Final Results
Mentmore Abbey Plc
2 July 2002
FOR IMMEDIATE RELEASE 2 JULY 2002
MENTMORE ABBEY plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 30 APRIL 2002
MENTMORE ABBEY IS A RESILIENT AND HIGHLY CASH GENERATIVE GROUP OPERATING IN
GROWTH MARKETS. RESULTS REFLECT THE CONTINUED SUCCESS OF OUR BUSINESSES IN WHAT
WAS PLANNED AS A YEAR OF INVESTMENT.
• Before goodwill amortisation and profit on disposal of investment:
- EBITDA before property disposals increased 4.4% to £35.4 million
(2001: £33.9 million)
- Total operating profit before property disposals of £29.2 million
(2001: £29.2 million)
- Interest covered 3.4 times (2001: 2.9 times)
- Profit before tax up 3.7% to £22.4 million (2001: £21.6 million)
- Earnings per share increased 1.4% to 8.93p (2001: 8.81p)
• After goodwill amortisation and profit on disposal of investment:
- Profit before tax of £24.9 million (2001: £15.3 million)
- Earnings per share of 10.07p (2001: 5.24p)
• Proposed final dividend increased by 3.7% to 0.85p per share (2001:
0.82p) giving a total of 1.252p per share for the year (2001: 1.222p).
Final dividend payable on 1 October 2002 to shareholders on the register on
13 September 2002.
• Operating cash flow of £31.5 million (2001: £33.2 million) representing
122% of operating profit before goodwill amortisation (2001: 111%).
All figures before share of joint venture.
• Net debt at 30 April 2002 was £153.1 million (2001: £156.3 million)
giving gearing of 71% (2001: 78%).
• Internal property revaluation undertaken at 31 October 2001. Whilst
not reflected in balance sheet, disclosed uplift of £90 million or 50p per
share. If reflected, gearing would reduce to 50% and net asset value per
share would increase to 168.9p.
• Personal storage made good progress. UK operating profits increased 13% to
£8.4 million (2001: £7.4 million). As expected, the accelerated opening
programme in France increased losses to £0.8 million (2001: losses of £0.2
million).
• Serviced business space focused on development and upgrade, with investment
of £33.9 million in the year. 23 sites were completed which lowered
current year profits by £1.9 million. As a consequence, operating profits
were £18.2 million (2001: £20.1 million).
• Records management demonstrated the benefits of last year's operational
improvements and has established itself as market leader in service
and product quality. Our share of operating profits increased by 81% to
£3.5 million (2001: £2.0 million).
Commenting on the results and prospects, Nick Smith, chairman said:
'Our income for the year reflects the continued success of our ongoing
businesses and our decision last year to increase the focus of our serviced
business space division on development and upgrades rather than the acquisition
of income producing properties. As anticipated, this change had the effect of
slowing profit growth in its initial year but results in this division, as in
personal storage, have fully met our expectations in a challenging economic
environment. Iron Mountain Europe, our records management joint venture,
continued to deliver improved results after the investment made last year in
their operations.
We are a resilient and highly cash generative group operating in growth markets.
We have capable management with a clear vision of where we are going. We will
be driving our personal storage and records management divisions and selected
parts of serviced business space even faster. We are confident that all our
businesses have potential for continued growth.
We have made a positive start in our programme to upgrade the products and the
services we offer our customers. We start the new financial year with a
significant amount of space to be filled and a high level of enquiries. We
remain confident that we shall now be able to build our future on a stronger
base.'
Contacts:
Mentmore Abbey plc 020 8946 3159
Nick Smith, Chairman
Clive Drysdale, Finance Director
Bridgewell Corporate Finance 020 7003 3000
Ian Dighe
Greg Aldridge
Buchanan Communications 020 7466 5000
Charles Ryland
Catherine Miles
Dresdner Kleinwort Wasserstein 020 7623 8000
Robert Petch
EDITORS NOTE:
Personal storage
The group has 41 centres with 180,600m(2) of space providing self-managed
storage units for over 11,000 personal customers and small and medium-sized
businesses on flexible terms.
Serviced business space
The group has 218 serviced business space centres with a capacity of 778,900m(2)
offering trading, office and retail space on flexible terms to over 5,000
businesses of all kinds.
Records management
Our records management business is a partnership with Iron Mountain
Incorporated, the world's leading records management company. It services
customers across Europe.
Chairman's statement
Overview
Our income for the year reflects the continued success of our ongoing businesses
and our decision last year to increase the focus of our serviced business space
division on development and upgrades rather than the acquisition of income
producing properties. As anticipated, this change had the effect of slowing
profit growth in its initial year but results in this division, as in personal
storage, have fully met our expectations in a challenging economic environment.
Iron Mountain Europe, our records management joint venture, continued to deliver
improved results and increased operating profits before goodwill amortisation by
81%.
Results
Group profits before tax, goodwill amortisation and the profit on the disposal
of our investment in Workspace Group grew to £22.4 million (2001: £21.6
million). The disposal of the Workspace investment provided a further £9.6
million of pre tax profit.
Earnings per share before goodwill amortisation and the profit on the disposal
of investment grew 1.4% to 8.93p (2001: 8.81p). After including these items
earnings per share grew 92% to 10.07p (2001: 5.24p).
Personal storage made good progress in starting to let the record amounts of the
space that we added last year. Those investments more than met our needs in the
current year and therefore we only added a small amount of new capacity. The
market continued to grow and we maintained our position.
In Paris, Une Piece en Plus has more than doubled its capacity since we acquired
it and continues to set the standards in that market.
Service business space focused its attention on the development and upgrade of
sites and the addition of new services. We upgraded 15 locations, developed new
space on 8 of our sites and have a further 19 sites in various stages of upgrade
or development. The remainder of our industrial and serviced space traded in
line with expectations demonstrating the continuing resilience of the small
business sector in the UK.
InShops took the first steps in its modernisation programme. We shall shortly
open the first InShops Selections in Port Talbot. The concept has been well
received and we look forward to positive trading.
These moves are designed to enable us to offer the small and medium sized
business a full solution to its space requirements whether for manufacture,
office, retail, storage or other service areas. Our steadily growing service
offering coupled with our totally flexible approach provides an excellent
solution to the special needs of smaller businesses.
Iron Mountain Europe ('IME'), our joint venture records management company,
demonstrated the benefits of operational improvements, the costs of which
adversely affected last year's results.
IME has established itself in the UK as market leader in service and product
quality. We have gained significant new business from major national and
international banks and continue to build on this success. In the rest of Europe
we are pursuing a similar philosophy and seeing similar positive responses in
the market.
Based on this success we have invested in new capacity in South East London,
Livingstone in Scotland, Deganza in Spain and near Marseilles in France.
Balance sheet
At the year end net debt was £153.1 million (2001: £156.3 million) leaving the
group with gearing of 71% (2001: 78%).
Our decision in early 2001 to focus on developments and upgrades was driven by
the high prices in the property market. This change lowered earnings in the
current year but we have enjoyed increases in our property values.
At 31 October 2001 we undertook a valuation of our property assets for financing
purposes in consultation with external valuers. Whilst not reflected in the
balance sheet, this identified an uplift in asset value of £90 million or 50
pence per share.
Had this valuation uplift been reflected in the balance sheet at 30 April 2002
it would have had the effect of reducing our gearing level to 50%.
Whilst we do not intend revaluing assets on a regular basis, this uplift
demonstrates an underlying increase in value to shareholders that is not
apparent from just considering the trading performance of the group.
