yellow Construction Company Limited is registered in England and Wales and its principal activity is property construction. The Big Yellow Holding Company Limited is registered in England and Wales and its principal activity is acting as an intermediate holding company. Big Yellow Self Stockage Company SAS is registered in France. It had not commenced trading at the year end. 14. Debtors Group Company Group Company 2001 2001 2000 2000 £ £ £ £ Trade debtors 122,557 - 88,669 - Amounts owed by group - 43,210,071 - 11,385,201 undertakings Other debtors 1,368,974 86,949 574,044 46,029 Prepayments and accrued 966,909 35,469 433,696 43,603 income ---- ---- ---- ---- 2,458,440 43,332,489 1,096,409 11,474,833 ======== ======== ======== ======== 15. Creditors: amounts falling due within one year Group Company Group Company 2001 2001 2000 2000 £ £ £ £ Bank loans - - 2,116,000 - Trade creditors 2,307,679 30,382 1,109,760 94,748 Taxation and social security 59,026 35,558 12,721 161,833 Other creditors 413,124 - 4,927,518 - Accruals and deferred income 3,414,032 290,989 1,581,761 327,570 Dividends payable - - 36,750 36,750 ---- ---- ---- ---- 6,193,861 356,929 9,784,510 620,901 ======== ======== ======== ======== Included within the group's other creditors is £nil (2000: £4,731,800) arising from the financing transaction described in note 25. 16. Creditors: amount falling due after more than one year Group Company Group Company 2001 2001 2000 2000 £ £ £ £ Loan stock (see note 25) - - 4,000,000 4,000,000 ======== ======== ======== ======== The loan stock represented convertible unsecured loan stock which was repayable on 21 September 2009. The loan stock was redeemed on 8 May 2000. Interest was payable on the loan stock at the rate of 71/2%. 17. Financial instruments The group's only financial instruments as at 31 March 2001 are cash, trade debtors and trade creditors, which arise directly from its operations. The group does not trade in financial instruments. All monetary assets and liabilities are denominated in sterling and the group therefore has no exposure to currency risk. Short term debtors and creditors have been omitted from all disclosures below. Details of non-equity shares are given in note 19. Maturity profile of financial liabilities 2001 2000 ---- ---- Bank Loan Other Bank Loan Other borrowings stock borrowings stock £ £ £ £ £ £ Within - - - 2,116,000 - 4,731,800 one year or less or on demand More than - - - - 4,000,000 - five years ---- ---- ---- ---- ---- ---- Gross - - - 2,116,000 4,000,000 4,731,800 financial liabilities ======== ======== ======== ======== ======== ======== The group had the following undrawn borrowing facilities at 31 March 2001. 2001 2000 £ £ Expiring in one year or less - 884,000 ---- ---- Total - 884,000 ======== ======== Interest rate profile Total Floating Fixed rate Weighted Weighted Weighted rate financial average average average financial liabilities fixed period period liabilities interest for until rate which maturity the rate is fixed £ £ £ At 31 March 2001 Gross - - - - - - financial liabilities ---- ---- ---- ---- ---- ---- At 31 March 2000 Gross 10,847,800 2,116,000 8,731,800 11.7% 4.9 years 3.9 years financial liabilities ---- ---- ---- ---- ---- ---- Total Floating rate financial assets £ £ At 31 March 2000 Gross financial assets 4,528,840 4,528,840 ---- ---- At 31 March 2001 Gross financial assets 10,967,581 10,967,581 ---- ---- The interest rate on floating rate assets and liabilities is linked to London Inter Bank Offer Rates. Fair values of financial assets and liabilities 2001 2000 ---- ---- Primary Carrying Estimated Carrying Estimated financial amount fair value amount fair value instruments £ £ £ £ held or issued to finance the group's operations Cash at bank, 10,967,581 10,967,581 4,528,840 4,528,840 in hand and other liquid investments ======== ======== ======== ======== 2001 2000 ---- ---- Primary Carrying Estimated Carrying amount Estimated financial amount fair value £ fair value instruments £ £ £ held or issued to finance the group's operations Bank - - 2,116,000 