TIDMWINK
RNS Number : 9553S
M Winkworth Plc
23 March 2016
M Winkworth Plc ("Winkworth" or the "Company")
Audited final results for the year to 31 December 2015
FINANCIAL HEADLINES
-- Winkworth revenues up by 6.7% to GBP5.87 million (2014:
GBP5.50 million) on franchisee turnover of GBP49.0 million
-- Profit before taxation down 1% to GBP1.91 million (2014: GBP1.93 million)
-- Basic earnings per ordinary share 11.95p (2014: 11.83p)
-- Cash generated from operations of GBP1.91 million (2014: GBP1.24 million)
-- Year-end cash position of GBP3.2 million (2014: GBP2.5 million)
-- Ordinary dividends payable up 10.2% to 6.5p per ordinary share (2014: 5.9p)
-- Special dividend declared of 1.8p per ordinary share
Business Highlights
-- Franchised offices sales down 2.4% to GBP49.0 million (2014:
GBP50.2 million)
-- 2 new offices opened and 8 franchises resold to new
management
-- London franchised offices sales accounted for 81% (2014: 81%)
of the group total
-- 38% of sales derived from lettings and management (2014:
35%)
Dominic Agace, CEO of the Company, commented:
"Despite headwinds for much of 2015 we reported broadly flat
profitability for the year, increased the total dividend payout by
41% and continued to invest in new, centralised initiatives to
drive growth in the medium term. After a strong finish to the year,
we are now enjoying a positive start to 2016 across all our offices
and an increase in franchisee applications."
Chairman's Statement
In 2015, Winkworth focused on developing its offering, improving
the overall quality of its franchises and optimising shareholder
returns. Our increased investment in services, particularly the
customer care service and the introduction of corporate
relocations, has been very successful and enabled Winkworth to meet
its gross turnover target for the year. Whilst having had an impact
on profits in 2015, the full benefits of this investment will be
felt late in 2016 and into 2017.
The increasing number of services introduced by the Company
reinforces the strengths of the brand while increasing its appeal
and profitability. As part of our three-year plan, centralised
services will be fully integrated into an upgraded Winkworth online
offering by 2017 and, as these gain further momentum, we expect to
see them contribute to long-term growth in both net profits and new
franchise interest.
The Company's management has maintained a good balance of
business between sales and rentals, interest in which varies
according to market conditions. Embracing both disciplines with a
highly professional approach underpins the offering of our
franchisees and strengthens their positioning in the market place.
It is my belief that there will be rising interest in new
franchises in the years ahead and sustained growth in the number of
Winkworth franchisees.
It is hard to predict the effects on the market place of the
various changes in taxation announced since the general election
and, as a result, the outlook for the housing market is currently
difficult to gauge. In addition, the result of the EU referendum
and its potential implications are clouding visibility for 2016. I
am confident, however, that Winkworth's business model will be
resilient to whatever the outcome may be for both sales and
rentals.
Finally, I would like to draw your attention to our prudent
approach to cash management. Having ended the year with cash
deposits in excess of GBP3 million and a revolving loan book of
over four years with some of our franchisees, we were in a position
to announce a very significant increase in total dividends payable
for 2015. Besides having a robust business model, the Company is in
a strong position to face the interesting times ahead and I remain
confident of its future.
CEO's Statement
Despite the positive underlying dynamics for the residential
property market in 2015, the market was dominated by election
uncertainty which weighed on consumer confidence and so, in turn,
on transaction levels. In addition, measures increasing the cost of
stamp duty for many London homeowners and the strengthening of
sterling had a negative impact. Despite these headwinds, we
continued to invest in new, centralised initiatives to drive growth
in the medium term, reported a broadly flat performance for the
year and substantially increased our dividend.
In 2015, Winkworth's total franchisee turnover fell by 2.4% to
GBP49.0 million (GBP50.2 million), with revenues generated from
property sales down by 8% to 30.1 million (GBP32.6 million) and
rental income increasing by 7% to 18.8 million (GBP17.5
million).
