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Big Yellow Group PLC

Big Yellow Group PLC. Big Yellow IFRS 2005 Restatement September 2005. Big Yellow and IFRS. Overview Key changes IFRS & UK GAAP Year ended 31 March 2005 restatement impact Performance measures. Overview. First time adoption is for the year ended 31 March 2006 Interims 2005 under IFRS

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Big Yellow Group PLC

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  1. Big Yellow Group PLC Big Yellow IFRS 2005 Restatement September 2005 1

  2. Big Yellow and IFRS • Overview • Key changes • IFRS & UK GAAP • Year ended 31 March 2005 restatement impact • Performance measures 2

  3. Overview • First time adoption is for the year ended 31 March 2006 • Interims 2005 under IFRS • No changes to cash-flow, banking covenants unaffected • Income statement • Profit re-defined • 2005 profit before tax increased by £38.7m • Balance Sheet • Big Yellow centres are investment properties and revalued at fair value • Full provision for deferred tax • Net assets up by £100.5m 3

  4. Key Changes • Property classification • Leaseholds • Deferred tax • Fair valuation of debt • Share based payments • Final dividend accounted for on cash basis • Goodwill – annual impairment review 4

  5. Investment Properties IAS 40 • Summary Definition • Property held by owner to earn rentals or for capital appreciation or both rather than for the supply of goods or services or for administration purpose; or for sale in ordinary course of business • Ancillary services to occupants of property must be minor in relation to arrangements as a whole • Self Storage Centres • All customers sign rental agreements for their specific unit and can stay for a minimum period or for as long as they like • The customer rental agreements qualify as operating leases • Customers have a lock on their unit and can come and go as they please • Packing material sales and services such as forklift etc. are 5-6% of turnover • Centres are held for capital appreciation • Defined real estate class with accepted valuation methodology • Conclusion • Big Yellow self storage centres are investment properties under IAS 40 5

  6. Property Accounting • Before • Open storage centres held at cost and depreciated • Properties in course of development held at cost • Surplus land for sale held in properties in course of development • No capitalisation of interest • IFRS • Open storage centres held at fair value and valuation changes through income statement • Property assets integral to the self storage centres no longer depreciated and restated for year ended 31 March 2005 but not previous years • Properties in course of development held at cost until open • Surplus land held for sale classified as non-current assets held for sale • No capitalisation of interest • 2005 Impact • Profit before tax increased by £38.7m for the year ended 31 March 2005, reflecting the revaluation uplift in the year and adjustment to depreciation 6

  7. Finance & Operating Leases • Properties held leasehold • 9 centres – average unexpired terms 21 years at 31 March 2005 • No intention for property to be sold to tenant (Big Yellow) by landlord • Valuation risk remains with landlords • Market value of properties greater than finance lease receivable • Repair and insurance obligation with Big Yellow • Accounting Treatment • Under IAS 17 these leases would be operating leases • However, properties to be treated as investment properties under IAS 40 and therefore accounted for as finance leases and fair valued • Customer rental agreements • Reviewed under IAS 17 and confirmed as operating leases 7

  8. Deferred Tax Liability • UK GAAP • Deferred tax on investment properties held at valuation disclosed but not on balance sheet • IFRS • Full provision for deferred tax on balance sheet changes in deferred tax go through income statement comprising of three elements. • Deferred tax liability on revaluation of investment properties £40.2m • Deferred tax liability on capital allowances arising from depreciation adjustment £0.6m • Deferred tax asset on IFRS deduction for share options £2.1m • Financial impact • Net assets at 31 March 2005 reduced by £38.7m 8

  9. Financial Instruments • UK GAAP • Debt in balance sheet at amortised cost • Interest rate swaps in balance sheet at book value • Fair value adjustment disclosed • IFRS • Debt in balance sheet at amortised cost • Interest rate swaps held at fair value in balance sheet • Changes in values go through income statement • Hedge accounting for interest swaps not adopted • No embedded derivatives requiring valuation • 2005 Impact • Profit before tax increased by £0.1m 9

  10. Share Based Payments • Post November 2002 share options • Valued using Black-Scholes model • Volatility • 2005 impact – profit before tax down by £0.1m 10

  11. Profit Before Tax - 2005 11

  12. Profit After Tax - 2005 12

  13. Total Assets – 31 March 2005 13

  14. Total Liabilities – 31 March 2005 14

  15. Equity – 31 March 2005 15

  16. Adjusted Earnings Per Share – 31 March 2005 16

  17. Adjusted Earnings Per Share – 31 March 2005 17

  18. Adjusted Net Assets per Share – 31 March 2005 18

  19. Adjusted Net Assets per Share – 31 March 2005 19

  20. Key Performance Measures 20

  21. Summary • Year ended 31 March 2006 under IFRS • Self storage centres revalued on balance sheet • Enhanced reported earnings, no change in cash-flow • But more volatile • Business as usual 21

  22. Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond Big Yellow's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company Operates or in economic technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Big Yellow does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. Information contained in this presentation relating to the Company or its share price, or the yield on its shares, should not be relied upon as a guide to future performance. 22

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