2,116,000 borrowings Loan stock - - 4,000,000 4,000,000 Other - - 4,731,800 4,731,800 ---- ---- ---- ---- Gross - - 10,847,800 10,847,800 financial liabilities ---- ---- ---- ---- 7% - - 1,000,000 1,000,000 convertible preference shares ---- ---- ---- ---- The fair values have been calculated by discounting expected cash flows at prevailing interest rates at the year end. 18. Provisions for liabilities and charges Deferred taxation The group The amounts not provided in the accounts are: Not provided Not provided 2001 2000 £ £ Capital allowances in advance of depreciation 4,113 38,325 Short term timing differences (103,575) (6,030) Less trading losses carried forward (1,478,277) (1,328,674) ---- ---- (1,577,739) (1,296,379) ======== ======== The company The amounts not provided in the accounts are: Not provided Not provided 2001 2000 £ £ Capital allowances in advance of depreciation 2,550 6,208 Short term timing differences (13,586) - Less trading losses carried forward (12,086) (12,086) ---- ---- (23,122) (5,878) ======== ======== 19. Called up share capital 2001 2000 £ £ Authorised: Nil (2000: 31,021,160) ordinary 'A' shares of 10p --- 3,102,116 each Nil (2000: 28,028,800) ordinary 'B' shares of 10p --- 2,802,880 each Nil (2000: 1,000,000) preference shares of 10p each --- 100,000 150,000,000 (2000: nil) ordinary shares of 10p each 15,000,000 --- ---- ---- 15,000,000 6,004,996 ======== ======== Called up, allotted and fully paid: Nil (2000: 28,399,760) ordinary 'A' shares of 10p --- 2,839,976 each Nil (2000: 23,028,800) ordinary 'B' shares of 10p --- 2,302,880 each Nil (2000: 1,000,000) preference shares of 10p each --- 100,000 96,485,590 (2000: nil) ordinary shares of 10p each 9,648,559 --- ---- ---- 9,648,559 5,242,856 ======== ======== By special resolution dated 17 April 2000 the authorised and issued 'A' and 'B' shares and the preference shares were converted into ordinary shares on 8 May 2000. By the same resolution the authorised share capital of the company was increased to £15,000,000 by the creation of 8,995,004 ordinary shares. Movements in the company's issued share capital during the year were as follows: No. £ At 1 April 2000 'A' ordinary shares of 10p each 28,399,760 2,839,976 'B' ordinary shares of 10p each 23,028,800 2,302,880 Preference shares of 10p each 1,000,000 100,000 ---- ---- 52,428,560 5,242,856 On 8 May 2000 Repurchase of preference shares (1,000,000) (100,000) Conversion of authorised and issued share capital 52,428,560 5,242,856 into ordinary shares of 10p each Issue of 45,057,030 ordinary shares of 10p each 45,057,030 4,505,703 ---- ---- At 31 March 2001 96,485,590 9,648,559 ======== ======== Details of directors' share options are given in note 3. At 31 March 2001 there were a further 543,625 (2000: 68,000) options in issue to members of the group's staff. 51,400 options with an exercise price of 62.5 pence per share were granted on 16 November 1999. These options are exercisable from 16 November 2002. 134,475 options with an exercise price of 100 pence per share were issued on 5 May 2000. These options are exercisable from 5 May 2003. 357,750 options with an exercise price of 137.5 pence per share were issued on 30 November 2000. These options are exercisable from 30 November 2003. 20. Statement of movements on reserves The group Share premium account Profit and loss account £ £ Balance at 1 April 2000 7,924,821 (2,179,940) Shares issued (net of 39,097,300 --- expenses) Loss retained for year --- (1,799,371) Redemption of preference (900,000) (44,110) shares ---- ---- Balance at 31 March 2001 46,122,121 (4,023,421) ======== ======== The company Balance at 1 April 2000 7,924,821 83,648 Shares issued (net of 39,097,300 --- expenses) Profit retained for the --- 71,158 year Redemption of preference (900,000) (44,110) shares ---- ---- Balance at 31 March 2001 46,122,121 110,696 ======== ======== 21. Financial commitments The group has operating lease commitments payable within the next year, expiring as follows: Group Land Company Land Group Land Company Land and buildings and buildings