Interim Results

Big Yellow Group PLC 23 November 2006 23 November 2006 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") Results for the Six Months and Second Quarter ended 30 September 2006 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 2006. Second First Six Six quarter quarter months months ended ended ended ended 30 Sept 30 June 30 Sept 30 Sept 2006 2006 2006 2005 Annualised revenue * £50.0m £47.6m +5% £50.0m £42.7m +17% Revenue £12.8m £11.6m +10% £24.4m £20.3m +20% Profit before tax £58.8m £42.2m +39% Adjusted profit before tax (1) £7.0m £6.0m +17% Basic earnings per share 38.37p 30.14p +27% Adjusted earnings per share (2) 4.47p 4.90p -9% Adjusted NAV per share (3) 347.3p 227.7p +53% Interim dividend 3.5p 2.0p +75% Occupied space 1,792,000 sq ft 1,740,000 sq ft +3% 1,792,000 sq ft 1,649,000 sq ft +9% (1) See note 5 (2) See note 7 (3) See note 13 * Based on revenue at the end of the period in respect of storage and other related income • Revenue increase of 20% to £24.4 million over same period last year (2005: £20.3 million) • Adjusted profit before tax(1) of £7.0 million up 17% (2005: £6.0 million) • Adjusted net assets per share(3) up significantly to 347.3 pence as at 30 September 2006 from 297.0 pence as at 31 March 2006 • Interim dividend increased to 3.5 pence per ordinary share (2005: 2.0 pence) • 42 stores open with a further 19 committed, providing 3.73 million sq ft of self storage space when completed; four opened in the period, with Edmonton opening after the period end • Acquired seven freehold sites in the period for redevelopment as self storage centres - Four in London at Merton, Richmond, Bromley and Eltham - One each in Sheffield, Poole and High Wycombe • Packing materials, insurance and other sales were £3.2 million (2005: £2.6 million) Commenting on the outlook, Nicholas Vetch, Chairman, said: "The key drivers for this business, including rising population, increased mobility, increased urbanisation, restrictive planning policies, high household formation and a lack of space continue to drive demand, and in that we remain fundamentally confident. "We remain alert to other factors such as the state of the housing market, consumer confidence, the general state of the economy and interest rates. "We believe the Group remains well positioned both defensively and from an expansionary perspective with strong cash flow, relatively low indebtedness, a growing and recognisable brand and a strong pipeline of future stores. We look forward to the future with confidence." - Ends - For further information, please contact: Big Yellow Group PLC 01276 470190 Nicholas Vetch, Chairman James Gibson, Chief Executive Officer Weber Shandwick Square Mile 020 7067 0700 Louise Robson or John Moriarty 23 November 2006 Big Yellow Group PLC ("Big Yellow", "the Group" or "the Company") Results for the Six Months and Second Quarter ended 30 September 2006 Chairman's Statement The Board of 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 2006. We are pleased with the Group's trading performance over the first half year of this financial year, which is in line with market expectations. We continue to expand our pipeline with seven site acquisitions in the period. Financial Results Revenue for the period was £24.4 million, up 20% from the £20.3 million achieved in the comparable period last year. Revenue for the second quarter of £12.8 million was 10% up on the £11.6 million reported for the quarter to 30 June. An important milestone was achieved as the underlying revenue on an annualised basis topped £50 million for the first time, up 17% (2005: £42.7 million). Profit before tax in the period was £58.8 million up from £42.2 million. After adjusting for the gain on the revaluation of investment properties and other matters shown in the table below, the Group made an adjusted profit before tax in the period of £7.0 million, up 17% from £6.0 million for the same period last year. Six months to Six months to Year ended 30 Sept 30 Sept 31 March 2006 2005 2006 Profit before Tax Analysis £m £m £m ------------------------------------------------------------------------------- Profit before tax 58.8 42.2 118.5 Less gain on revaluation of investment properties (51.5) (36.8) (106.2) (Less)/add fair value movement on interest rate swaps (0.3) 0.6 0.2 (Gains)/losses on sale of non-current assets - - 0.1 ------------------------------------------------------------------------------- Adjusted profit before tax 7.0 6.0 12.6 ------------------------------------------------------------------------------- Cash generated from operations rose to £16.9 