Final Results - Part 2

Mentmore Abbey Plc 3 July 2001 PART 2 Notes to the preliminary announcement 1. Segmental analysis Total Operational Turnover operating profit net assets 2001 2000 2001 2000 2001 2000 £'000 £'000 £'000 £'000 £'000 £'000 By activity: Continuing operations: Personal storage 16,276 10,625 7,177 5,126 49,806 26,622 Serviced business space 51,360 31,741 20,098 11,461 220,944 211,799 Records management - - 1,955 2,398 34,064 20,056 Property disposals 4,345 1,390 2,541 956 5,231 6,875 Other 3,038 3,181 (13) (207) 787 1,024 Goodwill amortisation - - (6,251) (3,049) - - Exceptional costs - - - (990) - - 75,019 46,937 25,507 15,695 310,832 266,376 Discontinued operations: Serviced business space - 860 - 617 - - Other - 991 - (97) - - 75,019 48,788 25,507 16,215 310,832 266,376 Operational net assets are net assets excluding investments, cash, borrowings, current and deferred tax and dividends payable. The segment categories have been expanded from that previously reported to separately identify the financial effect of the group's management of its property assets (Property disposals) which was previously amalgamated within serviced business space. Comparative figures have been adjusted accordingly. Turnover all originated in the United Kingdom with the exception of £1.7 million (2000: £0.4 million) which is supplied in other European countries. Turnover by destination was as follows: 2001 2000 £'000 £'000 United Kingdom 73,361 48,377 Other Europe 1,658 411 75,019 48,788 Total operating profit before goodwill amortisation all arose in the United Kingdom with the exception of £0.9 million (2000: £0.9 million) which was generated in other European countries. Further analysis of total operating profit after goodwill amortisation and exceptionals is as follows: 2001 2000 Continuing Dis- operations Continuing continued Existing Total operations operations Total Acquisitions £'000 £'000 £'000 £'000 £'000 £'000 Turnover 70,588 4,431 75,019 46,937 1,851 48,788 Cost of sales (36,881) (1,621)(38,502) (23,582) (601) (24,183) Gross profit 33,707 2,810 36,517 23,355 1,250 24,605 Administrative expenses (5,179) (1,535) (6,714) (6,019) (730) (6,749) Goodwill amortisation (3,907) (1,427) (5,334) (2,647) - (2,647) Exceptional costs - - - (990) - (990) Operating profit 24,621 (152) 24,469 13,699 520 14,219 Share of IME operating profit: Before goodwill 1,367 588 1,955 2,398 - 2,398 amortisation Goodwill amortisation (670) (247) (917) (402) - (402) Total operating profit 25,318 189 25,507 15,695 520 16,215 2. Operating profit Operating profit is stated after charging the following: 2001 2000 £'000 £'000 Goodwill amortisation 5,334 2,647 Depreciation - on owned assets 3,623 2,306 - on assets held under finance leases 2 6 Operating lease rentals - land and buildings 9,865 6,227 - other 263 91 Auditors' remuneration - audit work 55 55 During the year, the group's auditors were paid £32,000 (2000: £200,000) for services other than as auditors. Exceptional charges against operating profit in the prior year 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 £'000 Manor Credit (547) Britannia Storage Systems (20) Platignum Stationery 100 (467) The loss of £0.5m shown above for Manor Credit was wholly offset by corporation tax credits arising as a result of the disposal. It included £0.9 million of goodwill written back on disposal. 4. Net interest payable 2001 2000 £'000 £'000 On bank loans and overdrafts 11,623 5,209 Other financing costs 24 50 Share of IME joint venture interest 2,033 978 Interest payable and similar charges 13,680 6,237 Bank and other interest receivable (1,550) (1,014) Interest receivable from IME joint venture (1,276) (469) Net interest payable 10,854 4,754 5. Taxation on profit on ordinary activities 2001 2000 £'000 £'000 UK corporation tax at 30% (2000: 30%) 4,220 1,503 Deferred tax - 443 Share of IME joint venture tax 102 390 4,322 2,336 Certain subsidiaries of the group have unrelieved tax losses to carry forward against future trading profits. The exceptional costs incurred in 2000 gave rise to a tax credit of £0.8 million. 6. Dividends The directors recommend a final dividend of 0.82p per ordinary share (2000: 0.82p) to be paid on 2 October 2001 to shareholders on the register on 7 September 2001. An interim dividend of 0.402p per ordinary share (2000: 0.402p) was paid on 6 April 2001. This, together with the recommended final dividend makes a total for the year of 1.222p per ordinary share (2000: 1.222p). 7. Earnings per share Basic earnings per share are calculated on profit after tax of £11.0 million (2000: £8.8 million), divided by 175.1 million ordinary shares (2000: 142.7 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 179.3 million (2000: 145.5 million). The weighted average number of shares used to calculate earnings per share excludes shares held by the Quest (see note 12). 