Final Results

RNS Number : 9712F

M Winkworth Plc

05 May 2011

 



M Winkworth Plc ("Winkworth" or the "Company")

Audited final results for the year to 31 December 2010

FINANCIAL HEADLINES

§ Sales up by 9.5% to £3.7 million (2009: £3.4 million)

§ Profit before taxation £1.1 million (2009: £0.9 million), up 28%

§ Basic earnings per ordinary share 7.03p (2009: 6.22p)

§ Cash generated from operations of £1.2 million (2009: £1.1million)

§ Final interim dividend of 1.3p bringing the total dividend payable to 4.3p per ordinary share

Business Highlights

§ Gross property sales turnover of franchised offices of £21m up 30% on 2009 (£16m)

§ 114 new franchise applicants compared to 54 in 2009

§ Seven new franchised offices opened in new strategic markets

§ Prime central London activity in Q1 higher than Q1 2010

Chairman's Statement

2010 was a good year for Winkworth with overall transactions up by 22 per cent., despite lower volumes right across the UK market following the general election and the introduction of austerity measures. Our ability to grow came to an extent from a presence in more up-market locations and from the addition of offices with higher value properties. We developed our marketing efforts to mirror our forecast of where the market's strengths would lie and this had the beneficial effect of increasing the turnover of all the franchises that joined us in 2008-9.  

We consolidated our position in the active London market, underpinning our business throughout the year, and continued to expand steadily into affluent provincial towns and cities in the south and west of England such as Romsey, Bath, Exeter and Newbury. These new offices create an increased opportunity for growth in years to come.

This momentum and expansion has continued into 2011.  We have been delighted to see that the re-branded offices outside London are continuing to increase their turnover and are handling properties of higher value than they were able to under their previous brands.

Winkworth has benefited from this very visible growth by receiving a number of quality applications for new franchises. Notably, these have been from Chartered Surveyors and estate agents from amongst our competitors with many years' experience, bolstering our confidence for ongoing growth from these new potential franchisees.

We believe that volumes this year will remain substantially the same as in 2010, mainly due to a shortage of stock, hesitant buyers and more conservative mortgage lending.  There has, however, been price appreciation in central London and there remains potential for further price increases when buyers' income ceases to be eroded by inflation and taxation.  Our growth will come from our prominent position in the London market, along with increased sales from newly established offices and the added turnover of offices that have converted to the Winkworth brand. 

Winkworth aims to achieve steady growth, with an accent on income and an ongoing plan to manage risk.  We believe that such a policy gives strength to the business and we will continue to focus attention on providing our shareholders with regular and increasing returns.

CEO's Statement

The strong recovery in the UK market that began in the second half of 2009 carried through into the first half of 2010. The market became more subdued in the second half of the year after the General Election, as negative sentiment surrounding the announced austerity measures undermined the confidence of both buyers and sellers.

The pool of buyers was limited by ongoing finance constraints, as a consequence of which prices weakened whenever supply grew. In 2010, prices of flats outside of prime markets fell by some 10%. Family houses outperformed this market due to more favourable lending conditions and were able to hold their value. In general, low interest rates, overseas buying and sustained levels of employment continued to underpin prices in London.  

A buoyant start to 2010 enabled us to outperform the financial targets we had set ourselves for the year and we were also able to grow our franchise base both in London and in our target markets in the south of England that affiliate with the capital. New offices were opened in Fulham, Highbury, Romsey, Bath, Lewes and Northampton. Most recently we converted an agency in Newbury, using our systems and existing client base to improve its average property price and help grow its market share.

In 2010, we grew our transactions by 22%, outperforming the national market which saw mortgage approvals fall from 596,197 in 2009 to 575,167. Particular strength came from our new offices where transactions were 98% higher year-on-year.

At the end of the year we opened our country house department to strengthen our existing proposition and improve our ability to service high net worth clients, leveraging off our network of 57 offices across London. This department will help to source buyers for country houses, enabling our provincial offices to outperform local agencies when selling properties suited to the London buyer and has so far resulted in £14 million of instructions, 16 referrals and 3 sales. 

Rentals remained strong, with rental levels appreciating across the board, in some cases by as much as 15%. The low level of transactions in the sales market has, of course, benefited the rental market with frustrated buyers looking to rent as an interim measure until financing becomes more readily available and more properties come onto the market.

In 2010, the gross property sales revenues of our franchises grew by 30% to £21 million. Winkworth's sales grew to £3,707,543, an increase of 9.5% on the 2009 level of £3,386,053, while at £1,111,417 our profits before tax were 28% higher than 2009's result of £869,014, allowing us to pay a dividend of 4.3p per share, representing a total payout of £491,436 compared to £465,000 in 2009.

Outlook

In the current year to-date we have seen trading in line with our expectations. Central London has led the way with the percentage of asking prices achieved rising to 99% in February 2011 compared to 96% in February 2009.  In the first quarter, activity in prime central London was ahead year-on-year.

