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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lok'n Store Group Plc | LSE:LOK | London | Ordinary Share | GB0007276115 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,105.00 | 1,105.00 | 1,110.00 | 1,110.00 | 1,100.00 | 1,105.00 | 201,790 | 11:11:14 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 28.96M | 4.69M | 0.1420 | 77.82 | 365.17M |
From Apr 2019 to Apr 2024
TIDMLOK
RNS Number : 0435D
Lok'nStore Group PLC
24 April 2017
LOK'NSTORE GROUP PLC
("Lok'nStore" or "the Group")
Lok'nStore Group Plc, the fast growing self-storage company announces interim results for the six months to 31 January 2017
"Strong balance sheet funds growth strategy and pipeline of 8 new landmark stores"
Highlights:
Strong trading and cash flow
-- Revenue GBP8.34 million up 4.5% (31.1.2016: GBP7.99 million) -- Group Adjusted EBITDA(1) GBP3.31million up 0.5% (31.1.2016: GBP3.30 million) -- Adjusted pre-tax profit(2) GBP2.1 million up 13.5% -- Adjusted net profit(2) GBP1.9 million up 81.2%
Cash flow growth supports 12.4% dividend increase - progressive dividend policy
-- Cash available for Distribution (CAD) (3) GBP2.62 million up 6.5% (31.1.2016: GBP2.46 million)
-- Interim dividend 3 pence per share up 12.4% (31.1.2016: 2.67 pence per share)
Significant growth in asset value,
-- Adjusted Net Asset Value (NAV) per share(4) up 26.1% to GBP3.87 (31.1.2016: GBP3.07) -- Total assets up to GBP142.6(5) million (31.1.2016: GBP113.4 million)
Strong balance sheet, efficient use of capital, low debt
-- Sale of 1.975 million Treasury shares raising circa GBP8 million at 400 pence per share (purchase cost 150.3 pence), a premium to NAV(4)
-- Net debt GBP16.7 million down 35.3% (31.1.2016: GBP25.8 million) -- Loan to value ratio down to 14.4%(6) (31.1.2016: 26.2%) -- Extension of existing bank facility by 2 years until January 2023 -- Effective cost of debt 1.65% -- Rolling 12 month EBITDA 16.2 times net interest
Consistent performance in the self-storage business
-- Core self-storage revenue GBP7.0 million up 3.9% (31.1.2016: GBP6.74 million) -- Adjusted Store EBITDA GBP3.85(7) million up 0.1% (31.1.2016: GBP3.84 million) -- Occupied units pricing up 1.0% LFL(8) -- Unit Occupancy up 4.6% LFL(8)
Healthy pipeline of new landmark stores - 8 stores in pipeline
-- 4 new stores to open in 2017 in Wellingborough, Gillingham, Hemel Hempstead and Broadstairs
-- Plus 4 further new sites identified
-- Current pipeline adds 30% of extra trading space to the overall portfolio, 18% to our owned portfolio and 70% to the managed portfolio
-- Following successful completion of Managed Store pipeline will have 10 stores under management .
Confident Outlook
-- The Group is well positioned for future growth
Commenting on the Group's results, Andrew Jacobs CEO of Lok'nStore Group said,
"With strong trading Lok'nStore's profits continue to grow, as interest costs and taxation also come down. We are investing in the future growth of the business building more new landmark stores. Our low debt allows this rapid development programme to be financed from cash flow and existing bank facilities, while progressively increasing the dividend.
"Our new store development programme continues to change the balance of our stores with new and purpose built stores accounting for 64% of the portfolio. The three new stores we opened in 2016 are all trading well and the 4 sites acquired last year for new stores will open in 2017 increasing space by a further 18% and adding impetus to sales and earnings growth.
"Our objective is to open more landmark self-storage centres while remaining conservatively leveraged to deliver robust, predictable growing cash flow and dividends from an expanding asset base."
Enquiries:
Lok'nStore: Andrew Jacobs, CEO Ray Davies, Finance Director 01252 521 010 finnCap Ltd Julian Blunt / Giles Rolls, Corporate Finance Alice Lane, Corporate Broking 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))
1. Group Adjusted EBITDA - Earnings before interest, tax, depreciation and amortisation - The measure is designed to give clarity on the operating cash flow of the business stripping away non-cash charges, finance charges and tax. Adjusted EBITDA is defined as EBITDA before losses or profits on disposal, share-based payments, acquisition costs, and exceptional items.
2. Adjustment of prior period exceptional sale - Reading
In 2016, the Group received an additional amount of sale proceeds (net of costs) of GBP1.94 million on the sale of its old Reading store. The increase in the adjusted profit before tax of GBP2.1 million (31.01.16: GBP1.85 million) and the increase in the adjusted net profit GBP1.87 million (31.01.16: GBP1.03 million) reported in the highlights above strip out the effect of this exceptional item.
3. CAD - Cash available for Distribution - is calculated as Adjusted EBITDA minus total net finance cost, less capitalised maintenance expenses, New Works Team costs and current tax. This measure is designed to give clarity to the capacity of the business to generate net operating cash that can be used to pay dividends to shareholders.
4. NAV - Net Asset Value per share - Adjusted net asset value per share is the net assets adjusted for the valuation of leasehold stores 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.
5. Total assets - Total assets of GBP142.6 million is calculated by adding the independent valuation of the leasehold properties (GBP16.6 million) less their corresponding net book value (NBV) GBP3.0 million to the total assets in the balance sheet of GBP129.0 million.
6. 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 of GBP16.7 million (31.1.2016: GBP25.8 million) as a percentage of the total properties independently valued by JLL and including development land assets totalling GBP115.5 million (31.1.2016: GBP98.5 million) as set out in the Business and Financial Review.
7. Store adjusted EBITDA is Adjusted EBITDA (see 3 above) before the deduction of central and head office costs.
8. 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. During December 2016 and January 2017, Lok'nStore closed its store in Staines. Like-for-like (LFL) growth figures for the period strip out the effect of this closure.
9. Exceptional items - arose during the period from a further GBP14,390 of additional costs from the disposal of the old Portsmouth development site and GBP20,898 of costs relating to the closure of the Staines store.
10. 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.
11. Capex - capital expenditure
Glossary
Abbreviation
Hot Features
Premium
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
C&W Cushman & Wakefield
CAD Cash available for Distribution
Capex Capital Expenditure
CSOP Company Share Option Plan
EBT Employee Benefit Trust
EMI Enterprise Management Incentive Scheme
ESOP Employee Share Option Plan
EU European Union
HMRC Her Majesty's Revenue & Customs
IAS International Accounting Standard
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
JLL Jones Lang LaSalle
LIBOR London Interbank Offered Rate
LFL Like for like
LTV Loan to Value Ratio
NAV Net Asset Value
NBV Net book value
Operating Profit Earnings before interest and tax (EBIT)
RICS Royal Institution of Chartered Surveyors
sq. ft. Square Feet
Store adjusted Adjusted EBITDA (see above) but before central and
EBITDA head office costs
VAT Value Added Tax
Chairman's Statement
Healthy growth, increased dividend and active store opening programme
Lok'nStore Group continues to build on the successful implementation of all of our strategy objectives. Our focus is opening more landmark self-storage centres while remaining conservatively leveraged to deliver robust, predictable growing cash flow and dividends. Our expanding pipeline of new stores substantially increases the proportion of our store space which is new or purpose-built and will add further momentum to the growth of sales and profits.
Trading positive
For the half year period to January 2017 trading has been steady with revenue, profits and assets all increasing.
An increase in revenue of 4.5% to GBP8.34 million (31.1.2016: GBP7.99 million) resulted mainly from occupancy growth with prices holding steady.
Progressive Dividend
Dividend payments will reflect the growth in the underlying cash generated by the business as reflected in the cash available for distribution (CAD) which is up 6.5% in the period. As noted above this was balanced by an 8.5% increase in shares outstanding so CAD per share remained steady at an annualised 19 pence despite the significant reduction in risk as debt and LTV were brought down substantially.
At this interim stage we will pay one third of the previous year's total annual dividend which equates to 3.00 pence per share, up 12.4% on the 2.67 pence per share interim dividend last year. The ex-dividend date will be 11 May 2017; the record date 12 May 2017; with an intended payment date of 9 June 2017. The final dividend will be declared when the Group's full year results are announced.
Balance Sheet and financial platform strengthened to support Growth
Lok'nStore has worked to reduce debt, increase cash and increase the value of its trading assets. This shows through in our higher NAV and lower LTV metrics. Our Bank facilities have been extended and markedly lower interest costs are now feeding through into the Income Statement. Finance costs are 42.4% lower compared to the corresponding period last year. This is all reported in more detail in the remainder of the Statement.
Sale of Treasury Shares
In November 2016 Lok'nStore sold 1,975,000 ordinary shares of 1 pence each ("Ordinary Shares") held in treasury. This sale was undertaken to satisfy demand, and to improve liquidity in the Company's shares. The shares were sold to a range of institutional investors at a price of 400 pence per share. (The Company acquired the shares at an average price of 150.3 pence). We welcome the new shareholders to the register.
The sale of these shares from treasury will have no impact on earnings or taxable profits but has reduced debt, LTV and interest payable while increasing cash and current assets, so supporting the Company's growth strategy.
There remain 491,869 shares held in treasury. Following this transaction, the Company's total issued share capital was unchanged at 29,199,230 Ordinary Shares.
The growth of sales, profit and asset values combined with innovative asset management has allowed us to achieve a substantial reduction in the loan-to-value (LTV) ratio down to 14.4% (31.1.2016: 26.2%) and net debt down to GBP16.7 million (31.1.2016: GBP25.8 million) while we invested GBP2.8 million in store development in this period.
Rapid store development programme
Our rapid store development programme has led to an increase in new and purpose built space to 64% of our owned portfolio. Recently opened stores in Southampton, Bristol, Maidenhead, Reading, Aldershot and Chichester have plenty of capacity to continue contributing to growth during the coming years. We have 4 new landmark stores in Wellingborough, Gillingham, Hemel Hempstead and Broadstairs opening through 2017 which will increase space by a further 18% and we have identified 4 more sites taking our total pipeline to 8 stores. This strong pipeline will add further impetus to sales and earnings growth.
