REG - Lok'nStore Group - Interim Results
22/04/2024 07:00
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RNS Number : 3863L Lok'nStore Group PLC 22 April 2024
LOK'NSTORE GROUP PLC
("Lok'nStore" or "the Group")
Lok'nStore Group Plc, the AIM quoted self-storage company announces interim
results for the six months to 31 January 2024
Revenue
Headline
ü Group Revenue £14.17 million up 4.3% (31.01.2023: £13.58 million)
ü Headline Self Storage Revenue up 4.9% to £13.33 million (31.01.2023:
£12.70 million)
ü Group Adjusted EBITDA(1) £7.65 million down 3.6% (31.01.2023: £7.93
million)
Same Store(14)
ü Same Store Group Revenue(15) £13.93 million up 2.6% (31.01.2023: £13.58
million)
ü Same Store Self Storage Revenue(15) £13.09 million up 3.1% (31.01.2023:
£12.70 million)
ü Same Store Group Adjusted EBITDA(1) £7.86 million down 0.9% (31.01.2023:
£7.93 million)
This Same Store analysis and all other Alternative Performance Measures
(APM's) denoted by superscripts are explained in the key performance
indicators (KPIs) definitions below.
Operating Metrics
ü Pricing up 4.0% (31.01.2023: 9.2%) to £27.37 per sq. ft (31.01.2023:
£26.45 per sq. ft)
ü Occupied unit space down by 2.9% to 22,639 sq. ft to 862,554 sq. ft
ü Same Store stores(15) EBITDA margins 58.9% (31.01.2023: 60.3%)
Banking, net debt and liquidity
ü £10.0 million out of total debt of £43.7 million fixed at all-in cost of
5.2% at 31 January 2024
ü £15.0 million cash at period-end (31.07.2023: £42.1 million) (31.01.2023:
£40.3 million)
ü Net debt (excluding lease liabilities and deferred finance costs) £28.8
million (31.07.2023: £12.3 million) (31.01.2023: £26.5 million)
ü Loan to Value ratio(6) (net of cash) 8.3% (31.07.2023: 3.7%) (31.01.2023:
8.9%)
NAV per share
ü Adjusted Net Asset Value(5) per share up 0.1% to £9.87 per share
(31.07.2023: £9.86 per share)
(31.01.2023: £9.15 per share) (Refer Financial Results for detailed
calculation)
New store Pipeline(8)
ü Two new Landmark stores opened.
- Basildon in period
- Kettering (managed) just after period-end (9 February 2024)
ü Two new Landmark stores on site in Staines and Bromborough (managed) will
open in 2024
ü Sunbury leasehold store to be closed and customers moved to a new effective
freehold store in Staines and other freeholds
ü Planning permission received at Barking, Cheshunt and Eastbourne.
o Cheshunt expected to be on site by the end of 2024.
ü The Board is keeping under review when to go on site at the other pipeline
stores dependent on the economic cycle.
Recommended Cash Offer of Lok'nStore Group Plc by Shurgard Self Storage Ltd
"Shurgard") ("the Offer")
ü On 11 April 2024 the boards of Shurgard and Lok'nStore announced that they
had reached agreement on the terms of a recommended cash offer to be made by
Shurgard at 1,110 pence per share (the Offer).
ü The Directors intend to unanimously recommend the Offer.
ü The Offer contains a customary price adjustment in respect of any dividends
declared, made or paid after 11 April 2024 and hence the Board is not
recommending a dividend at this interim stage.
ü It is proposed that the Offer will be implemented by a Scheme of
Arrangement ("the Scheme")
For all of the definitions of the terms used in the highlights above refer to
the KPI notes section below.
Commenting on the Group's results, Andrew Jacobs, Chair of Lok'nStore Group
said,
"Lok'nStore's revenue has moved ahead with Group Revenue up 4.3% and headline
self-storage revenue up by 4.9%. With this muted growth and some cost
increases, Group Adjusted EBITDA of £7.65 million was down 3.6%. Customer
demand remains above levels seen pre-pandemic, although it has been lower
compared to the same period 12 months ago."
"We have made progress on our new store pipeline with our new Landmark store
in Basildon opened in December and Kettering opened in early February. We are
on site at two locations in Staines and Bromborough, both of which will open
in 2024."
Enquiries:
Lok'nStore: 01252 521 010
Andrew Jacobs, Chair
Ray Davies, Finance Director
Neil Newman-Shepherd, Managing Director
Cavendish Capital Markets Ltd 020 7220 0500
Julian Blunt / Seamus Fricker, Corporate Finance
Sunila de Silva, Corporate Broking
Peel Hunt 020 7418 8900
Capel Irwin / Carl Gough / Henry Nicholls
Camarco 0203 757 4991
Billy Clegg / Tom Huddart/ Letaba Rimell
Chair's Statement
Trading
At a headline level we report a 4.3% increase in Group Revenue. Same-Store
Group Revenue grew by 2.6% over the last year.
Occupied unit space was down 2.9% in the first half compared with the same
period last year. Our pricing moved forward by 4.0% when compared with 31
January 2023.
Customer demand remains above levels seen pre-pandemic, although it has been
lower compared to the same period 12 months ago,
Our new stores in Bedford, Peterborough and Basildon accounted for £0.45
million of operating costs as we expand our portfolio of Landmark assets. On a
Same Store basis, costs have increased by £0.43 million or 7.7%. £0.39
million of this relates to property cost increases from Rent, Energy and
Business rates.
The cash cost of bank interest paid (before capitalisation of interest costs,
non-utilisation fees and loan amortisation fees) in the period was £1.27
million (31.01.2023: £1.34 million). This broadly unchanged position reflects
the outcome of rising rates offset by the reduction in drawn debt (See
below).
Net Asset Value
In line with the Group's normal policy, we have not conducted an interim
valuation of trading assets in this period, however following the Offer, the
document relating to the Scheme ("the Scheme Document") will include an
independent external valuation in respect of Lok'nStore's property portfolio
commissioned in accordance with Rule 29 of the Takeover Code. The Scheme
Document will be circulated to shareholders within the next few weeks.
Adjusted Net Asset Value per share has moved up 1 penny to £9.87 per share
since last year-end (31 July 2023: £9.86 per share) (31 January 2023 £9.15
per share).
Since the last year-end at 31 July 2023 Jones Lang LaSalle (JLL), considers
that the yields and discount rates which were applied at the July 2023
year-end have not materially changed.
We have two new stores in Staines and Basildon which will have their maiden
external valuation in July 2024,. More details on the valuation of our trading
stores can be found in note 11 of the financial statements.
Investment in new Stores
In the period we invested £18.5 million in new store development. We opened
two new stores in Basildon and Kettering (9 February 2024). The Basildon store
is our first purpose built leasehold Landmark store.
We are also on site in Staines and Bromborough. At Staines we are positioned
above an Aldi supermarket and will open at the end of April 2024. We are on
site at Bromborough on behalf of a third-party Managed Store client.
At 31 January 2024, the remaining capital expenditure required to complete the
Staines and Basildon stores is £2.63 million, all of which can be paid out of
cash.
New Store pipeline
Beyond the stores currently on site, we have a further 7 stores in our
pipeline. In the last few months, we have achieved planning at Barking,
Cheshunt and Eastbourne. Bournemouth, Milton Keynes and Altrincham all have
live planning applications submitted.
It is our intention to go on site at the Cheshunt store before the end of
2024. We will build a c.60,000 sq. ft. Landmark store along with retail
space for a discount food retailer. The discount food retailer will pay a
lease premium to Lok'nStore on completion of planning matters and make further
payments to Lok'nStore through the building programme as work progresses.
We carefully evaluate the ongoing economic and trading position before making
any further capital commitments and can reduce capex quickly if the market
deteriorates.
Closure of Sunbury Leasehold Store
In line with our continuing strategy of recycling older stores into
purpose-built Landmark stores and leases into freeholds, we will close the
Sunbury leasehold store in early FY25. Our policy over many years has been
that we are happy with leasehold stores which provide a higher return on
capital than freeholds, but that we prefer freeholds if and when the
opportunity arises. Over the years we have both bought out the freeholds of
existing leasehold stores and also built new freehold stores elsewhere and
moved the customers from the leasehold to the freehold store.
In this case the closure of the Sunbury store has been timed to coincide with
the opening of our new store in Staines in Spring 2024, a few miles away. The
Staines store is an effective freehold, being on a 250-year lease at
peppercorn rent. We expect to move a number of the current Sunbury customers
to the new Staines store and other local freehold stores. Therefore, we expect
the new Staines store to be trading cash positively quickly. As the lease of
the Sunbury store expired in August 2022, the store was valued at £0 in the
July 2023 valuation.
The move from an older building to a new purpose-built Landmark store improves
our brand image to our customers, removes latent capital expenditure and
further reduces our environmental impact. The move from a leasehold to an
effective freehold also reduces operational gearing by removing the property
rental charge.
The closure will result in a modest reduction in the expected Group Revenue in
the coming years. In FY23, the Sunbury store generated £1.3 million in
revenue and £0.6 million of EBITDA.
Managed Stores
Our strategy includes increasing the number of stores we manage for third
party owners. This enables the Group to earn revenue without having to commit
capital, to amortise fixed central costs over a wider operating base and
direct further traffic to our website which benefits our entire operation.
Lok'nStore manages 17 stores for third-party owners including the Kettering
store which opened in February 2024. This will increase to 18 managed stores
once the Bromborough store opens in Autumn 2024.
During the period, we generated total Managed Store income of £0.78 million,
with recurring fees of £0.75 million (31.01.2023: £0.82 million), down 5.1%.
While base management fees, calculated as a percentage of revenue, were
higher, performance fees based on EBITDA were slightly lower due to the higher
operating costs of the Managed Stores.
In the management fees table in the Business and Financial Review, we separate
recurring management fees from non-recurring fees. Non-recurring fees relate
to one-off fees generated from planning, store opening, construction and
advisory and supplementary fees.
Cash Flow, Debt and Bank Covenants
The company continues to be in a strong financial position with low net debt.
On 11 August 2023, the Group paid down £19.02 million out of its recent
equity placing proceeds reducing the balance on its Revolving Credit Facility,
pending redrawing over time for its future deployment on the Group's pipeline
stores.
In December 2023, the Group entered into five-year interest rate swaps on
£10.0 million of its floating rate debt. The two separate swaps of £5.0
million each were executed at a SONIA swap rate of 3.51%, providing an all-in
effective rate payable on this swap of 5.2% and will result in estimated
saving of c.£0.2 million of interest payable in the coming year.
A conservative capital structure and a strong Balance Sheet remain a key focus
for the business. We report a period-end LTV ratio (net of cash) of 8.3%
(31.07.2023: 3.7%) and a low level of net debt of £28.8 million, (31.07.2023:
£12.3 million) (refer to note 24b). At 31 January 2024, the Group had cash
balances of £14.97 million. Cash inflow from operating activities before
investing and financing activities was £6.81 million in the year to 31
January 2024 (31.01.2023: £7.85 million).
The Group has a £100 million five-year Revolving Credit Facility. The Group
is not obliged to make any repayments on its loan facility prior to its
expiration in April 2026.
The floating average cost of bank debt on drawn facilities for the period was
6.72% (31.01.2023: 4.13%). as rates have moved higher. Except for the £10
million of fixed debt, the Group's remaining drawn bank debt of £33.7 million
(31.01.2023: £66.8 million) is unhedged. At the date of this Report the
Group's current cost of blended debt after including the positive effect of
the hedging is running at 6.63%.
At the period-end senior interest cover was 3.8 times finance charges on gross
debt tested on a 12-month rolling basis, against a bank covenant of 2.5 times.
On a quarterly and a monthly testing at 31 January 2024, the cover had risen
to over 4 times. At the period-end our loan-to-value ratio based on net bank
debt was 8.3% versus a bank covenant of 60%.
Recommended Cash Offer of Lok'nStore Group Plc by Shurgard Self Storage Ltd
("Shurgard") ("The Offer")
On 11 April 2024, the Boards of Shurgard and Lok'nStore announced that they
have reached agreement on the terms of a recommended cash offer to be made by
Shurgard to acquire the entire issued and to be issued share capital of
Lok'nStore (the 'Acquisition').
Under the terms of the Offer, Lok'nStore Shareholders will be entitled to
receive 1,110 pence in cash for each Lok'nStore Share. The Directors intend to
unanimously recommend the Offer.
The Offer is expected to be effected by means of a Court-sanctioned scheme of
arrangement between Lok'nStore and Scheme Shareholders under Part 26 of the
Companies Act 2006, although Shurgard reserves the right to effect the
Acquisition by way of a Takeover Offer.
The Offer contains a customary price adjustment in respect of any dividends
declared, made or paid after 11 April 2024 and hence the Board are not
recommending a dividend at this interim stage.
