REG - Lok'nStore Group - Preliminary Results <Origin Href="QuoteRef">LOK.L</Origin> - Part 3
19/10/2015 07:00
- Part 3: For the preceding part double click ID:nRSS5935Cb
amount.
10b Property, plant and equipment
Group DevelopmentPropertyassetsat cost£'000 Land andbuildingsat valuation£'000 LongLeaseholdland andbuildingsat valuation£'000 Short leaseholdimprovementsat cost£'000 Fixtures,fittings andequipmentat cost£'000 Motorvehiclesat cost£ '000 Total£'000
Cost or valuation
1 August 2013 8,716 50,774 - 2,544 16,148 145 78,327
Additions 4,297 17 148 16 2,007 - 6,485
Transfer from lease premium (note 10c) - - 2,800 - - - 2,800
Non-current assets classified as held for sale - (2,900) - - - - (2,900)
Disposals - - - - - (154) (154)
Reclassification - - (87) - 87 - -
Revaluations - 3,521 2,260 - - - 5,781
31 July 2014 13,013 51,412 5,121 2,560 18,242 (9) 90,339
Depreciation
1 August 2013 - - - 1,509 8,855 77 10,441
Depreciation - 487 13 90 623 11 1,224
Impairment 1,604 - - - - - 1,604
Disposals - - - - - (109) (109)
Revaluations (487) (13) - - - (500)
31 July 2014 1,604 - - 1,599 9,478 (21) 12,660
Net book value at 31 July 2014 11,409 51,412 5,121 961 8,764 12 77,679
Cost or valuation
1 August 2014 13,013 51,412 5,121 2,560 18,242 32 90,380
Additions 1,504 525 - 3 1,551 - 3,583
Disposals - - - - (289) (2) (291)
Reclassification (4,025) 2,958 - - 1,067 - -
Revaluations - 6,140 1,304 - - - 7,444
31 July 2015 10,492 61,035 6,425 2,563 20,571 30 101,116
Depreciation
1 August 2014 1,604 - - 1,599 9,478 19 12,700
Depreciation - 572 23 91 751 3 1,440
Disposals - - - - (230) (1) (231)
Revaluations - (572) (23) - - - (595)
31 July 2015 1,604 - - 1,690 9,999 21 13,314
Net book value at 31 July 2015 8,888 61,035 6,425 873 10,572 9 87,802
If all property, plant and equipment were stated at historic cost the carrying value would be £47.5 million (2014: £44.5
million).
Capital expenditure during the year related to the ongoing building at Bristol and Southampton, the expansion of capacity
at our Swindon East Store and also limited expenditures at our other existing stores. Further expenditure on racking at the
Saracen Olney store also increased capacity in our serviced document storage business.
Property, plant and equipment (non-current assets) with a carrying value of £87.8 million (2014: £77.7 million) are pledged
as security for bank loans.
Market Valuation of Freehold and Operating Leasehold Land and Buildings
On 31 July 2015, a professional valuation was prepared by Cushman & Wakefield LLP (C&W) in respect of eleven freehold, one
long leasehold and seven operating leasehold properties. The valuation was prepared in accordance with the RICS Valuation -
Professional Standards, published by The Royal Institution of Chartered Surveyors ("the Red Book"). 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 Red Book C&W have confirmed that:
· One of the members of the RICS who has been a signatory to the valuation provided to the Company for the same
purposes as this valuation have been a signatory since January 2004. The second member has been a signatory since 2014.
· C&W have prepared eleven previous valuations for the same purpose as this valuation on behalf of the Company.
· C&W do not provide other significant professional or agency services to the Company.
· In relation to the preceding financial year of C&W the proportion of the total fees payable by the Company to the
total fee income of the firm is less than 5%.
The valuation report indicates a total valuation for all properties valued of £88.9 million (2014: £79.1 million) of which
£74.1 million (2014: £64.5 million) relates to freehold and long leasehold properties, and £14.8 million (2014: £14.6
million) relates to properties held under operating leases.