million, an increase of 46% (2005: £11.6 million). In July of this year the Group placed 9.1 million shares at 400 pence per share raising approximately £35.8 million (net of expenses) to fund expansion and pay for the cost of conversion to a Real Estate Investment Trust ("REIT"). Net bank debt of £156.3 million at the period end represents 28% of the Group's investment and development property assets, totalling £562.0 million and 38% of adjusted net assets of £410.2 million. REITS In our year end report published on 16 May 2006, we indicated that the Group was favourably considering a conversion into a Real Estate Investment Trust ("REIT") subject to clarification of the rules and regulations, the majority of which have now been published. We anticipate further guidance being published over the coming weeks. The process of conversion to a REIT is on a self assessment basis and therefore by definition it is incumbent on the converting Group to ensure it complies with the conditions laid out in the legislation. In the light of this, and following extensive advice from our tax advisors, our lawyers and leading Queen's Counsel, we are of the view that Big Yellow does comply and the Group intends therefore to convert early in the new year. However, there remains one material outstanding issue on which there are ongoing discussions with HMRC and we hope to receive further clarification shortly. The Board believes that conversion is an important step in the evolution of the Group, that timing is of the essence in conversion and that pursuant to the professional advice received, the Group should succeed in its ambitions. The conversion charge to REIT status is estimated to be approximately £11.2 million, based on current valuations and on conversion the deferred tax provision in the balance sheet would be released. In connection with its conversion to a REIT the Company will need to amend its Articles of Association for technical reasons. An EGM circular will be sent to shareholders explaining the reasons for these changes and requesting approval. Dividend The Board has reviewed its dividend policy and has decided to significantly increase the interim dividend to 3.5 pence per share (2005: 2.0 pence) for the current year. The ex-dividend date will be 29 November and the record date 1 December with an intended payment date of 22 December. Future dividend policy will be governed by our REIT regulatory requirements which determine the level of property income dividend ("PID"), with any ordinary dividend in excess of this assessed by the Board based on prevailing circumstances and the outlook for the Group. As stated in our placing announcement in July, the Board's intention in a REIT regime would be to pay a total dividend in excess of the minimum PID required under the regulations. Dividends will be set based on 90% of qualifying post depreciation earnings, without further deduction for additional shadow capital allowances. Valuation and Net Asset Value The Group's investment properties have been valued by Cushman and Wakefield (C&W). At 30 September 2006 the total value of the Group's properties was £581.0 million, comprising £489.8 million for the 41 storage centres which were open at the period end, £72.2 million for sites held for development and £19.0 million of surplus land held for sale. The properties held for development and sale are held at historical cost less provision for impairment and have not been externally valued. The valuation translates into an adjusted net asset value of 347.3 pence per share (see note 13), up 53% from 227.7 pence per share last year and 17% from 297.0 pence per share at 31 March 2006. The value of the investment property portfolio at 30 September 2006 was £489.8 million, up £79.3 million from £410.5 million at 31 March 2006. The increase in valuation of the same store portfolio is £27.4 million representing a 7% total uplift, of which we estimate 3% is a function of capital growth and 4% operational performance. The balance of £51.9 million is the valuation of new stores opened in the period - Bristol South, Finchley East, Tunbridge Wells and Kingston - comprising capital expenditure of £26.8 million and a revaluation uplift of £25.1 million. The net yield on the portfolio based on the net operating income at store level in the first year after the projected stabilisation of each store is 7.34% (March 2006: 7.49%). We believe that this continues to offer attractive value when set against the September 2006 IPD UK All Property Yield of 5.51% (March 2006: 5.84%) and the 4% average annual net storage rent increases