REG - M Winkworth Plc - Final Results
19/04/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230419:nRSS6572Wa&default-theme=true
RNS Number : 6572W M Winkworth Plc 19 April 2023
M Winkworth Plc
Audited final results for the year to 31 December 2022
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 2022.
Highlights for the year:
Financial performance in 2022 in line with management expectations but below
the exceptional 2021 level. Revenues and pre-tax profits both markedly higher
than 2019.
• Franchised office network revenue down 3% to
£63.1 million (2021: £64.8 million).
• Sales revenues 54% of total revenues (2021: 60%).
• Revenues of £9.31 million in line with 2021 (2021
£9.45 million).
• Profit before taxation down 23% to £2.47 million
(2021: £3.21 million).
• Clean Balance Sheet: Year-end cash balance of
£5.25 million (2021: £5.02 million) - no debt.
• Two new offices opened in the year (2021: 6).
• Ordinary dividends of 11.0p per ordinary share
declared (2021: 9.3p per ordinary share excluding Special Dividends).
Dominic Agace, CEO of the Company, commented: "After an exceptionally strong
performance in sales in 2021, we continued to make good progress across the
business in 2022, in lettings and management in particular, and have delivered
a set of results which we consider to be very satisfactory against a
background that was at times challenging. Many of our key metrics for 2022 are
up by some 50% on 2019, the pre-pandemic year."
"While the outcome for the current year is shrouded, now that mortgages rates
having fallen from their peak and are settling at more historic norms of
around 4%, we see a rebased market emerging. Rental prices are showing greater
stability and we expect a further healthy contribution from our lettings and
management business in 2023."
Investor presentation
Dominic Agace, CEO of the Company, and Andrew Nicol, CFO of the Company, will
present the final audited results for the year to 31 December 2022 via the
Investor Meet Company platform on 20 April 2023 at 3.00pm 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 (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 Winkworth traded well in 2022, with growth on all
fronts compared to pre-pandemic levels of business. There has been substantial
growth in the business since 2019, which we are pleased has been reflected in
increased dividends.
I congratulate the franchisees on maintaining their staff and their
relationships with local communities, which led to an excellent performance.
Completed sales instructions hit an exceptionally high level which, allowing
for normal withdrawals due to outside issues, is remarkable. I believe that in
recent years the Company has taken a stride forward as key offices in the
country markets have matured, adding to the long-established London core and
the ongoing progress being made by our new partner businesses.
I enjoy my non-executive role but, of course, I was an estate agent on the
'shop floor' for over 50 years through some of the most interesting times in
the property market and in more recent years, I have influenced the business
to maintain our personal touch and the quality of the business. We believe
that our customers should have freedom of access to our agents and directors
or partners and we welcome discussion and casual calls on any subject related
to property. In this way, franchisees are able not only to gather useful
background information but also to exercise their expertise and judgement on
the market at all times. We do not have our own legal offering or financial
services business, but we encourage our franchisees to use their market
connections to help our clients with their transaction requirements.
While we have continued to upgrade our digital, online and other systems, as
we consistently invest to support the needs of our franchisees and customers,
Winkworth's greatest asset is its people. Our technology is there to enable
them to use their skills to create better outcomes for clients, not to reduce
headcount to the detriment of client care.
We are well-placed to interpret the large number of often disparate judgements
being made on the property market and to establish why certain reports on
trends may be more accurate than others. For instance, a report on site
registrations of properties for sale, in a changing market where some agents
may still be pitching over-optimistic prices, can distort the real picture.
Equally misleading can be analysis based on land registry prices which, as it
takes six months for the data to be published, are always out of date.
Likewise, building societies using their own data may only be lending to a
section of the market.
Local knowledge is vital for estimating realistic pricing, whereas blatant
over-pricing is a danger to the client and subsequently lowers the agent's
percentage of sales completed from instructions. This, not the largest number
of properties to sell, is the best gauge of success. Winkworth is not trying
to be the highest volume agent for property listings but instead aims to
achieve a high level of completed transactions at the best price for the
client.
