REG - Wynnstay Properties - Final Results <Origin Href="QuoteRef">WSP.L</Origin>

Wynnstay PropertiesAnnouncement

16/07/2015 11:02

RNS Number : 1985Q
Wynnstay Properties PLC
15 June 2015
Wynnstay Properties PLC
Preliminary Results for Year Ended 25th March 2014
CHAIRMAN'S STATEMENT
On behalf of the Board, I am delighted to report on another encouraging year for Wynnstay. We have ended the year with the portfolio being virtually fully-let and benefitting from an enhanced lease profile, with the annual revaluation producing a significant increase over the prior year and with net asset value per share rising substantially. We made two additions to the portfolio during the financial year and, since the year-end, we have exchanged contracts to make a further substantial acquisition.
Overview of financial performance
Wynnstay's financial performance for the year may be summarised as follows:

Change
2015
2014
 Property income
3.4%
1,663,000
1,609,000
 Profit before movement in fair value of investment properties and taxation
(11.1%)
899,000
1,011,000
 Earnings per share

81.8p
34.9p
 Dividends per share, paid and proposed
4.2%
12.3p
11.8p
 Net asset value per share
15.2%
531p
461p
 Net gearing

45.7%
41.4%
Property income for the year, at just over 1.66 million, was slightly higher than last year, reflecting a number of underlying changes arising from the active management of the portfolio. Profits before fair value movement and taxation for the year, at just under 900,000 were slightly lower than in the prior year largely due to higher overall finance costs.
Our annual property revaluation delivered an increase over the value for the prior year and the resulting surplus of1,530,000 has contributed to an increase of over 15% in net asset value per share.
Property Management and Portfolio
Wynnstay currently has a geographically dispersed portfolio focussed in various towns in the South and East of England with 59 tenants occupying over 71 separate properties in 19 locations. At the end of the financial year, the portfolio was virtually fully-let, with just one small vacant unit at our Quarry Wood Industrial Estate in Aylesford.
A considerable proportion of our tenants have been in occupation for many years; some tenants have joined us more recently. We aim to build strong, constructive relationships with our tenants and to meet their changing property needs, for instance by enlargement or reduction in space required, by undertaking alterations and improvements to the properties or by varying lease terms, where these are commercially practicable and beneficial.
During the course of the year, we have agreed lease renewals or extensions of leases with 8 tenants in 4 locations and have welcomed 7 new tenants. I reported on a number of these when I wrote to you in November 2014 with the interim results. Since then, we have also agreed new leases or lease extensions on one unit at Hailsham and on two units at St Neots and we have agreed lease variations that defer tenant breaks on two units at Basingstoke. However, the main focus in the second half of the year has been on our estate in Aylesford and on our property at Chessington.
At Aylesford, we are in the course of negotiations with a number of our existing tenants with a view to facilitating moves within the estate to accommodate their requirements which should lead to lease extensions or new leases on a number of units. I anticipate that these negotiations will be completed shortly and I will report to you further with our interim results in November.
The tenant of two of our units at Chessington vacated at the year-end following the disposal of that part of their business occupying these premises. I am pleased to report that we negotiated a satisfactory cash settlement with them regarding the dilapidations that needed to be undertaken. The units are being actively marketed and there has been some interest, but it is too early to say whether this will lead to successful lettings. In the meantime, we are carrying out an extensive refurbishment of the property funded by the monies received from the outgoing tenant. I hope that there will be progress to report to you at the time of our interim results in November.
In addition to the trade counter acquisition in Ipswich on which I reported to you in my statement last year, we also acquired towards the end of the financial year a freehold retail warehouse unit with car parking in an established out-of-town location in Weston-super-Mare, Somerset. This is occupied by Majestic Wine on a full repairing and insuring lease until October 2020 at an annual rent of 41,500 subject to an upward only review. The price of625,000 provides, after costs, a net initial yield of 6.3%.
Shortly after the end of the financial year, we entered into negotiations to acquire off-market an industrial estate in Hampshire and I am pleased to report that contracts have recently been exchanged, with completion due in the near future. The acquisition price of 2.6 million will be funded from our borrowing facility and our cash resources. Further details will be provided with the interim results in November and in our Accounts for the current year in due course.
Portfolio Valuation
As at 25 March 2015, our Independent Valuers, BNP Paribas Real Estate (who have succeeded Sanderson Weatherall), have undertaken the annual revaluation of the company's portfolio at 21,780,000 representing, as already mentioned, a revaluation surplus of 1,530,000. The Board considers this to be an excellent outcome.
Following the revaluation, as at the year-end, the industrial sector within the portfolio accounted for 58% by value, with the retail and office elements comprising 24% and 18% respectively.
Borrowings and Gearing
Total borrowings at the year-end were 7.6 million (2014 - 6.0 million) and net gearing at the year-end was 45.7% compared to 41.4% last year. The increased borrowings reflect the drawdown under our borrowing facility made to facilitate the purchase of the Ipswich and Weston-super-Mare properties during the year.
In December 2013, you will recall that we signed a new five year facility of 10 million, the main terms of which are broadly the same as those under the previous facility, other than an increase in the margin to 2.65% and an increase in the non-utilization fee to 1%. This higher margin, coupled with the increase in borrowings mentioned above, is reflected in higher financing costs for the year compared to the prior year.
Interest rates remain at an historic low level and the outlook, according to most commentators, seems to be for limited prospect of any meaningful increase in rates in the near future and rates are currently not forecast in the medium term to return to the levels prevailing in the pre-financial crisis period.
Costs
Our property costs in this year were marginally higher than in the prior year as we invested in some improvements jointly with tenants which are generally reflected in better lease terms. These costs remain under strict control, as do our administrative costs.

