TIDMWINK
RNS Number : 4951Y
M Winkworth Plc
07 September 2022
M Winkworth Plc
Interim Results for the six months ended 30 June 2022
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its unaudited interim results for the six months ended 30
June 2022.
Highlights for the period(1)
-- Results in line with expectations and show good progress
against 2019 but reflect extraordinary H1 2021 comparative
-- Network revenues down by 24% to GBP27.7 million (H1 2021:
GBP36.4 million; H1 2019: GBP21.4 million)
- Network sales revenues down by 39% to GBP15.0 million (H1
2021: GBP24.6 million; H1 2019: GBP10.0 million)
- Network lettings revenues up by 8% to GBP12.7 million (H1
2021: GBP11.8 million; H1 2019: GBP11.4 million)
-- Network sales revenues accounted for 54% of total network revenues (H1 2021: 68%)
-- Winkworth revenues down by 18% to GBP4.28 million (H1 2021:
GBP5.25 million; H1 2019: GBP2.55 million)
-- Majority-owned offices generated revenues of GBP1.19 million (H1 2021: GBP1.04 million)
-- Profit before taxation down by 46% to GBP1.07 million (H1
2021: GBP1.98 million; H1 2019: GBP0.58 million)
-- Cash balance at 30 June 2022 of GBP4.11 million (30 June
2021: GBP4.57 million; H1 2019: GBP2.51 million)
-- Two new franchised offices opened
-- Ordinary dividends of 5.4p declared during the period (H1 2021: 4.4p)
Note(1): H1 2019 comparatives have been included as a reference
point to the last H1 of normalised trading
Dominic Agace, Chief Executive Officer of the Company,
commented:
"Our first half results, which are in line with management's
expectations, are not flattered by the comparison with the
extraordinarily strong first half of 2021, but show that our
business has developed well since the last year of normalised
trading in 2019. As such, we are pleased with the good progress
that we have made since then. We enter the second half with an
overhang of unfulfilled business, the confidence that our
franchisees are adept at adjusting rapidly to changing markets, and
a business model that is designed to perform throughout the
property cycle."
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 (NOMAD and Broker) Tel : 020 7408 4090
Robert Finlay
David Coaten
Henry Willcocks
Chairman's Statement
After the exceptionally strong first half in 2021, this year's
results are encouraging and Winkworth has continued to trade well.
As things stand, sales transactions remain brisk, although there
are now signs that buyers in some areas are becoming more cautious
of excessive valuations, taking note of rising inflation and
interest rates and either making the most of available mortgage
offers or re-assessing their timings.
This shift in market sentiment may affect sales volumes going
into 2023 and lead to a more careful pricing environment, where the
most important consideration becomes choosing a buyer at a price
that will ensure completion of the transaction. Winkworth's
tailor-made approach to handling transactions becomes of even
greater importance in more mature markets such as these.
The lettings and management business has continued to grow. We
are, however, following closely developments which may have a
bearing on the long-term prospects for growth in the sector, in
particular the political debate on the future of the private rental
sector.
Over the course of my career, I have experienced the Rent Acts
pre-1986 and I am, therefore, personally wary of the outcome of the
current debate on the relationship between landlords and tenants.
It is interesting to note that the Irish government has recently
suggested introducing incentives to encourage landlords to grant
longer leases to tenants in return for tax incentives, whereas in
the UK, July 2022's White Paper considers scrapping fixed-term
tenancy agreements altogether. This uncertainty may cause some
landlords in the UK to reduce their portfolios or exit the
business.
While the build to rent sector may replace some of the demand at
the mid to lower end of the market, it will not replace the higher
demand for the individual and varied supply of rental properties
generated by the private rental sector. At this point of the cycle,
we suspect that Winkworth's sales business will grow faster than
rentals.
The core Winkworth franchise business continues to show organic
growth through steady and consistent expansion of the network,
while the businesses where we have taken an equity stake are
producing slightly more dynamic growth, giving us a good mix of
earnings. Our strategy remains to maintain a positive cash balance
through the cycle, and to make loans selectively to franchisees
looking to expand, thus broadening the Company's footprint. Estate
agency is a cyclical business, tied to the UK economy and a
fluctuating market, and one where the ability to retain cash brings
both stability and opportunities.