over the last four years. Furthermore, over the same period mature net operating income margins have increased from 48% to 58%. It is worth noting that external valuations are taken on the basis of a purchaser acquiring investment property as a direct property purchase and incurring 5.75% acquisition costs. In practice we believe that it is unlikely that these branded Big Yellow stores will be bought other than in a corporate structure. As at As at As at 30 Sept 30 Sept 31 March 2006 2005 2006 Analysis of Net Asset Value £'000 £'000 £'000 ------------------------------------------------------------------------------- Basic net asset value 319.4 188.7 244.3 Exercise of share options 3.3 7.0 5.8 ------------------------------------------------------------------------------- Diluted net asset value 322.7 195.7 250.1 Adjustments: Deferred tax on revaluation surpluses 87.5 51.2 72.1 Tax on fair value of interest rate swaps - 0.1 - ------------------------------------------------------------------------------- Adjusted net asset value 410.2 247.0 322.2 ------------------------------------------------------------------------------- Diluted net assets per share (pence) 273.2 180.4 230.5 Adjusted net assets per share (pence) 347.3 227.7 297.0 Diluted shares used for calculation (million) 118.1 108.5 108.5 ------------------------------------------------------------------------------- Property We are on schedule in respect of property acquisitions, with seven sites acquired in the year to date, four in London at Merton, Richmond, Bromley and Eltham and a further three in Sheffield, Poole and High Wycombe. There are now 19 stores in the pipeline which when fully developed will represent an additional 1.2 million square feet and when open will provide the Group with a total of 61 stores and 3.73 million square feet. We have planning permissions on four of the 19 pipeline stores and are in negotiations on the remaining 15.61% of our total stores and sites are located within the M25 and 52 are freehold or long leasehold. Our storage centre in Gloucester is due to open in December bringing to six the expected number of openings this financial year. Barriers to entry remain high with a competitive property market and an increasingly bureaucratic and lengthy planning process. International Franchise I am pleased to announce that in October we signed our first International Franchise Agreement for the United Arab Emirates with Big Yellow FZ LLC, a privately backed business set up to exploit the opportunities for development of a network of Big Yellow stores in the Gulf Cooperation Council states. The site for the first store in Dubai has been acquired to develop a 300,000 sq ft Big Yellow Self Storage centre, which is expected to open in Spring 2008. As is typical of franchise structures, we are not investing capital in this business but providing operating know-how and the licensing of the Big Yellow brand for an upfront fee and a share of future revenues. We are now reviewing other opportunities to expand the business internationally using this franchise model and have taken steps to protect the trademark in selected territories. Stores and the Market At the period end occupied space represented 1,792,000 sq ft, up 9% from 1,649,000 sq ft at the same time last year. This represents a 73% occupancy rate across all 41 stores open at the period end. During the period we opened storage centres in Tunbridge Wells, Finchley East, Bristol South and Kingston, with a further centre in Edmonton opening in October. We have included, as usual, a table summarising the trading performance of all our stores over the year, this can be found on page 5. The portfolio of 30 stores that were open for more than two years at the beginning of the period was 86% occupied at the end of the year, with an average occupancy during the year of 86%. In addition, these 30 stores achieved EBITDA margins of 63% and after an allocation of central overhead, net operating income margins of 58%. Same store revenue for these 30 stores increased 10% year-on-year, of which 7% is a result of yield improvement and the balance is occupancy growth. Outlook The key drivers for this business, including rising population, increased mobility, increased urbanisation, restrictive planning policies, high household formation and a lack of space, continue to drive demand, and in that we remain fundamentally confident. We remain alert to other factors such as the state of the housing market, consumer confidence, the general state of the economy and interest rates. We believe the Group remains well positioned