TIDMLOK
RNS Number : 8311D
Lok'nStore Group PLC
02 November 2020
LOK'NSTORE GROUP PLC
(" Lok'nStore " or "the Group ")
Preliminary Results for the year ended 31 July 2020
Lok'nStore Group Plc, a leading company in the UK self-storage
market announces results for the year ended 31 July 2020.
Highlights of Lok'nStore Group plc results 2020
Continued growth and strong new store opening programme
Resilient trading
ü Group Revenue GBP18.04 million up 6.44% (2019: GBP16.95
million)
ü Group Adjusted EBITDA(2) GBP9.65 million up 10.4% (2019:
GBP8.75 million)
ü Operating profit GBP 5.79 million up 12.2% (2019: GBP5.16
million before exceptional items(3) )
ü Store Management Fees GBP0.99 million up 21.4% (2019: GBP0.82
million)
ü Occupancy up 5.9% (2019: 6.0%), pricing level
ü Bad debt written off in year only 0.15% of Group Revenue
(2019: 0.26%)
Cash flow growth drives dividend increase - ninth consecutive
year of growth
ü Cash available for Distribution (CAD) (4) per share up 12.3%
to 21.3 pence (2019: 18.9 pence)
ü Annual dividend 13 pence per share up 8.3% (2019: 12 pence per
share)
Steady increase in asset value
ü Adjusted Total Assets(5) GBP229.4 million up 6.8% on last year
(2019: GBP214.7 million)
ü Adjusted Net Asset Value(6) per share up 4.7% to GBP5.56
(2019: GBP5.31)
Conservative use of debt
ü Loan to value ratio(7) 19.3% (2019: 16.1%) net of cash
ü Net debt of GBP 38.3 million ( 2019 : GBP29.3 million)
ü Average cost of debt 1.69 % ( 2019 : 2.11%)
ü GBP75 million bank facility extended by one year to April
2025
Healthy pipeline of new landmark stores (8) to deliver further
growth
ü Pipeline(9) of 14 new stores taking total stores to 49
ü Secured Pipeline will add 40.1% to owned trading space and
32.5% to total portfolio
Positive outlook
ü Revenue, profits and asset values all moving ahead
ü Good growth since year- end, strategy unchanged
For all of the definitions of the terms used in the highlights
above refer to the notes section below.
Commenting on the Group's results, Andrew Jacobs, Executive
Chairman of Lok'nStore Group said,
"This year Lok'nStore's r evenue , profits and asset values all
moved ahead and trading since the year end has been good. We are
raising the annual dividend by 8.3% to 13 pence per share, our
ninth consecutive year of increasing dividends.
"14 new sites will add considerably to future sales and earnings
growth, enabling further increases in dividends. Our strategy
remains to open more landmark stores in an under-supplied market
while maintaining a conservative balance sheet, leading to an
exciting period of growth."
Enquiries:
Lok'nStore:
Andrew Jacobs, Executive Chairman
Ray Davies, Finance Director 01252 521 010
finnCap Ltd
Julian Blunt / Giles Rolls, Corporate
Finance
Alice Lane, ECM 020 7220 0500
Camarco
Billy Clegg / Tom Huddart 0203 757 4980
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 understand how
the underlying business is performing. The following table
identifies those measures and explains what we mean when we use
them and importantly why we use them and what they tell you about
our business and performance.
1. Continuing Operations - The Group's document storage business
was sold on 31 January 2019 and its disposal constitutes a
discontinued operation. Separate reporting of discontinued
operations is important in providing users of financial statements
with the information necessary to determine the effects of a
disposal on the ongoing continuing operations of our business. To
ensure a clear separation of the financial performance of
Continuing Operations, Discontinued Operations are shown separately
on the Statement of Comprehensive Income as a profit on disposal
(after tax) which combines operating profit with the profit arising
on its disposal. The profit on discontinued operations is then
aggregated with profit on continuing operations in determining the
Group's total profit for the year.
2. Group Adjusted EBITDA - Earnings before interest, tax,
depreciation and amortisation - This measure strips away non-cash
charges, finance charges and tax and now also reflects the removal
of property lease costs from operating expenses as a result of the
implementation of IFRS 16. Adjusted EBITDA is defined as EBITDA
before losses or profits on disposal, share-based payments,
acquisition costs, exceptional items, finance income, finance costs
and taxation.
3. Exceptional Items - refers to one-off items of a
non-operational nature which arose during the year, often relating
to asset disposals, and are unlikely to be recurring. (Refer Note
3(c) of the Financial Statements).
4. CAD - Cash Available for Distribution - is calculated as
Adjusted EBITDA less total net finance cost, less capitalised
maintenance expenses, New Works Team costs and current tax. This
measure also excludes the impact of IFRS16 and includes leasing
charges as normal operating costs of each store, and gives clarity
on the recurring operating cash flow of the business. This measure
is designed to show the capacity of the business to generate
ongoing net operating cash that can be used to pay dividends to
shareholders or pay down debt. The calculation of the Cash
Available for Distribution is set out in the Business and Financial
Review.
5. Adjusted Total Assets - The value of adjusted total assets of
GBP229.4 million (2019: GBP 214.7 million) is calculated by adding
the independent valuation of the leasehold properties of GBP16.7
million (2019: GBP 18.7 million) less their corresponding net book
value (NBV) GBP3.7 million (2019: GBP 4.0 million) to the total
assets in the Statement of Financial Position of GBP216.4 million
(2019: GBP 200.0 million). This provides clarity on the significant
value of the leasehold stores as trading businesses which under
accounting rules on leases are only presented at their book values
within the Statement of Financial Position. Total assets now
include the Right of Use Assets as a result of the implementation
of IFRS 16 of GBP11.8 million. The comparative periods have been
adjusted accordingly (2019: GBP13.0 million).
6. NAV - Net Asset Value 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 Business and Financial Review.
7. LTV - Loan to Value Ratio - measures the 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 IFRS 16 lease liabilities) of GBP38.3
million as set out in note 17 (2019: GBP 29.3 million) as a
percentage of the total properties independently valued by JLL and
including development land assets of GBP29.9 million totalling
GBP198.3 million (2019: GBP 181.2 million) as set out in the
Business and Financial Review.
8. 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 debt.
9. Pipeline Sites - means sites for new stores that either we
have exchanged contracts on or have agreed heads of terms and are
progressing with our lawyers towards completion. We have 14
pipeline sites of which 10 are contracted and 4 are with lawyers.
Leicester, which was included in the pipeline sites at 31 July
2020, opened in August 2020 after the year-end.
10. Adjusted Store EBITDA is Group Adjusted EBITDA (see 2 above)
before the deduction of central and head office costs. Unlike Group
Adjusted EBITDA this measure excludes the impact of IFRS16 and
includes leasing charges 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 Business and Financial
Review.
11. Gearing - refers to the level of a company's debt related to
its equity capital, usually expressed in percentage form. It is a
measure of a company's financial leverage and shows the extent to
which its operations are funded by lenders 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 - EBITDAR is Earnings before
interest, tax, depreciation amortisation and rent. The measure is
designed to give clarity on the effect of the rent payable by
leasehold stores and how its elimination enables an analytical
comparison between freehold stores operating performance (which do
not pay rent) and leasehold stores operating performance. This
analysis is set out in a table in the Business and Financial
Review.
13. Cost Ratio - calculates the ratio of the total operating
costs of the business as set out in the Business and Financial
Review, expressed as a percentage of total group revenue (note 2),
giving a perspective on the cost efficiency of the business when
compared to the cost ratio of the previous year.
14. LFL- Like for Like - This measure is used to give
transparency on improvements in the operating business unrelated to
the opening of new stores or closure of old stores therefore giving
visibility of the true trading picture. The like for like key
performance measure is only used where its use is particularly
relevant to illustrate a performance metric not otherwise
apparent.
See also the glossary
Chairman's Statement
I am delighted to be reporting on this solid set of results with
Lok'nStore continuing to deliver on our commitment to sustainable
growth.
The full-year results can be summarised as:
-- Strong operating performance resulting in revenue and adjusted EBITDA profit growth
-- Pipeline of 14 (9) stores
-- Growing asset value
-- Increased dividend
-- Continuing to invest in our landmark store opening programme
The detail behind these results is discussed further in our
Business and Financial Review.
Continued investor interest in the self-storage sector together
with market transactions of self-storage operations underpins the
value of our assets today and our strategy to open more landmark
stores.
Increased dividend
The Board is confident in the strength of the business and
capacity of the management team to trade effectively through this
period, as demonstrated by these results, and accordingly deems it
appropriate to continue to pursue the Group's progressive dividend
policy.
Lok'nStore's increasing dividend payments to shareholders
reflect the growth in the underlying Cash Available for
Distribution (CAD) which is up 12.5 % over the year .
For the ninth consecutive year, and in line with our stated aim
to provide predictable dividend growth, we are proposing to
increase the annual dividend by 1 pence per share. The Group will
therefore pay a final dividend of 9 pence per share on 8 January
2021 following the interim dividend payment of 4 pence per share in
June 2020 making a total annual dividend of 13 pence per share, up
8.33 % from 12 pence last year. The dividend is well covered by the
Cash Available for Distribution of 21.3 pence per share, a pay-out
ratio of 61%.
The final dividend will be paid to shareholders on the register
on 27 November 2020 . The ex-dividend date will be 26 November
2020. The final deadline for Dividend Reinvestment Election by
investors is 11 December 2020.
Board changes
On 3 August 2020 Lok'nStore Group announced the following Board
changes, positioning the business for its next stage of growth.
With effect from 1 August 2020:
-- Neil Newman-Shepherd has been promoted to Managing Director.
Neil has worked in the self-storage industry since 2003 and with
Lok'nStore since 2006. Neil has served on the Lok'nStore Board
since 2015 as Group Sales Director and will now take an increasing
level of responsibility for the day to day operations of the
Group's business. Neil's part in the success of Lok'nStore over
recent years has been significant and we look forward to his
continued contribution to our future growth.
-- Andrew Jacobs became Executive Chairman and continues to
manage the overall strategic direction and property aspects of
Lok'nStore.
-- Simon Thomas stepped down from his role as Non-Executive
Chairman and now continues to serve as non-executive director. I
would like to express my thanks to Simon Thomas for his many years
support in the role of Chairman at Lok'nStore.
We were also delighted to welcome Jeff Woyda as an independent
Non-Executive Director with effect from 1 September 2020. During
his extensive and varied career Jeff has held a number of senior
executive positions and is currently Chief Financial Officer and
Chief Operating Officer of Clarkson plc, a FTSE 250 company and the
world's leading provider of integrated shipping services and
investment banking capabilities to the shipping and offshore
markets.
IFRS 16
The Group has applied IFRS 16 for the first time this year. IFRS
16 introduces new requirements with respect to lease accounting by
removing the distinction between operating and finance leases and
requiring the recognition of a Right of Use Asset and a
corresponding lease liability in the Statement of Financial
Position.
The prior period financial comparatives contained within these
statements have been restated to reflect the first-time adoption of
IFRS 16 which changes previously reported EBITDA, interest and
depreciation numbers in the Statement of Comprehensive Income.
Further details of these restatements can be found in note 1.
Lok'nStore will continue to report on CAD which aims to look
through the statutory accounts and give a clear picture of the
ongoing ability of the Group to generate positive cash flow from
the operating business that can be used to pay dividends to
shareholders to pay down debt or to invest in new stores.
Investment in our stores
While we invested GBP12.0 million in sites and store development
this year, we are able to report a year-end loan-to-value (LTV)
ratio of only 19.3% (2019: 16.1%) and net debt of GBP38.3 million
(2019: GBP29.3 million) (Refer to Note 17).
The Group continues to find high quality sites for new landmark
stores. Trading at our new stores has been reassuring and t his
underpins our confidence that our secured pipeline of ten more
landmark stores will add further momentum to sales and earnings
growth, adding 48.0 % more high quality trading space to our owned
portfolio. We are on-site at Salford and will shortly be commencing
development of our Warrington and Wolverhampton stores.
Managed Stores
Our growth strategy includes increasing the number of stores we
manage for third party owners. This enables the Group to earn
revenue without having to commit our capital, to amortise fixed
central costs over a wider operating base and drive further traffic
to our website which benefits our entire operation. We generated
managed store income of c. GBP1. 0 million this year, up 21.4% from
the previous year.
Managed store income is generated from our existing platform and
central management, resulting in a high effective profit margin.
Our current pipeline includes an additional 4 managed stores which
will take the total number of managed stores to 16.
Our People
We rely on our amazing people to deliver these impressive
results , even more so now in these difficult circumstances. During
the Covid-19 pandemic the dedication of our colleagues has shone
through more than ever, allowing us to support our customers during
this unprecedented period.
We will continue to invest in training to develop and deepen
their skills. We have reviewed our pay levels to ensure that all of
our employees are paid fairly and we continue to promote equity
ownership to our colleagues via our Share Investment Plan and the
granting of options.
We do this because it makes business sense and directly
contributes to our strategic and operational objectives which are
to:
-- Steadily increase cash available for distribution (CAD) per
share enabling a predictable growth of the dividend from a strong
asset base with conservative levels of debt
-- Fill existing stores and improve pricing
-- Acquire more sites to build new landmark stores
-- Increase the number of stores we manage for third parties
Coronavirus update
On 11 March 2020 the World Health Organization declared a global
pandemic which has profoundly altered the business landscape. The
Board outlines below how it has dealt effectively with this
unprecedented situation.
Although Self-Storage is a service business our facilities are
not used intensively. Customer footfall is always comparatively low
and our stores have only a few people in them at any given time,
even under normal circumstances.
At Lok'nStore the health and safety of our customers and
colleagues is our principal priority. To date the vast majority of
our team members have remained well. Of the small number of
colleagues who have had to self- isolate, either because they or
someone they live with have shown symptoms, all have recovered and
are back at work. We are also pleased to be able to report that no
colleagues have been hospitalised due to the virus.
Many of our customers are 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 and we are proud to serve them at
this difficult time.
Storage, logistics and transport are important parts of the
distribution network and as such were not selected for closure by
the Government , even at the peak of the crisis . Our objective is
to continue to keep our stores open so that our customers can
continue to operate. All of our stores have remained open since the
pandemic was declared and remain open at time of writing. You can
read more about how we have maintained a Covid-19 safe environment
in our Business and Financial Review.
Robust liquidity and cash flow
At 31 July 2020 the Group had cash balances of GBP13.1 million,
which has since increased to GBP13.9 million at the date of this
Report. The Group has a GBP75 million five-year revolving credit
facility which, following a one-year extension executed during the
year now runs until April 2025. This provides ample liquidity for
the Group's current needs. Cash balances combined with undrawn
committed facilities at the year-end amounted to GBP36.7 million.
The Group is not obliged to make any repayments on its loan
facility prior to its expiration in April 2025.
Cash inflow from operating activities before investing and
financing activities was GBP9.7 million in the year to 31 July
2020, and we continue to generate strong cash flows. Self-storage
revenue was up 6.3% year-on-year.
The Group has a resilient business model with strong cash flows
and a flexible and conservative debt structure. These features have
served us well during the year enabling the business to continue to
trade effectively, despite the challenges of the pandemic.
Debt, IFRS 16 and bank covenants
The average cost of bank debt on drawn facilities for the period
was 1.69%. (2019: 2.11 %). All of the Group's total drawn bank debt
of GBP 51.3 million is unhedged, which means we have benefited
immediately from the reduction in base lending rate during the
year. At the date of this Report the Group's current cost of debt
is running at 1.56 %.
Interest cover has remained very strong during the year and,
based on the current quarter , is in excess of 7 times against a
Group banking covenant of 2.5 times. At the period end our
loan-to-value ratio based on net bank debt was 19.3 % versus a
covenant of 60% providing a large cushion against any unforeseen
circumstances. Both the Loan to Value and Senior Interest covenants
continue to be tested excluding the effects of IFRS 16.
Capital Expenditure
Self-storage benefits from the short lead time between breaking
ground and store opening of only around 12 months. Despite our
expanding pipeline of new stores, and with the completion of the
Leicester store in August 2020, we are currently only on site in
one location where we have purchased and are fitting-out the new
store in Salford for an outlay of around GBP7.0 million. We intend
to start building work on the Warrington site in November 2020. We
have a high degree of flexibility regarding start dates for further
building at other sites. We can therefore adapt and flex our
development program to react to changing economic
circumstances.
Positive Outlook for Growth
Our results for the financial year are robust and trading since
the year end has been positive. This has all been achieved despite
the current deeply unsettled external circumstances . With
Lok'nStore's resilient business model and flexible and conservative
debt structure the Board is confident the Company will continue to
thrive under its proven and highly experienced management team and
staff. We look to the future with confidence.
Andrew Jacobs
Executive Chairman
30 October 2020
Strategic Report
The UK Self-Storage Market
The UK Self-Storage Market at a glance
The Self-Storage Association UK Annual Industry Survey 2020
reports that the UK Self Storage industry is made up of 1,900 sites
offering 49 million square feet of space.
Square Feet of Self Annual Turnover of Average Store Size
Storage per head of UK Self Storage Industry
Population
UK Australia US
0.7 1.9 9.4 GBP766 million 28,700 sq. ft.
------ ---------- ----- -------------------------- -----------------------
1% rise in occupancy Only 48% of people
across the industry have a good awareness
in 2019 of self-storage
-------------------------- -----------------------
Market overview
As reported in the Self-Storage Association UK (SSA UK) Annual
Industry Survey 2020 the UK self-storage market continues to grow
but remains under-developed relative to Australia and the US. In
the UK there are an estimated 1,900 self-storage facilities
providing 49 million square feet of storage space. With a
population of 66.65 million people in the UK this equates to only
0.73 square feet per person compared to 9.44 square feet per person
in the USA and 1.89 square feet in Australia. The UK has 41% of all
European self-storage space.
The structure of the UK industry is changing. When the industry
first emerged companies were predominately single owner sites often
located in industrial areas but larger operators (defined as
operators managing 10 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, according to the SSA
UK, larger operators now own or manage around 30% of facilities
which translates to 40% of market share in terms of revenue and
space. Currently Lok'nStore is the 4(th) largest operator in the UK
by number of stores.
Drivers of demand for self-storage
Demand for self-storage by both business and household 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
support a house sale, but increasingly householders are using
storage on a semi-permanent basis to free up space at home or store
belongings they don't 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 seasonal sales or office moves or
refurbishments.
Lok'nStore's Opportunity in the Market
The Self-Storage Association UK (SSA UK) Annual Industry Survey
2020 notes that public awareness of and demand for self-storage is
increasing. We know that on average customers chose a store within
5 miles of their home or business. With a pipeline of 10 secured
stores and a further 4 stores progressing through the acquisitions
process, Lok'nStore is well placed to attract these customers and
add further momentum to the growth of our sales and profits.
Combining the Group's competitive strengths (recognised brand,
excellent customer service, rigorous cost control) and the
attractive market dynamics of the storage sector (growing sector,
under supply, resilience during economic downturn) 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 steadily increase the Cash
Available for Distribution (CAD) enabling a predictable growth of
the dividend from a strong asset base and conservatively geared
balance sheet.
