Final Results

Big Yellow Group PLC 4 May 2001 PART 1 Big Yellow Group PLC Preliminary results for the year ended 31 March 2001 4 May 2001 HIGHLIGHTS * Annualised revenue £5.6 million (2000 -- £2.0 million) +182% * Turnover for the year £4.2 million (2000 -- £1.3 million) +211% * Loss for the year £1.8 million (2000 -- loss £2.2 million) * Twenty three stores committed * 1.3 million sq. ft. of net self storage space when fully built out * 3,900 customers (2000 -- 1,700) +129% * Merchandise, insurance and other sales up to 9.6% of storage income (March 2000 -- 6.0%). ENQUIRIES Nicholas Vetch (Chief Executive) 01276 470 190 James Gibson (Finance Director) CHAIRMAN'S STATEMENT Results This is the group's first full set of results following our flotation a year ago and they show that we are performing ahead of expectations and reinforce our confidence in the Big Yellow business model. We set out to establish a leading brand in the embryonic self-storage industry and the evidence to date supports our confidence that the right formula is in place to deliver this. Turnover for the year was £4.2 million, a rise of 211%. Additional revenue of £231,000 was derived from an insurance claim, giving total revenue of £4.4 million. As at the year end, underlying revenues on an annualised basis have risen to £5.6 million, an increase of 182% compared to the previous year. The group has incurred a pre-tax and pre-exceptional loss of £1.5 million for the twelve months, with a further exceptional loss of £300,000, charged in the period for the relocation of Staples Corner, in all totalling £1.8 million. This performance is ahead of expectations due to a combination of strong trading from our open stores and a lower than expected depreciation charge. Results for the next two years will inevitably be affected by the start up costs associated with our store opening programme and an increase in the depreciation charge as new stores open. The group is now committed to 23 stores of which 12 are now trading. A further 2 sites are under offer with terms agreed. Existing Stores All stores have performed well over the year with a particularly strong showing from London and towns close to the capital. In terms of both occupancy and revenue it is encouraging to note that all established stores are delivering ahead of budget. The customer base has remained much as before although an increasing number of large corporate customers are beginning to use the stores on a multi-site basis. This, we believe, reflects the quality and location of the stores coupled with the consistency of product; in short, the brand. At the end of the year total customers had increased to 3,900 from 1,700 at 31 March 2001. Merchandise, Insurance and Other Sales Merchandise, insurance and other sales are becoming an important revenue source, with sales receipts amounting to 9.6% of total storage income for the year. Not insignificant sales of merchandise are being made to non-storage customers both in stores and through the group's on-line Box and Lock Shop. We have also successfully implemented an administration charge for customers wanting to take advantage of our 24 hour access facility. Future Strategy The acquisition programme is on track to meet our target of 50 committed stores in the UK by 2003. The first half of the programme has been achieved without compromising the quality of store locations. A key challenge for our ongoing expansion programme will be to maintain this quality benchmark. The benefits of scale are very apparent in relation to the operational gearing of individual stores. This has focused our effort on securing larger sites which are capable of accommodating an average of 50-60,000 sq. ft. of net storage. Pursuing this aim has vindicated our strategy of locating half our stores in the London area. Looking forward it is likely that in order to maintain this approach, our focus will be on operating in the larger urban conurbations which can support stores of this scale. These markets also benefit from significant barriers to entry due to the shortage and price of appropriate real estate. To this end, we believe that serious consideration needs to be given to expansion into mainland European cities. Management is therefore undertaking comprehensive research into the market potential, which needless to say will be balanced by the risks associated with foreign expansion and of management distraction in the UK. In considering our potential financial exposure in this area we are fully cognisant of both our commitments in the UK and the risks of rapid expansion. We are likely to pursue this strategy with partners who will both share the financial risk and, where appropriate, bring knowledge of local markets. Funding On flotation in May 2000, the group raised £43.6 million (net of expenses). At the year end net cash in the balance sheet was £11.0 million. We have today announced a further issue of shares to raise a net £22.8 million together with a new committed bank facility of £20 million. The group now has the financial strength to continue the development of its UK store opening programme and support the first