Birkby plc

Citation

Temple, P. (1998), "Birkby plc", Journal of Property Valuation and Investment, Vol. 16 No. 1. https://doi.org/10.1108/jpvi.1998.11216aad.001

Birkby plc

Birkby plc

Accounts for Year to 31 March 1997

Last year was one of big changes for Birkby, chiefly because of its successful acquisition of British Coal Enterprise, the property redevelopment arm of British Coal. This resulted in a doubling in the number of managed workspace centres being operated by the group and underlined its position as a key provider of managed commercial property to small and medium sized businesses in the UK.

At the balance sheet date the company operated from 161 locations and provided 5.4m sq. ft of space to 4,000 customers on an "easy-in, easy-out" licensee basis. Income from this source amounts to £32.4m and accounts for the majority of income generated from managed workspace and managed retailspace activities.

In addition to the property acquisition, Birkby also began to exit from its involvement in discount food retailing. It sold part of its investment in Milbank Foods in March 1997 (just before the year-end) and the remainder after the balance sheet date. Provision for the loss on disposal was fully accounted for in the accounts for the year under review.

The business was sold to an existing user of Birkby space and contracts have been signed to cover the ongoing retention of the units sold as licensees. Of the non-property related activities, only the instalment credit operation of Manor Credit remains. A stake in Hill Hire (a plant hire business) was also sold in the course of the year, generating an exceptional profit of £0.7m.

Of more interest, however, is how the group proposes to expand its property activities in the future via what are described as complementary acquisitions. Gearing at the year-end was 45 per cent, after net assets increased by some 19 per cent to £64.3m (a revaluation netted an additional surplus of £3m). Net borrowings of £29m include around £8m from Manor Credit, which should arguably be set on one side when considering the underlying financial position of the main activity. Management considers gearing of around 70 per cent a reasonable level for a group of this type, and steps have been taken to put in place additional credit lines that will enable a ratio of this level to be reached.

In the workspace area, Birkby achieved pro-forma profits of £5.5m for the year compared to £3.2m the year before, with the former British Coal properties representing about a quarter of revenue. The workspace division now operates 102 centres with a total of 4.4m sq. ft of which the BCE business represents 1.5m sq. ft in 50 centres. Occupancy is currently around 76 per cent on a current cash equivalent basis.

Several of the BCE sites have seen substantial increases in occupancy since becoming part of the group and benefiting from proven management techniques. Other centres were added in the course of the year, notably Black Rock Mills, a 15 acre property in Huddersfield, now successfully converted and currently 45 per cent let. Five centres were acquired from Sheffield District Council for £1.7m to fill a gap in the Yorkshire portfolio.

Retail space has been slower to let and although occupancy levels are similar to the workspace division, this has only been achieved by discounting rents. The portfolio currently comprises 59 centres providing 1m sq. ft of space through 3,300 retail units. Annual income is in the region of £19m and profits about £3m.