Lok’nStore Group plc
Annual Report
and Accounts
for the year ended 31 July 2020
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Continued
growth and
strong new
store opening
programme.
We are a leading company in
the fast growing UK self-storage
market. We opened our first self-
storage centre in February 1995
and have grown consistently
over the last 25 years. We
currently operate 36 self-storage
centres mainly in Southern
England. We have been listed
on AIM since June 2000.
Overview
02 Chairman’s Statement
06 Group at a Glance
Strategic Report
10 The UK Self-Storage Market
12 Our Business Model
14 Our Strategy
15 Managing Director’s Review
20 Key Performance Indicators
22 Property Review
25 Financial Review
32 Section 172 Statement
Principal Risks and Uncertainties
33
36 Corporate Sustainability Report
Governance
42 Board of Directors and Advisers
44 Corporate Governance
51 Directors’ Report
54 Remuneration Report
56
Statement of Directors’
Responsibilities
Independent Auditor’s Report
to the Members of Lok’nStore
Group plc
57
Financial Statements
62
65
64
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Changes in Equity
Company Statement
of Changes in Equity
Consolidated and Company
Statements of Financial Position
Consolidated Statement
of Cash Flows
68 Accounting Policies
Notes to the
79
Financial Statements
66
67
122 Glossary
123 Our Stores
To find out more visit:
www.loknstore.com/investors
Highlights
GROUP REVENUE1*
£16.95m
£18.04m
up 6.4%
GROUP ADJUSTED
EBITDA2*
up 10.4%
19
20
£9.65m
£8.75m
19
20
ADJUSTED TOTAL
ASSETS5*
up 6.8%
ADJUSTED NET ASSET
VALUE6* PER SHARE
up 4.7%
OPERATING PROFIT 3*
£5.79m
£5.16m
up 12.2%
19
20
ANNUAL DIVIDEND
PER SHARE
up 8.3%
£214.7m
£229.4m
19
20
£5.31
£5.56
19
20
13.0p
12.0p
19
20
RESILIENT TRADING
• Group Revenue £18.04 million up 6.44%
(2019: £16.95 million)
STEADY INCREASE IN ASSET VALUE
• Adjusted Total Assets5* £229.4 million up 6.8% on last year
(2019: £214.7 million)
• Group Adjusted EBITDA2* £9.65 million up 10.4%
• Adjusted Net Asset Value6* per share up 4.7% to £5.56
(2019: £8.75 million)
(2019: £5.31)
• Operating profit £5.79 million up 12.2%
(2019: £5.16 million before exceptional items2*)
• Store Management Fees £0.99 million up 21.4%
(2019: £0.82 million)
CONSERVATIVE USE OF DEBT
• Loan to value ratio7* 19.3% (2019: 16.1%) net of cash
• Net debt of £38.3 million (2019: £29.3 million)
• Occupancy up 5.9% (2019: 6.0%) pricing level
• Average cost of debt 1.69% (2019: 2.11%)
• Bad debt written off in year only 0.15% of Group Revenue
• £75 million bank facility extended by one year to April 2025
(2019: 0.26%)
CASH FLOW GROWTH DRIVES DIVIDEND INCREASE
– NINTH CONSECUTIVE YEAR OF GROWTH
• Cash available for Distribution (CAD)4* per share up
12.3% to 21.3 pence (2019: 18.9 pence)
• Annual dividend 13 pence per share up 8.3%
(2019: 12 pence per share)
HEALTHY PIPELINE OF NEW LANDMARK
STORES TO DELIVER FURTHER GROWTH8*
• Pipeline9* of 14 new stores taking total stores to 49
• Secured Pipeline will add 40.1% to owned trading space
and 32.5% to total portfolio
POSITIVE OUTLOOK
• Revenue, profits and asset values all moving ahead
• Good growth since year-end, strategy unchanged
“ This year Lok’nStore’s revenue, profits and asset values all moved ahead and trading since the year end has
been good. We are raising the annual dividend by 8.3% to 13 pence per share, our ninth consecutive year of
increasing dividends.
14 new sites will add considerably to future sales and earnings growth, enabling further increases in dividends.
Our strategy remains to open more landmark stores in an under-supplied market while maintaining a conservative
balance sheet, leading to an exciting period of growth.”
Andrew Jacobs, Executive Chairman
*
See our Key Performance Indicators on pages 20 and 21.
01
Strategic ReportOverviewGovernanceFinancial Statements Chairman’s Statement
“ We continue to execute on our strategy
of increasing sales, profits and
asset values and opening more new
landmark stores to boost future value.”
Andrew Jacobs
Executive Chairman
Increased Dividend
The Board is confident in the strength
of the business and capacity of
the management team to trade
effectively through this period, as
demonstrated by these results, and
accordingly deems it appropriate
to continue to pursue the Group’s
progressive dividend policy.
Lok’nStore’s increasing dividend
payments to shareholders reflect
the growth in the underlying Cash
Available for Distribution (CAD) which
is up 12.5% over the year.
For the ninth consecutive year, and
in line with our stated aim to provide
predictable dividend growth, we are
proposing to increase the annual
dividend by one pence per share.
The Group will therefore pay a final
dividend of 9 pence per share on
8 January 2021 following the interim
dividend payment of 4 pence per
share in June 2020 making a total
annual dividend of 13 pence per share,
up 8.33% from 12 pence last year. The
dividend is well covered by the Cash
Available for Distribution of 21.3 pence
per share, a pay-out ratio of 61%.
The final dividend will be paid to
shareholders on the register on
27 November 2020. The ex-dividend
date will be 26 November 2020.
The final deadline for Dividend
Reinvestment Election by investors
is 11 December 2020.
Board Changes
On 3 August 2020 Lok’nStore Group
announced the following Board
changes, positioning the business for
its next stage of growth. With effect
from 1 August 2020:
• Neil Newman-Shepherd has been
promoted to Group Managing
Director. Neil has worked in the
self-storage industry since 2003
and with Lok’nStore since 2006.
Neil has served on the Lok’nStore
Board since 2015 as Group Sales
Director and will now take an
increasing level of responsibility
for the day to day operations of
the business. Neil’s part in the
success of Lok’nStore over recent
years has been significant and
we look forward to his continued
contribution to our future growth
• Andrew Jacobs became
Executive Chairman and
continues to manage the overall
strategic direction and property
aspects of Lok’nStore
• Simon Thomas stepped down
from his role as Non-Executive
Chairman and now continues to
serve as Non-Executive Director.
I would like to express my thanks
to Simon Thomas for his many
years of support in the role of
Chairman at Lok’nStore
I am delighted to be reporting
on this solid set of results
with Lok’nStore, continuing
to deliver on our commitment
to sustainable growth.
The full-year results can be
summarised as:
• Strong operating performance
resulting in revenue and adjusted
EBITDA profit growth
• Pipeline of 149* stores
• Growing asset value
•
Increased dividend
• Continuing to invest in our
landmark store opening
programme
The detail behind these results is
discussed further in our Business
and Financial Review.
Continued investor interest in the
self-storage sector together with
market transactions of self-storage
operations underpins the value of
our assets today and our strategy
to open more landmark stores.
*
See our Key Performance
Indicators on pages 20 and 21.
02
Lok’nStore Group plc Annual Report and Accounts 2020 1995
LOK’NSTORE
FOUNDED
£10m
EQUITY RAISED
IN 2001
#4
SELF STORAGE
OPERATOR IN THE UK
£12m
INVESTED IN STORES
AND PIPELINE IN
THE YEAR
14
PIPELINE STORES
We were also delighted to welcome
Jeff Woyda as an independent
Non-Executive Director with effect
from 1 September 2020. During his
extensive and varied career Jeff has
held a number of senior Executive
positions and is currently Chief
Financial Officer and Chief Operating
Officer of Clarkson plc, a FTSE 250
Company and the world’s leading
provider of integrated shipping
services and investment banking
capabilities to the shipping and
offshore markets.
IFRS 16
The Group has applied IFRS 16 for
the first time in this year. IFRS 16
introduces new requirements with
respect to lease accounting by
removing the distinction between
operating and finance leases and
requiring the recognition of a Right
of Use Asset and a corresponding
lease liability in the Statement of
Financial Position.
The prior period financial comparatives
contained within these statements
have been restated to reflect the
first-time adoption of IFRS 16 which
changes previously reported EBITDA,
interest and depreciation numbers
in the Statement of Comprehensive
Income. Further details of these
restatements can be found in note 1.
Lok’nStore will continue to report
on CAD which aims to look through
the statutory accounts and give a
clear picture of the ongoing ability
of the Group to generate positive
cash flow from the operating
business that can be used to pay
dividends to shareholders to pay
down debt or to invest in new stores.
Investment in Our Stores
While we invested £12.0 million in
sites and store development this
year, we are able to report a year-
end loan-to-value (LTV) ratio of
only 19.3% (2019: 16.1%) and
net debt of £38.3 million (2019:
£29.3 million) (Refer to Note 17).
The Group continues to find high
quality sites for new landmark
stores. Trading at our new stores
has been reassuring and this
underpins our confidence that
our secured pipeline of ten more
landmark stores will add further
momentum to sales and earnings
growth, adding 48.0% more high
quality trading space to our owned
portfolio. We are on-site at Salford
and will shortly be commencing
development of our Warrington
and Wolverhampton stores.
2020 marks the 25th anniversary
of Lok’nStore. Started in 1995
from one freehold store in
Horsham by our Executive
Chairman, Andrew Jacobs. Six
years later the business became
a public company and has
grown consistently ever since.
Today, Lok’nStore has over
12,000 customers across
a portfolio of 35 storage
customers and over 1.1 million
square feet of occupied storage
space. The Group is delivering
on its strategy of opening more
new landmark stores which will
add considerable momentum to
sales and earnings growth over
the medium term.
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Chairman’s Statement continued
Managed Stores
Our growth strategy includes
increasing the number of stores we
manage for third party owners. This
enables the Group to earn revenue
without having to commit our capital,
to amortise fixed central costs over
a wider operating base and drive
further traffic to our website which
benefits our entire operation. We
generated managed store income
of c. £1.0 million this year, up 21.4%
from the previous year.
• Steadily increase cash available
for distribution (CAD) per share
enabling a predictable growth
of the dividend from a strong
asset base with conservative
levels of debt
• Fill existing stores and
improve pricing
• Acquire more sites to build
new landmark stores
•
Increase the number of stores
we manage for third parties
Managed store income is generated
from our existing platform and central
management, resulting in a high
effective profit margin. Our current
pipeline includes an additional 4
managed stores which will take the
total number of managed stores to 16.
Our People
We rely on our amazing people to
deliver these impressive results and
even more so now in these difficult
circumstances. During the COVID-19
pandemic the dedication of our
colleagues has shone through
more than ever, allowing us to
support our customers during
this unprecedented period.
We will continue to invest in training
to develop and deepen their skills.
We have reviewed our pay levels
to ensure that all of our employees
are paid fairly and we continue to
promote equity ownership to our
colleagues via our Share Investment
Plan and the granting of options.
We do this because it makes
business sense and directly
contributes to our strategic and
operational objectives which are to:
Coronavirus Update
On 11 March 2020 the World Health
Organization declared a global
pandemic which has profoundly
altered the business landscape.
The Board outlines below how
it has dealt effectively with this
unprecedented situation.
Although self-storage is a service
business our facilities are not used
intensively. Customer footfall is
always comparatively low and our
stores have only a few people in
them at any given time, even under
normal circumstances
At Lok’nStore the health and safety
of our customers and colleagues
is our principal priority. To date the
vast majority of our team members
have remained well. Of the small
number of colleagues who have
had to self-isolate, either because
they or someone they live with have
shown symptoms, all have recovered
and are back at work. We are also
pleased to be able to report that no
colleagues have been hospitalised
due to the virus.
Many of our customers are providing
critical services distributing medical
and other essential supplies. We
include the NHS, GP surgeries,
care and home support services
and government departments
amongst our customers and we
are proud to serve them at this
difficult time. Storage, logistics and
transport are important parts of the
distribution network and as such
were not selected for closure by the
Government, even at the peak of the
crisis. Our objective is to continue
to keep our stores open so that our
customers can continue to operate.
All of our stores have remained open
since the pandemic was declared
and remain open at time of writing.
You can read more about how we
have maintained a COVID-19 safe
environment in our Business and
Financial Review.
Robust Liquidity
and Cash Flow
At 31 July 2020 the Group had cash
balances of £13.1 million, which has
since increased to £13.9 million at
the date of this Report. The Group
has a £75 million five-year revolving
credit facility which, following a
one-year extension executed during
the year, now runs until April 2025.
This provides ample liquidity for
the Group’s current needs. Cash
balances combined with undrawn
committed facilities at the year-end
amounted to £36.7 million. The
Group is not obliged to make any
repayments on its loan facility prior to
its expiration in April 2025.
Cash inflow from operating activities
before investing and financing
activities was £9.7 million in the year
to 31 July 2020, and we continue
to generate strong cash flows.
Self-storage revenue was up 6.3%
year-on-year.
The Group has a resilient business
model with strong cash flows and
a flexible and conservative debt
structure. These features have served
us well during the year enabling
the business to continue to trade
effectively, despite the challenges
of the pandemic.
04
Lok’nStore Group plc Annual Report and Accounts 2020 Positive Outlook for Growth
Our results for the financial year are
robust and trading since the year end
has been positive. This has all been
achieved despite the current deeply
unsettled external circumstances.
With Lok’nStore’s resilient business
model and flexible and conservative
debt structure the Board is confident
the Company will continue to
thrive under its proven and highly
experienced management team
and staff. We look to the future
with confidence.
Andrew Jacobs
Executive Chairman
30 October 2020
Debt, IFRS 16 and
Bank Covenants
The average cost of bank debt on
drawn facilities for the period was
1.69%. (2019: 2.11%). All of the
Group’s total drawn bank debt of
£51.3 million is unhedged, which
means we have benefited immediately
from the reduction in base lending
rate during the year. At the date
of this Report the Group’s current
cost of debt is running at 1.56%.
Interest cover has remained very
strong during the year and, based
on the current quarter, is in excess of
seven times against a Group banking
covenant of 2.5 times. At the period
end our loan-to-value ratio based on
net bank debt was 19.3% versus a
covenant of 60% providing a large
cushion against any unforeseen
circumstances. Both the Loan to
Value and Senior Interest covenants
continue to be tested excluding the
effects of IFRS 16.
Capital Expenditure
Self-storage benefits from the short
lead time between breaking ground
and store opening of only around
12 months. Despite our expanding
pipeline of new stores, and with the
completion of the Leicester store in
August 2020, we are currently only
on-site in one location where we
have purchased and are fitting-out
the new store in Salford for an outlay
of around £7.0 million. We intend to
start building work on the Warrington
site in November 2020. We have a
high degree of flexibility regarding
start dates for further building at
other sites. We can therefore
adapt and flex our development
programme to react to changing
economic circumstances.
05
Strategic ReportOverviewGovernanceFinancial Statements Group at a Glance
Lok’nStore Group plc is one of the leading companies
in the fast growing UK self-storage market.
Lok’nStore Group plc is one of the leading companies
in the fast growing UK self-storage market. We opened
our first self-storage centre in 1995 and have grown
consistently over the last 25 years, currently with 36
self-storage centres trading mainly in Southern England.
We have been listed on the AlM Market since June 2000
and the Board accounts for 29.3% of the Total Voting
Rights (TVR) in the Ordinary Shares of the Company
(2019: 28.5%).
We offer self-storage from our own stores, and
management services to third party storage owners.
Self-storage and other storage services are available
to both household and business customers at our
highly branded Lok’nStore centres.
HOUSEHOLD
STORAGE
BUSINESS
STORAGE
• Storage rooms
• Vehicle storage
• Pallet storage
• Self-storage archiving
• Student packages
• Flexible space
• Forces and
• Commercial vehicle
services packages
storage
REVENUE BY
CUSTOMER TYPE
NUMBER OF TRADING
STORES BY TYPE
NUMBER OF PIPELINE
STORES BY TYPE
67.2%
Household
customers
32.8%
Business
customers
24
Owned stores
12
Managed stores
10
Owned stores
4
Managed stores
Our Landmark Stores
We develop and operate self-storage centres
predominantly in prominent locations in
Southern England. Our eye-catching buildings
with their distinctive orange livery create highly
visible landmarks which continue to be a big
contributor of new business for Lok’nStore.
We acquired 3 new sites in this financial year:
Chester, Salford and Kettering.
We opened 2 new stores in this financial year:
Gloucester, and Oldbury.
We opened 1 new landmark store in Leicester
immediately post this financial year.
06
PAGE
09
OLDBURY
Lok’nStore Group plc Annual Report and Accounts 2020 New Stores
Gloucester
Oldbury
Pipeline Stores
Bedford
Bournemouth
Cheshunt
Chester
Kettering
Leicester
Salford
Stevenage
Warrington
Wolverhampton
Our Locations
Stores
Aldershot
Ashford
Basingstoke
Bristol
Broadstairs
Cardiff
Chichester
Crawley
Crayford
Dover
Eastbourne
Exeter
Fareham
Farnborough
Gillingham
Harlow
Hedge Ends
Hemel Hempstead
Horsham
Ipswich
Luton
Maidenhead
Milton Keynes
Northampton Central
Northampton Riverside
Poole
Portsmouth
Reading
Southampton
Sunbury
Swindon
Tonbridge
Wellingborough
To find out more about
our store locations visit:
www.loknstore.com
36
12,500
STORAGE CENTRES
CUSTOMERS
PAGE
41
167
EMPLOYEES
PAGE
61
LEICESTER
GLOUCESTER
07
Strategic ReportOverviewGovernanceFinancial Statements
08
Lok’nStore Group plc Annual Report and Accounts 2020Page Title Strategic
Report
10
The UK Self-Storage Market
12 Our Business Model
14 Our Strategy
15 Managing Director’s Review
20 Key Performance Indicators
22 Property Review
25
Financial Review
32 Section 172 Statement
33 Principal Risks and Uncertainties
36 Corporate Sustainability Report
LANDMARK STORE
OLDBURY
43,000
SQUARE FEET OF MAXIMUM
LETTABLE AREA
NOW
OPEN
Lok’nStore Oldbury opened in June 2020 and early
trading has been encouraging.
Located on an extremely busy short section of dual
carriageway between the M5 and Oldbury town
centre, with strong commercial uses including a large
supermarket and restaurants at either end. This recently
completed building was purchased before occupation by
its previous owner and converted to a bright and modern
self-storage facility, opening within six months of purchase.
Oldbury is located in the built-up suburban area between
Birmingham and Wolverhampton – with an extremely
densely populated catchment this store is already busy
and thriving.
09
Strategic ReportOverviewGovernanceFinancial Statements The UK Self-Storage Market
The UK self-storage market at a glance
The Self-Storage Association UK Annual Industry Survey 2020 reports that
the UK Self Storage industry is made up of 1,900 sites offering 49 million
square feet of space.
Market Overview
As reported in the Self-Storage
Association UK (SSA UK) Annual
Industry Survey 2020 the UK self-
storage market continues to grow
but remains under-developed relative
to Australia and the US. In the UK
there are an estimated 1,900 self-
storage facilities providing 49 million
square feet of storage space. With
a population of 66.65 million people
in the UK this equates to only 0.73
square feet per person compared
to 9.44 square feet per person in
the USA and 1.89 square feet in
Australia. The UK has 41% of all
European self-storage space.
The structure of the UK industry
is changing. When the industry
first emerged companies were
predominately single owner sites
often located in industrial areas
but larger operators (defined as
operators managing 10 or more
sites), such as Lok’nStore, have
recently been developing purpose
built stores in retail facing locations
offering customers a higher standard
of product and service.
The main barriers to entry to the
market remain the difficulty in finding
and securing suitable sites as well
as gaining the appropriate planning
consents. As a result, according to
the SSA UK, larger operators now
own or manage around 30% of
facilities which translates to 40%
of market share in terms of revenue
and space. Currently Lok’nStore is
the fourth largest operator in the UK
by number of stores.
Drivers of Demand
for Self-storage
Demand for self-storage by both
business and household customers
is driven by a specific need based
on changing circumstances as
well as economic activity and
business confidence.
For household customers their need
is often linked to a life event where
they will need space temporarily, for
example to support a house sale, but
increasingly householders are using
storage on a semi-permanent basis
to free up space at home or store
belongings they don’t have room for.
Business customers use self-
storage for a variety of purposes
including storage of goods, excess
or seasonal stock, document
archiving or storage of equipment
and tools. Businesses tend to store
for longer than household customers
and take larger units, although they
also take advantage of self-storage
for temporary periods to support
seasonal sales or office moves
or refurbishments.
Lok’nStore’s Opportunity
in the Market
The Self-Storage Association UK
(SSA UK) Annual Industry Survey
2020 notes that public awareness
of and demand for self-storage is
increasing. We know that on average
customers chose a store within
five miles of their home or business.
With a pipeline of 10 secured stores
and a further 4 stores progressing
through the acquisitions process,
Lok’nStore is well placed to attract
these customers and add further
momentum to the growth of our
sales and profits.
Combining the Group’s competitive
strengths (recognised brand,
excellent customer service, rigorous
cost control) and the attractive
market dynamics of the storage
sector (growing sector, under
supply, resilience during economic
downturn) with our strong balance
sheet and flexible operating and
ownership model (see our portfolio
strategy), we believe Lok’nStore can
take advantage of the opportunities
presented and continue its growth
without significantly increasing risk.
10
Lok’nStore Group plc Annual Report and Accounts 2020 £766m
ANNUAL TURNOVER
OF UK SELF
STORAGE INDUSTRY
SQUARE FEET
OF SELF STORAGE PER
HEAD OF POPULATION
9.4
1.9
0.7
UK
AUSTRALIA
USA
28,700
SQ. FT. AVERAGE
STORE SIZE
48%
ONLY
OF PEOPLE HAVE A
REASONABLE OR
GOOD AWARENESS
OF SELF STORAGE
91%
OF CUSTOMERS
ARE SATISFIED
WITH THE SERVICE
FROM THEIR SELF
STORAGE PROVIDER
86%
OF CUSTOMERS
TRAVEL LESS
THAN 30 MINUTES
TO THEIR SELF
STORAGE UNIT
11
Strategic ReportOverviewGovernanceFinancial Statements Our Business Model
Our overriding objective is to steadily increase
the Cash Available for Distribution (CAD).
WHAT WE DO
HOW WE CREATE VALUE
• Buy (or lease) prominent sites
• Take a flexible approach to site selection
• Build (or refurbish) landmark, highly
visible orange storage centres
• Offer clean, dry, secure storage to
business and household customers
• Offer managed storage services to
third party owners
•
Increase our asset base
• Careful cost control
• Drive store EBITDA growth through
a closely managed occupancy and
pricing strategy
• Earn fees from managing stores on
behalf of others
• Carefully balanced use of Leverage
36
UK STORES CURRENTLY TRADING
(INCLUDING 12 MANAGED STORES)
£18m
REVENUE
12
Lok’nStore Group plc Annual Report and Accounts 2020 This will enable a predictable growth of
the dividend from a strong asset base and
conservatively geared balance sheet.
SHARING VALUE WITH OUR STAKEHOLDERS
SHAREHOLDERS
• High quality earnings
• Growing NAV
• Progressive dividend policy
CUSTOMERS
• Easy to locate stores
• Friendly and high level
customer service
• Wide range of storage solutions
• Transparent and open contracts
OUR PEOPLE
• Development opportunities
through the Lok’nStore
Academy
• Uncapped bonus scheme
for all
• Share ownership plans
• Strong health and
safety approach
13p
5 star
ANNUAL DIVIDEND
PER SHARE
CUSTOMER REVIEWS
ON TRUSTPILOT
£390,000
PAID OUT IN BONUSES
TO STORE TEAMS
13
Strategic ReportOverviewGovernanceFinancial Statements Our Strategy
OUR OBJECTIVES
ACHIEVEMENTS IN 2020
STRATEGY IN ACTION
STEADILY INCREASE
CASH AVAILABLE FOR
DISTRIBUTION (CAD)
PER SHARE
Cash Available for Distribution
(CAD) per share up 12.3% to
21.28 pence (2019:18.95 pence).
FILL EXISTING STORES
AND IMPROVE PRICING
ACQUIRE MORE
SITES TO BUILD NEW
LANDMARK STORES
INCREASE THE NUMBER
OF STORES WE MANAGE
FOR THIRD PARTIES
We continued to improve our
online visibility through evolution
of our search engine strategy.
We focussed on developing
our teams’ sales and customer
service through the Lok’nStore
Academy.
These actions resulted in a 4%
increase in new customers over
the year. Excluding the lockdown
period, this would have increased
12.6% year on year.
Leicester store opened
immediately post year-end
in prominent location.
4 new sites in Chester,
Oldbury, Salford and Kettering.
Planning permissions
achieved at Warrington,
Salford, Stevenage,
Wolverhampton and Oldbury.
Managed stores in Gloucester
and Oldbury opened during
the year.
We have 4 managed sites in
the pipeline.
8.33%
INCREASE IN ANNUAL
DIVIDEND TO 13 PENCE
PER SHARE
5.9%
SELF-STORAGE UNIT
OCCUPANCY UP
SELF-STORAGE
PRICING BROADLY FLAT
10
STORES IN PLANNING
AND DEVELOPMENT
2
NEW SITES FOR
MANAGED STORES
IN CHESTER
AND KETTERING
14
Lok’nStore Group plc Annual Report and Accounts 2020 Managing Director’s Review
“ Improving operating performance
and asset values.”
Neil Newman-Shepherd
Managing Director
Lok’nStore Group has delivered
another excellent year successfully
implementing on all of our strategic
objectives. Revenue, profits and
asset values have once again all
moved ahead. Our large pipeline of
new stores will substantially increase
the proportion of our store space
which is new or purpose-built and
will add further momentum to the
growth of sales and profits with
plenty of new capacity contributing
to our growth over the coming years.
of the business, increased 6.7% to
£9.59 million (2019: £8.99 million).
The overall Adjusted EBITDA margin
across all stores was higher at
56.1% (2019: 55.8%) with the
Adjusted Store EBITDA margins
of the freehold stores at 61.9%
(2019: 61.8%) and the leasehold
stores at 42.9% (2019: 43.1%).
Over the course of the year unit
occupancy rose by a healthy 5.9%
and unit pricing was broadly level.
Robust Trading
Group revenue for the year was
18.04 million, up 6.44% year on
year (2019: £16.95 million) driven
by occupancy increases in both
old and new stores. This revenue
growth led to a 10.4% increase in
Group Adjusted EBITDA.
• Self-storage revenue £17.0 million
up 6.1% (2019: £16.00 million)
• Adjusted Store EBITDA
£9.59 million up 6.7%
(2019: £8.99 million)
• Unit occupancy up 5.9%
(2019: 6.0%)
• Unit pricing level
Total Adjusted Store EBITDA in
self-storage, a key performance
indicator of profitability and cash flow
By the year-end we had 12 managed
stores following the opening of the
2 new managed stores in Gloucester
and Oldbury.
As the business develops the
balance of the stores continues to
shift towards landmark freehold
stores and managed stores which
have a higher than average adjusted
store EBITDA margin at 61.9% and
100% respectively versus 56.1%
across all stores). The impact of
this will be to continue to increase
the average store EBITDA margin
of the Group overall, and this effect
is accentuated by operating more
stores from a relatively fixed central
cost base. In this context the new
stores in the pipeline will make a
larger than average contribution
to Group profits as they become
established trading units.
In the table on page 16 we show how
the performance of the stores varies
between freehold and leasehold
stores. Currently 45.1% of Lok’nStore
owned trading space is freehold,
23.7% is leasehold and 31.2% is
in managed stores.
Inevitably the leaseholds trade
on lower margins due to the rent
payable, but nevertheless the 42.9%
margins achieved is substantial,
and leads to a higher return on
capital than the freehold stores
which require much larger capital
expenditure to buy the land and
buildings. The freehold stores
produce 76.8% (2019: 75.2%) of the
Adjusted store EBITDA and account
for 91.6% (2019: 89.7%) of valuations
(including secured pipeline stores).
As we build out the current secured
pipeline we will be operating from
54.8% freehold space, leasehold
space will decline to 17.9% of space
and managed stores will increase to
27.3% of total space operated.
This mix of tenures with their different
risk and return characteristics
provides flexibility in the balance
sheet and opportunities to create
value throughout the cycle.
15
Strategic ReportOverviewGovernanceFinancial Statements Managing Director’s Review continued
Portfolio Analysis and Performance Breakdown
As at 31 July 2020
Freehold
Operating Leaseholds
Managed Stores
Total Stores Trading
Pipeline Stores9*
Owned
Managed Stores
Total Stores
Number
of Stores
% of
Valuation
% of
Adjusted
Store
EBITDA
Adjusted
Store
EBITDA
Margin (%)
When Fully Developed
% Lettable
Space
Number
of Stores
Total %
Lettable
Space
15
8
12
35
101
8
2
45
76.5
8.4
–
–
15.1
–
100
76.8
23.2
–
–
–
–
61.9
42.9
100
–
–
–
45.1
23.7
31.2
–
–
–
100
56.1
100
23
8
14
45
–
–
45
54.8
17.9
27.3
–
–
–
100
1 Applies to the 10 contracted stores only.
In the table below we show how the performance breaks down across the stores, based on age of store. Clearly
older stores have had more time to fill up and produced 67.4% EBITDAR margins. Over time as new stores and
pipeline sites go through their life cycle they will progress towards similar margins, adding substantially to revenues
and profits.
Operating Performance at a Glance (Lok’nStore Owned Stores Only)
Weeks Old
Year Ended 31 July 2020
Sales £’000
Stores Adjusted EBITDA £'000
EBITDA Margin (%)10*
Stores Adjusted EBITDAR £'000
EBITDAR Margin (%)12*
As at 31 July 2020 ('000 sq. ft.)
Maximum Net Area
Freehold ('000 sq. ft.)
Short Leasehold ('000 sq. ft.)
Number Stores
Freehold
Short Leasehold
Total Stores
Contracted
Pipeline
Under 100
100 to 250
Over 250
Total
357
(129)
(36.2%)
(129)
36.2%
2,089
1,314
62.9%
1,314
62.9%
476
355
–
8
–
8
193
193
–
2
–
2
49
49
–
3
–
3
14,644
8,403
57.4%
9,870
67.4%
945
537
408
10
8
18
17,090
9,588
56.1%
11,055
64.7%
1,542
1,134
408
23
8
31
Table covers Lok’nStore owned stores only.
In respect of the Farnborough Store (over 250 weeks) the total store revenue includes a £100,000 contribution
receivable from Group Head Office.
*
See our Key Performance Indicators on pages 20 and 21.
16
Lok’nStore Group plc Annual Report and Accounts 2020 6.1%
5.9%
10.4%
INCREASE IN
STORAGE REVENUE
INCREASE IN
UNIT OCCUPANCY
INCREASE IN ADJUSTED
STORE EBITDA
Ancillary Sales
Ancillary sales which consist of
boxes and packaging materials,
insurance and other sales increased
5.1% (2019: 11.0%) over the year
accounting for 11.0% of self-storage
revenues (2019: 11.1%).
locations and we continually invest
in new signage and lighting at our
existing stores as well as creating
striking designs for our new landmark
stores, to promote and enhance their
visual prominence and engage the
local community.
Marketing
New customers are typically drawn
to Lok’nStore as a result of three
key drivers:
• Our distinctive landmark stores
• Google and other search engines
• Existing customers, previous
customers and customer referrals
Store visibility remains pivotal to
our marketing efforts. With their
prominent positions, distinctive
design and bright orange elevations
our stores raise the profile of the
Lok’nStore brand and help to
generate a substantial proportion
of our business. Our new landmark
stores are located in highly prominent
The internet continues to be the main
media channel for our advertising.
Our website at www.loknstore.
co.uk is one of the most established
self-storage websites in the UK.
The website delivers a high level of
customer experience across desktop
and mobile devices. Any new
development of the website begins
with a mobile first focus. 60% of
visits to the website in the year were
from a mobile device, up 6% year on
year. This is a very dynamic area and
we are committed to its continued
development. We believe the internet
provides a strong competitive
advantage for the major operators
such as Lok’nStore with relatively
large marketing budgets.
Pipeline of New Stores
Against this background of ever
improving operating performance
we have invested £12.0 million
(2019: £14.0 million) in new store
development this year and we have
a new store pipeline of 10 secured
stores by the reporting date, which will
take the total to 45 stores. These will
all be purpose built landmark stores in
highly prominent locations and will add
substantially to the Group’s capacity
for revenue, profit and asset growth.