Our innovative approach to financing, our strong balance sheet and our growing cash flows means we are achieving all this while also reducing our gearing from its existing modest level and continually increasing dividends.
Operating Costs
We have a strong record of reducing our group operating costs each year however we cautioned at our 2016 year end results that although we maintain a disciplined approach to costs continuing to reduce them is increasingly challenging while delivering both strong revenue growth and an acceleration of our store opening programme. While overall costs have risen 7.6% and we provide a breakdown in the Business Review, the cost increases are driven by the expansion of the business in the areas of rates, staffing and advertising, and we are seeing little other cost pressures.
We will continue pushing Group margins up by building more landmark freehold stores and increasing the number of managed stores we operate from essentially an unchanged central cost platform.
Lok'nStore extends existing GBP40 million Banking Facility to six years
The Group has agreed a two year extension on its existing banking facility. The GBP40 million facility will now run until January 2023. Together with our GBP12.1 million of cash and GBP2.9 million cash generated from operations this will provide funding for more landmark site acquisitions and working capital.
The cost of our debt on GBP28.8 million drawn averaged 1.69% in the period.
Positive Outlook
Lok'nStore is a dynamic business with a robust platform for significant further growth. With a record of consistent profit growth and cash generation the Group is well positioned for the coming years. Recent strong trading will be reinforced by our programme of new landmark store openings.
With the high barriers to entry to the self-storage industry created by the strong demand for property in South-East England and the difficulties of the local planning process, we believe that Lok'nStore is creating a highly valuable asset in an attractive market.
Our main 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.
In order to achieve this our focus will be on four key areas:
1. Fill stores and improve pricing to increase cash flow from the existing stores 2. Acquire sites to build more landmark stores 3. Increase the number of stores we manage for third parties 4. Grow our document storage business
Our current pipeline of 8 new stores will contribute to the achievement of these objectives.
Finally, I should like to thank all of our employees for the contribution they have made to the Group's success. With our experienced and dedicated staff we have built a firm base for the coming years and we are looking to the future with confidence.
Simon G Thomas
Chairman
24 April 2017
Business and Financial Review
The Performance of our Stores - Self-storage business steady
-- Self-storage revenue GBP7.0 million up 3.9% (31.1.2016: GBP6.74 million) -- Adjusted Store EBITDA GBP3.85 million up 0.1% (31.1.2016: GBP3.84 million)
-- Unit occupancy increased 4.6% year on year on a like for like basis to 61.8% of current lettable area (CLA)
-- Occupied units pricing up 1.0% LFL
During the period self-storage revenues rose at a steady rate of 3.9% (4.5% LFL) and Store EBITDA edged ahead by 0.1% (1.1% LFL). This was a result of unit occupancy increasing 4.6% LFL over the period as pricing edged up 1% LFL. Store EBITDA growth was subdued as we absorbed the increased costs of the new landmark stores in Southampton and Bristol, and higher costs of internet search marketing.
As you can see from the table below 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 store EBITDA margin (62.9% and 100% respectively versus 54.5% across all stores). The impact of this is 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 8 new stores in the pipeline will make a larger than average contribution to Group profits as they become established trading units.
At the end of January 2017 34.5% of Lok'nStore's self-storage revenue was from business customers (31.1.2016: 33.1%) with the remainder from household customers. By number of customers 19.7% of our customers were business customers (31.1.2016: 19.6%).
When Fully Developed
---------------- ----------- --------------- -------------- --------- -------------------------------------------
Portfolio Number % of Valuation % of Adjusted Adjusted % lettable Number Total
Analysis of stores Store EBITDA Store space of stores % lettable
and Performance EBITDA Lok Owned space
Breakdown Margin
(%)
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
As at 31
January
2017
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Freehold and
long leasehold
stores 12 86.0 70.6 62.9 63.9 15 49.8
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Operating
Leaseholds
stores 7 14.0 29.4 41.3 36.1 8 25.7
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Managed Stores 6 100 10 24.5
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Pipeline stores
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Owned 4
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Managed 4
---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Total Self
Storage 33 100 100 54.5 100 33 100 ---------------- ----------- --------------- -------------- --------- ----------- ----------- ----------------- Document Storage 2 - - - - 2 - ---------------- ----------- --------------- -------------- --------- ----------- ----------- -----------------
Total freeholds and long leasehold stores account for 86% of total property values (long leaseholds are those with over 50 years remaining term).
Ancillary Sales
Ancillary sales consisting of boxes and packaging materials, insurance and other sales increased 5.5% (31.1.2016: 3.5%) over the year accounting for 11.1% of self-storage revenues (31.1.2016: 10.9%). We continue to promote customer goods insurance to new customers with the result that 90% (31.1.2016: 91%) of our new customers purchased the product over the year. This has resulted in nearly 80% of our customers being insured through Lok'nStore.
Saracen - Document storage business
-- Revenue GBP1.15 million up 8.8% (2015: GBP1.06 million) -- Adjusted EBITDA GBP0.25 million unchanged (2015: GBP0.25 million) -- Boxes stored up 8.0%. Tapes stored up 27% over the 12 months to end of January 2017
Revenue has increased in our document storage business as operating metrics improve in response to the Company's more customer facing marketing stance. This approach has resulted in excellent customer feedback and puts us in a good position to win new business, with boxes stored increasing 8.0% and tapes stored up 27%. Initially EBITDA growth has been dampened as the increased volume of incoming items pushes up distribution and handling costs, but later in the storage cycle the profitability of these items will increase as handling is reduced.
Last year we completed the final stage of our phased fit-out of new warehouse racking in our site in Olney and we now have the capacity to significantly increase the number of boxes stored within our existing premises.
Stores Property review
Lok'nStore has 25 freehold, leasehold and managed stores trading. Of these, 19 stores are owned with 12 freehold or long leasehold, 7 leasehold and 6 further sites operate under management contracts.
The average unexpired term of the Group's operating leaseholds is approximately 11 years and 2 months as at 31 January 2017 (12 years and 2 months: 31 January 2016). All of our current leasehold stores are inside the Landlord and Tenant Act providing us with a strong security of tenure.
Closure of Staines Store
Our leasehold store in Staines was on a short lease outside of the Landlord and Tenant Act (1954) and has now been closed.
Around 50% of the existing customers were moved to other Lok'nStore stores. Of the approximately 50% of customers that did move the majority are longer term so we expect revenue from these customers to show little downturn. All of Staines operating costs has been removed so EBITDA profit is at least neutral if not slightly enhanced by the impact of this move. There were no dilapidations payments made to the landlord.
Because the Staines store was outside of LTA (1954) act and on a short lease it has never been valued as an asset in our accounts. The carrying book value in the financial statements was therefore de minimis.
It should be noted that the headline revenue and occupancy figures for December 2016 onwards will be negatively impacted to some degree by the influence of the closure, but for the sake of transparency and simplicity we have chosen not to show like-for-like figures stripping out this effect, except where it makes a qualitative difference.
Managed Store Service
-- Management fees from Managed Stores GBP0.18 million (31.1.2016: GBP0.19 million)
Over recent years we have been developing our management services to third party storage owners. We have eight stores under management with six of these open and trading and two in Hemel Hempstead and Broadstairs under development and scheduled to open in 2017.
In the case of managed stores Lok'nStore receives a standard monthly fee, a performance fee based on certain objectives and a fee on successful exit. In some cases we charge acquisition, planning and branding fees. This allows us to earn revenue from our expertise and knowledge of the self-storage industry without having to commit our capital, to amortise various fixed central costs over a wider operating base, and to drive more visits to our website moving it up the rankings and benefitting all the stores we both own and manage.
In this period we earned GBP0.18 million (31.1.2016: GBP0.19 million) in management fees. We expect this to increase steadily over the coming years. The comparative 2016 figure was enhanced by accrued fees prior to the period which could not be booked until period ended January 2016 as follows:
Six months Six months
ended ended
31 January 31 January
2017 2016
Unaudited Unaudited
Management fees GBP GBP
---------------------- ------------ ------------
Management Fees 180,881 155,446
Prior period accrued
fees - 34,390
---------------------- ------------ ------------
Total management
fees 180,881 189,836
---------------------- ------------ ------------
Growth from new stores and more new landmark 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.
-- 2016 store openings in Bristol, Southampton and Chichester trading well -- 4 new sites under development adding 18% more space -- New and purpose built stores lettable space 64% of portfolio -- 4 further new store opportunities identified
-- Current pipeline adds 18% of extra space to our owned portfolio, 70% to the managed portfolio and 30% to the overall portfolio.
Development of two new landmark stores
Wellingborough and Gillingham
In September 2016 we received planning permission and completed the purchases of the sites in Gillingham and Wellingborough. We are now on site in both locations.
The sites are in prominent retail locations with large catchment areas and little established competition. The total capital investment of approximately GBP10 million will be financed from cash flow and our bank facility. The stores are scheduled to be open at the end of 2017. When developed these stores will add around 110,000 sq. ft. to the trading portfolio increasing the company's capacity of owned stores by 10%. They will take the proportion of Lok'nStore's space which is new or purpose built to 64%.
Two new stores to be developed under management contracts
Two new management contracts were signed in July 2016 to develop and operate two new stores in prominent retail locations in Hemel Hempstead and Broadstairs. Opening is scheduled for 2017. When developed, these will add around 70,000 sq. ft. to the trading portfolio.
Flexible and tactical approach to site acquisition
We continue our strategy of actively managing our store operating portfolio to ensure we are maximising both trading potential and asset 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. Our most important consideration is always the trading potential of the store rather than the type of property tenure.
With Wellingborough, Gillingham, Hemel Hempstead and Broadstairs set to open in 2017 this will increase the number of stores we operate to 29 and will capitalise on our efficient operating systems and growing internet marketing presence.
Store property assets and Net Asset Value
-- Total assets now GBP142.6 million (31.1.2016: GBP113.4 million) -- Adjusted net asset value of GBP3.87 per share up 26.1% on last year
Financial results
-- Group Revenue GBP8.34 million up 4.5% (31.1.2016: GBP7.99 million) -- Group Adjusted EBITDA GBP3.3million up 0.5% (31.1.2016: GBP3.3 million) -- Forward cost of debt currently 1.65% -- LTV down to 14.4% -- Treasury share sale for GBP7.82m (net of costs) -- CAD up 6.5% -- Interim dividend up 12.4% -- Cash balances GBP12.1 million (31.1.2016: GBP3.0 million)
Lok'nStore is a robust business which generates an increasing cash flow from its strong asset base. With a low LTV of 14.4% and low interest margins of 1.4% on its extended banking facility the business has a firm base for growth. The value of the Group's property assets underpins a flexible business model with stable and rising cash flows and low credit risk.
