REG - Wynnstay Properties - Interim Results for six months ended 29 Sept 2023
07/11/2023 11:00
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RNS Number : 6560S Wynnstay Properties PLC 07 November 2023
The information communicated within this announcement is deemed to
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WYNNSTAY PROPERTIES PLC
("Wynnstay" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2023
7 November 2023
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders on the six-month period ended 29
September 2023. In this period, our plans for management succession that we
announced last summer have been successfully completed and the portfolio has
continued to deliver good financial results for shareholders.
Interim Financial Results
The unaudited results are summarised in the table below and should be read in
conjunction with the following commentary and financial statements:
29 September 29 September
2023 2022
Rental Income +12.4% £1,216,000 £1,082,000
Property Income +12.8% £1,221,000 £1,082,000
Operating Income +9.1% £873,000 £800,000
Income before Taxation +12.1% £658,000 £587,000
Earnings per share +7.0% 18.4p 17.2p
Net Asset Value per share +1.9% 1,114p 1,093p
Interim Dividend per share +5.6% 9.5p 9.0p
Rental income for the half-year increased by 12.4% compared to the same period
last year, to £1,216,000 (2022: £1,082,000). This increase reflects
principally the acquisition in May 2023 of Riverdale Industrial Estate,
Tonbridge.
Other property income of £5,000, being service charge related management
fees, were received in the half-year (2022: £nil). While overall operating
costs were at a slightly higher level than in the same period last year due to
one-off costs associated with management succession, operating income
increased by 9.1% to £873,000 (2022: £800,000).
Borrowings from Handelsbanken of £9.958 million at the end of the half-year
(2022: £9.945 million) reflects our five-year loan fixed at a rate of 3.61%
from December 2021. At the end of the half-year, we held cash balances of
£1.0 million available for use in the business. In addition, we have
available the undrawn £5.0 million revolving credit facility with
Handelsbanken.
Management Succession
I reported in my statement in June that Paul Williams had decided to retire as
Managing Director and that Christopher Betts, a Chartered Surveyor with over
30 years' experience, had been appointed to succeed him following a short
handover period.
Chris joined Wynnstay, as planned, in mid-July and worked alongside Paul over
the following weeks familiarising himself with the portfolio and business, and
finally taking over fully from Paul as Managing Director in early September
when he also joined the Board. The handover was completed smoothly, on
schedule and without any issues.
In his first Managing Director's Review following below, Chris describes the
handover from Paul and portfolio activity over the past six months.
Dividend
In light of the financial results, the Board has decided to pay an increased
interim dividend of 9.5p per share (2022: 9.0p) on 15 December 2023 to those
shareholders on the register at the close of business on 17 November 2023.
In the current inflationary conditions, the Board appreciates the importance
to many shareholders of their investment income and of providing an attractive
yield on the Company's shares. The increase in the interim dividend for this
half-year is 5.6% compared to the same period last year.
Outlook
In the period following my statement in June, the economic outlook in the UK
appeared to be improving to some extent, with reduced inflation and better
performance data than many forecasters had expected earlier in the year. This
reduced the threat of imminent recession and its consequences.
It did not, however, remove the underlying concerns about economic growth, the
level of public debt, business investment and consumer spending. The direction
and medium-term level of interest rates, now at their highest rate for
seventeen years, remain unclear. In recent weeks, the mood has changed again
with increasing concerns about the economy compounded by international
conflicts and anticipated future energy prices. In addition, political
uncertainty in the UK, which impacts the economic outlook, now seems likely to
prevail until after the forthcoming general election.
Wynnstay's portfolio and financial performance have proved resilient despite
the continuing economic and political uncertainties and conditions that affect
the commercial property market as well as business and consumer sentiment and
activity. The Board remains optimistic about the current outlook for
Wynnstay's business and considers that we are well positioned to take
advantage of opportunities to continue to enhance the portfolio. I will report
to shareholders again in our Annual Report, which will be published in
mid-June 2024. Our Annual General Meeting next year will be held, as usual, at
the RAC Club on Tuesday 16 July 2024.
Finally, on behalf of the Board, I take this opportunity to thank shareholders
for their continued interest in and support for Wynnstay and send our best
wishes for a Happy Christmas and for 2024.
Philip Collins
Chairman
7 November 2023
MANAGING DIRECTOR'S REVIEW
It is with great pleasure that I set out my first report to shareholders as
Managing Director. The handover by Paul Williams over an eight-week period
from mid-July was very effective. The result is that I have been able to
settle into the role with the benefit of a good period of time to familiarise
myself with the properties, tenants, suppliers and the Company's way of
working. In addition, I have been briefed on current and upcoming issues and
opportunities.
