News blog
LoknStore
- BY: Andrew Hore |
- POSTED: 07/11/2011 |
Self storage operator Lok’nStore has substantially increased its dividend follow a further year of profit growth.
The final dividend has been increased from 0.67p a share to 2.67p a share, taking the total dividend to 3p a share (1p a share). Next year, the interim will be one-third of the total. The dividend is covered around four times by cash generated and should be increased in line with EBITDA growth.
Revenues rose 4% to £10.8m in the year to July 2011 as price rises offset any weakness in trading. Pre-tax profit jumped from £431,000 to £938,000. Lower depreciation and share-based payments charges were part of the reason for this but there was underlying growth in profit. Cash inflow from operations improved from £3.47m to £3.6m. There are still plenty of tax losses available to the company.
At 98.5p a share, Lok’nStore is valued at £24.6m. That is well below the adjusted NAV, including property revaluations, of 179p a share – after deferred tax provision.
Lok’nStore has secured a £40m five year facility from Lloyds TSB. This will mean that interest charges will increase but it provides enough room for further expansion. Net debt was £24.4m at the end of July 2011.
Management took a decision not to invest in new capacity back in 2007 and this has proved to be a good policy. This could change following a deal with supermarket operator Lidl involving the company’s site in Maidenhead. The supermarket still requires planning permission but if this is gained then construction is likely to commence.
In June, Lok’nStore acquired document storage services provider Saracen Datastore, which has four sites in the South East. Lok’nStore paid £3.7m for 90.6% of the business with managing director Leo Kane owning the rest. Lok’nStore already generated 10% of its revenues from document storage. In 2010, Leatherhead-based Saracen generated EBITDA of £400,000 on revenues of £1.6m.
Another way of expanding could be managing storage centres for third parties. Storage centres can provide an attractive return to private and institutional investors, as well as inheritance tax relief on the investment, but they need professional management. Lok’nStore could provide this and already runs one site on a management contract.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFOctober2011_25.pdf
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