Wynnstay Props. Regulatory News (WSP)

20 Jun 2006 11:42

Wynnstay Properties PLC20 June 2006 WYNNSTAY PROPERTIES PLC20 JUNE 2006 Wynnstay Properties PLC - "the Company" or "Wynnstay" Preliminary Results for Year Ended 25th March 2006 When I wrote to you 12 months ago, I cautioned that the year under review wouldbe a challenging one for your Company. In the event, the results aresatisfactory with profits proving to be resilient, despite adverse cost factors,whilst the value of the property portfolio continued to grow strongly, resultingin a substantial uplift in net asset value per share. Overview of results Profits before property disposals and taxation were £97,000 lower than lastyear, reflecting a reduction in rents and a one-off pension contribution towhich I refer below. However, the year end property revaluation produced afurther satisfactory increase in the value of the portfolio and, as a result,Shareholders' Funds rose from £11.90 million to £13.64 million. The results may be summarised as follows: Change 2006 2005 • Profit before property - 14.9% £553,000 £650,000 disposals and taxation: • Profit on ordinary activities - 49.4% £553,000 £1,093,000 before taxation: • Basic Earnings per share: - 54.6% 12.2p 26.9p • Normalised Earnings per share: - 15.9% 12.2p 14.5p • Dividends per share, paid and + 3.75% 8.3p 8.0p proposed: • Net asset value per share: + 14.6% 432p 377p* * Restated in accordance with accounting standard FRS 21 (Note 2). Property Management A 7% decline in rental income, compared with the previous year, resulted fromour office property in Epsom having become vacant at the half year stage,following the expiry of the occupational lease and also reflected the sale ofthe Bognor Regis property in February 2005. There has been a considerable amount of management activity in the portfolioduring the year, with a number of rent reviews, lease renewals and new leaseshaving been successfully negotiated. We completed the refurbishment andconversion of a large industrial unit at St Neots, Cambridgeshire into threesmaller self-contained units and I am pleased to report that all are now incomeproducing. A further unit at this location has recently become vacant and iscurrently being marketed. A proactive engagement with our tenants resulted in there being no bad debtsduring the year. Portfolio For the first time for several years, there have been no investment purchases orsales. We looked at a number of opportunities that were put to us or which weidentified but where, after evaluation, we decided not to proceed. In mostcases, the prices being sought did not appear sufficiently attractive oninvestment grounds. Whilst we keep under review the possibility of profitablydisposing of older properties, where growth prospects appear limited, we remainmindful of the need to maintain a strong rental income stream. Our Independent Valuers, Sanderson Weatherall, revalued the Company's portfolioat £20.35 million, an increase of 8.6% compared with £18.74 million last year.Increases were seen across almost the entire portfolio, with the more recentlyacquired industrial properties continuing to performing particularly well. As I said in my interim statement, in relation to our office property in Epsom,when an investment of this nature becomes vacant, there is an opportunity toconsider alternative strategies. In parallel with marketing the building for itsexisting office use we have decided to take advantage of the continuing strengthin the residential market and have applied for planning consent to construct anadditional floor whilst converting the two existing upper floors to provide atotal of 11 residential units with the ground and first floors remaining asoffices. If our application proves successful, this should realise substantialadded value. I hope to have further information to report at the time of theAnnual General Meeting at the end of July. Within the portfolio, following the revaluation, the industrial sector nowaccounts for 55% by value, with the balance of 45% divided equally betweenoffices and retail. Borrowings and Gearing Net borrowings at the year end were £5.68 million, compared with £5.93 millionand, as a result of Shareholders' Funds having increased by £1.74 million, netgearing at the year end fell to 42% compared with 50% as restated last year. We have recently successfully renewed and increased our loan facility with N.M.Rothschild & Sons Limited for a further five year period on improved terms. Dividend The Directors are recommending a total dividend for the year of 8.3p per share,compared with 8.0p last year, representing a 3.75% increase. An interim dividendof 2.3p was paid in December 2005 and, subject to approval of Shareholders atthe Annual General Meeting, a final dividend of 6.0p per share will be paid on3rd August 2006 to Shareholders on the register on 7th July 2006. Outlook Until we have reinvested recent sale proceeds and have come to a decision on thefuture of the Epsom property, rental income in the current year is expected toshow a modest decline. On the other hand, costs should be somewhat lower whichwill assist in maintaining profit levels. The results