Winkworth's turnover rose to GBP5.87 million, an increase of
6.7% on the 2014 level of GBP5.50 million. At GBP1.91 million,
profits before tax were 1% below 2014's result of GBP1.93 million.
Cash flow remained strong at GBP1.91 million (GBP1.24 million),
allowing a 40.7% increase in total dividends to 8.3p per share
compared with 5.9p in 2014.
We continued to invest in the rentals side of our business and,
in particular, our recently formed Corporate Relocation Department,
which generated 4,000 searches for rental property for our
landlords in 2015. This success helped to drive revenue growth,
with rentals rising by 7% and increasing as a proportion of
Winkworth's total sales from 35% in 2014 to 38% in 2015, a further
step towards our goal of rentals accounting for 50% of our
business.
We also saw significant progress in our Client Services
Department, which after a longer lead time than anticipated
delivered 300 instructions and referred 1,000 applicants between
offices in 2015. This department is expected to break even in 2016
and make a contribution to profits in 2017.
Our investment in centralised services adds value. We believe
that this will enable us to grow market share as our clients
benefit from marketing a property through Winkworth's joined-up
network, rather than through a single agency or an online
agent.
Significant progress was made in improving the mix of the
Winkworth network. Two new offices were opened in Sway and West
Bridgford while eight franchises were resold to the next generation
of Winkworth franchisees, which we expect to result in increased
revenue in 2016. New franchisee applications picked up sharply in
Q4 2015, with 40 applicants compared to 19 in the same period of
2014. We expect to see the number of new openings pick up with
three confirmed for 2016 and a further three in advanced
discussions.
Outlook
We are yet to see any negative impact on the residential
property market from the proposed referendum in 2016 and have
enjoyed a positive start to the year across all our offices. We
have also noted an increase in franchisee applicants registering
across the group. The year, therefore, has started well, with
unemployment remaining low and interest rate rises having been
pushed back, resulting in ongoing cheap mortgages. In January 2016,
the average 2-year fixed rate 75% LTV mortgage cost 2.16% compared
to 2.85% in January 2015, a reduction of 0.69%.
We have also noticed an improvement in the prime central London
markets with the middle to lower end (below GBP4m) seeing an
increase in applicants and so the potential for a resumption of
growth this year. Above this level, stamp duty changes are still to
be fully absorbed and we anticipate that further price reductions
may occur in 2016, weighing on transactions at this level.
In the rentals market we have noted that some larger landlords
may be looking to sell off parts of their portfolios following the
proposed reduction in the ability to offset interest on mortgage
costs against tax. With a continuing shortage of supply of
properties, however, we expect that the prospects of capital growth
and steadily rising rents will ensure that this sector continues to
attract interest.
For further information please contact:
M Winkworth Plc Tel: 020 7355 0220
Dominic Agace (Chief Executive
Officer)
Chris Neoh (Chief Financial
Officer)
Milbourne (Public Relations) Tel: 020 3540 6458
Tim Draper
Liberum Capital Limited (NOMAD Tel: 020 3100 2000
and Broker)
Tom Fyson / Christopher Britton
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 YEAR ENDED 31 DECEMBER 2015
2015 2014
Notes GBP GBP
CONTINUING OPERATIONS
Revenue 5,865,182 5,495,517
Cost of sales (1,551,281) (950,511)
------------ ------------
GROSS PROFIT 4,313,901 4,545,006
Administrative expenses (2,496,711) (2,704,886)
OPERATING PROFIT 1,817,190 1,840,120
Finance costs - (270)
Finance income 89,839 86,313
------------ ------------
PROFIT BEFORE TAXATION 1,907,029 1,926,163
Taxation 1 (391,578) (426,147)
------------ ------------
PROFIT FOR THE YEAR 1,515,451 1,500,016
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2016 03:00 ET (07:00 GMT)
------------ ------------
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR 1,515,451 1,500,016