We have 4 further store acquisitions
progressing through the legal process
which will take the total to 49 stores.
The graph below shows the speed of
fill-up of our stores broken down into
their age groups. You can see that
over time the stores have filled up
faster with the most recently opened
stores (on the left of the graph)
filling fastest of all. We believe that
this shows that the UK self-storage
market is still in its infancy with low
penetration and increased consumer
awareness leading to faster fill. It also
shows the strength of Lok’nStore’s
brand and landmark store model.
Store Revenue Growth after Opening
2013–2019
e
u
n
e
v
e
R
2005–2012
1995–2004
Week
26
52
78
104
130
156
182
208
234
260
286
312
338
364
390
Time Open
17
Strategic ReportOverviewGovernanceFinancial Statements Managing Director’s Review continued
Our COVID-19 Safe Response
Since March, we have been
responding to the evolving guidance
from the governments in England
and Wales regarding the pandemic,
as well as the guidelines issued
by the Self-Storage Association.
I am extremely proud of the way
our teams across the business have
met the challenge and adapted so
well in an uncertain environment.
Self-storage is a service business
but our facilities are not used
intensively. Customer footfall is
always comparatively low and our
stores have few people in them at
any given time, even under normal
circumstances.
Many of our customers provide
critical services distributing medical
and other essential supplies. We
include the NHS, GP surgeries, care
and home support services and
government departments amongst
our customers and we are proud to
provide them with an efficient service
at this difficult time.
Management reacted swiftly earlier
in the year in response to the crisis
with a comprehensive range of key
measures undertaken for colleagues
and customers alike. Here is a
summary of the key measures we
have taken:
For Our Colleagues
• Colleagues have been provided
with PPE including face masks,
visors and hand sanitiser
• Our stores have been fitted with
Perspex safety screens on desks
and clear COVID-19 signage
• During lockdown, we reduced
store opening hours and store
colleagues worked reduced
hours, with no loss of pay
• We have paid our team members
and Directors as normal, including
those working reduced hours or
self-isolating
• All bonus systems remained
unchanged so colleagues still
had the opportunity to increase
their earning potential
• Eight out of 167 team members
had a period of furlough during
which Lok’nStore maintained their
salary at its normal level. All of
these employees were furloughed
to enable them, where necessary,
to either shield or care for
someone shielding
• Most of our team members come
to our stores by car, by bike or
walking. For the small number
of colleagues who rely on public
transport we have worked with
them to find alternative methods
• We are in regular communication
with our store colleagues,
updating them on the latest
advice from Public Health
England and the Government.
We have also put in place
contingency plans around
reduced staffing levels to cope
with increased absences as a
result of self-isolation or illness
18
Lok’nStore Group plc Annual Report and Accounts 2020 Against the background of a strong
performance from our existing stores,
we have a current pipeline of 14 new
stores which will add considerable
momentum to sales and earnings
growth in the future.
Neil Newman-Shepherd
Managing Director
30 October 2020
For Our Customers
• Where a customer has
• All of our stores have remained
open since the 23 March 2020
• We remain vigilant with our
daily cleaning programme and
our staff have intensified cleaning
of the most commonly touched
areas and of shared equipment
such as trolleys
• New customers can access
our reception areas one at
a time to ensure strict social
distancing guidelines wearing
a face covering
• Existing customers are still able
to access their storage units as
normal without any face to face
contact with our team members
• Customers can still communicate
with our friendly teams by
telephone, email or live chat
approached us with a short-term
financial burden, we have worked
with them to find a mutual solution
• To further support our customers
from the 20 March 2020 no new
storage rate reviews will be issued
to customers until further notice
Future
Lok’nStore has a resilient business
model and has had an excellent
year, successfully implementing our
strategic objectives; trading has
remained strong since the year-end.
That all of this has been achieved
in the face of the current deeply
unsettled external circumstances is
all the more pleasing and a tribute to
all involved.
19
Strategic ReportOverviewGovernanceFinancial Statements Key Performance Indicators
What we mean when we say … (and why we use these Key Performance Indicators (KPIs))
In addition to IFRS accounting performance measures we use some
Alternative Performance Measures (APMs) to help us understand how
the underlying business is performing. The following table identifies
those measures and explains what we mean when we use them and
importantly why we use them and what they tell you about our business
and performance.
1.
2.
3.
4.
Continuing Operations – The Group’s document
storage business was sold on 31 January 2019 and
its disposal constitutes a discontinued operation.
Separate reporting of discontinued operations is
important in providing users of financial statements
with the information necessary to determine the
effects of a disposal on the ongoing continuing
operations of our business. To ensure a clear
separation of the financial performance of Continuing
Operations, Discontinued Operations are shown
separately on the Statement of Comprehensive
Income as a profit on disposal (after tax) which
combines operating profit with the profit arising on
its disposal. The profit on discontinued operations is
then aggregated with profit on continuing operations
in determining the Group’s total profit for the year.
Group Adjusted EBITDA – Earnings Before
Interest, Tax, Depreciation and Amortisation –
This measure strips away non-cash charges, finance
charges and tax and now also reflects the removal
of operating lease costs from operating expenses as
a result of the implementation of IFRS 16. Adjusted
EBITDA is defined as EBITDA before losses or profits
on disposal, share-based payments, acquisition
costs, exceptional items, finance income, finance
costs and taxation.
Exceptional Items – refers to one-off items of a
non-operational nature which arose during the year,
often relating to asset disposals, and are unlikely to be
recurring. (Refer Note 3(c) of the Financial Statements).
and gives clarity on the recurring operating cash flow
of the business. This measure is designed to show
the capacity of the business to generate ongoing net
operating cash that can be used to pay dividends
to shareholders or pay down debt. The calculation
of the Cash Available for Distribution is set out in the
Business and Financial Review.
5.
Adjusted Total Assets – The value of adjusted
total assets of £229.4 million (2019: £214.7 million) is
calculated by adding the independent valuation of
the leasehold properties of £16.7 million (2019: £18.7
million) less their corresponding net book value (NBV)
£3.7 million (2019: £4.0 million) to the total assets in the
Statement of Financial Position of £216.4 million (2019:
£200.0 million). This provides clarity on the significant
value of the leasehold stores as trading businesses
which under accounting rules on leases are only
presented at their book values within the Statement
of Financial Position. Total assets now include the
Right of Use Assets as a result of the implementation
of IFRS 16 of £11.8 million. The comparative periods
have been adjusted accordingly (2019: £13.0 million).
6.
NAV – Net Asset Value per Share – Adjusted
net asset value per share is the net assets adjusted
for the valuation of leasehold stores (properties
held under leases) and deferred tax divided by the
number of shares at the year-end. The shares held
in the Group’s employee benefits trust and treasury
shares are excluded from the number of shares.
The calculation of the Net Asset Value per share
is set out in the Business and Financial Review.
CAD – Cash Available for Distribution – is
calculated as Adjusted EBITDA less total net finance
cost, less capitalised maintenance expenses, New
Works Team costs and current tax. This measure also
excludes the impact of IFRS 16 and includes leasing
charges as normal operating costs of each store,
7.
LTV – Loan to Value Ratio – measures the debt
of the business expressed as a percentage of total
property assets giving a perspective on the gearing
of the business. The calculation is based on net debt
(excluding IFRS 16 lease liabilities) of £38.3 million
20
Lok’nStore Group plc Annual Report and Accounts 2020 as set out in note 17 (2019: £29.3 million) as a
percentage of the total properties independently
valued by JLL and including development land
assets of £29.9 million totalling £198.3 million
(2019: £181.2 million) as set out in the Business
and Financial Review.
8.
9.
Average Cost of Debt – The average cost of debt
is calculated by taking the total interest paid on the
Group’s Revolving Credit Facility in the quarterly/
weekly charging periods throughout the year and
taking an average based on the whole financial year.
Apart from the Group’s Revolving Credit Facility the
Group has no other debt.
Pipeline Sites – means sites for new stores that
either we have exchanged contracts on or have
agreed heads of terms and are progressing with our
lawyers towards completion. We have 14 pipeline
sites of which 10 are contracted and 4 are with
lawyers. Since the year-end Leicester, which was
included in the pipeline sites at 31 July 2020 opened
in August 2020.
10. Adjusted Store EBITDA – is Group Adjusted
EBITDA (see 2 above) before the deduction of
central and head office costs. Unlike Group Adjusted
EBITDA this measure excludes the impact of IFRS
16 and includes leasing charges as normal operating
costs of each store. The measure is designed to give
clarity on the recurring operating cash flow of the
business and provides important information on the
underlying performance of the trading stores and
shows the cash generating core of the business.
Use of this metric enables us to provide additional
information on store EBITDA contributions (after
leasing costs) and the margins analysed between
freehold and leasehold stores and according to
the age of the stores. This analysis is set out in
a table in the Business and Financial Review.
11. Gearing – refers to the level of a company’s debt
related to its equity capital, usually expressed in
percentage form. It is a measure of a company’s
financial leverage and shows the extent to which
its operations are funded by lenders versus
shareholders. Gearing can be measured by a
number of ratios and we use the debt-to-equity ratio
in this document. The calculation of the gearing
percentage, also referred to as the net debt to equity
ratio is set out in Note 17 of the Financial Statements.
12. Group Adjusted EBITDAR – EBITDAR is Earnings
before interest, tax, depreciation amortisation and
rent. The measure is designed to give clarity on the
effect of the rent payable by leasehold stores and
how its elimination enables an analytical comparison
between freehold stores operating performance
(which do not pay rent) and leasehold stores
operating performance. This analysis is set out
in a table in the Business and Financial Review.
13. Cost Ratio – calculates the ratio of the total
operating costs of the business as set out in the
Business and Financial Review, expressed as a
percentage of total Group revenue (note 2), giving
a perspective on the cost efficiency of the business
when compared to the cost ratio of the previous year.
14. LFL– Like for Like – This measure is used to give
transparency on improvements in the operating
business unrelated to the opening of new stores or
closure of old stores therefore giving visibility of the
true trading picture. The like for like key performance
measure is only used where its use is particularly
relevant to illustrate a performance metric not
otherwise apparent.
See also the Glossary on page 122.
21
Strategic ReportOverviewGovernanceFinancial Statements
Property Review
Store and Portfolio Strategy
Each of our operating store is a profitable unit in its own right. Therefore, our strategy is to continue to increase
the number of stores we operate without stretching our balance sheet. The core focus of this strategy is the
acquisition of highly prominent freehold locations in busy towns and cities in England where we will build well
branded landmark stores.
Flexible Approach to Site Acquisition
All of the projects noted below are part of our strategy of actively managing our operating portfolio to ensure we
are maximising both trading potential and value. This includes strengthening our distinctive brand, increasing the
size and number of our stores and replacing stores or sites where it will increase shareholder value.
We prefer to own freeholds if possible, and where opportunities arise we will seek to acquire the freehold of our
leasehold stores. However, we are happy to take leases on appropriate terms and benefit from the advantages of
a lower entry cost, with further options to create value later in the store’s development. We also consider selling
established stores on sale and manage back contracts in order to recycle the capital and protect the balance sheet.
Indeed, some of our stores have been freehold, leasehold and managed stores during their operating life cycle!
Our most important consideration is always the trading potential of the store rather than the property tenure.
The table below illustrates the rapid growth of store numbers and the changing tenure mix over time. Noteworthy is
the growth of managed stores over recent years.
Growth of Stores by Tenure – Including pipeline of secured stores and with lawyers
50
40
30
20
10
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 2020 Pipeline
Managed
Leasehold
Freehold
As at 31 July 2020, Lok’nStore operated 35 stores. Of these Lok’nStore owns 15 freehold stores and 8 stores are
held under commercial leases. All of our leasehold stores are inside the Landlord and Tenant Act providing us
with a strong security of tenure. 12 further sites operate under management contracts. The opening of Leicester
immediately post year-end takes the number of trading stores at the date of this report to 36.
The average unexpired term of the Group’s operating leaseholds is approximately nine years and seven months as at
31 July 2020.
22
Lok’nStore Group plc Annual Report and Accounts 2020 36
STORES NOW
TRADING
10
LANDMARK
STORES SECURED
32.5%
INCREASE IN
TRADING SPACE
Store Pipeline
• 4 new store opportunities identified and are
progressing with lawyers
• 10 contracted stores are under development of
which 8 will be owned freehold by Lok’nStore
and 2 will be managed stores
• Current Pipeline of 10 contracted stores adds
32.5% of extra trading space to the overall portfolio,
40.1% to our owned portfolio and 15.9% to the
managed portfolio
Growth from New Stores and More New
Stores to Come
Lok’nStore’s strong operating cash flow, solid asset
base, and tactical approach to its store property portfolio
provide the Group with opportunities to improve the
terms of its property usage in all stages of the economic
cycle. Our focus on the trading business gives us many
opportunities and our property decisions are always
driven by the requirements of the trading business.
Here is a summary of our current contracted pipeline;
• Bedford – Planning application in process
• Bournemouth – Planning application in process
• Cheshunt – Planning application in process. We
have signed an agreement to share this site with
a discount food retailer mitigating our development
costs and generating excellent footfall for the site
• Chester – Planning application in process
• Kettering – Design in process
• Leicester – Opened 1 August 2020 post
balance sheet
• Salford – On-site. The store is due to open in
April 2021
• Stevenage – Planning permission granted
• Warrington – Planning permission granted.
We aim to be on-site in November 2020
• Wolverhampton – Planning permission has
been granted. We aim to be on-site towards
the end of 2020
Managed Stores
Lok’nStore manages an increasing number of stores for
third party owners. Under this model Lok’nStore can
provide a turnkey package for investors wishing to own
trading self-storage assets. The investor supplies all
the capital for the project which Lok’nStore manages.
Lok’nStore will buy, build and operate the stores
under the Lok’nStore brand and within our current
management structure.
Under a managed store contract Lok’nStore receives a
standard monthly management fee based on revenue,
a performance fee based on certain objectives and
fees on a successful exit. We also charge acquisition,
planning and branding fees. This enables the Group to
earn revenue from our expertise and knowledge of the
self-storage industry without committing our capital, to
amortise fixed central costs over a wider operating base
and drive further traffic to our website which benefits our
entire operation.
All of the operating expenses of the store are paid for by
the third party out of the store revenue with Lok’nStore
receiving various fees and performance bonuses. This
strategy improves the risk adjusted return of the business
by increasing the operating footprint, revenues and profits
without committing capital.
Following the managed store opening of Gloucester in
February 2020 and Oldbury in June 2020, we now have
12 stores trading under management contracts at
31 July 2020. Chester and Kettering are in the design
stage and will add a further two stores to the managed
store portfolio.
We generated managed store income of £991,298 this
year, up 21.4% (2019: £816,676) from the previous period.
We expect this to continue increasing steadily over the
coming years as more managed stores are opened.
The graph on page 24 shows how our historical
management fees have grown and also indicates a
strong correlation between the total management fee
income and the number of stores under management
12 managed stores (2019: 11).
23
Strategic ReportOverviewGovernanceFinancial Statements Property Review continued
Growth in Store Management Fees
£1,400,000
£1,200,000
£1,000,000
s
’
£
£800,000
£600,000
£400,000
£200,000
0
s
e
r
o
t
S
d
e
g
a
n
a
M
f
o
r
e
b
m
u
N
16
14
12
10
8
6
4
2
0
2016
2017
2018
2019
2020
2021
2022
Management Fees
Number of Managed Stores
New Store Pipeline
As at 31 July 2020, we have 10 new stores secured in our Current Pipeline9*. All are in prominent locations with large
catchment areas and little established competition and demonstrate the Group’s ability to source high quality sites adding
to future sales and earnings growth. These eye-catching buildings, with their distinctive orange Lok’nStore branded
livery and prominent signage, create highly visible landmarks, which continue to be a big source of new customers.
When this contracted development pipeline of 10 sites has been completed Lok’nStore will operate from 45 stores
including 14 managed stores. In addition, 3 further new store opportunities are progressing with lawyers. The
10 secured pipeline sites represent a combination of 8 owned and 2 managed stores. These will add 561,497
sq. ft. of new capacity adding 61.1% to freehold trading space and 15.9% to the managed store portfolio delivering
a 32.5% increase in overall trading space.
Analysis of Stores
As at 31 Jul 2020
Freehold (JLL)
Leaseholds (JLL)
Pipeline (Freehold)
Pipeline (Leasehold)
Managed Stores (Trading)
Managed Stores (Pipeline)
Total
No. of
Stores
15
8
9
1
12
4
49
Stores
Trading
15
8
12
35
Pipeline
Total
Pipeline
Secured
Pipeline
with lawyers
9
1
4
14
8
2
10
1
1
2
4
Growing Store Property Assets and Net Asset Value
• Adjusted Total Assets £229.4 million5* up 6.8% on last year (2019: £214.7 million)
• Adjusted Net Asset Value of £5.56 per share up 4.7% on last year (2019: £5.31 per share)
Lok’nStore has a strong and growing asset base. Our freehold and operating leasehold stores have been independently
valued by Jones Lang LaSalle (JLL) at £168.4 million (Net Book Value (NBV) £56.6 million) as at 31 July 2020
(2019: £162.7 million: NBV £57.9 million). The change in property valuation is referred to further in the Financial Review
section of the Strategic Report and is detailed in note 11b of the notes to the financial statements.
Adding our stores under development at cost and land and buildings held at Director valuation, our total property
valuation is £200.2 million (2019: £183.7 million).
The increase in the values of properties which were also assessed by JLL last year was 3.5% (2019: 9.1%).
*
See our Key Performance Indicators on pages 20 and 21.
24
Lok’nStore Group plc Annual Report and Accounts 2020
Financial Review
“ Efficient capital allocation and
investment into fast growing
landmark assets.”
Ray Davies
Finance Director
Record Financial Results on All Measures
• Group Revenue £18.04 million up 6.44%
(2019: £16.95 million)
• Group Adjusted EBITDA2* (£9.65 million up 10.4%
(2019 Restated: £8.75 million)
• Operating profit (before exceptional items3*)
£5.79 million up 12.2% (2019: £5.16 million)
• Cash available for Distribution (CAD)4* £6.17 million
up 12.5% (2019: £5.49 million)
• Final proposed dividend up 8.0% to 9.0 pence per
share (2019: 8.33 pence per share)
• Cash balances £13.1 million (2019: £13.7 million)
Lok’nStore is a robust business which generates an
increasing cash flow from its strong asset base with a low
LTV of 19.3% and a low average cost of debt of 1.69%. The
value of the Group’s property assets underpins a flexible
business model with stable and rising cash flows and
low credit risk giving the business a firm base for growth.
IFRS 16
The Group has applied IFRS 16 for the first time in this
financial year. IFRS 16 introduces significant changes
to lessee accounting by removing the distinction
between operating and finance leases and requiring the
recognition of a Right of Use Asset and a corresponding
lease liability in the Statement of Financial Position.
The prior year financial comparatives contained within
these statements have been restated to reflect the
first-time adoption of IFRS 16 which changes previously
reported EBITDA, interest and depreciation numbers in
the Statement of Comprehensive Income. Further details
of these restatements can be found in note 1.
*
See our Key Performance Indicators on pages 20 and 21.
Lok’nStore will continue to report on the Cash available
for Distribution (CAD) which aims to look through the
statutory accounts and give a clear picture of the
ongoing ability of the Company to generate positive cash
flow from the operating business that can be used to pay
dividends or pay down debt. As mentioned above CAD
was up 12.5% for the year.
Both the Loan to Value and Senior Interest covenants set
out in our bank facility agreements continue to be tested
excluding the effects of IFRS 16. For covenant calculation
purposes, debt/LTV will continue to exclude Right of Use
Assets and the corresponding lease liabilities created
by IFRS 16. Operating lease costs will continue to be a
deduction in the calculation of EBITDA, in accordance
with the accounting principles in force prior to 1 January
2019, when testing the Senior Interest covenant.
Extension of Existing £75 Million Banking
Facility to April 2025
The Group has agreed a one year extension on its existing
joint banking facility with Royal Bank of Scotland plc
and Lloyds Bank plc. The £75 million five year revolving
credit facility which was executed last year included an
extension option which has now been implemented.
The interest rate margin is set at the London Inter-Bank
Offer Rate (LIBOR) plus 1.50%–1.75% based on a loan
to value covenant test. This rate is 1.50% currently and
our current all in debt cost on £51.3 million drawn is
averaging 1.6%–1.7%.
The facility which was due to expire in April 2024, will
now run until April 2025 providing funding for more
landmark site acquisitions. The facility includes an
accordion agreement to borrow a further £25 million
in the future not yet committed.
Bank covenants and margin are unaffected by this
extension of term.
25
Strategic ReportOverviewGovernanceFinancial Statements Financial Review continued
Management of Interest Rate Risk
• Average cost of debt 1.69% (2019: 2.11%)
With £51.3 million of gross debt currently drawn against the £75 million bank facility the Group is not committed
to hedging but will keep the matter under review. It is not the intention of the Group to enter into any hedging
arrangement at this time given our low level of net debt, low loan to value ratio and high interest cover.
Earnings per Share
The calculations of earnings per share are based on the following profits and numbers of shares.
Profit for the financial year – Continuing Operations
Profit for the financial year – Discontinued Operations
Total profit for the financial year attributable to owners of the Parent
Weighted average number of shares
For basic earnings per share
Dilutive effect of share options1
For diluted earnings per share
Earnings per share
Basic
Continuing Operations
Discontinued Operations
Total basic earnings per share
Diluted
Continuing Operations
Discontinued Operations
Total diluted earnings per share
Group
2020
£’000
2,974
–
2 ,974
Group
2019
Restated**
£’000
3,161
2,182
5,343
2020
No. of shares
2019
No. of shares
28,976,967
28,921,229
517,257
481,848
29,494,224
29,403,077
Group
2020
pence
10.26p
–
10.26p
10.08p
–
10.08p
Group
2019
Restated**
pence
10.93p
7.55p
18.48p
10.75p
7.42p
18.17p
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
1
Further options that could potentially dilute EPS in the future are excluded from the above because they are not dilutive in the period presented.
Full details of share options are included in notes 22 to 25.
Basic earnings per share were 10.26 pence (2019: 18.48 pence per share – restated) and diluted earnings per share
were 10.08 pence (2019: 18.17 pence per share – restated).
On a normalised basis stripping out the contribution from the Saracen business and the corresponding profit on
disposal in 2019, basic earnings per share for the continuing operations were 10.26 pence (2019: 10.93 pence
per share – restated) and diluted earnings per share were 10.08 pence (2019: 10.75 pence per share – restated).
26
Lok’nStore Group plc Annual Report and Accounts 2020 £18.04m
GROUP REVENUE
UP 6.4%
£9.65m
GROUP ADJUSTED
EBITDA UP 10.4%
£5.79m
OPERATING PROFIT
(BEFORE EXCEPTIONAL
ITEMS2) UP 12.2%
Costs – Continuing Operations
• Group operating costs amounted to £8.26 million for the year (2019: Restated £8.02 million) up by 3.0%
• Cost ratio13* reduced further to 45.8% (2019 Restated: 47.3%)
We have a strong record of disciplined control of our Group operating costs. In the year operating costs (stripping out the
IFRS 16 effect of the property lease costs) were up 3% year on year. Group operating costs amounted to £8.26 million
for the period, a 3.0% increase year on year (2019: £8.02 million) and we provide a breakdown below.
Future cost increases are likely to be driven by the expansion of the business in the areas of rates, staffing and marketing.
Overall cost increases are mainly driven by the expansion of the business and we are seeing little other cost pressures.
Property costs are our largest cost category and increased by 9.2%. These costs mainly constitute rent and rates
and have risen in recent years as we felt the effects of higher rates bills and as we opened our new landmark stores
which are generally larger. Staff costs increased by 2.1% as we staffed the new stores and paid performance
bonuses to all our store colleagues.
The decrease in overhead costs is principally due to a lower level of legal and professional costs related to work on
rent reviews, corporate tax and compliance work and costs arising on aborted store acquisitions compared to the
previous year.
Group Costs
Property costs
IFRS 16 restatement – leases
Restated property and premises costs
Staff costs
Overheads
Total
Increase
(decrease)
in costs %
Year ended
31 July 2020
£’000
Year ended
31 July 2019
Restated**
£’000
9.2
8.2
9.7
2.1
(8.4)
3.0
4,392
(1,467)
2,925
4,196
1,139
8,260
4,022
(1,356)
2,666
4,111
1,244
8,021
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Cash Flow and Financing
At 31 July 2020 the Group had cash balances of £13.1 million (2019: £13.7 million). Cash inflow from operating
activities before investing and financing activities was £9.7 million (2019: £9.5 million).
As well as using cash generated from operations to fund some capital expenditure, the Group has a £75 million five
year revolving credit facility which runs until April 2025. This provides sufficient liquidity for the Group’s current needs.
Undrawn committed facilities at the year-end amounted to £23.7 million (2019: £32.0 million).
Cash plus undrawn committed facilities amounts to £36.8 million leaving the business with plenty of headroom to keep
acquiring and building new landmark stores. The bank facility has a further £25 million accordion not yet committed.
Strong Cash Flow Supports 8.33% Annual Dividend Increase
• Annual dividend 13 pence per share up 8.33% (2019: 12 pence per share)
• Cash Available for Distribution (CAD) of 21.28 pence per share (2019: 18.95 pence per share)
Cash Available for Distribution (CAD) up 12.5% From Continuing Operations
Cash available for Distribution (CAD) provides a clear picture of ongoing cash flow available for dividends or debt
repayment. The CAD was up 12.5% in the year compared to last year.
To illustrate this fully the table on page 28 shows the calculation of CAD.
*
See our Key Performance Indicators on pages 20 and 21.
27
Strategic ReportOverviewGovernanceFinancial Statements Financial Review continued
Analysis of Cash Available for Distribution (CAD)
Based on Continued Operations
Group Adjusted EBITDA (per Statement of Comprehensive Income)
IFRS 16 restatement – property leases
Less: Net finance costs paid1
Capitalised maintenance expenses
New Works Team
Current tax (note 8)
Total deductions
Cash Available for Distribution
Increase in CAD over last year
Closing shares in issue (less shares held in EBT)
CAD per share (annualised)
Increase in CAD per share over last year
Group
Year ended
31 July 2020
£’000
Group
Year ended
31 July 2019
Restated**
£’000
9,654
(1,468)
(1,046)
(110)
(89)
(768)
(3,481)
6,173
12.5%
8,749
(1,356)
(903)
(99)
(90)
(811)
(3,259)
5,490
8.8%
Number
Number
29,010,078
28,960,574
21.28p
12.3%
18.95p
8.8%
1
Net finance costs represent finance costs paid per the Cash Flow Statement of £1.07 million less bank interest received £0.03 million to give the true
cash flow effect.
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Gearing11* (Excluding IFRS 16 Lease Liabilities)
At 31 July 2020 the Group had £51.3 million of gross bank borrowings (2019: £43.0 million) representing gearing of 31.3%
(2019: 24.9%) on net debt of £38.3 million (2019: £29.3 million). After adjusting for the uplift in value of short leaseholds
which are stated at depreciated historic cost in the statement of financial position, gearing is 28.3% (2019: 22.2%). After
adjusting for the deferred tax liability carried at year-end of £26.8 million gearing drops to 23.6% (2019: 19.0%).
Gearing11* (Including IFRS 16 Lease Liabilities)
At 31 July 2020 the Group had £51.3 million of gross bank borrowings (2019: £43.0 million) and £12.5 million of lease
liabilities (2019: £13.7 million) representing gearing of 41.8% (2019: 36.8%) on net debt of £50.7 million (2019: £42.9 million).
After adjusting for the uplift in value of short leaseholds which are stated at depreciated historic cost in the statement
of financial position, gearing is 37.7% (2019: 32.7%). After adjusting for the deferred tax liability carried at period end
of £26.8 million gearing drops to 31.5% (2019: 27.9%).
Capital Expenditure
The Group has an active store development programme and has grown through a combination of building new
stores, existing store improvements and relocations.
Capital expenditure during the period totalled £12 million (2019: £14.0 million). This was primarily the completions of
the Stevenage and Salford acquisitions, deposits paid on the Warrington, Chester and Kettering sites, together with
ongoing construction and fit out works at our site in Leicester. There was also planning and pre-development works
at our Wolverhampton, Bedford, Bournemouth, Stevenage and Cheshunt sites. The figure includes £382,190 of
capitalised interest in respect of the development sites.
The Group has capital expenditure contracted but not provided for in the financial statements of £2.97 million
(2019: £5.56 million). We carefully evaluate the ongoing economic and trading position before making any further
capital commitments.
*
See our Key Performance Indicators on pages 20 and 21.
28
Lok’nStore Group plc Annual Report and Accounts 2020
Purchase of treasury shares: The Group did not
buy or sell any treasury shares during the year. We
are proposing to renew our ongoing authority to buy
back shares at this year’s AGM to ensure the Group
continues to have flexibility to make purchases should
it be considered to be in the best interests of
shareholders to do so.
Post-year-end, on 25 September 2020, Lok’nStore,
bought back 8,000 Ordinary Shares of 1p each in the
market at a price of 519.0 pence per Ordinary Share.
On 2 October 2020 Lok’nStore bought back 29,972
Ordinary Shares of 1p each in the market at a price
of 517.5 pence per Ordinary Share.
Following the Buyback, the issued share capital of
the Company is 29,641,559 Ordinary Shares of which
the 37,972 Ordinary Shares acquired are now held
in treasury. The total number of voting rights in the
Company, excluding Treasury shares will therefore
be 29,603,587. (Refer note 34 – Events after the
Reporting Date).
Strong Balance Sheet, Efficient Use
of Capital, Conservative Level of Debt
• Revolving Credit Facility (RCF) £75 million
with accordion up to £100 million
• £12.0 million invested in new store pipeline
(2019: £15.1 million14)
• Net debt £38.3 million (2019: £29.3 million)
• Loan to Value Ratio (LTV) net of cash 19.3%
(2019: 16.1%)
• Cost of debt averaged 1.69% in the year (2019:
2.21%) on £51.3 million drawn (2019: £43.0 million)
Lok’nStore is a robust business with an excellent credit
model, low debt and gearing and which is strongly cash
generative from an increasing asset base. Its increased
bank facilities at low rates of interest position the
business well for the future.
Statement of Financial Position
Net Group assets at the year-end were £121.4 million up
4.1% (2019 Restated: £116.6 million). Freehold properties
were independently valued at 31 July 2020 at £151.7
million up 5.3% (2019: £144.0 million). Please refer to the
table of property values below.
The Parent Company’s net assets have increased as a
result of the dividend of paid up from Lok’nStore Limited,
the principal operating business.
Taxation
The Group has made a current tax provision against
earnings in this period of £0.92 million (2019: £0.81
million) based on a corporation tax rate of 19%
(2019: 19%). The deferred tax provision which used to
be calculated at forward corporation tax rates of 17% is
now calculated at the substantively enacted corporation
tax rate and has therefore reverted to 19%. The deferred
tax provision is substantially a tax provision against the
potential crystallisation (sales) of revalued properties
and past ‘rolled over’ gains amounts to £26.8 million.
(2019: £22.4 million). (See Note 20).
Market Valuation of Freehold and Operating
Leasehold Land and Buildings
It is the Group’s policy to commission an independent
external valuation of its properties at each financial
year-end.
Our 15 freehold properties are held in the statement of
financial position at fair value and have been valued by
JLL. Refer to note 11(b) – property, plant and equipment
and also to the accounting policies for details of the fair
value of trading properties.
The valuations of the leasehold stores held as leases
are not taken onto the statement of financial position.
However, these have also been valued and these
valuations have been used to calculate the Adjusted
Net Asset Value position of the Group. The value of
our leases in the valuation totals £16.73 million (2019:
£18.73 million) and we have reported by way of a note
the underlying value of these leasehold stores in our
revaluations and adjusted our Net Asset Value (NAV)
calculation accordingly to include their value. This
ensures comparable NAV calculations.
A deferred tax liability arises on the revaluation of the
properties and on the rolled-over gain arising from the
disposal of some trading stores. It is not envisaged that
any tax will become payable in the foreseeable future on
these disposals due to the availability of rollover relief. It is
not the intention of the Directors to make any significant
disposals of operational stores, although individual
disposals may be considered where it is clear that added
value can be created by recycling the capital into other
store opportunities.
