REG - Lok'nStore Group - Preliminary Results for year ended 31 July 2023
30/10/2023 07:15
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RNS Number : 6193R Lok'nStore Group PLC 30 October 2023
LOK'NSTORE GROUP PLC
("Lok'nStore" or "the Group")
Preliminary Results for the year ended 31 July 2023
Lok'nStore, the AIM listed self-storage company, is pleased to announce its
Preliminary Results for the year ended 31 July 2023.
Highlights
v Solid growth of Same Store Revenue
v Increase in Net Asset Value per share
v 10.1% increase in annual dividend
v Dynamic new store opening schedule driving future growth
§ Two new Landmark stores opened
§ Three further Landmark stores to open in FY24
v £20.5 million equity raise
v Low net debt and LTV
Reminder - We sold four stores on a sale and manage-back arrangement on 31
January 2022 adding circa £37 million to cash, reinforcing our strong
financial footing. ('the Sale')
· Our Same Store analysis strips out the Sale and the new stores
opened.
· Our Same Store Self Storage analysis also strips out the effect of
this sale, new stores and management income from Managed Stores.
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.
Strong revenue growth
Same Store(14)
ü Same Store Self Storage Revenue(15) £25.30 million up 12.1% (2022: £22.57
million)
ü Same Store Self Storage Adjusted EBITDA(1) £14.5 million up 4.0% (2022:
£13.9 million)
Headline
ü Group Revenue £27.1 million up 0.9% (2022: £26.9 million)
ü Group Adjusted EBITDA(1) £15.1 million down 7.9% (2022: £16.3 million)
Driven by solid operating metrics
ü Pricing up 6.8% to £27.37 per sq. ft (2022: £25.62 per sq. ft)
ü Closing occupancy in stores over 3 years old 80.6% (2022: 82.9%)
ü Move in's up 4.9% year on year
ü Managed store recurring revenue £1.5 million up 11.9% (2022: £1.3
million)
Management of Costs
ü The external cost increases experienced in year, specifically in energy,
insurance and interest charges - we expect the rate of these cost increases to
abate
ü Same Store store(15) EBITDA margins although lower remain robust at 57.2%
(2022: 61.3%)
Twelfth consecutive year of dividend increase
ü Annual dividend increased by 1.75 pence to 19.00 pence per share up 10.1%
(2022: 17.25 pence per share) - covered 1.5x by CAD
Net Asset Value up
ü Adjusted Net Asset Value(5) per share up 1.4% to £9.86 per share (2022:
£9.72 per share)
Disciplined capital allocation underpins our strong balance sheet and low net
debt
ü £20.5 million (gross) equity raised in July 2023
ü £42.1 million cash at year-end (2022: £46.5 million)
ü Net debt (excluding lease liabilities and deferred finance costs) reduced
to £12.3 million (2022: £20.3 million)
ü Loan to Value ratio(6) (net of cash) down to 3.7% (2022: 6.6%)
Dynamic pipeline(8) of new Landmark stores will deliver further growth
ü Two new Landmark stores opened - 108,890 sq.ft of new owned space added up
9.7%
ü Three new Landmark stores on site will add over 162,000 sq. ft of new
trading space.
Well positioned for the future
ü Trading momentum continues post year end with stores revenue up 6.3% for
August and September 2023 compared to the same corresponding two-month period
last year.
ü Flexibility to respond to market circumstances
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 business has once again moved ahead with Same Store Self Storage
revenue up 12.1%. Demand for UK self-storage assets remains strong, and this,
coupled with our new store openings, has driven our Net Asset Value up by 1.4%
to £9.86 per share. We are proposing a 10.1% increase in the annual dividend,
the twelfth year of increased dividends in a row. The net debt is low and LTV
is only 3.7%.
"Trading since the year-end continues to be in line with expectations. We have
opened two new Landmark stores and are on site at three more which will open
within the next 12 months which can be completed using cash. These new stores
will add further momentum to sales, earnings and net asset growth."
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
I am delighted to be reporting another year of good results for Lok'nStore,
delivering a strong operating and financial performance.
These results can be summarised as:
· Solid growth of Same Store(14) revenue
· Increase in Net Asset Value per share
· Rate of cost increases abating
· 10.1% increase in annual dividend
· Low net debt and LTV
· Dynamic new store opening schedule driving future growth
§ Two new Landmark stores opened
§ Three further Landmark stores to open in FY24
These results demonstrate Lok'nStore's delivery of growth in long-term
shareholder return through all stages of the economic cycle. The significant
and continued investor interest in the UK self-storage sector demonstrated by
market transactions underpins the increased value of our assets and our
strategy to open more Landmark stores.
The detail behind these results is discussed further in our Financial Review.
Further Strengthening the Balance Sheet
On 7 July 2023, the Company raised total gross proceeds of approximately
£20.5 million through the issue of 2,679,739 new Ordinary Shares via a
Placing and REX Retail Offer, at a price of 765 pence per Ordinary Share. The
Fundraising Shares represented approximately 8.9% of the Company's issued
share capital.
As a result, we have new shareholders as well as existing institutional
shareholders who have increased their shareholdings. We are also particularly
pleased that existing smaller retail shareholders participated via the REX
offer. I would like to thank existing shareholders for their support and
welcome our new shareholders to the Company.
In the previous financial year 2022, the Group completed the Sale. This
transaction added sales proceeds of c. £37 million to cash balances.
These two strategic actions reinforced the Company's excellent financial
position with low net debt. A conservative capital structure and a strong
Balance Sheet remain a key focus. We report a year-end LTV ratio (net of cash)
of only 3.7% (2022: 6.6%) and a low level of net debt of only £12.3 million,
down from £20.3 million in the previous year (refer to note 26b).
Continued revenue growth driven by strong demand
In the year we have replaced all the revenue generated from the four
established stores sold last year which is a great performance and at a
headline level we report a 0.9% increase in Group Revenue. Same-Store Group
Revenue remains strong with growth of 6.6% over last year.
Customer demand remains significantly above levels seen pre-pandemic and this
year has continued to move ahead with total move-ins up 4.9% compared to last
year. This continuing strong demand from new customers combined with our
dynamic pricing management has resulted in a total increase in pricing over
the past three years of 31.2%. Our pricing moved forward by 6.8% in the last
12 months.
Management of cost increases
At a headline level, total Group Operating Costs amounted to £11.8 million
for the period (2022: £10.4 million) up by 14.2%. On a Same Store basis
costs have increased by 17.8% compared to last year.
As previously reported at the half year, we have seen significant external
cost increases primarily through energy costs, which have risen in the year by
£1.2 million compared to the same period last year, a trebling of the
previous year's energy costs. In the coming year we expect this major change
in energy costs to abate and then decline in FY25.
Interest costs have also risen significantly. The cash costs of bank interest
paid (before capitalisation of interest costs, non-utilisation fees and loan
amortisation fees) in the year was £3.1 million compared to £1.3 million
last year. The average costs of debt over the year was 4.77%. With rates
rising throughout the year the Group's current cost of debt at year-end was
6.19%. Currently, interest on our active drawn loans is 6.68%.
We now have clarity on future business rates, following the publishing of the
revaluation listing which took effect from April 2023. This will result in our
business rates increasing £0.49 million per annum from April 2023 and by a
further £0.20 million per annum from April 2024.
We have robust EBITDA margins which provide a shelter to the business against
these external cost increases. This is supported by our ability to move our
own pricing forward.
We have a strong record of disciplined cost control. In FY24 we expect
Same-Store operating costs to increase more modestly, driven mainly by revised
business rates with other costs increases more muted. From FY25, we expect
operating costs to increase more slowly with cost increases mainly being
driven by the expansion of store numbers so revenue growth flows into
earnings.
Increase in Net Asset Value
I am pleased to report an increase of 1.5% in the Adjusted Net Asset Value per
share to £9.87 per share (2022: £9.72 per share) (31 January 2023 £9.15 per
share).
Since the last year-end at 31 July 2022 we have seen significant changes in
the debt markets. As a result, Jones Lang LaSalle (JLL), consider that the
yields and discount rates which were applied at the July 2022 year-end have
changed. On our owned freehold trading stores we have seen exit yields
increase on average by 33 basis points to 5.79%, with discount rates
increasing by 45 basis points to 7.47%.
These changes have been fully offset by improved cash flows and the extension
of the lease at our Eastbourne store. This demonstrates the impact operating
performance has on asset values and why one of our key objectives remains to
fill existing stores and continue improving pricing.
The Exit Yield and Discount Rates applied in the valuations are validated by
transactional evidence. There is continued strong institutional investor
appetite in the UK self-storage sector. JLL comment that "The self-storage
market has had strong market activity since July 2022 which reflects the
continued appetite for the sector but the higher cost of debt in the present
finance market is having an impact. The sector's operational resilience in
the current climate is making it a popular asset class with investors - this
is accentuated with its structural undersupply".
Our new Bedford and Peterborough Landmark stores had their maiden external
valuation in July 2023, which were accretive to asset value. We have two
further Owned Stores in Staines and Basildon opening in FY24 and expect these
to add momentum to Net Assets with their maiden external valuations at July
2024. More details on the valuation of our trading stores can be found on in
note 12(a) of the financial statements.
Further Dividend Growth
The Directors are proposing a final dividend of 13.25 pence per share an
increase of 8.2% (2022: 12.25 pence) following the interim dividend payment of
5.75 pence per share in June 2023, bringing the total distribution for the
year to 19 pence per share, an increase of 1.75 pence per share up 10.1%
(2022: 17.25 pence per share) and our twelfth year of increase in a row.
Subject to approval at the Company's AGM on 7 December 2023 the final dividend
will be paid on 5 January 2024 to shareholders on the register on 24 November
2023. The ex-dividend date will be 23 November 2023. The final deadline for
Dividend Reinvestment Election by investors is 8 December 2023.
Investment in new Stores
This year we invested £17.3 million in new store development adding 12% to
our owned stores trading space. We opened two new owned stores in Bedford and
Peterborough. Trading at our new stores continues to meet expectations and
this underpins our confidence that our pipeline will add further to sales and
earnings growth.
We are on site at three Stores, in Staines, Basildon, and Kettering (managed)
which will all open in the coming 12 months. The remaining capital expenditure
required to complete the Staines and Basildon stores is £12.7 million, all of
which can be paid out of cash. We are due to go on site shortly at
Bromborough, Wirral on behalf of a third-party Managed Store client.
Self-storage generally benefits from the short lead time between breaking
ground and store opening of around twelve months. We have only committed
future capital expenditure at the two owned stores where we are on site, both
of which will be open within the next 12 months. We have a high degree of
flexibility regarding start dates for further building at other sites. We can
therefore adapt our development programme quickly to react to changing
economic circumstances.
The pipeline progress is discussed further in the Property Review.
Cash Flow, Debt and Bank Covenants
At 31 July 2023, the Group had cash balances of £42.1 million. Cash inflow
from operating activities before investing and financing activities was £15.8
million in the year to 31 July 2023 (2022: £18.6 million).
The Group has a £100 million five-year revolving credit facility which,
together with cash, provides all the financing needs for the current secured
pipeline and runs until April 2026. The Group is not obliged to make any
repayments on its loan facility prior to its expiration in April 2026.
The average cost of bank debt on drawn facilities for the year was 4.77%
(2022: 1.71%). All of the Group's total drawn bank debt of £54.4 million
(2022: £66.8 million) is unhedged. At the date of this Report the Group's
current cost of debt is running at 6.68% as rates have moved higher since the
year-end.
At the year-end senior interest cover was 4 times finance charges on gross
debt tested on a 12-month rolling basis, against a bank covenant of 2.5 times.
At the year-end our loan-to-value ratio based on net bank debt was 3.7% versus
a bank covenant of 60% providing a large cushion of comfort.
Post Balance Sheet: 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.
Managed Stores
Our strategy includes growing 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 drive
further traffic to our website which benefits our entire operation.
During the year, we generated total Managed Store income of £1.66 million,
with recurring fees of £1.47 million (2022: £1.31 million) up 11.9%. This
was driven by increased revenues generated from the Managed Stores and also
the four stores we sold on manage back contracts on 31 January 2022.
In the management fees table in the Managing Director's 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.
Lok'nStore manages 16 stores for third-party owners. Our current new store
pipeline includes two Managed Stores, taking the total number to 18.
Our Team
We rely on our amazing people to deliver these impressive results and I would
like to thank them for all of their hard work and dedication. I am delighted
to say that all of our colleagues continue to benefit from the success of the
business and we continue to promote equity ownership to our colleagues through
our Shares in Partnership Equity Ownership scheme and the granting of share
options.
I am proud that during the year we introduced a comprehensive non-contributory
Employee Assistance Program which has a death in service life insurance for
all colleagues combined with an associated package of benefits. These include
direct access to a GP and availability of confidential counselling services,
as well as access to a range of online tools covering tax and legal advice,
childcare, fitness and personal coaching advice.
Board changes
The Board was delighted to announce the appointment of Tom Lampard, the
Group's Property Director, to the Board of Directors of the Group with effect
from 6 February 2023.
Tom joined Lok'nStore in March 2012, and has worked in a variety of roles
across the Group. Since July 2017, Tom has worked in the Group's property
acquisitions team, most recently as Director of Acquisitions, sourcing and
securing land and buildings to expand the Group's significant new store
pipeline. Tom is an integral member of the management team significantly
contributing to the Group's growth over recent years.
As part of the board's ongoing review of governance and with immediate effect,
Jeff Woyda will become chair of the Audit Committee with Charles Peal becoming
a member of the committee. I would like to thank Charles for his hard work
and dedication as chair of the Audit Committee over the last few years.
Post Balance Sheet: The Board was delighted to announce the appointment of
Bridget Barker to the Board of Directors of the Group with effect from 14
September 2023. Bridget is an experienced lawyer having gained over 35 years'
experience at Macfarlanes, a leading and well-established City of London law
firm, where she specialised in investment funds, financial services and
regulatory legal work with a focus on private equity and real estate funds.
Latterly she was head of the Investment Management Group at Macfarlanes. Since
leaving Macfarlanes, Bridget has pursued various non-executive roles and
consulting appointments at organisations such as Praesidium, Mirabaud 1819
Advisory Group and Mainspring Fund Services. Bridget is currently the CEO of
Race Against Dementia, a charity established to raise money to fund
breakthrough and innovative dementia research.
Share trading volumes and liquidity
It has been a feature for some time that high shareholder concentration in our
shares has contributed to lower share transaction volumes and has limited
their market liquidity. In addition, prospective and existing investors have
sometimes been unable to secure a meaningful sized holding.
In May 2023, I sold 1,250,000 Ordinary Shares of 1p each ("Ordinary Shares")
in the Company at a price of 800 pence per Ordinary Share.
As a result of this transaction and following the Placing in July 2023 I,
along with persons closely associated with me, still own, in aggregate,
4,359,550 Ordinary Shares representing 14.5 per cent of the Company's total
voting rights.
In May 2023, Simon Thomas sold 100,000 Ordinary Shares at a price of 815 pence
per Ordinary Share resulting in his beneficial interest in the Company
decreasing to 1,292,800 Ordinary Shares representing 4.3 per cent of the
Company's total voting rights.
These transactions have broadened the Group's institutional shareholder base
and potentially increased the liquidity in the trading of the Groups 's
shares. I remain the largest shareholder and Simon Thomas remains the fifth
largest shareholder, demonstrating our continued support for the business.
Environmental, Social and Governance
We are committed to decarbonising our business with an Operational Net Zero
target of 2040.
In recent years, the Lok'nStore Environmental committee, consisting of
colleagues in various roles across the business, including four Board members,
has been focused on practical improvements we can make to our environmental
footprint.
We are working hard to create an environmentally sustainable business for all
our customers, our colleagues, local communities and the wider environment. We
have made good progress on all of our environmental targets this year and
these are discussed in detail in our Environmental and Social Report.
Our Objectives
Our objectives are to:
· Fill existing stores and improve pricing
· Steadily increase the dividend from a strong asset base with
conservative levels of debt
· 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
This year's results are good and trading since the year-end remains in line
with management expectations.
Lok'nStore continues to experience year to year revenue growth on a Same Store
basis and this will be enhanced by the three stores opened in FY22 and two
stores opened this year. The opening of another two new owned stores over the
coming year will provide further momentum.
We expect the rate of external cost increases that we have experienced this
year to abate and we expect operating costs to revert to a position where cost
increases are mostly driven by the expansion of the number of stores meaning
that revenue growth flows into earnings.
We have an exciting period of growth ahead. With Lok'nStore's resilient and
flexible business model enabling the business to manage its conservative debt
structure the Board is confident the Group will continue to thrive. This
strength enables Lok'nStore to look confidently through the current external
market turbulence.
Andrew Jacobs
Chair
27 October 2023
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, non-underlying items and 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 £392.9 million (2022: £370.9 million) is calculated by adding the
independent valuation of the leasehold properties of £27.2 million (2022:
£24.2 million) less their corresponding net book value (NBV) £6.9 million
(2022: £7.2 million) to the total assets in the Statement of Financial
Position of £372.6 million (2022: £353.9 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 year-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 £12.3 million expressed as a
percentage of the total freehold and leasehold properties independently valued
by JLL of £301.9 million (2022: £279.0 million) and development land assets
of £30.6 million (2022: £29.2 million) totalling £332.5million (2022:
£308.2 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 debt 4.77% (2022: 1.71%).
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 13 pipeline sites of which 11
are contracted and two are progressing with lawyers. We currently have 26
Owned Stores trading with an additional 16 Managed Stores trading. When these
13 sites are fully developed, we will have a total of 55 stores - 37 will be
owned by the Group and 18 will be Managed Stores managed on behalf of
third-party owners.
9. Secured Pipeline Sites - The eleven sites for new stores on
which we have exchanged legal contracts. Of these, nine 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 17 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 43.6% (2022: 38.5 %)
14. Same Store Group - This measure is used to give transparency
on improvements in the operating business in the year unrelated to the opening
of new stores, closure of old stores, and more particularly in the previous
financial year, the Sale, commenting on stores that were open and trading at
both 31 July 2022 and 31 July 2023 financial year-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
The UK Self-Storage Market at a Glance
The Self-Storage Association (SSA UK) UK Annual Industry Survey 2023, reported
that the UK self-storage industry is made up of sites offering 55.5 million
sq. ft. of space.
Market Overview
As reported in the SSA UK Annual Industry Survey 2023 the UK self-storage
market continues to grow but remains under-developed relative to Australia and
the United States.
UK Australia US
Number of self-storage stores 2,231 1,300 54,100
Square feet of self-storage (millions) 55.5 43.59 3,067
Square feet of self-storage per population 0.82 1.75 9.39
In the UK there are an estimated 1,492 self-storage facilities, plus an
additional 739 containerised sites, providing a total of 55.5 million sq. ft.
of storage space. With a population of c.68 million people in the UK this
equates to only 0.82 sq. ft. per person. Occupancy rates across the UK
industry at 31 December 2022 of built space was stable at 83.3%.
