Wynnstay Properties (LSE:WSP) — Annual Results

0:01 Good morning, ladies and gentlemen, and welcome to the WYNNSTAY PROPERTIES PLC investor presentation. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish your responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. And if you could give out your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to the team from WYNNSTAY PROPERTIES PLC. Philip, good morning, sir. Good morning. Thank you very much. My name is Philip Collins. I'm the Chairman of WYNNSTAY PROPERTIES PLC, and I'm here together with Chris Betts, WYNNSTAY's Managing Director, to present our annual results for the year ended 03/25/2026.

0:54 This follows the publication of our annual report and financial statements that came out this morning when the market opened. Shareholders who received our company documents via the web will already have been notified of the availability of the annual report, which is also available on our website. Shareholders who have elected to receive paper copies will receive them in the post later this week. The presentation is in five parts. I will speak first about the highlights of the year from a corporate point of view as presented in our report. Chris will then cover the property highlights of the year and then go on to talk about the portfolio and present data on the performance of the portfolio over the last five years. I will then take over from Chris and present data on the corporate performance of WYNNSTAY as a company over that five year period.

1:47 Finally, I will note some key points about our distinctive approach to commercial property for private investors. There will be an opportunity for questions, which can be placed through the IMC facility. So first of all, our financial highlights. This slide summarizes the financial highlights of WYNNSTAY's year, running through the key numbers for shareholders compared to last year. Rental income has risen by seven percent to almost $2,900,000 aided by the acquisition of the five units in Cambridge in May of last year and underlying growth in the properties that we've held for five years of 3.5%. Operating income has risen by 4.6% before the fair value adjustment and 17.3% after the fair value adjustment.

2:38 And that adjustment, to remind you, is the increase in the value of the properties determined by our independent revaluation that we undertake each year. Earnings per share have risen, as shown, by 23.6. Dividends per share are being increased by 5.6% from 27p per share to 28.5p per share, and that is subject to approval of the final dividend by shareholders at the AGM in the middle of July. Net asset value per share has risen by 3.8 from $11.68 p per share to 1212p per share. And then finally, total accounting return, that is the sum of NAV and dividend increases, has risen by 6.2%.

3:32 In terms of borrowings, our borrowings remain modest with a loan to value ratio of 23.8% compared to 23.3% last year. And I'll come back to look at the position over five years later on. Significantly, our lenders, Handelsbank and PLC, have confirmed that they will they have credit approval and are willing to refinance our existing facilities when they expire in December 2026. That's subject to contract due diligence and documentation, and they will extend our total facilities from the present figure of $15,000,000 to $20,000,000 as our future business needs require. We expect to draw down $12,000,000 to refinance the existing facilities in December 2026.

4:22 Other matters of shareholder interest in the annual report. First of all, we've noted that we made two online presentations like this to shareholders and others using this platform, which were generally well received. Secondly, we've made further changes to the content of the annual report this year. We've enhanced the linkage to the website, for instance, with photographs rather than a printed list of the properties. We've also refreshed the former introduction to WYNNSTAY that we've used in recent years to provide an enhanced overview of the business and to present our key performance indicators in chart form, which some investors, we feel, may find easier to absorb. We've adopted the revised quoted Companies Alliance code of governance.

5:13 And finally, with the anticipated retirement of several directors, we have commenced a process to appoint a new independent chairman and thereafter new independent nonexecutive directors. I'll now hand over to Chris for his management review of the year and to talk about the portfolio performance over five years. Over to you, Chris. Good morning, everybody. The 2026 financial year saw very satisfactory performance from our property investments and operations. We believe the outcome reflects good tenant demand, our continued focus on portfolio quality, and disciplined asset management. As has been reported, we added to the portfolio in May 2025 with the acquisition of a five unit terrace in Water Beach, Cambridge.

6:05 As previously reported, the total cost of approximately £2,950,000 brought in an initial rental income of £183,000 per annum that we expect to see good growth from over the medium term because of the strong local economy. Whilst no property sales were completed during the year, we did contract to sell the Western Supermayor property at auction on the March 24, completing the disposal post year end a month later. This is a standalone unit occupied by Majestic WYNE, as you can see in the photo. We recognized that value had been materially increased through agreements of a five year lease renewal in February of this year and that more limited prospects of rental growth in the future meant that the investment would be optimized by selling at this point.

