10th May 2005 07:01
Big Yellow Group PLC10 May 2005 10 May 2005 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") RESULTS FOR THE TWELVE MONTHS AND FOURTH QUARTER ENDED 31 MARCH 2005 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company"), the selfstorage company, is pleased to announce results for the twelve months and forthe fourth quarter ended 31 March 2005. 4th quarter 3rd quarter Year Year ended ended ended ended 31 Mar 05 31 Dec 04 % 31 Mar 05 31 Mar 04 % Annualised revenue £36.5m £35.0m +4% £36.5m £27.8m . +31%Turnover £9.0m £8.8m +2% £33.4m £23.8m +40%EBDAT (see note 5) £2.5m £2.3m +9% £8.5m £5.1m +67%Profit before tax £1.28m £1.07m +20% £4.1m £1.2m +242%Earnings per share 2.52p 0.66pDividend - final 1.50p 1.05p - total 2.00p 1.05pAdjusted net assets per share (see note 21) 186p N/ANumber of customers 24,600 23,600 +4% 24,600 20,400 +21%Occupied space 1,470k sq ft 1,418k sq ft +4% 1,470k sq ft 1,268k sq ft +16% • Pre-tax profit of £4.1 million (2004: £1.2 million) up 242% • Annualised revenue of £36.5 million (2004: £27.8 million) up 31% • Earnings for the year before depreciation, amortisation and tax of £8.5 million (2004: £5.1 million) up 67%, (see note 5) • Final dividend proposed of 1.50p per ordinary share (2004:1.05p) • Adjusted Net Assets per share of 186p as at 31 March 2005 (see note 21) (175p as at 30 September 2004) • 33 stores currently open with a further 11 stores committed, providing 2.7 million sq ft of self storage space when completed • The number of customers continues to increase to 24,600 (2004: 20,400 customers) up 21% • Turnover for stores open more than two years at 1 April 2004 up 18% year on year, of which 10% is yield improvement, with the balance representing occupancy growth • Packing materials, insurance and other sales were £4.1 million in the year (2004: £3.1 million) • Facility with Royal Bank of Scotland, Bank of Ireland & Barclays Bank increased to £150 million from £80 million in April 2005 Commenting on the Outlook for the year, Nicholas Vetch, Chairman of Big Yellow,said: "We believe that in the short term trading conditions will continue to be moretesting than they have been in previous years as the consumer becomes morecautious in a slowing housing market. "However, we continue to believe that the Group's strong branding, focus oncustomer service and strength of operational management will give it resilience,but not complete immunity to any adverse market conditions. Further, the Groupis well financed with strong cashflow, significant available bank facilities,underpinned by its quality store portfolio, 80% of which is owned freehold. Wecautiously look forward to our busier summer period and the continued expansionof our portfolio through the opening of existing committed stores and furthersite acquisitions." - Ends - For further information, please contact: Big Yellow Group PLC 01276 470190Nicholas Vetch, ChairmanJames Gibson, Chief Executive Weber Shandwick Square Mile 020 7067 0700Louise Robson or Yvonne Alexander Big Yellow Group PLCTrading Summary Years since opening Greater than 2 years Between 1 and 2 Less than 1 at 1 April 2004 years year Total Number of stores 19 8 5 32 ------------------ ------------------ ---------- ----------At 31 March 2005Total capacity (sq ft) 1,086,000 549,000 277,000 1,912,000Occupied space (sq ft) 929,000 412,000 129,000 1,470,000Percentage occupied 86% 75% 47% 77% Freehold Leasehold Freehold Leasehold Freehold TotalNumber of stores 13 6 5 3 5 32Total capacity (sq ft) 741,000 345,000 360,000 189,000 277,000 1,912,000 --------- --------- --------- --------- --------- --------- £'000 £'000 £'000 £'000 £'000 £'000Annualised revenue 14,757 8,087 6,727 3,677 3,226 36,474 For the yearSelf storage sales 12,218 6,825 5,174 3,053 1,929 29,199Other income(1) 1,748 851 760 436 355 4,150Bulk storage sales - - - - 26 26 --------- --------- --------- --------- --------- ---------Total turnover 13,966 7,676 5,934 3,489 2,310 33,375 Direct store operating costs (excluding depreciation) (4,698) (3,800) (2,056) (2,106) (1,350) (14,010) --------- --------- --------- --------- --------- --------- Store EBITDA(2) 9,268 3,876 3,878 1,383 960 19,365EBITDA margin 66% 51% 65% 40% 42% 58% Store depreciation (1,629) (794) (897) (458) (466) (4,244) --------- --------- --------- --------- --------- ---------Store EBIT(3) 7,639 3,082 2,981 925 494 15,121 ---------Administration expenses (5,436)Operating profit 9,685Profit on sale of assets 2Net interest (5,634) ---------Profit before tax 4,053 ========= Capital expenditure at 31 March 2005 £m £m £m £m £m £mPre capital goods scheme 60.6 12.4 32.2 7.2 25.8 138.2Capital goods scheme repayment (4) 4.7 1.2 4.0 0.9 2.7 13.5To complete 0.0 0.0 0.0 0.0 1.6 1.6 --------- --------- --------- --------- --------- ---------Total cost 65.3 13.6 36.2 8.1 30.1 153.3 (1) Packing materials, insurance and other storage related fees(2) Earnings before interest, tax, depreciation and amortisation(3) Earnings before interest and tax(4) Capital goods scheme adjustment was made on 30 September 2004 at the Interim stage (see note 16) 10 May 2005 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") RESULTS FOR THE TWELVE MONTHS AND FOURTH QUARTER ENDED 31 MARCH 2005 The Group continued to enjoy growth over the year, despite more testing marketconditions in the second half arising from reduced consumer spending and aslowing housing market. In the face of a significant reduction