For the year as a whole, we anticipate a fall in prices of 5% outside of prime markets which are expected to hold their value. The key determinants will be the level of interest rates and the extent and timing of any increases. We believe that current expectations of an increase of between 0.5% and 1% can be absorbed by the property market this year.  Where there are forced sellers due to public sector cuts, however, we envisage that prices may fall further.

In 2010 we had 114 new franchise applicants compared to 54 in the previous year. At the start of 2011 we had a pipeline of 14 potential new offices and we target a further 8 to 10 openings over the course of the year.  In March 2011, Winkworth completed a placing of new shares to raise £1 million before expenses.  The net proceeds will be used by Winkworth to develop the Company's franchise base.  The Company is in discussions with a number of smaller agencies in strategically important territories to potentially join the Winkworth group.

The London market continues to outperform the national market, where we have seen ongoing weakness in transactions. This weakness is likely to lead to an increase in acquisition opportunities. The estate agency business remains highly competitive and, in a reduced volume market, we believe that strong brands will continue to gain market share.

For further information please contact:

M Winkworth Plc	Tel: [phone]
Dominic Agace (Chief Executive Officer)
Chris Neoh (Chief Financial Officer)
Milbourne (Financial PR)	Tel: [phone]
Tim Draper
FinnCap	Tel: [phone]
Matthew Robinson/Rose Herbert (Corporate Finance)
Tom Jenkins (Corporate Broking)

About Winkworth

Winkworth is a leading franchisor of residential real estate agencies and is admitted to trading on the AIM Market of the London Stock Exchange.

Established in Mayfair in 1835, Winkworth has a pre-eminent position in the mid to upper segments of the central London residential sales and lettings markets. In total, the company operates from over 80 offices in the UK, France and Portugal, having doubled in size in recent years.

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. Franchisees deliver in-depth local knowledge and a highly personalised service to their clients.

For further information please visit: www.winkworthplc.com

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2010

		2010		2009
	Notes	£		£
CONTINUING OPERATIONS
Revenue		3,707,543		3,386,053
Cost of sales		(840,240)		(989,800)
GROSS PROFIT		2,867,303		2,396,253
Other operating income		-		3,515
Administrative expenses		(1,758,691)		(1,532,594)
OPERATING PROFIT		1,108,612		867,174
Finance costs		-		(474)
Finance income		2,805		2,314
PROFIT BEFORE TAXATION		1,111,417		869,014
Taxation	1	(313,050)		(232,789)
PROFIT FOR THE YEAR		798,367		636,225
OTHER COMPREHENSIVE INCOME
Unrealised exchange (loss)/gain		(9,543)		13,223
OTHER COMPREHENSIVE INCOME FOR THE YEAR		788,824		649,448
Profit attributable to:
Owners of the parent		803,981		633,972
Non-controlling interests		(5,614)		2,253
		798,367		636,225
Total comprehensive income attributable to:
Owners of the parent		795,392		651,779
Non-controlling interests		(6,568)		(2,331)
		788,824		649,448
Earnings per share expressed
in pence per share:	3
Basic and diluted		7.03		6.22

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2010

		2010		2009
	Notes	£		£
ASSETS
NON-CURRENT ASSETS
Goodwill		208,965		218,430
Intangible assets		203,463		136,228
Property, plant and equipment		265,107		257,913
Investments		7,200		7,050
		684,735		619,621
CURRENT ASSETS
Trade and other receivables		498,320		357,831
Cash and cash equivalents		1,600,649		1,412,665
		2,098,969		1,770,496
TOTAL ASSETS		2,783,704		2,390,117
EQUITY
SHAREHOLDERS' EQUITY
Share capital	5	57,144		57,144
Share premium		777,213		777,213
Retained earnings		1,085,145		689,759
		1,919,502		1,524,116
Non-controlling interests		1,902		8,470
TOTAL EQUITY		1,921,404		1,532,586
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax		29,700		22,200
CURRENT LIABILITIES
Trade and other payables		451,361		458,287
Bank borrowings		92,089		111,392
Tax payable		177,150		265,652
Provisions		112,000		-
		832,600		835,331
TOTAL LIABILITIES		862,300		857,531
TOTAL EQUITY AND LIABILITIES		2,783,704		2,390,117

