Wynnstay Properties PLC
Annual Report and Financial Statements
for the year ended 25 March 2019
WYNNSTAY PROPERTIES PLC
Registered number: 00022473
ANNUAL REPORT
and
FINANCIAL STATEMENTS
YEAR ENDED 25TH MARCH 2019
CONTENTS
Directors and Advisers
Summary of Property Portfolio
Chairman’s Statement
Report of the Directors
2
3
4
8
12
Strategic Report
14
Chairman’s Corporate Governance Statement
15
Corporate Governance, Remuneration and Audit Report
20
24
25
26
27
29
44
45
48
Independent Auditor’s Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Five Year Financial Review
Notice of Annual General Meeting
Biographies of the Directors
– 1 –
WYNNSTAY PROPERTIES PLC
(Company incorporated in the United Kingdom)
DIRECTORS
P.G.H. COLLINS C.B.E.
(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. 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
BDO LLP
150 Aldersgate Street, London EC1A 4AB
SOLICITORS
FIELDFISHER LLP
Riverbank House, 2 Swan Lane, London EC4R 3TT
NOMINATED ADVISER & BROKER
PANMURE GORDON (UK) LIMITED
One New Change, London EC4M 9AF
VALUERS
BNP PARIBAS REAL ESTATE ADVISORY &
PROPERTY MANAGEMENT UK LIMITED
5 Aldermanbury Square, London EC2V 7BP
REGISTRARS
LINK ASSET SERVICES
65 Gresham Street, London EC2V 7NQ
BANKERS
C. HOARE & CO.
37 Fleet Street, London EC4P 4DQ
SVENSKA HANDELSBANKEN AB
5 Welbeck Street, London W1G 9YQ
– 2 –
WYNNSTAY PROPERTIES PLC
SUMMARY OF PROPERTY PORTFOLIO
AT 25TH MARCH 2019
Eastern Road
1 Industrial Unit
Quarry Wood Industrial Estate
18 Industrial Units
Crockford Lane
3 Industrial Units
Oakcroft Business Park
3 Industrial Units/Offices
High Street
Offices
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
Development Land
North Street
1 Retail Unit
City Trading Estate
6 Industrial Units
Petersfield Trade Park
6 Industrial Units
Bedford Road
Development Land
Huntingdon Road
St James’ Street
1 Retail Unit
Offices
Bell Lane
4 Industrial Units
Aldershot
Aylesford
Basingstoke
Chessington
Cosham
Hailsham
Heathfield
Hertford
Ipswich
Lewes
Lichfield
Liphook
Midhurst
Norwich
Petersfield
Petersfield
St Neots
Surbiton
Uckfield
Weston-super-Mare
Phillips Road
1 Retail Unit
All the above properties are Freehold.
– 3 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT
I am pleased to report on Wynnstay’s excellent financial performance in the past year, in which we have made
important changes to the portfolio.
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, property sales and taxation
• Earnings per share
• Dividends per share, paid and proposed
• Net asset value per share
• Loan to value ratio
• Gearing ratio
Change
+1.6%
+4.0%
-26.8%
+8.6%
+7.0%
2019
2018
£2,216,000
£2,182,000
£1,196,000
£1,150,000
71.1p
19.0p
807p
35.6%
52.7%
97.1p
17.5p
754p
34.1%
43.1%
Portfolio
Wynnstay’s portfolio is spread principally within the South and East of England. Following the acquisitions and
disposals mentioned later in this statement, we have around 80 tenants occupying over 85 separate properties in 20
locations.
Property rental income rose to just over £2.2 million and was thus at about the same level as last year (2018 - £2.2
million). As you may recall, at this time last year I anticipated that as a result of property disposals already made,
together with the loss of our tenant at Lewes, there might be a reduction in our rental income this year although
I noted that we were continually on the lookout for good opportunities to add to the portfolio. As previously
reported, we were successful in acquiring, at a cost of £4.1 million, an attractive freehold multi-let trade counter
estate of six units at Petersfield which is well-let and generates current net rental income of just over £203,500 per
annum. The income from this acquisition during the second half of the year, together with the prompt reletting of
the Lewes unit and successful rent reviews on some of the smaller properties in the portfolio, has enabled us to
maintain the same level of rental income, even after the further disposal in the latter part of the year of five of our
industrial units at St Neots.
The level of activity in terms of lease renewals, rent reviews and new leases has been slightly lower than in prior
years, providing reassurance of the general stability of our tenant base. As already reported we were successful
in reletting the unit vacated by Carpetright in Lewes to a new tenant under a new ten-year lease, with break
option and upward only rent review after five years, at a market rent which is similar to that being paid by the
previous tenant. We were also able to conclude a new ten-year lease of a large unit at Quarrywood Industrial
Estate, Aylesford to an existing tenant setting a new rental level for the Estate which should provide a valuable
comparable when undertaking rent reviews or granting new leases on the other 17 units in the future.
Last year, and at the half-year, I reported on our successful planning application for the construction of additional
units at Aylesford and to vary the terms to the planning permission in order to be able to carry out the development
in stages and our subsequent decision not to proceed with the project for the time being given uncertainties
in ground conditions and construction costs which impacted the project’s financial viability. I am pleased to
report that we carried out the necessary works to establish formal commencement under the permission that was
necessary to ensure that the planning permission granted remains in effect permanently, so that we can undertake
the project in the future. While doing these necessary works, we were also able to carry out at modest cost certain
– 4 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
initial groundworks which would form part of any future development. This has provided additional parking,
generating further rental income, from an existing tenant on the Estate.
At Liphook, the progress on the planning approval for two new units has been slow. We were advised to
withdraw our original application and submit a new one with a slightly different profile but broadly offering the
same accommodation. We expect to submit a new application, after pre-application advice, in the near future.
In the meantime, the prospective tenant for the new units has continued to confirm his interest in the units when
constructed.
At Basingstoke, we have recently learned that the planning application made by our tenant of two of the units has
been approved. The tenant has an option to acquire the entire site of three units on the terms previously reported
which were renewed at the beginning of April for a further six months. We await their decision on the exercise of
the option.
At Chessington, you will recall that our tenant of all three units decided to transfer their operations to their
parent company’s site in Crawley and therefore exercised the break clauses under the leases of two of their three
units. Following discussions, we mutually agreed with them to extend the date on which the breaks will become
effective to June 2019 to allow them time to organise their vacation of the units. The lease of the third unit runs
until June 2021. The tenants in fact moved out of all three units at the end of April and we are currently in the
course of discussing dilapidations on the two units where the leases will shortly expire. In the meantime, we are
actively marketing new leases of the two units vacated, together with the prospect of an assignment or a new lease
of the third unit, which remains let for another two years.
At Petersfield, we have spent much of the second part of the year preparing a planning application for the adjacent
cleared site next to our trade counter estate which, as previously announced, we acquired with planning consent
for three units for £756,000. We decided to make a new application using a slightly different and more up-to-date
design and configuration that we consider improves the appearance and maximises the use of the units for tenants.
We have keen interest from three national brands, and we are progressing terms in the expectation that we can
have agreements for leases in place for at least two units before construction commences.
Profits and Costs
The profit before movement in fair value of investment properties, property sales and taxation for the year was
£1,196,000 (2018: £1,150,000) and the net profit of £280,000 from the sale of the five units at St Neots is also
reflected in the accounts for the year. We continued to exercise tight control over property and administrative costs
during the year.
