TIDMWINK
RNS Number : 5619Q
M Winkworth Plc
13 September 2017
M Winkworth Plc
Interim Results for the Six Months ended 30 June 2017
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its
Interim Results for the six months ended 30 June 2017
Highlights for the period
-- Revenues down 7.6% to GBP2.54m (2016: GBP2.75m)
-- Profit before taxation down 25.2% to GBP0.54m (2016: GBP0.72m)
-- Cash generated from operations GBP0.77m (2016: GBP0.44m)
-- Cash balance as at 30 June 2017 GBP3.00m (2016: GBP2.84m)
-- Rental income increased to 45% of total revenues
-- Seven new franchisees signed
-- Dividends of 3.6p declared and paid during the period (2016: 3.5p)
Dominic Agace, Chief Executive Officer of the Company,
commented:
"With these results we are pleased to have demonstrated our
ability to adapt to challenging market conditions and maintain our
dividend payment. Although the market is likely to remain unsettled
for the remainder of the year, we expect to see franchises that
have converted to the Winkworth brand growing their market share by
plugging into our evolving platform and new franchises approaching
us to benefit from the greater rewards of equity ownership."
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
Stockdale Securities Ltd (NOMAD and Broker) Tel : 020 7601 6100
Robert Finlay
Ed Thomas
Henry Willcocks
Chairman's Statement
We are pleased to report some success in maintaining
profitability and growing our franchises during the period under
review. Notable achievements were an increase in rental turnover
and the signing of seven new offices, which gives us a total number
of offices at the end of the reporting period of 96.
Our robust estate agency platform is attracting an increasing
number of new franchisees as well as owner upgrades in some of our
older, established franchises such as Fulham. Our patience in
waiting for a downturn before significantly expanding our number of
offices is being rewarded, and this expansion has been achieved
without diluting cash resources in the first half of the year - my
congratulations to the management team.
We continue to focus on delivering the best services for our
franchisees to enable them to maintain top service levels to
vendors, buyers, landlords and tenants, and in order to maintain
the growth and goodwill attached to the Winkworth brand. The
successful roll-out of our centralised services, which now include
an evolving internet platform and back-up office services for our
franchises, is proving to be a powerful competitive advantage.
Work has continued on building our self-developed online client
portal and customer service system which, on completion, will fully
integrate sales, rentals and management allowing our clients and
offices to conduct more of their business through our website. Our
franchisees have diverse requirements, but we have been able to
include them into the development of the system. Furthermore, by
developing this system ourselves we have provided them with
additional security and savings. I would like to thank our internal
development team and franchisees for creating what we believe will
be the leading platform for independent agencies.
Even though an uncertain outlook for sales volumes continues to
weigh on the market, we are confident that our business model will
lead to a return to growth in this sector. Meanwhile, we are
delighted with the organic growth of our rentals business.
Although markets remain slow, based on the performance in the
first half of the current financial year, and recent trading, we
expect full year results to be in line with management's
expectations. Looking forward our net cash position and established
brand puts us in a strong position to take on whatever
opportunities arise.
Simon Agace
Non-Executive Chairman
13 September 2017
CEO's Statement
Comparisons between this half year's performance and H1 2016 are
complicated by the introduction of higher stamp duty for buy-to-let
and second property owners in April 2016, which led to a spike in
transactions, distorting sales performance from the underlying
market environment. As a result, 2016 was the first year in which
our second half was weaker than the first. We expect our seasonal
performance to revert to normal in 2017 after a 18% year-on-year
fall in the number of transactions in H1.
Excluding this comparison, the sales market has remained
unsettled, with political and economic uncertainty and
affordability issues post stamp duty changes weighing on
transactions. The exception in the first half was central London,
where price depreciation of some 15% over the last two years and
international buyers attracted by a cheaper pound led to renewed
interest, underpinning prices and increasing activity. Winkworth's
gross sales income in this sector rose by 7% year-on-year.
