REG - M Winkworth Plc - Half-year Report
11/09/2024 07:00
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RNS Number : 6521D M Winkworth Plc 11 September 2024
M Winkworth Plc
Interim Results for the six months ended 30 June 2024
M Winkworth Plc ("Winkworth" or the "Company") is pleased to announce its
unaudited interim results for the six months ended 30 June 2024.
Highlights for the period:
· Network revenues 6% higher at £27.9 million (H1 2023:
£26.4 million)
· Network sales revenues up by 9% to £13.4 million (H1
2023: £12.3 million)
· Network lettings revenues up by 4% to £14.5 million
(H1 2023: £14.0 million)
· Network sales revenues accounted for 48% of total
network revenues (H1 2023: 47%)
· Winkworth revenues at £5.14 million up by 20% on H1
2023 (H1 2023: £4.27 million)
· Majority-owned offices generated revenues of £1.51
million (H1 2023: £1.14 million)
· Profit before taxation up by 26% to £1.02 million (H1
2023: £0.81 million)
· Cash balance at 30 June 2023 of £4.12 million (30 June
2023: £4.23 million)
· Three new offices opened and four refranchised
· Ordinary dividends of 6.0p per ordinary share declared
during the period (H1 2023: 5.8p)
Dominic Agace, CEO of the Company, commented: "Our first half results are in
line with expectations and reflect an uptick in sales, with a greater number
of properties coming to market and transactions returning to more normalised
levels. Our lettings and management business has been more subdued but
underpins a strong performance from the group. With an above average number of
franchisees expected to be added in 2024, we are confident in the outlook for
the second half and beyond.
Investor presentation
Dominic Agace, CEO of the Company, and Andrew Nicol, CFO of the Company, will
present the Company's interim results via the Investor Meet Company platform
on 11 September 2024 at 14.00 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
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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
David Coaten
Rachel Goldstein
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
(https://url.avanan.click/v2/___http:/www.winkworthplc.com___.YXAxZTpzaG9yZWNhcDphOm86YTkwYTQ2ZjdmMzYwYTM3ZGM4NjFlNGY1ZTUwNDQ1Yzc6Njo4MWM0Ojc4OWIzNzY4ZTQzMmE4MjNlNjJlYTc4NjkyNjQ2YWMwYTVjZWMzYzhkMzNhNDkzNjIyMDA1YzJmOWUyOTIzNTI6cDpU)
Chair's Statement
2024 is proving to be a much more positive year for Winkworth than 2023,
albeit that the first half increase in completed sales has lagged the level of
sales agreed. With this uptick, we expect the ratio of sales to rentals within
our full year gross revenues to be above the 48:52 ratio achieved in the
first half of 2024 and the full year 2023.
Part of this is due to the recovery in demand for houses, an important segment
of the market in which Winkworth excels. As has been mentioned previously, we
have seen an increased number of families moving home, some down-sizing, some
relocating, and some moving up.
We invested in our operations in 2023 with some impact, of course, on our
profitability. But we anticipate that this investment will bear fruit towards
the end of this year and into 2025.
Over the last six months I have had the enjoyable opportunity of visiting
several of our franchisees, some in new offices and some in more established
ones, and I have found there is a very strong Winkworth spirit that augurs
well for the future. The steps taken to refresh our organisation over the
last 18 months have been positively received by our franchisees. From my
visits, I see great teamwork, locally focused, with a great selection of
property to market and the skill sets to close transactions.
Our equity-owned offices have expanded, and we are targeting good
profitability from all four businesses in 2025. I have confidence that these
offices are increasingly providing not only an important financial
contribution to the Group, but also training grounds for future
franchisees. The franchisee who we bought out of Tooting, for example, is now
very successfully running Streatham and Herne Hill, having reinvested in these
offices with some help from the Group.
Winkworth's strategy is to optimise its network's capacity to offer customers
a cross-section of suitable property in both the sales and rental markets, and
so to generate a high level of enquiries. Every month our website receives on
average 360,000 enquires and delivers over 4,500 enquiries to our offices,
which no small, independent company can match. It is the cross-section of
property that we handle and the number and quality of the properties on our
database that drives our sales and rentals success and defines Winkworth's
market position and the power of our long-established brand.
I have great confidence, therefore, in Winkworth's long-term growth prospects.