Management of interest rate risk
Of the GBP28.8 million of gross debt currently drawn against the GBP40 million revolving credit facility GBP20 million was at a fixed interest rate with GBP10 million fixed rate swap at a fixed 1 month sterling LIBOR rate of 1.2% and GBP10 million swap at a fixed 1 month sterling LIBOR rate of 1.15%. Both swaps expired 20 October 2016 and the Group's all-in floating rate dropped to (currently) 1.65% on its entire gross debt.
Under the current bank facility the Group is not committed to enter into hedging instruments going forwards but rather to keep such matters under review. Given our low level of indebtedness, low Loan to Value and high interest cover, combined with the wider uncertainties within the economy of Brexit likely to produce low rates for longer, it is not the intention of the Group to enter into an interest rate hedging arrangement at this time.
Taxation
The Group has made a current tax provision against earnings in this period of GBP0.42 million based on a corporation tax rate of 20%. The deferred tax provision which is calculated at forward corporation tax rates of 17% and is substantially a tax provision against the potential crystallisation (sales) of revalued properties and past 'rolled over' gains amounts to GBP14.45 million. (31.1.2016: GBP11.63 million) (see Note 16).
Earnings per share
Basic earnings per share were 6.91 pence (31.1.2016: 11.53 pence per share) and diluted earnings per share were 6.74 pence (31.1.2016: 11.26 pence per share). If 2016 figures are adjusted to eliminate the 2016 property sale gain of GBP1.94 million, the 2016 EPS is adjusted to 4.00 pence per share and the 2016 diluted EPS to 3.91 pence per share.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
Earnings per share
(EPS) GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ---------
Profit for the Period 1,870 2,972 4,282
Exceptional Gain
on sale of Reading - (1,940) (1,940)
------------------------- ------------ ------------ ---------
Adjusted earnings 1,870 1,032 2,342
------------------------- ------------ ------------ ---------
No. of shares No. of shares No. of shares
-------------------------- ---------------- ---------------- ----------------
Weighted average number
of shares
For basic earnings per
share 27,071,818 25,775,767 25,791,821
Dilutive effect of share
options 651,347 626,082 577,882
-------------------------- ---------------- ---------------- ----------------
For diluted earnings per
share 27,723,165 26,401,849 26,369,643
-------------------------- ---------------- ---------------- ----------------
Basic EPS 6.91 4.00 9.08
-------------------------- ---------------- ---------------- ----------------
Diluted EPS 6.74 3.91 8.88
-------------------------- ---------------- ---------------- ----------------
Operating costs
We have a strong record of reducing our group operating costs each year however we cautioned at our 2016 year end results that although we maintain a disciplined approach to costs continuing to reduce them is increasingly challenging while delivering both strong revenue growth and an acceleration of our store opening programme.
Group operating costs amounted to GBP4.87 million for the period, a 7.6% increase year on year (31.1.2016: GBP4.52 million) which derived from higher rates bills as we opened landmark stores, extra staffing in document storage and higher internet marketing costs.
Property costs which mainly constitute rent and rates have risen by 10.5% as we felt the effects of higher rates bills as we opened our new landmark stores at Southampton and Bristol and on our development site at Wellingborough. Rents remained static and utility costs rose modestly. Excluding these three categories (rent, rates and utilities) other minor property costs rose by only 2.2%.
Overhead costs while up 12.5% year on year are running lower for the full year 2017 on an annualised basis. The only significant increase in this category is the cost of internet marketing which has risen 70% year to year as we improve our search rankings. Excluding this expenditure other overhead expenditures were down 3.5% year to year.
Staff costs increased by 4% as we increase staffing at our serviced document storage unit to cope with increased volumes of incoming items. Across the rest of the Group there was no increase in staff costs.
Overall the cost increases are mainly driven by the expansion of the business and we are seeing little other cost pressures.
Group Increase Six months Six months Year
in costs ended 31 ended 31 ended 31
% Jan Jan July
2017 2016 2016
GBP'000 GBP'000 GBP'000
-------------------- ---------- ----------- ----------- ----------
Property costs 10.5 2,087 1,889 3,913
Staff costs 4.0 2,156 2,074 4,232
Overheads 12.5 541 481 1,128
Distribution costs 6.3 83 78 170
-------------------- ---------- ----------- ----------- ----------
Total 7.6 4,867 4,522 9,443
-------------------- ---------- ----------- ----------- ----------
Cash flow and financing
At 31 January 2017 the Group had cash balances of GBP12.1 million (31.1.2016: GBP3.0 million). Cash inflow from operating activities before investing and financing activities was GBP2.9 million (31.1.2016: GBP0.9 million), and the sale of the Treasury shares further added to our cash position. As well as using cash generated from operations to fund some capital expenditure, the Group has a six year revolving credit facility. This provides sufficient liquidity for the Group's current needs. Undrawn committed facilities at the period-end amounted to GBP11.2 million (31.1.2016: GBP11.2 million).
Gearing
At 31 January 2017 the Group had GBP28.8 million of gross borrowings (31.1.2016: GBP28.8 million) representing gearing of 20.7% (31.1.2016: 45.7%) on net debt of GBP16.7 million (31.1.2016: GBP25.8 million). After adjusting for the uplift in value of leaseholds which are stated at depreciated historic cost in the statement of financial position, gearing is 17.7% (31.1.2016: 38.0%). After adjusting for the deferred tax liability carried at period end of GBP14.4 million gearing drops to 15.3% (31.1.2016: 32.5%).
Cash available for Distribution (CAD) up 6.5%
Cash available for Distribution (CAD) provides a clear picture of ongoing cash flow available for dividends. The CAD was up 6.5% in the period although at a per share level this was balanced by the increase in the number of shares outstanding resulting from the sale of the Treasury shares.
To illustrate this fully the table below shows the calculation of CAD.
Analysis of Cash Available for Distribution (CAD)
Six months Six months Year ended
ended 31 January ended 31 January 31 July
2017 2016 2016
GBP'000 GBP'000 GBP'000
Group Adjusted EBITDA 3,313 3,298 6,295
Less: Net finance costs
(per Income Statement) (151) (415) (735)
Capitalised maintenance
expenses (55) (55) (110)
New Works Team (66) (67) (134)
Current tax (424) (303) (606)
------------------ ------------------ -----------
Total deductions (696) (840) (1,585)
------------------ ------------------ -----------
Cash Available for Distribution 2,617 2,458 4,710
------------------ ------------------ -----------
Increase over last year 6.5%
Number Number Number
Number of shares in issue 28,084,149 25,873,896 26,019,241
CAD per share (annualised) 19p 19p 18p
Capital expenditure and capital commitments
The Group has grown through a combination of site acquisition, existing store improvements and relocations. It has concentrated on extracting value from its existing assets and developing through collaborative projects and management contracts. Capital expenditure during the period totalled GBP2.8 million (31.1.2016: GBP4.6 million). This was primarily the purchase and subsequent construction works at our development sites in Gillingham and Wellingborough as well as completing fitting-out works at our Bristol store.
The Company has no further capital commitments beyond the build and fit-outs of the Gillingham and Wellingborough Stores and the refurbishment of the Old Southampton store for cruise parking totalling GBP5.4 million.
Market Valuation of Freehold and Operating Leasehold Land and Buildings
On 31 July 2016 professional valuations were prepared by Jones Lang LaSalle (JLL) in respect of eleven freeholds one long leasehold and seven operating leasehold properties. This valuation has been adopted for the 31 January 2017 period-end. The valuation was prepared in accordance with the RICS Valuation - Professional Standards, published by The Royal Institute of Chartered Surveyors (the "Red Book"). The valuation has been provided for accounts purposes and, as such, is a Regulated Purpose Valuation as defined in the Red Book.
A deferred tax liability arises on the revaluation of the properties and on the rolled-over gain arising from the disposal of some properties. It is not envisaged that any tax will become payable in the foreseeable future on these disposals due to the availability of rollover relief.
It is not the intention of the Directors to make any other significant disposals of trading stores, although individual disposals may be considered where it is clear that added value can be created by recycling the capital into other opportunities.
The Board will continue to commission independent valuations on its trading stores annually to coincide with its year-end reporting.
The valuations of our freehold property assets are included in the Statement of Financial Position at their fair value, but under applicable accounting standards, no value is included in respect of our leasehold stores to the extent that they are classified as operating leases. The value of our operating leases in the valuation totals GBP16.6 million (31.1.2016: GBP14.8 million). Instead we have reported by way of a note the underlying value of these leasehold stores in future revaluations and adjusted our Net Asset Value (NAV) calculation accordingly to include their value. This ensures comparable NAV calculations.
Analysis of Total Property Value
31 Jan 31 Jan 2016 31 July
No of 2017 Valuation No of Valuation No of 2016 Valuation
stores/sites GBP'000 stores/sites GBP'000 stores/sites GBP'000
-------------- ---------------- -------------- ------------ -------------- ----------------
Freehold and long
leasehold valued
by
JLL (1) (Jan 2016
C & W) 12 96,125 11 70,610 12 96,125
Leasehold valued by
JLL (2) (Jan 2016
C & W) 7 16,575 7 14,760 7(1) 16,575
-------------- ---------------- -------------- ------------ -------------- ----------------
Freehold land and
buildings at
Director
valuation (3) 1 3,000 - - 1 3,000
-------------- ---------------- -------------- ------------ -------------- ----------------
Subtotal 20 115,700 18 85,370 20 115,700
Sites in
development
at cost 2 2,792 3 13,150 2 457
-------------- ---------------- -------------- ------------ -------------- ----------------
Total 22 118,492 21 98,520 22 116,157
-------------- ---------------- -------------- ------------ -------------- ----------------
(1) Includes related fixtures and fittings (refer note 10b)
(2) The seven 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 11 years and 8 months at the date of the 2016 valuation (2015 valuation: 12 years and 8 months).
(3) For more details (refer note 10b - Directors valuation)
Total freeholds account for 86.0% of property values (31.1.2016: 85.0%).
