TIDMWINK
RNS Number : 8815L
M Winkworth Plc
11 September 2019
M Winkworth Plc
Interim Results for the six months ended 30 June 2019
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its
unaudited Interim Results for the six months ended 30 June
2019
Highlights for the period
-- Revenues down 2.5% to GBP2.73 million (H1 2018: GBP2.80 million)
-- Profit before taxation down 1.0% to GBP588k (H1 2018: GBP594k)
-- Cash balance at 30 June 2019 of GBP2.51 million - after
returning GBP1.15m to shareholders in August 2018 (30 June 2018:
GBP3.16 million)
-- Rental income increased to 53% of total revenues (H1 2018: 49%)
-- Three new offices signed up
-- Dividends of 3.8p declared and paid during the period (H1 2018: 3.7p)
Dominic Agace, Chief Executive Officer of the Company,
commented:
"While the sales market continues to be undermined by political
and economic uncertainty, our ship remains steady and we look
forward to an eventual revival in activity. In the meantime, I am
delighted by the ongoing growth in our lettings and management
business as our franchisees have worked tirelessly to build this
side of the business. We are confident of our proposition and very
pleased to see continuing high numbers of potential new franchisees
applying to join the group."
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
Richard Johnson
Henry Willcocks
Chairman's Statement
I am pleased to say that our business held up well in the first
half of 2019, during which the team continued to grow the rentals
and management side of the business. Sales volumes are historically
low and the rentals business, while attractive as a counterbalance,
is not, however, as profitable as sales. Our policy, therefore, is
not to invest heavily in buying rental businesses but to prepare
for an upturn in sales volumes which should increase our
profitability in the future.
Among Winkworth's key strengths are its franchisees' individual
skills, which are paramount to concluding transactions, be these
sales, purchases or rentals. Within sales in particular, we believe
that these personal skills will enable us to maximise any increase
in volumes.
Despite the uncertain times, we are confident that we will be
able to continue to distribute dividends at the current level and
hopeful that even a modest upturn in the marketplace will lead to
positive news on that front. We are satisfied that with our
substantial cash reserves, no debt or significant financial
obligations, our company will continue to perform well.
Meanwhile, we welcome the regulation and registration of estate
agency staff. We believe this will certainly be of benefit to
Winkworth.
Simon Agace
Non-Executive Chairman
11 September 2019
CEO's Statement
Following a weak market towards the latter part of 2018 and a
slow start to the current year as buyers awaited the delivery of
the March Brexit deadline, we enjoyed a pick-up in sales activity
following its postponement. This highlights that the will remains,
particularly in the family house market, for people to get on with
their lives in an environment where lower property prices have
offset some of the stamp duty burden and both mortgage rates and
employment remain positive for buyers. This has been reflected in
our sales applicants being 9% ahead of 2018 in the
year-to-date.
Prices in the first half were broadly flat, supported by the low
levels of property coming onto the market and the price falls of
previous years. The shortage of sellers coming to the market in
London, however, impacted on transactions, and as a result our
London sales income fell by 15%. This was to an extent
counter-balanced by a 15% rise in revenues in the country markets
which, typically, have a greater domestic focus and where reduced
prices encouraged activity. Commission rates of offices were on
average little changed.
The rentals and management side of our business has continued to
perform strongly following initiatives taken over the last five
years to grow this activity, and in the year-to-date we have
experienced an increase of 32% in lettings applicants registering
versus the same period in 2018. The recent tax changes in the
buy-to-let sector have contributed to a significant reduction in
the number of new landlords entering the sector and, therefore, we
believe that our growth ahead of that of our peers has been driven
by market share gains.
In H1 2019, gross revenues of the franchised office network of
GBP21.4m were 1% ahead on H1 2018 (GBP21.3m). Sales income fell by
8% to GBP10.0m (H1 2018: GBP10.9m) but lettings and management rose
by 10% to GBP11.4m (H1 2018: GBP10.3m), equating to a 53% lettings
and management / 47% sales income split across the business at the
half year, resulting in rentals outweighing sales for the first
time. As well as a strong performance in the lettings and
management business, it is worth noting that we saw good growth in
the country markets, with rentals income up by 16% and sales income
up 15%. Central London, where revenues are most sensitive to
political uncertainty, was the most affected by Brexit turmoil,
with income down by 10% on H1 2018. Since May, this market has
picked up and sentiment improved.
