Final Results

Mentmore Abbey Plc 4 July 2000 MENTMORE ABBEY plc PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 APRIL 2000 Mentmore Abbey plc, the leading space management group in Europe, announces preliminary results for the year ended 30 April 2000. RECORD RESULTS * Before goodwill amortisation and exceptional costs: - EBITDA increased 145% to £23.3 million - total operating profits of £20.3 million, up 152% on 1999 - interest covered 4.3 times by total operating profit (1999: 6.6 times) - profit before tax of £15.7 million, up 130% on 1999 - earnings per share increased 39% to 8.77p * Net debt at 30 April 2000 was £107.6 million giving gearing of 61% * Dividend increased by 5.8% - proposed final dividend of 0.82p per share giving a total of 1.222p per share (1999: 1.155p per share) * Personal storage - operating profits increased 15% to £5.1 million - £27.5 million acquisition of British Self Storage in June 2000 - opening programme accelerated with space increased by 110%; now operating from 32 locations of which two are joint personal storage and serviced business space sites * Serviced business space - operating profits from continuing activities £12.4 million in eight months since acquisition - integration process completed with anticipated benefits being realised - aggressive expansion of space; 25 new Imex sites added giving 160 locations in total * Records management - year of investment with focus on new capacity, IT and European development - six acquisitions completed, now operating in UK, France, Spain and Germany - our share (49.9%) of operating profits was £2.4 million Commenting on the results and prospects, Nick Smith, Chairman said: 'Each of our businesses performed in line with strategy and expectations. The resultant growth in earnings per share represents another excellent year. The strong trading base, the acquisition of British Self Storage and the investment in new sites for both Abbey and Imex leaves us positioned to move forward rapidly. Our market is growing strongly, is only lightly penetrated and we have or are moving towards leadership in each segment. We have a strong team in place. Our businesses are profitable and cash generative. With good cause, we remain optimistic.' Contacts: Mentmore Abbey plc, Nick Smith, Chairman 020 8946 3159 Clive Drysdale, Finance director Kim Taylor-Smith, Chief executive Buchanan Communications, Charles Ryland/Catherine 020 7466 5000 Miles Singer & Friedlander, Ian Dighi/Greg Aldridge 020 7623 3000 EDITORS NOTE: Personal storage The group has 32 centres providing self managed storage units for small and medium-sized businesses on flexible terms. Serviced business space The group has 160 serviced business space centres offering trading or office space on flexible terms to businesses of all kinds and 59 retail centres. Records management Our records management business is a partnership with Iron Mountain Incorporated, the world's leading records and information management services company. Chairman's statement Results Once again I am delighted to report on a year of exciting earnings growth. The results for the year before goodwill amortisation and exceptionals can be seen in the summary below. 2000 1999 % Total operating profits £20.3m £8.0m +152 EBITDA £23.3m £9.5m +145 After tax earnings £12.5m £5.4m +131 Earnings per share 8.77p 6.32p +39 Each of our businesses performed in line with strategy and expectations. The resultant growth in earnings per share represents another excellent year. These results include the contribution from the Birkby businesses from 1 September 1999 and reflect the fact that Iron Mountain Europe (formerly BDM) became a joint venture in January 1999; this makes direct year on year comparisons difficult. The acquisition of Birkby provided a solid foundation on which to grow. Their serviced business space operation, Imex, is strong and one upon which we are building. It also provides the opportunity for us to accelerate the growth of our personal storage business by combining the existing strengths of Abbey with Imex's space and skills. We are already demonstrating the strength of this proposition. In the months following acquisition we concluded that Birkby's instalment credit business did not fit our strategy. We therefore sold Manor Credit at the end of March. We are pleased that the new owners provide a good opportunity for the employees and customers of this business. In June this year we purchased British Self Storage, the third largest personal storage company in the UK market. They operate six centres, are profitable and have good potential from new and unlet space. Before goodwill amortisation and exceptionals, our interest charge was covered 4.3 times; a comfortable level in line with our expectations. Abbey continues to drive towards being the leading operator in the personal storage market. We have accelerated our new store opening programme, converted the first tranche of space from Imex to Abbey and developed ways to combine the skills and know how of both businesses in other areas. The sector has attracted new