Interim Results

Big Yellow Group PLC 09 November 2004 9 November 2004 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") Results for the Six Months and Second Quarter ended 30 September 2004 Big Yellow Group PLC, the self storage company, is pleased to announce results for the six months and for the second quarter ended 30 September 2004. -------------------------------------- Second First quarter quarter 6 months 6 months ended 30 ended 30 ended 30 ended 30 September June September September 2004 2004 2004 2003 Annualised revenue Â£35.0m Â£30.9m +13% Â£35.0m Â£24.8m +41% Turnover Â£8.3m Â£7.3m +14% Â£15.6m Â£11.0m +42% Profit before tax Â£0.99m Â£0.71m +39% Â£1.70m Â£0.14m Earnings per share 0.99p 0.06p Interim dividend 0.5p - Number of customers 23,300 22,900 +2% 23,300 18,600 +25% Occupied space 1,403,000 sq ft 1,378,000 sq ft +2% 1,403,000 sq ft 1,129,000 sq ft +24% -------------------------------------- â€¢ Pre-tax profit of Â£1.7 million for the half year and Â£0.99 million for the second quarter â€¢ Annualised revenue up 41% at Â£35.0 million (2003: 24.8 million) â€¢ Adjusted net assets per share of 175p as at 30 September 2004 following external valuation of trading stores (see note 12) â€¢ Interim dividend of 0.5 pence per ordinary share (2003: nil pence) â€¢ 42 stores committed, of which 31 are trading, providing 2.6 million sq ft of capacity when completed â€¢ Acquired freehold sites in Fulham, Tunbridge Wells and South Bristol; and a long leasehold in Central Bristol â€¢ 135,000 sq ft leased up in the period; total occupied space now 1.4 million sq ft, 76% occupancy â€¢ Number of customers up 25% to 23,300 (2003: 18,600) â€¢ Turnover for 19 stores open more than two years up 17% year on year, of which 6% is yield improvement, with the balance representing occupancy growth â€¢ Packing materials, insurance and other sales represented 15.3% of storage income (2003: 15.3%) Commenting on the Group's interim results, Nicholas Vetch, Chairman, said: "Over the period taken as a whole we have enjoyed good occupancy and strong revenue growth together with a significant rise in our profitability. We look forward to opening the next 11 stores, eight of which are located in Greater London, which we believe will contribute to further growth in earnings and net asset value per share". - Ends - For further information, please call: Big Yellow Group PLC 01276 470190 Nicholas Vetch, Chairman James Gibson, Chief Executive Weber Shandwick Square Mile 020 7067 0700 Louise Robson or Josh Royston Big Yellow Group PLC Trading Summary Years since opening as at Greater than 2 Between 1 and 2 Less than 1 Total 1 April 2004 years years year ------------------------------------------------------------------ Number of stores 19 8 4 31 ========= ========== ========== ========== As at 30 September 2004 Total capacity (sq ft) 1,086,000 548,000 223,000 1,857,000 Occupied space (sq ft) 930,000 390,000 83,000 1,403,000 Percentage occupied 86% 71% 37% 76% Freehold Leasehold Freehold Leasehold Freehold Total Number of stores 12 7 5 3 4 31 Total capacity (sq ft) 708,000 378,000 359,000 189,000 223,000 1,857,000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Annualised revenue 13,621 9,215 6,241 3,736 2,161 34,974 For the 6 month period: Self storage sales 5,317 3,731 2,314 1,431 695 13,488 Other income(1) 816 511 375 220 150 2,072 Bulk storage sales - - - - 16 16 ---- ---- ---- ---- ---- ---- Total turnover 6,133 4,242 2,689 1,651 861 15,576 Direct store operating costs (excluding depreciation) (2,110) (2,161) (1,118) (1,050) (542) (6,981) ---- ---- ---- ---- ---- ---- Store EBITDA(2) 4,023 2,081 1,571 601 319 8,595 Store depreciation (681) (432) (383) (220) (155) (1,871) ---- ---- ---- ---- ---- ---- Store EBIT(3) 3,342 1,649 1,188 381 164 6,724 Administration expenses (2,596) ----- Operating profit 4,128 Net interest (2,426) ----- Profit before tax 1,702 ===== Capital expenditure to 30 September Â£m Â£m Â£m Â£m Â£m Â£m Pre capital goods scheme 52.6(4) 13.7 32.2 7.0 18.9 124.4 Capital goods scheme repayment 5.6 1.4 4.1 0.9 2.8 14.8 to complete 0.0 0.0 0.0 0.0 1.7 1.7 ---- ---- ---- ---- ---- ---- Total cost 58.2 15.1 36.3 7.9 23.4 140.9 (1) Packing materials, insurance and other storage related fees (2) Earnings before interest, tax, depreciation and amortisation (3) Earnings before interest and tax (4) Excludes Â£6m purchase of Wandsworth store freehold at the end of the period (shown as a leasehold above) 9 November 2004 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") Results