Lok'nStore Group Plc Annual Report 2023

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FY2023 Annual Report · Lok'nStore Group Plc

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Lok’nStore Group plc

Annual Report
and Accounts

For the year ended 31 July 2023

’

Overview
02 Highlights
04 Chair’s Statement
10 Key Performance Indicators
12 Group at a Glance

Strategic Report
16 The UK Self-Storage Market

at a Glance

18 Our Business Model
20 Our Strategy
21 Managing Director’s Review
28 Property Review
34 Financial Review
43 Section 172 Statement
44 Principal Risks and Uncertainties

Environmental and Social
51 Environmental Targets and

Commitments

52 Environmental Management

Performance

54 Our Environmentally Progressive Stores
55 Social

Governance
62 Board of Directors and Advisers
64 Corporate Governance
72 Directors’ Report
77 Remuneration Report
81 Statement of Directors’ Responsibilities
Independent Auditor’s Report to the
82
Members of Lok’nStore Group plc

Financial Statements
90 Consolidated Statement
of Comprehensive Income
91 Consolidated Statement
of Changes in Equity

92 Company Statement

of Changes in Equity

93 Consolidated and Company

Statements of Financial Position

94 Consolidated Statement

of Cash Flows
95 Accounting Policies
106 Notes to the Financial Statements
142 Glossary
144 Our Store Locations

Lok’nStore Group plc Annual Report and Accounts 2023

Dynamic new store
opening schedule
driving future
growth.

We are a leading Company in the
fast-growing UK self-storage market.
We opened our first store in February
1995 and have grown consistently
over the last 28 years with 42 stores
operating across England and Wales.

We have been listed on the
AIM market since June 2000.

We operate both our Owned Stores
and Managed Stores for third
party owners. Storage services
are available to both household
and business customers at
Lok’nStore’s highly branded
and visually prominent buildings.

To find out more visit:
www.loknstore.co.uk/investors

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsHighlights

Lok’nStore, the AIM listed self-storage company,
is pleased to announce its Preliminary Results for
the year ended 31 July 2023.

SAME STORE SELF
STORAGE REVENUE

£25.30m

£22.57m

ADJUSTED TOTAL
ASSETS4*

£370.9m £395.4m

up 12.1%

up 6.4%

SAME STORE SELF
STORAGE ADJUSTED EBITDA

£13.9m £14.5m

ADJUSTED NET ASSET
VALUE5* PER SHARE

up 4.0%

up 1.5%

22 23

PRICING PER SQ. FT.

£25.62 £27.37

up 6.8%

22 23

ANNUAL DIVIDEND
PER SHARE

up 10.1%

£9.72 £9.87

22 23

19.00p

17.25p

22 23

“Lok’nStore’s business has once again moved
ahead with Same Store Self Storage revenue
up 12.1%. Demand for UK self-storage assets
remains strong, and this, coupled with our
new store openings, has driven our Net
Asset Value up by 1.4% to £9.86 per share.
We are proposing a 10.1% increase in the
annual dividend, the twelfth year of increased
dividends in a row. The net debt is low and LTV
is only 3.7%.”

“Trading since the year-end continues to be in
line with expectations. We have opened two
new Landmark stores and are on site at three
more which will open within the next 12 months
which can be completed using cash. These
new stores will add further momentum to sales,
earnings and net asset growth.”

Andrew Jacobs

Chair of Lok’nStore Group plc

Lok’nStore Group plc Annual Report and Accounts 2023SOLID
GROWTH OF SAME
STORE REVENUE

INCREASE
IN NET ASSET VALUE
PER SHARE

DYNAMIC
NEW STORE OPENING
SCHEDULE DRIVING
FUTURE GROWTH

We sold four stores on a sale and manage-back arrangement on
31 January 2022 adding circa £37 million to cash, reinforcing our strong
financial footing. (‘the Sale’)

STRONG REVENUE GROWTH

NET ASSET VALUE UP

• Same Store Self Storage Revenue15

£25.30 million up 12.1% (2022: £22.57 million)

• Adjusted Net Asset Value5 per share up 1.4%
to £9.86 per share (2022: £9.72 per share)

• Same Store Self Storage Adjusted EBITDA1
£14.5 million up 4.0% (2022: £13.9 million)

• Group Revenue £27.1 million up 0.9%

(2022: £26.9 million)

• Group Adjusted EBITDA1 £15.1 million

down 7.9% (2022: £16.3 million)

DRIVEN BY SOLID OPERATING METRICS

• Pricing up 6.8% to £27.37 per sq. ft.

(2022: £25.62 per sq. ft.)

• Closing occupancy in stores over
3 years old 80.6% (2022: 82.9%)

• Move-ins up 4.9% year-on-year

• Managed Store recurring revenue

£1.5 million up 11.9% (2022: £1.3 million)

MANAGEMENT OF COSTS

• External cost increases experienced

in year, specifically in energy, insurance
and interest charges – we expect the
rate of these cost increases to abate

• Same Store store15 EBITDA margins although
lower remain robust at 57.2% (2022: 61.3%)

TWELFTH CONSECUTIVE YEAR OF
DIVIDEND INCREASE

• Annual dividend increased by 1.75 pence to

19.00 pence per share up 10.1% (2022: 17.25
pence per share) – covered 1.5x by CAD

DISCIPLINED CAPITAL ALLOCATION
UNDERPINS OUR STRONG BALANCE
SHEET AND LOW NET DEBT

• £20.5 million (gross) equity raised in July 2023

• £42.1 million cash at year-end

(2022: £46.5 million)

• Net debt (excluding lease liabilities and
deferred finance costs) reduced to
£12.3 million (2022: £20.3 million)

• Loan to Value Ratio6 (net of cash) down

to 3.7% (2022: 6.6%)

DYNAMIC PIPELINE8 OF NEW LANDMARK
STORES WILL DELIVER FURTHER GROWTH

• Two new Landmark stores opened – 108,890
sq. ft. of new owned space added up 9.7%

• Three new Landmark stores on site will add
over 162,000 sq. ft. of new trading space

WELL POSITIONED FOR THE FUTURE

• Trading momentum continues post year-end
with stores revenue up 6.3% for August and
September 2023 compared to the same
corresponding two-month period last year

• Flexibility to respond to market circumstances

This Same Store analysis and all other Alternative Performance Measures (APMs) denoted by
superscripts are explained in the key performance indicators (KPIs) definitions on page 10.

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsChair’s Statement

“ Solid trading, increased Asset
Values and low net debt”
Andrew Jacobs

Chair

I am delighted to be reporting
another year of good results
for Lok’nStore, delivering a
strong operating and financial
performance.

These results can be summarised as:

• Solid growth of Same Store14

revenue

•

Increase in Net Asset Value
per share

• Rate of cost increases abating

• 10.1% increase in annual dividend

• Low net debt and LTV

• Dynamic new store opening

schedule driving future growth

– Two new Landmark stores

opened

– Three further Landmark stores

to open in FY24

These results demonstrate
Lok’nStore’s delivery of growth in
long-term shareholder return through
all stages of the economic cycle. The
significant and continued investor
interest in the UK self-storage sector
demonstrated by market transactions
underpins the increased value of our
assets and our strategy to open more
Landmark stores.

The detail behind these results
is discussed further in our
Financial Review.

Further Strengthening the
Balance Sheet
On 7 July 2023, the Company raised
total gross proceeds of approximately
£20.5 million through the issue of
2,679,739 new Ordinary Shares via
a Placing and REX Retail Offer, at
a price of 765 pence per Ordinary
Share. The Fundraising Shares
represented approximately 8.9% of
the Company’s issued share capital.

As a result, we have new
shareholders as well as existing
institutional shareholders who have
increased their shareholdings. We
are also particularly pleased that
existing smaller retail shareholders
participated via the REX offer. I would
like to thank existing shareholders for
their support and welcome our new
shareholders to the Company.

In the previous financial year 2022,
the Group completed the Sale. This
transaction added sales proceeds of
c. £37 million to cash balances.

These two strategic actions reinforced
the Company’s excellent financial
position with low net debt. A
conservative capital structure and a
strong Balance Sheet remain a key
focus. We report a year-end LTV ratio
(net of cash) of only 3.7% (2022: 6.6%)
and a low level of net debt of only
£12.3 million, down from £20.3 million
in the previous year (refer to note 29b).

Continued Revenue Growth
Driven by Strong Demand
In the year we have replaced all the
revenue generated from the four
established stores sold last year,
which is a great performance and
at a headline level we report a 0.9%
increase in Group Revenue. Same
Store Group Revenue remains strong
with growth of 6.6% over last year.

Customer demand remains significantly
above levels seen pre-pandemic
and this year has continued to move
ahead with total move-ins up 4.9%
compared to last year. This continuing
strong demand from new customers
combined with our dynamic pricing
management has resulted in a total
increase in pricing over the past three
years of 31.2%. Our pricing moved
forward by 6.8% in the last 12 months.

Management of
Cost Increases
At a headline level, total Group
Operating Costs amounted to £11.8
million for the period (2022: £10.4
million) up by 14.2%. On a Same
Store basis costs have increased
by 17.8% compared to last year.

As previously reported at the half year,
we have seen significant external cost
increases primarily through energy
costs, which have risen in the year by
£1.2 million compared to the same
period last year, a trebling of the
previous year’s energy costs.

Lok’nStore Group plc Annual Report and Accounts 2023ANNUAL DIVIDEND 19 PENCE PER SHARE UP 10.1%

£17.3m

INVESTED IN NEW
STORES THIS YEAR

1.4%

INCREASE IN NET
ASSET VALUE PER
SHARE TO £9.86

In the coming year we expect this
major change in energy costs to abate
and then decline in FY25.

Interest costs have also risen
significantly. The cash costs of bank
interest paid (before capitalisation of
interest costs, non-utilisation fees and
loan amortisation fees) in the year was
£3.1 million compared to £1.3 million
last year. The average costs of debt
over the year was 4.77%. With rates
rising throughout the year the Group’s
current cost of debt at year-end was
6.19%. Currently, interest on our active
drawn loans is 6.68%.

We now have clarity on future
business rates, following the
publishing of the revaluation listing
which took effect from April 2023.
This will result in our business rates
increasing £0.49 million per annum
from April 2023 and by a further £0.20
million per annum from April 2024.

We have robust EBITDA margins
which provide a shelter to the
business against these external
cost increases. This is supported
by our ability to move our own
pricing forward.

We have a strong record of disciplined
cost control. In FY24 we expect
Same-Store operating costs to
increase more modestly, driven
mainly by revised business rates with
other costs increases more muted.

From FY25, we expect operating
costs to increase more slowly with
cost increases mainly being driven
by the expansion of store numbers
so revenue growth flows into earnings.

Increase In Net Asset Value
I am pleased to report an increase
of 1.4% in the Adjusted Net Asset
Value per share to £9.86 per share
(2022: £9.72 per share) (31 January
2023 £9.15 per share).

Since the last year-end at 31 July
2022 we have seen significant
changes in the debt markets. As
a result, Jones Lang LaSalle (JLL),
consider that the yields and discount
rates which were applied at the July
2022 year-end have changed. On
our owned freehold trading stores
we have seen exit yields increase on
average by 33 basis points to 5.79%,
with discount rates increasing by
45 basis points to 7.47%.

These changes have been fully
offset by improved cash flows and
the extension of the lease at our
Eastbourne store. This demonstrates
the impact operating performance has
on asset values and why one of our
key objectives remains to fill existing
stores and continue improving pricing.

The Exit Yield and Discount Rates
applied in the valuations are validated
by transactional evidence. There is
continued strong institutional investor
appetite in the UK self-storage sector.
JLL comment that “The self-storage
market has had strong market activity
since July 2022 which reflects the
continued appetite for the sector but
the higher cost of debt in the present
finance market is having an impact.
The sector’s operational resilience
in the current climate is making it a
popular asset class with investors –
this is accentuated with its structural
undersupply”.

Our new Bedford and Peterborough
Landmark stores had their maiden
external valuation in July 2023, which
were accretive to asset value. We
have two further Owned Stores in
Staines and Basildon opening in FY24
and expect these to add momentum
to Net Assets with their maiden
external valuations at July 2024.

More details on the valuation of our
trading stores can be found on page
31 and in note 12(a) of the financial
statements on page 112.

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsChair’s Statement continued

Further Dividend Growth
The Directors are proposing a final
dividend of 13.25 pence per share an
increase of 8.2% (2022: 12.25 pence)
following the interim dividend payment
of 5.75 pence per share in June
2023, bringing the total distribution
for the year to 19 pence per share, an
increase of 1.75 pence per share up
10.1% (2022: 17.25 pence per share)
and our twelfth year of increase in
a row.

Subject to approval at the Company’s
AGM on 7 December 2023 the final
dividend will be paid on 5 January
2024 to shareholders on the register
on 24 November 2023. The ex-
dividend date will be 23 November
2023. The final deadline for Dividend
Reinvestment Election by investors is
8 December 2023.

Investment In New Stores
This year we invested £17.3 million in
new store development adding 12%
to our owned stores trading space.
We opened two new owned stores in
Bedford and Peterborough. Trading
at our new stores continues to meet
expectations and this underpins our
confidence that our pipeline will add
further to sales and earnings growth.

We are on site at three Stores, in
Staines, Basildon, and Kettering
(managed) which will all open in the
coming 12 months. The remaining
capital expenditure required to
complete the Staines and Basildon
stores is £12.7 million, all of which can
be paid out of cash. We are due to go
on site shortly at Bromborough, Wirral
on behalf of a third party Managed
Store client.

Self-storage generally benefits
from the short lead time between
breaking ground and store opening of
around twelve months. We have only
committed future capital expenditure
at the two owned stores where we
are on site, both of which will be open
within the next 12 months. We have
a high degree of flexibility regarding
start dates for further building at
other sites. We can therefore adapt
our development programme quickly
to react to changing economic
circumstances.

The pipeline progress is discussed
further in the Property Review on
pages 29 and 30.

Lok’nStore Group plc Annual Report and Accounts 2023Managed Stores
Our strategy includes growing the
number of stores we manage for
third party owners. This enables
the Group to earn revenue without
having to commit capital, to amortise
fixed central costs over a wider
operating base and drive further
traffic to our website which benefits
our entire operation.

During the year, we generated
total Managed Store income of
£1.66 million, with recurring fees
of £1.47 million (2022: £1.31 million)
up 11.9%. This was driven by
increased revenues generated from
the Managed Stores and also the
four stores we sold on manage
back contracts on 31 January 2022.

In the management fees table on
page 25 we separate recurring
management fees from non-recurring
fees. Non-recurring fees relate to
one off fees generated from planning,
store opening, construction and
advisory and supplementary fees.

Lok’nStore manages 16 stores for
third party owners. Our current new
store pipeline includes two Managed
Stores, taking the total number to 18.

Cash Flow, Debt and
Bank Covenants
At 31 July 2023, the Group had
cash balances of £42.1 million. Cash
inflow from operating activities before
investing and financing activities was
£15.8 million in the year to 31 July
2023 (2022: £18.6 million).

The Group has a £100 million five-
year Revolving Credit Facility which,
together with cash, provides all
the financing needs for the current
secured pipeline and runs until April
2026. The Group is not obliged
to make any repayments on its
loan facility prior to its expiration in
April 2026.

The average cost of bank debt on
drawn facilities for the year was 4.77%
(2022: 1.71%). All of the Group’s total
drawn bank debt of £54.4 million
(2022: £66.8 million) is unhedged. At
the date of this Report the Group’s
current cost of debt is running at
6.68% as rates have moved higher
since the year-end.

At the year-end senior interest
cover was 4 times finance charges
on gross debt tested on a 12-month
rolling basis, against a bank covenant
of 2.5 times. At the year-end our
loan-to-value ratio based on net
bank debt was 3.7% versus a bank
covenant of 60% providing a large
cushion of comfort.

Post Balance Sheet: On 11 August
2023, the Group paid down £19.02
million out of its recent equity placing
proceeds reducing the balance on
its Revolving Credit Facility, pending
redrawing over time for its future
deployment on the Group’s pipeline
stores.

Our Team
We rely on our amazing people
to deliver these impressive results
and I would like to thank them for
all of their hard work and dedication.
I am delighted to say that all of our
colleagues continue to benefit from
the success of the business and
we continue to promote equity
ownership to our colleagues through
our Shares in Partnership Equity
Ownership scheme and the granting
of share options.

I am proud that during the year we
introduced a comprehensive non-
contributory Employee Assistance
Program which has a death in service
life insurance for all colleagues
combined with an associated
package of benefits. These include
direct access to a GP and availability
of confidential counselling services,
as well as access to a range of online
tools covering tax and legal advice,
childcare, fitness and personal
coaching advice.

Board Changes
The Board was delighted to announce
the appointment of Tom Lampard,
the Group’s Property Director, to
the Board of Directors of the Group
with effect from 6 February 2023.

Tom joined Lok’nStore in March
2012, and has worked in a variety
of roles across the Group. Since
July 2017, Tom has worked in the
Group’s property acquisitions
team, most recently as Director of
Acquisitions, sourcing and securing
land and buildings to expand the
Group’s significant new store pipeline.
Tom is an integral member of the
management team significantly
contributing to the Group’s growth
over recent years.

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsChair’s Statement continued

As part of the board’s ongoing review
of governance and with immediate
effect, Jeff Woyda will become
chair of the Audit Committee with
Charles Peal becoming a member
of the committee. I would like to
thank Charles for his hard work
and dedication as chair of the Audit
Committee over the last few years.

Post Balance Sheet: The Board
was delighted to announce the
appointment of Bridget Barker to
the Board of Directors of the Group
with effect from 14 September
2023. Bridget is an experienced
lawyer having gained over 35
years’ experience at Macfarlanes,
a leading and well-established
City of London law firm, where she
specialised in investment funds,
financial services and regulatory
legal work with a focus on private
equity and real estate funds. Latterly
she was head of the Investment
Management Group at Macfarlanes.
Since leaving Macfarlanes, Bridget
has pursued various non-executive
roles and consulting appointments
at organisations such as Praesidium,
Mirabaud 1819 Advisory Group and
Mainspring Fund Services. Bridget
is currently the CEO of Race Against
Dementia, a charity established to
raise money to fund breakthrough
and innovative dementia research.

Share Trading Volumes
and Liquidity
It has been a feature for some time
that high shareholder concentration
in our shares has contributed to
lower share transaction volumes
and has limited their market liquidity.
In addition, prospective and existing
investors have sometimes been
unable to secure a meaningful
sized holding.

In May 2023, I sold 1,250,000
Ordinary Shares of 1p each (‘Ordinary
Shares’) in the Company at a price
of 800 pence per Ordinary Share.

As a result of this transaction
and following the Placing in July
2023 I, along with persons closely
associated with me, still own, in
aggregate, 4,359,550 Ordinary
Shares representing 14.5 per cent
of the Company’s total voting rights.

In May 2023, Simon Thomas sold
100,000 Ordinary Shares at a price
of 815 pence per Ordinary Share
resulting in his beneficial interest
in the Company decreasing
to 1,292,800 Ordinary Shares
representing 4.3 per cent of the
Company’s total voting rights.

These transactions have broadened
the Group’s institutional shareholder
base and potentially increased
the liquidity in the trading of the
Group’s shares. I remain the largest
shareholder and Simon Thomas
remains the fifth largest shareholder,
demonstrating our continued support
for the business.

Environmental, Social
and Governance
We are committed to decarbonising
our business with an Operational Net
Zero target of 2040.

In recent years, the Lok’nStore
Environmental committee, consisting
of colleagues in various roles across
the business, including four Board
members, has been focused on
practical improvements we can
make to our environmental footprint.

We are working hard to create
an environmentally sustainable
business for all our customers, our
colleagues, local communities and
the wider environment. We have
made good progress on all of our
environmental targets this year and
these are discussed in detail in our
Environmental and Social Report
from page 49.

Our Objectives
Our objectives are to:

• Fill existing stores and improve

pricing

• Steadily increase the dividend
from a strong asset base with
conservative levels of debt

• Develop our pipeline into new

Landmark stores

• Acquire more sites to build new

Landmark stores

•

Increase the number of stores
we manage for third parties

Lok’nStore Group plc Annual Report and Accounts 2023Outlook
This year’s results are good and
trading since the year-end remains in
line with management expectations.

Lok’nStore continues to experience
year to year revenue growth on a
Same Store basis and this will be
enhanced by the three stores opened
in FY22 and two stores opened this
year. The opening of another two new
owned stores over the coming year
will provide further momentum.

We expect the rate of external cost
increases that we have experienced
this year to abate and we expect
operating costs to revert to a position
where cost increases are mostly
driven by the expansion of the number
of stores meaning that revenue
growth flows into earnings.

We have an exciting period of growth
ahead. With Lok’nStore’s resilient and
flexible business model enabling the
business to manage its conservative
debt structure the Board is confident
the Group will continue to thrive.
This strength enables Lok’nStore to
look confidently through the current
external market turbulence.

Andrew Jacobs

Chair

27 October 2023

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsKey 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 explain how the
underlying business is performing.

Here we identify those measures and explain what we mean when we use
them and, importantly, why we use them:

Group Adjusted EBITDA (Group Adjusted
Earnings before interest, tax, depreciation and
amortisation) – Adjusted EBITDA is defined as
EBITDA before losses or profits on disposal, share-
based payments, acquisition costs, non-underlying
items and which demonstrates the cash generative
qualities of the business.

Non-underlying items – Refers to one-off items of
a non-operational nature which arose during the year,
and which may relate to asset disposals, abortive site
acquisition costs, or other costs and which are likely
to be material and infrequent events. (Refer to note 4
of the Financial Statements).

Cash Available for Distribution (CAD) – Is
calculated as Adjusted EBITDA less total net finance
cost, less capitalised maintenance expenses, New
Works Team costs and current tax. This measures
the capacity of the business to pay dividends or pay
down debt. The Cash Available for Distribution per
share is CAD divided by the number of shares in
issue less shares held in the Employee Benefit Trust
(EBT) which do not attract a dividend. The calculation
of the CAD and the CAD per share is set out in the
Financial Review.

Adjusted Total Group Assets – The value of
adjusted total assets of £392.9 million (2022: £370.9
million) is calculated by adding the independent
valuation of the leasehold properties of £27.2 million
(2022: £24.2 million) less their corresponding net book
value (NBV) £6.9 million (2022: £7.2 million) to the total
assets in the Statement of Financial Position of £372.6
million (2022: £353.9 million). This provides clarity on
the significant value of the leasehold stores as trading
businesses which, under the Group’s accounting
policy on leases, are only presented at their book
values within the Statement of Financial Position.

Adjusted Net Asset Value per share
(NAV 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 Financial Review.

Loan to Value ratio (LTV) – Measures the net 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 deferred finance costs) of £12.3 million
expressed as a percentage of the total freehold and
leasehold properties independently valued by JLL of
£301.9 million (2022: £279.0 million) and development
land assets of £30.6 million (2022: £29.2 million)
totalling £332.5million (2022: £308.2 million) as set
out in the Financial Review in the Analysis of Total
Property Value table.

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 bank debt. The average cost of
debt 4.77% (2022: 1.71%).

Pipeline Sites – Sites for new stores that either we
have exchanged contracts on or have agreed heads
of terms and are progressing with our lawyers towards
a contract exchange. We have 13 pipeline sites of
which 11 are contracted and two are progressing with
lawyers. We currently have 26 Owned Stores trading
with an additional 16 Managed Stores trading. When
these 13 sites are fully developed, we will have a total
of 55 stores – 37 will be owned by the Group and 18
will be Managed Stores managed on behalf of third
party owners.

Lok’nStore Group plc Annual Report and Accounts 202313. Cost Ratio calculates the ratio of the total operating
costs of the business as set out in the Financial
Review, expressed as a percentage of total Group
revenue (note 1), giving a perspective on the cost
efficiency of the business when compared to the
cost ratio of the previous year. The Cost Ratio has
increased to 43.6% (2022: 38.5%).

14. Same Store Group – This measure is used to give
transparency on improvements in the operating
business in the year unrelated to the opening of new
stores, closure of old stores, and more particularly
in the previous financial year, the Sale, commenting
on stores that were open and trading at both 31 July
2022 and 31 July 2023 financial year-ends. The Same
Store key performance measure helps to illustrate the
performance of the underlying business.

15. Same Store Self-Storage – This measure is

the Same Store Group performance but less
management income received from the management
of the Managed Store portfolio. This is used to give
transparency on the underlying trading of the
self-storage business.

See also the glossary on page 142.

Secured Pipeline Sites – The eleven sites for new
stores on which we have exchanged legal contracts.
Of these nine stores are Lok’nStore Owned Stores
and two will be Managed Stores.

10. Adjusted Store EBITDA is Group Adjusted EBITDA
(see 1 above) before the deduction of central and
Head Office costs. Unlike Group Adjusted EBITDA this
measure excludes the impact of IFRS 16 and includes
property rentals payable 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 Financial Review.

11. Gearing refers to the level of debt compared to

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 is Group Adjusted

EBITDA before the deduction of rent. The measure
is designed to give clarity on the effect of the rent
payable by leasehold stores and how its elimination
enables a comparison between the operating
performance of freehold stores (which do not pay rent)
and leasehold stores which pay rent. This analysis is
set out in a table in the Financial Review.

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial StatementsGroup at a Glance

Lok’nStore Group plc is one of
the leading companies in the UK
self-storage market.

We opened our first store in 1995 and have
grown consistently over the last 28 years,
and currently have 42 stores trading across
England and one in Wales.

We have been listed on the AlM Market since
June 2000 and the Board accounts for 20.8%
of the Total Voting Rights (TVR) in the Ordinary
Shares of the Company (2022: 28.6%).

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 stores.

HOUSEHOLD
STORAGE

BUSINESS STORAGE

• Storage rooms

• Vehicle storage

• Storage rooms

• Pallet storage

• Student packages

• Document archiving

• Forces and services

• Flexible space

packages

• Commercial vehicle storage

REVENUE BY
CUSTOMER TYPE

NUMBER OF TRADING
STORES BY TYPE

NUMBER OF PIPELINE
STORES BY TYPE

69.7%
Household
customers

30.3%
Business
customers

26
Owned stores
16
Managed stores
42
Total trading
stores

8
Owned Stores
2
Managed Stores
1
Leased
Store

Lok’nStore Group plc Annual Report and Accounts 202342
STORES TRADING

17,500
CUSTOMERS

193
TEAM MEMBERS

Our Locations
Stores
Aldershot
Ashford
Basingstoke
Bristol
Broadstairs
Cardiff
Chichester
Crawley
Crayford
Dover
Eastbourne
Exeter
Fareham
Farnborough
Gillingham
Gloucester
Harlow
Hedge End
Hemel Hempstead
Horsham
Ipswich
Leicester
Luton
Maidenhead
Milton Keynes
Northampton Central
Northampton Riverside
Oldbury
Poole
Portsmouth
Reading
Salford
Stevenage
Southampton
Sunbury
Swindon
Tonbridge
Warrington
Wellingborough
Wolverhampton

New Stores
Bedford
Peterborough

Pipeline Stores
Altrincham
Barking
Basildon
Bolton
Bournemouth
Bromborough
Cheshunt
Eastbourne
Kettering
Milton Keynes
Staines

To find out more about
our store locations visit:
www.loknstore.com

Strategic ReportEnvironmental and SocialOverviewGovernanceFinancial Statements14

Lok’nStore Group plc Annual Report and Accounts 2023Strategic
Report

The UK Self-Storage Market at a Glance

18 Our Business Model

20 Our Strategy

21 Managing Director’s Review

28 Property Review

Financial Review

43 Section 172 Statement

44 Principal Risks and Uncertainties

LANDMARK STORE

BEDFORD

56,000

LETTABLE SQUARE FEET

NOW

OPEN

Located on the very busy Cardington Road in Bedford.

This new Landmark Store is situated directly adjacent to
St John’s Retail Park and walking distance from a large
Tesco Extra superstore. Surrounding the area are various
retail establishments and dense housing.

Positioned to overhang the Cardington roundabout, the
store enjoys a constant flow of traffic throughout the day,
ensuring maximum visibility to the local population, which
exceeds 170,000 residents. Since its opening in February
2023, the store has experienced good early trading.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsThe UK Self-Storage Market at a Glance

The Self-Storage Association (SSA UK) UK Annual Industry Survey 2023
reported that the UK self-storage industry is made up of sites offering
55.5 million sq. ft. of space.

Market Overview
As reported in the SSA UK Annual Industry Survey 2023 the UK self-storage
market continues to grow but remains under-developed relative to Australia
and the United States.

Number of self-storage stores

Square feet of self-storage (millions)

Square feet of self-storage per population

Australia

2,231

55.5

0.82

1,300

43.59

1.75

54,100

3,067

9.39

In the UK there are an estimated
1,492 self-storage facilities, plus an
additional 739 containerised sites,
providing a total of 55.5 million sq. ft.
of storage space. With a population
of c. 68 million people in the UK
this equates to only 0.82 sq. ft. per
person. Occupancy rates across the
UK industry at 31 December 2022
of built space was stable at 83.3%.

The structure of the UK industry
is changing. When the industry
first emerged companies were
predominantly single owner sites
often located in industrial areas, but
larger operators (defined as operators
managing ten 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, larger operators
now own or manage around 30% of
all facilities which translates to 40%
of market share in terms of space.
Currently, Lok’nStore is the fifth
largest operator in the UK by number
of stores, currently owing or managing
42 trading stores.

There remains strong market sentiment
towards the sector with strong
inflation-proofed characteristics, a
structurally under supplied market and
a sector maturity providing investable
assets of suitable scale.

• Self-storage performs well in

times of economic uncertainty
compared to other sectors

• The robust nature of the business

model/sector throughout
the economic cycle has
proved its ability to withstand
exogenous shocks

• Potential for increased allocation
to self-storage as other sectors
are impacted by volatility

• An inflation hedge with low usage
of utilities will favour the sector

•

Investors in the sector include
those with low leverage

• Debt markets should remain

liquid due to income generation

• Pricing corrections in land will
create buying opportunities

• Yield gap with US and AsiaPac

markets remains wide

• Still structurally undersupplied
compared to demand drivers

Drivers of Demand for
Self-Storage
Demand for self-storage by both
household and business 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 turn a box room
into a home office, but increasingly
householders are using storage on
a semi-permanent basis to free up
space at home or store belongings
they do not 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 office
moves or refurbishments.