Adjusted Net Asset Value per Share
Adjusted net assets per share is the net assets of the Group business adjusted for the valuation of leasehold stores and deferred tax divided by the number of shares at the period-end. The shares currently held in the Group's employee benefits trust (own shares held) and in treasury are excluded from the number of shares.
At January 2017 the adjusted net asset value per share increased to GBP3.87 from GBP3.07 year on year, up 26.1%. This substantial increase is a result of higher property values as our new valuers recognised the strength of our landmark stores, cash generated from operations, offset in part by an increase in the shares in issue due to the exercise of share options by management and staff during the period.
31 Jan 31 Jan 31 July
2017 2016 2016
Analysis of net asset value (NAV) GBP'000 GBP'000 GBP'000
--------------------------------------------------- ---------- ---------- ----------
Net assets
Adjustment to include operating/short leasehold 80,733 56,409 71,475
stores at valuation
Add: JLL leasehold valuation 16,575 14,760 16,575
Deduct: leasehold properties and their
fixtures and fittings at NBV (3,006) (3,296) (3,065)
--------------------------------------------------- ---------- ---------- ----------
94,302 67,873 84,985
Deferred tax arising on revaluation of
leasehold properties(1) (2,307) (2,063) (2,432)
--------------------------------------------------- ---------- ---------- ----------
Adjusted net assets 91,995 65,810 82,553
Shares in issue Number Number Number
--------------------------------------------------- ---------- ---------- ----------
Opening shares in issue 29,109 28,447 28,447
Shares issued for the exercise of options 90 517 662
--------------------------------------------------- ---------- ---------- ----------
Closing shares in issue 29,199 28,964 29,109
Shares held in treasury (492) (2,467) (2,467)
Shares held in EBT (623) (623) (623)
--------------------------------------------------- ---------- ---------- ----------
Closing shares for NAV purposes 28,084 25,874 26,019
--------------------------------------------------- ---------- ---------- ----------
Adjusted net asset value per share after GBP3.28 GBP2.54 GBP3.17
deferred tax provision
--------------------------------------------------- ---------- ---------- ----------
Adjusted net asset value per share before
deferred tax provision
Adjusted net assets 91,995 65,810 82,553
Deferred tax liabilities and assets recognised
by the Group 14,446 11,634 15,361
Deferred tax arising on revaluation of
leasehold properties(1) 2,307 2,063 2,432
--------------------------------------------------- ---------- ---------- ----------
Adjusted net assets before deferred tax 108,748 79,507 100,346
--------------------------------------------------- ---------- ---------- ----------
Closing shares for NAV purposes 28,084 25,874 26,019
--------------------------------------------------- ---------- ---------- ----------
Adjusted net asset value per share before GBP3.87 GBP3.07 GBP3.86
deferred tax provision
--------------------------------------------------- ---------- ---------- ----------
(1) A deferred tax adjustment in respect of the uplift in the value of the leasehold properties has been included. Although this is a memorandum adjustment as leasehold properties are included in the Group's financial statements at cost and not at valuation, this deferred tax adjustment is included in the adjusted net asset value calculation in order to maintain a consistency of tax treatment between freehold and leasehold properties.
Corporate and Social Responsibilities
Lok'nStore conducts its business in a manner that reflects honesty, integrity and ethical conduct. We believe that the long-term success of the business is best served by respecting the interests of all our stakeholders. Management of social, environmental and ethical issues is of high importance to Lok'nStore. These issues are dealt with on a day-to-day basis by the Group's managers with principal accountability lying with the Board of Directors. We look for opportunities to address our responsibility to the environment, and we pay close attention to our energy use, carbon dioxide emissions, water use and waste production. At each year-end Lok'nStore commissions a full assessment of the Group's environmental impact.
Customers
We believe in clarity and transparency towards our customers. Brochures and literature are written in plain English, explaining clearly our terms of business without hiding anything. We are open and honest about our products and services and do not employ pressure selling techniques or attempt to take advantage of any vulnerable groups. If we make a mistake we acknowledge it, deal with the problem quickly, and learn from our error. We listen to our customers as we know that they can help us improve our service to them.
Andrew Jacobs Ray Davies Chief Executive Officer Finance Director
Consolidated Statement of Comprehensive Income
For the six months ended 31 January 2017
Notes Six months Six Year ended
ended months 31 July
31 January ended 2016
2017 31 Audited
Unaudited January GBP'000
GBP'000 2016
Unaudited
GBP'000
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Revenue 1 8,343 7,986 16,056
Total property, staff,
distribution
and general costs 2a (5,030) (4,689) (9,761)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Adjusted EBITDA(1) 3,313 3,297 6,295
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Amortisation of intangible assets (83) (84) (165)
Depreciation (897) (735) (1,537)
Equity settled share based
payments 18 (48) (93) (182)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
(1,028) (912) (1,884)
Store relocation costs (21) - -
Net settlement proceeds 2c - 1,940 1,940
Property disposal costs (14) (122) (123)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
(1,063) 906 (67)
6,228
Operating profit 2,250 4,203
Finance income 3 174 150 313
Finance cost 4 (325) (564) (1,048)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Profit before taxation 5 2,099 3,789 5,493
Income tax expense 6 (229) (817) (1,211)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Profit for the period 1,870 2,972 4,282
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Profit attributable to:
Owners of the parent 19 1,870 2,972 4,282
Other Comprehensive Income
Items that will not be
reclassified
to profit and loss
Increase in property valuation 391 379 17,651
Deferred tax relating to change
in property valuation 499 734 (2,387)
890 1,102 15,264
Items that may be subsequently
reclassified to profit and loss
Increase in fair value of cash
flow hedges 37 21 83
Deferred tax relating to cash flow
hedges - (10) (21)
----------------------------------- ------ ----------- ---------- ----------------------------------------------
37 11 62
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Other comprehensive income 927 1,113 15,326
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Total comprehensive income for
the period 2,797 4,085 19,608
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Attributable to:
Owners of the parent 2,797 4,085 19,608
----------------------------------- ------ ----------- ---------- ----------------------------------------------
Earnings per share attributable
to owners of the Parent
Basic 8 6.91p 11.53p 16.60p
Diluted 8 6.74p 11.26p 16.24p
----------------------------------- ------ ----------- ---------- ----------------------------------------------
(1) Adjusted EBITDA and operating profit are defined in the accounting policies section of the notes to the interim report.
Consolidated Statement of Changes in Equity
Share Share Other Revaluation Retained Total
capital premium reserves reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- ---------- ------------ ---------- ---------
1 August 2015 - Audited 285 2,614 8,685 32,239 9,146 52,969
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Profit for the period - - - - 2,972 2,972
Other comprehensive
income:
Increase in property
valuation net of deferred
tax - - - 1,102 - 1,102
Decrease in fair value
of cash flow hedges
net of deferred tax - - 11 - - 11
Total comprehensive
income - - 11 1,102 2,972 4,085
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Transactions with owners:
Dividend paid - - - - (1,456) (1,456)
Share based payments - - 93 - - 93
Transfers in relation
to share based payments - - (303) - 303 -
Deferred tax credit
relating to share options - - (6) - - (6)
Exercise of share options 5 719 - - - 724
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Total transactions
with owners
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Transfer realised gain
on asset disposal - - - (1,668) 1,668 -
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Transfer additional
dep'n on revaluation
net of deferred tax - - - (128) 128 -
31 January 2016 - Unaudited 290 3,333 8,480 31,545 12,761 56,409
----------------------------- --------- --------- ---------- ------------ ---------- ---------
Profit for the period - - - - 1,310 1,310
Other comprehensive
income:
Increase in property valuation net of deferred tax - - - 14,162 - 14,162 Decrease in fair value of cash flow hedges net of deferred tax - - 51 - - 51 Total comprehensive income - - 51 14,162 1,310 15,523 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Transactions with owners: Dividend paid - - - - (691) (691) Share based payments - - 89 - - 89 Transfers in relation to share based payments - - (98) - 98 - Deferred tax credit relating to share options - - (90) - - (90) Exercise of share options 1 234 - - - 235 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Total transactions with owners 1 234 (99) - (593) (457) ----------------------------- --------- --------- ---------- ------------ ---------- --------- Transfer realised gain on asset disposal - - - 29 (29) - ----------------------------- --------- --------- ---------- ------------ ---------- --------- Transfer additional dep'n on revaluation net of deferred tax - - - (134) 134 - 31 July 2016 - Audited 291 3,567 8,432 45,602 13,583 71,475 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Profit for the period - - - - 1,870 1,870 Other comprehensive income: Increase in property valuation net of deferred tax - - - 890 - 890 Decrease in fair value of cash flow hedges net of deferred tax - - 37 - - 37 Total comprehensive income - - 37 890 1,870 2,797 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Transactions with owners: Dividend paid - - - - (1,778) (1,778) Share based payments - - 48 - - 48 Transfers in relation to share based payments - - (66) - 66 - Deferred tax credit relating to share options - - 221 - - 221 Sale of shares from treasury (net of costs) - 4,704 - - 3,117 7,821 Exercise of share options 1 148 - - - 149 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Total transactions with owners 1 148 203 - 6,109 6,461 ----------------------------- --------- --------- ---------- ------------ ---------- --------- Transfer additional dep'n on revaluation net of deferred tax - - - (115) 115 - 31 January 2017 - Unaudited 292 8,419 8,672 46,377 16,973 80,733 ----------------------------- --------- --------- ---------- ------------ ---------- ---------
Consolidated Statement of Financial Position
31 January 2017
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ -------------------------------------------- ------------- ----------
Assets
Non-current assets
Intangible assets 3,509 3,674 3,593
Property, plant and equipment 9 106,628 88,494 104,363
Development loan capital 10 3,319 2,905 3,159
113,456 95,073 111,115
---------------------------------- ------ -------------------------------------------- ------------- ----------
Current assets
Inventories 11 168 139 165
Trade and other receivables 12 3,271 3,677 4,952
Cash and cash equivalents 12,140 3,010 5,335
---------------------------------- ------ -------------------------------------------- ------------- ----------
Total current assets 15,579 6,826 10,452
---------------------------------- ------ -------------------------------------------- ------------- ----------
Total assets 129,035 101,899 121,567
---------------------------------- ------ -------------------------------------------- ------------- ----------
Liabilities
Current liabilities
Trade and other payables 13 (4,522) (4,839) (5,794)
Taxation (597) (294) (173)
Derivative financial instruments 15b - (99) (37)
---------------------------------- ------ -------------------------------------------- ------------- ----------
(5,119) (5,232) (6,004)
---------------------------------- ------ -------------------------------------------- ------------- ----------
Non-current liabilities
Borrowings 15a (28,737) (28,624) (28,727)
Deferred tax 16 (14,446) (11,634) (15,361)
---------------------------------- ------ -------------------------------------------- ------------- ----------
(43,183) (40,258) (44,088)
---------------------------------- ------ -------------------------------------------- ------------- ----------
Total liabilities (48,302) (45,490) (50,092)
---------------------------------- ------ -------------------------------------------- ------------- ----------