Portfolio Valuation
As at 25 March 2019, our Independent Valuers, BNP Paribas Real Estate, have undertaken the annual revaluation
of the company’s portfolio at £35,095,000 representing a revaluation surplus of £771,000. Although this
revaluation surplus is lower than last year, thus also resulting in lower earnings per share of 71.1p (2018: 97.1p),
it reflects the vacation by the tenant of the Chessington units. The revaluation also includes, for the first time, the
acquisitions at Petersfield. The revaluation, which has contributed to a 7.0% increase in net asset value per share,
produced surpluses spread across most of the portfolio, with the greatest percentage surplus being achieved on our
Quarrywood Industrial Estate at Aylesford.
Following the changes in the portfolio during the year, as at the year-end, the industrial sector within the portfolio
accounted for 74% by value, with the retail warehouse and office sectors comprising 6% and 16% respectively
and 2% being in our remaining retail properties together with 2% in development land.
– 5 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
Finance, Borrowings and Gearing
At the year-end, we held cash of just under £1.0 million, having increased our borrowings to part finance the
purchase of Petersfield and then repaid £1.0 million of our borrowings following the completion of the sale of the
St Neots properties.
Borrowings at the year-end were £12.5 million (2018 - £10.24 million) and net gearing at the year-end was 52.7%
compared to 43.1% last year.
We have an excellent business relationship with our bankers, Handelsbanken with whom we have a facility that
can, in principle and without commitment, be increased to a maximum of £15 million. They were very supportive
and efficient in dealing with our requirements in relation to the two Petersfield acquisitions.
Dividend
In the light of the excellent financial outcome of the year, the Board is recommending a total dividend for the
year of 19.0p per share (2018 – 17.5p), which represents an increase of 8.6%. An interim dividend of 7.0p
per share (2018 – 6.5p) was paid in December 2018. Accordingly, subject to approval of Shareholders at the
Annual General Meeting, a final dividend of 12.0p per share (2018 – 11.00p) will be paid on 19th July 2019 to
Shareholders on the register on 21st June 2019.
The Board is delighted that Wynnstay’s excellent financial performance has enabled Shareholders to continue to
benefit from rising dividend income coupled with substantial increase in net asset value per share.
Outlook
The uncertainties over the UK’s exit from the European Union, coupled with domestic political uncertainties,
continue to cloud the economic outlook. However, the latest data about the economy remains broadly positive,
with employment continuing to reach record levels.
Wynnstay is a niche, focussed property investment company providing accommodation for small businesses
that are the bedrock of the UK economy as well as for some larger tenants. While we are not exposed to the high
street or to shopping centres where landlords, including some large property companies, are facing significant
challenges, our business will be sensitive to adverse economic conditions that affect small businesses and the
imposition of additional costs or burdens on such businesses.
While we have expanded and changed the focus of the business over recent years, we take a cautious, measured
approach in developing Wynnstay’s portfolio.
Format and Content of Report
Shareholders will notice that this year’s Annual Report is rather longer than in prior years. This results from the
introduction of a new rule for AIM Companies which requires all companies to adopt a corporate governance
code and to produce a corporate governance report as well as providing additional information on the Company’s
website. Like many AIM companies, we decided to adopt the Quoted Companies Alliance’s Corporate
Governance Code. We have sought to make our new report as comprehensive and informative as possible
about the Company’s business and functioning and to link it closely to other parts of the report which have been
required by statute for years, so as to avoid unnecessary repetition. We would be pleased to receive feedback from
Shareholders.
Our Executive Management
The day-to-day responsibility for Wynnstay’s business rests with our experienced executive directors – Paul
Williams, our Managing Director, and Toby Parker, our Finance Director. In the light of the results achieved
– 6 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S STATEMENT (continued)
this year, the non-executive Directors decided to award a bonus of £25,000 to Paul Williams and this is reflected
in the accounts for the year. We use discretionary bonuses as an additional incentive to align remuneration with
shareholders’ interests. As in prior years, resolutions in the same terms as those approved at last year’s meeting to
enable bonuses to be taken in the form of shares will be proposed at the Annual General Meeting.
Colleagues and Advisers
All three non-executive directors, Charles Delevingne, Paul Mather and Caroline Tolhurst have continued to
provide valuable advice and challenge in Board discussions, based on their extensive experience in the property
field and elsewhere. I would like to thank all the Directors, as well as our advisers, for their contributions over the
past year.
Unsolicited approaches to Shareholders
For many years, I have warned shareholders about “share scams”, typically unsolicited approaches, usually
by telephone, but now increasingly online, from an obviously overseas location and often using a name which
appears to carry some substance, about their shareholdings. I note that an increasing number of companies,
including many major quoted companies, are now carrying such warnings in their annual reports.
The latest report from the Financial Conduct Authority states that consumers lost nearly £200 million in 2018
from “share scams”, with the average loss being £29,000 (see: www.fca.org.uk/news/press-releases/fca-warns-
public-investment-scams-over-197-million-reported-losses-2018).
As always, I urge all shareholders to continue to be vigilant. 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. 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 Tuesday 16th July 2019 commencing at 11.30. As last year, it is
to be held at the company’s registered office, which is at our auditors, BDO LLP, 150 Aldersgate Street, London
EC1A 4AB. Coffee will be available from 11.00.
As always, I encourage all Shareholders to take part in the meeting 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.
Shareholders are asked to indicate by ticking the appropriate box on the enclosed proxy form whether or
not they intend to attend the meeting.
As at last year’s meeting and already noted above, the notice of meeting on pages 45 and 46 includes, in addition
to routine business, two further resolutions. These resolutions would give the Board authority, limited in both
amount (5% of share capital) and time (December 2020 at the latest) to issue shares, including shares held in
Treasury, and to do so without first offering them to existing shareholders.
Philip G.H. Collins
Chairman
12th June 2019
– 7 –
– 8 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2019
The Directors present their One Hundred and Thirty-Third Annual Report, together with the audited Financial
Statements of the Company for the year ended 25th March 2019.
Following the adoption by the Company of the Quoted Company Alliance Corporate Governance Code
(the Code) certain matters required by the Code to be included in the Annual Report are now addressed in
this report, the Strategic Report or the Corporate Governance Report with cross-references provided where
appropriate. The three reports should be read together with the Chairman’s Statement and the additional
information required by the Code published on the Company’s website.
Business and Future Development
As the Code requires a description of the business, strategy and business model promoting long-term value for
shareholders to be included in the Annual Report and similar information is also required by company law to
be included in the Strategic Report, these matters are dealt with in the Strategic Report on page 12.
Financial Objectives and Risks
As the Code requires a description of effective risk management systems to be included in the Annual Report
and company law requires a description of financial risk management objectives and policies, information on
exposure to risks and a description of the principal risks and uncertainties facing a company, these matters are all
dealt with in the Strategic Report on page 12 as well as in Note 17 of the financial statements on pages 39 - 42.
Profit for the Year
The profit for the year after taxation amounted to £1,928,000 (2018: £2,632,000). Details of movements in
reserves are set out in the statement of changes in equity on page 27.
Dividends
The Directors have decided to recommend a final dividend of 12.0 p per share for the year ended 25th March 2019
payable on 19th July 2019 to those shareholders on the register on 21st June 2019. This dividend, together with the
interim dividend of 7.0 p paid on 23rd December 2018, represents a total for the year of 19.0 p (2018: 17.5 p).
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report, the Corporate
Governance 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.
– 8 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2019 (continued)
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.
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 2019 and 25th March 2018 are shown below:
Ordinary Shares of 25p
25.3.18
25.3.19
P.G.H. Collins
C.P. Williams
C.H. Delevingne
T.J.C. Parker
Non-Executive Chairman
Managing Director
Non-Executive Director
Finance Director and Secretary
850,836
10,212
5,000
*28,250
850,836
10,212
5,000
*25,250
* of which: (i) 10,000 ordinary shares are held under the terms of a discretionary trust of which T.J.C. Parker is
both a trustee and a beneficiary (whilst T.J.C. Parker has a beneficial interest in these shares he only has a potential
or contingent entitlement dependent on the exercise of the Trustees of their discretions in his favour and the figure
for 2018 has accordingly been restated for consistency); and (ii) 18,250 ordinary shares are held in two SIPPs on
behalf of T.J.C. Parker.