entrants and increasing publicity. In a market where lack of customer awareness is a deterrent to growth we welcome this activity and are confident of our competitiveness. With the acquisition of British Self Storage we are in a strong position to continue this success story. Imex is already the largest provider of flexible serviced business space in the UK and continues to meet the needs of small and medium sized businesses. We are adding new centres and increasing our focus on the provision of improved services. The results reflect the strengths of this flexible service offering. Our Iron Mountain records management alliance is now trading under this name, the brand of our US partner. This is a tangible sign of our successful partnership. We have continued to expand our business. In the UK we added Stortext in Edinburgh and are in the process of integrating Datavault who Iron Mountain Incorporated acquired as part of their purchase of Pierce Leahy earlier this year; we expect to formally transfer this business to the European joint venture in the near future. Datavault are strong in Glasgow, Manchester, Bristol and London. To meet the needs of our global customers we have expanded into France and Spain and have joint ventures in Germany, the Netherlands, Hungary and both the Czech and Slovak Republics (the latter four are in the process of formally being transferred from Iron Mountain Incorporated). We are well on track to achieving our goal of leading this market across Europe. Dividend We are proposing a final dividend of 0.82p per share bringing the total for the year to 1.222p per share (1999: 1.155 pence per share) an increase of 5.8% over 1999. Employees and directors Our people have again made these results possible. The spirit with which they have worked with each other, whether they were new or long standing members of the group has been outstanding. I thank every one of them on behalf of the shareholders. During the year we saw changes in our Board. Kim Taylor-Smith, who was chief executive at Birkby, has taken on that role for the whole group; we are delighted to have such a good operator leading our business. Richard Makowski, managing director Iron Mountain Europe, resigned from the group Board in June 2000. He will continue his employment with Iron Mountain Europe. We have added three new non-executive directors. Michael Woodhead and Anthony Lewis joined from Birkby and Leigh Collins joined us in June 2000. Leigh provided us with invaluable help before he left stockbroking and we look forward to his continuing advice. Peter Pollock retired from the Board in October. We thank him for his invaluable help and advice in the early years of the group's recovery. Prospects The strong trading base, the acquisition of British Self Storage and the investment in new sites for both Abbey and Imex leaves us positioned to move forward rapidly. Our market is growing strongly, is only lightly penetrated and we have or are moving towards leadership in each segment. We have a strong team in place. Our businesses are profitable and cash generative. With good cause, we remain optimistic. Operating review The most important operational project during the year was the integration of Birkby into the group. This has proceeded smoothly and ahead of schedule. There have been some significant savings on personnel and premises. The integration has released synergies within the group and created new business opportunities which we have begun to exploit. Advantages arising from the integration We have made possible a more rapid expansion of our self-storage network by incorporating self-storage units into our rapidly expanding network of Imex serviced business space centres. The first such conversion has been completed at Tyseley in Birmingham, we have opened a new combined centre in Liverpool and submitted planning applications for further conversions. This enables us to increase significantly the size and geographic spread of our self- storage business without incurring the usual level of start-up costs. We now have a bank of potential self-storage users on our doorstep in the shape of existing clients of our serviced business space. This saves on marketing costs and brings a quicker uptake of units. Many people want secure, accessible storage and a base from which to trade and welcome the ability to meet these needs from one source and at one location. We also have the opportunity to acquire a wider range of sites which will suit combined use. It is now possible for us to develop or buy larger sites which would previously have been uneconomic as specialised self-storage or serviced business space but will be profitable for joint use. In addition, we expect to gain from our ability to vary the mix of storage and serviced business space use in response to changing demand, to keep more space filled and so maximise revenue flow. Brand development With the acquisition of the Imex network our business has changed substantially. We believe it is important to reposition ourselves to our customers and to develop our brand as the basis for further