for the Six Months and Second Quarter ended 30 September 2004 Chairman's Statement The Board of Big Yellow Group PLC is pleased to announce results for the six months and for the second quarter ended 30 September 2004. Over the period taken as a whole we have enjoyed good occupancy and strong revenue growth together with a significant rise in our profitability. We look forward to opening the next 11 stores, eight of which are located in Greater London, which we believe will contribute to further growth in earnings and net asset value per share. Financial Review The Group made a pre-tax profit in the half year of Â£1.7 million, up from Â£0.14 million last year. The earnings per share for the period was 0.99p (2003: 0.06p per share). Turnover for the period was Â£15.6 million, up 42% on the Â£11.0 million achieved in the comparable period last year. While the portfolio is more mature than in the prior year, we have managed to maintain packing materials, insurance and other sales as a proportion of storage income in the period at 15.3%. As at 30 September 2004, the Group had underlying storage and related revenues, calculated on an annualised basis (Annualised Revenue) of Â£35.0 million, up 41% (2003: Â£24.8 million). Turnover for the second quarter of Â£8.3 million was 14% up on the Â£7.3 million reported for the quarter to June. Operating cashflows have continued to improve, as reflected in the increase in EBDAT (see note 5) for the six month period to Â£3.7 million from Â£2.0 million for the same period in 2003. This is after a further provision of Â£0.6 million (September 2003: Â£nil) in the period in respect of the Directors' Long Term Bonus Plan, which takes the total provided to date to Â£0.8 million. Total administration expenses for the six months, excluding the bonus provision mentioned above, were Â£2.0 million, up from Â£1.7 million for the equivalent period last year. The increase arises principally from annual inflationary increases; corporate costs incurred centrally in relation to the new share incentive plans introduced in the period; and costs related to the Group restructuring at the end of September, the latter totalling Â£0.2 million. During the year the Group purchased 615,000 shares into Treasury and these are shown as a debit in reserves. Dividend The Board has reviewed its dividend policy and concluded that an interim dividend be paid in the current year, reflecting the Board's confidence in the Group's cashflow growth. Accordingly a dividend of 0.5p per share has been approved by the Board. The ex-dividend date will be 17 November 2004 and the record date 19 November 2004 with an intended payment date of 20 December 2004. Store trading performance We now have 31 stores opened and trading, having opened Swindon and Watford in the period, with an average occupancy of 76% at the period end. 19 of the stores have been open for more than two years, with an average occupancy of 86%, leaving 12 in the lease up phase with an average occupancy of 61%. The 19 stores open for more than two years achieved store level EBITDA trading margins of 66% for freeholds and 49% for leaseholds in line with March 2004 results. Same store turnover for the 19 stores open more than two years at the beginning of the period was up 17% year on year, of which 6% is yield improvement with the balance representing occupancy growth. A summary of trading performance for the period on the 31 open stores is included in the statement. The Group has traded strongly over the period taken as a whole with revenue up in every month. Occupancy rose in the first five months, but we experienced a 1.5% drop in occupancy in September. We believe a number of factors contributed to the weak September figures, including the usual winter slowdown, a lack of spare capacity in the existing portfolio and a reduction in the number of housing transactions. However, we have seen a pick up in move-ins since the period end, back to prior year levels. This, together with a reduction in move-outs compared with September, has lead to a resumption of occupancy growth. Restructuring The Group announced on 13 September the restructuring of its business with the transfer of trading operations into a new operating company separate from its property owning companies, and the reclassification to the Real Estate sector. This restructuring was completed on 30 September and became effective on 1 October 2004. The Board has been advised that as part of this restructuring, the