Interim Results

Mentmore Abbey Plc 4 December 2001 Immediate release 4 December 2001 MENTMORE ABBEY plc INTERIM ANNOUNCEMENT OF RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 RESULTS REFLECT GOOD DEMAND FOR ALL OUR SERVICES. THE CUSTOMER BASE REMAINS STABLE AND RESILIENT AND THE BUSINESS MAINTAINS ITS STRONG CASH GENERATION. THE RESULTS ARE IN LINE WITH OUR EXPECTATIONS. * Profit before tax of £15.5 million (2000: £6.7 million) * Earnings per share of 6.66p (2000: 2.18p) * Disposal of 20% stake in Workspace generated £29.9 million of cash and an exceptional profit before tax of £9.6 million. * Before goodwill amortisation and exceptionals - EBITDA of £17.0 million (2000: £16.5 million) - Total operating profit of £14.1 million (2000: £14.2 million) - Interest covered 3.0 times (2000: 2.7 times) - Profit before tax of £9.4 million (2000: £9.5 million) - Earnings per share of 3.55p (2000: 3.83p) * Net debt £149.7 million (2000: £151.0 million) with gearing 71% (2000: 84%) * Interim dividend maintained at 0.402p Personal storage - 39 centres: a record additional 10,000 sq. m. let - Let space 120,000 sq. m. out of capacity of 200,000 sq. m. - Annualised storage revenues increased by 31% to £19.6 million - Benefits from re-branding already evident - 34% of developed space less than two years old - Une Piece en Plus, based in Paris, ahead of expectations Serviced Business Space - Focus on developing new sites and upgrading existing outlets - Development and upgrade costs of £0.8 million - After costs performance broadly similar to last year - Demand good: 2% increase in like-for-like occupancy - Enhanced service offering and improved facilities following upgrades Records Management (Iron Mountain Europe - 49.9% owned joint venture) - Strong benefits evident from last year's investment programme - Major contracts won and prices increased - Revenues increased by 66% and our share of operating profits doubled to £1.8 million Commenting on the results and prospects, Nick Smith, Chairman, said: 'We have delivered results in line with our plans. Our personal storage business, both within the UK and France, continued to grow. Iron Mountain Europe, our records management business, demonstrated a strong profit recovery and new business wins. As planned, serviced business space focused on developing new sites and upgrading existing outlets and, after taking into account the associated costs, trading remained at a similar level to last year. Each of our markets is underdeveloped and continues to demonstrate growth. The heavy investment in the current period will give us a strong base from which to offer an increasing range of service based solutions to our customers. This will leave us in a position to continue our drive for ongoing growth in profits for your company in the coming years.' Contacts: Mentmore Abbey plc 020 8946 3159 Nick Smith, Chairman Kim Taylor-Smith, Chief Executive Clive Drysdale, Finance Director Bridgewell Corporate Finance 020 7626 3322 Ian Dighe Greg Aldridge Buchanan Communications 020 7466 5000 Charles Ryland Catherine Miles Dresdner Kleinwort Wasserstein 020 7623 8000 Charles Batten EDITORS NOTE: Personal storage The group has 39 centres providing self-managed storage units for personal customers and small and medium-sized businesses on flexible terms. Serviced business space The group has 217 serviced business space centres offering trading or office space on flexible terms to businesses of all kinds. Records management Our records management business is a partnership with Iron Mountain Incorporated, the world's leading records management company. It services customers across Europe. Chairman's Statement Introduction I am pleased to report our interim results for the six months to 31 October 2001 which reflect good demand for all our services. The customer base remains stable and resilient and the business maintains its strong cash flow. The results are in line with our expectations. Our personal storage business, both within the UK and France, continued to grow. Iron Mountain Europe, our records management business, demonstrated a strong profit recovery and new business wins. As planned, serviced business space focused on developing new sites and upgrading existing outlets and, after taking into account the associated costs, trading remained at a similar level to last year. Financial review Six months ended 31 October Before goodwill amortisation and exceptionals 2001 2000 Total operating profits £14.1m £14.2m EBITDA £17.0m £16.5m Profit before tax £9.4m £9.5m Earnings per share 3.55p 3.83p The profit before tax was adversely affected by £0.8 million of costs associated with our investment programme in serviced business space. Also, the results for the current period include £0.1 million of property profits compared to £0.6 million last time. After adjusting for these, pre tax trading profit grew by £1.2 million (14%). Personal storage Personal storage continued to deliver strong growth. In the period we let a record additional 10,000 square metres of space. We now have 120,000 square metres of let space out of a total capacity