Simon Agace
Non-Executive Chairman
7 September 2022
CEO's Statement
Activity in the sales market remained strong in the first half
of the year. Comparisons for the first half of the last three years
are difficult to make, with trading in 2020 having been severely
disrupted by lock downs, while as a result of the government's
stamp duty holiday in 2021, with a deadline set for the end of June
(exemption was tapered from GBP500,000 to GBP250,000 until
September 2021), sales in the first half of that year were boosted
by completions which would ordinarily have taken place in July and
August 2021.
While H1 2022 activity was below the level of H1 2021, it was
significantly ahead of the last normalised year of trading in 2019.
Sales agreed in H1 2022 were 16% down on H1 2021 but 40% ahead of
H1 2019.
Demand picked up in London, as buyers returned to city centres
post-pandemic and proximity to work regained importance. As a
result, we saw prices for houses starting to rise in London, while
interest in flats also picked up significantly as Covid trends
abated. With some buy-to-let landlords selling down their
portfolios, however, the supply of flats increased and held back
prices.
We also saw an upturn in activity in prime central London,
resulting in these offices accounting for a higher proportion of
revenues. This was led by lettings, with gross revenues rising by
14% in H1 versus 8% at Group level. While the lettings side of the
business has been leading the way, prime central London offers good
value relative to other international cities and we would expect
international interest in the sales market to return.
In the country markets we have seen demand easing as rapid
recent price increases and a partial reversion to city living have
cooled demand. With supply remaining extremely limited, however,
prices continued to rise in H1 as pent-up demand fed through.
Overall, in H1 2022 we sold more properties than any other
online or traditional agent in the postcodes that we cover(2).
Lettings and management continued to be extremely busy, with
activity picking up where 2021 left off and London leading the way
in terms of price rises, making up lost ground on the country
markets and now some 15% ahead of pre-pandemic levels. Demand has
been boosted by a return to cities from the country and, in prime
central London, by international interest including students. The
supply of rental properties has been squeezed by landlords selling
off properties on the back of increased taxation and regulation,
with the prospect of further proposals, which are currently being
debated further affecting their profitability. As a result, many
landlords have taken the opportunity of a strong sales market to
exit, creating a perfect storm for rent increases.
In H1 2022, gross revenues of the franchised network of GBP27.7m
were 24% lower year-on-year (2021: GBP36.4m) but 29% higher than
the GBP21.4m achieved in the last normalised period of 2019. Sales
income was down by 39% at GBP15.0m (2021: GBP24.6m; 2019: GBP10.0m)
while Lettings and Management increased by 8% to GBP12.7m (2021:
GBP11.8m; 2019: GBP11.4m), producing a 54:46 revenue split between
these two activities compared to a 68:32 ratio in 2021.
Winkworth's revenues fell by 18% to GBP4.28m (H1 2021: GBP5.25m)
and profit before taxation by 46% to GBP1.07m (H1 2021: GBP1.98m).
The Group's cash stood at GBP4.11m at 30 June 2022 (H1 2021:
GBP4.57m) and ordinary dividends of 5.4p were declared for the
first half of the year (H1 2021: 4.4p).
The investments that we have made in selected offices through
taking equity stakes in partnership with proven operators have
continued to bear fruit, generating increased franchise fees on the
back of the success of these businesses as well as profit
contributions to the Company. Winkworth Tooting is now
well-established and has retained its leading position by market
share for sales agreed in the area. Winkworth Crystal Palace has
continued to grow, both its market share and revenues and is
expected to make an increasingly significant contribution going
into next year.
Elsewhere, our new Developments and Commercial Investments
business, which is still at an early stage of development, is
expected to be profitable in 2022 and to grow significantly in
2023. These new ventures have made a considerable difference to our
business since we first invested in 2018 and, alongside new
franchising opportunities and the franchisee-led acquisitions that
we back, we expect these to help drive our growth over and above
market trends in the years ahead.
After opening six new offices in 2021, we carried a healthy
pipeline of opportunities into 2022, supporting our talented
franchisees in Bath and Exeter to acquire and convert
long-established businesses in Bristol and Crediton respectively,
the latter adding to the recently launched office in Tiverton last
year. We now have five offices in Devon, building on a localised
hub, which will continue to provide Winkworth with a regional point
of growth, in the same way as has our highly successful Norfolk
local network.