The structure of the UK industry is changing. When the industry first emerged
companies were predominantly single owner sites often located in industrial
areas, but larger operators (defined as operators managing ten or more sites),
such as Lok'nStore, have recently been developing purpose-built stores in
retail-facing locations offering customers a higher standard of product and
service.
The main barriers to entry to the market remain the difficulty in finding and
securing suitable sites as well as gaining the appropriate planning consents.
As a result, larger operators now own or manage around 30% of all facilities
which translates to 40% of market share in terms of space. Currently,
Lok'nStore is the fifth largest operator in the UK by number of stores,
currently owing or managing 42 trading stores.
There remains strong market sentiment towards the sector with strong inflation
proofed characteristics, a structurally under supplied market and a sector
maturity providing investable assets of suitable scale.
§ Self-storage performs well in times of economic uncertainty compared to
other sectors
§ The robust nature of the business model / sector throughout the economic
cycle has proved its ability to withstand exogenous shocks
§ Potential for increased allocation to self-storage as other sectors are
impacted by volatility
§ An inflation hedge with low usage of utilities will favour the sector
§ Investors in the sector include those with low leverage
§ Debt markets should remain liquid due to income generation
§ Pricing corrections in land will create buying opportunities
§ Yield gap with US and AsiaPac markets remains wide
§ Still structurally undersupplied compared to demand drivers
Drivers of Demand for Self-Storage
Demand for self-storage by both household and business customers is driven by
a specific need based on changing circumstances as well as economic activity
and business confidence.
For household customers their need is often linked to a life event where they
will need space temporarily, for example, to turn a box room into a home
office, but increasingly householders are using storage on a semi-permanent
basis to free up space at home or store belongings they do not have room for.
Business customers use self-storage for a variety of purposes including
storage of goods, excess or seasonal stock, document archiving or storage of
equipment and tools. Businesses tend to store for longer than household
customers and take larger units, although they also take advantage of
self-storage for temporary periods to support office moves or refurbishments.
During the pandemic, many of our customers were providing critical services
distributing medical and other essential supplies. We include the NHS, GP
surgeries, care and home support services and government departments amongst
our customers.
Lok'nStore's Opportunity in the Market
The SSA UK Annual Industry Survey 2023 noted that public awareness of and
demand for self-storage is increasing. We know that on average customers chose
a store within five miles of their home or business. With a secured pipeline
of eleven stores, and a continuing programme of evaluating further site
opportunities, Lok'nStore is well placed to attract new customers and add
further momentum to the growth of our sales and profits.
The Group's has a number of competitive strengths: recognised brand, excellent
customer service, rigorous cost control, and the attractive market dynamics of
the storage sector. With a growing sector, an under supplied market,
embedded resilience during economic downturns combined with our strong balance
sheet and flexible operating and ownership model (see our portfolio strategy),
we believe Lok'nStore can take advantage of the opportunities presented and
continue its growth without significantly increasing risk.
Our Business Model:
Our overriding objective is to increase the Cash Available for Distribution
(CAD) enabling a predictable growth of the dividend from a rising asset base
while maintaining a conservatively geared balance sheet.
What we do How we create value Sharing value with our stakeholders
· Buy or lease prominent sites · Take a strategic and tactical approach to site selection Shareholders
· Build highly visible orange Landmark stores · Increase our asset base · High-quality earnings
· Offer clean, dry, secure storage to business and household customers · Careful cost control · Growing NAV per share
· Offer managed storage services to third party owners · Drive store EBITDA growth through a closely managed occupancy and · Progressive dividend policy
pricing strategy
· Earn fees from managing stores on behalf of others
Customers
· Carefully balanced use of leverage
· Easy to locate stores
· Friendly and high-quality customer service
· Wide range of storage solutions
· Transparent and open contracts
Our people
· Personal development through the Lok'nStore Academy
· Regular opportunities for career progression through our expanding
store portfolio
· Uncapped bonus scheme
· Share ownership plans
· Regular gifts and rewards for all colleagues
42 UK Stores currently trading £27.1 million Group revenue · Rated 'Excellent' on Google with an average score of 4.8 out of 5 from
almost 8,000 reviews
(Including 16 Managed Stores) (2022: £26.9 million)
· £0.64 million paid out in bonuses to store teams (2022: £0.73
million)
· 57% of current store managers have been promoted internally
Our strategy:
Our objectives Achievements in 2023
Fill existing stores and improve pricing · Closing occupancy in stores over 3 years old, which strips out the
effect of the 108,890 sq. ft. of new space added in the year, was 80.6%
compared to 82.9% at 31 July 2022
· Self-storage pricing up 7.0%
Steadily increase the dividend from a strong asset base with conservative · Total annual dividend 19.00 pence per share up 10.14% (2022: 17.25
levels of debt pence per share)
· Net debt reduced to £12.3 million LTV net of cash 3.7%
Develop our secured pipeline into new Landmark stores · Two Landmark stores opened during the year.
· Planning permissions achieved at our Bolton site
Acquire more sites to build new Landmark stores · New sites acquired in Milton Keynes and Eastbourne this financial
year
· 11 stores secured in planning or development
Increase the number of stores we manage for third parties · Recurring managed store fees up 11.9%
· One Managed Store under development in Kettering
· A development site in Bromborough, Wirral acquired by a third party
investor
Managing Director's Review:
Total Same Store Self Storage Revenue up 12.1% Adjusted Same Store EBITDA up 4.0% Price per occupied sq. ft up 6.8%
"High quality cash flow generation and new store openings drive strong asset
values "
Neil Newman-Shepherd
Managing Director
Lok'nStore Group has had another successful year. In coming years, our
pipeline of new stores will substantially increase the proportion of our store
space which is new or purpose-built and will add further momentum to the
growth of sales and profits.
The Performance of Our Stores
Same Store
ü Same Store Group Revenue £27.1 million up 6.6% (2022: £25.4 million)
ü Same Store Adjusted EBITDA(1) £14.5 million up 4.0% (2022: £13.9 million)
ü Same Store Group Adjusted EBITDA(1) £15.2 million down 1% (2022: £15.4
million)
ü Same Store Group Operating Profit before non-underlying(2) items £9.2
million down 13.4% (2022: £10.6 million)
Headline
ü Group Revenue £27.1 million up 1% (2022: £26.9 million)
ü Group Adjusted EBITDA(1) £15.1 million down 7.9% (2022: £16.3 million)
ü Group Operating Profit before non-underlying(2) items £8.9 million down
21.9% (2022: £11.4 million)
ü Price up 6.8%
ü Store EBITDA Margins 56.1% (2022: 61.6%)
ü Managed Store revenue - recurring fees £1.5 million up 11.9%
Revenue Momentum Continues (refer table below)
Revenue growth in FY23 has remained strong with self-storage revenue up 5.3%.
Same-store self-storage revenue was up 12.1% on the previous year. H2
self-storage revenue increased by 11.2% against the previous year, slightly
ahead of expectations.
Price per sq. ft of occupied space was up a further 6.8% in the year driven by
continued strong demand and higher than previous levels of occupied space.
Closing occupancy in stores over 3 years old, which strips out the effect
of the 108,890 sq. ft. of new space added in the year, was 80.6% compared to
82.9% at 31 July 2022. Total occupied unit space was level with last year.
Performance - Same Store Analysis (14)
Headline Performance Same Store Performance 31 July 2022
31(st) July 2023 31st July 2023
Period end 31 July 2023 Increase £'000 Percentage £'000 £'000
Headline £'000 % Same Store Increase Headline Same Store
%
Group revenue 27,147 0.9 27,085 6.6 26,902 25,403
Self-storage revenue 25,364 5.3 25,302 12.1 24,076 22,577
Store Adjusted EBITDA 14,294 (4.0) 14,468 4.0 14,884 13,911
Group Adjusted EBITDA 15,056 (7.9) 15,229 (1.0) 16,349 15,376
Operating profit (before non-underlying items(2))
8,916 (21.9) 9,162 (13.4) 11,421 10,581
Operating profit (after non-underlying items)
8,598 (49.9) 8,843 (45.8) 17,160 16,317
Operating costs 11,838 14.2 11,602 17.8 10,365 9,850
As a result of the external cost increases we have seen in the year,
particularly around energy the overall Adjusted EBITDA margin across all
stores decreased to 56.1% from 61.6%. Adjusted Store EBITDA margins of the
freehold stores decreased to 61.8% (2022: 66.5%).
On a Same Store basis, the overall Adjusted EBITDA margin across all stores
decreased to 57.2% from 61.3%. The leasehold stores decreased to 46.1% (2022:
53.3%). Going forward, we expect these cost increases to abate and in the
absence of external factors, we expect margins to move ahead again over time
as new Landmark stores continue to fill and new stores open, resulting in
gains in revenue falling to earnings.
As the business develops the balance of the stores continues to shift towards
freehold Landmark stores and Managed Stores which have a higher-than-average
Adjusted Store EBITDA margin at 61.8% and 100% respectively, versus 56.1%
across all stores. The medium-term impact of this will be to continue to
increase the average EBITDA margin of the Group overall. This effect is
accentuated by operating more stores from a relatively fixed central cost
base. In this context, the new stores in the pipeline will make a larger
than average contribution to Group profits as they become established trading
units.
The freehold stores produce 70.2% (2022: 71.8%) of the Adjusted Store EBITDA
and account for 91.8% (2022: 91.4%) of valuations (including secured pipeline
stores). Leaseholds trade on lower margins due to the rent payable, but
nevertheless the 46.1% margin achieved is substantial, and leads to a higher
return on capital than the freehold stores which require much larger capital
expenditure to buy the land and buildings.
This mix of tenures with their different risk and return characteristics
provides flexibility in the balance sheet and opportunities to create value
throughout the property and economic cycle.
Ancillary Sales
Ancillary sales consisting of boxes, packaging materials, insurance and other
sales were £2.49 million (2022: £2.49 million) accounting for 9.8% (2022:
10.3%) 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% of Lok'nStore branded trading
space is Owned freehold, 19.5% is leasehold and 34.5% is Managed 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 July 2023
Freehold Stores 17 82.6 70.2 61.8 46.0 25 52.2
Leasehold Stores 9 8.2 29.8 46.1 19.5 10 14.7
Managed Stores 16 - - 100 34.5 18 33.1
Total stores trading 42 53 100
Pipeline Stores (secured)*
Owned - Freehold 8 9.2 - - - - -
Owned - Leasehold 1 - - - - - -
Managed 2 - - - - - -
Total Secured Pipeline Stores - - - - - -
11
Total Stores 53 100 100 56.1 100 53 100
*Applies to the 11 contracted stores only.
Analysis of Stores No of Stores/Sites Stores Trading Lok'nStore Stores Trading Managed Secured Pipeline
As at 31 Jan 2023
Freeholds 17 17
Leaseholds 9 9
Pipeline (Freehold) 8 8
Pipeline (Leasehold) 1 1
Subtotal 'Owned Stores' 35 26 9
Managed Stores (Trading) 16 16
Managed Stores (Pipeline) 2 2
Subtotal 'Managed Stores' 18 16 2
Total No. of Stores 53 26 16 11
MLA sq. ft 2,778,515 1,372,766 774,800 630,949
Over time as new stores and pipeline sites go through their life cycle, they
will progress towards similar margins adding substantially to revenues and
profits.
Operating Performance by age of store (Lok'nStore owned 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 Pipeline Under 100 100 to 250 over 250 Total
Year Ended 31 July 2023
Sales £000 881 2,263 22,320 25,464
Store Adjusted EBITDA £'000 (215) 1,170 13,339 14,294
EBITDA Margin (%) (24.4%) 51.7% 59.8% 56.1%
Store Adjusted EBITDAR £'000 (170) 1,170 15,111 16,111
EBITDAR Margin (%) (19.3%) 51.7% 67.7% 63.3%
As at 31 July 2023 ('000 sq. ft)
Maximum Net Area 535 217 161 994 1,907
Freehold / Long Leasehold 485 217 161 559 1,422
('000 sq. ft)
Short Leasehold ('000 sq. ft) 50 - - 435 485
Number of Stores
Freehold 8 4 3 10 25
Short Leasehold 1 - - 9 10
Total Stores 9 4 3 19 35
(1) In respect of the Farnborough Store (over 250 weeks), the total store
revenue includes a £100,000 contribution receivable from Group Head Office.
Marketing
New customers are typically drawn to Lok'nStore by three key drivers:
· Our distinctive Landmark stores
· Google and other search engines
· Existing or previous customers and customer referrals
Store visibility remains pivotal to our marketing efforts. With their
prominent positions, distinctive design, and bright orange elevations our
stores raise the profile of the Lok'nStore brand and help to generate a
substantial proportion of our business. Our Landmark stores are in highly
prominent locations, and we continually invest in new signage and lighting at
our existing stores as well as creating striking designs for our new Landmark
stores, to promote and enhance their visual prominence and engage the local
community.
The internet continues to be the main media channel for our advertising. Our
website at www.loknstore.co.uk (http://www.loknstore.co.uk) is one of the most
established self-storage websites in the UK. The website delivers a high
level of customer experience across desktop and mobile devices. This is a very
dynamic area, and we are committed to its continued development. We believe
the internet provides a strong competitive advantage for the major operators
such as Lok'nStore with relatively large marketing budgets.
New Landmark Stores
We have invested £17.3 million (2022: £12.2 million) in new store
development this year.
On 17 February 2023, our new Landmark store opened in Bedford. The store is in
a prominent location on the busy western side of the town, directly accessed
from a busy roundabout servicing all arterial routes to Tesco, the town centre
and neighbours Costa, Lidl and other retailers.
Our new freehold Landmark store in Peterborough opened on 27 June 2023. The
site occupies a central location in the city, prominently positioned on the
access route to a large and busy retail park with neighbouring occupiers
including B&Q, Aldi, Currys and Argos.
Early trading at both stores has been good.
We are on-site at three Stores: Staines (long leasehold), Basildon (leasehold)
and Kettering (managed), all of which will be open in the next 12 months,
adding a further 162,100 sq. ft. of trading space to the undersupplied UK
self-storage market. The Board anticipates that Staines and Basildon will be
NAV accretive at their first-time valuation in July 2024.
We have a total new store pipeline of eleven secured stores. These will all be
purpose-built Landmark stores in highly prominent locations and will add
substantially to the Group's capacity for revenue, profit and asset growth.
Further details on this pipeline can be found in the Property Review.
Managed Stores Recurring Revenue Increasing
Total Managed Store revenue in the year was £1.66 million (2022: £2.79
million). Last year, we received non - recurring management fees of £1.47
million from Managed Store owners following asset transactions. These fees
are positive for Lok'nStore but are irregular in their nature and have not
been repeated this year.
Stripping out the impact of this, recurring management fees were up by 11.9%
to £1.47 million as we saw the full-year effect of the four sale and
manage-back stores executed on 31 January 2022 last year. At the year-end,
we had 16 Managed Stores operating, with the Kettering store currently on site
and the Bromborough (Wirral) site due on site in the coming months. These two
sites will add to recurring management fees in the coming years.
Income from non-recurring fees was down in the year to £0.19 million (2022:
£1.47 million). Although these fees are irregular in nature, this
demonstrates the contractually embedded value in the Managed Stores income
stream. Non-recurring fees come from various sources such as including
planning success fees, construction and advisory fees and fees crystallised
when an asset transaction occurs. In 2022, the Group benefited from one-off
asset transaction fees from three stores in the portfolio which did not recur
this year.
Percentage Increase/(decrease) Group Group
Management Fees Year Ended Year Ended
31 July 2023 31 July 2022
% £ £
Recurring fees
Base management fees 929,810 722,084
Administration and compliance fees 105,000 86,916
Management performance fees 434,280 504,379
Recurring fees - Subtotal 11.9% 1,469,090 1,313,379
Construction & Advisory fees 30,000 12,500
Supplementary fees 160,000 1,459,177
Non-recurring fees -sub total (87.1) 190,000 1,471,677
Total management fees (40.4) 1,659,090 2,785,056
The graph below shows how our historical management fees have grown and
indicates a strong correlation between the recurring management fee income and
the number of stores under management.
Our Store Colleagues
The Group's progress that I have reported above could not have been achieved
without the commitment and dedication of our team members who have worked
extremely hard throughout this year. We did see elevated levels of colleague
turnover post-Covid but we now see levels of colleague turnover settle to
pre-Covid levels and the level of vacancies in the business is now at normal
levels.
I would personally like to thank our team members throughout the business for
the hard work, enthusiasm and dedication in achieving these results.
Our Business Model Provides Strength and Adapts Quickly in an Uncertain World
We operate with a high EBITDA margin, sheltering the business from cost
increases. Debt and leverage are low, and we have considerable cash on hand.
Importantly, the Company can pause capital expenditure quickly if market
conditions dictate and the ongoing business requires little maintenance
capital expenditure. At the year-end, we are on-site at three stores (one
Managed) where the capex required to complete the two Owned Store projects is
£12.7 million, compared to the £42.1 million of cash on hand.
The Company has c.17,500 customers who come from a diverse social and economic
background and whose reasons for storing are widely diverse. Customers pay on
a rolling four weekly up-front basis. As a result, bad debt continues to be
low at 0.3% of revenue. Each customer is relatively small with no self-storage
customer accounting for more than 1% of revenue. Additionally, the UK
self-storage market remains under-supplied, and demand remains strong.
Future
Lok'nStore has had a good year, with revenue moving ahead steadily,
demonstrating the strength of the self-storage business model throughout the
economic cycle. Trading has remained good and in line with expectations since
the year-end.
We are currently experiencing some cost increases, but the business is
sheltered from this effect by high EBITDA margins and our ability to raise
rates charged. These cost increases are now starting to slow and, in some
areas, reverse.
Against the background of a strong performance from our existing stores, we
have a secured pipeline of eleven new stores all of which will add
considerable momentum to sales and earnings growth in the future. Our flexible
model allows us to develop these new Landmark stores when market circumstances
and planning permissions dictate.
We will continue to deliver increasing returns from a secure asset and capital
base leveraging from our established business model and operational expertise
and digital platform. We will continue our focus on delivering the highest
levels of service.
Neil Newman-Shepherd
Managing Director
27 October 2023
Property Review
42 stores now trading 11 new Landmark stores secured New stores will add 29.4% to total trading space
Store and Portfolio Strategy
Our strategy is to continue to increase the number of stores we operate
without stretching our balance sheet, capitalising on a UK self-storage market
which is in a state of under-supply and comparative infancy. The core focus
of this strategy is the acquisition of highly prominent freehold locations in
busy towns and cities in England where we will build well-branded Landmark
stores.