What we do How we create value Sharing value with our stakeholders
Shareholders
* Buy (or lease) prominent sites * Take a flexible approach to site selection * High quality earnings
* Build (or refurbish) landmark, highly visible orange * Increase our asset base * Growing NAV
storage centres
* Careful cost control * Progressive dividend policy
* Offer clean, dry, secure storage to business and
household customers
* Drive store EBITDA growth through a closely managed
occupancy and pricing strategy Customers
* Offer managed storage services to third party owners * Easy to locate stores
* Earn fees from managing stores on behalf of others
* Friendly and high level customer service
* Carefully balanced use of Leverage
* Wide range of storage solutions
* Transparent and open contracts
Our people
* Development opportunities through the Lok'nStore
Academy
* Uncapped bonus scheme for all
* Share ownership plans
* Strong health and safety approach
---------------------------------------------------------- ----------------------------------------------------------
36 UK Stores currently GBP18 million revenue * 13 pence annual dividend per share
trading
(including 12 Managed
Stores) * 5 Star customer reviews on trust pilot
* GBP0.39 million (2019: GBP0.44 million paid out in
bonuses to store teams
---------------------------------------------------------- ----------------------------------------------------------
Our strategy:
Our objectives Achievements in 2020 Strategy in action
Steadily increase cash Cash Available for Distribution 8.33 % increase
available for distribution (CAD) per share up 12.3 % to 21.28 in annual dividend
(CAD) per share pence (2019:18.95 pence). to 13 pence per
share.
----------------------------------------- --------------------
Fill existing stores We continued to improve our online Self-storage
and improve pricing visibility through evolution of unit occupancy
our search engine strategy. up 5.9%
We focussed on developing our teams'
sales and customer service through Self-storage
the Lok'nStore Academy. pricing broadly
These actions resulted in a 4% increase flat.
in new customers over the year.
Excluding the lockdown period, this
would have increased 12.6% year
on year.
----------------------------------------- --------------------
Acquire more sites to Leicester store opened immediately Acquired a new
build new landmark stores post year-end year - in prominent site in Salford
location.
10 stores in planning or development.
Planning permissions achieved at
Warrington, Stevenage, Wolverhampton
----------------------------------------- --------------------
Increase the number Gloucester, and Oldbury managed Acquired 2 new
of stores we manage stores opened during the year. sites for managed
for third parties Stores in Chester
We have 4 managed store sites with and Kettering
lawyers.
----------------------------------------- --------------------
Managing Director's Review:
Total Self-Storage Adjusted Store EBITDA Unit Occupancy up
Revenue up 6.1% up 10.4% 5.9%
"Improving operating performance and asset values."
Neil Newman-Shepherd
Managing Director
Lok'nStore Group has delivered another excellent year
successfully implementing on all of our strategic objectives.
Revenue, profits and asset values have once again all moved ahead.
Our large 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 with
plenty of new capacity contributing to our growth over the coming
years .
Robust Trading
Group revenue for the year was GBP18.04 million, up 6.44% year
on year (2019: GBP16.95 million) driven by occupancy increases in
both old and new stores. This revenue growth led to a 10.4 %
increase in Group Adjusted EBITDA.
ü Total self-storage revenue GBP17.0 million up 6.1% (2019:
GBP16.00 million)
ü Adjusted Store EBITDA GBP9.59 million up 6.7% (2019: GBP8.99
million)
ü Unit occupancy up 5.9% (2019: 6.0%)
ü Unit pricing level
Total Adjusted Store EBITDA in self-storage, a key performance
indicator of profitability and cash flow of the business, increased
6.7% to GBP9.59 million (2019: GBP8.99 million). The overall
Adjusted EBITDA margin across all stores was higher at 56.1% (2019:
55.8%) with the Adjusted Store EBITDA margins of the freehold
stores at 61.9% (2019: 61.8%) and the leasehold stores at 42.9%
(2019: 43.1%).
Over the course of the year unit occupancy rose by a healthy
5.9% and unit pricing was level.
By the year-end we had 12 managed stores following the opening
of the 2 new managed stores in Gloucester and Oldbury.
As the business develops the balance of the stores continues to
shift towards landmark freehold stores and managed stores which
have a higher than average adjusted store EBITDA margin at 61.9%
and 100% respectively versus 56.1% across all stores. The impact of
this will be to continue to increase the average store EBITDA
margin of the Group overall, and 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.
In the table below we show how the performance of the stores
varies between freehold and leasehold stores. Currently 45.1% of
Lok'nStore owned trading space is freehold, 23.7% is leasehold and
31.2% is in managed stores.
Inevitably the leaseholds trade on lower margins due the rent
payable, but nevertheless the 42.9% margins 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. The freehold stores produce 76.8%
(2019: 75.2%) of the Adjusted store EBITDA and account for 91.6%
(2019: 89.7%) of valuations (including secured pipeline
stores).
As we build out the current secured pipeline we will be
operating from 54.8% freehold space, leasehold space will decline
to 17.9% of space and managed stores will increase to 27.3% of
total space operated.
This mix of tenures with their different risk and return
characteristics provides flexibility in the balance sheet and
opportunities to create value throughout the cycle .
Portfolio Analysis and Performance Breakdown
When fully Developed
Portfolio Analysis Number % of Valuation % of Adjusted % lettable Number Total
and Performance of stores Adjusted Store EBITDA space of Stores % lettable
Breakdown Store margin space
EBITDA (%)
----------- --------------- ---------- -------------- ----------- ------------
As at 31 July
2020
----------- --------------- ---------- -------------- ----------- ----------- ------------
Freehold 15 76.5 76.8 61.9 45.1 23 54.8
----------- --------------- ---------- -------------- ----------- ----------- ------------
Leaseholds 8 8.4 23.2 42.9 23.7 8 17.9
----------- --------------- ---------- -------------- ----------- ----------- ------------
Managed Stores 12 - - 100 31.2 14 27.3
----------- --------------- ---------- -------------- ----------- ----------- ------------
Total Stores
Trading 35 - - - - 45 -
----------- --------------- ---------- -------------- ----------- ----------- ------------
Pipeline Stores 10*
----------- --------------- ---------- -------------- ----------- ----------- ------------
Owned 8 15.1 - - - - -
----------- --------------- ---------- -------------- ----------- ----------- ------------
Managed Stores 2 - - - - - -
----------- --------------- ---------- -------------- ----------- ----------- ------------
Total Stores 45 100 100 56.1 100 45 100
----------- --------------- ---------- -------------- ----------- ----------- ------------
*Applies to the 10 contracted stores only.
In the table below we show how the performance breaks down
across the stores, based on age of store . Clearly older stores
have had more time to fill up and produced 67.4% EBITDAR margins.
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 at a glance (Lok'nStore owned stores
only)
Weeks Old Contracted Under 100 to 250 over 250 Total
Pipeline 100
Year Ended 31 July
2020
----------- ------ ----------- --------- -------
Sales GBP000 357 2,089 14,644 17,090
----------- ------ ----------- --------- -------
Stores Adjusted EBITDA
GBP'000 (129) 1,314 8,403 9,588
----------- ------ ----------- --------- -------
(36.2
EBITDA Margin (%) %) 62.9 % 57.4 % 56.1 %
----------- ------ ----------- --------- -------
Stores Adjusted EBITDAR
GBP'000 (129) 1,314 9,870 11,055
----------- ------ ----------- --------- -------
36.2
EBITDAR Margin (%) % 62.9 % 67.4 % 64.7 %
----------- ------ ----------- --------- -------
As at 31 July 2020
('000 sq. ft.)
----------- ------ ----------- --------- -------
Maximum Net Area 476 193 49 945 1,542
----------- ------ ----------- --------- -------
Freehold ('000 sq.
ft.) 355 193 49 537 1,134
----------- ------ ----------- --------- -------
Short Leasehold ('000
sq. ft.) - - - 408 408
----------- ------ ----------- --------- -------
Number Stores
----------- ------ ----------- --------- -------
Freehold 8 2 3 10 23
----------- ------ ----------- --------- -------
Short Leasehold - - - 8 8
----------- ------ ----------- --------- -------
Total Stores 8 2 3 18 31
----------- ------ ----------- --------- -------
Table covers Lok'nStore owned stores only.
In respect of the Farnborough Store (over 250 weeks) the total
store revenue includes a GBP100,000 contribution receivable from
Group Head Office .
Ancillary Sales
Ancillary sales which consist of boxes and packaging materials,
insurance and other sales increased 5.1% (2019: 11.0%) over the
year accounting for 11.0% of self-storage revenues (2019:
11.1%).
Marketing
New customers are typically drawn to Lok'nStore as a result of
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 new
landmark stores are located 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 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. Any new development of the website begins with a mobile
first focus. 60% of visits to the website in the year were from a
mobile device, up 6% year on year. 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.
Pipeline of New Stores
Against this background of ever improving operating performance
we have invested GBP 12.0 million (2019: GBP14.0 million) in new
store development this year and we have a new store pipeline of 10
secured stores by the reporting date, which will take the total to
45 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. We have 4
further store acquisitions progressing through the legal process
which will take the total to 49 stores.
Our Covid-19 safe response
Since March, we have been responding to the evolving guidance
from the governments in England and Wales regarding the pandemic ,
as well as the guidelines issued by the Self-Storage Association. I
am extremely proud of the way our teams across the business have
met the challenge and adapted so well in an uncertain
environment.
Self-Storage is a service business but our facilities are not
used intensively. Customer footfall is always comparatively low and
our stores have few people in them at any given time, even under
normal circumstances.
Many of our customers provide 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 and we are proud to provide them
with an efficient service at this difficult time.
Management reacted swiftly earlier in the year in response to
the crisis with a comprehensive range of key measures undertaken
for colleagues and customers alike.
Here is a summary of the key measures we have taken:
For our colleagues
-- Colleagues have been provided with PPE including face masks, visors and hand sanitiser.
-- Our stores have been fitted with Perspex safety screens on
desks and clear Covid-19 signage.
-- During lockdown, we reduced store opening hours and store
colleagues worked reduced hours, with no loss of pay.
-- We have paid our team members and directors as normal,
including those working reduced hours or self-isolating.
-- All bonus systems remained unchanged so colleagues still had
the opportunity to increase their earning potential.
-- 8 out of 167 team members had a period of furlough during
which Lok'nStore maintained their salary at its normal level. All
of these employees were furloughed to enable them , where
necessary, to either shield or care for someone shielding.
-- Most of our team members come to our stores by car, by bike
or walking. For the small number of colleagues who rely on public
transport we have worked with them to find alternative methods.
-- We are in regular communication with our store colleagues,
updating them on the latest advice from Public Health England and
the Government. We have also put in place contingency plans around
reduced staffing levels to cope with increased absences as a result
of self-isolation or illness.
For our customers
-- All of our stores have remained open since the 23 March 2020.
-- We remain vigilant with our daily cleaning programme and our
staff have intensified cleaning of the most commonly touched areas
and of shared equipment such as trolleys.
-- New customers can access our reception areas one at a time to
ensure strict social distancing guidelines wearing a face
covering.
-- Existing customers are still able to access their storage
units as normal without any face to face contact with our team
members.
-- Customers can still communicate with our friendly teams by telephone, email or live chat.
-- Where a customer has approached us with a short-term
financial burden, we have worked with them to find a mutual
solution.
-- To further support our customers from the 20 March 2020 no
new storage rate reviews have been issued to customers until
further notice.
Future
Lok'nStore has a resilient business model and has had an
excellent year , successfully implementing our strategic objectives
; trading has remained strong since the year- end. That all of this
has been achieved in the face of the current deeply unsettled
external circumstances is all the more pleasing and a tribute to
all involved.
Against the background of a strong performance from our existing
stores, we have a current pipeline of 14 new stores which will add
considerable momentum to sales and earnings growth in the
future.
Neil Newman-Shepherd
Managing Director
30 October 2020
Property review
Store and portfolio strategy
Each of our operating stores is a profitable unit in its own
right. Therefore, our strategy is to continue to increase the
number of stores we operate without stretching our balance sheet.
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.
Flexible approach to site acquisition
All of 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 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 development. We also
consider selling established stores on sale and manage back
contracts in order to recycle the capital and protect the balance
sheet. 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.
As at 31 July 2020, Lok'nStore operated 35 stores. Of these Lok
' nStore owns 15 freehold stores and 8 stores are held under
commercial leases. A ll of our leasehold stores are inside the
Landlord and Tenant Act providing us with a strong security of
tenure. 12 further sites operate under management contracts. The
opening of Leicester immediately post year-end takes the number of
trading stores at the date of this Report to 36.
The average unexpired term of the Group's leaseholds is
approximately 9 years and 7 months as at 31 July 2020.
Store pipeline
-- 4 new store opportunities identified and are progressing with lawyers
-- 10 contracted stores are under development of which 8 will be
owned freehold by Lok'nStore and 2 will be managed stores
-- Current Pipeline of 10 contracted stores adds 32.5 % of extra
trading space to the overall portfolio, 40.1 % to our owned
portfolio and 15.9 % to the managed portfolio
Growth from new stores and more new stores to come
Lok'nStore's strong 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.
Here is a summary of our current contracted pipeline;
Bedford - Planning application in process
Bournemouth - Planning application in process
Cheshunt - Planning application in process. We have signed an
agreement to share this site with a discount food retailer
mitigating our development costs and generating excellent footfall
for the site.
Chester - Planning application in process
Kettering - Design in process
Leicester - Opened August 1(st) 2020 post balance sheet
Salford - On site. The store is due to open in April 2021.
Stevenage - Planning permission granted
Warrington - Planning permission granted. We aim to be onsite in
November 2020
Wolverhampton - Planning permission has been granted. We aim to
be onsite towards the end of 2020
Managed Stores
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 all 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.
Under a managed store contract Lok'nStore receives a standard
monthly management fee based on revenue, a performance fee based on
certain objectives and fees on a successful exit. We also charge
acquisition, planning and branding fees. This enables the Group to
earn revenue from our expertise and knowledge of the self-storage
industry without committing our capital, to amortise fixed central
costs over a wider operating base and drive further traffic to our
website which benefits our entire operation.
All of the operating expenses of the store are paid for by the
third party out of the store revenue with Lok'nStore receiving
various fees and performance bonuses. This strategy improves the
risk adjusted return of the business by increasing the operating
footprint, revenues and profits without committing capital.
Following the managed store opening of Gloucester in February
2020 and Oldbury in June 2020, we now have twelve stores trading
under management contracts at 31 July 2020. Chester and Kettering
are in the design stage and will add a further two stores to the
managed store portfolio.
We generated managed store income of GBP991,298 this year, up
21.4% (2019: GBP816,676) from the previous period. We expect this
to continue increasing steadily over the coming years as more
managed stores are opened.
New Store pipeline
As at 31 July 2020, we have 10 new stores secured in our Current
Pipeline (9) . All are in prominent locations with large catchment
areas and little established competition 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.
When this contracted development pipeline of 10 sites has been
completed Lok'nStore will operate from 45 stores including 14
managed stores. In addition, 3 further new store opportunities are
progressing with lawyers. The 10 secured pipeline sites represent a
combination of 8 owned and 2 managed stores. These will add 561,497
sq. ft. of new capacity adding 61.1 % to freehold trading space and
15.9 % to the managed store portfolio delivering a 32.5 % increase
in overall trading space.
Analysis of Stores No of Stores Pipeline Pipeline Pipeline
With
As at 31 Jul 2020 Stores Trading Total Secured lawyers
--------------------------- ------- ---------- --------- --------- ---------
Freehold (JLL) 15 15
Leaseholds (JLL) 8 8
Pipeline (Freehold) 9 9 8 1
Pipeline (Leasehold) 1 1 1
Managed Stores (Trading) 12 12
Managed Stores (Pipeline) 4 4 2 2
Total 49 35 14 10 4
------- ---------- --------- ---------
Growing Store property assets and Net Asset Value
ü Adjusted Total Assets GBP229.4 million(5) up 6.8% on last year
(2019: GBP214.7 million)
ü Adjusted Net Asset Value of GBP5.56 per share up 4.7% on last
year (2019: GBP5.31 per share)
Lok'nStore has a strong and growing asset base. Our freehold and
leasehold stores have been independently valued by Jones Lang
LaSalle (JLL) at GBP168.4 million (Net Book Value (NBV) GBP56.6
million) as at 31 July 2020 (2019: GBP162.7 million: NBV GBP57.9
million). The change in property valuation is referred to further
in the Financial Review section of the Strategic Report and is
detailed in note 11b of the notes to the financial statements.
Adding our stores under development at cost and land and
buildings held at director valuation, our total property valuation
is GBP200.2 million (2019: GBP183.7 million). The increase in the
values of properties which were also assessed by JLL last year was
3.5% (2019: 9.1%).
Financial Review:
ü Group Revenue GBP18.04 million up 6.44 % (2019: GBP16.95
million)
ü Group Adjusted EBITDA(2) (GBP9.65 million up 10.4% (2019
Restated: GBP8.75 million)
ü Operating profit (before exceptional items (3) ) GBP 5.79
million up 12.2% (2019: GBP5.16 million)
ü Cash available for Distribution (CAD)(4) GBP6.17 million up
12.5% (2019: GBP5.49 million)
ü Final proposed dividend up 8.0% to 9.0 pence per share (2019:
8.33 pence per share)
ü Cash balances GBP13.1 million (2019: GBP13.7 million)
Lok'nStore is a robust business which generates an increasing
cash flow from its strong asset base with a low LTV of 19.3 % and a
low average cost of debt of 1.69 %. The value of the Group's
property assets underpins a flexible business model with stable and
rising cash flows and low credit risk giving the business a firm
base for growth.
IFRS 16
The Group has applied IFRS 16 for the first time in this
financial year. IFRS 16 introduces significant changes to lessee
accounting by removing the distinction between operating and
finance leases and requiring the recognition of a Right of Use
Asset and a corresponding lease liability in the Statement of
Financial Position.
The prior year financial comparatives contained within these
statements have been restated to reflect the first-time adoption of
IFRS 16 which changes previously reported EBITDA, interest and
depreciation numbers in the Statement of Comprehensive Income.
Further details of these restatements can be found in note 1.
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 positive cash flow from the operating business
that can be used to pay dividends or pay down debt. As mentioned
above CAD was up 12.5% for the year.
Both the Loan to Value and Senior Interest covenants set out in
our bank facility agreements 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. Operating 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, when testing the Senior Interest covenant.
Extension of existing GBP75 million Banking Facility to April
2025
The Group has agreed a one-year extension on its existing joint
banking facility with Royal Bank of Scotland plc and Lloyds Bank
plc. The GBP75 million five-year revolving credit facility which
was executed last year included an extension option which has now
been implemented.
The interest rate margin is set at the London Inter-Bank Offer
Rate (LIBOR) plus 1.50%-1.75% based on a loan to value covenant
test. This rate is 1.50% currently and our current all in debt cost
on GBP51.3 million drawn is averaging 1.6%-1.7%.
The facility which was due to expire in April 2024, will now run
until April 2025 providing funding for more landmark site
acquisitions. The facility includes an accordion agreement to
borrow a further GBP25 million in the future not yet committed.
Bank covenants and margin are unaffected by this extension of
term.
Management of interest rate risk
ü Average cost of debt 1.69% (2019: 2.11%)
With GBP 51.3 million of gross debt currently drawn against the
GBP 75 million bank facility the Group is not committed to hedging
but will keep the matter under review. It is not the intention of
the Group to enter into any hedging arrangement at this time given
our low level of net debt, low loan to value ratio and high
interest cover.
Earnings per share
The calculations of earnings per share are based on the
following profits and numbers of shares.