VAT election on all but one of its trading stores will be dis-applied. For those stores affected, storage charges from 1 October 2004 are now exempt from VAT. However, the Group will be unable to recover VAT on the majority of its future capital and operating expenditure. In addition, a proportion of VAT incurred and previously recovered on its historical capital expenditure will be repaid under the Capital Goods Scheme over a period of 10 years (see note 11). The Board believes that this action will improve the Group's competitive position, sales and profitability and provide flexibility for the future. Property We now have 42 stores open or committed, having acquired four stores in the period, freehold stores at Fulham, Tunbridge Wells and South Bristol and a long leasehold store in Central Bristol. When all 42 are open, they will provide total capacity of 2.6 million sq ft. Of the 11 committed stores, we have planning permission on four, are negotiating for planning permission on six and one is subject to a Planning Appeal. We have surplus land at a number of our sites, which we will sell over the coming months. The property strategy remains to acquire six to eight stores per year for the foreseeable future in London and the South. In addition, we believe that Big Yellow's brand is strengthening sufficiently to warrant trialling an expansion into certain key towns in the Midlands and the North. To that end, we are seeking suitable properties in Manchester, Leeds, Newcastle and Birmingham. We will set the strategy on the number of stores we intend to commit to in the Midlands and the North in due course. We intend to purchase our future properties by way of freehold acquisition in all but very exceptional circumstances. Further, we will take the opportunity to acquire the freehold interest in our leasehold stores when they become available. To that end, we have acquired the freehold of our Wandsworth store at the end of the period. The Group now owns 32 of its stores and sites freehold, one as a long leasehold and nine short leasehold. Valuation As mentioned above, we announced in September that the Group had been reclassified from Support Services to the Real Estate sector and trading commenced in the Real Estate sector on 20 September 2004. While our prime focus is on cash flow and profitability, the Board recognises that net asset value is an important metric in the assessment of property in real estate businesses. We therefore have commissioned a valuation of all the Group's trading properties from Cushman & Wakefield Healey & Baker ("C&W/H&B"). There are 35,000 self storage assets in the USA, in which there is a liquid and transparent market. The valuation methodology deployed by C&W/H&B mirrors exactly that used in the USA. This approach is recognised in the RICS Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors. We have set out a detailed explanation of the valuation in note 12. The properties held for development which have not been valued have been included at their cost. The resultant valuation is in the sum of Â£294 million comprising Â£207.1 million (70%) for freehold trading stores, Â£52.6 million (18%) for leasehold trading stores and Â£34.3 million (12%) for sites held for development. The valuation translates into an adjusted net asset value per share of 175p after the dilutive effect of outstanding share options. A further valuation will be carried out by C&W/H&B at the year-end and annually thereafter. At the half-year shareholders will be provided with an interim directors' valuation. The Group has not changed its accounting policy, assets are held at historical cost less depreciation. Outlook We believe that trading conditions in the coming months will be more testing than we have enjoyed to date. A significant tranche of our customers is derived from housing transactions and it is clear that volumes in the housing market have dropped considerably and may drop further. It has become apparent over the past five years that the business reacts well to good management and branding and we believe that the Group enjoys a commanding position in both respects within its industry. While we expect trading conditions to be more difficult in the forthcoming months, we believe the business will prove to be relatively resilient if not completely immune to any adverse changes, assisted by the continued restrictions on the supply side and growing market awareness of self storage and more particularly Big Yellow. The Group enjoys a