in housingtransactions the Group's performance over the winter months was satisfactory,with the mature stores holding their occupancy levels and lease up stores makingreasonable progress. Trading in the final quarter was in line with ourexpectations, but April has been weaker. Whilst annualised revenue advanced inApril, occupancy was flat, which we attribute to this more cautious consumerenvironment. Financial Results Turnover for the year was £33.4 million (2004: £23.8 million) an increase of40%. Underlying revenue on an annualised basis increased at the year end to£36.5 million (2004: £27.8 million), up 31% compared to the previous year.The Group made a pre-tax profit for the year of £4.1 million compared with aprofit of £1.2 million in 2004. Basic earnings per share were 2.52p (2004: 0.66p). Packing materials, insurance and other sales were £4.1 million, representing14.2% of storage income (March 2004: £3.1 million, 15.0%), and at the year endthe number of customers had risen to 24,600 from 20,400 at 31 March 2004, anincrease of 21%. The Group continues to increase its cash generation, making an operating cashsurplus of £8.5 million after operating costs, central overhead and interestcosts but before depreciation, amortisation and tax (2004: £5.1 million (see note5)). Annualised revenue over the fourth quarter rose by 4% to £36.5 million from£35.0 million at the end of the third quarter to the 31 December 2004. Turnoverfor the fourth quarter rose to £9.0 million from £8.8 million in the thirdquarter. Pre-tax profit for the fourth quarter was £1.28 million, up from £1.07million in the third quarter. Dividend The Board has reviewed its dividend policy and concluded that in addition to themaiden interim dividend of 0.5p, the final dividend be increased, reflectingconfidence in the Group's cashflow. The Board is therefore recommending a final dividend of 1.5p per ordinary share(2004: 1.05p), which together with the interim dividend of 0.5p (2004: nil),takes the total dividend for the year to 2.0p (2004: 1.05p). The ex-dividenddate will be 1 June 2005; the record date 3 June 2005; with an intended paymentdate of 1 July 2005. Placing In February 2005, 28.15 million shares controlled or managed by Pramerica RealEstate Investors were successfully placed into the market, spread across some 44investors, many of whom were new to the Company. This has doubled the free float and significantly enhanced liquidity in theCompany's shares, a benefit to all shareholders and the Company. I would like to thank Pramerica Real Estate Investors and, in particular,Jonathan Short and his colleagues for their support and guidance since theoriginal pre-flotation investment in September 1999. I am also delighted thatJonathan Short has agreed to remain on the Board as a Non-Executive director. Stores and the Market In the year we increased occupancy by 202,000 sq ft, with total occupancy at 31March 2005 of 1.47 million sq ft representing a 77% occupancy rate across alltrading stores. Occupancy levels on those stores that have been open for morethan two years have held steady at 86% over the winter period. We have included as usual a table summarising the trading performance of all ourstores over the year. The 19 stores open for more than two years made trading profits before interest, tax, depreciation and amortisation ("EBITDA") of £13.1million in the year on turnover of £21.6 million, giving a total EBITDA margin of 61% (2004: 57%). This comprises 66% for freeholds (2004: 66%) and 51% for leaseholds (2004: 49%). Same store turnover for these 19 stores increased 18% year on year, of which 10% is a result of yield improvement and the balance occupancy growth. Recently, the self storage market in the UK has witnessed some consolidationwith the merging of two of our competitors. The supply of new stores in our corearea remains limited due to the relatively high barriers of site acquisition andthe difficulty of obtaining planning permission. Demand for self storage appears to be more muted than in previous years, areaction we believe to be the result of a slowing housing market and a morecautious consumer. Management Management throughout the Group has remained stable during the year both at HeadOffice and within the Stores. As with all businesses like ours very little canbe achieved without the goodwill and hard work of the people involved and Ishould like therefore to express my continued thanks for all their endeavourswhich I believe provides the Group with such a strong competitive edge. Property We now have 44 stores open or committed having acquired six sites in the yearincluding five freeholds at Fulham, Gloucester, South Bristol, Tunbridge Wells,Leeds and a long leasehold site in Central Bristol. 