Three year strategic development
Our investment strategy over the past three years has changed the profile of
the business and that process will continue.
Personal storage has added 148% more space and moved into the Paris market. It
has been re-branded to be the most effective competitor in a market where growth
potential remains enormous. 32% of our investment has been in this business and
we expect this to continue to be our investment priority. This investment and
growth has been achieved while growing operating profits by 19.4% per annum,
compound.
In serviced business space we have been engaged on a carefully targeted
investment programme. We have concentrated on adding value to our base as well
as investing in a higher service product in the better parts of our portfolio.
We have also identified those parts of our portfolio that do not fit our
longer-term plans. These will be sold over time and the proceeds reinvested
into higher quality, growth product across the group's activities.
We have created a new division, Argo spaces, to concentrate on our higher
service level products. We invested £23.5 million last year in this business.
Results are beginning to reflect this investment with annualised revenues
increasing by 62.7% over the year. The remainder of the division has continued
to trade successfully while upgrading the product offering.
Since acquiring this business in 1999 we have grown revenues by 17%. Despite
the costs associated with the development and upgrade programme we have also
grown operating profits by 17%.
In records management we have grown this business into a pan European operation
to meet the needs of our blue chip customer base. We have also introduced new
IT systems which have improved our efficiency and enabled us to become market
leader in service delivery. The business is now in good shape, continues to take
market share from competitors and more importantly to persuade important
customers of the benefits of outsourcing.
Over the past three years, despite the operational costs incurred in achieving
the above, revenues have almost doubled and operating profits increased by 25%.
People
Shareholders will have seen that we are taking steps to strengthen our Board and
management to meet the challenges that lie ahead. We have appointed a new
independent director who brings proven senior management experience to our
Board. Richard Wright is chairman of the Board of National Savings and was,
until his retirement in April, Sales Director of Ford Motor Company UK. He will
become our senior independent non-executive director.
Kim Taylor-Smith resigned as group chief executive in June. Kim served Birkby
and ourselves for 15 years and has made a significant contribution throughout.
Anthony Lewis, non-executive director, has expressed a wish to reduce his
commitments in order to concentrate on his own property interests and will stand
down at the annual general meeting later this year. Anthony joined the Board
from Birkby plc where he had been a non-executive director for 10 years. He has
provided us with valuable help and assistance in the integration of that company
and the development of our combined group.
We thank both Anthony and Kim for their contributions and wish them continued
success.
In the short term I shall assume the additional role of chief executive. It is
our intention to recruit a new chief executive to lead the group forward as a
focused provider of serviced space solutions. We have already started that
search. When we find the right candidate and he has established himself I shall
revert to my role as chairman.
Our staff have responded positively to the new challenges that both we and the
market place have given them. On behalf of the Board and the shareholders, I
thank them most sincerely for their contribution to these results.
Dividends
We are proposing to increase the final dividend payment by 3.7% to 0.85 pence
per share bringing the total for the year to 1.252 pence.
The Board recognises the attraction to shareholders of a progressive dividend
policy and intends to revert to such a policy as earnings grow.
Group name
We are asking shareholders to approve a shortening of the group name to
Mentmore. This reflects both the way that many people already know the group
and the fact that we are dropping Abbey from our trading names. Mentmore was
part of the original group name when it first floated in 1935 as Mentmore
Manufacturing.
Summary
We are a resilient and highly cash generative group operating in growth markets.
We have capable management with a clear vision of where we are going. We will be
driving our personal storage and records management divisions and selected parts
of serviced business space even faster. We are confident that all our businesses
have potential for continued growth.
We have made a positive start in our programme to upgrade the products and the
services we offer our customers. We start the new financial year with a
significant amount of space to be filled and a high level of enquiries. We
remain confident that we shall now be able to build our future on a stronger
base.
Operating review
Personal storage
spaces personal storageTM centres provide individual lockable storage units for
use by private and business customers and is a leading operator in the UK and in
Paris. Although the numbers of centres are increasing rapidly, per capita
penetration is still a fraction of that seen in the United States. The market
continues to grow and has enormous potential.
The personal storage division accounts for 25.9% (2001: 24.6%) of group
operating profit excluding property disposals and goodwill amortisation. For the
year to 30 April 2002, spaces personal storage generated an operating profit of
£7.6 million (2001: £7.2 million) an increase of 5.7% on the previous year.
Key statistics for UK based spaces personal storage are:
2002 2001
No. of centres 34 32
Total storage capacity ('000 sq. m.) 156.7 152.2
Current utilisation (%) 65.1 60.6
Current annualised storage revenue (£m) 16.5 15.0
Other income (% of storage revenue) 9.4 8.5
spaces personal storage has performed well this year both in terms of revenue
and space let. In the UK revenue grew by 23.8% to £19.0 million and operating
profit by 12.8% to £8.4 million compared to last year, reflecting strong market
position.
As at 30 April 2002 occupancy was 102,009 sq. metres representing a range of
occupancy from zero to 93%, depending on the maturity of the centre.
We recently opened our 34th centre which is located in Bedford. In common with
other recent openings, the Bedford centre will be 'mixed use' offering both
serviced business space and personal storage. This combination broadens the
range of properties on which we can generate our target returns and provides
customers with additional options.
We have personal storage centres in prominent locations in many major cities in
the UK. We continue to target areas of high demand or new locations where the
combination of storage and serviced business space is likely to prove
successful.
The majority of the spaces personal storage centres were re-branded during the
year. This has been well received and has generated increased enquiry levels and
lettings. They present a modern, bright image to our customers and enhance our
reputation for excellent service. The high levels of repeat business we generate
substantiate our belief in the benefits of providing efficient, localised and
personal service to our customers.
Last year was our first full year since the acquisition of Une Piece en Plus ('
UPP'), our Paris based storage operator. We have established ourselves as the
premier brand in central Paris and recently opened our seventh centre in the
north of Paris in St. Denis. The centre has been configured to provide 'drive
through' units, a first in the Paris market and customer response has been
positive.
Our decision to accelerate the investment program in Paris resulted in losses of
£0.8 million (2001: loss of £0.2 million) during the period but we believe this
will generate substantial returns in the longer term.
Key statistics for UPP are given below:
2002 2001
No. of centres 7 4
Total storage capacity ('000 sq. m.) 23.9 11.7
Current utilisation (%) 48 89
Current annualised storage revenue (£m) 2.1 1.5
Other income (% of storage revenue) 3.1 2.4
Serviced business space
Our national network of serviced work and retail space provides flexible
accommodation to a wide range of customers. In an ever-changing environment, our
SME customers need space that can be rapidly adapted to their specific
requirements, allowing them to modify their accommodation as their circumstances
change.
The serviced business space division accounts for 62.0% (2001: 68.7%) of group
operating profit excluding property disposals and goodwill amortisation. For the
year to 30 April 2002, the division generated an operating profit of £18.2
million (2001: £20.1 million), a reduction of 9.6% on the previous year
reflecting the impact of the investment programme.
We have subdivided this division into three operations to provide management
teams focused on specific market segments. Argo spaces will focus on the higher
service end of the market, accelerating our efforts to add value for our
customers. Imex and In Shops will continue to service their traditional markets
whilst adding value and service at a faster rate than before.
Our customers are demanding better quality accommodation and a greater range of
services with a shift towards office and studio accommodation. This higher value
product generates an attractive return and has been the focus of our investment.
15 centres have been upgraded this year and we have identified a further 21 to
be upgraded in the coming year.
Service revenue has increased by 12% in part due to the success of Synex, our
telecoms business, and their ability to provide a comprehensive and efficient
telephony service to our customers.
