REG - Wynnstay Properties - Annual Report, AGM Notice & Proposed Share Buyback
16/06/2022 07:00
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RNS Number : 0559P Wynnstay Properties PLC 16 June 2022
The information communicated within this announcement is deemed to constitute
inside information for the purposes of the Market Abuse Regulation (EU) No.
596/2014 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement, this
information is considered to be in the public domain.
WYNNSTAY PROPERTIES PLC
("Wynnstay" or the "Company")
AUDITED RESULTS FOR YEAR ENDED 25 MARCH 2022 AND NOTICE OF AGM
CIRCULAR RELATING TO PROPOSED AUTHORITY TO PURCHASE ORDINARY SHARES, APPROVAL
OF A WAIVER UNDER RULE 9 OF THE TAKEOVER CODE AND NOTICE OF GENERAL MEETING
Wynnstay Properties PLC is pleased to announce its audited final results for
the year ended 25 March 2022 and that it proposes to seek from shareholders
authority for the Company to purchase up to 406,742 Ordinary Shares ("Share
Buyback") and approval of a waiver under Rule 9 of the Takeover Code ("Rule 9
Waiver").
The Annual Report and Financial Statements and the circular relating to the
Share Buyback and Rule 9 Waiver ("the Circular") are available on its website
www.wynnstayproperties.co.uk and will shortly be posted to those shareholders
who have elected to receive documents by post, when a further announcement
will be made.
The Company's Annual General Meeting ("AGM") will be held on Tuesday 19 July
2022 and the General Meeting relating to the Share Buyback and Rule 9 Waiver
will be held immediately following the AGM. Details of the arrangements for
both meetings are set out in the notices of meeting in the Annual Report and
Financial Statements and the Circular.
For further information please contact:
Wynnstay Properties plc
Philip Collins (Chairman)
020 7554 8766
WH Ireland Limited (Nominated Adviser and Broker):
Chris Hardie, Ben Thorne, Megan Liddell
020 7220 1666
LEI number is 2138006MASI24JYW5076.
For more information on Wynnstay visit: www.wynnstayproperties.co.uk
WYNNSTAY PROPERTIES PLC
AUDITED RESULTS FOR YEAR ENDED 25 MARCH 2022
The financial information set out in this announcement does not constitute
statutory accounts as defined in section 435 of the Companies Act 2006.
Accordingly pursuant to section 435(2), this announcement does not include the
auditor's report on the statutory accounts.
However the financial information for the year ended 25 March 2022 contained
in the announcement is taken directly from the statutory accounts for that
year. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under either Section 498 (2) or Section 498
(3) of the Companies Act 2006 and did not include references to any matters to
which the auditor drew attention by way of emphasis.
The statutory accounts for the year ended 25 March 2021 have been delivered to
the Registrar of Companies. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under either Section
498 (2) or Section 498 (3) of the Companies Act 2006 and did not include
references to any matters to which the auditor drew attention by way of
emphasis.
The statutory accounts for the year ended 25 March 2022 have not yet been
delivered to the Registrar of Companies. The 2022 accounts will be delivered
to the Registrar of Companies following the Company's Annual General
Meeting. The Annual Report and Financial Statements, including the Notice of
Annual General Meeting, are available on the Company's website
www.wynnstayproperties.co.uk and will shortly be posted to those shareholders
who have elected to receive documents by post, when a further announcement
will be made.
This announcement was approved by the Board on 15 June 2022.
WYNNSTAY PROPERTIES PLC
CHAIRMAN'S STATEMENT
I am delighted to report on another highly successful year and excellent
financial performance for Wynnstay shareholders.
Before my usual commentary on the year, I would like to draw shareholders'
attention to the new section in the Annual Report that precedes this
statement. This Introduction to Wynnstay describes Wynnstay's distinctive
approach to commercial property investment primarily for private shareholders
and provides information both on the Company's performance and its share price
performance over time. I will explain the reasons for this new section later
and I hope that shareholders will find it informative.
Returning now to the past year, Wynnstay's financial performance is summarised
in the following overview table.
Overview of financial performance
Change 2022 2021
• Rental Income 5.2% £2,252,000 £2,140,000
• Net Property Income (1.3%) £1,569,000 £1,590,000
• Operating Income 70.0% £7,581,000 £4,459,000
• Income before Taxation 77.9% £7,202,000 £4,048,000
• Earnings per share 48.3% 199.8p 134.7p
• Dividends per share, paid and proposed 7.1% 22.5p 21.0p
• Net asset value per share 19.3% 1,090p 911p
• Loan to value ratio 25.5% 29.4%
• Gearing ratio 21.8% 32.4%
Portfolio
Rental income increased by 5.2% to £2,252,000 compared to the prior year
(2021: £2,140,000).
In addition to rents, income in the form of dilapidations from outgoing
tenants and other property related receipts of £56,000 was received. This
income is lower than the prior year (2021: £298,000), which reflected other
receipts over an extended period as explained in last year's Annual Report.
As in previous years there has been extensive property management activity
within the portfolio leading to positive outcomes on various lease renewals,
rent reviews and new lettings. The portfolio currently comprises 77 tenancies
in 83 premises at 15 separate locations. The principal focus during this year
has been at Beaver Industrial Estate at Liphook and on the completion and
letting of our development at Petersfield.
At Liphook, the main highlights were the refurbishment and letting of one unit
to a longstanding tenant of other units on the estate. The tenant also
extended the lease of the other units they occupy as part of the transaction.
The medium-term letting of two other recently vacated units together with the
adjacent development site for use as associated storage space for an
infrastructure project were also completed. The lettings of all three units
were at significantly higher rents to those previously received. In addition,
we completed the renewal of leases on five other units at Liphook.
At Petersfield, our development of Parkers Trade Park 2 was completed within
budget and with only a slight delay to the project plan. This delay resulted
from difficulties experienced by our contractor in obtaining materials and
from construction workers being absent as a result of Covid, both being common
problems experienced within the construction industry. The lettings of two of
the three attractive modern units to Screwfix and Toolstation were completed
in early December 2021 and the third letting to Easy Bathrooms was completed
in early February 2022. The three tenants completed their fitting out promptly
and have been trading for some months. The property will become fully
income-producing in the current financial year on expiry of initial rent-free
periods and is a substantial positive addition to our portfolio.
At our largest asset, Quarry Wood Industrial Estate at Aylesford, we were able
to build on the successful activities on which I reported last year. Here we
let one unit to a new tenant at an increased rent without any void period or
rent-free period being granted and also completed two lease renewals.
Elsewhere in the portfolio we completed lease renewals or lease extensions at
Lichfield, Norwich and Heathfield and welcomed a new tenant at Lewes.
As reported at the half-year, the tenant of our office building at Surbiton
decided not to renew the lease. Although the longstanding tenant undertook the
dilapidations required under the lease, it was clear that the property would
require substantial further updating and refitting to meet the latest
standards. As a consequence we marketed the property for both sale as well as
to rent. I am pleased to report that we were able to secure a sale, which
completed within a few weeks of the property being vacated, at a price of
£2.65 million. This resulted in a gross profit of £150,000 and a net profit
of £125,000 after sales costs and taxation, compared to the book value in our
2021 accounts.
At the end of the year, the portfolio was 100% let and there were no arrears
or bad debts.
The successful outcome from management activities during the year is reflected
positively in the annual revaluation of the portfolio discussed in the
following section.
Portfolio Valuation
Our Independent Valuers, BNP Paribas Real Estate, undertook the annual
revaluation as at 25 March 2022 valuing the Company's portfolio at
£38,975,000. This represents a 23.7% increase of £7,470,000 on the
valuation as at 25 March 2021, adjusted for the sale of St James House,
Surbiton. During the year capitalised development costs of £1,583,000 were
incurred to complete the construction of Parkers Trade Park 2 at Petersfield.
Significant factors in the increase in the portfolio valuation this year are
the inclusion of the completed development at Petersfield, now valued
substantially above our total development costs, the impact of increased
rents, new or extended leases in the portfolio negotiated over the year and
higher values being realised for comparable industrial property assets
reflecting the strength of the market for this type of investment.
The annual valuation is undertaken under accounting standards for use in our
financial statements in accordance with RICS Global Standards and values each
property as a separate asset on the basis of a sale of that property in the
open market. Therefore the valuation does not take account of any additional
value that might be realised if the portfolio were to be offered on the open
market or any other special factors that may be relevant in the case of
individual potential purchasers, such as sales to other property investors,
existing tenants or adjoining owners.
Profits and Costs
Profits for the year are represented in the three net income lines of our
Statement of Comprehensive Income.
Net property income, before the fair value adjustment of investment
properties, property sales and taxation, for the year was similar to the
previous year at £1,569,000 (2021: £1,590,000).
Operating income after the fair value adjustment and property sales before
taxation rose to £7,581,000 (2021: £4,459,000).
The combined result is income before taxation for the year of £7,202,000
(2021: £4,048,000).
Our policy of exercising tight control over administrative costs has continued
to be effective. Property costs were significantly lower than in the prior
year at £125,000 (2021: £255,000) as we did not incur either substantial
void costs or refurbishment expenditure prior to relettings.
Finance, Borrowings and Gearing
At the year-end, we held cash of £3.5 million (2021: £2.0 million), our
borrowings were unchanged at £10.0 million (2021: £10.0 million) and net
gearing was 21.8% (2021: 32.4.%).
Our cash position remained positive throughout the year, although fluctuating,
as costs were incurred on the Petersfield development and the proceeds of sale
of the Surbiton property were received towards the end of the year. The
substantial reduction in net gearing reflects our cash position, the positive
result of the annual revaluation and the sale of the Surbiton property.
As anticipated in last year's Annual Report, in December 2021 we drew down
under our new five year £10 million facility with Handelsbanken PLC and were
able to fix the interest rate at 3.61%, slightly above the rate under the
previous facility (2021: 3.35%). In addition, in December 2021 we completed
the refinancing of our Revolving Credit Facility at an increased limit of £5
million (2021: £3.5 million).
Hence at the year end Wynnstay had a very healthy financial position. In
addition to our available cash balance and positive cash flow from our
property activities, our £5m revolving credit facility remained undrawn.
Dividend
Over recent years we have sought to pursue a progressive dividend policy that
aims to provide shareholders with a rising income commensurate with Wynnstay's
underlying growth and finances.
In the light of the excellent results for the year, the Board recommends a
final dividend of 14.0p per share (2021: 13.0p). An interim dividend of 8.5p
per share (2021: 8.0p) was paid in December 2021. Hence, the total dividend
for this year of 22.5p per share (2021: 21.5p) represents an increase of 7.1%
on the prior year.
Over the past five years, dividends have increased by 28.6% from 17.5p to
22.5p.