Lok'nStore's rising operating cash flow, solid asset base and tactical
approach to its store property portfolio provide the Group with opportunities
to improve the terms of its property usage in all stages of the economic
cycle. Our focus on the trading business gives us many opportunities and our
property decisions are always driven by the requirements of the trading
business.
The net proceeds of the equity fundraising in June 2023 will support the
continued development of the secured pipeline as well as providing valuable
liquidity with which to position Lok'nStore favourably as a strong buyer in
future site acquisition negotiations whilst maintaining the Group's
conservative approach to debt.
Flexible Approach to Site Acquisition
All the projects noted below are part of our strategy of actively managing our
operating portfolio to ensure we are maximising both trading potential and
value. This includes strengthening our distinctive brand, increasing the size
and number of our stores, and replacing stores or sites where it will increase
shareholder value. We are focused on allocating capital in the most efficient
manner to achieve our objectives.
We prefer to own freeholds if possible, and where opportunities arise, we will
seek to acquire the freehold of our leasehold stores. However, we are happy to
take leases on appropriate terms and benefit from the advantages of a lower
entry cost, with further options to create value later in the store's life
cycle.
Sale and Manage-Back of Stores
We also consider selling established stores on sale and manage-back contracts
in order to recycle the capital into the development of new Landmark stores
and manage the balance sheet as part of our successful growth strategy and
disciplined capital allocation. Indeed, some of our stores have been freehold,
leasehold, and Managed Stores during their operating life cycle.
Our most important consideration is always the trading potential of the store
rather than the property tenure and sale and manage-backs have these
additional advantages: -
i) The critical mass of store numbers benefits the business
(e.g. through Google search and sharing of other marketing costs)
ii) It spreads the central management costs
iii) Through the performance and exit fees we are exposed to
the trading and capital upside without committing capital
The table below illustrates the rapid growth of store numbers and the changing
tenure mix over time including the growth of Managed Stores over recent years.
At 31 July 2023, Lok'nStore operated 26 of its own stores. Of these Lok'nStore
owns 17 freehold and nine leasehold stores. All nine leasehold stores are
inside the Landlord and Tenant Act providing us with security of tenure. The
average unexpired term of the Group's leaseholds valued by JLL is 12 years and
10 months as at 31 July 2023. We operate 16 further stores under management
contracts.
Our Exciting Landmark Store Pipeline
We are on-site at three stores that will open during 2024 and we have two new
store opportunities which are progressing with lawyers.
Our current pipeline of eleven contracted stores will add 29.4% of extra
trading space to the overall portfolio, 39% to our Owned portfolio and 12.3%
to the Managed portfolio.
All 11 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 adding to future sales and earnings growth. 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.
The lease on the Sunbury store expired on the 30 July 2022. We are in dialogue
with the landlord regarding a new lease on the existing site or in a new site.
In the meantime, we continue to trade from the current store which benefits
from being protected by the provisions of the Landlord and Tenant Act.
Acquisitions During the Year
Milton Keynes: New Freehold
On 4 October 2022, we exchanged contracts, subject to planning, on a freehold
development opportunity in Watling Street, Milton Keynes. This new highly
visible roadside location in the north-west of the city complements our
existing leasehold store, seven miles to the south-east. Once developed, the
Landmark store will add circa 60,000 sq.ft. of lettable area.
Eastbourne: New Freehold
Contracts have been exchanged on a freehold site in Eastbourne, Sussex where
we intend to submit planning for a 60,000 sq. ft Landmark store shortly.
Completion is due by the end of the year upon vacation of the current
occupier. This prominant location, adjacent to supermarkets and retail, is
close to our existing leasehold store. The initial land cost will be £5.53
million and total net project costs are expected to be c.£12.0 million.
Eastbourne: Existing Leasehold Site
We recently announced the signing of a new lease at our existing Eastbourne
store which runs for twenty years. We have the valuable opportunity to
improve profitability in the Eastbourne market via a tenant only break clause
after five years. As with all other leased stores within the Group's
portfolio, the new lease benefits from being within the terms of the 1954
Landlord and Tenant Act. The current store has been trading successfully since
its opening in 2003.
Bolton: Purchase Completed
At the end of May 2023, the Group completed the purchase of a site in Bolton
for £1.8 million, for a new 57,578 sq. ft. Landmark store.
Further New Store Pipeline Progress
Following the Eastbourne freehold purchase, our total secured pipeline of 11
secured new stores will result in the Group operating 53 stores when fully
developed, increasing the Owned Store trading space by 37.7%. This pipeline of
new stores will add considerable momentum to sales and earnings growth once
developed.
Building work continues at three of our new Landmark store developments in
Staines (long leasehold), Basildon and Kettering (managed), all of which will
be open in the next 12 months and where the remaining capital expenditure as
at 31 July 2023 was £12.7 million, adding a further 162,100 sq. ft. of
trading space.
Planning Permissions Update
Lok'nStore's highly experienced management team continues to progress the new
store pipeline despite the planning system remaining lengthy and
unpredictable.
In January 2023, we were granted planning consent to build a Landmark store in
Bolton, Greater Manchester. We are now in the process of tendering for the
construction of this store which will provide 57,578 sq.ft. of new space.
Located on land on the east side of Manchester Road, Bolton, this site will be
in due course likely transferred to an existing Managed Store client and
subsequently developed by Lok'nStore and operated on their behalf.
We have received an indicative intention to formally grant planning permission
under delegated powers in Barking, Greater London, subject to the agreement of
planning conditions. At c.84,000 sq. ft, when it opens this freehold
Landmark store will be our biggest store to date.
We have also received a grant from the Planning Committee for our updated
planning permission at our freehold site in Cheshunt, Hertfordshire, subject
to the agreement of planning conditions. With this permission we intend to
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 a further payment to
Lok'nStore on completion of the building. The net remaining capital
expenditure to complete this project is c.£6.5 million.
Managed Stores
Bromborough: Contracts have been exchanged on a site for a new 49,500 sq. ft
Landmark store in Bromborough, Wirral. The site, which already benefits
from planning permission, will be owned by an existing Managed Store client.
Through our well-established Managed Store programme, Lok'nStore will receive
one-off fees for finding and securing the site, development advice and use of
the Lok'nStore brand. Once open, we will receive a recurring monthly
management fee as a percentage of revenue plus a valuable additional recurring
performance fee once returns reach an agreed level. The developer went
on-site in September 2023. The store is expected to open in late 2024.
Kettering: Building work continues at the new Landmark store development in
Kettering which is on track to open in spring 2024.
Summary of Our Current Pipeline at 31 July 2023
Total On site at
Store Size Status 31 July 2023
sq. ft sq. ft
Basildon Leasehold 49,700 On site - 49,700
opening late 2023
Staines Long Leasehold 66,500 On site - 66,500
opening Spring 2024
Kettering Managed 45,900 On site- opening Spring 2024 45,900
Bromborough Managed 49,500 Planning consent granted - on-site Autumn 2023
Bolton Freehold 57,578 Planning consent granted
Cheshunt Freehold 60,300 Planning Committee resolution to grant consent received
Barking Freehold 84,200 Planning application submitted - Indicative intention to formally grant
planning received
Bournemouth Freehold 75,100 Further planning application submitted
Altrincham Freehold 63,900 Planning appeal submitted
Milton Keynes Freehold 60,000 Planning application submitted
Eastbourne Freehold 60,000 In Design
Total 11 stores 672,678 162,100
During the year, we opened two new stores in Bedford and Peterborough. Early
trading in all new stores has been very encouraging. We acquired two new sites
during the year and have a further two sites progressing with lawyers.
Growing Store Property Assets and Net Asset Value
ü Adjusted Total Assets £392.9 million(4) up 5.9% on last year (2022:
£370.9 million)
ü Adjusted Net Asset Value of £9.86 pence per share up 1.4% on last year
(2022: £9.72 per share)
ü Value of operating stores £301.9 million up 8.2% on last year (2022:
£279.0 million)
ü Total property assets £334.0 million up 7.8% on last year (2022: £309.7
million)
ü Investment in new stores £17.3 million (including capitalised interest)
(2022: £12.2 million)
Market Valuation of Freehold and Leasehold Land and Buildings
It is the Group's policy to commission an independent external valuation of
its properties at each financial year-end. Our freehold stores have been
independently valued by JLL at £274.7 million (2022: £254.8 million).
Accordingly, Adjusted Total Group Assets(4) have moved up in the year to
£392.9 million, up 5.9% on 31 July (2022: £370.9 million). A significant
contributor to this increase was the uplift from the external valuation at 31
July 2023 combined with the trading strength of our business, as well as our
investment in new stores.
In this 12 month period, we saw a 0.8% same-store uplift in the valuations of
our freehold and leasehold trading stores of £2.23 million. This comparison
excludes the maiden valuations on our new stores in Bedford and Peterborough.
On our Owned freehold trading stores we have seen exit yields increase on
average by 33 basis points, with discount rates increasing by 45 basis points.
These changes had the effect of reducing the valuation by £15.45
million. Improved cash flows in the stores that were valued last year added
£14.20 million, which materially reversed the effects from the changing
capitalisation rates.
The remaining £24.15 million of valuation comes from the maiden valuations of
our Bedford and Peterborough stores and the regearing of the Eastbourne lease.
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.
Valuations
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
in the valuation totals £27.2 million (2022: £24.3 million) but they are
held at cost less accumulated depreciation in the Statement of Financial
Position.
Our freehold and leasehold stores have been independently valued by JLL at
£301.9
million (2022: £279.0 million). The value of adjusted total assets of
£392.9 million (2022: £370.9 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 the Group's
accounting policy rules on leases are only presented at their book values
within the Statement of Financial Position.
At the year-end, Lok'nStore had 42 stores trading. Of these, 26 stores are
Owned with 17 freeholds, nine leasehold and 16 under management contracts.
The average unexpired term of the Group's operating leaseholds valued by JLL
is approximately 12 years and 10 months at 31 July 2023. 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.
An analysis of the valuations achieved is set out in the table below.
Analysis of Total Property Value No of Stores 31 July 2023 Valuation No of Stores 31 July 2022 Valuation
/Sites £'000 /Sites £'000
Freeholds(3) valued by JLL(1) 17 274,725 15 254,775
Leaseholds valued by JLL(2) 9 27,200 9 24,250
Subtotal 26 301,925 24 279,025
Sites in development at cost(3) 9 30,605 9 29,215
Subtotal(4) 35 332,530 33 308,240
Freehold land & buildings at Director valuation 1 1,500 1 1,500
Total 36 334,030 34 309,740
(1) Includes related fixtures and fittings (refer to note 12a).
(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 9 years
and 7 months at the date of the 2023 valuation.
(3) Includes £1.54 million of capitalised interest during the period
(2022: £0.59 million).
(4) Loan to Value calculation based on these property values.
Total freehold properties account for 91.8% of all property values (2022:
92.2%).
Adding our stores under development at cost, and land and buildings held at
Director valuation, our total property valuation is up 7.8% to £334.0 million
(2022: £309.7 million). The increase in the values of properties which were
also valued by JLL last year was 8.2% (2022: 22.6%).
The change in the property valuation is referred to further in the Financial
Review section of the Strategic Report and is detailed in note 12(a) of the
notes to the financial statements. The principal drivers for this increase
are: -
· The trading stores have continued to trade at high occupancy. The
stabilised occupancy assumed by JLL is materially unchanged at 87.79% (2022:
88.23%)
· Discount Rates and Exit Yields applied by JLL have increased this
year reflecting changes in the debt market
· The increases in these capitalisation rates are lower than seen
in other sectors of the property industry over the past 12 months. There is
a significant amount of capital looking to access the self-storage market with
major private equity and institutions having entered the market in recent
years, including Schroders, Legal and General, The Carlyle Group, Angelo
Gordon, GIC, Heitman and Nuveen. The Board is aware of a number of other
institutions looking to enter the market either through direct acquisition or
by funding new store developments.
· Transactional activity in the UK and across Europe remains strong
JLL reported in its 2023 Valuation report: "Self-storage is widely viewed as
an inflation hedge. The sector has proved itself as a resilient asset class
that generally performs well during economic stress events as was seen during
the Global Financial Crisis and the Covid-19 pandemic".
Further changes in interest rates, risk free rates or changes in the
macro-economic outlook may affect the capitalisation rates applied by External
Valuers. In note 12a, we set out the likely effects of a 50 bps and a 100 bps
increase / decrease in Discount Rate and Exit Yield used in this year's
valuations.
Managed Stores
· Circa £150 million of store assets under management
· 11.9% increase in recurring management fees earned
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 drive 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 £1.66 million this year (2022:
£2.79 million). Within this, recurring fees were up 11.9% and we expect
recurring fees to continue increasing steadily over the coming years as more
Managed Stores are opened. Second half income was stronger and includes
additional fees from store openings and non-recurring fees contributed to
benefit additional supplementary fees (initial branding fees etc). Managed
Store income is generated from our existing platform and central management,
resulting in an effective margin from this activity of 100%.
Financial Review:
Same Store Group Revenue Same Store EBITDA 57.2% Net LTV 3.7%
£27.1 million up 6.6%
"Prudent balance sheet management and continuing investment into Landmark
stores"
Ray Davies
Finance Director
The Group has reported record revenue and profits with KPI metrics up on the
previous year.
Same Store
ü Same Store(14) Group Revenue £27.1 million up 6.6% (2022: £25.4 million)
ü Same Store Group Adjusted EBITDA(1) £15.2 million down 1% (2022: £15.4
million)
ü Same Store Group Operating Profit before non-underlying(2) items £9.2
million down 13.4% (2022: £10.6 million)
Headline
ü Group Revenue £27.1 million up 0.9% (2022: £26.9 million)
ü Group Adjusted EBITDA(1) £15.1 million down 7.9% (2022: £16.3 million)
ü Group Operating Profit before non-underlying(2) items £8.9 million down
21.9% (2022: £11.4 million)
ü Store EBITDA Margins 56.1% (2022: 61.6%)
ü Operating Profit £8.6 million down 49.9% (2022: £17.2 million)
ü Cash available for Distribution (CAD)(3) £9.13 million down 19.8% (2022:
£11.39 million)
ü Cash available for Distribution (CAD) per share 28.4 pence (2022: 38.7
pence)
ü Final dividend up 8.2% to 13.25 pence per share (2022: 12.25 pence per
share)
ü Cash balance £42.1 million (2022: £46.5 million)
ü £100 million Bank RCF runs to April 2026
Revenue
Total Group Revenue for the year was £27.1 million, an increase of £0.2
million (0.9%) from £26.9 million in the prior year. Same Store Revenue for
the year was £27.1 million, an increase of 6.6% (2022: £25.4 million).
Post-Balance Sheet. In FY24, the Group will change the way it provides
contents protection to its customers and during the course of the year will
transition to an Enhanced Liability Protection Service (ELPS) for our
customers. Prior to this change, IPT at 12% will continue to be paid to our
insurance provider based on our total insurance revenue and will continue to
be paid to us by our customers. After the change, ELPS will be subject to VAT
and not Insurance Premium Tax ("IPT").
As we transition to the ELPS scheme, we have decided not to pass the entirety
of the 8% differential uplift on to our customers immediately, and hence,
gross ELPS revenue next year will be lower but not materially so and will be
recovered completely over the next year or two.
Operating Costs
Group operating costs amounted to £11.8 million for the year (2022: £10.4
million) up by 14.2%
Historically, overall cost increases have been mainly driven by the expansion
of the business. As previously reported at our interim results in January
2023, we are now seeing some short term but significant external cost
pressures., At a headline level, total Group operating costs amounted to
£11.8 million for the year (2022: £10.4 million) up by 14.2%, which includes
the profit and loss costs of opening new stores in Bedford, Peterborough,
Warrington and Stevenage; offset by the reduction in costs from the Sale. On a
Same Store basis, costs have increased by 17.8% against last year (refer store
analysis of Group operating costs in the table below).
We saw significant external cost pressure in property costs this year, with
total property costs increasing by £1.45 million. Energy cost accounted for
£1.2 million of this uplift with a further £0.25 million from increased
Insurance costs.
Our largest cost area, staff costs, increased by 1.9% as we staffed the new
stores which was offset by lower performance bonuses to our store colleagues.
On a Same Store basis this increase was just 0.1%. 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.
The 9.0% increase in overhead costs is due to a combination of factors. There
has been a stepped increase in audit fees as the audit profession adjusts its
fee rates in response to higher regulatory costs. Legal and professional costs
related to work on rent reviews, corporate tax, and increased valuation costs
for additional work commissioned by the Group for valuation work completed by
JLL. Bank charges which now contain a full year amortisation charge (non-cash)
in respect of bank fees charged last year for the £25 million accordion and
the one-year RCF extension also increased costs. Amortisation charges for 2023
were £0.24 million (2022: £0.22 million). Other administrative costs
(computer support, telephones, printing postage and stationery and marketing
costs etc) show no material cost increases.
Looking forward, in FY24, we estimate that Same Store operating costs to
increase by around 6.0% or £0.75 million, driven materially by revised
business rates which will result in our 2023-24 business rates increasing
£0.49 million with transitional relief and by a further £0.20 million plus
future inflationary increases in FY25. This step change in business rates
will be offset in part by the reduction in medium term energy costs we are
seeing through our hedged purchasing and by improvements in our insurance
costs achieved during the renewal process for 2023-24.
We have a strong record of disciplined control of our costs. From FY25, we
fully expect operating costs to revert to a low growth position with cost
increases driven by the expansion of the business.
Group Operations Increase/ (decrease) Year Ended 31 July Year Ended
in Costs % 2023 31 July
£'000 2022
£'000
Property costs 28.6 6,821 5,304
Adjustment for property lease rentals 4.1 (1,817) (1,746)
Property and premises costs 40.7 5,004 3,558
Staff costs 1.9 5,267 5,369
Overheads 9.0 1,567 1,438
Total 14.2 11,838 10,365
Group Operations Increase (decrease) Year ended Year
Same Store Analysis in Costs % Ended 31 July Ended
2023 31 July
£'000 2022
£'000
Property costs 32.9 6,698 5,062
Adjustment for property lease rentals 4.1 (1,817) (1,746)
Restated property and premises costs 18.1 4,881 3,316
Staff costs 0.1 5,177 5,176
Overheads 12.5 1,544 1,358
Total 17.8 11,602 9,850
Strong Balance Sheet, Efficient Use of Capital, Low Debt
ü RCF of £100 million and runs to April 2026
ü £17.3* million invested in new store pipeline (2022: £12.2 million)
ü Net debt (excluding leases) £12.3 million (2022: £20.3 million)
ü Loan to Value ratio (LTV) net of cash 3.7% (2022: 6.6%)
ü Cost of debt averaged 4.8% in the year (2022: 1.71%) on £54.4 million
debt (2022: £66.8 million)
* Includes £1.54 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)
Management of Interest Rate Risk
Lok'nStore generates an increasing cash flow from its strong asset base with a
low LTV net of cash of 3.7% and an average cost of debt of 4.8%. 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 to fund future
growth.