We shall continue to invest in selected properties and land where we can
generate high levels of return. We shall dispose of some mature centres and will
re-invest the proceeds into the faster growing parts of the group.
Argo spaces represents our higher service content product supplied through fully
manned sites. We completed the upgrades of 6 sites and have a further 8 in
progress. The upgraded sites have been well received by customers with revenue
generation meeting our expectations even in a market that, in London especially,
has seen heavy discounting at the higher end.
Key statistics for Argo spaces, whose space represents 18.3% of the division,
are:
2002 2001
No. of centres 18 15
Total space ('000 sq. m.) 142.5 112.0
Physical occupancy rate (%) 79.4 80.0
Number of units available 1,397 1,077
Maximum annualised rental income (£m) 10.3 6.5
Current annualised rental income (£m) 8.3 5.1
Imex spaces provides a mixture of office, industrial and technology space. Sites
are typically unmanned although we continue to work to increase the service
content we provide.
Our success can be attributed to our ability to replace tenants quickly at
enhanced rental levels. Historically this has proven to be the case in both good
times and bad. On a like for like basis, our average charge for accommodation
increased by 4.6% during the year to £4.13 per sq. ft.
Key statistics for Imex spaces, whose space represents 68.0% of this division,
are:
2002 2001
No. of centres 147 149
Total space ('000 sq. m.) 529.9 528.2
Physical occupancy rate (%) 84.1 88.9
Number of units available 3,661 3,578
Maximum annualised rental income (£m) 22.6 21.2
Current annualised rental income (£m) 17.6 17.2
In Shops provides small units to independent traders within centres that
represent good quality retailing locations.
The business has now started a modernisation programme that will keep its
centres abreast of modern retail requirements and improve our returns. Minor
upgrade programmes have achieved encouraging returns. A new concept, In Shops
Selections - a strongly branded shopping environment with higher standards of
infrastructure and retail presentation has been established. The first centre
opens in Port Talbot in July. This product will improve returns in this
business.
Key statistics for In Shops, whose space represents 13.7% of this division, are:
2002 2001
No. of centres 53 57
Total space ('000 sq. m.) 106.5 112.7
Physical occupancy rate (%) 86.4 86.0
Number of units available 2,898 3,100
Maximum annualised rental income (£m) 26.2 26.7
Current annualised rental income (£m) 20.0 21.5
Records management
The market for records management is undergoing rapid transformation. To be a
serious provider in this business it is no longer good enough simply to provide
space for secure records storage. Customers are demanding more sophisticated
information management as well as faster retrieval, better tracking and more
active management, via the Internet, of their paper documents and magnetic
media.
The records management division accounts for 12.1% (2001: 6.7%) of group
operating profit excluding property disposals and goodwill amortisation. For
the year to 30 April 2002, the division generated an operating profit of £3.5
million (2001: £2.0 million), an increase of 81.4% on the previous year
reflecting the benefits of last year's operational improvements.
During the current year we saw profits grow based on a rapid improvement in
customer service levels and the accompanying improvements in customer
satisfaction. Costs were under better control and productivity continues to
improve as we saw the benefits of the investment during 2001.
We have made significant market share gains most notably in the financial
services sector, where three of the largest UK banks and two major US banks
entrusted us with their data management.
In addition, we have used Iron Mountain Incorporated's many years of experience,
sophisticated systems and consultative services to design and implement a number
of specialised, active records programmes to meet the growing needs of the
financial service community for better, more efficient and economic information
management.
We have strengthened our sales and account management teams and they have begun
to penetrate the mid sized business market with a transactional based sales
effort. These successes are being achieved in both archive and active storage.
Our customers are increasingly recognising the higher value they can derive from
our systems, our facilities and critically our people.
These improvements have been seen across Europe but most markedly in the UK.
However we are seeing a building momentum for outsourcing in other markets and
are well placed to take advantage of that trend.
The growth of the company is also being fueled by using Iron Mountain's global
account base. Customers around the world are recognising the advantages and
efficiencies of a one partner relationship. We see this avenue of growth both
in the UK and across our continental European businesses.
Efficient and economic real estate is an on-going focus of the company. The
majority of our customers want their records local to their users. By carefully
identifying locations and utilising our history of efficient design we provide
economic storage and services to support our customers, whether that be through
physical or electronic delivery.
Our success in the market place has accelerated our need for new capacity in the
London, Scotland, Manchester and Birmingham markets. These new facilities are
generally offering customers the highest levels of security and reliability in
the market.
In continental Europe we have followed a similar path to that in the UK,
building our processes, facilities and people into a market leading force.
In our media business, which provides off site data storage as part of
customers' disaster recovery planning, we have now established leadership in the
UK and across Europe. In this business, as others, we have strengthened our
management and our systems and improved our facilities.
Our geographic footprint and expanding services are designed to support the
growing needs of both disaster recovery and business continuity.
We continue to build on our success and are optimistic about the future.
Financial review
EBITDA (earnings before interest, taxes, depreciation and amortisation) is a key
performance indicator for the group - it broadly equates to cash flow generated
from operations and is the principal component in determining the group's debt
capacity. EBITDA before property profits for the year was £35.4 million (2001:
£33.9 million) growing 4.4% on last year.
Group results
FRS3 (Reporting Financial Performance) requires certain transactions,
principally those that are considered individually material or of a
non-recurring nature, to be reported separately below operating profit. The
results to 30 April 2002 include three such transactions of which two are
considered to be part of the normal trading operations of the group. To aid
comparison with last year a summary of the group's results is given below:
2002 2001
For the year ended 30 April £ million £ million
Turnover 77.4 75.0
Continuing operations 75.3 72.0
Discontinued activities 2.1 3.0
Trading profit 31.9 31.8
Total operating profit 29.4 31.8
Share of JV profit on disposal of fixed asset 1.0 -
Profit on disposal of operations 1.5 -
Net interest payable (9.5) (10.9)
Profit before tax - trading 22.4 20.9
Profit on disposal of investment 9.6 -
Income from fixed asset investment - 0.7
Goodwill amortisation (7.1) (6.3)
Profit before tax 24.9 15.3
Underlying earnings per share*+ 8.93p 8.81p
Basic earnings per share+ 10.07p 5.24p
* before goodwill amortisation and profit on disposal of investment
+ as restated for adoption of FRS19 (Deferred Tax)
Group turnover above (which excludes our share from joint ventures) increased by
3.2% to £77.4 million (2001: £75.0 million). Excluding discontinued activities
group turnover increased 4.6%. Our share of turnover from the Iron Mountain
Europe ('IME') joint venture increased by 45.3% to £27.7 million (2001: £19.1
million).
The share of joint venture profit on disposal of fixed asset relates to one
property sale. The profit on disposal of operation arose following the sale of
the Dutch serviced business space business; this was effectively the sale of two
trading properties. The sale of properties is an ongoing and important part of
the group's operations and therefore these profits have been included above with
total operating profit to reflect the true trading profit in the year.
As planned, trading profit was flat at £31.9 million (2001: £31.8 million). This
reflects our decision last year to increase the focus of our serviced business
space division on developments and upgrades rather than income producing
properties. EBITDA in this division fell by £1.4 million to £20.9 million (2001:
£22.3 million). In personal storage and records management EBITDA grew by 10.7%
and 69.3% to £9.5 million (2001: £8.6 million) and £5.1 million (2001: £3.0
million) respectively.
Net interest cost reduced by £1.4 million to £9.5 million (2001: £10.9 million).
