Wynnstay Properties : Half Year Report

WYNNSTAY PROPERTIES PLC

INTERIM REPORT

SIX MONTHS ENDED 29 SEPTEMBER 2020

WYNNSTAY PROPERTIES PLC

INTERIM REPORT FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2020

CHAIRMAN'S STATEMENT

Despite the business and economic challenges and uncertainties arising from the Covid-19 pandemic and the Brexit negotiations, I am pleased to report on a very creditable performance by Wynnstay for the six months period ending 29 September 2020.

Interim Financial Results

The unaudited results are summarised in the table below, which should be read in conjunction with the following commentary and financial statements:

		29 September	29 September
		2020	2019
Property Income	(11.2)%	£1,055,000	£1,188,000
Operating Income	(11.0)%	£750,000	£843,000
Income before Taxation	(49.8)%	£538,000	£1,072,000
Earnings per share	(54.4)%	16.0p	35.1p
Net Asset Value per share	(3.6)%	800p	830p
Interim Dividend per share	6.7%	8.0p	7.5p

Property Income for the half-year was just over 11% lower than in the same period last year at £1,055,000 (2019 - £1,188,000) with a broadly similar percentage decrease in Operating Income at £750,000 (2019 - £843,000). This year we have the benefit of a full contribution from the additional unit at Aylesford acquired in August 2019. However, last year's income also included rent from the two units at Chessington, which became vacant in June 2019, all three units at Basingstoke which we sold in August 2019 and our remaining unit at St Neots which we also sold last year.

This year's lower income also reflects the support that we have given to a number of tenants through concessionary arrangements to assist them in the difficult trading conditions arising from the impact of the Covid-19 pandemic. As I explained in my statement in July, these arrangements have involved either deferral of part of a quarter's rent for a limited period by spreading its payment over the remainder of our financial year or rent holidays or deferrals generally in return for the removal of tenant break options or lease extensions. Our willingness to assist and work with tenants to find suitable arrangements for them has been appreciated and all tenants who benefited from such initiatives have to date kept to the revised terms.

Income before taxation for the half-year was substantially lower than last year which included a profit of £440,000 on the sale of our properties at Basingstoke and St Neots, whereas this year there were no property sales. On a comparable basis, excluding property sales, income before taxation fell by just under 15%. Comparable earnings per share were also similarly affected by the property sales last year.

We continue to keep in close contact with our tenants and to monitor carefully the receipts of our adjusted rental income, taking account of the concessionary arrangements made. In my statement in July I reported that we had collected all of the rental income due for the first quarter of the year commencing 26 March 2020 and that we had collected over 70% of the rent due for the second quarter commencing 24 June 2020, comprising both quarterly rents and those now being paid monthly. I am pleased to report that there is now no significant rent outstanding for the second quarter and that for the third quarter, commencing 29 September 2020, we have collected 98% of the quarterly and monthly rents due, with the main outstanding items being the monthly payments now due on 1 December 2020.

Borrowings from Handelsbanken at the end of the half-year were the same as for the same period last year at £12.5 million.

In the light of the many challenges and uncertainties and their effects on our tenants, their businesses and the commercial property market, the Board considers the financial results for the first half of the year are very creditable.

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WYNNSTAY PROPERTIES PLC

INTERIM REPORT FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2020

Portfolio

The portfolio is 94% let which, while consistent with our past record of high occupancy and low voids, is considered by the Board to be very satisfactory in the circumstances. It is also encouraging to note that during August and September we negotiated the renewal, at increased rents, of two leases on our Quarry Wood Industrial Estate at Aylesford and we were also able to agree terms to relet a unit at Uckfield immediately following the expiry of the lease to the previous tenant.

Work has continued regarding the proposed development of our Trade Park at Petersfield, where I mentioned in my July statement that we were finalising agreements for lease with tenants for two of the three units. Negotiations have been slowed as a result of the Covid-19 pandemic, but I am pleased to report that we now seem to be making progress and anticipate both agreements being finalised shortly. In the meantime, we have been progressing with the tendering process for construction. When two of the three units are prelet, we feel confident that we should be in a position to appoint our chosen contractor with a view to starting construction early in 2021. On our Beaver Industrial Estate at Liphook we are keen to progress with the construction of the two single storey units. However, due to the current economic environment resulting from the pandemic, we do not expect to take further decisions on this until next year. I will of course keep shareholders updated on both developments in future statements.

I have previously reported on our plans to relet the two vacant units at Oakcroft Business Centre in Chessington. With much of the commercial property market and many businesses being in lockdown during the spring and early summer, while there was some interest from potential tenants, none came to fruition. Accordingly, we took the decision to explore interest in a sale of the entire freehold property of three units while continuing also to offer them for letting singly or in combination. There has been interest from potential purchasers as well as from potential tenants.

Dividend

In light of the financial results, the Board has decided to pay an increased interim dividend of 8.0p per share (2019 - 7.5p) on 18 December 2020 to those shareholders on the register on 4 December 2020. The Board is pleased to be able to increase the interim dividend by 6.7%, especially given the decision to pay a lower overall dividend last year as a result of the uncertainties caused by the Covid-19 pandemic.

While it is too soon to form a view on the overall dividend for this year, as I said in my statement in July we are keenly aware how important investment income is to many shareholders and we are determined to return to our progressive dividend policy as soon as practicable. While we are encouraged by Wynnstay's performance in the first half of the year future increases will, of course, depend on our financial results for the year as a whole and our assessment of future prospects in the light of the challenging business and economic conditions.

Share Scams

In each statement, I draw the attention of shareholders to the risk of "share scams", arising from unsolicited telephone calls or online offers or approaches. With this year's annual report, I also wrote separately to shareholders on this subject in the light of a number of share scam calls reported in the second half of July. Shareholders have reported another series of such calls over recent weeks and I again urge shareholders to be vigilant. Wynnstay's website (www.wynnstayproperties.co.uk) includes a warning and a link to other information about unsolicited calls on the Financial Conduct Authority's website.

Annual General Meetings 2020 and 2021

As you will know, our Annual General Meeting 2020 was convened as a closed meeting due to the Covid-19 pandemic and was held on 15 September 2020 when all the resolutions were duly passed on a poll vote. I would like to thank all the shareholders who took the trouble to return their proxy cards to express their voting directions.

We are hoping that for 2021 it will be possible to arrange our Annual General Meeting in mid-July in the usual form. The date and venue will be notified nearer the time when we can be certain that it can take place in the light of the conditions then prevailing.

Finally, on behalf of the Board, I thank all shareholders for their continued interest in and support for Wynnstay and, in these unusual and uncertain times for all of us, wish all shareholders and their families a Happy Christmas and a healthy and peaceful 2021.

Philip Collins

Chairman

23 November 2020

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