both defensively and from an expansionary perspective with strong cash flow, relatively low indebtedness, a growing and recognisable brand and a strong pipeline of future stores. We look forward to the future with confidence. Nicholas Vetch Chairman 23 November 2006 - Ends - For further information, please contact: Big Yellow Group PLC 01276 470190 Nicholas Vetch, Chairman James Gibson, Chief Executive Officer Weber Shandwick Square Mile 020 7067 0700 Louise Robson or John Moriarty TRADING SUMMARY Years since opening September September September September September September as at 1 April 2006 2006 2006 2006 2005 2005 2005 > 2 years < 2 years Total > 2 years < 2 years Total Number of stores 30 11 41 30 5 35 ========== ========== ========== ========== ========== ========== As at 30 September 2006 Total capacity (sq ft) 1,798,000 654,000 2,452,000 1,798,000 313,000 2,111,000 Occupied space (sq ft) 1,539,000 253,000 1,792,000 1,539,000 110,000 1,649,000 Percentage occupied 86% 39% 73% 86% 35% 78% £'000 £'000 £'000 £'000 £'000 £'000 Annualised revenue 42,800 7,223 50,023 39,944 2,784 42,728 For the 6 month period: Av. occupancy 86% 32% 72% 83% 25% 74% Av. annual rent psf £23.77 £22.94 £23.54 £22.42 £19.19 £22.38 Self storage sales 18,379 2,400 20,779 16,731 751 17,482 Other storage related income(1) 2,680 570 3,250 2,369 220 2,589 Development/tenant income 38 381 419 48 157 205 ---------- ---------- ---------- ---------- ---------- ---------- Total revenue 21,097 3,351 24,448 19,148 1,128 20,276 Direct store operating costs (excluding depreciation) (6,592) (1,983) (8,575) (6,296) (743) (7,039) Short leasehold rent(2) (1,114) - (1,114) (1,093) - (1,093) ---------- ---------- ---------- ---------- ---------- ---------- Store EBITDA(3) 13,391 1,368 14,759 11,759 385 12,144 EBITDA Margin(4) 63% 41% 60% 61% 34% 60% Central overhead(5) (1,255) (329) (1,584) (1,139) (202) (1,341) ---------- ---------- ---------- ---------- ---------- ---------- Store Net Operating Income 12,136 1,039 13,175 10,620 183 10,803 NOI margin 58% 31% 54% 55% 16% 53% ---------- ---------- ---------- ---------- ---------- ---------- Capital expenditure £m £m £m To 30 September 2006 145.1 69.0 214.1 Cost to complete - 4.0 4.0 Total projected cost 145.1 73.0 218.1 ---------- ---------- ---------- (1) Packing materials, insurance and other storage related fees. (2) Rent for 9 short leasehold properties accounted for as investment properties and finance leases under IFRS with total self storage capacity of 535,000 sq ft. (3) Earnings before interest, tax, depreciation and amortisation. (4) Of stores open more than 2 years, 9 leaseholds achieved a store EBITDA of £3.45 million and EBITDA margin of 50%. 21 freeholds achieved a store EBITDA of £9.94 million and EBITDA margin of 70%. (5) Allocation of overhead based on 6% of estimated stabilised income. CONSOLIDATED INCOME STATEMENT Six months ended 30 September 2006 Six months Six months Year ended ended ended 30 Sept 2006 30 Sept 2005 31 March 2006 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000 Revenue 2 24,448 20,276 41,889 Cost of sales (9,008) (7,660) (15,519) ------------- ------------- ------------- Gross profit 15,440 12,616 26,370 Administrative expenses (2,608) (2,261) (4,725) ------------- ------------- ------------- Operating profit before gain on investment properties 12,832 10,355 21,645 Gain on the revaluation of investment properties 51,447 36,789 106,218 ------------- ------------- ------------- Operating profit 64,279 47,144 127,863 Gains/(losses) on the sale of non-current assets 23 8 (52) Investment income 413 102 135 Finance costs 3 (5,909) (5,058) (9,399) ------------- ------------- ------------- Profit before taxation 58,806 42,196 118,547 Taxation 4 (17,698) (11,815) (35,112) ------------- ------------- ------------- Profit for the period (attributable to equity shareholders) 41,108 30,381 83,435 ============= ============= ============= Dividends paid 6 3,066 1,502 3,541 ============= ============= ============= Basic earnings per share 7 38.37p 30.14p 82.10p ============= ============= ============= Diluted earnings per share 7 37.81p 29.65p 80.47p ============= ============= ============= Adjusted earnings per share are shown in note 7. All items in the income statement relate to continuing operations. CONSOLIDATED BALANCE SHEET 30 September 2006 Note 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Non-current assets Investment property 8 489,850 329,370 410,470 Development property 8 72,171 34,164 57,988 Interest in leasehold properties 8 26,259 25,355 26,647 Plant, equipment and owner-occupied