Prices have remained steady in the more domestically-focused
outer London markets, underpinned by low interest rates and high
employment, but affordability issues continue.
Despite price reductions in central London, which accounts for
approximately 25% of our total London sales, our average fees
charged for a property sale were flat as a result of our average
property price continuing to grow on the strength of the Winkworth
brand. The average price of a Winkworth property sold increased by
2%, rising to GBP750,000 in London and GBP594,000 across the
UK.
With the sales market subdued, our investment in the lettings
and management side of the business has continued to pay dividends.
Despite an increase in supply post the buy-to-let mini boom
weighing on rental prices, lettings and management revenue grew by
4% and increased from 40% in H1 2016 to 45% of total gross revenue
for the franchised office network. Of particular note was the
strengthening of our property management business. This now
accounts for 37% of our letting revenue compared to 34% this time
last year, as increased training and our investment in improved
procedures are bolstered by a heightened focus by franchisees on
the value of this revenue stream. We see sustained growth in our
lettings and management business as rental prices level out
following the increase in supply.
In H1 2017, gross revenues of the franchised office network fell
by 9% to GBP21.4m (GBP23.6m), with sales falling 18% to GBP11.7m
(GBP14.3m), lettings down 2% to GBP6.0m (GBP6.1m) and property
management up 15% to GBP3.7m (GBP3.2m).
Whilst Winkworth's revenues fell by 8% to GBP2.54m (GBP2.75m),
and profit before taxation was 25% lower at GBP540k (GBP722k). Cash
generated from operations increased by 74% to GBP766k (GBP439k),
and the cash balance as at 30 June 2017 was GBP3.00m (2016:
GBP2.84m). The Company remains debt-free.
Dividends of 3.6p were declared for the period (3.6p) and
continue to be paid quarterly.
Against a background of a low transactional market we continue
to attract high quality new franchise applicants and convert
existing quality businesses to the Winkworth brand in markets that
are complementary to our existing network. Start-up franchisees are
typically successful managers whose earnings are depressed by
current market conditions and who are looking to own equity in
their own business, with the opportunity to secure their income
longer term and no longer be hamstrung by the corporate
requirements of larger well-known brands dragging down their
earnings potential.
Existing businesses may be lettings agencies looking to develop
into sales to offset the proposed loss of tenancy administration
fees, or estate agencies in prime locations looking to compete for
higher value properties and thus raise their profitability. In each
case, new franchisees are able to add value through an enhanced
level of service and, ultimately, the prices that their personal
skill set and the Winkworth platform can help their clients
achieve.
We have signed seven offices this year in Kingsbury, Milford On
Sea, Cheltenham, Surbiton, Sunningdale, Dartmouth and Brixham,
three of which were operational under the Winkworth brand in the
first half. This compares to two new offices this time last year.
With ongoing interest from exciting applicants, we expect this
trend to continue and already have a number of new franchised
offices lined up for launch in January 2018.
In order to attract candidates we have continued to invest in
the platform. We launched a recruitment department in June 2017 to
help franchisees find quality employees to enhance both their
businesses and the overall Winkworth profile.
Our digital plan is now well underway, with a new website having
been successfully launched in February and work in progress to
develop improved functionality for sales and lettings clients. This
will improve both the transparency of the Winkworth service and the
capability to link into it, as well as providing added support to
our franchisees as they use their skills and personal interaction
to add value to their clients' property transactions and management
requirements.
Outlook
We expect prices to be supported whilst interest rates remain
low and employment high, but for the number of transactions to
remain subdued on the back of an unpredictable economic outlook.
The exception to this is central London, where we anticipate that
transactions will continue to improve on the back of better
sentiment and that prices have bottomed out.
In the rental market we expect prices to stabilise, after having
fallen in H2 2016 and H1 2017, and activity to continue to grow as
the post stamp duty glut is absorbed.