7:00 In the event, we did better than expected in the sale with strong competitive bidding, achieving a price of £665,000 which represented a 35.7% uplift over the net book value of £490,000 as at 03/25/2025. There was a high level of leasing activity over the year with 18 new leases completed. The aggregate annual rental reserved under these leases amounts to almost £614,000 per annum. Three of these lettings were open market to new tenants, whilst the remaining 15 were renewals with existing occupiers, demonstrating the strong tenant retention across the portfolio.

7:53 I'm pleased to say that in no instance was rent agreed below the value as estimates of rental value. And in aggregate, the new income shows a 4.4% increase over the rental values used in the March 2025 valuation at the start of the year. Since the year end, two more lease renewals have been completed to leave only one outstanding from the period to March 2026. Over the year, nine leases were subject to tenant break options. And I'm pleased to say that none of these were exercised, resulting in rental income being maintained. Our good tenant retention meant that there were only three vacancies during the year.

8:42 One small unit in Hailsham was successfully relet in January. In Lip Hook, a unit and adjoining parcel of open storage land that was formerly let to Network Rail have remained vacant following the expiring releases at the end of February twenty twenty six and completion of Network Rail's re signaling projects on the adjoining line. Together, these two elements represent 2.7% of the total portfolio estimated rental value used in the March 2026 valuation. I'm pleased to say that the unit is under offer, and the land is being marketed for open storage use with some interest being shown. There was only one very minor instance of rent arrears during the year, being £3,202 written off in respect of another small unit in Hailsham prior to its re letting, which we reported on at the interim stage.

9:45 Looking at the valuation, our portfolio has continued to see rental growth. On a like for like basis, excluding the Cambridge acquisition, the total estimated rental value adopted for the March 2026 valuation increased by 2.2% from the year before. Valuation yields in the market for the properties that we're invested in have generally remained static over the year, with valuation movements driven primarily by leasing activity, lease expiries, break options, and rental growth. Our active management of those factors has been the primary driver of the 2.9% growth in the capital value of the portfolio on a like for like basis, which is now £44,170,000 Including Cambridge, portfolio is now valued at a total of £46,970,000 At the half year stage, we reported that developments of six new units on surplus land at Lippwick, Ayleswood and Ipswich was being explored.

10:54 Plan permission has now been secured at all three sites, providing for approximately 11,200 square feet of new lettable space, broadly evenly distributed across the three locations. However, updated advice indicates that construction costs have increased at a faster pace than projected rental growth, resulting in returns that are marginal relative to the capital risk in the projects. Whilst we do not currently consider progression of these schemes to be in shareholders' best interests, we will continue to monitor these opportunities. Frustratingly, the property industry continues to await clarity from government regarding the next phase of the minimum energy efficiency standards.

11:47 Whilst the minimum energy performance certificate rating of C by the end of twenty twenty seven remains likely, it is not yet clear whether this will apply only to new transactions or also to existing leases. In response to that likely outcome, we have now completed a review of all the properties and units with a current rating below this threshold of C. Taking account of improvements already completed by the company and indeed our tenants, fresh EPCs are in the process of being lodged, which will result in over 55% of these units achieving a C rating or above. The remaining units have been assessed and works identified now to achieve a minimum C rating over the next eighteen months.

12:35 Typically, this involves removal of gas fired heating in favor of air source heat pumps or other electric heating or indeed no heating at all, together with upgraded LED lighting. We projected a budget of £210,000 to complete this work, and this has been incorporated into our financial plans to deliver compliance by the end of twenty twenty seven December. In several cases, these improvements are expected to result in a B rating rather than a C. In addition to these energy efficiency improvement initiatives, planned capital expenditure includes refurbishment of works at LIPWOG and Heathfield.

13:22 Particular focus is being given to the replacement of over or over cladding of aging asbestos cement roof sheets, which are typically between forty and fifty years old and where repair is no longer viable. In all cases, our approach seeks to deliver clear future benefits in terms of both rental income and capital value from these projects. I'd now like to show how the 2026 results fit into the five year picture. Looking at the graph and bar chart on the left, all over the snapshots of the position at March 25 shows a slight dip. Occupancy of units within the portfolio remains at very high levels.

