REG - Wynnstay Properties - Interim Results for six months ended 29 Sept 2021
18/11/2021 07:00
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RNS Number : 7403S Wynnstay Properties PLC 18 November 2021
The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (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
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WYNNSTAY PROPERTIES PLC
("Wynnstay" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2021
18 November 2021
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders a strong performance by Wynnstay for
the six months period ending 29 September 2021 as well as to advise you of the
appointment of a new firm of auditors and a new AIM Nominated Adviser.
Interim Financial Results
The unaudited results are summarised in the table below, which should be read
in conjunction with the following commentary and financial statements:
29 September 29 September
2021 2020
Rental Income +2.7% £1,084,000 £1,055,000
Property Income* * £1,131,000 £1,055,000
Operating Income +11.9% £839,000 £750,000
Income before Taxation +20.8% £650,000 £538,000
Earnings per share +21.3% 19.4p 16.0p
Net Asset Value per share +14.7% 918p 800p
Interim Dividend per share +6.3% 8.5p 8.0p
* No percentage increase is given as the 29 September 2020 figure does not
include other property income.
Rental Income for the half-year increased by just over 2.7% compared to last
year at £1,084,000 (2020: £1,055,000) reflecting a number of successful rent
reviews, lease renewals and new lettings within the portfolio which are
detailed further below. Other property income which includes, for the first
time, items such as dilapidations, lease surrender and other property-related
receipts, added a further £47,000 to give Property Income of £1,131,000
(2020: £1,055,000). With lower overall operating costs, including reduced
void costs compared to last year, the result was an 11.9% increase in
Operating Income to £839,000 (2020: £750,000).
In my statement in July I reported that we had collected all of the rental
income due for the first quarter of the financial year. I am pleased to report
that there is no rent outstanding for the second quarter and that for the
third quarter, commencing 29 September 2021, we have collected all of the
quarterly and monthly rents due to date, with the only outstanding items being
the monthly payments that are due on 1 December 2021.
Borrowings from Handelsbanken of £10 million at the end of the half-year were
the same as at 25 March 2021 and lower than at the same time last year (£12.5
million) following the previously reported disposal of the Chessington
property in February 2021.
Portfolio
The portfolio was 99% let by rental income at the end of the half-year, which
is consistent with our past record of high occupancy and low voids.
The only void at the end of the half-year was a unit on our Beaver Industrial
Estate at Liphook where, as previously reported, the tenants went into
liquidation in November 2020 leaving substantial stock and fittings at the
premises, which passed to us when the lease was disclaimed by the appointed
liquidator. The stock and fittings have been disposed of by us, realising
proceeds which exceeded the unpaid rent and contributed to the funding of the
necessary refurbishment. The refurbished unit was offered to the market at a
significantly higher rent than was being paid under the previous lease. In the
second half of October, we agreed terms with existing tenants on the Estate
who are expanding their operations to take a new five-year lease and to extend
to 2026 the lease of their existing three units, which was due to expire at
the end of next year.
Two other adjoining units at Liphook have become vacant from the end of the
half-year following the decision by the existing tenants not to renew as a
result of the rationalisation of their business. The outgoing tenants left the
premises in good condition. I am pleased to report that we have been
successful in agreeing heads of terms for letting the units to new tenants who
need them for a specific project for two to three years for which they also
require, as storage space, our adjoining development site. In view of the
attractive terms negotiated for the units and site together we will defer, for
the time being, our planned development of the two new units, while taking
steps to preserve the existing planning permission.
Other management activity on the Beaver Industrial Estate at Liphook has seen
five lease renewals, most at increased rents, and the transfer of an existing
lease to a new business entity at an increased rent and on improved terms.
At our largest asset, Quarry Wood Industrial Estate at Aylesford, we completed
the letting of a unit following the exercise of a tenant break clause, to new
tenants at a record rent for the Estate, demonstrating the demand for units of
this type and size in the area. In addition, we negotiated two lease renewals
at higher rents.
At Lichfield, we negotiated and completed a new lease to the existing tenants,
a national chain, at an increased rent and negotiations are now proceeding on
renewals with the tenants of two other units, who are also a national chain.
The lease of one of our two units at Lewes was due to expire early next year.
The tenants closed the business and terms were agreed for them to return the
premises to us early on payment of a surrender premium. This has enabled us to
relet the unit immediately to new tenants.
The lease of one of our five units at Norwich has also been renewed at a
higher rent than provided in our annual valuation which should reflect well
both in the valuation at the year end and in relation to future negotiations
on the other units.