Net assets 80,733 56,409 71,475
---------------------------------- ------ -------------------------------------------- ------------- ----------
Equity
Equity attributable to owners
of the parent
Called up share capital 17 292 290 291
Share premium 8,419 3,333 3,567
Other reserves 18 8,672 8,480 8,432
Retained earnings 19 16,973 12,761 13,583
Revaluation reserve 46,377 31,545 45,602
---------------------------------- ------ -------------------------------------------- ------------- ------------
Total equity 80,733 56,409 71,475
---------------------------------- ------ -------------------------------------------- ------------- ------------
Approved by the Board of Directors and authorised for issue on 24 April 2017 and signed on its behalf by:
Andrew Jacobs Ray Davies Chief Executive Officer Finance Director
Consolidated Statement of Cash Flows
For the six months ended 31 January 2017
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
--------------------------------------------- ------ ------------ ------------ -----------
Operating activities
Cash generated from operations 21a 2,897 1,826 3,774
Income tax paid - (961) (961)
Net cash from operating activities 2,897 865 2,813
Investing activities
Development loan capital (160) (126) (380)
Purchase of property, plant and equipment 9 (2,770) (4,589) (6,988)
Net proceeds from disposal of property,
plant and equipment - 5,398 8,399
Interest received 18 135 14
--------------------------------------------- ------ ------------ ------------ -----------
Net cash (used in) / from investing
activities (2,912) 818 1,045
--------------------------------------------- ------ ------------ ------------ -----------
Financing activities
Repayment of borrowings - (27,701) (27,701)
Proceeds from new borrowings - 28,816 28,816
Loans granted to projects under management - (978) -
contracts
Loans repaid from projects under management 944 - -
contracts
Finance costs paid (315) (513) (885)
Equity dividends paid (1,778) (1,456) (2,147)
Proceeds from issuance of ordinary
shares (net) 148 724 959
Proceeds from sale of treasury shares 7,821 - -
(net)
--------------------------------------------- ------ ------------ ------------ -----------
Net cash used in financing activities 6,820 (1,108) (958)
Net increase in cash and cash equivalents
in the period 6,805 575 2,900
Cash and cash equivalents at beginning
of the period 5,335 2,435 2,435
--------------------------------------------- ------ ------------ ------------ -----------
Cash and cash equivalents at end of
the period 12,140 3,010 5,335
--------------------------------------------- ------ ------------ ------------ -----------
Accounting Policies
General Information
Lok'nStore Group plc is an AIM listed company incorporated and domiciled in England and Wales. The address of the registered office is One London Wall, London EC2Y 5AB, UK. Copies of this Interim Report and Accounts may be obtained from the Company's head office at 112 Hawley Lane, Farnborough, Hants, GU14 8JE, or from the investor section of the Company's website at http://www.loknstore.co.uk.
Basis of preparation
The interim results for the six months ended 31 January 2017 have been prepared on the basis of the accounting policies expected to be used in the 2017 Lok'nStore Group Plc Annual Report and Accounts and in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union ('EU') ('IFRS').
The same accounting policies, presentation and methods of computation are followed in these interim condensed set of financial statements as have been applied in the Group's latest annual audited financial statements.
The interim results, which were approved by the Directors on 24 April 2017, are unaudited. The interim results do not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006.
Comparative figures for the year ended 31 July 2016 have been extracted from the statutory accounts for the Group for that period, which carried an unqualified audit report, did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.
Going concern
The Directors can report that, based on the Group's budgets and financial projections, they have satisfied themselves that the business is a going concern. The Board has a reasonable expectation that the Company and the Group have adequate resources and facilities to continue in operational existence for the foreseeable future based on Group cash balances and cash equivalents of GBP12.1 million (31.01.2016: GBP3.0 million), undrawn committed bank facilities at 31 January 2017 of GBP11.2 million (31.01.2016: GBP11.4 million), and cash generated from operations in the period to 31 January 2017 of GBP2.9 million (31.01.2016: GBP0.8 million). The Group operates a GBP40 million five year revolving credit facility with Royal Bank of Scotland plc which provides funding for site acquisitions and working capital. The Group is fully compliant with all bank covenants and undertakings and is not obliged to make any repayments prior to expiration. The Group has recently agreed a two year extension on its existing banking facility with Royal Bank of Scotland plc and the facility which was due to expire in January 2021, will now run until January 2023 The financial statements are therefore prepared on a going concern basis.
Adjusted EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) is defined as profits from operations before all depreciation and amortisation charges, share-based payments and other non-recurring costs, finance income, finance costs and taxation.
Store adjusted EBITDA
Store adjusted EBITDA is defined as adjusted EBITDA (see above) but before central and head office costs.
Notes to the Financial Statements
For the six months ended 31 January 2017
1 Revenue
Analysis of the Group's revenue is shown below:
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
Stores trading GBP'000 GBP'000 GBP'000
---------------------------------------------- ------------ ------------ ----------
Self-storage revenue 6,225 6,004 11,931
Other storage related revenue 778 738 1,510
Ancillary store rental revenue - 4 3
Sub-total - Self-storage revenue
- owned stores 7,003 6,746 13,444
Management fees - managed stores 181 190 439
---------------------------------------------- ------------ ------------ ----------
Sub-total 7,184 6,936 13,883
Stores under development
Non-storage income 8 (8) -
---------------------------------------------- ------------ ------------ ----------
Sub-total 7,192 6,928 13,883
---------------------------------------------- ------------ ------------ ----------
Serviced archive and records management
revenue 1,151 1,058 2,173
---------------------------------------------- ------------ ------------ ----------
Total revenue per statement of comprehensive
income 8,343 7,986 16,056
---------------------------------------------- ------------ ------------ ----------
The segment information for the period ended 31 January 2017 and 2016 is as follows:
Serviced Serviced
2016/2017 - Unaudited archive archive
and records and records
Self-storage management Total Self-storage management Total
six months six months six months six months six months six months
ended ended ended ended ended ended
31 January 31 January 31 January 31 January 31 January 31 January
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------- ------------- ------------ ------------- ------------- ------------
Revenue from external
customers 7,192 1,151 8,343 6,928 1,058 7,986
------------------------------ ------------- ------------- ------------ ------------- ------------- ------------
Segment adjusted EBITDA 3,064 249 3,313 3,045 252 3,297
Depreciation (847) (49) (896) (685) (50) (735)
Amortisation of intangible
assets - (83) (83) - (84) (84)
Equity settled share based
payments (49) - (49) (93) - (93)
Store relocation costs (21) - (21) - - -
Net settlement proceeds
- Reading site - - - 1,940 - 1,940
Costs of disposal (14) - (14) (122) - (122)
Segment profit/(loss) 2,133 117 2,250 4,085 118 4,203
------------------------------ ------------- ------------- ------------ ------------- ------------- ------------
Central costs not allocated
to segments:
Finance income 174 150
Finance costs (325) (564)
------------------------------ ------------- ------------- ------------ ------------- ------------- ------------
Profit before taxation 2,099 3,789
Income tax expense (229) (817)
Consolidated profit for
the financial period 1,870 2,972
------------------------------ ------------- ------------- ------------ ------------- ------------- ------------
Serviced
2016 - Audited archive &
Self-storage records management Total
year year year
ended ended ended
31 July 31 July 31 July
2016 2016 2016
GBP'000 GBP'000 GBP'000
------------------------------ ------------- -------------------- ----------
Revenue from external
customers 13,883 2,173 16,056
------------------------------ ------------- -------------------- ----------
Segment adjusted EBITDA 5,708 587 6,295
Management charges 72 (72) -
------------------------------ ------------- -------------------- ----------
Segment adjusted EBITDA 5,780 515 6,295
Depreciation (1,436) (101) (1,537)
Amortisation of intangible
assets - (165) (165)
Equity settled share based
payments (182) - (182)
Net settlement proceeds
- Reading site 1,940 - 1,940
Net disposal costs - Swindon
stores (123) - (123)
Segment profit/(loss) 5,979 249 6,228
------------------------------ ------------- -------------------- ----------
Central costs not allocated
to segments:
Finance income 313
Finance costs (1,048)
------------------------------ ------------- -------------------- ----------
Profit before taxation 5,493
Income tax expense (1,211)
Consolidated profit for
the financial year 4,282
------------------------------ ------------- -------------------- ----------
2017 Serviced
Unaudited Serviced archive archive
& records & records
Self-storage management Total Self-storage management Total
31 January 31 January 31 January 31 January 31 January 31 January
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- ----------------- ------------ ------------- ------------ ------------
Segment assets 122,935 6,100 129,035 95,913 5,986 101,899
----------------------- ------------- ----------------- ------------ ------------- ------------ ------------
Segment liabilities (19,067) (498) (19,565) (16,322) (445) (16,767)
Borrowings (28,737) (28,624)
Derivative financials - (99)
Total liabilities (48,302) (45,490)
Capital expenditure 2,768 2 2,770 4,449 140 4,589
----------------------- ------------- ----------------- ------------ ------------- ------------ ------------
2016 Serviced
Audited Self-storage archive & Total
31 July records management 31 July
2016 31 July 2016 2016
GBP'000 GBP'000 GBP'000
------------------------ ------------- -------------------- ---------
Segment assets 115,253 6,314 121,567
------------------------ ------------- -------------------- ---------
Segment liabilities (20,727) (601) (21,238)
Borrowings (28,727)
Derivative financials (37)
------------------------ ------------- -------------------- ---------
Total liabilities (50,092)
------------------------ ------------- -------------------- ---------
Capital expenditure 6,629 359 6,988
------------------------ ------------- -------------------- ---------
2a Property, staff, distribution Six months Six months Year
and general costs ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ---------
Property and premises costs 2,087 1,889 3,913
Staff costs 2,156 2,074 4,232
General overheads 542 481 1,128
Distribution costs 83 78 170
---------------------------------- ------------ ------------ ---------
Retail products cost of sales 162 167 318
---------------------------------- ------------ ------------ ---------
5,030 4,689 9,761
---------------------------------- ------------ ------------ ---------
2b Cost of sales of retail products
Cost of sales represents the direct costs associated with the sale of retail products such as boxes and packaging and, the ancillary sales of insurance cover for customer goods, all of which fall within the Group's ordinary activities.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ---------
Retail 67 55 118
Insurance 20 33 51
Van hire - 1 1
Other 2 1 1
---------------------------------- ------------ ------------ ---------
89 90 171
Serviced archive consumables and
direct costs 73 77 147
---------------------------------- ------------ ------------ ---------
162 167 318
---------------------------------- ------------ ------------ ---------
2c Other Income and costs
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ---------
Net settlement proceeds - (1,940) (1,940)
Property disposal costs 14 122 123
Store relocation costs 21 - -
--------------------------- ------------ ------------ ---------
35 (1,818) (1,817)
--------------------------- ------------ ------------ ---------
In the year ended 31 July 2017, the Group received an additional GBP2 million from the purchaser of the original Reading store site in return for the relinquishment of all remaining rights over the site. This sum is in addition to the GBP2.9 million received from the purchaser on 31 October 2014, taking the total consideration to GBP4.9m.
