TIDMWINK
RNS Number : 3995Y
M Winkworth Plc
09 September 2020
M Winkworth Plc
Interim Results for the six months ended 30 June 2020
M Winkworth Plc ("Winkworth" or the "Company") is pleased to
announce its
unaudited Interim Results for the six months ended 30 June
2020
Highlights for the period
-- Revenues down 4.15% to GBP2.54 million (H1 2019 restated: GBP2.65 million)
-- Profit before taxation down 20.24% to GBP461k (H1 2019 restated: GBP578k)
-- Cash balance at 30 June 2020 of GBP3.27 million (30 June 2019: GBP2.51 million)
-- Rental income increased to 55% of total revenues (H1 2019: 53%)
-- One new office signed up
-- Dividends of 3.08p declared and paid during the period (H1 2019: 3.8p)
Dominic Agace, Chief Executive Officer of the Company ,
commented:
" Winkworth emerged from lockdown with increased market share
after rapidly adapting to the changed environment. As a result, in
relative terms, our first half performance in sales was
satisfactory and lettings and management proved solid. We have seen
a spike in activity in the first two months of the second half and,
if this carries through to the rest of the year, we hope to make up
much of the ground lost in the second quarter. Our balance sheet
continues to be strong and we are working hard to explore new
opportunities for organic growth . "
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
David Coaten
Henry Willcocks
Chairman's Statement
After the UK's Covid-19 related lockdown in March 2020, we took
a number of measures to help our franchisees weather the crisis and
adapt our head office costs to the changed market circumstances. As
a result of these initiatives, we are in a satisfactory position
for the year to date bearing in mind the uncertain background . As
a result of initiatives taken to grow profitability during the
lockdown period, we are in a satisfactory position for the year to
date bearing in mind the uncertain background .
One of the bright spots so far this year has been the benefit of
our 2019 decision to take our software and internet capabilities to
the next level. This has enabled us to move ahead quickly and
include videos, training and regulatory compliance online. These
upgrades to our internal platform have allowed us to cope with the
challenges of the last seven months and should protect us from any
future issues caused by a similar lockdown or increased working
from home .
From our experience of reopening our offices, we remain
convinced that our high street presence is still the driver of our
business. The return of our clients and buyers to our shops shows
they value the proximity of Winkworth's local expertise and
knowledge, together with the relationships built up over the years
of local trading .
We are reassured, therefore, that our business model works to
the benefit of our customers and is a sound economic model not only
in lockdown but in anticipation of the recovery .
I congratulate the franchisor team on their flexibility over
this period and, on behalf of tenants and landlords, our rental and
management staff for their patience and skill during the lockdown
period. The Company has not made any redundancies and we welcome
staff back to its head office, looking forward to once again
benefiting from the teamwork they generate. We have been fortunate
that our head office lease was due to expire in September 2020,
giving us the flexibility to extend and renegotiate one of our
major overheads.
One of the positive outcomes of this period of the pandemic has
been that it has enabled our businesses to look at their strengths
and weaknesses and we have been utilising that understanding to
create new opportunities. We are full of ideas and energy and
consider this to be a new launch into a changed market. Winkworth
has always thrived after market corrections, so we remain positive
for the future.
Simon Agace
Non-Executive Chairman
9 September 2020
CEO's Statement
Following the decisive election result in December 2019, sales
activity in Q1 2020 was brisk and we saw the price declines of the
latter part of 2019 reversed, supporting our view that, following
weakness in recent years, pent-up activity was ready to be released
once the outcome for Brexit became clearer. This came to a sudden
halt with the initiation of the nationwide lockdown, with the
property market being effectively put on pause for most of Q2 2020.
Despite this dramatic step, however, we have not witnessed the same
reaction in the property market as in 2008 following the financial
crash, which led to buyers reducing prices and transactions falling
through. Instead, although the majority of transactions were put on
hold, we saw fall-through rates continuing to be in line with an
industry average of 20%, and where price re-negotiations took
place, these averaged around 3% of the agreed price pre-lockdown
.
