Wynnstay Properties PLC
Annual Report and Financial Statements
for the year ended 25 March 2017
WYNNSTAY PROPERTIES PLC
ANNUAL REPORT
and
FINANCIAL STATEMENTS
YEAR ENDED 25TH MARCH 2017
CONTENTS
Directors and Advisers
Summary of Property Portfolio
Chairman’s Statement
Report of the Directors
Strategic Report
Report of the Auditors
Primary Statements
Notes to the Financial Statements
Five Year Financial Review
Notice of Annual General Meeting
Biographies of the Directors
2
3
4
9
13
14
15
19
35
36
39
– 1 –
WYNNSTAY PROPERTIES PLC
(Company incorporated in the United Kingdom)
directors
P.G.H. COLLINS CBE
(Non-Executive Chairman)
C.P. WILLIAMS, B.Sc., M.B.A., M.R.I.C.S.
(Managing Director)
C.H. DELEVINGNE
(Non-Executive Director)
T.J. NAGLE, B.Th., F.R.I.C.S.
(Non-Executive Director)
T. J. C. PARKER A.C.A.
(Finance Director & Secretary)
P. MATHER, B.Sc., F.R.I.C.S.
(Non-Executive Director)
C. M. TOLHURST, B.Sc., M.R.I.C.S., A.C.I.S.
(Non-Executive Director)
registered office
150 Aldersgate Street, London EC1A 4AB
auditors
MOORE STEPHENS LLP
150 Aldersgate Street, London EC1A 4AB
solicitors
FIELDFISHER LLP
Riverbank House, 2 Swan Lane, London EC4R 3TT
nominated adviser & broker
PANMURE GORDON & CO
One New Change, London EC4M 9AF
valuers
BNP PARIBAS REAL ESTATE ADVISORY &
PROPERTY MANAGEMENT UK LIMITED
5 Aldermanbury Square, London EC2V 7BP
registrars
CAPITA ASSET SERVICES
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
bankers
C. HOARE & CO.
37 Fleet Street, London EC4P 4DQ
SVENSKA HANDELSBANKEN SA
5 Welbeck Street, London W1G 9YQ
– 2 –
WYNNSTAY PROPERTIES PLC
SUMMARY OF PROPERTY PORTFOLIO
AT 25TH MARCH 2017
Eastern Road
1 Industrial Unit
Quarry Wood Industrial Estate
18 Industrial Units
Crockford Lane
3 Industrial Units
Oakcroft Business Park
3 Industrial Units/Offices
Short Wyre Street
2 Retail Units
High Street
High Street
Offices
1 Retail Unit
Crown Close Industrial Estate
7 Industrial Units
Station Road
5 Industrial Units
Hertingfordbury Road
1 Industrial Unit
Trinity Street
Brooks Road
5 Industrial Units
2 Retail Units
1-4, Prospect Drive
4 Industrial Units
Beaver Industrial Estate
17 Industrial Units
North Street
1 Retail Unit
City Trading Estate
6 Industrial Units
Huntingdon Road
6 Industrial Units
High Street
St James’ Street
Bell Lane
1 Retail Unit
Offices
4 Industrial Units
Aldershot
Aylesford
Basingstoke
Chessington
Colchester
Cosham
Gosport
Hailsham
Heathfield
Hertford
Ipswich
Lewes
Lichfield
Liphook
Midhurst
Norwich
St. Neots
Shirley
Surbiton
Uckfield
Weston-super-Mare
Phillips Road
1 Retail Unit
All the above properties are Freehold.
– 3 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT
On behalf of your Board, I am very pleased to report on Wynnstay’s strong financial performance last year and on some of our
plans for the current year and beyond.
Overview of financial performance
Wynnstay’s financial performance for the year may be summarised as follows:
• Property income
• Profit before movement in fair value of investment
properties and taxation
• Earnings per share
• Dividends per share, paid and proposed
• Net asset value per share
• Net gearing
Change
+14.0%
+13.8%
+55.7%
+19.3%
+15.4%
2017
2016
£2,028,000
£1,778,000
£999,000
£878,000
103.1p
15.75p
674p
56.2%
66.2p
13.2p
584p
54.2%
Property rental income rose to just over £2.0 million and was significantly higher than last year (2016 - £1.8 million). This
increase is mainly attributable to our acquisition of the four units at Lichfield in June 2016, as well as successful rent review
negotiations on three of those units undertaken by us post acquisition; the letting of the two larger units on the Beaver Industrial
Estate at Liphook to a long established business based at the Estate, to which I referred to at the half-year; and the new leases
at increased rents at the Oakcroft Business Centre in Chessington on which I reported last year. Towards the end of the year,
rental income was further enhanced when we negotiated a significant rent increase on review at our office premises at Surbiton,
the full benefit of which will arise in the current and future years.
The two smaller units at Liphook vacated when our tenant moved to the larger units on the Estate have both been relet to an
established local business, with the rents obtained on all four units creating useful comparable evidence for forthcoming rent
reviews due later this year.
As a result of the continued tight control of property and administrative costs, profit before fair value movement and taxation
for the year rose to just under £1.0 million.
Property Management
Our portfolio is spread principally in the South and East of England, with some recent acquisitions located outside these areas
where we perceive there are good opportunities for rental and capital growth. We now have around 84 tenants occupying over
92 separate properties in 21 locations. At the end of the financial year, the portfolio was fully-let and income-producing.
As will be apparent from what I have said above, and the further matters to which I refer below concerning Aylesford and
St Neots, it was a busy year for the management of the portfolio in which we successfully completed a number of additional
lease renewals, rent reviews and new leases at some of the smaller units in the portfolio. Our management continues to focus
on being approachable and flexible to meet tenants’ needs and ensuring that premises that are vacated are relet as quickly as
possible, whether to existing tenants or to new tenants.
Portfolio Development
Last year, I reported that we had obtained planning permission at Aylesford for the construction of five additional industrial/
warehouse units of varying sizes, designed to be flexible so being either self-contained or capable of incorporation into existing
adjoining units, which could provide over 20% additional lettable space on the estate as well as creating new car and goods
vehicle spaces. During the year, we have continued to assess the viability of the scheme in the light of the significant cost of
development and anticipated tenant demand. We are currently in discussions with our consultants and potential contractors.
Many shareholders will recall our investment in six industrial units in St Neots, which has been in the portfolio for many years
and is located in an area of the town that is now becoming predominantly residential in nature. After protracted discussions
with the owner of the adjoining industrial units we have both entered into options to sell our respective holdings to a residential
– 4 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
development company subject to that company securing, at their cost, planning permission for residential development of both
holdings. The outcome of the planning process is unlikely to be known until 2018 and if the necessary planning consent is
obtained we will then sell the majority of our industrial units to the residential development company for a figure significantly
in excess of our current valuation. We will be retaining one self-contained unit adjacent to the main entrance to the estate
probably until after the residential development has been built out.
During the course of this year, we anticipate taking advantage of the present strong demand for smaller commercial investment
properties by seeking to dispose of two or three of the smaller retail properties in the portfolio with a view to reinvestment of
the proceeds in properties that offer better prospects for future growth.