We have extended our network in the London boroughs and some of these extra
offices result from expansion by our existing franchisees - we expect this
trend to continue. Outside of London, areas such as Exeter, Reading and
Norfolk have exciting growth plans for 2025.
Finally, I would like to thank John Nicol, who is retiring as a non-executive
director, for his 10 years of service. John has made a very valuable
contribution to the group during his tenure and we wish him every success with
his future plans.
Simon Agace
Non-Executive Chair
10 September 2024
CEO's Statement
Despite interest rates remaining relatively high in the first half of this
year, 2024 has to-date been very encouraging. An increase in sellers coming to
the market has drawn out demand from buyers and this, combined with more
positive economic news, has led to far better conditions than 2023, when
uncertainty over the outlook for interest rates weighed on activity.
Network sales revenue in H1 2024 was up by 9% on H1 2023, but sales agreed is
a much stronger 21%, reflecting extended conveyancing times which will push
much of this activity into H2 2024 completions. A return to popularity of
city living, as post pandemic patterns continued to normalise, but without
significant price escalation, led to London recording the highest level of
growth, with sales income increasing by 11%, outperforming the average
performance of our network.
We were pleased to note that this latest increase in activity meant that,
since 2019, our national market share for sales agreed has grown by 36%¹. We
have combined this expansion in market share with a resolute focus on
delivering on our proposition to clients and we are proud of the fact that,
according to the latest data, Winkworth has the highest conversion rate from
new instruction to exchange of £1m+ homes of the top ten estate agents in
London².
In line with the trend that started in August last year, lettings growth
slowed, with network revenue up by 4% in H1 2024 but applicants 3% down on
last year, as tenants hit affordability ceilings and the reversal of the move
out of London to the country finally settled down, albeit with rental prices
remaining at high levels. Our network growth in the country markets, where
there is greater affordability, meant that lettings revenue there outperformed
the network average, with growth of 8%.
The combination of a slowing of the rental market and an uptick in sales
activity meant that our sales to lettings revenue ratio moved from 47:53 in H1
2023 to 48:52% in H1 2024. This healthy balance of income reflects our ability
to benefit from a more active sales market, while revenues remain underpinned
by our important lettings and management business.
In H1 2024, gross revenues of the franchised network of £27.9m were 6% higher
year-on-year (2023: £26.4m). Total sales income was 9% higher at £13.4m
(2023: £12.3m) while Lettings and Management increased by 4% to £14.5m
(2021: £14.0m).
At £5.14m, Winkworth's revenues were 20% higher than H1 2023 (H1 2023:
£4.27m), and profit before taxation rose by 26% to £1.02m (H1 2023:
£0.81m). The Group's cash stood at £4.12m at 30 June 2024 (H1 2023: £4.23m)
and ordinary dividends of 6.0p per ordinary share were declared for the first
half of the year (H1 2023: 5.8p).
This year we have focused on evolving the business, with the appointment of a
new executive director to the board and two new non-executives. In addition,
we have increased investment into our digital know-how and new business
teams to expedite growth, prepare for potential legislative changes and
deliver on digital projects to future-proof our business. We believe that
these increases in costs will deliver greater revenue growth in the medium
term.
We are on track to deliver on our annual target of eight new offices, having
in H1 2024 already opened three and with a further five in the pipeline. In
addition, we refranchised four offices in H1 2024 and have a further seven
refranchises under negotiation. Of this total of 12 new offices or talented
new operators, it is planned that 9 will be in the London area.
Our entrepreneurial manager partnerships at our equity-owned offices have
continued to grow their market share and revenue contribution, with progress
in three out of four of our ventures being above expectations. New management
in the fourth has now settled in and this change is expected to bear fruit in
2025.
Outlook
Now that the election is behind us and a government with a strong majority is
now in place, ending years of political uncertainty, and with interest rates
set to decline, early indications suggest that activity in the property market
will increase. Sales agreed have noticeably accelerated since the general
election in early July 2024. This increase in activity has been fuelled by
the highest number of properties on the market in the last five years and so
reflects supply meeting demand rather than demand driving price increases. We
therefore expect price increases to be modest in a new era of higher interest
rates and taxation.
In the lettings market, we see more uncertainty as the market awaits the
implementation of new legislation. We anticipate that there will be a further
reduction in supply as landlords exit the market and aren't replaced,
particularly in the short term as some look to speed up their exit in
anticipation of increases in capital gains tax.
