Wynnstay Props. Regulatory News (WSP)

19 Jun 2007 09:42

Wynnstay Properties PLC19 June 2007 19 June 2007 Wynnstay Properties PLC "the Company" or "Wynnstay" Preliminary Results for Year Ended 25th March 2007 CHAIRMAN'S STATEMENT I am pleased to report that 2006-2007 has been an exceptionally good year forWynnstay in financial terms. We achieved highly successful sales of our Epsomand Diss properties, whilst favourable taxation factors resulted in a 76% risein earnings per share, before taking account of property disposals.Additionally, the Company benefited from a further substantial increase in therevaluation of the portfolio. Taken together, these factors resulted inShareholders' funds increasing by almost 30% for the year under review. Overview of financial results The financial results may be summarised as follows: Change 2007 2006 - Profit before property disposals and taxation: + 2.5% £567,000 £553,000- Profit on ordinary activities before taxation: + 191.7% £1,613,000 £553,000- Basic Earnings per share: + 347.5% 54.6p 12.2p- Normalised Earnings per share: + 76.2% 21.5p 12.2p- Dividends per share, paid and proposed: + 7.2% 8.9p 8.3p- Net asset value per share: + 29.9% 561p 432p These results reflect a substantial profit from two disposals, firstly of theEpsom property with the benefit of planning permission for conversion toresidential use and secondly of our property at Diss. Marginally lower propertyincome was more than matched by reductions in administration and finance costs.The year's results also benefited from a significant tax credit, reflecting acombination of capital allowance claims and the partial write-back of thedeferred tax provision to which I refer below. The year-end property revaluationproduced a highly satisfactory increase in the value of the portfolio and, as aresult, Net Assets rose from £13.64 million to £17.69 million. Property Management The small decline in rental income of 2.6% compared with the previous year,resulted principally from our office property at Epsom having been vacantthroughout the year until the completion of its sale in January 2007 as well asfrom the Diss property which fell vacant from the expiry of its lease inNovember 2006. However, these income shortfalls were largely offset by a numberof new leases and satisfactory rent review settlements negotiated during theyear, most notably at our retail investment in Colchester. Our ManagingDirector, Paul Williams, deserves special credit for the way in which he workedwith our advisers and handled the planning requirements as well as thesubsequent tender process for the sale of the Epsom property, and thenegotiations relating to and the subsequent sale by auction of the Dissproperty, both of which produced an excellent outcome for Shareholders. Currently, we have two vacant industrial units where, in both cases, we haveagreed terms with new tenants and when these leases complete, the portfolio willbe fully let save for two small office suites. I am pleased to report that theclose relationship that we maintain with our tenants means that we have notsuffered from any bad debts during the year. Portfolio Our Independent Valuers, Sanderson Weatherall, revalued the Company's portfolioat £21,515,000, representing a like-for-like increase of 13.7% over the pastyear. Increases were seen across the entire portfolio, reflecting the benefitof rent reviews and new leases concluded, together with a further hardening ofyields generally and favourable market conditions for properties of the size andtype within the Company's portfolio. Throughout the past year Paul Williams has been very active in seeking out newinvestments. In addition to a number of individual properties across thesouthern part of England, he has considered larger estates and portfolios. Wehave entered into negotiations and made offers on some of these opportunities.However the prices being sought or ultimately obtained were not in our viewsufficiently attractive to make them worthwhile investments for your company. During the current year we will be evaluating the prospects for theredevelopment of certain of our properties which, were we to be successful inobtaining planning permission, are considered capable of delivering furthervalue to Shareholders. Following the revaluation, the industrial sector within the portfolio nowaccounts for 57% by value, with the retail and office elements comprising 26%and 17% respectively. Borrowings and Gearing The disposal of the Epsom and Diss properties enabled us to repay entirely ourvariable rate borrowings, although the unutilised element of the facilityremains fully available for drawdown to finance future acquisitions. Netborrowings at the year end were £3.16 million, compared with £5.68 million lastyear and, with Shareholders' Funds having increased by £4.05 million, netgearing at the year end fell to 18% compared with 42% last year. Taxation This year the Company is in the unusual position of enjoying a tax credit,rather than having a charge to tax on its profits. This arises from a partialwrite back of the deferred tax provision made in prior years, coupled with