Based on the performance in the first half of the current
financial year, and recent trading, we expect that full year
results should be in line with management's expectations.
With current market conditions set to continue for the remainder
of the year we expect to see franchises that have converted to the
Winkworth brand growing their market share by plugging into our
evolving platform, and new franchises approaching us to benefit
from the greater rewards of equity ownership. This combined with
the Company's strong financial position provides us with an ongoing
positive outlook for growth of the network.
Dominic Agace
Chief Executive Officer
13 September 2017
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period 1 January 2017 to 30 June 2017
(Unaudited) (Unaudited)
Period Period
1.1.17 1.1.16 (Audited)
Year
To To ended
30.6.17 30.6.16 31.12.16
GBP000's GBP000's GBP000's
CONTINUING OPERATIONS
Revenue 2,544 2,746 5,566
Cost of sales (661) (667) (1,477)
------------ ------------ ----------
GROSS PROFIT 1,883 2,079 4,089
Administrative expenses (1,376) (1,391) (2,743)
------------ ------------ ----------
OPERATING PROFIT 507 688 1,346
Finance costs - - -
Finance income 33 34 71
------------ ------------ ----------
PROFIT BEFORE TAXATION 540 722 1,417
Taxation (99) (148) (291)
------------ ------------ ----------
PROFIT FOR THE PERIOD 441 574 1,126
OTHER COMPREHENSIVE INCOME - - -
------------ ------------ ----------
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 441 574 1,126
============ ============ ==========
Earnings per share expressed
in pence per share: 3
Basic 3.46 4.52 8.84
Diluted 3.29 4.51 8.84
============ ============ ==========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2017
(Unaudited) (Unaudited) (Audited)
30.06.2017 30.06.2016 31.12.2016
Notes GBP000's GBP000's GBP000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 734 897 777
Property, plant and equipment 99 140 115
Investments 7 7 7
Trade and other receivables 619 735 716
Deferred tax - - -
------------ ------------ -----------
1,459 1,779 1,615
------------ ------------ -----------
CURRENT ASSETS
Trade and other receivables 1,820 2,002 1,348
Tax receivable 212 - 69
Cash and cash equivalents 3,005 2,838 2,972
------------ ------------ -----------
5,037 4,840 4,389
TOTAL ASSETS 6,496 6,619 6,004
============ ============ ===========
EQUITY
SHAREHOLDERS' EQUITY
Share capital 64 64 64
Share premium 1,793 1,793 1,793
Share option reserve 51 51 51
Retained earnings 3,539 3,462 3,556
------------ ------------ -----------
TOTAL EQUITY 5,447 5,370 5,464
------------ ------------ -----------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax 7 21 16
------------ ------------ -----------
CURRENT LIABILITIES
Trade and other payables 1,042 1,193 524
Tax payable - 35 -
------------ ------------ -----------
1,042 1,228 524
------------ ------------ -----------
TOTAL LIABILITIES 1,049 1,249 540
------------ ------------ -----------
TOTAL EQUITY AND LIABILITIES 6,496 6,619 6,004
============ ============ ===========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2016 to 30 June 2017
Share Retained Share Share Shareholders'
option
capital earnings reserve premium equity
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1
January 2016 64 3,334 51 1,793 5,242
Total comprehensive
income - 574 - - 574
Share-based payment - - - - -
Dividends paid - (446) - - (446)
--------- --------- --------- --------- --------------
Balance at 30
June 2016 64 3,462 51 1,793 5,370
--------- --------- --------- --------- --------------
Total comprehensive
income - 552 - - 552
Issue of share - - - - -
capital
Share-based payment - - - - -
Dividends paid - (458) - - (458)
--------- --------- --------- --------- --------------
Balance at 31
December 2016 64 3,556 51 1,793 5,464
--------- --------- --------- --------- --------------
Total comprehensive
income - 441 - - 441
Dividends paid - (458) - - (458)
--------- --------- --------- --------- --------------
Balance at 30
June 2017 64 3,539 51 1,793 5,447
========= ========= ========= ========= ==============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2017 to 30 June 2017
(Unaudited) (Unaudited)
Period Period
1.1.17 1.1.16 (Audited)
To To Year ended
30.6.17 30.6.16 31.12.16
Notes GBP000's GBP000's GBP000's
Cash flows from operating