Environmental progress
Our Environmental targets for FY24 are:
· Decarbonise our business to be Net Zero in our operations by 2040
· Assess recommended improvements from current EPCs and action as
appropriate
· Trial the installation of a battery at one store
· To increase the number of stores with PV systems
· Continue the roll out of LED lights for all stores
· Obtain BREEAM accreditation at one store
· Determine a route to eliminate waste destined for landfill
Our business Objectives
Our business objectives are to:
· Fill existing stores and improve pricing
· Develop our pipeline into new Landmark stores
· Acquire more sites to build new Landmark stores
· Increase the number of stores we manage for third parties
Outlook
In the short term our focus is to drive the operating performance of all of
our existing stores. We have opened stores in Basildon and Kettering and will
be opening shortly in Staines and Bromborough. We expect to go on site at
Cheshunt before the end of 2024. The Board are keeping under review when to
go on site at the other pipeline stores.
Since 31 January 2024 Lok'nStore has continued to observe positive but muted
revenue growth. Headline stores revenue in February and March 2024 was 4.2
per cent. up on the same period last year, compared to year-on-year growth of
13.7 per cent. in the same period in 2023.
Andrew Jacobs
Chair
19 April 2024
Notes - What we mean when we say … (and why we use these key performance
indicators (KPIs))
In addition to IFRS accounting performance measures we use some Alternative
Performance Measures (APMs) to help us explain how the underlying business is
performing.
Here we identify those measures and explain what we mean when we use them and,
importantly, why we use them: -
1. Group Adjusted EBITDA (Group Adjusted Earnings before
interest, tax, depreciation and amortisation) - Adjusted EBITDA is defined as
EBITDA before losses or profits on disposal, share-based payments, acquisition
costs and non-underlying items which demonstrates the cash generative
qualities of the business.
2. Non-underlying items - Refers to one-off items of a
non-operational nature which arose during the year, and which may relate to
asset disposals, abortive site acquisition costs, or other costs and which are
likely to be material and infrequent events. (Refer to note 4 of the Financial
Statements).
3. Cash Available for Distribution (CAD) - Is calculated as
Adjusted EBITDA less total net finance cost, less capitalised maintenance
expenses, New Works Team costs and current tax. This measures the capacity
of the business to pay dividends or pay down debt. The Cash Available for
Distribution per share is CAD divided by the number of shares in issue less
shares held in the Employee Benefit Trust (EBT) which do not attract a
dividend. The calculation of the CAD and the CAD per share is set out in the
Financial Review.
4. Adjusted Total Group Assets - The value of adjusted total
assets of £384.2 million (31.07.2023: £392.9 million) (31.01.2023: £353.0
million) is calculated by adding the independent valuation of the leasehold
properties of £27.2 million (31.07.2023: £27.2 million) (31.01.2023: £22.9
million) less their corresponding net book value (NBV) £6.9 million
(31.07.2023: £6.9 million (31.01.2023: £7.0 million) to the total assets in
the Statement of Financial Position of 363.9 million (31.07.2023 £372.6
million) (31.01.2023 £337.1 million).
This provides clarity on the significant value of the leasehold stores as
trading businesses which, under the Group's accounting policy on leases, are
only presented at their book values within the Statement of Financial
Position.
5. Adjusted Net Asset Value per share (NAV per share) -
Adjusted Net Asset Value per share is the net assets adjusted for the
valuation of leasehold stores (properties held under leases) and deferred tax
divided by the number of shares at the period-end. The shares held in the
Group's employee benefits trust and treasury shares are excluded from the
number of shares. The calculation of the Net Asset Value per share is set out
in the Financial Review.
6. Loan to Value ratio (LTV) - Measures the net debt of the
business expressed as a percentage of total property assets giving a
perspective on the gearing of the business. The calculation is based on net
debt (excluding deferred finance costs) of £28.8 million expressed as a
percentage of the total freehold and leasehold properties independently valued
by JLL of £301.9 million (31.07.2023: £301.9 million) and development land
assets of £45.2 million (31.07.2023: £30.6 million) totalling £347.1
million (31.07.2023: £332.5 million) (31.01.2023: £297.5 million) as set out
in the Financial Review in the Analysis of Total Property Value table.
7. Average Cost of Debt - The average cost of debt is
calculated by taking the total interest paid on the Group's Revolving Credit
Facility in the quarterly/weekly charging periods throughout the year and
taking an average based on the whole financial year. Apart from the Group's
Revolving Credit Facility, the Group has no other bank debt. The average cost
of floating debt was 6.72% (31.07.2023: 4.77%) (31.01.2023: 4.13%%).
8. Pipeline Sites - Sites for new stores that either we have
exchanged contracts on or have agreed heads of terms and are progressing with
our lawyers towards a contract exchange. We have 9 pipeline sites of which 8
are contracted and one progressing with lawyers. At 31 January 2024, we have
26 Owned Stores trading with an additional 16 Managed Stores trading. When
these 11 sites are fully developed, we will have a total of 54 stores - 36
will be owned by the Group and 18 will be Managed Stores managed on behalf of
third-party owners. The Kettering store recently opened after the period-end
in February 2024 making 17 Managed Stores trading, When the Bromborough site,
which is currently being built opens in the Autumn, we will have 18 Managed
Stores trading.
9. Secured Pipeline Sites - The ten sites for new stores on
which we have exchanged legal contracts. Of these, eight stores are Lok'nStore
Owned Stores and two will be Managed Stores.
10. Adjusted Store EBITDA is Group Adjusted EBITDA (see 1 above)
before the deduction of central and Head Office costs. Unlike Group Adjusted
EBITDA, this measure excludes the impact of IFRS 16 and includes property
rentals payable as normal operating costs of each store. The measure is
designed to give clarity on the recurring operating cash flow of the business
and provides important information on the underlying performance of the
trading stores and shows the cash-generating core of the business. Use of this
metric enables us to provide additional information on store EBITDA
contributions (after leasing costs) and the margins analysed between freehold
and leasehold stores and according to the age of the stores. This analysis is
set out in a table in the Financial Review.
11. Gearing refers to the level of debt compared to equity
(http://www.investopedia.com/terms/e/equity.asp) capital, usually expressed in
percentage form. It is a measure of a company's financial leverage
(http://www.investopedia.com/terms/l/leverage.asp) and shows the extent to
which its operations are funded by lenders
(http://www.investopedia.com/terms/l/lender.asp) versus shareholders. Gearing
can be measured by a number of ratios, and we use the debt-to-equity ratio in
this document. The calculation of the gearing percentage, also referred to as
the net debt to equity ratio, is set out in note 16 of the Financial
Statements.
12. Group Adjusted EBITDAR is Group Adjusted EBITDA before the
deduction of rent. The measure is designed to give clarity on the effect of
the rent payable by leasehold stores and how its elimination enables a
comparison between the operating performance of freehold stores (which do not
pay rent) and leasehold stores which pay rent. This analysis is set out in a
table in the Financial Review.
13. Cost Ratio calculates the ratio of the total operating costs
of the business as set out in the Financial Review, expressed as a
percentage of total Group revenue (note 1), giving a perspective on the cost
efficiency of the business when compared to the cost ratio of the previous
year. The Cost Ratio has increased to 45.2% (31.07.2023: 43.6 %) (31.01.2023:
40.7 %)
14. Same Store Group - This measure is used to give transparency
on the performance in the operating business in the period unrelated to the
opening of new stores, and commenting on stores that were open and trading at
both 31 January 2023 and 31 January 2024 financial period-ends. The Same Store
key performance measure helps to illustrate the performance of the underlying
business.
15. Same Store Self-Storage - This measure is the Same Store Group
measures, but less management income received from the management of the
Managed Store portfolio. This is used to give transparency on the underlying
trading of the self-storage business.
See also the glossary
Business and Financial Review:
The Performance of Our Stores
Headline
ü Group Revenue £14.17 million up 4.3% (31.01.2023: £13.58 million)
ü Group Adjusted EBITDA(1) £7.65 million down 3.6% (31.01.2023: £7.93
million)
ü Price up 4.0% (31.01.2023: 9.2%)
Same Store(14)
ü Same Store Self Storage Revenue(15) £13.09 million up 3.1% (31.01.2023:
£12.70 million)
ü Same Store Group Revenue(15) £13.93 million up 2.6% (31.01.2023: £13.58
million)
ü Same Store Group Adjusted EBITDA(1) £7.86 million down 0.9% (31.01.2023:
£7.93 million)
ü Same Store EBITDA margin decreased to 58.9% from 60.3%
Revenue
Revenue growth in FY24 is muted with self-storage revenue up 4.3%.
Same-store self-storage revenue was up 3.1% on the previous year.
Price per sq. ft of occupied space which was up 4.0% period to period
(31.01.2023: 9.2%).Customer demand remains above levels seen pre-pandemic,
although it has been lower compared to the same period 12 months ago. This
resulted in occupied unit space down 2.9% in the first half compared with the
same period last year.
Ancillary Sales
Ancillary sales consisting of boxes, packaging materials, insurance and other
sales were up 2.2% to £1.29 million (31.01.2023: £1.26 million) accounting
for 9.7% (31.01.2023: 10.5%) of self-storage revenues.
Portfolio Analysis and Performance Breakdown
In the table below we show how the performance of the stores varies between
freehold and leasehold stores. Currently 46.0% of Lok'nStore owned trading
space is freehold, 20.3% is leasehold and 33.7% is in Managed Stores.
The overall adjusted Same Store EBITDA margin across all stores decreased to
58.9% from 60.3%. Adjusted Same Store EBITDA margins of the freehold stores
increased to 66.0% (31.1.2023: 64.7%).
As the business develops the balance of the stores continues to shift towards
landmark freehold stores and managed stores which have a higher-than-average
adjusted store EBITDA margin at 62.8% and 100% respectively versus 55.3%
across all stores.
When Fully Developed
Portfolio Analysis and Performance Breakdown Number of stores % of Property % of Adjusted Store EBITDA Adjusted Store % lettable space Number of stores Total % lettable space
Valuation EBITDA Margin (%)
As at 31 January 2024
Freehold Stores 17 83.7 74.1 62.8 46.0 25 51.2
Leasehold Stores 10 7.0 25.9 41.2 20.3 10 17.4
Managed Stores 16 - - 100.0 33.7 18 31.3
Total stores trading 43 100.0 53 100.0
Pipeline Stores (secured)*
Owned - Freehold 8 9.3 - - - - -
Owned - Leasehold - - - - - - -
Managed 2 - - - - - -
Total secured Pipeline Stores 10 - - - - - -
Total Stores 53 100 100 55.3 100 53 100
*Applies to the 10 contracted stores only.
Analysis of Stores No of Pipeline
Stores Stores
As at 31 Jan 2024 Stores/Sites Trading Trading Total
Lok'nStore Managed
Freeholds 17 17 - -
Leaseholds 10 10 - -
Pipeline (Freehold) 8 - - 8
Pipeline (Leasehold) - - - -
Sub-total 'Owned Stores' 35
27 - 8
Managed Stores (Trading) 16 - 16 -
Managed Stores (Pipeline) 2 - - 2
Sub-total 'Managed Stores' -
18 16 2
Total No. of Stores. 53 27 16 10
MLA sq. ft. 2,781,454 1,424,098 775,947 581,409
The freehold stores produce 74.1% (31.1.2023: 72.1%) of the Adjusted store
EBITDA and account for 93.0% (31.1.2023: 92.3%) of valuations (including
secured pipeline stores).
Leaseholds trade on lower margins due to the rent payable, but nevertheless
the 41.2% margin achieved is attractive and leads to a higher return on
capital than the freehold stores which require much larger capital expenditure
to buy the land and buildings.
Operating Performance at a glance (Lok'nStore freehold and leasehold stores
only)
In the Operating Performance table below, we show how the performance breaks
down across the stores, based on the age of store. Older stores have had more
time to fill-up and produce higher EBITDA returns.
Weeks Old Secured Under 100 100 to 250 Over 250 Total
Pipeline
Six months ended 31 January 2024
Sales £000 818 1,239 11,320 13,377
Stores Adjusted EBITDA £'000 (319) 722 6,994 7,397
Adjusted EBITDA Margin (%) (39.0)% 58.3% 61.8% 55.3%
Stores Adjusted EBITDAR £'000 (196) 722 7,956 8,482
Adjusted EBITDAR Margin (%) (24.0)% 58.3% 70.3% 63.4%
As at 31 January 2024 (sq. ft.)
Maximum Net Area - 320 215 888 1,909
Freehold / Long leasehold ('000 sq. ft.) 486 270 215 453 1,424
Short Leasehold (sq. ft.) - 50 - 435 485
Number of Stores
Freehold / Long Leasehold 8 4 3 10 25
Short Leasehold - 1 - 9 10
Total Stores 8 5 3 19 35
Managed Store Revenue
Lok'nStore manages an increasing number of stores for third party owners.
Under this model, Lok'nStore can provide a turnkey package for investors
wishing to own trading self-storage assets. The investor supplies the capital
for the project which Lok'nStore manages. Lok'nStore will buy, build and
operate the stores under the Lok'nStore brand and within our current
management structure.
For Managed Stores Lok'nStore receives a standard monthly management fee, a
performance fee based on certain return hurdles and fees on a successful exit.
We also charge acquisition, planning and branding fees. This allows Lok'nStore
to earn revenue from our expertise and knowledge of the self-storage industry
without committing our capital. We can amortise various fixed central costs
over a wider operating base and direct more visits to our website, moving it
up the internet search rankings and benefitting all the stores we both own and
manage.