Portfolio Valuation
As at 25 March 2017, our Independent Valuers, BNP Paribas Real Estate, have undertaken the annual revaluation of the
company’s portfolio at £29,515,000 representing a revaluation surplus of £2,199,000. This reflects the increased rental income
and the improved lease profile and enhanced covenants achieved by our active management as well as positive conditions in
the commercial property investment market.
It is pleasing to note that the increase reflected in the revaluation, which has contributed to an increase of over 15% in net asset
value per share, was spread across most of the portfolio, with the most significant percentage rises being attributed to our larger
assets and to those where significant management activity has taken place.
Following the revaluation and the acquisition at Lichfield, as at the year-end, the industrial sector within the portfolio
accounted for 63% by value, with the retail warehouse and office sectors comprising 14% and 17% respectively and the
remaining 6% being in “high street” retail premises.
Borrowings and Gearing
Total borrowings at the year-end were £11.34 million (2016 - £10.0 million) and net gearing at the year-end was 56.2%
compared to 54.2% last year. The increased borrowings reflect the additional facility used to part fund the acquisition at
Lichfield, the balance being provided from our own cash resources.
As reported in our Trading Update shortly after the year-end, we have renegotiated the terms of our banking facilities with
Handelsbanken. A new five-year facility has been agreed to run until December 2021, with interest payable on £10.0 million
being fixed for the duration at 3.35%, and the balance of £1.34m continuing at a variable rate of 2.49% over LIBOR.
The renegotiated facility gives us greater certainty about our financing costs at a time when interest rates remain at the historic
low level that has prevailed for an exceptionally long time. The Board considered that it was prudent to fix the interest payable
on the major part of the facility at this time in order to provide certainty and stability for the next few years.
We have an excellent business relationship with Handelsbanken. In recent discussions they have indicated that, if we need
additional borrowing to finance new acquisitions, they are willing, in principle and without commitment, to increase our
facility to a maximum of £15 million.
Costs
The mix of our property costs was rather different this year compared to the prior year as the full occupancy of our properties
meant that we did not suffer empty rates, while management and legal fees were somewhat higher as a result of the various
matters already described above and we invested in improvements jointly with tenants, which are generally reflected in better
lease terms and increased rents. We continue to focus on control of administrative costs, which were also higher than in the
prior year. Part of this increase is due to non-recurring items (Board search firm fees and the costs associated with the revised
facility with Handelsbanken) with the balance arising from the review of Directors fees to which I refer below
Dividend
In the light of the excellent financial outcome of the year, the Board is recommending a total dividend for the year of 15.75p
per share (2016 – 13.2p), which represents an increase of over 19%. An interim dividend of 5.5p per share (2015 – 5.0p) was
paid in December 2016. Accordingly, subject to approval of Shareholders at the Annual General Meeting, a final dividend of
10.25p per share (2016 – 8.2p) will be paid on 21st July 2017 to Shareholders on the register on 23rd June 2017.
– 5 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
Shareholders have benefitted from significantly increased dividends over the past four years, reflecting the substantial
improvements in the overall quality of the properties, stronger tenant covenants and enhanced rental flow in the portfolio.
Future increases in dividends will depend on maintaining the impetus of our recent performance and making selective disposals
and additions to the portfolio.
Outlook
The successes that have contributed to our excellent financial performance and the plans described above give us confidence in
the future of Wynnstay.
At the moment, the consequences of Brexit and the forthcoming negotiations with the European Union do not seem to have
affected the part of the commercial property market in which Wynnstay is active. We have not seen significant evidence of
falling tenant demand or of tenants suffering financial difficulty. Published data shows that the UK economy is continuing to
grow, with employment and new business formations rising and consumer spending demonstrating considerable resilience.
However, given the inevitable uncertain background and recent signs of slowing growth and consumer spending, we feel that it
is right to be prudent while we plan to continue to grow Wynnstay’s portfolio, both organically and by acquisition.
Since the year-end, the general election has just delivered an uncertain outcome. There are many important challenges, in
addition to Brexit, that a new government will face to ensure that the UK has a vibrant and successful economy in which
smaller businesses play a vital role. Of particular importance to commercial property are the reform of the present system of
business rates and the heavy costs of property transactions arising from recent increases in stamp duty.
The Board
Retirement of Terry Nagle
In my interim statement in November, I reported on Terry Nagle’s decision to retire after 19 years on the Board and thus not to
stand for re-election at this year’s Annual General Meeting.
Terry’s entire business and professional career has been spent in the property world. After qualifying as a Chartered Surveyor
he cut his teeth dealing with the property assets of large multinational companies then expanding in Europe, including Mobil
and Rank Xerox. He then joined one of the UK’s largest and successful large quoted property company, Brixton Estate, where
he rose to become Property Director and then Managing Director.
Given his large company background compared to Wynnstay, we were very fortunate to attract Terry to take an interest in
Wynnstay and to join the Board in 1998. His hands-on experience of all aspects of commercial property, built up over many
years in different businesses and working with a range of professionals on diverse property matters, has been invaluable to
Wynnstay. He has provided valuable guidance to management and the Board on tricky property management issues and
constructive challenge on proposed actions that are brought to the Board.
Terry has also given insightful views on proposed acquisitions or disposals, often taking the opportunity to inspect properties
and the surrounding area to form his own view on whether they should be in Wynnstay’s portfolio. He has also taken a
particular interest in the preparation of our reports to shareholders and in shareholder relations, for which I am particularly
grateful.
Although Terry will be retiring from the Board, he assures me that he will continue to take an active interest in the Company’s
future and hopes to continue to attend our annual general meetings so that, if necessary, he can offer his views from the floor
instead of around the boardroom table.
Terry has recently undergone a major operation. I know that Shareholders will want to join with me in wishing him both full
recovery and a happy retirement.
Appointment of Paul Mather and Caroline Tolhurst
As foreseen in my interim statement and announced with our Trading Update at the end of March, our work with specialist
search consultants resulted in the appointment of Paul Mather and Caroline Tolhurst to the Board. Both Paul and Caroline are
chartered surveyors and have many years of experience in commercial property and property fund management.
Paul Mather’s career after qualification in professional practice brought him to central London where he focussed on active
asset management of commercial portfolios and developments as a group portfolio manager for Greycoat PLC and then as a
senior director at BNP Paribas Real Estate.
– 6 –
– 7 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
Caroline Tolhurst broadened her professional property career and experience into compliance, governance and investment
management as well as becoming a Chartered Secretary and has previously worked in senior positions at Grosvenor Limited,
NewRiver Retail Limited and Knight Frank LLP and currently has a number of property-related non-executive directorships.
I welcome Paul and Caroline to the Board, which they joined in April. Shareholders will have the opportunity to meet them at
the Annual General Meeting in July.
Directors Fees
We have not reviewed the level of Directors’ Fees in the light of the time commitment required for a long time. The number
of regular Board meetings each year has risen and the extent of contacts and communications among the Directors between
meetings has increased significantly. In discussion with potential search firms for the new appointments, it was clear that all
firms considered that our level of Directors’ Fees was low in the light of the number of meetings, overall time commitment and
responsibilities. This was confirmed by reference to the fees paid by a range of other AIM companies.