this year will benefitfrom the release of deferred tax provisions no longer required amounting to£159,000. It is difficult to predict at this stage whether property values willcontinue to grow at similar levels to those seen over recent years. The Board's view is that in the current market conditions, it remains importantto be very selective in only making property acquisitions which will increaseshareholder value in the medium to longer term. Nevertheless, with our modestlevels of gearing and renewed borrowing facility, we remain in a strongfinancial position to make further investments if the right opportunities becomeavailable. Your Board remains committed to growing the Company over the comingyears. Board and Management Changes Michael Cheesmer, who retired in March 2006, joined Wynnstay in its centenaryyear, 1986, when the Company's portfolio was valued at just £3.6 million,compared with its present value of over £20 million. The intervening years haveseen many ups and downs in the economy, in the property market as well as anumber of changes at Wynnstay. Michael has made an extremely valuablecontribution to the development of your Company over these past twenty years,during which time he remained totally committed to Wynnstay. In recognition ofhis services, the Board agreed to enhance his pension arrangements by making aspecial net one-off contribution of £57,000 to his scheme during the year.Shareholders will be aware that Wynnstay is not a company which has paid largebonuses in the past, nor has Michael benefited from share options during hislong term of office. In such circumstances the Board considered that thispayment was fully merited and I am sure you will join with me in wishing him andhis wife, Hazel, a long and happy retirement together. We look forward tocontinuing to see them both, as Shareholders, at our future Annual GeneralMeetings. Michael has been succeeded as Managing Director by Paul Williams, who joinedWynnstay at the end of February 2006 following a recruitment programme conductedby professional consultants. Paul, aged 48, is a Chartered Surveyor and hasspent his entire career in commercial property including, latterly, a fourteenyear period with MEPC. I welcome him to the Company and am very confident thathe will play a major part in taking the Company forward. Ian Lockhart has been our longest serving director, having joined the Board in1972. He has been a source of considerable wisdom and experience in overseeingWynnstay's development and we are very sorry that ill health forced him to takethe decision to retire at the end of the financial year. I am sure that you willwish to join with me in sending our thanks and best wishes to both Ian and tohis wife Rosanna. Alan Domin, our property manager, retired at the end of 2005, having firstjoined Wynnstay in 1983. He dealt with a wide range of practical issues both inrelation to the Company's portfolio as well as in managing properties forclients. We are grateful to him and extend our best wishes for a long and happyretirement. Annual General Meeting The Company's Annual General Meeting will be held at the Royal Automobile Clubat 12 Noon on Thursday 27th July 2006. Philip G.H. CollinsChairman CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 25TH MARCH 2006 2006 2005 Restated £'000 £'000 £'000 £'000TurnoverGross Rental Income 1,560 1,676Fees and 17 17Commissions -------------- -------------- 1,577 1,693Property Outgoings (62) (88) -------------- -------------- 1,515 1,605Administrative (589) (523)Expenses -------------- --------------Operating Profit 926 1,082Profit on Disposalof InvestmentProperties - 443 -------------- -------------- 926 1,525Finance CostsInterest Payable (385) (442)Investment Income 12 10 -------------- -------------- (373) (432) -------------- --------------Profit on OrdinaryActivities beforeTaxation 553 1,093 Taxation on Profitfrom OrdinaryActivities (168) (243) -------------- --------------Profit afterTaxationAttributable to 385 850OrdinaryShareholders Dividends (253) (243) -------------- --------------Retained Profit for 132 607the Financial Year ======== ======== Basic Earnings per 12.2p 26.9pShareNormalised Earnings 12.2p 14.5pper Share CONSOLIDATED BALANCE SHEET AT 25TH MARCH 2006 2006 2005 Restated £'000 £'000 £'000 £'000Fixed AssetsTangible Assets 20,357 18,751Quoted Investments 1 1 -------------- -------------- 20,358 18,752Current AssetsDebtors 35 84Cash at Bank and in 316 272Hand -------------- -------------- 351 356 Creditors: Amountsfalling due within oneyear (758) (704) -------------- --------------Net Current (407) (348)Liabilities -------------- --------------Total Assets Less 19,951 18,404Current Liabilities Creditors: Amountsfalling due after morethan one year (6,000) (6,200) -------------- -------------- 13,951 12,204 Provisions for (314) (304)Liabilities andCharges -------------- -------------- Net Assets 13,637 11,900 ======== ======== Capital and Reserves:Share Capital 789 789 ReservesCapital Redemption 205 205ReserveShare Premium Account 1,135 1,135Capital Reserve 151 151Revaluation Reserve 6,277 4,672 -------------- --------------Non-Distributable 7,768 6,163Reserves