This strategy improves the risk adjusted return of the business by increasing
the operating footprint, revenues and profits without committing capital.
There is a strong correlation between the total management fee income and the
number of stores under management.
We now manage in excess of £150 million of assets under this structure on
which we generated managed store income of £0.8 million this period
(31.01.2023: £0.8 million). Within this, recurring fees were broadly flat,
and we expect base management fees to increase steadily over the coming years
as as the Managed Stores mature. As more Managed Stores are opened this will
also increase base management fees.
Managed Store income is generated from our existing platform and central
management, resulting in an effective margin from this activity of 100%.
Non-recurring fees are positive for Lok'nStore but are irregular in their
nature. Income from non-recurring fees was down in the period to £0.03
million (31.01.2023: £0.06 million).
At the period-end, we had 16 Managed Stores operating. The Kettering store
recently opened after the period -end in February 2024 making 17 stores
trading, When the Bromborough site, which is currently being built opens in
the Autumn, we will have 18 Managed Stores trading..
Percentage Increase/ Group Group Group
Management fees (decrease) Period ended Period ended Year ended
31 January 2024 31 January 2023 31 July 2023
% £ £ £
Recurring fees
Base management fees 484,693 469,564 929,810
Administration and compliance fees 52,500 52,500 105,000
Enhanced Management fees 212,401 239,543 434,280
Recurring fees - Sub-total (1.6%) 749,594 761,607 1,469,090
Non-recurring fees
Construction & Advisory fees 30,000 - 30,000
Supplementary fees - 60,000 160,000
Non-recurring fees (50.0%) 30,000 60,000 190,000
Total management fees (5.1)% 779,594 821,607 1,659,090
Total Assets and Net Asset Value
· Adjusted Total Assets £384.2 million(4) up 8.83% on last year
(31.1.2023: £353.0) (31.7.2023: £392.9 million)
· Adjusted Net Asset Value (NAV) per share(5) January to January up
7.87% to £9.87 (31.1.2023: £9.15)
· Adjusted Net Asset Value (NAV) per share up 0.1% from 31 July 2023
(£9.86)
· Investment in new stores £18.5 million (including capitalised
interest) (31.1.2023: £8.3 million)
· Value of operating stores £305.4 million up 17.0% on last year
(31.1.2023: £261.1)
The value of adjusted total assets of £384.2 million (31.01.2023: £353.0
million) is calculated by adding the valuation of the leasehold properties
less their corresponding net book value to the other assets in the business.
This provides clarity on the significant value of the leasehold stores as
trading businesses which under accounting rules on leases are only presented
at their book values within the Statement of Financial Position. For the
detailed calculation refer to Note 4 on the Key Performance Indicator section.
We have reported by way of a note the underlying value of these leasehold
stores in revaluations and adjusted our Net Asset Value (NAV) calculation
accordingly to include their value. This ensures comparable NAV calculations.
An analysis of the valuations achieved is set out in the table below.
Analysis of Total Property Value No of store 31 Jan 2024 Valuation No of stores 31 Jan 2023 Valuation No of stores 31 July 2023 Valuation
/sites £'000 /sites £'000 /sites £'000
Freeholds(3) valued by JLL (1) 17 274,725 15 254,775 17 274,725
Directors' Valuation Adjustment - (16,650) -
Fair value of freehold stores 274,725 238,125 274,725
Leaseholds valued by JLL (2) 9 27,200 9 24,250 9 27,200
Directors' Valuation Adjustment - (1,300) -
Leaseholds open and trading to be valued by JLL (3) 1 3,510
Fair value of leasehold stores 30,710 22,950 27,200
Subtotal 27 305,435 24 261,075 26 301,925
Sites in development at cost (4) 8 45,217 10 36,393 9 30,605
Subtotal (5) 35 350,652 34 297,468 35 332,530
Freehold land & Buildings at Director valuation 1 1,500 1 1,500 1 1,500
Total 36 352,152 35 298,968 36 334,030
(1) Includes related fixtures and fittings (refer to note 11)
(2 ) The nine leaseholds valued by JLL are all within the terms
of the Landlord and Tenant Act (1954) giving a degree of security of tenure.
The average length of the leases on the leasehold stores valued was 12 years
and 10 months at the date of the July 2023 valuation.
(3) Basildon store now open and trading and will be valued in accordance
with Group valuation policy at the next 31 July 2024 year-end valuation.
Currently held at cost.
(4) Includes £1.27 million of capitalised interest during the period.
(31.01.2023: £0.66 million) (31.07.2023: £1.54 million).
(5) Loan to value calculation based on these property values.
Total freehold properties account for 91.9% of all property values (31.1.2023:
92.5%).
Market Valuation of Freehold and Leasehold Land and Buildings
It is the Group's usual policy to commission an independent external valuation
of its properties at each financial year-end. Our freehold and leasehold
stores were independently valued by JLL at £301.9 million at 31 July 2023.
Valuations
Except for the forthcoming closure of the Sunbury leasehold store, it is not
the current intention of the Directors to make any further significant
disposals of trading stores, although individual asset disposals may be
considered where value can more easily be added by recycling the capital into
new stores.
The valuations of our freehold property assets are included in the Statement
of Financial Position at their fair value. The value of our leasehold stores
independently valued by JLL at 31 July 2023 totals £27.2 million (31.07.2023:
£27.2 million) but they are held at cost less accumulated depreciation in the
Statement of Financial Position.
Our freehold and leasehold stores were independently valued by JLL at £301.9
million at 31 July 2023. The value of adjusted total assets of £384.2
million(4) (31.07.2023: £392.9 million) is calculated by adding the valuation
of the leasehold properties of £27.2 million less their corresponding net
book value of £6.9 million to the total assets in the Statement of Financial
Position of £363.9 million. This provides clarity on the value of the
leasehold stores as trading businesses which under the Group's accounting
policy rules on leases are only presented at their book values within the
Statement of Financial Position.
At the period-end, Lok'nStore had 43 stores trading. Of these, 27 stores are
Owned with 17 freeholds, 10 leasehold and 16 stores under management
contracts. After the period-end Kettering opened in early February, taking the
total of Managed Stores to 17 and 44 stores trading.
The average unexpired term of the Group's operating leaseholds is
approximately 12 years and 4 months at 31 January 2024. All of our leasehold
stores are inside the Landlord and Tenant Act providing us with a strong
degree of security of tenure.
A deferred tax liability arises on the revaluation of the properties and on
the rolled-over gain arising from the disposal of some properties. It is not
envisaged that any tax will become payable in the foreseeable future on these
disposals due to the availability of rollover relief.
.
We have reported by way of a note the underlying value of these leasehold
stores in revaluations and adjusted our Net Asset Value (NAV) calculation
accordingly to include their value. This ensures comparable NAV calculations.
Investment in new stores
We have invested £18.5 million (31.01.2023: £8.25 million) in new store
development in this period.
Landmark Store Pipeline
Our current pipeline of ten contracted stores will add 26.4% of extra trading
space to the overall portfolio, 34.1% to our Owned portfolio and 12.3% to the
Managed portfolio.
The Kettering managed store opened post period end on 9(th) February 2024. We
are on-site at two further stores that will open during 2024.
All 10 stores in our Secured Pipeline(9) are in prominent locations with large
catchment areas and demonstrate the Group's ability to source high-quality
sites. These eye-catching buildings, with their distinctive orange Lok'nStore
branded livery and prominent signage, create highly visible landmarks, which
continue to be a big source of new customers.
Beyond the stores currently on site, we have a further 7 stores in our
pipeline. In the period we received planning permission for our site at
Barking. Post period-end we have achieved planning at Eastbourne and
Cheshunt. Bournemouth, Milton Keynes and Altrincham all have live planning
applications submitted.
Summary of our contracted pipeline at 31 January 2024:
On-site at On site after
Store Size Status 31 Jan 2024 30 April 2024
sq. ft Size sq. ft Size sq. ft
(Additional)
Kettering Managed 45,900 Onsite - (opened 9(th) February 2024) 45,900
Staines Long Leasehold 66,500 On site - target opening May 2024 66,500
Bromborough Managed 49,500 Onsite - Target opening Autumn 2024 49,500
Bolton Freehold 57,578 Planning granted 57,578
Barking Freehold 84,200 Planning granted 84,200
Cheshunt Freehold 60,300 Planning granted 60,300
Eastbourne Freehold 60.000 Planning granted 60,000
Bournemouth Freehold 75,100 Further Planning application submitted 75,100
Altrincham Freehold 63,900 Further Planning application submitted 63,900
Milton Keynes Freehold 60,000 Planning application submitted 60,000
Total - 10 stores 622,978 161,900 461,078
Closure of Sunbury Leasehold Store
In line with our continuing strategy of recycling older stores into
purpose-built Landmark stores and leases into freeholds, we will close the
Sunbury leasehold store in early FY25. Our policy over many years has been
that we are happy with leasehold stores which provide a higher return on
capital than freeholds, but that we prefer freeholds. Over the years we have
both bought out the freeholds of existing leasehold stores and also built new
freehold stores elsewhere and moved the customers from the leasehold to the
freehold store.
The move from an older building to a new purpose-built Landmark store improves
our brand image to our customers, removes latent capital expenditure and
further reduces our environmental impact. The move from a leasehold to an
effective freehold also reduces operational gearing by removing the property
rental charge.
In this case the closure of the Sunbury store has been timed to coincide with
the opening of our new store in Staines a few miles away in Spring 2024. The
Staines store is an effective freehold, being on a 250-year lease at
peppercorn rent. We expect to move a number of the current Sunbury customers
to the new Staines store and other local freehold stores. Therefore, we expect
the new Staines store to be trading cash positively quickly. As the lease of
the Sunbury store expired in August 2022, the store was valued at £0 in the
July 2023 valuation.
The closure will result in a modest reduction in the expected Group Revenue in
the coming years. In FY23, the Sunbury store generated £1.3 million in
revenue and £0.6 million of EBITDA.
Environmental Targets. Commitments and Performance:
Lok'nStore remains committed to positively impacting the environment. At
31 July 23, Lok'nStore set targets in line with its Environmental Committee's
objectives.
These targeted objectives are:
· Decarbonise our business to be Net Zero in our operations by 2040
· Assess recommended improvements from current EPCs and action as
appropriate
· Trial the installation of a battery at one store
· To increase the number of stores with PV systems
· Continue the roll out of LED lights for all stores
· Obtain BREEAM accreditation at one store
· Determine a route to eliminate waste destined for landfill
Lok'nStore is pleased to announce progress on all of these targets. A
comprehensive analysis of the remaining direct emissions is currently
underway, with efforts directed towards establishing a pathway to lower the
current target of being Net Zero in our operations by 2040.
Substantial progress has been made in enhancing the ratings across our
existing Energy Performance Certificates (EPC's), with 89% of the freehold
portfolio now achieving a rating of B or above.
We remain focused on advancing battery storage solutions and continue to work
on defining implementation strategies. In the first half of the year, we have
identified stores that are yet to benefit from LED lighting and have
prioritised their conversion. Additionally, we maintain our initiative to
install photovoltaic (PV) systems on all new buildings, with the addition of
two new stores to our PV portfolio by year end.
As highlighted in the most recent Annual Report, Lok'nStore has diligently
monitored waste management for several years, resulting in a noteworthy
reduction in landfill waste during this period. The next phase of this
initiative involves determining a viable route to eliminate waste destined for
landfill.
Collaborative efforts with our suppliers have been initiated to enhance
reporting on waste volumes and destinations. The identification of remaining
stores in the portfolio where waste disposal still involves destination being
landfill is underway, with a focus on rerouting waste. Further progress on
this will be reported in full at 31 July 2024.
We are committed to environmental certification for our buildings and are
progressing BREEAM accreditation at our Kettering store, on behalf of the
managed store owner. We continue to make progress on this accreditation for
our pipeline of new stores where appropriate.
Financial results:
Headline
ü Group Revenue £14.17 million up 4.3% (31.01.2023: £13.58 million)
ü Group Adjusted EBITDA(1) £7.65 million down 3.6% (31.01.2023: £7.93
million)
ü Cash available for Distribution (CAD)(3) £5.17 million down 1%
(31.01.2023: £5.2 million) (31.07.2023: £9.13 million)
ü Cash available for Distribution of 16.0 pence per share (31.01.2023: 17.7
pence per share)
ü Cash balances £15.0 million (31.07.2023: £42.1 million)
ü £100 million Bank RCF runs to April 2026
Revenue
Total Group Revenue for the year was £14.17 million, an increase of £0.6
million and up 4.3% from £13.58 million in the prior period. Same Store
Revenue for the year was £13.93 million, an increase of 2.6% (31.01.2023:
£13.58 million). Same Store Self Storage Revenue was £13.09 million up 3.1%
(31.01.2023: £12.70 million)
Operating Costs
Of the £0.87 million increase in operating costs in the period, £0.45
million relates to the operating costs of the new stores in Bedford,
Peterborough and Basildon. The Basildon Store is a leasehold and therefore
includes a rent of £0.1 million in the period.
On a Same Store basis, costs have increased by £0.43 million or 7.7%. Of
this £0.39 million relates to property cost increases. More specifically:
· Rent costs increased by £93,417 (10.7%) following settled rent
reviews at two existing leasehold stores over the last 12 months. These stores
rents are now fixed for the next 5 years. In addition, the Basildon leasehold
rent commenced during the period.
