Record first half for Lok'n'Store

Investors were tucking away shares of Lok'n'Store after the storage facilities provider racked up record turnover and adjusted earnings at the interim stage.Revenue in the six months to the end of January rose 18.2% to £6.41m from £5.42m in the corresponding period the year before.Underlying group earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 12.6% to £1.93m from £1.71m the year but profit before tax slipped to £0.47m from £0.60m, as the company swallowed a £0.15m bank loan refinancing cost, while finance costs rose to £0.37m from £0.26m the year before, as the company's new, more expensive, banking facility kicked in during October.Year-on-year, the EBITDA margin across all stores increased from 45.9% to 46.2%. The EBITDA margins of the freehold stores were 58.9% and the leasehold stores achieved 30.7% (2011: 58.2% and 30.0% respectively). The occupancy of the stores was down 0.6% to 55.9% of current lettable area year-to-year.The average price achieved for self-storage space was £18.51 per square foot (sq. ft) per annum at January 31st, 2012, down 1.2% from a year earlier (2011: £18.73 per sq. ft per annum). This compares with the average of £21.97 for the UK industry and £21.87 for the South East region, according to a Self-Storage Association Survey conducted in 2011. Diluted earnings per share fell to 1.13p from 1.53p at the interim stage last year. Many investors, however, regard the company as glorified property play and are more concerned with the net asset value (NAV) per share; the adjusted NAV per share stood at 230p at the end of January, up a penny on a year earlier.Net debt rose to £25,4m from £21.9m the year before, and the loan-to-value (LTV) ratio climbed to 31.9% from 27.0% at the end of January 2011."The integration of the Saracen document storage business is progressing and contributing to our profitability. We have a clear plan and some near term drivers to continue this momentum into the future, including our joint venture in Maidenhead with Lidl that will open in 2013," said Andrew Jacobs, Chief Executive Officer of Lok'n'Store.Jacobs reiterated that the group is looking forward to the proposed closing of the value added tax (VAT) loophole regarding off-site self-storage, as flagged in the Chancellor of the Exchequer's Budget, as Lok'n'Store has always charged VAT on its services."Most of our larger competitors will have to respond to this change either by increasing prices or reducing margins to help them absorb the VAT. This will have a beneficial effect on Lok'n'Store's pricing and volumes," predicted company Chairman, Simon Thomas.The interim dividend has been tripled to 1p from 0.33p last year. Despite the lower profits, caused by more expensive banking facilities, the market was encouraged by the top line growth, the EBITDA performance and the fact that it has got new banking facilities in place, albeit at a price. The shares rose 4p to 105p in the first hour of trading.JH