TIDMWINK
RNS Number : 0196I
M Winkworth Plc
12 April 2022
M Winkworth Plc
Audited final results for the year to 31 December 2021
M Winkworth plc ("Winkworth" or the "Company"), the leading
franchisor of real estate agencies, is pleased to announce its
results for the year ended 31 December 2021.
Highlights for the year
-- Franchised office network revenue up 36% to GBP64.8 million (2020: GBP47.7 million)
-- Revenues up 47% to GBP9.45 million (2020: GBP6.41 million)
-- Profit before taxation up 110% to GBP3.21 million (2020: GBP1.53 million)
-- Year-end cash balance of GBP5.02 million (2020: GBP4.66 million)
-- Sales income 60% of total revenues (2020: 50%)
-- Six new franchises opened and two resold
-- Ordinary dividends of 9.3p per ordinary share (2020: 6.68p
per ordinary share) and special dividends of 7.7p per ordinary
share declared (2020: Nil)
Dominic Agace, CEO of the Company, commented: "We made excellent
progress in 2021, with a good performance in rentals and sales
income exceeding all company records. We welcomed six new
franchises to the group, while our two newly owned offices produced
strong results.
"We are mindful of the impact that the tragic situation in
Ukraine may have on UK inflation, interest rates and consumer
confidence, but have seen ongoing strong demand in the first
quarter of the current year with encouraging numbers of
applications for both sales and lettings.
"With new areas of regional expansion, our backing of ambitious
operators building local businesses, and growth in our core
business, where our long-established offices are benefiting from a
revival in activity in their prime markets, we see opportunities to
grow our business above market trend whilst both paying a
progressive dividend and maintaining a healthy cash balance."
Q1 2022 Dividend Declaration
The Directors are pleased to announce that the Company will pay
a dividend of 2.7p per ordinary share for the first quarter of 2022
to shareholders.
The timetable is as follows:
Dates
Ex-Dividend Date Thursday 21/04/2022
--------------------
Record Date Friday 22/04/2022
--------------------
Expected Payment Date Thursday 19/05/2022
--------------------
Investor presentation
Dominic Agace, CEO of the Company, and Andrew Nicol, CFO of the
Company, will present the final results for the year to 31 December
2021 via the Investor Meet Company platform today (12 April 2022)
at 4.00pm BST.
The presentation is open to all existing and potential
shareholders who can sign up and register to participate for free
at:
https://www.investormeetcompany.com/m-winkworth-plc/register-investor
Investors who already follow Winkworth on the Investor Meet
Company platform will automatically be invited.
For further information please contact:
M Winkworth Plc Tel : 020 7355 0206
Dominic Agace (Chief Executive Officer)
Andrew Nicol (Chief Financial Officer)
Milbourne (Public Relations) Tel : 07903 802545
Tim Draper
Shore Capital Ltd (NOMAD and Broker) Tel : 020 7408 4090
Robert Finlay
David Coaten
Henry Willcocks
About Winkworth
Winkworth is the leading London franchisor of residential real
estate agencies with a pre-eminent position in the mid to upper
segments of the sales and lettings markets. The franchise model
allows entrepreneurial real estate professionals to provide the
highest standards of service under the banner of a long-established
brand name and to benefit from the support and promotion that
Winkworth offers.
Winkworth is admitted to trading on the AIM Market of the London
Stock Exchange.
For further information please visit: www.winkworthplc.com
Chairman's Statement
I am pleased to report that 2021 saw a solid revival in the
sales market and a recovery in prices outside of central London,
where Winkworth's exposure enabled the company to benefit
significantly from the upturn. Our sales income, which accounted
for 60% of last year's revenues, broke all company records.
After a strong first half of 2021, the rental market has since
suffered from reduced availability of property to let, in part due
to landlords selling down properties which have become less
profitable due to increased regulatory and management costs, and
also as a result of many tenants renewing lease agreements. Our
locally-based teams remain well placed to maintain the quality of
their management and lettings activity and to control costs.