Dividend
In the light of the satisfactory results for the year, the Board is recommending a total dividend for the year of 12.3p per share (2014 - 11.8p). An increased interim dividend of 4.5p per share (2014 - 4.2p) was paid in December
2014. Accordingly, subject to approval of Shareholders at the Annual General Meeting, a final dividend of 7.8p per share (2014 - 7.6p) will be paid on 17th July 2015 to Shareholders on the register on 26th June 2015.
The increase in dividends this year should not be taken as an indication of further increases in the current year as this will depend on performance during the year, including our ability to maintain high levels of occupancy as well as to find suitable additions to the portfolio.
Outlook
Along with many other businesses, Wynnstay has undoubtedly benefitted from the greatly improved economic conditions and prospects that have developed over the recent past. Whether these prevail depends to a large extent upon political decisions taken by the new government following the outcome of the recent general election and developments affecting the UK economy, particularly anything that affects the prospects for small and medium- sized businesses and for consumer spending.
It is to be hoped that the election of the new government with broadly similar economic objectives to the previous government, but without the complications resulting from a coalition, will provide a sound basis for continued economic growth and further increases in employment. If this proves to be the case, it should greatly assist both our tenants and growth prospects in the commercial property market. Against this encouraging background, Wynnstay is in robust health and, in the Board's view, continues to offer opportunities for profitable growth. We will continue to make changes to enhance the value of the portfolio as and when opportunities to do so arise.
Unsolicited approaches to Shareholders
In common with warnings issued by many other companies and by regulators and in the media, I remind Shareholders that unsolicited approaches regarding their shares may be from fraudsters. If you are in any doubt, please refer to the letter I sent to all Shareholders in January 2014 (also available on our website: www.wynnstayproperties.co.uk) or to the website of the Financial Conduct Authority (www.fca.org.uk/consumers/ scams).
Annual General Meeting
Our Annual General Meeting will be held at the Royal Automobile Club on Thursday 16th July 2015. As always, I hope that as many Shareholders as possible will take the opportunity to come to London for the meeting and to meet the Board and other Shareholders informally to discuss the Company's affairs as well as to take part in the formal business.
Colleagues and Advisers
Our two executive directors - Paul Williams, our Managing Director, and Toby Parker, our Finance Director - have continued to manage Wynnstay with their customary efficiency and insight. The two executive directors and I, as your Chairman, also benefit from the wisdom and experience of our two non-executive directors - Charles Delevingne and Terence Nagle. I would like to thank all four of them, as well as our advisers, for their contributions over the past year.
Philip G.H. Collins
Chairman
12th June 2015


For further information please contact:
Wynnstay Properties Plc

Toby Parker, Finance Director
020 7554 8766


Charles Stanley Securities - Nominated Adviser 
020 7149 6000
Dugald J. Carlean 



STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2015

Notes
2015

2014


'000

'000
Property Income

1,663

1,609
Property Costs
2
 (87)

(79)
Administrative Costs
3
 (414)

(443)


1,162

1,087
Movement in Fair Value of: Investment Properties
9
1,530

170
Profit on Sale of Investment Property

-

52
Operating Income

2,692

1,309
Investment Income
5
2

1
Finance Costs
5
 (265)

(129)
Income before Taxation

2,429

1,181
Taxation
6
 (210)

(235)
Income after Taxation

2,219

946
Basic and diluted earnings per share
8
81.8p

34.9p
The company has no items of other comprehensive income.


