TIDMWINK
RNS Number : 9101U
M Winkworth Plc
03 April 2019
M Winkworth Plc
Audited final results for the year to 31 December 2018
M Winkworth plc ("Winkworth" or the "Company") is pleased to
announce its
results for the year ended 31 December 2018
Highlights for the year
-- Revenues of GBP5.98 million (2017: GBP5.42 million)
-- Profit before taxation GBP1.45 million (2017: GBP1.38 million)
-- Year-end cash balance of GBP2.94 million (2016: GBP3.58
million) after returning GBP1.15m of capital to shareholders
-- Rental income increased to 50% of total revenues (2017: 46%)
-- 12 new franchisees with six offices opened and six resold to new management
-- Capital repayment of 9p per share made in August 2018
-- Dividends of 7.45p declared and paid (2017: 7.25p)
Dominic Agace, CEO of the Company, commented:
"We are pleased with our results for 2018, achieved in a sales
market which remains testing. A weaker outcome in sales was
compensated for by ongoing growth in our very successful rentals
business, which now accounts for half of Group revenues. After
opening six new offices last year and reselling another six to new
management, we expect this year to see new opportunities as some
competing agencies seek to plug into to the Winkworth platform to
grow their market share and others look to sell their
portfolios."
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 Tel: 020 7601 6100
Broker)
Robert Finlay
Richard Johnson
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
Chairman's Statement
In these changing times, Winkworth's stakeholders are entitled
to a recap on their company's policy for the future.
For our shareholders, our priority is to increase the dividend
steadily and maintain a strong balance sheet. This is achievable
through a combination of organic growth and careful investment. For
our franchisees, it is to maintain their competitive advantage,
lower their costs where possible and deliver brand growth and
back-up services.
The uncertainties brought about by various stamp duty changes,
Brexit, pending withdrawal of tenant fees, and changes in taxation
in the rental market, have all influenced the residential market.
Reduced investment in the rental market due to over-regulation,
coupled with lower sale prices in the Home Counties, can affect
land prices dramatically and thus cause a subsequent reduction in
new home building. These are matters for those in the industry to
consider.
Our rentals business will this year see a minor negative impact
from the well-publicised change in tenant fees, and this has been
factored into our budget. Rental management and lettings remain
important parts of our business and development of our portfolio
management activity bodes well for future profitability. Pressure
on smaller agencies from increased regulation and lower returns
means that we expect to continue to grow the numbers of properties
managed and let.
Our clean balance sheet, with its strong cash position of
GBP2.94m at 31 December 2018, has meant that we are well positioned
to continue to grow in what we believe will be an ongoing low
volume market that benefits our franchised system. Even a modest
upturn in sales volume, or increased market share following
competitors' closures, will feed through to increased profits. Our
cost base is closely contained, which means that top line
improvements feed straight through to the bottom line.
We remain an attractive proposition for well-run companies
within the agency and professional property businesses interested
in discussing becoming part of the Winkworth franchise.
Simon Agace
Non-Executive Chairman
2 April 2019
CEO's Statement
Stretched affordability levels and increased taxation, combined
with uncertainty around Brexit discussions, meant that, despite
strong employment and low interest rates, property prices continued
to decline in 2018. This led to a reduction in transactions as many
sellers chose not to put their properties on the market. This was
accentuated in London, where tax and political concerns have a
greater impact on its international community and asking prices are
higher. The market was driven by needs-based buyers and sellers,
with the greatest activity being in the outer London house market
as families took advantage of price reductions, offsetting stamp
duty taxation increases, to move up the property ladder.
Winkworth's sales transactions fell by 4% overall and 6% in
London, but in this low transactional market we outperformed our
peers and grew market share, improving our ranking to second for
properties exchanged in London and third in listings, a reflection
of our efficiency at selling the properties we list.
Rentals and management revenues continued to grow strongly, and
we reinforced this side of the business with the appointment of a
Group head of lettings. Revenues rose by 8%, after a 6% increase in
2017, supported by our central initiatives - the Corporate
Relocation Department (CRD) providing quality tenants and the
Client Services Department (CSD) quality landlords. Within this
increase it was notable to see property management revenues
continuing to grow rapidly, rising by 12% following an increase of
15% in 2017. This enabled us to reach a 50/50 split in sales and
lettings, up from 54/46 in 2017.
Total gross revenues for the franchised office network rose by
1% in 2018 to GBP46.5m (2017: GBP46.2m) with sales 6% lower at
GBP23.4m (2017: GBP24.8m) and rentals up 8% to GBP23.1m (2017:
GBP21.3m). London offices accounted for 81% of gross revenues
(2017: 80%). The best performing area was outer London, which saw a
slight 1% dip in sales income but an increase of 10% in lettings
and management, compared to sales income down 6% and lettings
management up 8% for the Group as a whole. We opened six new
offices and new franchising applicants were up 78%, from 158 in
2017 to 282 in 2018. In addition, six offices were resold to new
management, and we would expect these to have a positive impact on
2019 revenues.