activities
Cash generated from
operations i 765 439 1,569
Interest paid - - -
Tax paid (250) (201) (453)
------------ ------------ -----------
Net cash from operating
activities 515 238 1,116
------------ ------------ -----------
Cash flows from investing
activities
Purchase of intangible
fixed assets (54) (32) (122)
Purchase of tangible
fixed assets (3) (124) (128)
Sale of property, plant
& equipment - - -
Interest received 33 34 71
------------ ------------ -----------
Net cash used in investing
activities (24) (122) (179)
------------ ------------ -----------
Cash flows from financing
activities
Share issue - - -
Equity dividends paid (458) (446) (1,133)
------------ ------------ -----------
Net cash used in financing
activities (458) (446) (1,133)
------------ ------------ -----------
Increase/(decrease)
in cash and cash equivalents 33 (330) (196)
Cash and cash equivalents
at beginning of period 2,972 3,168 3,168
------------ ------------ -----------
Cash and cash equivalents
at end of period ii 3,005 2,838 2,972
============ ============ ===========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2017 to 30 June 2017
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH
GENERATED FROM OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.17 1.1.16 (Audited)
Year
To To ended
30.6.17 30.6.16 31.12.16
GBP000's GBP000's GBP000's
Profit before taxation 540 722 1,417
Depreciation and amortisation 117 130 368
Share-based payments - - -
Finance costs - - -
Finance income (33) (34) (71)
------------ ------------ ----------
624 818 1,714
(Increase) in trade and other
receivables (377) (770) (97)
Increase/(decrease) in trade
and other payables 518 391 (48)
------------ ------------ ----------
Cash generated from operations 765 439 1,569
============ ============ ==========
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:
30.6.17 30.6.16 31.12.16
GBP000's GBP000's GBP000's
Cash and cash equivalents 3,005 2,838 2,972
========= ========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2017 to 30 June 2017
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2017 and the
comparative information for the periods ended 30 June 2016 and 31
December 2016 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 2016 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 2017
and 30 June 2016 is unaudited. The financial information for the
year ended 31 December 2016 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. The directors do not anticipate that any new standards,
applicable to the year ending 31 December 2017, will have an impact
on the results of the group.
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.
2. SEGMENTAL REPORTING
The directors believe that the group has only one segment, that
of a franchising business. Currently, these operations principally
occur in the UK, with only limited business in other territories.
Accordingly no segmental analysis is considered necessary.
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2017 to 30 June 2017
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 Per-share
Earnings number amount
GBP000's of shares pence
Period ended 30.06.17
Basic EPS
Earnings/number of shares 441 12,733 3.46
Effect of dilutive securities - 659 -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number
of shares 441 13,392 3.29
--------- ---------- ----------
Period ended 30.06.16
Basic EPS
Earnings/number of shares 574 12,682 4.52
Effect of dilutive securities - 41 -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number
of shares 574 12,723 4.51
Year ended 31.12.16
Basic EPS
Earnings/number of shares 1,126 12,733 8.84
Effect of dilutive securities - - -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number
of shares 1,126 12,733 8.84
--------- ---------- ----------
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2017 to 30 June 2017
4. INTANGIBLE ASSETS
GBP000's
Net book value at 1 January 2016 976
Additions 32
Amortisation (111)
---------
Net book value at 30 June 2016 897
---------
Additions 90
Disposals (164)
Amortisation (46)
---------
Net book value at 31 December 2016 777
---------
Additions 54
Amortisation (97)
---------
Net book value at 30 June 2017 734
=========
5. 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UUONRBSAKAAR
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