strong financial position with interest cover in excess of 2.5 times and a relatively conservative debt structure, whilst owning 32 of our stores and sites freehold and one long leasehold. The 11 stores in the development pipeline, 10 freehold and one long leasehold, will improve the average quality of the overall portfolio, of which eight will be in Greater London, with flagship stores being planned at Fulham, Kingston and Edmonton. We remain confident in our business plan, our branding, our market position and our financial structure. Nicholas Vetch Chairman 9 November 2004 - Ends - For further information, please call: Big Yellow Group PLC 01276 470190 Nicholas Vetch, Chairman James Gibson, Chief Executive Weber Shandwick Square Mile 020 7067 0700 Louise Robson or Josh Royston Big Yellow Group PLC Consolidated Profit and Loss Account Six months ended 30 September 2004 Six months Six months ended 30 ended 30 Year September September ended 31 2004 2003 March 2004 (unaudited) (unaudited) (audited) Note Â£'000 Â£'000 Â£'000 TURNOVER 2 15,576 10,957 23,830 Cost of sales (8,852) (7,658) (15,470) --------- --------- --------- GROSS PROFIT 6,724 3,299 8,360 Administrative expenses (2,596) (1,691) (3,641) --------- --------- --------- OPERATING PROFIT 4,128 1,608 4,719 Gains and losses on fixed assets - - 25 Interest receivable and similar income 55 75 187 Interest payable and similar charges 3 (2,481) (1,540) (3,688) --------- --------- --------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,702 143 1,243 Taxation 4 (715) (83) (592) --------- --------- --------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 987 60 651 Dividends 6 (500) - (1,044) --------- --------- --------- RETAINED PROFIT/(LOSS) FOR THE PERIOD/YEAR 13 487 60 (393) ========= ========= ========= Basic earnings per share 7 0.99p 0.06p 0.66p ========= ========= ========= Diluted earnings per share 7 0.97p 0.06p 0.64p ========= ========= ========= All items in the profit and loss account relate to continuing operations. The company has no recognised gains or losses other than those included in the profit above for the current financial period or preceding financial periods and therefore no separate statement of total recognised gains and losses has been presented. Big Yellow Group PLC Consolidated Balance Sheet 30 September 2004 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Note Â£'000 Â£'000 Â£'000 FIXED ASSETS Intangible assets 1,384 1,481 1,432 Tangible assets 8 169,464 114,458 130,692 -------- -------- -------- 170,848 115,939 132,124 -------- -------- -------- CURRENT ASSETS Stocks 275 245 288 Debtors 9 4,738 5,979 5,822 Cash at bank and in hand 5,157 8,217 756 -------- -------- -------- 10,170 14,441 6,866 CREDITORS: amounts falling due within one year 10 (18,296) (7,862) (12,017) -------- -------- -------- NET CURRENT (LIABILITIES)/ASSETS (8,126) 6,579 (5,151) -------- -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 162,722 122,518 126,973 CREDITORS: amounts falling due after more than one year 11 (104,384) (63,507) (68,582) -------- -------- -------- NET ASSETS 58,338 59,011 58,391 ======== ======== ======== CAPITAL AND RESERVES Called up share capital 13 10,000 9,940 9,940 Capital redemption reserve 13 1,653 1,638 1,653 Share premium account 13 2,171 1,923 1,959 Other distributable reserves 13 50,545 52,307 51,045 Treasury shares 13 (812) - - Profit and loss account 13 (5,219) (6,797) (6,206) -------- -------- -------- EQUITY SHAREHOLDERS' FUNDS 58,338 59,011 58,391 ======== ======== ======== Big Yellow Group PLC Reconciliation of Movements in Shareholder's Funds Six months ended 30 September 2004 Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Profit for the financial period/year 987 60 651 Dividends (500) - (1,044) -------- -------- -------- 487 60 (393) Issue of shares (net of issue costs) 272 - 51 Purchase of own shares - - (218) Purchase of treasury shares (812) - - -------- -------- -------- Net (reduction in)/addition to shareholders' funds (53) 60 (560) Opening shareholders' funds 58,391 58,951 58,951 -------- -------- -------- Closing shareholders' funds 58,338 59,011 58,391 ======== ======== ======== Big Yellow Group PLC Consolidated Cash Flow Statement Six months ended 30 September 2004 Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities B 6,020 2,528 9,107 Returns on investments and servicing of finance (2,190) (1,408) (3,346) Capital expenditure and financial investment (19,578) (15,334) (32,671) Equity dividends paid (1,044) (994) (994) ------- ------- ------- Cash outflow before financing (16,792) (15,208) (27,904) Financing Issue of ordinary share capital (net of expenses) 272 - 51 Increase in debt A 22,000 21,158 26,293 Purchase of own shares - - (218) Purchase of treasury shares (812) - - ------- ------- ------- 21,460 21,158 26,126 ------- ------- ------- Increase /(decrease) in cash in the period/ year A 4,668 5,950 (1,778) ======= ======= ====== Big Yellow Group PLC A. Reconciliation of net cash flow to movement in net debt Six months ended 30 September 2004 Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Increase/(decrease) in cash in the period/year 4,668 5,950 (1,778) Cash inflow from increase in debt financing (22,000) (21,158) (26,293) -------- -------- -------- Change in net debt resulting from cash flows (17,332) (15,208) (28,071) -------- -------- -------- Movement in net debt in the period/year (17,332) (15,208) (28,071) Net debt at start of period/year (68,404) (40,333) (40,333) -------- -------- -------- Net debt at end of period/year (85,736) (55,541) (68,404) ======== ======== ======== B. Reconciliation of operating profit to net cash inflow from operating activities Six months ended 30 September 2004 Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Operating profit 4,128 1,608 4,719 Depreciation 1,974 1,774 3,737 Amortisation of goodwill 48 48 97 Decrease/(increase) in stock 13 7 (36) Decrease/(increase) in debtors 381 (78) (428) (Decrease)/increase in creditors (524) (831) 1,018 -------- -------- -------- Net cash inflow from operating activities 6,020 2,528 9,107 ======== ======== ======== Big Yellow Group PLC Notes to the Interim Report Six months ended 30 September 2004 1. ACCOUNTING POLICIES Basis of preparation The interim information for the six months ended 30 September 2004 and 30 September 2003 is unaudited and does not comprise statutory accounts. The comparative figures for the year ended 31 March 2004 are not statutory accounts but are extracted from the audited statutory accounts. The statutory accounts for the year ended 31 March 2004 have been filed with the Registrar of Companies. They received an unqualified audit report which did not contain a statement under Section 237(2) or 237(3) of the Companies Act 1985. This interim report should be read in conjunction with the statutory accounts for the year ended 31 March 2004. The interim figures have been prepared on the same basis and applying the same accounting policies as in prior years. The Group has adopted UITF 37 "Purchases and sales of own shares" in accounting for its treasury shares. 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 profit before tax are attributable to one activity, the provision of self storage and related services. These all arise in the United Kingdom. 3. INTEREST PAYABLE AND SIMILAR CHARGES Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Bank loans 2,459 1,540 3,625 Other interest payable 22 - 63 ------- ------- ------ 2,481 1,540 3,688 ======= ======= ====== 4. TAXATION The current period tax charge for the Group relates entirely to a movement in deferred tax. No corporation tax will be payable as a result of tax losses within the Group, which at 31 March 2004 were Â£2.9 million. The deferred tax charge in the year results in a tax rate in excess of the standard rate of 30%, primarily because the Group depreciates its buildings for which no corporation tax relief is due, and this permanent disallowable is significant in relation to current period reported pre-tax profit. 5. PROFIT BEFORE DEPRECIATION, AMORTISATION, TAX AND EXCEPTIONAL ITEMS Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Profit before tax 1,702 143 1,243 ------ ------ ------ Exceptional items - - (25) Depreciation 1,974 1,774 3,737 Amortisation 48 48 97 Profit before depreciation, amortisation, taxation and exceptional items ("EBDAT") 3,724 1,965 5,052 ====== ====== ====== 6. DIVIDENDS An interim dividend of 0.5 pence per ordinary share has been declared (31 March 2004: final dividend of 1.05 pence per ordinary share, 30 September 2003: nil). The ex-dividend date will be 17 November 2004 and the record date 19 November 2004 with an intended payment date of 20 December 2004. 