- Part 2: For the preceding part double click ID:nRSa3323La
non-current assets classified as held for sale) 6,932 4,803 5,210
Non-current assets classified as held for sale 10 - - 2,900
Total assets 89,681 82,600 89,763
Liabilities
Current liabilities
Trade and other payables 13 (4,883) (4,213) (5,900)
Taxation (624) (206) (338)
(5,507) (4,419) (6,238)
Non-current liabilities
BorrowingsDerivative financial instrumentsDeferred tax 15a15b16 (27,497)-(10,966) (27,393)(57)(9,839) (27,445)-(10,870)
(38,463) (37,289) (38,315)
Total liabilities (43,970) (41,708) (44,553)
Net assets 45,711 40,892 45,210
Equity
Equity attributable to owners of the parent
Called up share capital 17 282 275 279
Share premium 2,342 1,430 1,801
Other reserves 19 7,347 9,662 8,595
Retained earnings 20 9,471 7,707 8,057
Revaluation reserve 26,269 21,818 26,478
Total equity 45,711 40,892 45,210
Approved by the Board of Directors and authorised for issue on 24 April 2015 and signed on its behalf by:
Andrew Jacobs Ray Davies
Chief Executive Officer Finance Director
Consolidated Statement of Cash Flows
For the six months ended 31 January 2015
Notes Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited £'000
Operating activities
Cash generated from operations 22a 1,388 1,606 5,241
Net cash from operating activities 1,388 1,606 5,241
Investing activities
Purchase of property, plant and equipment 9b (1,865) (1,570) (6,485)
Additions to property lease premiums 9c - (1,806) -
Proceeds from disposal of property, plant and equipment 2,907 7 19
Interest received 26 14 26
Net cash used in investing activities 1,068 (3,355) (6,440)
Financing activitiesRepayment of borrowingsProceeds from new borrowings -- -919 919(5)
Finance costs paid (524) (517) (1,033)
Equity dividends paid (1,258) (1,053) (1,543)
Proceeds from issuance of ordinary shares (net) 545 421 795
Net cash used in financing activities (1,237) (230) (867)
Net increase/(decrease) in cash and cash equivalents in the period 1,219 (1,979) (2,066)
Cash and cash equivalents at beginning of the period 2,178 4,243 4,244
Cash and cash equivalents at end of the period 3,397 2,264 2,178
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 London Wall, London EC2Y 5AB, UK. Copies of this Interim Report and Accounts may be obtained from
the Company's head office at 112 Hawley Lane, Farnborough, Hants, GU14 8JE, or from the investor section of the Company's
website at http://www.loknstore.co.uk.
Basis of preparation
The interim results for the six months ended 31 January 2015 have been prepared on the basis of the accounting policies
expected to be used in the 2015 Lok'nStore Group Plc Annual Report and Accounts and in accordance with the recognition and
measurement principles of International Financial Reporting Standards as adopted by the European Union ('EU') ('IFRS').
The same accounting policies, presentation and methods of computation are followed in these interim condensed set of
financial statements as have been applied in the Group's latest annual audited financial statements.
The interim results, which were approved by the Directors on 24 April 2015, are unaudited. The interim results do not
constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006.
Comparative figures for the year ended 31 July 2014 have been extracted from the statutory accounts for the Group for that
period, which carried an unqualified audit report, did not include a reference to any matters to which the auditor drew
attention by way of emphasis of matter, did not contain a statement under section 498(2) or (3) of the Companies Act 2006
and have been delivered to the Registrar of Companies.
Going concern
The Directors can report that, based on the Group's budgets and financial projections, they have satisfied themselves that
the business is a going concern. 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 £3.4 million (31.01.2014: £2.3 million), undrawn committed bank facilities at 31 January 2014 of £12.3
million (31.01.2014: £12.3 million), and cash generated from operations in the period to 31 January 2015 of £1.4 million
(31.01.2014: £1.6 million). The Group continues to operate its five year £40 million revolving credit facility with Lloyds
TSB plc. The facility has been in place since 20 October 2011 and runs until 19 October 2016. 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
Revenue comprises the fair value of the consideration received or receivable for goods and services provided in the
ordinary course of the Group's activities, net of discount, VAT and after eliminating sales within the Group.