Group
Group 2019
2020 GBP'000
GBP'000 Restated**
------------------------------------------------------- --------------- ---------------
Profit for the financial year - Continuing Operations 2,974 3,161
------------------------------------------------------- --------------- ---------------
Profit for the financial year - Discontinued
Operations - 2,182
------------------------------------------------------- --------------- ---------------
Total profit for the financial year attributable
to owners of the parent 2,974 5,343
------------------------------------------------------- --------------- ---------------
2020 2019
No. of shares No. of shares
------------------------------------------------------- --------------- ---------------
Weighted average number of shares
For basic earnings per share 28,976,967 28,921,229
Dilutive effect of share options(1) 517,257 481,848
------------------------------------------------------- --------------- ---------------
For diluted earnings per share 29,494,224 29,403,077
------------------------------------------------------- --------------- ---------------
Group Group
2020 2019
Earnings per share pence pence
Restated**
Basic
Continuing Operations 10.26p 10.93p
Discontinued Operations - 7.55p
---------------------------------- ------- -----------------
Total basic earnings per share 10.26p 18.48p
---------------------------------- ------- -----------------
Diluted
Continuing Operations 10.08p 10.75p
Discontinued Operations - 7.42p
---------------------------------- ------- -----------------
Total diluted earnings per share 10.08p 18.17p
---------------------------------- ------- -----------------
** details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
(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.
Basic earnings per share were 10.26 pence ( 2019 : 18.48 pence
per share - restated) and diluted earnings per share were 10.08
pence ( 2019 : 18.17 pence per share - restated).
On a normalised basis stripping out the contribution from the
Saracen business and the corresponding profit on disposal in 2019,
basic earnings per share for the continuing operations were 10.26
pence ( 2019 : 10.93 pence per share - restated) and diluted
earnings per share were 10.08 pence ( 2019 : 10.75 pence per share
- restated).
Costs - Continuing Operations
ü Group operating costs amounted to GBP8.26 million for the year
(2019: Restated GBP8.02 million) up by 3.0%.
ü Cost ratio(13) reduced further to 45.8% (2019 Restated:
47.3%)
We have a strong record of disciplined control of our group
operating costs. In the year operating costs (stripping out the
IFRS 16 effect of the property lease costs) were up 3%
year-on-year. Group operating costs amounted to GBP8.26 million for
the period, a 3.0% increase year on year (2019 Restated: GBP8.02
million) and we provide a breakdown below.
Future cost increases are likely to be driven by the expansion
of the business in the areas of rates, staffing and marketing.
Overall cost increases are mainly driven by the expansion of the
business and we are seeing little other cost pressures.
Property costs are our largest cost category and increased by
9.2%. These costs mainly constitute rent and rates and have risen
in recent years as we felt the effects of higher rates bills and as
we opened our new landmark stores which are generally larger. Staff
costs increased by 2.1% as we staffed the new stores and paid
performance bonuses to all our store colleagues.
The decrease in overhead costs is principally due to a lower
level of legal and professional costs related to work on rent
reviews, corporate tax and compliance work and costs arising on
aborted store acquisitions compared to the previous year.
Group Costs Increase Year ended Year ended
(decrease) 31 July 2020 31 July 2019
in costs GBP'000 GBP'000
% Restated**
----------------------- ------------ -------------- --------------
Property costs 9.2 4,392 4,022
IFRS 16 restatement -
leases 8.2 (1,467) (1,356)
----------------------- ------------ -------------- --------------
Restated property and
premises costs 9.7 2,925 2,666
Staff costs 2.1 4,196 4,111
Overheads (8.4) 1,139 1,244
Total 3.0 8,260 8,021
----------------------- ------------ -------------- --------------
Cash flow and financing
At 31 July 2020 the Group had cash balances of GBP13.1 million (
2019 : GBP13.7 million). Cash inflow from operating activities
before investing and financing activities was GBP 9.7 million (
2019 : GBP9.5 million).
As well as using cash generated from operations to fund some
capital expenditure, the Group has a GBP75 million five year
revolving credit facility which runs until April 2025. This
provides sufficient liquidity for the Group's current needs.
Undrawn committed facilities at the year-end amounted to GBP23.7
million ( 2019 : GBP32.0 million).
Cash plus undrawn committed facilities amounts to GBP36.8
million leaving the business with plenty of headroom to keep
acquiring and building new landmark stores. The bank facility has a
further GBP25 million accordion not yet committed.
Strong cash flow supports 8.33% annual dividend increase
ü Annual dividend 13 pence per share up 8.33% (2019: 12 pence
per share)
ü Cash Available for Distribution (CAD) of 21.28 pence per share
(2019: 18.95 pence per share)
Cash available for Distribution (CAD) up 12.5% from Continuing Operations
Cash available for Distribution (CAD) provides a clear picture
of ongoing cash flow available for dividends or debt repayment. The
CAD was up 12.5 % in the year compared to last year.
To illustrate this fully the table below shows the calculation
of CAD.
Analysis of Cash Available for Group Group
Distribution (CAD) Year ended Year ended
Based on Continued Operations 31 July 2020 31 July 2019
Restated **
GBP'000 GBP'000
--------------
Group Adjusted EBITDA
(per Statement of Comprehensive
Income) 9,654 8,749
IFRS 16 restatement - leases (1,468) (1,356)
Less: Net finance costs paid(1) (1,046) (903)
Capitalised maintenance expenses (110) (99)
New Works Team (89) (90)
Current tax (note 8) (768) (811)
-------------- --------------
Total deductions (3,481) (3,259)
-------------- --------------
Cash Available for Distribution 6,173 5,490
-------------- --------------
Increase in CAD over last year 12.5% 8.8%
Number Number
Closing shares in issue (less shares
held in EBT) 29,010,078 28,960,574
CAD per share (annualised) 21.28p 18.95p
Increase in CAD per share over
last year 12.3% 8.8%
** details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
(1) Net finance costs represent finance costs paid per the cash
flow statement of GBP1.07 million less bank interest received
GBP0.03 million to give the true cash flow effect.
Gearing (11) (excluding IFRS16 lease liabilities)
At 31 July 2020 the Group had GBP 51.3 million of gross bank
borrowings ( 2019 : GBP43.0 million) representing gearing of 31.3 %
(2019: 25.0%) on net debt of GBP 38.3 million ( 2019 : GBP29.3
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 28.3 % ( 2019 : 22.2
%). After adjusting for the deferred tax liability carried at
year-end of GBP 26.8 million gearing drops to 23.6 % ( 2019 : 19.0
%).
Gearing (11) (including IFRS16 lease liabilities)
At 31 July 2020 the Group had GBP 51.3 million of gross bank
borrowings ( 2019 : GBP43.0 million) and GBP 12.5 million of lease
liabilities ( 2019 : GBP 13.7 million) representing gearing of 41.8
% ( 2019 : 36.8 %) on net debt of GBP 50.7 million ( 2019 : GBP
42.9 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 37.7 % ( 2019 : 32.7%).
After adjusting for the deferred tax liability carried at period
end of GBP26.8 million gearing drops to 31.5 % ( 2019 : 27.9
%).
Capital expenditure
The Group has an active store development programme and has
grown through a combination of building new stores, existing store
improvements and relocations.
Capital expenditure during the period totalled GBP 12 million (
2019 : GBP 14.0 million). This was primarily the completions of the
Stevenage and Salford acquisitions, deposits paid on the
Warrington, Chester and Kettering sites, together with ongoing
construction and fit out works at our site in Leicester. There was
also planning and pre-development works at our Wolverhampton,
Bedford, Bournemouth, Stevenage and Cheshunt sites. The figure
includes GBP 382,190 of capitalised interest in respect of the
development sites.
The Group has capital expenditure contracted but not provided
for in the financial statements of GBP2.97 million (2019: GBP5.56
million). We carefully evaluate the ongoing economic and trading
position before making any further capital commitments.
Purchase of treasury shares: The Group did not buy or sell any
treasury shares during the year. We are proposing to renew our
ongoing authority to buy back shares at this year's AGM to ensure
the Group continues to have flexibility to make purchases should it
be considered to be in the best interests of shareholders to do
so.
Post-year-end, on 25 September 2020, Lok'nStore, bought back
8,000 ordinary shares of 1p each in the market at a price of 519.0
pence per Ordinary Share. On 2 October 2020 Lok'nStore bought back
29,972 ordinary shares of 1p each in the market at a price of 517.5
pence per Ordinary Share.
Following the Buyback, the issued share capital of the Company
is 29,641,559 Ordinary Shares of which the 37,972 Ordinary Shares
acquired are now held in treasury. The total number of voting
rights in the Company, excluding Treasury shares will therefore be
29,603,587. (Refer note 31 - E vents after the Reporting Date).
Strong balance sheet, efficient use of capital, conservative
level of debt
ü Revolving Credit Facility (RCF) GBP75 million with accordion up to GBP100 million
ü GBP12.0 million invested in new store pipeline (2019: GBP15.1 million(14) )
ü Net debt GBP38.3 million (2019: GBP29.3 million)
ü Loan to Value Ratio (LTV) net of cash 19.3% (2019: 16.1%)
ü Cost of debt averaged 1.69% in the year (2019: 2.21%) on GBP
51.3 million drawn (2019: GBP43.0 million)
(14) Including purchase of the The Box Room (Self-Storage)
Limited for GBP1.13 million in cash.
Lok'nStore is a robust business with an excellent credit model,
low debt and gearing and which is strongly cash generative from an
increasing asset base. Its increased bank facilities at low rates
of interest position the business well for the future.
Statement of Financial Position
Net Group assets at the year-end were GBP121.4 million up 4.1%
(2019 Restated: GBP116.6 million). Freehold properties were
independently valued at 31 July 2020 at GBP151.7 million up 5.3%
(2019: GBP144.0 million). Please refer to the table of property
values below.
The Parent Company's net assets have increased as a result of
the dividend of paid up from Lok'nStore Limited, the principal
operating business.
Taxation
The Group has made a current tax provision against earnings in
this period of GBP0.92 million (2019: GBP0.81 million) based on a
corporation tax rate of 19% (2019: 19%). The deferred tax provision
which used to be calculated at forward corporation tax rates of 17%
is now calculated at the substantively enacted corporation tax rate
and has therefore reverted to 19%. The deferred tax provision is
substantially a tax provision against the potential crystallisation
(sales) of revalued properties and past 'rolled over' gains amounts
to GBP26.8 million. (2019: GBP22.4 million). (See Note 20).
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 fifteen freehold properties are held in the statement of
financial position at fair value and have been valued by JLL. Refer
to note 11(b) - property, plant and equipment and also to the
accounting policies for details of the fair value of trading
properties.
The valuations of the leasehold stores held as leases are not
taken onto the statement of financial position. However, these have
also been valued and these valuations have been used to calculate
the Adjusted Net Asset Value position of the Group. The value of
our leases in the valuation totals GBP16.73 million (2019: GBP18.73
million) and we have reported by way of a note the underlying value
of these leasehold stores in our revaluations and adjusted our Net
Asset Value (NAV) calculation accordingly to include their value.
This ensures comparable NAV calculations.
A deferred tax liability arises on the revaluation of the
properties and on the rolled-over gain arising from the disposal of
some trading stores. It is not envisaged that any tax will become
payable in the foreseeable future on these disposals due to the
availability of rollover relief. It is not the intention of the
Directors to make any significant disposals of operational stores,
although individual disposals may be considered where it is clear
that added value can be created by recycling the capital into other
store opportunities.
The Board will continue to commission independent valuations on
its trading stores annually to coincide with its year-end
reporting.
Analysis of Total Property Value
No of stores/sites 31 July No of stores/sites 31 July
2020 Valuation 2019 Valuation
GBP GBP
------------------- ---------------- ------------------- ----------------
Freehold stores valued by JLL(1) 15 151,675,000 15 144,000,000
Short leasehold stores valued
by JLL(2) 8 16,725,000 8 18,725,000
Freehold land and buildings at
Director valuation (3) 1 1,931,457 1 2,509,070
------------------- ---------------- ------------------- ----------------
Subtotal 24 170,331,457 24 165,234,070
Sites in development at cost(4) 10 29,884,683 6 18,441,750
------------------- ---------------- ------------------- ----------------
Total 34 200,216,140 30 183,675,820
------------------- ---------------- ------------------- ----------------
(1) Includes related fixtures and fittings (refer to note 11b)
(2) The eight 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 2020 valuation
(2019 valuation: 11 years and 0 months).
(3) For more details refer note 11b - Directors valuation
(4) Includes GBP382,190 (31.07.2019: GBP332,326) of capitalised interest during the year.
Total freeholds account for 91.6% of property valuations (2019:
89.8%).
Increase in Adjusted Net Asset Value per Share
ü Adjusted Net Asset Value per share up 4.7% to GBP5.56 (2019
Restated: GBP5.31)
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 July 2020, the Adjusted Net Asset Value per share (before
deferred tax) increased 4.7% to GBP5.56 from GBP5.31 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 share options during the
year.
Group Group
31 July 31 July
Analysis of Adjusted Net Asset Value (NAV) 2020 2019
GBP'000 (Restated**)
GBP'000
---------------------------------------------------- ---------- --------------
Net assets
Adjustment to include short leasehold stores
at valuation 121,382 116,550
Add: JLL leasehold stores valuation
16,725 18,725
Deduct: leasehold properties and their fixtures
and fittings at NBV (3,707) (3,905)
---------------------------------------------------- ---------- --------------
134,400 131,370
Deferred tax arising on revaluation of leasehold
properties(1) (2,473) (2,519)
---------------------------------------------------- ---------- --------------
Adjusted net assets 131,927 128,851
---------------------------------------------------- ---------- --------------
Shares in issue Number Number
('000s) ('000s)
---------------------------------------------------- ---------- --------------
Opening shares in issue 29,584 29,499
Shares issued for the exercise of options 49 85
---------------------------------------------------- ---------- --------------
Closing shares in issue 29,633 29,584
Shares held in EBT (623) (623)
---------------------------------------------------- ---------- --------------
Closing shares for NAV purposes 29,010 28,961
---------------------------------------------------- ---------- --------------
Adjusted Net Asset Value per share after GBP4.55 GBP4.45
deferred tax provision
---------------------------------------------------- ---------- --------------
Group Group
31 July 31 July
Adjusted Net Asset Value per share before 2020 2019
deferred tax provision GBP'000 Restated**
GBP'000
Adjusted net assets 131,927 128,851
Deferred tax liabilities and assets recognised
by the Group 26,760 22,385
Deferred tax arising on revaluation of leasehold
properties(1) 2,473 2,519
---------------------------------------------------- ---------- --------------
Adjusted net assets before deferred tax 161,160 153,755
---------------------------------------------------- ---------- --------------
Closing shares for NAV purposes 29,010 28,961
---------------------------------------------------- ---------- --------------
Adjusted Net Asset Value per share before GBP5.56 GBP5.31
deferred tax provision
---------------------------------------------------- ---------- --------------
** details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
(1) A deferred tax adjustment in respect of the uplift in the
value of the leasehold properties has been included, calculated by
applying a tax rate of 19% (2019: 17%). 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.
Summary
Lok'nStore Group operates within the UK self-storage sector
which is still relatively immature. With a low loan to value and
flexible bank facilities through to 2025 this market presents an
excellent opportunity for further growth of the business. Recently
opened landmark stores and our strong pipeline of more landmark
stores demonstrate the Group's ability to use those strengths to
exploit the opportunities available.
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
employees 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 and communities, employees and shareholders and to
listen and take account of their views.
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 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 for the Board to consider risk at next scheduled Board Meeting
(or earlier if necessary)
Capex Committee Property Risk Committee
--------------------------------------------
Meets Monthly Meets Periodically
Manages proposed capital expenditure, Considers:
actual spend, rolling capex Risks associated with properties including
requirements 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 The main risks arising
Rate and from the Group's financial * Regular review by the Board (full details are set out
Liquidity instruments are interest in the Financial Review).
Risk rate risk and liquidity
risk (for details please
see note 17). * Debt and interest are low relative to assets and
earnings.
* Could reduce debt, if required, by executing 'Sale
and Manage-Back arrangements on mature stores.
------------------------------ -----------------------------------------------------------------
Tax Risk Changes to tax legislation
may impact the level * Regular monitoring of changes in legislation.
of corporation tax, capital
gains tax, VAT and stamp
duty land tax which would * Use of appointed professional advisers and trade
in turn affect the profits bodies.
of the company.
------------------------------ -----------------------------------------------------------------
Property The external independent
Valuation valuations of the stores * Regular monitoring of any changes in market
Risk are sensitive to both conditions and transactions occurring within our
operational trading marketplace.
performance
of the stores and also
wider market conditions. * Use of independent professional valuers expert in the
It follows that a reduction self-storage sector.
in operational performance
or a deterioration of
market conditions could * Past experience from the financial crisis of 2008
have a material adverse shows the sector has been resilient to a market
impact on the Net Asset downturn.
Value (NAV) of the Group.
* Store properties are all UK based and predominately
located in the affluent South of England and
therefore not exposed to
overseas/international/currency risks etc.
* Strong operational management teams with the skills,
experience and motivation to continue to drive
operational performance.
------------------------------ -----------------------------------------------------------------
Property Acquiring new sites is
Acquisition a key strategic objective * We hold weekly property meetings to manage the search
of the business but we process and property purchases.
face significant competition
from other uses such
as hotels, car showrooms * Use of property acquisition consultants.
and offices as well as
from other self-storage
operators. * Regular communication with agents.
* Attendance at industry relevant property events.
------------------------------ -----------------------------------------------------------------
Planning The process of gaining
Permission planning permissions * Where we can we acquire sites subject to planning.
remains challenging.
* We work with an established external planning
consultant.
* Our property team has over 20 years' experience.
------------------------------ -----------------------------------------------------------------
Construction Poor construction may
affect the value of the * We use a design and build contract with a variety of
property and/ or the established contractors.
efficient operation of
the centre.
* We use external project managers.
* All projects are overseen by our property team which
has over 20 years' experience.
------------------------------ -----------------------------------------------------------------
Maintenance/Damage Damage to properties
through poor maintenance * Regular site checks by team members.
or flood or fire could
render a centre inoperable.
* Rolling maintenance plan for all stores.
* Comprehensive disaster recovery plan.
* Appropriate insurance cover.
------------------------------ -----------------------------------------------------------------
Increased An increasing number
Competition of competitors in the * Established criteria for site selection including:
industry may negatively
impact Lok'nStore's existing
operations (e.g. pricing o Prominent locations
/ available sites) o High visibility
o Distinctive designs and bright orange
elevations and strong signage to attract
customers
* Continued investment in the Group's website and
internet marketing.
* Ensure high levels of customer service through
training and monitoring.
------------------------------ -----------------------------------------------------------------
Employee Loss of employees may
Retention affect our ability to * Aim to offer a good work/life balance and career
operate our stores and development.
provide the high levels
of customer service expected.
* Regular reviews of remuneration levels against
market.
* Achievable bonus systems.
* Generous Employee Share Schemes.
* High quality training via Lok'nStore Academy
* Intranet for improved communications.
* Established Employee rewards program.
------------------------------ -----------------------------------------------------------------
IT System A breach of our IT systems
Breach might adversely affect * Strong and regularly reviewed IT security systems.
the operations of the
business and our reputation.
* Well communicated policies and procedures for
handling and managing a systems breach.
------------------------------ -----------------------------------------------------------------
Covid-19 A spread of the virus
Risk and social protection * Please refer to our Covid-19 Group Response section
measures introduced by in the Managing Director's Review
Government may adversely
affect the operations
and financial performance
of the business and adversely
impact on the health
of staff.