Post Balance Sheet - Temporary Debt 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 debt 4.8% (2022: 1.71%)
· Average cost of debt (on active revolving loans at 31 July 2023) 6.2%
(2022: 2.71%)
· Current cost of debt at date of this Report 6.8%
With £54.4 million of gross debt currently drawn against the £100 million
bank facility, the Group is not committed to enter into interest rate hedged
instruments but continues to keep the matter under review. It is not the
current intention of the Group to commit to a hedged instrument at this time
given our low level of net debt, low Loan to Value ratio and high interest
cover.
The gross bank interest expense (before capitalisation of interest costs,
non-utilisation fees and loan amortisation fees) for the year was £3.1
million (2022: £1.30 million), due to higher average debt and higher average
costs of borrowing. These average costs of borrowing have continued to rise
after the year-end and the Group's current cost of debt is running at 6.8%.
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
year on our store development programme was £1.54 million (2022: £0.59
million). Total finance costs in the Statement of Comprehensive Income
increased to £2.56 million (2022: £1.33 million).
Lok'nStore will continue to report on the Cash Available for Distribution
(CAD) which aims to look through the statutory accounts and give a clear
picture of the ongoing ability of the Company to generate cash flow from the
operating business that can be used to pay dividends, make investments in new
stores, or pay down debt.
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.
Cash Flow and Financing
At 31 July 2023, the Group had cash balances of £42.1 million (2022: £46.5
million). Cash inflow from operating activities before investing and financing
activities was £15.81 million (2022: £18.57 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 £45.6 million (2022: £33.2 million). Cash plus
undrawn committed facilities amounts to £87.7 million, leaving the business
with plenty of headroom.
Earnings Per Share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Group Group
Year Ended Year Ended
31 July 31 July
2023 2022
£'000 £'000
Total profit for the financial year attributable to owners of the Parent 4,692 12,078
2023 2022
No. of Shares No. of shares
Weighted average number of shares
For basic earnings per share 29,518,911 29,287,451
Dilutive effect of share options(1) 467,137 549,321
For diluted earnings per share 29,986,048 29,836,772
(1) Further options that could potentially dilute EPS in the future are
excluded from the above because they are not dilutive in the period presented.
Full details of share options are included in note 22.
Group Group
2023 2022
pence pence
Total basic earnings per share
15.90p 41.24p
Total diluted earnings per share 15.65p 40.48p
High Quality Cash Flow
The Group's high quality cash flow is demonstrated by:
· Sound operating fundamentals -
o High store EBITDA margins 56.1% (freeholds 61.8%)
o Excellent credit model - bad debts in FY23 less than c. 0.3% of Group
revenue
o Minimum of four weeks storage paid in advance and every 28 days thereafter
o Over 90% of new customers pay by Direct Debit
o Contractual lien operates over customer goods in the event of serious
payment default
· Diversified customer base
o 17,500 customers with a wide mix of businesses and households covering
many sectors and geographies
o No customer concentration risk - no customer accounts for more than 0.5%
of Group revenue
· Other features
o Operates in 42 different localised markets
o Very low inventory required
o Very low capital re-investment required once initial build and fit-out has
been completed
o Low staffing requirements per store
Increasing Cash Flow Supports a 10.1% Annual Dividend Increase
ü Annual dividend 19 pence per share up 10.1% (2022: 17.25 pence per share)
ü Cash Available for Distribution of 28.4 pence per share (2022: 38.7 pence
per share)
ü Cash Available for Distribution £9.13 million (2022: £11.39 million)
CAD provides a clear picture of ongoing cash flow available for dividends, new
store development or debt repayment.
Analysis of Cash Available for Distribution (CAD) Group Group
Year Ended Year Ended
31 July 2023 31 July 2022
£'000 £'000
Group Adjusted EBITDA
(Per Statement of Comprehensive Income) 15,056 16,349
Property lease rents (1,817) (1,746)
Net finance costs paid (excluding re-financing costs) (2,664) (1,395)
Capitalised maintenance expenses (121) (120)
New Works Team (76) (125)
Current tax (note 9) (1,245) (1,572)
(5,923) (4,958)
Cash Available for Distribution 9,133 11,391
(Decrease) / Increase in CAD over last year £ (2,258) 3,149
(Decrease) / Increase in CAD over last year % (19.8%) 38.2%
Number Number
Closing shares in issue (less shares held in EBT) 312,144,246 29,380,333
CAD per share 28.4p 38.7p
(Decrease) / Increase in CAD per share over last year (26.6%) 36.7%
Analysis of the Underlying Business After Adjustment for Non-underlying Items
When comparing 31 July 2023 with last year, the Group benefited last year from
a higher than usual level of exceptional gains principally resulting from the
Sale totalling £5.9 million in the prior year.
In the table below we separate these non-underlying items and non-recurring
management fee income to show the performance of the underlying business.
2023 2023 2023 2022 2022 2022
£'000 £'000 £'000 £'000 £'000 £'000
Underlying Business Non-underlying Items and Non-recurring Management Fee Income Total Underlying Business Non-underlying Items and Non-recurring Management Fee Income Total
Revenue 27,147 -(1) 27,147 25,430 1,472(1) 26,902
Total property, staff, distribution, and general costs
(12,091) - (12,091) (10,553) - (10,553)
Adjusted EBITDA(1) 15,056 - 15,056 14,877 1,472 16,349
Depreciation (5,690) - (5,690) (4,727) - (4,727)
Equity-settled share-based payments
(450) - (450) (201) - (201)
Non-underlying items - (318)(2) (318) - 5,739(2) 5,739
(6,140) (318) (6,458) (4,928) 5,739 811
Operating profit 8,916 (318) 8,598 9,949 7,211 17,160
Finance income 665 - 665 42 - 42
Finance cost (2,562) - (2,562) (1,328) - (1,328)
Profit before taxation 7,019 (318) 6,701 8,663 7,211 15,874
( )
(1 ) Represents non-recurring
management fees
(2 ) Refer note 4 of the notes to the
financial statements for the analysis of non-underlying items
Taxation
The Group has made a current tax provision against earnings in this period of
£1.2 million (2022: £1.7 million) based on a blended corporation tax rate of
8 months at 19%, and 4 months at 25%. (2022: 19%). 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 £66.3 million (2022:
£63.2 million).
The external revaluation of the trading stores at 31 July 2023 is the
principal contributor to the uplift in the total deferred tax provision at the
year-end. (See note 20).
Gearing(11) (Excluding IFRS16 Lease Liabilities)
At 31 July 2023, the Group had £54.4 million of gross bank borrowings (2022:
£66.8 million) and cash of £42.1 million (2022: £46.5 million) representing
gearing of 5.3% (2022: 9.9%) on net assets of £230.5 million (2022: £205
million) - after adjusting for the uplift in value of short leaseholds which
are stated at depreciated historic cost in the Statement of Financial Position
gearing is 4.9% (2022: 9.1%).
Gearing(11) (Including IFRS16 Lease Liabilities)
At 31 July 2023, the Group had £54.4 million of gross bank borrowings (2022:
£66.8 million) and cash of £42.1 million (2022: £46.5 million) with £14.7
million of lease liabilities (2022: £10.9 million) representing gearing of
11.7% (2022:15.2%) on net assets of £230.5 million (2022: £205 million) -
after adjusting for the uplift in value of short leaseholds which are stated
at depreciated historic cost in the Statement of Financial Position gearing is
12.7% (2022: 17.0%).
Capital Expenditure
The Group has an active new store development programme. The Group has grown
through a combination of building new stores, existing store improvements and
relocations. We have concentrated on extracting value from existing assets and
developing through collaborative projects and management contracts.
Capital expenditure during the period totalled £17.3 million (2022: £12.2
million). This was primarily the contract exchange of the Milton Keynes site,
the purchase of the Bolton site and the exchange of contracts on the
Eastbourne site. There are ongoing construction and fit out works at our sites
in Staines and Basildon, final costs on Bedford and Peterborough prior to
opening, as well as the completion of construction works at our Stevenage and
Warrington stores. 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 £13.1 million (2022: £11.2 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 year-end were £230.5 million, up 12.3% (2022: £205.3
million)
The Parent Company's net assets have increased because of the £7.0 million
dividend paid up from Lok'nStore Limited, the principal operating business of
the Group.
Market Valuation of Freehold and Leasehold Land and Buildings
It is the Group's policy to commission an independent external valuation of
its properties at each financial year-end.
Our freehold stores have been independently valued by JLL at £274.7 million
(2022: £254.8 million), up 7.8%. Please refer to the table of property values
in the Property Review.
Accordingly, Adjusted Total Group Assets(4) have moved upwards sharply in the
year to £392.9 million, up 5.9% (2022: £370.9 million). A significant
contributor to this increase was the uplift from the external valuation at 31
July 2023 combined with the trading strength of our business, as well as our
investment in new stores.
In this 12-month period, we saw a Same Store uplift in valuations of £2.6
million in our freehold and leasehold trading stores, a 0.94% increase. The
like-for-like comparison excludes the Sale, and the maiden valuations on our
new stores in Bedford and Peterborough.
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.
Valuations
It is not the intention of the Directors to make any further significant
disposals of trading stores, although individual 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
in the valuation totals £27.2 million (2022: £24.3 million) but they are
held at cost less accumulated depreciation in the Statement of Financial
Position.
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.
An analysis of the valuations achieved is set out in the table below.
Increase in 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 year-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 July 2023, the Adjusted Net Asset Value per share (before deferred tax)
increased 1.4% to £9.86 from £9.72 last year.
This 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 year.
31 July 31 July
2023 2022
Analysis of Net Asset Value (NAV) £'000 £'000
Net assets 230,472 205,346
Adjustment to include short leasehold stores at valuation
Add: JLL leasehold valuation 27,200 24,250
Deduct: leasehold properties and their fixtures and fittings at NBV (6,952) (7,224)
250,720 222,372
Deferred tax arising on revaluation of leasehold properties(1) (5,062) (4,256)
Adjusted net assets 245,658 218,116
Number Number
Shares in issue '000 '000
Opening shares in issue 30,004 29,687
Shares issued for the exercise of options 83 317
Shares issued from the primary placing 2,680 -
Closing shares in issue 32,767 30,004
Shares held in EBT (623) (623)
Closing shares for NAV purposes 32,144 29,381
Adjusted Net Asset Value per share after deferred tax provision £7.64 £7.42
Adjusted Net Asset Value per share before deferred tax provision
Adjusted net assets (see above) 245,658 218,116
Deferred tax liabilities and assets recognised by the Group 66,290 63,214
Deferred tax arising on revaluation of leasehold 5,062 4,256
properties(1 )
Adjusted net assets before deferred tax 317,010 285,586
Closing shares for NAV purposes 32,144 29,381
Adjusted Net Asset Value per share before deferred tax provision
£9.86 £9.72
(1) A deferred tax adjustment in respect of the uplift in the value of the
leasehold properties has been included, calculated by applying the
substantively enacted corporation tax rate of 25% (2022: 25%). 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.
Move to SETS Trading Platform:
In February 2023, the Board approved a transition for trading of the Company's
shares on AIM from the London Stock Exchange's SETSqx (Stock Exchange
Electronic Trading Service: Quotes and Crosses) trading platform to its SETS
(Stock Exchange Electronic Trading System) platform, effective 7 February
2023.
This move is intended to provide investors with access to the entire SETS
system, providing liquidity via traditional order book trades, as well as firm
two-way quotes from market makers.
Summary
Lok'nStore Group operates within the UK self-storage industry which is still
an immature sector with strong growth prospects. With a low Loan to Value
ratio and plenty of headroom on our bank facilities, this market presents an
excellent opportunity for further growth of Lok'nStore's business.
Recently opened Landmark stores and our ambitious new store pipeline
demonstrate the Group's ability to use those strengths to exploit the
opportunities available throughout the economic cycle.
Our high margins, strong balance sheet and flexible business model enables
Lok'nStore to confidently look through the current external market
turbulence.
We look to the future with confidence.
Ray Davies
Finance Director
Principal Risks and Uncertainties:
Principal Risks and Uncertainties in Operating our Business
Risk management has been a fundamental part of the successful development of
Lok'nStore. The process is designed to improve the probability of achieving
our strategic objectives, keeping our team members safe, protecting the
interests of our shareholders and key stakeholders, and enhancing the quality
of our decision-making through understanding the risks inherent in both the
day-to-day operations and the strategic direction of the Group, as well as
their likely impact.
Management of our risks helps us protect our reputation, which is very
important to the ability of the Group to attract customers, particularly with
the growth of social media. We always try to communicate clearly with our
customers, suppliers, local authorities, communities, team members, and
shareholders, and to listen and take account of their views. We operate strict
Health and Safety policies and procedures and more information on these can be
found in the Environmental and Social Section.
Our Risk Management Governance
The Board has overall responsibility for the management of the Group's risks.
As the Group's strategic direction is reviewed and agreed, the Board
identifies the associated risks and works to reduce or mitigate them using an
established risk management framework in conjunction with the Executive
Management Team. This is a continuing and evolving process as we review and
monitor the underlying risk elements relevant to the business.
Risk Management Framework
The risk register covers all areas of the business including property,
finance, employees, insurance, customers, strategy, governance, and disaster
recovery. The risks are categorised by risk area and numerically rated based
on a combination of 'likelihood' and 'consequences and impact' on the
business. The combination of these two becomes the 'risk factor' and any
factor with a rating over 15 is reported to the Board.
Risk Management Team
Ray Davies, Finance Director, is the Board member responsible for ensuring
that the risk management and related control systems are effective, and that
the communication channels between the Board and the Executive Management Team
are open and working correctly. The Executive Management Team is responsible
for the day-to-day management of the risk factors. Responsibility for
identifying, managing, and controlling the risk is assigned to an individual
as shown on the risk register depending on the business area. Reporting
against the risks forms part of the monthly Executive management meeting and
the risk factor may be amended if applicable. There are also sub-committees
for particular risk areas which meet regularly. The Risk Management and
Reporting Structure is shown below.
Our Risk Management and Reporting Structure
The Board
Reviews Risk Register in full twice a year
Considers specific risk areas as raised by the Executive Board
Executive Board Committee
Reviews risks at monthly Executive management meetings and if material,
requests the Board consider risk at next scheduled Board Meeting (or earlier,
if necessary)
Capex Committee Property Risk Committee
Meets Monthly Meets Periodically
Manages proposed capital expenditure, actual spend, rolling capex requirements Considers:
Risks associated with properties including Health and Safety
Environmental Impact
Principal Risks
The principal risks our business faces and our key mitigations, are outlined
in the table below.
Risk Description Key Mitigation
Interest Rate and Liquidity Risk The main risks arising from the Group's financial instruments are interest § Regular review by the Board (full details are set out in the Financial
rate risk and liquidity risk (for details please see note 17). Review.
§ Debt and interest are low relative to assets and earnings. With interest
rates rising, this 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.
§ Could reduce debt, if required, by executing sale and manage-back
arrangements on mature stores or slow the rate of site development.
Tax Risk Changes to tax legislation may impact the level of corporation tax, capital § Regular monitoring of changes in legislation.
gains tax, VAT and stamp duty land tax which would in turn affect the profits
of the Group.
§ Use of appointed professional advisers and trade bodies.
Treasury Risk The Group has faced increased costs from adverse interest rate movements. The § The Group has a £100 million Revolving Credit Facility
Bank of England has raised base rates (BOEBR) fourteen times since December
2021 and BOEBR is currently 5.25% up from 0.1% in March 2020. which runs until April 2026, providing funding for future Landmark stores. The
two principal bank covenants (LTV and Senior Interest) are covenant compliant.
§ Lok'nStore is a robust business which generates an increasing cash flow
from its strong asset base with a low LTV net of cash of 3.7% (2022: 6.6%).
The value of the Group's assets underpins a flexible business model with
stable and rising cash flows and low credit risk giving the business a firm
base for growth.
§ Average cost of debt 4.77% (2022: 1.71%).
§ Average cost of debt (active revolving loans) 6.2% (2022: 2.71%).
§ Current cost of debt 6.8%.
§ With £54.4million of gross debt currently drawn against the £100 million
bank facility, the Group is not committed to enter into hedging instruments
although recognising that interest rates have risen significantly. The Group
continues to regularly monitor this risk.
§ The Group monitors compliance with its bank covenants closely and during
the year it complied with all of its bank covenants.
§ The Group has the ability to pay down debt which it did by repaying £19
million post-balance sheet.
§ The Group can raise equity to finance growth. On 7 July 2023, the Company
raised total gross proceeds of approximately £20.5 million through the issue
of 2,679,739 new Ordinary Shares via a Placing and REX Retail Offer, at a
price of 765 pence per Ordinary Share.
Property Valuation Risk The external independent valuations of the stores are sensitive to both § Regular monitoring of any changes in market conditions and transactions
operational trading performance of the stores and also wider market occurring within our marketplace.
conditions. It follows that a reduction in operational performance or a
deterioration of market conditions could have a material adverse impact on the
Net Asset Value (NAV) of the Group.
§ Use of independent professional valuers who are experts in the self-storage
sector. There is regular contact with the current valuer JLL and discussions
around market values and transactions within the sector, including post
year-end.
§ Previous experience of downturns, such as the Dotcom and Global Financial
crises, has demonstrated that Self-Storage has considerable resilience.
§ Stores are predominantly Landmark stores in prime locations and are all UK
based and predominantly located in the affluent South of England. The Group is
therefore not exposed to overseas/international currency risks, etc.
§ Operational management teams with the skills, experience, and motivation to
continue to drive operational performance.
Environmental Risk Flooding. § Flood risk due diligence undertaken on all prospective site acquisitions.
§ Flood protection measures in place at all stores.
Increased requirement to reduce waste and greenhouse gas emissions and reduce
environmental impact on the environment.
§ Group has been measuring environmental impact since 2005 and is committed
to manage waste effectively and control polluting emissions.
§ All new construction has solar power on the roofs of its buildings.
Property Acquisition Acquiring new sites is a key strategic objective of the business but we face § We hold weekly property meetings to manage the search process and property
significant competition from other uses such as hotels, car showrooms and purchases.
offices as well as from other self-storage operators.
§ Use of property acquisition consultants.
§ Regular communication with agents.
§ Attendance at industry relevant property events.
Planning Permission The process of gaining planning permissions remains challenging. § Where we can we acquire sites subject to planning.