7. EARNINGS PER ORDINARY SHARE Basic earnings per ordinary share has been calculated on the profit for the financial period of Â£987,000 (six months ended 30 September 2003: profit for the financial period of Â£60,000; year ended 31 March 2004: profit for the financial year of Â£651,000) and on the weighted average number of shares in issue during the period of 99,473,430 (six months ended 30 September 2003: 99,400,616; year ended 31 March 2004: 99,379,569). Diluted earnings per share has been calculated after allowing for the exercise of share options which have met the required exercise conditions. The weighted average number of shares in issue during the period is 101,388,197 (six months ended 30 September 2003: 101,013,842; year ended 31 March 2004: 100,973,605). 8. TANGIBLE FIXED ASSETS Fixtures, Short fittings Freehold leasehold Assets under Plant and Motor and office property improvements construction machinery vehicles equipment Total Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Cost At 1 April 2004 85,564 14,502 21,202 15,952 19 2,421 139,660 Additions 20,051 1,448 16,038 3,010 - 199 40,746 Reclassifications 2,942 - (2,942) - - - - ------ ------ ------ ------ ------ ------ ------ At 30 September 2004 108,557 15,950 34,298 18,962 19 2,620 180,406 ------ ------ ------ ------ ------ ------ ------ Accumulated depreciation At 1 April 2004 (2,841) (1,721) - (3,173) (11) (1,222) (8,968) Charge for the year (526) (304) - (850) (3) (291) (1,974) ------ ------ ------ ------ ------ ------ ------ At 30 September 2004 (3,367) (2,025) - (4,023) (14) (1,513) (10,942) ------ ------ ------ ------ ------ ------ ------ Net book value At 30 September 2004 105,190 13,925 34,298 14,939 5 1,107 169,464 ====== ====== ====== ====== ====== ====== ====== At 31 March 2004 82,723 12,781 21,202 12,779 8 1,199 130,692 ====== ====== ====== ====== ====== ====== ====== 9. DEBTORS 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Trade debtors 480 642 357 Other debtors 456 424 587 Deferred tax 485 1,709 1,200 Prepayments and accrued income 3,317 3,204 3,678 ------ ------ ------ 4,738 5,979 5,822 ====== ====== ====== 10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Bank overdraft - - 267 Trade creditors 2,887 2,292 3,985 Taxation and social security 125 101 117 VAT repayable under Capital Goods Scheme (see note 11) 2,479 - - Other creditors 1,151 1,593 1,518 Proposed dividend 500 - 1,044 Accruals and deferred income 11,154 3,876 5,086 ------ ------ ------- 18,296 7,862 12,017 ====== ====== ======= 11. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 30 September 2004 30 September 2003 31 March 2004 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Bank loans 90,893 63,893 68,893 Unamortised loan arrangement costs (530) (386) (311) VAT repayable under Capital Goods Scheme 14,021 - - ------- ------ ------ 104,384 63,507 68,582 ======= ====== ====== The bank loans are secured on certain of the Group's properties. The Group has VAT repayable under the Capital Goods Scheme which is estimated at Â£16.5 million. The projected annual repayment schedule is set out below: Total Â£'000 Year ended 31 March 2005 2,479 Years ended 31 March 2006 to 31 March 2010 (5 years) 9,525 Years ended 31 March 2011 to 31 March 2015 (5 years) 4,496 ------ Total 16,500 ====== 12. ADJUSTED NET ASSETS PER SHARE At 30 September 2004 Net assets Number of Net assets Â£'000 shares per share As per the balance sheet 58,338 100,001,506 Own shares held - (615,000) ------ ------- ------- 58,338 99,386,506 58.7p FRS 13 adjustment (154) - Exercise of share options 7,131 8,340,744 Revaluation uplift on freehold properties 91,240 - Revaluation uplift on leasehold properties 31,950 - ------ ------- ------- Adjusted net assets per share 188,505 107,727,250 175.0p ====== ======= ======= Net assets per share are shareholders' funds divided by the number of shares at the period end. The shares currently held in Treasury, which will be transferred to the Group's employee benefits trust (own shares held) are excluded from both net assets and the number of shares. Adjusted net assets per share include: â€¢ the effect of those shares issuable under employee share option schemes; â€¢ the fair value adjustment on the Group's external debt; and â€¢ the revaluation uplift on freehold and leasehold properties. Comparative data has not been provided as the Group did not carry out full valuations of the Group's property portfolio at 30 September 2003 or 31 March 2004. The Group's properties have been valued at 30 September 2004 by Cushman and Wakefield, Healy and Baker ("C&W/H&B"). Valuation methodology Background The USA has approximately 35,000 self storage assets trading in a highly fragmented market with the largest five operators accounting for only approximately 16% of market share based on net