The interests shown above in respect of P.G.H. Collins include non-beneficial interests of 229,596 shares held by
members of his family at 25th March 2019 and 2018.
C.P. Williams and 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, T.J.C. Parker and P. Mather retire by rotation and,
being eligible, offer themselves for re- election.
Brief biographies of each of the Directors appear on page 48.
– 9 –
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2019 (continued)
Directors’ Emoluments
Directors’ emoluments for the year ended 25th March 2019 are set out below:-
P.G.H. Collins
C.P. Williams
C.H. Delevingne
T.J.C.Parker
P. Mather
C.M. Tolhurst
Total 2019
Total 2018
Salaries
–
151,000
–
–
–
–
Fees
41,500
15,500
15,500
15,500
15,500
15,000
Pension
–
12,600
–
–
–
Benefits
–
4,627
–
–
–
–
Total
2019
41,500
183,727
15,500
15,500
15,500
15,000
Total
2018
40,000
172,685
15,000
19,000
15,000
–
£151,000
£119,000
£12,600
£4,627
£287,227
£142,000
£120,000
£16,200
£3,485
£281,685
The above figures include discretionary bonus payments determined by the Board to reflect performance
during the year of £25,000 (2018: £20,000) to Mr C.P. Williams and £nil (2018: £4,000) Mr T.J.C. Parker.
A company owned and controlled by Mr T.J.C. Parker, was paid a fee of £46,000 (2018: £45,000) for services
rendered during the year (see note 19).
Directors’ and Officers’ Liability Insurance
The Company has maintained Directors’ and Officers’ insurance as permitted by the Companies Act 2006.
Substantial Interests
As at 12th June 2019, the Directors have been notified or are aware of the following interests (including
spouses, associates and non-beneficial interests, where applicable, for both financial years), which are in
excess of three per cent of the issued ordinary share capital of the Company, excluding shares held in treasury:
No. of Ordinary
Shares of 25p
Percentage of
Issued Share
Capital 2019
P.G.H. Collins
G. J. Gibson
D. N. Gibson
Dr. G.L.A. Bird
J.V. Bird
850,836
272,192
121,378
112,000
111,750
31.38%
10.04%
4.47%
4.13%
4.12%
Percentage of
Issued Share
Capital 2018
Restated
31.38%
10.31%
4.19%
4.13%
4.12%
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.
– 10 –
10
WYNNSTAY PROPERTIES PLC
REPORT OF THE DIRECTORS 2019 (continued)
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.
Auditor
On 1st February 2019 Moore Stephens LLP merged its business with BDO LLP. As a result, Moore Stephens
LLP has resigned as auditor and the Directors have appointed BDO LLP as auditor in their place. BDO LLP
has indicated its willingness to continue in office and a resolution will be proposed at the Annual General
Meeting to reappoint BDO LLP as auditor for the next financial year.
Annual General Meeting
The Notice of the Annual General Meeting, to be held on Tuesday 16th July 2019, is set out on page 45.
By Order of the Board,
T.J.C. Parker
Secretary
12th June 2019
– 11 –
WYNNSTAY PROPERTIES PLC
STRATEGIC REPORT 2019
The Directors present their Strategic Report for the year ended 25th March 2019.
Following the adoption by the Company of the Quoted Company Alliance Corporate Governance Code
(the Code) certain matters required by the Code to be included in the Annual Report are now addressed in
this report, the Directors’ Report or the Corporate Governance Report with cross-references provided where
appropriate. The three reports should be read together with the Chairman’s Statement and the additional
information required by the Code published on the Company’s website.
Business, Business Model, Strategy and Future Development
Wynnstay is a long-established, successful property investment company focusing on acquiring, managing
and developing commercial property primarily, but not exclusively, in the south and south-east of England.
Through careful property selection, active direct property management and promoting constructive business
relationships with tenants, Wynnstay continues to grow and develop a diversified property portfolio.
Wynnstay’s strategy is to secure growth in net rental income and net asset value to provide shareholders with
long-term value including a progressive dividend policy, consistent with an appropriate level of dividend
cover.
Key challenges in the execution of this strategy are identifying and securing changes to the portfolio, whether
by acquisition or disposal, and managing the risks of the commercial property market.
A review of the Company’s business, its development and performance for the year, its position at the end
of the year and its future prospects is included in the Chairman’s Statement on pages 4 to 7. The financial
statements and notes are set out on pages 24 to 43.
Financial Objectives and Performance Indicators
The key financial objectives for the Company are to grow the rental income and the capital value of the
property portfolio and thus the net asset value per share. The pursuit of these objectives has delivered the
following results:
• Increase in rental income: 1.6% (2018: increase of 7.6%).
•
Increase in net asset value per share: 7.0% (2018: increase of 11.9%).
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.
– 12 –
WYNNSTAY PROPERTIES PLC
STRATEGIC REPORT 2019 (continued)
Risks, Uncertainties and Effective Risk Management
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 and monitoring the income exposure to any tenant contributing more
than 2% of total rental income on a monthly basis. Other risk factors include changes in legislation in respect
of taxation and the obtaining of planning consents, as well as those associated with financing and treasury
management including interest rate risk.
The Company’s financial risk management policies can be found at Note 17 of the financial statements on
pages 39 - 43.
This Strategic Report was approved by the Board and signed on its behalf by:
T.J.C. Parker
Director
12th June 2019
– 13 –
– 14 –
WYNNSTAY PROPERTIES PLC
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT 2019
In my role as Chairman of Wynnstay, I am responsible for ensuring sound corporate governance arrangements
and Board and individual Director effectiveness while the Board as a whole is to ensure that Wynnstay is well
managed for the long-term benefit of all shareholders. Good governance ensures effective and efficient decision-
making and risk management. Our corporate governance structure has evolved over many years since we became
one of the first companies admitted to AIM in 1995 and for some time now our Annual Report has described
our structure. We have adopted and adapted practices and procedures to promote good governance that are
considered appropriate for a company of Wynnstay’s complexity, nature, size and structure. We have strived, as
the business has grown and changed, for continual improvement making changes in recent years, for instance, in
management information flows and risk management reviews.
Since September 2018, the Company has adopted the Quoted Companies Alliance Corporate Governance Code
(the Code) following the London Stock Exchange’s recent changes to AIM Rule 26 which came into effect at
that time. The changes require AIM-listed companies to give details on their websites of a recognised code that a
board has decided to apply. The Code is constructed around ten broad principles, accompanied by explanations of
their application and a set of disclosures. A company is required to explain how each principle is applied, to the
extent that a board judges these to be appropriate in the company’s circumstances, and then provide an adequate
explanation for the approach taken. Where a company departs from a principle or its application a well-reasoned
explanation for doing so should be provided. This information has to be reviewed annually and websites should
include the date on which the information was last reviewed.
We prepared and placed our first Statement of Compliance on our website on 28th September 2018. This is our
first Annual Report required to contain a Corporate Governance Statement and a Corporate Governance Report.
Our Statement of Compliance has been updated concurrently with the Annual Report and will be placed on the
website together with the index to signpost the location of disclosures required by the Code.