STATEMENT OF FINANCIAL POSITION 25TH MARCH 2015


2015

2014

Notes
'000

'000
Non-Current Assets




Investment Properties
9
21,780

18,515
Investments
12
3

3


21,783

18,518
Current Assets




Accounts Receivable
13
489

267
Cash and Cash Equivalents

1,050

776


1,539

1,043
Current Liabilities




Accounts Payable
14
(1,086)

(876)
Income Taxes Payable

(225)

(235)


(1,311)

(1,111)
Net Current Assets

228

68
Total Assets Less Current Liabilities

22,011

18,450
Non-Current Liabilities




Bank Loans Payable
15
(7,621)

(5,951)
Net Assets

14,390

12,499
Capital and Reserves




Share Capital
17
789

789
Treasury Shares

(1,570)

(1,570)
Share Premium Account

1,135

1,135
Capital Redemption Reserve

205

205
Retained Earnings

13,831

11,940


14,390

12,499


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25TH MARCH 2015

2015

2014

'000

'000
Cashflow from operating activities
Income before taxation
2,429

1,181
Adjusted for:
Amortisation of deferred finance costs
-

3
Increase in fair value of investment properties
(1,530)

 (170)
Interest income
 (2)

 (1)
Interest expense
265

129
Profit on disposal of investment properties
-

 (52)
Changes in:
Trade and other receivables
 (221)

 (93)
Trade and other payables
210

31
Income taxes paid
 (221)

 (380)
Interest paid
 (255)

 (129)
Net cash from operating activities
675

519
Cashflow from investing activities
Interest and other income received
2

1
Purchase of investment properties
(1,735)

 (945)
Sale of investment properties
-

352
Net cash from investing activities
(1,733)

 (592)
Cashflow from financing activities
Dividends paid
 (328)

 (320)
Repayments on bank loans
-

(5,998)
Drawdown on bank loans
1,660

6,596
Net cash from financing activities
1,332

278
Net increase in cash and cash equivalents
274

205
Cash and cash equivalents at beginning of period
776

571
Cash and cash equivalents at end of period
1,050

776


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25th MARCH 2015
YEAR ENDED 25 MARCH 2015

Share Capital
Capital
Redemption
Reserve
Share
Premium Account
Treasury Shares
Retained Earnings
Total

 000
 000
 000
 000
 000
 000
Balance at 26 March 2014
789
205
1,135
(1,570)
11,940
12,499
Total comprehensive income for the year
-
-
-
-
2,219
2,219
Dividends - note 7
-
-
-
-
(328)
(328)
Balance at 25 March 2015
789
205
1,135
(1,570)
13,831
14,390
YEAR ENDED 25 MARCH 2014

Share Capital
Capital Redemption
Reserve
Share Premium Account
Treasury Shares
Retained Earnings
Total

 000
 000
 000
 000
 000
 000
Balance at 26 March 2013
789
205
1,135
(1,570)
11,314
11,873
Total comprehensive income for the year
-
-
-
-
946
946
Dividends - note 7
-
-
-
-
(320)
(320)
Balance at 25 March 2014
789
205
1,135
(1,570)
11,940
12,499