Accordingly the Board decided that the Directors Fees for 2016-17 and for 2017-18 should be set at £15,000 (2016 - £11,994).
In the light of this, the Board also decided that the Chairman’s remuneration should be set at £40,000 for the two years (2016 –
£33,528). The level of fees will be reviewed again at the end of this year.
Our Executive Management
The day-to-day management of Wynnstay’s business is in the expert hands of our very capable executive directors – Paul
Williams, our Managing Director, and Toby Parker, our Finance Director. The Company’s recent growth is a tribute to their
work on behalf of shareholders. In the light of the excellent results achieved this year, the non-executive Directors decided to
award them each a cash bonus: in the case of Paul, £25,000 and in the case of Toby, £5,000. The bonuses are reflected in the
accounts for the last year.
Last year I mentioned that we were proposing to introduce a HMRC-approved Share Incentive Plan for the executive
management. In the event, it transpired that the costs of establishing such a scheme for only such a small number of employees
would not have been proportionate relative to the potential benefits. So, at least for the time being, we will use discretionary
bonuses as an additional incentive to align remuneration with shareholders interests. However as mentioned below, Paul has
expressed a wish to consider taking any future bonuses in the form of Wynnstay shares and a resolution to enable this will be
proposed at the Annual General Meeting.
Colleagues and Advisers
I have already paid tribute to Terry Nagle on his retirement. Our other non-executive director, Charles Delevingne, continues
to provide his invaluable experience in the property world and he was closely involved with me in the search and recruitment
process for the new non-executive directors. I would like to thank all the Directors, as well as our advisers, for their
contributions over the past year.
Unsolicited approaches to Shareholders
Each year I warn shareholders about unsolicited approaches, usually by telephone, about their shareholdings. There is nothing
that we can do to deter or stop these approaches, or the use by callers of Wynnstay’s name or details of shareholdings. Once
again, I would urge all shareholders to be vigilant. On Wynnstay’s website (www.wynnstayproperties.co.uk), shareholders will
also find a warning and a link to other information about unsolicited approaches regarding shares on the Financial Conduct
Authority’s website (www.fca.org.uk/consumers/ scams).
Annual General Meeting
Our Annual General Meeting will be held on Thursday 13th July 2017 commencing at 11.30. This year, it is to be held at the
company’s registered office which is at our auditors, Moore Stephens LLP, 150 Aldersgate Street, London EC1A 4AB. Coffee
will be available from 11.00.
As always, I urge Shareholders to come to London for this event so that they can meet the Board and other Shareholders
informally to discuss the Company’s affairs as well as to take part in the formal business.
You will note from the notice of meeting on page 36 that, in addition to routine business, there are two additional resolutions
before the meeting this year.
– 7 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
These resolutions would give the Board authority, limited in both amount (5% of share capital) and time (December 2018 at
the latest) to issue shares, including shares held in Treasury, and to do so without first offering them to existing shareholders.
This authority is commonly sought in public companies as it is a potentially useful additional way of financing part of the
costs of an acquisition if this suits the vendor. A specific reason for the authority in our case is that our Managing Director,
Paul Williams, has expressed interest in receiving any future bonuses in shares. Although he could seek to purchase shares in
the market, our shares are often not readily available in the market so it is useful for the Board to have the authority to issue
shares directly to Paul as well as, if he wishes, to Toby Parker. Whilst an acquisition of shares in this way will not provide the
tax benefits associated with a share incentive scheme which I have mentioned above, it is a sign of Paul’s confidence in and
commitment to the Company that he has expressed this interest in aligning his financial interests with those of the Company
and of all other shareholders.
Philip G.H. Collins
Chairman
14 June 2017
– 8 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2017
The Directors present their One Hundred and Thirty First Annual Report, together with the audited Financial
Statements of the Company for the year ended 25th March 2017.
Please refer to the Strategic Report on page 13 for the activities and the likely future developments of the
Company and a discussion of the risks and uncertainties. Please refer to note 18 of the financial statements for
further disclosure of the financial risks.
Profit for the Year
The profit for the year after taxation amounted to £2,797,000 (2016: £1,796,000). Details of movements in
reserves are set out in the statement of changes in equity on page 18.
Dividends
The Directors have decided to recommend a final dividend of 10.25 pence per share for the year ended 25th March
2017 payable on 21st July 2017 to those shareholders on the register on 23rd June 2017. This dividend, together
with the interim dividend of 5.5 pence paid on 23rd December 2016, represents a total for the year of 15.75 pence
(2016 – 13.2 pence).
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law
the Directors have elected to prepare the financial statements in accordance with IFRS as adopted by the
European Union and applicable law. The financial statements must, in accordance with IFRS as adopted by
the European Union, present fairly the financial position and performance of the Company; such references
in the UK Companies Act 2006 to such financial statements giving a true and fair view are references to their
achieving a fair presentation. Under Company law directors must not approve the financial statements unless
they are satisfied that they give a true and fair view. In preparing these financial statements, the directors are
required to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether the financial statements have been prepared in accordance with IFRS as adopted by the
European Union;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation in other jurisdictions.
– 9 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2017 (continued)
Directors
The Directors holding office during the financial year under review and their beneficial and non-beneficial
interests in the ordinary share capital of the Company at 25th March 2017 and 25th March 2016 are shown below:
Ordinary Shares of 25p
25.3.16
25.3.17
P.G.H. Collins
C.P. Williams
C.H. Delevingne
T.J. Nagle
T.J.C. Parker
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Finance Director and Secretary
850,836
10,212
5,000
13,000
15,583
850,836
9,412
5,000
13,000
15,250
The interests shown above in respect of Mr. P.G.H. Collins include non-beneficial interests of 217,983 shares at
25th March 2017 and 2016.
Mr. C.P. Williams and Mr T.J.C. Parker each have a service agreement with the Company. Under the respective
terms thereof, their employment is subject to six months’ notice of termination by either party.
In accordance with the Company’s Articles of Association, Mr. P.G.H. Collins retires by rotation and, being
eligible, offers himself for re-election.
Brief biographies of each of the Directors appear on page 39.
Directors’ Emoluments
Directors’ emoluments for the year ended 25th March 2017 are set out below:-
P.G.H. Collins
C.P. Williams
C.H. Delevingne
T.J. Nagle
T.J.C.Parker
Total 2017
Total 2016
Salaries
–
140,360
–
–
–
Fees
40,000
15,000
15,000
15,000
15,000
Pension
–
11,536
–
–
5,000
Benefits
–
3,248
–
–
–
Total
2017
40,000
170,144
15,000
15,000
20,000
Total
2016
33,528
165,929
11,994
11,994
16,994
£140,360
£100,000
£16,536
£3,248
£260,144
£109,867
£81,504
£45,987
£3,081
£240,439
The above figures include discretionary bonus payments determined by the Board to reflect performance
during the year of £25,000 to Mr C.P.Williams and £5,000 to Mr T.J.C. Parker.
A company owned and controlled by Mr T.J.C. Parker, was paid a fee of £43,697 (2016: £41,617) for services
rendered during the year (see note 20).
