TIDMWINK
RNS Number : 9544A
M Winkworth Plc
30 March 2017
M Winkworth Plc
Audited final results for the year to 31 December 2016
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its
results for the year ended 31 December 2016
Highlights for the period
-- Revenues down 5.1% to GBP5.57 million (2015: GBP5.87 million)
-- Profit before taxation 25.7% lower at GBP1.42 million (2015: GBP1.91 million)
-- Net cashflow GBP(195,632) (2015: GBP662,217)
-- Cash balance at 31st December remained strong at GBP2.97 million (2015: GBP3.17 million)
-- Rental income increased to 44% of total revenues
-- Six new franchisees with two new offices opened and four resold to new management
-- Dividends of 7.1p declared and paid (2015: 6.5p plus a special dividend of 1.8p)
Dominic Agace, Chief Executive Officer of the Company,
commented:
"The resilience of Winkworth's franchising model has been
demonstrated in a difficult market, while the increasingly balanced
exposure between sales and rentals has proved to be a considerable
benefit. We are delighted by the progress that we have made outside
of London, with these offices now making an important contribution.
Our strong cash position provides us with opportunities to deliver
growth both by supporting the expansion plans of existing
franchisees and by helping the conversion of established businesses
to the Winkworth brand."
Chairman's Statement
Last year was a testing one for the UK residential property
market. In such a market, marked by uncertainty, a reduced number
of transactions and shifting dynamics in rentals, motivating buyers
and tenants to view properties becomes more than ever the prime
differentiator for a successful agency.
To achieve a satisfactory sale or rental price, clients require
maximum exposure for every property - without the power to generate
and execute viewings, an agency is unable to service their needs
adequately. The numerous investments that we have made since our
admission to AIM in 2009 have contributed to strengthening both our
business and our brand and, consequently, our ability to achieve
the exposure that our clients require.
In terms of growing the franchise network, the board is
confident that the market has to a large extent settled following
the unease caused by political upheaval in the UK over the last
couple of years and there are signs of reinvigorated interest in
joining the Winkworth franchise. As we remain highly diligent
throughout our selection process, however, always seeking winners
and well-funded applicants, it does take time to sign up new
franchisees. We remain of the belief that in most cases we can
create greater long term value through organic growth than through
acquisition.
We will continue to build services centrally to administer the
Winkworth network, thus helping to reduce overheads at the same
time as benefitting our franchisees. I welcome our new website
which is aimed at offering buyers, sellers, tenants and landlords a
digital solution backed by a full service experience.
I remain confident that Winkworth will not only grow but also
increase its market share as it evolves its offering to meet the
highest standards of today's marketplace.
Simon Agace
Non-Executive Chairman
30 March 2017
CEO's Statement
The theme of macro events influencing market sentiment continued
into 2016, a year which turned out to be an irregular one for
sales. The early part of the year saw a boom in activity in the run
up to stamp duty changes on second home properties, but this was
followed by a lull surrounding uncertainty over Brexit and its
likely implications. As a result, we experienced an unusually
strong first half and a weaker second one.
Underlying these events, the sales market was driven by strong
fundamentals, with interest rates remaining at record lows,
employment high, and wage inflation showing an uptick. These
fundamentals underpinned demand with the exception of the higher
end of the market, where stamp duty changes announced in the
November 2015 autumn statement continue to weigh on properties
valued in excess of GBP1 million. Here, buyers are still adjusting
to this increased cost, resulting in lower levels of activity. In
prime markets, however, with sterling having devalued and prices
fallen by some 15%, we are starting to see signs of the tax changes
being absorbed and central London market activity picked up
significantly in the last quarter of 2016, albeit from a low
base.
Our rentals business continued to grow on the back of new
initiatives such as the corporate relocation department and, in
2016, represented 44% of our income versus 38% in 2015. With an
improved proposition for landlords, property management commissions
grew by 16% to represent 15% of rental revenue compared to 12% in
2015.