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2015
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 Alternative Investment Market. The Company's registered number is 00022473.
1.1 Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. The financial statements have been presented in Pounds Sterling being the functional currency of the Company. 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 profit or loss, and investments.
The financial statements comprise the results of the Company drawn up to 25th March each year.
(a) New Interpretations and Revised Standards Effective for the year ended 25th March 2015 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 that are relevant to the operations and effective for accounting periods beginning on or after 26th March 2014.
(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 revisions to a number of existing standards and new interpretations with an effective date of implementation after the date of these financial statements.
It is not anticipated that the adoption of these revised standards and interpretations will have a material impact on the figures included in the financial statements in the period of initial application other than the following:
IFRS 9: Financial Instruments
The standard makes substantial changes to the recognition and measurement of financial assets and liabilities and de-recognition of financial assets.
There will only be three categories of financial assets whereby financial assets are recognised at either fair value through profit or loss, fair value through other comprehensive income or measured at amortised cost. On adoption of the standard, the Company will have to re-determine the classification of its financial assets based on the business model for each category of financial asset. This is not considered likely to give rise to any significant adjustments.
Financial liabilities of the Company are expected to continue to be recognised at amortised cost. The standard is effective for accounting periods beginning on or after 1 January 2018.
1.2 ACCOUNTING POLICIES
Investment Properties
All the Company's investment properties are revalued annually and stated at fair value at 25th March. The aggregate of any resulting surpluses or deficits are taken to profit or loss.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of the assets' previous carrying amount and fair value less cost to sell.
Depreciation
In accordance with IAS 40, freehold investment properties are included in the Statement of Financial Position at fair value, and are not depreciated.
Other plant and equipment is recognised at cost and depreciated on a straight line basis calculated at annual rates estimated to write off each asset over its useful life of 5 years.
Disposal of Investments
The gains and losses on the disposal of investment properties and other investments are included in profit or loss in the year of disposal.
Property Income
Property income is recognised on a straight line basis over the period of the lease. Revenue is measured at the fair value of the consideration receivable. 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 substantially 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 profit or loss, including deferred tax on the revaluation of investment property.
Trade and Other Accounts Receivable
Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. 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 employees' pension plans are charged to the statement of comprehensive income as incurred. The pension scheme is a defined contribution scheme.
Borrowings
Interest rate borrowings are 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.

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.
There are no judgemental areas identified by management that could have a material effect on the financial statements at the reporting date.
2. PROPERTY COSTS
2015

2014

'000

'000
Rents payable
-

3
Empty rates
-

12
Property management
12

9

12

24
Legal fees
22

26
Agents fees
53

29

87

79
3. ADMINISTRATIVE COSTS
2015

2014

'000

'000
Rents payable - operating lease rentals
21

20
General administration, including staff costs
357

357
Fees relating to potential equity issue
-

26
Auditors' remuneration: Audit fees
32

32
 Tax services
4

4
Amortisation of deferred finance costs
-

3

414

443
4. STAFF COSTS
2015

2014

'000

'000
Staff costs, including Directors, during the year were as follows:



Wages and salaries
189

178
Social security costs
21

21
Other pension costs
11

10

221

209

Details of Directors' emoluments, totaling 199,260 (2014: 189,393), are shown in the Directors' Report on page 8. There are no other key management personnel.

No.

No.
The average number of employees, including 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
5. FINANCE COSTS (NET)
2015

2014

'000

'000
Interest payable on bank loans
265

129
Less: Bank interest receivable
(2)

(1)

263

128
6. TAXATION
2015

2014
(a) Analysis of the tax charge for the year:
'000

'000
UK Corporation tax at 21% (2014: 23%)
225

235
Overprovision in previous year
(15)

-
Total current tax charge
210

235
Deferred tax - temporary differences
-

-
Tax charge for the year
210

235
(b) Factors affecting the tax charge for the year:



Net Income before taxation
2,429

1,181
Current Year:



Corporation tax thereon at 21% (2014 - 23%)
510

27
Expenses not deductible for tax purposes
19

18
Excess of capital allowances over depreciation
(3)

(3)
Investment gain on fair value not taxable
(321)

(39)
Investment gain not taxable
-

(13)
Other timing differences
20

-
Overprovision in previous year
(15)

-
Current tax charge
210

235
7. DIVIDENDS
2015

2014
Final dividend paid in year of 7.6p per share
'000

'000
(2014: 7.6p per share)
206

206
Interim dividend paid in year of 4.5p per share



(2014: 4.2p per share)
122

114

328

320
The Board recommends the payment of a final dividend of 7.8P per share, which will be recorded in the Financial Statements for the year ending 25th March 2016.

8. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing Income after Taxation attributable to Ordinary Shareholders of 2,219,000 (2014: 946,000) by the weighted average number of 2,711,617 (2014: 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.
9. INVESTMENT PROPERTIES
2015

2014

'000

'000
Investment Properties
Balance at 25th March 2014
18,515

17,700
Additions
1,735

945
Disposals
-

(300)

20,250

18,345
Revaluation Surplus
1,530

170
Balance at 25th March 20
21,780

18,515
The Company's freehold investment properties are carried at fair value as at 25th March 2015. The fair value of the properties has been calculated by independent valuers, BNP Paribas Real Estate, on the basis of market value, defined as:
"The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."
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 yields which range from 5.5% to 10%, with an average yield of 7.89% and an average weighted yield of 7.61% 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% increase or decrease in the yield would result in a corresponding decrease or increase of 1.36 million in the fair value movement through profit or loss.

10. OTHER PROPERTY, PLANT AND EQUIPMENT


2015
'000
2014
'000
Cost



Balance at 25th March 2015 and
at 25th March 2014

47
47




Depreciation



Balance at 25th March 2014

47
41
Charge for the Year

-
6
Balance at 25th March 2015

47
47




Net Book Values at 25th March 2014 and 25th March 2015

-
-
11.
OPERATING LEASES RECEIVABLE
The future minimum lease payments
2015
'000
2014
'000

receivable under non-cancellable operating leases which expire:



Not later than one year
1,422
1,494

Between 2 and 5 years
2,973
2,922

Over 5 years
997
1,102


5,392
5,518
Rental income under operating leases recognised in the profit or loss amounted to 1,663,000 (2014:
1,609,000).
Typically, the properties were let for a term of between 5 and 15 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 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.
12. INVESTMENTS
2015

2014

'000

'000
Quoted investments
3

3
13. ACCOUNTS RECEIVABLE
2015

2014

'000

'000
Trade receivables
486

264
Other receivables
3

3

489 

267

Trade receivables include an allowance for bad debts of 28,000 (2014: 28,000). Trade receivables of
22,600 (2014: 18,000) are considered past due but not impaired.
14. ACCOUNTS PAYABLE
2015

2014

'000

'000
Trade payables
7

40
Other creditors
107

163
Accruals and deferred income
972

673

1,086

876
15.
BANK LOANS PAYABLE
2015
'000

2014
'000

Non-current position
7,658

5,998

less: deferred finance costs
(37)

(47)


7,621

5,951
In December 2013, the bank loan was re-financed providing a credit facility of up to 10 million. 
Interest was charged at 1.25% per annum over LIBOR on funds drawn down until 17th December 2013 and at 2.65% per annum over LIBOR thereafter.
The loan is repayable in one instalment on 18 December 2018. The bank loan includes the following financial covenants:
 Rental income shall not be less than 2.25 times the interest costs
 The bank loan shall at no time exceed 50% of the market value of the properties secured.
The borrowing facility is secured by fixed charges over a number of freehold land and buildings owned by the Company, which at the year end had a combined value of 21,780,000 (2014: 17,155,000). The undrawn element of the borrowing facility available at 25th March 2015 was 2.3million (2014: 4.0million). A commitment fee of 1% per annum is payable on the undrawn amount.
16. DEFERRED TAX
A deferred tax asset of 44,145 (2014: 250,286) in respect of the investment property has not been recognised, as the Directors do not intend to sell the properties and therefore crystallise the potential deferred tax assets. If the investment properties were to be sold, the Directors believe it is unlikely that there would be suitable taxable profits from which the future reversal of the underlying timing differences could be deducted.
17. SHARE CAPITAL
2015

2014

'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.
18. 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 25th March 2015 the Company's financial instruments comprised borrowings and cash at bank and in hand, with short term receivables and short term payables excluded from IFRS 7. 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 these 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. Funds are invested and loan transactions contracted only with banks and financial institutions with a high credit rating.
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.
Concentration of credit risk exists to the extent that at 25th March 2015 and 2014, current account and short term deposits were held with two financial institutions, Svenska Handelsbanken AB and C Hoare & Co. Maximum exposure to credit risk on cash and cash equivalents at 25th March 2015 was 1,050,000 (2014:
776,000).
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 cash flow interest rate risk as it currently borrows at floating 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.
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:
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% increase in interest rates
0.5% decrease in interest rates
Impact on interest payable - gain/(loss)
2015
'000
38
2014
'000
30
2014
'000
(38)
2014
'000
(30)
Impact on interest receivable - (loss)/gain
(6)
(4)
6
4
Total impact on pre tax profit and equity
32
26
(32)26
(26)
The net exposure of the Company to interest rate fluctuations was as follows:
2015

2014
Floating rate borrowings (bank loans)
'000
(7,658)

'000
(5,998)
Less: cash and cash equivalents
1,050

776

(6,608)

(5,222)
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.