expansion. We position ourselves as providing space solutions' for all needs: that is, flexible space for any commercial or domestic use. We encourage our customers to see that space and related services are rapidly available, that it does not involve long or onerous commitments and that it is easy for them to expand or contract the space they use according to their needs. The introduction of our spaces' brand, is designed to give us a higher profile, modernise our image, build trust and loyalty among our customers and facilitate cross-selling between our different divisions. We will progressively evolve our Abbey Space Base and Imex brands to align them with this new spaces' identity. With the acquisition of Imex we have been able to improve our marketing. Our offer of 'spaces' solutions whether for self-storage or serviced business space is generating a strong response whilst reducing marketing costs. Personal storage Profits continued to grow rapidly even after the expense incurred in opening four new centres. Since the year end we have acquired seven new centres, six of which were as a result of British Self Storage. In addition we have a further five under development. In total we now have 32 centres. During the year we increased our prices by an average 8%. We opened centres at Oldbury in the West Midlands, Swanley on the junction of the M20/M25 motorway in Kent and Merton in South West London. All new sites have been fitted out in the new company livery and benefit from high visibility on busy main roads. Also, as already mentioned, we have incorporated a self-storage centre into our Imex serviced business space centre at Tysley in Birmingham (our first such conversion). Subsequent to the year end, we opened a second combined self-storage and serviced business space centre in Liverpool. Construction has started at Stanmore in Middlesex, New Malden in Surrey and we will soon complete a 60,000 sq ft extension to our existing centre in Battersea. We have recently purchased a third site in Birmingham and our first site in Manchester. Our acquisition of British Self Storage was an important step and has substantially increased our capacity without significant start up losses. British Self Storage was the third largest self-storage company in the UK operating from six sites, which are geographically complimentary to our existing centres. Total capacity of the six sites is 520,000 sq. ft. of net lettable space of which only 271,000 sq. ft. is currently let. The acquisition includes a recently constructed purpose built centre in Reading which is the largest of its kind in Europe. We will increase revenues by improving occupancy and increasing rates. We have continued to maintain a satisfyingly high ratio between the cost of fitting out or converting new centres and the revenues generated from customers. We believe that our future lies in providing good quality but low cost centres. Our experienced in-house design team have continued to achieve this critical balance. Everywhere we are proving able to fill new space relatively quickly. This has been helped by our ability to target Imex customers, our enhanced profile and our strengthened marketing. Outlook We are optimistic about the future development of personal storage. It is interesting to note that in the more mature market of the USA, there are nearly 30,000 self-storage centres compared with only around 300 in the UK. On a national basis the US market has more than 30 times the space per capita. We expect UK levels of personal storage space to climb towards, if not to reach, US levels. The rapidly rising profile of self-storage in the UK will, we believe, contribute to this trend. Our aim is to continue increasing the number of our centres, with a particular emphasis on London, Birmingham and other large cities in which we are currently under-represented like Manchester and Liverpool. Serviced business space Profits from our Imex serviced business network continued to grow rapidly as we steadily expanded our network. We opened 25 new centres, taking our total to 160, adding a further 1.0 million square feet of space and further establishing our position as the only truly national provider of serviced business space. We opened four sites in the North East, ten in the South and Midlands, one in Scotland, six in Yorkshire and four in the North West. Amongst these, our Radway Green Venture Park in Crewe and our site in Hartlepool were particularly important. We also completed the second stage development of twelve Research and Development pavilions at Trentham. We increased prices by an average of 4% and are adding services like telecoms, messaging and the provision of utilities; these generate extra income for us. Within the Imex portfolio of sites there are a number which are underdeveloped and which are now being expanded, prominent amongst them Templeborough in Yorkshire, Kirkcaldy in Scotland, Birtley near Gateshead and Glenfield Park in Blackburn. We expect these to provide increased revenue in the year ahead. We own other locations on which conversion has yet to