Freehold and long leasehold land and buildings are carried at valuation in the statement of financial position. Short
leasehold improvements at properties held under operating 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 £74.1 million valuation of the freehold and long
leasehold properties £6.7 million (2014: £5.1 million) relates to the net book value of fixtures, fittings and equipment,
and the remaining £67.4 million (2014: £59.4 million) relates to freehold and long leasehold properties.
The 2015 valuation includes and reflects movements in value which have resulted from the operational performance of the
stores and movements in the investment environment.
Market uncertainty
C&W's valuation report comments on valuation uncertainty resulting from low liquidity in the market for self-storage
property. C&W note that in the UK since Q1 2013 there have only been four transactions involving multiple assets and 10
single asset transactions. C&W state that due to the lack of comparable market information in the self-storage sector,
there is greater uncertainty attached to their opinion of value than would be anticipated during more active market
conditions.
Valuation Methodology
C&W have adopted different approaches for the valuation of the leasehold and freehold assets as follows:
Freehold and long leasehold property
The valuation is based on a discounted cash flow of the net operating income projected over a 10-year period and a notional
sale of the asset at the end of the 10th year.
Assumptions
a. Net operating income is based on projected revenue received less projected operating costs together with a central
administration charge representing 6% of the estimated annual revenue subject to a cap and a collar. The initial net
operating income is calculated by estimating the net operating income in the first 12 months following the valuation date.
b. The net operating income in future years is calculated assuming either straight-line absorption from day one actual
occupancy or variable absorption over years 1 to 4 of the cash flow period, to an estimated stabilised/mature occupancy
level. In the valuation the assumed stabilised occupancy level for the 19 trading stores (both freeholds and leaseholds)
averages 68.4% (2014: 67.9%). The projected revenues and costs have been adjusted for estimated cost inflation and revenue
growth.
c. The capitalisation rates applied to existing and future net cash flows have been estimated by reference to underlying
yields for industrial and retail warehouse property, yields for other trading property types such as hotels and student
housing, bank base rates, 10-year money rates, inflation and the available evidence of transactions in the sector. On
average for the 19 stores the yield (net of purchaser's costs) arising from the first year of the projected cash flow is
7.76% (2014: 8.11%). This rises to 10.02% (2014: 10.64%) based on the projected cash flow for the first year following
estimated stabilisation in respect of each property.
d. The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate that
reflects the risk associated with each asset. The weighted average annual discount rate adopted (for both freeholds and
leaseholds) is 11.25% (2014: 12.0%).
e. Purchaser's costs of 5.8% have been assumed initially and sale plus purchaser's costs totalling 7.8% are assumed on the
notional sales in the 10th year in relation to the freehold and long leasehold stores.
The fair value hierarchy within which the Fair Value Measurements are categorised is level 3, in accordance with IFRS 13
fair value measurements.
Property held under Operating Leaseholds
The same methodology has been used as for freehold property, except that no sale of the assets in the 10th 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 is approximately 12 years and 8 months as at 31 July 2015 (13 years and 8 months: 31 July 2014). Valuations for
stores held under operating 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 were 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 C&W valuation on this store is based on this Special
Assumption that the option to extend the lease for 10 years is exercised. This is consistent with the approach taken in
previous years.
10c Property lease premiums
The Maidenhead site opened as a new trading store in December 2013. Following the opening of this store the amounts being
held under lease premium were transferred in 2014 to property plant and equipment in order to keep all costs associated
with the store in one asset category.
Group 2015£'000 2014£'000
Balance at start of year - 2,800
Transfer to property plant and equipment - (2,800)
Balance 31 July - -
10d Non-current assets held for sale
£2.9 million of the asset relating to the existing trading store at Reading was presented as held for sale in the
comparative figures. This follows the agreement to sell the site for residential development for £2.9 million. The sale
completed in this financial year on 31 October 2014.