property 8 3,136 2,768 3,036 Goodwill 1,433 1,433 1,433 ----------- ----------- ---------- 592,849 393,090 499,574 ----------- ----------- ---------- Non-current assets classified as held for sale 19,000 3,757 6,300 Current assets Inventories 363 322 338 Trade and other receivables 9 7,638 4,322 6,009 Derivative financial instruments 178 - - Cash and cash equivalents 35,960 3,081 14,193 ----------- ----------- ---------- 44,139 7,725 20,540 ----------- ----------- ---------- Total assets 655,988 404,572 526,414 =========== =========== ========== Current liabilities Trade and other payables 10 (21,488) (14,961) (20,122) Derivative financial instruments - (496) (142) Current tax liabilities - (352) - ----------- ----------- ---------- (21,488) (15,809) (20,264) ----------- ----------- ---------- Non-current liabilities Bank borrowings 12 (191,429) (113,535) (155,608) Deferred tax liabilities 11 (89,766) (50,520) (70,580) Obligations under finance leases 10 (26,259) (25,355) (26,647) Other payables (7,674) (10,670) (8,996) ----------- ----------- ---------- (315,128) (200,080) (261,831) ----------- ----------- ---------- Total liabilities (336,616) (215,889) (282,095) =========== =========== ========== Net assets 319,372 188,683 244,319 =========== =========== ========== Equity Called up share capital 15 11,443 10,191 10,275 Share premium account 15 40,824 2,796 3,668 Reserves 15 267,105 175,696 230,376 ----------- ----------- ---------- Equity shareholders' funds 319,372 188,683 244,319 =========== =========== ========== CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Six months ended 30 September 2006 Six month Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Opening equity shareholders' funds 244,319 159,168 159,168 Issue of shares 38,324 524 1,480 Share-based employee remuneration 148 112 220 ------------ ------------ ---------- 282,791 159,804 160,868 Profit for the period 41,108 30,381 83,435 Current and deferred tax recognised in equity (1,461) - 3,557 ------------ ------------ ---------- 322,438 190,185 247,860 Dividends (3,066) (1,502) (3,541) ------------ ------------ ---------- Closing equity shareholders' funds 319,372 188,683 244,319 ============ ============ ========== CONSOLIDATED CASH FLOW STATEMENT Six months ended 30 September 2006 Six months Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating profit 64,279 47,144 127,863 Gain on the revaluation of investment properties (51,447) (36,789) (106,218) Depreciation 703 622 1,288 Share-based employee remuneration 148 112 220 Increase in inventories (25) (68) (84) Decrease/(increase) in receivables 685 863 (825) Increase/(decrease) in payables 2,589 (329) 3,156 ------------ ------------ ---------- Cash generated from operations 16,932 11,555 25,400 Interest paid (5,492) (5,533) (9,422) Interest received 264 113 147 ------------ ------------ ---------- Cash flows from operating activities 11,704 6,135 16,125 ------------ ------------ ---------- Investing activities Sale of non-current assets - 4,490 7,619 Purchase of non-current assets (61,195) (18,688) (61,269) ------------ ------------ ---------- Cash flows from investing activities (61,195) (14,198) (53,650) ------------ ------------ ---------- Financing activities Issue of share capital 38,324 524 1,480 Equity dividends paid (3,066) (1,502) (3,541) Increase in borrowings 36,000 5,743 47,400 ------------ ------------ ---------- Cash flows from financing activities 71,258 4,765 45,339 ------------ ------------ ---------- Net increase/(decrease) in cash and cash equivalents A 21,767 (3,298) 7,814 Opening cash and cash equivalents 14,193 6,379 6,379 ------------ ------------ ---------- Closing cash and cash equivalents 35,960 3,081 14,193 ============ ============ ========== A. Reconciliation of net cash flow to movement in net debt Six months ended 30 September 2006 Six months Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net increase/(decrease) in cash and cash equivalents in the period 21,767 (3,298) 7,814 Cash inflow from increase in debt financing (36,000) (5,743) (47,400) ------------ ------------ ---------- Change in net debt resulting from cash flows (14,233) (9,041) (39,586) ------------ ------------ ---------- Movement in net debt in the period (14,233) (9,041) (39,586) Net debt at start of period (142,100) (102,514) (102,514) ------------ ------------ ---------- Net debt at end of period (156,333) (111,555) (142,100) ============ ============ ========== NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES Basis of preparation The results for the half-year ended 30 September 2006 are unaudited