of 200,000 square metres. In the UK revenues grew by 31% and operating profits by 22% versus the same period last year. The programme to upgrade our sites to the new 'spaces' format has accelerated since we overcame the bottleneck of local planning constraints. This new format puts our centres at the forefront of the industry and has been well received by our customers. In Paris, Une Piece en Plus, which now has six sites open and another under development, traded ahead of our expectations. Annualised storage revenue increased in the period to £1.8 million. Both Montparnasse and Rue de Pyrenees are now open and contributing, however these new stores did not materially impact the numbers. Losses in Paris reflect the age and profile of this business. Overall, revenues in the half year were up 39% to £10.2 million (2000: £7.4 million) and operating profits grew 14% to £3.6 million (2000: £3.2 million). Serviced business space As expected, serviced business space profit did not grow in the period as space was taken out of commission for upgrading. However, demand for our flexible serviced accommodation remains good with a 2% increase in like for like occupancy. We acquired two existing business centres in Leeds and Altrincham late in the period. These are attractive additions, which meet our business and financial expectations. We sold two older sites that no longer met our criteria. During the period we had 22 centres in various stages of development of which six have already been completed. In addition, we are upgrading a further four centres. The operating costs and lost revenues relating to these developments and the upgrade programme amounted to over £0.8 million in the period. Capital expenditure on these was £16.9 million. Increasing consumer expectations makes our upgrade programme for InShops even more timely. A trial project in Clydebank resulted in a 30% uplift in income. As a result, we will upgrade two further centres in the New Year; these closures will incur costs but the rewards will fully justify the investment. Overall, revenues in the period increased to £26.2 million (2000: £25.9 million). While the underlying trading was broadly in line with last year, the £0.8 million upgrade and development costs reduced operating profits to £ 8.7 million (2000: £9.6 million). Iron Mountain Europe Iron Mountain Europe, our joint venture records management business, confirmed our belief in the quality of this market. We demonstrated the first benefits of last year's investments by increasing our share of revenues by 66% to £12.9 million (2000: £7.8 million) and doubling operating profits to £1.8 million (2000: £0.9 million). We have increased prices, improved efficiency and won major new contracts. These contracts have been won on the basis of a superior product and service and have all been at attractive margins. Other During the period we sold our stake in Workspace Group plc. This generated cash of £29.9 million and a profit before tax of £9.6 million. The proceeds have been invested in new capacity, which will help to drive our growth in future years. Our people continue to respond magnificently to the changing environment in which we operate. On behalf of all shareholders, I thank them for their continued efforts and support. Dividend We are maintaining the interim dividend at 0.402 pence per ordinary share. This will be paid on 8 April 2002 to shareholders on the register on 1 March 2002. Outlook Each of our markets is underdeveloped and continues to demonstrate growth. The heavy investment in the current period will give us a strong base from which to offer an increasing range of service based solutions to our customers. This will leave us in a position to continue our drive for ongoing growth in profits for your company in the coming years. Group profit and loss account for the six months ended 31 October 2001 Six Six months months ended ended Year ended 31 31 30 April October October 2001 2000 2001 as as restated restated Notes £'000 £'000 £'000 Turnover 2 37,945 35,661 75,019 Continuing operations: Group and share of joint venture 50,886 43,476 94,093 Less: group's share of joint venture (12,941) (7,815) (19,074) Group 37,945 35,661 75,019 Operating profit 9,442 10,864 24,469 Continuing operations: Before goodwill amortisation 12,297 13,347 29,803 Goodwill amortisation (2,855) (2,483) (5,334) 9,442 10,864 24,469 Share of operating profit in joint venture: Before goodwill amortisation 1,754 881 1,955 Goodwill amortisation (675) (340) (917) 1,079 541 1,038 Total operating profit 2 10,521 11,405 25,507 Before goodwill amortisation 14,051 14,228 31,758 Goodwill amortisation 2 (3,530) (2,823) (6,251) Profit on disposal of investment 9,646 - - Income from other fixed asset investments - 476 683 Profit on ordinary activities before interest 20,167 11,881 26,190 Net interest payable (4,630) (5,202) (10,854) Profit on ordinary activities before taxation 15,537 6,679 15,336 Taxation 3 (3,502) (2,934) (6,152) Profit on ordinary activities after taxation 12,035 3,745 9,184 Before goodwill amortisation and 4 exceptionals 6,419 6,568 15,435 Goodwill