At Wynnstay, we apply the principles of the Code to the extent reasonable and practicable for a company of
our size and nature and recognising the flexibility that lies within the Code so that it is neither a bureaucratic,
box-ticking exercise nor results in unnecessary, inappropriate or burdensome processes and procedures. So,
for instance, we do not see the need, in a company of this size with just two Executive Directors, for separate
remuneration and audit committees, where the functions undertaken typically by those committees can be fully
and properly carried out by the Non-Executive Directors as a group. This year we have reviewed, revised and
formalised the work of these groups. Nor have we undertaken formal Board and individual performance reviews,
relying instead on less formal methods of individual and group self-examination and self-assessment, which we
consider can be suitably effective, although we will keep this under review.
The Board acknowledges that a corporate culture based on sound ethical values and behaviours is an asset and
provides competitive advantages in the commercial property market where competition is intense and prospective
and existing tenants are seeking good quality premises that are suited to their needs from a considerate, reliable
landlord. Wynnstay aims to conduct its business with a high degree of professionalism, to operate within
appropriate professional standards and legal and regulatory requirements and to act with honesty and integrity in
a manner that gives confidence to those with whom it deals.
I consider that Wynnstay’s governance structures and processes are in line with its corporate culture, and are
appropriate to its size, nature, structure and complexity and its capacity, appetite and tolerance for risk and thus
I consider them to be “fit-for-purpose”. They have evolved over time in parallel with its objectives, strategy and
business model and are suitable for the Company’s growth plans in the short to medium term and I, with my
colleagues on the Board, continue to keep them under review and to make changes where required.
Philip G.H. Collins
Chairman
12th June 2019
– 14 –
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, REMUNERATION AND AUDIT REPORTS
Introduction
This report is presented by reference to each of the ten principles contained in the Quoted Companies Alliance
(QCA) Corporate Governance Code (the Code) under a concise heading for each principle. Where the QCA
recommends that a principle should be addressed in the Annual Report, we do so in this report, the Directors’
Report or the Strategic Report with cross-references provided where appropriate. The three reports should be
read together with the Chairman’s Statement and the additional information required by the Code published
on the Company’s website, including the Statement of Compliance. Where the Code recommends that a
principle should be addressed on the Company’s website, this report refers to the principle only and signposts
to the website, including to the Statement of Compliance. The index required by the Code to signpost where the
disclosures required by the Code are located forms part of the Statement of Compliance. For reasons explained
below this report covers audit and remuneration matters as well as corporate governance.
Principle 1: Strategy and Business Model Promoting Long-term Value for Shareholders
A description of the application of Principle 1 is recommended by the Code to be included in the Annual Report
and by company law is required to be included in the Strategic Report. We therefore deal with Principle 1 in that
report: see page 12.
Principle 2: Understanding and Meeting Shareholder Needs and Expectations
A description of the application of Principle 2 is recommended by the Code to be included on a company’s
website. We therefore deal with Principle 2 in the Statement of Compliance on the Company’s website.
Principle 3: Wider Stakeholder and Social Responsibilities and Implications for Long-term Success
A description of the application of Principle 3 is recommended by the Code to be included on the Company’s
website. We therefore deal with Principle 3 in the Statement of Compliance on the Company’s website.
Principle 4: Effective Risk Management
A description of the application of Principle 4 is recommended by the Code to be included in the Annual
Report. Under company law, the Directors’ Report must include a description of financial risk management
objectives and policies and information on exposure to price risk, credit risk, liquidity risk and cash flow risk
and the Strategic Report must include a description of the principal risks and uncertainties facing a company. We
therefore deal with Principle 4 in these reports: see pages 8 to 13.
Principle 5: Well-functioning Board and Balanced Team led by the Chair
A description of the application of Principle 5 is recommended by the Code to be included in the Annual Report
and is thus given below, which should be read together with the additional information required by the Code
to be given under Principles 6, 7, 8 and 9 provided in this report, elsewhere in the Annual Report and in the
Statement of Compliance on the Company’s website, as recommended by the Code.
The Code requires the identification of those directors who are considered to be independent and a description
of the time commitment required from directors including the number of meetings of the Board, and of any
committees, during the year, together with the attendance record of each Director.
The Board comprises two Executive and four Non-Executive Directors, including the Chairman. The Board
considers that all the Non-Executive Directors are independent. The biographies of all the Directors are given on
page 48.
Philip Collins, the Non-Executive Chairman, has been a Director for 30 years and Chairman for 20 years. He
has become a significant shareholder, having decided to invest over this period, to demonstrate his confidence
in Wynnstay’s long-term prospects. He has always placed the interests of all shareholders, and Wynnstay’s
long-term success, at the centre of his chairmanship, as evidenced by his actions and reports to shareholders. His
– 15 –
– 16 –
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, REMUNERATION AND AUDIT REPORTS (continued)
knowledge of the business and of shareholders, and his experience in both the private and public sectors, are all
valuable to the Board’s deliberations. There is no evidence that his tenure or his shareholding has had any adverse
impact on his independent judgement.
Charles Delevingne has served as a Non-Executive Director since June 2002. Notwithstanding the length of
his service, Mr Delevingne continues to demonstrate his commitment to fulfilling his role as a Non-Executive
Director, providing direction on business strategy and advice on business operations using his skills and
experience in commercial property. He is not involved in the daily management of the Company, nor in any
relationships or circumstances that might give rise to a conflict of interest or interfere with his exercise of
independent judgment. In addition, he continues to demonstrate the attributes of an independent non-executive
director and there is no evidence that his tenure has had any adverse impact on his independent judgment.
Paul Mather and Caroline Tolhurst were appointed to the Board in March 2017 and were deemed independent
on appointment and remain so. They are both Chartered Surveyors and have many years of experience in
commercial property and property investment management as well as, in the case of Caroline Tolhurst, in
corporate governance through her qualification and experience as a Chartered Secretary.
The Non-Executive Directors are expected to devote such time as is necessary for the proper performance of
their duties. Overall the Non-Executive Directors, other than the Chairman, are expected to spend a minimum
of 10 working days a year on the Company’s business. In practice, after taking account of 8-9 Board meetings a
year, preparation time, site visits and other requirements, 12-15 days per annum would be typical. The Chairman
typically spends the equivalent of 25-30 working days per annum on the Company’s business. The following
table shows directors’ attendance at scheduled Board meetings in the past financial year ended 25th March 2019.
Director
Philip Collins
Paul Williams
Toby Parker
Charles Delevingne
Paul Mather
Caroline Tolhurst
Board meetings
8/8
8/8
8/8
8/8
5/8 *
8/8
*In September 2019, Mr Mather suffered a serious accident resulting in major back and leg injuries. He was
unable to attend the September Board meeting. He was able to contribute to the November and December
meetings by reviewing the papers and submitting comments in writing. He has now recovered from his injuries.
In view of the Company’s size and nature, the Board does not consider that the establishment of Board
committees, such as a Remuneration Committee, a Nominations Committee or an Audit Committee, is
appropriate. Reports of the Non-Executive Directors consideration of Remuneration and Audit matters are
covered under Principle 10 below, as recommended by the Code.
In relation to nominations, the practice has been for a group of the Non-Executive Directors to be appointed to
deal with new appointments as and when required, as occurred in 2016/7 with the appointment of new Non-
Executive Directors.
– 16 –
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, REMUNERATION AND AUDIT REPORTS (continued)
Principle 6: Directors with Necessary Up-to-date Experience, Skills and Capabilities
The application of Principle 6 is recommended by the code to be included in the annual report and is therefore
included in this report, as well as elsewhere in this Annual Report, which should be read together with the
information provided under Principles 5, 7, 8 and 9 in this report and on the Company’s website.
The Code requires disclosure of the identity of each Director; the relevant experience, skills, personal qualities
that each brings to the Board; how the Board as a whole contains the necessary mix of experience, skills and
qualities (including gender balance) and capabilities to deliver the strategy over the medium to long-term; how
each director keeps his/her skill-set up-to-date; where external advisers have been engaged, their role and where
external advice on significant matters has been obtained; and any internal advisory roles.
