Wynnstay Props. Regulatory News (WSP)

Wynnstay Properties PLC

Preliminary Results for Year Ended 25th March 2012

CHAIRMAN'S STATEMENT

Since I wrote to you at this time last year, despite the unsettled macro-economic environment prevailing throughout 2011 and 2012 which has undoubtedly adversely affected the commercial property market, your company has been very active in its core business of property asset management. Where lease expiries are approaching, we have generally been able to retain existing tenants who might otherwise have been tempted to move, thereby keeping vacancies and associated non-recoverable costs together with bad debts to a minimum; we have relet vacantspace to newtenants; we havedisposed of properties that are non-coreto our long term portfolio and where future rental and capital growth are limited in prospect; and we have acquired new properties for the portfolio which meet our investment criteria within our preferred geographic area of operation. As a result, the Board is confident that its management and investment strategy place your company in a stronger position to continue to prosper for your benefit.

Overview of financial performance

Against this background, the financial performance for the year may be summarised as follows:

Profit before the movement in fair value of investment properties for the year was significantly higher than last year, principally as a result of the sale of investment properties at above net book value and reduced financing costs, both discussed further below. Earnings per share were however substantially reduced compared to the previous year due to the impact of the reduction in the valuation of the property portfolio, which is required to be reflected in the statement of comprehensive income (thus affecting earnings), as well as in the statement of financial position (thus affecting net asset value per share), as shown above. It will be noted from this table that whilst modest changes in the value of the portfolio from year to year can have a dramatic impact on earnings, the impact on net asset value is far less pronounced.

Property Management and Portfolio

As anticipated in my interim statement, property income was somewhat lower than the previous year at £1.50 million (2011 - £1.69 million), principally as a result of the loss of rental income from vacant properties and from properties formerly in the portfolio that had been sold in the previous year.

Shareholders will recall that, followingthe grant of planning consent for the change of use of the upper floors of our office building in Colchester, and with little prospect of future rental and capital growth, we marketed the freehold of the property for sale and accepted an offer. Unfortunately the sale process became very protracted and did not eventually proceed to completion. However, we were successful in achieving a sale at an improved price, to another purchaserwith completion on 23rd March 2012.

Towards the end of the year, we also began negotiations to sell our development site at Twickenham and our industrial unit at Alton and I am pleased to report that terms have been agreed and that since the year end the sale of Twickenham has been completed.

The proposals for our site at Twickenham had become rather drawn out. Shareholders will recall that we obtained planning consent in 2008 for the redevelopment of the site, which then comprised four industrial units. After considering various options, we obtained vacant possession of the units, which had been let on a short-term basis. To preserve our planning permission we commenced the development by demolishing the units last Autumn whilst we continued to explore various alternatives for the development of the site. There was interest in the site from a number of developers and we have recently completed the sale at a price of £1.62m.Whilst this is very slightly below the year end net book value, it is worth noting that prior to preparing our plans for its redevelopment the book value of the property with the industrial units was £900,000. As a result, even though we have incurred some property costs, we consider that the outcome is an excellent one for Shareholders. The sale contract also provides that, should the purchaser obtain an improved planning consent in the next five years, then a further payment will be due to Wynnstay.

In relation to the industrial unit at Alton, our tenants vacated the property some time ago, leaving a sub-tenant in occupation of part of the premises. Whilst continuing to pay rent until the end of their lease and accepting responsibility for dilapidations, our tenants indicated that they would not renew the lease. However, the sub- tenants expressed an interest in purchasing the premises and terms have been agreed for them to purchase the freehold. I hope to have further news at the time of the Annual General Meeting.

Shortly before the end of the year, as I reported in my interim statement, we completed the purchase of two retail warehouse units on an estate just outside Lewes in Sussex. The units are let to two well-known national chains, with significant unexpired terms on the leases, and are on an established out-of-town retailing location, with other well-known retail outlets located nearby. The consideration of £1.26 million was funded from our existing facility and the net initialyield is 7.8%.

Since the year end, we have also completedthe purchase of a freeholdoffice property opposite the railway station in Surbiton, Surrey. The building is let to part of the YMCA network which has taken a new 10 year lease from December 2011 without breaks. The consideration of £1.6 million was also funded from our existing facility and the net initial yield is 7.8%. We continue to actively seek other investment opportunities which will add shareholder value to the portfolio.

In a busy year on the management side we have been successful in reletting or renewing 10 leases across the estate.

As has always been the case, we believe that strong proactive relationships with our tenants are important and we continue to work closely with them to understand their current and future needs and thus to reduce the incidence of tenant defaults and vacant premises arising in the portfolio, with their attendant costs and loss of income. As a result of this attention to detail our vacancy rate remains low at only 2% on a rental basis and we suffered no bad debts during the year under review.