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: 2001 2000 Profit Earnings Profit Earnings after per after per tax share tax share £'000 p £'000 p As for basic earnings per share 11,014 6.29 8,848 6.20 Goodwill amortisation 6,251 3.57 3,049 2.14 Exceptional items (after tax) - - 618 0.43 Basic earnings per share before goodwill amortisation and exceptionals 17,265 9.86 12,515 8.77 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. 8. Intangible assets Goodwill £'000 Cost At 1 May 2000 78,652 Arising on acquisitions 35,695 Exchange movements 144 At 30 April 2001 114,491 Amortisation At 1 May 2000 2,647 Charge for the year 5,334 Exchange movements 2 At 30 April 2001 7,983 Net book value At 30 April 2001 106,508 At 30 April 2000 76,005 9. Tangible assets Plant, equipment Land and and buildings vehicles Total £'000 £'000 £'000 Cost At 1 May 2000 182,660 19,383 202,043 Arising on acquisition 8,496 3,239 11,735 Exchange movements 287 - 287 Additions 25,796 3,038 28,834 Disposals (1,910) (511) (2,421) Reclassification 30 (30) - At 30 April 2001 215,359 25,119 240,478 Depreciation At 1 May 2000 10,581 11,957 22,538 Arising on acquisition 34 278 312 Charge for the year 2,119 1,506 3,625 Disposals (45) (368) (413) At 30 April 2001 12,689 13,373 26,062 Net book value At 30 April 2001 202,670 11,746 214,416 At 30 April 2000 172,079 7,426 179,505 Land and buildings at cost comprise: 2001 2000 £'000 £'000 Land 84,509 67,647 Freehold buildings 94,630 81,794 Long leasehold 20,015 18,638 Short leasehold 16,205 14,581 215,359 182,660 The net book value of the group's plant, equipment and vehicles includes £ 18,000 (2000: £20,000) in respect of assets held under finance leases. 10. Investments Own IME joint Other shares venture £'000 £'000 £'000 At 1 May 2000 20,488 258 20,056 Additions - - 12,323 Disposals - (36) - Transfer (to)/from current assets (20,238) - 691 Loans made to IME - - 1,929 Share of loss retained by joint venture - - (1,097) Exchange movements - - 162 At 30 April 2001 250 222 34,064 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 2001 the number of shares held by the Quest was 434,136 (2000: 520,032) 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 86,267 shares on exercise of employee share options. The group's investment in its IME joint venture comprises its share of their net assets of £17.9 million (2000: £6.5 million) and loans of £16.1 million (2000: £13.5 million). The addition of £12.3 million represents new shares issued to the company by IME in December 2000 as a consequence of their acquisition of Datavault. New shares in the company were issued as consideration for their shares and these were placed by IME for cash. 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 Imex Holland B.V. Serviced business space Holland Inshops Centres Limited Serviced business space UK Synex Network Services Limited Serviced business space UK Homeware Brands Limited Other 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: Company Country of operation and registration Iron Mountain (UK) Limited UK Datavault Limited UK Archive Services Limited UK Beverley Records Management Limited Eire Memogarde S.A. France Datavault S.A. Spain Documentalia S.A. Spain Boston Data S.A. Spain Secur'Archiv Aktenmanagement GmbH Germany Further details of the group's share (49.9%) of the joint venture's net assets as at 30 April 2001 and its share of profits for the year then ended are given below: 2001 2000 £'000 £'000 Fixed assets 47,651 28,269 Current assets 11,057 5,191 Share of gross assets 58,708 33,460 Liabilities due within one year (20,211) (4,325) Liabilities due after more than one year (20,565) (22,591) Share of gross liabilities (40,776) (26,916) Share of net assets 17,932 6,544 Share of net debt included in net assets above (13,708) (8,478) The share of net debt disclosed above excludes loans due to the joint venture partners. 2001 2000 £'000 £'000 Turnover 19,074 13,338 EBITDA 3,026 3,124 Profit/(loss) before tax (995) 1,018 Taxation (102) (390) Profit/(loss) after tax (1,097) 628 During the year the group charged IME a management fee of £48,000 (2000: £ 48,000), property rentals of £0.6 million (2000: £0.6 million), labour costs of £0.1 million (2000: £0.1 million) and had interest receivable of £1.3 million (2000: £0.5 million). All transactions were undertaken on an arm's-length basis. 11. Stocks and assets held for resale 2001 2000 £'000 £'000 Stocks comprise: Raw materials 150 16 Work in progress 1,594 1,248 Finished goods 571 551 2,315 1,815 Assets held for resale of £5.2 million (2000: £6.9 million) are surplus properties awaiting disposal. 