The Board will continue to commission independent
valuations on its trading stores annually to coincide with
its year-end reporting.
14
Including purchase of the The Box Room (Self-Storage) Limited for £1.13 million in cash.
29
Strategic ReportOverviewGovernanceFinancial Statements Financial Review continued
Analysis of Total Property Value
Freehold stores valued by JLL1
Short leasehold stores valued by JLL2
Freehold land and buildings at Director valuation 3
Subtotal
Sites in development at cost4
Total
No of
stores/sites
15
8
1
24
10
34
31 July 2020
Valuation
£
151,675,000
16,725,000
1,931,457
170,331,457
29,884,683
200,216,140
No of
stores/sites
15
8
1
24
6
30
31 July 2019
Valuation
£
144,000,000
18,725,000
2,509,070
165,234,070
18,441,750
183,675,820
1
2
3
4
Includes related fixtures and fittings (refer to note 11b).
The eight leaseholds valued by JLL are all within the terms of the Landlord and Tenant Act (1954) giving a degree of security of tenure. The average
length of the leases on the leasehold stores valued was nine years and seven months at the date of the 2020 valuation (2019 valuation: 11 years
and 0 months).
For more details refer note 11b – Directors valuation.
Includes £382,190 (31.07.2019: £332,326) of capitalised interest during the year.
Total freeholds account for 91.6% of property valuations (2019: 89.8%).
Increase in Adjusted Net Asset Value per Share
• Adjusted Net Asset Value per share up 4.7% to £5.56 (2019 Restated: £5.31)
Adjusted Net Assets per Share are the net assets of the Group adjusted for the valuation of leasehold stores and
deferred tax divided by the number of shares at the year-end. The shares currently held in the Group’s employee
benefits trust (own shares held) and in treasury (zero) are excluded from the number of shares.
At July 2020 the Adjusted Net Asset Value per share (before deferred tax) increased 4.7% to £5.56 from £5.31 last
year. This increase is a result of higher property values on our existing stores as the strength of our landmark stores
is recognised, combined with cash generated from operations less dividend payments, offset in part by an increase
in the shares in issue due to the exercise of a small number share options during the year.
30
Lok’nStore Group plc Annual Report and Accounts 2020 Analysis of Adjusted Net Asset Value (NAV)
Net assets
Adjustment to include operating/short leasehold stores at valuation
Add: JLL operating leasehold valuation
Deduct: leasehold properties and their fixtures and fittings at NBV
Deferred tax arising on revaluation of leasehold properties1
Adjusted net assets
Shares in issue
Opening shares in issue
Shares issued for the exercise of options
Closing shares in issue
Shares held in EBT
Closing shares for NAV purposes
Adjusted Net Asset Value per share after deferred tax provision
Adjusted Net Asset Value per share before deferred tax provision
Adjusted net assets
Deferred tax liabilities and assets recognised by the Group
Deferred tax arising on revaluation of leasehold properties1
Adjusted net assets before deferred tax
Closing shares for NAV purposes
Adjusted Net Asset Value per share after deferred tax provision
Group
31 July 2020
£’000
Group
31 July 2019
Restated**
£’000
121,382
116,550
16,725
(3,707)
134,400
(2,473)
131,927
Number
(‘000s)
29,584
49
29,633
(623)
29,010
£4.55
18,725
(3,905)
131,370
(2,519)
128,851
Number
(‘000s)
29,499
85
29,584
(623)
28,961
£4.45
Group
31 July 2020
£’000
Group
31 July 2019
Restated**
£’000
131,927
26,760
2,473
161,160
29,010
£5.56
128,851
22,385
2,519
153,755
28,961
£5.31
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
1
A deferred tax adjustment in respect of the uplift in the value of the leasehold properties has been included, calculated by applying a tax rate of 19%
(2019: 17%). Although this is a memorandum adjustment as leasehold properties are included in the Group’s financial statements at cost and not
at valuation, this deferred tax adjustment is included in the adjusted net asset value calculation in order to maintain a consistency of tax treatment
between freehold and leasehold properties.
Summary
Lok’nStore Group operates within the UK self-storage sector which is still relatively immature. With a low loan to
value and flexible bank facilities through to 2025 this market presents an excellent opportunity for further growth of
the business. Recently opened landmark stores and our strong pipeline of more landmark stores demonstrate the
Group’s ability to use those strengths to exploit the opportunities available.
31
Strategic ReportOverviewGovernanceFinancial Statements Section 172 Statement
Section 172 of the Companies Act 2006 requires a Director of a Company to act in a way he or she considers, in
good faith, would be the most likely to promote the success of the Company for the benefit of its members as a
whole. In doing this Section 172, requires a Director to have regards among other matters to:
•
•
•
•
•
•
the likely consequences of any decision in the long-term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly with members of the Company.
The Directors give careful consideration to the factors set out above in discharging their duties under section 172,
details of which are contained throughout this Report. The Board’s obligations under Section 172 are considered
at Board meetings within each relevant section of the Board pack. The stakeholders we consider in this regard are
our employees, our customers, our shareholders, our suppliers, and the environment. The Board recognises that
building strong relationships with our stakeholders will help us to deliver our strategy in line with our long-term values
and operate the business in a sustainable way.
The Board regularly receives reports from management on issues concerning customers, the environment, suppliers,
employees, and investors, which it takes into account in its discussions and in its decision-making process under
Section 172.
32
Lok’nStore Group plc Annual Report and Accounts 2020 Principal Risks and Uncertainties
Principal Risks and
Uncertainties in
Operating our Business
Risk management has been a
fundamental part of the successful
development of Lok’nStore. The
process is designed to improve the
probability of achieving our strategic
objectives, keeping our employees
safe, protecting the interests of our
shareholders and key stakeholders,
and enhancing the quality of
our decision-making through
understanding the risks inherent in
both the day-to-day operations and
the strategic direction of the Group
as well as their likely impact.
Management of our risks helps us
protect our reputation which is very
important to the ability of the Group
to attract customers, particularly
with the growth of social media. We
always try to communicate clearly
with our customers, suppliers,
local authorities and communities,
employees and shareholders and to
listen and take account of their views.
We operate strict Health and Safety
policies and procedures and more
information on these can be found
on page 37.
Our Risk Management
Governance
The Board has overall responsibility
for the management of the Group’s
risks. As the Group’s strategic
direction is reviewed and agreed
the Board identifies the associated
risks and works to reduce or
mitigate them using an established
risk management framework in
conjunction with the Executive
Management Team. This is a
continuing and evolving process
as we review and monitor the
underlying risk elements relevant
to the business.
Risk Management
Framework
The risk register covers all areas of the
business including property, finance,
employees, insurance, customers,
strategy, governance and disaster
recovery. The risks are categorised
by risk area and rated based on
a combination of ‘likelihood’ and
‘consequences and impact’ on the
business. The combination of these
two becomes the ‘risk factor’ and any
factor with a rating over 15 is reported
to the Board.
Risk Management Team
Ray Davies, Group Finance Director,
is the Board member responsible for
ensuring that the risk management
and related control systems are
effective and that the communication
channels between the Board and
the Executive Management Team
are open and working correctly.
The Executive Management Team
is responsible for the day to day
management of the risk factors.
Responsibility for identifying,
managing and controlling the risk is
assigned to an individual as shown
on the risk register depending
on the business area. Reporting
against the risks forms part of the
monthly Executive Management
Meeting and the risk factor may be
amended if applicable. There are
also sub-committees for particular
risk areas which meet regularly. The
Risk Management and Reporting
Structure is shown below.
Our Risk Management and Reporting Structure
THE BOARD
Reviews Risk Register in full twice a year
Considers specific risk areas as raised
by the Executive Board
EXECUTIVE BOARD COMMITTEE
Reviews risks at monthly Executive Management Meetings and if material requests for
the Board to consider risk at next scheduled Board Meeting (or earlier if necessary)
CAPEX COMMITTEE
PROPERTY RISK COMMITTEE
Meets Monthly
Meets Periodically
Manages proposed capital expenditure,
actual spend, rolling capex requirements
Considers: Risks associated with properties
including Health & Safety
Environmental Impact
33
Strategic ReportOverviewGovernanceFinancial Statements Principal Risks and Uncertainties continued
Principal Risks
The principal risks our business faces and our key mitigations are outlined in the table below.
Risk
Description
Key Mitigation
Interest Rate and
Liquidity Risk
The main risks arising from the Group’s
financial instruments are interest rate
risk and liquidity risk (for details please
see note 17, page 103).
Tax Risk
Property
Valuation Risk
Changes to tax legislation may
impact the level of corporation tax,
capital gains tax, VAT and stamp duty
land tax which would in turn affect the
profits of the Company.
The external independent valuations
of the stores are sensitive to both
operational trading performance of the
stores and also wider market conditions.
It follows that a reduction in operational
performance or a deterioration of
market conditions could have a material
adverse impact on the Net Asset Value
(NAV) of the Group.
• Regular review by the Board (full details are set out in the
Financial Review, page 25)
• Debt and interest are low relative to assets and earnings
• Could reduce debt, if required, by executing ‘Sale and
Manage-Back’ arrangements on mature stores
• Regular monitoring of changes in legislation
• Use of appointed professional advisers and trade bodies
• Regular monitoring of any changes in market conditions
and transactions occurring within our marketplace
• Use of independent professional valuers expert in the
self-storage sector
• Past experience from the financial crisis of 2008 shows
the sector has been resilient to a market downturn
• Store properties are all UK based and predominately
located in the affluent South of England and therefore
not exposed to overseas/international/currency risks etc
• Strong operational management teams with the
skills, experience and motivation to continue to drive
operational performance
Property
Acquisition
Acquiring new sites is a key strategic
objective of the business but we face
significant competition from other
uses such as hotels, car showrooms
and offices as well as from other
self-storage operators.
• We hold weekly property meetings to manage the search
process and property purchases
• Use of property acquisition consultants
• Regular communication with agents
• Attendance at industry relevant property events
Planning
Permission
The process of gaining planning
permissions remains challenging.
• Where we can we acquire sites subject to planning
• We work with an established external planning consultant
• Our property team has over 20 years’ experience
Construction
Poor construction may affect the
value of the property and/or the
efficient operation of the centre.
• We use a design and build contract with a variety of
established contractors
• We use external project managers
• All projects are overseen by our property team which has
over 20 years’ experience
34
Lok’nStore Group plc Annual Report and Accounts 2020 Risk
Description
Key Mitigation
Maintenance/
Damage
Damage to properties through poor
maintenance or flood or fire could
render a centre inoperable.
• Regular site checks by team members
• Rolling maintenance plan for all stores
• Comprehensive disaster recovery plan
• Appropriate insurance cover
Increased
Competition
An increasing number of competitors
in the industry may negatively impact
Lok’nStore’s existing operations (e.g.
pricing/available sites).
• Established criteria for site selection including:
– Prominent locations
– High visibility
Employee
Retention
Loss of employees may affect our
ability to operate our stores and
provide the high levels of customer
service expected.
– Distinctive designs and bright orange elevations and
strong signage to attract customers
• Continued investment in the Group’s website and
internet marketing
• Ensure high levels of customer service through training
and monitoring
• Aim to offer a good work/life balance and career development
• Regular reviews of remuneration levels against market
• Achievable bonus systems
• Generous Employee Share Schemes
• High quality training via Lok’nStore Academy
(for further information see page 36)
• Intranet for improved communications
• Established Employee rewards programme
IT System Breach A breach of our IT systems might
adversely affect the operations of
the business and our reputation.
• Strong and regularly reviewed IT security systems
• Well communicated policies and procedures for handling
and managing a systems breach
COVID-19 Risk
A spread of the virus and social
protection measures introduced by
Government may adversely affect the
operations and financial performance
of the business and adversely impact
on the health of staff.
• Please refer to our COVID-19 Group Response section
in the Managing Director’s Review on page 18
35
Strategic ReportOverviewGovernanceFinancial Statements Corporate Sustainability Report
LOK’NSTORE ACADEMY
The Lok’nStore Academy continues to bring strategic and operational benefits to the
business, aligning our training under one branded project, providing personal development
opportunities to all of our team members. During the year the Academy offered a
number of training courses which have been delivered via classroom based learning and
since March via virtual training sessions. Over 5,460 hours of training was delivered via
classroom and virtual means – the equivalent of over 32 hours per team member. We are
delighted to report that 28 colleagues have completed National Vocational Qualifications
(NVQs) since the Academy opened. In the current year six colleagues have enrolled on
NVQs and these have progressed via virtual training sessions since the pandemic started.
Development of our teams through the Academy supports our strategic aim to fill
future Centre Manager roles internally. 61% of our current Centre Managers are internal
appointments having all developed from a Customer Service Assistant role, up from 55%
last year. We expect to continue to improve this percentage as the business grows, giving
us committed and talented team members at the customer facing heart of our business.
The Academy encompasses all in house training and quality audits such as our monthly
mystery shop programme and standards audits and performance reviews.
Corporate and Social Responsibilities
Lok’nStore conducts its business in a manner that
reflects honesty, integrity and ethical conduct. Our
Corporate Social Responsibility Report sets out our
environmental policy and how we manage our impact
on the environment and our policies and principles in
relation to our responsibilities to stakeholders including
suppliers, customers and employees.
We believe that the long-term success of our business
is best served by respecting the interests of all of 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. A full
assessment is set out below in our Environmental Policy.
Customers
We believe in clarity and transparency when
communicating with our customers. Brochures and
literature are written in plain English, explaining clearly
our terms of business without hiding anything in the small
print. 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. In return a substantial amount of
our business comes from previous customers, existing
customers taking more space and customer referrals.
COVID-19 events continue to move at a fast pace but our
objective is to continue to keep our stores open so that our
business customers in particular can continue to operate.
Many of them are providing critical services distributing
medical and other essential supplies. We include the
NHS, GP surgeries, care and home support services and
government departments amongst our customers. All of
our stores have remained open throughout the pandemic.
Suppliers
We are committed to conducting our business with
suppliers in a fair and honest manner, with openness
and integrity, operating in accordance with the terms
and conditions agreed upon. We expect our suppliers to
operate to these same principles.
Policy on Payment of Suppliers
The Group does not follow any formal code or standard
on payment practice. The Company’s policy, which
is also applied by the Group, is to ensure that, in the
absence of dispute, all suppliers are dealt with in
accordance with standard payment practice, whereby all
outstanding trade accounts are settled within the terms
agreed with the supplier at the time of the supply or
otherwise 30 days from invoice date. At the year-end the
credit taken from suppliers by the Group was 40 days
(2019: 40 days).
36
Lok’nStore Group plc Annual Report and Accounts 2020 5,460 hours
OF ACADEMY
TRAINING – UP 36.3%
100%
OF ELECTRICITY FROM
RENEWABLE SOURCES
80%
OF EMPLOYEES ARE MEMBERS
OF THE PENSION FUND
100%
50%
OF EMPLOYEES RECEIVE
PERFORMANCE RELATED BONUSES
OF EMPLOYEES ARE MEMBERS
OF SHARE INCENTIVE PLAN
Employees
At 31 July 2020 we had 167 employees (2019: 161).
We treat our employees with dignity and respect and
are committed to providing a positive attitude and an
enjoyable working environment. We have a professional
open culture where all colleagues can exchange
ideas and offer suggestions for improvement. This
encourages our team members to build on their skills,
through appropriate training and regular performance
review. Regular training courses at our Head Office
support these objectives and we talk below about
the contribution Lok’nStore Academy makes to this
(see the case study on the work of the Academy).
Remuneration of all Group colleagues is reviewed
annually to ensure all of our employees are paid fairly
and to ensure we can attract and retain the correct talent
to support our rapid growth. Our Company Intranet
provides a central point of knowledge for all employees
across the organisation. The system is regularly updated
with news, events and files making it a first point of
reference for Company communication and documents.
Share Ownership Plans
We are proud to have share ownership plans in which
all employees are eligible to participate. 50% of our
employees are members of our Share Incentive Plan
(SIP), a tax efficient equity scheme. This high level of
participation is testament to the loyalty and commitment
of our team members.
Our personnel are committed and motivated and help
maintain the exemplary levels of friendly service that
Lok’nStore provides to its customers. The Board would
like to thank all colleagues for their commitment to
our business and for their hard work and efforts over
the year.
Employee Benefit Trust
The Employee Benefit Trust owns 623,212 shares
(2019: 623,212), the costs of which are shown as a
deduction from shareholders’ funds. Full details are
provided in note 28 – Own Shares.
Health and Safety
The Board recognises the prime importance of
maintaining high standards of Health and Safety and
healthy working conditions for our teams, customers,
visitors, contractors and other people who may be
affected by our business activities. Lok’nStore has a
Property Risk Committee which meets periodically and
considers issues relevant to Health and Safety and other
risk issues within the Group under the overall supervision
of Ray Davies, Finance Director, who carries Board
responsibility for risk management.
The Health and Safety policy is reviewed by the
Committee on an annual basis. It is also amended to
include changes to Health and Safety Law as they occur.
The Health and Safety policy clearly sets out the duties
and responsibilities of the Managing Director, Managers
and all colleagues within the Group.
37
Strategic ReportOverviewGovernanceFinancial Statements Corporate Sustainability Report continued
Environmental Performance
Lok’nStore remains committed to reducing waste and ensuring commitment to its green policies. We have been
actively monitoring and measuring our environmental impacts since 2005. By monitoring environmental key
performance indicators (eKPIs) including greenhouse gas emissions (GHG), water use and waste, and reviewing
them against our stated Environmental Policy, we continue to achieve our stated aims; to manage waste effectively,
control polluting emissions and to encourage suppliers to minimise their impact on the environment.
The UK government requires all quoted companies to report on their GHG emissions as part of their annual
Directors’ report under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. As in
previous years, Lok’nStore engaged Trucost to review its reporting of environmental impacts for the financial year
ending 31 July 2020. A summary of their findings is included below. More detail can be found on our website.
ENVIRONMENTAL CASE STUDY:
As a socially responsible company Lok’nStore is committed to reducing the impact our operations have on
the environment. To ensure this commitment is fulfilled for this year and in the future, we are proud to confirm
that electricity for the entire Lok’nStore Group now comes from 100% renewable energy.
Our external electricity supplier obtains its energy either from renewable generators or from combined heat
and power sources. The Group stipulates that all energy supplied must be from renewable generation.
We continue to install photovoltaic (PV) solar panels on the roofs of our new buildings and are proud that we
have managed to increase electricity generated by 53% whilst exporting clean green energy to the national grid.
Lok’nStore facilities produced 347 MWh of PV electricity which is 1% more than in the previous reporting period.
The continued use of PV generated electricity helped Lok’nStore in avoiding 81 tCO2e of GHG emissions,
based on the national standard mix of non-renewable energy for FY 2019–20. Out of the total electricity
produced 84% was used at the sites, while the proportion of generation that was exported accounted for
16% of the total.
The Company’s elimination of any GHG footprint from electricity consumption at its facilities and export
of clean energy to the national grid demonstrate its successful approach to the environment.
More detail can be found on our website:
www.loknstore.com
38
Lok’nStore Group plc Annual Report and Accounts 2020 Environmental Management and Performance
Highlights for the year ending 31 July 2020
The Group’s operational Greenhouse Gas (GHG) emissions (direct and indirect) decreased by 38%, falling to 105
tCO2e from 170 tCO2e the previous financial year, the eighth year of decrease in a row. Normalising these emissions
by annual revenue allows intensity comparisons to be made. Lok’nStore recorded a 42% lower emission intensity of
5.8 tCO2e per £million in 2019–20 as compared to 10 tCO2e per £million in 2018–19.
Impact
Result Comment
Operational GHG
Emissions
(scope 1 & 2) ✓ In the year 2019-20 operational GHG emissions intensity has decreased by 42%. This
✓ This year we are pleased to have achieved a 52% decrease in direct GHG emissions
continues to demonstrate our ongoing commitment to decreasing GHG emissions, which
have reduced by 91.2% since 2005 when monitoring began from 1,189 tCO2e to 105 tCO2e.
from fuel used in travel despite an increased number of stores trading and geographical
spread. Vehicle fuel usage has decreased and efforts continue to be made to reduce the
use of heating from gas sources wherever possible. We saw a 26% increase in natural
gas consumption which is a relatively small percentage of our total energy consumption.
Direct Operational
GHG Emissions
(scope 1)
Indirect Operational
GHG Emissions
(scope 2)
✓ We achieved a decrease of 3% in total use of electricity across all our sites. We continue
to emit no indirect operational GHG emissions due to all of our electricity coming from
renewable feed stocks and on-site photovoltaic electricity generation.
Renewable Energy
Generation
✓ This year has seen a 1% increase in energy generated at our sites. Where possible PV
solar panels will continue to be installed on new stores to increase electricity generated
by our operations.
sites increased.
Waste Generation
Water Consumption ✓ Water usage has decreased by 25% in the year 2019–20, even as the total number of trading
and Recycling ✓ In the year 2019–20 total waste generation decreased by 4% as the total number of trading
sites increased. When adjusted for intensity we saw a 10% decrease in landfill waste.
Alongside the decrease in landfill waste we also saw an 8% decrease in waste recycled. This
reflects on the decrease in overall volume of waste more than it does on the route our waste
takes once generated by our customers and our own operations.
The Group’s environmental reporting is consistent with ‘Environmental Key Performance Indicators: Reporting Guidelines for
UK Business 2006’
Lok’nStore’s GHG reporting for 2019-20 aligns with government guidelines
Trucost found that Lok’nStore assessed and disclosed all material environmental impacts – GHG emissions, water consumption
and waste generation for its own facilities
The Board is committed to considering the impact our operations have on the environment and minimising them
wherever possible. We will continue to monitor and report our environmental impacts in line with government guidelines.
The Strategic Report as set out in pages 9 to 39 was approved by the Board of Directors and authorised for
issue on 30 October 2020 and signed on its behalf by
Andrew Jacobs
Ray Davies
Chief Executive Officer
Finance Director
39
Strategic ReportOverviewGovernanceFinancial Statements 40
Lok’nStore Group plc Annual Report and Accounts 2020Page Title Governance
42 Board of Directors and Advisers
44 Corporate Governance
51 Directors’ Report
54 Remuneration Report
56
57
Statement of Directors’ Responsibilities
Independent Auditor’s Report to the
Members of Lok’nStore Group plc
LANDMARK STORE
LEICESTER
57,339
SQUARE FEET OF MAXIMUM
LETTABLE AREA
NOW
OPEN
Lok’nStore Leicester opened in early August 2020
(immediately post year-end) and early trading has
been encouraging.
This stunning landmark store is unmissable and is
located in the Freemen’s Park area, to the south of
the city centre. Adjacent to the King Power football
stadium and the Leicester Tigers rugby stadium with
an adjacent national supermarket, cinema and leisure
complex. With its stunning curved glass facade this store
presents itself a busy main road out of the city centre.
This market leading purpose-built store serves the
330,000 strong population of Leicester with an easy
to find modern storage facility.
41
Strategic ReportOverviewGovernanceFinancial Statements Board of Directors and Advisers
EXECUTIVE DIRECTORS
Andrew Jacobs (61)
Executive Chairman
Ray Davies (63)
Finance Director
Neil Newman-
Shepherd (43)
Managing Director
Experience
Andrew established Lok’nStore 25
years ago after eight years working
in the Japanese equity market.
Andrew is responsible for strategy,
corporate finance and property.
He has an MPhil in Economics from
Cambridge University and a BSc in
Economics from LSE.
Key Areas of Expertise
Strategy, Corporate Finance,
Economics and Property.
Experience
Ray is a Fellow of the Institute of
Chartered Accountants and the
Institute of Chartered Secretaries
& Administrators. Prior to joining
Lok’nStore in 2004, Ray held several
senior finance positions in listed
companies in the construction,
health and fitness sectors.
Key Areas of Expertise
Finance and Accounting, Corporate
Reporting, Risk Management, Legal,
Tax and Compliance.
Experience
Neil joined the Lok’nStore Group
in October 2006 becoming Sales
Director in November 2015. Prior
to joining Lok’nStore, Neil gained
retail experience at Wickes and
Woolworths plc. Neil is responsible
for sales, operations, marketing
and people.
Key Areas of Expertise
Sales, Marketing and Human
Resource Management.
NON-EXECUTIVE DIRECTORS
Edward Luker (71)
Senior Non-Executive
Director
Simon Thomas (60)
Non-Executive
Director
Richard Holmes (60)
Non-Executive
Director
Experience
Edward is a Fellow of the Royal
Institution of Chartered Surveyors.
Edward is a well-known figure in the
UK property industry, having worked
for CB Richard Ellis for 33 years,
where he has been a Director and
Partner for 20 years. Edward joined
Lok’nStore in 2007.
Experience
Simon joined Lok’nStore in 1997
following successful careers in the
publishing and finance sectors.
He worked at Reed International,
Swiss Bank Corporation, Nomura
International and co-founded the
emerging markets investment
trust business at LCF Edmond de
Rothschild. Simon is particularly
interested in environmental
economics and natural capital.
Experience
Richard joined Lok’nStore
in 2000 having held senior
marketing and commercial roles
in Unilever, Boots (as Marketing
Director and Commercial Director)
and latterly Specsavers (as Group
Marketing Director).
Key Areas of Expertise
Commercial Property.
Key Areas of Expertise
Corporate Finance and
Environmental Performance.
Key Areas of Expertise
Marketing including Digital
Marketing, and Customer
Experience.
42
Lok’nStore Group plc Annual Report and Accounts 2020
DIRECTORS AND ADVISERS
Directors
The Board of Directors is supported by an Assistant
Company Secretary who assists the Chairman with the
setting of meeting agendas and provides the information
to the Board members prior to the meetings. A procedure
to enable Directors to take independent professional
advice if required has been agreed by the Board and
formally confirmed by all Directors.
In addition the Board
is advised by:
Secretary and
Registered Office
Dentons Secretaries Limited
One Fleet Place
London
EC4M 7WS
A. Jacobs
Executive Chairman
R.A. Davies
Finance Director
N. Newman-Shepherd Managing Director
E.T.D. Luker
Senior Non-Executive Director
S.G. Thomas
Non-Executive Director
R.J. Holmes
Non-Executive Director
C.P. Peal
Jeff Woyda
Non-Executive Director
Non-Executive Director
(appointed 1 September 2020)
Nominated Adviser
and Broker
finnCap Ltd
1, Bartholomew Close
London
EC1A 7BL
Auditor
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
Registrars
Link Asset Services
(Formerly Capita Registrars)
Link Group
6th Floor, 65 Gresham Street,
London
EC2V 7NQ
Solicitors
Dentons UKMEA LLP
One Fleet Place
London
EC4M 7WS
Goodman Derrick LLP
10 St Bride Street
London
EC4A 4AD
Glovers LLP
6 York Street
London
W1U 6QD
Charles Peal (65)
Non-Executive
Director
Jeff Woyda (58)
Non-Executive
Director
Experience
Charles joined Lok’nStore in 2007.
Charles started his career in 1977
at 3i Group, the leading UK quoted
Venture Capital Company. He was
Chief Executive of Legal and General
Ventures from 1988 to 2000 and has
served on several Boards since then.
Key Areas of Expertise
Capital Markets and
Fund Management.
Experience
Jeff joined the Board on 1 September
2020 as an independent Non-
Executive Director. During his
extensive and varied career Jeff,
a qualified accountant, has held a
number of senior Executive positions
and is currently Chief Financial
Officer and Chief Operating Officer
of Clarkson plc, a FTSE 250 company
and the world’s leading provider of
integrated shipping services and
investment banking capabilities to
the shipping and offshore markets.
Key Areas of Expertise
Finance and Technology,
Strategic Development, Financial
Management, Investor Relations
and Corporate Governance.
The Board has
over 100 years
of self-storage
experience.
Audit Committee
Remuneration Committee
To find out more visit:
www.loknstore.com/investors/the-board
Find out more about the Company’s
committees on pages 49 and 50
43
Strategic ReportOverviewGovernanceFinancial Statements
Corporate Governance
The Board of Lok’nStore Group plc has always sought to operate the
highest level of governance standards appropriate to the size and nature
of the Company.
The Group applies the Quoted Companies Alliance’s
Corporate Governance code (‘QCA Code’).
As Chairman it is my responsibility to ensure the
Company complies with the QCA Code and where
the Company deviates to explain why the Directors
believe this to be in the best interests of the Company.
In this section, we hope to demonstrate our Company’s
good corporate governance structure and where our
practices differ from the expectations set by the QCA
Code, why they do so. You can find more information
including our reporting directly referenced to the 10
principles of the QCA code on the corporate governance
page in the investor section on our website. These are
also summarised below and referenced to the relevant
content within the Annual Report.
Our Governance Structure
THE BOARD
Remuneration Committee
Audit Committee
Meets Once a Year
Chaired by Edward Luker
Meets Twice a Year
Chaired by Charles Peal
See page 49 for more information
See page 50 for more information
EXECUTIVE BOARD COMMITTEE
Meets Monthly
Considers:
Strategy, Management Accounts, Store Operations and
Performance, Human Resources, and Capital Expenditure
Property Committee
Property Risk Committee
Meets Weekly
Meets Periodically
Considers:
Sites under Development
New Acquisitions
Considers:
Risks associated with properties
including HS&E
OPERATIONAL MANAGEMENT
Day to Day Business Delivery
Internal Control
The Board is responsible for ensuring that the Group has
established and operates a system of internal control. In
this context, internal control is defined as those policies
and processes established to ensure that business
objectives are achieved cost effectively, assets and
shareholder value are safeguarded, and laws, regulations
and policies are complied with. Controls can provide
reasonable but not absolute assurance that risks are
identified and adequately managed to achieve business
objectives and to minimise material errors, losses and
fraud or breaches of laws and regulations.
The Group operates a strict system of internal financial
control, which is designed to ensure that the possibility
of misstatement or loss is kept to a minimum. There is
a comprehensive system in place for financial reporting
and the Board receives a number of reports to enable
it to carry out these functions in the most efficient
manner. These procedures include the preparation of
management accounts, forecast variance analysis and
other ad hoc reports. There are clearly defined authority
limits throughout the Group.
The Group continues to develop the internal audit
function utilising operational management to make
unannounced store visits as part of a process supported
by audit control checklists and other procedures. This
undertaking has contributed to sales by promoting
efficient store management, but also addresses risk
and credit control, cash and store banking, and space
and customer management. The internal audit checks
are designed to ensure any fraud or mismanagement
is quickly identified. The Group has a whistle-blowing
procedure within its employee handbook, which is issued
to all colleagues. All employees may raise concerns
about malpractice or improper or potentially illegal
behaviour in confidence without concern of victimisation
or disciplinary action.
44
Lok’nStore Group plc Annual Report and Accounts 2020 QCA Code Principle
Reporting Location
Compliant
With Code
1 Establish a strategy and business
model which promote long-term
value for shareholders
Our business model is set out on page 12 and our strategic
objectives and achievements in the year are set out on page 14.
The principle risks associated with the Business Model are set
out in the Principal Risks and Uncertainties section on page 33.
2 Seek to understand and meet
shareholder needs and expectations
Under Shareholder Relations on page 49 we discuss how we seek
to understand and meet shareholder needs and expectations.
Andrew Jacobs, Executive Chairman, is responsible for
shareholder liaison.
3 Take into account wider stakeholder
and social responsibilities and their
implications for long-term success
How we work with and take into account wider stakeholder
interests is detailed in our Corporate Sustainability Report on
pages 36 to 39.
4 Embed effective risk management,
considering both opportunities and
threats, throughout the organisation
Our approach to risk management is detailed on page 33 and our
principal risks are outlined on pages 34 and 35. Our approach to
Internal control and specifically internal audit is set out on page 44.
5 Maintain the Board as a
well-functioning, balanced
team led by the chair
The Board structure is reported on pages 46 and 47. Our committees
are detailed in this section of the Annual Report but can also be found
on our website: https://www.loknstore.co.uk/investors/
6 Ensure that between them the
Directors have the necessary
up-to-date experience, skills
and capabilities
Our Directors’ biographies can be found on pages 42 and 43 and
further information on the balance of skills and capabilities within
our Board can be found in the commentary on Board Evaluation
on page 47.
7 Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement
We set out this year’s information in the Corporate Governance
section on page 48.