Taken overall, the management of the portfolio in the first half of the year
has produced very satisfactory results both for short-term income and, in the
longer term, for appreciation in the portfolio valuation and in future income.
Our longstanding tenants at Surbiton have notified us that they will not renew
their lease, which will expire in December 2021, having decided particularly
in the light of the Covid pandemic that they can rationalise their operations
in their other premises elsewhere in the area. The existing sub-tenant of the
ground floor retail premises has approached us to take a new lease and we
anticipate concluding negotiations with them shortly. The office premises on
the two floors above will be the subject of reinstatement in accordance with
the terms of the lease by the outgoing tenants. We are currently offering the
offices for letting on market terms as well as considering a sale of the
entire building.
Turning now to the development of our Trade Park at Petersfield, substantial
progress on construction works was made over the summer and early autumn.
Despite the well-publicised challenges in the construction sector affecting
both labour and availability of materials, the contractors were able to
rephase the construction programme to take into account these challenges and
minimise the disruption to both the timetable and the costs. I am pleased to
report that works should be completed within budget in the next couple of
weeks, around six weeks behind schedule. The two prelet units will be handed
over shortly to the incoming tenants and should be rent-producing in the next
financial year. The third unit is on the market.
Dividend
In light of the financial results, the Board has decided to pay an increased
interim dividend of 8.5p per share (2020: 8.0p) on 17 December 2021 to those
shareholders on the register at the close of business on 2 December 2021. The
Board is pleased to be able to increase the interim dividend by a further
6.3%, following the increase of 6.7% at this time last year, and the increase
in the final dividend paid in July 2021.
The Board is keenly aware of the importance of investment income to many
shareholders and of the yield having regard to the recent significant increase
in the share price.
Completion of refinancing
In my statement in the Annual Report in July, I reported on the progress of
our refinancing of our two facilities with Handelsbanken, which expire in
December 2021. A new five-year fixed term facility of £10 million was signed
in June while a new revolving credit facility was not then available due to
the complexities of transitioning from LIBOR to Bank of England Base Rate.
I am now able to report that we have just completed a new five-year revolving
credit facility under which we can now borrow up to £5 million, an increase
of £1.5 million over the existing £3.5 million facility.
Change of Auditor
Shareholders will recall that our auditors for many years, Moore Stephens,
merged its business with BDO on 1 February 2019 and BDO were appointed as our
auditors at the Annual General Meeting in July 2019. Auditors are required to
change the partner responsible for the audit every five years and BDO are
required to do so for the current year.
The Board decided to put the audit out to tender among a number of firms, all
with quoted company, AIM and commercial property experience. BDO expressed
interest in tendering but indicated that its proposed fees would not be
competitive with the fees offered by other firms and accordingly it withdrew
from the process. We received nine expressions of interest in tendering and
short-listed four firms.
After a further round of written responses and meetings with the short-listed
firms, we have appointed Nexia Smith & Williamson, as our new auditors.
Nexia Smith & Williamson is an independent firm within the Smith &
Williamson group, among the "Top 10" firms of accountants and business
advisers in the UK and a member of Nexia International, a global network of
independent accounting and consultancy firms.
Nexia Smith & Williamson will undertake the audit for the current year and
their reappointment as auditors for the following year will be put to
shareholders for approval at the next Annual General Meeting in July 2022.
In consequence, BDO have resigned as our auditors and have confirmed that
there are no matters connected with their resignation that need to be brought
to the attention of shareholders or creditors. As required by law, a copy of
BDO's formal resignation letter is being sent to shareholders with this
report.
I would like to thank both BDO and Moore Stephens for their work for Wynnstay.
Change of Nomad
All companies quoted on AIM are required to have a Nominated Adviser, commonly
known as a Nomad.
We have now appointed WH Ireland Limited as the Company's Nomad and corporate
broker with immediate effect. They succeed Panmure Gordon who took on that
role when they acquired Charles Stanley Securities in 2015.
WH Ireland is the fourth largest Nomad and corporate broker on the AIM market,
representing around 60 AIM companies. The team advising us includes
long-established experience in the AIM market and the quoted commercial
property sector.
On behalf of shareholders, I would like to thank Panmure Gordon for their
advice over the past six years.
Shareholder Matters
In my statement in June, I mentioned that the Board would be reviewing ways in
which the issue of liquidity and marketability of Wynnstay's shares can be
addressed and improved generally. We engaged with a number of shareholders,
large and small, on an informal basis, over the summer and autumn and will
continue this process. The Board will reflect further on the position over the
coming months and discuss with WH Ireland what steps, if any, it might be
appropriate to consider.