12. Debtors 2001 2000 £'000 £'000 Trade debtors 3,072 2,555 Amounts owed by subsidiary undertakings - - Amounts owed by IME joint venture - 691 Net investment in finance lease and hire purchase agreements 108 128 Other debtors 1,161 842 Prepayments and accrued income 5,150 4,547 9,491 8,763 Group debtors falling due after more than one year amounted to £0.2 million (2000: £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 transferred from fixed to current asset investments during the year at its cost to the group of £20.2 million. This investment was sold on 21 May 2001 for approximately £30.0 million (after taking into account costs). 14. Creditors: amounts falling due within one year 2001 2000 £'000 £'000 Bank loans and overdrafts 12,494 1,800 Deferred acquisition loan notes 4,200 - Obligations under finance leases 8 17 Trade creditors 10,651 8,767 Amounts owed to subsidiary undertakings - - Social security and other taxes 811 1,155 Corporation tax 4,490 1,873 Other creditors 1,930 1,120 Accruals and deferred income 13,491 13,151 Proposed dividend 1,485 1,410 49,560 29,293 15. Creditors: amounts falling due after more than one year 2001 2000 £'000 £'000 Bank loans and overdrafts 144,071 106,417 Deferred acquisition loan notes 4,043 - Obligations under finance leases - 2 Borrowings 148,114 106,419 Other creditors 85 170 148,199 106,589 The above borrowings are repayable as follows: 2001 2000 £'000 £'000 Between one and two years 56,354 11,657 Between two and five years 37,112 34,966 After five years 54,648 59,796 148,114 106,419 Included above, for the group, are obligations under finance leases of which £ nil is repayable between one and two years (2000: £2,000). The aggregate amount of all loans repayable by instalment, of which any instalment is due for repayment after five years is £70.0 million (2000: £ 70.0). These were bank loans which were secured on certain property assets of the group and attracted interest at LIBOR plus a margin of 0.75%. 16. Provisions for liabilities and charges Charged to profit At 1 May and loss Exchange At 30 April 2000 account movements 2001 £'000 £'000 £'000 £'000 Pensions 145 16 - 161 Deferred tax 697 - (5) 692 842 16 (5) 853 The group's potential liability to deferred tax and the amounts provided are as follows: Potential liability Amounts provided 2001 2000 2001 2000 £'000 £'000 £'000 £'000 Accelerated capital allowances 1,230 533 692 254 Short-term timing differences (208) (118) - 150 Other - 293 - 293 1,022 708 692 697 There is further potential liability to deferred taxation of £9.1 million (2000: £8.6 million) which would arise in the event of freehold and long leasehold premises being sold at their balance sheet values. This comprises an amount of £6.2 million (2000: £6.2 million) on the realised gain over original cost together with £2.9 million (2000: £2.4 million) on the clawback of industrial building allowances. It is currently intended that all of the group's premises will be retained on a long-term basis and that any chargeable gain which might arise on any sale would be covered by rollover relief. 17. Acquisitions During the year the group acquired British Self Storage Limited, Une Piece en Plus S.A. and Synex Network Services Limited. Goodwill on acquisition arose as follows: Book value Conformity of Provisional prior to accounting fair value of assets acquisition policies acquired £'000 £'000 £'000 Fair value of assets acquired Tangible fixed assets 11,442 (19) 11,423 Stocks 35 - 35 Debtors 1,101 (33) 1,068 Borrowings (net) (8,984) (14) (8,998) Other creditors (3,670) (155) (3, 825) (76) (221) (297) Fair value of consideration Issue of new ordinary shares 290 Deferred acquisition loan notes 8,243 Deferred consideration 100 recognised Cash and expenses of acquisition 26,765 35,398 Goodwill arising on acquisition 35,695 In accordance with FRS6 the group has disclosed the fair value of the assets acquired as provisional. The impact of the acquisitions on the results of the group to 30 April 2001 can be seen in the segmental analysis in note 1 to the preliminary statement. 18. Financial instruments The major financial risks facing the group, treasury policy and the use of financial instruments are discussed in the financial review contained within the preliminary statement. 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 2001: Sterling 45,509 24,799 20,710 At 30 April 2000: Sterling 35,015 14,269 20,746 Euro 89 89 - 35,104 14,358 20,746 Financial assets comprise: cash £8.5 million (2000: £0.6 million), loans to joint ventures £16.1 million (2000: £13.5 million), own shares £0.2 million (2000: £0.3 million), other fixed asset investments £0.3 million (2000: £20.5 million), current asset investments £20.2 million (2000: nil) and long-term debtors £0.2 million (2000: £0.2 million). 