The Group recognises revenue when the amount of the revenue can be reliably measured and when goods are sold and title has
passed. Revenue from services provided is recognised evenly over the period in which the services are provided.
a) Self-storage revenue
Self-storage services are provided on a time basis. The price at which customers store their goods is dependent on size of
unit and store location. Customers are invoiced on a four-weekly cycle in advance and revenue is recognised based on time
stored to date within the cycle. When customers vacate they are rebated the unexpired portion of their four weekly advance
payment (subject to a seven day notice requirement).
b) Retail sales
The Group operates a 'pack shop' within each of its storage centres for selling storage related goods such as boxes, tape
and bubble-wrap. Sales include sales to the public at large as well as self-storage customers. Sales of goods are
recognised at point of sale when the product is sold to a customer.
c) Insurance
Customers may choose to insure their goods in storage. The weekly rate of insurance charged to customers is calculated
based on the tariff per week for each £1,000 worth of goods stored by the customer. This charge is retained by Lok'nStore
and covers the cost of the block policy and other costs. Customers are invoiced on a four-weekly basis for the insurance
cover they use and revenue is recognised based on time stored to date within the cycle.
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.
e) Serviced archive and records management
Typically Customers are invoiced monthly in advance for the storage of their archive boxes, tapes and files and revenue is
recognised based on time stored to date within the monthly cycle. In respect of the provision of additional services, such
as document box or tape collection and retrieval from archive, customers are invoiced typically monthly in arrears and
revenue is recognised in line with the provision of these services.
Adjusted EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) is defined as profits from operations before all
depreciation and amortisation charges, share-based payments and other non-recurring costs, finance income, finance costs
and taxation.
Store adjusted EBITDA
Store adjusted EBITDA is defined as adjusted EBITDA (see above) but before central and head office costs.
Operating profit
Operating profit is defined as profit after all costs except finance income, finance costs and taxation.
Critical accounting estimates and judgements
The preparation of consolidated financial statements under EU-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 values its self-storage centres using a discounted cash flow method which is based on current and projected net
operating income. Principal assumptions underlying management's estimation of the fair value are those relating to
stabilised occupancy levels, expected future growth in storage rents 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 9b. The carrying value of freehold land and buildings held
at valuation at the reporting date was £65.9 million (31.01.2014: £54.5 million) as shown in the Analysis of Total Property
Value table in the Chairman's Statement.
b) Assets in the course of construction and land held for pipeline 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. When acquiring sites for redevelopment into self-storage facilities, the Group estimates and makes judgements
on the potential net lettable storage space that it can achieve in its planning negotiations, together with the time it
will take to achieve mature occupancy levels. In addition, assumptions are made on the prices that can be achieved at the
store by comparison with other stores within the portfolio and within the local area. These judgements, taken together with
estimates of operating costs and the projected construction cost, allow the Group to calculate the potential net operating
income at maturity, projected returns on capital invested and hence to support the purchase price of the site at
acquisition. Following the acquisition, regular reviews are carried out taking into account the status of the planning
negotiations, and revised construction costs or capacity of the new facility, for example, to make an assessment of the
recoverable amount of the development property. The Group reviews all development property assets for impairment at each
reporting date in the light of the results of these reviews. Once a store is opened, it is valued as a trading store.
The carrying value of development property assets at the reporting date was £7.8 million (31.01.2014: £14.6 million - £4.6
million of which was classified as property lease premiums). Please see note 9c for more details.
c) Estimate of fair value of intangible assets acquired in business combination
The relative size of the Group's intangible assets, excluding goodwill, makes the judgements surrounding the estimated
useful lives important to the Group's financial position. At 31 January 2015 intangible assets, excluding goodwill,
amounted to £2.73 million (31.01.2014: £2.90 million).
The valuation method used and key assumptions are described in note 9a.
The useful life used to amortise intangible assets relates to the expected future performance of the assets acquired and
management's judgement of the period over which economic benefit will be derived from the asset. The estimated useful life
of customer relationships principally reflects management's view of the average economic life of the customer base and is
assessed by reference to customer churn rates. Typically, the customer base for a serviced archive business is relatively
inert. Corporate customers do not tend to switch service providers and indeed they incur box withdrawal charges should they
do so. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation
charge.
d) Non-current assets held for sale
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through
a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value
if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a
sale is considered highly probable.