commence and greenfield and brownfield sites on which new centres can be developed. In times when the cost of acquiring sites and land is rising, these are welcome assets which provide an attractive way to grow. We continue to enjoy good relationships with many local authorities and enterprise agencies who are a valuable source of sites and who refer many users to us from their business development units (in fact, local authorities are our biggest single source of referrals). We have become involved in a variety of regeneration projects, thanks to our skill in creating premises in which small local businesses can operate, some of which we own and some of which we manage on behalf of others. Inshops, the serviced retailspace network, has continued to make good progress during the year. A programme of selective upgrading and refurbishment of our centres has enabled us to increase income and attract new customers. During the period we opened a new centre in North Shields and closed an un-profitable centre in St Albans. Inshops now operate from 59 centres throughout the UK. Outlook Our future expansion programme will concentrate on the opening of new serviced business space centres, particularly where they can also be utilised for self-storage. Although we anticipate that Inshops will continue to trade well we do not see this as a priority for future investment. Steady growth of the British economy and measures by the government to encourage new and small businesses, together with the expansion of our network, should sustain strong growth. Records management This year has seen considerable change within our business reflecting our ongoing expansion within the United Kingdom and Europe. During the course of the year we rebranded our BDM business to that of Iron Mountain Europe. This is a tangible sign of our continually strengthening partnership with Iron Mountain who are the world's largest records and information service provider and the global leader in their sector. We continue to provide high-quality services geared to our customers' needs and integrated with their operations. Iron Mountain's services include off-site records storage and management across all sectors, related consultancy services, data security services including the off-site storage and rotation of electronic records, disaster recovery support and sales of related products. In the United Kingdom, we acquired Stortext, the leading service provider in the Edinburgh market and are in the process of integrating Datavault Limited. Datavault was acquired by Iron Mountain Incorporated as part of their purchase of Pierce Leahy earlier this year and we expect to formally transfer this business to the European joint venture in the near future. They have a strong position in the Glasgow, Bristol, Manchester and London markets providing a good geographic fit with the rest of our UK operations. Together they enable us to provide a comprehensive and nationwide service to our extensive client base. We have also opened a state of the art facility within London to meet our customers' ongoing needs. To meet the demands of our global customers, we have expanded into France and Spain as well as entering into joint ventures in Germany, Holland, Hungary and both the Czech and Slovak Republics. The latter four are in the process of being formally transferred from Iron Mountain Incorporated. The introduction of information technology developed in the USA into the UK and European marketplaces has given us a competitive advantage over rivals. The technology is web-based so customers can check the contents of boxes, know exactly where they are and can issue instructions for retrieval or destruction. This makes management of their data storage much more convenient and efficient. For us it has a number of benefits which include enhanced ability to customise our services to customers' individual needs, gains in efficiency and further cost savings from better utilisation of storage space. As a result of our continuing expansion and technological superiority, we are well on track to achieving our goal of leading this market across Europe. From a trading perspective our results reflect a difficult year. We saw a substantial reduction in business from our customers in the energy sector following the fall in oil prices. Simultaneously, we directed large-scale investment towards our European expansion and the strengthening of our sales structure as we embark on the next phase of our development. This is starting to pay dividends as we have entered the new year with a number of sizeable contract awards from organisations within the public and private sector across Europe, including Deutsche Bank, Financial Services Authority, Barclays Capital and the Department of the Environment, Transport and Regions. Outlook The trend towards greater outsourcing of records management services continues. We are well positioned as a result of the investments already carried out to capitalise on this trend and to reap the benefits of our new IT platform. Financial review The year to 30 April 2000 saw good levels