and buildings and buildings 2001 2001 2000 2000 £ £ £ £ Within one 27,656 27,656 --- --- year Within two 25,500 25,500 53,156 53,156 to five years After five 1,678,650 --- 836,888 --- years ---- ---- ---- ---- 1,731,806 53,156 890,044 53,156 ======== ======== ======== ======== 22. Capital commitments Group Company Group Company 2001 2001 2000 2000 £ £ £ £ Amounts contracted but not 6,787,300 --- 1,618,304 --- provided in respect of freehold properties ======== ======== ======== ======== 23. Reconciliation of operating profit to net cash flow from operating activities 2001 2000 £ £ Operating loss (2,908,951) (1,648,884) Depreciation 849,558 308,915 Amortisation of goodwill 96,995 96,411 Increase in stock (62,435) (29,581) Increase in debtors (1,359,529) (643,585) Increase in creditors 3,175,456 1,147,561 ---- ---- Net cash outflow from operating activities (208,906) (769,163) ======== ======== 24.(a) Analysis of cash flows for headings netted in the cash flow statement 2001 2001 2000 2000 £ £ £ £ Returns on investments and servicing of finance Interest received 1,257,182 259,239 Interest paid (662,549) (302,938) ---- ---- 594,633 (43,699) ======== ======== Capital expenditure and financial investment Purchase of (25,658,079) (12,038,414) tangible fixed assets ======== ======== Acquisitions and disposals Purchase of - (28,024) subsidiary undertaking ======== ======== Financing Issue of ordinary 43,603,003 7,767,677 share capital (net of expenses) Repurchase of (1,044,110) - preference shares Debt due within a year: Loans repaid (2,116,000) (509,000) (Repayment)/proceeds (4,731,800) 4,731,800 of financing transaction Reclassification of - 2,625,000 debt ---- ---- (6,847,800) 6,847,800 Debt due beyond a year: Loans repaid (4,000,000) - New loans acquired - 4,000,000 Reclassification of - (2,625,000) debt ---- ---- (4,000,000) 1,375,000 ---- ---- Net cash inflow 31,711,093 15,990,477 from financing ======== ======== 24. (b) Analysis of net debt At Cash At 31 March flow 31 March 2000 £ 2001 £ £ Cash at bank and in hand 4,528,840 6,438,741 10,967,581 Debt due after one year (4,000,000) 4,000,000 - Debt due within one year (6,847,800) 6,847,800 - ---- 10,847,800 ---- ---- ---- Total (6,318,960) 17,286,541 10,967,581 ======== ======== ======== 25. Related party transactions During the year ended 31 March 2000 the group entered into a financing transaction in respect of two of its properties with TR Property Investment Trust PLC ('TRPIT'), one of the company's shareholders. The group sold the properties to TRPIT for £4,731,800, but retained an option to repurchase the properties and retained the beneficial ownership of these properties. The group repurchased these properties on 26 June 2000 for consideration of £5,364,829. The profit and loss account for the year includes within interest payable and similar charges a charge of £96,159 (2000: £323,212) in respect of the option finance fee. During the year ended 31 March 2000 the company issued loan stock to Prudential Insurance Company of America, one of the company's shareholders. The terms of this loan stock are shown in note 16 and the charge for the total return for the year in respect of the loan stock is shown in note 6. The loan stock was redeemed on 8 May 2000. 26. Post balance sheet events Subsequent to the year end, the directors announced their intention to raise finance by way of a Placing and Open Offer to raise £22.8 million net of expenses. More details of this transaction are given in the Chairman's statement and operating and financial review. The table below shows the effect of this transaction on the group's balance sheet. Balance sheet as Net proceeds of Pro-forma balance at the proposed sheet as at 31 March 2001 placing and open 31 March 2001 £ offer £ £ Fixed assets 44,420,950 - 44,420,950 Current assets 13,520,170 22,794,730 36,314,900 Creditors: (6,193,861) - (6,193,861) amounts falling due within one year ---- ---- ---- Total net assets 51,747,259 22,794,730 74,541,989 ======== ======== ========

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