The names of the Directors and their experience, skills and capabilities is set out on the Company’s website
and on page 48. Reference is also made to the information on each of the Non-Executive Directors given under
Principle 5 above.
Each of the Executive Directors, Paul Williams and Toby Parker, have many years of practical experience in
their respective fields, namely property investment and management and accounting, financial and company
secretarial matters.
The Board considers that the experience and knowledge of each of the Directors is appropriate for the
Company’s current operations and strategy and gives them the ability to constructively challenge strategy,
scrutinise performance and assess risk and to deliver the Company’s strategy over the medium- to long-term.
Directors keep their skill-set up-to-date with a combination of attendance at industry events, individual reading
and study and experience gained from other board roles. The Company Secretary is responsible for ensuring the
Board is aware of any applicable regulatory changes and updates the Board as and when relevant. Directors are
able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s
expense.
The Company calls on the services of specialist external advisers in the usual way for its day-to-day business
needs.
The Chairman, Senior Independent Director and Company Secretary, working in their respective roles and
together, advise and support the Board as a whole, drawing on specialist external advisers where necessary.
Principle 7: Evaluating Board Performance Based on Clear and Relevant Objectives, Seeking
Continuous Improvement
The application of Principle 7 is recommended by the Code to be included in part in the annual report and in part
on a company’s website. The Company considers that it is convenient to deal with most of these matters in one
place in this report.
Historically there has been no requirement under the AIM Rules for a formal performance evaluation of the
Board and accordingly none has been undertaken. Given the size and nature of the Company’s business, the
Board currently does not consider it would be an appropriate use of cash resources to engage an external firm
to undertake a formal evaluation as the costs are likely to be disproportionate to any benefits. The Board will
consider the merits of developing further the internal self-evaluation and assessment of its performance.
– 17 –
– 18 –
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, REMUNERATION AND AUDIT REPORTS (continued)
After the end of each financial year, the Chairman holds a meeting with the Non-Executive Directors individually
and as a group without the Executive Directors being present. The Non-Executive Directors also meet annually
without the Chairman to appraise the Chairman’s performance. These meetings are intended to provide an
opportunity for open dialogue on individual and collective performance and on any necessary changes required.
The approach to succession planning and appointments is addressed, as recommended by the Code, under
Principle 7 in the Statement of Compliance on the Company’s website.
Principle 8: Corporate Culture Based on Ethical Values and Behaviours
The application of Principle 8 is recommended by the Code to be, and has thus been, addressed in the Corporate
Governance Statement: see page 14. Ensuring the means to determine that values and behaviours are recognised
and respected is addressed, as recommended by the code, under Principle 8 in the Statement of Compliance on
the Company’s website.
Principle 9: Governance Structures and Processes Fit-for-purpose, Supporting Good Decision-making
A high-level explanation of the application of Principle 9 is recommended by the code to be provided in the
Corporate Governance Statement and accordingly it has been provided in that statement: see page 14.
The Code recommends that supplementary detail required by the Code (role and responsibilities of Directors, role
of committees, matters reserved for the Board and plans for evolution of the governance framework) is addressed
on the website and it is so addressed under Principle 9 in the Statement of Compliance on the Company’s
website.
Principle 10: Dialogue on Governance and Performance with Shareholders and other Relevant
Stakeholders
The application of Principle 10 of the Code concerning dialogue on governance and performance with
shareholders and other relevant stakeholders is recommended by the Code to be included in part in the annual
report and in part on the website. The Company follows these recommendations and addresses the work of
committees, including in relation to audit and remuneration and the identification and reasons for any non-
publication of disclosures under the principles set out in the Code in this report.
The other matters, being the outcome of all general meeting votes, intended actions on, and reasons for,
significant votes cast against resolutions will be included on the Company’s website, including under Principle
10 of the Statement of Compliance; and historical annual reports, notices and general meetings and other
governance-related material are included on the Company’s website.
Communication and dialogue with shareholders and other relevant stakeholders has already been addressed
above in this report. The performance of the business during the last financial year is reviewed in detail in the
Chairman’s Statement, the Directors’ Report and the Strategic Report and elsewhere in the Annual Report.
The Board considers that the existing communication and reporting structures allow open dialogue between
shareholders and the Board and provide shareholders with a good understanding of the business.
The Code recommends the annual report to describe the work of committees and recommends inclusion in the
annual report. As already mentioned above, the Board does not have formally constituted committees, with the
Non-Executive Directors acting as a group in relation to audit and remuneration.
The following paragraphs report on the work of the Non-Executive Directors in relation to audit and
remuneration matters in the year.
– 18 –
WYNNSTAY PROPERTIES PLC
CORPORATE GOVERNANCE, REMUNERATION AND AUDIT REPORTS (continued)
Audit Report
The Non-Executive Directors discussed the audit with the external auditor on two occasions; first, at the outset
of the audit, in order to review the audit plan and the issues to be addressed; and then, at the completion of the
audit, in order to review the outcome. The first discussion took place without the Finance Director being present;
the second discussion was divided into two parts, and the Finance Director was present for the second part of that
discussion.
The whole Board considerered these discussions with the external auditor and the Independent Audit Report to
Members prior to the approval of the Financial Statements.
The discussions enabled the auditors to explain their proposed work and its outcome and the Non-Executive
Directors to raise any issues. It is considered that the process worked well and the audit did not raise any material
issues and the auditors were able to issue their audit report in the usual form.
Remuneration Report
The Directors currently determine remuneration, with the Non-Executive Directors determining the remuneration
of the Executive Directors and the Non-Executive Directors (other than the Chairman) determining the
Chairman’s remuneration. Directors’ Fees are determined by the whole Board. Details of the Directors’
remuneration are set out in the Directors’ Report on page 10.
It is the Company’s policy that the remuneration of Directors should be commensurate with the services
provided by them to the Company and should take account of published data on reasonable market comparables,
where available.
The Non-Executive Directors met twice after the end of the financial year to review the performance of the
Executive Directors and determine the level of any increases in remuneration and of any bonus. Increases in
remuneration were determined by reference to a mixture of publicly available remuneration studies relating to
the relevant specialism and role, other AIM companies and a few private property companies. Levels of bonus
were determined by reference to the assessment of individual performance in the roles and the delivery of good
outcomes for shareholders, and taking account of a number of relevant factors relevant to the performance of the
role. This process is necessarily subjective, but is considered to deliver a reasonable result for the individual, the
Company and its shareholders.
Directors’ Fees are determined primarily by reference to the fees payable in other AIM quoted companies, with
the level being set towards the lower end of the range.
The Chairman’s remuneration is set by the other Directors having regard to the commitment required to carry
out the function and its responsibilities and having regard to the level of Directors’ Fees and, to some extent,
comparables among other AIM companies.
Approved by the Board on 12th June 2019.
Philip G.H. Collins
Chairman
– 19 –
– 20 –
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WYNNSTAY PROPERTIES PLC
Opinion
We have audited the financial statements of Wynnstay Properties PLC (the “Company”) for the year ended 25
March 2019 which comprise the Statement of Comprehensive Income, the Statement of Financial Position,
the Statement of Cash Flows, the Statement of Changes in Equity and the notes to the financial statements,
including a summary of significant accounting policies. 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.
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 25 March 2019 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the “Auditor’s
responsibilities for the audit of the financial statements” section of our report. We are independent of the
Company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate, or
the Directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt over the Company’s ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
– 20 –
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WYNNSTAY PROPERTIES PLC
Key audit matter
How we addressed the Key Audit Matter in the Audit
Valuation of investment properties
In this area our audit procedures included:
• The inputs to the valuation model were checked
against market indices and other inputs such as
rents and lease terms.. and any significant variances
investigated.