In lettings and management, we continue to build the number of landlords and
tenants with whom the Company has a close relationship. We have always found
that proprietor-led management and lettings brings tenants and landlords
closer to decision-taking and guidance on their property. Our experience is
that landlords like to connect with a local individual rather than a
centralised, often remote team, so our relationship between landlords and the
manager of the office is, in our opinion, a long-term win.
When we listed on the London Stock Exchange in 2009, we raised capital to grow
outside of London, to maintain our London business and to develop our brand,
and we have made considerable strides in this direction since then. Our
managers have done a tremendous job in diversifying our profit centres, whilst
being committed to building and backing substantial businesses alongside our
core London offices, such as we have done in Bristol, Bath, Exeter, Norwich,
Brighton, Reading etc. Besides our focus on both residential sales and
lettings, we now also have a growing commercial business.
We also committed to maintain a strong balance sheet in order to develop the
Company without debt. This policy has enabled us not only to grow the
business, but also to pay progressive dividends to shareholders under all but
the most extreme market conditions. With uncertain times ahead, where
economically viable we will continue to prioritise dividend payments, while
retaining sufficient cash to be able to expand.
Simon Agace
Non-Executive Chairman
18 April 2023
CEO's Statement
In a year of fiscal tightening, the property market remained remarkably
resilient until the mini budget in October 2022, when confidence was upset by
the sharp rise in interest rates. Our results for 2022, while below those
recorded by an exceptionally strong performance in 2021, were very
satisfactory. It is worth noting that in 2022 our revenues, profit before tax
and net cash position were all some 50% higher than the pre-pandemic levels
achieved in 2019. Our ordinary dividends declared for 2022 showed an increase
of 18% over the prior year and were 41% above those declared in 2019.
Despite the upwards drift in the cost of finance, prices peaked at record
levels in August 2022, but after the budget we saw pricing being tested and a
predictable slowdown in activity, with early signs being for a soft landing
rather than significant weakness.
The ongoing reversal of the Covid-induced race for space, with a reversion to
office working and city life returning to business as usual, translated into
gross revenues of the franchised network in London being down by only 1%
year-on-year, compared to a fall of 9% in the country markets. As expected,
Central London benefitted from the return of international travel, with income
11% ahead of 2021.
Over the course of the year, we retained our position as the second agency by
number of properties exchanged in inner London¹.
The rental market remained incredibly strong across all regions, with price
increases of over 10% in many areas due to a shortage of supply following the
sell-off of many buy-to-let properties by landlords facing the higher tax and
regulatory changes that have reduced the viability of this activity in recent
years. This, combined with a significant movement of people to and from the
country driven by pandemic-related factors, led to notable price movements.
Increased market share and higher rents resulted in our network revenue
growing by 11%, led by central London where the additional factor of the
return of international travel boosted growth to 16%.
In 2022, gross revenues of the franchised network of £63.1m were down by 3%
year-on-year (2021: £64.8m). Sales income was down by 12% at £34.3m (2021:
£39.0m) while Lettings and Management increased by 11% to £28.7m (2021:
£25.8), producing a 54:46 revenue split between these two activities,
compared to a 60:40 ratio in 2021, as the sales market eased in the second
half of 2022 and lettings revenue continued to grow.
Winkworth's revenues declined by 1% to £9.31m (2021: £9.45m) and profit
before taxation fell by 23% at £2.46m (2021: £3.21m). The Group's cash
position at year end increased to £5.25m (2021: £5.02m). Dividends of 11.0p
per share were declared for the year (2021: 9.3p per share).
We continued to grow our franchise base, opening two new offices and
developing regional networks by backing existing successful franchisees. Our
Exeter franchisee opened a new office in Crediton and our Bath franchisee
opened in Bristol through acquisition. We successfully resold our leading
office in Shepherds Bush to a new generation franchisee to take it on to the
next level. While some openings expected to complete in the second half were
delayed, our pipeline remains healthy with five new offices in new markets
expected. We continue to see opportunities to support both key talent in the
network and outstanding candidates in the industry to acquire new businesses
and expand the Winkworth brand.
Our owned offices in Tooting and Crystal Palace, and our Development and
Commercial Investment ("DCI") business showed significant progress over 2021
in terms of their combined contribution to both revenues and profit before
taxation.
