TIDMWINK
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 GBP63.1 million
(2021: GBP64.8 million).
-- Sales revenues 54% of total revenues (2021: 60%).
-- Revenues of GBP9.31 million in line with 2021 (2021 GBP9.45 million).
-- Profit before taxation down 23% to GBP2.47 million (2021: GBP3.21 million).
-- Clean Balance Sheet: Year-end cash balance of GBP5.25 million
(2021: GBP5.02 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
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
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
London(1).
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 GBP63.1m
were down by 3% year-on-year (2021: GBP64.8m). Sales income was
down by 12% at GBP34.3m (2021: GBP39.0m) while Lettings and
Management increased by 11% to GBP28.7m (2021: GBP25.8), 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 GBP9.31m (2021: GBP9.45m)
and profit before taxation fell by 23% at GBP2.46m (2021:
GBP3.21m). The Group's cash position at year end increased to
GBP5.25m (2021: GBP5.02m). 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
GBP2.2m to GBP2.8m. 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.
Note(1): 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 YEARED 31 DECEMBER 2022
Notes 2022 2021
GBP'000 GBP'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: 1,951 2,519
Owners of the parent 30 89
Non-controlling interests
--------- ---------------
Earnings per share expressed in pence per Notes 1,981 2,608
share: 6 ====== ======
2022 2021
GBP GBP
Basic 15.32 19.78
Diluted 15.18 19.48
--------- ---------------
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2022
Notes 2022 2021
GBP'000 GBP'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
--------- ---------
CURRENT LIABILITIES 524 729
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 YEARED 31 DECEMBER
2022
Called
up
share Retained Share Other Non-controlling Total
capital earnings premium reserves Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 YEARED 31 DECEMBER 2022
Notes 2022 2021
GBP'000 GBP'000
Cash flows from operating activities 2,469 3,214
Profit before tax 531 509
Depreciation and amortisation charges 30 -
Impairment of fixed asset investments 38 52
Finance costs (39) (32)
Finance income 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 YEARED 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
GBP'000 GBP'000
Revenue
Estate agency and lettings business 2,781 2,231
Commissions and subscriptions due to the group under
franchise agreement 6,526 7,220
------- -------
9,307 9,451
4. TAXATION
Analysis of tax expense
2022 2021
GBP'000 GBP'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
Income 488 606
======= =======
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
GBP'000 GBP'000
Profit before income tax 2,469 3,214
------- -------
Profit multiplied by the standard rate of corporation
tax in the UK of 19% (2021 - 19%) 469 611
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
GBP'000 GBP'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 Per-share
average amount
number of
shares
GBP'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 Per-share
average amount
number of
shares
GBP'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: GBP'000 GBP'000
20,000,000 Ordinary shares of 0.5p 100 100
========= ==========
2022 2021
Issued and f GBP'000 GBP'000
u lly paid:
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 GBP713,000 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 .
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