14:11 Similarly, rent collection has been maintained at excellent levels with only minimal bad debts over the five year period. Our investments in the light industrial sector and our active management has enabled the portfolio to show sustained rental income growth in both absolute terms and on a like for like basis, as can be seen on the chart on the left. That, in turn, has enabled continued growth in capital value. The chart shows a steady picture like for like. And whilst the absolute number showed a slight dip in 2025 following property sales, This was followed by a rise this year following the acquisition of the Cambridge property.

15:03 A less positive metric is the gradual shortening in the average unexpired lease term within the portfolio, both to break and to lease expiry. The figures shown in our charts are weighted by rent per tenancy. This pattern is not unusual and reflects the wider market situation in all property sectors as businesses prefer to be more flexible and indeed have greater bargaining power. Nonetheless, we believe the picture has stabilized for our portfolio at least. Looking ahead, we can be encouraged by the reversionary potential within the portfolio, shown in the bar chart on the right, with market rents growing such that current rents receivable are at an increasingly lower proportion of the total estimated rental value.

15:53 In other words, there is an inherent potential for income to rise regardless of future growth. Our aim is to capture that gap as a minimum at rent review or might more likely on you letting. That in itself gives optimism for sustained performance in the future. I'll hand it back now to Philip for the corporate picture. Thank you very much, Chris. Looking at WYNNSTAY's corporate performance over five years, I'm going to present six charts that you will find in the annual report to show how WYNNSTAY has performed as a company during this five year period. In this first slide, the first two charts show the increase over five years in dividends, up from 22.5p per share to 28.5p last year and in net asset value per share, up from a $10.90 p per share to $12.12 p per share on the right.

16:50 So you'll see this constant progress in both those two charts. The next chart shows how these increases in dividends and net asset value per share combine to give total accounting return per share to shareholders. There was a substantial increase in 2022 as a result of a significant or substantial surplus on the revaluation and then further steady increases in each of the past four years. As I mentioned earlier, we we adopt a prudent level of borrowings to finance WYNNSTAY's expansion. And the level of borrowings has remained at or around 24% to 25% of loan to value ratio over the five year period.

17:42 Next, our operating costs. We pay considerable attention to managing our costs tightly. These charts show on the left our operating costs over our portfolio income, and on the right, the operating costs as a percentage of portfolio value. And you'll see that the operating costs on over income are at or around 24%, and they've been moving down. And the operating costs against portfolio value are significantly down at about 1.5%. Next, I want to move on to the share price performance. And obviously, the share price is determined by the market, not by the company.

18:29 But this first graph and then the next one I'm going to show you show how WYNNSTAY's share price has substantially outperformed, in this case, the FTSE Real Estate Investment Trust Index. So that's an index of all real estate companies that are quoted on the stock exchange, whether they're AIM or on the main market or in different categories of two fifty and three fifty. And as you'll see, we're in the top line, the lighter colored line, and you'll see we substantially outperformed there. The next sorry. The next slide shows the performance against the FTSE three fifty Index, which is an index of all companies, not just property companies, and also the AIM All Share Index.

19:19 And there, again, we are in the top line on the right hand side, and we substantially outperformed both those indices. And those graphs also appear in the annual report, and you'll see them when you look at the printed version or the version online. Sorry. Finally, want to say something about WYNNSTAY's profile. We are long established as a successful property company, and we have, we believe, a distinctive approach to commercial property investment and development. We've been closed on AIM for over thirty years since it came into existence in 1995. Our principal shareholders are private, that is retail investors, and many have been with us for a very long time.

20:12 You can read more about our profile in the annual report and on our website, but our aim is to generate rising dividend income and achieve capital appreciation over the medium to long term. The main features of our distinctive approach are these. First of all, we manage the portfolio directly rather than externally using external managers. We have only one employee. He's sitting here with me today, and he manages the entire portfolio. Secondly, we've built the portfolio incrementally and organically over time. We've disposed of assets and reinvested the proceeds as opportunities arise. And we've grown the portfolio over time without the need to pursue deal driven activity.

21:02 Our management is rewarded in salary and, where appropriate, a cash bonus. There are no share or similar incentives. As a result, dilution of shareholders' investments and the potential conflicts of interest are minimized. The Board and the management are totally focused on the control of our costs and performance for shareholders, as demonstrated in the charts presented earlier. We have prudent, pragmatic approach to finance, our use of retained profits, recycled, and prudent borrowings. You can read more about that if you look at our annual report this year in its new form or in slightly different form in the earlier years.