The rentals and management side of the business was affected to
a lesser extent, with lettings income proving resilient as many
tenants stayed put and renewals business increased. As moves into
vacant properties were still permitted, needs-based transactions
continued where appropriate. Property management continued to be
active as landlords looked to agents to help them through difficult
negotiations with tenants and find fair compromises with those with
changed circumstances looking to discuss rent reductions, pauses or
early exits from their properties .
In H1 2020, gross revenues of the franchised office network of
GBP18.9m were 11% down on H1 2019 (GBP21.2m). Sales income fell by
17% to GBP8.2m (H1 2019: GBP9.9m). Lettings and management declined
by 7% to GBP10.6m (H1 2019: GBP11.4m), equating to a 55% lettings
and management / 45% sales income split across the business at the
half year (H1 2019: 53% lettings and management / 47% sales).
Besides the overall resilient performance in the lettings and
management business, it is worth noting that, following a positive
start to 2020, our country rentals business grew by 8% .
Total income from our outer London markets, which represent 60%
of our business, fell by only 7%, while with international clients
leaving London and all but essential travel being banned, our
central London business remained the most sensitive, with a 27%
reduction in income in H1 .
Winkworth's revenues fell by 4.1% to GBP2.54m (2019: GBP2.65m
restated) and profit before taxation decreased by 20.2% to GBP461k
(2019: GBP578k restated). As at 30 June 2020, the Group's cash
stood at GBP3.27m (2019: GBP2.51m) and dividends of 3.08p were
declared for the first half of the year (2019: 3.8p) . While the
outlook for the second half of the year remains hard to predict,
the Board remains committed to paying a quarterly dividend.
We have signed one new office this year in Long Melford and have
three further openings in the pipeline for H2. In line with the
hiatus in the market, we have seen a fall in new franchise
applicants. As part of our portfolio management policy, we also
closed one office in H1 2020 .
As noted in the full year report for 2019, we are looking to
encourage talented individuals and to-date have backed one new
franchisee in Tooting through equity participation, aiming to
increase our financial return to above the 8% that we receive as
part of our regular franchise agreement. We are very pleased that,
against the trend, the Winkworth Tooting office maintained its
revenue in H1 2020 year-on-year. We have identified further
individuals with the potential to take on their own Winkworth
businesses in H2 2020 and 2021 and we look forward to updating
shareholders on our progress in due course.
Outlook
Since the ending of lockdown, we have seen a significant uplift
in activity in the sales market, with pent-up demand being combined
with new movers entering the market, looking for a change in their
living environment following enforced time at home. This has been
further fuelled by the raising of the stamp duty threshold, and
since the start of the second half we have seen the highest weekly
number of applicants in five years registering, viewing and
agreeing sales. With the stamp duty cut remaining in place until
March 2021, we anticipate that this surge in demand will be
maintained through H2 2020. While we do not expect this to lead to
higher prices, as increased demand is met by greater supply, we
anticipate that the number of transactions will continue to be
elevated. The change in taxation highlights the negative impact
that increased stamp duty has had on the property market and its
liquidity since the end of 2014 .
In rentals, we have seen increased supply outstripping demand,
particularly in central London where restricted international
movement has undermined tenant demand. While we anticipate seeing
increased activity as the market catches up from lockdown, we
expect this to be against a background of flat pricing overall as
rents fall in prime London areas .
A significant amount of management time has been spent on
dealing with the unique challenges presented by Covid-19, and the
prompt re-opening of all of our offices led to an increase in our
market share. But we have also remained focused on delivering our
strategy of creating profitable growth for the long term by
developing new opportunities and optimising performance. From an
operational point of view, we continue to invest in our digital
offering and the launch of a new platform for our website in H1
2020 has enabled us to integrate seamlessly with new proptech
solutions. The early signs for the new website platform are
extremely encouraging as we drive record leads to our offices .
Whilst the extent to which some of the exceptional trends will
continue longer-term is not yet clear, in the absence of further
Covid-19 restrictions the Board is expecting both sales and rentals
activity to be positive for the remainder of the year. The
Company's strong balance sheet means that it is well positioned to
withstand any further challenges, while also continuing to invest
in key areas of growth .