Directors’ and Officers’ Liability Insurance
The Company has maintained Directors’ and Officers’ insurance as permitted by the Companies Act 2006.
– 10 –
10
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2017 (continued)
Substantial Interests
As at 13th June 2017, the Directors have been notified or are aware of the following interests, which are in
excess of three per cent of the issued ordinary share capital of the Company:
No. of Ordinary
Shares of 25p
Percentage of
Issued Share
Capital 2017
Percentage of
Issued Share
Capital 2016
Mr P.G.H. Collins
850,836
Mr D. Gibson
98,878
Mr G. Gibson
243,192
31.38%
3.65%
8.97%
31.38%
3.5%
8.82%
Corporate Governance
The Board of Directors is accountable to Shareholders for the good corporate governance of the Company
under the AIM rules for companies. The Company is not required to comply and therefore does not comply
with the UK Corporate Governance Code. However, the Board is aware of the best practice defined by the
Code and has adopted procedures to the extent considered appropriate.
• The Company is headed by an effective Board of Directors.
• There is a clear division of responsibilities in running the Board and running the Company’s business.
• In the financial year, the Board comprised two executive and three non-executive Directors, including the
Chairman. In view of the size of the company, the Board appointed the Chairman and Mr C.H. Delevingne
to undertake the selection of consultants and to work with them on the selection of new non-executive
directors. The procedure for the appointment of new directors is determined by the Board as required by the
circumstances. As a result of this process, two additional non-executive Directors were appointed after the end
of the financial year.
• The Board receives and reviews on a regular basis financial and operating information appropriate to the
Directors being able to discharge their duties. An annual budget is approved by the Board and a revised forecast
is prepared at the half year stage. Cash flow and other financial performance indicators are monitored monthly
against budget.
• Directors submit themselves for re-election every three years by rotation in accordance with the Articles of
Association.
• The Board welcomes communication from the Company’s Shareholders and positively encourages their
attendance at the Annual General Meeting.
• In view of the current size of the Company and its Board the establishment of an audit committee or an internal
audit department would be inappropriate. However, the auditors have direct access to the non-executive
Chairman.
Remuneration Committee
The Board currently acts as the remuneration committee, with the non-executive Directors determining the
remuneration of the executive Directors, and the details of the Directors’ emoluments being set out on page
10 of this report. It is the Company’s policy that the remuneration of Directors should be commensurate with
services provided by them to the Company.
10
– 11 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2017 (continued)
Going Concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in existence
for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the
financial statements.
Internal Control
The Directors are responsible for the Company’s system of internal financial control, which is designed
to provide reasonable, but not absolute, assurance against material misstatement or loss. In fulfilling these
responsibilities, the Board has reviewed the effectiveness of the system of internal financial control. The
Directors have established procedures for planning and budgeting and for monitoring, on a regular basis, the
performance of the Company.
Statement as to Disclosure of Information to Auditors
Each of the persons who are Directors at the time when this report is approved has confirmed that:
• so far as each Director is aware, there is no relevant audit information of which the Company’s auditors are
unaware; and
• each Director has taken all the steps that ought to have been taken as a Director, including making
appropriate enquiries of fellow Directors and the Company’s auditors for that purpose, in order to be aware
of any information needed by the Company’s auditors in connection with preparing their report and to
establish that the Company’s auditors are aware of that information.
Annual General Meeting
The Notice of the Annual General Meeting, to be held on Thursday 13th July 2017, is set out on page 36.
By Order of the Board,
T.J.C. Parker
Secretary
14th June 2017
– 12 –
WYNNSTAY PROPERTIES PLC
STRATEGIC REPORT 2017
The Directors present their Strategic Report for the year ended 25th March 2017.
Principal Activity
The principal activity of the Company during the year continued to be that of Property Owners, Developers
and Managers.
Business Review, Performance Indicators and Risks
A review of the business for the year and of the future prospects of the Company is included in the
Chairman’s Statement on pages 4 to 8. The financial statements and notes are set out on pages 15 to 34.
The key performance indicators for the Company are those relating to the underlying movement in both rental
income and in the value of its property investments as set out below:
• Increase in rental income: 14.0% (2016: increase of 6.9%).
•
Increase in net asset value per share: 15.4% (2016: increase of 10.1%).
The Directors will continue to search for profitable investment opportunities, and make changes to enhance
the value of the portfolio as and when such opportunities arise.
The principal risks and uncertainties are those associated with the commercial property market, which is
cyclical by its nature and include changes in the supply and demand for space as well as the inherent risk
of tenant failure. In the latter case, the Company seeks to reduce this risk by requiring the payment of
rent deposits when considered appropriate. Other risk factors include changes in legislation in respect of
taxation and the obtaining of planning consents, etc. as well as those associated with financing and treasury
management. The Company’s risk management objectives can be found at note 18 of the financial statements.
This Strategic Report was approved by the Board and signed on its behalf by:
T.J.C. Parker
Director
14th June 2017
– 13 –
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF WYNNSTAY PROPERTIES PLC
We have audited the financial statements of Wynnstay Properties Plc for the year ended 25th March 2017 which
are set out on pages 15 to 34. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 9, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate .
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the company’s affairs as at 25th March 2017 and of its profit for the
year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information based on the work undertaken in the course of the audit given in the Directors’
Report and the Strategic Report for the financial year for which the financial statements are prepared is
consistent with the financial statements, and these reports have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the Strategic Report or Directors’ Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Paul Fenner, Senior Statutory Auditor
For and on behalf of Moore Stephens LLP, Statutory Auditor
150 Aldersgate Street
London EC1A 4AB
14th June 2017
– 14 –
– 15 –
STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
Property Income
Property Costs
Administrative Costs
Movement in Fair Value of:
Investment Properties
Profit on Sale of Investment Property
Operating Income
Investment Income
Finance Costs
Income before Taxation
Taxation
Income after Taxation
Basic and diluted earnings per share
Notes
2
3
9
5
5
6
8
The company has no items of other comprehensive income.