3 Finance income
Six months Six months
ended ended Year ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------- ------------ ------------ -----------
Bank interest 18 9 14
Other interest 156 141 299
---------------- ------------ ------------ -----------
174 150 313
---------------- ------------ ------------ -----------
4 Finance costs
Six months Six months
ended ended 31 Year ended
31 January January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ----------- -----------
Bank interest 283 456 797
Non-utilisation fees and amortisation
of bank loan arrangement fees 42 108 251
325 564 1,048
--------------------------------------- ------------ ----------- -----------
Most interest payable arises on bank loans classified as financial liabilities measured at amortised cost.
5 Profit before taxation
Six months ended Six months Year ended
31 January ended 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP '000
------------------------------------- ----------------- ------------------ -----------
Profit before taxation is stated
after charging:
Depreciation and amounts written
off property, plant and equipment:
- owned assets 897 735 1,535
Amortisation of intangible
assets 83 84 165
Operating lease rentals - land
and buildings 764 762 1,529
------------------------------------- ----------------- ------------------ -----------
6 Taxation
Six months ended Six months Year
31 January ended 31 January ended 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current tax:
UK corporation tax 424 728 606
---------------------------------------- ----------------- ------------------ ---------------
Deferred tax:
Origination and reversal of temporary
differences 71 468 976
Adjustments in respect of prior
periods - (379) 75
Impact of change in tax rate
on closing balance (266) - (446)
---------------------------------------- ----------------- ------------------ ---------------
Total deferred tax charge (195) 89 605
---------------------------------------- ----------------- ------------------ ---------------
Income tax expense for the period/year 229 817 1,211
---------------------------------------- ----------------- ------------------ ---------------
The charge for the period can be reconciled to the profit for the period as follows:
Year
Six months ended Six months ended 31
31 January ended 31 January July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit before tax 2,098 3,789 5,493
Tax on ordinary activities at
the standard effective rate of
corporation tax in the UK of 20%
(31.1.2016: 20.0%) 420 758 1,099
Expenses not deductible for tax
purposes 2 1 3
Depreciation of non-qualifying
assets 50 38 85
Share based payment charges in
excess of corresponding tax deduction 10 19 36
Adjustments in respect of prior
periods - deferred tax - (379) 75
Adjustments in respect of prior -
periods - corporation tax 3 -
Impact of change in tax rate on
closing DT balance (266) - (69)
Share option scheme 12 (12) (22)
Deferred tax on rolled over gain - 388 -
Other timing differences 1 1 4
---------------------------------------- ----------------- ------------------ ----------
Income tax expense for the period/year 229 817 1,211
---------------------------------------- ----------------- ------------------ ----------
Effective tax rate 10.9% 22.2% 22%
---------------------------------------- ----------------- ------------------ ----------
The UK's main rate of corporation tax reduced to 20% from 1 April 2015. The effective rate for this period is 10.9%. (31.01.2016: 22.2%). The effective rate is 23.6% after taking account of the effect of GBP266,091 arising from the reduction in forward deferred tax rates from 18% to 17%.
In addition to the amount charged to profit or loss for the period, deferred tax relating to the revaluation of the Group's properties of GBP84,445 (31.1.2016: GBP733,704) and the fair value of cash flow hedges of GBPnil (31.1.2016: GBP19,648) has been recognised directly in other comprehensive income (see note 16 on deferred tax).
7 Dividends
Six months Six months
ended ended 31 Year ended
31 January January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------ ----------- -------------
Amounts recognised as distributions to equity
holders in the year:
----------------------------------------------- ------------ ----------- -------------
Final dividend for the year ended 31 July
2015 (5.67 pence per share) - 1,456 1,456
Interim dividend for the six months to 31
January 2016 (2.67 pence per share) - - 691
Final dividend for the year ended 31 July 1,778 - -
2016 (6.33 pence per share)
1,778 1,456 2,147
----------------------------------------------- ------------ ----------- -------------
In respect of the current period the Directors propose that an interim dividend of 3.00 pence per share will be paid to the shareholders. The total estimated dividend to be paid is GBP842,524 based on the number of shares currently in issue as adjusted for shares held in the Employee Benefits Trust and for shares held on treasury. This interim dividend is an on-account payment of a final annual dividend and is ultimately subject to approval by shareholders at the 2017 Annual General Meeting and has not been included as a liability in these financial statements. The ex-dividend date will be 11 May 2017; the record date 12 May 2017; with an intended payment date of 9 June 2017.
8 Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------- ---------------- ------------ -----------
Profit for the financial period 1,870 2,972 4,282
----------------------------------- ---------------- ------------ -----------
No. of No. of
No. of shares shares shares
----------------------------------- ---------------- ------------ -----------
Weighted average number of shares
For basic earnings per share 27,071,818 25,775,767 25,791,821
Dilutive effect of share options 651,347 626,082 577,822
----------------------------------- ---------------- ------------ -----------
For diluted earnings per share 27,723,165 26,401,849 26,369,643
----------------------------------- ---------------- ------------ -----------
623,212 (31.01.2016: 623,212) shares are held in the Employee Benefit Trust and 491,869 (31.01.2016: 2,466,869) shares are held in Treasury. Both are excluded from the above calculation.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
-------------------- ------------ ------------ ---------
Earnings per share
Basic 6.91p 11.53p 16.60p
-------------------- ------------ ------------ ---------
Diluted 6.74p 11.26p 16.24p
-------------------- ------------ ------------ ---------
9 Property, plant and equipment
Long Fixtures,
Development leasehold Short fittings
property Land and land and leasehold and Motor
assets buildings buildings improvements equipment vehicles
at cost at valuation at valuation at cost at cost at cost Total
Group GBP'000 GBP '000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Net book value
at 31 July 2015
- Audited 8,888 61,035 6,425 873 10,572 19 87,802
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Net book value
at 31 January
2016
- Unaudited 13,150 57,935 6,478 827 10,096 8 88,494
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Net book value
at 31 July 2016
- Audited 458 80,953 90,263 782 12,902 5 104,363
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Cost or
valuation
1 August 2016 458 80,953 9,263 2,563 22,758 17 116,012
Additions 2,334 (43) - 36 443 - 2,770
Disposals - - - - - - -
Reclassification - - - - - - -
Revaluations - (45) 51 - - - 6
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
31 January 2016
- Unaudited 2,792 80,865 9,314 2,599 23,201 17 118,788
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Depreciation
1 August 2016 - - - 1,781 9,856 12 11,649
Depreciation - 323 63 49 461 1 897
Disposals - - - - - -
Revaluations (323) (63) - - - (386)
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
31 January 2017
Unaudited - - - 1,830 10,317 13 12,160
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Net book value
at 31 January
2017
- Unaudited 2,792 80,865 9,314 769 12,884 4 106,628
------------------ ------------ -------------- ------------- -------------- ----------- ---------- ----------
Capital expenditure during the period totalled GBP2.8 million (31.1.2016: GBP4.6 million). This was primarily the purchase and subsequent construction works at our development sites in Gillingham and Wellingborough as well as completing fitting-out works at our Bristol store.
Property, plant and equipment (non-current assets) with a carrying value of GBP106.6 million (31.1.2016: GBP88.5 million) are pledged as security for bank loans (see note 15a).
Market Valuation of Freehold and Operating Leasehold Land and Buildings
Following the comprehensive external valuation at 31 July 2016 by JLL, the freehold and leasehold properties have not been externally valued at 31 January 2017, although in accordance with the Group's established policy it is the intention to do so at the next year end at 31 July 2017.
Although the Board did not commission an external valuation at this interim period-end it is mindful of the need to accord with the measurement principles of International Financial Reporting Standards as adopted by the European Union. Accordingly after consulting with our external valuers, whilst there has been continued market activity in the self storage sector since July 2017, including the sale of the Big Box portfolio in October 2016 to US investors Storage Mart for in excess of GBP100m, as well as some sales of individual self storage assets, the Directors considered that there had not been such a material movement in market yields that warranted a modification to the position as at 31 January 2017 in respect of our properties externally valued at 31 July 2016. The Directors therefore consider that it is appropriate to maintain the portfolio's external valuation without modification pending a comprehensive external valuation at our 31 July 2017 year-end.
10 Development loan capital
In May 2015 Lok'nStore opened a new store in Aldershot, Hampshire to which it provided development loan capital. The store is managed for outside investors under the Lok'nStore brand. Lok'nStore has managed the building and subsequent operation of the store and will generate a return on GBP2.5 million of the total development capital committed to the project, and a management fee for the construction, operation and branding of the store.
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- ---------
Development loan capital 3,319 2,905 3,159
-------------------------- ----------- ----------- ---------
11 Inventories
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ---------
Consumables and goods for resale 168 139 165
---------------------------------- ----------- ----------- ---------
The amount of inventories recognised as an expense during the period was GBP81,005 (31.1.2016: GBP74,320).