of organic growth within the group but also a significant level of corporate activity. This, together with our records management business becoming a joint venture in January 1999, makes year on year comparison of the financial statements difficult. As far as the underlying trend of earnings are concerned, the only true measure of growth is earnings per share before goodwill amortisation and exceptionals - this increased 39% to 8.77p (1999: 6.32p). Corporate activity The group acquired Birkby plc for £171.9 million and made disposals valued at £9.8 million. The Birkby acquisition was primarily financed by issuing new shares but £50.4 million was funded by bank debt. In addition, Iron Mountain Europe, our records management joint venture, made six acquisitions valued at £27.9 million. These were financed by a mixture of shareholder loans and bank debt. Acquisitions: June 1999 Memogarde Records and information management France September 1999 Birkby Serviced business space UK/Holland Datavault Records and information management Spain Stortext Records and information management Scotland November 1999 Secur'Archiv (50.1%) Records and information management Germany February 2000 Documentalia Records and information management Spain March 2000 Boston Data Records and information management Spain Disposals: January 2000 Britannia Storage Systems Engineering UK March 2000 Manor Credit Asset finance UK Following the year end, in June, we acquired British Self Storage for £27.5 million of which £8.2 million is payable by way of loan notes over a four year period. Results - before goodwill amortisation and exceptional items Last year, Iron Mountain Europe was accounted for as a subsidiary for the eight months to 4 January 1999 and as a joint venture subsequent to that date. Accordingly the 1999 comparative results include 100% of their profits for the period as a subsidiary (sales through profit after tax) and a 49.9% share from the date it became a joint venture (our share of their operating profit, interest and tax charge). Current year results include this business as a joint venture for the full year. Group turnover grew by £22.9 million or 88% to £48.8 million (1999: £25.9 million). The acquisition of Birkby contributed £34.6 million whilst the change of accounting basis for Iron Mountain Europe meant that £11.7 million from last year was not repeated. Total operating profits increased by 152% to £20.3 million (1999: £8.0 million) of which £13.0 million was contributed by Birkby. Interest cost was covered 4.3 times by operating profit (1999:6.6 times). The group received £27.25 million in January 1999 following the transaction with Iron Mountain Incorporated resulting in surplus funds being available for a period of time . The reduction in cover from last year arises from the utilisation of these funds and the use of debt to fund acquisitions. The group's tax charge amounted to £3.2 million (1999: £1.4 million) of which £0.4 million (1999: £0.2 million) relates to Iron Mountain Europe and £0.4 million (1999: £0.1 million credit) is a deferred tax charge to reflect trading losses utilised from Birkby's pre acquisition activities; the balance of the charge is UK corporation tax at 30%. The effective rate of tax was 20% (1999: 21%). This remains lower than the standard rate of tax due to differences between accounting profits and those assessable for taxation - principally in relation to capital expenditure. Goodwill amortisation and exceptional items Goodwill on acquisitions post May 1998 is being capitalised as an intangible asset and amortised over 20 years. Goodwill prior to this date has been left as written off to reserves. In the current period amortisation of £2.6 million has been charged to profit and loss (1999: £nil) and £0.9 million has been set against the profit on disposal of Manor Credit. Exceptional costs of £1.0 million have been charged against operating profit and separately disclosed in the current year. Of this amount, £0.6 million relates to Birkby and principally comprises amounts payable to departing directors and £0.4 million represents the loss incurred on the sale of Homeware Brands' cutlery activities. Exceptional gains and losses on the disposal or part disposal of businesses are, where material, separately disclosed. This year a loss of £0.5 million is shown, the majority of which arises on the sale of Manor Credit. In 1999 a profit of £4.4 million was realised on the sale of 50.1% of our records management business. A tax credit of £0.8m arises from exceptional items in the year. Of this £0.3 million relates to those charged against operating profits and £0.5 million arises on the disposal of Manor Credit, thus cancelling the loss reported on this pre tax. Cash flows The group continues to be highly cash generative and continues to reinvest its cash flow to enhance growth in future periods. Operating activities generated £23.8 million (1999: £7.9 million) of which £18.5 million was contributed by Birkby. Tax payments increased to £4.4 million (1999: £0.5 million) as a result of increased profitability