Source - LSE Regulatory
RNS Number : 7291F
Wynnstay Properties PLC
09 November 2022
 

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 information is considered to be in the public domain.

WYNNSTAY PROPERTIES PLC

("Wynnstay" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2022

9 November 2022

 

CHAIRMAN'S STATEMENT

Against the background of serious international and domestic events, economic uncertainties and turmoil in financial markets, I am pleased to report that Wynnstay has continued to perform well for shareholders over the six-month period ending 29 September 2022.

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

2022

29 September

2021

Rental Income

-0.2%

£1,082,000

£1,084,000

Property Income

-4.3%

£1,082,000

£1,131,000

Operating Income

-4.6%

£800,000

£839,000

Income before Taxation

-9.7%

£587,000

£650,000

Earnings per share

-11.3%

17.2p

19.4p

Net Asset Value per share

+19.1%

1,093p

918p

Interim Dividend per share

+5.9%

9.0p

8.5p

While rental income for the half-year was broadly static, decreasing by just 0.2% compared to the same period last year, at £1,082,000 (2021: £1,084,000), that total reflects significant changes within the portfolio. These include the loss of income following the sale towards the end of the last financial year of our office property in Surbiton, offset by new income arising from the successful completion and letting of our three units at Petersfield Trade Park 2 late last calendar year and increased income from a number of successful rent reviews, lease renewals and new lettings within the portfolio mentioned in last year's Annual Report as well as those completed in the first half of this financial year which are mentioned below.

No other property income, such as tenant payments for dilapidations, was received in the half-year (2021: £47,000). As a consequence, and with overall operating costs being at a similar level to the same period last year, operating income decreased by 4.6% to £800,000 (2021: £839,000).

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 we have collected 99% of the rental income due for the second quarter and over 93% of the quarterly and monthly rental income due to date for the third quarter commencing 29 September 2022.

 

Borrowings from Handelsbanken of £9.945 million at the end of the half-year (2021: £10.0 million) reflect our new refinanced five-year loan at a fixed rate of 3.61% from December 2021. At the end of the half-year, we held cash balances of £3.2 million available for use in the business. In addition, we have available the undrawn £5m revolving credit facility with Handelsbanken.

Portfolio

The portfolio was fully let at the end of the half-year, which is consistent with our past record of high occupancy and low voids. Stability within our tenant base and fewer rent reviews and lease renewals has resulted in rather less management activity compared to the same period last year. However, as already indicated, the results of the activity to date have been beneficial in generating increased rental income and in establishing comparable evidence to support future negotiations and valuations.

For instance, at Quarry Wood Industrial Estate, Aylesford, we completed the rent review with our longstanding public authority tenant of one of the larger units on the estate resulting in a significantly increased rent.

At our office premises at Cosham, the lease to our government tenant was varied by mutual agreement to remove a tenant break option that could have been implemented in April 2023. At the same time we pre-agreed the April 2023 rent review at the existing rent, which reflected the current estimated rental value adopted by our valuers, thereby securing our rental income from the property for a further five years.

Lease renewals have also been successfully completed on two units at Hailsham, one unit at Ipswich, two units at Lichfield, two units at Petersfield Business Park and one unit at Uckfield. On the Beaver Industrial Estate at Liphook, a vacated unit was immediately relet to a new tenant at a rent that was significantly higher than that paid by the previous tenant and which should therefore establish a new rental level for the other units on the estate.

In the majority of cases, it is encouraging to report that the rents achieved were above, and in some cases significantly above, the estimated rental values adopted by our valuers in their latest valuation in March 2022.

Dividend

In light of the financial results, the Board has decided to pay an increased interim dividend of 9.0p per share (2021: 8.5p) on 16 December 2022 to those shareholders on the register at the close of business on 18 November 2022.

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 5.9% compared to the same period last year.

Annual General Meeting 2022

At our first fully open Annual General Meeting for three years due to the impact of Covid-19, attendance was nevertheless restricted due to the weather conditions, including a record high temperature in Central London. A number of shareholders who had indicated their intention to attend the meeting nevertheless decided not to do so on the day due to the heatwave.