------------------------------ -----------------------------------------------------------------
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2020
Notes Group Group
Year ended Year ended
31 July 2020 31 July 2019
(Restated**)
GBP'000 GBP'000
----------------------------------------- ------ -------------- ---------------
Revenue 2 18,041 16,950
Total property, staff, distribution
and general costs 3a (8,387) (8,201)
----------------------------------------- ------ -------------- ---------------
Adjusted EBITDA(1) 9,654 8,749
----------------------------------------- ------ -------------- ---------------
Amortisation of intangible assets - (83)
Depreciation 6 (3,779) (3,461)
Equity settled share based payments (88) (46)
----------------------------------------- ------ -------------- ---------------
(3,867) (3,590)
----------------------------------------- ------ -------------- ---------------
Profit on sale of land at store 3(c) - 295
Costs of sale and manage-back of
Crayford store 3(c) - (54)
Deferred financing on bank loan
written off 3(c) - (133)
--------------
- 108
---------------
(3,867) (3,482)
Operating profit 5,787 5,267
Finance income 4 29 31
Finance cost 5 (1,126) (926)
----------------------------------------- ------ -------------- ---------------
Profit before taxation 4,690 4,372
Income tax expense 8 (1,716) (1,211)
----------------------------------------- ------ -------------- ---------------
Profit for the period from continuing
operations 2,974 3,161
Profit for the period from discontinued
operations 12 - 2,182
Profit for the period 2,974 5,343
----------------------------------------- ------ -------------- ---------------
Profit attributable to:
Owners of the parent 24a 2,974 5,343
Other Comprehensive Income
Items that will not be reclassified
to profit and loss
Increase in property valuation 8,849 13,765
Deferred tax relating to change
in property valuation (3,602) (2,327)
---------------
Other comprehensive income 5,247 11,438
Total comprehensive income for
the period 8,221 16,781
----------------------------------------- ------ -------------- ---------------
Attributable to:
Owners of the parent 8,221 16,781
------------------------ -------- ---------
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2020
Group Group
Year ended Year ended
31 July 2020 31 July 2019
Earnings per share attributable (Restated**)
to owners of the Parent GBP'000 GBP'000
-------------- --------------
Basic 10
Continuing operations 10.26p 10.93p
Discontinued operations - 7.55p
---------------------------------- --- -------------- --------------
Total basic earnings per share 10.26p 18.48p
---------------------------------- --- -------------- --------------
Diluted 10
Continuing operations 10.08p 10.75p
Discontinued operations - 7.42p
---------------------------------- --- -------------- --------------
Total diluted earnings per share 10.08p 18.17p
---------------------------------- --- -------------- --------------
(1) Adjusted EBITDA is defined in the accounting policies
section of the notes to this Report.
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 July 2020
Attributable to owners of the Parent
Retained Total
earnings equity
Share Share Other Revaluation GBP'000 GBP'000
capital premium reserves reserve Restated Restated
GBP'000 GBP'000 GBP'000 GBP'000 ** **
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
31 July 2018 295 10,350 8,363 64,899 19,344 103,251
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Effect of new accounting
standard - IFRS 16 - - - - (389) (389)
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
As at 1 August 2018 - restated 295 10,350 8,363 64,899 18,955 102,862
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Profit for the year - - - - 5,343 5,343
Other comprehensive income:
Increase in property valuation
net of deferred tax - - - 11,438 - 11,438
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Total comprehensive income
for the year - - - 11,438 5,343 16,781
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Transactions with owners:
Dividend paid - - - - (3,279) (3,279)
Share based payments - - 46 - - 46
Transfers in relation to
share based payments - - (51) - 51 -
Deferred tax relating to
share options - - (1) - - (1)
Exercise of share options 1 140 - - - 141
Total transactions with
owners 1 140 (6) - (3,228) (3,093)
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Reserve transfer on disposal
of assets - - - (4,927) 4,927 -
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Transfer additional dep'n
on revaluation net of deferred
tax - - - (304) 304 -
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
31 July 2019 296 10,490 8,357 71,106 26,301 116,550
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Profit for the year - - - - 2,974 2,974
Other comprehensive income:
Increase in property valuation
net of deferred tax - - - 5,247 - 5,247
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Total comprehensive income
for the year - - - 5,247 2,974 8,221
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Transactions with owners:
Dividend paid - - - - (3,572) (3,572)
Share based payments - - 88 - - 88
Transfers in relation to
share based payments - - (14) - 14 -
Deferred tax relating to
share options - - 24 - - 24
Exercise of share options 1 70 - - - 71
Total transactions with
owners 1 70 98 - (3,558) (3,389)
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Reserve transfer on disposal
of assets - - - - - -
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
Transfer additional dep'n
on revaluation net of deferred
tax - - - (378) 378 -
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
31 July 2020 297 10,560 8,455 75,975 26,095 121,382
--------------------------------- --------- --------- ---------- ---------------- ---------- ----------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
Company Statement of Changes in Equity
For the year ended 31 July 2020
Share Share Retained Other
capital premium earnings reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
31 July
2018 295 10,350 3,870 1,843 16,358
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
Profit
for the
year - - 3,774 - 3,774
Equity
settled
share
based
payments - - - 46 46
Transfer
in
relation
to share
based
payments - - 51 (51) -
Exercise
of share
options 1 140 - - 141
Dividends
paid - - (3,279) - (3,279)
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
31 July
2019 296 10,490 4,416 1,838 17,040
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
Profit
for the
year - - 14,792 - 14,792
Equity
settled
share
based
payments - - - 88 88
Transfer
in
relation
to share
based
payments - - 14 (14) -
Exercise
of share
options 1 70 - - 71
Dividends
paid - - (3,572) - (3,572)
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
31 July
2020 297 10,560 15,650 1,912 28,419
----------- --------- ----------------------- --------------------------------------------- ---------- ----------
Consolidated and Company Statements of Financial Position
31 July 2020 Company Registration No. 04007169
Group
Group Group 31 July Company Company
31 July 31 July 2018 31 July 31 July
2020 2019 (Transition) 2020 2019
(Restated**) (Restated)**
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Assets
Non-current
assets
Intangibles - - 3,263 - -
Property,
plant and
equipment 11b 187,258 168,938 152,580 - -
Investments 13 - - - 2,552 2,464
Financial
assets 361 361 361 - -
Right of use
assets 11c 11,764 13,018 14,273 - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
199,383 182,317 170,477 2,552 2,464
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Current
assets
Inventories 14 270 298 257 - -
Trade and
other
receivables 15 3,628 3,707 4,476 25,867 14,576
Cash and cash
equivalents 13,066 13,662 4,990 - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Total
current
assets 16,964 17,667 9,723 25,867 14,576
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Total assets 216,347 199,984 180,200 28,419 17,040
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Liabilities
Current
liabilities
Trade and
other
payables 16 (4,676) (4,753) (5,159) - -
Lease
liabilities (1,298) (1,171) (1,035) - -
Taxation (368) (339) (612) - -
(6,342) (6,263) (6,806) - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Non-current
liabilities
Borrowings 18 (50,705) (42,331) (37,170) - -
Lease
liabilities 10 (11,158) (12,455) (13,627) - -
Deferred tax 20 (26,760) (22,385) (19,735) - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
(88,623) (77,171) (70,532) - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Total
liabilities (94,965) (83,434) (77,338) - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Net assets 121,382 116,550 102,862 28,419 17,040
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Equity
Equity
attributable
to owners of
the parent
Called up
share
capital 21 297 296 295 297 296
Share premium 10,560 10,490 10,350 10,560 10,490
Other
reserves 23 8,455 8,357 8,363 1,912 1,838
Retained
earnings 24 26,095 26,301 18,955 15,650 4,416
Revaluation
reserve 75,975 71,106 64,899 - -
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
Total
equity 121,382 116,550 102,862 28,419 17,040
-------------- ------ ---------------- -------------------- -------------------- ------------------- -------------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
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 2020 was GBP14.8 million (2019: GBP3.8
million).
Approved by the Board of Directors and authorised for issue on
30 October 2020 and signed on its behalf by:
Andrew Jacobs Ray Davies
Chief Executive Officer Finance Director
Consolidated Statement of Cash Flows
For the year ended 31 July 2020
Group Group
Year ended Year ended
31 July 31 July
2020 2019
(Restated**)
Notes GBP'000 GBP'000
---------------------------------------- ------ ----------------- --------------
Operating activities
Cash generated from operations 26a 9,700 9,545
Income tax paid (893) (955)
--------------
Net cash from operating activities 8,807 8,590
Investing activities
Proceeds from disposal of discontinued
operation
(net of disposal costs and cash
included in sale) - 6,849
Proceeds of sale of land (net of
disposal costs) - 796
Proceeds of sale of store - 7,418
Purchase of property, plant and
equipment 11b (11,628) (14,029)
Acquisition of subsidiary (net of
cash acquired) - (1,069)
Interest received 29 31
---------------------------------------- ------ ----------------- --------------
Net cash used in investing activities (11,599) (4)
---------------------------------------- ------ ----------------- --------------
Financing activities
Proceeds from drawdown of new bank
facility - 42,971
Repayment of bank borrowings on
retiring bank facility - (42,395)
Proceeds of bank borrowings utilised
for store development 8,351 5,653
Finance costs paid on bank refinancing (113) (593)
Finance costs paid (1,074) (934)
Lease liabilities paid (1,467) (1,478)
Equity dividends paid (3,572) (3,279)
Proceeds from issuance of ordinary
shares (net) 71 141
Net cash from financing activities 2,196 86
Net (decrease) / increase in cash
and cash equivalents in the period (596) 8,672
Cash and cash equivalents at beginning
of the period 13,662 4,990
---------------------------------------- ------ ----------------- --------------
Cash and cash equivalents at end
of the period 13,066 13,662
---------------------------------------- ------ ----------------- --------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
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 . 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 2020 and 31 July 2019, both of which are
audited. The Preliminary Announcement is prepared on the same basis
as set out in the statutory accounts for the year ended 31 July
2020. While the financial information included in this Preliminary
Announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRS), as adopted by the European Union (EU), this
announcement does not in itself contain sufficient information to
comply with IFRSs.
The statutory accounts for the year ended 31 July 2020 have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and International Financial Reporting
Interpretations Committee (IFRIC) Interpretations as adopted by the
European Union and comply with those parts of the Companies Act
2006 that are applicable to companies reporting under IFRS. The
Group has applied all accounting standards and interpretations
issued by the International Accounting Standards Board and
International Financial Reporting Interpretation Committee relevant
to its operations and effective for accounting periods beginning on
or after 1 August 2019. The statutory accounts for the year ended
31 July 2020 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.
Statutory accounts for the year ended 31 July 2019 have been
filed with the Registrar of Companies. The auditor's report for the
year ended 31 July 2020 was unqualified, did not include a
reference to any matter to which the auditor drew attention by way
of emphasis without qualifying their report and did not contain any
statement under section 498(2) or (3) of the Companies Act
2006.
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 adopted in the year
IFRS 16, (Leases Accounting) The Group has applied IFRS 16 for
the first time in this financial year. IFRS 16 introduces
significant changes to lessee accounting by removing the
distinction between operating and finance leases and requiring the
recognition of a Right of Use Asset and a corresponding lease
liability in the Statement of Financial Position.
The prior year financial comparatives contained within these
statements have been restated to reflect the first-time adoption of
IFRS 16 which changes previously reported EBITDA, interest and
depreciation numbers in the Statement of Comprehensive Income.
Further details of these restatements can be found in note 1.
Standards in issue but not yet effective
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. These standards,
which are effective for annual periods beginning on or after 1
January 2020 have been adopted by the EU unless otherwise
stated.
-- Amendments to References to the Conceptual Framework in IFRS Standards;
-- Amendments to IFRS 16, Covid-19 rent concession (effective 1 June 2020);
-- Amendments to IFRS 3, definition of a business;
-- IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors: Definition of Material;
-- IAS 1 Presentation of Liabilities (effective 1 January 2023 - not EU endorsed)
The Directors do not anticipate that the adoption of these
revised standards 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.
Goodwill
Goodwill arising on consolidation represents the excess of the
consideration transferred, the amount of any non-controlling
interest and the fair value of any previous interest in the
acquired entity over the fair value of the identifiable assets and
liabilities of a subsidiary at the date of acquisition. Goodwill is
recognised as a non-current asset.
Any deficiency of the consideration transferred, the amount of
any non-controlling interest and the fair value of any previous
interest in the acquired entity below the fair value of
identifiable assets and liabilities of a subsidiary (i.e. discount
on acquisition) is recognised directly in profit or loss.
Goodwill is reviewed for impairment at least annually. For the
purposes of impairment testing, assets are grouped at the lowest
levels for which there are separately identifiable cash flows,
known as cash generating units, and goodwill is allocated to these
units. If the recoverable amount of the cash generating unit is
less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the
unit. Impairment losses in relation to goodwill are recognised
immediately in profit or loss and are not reversed in subsequent
periods.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset or CGU
for which the estimate of future cash flows have not been
adjusted.
Going concern
The Directors can report that, based on the Group's budgets and
financial projections, which include the expected impact of
Covid-19 on the Group, they have satisfied themselves that the
business is a going concern. The impact of Covid-19 and the
measures the Directors have taken to mitigate its effects are set
out in ' Our Covid-19 safe response' section in the Managing
Directors 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 GBP13.1 million (2019:
GBP13.7 million), undrawn committed bank facilities at 31 July 2020
of GBP23.7 million (2019: GBP32.0 million), and cash generated from
operations in the year ended 31 July 2020 of GBP 9.7 million (2019:
GBP9.5 million).
The Group has a bank facility of GBP75 million, with a further
uncommitted GBP25 million accordion option taking the facility to
GBP100 million. The increased facility will provide funding for new
landmark site acquisitions and working capital to support the
Group's ambitious growth plans .
The facility is a combined agreement with Lloyds Bank and The
Royal Bank of Scotland plc and runs until April 2025 with an option
for a further one year extension. The interest rate is set at the
London Inter-Bank Offer Rate (LIBOR) plus a 1.50%-1.75% margin
based on a loan to value covenant test.
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.
a) Self-storage revenue
Self-storage services are provided on a time basis. The price at
which customers store their goods is dependent on size of unit and
store location. Customers are invoiced on a four-weekly cycle in
advance and revenue is recognised based on time stored to date
within the cycle. When customers vacate they are rebated the
unexpired portion of their four weekly advance payment (subject to
a seven day notice requirement). Revenue is recognised evenly over
the period of self-storage.
b) Retail sales
The Group operates a packaging shop within each of its storage
centres for selling storage related goods such as boxes, tape and
bubble-wrap. Sales include sales to the public at large as well as
self-storage customers. Sales of goods are recognised at point of
sale when the product is sold to a customer.
c) Insurance
Customers may choose to insure their goods in storage. The
weekly rate of insurance charged to customers is calculated based
on the tariff per week for each GBP1,000 worth of goods stored by
the customer. This charge is retained by Lok'nStore and covers the
cost of the block policy and other costs. Customers are invoiced on
a four-weekly basis for the insurance cover they use and revenue is
recognised based on time stored to date within the cycle.
The Group provides insurance to customers through a block policy
purchased from its insurer. Block policyholders supply VAT exempt
insurance transactions as principals rather than insurance related
services as intermediaries and accordingly insurance income
received from the customer is recognised as revenue rather than
offset against the costs of the block policy.
The key characteristics of a block policy are that:
-- There is a contract between the block policyholder and the
insurer which allows the block policyholder to effect insurance
cover subject to certain conditions
-- The Group acting in our own name as the block policyholder
procures insurance cover for third parties from the insurer
-- There is a contractual relationship between the block
policyholder and third parties under which the insurance is
procured
-- The block policyholder stands in place of the insurer in
effecting the supply of insurance to the third parties
-- The Group is not exposed to any insured losses arising from
its insurance activity.
d) Management fee income
Management fees earned for managing stores not owned by the
Group are recognised over the period for which the services are
provided. Fees are invoiced monthly based on revenue performance.
Additional performance fees may be earned if an individual Managed
Store 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.
IFRS 16 - Leases
Leases - the Group as lessee
Initial and subsequent measurement of the Right of Use Asset
A Right of Use Asset is recognised at commencement of the lease
and initially measured at the amount of the lease liability, plus
any incremental costs of obtaining the lease and any lease payments
made at or before the leased asset is available for use by the
group.
The Right of Use Asset is subsequently measured at cost less
accumulated depreciation and any accumulated impairment losses. The
depreciation methods applied are as follows:
-- Leased property - on a straight-line basis over the shorter of the lease term.
The Right of Use Asset is adjusted for any re-measurement of the
lease liability and lease modifications, as set out below.
Initial recognition of the lease liability
On commencement of a contract (or part of a contract) which
gives the group the right to use an asset for a period of time in
exchange for consideration, the group recognises a Right of Use
Asset and a lease liability unless the lease qualifies as a
'short-term' lease or a 'low-value' lease.
Where the lease term is twelve months or less and the lease does
not contain an option to purchase the leased asset, lease payments
are recognised as an expense on a straight-line basis over the
lease term.
Leases where the underlying asset is 'low-value', lease payments
are recognised as an expense on a straight-line basis over the
lease term.
Initial measurement of the lease liability
The lease liability is initially measured at the present value
of the lease payments during the lease term discounted using the
interest rate implicit in the lease, or the incremental borrowing
rate if the interest rate implicit in the lease cannot be readily
determined.
The lease term is the non-cancellable period of the lease plus
extension periods that the group is reasonably certain to exercise
and termination periods that the group is reasonably certain not to
exercise.
Lease payments include fixed payments, less any lease incentives
receivable, variable lease payments dependant on an index or a rate
(such as those linked to LIBOR) and any residual value guarantees.
Variable lease payments are initially measured using the index or
rate when the leased asset is available for use.
Subsequent measurement of the lease liability
The lease liability is subsequently increased for a constant
periodic rate of interest on the remaining balance of the lease
liability and reduced for lease payments. Interest on the lease
liability is recognised in profit or loss, unless interest is
directly attributable to qualifying assets, in which case it is
capitalised in accordance with the Group's policy on borrowing
costs.
Re-measurement of the lease liability
The lease liability is adjusted for changes arising from the
original terms and conditions of the lease that change the lease
term, the group's assessment of its option to purchase the leased
asset, the amount expected to be payable under a residual value
guarantee and/or changes in lease payments due to a change in an
index or rate. The adjustment to the lease liability is recognised
when the change takes effect and is adjusted against the Right of
Use Asset, unless the carrying amount of the Right of Use Asset is
reduced to nil, when any further adjustment is recognised in profit
or loss.
Adjustments to the lease payments arising from a change in the
lease term or the lessee's assessment of its option to purchase the
leased asset are discounted using a revised discount rate. The
revised discount rate is calculated as the interest rate implicit
in the lease for the remainder of the lease term, or if that rate
cannot be readily determined, the lessee's incremental borrowing
rate at the date of reassessment.
Lease modifications
A lease modification is a change that was not part of the
original terms and conditions of the lease and is accounted for as
a separate lease if it increases the scope of the lease by adding
the right to use one or more additional assets with a commensurate
adjustment to the payments under the lease.
For a lease modification not accounted for as a separate lease,
the lease liability is adjusted for the revised lease payments,
discounted using a revised discount rate. The revised discount rate
use is the interest rate implicit in the lease for the remainder of
the lease term, or if that rate cannot be readily determined, the
lessee company's incremental borrowing rate at the date of the
modification.