Whilst this principally reflects lower UK interest rates, the proceeds from the
sale of the Workspace investment in May 2001 reduced debt levels early in the
year. Interest cost for the year was covered 3.4 times (2001: 2.9 times) by
trading profit.
The group's tax charge represents an effective rate of 27.9% (2001: 28.5%) on
profits before goodwill amortisation and the profit on disposal of investments.
Tax attributable to the profit on disposal of investment was limited to £0.5
million due to the crystallisation of capital losses. The effective cash tax
rate remained at 20%.
Before goodwill amortisation and the profit on disposal of investment profit
after tax increased by 4.7% to £16.2 million (2001: £15.4 million). On the same
basis, basic earnings per share increased by 1.4% to 8.93 pence (2001: 8.81
pence) reflecting the higher average number of shares in issue during the year.
Goodwill amortisation increased to £7.1 million (2001: £6.3 million) reflecting
the inclusion of prior year acquisitions for a full year. The profit on disposal
of investment arose following the sale of the group's investment in Workspace
Group PLC in May 2001. After taking these into account profit after tax and
basic earnings per share were £18.2 million (2001: £9.2 million) and 10.07 pence
(2001: 5.24 pence) respectively.
Segmental analysis
Segmental information which shows sales, EBITDA, operating profit and
operational net assets for each division of the group is provided in note 1.
EBITDA has been included for the first time this year by segment so that
shareholders can assess each division's success by this key performance measure.
Cash flows
Operating cash flow as a percentage of operating profit before goodwill
amortisation improved to 121.5% (2001: 111.4%) demonstrating the cash generative
nature of the group.
Operating activities generated £31.5 million (2001: £33.2 million) which
principally funded net capital expenditure of £39.3 million (2001: £26.1
million). In addition, the group paid £15.7 million to fund IME's new London
facility and received £5.7 million (2001: paid £1.9 million) of loan repayments
from them.
Net interest payments reduced by £1.4 million to £6.9 million and tax payments
increased to £5.1 million (2001: £1.7 million). Cash inflow from disposals was
£2.5 million (2001: acquisition outflow of £31.1 million).
Cash inflow before financing was £0.7 million (2001: outflow of £37.3 million).
Balance sheet
Included in current assets is £16.3 million relating to the development of IME's
new records centre in South East London. This is now substantially complete and
will be sold to a third party and leased back to IME on an arm's length basis.
Net debt at 30 April 2002 amounted to £153.1 million (2001: £156.3 million) and
comprised bank debt of £149.1 million (2001: £148.1 million) and deferred
acquisition loan notes of £4.0 million (2001: £8.2 million). Net assets at 30
April 2002 were £215.7 million (2001: £199.3 million) giving gearing of 71%
(2001: 78%).
Had the uplift in property values of £90 million referred to in the chairman's
statement been reflected in the financial statements as at 30 April 2002 then
net assets would have been £305.7 million and gearing 50%.
Equity shareholders funds increased by £16.3 million in the year as a result of
the retained profit for the year of £15.9 million and £0.4 million for shares
issued primarily in respect of share options being exercised.
Treasury management
The group is primarily exposed to interest rate, liquidity and foreign exchange
risks. These are managed at group level and are controlled by the Board.
Treasury management is undertaken to minimise these risks with transactions only
being made in relation to underlying business requirements. There are no
transactions undertaken of a speculative nature and financial instruments are
not traded. The group's policies are outlined below.
Interest rate risk
The group's policy is to minimise interest cost. Exposure to interest rate
movements on group borrowings is managed by maintaining a mixture of fixed and
variable rate financing. Fixed interest rates are usually achieved through the
use of interest rate swaps. The group also uses financial instruments which cap
interest rate exposure and allow interest rates to fluctuate within upper and
lower limits. The relevant proportion of each type of financing is adjusted to
take account of prevailing market conditions.
At 30 April 2002, after taking into account swaps, £10 million of group
borrowings were fixed and £75 million operated within specified upper and lower
interest rate limits.
Liquidity risk
The group's policy is to maintain a mixture of committed and uncommitted
borrowing facilities with dates of maturity varying to meet anticipated
borrowing requirements in relation to its current business plan. Committed
facilities are maintained to cover what is perceived as core debt with
uncommitted facilities maintained to support day-to-day operations. The primary
source of funds is bank debt. The level and type of facility is regularly
reviewed, particularly in the event of corporate transactions.
At 30 April 2002 the group's UK banking facilities amounted to £168 million. The
principal elements of these were:
• a £98 million committed facility of which £63 million is an amortising
term loan with all but £4 million having a repayment due in February 2007 and
£35 million is a revolving credit facility with a bullet repayment due in
February 2007;
• a £52 million uncommitted facility which is due for review in June
2003;
• a £15 million facility to finance the development of IME's new records
centre.
In addition the group has bank facilities in France amounting to €2.4 million.
As at 30 April 2002 the group had unutilised bank facilities of £15.3 million.
During the year the group complied with all debt covenants.
Foreign exchange risk
Although the group is becoming more exposed to foreign exchange risk due to its
expansion in Continental Europe this still remains immaterial to the group as a
whole. The group's policy covers three areas of exposure - balance sheet net
assets, earnings and transactions:
• where considered material balance sheet net assets are protected from
currency exposures by borrowing in relevant currencies;
• at present the group does not protect earnings of overseas operations
against currency fluctuations;
• foreign currency transactions, where significant, are protected by way
of forward exchange contracts.
At 30 April 2002 the group had no forward exchange contracts.
Accounting standards
The group's accounting policies fully reflect the requirements of the Accounting
Standards Board ('ASB').
Three new Financial Reporting Standards have recently been issued: FRS17
(Retirement Benefits), FRS 18 (Accounting Policies) and FRS 19 (Deferred
Taxation).
Under the transitional arrangements contained within FRS 17, the requirements of
this standard are being introduced over the three years ending 30 April 2004. In
the meantime, retirement benefits will be accounted for under the rules set out
in SSAP24. Note 18 sets out the additional disclosures required this year by FRS
17.
The requirements of FRS 18 have been fully implemented this year. No changes
were required as a result of adopting this standard.
The requirements of FRS 19 have also been implemented this year. The adoption of
this standard results in a change in the accounting policy for deferred
taxation, the effect of which is shown in note 5.