Planning approval is increasingly dependent on Social or Environmental
enhanced features such as BREEAM standards, as well as local planners' demands
for green spaces, cycle and footpaths, etc. all adding cost and complexity to § We work with an established external planning consultant.
a planning project.
§ Our property team has over 20 years' experience in obtaining planning
consents for our stores.
Construction Poor construction may affect the value of the property and/or the efficient § We use a design and build contract with a variety of established
operation of the store. contractors.
Rising costs of developing a store may mean site opportunities which do not
meet management's return on investment criteria may not be taken up.
§ We use external project managers.
§ All projects are overseen by our property team which has over 20 years'
experience.
Availability of 'Grid Capacity' § Construction projects are subject to a tender process
§ Rising costs are factored into our financial modelling to ensure the
required returns are achievable.
§ Ensure sufficient due diligence undertaken to ensure supply.
§ Contracts to be subject to availability of Grid Capacity as a condition.
Maintenance/Damage Damage to properties through poor maintenance or flood or fire could render a § Regular site checks by team members.
store inoperable.
§ Rolling maintenance plan for all stores.
§ Comprehensive disaster recovery plan.
§ Appropriate insurance cover.
Increased Competition An increasing number of competitors in the industry may negatively impact § Established criteria for site selection including:
Lok'nStore's existing operations (e.g. pricing/available sites).
o Prominent locations
o High visibility
o Distinctive designs and bright orange elevations and signage to attract
customers.
§ Continued investment in the Group's website and internet marketing.
§ Ensure high levels of customer service through training and monitoring.
Colleague Retention Loss of team members may affect our ability to operate our stores and provide § Aim to offer a good work/life balance and career development.
the high levels of customer service expected.
§ Regular reviews of remuneration levels against market.
§ Achievable bonus systems.
§ Generous Employee Share Schemes.
§ High-quality training within the Lok'nStore Academy
§ Intranet for improved communications.
§ Established colleague rewards programme.
Cyber Security and IT System Breach A breach of our IT systems might adversely affect the operations and income of § Regularly reviewed IT security systems.
the business resulting in potential fines, customer compensation and causing
reputational damage to the Group.
§ Well communicated policies and procedures for handling and managing a
systems breach.
Future Pandemic Risk A spread of the virus and social protection measures which may be introduced § The Group has a well-defined policy and response developed and executed
by Government may adversely affect the operations and financial performance of throughout the recent Covid-19 pandemic.
the business and adversely impact on the health of team members.
§ Our Covid-19 Group Safe Response has been documented in detail in the
Managing Director's Review on page 20 in the 2021 Annual Report and is not
repeated here.
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2023
Notes Group Group
Year ended Year ended
31 July 2023 31 July 2022
£'000 £'000
Revenue 1 27,147 26,902
Total property, staff, distribution, and general costs 2 (12,091) (10,553)
Adjusted EBITDA(1) 15,056 16,349
Depreciation 7 (5,690) (4,727)
Equity-settled share-based payments 23a (450) (201)
Non-underlying items 4 (318) 5,739
(6,458) 811
Operating profit 8,598 17,160
Finance income 5 665 42
Finance cost 6 (2,562) (1,328)
Profit before taxation 6,701 15,874
Income tax expense 9 (2,009) (3,796)
Profit for the year attributable to Owners of the 24a 4,692 12,078
Parent
Other comprehensive income
Items that will not be reclassified to profit and loss
Fair value movement in property valuation 12 7,819 60,171
Deferred tax relating to change in property valuation 20 (1,954) (14,284)
Other comprehensive income 5,865 45,887
Total comprehensive income for the year attributable to Owners of the Parent
10,557 57,965
Earnings per share attributable to owners of the Parent Group Group
Year ended Year ended
31 July 2023 31 July 2022
£'000 £'000
Basic
Total basic earnings per share 11 15.90p 41.24p
Diluted
Total diluted earnings per share 11 15.65p 40.48p
(1) Adjusted EBITDA is defined in the accounting policies section of the
notes to this Report.
Consolidated Statement of Changes in Equity
For the year ended 31 July 2023
Attributable to
owners of the Parent
Share Share Other Revaluation Retained Total
Capital Premium Reserves Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000
31 July 2021 298 10,815 9,138 104,736 26,272 151,259
Profit for the year - - - - 12,078 12,078
Other comprehensive income:
Increase in property valuation net of deferred tax - - - -
45,887 45,887
Total comprehensive income for the year - - - 12,078
45,887 57,965
Transactions with owners:
Dividend paid - - - - (4,601) (4,601)
Share-based payments - - 201 - - 201
Transfers in relation to share-based payments -
- - (180) 180 -
Deferred tax relating to share options - - (57) - - (57)
Exercise of share options 3 576 - - - 579
Reserve transfer on disposal of assets - - - (20,258) 20,258 -
Transfer additional depreciation on revaluation net of deferred tax - - - (821) 821 -
Total transactions with owners 3 576 (36) (21,079) 16,658 (3,878)
31 July 2022 301 11,391 9,102 129,544 55,008 205,346
Profit for the year - - - - 4,692 4,692
Other comprehensive income:
Increase in property valuation net of deferred tax - - - -
5,865 5,865
Total comprehensive income for the year - - - 4,692
5,865 10,557
Transactions with owners:
Dividend paid - - - - (5,295) (5,295)
Share-based payments - - 450 - - 450
Transfers in relation to share-based payments -
- - (47) 47 -
Deferred tax 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 1 160 - - - 161
Transfer additional depreciation on revaluation net of deferred tax - - - -
(1,095) 1,095
Total transactions with owners 28 19,744 45 (1,095) (4,153) 14,569
31 July 2023 329 31,135 9,147 134,314 55,547 230,472
Company Statement of Changes in Equity
For the year ended 31 July 2023
Share Share Retained Other Total
Capital Premium Earnings Reserves Equity
£'000 £'000 £'000 £'000 £'000
31 July 2021 298 10,815 16,604 2,004 29,721
Profit and total comprehensive income for the year - - 5,756 -
5,756
Transactions with owners:
Equity settled share-based payments - - -
201 201
Transfer in relation to share- based payments - -
180 (180) -
Exercise of share options 3 576 - 579
Dividends paid - - (4,601) - (4,601)
Total transactions with owners 3 576 1,335 21 (1,935)
31 July 2022 301 11,391 17,939 2,025 31,656
Profit and total comprehensive income for the year - - 6,701 -
6,701
Transactions with owners:
Equity settled share-based payments - - -
450 450
Transfer in relation to share-based payments - -
47 (47) -
Primary equity placing 27 20,473 - - 20,500
Transaction costs of primary placing (889) (889)
Exercise of share options 1 160 - - 161
Dividends paid - - (5,295) - (5,295)
Total transactions with owners 28 19,744 1,453 403 21,628
31 July 2023 329 31,135 19,392 2,428 53,284
Consolidated and Company Statements of Financial Position
31 July
2023
Company Registration No. 04007169
Notes Group Group Company Company
31 July 31 July 31 July 31 July
2023 2022 2023 2022 Restated
£'000 £'000 £'000 £'000
Assets
Non-current assets
Property, plant, and equipment 12a 314,013 292,848 - -
Investments 13 - - 3,321 2,871
Other receivables 15 - - 42,963 22,785
Right of use assets 12b 13,769 10,424 - -
327,782 303,272 46,284 25,656
Current assets
Inventories 14 145 143 - -
Trade and other receivables 15 2,585 3,988 7,000 6,000
Cash and cash equivalents 17c 42,132 46,465 - -
Total current assets 44,862 50,596 7,000 6,000
Total assets 372,644 353,868 53,284 31,656
Liabilities
Current liabilities
Trade and other payables 16 (7,180) (7,229) - -
Obligations under lease liabilities 19 (826) (1,612) - -
Taxation - (989) - -
(8,006) (9,830) - -
Non-current liabilities
Borrowings 18 (54,046) (66,196) - -
Obligations under lease liabilities 19 (13,830) (9,282) - -
Deferred tax 20 (66,290) (63,214) - -
(134,166) (138,692) - -
Total liabilities (142,172) (148,522) - -
Net assets 230,472 205,346 53,284 31,656
Equity attributable to owners of the Parent
Called up share capital 21 329 301 329 301
Share premium 31,135 11,391 31,135 11,391
Other reserves 23a 9,147 9,102 2,428 2,025
Retained earnings 24 55,547 55,008 19,392 17,939
Revaluation reserve 134,314 129,544 - -
Total equity 230,472 205,346 53,284 31,656
As permitted by section 408 Companies Act 2006, the Parent Company's statement
of comprehensive income has not been included in these financial statements.
The profit and comprehensive income for the year ended 31 July 2023 was £6.7
million (2022: £5.8 million).
Approved by the Board of Directors and authorised for issue on 27 October 2023
and signed on its behalf by:
Andrew Jacobs
Ray Davies
Chair
Finance Director
Consolidated Statement of Cash Flows
For the year ended 31 July 2023
Notes Group Group
Year ended Year ended
31 July 31 July
2023 2022
£'000 £'000
Operating activities
Cash generated from operations 26a 15,815 18,569
Income tax paid (1,960) (1,060)
Net cash inflow from operating activities 13,855 17,509
Investing activities
Proceeds of sale & manage-back stores - 37,922
Purchase of property, plant, and equipment 12a (15,803) (11,961)
Interest received 665 13
Net cash generated by investing activities 15,138 25,974
Financing activities
Proceeds of bank borrowings utilised for store development and bank
refinancing
- 1,386
Repayment of bank borrowings (12,386) -
Finance costs paid (3,324) (1,741)
Lease liabilities paid (1,817) (1,746)
Primary equity placing (net of placing costs) 19,611 -
Equity dividends paid (5,295) (4,601)
Proceeds from exercise of share options 161 579
Net cash used in from financing activities (3,050) (6,123)
Net (decrease) / increase / in cash and cash equivalents in the year
(4,333) 37,360
Cash and cash equivalents at beginning of the year
46,465 9,105
Cash and cash equivalents at end of the year 42,132 46,465
No statement of cash flows is presented for the Company as it had no cash
flows in either year.
Accounting Policies
General Information
Lok'nStore Group plc is an AIM listed company incorporated and domiciled in
England and Wales. The address of the registered office is One Fleet Place,
London, EC4M 7WS, UK. Copies of this Annual Report and Accounts may be
obtained from the Company's head office at 112 Hawley Lane, Farnborough,
Hants, GU14 8JE or 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
Strategic Report.
Basis of Accounting
The preliminary financial information does not constitute full statutory
accounts within the meaning of section 434 of the Companies Act 2006 but is
derived from statutory accounts for the years ended 31 July 2023 and 31 July
2022, both of which are audited. The report of the auditor on the statutory
financial statements for the year ended 31 July 2023 was (i) unqualified; (ii)
did not include references to any matters to which the auditor drew attention
by way of emphasis without qualifying their report; and (iii) did not contain
statements under S 498(2) or (3) of the Companies Act 2006. The statutory
financial statements for the year ended 31 July 2023 will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
The statutory accounts for the year ended 31 July 2022 have been delivered to
the Registrar of Companies. The report of the auditor on the statutory
financial statements for the year ended 31 July 2022 was (i) unqualified; (ii)
did not include references to any matters to which the auditor drew attention
by way of emphasis without qualifying their report; and (iii) did not contain
statements under S 498(2) or (3) of the Companies Act 2006.
The Preliminary Announcement is prepared on the same basis as set out in the
statutory accounts for the year ended 31 July 2023. While the financial
information included in this Preliminary Announcement has been prepared in
accordance with the recognition and measurement criteria of UK-adopted
International Financial Reporting Standards (IFRS), this announcement does not
in itself contain sufficient information to comply with IFRSs. The Group
expects to publish full financial statements that comply with IFRSs in
November 2023.
The financial statements for the year ended 31 July 2023 have been prepared in
accordance with UK-adopted International Accounting Standards (IFRS) as
adopted by the UK Endorsement Board and with the requirements of the Companies
Act 2006 as applicable to companies reporting under those standards.
The Group has applied all accounting standards and interpretations issued by
the International Accounting Standards Board and International Financial
Reporting Interpretation Committee applicable to companies reporting under UK
adopted IFRS relevant to its operations and effective for accounting periods
beginning on or after 1 August 2022. There was no material impact on the
adoption of these.
The statutory accounts for the year ended 31 July 2023 will be 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 financial statements have been prepared on the historic cost basis except
that certain trading properties and non-current financial assets are stated at
fair value.
Standards, Amendments, Improvements & Interpretations applicable (1)
At the date of authorisation of these financial statements the following
standards, which have not been applied in these financial statements, were in
issue but not yet effective.
New pronouncement Effective date*
IFRS 17 Insurance Contracts 1 Jan 2023
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice 1 Jan 2023
Statement 2
Definition of Accounting Estimates - Amendments to IAS 8 1 Jan 2023
Deferred Tax related to Assets and Liabilities arising from a Single 1 Jan 2023
Transaction - Amendments to IAS 12
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12 Note 1
Classification of Liabilities as Current or Non-current and Non-current 1 Jan 2024
Liabilities with Covenants - Amendments to IAS 1
Lease Liability in a Sale and Leaseback - Amendments to IFRS 16 1 Jan 2024
Disclosures: Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7 1 Jan 2024
* Effective for annual periods beginning on or after this date.
Note 1: The amendments are effective immediately upon issuance. The disclosure
of the current tax expense related to Pillar Two income taxes and the
disclosures in relation to periods before the legislation is effective are
required for annual reporting periods beginning on or after 1 January 2023,
but are not required for any interim period ending on or before 31 December
2023.
The Directors do not anticipate that the adoption of these revised standards,
amendments and interpretations will have a significant impact on the figures
included in the financial statements in the period of initial application.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (and its subsidiaries) made
up to 31 July each year. 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 inflationary effect on rising
costs on the Group, they have satisfied themselves that the 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 Managing Director's Review.
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 £42.1
million (2022: £46.5 million), undrawn committed bank facilities at 31 July
2023, based on the Group's facility of £100 million, of £45.6 million (2022:
£33.2 million - based on £100 million facility), and cash generated from
operations in the year ended 31 July 2023 of £15.8 million (2022: £18.6
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 Directors continually review and update the Group's 'Rolling Forecast
Model' which projects forward for a minimum of three years. After taking into
account the Group's operating plan and budget for the year ending 31 July 2024
and beyond, and reviewing these projected cash flows, applying reasonable
sensitivity analysis, together with the Group's available cash balances,
borrowing facilities, and potential property valuation movements over that
period, the Directors consider that the Group has sufficient funds to meet its
liabilities and commitments as they fall due and for a period of at least
twelve months from the date of approval of these financial statements.
The Group's current and future 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 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. The opening offer discount of 50% (eight weeks for the price of
four) is spread evenly over the term of the discount period.
a) Self-storage revenue
Self-storage revenue is recognised over the period for which the space is
occupied by the customer on a time apportionment 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 stores 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 and therefore insurance risk.
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 revenue performance. Additional performance fees may
be earned if an individual Managed Store's 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.
Alternative Performance Measures (APMs)
In addition to International Financial Reporting Standards, (IFRS) accounting
performance measures, we use some Alternative Performance Measures (APMs) to
help us explain to the users of these Financial Statements how the underlying
business is performing.
Such APMs are Key Performance Indicators for our business and include, for
example, Adjusted Store EBITDA, Cash Available for Distribution (CAD), Loan to
Value (LTV), Adjusted Net Asset Value (NAV) and others.
We identify these measures and explain what we mean when we use them and,
importantly, why we use them. They are intended to supplement and not
substitute those financial measures prepared in accordance with IFRS.
Critical Accounting Estimates a) and Judgements b) 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. This
valuation uses a discounted cash flow methodology which is based on current
and projected net operating income. The Group employs expert external valuers,
JLL, who report on the value of the Group's stores on an annual basis. The
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 12(a) together
with estimation sensitivities undertaken. The carrying value of land and
buildings held at valuation at the reporting date was £255.6 million (2022:
£239.8 million) as shown in the table in note 12(a).
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 therefore justify the proposed 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
£30.6 million (2022: £29.2 million). Please see note 12(a) 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 year-end,
Lok'nStore operates 42 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 42 stores, Lok'nStore owns the
freehold interest in 17 stores, nine 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 42 stores trading under the
Lok'nStore brand. In addition, there is a secured pipeline of a further 11
stores (nine owned and two managed). When fully developed the Group will
operate 53 trading stores.
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 2023 (net deferred of tax) of £5.9 million (2022: £45.9
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 estimates the incremental borrowing
rate based on its external borrowings secured against a similar asset,
adjusted for the term of the lease.
Notes to the Financial Statements
For the year ended 31 July 2023
1 Revenue
Analysis of the Group's revenue is shown below:
Group Group
Stores trading 2023 2022
£'000 £'000
Self-storage revenue 22,873 21,585
Insurance revenue 2,251 2,239
Retail sales (packing materials etc.) 240 252
Sub-total self-storage revenue - owned stores 25,364 24,076
Management fees - managed stores 1,659 2,785
Sub-total 27,023 26,861
Non-storage income 124 41
Total revenue per statement of comprehensive income 27,147 26,902
Segmental information
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Executive to allocate resources to the segments and to assess their
performance. Given the nature of the Group's business, there is one segment,
which is the provision of self-storage and related services which all arise in
the UK.
2 Property, Staff, Distribution and General Costs Group
Group
2023
2022
£'000
£'000
Property and premises costs 6,821 5,304
Property rentals * (1,817) (1,746)
Net property and premises costs 5,004 3,558
Staff costs 5,267 5,369
General overheads 1,567 1,438
Sub-total operating costs 11,838 10,365
Retail products cost of sales (see note 3) 253 188
Total 12,091 10,553
*This adjustment relates to lease payments in the period which are treated as
a reduction in lease liabilities. The property and premises costs are
presented with this figure included to present the underlying costs associated
with lease rentals.
3 Cost of Sales of Retail Products
Cost of sales represents the direct costs associated with the sale of retail
products (boxes, packaging etc.), and the ancillary sales of insurance cover
for customer goods, all of which fall within the Group's ordinary activities.
Group Group
2023 2022
£'000 £'000
Retail 110 113
Insurance 97 23
Other 46 52
Total cost of sales of retail products 253 188
4 Non-underlying items Group Group
2023 2022
£'000 £'000
Profit on sale of trading stores (1) - 5,936
Liquidated damages received on development (2) 195 175
Abortive site costs (3) (63) (372)
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) -
Total non-underlying items (318) 5,739
(1 ) Profit arising on the sale and manage-back of four
trading stores located at Basingstoke, Cardiff, Horsham and Portsmouth.
(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 associated professional costs.