During the pandemic, many of our
customers were 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.

Lok’nStore Group plc Annual Report and Accounts 2023Lok’nStore’s Opportunity in
the Market
The SSA UK Annual Industry Survey
2023 noted 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 secured pipeline of eleven stores,
and a continuing programme of
evaluating further site opportunities,
Lok’nStore is well placed to attract
new customers and add further
momentum to the growth of our sales
and profits.

The Group has a number of
competitive strengths: recognised
brand, excellent customer service,
rigorous cost control, and the
attractive market dynamics of the
storage sector. With a growing sector,
an under-supplied market, embedded
resilience during economic downturns
combined 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.

Lok’nStore Warrington

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsOur Business Model

WHAT WE DO

HOW WE CREATE VALUE

• Buy or lease prominent sites

• Take a strategic and tactical approach to

• Build highly visible orange Landmark stores

• Offer clean, dry, secure storage to business

and household customers

• Offer managed storage services to

third party owners

site selection

•

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

UK STORES CURRENTLY TRADING
(INCLUDING 16 MANAGED STORES)

£27.1m

GROUP REVENUE
(2022: £26.9 MILLION)

Lok’nStore Group plc Annual Report and Accounts 2023Our overriding objective is to increase the Cash Available for Distribution
(CAD) enabling a predictable growth of the dividend from a rising asset
base while maintaining a conservatively geared balance sheet.

SHARING VALUE WITH OUR STAKEHOLDERS

SHAREHOLDERS

CUSTOMERS

OUR PEOPLE

• High-quality earnings

• Easy to locate stores

• Growing NAV per share

• Friendly and high-quality

• Progressive dividend policy

customer service

• Wide range of storage

solutions

• Transparent and
open contracts

19p

ANNUAL DIVIDEND
PER SHARE

Rated
‘Excellent’
ON GOOGLE WITH AN
AVERAGE SCORE OF
4.8 OUT OF 5 FROM
ALMOST 8,000 REVIEWS

• Personal development
through the Lok’nStore
Academy

• Regular opportunities for

career progression through
our expanding store portfolio

• Uncapped bonus scheme

• Share ownership plans

• Regular gifts and rewards for

all colleagues

£0.64m

PAID OUT IN BONUSES
TO STORE TEAMS
(2022: £0.73 MILLION)

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsOur Strategy

OUR OBJECTIVES

ACHIEVEMENTS IN 2023

STRATEGY IN ACTION

FILL EXISTING STORES
AND IMPROVE PRICING

Closing occupancy in stores
over 3 years old, which strips
out the effect of the 108,890
sq. ft. of new space added in
the year, was 80.6% compared
to 82.9% at 31 July 2022

Self-storage pricing up 6.8%

SELF-STORAGE PRICING UP

6.8%

STEADILY INCREASE
THE DIVIDEND FROM A
STRONG ASSET BASE
WITH CONSERVATIVE
LEVELS OF DEBT

Total annual dividend 19.00
pence per share up 10.14%
(2022: 17.25 pence per share)

Net debt reduced to £12.3
million LTV net of cash 3.7%

10.1%

INCREASE IN ANNUAL DIVIDEND
TO 19 PENCE PER SHARE
(2022: 17.25 PENCE PER SHARE)

DEVELOP OUR
SECURED PIPELINE
INTO NEW LANDMARK
STORES

Two Landmark stores opened
during the year

Planning permissions achieved
at our Bolton site

STORES OPENED DURING 2023

ACQUIRE MORE
SITES TO BUILD NEW
LANDMARK STORES

New sites acquired in Milton
Keynes and Eastbourne this
financial year

11 stores secured in planning
or development

STORES SECURED IN
PLANNING OR DEVELOPMENT

SITES CURRENTLY AT LAWYERS

INCREASE THE
NUMBER OF STORES
WE MANAGE FOR
THIRD PARTIES

One Managed Store under
development in Kettering

RECURRING MANAGED
STORE FEES UP

A development site in
Bromborough, Wirral acquired
by a third party investor

11.9%

Lok’nStore Group plc Annual Report and Accounts 2023Managing Director’s Review

“ High quality cash flow generation
and new store openings drive
strong asset values.”
Neil Newman-Shepherd
Managing Director

Lok’nStore Group has had another
successful year. In the coming
year, our 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.

The Performance
of Our Stores
Same Store

Headline

• Group Revenue £27.1 million
up 1% (2022: £26.9 million)

• Group Adjusted EBITDA1
£15.1 million down 7.9%
(2022: £16.3 million)

• Group Operating Profit before

non-underlying2 items £8.9 million
down 21.9% (2022: £11.4 million)

• Price up 6.8%

• Store EBITDA Margins 56.1%

Revenue Momentum
Continues (refer to
performance table
on page 22)
Revenue growth in FY23 has
remained strong with self-storage
revenue up 5.3%. Same-store self-
storage revenue was up 12.1% on
the previous year. H2 self-storage
revenue increased by 11.2% against
the previous year, slightly ahead of
expectations.

• Same Store Group Revenue

(2022: 61.6%)

• Managed Store revenue –
recurring fees £1.5 million
up 11.9%

£27.1 million up 6.6%
(2022: £25.4 million)

• Same Store Adjusted
EBITDA1 £14.5 million
up 4.0% (2022: £13.9 million)

• Same Store Group Adjusted
EBITDA1 £15.2 million down
1% (2022: £15.4 million)

• Same Store Group Operating
Profit before non-underlying2
items £9.2 million down 13.4%
(2022: £10.6 million)

Price per sq. ft. of occupied space
was up a further 6.8% in the year
driven by continued strong demand
and higher than previous levels of
occupied space. Closing occupancy
in stores over 3 years old, which strips
out the effect of the 108,890 sq. ft.
of new space added in the year, was
80.6% compared to 82.9% at 31 July
2022. Total occupied unit space was
level with last year.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsManaging Director’s Review continued

Performance – Same Store Analysis14

Headline Store Performance
31 July 2023

Same Store Performance
31 July 2023

31 July 2022

£’000

27,147

25,364

14,294

15,056

Increase
%

0.9

5.3

(4.0)

(7.9)

£’000

27,085

25,302

14,468

15,229

Increase
%

Headline
£’000

Same Store
£’000

6.6

12.1

4.0

(1.0)

26,902

24,076

14,884

16,349

25,403

22,577

13,911

15,376

8,916

(21.9)

9,162

(13.4)

11,421

10,581

8,598

11,838

(49.9)

14.2

8,843

11,602

(45.8)

17.8

17,160

10,365

16,317

9,850

Group revenue

Self-storage revenue

Store Adjusted EBITDA

Group Adjusted EBITDA

Operating profit
(before non-underlying items2)

Operating profit
(after non-underlying items)

Operating costs

As a result of the external cost
increases we have seen in the year,
particularly around energy the overall
Adjusted EBITDA margin across
all stores decreased to 56.1% from
61.6%. Adjusted Store EBITDA
margins of the freehold stores
decreased to 61.8% (2022: 66.5%).

On a Same Store basis, the overall
Adjusted EBITDA margin across
all stores decreased to 57.2%
from 61.3%. The leasehold stores
decreased to 46.1% (2022: 53.3%).
Going forward, we expect these cost
increases to abate and in the absence
of external factors, we expect margins
to move ahead again over time as
new Landmark stores continue to
fill and new stores open, resulting in
gains in revenue falling to earnings.

As the business develops the balance
of the stores continues to shift
towards freehold Landmark stores
and Managed Stores which have a
higher-than-average Adjusted Store
EBITDA margin at 61.8% and 100%
respectively, versus 56.1% across all
stores. The medium-term impact of
this will be to continue to increase the
average EBITDA margin of the Group
overall. 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.

The freehold stores produce 70.2%
(2022: 71.8%) of the Adjusted Store
EBITDA and account for 91.8%
(2022: 91.4%) of valuations (including
secured pipeline stores).

Leaseholds trade on lower margins
due to the rent payable, but
nevertheless the 46.1% margin
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.

This mix of tenures with their different
risk and return characteristics
provides flexibility in the balance
sheet and opportunities to create
value throughout the property and
economic cycle.

Ancillary Sales
Ancillary sales consisting of boxes,
packaging materials, insurance and
other sales were £2.49 million (2022:
£2.49 million) accounting for 10.8%
(2022: 10.3%) of self-storage revenues.

Lok’nStore Group plc Annual Report and Accounts 202312.1%
INCREASE IN TOTAL
SAME STORE SELF
STORAGE

4.0%
INCREASE IN
ADJUSTED SAME
STORE EBITDA

6.8%
INCREASE IN
PRICE PER OCCUPIED
SQUARE FOOT

Portfolio Analysis and Performance Breakdown
As at 31 July 2023

In the table below, we show how the performance of the stores varies between freehold and leasehold stores. Currently,
46% of Lok’nStore branded trading space is Owned freehold, 19.5% is leasehold and 34.5% is Managed 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

Freehold

Leaseholds

Managed Stores

Total Stores Trading

Pipeline Stores (secured)*

Owned – Freehold

Owned – Leasehold

Managed Stores

Total Secured Pipeline Stores

Total Stores

* Applies to the 11 contracted stores only.

Analysis of Stores
As at 31 July 2023

Freeholds

Leaseholds

Pipeline (Freehold)

Pipeline (Leasehold)

Subtotal ‘Owned Stores’

Managed Stores (Trading)

Managed Stores (Pipeline)

Subtotal ‘Managed Stores’

Total No. of Stores

MLA sq. ft.

82.6

8.2

–

9.2

–

100

70.2

29.8

–

61.8

46.1

100

–

46.0

19.5

34.5

–

52.2

14.7

33.1

100

–

100

56.1

100

No. of
Stores/Sites

Stores
Trading
Lok’nStore

Stores
Trading
Managed

Secured
Pipeline

–

2,778,515

1,372,766

774,800

630,949

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.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsManaging Director’s Review continued

Operating Performance by Age of Store (Lok’nStore Owned Stores Only)

In the Operating Performance table below, we show how the performance breaks down across the stores, based on
the age of store. Older stores have had more time to fill-up and produce higher EBITDA returns.

Weeks Old

Pipeline

Under 100

100 to 250

Over 250

Total

Year Ended 31 July 2023

Sales £’000

Store Adjusted EBITDA £'000

EBITDA Margin (%)

Store Adjusted EBITDAR £'000

EBITDAR Margin (%)

As at 31 July 2023 ('000 sq. ft.)

Maximum Net Area

Freehold/Long Leasehold (‘000 sq. ft.)

Short Leasehold ('000 sq. ft.)

Number of Stores

Freehold

Short Leasehold

Total Stores

881

(215)

(24.4%)

(170)

(19.3%)

217

–

2,263

1,170

51.7%

1,170

51.7%

161

–

22,320

13,339

59.8%

15,111

67.7%

994

559

435

25,464

14,294

56.1%

16,111

63.3%

1,907

1,422

485

535

485

In respect of the Farnborough Store (over 250 weeks), the total store revenue includes a £100,000 contribution receivable from Group
Head Office.

Marketing
New customers are typically drawn to
Lok’nStore by three key drivers:

• Our distinctive Landmark stores

• Google and other search engines

• Existing or previous customers

and customer referrals

Store visibility remains pivotal to
our marketing efforts. With their
prominent positions, distinctive
design, and bright orange elevations
our stores raise the profile of the
Lok’nStore brand and help to
generate a substantial proportion of
our business. Our Landmark stores
are in highly prominent locations, and
we continually invest in new signage
and lighting at our existing stores as
well as creating striking designs for
our new Landmark stores, to promote
and enhance their visual prominence
and engage the local community.

The internet continues to be the
main media channel for our advertising.
Our website at www.loknstore.co.uk
is one of the most established

self-storage websites in the UK.
The website delivers a high level of
customer experience across desktop
and mobile devices. 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.

New Landmark Stores
We have invested £17.3 million
(2022: £12.2 million) in new store
development this year.

On 17 February 2023, our new
Landmark store opened in Bedford.
The store is in a prominent location
on the busy western side of the
town, directly accessed from a busy
roundabout servicing all arterial
routes to Tesco, the town centre
and neighbours Costa, Lidl and
other retailers.

Our new freehold Landmark store in
Peterborough opened on 27 June
2023.

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, Currys
and Argos.

Early trading at both stores has
been good.

We are on-site at three Stores: Staines
(long leasehold), Basildon (leasehold)
and Kettering (managed), all of which
will be open in the next 12 months,
adding a further 162,100 sq. ft. of
trading space to the undersupplied
UK self-storage market. The Board
anticipates that Staines and Basildon
will be NAV accretive at their first-time
valuation in July 2024.

We have a total new store pipeline of
eleven secured 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. Further details on this pipeline
can be found in the Property Review
on pages 29 and 30.

Lok’nStore Group plc Annual Report and Accounts 2023Managed Stores Recurring
Revenue Increasing
Total Managed Store revenue in the
year was £1.66 million (2022: £2.79
million). Last year, we received non –
recurring management fees of £1.47
million from Managed Store owners
following asset transactions. These
fees are positive for Lok’nStore but
are irregular in their nature and have
not been repeated this year.

Stripping out the impact of this,
recurring management fees were up
by 11.9% to £1.47 million as we saw
the full-year effect of the four sale and
manage-back stores executed on
31 January 2022 last year. At the
year-end, we had 16 Managed Stores
operating, with the Kettering store
currently on site and the Bromborough
(Wirral) site due on site in the coming
months. These two sites will add to
recurring management fees in the
coming years.

Income from non-recurring fees was
down in the year to £0.19 million (2022:
£1.47 million). Although these fees are
irregular in nature, this demonstrates
the contractually embedded value in
the Managed Stores income stream.
Non-recurring fees come from various
sources such as including planning
success fees, construction and
advisory fees and fees crystallised
when an asset transaction occurs. In
2022, the Group benefited from one-
off asset transaction fees from three
stores in the portfolio which did not
recur this year.

Management Fees

Recurring fees

Base management fees

Administration and compliance fees

Management performance fees

Recurring fees – Subtotal

Construction & advisory fees

Supplementary fees

Non-recurring fees – Subtotal

Total management fees

Percentage
Increase/
(decrease)
%

Group
Year Ended
31 July 2022
£

Group
Year Ended
31 July 2021
£

929,810

105,000

434,280

11.9%

1,469,090

30,000

160,000

190,000

1,659,090

(87.1%)

(40.4%)

722,084

86,916

504,379

1,313,379

12,500

1,459,177

1,471,677

2,785,056

The graph below shows how our historical management fees have grown and indicates a strong correlation between
the recurring management fee income and the number of stores under management.

Management Fees

£3,000,000

£2,500,000

£2,000,000

s
’

£1,500,000

£1,000,000

£500,000

£0

Recurring

Non-Recurring

Number of Managed Stores

For all of the definitions of the terms used in the highlights above refer to the notes section on pages 10 and 11.

N
u
m
b
e
r
o
f

M
a
n
a
g
e
d
S
t
o
r
e
s

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements

“ I would
personally
like to thank
our team
members
throughout the
business for
the hard work,
enthusiasm
and dedication
in achieving
these results.”
Neil Newman-Shepherd

Managing Director

Managing Director’s Review continued

Future
Lok’nStore has had a good year,
with revenue moving ahead steadily,
demonstrating the strength of the self-
storage business model throughout
the economic cycle. Trading has
remained good and in line with
expectations since the year-end.

We are currently experiencing some
cost increases, but the business is
sheltered from this effect by high
EBITDA margins and our ability to
raise rates charged. These cost
increases are now starting to slow
and in some areas, reverse.

Against the background of a strong
performance from our existing stores,
we have a secured pipeline of eleven
new stores all of which will add
considerable momentum to sales and
earnings growth in the future. Our
flexible model allows us to develop
these new Landmark stores when
market circumstances and planning
permissions dictate.

We will continue to deliver increasing
returns from a secure asset and
capital base leveraging from our
established business model and
operational expertise and digital
platform. We will continue our focus
on delivering the highest levels
of service.

Neil Newman-Shepherd

Managing Director

27 October 2023

Our Store Colleagues
The Group’s progress that I have
reported above could not have been
achieved without the commitment
and dedication of our team members
who have worked extremely hard
throughout this year. We did see
elevated levels of colleague turnover
post-Covid but we now see levels of
colleague turnover settle to pre-Covid
levels and the level of vacancies in
the business is now at normal levels.

Our Business Model
Provides Strength and
Adapts Quickly in an
Uncertain World
We operate with a high EBITDA
margin, sheltering the business from
cost increases. Debt and leverage are
low, and we have considerable cash
on hand. Importantly, the Company
can pause capital expenditure quickly
if market conditions dictate and
the ongoing business requires little
maintenance capital expenditure. At
the year-end, we are on-site at three
stores (one Managed) where the
capex required to complete the two
Owned Store projects is £12.7 million,
compared to the £42.1 million of cash
on hand.

The Company has c.17,500 customers
who come from a diverse social and
economic background and whose
reasons for storing are widely diverse.
Customers pay on a rolling four
weekly up-front basis. As a result,
bad debt continues to be low at
0.3% of revenue. Each customer is
relatively small with no self-storage
customer accounting for more than
1% of revenue. Additionally, the
UK self-storage market remains
under-supplied, and demand
remains strong.

Lok’nStore Group plc Annual Report and Accounts 2023Lok’nStore Wellingborough

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsProperty Review

Store and Portfolio Strategy
Our strategy is to continue to increase
the number of stores we operate
without stretching our balance sheet,
capitalising on a UK self-storage
market which is in a state of under-
supply and comparative infancy.
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.

Lok’nStore’s rising 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.

The net proceeds of the equity
fundraising in July 2023 will support
the continued development of the
secured pipeline as well as providing
valuable liquidity with which to
position Lok’nStore favourably
as a strong buyer in future site
acquisition negotiations whilst
maintaining the Group’s
conservative approach to debt.

Flexible Approach
to Site Acquisition
All 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 are
focused on allocating capital in the
most efficient manner to achieve
our objectives.

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 life cycle.

Sale and Manage-Back
of Stores
We also consider selling established
stores on sale and manage-back
contracts in order to recycle the
capital into the development of
new Landmark stores and manage
the balance sheet as part of our
successful growth strategy and
disciplined capital allocation. Indeed,
some of our stores have been
freehold, leasehold, and Managed
Stores during their operating life cycle.

The table below illustrates the rapid growth of store numbers and the changing tenure mix over time including the
growth of Managed Stores over recent years.

Lok’nStore Number of Stores Trading Since Inception

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

1
2
0
2

2
2
0
2

3
2
0
2

e
n

i
l

e
p
P

Freehold

Leasehold

Managed

.
l
c
n

Lok’nStore Group plc Annual Report and Accounts 2023
42
STORES NOW
TRADING

11
NEW LANDMARK
STORES SECURED

29.4%
ADDED BY NEW STORES
TO TRADING SPACE

Our most important consideration
is always the trading potential of the
store rather than the property tenure
and sale and manage-backs have
these additional advantages:

i) The critical mass of store numbers
benefits the business (e.g. through
Google search and sharing of
other marketing costs)

ii) It spreads the central
management costs

iii) Through the performance and
exit fees we are exposed to the
trading and capital upside without
committing capital

At 31 July 2023, Lok’nStore operated
26 of its own stores. Of these
Lok’nStore owns 17 freehold and nine
leasehold stores. All nine leasehold
stores are inside the Landlord and
Tenant Act providing us with security
of tenure. The average unexpired term
of the Group’s leaseholds valued by
JLL is 12 years and 10 months as at
31 July 2023. We operate 16 further
stores under management contracts.

Our Exciting Landmark
Store Pipeline
We are on-site at three stores that
will open during 2024 and we have
two new store opportunities which
are progressing with lawyers.

Our current pipeline of eleven
contracted stores will add 29.4%
of extra trading space to the overall
portfolio, 39% to our Owned portfolio
and 12.3% to the Managed portfolio.

All 11 stores in our Secured Pipeline9
are in prominent locations with large
catchment areas 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.

The lease on the Sunbury store
expired on the 30 July 2022. We are
in dialogue with the landlord regarding
a new lease on the existing site or
in a new site. In the meantime, we
continue to trade from the current
store which benefits from being
protected by the provisions of the
Landlord and Tenant Act.

Acquisitions During the Year

Milton Keynes: New Freehold

On 4 October 2022, we exchanged
contracts, subject to planning, on a
freehold development opportunity
in Watling Street, Milton Keynes.
This new highly visible roadside
location in the north-west of the city
complements our existing leasehold
store, seven miles to the south-east.
Once developed, the Landmark
store will add circa 60,000 sq. ft.
of lettable area.

Eastbourne: New Freehold

Contracts have been exchanged on
a freehold site in Eastbourne, Sussex
where we intend to submit planning
for a 60,000 sq. ft. Landmark store
shortly. Completion is due by the
end of the year upon vacation of the
current occupier. This prominent
location, adjacent to supermarkets
and retail, is close to our existing
leasehold store. The initial land cost
will be £5.53 million and total net
project costs are expected to be
c.£12.0 million.

Eastbourne: Existing
Leasehold Site

We recently announced the signing
of a new lease at our existing
Eastbourne store which runs for
twenty years. We have the valuable
opportunity to improve profitability in
the Eastbourne market via a tenant
only break clause after five years.
As with all other leased stores within
the Group’s portfolio, the new lease
benefits from being within the terms
of the 1954 Landlord and Tenant Act.
The current store has been trading
successfully since its opening in 2003.

Bolton: Purchase Completed

At the end of May 2023, the Group
completed the purchase of a site
in Bolton for £1.8 million, for a new
57,578 sq. ft. Landmark store.

Further New Store
Pipeline Progress
Following the Eastbourne freehold
purchase our total secured pipeline
of 11 secured new stores will result
in the Group operating 53 stores
when fully developed, increasing the
Owned Store trading space by 37.7%.
This pipeline of new stores will add
considerable momentum to sales and
earnings growth once developed.

Building work continues at three
of our new Landmark store
developments in Staines (long
leasehold), Basildon and Kettering
(managed), all of which will be open
in the next 12 months and where
the remaining capital expenditure as
at 31 July 2023 was £12.7 million,
adding a further 162,100 sq. ft. of
trading space.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsProperty Review continued

Planning Permissions
Update
Lok’nStore’s highly experienced
management team continues to
progress the new store pipeline
despite the planning system remaining
lengthy and unpredictable.

We have received an indicative
intention to formally grant planning
permission under delegated powers
in Barking, Greater London, subject to
the agreement of planning conditions.
At c.84,000 sq. ft, when it opens this
freehold Landmark store will be our
biggest store to date.

In January 2023, we were granted
planning consent to build a Landmark
store in Bolton, Greater Manchester.
We are now in the process of
tendering for the construction of this
store which will provide 57,578 sq. ft.
of new space. Located on land on the
east side of Manchester Road, Bolton,
this site will be in due course likely
transferred to an existing Managed
Store client and subsequently
developed by Lok’nStore and
operated on their behalf.

We have also received a grant
from the Planning Committee for
our updated planning permission
at our freehold site in Cheshunt,
Hertfordshire, subject to the
agreement of planning conditions.
With this permission we intend to build
a c.60,000 sq. ft. Landmark store
along with retail space for a discount
food retailer. The discount food retailer
will pay a lease premium to Lok’nStore
on completion of planning matters
and a further payment to Lok’nStore
on completion of the building. The
net remaining capital expenditure to
complete this project is c.£6.5 million.

Managed Stores
Bromborough: Contracts have
been exchanged on a site for a
new 49,500 sq. ft. Landmark store
in Bromborough, Wirral. The site,
which already benefits from planning
permission, will be owned by an
existing Managed Store client. Through
our well-established Managed Store
programme, Lok’nStore will receive
one-off fees for finding and securing
the site, development advice and use
of the Lok’nStore brand. Once open,
we will receive a recurring monthly
management fee as a percentage
of revenue plus a valuable additional
recurring performance fee once returns
reach an agreed level. The developer
went on-site in September 2023. The
store is expected to open in late 2024.

Kettering: Building work continues at
the new Landmark store development
in Kettering which is on track to open
in spring 2024.

Summary of our Current Pipeline at 31 July 2023:

Store

Basildon

Staines

Kettering

Leasehold

Long Leasehold

Managed

Bromborough

Managed

Bolton

Cheshunt

Barking

Freehold

Bournemouth

Freehold

Altrincham

Freehold

Milton Keynes

Freehold

Eastbourne

Freehold

Size
sq. ft.

49,700

66,500

45,900

49,500

57,578

60,300

84,200

75,100

63,900

60,000

Status

On site – opening late 2023

On site – opening Spring 2024

On site– opening Spring 2024

Planning consent granted – on-site Autumn 2023

Planning consent granted

Planning Committee resolution to grant consent received

Planning application submitted – Indicative intention to
formally grant planning received

Further planning application submitted

Planning appeal submitted

Planning application submitted

In Design

On site at
31 July 2023
sq. ft.

49,700

66,500

45,900

Total 11 stores

672,678

162,100

During the year, we opened two new stores in Bedford and Peterborough. Early trading in all new stores has been
very encouraging. We acquired two new sites during the year and have a further two sites progressing with lawyers.

Lok’nStore Group plc Annual Report and Accounts 2023
On our Owned freehold trading
stores we have seen exit yields
increase on average by 33 basis
points, with discount rates increasing
by 45 basis points. These changes
had the effect of reducing the
valuation by £15.45 million. Improved
cash flows in the stores that were
valued last year added £14.20 million,
which materially reversed the effects
from the changing capitalisation rates.

The remaining £24.15 million of
valuation comes from the maiden
valuations of our Bedford and
Peterborough stores and the
regearing of the Eastbourne lease.

It remains the Group’s established
policy to undertake a comprehensive
external valuation at each year-end
and we will do so at the next year end
at 31 July 2024.

Valuations
It is not the current intention of
the Directors to make any further
significant disposals of trading stores,
although individual asset disposals
may be considered where value can
more easily be added by recycling the
capital into new stores.

The valuations of our freehold
property assets are included in the
Statement of Financial Position at their
fair value. The value of our leasehold
stores in the valuation totals £27.2
million (2022: £24.3 million) but they
are held at cost less accumulated
depreciation in the Statement of
Financial Position.

Growing Store Property
Assets and Net Asset Value
• Adjusted Total Assets £392.9
million4 up 5.9% on last year
(2022: £370.9 million)

• Adjusted Net Asset Value of £9.86
pence per share up 1.4% on last
year (2022: £9.72 per share)

• Value of operating stores £301.9
million up 8.2% on last year
(2022: £279.0 million)

• Total property assets £334.0
million up 7.8% on last year
(2022: £309.7 million)

•

Investment in new stores
£17.3 million (including capitalised
interest) (2022: £12.2 million)

Market Valuation of
Freehold and Leasehold
Land and Buildings
It is the Group’s policy to commission
an independent external valuation of
its properties at each financial year-
end. Our freehold stores have been
independently valued by JLL at
£274.7 million (2022: £254.8 million).

Accordingly, Adjusted Total Group
Assets4 have moved up in the year
to £392.9 million, up 5.9% on 31 July
(2022: £370.9 million). A significant
contributor to this increase was the
uplift from the external valuation at
31 July 2023 combined with the
trading strength of our business, as
well as our investment in new stores.

In this 12 month period, we saw
a 0.8% same-store uplift in the
valuations of our freehold and
leasehold trading stores of £2.23
million. This comparison excludes
the maiden valuations on our new
stores in Bedford and Peterborough.

Our freehold and leasehold stores
have been independently valued by
JLL at £301.9 million (2022: £279.0
million). The value of adjusted total
assets of £392.9 million (2022: £370.9
million) is calculated by adding the
valuation of the leasehold properties
less their corresponding net book
value to the other assets in the
business. This provides clarity on
the significant value of the leasehold
stores as trading businesses which
under the Group’s accounting policy
rules on leases are only presented at
their book values within the Statement
of Financial Position.

At the year-end, Lok’nStore had
42 stores trading. Of these, 26
stores are Owned with 17 freeholds,
nine leasehold and 16 under
management contracts.

The average unexpired term of the
Group’s operating leaseholds valued
by JLL is approximately 12 years
and 10 months at 31 July 2023. All
of our leasehold stores are inside the
Landlord and Tenant Act providing
us with a strong degree of security
of tenure.

A deferred tax liability arises on the
revaluation of the properties and on
the rolled-over gain arising from the
disposal of some properties. It is not
envisaged that any tax will become
payable in the foreseeable future on
these disposals due to the availability
of rollover relief.

We have reported by way of a
note the underlying value of these
leasehold stores in revaluations and
adjusted our Net Asset Value (NAV)
calculation accordingly to include
their value. This ensures comparable
NAV calculations. An analysis of the
valuations achieved is set out in the
table on page 32.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsProperty Review continued

Analysis of Total Property Value

Freeholds3 valued by JLL1

Leaseholds valued by JLL2

Subtotal

Sites in development at cost3

Subtotal4

Freehold land & buildings at Director valuation

Total

Includes related fixtures and fittings (refer to note 12a).

No of
Stores/
Sites

31 July 2023
Valuation
£’000

No of
Stores/
Sites

31 July 2022
Valuation
£’000

274,725

27,200

301,925

30,605

332,530

1,500

334,030

254,775

24,250

279,025

29,215

308,240

1,500

309,740

2 The nine 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 12 years and 10 months at the date of the 2023 valuation.

Includes £1.54 million of capitalised interest during the period. (2022: £0.59 million).

Loan to Value calculation based on these property values.

Total freehold properties account
for 91.8% of all property values
(2022: 92.2%).