Post Brexit, we saw a reduction in searches through our
corporate relocation department. While we still received over 4,000
searches for companies looking to move staff to London over the
course of the year, a 6% increase on 2015, we witnessed a change in
the make-up of these companies, with an increasing bias towards the
technology and creative sectors partly offsetting a reduction in
financial services. The latter were not only less active but also
reduced their relocation budgets, while the former were typically
seeking less expensive space in areas outside of the traditional
central London zones. This contributed to downward pressure on
rents in central London, whereas outer London rental markets
remained strong. As rents in central London soften and greater
value becomes apparent in 2017, we expect to see demand pick up in
this market.
In geographic terms, the best performing markets over the course
of the year were in suburban areas and provincial towns, where
higher stamp duty was less of an impediment. Winkworth's sales
income grew by 3% in the country markets, despite a pause in
activity around the Brexit vote, and represented 27% of our total
sales revenues, up from 22% in 2015. Rental income growth in the
country was stronger still, rising by 21%, so that the total
contribution to group turnover from offices outside of London
increased from 19% in 2015 to 21%. This vindicates our strategy of
expansion outside of London since 2008.
In 2016, gross revenues of the franchised office network fell by
6% to GBP46.12m (GBP49.01m) with sales 14% lower at GBP25.98m
(GBP30.14m) and rentals up 7% to GBP20.05m (GBP18.78m). Winkworth's
revenues fell by 5.1% to GBP5.57m (GBP5.86m) and profit before
taxation was 26% lower at GBP1.42m (GBP1.91m). Partly as a result
of the GBP229,000 special dividend declared in December 2015 and
paid in 2016, there was a cash outflow in the year of GBP(195,632)
(2015 inflow of GBP662,217). Year end cash balances remained strong
at GBP2.97 million (GBP3.17 million) and the group remained debt
free. Dividends of 7.1p were declared for the year (2015: 8.3p
including a special dividend of 1.8p), representing a 9% increase
in regular dividends.
In 2016, two new offices were opened in Colindale and
Marlborough, while four existing offices were resold to new
management, giving us a total number of offices at year end of 94.
With a new office in Cheltenham and the conversion of an existing
estate agency in Kingsbury, we have a further seven new offices in
the pipeline and so anticipate 6-8 openings in 2017 as well as a
further 1-2 resales. We anticipate seeing further opportunities to
add or resell offices to talented individuals looking to take the
step of owning their own business and so being able to share in the
equity rewards that this can bring.
We continue to build central services to support our franchisees
and help them to grow market share. The client services department,
which refers searches across offices, met with further success,
generating gross franchise office fees of GBP0.61 million, up from
GBP0.36 million in 2015. The corporate relocation department
continued to help franchisees let more properties to high quality
tenants, generating GBP0.35 million in franchised offices fees
against GBP0.25 million in 2015.
To add to these central facilities, we are launching a
recruitment service in Q3 2017 to help franchisees lower costs
while improving their ability to attract high quality employees. We
are also excited about the new website that was launched in March
2017, providing a platform that will enable clients to deal with
their properties and interact with us both on and offline. Our
experienced local franchisees will be in a position to maintain the
high standards of personal service that they provide while offering
clients new digital options for communicating, transacting or
managing their properties.
Outlook
We believe that low unemployment, wage inflation and record low
interest rates will continue to underpin the domestic property
market. While the increased cost of transactions above GBP1 million
and the knock-on effect lower down the chain will continue to act
as a brake on transactions in 2017, we are starting to see higher
stamp duty absorbed in prime central London where prices are
stabilising. We also anticipate that without the macro events of a
referendum or an election and a positive outlook for UK growth
there will be a gradual improvement in sentiment and so buyer
interest this year. We expect the country markets to be at the
forefront of this improvement, with good affordability ratios and
cheap mortgages leading to price growth.
In the rentals market we expect that the over-supply from the
buy-to-let boom will increasingly be absorbed and that demand from
corporate tenants will stabilise. As interest in central London,
the area most affected, recovers there may be some lowering of
rents in greater London as a result. We anticipate that rental
prices in the country markets will remain broadly flat while the
increased supply from Q1 2016 is absorbed.