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2010

		Share		Retained		Share		Shareholders'
	Notes	capital		earnings		premium		equity
		£		£		£		£
Balance at 1 January 2009		100		552,880		-		552,980
Issue of share capital		7,144		-		777,213		784,357
Total comprehensive income		-		651,779		-		651,779
Bonus issue		49,900		(49,900)		-		-
Dividends paid	2	-		(465,000)		-		(465,000)
Balance at 31 December 2009		57,144		689,759		777,213		1,524,116
Total comprehensive income		-		795,392		-		795,392
Dividends paid		-		(400,006)		-		(400,006)
Balance at 31 December 2010		57,144		1,085,145		777,213		1,919,502
						Non-controlling			Total
						interests			equity
						£			£
Balance at 1 January 2009						10,801			563,781
Issue of share capital						-			784,357
Total comprehensive income						(2,331)			649,448
Dividends paid	2					-			(465,000)
Balance at 31 December 2009						8,470			1,532,586
Total comprehensive income						(6,568)			788,824
Dividends paid	2					-			(400,006)
Balance at 31 December 2010						1,902			1,921,404

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2010

			2010		2009
	Notes		£		£
Cash flows from operating activities
Cash generated from operations	4		1,154,313		1,083,813
Interest paid			-		(474)
Tax paid			(394,051)		(121,365)
Net cash from operating activities			760,262		961,974
Cash flows from investing activities
Purchase of intangible fixed assets			(100,035)		-
Purchase of tangible fixed assets			(55,589)		(115,563)
Purchase of fixed asset investments			(150)		-
Sale of tangible fixed assets			-		100
Interest received			2,805		2,314
Net cash from/(used in) investing activities			(152,969)		(113,149)
Cash flows from financing activities
Loan repayments in year			-		(46,000)
Share issue			-		1,143,000
Flotation costs			-		(358,643)
Equity dividends paid			(400,006)		(465,000)
Net cash (used in)/from financing activities			(400,006)		273,357
Increase in cash and cash equivalents			207,287		1,122,182
Cash and cash equivalents at beginning of year			1,301,273		179,091
Cash and cash equivalents at end of year			1,508,560		1,301,273

M WINKWORTH PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2010

1.          TAXATION

Analysis of the tax charge
	2010	2009
	£	£
Current tax	305,550	231,789
Deferred tax	7,500	1,000
Total tax charge in statement of comprehensive income	313,050	232,789

             Factors affecting the tax charge

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

	2010		2009
	£		£
Profit on ordinary activities before taxation	1,101,875		882,237
Profit on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 28% (2009 - 28%)	308,525		247,026
Effects of:
Expenses not deductible for tax purposes	2,643		11,857
Adjustment in respect of prior periods	1,751		(26,909)
Different tax rates	150		842
Capital allowances in excess of depreciation	(7,519)		(1,027)
Total current tax	305,550		231,789
Deferred tax	7,500		1,000
Total tax charge in statement of comprehensive income	313,050		232,789

2.          DIVIDENDS

	2010					2009
	£					£
Ordinary shares of 0.5p each (2009: £1 each)
Interim paid 2010 - 3.5p per share (2009 - £4,650 per share)		400,006			465,000

                After the statement of financial position date a final interim dividend of 1.3p per 0.5p ordinary share was paid, which is not reflected in the statement of financial position at the year end. After 31 December 2009, a final 2009 dividend of 0.5p per 0.5p ordinary share was paid. As this was declared after the comparative statement of financial position date, it is reflected in the above 2010 interim dividends paid.

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 outstanding during the period.

There are no dilutive potential shares in issue.

			Weighted
			average		Per-share
	Earnings		number		amount
	£		of shares		pence
2010	803,981		11,428,750		7.03
2009	633,972		10,195,719		6.22

4.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

	2010		2009
	£		£
Profit before taxation	1,101,875		882,237
Depreciation and amortisation	80,858		75,042
Loss on disposal of property, plant and equipment	-		464
Reclassification of intangible assets	259		-
Exchange rate variance	9,542		18,290
Finance costs	-		474
Finance income	(2,806)		(2,314)
	1,189,728		974,193
Increase in trade and other receivables	(140,489)		(22,302)
(Decrease)/increase in trade and other payables	(6,926)		131,922
Increase in provisions	112,000		-
Cash generated from operations	1,154,313		1,083,813

5.                           SHARE CAPITAL

Authorised:			2010		2009
			£		£
20,000,000	Ordinary shares of 0.5p		100,000		100,000
Issued and fully paid:			2010		2009
			£		£
11,428,750	Ordinary shares of 0.5p		57,144		57,144

6.          FINANCIAL INFORMATION

             The financial information set out in this preliminary announcement, which has been extracted from the audited report and financial statements, does not constitute the company's statutory accounts for the year ended 31 December 2010.

             The report of the auditor on the report and financial statements for the year ended 31 December 2010 is not qualified and does not include a statement under s498(2) or s498(3) of the Companies Act 2006.                          

7.          ANNUAL REPORT AND ACCOUNTS

             Copies of the annual report and accounts for the year ended 31 December 2010 together with the notice of the Annual General Meeting to be held at the offices of FinnCap, 60 New Broad Street, London, EC2M 1JJ on                               6 June 2011, 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.                       

 

END

 

 

FR UGUUAAUPGGMC