· Energy costs increased by £81,041 (10.6%). These will decline
markedly in the coming year
· Business rates increased by £53,998 (5.7%)
· Insurance costs decreased by 10.2% period to period
Total staff costs, increased by 6.5% as we staffed the new stores which was
offset by lower performance bonuses to our store colleagues. On a Same Store
basis, total staff costs, increased by just 0.7%. There was also a lower
national insurance cost because of the combined effects of lower bonuses paid
and fewer share options exercised by management and staff in the year.
From FY25, we expect operating costs to revert to a slower rate of growth with
cost increases driven mainly by the expansion of the business.
Banking, net debt and liquidity
ü RCF of £100 million and runs to April 2026
ü £18.5* million invested in new store pipeline (31.07.2023: £17.3 million)
ü Net debt (excluding leases) £28.8 million (31.07.2023: £12.3 million)
ü Loan to Value ratio (LTV) net of cash 8.3% (31.07.2023: 3.7%)
ü Cost of floating debt averaged 6.72% in the period (31.07.2023: 4.8%) on
£33.8 million debt
(31.07.2023: £54.4 million)
ü All-in cost of fixed (swap) on £10 million debt averaged 5.2% in the
period
* Includes £1.27 million of capitalised interest
The Group's RCF of £100 million is a joint agreement with ABN AMRO NV and
NatWest Bank plc participating equally and runs until April 2026 providing
funding for more Landmark site acquisitions. The Group is fully compliant with
the two principal bank covenants (LTV and Senior Interest).
Reduction of debt (RCF)
On 11 August 2023, the Group paid down £19.02 million out of its recent
equity placing proceeds reducing the balance on its RCF, pending redrawing
over time for its future deployment on the Group's pipeline stores.
Interest expense and bank borrowings
The Group pays a margin of 1.5% on its Interest and the all-in effective rate
is calculated by reference to SONIA (Sterling Over Night Indexed Average) plus
margin.
· Average cost of floating debt 6.72% (31.07.2023: 4.8%)
· Average cost of debt (on active revolving loans at 31 January 2024)
6.6% (31.07.2023: 6.2%)
· Current cost of debt at date of this Report 6.6%
Management of Interest Rate Risk
The Board's strategy has been to regularly review the Group's interest rate
hedging position and to monitor prevailing SONIA and swap rates with a view to
fixing a proportion of its floating debt when the time was considered
opportune.
In December 2023, the Group entered into a £5.0 million interest rate swap
with ABN Amro Bank effective from 21 December 2023 at a fixed 5-year SONIA
swap rate of 3.51%. Also, in December 2023 the Group entered into a £5
million interest rate swap with Nat West Bank plc effective from 22 December
2023 at a fixed 5-year SONIA swap rate of 3.51%. This £10 million of
aggregate swap instruments fixes the interest rate on £10.0 million of debt
at an effective rate of 5.21% based on current 150 basis points (bps) margin
and will result in estimated saving of c. £0.2 million of interest payable in
the coming year compared to the company's current cost of floating debt of
6.72% on its Revolving Credit Facility.
Lok'nStore has £43.8 million currently drawn against its £100 million
revolving credit facility of which £10 million is now at a fixed interest
rate. This leaves a balance of £33.8 million floating at a current all-in
rate of around 6.6%. The £10 million fixed rate is treated as an effective
cash flow hedge and its fair value stated as a liability. (See Note 17b).
Lok'nStore generates its cash flow from its strong asset base with a low LTV
net of cash of 8.3%. The value of the Group's assets underpins a resilient
business model with stable and rising cash flows and low credit risk giving
the business a firm base.
The gross bank interest expense (before capitalisation of interest costs,
non-utilisation fees and loan amortisation fees) for the period was £1.27
million (31.1.2023: £1,34 million) (31.07.2023: £3.11 million), due to
higher average debt and higher average costs of borrowing. These average costs
of borrowing is currently running at 6.6%.
The Group continues to monitor closely the effects of rising interest rates on
its Senior Interest covenant, which is tested on a 12-month rolling basis, and
the Group's flexible business model will enable it to take appropriate steps
to mitigate its effects should it be required. Capitalised interest in the
period on our store development programme was £1.27 million (31.1.2023:
£0.66 million) (31.07.2023: £1.54 million). Total finance costs in the
Statement of Comprehensive Income were £0.6 million (31.01.2023: £1.0
million) (31.07.2023: £2.56 million).
As agreed with the banks, both the Loan to Value and Senior Interest covenants
set out in our bank facility continue to be tested excluding the effects of
IFRS 16. For covenant calculation purposes, debt / LTV will continue to
exclude right of use assets and the corresponding lease liabilities created by
IFRS 16. When testing the Senior Interest Covenant, property lease costs will
continue to be a deduction in the calculation of EBITDA, in accordance with
the accounting principles in force prior to 1 January 2019.
Derivative financial instruments and hedge accounting
The Group's activities expose it to interest rate risk. The Group uses
interest rate swap contracts to hedge these exposures. The Group does not
use derivative financial instruments for speculative or for any other
purposes.
The use of financial derivatives is governed by the Group's policies as
approved by the board of directors. The Group documents its risk management
objectives and strategy for undertaking hedging transactions within the
Group's Risk Register. The Group also documents its assessment both at hedge
inception and on an on-going basis to assess whether the derivatives that are
used are effective in offsetting changes in fair value or cash flows of the
hedged items.
Derivative financial instruments are measured at fair value and the fair
values of the hedged derivative instruments are disclosed in note 17b.
Movements on the hedging reserve in other comprehensive income are shown in
note 24. The full fair value of a hedging derivative is classified as a
non-current asset or liability when the remaining hedged item has more than 12
months to run, and as a current asset or liability when the remaining maturity
of the hedged item is less than 12 months.
Instruments quoted in an active market are measured at their current bid
price. For instruments that are not quoted in an active market, the fair
value is estimated using a valuation technique. Techniques that are used by
the Group include comparisons to recent market transactions or reference to
other instruments which are substantially the same, discounted cash flow
analysis and option pricing models. Inputs to such techniques rely on market
inputs where such information is readily available.
Cash flow hedges
Hedges of exposures to variable cash flows attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast
transaction that could affect profit or loss are accounted for as cash flow
hedges when the hedging criteria has been achieved. The Group uses cash flow
hedges to account for the hedging of variable rate borrowings. The
effective portion of changes in the fair value is recognised in other
comprehensive income whilst the gain or loss on the ineffective portion is
recognised immediately in profit or loss.
Amounts accumulated in other comprehensive income are recycled to profit or
loss in the periods when the hedged item affects profit or loss. However,
when a forecast transaction that is hedged results in the recognition of a
non-financial asset, the gains and losses previously deferred into other
comprehensive income are transferred from other comprehensive income and
included in the initial measurement of the cost of the asset.
Cash flow and financing
At 31 January 2024, the Group had cash balances of £15.0 million (31.07.2023:
£42.1 million). Cash inflow from operating activities before investing and
financing activities was £7.1 million (31.01.2023: £7.8 million). As well
as using cash generated from operations to fund some capital expenditure, the
Group's £100 million five-year Revolving Credit Facility provides sufficient
liquidity for the Group's current needs. Undrawn committed facilities at
the period-end amounted to £56.3 million (31.07.2023: £45.6 million). Cash
plus undrawn committed facilities amounts to £71.3 million, leaving the
business with plenty of headroom.
Earnings per share
Basic earnings per share were 9.12 pence (31.1.2023: 12.38 pence per share)
and diluted earnings per share were 9.06 pence (31.1.2023: 12.17 pence per
share).
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Total profit for the financial year attributable to owners of the parent 2,937 3,651 4,692
No. of shares
Weighted average number of shares No. of shares No. of shares
For basic earnings per share 32,189,583 29,479,779 29,518,911
Dilutive effect of share options 207,735 520,042 467,137
For diluted earnings per share 32,397,318 29,999,821 29,986,048
623,212 shares (31.01.2023: 623,212) are held in the Employee Benefit Trust,
and these are excluded from the above calculation.
Earnings per share attributable to owners of the Parent Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
Earnings per share - Basic
Basic earnings per share 9.12p 12.38p 15.90p
Earnings per share - Diluted
Total diluted earnings per share 9.06p 12.17p 15.65p
Cash Available for Distribution
ü Cash Available for Distribution of 16.0 pence per share (31.01.2023: 17.7
pence per share)
ü Cash Available for Distribution £5.17 million (31.01.2023: £5.21 million)
CAD provides a clear picture of ongoing cash flow available for dividends, new
store development or debt repayment.
The table below shows the calculation of CAD
Analysis of Cash Available for Distribution (CAD) Period ended Period ended Year ended
31 January 2024 31 January 2023 31 July 2023
£'000 £'000 £'000
Group Adjusted EBITDA 7,647 7,931 15,056
(Per Statement of Comprehensive Income)
Adjustment for property lease rentals (885) (871) (1,817)
Net finance costs paid (877) (1,135) (2,664)
Capitalised maintenance expenses (110) (11) (121)
New Works Team (42) (35) (76)
Current tax (Note 8) (559) (671) (1,245)
Total deductions (2,473) (2,722) (5,923)
Cash Available for Distribution 5,174 5,208 9,133
(Decrease) in CAD over last year £ (34) (369) (2,258)
(Decrease) / increase in CAD over last period / year % (1.0%) (6.6%) (19.8%)
Number Number Number
Closing shares in issue (less shares held in EBT and treasury)
32,271,931 29,422,990 32,144,246
CAD per share 16.0p 17.7p 28.4p
(Decrease) / increase in CAD per share over last period / year
(9.4%) 57.2% (26.6%)
Taxation
The Group has made a current tax provision against earnings in this period of
£0.6 million (31.07.2023: £1.2 million) based on a corporation tax rate of
25%. (31.07.2023: 8 months at 19%, 4 months at 25%).
The deferred tax provision which is calculated at forward corporation tax
rates of 25% is substantially a tax provision against the potential
crystallisation (sales) of revalued properties and past 'rolled over' gains
and amounts to £67.4 million (31.07.2023: £66.3 million).
Gearing(11) (Excluding IFRS16 Lease Liabilities)
At 31 January 2024, the Group had £43.7 million of gross bank borrowings
(31.07.2023: £54.4 million) and cash of £15.0 million (31.07.2023: £42.1
million) representing gearing of 12.5% (31.07.2023: 5.3%) on net assets of
£230.9 million (31.07.2023: £230.5 million).
Capital Expenditure
The Group has an active new store development programme, and has grown through
a combination of building new stores, existing store improvements and
relocations.
Capital expenditure during the period totalled £18.5 million. This was
primarily the contract exchange of the Milton Keynes site, the purchase of the
Eastbourne site and the completion monies passing to the developer for
completing the Staines building prior to its fit-out. There are ongoing
construction and fit out works at our sites in Staines and Basildon, final
costs on Bedford and Peterborough. Planning and pre-development works at our
Bournemouth, Altrincham, Barking and Cheshunt sites also featured.
The Group has capital expenditure contracted but not provided for in the
financial statements of £4.27 million (31.07.2023: £13.1 million).
We carefully evaluate the ongoing economic and trading position before making
any further capital commitments and can reduce capex quickly if the market
deteriorates.
Lok'nStore has a good credit model, with low debt and gearing and which is
strongly cash generative from an increasing asset base. Increased bank
facilities, on competitive margins, and extended to April 2026, positions the
business well for the future.
Statement of Financial Position
Group net assets at the period-end were £230.9 million, up 0.2% (31.07.2023:
£230.5 million)
Market Valuation of Freehold and Leasehold Land and Buildings
It remains the Group's usual policy to undertake a comprehensive external
valuation at each year-end and we would normally do so at the next year-end at
31 July 2024, however following "the Offer" the Scheme Document will include a
valuation in respect of Lok'nStore's property portfolio in accordance with
Rule 29 of the code.
Adjusted Net Asset Value Per Share
Adjusted Net Assets per Share are the net assets of the Group adjusted for the
valuation of leasehold stores and deferred tax divided by the number of shares
at the period-end. The shares currently held in the Group's Employee Benefits
Trust (own shares held) and in treasury (zero) are excluded from the number of
shares.
At 31 January 2024, the Adjusted Net Asset Value per share (before deferred
tax) increased 0.1% to £9.87 from £9.86 at 31 July 2023. last year. Adjusted
Net Asset Value per share (before deferred tax) increased 78.7% compared to
£9.15 at 31 January 2023.
This year-on-year increase is a result of higher property values on our
existing stores as the strength of our Landmark stores is recognised, combined
with cash generated from operations less dividend payments, offset in part by
an increase in the shares in issue due to the exercise of a small number of
share options during the period.