We expect a broadly flat market to continue to be favourable to
the franchising model and provide new opportunities to grow the
business. We are in regular conversation with existing agencies to
explore how we can help them grow market share in a slow market,
and with entrepreneurs looking to start-up businesses with the
support of a strong brand. In particular, we see an opportunity to
convert lettings and management businesses in provincial markets to
Winkworth. By joining us we can not only support their existing
business but also offer them a sales operation, more than
offsetting the loss of tenancy administration fees in 2018, which
in the case of some independent specialist lettings agencies we
estimate could account for up to 30% of their revenue. With an
average Winkworth franchised office posting a 56/44 balance between
sales and rental income, we can help talented operators to more
than replace this revenue loss.
We remain debt-free, and the strength of our cash position
provides us with opportunities in the current market to deliver
growth both by supporting the expansion plans of existing
franchisees and by helping the conversion of established businesses
to the Winkworth brand.
Dominic Agace
Chief Executive Officer
30 March 2017
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
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 PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the Year Ended 31 December 2016
2016 2015
Notes GBP GBP
CONTINUING OPERATIONS
Revenue 5,566,389 5,865,182
Cost of sales (1,477,542) (1,551,281)
GROSS PROFIT 4,088,847 4,313,901
Administrative expenses (2,743,291) (2,496,711)
OPERATING PROFIT 1,345,556 1,817,190
Finance income 71,383 89,839
PROFIT BEFORE TAXATION 1,416,939 1,907,029
Taxation 1 (290,919) (391,578)
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR 1,126,020 1,515,451
Total comprehensive income attributable
to:
Owners of the parent 1,126,020 1,515,451
Earnings per share expressed
in pence per share: 3
Basic 8.84 11.95
Diluted 8.84 11.91
M WINKWORTH PLC (REGISTERED NUMBER: 01189557)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2016
2016 2015
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible assets 776,819 976,001
Property, plant and equipment 115,357 34,650
Investments 7,200 7,200
Trade and other receivables 715,654 800,189
Deferred tax - 2,222
1,615,030 1,820,262
CURRENT ASSETS
Trade and other receivables 1,347,693 1,166,173
Tax receivable 69,167 -
Cash and cash equivalents 2,972,072 3,167,704
4,388,932 4,333,877
TOTAL ASSETS 6,003,962 6,154,139
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 5 63,666 63,666
Share premium 1,792,906 1,792,906
Other reserves 51,295 51,295
Retained earnings 3,556,228 3,334,268
TOTAL EQUITY 5,464,095 5,242,135
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax 16,164 -
CURRENT LIABILITIES
Trade and other payables 523,703 800,536
Tax payable - 111,468
523,703 912,004
TOTAL LIABILITIES 539,867 912,004
TOTAL EQUITY AND LIABILITIES 6,003,962 6,154,139
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2016
Notes Share Share Share option Retained Total
capital premium reserve earnings equity
GBP GBP GBP GBP
Balance at 1 January
2015 63,381 1,718,469 47,488 2,871,971 4,701,309
Changes in equity
Total comprehensive income - - - 1,515,451 1,515,451
Transactions with owners
in their capacity as
owners
Issue of share capital 285 62,415 - - 62,700
Share options exercised - 12,022 (12,022) - -
Dividends 2 - - - (1,053,154) (1,053,154)
Share-based payment - - 15,829 - 15,829
Balance at 31 December
2015 63,666 1,792,906 51,295 3,334,268 5,242,135
Changes in equity
Total comprehensive income - - - 1,126,020 1,126,020
Transactions with owners
in their capacity as
owners
Dividends 2 - - - (904,060) (904,060)
Balance at 31 December
2016 63,666 1,792,906 51,295 3,556,228 5,464,095
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2016
2016 2015
Notes GBP GBP
Cash flows from operating activities
Cash generated from operations 4 1,569,185 1,913,669
Tax paid (453,167) (471,919)
Net cash from operating activities 1,116,018 1,441,750
Cash flows from investing activities