( )
5 Finance
Income
Group Group
2023 2022
£'000 £'000
Bank interest 660 42
Other interest 5 -
Total finance income 665 42
Interest receivable arises on cash and cash equivalents (see note 17).
6 Finance Costs
Group Group
2023 2022
£'000 £'000
Interest on bank borrowings 3,112 1,296
Capitalised interest (1,544) (589)
Net bank interest 1,568 707
Non-utilisation fees 212 166
Amortisation of bank loan arrangement fees 235 216
Interest on obligations under lease liabilities 547 239
Total finance costs 2,562 1,328
7 Profit before
Taxation
Group Group
Profit before taxation is stated after charging: 2023 2022
£'000 £'000
Depreciation and amounts written off property, plant and equipment:
Depreciation based on cost 2,550 2,316
Depreciation based on revalued assets 1,452 1,094
Depreciation of property, plant and equipment (note 12a) 4,002 3,410
Depreciation of right of use assets 1,688 1,314
Loss on disposal of fixed assets - 3
Total 5,690 4,727
Group Group
2023 2022
£'000 £'000
Audit services
- UK statutory audit of the Company and consolidated accounts 144 125
Other services
- Interim Review - agreed upon procedures 12 9
156 134
Comprising:
Audit services 144 125
Non-audit services 12 9
Amounts payable to RSM UK Audit LLP 156 134
8 Employees
Group Group
2023 2022
No. No.
The average monthly number of persons (including Directors) employed by the
Group during the year was:
Store management * 163 151
Administration 30 27
193 178
Of the 163 store employees, 64 (2022:54) are directly deployed in Managed
Stores and the corresponding employee costs are recharged to the third party
owners.
Costs for the above persons: Group Group
2023 2022
£'000 £'000
Wages and salaries 4,060 4,174
Social security costs 530 702
Pension costs 109 98
4,699 4,974
Share-based remuneration (options) 450 201
5,149 5,175
Share-based remuneration is separately disclosed in the statement of
comprehensive income. Wages and salaries of £92,572 (2022: £154,920) have
been capitalised as additions to property, plant and equipment as they are
directly attributable to the acquisition of these assets.
All other employee costs are included in staff costs in the statement of
comprehensive income.
In relation to pension contributions, there was £19,938 (2022: £32,807)
outstanding at the year-end. There were no employees employed by Lok'nStore
Group plc in the year other than the Directors (2022: nil).
Directors' Remuneration Salary Bonuses Benefits Pension Gains on Total
2023 £ £ £ Sub Total £ Share Options £
£ £
Executive:
A Jacobs 235,035 32,250 8,235 275,520 - - 275,520
RA Davies 182,792 20,627 5,587 209,006 7,312 326,687 543,005
N Newman-Shepherd 102,397 70,715 2,912 176,024 4,096 30,222 210,342
T Lampard 32,099 20,417 1,253 53,769 1,284 - 55,053
Non-Executive:
J Woyda 31,345 - - 31,345 - - 31,345
SG Thomas 25,075 - 5,914 30,989 - - 30,989
RJ Holmes 25,075 - - 25,075 - - 25,075
CP Peal 25,075 - - 25,075 - - 25,075
658,893 144,009 23,901 826,803 12,692 356,909 1,196,404
Directors' Remuneration Salary Bonuses Benefits Pension Gains on Total
2022 £ £ £ Sub Total £ Share Options £
£ £
Executive:
A Jacobs 223,842 146,500 7,387 377,729 - 1,360,277 1,738,006
RA Davies 174,087 49,287 5,587 228,961 6,963 456,995 692,919
N Newman-Shepherd 97,521 100,523 2,793 200,837 3,901 11,058 215,796
Non-Executive:
J Woyda 27,364 - - 27,364 - - 27,364
SG Thomas 23,881 - 5,570 29,451 - - 29,451
RJ Holmes 23,881 - - 23,881 - - 23,881
ETD Luker 9,950 - - 9,950 - - 9,950
CP Peal 23,881 - - 23,881 - - 23,881
604,407 296,310 21,337 922,054 10,864 1,828,330 2,761,248
Details of the Directors' remuneration are shown above.
The highest paid Director received contributions during the year of £7,312
(2022; £nil). The benefits in kind all relate to medical insurance premiums
paid on behalf of the Directors. The number of Directors to whom retirement
benefits are accruing under money purchase pension schemes in respect of
qualifying service is two (2022: two).
9 Taxation
Group Group
2023 2022
£'000 £'000
Current tax:
UK corporation tax - current year 1,283 1,572
UK corporation tax - adjustment in respect of prior period (38) 111
Total UK corporation tax 1,245 1,683
Deferred tax:
Origination and reversal of temporary differences 764 2,113
Total deferred tax 764 2,113
Total Income tax expense for the year 2,009 3,796
The charge for the year can be reconciled to the profit for the year as
follows:
2023 2022
£'000 £'000
Profit before tax 6,701 15,874
Tax on ordinary activities at the effective standard rate of corporation tax
in the UK of 21% (2022: 19%)
1,423 3,016
Depreciation of non-qualifying assets 482 377
Share-based payment charges in excess of corresponding tax deduction 94 (337)
Adjustments in respect of prior periods - corporation tax (38) 111
Tax effect of rolled over gains on sale of property - 432
Other 48 197
Income tax expense for the year 2,009 3,796
Effective tax rate 30% 24%
In addition to the amount charged to profit or loss for the year, deferred tax
relating to the revaluation of the Group's properties of £1.95 million (2022:
£14.3 million) has been recognised directly in other comprehensive income
(see note 20 on deferred tax).
The current year tax charge is a blended rate of 21% based on a pro-rata
calculation of eight months at 19% and four months at 25%. The deferred tax
balances are measured at the substantively enacted rates of corporation tax
being 19% until 31 March 2023 and a rate of 25% thereafter.
10 Dividends
2023 2022
Amounts recognised as distributions to equity holders in the year: £'000 £'000
Final dividend for the year ended 31 July 2021 (10.67 pence per share) - 3,132
Interim dividend for the year to 31 July 2022 (5.00 pence per share) - 1,469
Final dividend for the year ended 31 July 2022 (12.25 pence per share) 3,602 -
Interim dividend for the year to 31 July 2023 (5.75 pence per share) 1,693 -
5,295 4,601
In respect of the current year the Directors paid an interim dividend of 5.75
pence per share to shareholders on 10 June 2023. The Directors propose that a
final dividend of 13.25 pence per share will be paid to the shareholders. The
total estimated final dividend to be paid is approximately £4.34 million
based on the number of shares in issue at 13 October 2023 as adjusted for
shares held in the Employee Benefits Trust.
This is subject to approval by shareholders at the Annual General Meeting on 7
December 2023 and has not been included as a liability in these financial
statements. The ex-dividend date will be 23 November 2023; the record date 24
November 2023; with an intended payment date of 5 January 2023. The final
deadline for Dividend Reinvestment Election (DRIP) is 8 December 2023.
11 Earnings per Share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Group Group
2023 2022
£'000 £'000
Total profit for the financial year attributable to owners of the Parent 4,692 12,078
2023 2022
No. of shares No. of shares
Weighted average number of shares
For basic earnings per share 29,518,911 29,287,451
Dilutive effect of share options(1) 467,137 549,321
For diluted earnings per share 29,986,048 29,836,772
(1) Further options that could potentially dilute EPS in the future are
excluded from the above because they are not dilutive in the period presented.
Full details of share options are included in note 22.
Earnings per share Group Group
2023 2022
pence pence
Basic
Total basic earnings per share
15.90p 41.24p
Diluted
Total diluted earnings per share 15.65p 40.48p
12a) Property, Plant and Equipment
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 2021 33,676 199,617 7,557 30,420 10 271,280
Additions 10,611 756 158 663 - 12,188*
Transfers (15,072) 11,234 - 3,838 - -
Disposals - (30,101) - (3,615) - (33,716)
Revaluations - 58,299 - - - 58,299
31 July 2022 29,215 239,805 7,715 31,306 10 308,051
Depreciation
1 August 2021 - - 2,509 13,109 10 15,628
Depreciation - 1,872 296 1,242 - 3,410
Disposals - - - (1,963) - (1,963)
Revaluations - (1,872) - - - (1,872)
31 July 2022 - - 2,805 12,388 10 15,203
Net book value at 31 July 2022
29,215 239,805 4,910 18,918 - 292,848
Cost or valuation
1 August 2022 29,215 239,805 7,715 31,306 10 308,051
Additions 13,260 38 173 3,877 - 17,348*
Transfers (11,870) 10,186 - 1,684 - -
Disposals - - - - - -
Revaluations - 5,570 - - - 5,570
31 July 2023 30,605 255,599 7,888 36,867 10 330,970
Depreciation
1 August 2022 - - 2,805 12,388 10 15,203
Depreciation - 2,249 301 1,452 - 4,002
Disposals - - - - - -
Revaluations - (2,249) - - - (2,249)
31 July 2023 - - 3,106 13,840 10 16,956
Net book value at 31 July 2023
30,605 255,599 4,782 23,027 - 314,013
* including capitalised interest costs of £1,544,229 (2022: £589,843).
The Group has an active store development programme and in accordance with IAS
23 (borrowing costs) has material assets that take a substantial period of
time to develop from acquisition to ultimate store opening. Accordingly
borrowing costs of £1,54 million (2022: £0.59 million) have been capitalised
that are directly attributable to the acquisition, construction and fit-out of
these qualifying store assets. £332,529 of this amount relates to development
stores which opened during the year leaving a balance of £1,211,700 carried
in development property assets. If all property, plant and equipment were
stated at historic cost the carrying value would be £124.9 million (2022:
£111.4 million).
Capital expenditure during the period totalled £17.3 million. (2022: £12.2
million). This was primarily the contract exchange of the Milton Keynes site,
the purchase of the Bolton site and the exchange of contracts on the
Eastbourne site. There are ongoing construction and fit out works at our sites
in Staines and Basildon, final costs on Bedford and Peterborough prior to
opening, as well as and the completion of construction works at our Stevenage
and Warrington stores. Also, planning and pre-development works at our
Bournemouth, Altrincham, Barking and Cheshunt sites featured.
Property, plant and equipment (non-current assets) with a carrying value of
£314.0 million (2022: £292.8 million) are pledged as security for bank
loans.
Independent External Market Valuation of Freehold and Leasehold Land and
Buildings
Fair Value Measurement
The fair value hierarchy within which the fair value measurements are
categorised is level 3, in accordance with IFRS 13 (fair value measurement).
On 31 July 2023, an independent professional valuation was prepared by JLL in
respect of 15 freehold, and nine leasehold stores operated by Lok'nStore. The
valuation was prepared in accordance with the RICS Valuation - Global
Standards 2022 - UK national supplement, published by The Royal Institution of
Chartered Surveyors (the RICS Red Book) and the valuation methodology is
explained in more detail below. The valuations were prepared on the basis of
Fair Value as a fully equipped operational entity having regard to trading
potential. The valuation was provided for accounts purposes and as such, is a
Regulated Purpose Valuation as defined in the Red Book. In compliance with the
disclosure requirements of the RICS Red Book JLL has confirmed that:
· This is the eighth year that JLL has been appointed to value the
properties.
· The valuers who prepared the valuation have the necessary skills and
experience having been significantly involved in the sector.
· JLL do not provide other significant professional or agency services
to the Company.
· In relation to the preceding financial year of JLL the proportion of
the total fees payable by the Company to the total fee income of the firm is
less than 5% and is minimal.
The valuation report indicates a total valuation for all properties valued of
£301.9 million (2022: £279 million) of which £274.7 million (2022: £254.8
million) relates to freehold properties, and £27.2 million (2022: £24.2
million) relates to properties held under leases. Full details are set out in
the property review in the table of property values.
Freehold land and buildings are carried at valuation in the statement of
financial position. Short leasehold improvements at properties held under
leases are carried at cost rather than valuation in accordance with IFRS.
For the trading properties the valuation methodology explained in more detail
below is based on fair value as fully equipped operational entities, having
regard to trading potential. Of the £274.7 million (2022: £254.8 million)
valuation of the freehold properties £20.9 million (2022: £16.6 million)
relates to the net book value of fixtures, fittings and equipment, and the
remaining £253.8 million (2022: £238.2 million) relates to freehold
properties.
The 2023 valuation includes and reflects movements in value which have
resulted from the operational performance of the stores and market movements
in the investment environment.
Valuation Methodology
JLL has adopted the profits method of valuation and cross-checked with the
direct comparison method based on recent transactions in the sector, which is
the main method of pricing adopted by purchasers of self-storage properties.
The carrying value of freehold land and buildings of £255.3million also
includes £1.5 million of assets held at Directors' valuation (see below).
JLL have valued the assets on an individual basis and have disregarded any
portfolio effect.
The profits method of valuation considers the cash flow generated by the
trading potential of the self-storage facility. Due to the specialised design
and use of the buildings, the value is typically based on their ability to
generate a net income from operating as self-storage facilities.
JLL have constructed a discounted cash flow model. This sets out their
explicit assumptions on the underlying cash flow that they believe could be
generated by a Reasonably Efficient Operator at each of the properties, both
at the valuation date and in the near future as the properties increase their
occupancy and rates charged to customers. Judgements are made as to the
trading potential and likely long-term sustainable occupancy.
Stable occupancy depends upon the nature of demand, size of property and
nearby competition, and allows for a reasonable vacancy rate to enable the
operator to contract units to new customers. In the valuation the assumed
stabilised occupancy level for the 26 trading stores (both freeholds and
leaseholds) averages 87.79% (2022: 88.23%).
Expenditure is deducted (such as business rates, staff costs, repair and
maintenance, utilities, marketing and bad debts) as well as an operator's
charge which takes account of central costs. JLL also make an allowance for
long- term capex requirements where applicable. The assumptions used by JLL
include: -
· The cash flow for freeholds runs for an explicit period of ten years,
after which it is capitalised at an all risks yield which reflects the
implicit future growth of the business, or a hypothetical sale.
· The cash flow for leaseholds continues for the unexpired term of the
lease.
· The Discount Rate applied has had regard to recent transactions,
weighted average costs of capital and target return in other asset types with
adjustments made to reflect differences in the risk and liquidity profile.
· The weighted average annual Discount Rate adopted (for both freeholds
and leaseholds) is 7.62% (2022: 7.21%).
· The Discount Rates used in the freehold valuation ranges from 6.75% to
9.00% (2022: 6.50% to 8.75%).
· The yield arising from the first year of the projected cash flow is
4.90% (2022: 5.30%), rising to 7.13% (2022: 6.79%) in year five.
· JLL has assumed purchasers' costs of 6.80% (2022: 6.80%).
· The average assumed stabilised occupancy is 87.79% (2022: 88.23%).
· The average Exit Yield assumed is 6.51% (2022: 6.16%).
The comparison method considers recent transactions where self-storage
properties have sold, and then adjusts them based on a multiple of current
earnings and a capital value per square foot. They are adjusted to reflect
differences in location, physical characteristics, local supply and demand,
tenure and trading levels.
The Group has reported that the Lok'nStore trading stores have performed very
well in terms of increasing pricing while maintaining occupancy over the
course of the year.
For leaseholds, the same methodology has been used as for freehold property,
except that no sale of the assets in the tenth year is assumed, but the
discounted cash flow is extended to the expiry of the lease. The average
unexpired term of the Group's operating leaseholds valued by JLL is
approximately twelve years and ten months as at 31 July 2023 (ten years and
one month: 31 July 2022). Valuations for stores held under leases are not
reflected in the statement of financial position and the assets in relation to
these stores are carried at cost less accumulated depreciation.
In 2011, one of the Group store's leases was renegotiated and includes a
ten-year option to renew the leases from March 2026 to March 2036. The option
to extend is only operable in the event that all four of the leases applicable
to this store are extended and this option is personal to Lok'nStore or
another "major self-storage operator", to be approved by the landlord
(approval not to be unreasonably withheld). The JLL valuation on this store is
based on this Special Assumption that the option to extend the lease for ten
years is exercised. This is consistent with the approach taken in previous
years.
Self-storage valuations are complex and involve a degree of judgement. As a
guide and assuming all other factors are constant, improvements in a store's
EBITDA would lead to an increase in that store's valuation. Conversely, an
increase in Exit Yield and Discount Rate would result in a lower valuation and
vice-versa.
The effect of a change in more than one input would magnify the impact on the
valuation. Inputs moving in opposite directions, such as price and occupancy
improving but capitalisation rates increasing could result in no net impact on
valuations.
Further changes in interest rates, risk free rates or changes in the
macro-economic outlook may affect the capitalisation rates applied by External
Valuers in future independent valuations.
As an example of the sensitivity of capitalisation rates:
* A 50bpts decrease in the Exit Yields and Discount Rate would result
in a £28.3 million increase in this year's valuation.
* A 100bpts decrease in the Exit Yields and Discount Rate would result
in a £62.8 million increase in this year's valuation.
* A 50bpts increase in the Exit Yield and Discount Rate would result
in a £23.8 million decrease in this year's valuation.
* A 100bpts increase in the Exit Yield and Discount Rate would result
in a £44.1 million decrease in this year's valuation.
It is the Company's policy to conduct independent valuations of all trading
assets at the end of each financial year. At the interim half year stage,
the Directors will consult with JLL to consider whether there has been any
material change in market conditions. If there has been then the Directors
will instruct an Independent Valuation at this point.
Directors' valuation of land and property
Land & Buildings at the rear of the new Salford trading store
Following the opening of the new Salford store in 2022, there is available
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 tenants,
the Directors continue to place a Directors' valuation of £1.5 million (2022:
£1.5 million) on this land and building.
The total value of land and property carried at Directors' valuation at 31
July 2023 is £1.5 million (2022: £1.5 million).
12b) 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 £13.8 million at 31 July
2023 (2022: £10.4 million) and total lease liabilities of £14.7 million,
(2022: £10.9 million) with depreciation charges of £1.7 million (2022: £1.3
million) and lease interest charges of £0.5 million (2022: £0.2 million).
Detailed analysis is provided in the tables below: -
Group Group
Right of use asset (ROU) 31 July 2023 £'000 31 July 2022
£'000
At 31 July 2022 10,424 10,503
Additions 5,032 1,235
Depreciation (1,688) (1,314)
At 31 July 2023 13,768 10,424
Group Group
31 July 2023 31 July 2022
£'000 £'000
Property rentals 1,817 1,746
Depreciation of right of use asset (ROU) (1,688) (1,314)
Interest charged on lease liability (547) (239)
Impact on Comprehensive Income (418) 193
The right of use assets represents the present value of minimum lease payments
for the Group's property leases. The Group has no leases on any other types of
assets. The Present Value of all future operating lease payments on existing
leases is calculated using 2.2% (2022: 2.2%) and on the two new leases
executed in the current year 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.