============ ============
Total comprehensive income
attributable to:
Owners of the parent 1,515,451 1,500,016
============ ============
Earnings per share expressed
in pence per share: 3
Basic 11.95 11.83
Diluted 11.91 11.80
============ ============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2015
2015 2014
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible assets 976,001 1,092,790
Property, plant and equipment 34,650 85,211
Investments 7,200 7,200
Trade and other receivables 800,189 810,704
Deferred tax 2,222 -
---------- ----------
1,820,262 1,995,905
---------- ----------
CURRENT ASSETS
Trade and other receivables 1,166,173 879,558
Cash and cash equivalents 3,167,704 2,505,487
---------- ----------
4,333,877 3,385,045
---------- ----------
TOTAL ASSETS 6,154,139 5,380,950
========== ==========
EQUITY
SHAREHOLDERS' EQUITY
Share capital 5 63,666 63,381
Share premium 1,792,906 1,718,469
Share option reserve 51,295 47,488
Retained earnings 3,334,268 2,871,971
---------- ----------
TOTAL EQUITY 5,242,135 4,701,309
---------- ----------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax - 6,849
---------- ----------
CURRENT LIABILITIES
Trade and other payables 800,536 490,054
Tax payable 111,468 182,738
---------- ----------
912,004 672,792
---------- ----------
TOTAL LIABILITIES 912,004 679,641
---------- ----------
TOTAL EQUITY AND LIABILITIES 6,154,139 5,380,950
========== ==========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Share Share Share Retained Shareholders'
capital premium option earnings equity
Notes GBP GBP reserve GBP GBP
GBP
Balance
at 1
January
2014 63,381 1,718,469 15,829 2,119,853 3,917,532
Dividends paid 2 - - - (747,898) (747,898)
Total comprehensive
income - - - 1,500,016 1,500,016
Share-based payment - - 31,659 - 31,659
Balance at 31
December 2014 63,381 1,718,469 47,488 2,871,971 4,701,309
--------- ------------ --------- ------------ --------------
Issue of share
capital 285 74,437 - - 74,722
Dividends paid 2 - - - (1,053,154) (1,053,154)
Total comprehensive
income - - - 1,515,451 1,515,451
Share-based payment - - 3,807 - 3,807
Balance at 31
December 2015 63,666 1,792,906 51,295 3,334,268 5,242,135
========= ============ ========= ============ ==============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014
Notes GBP GBP
Cash flows from operating
activities
Cash generated from
operations 4 1,913,669 1,236,895
Interest paid - (270)
Tax paid (471,919) (482,093)
---------- ----------
Net cash from operating
activities 1,441,750 754,532
---------- ----------
Cash flows from investing
activities
Purchase of intangible
fixed assets (107,477) (244,732)
Purchase of property,
plant & equipment (639) (42,977)
Sale of freehold property - 51,177
Interest received 89,839 86,313
---------- ----------
Net cash from investing
activities (18,277) (150,219)
---------- ----------
Cash flows from financing
activities
Share issue 62,700 -
Equity dividends paid (823,956) (747,898)
---------- ----------
Net cash from financing
activities (761,256) (747,898)
---------- ----------
(Decrease)/increase
in cash and cash equivalents 662,217 (143,585)
Cash and cash equivalents
at beginning of year 2,505,487 2,649,072
Cash and cash equivalents
at end of year 3,167,704 2,505,487
========== ==========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. TAXATION
Analysis of tax expense
2015 2014
GBP GBP
Current tax:
Taxation 405,389 432,028
Adjustment re previous years (4,740) (6,667)
Total current tax 400,649 425,361
Deferred tax (9,071) 786
Total tax expense in consolidated statement of comprehensive
income
391,578 426,147
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:
2015 2014
GBP GBP
Profit on ordinary activities before
taxation 1,907,029 1,926,163
========== ==========
Profit on ordinary activities
multiplied by the rate of corporation
tax
in the UK of 20.250% (2014 - 21.490%) 386,173 413,932
Effects of:
Expenses not deductible for tax
purposes 11,176 13,241
Adjustment in respect of prior periods (4,740) (6,664)
Different tax rates (340) 1,191
Depreciation in excess of capital
allowances (691) 4,447
Total current tax 391,578 426,147
========== ==========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2016 03:00 ET (07:00 GMT)