Adding our stores under development
at cost, and land and buildings held at
Director valuation, our total property
valuation is up 7.8% to £334.0 million
(2022: £309.7 million). The increase in
the values of properties which were
also valued by JLL last year was 8.2%
(2022: 22.6%).

The change in the property valuation
is referred to further in the Financial
Review section of the Strategic Report
and is detailed in note 12(a) of the
notes to the financial statements. The
principal drivers for this increase are:

• The trading stores have continued
to trade at high occupancy. The
stabilised occupancy assumed
by JLL is materially unchanged
at 87.79% (2022: 88.23%).

• Discount Rates and Exit Yields
applied by JLL have increased
this year reflecting changes in
the debt market.

• The increases in these

capitalisation rates are lower
than seen in other sectors of the
property industry over the past
12 months. There is a significant
amount of capital looking to
access the self-storage market
with major private equity and
institutions having entered the
market in recent years, including
Schroders, Legal and General,
The Carlyle Group, Angelo
Gordon, GIC, Heitman and
Nuveen. The Board is aware of
a number of other institutions
looking to enter the market either
through direct acquisition or by
funding new store developments.

• Transactional activity in the UK and
across Europe remains strong.

JLL reported in its 2023 Valuation
report: “Self-storage is widely viewed
as an inflation hedge. The sector has
proved itself as a resilient asset class
that generally performs well during
economic stress events as was seen
during the Global Financial Crisis and
the Covid-19 pandemic”.

Further changes in interest rates,
risk free rates or changes in the
macro-economic outlook may affect
the capitalisation rates applied by
External Valuers. In note 12a we
set out the likely effects of a 50 bps
and a 100 bps increase/decrease in
Discount Rate and Exit Yield used
in this year’s valuations.

Lok’nStore Group plc Annual Report and Accounts 2023“ Self-storage is widely viewed as an inflation hedge. The sector has proved itself as a
resilient asset class that generally performs well during economic stress events as was
seen during the Global Financial Crisis and the Covid-19 pandemic.”

Jones Lang LaSalle (JLL)

2023 Valuation report

Managed Stores
• Circa £150 million of store assets

under management

• 11.9% increase in recurring
management fees earned

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
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.

For Managed Stores Lok’nStore
receives a standard monthly
management fee, a performance
fee based on certain return hurdles
and fees on a successful exit. We
also charge acquisition, planning and
branding fees. This allows Lok’nStore
to earn revenue from our expertise
and knowledge of the self-storage
industry without committing our
capital. We can amortise various fixed
central costs over a wider operating
base and drive more visits to our
website, moving it up the internet
search rankings and benefiting all the
stores we both own and manage.

This strategy improves the risk
adjusted return of the business by
increasing the operating footprint,
revenues and profits without
committing capital. There is a
strong correlation between the total
management fee income and the
number of stores under management.

We now manage in excess of £150
million of assets under this structure
on which we generated managed
store income of £1.66 million this
year (2022: £2.79 million). Within this,
recurring fees were up 11.9% and
we expect recurring fees to continue
increasing steadily over the coming
years as more Managed Stores are
opened. Second half income was
stronger and includes additional
fees from store openings and non-
recurring fees contributed to benefit
additional supplementary fees (initial
branding fees etc). Managed Store
income is generated from our existing
platform and central management,
resulting in an effective margin from
this activity of 100%.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsFinancial Review

“ Prudent balance sheet management
and continuing investment into
Landmark stores.”
Ray Davies
Finance Director

The Group has reported higher
revenue and strong profits.

Same Store
• Same Store14 Group Revenue
£27.1 million up 6.6% (2022:
£25.4 million)

• Same Store Group Adjusted
EBITDA1 £15.2 million down
1% (2022: £15.4 million)

• Same Store Group Operating
Profit before non-underlying2
items £9.2 million down 13.4%
(2022: £10.6 million)

Headline
• Group Revenue £27.1 million
up 0.9% (2022: £26.9 million)

• Group Adjusted EBITDA1
£15.1 million down 7.9%
(2022: £16.3 million)

• Group Operating Profit before

non-underlying2 items £8.9 million
down 21.9% (2022: £11.4 million)

• Store EBITDA Margins 56.1%

(2022: 61.6%)

• Operating Profit £8.6 million

down 49.9% (2022: £17.2 million)

• Cash available for Distribution
(CAD)3 £9.13 million down
19.8% (2022: £11.39 million)

• Cash available for Distribution
(CAD) per share 28.4 pence
(2022: 38.7 pence)

• Final dividend up 8.2%

to 13.25 pence per share
(2022: 12.25 pence per share)

• Cash balance £42.1 million

(2022: £46.5 million)

• £100 million Bank RCF runs

to April 2026.

Revenue
Total Group Revenue for the year
was £27.1 million, an increase of £0.2
million (0.9%) from £26.9 million in the
prior year. Same Store Revenue for
the year was £27.1 million, an increase
of 6.6% (2022: £25.4 million).

Post-Balance Sheet. In FY24, the
Group will change the way it provides
contents protection to its customers
and during the course of the year will
transition to an Enhanced Liability
Protection Service (ELPS) for our
customers. Prior to this change, IPT
at 12% will continue to be paid to our
insurance provider based on our total
insurance revenue and will continue
to be paid to us by our customers.
After the change, ELPS will be subject
to VAT and not Insurance Premium
Tax (‘IPT’).

As we transition to the ELPS scheme,
we have decided not to pass the
entirety of the 8% differential uplift on
to our customers immediately, and
hence, gross ELPS revenue next year
will be lower but not materially so and
will be recovered completely over the
next year or two.

Operating Costs
Group operating costs amounted
to £11.8 million for the year
(2022: £10.4 million) up by 14.2%.

Historically, overall cost increases
have been mainly driven by the
expansion of the business. As
previously reported at our interim
results in January 2023, we are
now seeing some short term but
significant external cost pressures.
At a headline level, total Group
operating costs amounted to £11.8
million for the year (2022: £10.4
million) up by 14.2%, which includes
the profit and loss costs of opening
new stores in Bedford, Peterborough,
Warrington and Stevenage; offset
by the reduction in costs from the
Sale. On a Same Store basis, costs
have increased by 17.8% against last
year (refer store analysis of Group
operating costs in the table opposite).

We saw significant external cost
pressure in property costs this year,
with total property costs increasing by
£1.45 million. Energy cost accounted
for £1.2 million of this uplift with a
further £0.25 million from increased
Insurance costs.

Our largest cost area, staff costs,
increased by 1.9% as we staffed the
new stores which was offset by lower
performance bonuses to our store
colleagues. On a Same Store basis
this increase was just 0.1%.

Lok’nStore Group plc Annual Report and Accounts 2023£27.1m
SAME STORE
GROUP REVENUE
UP 6.6%

57.2%
SAME STORE
EBITDA MARGIN

3.7%
NET LTV

There was also a lower national
insurance cost because of the
combined effects of lower bonuses
paid and fewer share options
exercised by management and staff
in the year.

The 9.0% increase in overhead costs
is due to a combination of factors.
There has been a stepped increase
in audit fees as the audit profession
adjusts its fee rates in response to
higher regulatory costs. Legal and
professional costs related to work
on rent reviews, corporate tax,
and increased valuation costs for
additional work commissioned by the
Group for valuation work completed
by JLL.

Bank charges which now contain
a full year amortisation charge
(non-cash) in respect of bank fees
charged last year for the £25 million
accordion and the one-year RCF
extension also increased costs.
Amortisation charges for 2023 were
£0.24 million (2022: £0.22 million).
Other administrative costs (computer
support, telephones, printing postage
and stationery and marketing costs
etc) show no material cost increases.

Looking forward, in FY24, we estimate
that Same Store operating costs to
increase by around 6.0% or £0.75
million, driven materially by revised
business rates which will result in our
2023-24 business rates increasing

£0.49 million with transitional relief
and by a further £0.20 million plus
future inflationary increases in FY25.
This step change in business rates
will be offset in part by the reduction
in medium term energy costs we
are seeing through our hedged
purchasing and by improvements in
our insurance costs achieved during
the renewal process for 2023-24.

We have a strong record of disciplined
control of our costs. From FY25, we
fully expect operating costs to revert
to a low growth position with cost
increases driven by the expansion
of the business.

Group Operating Costs

Group Operations

Property costs

Adjustment for property lease rentals

Property and premises costs

Staff costs

Overheads

Total

Group Operations
Same Store Analysis

Property costs

Adjustment for property lease rentals

Restated property and premises costs

Staff costs

Overheads

Total

Increase/(decrease)
in Costs

28.6

4.1

40.7

1.9

9.0

14.2

Increase/(decrease)
in Costs

32.9

4.1

18.1

0.1

12.5

17.8

Year Ended
31 July 2023
£’000

Year Ended
31 July 2022
£’000

6,821

(1,817)

5,004

5,267

1,567

5,304

(1,746)

3,558

5,369

1,438

11,838

10,365

Year Ended
31 July 2023
£’000

Year Ended
31 July 2022
£’000

6,698

(1,817)

4,881

5,177

1,544

11,602

5,062

(1,746)

3,316

5,176

1,358

9,850

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsFinancial Review continued

Strong Balance Sheet,
Efficient Use of Capital,
Low Debt
• RCF of £100 million and runs to

April 2026

• £17.3* million invested in new

store pipeline (2022: £12.2 million)

Interest Expense and
Bank Borrowings
The Group pays a margin of 1.5% on
its Interest and the all-in effective rate
is calculated by reference to SONIA
(Sterling Over Night Indexed Average)
plus margin.

• Net debt (excluding leases)

• Average cost of debt 4.8%

£12.3 million (2022: £20.3 million)

(2022: 1.71%)

• Loan to Value ratio (LTV) net of

cash 3.7% (2022: 6.6%)

• Cost of debt averaged 4.8% in the
year (2022: 1.71%) on £54.4 million
debt (2022: £66.8 million)

• Average cost of debt (on active
revolving loans at 31 July 2023)
6.2% (2022: 2.71%)

• Current cost of debt at date of

this Report 6.8%

Includes £1.54 million of capitalised
interest.

The Group’s RCF of £100 million is a
joint agreement with ABN AMRO NV
and NatWest Bank plc participating
equally and runs until April 2026
providing funding for more Landmark
site acquisitions. The Group is fully
compliant with the two principal bank
covenants (LTV and Senior Interest).

Management of Interest
Rate Risk
Lok’nStore generates an increasing
cash flow from its strong asset base
with a low LTV net of cash of 3.7%
and an average cost of debt of 4.8%.
The value of the Group’s assets
underpins a resilient business model
with stable and rising cash flows and
low credit risk giving the business a
firm base to fund future growth.

Post Balance Sheet –
Temporary Reduction
of Debt (RCF)
On 11 August 2023, the Group
paid down £19.02 million out of
its recent equity placing proceeds
reducing the balance on its RCF,
pending redrawing over time for its
future deployment on the Group’s
pipeline stores.

With £54.4 million of gross debt
currently drawn against the £100
million bank facility, the Group is not
committed to enter into interest rate
hedged instruments but continues
to keep the matter under review. It is
not the current intention of the Group
to commit to a hedged instrument
at this time given our low level of net
debt, low Loan to Value ratio and high
interest cover.

The gross bank interest expense
(before capitalisation of interest
costs, non-utilisation fees and loan
amortisation fees) for the year was
£3.1 million (2022: £1.30 million), due
to higher average debt and higher
average costs of borrowing. These
average costs of borrowing have
continued to rise after the year-end
and the Group’s current cost of debt
is running at 6.8%.

The Group continues to monitor
closely the effects of rising interest
rates on its Senior Interest covenant,
which is tested on a 12-month
rolling basis, and the Group’s flexible
business model will enable it to take
appropriate steps to mitigate its
effects should it be required.

Capitalised interest in the year on our
store development programme was
£1.54 million (2022: £0.59 million).
Total finance costs in the Statement
of Comprehensive Income increased
to £2.56 million (2022: £1.33 million).

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 cash
flow from the operating business that
can be used to pay dividends, make
investments in new stores, or pay
down debt.

As agreed with the banks, both the
Loan to Value and Senior Interest
covenants set out in our bank facility
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. When
testing the Senior Interest Covenant,
property 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.

Cash Flow and Financing
At 31 July 2023, the Group had cash
balances of £42.1 million (2022: £46.5
million). Cash inflow from operating
activities before investing and financing
activities was £15.81 million (2022:
£18.57 million). As well as using cash
generated from operations to fund
some capital expenditure, the Group’s
£100 million five-year Revolving Credit
Facility provides sufficient liquidity for
the Group’s current needs. Undrawn
committed facilities at the period-end
amounted to £45.6 million (2022:
£33.2 million). Cash plus undrawn
committed facilities amounts to
£87.7 million, leaving the business
with plenty of headroom.

Lok’nStore Group plc Annual Report and Accounts 2023Earnings Per Share
The calculations of earnings per share are based on the following profits and numbers of shares.

Group
Year Ended
31 July 2023
£’000

Group
Year Ended
31 July 2022
£’000

Total profit for the financial year attributable to owners of the Parent

4,692

12,078

Weighted average number of shares for basic earnings per share

Dilutive effect of share options1

For diluted earnings per share

2023
No. of Shares

2022
No. of Shares

29,518,911

29,287,451

467,137

29,986,048

549,321

29,836,772

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 21 to 25.

Total basic earnings per share

Total diluted earnings per share

Group
2023
Pence

15.90p

15.65p

Group
2022
Pence

41.24p

40.48p

High Quality Cash Flow
The Group’s high quality cash flow is demonstrated by:

• Sound operating fundamentals –

• Diversified customer base

• Other features

– 17,500 customers with a

– Operates in 42 different

wide mix of businesses and
households covering many
sectors and geographies

– No customer concentration
risk – no customer accounts
for more than 0.5% of Group
revenue

localised markets

– Very low inventory required
– Very low capital re-investment
required once initial build and
fit-out has been completed

– Low staffing requirements

per store

– High store EBITDA margins
56.1% (freeholds 61.8%)

– Excellent credit model –

bad debts in FY23 less than
c. 0.3% of Group revenue

– Minimum of four weeks storage
paid in advance and every
28 days thereafter

– Over 90% of new customers

pay by Direct Debit

– Contractual lien operates over
customer goods in the event
of serious payment default

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsFinancial Review continued

Increasing Cash Flow Supports a 10.1% Annual Dividend Increase
• Annual dividend 19 pence per share up 10.1% (2022: 17.25 pence per share)

• Cash Available for Distribution of 28.4 pence per share (2022: 38.7 pence per share)

• Cash Available for Distribution £9.13 million (2022: £11.39 million)

CAD provides a clear picture of ongoing cash flow available for dividends, new store development or debt repayment.

Analysis of Cash Available for Distribution (CAD)

Group Adjusted EBITDA

(Per Statement of Comprehensive Income)

Property lease rents

Net finance costs paid (excluding re-financing costs)

Capitalised maintenance expenses

New Works Team

Current tax (note 9)

Cash Available for Distribution

(Decrease)/Increase in CAD over last year £

(Decrease)/Increase in CAD over last year %

Closing shares in issue (less shares held in EBT)

CAD per share

(Decrease)/Increase in CAD per share over last year

Group
Year Ended
31 July 2023
£’000

Group
Year Ended
31 July 2022
£’000

15,056

(1,817)

(2,664)

(121)

(76)

(1,245)

(5,923)

9,133

(2,258)

(19.8%)

16,349

(1,746)

(1,395)

(120)

(125)

(1,572)

(4,958)

11,391

3,149

38.2%

Number

32,144,246

29,380,333

28.4p

(26.6%)

38.7p

36.7%

Analysis of the Underlying Business After Adjustment for Non-underlying Items
When comparing 31 July 2023 with last year, the Group benefited last year from a higher than usual level of exceptional
gains principally resulting from the Sale totalling £5.9 million in the prior year.

In the table opposite we separate these non-underlying items and non-recurring management fee income to show the
performance of the underlying business.

Lok’nStore Group plc Annual Report and Accounts 2023Revenue

Total property, staff,
distribution, and general costs

Adjusted EBITDA1

Depreciation

Equity-settled share-based
payments

Non-underlying items

Operating profit

Finance income

Finance cost

Profit before taxation

Underlying
Business

27,147

(12,091)

15,056

(5,690)

(450)

–

(6,140)

8,916

665

(2,562)

7,019

2023
£’000

Non-underlying
Items and
Non-recurring
Management
Fee Income

–1

–

(318)2

(318)

–

(318)

2022
£’000

Non-underlying
Items and
Non-recurring
Management
Fee Income

Underlying
Business

Total

25,430

1,4721

26,902

(10,553)

14,877

(4,727)

(201)

–

(4,928)

9,949

(1,328)

8,663

–

1,472

–

5,7392

5,739

7,211

–

7,211

(10,553)

16,349

(4,727)

(201)

5,739

811

17,160

(1,328)

15,874

Total

27,147

(12,091)

15,056

(5,690)

(450)

(318)

(6,458)

8,598

665

(2,562)

6,701

1 Represents non-recurring management fees.

2 Refer note 4 of the notes to the financial statements for the analysis of non-underlying items.

Taxation
The Group has made a current
tax provision against earnings
in this period of £1.2 million
(2022: £1.7 million) based on a
blended corporation tax rate of 8
months at 19%, and 4 months at
25%. (2022: 19%).

The deferred tax provision which is
calculated at forward corporation
tax rates of 25% is substantially a
tax provision against the potential
crystallisation (sales) of revalued
properties and past ‘rolled over’ gains,
and amounts to £66.3 million (2022:
£63.2 million).

The external revaluation of the trading
stores at 31 July 2023 is the principal
contributor to the uplift in the total
deferred tax provision at the year-end
(See note 20).

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsFinancial Review continued

Gearing11 (Excluding
IFRS16 Lease Liabilities)
At 31 July 2023, the Group
had £54.4 million of gross bank
borrowings (2022: £66.8 million)
and cash of £42.1 million (2022:
£46.5 million) representing gearing
of 5.3% (2022: 9.9%) on net assets
of £230.5 million (2022: £205 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 4.9% (2022: 9.1%).

Gearing11 (Including IFRS16
Lease Liabilities)
At 31 July 2023, the Group had £54.4
million of gross bank borrowings
(2022: £66.8 million) and cash of
£42.1 million (2022: £46.5 million)
with £14.7 million of lease liabilities
(2022: £10.9 million) representing
gearing of 11.7% (2022:15.2%) on net
assets of £230.5 million (2022: £205
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 12.7% (2022: 17.0%).

Capital Expenditure
The Group has an active new store
development programme. The Group
has grown through a combination
of building new stores, existing store
improvements and relocations. We
have concentrated on extracting value
from existing assets and developing
through collaborative projects and
management contracts.

Capital expenditure during the period
totalled £17.3 million (2022: £12.2
million). This was primarily the contract
exchange of the Milton Keynes site,
the purchase of the Bolton site and
the exchange of contracts on the
Eastbourne site. There are ongoing
construction and fit out works at our
sites in Staines and Basildon, final
costs on Bedford and Peterborough
prior to opening, as well as the

completion of construction works at
our Stevenage and Warrington stores.
Planning and pre-development works
at our Bournemouth, Altrincham,
Barking and Cheshunt sites also
featured.

A significant contributor to this
increase was the uplift from the
external valuation at 31 July 2023
combined with the trading strength
of our business, as well as our
investment in new stores.

The Group has capital expenditure
contracted but not provided for in the
financial statements of £13.1 million
(2022: £11.2 million). We carefully
evaluate the ongoing economic and
trading position before making any
further capital commitments and can
reduce capex quickly if the market
deteriorates.

Lok’nStore has a good credit model,
with low debt and gearing and which
is strongly cash generative from an
increasing asset base. Increased bank
facilities, on competitive margins, and
extended to April 2026, positions the
business well for the future.

Statement of
Financial Position
Group net assets at the year-end
were £230.5 million, up 12.3%
(2022: £205.3 million).

The Parent Company’s net assets
have increased because of the
£7.0 million dividend paid up from
Lok’nStore Limited, the principal
operating business of the Group.

Market Valuation of
Freehold and Leasehold
Land and Buildings
It is the Group’s policy to commission
an independent external valuation of
its properties at each financial
year-end.

Our freehold stores have been
independently valued by JLL at
£274.7 million (2022: £254.8 million),
up 7.8%. Please refer to the table
of property values on page 32.

Accordingly, Adjusted Total Group
Assets4 have moved upwards sharply
in the year to £392.9 million, up 5.9%
(2022: £370.9 million).

In this 12 month period, we saw
a Same Store uplift in valuations
of £2.6 million in our freehold and
leasehold trading stores, a 0.94%
increase. The like-for-like comparison
excludes the Sale, and the maiden
valuations on our new stores in
Bedford and Peterborough.

It remains the Group’s established
policy to undertake a comprehensive
external valuation at each year-end
and we will do so at the next year-end
at 31 July 2024.

Valuations

It is not the intention of the Directors to
make any further significant disposals
of trading stores, although individual
disposals may be considered where
value can more easily be added by
recycling the capital into new stores.

The valuations of our freehold property
assets are included in the Statement
of Financial Position at their fair value.
The value of our leasehold stores in
the valuation totals £27.2 million (2022:
£24.3 million) but they are held at cost
less accumulated depreciation in the
Statement of Financial Position.

We have reported by way of a note,
the underlying value of these leasehold
stores in revaluations and adjusted
our Net Asset Value (NAV) calculation
accordingly to include their value. This
ensures comparable NAV calculations.
An analysis of the valuations achieved
is set out in the table opposite.

Lok’nStore Group plc Annual Report and Accounts 2023Increase in Adjusted Net
Asset Value Per Share
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 31 July 2023, the Adjusted Net
Asset Value per share (before deferred
tax) increased 1.4% to £9.86 from
£9.72 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 of
share options during the year.

Analysis of Net Asset Value (NAV)

Net assets

Adjustment to include operating/short leasehold stores at valuation

Add: JLL 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

Shares issued from the primary placing

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 (see above)

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 before deferred tax provision

31 July 2023
£’000

31 July 2022
£’000

230,472

205,346

27,200

(6,952)

250,720

(5,062)

245,658

Number
(‘000s)

30,004

2,680

32,767

(623)

32,144

£7.64

24,250

(7,224)

222,372

(4,256)

218,116

Number
(‘000s)

29,687

317

–

30,004

(623)

29,381

£7.42

31 July 2023
£’000

31 July 2022
£’000

245,658

66,290

5,062

317,010

32,144

£9.86

218,116

63,214

4,256

285,586

29,381

£9.72

1 A deferred tax adjustment in respect of the uplift in the value of the leasehold properties has been included, calculated by applying the
substantively enacted corporation tax rate of 25% (2022: 25%). 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.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsFinancial Review continued

Move to SETS
Trading Platform
In February 2023, the Board
approved a transition for trading of the
Company’s shares on AIM from the
London Stock Exchange’s SETSqx
(Stock Exchange Electronic Trading
Service: Quotes and Crosses) trading
platform to its SETS (Stock Exchange
Electronic Trading System) platform,
effective 7 February 2023.

This move is intended to provide
investors with access to the entire
SETS system, providing liquidity
via traditional order book trades,
as well as firm two-way quotes
from market makers.

Summary
Lok’nStore Group operates within
the UK self-storage industry which
is still an immature sector with strong
growth prospects. With a low Loan
to Value ratio and plenty of headroom
on our bank facilities, this market
presents an excellent opportunity
for further growth of Lok’nStore’s
business.

Recently opened Landmark stores
and our ambitious new store pipeline
demonstrate the Group’s ability to
use those strengths to exploit the
opportunities available throughout
the economic cycle.

Our high margins, strong balance
sheet and flexible business model
enables Lok’nStore to confidently
look through the current external
market turbulence.

We look to the future with confidence.

Ray Davies

Finance Director

Lok’nStore Group plc Annual Report and Accounts 2023Section 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 regard 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;

• 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.

We consider in this regard our
team members, our customers,
our shareholders, our suppliers
and the environment to be our
stakeholders. The Board recognises
that building good 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 are discussed
and incorporated into decision-
making particularly with respect to
the Board’s Section 172 obligations.

In July 2023, the Board raised
£20.5 million (gross) of equity and
with its £100 million bank facility, has
increased the Group’s liquidity and
working capital to pursue its growth
strategy for shareholders. This cash
is now available to be recycled into
new state-of-the-art Landmark
stores. These new stores will in due
course generate more growth in
revenue, profits and dividends for
shareholders but will also have a
positive environmental effect as the
new stores will have solar PV and
be generally more energy efficient.

Further information on our approach to Section 172 is to be found in the following sections of our Annual Report:

Employees

Customers

• Chair’s Statement

• Managing Director’s Review

• Environmental and Social

• Chair’s Statement

• Managing Director’s Review

• Environmental and Social

Suppliers and Partners

• Environmental and Social

Investors

Environment &
Sustainability

Longer Term

• Governance

• Chair’s Statement

• Managing Director’s Review

• Financial Review

• Governance

• Chair’s Statement

• Managing Director’s Review

• Environmental and Social Report

• Chair’s Statement

• Managing Director’s Review

• Financial Review

• Principal Risks and Uncertainties

• Page 4

• Page 21

• Page 49

• Page 4

• Page 21

• Page 49

• Page 61

• Page 4

• Page 21

• Page 34

• Page 61

• Page 4

• Page 21

• Page 49

• Page 4

• Page 21

• Page 34

• Page 44

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsPrincipal 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
team members 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,
communities, team members, 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 58.

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 numerically rated based
on a combination of ‘likelihood’ and
‘consequences and impact’ on the
business. The combination of these
two becomes the ‘risk factor’ and any
factor with a rating over 15 is reported
to the Board.

Risk Management Team
Ray Davies, Finance Director, is
the Board member responsible for
ensuring that the risk management
and related control systems are
effective, and that the communication
channels between the Board and
the Executive Management Team
are open and working correctly.
The Executive Management Team
is responsible for the day-to-day
management of the risk factors.
Responsibility for identifying,
managing, and controlling the risk is
assigned to an individual as shown
on the risk register depending on
the business area. Reporting against
the risks forms part of the monthly
Executive management meeting
and the risk factor may be amended
if applicable. There are also sub-
committees for particular risk areas
which meet regularly. The Risk
Management and Reporting
Structure is shown below.

OUR RISK MANAGEMENT AND REPORTING STRUCTURE

THE BOARD

Reviews Risk Register in full twice a year

Considers specific risk areas as raised
by the Executive Board

EXECUTIVE BOARD COMMITTEE

Reviews risks at monthly Executive management meetings and if material, requests the Board
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 and Safety

Environmental Impact

Lok’nStore Group plc Annual Report and Accounts 2023Principal 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).

Tax Risk

Treasury 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 Group.

The Group has faced increased costs
from adverse interest rate movements.
The Bank of England has raised base
rates (BOEBR) fourteen times since
December 2021 and BOEBR is
currently 5.25% up from 0.1% in
March 2020.

• Regular review by the Board (full details are set out in the

Financial Review, from page 34).

• Debt and interest are low relative to assets and earnings. With
interest rates rising, this risk per se is increasing, however the
Executive and the Board monitor this position carefully through the
Group’s detailed operating reports produced on a weekly basis
and detailed financial and accounting reports produced
on a monthly basis.

• Could reduce debt, if required, by executing sale and manage-
back arrangements on mature stores or slow the rate of site
development.

• Regular monitoring of changes in legislation.
• Use of appointed professional advisers and trade bodies.

• The Group has a £100 million Revolving Credit Facility which runs
until April 2026 providing funding for future Landmark site stores.
The two principal bank covenants (LTV and Senior Interest) are
covenant compliant.

• Lok’nStore is a robust business which generates an increasing
cash flow from its strong asset base with a low LTV net of cash
of 3.7% (2022: 6.6%). The value of the Group’s assets underpins
a flexible business model with stable and rising cash flows and low
credit risk giving the business a firm base for growth.

• Average cost of debt 4.77% (2022: 1.71%).
• Average cost of debt (active revolving loans) 6.2% (2022: 2.71%).
• Current cost of debt 6.8%.
• With £54.4million of gross debt currently drawn against the

£100 million bank facility, the Group is not committed to enter
into hedging instruments although recognising that interest rates
have risen significantly. The Group continues to regularly monitor
this risk.

• The Group monitors compliance with its bank covenants closely
and during the year it complied with all of its bank covenants.

• The Group has the ability to pay down debt which it did by

repaying £19 million post-balance sheet.

• The Group can raise equity to finance growth. On 7 July 2023,
the Company raised total gross proceeds of approximately
£20.5 million through the issue of 2,679,739 new Ordinary Shares
via a Placing and REX Retail Offer, at a price of 765 pence per
Ordinary Share.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsPrincipal Risks and Uncertainties continued

Risk

Description

Key Mitigation

Property
Valuation Risk

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 monitoring of any changes in market conditions and

transactions occurring within our marketplace.

• Use of independent professional valuers who are experts in the

self-storage sector. There is regular contact with the current valuer
JLL and discussions around market values and transactions within
the sector, including post year-end.

• Previous experience of downturns, such as the Dotcom and

Global Financial crises, has demonstrated that Self-Storage has
considerable resilience.

• Stores are predominantly Landmark stores in prime locations and
are all UK based and predominantly located in the affluent South
of England. The Group is therefore not exposed to overseas/
international currency risks, etc.

• Operational management teams with the skills, experience, and

motivation to continue to drive operational performance.

Environmental
Risk

Flooding.

• Flood risk due diligence undertaken on all prospective

Increased requirement to reduce
waste and greenhouse gas emissions
and reduce environmental impact on
the environment.

site acquisitions.

• Flood protection measures in place at all stores.
• Group has been measuring environmental impact since 2005
and is committed to manage waste effectively and control
polluting emissions.

• All new construction has solar power on the roofs of its buildings.

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.

Planning approval is increasingly
dependent on Social or Environmental
enhanced features such as BREEAM
standards, as well as local planners’
demands for green spaces, cycle and
footpaths, etc. all adding cost and
complexity to a planning project.

• 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 in obtaining

planning consents for our stores.

Construction

Poor construction may affect the
value of the property and/or the
efficient operation of the store.

