Final Results

RNS Number : 6276F

Wynnstay Properties PLC

19 June 2012

 

Wynnstay Properties PLC

Preliminary Results for Year Ended 25th March 2012

CHAIRMAN'S STATEMENT

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

Overview of financial performance

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

	Change	2012	2011
·      Profit before movement in fair value of investment properties and taxation	+31%	£1,158,000	£886,000
·      Earnings per share	-74%	4.3p	16.6p
·      Dividends per share, paid and proposed:	-	10.5p	10.5p
·      Net asset value per share:	-1.3%	456p	462p
·      Gearing	-4.2%	50.3%	52.5%

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

 

Property Management and Portfolio

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

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

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

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

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

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

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

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

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

Portfolio Valuation

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

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

Borrowings and Gearing

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

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

 

Costs

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

 

Dividend

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

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

Outlook

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

Unsolicited approaches to shareholders

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

 

Annual General Meeting

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

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

Colleagues and Advisers

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

 

18th June 2012

Philip G.H. Collins

Chairman

For further information please contact:

Wynnstay Properties Plc
Toby Parker, Finance Director	020 7554 8766
Charles Stanley Securities - Nominated Adviser	020 7149 6000
Dugald J. Carlean / Carl Holmes

STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2012

	Notes	2012	2011
		£'000	£'000
Property Income	1	1,503	1,691
Property Costs	2	(182)	(136)
Administrative Costs	3	(389)	(389)
		932	1,166
Movement in Fair Value of: Investment Properties	9	(866)	(225)
Profit/(Loss) on Sale of Investment Property		346	(39)
Operating Income		412	902
Investment Income	5	3	6
Finance Costs	5	(123)	(247)
Income before Taxation		292	661
Taxation	6	(175)	(212)
Income after Taxation		117	449
Basic and diluted earnings per share	8	4.3p	16.6p
The company has no other items of comprehensive income.

STATEMENT OF FINANCIAL POSITION 25TH MARCH 2012

		2012	2011
	Notes	£'000	£'000
Non Current Assets
Investment Properties	9	16,965	18,825
Other Property, Plant and Equipment	10	-	6
Investments	12	3	3
		16,968	18,834
Current Assets
Accounts Receivable	14	319	26
Cash and Cash Equivalents		966	881
		1,285	907
Current Liabilities
Accounts Payable	15	(808)	(757)
Income Taxes Payable		(217)	(240)
		(1,025)	(997)
Net Current Assets		2,584	1,205
Total Assets Less Current Liabilities		19,552	20,039
Non-Current Liabilities
Bank Loans Payable	16	(7,187)	(7,455)
Deferred Taxation	17	(6)	(56)
Net Assets		12,359	12,528
Capital and Reserves
Share Capital	18	789	789
Treasury shares		(1,570)	(1,570)
Share Premium Account		1,135	1,135
Capital Redemption Reserve		205	205
Retained Earnings		11,800	11,969
		12,359	12,528

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

	2012	2011
	£'000	£'000
Cashflow from operating activities
Income before taxation	292	661
Adjusted for:
Depreciation	6	2
Decrease in fair value of investment properties	866	225
Interest income	(3)	(6)
Interest expense	123	312
Profit on financial liabilities at fair value	-	(65)
(Profit)/loss on disposal of investment properties	(346)	39
Changes in:
Trade and other receivables	(293)	77
Trade and other payables	51	(120)
Income taxes paid	(248)	(266)
Interest paid	(123)	(312)
Net cash from operating activities	325	547
Cashflow from investing activities
Interest and other income received	3	6
Purchase of investment properties	(1,330)	-
Sale of investment properties	1,641	906
Net cash from investing activities	314	912
Cashflow from financing activities
Dividends paid	(286)	(286)
Repayments on bank loans	(1,605)	(1,045)
Drawdown on bank loans	1,337	-
Net cash from financing activities	(554)	(1,331)
Net increase in cash and cash equivalents	85	128
Cash and cash equivalents at beginning of period	881	753
Cash and cash equivalents at end of period	966	881

