WYNNSTAY PROPERTIES PLC

Annual Report • Jun 17, 2014

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RNS Number : 7468J

Wynnstay Properties PLC

17 June 2014

Wynnstay Properties PLC

Preliminary Results for Year Ended 25th March 2014

CHAIRMAN'S STATEMENT

I am pleased to be able to report another year of steady progress for your Companyagainst the background of more optimistic news of the UK economy.We continue to add to the portfolio and to capitalise on the opportunities which arise to retain existingtenants and to attract new ones. At the year-end,the portfolio was fully let.

Overview of financial performance

Wynnstay's financial performance for the year may be summarised as follows:

	Change	2014	2013
•            Property income	(1.2%)	£1,609,000	£1,628,000
•            Profit before movement in fair value of            investment properties and taxation	(8.3%)	£1,011,000	£1,103,000
•            Earnings per share		34.9p	(7.1p)
•            Dividends per share, paid and proposed:	+9.3%	11.8p	10.8p
•            Net asset value per share:	+5.3%	461p	438p
•            Net gearing	+2.0%	41.4%	40.6%

Property income for the year, at just over £1.6 million, was at a similar level to last year, albeit reflecting a number of underlying changes arising from the active management of the portfolio. Profits before fair value movement and taxation for the year, at just over £1 million were slightly lower than in the prior year as a result of additional administrative costs noted below.

Our annual property revaluation delivered an increase over the value for the prior year and the resulting surplus of

£170,000 has contributed, along with retained earnings and the profit on the property disposal noted below, to an increase of over 5% in net asset value per share.

Property Management and Portfolio

It has been another very active year in the management of the portfolio. We currently have 53 tenants occupying over 70 separate properties on 66 leases in 18 locations. During the course of the year we renewed or extended the existing leases of 8 tenants and welcomed 3 new ones.

I noted two significant management achievements when I reported to you in November: the extension until 2018 of the lease of our office premises at Cosham to a Government Department and the granting of a new ten year lease to a national retail business of a vacant unit at Hertford. I reported on other changes in November and since then we have also extended the lease of one of the industrial units at Heathfield, renewed another lease at Norwich and granted a lease to a new business on one of our retail units in Colchester, which was vacated by a longstanding tenant in January 2014.

During the year, there have been two noteworthy changes in the portfolio. As I reported in my last annual Chairman's Statement, early in the financial year we acquired Crown Close Industrial Estate in Hailsham, West Sussex details of which are set out in that statement. Secondly, as foreshadowed in my statement in November, we have successfully sold the other vacant unit at Hertford to an owner-occupier at a price that was 17% above the net book value.

A number of potential acquisitions have been explored and I am pleased to report that shortly after the end of the year we agreed and completed the purchase of a freehold trade counter investment to the east of the centre of Ipswich, in close proximity to the Neptune Marina development and residential development areas. The five units comprising 18,300 square feet are fully let to three tenants, one being part of a national chain and the two others being regional businesses. The total passing rent is £86,500 and with the price paid of £1,037,500, the net initial yield is 7.9%. This acquisition, having been made after the year-end, is not reflected in these financial statements.

Portfolio Valuation

As at 25 March 2014, our Independent Valuers, Sanderson Weatherall, have undertaken the annual valuation of the company's portfolio at £18,515,000 representing, as mentioned above, a revaluation increase of £170,000. The Board consider this to be a satisfactory outcome and it is particularly pleasing to note a modest increase in the value of our most recent acquisitions at Hailsham, Lewes and Surbiton.

Following the revaluation, as at the year-end, the industrial sector within the portfolio accounted for 62% by value, with the retail and office elements comprising 18% and 20% respectively.

Borrowings and Gearing

Total borrowings at the year-end were £6.0 million (2013: £5.4 million) and net gearing at the year-end was 41.4% compared to 40.6% last year. The increased borrowings reflect the drawdown under our borrowing facility made to facilitate the purchase of our Hailsham property in May 2013.

As you may recall, the five-year term of our borrowing facility of £8.5 million with Svenska Handelsbanken expired in December 2013. In December, we signed a new five year facility of £10 million, the main terms of which are broadly the same as those under the previous facility, other than an increase in the margin to 2.65% and an increase in the non-utilization fee to 1%. This higher margin, coupled with the increase in borrowings mentioned above, is reflected in higher financing costs for the year compared to the prior year.