The significant increase in the right of use asset relates to the execution of
a new 20-year lease at our Eastbourne Store and a new 25 year lease on our
Basildon store.
13 Investments
Company investments in subsidiary undertakings £'000
31 July 2020 2,670
Capital contributions arising from share-based payments 201
31 July 2022 2,871
Capital contributions arising from share-based payments 450
31 July 2023 3,321
The Company holds more than 20% of the share capital of the following
companies, all of which are incorporated in England and Wales:
% of Shares and Voting Rights
Company Name Company Class of Shareholding Directly Indirectly Nature of Entity
Registration No.
Lok'nStore Limited * # 02902717 Ordinary 100 - Self-storage
Lok'nStore Trustee Limited ¥( ) ♦ 03788705 Ordinary - 100 Trustee
Southern Engineering and Machinery Company Ltd ¥ (*) ( )# 00381670 Ordinary - 100 Self-storage
Semco Machine Tools Limited ≠ ( )# 01025573 Ordinary - 100 Dormant
Semco Engineering Limited ≠( ) # 01164294 Ordinary - 100 Dormant
ParknCruise Limited( ) ¥ ♦ 10329934 Ordinary - 100 Dormant
The Box Room (Self-storage) Limited ¥ (*) ♦ 06840417 Ordinary - 100 Self-storage
¥ These companies are subsidiaries of Lok'nStore Limited.
≠ ( )These companies are subsidiaries of Southern Engineering and
Machinery Company Limited and did not trade during the year.
(* ) These companies have taken the exemption from audit under Section 479A
of the Companies Act 2006.
♦ The address of these companies is 112, Hawley Lane, Farnborough, Hants.
GU14 8JE.
# The address of these companies is 1, Fleet Place, London. EC4M 7WS.
14 Inventories
Group Group
2023 2022
£'000 £'000
Consumables and goods for resale 145 143
The amount of inventories recognised in Group cost of sales as an expense
during the year was £109,106 (2022: £112,887) (see note 3). The Company had
no inventory in either year.
15 Trade and Other Receivables
Group Group
2023 2022
£'000 £'000
Trade receivables 1,342 1,198
Other receivables 779 2,318
Taxation 27 -
Prepayments and accrued income 437 472
2,585 3,988
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value. Other receivables include monies receivable
from the managed stores for services provided by the Group.
The following balances existed between the Company and its subsidiaries at 31
July:
Company Company
2023 2022
Restated
£'000 £'000
Current receivables 7,000 6,000
Non-current receivables (restated) 42,963 22,785
Net amount due from Lok'nStore Limited 49,963 28,785
The non-current receivables represent amounts which are not expected to be
repaid within one year notwithstanding that the balance is repayable on
demand. Previously the entire balance was included in current receivables and
therefore the comparative balance has been restated to present £22.8m as a
non-current receivable which has decreased the previously presented current
receivables by the same amount. There is no impact on the previously reported
result for the period ended 31 July 2022 or net assets at that date of the
parent entity. The Directors have determined it is not necessary to
re-present the balance sheet for the year ended 31 July 2021 as doing so would
not improve a user's understanding of the adjustment.
Receivables from group undertakings are interest free. These have been
considered for impairment using the twelve-month expected credit loss model
because there have been no changes in credit risk since initial recognition.
The expected credit losses on amounts owed by Group companies is insignificant
(2022: insignificant).
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.
Included in the Group's trade receivables balance are receivables with a
carrying amount of £0.14 million (2022: £0.1 million) which are past due at
the reporting date for which the Group has not provided as there has not been
a significant change in credit quality 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. The average age of these receivables is 53
days past due (2022: 55 days past due). The Group does not expect credit
losses on intra-group balances.
Ageing of past due but not impaired receivables
Group Group
2023 2022
£'000 £'000
0-30 days 28 22
30-60 days 13 8
60+ days 95 70
Total 136 100
Movement in the allowance for credit losses
2023 2022
£'000 £'000
Balance at the beginning of the year 100 147
Impairment losses recognised 32 30
Amounts written off as uncollectible 4 (77)
Balance at the end of the year 136 100
The concentration of credit risk is limited due to the customer base being
large and unrelated. Accordingly, the Directors believe that there is no
further provision required.
Ageing of impaired trade receivables Group Group
2023 2022
£'000 £'000
0-30 days - -
30-60 days - -
60+ days 136 100
Total 136 100
16 Trade and Other Payables
Group Group
2023 2022
£'000 £'000
Trade payables 1,326 1,849
Taxation and social security costs 453 1,014
Other payables 549 588
Accruals and deferred income 4,852 3,778
7,180 7,229
The Group has financial risk management policies in place to ensure that all
payables are paid within credit terms. The Directors consider that the
carrying amount of trade and other payables approximates fair value. The
Company had no trade and other payables in either year.
The Group invoices its customers in advance, and therefore any deferred income
balance is primarily related to amounts paid by customers for storage
services beyond the Balance Sheet date.
17 Financial Instruments
Capital management and gearing
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which include the
borrowings disclosed in note 18, 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 during the year with hedging forming a Board agenda item for discussion
at each Board meeting.
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 year-end is as follows:
Gearing - Bank borrowings Group Group
2023 2022
£'000 £'000
Gross debt - bank borrowings * (54,399) (66,785)
Cash and cash equivalents 42,132 46,465
Net debt (12,267) (20,320)
Total equity - balance sheet 230,472 205,346
Net debt to equity ratio 5.3% 9.9%
Total Gearing - Bank borrowings and lease liabilities Group Group
2023 2022
£'000 £'000
Gross debt - bank borrowings * (54,399) (66,785)
Gross debt - lease liabilities (14,656) (10,894)
Cash and cash equivalents 42,132 46,465
Net debt (26,923) (31,214)
Total equity - balance sheet 230,472 205,346
Net debt to equity ratio 11.7% 15.2%
* Gross debt is the total amount of bank debt drawn before any amortisation of
bank arrangement fees.
The movement of the Group's gearing ratio arises principally through the
combined effect of an increase in the value of its trading properties, and the
cash generated from operations also enhanced by loan repayments during the
year reducing the RCF by £12.4 million.
The Group's operating cash was also applied to ongoing planning, construction
and fit out works at other sites, This expenditure during the period totalled
£17.3 million (2022: £12.2 million). This was primarily the contract
exchange of the Milton Keynes site, the purchase of the Bolton site and the
exchange of contracts on the Eastbourne site. There are ongoing construction
and fit out works at our sites in Staines and Basildon, final costs on Bedford
and Peterborough prior to opening, as well as and the completion of
construction works at our Stevenage and Warrington stores. Also, planning
and pre-development works at our Bournemouth, Altrincham, Barking and Cheshunt
sites featured.
Exposure to credit and interest rate risk arises in the normal course of the
Group's business.
A Derivative financial instruments and hedge accounting
The Group's activities expose it primarily to the financial risks of interest
rates. The Group previously has hedged through the deployment of interest rate
swaps although the Group had no such instruments in place at 31 July 2022 or
31 July 2023. The Board continues to keep its hedging policy under periodic
review.
B Debt management
Debt is defined as non-current and current borrowings, as detailed in note 18.
Equity includes all capital and reserves of the Group. The Group is not
subject to externally imposed capital requirements.
The Group borrows through a joint revolving credit facility with Royal Bank of
Scotland/NatWest Bank plc and ABN AMRO Bank secured on its store portfolio and
other Group assets, excluding intangibles, with a net book value of £314.0
million (2022: £292.8 million).
Borrowings are arranged to ensure the Group fulfils its strategy of growth and
development of its stores and to maintain short-term liquidity. As at the
reporting date the Group has a committed revolving credit facility of £100
million (2022: £100 million) providing undrawn committed facilities at 31
July 2023 of £45.6 million. This facility runs to April 2026, and details are
provided in note 18 (Borrowings).
C Interest rate risk management
The Group's policy on interest rate management is agreed at Board level and is
reviewed on an on-going basis. All borrowings are denominated in Sterling and
are detailed in note 17.
The Group has a number of revolving loans within its overall revolving credit
facility and as such is exposed to interest rate risks at the time of renewal
arising from any upward movement in the SONIA rate. With the rising level of
interest rates, the Board monitors closely its effect on the business and has
levers in place to mitigate the effects.
Cash and cash equivalents: Cash balances and cash equivalents represent only
liquid assets with a maturity of three months or less and include cash in hand
deposits at call with banks (treasury deposit). Cash held in current accounts
have historically earned little no interest but with rising interest rates
instant access accounts now attract a rate of 3.3%.
Surplus cash is transferred daily to a treasury deposit account which earns
interest at the prevailing money market rates currently 3.55%. All amounts are
denominated in Sterling. The balances at 31 July 2023 are as follows:
Group Group
2023 2022
£'000 £'000
Variable rate treasury deposits 41,238 45,371
SIP trustee deposits 63 63
Cash in operating current accounts 826 1,031
Other cash and cash equivalents 5 -
Total cash and cash equivalents 42,132 46,465
As at 31 July 2023, the Group had £8 million on treasury reserve with ABN
Amro Bank.
Amount From To Interest rate Interest to maturity
£4,000,000 GBP (3 months) 31 May 2023 31 August 2023 4.05% £40,832.88
£4,000,000 GBP (2 months) 1 June 2023 1 August 2023 3.77% £25,202.19
Equity Raise: On 7 July 2023, the Company raised total gross proceeds of
approximately £20.5 million (gross) through the oversubscribed issue of
2,679,739 new Ordinary Shares via a Placing and REX Retail Offer.
Post Balance Sheet, the Group repaid £19 million of its Revolving Credit
Facility and will redraw as required as it deploys the cash required to
progress its development pipeline.
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.
D Interest rate sensitivity analysis
Over the longer term, significant changes in interest rates may have an impact
on consolidated earnings.
At 31 July 2023, it is estimated that an increase of one percentage point in
interest rates would have increased the Group's annual interest charge by
£0.54 million (2022: £0.67 million) and conversely a decrease of one
percentage point in interest rates would have reduced the Group's annual
profit before tax by £0.54 million (2022: £0.67 million). There would have
been no effect on amounts recognised directly in other comprehensive income.
The sensitivity has been calculated by increasing by 1% the average variable
interest rate of 4.77% and applying to the variable rate borrowings of £54.4
million in the year (2022: £68.8 million/1.71%).
E Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has built an appropriate liquidity risk management framework
for the management of the Group's short, medium and long-term funding and
liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves, banking
facilities and reserve borrowing facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. Included in note B above is a description of
additional undrawn facilities that the Group has at its disposal to further
reduce liquidity risk.
Short-term money market deposits are used to manage liquidity whilst
maximising the rate of return on cash resources, giving due consideration to
risk.
F Foreign currency management
The Group operates solely in the United Kingdom and as such all of the Group's
financial assets and liabilities are denominated in Sterling and there is no
exposure to exchange risk.
G Credit risk
The credit risk management policies of the Group, with respect to trade
receivables, are discussed in note 15. There has not been a significant change
in credit quality.
The Group has a strong credit model with customers paying four-weekly in
advance for their storage. The Group has no significant concentration of
credit risk, with exposure spread across 17,500 customers (2022: 17,000) and
with no individual self-storage customer accounting for more than 1% of total
revenue and no entities under common control (e.g., Government) accounting for
more than 5% of total revenues.
The Group holds a right of lien over its self-storage customers' goods if
customer debts are not paid although this is used relatively infrequently
within the context of overall customer numbers and only ever as a final stage
in the debt recovery process.
The credit risk on liquid funds is limited because the counterparty is a bank
with high credit ratings assigned by international credit-rating agencies, in
line with the Group's policy which is to borrow from major institutional banks
when arranging finance. The Group's maximum exposure to credit risk at 31 July
2023 was £1.38 million (2022: £2.26 million) on receivables and £42.1
million (2022: £46.5 million) on cash and cash equivalents.
H Maturity analysis of financial liabilities
The undiscounted contractual cash flow maturities are as follows:
2023 - Group Trade Borrowings Interest on
and Other £'000 Borrowings
Payables £'000
£'000
Over five years - - -
From two to five years - 54,399 1,632
From one to two years - - 3,366
Due after more than one year - 54,399 4,998
Due within one year 4,224 - 3,366
Total contractual undiscounted cash flows 4,224 54,399 8,364
2022 - Group Trade Borrowings Interest on
and Other £'000 Borrowings
Payables £'000
£'000
Over five years - - -
From two to five years - 66,785 3,131
From one to two years - - 1,809
Due after more than one year - 66,785 4,940
Due within one year 4,207 - 1,809
Total contractual undiscounted cash flows 4,207 66,785 6,749
Lease liabilities are separately disclosed in note 19.
I Classification of financial
instruments
Group Group
2023 2022
£'000 £'000
Categories of financial assets and financial liabilities
Financial assets measured at amortised cost
Trade and other receivables (1) 2,121 3,516
Cash and cash equivalents 42,132 46,465
Financial liabilities measured at amortised cost
Trade and other payables (4,224) (4,207)
Lease liabilities (17,148) (10,894)
Bank loans (54,046) (66,196)
The fair values of the Group's cash and short-term deposits and those of other
financial assets equate to their carrying amounts. The amounts are presented
net of provisions for doubtful receivables and allowances for impairment are
made where appropriate. The fair value of financial liabilities equates to
their carrying amounts.
J Company's financial instruments
The Company's financial assets are amounts owed by subsidiary undertakings
amounting to £50.0 million (2022: £28.8 million) which are classified as
loans and receivables, refer note 15. These amounts are denominated in
Sterling. The Company has no financial liabilities.
18 Borrowings
Bank borrowings Group Group
2023 2022 £'000
£'000
Non-current
Bank loans repayable in more than two years
but not more than five years
Gross 54,399 66,785
Deferred financing costs (353) (589)
Net bank borrowings 54,046 66,196
Non-current borrowings 54,046 66,196
The Group currently has £54.4 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 £314.0 million (2022: £292.8 million) together with
cross-company guarantees from Group companies.
The interest rate is set under the Sterling Overnight Index Average (SONIA)
arrangements. The all-in debt cost on £54.4 million drawn averaged 4.77%
(2022: 1.55%) in the period with the costs of debt rising to 6.19% on active
revolving loans.
The Group is not obliged to make any repayments prior to the facility's
expiration in April 2026. The two principal bank covenants (LTV and Senior
interest) and margin are unaffected by the execution of the accordion and this
extension of term. Margin/pricing is also unaffected.
With current facility utilisation at £54.4 million and combined with cash
balances of £42.1 million the £100 million facility provides around £87.7
million of available cash headroom.
19 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%
(2022: 2.2%) as an incremental borrowing rate as the Discount Rate, or 6.43%
in respect of new leases entered into in the current year.
After the application of a weighted depreciation charge based on the
individual lease term of the separate leases and the imputation of an interest
charge at 2.2% (2022: 2.2%), and on the two new leases executed in the current
year at 6.43%, as part of the amortisation of the lease liability the total
lease liabilities are shown below.
Lease liabilities attributable to right of use assets Group Group
2023 2022 £'000
£'000
Current lease liabilities
Amounts due within one year 826 1,612
Non-current lease liabilities
Amounts due in one to two years 1,039 1,174
Amounts due in three to five years 1,786 2,774
Amounts due in more than five years 11,005 5,334
Non-current lease liabilities 13,830 9,282
Total lease liabilities 14,656 10,894
Lease liabilities attributable to right of use assets Group Group
2023 2022
£'000 £'000
Balance brought forward 10,894 11,166
Increase in new leases 5,032 1,235
Lease repayments (1,817) (1,746)
Lease interest (non-cash) 547 239
Total lease liabilities 14,656 10,894
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 27 (Commitments under Property Leases).
20 Deferred
Tax
Deferred tax liability Group Group
2023 2022
£'000 £'000
Liability at start of year 63,214 46,760
Total charge to income for the year 764 2,113
63,978 48,873
Tax charged directly to other comprehensive income 1,954 14,284
Charge / (credit) to share-based payment reserve 358 57
Liability at end of year 66,290 63,214
The following are the major deferred tax liabilities and assets recognised by
the Group and the movements during the year:
Accelerated Other Revaluation of Rolled Total
Capital Temporary Properties over Gain £'000
Allowances Differences £'000 on Disposal Share
£'000 £'000 £'000 Options
£'000
At 31 July 2021 5,128 609 38,163 3,714 (854) 46,760
Charge to income for the year 591 - - 1,522 - 2,113
Charge to other comprehensive income
- - 9,978 4,306 - 14,284
Credit to share-based payment reserve - - - -
57 57
At 31 July 2022 5,719 609 48,141 9,542 (797) 63,214
Charge to income for the year 797 (33) - - - 764
Charge to other comprehensive income
- - 1,954 - - 1,954
Credit to share-based payment reserve - - - -
358 358
At 31 July 2023 6,516 576 50,095 9,542 (439) 66,290
The increase in the deferred tax liability arises substantially from a
combination of an increase in the valuation of the Group's stores and a
provision for the gain arising on the Sale which will in due course be subject
to a roll-over relief claim.
The deferred tax provision is substantially a tax provision against the
potential crystallisation (sales) of revalued properties and past 'rolled
over' gains and amounts to £66.3 million (2022: £63.2 million). The timing
of any crystallisation of these liabilities is within the Board's control.
21 Share Capital
2023 2022
Authorised: £'000 £'000
35,000,000 Ordinary Shares of 1 pence each (2022: 35,000,000) 350 350
Allotted, issued and fully paid Ordinary Shares £'000 £'000
Balance at start of year 301 298
Options exercised during the year 1 3
Primary placing of fully paid Ordinary Shares 27 -
Balance at end of year 329 301
Called up, Called up,
Allotted and Allotted and
Fully Paid Fully Paid
Number Number
Number of shares at start of the year 30,003,545 29,686,787
Options exercised during the year 84,174 316,758
Primary placing of fully paid Ordinary Shares 2,679,739 -
Number of shares at end of the year 32,767,458 30,003,545
The share capital of the Company consists only of fully paid Ordinary Shares
with a nominal par value of 1 penny per share. There are no restrictions on
the ability of shareholders to receive dividends. All Ordinary Shares are
equally eligible to receive dividends and represent one vote at shareholders'
meetings. The Ordinary Shares carry no right to fixed income.
On 7 July 2023, the Company raised total gross proceeds of approximately
£20.5 million (gross) through the oversubscribed issue of 2,679,739 new
Ordinary Shares via a Placing and REX Retail Offer, at a price of 765 pence
per Ordinary Share. The Fundraising Shares represented approximately 8.9% of
the Company's issued share capital. The transaction costs of the brokers
associated with the equity raise were £732,561 and together with £156,459
legal and other associated costs total £889,020 and are recognised in equity.