8 Promote a corporate culture that is
Please see our Corporate Sustainability Report on pages 36 to 39.
based on ethical values and behaviours
9 Maintain governance structures
Please see the Corporate Governance Section from page 41.
and processes that are fit for purpose
and support good decision-making
by the Board
10 Communicate how the
Please see the Corporate Governance Section, specifically page 49.
company is governed and is
performing by maintaining a
dialogue with shareholders
and other relevant stakeholders
Results of voting at our AGMs can be found on the announcements
page of our website: https://www.loknstore.co.uk/investors/
announcements/
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
45
Strategic ReportOverviewGovernanceFinancial Statements Corporate Governance continued
The Board
Three Executive Directors and Five Non-Executive Directors
Meets:
Considers:
Receives:
Five times a year
with teleconferences
when required
• Financial strategy
• Detailed management accounts against budgets
• Company performance
• A current trading appraisal
• Major investments
• Capital resources
• Risk management
• Reporting to shareholders
• Minutes of all subcommittees
• The Risk Register
• The Conflicts Register
The Directors
The Board consists of three Executive Directors and
five Non-Executive Directors following the appointment
of Jeff Woyda. The expertise of the Directors covers
Company Law, Corporate Finance, Economics,
Finance and Accounting, Corporate Reporting, Risk
Management, Tax and Compliance, Marketing,
Operations, Property Law and Strategy.
Activities
The Non-Executive Directors provide considerable
support to the Executive Chairman and while much of
this is via informal meetings, telephone calls and email
correspondence, the Non-Executive Directors also lend
their expertise and experience to other members of the
management team.
Conflicts of Interest
The Directors have a responsibility to act in the best
interests of the Group and its Shareholders and in
keeping with this responsibility it is imperative that
Directors are aware of and properly manage potential
conflicts of interest.
The table below shows the Directorships that the
Group Directors hold in other Companies both inside
and outside the Group:
Jeff Woyda
H. Clarkson & Company Limited
Clarkson PLC
Clarksons Platou Structured Asset Finance Ltd
Clarkson Research Holdings Ltd
Halcyon Shipping Ltd
Oilfield Publications Ltd
Clarkson Capital Ltd
LNG UK PLC
Levelseas Ltd
Clarkson Shipbroking Group Limited
46
Clarksons (Trustees) Limited
Clarksons Overseas Shipbroking Limited
Clarkson Research Services Limited
Clarkson Logistics Limited
Clarkson Property Holdings Limited
Directorships held by Jeff Woyda
in the last five years:
J.O. Plowright & Co. (Holdings) Limited
Clarksons Platou Securities Limited
Clarksons Platou Legal Services Limited
Clarkson Tankers Limited
Clarkson Dry Cargo Limited
Clarkson Sale and Purchase Limited
Clarkson Shipbrokers Limited
Clarkson Holdings Limited
Clarksons Platou Futures Limited
International Transport Intermediaries Club Limited
Maritech Services Limited
J.O. Plowright & Co. (Holdings) Limited
Maritech Holdings Limited
Seafix Limited
Maritech Development Limited
Andrew Jacobs
Andrew Jacobs (UK) Limited
Lok’nStore Limited*
The Box Room (Self Storage) Ltd*
Simon Thomas
Lok’nStore Limited*
Simon Thomas (UK) Limited
Lok’nStore Group plc Annual Report and Accounts 2020 Richard Holmes
Lok’nStore Limited*
Lok’nStore Trustee Limited*
First Contact Healthcare**
Ray Davies
Ash Road SS Limited
Davies Elise Consulting Limited
Lok’nStore Limited*
Lok’nStore Trustee Limited*
ParknCruise Limited*
Semco Engineering Limited*
Semco Machine Tools Limited*
Southern Engineering and Machinery Co. Limited*
The Box Room (Self Storage) Ltd*
Chichester Storage Limited
Broadstairs Storage Limited
Charles Peal
No other Directorships
Edward Luker
Edward Luker Consulting Limited
St George’s School Ascot Trust Limited
Neil Newman-Shepherd
Lok’nStore Limited*
*
Lok’nStore Group Companies
** Guernsey registered company
Conflicts of interest arise where an individual’s personal
interests or those interests related to legitimate outside
roles may conflict with the interests of the Group. This
could, for example, inhibit open discussions or lead to
a perception that the individual is acting outside of the
Group’s interests.
It is recognised that conflicts of interest will inevitably
occur from time to time and that Directors legitimately
undertake roles outside of the Group. The Board therefore
believes it is important to be transparent in terms of such
interests and to ensure they are properly recorded and,
where necessary, Directors will withdraw from decision-
making if there is a danger of perceived conflict.
A register of interests is maintained by the Assistant
Company Secretary and is circulated to the Directors in
advance of each Board meeting. Conflicts of Interest are
considered and authorised by the Board as they arise.
We report in note 31 related party transactions.
Additionally, in the interests of transparency we include
items which, while not strictly falling within the definition
of a related party transaction, are still considered matters
of interest.
Board Evaluation and Composition
Board Attendance
Board
Audit
Committee
Remuneration
Committee
Annual General
Meeting
%
Attendance
Total Number of Meetings in 2019/2020
7 (3 via ‘Zoom’)
Executive Directors
Andrew Jacobs
Ray Davies
Neil Newman-Shepherd
Non-Executive Directors
Simon Thomas
Edward Luker
Charles Peal
Richard Holmes
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
7 (3 via ‘Zoom’)
2
n/a
n/a
n/a
n/a
1
1
n/a
1
n/a
n/a
n/a
n/a
1
n/a
1
1
1
1
1
1
1
1
1
100%
100%
100%
100%
100%
100%
100%
47
Strategic ReportOverviewGovernanceFinancial Statements Corporate Governance continued
The 2019 QCA Code expects companies to, ‘evaluate
Board performance based on clear and relevant
objectives, seeking continuous improvement.’ Our
Executive Directors are evaluated on a quarterly basis
via the Company’s senior management review system in
which objectives are set and performance against these
objectives is subsequently measured. Remuneration
is linked to these objectives and may include relevant
performance targets such as number of new properties
acquired or turnover growth. Our Non-Executives were
evaluated informally within this year’s review of our
Board composition and we report on this below.
We have previously reported (against The UK Corporate
Governance Code’s requirement that a smaller company
should have at least two Non-Executive Directors that
are deemed independent) that all of our Non-Executive
Directors have served for longer than nine years and
were therefore no longer deemed independent. Our new
code, the Quoted Companies Alliance Code, takes a
more pragmatic approach stating that, ‘length of tenure
does not automatically affect independence’ and that the
Board should, ‘make a decision regarding such Director’s
independence.’
Therefore, as part of our review of the Board composition
this year we looked at the ability of our Non-Executive
Directors to be objective, the experience each of our
Non-Executive Directors brings to the business and the
contribution they have made in the year. We established
that the broad range of skills, expertise and attitude
amongst the Executive and Non-Executive Directors
includes all the matters that the Company deals with –
strategy, property, finance, human resources, marketing,
and organisation. Further the long experience of Board
Members continues to be considered an asset and all
express challenges freely and robustly.
We also met with potential Non-Executive Directors to
explore what expertise they might bring to the Board
and discussed the balance between new experiences
and increasing costs. After careful consideration we
concluded that although the current composition of
the Board remains effective it in the best interest of
shareholders and the Company as a whole to appoint
a new independent Non-Executive Director with
the necessary skills and a wealth of knowledge and
experience held in senior roles across multiple
disciplines to contribute to the Group for its next
stage of significant growth. Accordingly, Jeff Woyda
was appointed as an independent Non-Executive
Director on 1 September 2020. His biography details
are set out in this Report on page 43.
Although Non-Executive Directors who have served
over nine years must offer themselves for re-election at
every Annual General Meeting, and accordingly Simon
Thomas, Edward Luker, Charles Peal and Richard
Holmes offer themselves for re-election at every AGM,
the Group considers the Non-Executive Directors to
be independent and therefore compliant with the Code.
Directors’ Remuneration
The Remuneration Committee consists of Edward Luker
(Chairman of the Committee) and Richard Holmes.
The Committee meets and considers, within existing
terms of reference, the remuneration policy and makes
recommendations to the Board for each Executive
Director. The Committee’s remuneration policy aims to
design a package that will align the interests of Executive
Directors and those of shareholders. The Executive
Directors’ remuneration consists of a package of basic
salary, bonuses and share options, which are linked to
corporate achievements and these levels are determined
by the Remuneration Committee.
Performance related bonuses are calculated in
accordance with strict and measurable performance
criteria. There are no specific performance conditions
relating to the historic grant of share options beyond
the share price performance. There are appropriate
performance criteria which apply for the grant of future
share options to Directors and Senior Managers in
the business as part of their participation in long-term
performance awards in order to meet the objectives
of the business and accord with accepted corporate
governance. The details of each Director’s remuneration
are set out in note 7 in the financial statements and in the
remuneration report on page 54.
The Committee meets once a year and considers
proposals from the Executive Chairman.
48
Lok’nStore Group plc Annual Report and Accounts 2020 Shareholder Relations
We aim to provide balanced, clear and transparent
communications which allow our shareholders to
understand our performance, strategy and prospects.
Further aiding transparency is the fact that the Group has
a straight forward capital structure with only one class of
shares and one bank facility.
The Directors also meet and discuss the performance
of the Group with shareholders throughout the year with
specific schedules to visit institutional investors, analysts
and the media being held after the announcement of the
half year and full year results. At the AGM the Board give
a presentation of events and progress during the year.
Attendee shareholders are encouraged to mix and engage
with the Directors after the formal business of the AGM
has concluded.
Regular Regulatory News Service announcements
(RNS) are made via the London Stock Exchange
throughout the year keeping all shareholders informed
about acquisitions, trading conditions, Director dealings
etc. Queries raised by a shareholder, either verbally or
in writing, are promptly answered by whoever is best
placed on the Board to do so.
Accounting Dates and
Reporting Calendar 2020
January
February
March
April
May
June
July
August
September
October
November
December
H1 Period-End
Pre-close Trading Statement (H1)
Interim Results Announced
Financial Year-End
Pre-close Trading Statement
Preliminary Statement
AGM
Accountability and Audit
The Board believes that the audited Annual Report
and Accounts play an important part in presenting all
shareholders with an assessment of the Group’s position
and prospects. The Strategic Report contains a detailed
consideration of the Group’s position and prospects.
Board Committees
The following section introduces the Group’s
committees, members and the terms of reference.
Nomination Committee
A Nomination Committee would oversee the appointment
of a new Director. Due to the relatively small size of the
Company, the Board do not believe that a Nomination
Committee is necessary. In the event of a proposal to
appoint a new Director, this is discussed at a full Board
meeting with each member being given the opportunity
to meet the individual concerned prior to any formal
decision being taken. Each member of the Board is
subject to the re-election provisions of the Articles of
Association, which require them to offer themselves
for re-election at least once every three years.
Remuneration Committee
The Remuneration Committee consists of Edward Luker
(Chairman of the Committee) and Richard Holmes. The
Committee meets once a year and considers, within
existing terms of reference, the remuneration policy
and makes recommendations to the Board for each
Executive Director. Further the Committee considers
proposals from the Chief Executive Officer on the
remuneration of the operational management team
especially in relation to bonus share option awards
under the long-term performance related pay schemes.
The Committee’s remuneration policy aims to design
a package that will align the interests of Executive
Directors and those of shareholders. The Executive
Directors’ remuneration consists of a package of basic
salary, bonuses and long-term performance related pay
including share options, which are linked to corporate
achievements and these levels are determined by the
Remuneration Committee. The details of each Director’s
remuneration are set out in the Remuneration Report
on page 54 and more details are given in note 7 in the
financial statements.
49
Strategic ReportOverviewGovernanceFinancial Statements Corporate Governance continued
An analysis of the fees payable to the external audit firm
in respect of both audit and non-audit services during
the year is set out in note 6 to the financial statements.
The Committee is satisfied that the external Auditor remains
independent in the discharge of their audit responsibilities.
The Board will continue to review the Company’s
corporate governance and annual reporting against
the QCA Code and to implement appropriate systems
in order to support the Directors in executing their
responsibilities to all of the Company’s Stakeholders.
On behalf of the Board.
Andrew Jacobs
Executive Chairman
30 October 2020
Audit Committee
The Company has an Audit Committee, to whom the
external Auditor, RSM UK Audit LLP, reports. The
Committee consists of Charles Peal (Chairman of the
Committee) and Edward Luker. Charles Peal is the
Committee’s Nominated Financial Expert (for details of
Charles’ experience please see his biography on page
43). The Committee is responsible for the relationship
with the Group’s external Auditor and the review of
the Group’s financial reporting and internal controls.
The Committee meets prior to the announcement of
the Group’s financial results to consider the Auditors’
Findings Report and consider any corresponding
recommendations. It also convenes to discuss and
review the findings of the external JLL Valuation Report
prior to the Groups year-end results. The Committee
would convene at other times should it be necessary.
The Audit Committee also undertakes a formal
assessment of the Auditor’s independence each year,
which includes:
• a review of non-audit services provided to the
Group and related fees;
• discussion with the Auditor of a written report
detailing all relationships with the Company and
any other parties that could affect independence
or the perception of independence;
• a review of the Auditor’s own procedures for
ensuring the independence of the audit firm and
partners and team members involved in the audit,
including the regular rotation of the audit partner
every five years; and
• obtaining written confirmation from the Auditor that,
in their professional judgement, they are independent.
50
Lok’nStore Group plc Annual Report and Accounts 2020 Directors’ Report
The Directors submit their report and the audited
financial statements of the Company and of the
Group for the year ended 31 July 2020.
Principal Activity
The principal activity of the Group during the year
was that of providing self-storage and related services.
Review of the Business and
Future Developments
A detailed account of the Group’s progress during the
year and its future prospects are set out in the Chairman’s
Review on page 2 and the Strategic Report on pages 9
to 39. The key performance indicators are set out in the
Highlights on page 1 and discussed in more detail in the
Financial Review on page 25 and the Managing Director’s
Review on page 15. Commentary on financial risk
managements is included on page 33 and disclosures
on financial instruments are provided in note 17.
Going Concern
A review of the Group’s business activities, together
with the matters likely to influence its future development,
performance and its position in the wider market are
set out in the Strategic Report. The financial position
of the Group, its cash flows and borrowing facilities
are shown in the Statement of Financial Position, Cash
Flow Statement and corresponding notes and policies
contained within the financial statements.
Further information concerning the Group’s objectives,
policies, its financial risk management objectives as well
as details of financial instruments and credit and liquidity
risk are also found in the Strategic Report and in the
notes to the financial statements – See note 17.
The Directors can report that, based on the Group’s
budgets and financial projections, which include the
expected impact of COVID-19 on the Group, they
have satisfied themselves that the business is a going
concern. The impact of COVID-19 and the measures the
Directors have taken to mitigate its effects are set out in
‘Our COVID-19 safe response’ section in the Managing
Directors Review on page 15.
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 of £13.1
million, (2019: £13.7 million) undrawn committed facilities at
31 July 2020 of £23.7 million (2019: £32.0 million) and cash
generated from operations £9.7 million (2019: £9.5 million).
The Group operates a Revolving Credit Facility of £75
million, with a further uncommitted £25 million accordion
option taking the facility to £100 million. The increased
facility continues to provide funding for new landmark
site acquisitions to support the Group’s ambitious growth
plans. The facility is a combined agreement with Lloyds
Bank and The Royal Bank of Scotland plc and runs
until April 2025 with an option for a further two one year
extensions. The interest rate is set at the London Inter-
Bank Offer Rate (LIBOR) plus a 1.50%-1.75% margin
based on a loan to value covenant test. The Group is fully
compliant with all bank covenants and undertakings and
is not obliged to make any repayments prior to expiration.
The financial statements are therefore prepared on a
going concern basis.
Dividend
The Directors propose that a final dividend of 9.00 pence
per share will be paid to the shareholders. The total
estimated dividend to be paid is £2.6 million based on
the number of shares in issue at 16 October 2020 as
adjusted for shares held in the Employee Benefits Trust.
This is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability
in these financial statements. The ex-dividend date will be
26 November 2020; the record date 27 November 2020;
with an intended payment date of 8 January 2020. The
final deadline for Dividend Reinvestment Election (DRIP)
is 11 December 2020.
Events after the Reporting Date
Reportable events after the reporting date are set out in
note 34 in the financial statements.
Directors
The following Directors held office during the year and
subsequently:
SG Thomas
A Jacobs
RA Davies
ETD Luker
RJ Holmes
CP Peal
N Newman-Shepherd
J Woyda
(appointed 1 September 2020)
Details of the interests of the Directors in the shares
of the Company are set out below and details of their
remuneration are disclosed in note 7 of the financial
statements. Biographical details of the Directors are set
out on pages 42 and 43.
51
Strategic ReportOverviewGovernanceFinancial Statements
Directors’ Report continued
Reappointment of Directors
Richard Holmes, Edward Luker and Charles Peal who have over 16, 13 and 13 years tenure respectively as
Non-Executives are required under the Companies Act 2006 to offer themselves for re-election at every AGM
and accordingly offer themselves for re-election at the next AGM. Simon Thomas by virtue of his accumulated
tenure both as an Executive and a Non-Executive Director also offers himself for re-election at the next AGM.
Jeff Woyda, who was appointed as an additional Director of the Company on 1 September 2020, is required
to offer himself up for reappointment in accordance with Article 103 of the Company’s Articles of Association.
Directors’ and Officers’ Liability Insurance
The Company has liability insurance covering the Directors and Officers of the Company and its subsidiaries.
Substantial Shareholdings
The Directors have been notified or are aware that the following are interested in 3% or more of the issued Ordinary
Share capital of the Company as at 13 October 2020:
Current
Rank
% at
13 Oct
2020
Number of
Shares
Total Shares
in Issue
% at
17 Oct
2019
Number of
Shares
Total
Shares
in Issue
Andrew Jacobs
Canaccord Genuity Wealth
BlackRock
Premier Miton Investors
Simon Thomas
Stonehage Fleming (formerly
Cavendish Asset Management)
Hargreaves Lansdown
Downing
Investec Wealth
1 Represents total shares in issue
1
2
3
4
5
6
7
8
9
5,203,600
2,000,000
1,869,722
1,653,392
1,530,000
990,235
918,848
910,196
908,421
17.58
6.76
6.31
5.59
5.17
3.34
3.10
3.07
3.07
17.59
5,204,600
5.54
4.66
8.28
5.54
3.84
3.25
3.37
–
1,640,000
1,379,608
2,449,455
1,530,000
1,077,115
960,480
996,650
–
29,604,081
29,586,5551
Market Valuation of Freehold Land and Buildings
The changes in property, plant and equipment during the year and details of property valuations at 31 July 2020 are
shown in note 11(b) to the Financial Statements. Further commentary on the property portfolio is contained in the
Property Review on page 22 and in the Financial Review on page 25.
Share Buy-back Authority
Authority will be sought at the Company’s AGM on 10 December 2020 from shareholders to approve a share
buyback authority. The buy-back authority will only be exercised in circumstances where the Directors regard
such purchases to be in the best interests of shareholders as a whole.
Statement of Disclosure of Information to the Auditor
The Directors who were in office at the date of approval of these financial statements have confirmed that, as far
as they are aware, there is no relevant audit information of which the Auditor is unaware. Each of the Directors has
confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that it has been communicated to the Auditor.
52
Lok’nStore Group plc Annual Report and Accounts 2020 Stakeholder Engagement
Effective engagement with stakeholders at Board
level and throughout our business is crucial to fulfilling
the Group’s strategic objectives. We continue to be
collaborative with all stakeholder groups including
customers, employees, suppliers, local authorities,
regulators, funders and investors. This approach
necessarily involves listening to and taking account
of their views and feedback, while also being open
to change.
Annual General Meeting
Meeting Arrangements
The continuing Coronavirus (‘COVID-19’) pandemic
has led to the imposition of severe restrictions on
public gatherings. As a consequence, we are making
changes to the way in which we conduct this year’s
AGM. The Company understands and respects the
importance of the AGM to Shareholders and the Board
greatly values the opportunity to meet Shareholders
in person. However, the health and safety of our
Shareholders, employees and the broader community
is of paramount importance.
In light of the UK Government’s current guidance
on public gatherings, and the new regulations set
out in Schedule 14 of the Corporate Insolvency and
Governance Act, the Board has concluded that
Shareholders will not be permitted to attend the AGM
in person this year and this year’s AGM, which will be
held on 10 December 2020 at 4.30pm, will be run as
a closed meeting.
Only a small number of Directors will be permitted
to attend the AGM to satisfy the minimum quorum
requirements as stated in the Company’s Articles
of Association. The format of the meeting will be
purely functional.
All other Shareholders should not attempt to attend
the AGM in person.
Shareholders are strongly encouraged to appoint the
Chairman of the meeting as their proxy. Under the
Government restrictions, if a Shareholder appoints
someone else as their proxy, that proxy will not be able
to attend the meeting in order to cast the Shareholder’s
vote. Therefore, the appointment of any person
other than the Chairman of the meeting would
result in your votes not being cast.
Each of the resolutions to be considered at the AGM
will be voted on by way of a poll. This ensures that
Shareholders who are unable to attend the AGM but
who have appointed proxies have their votes taken into
account. The results of the polls will be announced to
AIM and published on the Company’s website as soon
as possible after the conclusion of the AGM.
The Board will continue to monitor the evolving impact
of the pandemic and, if it becomes appropriate or
necessary to make changes to the proposed format
of the 2020 AGM, will inform Shareholders as soon
as possible.
Whilst Shareholders will not be permitted to attend the
AGM in person, your participation is important to us.
If you would like to ask a question regarding any of
the proposed Resolutions, please send them to
Suzy Wolfe, Assistant Company Secretary to
suzywolfe@loknstore.co.uk by 1 December 2020.
Auditor
A resolution to reappoint RSM UK Audit LLP as Auditor
will be put to the members at the Annual General
Meeting. A formal notice together with explanatory
circular will be sent to shareholders.
On behalf of the Board.
Ray Davies
Director
30 October 2020
53
Strategic ReportOverviewGovernanceFinancial Statements Remuneration Report
Although the Group is not required to set out a formal Remuneration Report, we set out
below the key components of the Directors’ remuneration in accordance with AIM Rule 19.
Base Salary: Provides competitive fixed remuneration
to retain key employees and reflect their experience and
expertise in the context of the role and set by reference
to the market.
Annual and Monthly Bonuses: Aligns reward to
key Group strategic objectives and drives short-term
performance.
Long Term Incentive Plan: Following strict
performance criteria aligns Executive Director interests
with those of shareholders and rewards achievement
of the long-term plan. (See below and note 24b of the
financial statements).
All Employee Scheme: The Group operates an HMRC
approved Share Incentive Plan (SIP). This encourages
share ownership by all employees and allows them to
share in the long-term success of the Group. R Davies
and N Newman, Executive Directors, also participate in
this scheme.
Other Benefits: The benefits reported in the table below
all relate to medical insurance premiums paid on behalf
of the Directors. An additional benefit is Death in Service
Insurance typically at four times base salary (subject to a
cap of £0.5 million).
Service Contracts: Executive Directors’ service
contracts operate on a rolling basis without a specific
end-date providing for one year’s notice on the part of
the Company and six months’ notice on the part of the
employee. Non-Executives do not have service contracts
with the Company but rather their appointments are
governed by letters of appointment.
Directors’ Remuneration
Emoluments
£
Bonuses
Benefits
Sub total
Pension
Gains on
share options
£
£
£
225,233
165,797
82,877
31,518
22,743
28,430
22.743
36,500
13,300
40,345
–
–
–
–
6,107
4,845
2,560
4,808
–
–
–
267,840
183,942
125,782
36,326
22,743
28,430
22.743
220,816
160,968
78,931
30,900
22,297
27,873
22,297
38,250
22,641
64,034
–
–
–
–
5,435
4,612
2,364
4,804
–
–
–
264,501
188,221
145,329
35,704
22,297
27,873
22,297
£
–
6,631
3,315
–
–
–
–
Total
£
267,840
190,573
£
–
–
172,358
301,455
–
–
–
–
36,326
22,743
28,430
22.743
£
–
4,829
2,631
–
–
–
–
£
–
–
–
40,580
–
–
–
Total
£
264,501
193,050
147,960
76,284
22,297
27,873
22,297
579,341
90,145
18,320
687,806
9,946
172,358
870,110
Emoluments
£
Bonuses
Benefits
Sub total
Pension
Gains on
share options
£
£
£
564,082
124,925
17,215
706,222
7,460
40,580
754,262
2020
Executive:
A Jacobs
RA Davies
N Newman-Shepherd
Non-Executive:
SG Thomas
RJ Holmes
ETD Luker
CP Peal
2019
Executive:
A Jacobs
RA Davies
N Newman-Shepherd
Non-Executive:
SG Thomas
RJ Holmes
ETD Luker
CP Peal
54
Lok’nStore Group plc Annual Report and Accounts 2020 Details of the Directors’ remuneration is shown above. Key management personnel are defined as the Directors of
the Group and the additional participants in the Partnership Performance Plan (PPP).
The highest paid Director did not accrue any pension rights during the year. The benefits in kind all relate to medical
insurance premiums paid on behalf of the Directors. The number of Directors to whom retirement benefits are
accruing under money purchase pension schemes in respect of qualifying service is two (2019: two).
The following table shows a summary of the options held by Directors under all schemes. Refer Notes 22 to 25
for details.
2020
Executive Directors
A Jacobs – Unapproved
A Jacobs – PPP
A Jacobs total
RA Davies – Unapproved
RA Davies – CSOP
RA Davies – PPP
RA Davies total
N Newman-Shepherd – Unapproved
N Newman-Shepherd – CSOP
N Newman-Shepherd – PPP
N Newman-Shepherd total
Non-Executive Directors
SG Thomas – Unapproved
Total
at 31 July
2019
Options
Granted
Options
Exercised/
Lapsed
Unapproved
Scheme
Approved
CSOP
Share
Options
Total
at 31 July
2020
206,087
80,000
286,087
246,977
7,742
80,000
334,719
172,421
10,661
120,000
303,082
–
40,000
40,000
–
–
40,000
40,000
–
–
–
–
–
–
–
–
–
(36,822)
(2,043)
60,000
60,000
–
–
–
206,087
120,000
326,087
246,977
–
–
–
–
206,087
120,000
326,087
246,977
–
7,742
7,742
120,000
366,977
135,599
–
120,000
7,742
374,719
–
135,599
–
8,618
8,618
180,000
315,599
–
180,000
8,618
324,217
5,217
–
5,217
5,217
–
All Directors total
929,105
140,000
(38,865)
1,013,880
16,360
1,030,240
The grant of options to Executive Directors and senior management is recommended by the Remuneration Committee
on the basis of their contribution to the Group’s success. The options vest after two and a half, three or five years,
subject to the performance criteria attached to the options.
Unapproved Share Options – Long Term Partnership Performance Plan (LTPPP)
On 2 July 2019 the Group adopted the Company Long Term Partnership Performance Plan (LTPPP). The Plan
is a discretionary benefit offered by the Company for the benefit of selected key employees including Executive
Directors. Its main purpose is to increase the interest of the employees in the Groups long-term business goals and
performance through share ownership. It contains specific performance criteria. Further details are set out in note
24(b) of the financial statements.
On behalf of the Board and signed on its behalf by:
Andrew Jacobs
Ray Davies
Executive Chairman
Finance Director
55
Strategic ReportOverviewGovernanceFinancial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report and
Directors’ Report and the financial statements in accordance with
applicable law and regulations.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and the Company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and
enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group
and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information on
the Lok’nStore Group plc websites.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Company law requires the Directors to prepare Group
and Company Financial Statements for each financial
year. The Directors are required by the AIM Rules of
the London Stock Exchange to prepare Group financial
statements in accordance with International Financial
Reporting Standards (‘IFRS’) as adopted by the
European Union (‘EU’) and have elected under company
law to prepare the Company financial statements in
accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS
adopted by the EU to present fairly the financial position
of the Group and the Company and the financial
performance of the Group. The Companies Act 2006
provides in relation to such financial statements that
references in the relevant part of that Act to financial
statements giving a true and fair view are references
to their achieving a fair presentation.
Under company law the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the
Group for that period.
In preparing the Group and Company financial
statements the Directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgements and accounting estimates that are
reasonable and prudent;
c. state whether they have been prepared in accordance
with IFRSs adopted by the EU; and
d. prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and the Company will continue in business.
56
Lok’nStore Group plc Annual Report and Accounts 2020 Independent Auditor’s Report
to the Members of Lok’nStore Group plc
Opinion
We have audited the financial statements of Lok’nStore
Group plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 July 2020 which
comprises the consolidated statement of comprehensive
income, the consolidated and company statements
of change in equity, the consolidated and company
statements of financial position, the consolidated
statement of cash flows and notes to the financial
statements, including a summary of significant
accounting policies. The financial reporting framework
that has been applied in their preparation is applicable
law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as
regards the Parent Company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
Conclusions Relating to Going Concern
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the Directors’ use of the going concern basis
of accounting in the preparation of the financial
statements is not appropriate; or
the Directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group’s or the
Parent Company’s ability to continue to adopt the
going concern basis of accounting for a period of
at least 12 months from the date when the financial
statements are authorised for issue.
Summary of our Audit Approach
Key audit
matters
Materiality
In our opinion:
the financial statements give a true and fair view
of the state of the Group’s and of the Parent
Company’s affairs as at 31 July 2020 and of the
Group’s profit for the year then ended;
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
the Parent Company financial statements have been
properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the Companies Act 2006; and
•
•
•
•
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Scope
Group
• Property valuation
Parent Company
• None
Group
• Overall materiality: £460,000
(2019: £462,000)
• Performance materiality: £345,000
(2019: £347,000)
Parent Company
• Overall materiality: £230,000
(2019: £230,000)
• Performance materiality: £172,000
(2019: £173,000)
Our audit procedures covered 100% of
revenue, 100% of total assets and 100%
of profit before tax.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to SME listed entities and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Group and Parent Company financial
statements of the current period and include the most
significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including
those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
Group and Parent Company financial statements as a
whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
57
Strategic ReportOverviewGovernanceFinancial Statements Independent Auditor’s Report continued
to the Members of Lok’nStore Group plc
Property Valuation
Key audit matter
description
Property valuation is inherently subjective in nature and the Group employs external valuers to apply professional
judgement concerning market conditions and factors impacting the valuation of individual properties
Fair values are calculated using actual and forecast inputs such as occupancy, capitalisation rates, maximum
lettable area, operating expenses and net rent per square foot by property as at 31 July 2020
We consider property valuation to be Key Audit Matter due to the degree of estimation uncertainty inherent
in the valuation and the allocation of resources in the audit
Refer to note 11b to the financial statements for the disclosures relating to the property valuations
How the matter
was addressed
in the audit
Our approach to auditing the valuations involved the following:
• We tested the integrity of the information provided to the external valuer by management by agreeing key
inputs such as actual occupancy and profitability to underlying records and source evidence;
• We evaluated the competence, capabilities and objectivity of the external valuation report;
• We assessed the scope of the work which the external valuer was requested to perform by management
and the valuation methodology applied determining whether changes to the method were appropriate;
• We discussed the valuations with the external valuer and challenged them on the key assumptions
applied and focussed on properties we identified as having significant or unusual valuation movements
(compared to underlying performance or previous periods);
• We utilised an independent Auditor’s expert in property valuation to assist the audit team in assessing
the appropriateness of the valuation methodology adopted by the external valuer and in assessing the
assumptions applied to a sample of specific properties as instructed by the audit team;
• We benchmarked the resulting valuations and valuation inputs to comparable businesses in the sector;
• We challenged management to justify the assumptions used in the model (particularly in respect of trading
forecasts and comparison of those forecasts to actual results); and
• We considered the key assumptions relating to the rollover relief and to the calculations of deferred tax
arising on the property valuations.
Our Application of Materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing
and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and
on the financial statements as a whole, could reasonably influence the economic decisions of the users we take
into account the qualitative nature and the size of the misstatements. Based on our professional judgement, we
determined materiality as follows:
Overall materiality
£460,000 (2019: £462,000)
£230,000 (2019: £230,000)
Group
Parent Company
Basis for determining
overall materiality
10% of profit before tax
Performance materiality
£345,000 (2019: £347,000)
75% of overall materiality
Basis for determining
performance materiality
Reporting of misstatements
to the Audit Committee
10% of profit before tax
(capped at component materiality)
£172,000 (2019: £173,000)
75% of overall materiality
Misstatements in excess of £23,000 and
misstatements below that threshold that, in our
view, warranted reporting on qualitative grounds.