2017
£’000
2,028
(131)
(528)
1,369
2,199
–
3,568
3
(373)
3,198
(401)
2,797
2016
£’000
1,778
(122)
(462)
1,194
946
127
2,267
4
(320)
1,951
(155)
1,796
103.1p
66.2p
– 15 –
– 15 –
WYNNSTAY PROPERTIES PLC
STATEMENT OF FINANCIAL POSITION 25TH MARCH 2017
2017
£’000
29,515
3
29,518
455
1,075
1,530
(1,039)
(195)
(1,234)
296
29,814
(11,340)
(209)
(11,549)
18,265
789
(1,570)
1,135
205
17,706
18,265
2016
£’000
25,230
3
25,233
319
1,383
1,702
(941)
(180)
(1,121)
581
25,814
(9,972)
(3)
(9,975)
15,839
789
(1,570)
1,135
205
15,280
15,839
Notes
9
12
13
14
15
16
17
Non Current Assets
Investment Properties
Investments
Current Assets
Accounts Receivable
Cash and Cash Equivalents
Current Liabilities
Accounts Payable
Income Taxes Payable
Net Current Assets
Total Assets Less Current Liabilities
Non-Current Liabilities
Bank Loans Payable
Deferred Tax Payable
Net Assets
Capital and Reserves
Share Capital
Treasury Shares
Share Premium Account
Capital Redemption Reserve
Retained Earnings
Approved by the Board and authorised for issue on 14th June 2017
P.G.H. Collins
Chairman
T.J.C. Parker
Finance Director
– 16 –
WYNNSTAY PROPERTIES PLC
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25TH MARCH 2017
Cashflow from operating activities
Income before taxation
Adjusted for:
Amortisation of deferred finance costs
Increase in fair value of investment properties
Interest income
Interest expense
Profit on disposal of investment properties
Changes in:
Trade and other receivables
Trade and other payables
Cash generated from operations
Income taxes paid
Interest paid
2017
£’000
3,198
28
(2,199)
(3)
373
–
(136)
99
1,360
2016
£’000
1,951
9
(946)
(4)
320
(127)
171
(146)
1,228
(181)
(345)
(197)
(320)
Net cash from operating activities
834
711
Cashflow from investing activities
Interest and other income received
Purchase of investment properties
Sale of investment properties
Net cash from investing activities
Cashflow from financing activities
Dividends paid
Drawdown on bank loans
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
3
(2,086)
–
(2,083)
(371)
1,312
941
(308)
1,383
1,075
4
(2,739)
362
(2,373)
(347)
2,342
1,995
333
1,050
1,383
– 17 –
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
YEAR ENDED 25TH MARCH 2017
Share
Capital
£ 000
789
–
–
Capital
Redemption
Reserve
Share
Premium
Account
Treasury
Shares
Retained
Earnings
£ 000
£ 000
£ 000
£ 000
Total
£ 000
205
1,135
(1,570)
15,280
15,839
–
–
–
–
–
–
2,797
(371)
2,797
(371)
Balance at 26th March 2016
Total comprehensive
income for the year
Dividends – note 7
Balance at 25th March 2017
789
205
1,135
(1,570)
17,706
18,265
YEAR ENDED 25TH MARCH 2016
Share
Capital
£ 000
Capital
Redemption
Reserve
Share
Premium
Account
Treasury
Shares
Retained
Earnings
£ 000
£ 000
£ 000
£ 000
Total
£ 000
Balance at 26th March 2015
789
205
1,135
(1,570)
13,831
14,390
Total comprehensive
income for the year
Dividends – note 7
–
–
–
–
–
–
–
–
1,796
(347)
1,796
(347)
Balance at 25th March 2016
789
205
1,135
(1,570)
15,280
15,839
– 18 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
1.
BASIS OF PREPARATION, ACCOUNTING POLICIES AND ESTIMATES
Wynnstay Properties Plc is a public limited company incorporated and domiciled in England and
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.
1.1 Basis of Preparation
The financial statements 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 and financial assets
measured at fair value through profit or loss, and investments.
The financial statements comprise the results of the Company drawn up to 25th March each year.
(a) New Interpretations and Revised Standards Effective for the year ended 25th March 2017
The Directors have adopted all new and revised standards and interpretations issued by the
International Accounting Standards Board (“IASB”) and the International Financial Reporting
Interpretations Committee (“IFRIC”) of the IASB and adopted by the EU that are relevant to the
operations and effective for accounting periods beginning on or after 26th March 2016. The adoption
of these interpretations and revised standards had the following impact on the disclosures and
presentation of the financial statements:
IAS 40 Investment Property
The amendment to the standard clarifies that judgement is required over whether the acquisition of an
investment property is an acquisition of an asset or a business combination that falls within the scope
of IFRS 3. The amendment will prospectively impact the accounting treatment for the acquisition of
investment property which falls under the scope of business combinations.
The Company has evaluated its investment property acquisitions during the year ended 25th March
2017 and has not identified any transactions which fall within the scope of business combinations. The
investment properties acquired during the year are disclosed in note 9 .
(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 as well as a number of new standards 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. The
following standards may have a minor impact:
– 19 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
IFRS 9: Financial Instruments
The standard makes substantial changes to the measurement of financial assets and financial liabilities
and derecognition of financial assets. There will only be three categories of financial assets whereby
financial assets are recognised at either fair value through profit and loss, fair value through other
comprehensive income or measured at amortised cost. On adoption of the standard, the Group will
have to re-determine the classification of its financial assets based on the business model for each
category of financial asset. This is not considered likely to give rise to any significant adjustments.
The principal change to the measurement of financial assets measured at amortised cost or fair value
through other comprehensive income is that impairments will be recognised on an expected loss basis
compared to the current incurred loss approach. As such, where there are expected to be credit losses
these are recognised in profit or loss. For financial assets measured at amortised cost the carrying
amount of the asset is reduced for the loss allowance. For financial assets measured at fair value
through other comprehensive income the loss allowance is recognised in other comprehensive income
and does not reduce the carrying amount of the financial asset.
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 or loss, for example derivative
financial instruments, with changes in the liabilities’ credit risk recognised in other comprehensive
income.
The standard is effective for periods beginning on or after 1 January 2018.
IFRS 15 – Revenue from contracts with customers
The standard has been developed to provide a comprehensive set of principles in presenting the nature,
amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.
The standard is based around five steps in recognising revenue:
Identify the contract with the customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price
Recognise revenue when a performance obligation is satisfied
On application of the standard the disclosures are likely to increase. The standard includes principles
on disclosing the nature, amount, timing and uncertainty of revenue and cash flows arising from
contracts with customers, by providing qualitative and quantitative information.
The Company has not as yet evaluated the full extent of the impact that the standard will have on its
financial statements, however the effect is not considered likely to be material.
The standard is effective for periods beginning on or after 1 January 2018.
– 20 –
– 21 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
IFRS 16 – Leases
The standard makes substantial changes to the recognition and measurement of leases by lessees.
On adoption of the standard, lessees, with certain exceptions for short term or low value leases,
will be required to recognise all leased assets on their balance sheet as ‘right-of-use assets’ with a
corresponding lease liability. This is likely to significantly increase the asset and liability balances
recognised in the balance sheet..
In addition to the re-measurements required, on application of the standard, the disclosures are likely to
increase. The standard includes principles on disclosing the nature, amount, timing and variability of
lease payments and cash flows, by providing qualitative and quantitative information.
The requirements for lessors are substantially unchanged although the disclosures are also likely to
increase.
The Company has not as yet evaluated the full extent of the impact that the standard will have on its
financial statements, however the effect is not considered likely to be material.
The standard is effective for periods beginning on or after 1 January 2019 but is yet to be endorsed by
the EU.
– 21 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
1.2 ACCOUNTING POLICIES
Investment Properties
All the Company’s investment properties are revalued annually and stated at fair value at 25th March.
The aggregate of any resulting surpluses 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.
Investment properties are recognised as acquisitions or disposals based on the date of contract
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.
Other plant and equipment is recognised at cost and depreciated on a straight line 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
profit or loss in the year of disposal.
Property Income
Property income is recognised on a straight line basis over the period of the lease. 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 available against which deductible temporary
differences can be utilised.
– 22 –
– 23 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
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 profit or loss, including deferred tax on the revaluation of investment property.