Subject to shareholder approval, the final dividend will be paid on 27 July
2022 to shareholders on the register at the close of business on 1 July 2022.
Appointment of new Auditors and Nominated Advisers
As reported at the half-year, we have appointed Nexia Smith & Williamson
as our new auditors and WH Ireland Limited as our Nominated Adviser and
Corporate Broker.
With these financial statements, Nexia Smith & Williamson have completed
their first audit and I am pleased to report that the audit was well planned,
progressed very smoothly and was completed in accordance with the agreed
timetable and at lower cost than last year. Nexia Smith & Williamson have
subsequently changed their name to CLA Evelyn Partners Limited and are
referred to as CLA Evelyn Partners Limited throughout the remainder of this
report. Shareholders will be invited to approve the reappointment of CLA
Evelyn Partners Limited at the Annual General Meeting.
We have established an excellent working relationship with our new nominated
advisers, WH Ireland Limited, who have provided significant initial advice and
guidance to us in the past few months.
Shareholder Matters
In last year's statement I noted that we were aware that the liquidity in the
market for Wynnstay shares can be relatively thin, with only small volumes
being traded and involving large spreads (the difference between the bid and
offer prices). I indicated that we would be reviewing ways in which this issue
might be addressed and how the marketability of Wynnstay shares can be
improved generally. I invited shareholders with views on this subject to
express them and said that we also expected to engage with our shareholder
base directly to seek opinions.
As reported in November, we engaged with a number of shareholders, large and
small, on an informal basis, over the summer and autumn and intended to
continue this process and that we would reflect further on the position over
the following months and discuss with WH Ireland Limited, what steps, if any,
it might be appropriate to consider. Every shareholder will have their own
reasons for buying, selling or continuing to hold investments, including
Wynnstay shares, and these reasons will change from time to time according to
their personal circumstances.
As a quoted company Wynnstay has a small, and rather unusual, share register
on which there are under 250 accounts, a significant number of which are
connected through family relationships. Shareholders are private investors
rather than funds or institutions and, in the main, are long-term holders. A
number of holdings have been in the same families for a long time, in some
cases since the Company's formation in 1886, passing from generation to
generation. As these holders tend not to sell shares, although they may
occasionally either sell or acquire further shares, they do not necessarily
see liquidity and marketability of Wynnstay shares as an issue. These
long-term investors provide stability and continuity within the shareholder
base.
One consequence of this share register structure is that the volume and
proportion of Wynnstay shares traded in the market is less than for many
quoted companies where share registers are larger and holdings are more
dispersed. Fewer Wynnstay shares tend to be available to trade and then only
usually in modest quantities. At times this can create frustration among
investors seeking to buy shares, whether for the first time or to add to their
holdings. Frustration may also arise from the size of the "spread" and the
high discount to net asset value of the share price. However both these
features also arise in other, much larger, quoted property companies. Some new
investors may also be deterred from a holding in Wynnstay in case it cannot
easily be realised in the future, if and when the need arises.
The Board has concluded that there are four actions that would assist in
improving the liquidity and marketability of Wynnstay shares.
First, to provide existing and potential investors with further succinct
information on Wynnstay, its business and performance. This is now provided in
the Introduction to Wynnstay below which describes Wynnstay's distinctive
approach as a small quoted specialist property company with a private investor
shareholder base.
Secondly, to demonstrate Wynnstay has performed well for its investors, both
against its objectives and relative to other quoted property companies, in the
medium to long-term. The tables and chart set out in the Introduction to
Wynnstay below show Wynnstay's corporate and property portfolio performance
over five years as well as the performance of its share price compared to the
FTSE 350 Real Estate Investment Trusts Index over the past ten years. The
Company specific information demonstrates, in the Board's view, the benefits
of Wynnstay's distinctive approach and the share price comparison shows that
Wynnstay's share price has substantially outperformed the quoted property
company market in the long-term.
Thirdly, in the light of the generally limited market in the Company's shares
on AIM and the discount of the share price to declared net asset value per
share, which has typically been up to 25% in recent years, it is important for
all shareholders that the Company has an authority to purchase its own shares.
This is so that the Company can act as a purchaser in the market where it is
appropriate, and in the interests of shareholders generally, to do so. Other
quoted property and investment companies, as well as other quoted companies,
use share buybacks on a routine basis to enhance earnings and net asset value
per share. Where shares are bought back dividends cease to be payable, thus
conserving cash in the business and benefitting continuing shareholders; and
the shares bought back can either be cancelled or can be held in treasury for
reissue.
The Board considers that in appropriate circumstances the purchase by the
Company of its own shares would represent a good use of its available cash
resources, and, by increasing earnings and net asset value per share, would
assist in maximising shareholder value. The present intention would be to hold
any shares bought back in treasury so that they are available for
reissue where there is market demand for shares or to facilitate individual
property acquisitions.
Fourthly, the Board considers that it would also assist in Wynnstay's future
development if authority continued to be granted by shareholders to issue a
limited number of shares without first offering them to existing shareholders.
If the authority is used, it would give Wynnstay flexibility, for instance, to
issue shares for small fundraisings which might support a larger acquisition
and allow the issue of shares as part consideration on individual property
acquisitions to vendors, where the vendors wish to retain in interest in a
broader portfolio of assets in a quoted company. Bringing in new investors
with an interest in commercial property and in Wynnstay's distinctive approach
to the share register would broaden the shareholder base and support its
future development.
Authority to buy back shares through market purchases
Shareholders last granted authority to the Board for the Company to buy back
shares through market purchases over ten years ago. This resulted in the
purchase of 443,500 shares in 2010. Authority to buy back shares was also
granted in 2011. No shares were purchased under that authority and it has not
been sought in following years.
Authority to buy back shares requires the approval by resolution of
shareholders, other than those who hold or are part of a Concert Party holding
more than 30% of the shares and following a recommendation of the Independent
Directors. As I, and my immediate family, have substantial holdings and have
been deemed by the Takeover Panel to be members of a Concert Party, we cannot
participate in the vote on any resolution put to shareholders.
A circular approved by the Independent Directors explaining and seeking
approval of the proposed authority to make market purchases of the Company's
shares and of an exemption under Rule 9 of the City Code on Takeovers and
Mergers is being issued to shareholders.
Authority to issue shares without pre-emption rights
For a number of years at Annual General Meetings, Shareholders have granted
authority to the Board to issue shares without first offering them to existing
shareholders. This authority has been limited to 5% of the issued share
capital. As explained above, the Board considers that there may be situations
in relation to the future acquisition of properties, where the authority may
continue to be useful. Hence, we are again seeking shareholder approval of a
resolution at the AGM to enable this.
Outlook
After emerging from the difficulties created by four years of uncertainty
resulting from the UK leaving the European Union followed by nearly two years
of the Covid-19 pandemic we are now faced with the prospect of a war in Europe
and trade disruption arising from the Russian invasion of Ukraine. Inflation
is rising sharply in the UK, putting real pressure on business costs and
household incomes with consequent potential impacts on the economy.
The Board considers that Wynnstay has entered this further period of
uncertainty in a very healthy position. We have an excellent property
portfolio which should continue to grow unless there is significant disruption
caused by external events beyond our control or the UK economy suffers a
significant downturn which affects the ability or willingness of businesses to
invest or of consumers to spend. Government measures to support business and
assist consumers in addressing the challenges will be vital.
The Board is encouraged by the progress that has been made over recent years
in continuing to improve the quality and value of the assets in the portfolio.
Shareholders should bear in mind that the commercial property market is
cyclical and that asset values can move up and down over time as a result. On
the other hand, Wynnstay has always adopted a cautious and realistic approach
in valuing our assets and to the management and development of the business.
As noted above, our annual revaluation is undertaken for accounting purposes
and values our individual assets, not the portfolio as a whole.
Colleagues and Advisers
Our Managing Director, Paul Williams, and our finance and company secretarial
colleagues have continued to work effectively to deliver for shareholders. I
would like to thank them, as well as my colleagues on the Board and our
professional advisers, for their support over the year.
In recognition of the excellent financial results for shareholders, the Board
has determined that Paul Williams should receive a bonus for the financial
year of £35,000.
Shareholding Enquiries
From time to time we receive enquiries from shareholders with questions about
their shareholdings or about buying or selling Wynnstay shares or transferring
them, typically to relatives.
All enquiries about shareholdings, including changes of address and bank
details and about such transfers of shares, should be directed to our
Registrars, Link Group, whose details are available on the Company's website.
As regards buying or selling shares, this can be carried out by registering
the holding online with our Registrars, Link Group, via their secure share
portal www.signalshares.com (http://www.signalshares.com) , which also enables
shareholdings to be managed quickly and easily. Shares can, of course, also be
bought and sold in the usual way through a stockbroker or an online platform.
Annual General Meeting
The AGM provides an important and valued opportunity for the Board to engage
with shareholders. For the last two years, it has not been possible to convene
the meeting in the normal way due to the Covid-19 pandemic and, with great
reluctance, we held our meeting with restricted attendance and urged
shareholders to cast votes by proxy.
Now that the pandemic restrictions and measures are behind us, I am pleased to
say that our AGM this year will be held at 2.30pm on Tuesday 19 July 2022 at
the Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS. The Notice of
Meeting is to be found at the end of this Annual Report.
The Annual General Meeting will be followed by a General Meeting for the
purposes set out in the Notice of Meeting and the circular mentioned above.
Shareholders who have registered for Link services online can also benefit
from the ability to cast their proxy votes electronically, rather than by
post. Shareholders not already registered for Link services online will need
their investor code, which can be found on their share certificate or dividend
tax voucher, in order to register.
To maximise shareholder engagement, shareholders who are unable to attend the
AGM are encouraged to submit in writing those questions that they might have
wished to ask in person at the meeting. Questions should be emailed to
company.secretary@wynnstayproperties.co.uk at least 48 hours in advance of the
AGM. You will receive a written response and, if there are common themes
raised by a number of shareholders, we aim to provide a summary for all
shareholders, grouping themes and topics together where appropriate, on the
Company's website following the AGM.
Finally, on behalf of the Board, I would like to thank all shareholders in
Wynnstay, whether they have held shares for many years or have recently
acquired their shares, for demonstrating their confidence in the Company and
its future.
Philip Collins
Chairman
15 June 2022
INTRODUCTION TO WYNNSTAY
A distinctive approach to commercial property investment primarily for private
investors
Wynnstay is an AIM listed property investment and development business. Its
principal shareholders are private investors wishing to invest in a portfolio
of good quality secondary commercial properties for medium to long-term
capital and income growth. The portfolio is currently focused on industrial,
including trade counter, units.
Strategy
Wynnstay aims to achieve capital appreciation and generate rising dividend
income for shareholders from a diversified and resilient commercial property
portfolio in Central and Southern England, with diversity and resilience being
reflected in the location, number and nature of the properties, and the mix of
lease terms, tenants and uses.