Portfolio Valuation

As at 25 March 2012, our independent Valuers, Sanderson Weatherall and Chesterton Humberts, have undertaken the annual valuation of the company'sportfolio at £19,325,000, representing as mentioned above, a modest fall, on a like-for-like basis of 4%, over the valuation at the end of the prior year. This valuation is before adjusting for estimated costs to sell of £36,400 for those properties classified as non current assets held for sale at the year end and is a satisfactory outcome given the conditions in the commercial property market and the economy as a whole.

Following the revaluation at the year-end, the industrial sector within the portfolio accounted for 68% by value, with the office and retail elementscomprising 12% and 20% respectively.

Borrowings and Gearing

Net borrowings at the year-end were £7.19 million (2011 - £7.45 million)and net gearing at the year-end was 50.7% comparedto 52% last year.

As I have previously observed, the Company benefits from the historically very low levels of interest payable under our borrowing facility where the rate of interest is variable and is linked to Libor. At present, there seems to be limited prospectof an increase in interest rates in the immediate future, but the Board continues to keep the position under close review. The Board has commenced outline discussions with its bankers as regards the refinancing of the loans that fall due in December2013. The Board considers that the properties recently added to the portfolio and the new leases recently completed will assist in negotiating satisfactory terms.

Costs

As last year, our propertycosts this year have been significantly impacted by a numberof one off costs relating to the Twickenham site. Administrative costs were held at about the same level as in the previous year.

Dividend

The Directors are recommending a total dividend for the year at the same level as last year, namely 10.5p per share. An interimdividend of 2.9p per share was paid in December 2011 and, subject to approval of Shareholders at the Annual General Meeting, a final dividend of 7.6p per share will be paid on 23rd July 2012 to Shareholders on the register on 29th June 2012.

The Directorshave decided to maintain their fees, together with salary and consultancy fees in the current year, at the same level as last year. This commitment, together with the holding of the dividend, demonstrates the alignment of the Directors' interests with those of the Shareholders.

Outlook

It is difficultto give a clear view given that the prospectsfor the United Kingdom economy are uncertain, even in the medium to long-term. Nevertheless, your Company has performed well in the difficult conditions over the past few years and it remains in robust health. The changes that we have made to the portfolio should add to the quality of our earnings and the value of our assets, delivering an improved income stream and net asset value for Shareholders in the longer term.

Unsolicited approaches to shareholders

Shareholders are remindedthat unsolicited approaches regarding their shares may be from fraudsters. Your attention is drawn to the letter enclosed.

Annual General Meeting

Our Annual General Meeting will be held at the Royal Automobile Club on Thursday 19th July 2012. As always, I would encourage as many Shareholders as possible to attend so that they can both take part in the formal business and meet the Board and other Shareholders informally before and after the meeting and discuss the Company's activities.

The Company's Annual Report & Accounts for the year ended 25th March 2012 will be posted to shareholders on Thursday and are available to download on the Company's website http://www.wynnstayproperties.co.uk 

Colleagues and Advisers

I opened this statement with reference to the amount of activity that has taken place this year. Wynnstay relies on the commitment, expertiseand enthusiasm of our two executive directors - Paul Williams,our Managing Director, and Toby Parker,our Finance Director- to manage the company's affairs effectively andefficiently subject tothe Board's oversight with the modest resources made available to them. The two executive directors and I, as your Chairman, benefit from the experience and wisdom of our two non-executive directors - Charles Delevingne and Terence Nagle, both of whom have spent their entire careers in commercial property. I would like to thank all of them as well as our advisersfor their professionalism, wise counsel and support throughout the past year.

18th June 2012

Philip G.H. Collins

Chairman

For further information please contact:

STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2012

STATEMENT OF FINANCIAL POSITION 25TH MARCH 2012

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25TH MARCH 2012

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25th MARCH 2012

YEAR ENDED 25 MARCH 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2011

1. ACCOUNTING POLICIES

Wynnstay Properties PLC is a public limitedcompany incorporated and domiciled in England & 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.

Basis of Preparation

The Accounts 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, financial assets and financial liabilities measured at fair value through profit or loss, and investments.

The financialstatements comprise the results of the Company drawn up to 25th March each year.

(a) New interpretations and revised standards effective for the year ended 25 March 2012

The directors have adopted all new and revised standards and interpretations issued by the International Accounting Standards Board("IASB") and the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are relevant to the operations and effective for periods beginning or before 26 March 2011.

(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 revisions to existing standards.