Dominic Agace
Chief Executive Officer
9 September 2020
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 2020 to 30 June 2020
(Unaudited) (Unaudited)
Period Period
1.1.20 1.1.19 (Audited)
To To Year ended
30.6.20 30.6.19 31.12.19
as restated
GBP000's GBP000's GBP000's
CONTINUING OPERATIONS
Revenue 2 2,544 2,648 6,416
Cost of sales (517) (668) (1,320)
------------ ------------ -----------
GROSS PROFIT 2,027 1,980 5,096
Other operating income 98 - -
Administrative expenses (1,673) (1,418) (3,561)
Negative goodwill - - 68
------------ ------------ -----------
OPERATING PROFIT 452 562 1,603
Finance costs (13) (17) (29)
Finance income 22 32 54
------------ ------------ -----------
PROFIT BEFORE TAXATION 461 577 1,628
Taxation (87) (114) (320)
------------ ------------ -----------
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 374 463 1,308
============ ============ ===========
Profit and total comprehensive
income attributable to:
Owners of the parent 365 463 1,285
Non-controlling interests 9 - 23
------------ ------------ -----------
TOTAL COMPREHENSIVE INCOME SINCE
LAST ANNUAL REPORT 374 463 1,308
============ ============ ===========
Earnings per share expressed
in pence per share: 3
Basic 2.87 3.64 10.09
Diluted 2.86 3.63 10.07
============ ============ ===========
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2020
(Unaudited) (Unaudited) (Audited)
30.06.2020 30.06.2019 31.12.2019
as restated
Notes GBP000's GBP 000's GBP 000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 4 722 56 668
Property, plant and equipment 434 600 607
Prepaid assisted acquisitions support 463 582 541
Investments 49 57 43
Trade and other receivables 423 655 372
2,091 1,950 2,231
------------ ------------ ---------------
CURRENT ASSETS
Trade and other receivables 1,460 1,641 913
Cash and cash equivalents 3,266 2,513 3,571
------------ ------------ ---------------
4,726 4,154 4,484
TOTAL ASSETS 6,817 6,104 6,715
============ ============ ===============
EQUITY
SHAREHOLDERS' EQUITY
Share capital 64 64 64
Share option reserve 51 51 51
Retained earnings 4,751 4,529 4,867
------------ ------------ ---------------
4,866 4,644 4,982
Non-controlling interests 106 - 97
TOTAL EQUITY 4,972 4,644 5,079
------------ ------------ ---------------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 259 299 294
Deferred tax 58 14 66
------------ ------------ ---------------
317 313 360
CURRENT LIABILITIES
Trade and other payables 1,301 1,020 1,085
Tax payable 227 127 191
------------ ------------ ---------------
1,528 1,147 1,276
------------ ------------ ---------------
TOTAL LIABILITIES 1,845 1,460 1,636
------------ ------------ ---------------
TOTAL EQUITY AND LIABILITIES 6,817 6,104 6,715
============ ============ ===============
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period 1 January 2020 to 30 June 2020
Non controlling
Share Retained Share option Shareholders'
capital earnings reserve interest equity
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1 January
2019 64 4,550 51 - 4,665
Total comprehensive
income - 463 - - 463
Dividends paid - (484) - - (484)
--------- ----------- --------------- ---------------- ----------------
Balance at 30 June
2019 64 4,529 51 - 4,644
--------- ----------- --------------- ---------------- ----------------
Acquired with subsidiary - - - 74 74
Profit and comprehensive
income - 822 - 23 845
Dividends paid - (484) - - (484)
--------- ----------- --------------- ---------------- ----------------
Balance at 31 December
2019 64 4,867 51 97 5,079
--------- ----------- --------------- ---------------- ----------------
Total comprehensive
income - 365 - 9 374
Dividends paid - (481) - - (481)
--------- ----------- --------------- ---------------- ----------------
Balance at 30 June
2020 64 4,751 51 106 4,972
========= =========== =============== ================ ================
M WINKWORTH PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2020 to 30 June 2020
(Unaudited) (Unaudited)
Period Period
1.1.20 1.1.19 (Audited)
To To Year ended
30.6.20 30.6.19 31.12.19
as restated
Notes GBP000's GBP000's GBP000's
Cash flows from operating activities
Cash generated from operations i 491 407 2,275
Tax paid (60) (120) (255)
------------ ------------ -----------
Net cash from operating activities 431 287 2,020