For location, the focus is on areas where there is strong occupational demand.
While many tenants have been in occupation for a considerable time, where a
tenant leaves, voids can be managed and relettings can be achieved.
The majority of properties are multi-let, resulting in a number of individual
tenancies in most locations, reducing exposure to any single tenant and risk
of loss of rental income in the case of defaults and voids.
Leases are mainly for terms of five years or more with relatively few
short-term agreements (two years or less), and usually with upward only rent
reviews based on market rates. Flexibility in addressing tenant needs and
requirements generally mean that the terms agreed result in a mutually
beneficial outcome for both parties.
Tenants comprise a broad spread of occupiers, also reducing risk exposure:
national and local government, international businesses, national trading
chains and regional and local businesses. Uses include manufacturing and
services; storage and distribution; and trade counter and out-of-town retail.
Active direct management and close engagement and constructive business
relationships with tenants, together with refurbishment and selective
development over time, underpin capital value and increase income.
Managed for shareholders
The portfolio is directly, rather than externally, managed. Finance and
administrative operations are largely outsourced to external providers to meet
specific needs. All report to the Board, the majority of whom are
non-executive directors.
Management remuneration comprises salary and, where appropriate, a cash bonus.
Wynnstay does not offer incentive schemes, such as share plans, share options
or share bonuses.
As a result both management and the Board are focused on Wynnstay's
performance for the benefit of shareholders, operational costs are closely
controlled and dilution of shareholders' investment and potential conflicts of
interest are minimised.
Incremental growth
The portfolio has been built incrementally, with opportunities being taken to
dispose of assets as and when the time is appropriate and to reinvest in
assets that offer better long-term returns.
This is achieved gradually over time, without the need for deal-driven
activity in pursuit of corporate or portfolio expansion.
Funding
Wynnstay adopts a prudent, pragmatic approach to funding. Investments are
funded in part by retained profits and recycling capital receipts from
disposals and in part from borrowings, the majority at a fixed rate and held
at a modest loan-to-value level, from an experienced and supportive property
lender. This provides security at times of uncertainty in debt markets.
Valuation
Properties are valued on a cautious basis, based upon professional advice from
expert external valuers, recognising that commercial property is a cyclical
market that can exhibit significant upward and downward movements over time
and that steadiness and progression are most likely to be in shareholders'
interests.
Wynnstay on AIM
Wynnstay's shares were quoted on its AIM introduction in 1995 at a mid-market
price of 150p. On the day prior to the approval of this report, the mid-market
price was 660p, an increase of 340%. The dividend paid in 1995 was 4p per
share. The dividend paid for the current year will be 22.5p per share, an
increase of 462%.
Performance
Wynnstay's distinctive approach has delivered on its strategy over both the
medium and long term. Shareholders have benefitted from substantial increases
in net asset value per share and dividends as the portfolio and its management
have delivered strong results.
Corporate Performance
Year Ended 25 March Increase 2022 2021 2020 2019 2018
2018-2022
pence pence pence pence pence
Net Asset Value per share 44.6% 1,090p 911p 792p 807p 754p
Dividends per share 28.6% 22.5p 21.0p 15.0p 19.0p 17.5p
Portfolio Performance
Year ended 25 March Increase 2022 2021 2020 2019 2018
2018-2022
£'000 £'000 £'000 £'000 £'000
Property Income 5.8% 2,308 2,438 2,271 2,216 2,182
Rental Income 3.2% 2,252 2,140 2,271 2,216 2,182
Portfolio Value 29.6% 38,975 34,005 34,260 35,095 30,070
% % % % %
Loan-to-value ratio 25.5% 29.4% 36.5% 35.6% 34.1%
Gearing ratio 21.8% 32.4% 52.2% 52.7% 43.1%
Occupancy at year-end 100% 99% 94% 100% 100%
Rent Collection for year 100% 99%* 100% 100% 100%
Operating Costs/Income 32.0% 34.8% 30.3% 28.2% 30.6%
Operating Costs/Portfolio Value 1.9% 2.5% 2.0% 1.8% 2.2%
years years years years years
Weighted average unexpired lease term:
- to lease break
- to lease expiry 3.0 2.8 3.6 2.8 3.1
4.4 4.5 4.8 4.2 4.1
* Excludes rent concessions of £29,000 granted to tenants as a result of the
Covid-19 pandemic.
Share Price Performance
Although Wynnstay is quoted on AIM, and therefore is not a constituent of the
FTSE 350 Real Estate Investment Trusts Index, the index contains a good
cross-section of quoted property companies of various forms, all much larger
than Wynnstay. Wynnstay's share price relative to the FTSE 350 Real Estate
Investment Trusts Index is shown in the chart below. Wynnstay's share price
has substantially outperformed the index over the ten-year period.
WYNNSTAY PROPERTIES PLC
STRATEGIC REPORT 2022
The Directors present their Strategic Report for the year ended 25 March 2022.
Following the adoption by the Company of the Quoted Company Alliance Corporate
Governance Code (the Code) certain matters required by the Code to be included
in the Annual Report are now addressed in this report, the Directors' Report
or the Corporate Governance Report with cross-references provided where
appropriate. The three reports should be read together with the Introduction
to Wynnstay, the Chairman's Statement and the additional information required
by the Code published on the Company's website.
Business, Business Model, Strategy and Future Development
Wynnstay is a long-established, successful property investment and development
company. Its business, business model, strategy and future development are
described in the Introduction to Wynnstay and the Chairman's Statement.
Financial Objectives and Performance Indicators
The key financial objectives for the Company are to achieve capital
appreciation and generate rising dividend income for shareholders from a
diversified and resilient commercial property portfolio as described in the
Introduction to Wynnstay and the Chairman's Statement which also contain
details of performance against selected indicators.
The Directors consider that the Company's performance against the indicators
to be creditable. As a result of changes made to the portfolio, including
disposals of two significant properties in the past two financial years and a
development project, rental income has been relatively stable for a period
while active management, close engagement with tenants and favourable market
conditions have all contributed to the substantial increase in net asset value
per share.
Risks, Uncertainties and Effective Risk Management
The principal risks and uncertainties are those associated with the commercial
property market, which is cyclical by its nature and include changes in the
supply and demand for space and investor demand for commercial property assets
as well as the inherent risk of tenant failure. In the latter case, the
Company seeks to reduce this risk by requiring the payment of rent deposits
when considered appropriate and monitoring the income exposure to any tenant
contributing more than 2% of total rental income on a quarterly basis.
Other risk factors include changes in legislation in respect of taxation and
the obtaining of planning consents, as well as those associated with financing
and treasury management including interest rate risk. The Company's financial
risk management policies can be found at Note 19 of the financial statements.
In common with all other business activities, the Company is exposed to many
of the usual risks and uncertainties arising from commercial, economic and
political circumstances and events, as well as to unpredictable external
shocks, such as the Covid pandemic and the invasion of Ukraine by Russia.
Among the principal risks and uncertainties considered are:
· Significant potential income reduction and bad debts as tenants have
difficulty in maintaining rent payments and potential voids within the
portfolio arising from tenant failures, resulting in additional costs;
· Significant potential impacts on the economy and market sentiment
generally capable of adversely affecting the commercial property market and
commercial property values;
· Significant potential disruption to the businesses of letting agents,
property professionals and the general services on which the business relies;
· Significant potential impacts of inflation on costs, of supply chain
constraints for raw materials and construction products and of labour market
constraints on any developments or works it may undertake.
The Company carefully vets prospective new tenants from a credit risk
perspective. Bad debts are mitigated by close engagement with businesses
within a diversified mix of tenants across the portfolio.
The Board monitors carefully its rental income receipts. The Company received
all the rental income due for the financial year ended 25 March 2022 and the
portfolio was 100 % let by rental value as at 25 March 2022.
The Board regularly reviews the portfolio, including feedback from engagement
with tenants, in order to assess the risk of tenant failures.
Directors' duty to promote the success of the Company under Section 172
Companies Act 2006
The Strategic Report is required to include a statement that describes how the
directors have had regard to the matters set out in section 172(1) (a) to (f)
of the Companies Act 2006 when performing their duty under section 172. Some
of the matters identified in Section 172(1) are already covered by similar
provisions in the QCA Corporate Governance Code and have thus been reported by
the Company in the Corporate Governance Statement, the Corporate Governance
Report and the QCA Statement of Compliance on our website. In order to avoid
unnecessary duplication, the relevant parts of those documents are identified
below and are to be treated as expressly incorporated by reference into this
Strategic Report.
Under section 172 (1) of the Companies Act 2006, each individual Director must
act in the way he considers, in good faith, would be the most likely to
promote the success of the Company for benefit of its members as a whole, and
in doing so have regard (among other matters) to six matters detailed in the
section.
In discharging their duties, the Directors seek to promote the success of
Wynnstay for the benefit of members as a whole and have regard to all the
matters set out in Section 172(1), where applicable and relevant to the
business, taking account of its size and structure and the nature and scale of
its activities in the commercial property market. The following paragraphs
address each of the six matters in Section 172(1) (a) to (f).
(a) The likely consequences of any decision in the long term: The commercial
property market is cyclical by nature. Investing in commercial property is a
long-term business. The decisions that we take must have regard to long term
consequences in terms of success or failure and managing risks and
uncertainties. We cannot expect that every decision we take will prove, with
the benefit of hindsight, to be the best one: external factors may affect the
market and thus change conditions in the future, after a decision has been
taken. However, we consider that our record of decisions on acquisitions,
disposals and active management of the portfolio is very strong. This is
reflected in the long-term performance of Wynnstay over the years in terms of
net asset value and dividends paid to shareholders.
(b) The interests of the Company's employees: We have only one full time
employee, who is the Managing Director. He sits on the Board with the
Non-Executive Directors. There are no other employees.
(c) The need to foster the Company's business relationships with suppliers,
customers and others: We have regularly reported in our annual reports on the
constructive relationships that Wynnstay seeks to build with its tenants and
the mutual benefits that this brings to both parties; and we have extended
this reporting in recent years following Principle 3 of the QCA Code to
include suppliers and others. This is therefore addressed under Principle 3 in
the QCA Compliance Statement. In the past year, it has been vital to foster
our business relationships with tenants given external factors affecting
business and the economy.
(d) The impact of the Company's operations on the community and the
environment: This is also addressed under Principle 3 of the QCA Code in the
QCA Compliance Statement. Due to its size and structure and the nature and
scale of its activities, the Board considers that the impact of Wynnstay's
operations as a landlord on the community and the environment is low.
Wynnstay's assets are used by its tenants for their own operations rather than
by Wynnstay itself. In the past year, Wynnstay has not been made aware of any
tenant operations that have had a significant impact on the community or the
environment. In relation to planned developments, Wynnstay seeks to ensure
that designs and construction comply with all relevant environmental standards
and with local planning requirements and building regulations so as not to
adversely affect the community or the environment.