thebenefit of successful claims we have made for plant and machinery and industrialbuildings allowances at various properties in relation to 2006-7 as well as forprior tax years. Following changes to the industrial buildings allowance regimeannounced in this year's Budget, we expect to release the remaining deferred taxprovision in the year ending 25th March 2008. The disposals at Epsom and Disswere achieved without any charge to Capital Gains Tax. Dividend The Directors are recommending a total dividend for the year of 8.9p per share,compared with 8.3p last year, representing a 7.2% increase. An interim dividendof 2.45p was paid in December 2006 and, subject to approval of Shareholders atthe Annual General Meeting, a final dividend of 6.45p per share will be paid on2nd August 2007 to Shareholders on the register on 6th July 2007. Outlook Your Company has entered the present financial year in a strong position. Withour exceptionally low gearing, and with substantial unused borrowing facilities,we are well positioned to invest when the right properties become available onacceptable terms or should we prove successful in identifying a suitablecorporate opportunity which matches our property investment criteria. Base rate has increased four times since August last year and, with actual andforecast levels of inflation being higher than we have experienced for a numberof years, it may be that there will be further increases over the coming months. A number of commentators have also been calling the top of the commercialproperty investment market for some time, but nevertheless there still appearsto be a strong demand which continues to drive the market and is reflected inprices and valuations. The proposed changes announced in the Budget to restrictthe existing relief from business rates on vacant commercial property seemlikely to affect valuations. Under these changes, such premises will now onlyqualify for relief over a very limited period and inevitably this will imposeadditional financial burdens on landlords. The Board's view remains that inthese market conditions, it remains important to be extremely selective inmaking acquisitions in order that they will add shareholder value in the mediumto longer term. For the current accounting year, we will be required by the London StockExchange, as a company whose shares are listed on the Alternative InvestmentMarket, to produce financial statements in accordance with InternationalFinancial Reporting Standards rather than, as at present, under UK GenerallyAccepted Accounting Principles. The main impact of this will be a requirementfor the Company to provide for Capital Gains Tax on the unrealised surpluseswithin its portfolio. At present this contingent liability is quantified andreflected in the notes, rather than being actually provided for in the financialstatements. Board and Management Changes Peter Kirkland, our Finance Director and Company Secretary, has indicated hisintention to retire and will be leaving us following the Annual General Meetingin July. He joined Wynnstay in 1995 as our first full-time Finance Director,following a career which started in the City and then took him into seniorexecutive and Board positions in a number of substantial companies in theconstruction and property sectors. His financial and commercial experience of these sectors has proved invaluableto Wynnstay as has his great attention to detail and his willingness to adapt tothe wide-ranging demands of working in a small quoted company. His experienceand skills were amply displayed and were particularly valuable, for instance,during the negotiation of our borrowing facilities and their more recentrenewal, but he has also provided practical advice in dealing with a broad rangeof property issues. While Peter has been at Wynnstay, it has developed andgrown substantially and successfully, and I am personally indebted to him forthe constant support and wise counsel that he has provided to me, as well as tothe Board generally, since I became Chairman in 1998. In recognition of his services, the Board agreed to enhance his pensionarrangements by making a special net one-off contribution of £35,000 to hisscheme during the year under review. As I pointed out last year, Shareholderswill be aware that Wynnstay is not a company which has paid large bonuses in thepast, nor has Peter benefited from share options during his term of office. Insuch circumstances the Board considered that this payment was fully merited andI am sure you will join with me in wishing Peter a long and happy retirement. Iexpect to be in a position to announce his successor shortly. Annual General Meeting Our Annual General Meeting will be held at the Royal Automobile Club at 12 noonon Thursday 26th July 2007. Philip G.H. Collins Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 25TH MARCH 2007 2007 2006 £'000 £'000 £'000 £'000TurnoverGross Rental Income 1,520 1,560Fees and Commissions 16 17 ------------ ------------ 1,536 1,577Property Outgoings (48) (62) ------------ ------------ 1,488 1,515Administrative Expenses (587) (589) ------------ ------------Operating Profit 901 926 