33 stores are trading, with Beckenham having opened since the year end. Theproposed Fulham store, subject to Planning approval, is expected to provide inexcess of 125,000 sq ft of net lettable storage space, equivalent to twostandard stores. Of the 11 committed but unopened stores we have planning permissions on five andare negotiating for planning permission on the remainder. When fully developed,these stores will provide an additional 700,000 sq ft of net lettable selfstorage, taking the total for all stores to 2.7 million sq ft. Of the 44 storesor sites, 24 are located in Greater London with net lettable capacity of 1.6million sq ft (59%). The property strategy remains to acquire six to eight sites per year for theforeseeable future. As indicated at the interim results we intend to expandinto certain key towns in the Midlands and the North and to that end we areseeking suitable properties in those areas. We are pleased to have acquired ourfirst store in Leeds, which is due to open in the early summer of this year. Although we have succeeded in acquiring 13 development sites in the last twoyears, the acquisition of high profile, quality sites, which meet our criteriaand obtaining Planning Consents remains challenging and the key barrier togrowth. We are primarily focussed on acquiring freehold properties in all but veryexceptional circumstances and, when they come available, acquiring the freeholdof our leasehold stores. Indeed, in October 2004 we completed the acquisitionof the freehold investment building, part occupied by our Wandsworth store. TheGroup now owns 34 of its stores and sites freehold, one long leasehold and 9short leasehold. During the year, the Group sold surplus land at three of its stores for £7.35million at pro-rata book value which has been recycled into funding capitalexpenditure. Valuation and Net Asset Value Following the transfer to the Real Estate sector and first valuation disclosedin our Interim statement, we have commissioned a further valuation of theGroup's property at 31 March 2005 (see Note 22). The total value of the group's properties is £314.2 million comprising £223.8million (71%) for freehold trading stores £51.5 million (17%) for leaseholdtrading stores and £38.9 million (12%) for sites held for development. Theproperties held for development have not been valued and have been included atcost. The valuation translates into an adjusted net asset value per share of186p after the dilutive effect of outstanding share options. In future years an external valuation will be carried out every six months usingthe same valuation model. The Group has not changed its accounting policy, andassets are held at historical cost less depreciation. Outlook We believe that in the short term trading conditions will continue to be moretesting than they have been in previous years as the consumer becomes morecautious in a slowing housing market. However, we continue to believe that the Group's strong branding, focus oncustomer service and strength of operational management will give it resilience,but not complete immunity to any adverse market conditions. Further, the Groupis well financed with strong cashflow, significant available bank facilities,underpinned by its quality store portfolio, 80% of which is owned freehold. Wecautiously look forward to our busier summer period and the continued expansionof our portfolio through the opening of existing committed stores and furthersite acquisitions. Nicholas VetchChairman9 May 2005 OPERATING REVIEW Stores During the year, we opened stores in Swindon, Watford and Tolworth and after theyear end, Beckenham, bringing the number of stores now trading to 33. Theseprovide a total 2.0 million sq ft of net lettable space. 30 of the stores arenow trading profitably at the pre-tax level and all but the two most recentlyopened stores have positive operating cashflow. The maturity profile across the stores open at the end of the year is set out inthe trading summary and shows a blended occupancy for the portfolio of 77% (1.47million sq ft), with the 19 stores more than two years old at an averageoccupancy of 86%. There are a further 11 stores in the pipeline which, when fullydeveloped, will increase the total capacity of the portfolio to 2.7 million sq ft. Customer move-ins per store averaged 97 per month over the year, down slightlyfrom the 100 per month last year, reflecting a more mature store portfolio and amore difficult trading environment in the second half of the year. The continued drive to improve store operating standards and consistency acrossthe portfolio remains a key focus for the Group. During the year our developmentof store managers has included increasing their ownership and accountability.There has been additional effort devoted to selling standards and customerservice and this has been backed up by more streamlined and effective mysteryshop and ex-customer surveys managed from head office. This has been the first year of running a revised bonus scheme for all the storemanagement team with quarterly targets based on profit rather than revenue. Weimplemented this in the quarter to June to reflect the increasing proportion ofmature stores in the business. The result has been an improved understanding ofsales lines and control of store costs. Staff have found the build up ofperformance and bonus more visible with monthly reporting, and bonus payoutshave been less seasonal, which was one of the key objectives. The Company manages the construction and fit-out of its stores in-house as webelieve it provides better control and we have an excellent record of buildingstores on time and within budget. We continue to review our specifications andbuilding methods to comply with building regulations and operational demands. Some of our earlier stores are now over five years old and to maintain thequality of our estate and customer offering we continue to invest in a rollingprogramme of store makeovers, preventative maintenance, store cleaning and therepair and replacement of essential equipment. In January 2005 the Company became regulated by the FSA and authorised to sellcustomer insurance under new