• We held a discussion with the external valuer to
challenge the key assumptions based on our analysis
of market indices and value of similar properties and
gain a better understanding of their independence
and quality control procedures and their approach to
valuation.
• The instructions provided to the valuer were
reviewed for completeness and to check that there
was no evidence of management bias.
The Company holds investment properties
(Note 9) which comprise properties owned
by the Company held for rental income.
Investment properties, held at fair value, are
valued by independent external valuers whose
details are disclosed in Note 15 with input from
the Directors. The valuation of investment
properties requires significant judgement as
each valuation requires consideration of the
individual nature of the property, its location, its
cash flows and comparable market transactions.
The valuation of the Company’s investment
properties requires significant judgements to
be made by the external valuers in relation
to the appropriate market capitalisation yields
and estimated rental values and appropriate
input inf ormati on t o be provid e d b y
management in relation to the passing rents
and lease particulars. Any input inaccuracies or
unreasonable valuation judgements could result
in a material misstatement of the statement
of comprehensive income and statement of
financial position. The accounting policies are
disclosed on pages 29 - 32.
Our application of materiality
We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements
as a whole. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take
into account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole
We determined the materiality for the financial statements as a whole to be £362,000 (2018 - £310,000),
calculated with reference to a benchmark of the Company’s gross assets, which is a typical primary measure
for users of the financial statements of investment property companies, of which it represents approximately
1%. In addition, we set a specific materiality level of £44,000 (2018 - £44,000) for revenue items calculated at
2% of turnover.
This is the threshold above which missing or incorrect information in financial statements is considered to
have an impact on the decision making of users.
– 21 –
– 22 –
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WYNNSTAY PROPERTIES PLC
Performance materiality is the application of materiality at the individual account or balance level set at an
amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole. The Company’s performance
materiality was set at £271,000 (2018 - £232,500) which represents 75% (2018 – 70%), based on our
assessment of the Company’s risk profile, of the above materiality levels.
We reported to the Audit Committee all potential adjustments in excess of £18,000 (2018 - £15,500) being 5%
of the materiality for the financial statements as a whole.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement
in the financial statements. In particular, we looked at where the Directors made subjective judgements, for
example in respect of the valuation of investment properties which have a high level of estimation uncertainty
involved.
We considered the risk of the financial statements being misstated or not prepared in accordance with the
underlying legislation or standards. We then directed our work toward areas of the financial statements which
we assessed as having the highest risk of containing material misstatements.
We gained an understanding of the legal and regulatory framework applicable to the Company and the
industry in which it operates, and considered the risk of acts by the Company which were contrary to
applicable laws and regulations, including fraud. These included but were not limited to compliance with
Companies Act 2006, the AIM rules, the principles of the QCA Corporate Governance Code and industry
practice represented by IFRS (EU).
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report 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 the Directors’ Report.
– 22 –
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WYNNSTAY PROPERTIES PLC
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, 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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities Statement set out on page 8 the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
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.
Paul Fenner (Senior Statutory Auditor)
for and on behalf of BDO LLP
Statutory Auditor
150 Aldersgate Street
London EC1A 4AB
12 June 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
– 23 –
– 24 –
STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2019
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.
2019
£’000
2,216
(81)
(544)
1,591
771
280
2,642
3
(399)
2,246
(318)
1,928
2018
£’000
2,182
(148)
(520)
1,514
1,631
210
3,355
1
(365)
2,991
(359)
2,632
71.1p
97.1p
– 24 –
WYNNSTAY PROPERTIES PLC
STATEMENT OF FINANCIAL POSITION 25TH MARCH 2019
2019
£’000
33,695
3
33,698
157
959
1,116
1,400
2,516
(1,178)
(232)
(1,410)
1,106
34,804
(12,500)
(421)
(12,921)
21,883
789
205
1,135
(1,570)
21,324
21,883
2018
£’000
28,770
3
28,773
808
1,434
2,242
1,300
3,542
(1,075)
(211)
(1,286)
2,256
31,029
(10,240)
(346)
(10,586)
20,443
789
205
1,135
(1,570)
19,884
20,443
Notes
9
11
12
9
13
14
15
16
Non Current Assets
Investment Properties
Investments
Current Assets
Accounts Receivable
Cash and Cash Equivalents
Non-current assets held for Sale
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
Capital Redemption Reserve
Share Premium Account
Treasury Shares
Retained Earnings
Approved by the Board and authorised for issue on 12th June 2019
P.G.H. Collins
Chairman
T.J.C. Parker
Finance Director
Registered number: 00022473
– 25 –
WYNNSTAY PROPERTIES PLC
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25TH MARCH 2019
2019
£’000
2,247
(771)
(3)
398
(280)
651
102
2,344
(222)
(398)
1,724
3
(4,924)
950
(3,971)
(488)
3,260
(1,000)
1,772
(475)
1,434
959
2018
£’000
2,991
(1,631)
(1)
365
(210)
(353)
36
1,196
(294)
(365)
537
1
(98)
1,386
1,289
(454)
–
(1,100)
(1,554)
359
1,075
1,434
Cashflow from operating activities
Income before taxation
Adjusted for:
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
Net cash from operating activities
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
Repayment of 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
– 26 –
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
YEAR ENDED 25TH MARCH 2019
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)
19,884
20,443
–
–
–
–
–
–
1,928
(488)
1,928
(488)
Balance at 26th March 2018
Total comprehensive
income for the year
Dividends – note 7
Balance at 25th March 2019
789
205
1,135
(1,570)
21,324
21,883
YEAR ENDED 25TH MARCH 2018
Share
Capital
£ 000
Capital
Redemption
Reserve
Share
Premium
Account
Treasury
Shares
Retained
Earnings
£ 000
£ 000
£ 000
£ 000
Total
£ 000
Balance at 26th March 2017
789
205
1,135
(1,570)
17,706
18,265
Total comprehensive
income for the year
Dividends – note 7
–
–
–
–
–
–
–
–
2,632
(454)
2,632
(454)
Balance at 25th March 2018
789
205
1,135
(1,570)
19,884
20,443
FUNDS AVAILABLE FOR DISTRIBUTION
Retained earnings
Less: Cumulative unrealised fair value movement
Distributable reserves
2019
£ 000
21,324
(7,606)
2018
£ 000
19,884
(7,415)
13,718
12,469
– 27 –
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
Explanation of Capital and Reserves:
• Share Capital: This represents the subscription, at par value, of the Ordinary shares of the company.
• Capital Redemption Reserve: This represents money that the company must retain when it has bought
back shares, and which it cannot pay to shareholders as dividends: The capital redemption reserve is a non-
distributable reserve and represents paid up share capital.
• Share Premium Account: This represents the subscription monies paid for Ordinary shares in excess of
their par value.
• Treasury shares: This represents the total consideration and costs paid by the company when purchasing
the 443,650 shares, as referred to in Note 16, in March 2010.
• Retained earnings: This represents the after-tax profits that can be used to pay dividends. Dividends
however, can only be paid from Distributable reserves as detailed in the preceding table.
– 28 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
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 and rounded to the nearest thousand. 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. These financial statements are prepared on a going concern basis as the directors have
reviewed the next two years projected cash flows and consider that the company is able to pay its debts
as and when they fall due.
(a) New Interpretations and Revised Standards Effective for the year ended 25th March 2019
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 2018. The adoption
of these interpretations and revised standards had the following impact on the disclosures and
presentation of the financial statements:
IFRS 9: Financial Instruments
The standard makes substantial changes to the measurement of financial assets and financial liabilities
and derecognition of financial assets. There are only 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 Company has
re-determined the classification of its financial assets based on the business model for each category of
financial asset. This has not given 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 are 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 continue to be carried at amortised cost, however, some financial liabilities
are required to be measured at fair value through profit or loss, for example derivative financial
instruments which the company does not have, with changes in the liabilities’ credit risk recognised in
other comprehensive income.