31 Jan 31 Jan 31 July
2024 2023 2023
Analysis of net asset value (NAV) £'000 Unaudited £'000 £'000
Unaudited Audited
Net assets 230,886 193,674 230,472
Adjustment to include operating/short leasehold stores at valuation
Add: JLL leasehold valuation 27,200 22,950 27,200
Deduct: leasehold properties and their fixtures and fittings at NBV (6,891) (7,039) (6,952)
251,195 209,585 250,720
Deferred tax arising on revaluation of leasehold properties(1) (5,077) (3,978) (5,062)
Adjusted net assets 246,118 205,607 245,658
Number Number Number
Shares in issue '000 '000 '000
Opening shares in issue 32,767 30,004 30,004
Shares issued for the exercise of options 128 42 83
Shares issued from primary placing - - 2,680
Closing shares in issue 32,895 30,046 32,767
Shares held in EBT (623) (623) (623)
Closing shares for NAV purposes 32,272 29,423 32,144
Adjusted net asset value per share after deferred tax provision £7.62 £6.99 £7.64
Adjusted net asset value per share before deferred tax provision
Adjusted net assets (see above) 246,118 205,607 245,658
Deferred tax liabilities and assets recognised by the Group 67,449 59,535 66,290
Deferred tax arising on revaluation of leasehold 5,077 3,978 5,062
properties(1 )
Adjusted net assets before deferred tax 318,644 269,120 317,010
Closing shares for NAV purposes 32,272 29,423 32,144
Adjusted net asset value per share before deferred tax provision
£9.87 £9.15 £9.86
(1) A deferred tax adjustment in respect of the uplift in
the value of the leasehold properties has been included. Although this is a
memorandum adjustment as leasehold properties are included in the Group's
financial statements at cost and not at valuation, this deferred tax
adjustment is included in the adjusted net asset value calculation in order to
maintain a consistency of tax treatment between freehold and leasehold
properties.
Neil Newman
Ray Davies
Group Managing Director
Group Finance Director
Environmental Targets. Commitments and Performance:
Lok'nStore remains committed to positively impacting the environment. At 31
July 23, Lok'nStore set targets in line with its Environmental Committee's
objectives.
These targeted objectives are:
· Decarbonise our business to be Net Zero in our operations by 2040
· Assess recommended improvements from current EPCs and action as
appropriate
· Trial the installation of a battery at one store
· To increase the number of stores with PV systems
· Continue the roll out of LED lights for all stores
· Obtain BREEAM accreditation at one store
· Determine a route to eliminate waste destined for landfill
Lok'nStore is pleased to announce progress on all of these targets. A
comprehensive analysis of the remaining direct emissions is currently
underway, with efforts directed towards establishing a pathway to lower the
current target of being Net Zero in our operations by 2040.
Substantial progress has been made in enhancing the ratings across our
existing Energy Performance Certificates (EPC's), with 89% of the freehold
portfolio now achieving a rating of B or above.
We remain focused on advancing battery storage solutions and continue to work
on defining implementation strategies. In the first half of the year, we have
identified stores that are yet to benefit from LED lighting and have
prioritised their conversion. Additionally, we maintain our initiative to
install photovoltaic (PV) systems on all new buildings, with the addition of
two new stores to our PV portfolio by year end.
As highlighted in the most recent Annual Report, Lok'nStore has diligently
monitored waste management for several years, resulting in a noteworthy
reduction in landfill waste during this period. The next phase of this
initiative involves determining a viable route to eliminate waste destined for
landfill.
Collaborative efforts with our suppliers have been initiated to enhance
reporting on waste volumes and destinations. The identification of remaining
stores in the portfolio where waste disposal still involves destination being
landfill is underway, with a focus on rerouting waste. Further progress on
this will be reported in full at 31 July 2024.
We are committed to environmental certification for our buildings and are
progressing BREEAM accreditation at our Kettering store, on behalf of the
managed store owner. We continue to make progress on this accreditation for
our pipeline of new stores where appropriate.
Consolidated Statement of Comprehensive Income
For the six months ended 31 January 2024
Notes Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Revenue 1 14,168 13,583 27,147
Total property, staff, distribution and general costs 2
(6,521) (5,652) (12,091)
Group Adjusted EBITDA(1) 7,647 7,931 15,056
Depreciation 7 (2,743) (2,463) (5,690)
Equity settled share-based payments (287) (225) (450)
Non-underlying items 4 (20) 119 (318)
(3,050) (2,569) (6,458)
Operating profit
4,597 5,362 8,598
Finance income 5 282 305 665
Finance cost 6 (606) (1,008) (2,562)
Profit before taxation 4,273 4,659 6,701
Income tax expense 8 (1,336) (1,008) (2,009)
Profit attributable to:
Owners of the parent 22 2,937 3,651 4,692
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Fair value movement in property valuation 1,608 (16,057) 7,819
Deferred tax relating to change in property valuation (258) 4,014 (1,954)
Increase in fair value of cash flow hedges 55 - -
Deferred tax relating to cash flow hedges (14) - -
Other comprehensive income 1,391 (12,043) 5,865
Total comprehensive income for the period attributable to Owners of the Parent
4,328 (8,392) 10,557
Earnings per share attributable to owners of the Parent Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
Notes Unaudited Audited
Earnings per share Basic
Total basic earnings per share 10 9.12p 12.38p 15.90p
Earnings per share
Diluted
Total diluted earnings per share 10 9.06p 12.17p 15.65p
Consolidated Statement of Changes in Equity
For the six months ended 31 January 2024
Attributable to owners of the Parent
Share Share Other Revaluation Retained Total
capital premium reserves reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000
1 August 2022 - Audited 301 11,391 9,102 129,544 55,008 205,346
Profit for the period 3,651 3,651
- - - -
Other comprehensive income
Increase in property valuation net of deferred tax - - - (12,043) - (12,043)
Total comprehensive income for the year - - - (12,043) 3,651 (8,392)
Transactions with Owners
Dividend paid - - - - (3,602) (3,602)
Share based payments - - 225 - - 225
Transfers in relation to share based payments - - (24) - 24 -
Exercise of share options - 97 - - - 97
Transfer additional dep'n on revaluation net of deferred tax - - -
(432) 432 -
Total transactions with owners - 97 201 (432) (3,146) (3,280)
301 11,488 9,303 117,069 55,513 193,674
31 January 2023 - Unaudited
Profit for the period (restated) - - - - 1,041 1,041
Other comprehensive income
Increase in property valuation net of deferred tax - - - 17,908 - 17,908
Total comprehensive income for the year - - - 17,908 1,041 18,949
Transactions with Owners
Dividend paid - - - - (1,693) (1,693)
Share based payments - - 225 - - 225
Transfers in relation to share based payments - - (23) - 23 -
Deferred tax credit relating to share options - - (358) - - (358)
Primary equity placing (gross) 27 20,473 - - - 20,500
Transaction costs of primary placing - (889) - - - (889)
Exercise of share options 1 63 - - - 64
Transfer additional dep'n on revaluation net of deferred tax - -
- - (663) 663 -
Total transactions with owners 28 19,647 (156) (663) (4,609) 17,849
31 July 2023 - Audited 329 31,135 9,147 134,314 55,547 230,472
Profit for the period - - - - 2,937 2,937
Other comprehensive income
Increase in property valuation net of deferred tax - - - 1,350 - 1,350
Decrease in fair value of cash flow hedges - - 55 - - 55
Deferred tax relating to cash flow hedges - - (14) - - (14)
Total comprehensive income for the year - - 41 1,350 2,937 4,328
Transactions with Owners
Dividend paid - - - - (4,267) (4,267)
Share based payments - - 286 - - 286
Transfers in relation to share based payments - - (129) - 129 -
Deferred tax credit relating to share options - - (108) - - (108)
Exercise of share options 1 174 - - - 175
Transfer additional dep'n on revaluation net of deferred tax -
- - (577) 577 -
Total transactions with owners 1 174 49 (577) (3,561) (3,914)
31 January 2024 - Unaudited 330 31,309 9,237 135,087 54,923 230,886
Consolidated Statement of Financial Position
31 January
2024
Notes
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 11 332,067 283,240 314,013
Right of use assets 12 13,110 9,712 13,769
Derivative financial instruments 17b 55 - -
345,232 292,952 327,782
Current assets
Inventories 13 131 132 145
Trade and other receivables 14 3,517 3,738 2,585
Cash and cash equivalents 14,975 40,262 42,132
Total current assets 18,623 44,132 44,862
Total assets 363,855 337,084 372,644
Liabilities
Current liabilities
15
Trade and other payables (7,450) (6,893) (7,180)
Lease liabilities 18 (992) (1,295) (826)
Taxation (257) (580) -
Total current liabilities (8,699) (8,768) (8,006)
Non-current liabilities
Borrowings 17 (43,508) (66,314) (54,046)
Lease liabilities 18 (13,315) (8,792) (13,830)
Deferred tax 19 (67,447) (59,536) (66,290)
Total non-current liabilities (124,270) (134,642) (134,166)
Total liabilities (132,990) (143,410) (142,172)
Net assets 230,886 193,674 230,472
Equity
Equity attributable to owners of the parent
Called up share capital 20 330 301 329
Share premium 31,309 11,488 31,135
Other reserves 21 9,237 9,303 9,147
Retained earnings 22 54,923 55,513 55,547
Revaluation reserve 135,087 117,069 134,314
Total equity 230,886 193,674 230,472
Approved by the Board of Directors and authorised for issue on 19 April 2024
and signed on its behalf by:
Andrew Jacobs
Ray Davies
Chair
Finance Director
Consolidated Statement of Cash Flows
For the six months ended 31 January 2024
Notes Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Operating activities
Cash generated from operations 24a 7,090 7,847 15,815
Income tax paid (275) (950) (1,960)
Net cash from operating activities 6,815 6,897 13,855
Investing activities
Purchase of property, plant and equipment 11 (17,263) (7,589) (15,803)
Interest received 282 305 665
Net cash (used in) investing activities (16,981) (7,284) (15,138)
Financing activities
Proceeds of bank borrowings utilised for store development and bank 8,369 (1,440) (3,324)
refinancing
Repayment of bank borrowings (19,043) - (12,386)
Finance costs paid (1,158) (1,440) (3,324)
Lease liabilities paid (1,086) (871) (1,817)
Primary equity placing (net of placing costs) - - 19,611
Equity dividends paid (4,267) (3,602) (5,295)
Proceeds from issuance of ordinary shares (net) 175 97 161
Net cash (used in) financing activities (16,991) (5,816) (3,050)
Net (decrease) in cash and cash equivalents in the period
(27,157) (6,203) (4,333)
Cash and cash equivalents at beginning of the period
42,132 46,465 46,465
Cash and cash equivalents at end of the period
14,975 40,262 42,132
Accounting Policies
General information
Lok'nStore Group plc is an AIM listed company incorporated and domiciled in
England and Wales. As required, further information is available in the
investor section of the company's website at http://www.loknstore.co.uk
(http://www.loknstore.co.uk) . The address of the registered office is One
Fleet Place, London, EC4M 7WS, UK. Copies of this Interim Report and Accounts
may be obtained from the company's head office at 112 Hawley Lane,
Farnborough, Hants, GU14 8JE or from the investor section of the company's
website at http://www.loknstore.co.uk (http://www.loknstore.co.uk) . The
principal activities of the Group and the nature of its operations
are described in the Business and Financial Review.
Basis of Accounting
The interim results for the six months ended 31 January 2024 have been
prepared on the basis of the accounting policies expected to be used in the
2024 Lok'nStore Group Plc Annual Report and Accounts and in accordance with
the recognition and measurement principles of UK adopted International
Accounting Standards.
The statutory accounts for the year ended 31 July 2023 were delivered to the
Registrar of Companies following the company's Annual General Meeting and will
be available from the investor section of the company's website at
http://www.loknstore.co.uk (http://www.loknstore.co.uk) .
The same accounting policies, presentation and methods of computation are
followed in these interim condensed set of financial statements as have been
applied in the Group's latest annual audited financial statements and will
also be applied to the next annual audited financial statements.
The interim results, which were approved by the Directors on 19 April 2024,
are unaudited. The interim results do not constitute statutory financial
statements within the meaning of section 434A of the Companies Act 2006.
Comparative figures for the year ended 31 July 2023 have been extracted from
the statutory accounts for the Group for that period, which carried an
unqualified audit report, did not include a reference to any matters to which
the auditor drew attention by way of emphasis of matter, did not contain a
statement under section 498(2) or (3) of the Companies Act 2006 and have been
delivered to the Registrar of Companies.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the company (and its subsidiaries).
Control is achieved where the company has power over the investee, exposure or
rights to variable returns from the investee and the ability to use its power
to vary those returns. Intra-group transactions, balances, and unrealised
gains and losses on transactions between Group companies are eliminated on
consolidation, except to the extent that intra-group losses indicate an
impairment.
Going concern
The Directors can report that, based on the Group's budgets and financial
projections, which include a recognition of the effect of rising costs, on the
Group, they have satisfied themselves that business is a going concern. The
impact of rising costs and increasing bank interest rates and the measures the
Directors have taken to mitigate its effects are set out in the Business and
Financial Review.
The Group has a Revolving Credit Facility of £100 million which runs until
April 2026.The Board has a reasonable expectation that the company and the
Group have adequate resources and facilities to continue in operational
existence for the foreseeable future based on Group cash balances and cash
equivalents of £15.0 million (31.07.2023: £40.3 million), undrawn committed
bank facilities at 31 January 2024 of £56.3 million (31.07.2023: £33.2
million), and cash generated from operations in the period of £7.09 million
(31.01.2023: £7.85 million).