12 Trade and other receivables
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ------------- ----------
Trade receivables 1,414 1,344 2,027
Other receivables 857 1,511 1,910
Prepayments and accrued income 1,000 822 1,015
3,271 3,677 4,952
-------------------------------- ----------- ------------- ----------
The Directors consider that the carrying amount of trade and other receivables and accrued income approximates their fair value.
13 Trade and other payables
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ----------- ---------
Trade payables 593 864 887
Taxation and social security costs 666 884 1,369
Other payables 1,156 1,095 1,197
Accruals and deferred income 2,107 1,996 2,341
------------------------------------ ----------- ----------- ---------
4,522 4,839 5,794
------------------------------------ ----------- ----------- ---------
The Directors consider that the carrying amount of trade and other payables and accruals approximates fair value.
14 Capital management and gearing
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The gearing ratio at the period-end is as follows:
Capital Management 31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------- ----------- ----------- ---------
Gross debt (28,816) (28,816) (28,816)
Cash and cash equivalents 12,140 3,010 5,335
--------------------------- ----------- ----------- ---------
Net debt (16,676) (25,806) (23,481)
Total equity 80,733 56,409 71,475
Net debt to equity ratio 20.7% 45.7% 32.8%
--------------------------- ----------- ----------- ---------
15a Borrowings
31 January 31 January 31 July
2017 Unaudited 2016 Unaudited 2016
GBP'000 GBP'000 Audited
GBP'000
--------------------------------------- ---------------- ---------------- ---------
Non-current
Bank loans repayable in more than two
years
but not more than five years
Gross 28,816 28,816 28,816
Deferred financing costs (79) (192) (89)
--------------------------------------- ---------------- ---------------- ---------
Net bank borrowings 28,737 28,624 28,727
--------------------------------------- ---------------- ---------------- ---------
The Group has agreed a two year extension on its existing banking facility with Royal Bank of Scotland plc. The GBP40 million five year revolving credit facility which was executed last year included an extension option which has now been implemented. The facility which was due to expire in January 2021, will now run until January 2023 providing funding for more landmark site acquisitions and working capital.
The GBP40 million five year revolving credit facility set the interest rate margin at the London Inter-Bank Offer Rate (LIBOR) plus 1.40%-1.65% based on a loan to value covenant test. This rate is 1.40% currently and the all in debt cost on GBP28.8 million drawn averaged 1.7% in the last five months. Bank covenants and margin are unaffected by this extension of term.
The GBP40 million revolving credit facility is secured by legal charges and debentures over the freehold and leasehold properties and other assets of the business with a net book value of GBP125.5 million together with cross-company guarantees from Group companies. The Group is not obliged to make any repayments prior to expiration.
15b Derivative financial instruments
Of the GBP28.8 million of gross debt currently drawn against the revolving credit facility, GBP20 million was at a fixed interest rate with GBP10 million fixed rate swap at a fixed 1 month sterling LIBOR rate of 1.2% and GBP10 million swap at a fixed 1 month sterling LIBOR rate of 1.15%.
The GBP20 million fixed rate was treated as an effective cash flow hedge and its fair value on a mark-to-market basis has fluctuated historically. Under current facility arrangements the Group is not committed to enter into hedging instruments going forwards but rather to keep such matters under periodic review. The fixed interest swaps expired on 20 October 2016 and the Groups entire GBP28.8 million of gross debt reverted to variable rate and results in an overall weighted average rate over the financial period of 1.74%. At the balance sheet date the effective cost of debt is 1.65 %
Fair Value
31 Jan 31 Jan
2017 2016 31 July
Principal Maturity Unaudited Unaudited 2016 Audited
Currency GBP date GBP'000 GBP'000 GBP'000
3032816LS Interest rate
swap GBP 10,000,000 20/10/2016 - (51) (19)
3047549LS Interest rate
swap GBP 10,000,000 20/10/2016 - (48) (18)
------------------------- ---------- ----------- ----------- ----------- ----------- --------------
20,000,000 - (99) (37)
------------------------------------ ----------- ----------- ----------- ----------- --------------
The movement in fair value of the interest rate swaps of GBP37,850 (31.1.2016: GBP20,529) has been recognised in other comprehensive income in the period.
16 Deferred tax
31 January 31 January 31 July 2016
2017 2016 Audited
Unaudited Unaudited GBP'000
Deferred tax liability GBP'000 GBP'000
-------------------------------------- ----------- ----------- -------------
Liability at start of period/year 15,361 12,252 12,252
Charge to income for the period/year (195) 89 605
Tax charged directly to other
comprehensive income (499) (707) 2,408
Credit to share based payment
reserve (221) - 96
Liability at end of period/year 14,446 11,634 15,361
-------------------------------------- ----------- ----------- -------------
The following are the major deferred tax liabilities and assets recognised by the Group and the movements during the year:
Rolled
Accelerated Other Revaluation over
Capital Tax Intangible temporary of gain Share
Allowances losses assets differences properties on disposal Options Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
At 31 July 2015
-
Audited 1,708 - 530 (8) 8,586 1,787 (351) 12,252
Charge/
(credit)
to income for
the
period (62) - (68) 34 - 162 23 89
Charge to other
comprehensive
income - - - 10 (734) 11 6 (707)
At 31 January
2016
- Unaudited 1,646 - 462 36 7,852 1,960 (322) 11,634
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
Charge/
(credit)
to income for
the
period 209 - (15) (23) - 362 (17) 516
Charge to other
comprehensive
income - - - 11 3,109 1 (6) 3,115
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
Charge to share
based payment
reserve - - - - - - 96 96
---------------- ------------ --------- ----------- ------------ ------------ ------------
At 31 July 2016
-
Audited 1,855 - 447 24 10,961 2,323 (249) 15,361
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
Charge/
(credit)
to income for
the
period (34) - (39) (8) - (141) 27 (195)
Charge to other
comprehensive
income - - - - (511) 12 - (499)
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
Charge to share
based payment
reserve - - - - - - (221) (221)
---------------- ------------ --------- ----------- ------------ ------------ ------------
At 31 January
2017
- Unaudited 1,821 - 408 16 10,450 2,194 (443) 14,446
---------------- ------------ --------- ----------- ------------ ------------ ------------ --------- ---------
17 Share capital
31 January 31 January 31 July 2016
2017 2016 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
------------------------------------------ ------------- ------------- -------------
Authorised: :35,000,000 ordinary
shares of 1 pence each 350 350 350
------------------------------------------ ------------- ------------- -------------
Called up, Called up, Called up,
allotted and allotted allotted
and and
fully paid fully paid fully paid
Number Number Number
------------------------------------------ ------------- ------------- -------------
Number of shares at start of period/year 29,109,322 28,446,749 28,446,749
------------------------------------------ ------------- ------------- -------------
Options exercised during period/year 89,908 517,328 662,573
------------------------------------------ ------------- ------------- -------------
Balance at end of period/year 29,199,230 28,964,077 29,109,322
------------------------------------------ ------------- ------------- -------------
Allotted, issued and fully paid GBP GBP GBP
ordinary shares
------------------------------------------ ------------- ------------- -------------
Balance at start of period/year 291,093 284,467 284,467
Options exercised during period/year 899 5,175 6,626
------------------------------------------ ------------- ------------- -------------
Balance at end of period/year 291,992 289,640 291,093
------------------------------------------ ------------- ------------- -------------
The Company has one class of ordinary shares which carry no right to fixed income.
18 Other reserves
Share-based
Cash flow Other Capital
hedge Merger reserve redemption payment
reserve reserve reserve reserve Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------ -------- -------- ----------- ------------ --------
1 August 2015 - Audited (99) 6,295 1,294 34 1,161 8,685
------------------------------- ------------ -------- -------- ----------- ------------ --------
Equity share based payments - - - - 93 93
Transfer to retained
earnings in relation
to share based payments - - - - (303) (303)
Cash flow hedge reserve
net of tax 11 - - - - 11
Tax credit relating to
share options (6) (6)
------------------------------- ------------ -------- -------- ----------- ------------ --------
31 January 2016 - Unaudited (88) 6,295 1,294 34 945 8,480
------------------------------- ------------ -------- -------- ----------- ------------ --------
Equity share based payments - - - - 89 89
Transfer to retained
earnings in relation
to share based payments - - - - (98) (98)
Cash flow hedge reserve
net of tax 51 - - - - 51
Tax credit relating to
share options (90) (90)
------------------------------- ------------ -------- -------- ----------- ------------ --------
31 July 2016 - Audited (37) 6,295 1,294 34 846 8,432
------------------------------- ------------ -------- -------- ----------- ------------ --------
Equity share based payments - - - - 48 48
Transfer to retained
earnings in relation
to share based payments - - - - (66) (66)
Cash flow hedge reserve
net of tax 37 - - - - 37
Tax credit relating to
share options - - - - 221 221
------------------------------- ------------ -------- -------- ----------- ------------ --------
31 January 2017 - Unaudited - 6,295 1,294 34 1,049 8,672 ------------------------------- ------------ -------- -------- ----------- ------------ --------
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 in the period amounted to GBP65,570 (31.1.2016: GBP302,804).
19 Retained earnings Retained
earnings Retained
before
deduction Own shares earnings
of
own shares (note 21) Total
Group GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- -----------
1 August 2015 - Audited 13,387 (4,241) 9,146
------------------------------------- ----------- ----------- -----------
Profit for the financial period 2,972 - 2,972
Transfer from revaluation reserve 128 - 128
Transfer from share based payment
reserve (Note 18) 303 - 303
Dividend paid (1,456) - (1,456)
Transfer realised gain on asset
disposal 1,668 - 1,668
------------------------------------- ----------- ----------- -----------
31 January 2016 - Unaudited 17,002 (4,241) 12,761
------------------------------------- ----------- ----------- -----------
Profit for the financial period 1,310 - 1,310
Transfer from revaluation reserve 134 - 134
Transfer from share based payment
reserve (Note 18) 98 - 98
Dividend paid (691) - (691)
Transfer realised gain on asset
disposal (29) - (29)
------------------------------------- ----------- ----------- -----------
31 July 2016 - Audited 17,824 (4,241) 13,583
------------------------------------- ----------- ----------- -----------
Profit for the financial period 1,870 - 1,870
Transfer from revaluation reserve 115 - 115
Transfer from share based payment
reserve (Note 18) 66 - 66
Dividend paid (1,778) - (1,778)
Sale of Treasury shares - 3,117 3,117
------------------------------------- ----------- ----------- -----------
31 January 2017 - Unaudited 18,097 (1,124) 16,973
------------------------------------- ----------- ----------- -----------
The transfer from revaluation reserve represents the additional depreciation charged on revalued assets net of deferred tax.