Profit and Loss 5,080 4,948Account -------------- --------------Equity Shareholders' 13,637 11,900Funds ======== ======== CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 25TH MARCH 2006 2006 2005 £'000 £'000 £'000 £'000 Cash Flow from Operating 1,004 1,163Activities Returns on Investmentand Servicing of FinanceInterest Received 10 10Interest Paid (388) (506) -------------- --------------Net Cash (Outflow) fromReturns on Investmentand Servicing of Finance (378) (496) Taxation Paid (127) (164) Capital Expenditure andFinancial InvestmentPurchase of Tangible (3) (1,571)Fixed AssetsDisposal of Tangible 1 1,468Fixed Assets -------------- -------------- Net Cash (Outflow) from (2) (103)Investing Activities Equity Dividends Paid (253) (243) -------------- --------------Net Cash Inflow before 244 157Financing FinancingDrawdown of Bank Loan - 1,342Repayment of Bank Loan (200) (1,742) -------------- -------------- Increase/(Decrease) in 44 (243)Cash in the Period ======== ======== Reconciliation of NetCash Flow to Movement inNet DebtIncrease/(Decrease) in 44 (243)Cash in the PeriodCash Outflow from Debt 200 400Financing -------------- --------------Movement in Net Debt in 244 157the Period Net Debt at 25th March (5,928) (6,085)2005 -------------- --------------Net Debt at 25th March (5,684) (5,928)2006 ======== ======== OTHER FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2006 2006 2005 Restated £'000 £'000 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESProfit for the Financial Year after Taxation 385 850Taxation on Realised Property Revaluation - (66)Unrealised Surplus on Revaluation of 1,605 739Investment Properties ------------------ ------------------Total Recognised Gains and Losses for the Year 1,990 1,523 =========== =========== The Company has adopted FRS 21 in the year ended 25th March 2006. Although thishas not impacted on the recognised gains or losses, in either the current orprior years, the net assets of the prior year have increased by £180,000. RECONCILIATION OF MOVEMENT OF SHAREHOLDERS' FUNDSOpening Shareholders' Funds as at 26th March 11,720 10,4492005 as previously reportedPrior year adjustment - Final Dividend 180 171 ------------------ ------------------Opening Shareholders' Funds as at 26th March 11,900 10,6202005 - restated Profit for the Financial Year after Taxation 385 850Dividends (253) (243)Other recognised Gains and Losses - as perStatement of Total Recognised Gains and Losses 1,605 673 ------------------ ------------------Closing Shareholders' Funds as at 25th March 13,637 11,9002006 =========== =========== NOTE OF HISTORICAL COST PROFITS AND LOSSESProfit on Ordinary Activities before Taxation 553 1,093Realisation of Property Revaluation Gains on - 572Previous Years ------------------ ------------------Historical Cost Profit on Ordinary Activities 553 1,665before Taxation =========== ===========Historical Cost Profit for the Year Retainedafter 132 1,179Taxation and Dividends =========== =========== Notes: 1. The financial information above does not constitute full accounts within themeaning of Section 240 Companies Act 1985 as amended (the 'Act'). Full accountsin respect of the year ended 25th March 2005, on which the auditors reportedwithout qualification and which contained no statement under Section 237 (2) or(3) of the Act, have been delivered to the Registrar of Companies. 2. In compliance with accounting standard FRS 21, "Events after the BalanceSheet Date", dividends which have been declared after the balance sheet date areno longer recognised as a liability. Accordingly, a prior year adjustment hasbeen made to reflect this change in accounting policy. As a result of adoptingthis accounting standard, retained earnings increased by £171,000 as at 25thMarch 2004, and by £180,000 as at 25th March 2005. 2006 2005 £'000 £'000 Final prior year dividend paid in year of 5.7pper share 180 171(2004: 5.4p per share) Interim current year dividend paid in year of2.3p per share 73 72(2005: 2.3p per share) --------------- --------------- 253 243 --------------- --------------- 3. Basic earnings per share have been calculated on profits after taxationattributable to Shareholders of £385,000 (2005: £850,000) and on 3,155,267ordinary shares being the weighted average number of shares in issue in bothperiods. Normalised earnings per share have been calculated on profits aftertaxation attributable to Shareholders, excluding profit on property disposals,of £385,000 (2005: £458,000) on the same weighted average of 3,155,267 shares. 4. A final dividend of 6.0p (2005: 5.7p) per share is being recommended and willbe paid on 3 August 2006 to Shareholders on the register at the close ofbusiness on 7 July 2006. 5. The 2006 Annual Report & Financial Statements will be posted to Shareholdersshortly and copies may be obtained by writing to the Secretary, WynnstayProperties PLC, Cleary Court, 21 St. Swithin's Lane, London EC4N 8AD. 6. The Company's Annual General Meeting will be held at 12 noon on Thursday 27thJuly 2006 at The Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS. This information is provided by RNS The company news service from the London Stock Exchange