Misstatements in excess of £11,500 and
misstatements below that threshold that, in our
view, warranted reporting on qualitative grounds.
An Overview of the Scope of our Audit
The Group consists of nine components, all of which are based in the UK.
The scope of our audit covered 100% of revenue, 100% of total assets and 100% of profit before tax. Subsidiaries that were
subject to audit exemption were audited to Group materiality as part of the audit of the consolidated financial statements.
Other Information
The Directors are responsible for the other information. The other information comprises the information included
in the Annual Report, other than the financial statements and our Auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon.
58
Lok’nStore Group plc Annual Report and Accounts 2020 In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
and for such internal control as the Directors determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors
are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
We have nothing to report in this regard.
Opinions on Other Matters Prescribed
by the Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
•
•
the information given in the Strategic Report and
the Directors’ Report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
the Strategic Report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
Matters On Which We Are Required to
Report by Exception
In the light of the knowledge and understanding of the
Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
the Parent Company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Auditor’s Responsibilities for the Audit of
the Financial Statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an Auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our Auditor’s report.
Use of Our Report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them
in an Auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Graham Ricketts (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP,
Statutory Auditor
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement set out on page 56, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view,
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
30 October 2020
59
Strategic ReportOverviewGovernanceFinancial Statements 60
Lok’nStore Group plc Annual Report and Accounts 2020Page TitlePage Subtitle Financial
Statements
62
64
65
66
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statements
of Financial Position
67 Consolidated Statement of Cash Flows
68 Accounting Policies
79 Notes to the Financial Statements
122 Glossary
123 Our Stores
LANDMARK STORE
GLOUCESTER
41,000
SQUARE FEET OF MAXIMUM
LETTABLE AREA
NOW
OPEN
Lok’nStore Gloucester opened in February 2020
and early trading has been has been steady.
Located next door to a busy edge of city centre
supermarket on the main North-South road through
the city. The store team have units ranging in
size from small lockers to small warehouse space
providing an unparalleled modern service self-storage
experience Gloucester.
Gloucester has a population in excess of 130,000
and this store, with its excellent frontage to the road
provides modern, bright and highly accessible storage
to that population.
61
Strategic ReportOverviewGovernanceFinancial Statements Consolidated Statement of Comprehensive Income
For the year ended 31 July 2020
Revenue
Total property, staff, distribution and general costs
Adjusted EBITDA1
Amortisation of intangible assets
Depreciation
Equity settled share-based payments
Profit on sale of land at store
Costs of sale & manage–back of Crayford store
Deferred financing on bank loan written off
Operating profit
Finance income
Finance cost
Profit before taxation
Income tax expense
Profit for the period from continuing operations
Profit for the period from discontinued operations
Profit for the period
Profit attributable to:
Owners of the Parent
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Increase in property valuation
Deferred tax relating to change in property valuation
Other comprehensive income
Total comprehensive income for the period
Attributable to: Owners of the Parent
Group
Year Ended
31 July 2020
£’000
18,041
(8,387)
Group
Year Ended
31 July 2019
Restated**
£’000
16,950
(8,201)
Notes
2
3a
6
3(c)
3(c)
3(c)
4
5
8
12
9,654
–
(3,779)
(88)
(3,867)
–
–
–
–
(3,867)
5,787
29
(1,126)
4,690
(1,716)
2,974
–
2,974
8,749
(83)
(3,461)
(46)
(3,590)
295
(54)
(133)
108
(3,482)
5,267
31
(926)
4,372
(1,211)
3,161
2,182
5,343
27a
2,974
5,343
8,849
13,765
(3,602)
5,247
8,221
8,221
(2,327)
11,438
16,781
16,781
1 Adjusted EBITDA is defined in the accounting policies section of the notes to this Report.
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
62
Lok’nStore Group plc Annual Report and Accounts 2020 Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2020
Earnings per share attributable to owners of the Parent
Basic
Continuing operations
Discontinued operations
Total basic earnings per share
Diluted
Continuing operations
Discontinued operations
Total diluted earnings per share
Notes
10
10
Group
Year Ended
31 July 2020
£’000
Group
Year Ended
31 July 2019
Restated**
£’000
10.26p
–
10.26p
10.08p
–
10.08p
10.93p
7.55p
18.48p
10.75p
7.42p
18.17p
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
63
Strategic ReportOverviewGovernanceFinancial Statements Consolidated Statement of Changes in Equity
For the year ended 31 July 2020
Attributable to Owners of the Parent
Share
Capital
£’000
Share
Premium
£’000
Other
Reserves
£’000
Revaluation
Reserve
£’000
Retained
Earnings
Restated**
£’000
Total
Equity
Restated**
£’000
31 July 2018
Effect of new accounting standard – IFRS 16
As at 1 August 2018 – restated
295
–
295
10,350
8,363
64,899
19,344
103,251
–
–
–
(389)
(389)
10,350
8,363
64,899
18,955
102,862
Profit for the year
Other comprehensive income:
Increase in property valuation net of deferred tax
Total comprehensive income for the year
Transactions with owners:
Dividend paid
Share based payments
Transfers in relation to share-based payments
Deferred tax relating to share options
Exercise of share options
Total transactions with owners
Reserve transfer on disposal of assets
Transfer additional depreciation on
revaluation net of deferred tax
–
–
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
–
140
140
–
–
–
–
–
–
46
(51)
(1)
–
(6)
–
–
–
5,343
5,343
11,438
11,438
–
5,343
11,438
16,781
–
–
–
–
–
–
(3,279)
(3,279)
–
51
–
–
46
–
(1)
141
(3,228)
(3,093)
(4,927)
(304)
4,927
304
–
–
31 July 2019
296
10,490
8,357
71,106
26,301
116,550
Profit for the year
Other comprehensive income:
Increase in property valuation net of deferred tax
Total comprehensive income for the year
Transactions with owners:
Dividend paid
Share based payments
Transfers in relation to share-based payments
Deferred tax relating to share options
Exercise of share options
Total transactions with owners
Reserve transfer on disposal of assets
Transfer additional depreciation on
revaluation net of deferred tax
–
–
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
–
70
70
–
–
–
–
–
–
88
(14)
24
–
98
–
–
–
2,974
2,974
5,247
5,247
–
2,974
5,247
8,221
–
–
–
–
–
–
–
(378)
(3,572)
(3,572)
–
14
–
–
88
–
24
71
(3,558)
(3,389)
–
378
–
–
31 July 2020
297
10,560
8,455
75,975
26,095
121,382
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
64
Lok’nStore Group plc Annual Report and Accounts 2020 Company Statement of Changes in Equity
For the year ended 31 July 2020
31 July 2018
Profit for the year
Equity settled share-based
payments
Transfer in relation to
share-based payments
Exercise of share options
Dividends paid
31 July 2019
Profit for the year
Equity settled share
based payments
Transfer in relation to
share-based payments
Exercise of share options
Dividends paid
31 July 2020
Share
Capital
£’000
295
Share
Premium
£’000
10,350
–
–
–
1
–
–
–
–
140
–
296
10,490
–
–
–
1
–
–
–
–
70
–
Retained
Earnings
£’000
3,870
3,774
–
51
–
(3,279)
4,416
14,792
–
14
–
(3,572)
Other
Reserves
£’000
1,843
–
46
(51)
–
–
Total
£’000
16,358
3,774
46
–
141
(3,279)
1,838
17,040
–
88
(14)
–
–
14,792
88
–
71
(3,572)
297
10,560
15,650
1,912
28,419
65
Strategic ReportOverviewGovernanceFinancial Statements Consolidated and Company
Statements of Financial Position
31 July 2020
Company Registration No. 04007169
Assets
Non-current assets
Intangibles
Property, plant and equipment
Investments
Financial assets
Right of use assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Taxation
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Total liabilities
Net assets
Equity
Equity attributable to owners of the Parent
Called up share capital
Share premium
Other reserves
Retained earnings
Revaluation reserve
Total equity
Group
31 July
2020
£’000
Group
31 July
2019
Restated**
£’000
Group
31 July
2018
(Transition)
Restated**
£’000
Company
31 July
2020
£’000
Company
31 July
2019
Restated**
£’000
–
187,258
–
361
11,764
199,383
270
3,628
13,066
–
168,938
–
361
13,018
182,317
298
3,707
13,662
3,263
152,580
–
361
14,273
170,477
257
4,476
4,990
16,964
216,347
17,667
199,984
9,723
180,200
–
–
2,552
–
–
2,552
–
25,867
–
25,867
28,419
(4,676)
(1,298)
(368)
(6,342)
(50,705)
(11,158)
(26,760)
(88,623)
(94,965)
(4,753)
(1,171)
(339)
(6,263)
(42,331)
(12,455)
(22,385)
(77,171)
(83,434)
(5,159)
(1,035)
(612)
(6,806)
(37,170)
(13,627)
(19,735)
(70,532)
(77,338)
–
–
–
–
–
–
–
–
–
–
–
2,464
–
–
2,464
–
14,576
–
14,576
17,040
–
–
–
–
–
–
–
–
–
121,382
116,550
102,862
28,419
17,040
297
10,560
8,455
26,095
75,975
121,382
296
10,490
8,357
26,301
71,106
116,550
295
10,350
8,363
18,955
64,899
102,862
297
10,560
1,912
15,650
–
28,419
296
10,490
1,838
4,416
–
17,040
Notes
11b
13
11c
14
15
16
18
19
20
21
26
27
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
As permitted by section 408 Companies Act 2006, the Parent Company’s statement of comprehensive income has
not been included in these financial statements. The profit and comprehensive income for the year ended 31 July
2020 was £14.8 million (2019: £3.8 million).
Approved by the Board of Directors and authorised for issue on 30 October 2020 and signed on its behalf by:
Andrew Jacobs
Chief Executive Officer
Ray Davies
Finance Director
66
Lok’nStore Group plc Annual Report and Accounts 2020
Consolidated Statement of Cash Flows
For the year ended 31 July 2020
Group
Year ended
31 July
2020
£’000
Group
Year ended
31 July
2019
Restated**
£’000
Notes
29a
Operating activities
Cash generated from operations
Income tax paid
Net cash generated from operations
Investing activities
Proceeds of disposal of discontinued operation
(net of disposal costs and cash included in sale)
Proceeds of sale of land (net of disposal costs)
Proceeds of sale of store
Purchase of property, plant and equipment
Acquisition of subsidiary (net of cash acquired)
Interest received
Net cash used in investing activities
Financing activities
Proceeds from drawdown of new bank facility
Repayment of bank borrowings on retiring bank facility
Proceeds of bank borrowings utilised for store development
Finance costs paid on bank refinancing
Finance costs paid
Lease liabilities paid
Equity dividends paid
Proceeds from issue of Ordinary Shares (net)
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents in the period
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
9,700
(893)
8,807
–
–
–
11b
(11,628)
–
29
(11,599)
–
–
8,351
(113)
(1,074)
(1,467)
(3,572)
71
2,196
(596)
13,662
13,066
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
No statement of cash flows is presented for the Company as it had no cash flows in either year.
9,545
(955)
8,590
6,849
796
7,418
(14,029)
(1,069)
31
(4)
42,971
(42,395)
5,653
(593)
(934)
(1,478)
(3,279)
141
86
8,672
4,990
13,662
67
Strategic ReportOverviewGovernanceFinancial Statements Accounting Policies
General Information
Lok’nStore Group plc is an AIM listed company incorporated and domiciled in England and Wales. The address of
the registered office is One Fleet Place, London, EC4M 7WS, UK. Copies of this Annual Report and Accounts may
be obtained from the Company’s head office at 112 Hawley Lane, Farnborough, Hants, GU14 8JE or the investor
section of the Company’s website at http://www.loknstore.co.uk. The principal activities of the Group and the nature
of its operations are described in the Strategic Report.
Basis of Accounting
The statutory accounts for the year ended 31 July 2020 have been prepared in accordance with International
Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC)
Interpretations as adopted by the European Union and comply with those parts of the Companies Act 2006 that are
applicable to companies reporting under IFRS. The Group has applied all accounting standards and interpretations
issued by the International Accounting Standards Board and International Financial Reporting Interpretation
Committee relevant to its operations and effective for accounting periods beginning on or after 1 August 2019.
The statutory accounts for the year ended 31 July 2020 will be delivered to the Registrar of Companies following
the Company’s Annual General Meeting and will be available from the investor section of the Company’s website
at http://www.loknstore.co.uk.
Statutory accounts for the year ended 31 July 2019 have been filed with the Registrar of Companies. The Auditor’s
report for the year ended 31 July 2020 was unqualified, did not include a reference to any matter to which the Auditor
drew attention by way of emphasis without qualifying their report and did not contain any statement under section
498(2) or (3) of the Companies Act 2006.
The financial statements have been prepared on the historic cost basis except that certain trading properties and
non-current financial assets are stated at fair value.
Standards Adopted in the Year
IFRS 16, (Leases Accounting). The Group has applied IFRS 16 for the first time in this financial year. IFRS 16
introduces significant changes to lessee accounting by removing the distinction between operating and finance
leases and requiring the recognition of a Right of Use Asset and a corresponding lease liability in the Statement of
Financial Position.
The prior year financial comparatives contained within these statements have been restated to reflect the first-time
adoption of IFRS 16 which changes previously reported EBITDA, interest and depreciation numbers in the Statement
of Comprehensive Income. Further details of these restatements can be found in note 1.
Standards in issue but not yet effective
At the date of authorisation of these financial statements the following standards, which have not been applied
in these financial statements, were in issue but not yet effective. These standards, which are effective for annual
periods beginning on or after 1 January 2020 have been adopted by the EU unless otherwise stated.
• Amendments to References to the Conceptual Framework in IFRS Standards;
• Amendments to IFRS 16, COVID-19 rent concession (effective 1 June 2020);
• Amendments to IFRS 3, definition of a business;
•
•
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Material;
IAS 1 Presentation of Liabilities (effective 1 January 2023 – not EU endorsed)
The Directors do not anticipate that the adoption of these revised standards and interpretations will have a significant
impact on the figures included in the financial statements in the period of initial application.
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Lok’nStore Group plc Annual Report and Accounts 2020 Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (and its subsidiaries) made up to 31 July each year. Control is achieved where the Company has power
over the investee, exposure or rights to variable returns from the investee and the ability to use its power to vary
those returns.
Intra-group transactions, balances, and unrealised gains and losses on transactions between Group companies are
eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.
Goodwill
Goodwill arising on consolidation represents the excess of the consideration transferred, the amount of any non-
controlling interest and the fair value of any previous interest in the acquired entity over the fair value of the identifiable
assets and liabilities of a subsidiary at the date of acquisition. Goodwill is recognised as a non-current asset.
Any deficiency of the consideration transferred, the amount of any non-controlling interest and the fair value of
any previous interest in the acquired entity below the fair value of identifiable assets and liabilities of a subsidiary
(i.e. discount on acquisition) is recognised directly in profit or loss.
Goodwill is reviewed for impairment at least annually. For the purposes of impairment testing, assets are grouped at
the lowest levels for which there are separately identifiable cash flows, known as cash generating units, and goodwill
is allocated to these units. If the recoverable amount of the cash generating unit is less than the carrying amount of
the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment
losses in relation to goodwill are recognised immediately in profit or loss and are not reversed in subsequent periods.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the asset or CGU for which the estimate of
future cash flows have not been adjusted.
Going Concern
The Directors can report that, based on the Group’s budgets and financial projections, which include the expected
impact of COVID-19 on the Group, they have satisfied themselves that the business is a going concern. The impact
of COVID-19 and the measures the Directors have taken to mitigate its effects are set out in ‘Our COVID-19 safe
response’ section in the Managing Directors Review on page 18.
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 £13.1 million (2019: £13.7 million), undrawn committed bank facilities at 31 July 2020 of £23.7 million (2019:
£32.0 million), and cash generated from operations in the year ended 31 July 2020 of £9.7 million (2019: £9.5 million).
The Group has a bank facility of £75 million, with a further uncommitted £25 million accordion option taking the
facility to £100 million. The increased facility will provide funding for new landmark site acquisitions and working
capital to support the Group’s ambitious growth plans.
The facility is a combined agreement with Lloyds Bank and The Royal Bank of Scotland plc and runs until April 2025
with an option for a further one year extension. The interest rate is set at the London Inter-Bank Offer Rate (LIBOR)
plus a 1.50%–1.75% margin based on a loan to value covenant test.
The Group is fully compliant with all bank covenants and undertakings and is not obliged to make any repayments
prior to expiration. The financial statements are therefore prepared on a going concern basis.
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Strategic ReportOverviewGovernanceFinancial Statements Accounting Policies continued
Revenue Recognition
The Group recognises revenue when the amount of the revenue can be reliably measured and when goods are
sold and title has passed. Revenue from services provided is recognised evenly over the period in which the services
are provided.
a) Self-storage Revenue
Self-storage services are provided on a time basis. The price at which customers store their goods is dependent
on size of unit and store location. Customers are invoiced on a four-weekly cycle in advance and revenue is
recognised based on time stored to date within the cycle. When customers vacate they are rebated the unexpired
portion of their four weekly advance payment (subject to a seven day notice requirement). Revenue is recognised
evenly over the period of self-storage.
b) Retail Sales
The Group operates a packaging shop within each of its storage centres for selling storage related goods such as
boxes, tape and bubble-wrap. Sales include sales to the public at large as well as self-storage customers. Sales
of goods are recognised at point of sale when the product is sold to a customer.
c) Insurance
Customers may choose to insure their goods in storage. The weekly rate of insurance charged to customers is
calculated based on the tariff per week for each £1,000 worth of goods stored by the customer. This charge is retained
by Lok’nStore and covers the cost of the block policy and other costs. Customers are invoiced on a four-weekly
basis for the insurance cover they use and revenue is recognised based on time stored to date within the cycle.
The Group provides insurance to customers through a block policy purchased from its insurer. Block policyholders
supply VAT exempt insurance transactions as principals rather than insurance related services as intermediaries
and accordingly insurance income received from the customer is recognised as revenue rather than offset against
the costs of the block policy.
The key characteristics of a block policy are that:
• There is a contract between the block policyholder and the insurer which allows the block policyholder to
effect insurance cover subject to certain conditions
• The Group acting in our own name as the block policyholder procures insurance cover for third parties from
the insurer
• There is a contractual relationship between the block policyholder and third parties under which the insurance
is procured
• The block policyholder stands in place of the insurer in effecting the supply of insurance to the third parties
The Group is not exposed to any insured losses arising from its insurance activity.
d) Management Fee Income
Management fees earned for managing stores not owned by the Group are recognised over the period for which
the services are provided. Fees are invoiced monthly based on revenue performance. Additional performance
fees may be earned if an individual Managed Store EBITDA performance exceeds agreed thresholds. Periodic
fees may also be earned for additional specific services provided and are invoiced when that service has been
completed. Revenue is recognised for each performance condition once the condition has been met.
Segmental Information
In accordance with the requirements of IFRS 8 Operating Segments, the Group has reviewed its identifiable business
segments and the information used and provided internally to the Board, which is considered to be the Chief Operating
Decision Maker, in order to make decisions about resource allocation and performance management. Financial
information is reported to the Board with revenue and profit analysed between self-storage activity and serviced
archive and records management activity. All activities arise in the United Kingdom.
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Lok’nStore Group plc Annual Report and Accounts 2020
Adjusted EBITDA – Earnings Before Interest, Tax, Depreciation and Amortisation
This measure strips away non-cash charges, finance charges and tax and now also reflects the removal of property
lease costs from operating expenses as a result of the implementation of IFRS 16. Adjusted EBITDA is defined as
EBITDA before losses or profits on disposal, share-based payments, acquisition costs, exceptional items, finance
income, finance costs and taxation.
Earnings before interest, tax, depreciation and amortisation (EBITDA), is defined as EBITDA before losses or profits on
disposal, share-based payments, acquisition costs, and exceptional items, finance income, finance costs and taxation.
Adjusted Store EBITDA
This measure is Group Adjusted EBITDA before the deduction of central and head office costs however unlike Group
Adjusted EBITDA this measure excludes the impact of IFRS 16 and includes leasing charges as normal operating
costs of each store. The measure is designed to give clarity on the recurring operating cash flow of the business and
provides important information on the underlying performance of the trading stores and shows the cash generating
core of the business. Use of this metric enables us to provide additional information on store EBITDA contributions (after
leasing costs) and the margins analysed between freehold and leasehold stores and according to the age of the stores.
Operating Profit
Operating profit is defined as profit after all costs except finance income, finance costs and taxation.
Discontinued Operations (2019)
The Group’s document storage business was sold in the previous financial year and its disposal constituted a
discontinued operation. Separate reporting of discontinued operations is important in providing users of financial
statements with the information necessary to determine the effects of a disposal on the ongoing continuing
operations of our business. To ensure a clear separation of the financial performance of Continuing Operations,
Discontinued Operations are shown separately on the Statement of Comprehensive Income as a profit on disposal
(after tax) which combines operating profit with the profit arising on its disposal. The profit on discontinued
operations is then aggregated with profit on continuing operations in determining the Group’s total net profit.
Taxation
Income tax expense represents the sum of the current tax payable and deferred tax.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the statement of comprehensive income because some items of income or expense are taxable or deductible in
different years or may not be taxable or deductible. The Group’s liability for current tax is calculated using tax rates
and laws that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax which may be payable or recoverable in the future arising from the temporary differences
between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit. It is accounted for using the ‘balance sheet liability method’. Deferred tax is
provided in full on the differences between the revalued amount of trading property assets carried in the Statement
of Financial Position and their corresponding tax bases. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset realised, based on tax rates that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other
comprehensive income, in which case the tax is also recognised directly in other comprehensive income.
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Strategic ReportOverviewGovernanceFinancial Statements Accounting Policies continued
Retirement Benefits
The amount charged to profit or loss in respect of pension costs is the contributions payable to money purchase
schemes in the year. Differences between contributions payable in the year and contributions actually paid are shown
as either accruals or prepayments in the statement of financial position. There are no defined benefits schemes.
Equity Share-based Payments
The cost of providing share-based payments to employees is charged to profit or loss over the vesting period of the
related share options. The cost is based on the fair value of the options determined at grant date using the Black-
Scholes pricing model, which is appropriate given the vesting and other conditions attaching to the options. The
charge is adjusted to reflect expected and actual levels of vesting.
Property Lease Premiums
Costs relating to the acquisition of long leases are classified as a non-current asset in the statement of financial position.
Costs may include lease premiums paid on entering such a lease and other related costs. Following the opening of a
store during the year amounts held under lease premiums are transferred to property plant and equipment.
Property, Plant and Equipment
Freehold properties and long leasehold properties are measured at fair value which represents the Group’s assessment
of the highest and best use of the asset. Gains or losses arising from the changes in fair value of the trading properties
are included in Other Comprehensive Income for the period in which they arise unless a decrease in fair value exceeds
the cumulative valuation surplus for a particular asset, in which case the excess is recognised in profit or loss. A
comprehensive external valuation is performed annually at each reporting date. Once a store is opened lease premiums
are transferred to property, plant and equipment and carried at their transferred cost less any accumulated depreciation.
Short leasehold improvements, fixtures, fittings and equipment, and motor vehicles are carried at cost less
accumulated depreciation. Expenditure related to the improvement of the buildings is capitalised and depreciated
over the remaining period of the lease term.
Assets in the course of construction and land held for development of new stores (‘development property assets’)
are carried at cost, less any recognised impairment loss. Depreciation of these assets commences when the assets
are ready for their intended use.
Depreciation is provided on all property, plant and equipment other than freehold land and development property
assets at rates calculated to write each asset down to its estimated residual value evenly over its expected useful life
as follows:
Freehold property
over 50 years straight line
Long leasehold property and lease premium
over unexpired lease period or renewal term
Short leasehold improvements
Fixtures, fittings and equipment
Computer equipment
Motor vehicles
over unexpired lease period or renewal term
5% to 15% reducing balance
over two years straight line
25% reducing balance
The assets’ residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate on an
annual basis. An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal.
The additional depreciation arising from the revaluation of freehold and long leasehold properties of £466,418 (2019:
£380,565) is included within total depreciation on the face of the statement of comprehensive income and transferred
from the revaluation reserve to retained earnings each year.
Intangible Assets (Other Than Goodwill)
Customer relationships acquired in a business combination are measured initially at fair value and are subsequently
amortised on a straight-line basis over their estimated useful lives (20 years).
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Lok’nStore Group plc Annual Report and Accounts 2020 Impairment of Property, Plant and Equipment and Intangible Assets (Other than Goodwill)
At each reporting date the Group reviews the carrying amounts of its property, plant and equipment and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists the recoverable amount of the asset is estimated in order to determine the extent, if any, of
the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount
of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit
or loss. Where an impairment loss is subsequently reversed, the carrying amount of the assets or cash-generating
unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years.
A reversal of an impairment loss is recognised immediately in profit or loss.
IFRS 16 – Leases
Leases – the Group as Lessee
Initial and subsequent measurement of the Right of Use Asset
A Right of Use Asset is recognised at commencement of the lease and initially measured at the amount of the lease
liability, plus any incremental costs of obtaining the lease and any lease payments made at or before the leased asset
is available for use by the Group.
The Right of Use Asset is subsequently measured at cost less accumulated depreciation and any accumulated
impairment losses. The depreciation methods applied are as follows:
• Leased property – on a straight-line basis over the shorter of the lease term
The Right of Use Asset is adjusted for any re-measurement of the lease liability and lease modifications, as set out below.
Initial recognition of the lease liability
On commencement of a contract (or part of a contract) which gives the Group the right to use an asset for a period
of time in exchange for consideration, the Group recognises a Right of Use Asset and a lease liability unless the lease
qualifies as a ‘short-term’ lease or a ‘low-value’ lease.
Where the lease term is twelve months or less and the lease does not contain an option to purchase the leased
asset, lease payments are recognised as an expense on a straight-line basis over the lease term.
Leases where the underlying asset is ‘low-value’, lease payments are recognised as an expense on a straight-line
basis over the lease term.
Initial measurement of the lease liability
The lease liability is initially measured at the present value of the lease payments during the lease term discounted
using the interest rate implicit in the lease, or the incremental borrowing rate if the interest rate implicit in the lease
cannot be readily determined.
The lease term is the non-cancellable period of the lease plus extension periods that the Group is reasonably certain
to exercise and termination periods that the Group is reasonably certain not to exercise.
Lease payments include fixed payments, less any lease incentives receivable, variable lease payments dependant
on an index or a rate (such as those linked to LIBOR) and any residual value guarantees. Variable lease payments are
initially measured using the index or rate when the leased asset is available for use.
Subsequent measurement of the lease liability
The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the lease
liability and reduced for lease payments. Interest on the lease liability is recognised in profit or loss, unless interest is directly
attributable to qualifying assets, in which case it is capitalised in accordance with the Group’s policy on borrowing costs.
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Strategic ReportOverviewGovernanceFinancial Statements Accounting Policies continued
IFRS 16 – Leases continued
Leases – the Group as Lessee continued
Re-measurement of the lease liability
The lease liability is adjusted for changes arising from the original terms and conditions of the lease that change the lease
term, the Group’s assessment of its option to purchase the leased asset, the amount expected to be payable under a
residual value guarantee and/or changes in lease payments due to a change in an index or rate. The adjustment to the
lease liability is recognised when the change takes effect and is adjusted against the Right of Use Asset, unless the
carrying amount of the Right of Use Asset is reduced to nil, when any further adjustment is recognised in profit or loss.
Adjustments to the lease payments arising from a change in the lease term or the lessee’s assessment of its option
to purchase the leased asset are discounted using a revised discount rate. The revised discount rate is calculated as
the interest rate implicit in the lease for the remainder of the lease term, or if that rate cannot be readily determined,
the lessee’s incremental borrowing rate at the date of reassessment.
Lease modifications
A lease modification is a change that was not part of the original terms and conditions of the lease and is accounted
for as a separate lease if it increases the scope of the lease by adding the right to use one or more additional assets
with a commensurate adjustment to the payments under the lease.
For a lease modification not accounted for as a separate lease, the lease liability is adjusted for the revised lease
payments, discounted using a revised discount rate. The revised discount rate use is the interest rate implicit in
the lease for the remainder of the lease term, or if that rate cannot be readily determined, the lessee company’s
incremental borrowing rate at the date of the modification.
Where the lease modification decreases the scope of the lease, the carrying amount of the Right of Use Asset is
reduced to reflect the partial or full termination of the lease. Any difference between the adjustment to the lease
liability and the adjustment to the Right of Use Asset is recognised in profit or loss.
For all other lease modifications, the adjustment to the lease liability is recognised as an adjustment to the Right of
Use Asset.
Investments
Shares in subsidiary undertakings are considered long-term investments and are classified as non-current assets
in the Parent Company’s statement of financial position. All investments are stated at cost. Provision is made for any
impairment in the value of non-current asset investments.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first in, first out basis.
Net realisable value is based upon estimated selling prices less any costs of disposal. Provision is made for obsolete
and slow moving items.
Financial Instruments
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument. IFRS 9 covers the classification, measurement and
derecognition of financial assets and liabilities. There has been no impact on the Group’s accounting for financial
liabilities, as the new requirements only affect the accounting for financial liabilities that are designed at fair value
through the income statement and the Group does not have any such liabilities.
The impairment model under IFRS 9 requires the recognition of impairment provisions based on expected credit
losses rather than only incurred credit losses as is the situation under IAS39. The significant financial assets held by
the Group that will be affected by the impairment losses recognised under IFRS 9 are trade and other receivables.
74
Lok’nStore Group plc Annual Report and Accounts 2020 Trade receivables as indicated in Note 15 are £0.75 million. As described in Note 15 the Group’s exposure to credit
risk is low and the Group’s credit model robust. The Directors have assessed the impact of impairment losses
recognised for trade receivables under IFRS 9 at 31 July 2020 based on actual losses experienced over the past five
years and concluded that the impact and volatility on impairment losses recognised under IFRS 9 to be immaterial.
The Company holds interCompany loan and receivables balances with the subsidiaries of the Group as disclosed in
Note 15. The Directors do not estimate there to be a material impact on the Company only Financial Statements from
the recognition of impairment provisions for the loans and receivables.
Bank Borrowings and Finance Costs
Interest-bearing bank loans are recorded at the proceeds received net of direct issue costs. Issue costs are
amortised against the carrying value amount of the loan over the period of the loan with the cost recognised in profit
and loss as part of finance costs.
Borrowing costs are recognised in profit or loss in the year in which they are incurred, unless the costs are incurred
as part of the development of a qualifying asset, when they will be capitalised. A qualifying asset is an asset that
necessarily takes a substantial period of time to get ready for its intended use. Commencement of capitalisation
is the date when the Group incurs expenditure for the qualifying asset, incurs borrowing costs and undertakes
activities that are necessary to prepare the assets for their intended use. In the case of suspension of activities during
extended periods, the Group suspends capitalisation. The Group ceases capitalisation of borrowing costs when
substantially all of the activities necessary to prepare the asset for use are complete.
The Group has an active store development programme and in accordance with IAS 23 has material qualifying
assets that take a substantial period of time to develop from acquisition to ultimate store opening. Accordingly
borrowing costs have been capitalised in the current year that are directly attributable to the acquisition, construction
and fit-out of these qualifying store assets. The Group funds these developments from a general bank revolving
credit facility and the capitalisation rate applied is the average cost of these funds. When an individual store
development is complete and the store has opened capitalisation of attributable borrowing costs ceases. In the
current year £382,190 (2019: £430,321) interest was capitalised in respect of nine qualifying development assets.
Derivative Financial Instruments and Hedge Accounting
The Group’s activities expose it to interest rate risk. The Group has used interest rate swap contracts to hedge these
exposures. The Group does not use derivative financial instruments for speculative or for any other purposes.
The use of financial derivatives is governed by the Group’s policies as approved by the Board of Directors. The Group
documents its risk management objectives and strategy for undertaking hedging transactions within the Group’s Risk
Register. The Group also documents its assessment both at hedge inception and on an on-going basis to assess
whether the derivatives that are used are effective in offsetting changes in fair value or cash flows of the hedged items.
There were no financial derivatives held by the Group at 31 July 2020 or 31 July 2019.
Cash Flow Hedges
Hedges of exposures to variable cash flows attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction that could affect profit or loss are accounted for as cash flow hedges
when the hedging criteria has been achieved. The Group designates certain derivative instruments as hedges of
the variable rate borrowings. The effective portion of changes in the fair value is recognised in other comprehensive
income whilst the gain or loss on the ineffective portion is recognised immediately in profit or loss.