Where the lease modification decreases the scope of the lease,
the carrying amount of the Right of Use Asset is reduced to reflect
the partial or full termination of the lease. Any difference
between the adjustment to the lease liability and the adjustment to
the Right of Use Asset is recognised in profit or loss.
For all other lease modifications, the adjustment to the lease
liability is recognised as an adjustment to the Right of Use
Asset.
Critical accounting estimates and judgements
The preparation of 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 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.
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 11b. The carrying value of land and buildings held at
valuation at the reporting date was GBP 141.4 million (2019:
GBP133.5 million) as shown in the table in note 11b.
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 net lettable storage space that it can achieve in its
planning negotiations, together with the time it will take to
achieve maturity occupancy level. In addition, assumptions are made
on the storage fees that can be achieved at the store by comparison
with other stores within the portfolio and within the local area.
These judgements, taken together with estimates of operating costs
and the projected construction cost, allow the Group to calculate
the potential net operating income at maturity, projected returns
on capital invested and hence to support the purchase price of the
site at acquisition. Following the acquisition, regular reviews are
carried out taking into account the status of the planning
negotiations, and revised construction costs or capacity of the new
facility, for example, to make an assessment of the recoverable
amount of the development property. The Group reviews all
development property assets for impairment at each reporting date
in the light of the results of these reviews. Once a store is
opened it is valued as a trading store.
The carrying value of development property assets at the
reporting date was GBP29.9 million (2019: GBP18.4 million). Please
see note 11b 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 holding of land is not a core
activity.
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 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. All of this
trading 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.
Furthermore, 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 35 stores
mainly in Southern England. Of the 35 stores, Lok'nStore owns the
freehold interest in 15 stores, 8 of the stores are held under
commercial leases, with the remaining 12 managed stores operating
under management contracts for third party owners. 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 2020 (net deferred of tax) of
GBP5.6 million (2019: GBP11.4 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 similar asset, adjusted for the term of
the lease.
Notes to the Financial Statements
For the year ended 31 July 2020
1 Implementation of IFRS 16 - Leases
IFRS 16 represents a significant change to the way that the
Group prepares its financial statements. The effective date of
adoption is for accounting periods commencing after 1 January 2019
and the standard therefore applies to Lok'nStore's financial
statements for the year ended 31 July 2020 and has been applied in
these financial statements using the full retrospective
approach.
IFRS 16 primarily affects the accounting by lessees and results
in the recognition of the value of almost all leases on the balance
sheet. The standard removes the current distinction between
operating and financing leases and requires recognition of an asset
(the right to use the leased item) and a financial liability to pay
rentals.
The application of IFRS 16 relates to the Groups property
leases. The Group has no leases on any other types of assets.
The Statement of Financial Position: The Group's leases on its
leased stores are recognised as a 'Right of Use Asset' and as a
corresponding liability at the year-end. Each lease payment is
allocated between the liability element and the finance cost
element. The finance costs are charged to profit and loss over the
lease period so as to produce a constant periodic rate of interest
on the remaining liability for the period. The Right of Use Asset
is depreciated on a weighted depreciation charge based on the
individual lease term of the separate leases . Assets and
liabilities arising from a lease will initially be measured on a
present value basis which will include the fixed rental payments
less any lease incentives receivable. If the interest rate implicit
in the lease cannot be readily determined the lease payments will
be discounted by the Group's incremental borrowing rate (cost of
debt) to obtain an asset of similar value over a similar term with
similar security. Right of Use Assets will be measured at
cost comprising the initial measurement of the lease liability
plus any initial direct costs (if any). The Group's current
property lease commitments are reported in Note 27.
The Statement of Profit or Loss: This is affected because the
total expense is typically higher in the earlier years of a lease
and lower in later years. Additionally, the rent operating expense
that would usually be reported in these financial statements at
GBP1.47 million (2019: GBP1.36 million) is replaced with interest
and depreciation as a consequence of the 'capitalisation effect' of
the leases, so the Group's key metric of Adjusted EBITDA increases
significantly by the removal of the rent expense from the operating
profit and loss. Other performance measures including Operating
Profit also increases although reported interest and depreciation
will be higher. Accordingly, the key metrics and Alternative
Performance Measures (APM's) have been updated for IFRS16 in the
KPI's section above.
The Consolidated Statement of Cash Flows: While overall
underlying cash flow is unaffected by the changes the presentation
within the Consolidated Statement of Cash Flows will change.
Reported operating cash flows will be higher as cash payments for
the principal portion of the lease liability are classified within
financing activities.
The effect on financial ratios such as gearing or leverage
causes them to rise as the lease liability now forms part of net
debt.
To give a broad overview of the numerical effect on the
implementation of IFRS 16 as it would apply to the current period
and comparative numbers we have:
Group Group
31 July 31 July
2020 2019
GBP'000 GBP'000
---------------------------------- --------- ---------
Continuing operations
Rents payable under leases 1,467 1,356
---------------------------------- --------- ---------
Discontinued operations
Rents payable under leases - 122
---------------------------------- --------- ---------
Total rents payable under leases 1,467 1,478
---------------------------------- --------- ---------
To ensure consistency and effective comparison with prior
periods, the Group has elected to apply the full retrospective
implementation approach with restatement of the comparative
information. The transition date of initial application is
therefore 1 August 2018. 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% as
an effective cost of debt as the discount rate. This calculates an
opening Right of Use Asset (ROU) as at 1 August 2018 of GBP14.27
million. Correspondingly this is also the opening value of the
lease liability following the capitalisation of the leases.
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% as part of the amortisation of the
lease liability a reconciliation of the total leases to the IFRS
lease liability is shown below:
Continuing Operations Group Group Group
Statement of Financial Position (extract) 31 July 31 July 31 July
2020 2019 2018
GBP'000 GBP'000 transition
GBP'000
IFRS 16 IFRS 16 IFRS 16
Restated Restated
Right of Use Asset (ROU) 11,764 13,018 14,273
Equity - accumulated effect of restatement 692 608 389
-------------------------------------------- --------- --------- ------------
12,456 13,626 14,662
-------------------------------------------- --------- --------- ------------
Current Lease Liability
Amounts due within one year 1,298 1,171 1,035
Non-current Lease Liability
Amounts due in one to two years 1,327 1,298 1,171
Amounts due in three to five years 2,881 3,352 3,709
Amounts due in more than five years 6,950 7,805 8,747
-------------------------------------------- --------- --------- ------------
Non-current Lease Liability 11,158 12,455 13,627
-------------------------------------------- --------- --------- ------------
Total lease liability 12,456 13,626 14,662
-------------------------------------------- --------- --------- ------------
Statement of Comprehensive Income Group Group Group
(extract) 31 July 31 July 31 July
2020 2019 2018
GBP'000 GBP'000 transition
GBP'000
IFRS 16 IFRS 16 IFRS 16
Restated Restated
** **
Operating lease expense 1,467 1,356 1,191
Depreciation of Right of Use Asset
(ROU) (1,254) (1,254) (1,254)
------------------------------------- --------- --------- ------------
Interest charged on lease liability (296) (321) (325)
Impact on Comprehensive Income (83) (219) (389)
------------------------------------- --------- --------- ------------
Analysis of the effect within the Group Group Group
Statement of Comprehensive Income 31 July 31 July 31 July
2020 2019 2018
transition
GBP'000 GBP'000 GBP'000
IFRS 16 IFRS 16 IFRS 16
Restated Restated
** **
Increase in EBITDA 1,467 1,356 1,191
Increase / (decrease) in operating
profit 213 101 (64)
------------------------------------ --------- --------- ------------
Increase / (decrease) in PBT (83) (219) (389)
------------------------------------ --------- --------- ------------
The Group has applied a single discount rate equivalent to its
effective cost of debt. For more detailed information on the Groups
cash commitments under its property leases refer to note 27
(Commitments under property leases).
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2019
Notes Year ended Year ended
31 July Impact of 31 July
2019
2019 IFRS 16 (Restated)
GBP'000 GBP'000 GBP'000
----------------------------------------- ------ ------------------- --------------------- ---------------
Revenue 2 16,950 - 16,950
Total property, staff, distribution
and general costs 3a (9,557) 1,356 (8,201)
----------------------------------------- ------ ------------------- --------------------- ---------------
Adjusted EBITDA(1) 7,393 1,356 8,749
----------------------------------------- ------ ------------------- --------------------- ---------------
Amortisation of intangible assets (83) - (83)
Depreciation (2,207) (1,254) (3,461)
Equity settled share based payments (46) - (46)
----------------------------------------- ------ ------------------- --------------------- ---------------
(2,336) (1,254) (3,590)
----------------------------------------- ------ ------------------- --------------------- ---------------
Profit on sale of land at store 3(c) 295 - 295
Costs of sale and manage-back
of Crayford store 3(c) (54) - (54)
Deferred financing on bank loan
written off 3(c) (133) - (133)
------------------- ---------------------
108 - 108
---------------
(2,228) (1,254) (3,482)
Operating profit 5,165 102 5,267
Finance income 4 31 - 31
Finance cost - bank borrowings 5 (605) - (605)
Finance cost - lease liabilities 5 - (321) (321)
----------------------------------------- ------ ------------------- --------------------- ---------------
(574) (321) (895)
Profit (loss) before taxation 4,591 (219) 4,372
Income tax expense 8 (1,211) - (1,211)
----------------------------------------- ------ ------------------- --------------------- ---------------
Profit for the period from continuing
operations 3,380 (219) 3,161
Profit for the period from discontinued
operations 12 2,182 - 2,182
Profit for the period 5,562 (219) 5,343
----------------------------------------- ------ ------------------- --------------------- ---------------
Profit attributable to:
Owners of the parent 24 5,562 (219) 5,343
Other Comprehensive Income
Items that will not be reclassified
to profit and loss
Increase in property valuation 13,765 - 13,765
Deferred tax relating to change
in property valuation (2,327) - (2,327)
---------------
11,438 - 11,438
Items that may be subsequently
reclassified to profit and loss
Other comprehensive income 11,438 - 11,438
----------------------------------------- ------ ------------------- --------------------- ---------------
Total comprehensive income for
the period 17,000 (219) 16,781
----------------------------------------- ------ ------------------- --------------------- ---------------
Attributable to:
Owners of the parent 17,000 (219) 16,781
------------------------ --------- -------- ---------
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2019
Year ended
Year ended Impact of 31 July
2019
31 July IFRS 16 (Restated)
2019 GBP'000 GBP'000
Earnings per share attributable GBP'000
to owners of the Parent
------------------- -------------------- ------------
Basic 10
Continuing operations 11.69p (0.76p) 10.93p
Discontinued operations 7.55p - 7.55p
---------------------------------- --- ------------------- -------------------- ------------
Total basic earnings per share 19.24p (0.76p) 18.48p
---------------------------------- --- ------------------- ------------
Diluted 10
Continuing operations 11.50p (0.75p) 10.75p
Discontinued operations 7.42p - 7.42p
---------------------------------- --- ------------------- -------------------- ------------
Total diluted earnings per share 18.92p (0.75p) 18.17p
---------------------------------- --- ------------------- -------------------- ------------
(1) Adjusted EBITDA is defined in the accounting policies
section of the notes to the financial report.
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Financial Position
31 July 2019
31 July
31 July Impact of 2019
2019 IFRS 16 (Restated)
Notes GBP'000 GBP'000 GBP'000
------------------------------ ----------- -------------------- -------------------------------- --------------------
Assets
Non-current assets
Property, plant and equipment 11b 168,938 - 168,938
Financial assets 361 - 361
Right of Use Assets 11c - 13,018 13,018
------------------------------ ----------- -------------------- -------------------------------- --------------------
169,299 13,018 182,317
------------------------------ ----------- -------------------- -------------------------------- --------------------
Current assets
Inventories 14 298 - 298
Trade and other receivables 15 3,707 - 3,707
Cash and cash equivalents 13,662 - 13,662
------------------------------ ----------- -------------------- -------------------------------- --------------------
Total current assets 17,667 - 17,667
------------------------------ ----------- -------------------- -------------------------------- --------------------
Total assets 186,966 13,018 199,984
------------------------------ ----------- -------------------- -------------------------------- --------------------
Liabilities
Current liabilities
Trade and other payables 16 (4,753) - (4,753)
Lease liabilities - (1,171) (1,171)
Taxation (339) - (339)
(5,092) (1,171) (6,263)
------------------------------ ----------- -------------------- -------------------------------- --------------------
Non-current liabilities
Borrowings 18a (42,331) - (42,331)
Lease liabilities 19 - (12,455) (12,455)
Deferred tax 20 (22,385) - (22,385)
------------------------------ ----------- -------------------- -------------------------------- --------------------
(64,716) (12,455) (77,171)
------------------------------ ----------- -------------------- -------------------------------- --------------------
Total liabilities (69,808) ( 13,626) (83,434)
------------------------------ ----------- -------------------- -------------------------------- --------------------
Net assets 117,158 (608) 116,550
------------------------------ ----------- -------------------- -------------------------------- --------------------
Equity
Equity attributable to owners
of the parent
Called up share capital 21 296 - 296
Share premium 10,490 - 10,490
Other reserves 23 8,357 - 8,357
Retained earnings 24 26,909 (608) 26,301
Revaluation reserve 71,106 - 71,106
------------------------------ ----------- -------------------- -------------------------------- --------------------
Total equity 117,158 (608) 116,550
------------------------------ ----------- -------------------- -------------------------------- --------------------
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2018
Notes Year ended Year ended
31 July Impact of 31 July
2018
2018 IFRS 16 (Restated**)
GBP'000 GBP'000 GBP'000
----------------------------------------- ------- ------------------- --------------------- ---------------
Revenue 15,372 - 15,372
Total property, staff, distribution
and general costs (8,739) 1,190 (7,549)
-------------------------------------------------- ------------------- --------------------- ---------------
Adjusted EBITDA(1) 6,633 1,190 7,823
-------------------------------------------------- ------------------- --------------------- ---------------
Amortisation of intangible assets (165) - (165)
Depreciation (1,880) (1,254) (3,134)
Equity settled share based payments (33) - (33)
-------------------------------------------------- ------------------- --------------------- ---------------
(2,078) (1,254) (3,332)
------------------------------------------------- ------------------- --------------------- ---------------
Carried interest - fees receivable 361 - 361
Receivables from warranty claims 230 - 230
591 - 591
---------------
(1,487) (1,254) (2,741)
Operating profit 5,146 (64) 5,082
Finance income 80 - 80
Finance cost - bank borrowings (463) - (463)
Finance cost - lease liabilities - (325) (325)
-------------------------------------------------- ------------------- --------------------- ---------------
(383) (325) (708)
Profit (loss) before taxation 4,763 (389) 4,374
Income tax expense (1,459) - (1,459)
-------------------------------------------------- ------------------- --------------------- ---------------
Profit for the period from continuing
operations 3,304 (389) 2,915
Profit for the period from discontinued
operations 453 - 453
Profit for the period 3,757 (389) 3,368
-------------------------------------------------- ------------------- --------------------- ---------------
Profit attributable to:
Owners of the parent 3,757 (389) 3,368
Other Comprehensive Income
Items that will not be reclassified
to profit and loss
Increase in property valuation 15,723 - 15,723
Deferred tax relating to change
in property valuation (2,698) - (2,698)
---------------
13,025 - 13,025
Items that may be subsequently
reclassified to profit and loss
Other comprehensive income 13,025 - 13,025
-------------------------------------------------- ------------------- --------------------- ---------------
Total comprehensive income for
the period 16,782 (389) 16,393
-------------------------------------------------- ------------------- --------------------- ---------------
Attributable to:
Owners of the parent 16,782 (389) 16,393
------------------------ --------- -------- ---------
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2018
Year ended
Year ended Impact of 31 July
2018
31 July IFRS 16 (Restated)
2018 GBP'000 GBP'000
Earnings per share attributable GBP'000
to owners of the Parent
------------------- -------------------- ------------
Basic 10
Continuing operations 11.48p (1.35p) 10.13p
Discontinued operations 1.57p - 1.57p
---------------------------------- --- ------------------- -------------------- ------------
Total basic earnings per share 13.05p (1.35p) 11.70p
---------------------------------- --- ------------------- ------------
Diluted 10
Continuing operations 11.28p (1.32p) 9.96p
Discontinued operations 1.55p - 1.55p
---------------------------------- --- ------------------- -------------------- ------------
Total diluted earnings per share 12.83p (1.32p) 11.51p
---------------------------------- --- ------------------- -------------------- ------------
(1) Adjusted EBITDA is defined in the accounting policies
section of the notes to the financial report.
Reconciliation of the impact of IFRS16 on the previously
reported
Consolidated Statement of Financial Position
31 July 2018
31 July
31 July Impact of 2018
2018 IFRS 16 (Restated)
Notes GBP'000 GBP'000 GBP'000
---------------------------- -------- -------------------- -------------------------------- --------------------
Assets
Non-current assets
Intangible assets 3,263 - 3,263
Property, plant and equipment 152,580 - 152,580
Financial assets 361 - 361
Right of Use Assets - 14,273 14,273
-------------------------------------- -------------------- -------------------------------- --------------------
156,204 14,273 170,477
-------- -------------------- -------------------------------- --------------------
Current assets
Inventories 257 - 257
Trade and other receivables 4,476 - 4,476
Cash and cash equivalents 4,990 - 4,990
-------------------------------------- -------------------- -------------------------------- --------------------
Total current assets 9,723 - 9,723
-------------------------------------- -------------------- -------------------------------- --------------------
Total assets 165,927 14,273 180,200
-------------------------------------- -------------------- -------------------------------- --------------------
Liabilities
Current liabilities
Trade and other payables (5,159) - (5,159)
Lease liabilities - (1,035) (1,035)
Taxation (612) - (612)
(5,771) (1,035) (6,806)
-------- -------------------- -------------------------------- --------------------
Non-current liabilities
Borrowings (37,170) - (37,170)
Lease liabilities - (13,627) (13,627)
Deferred tax (19,735) - (19,735)
-------------------------------------- -------------------- -------------------------------- --------------------
(56,905) (13,627) (70,532)
-------- -------------------- -------------------------------- --------------------
Total liabilities (62,676) ( 14,662) (77,338)
-------------------------------------- -------------------- -------------------------------- --------------------
Net assets 103,251 (389) 102,862
-------------------------------------- -------------------- -------------------------------- --------------------
Called up share capital 295 - 295
Share premium 10,350 - 10,350
Other reserves 8,363 - 8,363
Retained earnings 19,344 (389) 18,955
Revaluation reserve 64,899 - 64,899
----------------------------- ------- -------------------- -------------------------------- --------------------
Total equity 103,251 (389) 102,862
----------------------------- ------- -------------------- -------------------------------- --------------------
2 Revenue
Analysis of the Group's revenue is shown below:
Group Group
Stores trading 2020 2019
GBP'000 GBP'000
Self-storage revenue 15,126 14,235
Insurance revenue 1,663 1,533
Retail sales 201 241
Total self-storage revenue - owned stores 16,990 16,009
Ancillary store revenue 4 44
Management fees - managed stores 991 817
---------------------------------------------- --------- ---------
Sub-total 17,985 16,870
Non-storage income 56 80
---------------------------------------------- --------- ---------
Total revenue per statement of comprehensive
income 18,041 16,950
---------------------------------------------- --------- ---------
The Group's serviced archive and record management segment was
sold in the prior year and is presented as a discontinued operation
(see note 12). Following the disposal, the Group has one operating
segment, being self-storage in the UK.