legislation. This decision was taken afterconsultation with the UK Self Storage Association who had discussions with theTreasury and FSA, and after taking our own legal advice. It also signed a newBinding Agreement with its Lloyd's Underwriter. We have reviewed all our sellingprocedures and, where necessary, revised our storage agreement and insuranceagreement with notification of changes to all customers. Security The safety and security of our customers and stores remains a key priority. Toachieve this we invest in state of the art access control systems, individualroom alarms, digital CCTV systems, intruder and fire alarm systems and theremote monitoring of our stores out of hours. We have implemented security procedures in relation to customers in line withadvice from the Metropolitan Police. We continue to work with the regulatoryauthorities on issues of security and review our operational proceduresregularly. The importance of security and the need for vigilance is communicatedto all store staff and reinforced through regular training. Marketing During the year the Company spent approximately £1.35 million, 4% of turnover,on above the line marketing, in line with the previous year. We ran a successful TV campaign on Carlton/London Weekend Television and a radiocampaign on Heart FM and selected local radio stations. Both campaigns were runover our peak trading period last summer and followed by further radio campaignsin the autumn. This was our second year of significant TV and radio investmentwhich we believe has contributed to the achievement of Big Yellow as the leadingbrand in our area of operation. To build on this success and reinforce Big Yellow's brand position we haverecently launched a further TV and radio advertising campaign, timed to coincidewith our busier summer trading period and with a focus on Greater London andsurrounding towns, benefiting 24 of our stores. Local marketing, selling standards and customer service at store level are alsocritical to building the brand and achieving store performance. This effort atthe stores along with our central marketing initiatives is now focused on thelease up on stores between one and two years old with current occupancies of 60%and over. People At Big Yellow we aim to provide a lively, fun and enjoyable work environment,without losing the commitment to customer service and standards of performance. As the business has grown it has been necessary to formalise the means by whichideas and policy changes are communicated and discussed with employees. Thereare regular consultation meetings held with employees, both formally andinformally, with directors and senior management spending significant time inthe stores and being accessible to employees at all levels. We encourage a partnership culture within the business and believe in staffparticipating in corporate performance through share incentives. Many employeeshave benefited or continue to benefit from share options granted in previousyears. In August 2004 we introduced a new Sharesave Scheme which provides anopportunity to invest in the future success of Big Yellow linked over a threeyear savings period. In addition, a new stakeholder pension scheme managed by Friends Provident wasput in place last summer to provide more effective pension provision within theGroup, as we are committed to encouraging our employees to save for theirfuture. Currently over 60% of our employees are members of the scheme. We had 166 employees in the business at 31 March, and recruiting and retainingthe right calibre people remains critical to the continued success of BigYellow. We promote the individual development of staff through training andregular performance appraisals and have a policy on flexible working to meetindividual needs where possible, without compromising corporate objectives. Systems From day one the Board has always considered investment in the development of ITsystems as critical to achieving the Group's strategic and operational goals.This process has continued in the last year with further development of ourcentralised operating system. This is the first centralised off the shelfpackage available from a UK supplier capable of managing a large portfolio andwas rolled out into our stores in 2003/2004. In the last year we havesuccessfully achieved efficiencies in day to day operations and improved thequality of management information and hence financial and operational controls. An example of the efficiency gains has been the implementation of changes tocustomer letters, promotions and storage rents all of which can now be changedon the whole portfolio within a matter of hours. Furthermore the processing ofthe current year price increase to approximately 25,000 existing customers wasachieved within a 24 hour period. Under the previous decentralised store basedPC system this would have taken significantly longer. This centralisation of operating systems necessitated investment in new headoffice infrastructure in tandem with an updated IT disaster recovery plan. Allcurrent systems have been selected and implemented to support the projectedgrowth of the business. FINANCIAL REVIEW Profit and Loss Account Annualised revenue, the measure of store revenue being billed (net of alldiscounts) at the end of the year, increased to £36.5 million, up from £27.8million last year, an increase of 31%. Turnover for the year was £33.4 million,up 40% from the £23.8 million for 2004. Other