TIDMWINK
RNS Number : 0333L
M Winkworth Plc
08 September 2021
M Winkworth Plc
Interim Results for the six months ended 30 June 2021
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its unaudited Interim Results for the six months ended 30
June 2021
Highlights for the period
-- Network revenues up by 92% to GBP36.4 million (H1 2020: GBP18.9 million)
- Network sales revenues up by 195% to GBP24.6 million (H1 2020: GBP8.3 million)
- Network lettings revenues up by 11% to GBP11.8 million (H1 2020: GBP10.6 million)
-- Network sales revenues accounted for 68% of total network revenues (H1 2020: 45%)
-- Winkworth revenues up by 107% to GBP5.25 million (H1 2020: GBP2.54 million)
-- Majority-owned offices generated revenues of GBP1.04 million (H1 2020: GBP0.35 million)
-- Profit before taxation up by 330% to GBP1.98 million (H1 2020: GBP0.46 million)
-- Cash balance at 30 June 2021 of GBP4.57 million (30 June 2020: GBP3.27 million)
-- Three new franchised offices opened
-- Dividends of 8.30p declared during the period (H1 2020: 3.08p)
Dominic Agace, Chief Executive Officer of the Company ,
commented:
"While the first half of this year was marked by an exceptional
level of sales activity, it also vindicated our strategic expansion
in recent years into the country, enabling us to service clients
not only in the buoyant London market, but also Londoners and
country dwellers seeking more space or a change in environment. Our
rental business remained strong, albeit on this occasion it was
outshone by sales, and we are again encouraged by the number of
applications from talented operators looking to work within our
successful and well-balanced franchise model."
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
Chairman's Statement
I would like to congratulate management, staff and franchisees
on these exceptionally strong first half figures. The upturn in
sales, which was the main driver of this performance, started at
the end of 2020 and carried through into 2021, leading to a much
increased workload for everyone. All this took place despite Covid
uncertainty and I would also like to thank and congratulate the
lawyers, mortgage brokers, surveyors and bankers for meeting stamp
duty deadlines, and our clients for their patience and, in some
cases, perseverance. This was a difficult time for all, but the
outcome proved that it was worthwhile.
Housing market transactions have been depressed since 2015,
leading to the dominance of rental and management turnover over the
last five years. Since the autumn of 2020, however, there has been
a significant catch up in completed sales and our franchisees have
handled the dramatic increase in sales volumes with well-proven
professionalism.
Our rental and management revenue were up and slightly ahead of
H1 2019, but still subdued in central London which has suffered
from a lack of overseas tenants, students and visiting
professionals. There are now signs that the rental market is
recovering, with best-in-class properties letting quickly. Subject
to the continued unwinding of Covid stipulations, we therefore
expect that the rentals market will show some recovery in the
second half.
Meanwhile, as the rentals market becomes ever more subject to
regulation, rebalancing the rights of landlords and tenants, we
believe that landlords will increasingly seek a greater degree of
protection by using qualified estate agents to access personalised
expert advice and guidance at all stages of the tenancy. Much of
this work needs hands on professional guidance rather than
standardised digital solutions.
Winkworth's strength lies in its flexibility in handling both
sales and rentals, and in having long-established, locally based
franchisees. We are seeing a growing number of highly qualified,
dynamic new franchisees joining us to take advantage of the
opportunities presented by a revived market, and we wish them every
success. It is very exciting to see a new office in Hellesdon, a
Tiverton office added to the Exeter/Devon business, and Ferndown
added to our dynamic Bournemouth group.
From my experience of over 40 years in this business, Winkworth
is in a very strong position.
Simon Agace
Non-Executive Chairman
7 September 2021
CEO's Statement
The sales market in the first half of 2021 was extraordinarily
active. This resulted from a number of factors, namely
pandemic-induced buyers searching for space and bringing forward
moves to the country that may normally have been five years away,
record low interest rates, and the government being overtly
supportive of the housing market, in particular after the release
from lockdown. These factors led to record months of sales
completions in March 2021, prior to the extension of the stamp duty
holiday, and in June 2021, with our H1 sales revenue outstripping
the whole of 2020.