but also due to the Government's change to tax payment rules. Net capital expenditure of £23.6 million (1999: £3.5 million) was directed to our core operating activities. Loan funding of £13.5 million was provided to Iron Mountain Europe for growth of their business (1999: £nil) and a net £68.8 was spent on acquisitions and disposals. Cash flow from operating activities, together with a net £74.0 million raised through additional financing (1999: £9.5 million repaid), was used to fund the expenditure incurred. Balance sheet Goodwill of £79.6 million arose on the acquisition of Birkby and has been capitalised as an intangible asset. After amortisation and the transfer on disposal of Manor Credit referred to earlier, £76.0 million remains at 30 April 2000. The investment in our Iron Mountain Europe joint venture at 30 April 2000 of £20.0 million (1999: £6.1 million) comprised our share of their net assets of £6.5 million (1999: £6.1 million) and loans made of £13.5 million (1999: £nil). Our joint venture partner has also made similar loans. There are no fixed repayment dates for these loans and repayment is not anticipated to be made in the near term. Interest is charged on the balance outstanding at commercial rates. Other investments, which are held at cost, primarily comprises a 20% equity holding in UK listed Workspace Group plc; this was acquired by Birkby in April 1999. Their activity is the provision of serviced business space predominantly in London. At 30 April 2000 this investment, based on mid market price, was valued at £26.1 million against a cost to the group of £20.2 million. Net debt at 30 April 2000 amounted to £107.6 million (1999: net funds of £15.5 million); this was principally bank debt. With net assets at 30 April 2000 of £177.6 million gearing for the group at the year end was 61% (1999: nil). Equity shareholders' funds increased by £128.4 million in the year as a result of the retained profit for the year of £6.7 million, shares issued to acquire Birkby and in respect of share options being exercised amounting to £122.0 million and deducting exchange differences on overseas operations of £0.3 million. Group profit and loss account for the year ended 30 April 2000 2000 Before ----- good- will Notes amorti- Good- sation will Excep- Total 1999 and amorti- tionals excep- sation tionals £'000 £'000 £'000 £'000 £'000 Turnover 1 48,788 - - 48,788 25,931 Continuing operations: Group and share of 27,144 27,144 27,778 joint venture Acquisitions 33,131 33,131 - ------ ------ ------ 60,275 60,275 27,778 Discontinued operations 1,851 1,851 1,723 ------ ------ ------ 62,126 62,126 29,501 Less: Group's share of (13,338) (13,338)(3,570) joint venture ------- ------- ------- 48,788 48,788 25,931 ------ ------- ------- Cost of sales (24,183) - (386)(24,569)(13,007) ------ ---------- ------- ------- Gross profit 24,605 - (386) 24,219 12,924 Administrative expenses (6,749) (2,647)(604) (10,000)(5,763) -------- ----------- ------- ------ Operating profit 2 17,856 (2,647)(990) 14,219 7,161 Continuing operations: Existing activities 4,919 4,533 7,262 Acquisitions 12,417 9,166 - ------- ----- ------ 17,336 13,699 7,262 Discontinued activities 520 520 (101) ------- ------ ------ 17,856 14,219 7,161 ------- ------ ------ Share of operating profit in joint venture 2,398 (402) - 1,996 876 ------- ----- ------ ------- ---- Total operating profit 1 20,254 (3,049)(990) 16,215 8,037 (Loss)/profit on 3 - - (467) (467) 4,433 disposal of operations (net) - Income from other fixed asset investments 190 - - 190 ------ ------- ------ ------- ------ Profit on ordinary 20,444 (3,049) 1,457) 15,938 12,470 activities before interest Net interest payable (4,754) - - (4,754)(1,215) ------- ------- ------ ------- ------ Profit on ordinary activities before 15,690 (3,049)(1,457) 11,184 11,255 taxation Taxation on profit on ordinary activities 4 (3,175) - 839 (2,336)(1,413) ------- ------ ------ ------- ------ Profit for the year 12,515 (3,049) (618) 8,848 9,842 Dividends 2,099 - - (2,099) (998) ------- ------ ------ ------- ------- Retained profit for the 10,416 (3,049) (618) 6,749 8,844 year ------- ------- ------ ------- ------- Earnings per share 6 Basic 6.20p 11.50p Basic before goodwill amortisation and 8.77p 6.32p exceptionals 6.08p 11.32p Diluted Diluted before goodwill 8.60p 6.22p amortisation and exceptionals Dividends per share 5 1.222p 1.155p Group balance sheet at 30 April 2000 Group Notes 2000 1999 £'000 £'000 Fixed assets Intangible assets 76,005 - Tangible assets 179,505 31,637 Investments IME joint venture 20,056 6,099 share of gross assets 33,460 14,028 share of gross liabilities (26,916) (7,929) -------- -------- share of net assets 6,544 6,099 loans to joint venture 13,512 - -------- ------- Own shares 258 - Other 20,488 - ------- ------- 296,312 37,736 ------- ------- Current assets Stocks 1,815 1,269 Assets held for resale 6,875 - Debtors 8,763 1,784 Cash at bank and in hand 615 15,499 -------- -------- 18,068 18,552 Creditors: amounts falling due within one year (29,293) (6,960) -------- -------- Net current