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

YEAR ENDED 25 MARCH 2012
	Share Capital	Capital Redemption Reserve	Share Premium Account	Treasury Shares	Retained Earnings	Total
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
Balance at 26 March 2011	789	205	1,135	(1,570)	11,969	12,528
Total comprehensive income for the year	-	-	-	-	117	117
Dividends	-	-	-	-	(286)	(286)
Balance at 25 March 2012	789	205	1,135	(1,570)	11,800	12,359

YEAR ENDED 25 MARCH 2011

	Share Capital	Capital Redemption Reserve	Share Premium Account	Treasury Shares	Retained Earnings	Total
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
Balance at 26 March 2010	789	205	1,135	(1,570)	11,806	12,365
Total comprehensive income for the year	-	-	-	-	449	449
Dividends - note 7	-	-	-	-	(286)	(286)
Balance at 25 March 2011	789	205	1,135	(1,570)	11,969	12,528

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

1.  ACCOUNTING POLICIES

Wynnstay Properties PLC is a public limitedcompany incorporated and domiciled in England & Wales. The principal activity of the company is property investment, development and management. The Company's ordinary shares are traded on the Alternative Investment Market. The Company's registered number is 00022473. 

 

Basis of Preparation

The Accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. The financial statements have been presented in pounds sterling being the functional currency of the company. The financial statements have been prepared under the historical cost basis modified for the revaluation of investment properties, financial assets and financial liabilities measured at fair value through profit or loss, and investments.

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

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

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

 

(b) Standards and Interpretations in issue but not yet effective

The International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") have issued revisions to a number of existing standards and new interpretations with an effective date of implementation after the date of these financial statements. 
 

It is not anticipated that the adoption of these revised standards and interpretations will have a material impact on the figures included in the financial statements in the period of initial application other than the following revisions to existing standards.

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

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

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

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

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

Key Sources of Estimation Uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.

Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision affects only that period. The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are those relating to the fair value of investmentproperties.

Investment Properties

All the company's investment properties are revalued annually and stated at fair value at 25th March. The aggregate of any resultingsurpluses or deficits are taken to profit or loss.

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of the assets' previous carrying amount and fair value less cost to sell.

Depreciation

In accordancewith IAS 40, freehold investment properties are included in the statement of financial position at fair value, and are not depreciated. 
 

Other plant and equipmentis recognised at cost and depreciated on a straightline basis calculated at annual rates estimated to write off each asset over its useful life of 5 years. 

 

Disposal of Investments

The gains and losses on the disposal of investment properties and other investments are included in the statement of comprehensive income in the year of disposal. 

 

Property Income

Property Income represents the value of accrued charges under operating leases for rental of the Company's properties. Revenue is measured at the fair value of the consideration receivable. All income is derived in the United Kingdom.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. Current tax is the expected tax payable on the taxable income for the year based on the tax rate enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of prior years. Taxable profit differs from income before tax because it excludes items of income or expense that are deductible in other years, and it further excludes items that are never taxable or deductible.

Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences (including unrealised gains on revaluation of investment properties) and deferred tax assets are recognised to the extent that it is probable that taxable profits will be availableagainst which deductible temporary differences can be utilised. 
 

The Company provides for deferred tax on investment properties by reference to the tax that would be due on the sale of investment properties. Deferred tax is calculated at the rates that are expected to apply in the period when the liability is settled, or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income,including deferred tax on the revaluation of investment property. 
 

Trade and other accounts receivable

Trade and other receivables are initially measured at fair value as reduced by appropriate allowances for estimated irrecoverable amounts. All receivables do not carry any interest and are short term in nature. 
 

Cash and cash equivalents

Cash comprises cash at bank and on demand deposits. Cash equivalents are short term (less than three months from inception), repayable on demand and which are subject to an insignificant risk of change in value.

Trade and other accounts payable

Trade and other payables are initiallymeasured at fair value. All trade and other accounts payable are non-interest bearing.

Pensions

Pension contributions towards employees' pension plans are charged to the statement of comprehensive income as incurred. The pension scheme is a defined contribution scheme. 
 