The experience within our group has enabled our franchisees and
our management team to build a unique estate agency business, with
a complete and complementary offering of specialised residential
sales, letting and property management. Winkworth benefits from a
broadly even mix between sales and rentals, but for the immediate
future we expect our sales commissions to account for more than
half of total revenues, as was the case in 2021.
The focus of our management has always been to ensure that our
franchisees can build their local businesses for the long term
under the umbrella of our brand. Besides helping our franchisees to
become established and grow, our franchising team is developing
co-ordinated actions for those that require help to plan for their
eventual retirement. Winkworth is perhaps unique in this approach
to inter-generational planning, which we believe will help us to
further build our brand as new joiners accept the challenge of
taking franchises on to the next level.
As a further incentive to our entrepreneurial estate agents, we
are also looking to selectively increase the number of owners with
equity stakes in local offices, where these are majority owned by
the Company. At our Tooting and Crystal Palace offices, where the
Company has majority stakes, the managers that we have backed have
performed very well, achieving in excess of GBP2m of turnover in
2021.
From my inception of Winkworth's franchise system in 1981, I
have always backed teams of experienced estate agents to grow their
operations. The current management team has steadily and carefully
continued this strategy to even greater effect. We are a debt-free
business and have advanced plans for investing in new franchises,
while at all times maintaining a prudent level of cash
reserves.
Simon Agace
Non-Executive Chairman
11 April 2022
CEO's Statement
The powerful post pandemic recovery drove a very buoyant
property market in 2021, fuelled by extraordinary levels of
activity around the time of the first proposed stamp duty deadline
in June and then the extended deadline at the end of September,
producing record months of sales income for the Company.
Despite concerns that the expiry of these incentives would lead
to a lull, the fundamental desire to move continued to create
strong buyer demand and resulted in a second half that exceeded our
expectations, with growing interest in London and strong price
growth in the country markets, where supply couldn't keep up with
demand.
Over the course of the year, following the successful vaccine
roll-out, we saw the move out of cities to the country start to
reverse, with lettings demand leading the way. A return to work in
London, alongside ongoing demand for houses and flats with outdoor
space, saw a significant rise in interest there as the year
progressed. Despite travel difficulties in central London, there
were also early signs of prices moving up. Winkworth's 2021 London
sales income rose by 60% over 2020 and country income by 76%.
Our rental business also performed well over the year, with
initial strength in activity and price growth in country markets
and an upturn in London in the second half of the year following
the return of young professionals, some international travel and
international students. Rental income in the country increased by
10% on 2020, outer London by 8% and, with a strong finish to the
year, central London by 4%. After several years of landlords
selling down their property portfolios and many tenants choosing to
renew agreements, a shortage of supply in the country market and in
certain country towns and cities led to price increases of up to
20%. In London we saw rental prices move ahead of pre-pandemic
levels towards the end of the year.
In 2021, gross revenues of the franchised network of GBP64.8m
were significantly up both year-on-year and when compared to 2019
(2020: GBP47.7m; 2019: GBP48.3m). Sales income was up by 64% at
GBP39.0m (2020: GBP23.8m; 2019: GBP23.8m) while Lettings and
Management increased by 8% to GBP25.8m (2020: GBP23.9m; 2019:
GBP24.4m), producing a 60:40 revenue split between these two
activities compared to a 50:50 ratio in 2020.
Winkworth's revenues rose by 47% to GBP9.45m (2020: GBP6.41m)
and profit before taxation was 110% higher at GBP3.21m (2020:
GBP1.53m). The Group's cash position at year end increased to
GBP5.02m (2020: GBP4.66m). Dividends of 9.3p per ordinary share
were declared for the year (2020: 6.68p per ordinary share) as well
as special dividends of 7.7p per ordinary share.
Encouraged by the strong property market, we saw an increase in
activity in new franchising, with a mixture of cold start
franchises by new operators and the growth of existing franchisees
entering complementary areas. In total, six new offices were opened
in 2021 in Eaton, Maida Vale, Wimbledon, Ferndown, Hellesdon and
Tiverton. Two existing offices in Ealing and Fulham were resold to
new operators, and we expect to see revenues from these
long-established offices increasing as they benefit from a new
injection of energy.