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 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 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.
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.
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.
1.3
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 which are revalued annually by the
Company’s independent valuers.
There are no judgemental areas identified by management that could have a material effect on the
financial statements at the reporting date.
– 23 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
2. PROPERTY COSTS
Empty rates
Property management
Legal fees
Agents fees
3. ADMINISTRATIVE COSTS
Rents payable – operating lease rentals
General administration, including staff costs
Auditors’ remuneration: Audit fees
Tax services
4. STAFF COSTS
Staff costs, including Directors, during the year were as follows:
Wages and salaries
Social security costs
Other pension costs
2017
£’000
1
65
66
40
25
131
2017
£’000
25
465
32
6
528
2017
£’000
244
23
17
284
2016
£’000
41
35
76
25
21
122
2016
£’000
21
405
32
4
462
2016
£’000
195
20
46
261
Details of Directors’ emoluments, totaling £260,144 (2016: £240,439), are shown in the Directors’ Report
on page 10. There are no other key management personnel.
The average number of employees, including Directors,
engaged wholly in management and administration was:
The number of Directors for whom the Company paid pension benefits
during the year was:
2017
No.
5
2
2016
No.
5
2
– 24 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
5. FINANCE COSTS (NET)
Interest payable on bank loans
Less: Bank interest receivable
6. TAXATION
(a) Analysis of the tax charge for the year:
UK Corporation tax at 20% (2016: 20%)
Overprovision in previous year
Total current tax charge
Deferred tax – temporary differences
Tax charge for the year
(b) Factors affecting the tax charge for the year:
Net Income before taxation
Current Year:
Corporation tax thereon at 20% (2016 - 20%)
Expenses not deductible for tax purposes
Excess of capital allowances over depreciation
Investment gain on fair value not taxable
Investment gain not taxable
Other timing differences
Overprovision in previous year
Current tax charge
7. DIVIDENDS
Final dividend paid in year of 8.2p per share
(2016: 7.8p per share)
Interim dividend paid in year of 5.5p per share
(2016: 5.0p per share)
2017
£’000
373
(3)
370
2017
£’000
195
–
195
205
401
2016
£’000
320
(4)
316
2016
£’000
180
(28)
152
3
155
3,198
1,951
640
14
(2)
(440)
–
(16)
–
195
2017
£’000
222
149
371
390
7
(3)
(189)
(25)
3
(28)
155
2016
£’000
212
135
347
The Board recommends the payment of a final dividend of 10.25p per share, which will be recorded in the
Financial Statements for the year ending 25th March 2018.
– 25 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
8. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing Income after Taxation attributable to Ordinary
Shareholders of £2,797,000 (2016: £1,796,000) by the weighted average number of 2,711,617 (2016:
2,711,617) ordinary shares in issue during the period excluding shares held as treasury. There are no
instruments in issue that would have the effect of diluting earnings per share.
9. INVESTMENT PROPERTIES
Investment Properties
Balance at 25th March 2016
Additions
Disposals
Revaluation Surplus
Balance at 25th March 2017
2017
£’000
25,230
2,086
–
27,316
2,199
29,515
2016
£’000
21,780
2,739
(235)
24,284
946
25,230
The Company’s freehold investment properties are carried at fair value as at 25th March 2017. The fair
value of the properties has been calculated by independent valuers, BNP Paribas Real Estate, on the basis
of market value, defined as:
“The estimated amount for which a property should exchange on the date of valuation between a willing
buyer and a willing seller in an arm’s-length transaction, after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion.”
These recurring fair value measurements for non-financial assets use inputs that are not based on observable
market data, and therefore fall within level 3 of the fair value hierarchy.
The significant unobservable market data used is property yields which range from 5.51% to 9.66%, with an
average yield of 7.44% and an average weighted yield of 6.75% for the portfolio.
There have been no transfers between levels of the fair value hierarchy. Movements in the fair value are
recognised in profit or loss.
A 0.5% increase or decrease in the yield would result in a corresponding decrease or increase of £1.78
million in the fair value movement through profit or loss.
– 26 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
10. OTHER PROPERTY, PLANT AND EQUIPMENT
Cost
Balance at 25th March 2016 and 25th March 2017
Depreciation
Balance at 25th March 2016
Charge for the Year
Balance at 25th March 2017
Net Book Values at 25th March 2016
and 25th March 2017
11. OPERATING LEASES RECEIVABLE
The following are the future minimum lease
payments receivable under non-cancellable
operating leases which expire:
Not later than one year
Between 2 and 5 years
Over 5 years
2017
£’000
2016
£’000
47
47
–
47
–
2017
£’000
2,026
4,061
245
6,332
47
47
–
47
–
2016
£’000
1,696
3,719
654
6,069
Rental income under operating leases recognised through profit or loss amounted to £2,028,000 (2016:
£1,778,000).
Typically, the properties were let for a term of between 5 and 10 years at a market rent with rent reviews
every 5 years. The above maturity analysis reflects future minimum lease payments receivable to the next
break clause in the operating lease. The properties are generally leased on terms where the tenant has the
responsibility for repairs and running costs for each individual unit with a service charge payable to cover
common services provided by the landlord on certain properties.
– 27 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
12. INVESTMENTS
Quoted investments
13. ACCOUNTS RECEIVABLE
Trade receivables
Other receivables
2017
£’000
3
2017
£’000
451
4
455
2016
£’000
3
2016
£’000
316
3
319
Trade receivables include an allowance for bad debts of £nil (2016: nil). Trade receivables of
£10,000 (2016: £13,000) are considered past due but not impaired.
14. ACCOUNTS PAYABLE
Trade payables
Other creditors
Accruals and deferred income
15. BANK LOANS PAYABLE
Non-current position
Less: deferred finance costs
2017
£’000
7
134
898
1,039
2017
£’000
11,340
–
11,340
2016
£’000
24
129
788
941
2016
£’000
10,000
(28)
9,972
In December 2016, a new five year facility comprising both a Fixed Rate Facility and a Revolving Credit
Facility was entered into providing a total credit facility of £11.34 million. Interest was charged at 3.35%
per annum over LIBOR for the Fixed Rate Facility of £10million and 2.49% over 3 month LIBOR for the
Revolving Credit Facility of £1.34million.
The loan is repayable in one instalment on 18 December 2021. The bank loan includes the following
financial covenants:
• Rental income shall not be less than 2.25 times the interest costs
• The bank loan shall at no time exceed 50% of the market value of the properties secured.
– 28 –
– 29 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
15. BANK LOANS PAYABLE (Continued)
The borrowing facility is secured by fixed charges over the freehold land and buildings owned by the
Company, which at the year end had a combined value of £29,515,000 (2016: £25,230,000). The undrawn
element of the borrowing facility available at 25th March 2017 was £nil (2016: nil).
16. DEFERRED TAX
A deferred tax liability of £209,000 has been recognised in respect of the investment properties (2016: £3,000).
17. SHARE CAPITAL
Authorised
2017
£’000
2016
£’000
8,000,000 Ordinary Shares of 25p each:
2,000
2,000
Allotted, Called Up and Fully Paid
3,155,267 Ordinary shares of 25p each
789
789
All shares rank equally in respect of Shareholder rights.