With further opportunities in the pipeline, we expect to open
6-8 new offices this year. In addition, we have resold our
Shepherds Bush office to a new operator, as we did with our Ealing
and Fulham offices last year, bringing a new generation of talented
franchisees into well established and successful offices. We expect
their energy and commitment to take these offices to new
heights.
Outlook
Despite a backdrop of increasing interest rates leading to
higher funding costs, our sales applicants remain high. Sales
applicants in July 2022 were 4% ahead of July 2021 and 26% ahead of
July 2019. Lettings demand continues to be strong, with applicants
up 7% versus July 2021 and 44% ahead of 2019. We do expect the
increased cost of borrowing to have an impact on property,
softening demand and slowing the price increases seen of late. With
strong levels of employment, however, as well as the significant
pent-up demand to relocate post-Covid, and as the cost of renting
increases, we expect sales demand to remain strong for the
remainder of the year, with prices in positive territory.
Beyond that, much will depend on the trajectory of interest
rates and macro-economic factors. With a limited fixed cost base, a
healthy cash balance and no debt, we remain confident. Our
considered growth strategy is to support talented and proven
franchisees in acquiring businesses and to expand our equity
ownership of businesses in partnership with established operators.
In this way, we believe we can outperform market trends and
continue to pay a progressive dividend.
Note(2): based on postcodes where Winkworth has listed a
property - Source: TwentyEA
Dominic Agace
Chief Executive Officer
7 September 2022
About Winkworth
Established in Mayfair in 1835, Winkworth is a leading
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 well-respected 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
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period 1 January 2022 to 30 June 2022
(Unaudited) (Unaudited)
Period Period
1.1.22 1.1.21 (Audited)
To To Year ended
30.6.22 30.6.21 31.12.21
GBP000's GBP000's GBP000's
CONTINUING OPERATIONS
Revenue 2 4,281 5,247 9,451
Cost of sales (769) (696) (1,294)
------------ ------------ -----------
GROSS PROFIT 3,512 4,551 8,157
Other operating income 1 - 18
Administrative expenses (2,433) (2,560) (4,941)
Negative goodwill - - -
------------ ------------ -----------
OPERATING PROFIT 1,080 1,991 3,234
Finance costs (19) (19) (52)
Finance income 11 7 32
------------ ------------ -----------
PROFIT BEFORE TAXATION 1,072 1,979 3,214
Taxation (265) (408) (606)
------------ ------------ -----------
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 807 1,571 2,608
============ ============ ===========
Profit and total comprehensive
income attributable to:
Owners of the parent 797 1,491 2,519
Non-controlling interests 10 80 89
------------ ------------ -----------
TOTAL COMPREHENSIVE INCOME SINCE
LAST ANNUAL REPORT 807 1,571 2,608
============ ============ ===========
Earnings per share expressed
in pence per share: 3
Basic 6.26 11.71 19.78
Diluted 6.22 11.57 19.48
============ ============ ===========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2022
(Unaudited) (Unaudited) (Audited)
30.06.2022 30.06.2021 31.12.2021
Notes GBP000's GBP 000's GBP 000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 963 799 925
Property, plant and equipment 807 1,076 944
Prepaid assisted acquisitions support 402 313 279
Investments 51 56 71
Trade and other receivables 484 393 334
2,707 2,637 2,553
------------ ------------ ---------------
CURRENT ASSETS
Trade and other receivables 1,449 1,952 1,301
Cash and cash equivalents 4,108 4,568 5,019
------------ ------------ ---------------
5,557 6,520 6,320
TOTAL ASSETS 8,264 9,157 8,873
============ ============ ===============
EQUITY
SHAREHOLDERS' EQUITY
Share capital 64 64 64
Share option reserve 51 51 51
Retained earnings 5,745 5,909 6,145
------------ ------------ ---------------
5,860 6,024 6,260
Non-controlling interests 82 163 72
TOTAL EQUITY 5,942 6,187 6,332
------------ ------------ ---------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 508 762 632
Deferred tax 87 92 97
------------ ------------ ---------------
595 854 729
CURRENT LIABILITIES
Trade and other payables 1,354 1,648 1,412
Tax payable 373 468 400
------------ ------------ ---------------
1,727 2,116 1,812
------------ ------------ ---------------