Financial Instruments

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

 

2.   PROPERTY COSTS		2012	2011
		£'000	£'000
Rents payable		5	5
Empty rates		44	46
Twickenham costs		66	-
Property management		18	29
		133	80
Legal fees		39	37
Agents fees		10	12
Bad debts		-	7
		182	136
3.   ADMINISTRATIVE COSTS		2012	2011
		£'000	£'000
Rents payable - operating lease rentals		17	20
General administration, including staff costs		329	330
Auditors' remuneration:   Audit fees		32	32
Tax services		5	5
Depreciation and amortisation		6	2
		389	389
Included within General administration costs above are pension payments made to a former director of £nil (2011: £5,724).
4.   STAFF COSTS		2012	2011
		£'000	£'000
Staff costs, including Directors, during the year were as follows:
Wages and salaries		167	166
Social security costs		18	18
Other pension costs		10	15
		195	199
Details of Directors' emoluments, totalling £180,479 (2011: £174,989), are shown in the Report of the Directors
	No.		No.
The average number of employees, including Directors, engaged wholly in management and administration was:	5		5
The number of Directors for whom the Company paid pension benefits during the year was:	1		1

5.   FINANCE COSTS (NET)	2012	2011
	£'000	£'000
Interest payable on bank loans	123	312
(Profit)/Loss on financial liabilities at fair value through profit or loss (note 19)	…-	(65)
	123	247
Less: Bank interest receivable	(3)	(6)
	120	241
6.   TAXATION	2012	2011
	£'000	£'000
(a) Analysis of the tax charge for the year:
UK Corporation tax at 26% (2011: 28%)	225	237
Deferred tax - temporary differences	(50)	(25)
Current tax charge for the year	175	212
(b) Factors affecting the tax charge for the year:
Net Income before taxation	292	661
Current Year:
Corporation tax thereon at 26% (2011 - 28%)	76	185
Expenses not deductible for tax purposes	14	8
Excess of capital allowances over depreciation	-	(7)
Investment loss on fair value not taxable	225	63
Investment gain not taxable	(90)	-
Marginal rate relief	-	(12)
	225	237
7.   DIVIDENDS	2012	2011
	£'000	£'000
Final dividend paid in year of 7.6p per share
(2011: 7.6 per share)	206	206
Interim dividend paid in year of 2.9p per share
(2011: 2.9p per share)	80	80
	286	286
The Board recommends the payment of a final dividend of 7.6p per share, which will be recorded in the Financial Statements for the year ending 25th March 2013.

8.   EARNINGS PER SHARE
Basic earnings per share are calculated by dividing Income after Taxation attributable to Ordinary Shareholders of £117,000 (2011: £449,000) by the weighted average number of 2,711,617 (2011: 2,711,617) ordinary shares in issue during the period.  There are no instruments in issue that would have the effect of diluting earnings per share.
9.   INVESTMENT PROPERTIES	2012	2011
	£'000	£'000
Cost
Balance at 25th March 2011	18,825	21,290
Additions	1,330	-
Disposals	-	(945)
Revaluation deficit	(866)	(225)
	19,289	18,825
Less:
Assets held for sale (note 13)
Balance at 25th March 2011	1,295	-
Additions	2,324	1,295
Disposals	(1,295)	-
Balance at 25th March 2012	2,324	1,295
Investment properties as at 25th March 2012	16,965	18,825

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

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

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

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

10.        OTHER PROPERTY, PLANT AND EQUIPMENT
		2012 £'000	2011 £'000
Cost
Balance at 25th March 2011 and at 25th March 2012		47	47
Depreciation
Balance at 25th March 2011		41	39
Charge for the Year		6	2
Balance at 25th March 2012		47	41
Net Book Values at 25th March 2012		-	6

11.        OPERATING LEASES RECEIVABLE
		2012	2011
The future minimum lease payments receivable under non-cancellable operating leases which expire:		£'000	£'000
Not later than one year		1,361	1,389
Between 2 and 5 years		2,646	2,439
Over 5 years		144	197
		4	4,025
Rental Income recognised in the statement of comprehensive income amounted to £1,503,000 (2011: £1,691,000).
Typically, the properties were let for a term of between 5 and 15 years at a market rent with rent reviews every 5 years. The above analysis reflects future minimum lease payments receivable to the next break clause in the operating lease. The properties are 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.