stages of its expansion into mainland Europe. Outlook Since 31 March 2001 all stores have performed strongly and both occupancy and revenue are ahead of budget. As indicated at the time of the flotation the Directors' current intention is that the Company will seek admission to the Official List in the first half of 2002. Big Yellow has now established itself as a leading protagonist in the UK's self-storage sector. We have a strong emerging brand with an unparalleled portfolio of stores in locational and quality terms. Most importantly, we have a strong team of people at both the stores and head office. David White Chairman 4 May 2001 Operating and Financial Review Operating review The past year has seen a systemisation of all areas of the business. The aim has been to allow the rollout of stores at a fairly ambitious rate, without incurring undue risk and compromising the emerging brand. The continued successful creation of the brand will rely on the group achieving excellently located stores, built at economic cost to a consistent standard, with standardised levels of customer service, marketed in a cohesive way and most importantly manned by high calibre, well trained people. Property and Construction The group has committed to 11 new stores over the year, 5 in London and 6 in the South of the UK. These stores will provide 610,000 sq. ft. of net storage space when fully developed, taking the total committed to 23 stores providing 1.3 million sq. ft. A further 2 sites are under offer with terms agreed. Twelve stores are now trading, with a further 11 in the construction pipeline due to open over the coming months. As previously announced, the existing Staples Corner store is being relocated into a new, better located and much larger store (107,000 sq. ft.) which is now open and trading. Following a fire, caused by vandals, at our Wandsworth store last July, the store has now reopened. We very much regret, notwithstanding the fact that the majority of our customers were insured, many of them will have lost personal possessions of sentimental and not necessarily monetary value. The group was fully insured and the associated insurance claim has been met or agreed, resulting in no financial loss to the Group. The planning process has been more difficult than we had previously anticipated which has resulted in delays, but following a redoubling of effort and resource we now have consents on 21 of the 25 stores (including the 2 under offer) and the remainder are being progressed. Planning difficulties will be a continuing feature of the business. Following the successful trial of externally accessed drive up units at Slough, we are seeking (and in some cases have received planning permissions) to construct more of these units at various stores, which will increase capacity by up to 15,000 sq. ft. In an effort to maximise returns from the real estate portfolio we are seeking alternative uses for surplus land adjacent to our stores and have successfully obtained planning permission for a fast food outlet at Ilford, which we expect to sell in due course. The construction team is being ably lead by Tom Phillips, who, together with his team, deserve particular commendation for implementing what has been a significant build out programme, with minimal time and cost overruns. An even larger task lies before them. Operations Most of the group's operational activities are now broadly systemised and streamlined from store openings to health and safety. Most of our supply contracts are now let on a bulk basis which has resulted in significant efficiency gains or savings, or both. David Knight, our Facilities Manager, has achieved much in the short period of time he has been with the company. Doug Perrins, Store Openings Manager, has refined the process to a two week programme which has significantly increased our capacity to open new stores. We have recently concluded opening four stores in eight weeks. People The group has been successful in attracting high calibre people to both the stores and the head office. A successful recruitment programme is down in part to Big Yellow winning a reputation as an attractive place to work, and in part the attraction of the group to customer orientated people seeking an alternative to an over pressurised working environment in the retail market. In addition, our Human Resources Manager, Cheryl Hathaway, has significantly professionalised the human resources function. We have also developed an extensive and rigorous induction and training programme concentrating on operational, sales and customer care services. This has done much to boost the confidence of new members of the team. To recognise the contribution of our employees, we operate Group reward schemes and once employees have been with the group for six months they are awarded share options and become recognised as a 'Partner' in the business. Marketing and Sales Whilst we do not believe that marketing itself can serve to build a brand, it can certainly communicate a brand once established and the marketing effort through the establishment of our new web site and other initiatives has served to