and were approved by the Board on 22 November 2006. The financial information contained in this report does not constitute statutory accounts within the meaning of the section 240 of the Companies Act 1985. The full accounts for the year ended 31 March 2006, which received an unqualified report from the auditors, and did not contain a statement under S.237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of Companies. The interim report has been prepared in accordance with IAS 34 "Interim Financial Reporting". The unaudited information in the interim financial statements has been prepared on the basis of the accounting policies set out in the 2006 Big Yellow Group PLC Annual Report and Accounts. 2. SEGMENTAL INFORMATION Revenue represents amounts derived from the provision of self storage accommodation and related services which fall within the Group's ordinary activities after deduction of trade discounts and value added tax. The Group's net assets, revenue and profit before tax are attributable to one activity, the provision of self storage accommodation and related services. These all arise in the United Kingdom. Total revenue for the period was £24.4 million (2005: £20.3 million). Revenue from self storage accommodation was £20.7 million in the period (2005: £17.5 million), £3.2 million came from other storage related income such as sales of packaging materials and insurance (2005: £2.6 million) and £0.5 million came from non-storage related income (2005: £0.2 million). Further analysis of the Group's operating revenue and costs can be found in the Trading Summary on page 5 of 18. 3. FINANCE COSTS Six months Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Interest on bank borrowings 5,413 3,695 7,579 Other interest payable 19 1 26 Interest on finance lease obligations 797 789 1,574 Change in fair value of interest rate swaps (320) 573 220 ------------ ------------ ---------- Finance Costs 5,909 5,058 9,399 ------------ ------------ ---------- 4. TAX Six months Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Current tax - UK corporation tax at 30% 2,605 320 1,133 Deferred tax 15,093 11,495 33,979 ------------ ------------ ---------- 17,698 11,815 35,112 ------------ ------------ ---------- In addition to the current period income statement tax charge of £17.7 million, there is an overall debit to reserves of £1.5 million. This consists of a credit for the current tax deduction of £2.6 million and a charge of £4.1 million in respect of the reduction in the deferred tax asset arising on potential future deductions under Schedule 23. 5. ADJUSTED PROFIT BEFORE TAX Six months Six months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit before tax 58,806 42,196 118,547 ----------- ------------ ---------- Gain on revaluation of investment properties (51,447) (36,789) (106,218) Change in fair value of interest rate swaps (320) 573 220 (Gains)/losses on sale of non-current assets (23) (8) 52 ----------- ------------ ---------- Adjusted profit before tax 7,016 5,972 12,601 ----------- ------------ ---------- Adjusted profit before tax, excluding gains on revaluation of investment properties, changes in fair value of interest rate swaps and gains or losses on the sale of non-current assets, has been disclosed to give a clearer understanding of the Group's underlying trading performance. 6. DIVIDENDS An interim dividend of 3.5 pence per ordinary share has been declared (2005: 2.0 pence). The ex-dividend date will be 29 November 2006 and the record date 1 December 2006 with an intended payment date of 22 December 2006. The interim dividend has not been included as a liability at 30 September 2006. The 2006 final dividend of £3,066,000 representing 3.0 pence per ordinary share was paid on 12 July 2006 and is included in the consolidated statement of changes in equity. 7. EARNINGS PER ORDINARY SHARE Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Earnings Shares Pence Earnings Shares Pence Earnings Shares Pence £m Million per share £m Million per share £m million per share Basic 41.11 107.15 38.37 30.38 100.79 30.14 83.44 101.62 82.10 Adjustments: Dilutive share options 1.57 (0.56) 1.68 (0.49) 2.07 (1.63) --------- -------- ---------- --------- -------- ---------- --------- -------- ---------- Diluted 41.11 108.72 37.81 30.38 102.47 29.65 83.44 103.69 80.47 --------- -------- ---------- --------- -------- ---------- --------- -------- ---------- Adjustments: Gain on investment properties (51.45) (47.32) (36.79) (35.90) (106.22) (102.44) Change in fair value of interest rate swaps (0.32) (0.29) 0.57 0.55 0.22 0.21 (Gain)/loss on sale of non-current assets (0.02) (0.02) (0.01) (0.01) 0.05 0.05 Tax 15.54 14.29 10.87 10.61 31.78 30.65 --------- -------- ---------- --------- -------- ---------- --------- -------- ---------- Adjusted 4.86 108.72 4.47 5.02 102.47 4.90 9.27 103.69 8.94 --------- -------- ---------- --------- -------- ---------- --------- -------- ---------- The adjustment for gains and losses on sale of non-current assets has been included for consistency with the calculation of adjusted profit before tax (see note 5). 