Rising costs of developing a store
may mean site opportunities which
do not meet management’s return
on investment criteria may not be
taken up.

Availability of ‘Grid Capacity’.

• 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.

• Construction projects are subject to a tender process.
• Rising costs are factored into our financial modelling to ensure

the required returns are achievable.

• Ensure sufficient due diligence undertaken to ensure supply.
• Contracts to be subject to availability of Grid Capacity as a condition.

Lok’nStore Group plc Annual Report and Accounts 2023Risk

Description

Key Mitigation

Maintenance/
Damage

Damage to properties through poor
maintenance or flood or fire could
render a store 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).

Colleague
Retention

Loss of team members may affect
our ability to operate our stores and
provide the high levels of customer
service expected.

Cyber Security
and IT System
Breach

A breach of our IT systems might
adversely affect the operations and
income of the business resulting
in potential fines, customer
compensation and causing
reputational damage to the Group.

Future
Pandemic Risk

A spread of the virus and social
protection measures which may be
introduced by Government may
adversely affect the operations and
financial performance of the business
and adversely impact on the health of
team members.

• Established criteria for site selection including:

– Prominent locations
– High visibility
– Distinctive designs and bright orange elevations and 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 within the Lok’nStore Academy (for further

information see page 57.

• Intranet for improved communications.
• Established colleague rewards programme.

• Regularly reviewed IT security systems.
• Well communicated policies and procedures for handling and

managing a systems breach.

• The Group has a well-defined policy and response developed and

executed throughout the recent Covid-19 pandemic.

• Our Covid-19 Group Safe Response has been documented in

detail in the Managing Director’s Review on page 21 in the 2021
Annual Report and is not repeated here.

The Strategic Report as set out in pages 15 to 47 was approved by the Board of Directors and authorised for issue on
27 October 2023 and signed on its behalf by:

Andrew Jacobs

Ray Davies

Chair

Finance Director

27 October 2023

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements48

Lok’nStore Group plc Annual Report and Accounts 2023Environmental
and Social

Environmental Targets and Commitments

52 Environmental Management Performance

54 Our Environmentally Progressive Stores

55 Social

ENVIRONMENTAL
MATTERS

Key Highlights
• Commitment to install Photovoltaic
(PV) generation on all new stores

• Operational GHG emissions down

93% since 2005

• The proportion of total electricity
needs provided on site with PV is
16% of the total electricity need

• Gas use down 39% this year

• Waste down 6% this year

• Water use down 19% this year

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsEnvironmental

Our Stores Generating
Renewable Energy

• Stores with PV

• Stores without PV

Lok’nStore in the year had a c.£300k
displaced grid energy saving from
solar energy generated and used
in its own stores.

RENEWABLE
ELECTRICITY

NUMBER OF TRADING
STORES WITH PV

NUMBER OF STORES WITH
AN EPC OF B OR ABOVE

100%
of portfolio

57%

46%

5050

Lok’nStore Group plc Annual Report and Accounts 2022

Lok’nStore Group plc Annual Report and Accounts 2023ENVIRONMENTAL TARGETS AND COMMITMENTS

Our Drive to Net Zero Operational
GHG Emissions

We continue to monitor and implement strategies to
minimise this very small tail of our direct emissions.

The global scientific and governmental community
has identified a need to achieve Net Zero global
carbon emissions by 2050. This year, Lok’nStore has
set a target to achieve Operational Net Zero carbon
emissions by 2040. Lok’nStore’s Greenhouse Gas
(GHG) emissions from direct operational sources are
limited to natural gas use, used for heating and hot
water only, and transport related fuel use.

Lok’nStore decreased its natural gas use by 39% in
the year. This comparatively low generation of GHGs
and our efforts since 2005 to monitor and reduce our
operational GHG emissions, Scope 1 and 2, have
resulted in a significant decrease over that time, even
as the business has grown to 42 stores.

Lok’nStore Environmental Commitments
and Targets

Lok’nStore remains committed to positively impacting
the environment.

Our Environmental Committee is led by Andrew
Jacobs, Chair, as well as a Non-Executive Director and
two Executive Board Directors. The committee abides
by three key strategic themes:

• To be the ‘Big Friendly Storage Company’ to both

our customers and the environment

• Provide environmentally excellent buildings for

colleagues and customers

• Plan and deliver a sustainable business

Our Targets FY22/23

Result Our Progress

To obtain Energy Performance
Certificates for all Owned Stores

All Owned Stores have an EPC rating ranging from A-E. Of this 46% are a B
or above.

To complete a feasibility study on
battery storage to complement
future PV systems

To increase the number
of stores with PV systems

Complete a feasibility study
to retrofit all stores that are
suitable for PV

A feasibility study has been completed. Having assessed the value of installing
battery storage against electricity exported back to the Grid, the Environmental
Committee have concluded that battery storage is currently uneconomic.
We will continue to keep this under review.

PV was installed on Bedford and Peterborough within the year.

We have identified all the stores that have the potential to have PV installed
on existing roofs. We are working with a third party to progress installations.

Review the benefit of swapping
diesel van to an electric van

Findings show that the extremely low use of our single company van means it
is most appropriate to change to an electric van at the current van’s end of life.

To trial the retrofitting of
LED lighting in place of lower
efficiency fittings

We completed trials at one Owned and two Managed Stores. Results make
a clear case for continued roll out across the few remaining stores that have
fluorescent tubes.

OUR TARGETS FY23/24

OUR COMMITMENTS

• Decarbonise our business to be Net Zero in

operations in 2040

• Assess recommended improvements from
current EPCs and action as appropriate
• Trial the installation of a battery at one store
• To increase the number of stores with

PV systems

• Continue the roll out of LED lights for all stores
• Obtain BREEAM at one store
• Determine a route to eliminate waste destined

for landfill

Install EV charging across all new stores

•
• Optimise energy usage in stores
• Engage with our colleagues and customers

about our Green Credentials

• Review internal processes to continuously make

green improvements
Install PV on all new stores

•

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsEnvironmental continued

Environmental Management and Performance
Lok’nStore is committed to its
environmental strategy and
sustainability policy. We have been
actively monitoring and measuring
our environmental impacts since
2005. By monitoring environmental
key performance indicators including
greenhouse gas emissions (GHG),
water use and waste, and reviewing
them against our stated policy, we
continue to achieve our stated aims;
to control polluting emissions, manage
water and waste effectively, 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 Director’s Report under the
Companies Act 2006 (Strategic
Report and Directors’ Report)
Regulations 2013. As in previous
years, Lok’nStore engaged S&P
Global Intelligence, a leading company
in environmental, carbon data and
risk, to review the Group’s reporting of
environmental impacts for the financial
year ended 31 July 2023.

Highlights for the Year Ended 31 July 2023

Impact

Result Comment

A summary of their findings is
included below. S&P Global
Intelligence found that Lok’nStore
assessed and disclosed all material
environmental impacts – GHG
emissions, water consumption and
waste generation for its own facilities.
The full operational footprint report
containing comprehensive metrics,
key ratios and their methodology can
be found on our website.

Operational GHG Emissions
Intensity

During FY22/23 Lok’nStore decreased operational GHG emission
intensity by 27% from 4.14 to 3.03 tCO2e per million (£m) revenue.

Direct Operational GHG
Emissions (Scope 1)

Indirect Operational GHG
Emissions (Scope 2)

During FY22/23 Lok’nStore’s Scope 1 emissions decreased by 8% to
81.9 tCO2e from 89.4 tCO2e.

We experienced a decrease of 23% in total electricity intensity across
all of our sites.

Renewable Energy Generation

20% increase in energy generated at our sites.

Water Consumption

In the year 22/23, we have seen a 19% decrease in water consumption.

Waste Generation and Recycling

In the year 22/23, total waste generation decreased by 6%.

Improvement in environmental performance year on year

Direct Operational GHG
Emissions (Scope 1)
This year, we had a 19% decrease
in direct GHG emissions from
fuel used in travel. We also saw
a 39% decrease in natural gas
consumption. The decrease is as a
result of decarbonisation reflecting our
progress towards our aim to remove
natural gas boilers at the end of their
useful life and replace with electric
boilers, which takes advantage of
our electricity from 100% renewable
sources.

Indirect Operational GHG
Emissions (Scope 2)
We continue to emit no indirect
operational GHG emissions due to
long-standing supply contracts for
renewable electricity and our own
on-site photovoltaic.

Renewable Energy
Generation
Generation of electricity from our solar
panels installed on our buildings is
dependent on both the number of
panels fitted and sunshine hours; and
a 20% increase in energy generated
at our sites is reflective of more
sunshine hours during the period and
two new sites added in the period.

PV solar panels will continue to
be installed on new stores to
increase electricity generated by
our operations. 57% of trading
stores have photovoltaic panels,
of which 58% are Owned Stores.

Water Consumption
Though the total number of stores
trading has increased, water intensity
decreased by 35%. Lok’nStore has
undertaken a comprehensive review
of its water meters using a third
party and has put in place stringent
monitoring processes to ensure
accurate billing and reporting on water
use. This ensures expected water
use is recorded and easily identifies
potential leaks or excessive use.

52
52

Lok’nStore Group plc Annual Report and Accounts 2022

Lok’nStore Group plc Annual Report and Accounts 2023
SUSTAINABLE PROGRESS ON OUR TARGETS

Waste Generation
and Recycling
The total number of trading sites
increased and when adjusted for
intensity saw a 25% decrease in
landfill waste. Lok’nStore have
closely monitored waste for 4
years which has led to a significant
reduction in waste to landfill within
that period. Through engagement
with our supplier, we now have
management systems in place
where the destination of our waste
can be reported in greater detail.
In addition to this, our supplier
has confirmed Lok’nStore’s landfill
diversion rate currently is 97.45% due
to how the waste is treated at its final
disposal point and these facilities’
effectiveness. Our supplier sources
the best disposal facilities available
to each store and, where possible,
ensures that no waste should go
directly to landfill.

In the coming financial year, we hope
to be able to provide even better
reporting now that we have increased
knowledge of how our waste is
treated once it leaves our stores. This
is further evidence of our improved
environmental management systems.

Biodiversity
We target net biodiversity gain and
create wild habitats on our sites.
When building a new storage centre
we leave areas behind and around
the side of the building for trees,
wild-growing flowers and insects.
Flowers in these areas will help the
local wildlife thrive and encourage
pollinators to visit.

The Board considers the impact our
operations have on the environment
with a view to minimising them
wherever possible. We will continue to
monitor and report our environmental
impacts in line with government
guidelines.

2005 VS 2023 93% Reduction
in GHG Emissions
Lok’nStore began reporting on
environmental factors in 2005.
Since then, Lok’nStore has been
making conscious decisions to make
a positive environmental impact,
especially targeting lower GHG
emissions. Lok’nStore has made a
series of impactful decisions to reduce
its environmental footprint, prior to
the known importance of Net Zero.
The graph below shows how
Lok’nStore’s emissions would look
if the same environmental decisions
of 2005 had been continued over the
17 years alongside its current portfolio
of stores.

Employee Engagement
In the year, we have employed a
two-pronged approach to waste and
energy savings, introducing energy
saving LED lights on a store-by-
store basis and providing a range of
recycling bins for our teams – whilst
engaging with colleagues to update
them on the Group’s energy use
and to promote energy and waste
conservation amongst our teams.

How it could have been – if Lok’nStore had taken no action to limit it’s impact on the environment

e
2
O
C
s
e
n
n
o
t

i
r
t
e
M

3,000

2,500

2,000

1,500

1,000

500

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

If Lok’nStore made no environmental changes

Lok’nStore actual outcome

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements

Environmental continued

OUR ENVIRONMENTALLY PROGRESSIVE STORES

Lok’nStore Group plc Annual Report and Accounts 2023Social

Our Team
At 31 July 2023, we had 193
colleagues (2022: 178 colleagues).
We treat our colleagues with dignity
and respect and are committed to
providing a positive attitude and
an enjoyable working environment.
We have a professional, open and
customer first focused culture.
Colleagues can exchange ideas,
share best practice and offer
suggestions for improvement through
regular meetings with managers
and Directors.

Our Central Support Team is visiting
and in daily telephone communication
with our store colleagues to promote
the Company’s objectives, review
performance, celebrate success and
manage risk factors. Our recruitment
process allows us the flexibility to
recruit new team members based on
a number of desirable characteristics
including: personality, work ethic and
previous employment.

Lok’nStore fosters an inclusive
environment where diversity and
equality thrive. At Lok’nStore, we
do not permit discrimination in any
form. Lok’nStore has a responsibility
to respect the human rights of our
colleagues and customers, and
we are committed to ensuring that
our supply chain upholds the same
values. We uphold clear standards for
issues including: health and safety,
freedom of association, preventing
discrimination, no forced labour,
political influence, working hours and
working conditions.

Male

Female

Store Colleagues

41%

59%

Head Office/CST

48% 52%

The Board

Total

89% 11%

56% 44%

At Lok’nStore, we believe colleagues
are our most valuable asset and we
recognise that the cost-of-living crisis
has had an effect amongst our teams.
To assist colleagues, Lok’nStore made
two cost-of-living payments totalling
£400 per person. Feedback from our
teams was very positive. As of March
2023, Lok’nStore introduced Help at
Hand, a completely confidential digital
health and wellbeing service which
provides our colleagues and their
immediate family with access to key
health and wellbeing services via an
app. In addition to this, Lok’nStore has
an employee benefits scheme called
Rewards Locker where colleagues
have access to exclusive rewards and
savings across a variety of retailers.

From January 2023, all colleagues
received a new Death in Service
benefit, providing peace of mind for
our colleagues and their loved ones.
For more information, please see
page 77.

We encourage our team members
to build on their skills, through the
Lok’nStore Academy and regular
performance reviews. Training
courses and team meetings are held
regularly at the Group’s Head Office
where our store colleagues are joined
for lunch by our Central Support
Team, Head Office colleagues and
the Executive Directors. This gives
the senior management team an
opportunity to monitor and assess
the culture throughout the business.

During the year, Lok’nStore hosted
a mental health awareness training
session for an initial group of
colleagues through a third party
provider. During this session, our team
learnt how to engage in conversations
around mental health, how to support
colleagues effectively, correctly spot
indicators and create action plans to
improve both their team’s and their
own mental health.

Lok’nStore conducts internal audits of
all of its stores to uphold and monitor
procedures, standards, mitigate risks
and enhance the overall customer
experience. In addition to this, we
have engaged a third party supplier
to conduct first impression audits
to uphold presentational standards.
Similarly, we continue to monitor and
improve customer experience and
service standards through a third
party mystery shop supplier, which
are also reviewed in meetings with
our colleagues to further their skills
and drive standards.

We promote and underpin our
customer first focused culture and
celebrate success constantly through
a variety of channels including regular
email communication to colleagues,
the Lok’nStore intranet and through
monthly bonus letters sent to all
store colleagues. All of these are fully
branded and use positive language
to promote Company values.

Remuneration of all Group colleagues
is reviewed annually to ensure all of
our team members are paid fairly
and to ensure we can attract and
retain the correct talent to support
our expansion.

The Board would like to thank all
colleagues for their commitment
to our customers and for their
hard work and efforts over
the year.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsSocial continued

Employee Benefit Trust
The Employee Benefit Trust owns 623,212 shares (2022: 623,212 shares), the costs of which are shown as a deduction
from shareholders’ funds. Full details are provided in note 28 – Own Shares.

Social Initiatives

Bonus Schemes

Opportunity to Buy
and Receive Shares

Colleague Engagement
Activities

Comment

We are delighted to say that all of our colleagues continue to benefit from the success of
the business through our bonus schemes. During the year, we paid over £0.64 million in
bonuses to those colleagues.

Lok’nStore has a share incentive plan (SIP) in which all colleagues are eligible to
participate. 82% of our colleagues are enrolled members of our share scheme, with 58%
of colleagues being investing members.

Colleagues are given the opportunity to take part in internal competitions run via our
engaging intranet with a chance to win a variety of prizes. Every colleague receives a
Christmas hamper gift as a token of the Company’s appreciation. We also celebrate
Company and individual successes throughout the year.

Social Activities

Lok’nStore hosts Company parties for all colleagues to attend.

Internal Progression Routes
and Career Management

At Lok’nStore, we aim to fill most positions through internal promotions. We are extremely
proud that 57% of our current store managers have been promoted internally.

Development and Training

Contributing to Society

All colleagues are supported to learn and develop through internal and external training.
We provide internal training workshops, process update training as well as
apprenticeships, and National Vocational Qualifications.

During this financial year, the Group has made significant cash payments in relation to
Corporation Tax, Insurance Premium Tax (IPT), Employer National Insurance contributions,
VAT and Business (Rates) totalling over £6.68 million.

The Lok’nStore
Environmental Committee
In recent years, we have introduced
an Environmental Committee that
meets quarterly to review and discuss
practical steps we can take as a
business to further reduce our impact
on the environment. The Committee
members consist of stakeholders
at all levels of the business whose
roles all have a direct link to our
environmental performance.

The Environmental Committee
includes two Executive Board
Directors and a Non-Executive
Director, Simon Thomas, who has
special responsibility on the Board
for environmental matters. We
regularly discuss our successes
and environmental projects
with colleagues through internal
communications.

This gives all colleagues the
opportunity to raise ideas of how we
can further improve our environmental
performance and the engagement
with all areas of the business.

Cyber Security
The environment around cyber threat
remains and arguably is growing,
as more companies succumb to
malicious or ransom-ware attacks.
Although our firewalls have never
been penetrated, throughout this
financial year we have undertaken
a comprehensive cyber project to
strengthen our defences against such
attacks.

The scope of the project has been
extensive and includes an external
audit of our IT processes, an upgrade
of our IT policy, email policy, password
policy, and incident response plan.

Layers of additional penetration
security have been put in place to
further strengthen our ‘firewall’ as
well as multi-factor authentication
on Microsoft Office 365 accounts.
Potential vulnerabilities have been
evaluated and unsupported software
removed. Penetration testing has been
completed using GCHQ approved
external agents who were unable to
penetrate our systems. Executive
Directors have additional VPN security
when accessing public Wi-Fi networks
via laptops/mobile devices.

This is supported by a mandated
cyber security training for all
colleagues who have access to
information resources.

Lok’nStore Group plc Annual Report and Accounts 2023The Lok’nStore Academy

The Lok’nStore Academy continues
to bring strategic and operational
benefits to the business, aligning
our training under one branded
project and 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 virtual training
sessions. Our continuing growth
and dynamic pipeline of new stores
allows our colleagues to grow as the
business grows.

Development of our teams through
the Academy supports our strategic
aim to fill future Store Manager roles
internally.

Today, 57% (2022: 55%) of our
Store Managers are internal
appointments having all developed
from a Customer Service Assistant
role. We aim 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.

Our third party mystery shopping
company, Performance in People
(‘PIP’), hosted a Customer
Experience Event (CX Day 2023)
that brings together Senior CX

Professionals from world class
brands to discuss and showcase
innovative approaches around
customer excellence. Performance
in People presented some awards
to celebrate, and reward some
of the very best in the industry,
and we are pleased to report that
Lok’nStore picked up two awards:
BMS Champion 2022 and Top BMS
performer. Mike Dalloz – Managing
Director of PIP said, “This is a
massive achievement, the call was
a perfect example of exhibiting
telephone behaviours necessary
to deliver an exceptional customer
experience, which was why it was
selected as the winner in front of
tens of thousands of other mystery
shopping calls”.

Our Customers
We believe in clarity and transparency
when communicating with our
customers. Our website is informative
yet engaging and, where necessary,
clearly explains 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. We have a
responsibility to our customers to
offer products and services that meet
the high standards they expect of a
company that is charged with looking
after their possessions.

Customer Reviews

Google

Feefo (Movein Reviews)

Feefo (Vacation Reviews)

Trustpilot

Rating

4.8
out of 5

4.9
out of 5

4.8
out of 5

4.5
out of 5

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsSocial continued

Our Communities
At Lok’nStore, our objective is to
engage in philanthropy by making
positive and meaningful contributions
to the local communities surrounding
our stores. We have over 50 charities
storing with us at a reduced rate
and provide over 1,000 sq. ft. of
free space to our partner charities.
Whenever feasible, where there is a
need, we distribute Lok’nStore boxes
to the community.

Charity and Community Engagement

Free space donated to
charity use

Discounted space for
charity use

£28,329

£21,668

One off donations*

£365

* Matching colleague donations for

Christmas Jumper Day.

Our 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.
Lok’nStore is proud to have worked
with a number of its suppliers for
many years and have achieved
long-standing relationships to the
benefit of both parties.

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 38 days
(2022: 39 days).

FY ended 31 July 23

Within 30 days

Between 30 and 60 days

Over 60 days

Average time to pay an
invoice

40%

57%

38 days

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
interact with 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 this 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.

Customer, Contractor and
Visitor Health and Safety

FY22/23

Number of colleagues at
31 July 2023

200

Number of minor injuries

Of which were customers,
contractors, and visitors

Of which were minor cuts

Of which were team
members

RIDDOR reportable events 0

Lok’nStore Group plc Annual Report and Accounts 202359

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements60

Lok’nStore Group plc Annual Report and Accounts 2023Governance

62 Board of Directors and Advisers

64 Corporate Governance

72 Directors’ Report

77 Remuneration Report

81 Statement of Directors’ Responsibilities

Independent Auditor’s Report to the
Members of Lok’nStore Group plc

LANDMARK STORE

PETERBOROUGH

45,000

SQUARE FEET OF MAXIMUM
LETTABLE AREA

NOW

OPEN

Lok’nStore acquired and developed this four-storey
Landmark store situated prominently along the main
road leading to the well occupied Maskew Avenue
Retail Park.

Its strategic location next to various food, retail, and leisure
premises makes it a convenient choice for the sizeable
population it serves in Peterborough.

The facility opened in June 2023, and the store has
experienced good early trading.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsBoard of Directors and Advisers

EXECUTIVE DIRECTORS

Andrew Jacobs (64)
Chair

Ray Davies (66)
Finance Director

Neil Newman-Shepherd (46)
Managing Director

Tom Lampard (41)
Property Director

Experience
Andrew established Lok’nStore 27
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.

Experience
Ray is a Fellow of the Institute of
Chartered Accountants and a
Fellow of the Institute of Chartered
Secretaries and Administrators.
Prior to joining Lok’nStore in 2004,
Ray held several senior finance
positions in listed companies
in the construction, health and
fitness sectors.

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.

Experience
Tom joined Lok’nStore in March
2012, and has worked in a
variety of roles across the Group.
Since 2017, Tom has worked in
the Group’s property team, as
Director of Acquisitions becoming
Property Director in 2023, where
he is responsible for sourcing
and securing land and buildings,
ensuring planning permissions and
the eventual construction and fit-out
of the properties.

Key Areas of Expertise
Strategy, corporate finance,
economics and property.

Key Areas of Expertise
Finance and accounting, corporate
reporting, risk management, legal,
tax and compliance.

Key Areas of Expertise
Sales, marketing, and human
resource management.

Key Areas of Expertise
Property, acquisitions, planning,
construction, and Managed
Store services.

DIRECTORS

The Board of Directors is supported by an Assistant Company Secretary who assists the Chair 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.

A. Jacobs
R. Davies
N. Newman-Shepherd
T. Lampard
J. Woyda C
S. Thomas
R. Holmes
C. Peal C
B. Barker

Chair
Finance Director
Managing Director
Property Director (Appointed 6 February 2023)
Senior Independent Non-Executive Director

Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (Appointed 14 September 2023)

Following the conclusion of the FY23 audit formalities Jeff Woyda will become Chair of the Audit Committee.

Audit Committee

Remuneration Committee

Chair

Find out more about the Company’s
committees on page 66.

Lok’nStore Group plc Annual Report and Accounts 2023

THE BOARD HAS OVER 100 YEARS OF SELF-STORAGE EXPERIENCE

NON-EXECUTIVE DIRECTORS

Jeff Woyda (61)
Senior Independent
Non-Executive Director

Experience
Jeff joined the Board on
1 September 2020 as an
independent Non-Executive
Director. 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.

Simon Thomas (63)
Non-Executive Director

Richard Holmes (63)
Non-Executive Director

Charles Peal (68)
Non-Executive Director

Experience
Richard joined Lok’nStore
in 2000, having held senior
marketing and commercial
roles at Unilever, Boots
(as Marketing Director and
Commercial Director) and
latterly, Specsavers (as
Group Marketing 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.

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. He is a
member of Defra’s Council
for Sustainable Business.

Bridget Barker (65)
Non-Executive Director
(appointed 14 September 2023)

Experience
Bridget joined the
Lok’nStore Board on
14 September 2023.
Bridget is an experienced
lawyer with over 35 years’
experience at Macfarlanes,
a leading City of London law
firm, latterly as head of the
Investment Management
Group. Since leaving,
Bridget has pursued various
non-executive roles and
consulting appointments
at organisations such as
Praesidium, Mirabaud
1819 Advisory Group and
Mainspring Fund Services.

Key Areas of Expertise
Corporate finance and
environmental performance.

Key Areas of Expertise
Marketing including digital
marketing and customer
experience.

Key Areas of Expertise
Strategy, Capital Markets
and Fund Management.

Key Areas of Expertise
Legal, Private Equity and
Real Estate Funds.

ADVISERS

In addition, the Board is advised by:

Secretary and Registered Office: Dentons Secretaries Limited, One Fleet Place, London, EC4M 7WS

Nominated Adviser and Brokers: Cavendish Capital Markets Limited, One Bartholomew Close, London, EC1A 7BL

Nominated Adviser and Brokers: Peel Hunt LLP, 100 Liverpool Street, London, EC2M 2AT

Statutory Auditor: RSM UK Audit LLP, 25 Farringdon Street, London, EC4A 4AB

Registrars: Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL

Solicitors: Dentons UKMEA LLP, One Fleet Place, London, EC4M 7WS

Solicitors: RWK Goodman LLP, 69 Carter Lane, London, EC4V 5EQ

Solicitors: Russell-Cooke, 2, Putney Hill, London, SW15 6AB

Direct and Indirect Tax Advisors: BDO LLP, 55 Baker Street, London, W1U 7EU

To find out more visit: www.loknstore.com/investors/the-board

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsCorporate Governance

Corporate Governance Statement
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 Chair 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
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 ten 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.

QCA Code Principle

Reporting Location

1 Establish a strategy and business
model which promotes long-term
value for shareholders

Our business model is set out on page 18 and our strategic objectives and achievements in
the year are set out on page 20. The principal risks associated with the business model are
set out in the Principal Risks and Uncertainties section on pages 44 to 47.

2 Seek to understand and meet

shareholder needs and expectations

Under Shareholder Relations on page 71, we discuss how we seek to understand and meet
shareholder needs and expectations.

Compliant
With Code

Andrew Jacobs, Chair, is responsible for shareholder liaison. We consider communication
and shareholder engagement to be high and cite two recent examples:

The retail offer to smaller (retail) investors who were invited to participate in the recent
Company equity placing via a dedicated REX platform.

Regular communication with larger institutional shareholders in order to foster and
achieve greater mutual understanding of respective positions on ESG issues.

How we work with and take into account wider stakeholder interests is detailed in the
Environmental and Social section on pages 49 to 59.

3 Take into account wider stakeholder
and social responsibilities and their
implications for long-term success

4 Embed effective risk management,
considering both opportunities and
threats, throughout the organisation

Our approach to risk management is detailed on page 44 and our principal risks are
outlined on pages 44 to 47. Our approach to internal control and specifically internal
audit is set out on page 67.

5 Maintain the Board as a well-functioning,

The Board structure is reported on pages 62 to 76.

balanced team led by the Chair

6 Ensure that between them the

Directors have the necessary up-to-date
experience, skills, and capabilities

7 Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement

8 Promote a corporate culture that is

based on ethical values and behaviours

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/

The Directors maintain their knowledge through a combination of reading of technical and
market bulletins.

We strive to maintain an overall balance of experience, skills, and knowledge to ensure the
Board operates effectively and to create long-term sustainable value for the Group and its
shareholders.

Our Directors’ biographies can be found on pages 62 to 63 and further information on
the balance of skills and capabilities within our Board can be found in the commentary on
Board Evaluation on page 70.

We set out this year’s information in the Corporate Governance section on page 70.

The Board of Lok’nStore have embedded a culture which is professional, open and
customer focused. This underpins our core strategy and objective of growth, both through
increased occupancy of existing sites and through the opening of new Landmark stores.
Our culture drives the experience of the customer, ensuring that they receive a high quality
service which then leads to repeat business/referrals via word of mouth/positive google
reviews etc.

Please see our Environmental and Social matters on pages 49 to 59.

9 Maintain governance structures and

Please see the Corporate Governance section from page 61.

processes that are fit for purpose and
support good decision-making by the Board

10 Communicate how the Company
is governed and is performing by
maintaining a dialogue with shareholders
and other relevant stakeholders

Please see the Corporate Governance section, specifically page 71.