assets/(liabilities) (11,225) 11,592 -------- -------- Total assets less current liabilities 285,087 49,328 Creditors: amounts falling due after more than one year (106,589) (12) Provisions for liabilities and charges (842) (133) -------- -------- Net assets 177,656 49,183 ======== ========= Capital and reserves Called up share capital 17,186 8,621 Share premium account 114,843 415 Other reserve 27,226 27,226 Profit and loss account 18,401 12,921 -------- --------- Equity shareholders' funds 7 177,656 49,183 ======== ========= Group cash flow statement for the year ended 30 April 2000 Notes 2000 1999 £'000 £'000 Cash flow from operating activities 8(a) 23,792 7,900 Returns on investments and servicing of finance 8(b) (2,646) (1,471) UK corporation tax (4,357) (509) Capital expenditure 8(b) (23,634) (3,511) Loans made to joint venture (13,512) - Acquisitions and disposals 8(b) (68,845) 20,236 Equity dividends paid (1,367) (926) ------- ------- Cash (outflow)/inflow before financing (90,569) 21,719 Financing - issue of shares 290 480 - increase/(decrease) in debt 8(b) 73,722 (9,945) ------ ------- (Decrease)/increase in cash in the year (16,557) 12,254 ======== ======== ---------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt for the year ended 30 April 2000 (Decrease)/increase in cash in the year (16,557) 12,254 Cash (inflow)/outflow from change in debt and lease financing (73,722) 9,945 ------- ------- Change in net debt resulting from cash flows (90,279) 22,199 Loans and finance leases (acquired)/divested with subsidiary undertakings (33,000) 10,437 Other non-cash movements 183 (194) ------- -------- Movement in net debt in the year (123,096) 32,442 Net funds at 1 May 1999 15,475 (16,967) ------- -------- Net (debt)/funds at 30 April 2000 8(c) (107,621) 15,475 ======= ======= Notes to the preliminary announcement 1. Segmental analysis Total Consolidated Turnover operating profit net assets 2000 1999 2000 1999 2000 1999 £'000 £'000 £'000 £'000 £'000 £'000 By activity: Continuing operations: Personal storage 10,625 8,844 5,126 4,455 26,622 28,000 Serviced business space 33,131 - 12,417 - 218,674 - Records management - 11,736 2,398 3,930 20,056 6,099 Other 3,181 3,628 (207) (247) 1,024 2,168 Goodwill amortisation and exceptionals - - (4,039) - - - ------- ----- ------ ------ ------ ----- 46,937 24,208 15,695 8,138 266,376 36,267 Discontinued operations: Serviced business space 860 - 617 - - - Other 991 1,723 (97) (101) - 86 -------- ----- ------- ------ ------ ------- 48,788 25,931 16,215 8,037 226,376 36,353 ------- ------ ------- ------- ------ ------- Cash at bank and in hand, other fixed asset investments, bank loans and overdrafts, finance leases, corporation tax and dividends payable (88,720)12,830 ------- ------ 177,656 49,183 ======= ====== The segment categories have been changed from that previously reported to reflect the acquisition of Birkby plc and the fact that Iron Mountain Europe is now a joint venture operation. Personal storage comprises Abbey Storage; Serviced business space includes Birkby's work and retail space under continuing operations and asset finance activities under discontinued operations; Records management comprises the Iron Mountain Europe joint venture; Other includes the remainder of the group's operations. Comparative figures have been adjusted accordingly. 2. Operating profit Exceptional charges against operating profit in the current year (1999: £nil) comprise: £'000 Termination costs in relation to former directors of Birkby 604 Loss on sale of Homeware Brands' cutlery activities 386 ---- 990 ---- 3. (Loss)/profit on disposal of operations (net) 2000 1999 £'000 £'000 Manor Credit (547) - Britannia Storage Systems (20) - Iron Mountain Europe (50.1% disposal) - 4,433 Platignum Stationery 100 - ----- ------- (467) 4,433 ------ ------- The loss of £0.5m shown above for Manor Credit is wholly offset by corporation tax credits arising as a result of the disposal. It includes £0.9 million of goodwill written back on disposal. The profit on disposal of 50.1% of Iron Mountain Europe in 1999 was after goodwill written back of £18.3 million. 4. Taxation on profit on ordinary activities 2000 1999 £'000 £'000 UK corporation tax at 30% (1999: 31%) 1,503 1,327 Deferred tax 443 (104) Share of IME joint venture tax 390 190 ------ ----- 2,336 1,413 ====== ======= 5. Dividends The directors recommend a final dividend of 0.82p per ordinary share (1999: 0.781p) to be paid on 2 October 2000 to shareholders on the register on 4 September 2000. An interim dividend of 0.402p per ordinary share (1999: 0.374p) was paid on 6 April 2000. This, together with the recommended final dividend, makes a total for the year of 1.222p per ordinary share (1999: 1.155p). 