Note¹: TwentyEA - Winkworth's SSTC market share H1 2019 vs Winkworth's SSTC
market share H1 2024
Note²: Twenty EA - Based on Exchange data from 1st January 2024 - 7th July
2024. The Top 10 estate agents in London are defined as the top 10 estate
agents in London ranked by number of New Instructions during this period.
Dominic Agace
Chief Executive Officer
10 September 2024
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period 1 January 2024 to 30 June 2024
(Unaudited) (Unaudited)
Period Period
1.1.24 1.1.23 (Audited)
To To Year ended
30.6.24 30.6.23 31.12.23
£000's £000's £000's
CONTINUING OPERATIONS
Revenue 2 5,143 4,267 9,265
Cost of sales (880) (776) (1,573)
GROSS PROFIT 4,263 3,491 7,692
Other operating income - 1 1
Administrative expenses (3,273) (2,696) (5,848)
Negative goodwill - - 252
OPERATING PROFIT 990 796 2,097
Finance costs (32) (19) (39)
Finance income 63 34 88
PROFIT BEFORE TAXATION 1,021 811 2,146
Taxation (262) (249) (467)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 759 562 1,679
759 559 1,668
Profit and total comprehensive income attributable to:
Owners of the parent
Non-controlling interests - 3 11
TOTAL COMPREHENSIVE INCOME SINCE LAST ANNUAL REPORT
759 562 1,679
Earnings per share expressed
in pence per share: 3
Basic 5.88 4.33 13.02
Diluted 5.83 4.25 13.00
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2024
(Unaudited) (Unaudited) (Audited)
30.06.2024 30.06.2023 31.12.2023
Notes £000's £000's £000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 1,275 930 1,300
Property, plant and equipment 869 596 984
Prepaid assisted acquisitions support 572 624 607
Investments 7 33 63
Trade and other receivables 693 321 350
3,416 2,504 3,304
CURRENT ASSETS
Trade and other receivables 1,492 1,454 1,450
Cash and cash equivalents 4,124 4,234 4,548
5,616 5,688 5,998
TOTAL ASSETS 9,032 8,192 9,302
EQUITY
SHAREHOLDERS' EQUITY
Share capital 65 65 65
Share premium 179 179 179
Retained earnings 6,380 6,059 6,396
6,640
6,624 6,303
Non-controlling interests - 105 -
TOTAL EQUITY 6,624 6,408 6,640
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 706 400 767
Deferred tax 173 86 181
879 486 948
CURRENT LIABILITIES
Trade and other payables 1,476 1,030 1,556
Tax payable 53 268 158
1,529 1,298 1,714
TOTAL LIABILITIES 2,408 1,784 2,662
TOTAL EQUITY AND LIABILITIES 9,032 8,192 9,302
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2024 to 30 June 2024
Share Share Non controlling
Share Retained Premium option Shareholders'
capital earnings account reserve interest equity
£000's £000's £000's £000's £000's £000's
Balance at 1 January 2023 64 6,212 - 51 102 6,429
Issue of share capital 1 - 179 - - 180
Total comprehensive income - 610 - (51) 3 562
Dividends paid - (763) - - - (763)
Balance at 30 June 2023 65 6,059 179 - 105 6,408
NCI on acquisition of shares - (24) - - (113) (137)
Total comprehensive income - 1,109 - - 8 1,117
Dividends paid - (748) - - - (748)
Balance at 31 December 2023 65 6,396 179 - - 6,640
Total comprehensive income - 759 - - - 759
Dividends paid - (775) - - - (775)
Balance at 30 June 2024 65 6,380 179 - - 6,624
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2024 to 30 June 2024
(Unaudited) (Unaudited)
Period Period
1.1.24 1.1.23 (Audited)
To To Year ended
30.6.24 30.6.23 31.12.23
Notes £000's £000's £000's
Cash flows from operating activities
Cash generated from operations i 858 313 2,081
Interest paid - (1) (1)
Tax paid (375) (353) (670)
Net cash generated from/(used in) operating activities 483 (41) 1,410
Cash flows from investing activities
Purchase of intangible fixed assets (82) (127) (229)
Purchase of tangible fixed assets (24) (103) (35)
Sale of tangible - 69 -
Sale of investments 57 - -
Assisted acquisition support (8) (168) (217)
Interest received 63 39 88
Net cash generated from/(used in) investing activities 6 (290) (393)
Cash flows from financing activities
New lease in year - 119 -
Payment of lease liabilities (106) (203) (214)
Interest paid on lease liabilities (32) (19) (38)
Equity dividends paid (775) (763) (1,511)
Purchase of non-controlling interest - - (137)
Share issue - 180 180
Net cash used in financing activities (913) (686) (1,720)