sales, comprising the selling of packaging materials, insurance andstorage related charges represented 14% of storage income for the year (2004:15%). Although down slightly in percentage terms this was £4.1 million for theyear up from £3.1 million in 2004. Within this we sold £1.8 million of packingmaterials (2004: £1.5 million). The Group made a pre-tax profit in the year of £4.1 million, up significantlyfrom the £1.2 million in the prior year. The Group sold surplus land at three of its store development sites for netproceeds of £7.35 million making a net profit of £2,000 (see note 5). The basic earnings per share for the year was 2.52p (2004: earnings per share0.66p) and the fully diluted earnings per share was 2.48p (2004: earnings pershare 0.64p). The Group's cash earnings continue to grow as reflected by the increase in EBDATfor the year to £8.5 million (see note 5) from £5.1 million last year. Thecurrent year result is after payment to Directors and senior management of afour year cash bonus totalling £1.4 million, including employers NationalInsurance contributions. This scheme was set up to reward senior managementthrough the early growth phase of the business and has not been renewed. Administration expenses including the cost of construction management were £5.4million (2004: £3.6 million) for the year. The current year expense includes theLong Term bonus mentioned above of £1.4 million, including employers nationalinsurance contributions and £0.3 million in relation to corporate costsprincipally related to the Group restructuring and new share incentive plansintroduced in the first half. The balance is annual inflationary increases. Net interest expense for the year increased to £5.6 million up from £3.5 millionin 2004 reflecting the increase in net borrowing over the period. The averagecost of borrowing including margin at 31 March is set out below: 2005 2004 Average interest rate on fixed rate debt 6.5% 6.6%Average interest rate on variable rate debt 6.0% 5.8%Overall weighted average interest rate 6.3% 6.4% Depreciation and goodwill amortisation for the year increased to £4.4 million(2004: £3.8 million) in line with increased capital expenditure on new storeopenings. Group Restructuring On 13 September 2004 the Group announced the restructuring of its business withthe transfer of trading operations into a new operating company separate fromits property owning companies and the reclassification to the Real Estatesector. This restructuring was completed on 30 September and became effective on1 October 2004. The Board was advised that as part of this restructuring the VAT election on allbut one of its trading stores would automatically be dis-applied on completionof the restructuring. For those stores affected, storage charges from 1 October2004 are now exempt from VAT. However the Group is now unable to recover VAT onthe majority of its capital and operating expenditure. In addition a proportionof the VAT incurred and previously recovered on its historical capitalexpenditure will be repaid under the Capital Goods Scheme over a period of 10years (see Note 16). The Board believes this action improves the Group'scompetitive position, sales and profitability, and provides flexibility for thefuture. Balance Sheet and Cash Flow The Group's property fixed assets are held in the balance sheet at historicalcost net of depreciation. During the year the Company incurred capital expenditure of £42.8 million (2004:£36 million), the majority on the acquisition of sites and construction ofstores. In addition, £16 million of VAT previously recovered but now repayableunder the Capital Goods Scheme (see note 16) has been capitalised, of which £1.9million was paid in February 2005. The increase in the net book value of tangible fixed assets in the year from£130.6 million to £177.8 million at 31 March 2005 is set out below: £ million 1 April 2004 130.6Additions 42.8Disposals (7.3)Capital Goods Scheme Adjustment 16.0Depreciation (4.3) ---------31 March 2005 177.8 ========= Following the reclassification to the Real Estate sector in September 2004 wecommissioned a valuation of all the Group's trading stores as at 30 Septemberand reported an adjusted net asset per share figure for the first time as partof our Interim Results. We intend to value our properties externally only on anannual basis at the year end in future, and have therefore had the portfolio oftrading stores valued as at 31 March 2005. The results of this valuation areshown in note 22. These valuations have not been booked in the accounts. Theproperties held for development totalling £38.9 million at 31 March 2005 havenot been re-valued and are held at cost (2004: £21.2 million). The historical cost net assets of the Group at 31 March 2005 were £58.7 million(2004: £58.4 million), the movement comprising a profit after tax of £2.5million, new share issues on exercise of options £0.6 million, less dividend of£2.0 million and purchase of shares into a Employee Benefit Trust of £0.8million. The Group had net current assets of £0.3 million at 31 March 2005 (2004: netcurrent liabilities of £5.1 million). The Group is strongly cash generative anddraws down from its longer term committed facilities as required to meetobligations. The cash inflow from operating activities for the year was £14.8million compared with an inflow of £9.1 million in 2004, an increase of 63%. Financing and Treasury Over the years we have cultivated