Group profit and loss account
for the year ended 30 April 2002
2002 2001
as restated
Notes £'000 £'000
Turnover 1 77,405 75,019
Continuing operations:
Group and share of joint venture 102,988 91,055
Less: group's share of joint venture (27,705) (19,074)
Group 75,283 71,981
Discontinued activities 2,122 3,038
77,405 75,019
Cost of sales (42,397) (38,502)
Gross profit 35,008 36,517
Administrative expenses (14,912) (12,048)
Operating profit 2 20,096 24,469
Continuing operations:
Existing activities 25,911 29,816
Goodwill amortisation (5,726) (5,334)
20,185 24,482
Discontinued activities (89) (13)
20,096 24,469
Share of operating profit in joint venture:
Before goodwill amortisation 3,546 1,955
Goodwill amortisation (1,365) (917)
2,181 1,038
Total operating profit 1 22,277 25,507
Before goodwill amortisation 29,368 31,758
Goodwill amortisation (7,091) (6,251)
Share of joint venture profit on disposal of fixed asset 1,021 -
Profit on disposal of operations 3 1,529 -
Profit on disposal of investment 13 9,646 -
Income from other fixed asset investments - 683
Profit on ordinary activities before interest 34,473 26,190
Net interest payable 4 (9,525) (10,854)
Profit on ordinary activities before taxation 24,948 15,336
Before goodwill amortisation and profit on disposal of investment 22,393 21,587
Goodwill amortisation and profit on disposal of investment 2,555 (6,251)
Taxation 5 (6,739) (6,152)
Profit on ordinary activities after taxation 18,209 9,184
Before goodwill amortisation and profit on disposal of investment 16,154 15,435
Goodwill amortisation and profit on disposal of investment 2,055 (6,251)
Dividends 6 (2,270) (2,237)
Retained profit for the year 15,939 6,947
Earnings per share 7
Basic 10.07p 5.24p
Basic before goodwill amortisation and profit on disposal of 8.93p 8.81p
investment
Diluted 10.01p 5.12p
Diluted before goodwill amortisation and profit on disposal of 8.88p 8.61p
investment
Dividends per share 1.252p 1.222p
Group balance sheet
at 30 April 2002
Group
2002 2001
as restated
Notes £'000 £'000
Fixed assets
Intangible assets 8 100,906 106,508
Tangible assets 9 250,965 214,416
Investments 10
IME joint venture 28,096 33,273
- share of gross assets 60,457 58,708
- share of gross liabilities (42,781) (41,567)
- share of net assets 17,676 17,141
- loans to joint venture 10,420 16,132
Own shares 14 222
Other 250 250
380,231 354,669
Current assets
Stocks 11 1,824 2,315
Development in progress 11 16,312 -
Assets held for resale - 5,231
Debtors 12 8,757 9,491
Investments 13 - 20,238
Cash at bank and in hand 4,093 8,465
30,986 45,740
Creditors: amounts falling due within one year 14 (54,796) (49,560)
Net current liabilities (23,810) (3,820)
Total assets less current liabilities 356,421 350,849
Creditors: amounts falling due after more than one year 15 (136,278) (148,199)
Provisions for liabilities and charges 16 (4,475) (3,345)
Net assets 215,668 199,305
Capital and reserves
Called up share capital 18,131 18,097
Share premium account 130,148 129,804
Other reserve 27,226 27,226
Profit and loss account 40,163 24,178
Equity shareholders' funds 215,668 199,305
Group cash flow statement
for the year ended 30 April 2002
2002 2001
Notes £'000 £'000
Cash flow from operating activities 20(a) 31,490 33,219
Returns on investments and servicing of finance 20(b) (6,854) (7,619)
UK corporation tax (5,061) (1,692)
Capital expenditure and financial investment (19,109) (28,007)
Proceeds from sale of investments 20(b) 30,155 36
Development on behalf of joint venture (15,688) -
Loans repaid by/(made to) joint venture 5,712 (1,929)
Capital expenditure 20(b) (39,288) (26,114)
Acquisitions and disposals 20(b) 2,452 (31,056)
Equity dividends paid (2,214) (2,162)
Cash inflow/(outflow) before financing 704 (37,317)
Financing
- issue of shares 340 3,259
- (decrease)/increase in debt and lease financing 20(b) (10,179) 39,268
(Decrease)/increase in cash in the year (9,135) 5,210
Reconciliation of net cash flow to movement in net debt
for the year ended 30 April 2002
2002 2001
Notes £'000 £'000
(Decrease)/increase in cash in the year (9,135) 5,210
Cash outflow/(inflow) from change in debt and lease financing 10,179 (39,268)
Change in net debt resulting from cash flows 1,044 (34,058)
Loans and finance leases divested/(acquired) with subsidiary 2,219 (6,141)
undertakings
Non-cash movements (63) (8,531)
Movement in net debt in the year 3,200 (48,730)
Net debt at 1 May 2001 (156,351) (107,621)
Net debt at 30 April 2002 20(c) (153,151) (156,351)
Statement of total recognised gains and losses
for the year ended 30 April 2002
2002 2001
as restated
£'000 £'000
Group profit for the year 17,764 10,251
Share of profit/(loss) in joint venture for the year 445 (1,067)
Profit for the year 18,209 9,184
Currency translation differences on foreign currency net investments 46 283
Total recognised gains and losses in the financial year 18,255 9,467
Prior year adjustment for deferred tax (note 5) (3,283) -
Total recognised gains and losses since last annual report 14,972 9,467
Reconciliation of movements in shareholders' funds
for the year ended 30 April 2002
2002 2001
as restated
£'000 £'000
Profit for the year 18,209 9,184
Other recognised gains and losses in the year 46 283
Shares issued net of expenses 378 15,872
Dividends (2,270) (2,237)
Net addition to shareholders' funds 16,363 23,102
Opening shareholders' funds as previously stated 202,588 177,656
Prior year adjustment for deferred tax (note 5) (3,283) (1,453)
Opening shareholders' funds as restated 199,305 176,203
Closing shareholders' funds 215,668 199,305
Notes to the preliminary announcement
1. Segmental analysis
Total
operating Operational
profit
Turnover Ebitda* net assets
2002 2001 2002 2001 2002 2001 2002 2001
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
By activity:
Continuing operations:
Personal storage 20,916 16,276 9,486 8,565 7,589 7,177 85,210 83,870
Serviced business space 53,575 51,360 20,904 22,324 18,160 20,098 248,736 220,944
Records management - - 5,122 3,026 3,546 1,955 28,096 33,273
Property disposals 792 4,345 - - 162 2,541 - 5,231
Goodwill amortisation - - - - (7,091) (6,251) - -
75,283 71,981 35,512 33,915 22,366 25,520 362,042 343,318
Discontinued operations:
Other 2,122 3,038 (84) (3) (89) (13) - 787
77,405 75,019 35,428 33,912 22,277 25,507 362,042 344,105
*Earnings before interest, taxes, depreciation and amortisation
Operational net assets are net assets excluding own shares, current and other
fixed asset investments, development in progress, cash, borrowings, current and
deferred tax and dividends payable.
Turnover all originated in the United Kingdom with the exception of £2.3 million
(2001: £1.7 million) which was supplied in other European countries. Turnover by
destination was as follows:
2002 2001
£'000 £'000
United Kingdom 75,143 73,361
Other Europe 2,262 1,658
77,405 75,019
Total operating profit before goodwill amortisation all arose in the United
Kingdom with the exception of losses of £0.7 million (2001: £0.9 million) which
were generated in other European countries.
Further analysis of total operating profit after goodwill amortisation is as
follows:
2002 2001
Dis- Dis-
Continuing continued Continuing continued
operations activities Total activities activities Total
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 75,283 2,122 77,405 71,981 3,038 75,019
Cost of sales (40,842) (1,555) (42,397) (36,400) (2,102) (38,502)
Gross profit 34,441 567 35,008 35,581 936 36,517
Administrative expenses (8,530) (656) (9,186) (5,765) (949) (6,714)
Goodwill amortisation (5,726) - (5,726) (5,334) - (5,334)
Operating profit 20,185 (89) 20,096 24,482 (13) 24,469
Share of IME operating profit:
Before goodwill amortisation 3,546 - 3,546 1,955 - 1,955
Goodwill amortisation (1,365) - (1,365) (917) - (917)
Total operating profit 22,366 (89) 22,277 25,520 (13) 25,507
2. Operating profit
Operating profit is stated after charging the following:
2002 2001
£'000 £'000
Goodwill amortisation 5,726 5,334
Depreciation - on owned assets 4,646 3,623
- on assets held under finance leases - 2
Operating lease rentals - land and buildings 10,437 9,865
- other 239 263
Auditors' remuneration - audit work 62 55
During the year, the group's auditors were paid £22,000 (2001: £32,000) for
services other than as auditors.