3(a) Property, staff, distribution and
general costs
Group
Group 2019
2020 GBP'000
GBP'000 Restated **
----------------------------------------- --------- --------------------------------------
Property and premises costs 4,392 4,022
IFRS 16 restatement - leases (1,467) (1,356)
----------------------------------------- --------- --------------------------------------
Restated property and premises costs 2,925 2,666
Staff costs 4,196 4,111
General overheads 1,139 1,244
----------------------------------------- --------- --------------------------------------
Sub-total operating costs 8,260 8,021
Retail products cost of sales (see note
3b) 127 180
----------------------------------------- --------- --------------------------------------
8,387 8,201
----------------------------------------- --------- --------------------------------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
3(b) 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
2020 2019
GBP'000 GBP'000
----------- --------- ---------
Retail 98 121
Insurance 13 26
Other 16 33
----------- --------- ---------
127 180
----------- --------- ---------
3(c) Other income and costs
Group Group
2020 2019
GBP'000 GBP'000
----------------------------------------- ---------- ---------
Profit on sale of land at store (1) - (295)
Costs of sale and manage-back Crayford
store (2) - 54
Deferred financing on bank loan written
off (3) - 133
----------------------------------------- ---------- ---------
- (108)
---------------------------------------------------- ---------
(2019) (:)
(1 Profit on sale of land at store:) (During the year land at
the rear of our Southampton store with a fair value of GBP500,000
was sold for GBP800,000. There was GBP4,043 of associated costs of
sale.)
(2) (Costs of sale and manage-back Crayford store:) (On 28th
February 2019 the Crayford store was sold at its fair value to an
investment fund for GBP7.52 million in cash. Lok'nStore will
continue to manage the store maintaining the operational footprint
of the business and will receive management and performance fees.
Legal and professional costs associated with this transaction
amounted to GBP) (54,483.)
(3) (Deferred financing on bank loan written off.) (In April
2019, the Group executed a new bank facility increasing facilities
available by GBP25 million to GBP75 million, with a further GBP25
million accordion option taking the facility to GBP100 million. The
deferred element of the original financing costs of GBP133,307 was
accordingly written off.)
4 Finance income
Group Group
2020 2019
GBP'000 GBP'000
---------------- --------- ---------
Bank interest 29 24
Other interest - 7
29 31
---------------- --------- ---------
Interest receivable arises on cash and cash equivalents (see
note 17).
5 Finance costs
Group
Group 2019
2020 GBP'000
GBP'000 Restated **
------------------------------- --------- -------------
Bank interest 510 452
Non-utilisation fees 183 89
Bank loan arrangement fees 137 64
Interest on lease liabilities 296 321
1,126 926
------------------------------- --------- -------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
6 Profit before taxation
Group
Group 2019
2020 GBP'000
GBP'000 Restated**
------------------------------------------------ --------- ------------
Profit before taxation is stated after
charging:
Depreciation and amounts written off property,
plant and equipment:
Owned assets 2,525 2,207
Depreciation of Right of Use Assets (IFRS
16) (note 1) 1,254 1,254
------------------------------------------------ --------- ------------
3,779 3,461
Amortisation of intangible assets - 83
3,779 3,544
------------------------------------------------ --------- ------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
Amounts payable to RSM UK Audit LLP and their associates for
audit and non-audit services:
Group Group
2020 2019
GBP'000 GBP'000
--------- ---------
Audit services
- UK statutory audit of the Company and
consolidated accounts 68 66
Other services
Other services supplied pursuant to such
legislation
- interim review 9 12
- other services - 3
Tax services
- compliance services 23 23
- advisory services 9 31
109 135
------------------------------------------ ---- ----
Comprising:
Audit services 68 66
Non-audit services 41 69
109 135
------------------------------------------ ---- ----
7 Employees
Group Group
2020 2019
No. No.
-------------------------------------------------- ------ ------
The average monthly number of persons (including
Directors) employed by the Group during
the year was:
Store management 142 132
Administration 25 24
-------------------------------------------------- ------ ------
167 156
-------------------------------------------------- ------ ------
Group Group
2020 2019
GBP'000 GBP'000
------------------------------------ --------- ---------
Costs for the above persons:
Wages and salaries 3,580 3,446
Social security costs 440 424
Pension costs 114 85
------------------------------------ --------- ---------
4,134 3,955
Share based remuneration (options) 88 46
------------------------------------ --------- ---------
4,222 4,001
------------------------------------ --------- ---------
Share based remuneration is separately disclosed in the
statement of comprehensive income. Wages and salaries of GBP91,815
(2019: GBP90,436) 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 GBP15,183 (2019:
GBP13,217) outstanding at the year-end.
There were no employees employed by Lok'nStore Group Plc in the
year (2019: nil).
Gains
on
Directors' share
Remuneration Emoluments Bonuses Benefits Sub total Pension options Total
2020 GBP GBP GBP GBP GBP GBP GBP
Executive:
A Jacobs 225,233 36,500 6,107 267,840 - - 267,840
RA Davies 165,797 13,300 4,845 183,942 6,631 - 190,573
N Newman-Shepherd 82,877 40,345 2,560 125,782 3,315 172,358 301,455
Non-Executive:
SG Thomas 31,518 - 4.808 36,326 - - 36,326
RJ Holmes 22,743 - - 22,743 - - 22,743
ETD Luker 28,430 - - 28,430 - - 28,430
CP Peal 22,743 - - 22,743 - - 22,743
579,341 90,145 18,320 687,806 9,946 172,358 870,110
------------------- ----------- --------- --------- ------------ ------------- ---------- ----------
Gains
on
Directors' share
Remuneration Emoluments Bonuses Benefits Sub total Pension options Total
2019 GBP GBP GBP GBP GBP GBP GBP
Executive:
A Jacobs 220,816 38,250 5,435 264,501 - - 264,501
RA Davies 160,968 22,641 4,612 188,221 4,829 - 193,050
N Newman-Shepherd 78,931 64,034 2,364 145,329 2,631 - 147,960
Non-Executive:
SG Thomas 30,900 - 4,804 35,704 - 40,580 76,284
RJ Holmes 22,297 - - 22,297 - - 22,297
ETD Luker 27,873 - - 27,873 - - 27,873
CP Peal 22,297 - - 22,297 - - 22,297
564,082 124,925 17,215 706,222 7,460 40,580 754,262
------------------- ----------- ---------- --------- ------------ -------- --------- ----------
Details of the Directors remuneration is shown above. Key
management personnel are defined as the Directors of the Group and
the additional participants in the Partnership Performance Plan
(PPP) .
The highest paid Director did not accrue any pension rights
during the year. 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
(2019: two).
8 Taxation
Group
Group 2019
2020 GBP'000
GBP'000 Restated**
Current tax:
UK corporation tax 920 811
--------------------------------------------------- --------- ------------
Deferred tax:
Origination and reversal of temporary differences 730 400
Adjustments in respect of prior periods 66 -
Total deferred tax 796 400
--------------------------------------------------- --------- ------------
Income tax expense for the year 1,716 1,211
--------------------------------------------------- --------- ------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
The charge for the year can be reconciled to the profit for the
year as follows:
2019
2020 GBP'000
GBP'000 Restated**
Profit before tax 4,690 4,372
Tax on ordinary activities at the effective standard
rate of corporation tax in the UK of 19% (2019:
19%) 931 880
Expenses not deductible for tax purposes - 18
Depreciation of non-qualifying assets 229 355
Share based payment charges in excess of corresponding
tax deduction 17 2
Impact of change in tax rate on closing deferred 806 -
tax balances
Adjustments in respect of prior periods - deferred 66 -
tax
Impact of change in tax rate on timing differences (157) (17)
Write-back of over provision (153) -
Other (23) (27)
Income tax expense for the year 1,716 1,211
-------------------------------------------------------- --------- ------------
Effective tax rate 36% 28%
-------------------------------------------------------- --------- ------------
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 GBP3.7 million (2019: GBP2.3 million) has been
recognised as a debit/credit directly in other comprehensive income
(see note 20 on deferred tax). Impact of change in the tax rate on
closing deferred tax balances arises because the deferred tax
provision which used to be calculated at forward corporation tax
rates of 17% is now calculated at the substantively enacted
corporation tax rate and has therefore reverted to 19%.
9 Dividends
Amounts recognised as distributions to equity 2020 2019
holders in the year: GBP'000 GBP'000
Final dividend for the year ended 31 July 2018
(7.67 pence per share) - 2,217
Interim dividend for the year to 31 July 2019
(3.67 pence per share) - 1,062
Final dividend for the year ended 31 July 2019 2,413 -
(8.33 pence per share)
Interim dividend for the year to 31 July 2020 1,159 -
(4.00 pence per share)
3,572 3,279
------------------------------------------------- --------- ---------
In respect of the current year the Directors paid an interim
dividend of 4.0 pence per share to shareholders on 12 June 2020.
The Directors propose that a final dividend of 9.00 pence per share
will be paid to the shareholders. The total estimated final
dividend to be paid is GBP 2.6 million based on the number of
shares in issue at 16 October 2020 as adjusted for shares held in
the Employee Benefits Trust.
This is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these
financial statements. The ex-dividend date will be 26 November
2020; the record date 27 November 2020; with an intended payment
date of 8 January 2020. The final deadline for Dividend
Reinvestment Election (DRIP) is 11 December 2020.
10 Earnings per share
The calculations of earnings per share are based on the
following profits and numbers of shares.
Group
2019
Group GBP'000
2020 Restated
GBP'000 **
-------------------------------------------------- --------------- ---------------
Profit for the financial year attributable to
continuing operations 2,974 3,161
Profit for the financial year attributable to
discontinued operations - 2,182
-------------------------------------------------- --------------- ---------------
Total profit for the financial year attributable
to owners of the parent 2,974 5,343
-------------------------------------------------- --------------- ---------------
2020 2019
No. of shares No. of shares
-------------------------------------------------- --------------- ---------------
Weighted average number of shares
For basic earnings per share 28,976,967 28,921,229
Dilutive effect of share options(1) 517,257 481,848
-------------------------------------------------- --------------- ---------------
For diluted earnings per share 29,494,224 29,403,077
-------------------------------------------------- --------------- ---------------
(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. Details of share options are included in note
22 .
Group
Group 2019
2020 pence
Earnings per share pence Restated**
Basic
Continuing operations 10.26p 10.93p
Discontinued operations - 7.55p
---------------------------------- --------- ------------
Total basic earnings per share 10.26p 18.48p
---------------------------------- --------- ------------
Diluted
Continuing operations 10.08p 10.75p
Discontinued operations - 7.42p
---------------------------------- --------- ------------
Total diluted earnings per share 10.08p 18.17p
---------------------------------- --------- ------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
11(a) Intangible assets
Contractual
customer
Goodwill relationships Total
Group GBP'000 GBP'000 GBP'000
------------------------------------ ----------- --------------- ---------
Cost at 1 August 2018 1,110 3,309 4,419
Amortisation at 1 August 2018 - (1,156) (1,156)
Amortisation charge - (83) (83)
------------------------------------ ----------- --------------- ---------
Amortisation at 31 July 2019 - (1,239) (1,239)
------------------------------------ ----------- --------------- ---------
Disposal (1,110) (2,070) (3,180)
------------------------------------ ----------- --------------- ---------
Net book value at 31 July 2019 and - - -
31 July 2020
------------------------------------ ----------- --------------- ---------
All goodwill and customer relationships were allocated to the
serviced document storage cash-generating unit (CGU) identified as
a separate business segment.
In the previous year, on 31 January 2019 Lok'nStore disposed of
its serviced document storage business Saracen Datastore Limited
("Saracen") for GBP7.64 million in cash against its Net Book Value
as at 31 July 2018 of GBP5.4 million and which included the value
of the intangible assets. The recoverable amount exceeds the
carrying amount of the CGU .
11(b) Property, plant and equipment
Long
leasehold Fixtures,
Development Land and land and Short fittings
property buildings buildings leasehold and Motor
assets at at improvements equipment vehicles
at cost valuation valuation at cost at cost at cost Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------ ---------- ---------- ------------- ---------- ----------------- ---------
Cost or valuation
1 August 2018 16,570 108,486 11,438 2,648 27,186 17 166,345
Additions 6,667 2,804 1,493 162 2,744 20 13,890
Additions -
Acquisition
of subsidiary - - - 1,242 - - 1,242
Reclassification (4,185) 17,116 (12,931) - - - -
Transfers 6 (6) - - - - -
Disposals (616) (8,058) - - (1,109) - (9,783)
Disposals -
discontinued
operations - - - (84) (2,267) (7) (2,358)
Revaluations - 13,189 - - - - 13,189
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
31 July 2019 18,442 133,531 - 3,968 26,554 30 182,525
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
Depreciation
1 August 2018 - - - 1,979 11,772 14 13,765
Depreciation - 1,004 - 156 1,091 5 2,256
Disposals - (428) - - (726) - (1,154)
Disposals
-discontinued
operations - - - (57) (640) (7) (704)
Revaluations - (576) - - - - (576)
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
31 July 2019 - - - 2,078 11,497 12 13,587
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
Net book value
at 31 July 2019 18,442 133,531 - 1,890 15,057 18 168,938
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
Cost or valuation
1 August 2019 18,442 133,531 - 3,968 26,554 30 182,525
Additions 11,443 149 - 29 389 - 12,010
Disposals - - - - - (20) (20)
------------------
Revaluations - 7,686 - - - - 7,686
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
31 July 2020 29,885 141,366 - 3,997 26,943 10 202,201
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
-
Depreciation
1 August 2019 - - - 2,078 11,497 12 13,587
Depreciation - 1,164 - 191 1,167 2 2,524
Disposals - - - - - (4) (4)
Revaluations - (1,164) - - - - (1,164)
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
31 July 2020 - - - 2,269 12,664 10 14,943
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
Net book value
at 31 July 2020 29,885 141,366 - 1,728 14,279 - 187,258
------------------ ------------ ---------- ---------- ------------- ---------- ------ --------------------
The Group has an active store development programme and in
accordance with IAS 23 has material qualifying assets that take a
substantial period of time to develop from acquisition to ultimate
store opening. Accordingly borrowing costs of GBP382,190 (2019:
GBP430,321) have been capitalised in the current year that are
directly attributable to the acquisition, construction and fit-out
of these qualifying store assets. The total amount is carried in
development property assets.
If all property, plant and equipment were stated at historic
cost the carrying value would be GBP91.6 million (2019: GBP81.7
million).
Capital expenditure during the year totalled GBP 12.0 million (
2019 : GBP14.0 million). This was primarily the purchase of our
Stevenage and Salford sites, the exchange of contracts at our
Warrington site, and the completion of construction works at our
Leicester store which opened post-balance sheet in August 2020.
Costs relating to the planning and pre-development works on our
Bournemouth, Bedford, and Cheshunt sites also featured.
Property, plant and equipment (non-current assets) with a
carrying value of GBP 187.3 million (2019: GBP168.9 million) are
pledged as security for bank loans.
Market Valuation of Freehold and Leasehold Land and
Buildings
On 31 July 2020 an independent professional valuation was
prepared by Jones Lang LaSalle Limited (JLL) in respect of 15
freehold, and 8 leasehold properties . The valuation was prepared
in accordance with the RICS Valuation - Global Standards 2017,
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 have confirmed that:
-- This is the fourth 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 GBP 168.4 million (2019: GBP162.7 million) of
which GBP 151.7 million (2019: GBP144.0 million) relates to
freehold properties, and GBP
16.7 million (2019: GBP18.7 million) relates to properties held under leases.
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
GBP 151.7 million (2019: 144.0 million) valuation of the freehold
properties GBP 12.3 million (2019: GBP13.0 million) relates to the
net book value of fixtures, fittings and equipment, and the
remaining GBP 139.4 million (2019: GBP131.0 million) relates to
freehold and long leasehold properties.
The 2020 valuation includes and reflects movements in value
which have resulted from the operational performance of the stores
and movements in the investment environment.
Valuation Methodology
Jones Lang LaSalle Limited (JLL) have 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.
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 sell units to new customers.
In the valuation the assumed stabilised occupancy level for the 23
trading stores (both freeholds and leaseholds) averages 84.9 %
(2019: 84.3%).
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 10
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 8.70% (2019: 10.09%). The yield
arising from the first year of the projected cash flow is 6.08%
(2019: 5.99%), rising to 8.13% (2019: 8.74%) in year five.
-- JLL have assumed purchasers' costs of 6.8% (2019: 6.8%).
-- The average assumed stabilised occupancy is 84.9 % (2019: 84.3%).
-- The average exit yield assumed is 7.13 % (2019: 7.22%).
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.
JLL reported that the Lok'nStore portfolio has generally
performed very well in terms of increasing occupancy over the
course of the year which has driven the assumed stabilised
occupancy higher.
For 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 9 years and 7 months as at 31
July 2020 (11 years and 0 months: 31 July 2019). 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 10 years is exercised. This is consistent with the
approach taken in previous years.
The fair value hierarchy within which the Fair Value
measurements are categorised is level 3, in accordance with IFRS 13
fair value measurements.
Directors' valuation of land and property
The old Southampton store : Following the opening of the new
Southampton store with the corresponding transfer of all customers
from the old Southampton store, the vacant building was redeveloped
for cruise parking. In 2020 the Board concluded that management
time and capital could be more effectively deployed within the
self-storage business and the operation was closed. Accordingly,
the Directors placed their valuation on the current developed site
at GBP2.0 million (2019: 2.5 million) which is their best estimate
of the potential realisable value of the site in current market
conditions.
The total value of land and property carried at Director
Valuation at 31 July 2020 is GBP2.0 million (2019: GBP2.5
million).
11 c) Right of Use Assets (ROU)
Group Group Group
Group property leases 31 July 31 July 31 July
2020 2019 2018
GBP'000 transition
GBP'000 GBP'000
IFRS 16 IFRS 16 IFRS 16
Restated Restated
Right of Use Asset (ROU) - opening
balance 13,018 14,272 15,526
Depreciation of Right of Use Asset
(ROU) (1,254) (1,254) (1,254)
Right of Use Asset (ROU) - closing
balance 11,764 13,018 14,272
------------------------------------ --------- --------- -------------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
The application of IFRS 16 relates to the Groups property
leases. The Group has no leases on any other types of assets.
To ensure consistency and effective comparison with prior
periods, the Group has elected to apply the full retrospective
implementation approach with reinstatement of the comparative
information. The transition date of initial application is
therefore 1 August 2018. The Present Value of all future operating
lease payments is calculated using 2.2% as an effective cost of
debt as the single discount rate. This calculates an opening Right
of Use Asset (ROU) as at 1 August 2018 of GBP14.3 million.
The Right of Use Asset is depreciated on a depreciation charge
based on the individual lease term of the separate leases.
12 Disposal of Saracen Datastore Limited
On 31 January 2019 Lok'nStore disposed of its serviced document
storage business Saracen Datastore Limited ("Saracen") for GBP7.64
million in cash against its Net Book Value as at 31 July 2018 of
GBP5.4 million.
In the short term the disposal proceeds were used to reduce
overall Group borrowing and will improve all key banking ratios. In
the medium term the disposal proceeds will be used to fund the
ongoing investment into our highly accretive development pipeline
of new self-storage centres, fulfilling the Group's objective of
growing asset value by recycling capital from lower growth assets
into high growth landmark stores.