Share Certificates and Shareholder Records
In the first half of the year, there have been a number of enquiries about
shareholdings, missing share certificates and shareholder records. These
typically come from situations where shares have been transferred, whether
through the market or off-market, where the stockbroker involved has acted for
both sides. There have been many changes of ownership in stockbroking firms
over the years and certificates and records can be lost when individual
brokers change firms, taking clients with them, or firms merge or are taken
over. Real difficulties can arise for executors when they know that the
deceased owned Wynnstay shares, but they cannot trace either share
certificates or stockbroker records.
I would encourage shareholders to check their records and ensure that they
know where their certificates are held and which stockbrokers or nominees are
responsible for their holdings.
Share Scams
In each statement, I draw the attention of shareholders to the risk of "share
scams", arising from unsolicited telephone calls or online offers or
approaches.
I experienced this personally a few months ago when I received an unsolicited
call, unrelated to Wynnstay. The caller, with a convincing Scottish accent,
claimed to be from an investment bank with a name similar to a well-known
Japanese financial institution. I was informed that I was the owner of some
shares in a US-listed company. This had been the subject of a massive fraud in
the 1980's, but was now solvent and being sold. I could benefit, provided I
supplied some personal financial details. Both the investment bank and my
alleged investment were totally fictitious. While entertaining in some
respects, the call illustrated how superficially credible some share scams can
be.
I urge shareholders to be vigilant. Wynnstay's website
(www.wynnstayproperties.co.uk) includes a warning and a link to other
information about unsolicited calls on the Financial Conduct Authority's
website.
Annual General Meetings 2021 and 2022
As you will know, our Annual General Meeting 2021 was convened shortly after
the government had announced that the existing Covid-19 regulations would
continue for at least another four weeks and continued to place limits on the
number of individuals and households permitted to gather indoors. As a result,
the Board decided with great reluctance to restrict attendance at the AGM,
which was duly held on 20 July 2021 when all the resolutions were duly passed
on a poll vote. I would like to thank all the shareholders who took the
trouble to return their proxy cards to express their voting directions.
We are hoping that for 2022 it will be possible to arrange our Annual General
Meeting in mid-July in the usual form. The date and venue will be notified
nearer the time when we can be certain that it can take place in the light of
the conditions then prevailing.
Finally, on behalf of the Board, I wish all shareholders and their families a
Happy Christmas and convey our best wishes for 2022.
Philip Collins
Chairman
17 November 2021
1. STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
Six months ended Year ended
29 September 29 September 25 March
2021 2020 2021
£'000 £'000 £'000
Property Income 1,131 1,055 2,438
Property Costs (25) (44) (255)
Administrative Costs (267) (261) (593)
Operating Income 839 750 1,590
Movement in fair value of
Investment Properties - - 1,748
Profit on Sale of Investment Property - - 1,121
839 750 4,459
Investment Income - 1 1
Finance Costs (189) (213) (412)
Income before Taxation 650 538 4,048
Taxation (123) (104) (395)
Income after Taxation 527 434 3,653
Basic and diluted earnings per share 19.4p 16.0p 134.7p
The company has no other items of comprehensive income.
2. STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
29 September 29 September 25 March
2021 2020 2021
£'000 £'000 £'000
Non-Current Assets
Investment Properties 34,871 34,281 34,005
Investments 3 3 3
34,874 34,284 34,008
Current Assets
Accounts Receivable 262 420 342
Cash and Cash Equivalents 1,586 1,338 2,001
1,848 1,758 2,343
Current Liabilities
Accounts Payable (1,001) (1,174) (929)
Income Taxes Payable (374) (343) (249)
Bank Loans Payable (10,000) - (10,000)
(11,375) (1,518) (11,178)
Net Current (Liabilities)/Assets (9,527) 240 (8,835)
Total Assets Less Current Liabilities 25,347 34,524 25,173
Non-Current Liabilities
Bank Loans Payable - (12,500) -
Deferred Tax Payable (461) (315) (461)
(461) (12,815) (461)
Net Assets 24,886 21,709 24,712
Share Capital 789 789 789
Capital Redemption Reserve 205 205 205
Share Premium Account 1,135 1,135 1,135
Treasury shares (1,570) (1,570) (1,570)
Retained Earnings 24,327 21,150 24,153
24,886 21,709 24,712
Net Asset Value per share 918p 800p 911p
3. STATEMENT OF CASHFLOWS
Unaudited Audited
Six months ended Year ended
29 September 29 September 2020 25 March
2021 2021
£'000 £'000 £'000
Cashflows from operating activities
Income before taxation 650 538 4,048
Adjusted for:
(Increase) in fair value of investment properties (866) - (1,748)
Interest income - (1) (1)
Interest expense 189 213 412
Profit on disposal of investment properties - - (1,121)
Movement in dilapidations for property sold - - 55
Changes in:
Trade and other receivables 80 (176) (98)