strong relationships with leading banks andother financial institutions. These relationships are key to the continuedfinancing of the Group's growth, as although we will increasingly be able tofund our expansion internally from cashflow, there will continue to be a needfor further bank debt in the medium term. The Group enjoys a strong financial position with interest cover in excess of2.5 times with a relatively conservative debt structure secured principallyagainst its freehold estate. The Group was comfortably in compliance with itsbank covenants at 31 March 2005. At the end of the year, the Group had net borrowings of £102.5 million, anincrease of £34.1 million over last year following £45.7 million of capitalexpenditure, £5.1 million of net interest paid, dividend payments of £1.5million, net cashflows from changes in share capital of £0.2 million, offset byoperating cash flow of £14.7 million, and land disposal proceeds of £3.7million. Subsequent to the year end, the Group has increased its bank facility with theRoyal Bank of Scotland, Bank of Ireland and more recently Barclays to £150million. We are delighted to welcome Barclays to the syndicate of banks. Thisfacility is secured on a portfolio of freehold and leasehold assets, and willincrease total bank facilities to £183 million. Net debt at the end of March was£102.5 million, and this will leave significant available facilities to fundexpansion together with the Group's growing operational cashflow. Treasury continues to be closely monitored and its policy approved by the Board.We maintain a close watch on medium and long term rates and the Group's policyin respect of interest rates is to maintain a balance between flexibility andhedging of interest rate risk. At 31 March 2005, the Group had total borrowingsof £109 million of which £53 million is fixed at maturities expiring in 2007 and2010. We will continue to review policy in relation to future interest rateexposure based on assessment of prevailing market conditions. The Group has entered into a number of swaps to fix the interest payable on aproportion of the external borrowings. Bank loans totalling £52.9 million arefixed or are subject to interest rate swaps which expire between 2007 and 2010. Cash deposits are only placed with approved financial institutions in accordancewith Group policy. Share capital The share capital of the Company totalled £10.1 million at 31 March 2005 (2004:£9.9 million), consisting of 100,725,537 ordinary shares of 10p each (2004:99,400,216 shares). During the year the Group purchased 615,000 shares into Treasury at an averageprice of 132p, which were subsequently transferred into an Employee BenefitTrust ("EBT"). These shares are shown as a debit in reserves and are notincluded in calculating earnings and net asset value per share. Shares issued for the exercise of options during the period amounted to1,325,321 at an average exercise price of 43p. 2005 2004 Opening shares 99,400,216 99,400,616Buy-backs in the market for cancellation - (150,000) Shares issued for the exercise of options 1,325,321 149,600 ----------- -----------Closing shares in issue 100,725,537 99,400,216Shares held in EBT (615,000) - ----------- -----------Closing shares for NAV purposes 100,110,537 99,400,216 =========== =========== 67,465,613 million shares were traded in the market during the year ended 31March 2005 (2004:22,700,673). The average mid market price of shares tradedduring the year was 161p with a high of 217p and a low of 122p. At 31 March 2005 there were 7,804,295 shares subject to share option awards toemployees of the Group at an average strike price of 91p. Dividend A final dividend of 1.5p per share is proposed, increased from the 1.05p finaldividend for 2004 and together with the interim dividend of 0.5p (2004: Nil)takes the total dividend for the year to 2.0p (2004: 1.05p). Taxation The current year tax charge for the Group of £1.5 million (2004: £0.6 million)relates to a movement in deferred tax of £1.5 million and corporation taxpayable of £0.03 million. The deferred tax asset brought forward of £1.2 million, which arose principallyas a result of historic trading losses, has been fully reversed in the currentyear, and has been replaced by a deferred tax liability of £0.3 million. The Group has an effective tax rate for the year of 38% reduced from 47.6% in2004. This effective tax rate is higher than 30% because the Group does notreceive full tax relief for the cost of acquiring or redeveloping its propertyfixed assets, primarily in relation to its buildings which the Companydepreciates. As a result, a significant proportion of the capital expenditureof the Group's property fixed assets does not create a deductible expense fortax purposes. As the Group grows and if the level of profits increases we wouldexpect to see a further reduction in the effective tax rate. However theeffective tax rate will always continue to be higher than the standardcorporation tax rate whilst the Group continues to depreciate its property fixedassets and a proportion of its capital expenditure on property fixed assets,primarily in relation to buildings, continues to not qualify for tax relief (seenote 8). International Financial Reporting Standards ("IFRS") The first full financial statements that the Group will report under IFRS willbe for the year ended 31 March 2006. Our Interim results for the period to 30September 2005 will be presented under IFRS. The move