rentable square footage. The vast majority of centres are owned and managed singly or in small portfolios. These properties have a well established track record of being traded and are therefore considered as liquid property assets. Many valuations of this asset class are undertaken by appraisers in the USA and the accepted valuation approach is to value the properties having regard to trading potential. This approach is recognised in the RICS Appraisal & Valuation Standards published by The Royal Institution of Chartered Surveyors and is adopted for other categories of property that are normally bought and sold on the basis of their trading potential. Examples include hotels, bars, restaurants, marinas and petrol stations. The UK self storage sector differs from the USA in that the five largest groups control 40-50% of the market and this proportion is likely to increase. The scope for active trading of these property assets is therefore likely to be less, however there is now some evidence that there will be liquidity, with the first store of reasonable quality having recently been acquired by a competitor in West London. C&W/H&B believe that the valuation methodology adopted in the USA is the most appropriate for the UK market. Methodology C&W/H&B have adopted different methodologies for the valuation of the leasehold and freehold assets as follows: Freehold The valuation is a discounted cash flow of the net operating income over a 10 year period and notional sale of the asset at the end of the tenth year. Assumptions A. Net operating income is based on revenue received less operating costs which include a central administration charge representing 6% of the estimated annual revenue. 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 straight line absorption from day one actual occupancy to an estimated stabilised/mature occupancy level. In the valuation the assumed stabilised occupancy level for the 31 stores (both freeholds and leaseholds) averages 85.48%. The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. C. Capitalisation rates of existing and future net cashflow have been estimated by reference to underlying yields for industrial and retail warehouse property, bank base rates, 10 year money rates and inflation. On average, for all 31 stores, the yield (net of purchaser's costs) arising from the first year of the projected cashflow is 8.19%. This rises to 9.21% based on the projected cashflow for the first year following estimated stabilisation of the porftolio. D. The notional sale of the freeholds at the end of the tenth year has been calculated at a weighted average exit yield of 8.75%. E. The future net cashflow 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 11.75%. F. Purchaser's costs of 5.75% (on all assets other than those in stamp duty exempt areas) have been assumed initially and sale and purchaser's costs totalling 7.75% are assumed on the notional sales in the tenth year in relation to the freehold stores. 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 leaseholds is 21 years. 13. MOVEMENT ON RESERVES Capital Share Other Profit Share redemption premium distributable Treasury and loss capital reserve account reserves shares account Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 April 2004 9,940 1,653 1,959 51,045 - (6,206) 58,391 Profit for the financial period - - - - - 987 987 Dividend - - - - - (500) (500) Appropriation - - - (500) - 500 - Issue of share capital 60 - 212 - - - 272 Purchase of treasury shares - - - - (812) - (812) ------ ------ ------ ------ ------ ------ ------ Balance at 30 September 2004 10,000 1,653 2,171 50,545 (812) (5,219) 58,338 ====== ====== ====== ====== ====== ====== ====== INDEPENDENT REVIEW REPORT TO BIG YELLOW GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 September 2004 which comprises the profit and loss account, the balance sheet, the reconciliation of movements in shareholders' funds, the cash flow statement, and the related notes 1 to 13. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review 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, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting polices and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2004. Deloitte & Touche LLP Chartered Accountants London 9 November 2004 This information is provided by RNS The company news service from the London Stock Exchange

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Tuesday, 4th June 2024

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