Winkworth's revenues declined by 2.5% to GBP2.73m (H1 2018:
GBP2.80m) and profit before taxation decreased by 1.0% to GBP588k
(H1 2018: GBP594k). The Group's cash balance as at 30 June 2019 was
GBP2.51m (30 June 2018: GBP3.16m, prior to the return of GBP1.15m
to shareholders in August 2018) and dividends of 3.8p were declared
for the first half of the year (2018: 3.7p).
We have signed three new franchises so far this year, and have
opened two, in Leigh on Sea and Southwold. We have a further two
offices likely to open in H2 of this year. We continue to
experience strong interest in new franchises, with applicants
slightly down at 121 in H1 2019 versus 134 in H1 2018 but still
significantly up on H1 2016 (49) and H1 2017 (57). A reflection of
the interest in our proposition is the increase of over 50% that we
have seen in web traffic to our franchising site, which we hope
will feed through to increased applications in a more certain
environment.
Outlook
While there are a number of macro factors that can still affect
market conditions in the coming months, we will continue to invest
in our business and pay dividends while positioning ourselves to
take advantage of any upturn once Brexit uncertainty clears.
Since the tenant fee ban came into force in June this year,
early indications are that as our offices' charges have been lower
than our peers', and given the relatively small revenue that we
derive from this source in the context of our total lettings and
management revenues, we will see a limited impact and anticipate
that our lettings revenues will continue to grow year-on-year. We
do, however, envisage that with more landlords having to bear these
costs, combined with the ongoing impact of changes to tax relief
and increased stamp duty, there will be further contraction in the
buy-to-let sector. Landlords will de-leverage in order to offset
these factors and boost yields, which with increased applicants and
less available stock is likely to lead to rising rents over the
course of the year.
In the sales market we see prices underpinned by low interest
rates and high employment and anticipate that these will stabilise
at their new level. While uncertainty remains, we expect to see an
uptick in activity as buyers seize the opportunity to take their
next step on the property ladder.
From an operational point of view, we look to continue to both
evolve our digital offering through new services and to bring a new
generation of talent on board. We see an opportunity to attract
franchisee managers into the business as constrained earnings at
some competitors enhance the attraction of equity ownership.
Where we have done this to date, we have seen significant
uplifts in the performance of offices and we are taking full
advantage of the earnings opportunities in some of the key areas we
cover, while also enhancing our brand. We look forward to welcoming
more new managers on board over the coming months and to supporting
some of the best talent in the industry through company loans or,
in very selective cases, equity participation.
We continue to see significant levels of franchisee applicants
and the quality of these is improving. It was interesting to note
there was a significant uptick in applicants in the period post the
delay to Brexit in March and we anticipate seeing an acceleration
in conversions to new franchises once the broader economic and
political outlook becomes clearer.