(e) The desirability of the Company maintaining a reputation for high
standards of business conduct: This is addressed under Principle 8 of the QCA
Code in the Corporate Government Statement and in the QCA Compliance
Statement. The Board considers that maintaining Wynnstay's reputation for high
standards of business conduct is not just desirable: it is a valuable asset in
the competitive commercial property market.
(f) The need to act fairly as between members of the Company: Wynnstay has
only one class of shares. Thus all shareholders have equal rights and,
regardless of the size of their holding, every shareholder is, and always has
been, treated equally and fairly. Relations with shareholders are further
addressed under Principles 2, 3 and 10 of the QCA Code in the Corporate
Governance Report and the QCA Compliance Statement. We continue to review how
we communicate with shareholders and we encourage shareholders to adopt
electronic communications and proxy voting in place of paper documents where
this suits them as well as to raise questions in writing if they are unable to
attend annual general meetings.
This Strategic Report was approved by the Board and is signed on its behalf
by:
Philip Collins
Director
15 June 2022
WYNNSTAY PROPERTIES PLC
CHAIRMAN'S CORPORATE GOVERNANCE STATEMENT
As Chairman, it is my responsibility, working with my fellow Board colleagues,
to ensure that good corporate governance arrangements and standards apply
within the Company.
Our corporate governance structure has evolved over many years since we became
one of the first companies admitted to AIM in 1995. We have adopted and
adapted practices and procedures to promote good governance that are
considered appropriate for a company of Wynnstay's size and structure and the
nature and scale of its activities. We have strived, as the business has grown
and changed, for continual improvement making changes in recent years, for
instance, in management information flows and risk management reviews.
In September 2018, the Company adopted the Quoted Companies Alliance (QCA)
Corporate Governance Code (the Code). The Code is constructed around ten broad
principles, which are set out in the Corporate Governance Report.
At Wynnstay, we apply the principles of the Code to the extent reasonable and
practicable for a company of our size and structure and the nature and scale
of our activities, recognising the flexibility that lies within the Code so
that it is neither a bureaucratic, box-ticking exercise nor results in
unnecessary, inappropriate or burdensome processes and procedures.
So, for instance, we do not see the need in a company of this size with one
full-time employee, the Managing Director, for separate remuneration and audit
committees, where the functions undertaken typically by those committees can
be fully and properly carried out by the Non-Executive Directors working
formally as a group to consider remuneration and the audit plan, process and
outcome. We have used individual and group review and self-assessment suited
to our small size and structure, rather than formal external Board and
individual performance reviews. During the financial year the Board conducted
a further evaluation of its performance through a self-assessment process. The
results are described under Principle 7 of the Code in the Corporate
Governance Report. The evaluation has provided further useful insight into the
work of the Board over the past year and focus for the next year.
Our Statement of Compliance has been reviewed and updated concurrently with
the preparation of this Annual Report and will be placed on the website
together with the index to signpost the location of disclosures required by
the Code.
The Board acknowledges that a corporate culture based on sound ethical values
and behaviours is an asset and provides competitive advantages in the
commercial property market where competition is intense and prospective and
existing tenants are seeking good quality premises that are suited to their
needs from a considerate, reliable landlord. Wynnstay aims to conduct its
business with a high degree of professionalism, to operate within appropriate
professional standards and legal and regulatory requirements and to act with
honesty and integrity in a manner that gives confidence to those with whom it
deals.
I consider that Wynnstay's governance structures and processes are in line
with its corporate culture, and are appropriate to its size and structure, the
nature and scale of its activities and its capacity, appetite and tolerance
for risk and thus I consider them to be "fit-for-purpose". They have evolved
over time in parallel with its objectives, strategy and business model and are
suitable for the Company's growth plans in the short to medium term and I,
with my colleagues on the Board, continue to keep them under review and to
make changes where required.
Philip Collins
Chairman
15 June 2022
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, AUDIT AND REMUNERATION REPORTS
Introduction
This report is presented by reference to each of the ten principles contained
in the Quoted Companies Alliance (QCA) Corporate Governance Code (the Code)
under a concise heading for each principle. Where the QCA recommends that a
principle should be addressed in the Annual Report, we do so in this report,
the Directors' Report or the Strategic Report with cross-references provided
where appropriate. The three reports should be read together with the
Chairman's Statement and the additional information required by the Code
published on the Company's website, including the Statement of Compliance.
Where the Code recommends that a principle should be addressed on the
Company's website, this report refers to the principle only and signposts to
the website, including to the Statement of Compliance. The index required by
the Code to signpost where the disclosures required by the Code are located
forms part of the Statement of Compliance. For reasons explained below this
report covers audit and remuneration matters as well as corporate governance.
Principle 1: Establish a strategy and business model which promote long-term
value for shareholders
A description of the application of Principle 1 is recommended by the Code to
be included in the annual report and by company law is required to be included
in the Strategic Report. We therefore deal with Principle 1 in that report.
Principle 2: Seek to understand and meet shareholder needs and expectations
A description of the application of Principle 2 is recommended by the Code to
be included on a company's website. We therefore deal with Principle 2 in the
Statement of Compliance on the Company's website.
Principle 3: Take into account wider stakeholder and social responsibilities
and implications for long-term success
A description of the application of Principle 3 is recommended by the Code to
be included on the Company's website. We therefore deal with Principle 3 in
the Statement of Compliance on the Company's website.
Principle 4: Embed effective risk management, considering both opportunities
and threats, throughout the organisation
A description of the application of Principle 4 is recommended by the Code to
be included in the annual report. Under company law, the Directors' Report
must include a description of financial risk management objectives and
policies and information on exposure to price risk, credit risk, liquidity
risk and cash flow risk and the Strategic Report must include a description of
the principal risks and uncertainties facing a company. We therefore deal with
Principle 4 in these reports.
Principle 5: Maintain the board as a well-functioning, balanced team, led by
the Chair
A description of the application of Principle 5 is recommended by the Code to
be included in the annual report. The information given below should be read
together with the additional information required by the Code to be given
under Principles 6, 7, 8 and 9 provided in this report, elsewhere in this
Annual Report and in the Statement of Compliance on the Company's website, as
recommended by the Code.
The Code requires the identification of those directors who are considered to
be independent and a description of the time commitment required from
directors including the number of meetings of the Board, and of any
committees, during the year, together with the attendance record of each
Director.
The Board comprises one executive, the Managing Director, and four
Non-Executive Directors, including the Chairman. The Board considers that all
the Non-Executive Directors are independent. The biographies of the all the
Directors are available on the Company's website.
Philip Collins, the Non-Executive Chairman, has been a Director since 1988 and
became Chairman in 1998. He has become a significant shareholder, having
decided to invest over this period, to demonstrate his confidence in
Wynnstay's long-term prospects. He has always placed the interests of all
shareholders, and Wynnstay's long term success, at the centre of his
chairmanship, as evidenced by his actions and reports to shareholders. His
knowledge of the business and of shareholders, and his experience in both the
private and public sectors, are all valuable to the Board's deliberations.
There is no evidence that his tenure or his shareholding has had any adverse
impact on his independent judgement.
Charles Delevingne has served as a Non-Executive Director since June 2002.
Notwithstanding the length of his service, Mr Delevingne continues to
demonstrate his commitment to fulfilling his role as a Non-Executive Director,
providing direction on business strategy and advice on business operations
using his skills and experience in commercial property. He is not involved in
the daily management of the Company, nor in any relationships or circumstances
that might give rise to a conflict of interest or interfere with his exercise
of independent judgment. In addition, he continues to demonstrate the
attributes of an independent non-executive director and there is no evidence
that his tenure has had any adverse impact on his independent judgment.
Paul Mather and Caroline Tolhurst were appointed to the Board in March 2017
and were deemed independent on appointment and remain so. They are both
Chartered Surveyors and have many years of experience in commercial property
and property investment management as well as, in the case of Caroline
Tolhurst, in corporate governance through her qualification and experience as
a Company Secretary.
The Non-Executive Directors are expected to devote such time as is necessary
for the proper performance of their duties. Overall, the Non-Executive
Directors, other than the Chairman, are expected to spend a minimum of 10
working days a year on the Company's business. In practice, after taking
account of around 6 or 7 scheduled Board meetings a year, preparation time,
site visits and other requirements mentioned below, 12-18 days per annum would
be typical. The Chairman typically spends the equivalent of 25-30 working days
per annum on the Company's business. The following table shows directors'
attendance at Board meetings, including ad hoc meetings, in the financial year
ended 25 March 2022.
Director Board meetings
Philip Collins 13/13
Paul Williams 13/13
Charles Delevingne 13/13
Paul Mather 13/13
Caroline Tolhurst 13/13
In addition to these meetings, all the Directors took part in two strategy
discussions, three non-executive Directors met as the Audit Committee to
review and approve various audit-related matters and documents, and two
Directors also took part in Board sub-committee meetings authorised to approve
the final texts of documents or transactions on behalf of the Board.
In view of the Company's size and nature, the Board does not consider that the
establishment of formal Board committees, such as a Remuneration Committee, a
Nomination Committee or an Audit Committee, is appropriate. Reports of the
Non-Executive Directors' consideration of Remuneration and Audit matters are
covered under Principle 10 below, as recommended by the Code.
In relation to nominations, these are managed by the Non-Executive Directors,
or delegated to an ad hoc committee of them, who report with recommendations
to the Board. The approach to succession planning and appointments is
addressed, as recommended by the Code, under Principle 7 in the Statement of
Compliance on the Company's website.
Principle 6: Ensure that between them directors have the necessary up-to-date
experience, skills and capabilities
The application of Principle 6 is recommended by the Code to be included in
the annual report and is therefore included in this report, as well as
elsewhere in this Annual Report, which should be read together with the
information provided under Principles 5, 7, 8 and 9 in this report and on the
Company's website.
The Code requires disclosure of the identity of each Director; the relevant
experience, skills and personal qualities that each brings to the Board; how
the Board as a whole contains the necessary mix of experience, skills and
qualities and capabilities to deliver the strategy over the medium to
long-term; how each director keeps his/her skill-set up-to-date; where
external advisers have been engaged, their role and where external advice on
significant matters has been obtained; and any internal advisory roles.
The names of the Directors and their experience, skills and capabilities are
set out on the Company's website. Reference is also made to the information on
each of the Non-Executive Directors given under Principle 5 above.
The Managing Director, Paul Williams, has many years of practical experience
in property investment and management. The Board has engaged experienced
professionals to manage accounting, financial and Company secretarial matters.
Alan Palmer, the Director of Finance, although not a Board Director, attends
all Board meetings and advises the Board on accounting and financial matters.