12.        INVESTMENTS	2012	2011
	£'000	£'000
Quoted investments	3	3
13.        NON CURRENT ASSETS HELD FOR SALE	2012	2011
	£'000	£'000
Investment properties held for sale	2,324	1,295
The Company anticipates that it will sell two commercial properties within the current financial year and, as a result, these properties have been re-classified as held for sale. Since the year end, the Company has completed on the sale of a development site at Twickenham.
14.        ACCOUNTS RECEIVABLE	2012	2011
	£'000	£'000
Other receivables	319	26
	319	26
15.        ACCOUNTS PAYABLE	2012	2011
	£'000	£'000
Other creditors	184	153
Accruals and deferred income	624	604
	808	757

16.        BANK LOANS PAYABLE	2012	2011
	£'000	£'000
Bank Loan: Repayable on 17 December 2013	7,187	7,455
Interest is being charged at 1.25% per annum over LIBOR on the loan until 17 December 2013. The loan facility is secured by fixed charges over a number of freehold land and buildings owned by the Company, which at the year end had a combined value of £13,443,800 (2011: £11,590,000). The undrawn element of the loan facility available at 25th March 2012 was £1.3million (2011: £1.05million). The loan is additionally secured by a memorandum of security over cash deposits of £nil (2011: £300,000).

17.        DEFERRED TAX
The movement in the deferred tax liability during the year is as follows:
		Deferred Tax on property revaluation £'000
At 26th March 2011		56
Release of provision in the year		(50)
At 25th March 2012		6

18.        SHARE CAPITAL	2012	2011
	£'000	£'000
Ordinary Shares of 25p each:
Authorised: 8,000,000 shares	2,000	2,000
Allotted, Called Up and Fully Paid	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.

19. FINANCIAL INSTRUMENTS

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

At 25th March 2012 the Company's financial instruments comprised borrowings and cash and cash equivalents, with short term receivables and short term payables excluded from IFRS 7. The main purpose of these financial instruments was to raise finance for the Company's operations. Throughout the period under review, the Company has not traded in any other financial instruments and the fair value of the Company's financial assets and liabilities at 25th March 2012 is not materially different from their book value. The Board reviews and agrees policies for managing each of these risks and they are summarised below:

Credit Risk

The risk of financial loss due to a counterparty's failure to honour its obligations arises principally in connection with property leases and the investment of surplus cash.

Tenant rent payments are monitored regularlyand appropriate action is taken to recovermonies owed or, if necessary, to terminate the lease. Funds may be invested and loan transactions contracted only with banks and financial institutions with a high credit rating.

The Group has no significant concentration of credit risk associated with trading counterparties (considered to be over 5% of net assets) with exposure spread over a large number of tenancies.

Concentration of credit risk exist to the extent that at 25th March 2012 and 2011, current account and short term deposits were  held with two financial institutions, Svenska Handelsbanken AB and C Hoare & Co . Maximum exposure to credit risk on cash and cash equivalents at 25th March 2012 was £966,000 (2011:

£885,000).

Currency Risk

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

Interest Rate Sensitivity

Financial instruments affected by interest rate risk include loan borrowings and cash deposits. The analysis below shows the sensitivity of the statement of comprehensive income and equity to a 0.5% change in interest rates:

	0.5% decrease in interest rates		0.5% decrease in interest rates
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Impact of net interest payable - gain/(loss)	36	37	(36)	(37)
Impact of net interest receivable - gain/(loss)	(5)	(4)	5	4
Total impact on pre tax profit and equity	31	33	(31)	(33)

The net exposure of the Company to interest rate fluctuations was as follows:
	2012	2011
	£'000	£'000
Floating rate borrowings (bank loans)	(7,187)	(7,455)
Less: cash and cash equivalents	966	881
	(6,221)	(6,574)

Fair value of financial instruments

Except as detailed in the following table, management consider the carrying amounts of financial assets and financial liabilities recognised at amortised cost approximate to their fair value. A comparison of book values and fair values of the Company's financial assets and liabilities is set out below:

	2012 Book Value £'000	2012 Fair Value £'000	2011 Book Value £'000	2011 Fair Value £'000
Interest bearing borrowings (note 16)	(7,187)	(7,037)	(7,455)	(7,213)
Total	(7,187)	(7,037)	(7,455)	(7,213)