With interest rates rising, interest risk per se is increasing, however the
Executive and the Board monitor this position carefully through the Group's
detailed operating reports produced on a weekly basis and detailed financial
and accounting reports produced on a monthly basis. The Group's bank covenant
compliance is reviewed as part of this process. The Bank's senior interest
covenant is tested quarterly on a 12-month rolling basis.
The Group is fully compliant with all bank covenants and undertakings and is
not obliged to make any repayments prior to expiration. The robust capital
structure, cash flow and financing and the performance of the business are
reported in the Chair's Statement and in the Business and Financial review.
The interim financial statements are therefore prepared on a going concern
basis.
Revenue recognition
The Group recognises revenue when the amount of the revenue can be reliably
measured and when goods are sold, and title has passed. Revenue from services
provided is recognised evenly over the period in which the services are
provided.
a) Self-storage revenue
Self-storage services are provided on a time basis. The price at which
customers store their goods is dependent on size of unit and store location.
Customers are invoiced on a four-weekly cycle in advance and revenue is
recognised based on time stored to date within the cycle. When customers
vacate, they are rebated the unexpired portion of their four weekly advance
payment (subject to a seven-day notice requirement). Revenue is recognised
evenly over the period of self-storage.
b) Retail sales
The Group operates a packaging shop within each of its storage centres for
selling storage-related goods such as boxes, tape and bubble-wrap. Sales
include sales to the public at large as well as self-storage customers. Sales
of goods are recognised at point of sale when the product is sold to a
customer.
c) Insurance
Customers may choose to insure their goods in storage. The weekly rate of
insurance charged to customers is calculated based on the tariff per week for
each £1,000 worth of goods stored by the customer. This charge is retained by
Lok'nStore and covers the cost of the block policy and other costs.
Customers are invoiced on a four-weekly basis for the insurance cover they
use, and revenue is recognised based on time stored to date within the cycle.
The Group provides insurance to customers through a block policy purchased
from its insurer. Block policyholders supply VAT exempt insurance transactions
as principals rather than insurance-related services as intermediaries and
accordingly insurance income received from the customer is recognised as
revenue rather than offset against the costs of the block policy. The key
characteristics of a block policy are that:
· There is a contract between the block policyholder and the insurer which
allows the block policyholder to effect insurance cover subject to certain
conditions.
· The Group acting in our own name as the block policyholder procures
insurance cover for third parties from the insurer.
· There is a contractual relationship between the block policyholder and
third parties under which the insurance is procured.
· The block policyholder stands in place of the insurer in effecting the
supply of insurance to the third parties.
· The Group is not exposed to any insured losses arising from its insurance
activity.
d) Management fee income
Management fees earned for managing stores not owned by the Group are
recognised over the period for which the services are provided. Fees are
invoiced monthly based on a percentage of revenue performance. Additional
performance fees may be earned if an individual managed stores' EBITDA
performance exceeds agreed thresholds. Periodic fees may also be earned for
additional specific services provided and are invoiced when that service has
been completed. Revenue is recognised for each performance condition once the
condition has been met.
Critical Accounting Estimates a) and b) and Judgements c) and d)
The preparation of financial statements under IFRS requires management to make
estimates and assumptions that may affect the application of accounting
policies and the reported amounts of assets and liabilities, income and
expenses. Actual outcomes may differ from these estimates and assumptions. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
a) Estimate of fair value of trading properties
The Group commissions an external valuation of its self-storage stores at each
financial year-end. This valuation uses a discounted cash flow methodology
which is based on current and projected net operating income. Principal
assumptions underlying management's estimation of the fair value are those
relating to stabilised occupancy levels expected future growth in storage fees
and operating costs, maintenance requirements, capitalisation rates and
Discount Rates.
A more detailed explanation of the background and methodology adopted in the
valuation of the Group's trading properties is set out in note 11. The
carrying value of land and buildings held at valuation at the reporting date
was £256.1 million (31.07.2023: £255.6 million) as shown in the table in
note 11.
b) Assets in the course of construction and land held for store development
('Development property assets')
The Group's development property assets are held in the statement of financial
position at historic cost and are not valued externally. In acquiring sites
for redevelopment into self-storage facilities, the Group estimates and makes
judgements on the potential lettable storage space that it can achieve in its
planning negotiations, together with the time it will take to achieve
maturity. In addition, assumptions are made on the storage fees that can be
achieved at the store by comparison with other stores within the portfolio and
within the local area.
These judgements, taken together with estimates of operating costs and the
projected construction cost, allow the Group to calculate the potential net
operating income at maturity, projected returns on capital invested and hence
to support the purchase price of the site at acquisition.
Following the acquisition, regular reviews are carried out taking into account
the status of the planning negotiations, and revised construction costs or
capacity of the new facility, for example, to make an assessment of the
recoverable amount of the development property. The Group reviews all
development property assets for impairment at each reporting date in the light
of the results of these reviews. Once a store is opened it is valued as a
trading store.
The carrying value of development property assets at the reporting date was
£45.2 million (31.07.2023: £30.6 million). See note 11 for more details.
c) Classification of self-storage facilities as owner-occupied properties
rather than investment properties
The Directors consider that Lok'nStore Group plc is the Parent Company of a
'trading business' and is not wholly or mainly engaged in making investments.
The Group is an integrated storage solutions business offering a range of
services to its customers. We provide services to our customers under
contracts for the provision of storage services which do not give them any
property or tenancy rights and a large number of the stores we operate are
from properties where we do not own the land or the buildings. The assets we
do own are valued on the basis of the trading cash flows that the operating
businesses generate.
The Group continues to develop its managed stores' business where it uses its
operational and logistic expertise to provide a full range of services to
customers in stores we manage for third-party owners. In recent years the
Group has developed many new managed stores all of which are owned by
third-party investors and managed by Lok'nStore.
Previously owned sites at Woking, Ashford, Swindon and Crayford, have
historically been the subject of sale and manage-back transactions by which
Lok'nStore has retained the management of the business when a third-party
owner acquired the business, land and buildings. In FY2022, another four
trading stores were the subject of sale and manage-back transactions by which
Lok'nStore has retained the management of the business.
All of this trading activity, including active management and marketing
activity, as well as the self-storage income earned from our leasehold stores'
activity, demonstrate that the holding of land is not a core activity because
the trading operation is not dependent on the ownership of land. See the chart
in the Property Review for the changing ownership structure of the stores.
The Group has always and continues to comply with all of the usual accounting
and tax protocols consistent with a trading business. As at the period-end,
Lok'nStore operated 43 stores mainly in southern England, although in recent
years we have expanded our historically southern England focused geographic
footprint into the Southwest (Exeter), Wales (Cardiff) and the Northwest
(Salford, Warrington, and Altrincham). Of the 43 stores, Lok'nStore owns the
freehold interest in 17 stores, 10 of the stores are held under commercial
leases. There are a further 16 managed stores operating under management
contracts for third-party owners making a total of 43 stores trading under the
Lok'nStore brand. In addition, there is a secured pipeline of a further 10
stores (8 owned and 2 managed). When fully developed the Group will operate 53
trading stores. Since the period-end this had risen to 44 stores with the
opening of the Kettering (Managed Store) in early February 2024.
One of the features of Lok'nStore's strategy is to increase the number of
stores we manage for third parties selling our expertise in storage solutions
management, operating systems and marketing, through management fees rather
than retaining a proprietary interest in land and buildings.
The classification of self-storage facilities as owner-occupied properties
rather than investment properties has resulted in the recognition of fair
value gains in the period (net deferred of tax) of £1.35 million (31.07.2023:
£5.9 million) in Other Comprehensive Income rather than the Income Statement.
d) Application of IFRS 16
The Group uses judgement to assess whether the interest rate implicit in the
lease is readily determinable. When the interest rate implicit in the
lease is not readily determinable, the Group makes a judgement on the
incremental borrowing rate based on its external borrowings secured against a
similar asset, adjusted for the term of the lease.
e) Dilapidations
The Group has a number of stores operating under leasehold tenure. From time
to time, in accordance with the Group's stated objective to maximise
shareholder value, it may choose not to renew a lease, particularly where
alternative premises have been sourced and customers can be moved into the new
premises. In these circumstances the Group may incur repairing and decoration
liabilities ('dilapidations') based on the tenant's obligation to the landlord
to keep the leasehold premises in good repair and decorative condition.
Landlords in these circumstances will normally serve a schedule of
dilapidations on the tenant setting out a list of items to be remedied. This
may also refer to obligations on the tenant to reinstate any alterations works
previously undertaken by the tenant under a Licence for Alterations.
Such claims will always be negotiated vigorously by Lok'nStore and may require
legal, valuation and surveyor's expertise, particularly if it can be shown
that the landlord's interest in the premises has not been diminished by the
dilapidations. As such, evaluations of actual liabilities are always a
critical judgement and any sums provided to be set aside can only be an
estimate until a settlement is concluded.
Notes to the Financial Statements
For the six months ended 31 January 2024
1 Revenue
Analysis of the Group's revenue from continuing operations is shown below:
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
Stores trading £'000 £'000 £'000
Self-storage revenue 12,038 11,438 22,873
Insurance revenue 1,177 1,138 2,251
Retail sales 112 124 240
Sub-total - self-storage revenue - owned stores 13,327 12,700 25,364
Management fees - managed stores 780 822 1,659
Sub-total 14,107 13,522 27,023
Non-storage income 61 61 124
Total revenue per statement of comprehensive income 14,168 13,583 27,147
2 Property, staff, distribution, general costs and retail
cost of sales
Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Property and premises costs 3,682 3,034 6,821
Property lease rental payments (885) (871) (1,817)
Net property and premises costs 2,797 2,163 5,004
Staff costs 2,744 2,577 5,267
General overheads 856 787 1,567
Subtotal - operating costs 6,397 5,527 11,838
Retail products cost of sales 124 125 253
Total property, staff, distribution, general costs and retail cost of sales 6,521 5,652 12,091
3 Cost of sales of retail products
Cost of sales represents the direct costs associated with the sale of retail
products such as boxes and packaging and the ancillary sales of insurance
cover for customer goods, all of which fall within the Group's ordinary
activities.
Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Retail 59 55 110
Insurance 41 48 97
Other 24 22 46
Total cost of sales of retail products 124 125 253
4 Non-underlying items
Six months ended Six months Year
31 January ended ended
2024 31 January 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Project costs ¹ (20) - -
Liquidated damages received on development (2) - 195 195
Abortive costs (3) - (76) (63)
Recognition of additional Share Incentive Plan (SIP) liability - - (369)
Additional follow-on costs relating to the sale and manage-back of four
trading stores located at Basingstoke, Cardiff, Horsham and Portsmouth.
- - (81)
(20) 119 (318)
(2024)
(1 ) Project costs
(2023)
(2 ) Liquidated damages received on the late delivery of a
new store development which has subsequently opened.
(3 ) The Group's active search for suitable development sites
for new Landmark stores has resulted in some abortive costs - mainly around
planning and corporate professional costs.
5 Finance income
Six months ended Six months ended Year ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Bank interest 279 305 660
Other interest 3 - 5
Total finance income 282 305 665
Interest receivable arises on cash and cash equivalents (see note 16).
6 Finance costs
Six months ended 31 January Six months ended 31 January Year ended
2024 2023 31 July
Unaudited Unaudited 2023
£'000 £'000 Audited
£'000
Bank interest - 676 1,568
Non-utilisation fees 190 100 212
Amortisation of bank loan arrangement fees 116 117 235
Interest on lease liabilities 300 115 547
Total finance cost 606 1,008 2,562
Most interest payable arises on bank loans classified as financial
liabilities measured at amortised cost.
7 Profit before taxation
Six months ended Six months Year ended
31 January ended 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £ '000
Profit before taxation is stated after charging:
Depreciation and amounts written off property, plant and equipment:
Depreciation based on historic cost 1,316 1,225 2,550
Depreciation based on revalued assets 769 576 1,455
Depreciation of property, plant and equipment: 2,085 1,801 4,002
Depreciation of right of use assets 658 662 1,688
2,743 2,463 5,690
8 Taxation
Six months ended 31 January Six months Year
2024 ended 31 January ended 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Current tax:
UK corporation tax 559 671 1,245
Deferred tax:
Origination and reversal of temporary differences 777 336 764
Total deferred tax charge 777 336 764
Income tax expense for the period/year 1,336 1,008 2,009
The charge for the period can be reconciled to the profit for the period as
follows:
Six months ended 31 January Six months Year
2024 ended 31 January ended 31 July
Unaudited 2023 2023
£'000 Unaudited Audited
£'000 £'000
Profit before tax 4,273 4,659 6,701
Tax on ordinary activities at the standard effective rate of corporation tax
in the UK of 25%
1,068 866 1,423
Depreciation of non-qualifying assets 257 225 482
Share based payment charges in excess of corresponding tax deduction
72 (13) 94
Other non-deductible expenditure 17 2 -
Adjustments in respect of prior periods - corporation tax (38) - (38)
Other (40) (72) 48
Income tax expense for the period/year 1,336 1,008 2,009
Effective tax rate 31.3% 21.6% 30.0%
With the increase in corporation tax rate to 25% effective 1 April 2023, the
Group paid a blended rate of 18.6% for year ended 31 July 2023.