Winkworth's revenues grew by 10% to GBP5.98m (2017: GBP5.42m)
and profit before taxation increased by 5% to GBP1.45m (2017:
GBP1.38m). The Group's cash stood at GBP2.94m (2017: GBP3.58m),
after returning GBP1.15m of cash to shareholders in August 2018.
Dividends of 7.45p were declared for the year (2017: 7.25p).
Our central teams continued to drive revenue to our franchisees,
with CSD and CRD producing just over GBP1m in combined revenue for
participating offices. CSD generated 1,538 valuations leading to
377 instructions, a 25% increase on 2017. The digital marketing
campaign conducted in 2018 also paid off, with a 41% rise in visits
to the website compared to 2017, 30% more new users and a 21%
increase in leads sent out through the website to franchisees.
We continue to invest in our digital platform. Now that stage
one of the sales platform has been rolled out and is evolving, we
are looking to start the roll out of the lettings platform this
year.
Outlook
As prices have declined over the last few years, we have noticed
a consistent increase in applicants and so a pent-up demand that
has not yet flowed through to a rise in sales. This is partly
attributable to changing political dynamics creating uncertainty
and holding transaction levels back. So long as political
uncertainty dominates the news we anticipate that this will remain
the case. However, when we eventually enter a period of relative
stability we would expect the market to unlock, with sellers coming
forward and buying demand feeding through to increased
transactions, albeit without significant price increases due to
affordability and tax changes. In lettings we anticipate strong
levels of demand to continue to be driven by young
professionals.
So far this year, we are generating new franchising applicants
and a pipeline for new offices broadly in-line with 2018. We expect
a delay in some of the new applicants coming onboard as they await
the outcome of Brexit negotiations, but we do envisage that these
will come though once there is greater clarity. We will continue to
invest in the digital platform and the services we provide to
franchisees to support their expertise and skills with a strong
central platform to enable them to offer best-in-class services to
their clients.
We expect to see new opportunities deriving from agencies
looking to convert to and plug into the Winkworth platform in order
to grow their market share, as well as agencies looking to sell
their portfolios. Under current market conditions and as some
successful franchisees who have been with us for many years look to
pass on the baton, we also see an exciting opportunity to bring in
new talented operators with successful track records looking for
equity to acquire offices and take them on to the next level. Four
of our top five fastest growing offices in 2018 were managed by new
operators joining the network.
Dominic Agace
Chief Executive Officer
2 April 2019
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 31 DECEMBER 2018
2018 2017
Notes GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 5,979 5,423
Cost of sales (1,547) (1,292)
--------- ---------
GROSS PROFIT 4,432 4,131
Administrative expenses (3,063) (2,829)
--------- ---------
OPERATING PROFIT 1,369 1,302
Finance income 83 74
--------- ---------
PROFIT BEFORE TAXATION 1,452 1,376
Tax 1 (288) (273)
--------- ---------
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR
THE YEAR 1,164 1,103
========= =========
Earnings per share expressed in pence per
share: 3
Basic 9.14 8.66
Diluted 9.14 8.66
========= =========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2018
2018 2017
Notes GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 674 796
Property, plant and equipment 121 98
Investments 53 7
Trade and other receivables 724 516
--------- ---------
1,572 1,417
--------- ---------
CURRENT ASSETS
Trade and other receivables 1,026 1,102
Corporation tax receivable - 208
Cash and cash equivalents 2,935 3,579
--------- ---------
3,961 4,889
--------- ---------
TOTAL ASSETS 5,533 6,306
========= =========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 5 64 64
Share premium 6 - 1,793
Other reserves 51 51
Retained earnings 4,550 3,742
--------- ---------
TOTAL EQUITY 4,665 5,650
--------- ---------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax 17 11
--------- ---------
CURRENT LIABILITIES
Trade and other payables 722 645
Corporation tax payable 129 -
--------- ---------
851 645
--------- ---------
TOTAL LIABILITIES 868 656
--------- ---------
TOTAL EQUITY AND LIABILITIES 5,533 6,306
========= =========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2018
Notes Called up Retained Share Other Total
share earnings premium reserves equity
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2017 64 3,556 1,793 51 5,464
Changes in equity
Dividends 2 - (917) - - (917)
Total comprehensive
income - 1,103 - - 1,103
------------- ----------- --------- ----------------- ---------
Balance at 31 December
2017 64 3,742 1,793 51 5,650
Changes in equity
Capital reduction - - (1,146) - (1,146)
Capital reduction
expenses - (61) - - (61)
Transfer of excess
share premium - 647 (647) - -
Dividends 2 - (942) - - (942)
Total comprehensive
income - 1,164 - - 1,164