11 Investments
Company Investments in subsidiary undertakings £'000
31 July 2012 1,682
Capital contributions arising from share-based payments 94
31 July 2013 1,776
Capital contributions arising from share-based payments 119
31 July 2014 1,895
Capital contributions arising from share-based payments 211
31 July 2015 2,106
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 held
Class ofshareholding Directly Indirectly Nature ofentity
Lok'nStore Limited * Ordinary 100 - Self-storage
Lok'nStore Trustee Limited1 * Ordinary - 100 Trustee
Southern Engineering and Machinery Company Limited1 * Ordinary - 100 Land
Semco Machine Tools Limited2 * Ordinary - 100 Dormant
Semco Engineering Limited2 * Ordinary - 100 Dormant
Saracen Datastore Limited1 Ordinary - 100 ServicedDocumentStorage
1 These companies are subsidiaries of Lok'nStore Limited.
2 These companies are subsidiaries of Southern Engineering and Machinery Company Limited and did not trade during the
year.
* The company has taken the exemption from audit under Section 479A of the Companies Act 2006
The fair value of these investments has not been disclosed because it cannot be measured reliably as there is no active
market for these equity instruments. The Company currently has no plans to dispose of these investments.
12 Development capital
In May 2015 Lok'nStore opened a new managed store in Aldershot, Hampshire. The store is managed for outside investors under
the Lok'nStore brand. Lok'nStore has managed the building and subsequent operation of the store. Lok'nStore will generate
a return on £2.5 million of the total development capital committed to the project, and a management fee for the
construction, operation and branding of the store.
Group2015£'000 Group2014£'000
Development capital 2,779 -
13 Inventories
Group2015£'000 Group2014£'000
Consumables and goods for resale 141 131
The amount of inventories recognised as an expense during the year was £184,716 (2014: £208,587) and is included as an
expense in cost of sales.
14 Trade and other receivables
Group2015£'000 Group2014£'000
Trade receivables 1,302 1,542
Other receivables 640 666
Prepayments and accrued income 537 693
2,479 2,901
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
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 10 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 Company 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 past default experience.
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, and also to pay a deposit of four weeks' storage income. 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.
In respect of its document storage business, customers are invoiced typically monthly in advance for the storage of their
boxes, tapes and files. The provision of additional services, such as document boxes or tape collection and retrieval from
archive, typically are invoiced monthly in arrears. The serviced archive segment with over 360 customers has a greater
customer concentration - refer note 1(b) segmental analysis.
Included in the Group's trade receivables balance are receivables with a carrying amount of £202,546 (2014: £235,470) 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 39 days past due (2014: 39 days past
due).
Ageing of past due but not impaired receivables
Group2015£'000 Group2014£'000
0-30 days 119 132
30-60 days 43 63
60+ days 41 40
Total 203 235
Movement in the allowance for bad debts
Group Group
2015 2014
£'000 £'000
Balance at the beginning of the year 163 149
Impairment losses recognised 39 34
Amounts written off as uncollectible (28) (20)
Balance at the end of the year 174 163
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
Group2015£'000 Group2014£'000
0-30 days - -
30-60 days - -
60+ days 174 163
Total 174 163
15 Trade and other payables
Group2015£'000 Group2014£'000
Trade payables 1,901 2,031
Taxation and social security costs 464 149
Other payables 1,173 1,139
Accruals and deferred income 2,433 2,581
5,971 5,900
The Directors consider that the carrying amount of trade and other payables and accruals and deferred income approximates
fair value.
16 Financial instruments
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 stakeholders through the optimisation of the debt and equity balance. The capital structure of the
Group consists of debts, which include the borrowings disclosed in note 17a, 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.
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 conservative gearing ratio (the
proportion of net debt to equity). 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:
Capital Management Group2015£'000 Group2014£'000
Gross borrowings (27,701) (27,701)
Cash and cash equivalents 2,435 2,178
Net debt (25,266) (25,523)
Total equity 52,968 45,210
Net debt to equity ratio 47.7% 56.4%
The decrease in the Group's gearing ratio arises principally through the combined effect of an increase in the C&W
valuation of its properties, and cash generated from operations.