Results of voting at our AGMs can be found on the announcements page of our website:
https://www.loknstore.co.uk/investors/announcements/

Lok’nStore Group plc Annual Report and Accounts 2023Our Governance Structure

THE BOARD
Typically meets at least 5 times a year, Chair: Andrew Jacobs
• Leading role in determining the composition and structure of the Board (with Remuneration Committee acting as Nomination Committee)

• Incentivising, managing and mentoring the Senior Executive Management team

• Setting the strategic direction and main goals of the business

• Approving significant changes to the Group’s business model

• Setting the standards, culture and values of the Group

• Overseeing the internal control system of the Group and its risk management

• Approving the annual business plan for the Group

• Approving site and store acquisitions and major items of capital expenditure

• Approving the Group’s financing structure

• Ensuring a positive dialogue with our stakeholders is maintained

• Creating and maintaining the conditions necessary for overall individual director engagement

• Managing relations and ensure effective communication with shareholders

Environmental Committee

Meets quarterly,
chaired by Andrew Jacobs

• Monitoring sustainability performance

• Overseeing the Group’s environmental
targets, commitments and strategy

• Providing guidance on emerging
environmental issues, including
environmental risks, and their impact
on the Group’s business

• Overseeing the Group’s ESG reporting,
including external audit/assurance
mechanisms

See page 51 for more information

Remuneration Committee

Meets once a year,
chaired by Jeff Woyda

Audit Committee

Meets three times a year,
chaired by Charles Peal

• Setting, reviewing and recommending
the policy on the remuneration of the
Executive Directors

• Overseeing the senior management team
and Company wide remuneration approach

• Monitoring the implementation of the
Remuneration policy

• Overseeing the alignment of reward,
incentives, and culture

• Considers proposals from the Chair on the
remuneration of the operational management
team especially in relation to bonus
share option awards under the long-term
performance-related pay schemes

See page 66 for more information

• Monitoring the integrity of the financial
statements any formal announcements
relating to the group’s financial performance
and reviewing significant financial reporting
judgements thereto

• Reviewing the Group’s internal control and
risk management systems, together with
the relationship with the Group’s external
auditor and the review of the Group’s financial
reporting and internal controls

• Consider the Auditor’s Findings Report and
any corresponding recommendations

• Assess and provide necessary challenge to
estimates and judgements contained within the
financial statements including, but not limited
to, discussion and review the findings
of the external JLL Valuation Report prior
to the Group’s year-end results

• The committee would also convene prior
to the Group’s interim financial results and
at other times should it be necessary

See page 66 for more information

EXECUTIVE BOARD COMMITTEE
Chaired by Andrew Jacobs
Meets monthly

• Considers: Management Accounts, Store Operations and Performance, Human Resources

• Implementing the Group’s business plan and strategy

• Managing the risk of the business

• Focusing on financial performance

See page 44 for more information

Property Committee

Meets Weekly, Chaired by Andrew Jacobs

Property Risk Committee

Meets Periodically

Considers:
Sites under Development and New Acquisitions

Considers:
Risks Associated with Properties including HSE

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsCorporate Governance continued

The Board Committees
The following section introduces the Group’s
committees, members and the terms of reference.

The Audit Committee also undertakes a formal
assessment of the auditor’s independence each year,
which includes:

Nomination Committee
A Nomination Committee would oversee the appointment
of a new Director. Due to the relatively small size of the
Company, the Board does 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 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 8 in the financial statements and in
the Remuneration Report on page 77.

Audit Committee
The Company has an Audit Committee, to whom
the external auditor, RSM UK Audit LLP, reports.
The Committee consists of Charles Peal (Chair of the
Committee) and Jeff Woyda and has recently been
joined by Bridget Barker. Charles Peal is the Committee’s
Nominated Financial Expert and for details of Charles’
experience please see his biography on page 63. 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.

• a review of non-audit services provided to the Group
and related fees ensuring that only those services
provided by the Ethical Standard of the FRC are
permitted

• 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, objectivity and effectiveness of the
audit process, and the partners and team members
involved in the audit, including the regular rotation of
the audit partner every five years

• obtaining written confirmation from the auditor that, in
their professional judgement, they are independent of
the Group.

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 7 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.

The Audit Committee is required to report its findings to
the Board identifying any matters on which it considers
that action or improvement is needed and make
recommendations on any steps to be taken.

This year, the Committee has continued to focus on
the narrative reporting and governance disclosures
contained in the Annual Report and to ensure that it
represents a fair, balanced and understandable picture
of the Group’s performance, strategy, viability and
business model.

Lok’nStore Group plc Annual Report and Accounts 2023The Audit Committee and
Critical Matters of Judgement
The Committee focuses on matters it considers
important and where there is a high degree of complexity
and/or judgement. A particular example is the valuation
of the Group’s trading properties. This is carried out
by external valuers, but by its nature is subjective with
significant judgement applied to the Valuation. The Audit
Committee members meet with the external valuers, the
auditors, the Managing Director and the Finance Director
to discuss and review the key judgements. This review
included challenge on assumptions made on stabilised
occupancy, exit yields and discount rates, revenue and
occupancy growth.

Management also have processes in place to review the
external valuations. In addition, the external auditors use
separate valuation specialists to review the Valuations
prepared by the Group’s external valuer.

Non-Audit Work
The Committee’s policy, reflecting the FRC’s Ethical
Standard on Non-Audit services is that the Group’s
auditors will not be commissioned to undertake non-
audit work. More generally, the external auditors may
not provide services, which places them in a conflict-
of-interest position in relation to their statutory audit
work. Such activities will include financial system design,
tax compliance and advisory services, etc. A list of the
advisors is set out on page 63, noting the separation
of accountant’s responsibilities between audit (RSM)
and direct and indirect tax work (BDO).

Risk Management and Internal Control
The Committee and the Board reviewed the internal
control processes of the business and the Group’s Risk
Register during the year. The risks and uncertainties
facing the Group are considered in the Strategic Report
on pages 44 to 47.

Overview
Based on all of the above, the Committee has concluded
that, taken as a whole, the disclosures contained
in the Annual Report provide a fair, balanced and
understandable picture for shareholders to assess
the Group’s performance, strategy, viability and
business model.

The Chair of the Audit Committee will be available at the
forthcoming Annual General Meeting on 7 December
2023, to answer any questions about the work of
the Committee.

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 colleagues may raise concerns about malpractice or
improper or potentially illegal behaviour in confidence
without concern of victimisation or disciplinary action.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsCorporate Governance continued

The Board
Four Executive Directors and Four Non-Executive Directors

Meets:

Considers:

Receives:

Meets regularly throughout
the year (nine times in the
current year). See page 70
for table recording Board
attendance.

• Financial strategy

• Detailed management accounts against budgets

• Company performance

• A current trading appraisal

• Major investments

• Minutes of all subcommittees

• Capital resources

• The Risk Register

• Risk management

• The Conflicts Register

• Reporting to shareholders

The Directors
Following the appointment of Tom Lampard on
6 February 2023, the Board consists of four Executive
Directors and five Non-Executive Directors. 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 Chair 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.

Accountability and Audit
The Board believes that the audited Annual Report
and Accounts plays 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.

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 and Trusts both inside
and outside the Group:

Jeff Woyda
Clarkson (Trustees) Limited
Clarkson Capital Limited
Clarkson Dry Cargo Limited
Clarkson Holdings Limited
Clarksons Overseas Shipbroking Limited
Clarkson PLC
Clarkson Property Holdings Limited
Clarkson Research Holdings Limited
Clarkson Research Services Limited
Clarkson Sale and Purchase Limited
Clarkson Shipbrokers Limited
Clarkson Shipbroking Group Limited
Clarkson Tankers Limited
Clarksons Platou Legal Services Limited
Clarksons Structured Asset Finance Limited
H. Clarkson & Company Limited
Halcyon Shipping Limited
International Transport Intermediaries Club Limited –
(Non-Executive Chair and Director)
J.O. Plowright & Co. (Holdings) Limited
LevelSeas Limited
Maritech Development Limited
Maritech Holdings Limited
Maritech Limited
Maritech Services Limited
Recap Manager Limited (appointed 31/03/2023)
Seafix Limited

Lok’nStore Group plc Annual Report and Accounts 2023Jeff Woyda Overseas Directorships
Afromar Properties (PTY) Limited
Clarkson Shipping Services Acquisition USA LLC
Clarksons Shipping Services USA LLC
Clarkson Shipping Services India Private Limited
Clarksons Hong Kong Limited
Clarksons Norway AS
Clarksons South Africa (Pty) Ltd
Clarksons Shipping Services USA LLC
Clarksons Singapore Pte. Limited
Clarksons USA Inc.

Directorships held by Jeff Woyda
in the last five years:
Oilfield Publications Limited
LNG UK PLC
Clarkson Logistics Limited
Clarksons Platou Futures Limited

Overseas directorships held by Jeff Woyda
in the last 5 years
Bonus Plus Investments Limited
Diligent Challenger Limited
Clarksons Logistics (HK) Limited

Trusteeships held by Jeff Woyda
The Clarkson Foundation CIO
The Clarkson PLC Pension Scheme
J.O. Plowright & Co. (Holdings) Limited Pension and
Assurance Scheme

Andrew Jacobs
Andrew Jacobs (UK) Limited
Andrew Jacobs LLP
Lok’nStore Limited*
The Box Room (Self-Storage) Ltd*

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*
Gypsy Moth Storage Limited (formerly Chichester
Storage Limited)
Broadstairs Storage Limited

Simon Thomas
Lok’nStore Limited*
Simon Thomas (UK) Limited
Storelab Limited

Richard Holmes
Lok’nStore Limited*
Lok’nStore Trustee Limited*
Moorfield Eye Hospital NHS Foundation Trust
The Schiehallion Fund Limited **

Charles Peal
No other directorships

Tom Lampard
No other directorships

Neil Newman-Shepherd
Lok’nStore Limited*

Bridget Barker
Bridget Barker Services Limited
Heritage Collins Ltd
Mainspring Fund Services Limited
Mainspring Nominees Limited
MSCT Trustee Limited
RAD Commercial Limited
TSO Holdings (UK) Limited
York House (Chelsea) Porter’s Flat Limited

Directorships held by Bridget Barker
in the last five years:
Hero Inc. Limited
Zedra Fund Managers (Guernsey) Limited

Overseas directorships held by Bridget Barker
Praesidium S.A.
Praesidium Investment Advisers Limited

Lok’nStore Group Companies.

** Guernsey registered Companies.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsCorporate Governance continued

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 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 set out in detail in note 31 Directors’ interests and
also confirm that there were no reportable related party
transactions in this financial year. 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. We
therefore report on the Lok’nStore Group plc dividends
received by all Directors, including Non-Executive Directors,
and do not consider these to be material business
relationships which would impair their independence.

Board Evaluation, Composition and Attendance
Board Attendance during the year is set out in the table below. Meetings have often been a mix of physical attendees
with occasions when Directors have dialled in via Zoom/Teams in order to participate.

Board Attendance

Total Number of Meetings in 2022-2023

Board

Executive Directors

Andrew Jacobs

Ray Davies

Neil Newman-Shepherd

Tom Lampard

Non-Executive Directors

Simon Thomas

Charles Peal

Richard Holmes

Jeff Woyda

Audit
Committee

Remuneration
Committee

Annual General

Meeting % Attendance

n/a

100%

Bridget Barker was appointed to the Board on 14 September 2023.

Tom Lampard attended all four of the Board Meetings subsequent to his appointment during the year.

The 2018 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 the
number of new properties acquired or revenue growth.
Our Non-Executives were evaluated informally within
this year’s review of our Board composition, and we
report on this as follows.

The UK Corporate Governance Code’s requirement is
that a smaller company should have at least two Non-
Executive Directors that are deemed independent. Three
of our Non-Executive Directors have served for longer
than nine years and were therefore no longer deemed
independent under this Code. However, our adopted
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’.

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.

Lok’nStore Group plc Annual Report and Accounts 2023We established that the broad range of skills, expertise,
and attitude amongst the Executive and Non-
Executive Directors includes all the matters that the
Group deals with – strategy, property, finance, human
resources, marketing and organisation. Furthermore,
the long experience of Board Members continues to be
considered an asset and all express challenges freely
and robustly.

In September 2020, we appointed Jeff Woyda, who
has considerable 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 growth. He is our current Senior Independent Non-
Executive Director and Chairman of the Remuneration
Committee. During this current financial year, we
have also met with potential Non-Executive Directors
to explore what expertise they might bring to the
Board and discussed the balance between new
experiences, diversity and increasing costs. After
careful consideration, we concluded that while the
current composition of the Board remains effective and
appropriate for the time being, we considered that the
appointment of an additional Independent Director would
add value and enable the key Committees of Audit and
Remuneration to be refreshed.

After the year-end, the Board was pleased to announce
the appointment of Bridget Barker who joined the Board
on 14 September 2023. Bridget joins us with a wealth
of knowledge and is an experienced lawyer having
gained over 35 years’ experience at Macfarlanes, a
leading and well-established City of London law firm,
where she specialised in investment funds, financial
services and regulatory legal work with a focus on private
equity and real estate funds. Latterly, she was Head
of the Investment Management Group at Macfarlanes.
Bridget will be appointed to the Company’s Audit and
Remuneration Committees in the coming year providing
a second Independent Non-Executive Director on each
Committee.

When making a Board appointment we interview a
number of candidates, and we select the best candidate
for the position. Our firm belief is that we should always
act in the best interest of shareholders in these matters,
while of course continuing to recognise that diversity is
important.

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, Charles Peal and Richard Holmes offer
themselves for re-election at every AGM, the Group
nevertheless considers these Non-Executive Directors to
be independent and therefore compliant with the Code.

Richard Holmes and Charles Peal’s deep and broad
experience are important assets to our business and
the committees they sit on.

Additionally, Tom Lampard, who was appointed to
the Board in February 2023, will also offer himself for
election at the forthcoming Annual General Meeting.
Bridget Barker who was appointed to the Board on
14 September 2023, will also offer herself for election
at the forthcoming Annual General Meeting.

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 straightforward 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
gives 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.

Frequent 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 2023

January

February

April

July

August

H1 Period- End

Pre-close Trading Statement (H1)

Interim Results Announced

Financial Year-End

Pre-close Trading Statement

End October

Preliminary Statement

December

AGM

On behalf of the Board.

Andrew Jacobs

Chair

27 October 2023

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsDirectors’ Report

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 2023.

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 prospects are set out in the Chair’s
Statement on pages 4 to 9 and the Strategic Report
on pages 15 to 47. The key performance indicators are
set out in the Highlights on page 2 and discussed in
more detail in the Financial Review on page 34 and the
Managing Director’s Review on page 21. Commentary
on financial risk management is included on page 44 and
disclosures on financial instruments are provided in note
17. The Carbon energy reporting disclosures have been
provided in the Environmental Report on pages 49 to 59.

Capital Structure
Details of the authorised share capital, together with
details of the movements in the Company’s issued
share capital during the year are shown in note 21.
The Company has one class of Ordinary Share which
carry no right to any fixed income. Each share carries the
right to one vote at General Meetings of the Company.

There are no specific restrictions on the size of the
holding nor on the transfer of share.

Details of Employee Share Schemes are set out in note
22 to 25 of the notes to the financial statements and
details of the shares held by the Company’s Employee
Benefit Trust are set out in note 28.

No person has any special rights of control over the
Company’s share capital and all issued share capital
is fully paid.

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 is 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, Statement of Cash
Flows 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 a
recognition of the inflationary effect of rising costs and
the expected impact on the Group, they have satisfied
themselves that the business is a going concern.

The Group operates a Revolving Credit Facility of £100
million. The facility continues to provide funding for future
Landmark stores to support the Group’s ambitious
growth plans. The facility is a joint agreement with ABN
AMRO N.V. and NatWest Bank plc participating equally
and runs until April 2026. The interest rate is set at the
Sterling Overnight Index Average (SONIA) 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. Further details are provided in note 18
(Borrowings).

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 £42.1 million, undrawn committed facilities at
31 July 2023 of £45.6 million and cash generated
from operations of £15.8 million.

Lok’nStore Group plc Annual Report and Accounts 2023Directors
The following Directors held office during the year and
subsequently:

With interest rates rising, this risk per se is increasing,
however the Executive and the Board monitor this
position carefully through the Group’s detailed operating
reports produced on a weekly basis and detailed
financial and accounting reports produced on a monthly
basis. The Group’s bank covenant compliance is
reviewed as part of this process. The Bank’s Senior
Interest covenant is tested quarterly on a 12-month
rolling basis.

Executive

A. Jacobs
(Chair)

R. Davies
(Finance Director)

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.

N. Newman-Shepherd
(Managing Director)

T. Lampard
(Property Director)

Non-Executive

J. Woyda
(Senior Non-Executive)

S. Thomas
(Non-Executive)

R. Holmes
(Non-Executive)

C. Peal
(Non-Executive)

B. Barker
(Non-Executive) –
Appointed 14 September 2023

Dividend
The Directors propose that a final dividend of 13.25
pence per share will be paid to the shareholders (2022:
12.25 pence per share). The total annual dividend payout
of 19.00 pence represents a 10.14% increase (2022
17.25 pence). The total estimated dividend to be paid
is £4.34 million based on the number of shares in issue
at 13 October 2023 as adjusted for shares held in the
Employee Benefit Trust. This is subject to approval by
shareholders at the Annual General Meeting on
7 December 2023 and has not been included as a
liability in these financial statements. The ex-dividend
date will be 23 November 2023; the record date
24 November 2023; with an intended payment date
of 5 January 2023. The final deadline for Dividend
Reinvestment Election (DRIP) is 8 December 2023.

From April 2018, dividend tax credits have been
replaced by an annual tax-free allowance on dividend
income across an individual’s entire share portfolio.
Above this threshold tax is paid by reference to their
individual tax bracket and personal circumstances. It is
the shareholder’s responsibility to include all dividend
income when calculating their tax liability. Lok’nStore
will continue to provide confirmations of the dividends
it has paid to registered shareholders.

Events after the Reporting Date
Reportable events after the reporting date are set out in
note 34 in the financial statements.

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 8 of the financial
statements. Biographical details of the Directors are set
out on pages 62 to 63.

Reappointment of Directors
Richard Holmes and Charles Peal who have over 19
and 16 years tenure respectively as Non-Executives
are required 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.

Andrew Jacobs and Jeff Woyda now retire by rotation
and offer themselves for re-election. Tom Lampard,
appointed during this financial year, also offers himself
for election at the forthcoming AGM.

Bridget Barker, who was appointed as an additional
independent Non-Executive Director of the Company
on 14 September 2023, is required to offer herself up
for reappointment in accordance with Article 103 of the
Company’s Articles of Association.

The biographical details of Bridget are set out on page
63 of this Report.

Directors’ and Officers’ Liability Insurance
A qualifying third-party indemnity provision for the benefit
of the Directors and Officers of the Company and its
subsidiaries throughout the financial year and as at the
date of approval of the Directors’ Report.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsDirectors’ Report continued

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 2023:

Current
Rank

% at

13 Oct 2023

Number of
Shares

Total Shares

% at

in Issue

15 Oct 2022

Number of
Shares

Total Shares

in Issue

Andrew Jacobs

Canaccord Genuity Wealth
Management (inst)

Investec Wealth & Investment

BlackRock

Simon Thomas

Hargreaves Lansdown

Interactive Investor

12.06

3,953,600

17.34

5,203,600

7.93

2,598,000

7.70

2,523,764

6.79

2,224,156

3.91

1,282,800

3.10

1,015,764

3.07

1,006,161

9.02

2,706,550

7.36

5.07

4.77

3.04

3.36

2,207,997

1,552,510

1,430,000

912,593

1,007,354

Represents total shares in issue

32,769,563

30,008,099

As at 13 October 2023, the Board of Directors either directly or indirectly hold 20.8% of the total issued share capital
of the Group and 20.8% of the Voting shares of the Group.

Group Director Shareholdings as at 31 July 2023

A. Jacobs

S. Thomas

R. Davies

R. Holmes

C. Peal

N. Newman-Shepherd

J. Woyda

T. Lampard

Total

Notes

1 and 3

2, 4 and 5

7 and 9

Number of
Ordinary Shares:
Beneficial

Number of
Ordinary Shares:
Non-Beneficial

Percentage
held

3,953,600

1,292,800

81,807

279,606

318,816

30,739

2,419

100

95,600

12.36%

17,589

180,485

1,988

3.95%

0.25%

0.91%

1.52%

0.10%

0.01%

0.00%

5,959,887

295,662

19.09%

Lok’nStore Group plc Annual Report and Accounts 2023
Major Shareholders

Andrew Jacobs

Shares held by Andrew Jacobs LLP

Shares held by Andrew Jacobs’ wife, daughters and son

Shares held by his pension fund

Andrew Jacobs and connected persons

Simon Thomas

Shares held by Simon Thomas LLP

Shares held by his pension fund

Rhys Warren-Thomas – Simon Thomas’ brother (Note 1)

Simon Thomas and connected persons

Total Ordinary Shares held by Major Shareholders

* Rounded to two decimal places.

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
2023 are shown in note 12(a) to the Financial Statements.
Further commentary on the property portfolio is contained
in the Property Review on page 28 and in the Financial
Review on page 40.

Share Buy-back Authority
Authority will be sought at the Company’s AGM on
7 December 2023 from shareholders to approve a
share buy-back 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.

Number of
Ordinary Shares

Percentage
Held*

3,953,600

95,600

310,350

4,359,550

1,292,800

253,390

57,319

1,603,509

5,963,059

12.07

0.29

0.95

13.30

3.95

0.77

0.18

4.89

18.20

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, colleagues, 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.

Colleague Consultation
The Group seeks to ensure our teams are committed to
our objectives in a number of ways. Strategic changes
are communicated directly to all colleagues who
are encouraged to address queries to the Executive
Directors. There are regular team meetings at store level
to provide team members with information about the
performance of, and initiatives in their stores. A wide
range of information is also communicated across the
Group’s intranet, including dissemination of the Group’s
financial results and press releases, and regular updates
from each department.

Colleagues are encouraged to participate in the Group’s
performance through colleague share schemes and
performance related bonuses. 53% of eligible employees
participate in the Group’s SIP Share Save Scheme.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsBribery and Corruption
The Group adheres to a range of policies, which include
anti-bribery and corruption. Our bribery policy, including
corruption, has been reviewed with no changes made.
This has been signed off by the Group Managing
Director.

Political Contributions
The Group made no political contributions during the
year (2022: nil).

Corporate Governance
The Group’s statement on Corporate Governance can be
found in the Corporate Governance Report on pages 61
to 87. The Corporate Governance Report forms part of
the Directors’ Report and is incorporated into it by
cross-reference.

Annual General Meeting
The Board considers the Annual General Meeting an
important opportunity to present to shareholders the
Company’s performance and intends to hold its Annual
General Meeting at 5.30 pm on 7 December 2023
to be held at the offices of Cavendish Financial, One
Bartholomew Close, London EC1A 7BL.

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 and Form of Proxy will be sent to shareholders.

On behalf of the Board.

Ray Davies

Finance Director

27 October 2023

Directors’ Report continued

Non-Discrimination
The Group’s recruitment policy is committed to promote
equality, judging neither by race, nationality, religion, age,
gender, disability, sexual orientation, nor political opinion
and to treat all stakeholders fairly.

In the event of a team member becoming disabled,
every effort is made to ensure their employment with
the Group continues, reasonable adjustments are made,
and that appropriate training is arranged. It is the policy
of the Group that the training, career development and
portion of disabled persons should, as far as possible,
be identical to that of other team members.

Human Rights
Lok’nStore is a Company that respects human rights
and aims to provide assurance to internal and external
stakeholders that we are committed to human rights
and the principles of the universal declaration of
human rights.

We are committed to creating and maintaining a positive
and professional work environment that reflects and
respects the basic rights of freedom to lead a dignified
life, free from fear or want, and where stakeholders
are free to express their independent beliefs. Our
employment policies and practices reflect a culture
where decisions are made solely on the basis of
individual capability and potential in relation to the needs
of the business.

Modern Slavery
The Group is committed to ensuring that there is no
modern slavery or human trafficking in our supply chains
or in any part of our business. Lok’nStore has not at
this time reached the hurdle for the requirement to
publish a Modern Slavery Compliance Statement but it
recognises its responsibilities in this area. To that end,
we propose to further develop our due diligence process
for identifying modern slavery. If we become aware that
any of our suppliers have modern slavery or human
trafficking related issues, we will address those situations
as appropriate. We will further review our business terms
to ensure that they reflect our commitment to operating
our business in a responsible and ethical way, including
by developing a code of conduct that we will require our
suppliers to adhere to.

Lok’nStore Group plc Annual Report and Accounts 2023Remuneration Report

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 team members and reflect their level of
skill, experience and expertise, scope of responsibilities
and performance in the context of the role and set by
reference to the market but taking into account business
performance, economic climate, market conditions and
inflation. The base salary is normally set annually and
effective from 1 August.

Annual and Monthly Bonuses: Aligns reward to
key Group strategic objectives and drives short-term
performance against the Group’s business plan for each
financial year. Revenue growth from the trading business
and strategic growth through the growth in the number
of stores/sites are the key drivers of the Annual Bonus.

Long Term Incentive Plans: Following strict
performance criteria aligns Executive Director interests
with those of shareholders and rewards achievement of
the long-term plan. The awards are granted subject to
performance conditions to be met over a performance
period of five years. (See below and note 24(b) and 24(c)
of the financial statements for details of the Schemes).
Certain senior managers who are in a position to
significantly influence the performance of the Group
also participate in the Schemes.

All Employee Scheme: The Group operates an HMRC
approved Share Incentive Plan (SIP). This encourages
share ownership by all team members and allows
them to share in the long-term success of the Group.
R. Davies, N. Newman-Shepherd and T. Lampard,
Executive Directors, also participate in this scheme.

Pension Entitlements: The Group pays pension
contributions into the Executive Directors’ personal
pension plans calculated at 4% of base salary. The Group
does not participate in any defined benefit 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 basic salary. The Group
recently introduced a comprehensive non-contributory
Employee Assistance Program for all employees which
has a death in service life insurance at four times base
salary for all colleagues, combined with an associated
package of benefits, such as direct access to a GP and
availability of confidential counselling services, as well as
access to a range of online tools covering tax and legal
advice, childcare, fitness and personal coaching advice.
The Executive Directors participate in this scheme.

Service Contracts: Executive Directors’ service
contracts operate on a rolling basis without a specific
end-date providing for up to one year’s notice on the
part of the Company and six months’ notice on the part
of the Director. Non-Executive Directors do not have
service contracts with the Company but rather their
appointments are governed by letters of appointment.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsRemuneration Report continued

Directors’ Remuneration

Directors’
Remuneration 2023

Salary
£

Bonuses
£

Benefits
£

Sub Total
£

Pension
£

Executive:

A. Jacobs

R. Davies

235,035

182,792

N. Newman-Shepherd

102,397

T. Lampard#

32,099

Non-Executive:

J. Woyda

S. Thomas

R. Holmes

C. Peal

31,345

25,075

32,250

20,627

70,715

20,417

–

8,235

5,587

2,912

1,253

–

5,914

–

275,520

209,006

176,024

53,769

31,345

30,989

25,075

–

7,312

4,096

1,284

–

Gains on
Share
Options
£

–

326,687

30,222

–

Total
£

275,520

543,005

210,342

55,053

31,345

30,989

25,075

658,893

144,009

23,901

826,803

12,692

356,909

1,196,404

Directors’
Remuneration 2022

Salary
£

Bonuses
£

Benefits
£

Sub Total
£

Pension
£

Gains on
Share
Options
£

Total
£

Executive:

A. Jacobs

R. Davies

223,842

174,087

N. Newman-Shepherd

97,521

Non-Executive:

J. Woyda

S. Thomas

R. Holmes

C. Peal

E. Luker

27,364

23,881

9,950

23,881

146,500

49,287

100,523

–

7,387

5,587

2,793

–

5,570

–

377,729

228,961

200,837

27,364

29,451

23,881

9,950

23,881

–

1,360,277

1,738,006

6,963

3,901

456,995

692,919

11,058

215,796

–

27,364

29,451

23,881

9,950

23,881

604,407

296,310

21,337

922,054

10,864

1,828,330

2,761,248

# Tom Lampard, the Group’s Property Director, joined the Board of Directors of the Group with effect from 6 February 2023.

The highest paid Director received contributions during the year of £7,312 (2022; £nil). 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 (2022: two).

Lok’nStore Group plc Annual Report and Accounts 2023The following table shows a summary of the options held by Directors under all schemes. Refer to notes 22 to 25
for details.

2023

Executive Directors

A. Jacobs – Unapproved

A. Jacobs – PPP (2018)

A. Jacobs – PPP (2023)

A. Jacobs – total

R. Davies – Unapproved

R. Davies – CSOP

R. Davies – PPP (2018)

R. Davies – PPP (2023)

R. Davies total

N. Newman – Unapproved

N. Newman – CSOP

N. Newman – PPP (2018)

N. Newman – PPP (2023)

N. Newman total

T. Lampard – Unapproved

T. Lampard – CSOP

T. Lampard – PPP (2018)

T. Lampard – PPP (2023)

T. Lampard total

All Directors total

2022

Executive Directors

A. Jacobs – Unapproved

A. Jacobs – PPP (2018)

A. Jacobs – total

R. Davies – Unapproved

R. Davies – CSOP

R. Davies – PPP (2018)

R. Davies total

N. Newman – Unapproved

N. Newman – CSOP

N. Newman – PPP (2018)

N. Newman-Shepherd total

Total
at 31 July
2022

Options
Granted

Options
Exercised

Unapproved
Scheme

Approved
CSOP
Share
Options

Total
at 31 July
2023

–

200,000

–

200,000

181,977

2,941

198,236

–

383,154

135,599

8,182

299,422

–

443,203

11,840

8,984

250,000

–

270,824

–

40,000

–

40,000

–

60,000

–

60,000

–

(50,000)

–

(50,000)

(2,420)

(1,600)

–

200,000

40,000

240,000

131,977

–

2,941

198,236

40,000

370,213

133,179

–

299,422

60,000

(4,020)

492,601

–

11,840

–

250,000

60,000

321,840

–

2,941

–

6,582

–

6,582

–

8,984

–

200,000

40,000

240,000

131,977

2,941

198,236

40,000

373,154

133,179

6,582

299,422

60,000

499,183

11,840

8,984

250,000

60,000

8,984

330,824

1,297,181

200,000

(54,020)

1,424,654

18,507

1,443,161

Total
at 31 July
2021

Options
Granted

Options
Exercised

Unapproved
Scheme

Approved
CSOP
Share
Options

Total
at 31 July
2022

206,087

160,000

366,087

246,977

7,742

160,000

414,719

135,599

8,618

240,000

384,217

–

(206,087)

40,000

–

(206,087)

–

200,000

–

(65,000)

181,977

2,941

38,236

41,177

–

964

59,422

60,386

(7,742)

–

(72,742)

–

(1,400)

–

(1,400)

–

198,236

380,213

135,599

–

299,422

435,021

–

2,941

–

2,941

–

8,182

–

8,182

–

200,000

181,977

2,941

198,236

383,154

135,599

8,182

299,422

443,203

All Directors total

1,165,023

141,563

(280,229)

1,015,234

11,123

1,026,357

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements

Remuneration Report continued

The grant of options to Executive Directors and senior
management is recommended by the Remuneration
Committee based on 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 – 2018 Long-
Term Partnership Performance Plan (PPP)
On 2 July 2018, the Group adopted the Company
Long-Term Partnership Performance Plan (PPP). The
Plan is a discretionary benefit offered by the Company
for the benefit of selected key team members including
Executive Directors. Its main purpose is to increase the
commitment and interest of colleagues in the Group’s
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.