------------- ----------- --------- ----------------- ---------
Balance at 31 December
2018 64 4,550 - 51 4,665
============= =========== ========= ================= =========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
2018 2017
Notes GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 4 1,612 2,115
Tax paid 56 (417)
--------- ---------
Net cash from operating activities 1,668 1,698
--------- ---------
Cash flows from investing activities
Purchase of intangible fixed assets (119) (224)
Purchase of tangible fixed assets (70) (23)
Purchase of fixed asset investments (78) -
Sale of intangible fixed assets 21 -
Interest received 83 74
--------- ---------
Net cash from investing activities (163) (173)
--------- ---------
Cash flows from financing activities
Capital reduction (1,146) -
Costs relating to capital reduction (61) -
Equity dividends paid (942) (917)
--------- ---------
Net cash from financing activities (2,149) (917)
========= =========
(Decrease)/increase in cash and cash equivalents (644) 608
Cash and cash equivalents at beginning
of year 3,579 2,971
--------- ---------
Cash and cash equivalents at end of year 2,935 3,579
========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
1. TAXATION
Analysis of tax expense
2018 2017
GBP'000 GBP'000
Current tax:
Taxation 280 274
Adjustment re previous years 2 4
------- -------
Total current tax 282 278
Deferred tax (note 20) 6 (5)
------- -------
Total tax expense in consolidated statement of profit
or loss and other comprehensive
Income 288 273
======= =======
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:
2018 2017
GBP'000 GBP'000
Profit before income tax 1,452 1,376
------- -------
Profit multiplied by the standard rate of corporation
tax in the UK of 19% (2017 - 19.25%) 275 265
Effects of:
Expense not deductible for tax purposes 1 7
Adjustment in respect of prior periods 10 4
Depreciation in excess of capital allowances 2 (3)
------- -------
Tax expense 288 273
======= =======
2. DIVIDENDS
2018 2017
GBP'000 GBP'000
Ordinary shares of 0.5p each
Interim 942 917
======= =======
There are no proposed dividends at the reporting date.
3. 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.
2018
Earnings Weighted Per-share
average amount
number of
shares
GBP'000 '000 pence
Basic EPS
Earnings attributable to ordinary shareholders 1,164 12,733 9.14
Effect of dilutive securities - - -
--------- ----------- ----------
Diluted EPS
Adjusted earnings 1,164 12,733 9.14
========= =========== ==========
Given that the market price of the shares has fallen lower than
the strike price, for the options granted on 10 May 2017, this has
made the options anti-dilutive.
2017
Earnings Weighted Per-share
average amount
number of
shares
GBP'000 '000 pence
Basic EPS
Earnings attributable to ordinary
shareholders 1,103 12,733 8.66
Effect of dilutive securities - - -
--------- ----------- ----------
Diluted EPS
Adjusted earnings 1,103 12,733 8.66
========= =========== ==========
4. RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
Group 2018 2017
GBP'000 GBP'000
Profit before tax 1,452 1,376
Depreciation charges 270 246
Profit on disposal of fixed assets (3) -
Impairment of fixed asset investments 32 -
Finance income (83) (74)
--------- -------
1,668 1,548
(Increase)/decrease in trade and other receivables (133) 446
Increase in trade and other payables 77 121
--------- -------
Cash generated from operations 1,612 2,115
========= =======
5. CALLED UP SHARE CAPITAL
2018 2017
Authorised: GBP GBP
20,000,000 Ordinary shares of 0.5p 100 100
========= ===========
2018 2017
Issued and fully GBP GBP
paid:
12,733,238 Ordinary shares of 0.5p 64 64
========= ===========
6. 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.
On 24 July, 2018, the High Court of Justice of England and Wales
made an order approving a Reduction of Capital. Under the terms of
this arrangement, the Company's share premium account of
approximately GBP1.793 million was cancelled and approximately
GBP1.146 million of capital was returned to shareholders. The
balance of approximately GBP0.647 million, less the costs of the
Return of Capital, was transferred to the Company's profit and loss
account.
The share price at close of business on 23 July 2018, the day
before the High Court made the order, was 130.0p for each 0.5p
share.
7. FINANCIAL INFORMATION
The financial information contained within this preliminary
announcement for the year ended 31 December 2018 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 2017 have been filed with
the Registrar of Companies and those for the year ended 31 December
2018 will be filed following the Company's annual general meeting.
The auditors' reports on the statutory accounts for the years ended
31 December 2018 and 31 December 2017 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.
8. ANNUAL REPORT AND ACCOUNTS
Copies of the annual report and accounts for the year ended 31
December 2018 together with the notice of the Annual General
Meeting to be held at the offices of M Winkworth Plc on 14 May
2019, will be posted to shareholders shortly and will be available
to view and download from the Company's website at
www.winkworthplc.com
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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