I would like to thank all those shareholders who took the trouble to complete their proxy forms. All the resolutions before the meeting were duly passed.

Share buy-back

Following the Annual General Meeting, a General Meeting was held to consider two resolutions to authorise the Company to make market purchases of its own shares. Both resolutions were duly passed.

 

Following the granting of this authority, the Company purchased 15,000 Ordinary Shares at a price of 710p per share at the beginning of September 2022.

The Directors continue to monitor the availability of shares in the market through the Company's brokers and should further opportunities arise may exercise the authority to make further market purchases of its own shares at an appropriate price where this is in the best interests of shareholders generally.

Outlook

When I reported to you in the middle of June, I noted that the UK had entered a further period of uncertainty following the difficulties resulting from Brexit, Covid-19 and the ongoing war in Ukraine.

Since then, we have witnessed unexpected political events at home, forecasts of significantly reduced growth or serious recession for the UK economy and other world economies, high inflation for businesses and consumers, especially in the cost of energy, as well as turmoil in financial markets.

Shareholders may have read commentary in the press about the potential impact of these events and forecasts on the UK commercial property market and on the ability of businesses to survive.

As in the financial crisis of 2008-10 and the Covid-19 crisis of 2020-22, we continue to monitor the portfolio and will work closely with our tenants in these extremely challenging times. In the previous crises we saw how small business tenants, who are most likely to be adversely affected, demonstrated their ability to adapt to conditions. In the portfolio we have a broad spread of tenants, many of whom are longstanding, across different business sectors in areas of the country where there is a record of strong occupational demand and limited supply.

We remain well placed 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 to acquire any suitable properties which may come to the market unexpectedly as a result of the current conditions.

Finally, despite the gloom and uncertainties arising from recent events, I would like to convey to all shareholders and their families the Board's best wishes for a Happy Christmas and for good health and happiness in 2023.

Philip Collins

Chairman

9 November 2022



 

1. STATEMENT OF COMPREHENSIVE INCOME


Unaudited
Six months ended

29 September
2022
£'000


Unaudited
Six months ended

29 September
2021
£'000


Audited
Year ended

25 March

2022
£'000

 

 





Property Income

1,082


1,131


2,308

Property Costs

(24)


(25)


(125)

Administrative Costs

(258)


(267)


(614)

Net Property Income

800


839


1,569

Movement in fair value of

 


 



 Investment Properties

-


-


5,887

Profit on Sale of Investment Property

-


-


125

Operating Income

800


839


7,581

Investment Income

5


-


-

Finance Costs

(218)


(189)


(379)

Income before Taxation

587


650


7,202

Taxation

(121)


(123)


(1,784)

Income after Taxation

466


527


5,418


 


 



Basic and diluted earnings per share

17.2p


19.4p


199.8p

 

The company has no other items of comprehensive income.

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. STATEMENT OF FINANCIAL POSITION

 


 


 


 


Unaudited
Six months ended

29 September
2022
£'000


Unaudited
Six months ended

29 September
2021
£'000


Audited
Year ended

25 March

2022

£'000







Non-Current Assets






Investment Properties

38,975


34,871


38,975

Investments

 

3

 

3


3

 

38,978

 

34,874


 38,978







Current Assets






Accounts Receivable

362


262


301

Cash and Cash Equivalents

3,207  


1,586


 3,491


3,569


1,848


3,792


 





Current Liabilities






Trade and other payables

(766)


(1,001)


(1,048)

Income Taxes Payable

(404)


(374)


(284)

Bank Loans Payable

-


(10,000)


-


(1,170)


(11,375)


(1,332)







Net Current Assets / (Liabilities)

2,399


(9,527)


2,460







Total Assets less Current Liabilities

 

 Less Current

 

 LLiabilities

41,377


25,347


41,438

 

 






Non-Current Liabilities






Bank Loans Payable

(9,945)