Categories of financial instruments

	2012	2011
	£'000	£'000
Financial assets:
Loans and receivables	319	26
Cash and cash equivalents	966	881
Quoted investments	3	3
Total financial assets	1,288	910
Non-financial assets	19,289	20,126
Total assets	20,577	21,036
Financial liabilities at Amortised cost:	8,212	8,452
Non-financial liabilities	6	56
Total liabilities	8,218	8,508
Shareholders' equity	12,359	12,528
Total shareholders' equity and liabilities	20,577	21,036

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

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

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

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

	Level 1 £'000	Level 2 £'000	Level 3 £'000	Level 4 £'000
Financial instruments at 25 March 2012
Quoted investments	3	-	-	3
	3	-	-	3

	Level 1 £'000	Level 2 £'000	Level 3 £'000	Level 4 £'000
Financial instruments at 25 March 2011
Derivative instruments at fair value through profit or loss	-	65	-	65
Quoted investments	3	-	-	3
	3	65	-	68

Capital Management

The primary objectives of the Company's capital management are:

·      to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders: and

·      to enable the Company to respond quickly to changes in market conditions and to take advantage of opportunities

Capital comprises shareholders equity plus net borrowings. The Company monitors capital using loan to value and gearing ratios. The former is calculated by reference to net borrowings as a percentage of the year end valuation of the investment property portfolio. Gearing ratio is the percentage of net borrowings divided by shareholders equity. Net borrowings comprises total borrowings less cash and cash equivalents. 

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

	2012	2011
	£'000	£'000
Total Borrowings	7,187	7,455
Cash and cash equivalents	(966)	(881)
Net borrowings	6,221	6,574
Shareholders equity	12,359	12,528
Investment properties	19,289	20,120
Loan to value ratio	32.3%	32.7%
Gearing ratio	50.3%	52.5%

20.        STATEMENT OF CASH FLOWS

Analysis of Net Debt	25th March	Cash	26th March
	2012	Movement	2011
	£'000	£'000	£'000
Cash and cash equivalents	(966)	(85)	(881)
Bank loan due after more than one year	7,187	(268)	7,455
Net Debt	6,221	353	6,574
21.        COMMITMENTS UNDER OPERATING LEASES
Future rental commitments at 25th March 2012 under non-cancellable operating leases are as follows:-
		2012	2011
		£'000	£'000
Within one year		21	15
Between two to five years		5	7
		26	22
22.        RELATED PARTY TRANSACTIONS
The Company has entered into an agreement with I.F.M.Consultants Ltd, a company owned and controlled by T.J.C. Parker, a Director of the Company, for that company to provide certain consultancy services. During the year to 25th March 2012, I.F.M. Consultants Ltd was paid £36,648 (2011: £33,825). There were no other related party transactions other than with the Directors, which have been disclosed under Directors' Emoluments in the Report of the Directors.

23.        EVENTS after the end of the reporting period

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

24. SEGMENTAL REPORTING

	Industrial		Retail		Office		Total
	2012	2011	2012	2011	2012	2011	2012	2011
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Rental Income	1,020	1,100	214	299	269	292	1,503	1,691
Loss on property investments at fair value	(866)	(105)		(110)		(10)	(866)	(225)
Total income and gain	154	995	214	189	269	282	637	1,466
Property expenses	(182)	(136)	-	-	-	-	(182)	(136)
Segment (loss)/profit	(28)	859	214	189	269	282	455	1,330
Unallocated corporate expenses							(389)	(389)
Profit/(Loss) on sale of investment property							346	(39)
Operating income							412	902
Interest expense (all relating to property loans)							(123)	(247)
Interest income and other income							3	6
Income before taxation							292	661
Other information	Industrial		Retail		Office		Total
	2012	2011	2012	2011	2012	2011	2012	2011
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets	13,036	14,180	3,960	3,030	2,293	2,910	19,289	20,120
Segment assets held as security	7,191	6,015	3,960	3,030	2,293	2,545	13,444	11,590

25. ANNUAL REPORT AND ACCOUNTS

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

 

END

 

 

FR BKFDNABKDOAD