Amounts accumulated in other comprehensive income are recycled to profit or loss in the periods when the hedged
item affects profit or loss. However, when a forecast transaction that is hedged results in the recognition of a non-
financial asset, the gains and losses previously deferred into other comprehensive income are transferred from other
comprehensive income and included in the initial measurement of the cost of the asset. The Group currently has no
hedging instruments although hedging policy is kept under regular review.
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Strategic ReportOverviewGovernanceFinancial Statements Accounting Policies continued
Trade Receivables
For trade receivables, expected credit losses are measured by applying an expected loss rate to the gross carrying
amount. The expected loss rate comprises the risk of a default occurring and the expected cash flows on default
based on the aging of the receivable. The risk of a default occurring always takes into consideration all possible
default events over the expected life of those receivables (‘the lifetime expected credit losses’).
Trade receivables as indicated in Note 15 are £0.75 million. As described in Note 15 the Group’s exposure to credit
risk is low and the Group’s credit model robust. The Directors have assessed the impact of impairment losses
recognised for trade receivables under IFRS 9 at 31 July 2020 based on actual losses experienced over the past five
years and concluded that the impact and volatility on impairment losses recognised under IFRS 9 to be immaterial.
The Company holds inter-company loan and receivables balances with the subsidiaries of the Group as disclosed in
Note 15.
Liabilities and Equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial
assets. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Interest bearing loans and overdrafts are initially measured at fair value net of direct transaction costs and are
subsequently measured at amortised cost, using the effective interest rate method. Any difference between the
proceeds net of transaction costs and the settlement or redemption of borrowings is recognised over the term of the
borrowing. Trade and other payables are initially recognised at fair value and are subsequently stated at amortised
cost using the effective interest rate method.
Cash and Cash Equivalents
Cash and cash equivalents comprises cash and short-term deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash. The carrying amounts of these assets approximate to their
fair value and the risk of changes in value is not significant.
Financial Assets
Trade, Group and other debtors which are receivable within one year and which do not constitute a financing
transaction are initially measured at the transaction price and subsequently measured at amortised cost being the
transaction price less any amounts settled and any impairment losses. Where the Group is entitled to receive cash
under a management services agreement at a future specified date this is recorded as a financial asset at the current
fair value of the cash ultimately receivable. Where this amount is receivable in more than one year hence the financial
asset is presented as a non-current asset.
Impairment of Financial Assets
A financial asset is credit-impaired when events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred.
The expected credit loss recognised in profit or loss for a credit impaired financial asset is the difference between
the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial
asset’s original effective interest rate.
Net Debt
Net debt comprises the borrowings of the Group less cash and cash equivalents.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event which it is probable
will result in an outflow of economic benefits that can be reliably estimated.
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Lok’nStore Group plc Annual Report and Accounts 2020 Employee Benefit Trust
The Group operates an employment benefit trust and has de facto control of the shares held by the trust and bears
their benefits and risks. The Group records certain assets and liabilities of the trust as its own. Finance costs and
administrative expenses are charged as they accrue.
Own Shares
The cost of own shares held by the employee benefit trust (ESOP shares) and treasury shares is shown as a
deduction from retained earnings. Earnings per share are calculated on the net shares in issue.
Critical Accounting Estimates and Judgements
The preparation of financial statements under EU-IFRS requires management to make estimates and assumptions
that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and
expenses. Actual outcomes may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
a) Estimate of fair value of trading properties
The Group commissions an external valuation of its self-storage stores. This valuation uses a discounted
cash flow methodology which is based on current and projected net operating income. Principal assumptions
underlying management’s estimation of the fair value are those relating to stabilised occupancy levels expected
future growth in storage rents and operating costs, maintenance requirements, capitalisation rates and discount
rates. A more detailed explanation of the background and methodology adopted in the valuation of the Group’s
trading properties is set out in note 11b. The carrying value of land and buildings held at valuation at the reporting
date was £141.4 million (2019: £133.5 million) as shown in the table in note 11(b).
b) Assets in the course of construction and land held for store development
(‘Development property assets’)
The Group’s development property assets are held in the statement of financial position at historic cost and are
not valued externally. In acquiring sites for redevelopment into self-storage facilities, the Group estimates and
makes judgements on the potential net lettable storage space that it can achieve in its planning negotiations,
together with the time it will take to achieve maturity occupancy level. In addition, assumptions are made on the
storage fees that can be achieved at the store by comparison with other stores within the portfolio and within the
local area. These judgements, taken together with estimates of operating costs and the projected construction
cost, allow the Group to calculate the potential net operating income at maturity, projected returns on capital
invested and hence to support the purchase price of the site at acquisition. Following the acquisition, regular
reviews are carried out taking into account the status of the planning negotiations, and revised construction
costs or capacity of the new facility, for example, to make an assessment of the recoverable amount of the
development property. The Group reviews all development property assets for impairment at each reporting date
in the light of the results of these reviews. Once a store is opened it is valued as a trading store.
The carrying value of development property assets at the reporting date was £29.9 million (2019: £18.4 million).
Please see note 11b for more details.
c) Classification of self-storage facilities as owner occupied properties rather than investment properties
The Directors consider that Lok’nStore Group plc is the Parent Company of a ‘Trading business’ and is not wholly
or mainly engaged in making investments. The holding of land is not a core activity.
The Group is an integrated storage solutions business offering a range of services to its customers. We provide
services to our customers under contracts for the provision of storage services which do not give them any
property or tenancy rights and a large number of the stores we operate are from properties where we do not
own the land or the buildings. The assets we do own are valued on the basis of the trading cash flows that the
operating businesses generate.
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Strategic ReportOverviewGovernanceFinancial Statements
Accounting Policies continued
Critical Accounting Estimates and Judgements continued
c) Classification of self-storage facilities as owner occupied properties rather than investment
properties continued
The Group continues to develop its managed stores business where it uses its operational and logistic expertise
to provide a full range of services to customers in stores we manage for third party owners. In recent years the
Group has developed many new managed stores all of which are owned by third-party investors and managed
by Lok’nStore.
Previously owned sites at Woking, Ashford, Swindon and Crayford, have been the subject of sale and manage-
back transactions by which Lok’nStore has retained the management of the business when a third party owner
acquired the business, land and buildings. All of this trading activity as well as the self-storage income earned
from our leasehold stores’ activity demonstrate that the holding of land is not a core activity because the trading
operation is not dependent on the ownership of land. See the chart on page 22 for the changing ownership
structure of the stores.
Furthermore, the Group has always and continues to comply with all of the usual accounting and tax protocols
consistent with a trading business. As at the year-end, Lok’nStore operates 35 stores mainly in Southern
England. Of the 35 stores, Lok’nStore owns the freehold interest in 15 stores, eight of the stores are held under
commercial leases, with the remaining 12 managed stores operating under management contracts for third
party owners. One of the features of Lok’nStore’s strategy is to increase the number of stores we manage for
third parties selling our expertise in storage solutions management, operating systems and marketing, through
management fees rather than retaining a proprietary interest in land and buildings.
The classification of self-storage facilities as owner occupied properties rather than investment properties has
resulted in the recognition of fair value gains in 2020 (net deferred of tax) of £5.6 million (2019: £11.4 million) in
Other Comprehensive Income rather than the Income Statement.
d) Application of IFRS 16
The Group uses judgement to assess whether the interest rate implicit in the lease is readily determinable. When
the interest rate implicit in the lease is not readily determinable, the Group estimates the incremental borrowing
rate based on its external borrowings secured against similar asset, adjusted for the term of the lease.
78
Lok’nStore Group plc Annual Report and Accounts 2020
Notes to the Financial Statements
For the year ended 31 July 2020
1 Implementation of IFRS 16 – Leases
IFRS 16 represents a significant change to the way that the Group prepares its financial statements. The effective
date of adoption is for accounting periods commencing after 1 January 2019 and the standard therefore applies to
Lok’nStore’s financial statements for the year ended 31 July 2020 and has been applied in these financial statements
using the full retrospective approach.
IFRS 16 primarily affects the accounting by lessees and results in the recognition of the value of almost all leases
on the balance sheet. The standard removes the current distinction between operating and financing leases and
requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals.
The application of IFRS 16 relates to the Groups property leases. The Group has no leases on any other types of assets.
The Statement of Financial Position: The Group’s leases on its leased stores are recognised as a ‘Right of
Use Asset’ and as a corresponding liability at the year-end. Each lease payment is allocated between the liability
element and the finance cost element. The finance costs are charged to profit and loss over the lease period so
as to produce a constant periodic rate of interest on the remaining liability for the period. The Right of Use Asset is
depreciated on a weighted depreciation charge based on the individual lease term of the separate leases. Assets
and liabilities arising from a lease will initially be measured on a present value basis which will include the fixed rental
payments less any lease incentives receivable. If the interest rate implicit in the lease cannot be readily determined
the lease payments will be discounted by the Group’s incremental borrowing rate (cost of debt) to obtain an asset
of similar value over a similar term with similar security. Right of Use Assets will be measured at cost comprising
the initial measurement of the lease liability plus any initial direct costs (if any). The Group’s current property lease
commitments are reported in Note 30.
The Statement of Profit or Loss: This is affected because the total expense is typically higher in the earlier years
of a lease and lower in later years. Additionally, the rent operating expense that would usually be reported in these
financial statements at £1.47 million (2019: £1.36 million) is replaced with interest and depreciation as a consequence
of the ‘capitalisation effect’ of the leases, so the Group’s key metric of Adjusted EBITDA increases significantly by the
removal of the rent expense from the operating profit and loss. Other performance measures including Operating
Profit also increases although reported interest and depreciation will be higher. Accordingly, the key metrics and
Alternative Performance Measures (APMs) have been updated for IFRS 16 in the KPIs section above.
The Consolidated Statement of Cash Flows: While overall underlying cash flow is unaffected by the changes the
presentation within the Consolidated Statement of Cash Flows will change. Reported operating cash flows will be
higher as cash payments for the principal portion of the lease liability are classified within financing activities.
The effect on financial ratios such as gearing or leverage causes them to rise as the lease liability now forms part of
net debt.
To give a broad overview of the numerical effect on the implementation of IFRS 16 as it would apply to the current
period and comparative numbers we have:
Continuing operations
Rents payable under leases
Discontinued operations
Rents payable under leases
Total rents payable under leases
Group
31 July
2020
£’000
Group
31 July
2019
£’000
1,467
1,356
–
1,467
122
1,478
79
Strategic ReportOverviewGovernanceFinancial Statements For the year ended 31 July 2020
1 Implementation of IFRS 16 – Leases continued
To ensure consistency and effective comparison with prior periods, the Group has elected to apply the full
retrospective implementation approach with reinstatement of the comparative information. The transition date of
initial application is therefore 1 August 2018. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the leases. Where
this cannot be readily determined the Present Value of all future operating lease payments is calculated using 2.2%
as an effective cost of debt as the discount rate. This calculates an opening Right of Use Asset (ROU) as at 1 August
2018 of £14.27 million. Correspondingly this is also the opening value of the lease liability following the capitalisation
of the leases.
After the application of a weighted depreciation charge based on the individual lease term of the separate property
leases and the imputation of an interest charge at 2.2% as part of the amortisation of the lease liability a reconciliation
of the total leases to the IFRS lease liability is shown below:
Continuing Operations
Statement of Financial Position (extract)
Right of Use Asset (ROU)
Equity – accumulated effect of restatement
Current Lease Liability
Amounts due within one year
Non-current Lease Liability
Amounts due in one to two years
Amounts due in three to five years
Amounts due in more than five years
Non-current Lease Liability
Total lease liability
Group
31 July
2020
IFRS 16
£’000
11,764
692
12,456
Group
31 July
2019
IFRS 16
Restated
£’000
13,018
608
13,626
Group
31 July
2018
(Transition)
IFRS 16
Restated
£’000
14,273
389
14,662
1,298
1,171
1,035
1,327
2,881
6,950
11,158
12,456
1,298
3,352
7,805
12,455
13,626
1,171
3,709
8,747
13,627
14,662
80
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continued Statement of Comprehensive Income (extract)
Property lease expense
Depreciation of Right of Use Asset (ROU)
Interest charged on lease liability
Impact on Comprehensive Income
Group
31 July
2020
IFRS 16
Restated
£’000
1,467
(1,254)
(296)
(83)
Analysis of the effect within the Statement of Comprehensive Income
Increase in EBITDA
Increase/(decrease) in operating profit
Increase/(decrease) in PBT
Group
31 July
2020
IFRS 16
Restated
£’000
1,467
213
(83)
Group
31 July
2019
IFRS 16
Restated
£’000
1,356
(1,254)
(321)
(219)
Group
31 July
2019
IFRS 16
Restated
£’000
1,356
101
(219)
Group
31 July
2018
(Transition)
IFRS 16
Restated
£’000
1,191
(1,254)
(325)
(389)
Group
31 July
2018
(Transition)
IFRS 16
Restated
£’000
1,191
(64)
(389)
The Group has applied a single discount rate equivalent to its effective cost of debt. For more detailed information
on the Groups cash commitments under leases refer to note 30 (Commitments under leases).
81
Strategic ReportOverviewGovernanceFinancial Statements 1 Implementation of IFRS 16 – Leases continued
Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2019
Revenue
Total property, staff, distribution and general costs
Notes
2
3a
Year Ended
31 July
2019
£’000
Impact of
IFRS 16
£’000
Year Ended
31 July
2019
Restated
£’000
16,950
(9,557)
7,393
83
(2,207)
(46)
(2,336)
295
(54)
(133)
108
(2,228)
5,165
31
(605)
–
(574)
4,591
(1,211)
3,380
2,182
5,562
–
1,356
1,356
–
(1,254)
–
(1,254)
–
–
–
–
(1,254)
102
–
–
(321)
(321)
(219)
–
(219)
–
(219)
16,950
(8,201)
8,749
(83)
(3,461)
(46)
(3,590)
295
(54)
(133)
108
(3,482)
5,267
31
(605)
(321)
(895)
4,372
(1,211)
3,161
2,182
5,343
3(c)
3(c)
3(c)
4
5
5
8
12
27
5,562
(219)
5,343
13,765
(2,327)
11,438
11,438
17,000
17,000
–
–
–
–
(219)
(219)
13,765
(2,327)
11,438
11,438
16,781
16,781
Adjusted EBITDA1
Amortisation of intangible assets
Depreciation
Equity settled share-based payments
Profit on sale of land at store
Costs of sale & manage–back of Crayford store
Deferred financing on bank loan written off
Operating profit
Finance income
Finance cost – bank borrowings
Finance cost – lease liabilities
Profit (loss) before taxation
Income tax expense
Profit for the period from continuing operations
Profit for the period from discontinued operations
Profit for the period
Profit attributable to:
Owners of the Parent
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Increase in property valuation
Deferred tax relating to change in property valuation
Items that may be subsequently reclassified to profit and loss
Other comprehensive income
Total comprehensive income for the period
Attributable to: Owners of the Parent
1 Adjusted EBITDA is defined in the accounting policies section of the notes to the interim report.
82
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2019
Earnings per share attributable to owners
of the Parent
Basic
Continuing operations
Discontinued operations
Total basic earnings per share
Diluted
Continuing operations
Discontinued operations
Total diluted earnings per share
Year Ended
31 July
2019
£’000
Impact of
IFRS 16
£’000
Notes
Year Ended
31 July
2019
Restated
£’000
10
10
11.69p
7.55p
19.24p
11.50p
7.42p
18.92p
(0.76p)
–
(0.76p)
(0.75p)
–
(0.75p)
10.93p
7.55p
18.48p
10.75p
7.42p
18.17p
83
Strategic ReportOverviewGovernanceFinancial Statements 1 Implementation of IFRS 16 – Leases continued
Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Financial Position
31 July 2019
Notes
31 July
2019
£’000
Impact of
IFRS 16
£’000
31 July
2019
Restated
£’000
168,938
361
13,018
182,317
298
3,707
13,662
17,667
168,938
361
–
169,299
298
3,707
13,662
17,667
–
–
13,018
13,018
–
–
–
–
186,966
13,018
199,984
(4,753)
–
(339)
(5,092)
–
(1,171)
–
(1,171)
(42,331)
–
–
(12,455)
(22,385)
(64,716)
(69,808)
117,158
296
10,490
8,357
26,909
71,106
117,158
–
(12,455)
(13,626)
(608)
–
–
–
(608)
–
(608)
(4,753)
(1,171)
(339)
(6,263)
(42,331)
(12,455)
(22,385)
(77,171)
(83,434)
116,550
296
10,490
8,357
26,301
71,106
116,550
Assets
Non-current assets
Property, plant and equipment
Financial assets
Right of use assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Taxation
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Total liabilities
Net assets
Equity
Equity attributable to owners of the Parent
Called up share capital
Share premium
Other reserves
Retained earnings
Revaluation reserve
Total equity
84
11b
11c
14
15
16
18
19
20
21
26
27
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2018
Revenue
Total property, staff, distribution and general costs
Adjusted EBITDA1
Amortisation of intangible assets
Depreciation
Equity settled share-based payments
Carried interest – fees receivable
Receivables from warranty claims
Operating profit
Finance income
Finance cost – bank borrowings
Finance cost – lease liabilities
Profit (loss) before taxation
Income tax expense
Profit for the period from continuing operations
Profit for the period from discontinued operations
Profit for the period
Profit attributable to:
Owners of the Parent
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Increase in property valuation
Deferred tax relating to change in property valuation
Other comprehensive income
Total comprehensive income for the period
Attributable to:
Owners of the Parent
Year Ended
31 July
2018
£’000
Impact of
IFRS 16
£’000
15,372
(8,739)
6,633
(165)
(1,880)
(33)
(2,078)
361
230
591
(1,487)
5,146
80
(463)
–
(383)
4,763
(1,459)
3,304
453
3,757
–
1,190
1,190
–
(1,254)
–
(1,254)
–
–
–
(1,254)
(64)
–
–
(325)
(325)
(389)
–
(389)
–
(389)
Year ended
31 July
2018
Restated
£’000
15,372
(7,549)
7,823
(165)
(3,134)
(33)
(3,332)
361
230
591
(2,741)
5,082
80
(463)
(325)
(708)
4,374
(1,459)
2,915
453
3,368
3,757
(389)
3,368
15,723
(2,698)
13,025
13,025
16,782
–
–
–
–
(389)
15,723
(2,698)
13,025
13,025
16,393
16,782
(389)
16,393
1 Adjusted EBITDA is defined in the accounting policies section of the notes to the interim report.
85
Strategic ReportOverviewGovernanceFinancial Statements 1 Implementation of IFRS 16 – Leases continued
Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2018
Earnings per share attributable to owners of the Parent
Basic
Continuing operations
Discontinued operations
Total basic earnings per share
Diluted
Continuing operations
Discontinued operations
Total diluted earnings per share
Year ended
31 July
2018
£’000
Impact of
IFRS 16
£’000
Year ended
31 July
2018
Restated
£’000
11.48p
1.57p
13.05p
11.28p
1.55p
12.83p
(1.35p)
–
(1.35p)
(1.32p)
–
(1.32p)
10.13p
1.57p
11.70p
9.96p
1.55p
11.51p
86
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
Reconciliation of the impact of IFRS 16 on the previously reported
Consolidated Statement of Financial Position
31 July 2018
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Financial assets
Right of use assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Taxation
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Total liabilities
Net assets
Equity
Equity attributable to owners of the Parent
Called up share capital
Share premium
Other reserves
Retained earnings
Revaluation reserve
Total equity
31 July
2018
£’000
Impact of
IFRS 16
£’000
31 July
2018
Restated
£’000
3,263
152,580
361
–
156,204
257
4,476
4,990
9,723
–
–
–
14,273
14,273
–
–
–
–
3,263
152,580
361
14,273
170,477
257
4,476
4,990
9,723
165,927
14,273
180,200
(5,159)
–
(612)
(5,771)
(37,170)
–
(19,735)
(56,905)
(62,676)
103,251
295
10,350
8,363
19,344
64,899
103,251
–
(1,035)
–
(1,035)
–
(13,627)
–
(13,627)
(14,662)
(389)
–
–
–
(389)
–
(389)
(5,159)
(1,035)
(612)
(6,806)
(37,170)
(13,627)
(19,735)
(70,532)
(77,338)
102,862
295
10,350
8,363
18,955
64,899
102,862
87
Strategic ReportOverviewGovernanceFinancial Statements
2 Revenue
Analysis of the Group’s revenue is shown below:
Stores trading
Self-storage revenue
Insurance revenue
Retail sales
Total self-storage revenue – owned stores
Ancillary store revenue
Management fees – managed stores
Sub-total
Non-storage income
Total revenue per statement of comprehensive income
Group
2020
£’000
15,126
1,663
201
16,990
4
991
17,985
56
18,041
Group
2019
£’000
14,235
1,533
241
16,009
44
817
16,870
80
16,950
The Group’s serviced archive and record management segment was sold in the period and is presented as a
discontinued operation (see note 12). Following the disposal, the Group has one operating segment, being self-
storage in the UK.
3(a) Property, Staff, Distribution and General Costs
Property and premises costs
IFRS 16 restatement – leases
Restated property and premises costs
Staff costs
General overheads
Sub-total operating costs
Retail products cost of sales (see note 3b)
Group
2020
£’000
4,392
(1,467)
2,925
4,196
1,139
8,260
127
8,387
Group
2019
Restated**
£’000
4,022
(1,356)
2,666
4,111
1,244
8,021
180
8,201
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
3(b) Cost of Sales of Retail Products
Cost of sales represents the direct costs associated with the sale of retail products (boxes, packaging etc.), and
the ancillary sales of insurance cover for customer goods, all of which fall within the Group’s ordinary activities.
Retail
Insurance
Other
88
Group
2020
£’000
98
13
16
127
Group
2019
£’000
121
26
33
180
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 3(c) Other Income and Costs
Profit on sale of land at store1
Costs of sale & manage-back Crayford store2
Deferred financing on bank loan written off3
2019:
Group
2020
£’000
–
–
–
–
Group
2019
£’000
(295)
54
133
(108)
1
2
3
Profit on sale of land at store: During the year land at the rear of our Southampton store with a fair value of £500,000 was sold for £800,000. There was
£4,043 of associated costs of sale.
Costs of sale & manage-back Crayford store: On 28 February 2019 the Crayford store was sold at its fair value to an investment fund for £7.52 million in
cash. Lok’nStore will continue to manage the store maintaining the operational footprint of the business and will receive management and performance
fees. Legal and professional costs associated with this transaction amounted to £54,483.
Deferred financing on bank loan written off. In April 2019, the Group executed a new bank facility increasing facilities available by £25 million to £75
million, with a further £25 million accordion option taking the facility to £100 million. The deferred element of the original financing costs of £133,307
was accordingly written off.
4 Finance Income
Bank interest
Other interest
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Interest receivable arises on cash and cash equivalents (see note 17).
5 Finance Costs
Bank interest
Non-utilisation fees
Bank loan arrangement fees
Interest on lease liabilities
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Group
2020
£’000
29
–
29
Group
2020
£’000
510
183
137
296
1,126
Group
2019
Restated**
£’000
24
7
31
Group
2019
Restated**
£’000
452
89
64
321
926
89
Strategic ReportOverviewGovernanceFinancial Statements 6 Profit Before Taxation
Profit before taxation is stated after charging:
Depreciation and amounts written off property, plant and equipment:
Owned assets
Depreciation of right of use assets (IFRS 16) (Note 1)
Amortisation of intangible assets
Amounts payable to RSM UK Audit LLP and their associates for audit
and non-audit services:
Audit services
– UK statutory audit of the Company and consolidated accounts
Other services
– the auditing of accounts of subsidiaries of the Company pursuant to legislation
Other services supplied pursuant to such legislation
– interim review
– other services
Tax services
– compliance services
– advisory services
Comprising:
Audit services
Non-audit services
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Group
2020
£’000
Group
2019
Restated**
£’000
2,525
1,254
3,779
–
3,779
68
–
9
–
23
9
109
68
41
109
2,207
1,254
3,461
83
3,544
66
–
12
3
23
31
135
66
69
135
90
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 7 Employees
The average monthly number of persons (including Directors) employed by the Group
during the year was:
Store management
Administration
Costs for the above persons:
Wages and salaries
Social security costs
Pension costs
Share based remuneration (options)
Group
2020
No.
142
25
167
Group
2020
£’000
3,580
440
114
4,134
88
4,222
Group
2019
No.
132
24
156
Group
2019
£’000
3,446
424
85
3,955
46
4,001
Share based remuneration is separately disclosed in the statement of comprehensive income. Wages and salaries
of £91,815 (2019: £90,436) have been capitalised as additions to property, plant and equipment as they are directly
attributable to the acquisition of these assets. All other employee costs are included in staff costs in the statement
of comprehensive income.
In relation to pension contributions, there was £15,183 (2019: £13,217) outstanding at the year-end.
There were no employees employed by Lok’nStore Group plc in the year (2019: nil).
91
Strategic ReportOverviewGovernanceFinancial Statements 7 Employees continued
Directors’ Remuneration
Directors’
Remuneration 2020
Emoluments
£
Bonuses
£
Benefits
£
Sub total
£
Pension
£
Gains
on share
options
£
Total
£
Executive:
A Jacobs
RA Davies
N Newman-Shepherd
Non-Executive:
SG Thomas
RJ Holmes
ETD Luker
CP Peal
225,233
165,797
82,877
31,518
22,743
28,430
22.743
36,500
13,300
40,345
–
–
–
–
6,107
4,845
2,560
4.808
–
–
–
267,840
183,942
125,782
36,326
22,743
28,430
22.743
–
6,631
3,315
–
–
267,840
190,573
172,358
301,455
–
–
–
–
–
–
–
–
36,326
22,743
28,430
22,743
579,341
90,145
18,320
687,806
9,946
172,358
870,110
Directors’
Remuneration 2019
Emoluments
£
Bonuses
£
Benefits
£
Sub total
£
Pension
£
Executive:
A Jacobs
RA Davies
N Newman-Shepherd
Non-Executive:
SG Thomas
RJ Holmes
ETD Luker
CP Peal
220,816
160,968
78,931
30,900
22,297
27,873
22,297
38,250
22,641
64,034
–
–
–
–
5,435
4,612
2,364
4,804
–
–
–
264,501
188,221
145,329
35,704
22,297
27,873
22,297
–
4,829
2,631
–
–
–
–
Gains
on share
options
£
–
–
–
40,580
–
–
–
Total
£
264,501
193,050
147,960
76,284
22,297
27,873
22,297
564,082
124,925
17,215
706,222
7,460
40,580
754,262
Details of the Directors’ remuneration is shown above. Key management personnel are defined as the Directors of
the Group and the additional participants in the Partnership Performance Plan (PPP).
The highest paid Director did not accrue any pension rights during the year. The benefits in kind all relate to medical
insurance premiums paid on behalf of the Directors. The number of Directors to whom retirement benefits are
accruing under money purchase pension schemes in respect of qualifying service is two (2019: two).
92
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 8 Taxation
Current tax:
UK corporation tax
Deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of prior periods
Total deferred tax
Income tax expense for the year
**
Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
The charge for the year can be reconciled to the profit for the year as follows:
Profit before tax
Tax on ordinary activities at the effective standard rate of corporation tax in the UK of 19%
(2019: 19%)
Expenses not deductible for tax purposes
Depreciation of non-qualifying assets
Share based payment charges in excess of corresponding tax deduction
Impact of change in tax rate on closing deferred tax balances
Adjustments in respect of prior periods – deferred tax
Impact of change in tax rate on timing differences
Write-back of over provision
Other
Income tax expense for the year
Effective tax rate
Group
2020
£’000
920
730
66
796
1,716
2020
£’000
4,690
931
–
229
17
806
66
(157)
(153)
(23)
1,716
36%
Group
2019
Restated**
£’000
811
400
–
400
1,211
2019
Restated**
£’000
4,372
880
18
355
2
–
–
(17)
–
(27)
1,211
28%
**
Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
In addition to the amount charged to profit or loss for the year, deferred tax relating to the revaluation of the Group’s
properties of £3.7 million (2019: £2.3 million) has been recognised as a debit/credit directly in other comprehensive
income (see note 20 on deferred tax). Impact of change in the tax rate on closing deferred tax balances arises
because the deferred tax provision which used to be calculated at forward corporation tax rates of 17% is now
calculated at the substantively enacted corporation tax rate and has therefore reverted to 19%.
93
Strategic ReportOverviewGovernanceFinancial Statements 9 Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 July 2018 (7.67 pence per share)
Interim dividend for the year to 31 July 2019 (3.67 pence per share)
Final dividend for the year ended 31 July 2019 (8.33 pence per share)
Interim dividend for the year to 31 July 2020 (4.00 pence per share)
2020
£’000
–
–
2,413
1,159
3,572
2019
£’000
2,217
1,062
–
–
3,279
In respect of the current year the Directors paid an interim dividend of 4.0 pence per share to shareholders on
12 June 2020. The Directors propose that a final dividend of 9.00 pence per share will be paid to the shareholders.
The total estimated dividend to be paid is £2.6 million based on the number of shares in issue at 16 October 2020 as
adjusted for shares held in the Employee Benefits Trust.
This is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability
in these financial statements. The ex-dividend date will be 26 November 2020; the record date 27 November 2020;
with an intended payment date of 8 January 2020. The final deadline for Dividend Reinvestment Election (DRIP) is
11 December 2020.
10 Earnings per Share
The calculations of earnings per share are based on the following profits and numbers of shares.
Profit for the financial year attributable to continuing operations
Profit for the financial year attributable to discontinued operations
Total profit for the financial year attributable to owners of the Parent
Weighted average number of shares
For basic earnings per share
Dilutive effect of share options1
For diluted earnings per share
Group
2020
£’000
2,974
–
2,974
Group
2019
Restated**
£’000
3,161
2,182
5,343
2020
No. of shares
2019
No. of shares
28,976,967
28,921,229
517,257
481,848
29,494,224
29,403,077
1
Further options that could potentially dilute EPS in the future are excluded from the above because they are not dilutive in the period presented.
Full details of share options are included in notes 22 to 25.
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
94
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
Earnings per share
Basic
Continuing operations
Discontinued operations
Total basic earnings per share
Diluted
Continuing operations
Discontinued operations
Total diluted earnings per share
Group
2020
pence
10.26p
–
10.26p
10.08p
–
10.08p
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
11(a) Intangible Assets
Group
Cost at 1 August 2018
Amortisation at 1 August 2018
Amortisation charge
Amortisation at 31 July 2019
Disposal
Net book value at 31 July 2019 and 31 July 2020
Contractual
customer
relationships
£’000
3,309
(1,156)
(83)
(1,239)
(2,070)
–
Goodwill
£’000
1,110
–
–
–
(1,110)
–
Group
2019
Restated**
pence
10.93p
7.55p
18.48p
10.75p
7.42p
18.17p
Total
£’000
4,419
(1,156)
(83)
(1,239)
(3,180)
–
All goodwill and customer relationships were allocated to the serviced document storage cash-generating unit (CGU)
identified as a separate business segment.
In the previous year, on 31 January 2019 Lok’nStore disposed of its serviced document storage business Saracen
Datastore Limited (‘Saracen’) for £7.64 million in cash against its Net Book Value as at 31 July 2018 of £5.4 million and
which included the value of the intangible assets. The recoverable amount exceeds the carrying amount of the CGU.