In March 2010, the company acquired 443,650 Ordinary shares of Wynnstay Properties Plc from Channel
Hotels and Properties Ltd at a price of £3.50 per share. These shares, representing in excess of 14% of the
total shares in issue, are held in Treasury.
– 29 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
18. 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 2017 the Company’s financial instruments comprised borrowings, cash and cash equivalents,
short term receivables and short term payables. 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. 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 regularly and appropriate action is taken to recover monies owed or, if
necessary, to terminate the lease. Funds are invested and loan transactions contracted only with banks and
financial institutions with a high credit rating.
The Company 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 exists to the extent that at 25th March 2017 and 2016, 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 2017 was £1,075,000 (2016:
£1,383,000).
Currency Risk
As all of the Company’s assets and liabilities are denominated in Pounds Sterling, there is no exposure to
currency risk.
Interest Rate Risk
The Company is exposed to cash flow interest rate risk as it currently borrows at floating interest rates. The
Company monitors and manages its interest rate exposure on a periodic basis but does not take out financial
instruments to mitigate the risk. The Company finances its operations through a combination of retained
profits and bank borrowings.
Liquidity Risk
The Company seeks to manage liquidity risk to ensure sufficient funds are available to meet the requirements
of the business and to invest cash assets safely and profitably. The Board reviews available cash to ensure
there are sufficient resources for working capital requirements.
– 30 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
18. FINANCIAL INSTRUMENTS (Continued)
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:
0.5% decrease
in interest rates
0.5% increase
in interest rates
Impact on interest payable - gain/(loss)
Impact on interest receivable - (loss)/gain
Total impact on pre tax profit and equity
2017
£'000
7
(5)
2
2016
£'000
50
(7)
43
2017
£'000
(7)
5
(2)
The net exposure of the Company to interest rate fluctuations was as follows:
Floating rate borrowings (bank loans)
Less: cash and cash equivalents
2017
£'000
(1,340)
1,075
(265)
2016
£'000
(50)
7
(43)
2016
£'000
(10,000)
1,383
(8,617)
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.
Interest bearing borrowings (note 15)
2017
Book Value
£’000
(11,340)
2017
Fair Value
£’000
(11,340)
2016
Book Value
£’000
(9,972)
2016
Fair Value
£’000
(9,998)
Total
(11,340)
(11,340)
(9,972)
(9,998)
– 31 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
18. FINANCIAL INSTRUMENTS (Continued)
Categories of Financial Instruments
Financial assets:
Quoted investments
Loans and receivables
Cash and cash equivalents
Total financial assets
Non-financial assets
Total assets
Financial liabilities at amortised cost
Total liabilities
Shareholders’ equity
Total shareholders’ equity and liabilities
2017
£’000
3
455
1,075
1,533
29,515
31,048
2016
£’000
3
319
1,383
1,705
25,230
26,935
12,574
11,096
12,783
18,265
31,048
11,096
15,839
26,935
The only financial instruments measured subsequent to initial recognition at fair value as at 25th March are
quoted investments. These are included in level 1 in the IFRS 7 hierarchy as they are based on quoted prices
in active markets.
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 total net debt 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 comprise total borrowings less cash and cash equivalents. The Company’s policy is
that the loan to value ratio should not exceed 50% and the gearing ratio should not exceed 100%.
Net borrowings and overdraft
Cash and cash equivalents
Net borrowings
Shareholders’ equity
Investment properties
Loan to value ratio
Net gearing ratio
– 32 –
2017
£'000
11,340
(1,075)
10,265
18,265
29,515
34.8%
56.2%
2016
£'000
9,972
(1,383)
8,589
15,839
25,230
34.0%
54.2%
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
19. COMMITMENTS UNDER OPERATING LEASES
Future rental commitments at 25th March 2017 under non-cancellable operating leases are as follows:-
Within one year
Between two to five years
2017
£’000
28
28
56
2016
£’000
24
28
52
20. RELATED PARTY TRANSACTIONS
The Company has entered into an agreement with T.J.C.P. Consultants Ltd, a company owned and controlled
by T.J.C. Parker which during the year was paid £43,697 (2016: £41,617). There were no other related party
transactions other than with the Directors, which have been disclosed under Directors’ Emoluments in the
Directors’ Report on page 8.
– 33 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2017
WYNNSTAY PROPERTIES PLC
21. SEGMENTAL REPORTING
Industrial
Retail
Office
Total
2017
2016
2017
2016
2017
2016
2017
2016
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
1,298
1,145
1,253
773
465
24
245
15
335
1,030
280
158
2,028
2,199
1,778
946
Rental Income
Profit/(loss) on property
investments at fair value
Total income and gain/(loss)
2,443
2,027
489
260
1,295
437
4,227
2,724
Property expenses
(131)
(122)
–
–
–
–
(131)
(122)
Segment profit/(loss)
2,312
1,905
489
260
1,295
437
4,096
2,602
Unallocated corporate
expenses
Profit on sale of
investment property
Operating income
Interest expense (all relating
to property loans)
Interest income and
other income
Income before taxation
–
–
–
127
–
–
–
127
(528)
(462)
3,568
2,267
(373)
(320)
3
4
3,198
1,951
Other information
Industrial
Retail
Office
Total
2017
2016
2017
2016
2017
2016
2017
2016
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Segment assets
18,483
16,117
5,915
5,025
5,118
4,088
29,515
25,230
Segment assets held
as security
18,483
16,117
5,915
5,025
5,118
4,088
29,515
25,230
– 34 –
WYNNSTAY PROPERTIES PLC
FIVE YEAR FINANCIAL REVIEW
Years Ended 25th March:
2017
£’000
2016
£’000
STATEMENT OF COMPREHENSIVE INCOME
Property Income
Profit before movement in fair value of
investment properties and taxation
Income before Taxation
Income/(Loss) after Taxation
2,028
999
3,198
2,797
1,778
878
1,951
1,796
IFRS
2015
£’000
1,663
899
2,429
2,219
2014
£’000
2013
£’000
1,609
1,011
1,181
946
1,628
1,103
166
(193)
STATEMENT OF FINANCIAL POSITION
Investment Properties
Equity Shareholders’ Funds
29,515
18,265
25,230
15,839
21,780
14,390
18,515
12,499
17,700
11,873
PER SHARE
Basic earnings
Dividends paid and proposed
Net Asset Value
103.1p
15.75p
674p
66.2p
13.2p
584p
81.8p
12.3p
531p
34.9p
11.8p
461p
(7.1p)
10.8p
438p
– 35 –
WYNNSTAY PROPERTIES PLC
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the one hundred and thirty first ANNUAL GENERAL MEETING of the
Members of Wynnstay Properties PLC will be held at Moore Stephens LLP, 150, Aldersgate Street, London
EC1A 4AB on Thursday, 13th July 2017, at 11.30 a.m.. The business of the meeting will be to consider and, if
thought fit, to pass the following ordinary and special resolutions.