Wholly owned offices continued to grow above market trend in
2021, providing the Company with returns over and above the 8%
franchise fee. Our Tooting office was ranked first in its areas by
sales agreed in 2021 and has progressed from being Winkworth's 13th
office by gross revenue generated to its 9th. Our Crystal Palace
office completed its first full calendar year under our ownership
and revenue progressed successfully in the period. We also
established our Developments and Commercial investment business,
which shows early signs of promise.
Outlook
With a busy end to the year in London and increasing interest in
central London markets, where both sales and lettings are
benefiting as city life returns to a more normal footing, we expect
activity to be brisk in 2022. London sales prices are again
starting to rise, supported by a historically low interest rate
environment and record levels of household savings.
Houses in all locations remain the most sought-after type of
property, albeit we are seeing demand for flats in London being
more active in 2022 than they have been for several years. Overall,
we expect to see London prices improve further this year. In the
country markets, it is possible that activity will drop off from
the elevated levels experienced in 2021, but a shortage of supply
should continue to support prices in the near term.
In lettings we anticipate that prices will move up significantly
due to a lack of supply. Rental demand remains very strong and,
while we expect to see growth in rentals income in 2022, this will
be limited by the availability of properties.
Having recruited talented new franchisees to create local hubs
in Devon, Norfolk and Dorset, we plan to further expand in these
areas through a combination of organic growth and acquisitions
supported by the Company.
With new areas of regional expansion, our backing of ambitious
operators building local businesses, and growth in our core
business, where our long-established offices are benefiting from a
revival in activity
in their prime markets, we see opportunities to grow our
business above market trend whilst both paying a progressive
dividend and maintaining a healthy cash balance.
Dominic Agace
Chief Executive Officer
11 April 2022
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 31 DECEMBER 2021
2021 2020
Notes GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 9,451 6,406
Cost of sales (1,294) (1,137)
--------- ---------------
GROSS PROFIT 8,157 5,269
18 48
Administrative expenses (4,941) (3,921)
Negative goodwill - 119
--------- ---------------
OPERATING PROFIT 3,234 1,515
Finance costs (52) (22)
Finance income 32 39
--------- ---------------
PROFIT BEFORE TAXATION 3,214 1,532
Tax 4 (606) (295)
--------- ---------------
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR
THE YEAR 2,608 1,237
========= ===============
Profit and total comprehensive income attributable
to:
Owners of the parent 2,519 1,169
Non-controlling interests 89 68
--------- ---------------
2,608 1,237
====== ======
Notes
Earnings per share expressed in pence per 6 2021 2020
share: GBP GBP
Basic 19.78 9.18
Diluted 19.48 9.14
--------- ---------------
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2021
2021 2020
Notes GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 925 850
Property, plant and equipment 944 827
Prepaid assisted acquisitions support 279 338
Investments 71 71
Trade and other receivables 334 307
--------- ---------
2,553 2,393
--------- ---------
CURRENT ASSETS
Trade and other receivables 1,301 911
Cash and cash equivalents 5,019 4,661
--------- ---------
6,320 5,572
--------- ---------
TOTAL ASSETS 8,873 7,965
========= =========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 64 64
Share based payment reserve 8 51 51
Retained earnings 6,145 5,147
--------- ---------
6,260 5,262
Non-controlling interests 72 165
--------- ---------
TOTAL EQUITY 6,332 5,427
--------- ---------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 632 512
Deferred tax 97 90
--------- ---------
CURRENT LIABILITIES 729 602
Trade and other payables 1,412 1,756
Corporation tax payable 400 180
--------- ---------
1,812 1,936
TOTAL LIABILITIES 2,541 2,538
--------- ---------
TOTAL EQUITY AND LIABILITIES 8,873 7,965
========= =========
M Winkworth PLC
Consolidated Statement of Changes
in Equity
for the Year Ended 31 December
2021
Called
up
share Retained Share Other Non-controlling Total