Unapproved Share Options – 2023 Long-
Term Partnership Performance Plan (PPP)
In July 2023, the Group adopted a follow-on scheme
from the 2018 scheme, the former having completed its
five-year annual award allocation last July 2022. The new
2023 Company Long-Term Partnership Performance
Plan (PPP) is also a discretionary benefit offered by the
Company for the benefit of selected key team members
including Executive Directors and is similarly constructed
to its predecessor, albeit with new and challenging
performance targets. Further details are set out in note
24(c) of the financial statements.

Its purpose is to continue to reward the senior
management for their effort in the achievement of the
Group’s long-term business goals and performance
through share ownership.

On behalf of the Board and signed on its behalf by:

Jeff Woyda

Richard Holmes

Chairman of the
Remuneration
Committee

Member of the
Remuneration
Committee

Lok’nStore Group plc Annual Report and Accounts 2023

Statement of Directors’ Responsibilities

The Directors are responsible for preparing
the Strategic Report, the Directors’ Report,
and the financial statements in accordance
with applicable law and regulations.

Company law requires the Directors to prepare Group
and Company financial statements for each financial
year. The Directors have elected under company law
and are required by the AIM Rules of the London Stock
Exchange to prepare the Group financial statements in
accordance with UK-adopted International Accounting
Standards and have elected under company law to
prepare the company financial statements in accordance
with UK-adopted International Accounting Standards and
applicable law.

The Group and Company financial statements are
required by law and UK-adopted International Accounting
Standards 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 each of 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 UK-adopted International Accounting Standards
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.

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 requirements of 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
included on the Lok’nStore Group plc website.

Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsIndependent 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 2023 which comprise
of the consolidated statement of comprehensive income,
the consolidated and company statements of changes
in equity, the consolidated and company statements of
financial position, the consolidated statement of cash
flows and notes to the financial statements, including
significant accounting policies. The financial reporting
framework that has been applied in their preparation is
applicable law and UK-adopted International Accounting
Standards and, as regards the parent company financial
statements, as applied in accordance with the provisions
of the Companies Act 2006.

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 2023 and of the group’s profit for
the year then ended;

•

the group financial statements have been properly
prepared in accordance with UK-adopted
International Accounting Standards;

•

the parent company financial statements have been
properly prepared in accordance with UK-adopted
International Accounting Standards 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.

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 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 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.

Summary of Our Audit Approach

Key audit
matters

Group
• Valuation of property, plant

Parent Company
• None

Materiality

and equipment – Freehold stores

Group
• Overall materiality: £755,000

(2022: £916,000)

Parent Company
• Overall materiality: £679,000

(2022: £554,000)

• Performance materiality: £566,000

• Performance materiality: £509,000

(2022: £687,000)

(2022: £415,000)

Scope

Our audit procedures covered 100% of revenue, 100% of total assets and 100% of profit before tax.

Lok’nStore Group plc Annual Report and Accounts 2023Key Audit Matters
Key audit matters are those matters that, in our
professional judgment, 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.

Valuation of Property, Plant and Equipment – Freehold Stores

Key audit matter
description

At 31 July 2023, the fair value of freehold stores was £255.6m (2022: £239.8m). Disclosures in
respect of the property valuations are included in note 12a) of the financial statements.

How the matter was
addressed in the audit

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 freehold properties.

Fair values are calculated using actual and forecast inputs such as store occupancy, maximum
lettable area, net revenue by square foot, expenses, forecast expenditure and exit yields by
property as at 31 July 2023.

The valuation of freehold properties is deemed to be a Key Audit Matter due to the importance
of these assets to the group’s financial statements, the degree of estimation uncertainty
inherent in the valuation and the allocation of resource in the audit.

Our approach to auditing the valuations included the following:

• We evaluated the qualifications, objectivity and independence of those involved in preparing

the external valuation report.

• We tested the integrity of the initial information provided to the external valuer through

agreeing inputs such as actual occupancy, capital expenditure and profitability to underlying
documentation tested elsewhere in our audit work.

• We discussed the valuations with the external valuation expert and challenged them on

key inputs, including the assumed fill-up rate of the portfolio and the stabilised occupancy
rates used.

• We utilised an independent auditor’s expert in property valuation to assist the audit team in

assessing the appropriateness of the methodology used by the external valuer – this included
reviewing a specific sample of properties within the portfolio.

• We challenged management on the valuation movement during the year focusing on

occupancy rates and exit yields.

• We audited the disclosures relating to the property valuation, including disclosure of the

critical estimates and judgements by management.

Key Observations

Based on our audit work, we are satisfied that the judgements and assumptions used in arriving
at the fair value of the freehold properties are appropriate and supported by evidence obtained
during the course of the audit.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsIndependent Auditor’s Report continued
to the Members of Lok’nStore Group plc

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

£755,000 (2022: £916,000)

£679,000 (2022: £554,000)

Group

Parent company

Basis for determining
overall materiality

Rationale for benchmark
applied

5% of Adjusted EBITDA

Benchmark is considered
to represent the trading
performance of the business
and potential return to investors.

2% of gross assets – capped at 90% of group materiality
(2022: 10% of profit before tax)

Benchmark is considered to represent the value of the
underlying business.

Performance materiality

£566,000 (2022: £687,000)

£509,000 (2022: £415,000)

Basis for determining
performance materiality

Reporting of
misstatements to the
Audit Committee

75% of overall materiality

Misstatements in excess of
£38,000 and misstatements
below that threshold that,
in our view, warranted reporting
on qualitative grounds.

Misstatements in excess of £34,000 and misstatements
below that threshold that, in our view, warranted reporting
on qualitative grounds.

An Overview of The Scope of Our Audit
The group is deemed to consist of one component which
provides self-storage solutions. All subsidiaries are based
in the UK.

Full scope audit procedures were completed on the
consolidated and parent company financial statements.
The scope of our audit covered 100% of revenue, 100%
of total assets and 100% of profit before tax included in
the consolidated financial statements and no component
auditors were used.

Conclusions Relating to Going Concern
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue to
adopt the going concern basis of accounting included:

• Reviewing management’s going concern assessment

covering the 12 month period from the date of
approval of the financial statements

Subsidiaries that were subject to audit exemption were
audited to group materiality as part of the audit of the
consolidated financial statements.

• Checking the mathematical accuracy of the

underlying financial model

• Assessing management’s sensitivity analysis,
including considering the impact on bank loan
covenants

• Reviewing covenant compliance calculations, with
specific consideration to the current increasing
interest rate movements and market volatility.

• Reviewing the appropriateness of going concern

disclosures in the financial statements

Lok’nStore Group plc Annual Report and Accounts 2023Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s or the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.

Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report.

Other Information
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within the
annual report. 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.

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 course of 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 this gives rise to a material misstatement in the
financial statements themselves. 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.

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.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsIndependent Auditor’s Report continued
to the Members of Lok’nStore Group plc

Responsibilities of Directors
As explained more fully in the directors’ responsibilities
statement set out on page 81, the directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view,
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.

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.

The Extent to Which The Audit Was
Considered Capable of Detecting
Irregularities, Including Fraud
Irregularities are instances of non-compliance with
laws and regulations. The objectives of our audit are to
obtain sufficient appropriate audit evidence regarding
compliance with laws and regulations that have a direct
effect on the determination of material amounts and
disclosures in the financial statements, to perform audit
procedures to help identify instances of non-compliance
with other laws and regulations that may have a material
effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance
with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of
the financial statements due to fraud, to obtain sufficient
appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud through designing
and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified
during the audit.

However, it is the primary responsibility of management,
with the oversight of those charged with governance,
to ensure that the entity’s operations are conducted in
accordance with the provisions of laws and regulations
and for the prevention and detection of fraud.

In identifying and assessing risks of material
misstatement in respect of irregularities, including fraud,
the group audit engagement team:

• obtained an understanding of the nature of the
industry and sector, including the legal and
regulatory framework that the group and parent
company operate in and how the group and
parent company are complying with the legal
and regulatory framework;

•

inquired of management, and those charged with
governance, about their own identification and
assessment of the risks of irregularities, including
any known actual, suspected or alleged instances
of fraud;

• discussed matters about non-compliance with
laws and regulations and how fraud might occur
including assessment of how and where the
financial statements may be susceptible to fraud.

Lok’nStore Group plc Annual Report and Accounts 2023The most significant laws and regulations were determined as follows:

Legislation/Regulation

Additional audit procedures performed by the audit engagement team included:

IFRS/UK-adopted IAS and
Companies Act 2006

• Review of the financial statement disclosures and testing to supporting documentation;

• Completion of disclosure checklists to identify areas of non-compliance.

Tax compliance regulations

• Inspection of any advice received from tax advisors

• Consideration of whether any matters identified in the audit required reporting to an

appropriate authority outside of the entity.

The areas that we identified as being susceptible to material misstatement due to fraud were:

Risk

Audit procedures performed by the audit engagement team:

Revenue recognition –
Cut off and existence

• Checking the timing of revenue recognised around the year end on a sample basis by

checking contract start dates to occupancy reports.

Management override
of controls

• Reconciling revenue recorded in the financial statements to the group’s occupancy
management system and cash received. We checked a sample of customers from
the occupancy management system to signed contracts and evidence of customer
identification checks.

• Testing a sample of one-off management fees to check that the period in which they were

recognised aligned with the conditions in the underlying agreement. This sample was
agreed back to bank statement receipt.

• Testing the appropriateness of journal entries and other adjustments;

• Assessing whether the judgements made in making accounting estimates are indicative of

a potential bias; and

• Evaluating the business rationale of any significant transactions that are unusual or outside

the normal course of business.

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.

David Hough (Senior Statutory Auditor)

For and on behalf of RSM UK Audit LLP,
Statutory Auditor

Chartered Accountants
25 Farringdon Street London
EC4A 4AB

27 October 2023

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements88

Lok’nStore Group plc Annual Report and Accounts 2023Financial
Statements

90 Consolidated Statement of
Comprehensive Income

91 Consolidated Statement of Changes in Equity

92 Company Statement of Changes in Equity

93 Consolidated and Company Statements

of Financial Position

94 Consolidated Statement of Cash Flows

95 Accounting Policies

106 Notes to the Financial Statements

142 Glossary

144 Our Stores

CASE STUDY:

PROUD PARTNERS OF
SCHOOLS AND LOCAL
COMMUNITIES
38%

OF STORES HAVE A SCHOOL STORING

Lok’nStore is proud to be the local storage company of choice
for schools and communities across the UK. We understand that
space within schools is always at a premium, so we offer a range of
storage solutions to help schools rationalise their space and focus
on education.

As a Group, Lok’nStore is pleased to be the storage partner for 26 schools
within those communities, for which we store all manner of equipment,
furniture and archive paperwork for schools, freeing up valuable space
that can be used for teaching and learning.

In addition to schools, Lok’nStore stores for hundreds of clubs, societies,
institutions, not-for-profit organisations, local councils and government
agencies. We know that customers choose Lok’nStore because of our
scale as a national service provider, but we also take great care to be a
friendly face and a reliable partner in the communities in which we operate.
We are committed to supporting the local communities we serve.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2023

Revenue

Total property, staff, distribution, and general costs

Adjusted EBITDA1

Depreciation

Equity-settled share-based payments

Non-underlying items

Operating profit

Finance income

Finance cost

Profit before taxation

Income tax expense

Group
Year ended
31 July 2023
£’000

27,147

(12,091)

15,056

(5,690)

(450)

(318)

(6,458)

8,598

665

(2,562)

6,701

(2,009)

Group
Year ended
31 July 2022

£’000

26,902

(10,553)

16,349

(4,727)

(201)

5,739

811

17,160

(1,328)

15,874

(3,796)

Notes

26a

Profit for the year attributable to Owners of the Parent

27a

4,692

12,078

Other comprehensive income

Items that will not be reclassified to profit and loss

Fair value movement in property valuation

Deferred tax relating to change in property valuation

Other comprehensive income

Total comprehensive income for the year attributable to
Owners of the Parent

Earnings per share attributable to owners of the Parent

Basic

Total basic earnings per share

Diluted

Total diluted earnings per share

7,819

(1,954)

5,865

60,171

(14,284)

45,887

10,557

57,965

15.90p

41.24p

15.65p

40.48p

1 Adjusted EBITDA is defined in the accounting policies section of the notes to this Report.

Lok’nStore Group plc Annual Report and Accounts 2023

Consolidated Statement of Changes in Equity
For the year ended 31 July 2023

Attributable to owners of the Parent

Share
Capital
£’000

Share
Premium
£’000

Other
Reserves
£’000

Revaluation
Reserve
£’000

Retained
Earnings
£’000

Total
Equity
£’000

31 July 2021

298

10,815

9,138

104,736

26,272

151,259

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

Reserve transfer on disposal of assets

Transfer additional depreciation on revaluation
net of deferred tax

Total transactions with owners

–

576

–

201

(180)

(57)

–

12,078

45,887

–

12,078

45,887

57,965

(4,601)

–

180

–

(20,258)

20,258

(821)

821

201

–

(57)

579

–

576

(36)

(21,079)

16,658

(3,878)

31 July 2022

301

11,391

9,102

129,544

55,008

205,346

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

Primary equity placing (gross)

Transaction costs of primary placing

Exercise of share options

Transfer additional depreciation on revaluation
net of deferred tax

–

20,473

(889)

160

–

450

(47)

(358)

–

Total transactions with owners

19,744

–

4,692

5,865

–

5,865

4,692

10,557

–

(5,295)

–

450

–

(358)

20,500

(889)

161

(1,095)

1,095

–

(4,153)

14,569

31 July 2023

329

31,135

9,147

134,314

55,547

230,472

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsCompany Statement of Changes in Equity
For the year ended 31 July 2023

31 July 2021

298

10,815

16,604

2,004

29,721

Share
Capital
£’000

Share
Premium
£’000

Retained
Earnings
£’000

Other
Reserves
£’000

Total Equity
£’000

Profit and total comprehensive income for the year

Transactions with owners:

Equity settled share-based payments

Transfer in relation to share-based payments

Exercise of share options

Dividends paid

Total transactions with owners

–

576

–

576

5,756

–

5,756

–

180

–

(4,601)

1,335

201

(180)

–

201

–

579

(4,601)

(1,935)

31 July 2022

301

11,391

17,939

2,025

31,656

Profit and total comprehensive income for
the year

Transactions with owners:

Equity settled share-based payments

Transfer in relation to share-based payments

Primary equity placing

Transaction costs of primary placing

Exercise of share options

Dividends paid

Total transactions with owners

–

20,473

(889)

160

–

19,744

6,701

–

6,701

–

(5,295)

1,453

450

(47)

–

403

450

–

20,500

(889)

161

(5,295)

21,628

31 July 2023

329

31,135

19,392

2,428

53,284

Lok’nStore Group plc Annual Report and Accounts 2023Consolidated and Company
Statements of Financial Position
31 July 2023 Company Registration No. 04007169

Assets

Non-current assets

Property, plant and equipment

Investments

Other receivables

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

Obligations under lease liabilities

Taxation

Non-current liabilities

Borrowings

Obligations under lease liabilities

Deferred tax

Total liabilities

Net assets

Equity attributable to owners of the Parent

Called up share capital

Share premium

Other reserves

Retained earnings

Revaluation reserve

Total equity

Group
31 July 2023
£’000

Group
31 July 2022
£’000

Company
31 July 2023
£’000

Notes

Company
31 July 2022

Restated
£’000

12a

12b

17c

26a

314,013

292,848

–

13,769

327,782

145

2,585

42,132

44,862

–

10,424

303,272

143

3,988

46,465

50,596

372,644

353,868

(7,180)

(826)

–

(8,006)

(54,046)

(13,830)

(66,290)

(134,166)

(142,172)

230,472

329

31,135

9,147

55,547

134,314

230,472

(7,229)

(1,612)

(989)

(9,830)

(66,196)

(9,282)

(63,214)

(138,692)

(148,522)

205,346

301

11,391

9,102

55,008

129,544

205,346

–

3,321

42,963

–

46,284

–

7,000

–

7,000

53,284

–

2,871

22,785

–

25,656

–

6,000

–

6,000

31,656

–

53,284

31,656

329

31,135

2,428

19,392

–

53,284

301

11,391

2,025

17,939

–

31,656

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
2023 was £6.7 million (2022: £5.8 million).

Approved by the Board of Directors and authorised for issue on 27 October 2023 and signed on its behalf by:

Andrew Jacobs

Chair

Ray Davies

Finance Director

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements

Consolidated Statement of Cash Flows
For the year ended 31 July 2023

Operating activities

Cash generated from operations

Income tax paid

Net cash inflow from operating activities

Investing activities

Proceeds of sale & manage-back stores

Purchase of property, plant and equipment

Interest received

Net cash generated by investing activities

Financing activities

Proceeds of bank borrowings utilised for store development and bank refinancing

Repayment of bank borrowings

Finance costs paid

Lease liabilities paid

Primary equity placing (net of placing costs)

Equity dividends paid

Proceeds from exercise of share options

Net cash used in financing activities

Net (decrease)/increase/in cash and cash equivalents in the year

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Notes

29a

12a

Group
Year ended
31 July 2023
£’000

Group
Year ended
31 July 2022

£’000

15,815

(1,960)

13,855

–

(15,803)

665

15,138

–

(12,386)

(3,324)

(1,817)

19,611

(5,295)

161

(3,050)

(4,333)

46,465

42,132

18,569

(1,060)

17,509

37,922

(11,961)

25,974

1,386

–

(1,741)

(1,746)

–

(4,601)

579

(6,123)

37,360

9,105

46,465

No statement of cash flows is presented for the Company as it had no cash flows in either year.

Lok’nStore Group plc Annual Report and Accounts 2023Accounting 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 financial statements for the year ended 31 July 2023 have been prepared in accordance with UK-adopted
International Accounting Standards (IFRS) as adopted by the UK Endorsement Board and with the requirements of
the Companies Act 2006 as applicable to companies reporting under those standards.

The Group has applied all accounting standards and interpretations issued by the International Accounting
Standards Board and International Financial Reporting Interpretation Committee applicable to companies reporting
under UK adopted IFRS relevant to its operations and effective for accounting periods beginning on or after 1 August
2022. There was no material impact on the adoption of these.

The statutory accounts for the year ended 31 July 2023 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.

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, Amendments, Improvements & Interpretations Applicable1
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.

New pronouncement
IFRS 17 Insurance Contracts

Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2

Definition of Accounting Estimates – Amendments to IAS 8

Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12

Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants –
Amendments to IAS 1

Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

Disclosures: Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

Effective date*
1 Jan 2023

1 Jan 2023

Note 1

1 Jan 2024

* Effective for annual periods beginning on or after this date.

The amendments are effective immediately upon issuance. The disclosure of the current tax expense related to Pillar Two income
taxes and the disclosures in relation to periods before the legislation is effective are required for annual reporting periods beginning
on or after 1 January 2023, but are not required for any interim period ending on or before 31 December 2023.

The Directors do not anticipate that the adoption of these revised standards, amendments and interpretations
will have a significant impact on the figures included in the financial statements in the period of initial application.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsAccounting Policies continued

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.

Going Concern
The Directors can report that, based on the Group’s budgets and financial projections, which include a recognition
of the inflationary effect on rising costs, on the Group they have satisfied themselves that the business is a going
concern. The impact of rising costs and increasing bank interest rates and the measures the Directors have taken
to mitigate its effects are set out in the Managing Director’s Review on page 21.

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 £42.1 million (2022: £46.5 million), undrawn committed bank facilities at 31 July 2023, based on the Group’s
facility of £100 million, of £45.6 million (2022: £33.2 million – based on £100 million facility), and cash generated from
operations in the year ended 31 July 2023 of £15.8 million (2022: £18.6 million).

With interest rates rising, interest risk per se is increasing, however the Executive and the Board monitor this position
carefully through the Group’s detailed operating reports produced on a weekly basis and detailed financial and
accounting reports produced on a monthly basis.

The Directors continually review and update the Group’s ‘Rolling Forecast Model’ which projects forward for a
minimum of three years. After taking into account the Group’s operating plan and budget for the year ending
31 July 2024 and beyond, and reviewing these projected cash flows, applying reasonable sensitivity analysis,
together with the Group’s available cash balances, borrowing facilities, and potential property valuation movements
over that period, the Directors consider that the Group has sufficient funds to meet its liabilities and commitments
as they fall due and for a period of at least twelve months from the date of approval of these financial statements.

The Group is fully compliant with all bank covenants and undertakings and is not obliged to make any repayments
prior to expiration. The financial statements are therefore prepared on a going concern basis.

Revenue Recognition
The Group recognises revenue when the amount of the revenue can be reliably measured and when goods are sold,
and title has passed. Revenue from services provided is recognised evenly over the period in which the services are
provided. The opening offer discount of 50% (eight weeks for the price of four) is spread evenly over the term of the
discount period.

a) Self-storage revenue

Self-storage revenue is recognised over the period for which the space is occupied by the customer on a time
apportionment 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 stores 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.

Lok’nStore Group plc Annual Report and Accounts 2023c) 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 and therefore insurance risk.

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’s 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 and the Group has
determined that there is one operating segment.

Alternative Performance Measures (APMs)
In addition to International Financial Reporting Standards, (IFRS) accounting performance measures, we use some
Alternative Performance Measures (APMs) to help us explain to the users of these Financial Statements how the
underlying business is performing.

Such APMs are Key Performance Indicators for our business and include, for example, Adjusted Store EBITDA,
Cash Available for Distribution (CAD), Loan to Value (LTV), Adjusted Net Asset Value (NAV) and others.

We identify these measures on page 10 and explain what we mean when we use them and, importantly, why we use
them. They are intended to supplement and not substitute those financial measures prepared in accordance with IFRS.

Operating Profit
Operating profit is defined as profit after all costs except finance income, finance costs and taxation.

Non-underlying Items
Refers to one-off items of a non-operational nature which arose during the year, and which may relate to asset
disposals, abortive site acquisition costs, or other costs and which are likely to be material and infrequent events.
(Refer to note 4 of the Financial Statements).

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsAccounting Policies continued

Cashflow
The parent entity does not hold a bank account and payments made on behalf of the parent entity are made by the
subsidiary undertaking on direction by the parent. The parent company accounts for this as a non-cash transaction,
as there is no direct exchange of cash to or from the company and accordingly no parent company cashflow
statement is presented.

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 except for when the taxable temporary difference is associated with interests in
subsidiaries, associates or joint ventures and the timing of the reversal can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.

The carrying amounts of deferred tax assets are 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.
Deferred tax is recognised directly in equity in relation to depreciation transfers on revalued assets.

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 Settled Share-Based Payments
The Group issues equity-settled share-based payments to certain colleagues. These are measured at fair value at
the date of grant. The fair value determined at the grant date and therefore the cost of the share-based payment
to employees is expensed to profit or loss on a straight-line basis 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. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations. At each balance sheet date, the Group revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the
original estimates, if any, is recovered in the statement of comprehensive income such that the cumulative expense
reflects the revised estimate with a corresponding adjustment to equity reserves.

Lok’nStore Group plc Annual Report and Accounts 2023For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured
initially at the fair value of the liability. At each balance sheet date until the liability is settled, and at the date of
settlement, the fair value of the liability is re-measured, with any changes in fair value recognised in the statement
of comprehensive income for the year.

Property, Plant and Equipment
Freehold 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.

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 (excluding land) 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

over unexpired lease period or renewal term

Short leasehold improvements

over unexpired lease period or renewal term

Fixtures, fittings, and equipment

5% to 15% reducing balance

Computer equipment

Motor vehicles

over 2 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 £1,459,366
(2022: £1,094,722) 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.

Impairment of Property, Plant and Equipment
At each reporting date the Group reviews the carrying amounts of its property, and plant and equipment assets
which have not been revalued 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.

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsAccounting Policies continued

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 or useful life.

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 12 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.

For 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 SONIA) and any residual value guarantees. Variable lease payments are
initially measured using the index or rate when the leased asset is available for use.

Subsequent measurement of the lease liability

The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the
lease liability and reduced for lease payments. Interest on the lease liability is recognised in profit or loss, unless
interest is directly attributable to qualifying assets, in which case it is capitalised in accordance with the Group’s
policy on borrowing costs.

Re-measurement of the lease liability

The lease liability is adjusted for changes arising from the original terms and conditions of the lease that change
the lease term, the Group’s assessment of its option to purchase the leased asset, the amount expected to be
payable under a residual value guarantee and/or changes in lease payments due to a change in an index or rate.
The adjustment to the lease liability is recognised when the change takes effect and is adjusted against the right of
use asset, unless the carrying amount of the right of use asset is reduced to zero, 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 Group’s incremental borrowing rate at the date of reassessment.

100

Lok’nStore Group plc Annual Report and Accounts 2023Lease 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 used 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.

The impairment model under IFRS 9 requires the recognition of impairment provisions based on expected credit
losses rather than only incurred credit losses. The significant financial assets held by the Group that are affected
by the impairment losses recognised under IFRS 9 are trade and other receivables.

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, typically when the store opens for trade.

101

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsAccounting Policies continued

Leases – the Group as lessee continued
The Group has an active store development programme and in accordance with IAS 23 (borrowing costs) 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 for the year 2023:
4.77% (2022: 1.71%). When an individual store development is complete, and the store has opened, capitalisation
of attributable borrowing costs ceases. In the current year £1.54 million (2022: £0.59 million) interest was capitalised
in respect of ten qualifying development assets.

Derivative Financial Instruments and Hedge Accounting
The Group’s activities expose it to interest rate risk. The Group has historically used interest rate swap contracts to
hedge these exposures. There were no financial derivatives held by the Group at 31 July 2023 or at 31 July 2022.
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.

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 ageing 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 £1.3 million (2022: £1.20 million). As described in note 15 the Group’s
exposure to credit risk is low and the Group’s credit model is solid. The Directors have assessed the impact of future
impairment losses recognised for trade receivables under IFRS 9 at 31 July 2023 based on actual losses experienced
over the past five years and concluded that the impact on impairment losses recognised under IFRS 9 is immaterial.

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 as 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 comprise 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 and other debtors and amounts due from Group undertakings 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.

102

Lok’nStore Group plc Annual Report and Accounts 2023Where 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, the financial asset is presented as a non-current asset. Where the amounts are
now due and payable and have been invoiced accordingly, the amount is treated as a debtor.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.

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.

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.

Dividends
Dividends are recognised when declared during the financial year.

Critical Accounting Estimates a) and Judgements b) c) and d)
The preparation of financial statements under 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. The Group employs expert external
valuers, JLL, who report on the value of the Group’s stores on an annual basis. The principal assumptions underlying
management’s estimation of the fair value are those relating to stabilised occupancy levels, expected future growth
in storage fees 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 12(a) together with estimation sensitivities undertaken. The carrying value of land and buildings
held at valuation at the reporting date was £255.6 million (2022: £239.8 million) as shown in the table in note 12(a).

103

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsAccounting Policies continued

Critical Accounting Estimates a) and Judgements b) c) and d) continued
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 lettable storage space that it can achieve in its planning negotiations, together with the
time it will take to achieve maturity. 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 therefore justify the proposed
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 £30.6 million (2022: £29.2 million).
Please see note 12(a) 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 Group is an integrated storage solutions business offering a range of services to its customers. We provide
services to our customers under contracts for the provision of storage services which do not give them any property
or tenancy rights and a large number of the stores we operate are from properties where we do not own the land
or the buildings. The assets we do own are valued on the basis of the trading cash flows that the operating
businesses generate.

The Group continues to develop its managed stores’ business where it uses its operational and logistic expertise
to provide a full range of services to customers in stores we manage for third-party owners. In recent years the
Group has developed many new managed stores all of which are owned by third-party investors and managed
by Lok’nStore.

Previously owned sites at Woking, Ashford, Swindon and Crayford, have historically 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. In FY2022, another four trading stores were the subject of sale
and manage-back transactions by which Lok’nStore has retained the management of the business.

All of this trading activity, including active management and marketing 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 28 for the changing ownership
structure of the stores.

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 42 stores mainly in southern England, although in recent
years we have expanded our historically southern England focused geographic footprint into the Southwest (Exeter),
Wales (Cardiff) and the Northwest (Salford, Warrington, and Altrincham). Of the 42 stores, Lok’nStore owns the
freehold interest in 17 stores, nine of the stores are held under commercial leases. There are a further 16 managed
stores operating under management contracts for third-party owners making a total of 42 stores trading under the
Lok’nStore brand. In addition, there is a secured pipeline of a further 11 stores (nine owned and two managed).
When fully developed the Group will operate 53 trading stores.

104

Lok’nStore Group plc Annual Report and Accounts 2023One 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 2023 (net deferred of tax) of £5.9 million (2022: £45.9 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 a similar asset, adjusted for the term of the lease.

105

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsNotes to the Financial Statements
For the year ended 31 July 2023

1 Revenue
Analysis of the Group’s revenue is shown below:

Stores trading

Self-storage revenue

Insurance revenue

Retail sales (packing materials etc.)

Subtotal self-storage revenue – owned stores

Management fees – managed stores

Subtotal

Non-storage income

Total revenue per statement of comprehensive income

Segmental information

Group
2023
£’000

22,873

2,251

240

25,364

1,659

27,023

124

27,147

Group
2022
£’000

21,585

2,239

252

24,076

2,785

26,861

26,902

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their
performance. Given the nature of the Group’s business, there is one segment, which is the provision of self-storage
and related services which all arise in the UK.