Peak activity was focused on the country markets, where the
desire to move away from city centres played its biggest part. It
was interesting to note that, outside of the internationally
reliant central London market, London also performed very strongly,
with a move to more space and the easing of political uncertainty
proving to be driving factors.
Perhaps the greatest division was between houses and flats, with
house prices increasing and flats proving more difficult to sell
following the withdrawal of the support of many buy-to-let
investors. Despite the stamp duty holiday and government
initiatives to support 95% LTV mortgages, this sector saw limited
price increases.
Similarly, the rental market was divided between house and flat
demand, with houses and country locations leading the way, while
London rentals suffered from an absence of international workers,
students, and young professional sharers. Demand recovered as H1
progressed and people started to prepare for the return to work.
While rents in the country markets grew significantly, those in
London remained behind pre-pandemic levels, albeit with early signs
of a recovery towards the end of H1.
In H1 2021, gross revenues of the franchised office network of
GBP36.4m were up by 92% (H1 2020: 18.9m). Sales income rose by 195%
to GBP24.6m (H1 2020: GBP8.3m). Lettings and management rose by 11%
to GBP11.8m (H1 2020: GBP10.6m), equating to a 32% lettings and
management / 68% sales income split across the business at the half
year (H1 2020: 55% lettings and management / 45% sales).
The first half gross revenues of GBP36.4m were also markedly
higher than the H1 2019 result of GBP21.4m, with sales up by 146%
and lettings and management up by 4% on the comparative period.
Winkworth's revenues rose by 107% to GBP5.25m (H1 2020:
GBP2.54m) and profit before taxation by 330% to GBP1.98m (H1 2020:
GBP0.46m). The Group's cash stood at GBP4.57m (H1 2020: GBP3.27m)
and ordinary dividends of 4.4p were declared for the first half of
the year (H1 2020: 3.08p). as well as special dividends of
3.9p.
Our Tooting business, where we now own 90% of the equity,
performed well and progress was also made at our Crystal Palace
office. We continue to expand the network, and it is interesting to
note that the three new office openings, Hellesdon, Ferndown and
Tiverton, were all additions made by existing franchisees looking
to grow their businesses. We continue to see an uplift in new
franchise applications and hope to open a total of eight new
franchises for the year as a whole.
We have also backed the start-up of a commercial agency,
advising on investment in retail or business premises for
development or conversion into residential accommodation. The early
results from this venture are very encouraging.
Outlook
The ending of the stamp duty holiday, the re-opening of foreign
travel in August, and transactions due to complete in July having
been brought forward to June will, inevitably, mean that some of
the fervour will come out of the sales market. But with the ending
of stamp duty relief being both phased and extended, it would
appear that a cliff edge moment has been avoided. Our sales
applicants continue to track well ahead of 2019 levels, with plenty
of activity remaining as years of repressed underlying demand are
supported by mortgage rates as low as 1%.
We see a slight reversal of the move to the country, as the
great debate on working from home plays out and workers once again
return to city centres to be nearer their offices. With activity
and prices in the country markets having been depressed in recent
years, however, we see plenty of opportunity in a vibrant country
market going forwards, while London should continue to trade well
as young city professionals move back to build their careers. As
international travel returns, we also expect to see a steady
acceleration of interest in central London sales, with foreign
buyers joining domestic ones to compete for properties.
We have seen a significant upturn in activity in the rental
market as the return to work brings tenants back to London and
houses in outer London recover to their pre-pandemic rents. We
expect central London flats rents to follow suit over the coming
year as international clients, students and young professionals
return.
Since 2008, our long-term thinking as an organisation has been
to build our network into the country markets most affected by the
financial crisis and to refine our London network to take advantage
of increased activity, thus strengthening the core proposition of
our brand and generating the greatest benefit from our influential
London network. While we remain open to exploring small
acquisitions at the right price, our focus remains firmly on
expanding the network selectively.