(424) (1,017) (703)
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period 4,548 5,251 5,251
Cash and cash equivalents at end of period ii 4,124 4,234 4,548
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2024 to 30 June 2024
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.24 1.1.23 (Audited)
To To Year ended
30.6.24 30.6.23 31.12.23
£000's £000's £000's
Profit before taxation 1,021 811 2,146
Depreciation and amortisation 288 256 531
(Reversal of) Impairment of fixed asset investments - 7 (22)
Negative goodwill - - (252)
Finance costs 32 19 39
Finance income (63) (34) (88)
Gain on disposal of fixed asset (1) - (9)
1,277 1,059 2,345
(385) (246) (269)
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables (34) (500) 5
Cash generated from operations 858 313 2,081
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:
30.6.24 30.6.23 31.12.23
£000's £000's £000's
Cash and cash equivalents 4,124 4,234 4,548
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2024 to 30 June 2024
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2024 and the comparative
information for the periods ended 30 June 2023 and 31 December 2023 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 2023 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 2024 and 30 June
2023 is unaudited. The financial information for the year ended 31 December
2023 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 2024 to 30 June 2024
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 2024 6 months 2023 12 months 2023
£000 £000 £000
Revenue
Corporate owned offices 1,512 1,134 2,695
Commissions and subscriptions due to the group under franchisee agreements
3,631 3,133 6,570
5,143 4,267 9,265
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 2024 to 30 June 2024
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
£000's 000's pence
Period ended 30.06.24
Basic EPS
Earnings/number of shares 759 12,909 5.88
Effect of dilutive securities - 110 (0.05)
Diluted EPS
Adjusted earnings/number of shares 759 13,019 5.83
Period ended 30.06.23
Basic EPS
Earnings/number of shares 559 12,909 4.33
Effect of dilutive securities - 217 (0.08)
Diluted EPS
Adjusted earnings/number of shares 559 13,126 4.25
Year ended 31.12.23
Basic EPS
Earnings/number of shares 1,668 12,814 13.02
Effect of dilutive securities - 20 -
Diluted EPS
Adjusted earnings/number of shares 1,668 12,834 13.00
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2024 to 30 June 2024
4. INTANGIBLE ASSETS
Customer lists Website development
Total
£000's £000's £000's
Net book value at 1 January 2023 495 411 906
Additions - 103 103
Amortisation (22) (57) (79)
Net book value at 30 June 2023 473 457 930
Additions 343 119 462
Amortisation (29) (63) (92)
Net book value at 31 December 2023 787 513 1,300
Additions - 82 82
Amortisation (33) (74) (107)
Net book value at 30 June 2024 754 521 1,275
5. FINANCIAL INSTRUMENTS
Categories of financial instruments
The group has the following financial instruments:
30.06.2024 30.06.2023 31.12.2023
£000's £000's £000's
Financial assets that are debt instruments measured at amortised cost
Trade receivables 885 872 976
Loans to franchisees 949 599 582
Other receivables 98 48 64
Financial liabilities measured at amortised cost
Trade payables 674 218 449
Lease liability 836 556 940
Other payables 38 27 24
Financial assets measured at fair value
Listed investments 7 26 63
Listed investments are valued by reference to publicly available share prices
and are considered at level 1 under the IFRS 13 fair value hierarchy.
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2024 to 30 June 2024
7. RELATED PARTY
DISCLOSURES
During the 6 months to 30 June 2024, total dividends of £394,144 (30 June
2023: £375,121) were paid to the directors.
8. POST BALANCE SHEET EVENTS
On 10 July 2024, M Winkworth Plc declared dividends of 3p per ordinary share
for the second quarter of 2024.
9. INTERIM RESULTS
Copies of this notice are available to the public from the registered office
at 13 Charles II Street, St James's, London, SW1Y 4QU, and on the Company's
website at www.winkworthplc.com
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