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 currently has two interest
rate swaps with Lloyds Bank plc which run until October 2016. These have been maintained and are reported fully in the
Financial Review and in note 17(b).
BDebt management
Debt is defined as non-current and current borrowings, as detailed in note 17a. Equity includes all capital and reserves of
the Group. The Group is not subject to externally imposed capital requirements.
The Group borrows through a senior five year term revolving credit facility, arranged through Lloyds Bank Group plc secured
on its store portfolio and other Group assets with a net book value of £99.4 million (2014: £89.8 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 £40 million (2014: £40 million).
This facility expires on 19 October 2016. Undrawn committed facilities at the year-end amounted to £12.3 million (2014:
£12.3 million).
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 17a. 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 LIBOR rate. The Group continues its two cash flow hedging interest rate swap arrangements in order
to reduce the risk of such upward movements in LIBOR rate. These instruments and the movement in their fair values are
detailed in note 17b.
The following interest rates applied during the financial year:
a) London Inter-Bank Offer Rate (LIBOR) plus 2.35%-2.65% Lloyds Bank plc margin based on a loan to value covenant test
for the revolving advances amounting to £27.7 million (2014: £27.7 million).
b) 40% of the applicable margin in 1 above for non-utilisation (i.e. that part of the facility which remains undrawn
from time to time). As at 31 July 2015 the prevailing non-utilisation charge is calculated at a rate of 0.94%.
c) Rates prevailing on the Group's Interest rate swaps. See note 17b.
Cash balances held in current accounts attract no interest but surplus cash is transferred daily to a treasury deposit
account which earns interest at the prevailing money market rates1. All amounts are denominated in Sterling. The balances
at 31 July 2015 are as follows:
Group2015£'000 Group2014£'000
Variable rate treasury deposits1 1,744 1,927
SIP trustee deposits 46 56
Cash in operating current accounts 602 113
Other cash and cash equivalents 43 82
Total cash and cash equivalents 2,435 2,178
1 Money market rates for the Group's variable rate treasury deposit track Lloyds Bank plc base rate. The rate
attributable to the variable rate deposits at 31 July 2015 was 0.5%.
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
In managing interest rate risk the Group aims to reduce the impact of short-term fluctuations on the Group's earnings,
without jeopardising its flexibility. Over the longer term, permanent changes in interest rates may have an impact on
consolidated earnings.
At 31 July 2015, it is estimated that an increase of one percentage point in interest rates would have reduced the Group's
annual profit before tax by £77,005 (2014: £77,005) and conversely a decrease of one percentage point in interest rates
would have increased the Group's annual profit before tax by £77,005 (2014: £77,005). 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 2.85% applying to the variable rate borrowings of £7.7 million in the year (2014: £7.7
million / 2.84%).
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 14.
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 2015 was £1,468,261 (2014: £1,711,258) on receivables and £2,435,399
(2014: £2,177,630) on cash and cash equivalents. Additionally, the Group has provided development loan capital in respect
of the Aldershot store development, a managed contract. The current balance outstanding at 31 July 2015 was £2,778,824.
These amounts are secured by way of a fixed priority first charge and a debenture over all of the Aldershot assets.