Dominic Agace
Chief Executive Officer
7 September 2021
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 2021 to 30 June 2021
(Unaudited) (Unaudited)
Period Period
1.1.21 1.1.20 (Audited)
To To Year ended
30.6.21 30.6.20 31.12.20
GBP000's GBP000's GBP000's
CONTINUING OPERATIONS
Revenue 2 5,247 2,544 6,406
Cost of sales (696) (517) (1,137)
------------ ------------ -----------
GROSS PROFIT 4,551 2,027 5,269
Other operating income - 98 48
Administrative expenses (2,560) (1,673) (3,921)
Negative goodwill - 119
------------ ------------ -----------
OPERATING PROFIT 1,991 452 1,515
Finance costs (19) (13) (22)
Finance income 7 22 39
------------ ------------ -----------
PROFIT BEFORE TAXATION 1,979 461 1,532
Taxation (408) (87) (295)
------------ ------------ -----------
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 1,571 374 1,237
============ ============ ===========
Profit and total comprehensive
income attributable to:
Owners of the parent 1,491 365 1,169
Non-controlling interests 80 9 68
------------ ------------ -----------
TOTAL COMPREHENSIVE INCOME SINCE
LAST ANNUAL REPORT 1,571 374 1,237
============ ============ ===========
Earnings per share expressed
in pence per share: 3
Basic 11.71 2.87 9.18
Diluted 11.57 2.86 9.14
============ ============ ===========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2021
(Unaudited) (Unaudited) (Audited)
30.06.2021 30.06.2020 31.12.2020
Notes GBP000's GBP 000's GBP 000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 799 722 850
Property, plant and equipment 1,076 434 827
Prepaid assisted acquisitions support 313 463 338
Investments 56 49 71
Trade and other receivables 393 423 307
2,637 2,091 2,393
------------ ------------ ---------------
CURRENT ASSETS
Trade and other receivables 1,952 1,460 911
Cash and cash equivalents 4,568 3,266 4,661
------------ ------------ ---------------
6,520 4,726 5,572
TOTAL ASSETS 9,157 6,817 7,965
============ ============ ===============
EQUITY
SHAREHOLDERS' EQUITY
Share capital 64 64 64
Share option reserve 51 51 51
Retained earnings 5,909 4,751 5,147
------------ ------------ ---------------
6,024 4,866 5,262
Non-controlling interests 163 106 165
TOTAL EQUITY 6,187 4,972 5,427
------------ ------------ ---------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 762 259 512
Deferred tax 92 58 90
------------ ------------ ---------------
854 317 602
CURRENT LIABILITIES
Trade and other payables 1,648 1,301 1,756
Tax payable 468 227 180
------------ ------------ ---------------
2,116 1,528 1,936
------------ ------------ ---------------
TOTAL LIABILITIES 2,970 1,845 2,538
------------ ------------ ---------------
TOTAL EQUITY AND LIABILITIES 9,157 6,817 7,965
============ ============ ===============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2021 to 30 June 2021
Non controlling
Share Retained Share option Shareholders'
capital earnings reserve interest equity
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1 January
2020 64 4,867 51 97 5,079
Total comprehensive
income - 365 - 9 374
Dividends paid - (481) - - (481)
--------- ----------- --------------- ---------------- ----------------
Balance at 30 June
2020 64 4,751 51 106 4,972
--------- ----------- --------------- ---------------- ----------------
Acquired with subsidiary - - - -
Profit and comprehensive
income - 804 - 59 863
Dividends paid - (408) - - (408)
--------- ----------- --------------- ---------------- ----------------
Balance at 31 December
2020 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
========= =========== =============== ================ ================
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2021 to 30 June 2021
(Unaudited) (Unaudited)
Period Period
1.1.21 1.1.20 (Audited)
To To Year ended
30.6.21 30.6.20 31.12.20
Notes GBP000's GBP000's GBP000's
Cash flows from operating activities
Cash generated from operations i 1,010 491 2,762
Tax paid (120) (60) (313)
------------ ------------ -----------
Net cash from operating activities 890 431 2,449
------------ ------------ -----------
Cash flows from investing activities
Purchase of intangible fixed
assets - (105) (142)
Purchase of tangible fixed
assets (28) (7) (82)
Assisted acquisition support (35) - (17)
Cash acquired on acquisition - - -
Cash paid to acquire subsidiary - - -
Interest received 7 22 39
------------ ------------ -----------
Net cash used in investing
activities (56) (90) (202)
------------ ------------ -----------
Cash flows from financing activities
Payment of lease liabilities (97) (152) (246)
Interest paid on lease liabilities (19) (13) (22)
Equity dividends paid (674) (481) (889)
Non controlling interest (137)
------------ ------------ -----------
Net cash used in financing
activities (927) (646) (1,157)
------------ ------------ -----------
Increase/(decrease) in cash