TOTAL LIABILITIES 2,322 2,970 2,541
------------ ------------ ---------------
TOTAL EQUITY AND LIABILITIES 8,264 9,157 8,873
============ ============ ===============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2022 to 30 June 2022
Non
Share Retained Share controlling Shareholders'
option
capital earnings reserve interest equity
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1
January
2021 64 5,147 51 165 5,427
Total comprehensive
income - 1,491 - 80 1,571
NCI on acquisition
of shares - (55) - (82) (137)
Dividends paid - (674) - - (674)
--------- ---------- --------- ------------ ---------------
Balance at 30 June
2021 64 5,909 51 163 6,187
--------- ---------- --------- ------------ ---------------
Total comprehensive
income - 1,028 - 9 1,037
NCI on acquisition
of shares - 100 - (100) -
Dividends paid - (892) - - (892)
--------- ---------- --------- ------------ ---------------
Balance at 31
December
2021 64 6,145 51 72 6,332
--------- ---------- --------- ------------ ---------------
Total comprehensive
income - 797 - 10 807
Dividends paid - (1,197) - - (1,197)
--------- ---------- --------- ------------ ---------------
Balance at 30 June
2022 64 5,745 51 82 5,942
========= ========== ========= ============ ===============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2022 to 30 June 2022
(Unaudited) (Unaudited)
Period Period
1.1.22 1.1.21 (Audited)
To To Year ended
30.6.22 30.6.21 31.12.21
Notes GBP000's GBP000's GBP000's
Cash flows from operating
activities
Cash generated from operations i 995 1,010 2,958
Interest paid (1) - (1)
Tax paid (300) (120) (382)
------------ ------------ -----------
Net cash from operating activities 694 890 2,575
------------ ------------ -----------
Cash flows from investing
activities
Purchase of intangible fixed
assets (108) - (180)
Purchase of tangible fixed
assets (10) (28) (46)
Assisted acquisition support (165) (35) (50)
Interest received 11 7 32
------------ ------------ -----------
Net cash used in investing
activities (272) (56) (244)
------------ ------------ -----------
Cash flows from financing
activities
Payment of lease liabilities (117) (97) (219)
Interest paid on lease liabilities (19) (19) (51)
Equity dividends paid (1,197) (674) (1,566)
Non controlling interest - (137) (137)
------------ ------------ -----------
Net cash used in financing
activities (1,333) (927) (1,973)
------------ ------------ -----------
Increase/(decrease) in cash
and cash equivalents (911) (93) 358
Cash and cash equivalents
at beginning of period 5,019 4,661 4,661
------------ ------------ -----------
Cash and cash equivalents
at end of period ii 4,108 4,568 5,019
============ ============ ===========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2022 to 30 June 2022
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.22 1.1.21 (Audited)
To To Year ended
30.6.22 30.6.21 31.12.21
GBP000's GBP000's GBP000's
Profit before taxation 1,072 1,979 3,214
Depreciation and amortisation 259 255 509
(Reversal of) Impairment of fixed
asset investments 20 15 -
Finance costs 19 19 (32)
Finance income (11) (7) 52
Loss on disposal of fixed asset - 1 1
------------ ------------ -----------
1,359 2,262 3,744
(Increase) in trade and other receivables 265 (1,125) (411)
Increase/(decrease) in trade and
other payables (629) (127) (375)
Cash generated from operations 995 1,010 2,958
============ ============ ===========
ii. CASH AND CASH EQUIVALENTS
The amounts disclosed in the cash flow statement in respect of
cash and cash equivalents are in respect of these balance sheet
amounts:
30.6.22 30.6.21 31.12.21
GBP000's GBP000's GBP000's
Cash and cash equivalents 4,108 4,568 5,019
========= ========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2022 to 30 June 2022
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2022 and the
comparative information for the periods ended 30 June 2021 and 31
December 2021 do not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the most recent
statutory accounts for the year ended 31 December 2021 has been
delivered to the Registrar of Companies. The auditor's report on
these accounts was unqualified and did not contain a statement
under section 498 of the Companies Act 2006.
The financial information for the six months ended 30 June 2022
and 30 June 2021 is unaudited. The financial information for the
year ended 31 December 2021 is derived from the group's audited
annual report and accounts.