The standard was effective for periods beginning on or after 1 January 2018.
An impact assessment of the standard was carried out and it was concluded that it has no material
effect.
– 29 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
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
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 standard was effective for periods beginning on or after 1 January 2018.
All income is rental income and it not in the scope of IFRS 15. Therefore, the company has no income
that falls under the scope of IFRS 15. Service charges invoices raised for a property are not included
as property income and are matched to costs incurred on that property with any balance owing to the
tenants being shown as a liability in the accounts. There is no contingent property income.
(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.
The adoption of these revised standards and interpretations has no material impact on the figures
included in the financial statements in the period of initial application. The following standards may
have a minor impact:
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, are
required to recognise all leased assets on their Statement of Financial Position as ‘right-of-use assets’
with a corresponding lease liability. This is likely to significantly increase the asset and liability
balances recognised in the Statement of Financial Position.
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 standard is effective for periods beginning on or after 1 January 2019.
An impact assessment of the standard was carried out and it was concluded that it has no material
effect as the only lease the company has entered into has less than 18 months to expiry with a total
liability of not more than £30,000.
– 30 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
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. The independent valuers
take into consideration the residual lease term as a factor in determining the value along with the yield.
Investment properties are recognised as acquisitions or disposals based on the date of contract
completion.
Assets held for sale
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 fair value less cost to sell.
Depreciation
In accordance with IAS 40, freehold investment properties are included in the Statement of Financial
Position at fair value and are not depreciated.
The company has no other plant and equipment.
Disposal of Investments
The gains and losses on the disposal of investment properties and other investments are included in
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 and the company reflects any rent-free period
as and when it has been taken at the outset of the lease rather than accounting for the lease incentives
over the term of the lease. Lease deposits are held in a separate designated deposit account. 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.
– 31 –
– 32 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
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 expected credit losses. All receivables do not carry any
interest and are short term in nature.
Cash and Cash Equivalents
Cash comprises cash at bank and on demand deposits. Cash equivalents are short term (less than three
months from inception), repayable on demand and are subject to an insignificant risk of change in
value.
Trade and Other Accounts Payable
Trade and other payables are initially measured at fair value and subsequently measured at amortised
cost. All trade and other accounts payable are non-interest bearing.
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 directors having taken advice from the Company’s independent external valuers as well as the
judgement taken by the directors as to whether a property is being held for sale. The key judgements
required when valuing investment properties are discussed in more detail in note 9.
The directors have considered the impact of Brexit on the business and do not consider that this will
have a material effect in the short to medium term on the company or on any of the current tenants of
the portfolio and therefore the income projections in the cash flow are reasonable.
There are no other judgemental areas identified by management that could have a material effect on the
financial statements at the reporting date.
– 32 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
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’ fees, during the year were as follows:
Wages and salaries
Social security costs
Other pension costs
2019
£’000
4
44
48
27
6
81
2019
£’000
26
479
35
4
544
2019
£’000
274
28
13
315
2018
£’000
4
114
118
22
8
148
2018
£’000
26
455
35
4
520
2018
£’000
266
31
16
313
Further details of Directors’ emoluments, totalling £287,227 (2018: £281,685), are shown in the Directors’
Report on page 10. There are no other key management personnel.
The average number of employees, including Non-Executive Directors,
engaged wholly in management and administration was:
The number of Directors for whom the Company paid pension benefits
during the year was:
2019
No.
6
1
2018
No.
6
2
– 33 –
– 34 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
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 19% (2018: 19%)
Underprovision 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 19% (2018 - 19%)
Expenses not deductible for tax purposes
Excess of capital allowances over depreciation
Investment gain on fair value not taxable
Investment profit on disposal
Current tax charge
7. DIVIDENDS
Final dividend paid in year of 11.0p per share
(2018: 10.25p per share)
Interim dividend paid in year of 7.0p per share
(2018: 6.5p per share)
2019
£’000
399
(3)
396
2019
£’000
236
7
243
75
318
2018
£’000
365
(1)
364
2018
£’000
222
–
222
137
359
2,247
2,991
427
9
–
(147)
(53)
236
2019
£’000
298
190
488
569
3
–
(310)
(40)
222
2018
£’000
278
176
454
The Board recommends the payment of a final dividend of 12.0 p per share, which will be recorded in the
Financial Statements for the year ending 25th March 2020.
– 34 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
8. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing Income after Taxation attributable to Ordinary
Shareholders of £1,928,000 (2018: £2,632,000) by the weighted average number of 2,711,617 (2018:
2,711,617) ordinary shares in issue during the period excluding shares held as treasury. There are no
options in issue and no instruments in issue that would have the effect of diluting earnings per share.
9. PROPERTIES
Properties
Balance at 25th March 2018
Additions
Disposals
Revaluation Surplus
Assets held for Sale
Balance at 25th March 2019
2019
£’000
30,070
4,924
(670)
771
35,095
(1,400)
33,695
2018
£’000
29,515
96
(1,172)
1,631
30,070
(1,300)
28,770
The Company’s freehold investment properties are carried at fair value as at 25th March 2019. 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 5.12% to 8.03%, with an
average yield of 6.38% and an average weighted yield of 6.50% 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% decrease in the yield would result in a corresponding increase of £3.155 million in the fair value
movement through profit or loss. A 0.5% increase in the yield would result in a corresponding decrease of
£2.073million in the fair value movement through profit or loss.
– 35 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
10. 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
2019
£’000
2,080
4,102
181
6,362
2018
£’000
1,870
3,913
123
5,906
Rental income under operating leases recognised through profit or loss amounted to £2,216,000
(2018: £2,182,000).
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. The service charge is not included as
income in the accounts of the company as any revenue is netted off against the associated costs with any
residual balance being shown as a liability.
11. INVESTMENTS
Quoted investments
2019
£’000
3
2018
£’000
3
– 36 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
12. ACCOUNTS RECEIVABLE
Trade receivables
Other receivables
2019
£’000
150
7
157
2018
£’000
802
6
808
Trade receivables include an allowance for credit losses of £nil (2018: nil). Trade receivables of
£nil (2018: £10,000) are considered past due but not impaired. Trade receivables in the prior year included
a one-off amount due post completion on the sale of a property prior to the year end.
13. ACCOUNTS PAYABLE
Trade payables
Other creditors
Accruals and deferred income
14. BANK LOANS PAYABLE
Non-current loan
2019
£’000
38
148
991
1,178
2019
£’000
12,500
12,500
2018
£’000
–
140
935
1,075
2018
£’000
10,240
10,240
In December 2016, a five-year facility comprising both a Fixed Rate Facility and a Revolving Credit Facility
was entered into providing a total credit facility of £13.5 million. Interest was charged at 3.35% per annum
for the Fixed Rate Facility of £10 million and 2.49% over three-month LIBOR for the Revolving Credit
Facility of £2.5 million (2018: £0.24 million).
The loan is repayable in one instalment on 18 December 2021. The bank loan includes the following
financial covenants which were complied with during the year:
• 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.
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 £35,095,000 (2018: £30,070,000). The undrawn
element of the borrowing facility available at 25th March 2019 was £1,000,000 (2018: £1,000,000).
– 37 –
– 38 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
15. DEFERRED TAX
A deferred tax liability of £421,000 has been recognised in respect of the investment properties (2018:
£346,000).
Deferred Tax brought forward
Charge for the year
Deferred Tax carried forward
16. SHARE CAPITAL
Authorised
2019
£’000
346
75
421
2019
£’000
2018
£’000
209
137
346
2018
£’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. As a result, the total number of shares with voting rights is
2,711,617.