95
Strategic ReportOverviewGovernanceFinancial Statements 11(b) Property, Plant and Equipment
Development
property
assets at
cost £’000
Land and
buildings
at valuation
£’000
Long
leasehold
land and
buildings at
valuation
£’000
Short
leasehold
improvements
at cost
£’000
Fixtures,
fittings and
equipment at
cost
£’000
Motor
vehicles
at cost
£’000
Group
Cost or valuation
1 August 2018
Additions
Additions –
Acquisition of subsidiary
16,570
108,486
6,667
–
2,804
–
11,438
1,493
–
Reclassification
(4,185)
17,116
(12,931)
Transfers
Disposals
Disposals – discontinued
operations
Revaluations
31 July 2019
Depreciation
1 August 2018
Depreciation
Disposals
Disposals –discontinued
operations
Revaluations
31 July 2019
Net book value at
31 July 2019
Cost or valuation
1 August 2019
Additions
Reclassification
Transfers
Disposals
Disposals – discontinued
operations
Revaluations
31 July 2020
1 August 2019
Depreciation
Disposals
Revaluations
31 July 2020
6
(616)
–
–
(6)
(8,058)
–
13,189
18,442
133,531
–
–
–
–
–
–
–
1,004
(428)
–
(576)
–
18,442
133,531
18,442
11,443
133,531
149
–
–
–
–
–
–
–
–
–
7,686
29,885
141,366
–
–
–
–
–
–
1,164
–
(1,164)
–
Net book value at
31 July 2020
29,885
141,366
96
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£’000
166,345
13,890
1,242
–
–
(9,783)
17
20
–
–
–
–
(7)
(2,358)
27,186
2,744
–
–
–
(1,109)
(2,267)
2,648
162
1,242
–
–
–
(84)
–
–
–
13,189
3,968
26,554
30
182,525
1,979
156
–
(57)
–
2,078
1,890
11,772
1,091
(726)
(640)
–
11,497
15,057
3,968
29
26,554
389
–
–
–
–
–
3,997
2,078
191
–
–
2,269
1,728
–
–
–
–
–
26,943
11,497
1,167
–
–
12,664
14,279
14
13,765
5
–
(7)
–
12
18
2,256
(1,154)
(704)
(576)
13,587
168,938
30
182,525
–
–
–
(20)
–
–
10
12
2
(4)
–
12,010
–
–
(20)
–
7,686
202,201
13,587
2,524
(4)
(1,164)
10
14,943
–
187,258
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
The Group has an active store development programme and in accordance with IAS 23 has material qualifying
assets that take a substantial period of time to develop from acquisition to ultimate store opening. Accordingly
borrowing costs of £382,190 (2019: £430,321) have been capitalised in the current year that are directly attributable
to the acquisition, construction and fit-out of these qualifying store assets. The total amount is carried in
development property assets.
If all property, plant and equipment were stated at historic cost the carrying value would be £91.6 million
(2019: £81.7 million).
Capital expenditure during the year totalled £12.0 million (2019: £14.0 million). This was primarily the purchase of our
Stevenage and Salford sites, the exchange of contracts at our Warrington site, and the completion of construction
works at our Leicester store which opened post-balance sheet in August 2020. Costs relating to the planning and
pre-development works on our Bournemouth, Bedford, and Cheshunt sites also featured.
Property, plant and equipment (non-current assets) with a carrying value of £187.3 million (2019: £168.9 million) are
pledged as security for bank loans.
Market Valuation of Freehold and Leasehold Land and Buildings
On 31 July 2020 a professional valuation was prepared by Jones Lang LaSalle Limited (JLL) in respect of 15
freehold, and eight leasehold properties. The valuation was prepared in accordance with the RICS Valuation – Global
Standards 2017, published by The Royal Institution of Chartered Surveyors (‘the RICS Red Book’) and the valuation
methodology is explained in more detail below. The valuations were prepared on the basis of Fair Value as a fully
equipped operational entity having regard to trading potential. The valuation was provided for accounts purposes
and as such, is a Regulated Purpose Valuation as defined in the Red Book. In compliance with the disclosure
requirements of the RICS Red Book JLL have confirmed that:
• This is the fourth year that JLL has been appointed to value the properties
• The valuers who prepared the valuation have the necessary skills and experience having been significantly
involved in the sector
• JLL do not provide other significant professional or agency services to the Company
•
In relation to the preceding financial year of JLL the proportion of the total fees payable by the Company to the
total fee income of the firm is less than 5% and is minimal
The valuation report indicates a total valuation for all properties valued of £168.4 million (2019: £162.7 million) of
which £151.7 million (2019: £144.0 million) relates to freehold properties, and £16.7 million (2019: £18.7 million) relates
to properties held under leases.
Freehold land and buildings are carried at valuation in the statement of financial position. Short leasehold improvements
at properties held under leases are carried at cost rather than valuation in accordance with IFRS.
For the trading properties the valuation methodology explained in more detail below is based on fair value as fully
equipped operational entities, having regard to trading potential. Of the £151.7 million (2019:144.0 million) valuation
of the freehold properties £12.3 million (2019: £13.0 million) relates to the net book value of fixtures, fittings and
equipment, and the remaining £139.4 million (2019: £131.0 million) relates to freehold and long leasehold properties.
The 2020 valuation includes and reflects movements in value which have resulted from the operational performance
of the stores and movements in the investment environment.
97
Strategic ReportOverviewGovernanceFinancial Statements 11(b) Property, Plant and Equipment continued
Valuation Methodology
Jones Lang LaSalle Limited (JLL) have adopted the profits method of valuation, and cross checked with the direct
comparison method based on recent transactions in the sector, which is the main method of pricing adopted by
purchasers of self-storage properties.
JLL have valued the assets on an individual basis and have disregarded any portfolio effect.
The profits method of valuation considers the cash flow generated by the trading potential of the self-storage facility.
Due to the specialised design and use of the buildings, the value is typically based on their ability to generate a net
income from operating as self-storage facilities.
JLL have constructed a discounted cash flow model. This sets out their explicit assumptions on the underlying cash
flow that they believe could be generated by a Reasonably Efficient Operator at each of the properties, both at the
valuation date and in the near future as the properties increase their occupancy and rates charged to customers.
Judgements are made as to the trading potential and likely long-term sustainable occupancy.
Stable occupancy depends upon the nature of demand, size of property and nearby competition, and allows for
a reasonable vacancy rate to enable the operator to sell units to new customers. In the valuation the assumed
stabilised occupancy level for the 23 trading stores (both freeholds and leaseholds) averages 84.9% (2019: 84.3%).
Expenditure is deducted (such as business rates, staff costs, repair and maintenance, utilities, marketing and
bad debts) as well as an operator’s charge which takes account of central costs. JLL also make an allowance
for long-term capex requirements where applicable. The assumptions used by JLL include:
• The cash flow for freeholds runs for an explicit period of 10 years, after which it is capitalised at an all risks yield
which reflects the implicit future growth of the business, or a hypothetical sale
• The cash flow for leaseholds continues for the unexpired term of the lease
• The discount rate applied has had regard to recent transactions, weighted average costs of capital and
target return in other asset types with adjustments made to reflect differences in the risk and liquidity profile
• The weighted average annual discount rate adopted (for both freeholds and leaseholds) is 8.70%
(2019: 10.09%). The yield arising from the first year of the projected cash flow is 6.08% (2019: 5.99%),
rising to 8.13% (2019: 8.74%) in year five
• JLL have assumed purchasers’ costs of 6.8% (2019: 6.8%)
• The average assumed stabilised occupancy is 84.9% (2019: 84.3%)
• The average exit yield assumed is 7.13% (2019: 7.22%)
The comparison method considers recent transactions where self-storage properties have sold, and then adjusts
them based on a multiple of current earnings, and a capital value per square foot. They are adjusted to reflect
differences in location, physical characteristics, local supply and demand, tenure and trading levels.
JLL reported that the Lok’nStore portfolio has generally performed very well in terms of increasing occupancy over
the course of the year which has driven the assumed stabilised occupancy higher.
For leaseholds the same methodology has been used as for freehold property, except that no sale of the assets in
the tenth year is assumed, but the discounted cash flow is extended to the expiry of the lease. The average unexpired
term of the Group’s operating leaseholds is approximately nine years and seven months as at 31 July 2020 (11 years
and 0 months: 31 July 2019). Valuations for stores held under leases are not reflected in the statement of financial
position and the assets in relation to these stores are carried at cost less accumulated depreciation.
In 2011, one of the Group store’s leases was renegotiated and includes a ten year option to renew the leases from
March 2026 to March 2036. The option to extend is only operable in the event that all four of the leases applicable
to this store are extended and this option is personal to Lok’nStore or another ‘major self-storage operator’, to be
98
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 approved by the landlord (approval not to be unreasonably withheld). The JLL valuation on this store is based on this
Special Assumption that the option to extend the lease for 10 years is exercised. This is consistent with the approach
taken in previous years.
The fair value hierarchy within which the Fair Value measurements are categorised is level 3, in accordance with
IFRS 13 fair value measurements.
Directors’ Valuation of Land and Property
The old Southampton store: Following the opening of the new Southampton store with the corresponding transfer
of all customers from the old Southampton store, the vacant building was redeveloped for cruise parking. In 2020
the Board concluded that management time and capital could be more effectively deployed within the self-storage
business and the operation was closed. Accordingly, the Directors placed their valuation on the current developed
site at £2.0 million (2019: £2.5 million) which is their best estimate of the potential realisable value of the site in current
market conditions.
The total value of land and property carried at Director Valuation at 31 July 2020 is £2.0 million (2019: £2.5 million).
11(c) Right of Use Assets (ROU)
Group Property Leases
Right of Use Asset (ROU) – opening balance
Depreciation of Right of Use Asset (ROU)
Right of Use Asset (ROU) – closing balance
Group
31 July
2020
IFRS 16
£’000
13,018
(1,254)
11,764
Group
31 July
2019
IFRS 16
Restated**
£’000
14,272
(1,254)
13,018
Group
31 July
2018
(Transition)
IFRS 16
Restated**
£’000
15,526
(1,254)
14,272
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
The application of IFRS 16 relates to the Groups property leases. The Group has no leases on any other types of assets.
To ensure consistency and effective comparison with prior periods, the Group has elected to apply the full
retrospective implementation approach with reinstatement of the comparative information. The transition date of
initial application is therefore 1 August 2018. The Present Value of all future operating lease payments is calculated
using 2.2% as an effective cost of debt as the single discount rate. This calculates an opening Right of Use Asset
(ROU) as at 1 August 2018 of £14.3 million.
The Right of Use Asset is depreciated on a depreciation charge based on the individual lease term of the
separate leases.
12 Disposal of Saracen Datastore Limited
On 31 January 2019 Lok’nStore disposed of its serviced document storage business Saracen Datastore Limited
(‘Saracen’) for £7.64 million in cash against its Net Book Value as at 31 July 2018 of £5.4 million.
In the short term the disposal proceeds were used to reduce overall Group borrowing and will improve all key
banking ratios. In the medium term the disposal proceeds will be used to fund the ongoing investment into our highly
accretive development pipeline of new self-storage centres, fulfilling the Company’s objective of growing asset value
by recycling capital from lower growth assets into high growth landmark stores.
The proceeds of disposal net of disposal costs was treated as a receipt in Investing Activities in the Consolidated
Cash Flow Statement and contributed £6.85 million to the increase in cash and cash equivalents in the previous year.
99
Strategic ReportOverviewGovernanceFinancial Statements 12 Disposal of Saracen Datastore Limited continued
Key amounts relating to the discontinued operation are as follows:
Revenue
Expenses
EBITDA
Depreciation
Finance income/costs
Profit before tax
Tax
Profit after tax
Profit on disposal of subsidiary
After tax disposal profit
Total profit on discontinued operations
31 July
2020
£’000
31 July
2019
Restated**
£’000
–
–
–
–
–
–
–
–
–
–
–
1,156
(902)
254
(48)
3
209
8
217
1,965
1,965
2,182
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Before disposal, Saracen contributed £1.16 million to the Group’s revenue and £0.25 million to its EBITDA in the
period up to its disposal on 31 January 2019. The carrying value of Saracen’s assets and liabilities that were sold
on 31 January 2019 was as follows:
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Receivables
Cash
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets disposed of
Cash proceeds (net of fees/costs of disposal)
Profit on disposal
£’000
3,180
1,654
4,834
5
722
508
1,235
6,069
(603)
(79)
(682)
5,387
7,352
1,965
The profit on disposal was included in profit on discontinued operations in the consolidated statement of comprehensive
income. The Group believes that Substantial Shareholder Relief would be available on the gain made on the disposal
of the shares. Proceeds from disposal of discontinued operation (net of disposal costs and cash included in sale) is
presented as an investing activity in the consolidated statement of cash flows.
100
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 13 Investments
Company Investments in subsidiary undertakings
31 July 2018
Capital contributions arising from share-based payments
31 July 2019
Capital contributions arising from share-based payments
31 July 2020
£’000
2,418
46
2,464
88
2,552
The Company holds more than 20% of the share capital of the following companies, all of which are incorporated in
England and Wales:
Lok’nStore Limited3,5
Lok’nStore Trustee Limited1,3,4
Southern Engineering and Machinery
Company Limited1,3,5
Semco Machine Tools Limited2,5,5
Semco Engineering Limited2,3,5
Saracen Datastore Limited1,5,6
ParknCruise Limited1,4
The Box Room (Self Storage) Limited1,4
% of shares and voting rights held
Class of
shareholding
Directly
Indirectly
Nature of entity
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
Self-storage
Trustee
Self-storage
Dormant
Dormant
Serviced Document Storage
Dormant
Self-storage
1
2
3
4
5
6
These companies are subsidiaries of Lok’nStore Limited.
These companies are subsidiaries of Southern Engineering and Machinery Company Limited and did not trade during the year.
These companies have taken the exemption from audit under Section 479A of the Companies Act 2006.
The address of these companies is 112, Hawley Lane, Farnborough, Hants. GU14 8JE.
The address of these companies is 1, Fleet Place London EC4M 7WS.
The serviced document storage business was sold in the previous year.
14 Inventories
Consumables and goods for resale
Group
2020
£’000
270
Group
2019
£’000
298
The amount of inventories recognised in cost of sales as an expense during the year was £97,966 (2019: £120,954).
(See Note 3(b)).
15 Trade and Other Receivables
Trade receivables
Other receivables
Prepayments and accrued income
Group
2020
£’000
746
2,451
431
3,628
Group
2019
£’000
1,055
2,270
382
3,707
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
101
Strategic ReportOverviewGovernanceFinancial Statements 15 Trade and Other Receivables continued
Other receivables include monies receivable from the managed stores for services provided by the Group and also
includes a £0.61 million VAT repayment owed to the Group by HMRC which was received post year-end.
The following balances existed between the Company and its subsidiaries at 31 July:
Net amount due from Lok’nStore Limited
Company
2020
£’000
25,867
Company
2019
£’000
14,576
The amount due from Lok’nStore Limited is interest free. The balance is repayable on demand.
Trade receivables
In respect of its self-storage business the Group does not typically offer credit terms to its customers and hence the
Group is not exposed to significant credit risk. All customers are required to pay in advance of the storage period.
Late charges are applied to a customer’s account if they are more than 10 days overdue in their payment. The
Group provides for receivables based upon sales levels and estimated recoverability. There is a right of lien over the
customers’ goods, so if they have not paid within a certain time frame the Company has the right to sell the items
they store to cover the debt owed by the customer. Trade receivables that are overdue are provided for based on
estimated irrecoverable amounts, determined by reference to expected credit losses.
For individual self-storage customers the Group does not perform credit checks. However, this is mitigated by the
fact that all customers are required to pay in advance. Before accepting a new business customer who wishes to
use a number of the Group’s stores, the Group uses an external credit rating to assess the potential customer’s
credit quality and defines credit limits by customer. There are no customers who represent more than 5% of the total
balance of trade receivables.
Included in the Group’s trade receivables balance are receivables with a carrying amount of £110,668 (2019:
£55,049) which are past due at the reporting date for which the Group has not provided as there has not been a
significant change in credit quality and the amounts are still considered recoverable. The Group holds a right of lien
over its self-storage customers’ goods if these debts are not paid. The average age of these receivables is 54 days
past due (2019: 51 days past due).
Ageing of past due but not impaired receivables
0–30 days
30–60 days
60+ days
Total
Movement in the allowance for credit losses
Balance at the beginning of the year
Impairment losses recognised
Amounts written off as uncollectible
Balance at the end of the year
102
Group
2020
£’000
16
16
79
111
Group
2020
£’000
191
20
(22)
189
Group
2019
£’000
14
4
37
55
Group
2019
£’000
165
39
(13)
191
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the
Directors believe that there is no further provision required.
Ageing of impaired trade receivables
0–30 days
30–60 days
60+ days
Total
16 Trade and Other Payables
Trade payables
Taxation and social security costs
Other payables
Accruals and deferred income
Group
2020
£’000
–
–
189
189
Group
2020
£’000
1,275
137
777
2,487
4,676
Group
2019
£’000
–
–
191
191
Group
2019
£’000
640
388
1,115
2,610
4,753
The Directors consider that the carrying amount of trade and other payables approximates fair value.
17 Financial Instruments
Capital management and gearing
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of
the Group consists of debts, which include the borrowings disclosed in note 18, cash and cash equivalents and equity
attributable to the owners of the Parent, comprising issued capital, reserves and retained earnings as disclosed
in the Consolidated Statement of Changes in Equity. The Group’s banking facilities require that management give
regular consideration to interest rate hedging strategy. The Group has complied with this during the year.
The Group’s Board reviews the capital structure on an on-going basis. As part of this review, the Board considers the
cost of capital and the risks associated with each class of capital. The Group seeks to have a relatively conservative
gearing ratio (the proportion of net debt to equity) balancing the overall level with the opportunities for the growth of
the business. The Board considers at each review the appropriateness of the current ratio in light of the above. The
Board is currently satisfied with the Group’s gearing ratio.
The gearing ratio at the year-end is as follows:
Gearing – Bank Borrowings
Gross debt
Cash and cash equivalents
Net debt
Total equity – balance sheet
IFRS restatement
Adjusted total equity
Net debt to equity ratio
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
Group
2020
£’000
(51,322)
13,066
(38,255)
121,382
692
122,074
31.3%
Group
2019
Restated**
£’000
(42,972)
13,662
(29,310)
116,550
608
117,158
25.0%
103
Strategic ReportOverviewGovernanceFinancial Statements 17 Financial Instruments continued
Capital management and gearing continued
Total Gearing – Bank Borrowings and lease liabilities
Gross debt – bank borrowings
Gross debt – lease liabilities
Cash and cash equivalents
Net debt
Total equity – balance sheet
Net debt to equity ratio
Group
2020
£’000
(51,322)
(12,455)
13,066
(50,711)
121,382
41.8%
Group
2019
Restated**
£’000
(42,972)
(13,626)
13,662
(42,936)
116,550
36.8%
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
The modest increase in the Group’s gearing ratio arises principally through the combined effect of an increase in the
value of its trading properties, and the cash generated from operations. These effects on gearing were offset by the
purchase of our Stevenage and Salford sites, the exchange of contracts at our Warrington site, and the completion
of construction works at our Leicester store which opened post-balance sheet in August 2020. Costs relating to the
planning and pre-development works on our Bournemouth, Bedford, and Cheshunt sites also featured.
Exposure to credit and interest rate risk arises in the normal course of the Group’s business.
A Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of interest rates. The Group previously has hedged
through the deployment of interest rate swaps although the Group had no such instruments in place at 31 July 2019
or 31 July 2020. The Board continues to keep its hedging policy under periodic review.
B Debt management
Debt is defined as non-current and current borrowings, as detailed in note 18. Equity includes all capital and reserves
of the Group. The Group is not subject to externally imposed capital requirements.
The Group borrows through a joint revolving credit facility with Royal Bank of Scotland plc and Lloyds Banking Group
secured on its store portfolio and other Group assets, excluding intangibles, with a net book value of £187.3 million
(2019: £168.9 million). Borrowings are arranged to ensure the Group fulfils its strategy of growth and development
of its stores and to maintain short-term liquidity. As at the reporting date the Group has a committed revolving credit
facility of £75 million (2019: £75 million). This facility provides an accordion £25 million which, although uncommitted,
can take the facility to £100 million and runs to 2024 with an option of two one year extensions. Undrawn committed
facilities at the year-end amounted to £23.7 million (2019: £32.0 million).
C Interest rate risk management
The Group’s policy on interest rate management is agreed at Board level and is reviewed on an on-going basis.
All borrowings are denominated in Sterling and are detailed in note 18. The Group has a number of revolving loans
within its overall revolving credit facility and as such is exposed to interest rate risks at the time of renewal arising
from any upward movement in the LIBOR rate.
Cash balances held in current accounts attract no interest but surplus cash is transferred daily to a treasury deposit
account which earns interest at the prevailing money market rates1. All amounts are denominated in Sterling. The
balances at 31 July 2020 are as follows:
104
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 Variable rate treasury deposits1
SIP trustee deposits
Cash in operating current accounts
Other cash and cash equivalents
Total cash and cash equivalents
Group
2020
£’000
11,608
63
1,385
10
13,066
Group
2019
£’000
12,232
63
1,357
10
13,662
1 Money market rates for the Group’s variable rate treasury deposit track Royal Bank of Scotland plc base rate.
The Interest rate between August 2019 and 28 May 2020 was 0.30% on balances greater than £1 million and 0.20%
on balances below £1 million. This rate had been in place since 2 August 2018. On 29 May 2020, the rate on the
account changed to a flat rate of 0.01% Gross/AER on all balances.
The rate attributable to the variable rate deposits at 31 July 2020 was 0.01%.
The Group reviews the current and forecast projections of cash flow, borrowing and interest cover as part of its
monthly management accounts review. In addition, an analysis of the impact of significant transactions is carried out
regularly, as well as a sensitivity analysis of the impact of movements in interest rates on gearing and interest cover.
D Interest rate sensitivity analysis
Over the longer term, significant changes in interest rates may have an impact on consolidated earnings.
At 31 July 2020, it is estimated that an increase of one percentage point in interest rates would have reduced the
Group’s annual profit before tax by £513,222 (2019: £429,717) and conversely a decrease of one percentage point
in interest rates would have increased the Group’s annual profit before tax by £513,222 (2019: 429,717). There would
have been no effect on amounts recognised directly in other comprehensive income. The sensitivity has been
calculated by increasing by 1% the average variable interest rate of 1.69% applying to the variable rate borrowings
of £51.3 million in the year (2019: £43.0 million/2.11%).
E Cash management and liquidity
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking
facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities. Included in note B above is a description of additional undrawn
facilities that the Group has at its disposal to further reduce liquidity risk.
Short-term money market deposits are used to manage liquidity whilst maximising the rate of return on cash
resources, giving due consideration to risk.
F Foreign currency management
The Group operates solely in the United Kingdom and as such all of the Group’s financial assets and liabilities are
denominated in Sterling and there is no exposure to exchange risk.
G Credit risk
The credit risk management policies of the Group with respect to trade receivables are discussed in note 15. There
has not been a significant change in credit quality. The Group has a robust credit model with customers paying
four-weekly in advance for their storage. The Group has no significant concentration of credit risk, with exposure
spread across over 12,500 customers and with no individual self-storage customer accounting for more than 1%
of total revenue and no group entities under common control (e.g. Government) accounting for more than 10% of
total revenues. The Group holds a right of lien over its self-storage customers’ goods if customer debts are not paid
although this is used relatively infrequently within the context of overall customer numbers and only ever as a final
stage in the debt recovery process.
105
Strategic ReportOverviewGovernanceFinancial Statements 17 Financial Instruments continued
G Credit risk continued
The credit risk on liquid funds is limited because the counterparty is a bank with high credit ratings assigned by
international credit-rating agencies, in line with the Group’s policy which is to borrow from major institutional banks
when arranging finance.
The Group’s maximum exposure to credit risk at 31 July 2020 was £2.40 million (2019: £3.38 million) on receivables
and £13.1 million (2019: £13.7 million) on cash and cash equivalents.
H Maturity analysis of financial liabilities
The undiscounted contractual cash flow maturities are as follows:
2020 – Group
Over five years
From two to five years
From one to two years
Due after more than one year
Due within one year
Total contractual undiscounted cash flows
2019 – Group
Over five years
From two to five years
From one to two years
Due after more than one year
Due within one year
Total contractual undiscounted cash flows
I Fair values of financial instruments
Categories of financial assets and financial liabilities
Financial assets
Trade and other receivables1
Cash and cash equivalents
Financial liabilities
Trade and other payables
Bank loans
Trade and other
payables
£’000
Borrowings
£’000
Interest on
borrowings
£’000
–
–
–
–
2,585
2,585
–
51,322
–
51,322
–
51,322
–
2,364
865
3,229
865
4,094
Trade and other
payables
£’000
Borrowings
£’000
Interest on
borrowings
£’000
–
–
–
–
2,199
2,199
–
42,972
–
42,972
–
42,972
Group
2020
£’000
3,610
13,066
(2,585)
(50,705)
–
2,474
906
3,380
906
4,286
Group
2019
Restated**
£’000
3,992
13,662
(2,199)
(42,331)
1
Includes £361,460 relating to fees receivable in 2022 from the Aldershot managed store currently classified as a non-current asset (measured at fair value).
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
106
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 The fair values of the Group’s cash and short-term deposits and those of other financial assets equate to their
carrying amounts. The Group’s receivables and cash and cash equivalents are all classified as loans and receivables
and carried at amortised cost. The amounts are presented net of provisions for doubtful receivables and allowances
for impairment are made where appropriate. Trade and other payables and bank borrowings are all classified as
financial liabilities measured at amortised cost.
J Company’s financial instruments
The Company’s financial assets are amounts owed by subsidiary undertakings amounting to £25,9 million (2019:
£14.6 million) which are classified as loans and receivables, and the investment in its subsidiary undertaking of £2.55
million (2019: £2.46 million). These amounts are denominated in Sterling, are non-interest bearing, are unsecured and
fall due for repayment within one year. No amounts are past due or impaired. The Company has no financial liabilities.
18 Borrowings
Bank borrowings
Non-current
Bank loans repayable in more than two years but not more than five years
Gross
Deferred financing costs
Net bank borrowings
Non-current borrowings
Group
2020
£’000
51,322
(617)
50,705
50,705
Group
2019
£’000
42,972
(641)
42,331
42,331
The Group has a joint £75 million five year revolving credit facility banking facility with Lloyds Bank and Royal Bank
of Scotland plc. The facility provides an accordion £25 million which can take the facility to £100 million and runs to
April 2025 with an option of a one year extension.
The Group currently has £51.3 million drawn against its facility which is secured with RBS and Lloyds jointly by legal
charges and debentures over the freehold and leasehold properties and other tangible assets of the business with a net
book value of £187.8 million (2019 £168.9 million) together with cross-company guarantees from Group companies.
On 14 July 2020, the Group implemented a one year extension on its existing joint banking facility. The facility which
was due to expire in April 2024, will now run until April 2025 providing funding for more landmark site acquisitions.
The £75 million five year revolving credit facility set the interest rate margin at the London Inter-Bank Offer Rate (LIBOR)
plus 1.50%–1.75% based on a loan to value covenant test. This rate is 1.50% currently and our current all in debt
cost on £51.2 million drawn is averaging 1.6%-1.7%.
Bank covenants and margin are unaffected by this extension of term.
19 Lease Liabilities
To ensure consistency and effective comparison with prior periods, the Group has elected to apply the full
retrospective implementation approach with reinstatement of the comparative information. The transition date of
initial application is therefore 1 August 2018. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the leases. Where
this cannot be readily determined the Present Value of all future operating lease payments is calculated using 2.2%
as an effective cost of debt as the discount rate.
After the application of a weighted depreciation charge based on the individual lease term of the separate leases and
the imputation of an interest charge at 2.2% as part of the amortisation of the lease liability the total lease liabilities
stated under the first-time adoption of IFRS 16 is shown below. The impact of the adoption of IFRS 16 is also set
out in note 1 of the financial statements.
107
Strategic ReportOverviewGovernanceFinancial Statements 19 Lease Liabilities continued
Lease liabilities attributable to Right of Use assets
Current lease liabilities
Amounts due within one year
Non-current lease liabilities
Amounts due in one to two years
Amounts due in three to five years
Amounts due in more than five years
Non-current lease liabilities
Total lease liabilities
Lease liabilities attributable to Right of Use assets
Balance B/Fwd
Lease repayments
Lease interest (non-cash)
Total lease liabilities
Group
2020
£’000
Group
2019
Restated**
£’000
1,298
1,171
1,326
2,881
6,950
11,157
12,455
Group
2020
£’000
13,626
(1,467)
296
12,455
1,298
3,352
7,805
12,455
13,626
Group
2019
Restated**
£’000
14,662
(1,356)
320
13,626
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
The application of IFRS 16 relates to the Group’s property leases. The portfolio of property leases all have similar
characteristics. Subject to periodic future rent reviews, typically every five years, there are no variable lease payments.
The Group has no leases on any other types of assets.
The total cash outflow for leases is set out in note 30 (Commitments under property leases).
20 Deferred Tax
Deferred tax liability
Liability at start of year
Charge to income for the year – continued operations
Charge to income for the year – discontinued operations
Total charge to income for the year
Tax charged directly to other comprehensive income
Tax credited – disposal of subsidiary
Initial recognition on acquisition of subsidiary
(Credit)/debit to share-based payment reserve
Liability at end of year
108
Group
2020
£’000
22,385
796
–
796
3,602
–
–
(23)
26,760
Group
2019
£’000
19,735
400
32
432
2,327
(134)
24
1
22,385
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 The following are the major deferred tax liabilities and assets recognised by the Group and the movements during
the year:
At 1 August 2019
Charge/(credit) to income
for the year
Charge to other comprehensive
income
Reclassification following
store disposal
Charge to share-based
payment reserve
At 31 July 2019
Charge/ (credit) to income
for the year
Charge to other
comprehensive income
Charge to share-based
payment reserve
At 31 July 2020
Accelerated
Capital
Allowances
£’000
Other
temporary
differences
£’000
Revaluation
of
properties
£’000
Rolled
over gain
on disposal
£’000
2,879
336
383
(14)
–
–
–
3,215
434
–
–
–
–
–
369
110
–
–
14,568
2,146
–
2,327
(558)
–
16,337
–
3,602
–
–
–
558
–
2,704
252
–
–
Share
options
£’000
(241)
–
–
–
1
Total
£’000
19,735
322
2,327
–
1
(240)
22,385
–
–
796
3,602
(23)
(23)
3,649
479
19,939
2,956
(263)
26,760
The increase in the deferred tax liability arises substantially from a combination of an increase in the valuation of the
Group’s stores and a rise in forward tax rates which used to be calculated at forward corporation tax rates of 17%
and is calculated at the substantively enacted corporation tax rate and has therefore reverted to 19%. The deferred
tax provision is substantially a tax provision against the potential crystallisation (sales) of revalued properties and
past ‘rolled over’ gains and amounts to £26.8 million (2019: £22.4 million) – the crystallisation of which is within the
Board’s control.
21 Share Capital
Authorised:
35,000,000 Ordinary Shares of 1 penny each (2019: 35,000,000)
Allotted, issued and fully paid Ordinary Shares
Balance at start of year
Options exercised during the year 85,171 (2019: 195,692)
Balance at end of year
Number of shares at start of the year
Options exercised during the year
Number of shares at end of the year
The Company has one class of Ordinary Shares which carry no right to fixed income.
2020
£’000
350
£’000
296
1
297
2019
£’000
350
£’000
295
1
296
Called up,
allotted and
fully paid
Number
Called up,
allotted and
fully paid
Number
29,583,786
29,498,615
49,504
85,171
29,633,290
29,583,786
109
Strategic ReportOverviewGovernanceFinancial Statements 22 Equity Settled Share-based Payment Plans
The Group operates three equity-settled share-based payment plans; one approved and two unapproved share
option schemes.
The Company has the following share options:
2020
Summary
Unapproved Share Options
(refer note 24(a))
Unapproved Share Options
(PPP Scheme) – refer note 24(b))
Approved CSOP Share Options
(refer note 25)
Total
2019
Summary
Unapproved Share Options
(refer note 24(a))
Unapproved Share Options
(PPP Scheme) – refer note 24(b))
Approved CSOP Share Options
(refer note 25)
As at
31 July 2019
No of options
Granted
Exercised
Lapsed/
surrendered
750,851
8,945
(44,692)
540,000
290,000
–
–
–
As at
31 July 2020
No of options
715,104
830,000
94,939
11,079
(4,812)
(3,271)
97,935
1,385,790
310,024
(49,504)
(3,271)
1,643,039
As at
31 July 2018
No of options
Granted
Exercised
817,551
3,300
(70,000)
140,000
400,000
–
Lapsed/
surrendered
As at
31 July 2019
No of options
–
–
750,851
540,000
92,199
15,673
(9,952)
(2,981)
94,939
Total
1,049,750
418,973
(79,952)
(2,981)
1,385,790
The following table shows options held by Directors under all schemes.