9 Dividends
Six months ended 31 January 2024 Six months ended 31 January 2023 Year
Unaudited Unaudited ended 31 July
£'000 £'000 2023
Audited
Amounts recognised as distributions to equity holders in the year: £'000
Final dividend - year ended 31 July 2022 (12.25 pence per share) - 3,602 3,602
Interim dividend - six months to 31 July 2023 (5.00 pence per share)
Final dividend - year ended 31 July 2023 (13.25 pence per share) 4,267 - 1,693
4,267 3,602 5,295
Owing to the circumstances as regards the recommended cash offer for the
company by Shurgard Self Storage Ltd as announced on 11 April 2024, the
company will not be paying an interim dividend.
10 Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Total profit for the financial year attributable to owners of the parent 2,937 3,651 4,692
No. of shares No. of shares No. of shares
Weighted average number of shares
For basic earnings per share 32,189,583 29,479,779 29,518,911
Dilutive effect of share options 207,735 520,042 467,137
For diluted earnings per share 32,397,318 29,999,821 29,986,048
623,212 shares (31.01.2023: 623,212) are held in the Employee Benefit Trust,
and these are excluded from the above calculation.
Earnings per share attributable to owners of the Parent Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
Earnings per share - Basic
Basic earnings per share 9.12p 12.38p 15.90p
Earnings per share - Diluted
Total diluted earnings per share 9.06p 12.17p 15.65p
11 Property, plant and equipment
The Group has an active store development programme and has material
qualifying assets that take a substantial period of time to develop from
acquisition to store opening. Accordingly, in accordance with IAS 23,
borrowing costs of £1.27 million (six months ended 31.1.2023: £0.66 million:
year ended 31.07.2023 £1.5 million) have been capitalised in the current
period that are directly attributable to the acquisition, construction and
fit-out of these qualifying store assets.
Capital expenditure during the period totalled £18.5 million. This was
primarily the contract exchange of the Milton Keynes site, the purchase of the
Eastbourne site and the completion monies passing to the developer for
completing the Staines building prior to its fit-out. site. There are ongoing
construction and fit out works at our sites in Staines and Basildon, final
costs on Bedford and Peterborough. Planning and pre-development works at our
Bournemouth, Altrincham, Barking and Cheshunt sites also featured.
Property, plant and equipment (non-current assets) with a carrying value of
£332.1 million (31.7.2023: £314.0 million) (31.1.2023: £283.2 million) are
pledged as security for bank loans (see Note 17).
Market Valuation of Freehold and Operating Leasehold Land and Buildings
It remains the Group's established policy to undertake a comprehensive
external valuation at each year-end and we will do so at the next year-end at
31 July 2024.
Directors' valuation of land and property
Land & Buildings at the rear of the new Salford trading store.
Following the opening of the Salford store there is a remainder of land and
building at the rear of the new store which is suitable for rent on commercial
terms to third party users. Based on negotiated rents with third parties the
Directors continue to place a Directors' Valuation of £1.5 million on this
land and building. (31.7.2023: £1.5 million) (31.1.2023: £1.5 million).
Group Development Land and Short leasehold Fixtures, Motor Total
property assets buildings improvements fittings and vehicles £'000
at cost at valuation at cost equipment at cost
£'000 £ '000 £'000 at cost £'000
£'000
Cost or valuation
1 August 2022 29,215 239,805 7,715 31,306 10 308,051
Additions 7,178 50 32 991 8,251
Transfers
Disposals - - - - - -
Revaluations - (17,016) - - - (17,016)
31 January 2023 Unaudited 36,393 222,839 7,747 32,297 10 299,286
Depreciation
1 August 2022 - - 2,805 12,388 10 15,203
Depreciation - 958 151 692 - 1,801
Revaluations - (958) - - - (958)
31 January 2023 Unaudited - - 2,956 13,080 10 16,046
Net book value at 31 January 2023 - Unaudited
36,393 222,839 4,791 19,217 - 283,240
Cost or valuation
1 February 2023 36,393 222,839 7,747 32,297 10 299,286
Additions 6,082 (12) 141 2,886 - 9,097
Transfers (11,870) 10,186 - 1,684 - -
Disposals - - - - - -
Revaluations - 22,586 - - - 22,586
31 July 2023 - Audited 30,605 255,599 7,888 36,867 10 330,969
Depreciation
1 February 2023 - - 2,956 13,080 10 16,046
Depreciation - 1,291 150 760 - 2,201
Revaluations - (1,291) - - - (1,291)
31 July 2023 - Audited - - 3,106 13,840 10 16,956
Net book value at 31 July 2023 - Audited 30,605 255,599 4,782 23,027 - 314,013
Cost or valuation 30,605 255,599 7,888 36,867 10 330,969
1 August 2023
Additions 18,122 167 128 114 - 18,531
Transfers (3,510) - - 3,510 - -
Revaluations - 375 - - - 375
31 January 2024 - Unaudited 45,217 256,141 8,016 40,491 10 349,875
Depreciation
1 August 2023 - - 3,106 13,840 10 16,956
Depreciation - 1,233 139 713 - 2,085
Revaluations - (1,233) - - - (1,233)
31 January 2024 Unaudited - - 3,245 14,553 10 17,808
Net book value at 31 January 2024 - Unaudited 45,217 256,141 4,771 25,938 - 332,067
12 Right of Use assets (ROU)
The Group accounts for the value of its property leases on the balance sheet
by the recognition of a right of use asset (the right to use the leased item)
and a corresponding financial liability to pay rentals due over the property
lease term. This treatment relates to the Group's property leases. The Group
has no leases on any other types of assets.
The Group recognises right of use assets (ROU) of £13.1 million at 31 January
2024 (£13.8 million at 31 July 2023 and total lease liabilities of £14.7
million, (31.07.2023: £14.7 million) with depreciation charges of £0.7
million (31.07.2023: £1.7 million) and lease interest charges of £0.3
million (31.07.2023: £0.5 million).
Detailed analysis is provided in the tables below: -
Group Group Group
Right of use asset (ROU) 31 January 2024 31 January 2023 £'000 31 July 2023
£'000 £'000
At 31 July 2022 13,768 10,424 10,424
Additions - (50) 5,032
Depreciation (658) (662) (1,688)
At 31 July 2024 13,110 9,712 13,768
The Group accounts for the value of its property leases on the balance sheet
by the recognition of a right of use asset (the right to use the leased item)
and a corresponding financial liability to pay rentals due over the property
lease term. This treatment relates to the Group's property leases. The Group
has no leases on any other types of assets.
Group Group Group
31 January 31 January 31 July
2024 2023 2023 £'000
£'000 £'000
Property rentals 885 871 1,817
Depreciation of right of use assets (ROU) (658) (662) (1,688)
Interest charged on lease liability (299) (115) (547)
Impact on Comprehensive Income 72 94 (418)
The Present Value of all future operating lease payments on existing leases is
calculated using 2.2% (2023: 2.2%) and on the two new leases executed in 2023
at 6.43% as an incremental borrowing rate as the single Discount Rate. The
right of use assets are depreciated based on the individual lease term of the
separate leases.
13 Inventories
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Consumables and goods for resale 131 132 145
The amount of inventories recognised as an expense during the period was
£59,320 (31.1.2023: £54,851).
14 Trade and other receivables
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited £'000 Audited £'000
£'000
Trade receivables 1,293 1,960 1,342
Other receivables 1,690 1,252 779
Taxation - - 27
Prepayments and accrued income 534 526 437
3,517 3,738 2,585
Other receivables includes a VAT repayment receivable of £623,129. This was
received from HMRC on 12 March 2024.
Trade receivables
In respect of its self-storage business the Group does not typically offer
credit terms to its customers and hence the Group is not exposed to
significant credit risk. All customers are required to pay in advance of the
storage period. Late charges are applied to a customer's account if they are
more than ten days overdue in their payment. The Group provides for
receivables based upon sales levels and estimated recoverability.
There is a right of lien over the customers' goods, so if they have not paid
within a certain time frame the Group has the right to sell the items, they
store to cover the debt owed by the customer. Trade receivables that are
overdue are provided for based on estimated irrecoverable amounts, determined
by reference to expected credit losses.
For individual self-storage customers, the Group does not perform credit
checks. However, this is mitigated by the fact that all customers are required
to pay in advance. Before accepting a new business customer who wishes to use
a number of the Group's stores, the Group uses an external credit rating to
assess the potential customer's credit quality and defines credit limits by
customer. There are no customers who represent more than 5% of the total
balance of trade receivables.
There has not been a significant change in credit quality in the Group's trade
receivables and the amounts are still considered recoverable. The Group holds
a right of lien over its self-storage customers' goods if these debts are not
paid.
15 Trade and other payables
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited £'000 Audited £'000
£'000
Trade payables 2,858 2,310 1,326
Taxation and social security costs 467 401 453
Other payables 536 561 549
Accruals and deferred income 3,589 3,621 4,852
7,450 6,893 7,180
The Directors consider that the carrying amount of trade and other payables
and accruals approximates fair value.
16 Capital management and gearing
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising the return to stakeholders
through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 17, cash and cash equivalents and equity
attributable to the owners of the Parent, comprising issued capital, reserves
and retained earnings as disclosed in the Consolidated Statement of Changes in
Equity.
The Group's banking facilities require that management give regular
consideration to interest rate hedging strategy. The Group has complied with
this requirement during the year.
The Group's Board reviews the capital structure on an on-going basis. As part
of this review, the Board considers the cost of capital and the risks
associated with each class of capital.
The Group seeks to have a relatively conservative gearing ratio (the
proportion of net debt to equity) balancing the overall level with the
opportunities for the growth of the business. The Board considers at each
review the appropriateness of the current ratio in light of the above. The
Board is currently satisfied with the Group's gearing ratio.
The gearing ratio at the period-end is as follows:
Gearing - Bank Borrowings 31 January 31 January 31 July
2024 2023 2023
Unaudited £'000 Unaudited £'000 Audited £'000
Gross debt (43,744) (66,785) (54,399)
Cash and cash equivalents 14,975 40,262 42,132
Net debt (28,769) (26,523) (12,267)
Total equity - balance sheet 230,886 193,674 230,472
Net debt to equity ratio 12.5% 13.7% 5.3%
Total Gearing - Bank Borrowings and lease liabilities 31 January 31 January 31 July
2024 2023 2023
Unaudited £'000 Unaudited £'000 Audited £'000
Gross debt - bank borrowings (43,744) (66,785) (54,399)
Gross debt - lease liabilities (14,307) (10,087) (14,656)
Cash and cash equivalents 14,975 40,262 42,132
Net debt (43,076) (36,610) (26,923)
Total equity - balance sheet 230,886 193,674 230,472
Net debt to equity ratio 18.7% 18.9% 11.7%
Cash balances held in current accounts attract no interest, but surplus cash
is transferred daily to a treasury deposit account which earns interest at the
prevailing money market rates. All amounts are denominated in Sterling. The
balances at 31 January 2024 are as follows:
31 January 31 January 31 July
2024 2023 2023
Unaudited £'000 Unaudited £'000 Audited £'000
Variable rate treasury deposits 14,539 39,490 41,238
SIP trustee deposits 63 63 63
Cash in operating current accounts 368 703 826
Other cash and cash equivalents 5 6 5
Total cash and cash equivalents 14,975 40,262 42,132
The Group reviews the current and forecast projections of cash flow, borrowing
and interest cover as part of its monthly management accounts review. In
addition, an analysis of the impact of significant transactions is carried out
regularly, as well as a sensitivity analysis of the impact of movements in
interest rates on gearing and interest cover.
The Group places its cash deposits not immediately required for store
development activity cash on Treasury Deposit Reserve in tranches based on
fixed monthly deposit periods and executes these on a rolling basis.
17a Borrowings
The Group currently has £43.7 million drawn against its facility which is
secured with RBS and ABN AMRO jointly by legal charges and debentures over the
freehold and leasehold properties and other tangible assets of the business
with a net book value of £332.1 million (31.1.2023: £283.2 million) together
with cross-company guarantees from Group companies.
The interest rate is set under Sterling Overnight Index Average (SONIA)
arrangements. The all-in debt cost on the floating rate of £33.7 million
drawn averaged 6.72% (31.7.2023: 4.77%) in the period. The £10 million of
fixed debt (see note 17b) reduced the total average all-in rate to 6.63%.
The Group is not obliged to make any repayments prior to the facility's
expiration in April 2026.
Bank borrowings 31 January 31 January 31 July
2024 Unaudited 2023 Unaudited 2023
£'000 £'000 Audited £'000
Non-current
Bank loans repayable in more than two years
but not more than five years
Gross 43,744 66,785 54,399
Deferred financing costs (236) (471) (353)
Net bank borrowings 43,508 66,314 54,046
Non-current borrowings 43,508 66,314 54,046
17b Derivative financial instruments
In December 2023, the Group entered into a £5.0 million interest rate swap
with ABN Amro Bank effective from 21 December 2023 at a fixed 5-year SONIA
swap rate of 3.51%. Also, in December 2023 the Group entered into a £5
million interest rate swap with Nat West Bank plc effective from 22 December
2023 at a fixed 5-year SONIA swap rate of 3.51%. This £10 million of
aggregate swap instruments fixes the interest rate on £10.0 million of debt
at an effective rate of 5.21% based on current 150 basis points (bps) margin
and will result in estimated saving of c. £0.2 million of interest payable in
the coming year compared to the company's current cost of floating debt of
6.7% on its Revolving Credit Facility.