IFRS 9: Financial Instruments - The standard makes substantial changes to the recognition and measurement of financial assets and financial liabilities and de-recognition of financial assets. In the future there will only be two categories of financial assets; those at fair value through profit and loss and those measured at amortised cost.

Most financial liabilities will continue to be carried at amortised cost, however, some financial liabilities will be required to be measured at fair value through profit and loss, for example derivative financial instruments, with changes in the liabilities' credit risk recognised in other comprehensive income. 

The standardis effective for accounting periods beginning on or after 1 January 2015.

IFRS 13: Fair Value Measurement - The standardoutlines a single frameworkfor measuring fair value and the required disclosure thereof when required or permitted by other International Financial Reporting Standards. The standard is unlikely to impact the fair value measurement of assets and liabilities that are currently recognised at fair value, however there will be greater disclosure given.

The standardis effective for accounting periods beginning on or after 1 January 2013.

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 accountingestimates 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 investmentproperties.

Investment Properties

All the company's investment properties are revalued annually and stated at fair value at 25th March. The aggregate of any resultingsurpluses 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 accordancewith IAS 40, freehold investment properties are included in the statement of financial position at fair value, and are not depreciated.

Other plant and equipmentis recognised at cost and depreciated on a straightline 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 the statement of comprehensive income in the year of disposal.

Property Income

Property Income represents the value of accrued charges under operating leases for rental of the Company's properties. 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 availableagainst 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 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 in the statement of comprehensive income,including deferred tax on the revaluation of investment property.

Trade and other accounts receivable

Trade and other receivables are initially measured at fair value 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 which are subject to an insignificant risk of change in value.

Trade and other accounts payable

Trade and other payables are initiallymeasured at fair value. 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.

Financial Instruments

Derivative financial instruments are initially measured at fair value at the contract date entered into, and subsequently measured to their fair value at each reporting date. Derivatives are recognised separately on the statement of financial position, when not closely related to the host contract. Changes in the fair value of derivativefinancial instruments that do not qualify for hedge accounting are recognised in profit or loss.

The Company's freehold investment properties were valued at £19,325,000 by Independent Valuers, Sanderson Weatherall and Chesterton Humberts Chartered Surveyors, as at 25th March 2012,in accordance with the RICS Appraisal and Valuation Standards, on the basis of Market Value, defined as:

"The estimatedamount for which a propertyshould exchange on the date of valuationbetween a willing buyer and a willingseller in an arm's-length transaction, after proper marketing wherein the partieshad each acted knowledgeably, prudently and without compulsion".

Assets held for sale of £2,324,000included an adjustmentto exclude the estimated costs to sell of £36,400 from the valuation.

Freehold investment properties, including assetsheld for sale (Note 13), would have been shownat an historical cost of £15,187,400 (2011: £16,613,000) if revaluations had not been undertaken.

19. FINANCIAL INSTRUMENTS

The objective of the Company's policies is to manage the Company's financial risk, secure cost effective funding for the Company's operations and minimise the adverse effects of fluctuations in the financial markets on the value of the Company's financial assets and liabilities, on reported profitability and on the cash flows of the Company.

At 25th March 2012 the Company's financial instruments comprised borrowings and cash and cash equivalents, 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 and the fair value of the Company's financial assets and liabilities at 25th March 2012 is not materially different from their book value. 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 regularlyand appropriate action is taken to recovermonies owed or, if necessary, to terminate the lease. Funds may be invested and loan transactions contracted only with banks and financial institutions with a high credit rating.

The Group 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 exist to the extent that at 25th March 2012 and 2011, 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 2012 was £966,000 (2011:

£885,000).

Currency Risk

As the Company's assetsand liabilities are denominated in Pounds Sterling, there is no exposure to currency risk.

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:

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. A comparison of book values and fair values of the Company's financial assets and liabilities is set out below:

Categories of financial instruments

The following table provides an analysis of financial instruments as at 25th March that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

·; Level 1: fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.

·; Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e as prices) or indirectly (i.e derived from prices).

·; Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.

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 net borrowings 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 comprises total borrowings less cash and cash equivalents.

The Company's policy is that the loan to value ratio should not exceed 60% and that the gearing ratio should not exceed 100%.

20. STATEMENT OF CASH FLOWS

23. EVENTS after the end of the reporting period

On 27th April, the Company completed on the purchase of a freehold office building in Surbiton for £1,600,000 which is let on a long lease to the YMCA. On 11th June, the Company completed on the sale of the freehold property in Twickenham for £1,620,000.

24. SEGMENTAL REPORTING

25. ANNUAL REPORT AND ACCOUNTS

The Annual Report and Accounts for the year ended 25th March 2012 will be posted to shareholders on or about 20th June 2012.