The proceeds of disposal net of disposal costs was treated as a
receipt in Investing Activities in the Consolidated Cash flow
Statement and contributed GBP6.85 million to the increase in cash
and cash equivalents in the previous year.
Key amounts relating to the discontinued operation are as
follows:
31 July
31 July 2019
2020 GBP'000
GBP'000 Restated**
Revenue - 1,156
Expenses - (902)
----------------------------------------- ----------- ------------
EBITDA - 254
Depreciation - (48)
Finance income /costs - 3
----------------------------------------- ----------- ------------
Profit before tax - 209
----------------------------------------- ----------- ------------
Tax - 8
Profit after tax - 217
----------------------------------------- ----------- ------------
Profit on disposal of subsidiary - 1,965
After tax disposal profit - 1,965
----------------------------------------- ----------- ------------
Total profit on discontinued operations - 2,182
----------------------------------------- ----------- ------------
Before disposal, Saracen contributed GBP1.16 million to the
Group's revenue and GBP0.25 million to its EBITDA in the period up
to its disposal on 31 January 2019. The carrying value of Saracen's
assets and liabilities that were sold on 31 January 2019 was as
follows:
Assets
Non-current assets GBP'000
Intangible assets 3,180
Property, plant and equipment 1,654
4,834
Current assets
Inventories 5
Receivables 722
Cash 508
----------------------------------------------- --------
1,235
----------------------------------------------- --------
Total assets 6,069
-----------------------------------------------
Current liabilities (603)
Non-current liabilities (79)
----------------------------------------------- --------
Total liabilities (682)
Net assets disposed of 5,387
Cash proceeds (net of fees/costs of disposal) 7,352
----------------------------------------------- --------
Profit on disposal 1,965
----------------------------------------------- --------
The profit on disposal was included in profit on discontinued
operations in the consolidated statement of comprehensive income.
The Group believes that Substantial Shareholder Relief would be
available on the gain made on the disposal of the shares. Proceeds
from disposal of discontinued operation (net of disposal costs and
cash included in sale) is presented as an investing activity in the
consolidated statement of cash flows.
13 Investments
Company Investments in subsidiary undertakings GBP'000
--------------------------------------------------------- --------
31 July 2018 2,418
Capital contributions arising from share-based payments 46
--------------------------------------------------------- --------
31 July 2019 2,464
--------------------------------------------------------- --------
Capital contributions arising from share-based payments 88
--------------------------------------------------------- --------
31 July 2020 2,552
--------------------------------------------------------- --------
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 of Directly Indirectly Nature
shareholding of entity
Lok'nStore Limited * # Ordinary 100 - Self-storage
Lok'nStore Trustee Limited(1 Ordinary - 100 Trustee
*)
Southern Engineering and Machinery Ordinary - 100 Self-storage
Company Limited(1 *) #
Semco Machine Tools Limited(2 Ordinary - 100 Dormant
*) #
Semco Engineering Limited(2 *) Ordinary - 100 Dormant
#
Saracen Datastore Limited(1) Ordinary - 100 Serviced
# @ Document
Storage
ParknCruise Limited(1) Ordinary - 100 Dormant
The Box Room (Self Storage) Limited Ordinary - 100 Self-storage
(1)
(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.
(*) 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.
(@) The serviced document storage business was sold in the
previous year.
14 Inventories
Group Group
2020 2019
GBP'000 GBP'000
---------------------------------- --------- ---------
Consumables and goods for resale 270 298
---------------------------------- --------- ---------
The amount of inventories recognised in cost of sales as an
expense during the year was GBP97,966 (2019: GBP120,954). (See Note
3(b)).
15 Trade and other receivables
Group Group
2020 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Trade receivables 746 1,055
Other receivables 2,451 2,270
Prepayments and accrued income 431 382
3,628 3,707
-------------------------------- --------- ---------
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
Other receivables include monies receivable from the managed
stores for services provided by the Group and also includes a
GBP0.61 million VAT repayment owed to the Group by HMRC which was
received post year-end.
The following balances existed between the Company and its
subsidiaries at 31 July:
Company Company
2020 2019
GBP'000 GBP'000
-------------------------------- -------------- --------------
Net amount due from Lok'nStore
Limited 25,867 14,576
----------------------------------- -------------- --------------
The amount due from Lok'nStore Limited is interest free. The
balance is repayable on demand.
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 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 GBP110,668 (2019: GBP55,049)
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
54 days past due (2019: 51 days past due).
Ageing of past due but not impaired receivables
Group Group
2020 2019
GBP'000 GBP'000
----------------------------------------------- --------- ---------
0-30 days 16 14
30-60 days 16 4
60+ days 79 37
----------------------------------------------- --------- ---------
Total 111 55
----------------------------------------------- --------- ---------
Movement in the allowance for credit losses
Group Group
2020 2019
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Balance at the beginning of the year 191 165
Impairment losses recognised 20 39
Amounts written off as uncollectible (22) (13)
----------------------------------------------- --------- ---------
Balance at the end of the year 189 191
----------------------------------------------- --------- ---------
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
2020 2019
GBP'000 GBP'000
-------------------------------------- --------- ---------
0-30 days - -
30-60 days - -
60+ days 189 191
-------------------------------------- --------- ---------
Total 189 191
-------------------------------------- --------- ---------
16 Trade and other payables
Group Group
2020 2019
GBP'000 GBP'000
------------------------------------ --------- ---------
Trade payables 1,275 640
Taxation and social security costs 137 388
Other payables 777 1,115
Accruals and deferred income 2,487 2,610
------------------------------------ --------- ---------
4,676 4,753
------------------------------------ --------- ---------
The Directors consider that the carrying amount of trade and
other payables approximates fair value.
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
debts, 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.
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
2020 2019
GBP'000 GBP'000
--------- -----------
Restated**
------------------------------ --------- -----------
Gross debt (51,322) (42,972)
Cash and cash equivalents 13,066 13,662
------------------------------ --------- -----------
Net debt (38,255) (29,310)
-----------
Total equity - balance sheet 121,382 116,550
-----------
IFRS 16 restatement 692 608
------------------------------ --------- -----------
Adjusted total equity 122,074 117,158
------------------------------ --------- -----------
Net debt to equity ratio 31.3% 25.0%
------------------------------ --------- -----------
Total Gearing - Bank Borrowings and Group Group
lease liabilities 2020 2019
GBP'000 GBP'000
--------- -----------
Restated**
------------------------------------- --------- -----------
Gross debt - bank borrowings (51,322) (42,972)
Gross debt - lease liabilities (12,455) (13,626)
Cash and cash equivalents 13,066 13,662
------------------------------------- --------- -----------
Net debt (50,711) (42,936)
-----------
Total equity - balance sheet 121,382 116,550
-----------
Net debt to equity ratio 41.8% 36.8%
------------------------------------- --------- -----------
The modest increase in 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.
These effects on gearing were offset by the purchase of our
Stevenage and Salford sites, the exchange of contracts at our
Warrington site, and the completion of construction works at our
Leicester store which opened post-balance sheet in August 2020.
Costs relating to the planning and pre-development works on our
Bournemouth, Bedford, and Cheshunt sites also 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 2019 or 31 July 2020. 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 plc and Lloyds Banking Group secured on its
store portfolio and other Group assets, excluding intangibles, with
a net book value of GBP187.3 million (2019 Restated: GBP168.9
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 GBP 75 million (2019: GBP75
million). This facility provides for an accordion of GBP25 million
which although uncommitted can take the facility to GBP100 million
and runs to 2025 with an option of a one year extensions. Undrawn
committed facilities at the year-end amounted to GBP23.7 million
(2019: GBP32.0 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 18. 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.
Cash balances held in current accounts attract no interest but
surplus cash is transferred daily to a treasury deposit account
which earns interest at the prevailing money market rates(1) . All
amounts are denominated in Sterling. The balances at 31 July 2020
are as follows:
Group Group
2020 2019
GBP'000 GBP'000
-------------------------------------- --------- ---------
Variable rate treasury deposits(1) 11,608 12,232
SIP trustee deposits 63 63
Cash in operating current accounts 1,385 1,357
Other cash and cash equivalents 10 10
-------------------------------------- --------- ---------
Total cash and cash equivalents 13,066 13,662
-------------------------------------- --------- ---------
(1) Money market rates for the Group's variable rate treasury
deposit track Royal Bank of Scotland plc base rate.
The Interest rate between August 2019 and 28(th) May 2020 was
0.30% on balances greater than GBP1m and 0.20% on balances below
GBP1m. This rate had been in place since 2(nd) August 2018. On
29(th) May 2020, the rate on the account changed to a flat rate of
0.01% Gross/AER on all balances. The rate attributable to the
variable rate deposits at 31 July 2020 was 0.01%.
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 2020, it is estimated that an increase of one
percentage point in interest rates would have reduced the Group's
annual profit before tax by GBP513,222 (2019: GBP429,717) and
conversely a decrease of one percentage point in interest rates
would have increased the Group's annual profit before tax by
GBP513,222 (2019: 429,717). 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 1.69 % applying to the variable rate
borrowings of GBP51.3 million in the year (2019: GBP43.0 million /
2.11%).
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 robust 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 over 12,500 customers and with no
individual self-storage customer accounting for more than 1% of
total revenue and no group entities under common control (e.g.
Government) accounting for more than 10% 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 2020 was
GBP2.40 million (2019: GBP3.38 million) on receivables and GBP13.1
million (2019: GBP13.7 million) on cash and cash equivalents.
H Maturity analysis of financial liabilities
The undiscounted contractual cash flow maturities are as
follows:
2020 - Group Trade Interest
and other on
payables Borrowings borrowings
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- ------------
Over five years - - -
From two to five years - 51,322 2,364
From one to two years - - 865
------------------------------------- ----------- ----------- ------------
Due after more than one year - 51,322 3,229
Due within one year 2,585 - 865
------------------------------------- ----------- ----------- ------------
Total contractual undiscounted cash
flows 2,585 51,322 4,094
------------------------------------- ----------- ----------- ------------
2019 - Group Trade Interest
and other on
payables Borrowings borrowings
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- ------------
Over five years - - -
From two to five years - 42,972 2,474
From one to two years - - 906
------------------------------------- ----------- ----------- ------------
Due after more than one year - 42,972 3,380
Due within one year 2,199 - 906
------------------------------------- ----------- ----------- ------------
Total contractual undiscounted cash
flows 2,199 42,972 4,286
------------------------------------- ----------- ----------- ------------
I Fair values of financial instruments
Group Group
2020 2019
GBP'000 GBP'000
---------------------------------------------- --------- ----------
Categories of financial assets and financial Restated
liabilities **
Financial assets
Trade and other receivables (1) 3,610 3,992
Cash and cash equivalents 13,066 13,662
Financial liabilities
Trade and other payables (2,585) (2,199)
Lease liabilities (12,456) (13,626)
Bank loans (50,705) (42,331)
---------------------------------------------- --------- ----------
(1) Includes GBP361,460 relating to fees receivable in 2022 from
the Aldershot managed store currently classified as a non-current
asset (measured at fair value).
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
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 GBP25.9 million (2019: GBP14.6 million)
which are classified as loans and receivables, and the investment
in its subsidiary undertaking of GBP2.55 million (2019: GBP2.46
million). 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.
18 Borrowings
Group Group
2020 2019
Bank borrowings GBP'000 GBP'000
--------------------------------------------- --------- ---------
Non-current
Bank loans repayable in more than two years
but not more than five years
Gross 51,322 42,972
Deferred financing costs (617) (641)
--------------------------------------------- --------- ---------
Net bank borrowings 50,705 42,331
--------------------------------------------- --------- ---------
Non-current borrowings 50,705 42,331
--------------------------------------------- --------- ---------
The Group has a joint GBP75 million five year revolving credit
facility banking facility with Lloyds Bank and Royal Bank of
Scotland plc. The facility provides an accordion GBP25 million
which can take the facility to GBP100 million and runs to April
2025 with an option of a one year extension.
The Group currently has GBP51.3 million drawn against its
facility which is secured with RBS and Lloyds 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
GBP 187.8 million (2019 GBP168.9 million) together with
cross-company guarantees from Group companies.
On 14 July 2020, the Group implemented a one year extension on
its existing joint banking facility. The facility which was due to
expire in April 2024, will now run until April 2025 providing
funding for more landmark site acquisitions.
The GBP75 million five year revolving credit facility set the
interest rate margin at the London Inter-Bank Offer Rate (LIBOR)
plus 1.50%-1.75% based on a loan to value covenant test. This rate
is 1.50% currently and our current all in debt cost on GBP51.2
million drawn is averaging 1.6%-1.7%.
Bank covenants and margin are unaffected by this extension of
term.
19 Lease liabilities
To ensure consistency and effective comparison with prior
periods, the Group has elected to apply the full retrospective
implementation approach with reinstatement of the comparative
information. The transition date of initial application is
therefore 1 August 2018.
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% as an effective
cost of debt as the discount rate.
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% as part of the amortisation of the
lease liability the total lease liabilities stated under the
first-time adoption of IFRS 16 is shown below. The impact of the
adoption of IFRS 16 is also set out in note 1 of the financial
statements.
Lease liabilities attributable to Right of Group Group
Use Assets 2020 2019
GBP'000 GBP'000
--------- ---------
Restated
**
-------------------------------------------- --------- ---------
Current lease liabilities
Amounts due within one year 1,298 1,171
Non-current lease Liabilities
Amounts due in one to two years 1,326 1,298
Amounts due in three to five years 2,881 3,352
Amounts due in more than five years 6,950 7,805
-------------------------------------------- --------- ---------
Non-current lease liabilities 11,157 12,455
-------------------------------------------- --------- ---------
Total lease liabilities 12,455 13,626
-------------------------------------------- --------- ---------
Lease liabilities attributable to Right of Group Group
Use Assets 2020 2019
GBP'000 GBP'000
--------- ---------
Restated
**
-------------------------------------------- --------- ---------
Balance B/Fwd 13,626 14,662
Lease repayments (1,467) (1,356)
Lease interest (non-cash) 296 320
Total lease liabilities 12,455 13,626
-------------------------------------------- --------- ---------
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
The application of IFRS 16 relates to the Groups property
leases. 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 cash outflow for leases is set out in note 27
(Commitments under property leases).
20 Deferred tax
Group Group
2020 2019
Deferred tax liability GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Liability at start of year 22,385 19,735
Charge to income for the year - continued operations 796 400
Charge to income for the year - discontinued
operations - 32
------------------------------------------------------ --------- ---------
Total charge to income for the year 796 432
------------------------------------------------------ --------- ---------
Tax charged directly to other comprehensive
income 3,602 2,327
Tax credited - disposal of subsidiary - (134)
Initial recognition on acquisition of subsidiary - 24
(Credit) / debit to share based payment reserve (23) 1
Liability at end of year 26,760 22,385
------------------------------------------------------ --------- ---------
The following are the major deferred tax liabilities and assets
recognised by the Group and the movements during the year:
Accelerated Other Rolled
Capital temporary Revaluation of over gain Share
Allowances differences properties on disposal options Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
At 1 August 2019 2,879 383 14,568 2,146 (241) 19,735
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge/ (credit) to
income for the year 336 (14) - - - 322
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge to other
comprehensive income - - 2,327 - - 2,327
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Reclassification
following store
disposal - - (558) 558 - -
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge to share based
payment reserve - - - - 1 1
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
At 31 July 2019 3,215 369 16,337 2,704 (240) 22,385
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge/ (credit) to
income for the year 434 110 - 252 - 796
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge to other
comprehensive income - - 3,602 - - 3,602
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
Charge to share based
payment reserve - - - - (23) (23)
----------------------- ------------ ------------- --------------- ------------------ ---------------- ---------
At 31 July 2020 3,649 479 19,939 2,956 (263) 26,760
-----------------------
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 rise in forward tax rates which used to be calculated
at forward corporation tax rates of 17% and is calculated at the
substantively enacted corporation tax rate and has therefore
reverted to 19%. 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 GBP26.8
million (2019: GBP22.4 million) - the crystallisation of which is
within the Board's control.
21 Share capital
2020 2019
Authorised: GBP'000 GBP'000
------------------------------------- ------------- -------------
35,000,000 ordinary shares of 1
penny each (2019: 35,000,000) 350 350
-------------------------------------- ------------- -------------
Allotted, issued and fully paid GBP'000 GBP'000
ordinary shares
------------------------------------- ------------- -------------
Balance at start of year 296 295
Options exercised during the year
85,171 (2019: 195,692) 1 1
-------------------------------------- ------------- -------------
Balance at end of year 297 296
-------------------------------------- ------------- -------------
Called up, Called up,
allotted and allotted and
fully paid fully paid
Number Number
------------------------------------- ------------- -------------
Number of shares at start of the
year 29,583,786 29,498,615
-------------------------------------- ------------- -------------
Options exercised during the year 49,504 85,171
-------------------------------------- ------------- -------------
Number of shares at end of the year 29,633,290 29,583,786
-------------------------------------- ------------- -------------
The Company has one class of ordinary shares which carry no
right to fixed income.
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 the following share options:
2020 As at As at
Summary 31 July 2019 Lapsed/ 31 July
2020
No of options Granted Exercised surrendered No of options
-------------------------
Unapproved Share Options 750,851 8,945 (44,692) - 715,104
Unapproved Share Options
(PPP Scheme) 540,000 290,000 - - 830,000
Approved CSOP Share
Options 94,939 11,079 (4,812) (3,271) 97,935
Total 1,385,790 310,024 (49,504) (3,271) 1,643,039
2019 As at As at
Summary 31 July 2018 Lapsed/ 31 July
2019
No of options Granted Exercised surrendered No of options
Unapproved Share Options
(refer note 24(a)) 817,551 3,300 (70,000) - 750,851
Unapproved Share Options
(PPP Scheme) 140,000 400,000 - - 540,000
Approved CSOP Share
Options 92,199 15,673 (9,952) (2,981) 94,939
Total 1,049,750 418,973 (79,952) (2,981) 1,385,790
The following table shows options held by Directors under all
schemes.
Approved
Total CSOP Total
at 31 Options Options Unapproved share at 31
July 2019 granted Exercised/lapsed Scheme options July 2020
2020
Executive Directors
A Jacobs - Unapproved 206,087 - - 206,087 - 206,087
A Jacobs - PPP 80,000 40,000 - 120,000 - 120,000
A Jacobs - total 286,087 40,000 - 326,087 - 326,087
RA Davies - Unapproved 246,977 - - 246,977 - 246,977
RA Davies - CSOP 7,742 - - - 7,742 7,742
RA Davies - PPP 80,000 40,000 - 120,000 - 120,000
RA Davies total 334,719 40,000 - 366,977 7,742 374,719
N Newman-Shepherd - Unapproved 172,421 - (36,822) 135,599 - 135,599
N Newman-Shepherd - CSOP 10,661 - (2,043) - 8,618 8,618
N Newman-Shepherd - PPP 120,000 60,000 - 180,000 - 180,000
N Newman-Shepherd total 303,082 60,000 (38,865) 315,599 8,618 324,217
Non-Executive Directors
SG Thomas - Unapproved 5,217 - - 5,217 - 5,217
All Directors total 929,105 140,000 (38,865) 1,013,880 16,360 1,030,240
Approved
Total CSOP Total
at 31 Options Options Unapproved share at 31
July 2018 granted Exercised/lapsed Scheme options July 2019
2019
Executive Directors
A Jacobs - Unapproved 206,087 - - 206,087 - 206,087
A Jacobs - PPP - 80,000 - 80,000 - 80,000
A Jacobs - total 206,087 80,000 - 286,087 - 286,087
RA Davies - Unapproved 246,977 - - 246,977 - 246,977
RA Davies - CSOP 7,742 - - - 7,742 7,742
RA Davies - PPP - 80,000 - 80,000 - 80,000
RA Davies total 254,719 80,000 - 326,977 7,742 334,719
N Newman-Shepherd - Unapproved 172,421 - - 172,421 - 172,421
N Newman-Shepherd - CSOP 10,661 - - - 10,661 10,661
N Newman-Shepherd - PPP - 120,000 - 120,000 - 120,000
N Newman-Shepherd total 183,082 120,000 - 292,421 10,661 303,082
Non-Executive Directors
SG Thomas - Unapproved 25,217 - (20,000) 5,217 - 5,217
All Directors total 669,105 280,000 (20,000) 910,702 18,403 929,105
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 (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 and a half years 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. For options granted on 31 July 2020,
the expected term is assumed to be 12.4 years, which is halfway
between vesting and lapse. For options granted on 31 January 2020,
the expected term is assumed to be 11.2 years. 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. 12.4 years).