8. NON-CURRENT ASSETS a) Investment property, Development property and Interests in leasehold properties Interest in Investment Development leasehold property property properties £'000 £'000 £'000 At 1 April 2006 410,470 57,988 26,647 Additions 1,062 41,054 - Reclassifications 26,871 (26,871) - Revaluation 51,447 - - Depreciation - - (388) ----------- ------------ ------------ At 30 September 2006 489,850 72,171 26,259 ----------- ------------ ------------ b) Plant equipment and owner occupied property Fixtures, fittings Freehold Leasehold Plant and and office property improvements machinery equipment Total £'000 £000 £'000 £'000 £'000 Cost At 1 April 2006 1,770 17 451 3,396 5,634 Additions - - 49 366 415 --------- --------- --------- --------- ------- At 30 September 2006 1,770 17 500 3,762 6,049 --------- --------- --------- --------- ------- Accumulated Depreciation At 1 April 2006 (6) (17) (158) (2,417) (2,598) Charge for the period (7) - (21) (287) (315) --------- --------- --------- --------- ------- At 30 September 2006 (13) (17) (179) (2,704) (2,913) --------- --------- --------- --------- ------- Net book value At 30 September 2006 1,757 - 321 1,058 3,136 ========= ========= ========= ========= ======= At 31 March 2006 1,764 - 293 979 3,036 ========= ========= ========= ========= ======= 9. TRADE AND OTHER RECEIVABLES 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Trade receivables 1,322 710 1,042 Other receivables 2,499 282 284 Prepayments and accrued income 3,817 3,330 4,683 ---------- ----------- --------- 7,638 4,322 6,009 ---------- ----------- --------- 10. TRADE AND OTHER PAYABLES 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Current Trade payables 2,822 2,635 4,835 Other payables 5,393 3,170 1,855 Accruals and deferred income 11,778 7,662 11,760 VAT repayable under Capital Goods Scheme 1,495 1,494 1,672 ------------ ----------- --------- 21,488 14,961 20,122 ============ =========== ========= Non-current VAT repayable under Capital Goods Scheme 7,674 10,670 8,996 ============ =========== ========= 11. DEFERRED TAX 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 The amounts provided in the accounts are: Revaluation of investment properties 87,493 51,224 72,059 Capital allowances in advance of depreciation 3,579 2,608 3,674 Deduction for share options (454) (2,625) (4,547) Other items (852) (687) (606) ----------- ---------- --------- 89,766 50,520 70,580 =========== ========== ========= 12. BANK BORROWINGS 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Bank borrowings 192,259 114,038 156,293 Unamortised loan arrangement costs (830) (503) (685) ----------- ---------- --------- 191,429 113,535 155,608 =========== ========== ========= The bank loans are secured on certain of the Group's properties. Additional drawings of £36,000,000 were made during the period. A loan of £16,293,000 included in the above was repaid on 23 October 2006. 13. ADJUSTED NET ASSETS PER SHARE Analysis of net asset value As at As at As at 30 Sept 2006 30 Sept 2005 31 March 2006 £'000 £'000 £'000 Basic net asset value 319,372 188,683 244,319 Exercise of share options 3,346 6,996 5,839 ---------- ---------- ---------- Diluted net asset value 322,718 195,679 250,158 ---------- ---------- ---------- Adjustments: Deferred tax on revaluation 87,493 51,224 72,059 Tax on fair value of interest rate swaps (53) 149 43 ---------- ---------- ---------- Adjusted net asset value 410,158 247,052 322,260 ---------- ---------- ---------- Basic net assets per share (pence) 280.6 186.8 239.2 Diluted net assets per share (pence) 273.2 180.4 230.5 Adjusted net assets per share (pence) 347.3 227.7 297.0 Shares in issue 114,437,110 101,639,987 102,752,607 Own shares held (615,000) (615,000) (615,000) Basic shares in issue used for calculation 113,822,110 101,024,987 102,137,607 Exercise of share options 4,282,645 7,455,422 6,368,227 Diluted shares used for calculation 118,104,755 108,480,409 108,505,834 Net assets per share are shareholders' funds divided by the number of shares at the period end. The shares currently held in 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; • deferred tax on the revaluation uplift on freehold and leasehold properties; and • tax on the fair value adjustment on interest rate swaps. 