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 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 At 30 April 2000: Sterling 106,053 170 95,864 10,019 7.05 2.56 Euro 2,353 - 2,353 - 108,406 170 98,217 10,019 Financial liabilities comprise: borrowings £164.8 million (2000: £108.2 million) and long-term creditors £0.1 million (2000: £0.2 million). The weighted average period until maturity for financial liabilities on which no interest is paid is 1 year (2000: 1.5 years). Floating rate liabilities bear interest based on LIBOR. 18. Financial instruments continued Maturity of financial liabilities The maturity of financial liabilities was as follows: 2001 2000 Total Borrowings Other Total Borrowings Other £'000 £'000 £'000 £'000 £'000 £'000 Within one year 16,702 16,702 - 1,817 1,817 - Between one and two years 56,439 56,354 85 11,827 11,657 170 Between two and five years 37,112 37,112 - 34,966 34,966 - After five years 54,648 54,648 - 59,796 59,796 - 164,901 164,816 85 108,406 108,236 170 Other financial liabilities comprise government grants. Fair values of financial assets and liabilities The book values and estimated fair values of financial assets and liabilities was as follows: 2001 2000 Book Fair Book Fair value value value value £'000 £'000 £'000 £'000 Other fixed asset investments 250 250 20,488 26,358 Financial assets excluding other fixed 45,259 54,959 14,616 14,616 asset investments Borrowings (164,816)(164,816)(108,236)(108,236) Interest rate swaps - (281) - (346) Other financial liabilities (85) (85) (170) (170) Other matters At 30 April 2001 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. 19. Cash flow statement a) Reconciliation of operating profit to cash flow from operating activities 2001 2000 £'000 £'000 Operating profit 24,469 14,219 Goodwill amortisation 5,334 2,647 Depreciation charge 3,625 2,312 (Profit)/loss on sale of tangible fixed assets (612) 11 Decrease in stocks and assets held for resale 928 5,384 Increase in debtors (235) (749) Decrease in creditors (306) (44) Increase in provisions for liabilities and charges 16 12 Net cash inflow from operating activities 33,219 23,792 b) Analysis of cash flows for headings netted in cash flow statement 2001 2000 £'000 £'000 Returns on investments and servicing of finance Dividends received from other fixed asset investments 683 190 Interest paid (net) (8,302) (2,836) Net cash outflow for returns on investments and servicing of (7,619) (2,646) finance Capital expenditure Purchase of tangible fixed assets (28,734) (24,091) Sale of tangible fixed assets 2,656 457 Net cash outflow for capital expenditure (26,078) (23,634) Acquisitions and disposals Acquisitions (Note 19d) (28,199) (50,291) Bank overdrafts acquired with acquisitions (2,857) (28,601) Sale of Manor Credit - 9,748 Sale of 50.1% of IME - (70) Net overdrafts transferred on sale of subsidiaries - 289 Sale of other subsidiaries - 80 Net cash outflow for acquisitions and disposals (31,056) (68,845) Financing Debt due within one year - increase in borrowings 7,790 - Debt due beyond one year - increase in borrowings 32,205 75,227 Debt due within one year - repayment of borrowings (676) (1,500) Capital element of finance lease rental payments (51) (5) Net cash inflow from financing 39,268 73,722 19. Cash flow statement continued c) Analysis of changes in net debt Other At 30 April At 1 May non-cash 2000 Cash flow Acquisitions movements 2001 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 615 7,850 - - 8,465 Overdrafts (1,673) (2,640) - - (4,313) (1,058) 5,210 - - 4,152 Loans due within one (127) (7,114) (791) (4,349) (12,381) year Loans due after one year (106,417) (32,205) (5,310) (4,182) (148,114) Finance leases (19) 51 (40) - (8) (106,563) (39,268) (6,141) (8,531) (160,503) Total net debt (107,621) (34,058) (6,141) (8,531) (156,351) Other non-cash movements includes £8.2 million of deferred acquisition loan notes issued on the acquisition of British Self Storage. The balance relates to loan amortisation costs written off during the year and foreign exchange differences. d) Acquisitions 2001 2000 £'000 £'000 Cash consideration and acquisition costs paid 26,648 47,155 Shareholder loans repaid on acquisition 1,551 - Share issue costs paid - 3,136 28,199 50,291 Acquisitions contributed £2.9 million to the group's net operating cash flows, paid £0.5 million in respect of net returns on investments and servicing of finance and utilised a net £1.4 million for capital expenditure. 20. Statutory accounts The above financial information is extracted from the company's statutory accounts for the two years ended 30 April 2001. The accounts for the year ended 30 April 2000 have been filed and those for the year ended 30 April 2001 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. 21. 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 5 September 2001.

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