While interest rates will undoubtedly rise as the economic recovery becomes established, starting perhaps later in the year, they are currently not forecast by experts to return to the historic levels of the pre-financial crisis period. 

Costs

Our property costs this year were less than in the prior year, mainly due to the saving in the payment of business rates on vacant premises in the year. Administrative costs are higher than in the previous year, as we incurred some professional fees in examining the formalities of raising further equity finance from shareholders. These fees have been fully accrued for in these accounts, as the Board's current intention is only to progress this further, if conditions are then appropriate, once it appears that the new borrowing facility will be fully utilised.

Dividend

The Board is recommending a total dividend for the year of 11.8p per share being an increase over the 10.8p paid in the last year. An increased interim dividend of 4.2p per share was paid in December 2013 and the Board has considered carefully whether the final dividend for the year should also be increased, but has decided against doing so. Accordingly, subject to approval of Shareholders at the Annual General Meeting, a final dividend of 7.6p per share will be paid on 18th July 2014 to Shareholders on the register on 27th June 2014.

However, assuming favourable conditions at the end of the half-year, the Board will again consider increasing the interim dividend for payment in December 2014, with a view to aligning further the overall balance between the interim and final dividends.

Outlook

As mentioned in the opening paragraph of this statement, there appears now to be greater optimism about the UK economy than has been the case for more than six years. The economic outlook, and particularly the prospects for small and medium-sized businesses, inevitably affects the value of the commercial property in which we invest and the terms that can be agreed with tenants. If this improvement in optimism and outlook is sustained it should lead to a return to rental growth which will in turn result in a further increase in the value of your Company's portfolio.

As the UK emerges from the difficult economic conditions of recent years, Wynnstay is in good shape and, in the Board's view, continues to offer opportunities for profitable growth. We will continue to make changes to enhance the value of the portfolio as and when opportunities to do so arise.

Unsolicited approaches to Shareholders

Shareholders are reminded that unsolicited approaches regarding their shares may be from fraudsters. If you are in any doubt, please refer to my letter sent to all Shareholders in January this year (also available on our website: www.wynnstayproperties.co.uk) or to the website of the Financial Conduct Authority (www.fca.org.uk/ consumers/scams).

Annual General Meeting

Our Annual General Meeting will be held at the Royal Automobile Club on Thursday 10th July 2014. As always, I hope that as many Shareholders as possible will attend to meet the Board and other Shareholders informally before and after the meeting to discuss the Company's affairs as well as to take part in the formal business.

Colleagues and Advisers

Finally I would like to express my appreciation for the contributions of our two executive directors - Paul Williams, our Managing Director, and Toby Parker, our Finance Director - who manage Wynnstay's affairs efficiently and effectively, as well as with flair and determination. The two executive directors and I, as your Chairman, also benefit from the long experience in commercial property of our two non-executive directors - Charles Delevingne and Terence Nagle. I would like to thank all four of them, as well as our advisers, for their contributions over the past year.

Philip G.H. Collins

Chairman

16th June 2014

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

WYNNSTAY PROPERTIES PLC

STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 25TH MARCH 2014

	Notes	2014 £'000		2013 £'000
Property Income		1,609		1,628
Property Costs	2	(79)		(125)
Administrative Costs	3	(443)		(384)
		1,087		1,119
Movement in fair value of: Investment Properties	9	170		(937)
Profit on Sale of Investment Property		52		100
Operating Income		1,309		282
Investment Income	5	1		1
Finance Costs	5	(129)		(117)
Income before Taxation		1,181		166
Taxation	6	(235)		(359)
Income/(Loss) after Taxation		946		(193)
Basic and diluted earnings per share	8	34.9p		(7.1p)

The company has no items of other comprehensive income.