21:51 That's all we want to say in the presentation, which has lasted about twenty minutes. I hope it's been helpful. All the information in the presentation is publicly available in our annual report and from our website. If there are any questions, we'd be happy to take them now. Perfect. Philip, Chris, if I may just jump back in there. Thank you very much indeed for your presentation this morning. And gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the company take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboards. Guys, this stage, if I may just hand back you to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you.

22:40 Chris, do you want to deal with the first question? Yes. Let me do that. Yeah, the first question says, how are Valuers currently assessing secondary industrial assets relative to transaction evidence? And are you seeing any disconnect between private market values and public market valuations? Our valuations, as carried out by BNP Paribas Real Estate, are based on transaction evidence wherever possible. And therefore, I don't see that there is a particular disconnect. There is always something of a lag between valuations and market activity, not least because transactions are not taking place particularly readily in the current market with a fair amount of caution.

23:29 So there's not an awful lot of evidence to go on to base valuations on. But wherever possible, it is based on transactional evidence. Shall I ask the second one? Yeah. Follow on question, actually, in a way from that previous one is that the Western Super Met property was sold post year end for £665,000 an uplift over the March 25 valuation. Was the March 2026 carrying value already uplifted to £665,000 because the property was held for sale? And what does this sale imply about the conservatism or otherwise of the portfolio valuation? The straightforward answer is yes. The March 2026 results do incorporate the Western Settle value as a property held for sale.

24:24 There is a large uplift on the March 2025 valuation achieved by the sale price. I think that is very much down to the uncertainty of the situation in March 2025 when we did not know if Majestic WYNNS were going to renew a lease or not. And that was reflected in both the yield and assumptions about the cash profile of the investment that the value was adopted in March 2025. The in the event that caution was well borne out because Majestic spent a lot of time last summer deciding whether they wanted to stay in the property or not. And negotiations were difficult and long winded. But they did renew a five year lease, and that brought about a significant uplift in value, which I'm happy was right and proper, as it were.

25:21 I think when you get small properties that can appeal to private investors in particular, which I believe the Western Comerre Property did or does, it is always quite a little bit difficult to put a fully accurate picture on because personal preferences and so on can come very much into the picture, as indeed, in this case, probably the enthusiasm brought about by an auction sale can be a factor as well. Okay. The next question is one for me. Given that the Chairman's statement refers to the anticipated retirement of the Chairman and other directors, shareholders would benefit from clarity on timing.

26:08 And then there's a second part to that question, is the Chairman retiring this year? And will the new Chairman be appointed before or after the additional independent nonexecutive directors are recruited? So to answer the first part, shareholders will benefit from clarity on timing. We have said all we are able to say at this stage. It's quite clear in the Chairman's statement that we are going through a process. It's an established process as you would expect for a public company. We anticipate that the, Chairman, the new Chairman will be appointed, and then we'd move into a process of appointing new independent nonexecutive directors. So the Chairman will be appointed first and then followed by the nonexecutive directors, and announcements will be made at the appropriate time. There will be no further comment I can give at this stage.

27:05 Then a further question, was there a reason why the company did not provide a trading update this year for only the second time in the last ten years? It is true that we have usually provided the trading update at the end of the year. Occasionally, we've done it at the very end of March or the beginning of April. Usually, we've done it at the end of April or beginning of May. We didn't do it this year because there didn't seem to be a reason to do so. There's no obligation to give a trading update for AIM companies. And it seemed better to work as we have done on the annual report and to give a fuller picture to shareholders at this stage. I think that's the end of the questions. Absolutely, guys. If I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Philip, perhaps before really now, just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

28:13 Yes. I'd just like to thank everybody who's joined the presentation today and also to welcome those who'll be viewing it online later on, either on our website or on the IMC facility. And I would encourage you, please, to give us feedback on these presentations because it is very useful to us in deciding how best to communicate with our shareholders and also with other investors and advisers. Thank you very much. Perfect, Philip. That's great. And thank you once again for updating investors this morning. I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of WYNNSTAY PROPERTIES PLC, we would like to thank you for attending today's presentation.

29:03 That now concludes today's session. So good morning to you all.