Dominic Agace
Chief Executive Officer
11 September 2019
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 2019 to 30 June 2019
(Unaudited) (Unaudited)
Period Period
1.1.19 1.1.18 (Audited)
To To Year ended
30.6.19 30.6.18 31.12.18
as restated as restated
GBP000's GBP000's GBP000's
CONTINUING OPERATIONS
Revenue 2,727 2,798 5,979
Cost of sales (668) (811) (1,547)
------------ ------------ ------------
GROSS PROFIT 2,059 1,987 4,432
Administrative expenses (1,483) (1,412) (3,015)
------------ ------------ ------------
OPERATING PROFIT 576 575 1,417
Finance costs (20) (26) (50)
Finance income 32 45 83
------------ ------------ ------------
PROFIT BEFORE TAXATION 588 594 1,450
Taxation (114) (117) (288)
------------ ------------ ------------
PROFIT FOR THE PERIOD 474 477 1,162
OTHER COMPREHENSIVE INCOME - - -
------------ ------------ ------------
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 474 477 1,162
Prior year adjustment (19) (19) (19)
------------ ------------ ------------
TOTAL COMPREHENSIVE INCOME SINCE
LAST ANNUAL REPORT 455 458 1,143
============ ============ ============
Earnings per share expressed
in pence per share: 3
Basic 3.72 3.75 9.13
Diluted 3.72 3.75 9.13
============ ============ ============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2019
(Unaudited) (Unaudited) (Audited)
30.06.2019 30.06.2018 31.12.2018
as restated as restated
Notes GBP000's GBP000's GBP000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 638 696 674
Property, plant and equipment 797 1,018 940
Investments 57 7 53
Trade and other receivables 655 887 725
2,147 2,608 2,392
------------ ------------ ------------
CURRENT ASSETS
Trade and other receivables 1,641 1,673 1,026
Tax receivable - - -
Cash and cash equivalents 2,513 3,156 2,935
------------ ------------ ------------
4,154 4,829 3,961
TOTAL ASSETS 6,301 7,437 6,353
============ ============ ============
EQUITY
SHAREHOLDERS' EQUITY
Share capital 64 64 64
Share premium - 1,793 -
Share option reserve 51 51 51
Retained earnings 4,519 3,729 4,529
------------ ------------ ------------
TOTAL EQUITY 4,634 5,637 4,644
------------ ------------ ------------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax 14 8 17
------------ ------------ ------------
CURRENT LIABILITIES
Trade and other payables 810 644 724
Contract liabilities 716 958 839
Tax payable 127 190 129
------------ ------------ ------------
1,653 1,792 1,692
------------ ------------ ------------
TOTAL LIABILITIES 1,667 1,800 1,709
------------ ------------ ------------
TOTAL EQUITY AND LIABILITIES 6,301 7,437 6,353
============ ============ ============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2019 to 30 June 2019
Share Retained Share option Share Shareholders'
capital earnings reserve premium equity
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1 January
2018 64 3,742 51 1,793 5,650
Prior year adjustment - (19) - - (19)
----------------------- --------- ------------- --------- --------------
As restated 64 3,723 51 1,793 5,631
----------------------- --------- ------------- --------- --------------
Total comprehensive
income - 477 - - 477
Dividends paid - (471) - - (471)
----------------------- --------- ------------- --------- --------------
Balance at 30 June
2018 64 3,729 51 1,793 5,637
----------------------- --------- ------------- --------- --------------
Capital reduction - - - (1,146) (1,146)
Capital reduction
expenses - (61) - - (61)
Transfer of excess
share premium 647 - (647) -
Total comprehensive
income - 685 - - 685
Dividends paid - (471) - - (471)
----------------------- --------- ------------- --------- --------------
Balance at 31 December
2018 64 4,529 51 - 4,644
----------------------- --------- ------------- --------- --------------
Total comprehensive
income - 474 - - 474
Dividends paid - (484) - - (484)
----------------------- --------- ------------- --------- --------------
Balance at 30 June
2019 64 4,519 51 - 4,634
======================= ========= ============= ========= ==============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2019 to 30 June 2019
(Unaudited) (Unaudited)
Period Period
1.1.19 1.1.18 (Audited)
To To Year ended
30.6.19 30.6.18 31.12.18
as restated as restated
Notes GBP000's GBP000's GBP000's
Cash flows from operating activities
Cash generated from operations i 243 (233) 1,662
Interest paid (20) (26) (50)
Tax paid (120) 278 56
------------ ------------ ------------
Net cash from operating activities 103 19 1,668
------------ ------------ ------------
Cash flows from investing activities
Purchase of intangible fixed
assets (69) (12) (119)
Purchase of tangible fixed
assets (4) (4) (70)
Purchase of fixed asset investments - - (78)
Sale of intangible fixed assets - - 21
Interest received 32 45 83
------------ ------------ ------------
Net cash used in investing
activities (41) 29 (163)
------------ ------------ ------------
Cash flows from financing activities
Equity dividends paid (484) (471) (942)
Capital reduction (1,146)
Costs relating to capital reduction (61)
Net cash used in financing