amortisation and exceptionals 5,616 (2,823) (6,251) Dividends (729) (752) (2,237) Retained profit for the period 11,306 2,993 6,947 Earnings per share 4 Basic 6.66p 2.18p 5.24p Basic before goodwill amortisation and 3.55p 3.83p 8.81p exceptionals Diluted 6.62p 2.13p 5.12p Diluted before goodwill amortisation and exceptionals 3.53p 3.74p 8.61p Dividends per share 0.402p 0.402p 1.222p Group balance sheet as at 31 October 2001 31 31 30 April October October 2001 2000 2001 as as restated restated Notes £'000 £'000 £'000 Fixed assets Intangible assets 103,790 108,647 106,508 Tangible assets 234,105 204,405 214,416 Investment in IME joint venture 30,795 20,986 33,273 - share of gross assets 59,068 34,686 58,708 - share of gross liabilities (42,095) (29,326) (41,567) - share of net assets 16,973 5,360 17,141 - loans to joint venture 13,822 15,626 16,132 Own shares 216 257 222 Other investments 250 20,488 250 369,156 354,783 354,669 Current assets Stocks and developments in progress 15,046 1,217 2,315 Assets held for resale 5,221 6,564 5,231 Debtors 10,397 7,994 9,491 Investments - - 20,238 Cash at bank and in hand 8,767 8,631 8,465 39,431 24,406 45,740 Creditors: amounts falling due within one (49,695) (86,820) (49,560) year Net current liabilities (10,264) (62,414) (3,820) Total assets less current liabilities 358,892 292,369 350,849 Creditors: amounts falling due after more (143,856) (110,632) (148,199) than one year Provisions for liabilities and charges (4,021) (2,262) (3,345) Net assets 211,015 179,475 199,305 Capital and reserves Called up share capital 18,129 17,215 18,097 Share premium account 130,131 115,030 129,804 Other reserve 27,226 27,226 27,226 Profit and loss account 35,529 20,004 24,178 Equity shareholders' funds 7 211,015 179,475 199,305 Group cash flow statement for the six months ended 31 October 2001 Six Six months months ended ended Year ended 31 31 30 April October October 2001 2000 2001 Notes £'000 £'000 £'000 Cash flow from operating activities 5 15,435 15,917 33,219 Returns on investment and servicing of (2,462) (3,263) (7,619) finance Proceeds from sale of investment 29,884 - - Taxation (2,116) 480 (1,692) Capital expenditure (23,203) (15,166) (26,078) Development on behalf of joint venture (12,018) - - Loans repaid by/(made to) joint venture 2,310 (1,423) (1,929) Acquisitions and disposals 4 (24,426) (31,056) Equity dividends paid (1,484) (1,410) (2,162) Cash inflow/(outflow) before use of financing 6,350 (29,291) (37,317) Financing - issue of shares 321 216 3,259 - (decrease)/increase in debt (6,846) 26,718 39,268 (Decrease)/increase in cash in the period (175) (2,357) 5,210 Reconciliation of net cash flow to movement in net debt for the six months ended 31 October 2001 Six Six months months ended ended 31 31 Year October October ended 2001 2000 30 April 2001 Notes £'000 £'000 £'000 (Decrease)/increase in cash in the period (175) (2,357) 5,210 Cash inflow from change in debt and lease financing 6,846 (26,718) (39,268) Change in net debt resulting from cash 6,671 (29,075) (34,058) flows Loans and finance leases acquired with subsidiary undertakings - (6,102) (6,141) Non-cash movements (69) (8,243) (8,531) Movement in net debt in the period 6,602 (43,420) (48,730) Net debt at beginning of the period (156,351) (107,621) (107,621) Net debt at end of the period 6 (149,749) (151,041) (156,351) Non-cash movements include £8.2 million of vendor loan notes issued on the acquisition of British Self-Storage in June 2000. Notes to the interim results for the six months ended 31 October 2001 1. Basis of preparation The interim results have not been audited but have been reviewed by the auditors. They have been prepared on the basis of accounting policies consistent with those adopted for the year ended 30 April 2001 with the exception of the adoption of the new accounting standard on deferred tax. Details of this change in accounting policy are set out in note 3. The comparative figures for the year ended 30 April 2001 and other financial information contained herein do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 April 2001, which received an audit report which was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of Companies. 2. Segmental analysis Six months Six months ended ended 31 October 31 October Year ended 2001 2000 30 April 2001 £'000 £'000 £'000 Turnover Continuing operations: Personal storage 10,247 7,358 16,276 Serviced business space 26,162 25,885 51,360 Property disposals - 1,025 4,345 Other 1,536 1,393 3,038 37,945 35,661 75,019 Total operating profit Continuing operations: Personal storage 3,604 3,166 7,177 Serviced business space 8,677 9,589 20,098 Records management 1,754 881 1,955 Property disposals 80 617 2,541 Other (64) (25) (13) Goodwill amortisation (3,530) (2,823) (6,251) 10,521 11,405 25,507 3. Taxation The tax charge on profits before goodwill amortisation and exceptionals for the six months ended 31 October 2001 is based on an estimated effective rate of 31.9% for the year ending 30 April 2002. In addition to this the charge for the period includes an amount of £0.5 million relating to the profit on the