14. VALUATIONS £'000 Deemed Cost Valuation Revaluation on deemed cost Freehold Stores* As at 1 April 2006 151,985 349,400 197,415 Movement in period 27,761 77,610 49,849 --------------- --------------- --------------- As at 30 Sept 2006 179,746 427,010 247,264 Leasehold Stores As at 1 April 2006 18,288 61,070 42,782 Movement in period 173 1,770 1,597 --------------- --------------- --------------- As at 30 Sept 2006 18,461 62,840 44,379 All Stores As at 1 April 2006 170,273 410,470 240,197 Movement in period 27,933 79,380 51,447 --------------- --------------- --------------- As at 30 Sept 2006 198,206 489,850 291,644 =============== =============== =============== * Includes one long leasehold property The freehold and leasehold trading properties have been valued as at 30 September 2006 by external valuers, Cushman & Wakefield, Real Estate Consultants ("C&W"). The valuation has been carried out in accordance with the RICS Appraisal and Valuation Standards published by The Royal Institution of Chartered Surveyors ("the Red Book"). The valuation of each of the trading properties has been prepared on the basis of Market Value as a fully equipped operational entity, having regard to trading potential. The valuation has been provided for accounts purposes and as such, is a Regulated Purpose Valuation as defined in the Red Book. In compliance with the disclosure requirements of the Red Book, C&W have confirmed that: • The members of the RICS who have been the signatories to the valuations provided to the Company for the same purposes as this valuation have done so since September 2004. • C&W have continuously been carrying out this valuation for the same purposes as this valuation on behalf of the Company since September 2004. • C&W do not provide other significant professional or agency services to the Company. • In relation to the preceding financial year of C&W, the proportion of the total fees payable by the Company to the total fee income of the firm is less than 5%. Methodology C&W have adopted different approaches for the valuation of the leasehold and freehold assets as follows: Freehold The valuation is based on a discounted cash flow of the net operating income over a ten year period and notional sale of the asset at the end of the tenth year. Assumptions A. Net operating income is based on projected revenue received less projected operating costs together with 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 41 stores (both freeholds and leaseholds) open at 30 September 2006 averages 86.06% (March 2006: 85.98%; September 2005: 85.74%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. C. The capitalisation rates applied to existing and future net cash flow have been estimated by reference to underlying yields for industrial and retail warehouse property, bank base rates, ten year money rates, inflation and the available evidence of transactions in the sector. On average, for all 41 stores, the yield (net of purchaser's costs) arising from the first year of the projected cash flow is 5.77% (March 2006: 6.01%; September 2005: 7.09%). This rises to 7.34% (March 2006: 7.49%; September 2005: 8.37%) based on the projected cash flow for the first year following estimated stabilisation in respect of each property. D. The future net cash flow 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 10.39% (March 2006: 10.59%; September 2005: 11.05%). E. Purchaser's costs of 5.75% have been assumed initially and sale plus 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 19.3 years (March 2006: 19.8 years; September 2005: 20.3 years). 15. MOVEMENT ON RESERVES Share Share premium capital account Reserves Total £'000 £'000 £'000 £'000 At 1 April 2006 10,275 3,668 230,376 244,319 Profit for the period - - 41,108 41,108 Current/deferred tax - - (1,461) (1,461) Dividend - - (3,066) (3,066) Issue of shares 1,168 37,156 - 38,324 Equity share options - - 148 148 -------- -------- -------- -------- At 30 September 2006 11,443 40,824 267,105 319,372 ======== ======== ======== ======== On 10 July the Group raised £35.8 million net of expenses through the placing of 9.1 million ordinary shares at a placing price of 400 pence per share. In addition a total of 2,584,503 shares were issued to satisfy share options exercised during the period. This information is provided by RNS The company news service from the London Stock Exchange

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