Notes to the Financial Statements
For the six months ended 31 January 2015
1a Revenue
Analysis of the Group's revenue is shown below:
Six monthsended31 January2015Unaudited Six monthsended31 January2014Unaudited Yearended31 July2014Audited
Stores trading £'000 £'000 £'000
Self-storage revenue 5,921 5,074 10,510
Other storage related revenue 713 648 1,349
Ancillary store rental revenue 4 4 4
Management fees 68 61 128
Sub-total 6,706 5,787 11,991
Stores under development
Non-storage income - 43 79
Sub-total 6,706 5,830 12,070
Serviced archive and records management revenue 923 884 1,840
Total revenue per statement of comprehensive income 7,629 6,714 13,910
1b Segmental information
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the Board to allocate resources to the segments and to assess their performance.
All of the Group's activities occur in the United Kingdom.
Financial information is reported to the Board with revenue and profit analysed between self-storage activity and serviced
archive and records management activity.
Segment revenue comprises of sales to external customers and excludes gains arising on the disposal of assets and finance
income. Segment profit reported to the Board represents the profit earned by each segment before acquisition costs and
other non-recurring set-up costs, finance income, finance costs and tax. For the purposes of assessing segment performance
and for determining the allocation of resources between segments, the Board uses a measure of adjusted EBITDA (as defined
in the accounting policies) and reviews the non-current assets attributable to each segment as well as the financial
resources available. All assets are allocated to reportable segments. Assets that are used jointly by segments are
allocated to the individual segments on a basis of revenues earned. All liabilities are allocated to individual segments
other than borrowings and tax. Information is reported to the Board of Directors on a product basis as management believe
that the activity of self-storage and the activity of serviced archive and records management expose the Group to differing
levels of risk and rewards due to the length, nature, seasonality and customer base of their respective operating
cycles.
The amounts presented to the Board with respect to total assets and total liabilities are measured in a manner consistent
with the financial statements and are allocated based on the operations of the segment. Borrowings are managed centrally on
a Group basis and are therefore not allocated to segments.
Corporate transactions and the treasury function are managed centrally and therefore are not allocated to segments. Sales
between segments are carried out at arm's length. The serviced archive segment with over 340 customers has a greater
customer concentration with its ten largest corporate customers accounting for 32.5% (31.01.2014: 32.9%) of revenue its top
50 accounting for 63.0% (31.01.2014: 64.2%) and its top 100 accounting for 79.9% (31.01.2014: 80.9%) of revenue. The
self-storage segment with over 8,000 customers has no individual self-storage customer accounting for more than 1% of total
revenue and no group of entities under common control (e.g. Government) accounts for more than 10% of total revenues.
The segment information for the period ended 31 January 2015 is as follows:
2014/2015 - Unaudited Self-storagesix monthsended31 January2015£'000 Servicedarchiveand recordsmanagementsix monthsended31 January2015£'000 Totalsix monthsended31 January2015£'000 Self-storagesix monthsended31 January2014£'000 Servicedarchiveand recordsmanagementsix monthsended31 January2014£'000 Totalsix monthsended31 January2014£'000
Revenue from external customers 6,706 923 7,629 5,830 884 6,714
Segment adjusted EBITDA 2,808 108 2,916 2,106 73 2,179
DepreciationAmortisation of intangible assetsLoss on disposal - motor vehicles (633)-- (48)(83)(8) (681)(83)(8) (531)-(4) (48)(83)(5) (579)(83)(9)
Equity settled share based payments (112) - (112) (37) - (37)
Segment profit/(loss) 2,063 (31) 2,032 1,534 (63) 1,471
Central costs not allocated to segments:
Finance income 26 14
Finance costs (575) (569)
Profit before taxation 1,483 916
Income tax expense (387) (220)
Consolidated profit for the financial period 1,096 696
2013/2014 - Audited Self-storageyearended31 July2014£'000 Servicedarchive &recordsmanagementyearended 31 July2014£'000 Totalyearended31 July2014£'000
Revenue from external customers 12,070 1,840 13,910
Segment adjusted EBITDAManagement charges 4,37825 238(25) 4,616-