6. Earnings per share Basic earnings per share are calculated on profit after tax of £8.8 million (1999: £9.8 million), divided by 142.7 million ordinary shares (1999: 85.5 million ordinary shares) being the weighted average number of shares in issue during the year. Diluted earnings per share are calculated after allowing for the dilutive effect of conversion into ordinary shares of the weighted average number of share options outstanding during the year. The number of shares used for the diluted earnings per share calculation was 145.5 million (1999: 86.9 million). Basic earnings per share before goodwill amortisation and exceptionals has been separately disclosed on the face of the profit and loss account to facilitate comparison of the underlying performance of the group. The calculation uses the same weighted average number of shares in issue as for the basic earnings per share but reflects the following items: 2000 1999 Profit Earnings Profit after Earnings tax per share tax per share £'000 p £'000 p As for basic earnings per share 8,848 6.20 9,842 11.50 Goodwill amortisation 3,049 2.14 - - Exceptional items (after tax) 618 0.43 - - Profit on disposal of shares in IME - - (4,433) (5.18) ------ ------ ------- -------- Basic earnings per share before goodwill amortisation and exceptionals 12,515 8.77 5,409 6.32 ------- ------- ------ -------- Diluted earnings per share before goodwill amortisation and exceptionals similarly reflects the above adjustments but uses the same weighted average number of shares in issue as for diluted earnings per share. 7. Reconciliation of movements in shareholders' funds 2000 1999 £'000 £'000 Profit for the year 8,848 9,842 Other recognised gains and losses in the year (342) - Shares issued net of expenses 122,066 480 Goodwill written back - 18,256 Dividends (2,099) (998) -------- ------- Net addition to shareholders' funds 128,473 27,580 Opening shareholders' funds 49,183 21,603 -------- ------- Closing shareholders' funds 177,656 49,183 ======= ======== 8. Cash flow statement a) Reconciliation of operating profit to cash flow from operating activities 2000 1999 £'000 £'000 Operating profit 14,219 7,161 Goodwill amortisation 2,647 - Depreciation charge 2,312 1,279 Loss on sale of tangible fixed assets 11 7 Decrease in stocks and assets held for resale 5,384 98 Increase in debtors (749) (50) Decrease in creditors (44) (605) Increase in provisions for liabilities and charges 12 10 ----- -------- Net cash inflow from operating activities 23,792 7,900 ====== ========= b) Analysis of cash flows for headings netted in cash flow statement 2000 1999 £'000 £'000 Returns on investments and servicing of finance Dividends received from other fixed asset investments 190 - Interest paid (net) (2,836) (1,401) Interest element of finance lease rental payments - (70) ------ ------- Net cash outflow for returns on investments and servicing of finance (2,646) (1,471) ======= ======= Capital expenditure Purchase of tangible fixed assets (24,091) (3,550) Sale of tangible fixed assets 457 39 ------ ------- Net cash outflow for capital expenditure (23,634) (3,511) ====== ======= Acquisitions and disposals Purchase of Birkby (50,291) - Bank overdrafts acquired with Birkby (28,601) - Sale of Manor Credit 9,748 - Deferred consideration paid for subsidiary undertaking - (5,222) Sale of 50.1% of IME (70) 26,705 Net (overdrafts)/cash transferred on sale of subsidiaries 289 (1,247) Sale of other subsidiaries 80 - ------- -------- Net cash (outflow)/inflow for acquisitions and disposals (68,845) 20,236 ======== ========= Financing Debt due beyond one year - increase in borrowings 75,227 1,983 Debt due within one year - repayment of borrowings (1,500) (1,832) Debt due beyond one year - repayment of borrowings - (9,667) Capital element of finance lease rental payments (5) (429) --------- -------- Net cash inflow/(outflow) from financing 73,722 (9,945) ========= ======== c) Analysis of changes in net (debt)/funds At 1 Acqui- Other non- At 30 May Cash sition cash April 1999 flow of movements 2000 Birkby £'000 £'000 £'000 £'000 £'000 Cash at bank 15,499 (14,884) - - 615 and in hand - - Overdrafts - (1,673) - - (1,673) ------- ------- -------- 15,499 (16,557) - - (1,058) ------- ------- -------- Loans due within one year - 1,500 (1,640) 13 (127) Loans due after one year - (75,227)(31,360) 170 (106,417) Finance leases (24) 5 - - (19) ------ ------- -------- ------ -------- (24) (73,722) (33,000) 183 (106,563) ------ ------- -------- ------ --------- Total net (debt)/funds 15,475 (90,279) (33,000) 183 (107,621) ------ ------- --------- ------ --------- Other non-cash movements relate to loan amortisation costs written off during the year and foreign exchange movements. 9. Statutory accounts The above financial information is extracted from the company's statutory accounts for the two years ended 30 April 2000. The accounts for the year ended 30 April 1999 have been filed and those for the year ended 30 April 2000 will be filed with the Registrar of Companies. The company's auditors, RSM Robson Rhodes gave unqualified reports on the accounts for both years and the reports did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 10. Financial statement and annual general meeting Audited financial statements and the annual report will be posted to shareholders in due course. The annual general meeting will be held on 7 September 2000.

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