activities (484) (471) (2,149)
------------ ------------ ------------
Increase/(decrease) in cash
and cash equivalents (422) (423) (644)
Cash and cash equivalents at
beginning of period 2,935 3,579 3,579
------------ ------------ ------------
Cash and cash equivalents at
end of period ii 2,513 3,156 2,935
============ ============ ============
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2019 to 30 June 2019
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.19 1.1.18 (Audited)
To To Year ended
30.6.19 30.6.18 31.12.18
as restated as restated
GBP000's GBP000's GBP000's
Profit before taxation 588 594 1,450
Depreciation and amortisation 252 252 508
Profit on disposal of fixed assets - - (3)
(Reversal of) Impairment of fixed
asset investments (4) - 32
Finance costs 20 26 50
Finance income (32) (45) (83)
------------ ------------ ------------
824 827 1,954
(Increase) in trade and other receivables (546) (941) (133)
Increase/(decrease) in trade and
other payables 88 (2) 77
Increase/(decrease) in contract liabilities (123) (117) (236)
------------ ------------ ------------
Cash generated from operations 243 (233) 1,662
============ ============ ============
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:
30.6.19 30.6.18 31.12.18
GBP000's GBP000's GBP000's
Cash and cash equivalents 2,513 3,156 2,935
========= ========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2019 to 30 June 2019
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2019 and the
comparative information for the periods ended 30 June 2018 and 31
December 2018 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 2018 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 2019
and 30 June 2018 is unaudited. The financial information for the
year ended 31 December 2018 is derived from the group's audited
annual report and accounts subject to adjustment in respect of the
application of IFRS 16, as set out in note 5.
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.
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.
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 30.06.19
Basic EPS
Earnings/number of shares 474 12,733 3.72
Effect of dilutive securities - - -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 474 12,733 3.72
--------- ---------- ----------
Period ended 30.06.18
Basic EPS
Earnings/number of shares 477 12,733 3.75
Effect of dilutive securities - - -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 477 12,733 3.75
Year ended 31.12.18
Basic EPS
Earnings/number of shares 1,162 12,733 9.13
Effect of dilutive securities - - -
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 1,162 12,733 9.13
--------- ---------- ----------
4. INTANGIBLE ASSETS
GBP000's
Net book value at 1 January 2018 796
Additions 12
Amortisation (112)
---------
Net book value at 30 June 2018 696
---------
Additions 107
Disposals (30)
Amortisation (112)
Eliminated on disposal 13
---------
Net book value at 31 December 2018 674
---------
Additions 69
Amortisation (105)
---------
Net book value at 30 June 2019 638
=========
5. LEASES
Note 31/12/2018 30/06/2018
GBP'000 GBP'000
Profit for the year (as previously
stated) 1,164 479
Depreciation charge i (238) (119)
Interest charge i (50) (26)
Rent payable i 286 143
----------- -----------
Profit for the year (as restated) 1,162 477
----------- -----------
i. IFRS 16: Leases
Under IAS 17 Leases, the company was not required to recognise
off-balance operating leases as tangible assets.
Under IFRS 16 Leases, there is a requirement to recognise a
value in use asset. Therefore, an asset of GBP1,056k was recognised
on transition with a corresponding balance in Contract liabilities
of GBP1,075k, giving rise to a prior year adjustment charge of
GBP19k. The rent payable in the year to 31 December 2018 of GBP286k
was offset against Contract liabilities and depreciation of GBP238k
and interest of GBP50k were charged to the income statement.
The change was made in accordance with the transitional
provision that allows a company to measure lease assets at an
amount based on the lease liability, rather than as if IFRS 16 had
always been applied. In line with this the discount rate used was
at the date of transition.
6. POST BALANCE SHEET EVENTS
On 1 July 2019, Winkworth Franchising Limited acquired 55% of
Tooting Estates Limited, which operates the Winkworth franchise in
the Tooting area, for GBP22,500. The consideration of GBP22,500,
was paid in cash. In addition, Winkworth Franchising Limited
advanced a further GBP92,500 of loans to Tooting Estates Limited
repayable over 5 years at a rate of 5%.
As well as the financial impact, the acquisition of Tooting
Estates Limited as a subsidiary, will keep Winkworth in touch with
and learning from front end experiences and industry trends. It
will also provide a live platform to test and develop future
digital initiatives and evolve our centralised CRM systems which
will be of benefit to all our franchisees.
7. 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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