DepreciationAmortisation of intangible assetsLoss on disposal - motor vehicles (1,127)-(8) (96)(165)(20) (1,223)(165)(28)
Equity settled share based payments (119) - (119)
Impairment of development land asset (1,604) - (1,604)
Segment profit/(loss) 1,545 (68) 1,477
Central costs not allocated to segments:
Finance income 26
Finance costs (1,136)
Profit before taxation 367
Income tax expense (170)
Consolidated profit for the financial year 197
2014/2015 Self-storagesix monthsended31 January 2015£'000 Serviced archive& recordsmanagementsix monthsended31 January 2015£'000 Total six monthsended31 January2015£'000 Self-storagesix monthsended31 January 2014£'000 Servicedarchive &recordsmanagementsix monthsended31 January2014£'000 Total six monthsended31 January2014£'000
Total assets 83,806 5,875 89,681 76,892 5,708 82,600
Segment liabilities (15,975) (498) (16,473) (13,736) (522) (14,258)
Borrowings(not allocated to segment liabilities)Derivative financial instruments(not allocated to segment liabilities) (27,497) - (27,393) (57)
Total liabilities (43,970) (41,708)
Capital expenditure 1,423 442 1,865 3,195 181 3,376
1 Capital expenditure includes fixed asset additions (note 9b) and additions to property lease premiums (note 9c)
2013/2014 Self-storagesix monthsended31 July 2014£'000 Serviced archive& recordsmanagementsix months ended31 July 2014£'000 Total six monthsended31 July2014£'000
Total assets 83,803 5,960 89,763
Segment liabilities (16,379) (729) (17,108)
Borrowings (not allocated to segment liabilities)Derivative financial instruments(not allocated to segment liabilities) (27,445)
Total liabilities (44,553)
Capital expenditure 6,269 215 6,484
2a Property, staff, distribution and general costs
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Property and premises costs 1,960 1,829 3,689
Staff costs 2,005 1,870 3,971
General overheads 491 552 1,153
Distribution costs 95 93 189
Retail products cost of sales 162 191 292
4,713 4,535 9,294
2b Cost of sales of retail products
Cost of sales represents the direct costs associated with the sale of retail products (boxes, packaging etc.), the
ancillary sales of insurance cover for customer goods and the provision of van hire services, all of which fall within the
Group's ordinary activities.
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Retail 69 67 149
Insurance 17 27 32
Van hire - 22 6
Other 1 30 -
87 146 187
Serviced archive consumables and direct costs 75 45 105
162 191 292
2c Other costs
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Impairment of development land asset (see note 9b) - - 1,604
3 Finance income
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Bank interest 26 14 26
All interest receivable arises on cash and cash equivalents.
4 Finance costs
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Bank interest 465 454 912
Non-utilisation fees and amortisation of bank loan arrangement fees 110 114 223
Hire purchase and other interest - 1 1
575 569 1,136
Most interest payable arises on bank loans classified as financial liabilities measured at amortised cost.
5 Profit before taxation
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£ '000
Profit before taxation is stated after charging:
Depreciation and amounts written off property, plant and equipment:
- owned assets Amortisation of intangible assetsOperating lease rentals - land and buildings 681 83773 580 83779 1,224 1651,529
6 Taxation
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Current tax:
UK corporation tax 293 206 338
Deferred tax:
Origination and reversal of temporary differences 94 14 (311)
Adjustments in respect of prior periods - - 143
Total deferred tax charge / (credit) 94 14 (168)
Income tax expense for the period/year 387 220 170
The charge for the period can be reconciled to the profit for the period as follows:
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Profit before tax 1,483 916 368
Tax on ordinary activities at the standard effective rate of corporation tax in the UK of 20.67% (31.1.2014: 22.4%) 306 205 82
Expenses not deductible for tax purposes 4 2 3
Depreciation of non-qualifying assets 58 21 41
Share based payment charges in excess of corresponding tax deduction 23 8 26
Amounts not recognised in deferred tax - (16) -
Adjustments in respect of prior periods - deferred tax - - 143
Sale of Reading recognised for tax purposes - - (132)
Impact of change in tax rate on timing differences (4) - 7
Income tax expense for the period/year 387 220 170
Effective tax rate 26% 24% 46%
The UK's main rate of corporation tax reduced to 21% from 1 April 2014. The effective rate for this period is 26%.