Portfolio Activity
As reported in our last Annual Report, we completed the purchase of Riverdale
Industrial Estate, Tonbridge in May 2023. The initial rental income of
£140,350 p.a. on acquisition has been boosted by the rent reviews on three of
the five units which have now been agreed at the levels anticipated on
purchase, effective from September 2022. These settlements set a good base for
the ongoing negotiations for renewal of the lease of the prominently situated
Unit 1 which are expected to conclude later this year.
Earlier this year the tenant of the Hertford property served notice of their
intention to vacate on expiry of the lease in October 2023. Agents were
instructed to market the property and an offer to purchase the freehold was
received from a regional motor trade business. Opportunities for
owner-occupiers are rare and we were able to agree an attractive price of
£910,000, generating a profit before tax and costs over the investment value
at March 2023 of £295,000. Completion took place simultaneously with exchange
of contracts on 25 October.
Two other units became vacant in the first half of the year. A tenant in
Uckfield decided, on retirement of the owner from his business, not to renew
its lease in June. However, we were able to quickly agree terms for a new open
market letting and this completed in August 2023 at a rent ahead of the
estimated rental value used by the valuers in the March 2023 valuation. In the
face of rent arrears, the lease of a unit in Hailsham was forfeited in May
2023 and the tenant was subsequently declared insolvent. Remarketing brought
several expressions of interest, and the unit is now under offer at a rent in
excess of the estimated rental value used by the valuers in the March 2023
valuation, conditional on some external maintenance works and an updated
planning use permission.
Two tenants of single units in Aylesford have exercised lease break clauses
effective in the second half of the year. Whilst these decisions are
disappointing, we remain confident of reletting prospects in the light of past
experience, limited supply in the area and our constructive and pragmatic
approach to attracting new tenants. This optimism is borne out by the
successful creation of a new long-term tenancy at Aylesford from the desire of
a tenant to assign their short-term lease. We have also successfully renewed
the leases held by the main tenant at Heathfield with a significant increase
in rent.
In the Managing Director's review in the Annual Report in June, we reported
that all rental income due for the first quarter of the financial year had
been received. I am pleased to report that no rent is outstanding for the
second quarter except for a small element that is subject to a loss of rent
insurance claim following water ingress. For the third quarter, commencing 29
September 2023, we have collected 99% of the aggregate quarterly and monthly
rents due by 1 November.
We continue to monitor the market and consider suitable investment
opportunities. With our principal borrowing being at a fixed rate, our low
loan-to-value ratio and with both cash and a further borrowing facility
available, we remain in a good position to take advantage of market
opportunities.
Christopher Betts
Managing Director
7 November 2023
1. STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months ended
Six months ended
Year ended
29 September 29 September 25 March
2023 2022 2023
£'000 £'000 £'000
Property Income 1,221 1,082 2,312
Property Costs (26) (24) (96)
Administrative Costs (328) (258) (719)
Net Property Income 867 800 1,497
Movement in fair value of
Investment Properties 6 - 345
Operating Income 873 800 1,842
Investment Income 11 5 27
Finance Costs (226) (218) (439)
Income before Taxation 658 587 1,430
Taxation (162) (120) (288)
Income after Taxation and Total Comprehensive Income 496 467 1,142
Basic and diluted earnings per share 18.4p 17.2p 42.2p
The company has no other items of comprehensive income.
2. STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
29 September 29 September 25 March
2023 2022 2023
£'000 £'000 £'000
Non-Current Assets
Investment Properties 41,819 38,975 39,320
Investments 3 3 3
41,822 38,978 39,323
Current Assets
Trade and other receivable 382 362 482
Cash and Cash Equivalents 996 3,207 3,268
1,378 3,569 3,750
Current Liabilities
Trade and other payables (698) (766) (844)
Income Taxes Payable (484) (404) (308)
(1,182) (1,170) (1,152)
Net Current Assets / (Liabilities) 196 2,399 2,598
Total Assets less Current Liabilities 42,018 41,377 41,921
Less Current
LLiabilities
Non-Current Liabilities
Bank Loans Payable (9,958) (9,945) (9,951)
Deferred Tax Payable (2,034) (1,962) (2,034)
(11,992) (11,907) (11,985)
) )
Net Assets 30,026 29,470 29,936
Capital and Reserves
Share Capital 789 789 789
Capital Redemption Reserve 205 205 205
Share Premium Account 1,135 1,135 1,135
Treasury Shares (1,734) (1,734) (1,734)
Retained Earnings 29,631 29,075 29,541
30,026 29,470 29,936
Net Asset Value pence per share 1,114p 1,093p 1,110p
3. STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months ended Six months ended Year
ended
29 September 29 September 2022 25 March
2023 2023
£'000 £'000 £'000
Cash flows from operating activities
Income before taxation 658 587 1,430
Adjusted for:
(Increase) in fair value of investment properties - - (345)
Interest receivable (11 ) (5) (27)
Interest and finance costs payable 226 218 439
Amortised loan fees 7 7 13
Revaluation movement - - 33
Changes in:
Decrease / (increase) in trade and other receivables 100 (61) (181)
Increase / (decrease) in trade and other payables 30 (162) (181)
Cash generated from operations 1,010 584 1,181
Income taxes paid (162) (111) (206)
Net cash from operating activities 848 473 975
Cash flows from investing activities
Interest and other income received 11 5 27
Purchase of investment properties (2,499) - -
Net cash generated from investing activities (2,488) 5 27
Cash flows from financing activities
Interest paid (226) (218) (439)
Dividends paid (406) (380) (622)
Repurchase of shares into treasury - (164) (164)
Net cash used in financing activities (632) (762) (1,225)
(Decrease) / increase in cash and cash equivalents (2,272) (284) (223)
Cash and cash equivalents at beginning of period 3,268 3,491 3,491
Cash and cash equivalents at end of period 996 3,207 3,268
4. STATEMENT OF CHANGES IN EQUITY
UNAUDITED SIX MONTHS ENDED 29 SEPTEMBER 2023
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 26 March 2023 789 205 1,135 (1,734) 29,541 29,936
Total comprehensive income for the period - - - - 496 496
Dividends - - - - (406) (406)
Balance at 29 September 2023 789 205 1,135 (1,733) 29,631 30,026
UNAUDITED SIX MONTHS ENDED 29 SEPTEMBER 2022
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 26 March 2022 789 205 1,135 (1,570) 28,988 29,547
Total comprehensive income for the period - - - - 467 467
Treasury share repurchases - - - (164) - (164)
Dividends - - - - (380) (380)
Balance at 29 September 2022 789 205 1,135 (1,734) 29,075 29,470
AUDITED YEAR ENDED 25 MARCH 2023
Share Capital Capital Redemption Reserve Share Premium Account Treasury Shares Retained Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 26 March 2022 789 205 1,135 (1,570) 28,988 29,547
Total comprehensive income for the year - - - - 1,142 1,142
Treasury share repurchases - - - (164) - (164)
Revaluation movement - - - - 33 33
Dividends - - - - (622) (622)
Balance at 25 March 2023 789 205 1,135 (1,734) 29,541 29,936
5. ACCOUNTING POLICIES
Wynnstay Properties PLC is a public limited company incorporated and domiciled
in England and Wales (registered no: 22473). The principal activity of the
company is property investment, development and management. The Company's
ordinary shares are traded on AIM, part of the London Stock Exchange (ISIN:
GB0009842898).
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 2023 which were prepared in accordance with IFRS. The
financial information for the six month periods ended 29 September 2023 and 29
September 2022 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 2023 has been extracted from the latest published audited
financial statements.
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.
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.
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. Other property income includes dilapidations,
lease surrender premiums and other property related receipts.
Unaudited Unaudited Audited
Six months ended Six months ended Year
ended
29 September 29 September 2022 25 March
2023 2023
£'000 £'000 £'000
Rental income 1,216 1,082 2,304
Other property income 5 - 8
1,221 1,082 2,312
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 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.
Comparative information
The information for the year ended 25 March 2023 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 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.
Share Buy-Back and Treasury Shares
During the period the Company did not acquire any Ordinary Shares (2022:
15,000 shares acquired) under the authority to make market purchases of its
shares approved at the General Meeting on 19 July 2022. The shares acquired
are held in treasury and all the costs directly associated with the share
buy-back are included within Treasury Shares in the Statement of Financial
Position.
6. DIVIDENDS
Period Payment Per share (pence) Amount paid/proposed
Date £'000
6 months to 29 September 2023 15 December 2023 9.5 256
6 months to 29 September 2022 16 December 2022 9.0 244
Year ended 25 March 2023 27 July 2023 15.0 406
7. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
Basic earnings per share are calculated by dividing income after taxation and
Total Comprehensive Income attributable to Ordinary Shareholders of £496,000
(2022: £467,000) by the weighted average number of 2,696,617 (2022:
2,709,692) Ordinary Shares in issue during the period excluding shares held in
treasury. Net Asset value per share is calculated by dividing net assets of
£30,026,000 (2022: £29,470,000) by the number of 2,696,617 Ordinary Shares
in issue at the reporting date 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)
Hugh Morgan, Chris Hardie, Sarah Mather
020 7220 1666
LEI number: 2138006MASI24JYW5076
For more information on Wynnstay visit: www.wynnstayproperties.co.uk
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