Trade and other payables 197 (89) (326)
Cash generated from operations 250 485 1,221
Income taxes paid (123) - (249)
Interest paid (189) (213) (412)
Net cash from operating activities (62) 272 560
Cashflows from investing activities
Interest and other income received - 1 1
Purchase of investment properties - (21) (117)
Sale of investment properties - - 3,187
Net cash from investing activities -- (20) 3,071
Cashflows from financing activities
Dividends paid (353) (203) (419)
Drawdown on bank loans - - -
Repayment of bank loans - - (2,500)
Net cash from financing activities (353) (203) (2,919)
(Decrease)/Increase in cash and cash equivalents (415) 49 712
Cash and cash equivalents at beginning of period 2,001 1,289 1,289
Cash and cash equivalents at end of period 1,586 1,338 2,001
4. STATEMENT OF CHANGES IN EQUITY
UNAUDITED SIX MONTHS ENDED 29 SEPTEMBER 2021
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained 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 income for the period - - - - 527 527
Dividends - - - - (353) (353)
Balance as at 29 September 2021 789 205 1,135 (1,570) 24,327 24,886
UNAUDITED SIX MONTHS ENDED 29 SEPTEMBER 2020
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained 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 income for the period - - - - 434 434
Dividends - - - - (203) (203)
Balance as at 29 September 2020 789 205 1,135 (1,570) 21,150 21,709
AUDITED YEAR ENDED 25 MARCH 2021
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained 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 income for the year - - - - 3,653 3,653
Dividends - - - - (419) (419)
Balance as at 25 March 2021 789 205 1,135 (1,570) 24,153 24,712
5. ACCOUNTING POLICIES
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.
Basis of Preparation
These unaudited condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standard ("IFRS") IAS 34
Interim Financial Reporting. They do not constitute statutory accounts within
the meaning of section 435 of the Companies Act 2006.
The unaudited condensed interim financial statements should be read in
conjunction with the financial statements of the Company as at and for the
year ended 25 March 2021 which were prepared in accordance with IFRS. The
financial information for the 6 month periods ended 29 September 2021 and 29
September 2020 have not been audited and the auditors have not reported on or
reviewed these interim financial statements. The information for the year
ended 25 March 2021 has been extracted from the latest published audited
financial statements.
Key Sources of Estimation Uncertainty
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.
Investment Properties
All the Company's investment properties are independently revalued annually
and stated at fair value at 25 March. The aggregate of any resulting increases
or decreases are taken to operating income within the Statement of
Comprehensive Income. Investment properties are recognised as acquisitions or
disposals based on the date of contract completion. Values of investment
properties undergoing development or improvements are stated at cost until
practical 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 the Statement of Comprehensive Income in the year
of 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. Other property income includes dilapidations,
lease surrender and other property related receipts.
Unaudited Audited
Six months ended Year ended
29 September 29 September 2020 25 March
2021 2021
£'000 £'000 £'000
Rental income 1,084 1,055 2,140
Other property income 47 - 298
1,131 1,055 2,438
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
period 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 properties.
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 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.
Comparative information
The information for the year ended 25 March 2021 has been extracted from the
latest published audited financial statements.
Pensions
Pension contributions towards an employee's pension plan are charged to the
statement of comprehensive income as incurred. The pension plan 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.
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 where the receipt
is treated as part of the proceeds of sale of the property.
6. DIVIDENDS
Payment Per share (pence) Amount paid/proposed
Date £'000
Period
6 months to 29 September 2021 17 December 2021 8.5 230
6 months to 29 September 2020 18 December 2020 8.0 217
Year ended 25 March 2021 27 July 2021 13.0 353
7. EARNINGS AND NET ASSET VALUE PER SHARE
Basic earnings per share are calculated by dividing income after taxation
attributable to Ordinary Shareholders of £527,000 (2020: £434,000), and net
asset value per share is calculated by dividing net assets of £24,886,000
(2020: £21,709,000), in each case by the weighted average number of
2,711,617 (2020: 2,711,617) ordinary shares in issue during the period
excluding shares held in treasury. There are no options and no instruments
in issue that would have the effect of diluting earnings per share.
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: 2138006MASI24JYW5076
For more information on Wynnstay, visit www.wynnstayproperties.co.uk
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