to IFRS will not changethe underlying performance and cashflow of the business but will impact the wayin which results are presented. Based on our review to date, we consider thatthe changes that will most affect Big Yellow are as follows: •We believe that all our operating leases will remain as operating leases under IFRS. •Awards made under our share option and long term incentive plans since 7 November 2002 will be fair valued. •The goodwill in our balance sheet will not be subject to amortisation, but instead will be subject to an annual impairment review. •The 2005 final dividend will not be included in the closing balance sheet, but accounted for on a cash basis. •The swap arrangements in place fixing interest rates on part of our bank debt will be marked to market. We will present our restated results under IFRS for the year ended 31 March 2005to the market in September 2005 prior to the announcement of our interimresults. In our quarterly results for the 3 months to June 2005, announced inJuly, we will not present a pre-tax profit figure as we will not have completedour IFRS restatement exercise by then. - Ends - For further information, please contact: Big Yellow Group PLC 01276 470190Nicholas Vetch, ChairmanJames Gibson, Chief Executive Weber Shandwick Square Mile 020 7067 0700Louise Robson or Yvonne Alexander Big Yellow Group PLC Consolidated Profit and Loss AccountYear ended 31 March 2005 Note 2005 2004 £'000 £'000 Turnover 2 33,375 23,830 Cost of sales (18,254) (15,470) -------- --------Gross profit 15,121 8,360 Administrative expenses 4 (5,436) (3,641) -------- --------Operating profit 4 9,685 4,719 Gains and losses on fixed assets 5 2 25 Other interest receivable and similar income 142 187 Interest payable and similar charges 6 (5,776) (3,688) -------- --------Profit on ordinary activities before taxation 4,053 1,243 Taxation 8,18 (1,531) (592) -------- --------Profit on ordinary activities after taxation 20 2,522 651 Dividends 9,20 (2,012) (1,044) -------- --------Retained profit/(loss) for the financial year 510 (393) ======== ========Basic earnings per share 10 2.52p 0.66pDiluted earnings per share 10 2.48p 0.64p ======== ======== All results derive from continuing activities. There are no recognised gains or losses other than the profit or loss for thefinancial period and, accordingly, no statement of total recognised gains andlosses is shown. Big Yellow Group PLC Consolidated Balance Sheet31 March 2005 Note 2005 2004 £'000 £'000Fixed assetsIntangible assets 11 1,335 1,432Tangible assets 12 177,824 130,692 -------- -------- 179,159 132,124 -------- --------Current assetsStocks - goods held for resale 254 288Debtors 14 8,896 5,822Cash at bank and in hand 6,379 756 -------- -------- 15,529 6,866Creditors: amounts falling due within one year 15 (15,224) (12,017) -------- --------Net current assets/(liabilities) 305 (5,151) -------- --------Total assets less current liabilities 179,464 126,973 Creditors: amounts falling due after more than one year 16 (120,486) (68,582) Provisions for liabilities and charges 18 (299) - -------- --------Net assets 58,679 58,391 ======== ========Capital and reservesCalled up share capital 19 10,073 9,940Capital redemption reserve 20 1,653 1,653Share premium account 20 2,390 1,959Other distributable reserve 20 9,059 51,045Own shares 20 (812) -Profit and loss account 20 (3,684) (6,206) -------- --------Equity shareholders' funds 58,679 58,391 ======== ======== Big Yellow Group PLC Reconciliation of movements in Shareholders' FundsYear ended 31 March 2005 2005 2004 Group Company Group Company £'000 £'000 £'000 £'000Group Profit for the financial year 2,522 34 651 7Dividends (2,012) (2,012) (1,044) (1,044) -------- -------- -------- -------- 510 (1,978) (393) (1,037) Issue of shares (net of issue costs) 564 564 51 51LTIP credit 26 26 - -Own shares (812) (812) - -Repurchase and cancellation of ordinary shares - - (218) (218) -------- -------- -------- -------- Net addition to/(deduction) from shareholders' funds 288 (2,200) (560) (1,204) Opening shareholders' funds 58,391 64,716 58,951 65,920 -------- -------- -------- -------- Closing shareholders' funds 58,679 62,516 58,391 64,716 ======= ======== ======== ======== Big Yellow Group PLC Consolidated Profit Cash Flow StatementYear ended 31 March 2005 2005 2004 Note £'000 £'000 £'000 £'000 Cash inflow from operating activities 25 14,787 9,107 Returns on investments and servicing of finance 26(a) (5,123) (3,346) Capital expenditure and financial investment 26(a) (41,981) (32,671) Equity dividends paid (1,545) (994) -------- --------Cash outflow before financing (33,862) (27,904) FinancingIssue of ordinary share capital (net of expenses) 26(a) 564 51Repurchase and cancellation of ordinary shares 26(a) - (218)Own shares (812) -Increase in debt 26(a) 40,000 26,293 ------- ------- 39,752 26,126 ------- -------Increase/(decrease) in cash in the year 26(b) 5,890 (1,778) ======= ======= Reconciliation of net cash flow to movement in net debtYear ended 31 March 2005 2005 2004 Note £'000 £'000 £'000 £'000 Increase/(decrease) in cash in the year 5,890 (1,778) Cash inflow from increase in debt financing 26(b) (40,000) (26,293) ------- -------Change in net debt resulting from cash flows (34,110) (28,071) ------- -------Movement in net debt in the year 26(b) (34,110) (28,071) Net debt at start of year (68,404) (40,333) ------- -------Net debt at end of year 26 (b) (102,514) (68,404) ======= ======= Big