22 Equity-Settled Share-Based Payment Plans
The Group operates three equity-settled share-based payment plans: one
approved and two unapproved share option schemes.
The Company has granted the following share options:
2023 As at As at
Summary 31 July 2022 31 July 2023
Lapsed/
No. of Options Granted Exercised Surrendered No. of Options
Unapproved Share Options 404,790 - (69,559) - 335,231
Unapproved Share Options (2018 PPP Scheme) 1,267,658 - - - 1,267,658
Unapproved Share Options (2023 PPP Scheme) - 264,000 - - 264,000
Approved CSOP Share Options 62,583 20,272 (14,615) - 68,240
Total 1,735,031 284,272 (84,174) - 1,935,129
2022 As at As at
Summary 31 July 2021 31 July 2022
Lapsed/
No. of Options Granted Exercised Surrendered No of Options
Unapproved Share Options 683,950 1,163 (280,323) - 404,790
Unapproved Share Options (PPP Scheme) 990,000 277,658 - - 1,267,658
Approved CSOP Share Options 86,476 12,542 (36,435) - 62,583
Total 1,760,426 291,363 (316,758) - 1,735,031
The following table shows options held by Directors under all schemes.
Total Options Granted Unapproved Scheme Approved Total
at 31 July 2022 Options Exercised CSOP Share Options at 31 July 2023
2023
Executive Directors
A Jacobs - Unapproved - - - - - -
A Jacobs - PPP (2018) 200,000 - - 200,000 - 200,000
A Jacobs - PPP (2023) - 40,000 - 40,000 - 40,000
A Jacobs - total 200,000 40,000 - 240,000 - 240,000
RA Davies - Unapproved 181,977 - (50,000) 131,977 - 131,977
RA Davies - CSOP 2,941 - - 2,941 2,941
RA Davies - PPP (2018) 198,236 - - 198,236 - 198,236
RA Davies - PPP (2023) - 40,000 - 40,000 - 40,000
RA Davies total 383,154 40,000 (50,000) 370,213 2,941 373,154
N Newman - Unapproved 135,599 - (2,420) 133,179 - 133,179
N Newman - CSOP 8,182 - (1,600) 6,582 6,582
N Newman - PPP (2018) 299,422 - - 299,422 - 299,422
N Newman - PPP (2023) - 60,000 - 60,000 - 60,000
N Newman total 443,203 60,000 (4,020) 492,601 6,582 499,183
Tom Lampard - Unapproved 11,840 - - 11,840 - 11,840
Tom Lampard - CSOP 8,984 - - 8,984 8,984
Tom Lampard - PPP (2018) 250,000 - - 250,000 - 250,000
Tom Lampard - PPP (2023) - 60,000 - 60,000 - 60,000
T Lampard total 270,824 60,000 - 321,840 8,984 330,824
All Directors total 1,297,181 200,000 (54,020) 1,424,654 18,507 1,443,161
Total Options Granted Options Unapproved Scheme Approved Total
at 31 July 2021 Exercised CSOP Share Options at 31 July 2022
2022
Executive Directors
A Jacobs - Unapproved 206,087 - (206,087) - - -
A Jacobs - PPP (2018) 160,000 40,000 - 200,000 - 200,000
A Jacobs - total 366,087 40,000 (206,087) 200,000 - 200,000
RA Davies - Unapproved 246,977 - (65,000) 181,977 - 181,977
RA Davies - CSOP 7,742 2,941 (7,742) - 2,941 2,941
RA Davies - PPP (2018) 160,000 38,236 - 198,236 - 198,236
RA Davies total 414,719 41,177 (72,742) 380,213 2,941 383,154
N Newman - Unapproved 135,599 - - 135,599 - 135,599
N Newman - CSOP 8,618 964 (1,400) - 8,182 8,182
N Newman - PPP (2018) 240,000 59,422 - 299,422 - 299,422
N Newman-Shepherd total 384,217 60,386 (1,400) 435,021 8,182 443,203
All Directors total 1,165,023 137,658 (280,229) 1,015,234 11,123 1,026,357
The grant of options to Executive Directors and senior management is
recommended by the Remuneration Committee on the basis of their contribution
to the Group's success. The options vest after two and a half, three or five
years, subject to the performance criteria attached to the options.
Under the CSOP Approved Share Option scheme and the Unapproved Share Options
scheme, the exercise price of the options is equal to the closing mid-market
price of the shares on the trading day previous to the date of the grant.
Exercise of an option is subject to continued employment or in the case of
unapproved options at the discretion of the Board. The life of each option
granted is six and a half to seven years. There are no cash settlement
alternatives.
Under the CSOP Approved Share Option scheme and the Unapproved Share Options
scheme, the expected volatility is based on a historical review of share price
movements over a period of time, prior to the date of grant, commensurate with
the expected term of each award. The expected term is assumed to be six and a
half years which is part way between vesting (two and a half to three years
after grant) and lapse (ten years after grant). The risk-free rate of return
is the UK gilt rate at date of grant commensurate with the expected term
(i.e., six and a half years).
Under the Partnership Performance Plan, the expected volatility is based on a
historical review of share price movements over a period of time, prior to the
date of grant, commensurate with the expected term of each award. There were
no options granted on 31 July 2023 in respect of the 2018 Scheme.
The vesting date is based upon the assumption that the CAD and/or NAV targets
are met at the same time as the share price target is met, and the lapse date
is the fifteenth anniversary of the grant. The risk-free rate of return is the
UK gilt rate at date of grant commensurate with the expected term (i.e.10.34
years).
The total charge for the year relating to employer share-based payment schemes
was £449,623 (2022: £201,385), all of which relates to equity-settled
share-based payment transactions.
23(a) Other Reserves
Capital Share-based
Merger Other Redemption Payment
Reserve Reserve Reserve Reserve Total
Group £'000 £'000 £'000 £'000 £'000
31 July 2021 6,295 1,294 34 1,515 9,138
Share-based remuneration (options) - - - 201 201
IFRS 2 - transfer retained earnings - - - (180) (180)
Tax charge relating to share options - - - (57) (57)
31 July 2022 6,295 1,294 34 1,479 9,102
Share-based remuneration (options) - - - 450 450
IFRS 2 - transfer retained earnings - - - (47) (47)
Tax charge relating to share options - - - (358) (358)
31 July 2023 6,295 1,294 34 1,524 9,147
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.
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. The revaluation reserve is a non-cash
non-distributable reserve that reflects the uplift between market (fair) value
of the Group's store assets and their historic book value.
Share-based payment reserve
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. The total
amounts calculated and accordingly transferred to retained earnings amounted
to £46,662 (2022: £180,391).
23(b) Other Reserves
Other Share-based
Reserve Payment
Reserve Total
Company £'000 £'000 £'000
31 July 2021 1,114 890 2,004
Share-based remuneration (options) - 201 201
IFRS 2 - transfer to/from retained earnings - (180) (180)
31 July 2022 1,114 911 2,025
Share-based remuneration (options) - 450 450
IFRS 2 - transfer to/from retained earnings - (47) (47)
31 July 2023 1,114 1,314 2,428
24(a) Retained Earnings
Retained Earnings
before Deduction Retained Earnings
Own Shares
of Own Shares (note Total
25)
Group £'000 £'000 £'000
31 July 2021 26,772 (500) 26,272
Profit attributable to owners of
Parent for the financial year 12,078 - 12,078
Transfer from revaluation reserve
Additional depreciation on revaluation 821 - 821
Transfer from share-based payment reserve (note 23a) 180 - 180
Reserve transfer on disposal of assets 20,258 - 20,258
Dividend paid (4,601) - (4,601)
31 July 2022 55,508 (500) 55,008
Profit attributable to owners of
Parent for the financial year 4,692 - 4,692
Transfer from revaluation reserve
Additional depreciation on revaluation 1,095 - 1,095
Transfer from share-based payment reserve (note 23a) -
47 47
Dividend paid (5,295) - (5,295)
31 July 2023 56,047 (500) 55,547
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 and shares purchased
separately by Lok'nStore Limited for Treasury Account.
24(b) Retained Earnings
Retained Earnings
Retained
before Deduction Earnings
Own Shares
of Own Shares (note 25) Total
Company £'000 £'000 £'000
31 July 2021 16,604 - 16,604
Profit attributable to owners of
Company for the financial year 5,756 - 5,756
Transfer from share-based payment reserve (note 23b)
180 - 180
Dividend paid (4,601) - (4,601)
31 July 2022 17,939 - 17,939
Profit attributable to owners of
Company for the financial year 6,701 - 6,701
Transfer from share-based payment reserve (note 23b)
47 - 47
Dividend paid (5,295) - (5,295)
31 July 2023 19,392 - 19,392
25 Own Shares
EBT EBT Treasury Treasury Own Shares
Shares Shares Shares Shares total
Number £ Number £ £
31 July 2022 and 31 July 2023 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 colleagues salaries on
a monthly basis as they so instruct for purchase of shares in the Company.
Shares are allocated to colleagues based on the prevailing market price when
the salary deductions are made.
As at 31 July 2023, the Trust held 623,212 (2022: 623,212) Ordinary Shares of
1 pence each with a market value of £4,923,375 (2022: £6,356,762). No shares
were transferred out of the scheme during the year (2022: nil).
No options have been granted under the EBT. The EBT waived its dividends in
full. No other dividends were waived during the year.
26 Cash flows
(a) Reconciliation of profit before tax to cash generated from operations
Year Year
ended ended
31 July 31 July
2023 2022
£'000 £'000
Profit before tax 6,701 15,874
Depreciation 5,690 4,727
Equity-settled share-based payments 450 201
Non-underlying items (note 4) 318 (5,739)
Interest receivable (665) (42)
Interest payable - bank borrowings 2,015 1,089
Interest payable - lease liabilities 547 239
Decrease / (increase) in financial asset - 509
(Increase) / decrease in inventories (2) 148
Decrease (increase) in receivables 1,393 285
(Decrease) / Increase in payables (632) 1,278
Cash generated from operations 15,815 18,569
(b) Reconciliation of net cash flow to movement in net bank debt
Net bank debt is defined as non-current and current borrowings, as detailed in
note 18, less cash and cash equivalents.
Group Group
2023 2022
£'000 £'000
(Decrease) / increase in cash in the year (4,333) 37,360
Change in net debt resulting from cash flows 12,386 (1,386)
Movement in net debt in year 8,053 35,974
Net bank debt brought forward (20,320) (56,294)
Net bank debt carried forward (12,267) (20,320)
27 Commitments Under Property Leases
At 31 July 2023 the total future minimum lease payments as a lessee under
non-cancellable leases were as follows:
Group Group
2023 2022
Land and Buildings £'000 £'000
Amounts due:
Within one year 1,415 1,727
Between two and five years 4,354 4,737
After five years 14,687 6,273
20,456 12,737
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.
The Group's property leases on its leased stores are recognised as a right of
use asset and as a corresponding liability at the year-end.
28 Related Party Transactions and Directors Share Interests
There were no reportable related party transactions during the year.
The Company provides share options for the employees of Lok'nStore Limited.
The capital contributions arising from these share-based payments are
separately disclosed under investments in note 13.
The aggregate remuneration of the Directors, and the other key management
personnel of the Group, is set out below. Further information on the
remuneration of individual Directors is found in note 8.
Group Group
2023 2022
£'000 £'000
Short-term employee benefits - Directors 827 922
Short-term employee benefits - Other key management 175 259
Post-employment benefits - Directors 13 11
Post-employment benefits - Other key management 6 8
Share-based payments 450 201
Social security costs - Directors 158 370
Social security costs - Other key management 43 49
Total 1,672 1,934
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.
Group Director shareholdings - dividends received
In respect of the total dividends paid during the year of £5.3 million (2022:
£4.6 million), the Group Directors received the amounts set out in the table
below: -
Director's Dividend Income Holding Final 2022 Interim 2023 Total 2023 Total 2022
12.25 pence per Share 5.75 pence
per Share
Executive: No. £ £ £ £
A Jacobs * 3,953,600 675,459 317,052 992,511 864,036
R Davies 81,807 10,021 4,704 14,725 11,570
N Newman-Shepherd 30,739 3,766 1,767 5,533 4,817
Non-Executive: ●
SG Thomas * 1,546,190 189,408 88,906 278,314 265,010
RJ Holmes 279,606 35,477 16,652 52,129 45,381
CP Peal 590,865 72,381 33,975 106,356 94,118
J Woyda 2,419 296 139 435 379
6,485,226 986,808 463,195 1,450,003 1,285,311
* Andrew Jacobs and Simon Thomas dividend income above includes their
respective holdings in their individual pension funds.
Managed Stores - Group Director shareholdings
The relationship between Lok'nStore Group plc and the Managed Stores which it
manages have been reported in detail in last year's financial statements and
is not repeated here.
Although the Director holdings in Managed Stores falls outside of the
definition of related party transactions they are disclosed here, as in
previous years, for transparency and are set out in the table below: -
Director Wolverhampton Broadstairs Exeter
No. of Shares No. of Shares No. of Shares
Andrew Jacobs 36,800 38,160 240,000
Charles Peal - - 500,000
Simon Thomas - - 160,000
Total shareholding 36,800 38,160 900,000
Issued Share Capital 189,341 189,690 3,970,000
% of Issued Share Capital 19.4% 20.1% 22.7%
· These shareholdings relate to three Managed Stores, each in separate
corporate vehicles, which have very specific EIS tax advantages. The
Directors' respective shareholdings in these companies have remained unchanged
since their initial investment.
· The Lok'nStore Directors have no other shareholdings in any other
Managed Stores.
· Changes in UK Tax legislation mean that these EIS tax advantages no
longer exist, and these reliefs are no longer available for Managed Store
opportunities that may be undertaken in the future.
· Under UK Takeover Panel protocols in relation to the Rule 9 Waiver
agreed each year with Lok'nStore Group plc, necessary to preserve the Group's
share buyback authority, Andrew Jacobs cannot, by agreement with the Panel,
purchase any more Lok'nStore shares. As such the three EIS investment vehicles
represented an opportunity for Mr Jacobs to hold additional self-storage
assets in tax efficient vehicles.
· Lok'nStore Group operate 16 Managed Stores, currently trading, and
have two further secured Managed Stores in the pipeline in Kettering and
Bromborough (Wirral) making a total of 18 Managed Stores. The Managed Store
strategy is a well-developed one which enables the Group to increase the
operational footprint of Lok'nStore branded stores without the balance sheet
risk of ownership.
· At 31 July 2023, Lok'nStore has a total of 53 stores (42 currently
trading and a pipeline of 11 secured stores).
· The terms of the Management Services Agreements executed between
Lok'nStore and with Wolverhampton, Broadstairs and Exeter were executed at
arm's length on normal commercial terms with independent Director(s) who were
not directors of Lok'nStore and therefore unconnected. The commercial terms
are all similar to, and consistent with, those agreed with other third-party
Managed Store owners.
· The Board of Lok'nStore Group plc have governance protocols in place
to ensure that there are no conflicts of interest between the Group and the
shareholders of the Wolverhampton, Broadstairs and Exeter stores.
Specifically, Mr Jacobs could not hold a disproportionate holding in the EIS
Managed Stores not commensurate with his shareholding in Lok'nStore Group plc.
29 Capital Commitments
The Group has capital expenditure contracted but not provided for in the
financial statements of £13.1 million (2022: £11.21 million) relating to
commitments to complete the ongoing construction of our sites in Peterborough
and final contract commitments on our completed sites at Warrington and
Stevenage.
We are also committed on the Staines Store project in respect of the land and
main build contract and the Basildon Store in respect of the lease commitment
which commenced on 26 June 2023 following practical completion of the delivery
of the building to us.
30 Guarantees
The Company and its subsidiary Lok'nStore Limited are joint borrowers under
the facility agreement disclosed in note 18. Each entity provides a guarantee
to the lenders in respect of the remaining amount due under the agreement.
31 Events after the Reporting Date
1) Barking Planning Permission Grant
On 21 September 2023 we received notice of the grant of planning permission
for our development in Barking, further on the same date planning agreements
were agreed and sealed by the Local Authority. We may now proceed to develop
the site for 85,000 sq.ft of lettable self-storage space.
2) Cheshunt Planning Permission Grant / Cheshunt Planning Agreement
secured
On 20 October 2023, we received notice of the grant of planning permission for
our self-storage development in Cheshunt. On the same date planning agreements
were agreed and sealed by the Local Authority. We may now proceed to develop
the site for self-storage alongside a discount food supermarket.
3) Luton Residential Planning Permission
On Tuesday 22 August 2023, Luton Borough Council Planning Committee resolved
to delegate that the Head of Planning may grant planning permission, subject
to satisfactory Planning Agreements, for 136 residential apartments at our
existing Luton Store site.
4) Temporary Debt reduction
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.
.
5) Appointment of a new Non-Executive Director
The Board is pleased to announce the appointment of Bridget Barker who joined
the Board on 14 September 2023.
Bridget joins us with a wealth of experience and is an experienced lawyer
having gained over 35 years' experience at Macfarlanes, a leading and
well-established City of London law firm, where she specialised in investment
funds, financial services and regulatory legal work with a focus on private
equity and real estate funds. Latterly she was head of the Investment
Management Group at Macfarlanes. Since leaving Macfarlanes, Bridget has
pursued various non-executive roles and consulting appointments at
organisations such as Praesidium, Mirabaud 1819 Advisory Group and Mainspring
Fund Services.
Bridget will be appointed to the Company's audit and remuneration committees
in the coming year providing a second independent non-executive director on
each Committee.
Glossary
Abbreviation
APM Alternative performance measure
AGM Annual General Meeting
Bps Basis Points
BREEAM Building Research Establishment Environmental Assessment Method
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
EV Electric Vehicle
GHG Greenhouse gas
HMRC His Majesty's Revenue and Customs
IAS International Accounting Standard
IFRIC International Financial Reporting Interpretations Committee
IPT Insurance Premium Tax
IFRS International Financial Reporting Standards
ISA International Standards on Auditing
JLL Jones Lang LaSalle
KPI Key Performance Indicator
Landmark Store A large modern, purpose built, and visually prominent store positioned in a
retail-facing location within its marketplace.
LFL Like for like
LTPPP Long Term Partnership Performance Plan
LTV Loan to Value ratio
Move -ins When a prospective customer has completed the sales process and moves their
goods into a storage unit
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
RCF Bank Revolving Credit Facility
RICS Royal Institution of Chartered Surveyors
RIDDOR Reporting of Injuries, Disease and Dangerous Occurrences Regulations 2013
RNS Regulatory News Service
ROU Right of Use Asset
Sale In the previous financial year, FY22, the sale and manage-back of previously
owned stores (Basingstoke, Cardiff, Horsham and Portsmouth stores)
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 FIFEAIDLAFIVRecent news on Lok'n Store
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