He has extensive experience of the commercial property sector, with former
senior roles in finance, treasury and corporate finance in quoted property
companies. His services are provided through The CFO Centre Limited, a
specialist provider of part-time Finance Director services to small and medium
sized enterprises (SMEs).
Susan Wallace FCIS, Company Secretary, is a Chartered Secretary and a founding
partner of Bruce Wallace Associates Limited, a specialist provider of company
secretarial and compliance services to SME businesses and quoted companies. In
her role, she is supported by other professionals in her company.
The Board considers that the experience and knowledge of each of the Directors
and the experienced professionals is appropriate for the Company's current
operations and strategy and gives them the ability to constructively challenge
strategy, scrutinise performance and assess risk and to deliver the Company's
strategy over the medium to long term.
Directors keep their skill sets up-to-date with a combination of attendance at
industry events, individual reading and study and experience gained from other
board roles. The Company Secretary is responsible for ensuring the Board is
aware of any applicable regulatory changes and updates the Board as and when
relevant. Directors are able to take independent professional advice in the
furtherance of their duties, if necessary, at the Company's expense.
The Company calls on the services of specialist external advisers in the usual
way for its day-to-day business needs.
The Chairman, Senior Independent Director, Company Secretary and Director of
Finance, working in their respective roles and together, advise and support
the Board as a whole, drawing on specialist external advisers where necessary.
Principle 7: Evaluating board performance based on clear and relevant
objectives, seeking continuous improvement
The application of Principle 7 is recommended by the Code to be included in
part in the annual report and in part on a company's website. The Company
considers that it is convenient to deal with most of these matters in one
place in this report.
After the end of each financial year, the Chairman usually holds a meeting
with the Non-Executive Directors individually and as a group without the
Managing Director. The Non-Executive Directors also meet annually without the
Chairman to appraise the Chairman's performance. These meetings are intended
to provide an opportunity for open dialogue on individual and collective
performance and on any necessary changes required.
The Board carried out a further internal board evaluation based, as in the
previous year, on the same set of questions typically used by smaller
companies for this purpose. The Directors were asked to rate the Board's
performance by providing a score, within a range of 0-5, and comments for each
question as well as to suggest ideas to improve the working of the Board and
to make comparisons with the previous year. The scores and comments were
amalgamated into an anonymised results schedule, which was then considered by
the Board. The total ratings and average scores for each question and all the
comments submitted were reviewed.
The discussion of the results identified several areas of improvement from the
previous year, notably in relation to oversight of effective risk management,
the time devoted to long-term, new or emerging strategic issues and board
processes where changes in the scheduling and content of Board meetings had
contributed. Building on this, further areas of improvement identified in
the evaluation included enhanced communications on routine matters between
Board meetings, focusing greater Board time and discussion on important
priority issues by improving reporting and agenda management and exploring
more effective communications with shareholders. These actions are being taken
forward in 2022.
The Board will carry out a similar evaluation exercise towards the end of the
current financial year, which will include the effectiveness of the changes
implemented. Given the size and nature of the Company's business, the Board
currently does not consider it would be an appropriate use of cash resources
to engage an external firm to undertake a formal evaluation although it will
keep this under review.
The approach to succession planning and appointments is addressed, as
recommended by the Code, under Principle 7 in the Statement of Compliance on
the Company's website.
Principle 8: Promote a corporate culture based on ethical values and
behaviours
The application of Principle 8 is recommended by the Code to be addressed in
the Chairman's Corporate Governance Statement. Ensuring the means to determine
that values and behaviours are recognised and respected is addressed, as
recommended by the Code, under Principle 8 in the Statement of Compliance on
the Company's website.
Principle 9: Maintain governance structures and processes that are
fit-for-purpose, and support good decision making
A high-level explanation of the application of Principle 9 is recommended by
the Code to be provided in the Chairman's Corporate Governance Statement.
The Code recommends that supplementary detail required by the Code (role and
responsibilities of Directors, role of committees, matters reserved for the
Board and plans for evolution of the governance framework) is addressed on the
website and it is so addressed under Principle 9 in the Statement of
Compliance on the Company's website.
Principle 10: Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The application of Principle 10 of the Code is recommended by the Code to be
included in part in the annual report and in part on the website. The Company
follows these recommendations and addresses the work of committees, including
in relation to audit and remuneration and the identification and reasons for
any non-publication of disclosures under the principles set out in the Code in
this report.
The other matters, being the outcome of all general meeting votes and intended
actions on and reasons for significant votes cast against resolutions, are
shown on the Company's website, including under Principle 10 of the Statement
of Compliance; and historical annual reports, notices and general meetings and
other governance-related material are included on the Company's website.
Communication and dialogue with shareholders and other relevant stakeholders
has already been addressed above in this report. The performance of the
business during the last financial year is reviewed in detail in the
Chairman's Statement, the Directors' Report and the Strategic Report and
elsewhere in the Annual Report.
The Board considers that the existing communication and reporting structures
allow open dialogue between shareholders and the Board and provide
shareholders with a good understanding of the business.
The Code recommends the annual report to describe the work of committees and
recommends inclusion in the annual report. As already mentioned above, the
Board does not have formally constituted committees, with the Non-Executive
Directors acting as a group in relation to audit and remuneration.
The following paragraphs report on the work of the Non-Executive Directors in
relation to audit and remuneration matters in the year.
Audit Report
Following the appointment of Nexia Smith & Williamson (now re-named CLA
Evelyn Partners Limited) as the Company's new auditor in November 2021, the
Senior Independent Director and the Director of Finance met and discussed the
audit with the auditor before the year-end and a draft Audit Planning Report
prepared by the auditor was reviewed subsequently by the Board.
At the completion of the audit, the auditor presented its Audit Completion
Report to the Non-Executive Directors before the Financial Statements were
presented for Board approval. The discussions enabled the auditor to explain
the proposed work and its outcome and the Non-Executive Directors to raise any
issues. It is considered that the process worked well. The audit did not
raise any material issues and the auditor was able to issue the audit report
as scheduled and in the usual form.
Remuneration Report
The Directors currently determine remuneration, with the Non-Executive
Directors determining the remuneration of the Executive Director and the
Non-Executive Directors (other than the Chairman) determining the Chairman's
remuneration. Directors' fees are determined by the whole Board. Details of
the Directors' remuneration are set out in the Directors' Report.
It is the Company's policy that the remuneration of Directors should be
commensurate with the services provided by them to the Company and should take
account of published data on reasonable market comparables, where available
and relevant to our situation.
The Non-Executive Directors met after the end of the financial year to review
the performance of the Managing Director and determine the level of his
remuneration and any bonus. Remuneration has been determined historically by
reference to a mixture of publicly available remuneration studies relating to
the relevant specialism and role, other AIM companies and a few private
property companies. However, such information has become less readily
available in recent years and may not in any event be applicable to our
particular circumstances. Levels of bonus are determined by reference to the
assessment of performance against objectives for the business. This process is
necessarily subjective but is considered to deliver a reasonable result for
the individual, the Company and its shareholders. For the year ended 25 March
2022, it was agreed that a bonus was payable for the year. Details of
remuneration are disclosed in the Directors' Report.
Directors' fees are determined primarily by reference to the fees payable in
other AIM quoted companies, with the level being set towards the lower end of
the range. The Chairman's remuneration is set having regard to the commitment
required to carry out the function and its responsibilities and having regard
to the level of Directors' fees and, to some extent, comparables among other
AIM companies.
This Report was approved by the Board and is signed on its behalf by:
Philip Collins
Director
15 June 2022
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2022
The Directors present their One Hundred and Thirty-Sixth Annual Report,
together with the audited Financial Statements of the Company for the year
ended 25 March 2022.
Following the adoption by the Company of the Quoted Company Alliance Corporate
Governance Code (the Code) certain matters required by the Code to be included
in the Annual Report are now addressed in this report, the Strategic Report or
the Corporate Governance Report with cross-references provided where
appropriate. The three reports should be read together with the Chairman's
Statement and the additional information required by the Code published on the
Company's website.
Business and Future Development
As the Code requires a description of the business, strategy and business
model promoting long-term value for shareholders to be included in the Annual
Report, and similar information is also required by company law to be included
in the Strategic Report, these matters are dealt with in the Strategic Report.
Financial Objectives and Risks
As the Code requires a description of effective risk management systems to be
included in the Annual Report and company law requires a description of
financial risk management objectives and policies, information on exposure to
risks and a description of the principal risks and uncertainties facing a
company, these matters are all dealt with in the Strategic Report as well as
in Note 1.3 of the financial statements.
Profit for the Year
The profit for the year after taxation amounted to £5,418,000 (2021:
£3,653,000). Details of movements in reserves are set out in the statement of
changes in equity.
Dividends
The Directors have decided to recommend a final dividend of 14p per share for
the year ended 25 March 2022 payable on 27 July 2022 to those shareholders on
the register at the close of business on 1 July 2022. This dividend, together
with the interim dividend of 8.5p paid on 17 December 2021, represents a total
for the year of 22.5p (2021: 21.5p).
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic Report, the
Directors' Report, the Corporate Governance Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors prepared the Company's financial statements in
accordance with UK adopted International Financial Reporting Standards (IFRS).
The Directors must only approve the financial statements if they are satisfied
that they give a true and fair view of the state of affairs of the Company and
of the profit or loss of the Company for the reporting period. In preparing
these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• state whether the financial statements have been prepared in
accordance with IFRS; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the 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 Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
Directors
The Directors holding office during the financial year under review and their
interests (including spouses, other related parties and non-beneficial
interests, where applicable) in the ordinary share capital of the Company at
25 March 2022 and 25 March 2021 are shown below:
Ordinary
Shares of 25p
25.3.22
25.3.21
P.G.H.
Collins
Non-Executive Chairman
850,836 850,836
C.P.
Williams
Managing Director
11,612 11,612
C.H.
Delevingne
Non-Executive Director
5,000 5,000
The interests shown above in respect of Mr. P.G.H. Collins include
non-beneficial interests of 229,596 shares at 25 March 2022 and 2021.
Mr. C.P. Williams has a service agreement with the Company under which his
employment is subject to six months' notice of termination by either party.
In accordance with the Company's Articles of Association, Mr Philip Collins
and Mr Paul Mather retire by rotation and, being eligible, offer themselves
for re-election at the Annual General Meeting.
Biographies of each of the Directors are available on the Company's website.
Directors' Emoluments
Directors' emoluments for the year ended 25 March 2022 are set out below:
Total Total
Salaries Fees
Pension Benefits
2022 2021
P.G.H.
Collins
- 43,500
- -
43,500 42,500
C.P.
Williams
168,000 16,250
13,300 7,330
204,880 195,746
C.H.
Delevingne
- 16,250
- -
16,250 15,850
P.