Purchase of intangible fixed
assets (121,758) (107,477)
Purchase of tangible fixed assets (128,017) (639)
Interest received 71,383 89,839
Net cash from investing activities (178,392) (18,277)
Cash flows from financing activities
Share issue - 62,700
Equity dividends paid (1,133,258) (823,956)
Net cash from financing activities (1,133,258) (761,256)
(Decrease)/increase in cash and
cash equivalents (195,632) 662,217
Cash and cash equivalents at
beginning of year 3,167,704 2,505,487
Cash and cash equivalents at
end of year 2,972,072 3,167,704
M WINKWORTH PLC
NOTES TO THE STATEMENTS OF CASH FLOWS
for the Year Ended 31 December 2016
1. TAXATION
Analysis of tax expense
2016 2015
GBP GBP
Current tax:
Taxation 274,450 405,389
Adjustment re previous years (1,918) (4,740)
Total current tax 272,532 400,649
Deferred tax 18,387 (9,071)
Total tax expense in consolidated
statement of profit or loss and
other comprehensive income 290,919 391,578
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:
2016 2015
GBP GBP
Profit before tax 1,416,939 1,907,029
Profit on ordinary activities
multiplied by the standard rate
of corporation tax in the UK
of 20% (2015 - 20.250%) 283,388 386,173
Effects of:
Expenses not deductible for tax
purposes 8,781 11,176
Adjustment in respect of prior
periods taxable (1,918) (4,740)
Different tax rates 149 (340)
Depreciation in excess of capital
allowances 519 (691)
Tax expense 290,919 391,578
2. DIVIDENDS
2016 2015
GBP GBP
Ordinary shares of 0.5p each
Final 2015 and interim 2016 paid - 7.1p per
share (2015 - 8.3p per share) 904,060 1,053,154
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.
2016
Weighted
average Per-share
Earnings number of amount
GBP shares pence
Basic EPS
Earnings attributable to ordinary
shareholders 1,126,020 12,733,238 8.84
Effect of dilutive securities
Options - - -
Diluted EPS
Adjusted earnings 1,126,020 12,733,238 8.84
The share options are underwater as at 31 December 2016.
2016
Weighted
average Per-share
Earnings number of amount
GBP shares pence
Basic EPS
Earnings attributable to ordinary
shareholders 1,515,451 12,681,548 11.95
Effect of dilutive securities
Options - 41,298 -
Diluted EPS
Adjusted earnings 1,515,451 12,722,846 11.91
4. RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM
OPERATIONS
2016 2015
GBP GBP
Group
Profit before tax 1,416,939 1,907,029
Depreciation amortisation and impairment 368,249 275,466
Share based payments - 15,829
Finance income (71,383) (89,839)
1,713,805 2,108,485
Increase in trade and other receivables (96,985) (276,100)
(Decrease)/increase in trade and
other payables (47,635) 81,284
Cash generated from operations 1,569,185 1,913,669
2016 2015
GBP GBP
Company
Profit before tax 906,131 1,055,102
Dividend income (906,139) (1,055,233)
(8) (131)
Decrease/(increase) in trade and
other receivables 229,198 (229,198)
Cash generated from operations 229,190 (229,329)
5. CALLED UP SHARE CAPITAL
2016 2015
GBP GBP
Authorised:
Ordinary shares of
20,000,000 0.5p 100,000 100,000
2016 2015
GBP GBP
Issued and fully
paid:
Ordinary shares of
12,733,238 0.5p 63,666 63,666
6. FINANCIAL INFORMATION
The financial information contained within this preliminary
announcement for the year ended 31 December 2016 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 2015 have been filed with
the Registrar of Companies and those for the year ended 31 December
2016 will be filed following the Company's annual general meeting.
The auditors' reports on the statutory accounts for the years ended
31 December 2016 and 31 December 2015 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.
7. ANNUAL REPORT AND ACCOUNTS
Copies of the annual report and accounts for the year ended 31
December 2016 together with the notice of the Annual General
Meeting to be held at the offices of M Winkworth Plc on 28 April
2017, will be posted to shareholders shortly and will be available
to view and download from the Company's website at
www.winkworthplc.com
The annual report and accounts will be filed at Companies House
in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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