Total at
31 July
2019
Options
granted
Options
Exercised/
lapsed
Unapproved
Scheme
Approved
CSOP share
options
Total at
31 July
2020
2020
Executive Directors
A Jacobs – Unapproved
A Jacobs – PPP
A Jacobs – total
RA Davies – Unapproved
RA Davies – CSOP
RA Davies – PPP
RA Davies – total
206,087
80,000
286,087
246,977
7,742
80,000
334,719
–
40,000
40,000
–
–
40,000
40,000
–
–
–
–
–
–
–
206,087
120,000
326,087
246,977
–
120,000
366,977
N Newman-Shepherd – Unapproved
172,421
N Newman-Shepherd – CSOP
N Newman-Shepherd – PPP
N Newman-Shepherd – total
Non-Executive Directors
10,661
120,000
303,082
–
–
(36,822)
135,599
(2,043)
–
60,000
60,000
180,000
315,599
–
–
–
–
–
–
–
7,742
–
7,742
–
8,618
–
8,618
206,087
120,000
326,087
246,977
7,742
120,000
374,719
135,599
8,618
180,000
324,217
SG Thomas – Unapproved
5,217
–
5,217
–
5,217
All Directors – total
929,105
140,000
(38,865)
1,013,880
16,360
1,030,240
110
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
Total at
31 July
2018
Options
granted
Options
Exercised/
lapsed
Unapproved
Scheme
Approved
CSOP share
options
Total at
31 July
2019
2019
Executive Directors
A Jacobs – Unapproved
A Jacobs – PPP
A Jacobs – total
RA Davies – Unapproved
RA Davies – CSOP
RA Davies – PPP
RA Davies – total
N Newman-Shepherd – Unapproved
N Newman-Shepherd – CSOP
N Newman-Shepherd – PPP
206,087
–
206,087
246,977
7,742
–
254,719
172,421
10,661
–
N Newman-Shepherd – total
183,082
Non-Executive Directors
–
80,000
80,000
–
–
80,000
80,000
–
–
120,000
120,000
–
–
–
–
–
–
–
–
–
–
–
206,087
80,000
286,087
246,977
–
80,000
326,977
172,421
–
–
–
–
7,742
–
7,742
–
–
10,661
120,000
292,421
–
10,661
206,087
80,000
286,087
246,977
7,742
80,000
334,719
172,421
10,661
120,000
303,082
SG Thomas – Unapproved
25,217
–
All Directors – total
669,105
280,000
(20,000)
(20,000)
5,217
910,702
–
5,217
18,403
929,105
The grant of options to Executive Directors and senior management is recommended by the Remuneration Committee
on the basis of their contribution to the Group’s success. The options vest after two and a half, three or five years,
subject to the performance criteria attached to the options.
Under the CSOP Approved Share Option scheme (Note 25) and the Unapproved Share Options scheme (Note 24(a)),
the exercise price of the options is equal to the closing mid-market price of the shares on the trading day previous to
the date of the grant. Exercise of an option is subject to continued employment or in the case of unapproved options
at the discretion of the Board. The life of each option granted is six and a half to seven years. There are no cash
settlement alternatives.
The rules governing the PPP scheme are disclosed in Note 24(b).
Under the CSOP Approved Share Option scheme (Note 25) and the Unapproved Share Options scheme (Note 24(a)),
the expected volatility is based on a historical review of share price movements over a period of time, prior to the
date of grant, commensurate with the expected term of each award. The expected term is assumed to be six and
a half years which is part way between vesting (two and a half to three years after grant) and lapse (10 years after
grant). The risk free rate of return is the UK gilt rate at date of grant commensurate with the expected term (i.e. six
and a half years).
Under the Partnership Performance Plan (Note 24(b)), the expected volatility is based on a historical review of share
price movements over a period of time, prior to the date of grant, commensurate with the expected term of each
award. For options granted on 31 July 2020, the expected term is assumed to be 12.4 years, which is halfway
between vesting and lapse. For options granted on 31 January 2020, the expected term is assumed to be 11.2 years.
The vesting date is based upon the assumption that the CAD and/or NAV targets are met at the same time as the
share price target is met, and the lapse date is the fifteenth anniversary of the grant. The risk free rate of return is
the UK gilt rate at date of grant commensurate with the expected term (i.e. 12.4 years).
The total charge for the year relating to employer share-based payment schemes was £87,990 (2019: £46,221), all of
which relates to equity-settled share-based payment transactions.
111
Strategic ReportOverviewGovernanceFinancial Statements
23 Enterprise Management Initiative Scheme
The Company operated a share option scheme under the Enterprise Management Initiative (EMI).
The Group has for some years no longer met the EMI Scheme qualifying criteria. Accordingly, there were no options
issued under this scheme during the year, and no options remained at the year-end. The scheme is now closed.
24(a) Unapproved Share Options
The Company issues unapproved share options, the vesting conditions of which have been met.
Movements in the year are shown below:
Outstanding at 1 August
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 July
Exercisable at 31 July
Weighted
average
exercise price
2020
pence
178.76
570.00
–
130.22
179.08
171.04
Options
2020
number
750,851
8,945
–
(44,692)
715,104
698,514
Weighted
average
exercise price
2019
pence
174.59
527.00
–
146.46
178.76
164.43
Options
2019
number
817,551
3,300
–
(70,000)
750,851
704,982
The options outstanding at 31 July 2020 had a weighted average remaining contractual life of 6.7 years (2019: 6.6 years).
The exercise prices for shares exercisable at 31 July 2020 ranged from 56.50 pence per share to 387.50 pence
per share.
The following sets out the movements in the year in respect of unapproved share options held by the Directors of
the Company.
As at
31 July
2019
206,087
A Jacobs
S Thomas
5,217
R Davies
246,977
N Newman-Shepherd 172,421
Total
630,702
Granted
Exercised/
lapsed
As at
31 July
2020
Exercise
price
£
Date from
which
exercisable
–
–
–
–
–
–
–
–
206,087 1.085 – 2.855
5,217 2.070 – 2.855
246,977
0.850 – 2.135
(36,822)
135,599 1.360 – 3.875
(36,822)
593,880
31/7/15 –
6/8/18
31/7/17 –
6/8/18
31/7/10 –
31/7/17
31/7/16 –
31/7/20
Expiry
date
31/7/22 –
6/8/25
31/1/24 –
6/8/25
31/7/17 –
31/7/27
31/7/18 –
31/7/27
112
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 24(b) Unapproved Share Options – Partnership Performance Plan (PPP)
On 2 July 2019 the Group adopted the Company Partnership Performance Plan (PPP).
The Plan is a discretionary benefit offered by the Company for the benefit of selected key employees. Its main
purpose is to increase the interest of the employees in the Group’s long-term business goals and performance
through share ownership.
Shares purchased or received under the Plan, any cash received under the Plan and any gains obtained under the
Plan are not part of salary for any purpose except to any extent required by statute.
The Remuneration Committee of the Board of the Company shall have the right to decide, in its sole discretion,
whether or not awards will be granted and to which employees those awards will be granted.
A summary of the structure and rules of the Plan are set out below:
Structure
• Options are granted on Lok’nStore Group plc shares
• The exercise price is at £6 is well above the current price to allow the issuance of more options increasing
member returns if ambitious targets are hit
• Options are to be issued to participants in five annual tranches from July 2019 to July 2022
• Participants will have 10 years to exercise from vesting dates
• Performance criteria are geared to achievement of ambitious long-term plan
• Performance targets of share price, NAV and CAD thresholds for each award. NAV and CAD thresholds to be
determined each year by the Remuneration Committee
• Alternative exercise methods can be considered by the Group:
— Participants may exercise and hold – paying tax arising
— Participants may exercise and sell – paying tax arising
— Group delivers net profit to participants in cash or shares
Main Rules & Conditions
• Conditional on participants remaining in employment with the Group
• Replaces LTPRP for participating members
• Existing cash bonus schemes remain in place
• All options vest if there is a change of control
•
Includes Good/Bad Leaver clauses
• The Scheme is entirely at the discretion of the Remuneration Committee who act on behalf of the Board
Movements in the year are shown below:
Outstanding at 1 August 2019
Granted during the year
Outstanding at 31 July 2020
Exercisable at 31 July 2020
Weighted
average
exercise price
pence
600.00
600.00
600.00
–
Options
number
540,000
290,000
830,000
–
113
Strategic ReportOverviewGovernanceFinancial Statements 24(b) Unapproved Share Options – Partnership Performance Plan (PPP) continued
The following unapproved share options have been granted to Directors of the Company during the year.
As at
31 July
2019
40,000
40,000
–
80,000
40,000
40,000
–
80,000
60,000
60,000
Granted
–
–
40,000
40,000
–
–
40,000
40,000
–
–
As at
31 July
2020
40,000
40,000
40,000
120,000
40,000
40,000
40,000
120,000
Exercise
price
pence
600.00
600.00
600.00
Date from which
exercisable
Expiry
date
31/07/2023
31/07/2033
31/07/2024
31/07/2034
31/07/2025
31/07/2035
600.00
600.00
600.00
31/07/2023
31/07/2033
31/07/2024
31/07/2034
31/07/2025
31/07/2035
60,000
600.00
31/07/2023
31/07/2033
60,000
600.00
31/07/2024
31/07/2034
–
60,000
60,000
600.00
31/07/2025
31/07/2035
120,000
60,000
180,000
A Jacobs
A Jacobs
A Jacobs
A Jacobs –
Total
R Davies
R Davies
R Davies
R Davies –
Total
N Newman–
Shepherd
N Newman–
Shepherd
N Newman–
Shepherd
N Newman–
Shepherd –
Total
25 CSOP Approved Share Options
On 2 June 2010 the Group adopted a Company Share Option Plan (CSOP). The CSOP achieved HMRC approval on
28 June 2010. There are no performance conditions attached to share options issued under CSOP.
Movements in the year are shown below:
Outstanding at 1 August
Granted during the year
Forfeited/surrendered during the year
Exercised during the year
Outstanding at 31 July
Exercisable at 31 July
Weighted
average
exercise price
2020
pence
261.68
570.00
489.17
264.51
376.83
294.58
Options
2020
number
94,939
11,079
(3,271)
(4,812)
97,935
55,942
Weighted
average
exercise price
2019
pence
311.59
527.00
402.50
269.79
261.68
241.78
Options
2019
number
92,199
15,673
(2,981)
(9,952)
94,939
42,204
The options outstanding at 31 July 2020 had a weighted average remaining contractual life of 9.9 years (2019: 10.5
years). The exercise prices for shares exercisable at 31 July 2020 ranged from 207.0 pence per share to 387.5 pence
per share.
114
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 The inputs into the Black-Scholes model used to value the options granted during the year are as follows:
Share price
at date
of grant
pence
Expected
life (years)
10.50
9.90
527.00
570.00
Exercise
price
pence
527.00
570.00
Expected
volatility (%)
Expected
dividend
yield (%)
Risk free
interest rate
(%)
25.02
33.52
2.15
2.16
0.44
0.00
Fair value
charge
per award
pence
96.0
141.00
Date of grant
31 July 2019
31 July 2020
The following CSOP approved share options have been granted to Directors of the Company.
R Davies
N Newman-Shepherd
As at
31 July
2019
7,742
10,661
18,403
Granted
–
–
–
Exercised/
lapsed
–
As at
31 July
2020
7,742
Exercise
price
pence
3.875
(2,043)
8,618 1.360 – 3.875
Date from
which
exercisable
31/7/20
31/7/14
– 31/7/20
Expiry
Date
31/7/27
31/7/21
–31/7/27
–
16,360
26(a) Other Reserves
Group
1 August 2018
Share based remuneration (options)
IFRS 2 – transfer (to)/from retained earnings
Tax charge relating to share options
Merger
reserve
£’000
6,295
–
–
–
Other
reserve
£’000
1,294
–
–
–
31 July 2019
6,295
1,294
Share based remuneration (options)
IFRS 2 – transfer (to)/from retained earnings
Tax charge relating to share options
–
–
–
–
–
–
31 July 2020
6,295
1,294
Capital
redemption
reserve
£’000
Share-
based
payment
reserve
£’000
34
–
–
–
34
–
–
–
34
740
46
(51)
(1)
734
88
(14)
24
832
Total
£’000
8,363
46
(51)
(1)
8,357
88
(14)
24
8,455
The merger reserve represents the excess of the nominal value of the shares issued by Lok’nStore Group plc over the
nominal value of the share capital and share premium of Lok’nStore Limited as at 31 July 2001. The other distributable
reserve and the capital redemption reserve arose in the year ended 31 July 2004 from the purchase of the Company’s
own shares and a cancellation of share premium.
Share based payment reserve
Under IFRS 2 there is the option to make transfers from the share-based payment reserve to retained earnings in
respect of accumulated share option charges where the options have either been exercised or have lapsed post-vesting.
The total amounts calculated and accordingly transferred to retained earnings amounted to £13,760 (2019: £51,295).
115
Strategic ReportOverviewGovernanceFinancial Statements 26(b) Other Reserves
Company
1 August 2019
Share based remuneration (options)
IFRS 2 – transfer to/from retained earnings
31 July 2019
Share based remuneration (options)
IFRS 2 – transfer to/from retained earnings
31 July 2020
27(a) Retained Earnings
Group
1 August 2018
Effect of new accounting standard – IFRS 16
As at 1 August 2018 – restated
Profit attributable to owners of Parent for the financial year
Transfer from revaluation reserve
(Additional depreciation on revaluation)
Transfer from share-based payment reserve (Note 26a)
Dividend paid
Asset disposals
31 July 2019
Profit attributable to owners of Parent for the financial year
Transfer from revaluation reserve
(Additional depreciation on revaluation)
Transfer from share-based payment reserve (Note 26a)
Dividend paid
31 July 2020
Other
reserve
£’000
1,114
–
–
1,114
–
–
1,114
Share-based
payment
reserve
£’000
729
46
(51)
724
88
(14)
798
Total
£’000
1,843
46
(51)
1,838
88
(14)
1,912
Retained
earnings before
deduction of
own shares
Restated**
£’000
Own shares
(note 26)
£’000
Retained
earnings
Total
Restated**
£’000
19,844
(389)
19,455
5,343
304
51
(3,279)
4,927
26,801
2,974
378
14
(3,572)
26,595
(500)
–
(500)
–
–
–
–
–
(500)
–
–
–
–
(500)
19,344
(389)
18,955
5,343
304
51
(3,279)
4,927
26,301
2,974
378
14
(3,572)
26,095
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
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.
116
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
27(b) Retained Earnings
Company
1 August 2018
Profit attributable to owners of Company for the financial year
Transfer from share-based payment reserve (Note 26b)
Dividend paid
31 July 2019
Profit attributable to owners of Company for the financial year
Transfer from share-based payment reserve (Note 26b)
Dividend paid
31 July 2020
28 Own Shares
Retained
earnings before
deduction of
own shares
£’000
Own shares
(note 26)
£’000
3,870
3,774
51
(3,279)
4,416
14,792
14
(3,572)
15,650
–
–
–
–
–
–
–
–
–
Retained
earnings
Total
£’000
3,870
3,774
51
(3,279)
4,416
14,792
14
(3,572)
15,650
31 July 2019 and 31 July 2020
EBT
shares
Number
623,212
EBT
shares
£
499,910
Treasury
shares
Number
–
Treasury
shares
£
Own shares
total
£
–
499,910
The Group operates an Employee Benefit Trust (EBT) under a settlement dated 8 July 1999 between Lok’nStore
Limited and Lok’nStore Trustee Limited, constituting an employees’ share scheme.
Funds are placed in the trust by way of deduction from employees’ salaries on a monthly basis as they so instruct
for purchase of shares in the Company. Shares are allocated to employees at the prevailing market price when the
salary deductions are made.
As at 31 July 2020, the Trust held 623,212 (2019: 623,212) Ordinary Shares of 1 penny each with a market value of
£3,552,308 (2019: £3,284,327). No shares were transferred out of the scheme during the year (2019: nil).
No options have been granted under the EBT. The EBT waived its dividends in full. No other dividends were waived
during the year.
117
Strategic ReportOverviewGovernanceFinancial Statements 29 Cash Flows
(a) Reconciliation of profit before tax to cash generated from operations
Profit before tax – continuing operations
Profit before tax – discontinued operations
Total profit before tax
Depreciation
Amortisation of intangible assets
Equity settled share-based payments
Profit on sale of land at store
Profit on disposal of Saracen business
Costs of sale and manage-back – Crayford store
Deferred financing on bank loan written off
Interest receivable
Interest payable – bank borrowings
Interest payable – lease liabilities
Decrease/(increase) in inventories
Decrease in receivables
(Decrease) in payables
Cash generated from operations
Six months ended
31 January 2020
Unaudited
£’000
Year ended
31 July 2019
Audited
Restated**
£’000
4,690
–
4,690
3,779
–
88
–
–
–
–
(29)
830
296
28
79
(61)
9,700
4,372
2,174
6,546
3,695
83
46
(296)
(1,967)
54
133
(31)
602
342
(41)
768
(389)
9,545
** Details of the restatements following the adoption of IFRS 16 are made in note 1 to the financial statements.
(b) Reconciliation of net cash flow to movement in net debt
Net debt is defined as non-current and current borrowings, as detailed in note 18 less cash and cash equivalents.
(Decrease)/increase in cash in the year
Change in net debt resulting from cash flows
Movement in net debt in year
Net debt brought forward
Net debt carried forward
Group
2020
£’000
(596)
(8,350)
(8,946)
(29,310)
(38,255)
Group
2019
£’000
8,672
(5,637)
3,035
(32,345)
(29,310)
118
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020 30 Commitments Under Property Leases
At 31 July 2020 the total future minimum lease payments as a lessee under non-cancellable leases were as follows:
Land and buildings
Amounts due:
Within one year
Between two and five years
After five years
Group
2020
£’000
1,575
5,041
7,811
14,427
Group
2019
£’000
1,517
5,358
8,165
15,040
Property lease payments represent rentals payable by the Group for certain of its properties. Typically, leases are
negotiated for a term of 20 years and rentals are fixed for an average of five years.
Under the first-time adoption of IFRS 16, the Group’s property leases on its leased stores are now recognised
as a ‘Right of Use Asset’ and as a corresponding liability at the year–end. This is fully explained in Note 1 of the
financial statements.
31 Related Party Transactions
The Company provides share options for the employees of Lok’nStore Limited. The capital contributions arising from
these share-based payments are separately disclosed under investments in note 13.
The aggregate remuneration of the Directors, and the other key management personnel of the Group, is set out
below. Further information on the remuneration of individual Directors is found in note 7.
Short term employee benefits – Directors
Short term employee benefits – Other key management
Post-employment benefits – Directors
Post-employment benefits – Other key management
Share-based payments
Total
Group
2020
£’000
965
328
10
10
88
Group
2019
£’000
892
311
7
7
46
1,401
1,263
The Group recognises a number of management personnel that are important to retain within the business in order
for it to achieve its strategic plan. Accordingly, these are recognised as key personnel and are participants in the
Long Term Performance Plan. They are included in the table above.
119
Strategic ReportOverviewGovernanceFinancial Statements 31 Related Party Transactions continued
Group Director shareholdings – dividends received
In respect of the total dividends paid during the year of £3,572,001 (2019: £3,279,691), the Group Directors received
the amounts set out in the table below:
Directors’ Dividend Income
Executive:
A Jacobs
Ray Davies
N Newman-Shepherd
Non-Executive:
SG Thomas
RJ Holmes
ETD Luker
CP Peal
Final 2019
8.33 pence
per share
£
Interim 2020
3.33 pence
per share
£
Holding
No.
Total 2020
£
Total 2019
£
5,203,600
433,460
208,144
641,644
590,202
64,329
17,164
1,530,000
273,674
28,800
644,222
4,759
1,430
127,473
22,797
2,399
53,064
2,573
566
61,200
10,947
1,152
25,769
7,332
1,996
7,166
1,570
188,673
192,677
33,744
3,551
78,833
31,035
3,266
58,914
7,761,789
645,382
310,351
955,733
884,830
Managed Stores – Group Director shareholdings
Although the Director holdings in Managed Stores falls outside of the definition of related party transactions they are
disclosed here for transparency and are set out in the table below: -
Director
Andrew Jacobs
Charles Peal
Simon Thomas
Total shareholding
Issued Share Capital
% of Issued Share Capital
Chichester
No of shares
Broadstairs
No of shares
Exeter
No of shares
36,800
38,160
–
–
36,800
189,341
19.4%
–
–
38,160
240,000
500,000
160,000
900,000
189,690
3,970,000
20.1%
22.7%
32 Capital Commitments and Guarantees
The Group has capital expenditure contracted but not provided for in the financial statements of £2.97 million
(2019: £5.56 million) relating to commitments to complete the purchase of a site in Warrington and on which
contracts have been exchanged, building contracts on its Leicester development site as well as building retentions
outstanding on the completed Maidenhead, Wellingborough and Ipswich stores.
33 Bank Borrowings
The Company has guaranteed the bank borrowings of Lok’nStore Limited, a subsidiary company. As at the year-end,
that company had gross bank borrowings of £51.3 million (2019: £43.0 million).
120
Lok’nStore Group plc Annual Report and Accounts 2020Notes to the Financial Statements continuedFor the year ended 31 July 2020
34 Events after the Reporting Date
i.
Novel Coronavirus (COVID-19) Update: Since the outbreak of the Novel Coronavirus (COVID-19) was declared
a ‘Global Pandemic’ by the World Health Organization on the 11th March 2020, we have reported comprehensively
on the up to date COVID-19 position and this is contained within the Chairman’s Statement. Trading since the
year-end has continued to be positive and is consistent with the strong finish to the financial year.
ii.
Leicester store opening: Following completion of its store development, the Leicester store opened post
year-end in early August 2020. The 57,500 sq. ft. store is in a highly prominent location opposite a major food
retailer in the heart of Leicester’s busy retail district. Early trading has been encouraging.
iiI. Share buyback (Purchases in Own Shares): On 25 September 2020, Lok’nStore, bought back 8,000 Ordinary
Shares of 1p each in the market at a price of 519.0 pence per Ordinary Share (‘Buy-back’). The Ordinary Shares
acquired will be held in treasury.
Lok’nStore announced that on 2 October 2020 it bought back 29,972 Ordinary Shares of 1p each in the market
at a price of 517.5 pence per Ordinary Share. The Ordinary Shares acquired will be held in treasury.
Following the Buyback, the issued share capital of the Company is 29,641,559 Ordinary Shares of which 37,972
are now held in treasury. The total number of voting rights in the Company, excluding Treasury shares will
therefore be 29,603,587.
iv. Purchase of Peterborough site: On 23 October 2020 the Group acquired a site in Peterborough. The site
occupies a central location in the city, prominently positioned on the access route to a large and busy retail park
with neighbouring occupiers including B&Q, Aldi, Curry’s and Argos. The purchase is subject to the successful
receipt of a planning permission for a 45,000 sq. ft. purpose built landmark self-storage facility.
121
Strategic ReportOverviewGovernanceFinancial Statements
Glossary
Abbreviation
APM
Alternative performance measures
Adjusted EBITDA
Earnings before all depreciation and amortisation charges, losses or profits on disposal,
share-based payments, acquisition costs, and non-recurring professional costs, finance income,
finance costs and taxation
Adjusted Store EBITDA
Adjusted EBITDA (see above) but before central and head office costs
AGM
APD
Bps
CAC
CAD
Capex
CGU
CO2e
CSOP
EBT
eKPIs
EMI
ESOP
EU
GHG
HMRC
IAS
IFRIC
IFRS
ISA
JLL
LIBOR
LFL
LTPPP
LTV
MWh
NAV
NBV
Annual General Meeting
Auditing Practices
Basis Points
Contributory asset charges
Cash available for Distribution
Capital Expenditure
Cash generating units
Carbon Dioxide Equivalents
Company Share Option Plan
Employee Benefit Trust
Environmental key performance indicators
Enterprise Management Incentive Scheme
Employee Share Option Plan
European Union
Greenhouse gas
Her Majesty’s Revenue & Customs
International Accounting Standard
International Financial Reporting Interpretations Committee
International Financial Reporting Standards
International Standards on Auditing
Jones Lang LaSalle
London Interbank Offered Rate
Like for like
Long Term Partnership Performance Plan
Loan to Value Ratio
Megawatt Hour
Net Asset Value
Net Book Value
Operating Profit
Earnings before interest and tax (EBIT)
PPP
PV
QCA
RICS
SIP
SME
Sq. ft.
tCO2e
TVR
VAT
122
Partnership Performance Plan
Photovoltaic
Quoted Companies Alliance
Royal Institution of Chartered Surveyors
Share Incentive Plan
Small and medium sized enterprises
Square Feet
Tonnes of carbon dioxide equivalent
Total voting rights
Value Added Tax
Lok’nStore Group plc Annual Report and Accounts 2020 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
Owned Trading Stores
Basingstoke, Hampshire
Crockford Lane
Chineham
Basingstoke
Hampshire
RG24 8NA
Tel 01256 474700
basingstoke@loknstore.co.uk
Bristol, Gloucestershire
Longwell Green Trade Park
Aldermoor Way
Bristol
Gloucestershire
BS30 7ET
Tel 0117 967 7055
Bristol@loknstore.co.uk
Cardiff, Glamorgan
234, Penarth Road
Cardiff
Glamorgan
Wales
CF11 8LR
Tel 0292 022 1901
Cardiff @loknstore.co.uk
Eastbourne, East Sussex
Unit 4, Hawthorn Road
Eastbourne
East Sussex
BN23 6QA
Tel 01323 749222
eastbourne@loknstore.co.uk
Fareham, Hampshire
26 + 27 Standard Way
Fareham Industrial Park
Fareham
Hampshire
PO16 8XJ
Horsham, West Sussex
Blatchford Road
Redkiln Estate
Horsham
West Sussex
RH13 5QR
Tel 01329 283300
fareham@loknstore.co.uk
Tel 01403 272001
horsham@loknstore.co.uk
Farnborough, Hampshire
Ipswich, Suffolk
112 Hawley Lane
Farnborough
Hampshire
GU14 8JE
Tel 01252 511112
farnborough@loknstore.co.uk
Gillingham, Kent
Courteney Road
Gillingham
Kent
ME8 0RT
Tel 01634 366044
gillingham@loknstore.co.uk
Harlow, Essex
Edinburgh Way
Temple Fields
Harlow
Essex
CM20 2GF
7a Futura Park
Futura Park
Ipswich
Suffolk
IP3 9QH
Tel 01473 794940
exeter@loknstore.co.uk
Luton, Bedfordshire
27 Brunswick Street
Luton
Bedfordshire
LU2 0HG
Tel 01582 721177
luton@loknstore.co.uk
Maidenhead, Berkshire
Stafferton Way
Maidenhead
Berkshire
SL6 1AY
Tel 01279 882366
harlow@loknstore.co.uk
Tel 01628 878870
maidenhead@loknstore.co.uk
Hedge End, Southampton
Milton Keynes, Buckinghamshire
Units 2 & 3
Waterloo Industrial Estate
Flanders Rd
Hedge End
Southampton
SO30 2QT
Tel 01489 787005
HedgeEnd@loknstore.co.uk
Etheridge Avenue
Brinklow
Milton Keynes
Buckinghamshire
MK10 0BB
Tel 01908 281900
miltonkeynes@loknstore.co.uk
123
Strategic ReportOverviewGovernanceFinancial Statements Our Stores continued
Owned Trading Stores
continued
Northampton Central,
Northamptonshire
16 Quorn Way
Grafton Street Industrial Estate
Northampton
Northamptonshire
NN1 2PN
Tel 01604 629928
nncentral@loknstore.co.uk
Northampton Riverside,
Northamptonshire
Units 1–4, Carousel Way
Northampton
Northamptonshire
NN3 9HG
Tel 01604 785522
northampton@loknstore.co.uk
Poole, Dorset
50 Willis Way
Fleetsbridge
Poole
Dorset
BH15 3SY
Tel 01202 666160
poole@loknstore.co.uk
Portsmouth, Hampshire
Rudmore Square
Portsmouth
Hampshire
PO2 8RT
Tel 02392 876783
portsmouth@loknstore.co.uk
Reading, Berkshire
251 A33 Relief Road
Reading
Berkshire
RG2 0RR
Tel 01189 588999
reading@loknstore.co.uk
Southampton, Hampshire
Cheshunt, Hertfordshire
Third Avenue
Southampton
Hampshire
SO15 0JX
Tel 02380 783388
southampton@loknstore.co.uk
Sunbury, Middlesex
Unit C, The Sunbury Centre
Hanworth Road
Sunbury on Thames
Middlesex
TW16 5DA
Tel 01932 761100
sunbury@loknstore.co.uk
Tonbridge, Kent
Unit 6 Deacon Trading Estate
Vale Road
Tonbridge
Kent
TN9 1SW
Tel 01732 771007
tonbridge@loknstore.co.uk
Wellingborough,
Northamptonshire
19/21 Whitworth Way
Wellingborough
Northamptonshire
NN8 2EF
Tel 01634 366044
gillingham@loknstore.co.uk
Development Locations –
LNS Owned Stores
Bedford, Bedfordshire
69 Cardington Road
Bedford
Bedfordshire
NK42 0BQ
Bournemouth, Dorset
Land at Wessex Field
Deansleigh Road
Bournemouth
Dorset
BH7 7DU
Land lying on the South Side
of Halfhide Lane
Turnford
Hertfordshire
EN8 0FH
Leicester, East Midlands
21 Freemens Common Road
Leicester
East Midlands
LE2 7SL
Tel 0116 497 0785
leicester@loknstore.co.uk
(Opened August 2020)
Stevenage, Hertfordshire
Part of Land at Plot 2000
Stevenage Business Park Gunnels
Wood Road
Stevenage
Hertfordshire
SG1 2BL
Warrington, Cheshire
Land at Winwick Road
Warrington
Cheshire
WA2 7PF
Wolverhampton, Staffordshire
Land at Pantheon Park
Wednesfield Way
Wolverhampton
Staffordshire
WV11 3DR
Salford, Lancashire
1 North Phoebe Street
Salford
Lancashire
M5 4EA
Managed Stores – Trading
Aldershot, Hampshire
251, Ash Road
Aldershot
Hampshire
GU12 4DD
Tel 0845 4856415
aldershot@loknstore.co.uk
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Lok’nStore Group plc Annual Report and Accounts 2020 Ashford, Kent
Wotton Road
Ashford
Kent
TN23 6LL
Tel 01233 645500
ashford@loknstore.co.uk
Broadstairs, Kent
Unit 2, Pyramid Business Park,
Poorhole Lane,
Broadstairs,
Kent
CT10 2PT
Dover, Kent
White Cliffs Business Park
Honeywood Parkway
Dover
Kent
CT16 3FF
Tel 01304 827353
dover@loknstore.co.uk
Exeter, Devon
1 Matford Park Road
Exeter
Devon
EX2 8ED
Tel 01843 863253
broadstairs@loknstore.co.uk
Tel 01392 823989
exeter@loknstore.co.uk
Chichester, West Sussex
Gloucester, Gloucestershire
17, Terminus Road
Chichester
West Sussex
PO19 8TX
Tel 01243 771840
chichester@loknstore.co.uk
Crawley, West Sussex
Sussex Manor Business Park
Gatwick Road
Crawley
West Sussex
RH10 9NH
Tel 01293 738530
crawley@loknstore.co.uk
Crayford, Kent
Block B
Optima Park
Thames Road
Crayford
Kent
DA1 4QX
Tel 01322 525292
crayford@loknstore.co.uk
Metz Way
Triangle Park
Gloucester
Gloucestershire
GL1 1AH
Tel 01452 938082
gloucester@loknstore.co.uk
(Opened February 2020)
Hemel Hempstead, Hertfordshire
Fortius Point
47, Maylands Avenue
Hemel Hempstead
Hertfordshire
HP2 7DE
Tel 01442 240768
hemelhempstead@loknstore.co.uk
Oldbury, West Midlands
6 Churchbridge
Oldbury
West Midlands
B69 2AP
Tel 0121 5446309
Oldbury@loknstore.co.uk
(Opened February 2020)
Swindon, Wiltshire
Kembrey Street
Elgin Industrial Estate
Swindon
Wiltshire
SN2 8UY
Tel 01793 421234
swindoneast@loknstore.co.uk
Managed stores –
Under Development
Chester, Cheshire
58-64 Sealand Road
Chester
Cheshire
CH1 4LD
Kettering, Northamptonshire
Site between Pytchley Lane
and Pytchley Road
Kettering
Northamptonshire
NN15 6XB
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Head Office
Lok’nStore Group plc
112 Hawley Lane
Farnborough
Hampshire
GU14 8JE
T. 01252 521010
www.loknstore.co.uk
www.loknstore.com
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