Yellow Group PLC Company Balance Sheet31 March 2005 Note 2005 2004 £'000 £'000Fixed assets Tangible assets 12 399 402Investments 13 2,029 2,029 ------- -------- 2,428 2,431 ------- --------Current assetsDebtors 14 137,666 80,151Cash at bank and in hand 4,293 - ------- -------- 141,959 80,151Creditors: amounts falling due within one year 15 (6,187) (1,970) ------- --------Net current assets 135,772 78,181 ------- -------Total assets less current liabilities 138,200 80,612 Creditors: amounts falling due after more than one year 16 (75,600) (15,896) Provisions for liabilities and charges 18 (84) - ------- --------Net assets 62,516 64,716 ======= ========Capital and reservesCalled up share capital 19 10,073 9,940Capital redemption reserve 20 1,653 1,653Share premium account 20 2,390 1,959Other distributable reserve 20 49,059 51,045Own shares 20 (812) -Profit and loss account 20 153 119 ------- --------Equity shareholders' funds 62,516 64,716 ======= ======== Big Yellow Group PLC Notes to the accountsYear ended 31 March 2005 The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2005 or 2004, but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) or (3) Companies Act 1985. 1. Accounting policies The financial statements are prepared in accordance with applicable United Kingdom accounting standards. The principal accounting policies adopted are described below. They have all been applied consistently throughout the current and preceding year. Accounting convention The financial statements are prepared under the historical cost convention. Basis of consolidation The Group accounts consolidate the accounts of Big Yellow Group PLC and all its subsidiaries at the year end using acquisition accounting principles. Goodwill 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 Tangible fixed assets are carried at historical cost less depreciation and any provision for impairment Depreciation is provided on cost in equal annual instalments over the estimated useful lives of the assets. No depreciation is provided on land and assets in the course of construction. Interest, overhead and pre-opening launch costs are not capitalised. The useful economic lives of the assets are as follows: Freehold property 50 years Mezzanine flooring and staircases 25 years Leasehold improvements Over period of the lease Plant and machinery 10 years Motor vehicles 4 years Fixtures and fittings 5 years Computer equipment 3 years Mezzanine flooring and staircases are disclosed in note 12 under freehold property or short leasehold improvements as appropriate. 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 costs Pension costs represent contributions payable to defined contribution schemes, the assets of which are held separately from those of the Group. Current tax Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities are not discounted. Leases Operating lease rentals are charged to income in equal annual amounts over the lease term. Loan arrangement costs Costs relating to the raising of general corporate loan facilities are amortised over the estimated life of the loan and charged to the profit and loss account as part of the interest expense. The bank loans are disclosed net of unamortised loan issue costs. Turnover Turnover 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. Storage income is recognised over the period for which the storage unit is occupied by the customer. Insurance commissions are recognised over the period to which they relate. Own shares In accordance with UITF 38 "Accounting for ESOP trusts", own shares held by the Group are shown as a deduction from shareholders' funds and included in other reserves. The cost of own shares is transferred from other reserves to the profit and loss reserve systematically over the LTIP performance period. 2. Segmental information The Group's net assets, turnover and profit before tax are attributable to one activity, the provision of self storage and related services. All the Group's net assets, turnover and profit before tax arise in the United Kingdom. 3. Information regarding employees 2005 2004 Employees £'000 £'000 Wages and salaries (including Directors) 5,731 4,285 Social security costs 642 467 Other pension costs 168 132 ------ ------ 6,541 4,884 ====== ====== The average number of employees (including Directors) employed by the Group during the year: No. No. Sales 130 112 Administration 30 28 ------ ------ 160 140 ====== ======4. Operating profit 2005 2004 £'000 £'000 Operating profit is stated after charging: Depreciation 4,347 3,737 Amortisation of goodwill 97 97 Auditors' remuneration - Group audit fees 110 102 - non-audit services 164 29 Operating leases - other 2,453 2,342 ====== ====== Included in Group audit fees are £11,000 (2004: £10,000) in respect of the Company. The non-audit services provided during the year were £130,000 in relation to advice on the tax implications of the Group restructuring in September 2004, and £34,000 for advice on the establishment of the LTIP and Sharesave Scheme. 5. Profit before depreciation, amortisation, tax and exceptional items ("EBDAT") 2005 2004 £'000 £'000 Profit before tax 4,053 1,243 Add back/(deduct): Exceptional items (2) (25) Depreciation 4,347 3,737 Amortisation 97 97 ====== ====== Profit before depreciation, amortisation and exceptional items 8,495 5,052 ====== ====== Exceptional items 2005 2004Related Shares:
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