WYNNSTAY PROPERTIES PLC

STATEMENT OF FINANCIAL POSITION 25TH MARCH 2014

	Notes	2014 £'000		2013 £'000
Non Current Assets
Investment Properties	9	18,515		17,700
Investments	12	3		3
		18,518		17,703
Current Assets Accounts Receivable	13	267		191
Cash and Cash Equivalents		776		571
		1,043		762
Current Liabilities Accounts Payable	14	(876)		(816)
Bank Loans Payable	15	-		(5,396)
Income Taxes Payable		(235)		(380)
		(1,111)		(6,592)
Net Current Liabilities		(68)		(5,830)
Total Assets Less Current Liabilities		18,450		11,873
Non-Current Liabilities Bank Loans Payable	15	(5,951)		-
Net Assets		12,499		11,873
Capital and Reserves
Share Capital	17	789		789
Treasury Shares		(1,570)		(1,570)
Share Premium Account		1,135		1,135
Capital Redemption Reserve		205		205
Retained Earnings		11,940		11,314
		12,499		11,873

WYNNSTAY PROPERTIES PLC

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 25TH MARCH 2014

	2014 £'000		2013 £'000
Cashflow from operating activities
Income before taxation	1,181		166
Adjusted for: Amortisation of deferred finance costs	3		-
Allowance for trade receivables	-		28
(Increase)/decrease in fair value of investment properties	(170)		937
Interest income	(1)		(1)
Interest expense	129		117
Profit on disposal of investment properties	(52)		(100)
Changes in: Trade and other receivables	(93)		100
Trade and other payables	31		14
Income taxes paid	(380)		(208)
Interest paid	(129)		(117)
Net cash from operating activities	519		936
Cashflow from investing activities Interest and other income received	1		1
Purchase of investment properties	(945)		(1,672)
Sale of investment properties	352		2,424
Net cash from investing activities	(592)		753
Cashflow from financing activities Dividends paid	(320)		(293)
Repayments on bank loans	(5,998)		(2,850)
Drawdown on bank loans	6,596		1,059
Net cash from financing activities	278		(2,084)
Net (decrease)/increase in cash and cash equivalents	205		(395)
Cash and cash equivalents at beginning of period	571		966
Cash and cash equivalents at end of period	776		571

WYNNSTAY PROPERTIES PLC

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 25th MARCH 2014

YEAR ENDED 25 MARCH 2014				Capital	Share
	Share			Redemption	Premium	Treasury	Retained
	Capital			Reserve	Account	Shares	Earnings	Total
	£ 000			£ 000	£ 000	£ 000	£ 000	£ 000
Balance at 26 March 2013	789			205	1,135	(1,570)	11,314	11,873
Total comprehensive
income for the year-	-			-	-	-	946	946
Dividends - note 7-	-			-	-	-	(320)	(320)
Balance at 25 March 2014	789			205	1,135	(1,570)	11,940	12,499
YEAR ENDED 25 MARCH 2013
				Capital	Share
	Share			Redemption	Premium	Treasury	Retained
	Capital			Reserve	Account	Shares	Earnings	Total
	£ 000			£ 000	£ 000	£ 000	£ 000	£ 000
Balance at 26 March 2012	789			205	1,135	(1,570)	11,800	12,359
Total comprehensive
loss for the year Dividends - note 7 Balance at 25 March 2013			-	-	-	-	(193)	(193)
	-	-	-	-	(293)	(293)
	789	205	1,135	(1,570)	11,314	11,873

WYNNSTAY PROPERTIES PLC

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 25TH MARCH 2014

1.              BASIS OF PREPARATION, ACCOUNTING POLICIES AND ESTIMATES

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

1.1     Basis of Preparation

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

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

(a)      New Interpretations and Revised Standards Effective for the year ended 25th March 2014 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 that are relevant to the operations and effective for accounting periods beginning on or after 26th March 2013.

(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 an existing standard.

IFRS 9: Financial Instruments

The standard makes substantial changes to the recognition and measurement of financial assets and liabilities and derecognition of financial assets. In the future, there will only be two categories of financial assets, although there are current proposals in issue to increase these to three. Under the current issue, financial assets are recognised at either fair value through profit and loss or measured at amortised cost. On adoption of the standard, the Company will have to redetermine the classification of its financial assets, specifically those classified as available for sale and held to maturity financial assets. Most financial liabilities will continue to be carried at amortised cost, however, some financial liabilities will require to be measured at fair value through profit or loss, for example derivative financial instruments, with changes in the liabilities' credit risk recognised in other comprehensive income.

The standard currently has no mandatory effective date.

1.2             ACCOUNTING POLICIES Investment Properties

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

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

Depreciation

In accordance with IAS 40, freehold investment properties are included in the Statement of Financial Position at fair value, and are not depreciated.