The Own Shares Reserve represents the cost of shares in Lok'nStore Group plc purchased in the market and held in the Employee Benefit Trust to satisfy awards made under the Group's share incentive plan and shares purchased separately by Lok'nStore Limited for Treasury Account. These treasury shares have not been cancelled and were purchased at an average price considerably lower than the Group's adjusted net asset value. These shares may in due course be released back into the market to assist liquidity of the Company's stock and to provide availability of a reasonable line of stock to satisfy investor demand as and when required.
20 Own shares
ESOP ESOP Treasury Treasury Own shares
shares shares shares shares total
Number GBP Number GBP GBP
-------------------------- -------- -------- ---------- ---------- -----------
1 August 2015 - Audited 623,212 499,910 2,466,869 3,741,036 4,240,946
31 January 2016 -
Unaudited 623,212 499,910 2,466,869 3,741,036 4,240,946
31 July 2016 - Audited 623,212 499,910 2,466,869 3,741,036 4,240,946
-------------------------- -------- -------- ---------- ---------- -----------
31 January 2017 -
Unaudited 623,212 499,910 491,869 624,247 1,124,157
-------------------------- -------- -------- ---------- ---------- -----------
On 1 November 2016 the Group sold 1,975,000 ordinary shares of 1 pence each ("Ordinary Shares") held in treasury. This sale was undertaken to satisfy demand for the Company's shares, and to improve liquidity going forward. The Ordinary Shares were sold to a range of institutional investors at a price of 400 pence per share.
Lok'nStore Limited now holds a total of 491,869 (31.1.2016: 2,466,869) of Lok'nStore Group plc ordinary shares of 1p each for treasury with an aggregate nominal value of GBP4,919 purchased for an aggregate cost of GBP618,413 at an average price of GBP1.26 per share. These shares represent 1.68% of the Parent Company's called-up share capital. The maximum number of shares held by Lok'nStore Limited in the period was 2,466,869.
The Group operates an Employee Benefit Trust (EBT) under a settlement dated 8 July 1999 between Lok'nStore Limited and Lok'nStore Trustee Limited, constituting an employees' share scheme. Funds are placed in the trust by way of deduction from employees' salaries on a monthly basis as they so instruct for purchase of shares in the Company. Shares are allocated to employees at the prevailing market price when the salary deductions are made. As at 31 January 2017, the Trust held 623,212 (31.01.2016: 623,212) ordinary shares of 1 pence each with a market value of GBP2,835,615 (31.01.2016: GBP2,003,627). No shares were transferred out of the scheme during the period (2016: nil). No dividends were waived during the year. No options have been granted under the EBT.
21 Cash flows
(a) Reconciliation of profit before tax to cash generated from operations
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ---------
Profit before tax 2,099 1,849 5,493
Depreciation 897 735 1,535
Amortisation of intangible
assets 83 83 165
Equity settled share based
payments 49 93 182
Store relocation costs and 35 - -
site disposal costs
Net settlement proceeds - Reading
site - - (1,940)
Disposal costs - - 123
Interest receivable (174) (150) (313)
Interest payable 325 564 1,048
(Increase)/decrease in inventories (3) 2 (24)
Decrease/(increase) in receivables 736 (221) (2,471)
Decrease in payables (1,150) (1,129) (24)
-------------------------------------- ------------ ------------ ---------
Cash generated from operations 2,897 1,826 (3,774)
-------------------------------------- ------------ ------------ ---------
(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 15a less cash and cash equivalents.
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Increase in cash in the period/year 6,805 575 2,900
Change in net debt resulting
from cash flows - (1,115) (1,115)
----------------------------------------- ------------ ------------ ---------
Movement in net debt in period 6,805 (540) 1,785
Net debt brought forward (23,481) (25,266) (25,266)
----------------------------------------- ------------ ------------ ---------
Net debt carried forward (16,676) (25,806) (23,481) ----------------------------------------- ------------ ------------ --------- 22 Events after the reporting date
There were no reportable events after the reporting date.
23 Capital commitments and guarantees
The Group has capital expenditure contracted but not provided for in the financial statements of GBP5.4 million (31.01.2016: GBP2.2 million). These relate to the build and fit-outs of the Gillingham and Wellingborough Stores and the refurbishment of the Old Southampton store for cruise parking.
Our Stores
Head office
Lok'nStore plc
112 Hawley Lane
Farnborough
Hampshire GU14 8JE
Tel 01252 521010
www.loknstore.co.uk
www.loknstore.com
Central Enquiries
0800 587 3322
info@loknstore.co.uk
www.loknstore.co.uk
Basingstoke, Hampshire
Crockford Lane
Chineham
Basingstoke
Hampshire RG24 8NA
Tel 01256 474700
Fax 01256 477377
basingstoke@loknstore.co.uk
Bristol, Gloucestershire
Longwell Green Trade Park
Aldermoor Way
Bristol
BS30 7ET
Tel 0117 967 7055
Bristol@loknstore.co.uk
Crayford, Kent
Block B
Optima Park
Thames Road
Crayford
Kent DA1 4QX
Tel 01322 525292
Fax 01322 521333
crayford@loknstore.co.uk
Eastbourne, East Sussex
Unit 4, Hawthorn Road
Eastbourne
East Sussex BN23 6QA
Tel 01323 749222
Fax 01323 648555
eastbourne@loknstore.co.uk
Fareham, Hampshire
26 + 27 Standard Way
Fareham Industrial Park
Fareham
Hampshire PO16 8XJ
Tel 01329 283300
Fax 01329 284400
fareham@loknstore.co.uk
Farnborough, Hampshire
112 Hawley Lane
Farnborough
Hampshire GU14 8JE
Tel 01252 511112
Fax 01252 744475
farnborough@loknstore.co.uk
Harlow, Essex
Unit 1 Dukes Park
Edinburgh Way
Harlow
Essex CM20 2GF
Tel 01279 454238
Fax 01279 443750
harlow@loknstore.co.uk
Horsham, West Sussex
Blatchford Road
Redkiln Estate
Horsham
West Sussex RH13 5QR
Tel 01403 272001
Fax 01403 274001
horsham@loknstore.co.uk
Luton, Bedfordshire
27 Brunswick Street
Luton
Bedfordshire LU2 0HG
Tel 01582 721177
Fax 01582 721188
luton@loknstore.co.uk
Maidenhead, Berkshire
Stafferton Way
Maidenhead
Berkshire
SL6 1AY
Tel 01628 878870
Fax 01628 620136
maidenhead@loknstore.co.uk
Milton Keynes, Buckinghamshire
Etheridge Avenue
Brinklow
Milton Keynes
Buckinghamshire MK10 0BB
Tel 01908 281900
Fax 01908 281700
miltonkeynes@loknstore.co.uk
Northampton Central
16 Quorn Way
Grafton Street Industrial Estate
Northampton NN1 2PN
Tel 01604 629928
Fax 01604 627531
nncentral@loknstore.co.uk
Northampton Riverside
Units 1-4
Carousel Way
Northampton
Northamptonshire NN3 9HG
Tel 01604 785522
Fax 01604 785511
northampton@loknstore.co.uk
Poole, Dorset
50 Willis Way
Fleetsbridge
Poole
Dorset BH15 3SY
Tel 01202 666160
Fax 01202 666806
poole@loknstore.co.uk
Portsmouth, Hampshire
Rudmore Square
Portsmouth PO2 8RT
Tel 02392 876783
Fax 02392 821941
portsmouth@loknstore.co.uk
Reading, Berkshire
251 A33 Relief Road
Reading
RG2 0RR
reading@loknstore.co.uk
Southampton, Hampshire
Third Avenue
Southampton
Hampshire SO15 0JX
Tel 02380 783388
Fax 02380 783383
southampton@loknstore.co.uk
Staines, Middlesex
The Causeway
Staines
Middlesex TW18 3AY
Tel 01784 464611
Fax 01784 464608
staines@loknstore.co.uk
Sunbury on Thames, Middlesex
Unit C, The Sunbury Centre
Hanworth Road
Sunbury
Middlesex TW16 5DA
Tel 01932 761100
Fax 01932 781188
sunbury@loknstore.co.uk
Tonbridge, Kent
Unit 6 Deacon Trading Estate
Vale Road
Tonbridge
Kent TN9 1SW
Tel 01732 771007
Fax 01732 773350
tonbridge@loknstore.co.uk
Development locations (Owned Stores)
Wellingborough, Northamptonshire
19/21 Whitworth Way
Wellingborough NN8 2EF
Gillingham, Kent
Courtney Road
Gillingham
Kent ME8 0RT
Managed stores
Aldershot, Hampshire
251, Ash Road
Aldershot
GU12 4DD
Tel 0845 4856415
aldershot@loknstore.co.uk
Ashford, Kent
Wotton Road
Ashford
Kent TN23 6LL
Tel 01233 645500
Fax 01233 646000
ashford@loknstore.co.uk
Chichester, West Sussex
17, Terminus Road,
Chichester,
PO19 8TX
Tel 01243 771840
Chichester@loknstore.co.uk
Crawley, West Sussex
Sussex Manor Business Park
Gatwick Road
Crawley
RH10 9NH
Tel 01293 738530
crawley@loknstore.co.uk
Swindon Kembrey Park, Wiltshire
Kembrey Street
Elgin Industrial Estate
Swindon
Wiltshire SN2 8UY
Tel 01793 421234
Fax 01793 422888
swindoneast@loknstore.co.uk
Woking
Marlborough Road
Woking
GU21 5JG
Tel 01483 378323
Fax 01483 722444
woking@loknstore.co.uk
Under Development (Managed Stores)
Hemel Hempstead
Broadstairs
This information is provided by RNS
The company news service from the London Stock Exchange
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April 24, 2017 02:00 ET (06:00 GMT)
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