H Maturity analysis of financial liabilities
The undiscounted contractual cash flow maturities are as follows:
2015 - Group
Tradeand otherpayables£'000 Borrowings£'000 Interest onborrowings£'000
From two to five years - - -
From one to two years - 27,701 205
Due after more than one year - - 205
Due within one year 3,857 - 925
Total contractual undiscounted cash flows 3,857 27,701 1,130
2014 - Group
Tradeand otherpayables£'000 Borrowings£'000 Interest onborrowings£'000
From two to five years - 27,701 205
From one to two years - - 924
Due after more than one year - - 1,129
Due within one year 3,656 - 923
Total contractual undiscounted cash flows 3,656 27,701 2,052
I Fair values of financial instruments
2015£'000 2014£'000
Categories of financial assets and financial liabilities
Financial assets
Trade and other receivables 1,468 1,711
Cash and cash equivalents 2,435 2,178
Development loan capital 2,779 -
Financial liabilities
Trade and other payables (3,857) (3,656)
Bank loans (27,548) (27,445)
The fair values of the Group's cash and short-term deposits and those of other financial assets equate to their carrying
amounts. The Group's receivables and cash and cash equivalents are all classified as loans and receivables and carried at
amortised cost. The amounts are presented net of provisions for doubtful receivables and allowances for impairment are made
where appropriate. Trade and other payables and bank borrowings are all classified as financial liabilities measured at
amortised cost.
J Company's financial instruments
The Company's financial assets are amounts owed by subsidiary undertakings amounting to £3.0 million (2014: £2.3 million)
which are classified as loans and receivables, and the investment in its subsidiary undertaking of £0.2 million (excluding
capital contributions). These amounts are denominated in Sterling, are non-interest bearing, are unsecured and fall due for
repayment within one year. No amounts are past due or impaired. The Company has no financial liabilities.
17a Borrowings
Group2015£'000 Group2014£'000
Non-current
Bank loans repayable in one to two years - Gross 27,701 -
Bank loans repayable in more than two years but not more than five years - Gross - 27,701
Deferred financing costs (153) (256)
Net bank borrowings 27,548 27,445
Non-current borrowings 27,548 27,445
The £40 million revolving credit facility with Lloyds Bank plc is secured by legal charges and debentures over the freehold
and leasehold properties and other tangible assets of the business with a net book value of £95.6 million together with
cross-company guarantees from Group companies. The revolving credit facility is for a five-year term and expires on 19
October 2016. The Group is not obliged to make any repayments prior to expiration. The loans bear interest at the London
Inter-Bank Offer Rate (LIBOR) plus 2.35%-2.65% Lloyds Bank plc margin based on a loan to value covenant test.
17b Derivative financial instruments
The Group continues to operate two separate £10 million interest rate swaps as a cash flow hedge with Lloyds Bank plc, both
effective from 31 May 2012, the first at a fixed 1 month sterling LIBOR rate of 1.2% and the second at a fixed one-month
sterling LIBOR rate of 1.15%. Both swaps run up to the expiration of the current banking facility in October 2016. The
balance of the drawn facility of £7.7 million (2014: £7.7 million) remains at a floating rate.
Currency Principal£ Maturity date Fair value2015£'000 Fair value2014£'000
3032816LS Interest rate swap GBP 10,000,000 20/10/2016 (63) 20
3047549LS Interest rate swap GBP 10,000,000 20/10/2016 (56) 31
20,000,000 (119) 51
The movement in fair value of the interest rate swaps of £169,925 (2014: £321,654) has been recognised in other
comprehensive income in the year.
18 Deferred tax
Deferred tax liability Group2015£'000 Group2014£'000
Liability at start of year 10,870 9,705
Charged / (credited) to income for the year 151 (168)
Tax debited directly to other comprehensive income 1,540 1,333
Credit to share based payment reserve (309) -
Liability at end of year 12,252 10,870
The following are the major deferred tax liabilities and assets recognised by the Group and the movements during the year:
AcceleratedCapitalAllowances£'000 Taxlosses£'000 Intangibleassets£'000 Othertemporarydifferences£'000 Revaluationofproperties£'000 Rolledover gainondisposal£'000 Shareoptions£'000 Total£'000
At 1 August 2013 1,075 (6) 596 (35) 6,242 1,833 - 9,705
Charge/ (credit) to income for the year 366 6 (33) (8) (495) (4) - (168)
Charge to other comprehensive income - - - 72 1,261 - - 1,333
At 31 July 2014 1,441 - 563 29 7,008 1,829 - 10,870
Charge/ (credit) to income for the year 267 - (33) 1 - (42) (42) 151
Charge /(credit) to other comprehensive income - - - (38) 1,578 - - 1,540
Credit to share based payment reserve - - - - - - (309) (309)
At 31 July 2015 1,708 - 530 (8) 8,586 1,787 (351) 12,252
A deferred tax asset of £350,706 arises in respect of the share options in existence at 31 July 2015 and due to its
material size has now been recognised in the accounts. No deferred tax asset arises in relation to the remainder of the
share options as at 31 July 2015 as the share price at the year-end is below the exercise price of the options.