2015
Book Value
'000
2015
Fair Value
'000
2014
Book Value
'000
2014
Fair Value
'000
Interest bearing borrowings (note 15)
(7,621)
(7,672)
(5,951)
(5,998)
Total
(7,621)
(7,672)
(5,951)
(5,998)
Categories of Financial Instruments

2015
2014

'000
'000
Financial assets:


Quoted investments
3
3
Loans and receivables
489
267
Cash and cash equivalents
1,050
776
Total financial assets
1,542
1,046
Non-financial assets
21,780
18,515
Total assets
23,322
19,561



Financial liabilities at amortised cost
8,932
7,062
Total liabilities
8,932
7,062



Shareholders' equity
14,390
12,499
Total shareholders' equity and liabilities
23,322
19,561
The only financial instruments measured subsequent to initial recognition at fair value as at 25th March are quoted investments. These are included in level 1 in the IFRS 7 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 net 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 loan to value ratio should not exceed 50% and the gearing ratio should not exceed 100%.

2015

2014

'000

'000
Net borrowings and overdraft
7,621

5,951
Cash and cash equivalents
(1,050)

(776)
Net borrowings
6,571

5,175
Shareholders' equity
14,390

12,499
Investment properties
21,780

18,515
Loan to value ratio
30.2%

28.0%
Net gearing ratio
45.7%

41.4%
19. STATEMENT OF CASH FLOWS
Analysis of Net Debt
25th March
Cash
26th March

2015
Movement
2014

'000
'000
'000
Cash and cash equivalents
(1,050)
(274)
(776)
Bank loan
7,658
1,660
5,998
Net Debt
6,608
1,386
5,222
20. COMMITMENTS UNDER OPERATING LEASES
Future rental commitments at 25th March 2015 under non-cancellable operating leases are as follows:-


2015
2014


'000
'000
Within one year

20
19
Between two to five years

3
24


23
43
21. RELATED PARTY TRANSACTIONS
The Company had entered into an agreement with I.F.M. Consultants Ltd, a company owned and controlled by T.J.C. Parker, a Director of the Company, for that company to provide certain consultancy services. During the year to 25th March 2015, I.F.M. Consultants Ltd was paid nil (2014: 38,480). As of 26th March 2014, the Company terminated its agreement with I.F.M. Consultants Ltd and entered into a new agreement with T.J.C.P. Consultants Ltd, a company owned and controlled by T.J.C. Parker which during the year was paid 40,404 (2014: 38,480). There were no other related party transactions other than with the Directors, which have been disclosed under Directors' Emoluments in the Directors' Report on page 8.
22. EVENTS AFTER THE END OF THE REPORTING PERIOD
Shortly after the end of the financial year, the Directors entered into negotiations off the market to acquire an industrial estate in Hampshire. Contracts have recently been exchanged, with completion due in the near future. The acquisition price of 2.6 million will be funded from the borrowing facility and cash resources.

23. SEGMENTAL REPORTING

Industrial
Retail
Office
Total
2015
'000 
2014
'000
2015
'000 
2014
'000
2015
'000 
2014
'000
2015
'000 
2014
'000
Rental Income
1,015
1,107
351
163
297
339
1,663
1,609
Profit/(loss) on property investments at fair value
1,143
230
210
25
178
(85)
1,530
170
Total income and gain/(loss)
2,157
1,337
561
188
475
254
3,193
1,779
Property expenses
(87)
(79)
-
-
-
-
(87)
(79)
Segment profit/(loss)
2,070
1,258
561
188
475
254
3,106
1,700
Unallocated corporate expenses






(414)
(443)
Profit on sale of investment property

52
-
-
-
-
-
52
Operating income






2,692
1,309
Interest expense (all relating to property loans)






(265)
(129)
Interest income and other income






2
1
Income before taxation






2,429
1,181


Other information
Industrial



Retail



Office



Total


Segment assets
2015

2014

2015

2014

2015

2014

2015

2014
'000

'000

'000

'000

'000

'000

'000

'000
12,605

11,462

5,245

3,300

3,930

3,753

21,780

18,515
Segment assets held as security
12,605

10,102

5,245

3,300

3,930

3,753

21,780

17,155

















This information is provided by RNS
The company news service from the London Stock Exchange
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