(31.01.2014: 24%).
In addition to the amount charged to profit or loss for the period, deferred tax relating to the revaluation of the Group's
properties of £25,612 (31.1.2014: £72,916) and the fair value of cash flow hedges of £28,320 (31.1.2014: (£47,963) has been
recognised directly in other comprehensive income (see note 16 on deferred tax).
7 Dividends
Six months ended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 July 2013 (4.33 pence per share) - 1,053 1,053
Interim dividend for the six months to 31 January 2014 (2.00 pence per share) - - 490
Final dividend for the year ended 31 July 2014 (5.00 pence per share) 1,258 - -
1,258 1,053 1,543
In respect of the current year the Directors propose that an interim dividend of 2.33 pence per share will be paid to the
shareholders. The total estimated dividend to be paid is £568,161 based on the number of shares currently in issue as
adjusted for shares held in the Employee Benefits Trust and for shares held on treasury. This interim dividend is an
on-account payment of a final annual dividend and is ultimately subject to approval by shareholders at the 2015 Annual
General Meeting and has not been included as a liability in these financial statements. The ex-dividend date will be 7 May
2015; the record date 8 May 2015; with an intended payment date of 15 June 2015.
8 Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares.
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£'000 Yearended31 July2014Audited£'000
Profit for the financial period 1,096 696 197
No. of shares No. of shares No. of shares
Weighted average number of shares
For basic earnings per share 24,950,434 24,228,587 24,392,144
Dilutive effect of share options 614,261 561,021 589,427
For diluted earnings per share 25,564,695 24,789,608 24,981,571
623,212 (31.01.2014: 623,212) shares are held in the Employee Benefit Trust and 2,466,869 (31.01.2014: 2,466,869) shares
are held in Treasury. Both are excluded from the above calculation.
Six monthsended31 January2015Unaudited£'000 Six monthsended31 January2014Unaudited£ Yearended31 July2014Audited£
Earnings per share
Basic 4.39p 2.87p 0.81p
Diluted 4.29p 2.81p 0.79p
9a Intangible assets
Group Goodwill£'000 Contractualcustomerrelationships£'000 Total£'000
Cost at 1 August 2013 1,110 3,309 4,419
Amortisation at 1 August 2013 - (331) (331)
Charge for the period - (83) (83)
Amortisation at 31 January 2014 - (414) (414)
Net book value at 31 January 2014 1,110 2,895 4,005
Cost at 31 January 2014 1,110 3,309 4,419
Amortisation at 31 January 2014 - (414) (414)
Charge for the period - (83) (83)
Amortisation at 31 July 2014 - (496) (496)
Net book value at 31 July 2014 1,110 2,813 3,923
Cost at 1 August 2014 1,110 3,309 4,419
Amortisation at 1 August 2014 - (496) (496)
Charge for the period - (83) (83)
Amortisation at 31 January 2015 - (579) (579)
Net book value at 31 January 2015 1,110 2,730 3,840
All goodwill and customer relationships are allocated to the serviced archive cash-generating unit (CGU) identified as a
separate business segment.
The remaining amortisation period of the contractual customer relationships at 31 January 2015 is 15 years and 5 months
(2014: 16 years 5 months).
The values for impairment purposes are based on estimated future cash flows and the following key assumptions:
· a discount rate of 11%
· estimated useful lives of customer relationships (20 years)
· long term sustainable growth rates of 2.75%
· a forward corporation tax rate of 20%
· sensitivity: the Group has conducted a sensitivity analysis on the impairment test of each CGU's carrying value. A
cut in projected sales growth by around 6% would result in the carrying value of goodwill being reduced to its recoverable
amount.
9b Property, plant and equipment
Group DevelopmentPropertyassetsat cost£'000 Land andbuildingsat valuation£ '000 Longleaseholdland andbuildingsatvaluation£'000 Shortleaseholdimprovementsat cost£'000 Fixtures,fittings andequipmentat cost£'000 Motorvehiclesat cost£'000 Total£'000
Net book value at 31 July 2013 8,716 50,774 - 1,035 7,293
- More to follow, for following part double click ID:nRSa3323Lc