REG - M Winkworth Plc - Final Results
12/04/2022 07:01
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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 £64.8 million (2020:
£47.7 million)
· Revenues up 47% to £9.45 million (2020: £6.41 million)
· Profit before taxation up 110% to £3.21 million (2020: £1.53
million)
· Year-end cash balance of £5.02 million (2020: £4.66 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
(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
(http://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
£2m 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 £64.8m were
significantly up both year-on-year and when compared to 2019 (2020: £47.7m;
2019: £48.3m). Sales income was up by 64% at £39.0m (2020: £23.8m; 2019:
£23.8m) while Lettings and Management increased by 8% to £25.8m (2020:
£23.9m; 2019: £24.4m), 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 £9.45m (2020: £6.41m) and profit before
taxation was 110% higher at £3.21m (2020: £1.53m). The Group's cash position
at year end increased to £5.02m (2020: £4.66m). 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 YEAR ENDED 31 DECEMBER 2021
2021 2020
Notes £'000 £'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
2021 2020
Notes £ £
Earnings per share expressed in pence per share: 6
Basic 19.78 9.18
Diluted 19.48 9.14
2021
£
1,237
2020
£
Basic
19.78
9.18
Diluted
19.48
9.14
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2021
2021 2020
Notes £'000 £'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
729 602
CURRENT LIABILITIES
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
£'000 £'000 £'000 £'000 £'000 £'000 £'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 YEAR ENDED 31 DECEMBER 2021
2021 2020
Notes £'000 £'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 YEAR ENDED 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
£'000 £'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
£'000 £'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
606 295
Income
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
£'000 £'000
Profit before income tax 3,214 1,532
Profit multiplied by the standard rate of corporation tax in the UK of 611 291
19% (2021 - 19%)
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. DIVIDENDS
2021 2020
£'000 £'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 average number of shares Per-share amount
£'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 average number of shares Per-share amount
£'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: £'000 £'000
20,000,000 Ordinary shares of 0.5p 100 100
2021
2020
Issued and fully paid: £'000 £'000
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 £136,963.
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 to March 21 10% NCI 9m to December 21 Total
£ £
£
Tooting Estates Limited
Profit after tax 152,628 198,774 351,402
NCI in the year 68,683 19,877 88,560
45% NCI Restated 10% NCI Impaction of additional 35% on NCI
£ £ £
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 (http://www.winkworthplc.com)
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