2 Property, Staff, Distribution and General Costs

Property and premises costs

Property rentals*

Net property and premises costs

Staff costs

General overheads

Subtotal operating costs

Retail products cost of sales (see note 3)

Total

Group
2023
£’000

6,821

(1,817)

5,004

5,267

1,567

11,838

253

12,091

Group
2022
£’000

5,304

(1,746)

3,558

5,369

1,438

10,365

188

10,553

This adjustment relates to lease payments in the period which are treated as a reduction in lease liabilities. The property and premises
costs are presented with this figure included to present the underlying costs associated with lease rentals.

3 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

Total cost of sales of retail products

106

Group
2023
£’000

110

253

Group
2022
£’000

113

188

Lok’nStore Group plc Annual Report and Accounts 20234 Non-underlying items

Profit on sale of trading stores1

Liquidated damages received on development2

Abortive site costs3

Recognition of additional Share Incentive Plan (SIP) liability

Additional follow-on costs relating to the sale and manage-back of four
trading stores located at Basingstoke, Cardiff, Horsham, and Portsmouth

Total non-underlying items

Group
2023
£’000

–

195

(63)

(369)

(81)

(318)

Group
2022
£’000

5,936

175

(372)

–

5,739

1 Profit arising on the sale and manage-back of four trading stores located at Basingstoke, Cardiff, Horsham and Portsmouth.

Liquidated damages received on the late delivery of a new store development which has subsequently opened.

The Group’s active search for suitable development sites for new Landmark stores has resulted in some abortive costs - mainly around
planning and associated professional costs.

5 Finance Income

Bank interest

Other interest

Total finance income

Interest receivable arises on cash and cash equivalents (see note 17).

6 Finance Costs

Interest on bank borrowings

Capitalised interest

Net bank interest

Non-utilisation fees

Amortisation of bank loan arrangement fees

Interest on obligations under lease liabilities

Total finance costs

Group
2023
£’000

660

665

Group
2023
£’000

3,112

(1,544)

1,568

212

235

547

2,562

Group
2022
£’000

–

Group
2022
£’000

1,296

(589)

707

166

216

239

1,328

107

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements7 Profit before Taxation

Profit before taxation is stated after charging:

Depreciation and amounts written off property, plant and equipment:

Depreciation based on cost

Depreciation based on revalued assets

Depreciation of property, plant and equipment (note 12a)

Depreciation of right of use assets

Loss on disposal of fixed assets

Total

Audit services

– UK statutory audit of the Company and consolidated accounts

Other services

– Interim Review – agreed upon procedures

Comprising:

Audit services

Non-audit services

Amounts payable to RSM UK Audit LLP

8 Employees

Group
2023
£’000

2,550

1,452

4,002

1,688

–

5,690

Group
2023
£’000

144

156

144

156

Group
2022
£’000

2,316

1,094

3,410

1,314

4,727

Group
2022
£’000

125

134

125

134

Group
2023
No.

Group
2022
No.

The average monthly number of persons (including Directors) employed by the Group
during the year was:

Store management*

Administration

163

193

Of the 163 store employees, 64 (2022:54) are directly deployed in Managed Stores and the corresponding employee costs are
recharged to the third party owners.

Costs for the above persons:

Wages and salaries

Social security costs

Pension costs

Share-based remuneration (options)

108

Group
2023
£’000

4,060

530

109

4,699

450

5,149

151

178

Group
2022
£’000

4,174

702

4,974

201

5,175

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023Share-based remuneration is separately disclosed in the statement of comprehensive income. Wages and salaries
of £92,572 (2022: £154,920) 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 £19,938 (2022: £32,807) outstanding at the year-end. There were no
employees employed by Lok’nStore Group plc in the year other than the Directors (2022: nil).

Directors’
Remuneration
2023

Executive:

A. Jacobs

R. Davies

N. Newman-Shepherd

T. Lampard

Non-Executive:

J. Woyda

S. Thomas

R. Holmes

C. Peal

Directors’
Remuneration
2022

Executive:

A. Jacobs

R. Davies

N. Newman-Shepherd

Non-Executive:

J. Woyda

S. Thomas

R. Holmes

E. Luker

C. Peal

Salary

Bonuses
£

Benefits
£

Sub Total

Pension
£

235,035

182,792

102,397

32,099

31,345

25,075

32,250

20,627

70,715

20,417

–

8,235

5,587

2,912

1,253

–

5,914

–

275,520

209,006

176,024

53,769

31,345

30,989

25,075

–

7,312

4,096

1,284

–

Gains
on Share
Options
£

–

326,687

30,222

–

Total

275,520

543,005

210,342

55,053

31,345

30,989

25,075

658,893

144,009

23,901

826,803

12,692

356,909

1,196,404

Salary
£

Bonuses

Benefits

Sub Total

Pension
£

Gains
on Share
Options
£

Total
£

223,842

174,087

97,521

27,364

23,881

9,950

23,881

146,500

49,287

100,523

–

7,387

5,587

2,793

–

5,570

–

377,729

228,961

200,837

27,364

29,451

23,881

9,950

23,881

–

1,360,277

1,738,006

6,963

3,901

456,995

11,058

692,919

215,796

–

27,364

29,451

23,881

9,950

23,881

604,407

296,310

21,337

922,054

10,864

1,828,330

2,761,248

Details of the Directors’ remuneration are shown above.

109

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements9 Taxation

Current tax:

UK corporation tax – current year

UK corporation tax – adjustment in respect of prior period

Total UK corporation tax

Deferred tax:

Origination and reversal of temporary differences

Total deferred tax

Total Income tax expense for the year

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 21%
(2022: 19%)

Depreciation of non-qualifying assets

Share-based payment charges in excess of corresponding tax deduction

Adjustments in respect of prior periods – corporation tax

Tax effect of rolled over gains on sale of property

Other

Income tax expense for the year

Effective tax rate

Group
2023
£’000

1,283

(38)

1,245

764

2,009

2023
£’000

6,701

1,423

482

(38)

–

2,009

30%

Group
2022
£’000

1,572

111

1,683

2,113

3,796

2022
£’000

15,874

3,016

377

(337)

111

432

197

3,796

24%

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 £1.95 million (2022: £14.3 million) has been recognised directly in other comprehensive income
(see note 20 on deferred tax).

The current year tax charge is a blended rate of 21% based on a pro-rata calculation of eight months at 19% and
four months at 25%. The deferred tax balances are measured at the substantively enacted rates of corporation tax
being 19% until 31 March 2023 and a rate of 25% thereafter.

110

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 202310 Dividends

Amounts recognised as distributions to equity holders in the year:

Final dividend for the year ended 31 July 2021 (10.67 pence per share)

Interim dividend for the year to 31 July 2022 (5.00 pence per share)

Final dividend for the year ended 31 July 2022 (12.25 pence per share)

Interim dividend for the year to 31 July 2023 (5.75 pence per share)

2023
£’000

–

3,602

1,693

5,295

2022
£’000

3,132

1,469

–

4,601

In respect of the current year the Directors paid an interim dividend of 5.75 pence per share to shareholders on
10 June 2023. The Directors propose that a final dividend of 13.25 pence per share will be paid to the shareholders.
The total estimated final dividend to be paid is approximately £4.34 million based on the number of shares in issue
at 13 October 2023 as adjusted for shares held in the Employee Benefits Trust.

This is subject to approval by shareholders at the Annual General Meeting on 7 December 2023 and has not been
included as a liability in these financial statements. The ex-dividend date will be 23 November 2023; the record date
24 November 2023; with an intended payment date of 5 January 2023. The final deadline for Dividend Reinvestment
Election (DRIP) is 8 December 2023.

11 Earnings per Share
The calculations of earnings per share are based on the following profits and numbers of shares.

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
2023
£’000

4,692

Group
2022
£’000

12,078

2023

2022

No. of Shares

29,518,911

29,287,451

467,137

549,321

29,986,048

29,836,772

Earnings per share
Basic

Total basic earnings per share

Diluted

Total diluted earnings per share

Group
2023
Pence

15.90p

Group
2022
Pence

41.24p

15.65p

40.48p

111

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements12a) Property, Plant and Equipment

Group

Cost or valuation

1 August 2021

Additions

Transfers

Disposals

Revaluations

31 July 2022

Depreciation

1 August 2021

Depreciation

Disposals

Revaluations

31 July 2022

Cost or valuation

1 August 2022

Additions

Transfers

Disposals

Revaluations

31 July 2023

Depreciation

1 August 2022

Depreciation

Disposals

Revaluations

31 July 2023

Development
Property
Assets at
Cost
£’000

Land and
Buildings
at Valuation
£’000

Short
Leasehold
Improvements
at Cost
£’000

Fixtures,
Fittings and
Equipment
at Cost
£’000

Motor
Vehicles
at Cost
£’000

Total
£’000

33,676

10,611

(15,072)

–

199,617

756

11,234

(30,101)

58,299

7,557

158

–

30,420

271,280

663

3,838

(3,615)

–

12,188*

–

(33,716)

58,299

29,215

239,805

7,715

31,306

308,051

–

1,872

–

(1,872)

–

29,215

13,260

(11,870)

–

239,805

10,186

–

5,570

–

2,249

–

(2,249)

–

2,509

296

–

2,805

4,910

7,715

173

–

13,109

1,242

(1,963)

–

12,388

18,918

31,306

3,877

1,684

–

2,805

301

–

3,106

4,782

12,388

1,452

–

13,840

23,027

–

15,628

3,410

(1,963)

(1,872)

15,203

292,848

308,051

17,348*

–

5,570

330,970

15,203

4,002

–

(2,249)

16,956

314,013

30,605

255,599

7,888

36,867

Net book value at 31 July 2022

29,215

239,805

Net book value at 31 July 2023

30,605

255,599

Including talised interest costs of £1,544,229 (2022: £589,843).

The Group has an active store development programme and in accordance with IAS 23 (borrowing costs) has
material assets that take a substantial period of time to develop from acquisition to ultimate store opening.
Accordingly borrowing costs of £1,54 million (2022: £0.59 million) have been capitalised that are directly attributable
to the acquisition, construction and fit-out of these qualifying store assets. £332,529 of this amount relates to
development stores which opened during the year leaving a balance of £1,211,700 carried in development property
assets. If all property, plant and equipment were stated at historic cost the carrying value would be £124.9 million
(2022: £111.4 million).

112

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023Capital expenditure during the period totalled £17.3 million. (2022: £12.2 million). This was primarily the contract
exchange of the Milton Keynes site, the purchase of the Bolton site and the exchange of contracts on the Eastbourne
site. There are ongoing construction and fit out works at our sites in Staines and Basildon, final costs on Bedford
and Peterborough prior to opening, as well as and the completion of construction works at our Stevenage and
Warrington stores. Also, planning and pre-development works at our Bournemouth, Altrincham, Barking and
Cheshunt sites featured.

Property, plant and equipment (non-current assets) with a carrying value of £314.0 million (2022: £292.8 million) are
pledged as security for bank loans.

Independent External Market Valuation of Freehold and Leasehold Land and Buildings

Fair Value Measurement

The fair value hierarchy within which the fair value measurements are categorised is level 3, in accordance with
IFRS 13 (fair value measurement).

On 31 July 2023, an independent professional valuation was prepared by JLL in respect of 15 freehold, and nine
leasehold stores operated by Lok’nStore. The valuation was prepared in accordance with the RICS Valuation – Global
Standards 2022 – UK national supplement, 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 has confirmed that:

• This is the eighth 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 £301.9 million (2022: £279 million) of which
£274.7 million (2022: £254.8 million) relates to freehold properties, and £27.2 million (2022: £24.2 million) relates to
properties held under leases. Full details are set out in the property review in the table of property values on page 32.

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 £274.7 million (2022: £254.8 million) valuation
of the freehold properties £20.9 million (2022: £16.6 million) relates to the net book value of fixtures, fittings and
equipment, and the remaining £253.8 million (2022: £238.2 million) relates to freehold properties.

The 2023 valuation includes and reflects movements in value which have resulted from the operational performance
of the stores and market movements in the investment environment.

113

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements12a) Property, Plant and Equipment continued
Valuation Methodology

JLL has 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. The carrying value of freehold land and buildings of £255.3 million also includes £1.5 million of assets
held at Directors’ valuation (see below).

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 contract units to new customers. In the valuation the assumed
stabilised occupancy level for the 26 trading stores (both freeholds and leaseholds) averages 87.79% (2022: 88.23%).

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 ten 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 7.62% (2022: 7.21%).

• The Discount Rates used in the freehold valuation ranges from 6.75% to 9.00% (2022: 6.50% to 8.75%).

• The yield arising from the first year of the projected cash flow is 4.90% (2022: 5.30%), rising to 7.13% (2022: 6.79%)

in year five.

• JLL has assumed purchasers’ costs of 6.80% (2022: 6.80%).

• The average assumed stabilised occupancy is 87.79% (2022: 88.23%).

• The average Exit Yield assumed is 6.51% (2022: 6.16%).

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.

The Group has reported that the Lok’nStore trading stores have performed very well in terms of increasing pricing
while maintaining occupancy over the course of the year.

114

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023For 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 valued by JLL is approximately twelve years and ten months
as at 31 July 2023 (ten years and one month: 31 July 2022). Valuations for stores held under leases are not
reflected in the Statement of Financial Position and the assets in relation to these stores are carried at cost less
accumulated depreciation.

In 2011, one of the Group store’s leases was renegotiated and includes a ten-year option to renew the leases from
March 2026 to March 2036. The option to extend is only operable in the event that all four of the leases applicable
to this store are extended and this option is personal to Lok’nStore or another ‘major self-storage operator’, to be
approved by the landlord (approval not to be unreasonably withheld). The JLL valuation on this store is based on
this Special Assumption that the option to extend the lease for ten years is exercised. This is consistent with the
approach taken in previous years.

Self-storage valuations are complex and involve a degree of judgement. As a guide and assuming all other factors
are constant, improvements in a store’s EBITDA would lead to an increase in that store’s valuation. Conversely,
an increase in Exit Yield and Discount Rate would result in a lower valuation and vice-versa.

The effect of a change in more than one input would magnify the impact on the valuation. Inputs moving in opposite
directions, such as price and occupancy improving but capitalisation rates increasing could result in no net impact
on valuations.

Further changes in interest rates, risk free rates or changes in the macro-economic outlook may affect the
capitalisation rates applied by External Valuers in future independent valuations.

As an example of the sensitivity of capitalisation rates:

• A 50bpts decrease in the Exit Yields and Discount Rate would result in a £28.3 million increase in this

year’s valuation.

• A 100bpts decrease in the Exit Yields and Discount Rate would result in a £62.8 million increase in this

year’s valuation.

• A 50bpts increase in the Exit Yield and Discount Rate would result in a £23.8 million decrease in this

year’s valuation.

• A 100bpts increase in the Exit Yield and Discount Rate would result in a £44.1 million decrease in this

year’s valuation.

It is the Company’s policy to conduct independent valuations of all trading assets at the end of each financial year.
At the interim half year stage, the Directors will consult with JLL to consider whether there has been any material
change in market conditions. If there has been then the Directors will instruct an Independent Valuation at this point.

Directors’ valuation of land and property

Land & Buildings at the rear of the new Salford trading store

Following the opening of the new Salford store in 2022, there is available land and building at the rear of the new
store which is suitable for rent on commercial terms to third party users. Based on negotiated rents with tenants,
the Directors continue to place a Directors’ valuation of £1.5 million (2022: £1.5 million) on this land and building.

The total value of land and property carried at Directors’ valuation at 31 July 2023 is £1.5 million (2022: £1.5 million).

115

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements12b) Right of use assets (ROU)
The Group accounts for the value of its property leases on the balance sheet by the recognition of a right of use asset
(the right to use the leased item) and a corresponding financial liability to pay rentals due over the property lease term.
This treatment relates to the Group’s property leases. The Group has no leases on any other types of assets.

The Group recognises right of use assets (ROU) of £13.8 million at 31 July 2023 (2022: £10.4 million) and total lease
liabilities of £14.7 million, (2022: £10.9 million) with depreciation charges of £1.7 million (2022: £1.3 million) and lease
interest charges of £0.5 million (2022: £0.2 million).

Detailed analysis is provided in the tables below:

At 31 July 2022

Additions

Depreciation

At 31 July 2023

Property rentals

Depreciation of right of use asset (ROU)

Interest charged on lease liability

Impact on Comprehensive Income

Group
31 July 2023

£’000

10,424

5,032

(1,688)

13,768

Group
31 July 2023

£’000

1,817

(1,688)

(547)

(418)

Group
31 July 2022
£’000

10,503

1,235

(1,314)

10,424

Group
31 July 2022
£’000

1,746

(1,314)

(239)

193

The right of use assets represents the present value of minimum lease payments for the Group’s property leases.
The Group has no leases on any other types of assets. The Present Value of all future operating lease payments
on existing leases is calculated using 2.2% (2022: 2.2%) and on the two new leases executed in the current year at
6.43% as an incremental borrowing rate as the single Discount Rate. The right of use assets are depreciated based
on the individual lease term of the separate leases.

The significant increase in the right of use asset relates to the execution of a new 20-year lease at our Eastbourne
Store and a new 25 year lease on our Basildon store.

13 Investments

Company investments in subsidiary undertakings

31 July 2021

Capital contributions arising from share-based payments

31 July 2022

Capital contributions arising from share-based payments

31 July 2023

£’000

2,670

201

2,871

450

3,321

116

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023The Company holds more than 20% of the share capital of the following companies, all of which are incorporated in
England and Wales:

Company Name

Lok’nStore Limited* #

Lok’nStore Trustee Limited ¥ †

Southern Engineering and Machinery
Company Ltd ¥* #

Semco Machine Tools Limited ≠ #

Semco Engineering Limited ≠ #

ParknCruise Limited ¥ †

The Box Room (Self-storage) Limited ¥* †

% of Shares and Voting Rights

Company
Registration
No.

02902717

03788705

00381670

01025573

01164294

10329934

06840417

Class of
Shareholding

Directly

Indirectly

Nature

of Entity

Ordinary

100

–

Self-storage

–

100

Trustee

Self-storage

Dormant

Self-storage

¥ 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.

14 Inventories

Consumables and goods for resale

Group
2023
£’000

145

Group
2023
£’000

143

The amount of inventories recognised in Group cost of sales as an expense during the year was £109,106
(2022: £112,887) (see note 3). The Company had no inventory in either year.

117

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements15 Trade and Other Receivables

Trade receivables

Other receivables

Taxation

Prepayments and accrued income

Group
2023
£’000

1,342

779

437

2,585

Group
2022
£’000

1,198

2,318

–

472

3,988

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Other
receivables include monies receivable from the managed stores for services provided by the Group.

The following balances existed between the Company and its subsidiaries at 31 July:

Current receivables

Non-current receivables (restated)

Net amount due from Lok’nStore Limited

Company

2023
£’000

7,000

42,963

49,963

Company
2022
Restated
£’000

6,000

22,785

28,785

The non-current receivables represent amounts which are not expected to be repaid within one year notwithstanding
that the balance is repayable on demand. Previously the entire balance was included in current receivables and
therefore the comparative balance has been restated to present £22.8m as a non-current receivable which has
decreased the previously presented current receivables by the same amount. There is no impact on the previously
reported result for the period ended 31 July 2022 or net assets at that date of the parent entity. The Directors have
determined it is not necessary to re-present the balance sheet for the year ended 31 July 2021 as doing so would
not improve a user’s understanding of the adjustment.

Receivables from group undertakings are interest free. These have been considered for impairment using the twelve-
month expected credit loss model because there have been no changes in credit risk since initial recognition. The
expected credit losses on amounts owed by Group companies is insignificant (2022: insignificant).

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 ten days overdue in their payment. The
Group provides for receivables based upon sales levels and estimated recoverability. There is a right of lien over
the customers’ goods, so if they have not paid within a certain time frame the Group has the right to sell the items
they store to cover the debt owed by the customer. Trade receivables that are overdue are provided for based on
estimated irrecoverable amounts, determined by reference to expected credit losses.

For individual self-storage customers, the Group does not perform credit checks. However, this is mitigated by the
fact that all customers are required to pay in advance. Before accepting a new business customer who wishes to
use a number of the Group’s stores, the Group uses an external credit rating to assess the potential customer’s
credit quality and defines credit limits by customer. There are no customers who represent more than 5% of the total
balance of trade receivables.

Included in the Group’s trade receivables balance are receivables with a carrying amount of £0.14 million (2022:
£0.1 million) 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 53 days
past due (2022: 55 days past due). The Group does not expect credit losses on intra-group balances.

118

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023Ageing 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

Group
2023
£’000

136

2023
£’000

100

136

Group
2022
£’000

100

2022
£’000

147

(77)

100

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
2023
£’000

–

136

Group
2023
£’000

1,326

453

549

4,852

7,180

Group
2022
£’000

–

100

Group
2022
£’000

1,849

1,014

588

3,778

7,229

The Group has financial risk management policies in place to ensure that all payables are paid within credit terms.
The Directors consider that the carrying amount of trade and other payables approximates fair value. The Company
had no trade and other payables in either year.

The Group invoices its customers in advance, and therefore any deferred income balance is primarily related to
amounts paid by customers for storage services beyond the Balance Sheet date.

119

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements17 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 debt, 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 with hedging forming a Board agenda item for discussion at each Board meeting.

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 – bank borrowings*

Cash and cash equivalents

Net debt

Total equity – balance sheet

Net debt to equity ratio

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
2023
£’000

(54,399)

42,132

(12,267)

230,472

5.3%

Group
2023
£’000

(54,399)

(14,656)

42,132

(26,923)

230,472

11.7%

Group
2022
£’000

(66,785)

46,465

(20,320)

205,346

9.9%

Group
2022
£’000

(66,785)

(10,894)

46,465

(31,214)

205,346

15.2%

* Gross debt is the total amount of bank debt drawn before any amortisation of bank arrangement fees.

The movement of 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 also enhanced by loan repayments during the year
reducing the RCF by £12.4 million.

The Group’s operating cash was also applied to ongoing planning, construction and fit out works at other sites, this
expenditure during the period totalled £17.3 million (2022: £12.2 million). This was primarily the contract exchange
of the Milton Keynes site, the purchase of the Bolton site and the exchange of contracts on the Eastbourne site.
There are ongoing construction and fit out works at our sites in Staines and Basildon, final costs on Bedford
and Peterborough prior to opening, as well as and the completion of construction works at our Stevenage and
Warrington stores. Also, planning and pre-development works at our Bournemouth, Altrincham, Barking and
Cheshunt sites featured.

Exposure to credit and interest rate risk arises in the normal course of the Group’s business.

120

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023A 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 2022
or 31 July 2023. 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/NatWest Bank plc and ABN
AMRO Bank secured on its store portfolio and other Group assets, excluding intangibles, with a net book value of
£314.0 million (2022: £292.8 million).

Borrowings are arranged to ensure the Group fulfils its strategy of growth and development of its stores and to
maintain short-term liquidity. As at the reporting date the Group has a committed Revolving Credit Facility of £100
million (2022: £100 million) providing undrawn committed facilities at 31 July 2023 of £45.6 million. This facility runs
to April 2026, and details are provided in note 18 (Borrowings).

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 17.

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 SONIA rate. With the rising level of
interest rates, the Board monitors closely its effect on the business and has levers in place to mitigate the effects.

Cash and cash equivalents: Cash balances and cash equivalents represent only liquid assets with a maturity of three
months or less and include cash in hand deposits at call with banks (treasury deposit). Cash held in current accounts
have historically earned little no interest but with rising interest rates instant access accounts now attract a rate of 3.3%.

Surplus cash is transferred daily to a treasury deposit account which earns interest at the prevailing money market
rates currently 3.55%. All amounts are denominated in Sterling. The balances at 31 July 2023 are as follows:

Variable rate treasury deposits

SIP trustee deposits

Cash in operating current accounts

Other cash and cash equivalents

Total cash and cash equivalents

Group
2023
£’000

41,238

826

42,132

As at 31 July 2023, the Group had £8 million on treasury reserve with ABN Amro Bank.

Amount

£4,000,000 GBP (3 months)

£4,000,000 GBP (2 months)

From

Interest rate

31 May 2023

31 August 2023

1 June 2023

1 August 2023

4.05%

3.77%

Group
2022
£’000

45,371

1,031

–

46,465

Interest to
maturity

£40,832.88

£25,202.19

Equity Raise: On 7 July 2023, the Company raised total gross proceeds of approximately £20.5 million (gross)
through the oversubscribed issue of 2,679,739 new Ordinary Shares via a Placing and REX Retail Offer. Post Balance
Sheet, the Group repaid £19 million of its Revolving Credit Facility and will redraw as required as it deploys the cash
required to progress its development pipeline.

121

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements17 Financial Instruments continued
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 2023, it is estimated that an increase of one percentage point in interest rates would have increased the
Group’s annual interest charge by £0.54 million (2022: £0.67 million) and conversely a decrease of one percentage
point in interest rates would have reduced the Group’s annual profit before tax by £0.54 million (2022: £0.67 million).
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 4.77% and applying to the variable rate
borrowings of £54.4 million in the year (2022: £68.8 million/1.71%).

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 strong 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 17,500 customers (2022: 17,000) and with no
individual self-storage customer accounting for more than 1% of total revenue and no entities under common control
(e.g., Government) accounting for more than 5% of total revenues.

The Group holds a right of lien over its self-storage customers’ goods if customer debts are not paid although this is
used relatively infrequently within the context of overall customer numbers and only ever as a final stage in the debt
recovery process.

The credit risk on liquid funds is limited because the counterparty is a bank with high credit ratings assigned by
international credit-rating agencies, in line with the Group’s policy which is to borrow from major institutional banks
when arranging finance.

The Group’s maximum exposure to credit risk at 31 July 2023 was £1.38 million (2022: £2.26 million) on receivables
and £42.1 million (2022: £46.5 million) on cash and cash equivalents.

122

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023H Maturity analysis of financial liabilities

The undiscounted contractual cash flow maturities are as follows:

2023 – 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

2022 – 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

Lease liabilities are separately disclosed in note 19.

I Classification of financial instruments

Categories of financial assets and financial liabilities

Financial assets measured at amortised cost

Trade and other receivable

Cash and cash equivalents

Financial liabilities measured at amortised cost

Trade and other payables

Lease liabilities

Bank loans

Trade and
Other Payables

£’000

Borrowings
£’000

Interest on
Borrowings
£’000

–

4,224

–

54,399

–

54,399

–

54,399

–

1,632

3,366

4,998

3,366

8,364

Trade and
Other Payables

£’000

Borrowings
£’000

Interest on
Borrowings
£’000

–

4,207

–

66,785

–

66,785

–

66,785

Group
2023
£’000

2,121

42,132

(4,224)

(17,148)

(54,046)

–

3,131

1,809

4,940

1,809

6,749

Group
2022
£’000

3,516

46,465

(4,207)

(10,894)

(66,196)

The fair values of the Group’s cash and short-term deposits and those of other financial assets equate to their
carrying amounts. The amounts are presented net of provisions for doubtful receivables and allowances for
impairment are made where appropriate. The fair value of financial liabilities equates to their carrying amounts.

J Company’s financial instruments

The Company’s financial assets are amounts owed by subsidiary undertakings amounting to £50.0 million
(2022: £28.8 million) which are classified as loans and receivables, refer note 15. These amounts are denominated
in Sterling. The Company has no financial liabilities.

123

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements18 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
2023
£’000

54,399

(353)

54,046

Group
2022
£’000

66,785

(589)

66,196

The Group currently has £54.4 million drawn against its facility which is secured with RBS and ABN AMRO 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 £314.0 million (2022: £292.8 million) together with cross-company guarantees
from Group companies.

The interest rate is set under the Sterling Overnight Index Average (SONIA) arrangements. The all-in debt cost on
£54.4 million drawn averaged 4.77% (2022: 1.55%) in the period with the costs of debt rising to 6.19% on active
revolving loans.

The Group is not obliged to make any repayments prior to the facility’s expiration in April 2026. The two principal
bank covenants (LTV and Senior interest) and margin are unaffected by the execution of the accordion and this
extension of term. Margin/pricing is also unaffected.

With current facility utilisation at £54.4 million and combined with cash balances of £42.1 million the £100 million
facility provides around £87.7 million of available cash headroom.

19 Lease Liabilities
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% (2022: 2.2%) as an incremental borrowing rate as the Discount
Rate, or 6.43% in respect of new leases entered into in the current year.

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% (2022: 2.2%), and on the two new leases executed in the current year at
6.43%, as part of the amortisation of the lease liability the total lease liabilities are shown below.

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

124

Group
2023
£’000

Group
2022
£’000

826

1,612

1,039

1,786

11,005

13,830

14,656

1,174

2,774

5,334

9,282

10,894

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023Lease liabilities attributable to right of use assets

Balance brought forward

Increase in new leases

Lease repayments

Lease interest (non-cash)

Total lease liabilities

Group
2023
£’000

10,894

5,032

(1,817)

547

14,656

Group
2022
£’000

11,166

1,235

(1,746)

239

10,894

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 future commitments due under non-cancellable leases is set out in note 30 (Commitments under
Property Leases).

20 Deferred Tax

Deferred tax liability

Liability at start of year

Total charge to income for the year

Tax charged directly to other comprehensive income

Charge/(credit) to share-based payment reserve

Liability at end of year

Group
2023
£’000

63,214

764

63,978

1,954

358

66,290

Group
2022
£’000

46,760

2,113

48,873

14,284

63,214

The following are the major deferred tax liabilities and assets recognised by the Group and the movements during
the year:

Accelerated
Capital
Allowances
£’000

Other
Temporary
Differences
£’000

Revaluation
of Properties
£’000

Rolled over
Gain on
Disposal
£’000

Share
Options
£’000

Total
£’000

At 31 July 2021

Charge to income for the year

Charge to other comprehensive income

Credit to share-based payment reserve

At 31 July 2022

Charge to income for the year

Charge to other comprehensive income

Credit to share-based payment reserve

5,128

591

–

5,719

797

–

609

38,163

–

609

(33)

–

9,978

–

48,141

–

1,954

–

3,714

1,522

4,306

–

(854)

46,760

–

2,113

14,284

9,542

(797)

63,214

–

358

764

1,954

358

At 31 July 2023

6,516

576

50,095

9,542

(439)

66,290

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 provision for the gain arising on the Sale which will in due course be subject to a roll-over
relief claim.