Profit on Disposal of Investment Properties 1,046 - ------------ ------------ 1,947 926Finance CostsInterest Payable (350) (385)Investment Income 16 12 ------------ ------------ (334) (373) ------------ ------------Profit on Ordinary Activities before Taxation 1,613 553 Taxation on Profit from Ordinary Activities 110 (168) ------------ ------------Profit after Taxation Attributable to OrdinaryShareholders 1,723 385 Dividends (266) (253) ------------ ------------ Retained Profit for the Financial Year 1,457 132 ======= =======Basic Earnings per Share 54.6p 12.2p Normalised Earnings per Share 21.5p 12.2p CONSOLIDATED BALANCE SHEET AT 25TH MARCH 2007 2007 2006 £'000 £'000 £'000 £'000Fixed AssetsTangible Assets 21,530 20,357 Quoted Investments 1 1 ------------ ------------ 21,531 20,358Current AssetsDebtors 422 35Cash at Bank and in Hand 637 316 ------------ ------------ 1,059 351Creditors: Amounts falling due within one year (946) (758) ------------ ------------Net Current Assets/(Liabilities) 113 (407) ------------ ------------ Total Assets Less Current Liabilities 21,644 19,951 Creditors: Amounts falling due after more thanone year (3,800) (6,000) ------------ ------------ 17,844 13,951 Provisions for Liabilities and Charges (155) (314) ------------ ------------Net Assets 17,689 13,637 ====== ======Capital and Reserves:Share Capital 789 789ReservesCapital Redemption Reserve 205 205Share Premium Account 1,135 1,135Capital Reserve 151 151Revaluation Reserve 9,031 6,277 ------------ ------------Non-Distributable Reserves 10,522 7,768 Profit and Loss Account 6,378 5,080 ------------ ------------Equity Shareholders' Funds 17,689 13,637 ====== ====== CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 25TH MARCH 2007 2007 2006 £'000 £'000 £'000 £'000 Cash Flow from Operating Activities 1,209 1,004 Returns on Investment and Servicing ofFinanceInterest Received 15 10Interest Paid (361) (388) ------------ ------------Net Cash (Outflow) from Returns on Investmentand Servicing of Finance (346) (378) Taxation Paid (131) (127) Capital Expenditure and Financial InvestmentPurchase of Tangible Fixed Assets (7) (3)Disposal of Tangible Fixed Assets 2,062 1 ------------ ------------Net Cash Inflow/(Outflow) from InvestingActivities 2,055 (2) Equity Dividends Paid (266) (253) ------------ ------------Net Cash Inflow before Financing 2,521 244 FinancingRepayment of Bank Loan (2,200) (200) ------------ ------------Increase in Cash in the Period 321 44 ====== ====== Reconciliation of Net Cash Flow to Movementin Net DebtIncrease in Cash in the Period 321 44Cash Inflow from Debt Financing 2,200 200 ------------ ------------Movement in Net Debt in the Period 2,521 244 Net Debt at 25th March 2006 (5,684) (5,928) ------------ ------------ Net Debt at 25th March 2007 (3,163) (5,684) ====== ====== OTHER FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2007 2007 2006 £'000 £'000 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Profit for the Financial Year after Taxation 1,723 385 Unrealised Surplus on Revaluation of Investment Properties 2,595 1,605 ------------ ------------Total Recognised Gains and Losses for the Year 4,318 1,990 ====== ====== RECONCILIATION OF MOVEMENT OF SHAREHOLDERS' FUNDS Opening Shareholders' Funds as at 26th March 2006 13,637 11,900 Profit for the Financial Year after Taxation 1,723 385 Dividends (266) (253) Other recognised Gains and Losses - as per Statement of TotalRecognised Gains and Losses 2,595 1,605 ------------ ------------Closing Shareholders' Funds as at 25th March 2007 17,689 13,637 ====== ====== NOTE OF HISTORICAL COST PROFITS AND LOSSES Profit on Ordinary Activities before Taxation 1,613 553 Realisation of Property Revaluation Gains from Previous Years (159) - ------------ ------------Historical Cost Profit on Ordinary Activities before Taxation 1,454 553 ====== ======Historical Cost Profit for the Year Retained after Taxation and Dividends 1,298 132 ====== ====== Notes: 1. The financial information above does not constitute full accounts withinthe meaning of Section 240 Companies Act 1985 as amended (the 'Act'). Fullaccounts in respect of the year ended 25th March 2006, on which the auditorsreported without qualification and which contained no statement under Section237 (2) or (3) of the Act, have been delivered to the Registrar of Companies. 2. Basic earnings per share have been calculated on profits after taxationattributable to Shareholders of £1,723,000 (2006: £385,000) 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 £677,000 (2006: £385,000) on the same weighted average of 3,155,267 shares. 3. A final dividend of 6.45p (2006: 6.0p) per share is being recommended andwill be paid on 2nd August 2007, to Shareholders on the register at the close ofbusiness on 6th July 2007. 4. The 2007 Annual Report & Financial Statements will be posted toShareholders shortly and copies may be obtained by writing to the Secretary,Wynnstay Properties PLC, Cleary Court, 21 St. Swithin's Lane, London EC4N 8AD. 5. The Company's Annual General Meeting will be held at 12 noon on Thursday26th July 2007 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