Mather
- 16,250
- -
16,250 15,850
C.M.
Tolhurst
- 21,650
- -
21,650 20,850
Total
2022
£168,000 £113,900 £13,300
£7,330 £302,530
Total
2021
£159,000 £110,900 £12,900
£7,996 £290,796
The above figures for 2022 include a discretionary bonus payment of £35,000
to Mr C.P. Williams being the amount determined by the Board to reflect his
performance during that year. A discretionary bonus payment of £30,000 was
paid to Mr Williams for the financial year ended 25 March 2021.
Directors' and Officers' Liability Insurance
The Company has maintained Directors' and Officers' insurance as permitted by
the Companies Act 2006.
Interests in the Company's Shares
As at 15 June 2022, the Directors have been notified or are aware of the
following interests (including spouses, other related parties and
non-beneficial interests, where applicable, for both financial years), which
are in excess of three per cent of the issued ordinary share capital of the
Company, excluding shares held in treasury:
No. of Ordinary Percentage
of Percentage of
Shares of 25p
Share Share
Capital 2022 Capital 2021
P.G.H. Collins
850,836
31.38% 31.38%
G. J. Gibson
272,192
10.04% 10.04%
D. N. Gibson
121,378
4.47%
4.47%
Dr. G.L.A. Bird
112,000
4.13%
4.13%
J.V. Bird
111,750
4.12%
4.12%
Going Concern
The Directors consider, as at the date of approving the financial statements,
that there is reasonable expectation that the Company has adequate financial
resources to continue to operate, and to meet its liabilities as they fall due
for payment, for at least twelve months following the approval of the
financial statements.
Internal Control
The Directors are responsible for the Company's system of internal financial
control, which is designed to provide reasonable, but not absolute, assurance
against material misstatement or loss. In fulfilling these responsibilities,
the Board has reviewed the effectiveness of the system of internal financial
control. The Directors have established procedures for planning and budgeting
and for monitoring, on a regular basis, the performance of the Company.
Statement as to Disclosure of Information to Auditors
Each of the persons who are Directors at the time when this report is approved
has confirmed that:
• so far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
• each Director has taken all the steps that ought to have been
taken as a Director, including making appropriate enquiries of fellow
Directors and the Company's auditors for that purpose, in order to be aware of
any information needed by the Company's auditors in connection with preparing
their report and to establish that the Company's auditors are aware of that
information.
Auditor
BDO LLP resigned as the Company's auditor in November 2021, confirming that
there were no matters relating to their ceasing to hold office that ought to
be brought to members' attention, and Nexia Smith & Williamson were
engaged in their place. Nexia Smith & Williamson have subsequently changed
their name to CLA Evelyn Partners Limited. A resolution to appoint CLA Evelyn
Partners Limited as the Company's auditor for the next financial year will
therefore be proposed at the Annual General Meeting.
Annual General Meeting
The Notice of the Annual General Meeting, to be held on 19 July 2022, is set
out at the end of the Annual Report.
By Order of the Board
Susan Wallace
Secretary
15 June 2022
WYNNSTAY PROPERTIES PLC
STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25 MARCH 2022
Notes 2022 2021
£'000 £'000
Property Income 2 2,308 2,438
Property Costs 3 (125) (255)
Administrative Costs 4 (614) (593)
Net Property Income 1,569 1,590
Movement in Fair Value of 5,887 1,748
Investment Properties 10
Profit on Sale of Investment Property 125 1,121
Operating Income 7,581 4,459
Investment Income 6 - 1
Finance Costs 6 (379) (412)
Income before Taxation 7,202 4,048
Taxation 7 (1,784) (395)
Income after Taxation 5,418 3,653
Basic and diluted earnings per share 9 199.8p 134.7p
The Company has no items of other comprehensive income.
WYNNSTAY PROPERTIES PLC
STATEMENT OF FINANCIAL POSITION 25 MARCH 2022
2022 2021
Notes £'000 £'000
Non-Current Assets
Investment Properties 10 38,975 34,005
Investments 12 3 3
38,978 34,008
Current Assets
Trade and other receivables 14 301 342
Cash and Cash Equivalents 3,491 2,001
3,792 2,343
Current Liabilities
Trade and other payables 15 (1,048) (929)
Income Taxes Payable (284) (249)
Bank Loans Payable 16 - (10,000)
(1,332) (11,178)
Net Current Assets / (Liabilities) 2,460 (8,835)
Total Assets Less Current Liabilities 41,438 25,173
Non-Current Liabilities
Bank Loans Payable 16 (9,938) -
Deferred Tax Payable 17 (1,953) (461)
(11,891) (461)
Net Assets 29,547 24,712
Capital and Reserves
Share Capital 18 789 789
Capital Redemption Reserve 205 205
Share Premium Account 1,135 1,135
Treasury Shares (1,570) (1,570)
Retained Earnings 28,988 24,153
29,547 24,712
Net Asset Value pence per share 1,090p 911p
Approved by the Board and authorised for issue on 15 June 2022
June 2022
P.G.H.
Collins
C.P. Williams
Director
Director
Registered number: 00022473
WYNNSTAY PROPERTIES PLC
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25 MARCH 2022
2022 2021
Restated
£'000 £'000
Cash flows from operating activities
Income before taxation 7,202 4,048
Adjusted for:
(Increase) in fair value of investment properties (5,887) (1,748)
Interest received - (1)
Interest paid 379 412
Profit on disposal of investment properties (125) (1,121)
Movement in dilapidations for property sold - 55
Changes in:
Decrease/(increase) in trade and other receivables 41 (98)
Increase/(decrease) in trade and other payables 153 (326)
Cash generated from operations 1,763 1,221
Income taxes paid (284) (249)
Net cash used in operating activities 1,479 972
Cash flows from investing activities
Interest and other income received - 1
Purchase of investment properties (1,583) (117)
Sale of investment properties 2,618 3,187
Net cash generated from investing activities 1,035 3,071
Cash flows from financing activities
Interest paid (379) (412)
Dividends paid (583) (419)
Drawdown of bank loans net of fees 9,938 -
Repayment of bank loans (10,000) (2,500)
Net cash used in financing activities (1,024) (3,331)
Increase in cash and cash equivalents 1,490 712
Cash and cash equivalents at beginning of period 2,001 1,289
Cash and cash equivalents at end of period 3,491 2,001
2021 figures have been restated for the reclassification of Interest paid into
Cash flows from financing activities.
WYNNSTAY PROPERTIES PLC
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25 MARCH 2022
YEAR ENDED 25 MARCH 2022
Capital Share
Share Redemption Reserve Premium Treasury Retained
Capital Account Shares Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 26 March 2021 789 205 1,135 (1,570) 24,153 24,712
Total comprehensive - - - - 5,418 5,418
income for the year
Dividends - note 8 - - - - (583) (583)
Balance at 25 March 2022 789 205 1,135 (1,570) 28,988 29,547
YEAR ENDED 25 MARCH 2021
Capital Share
Share Redemption Reserve Premium Treasury Retained
Capital Account Shares Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 26 March 2020 789 205 1,135 (1,570) 20,919 21,478
Total comprehensive - - - - 3,653 3,653
income for the year
Dividends - note 8 - - - - (419) (419)
Balance at 25 March 2021 789 205 1,135 (1,570) 24,153 24,712
FUNDS AVAILABLE FOR DISTRIBUTION
2022 2021
£'000 £'000
Retained Earnings 28,988 24,153
Less: Cumulative Unrealised Fair Value (12,996) (7,967)
Adjustment of Property Investments net of tax
Treasury Shares (1,570) (1,570)
Distributable Reserves 14,422 14,616
WYNNSTAY PROPERTIES PLC
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25 MARCH 2022
Explanation of Capital and Reserves:
· Share Capital: This represents the subscription, at par value, of the
Ordinary Shares of the Company.
· Capital Redemption Reserve: This represents money that the Company
must retain when it has bought back shares, and which it cannot pay to
shareholders as dividends: It is a non-distributable reserve and represents
paid up share capital.
· Share Premium Account: This represents the subscription monies paid
for Ordinary Shares of the Company in excess of their par value.
· Treasury Shares: This represents the total consideration and costs
paid by the Company when purchasing the 443,650 shares as referred to in Note
18.
· Retained Earnings: This represents the profits after tax that can be
used to pay dividends. However, dividends can only be paid from Distributable
Reserves as detailed in the preceding table.
WYNNSTAY PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 25 MARCH 2022
1. BASIS OF PREPARATION, ACCOUNTING POLICIES AND ESTIMATES
Wynnstay Properties PLC is a public limited company incorporated and domiciled
in England and Wales. The principal activity of the Company is property
investment, development and management. The Company's ordinary shares are
traded on the AIM, part of The London Stock Exchange. The Company's registered
number is 00022473.
1.1 Basis of Preparation
The financial statements have been prepared in accordance with UK adopted
International Financial Reporting Standards ("IFRS"). The financial statements
have been presented in Pounds Sterling being the functional currency of the
Company and rounded to the nearest thousand. The financial statements have
been prepared under the historical cost basis modified for the revaluation of
investment properties and financial assets measured at fair value through
Operating Income.
(a) New Interpretations and Revised Standards Effective for the year ended 25
March 2022
The Directors have adopted all new and revised standards and interpretations
issued by the International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee ("IFRIC") of the
IASB and adopted by applicable law that are relevant to the operations and
effective for accounting periods beginning on or after 26 March 2021;
· Amendment to IFRS 16: Leases Covid 19-Related Rent Concessions
(#AmendIFRS16) (#IAS16IAS37IFRS3)
· (#IAS16IAS37IFRS3) (#IAS16IAS37IFRS3) IAS 37: Provisions, Contingent
Liabilities and Contingent Assets (#IAS16IAS37IFRS3)
The adoption of these interpretations and revised standards had no material
impact on the disclosures and presentation of the financial statements.
(b) Standards and Interpretations in Issue but not yet Effective
The International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC") have issued the below
revisions to existing standards or new interpretations or new standards with
an effective date of implementation after the period of these financial
statements.
The following new amendment applicable in future periods has not been early
adopted as it is not expected to have a significant impact on the financial
statements of the Company:
· Amendments to IAS 1: Classification of Liabilities as Current or
Non-current (effective for accounting periods beginning on or after 1 January
2023).
(c) Going concern
The financial statements have been prepared on a going concern basis. This
requires the Directors to consider, as at the date of approving the financial
statements, that there is reasonable expectation that the Company has adequate
financial resources to continue to operate, and to meet its liabilities as
they fall due for payment, for at least twelve months following the approval
of the financial statements.