19 Share capital
2015 2014
Authorised: £'000 £'000
35,000,000 ordinary shares of 1 pence each (2014: 35,000,000) 350 350
Allotted, issued and fully paid ordinary shares £'000 £'000
Balance 1 August 279 272
Options exercised 637,641 shares (2014: 667,915 shares) 6 7
Balance 31 July 285 279
Called up, Called up,
allotted and allotted and
fully paid fully paid
Number Number
Number of shares at 31 July 28,446,749 27,809,108
The Company has one class of ordinary shares which carry no right to fixed income.
20 Equity settled share-based payment plans
The Group operates two equity-settled share-based payment plans, an approved and an unapproved share option scheme, the
rules of which are similar in all material respects. The Enterprise Management Initiative Scheme (EMI) is closed to new
grants of options as the Company no longer meets the HMRC small company criteria.
The Company has the following share options:
2015 As At As at
Summary 31 July 2014 Lapsed/ 31 July 2015
No of options Granted Exercised surrendered No of options
Enterprise Management Initiative Scheme 41,414 - (41,414) - -
Unapproved Share Options 2,276,111 - (535,321) (23,611) 1,717,179
Approved CSOP Share Options 246,286 18,653 (60,906) (26,389) 177,644
Total 2,563,811 18,653 (637,641) (50,000) 1,894,823
2014 As At As at
Summary 31 July 2013 Lapsed/ 31 July 2014
No of options Granted Exercised surrendered No of options
Enterprise Management Initiative Scheme 163,368 - (121,954) - 41,414
Unapproved Share Options 2,156,583 587,939 (468,411) - 2,276,111
Approved CSOP Share Options 233,775 93,061 (77,550) (3,000) 246,286
Total 2,553,726 681,000 (667,915) (3,000) 2,563,811
The following table shows options held by Directors under all schemes.
At 31 July 2015
Total at 31 July2014 Optionsgranted Optionsexercised EMIScheme UnapprovedScheme Approved CSOPShareoptions Total at 31 July2015
2015
Executive Directors
A Jacobs - Unapproved 580,000 - (200,000) - 380,000 - 380,000
SG Thomas - Unapproved 220,000 - (50,000) - 170,000 - 170,000
RA Davies - Unapproved 581,977 - (50,000) - 531,977 - 531,977
RA Davies - CSOP 14,493 - - - - 14,493 14,493
RA Davies total 596,470 - (50,000) - 531,977 14,493 546,470
CM Jacobs - EMI 31,414 - (31,414) - - - -
CM Jacobs - Unapproved 259,509 - (113,841) - 145,668 - 145,668
CM Jacobs - CSOP 29,077 - (8,500) - - 20,577 20,577
CM Jacobs total 320,000 - (153,755) - 145,668 20,577 166,245
Non-Executive Directors
ETD Luker - Unapproved 15,000 - - - 15,000 - 15,000
C P Peal - Unapproved 10,000 - - - 10,000 - 10,000
Non-Executive total 25,000 - - - 25,000 - 25,000
All Directors total 1,741,470 - (453,755) - 1,252,645 35,070 1,287,715
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 or three years. No options have been
granted under the EMI approved scheme in the year (2014: nil) and no options remain in this 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. The exercise of options awarded has been subject to a key non-market performance condition being the
achievement of an annual revenue target of £10 million. This condition has now been achieved. Exercise of an option is
subject to continued employment. The life of each option granted is six and a half to seven years. There are no cash
settlement alternatives.