capital earnings premium reserves Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2020 64 4,867 - 51 4,982 97 5,079
Changes in equity
Dividends - (889) - - (889) - (889)
Acquired with subsidiary - - - - - - -
Profit and total comprehensive
income - 1,169 - - 1,169 68 1,237
------- -------- ------- -------- ------- --------------- -------
Balance at 31 December 2020 64 5,147 - 51 5,262 165 5,427
------- -------- ------- -------- ------- --------------- -------
Changes in equity
NCI on acquisition of shares - 45 - - 45 (182) (137)
Dividends - (1,566) - - (1,566) - (1,566)
Total comprehensive income - 2,519 - - 2,519 89 2,608
------- -------- ------- -------- ------- --------------- -------
Balance at 31 December 2021 64 6,145 - 51 6,260 72 6,332
======= ======== ======= ======== ======= =============== =======
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2021
2021 2020
Notes GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 3,214 1,532
Depreciation charges 509 555
Impairment of intangible - 66
Negative goodwill - (119)
FV uplift on investment - (28)
Finance costs 52 22
Finance income (32) (39)
3,744 1,989
Increase in trade and other receivables (411) 67
Increase/(decrease) in trade and other
payables (375) 706
--------- ---------
Cash generated from operations 2,958 2,762
Interest paid (1) -
Tax paid (382) (313)
--------- ---------
Net cash from operating activities 2,575 2,449
--------- ---------
Cash flows from investing activities
Purchase of intangible fixed assets (180) (142)
Purchase of tangible fixed assets (46) (82)
Assisted acquisitions support (50) (17)
Interest received 32 39
--------- ---------
Net cash from investing activities (244) (202)
--------- ---------
Cash flows from financing activities
Payments of lease liabilities (219) (246)
Interest paid on lease liabilities (51) (22)
Acquisition of non-controlling interest (137) -
Equity dividends paid (1,566) (889)
--------- ---------
Net cash from financing activities (1,973) (1,157)
========= =========
Increase/(decrease) in cash and cash equivalents 358 1,090
Cash and cash equivalents at beginning
of year 4,661 3,571
--------- ---------
Cash and cash equivalents at end of year 5,019 4,661
========= =========
WINKWORTH PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
1. STATUTORY INFORMATION
M Winkworth Plc is a public company, registered in England and
Wales and quoted on AIM. The Company's registered number and
registered office address can be found on the Company Information
page of the Annual Report.
2. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared under the historical
cost convention, with the exception of financial instruments as set
out below, and in accordance with International Financial Reporting
Standards adopted by the European Union ("IFRS"). The financial
statements are presented in pound sterling, which is also the
company's functional currency. The following principal accounting
policies have been applied consistently in dealing with items which
are considered material in relation to the financial
statements.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
The Group has a strong cash base and no borrowings, with a high
level of discretionary expenditure, which can be cut at short
notice. Income would need to fall substantially for a prolonged
period, beyond six months, before a cash shortfall arose, at which
point stronger measures would be taken to cut costs. Thus, the
Directors continue to adopt the going concern basis of accounting
in preparing the accounts.
Revenue
Revenue represents the value of commissions and subscriptions
due to the Group under franchise agreements, together with the
value of fees earned by its subsidiary lettings business. Revenue
in respect of commissions due on house sales is recognised at the
point of the relevant property sale having been completed by the
franchisee. Revenue in respect of commissions due on lettings,
property management and administration services is recognised in
the period to which the services relate. The Group earns a straight
8% by value on all sales and lettings income generated by the
franchisees.
3. SEGMENTAL REPORTING
The board of directors, as the chief operating decision making
body, review financial information and make decisions about the
Group's business and have identified a single operating segment,
that of estate agency and related services and the franchising
thereof.
The directors believe that there are two material revenue
streams relevant to estate agency franchising.