– 38 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
17. 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 2019 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 reviewed the current portfolio of tenants
and does not anticipate any potential future credit losses.
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 2019 and 2018, 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 2019 was £959,000 (2018:
£1,434,000).
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 interest rate risk that could affect cash flow as it currently borrows at both
floating and fixed 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 regularly reviews available cash
to ensure there are sufficient resources for working capital requirements.
– 39 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
17. 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:
Impact on interest payable - gain/(loss)
Impact on interest receivable - (loss)/gain
Total impact on pre tax profit and equity
0.5% decrease
in interest rates
0.5% increase
in interest rates
2019
£'000
13
(5)
8
2018
£'000
1
(7)
(6)
2019
£'000
(13)
5
(8)
2018
£'000
(1)
7
6
The calculation of the net exposure to interest rate fluctuations was based on following as at 25 March:
Floating rate borrowings (bank loans)
Less: cash and cash equivalents
2019
£'000
(2,500)
962
(1,538)
2018
£'000
(240)
1,434
1,194
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)
2019
Book Value
£’000
(12,500)
2019
Fair Value
£’000
(12,500)
2018
Book Value
£’000
(10,240)
2018
Fair Value
£’000
(10,240)
Total
(12,500)
(12,500)
(10,240)
(10,240)
– 40 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
17. FINANCIAL INSTRUMENTS (Continued)
Categories of Financial Instruments
Financial assets:
Quoted investments measured at fair value
Loans and receivables measured at amortised cost
Cash and cash equivalents measured at amortised cost
Total financial assets
Non-financial assets
Total assets
Financial liabilities at amortised cost
Total liabilities
Shareholders’ equity
Total shareholders’ equity and liabilities
2019
£’000
3
157
959
1,119
35,095
36,214
2018
£’000
3
808
1,434
2,246
30,070
32,316
14,331
11,509
14,331
21,883
36,214
11,873
20,443
32,316
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 13 hierarchy as they are based on quoted
prices in active markets.
The maturity of the financial liabilities is as follows:
Within one year
Between 1 to 2 years
Between 2 to 5 years
Total
2019
£’000
2,181
350
12,763
15,294
The above includes estimated annual interest payments of £350,000.
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 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 net loan to value ratio should not exceed 50% and the gearing ratio should not
exceed 100%.
– 41 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
17. FINANCIAL INSTRUMENTS (Continued)
Net borrowings and overdraft
Cash and cash equivalents
Net borrowings
Shareholders’ equity
Investment properties
Loan to value ratio
Net borrowings to value ratio
Gearing ratio
2019
£'000
12,500
(959)
11,541
21,883
35,095
35.6%
32.9%
52.7%
2018
£'000
10,240
(1,434)
8,806
20,443
30,070
34.1%
29.3%
43.1%
18. COMMITMENTS UNDER OPERATING LEASES
Future rental commitments at 25th March 2019 under non-cancellable operating leases are as follows:
Within one year
Between two to five years
2019
£’000
25
5
30
2018
£’000
25
29
54
19. 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 £46,000 (2018: £45,000). 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 10.
– 42 –
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2019
WYNNSTAY PROPERTIES PLC
20. SEGMENTAL REPORTING
Industrial
Retail
Office
Total
2019
2018
2019
2018
2019
2018
2019
2018
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
1,671
681
1,618
1,153
127
120
162
20
418
(30)
402
458
2,216
771
2,182
1,631
Rental Income
Profit on investment
property at fair value
Total income and gain
2,352
2,771
247
182
388
860
2,987
3,813
Property expenses
(81)
(148)
–
–
–
–
(81)
(148)
Segment profit/(loss)
2,271
2,623
247
182
388
860
2,906
3,665
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
280
–
–
–
–
–
280
210
(544)
(521)
2,642
3,354
(398)
(365)
3
1
2,247
2,991
Other information
Industrial
Retail
Office
Total
2019
2018
2019
2018
2019
2018
2019
2018
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Segment assets
24,670
19,735
4,880
4,760
5,545
5,575
35,095
30,070
Segment assets held
as security
24,670
19,735
4,880
4,760
5,545
5,575
35,095
30,070
– 43 –
WYNNSTAY PROPERTIES PLC
FIVE YEAR FINANCIAL REVIEW
Years Ended 25th March:
2019
£’000
2018
£’000
STATEMENT OF COMPREHENSIVE INCOME
Property Income
Profit before movement in fair value of
investment properties and taxation
Income before Taxation
Income after Taxation
2,216
1,196
2,247
1,928
2,182
1,150
2,991
2,632
IFRS
2017
£’000
2,028
999
3,198
2,797
2016
£’000
2015
£’000
1,778
878
1,951
1,796
1,663
899
2,429
2,219
STATEMENT OF FINANCIAL POSITION
Investment Properties
Equity Shareholders’ Funds
35,095
21,883
30,070
20,443
29,515
18,265
25,230
15,839
21,780
14,390
PER SHARE
Basic earnings
Dividends paid and proposed
Net Asset Value
71.1p
19.0p
807p
97.1p
17.5p
754p
103.1p
15.75p
674p
66.2p
13.2p
584p
81.8p
12.3p
531p
– 44 –
WYNNSTAY PROPERTIES PLC
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the one hundred and thirty third ANNUAL GENERAL MEETING of the
Members of Wynnstay Properties PLC will be held at BDO LLP, 150, Aldersgate Street, London EC1A 4AB
on Tuesday, 16th July 2019, 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 2019.
2 To declare a final dividend for the year ended 25th March 2019 of 12.0 pence per ordinary share.
3 To fix the remuneration of the Directors.
4 To reappoint BDO 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 Toby Parker as a Director of the Company, who retires and offers himself for re-election.
6 To re-elect Paul Mather as a Director of the Company, who retires and offers himself for re-election.
7 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 2020 or, if earlier, at the conclusion of the annual general meeting of the
Company to be held in 2020. 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
authorisation had not expired.
Continued on page 46
– 45 –
– 46 –
WYNNSTAY PROPERTIES PLC
NOTICE OF ANNUAL GENERAL MEETING
SPECIAL RESOLUTION
8 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 7 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
(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
2020 or, if earlier, at the conclusion of the annual general meeting of the Company to be held in 2020. 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
12th June 2019
– 46 –
WYNNSTAY PROPERTIES PLC
NOTICE OF ANNUAL GENERAL 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, Link Asset Services, 65 Gresham Street, London EC2V
7NQ 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, voting and speaking
3.
at the 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. A corporation which is a shareholder can appoint one or more corporate representatives who may exercise,
on its behalf, all its powers as a shareholder provided that no more than one corporate representative
exercises powers over the same share.
5. 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 15th July
2019 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 15th July 2019 shall be disregarded in determining the rights of any person to attend or vote
at the meeting.
6. 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.
– 47 –
WYNNSTAY PROPERTIES PLC
BIOGRAPHIES OF THE DIRECTORS
Philip G.H. Collins (Non-Executive Chairman) aged 71, 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 61 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 69. 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.
Toby J. C. Parker (Finance Director and Company Secretary) aged 64, 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 64 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. Appointed
a director of Wynnstay Properties in March 2017.
Caroline M. Tolhurst (Non-Executive) aged 57, is a Chartered Surveyor and a Chartered Secretary with 30
years’ experience in property and investment sectors. She was Company Secretary at Grosvenor Limited and
NewRiver Retail Limited and compliance officer for Knight Frank LLP’s regulated businesses. She is also a
Board member and Committee Chair at A2Dominion Housing Group Limited and LocatED Property Limited.
Appointed a director of Wynnstay Properties in March 2017.
– 48 –