3. Profit on disposal of operations
The trade and assets of Homeware Brands were sold on 30 November 2001 at book
value. Its contribution to the group's results are shown under discontinued
activities in note 1. Imex Holland, which comprises two operating sites, was
sold on 4 January 2002 at a profit of £1.5 million. In the year to 30 April 2002
it contributed turnover of £0.4 million and operating profit of £0.1 million.
4. Net interest payable
2002 2001
£'000 £'000
On bank loans and overdrafts 8,472 11,280
On deferred acquisition loan notes 372 343
Other financing costs 4 24
Share of IME joint venture interest 1,916 2,033
Interest payable and similar charges 10,764 13,680
Bank and other interest receivable (370) (1,550)
Interest receivable from IME joint venture (869) (1,276)
Net interest payable 9,525 10,854
5. Taxation
FRS19 (Accounting for deferred tax) has been adopted with effect from 1 May
2000. FRS19 requires that deferred tax be recognised in respect of all timing
differences that have originated but not reversed by the balance sheet date. The
group's previous accounting policy in respect of deferred tax was only to
recognise deferred tax to the extent that a liability would crystallise. As a
result of the change of accounting policy a prior year adjustment of £3.3
million has been made. Comparative figures have been restated to take into
account the following:
2001
£'000
Profit for the year
Group tax charge increase 1,860
Share of IME joint venture tax charge reduction (30)
Reduction in reported profit for the financial year 1,830
Balance sheet
Group deferred tax provision increase 2,492
Share of IME joint venture net assets reduction 791
Reduction in shareholders' funds 3,283
5. Taxation continued
The tax charge for the year comprises:
2001
2002 as restated
£'000 £'000
Current tax
UK corporation tax at 30% 5,192 4,468
UK prior year (707) (248)
Total current tax 4,485 4,220
Deferred tax
Origination and reversal of timing differences 1,413 1,860
Group tax charge 5,898 6,080
Share of IME joint venture tax 841 72
Total tax charge 6,739 6,152
The UK current tax charge includes £0.5 million (2001: £nil) relating to the
profit on disposal of investment.
The total current tax charge for the year varied from the standard rate of
corporation tax in the UK for
the following reasons:
2001
2002 as restated
£'000 £'000
Profit on ordinary activities before taxation 24,948 15,336
Standard rate of UK corporation tax @ 30% 7,484 4,601
Effects of:
Deducting joint venture tax (charge)/credit at the standard rate (788) 299
Goodwill amortisation for which no tax relief is available 2,127 1,600
Capital losses crystallised (2,394) -
Capital allowances in excess of depreciation (1,253) (1,249)
Utilisation of tax losses (107) (565)
Other timing differences (53) (46)
Adjustments to tax charge in respect of prior periods (707) (248)
Unrelieved overseas trading losses 140 65
Other permanent differences 36 (237)
Actual total current tax charge 4,485 4,220
Future tax charges may be affected by the following factors:
(1) based on current capital investment plans the group expects to
continue to be able to claim capital allowances in excess of depreciation in
future years at a similar level to the current year.
(2) no provision has been made for potential liability to deferred
taxation of £5.8 million (2001: £6.2 million) which would arise in the event of
freehold and long leasehold properties being sold at their balance sheet value.
Such tax would become payable only if the property were sold without it being
possible to claim rollover relief. At present it is not envisaged that any tax
will become payable in the foreseeable future.
6. Dividends
2002 2001
£'000 £'000
Interim paid 0.402p per ordinary share (2001: 0.402p) 729 752
Final proposed 0.85p per ordinary share (2001: 0.82p) 1,541 1,485
2,270 2,237
7. Earnings per share
Basic earnings per share are calculated on profit after tax of £18.2 million
(2001: £9.2 million as restated), divided by 180.8 million ordinary shares
(2001: 175.1 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 181.9 million
(2001: 179.3 million). The weighted average number of shares used to calculate
earnings per share excludes shares held by the Quest (see note 10).
Basic earnings per share before goodwill amortisation and profit on disposal of
investment 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:
2002 2001
Profit Earnings Profit Earnings
after tax per share after tax per share
as restated as restated
£'000 p £'000 p
As for basic earnings per share 18,209 10.07 9,184 5.24
Goodwill amortisation 7,091 3.92 6,251 3.57
Profit on disposal of investment (after tax) (9,146) (5.06) - -
Basic earnings per share before goodwill
amortisation and profit on disposal of investment 16,154 8.93 15,435 8.81
Diluted earnings per share before goodwill amortisation and profit on disposal
of investment similarly reflects the above adjustments but uses the same
weighted average number of shares in issue as for diluted earnings per share.
8. Intangible assets
Goodwill
£'000
Cost
At 1 May 2001 114,491
Arising on acquisition 141
Exchange movements (17)
At 30 April 2002 114,615
Amortisation
At 1 May 2001 7,983
Charge for the year 5,726
At 30 April 2002 13,709
Net book value
At 30 April 2002 100,906
At 30 April 2001 106,508
9. Tangible assets
Plant,
equipment
Land and and
buildings vehicles Total
£'000 £'000 £'000
Cost
At 1 May 2001 215,359 25,119 240,478
Arising on acquisition - 14 14
Arising on disposal of operations (2,998) - (2,998)
Exchange movements (2) (3) (5)
Additions 34,517 5,729 40,246
Transfers from assets held for disposal 4,744 - 4,744
Disposals (819) (1,357) (2,176)
At 30 April 2002 250,801 29,502 280,303
Depreciation
At 1 May 2001 12,689 13,373 26,062
Arising on disposal of operations (1) - (1)
Charge for the year 2,606 2,040 4,646
Disposals (192) (1,177) (1,369)
At 30 April 2002 15,102 14,236 29,338
Net book value
At 30 April 2002 235,699 15,266 250,965
At 30 April 2001 202,670 11,746 214,416
Land and buildings at cost comprise:
2002 2001
£'000 £'000
Land 97,869 84,509
Freehold buildings 115,113 94,630
Long leasehold 20,632 20,015
Short leasehold 17,187 16,205
250,801 215,359
The net book value of the group's plant, equipment and vehicles includes £nil
(2001: £18,000) in respect of assets held under finance leases.
10. Investments
Own IME joint
Other shares venture
as restated
£'000 £'000 £'000
At 1 May 2001 250 222 33,273
Disposals - (208) -
Loans repaid by IME - - (5,712)
Share of profit retained by joint - - 445
venture
Exchange movements - - 90
At 30 April 2002 250 14 28,096
The group's other investment, which is held at cost, represents a 15% equity
interest amounting to £0.25 million in Citib@se plc, an unlisted company, which
operates in England in the provision of serviced office space.
The company operates a Qualifying Employee Share Ownership Trust ('Quest') which
holds shares issued by the company in relation to the group's employee share
save schemes. At 30 April 2002 the number of shares held by the Quest was
102,290 (2001: 434,136) and are included above at the price at which employees
can subscribe for the shares on exercise of their options. Dividends in respect
of these shares have been waived whilst being held by the Quest. During the year
the Quest disposed of 331,846 shares on exercise of employee share options.
The group's investment in its IME joint venture comprises its share of their net
assets of £17.7 million (2001: £17.1 million as restated) and loans of £10.4
million (2001: £16.1 million). Comparative figures for share of net assets have
been restated following the adoption of FRS19. Details are given in note 5.