ORDINARY RESOLUTIONS
1 To receive the Report of the Directors and the Financial Statements for the year ended 25th March 2017.
2 To declare a final dividend for the year ended 25th March 2017of 10.25 pence per ordinary share.
3 To fix the remuneration of the Directors.
4 To reappoint Moore Stephens LLP as auditors of the Company, to hold office from the conclusion of the
annual general meeting until the conclusion of the next annual general meeting of the Company and to
authorise the Directors to determine their remuneration.
5 To re-elect as a Director of the Company Paul Mather, who retires and offers himself for re-election.
6 To re-elect as a Director of the Company Caroline Tolhurst, who retires and offers herself for re-election.
7 To re-elect as a Director of the Company Philip G.H. Collins, who retires and offers himself for
re-election.
8 That the Directors of the Company are generally and unconditionally authorised for the purposes of
section 551 of the Companies Act 2006 (the “Act”), in substitution for all previous authorisations, to
exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe
for or convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount
of £39,440.75, and this authorisation shall, unless previously revoked by resolution of the Company,
expire on 31 December 2018 or, if earlier, at the conclusion of the annual general meeting of the
Company to be held in 2018. The Company may, at any time before such expiry, make offers or enter into
agreements which would or might require shares to be allotted or Rights to be granted after such expiry
and the Directors may allot shares or grant Rights in pursuance of any such offer or agreement as if this
authorization had not expired.
– 36 –
– 37 –
WYNNSTAY PROPERTIES PLC
NOTICE OF MEETING
SPECIAL RESOLUTIONS
9 That the Directors of the Company are empowered (i) pursuant to section 570 of the Act to allot equity
securities (within the meaning of section 560 of the Act) for cash pursuant to the authorisation conferred
by Resolution 8 above and (ii) pursuant to section 573 of the Act to allot equity securities (within the
meaning of section 560(3) of the Act), in each case as if section 561 of the Act did not apply to the
allotment, provided that this power shall be limited to:
(a) The allotment of equity securities in connection with an offer of, or invitation to apply for, equity
securities made (i) to holders of ordinary shares in the Company in proportion (as nearly as many
as practicable) to the respective number of ordinary shares held by them on the record date for such
offer and (ii) to holders of other equity securities as may be required by the rights attached to those
securities or, if the Directors consider it desirable, as may be permitted by such rights, but subject in
each case to such exclusions or other arrangements as the Directors may deem necessary or expedient
in relation to treasury shares, fractional entitlements, record dates or legal or practical problems in or
under the laws of any territory or the requirements of any regulatory body or stock exchange; and
(b) The allotment (otherwise than pursuant to paragraph (a) above) of further equity securities up to any
aggregate nominal amount of £39,440.75,
and this power shall, unless previously revoked by resolution of the Company, expire on 31 December
2018 or, if earlier, at the conclusion of the annual general meeting of the Company to be held in 2018. The
Company may, at any time before the expiry of this power, make offers or enter into agreements which
would or might require equity securities to be allotted after such expiry and the Directors may allot equity
securities in pursuance of any such offer or agreement as if this power had not expired.
Registered Office:
150 Aldersgate Street
London EC1A 4AB
By Order of the Board,
T. J. C. Parker
Secretary
14th June 2017
– 37 –
WYNNSTAY PROPERTIES PLC
NOTICE OF MEETING
Notes:
1. A Member entitled to attend and vote at the Meeting may appoint one or more proxies to attend, speak and
vote in their stead. The proxy need not be a Member of the Company. To be effective, completed forms
of proxy and the power of attorney or other authority (if any) under which they are signed or a copy of
that power or authority certified notarially or in accordance with the Powers of Attorney Act 1971 must
be lodged at the office of the Company’s registrars, Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU at least 48 hours before the time appointed for the Meeting. A form of proxy
is enclosed.
2. Completion and return of a form of proxy will not preclude a member from attending and voting at the
3.
meeting in person should he wish to do so.
In the case of joint shareholders, the vote of the senior who tenders a vote, whether in person (including
by corporate representative) or by proxy, shall be accepted to the exclusion of the votes of the other joint
shareholders. Seniority is determined by the order in which the names of the joint holders appear in the
Company’s register of members.
4. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that
only those shareholders registered in the register of members of the Company as at 11.30 a.m. on 11th July
2017 shall be entitled to attend or vote at the Annual General Meeting in respect of the number of ordinary
shares registered in their name at that time. Changes to entries on the relevant register of securities after
11.30 a.m. on 11th July 2017 shall be disregarded in determining the rights of any person to attend or vote
at the Meeting.
5. Copies of the service agreements under which Directors of the Company are employed by the Company
will be available for inspection at the Company’s registered office during normal business hours on any
weekday from the date of this Notice until the date of the Annual General Meeting and for 15 minutes
prior to and during the Meeting.
– 38 –
WYNNSTAY PROPERTIES PLC
BIOGRAPHIES OF THE DIRECTORS
Philip G.H. Collins CBE (Non-Executive Chairman) aged 69, is a Solicitor and was Chairman of the
Office of Fair Trading from 2005 to 2014. He was formerly a partner in an international firm based in the City
where he specialised in E.U. law, with particular emphasis on competition issues. Previously, after practising
for some years in the corporate and commercial field, he was seconded for a period to work as Chief Legal
Adviser in an industrial group. Appointed a Director of Wynnstay Properties in 1988 and elected Chairman in
October 1998.
Paul Williams (Managing Director) aged 59 is a Chartered Surveyor and holds a Degree in Land
Management as well as an MBA. He has spent his entire career in commercial property including a fourteen
year period with MEPC where he held a number of senior positions. Paul has also worked for Lloyds TSB,
Legal & General, GE Pensions and Credit Suisse Asset Management and joined Wynnstay Properties as
Managing Director in February 2006.
Charles H. Delevingne (Non-Executive) aged 67. After spending his early career as a partner with prominent
estate agencies, in 1981 he founded Harvey White Properties Limited, a substantial private commercial
property investment company. Appointed a Director of Wynnstay Properties in June 2002.
Terence J. Nagle (Senior Independent Non-Executive) aged 74, is a Chartered Surveyor who has spent his
entire career in property with companies which include Mobil Oil and Rank Xerox. In 1972 he joined Brixton
Estate and was Property Director from 1984 to 1993 and Managing Director from 1993 to 1997. Appointed a
Director of Wynnstay Properties in October 1998.
Toby J. C. Parker (Finance Director and Company Secretary) aged 62, is a Chartered Accountant who has
worked for a number of small and medium sized companies in a varied number of business sectors both in the
UK and abroad. Appointed a Director of Wynnstay Properties in August 2007.
Paul Mather (Non-Executive) aged 62 is a Chartered Surveyor who has spent his career focused on active
asset management of commercial portfolios and developments in central London. He was a senior director at
BNP Paribas Real Estate for 13 years and group portfolio manager for Greycoat PLC for 17 years.
Caroline M. Tolhurst (Non-Executive) aged 55. is a Chartered Surveyor, and her experience has broadened
into compliance, governance and investment management and she is qualified as a Chartered Secretary. She
was Company Secretary at Grosvenor Limited and NewRiver Retail Limited and compliance officer for
Knight Frank LLP’s regulated businesses.
– 39 –