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 £66.3 million (2022: £63.2 million). The timing of any
crystallisation of these liabilities is within the Board’s control.

125

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements21 Share Capital

Authorised:

35,000,000 Ordinary Shares of 1 pence each (2022: 35,000,000)

Allotted, issued and fully paid Ordinary Shares

Balance at start of year

Options exercised during the year

Primary placing of fully paid Ordinary Shares

Balance at end of year

Number of shares at start of the year

Options exercised during the year

Primary placing of fully paid Ordinary Shares

Number of shares at end of the year

2023
£’000

350

2023
£’000

301

329

2022
£’000

350

2022
£’000

298

–

301

Called up,
Allotted and
Fully Paid
Number

30,003,545

29,686,787

84,174

2,679,739

316,758

–

32,767,458

30,003,545

The share capital of the Company consists only of fully paid Ordinary Shares with a nominal par value of 1 penny per
share. There are no restrictions on the ability of shareholders to receive dividends. All Ordinary Shares are equally
eligible to receive dividends and represent one vote at shareholders’ meetings. The Ordinary Shares carry no right
to fixed income.

On 7 July 2023, the Company raised total gross proceeds of approximately £20.5 million (gross) through the
oversubscribed issue of 2,679,739 new Ordinary Shares via a Placing and REX Retail Offer, at a price of 765 pence
per Ordinary Share. The Fundraising Shares represented approximately 8.9% of the Company’s issued share capital.
The transaction costs of the brokers associated with the equity raise were £732,561 and together with £156,459
legal and other associated costs total £889,020 and are recognised in equity.

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 granted the following share options:

Granted

Exercised

Lapsed/
Surrendered

As at
31 July 2023
No. of Options

2023
Summary

Unapproved Share Options
(refer note 24(a))

Unapproved Share Options
(PPP Scheme) – refer note 24(b))

Unapproved Share Options
(2023 PPP Scheme) – refer note 24(c))

Approved CSOP Share Options
(refer note 25)

Total

126

As at
31 July 2022
No. of Options

404,790

1,267,658

–

(69,559)

–

264,000

62,583

1,735,031

20,272

284,272

(14,615)

(84,174)

–

335,231

1,267,658

264,000

68,240

1,935,129

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 20232022
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

As at
31 July 2021
No. of Options

Granted

Exercised

Lapsed/
Surrendered

As at
31 July 2022
No. of Options

683,950

1,163

(280,323)

990,000

277,658

–

86,476

1,760,426

12,542

291,363

(36,435)

(316,758)

–

404,790

1,267,658

62,583

1,735,031

The following table shows options held by Directors under all schemes.

2023

Executive Directors

Total at

31 July 2022

Options
Granted

Options
Exercised

Unapproved
Scheme

Approved
CSOP Share
Options

Total at

31 July 2023

A. Jacobs – Unapproved

–

A. Jacobs – PPP (2018)

200,000

A. Jacobs – PPP (2023)

A. Jacobs – total

R. Davies – Unapproved

R. Davies – CSOP

R. Davies – PPP (2018)

R. Davies – PPP (2023)

R. Davies total

N. Newman – Unapproved

N. Newman – CSOP

N. Newman – PPP (2018)

N. Newman – PPP (2023)

N. Newman total

T. Lampard – Unapproved

T. Lampard – CSOP

T. Lampard – PPP (2018)

T. Lampard – PPP (2023)

T. Lampard total

–

200,000

181,977

2,941

198,236

–

383,154

135,599

8,182

299,422

–

443,203

11,840

8,984

250,000

–

270,824

–

40,000

–

40,000

–

60,000

–

60,000

–

(50,000)

–

(50,000)

(2,420)

(1,600)

–

(4,020)

–

200,000

40,000

240,000

131,977

–

2,941

198,236

40,000

370,213

133,179

299,422

60,000

492,601

11,840

–

250,000

60,000

321,840

–

2,941

–

6,582

–

6,582

–

8,984

–

8,984

18,507

All Directors total

1,297,181

200,000

(54,020)

1,424,654

–

200,000

40,000

240,000

131,977

2,941

198,236

40,000

373,154

133,179

6,582

299,422

60,000

499,183

11,840

8,984

250,000

60,000

330,824

1,443,161

127

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements22 Equity-Settled Share-Based Payment Plans continued

2022

Executive Directors

A. Jacobs – Unapproved

A. Jacobs – PPP (2018)

A. Jacobs – total

R. Davies – Unapproved

R. Davies – CSOP

R. Davies – PPP (2018)

R. Davies total

N. Newman – Unapproved

N. Newman – CSOP

N. Newman – PPP (2018)

N. Newman-Shepherd total

Total at

31 July 2021

Options
Granted

Options
Exercised

Unapproved
Scheme

Approved
CSOP Share
Options

Total at

31 July 2022

206,087

160,000

366,087

246,977

7,742

160,000

414,719

135,599

8,618

240,000

384,217

–

(206,087)

40,000

–

(206,087)

–

200,000

–

(65,000)

181,977

2,941

38,236

41,177

–

964

59,422

60,386

(7,742)

–

(72,742)

–

(1,400)

–

(1,400)

–

198,236

380,213

135,599

–

299,422

435,021

–

2,941

–

2,941

–

8,182

–

8,182

–

200,000

181,977

2,941

198,236

383,154

135,599

8,182

299,422

443,203

All Directors total

1,165,023

141,563

(280,229)

1,015,234

11,123

1,026,357

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 24b.

Under the CSOP Approved Share Option scheme (note 25) and the Unapproved Share Options scheme (note 24a), 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 (ten 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. There were no options granted on 31 July 2023 in respect of the 2018 Scheme.

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. 10.34 years).

The total charge for the year relating to employer share-based payment schemes was £449,623 (2022: £201,385),
all of which relates to equity-settled share-based payment transactions.

128

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 202323 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.

24a) 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

Exercised during the year

Outstanding at 31 July

Exercisable at 31 July

Options
2023
Number

404,790

–

(69,559)

335,231

325,460

Weighted Average
Exercise Price
2023

Pence

205.93

–

135.29

220.59

204.13

Options
2022
Number

683,950

1,163

(280,323)

404,790

386,074

Weighted Average
Exercise Price
2022

Pence

188.16

1020.00

165.95

205.93

183.25

The options outstanding at 31 July 2023 had a weighted average remaining contractual life of 1.8 years (2022: 2.5
years). The exercise prices for shares exercisable at 31 July 2023 ranged from 56.50 pence per share to 570.0 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 2022 Granted

Exercised

31 July 2023

As at

Exercise
Price

Pence

Date
from which
Exercisable

Expiry
Date

A. Jacobs

R. Davies

N. Newman

T. Lampard

Total

–

181,977

135,599

11,840

329,416

–

(50,000)

131,977

0.565 to 2.075

31/7/12 to 31/7/17

31/7/24

(2,420)

133,179

1.360 to 3.875 31/7/16 to 31/7/20

31/1/24 to 31/7/27

–

11,840

3.250 to 3.875

31/7/19 to 31/7/20

31/7/26 to 31/7/27

(52,420)

276,996

24b) Unapproved Share Options – 2018 Partnership Performance Plan (PPP)
On 2 July 2018, 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 commitment and interest of colleagues 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 colleagues those awards will be granted.

129

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements24b) Unapproved Share Options – 2018 Partnership Performance Plan (PPP) continued
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 £6 per share, well above the market price at inception 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 2018 to July 2023.

• Participants will have ten 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 or exercise and sell – paying tax arising

— Group delivers net profit to participants in cash or shares

Main Rules and Conditions

• Conditional on participants remaining in employment with the Group.

• 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 2022

Granted during the year

Lapsed during the year

Outstanding at 31 July 2023

Exercisable at 31 July 2023

Weighted
Average
Exercise Price
Pence

Options
Number

1,267,658

600.00

–

1,267,658

990,000

–

600.00

–

130

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023The following unapproved share options have been granted to Directors of the Company during the year.

As at

Exercise
Price

Date from
which
Exercisable

Expiry
Date

Performance
Conditions
Met

31 July 2022

Granted

31 July 2023

A. Jacobs

40,000

A. Jacobs – total

200,000

R. Davies

R. Davies – total

N. Newman

40,000

38,236

198,236

60,000

59,422

N. Newman – total

299,422

T. Lampard

T. Lampard – total

Total

40,000

10,000

40,000

60,000

250,000

947,658

–

40,000

200,000

40,000

38,236

198,236

60,000

59,422

299,422

40,000

10,000

40,000

60,000

250,000

947,658

320,000 options were granted to senior key team members.

Pence

600.00

31/07/2023

31/07/2033

31/07/2024

31/07/2034

31/07/2025

31/07/2035

31/07/2026

31/07/2036

31/07/2027

31/07/2037

31/07/2023

31/07/2033

31/07/2024

31/07/2034

31/07/2025

31/07/2035

31/07/2026

31/07/2036

31/07/2027

31/07/2037

31/07/2023

31/07/2033

31/07/2024

31/07/2034

31/07/2025

31/07/2035

31/07/2026

31/07/2036

31/07/2027

31/07/2037

600.00

31/07/2023

31/07/2033

600.00

31/07/2024

31/07/2034

600.00

31/07/2025

31/07/2035

31/07/2025

31/07/2035

31/07/2026

31/07/2036

31/07/2027

31/07/2037

Yes

131

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements24b) Unapproved Share Options – 2018 Partnership Performance Plan (PPP) continued
The 2018 Partnership Performance Plan (PPP) was a five-year annual award plan which has now completed its
annual award cycle for new awards.

Set out below is the current position on which awards have had their performance conditions met in respect of each
tranche of awards issued.

Based on
Annual Reports

Performance Targets

1010 PPP Tranche
& Issue Date

Issued

Exercise
Price

CAD per
Share

Nav per
Share

Share
Price

Earliest
Period for
Exercise

CAD
per
Share

Nav
per
Share

Performance
Conditions
Met

Share
Price

Tranche 1 –
Issued July 2018

Tranche 2 –
Issued July 2019

Tranche 3 –
Issued July 2020

Tranche 4 –
Issued July 2021

Tranche 5 –
Issued July 2022

Yes

£6.00

30 pence

£6.00

31/07/2023

Yes

£6.00

35 pence

£7.00

31/07/2024

Yes

£6.00

40 pence

£8.00

31/07/2025

Yes

£6.00

45 pence

£9.00

31/07/2026

Yes

£6.00

50 pence

£10.00 £10.00

31/07/2027

Yes

The 2023 Partnership Performance Plan (PPP) has now opened with its first annual awards granted on 31 July
2023 (refer note 24(c) below).

24c) Unapproved Share Options – 2023 Partnership Performance Plan (PPP)
On 31 July 2023, the Group adopted a new 2023 Company Partnership Performance Plan (PPP).

The 2023 Plan follows on from the successful 2018 Partnership Performance Plan which has now completed its five-year
award cycle with the last allocation of options issued in July 2022. The new Plan is a similar structure to its predecessor
but moves the NAV and share price targets from £10 under the previous plan to £15 over the five-year award cycle.

The new Plan is a discretionary benefit offered by the Company for the benefit of selected key team members. Its
main purpose is to increase the commitment and interest of colleagues 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.

132

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023A 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 £10 per share, well above the market price at inception 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 2023 to July 2028.

• Participants will have ten years to exercise from vesting dates.

• Performance criteria are challenging and are geared to achievement of an 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.

• The targets for the July 2023 are as follows:

July 2023

£10.00

£11.00

55p

£11.00

Exercise Price

Share price target

CAD Target

Nav Target

• Alternative exercise methods can be considered by the Group:

— Participants may exercise and hold or exercise and sell – paying tax arising

— Group delivers net profit to participants in cash or shares

Main Rules and Conditions

• Conditional on participants remaining in employment with the Group.

• 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:

Granted during the year

Lapsed during the year

Outstanding at 31 July 2023

Exercisable at 31 July 2023

64,000 options were granted to senior key team members.

Options
Number

264,000*

–

264,000

–

Weighted Average
Exercise Price
Pence

1000.00

–

1000.00

–

133

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements24c) Unapproved Share Options – 2023 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 2022

Granted

31 July 2023

Exercise
Price

(Pence)

Date from
which
Exercisable

Expiry
Date

Performance
Conditions
Met

A. Jacobs

A. Jacobs – total

R. Davies

R. Davies – total

N. Newman-Shepherd

N. Newman – total

T. Lampard

T. Lampard – total

Total

–

40,000

60,000

40,000

60,000

200,000

1000.00

31/07/2028

31/07/2038

1000.00

31/07/2028

31/07/2038

1000.00

31/07/2028

31/07/2038

1000.00

31/07/2028

31/07/2038

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 this CSOP Plan.

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

Options
2023

Number

Weighted Average
Exercise Price
2023
Pence

Options
2022
Number

Weighted Average
Exercise Price
2022
Pence

62,583

20,272

–

(14,615)

68,240

33,150

326.78

790.00

–

453.34

212.33

437.08

86,476

12,542

–

(36,435)

62,583

35,220

372.48

1020.00

–

312.97

326.78

382.85

The options outstanding at 31 July 2023 had a weighted average remaining contractual life of 7.2 years (2022: 6.6 years).

The exercise prices for shares exercisable at 31 July 2023 ranged from 207.00 pence per share to 570.00 pence per
share. The inputs into the Black-Scholes model used to value the options granted during the year are as follows:

Date of Grant

31 July 2022

31 July 2023

Expected
Life

(Years)

Share Price
at Date
of Grant
(Pence)

Exercise
Price

(Pence)

Expected
Volatility
(%)

Expected
Dividend
Yield
(%)

6.60

7.20

1020.00

790.00

35.10

36.19

1.54

2.28

Risk-Free
Interest Rate

(%)

1.71

4.29

Fair Value
Charge
per Award
(Pence)

322.00

271.00

134

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 2023As at
31 July
2022

2,941

R. Davies

N. Newman-Shepherd

8,182

T. Lampard

8,984

20,107

26a) Other Reserves

Group

31 July 2021

Share-based remuneration (options)

IFRS 2 – transfer retained earnings

Tax charge relating to share options

The following CSOP approved share options have been granted to Directors of the Company. The expected price
volatility is based on the historical volatility (based on the remaining life of the options), adjusted for any expected
changes to future volatility due to publicly available information.

Granted

Exercised

As at
31 July
2023

Exercise

Price (Pence)

Date from
which
Exercisable

Expiry
Date

–

(–)

2,941

(1,600)

6,582

(–)

(1,600)

8,984

18,507

1,020.0

207.0 to
1,020.0

287.05 to

570.0

31/7/25

31/7/32

31/7/17 to
31/7/25

31/7/17 to
31/7/23

31/7/24 to
31/7/32

31/7/25 to
31/7/30

Merger
Reserve
£’000

6,295

Other
Reserve
£’000

1,294

–

Capital
Redemption
Reserve
£’000

Share-based
Payment
Reserve
£’000

Total
£’000

9,138

201

(180)

(57)

1,515

201

(180)

(57)

1,479

9,102

450

(47)

(358)

1,524

450

(47)

(358)

9,147

–

31 July 2022

6,295

1,294

Share-based remuneration (options)

IFRS 2 – transfer retained earnings

Tax charge relating to share options

–

31 July 2023

6,295

1,294

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. The revaluation reserve is a non-cash
non-distributable reserve that reflects the uplift between market (fair) value of the Group’s store assets and their
historic book value.

Share-based payment reserve

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 £46,662
(2022: £180,391).

135

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements26b) Other Reserves

Company

31 July 2021

Share-based remuneration (options)

IFRS 2 – transfer to/from retained earnings

31 July 2022

Share-based remuneration (options)

IFRS 2 – transfer to/from retained earnings

31 July 2023

27a) Retained Earnings

Group

31 July 2021

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)

Reserve transfer on disposal of assets

Dividend paid

31 July 2022

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 2023

Other
Reserve
£’000

1,114

–

1,114

–

Share-based
Payment
Reserve
£’000

890

201

(180)

911

450

(47)

1,114

1,314

Retained Earnings
before Deduction
of Own Shares
£’000

26,772

12,078

821

180

20,258

(4,601)

55,508

4,692

1,095

(5,295)

56,047

Own Shares
(note 28)
£’000

(500)

–

(500)

–

(500)

Total
£’000

2,004

201

(180)

2,025

450

(47)

2,428

Retained
Earnings
Total
£’000

26,272

12,078

821

180

20,258

(4,601)

55,008

4,692

1,095

(5,295)

55,547

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.

136

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 202327b) Retained Earnings

Company

31 July 2021

Profit attributable to owners of Company for the financial year

Transfer from share-based payment reserve (note 25b)

Dividend paid

31 July 2022

Profit attributable to owners of Company for the financial year

Transfer from share-based payment reserve (note 25b)

Dividend paid

31 July 2023

28 Own Shares

Retained Earnings
before Deduction of

Own Shares
£’000

Own Shares
(note 28)
£’000

16,604

5,756

180

(4,601)

17,939

6,701

(5,295)

19,392

–

Retained
Earnings
Total
£’000

16,604

5,756

180

(4,601)

17,939

6,701

(5,295)

19,392

31 July 2022 and 31 July 2023

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 colleagues salaries on a monthly basis as they so instruct for
purchase of shares in the Company. Shares are allocated to colleagues based on the prevailing market price when
the salary deductions are made.

As at 31 July 2023, the Trust held 623,212 (2022: 623,212) Ordinary Shares of 1 pence each with a market value of
£4,923,375 (2022: £6,356,762). No shares were transferred out of the scheme during the year (2022: nil).

No options have been granted under the EBT. The EBT waived its dividends in full. No other dividends were waived
during the year.

137

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements29 Cash flows
a) Reconciliation of profit before tax to cash generated from operations

Profit before tax

Depreciation and loss on disposal

Equity-settled share-based payments

Non-underlying items (note 4)

Interest receivable

Interest payable – bank borrowings

Interest payable – lease liabilities

Decrease in financial asset

(Increase)/decrease in inventories

Decrease in receivables

(Decrease)/increase in payables

Cash generated from operations

Year ended
31 July 2023

£’000

6,701

5,690

450

318

(665)

2,015

547

–

(2)

1,393

(632)

15,815

Year ended
31 July 2022
£’000

15,874

4,727

201

(5,739)

(42)

1,089

239

509

148

285

1,278

18,569

b) Reconciliation of net cash flow to movement in net bank debt

Net bank 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 bank debt brought forward

Net bank debt carried forward

Group
2023
£’000

(4,333)

12,386

8,053

(20,320)

(12,267)

Group
2022
£’000

37,360

(1,386)

35,974

(56,294)

(20,320)

30 Commitments Under Property Leases
At 31 July 2023 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
2023
£’000

1,415

4,354

14,687

20,456

Group
2022
£’000

1,727

4,737

6,273

12,737

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.

The Group’s property leases on its leased stores are recognised as a right of use asset and as a corresponding
liability at the year-end.

138

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 202331 Related Party Transactions and Directors Share Interests
There were no reportable related party transactions during the year.

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 8.

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

Social security costs – Directors

Social security costs – Other key management

Total

Group
2023
£’000

Group
2022
£’000

827

175

450

158

922

259

201

370

1,672

1,820

The Group recognises a number of management personnel that are important to retain within the business in order
for it to achieve its strategic plan. Accordingly, these are recognised as key personnel and are participants in the
Long-Term Performance Plan. They are included in the table above.

Group Director shareholdings – dividends received

In respect of the total dividends paid during the year of £5.3 million (2022: £4.6 million), the Group Directors received
the amounts set out in the table below:

Final 2022
12.25 pence
per Share

Interim 2023
5.75 pence
per Share

Total
2023
£

Total
2022
£

Director’s Dividend Income

Executive:

A. Jacobs*

R. Davies

N. Newman-Shepherd

Non-Executive:

S.G. Thomas*

R.J. Holmes

C.P. Peal

J. Woyda

Holding
No.

3,953,600

81,807

30,739

675,459

10,021

3,766

1,546,190

189,408

279,606

590,865

2,419

35,477

72,381

296

317,052

4,704

1,767

88,906

16,652

33,975

139

992,511

14,725

5,533

278,314

52,129

106,356

435

864,036

11,570

4,817

265,010

45,381

94,118

379

* Andrew Jacobs and Simon Thomas dividend income above includes their respective holdings in their individual pension funds.

6,485,226

986,808

463,195

1,450,003

1,285,311

139

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial Statements31 Related Party Transactions and Directors Share Interests continued
Managed Stores – Group Director shareholdings

The relationship between Lok’nStore Group plc and the Managed Stores which it manages have been reported in
detail in last year’s financial statements and is not repeated here.

Although the Director holdings in Managed Stores falls outside of the definition of related party transactions they are
disclosed here, as in previous years, 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

Wolverhampton
No. of Shares

Broadstairs
No. of Shares

Exeter
No. of Shares

36,800

38,160

–

36,800

189,341

19.4%

–

38,160

189,690

20.1%

240,000

500,000

160,000

900,000

3,970,000

22.7%

• These shareholdings relate to three Managed Stores, each in separate corporate vehicles, which have very
specific EIS tax advantages. The Directors’ respective shareholdings in these companies have remained
unchanged since their initial investment.

• The Lok’nStore Directors have no other shareholdings in any other Managed Stores.

• Changes in UK Tax legislation mean that these EIS tax advantages no longer exist, and these reliefs are no longer

available for Managed Store opportunities that may be undertaken in the future.

• Under UK Takeover Panel protocols in relation to the Rule 9 Waiver agreed each year with Lok’nStore Group
plc, necessary to preserve the Group’s share buy-back authority, Andrew Jacobs cannot, by agreement with
the Panel, purchase any more Lok’nStore shares. As such the three EIS investment vehicles represented an
opportunity for Mr Jacobs to hold additional self-storage assets in tax efficient vehicles.

• Lok’nStore Group operate 16 Managed Stores, currently trading, and have two further secured Managed Stores
in the pipeline in Kettering and Bromborough (Wirral) making a total of 18 Managed Stores. The Managed Store
strategy is a well-developed one which enables the Group to increase the operational footprint of Lok’nStore
branded stores without the balance sheet risk of ownership.

• At 31 July 2023, Lok’nStore has a total of 53 stores (42 currently trading and a pipeline of 11 secured stores).

• The terms of the Management Services Agreements executed between Lok’nStore and with Wolverhampton,

Broadstairs and Exeter were executed at arm’s length on normal commercial terms with independent Director(s)
who were not directors of Lok’nStore and therefore unconnected. The commercial terms are all similar to, and
consistent with, those agreed with other third-party Managed Store owners.

• The Board of Lok’nStore Group plc have governance protocols in place to ensure that there are no conflicts
of interest between the Group and the shareholders of the Wolverhampton, Broadstairs and Exeter stores.
Specifically, Mr Jacobs could not hold a disproportionate holding in the EIS Managed Stores not commensurate
with his shareholding in Lok’nStore Group plc.

140

Lok’nStore Group plc Annual Report and Accounts 2023Notes to the Financial Statements continuedFor the year ended 31 July 202332 Capital Commitments
The Group has capital expenditure contracted but not provided for in the financial statements of £13.1 million
(2022: £11.21 million) relating to commitments to complete the ongoing construction of our sites in Peterborough
and final contract commitments on our completed sites at Warrington and Stevenage.

We are also committed on the Staines Store project in respect of the land and main build contract and the Basildon
Store in respect of the lease commitment which commenced on 26 June 2023 following practical completion of the
delivery of the building to us.

33 Guarantees
The Company and its subsidiary Lok’nStore Limited are joint borrowers under the facility agreement disclosed in note
18. Each entity provides a guarantee to the lenders in respect of the remaining amount due under the agreement.

34 Events after the Reporting Date
1) Barking Planning Permission Grant

On 21 September 2023 we received notice of the grant of planning permission for our development in Barking,
further on the same date planning agreements were agreed and sealed by the Local Authority. We may now proceed
to develop the site for 85,000 sq. ft. of lettable self-storage space.

2) Cheshunt Planning Permission Grant/Cheshunt Planning Agreement secured

On 20 October 2023, we received notice of the grant of planning permission for our self-storage development in
Cheshunt. On the same date planning agreements were agreed and sealed by the Local Authority. We may now
proceed to develop the site for self-storage alongside a discount food supermarket.

3) Luton Residential Planning Permission

On Tuesday 22 August 2023, Luton Borough Council Planning Committee resolved to delegate that the Head of
Planning may grant planning permission, subject to satisfactory Planning Agreements, for 136 residential apartments
at our existing Luton Store site.

4) Temporary Debt reduction

On 11 August 2023, the Group paid down £19.02 million out of its recent equity placing proceeds reducing the
balance on its RCF, pending redrawing over time for its future deployment on the Group’s pipeline stores.

5) Appointment of a new Non-Executive Director

The Board is pleased to announce the appointment of Bridget Barker who joined the Board on 14 September 2023.

Bridget joins us with a wealth of experience and is an experienced lawyer having gained over 35 years’ experience
at Macfarlanes, a leading and well-established City of London law firm, where she specialised in investment funds,
financial services and regulatory legal work with a focus on private equity and real estate funds. Latterly she was
head of the Investment Management Group at Macfarlanes. Since leaving Macfarlanes, Bridget has pursued various
non-executive roles and consulting appointments at organisations such as Praesidium, Mirabaud 1819 Advisory
Group and Mainspring Fund Services.

Bridget will be appointed to the Company’s audit and remuneration committees in the coming year providing a
second independent non-executive director on each Committee.

141

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsGlossary

Abbreviation

APM

AGM

Bps

Alternative performance measure

Annual General Meeting

Basis Points

BREEAM

Building Research Establishment Environmental Assessment Method

Cash available for Distribution

Capital Expenditure

Cash-generating units

Carbon Dioxide Equivalents

Company Share Option Plan

Dividend Reinvestment Plan

Employee Benefit Trust

Enterprise Investment Scheme

Environmental key performance indicators

Enterprise Management Incentive Scheme

Employee Share Option Plan

European Union

Electric Vehicle

Greenhouse gas

His Majesty’s Revenue and Customs

International Accounting Standard

International Financial Reporting Interpretations Committee

Insurance Premium Tax

International Financial Reporting Standards

International Standards on Auditing

Jones Lang LaSalle

Key Performance Indicator

CAD

Capex

CGU

CO2 e

CSOP

DRIP

EBT

EIS

(eKPIs)

EMI

ESOP

GHG

HMRC

IAS

IFRIC

IPT

IFRS

ISA

JLL

KPI

142

Lok’nStore Group plc Annual Report and Accounts 2023Landmark Store

A large modern, purpose built, and visually prominent store positioned in a retail-facing location
within its marketplace

LFL

LTPPP

LTV

Move-ins

MWh

NAV

NBV

Like for like

Long Term Partnership Performance Plan

Loan to Value ratio

When a prospective customer has completed the sales process and moves their goods into a
storage unit

Megawatt Hour

Net Asset Value

Net Book Value

Operating Profit

Earnings before interest and tax (EBIT)

PPP

QCA

RCF

RICS

Partnership Performance Plan

Photovoltaic

Quoted Companies Alliance

Bank Revolving Credit Facility

Royal Institution of Chartered Surveyors

RIDDOR

Reporting of Injuries, Disease and Dangerous Occurrences Regulations 2013

RNS

ROU

Sale

SIP

SME

SONIA

sq. ft.

tCO2e

TVR

VAT

Regulatory News Service

Right of Use Asset

In the previous financial year, FY22, the sale and manage-back of previously owned stores
(Basingstoke, Cardiff, Horsham and Portsmouth stores)

Share Incentive Plan

Small and medium sized enterprises

Sterling Overnight Index Average

Square feet

Tonnes of carbon dioxide equivalent

Total voting rights

Value added tax

143

Strategic ReportOverviewEnvironmental and SocialGovernanceFinancial StatementsOur Store Locations

Aldershot, Hampshire

Eastbourne, East Sussex

Altrincham, Cheshire

Eastbourne, East Sussex

Ashford, Kent

Barking, London

Basildon, Essex

Exeter, Devon

Fareham, Hampshire

Northampton Central,
Northamptonshire

Northampton Riverside,
Northamptonshire

Oldbury, West Midlands

Farnborough, Hampshire

Peterborough, Northamptonshire

Basingstoke, Hampshire

Gillingham, Kent

Bedford, Bedfordshire

Gloucester, Gloucestershire

Bolton, Lancashire

Harlow, Essex

Bournemouth, Dorset

Hedge End, Southampton

Bristol, Gloucestershire

Hemel Hempstead, Hertfordshire

Broadstairs, Kent

Horsham, West Sussex

Bromborough, Cheshire

Ipswich, Suffolk

Cardiff, Glamorgan

Kettering, Northamptonshire

Cheshunt, Hertfordshire

Leicester, East Midlands

Chichester, West Sussex

Luton, Bedfordshire

Crawley, West Sussex

Maidenhead, Berkshire

Poole, Dorset

Portsmouth, Hampshire

Reading, Berkshire

Salford, Lancashire

Southampton, Hampshire

Staines, Surrey

Stevenage, Hertfordshire

Sunbury, Middlesex

Swindon, Wiltshire

Tonbridge, Kent

Warrington, Cheshire

Crayford, Kent

Dover, Kent

Milton Keynes, Buckinghamshire

Wellingborough, Northamptonshire

Milton Keynes, Buckinghamshire

Wolverhampton, Staffordshire

Open Stores

Pipeline Stores

New Stores in Period

144

Lok’nStore Group plc Annual Report and Accounts 2023CBP021703

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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