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

Disposal of Investments

The gains and losses on the disposal of investment properties and other investments are included in profit or loss in the year of disposal.

Property Income

Property income is recognised on a straight line basis over the period of the lease. Revenue is measured at the fair value of the consideration receivable. All income is derived in the United Kingdom.

Taxation

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

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

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 as reduced by appropriate allowances for estimated irrecoverable amounts. All receivables do not carry any interest and are short term in nature.

Cash and Cash Equivalents

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

Trade and Other Accounts Payable

Trade and other payables are initially measured at fair value. All trade and other accounts payable are not 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 distributable 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.

1.2             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.

There are no judgemental areas identified by management that could have a material effect on the financial statements at the reporting date.

2.	PROPERTY COSTS Rents payable	2014 £'000 3		2013 £'000 4
	Empty rates	12		7
	Twickenham costs	-		1
	Property management	9		43
		24		55
	Legal fees	26		22
	Agents fees	29		20
	Allowance for trade receivables	-		28
		79		125
3.	ADMINISTRATIVE COSTS Rents payable - operating lease rentals	2014 £'000 20		2013 £'000 18
	General administration, including staff costs	358		330
	Fees relating to potential equity issue	26		-
	Auditors' remuneration:  Audit fees	32		32
	Tax services	4		4
	Amortisation of deferred finance costs	3		-
		443		384
4.	STAFF COSTS Staff costs, including Directors, during the year were as follows:	2014 £'000		2013 £'000
	Wages and salaries	178		170
	Social security costs	21		22
	Other pension costs	10		10
		209		202

Details of Directors' emoluments, totaling £189,393 (2013: £180,479), are shown in the Strategic Report on page 11. There are no other key management personnel.

	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) Interest payable on bank loans	2014 £'000 129		2013 £'000 117
	Less: Bank interest receivable	(1)		(1)
		128		116
6.	TAXATION (a) Analysis of the tax charge for the year:	2014 £'000		2013 £'000
	UK Corporation tax at 23% (2013: 24%)	235		380
	Overprovision in previous year	-		(15)
	Total current tax charge	235		365
	Deferred tax - temporary differences	-		(6)
	Tax charge for the year	235		359
	(b) Factors affecting the tax charge for the year: Net Income before taxation	1,181		166
	Current Year: Corporation tax thereon at 23% (2013 - 24%)	272		40
	Expenses not deductible for tax purposes	18		7
	Excess of capital allowances over depreciation	(3)		(5)
	Investment (gain)/loss on fair value allowable	(39)		225
	Investment gain not taxable	(13)		(24)
	Investment gain taxable	-		137
	Overprovision in previous year	-		(15)
	Deferred tax	-		(6)
	Current tax charge	235		359
7.	DIVIDENDS Final dividend paid in year of 7.6p per share	2014 £'000		2013 £'000
	(2013: 7.6p per share) Interim dividend paid in year of 4.2p per share (2013: 3.2p per share)	206 114		206 87
		320		293

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 2015.

8.   EARNINGS PER SHARE

Basic earnings per share are calculated by dividing Income after Taxation attributable to Ordinary Shareholders of £946,000 (2013: loss £193,000) by the weighted average number of 2,711,617 (2013: 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 Investment Properties	2014 £'000		2013 £'000
		Balance at 25th March 2013	17,700		19,289
		Additions	945		1,672
		Disposals	(300)		(2,324)
			18,345		18,637
		Revaluation Surplus/ (Deficit)	170		(937)
		Balance at 25th March 2014	18,515		17,700
	Less:
	Assets Held for Sale
	Balance at 25th March 2013		-		2,324
	Disposals		-		(2,324)
	Balance at 25th March 2014		18,515		-
	Investment properties at 25th March 2013		18,515		17,700

The Company's freehold investment properties are carried at fair value as at 25th March 2014. The fair value of the properties has been calculated by independent valuers, Sanderson Weatherall, 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 6% to 11%, with an average yield of 8.44% and an average weighted yield of 5.56% for the portfolio.

There have been no transfers between levels of the fair value hierarchy. Movements in the fair value are recognised in profit or loss.

A 0.5% increase or decrease in the yield would result in a corresponding increase or decrease of £92,575 in the fair value movement through profit or loss.