The annual financial statements are prepared in accordance with
UK adopted International Accounting Standards (UK IFRS). The
condensed set of financial statements included in this interim
financial report has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting'.
The accounting policies and methods of computation used in this
financial information is consistent with those applied in the
group's latest annual audited financial statements, except as noted
below.
Taxation
Income tax expense has been recognised based on the best
estimate of the weighted average annual effective income tax rate
expected for the full financial year.
Deferred tax is recognised in respect of all material temporary
differences that have originated but not reversed at the balance
sheet date.
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2022 to 30 June 2022
2. 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.
6 months 6 months 12 months
2022 2021 2021
GBP000 GBP000 GBP000
Revenue
Estate agency and lettings business 1,185 1,038 2,231
Commissions and subscriptions due
to the group under franchisee agreements 3,096 4,209 7,220
--------- --------- ----------
4,281 5,247 9,451
--------- --------- ----------
All revenue is earned in the UK and no customer represents more
than 10% of total revenue in either of the years reported.
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2022 to 30 June 2022
3. EARNINGS PER SHARE
Basic and diluted earnings per share is calculated by dividing
the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period.
Weighted
average
number Per-share
Earnings of shares amount
GBP000's 000's pence
Period ended 30.06.22
Basic EPS
Earnings/number of shares 797 12,733 6.26
Effect of dilutive securities - 87 (0.04)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 797 12,820 6.22
--------- ---------- ----------
Period ended 30.06.21
Basic EPS
Earnings/number of shares 1,491 12,733 11.71
Effect of dilutive securities - 149 (0.14)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 1,491 12,882 11.57
Year ended 31.12.21
Basic EPS
Earnings/number of shares 2,519 12,733 19.78
Effect of dilutive securities - 195 (0.3)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 2,519 12,928 19.48
--------- ---------- ----------
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2022 to 30 June 2022
4. INTANGIBLE ASSETS
Customer Website
lists development Total
GBP000's GBP000's GBP000's
Net book value at 1 January 2021 585 265 850
Additions - - -
Amortisation (23) (28) (51)
--------- ------------- ---------
Net book value at 30 June 2021 562 237 799
--------- ------------- ---------
Additions - 179 179
Amortisation (22) (31) (53)
Net book value at 31 December
2021 540 385 925
--------- ------------- ---------
Additions - 108 108
Amortisation (23) (47) (70)
--------- ------------- ---------
Net book value at 30 June 2022 517 446 963
========= ============= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2022 to 30 June 2022
5. FINANCIAL INSTRUMENTS
Categories of financial instruments
The group has the following financial instruments:
30.06.2022 30.06.2021 31.12.2021
GBP000's GBP000's GBP000's
Financial assets that are debt
instruments measured at amortised
cost
Trade receivables 985 1,491 667
Loans to franchisees 646 632 530
Other receivables 46 222 37
Financial liabilities measured
at amortised cost
Trade payables 271 86 411
Lease liability 752 992 871
Other payables 10 44 8
Financial assets measured at fair
value
Listed investments 44 49 64
Listed investments are valued by reference to publicly available
share prices and are considered at level 1 under the IFRS 13 fair
value hierarchy.
6 . RELATED PARTY DISCLOSURES
During the 6 months to 30 June 2022, total dividends of
GBP595,019 (30 June 2021: GBP341,097) were paid to the
directors.
During the 6 months to 30 June 2022, the Company received a
dividend of GBP1,171,458 (30 June 2021: GBP674,862) from its
subsidiary undertaking Winkworth Franchising Limited. The balance
owed by Winkworth Franchising Limited to the Company at 30 June
2021 was GBP1,267,587 (30 June 2021: GBP1,267,587).
The balance owed by the Fulham franchise, which is owned by
Dominic Agace's wife and her business partner, to Winkworth
Franchising Limited at 30 June 2022 was GBP15,130 (30 June 2021:
GBPNil).
7. POST BALANCE SHEET EVENTS
On 13 July 2022, M Winkworth Plc declared dividends of 2.7p for
the second quarter of 2022.
8. INTERIM RESULTS
Copies of this notice are available to the public from the
registered office at 1 Lumley Street, London, W1K 6TT, and on the
Company's website at www.winkworthplc.com
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September 07, 2022 02:00 ET (06:00 GMT)
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