2021 2020
GBP'000 GBP'000
Revenue
Estate agency and lettings business 2,231 1,083
Commissions and subscriptions due to the group under
franchise agreement 7,220 5,323
------- -------
9,451 6,406
4. TAXATION
Analysis of tax expense
2021 2020
GBP'000 GBP'000
Current tax:
Taxation 599 302
Adjustment re previous years - (3)
------- -------
Total current tax 599 299
Deferred tax 7 (4)
------- -------
Total tax expense in consolidated statement of profit
or loss and other comprehensive
Income 606 295
======= =======
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate
of corporation tax in the UK. The difference is explained
below:
2021 2020
GBP'000 GBP'000
Profit before income tax 3,214 1,532
------- -------
Profit multiplied by the standard rate of corporation
tax in the UK of 19% (2021 - 19%) 611 291
Effects of:
Expense not deductible for tax purposes (18) 3
Adjustment in respect of prior periods - (3)
Depreciation in excess of capital allowances 12 5
Other movements 1 (1)
------- -------
Tax expense 606 295
======= =======
5. DIVIDS
2021 2020
GBP'000 GBP'000
Ordinary shares of 0.5p each 1,566 889
======= =======
6. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during
the period.
2021
Earnings Weighted Per-share
average amount
number of
shares
GBP'000 '000 pence
Basic EPS
Earnings attributable to ordinary shareholders 2,519 12,733 19.78
Effect of dilutive securities - 195 -
--------- ----------- ----------
Diluted EPS
Diluted earnings 2,519 12,928 19.48
========= =========== ==========
2020
Earnings Weighted Per-share
average amount
number of
shares
GBP'000 '000 pence
Basic EPS
Earnings attributable to ordinary
shareholders 1,169 12,733 9.18
Effect of dilutive securities - 57 -
--------- ----------- ----------
Diluted EPS
Diluted earnings 1,169 12,790 9.14
========= =========== ==========
7. CALLED UP SHARE CAPITAL
2021 2020
Authorised: GBP'000 GBP'000
20,000,000 Ordinary shares of 0.5p 100 100
========= ===========
2021 2020
Issued and f GBP'000 GBP'000
u lly paid:
12,733,238 Ordinary shares of 0.5p 64 64
========= ===========
8. RESERVES
Retained earnings are earnings retained by the Company not paid out in dividends.
Share premium is the premium paid on shares purchased in the
Company.
Other reserves are the fair value equity components recognised
over the vesting period of share based payments.
9. ACQUISITION OF ADDITIONAL SHARES IN SUBSIDIARY
On 23 March 2021, the Heads of Terms were signed in relation to
Winkworth Franchising Limited's acquisition of a further 35% of
Tooting Estates Limited, which operates in the Winkworth franchise
in the Tooting area, for GBP136,963.
Per IFRS 10, when the holding in a subsidiary changes but the
parent retains control, which is the case with the purchase of the
additional shares in Tooting Estates Limited, the NCI is to be
adjusted to reflect the change in ownership as demonstrated
below:
45% NCI 3m 10% NCI 9m to Total
to March 21 December 21
GBP GBP GBP
------------------------------ ----------------------- ------------------------ -------------------------
Tooting Estates
Limited
Profit after tax 152,628 198,774 351,402
NCI in the year 68,683 19,877 88,560
Impaction
Restated 10% of additional
45% NCI NCI 35% on NCI
GBP GBP GBP
------------------------------ ----------------------- ------------------------ -------------------------
NCI b/fwd 165,229 36,718 (128,511)
NCI to March 2021 68,683 15,263 (53,420)
Total NCI to March
2021 233,912 51,981 (181,931)
10. POST BALANCE SHEET EVENTS
On 12 January 2022, M Winkworth Plc declared dividends of 2.7p
per share as well as special dividends of 3.8p per share for the
fourth quarter of 2021.
11. FINANCIAL INFORMATION
The financial information contained within this announcement for
the year ended 31 December 2021 is derived from but does not
comprise statutory financial statements within the meaning of
section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2020 have been filed with the Registrar of
Companies and those for the year ended 31 December 2021 will be
filed following the Company's annual general meeting. The auditors'
reports on the statutory accounts for the years ended 31 December
2021 and 31 December 2020 are unqualified, do not draw attention to
any matters by way of emphasis, and do not contain any statements
under section 498 of the Companies Act 2006.
12. ANNUAL REPORT AND ACCOUNTS
Copies of the annual report and accounts for the year ended 31
December 2021 together with the notice of the Annual General
Meeting to be held at the offices of M Winkworth Plc on 24 May
2022, will be posted to shareholders shortly and will be available
to view and download from the Company's website at
www.winkworthplc.com
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