 

-


(9,938)

Deferred Tax Payable

(1,962)


(461)


(1,953)


(11,907)

)


(461)


11,891)







Net Assets

29,470


24,886


29,547







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

(1,733)


(1,570)


(1,570)

Retained Earnings

29,074


24,327


28,988








29,470

 


24,886

 


29,547


 





Net Asset Value pence per share

1,093p


918p


1,090p

                            

3. STATEMENT OF CASH FLOWS


Unaudited
Six months ended

29 September
2022
£'000


Unaudited
Six months ended

29 September
2021
£'000


Audited
Year ended

25 March

2022

£'000

 






Cash flows from operating activities






Income before taxation

 587


 650


7,202

Adjusted for:






(Increase) in fair value of investment properties

-


(866)


(5,887)

Interest received

(5)


-


-

Interest paid

 218


 189


 379

Profit on disposal of investment properties

-


-


(125)


 





Changes in:






(Increase) / decrease in trade and other receivables

(61)


 80


41

(Decrease) / increase in trade and other payables

 (162)


 197


 153

Cash generated from operations

577


250


1,763







Income taxes paid

(111)


(123)


(284)







Net cash from operating activities

466


127


1,479







Cash flows from investing activities






Interest and other income received

5

 

-


-

Purchase of investment properties

-


-


(1,583)

Sale of investment properties

-


-


2,618







Net cash generated from investing activities

 5


 --


1,035







Cash flows from financing activities






 

Interest paid

 

(218)


 

(189)


 

(379)

Dividends paid

(380)


(353)


(583)

Drawdown on bank loans

6


-


9,938

Treasury Shares buy-back costs

(163)


-


-

Repayment of bank loans

-


-


(10,000)

Net cash used in financing activities

(755)


(542)


(1,024)







(Decrease) / increase in cash and cash equivalents

(284)


(415)


1,490

Cash and cash equivalents at beginning of period

 3,491


 2,001


2,001

Cash and cash equivalents at end of period

 3,207


 1,586


 3,491

 

 

 

 

 

4. STATEMENT OF CHANGES IN EQUITY

 

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

      -

      -

      -

      -

466

466

Changes in Treasury Shares

      -

      -

      -

     (163)

 

      -

(163)

 

Dividends

      -

      -

      -

      -

(380)

(380)

Balance at 29 September 2022

789

205

1,135

(1,733)

29,074

29,470








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 at 29 September 2021

789

205

1,135

(1,570)

24,327

24,886








AUDITED YEAR ENDED 25 MARCH 2022


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 year

      -

      -

      -

-

5,418

5,418

Dividends

      -

      -

      -

      -

(583)

(583)

Balance at 25 March 2022

789

205

1,135

(1,570)

28,988

29,547

 



 

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 2022 which were prepared in accordance with IFRS. The financial information for the six month periods ended 29 September 2022 and 29 September 2021 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 2022 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. 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 premiums and other property related receipts.

 


Unaudited
Six months ended

29 September
2022
£'000


Unaudited
Six months ended

29 September
2021
£'000


Audited
Year ended

25 March

2022
£'000


 


 


 

Rental income

1,082


1,084


2,252

Other property income

-


47


56


1,082


1,131


2,308

 

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 2022 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 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 acquired 15,000 Ordinary Shares (2021: nil) 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

Date

Per share (pence)

Amount paid/proposed

£'000

 

 

 


6 months to 29 September 2022

16 December 2022

9.0

244

6 months to 29 September 2021

17 December 2021

8.5

230

Year ended 25 March 2022

27 July 2022

14.0

380

 

7. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE

 

Basic earnings per share are calculated by dividing income after taxation attributable to Ordinary Shareholders of £466,000 (2021: £527,000) by the weighted average number of 2,709,692 (2021: 2,711,617) Ordinary Shares in issue during the period excluding shares held in treasury. Net Asset value per share is calculated by dividing net assets of £29,470,000 (2021: £24,886,000) by the number of 2,711,617 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):

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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