10.        OTHER PROPERTY, PLANT AND EQUIPMENT

		2014 £'000	2013 £'000
Cost
Balance at 25th March 2013 and at 25th March 2014		47	47
Depreciation
Balance at 25th March 2013		47	41
Charge for the Year		-	6
Balance at 25th March 2014		47	47
Net Book Values at 25th March 2013 and 25th March 2014		-	-

11.	OPERATING LEASES RECEIVABLE The future minimum lease payments	2014 £'000		2013 £'000
	receivable under non-cancellable operating leases which expire:
	Not later than one year	1,494		1,366
	Between 2 and 5 years	2,922		2,583
	Over 5 years	1,102		1,141
		5,518		5,090

Rental income recognised in the profit or loss amounted to £1,609,000 (2013: £1,628,000).

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 maturity 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 Quoted investments	2014 £'000 3		2013 £'000 3
13.	ACCOUNTS RECEIVABLE Trade receivables	2014 £'000 264		2013 £'000 182
	Other receivables	3		9
		267		191

Trade receivables include an allowance for bad debts of £28,000 (2013: £28,000). Trade receivables of

£18,000 (2013: £8,000) are considered past due but not impaired.

14.	ACCOUNTS PAYABLE Trade payables	2014 £'000 40			2013 £'000 20
	Other creditors	163			125
	Accruals and deferred income	673			671
		876			816
15.	BANK LOANS PAYABLE Current position	2014 £'000 -			2013 £'000 5,396
	Non-current position	5,998			-
	less: deferred finance costs	(47)			-
		5,951			5,396

The bank loan was re-financed in the year providing a credit facility of up to £10 million. Interest was charged at 1.25% per annum over LIBOR on funds drawn down until 17th December 2013 and at 2.65% per annum over LIBOR thereafter.

The loan is repayable in one instalment on 18 December 2018. The bank loan includes the following financial covenants:

•               Rental income shall not be less than 2.25 times the interest costs

•               The bank loan shall at no time exceed 50% of the market value of the properties secured.

The borrowing 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 £17,155,000 (2013: £13,380,000). The undrawn element of the borrowing facility available at 25th March 2014 was £4.0million (2013: £3.1million). A commitment fee of 1% per annum is payable on the undrawn amount. In the accounts for the year ended 25th March 2013, as the borrowing facility expired and the funds drawn down were repayable on 17th December 2013, it was treated as a current liability.

16.        DEFERRED TAX

A deferred tax asset of £250,286 (2013: £291,751) has not been recognised, as the Directors believe it is unlikely that there will be suitable taxable profits in the foreseeable future from which the future reversal of the underlying timing differences can be deducted.

17.       SHARE CAPITAL

		2014 £'000		2013 £'000
	Authorised
	8,000,000 Ordinary Shares of 25p each:
	Allotted, Called Up and Fully Paid	2,000		2,000
	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.

18.        FINANCIAL INSTRUMENTS

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

At 25th March 2014 the Company's financial instruments comprised borrowings and cash at bank and in hand, 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 2014 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 regularly and appropriate action is taken to recover monies owed or, if necessary, to terminate the lease. Funds are invested and loan transactions contracted only with banks and financial institutions with a high credit rating.

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

Concentration of credit risk exists to the extent that at 25th March 2014 and 2013, 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 2014 was £776,000 (2013:

£571,000).

Currency Risk

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

Interest Rate Risk

The Company is exposed to cash flow interest rate risk as it currently borrows at  floating interest rates. The Company monitors and manages its  interest  rate  exposure  on  a  periodic  basis. The Company finances its operations through a combination of retained profits and bank borrowings.

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% increase in interest rates		0.5% decrease in interest rates
Impact on interest payable - gain/(loss)	2014 £'000 30	2013 £'000 27	2014 £'000 (30)	2013 £'000 (27)
Impact on interest receivable - (loss)/gain	(4)	(3)	4	3
Total impact on pre tax profit and equity	26	24	(26)	(24)

The net exposure of the Company to interest rate fluctuations was as follows:	2014		2013
Floating rate borrowings (bank loans)	£'000 (5,998)		£'000 (5,396)
Less: cash and cash equivalents	776		571
	(5,222)		(4,825)

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.