Tooting retained its position as number one for 'Sold Subject to Contract' in
its area and Crystal Palace continued to grow its revenue and improve its
market share, rising from 7th to 4th in its area and growing its revenue by
30% over 2021. DCI revenues more than doubled in 2022.
Overall, our partnered businesses revenue grew by 27% from £2.2m to £2.8m.
We will seek to grow the revenues and profitability of our partnered
businesses and plan to launch a new homes operation within our DCI venture as
part of its evolution.
OUTLOOK
The sales market continues to be supported by the shortage and high cost of
rental property, pent-up savings post-pandemic, a strong employment market,
and private sector wage inflation. After a positive start to the year, we
expect the property market to perform towards the higher end of expectations,
albeit at transaction levels more closely aligned to historic averages than
the boom levels of the last two years, with the increased cost of finance
leading to prices drifting down by 5%.
A severe shortage of supply continues to underpin rental prices, particularly
in London where the return to city living is driving demand and buy-to-let
landlords have sold down portfolios in response to the increased costs of
finance and management. Affordability ceilings are, however, now being reached
and, as financing costs fall from peak levels, some landlords may now be
tempted back into the market.
With mortgages rates having fallen from the peak levels seen after the mini
budget and now settling at more historic norms of around 4%, we see a rebased
market emerging, with UK transactions reverting closer to the long-term
average of around 1m per annum. As such we see opportunities to invest in the
right talented people in the industry, supporting their entrepreneurial
ambition to own a business, and in existing franchisees seeking to grow the
revenue of their existing offices or open new ones.
Note¹: based on postcodes where Winkworth has listed a property - Source:
twentyea
Dominic Agace
Chief Executive Officer
18 April 2023
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Notes £'000 £'000
CONTINUING OPERATIONS
Revenue 9,307 9,451
Cost of sales (1,594) (1,294)
GROSS PROFIT 7,713 8,157
1 18
Administrative expenses (5,246) (4,941)
Negative goodwill - -
OPERATING PROFIT 2,468 3,234
Finance costs (38) (52)
Finance income 39 32
PROFIT BEFORE TAXATION 2,469 3,214
Tax 4 (488) (606)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,981 2,608
Profit and total comprehensive income attributable to:
Owners of the parent 1,951 2,519
Non-controlling interests 30 89
1,981
2,608
2022 2021
Notes £ £
Earnings per share expressed in pence per share: 6
Basic 15.32 19.78
Diluted 15.18 19.48
2022
£
2,608
2021
£
Basic
15.32
19.78
Diluted
15.18
19.48
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2022
2022 2021
Notes £'000 £'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 906 925
Property, plant and equipment 666 944
Prepaid assisted acquisitions support 503 279
Investments 41 71
Trade and other receivables 385 334
2,501 2,553
CURRENT ASSETS
Trade and other receivables 1,146 1,301
Cash and cash equivalents 5,251 5,019
6,397 6,320
TOTAL ASSETS 8,898 8,873
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 64 64
Share based payment reserve 8 51 51
Retained earnings 6,212 6,145
6,327
6,260
Non-controlling interests 102 72
TOTAL EQUITY 6,429 6,332
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 433 632
Deferred tax 91 97
524 729
CURRENT LIABILITIES
Trade and other payables 1,575 1,412
Corporation tax payable 370 400
1,945 1,812
TOTAL LIABILITIES 2,469 2,541
TOTAL EQUITY AND LIABILITIES 8,898 8,873
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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 2021 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
Changes in equity
Dividends - (1,884) - - (1,884) - (1,884)
Total comprehensive income - 1,951 - - 1,951 30 1,981
Balance at 31 December 2022 64 6,212 - 51 6,327 102 6,429
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Notes £'000 £'000
Cash flows from operating activities
Profit before tax 2,469 3,214
Depreciation and amortisation charges 531 509
Impairment of fixed asset investments 30 -
Finance costs 38 52
Finance income (39) (32)
3,029 3,744
Increase in trade and other receivables 106 (411)
Increase/(decrease) in trade and other payables 198 (375)
Cash generated from operations 3,333 2,958
Interest paid - (1)
Tax paid (521) (382)
Net cash from operating activities 2,812 2,575