------------ ------------ -----------
Cash flows from investing activities
Purchase of intangible fixed
assets (105) (11) (170)
Purchase of tangible fixed
assets (7) (4) (9)
Assisted acquisition support - (58) (98)
Cash acquired on acquisition - - 116
Cash paid to acquire subsidiary - - (23)
Interest received 22 32 54
------------ ------------ -----------
Net cash used in investing
activities (90) (41) (130)
------------ ------------ -----------
Cash flows from financing activities
Payment of lease liabilities (152) (167) (257)
Interest paid on lease liabilities (13) (17) (29)
Equity dividends paid (481) (484) (968)
------------ ------------ -----------
Net cash used in financing
activities (646) (668) (1,254)
------------ ------------ -----------
Increase/(decrease) in cash
and cash equivalents (305) (422) 636
Cash and cash equivalents at
beginning of period 3,571 2,935 2,935
------------ ------------ -----------
Cash and cash equivalents at
end of period ii 3,266 2,513 3,571
============ ============ ===========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2020 to 30 June 2020
i. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
(Unaudited) (Unaudited)
Period Period
1.1.20 1.1.19 (Audited)
To To Year ended
30.6.20 30.6.19 31.12.19
as restated
GBP000's GBP000's GBP000's
Profit before taxation 461 577 1,628
Depreciation and amortisation 306 306 573
(Reversal of) Impairment of fixed
asset investments (4) (4) 10
Negative goodwill (68)
Finance costs 13 17 29
Finance income (22) (32) (54)
------------ ------------ -----------
754 864 2,118
(Increase) in trade and other receivables (1,660) (546) (1,464)
Increase/(decrease) in trade and
other payables 1,397 89 1,621
Cash generated from operations 491 407 2,275
============ ============ ===========
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:
30.6.20 30.6.19 31.12.19
GBP000's GBP000's GBP000's
Cash and cash equivalents 3,266 2,513 3,571
========= ========= =========
M WINKWORTH PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
for the period 1 January 2020 to 30 June 2020
1. ACCOUNTING POLICIES
Basis of preparation
The interim report for the six months ended 30 June 2020 and the
comparative information for the periods ended 30 June 2019 and 31
December 2019 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 2019 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 2020
and 30 June 2019 is unaudited. The financial information for the
year ended 31 December 2019 is derived from the group's audited
annual report and accounts. The financial information for the six
months ended 30 June 2019 has been restated for the adjustment in
respect of the application of IFRS 16, as set out in note 5.
In addition, as disclosed in note 3 to the financial statements
for the year ended 31 December 2019, the Directors reconsidered the
nature of the payments made to franchises on inception of a
franchise arrangement, which are intended to assist with branding
and other costs. These had previously been presented as an
intangible asset under IAS 38, but the directors are now of the
view that the payments do not result in the group receiving a
distinct good or service from the franchisee and, in consequence,
consider them to meet the definition of consideration payable to a
customer under IFRS 15. Consequently, in the financial statements
for the year ended 31 December 2019 this was described as "Prepaid
assisted acquisitions support" on the group statement of financial
position. The asset continues to be amortised over 10 years on a
straight-line basis, however, the amortisation is now recognised as
a deduction in revenue rather than an amortisation charge to
administrative expenses. As a result, revenue and administrative
expenses reported
at 30 June 2019 have been restated by GBP79,000. There is no
impact on the profit or net assets reported for the period ended/as
at 30 June 2019.
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 board of directors, as the chief operating decision making
body, review financial information and make decisions about the
group's business and have identified a single operating segment,
that of estate agency and related services and the franchising
thereof.
The directors believe that there are two material revenue
streams relevant to estate agency franchising.