promote business. Marketing spend for the year was approximately £560,000, representing approximately 13% of turnover, which as new stores open will rise for the coming year, but as a percentage of turnover should fall. Systems Our approach to IT systems remains unchanged. We continue to invest in the development of the specialist 'best of breed' linked software which we have acquired for customer management, gate control and store security, finance, contact management and the head office and store network. Stuart Grinnall our IT manager, deserves special recognition for his hard work over the year implementing and supporting our IT systems. Financial review Results The results for the year 31 March 2001 reflect an encouraging trading performance with all stores trading ahead of our expectations. Annualised revenue at the year end increased to £5.6 million from £2.0 million last year, an increase of 182%. Turnover for the year increased by 211% to £4.17 million (2000: £1.34 million). The loss before tax for the year of £1.80 million (2000 loss £2.12 million) is after an exceptional provision of £300,000 in respect of the relocation of our Staples Corner store. At the end of the year the company had 73 employees with the average number of employees during the year increasing to 56 from 26 last year. Accordingly administration expenses, which include the cost of construction management, were £2.47 million compared to £1.08 million last year. The head office team is now at the desired level to manage the projected growth of the business. All administration expenses including construction management are charged to the profit and loss account. The increase in net interest income to £1.07 million from a net interest expense of £0.47 million reflects the cash positive position of the group following receipt of the placing proceeds in May 2000 and repayment of bank borrowings and other debt. In line with the growth in operating stores the total depreciation charge and goodwill amortisation for the year increased to £0.95 million from £0.41 million. Financing On flotation in May 2000, the group raised approximately £43.6 million (net of expenses) taking the total share capital base to £55.8 million. £11.9 million was used to repay borrowings and redeem preference capital leaving the balance sheet ungeared. At the end of the year net cash in the balance sheet was £11.0 million and we have now also put in place a committed bank facility of £20 million. The new £ 20 million facility is secured on certain of our freehold properties with a term expiring in 2005 and with no amortisation. This new bank facility together with the net proceeds of the Placing and Open Offer announced today of £22.8 million are available to fund further growth in the business. Treasury Management Since flotation the group has been in a net cash position although we do expect to draw down on the new bank facility in the current year. All treasury risk is managed at group level with policy approved by the board. Cash deposits are only placed with approved financial institutions in accordance with group policy. Additionally the board has and will continue to review policy in relation to any potential future interest rate exposure based on an assessment of prevailing market conditions. Balance Sheet & Cashflow At 31 March 2001 the group had net current assets of £7.33 million compared to net current liabilities of £4.13 million the previous year end. The improvement is due principally to an increase in cash in the year of £6.4 million after repaying short term financing of £6.8 million. The cash out flow from operating activities for the year reduced to £0.21 million from £0.77 million. Of the £43.6 million net proceeds of the issue of shares in May 2000, £25.7 million has been used to fund capital expenditure together with a total of £10.85 million to repay financial borrowings and £ 1.04 million to redeem preference capital. Dividends Dividends have not been paid in respect of the ordinary shares of the company in any of the periods reported upon and no dividend is proposed. Following the redemption of preference shares by way of a share buy back from the proceeds of the issue of new shares in May 2000 the preference dividend accrued of £36,750 at 31 March 2000 was no longer payable. It has therefore been credited to the profit and loss account. Taxation No liability to corporation tax arises on the group's results for the year due to the availability of tax losses in the group. The finance team led by Mike Cole, Financial Controller, deserves particular recognition for a tremendous performance in the year implementing new systems to improve control and most importantly providing the timely management information required to manage a high growth business such as Big Yellow. Consolidated Profit and Loss Account Year ended 31 March 2001 2001 2000 Note £ £ Turnover 2 4,174,300 1,342,963 Exceptional item 5 (300,000) - Other cost of sales (4,544,560) (1,908,861) ---- ---- Total cost of sales (4,844,560) (1,908,861) ---- ---- Gross loss (670,260) (565,898) Administrative expenses (2,469,313) (1,082,986) Other operating