	2014	2014	2013	2013
	Book Value	Fair Value	Book Value	Fair Value
	£'000	£'000	£'000	£'000
Interest bearing borrowings (note 15)	(5,951)	(5,998)	(5,396)	(5,411)
Total	(5,951)	(5,998)	(5,396)	(5,411)

Categories of Financial Instruments

Financial assets:

	2014	2013
	£'000	£'000
Financial assets:
Quoted investments	3	3
Loans and receivables	267	191
Cash and cash equivalents	776	571
Total financial assets	1,046	765
Non-financial assets	18,515	17,700
Total assets	19,561	18,465
Financial liabilities at amortised cost	7,062	6,592
Total liabilities	7,062	6,592
Shareholders' equity	12,499	11,873
Total shareholders' equity and liabilities	19,530	18,465

The only financial instruments measured subsequent to initial recognition at fair value as at 25th March are quoted investments. These are included in level 1 in the IFRS 7 hierarchy as they are based on quoted prices in active markets.

Capital Management

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

•        to safeguard the Company'sability to continueas a going concern, so that it can continueto provide returns for 

shareholders: and

•        to  enable the Company to respond quickly to changes in market conditionsand to take advantage of opportunities.

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

The Company's policy is that the loan to value ratio should not exceed 50% and the gearing ratio should not exceed 100%.

Net borrowings and overdraft	2014 £'000 5,951		2013 £'000 5,396
Cash and cash equivalents	(776)		(571)
Net borrowings	5,175		4,825
Shareholders' equity	12,499		11,873
Investment properties	18,515		17,700
Loan to value ratio	28.0%		27.3%
Net gearing ratio	41.4%		40.6%

19.	STATEMENT OF CASH FLOWS Analysis of Net Debt	25th March	Cash	26th March
		2014 £'000	Movement £'000	2013 £'000
	Cash and cash equivalents	(776)	(205)	(571)
	Bank loan	5,998	602	5,396
	Net Debt	5,222	397	4,825

20.        COMMITMENTS UNDER OPERATING LEASES

Future rental commitments at 25th March 2014 under non-cancellable operating leases are as follows:-

	2014		2013
£'000		£'000
Within one year	19		22
Between two to five years	24		3
	43		25

21.        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 2014, I.F.M. Consultants Ltd was paid £38,480 (2013: £36,648). There were no other related party transactions other than with the Directors, which have been disclosed under Directors' Emoluments in the Strategic Report on page 11. As of 26th March 2014, the Company terminated its agreement with I.F.M. Consultants Ltd and entered into a new agreement with T.J.C. Consultants Ltd, a company owned and controlled by T.J.C. Parker.

22.        EVENTS AFTER THE END OF THE REPORTING PERIOD

On 29th April 2014, the Company completed the purchase of an 18,300 sq ft trade counter investment in Ipswich at a cost of £1,037,500 with a passing rent of £86,500 representing a net initial yield of 7.9%. This was financed by drawing down funds available under our borrowing facility.

23.        SEGMENTAL REPORTING

	Industrial		Retail		Office			Total
Rental Income	2014 £'000 1,107	2013 £'000 1,068	2014 £'000 163	2013 £'000 195	2014 £'000 339	2013 £'000 365		2014 £'000 1,609	2013 £'000 1,628
Profit/(loss) on property investments at fair value	230	(163)	25	(685)	(85)	(90)		170	(937)
Total income and gain/(loss)	1,337	906	188	(490)	254	275		1,779	691
Property expenses	(79)	(125)	-	-	-	-		(79)	(125)
Segment profit/(loss)	1,258	781	188	(490)	254	275		1,700	566
Unallocated corporate expenses								(443)	(384)
Profit on sale of investment property	52	100	-	-	-	-		52	100
Operating income								1,309	282
Interest expense (all relating to property loans)								(129)	(117)
Interest income and other income								1	1
Income before taxation								1,181	166

Other information	Industrial				Retail				Office				Total
	2014		2013		2014		2013		2014		2013		2014		2013
	£'000		£'000		£'000		£'000		£'000		£'000		£'000		£'000
Segment assets	11,462		10,588		3,300		3,275		3,753		3,837		18,515		17,700
Segment assets held	6,143		6,268		3,300		3,275		3,753		3,837		13,196		13,380
as security

This information is provided by RNS

The company news service from the London Stock Exchange

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