The group's principal operating subsidiaries, all of which are wholly owned,
are:
Country of operation
Company Activity and registration
Abbey Storage Limited Personal storage UK
British Self Storage Limited Personal storage UK
Une Piece en Plus S.A. Personal storage France
Imex Spaces Limited Serviced business space UK
Inshops Centres Limited Serviced business space UK
Synex Network Services Limited Serviced business space UK
On 4 January 1999 Iron Mountain Europe Limited became a 49.9% owned joint
venture undertaking following the disposal of shares to Iron Mountain
Incorporated. The principal operating subsidiaries of the joint venture, all of
which are wholly owned and provide records and information management services
are:
Country of operation
Company and registration
Iron Mountain (UK) Limited UK
Datavault Limited UK
Archive Services Limited UK
Beverly Records Management Limited Eire
Memogarde S.A. France
Datavault S.A. Spain
Documentalia S.A. Spain
Iron Mountain Deutschland GmbH Germany
10. Investments continued
Further details of the group's share (49.9%) of the joint venture's net assets
as at 30 April 2002 and its share of profits for the year then ended are given
below:
2001
2002 as restated
£'000 £'000
Fixed assets 50,309 47,651
Current assets 10,148 11,057
Share of gross assets 60,457 58,708
Liabilities due within one year (19,551) (20,211)
Liabilities due after more than one year (23,230) (21,356)
Share of gross liabilities (42,781) (41,567)
Share of net assets 17,676 17,141
Share of net debt included in net assets above (13,044) (13,708)
The share of net debt disclosed above excludes loans due to the joint venture
partners.
2001
2002 as restated
£'000 £'000
Turnover 27,705 19,074
EBITDA 5,122 3,026
Profit/(loss) before tax 1,286 (995)
Taxation (841) (72)
Profit/(loss) after tax 445 (1,067)
During the year the group charged IME a management fee of £48,000 (2001:
£48,000), property rentals of £0.6 million (2001: £0.6 million), labour costs of
£nil (2001: £0.1 million) and had interest receivable of £0.9 million (2001:
£1.3 million). All transactions were undertaken on an arm's-length basis.
11. Stocks and development in progress
2002 2001
£'000 £'000
Stocks comprise:
Raw materials 111 150
Work in progress 1,678 1,594
Finished goods 35 571
1,824 2,315
The development in progress of £16.3 million comprises a new records management
facility for IME in South East London. This is now substantially complete and
will be sold to a third party at cost and leased back to IME on an arms length
basis.
12. Debtors
2002 2001
£'000 £'000
Trade debtors 3,290 3,072
Net investment in finance lease and hire purchase agreements 86 108
Other debtors 1,082 1,161
Prepayments and accrued income 4,299 5,150
8,757 9,491
Group debtors falling due after more than one year amounted to £0.1 million
(2001: £0.2 million).
13. Current asset investments
The group's 20% equity interest in Workspace Group PLC, a listed company which
operates in England in the provision of serviced business space, was sold on 21
May 2001.
14. Creditors: amounts falling due within one year
2002 2001
£'000 £'000
Bank loans and overdrafts 21,403 12,494
Deferred acquisition loan notes - 4,200
Obligations under finance leases - 8
Trade creditors 10,193 10,651
Social security and other taxes 1,300 811
Corporation tax 3,914 4,490
Other creditors 1,811 1,930
Accruals and deferred income 14,634 13,491
Proposed dividend 1,541 1,485
54,796 49,560
15. Creditors: amounts falling due after more than one year
2002 2001
£'000 £'000
Bank loans and overdrafts 131,798 144,071
Deferred acquisition loan notes 4,043 4,043
Borrowings 135,841 148,114
Other creditors 437 85
136,278 148,199
The above borrowings are repayable as follows:
2002 2001
£'000 £'000
Between one and two years 62,781 56,354
Between two and five years 71,671 37,112
After five years 1,389 54,648
135,841 148,114
The aggregate amount of all loans repayable by instalment, of which any
instalment is due for repayment after five years is £1.4 million (2001: £70.0
million). These were bank loans which were secured on certain property assets
of the group and attracted interest at LIBOR plus a margin of 1.0%.
16. Provisions for liabilities and charges
Charged
At 1 May to profit
2001 and loss Arising on Paid in Exchange At 30 April
as restated account disposal the year movements 2002
£'000 £'000 £'000 £'000 £'000 £'000
Pensions 161 100 - (130) - 131
Deferred tax 3,184 1,413 (249) - (4) 4,344
3,345 1,513 (249) (130) (4) 4,475
Following the adoption of FRS19 the group's deferred tax provision as at 30
April 2001 has been restated.
Full details are given in note 5.
The group's deferred tax provision comprises:
2001
2002 as restated
£'000 £'000
Accelerated capital allowances 6,668 5,664
Short-term timing differences (822) (871)
Losses (1,502) (1,609)
4,344 3,184
17. Commitments and contingent liabilities
(a) Operating lease commitments
The group was committed to make the following payments over the forthcoming 12
months in respect of operating leases which expire:
2002 2001
Land and Land and
buildings Other buildings Other
£'000 £'000 £'000 £'000
Within one year - 8 - 14
Between one and two years 80 17 - 83
Between two and five years 910 213 161 78
Over five years 9,870 - 9,809 -
10,860 238 9,970 175
(b) Contingent liabilities
The group had contingent liabilities on documentary credits amounting to £nil at
30 April 2002 (2002: £35,000).
18. Pensions
The group operates both defined benefit and defined contribution pension
schemes. The assets of the schemes are held in separate trustee administered
funds. The total pension cost for the group was £0.4 million (2001: £0.2
million) of which £0.1 million (2001: £16,000) related to defined benefit
schemes.
An actuarial valuation of the group's defined benefit scheme was carried out at
1 April 2000 by an independent actuary using the projected unit method. The
principal assumptions adopted were that investment returns would be 5% and that
investment returns would be equal to future salary increases and exceed pension
increases by 2%. At 1 April 2000 the market value of the scheme's assets were
£2.7 million, sufficient to cover 93% of accrued benefits after allowing for
expected future increases in earnings. As recommended by the actuary, employers'
contributions to the scheme recommenced on 1 April 2001 and are currently at the
rate of £130,000 per annum.
The company processes transactions and makes payments on behalf of the trustees
of the principal pension scheme. These items are recharged on an arm's-length
basis with the company making no gain or loss. At 30 April 2002 the pension
scheme owed the company £17,000 (2001: £49,000) in respect of transactions
processed but not yet recharged.
Additional discloures are given below regarding the group's defined benefit
scheme which are required under the transitional provisions of FRS17 -
Retirement Benefits. The disclosures relate to the first year of the
transitional provisions and provide information which will be necessary for full
implementation of FRS17 in the year ending
30 April 2004.
The actuarial valuation described above has been updated to 30 April 2002 by a
qualified actuary using revised assumptions that are consistent with the
requirements of FRS17. Scheme assets are stated at their market value
at 30 April 2002.
The key assumptions used for the actuarial valuation under FRS17 were:
Valuation method Projected unit
Discount rate 5.9%
Inflation rate 2.8%
Increase in LPI linked pensions in payment 2.8%
The fair value of the assets in the scheme, the present value of the scheme's
liabilities and the expected rate of return at the balance sheet date were:
% £'000
Equities and property 8.0 1,007
Bonds 5.5 1,169
Other 5.0 72
Total market value of scheme's assets 6.6 2,248
Present value of scheme's liabilities (2,615)
Net deficit in the scheme (367)
Related deferred tax asset 110
Net pension liability (257)
Had FRS17 been adopted and the above pension liability recorded in place of the
current provision of £0.1 million (note 16) less the related deferred tax asset
it would impact the balance sheet as follows:
Profit and
loss reserve Net assets
£'000 £'000
As currently reported 40,163 215,668
Increase in pension liability (net of deferred tax) (166) (166)
On FRS17 basis 39,997 215,502
19. Financial instruments
The major financial risks facing the group, treasury policy and the use of
financial instruments are discussed in the financial review. The group has taken
advantage of the exemption under FRS 13 to exclude short term debtors and
creditors from the following disclosures.