income 230,622 - ---- ---- Operating loss 4 (2,908,951) (1,648,884) Interest receivable and similar income 1,259,684 304,813 Interest payable and similar charges 6 (186,854) (778,633) ---- ---- Loss on ordinary activities before and 8 (1,836,121) (2,122,704) after taxation for the financial year Non-equity dividends 9 36,750 (36,750) ---- ---- Loss for the financial year 20 (1,799,371) (2,159,454) ========= ========= Loss per share 10 (2p) (5p) ========= ========= Diluted loss per share 10 (2p) (5p) ========= ========= There are no recognised gains or losses for the current or preceding financial year other than as stated above and therefore no separate statement of total recognised gains and losses has been presented. All activities in the profit and loss account relate to continuing operations. Consolidated Balance Sheet 31 March 2001 Note 2001 2000 £ £ Fixed assets Intangible assets 11 1,723,479 1,820,474 Tangible assets 12 42,697,471 17,294,810 ---- ---- 44,420,950 19,115,284 ---- ---- Current assets Stocks 94,149 31,714 Debtors 14 2,458,440 1,096,409 Cash at bank and in hand 10,967,581 4,528,840 ---- ---- 13,520,170 5,656,963 Creditors: amounts falling due within 15 (6,193,861) (9,784,510) one year ---- ---- Net current assets/(liabilities) 7,326,309 (4,127,547) ---- ---- Total assets less current liabilities 51,747,259 14,987,737 Creditors: amounts falling due after 16 - (4,000,000) more than one year ---- ---- 51,747,259 10,987,737 ========= ========= Capital and reserves Called up share capital 19 9,648,559 5,242,856 Share premium account 20 46,122,121 7,924,821 Profit and loss account 20 (4,023,421) (2,179,940) ---- ---- Shareholders' funds 51,747,259 10,987,737 ========= ========= Equity shareholders' funds 51,747,259 9,987,737 Non-equity shareholders' funds - 1,000,000 ---- ---- 51,747,259 10,987,737 ========= ========= Reconciliation of Movements in Shareholders' Funds Year ended 31 March 2001 2001 2000 £ £ The group Loss for the financial year (1,836,121) (2,122,704) Dividends 36,750 (36,750) ---- ---- (1,799,371) (2,159,454) Issue of shares (net of issue costs) 43,603,003 7,767,677 Redemption of preference shares (1,044,110) - ---- ---- Net addition to shareholders' funds 40,759,522 5,608,223 Opening shareholders' funds 10,987,737 5,379,514 ---- ---- Closing shareholders' funds 51,747,259 10,987,737 ========= ========= The company Profit for the financial year 34,408 160,146 Dividends 36,750 (36,750) ---- ---- 71,158 123,396 Issue of shares (net of issue costs) 43,603,003 7,767,677 Redemption of preference shares (1,044,110) - ---- ---- Net addition to shareholders' funds 42,630,051 7,891,073 Opening shareholders' funds 13,251,325 5,360,252 ---- ---- Closing shareholders' funds 55,881,376 13,251,325 ========= ========= Consolidated Cash Flow Statement Year ended 31 March 2001 2001 2000 ---- ---- Note £ £ £ £ Cash outflow from 23 (208,906) (769,163) operating activities Returns on 24(a) 594,633 (43,699) investments and servicing of finance Capital 24(a) (25,658,079) (12,038,414) expenditure and financial investment Acquisitions 24(a) - (28,024) ---- ---- Cash outflow (25,272,352) (12,879,300) before financing Financing Issue of ordinary 24(a) 43,603,003 7,767,677 share capital (net of expenses) Repurchase of 24(a) (1,044,110) - preference shares (Decrease)/increase 24(a) (6,116,000) 3,491,000 in debt (Repayment)/proceeds 24(a) (4,731,800) 4,731,800 of financing transaction ---- ---- 31,711,093 15,990,477 ---- ---- Increase in cash 24(b) 6,438,741 3,111,177 in the year ========= ========= Reconciliation of Net Cash Flow to Movement in Net Funds Year ended 31 March 2001 2001 2000 ---- ---- Note £ £ £ £ Increase in cash 6,438,741 3,111,177 in the year Cash 24(b) 10,847,800 (8,222,800) outflow/(inflow) from decrease/(increase) in debt financing ---- ---- Change in net 17,286,541 (5,111,623) debt resulting from cash flows ---- ---- Movement in net 24(b) 17,286,541 (5,111,623) debt in the year Net debt at start (6,318,960) (1,207,337) of year ---- ---- Net funds/(debt) 10,967,581 (6,318,960) at end of year ========= ========= Company Balance Sheet 31 March 2001 2001 2000 Note £ £ Fixed assets Tangible assets 12 202,516 149,052 Investments 13 2,041,189 2,029,027 ---- ---- 2,243,705 2,178,079 ---- ---- Current assets Debtors 14 43,332,489 11,474,833 Cash at bank and in hand 10,662,111 4,219,314 ---- ---- 53,994,600 15,694,147 Creditors: amounts falling due within one 15 (356,929) (620,901) year ---- ---- Net current assets 53,637,671 15,073,246 ---- ---- Total assets less current liabilities 55,881,376 17,251,325 Creditors: amounts falling due after more 16 - (4,000,000) than one year ---- ---- 55,881,376 13,251,325 ========= ========= Capital and reserves Called up share capital 19 9,648,559 5,242,856 Share premium account 20 46,122,121 7,924,821 Profit and loss account 20 110,696 83,648 ---- ---- Shareholders' funds 55,881,376 13,251,325 ========= ========= Equity shareholders' funds 55,881,376 12,251,325 Non-equity shareholders' funds - 1,000,000 ---- ---- 55,881,376 13,251,325 ========= ========= MORE TO FOLLOW

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