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 £35.0m £30.9m +13% £35.0m £24.8m +41%
Turnover £8.3m £7.3m +14% £15.6m £11.0m +42%
Profit
before tax £0.99m £0.71m +39% £1.70m £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%
--------------------------------------
• Pre-tax profit of £1.7 million for the half year and £0.99 million for
the second quarter
• Annualised revenue up 41% at £35.0 million (2003: 24.8 million)
• Adjusted net assets per share of 175p as at 30 September 2004 following
external valuation of trading stores (see note 12)
• Interim dividend of 0.5 pence per ordinary share (2003: nil pence)
• 42 stores committed, of which 31 are trading, providing 2.6 million sq
ft of capacity when completed
• Acquired freehold sites in Fulham, Tunbridge Wells and South Bristol;
and a long leasehold in Central Bristol
• 135,000 sq ft leased up in the period; total occupied space now 1.4
million sq ft, 76% occupancy
• Number of customers up 25% to 23,300 (2003: 18,600)
• 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
• 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
£'000 £'000 £'000 £'000 £'000 £'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 £m £m £m £m £m £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 £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 £1.7 million, up from £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 £15.6 million, up 42% on the £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 £35.0 million, up 41%
(2003: £24.8 million). Turnover for the second quarter of £8.3 million was 14%
up on the £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 £3.7 million from £2.0 million
for the same period in 2003. This is after a further provision of £0.6 million
(September 2003: £nil) in the period in respect of the Directors' Long Term
Bonus Plan, which takes the total provided to date to £0.8 million.
Total administration expenses for the six months, excluding the bonus provision
mentioned above, were £2.0 million, up from £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 £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 £294 million
comprising £207.1 million (70%) for freehold trading stores, £52.6 million (18%)
for leasehold trading stores and £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 £'000 £'000 £'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 £'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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 £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)
£'000 £'000 £'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 £987,000 (six months ended 30 September 2003: profit for the
financial period of £60,000; year ended 31 March 2004: profit for the financial
year of £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 £'000 £'000 £'000 £'000 £'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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
£16.5 million. The projected annual repayment schedule is set out below:
Total
£'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
£'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:
• the effect of those shares issuable under employee share option schemes;
• the fair value adjustment on the Group's external debt; and
• 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
£'000 £'000 £'000 £'000 £'000 £'000 £'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
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