Cash flows from investing activities
Purchase of intangible fixed assets (123) (180)
Purchase of tangible fixed assets (19) (46)
Purchase of tangible fixed assets 1 -
Assisted acquisitions support (316) (50)
Interest received 39 32
Net cash used in investing activities (418) (244)
Cash flows from financing activities
Payments of lease liabilities (240) (219)
Interest paid on lease liabilities (38) (51)
Acquisition of non-controlling interest - (137)
Equity dividends paid (1,884) (1,566)
Net cash used in financing activities (2,162) (1,973)
Increase/(decrease) in cash and cash equivalents 232 358
Cash and cash equivalents at beginning of year 5,019 4,661
Cash and cash equivalents at end of year 5,251 5,019
WINKWORTH PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
2022 2021
£'000 £'000
Revenue
Estate agency and lettings business 2,781 2,231
Commissions and subscriptions due to the group under 6,526 7,220
franchise agreement
9,307 9,451
4. TAXATION
Analysis of tax expense
2022 2021
£'000 £'000
Current tax:
Taxation 496 599
Adjustment re previous years (2) -
Total current tax 494 299
Deferred tax (6) 7
Total tax expense in consolidated statement of profit or loss and other
comprehensive
488 606
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:
2022 2021
£'000 £'000
Profit before income tax 2,469 3,214
Profit multiplied by the standard rate of corporation tax in the UK of 469 611
19% (2021 - 19%)
Effects of:
Expense (income) not deductible (taxable) for tax purposes 9 (18)
Adjustment in respect of prior periods (2) -
Depreciation in excess of capital allowances 18 12
Other movements (6) 1
Tax expense 488 606
5. DIVIDENDS
2022 2021
£'000 £'000
Ordinary shares of 0.5p each 1,884 1,566
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.
2022
Earnings Weighted average number of shares Per-share amount
£'000 '000 pence
Basic EPS
Earnings attributable to ordinary shareholders 1,951 12,733 15.32
Effect of dilutive securities - 122 -
Diluted EPS
Diluted earnings 1,951 12,855 15.18
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
7. CALLED UP SHARE CAPITAL
2022
2021
Authorised: £'000 £'000
20,000,000 Ordinary shares of 0.5p 100 100
2022
2021
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. POST BALANCE SHEET EVENTS
On 13 January 2023, M Winkworth Plc declared dividends of 2.9p per or the
fourth quarter of 2022.
After the reporting date the Directors became aware that aggregate dividends
totalling £713,000 paid in the period and shortly after the end of the period
had been made otherwise than in accordance with the Companies Act 2006 as
unaudited interim accounts had not been filed at Companies House prior to the
dividend payment. A resolution has been proposed at the General Meeting to be
held on 6 June 2023 to authorise the appropriation of distributable profits to
the payment of the relevant dividends and waive the entitlement of the Company
to pursue shareholders and Directors for repayment. This will constitute a
related party transaction under IAS24 'Related party disclosures', the effect
of which will be to return all parties, so far as possible, to the position
they would have been in had the relevant dividends been made in full
compliance with the Companies Act 2006.
10. FINANCIAL INFORMATION
The financial information contained within this announcement for the year
ended 31 December 2022 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 2021 have been filed
with the Registrar of Companies and those for the year ended 31 December 2022
will be filed following the Company's annual general meeting. The auditors'
reports on the statutory accounts for the years ended 31 December 2022 and 31
December 2021 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.
11. ANNUAL REPORT AND ACCOUNTS
Copies of the annual report and accounts for the year ended 31 December 2022
together with the notice of the Annual General Meeting to be held at the
offices of M Winkworth Plc, 13 Charles II Street, St James's, London SW1Y 4QU
on 6 June 2023 at 10.30am, 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) .
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR GPUMCCUPWGQRRecent news on M Winkworth
See all newsREG - M Winkworth Plc - Final Results
AnnouncementREG - M Winkworth Plc - Dividend Declaration
AnnouncementREG - M Winkworth Plc - Notice of Results and Investor Presentation
AnnouncementREG - M Winkworth Plc - Directorate Change
AnnouncementREG - M Winkworth Plc - Trading Update and Dividend Declaration
Announcement