and cash equivalents (93) (305) 1,090
Cash and cash equivalents at
beginning of period 4,661 3,571 3,571
------------ ------------ -----------
Cash and cash equivalents at
end of period ii 4,568 3,266 4,661
============ ============ ===========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2021 to 30 June 2021
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.21 1.1.20 (Audited)
To To Year ended
30.6.21 30.6.20 31.12.20
GBP000's GBP000's GBP000's
Profit before taxation 1,979 461 1,532
Depreciation and amortisation 255 306 555
(Reversal of) Impairment of fixed
asset investments 15 (4) -
Impairment of intangible - - 66
Negative goodwill - - (119)
FV uplift on investment - - (28)
Finance costs 19 13 22
Finance income (7) (22) (39)
Loss on disposal of fixed asset 1 - -
------------ ------------ -----------
2,262 754 1,989
(Increase) in trade and other receivables (1,125) (1,660) 67
Increase/(decrease) in trade and
other payables (127) 1,397 706
Cash generated from operations 1,010 491 2,762
============ ============ ===========
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:
30.6.21 30.6.20 31.12.20
GBP000's GBP000's GBP000's
Cash and cash equivalents 4,568 3,266 4,661
========= ========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2021 to 30 June 2021
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2021 and the
comparative information for the periods ended 30 June 2020 and 31
December 2020 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 2020 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 2021
and 30 June 2020 is unaudited. The financial information for the
year ended 31 December 2020 is derived from the group's audited
annual report and accounts.
The annual financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. 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 2021 to 30 June 2021
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
2021 2020 2020
GBP000 GBP000 GBP000
Revenue
Corporate owned offices 1,038 352 1,083
Management service fees 4,209 2,192 5,323
--------- --------- ----------
5,247 2,544 6,406
--------- --------- ----------
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 2021 to 30 June 2021
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 30.06.21
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
--------- ---------- ----------
Period ended 30.06.20
Basic EPS
Earnings/number of shares 365 12,733 2.87
Effect of dilutive securities - 25 (0.01)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 365 12,758 2.86
Year ended 31.12.20
Basic EPS
Earnings/number of shares 1,169 12,733 9.18
Effect of dilutive securities - 57 (0.04)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 1,169 12,790 9.14
--------- ---------- ----------
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2021 to 30 June 2021
4. INTANGIBLE ASSETS
Customer Website
lists development Total
GBP000's GBP000's GBP000's
Net book value at 1 January 2020 478 190 668
Additions - 105 105
Amortisation (17) (34) (51)
--------- ------------- ---------
Net book value at 30 June 2020 461 261 722
--------- ------------- ---------
Additions 147 37 184
Acquired with subsidiary - - -
Amortisation (23) (33) (56)
Net book value at 31 December
2020 585 265 850
--------- ------------- ---------
Additions -
Amortisation (23) (28) (51)
--------- ------------- ---------
Net book value at 30 June 2021 562 237 799
========= ============= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2021 to 30 June 2021
5. FINANCIAL INSTRUMENTS
Categories of financial instruments
The group has the following financial instruments:
30.06.2021 30.06.2020 31.12.2020
GBP000's GBP000's GBP000's
Financial assets that are debt
instruments measured at amortised
cost
Trade receivables 1,491 919 454
Loans to franchisees 632 671 525
Other receivables 222 70 32
Financial liabilities measured
at amortised cost
Trade payables 86 302 323
Lease liability 992 283 723
Other payables 44 111 107
Financial assets measured at fair
value
Listed investments 49 41 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 2021, total dividends of
GBP341,097 (30 June 2020: GBP243,273) were paid to the
directors.
During the 6 months to 30 June 2021, the company received a
dividend of GBP674,862 (30 June 2020: GBP481,316) 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 2020: GBP1,267,587).
7 . ACQUISITION OF FURTHER SHAREHOLDING
On 31 March 2021, Winkworth Franchising Limited acquired a
further 35% of Tooting Estates Limited, which operates the
Winkworth franchise in the Tooting area, for GBP136,963. The Heads
of Terms in relation to the acquisition were signed on 23 March
2021.
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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END
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