The Directors have reviewed cash balances and borrowing facilities to cover at
least twelve months of operations, including financing costs and continuation
of employment and advisory costs as currently contracted without any reduction
for cost saving initiatives. The results of the review show that the Company
has cash and borrowing facilities to cover at least twelve months of
operations, and that the Company will satisfy the financial covenant ratios in
the borrowing facilities as described in Note 16. In addition, the Statement
of Financial Position as at 25 March 2022 shows that the Company held a cash
balance of £3.5m and net assets of £29.5m and had a low gearing ratio of
21.8%. In the light of the foregoing considerations, the Directors consider
that the adoption of the going concern basis is reasonable and appropriate.
1.2 Accounting Policies
Investment Properties
All the Company's investment properties are independently revalued annually
and stated at fair value as at 25 March. The aggregate of any resulting
increases or decreases are taken to operating income within the Statement of
Comprehensive Income. The basis of independent valuation is described in Note
10.
Investment properties are recognised as acquisitions or disposals based on the
date of contract completion.
Depreciation
In accordance with IAS 40, freehold investment properties are included in the
Statement of Financial Position at fair value and are not depreciated.
The Company has no other plant and equipment.
Disposal of Investments
The gains and losses on the disposal of investment properties and other
investments are included in Operating Income in the year of disposal. Gains
and losses are calculated on the net difference between the carrying value of
the properties and the net proceeds from their disposal.
Property Income
Property income is recognised on a straight-line basis over the period of the
lease and is measured at the fair value of the consideration receivable. Lease
deposits are held in separate designated deposit accounts and are thus not
treated as assets of the Company in the financial statements. All income is
derived in the United Kingdom.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. Current tax is the expected tax payable on the taxable income for the
year based on the tax rate enacted or substantively enacted at the reporting
date, and any adjustment to tax payable in respect of prior years. Taxable
profit differs from income before tax because it excludes items of income or
expense that are deductible in other years, and it further excludes items that
are never taxable or deductible.
Deferred taxation is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profits and is accounted for using the statement of financial
position liability method. Deferred tax liabilities are recognised for all
taxable temporary differences (including unrealised gains on revaluation of
investment properties) and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
The Company provides for deferred tax on investment properties by reference to
the tax that would be due on the sale of the investment properties. Deferred
tax is calculated at the rates that are expected to apply in the period when
the liability is settled, or the asset is realised. Deferred tax is charged or
credited to Income after Taxation, including deferred tax on the revaluation
of investment property.
Trade and Other Accounts Receivable
Trade and other receivables are initially measured at the operating lease
measurement value and subsequently measured at amortised cost as reduced by
appropriate allowances for expected credit losses. All receivables do not
carry any interest and are short term in nature.
Cash and Cash Equivalents
Cash comprises cash at bank and on demand deposits. Cash equivalents are short
term (less than three months from inception), repayable on demand and are
subject to an insignificant risk of change in value.
Trade and Other Accounts Payable
Trade and other payables are initially measured at fair value and subsequently
measured at amortised cost. All trade and other accounts payable are
non-interest bearing.
Pensions
Pension contributions towards the employee's pension plan are charged to the
statement of comprehensive income as incurred. The pension scheme is a defined
contribution scheme.
Borrowings
Interest rate borrowings are initially recognised at fair value, being
proceeds received less any directly attributable transaction costs. Borrowings
are subsequently stated at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption value is recognised in profit or
loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
Dilapidations
Dilapidations receipts are recognised in the Statement of Comprehensive Income
when the right to receive them arises. They are recorded in revenue as other
property income unless a property has been agreed to be sold whereby the
receipt is treated as part of the proceeds of sale of the property. See Note
2.
1.3 Key Sources of Estimation Uncertainty and Judgements
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that may affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period. The key sources
of estimation uncertainty that have a significant risk of causing material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are those relating to the fair value of investment properties
which are revalued annually by the Directors having taken advice from the
Company's independent external valuers, on the basis described in Note 10, as
well as the judgement taken by the Directors as to whether a property is being
held for sale.
There are no other judgemental areas identified by management that could have
a material effect on the financial statements at the reporting date.
2. PROPERTY INCOME 2022 2021
£'000 £'000
Rental income 2,252 2,140
Other property income 56 298
2,308 2,438
Rental income comprises rents earned and apportioned over the lease period
taking into account rent free periods and rents received during the period.
Other property income comprises unexpended dilapidations and miscellaneous
income arising from the letting of properties.
3. PROPERTY COSTS 2022 2021
£'000 £'000
Empty rates 3 47
Property management 65 176
68 223
Legal fees 34 21
Agent fees 23 11
125 255
4. ADMINISTRATIVE COSTS 2022 2021
£'000 £'000
Rents payable - short term lease 32 28
General administration, including staff costs 548 522
Auditors' remuneration - audit fees CLA Evelyn Partners Limited 31 -
(formerly Nexia Smith & Williamson)
Auditors' remuneration - audit fees BDO - 38
Tax services - BDO - 5
Tax services - Associate of Nexia Smith & Williamson 3 -
614 593
5. STAFF COSTS 2022 2021
£'000 £'000
Staff costs, including Directors' fees, during the year were as follows:
Wages and salaries 289 278
Social security costs 34 32
Other pension costs 13 13
336 323
Further details of Directors' emoluments, totalling £302,530 (2021:
£290,796), are shown in the Directors' Report. There are no other key
management personnel.
2022 2021
No. No.
The average number of employees, including Non-Executive Directors, engaged
wholly in management and administration was:
5 5
The number of Directors for whom the Company paid pension benefits
during the year was: 1 1
6. FINANCE COSTS (NET) 2022 2021
£'000 £'000
Interest payable and finance costs on bank loans 379 412
Less: Bank interest receivable - (1)
379 411
7. TAXATION 2022 2021
£'000 £'000
(a) Analysis of the tax charge for the year:
UK Corporation tax at 19% (2021: 19%)
Total current tax charge 292 249
Deferred tax - temporary differences 1,492 146
Tax charge for the year 1,784 395
(b) Factors affecting the tax charge for the year:
Net Income before taxation 7,202 4,048
Current Year:
Corporation tax thereon at 19% (2021: 19%) 1,368 769
Capital gains net tax movement on disposals 106 (187)
Deferred tax adjustment for change to 25% tax rate (2021: 19%) 467 -
Deferred tax net adjustments arising from revaluation of properties properties (157) (187)
Total tax charge for the year 1,784 395
8. DIVIDENDS 2022 2021
£'000 £'000
Final dividend paid in year of 13.0p per share
(2021: Second Interim dividend 7.5p per share) 352 203
Interim dividend paid in year of 8.5p per share
(2021: Interim dividend 8.0p per share) 231 216
583 419
On 15 June 2022 the Board resolved to pay a final dividend of 14p per share
which will be recorded in the Financial Statements for the year ending 25
March 2023.
9. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing Income after Taxation
attributable to Ordinary Shareholders of £5,356,000 (2021: £3,653,000) by
the weighted average number of 2,711,617 (2020: 2,711,617) ordinary shares in
issue during the period excluding shares held as treasury. There are no
instruments in issue that would have the effect of diluting earnings per
share.
10. INVESTMENT PROPERTIES 2022 2021
£'000 £'000
Properties
Balance at beginning of financial year 34,005 34,260
Additions 1,583 117
Disposals (2,500) (2,120)
Revaluation Surplus 5,887 1,748
Balance at end of financial year 38,975 34,005
The Company's freehold properties were valued as at 25 March 2022 by BNP
Paribas Real Estate, Chartered Surveyors, acting in the capacity of external
valuers, and adopted by the Directors. The valuations were undertaken in
accordance with the requirements of IFRS 13 and the RICS Valuation - Global
Standards 2020.
The valuation of each property was on the basis of Fair Value. The valuers
reported that the total aggregate Fair Value of the properties held by the
Company was £38,975,000.
The valuer's opinions were primarily derived from comparable recent market
transactions on arms-length terms.
In the financial year ending 25 March 2022, the total fees earned by the
valuer from Wynnstay Properties PLC and connected parties were less than 5% of
the valuer's Company turnover.
The valuation complies with International Financial Reporting Standards. The
definition adopted by the International Accounting Standards Board (IASB) in
IFRS 13 is Fair Value, defined as: 'The price that would be received to sell
an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date.'
These recurring fair value measurements for non-financial assets use inputs
that are not based on observable market data, and therefore fall within level
3 of the fair value hierarchy.
The significant unobservable market data used is property equivalent yields
which range from 4.3% to 8.5%, with an average equivalent yield of 6.2% (2021:
6.7%) and an average weighted equivalent yield of 6.25% (2021: 6.38%) for the
portfolio.
There have been no transfers between levels of the fair value hierarchy.
Movements in the fair value are recognised in profit or loss.
A 0.5% decrease in the weighted equivalent yield would result in a
corresponding increase of £3.81 million in the fair value movement through
profit or loss. A 0.5% increase in the same yield would result in a
corresponding decrease of £3.19 million in the fair value movement through
profit or loss.
11. OPERATING LEASES RECEIVABLE 2022 2021
The following are the future minimum lease payments receivable under £'000 £'000
non-cancellable operating leases which expire:
Not later than one year 354 391
Between 1 and 5 years 4,753 3,519
Over 5 years 622 1,710
5,729 5,620
Rental income under operating leases recognised through profit or loss
amounted to £2,252,000 (2021: £2,140,000).
Typically, the properties were let for a term of between 5 and 10 years at a
market rent with rent reviews every 5 years. The above maturity analysis
reflects future minimum lease payments receivable to the next break clause in
the operating lease. The properties are generally leased on terms where the
tenant has the responsibility for repairs and running costs for each
individual unit with a service charge payable to cover common services
provided by the landlord on certain properties. The Company manages the
services provided for a management fee and the service charges are not
recognised as income in the accounts of the Company as any receipts are netted
off against the associated expenditures with any residual balance being shown
as a liability.
If the tenant does not carry out its responsibility for repairs and the
Company receives a dilapidations payment, the resulting cash is recorded in
revenue as other property income unless a property has been agreed to be sold
where the receipt is treated as part of the proceeds of sale of the property.
See Note 2.
12. INVESTMENTS 2022 2021
£'000 £'000
Quoted investments 3 3
13. SUBSIDIARY COMPANY
The Company has the following dormant subsidiary which the Directors consider
immaterial to, and thus has not been consolidated into, the financial
statements. The subsidiary holds the legal title to an access road to an
investment property, the use of which is shared between the Company, its
tenants at the property and neighbouring premises.
Scanreach Limited 80%
owned Dormant Net
Assets: £4,447 (2021: £4,447)
(2020: £4,437)
Scanreach Limited 80% owned Dormant
Net Assets: £4,437 (2018: £4,437)
14. ACCOUNTS RECEIVABLE 2022 2021
£'000 £'000
Trade receivables 215 322
Other receivables 86 20
301 342
Trade receivables include an adjustment for credit losses of £nil (2021:
£6,282). Trade receivables of £nil (2021: nil) are considered past due, but
not impaired.