The total charge for the year relating to employer share-based
payment schemes was GBP87,990 (2019: GBP46,221), 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 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 August 2018 6,295 1,294 34 740 8,363
Share based remuneration
(options) - - - 46 46
IFRS 2 - transfer (to)
/ from retained earnings - - - (51) (51)
Tax charge relating to
share options - - - (1) (1)
31 July 2019 6,295 1,294 34 734 8,357
Share based remuneration
(options) - - - 88 88
IFRS 2 - transfer (to)
/ from retained earnings - - - (14) (14)
Tax charge relating to
share options - - - 24 24
31 July 2020 6,295 1,294 34 832 8,455
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
GBP13,760 (2019: GBP 51,295 ) .
23(b) Other reserves
Other Share-based
reserve payment
reserve Total
Company GBP'000 GBP'000 GBP'000
1 August 2019 1,114 729 1,843
Share based remuneration (options) - 46 46
IFRS 2 - transfer to/from retained
earnings - (51) (51)
31 July 2019 1,114 724 1,838
Share based remuneration (options) - 88 88
IFRS 2 - transfer to/from retained
earnings - (14) (14)
31 July 2020 1,114 798 1,912
24a) Retained earnings
Retained earnings Retained
earnings
before deduction Own shares
of own shares (Note 25) Total
Group GBP'000 GBP'000 GBP'000
Restated Restated
** **
1 August 2018 19,844 (500) 19,344
Effect of new accounting standard
- IFRS 16 (389) - (389)
As at 1 August 2018 - restated 19,455 (500) 18,955
Profit attributable to owners
of
Parent for the financial year 5,343 - 5,343
Transfer from revaluation reserve
(Additional depreciation on revaluation) 304 - 304
Transfer from share based payment
reserve (Note 23a) 51 - 51
Dividend paid (3,279) - (3,279)
Asset disposals 4,927 - 4,927
31 July 2019 26,801 (500) 26,301
Profit attributable to owners
of
Parent for the financial year 2,974 - 2,974
Transfer from revaluation reserve
(Additional depreciation on revaluation) 378 - 378
Transfer from share based payment
reserve (Note 26a) 14 - 14
Dividend paid (3,572) - (3,572)
31 July 2020 26,595 (500) 26,095
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 Own shares earnings
of own shares (Note 25) Total
Company GBP'000 GBP'000 GBP'000
1 August 2018 3,870 - 3,870
Profit attributable to owners
of
Company for the financial year 3,774 - 3,774
Transfer from share based payment
reserve (Note 23a) 51 - 51
Dividend paid (3,279) - (3,279)
31 July 2019 4,416 - 4,416
Profit attributable to owners
of
Company for the financial year 14,792 - 14,792
Transfer from share based payment
reserve (Note 23a) 14 - 14
Dividend paid (3,572) - (3,572)
31 July 2020 15,650 - 15,650
25 Own shares
EBT EBT Treasury Treasury Own shares
shares shares shares shares total
Number GBP Number GBP GBP
31 July 2019 and
31 July 2020 623,212 499,910 - - 499,910
The Group operates an Employee Benefit Trust (EBT) under a
settlement dated 8 July 1999 between Lok'nStore Limited and
Lok'nStore Trustee Limited, constituting an employees' share
scheme.
Funds are placed in the trust by way of deduction from
employees' salaries on a monthly basis as they so instruct for
purchase of shares in the Company. Shares are allocated to
employees at the prevailing market price when the salary deductions
are made.
As at 31 July 2020, the Trust held 623,212 (2019: 623,212)
ordinary shares of 1 penny each with a market value of GBP3,552,308
(2019: GBP3,284,327). No shares were transferred out of the scheme
during the year (2019: 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
2020 2019
GBP'000 GBP'000
Restated
**
Profit before tax - continuing
operations 4,690 4,372
Profit before tax - discontinued
operations - 2,174
Total profit before tax 4,690 6,546
Depreciation 3,779 3,695
Amortisation of intangible
assets - 83
Equity settled share based
payments 88 46
Profit on sale of land at store - (296)
Profit on disposal of Saracen
business - (1,967)
Costs of sale and manage-back
- Crayford store - 54
Deferred financing on bank
loan written off - 133
Interest receivable (29) (31)
Interest payable - bank borrowings 830 602
Interest payable - lease liabilities 296 342
Decrease / (increase) in inventories 28 (41)
Decrease in receivables 79 768
(Decrease) in payables (61) (389)
Cash generated from operations 9,700 9,545
** Details of the restatements following the adoption of IFRS 16
are made in note 1 to the financial statements.
(b) Reconciliation of net cash flow to movement in net debt
Net debt is defined as non-current and current borrowings, as
detailed in note 18 less cash and cash equivalents.
Group Group
2020 2019
GBP'000 GBP'000
--------
Decrease / increase) in cash
in the year (596) 8,672
Change in net debt resulting
from cash flows (8,350) (5,637)
Movement in net debt in year (8,946) 3,035
Net debt brought forward (29,310) (32,345)
Net debt carried forward (38,256) (29,310)
27 Commitments under property leases
At 31 July 2020 the total future minimum lease payments as a
lessee under non-cancellable leases were as follows:
Group Group
2020 2019
Land and buildings GBP'000 GBP'000
------------------------ -------- --------
Amounts due: 1.
Within one year 1,575 1,517
Between two and five
years 5,041 5,358
After five years 7,811 8,165
------------------------ -------- --------
14,427 15,040
--------
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.
Under the first-time adoption of IFRS 16, the Group's property
leases on its leased stores are now recognised as a 'Right of Use
Asset' and as a corresponding liability at the year-end. This is
fully explained in Note 1 of the financial statements.
28 Related party transactions
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 7.
Group Group
2020 2019
GBP'000 GBP'000
---------- -----------------
Short term employee benefits - Directors 965 892
Short term employee benefits - Other
key management 328 311
Post-employment benefits - Directors 10 7
Post-employment benefits - Other
key management 10 7
Share-based payments 88 46
---------- -----------------
Total 1,401 1,263
---------- -----------------
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
GBP3,572,001 (2019: GBP3,279,691), the Group Directors received the
amounts set out in the table below: -
Director's Holding Final 2019 Interim 2020 Total 2020 Total 2019
Dividend
Income
8.33 pence 4.00 pence
per share per
share
No. GBP GBP GBP GBP
Executive:
A Jacobs 5,203,600 433,460 208,144 641,644 590,202
Ray Davies 64,329 4,759 2,573 7,332 7,166
N
Newman-Shepherd 17,164 1,430 566 1,996 1,570
Non-Executive:
SG Thomas 1,530,000 127,473 61,200 188,673 192,677
RJ Holmes 273,674 22,797 10,947 33,744 31,035
ETD Luker 28,800 2,399 1,152 3,551 3,266
CP Peal 644,222 53,064 25,769 78,833 58,914
7,761,789 645,382 310,351 955,733 884,830
Managed Stores - Group Director shareholdings
Although the director holdings in Managed Stores falls outside
of the definition of related party transactions they are disclosed
here for transparency and are set out in the table below: -
Director Chichester 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%
29 Capital commitments and guarantees
The Group has capital expenditure contracted but not provided
for in the financial statements of GBP 2.97 million (2019: GBP5.56
million) relating to commitments to complete the purchase of a site
in Warrington and on which contracts have been exchanged, building
contracts on its Leicester development site as well as building
retentions outstanding on the completed Maidenhead, Wellingborough
and Ipswich stores.
30 Bank borrowings
The Company has guaranteed the bank borrowings of Lok'nStore
Limited, a subsidiary company. As at the year-end, that company had
gross bank borrowings of GBP 51.3 million (2019: GBP43.0
million).
31 Events after the Reporting Date
i. Novel Coronavirus (COVID-19) Update
Since the outbreak of the Novel Coronavirus (COVID-19) was
declared a "Global Pandemic" by the World Health Organisation on
the 11th March 2020, we have reported comprehensively on the up to
date COVID 19 position and this is contained within the Chairman's
Statement. Trading since the year-end has continued to be positive
and is consistent with the strong finish to the financial year.
ii. Leicester store opening
Following completion of its store development, the Leicester
Store open ed post year-end in early August 2020. The 57,500 sq.
ft. store is in a highly prominent location opposite a major food
retailer in the heart of Leicester's busy retail district. Early
trading has been encouraging.
iii. Share buyback (Purchases in Own Shares)
On 25 September 2020, Lok'nStore, bought back 8,000 ordinary
shares of 1p each ("Ordinary Shares") in the market at a price of
519.0 pence per Ordinary Share ("Buy-back"). The Ordinary Shares
acquired will be held in treasury.
Lok'nStore announced that on 2 October 2020 it bought back
29,972 ordinary shares of 1p each ("Ordinary Shares") in the market
at a price of 517.5 pence per Ordinary Share. The Ordinary Shares
acquired will be held in treasury.
Following the Buyback, the issued share capital of the Company
is 29,641,559 Ordinary Shares of which 37,972 are now held in
treasury. The total number of voting rights in the Company,
excluding Treasury shares will therefore be 29,603,587.
iv. Purchase of Peterborough Site
On 23 October 2020 the Group acquired a site in Peterborough.
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, Curry's and Argos.
The purchase is subject to the successful receipt of a planning
permission for a 45,000 sq.ft. purpose built landmark self-storage
facility.
Glossary
Abbreviation
APM Alternative performance measures
Adjusted EBITDA Earnings before all depreciation and
amortisation charges, losses or profits on disposal, share-based
payments, acquisition costs, and non-recurring professional costs,
finance income, finance costs and taxation
Adjusted Store EBITDA Adjusted EBITDA (see above) but before central and head office costs
AGM Annual General Meeting
APD Auditing Practices
Bps Basis Points
CAC Contributory asset charges
CAD Cash available for Distribution
Capex Capital Expenditure
CGU Cash generating units
CO2 e Carbon Dioxide Equivalents
CSOP Company Share Option Plan
EBT Employee Benefit Trust
(eKPIs) Environmental key performance indicators
EMI Enterprise Management Incentive Scheme
ESOP Employee Share Option Plan
EU European Union
GHG Greenhouse gas
HMRC Her Majesty's Revenue and Customs
IAS International Accounting Standard
IFRIC International Financial Reporting Interpretations
Committee
IFRS International Financial Reporting Standards
ISA International Standards on Auditing
JLL Jones Lang LaSalle
LIBOR London Interbank Offered Rate
LFL Like for like
LTV Loan to Value Ratio
MWh Megawatt Hour
NAV Net Asset Value
NBV Net Book Value
Operating Profit Earnings before interest and tax (EBIT)
PPP Partnership Performance Plan
PV Photovoltaic
QCA Quoted Companies Alliance
RICS Royal Institution of Chartered Surveyors
SIP Share Incentive Plan
SME Small and medium sized enterprises
Sq. ft. Square Feet
tCO2e Tonnes of carbon dioxide equivalent
TVR Total voting rights
VAT Value Added Tax
Our Stores
Head Office - Lok'nStore Central Enquiries
plc 0800 587 3322
112 Hawley Lane info@loknstore.co.uk
Farnborough www.loknstore.co.uk
Hampshire
GU14 8JE
Tel 01252 521010
www.loknstore.co.uk
www.loknstore.com
Owned Trading Stores
Basingstoke, Hampshire Bristol, Gloucestershire Cardiff, Wales Eastbourne, East
Crockford Lane Longwell Green 234, Penarth Road Sussex
Chineham Trade Park Cardiff Unit 4, Hawthorn
Basingstoke Aldermoor Way Wales Road
Hampshire Bristol CF11 8LR Eastbourne
RG24 8NA Gloucestershire Tel 0292 022 1901 East Sussex
Tel 01256 474700 BS30 7ET Cardiff @loknstore.co.uk BN23 6QA
basingstoke@loknstore.co.uk Tel 0117 967 7055 Tel 01323 749222
Bristol@loknstore.co.uk eastbourne@loknstore.co.uk
Fareham, Hampshire Farnborough, Hampshire Gillingham, Kent Harlow, Essex
26 + 27 Standard 112 Hawley Lane Courtney Road Edinburgh Way
Way Farnborough Gillingham Temple Fields
Fareham Industrial Hampshire Kent Harlow
Park GU14 8JE ME8 0RT Essex
Fareham Tel 01252 511112 Tel 01634 366044 CM20 2GF
Hampshire farnborough@loknstore.co.uk gillingham@loknstore.co.uk Tel 01279 882366
PO16 8XJ harlow@loknstore.co.uk
Tel 01329 283300
fareham@loknstore.co.uk
Hedge End, Southampton Horsham, West Sussex Ipswich Luton, Bedfordshire
Units 2 and 3 Blatchford Road Part of Site 7 27 Brunswick Street
Waterloo Industrial Redkiln Estate Futura Park Luton
Estate Flanders Horsham Ipswich Bedfordshire
Rd West Sussex IP3 9QH LU2 0HG
Hedge End RH13 5QR Tel 01473 794940 Tel 01582 721177
Southampton Tel 01403 272001 exeter@loknstore.co.uk luton@loknstore.co.uk
SO30 2QT horsham@loknstore.co.uk
Tel 01489 787005
HedgeEnd@loknstore.co.uk
Maidenhead, Berkshire Milton Keynes, Northampton Central Northampton Riverside
Stafferton Way Buckinghamshire 16 Quorn Way Units 1-4, Carousel
Maidenhead Etheridge Avenue Grafton Street Way
Berkshire Brinklow Industrial Estate Northampton
SL6 1AY Milton Keynes Northampton Northamptonshire
Tel 01628 878870 Buckinghamshire Northamptonshire NN3 9HG
maidenhead@loknstore.co.uk MK10 0BB NN1 2PN Tel 01604 785522
Tel 01908 281900 Tel 01604 629928 northampton@loknstore.co.uk
miltonkeynes@loknstore.co.uk nncentral@loknstore.co.uk
Poole, Dorset Portsmouth, Hampshire Reading, Berkshire Southampton, Hampshire
50 Willis Way Rudmore Square 251 A33 Relief Third Avenue
Fleetsbridge Portsmouth Road Southampton
Poole Hampshire Reading Hampshire
Dorset PO2 8RT Berkshire SO15 0JX
BH15 3SY Tel 02392 876783 RG2 0RR Tel 02380 783388
Tel 01202 666160 portsmouth@loknstore.co.uk Tel 01189 588999 southampton@loknstore.co.uk
poole@loknstore.co.uk reading@loknstore.co.uk
Sunbury, Middlesex Tonbridge, Kent Wellingborough,
Unit C, The Sunbury Unit 6 Deacon Trading Northamptonshire
Centre Estate 19/21 Whitworth
Hanworth Road Vale Road Way
Sunbury on Thames Tonbridge Wellingborough
Middlesex TW16 5DA Kent Northamptonshire
Tel 01932 761100 TN9 1SW NN8 2EF
sunbury@loknstore.co.uk Tel 01732 771007 Tel 01634 366044
tonbridge@loknstore.co.uk gillingham@loknstore.co.uk
Development locations - LNS Owned Stores
Bedford Bournemouth, Dorset Cheshunt, Hertfordshire Leicester
69 Cardington Road Land at Wessex Land lying on Part of land forming
Bedford Field the South Side part of Freemens
NK42 0BQ Deansleigh Road of Halfhide Lane Common Road Leicester
Bournemouth Turnford LE2 7SL
Dorset Hertfordshire (Opened August 2020)
BH7 7DU
Stevenage, Hertfordshire Warrington, Cheshire Wolverhampton, Salford, nr. Manchester
Part of Land at Land at Winwick Staffordshire A57 Regent Road,
Plot 2000 Road, Warrington Land at Pantheon Salford,
Stevenage Business Cheshire Park Wednesfield Manchester,
Park Gunnels Wood WA2 7PF Way M5 4EA
Road Wolverhampton
Stevenage Staffordshire
Hertfordshire WV11 3DR
SG1 2BL
Managed stores - Trading
Aldershot, Hampshire Ashford, Kent Broadstairs, Kent Chichester, West
251, Ash Road Wotton Road Unit 2, Pyramid Sussex
Aldershot Ashford Business Park, 17, Terminus Road
Hampshire Kent Poorhole Lane, Chichester
GU12 4DD TN23 6LL Broadstairs, West Sussex
Tel 0845 4856415 Tel 01233 645500 Kent PO19 8TX
aldershot@loknstore.co.uk ashford@loknstore.co.uk CT10 2PT Tel 01243 771840
Tel 01843 863253 chichester@loknstore.co.uk
broadstairs@loknstore.co.uk
Crawley, West Sussex Crayford, Kent Dover, Kent Exeter
Sussex Manor Business Block B Honeywood Parkway 1 Matford Park Road
Park Optima Park Whitfield Exeter
Gatwick Road Thames Road Dover Devon
Crawley Crayford CT16 3FJ EX2 8ED
West Sussex Kent Tel 01304 827353 Tel 01392 823989
RH10 9NH DA1 4QX dover@loknstore.co.uk exeter@loknstore.co.uk
Tel 01293 738530 Tel 01322 525292
crawley@loknstore.co.uk crayford@loknstore.co.uk
Gloucester Hemel Hempstead, Oldbury Swindon, Wiltshire
Land at Triangle Hertfordshire 6 Churchbridge, Kembrey Street
Park Fortius Point, Oldbury, Elgin Industrial
Metz Way 47, Maylands Avenue West Midlands Estate
Gloucester Hemel Hempstead B69 2AP Swindon
GL4 Hertfordshire Tel 0121 5446309 Wiltshire
(Opened February HP2 7DE (Opened February SN2 8UY
2020) Tel 01442 240768 2020) Tel 01793 421234
gloucester@loknstore.co.uk hemelhempstead@loknstore.co. Oldbury@loknstore.co.uk swindoneast@loknstore.co.uk
uk
Managed stores - Under Development
Chester Kettering
58-64 Sealand Road, Site between Pytchley
Chester CH1 4LD Lane and Pytchley
Road,
Kettering. NN15
6XB
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FDMFMSESSEIS
(END) Dow Jones Newswires
November 02, 2020 02:00 ET (07:00 GMT)
Lok'n Store (LSE:LOK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lok'n Store (LSE:LOK)
Historical Stock Chart
From Apr 2023 to Apr 2024