Currency and interest rate risk profile of financial assets and liabilities
After taking into account interest rate swaps the currency and interest rate
profile of the group's financial assets
and liabilities was:
Non-
Floating interest
Total rate bearing
Financial assets £'000 £'000 £'000
At 30 April 2002:
Sterling 14,932 14,668 264
Euro 15 15 -
14,947 14,683 264
At 30 April 2001:
Sterling 45,509 24,799 20,710
Financial assets comprise: cash £4.1 million (2001: £8.5 million), loans to
joint ventures £10.4 million (2001: £16.1 million), own shares £14,000 (2001:
£0.2 million), other fixed asset investments £0.3 million (2001: £0.3 million),
current asset investments £nil (2001: £20.2 million) and long-term debtors £0.1
million (2001: £0.2 million). Cash at bank and in hand bears interest at
prevailing market rates. Loans to the joint venture bears interest at rates
agreed between the joint venture partners and during the year ranged from 4.2%
to 8.0%. It is not possible to compute the weighted average period until
maturity for financial assets on which no interest is paid.
Weighted
Weighted average
Non- average period for
interest Floating Fixed fixed which rate
Total bearing rate rate rate fixed
Financial liabilities £'000 £'000 £'000 £'000 % Years
At 30 April 2002:
Sterling 156,875 577 146,298 10,000 7.05 0.56
Euro 946 - 946 -
157,821 577 147,244 10,000
At 30 April 2001:
Sterling 160,882 85 150,789 10,008 7.05 1.56
Euro 4,019 - 4,019 -
164,901 85 154,808 10,008
Financial liabilities comprise: borrowings £157.2 million (2001: £164.8 million)
and long term creditors £0.4 million (2001: £0.1 million). The weighted average
period until maturity for financial liabilities on which no interest is paid is
8 years (2001: 1 year). Floating rate liabilities bear interest based on LIBOR
with the exception of £75 million which is subject to an interest rate collar
which caps LIBOR at 7.26%, has a floor of 5.50% and which expires in May 2004.
19. Financial instruments continued
Maturity of financial liabilities
The maturity of financial liabilities was as follows:
2002 2001
Total Borrowings Other Total Borrowings Other
£'000 £'000 £'000 £'000 £'000 £'000
Within one year 21,543 21,403 140 16,702 16,702 -
Between one and two years 62,836 62,781 55 56,439 56,354 85
Between two and five years 71,836 71,671 165 37,112 37,112 -
After five years 1,606 1,389 217 54,648 54,648 -
157,821 157,244 577 164,901 164,816 85
Other financial liabilities comprise indirect taxation and government grants.
Fair values of financial assets and liabilities
The book values and estimated fair values of financial assets and liabilities
was as follows:
2002 2001
Book value Fair value Book value Fair value
£'000 £'000 £'000 £'000
Other fixed asset investments 250 250 250 250
Financial assets excluding other fixed asset investments 14,697 14,697 45,259 54,959
Borrowings (157,244) (157,244) (164,816) (164,816)
Interest rate swaps - (866) - (281)
Other financial liabilities (577) (577) (85) (85)
Other matters
At 30 April 2002 the group did not have outstanding any forward currency
contracts or any undrawn amounts under its committed banking facilities.
Currency gains and losses taken through the profit and loss account during the
year were immaterial.
20. Cash flow statement
a) Reconciliation of operating profit to cash flow from
operating activities
2002 2001
£'000 £'000
Operating profit 20,096 24,469
Goodwill amortisation 5,726 5,334
Depreciation charge 4,646 3,625
Loss/(profit) on sale of tangible fixed assets 21 (612)
Decrease in stocks and assets held for resale 320 928
Decrease/(increase) in debtors 613 (235)
Increase/(decrease) in creditors 98 (306)
(Decrease)/increase in provisions for liabilities and charges (30) 16
Net cash inflow from operating activities 31,490 33,219
b) Analysis of cash flows for headings netted in cash flow
statement
2002 2001
£'000 £'000
Returns on investments and servicing of finance
Dividends received from other fixed asset investments - 683
Interest received 370 1,550
Interest paid (7,224) (9,852)
Net cash outflow for returns on investments and servicing of (6,854) (7,619)
finance
Proceeds from sale of investments
Workspace Group PLC 29,947 -
Own shares 208 36
Net cash inflow for sale of investments 30,155 36
Capital expenditure
Purchase of tangible fixed assets (40,074) (28,734)
Sale of tangible fixed assets 786 2,620
Net cash outflow for capital expenditure (39,288) (26,114)
Acquisitions and disposals
Acquisitions (note 20d) (38) (28,199)
Cash at bank/(bank overdrafts) acquired with acquisitions 3 (2,857)
Sale of Homeware Brands (note 20e) 658 -
Sale of Imex Holland (note 20e) 1,829 -
Net cash inflow/(outflow) for acquisitions and disposals 2,452 (31,056)
Financing
Debt due within one year - increase in borrowings 4,134 7,790
Debt due beyond one year - increase in borrowings 7,191 32,205
Debt due within one year - repayment of borrowings (4,200) (676)
Debt due beyond one year - repayment of borrowings (17,296) -
Capital element of finance lease rental payments (8) (51)
Net cash (outflow)/inflow from financing (10,179) 39,268
20. Cash flow statement continued
c) Analysis of changes in net debt
Other
At 1 May non-cash At 30
April
2001 Cash Disposals movements 2002
flow
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 8,465 (4,372) - - 4,093
Overdrafts (4,313) (4,763) - - (9,076)
4,152 (9,135) - - (4,983)
Debt due within one year (12,381) 66 127 (139) (12,327)
Debt due after one year (148,114) 10,105 2,092 76 (135,841)
Finance leases (8) 8 - - -
(160,503) 10,179 2,219 (63) (148,168)
Total net debt (156,351) 1,044 2,219 (63) (153,151)
Other non-cash movements relate to loan amortisation costs written off during
the year and foreign exchange differences.
d) Acquisitions
2002 2001
£'000 £'000
Cash consideration and acquisition costs paid 38 26,648
Shareholder loans repaid on acquisition - 1,551
38 28,199
e) Sale of Homeware Brands and Imex Holland
Homeware Imex
Brands Holland
£'000 £'000
Net assets disposed of:
Tangible fixed assets - 2,997
Stocks 658 -
Debtors - 245
Bank loans - (2,219)
Other creditors - (474)
Deferred tax - (249)
658 300
Profit on disposal - 1,529
658 1,829
Satisfied by:
Cash proceeds received (net of costs) 658 1,829
21. Financial statements and annual general meeting
This preliminary statement, which has been agreed with the auditors was approved
by the Board on 2 July 2002. It is not the company's statutory accounts.
Statutory accounts will be sent to shareholders in due course.
The statutory accounts for the year ended 30 April 2001 have been delivered to
the Registrar of Companies and received an audit report which was unqualified
and did not contain statements under s237(2) or (3) of the Companies Act 1985.
The statutory accounts for the year ended 30 April 2002 have not yet been
approved, audited or filed.
The annual general meeting will be held on 4 September 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
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