15. ACCOUNTS PAYABLE 2022 2021
£'000 £'000
Trade payables 7 28
Other creditors 84 65
Deferred income 535 535
Accruals 422 301
1,048 929
16. BANK LOANS PAYABLE 2022 2021
£'000 £'000
Current loan - 10,000
Non-current loan 9,938 -
9,938 10,000
In December 2021, a five-year Fixed Rate Facility of £10 million and a
Revolving Credit Facility of £5.0 million were entered into providing a total
committed credit facility of £15.0 million. Interest on loan amounts drawn
down under the Fixed Rate Facility of £10 million (2021: £10 million) is
charged at 3.61% per annum (2021: 3.35%) for the year ended 25 March 2022. No
loan amounts have been drawn down under the Revolving Credit Facility during
the year and the balance drawn as at 25 March 2022 is £nil (2021: £nil).
Both facilities are repayable in one instalment on 17 December 2026. The
facilities include the following financial covenants which were complied with
during the year:
• Rental income shall not be less than 2.25 times the interest costs
• The drawn balance shall at no time exceed 50% of the market value
of the properties secured.
The facilities are secured by fixed charges over freehold land and buildings
owned by the Company, which at the year-end had a combined value of
£35,330,000 (2021: £33,185,000). The undrawn element of the facilities
available at 25 March 2022 was £5,000,000 (2021: £3,500,000).
Interest charged under the Revolving Credit Facility is linked to Bank of
England Base Rate as the reference rate.
17. DEFERRED TAX 2022 2021
£'000 £'000
Deferred Tax brought forward 461 314
Charge for the year 1,492 147
Deferred Tax carried forward 1,953 461
A deferred tax liability of £1,953,000 (2021: £461,000) is recognised in
respect of the investment properties and has been calculated at a tax rate of
25% (2021: 19%).
18. SHARE CAPITAL 2022 2021
£'000 £'000
Authorised
8,000,000 Ordinary Shares of 25p each: 2,000 2,000
Allotted, Called Up and Fully Paid
3,155,267 Ordinary shares of 25p each: 789 789
All shares rank equally in respect of shareholder rights.
In March 2010, the Company acquired 443,650 Ordinary shares of Wynnstay
Properties PLC from Channel Hotels and Properties Ltd at a price of £3.50 per
share. These shares, representing in excess of 14% of the total shares in
issue, are held in Treasury. As a result, the total number of shares with
voting rights is 2,711,617.
19. FINANCIAL INSTRUMENTS
The objective of the Company's policies is to manage the Company's financial
risk, secure cost-effective funding for the Company's operations and minimise
the adverse effects of fluctuations in the financial markets on the value of
the Company's financial assets and liabilities, on reported profitability and
on the cash flows of the Company.
At 25 March 2022 the Company's financial instruments comprised borrowings,
cash and cash equivalents, short term receivables and short-term payables. The
main purpose of these financial instruments was to raise finance for the
Company's operations. Throughout the period under review, the Company has not
traded in any other financial instruments. The Board reviews and agrees
policies for managing each of the associated risks and they are summarised
below:
Credit Risk
The risk of financial loss due to a counterparty's failure to honour its
obligations arises principally in connection with property leases and the
investment of surplus cash.
Tenant rent payments are monitored regularly, and appropriate action is taken
to recover monies owed or, if necessary, to terminate the lease. The Company
carefully vets prospective new tenants from a credit risk perspective. Bad
debts are mitigated by close engagement with tenant businesses within a
well-diversified mix of some 77 tenancies across the portfolio and close
monitoring of rental income receipts. In the light of the Covid-19 pandemic
the Company has regularly reviewed the portfolio, including feedback from
engagement with tenants, in order to assess the risk of tenant failures.
The Company has no significant concentration of credit risk associated with
trading counterparties (considered to be over 5% of net assets) with exposure
spread over a large number of tenancies. In terms of concentration of
individual tenant's rents versus total gross annual passing rents the Company
has 3 tenants whose rent, on an individual basis, is between 5.0% and 7.3% of
total gross annual passing rents.
Funds are invested and loan transactions contracted only with banks and
financial institutions with a high credit rating. Concentration of credit risk
exists to the extent that as at 25 March 2022 and 2021 current account and
short-term deposits were held with two financial institutions, Handelsbanken
PLC and C Hoare & Co. The combined exposure to credit risk on cash and
cash equivalents at 25 March 2022 was £3,491,000 (2021: £2,001,000).
Currency Risk
As all of the Company's assets and liabilities are denominated in Pounds
Sterling, there is no exposure to currency risk.
Interest Rate Risk
The Company is exposed to interest rate risk that could affect cash flow as it
currently borrows at both floating and fixed interest rates. The Company
monitors and manages its interest rate exposure on a periodic basis, but does
not take out financial instruments to mitigate the risk. The Company finances
its operations through a combination of retained profits and bank borrowings.
Liquidity Risk
The Company seeks to manage liquidity risk to ensure sufficient funds are
available to meet the requirements of the business and to invest cash assets
safely and profitably. The Board regularly reviews available cash to ensure
there are sufficient resources for working capital requirements.
Interest Rate Sensitivity
Financial instruments affected by interest rate risk include loan borrowings
and cash deposits. The analysis below shows the sensitivity of the statement
of comprehensive income and equity to a 0.5% change in interest rates:
0.5% decrease 0.5% increase
in interest rates in interest rates
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Impact on interest payable - gain/(loss) - - - -
Impact on interest receivable - (loss)/gain (17) (10) 17 10
Total impact on pre-tax profit and equity (17) (10) 17 10
The calculation of the net exposure to interest rate fluctuations was based on
the following as at 25 March:
2022 2021
£'000 £'000
Floating rate borrowings (bank loans) - -
Less: cash and cash equivalents 3,491 2,001
3,491 2,001
Fair Value of Financial Instruments
Except as detailed in the following table, management consider the carrying
amounts of financial assets and financial liabilities recognised at amortised
cost approximate to their fair value.
2022 2022 2021 2021
Book Value Fair Value Book Value Fair Value
£'000 £'000 £'000 £'000
Interest bearing borrowings (note 16) (9.938) (9,938) (10,000) (10,000)
Total (9,938) (9,938) (10,000) (10,000)
2022 2021
Categories of Financial Instruments £'000 £'000
Financial assets:
Quoted investments measured at fair value 3 3
Loans and receivables measured at amortised cost 301 342
Cash and cash equivalents measured at amortised cost 3,491 2,001
Total financial assets 3,795 2,346
Financial liabilities at amortised cost 10,451 10,628
Total liabilities 13,223 11,639
Shareholders' equity 29,547 24,712
Total shareholders' equity and liabilities 42,770 36,351
The only financial instruments measured subsequent to initial recognition at
fair value as at 25 March are quoted investments. These are included in level
1 in the IFRS 13 fair value hierarchy as they are based on quoted prices in
active markets.
Capital Management
The primary objectives of the Company's capital management are:
· to safeguard the Company's ability to continue as a going concern,
so that it can continue to provide returns for shareholders: and
· to enable the Company to respond quickly to changes in market
conditions and to take advantage of opportunities.
Capital comprises shareholders' equity plus net borrowings. The Company
monitors capital using loan to value and gearing ratios. The former is
calculated by reference to total debt as a percentage of the year end
valuation of the investment property portfolio. Gearing ratio is the
percentage of net borrowings divided by shareholders' equity. Net borrowings
comprise total borrowings less cash and cash equivalents. The Company's policy
is that the net loan to value ratio should not exceed 50% and the gearing
ratio should not exceed 100%.
2022 2021
£'000 £'000
Loans and overdraft 9,938 10,000
Cash and cash equivalents (3,491) (2,001)
Net borrowings 6,447 7,999
Shareholders' equity 29,547 24,712
Investment properties 38,975 34,005
Loan to value ratio 25.5% 29.4%
Net borrowings to value ratio 16.5% 23.5%
Gearing ratio 21.8% 32.4%
20. RELATED PARTY TRANSACTIONS
Related Party Transactions with the Directors have been disclosed under
Directors' Emoluments in the Directors' Report. There were no other Related
Party Transactions during the year (2021: £nil).
21. SEGMENTAL REPORTING
The Chief Operating Decision Maker ('CODM'), who is responsible for the
allocation of resources and assessing performance of the operating segments,
has been identified as the Board. IFRS 8 requires operating segments to be
identified on the basis of internal reports that are regularly reviewed by the
Board. The Board have reviewed segmental information and concluded that there
are three operating segments.
Industrial Retail Office Total
2022 2021 2022 2021 2022 2021 2022 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Rental Income 1,884 1,676 68 140 300 324 2,252 2,140
Other Property Income 56 298 - - - - 56 298
Profit /(Loss) on investment property at fair value 5,872 2,093 40 50 (25) (395) 5,887 1,748
Total income and gain 7,812 4,067 108 190 275 (71) 8,195 4,186
Property expenses (125) (215) - (5) - (35) (125) (255)
Segment profit/(loss) 7,687 3,852 108 185 275 (106) 8,070 3,931
Unallocated corporate expenses (614) (593)
Profit on sale of 125 1,121
investment property
Operating income 7,581 4,459
Interest expense (all relating to property loans) (379) (412)
Interest income and - 1
other income
Income before taxation 7,202 4,048
Other information Industrial Retail Office Total
2022 2021 2022 2021 2022 2021 2022 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment assets 36,655 29,200 1,010 970 1,310 3,835 38,975 34,005
Segment assets held 33,010 28,380 1,010 970 1,310 3,835 35,330 33,185
as security
22. CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the financial
year, but not recognised as liabilities in the financial
statements is: £nil (2021: £1,518,000).
WYNNSTAY PROPERTIES PLC
FIVE YEAR FINANCIAL REVIEW
Year Ended 25 March: 2022 2021 2020 2019 2018
£'000 £'000 £'000 £'000 £'000
STATEMENT OF COMPREHENSIVE INCOME
Property Income 2,308 2,438 2,271 2,216 2,182
Net Property Income 1,569 1,590 1,583 1,591 1,514
Operating Income 7,591 4,459 686 2,642 3,355
Income before Taxation 7,202 4,048 258 2,247 2,991
Income after Taxation 5,418 3,653 123 1,928 2,632
STATEMENT OF FINANCIAL POSITION
Investment Properties 38,975 34,005 34,260 35,095 30,070
Equity Shareholders' Funds 29,547 24,712 21,478 21,883 20,443
PER SHARE
Basic earnings 199.8p 134.7p 4.5p 71.1p 97.1p
Dividends Paid and Proposed 22.5p 21.0p 15.0p 19.0p 17.5p
Net Asset Value 1,090p 911p 792p 807p 754p
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