6 months 6 months 12 months
2020 2019 2019
GBP000 GBP000 GBP000
Revenue
Corporate owned offices 352 - 498
Management service fees 2,192 2,648 5,918
--------- --------- ----------
2,544 2,648 6,416
--------- --------- ----------
All revenue is earned in the UK and no customer represents more
than 10% of total revenue in either of the years reported.
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
number Per-share
Earnings of shares amount
GBP000's 000's pence
Period ended 30.06.20
Basic EPS
Earnings/number of shares 365 12,733 2.87
Effect of dilutive securities - 25 (0.01)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 365 12,758 2.86
--------- ---------- ----------
Period ended 30.06.19
Basic EPS
Earnings/number of shares 463 12,733 3.64
Effect of dilutive securities - 6 (0.01)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 463 12,739 3.63
Year ended 31.12.19
Basic EPS
Earnings/number of shares 1,285 12,733 10.09
Effect of dilutive securities - 25 (0.02)
--------- ---------- ----------
Diluted EPS
Adjusted earnings/number of
shares 1,285 12,758 10.07
--------- ---------- ----------
4. INTANGIBLE ASSETS
Customer Website
lists development Total
GBP000's GBP000's GBP000's
Net book value at 1 January 2019 - 71 71
Additions - 11 11
Amortisation - (26) (26)
--------- ------------- ---------
Net book value at 30 June 2019 - 56 56
--------- ------------- ---------
Additions - 159 159
Acquired with subsidiary 496 - 496
Amortisation (18) (25) (43)
Net book value at 31 December 2019 478 190 668
--------- ------------- ---------
Additions - 105 105
Amortisation (17) (34) (51)
--------- ------------- ---------
Net book value at 30 June 2020 461 261 722
========= ============= =========
5. LEASES
Note 30/06/2019
GBP'000
Profit for the period (as
previously stated) 474
Change in depreciation charge i (54)
Change in interest charge i 3
Change in rent payable i 40
-----------
Profit for the period (as
restated) 463
===========
i. IFRS 16: Leases
Under IAS 17 Leases, the company was not required to recognise
off-balance operating leases as tangible assets.
Initially on preparation of the 30 June 2019 interim accounts,
the decision was made to recognise the leases under IFRS 16 using
the retrospective approach. However, the directors reassessed the
approach to adopting IFRS 16 during the year ended 31 December
2019, and 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. Comparative amounts in these interim
accounts have therefore been restated to reflect the accounting
treatment adopted in the audited financial statements for the year
ended 31 December 2019.
6. FINANCIAL INSTRUMENTS
Categories of financial instruments
The group has the following financial instruments:
30.06.2020 30.06.2019 31.12.2019
GBP000's GBP000's GBP000's
Financial assets that are debt
instruments measured at amortised
cost
Trade receivables 919 1,075 476
Loans to franchisees 671 938 590
Other receivables 70 - 20
Financial liabilities measured
at amortised cost
Trade payables 302 332 362
Lease liability 283 509 538
Other payables 111 5 104
Financial assets measured at fair
value
Listed investments 41 50 36
Listed investments are valued by reference to publicly available
share prices and are considered at level 1 under the IFRS 13 fair
value hierarchy.
7 . RELATED PARTY DISCLOSURES
During the 6 months to 30 June 2020, total dividends of
GBP243,273 (30 June 2019: GBP242,748) were paid to the
directors.
During the 6 months to 30 June 2020, the company received a
dividend of GBP481,316 (30 June 2019: GBP483,863) from its
subsidiary undertaking Winkworth Franchising Limited. The balance
owed by Winkworth Franchising Limited to the company at 30 June
2020 was GBP1,267,587 (30 June 2019: GBP1,025,665).
8 . POST BALANCE SHEET EVENTS
On 20 July 2020 the group acquired the trade and assets of
Stilum Properties Limited through a subsidiary undertaking, Crystal
Palace Estates Limited. The trade and assets were acquired for
GBPNil consideration. Crystal Palace Estates Limited commenced
trading on 27 July 2020.
9. 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
IR UWURRRRUKRUR
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September 09, 2020 02:00 ET (06:00 GMT)
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