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 years which is part way
between vesting (two and a half to three years after grant) and lapse (10 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 years).
The total charge for the year relating to employer share-based payment schemes was £210,558 (2014: £118,586), all of which
relates to equity-settled share-based payment transactions.
21a Other reserves
Cash flow Other Capital Share-based
hedge Merger reserve redemption payment
reserve reserve reserve reserve Total
Group £'000 £'000 £'000 £'000 £'000 £'000
1 August 2013 (217) 6,295 2,837 34 1,562 10,511
Share based payments - - - - 119 119
Transfer to retained earnings in relation to share based payments - - - - (742) (742)
Cash flow hedge reserve net of tax 250 - - - - 250
Dividends paid - - (1,543) - - (1,543)
31 July 2014 33 6,295 1,294 34 939 8,595
Share based payments - - - - 211 211
Transfer to retained earnings in relation to share based payments - - - - (298) (298)
Cash flow hedge reserve net of tax (132) - - - - (132)
Tax credit relating to share options - - - - 309 309
31 July 2015 (99) 6,295 1,294 34 1,161 8,685
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.
Share based payment reserve
Under IFRS2 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 £298,268 (2014: £741,806).
21b Other reserves
Other Share-based
reserve payment
reserve Total
Company £'000 £'000 £'000
1 August 2013 2,657 1,776 4,433
Share based payments - 119 119
Transfer to retained earnings in relation to share based payments - (742) (742)
Dividends paid (1,543) - (1,543)
31 July 2014 1,114 1,153 2,267
Share based payments - 211 211
Transfer to retained earnings in relation to share based payments - (298) (298)
31 July 2015 1,114 1,066 2,180
22 Retained earnings
Retainedearnings before Retained
deduction of Own shares earnings
own shares (note 23) Total
Group £'000 £'000 £'000
1 August 2013 10,872 (4,241) 6,631
Profit attributable to owners ofParent for the financial year 197 - 197
Transfer from revaluation reserve(Additional depreciation on revaluation) 207 - 207
Transfer from share based payment reserve (Note 21a) 742 - 742
Transfer from non-controlling interest 280 - 280
31 July 2014 12,298 (4,241) 8,057
Profit attributable to owners ofParent for the financial year 1,968 - 1,968
Transfer from revaluation reserve(Additional depreciation on revaluation) 249 - 249
Transfer from share based payment reserve (Note 21a) 298 - 298
Transfer realised gain on asset disposal 421 - 421
Dividend paid (1,847) - (1,847)
31 July 2015 13,387 (4,241) 9,146
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. These treasury shares have not been cancelled and were purchased at an average
price considerably lower than the Group's adjusted net asset value. These shares may in due course be released back into
the market to assist liquidity of the Company's stock and to provide availability of a reasonable line of stock to satisfy
investor demand as and when required.
The Company has taken advantage of the exemption available under the Companies Act 2006 not to present the Company income
statement of Lok'nStore Group plc. The Company loss for the year was £139,354 (2014: £173,882).
23 Own shares
ESOP ESOP Treasury Treasury Own shares
shares
- More to follow, for following part double click ID:nRSS5935CdRecent news on Lok'n Store
See all newsREG - Lok'nStore Group Shurgard Self Strge. - Timing of Posting of Scheme Document
AnnouncementREG - Barclays PLC Lok'nStore Group - Form 8.3 - Lok’n Store Group plc
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AnnouncementREG - Peel Hunt LLP Lok'nStore Group - Form 8.5 (EPT/RI) - Lok'nStore Group PLC
AnnouncementREG - JPMorgan Sec.Plc Lok'nStore Group - Form 8.5 (EPT/RI)-Lok’n Store Group plc
Announcement