The £10 million fixed rate is treated as an effective cash flow hedge and its
fair value stated as a non-current asset of £54,664 as set out in the table
below.
Currency Principal Maturity date Fair value
£ £
Interest rate swap (NatWest) GBP 5,000,000 22/12/28 20,960
Interest rate swap (ABN Amro) GBP 5,000,000 21/12/28 33,704
10,000,000 54,664
The fair value of the interest rate swaps of £54,664 has been recognised in
other comprehensive income in the year.
18 Lease liabilities
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the leases. Where this cannot be readily determined the
Present Value of all future operating lease payments is calculated using 2.2%
(2023: 2.2%) as an incremental borrowing rate as the Discount Rate.
After the application of an interest charge at 2.2% (2023: 2.2%) but 6.4%
based on the effect of the two leases executed, the total lease liabilities
are shown below.
Lease liabilities attributable to Right of Use assets 31 January 31 January 31 July
2024 Unaudited £'000 2023 Unaudited £'000 2023
Audited
£'000
Current lease liabilities
Amounts due within one year 992 1,295 826
Non-current lease liabilities
Amounts due in one to two years 1,001 1,075 1,039
Amounts due in three to five years 1,753 2,642 1,786
Amounts due in more than five years 10,561 5,075 11,005
Non-current lease liabilities 13,315 8,792 13,830
Total lease liabilities 14,307 10,087 14,656
Lease liabilities attributable to Right of Use assets 31 January 31 January 31 July
2024 Unaudited £'000 2023 Unaudited 2023
£'000 Audited £'000
Total lease liabilities B/fwd 14,656 10,894 10,894
Increase in lease liabilities - lease extensions - (51) 5,032
Lease repayments (649) (871) (1,817)
Lease interest (non-cash) 300 115 547
Total lease liabilities C/fwd 14,307 10,087 14,656
The portfolio of property leases all have similar characteristics. Subject to
periodic future rent reviews, typically every five years, there are no
variable lease payments. The Group has no leases on any other types of assets.
The total future commitments due under non-cancellable leases is set out in
note 25 (Commitments under Property Leases).
19 Deferred tax
Deferred tax liability 31 January 2024 31 January 2023 31 July
Unaudited Unaudited 2023
£'000 £'000 Audited
£'000
Liability at start of period/year 66,290 63,214 63,214
Charge to income for the period/year 777 336 764
Tax charged / credited directly to other comprehensive income 272 (4,014) 1,954
Credit to share based payment reserve 108 - 358
Liability at end of period/year 67,447 59,536 66,290
20 Share capital
31 January 2024 31 January 2023 31 July
Unaudited Unaudited 2023
£'000 £'000 Audited
£'000
Authorised: 35,000,000 ordinary shares of 1 pence each 350 350 350
Called up, Called up, Called up,
allotted and allotted and allotted and
fully paid fully paid fully paid
Number Number Number
Number of shares at start of period/year 32,767,458 30,003,545 30,003,545
Options exercised during period/year 127,685 42,657 84,174
Primary placing of fully paid ordinary shares - 7 July 2023 - - 2,679,739
Balance at end of period/year 32,895,143 30,046,202 32,767,458
Allotted, issued and fully paid ordinary shares £ £ £
Balance at start of period/year 329 301 301
Options exercised during period/year 1 - 1
Primary placing of fully paid ordinary shares - 27
Balance at end of period/year 330 301 329
The company has one class of ordinary shares which carry no right to fixed
income.
21 Other reserves
Other Capital Share-based
Merger reserve redemption payment Hedging
reserve reserve reserve reserve Total
Group £'000 £'000 £'000 £'000 £'000 £'000
1 August 2022 - Audited 6,295 1,294 34 1,479 - 9,102
Equity share based payments - - - 225 - 225
Tax credit relating to share options - - - (24) - (24)
31 January 2023 - Unaudited 6,295 1,294 34 1,680 - 9,303
Equity share based payments - - - 225 - 225
Transfer to retained earnings in relation to share based payments (47) - (47)
- - -
Tax relating to share options - - - (334) - (334)
31 July 2023 - Audited 6,295 1,294 34 1,524 - 9,147
Equity share based payments - - - 286 - 286
Cash flow hedge reserve net of tax - - - - 41 41
Transfer to retained earnings in relation to share based payments - - - (129) - (129)
Tax credit relating to share options - - - (108) - (108)
31 January 2024 - Unaudited 6,295 1,294 34 1,573 41 9,237
Merger reserve
The merger reserve represents the excess of the nominal value of the shares
issued by Lok'nStore Group plc over the nominal value of the share capital and
share premium of Lok'nStore Limited as at 31 July 2001.
Other reserves
The other distributable reserve and the capital redemption reserve arose in
the year ended 31 July 2004 from the purchase of the company's own shares and
a cancellation of share premium.
Share based payment reserve
Under IFRS 2 there is the option to make transfers from the share-based
payment reserve to retained earnings in respect of accumulated share option
charges where the options have either been exercised or have lapsed
post-vesting.
22 Retained earnings
Retained earnings before deduction of own shares Retained earnings
Own shares
(Note 23) Total
Group £'000 £'000 £'000
1 August 2023 - Audited
Profit for the financial period 3,651 - 3,651
Transfer from revaluation reserve - additional depreciation on revaluation 432 - 432
Transfer share-based payment reserve (Note 21) 24 - 24
Dividend paid (3,602) - (3,602)
31 January 2023 - Unaudited 56,013 (500) 55,513
1 February 2023 - Unaudited
Profit for the financial period 1,041 - 1,041
Transfer from revaluation reserve - additional depreciation on revaluation 663 - 663
Transfer share-based payment reserve (Note 21) 23 - 23
Dividend paid (1,693) - (1,693)
31 July 2023 - Audited 56,047 (500) 55,547
1 August 2023 - Audited
Profit for the financial period 2,937 - 2,937
Transfer from revaluation reserve - additional depreciation on revaluation 577 - 577
Transfer share-based payment reserve (Note 21) 129 - 129
Dividend paid (4,267) - (4,267)
31 January 2024 - Unaudited 55,423 (500) 54,923
The transfer from revaluation reserve represents the additional depreciation
charged on revalued assets net of deferred tax. The Own Shares Reserve
represents the cost of shares in Lok'nStore Group plc purchased in the market
and held in the Employee Benefit Trust to satisfy awards made under the
Group's share incentive plan.
23 Own shares
EBT EBT Treasury Treasury Own shares
shares shares Total
Number £ Number £ £
31 July 2022 - Audited 623,212 499,910 - 499,910
31 January 2023 - Unaudited 623,212 499,910 - - 499,910
31 July 2023 - Audited 623,212 499,910 - - 499,910
31 January 2024 - Unaudited 623,212 499,910 - - 499,910
The Group operates an Employee Benefit Trust (EBT) under a settlement dated 8
July 1999 between Lok'nStore Limited and Lok'nStore Trustee Limited,
constituting an employees' share scheme.
Funds are placed in the trust by way of deduction from employees' salaries on
a monthly basis as they so instruct for purchase of shares in the company.
Shares are allocated to employees at the prevailing market price when the
salary deductions are made.
As at 31 January 2024, the Trust held 623,212 (31.01.2023: 623,212) ordinary
shares of 1 pence each with a market value of £5,048,017 (31.01.2023:
£5,920,514). No shares were transferred out of the scheme during the period
(2023: Nil). No options have been granted under the EBT.
24 Cash flows
(a) Reconciliation of profit before tax to cash generated from operations
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Group profit before tax 4,273 4,659 6,701
Depreciation and loss on disposal 2,743 2,463 5,690
Equity settled share-based payments 287 225 405
Non-underlying items 20 (119) 318
Interest receivable (282) (305) (665)
Interest payable - bank borrowings 307 894 2,015
Interest payable - lease liabilities 299 115 547
Decrease / (increase) in inventories 14 11 (2)
(Increase) / decrease in receivables (959) 250 1,393
Increase /(decrease) increase in payables 388 (346) (632)
Cash generated from operations 7,090 7,847 15,815
(b) Reconciliation of net cash flow to movement in net debt
Net debt is defined as non-current and current borrowings, as detailed in note
17 less cash and cash equivalents.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
(Decrease) / increase in cash in the period/year
(27,157) (6,203) (4,333)
Change in net debt resulting from cash flows 10,655 - 12,386
Movement in net debt in period (16,502) (6,203) 8,053
Net debt brought forward (12,267) (20,320) (20,320)
Net debt carried forward (28,769) (26,523) (12,267)
25 Commitments under property leases
At 31 January 2024 the total future minimum lease payments as a lessee under
non-cancellable property leases were as follows:
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
Land and buildings £'000 £'000 £'000
Amounts due:
Within one year 1,560 1,727 1,415
Between two and five years 4,228 4,663 4,354
After five years 14,020 5,693 14,687
19,808 12,083 20,456
Property lease payments represent rentals payable by the Group for certain of
its properties. Typically, leases are negotiated for a term of 20 years and
rentals are fixed for an average of five years.
26 Related party events
The aggregate remuneration of the Directors, and the other key management
personnel of the Group, is set out below.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Short-term employee benefits - Directors 421 374 827
Short-term employee benefits - Other key management 65 105 175
Post-employment benefits - Directors 11 9 13
Post-employment benefits - Other key management 3 4 6
Share-based payments 287 225 450
Social security costs - Directors 144 80 158
Social security costs - Other key management 23 23 43
Total 954 820 1,672
The Group recognises a number of management personnel that are important to
retain within the business in order for it to achieve its strategic plan.
Accordingly, these are recognised as key personnel and are participants in the
Long-Term Performance Plan. They are included in the table above.
27 Capital Commitments
The Group has capital expenditure contracted but not provided for in the
financial statements of £4.27 million relating to commitments to complete the
ongoing construction of our sites in Staines, a phase 2 fit-out at Bedford,
and retentions held on Warrington, Stevenage, Bedford and Peterborough.
28 Events after the Reporting Date
· Eastbourne planning
A new formal planning permission for a new store in Eastbourne, Sussex was
approved on 18 March 2024.
· Recommended Cash Offer of Lok'nStore Group Plc by Shurgard Self
Storage Ltd ("Shurgard") ("The Offer")
On 11 April 2024, the Boards of Shurgard and Lok'nStore announced that they
have reached agreement on the terms of a recommended cash offer to be made by
Shurgard to acquire the entire issued and to be issued share capital of
Lok'nStore (the 'Acquisition').
Under the terms of the Offer, Lok'nStore Shareholders will be entitled to
receive 1,110 pence in cash for each Lok'nStore Share. The Directors intend to
unanimously recommend the Offer.
The Offer is expected to be effected by means of a Court-sanctioned Scheme of
Arrangement between Lok'nStore and Scheme Shareholders under Part 26 of the
Companies Act 2006, although Shurgard reserves the right to effect the
Acquisition by way of a Takeover Offer.
The Offer contains a customary price adjustment in respect of any dividends
declared, made or paid after 11 April 2024 and hence the Board are not
recommending a dividend at this interim stage.
Glossary
Abbreviation
APM Alternative performance measure
Adjusted EBITDA Earnings before all depreciation and amortisation charges, losses or profits
on disposal, share-based payments, acquisition costs, non-underlying items and
non-recurring professional costs, finance income, finance costs and taxation
Adjusted Store EBITDA Adjusted EBITDA (see above) but before central and head office costs
AGM Annual General Meeting
Bps Basis Points
CAD Cash available for Distribution
Capex Capital Expenditure
CGU Cash-generating units
CO2 e Carbon Dioxide Equivalents
CSOP Company Share Option Plan
DRIP Dividend Reinvestment Plan
EBT Employee Benefit Trust
EIS Enterprise Investment Scheme
(eKPIs) Environmental key performance indicators
EMI Enterprise Management Incentive Scheme
ESOP Employee Share Option Plan
EU European Union
GHG Greenhouse gas
HMRC His Majesty's Revenue and Customs
IAS International Accounting Standard
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
ISA International Standards on Auditing
JLL Jones Lang LaSalle
KPI Key Performance Indicator
LFL Like for like
LTPPP Long Term Partnership Performance Plan
LTV Loan to Value Ratio
MWh Megawatt Hour
NAV Net Asset Value
NBV Net Book Value
Operating Profit Earnings before interest and tax (EBIT)
PPP Partnership Performance Plan
PV Photovoltaic
QCA Quoted Companies Alliance
RICS Royal Institution of Chartered Surveyors
RNS Regulatory News Service
ROU Right of Use Asset
SIP Share Incentive Plan
SME Small and medium sized enterprises
SONIA Sterling Overnight Index Average
Sq. ft. Square feet
tCO2e Tonnes of carbon dioxide equivalent
TVR Total voting rights
VAT Value Added Tax
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. END FR QKCBBQBKDKQDRecent news on Lok'n Store
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