disposal of investments. Financial Reporting Standard 19 - Accounting for deferred tax ('FRS 19') has been adopted with effect from 1 May 2000. FRS 19 requires that deferred tax be recognised in respect of all timing differences that have originated but not reversed by the balance sheet date. The group's previous accounting policy in respect of deferred tax was to only recognise deferred tax to the extent that it was probable that a liability would crystallise. The effect of adopting FRS 19 is to reduce profit after tax for the current period by £0.8 million (2000: £0.8 million) from £12.8 million to £12.0 million and to reduce opening net assets at 30 April 2001 by £3.3 million from £202.6 million to £199.3 million. Basic earnings per share for the six months ended 31 October 2000 have been restated from 2.64p to 2.18p and for the same period basic earnings per share before goodwill amortisation and exceptionals have been restated from 4.29p to 3.83p. Prior year comparatives have been restated accordingly. 4. Earnings per share Basic earnings per share are calculated on profit after tax of £12.0 million (2000: £3.7 million as restated), divided by 180.8 million ordinary shares (2000: 171.4 million ordinary shares) being the weighted average number of shares in issue during the period. Diluted earnings per share are calculated after allowing for the dilutive effect of conversion into ordinary shares of the weighted average number of share options outstanding during the period. The number of shares used for the diluted earnings per share calculation was 181.7 million (2000: 175.8 million). The weighted average number of shares used to calculate earnings per share excludes shares held by the Quest. Basic earnings per share before goodwill amortisation and exceptionals has been separately disclosed on the face of the profit and loss account to facilitate comparison of the underlying performance of the group. The calculation uses the same weighted average number of shares in issue as for the basic earnings per share but reflects the following items: Six Six months months ended ended 31 31 Year October October ended 2001 2000 30 April 2001 as as restated restated £'000 £'000 £'000 Profit after tax As for basic earnings per share 12,035 3,745 9,184 Goodwill amortisation 3,530 2,823 6,251 Profit on disposal of investment (9,646) - - Tax on profit on disposal of investment 500 - - As for basic earnings per share before goodwill amortisation and exceptionals 6,419 6,568 15,435 Six Six months months ended ended Year ended 31 31 30 April October October 2001 2000 2001 as as restated restated p p p Earnings per share Basic earnings per share 6.66 2.18 5.24 Goodwill amortisation 1.95 1.65 3.57 Profit on disposal of investment (5.33) - - Tax on profit on disposal of investment 0.27 - - Basic earnings per share before goodwill amortisation and exceptionals 3.55 3.83 8.81 Diluted earnings per share before goodwill amortisation and exceptionals similarly reflects the above adjustments but uses the same weighted average number of shares in issue as for diluted earnings per share. 5. Reconciliation of operating profit to cash flow from operating activities Six Six months months ended ended 31 31 Year ended October October 2001 2000 30 April 2001 £'000 £'000 £'000 Operating profit 9,442 10,864 24,469 Goodwill amortisation 2,855 2,483 5,334 Depreciation charge 2,270 1,775 3,625 Profit on sale of tangible fixed assets (80) (1) (612) Decrease in stocks and assets held for resale 1,208 909 928 (Increase)/decrease in debtors (493) 1,070 (235) Increase/(decrease) in creditors 242 (1,192) (306) (Decrease)/increase in provision for liabilities and charges (9) 9 16 15,435 15,917 33,219 6. Net debt 31 October 31 October 2001 2000 30 April 2001 Net debt comprises: £'000 £'000 £'000 Cash at bank and in hand 8,767 8,631 8,465 Overdrafts (4,722) (12,046) (4,313) Bank loans (145,551) (139,376) (152,252) Finance leases - (7) (8) Deferred acquisition loan notes (8,243) (8,243) (8,243) (149,749) (151,041) (156,351) Bank loans, finance leases and deferred acquisition loan notes include amounts due after more than one year amounting to £143.8 million (2000: £110.5 million). 7. Reconciliation of movement in shareholders' funds 31 October 31 October 30 April 2001 2000 2001 as restated as restated £'000 £'000 £'000 Profit for the period 12,035 3,745 9,184 Other recognised gains and losses in the 45 63 283 period Shares issued net of expenses 359 216 15,872 Dividends (729) (752) (2,237) Net addition to shareholders' funds 11,710 3,272 23,102 Opening shareholders' funds as previously 202,588 177,656 177,656 stated Prior year adjustment (3,283) (1,453) (1,453) Opening shareholders' funds as restated 199,305 176,203 176,203 Closing shareholders' funds 211,015 179,475 199,305 8. Interim results statement The interim results statement, which was approved by the Board on 4 December 2001, will be posted to all shareholders. Thereafter copies may be obtained from the Company Secretary, Mentmore Abbey plc, Park House, 14 Pepys Road, London SW20 8NH.

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