Half Yearly Report

RNS Number : 9100M

M Winkworth Plc

24 September 2012

 

M Winkworth Plc

Interim Results for the Six Months ended 30 June 2012

M Winkworth Plc ("Winkworth", the "Company" or the "Group") is pleased to announce its

Interim Results for the six months ended 30 June 2012

Highlights

·     Sales up 5.8% to £1.89 million (2011: £1.79 million)

·     Profit before taxation £421,140 (2011: £564,846) after £90,000 of exceptional costs

·     Cash generated from operations £241,387 (2011: £35,585)

·     5 new offices opened so far in 2012  and a further two signed for 2013

·     2012 interim dividend of 2.4p declared and paid

"With the festivities surrounding the London Olympics now over and the most recent government initiatives to lower the cost of mortgages in place, we expect the year to end well. In a still subdued market we anticipate that overall transactions in the UK will rise by 10% in 2012 following an upturn in the final quarter. 

In the near term, we see our growth coming from our increasing number of country offices, where in 2012 to-date we have added 26% to the average property price listed and, as a result of these being plugged into the Winkworth network, increased average fees by 13%."

Dominic Agace, Chief Executive Officer

For further information please contact:

M Winkworth Plc                                                                                      Tel : [phone]

Dominic Agace (Chief Executive Officer)

Chris Neoh (Chief Financial Officer)

Milbourne (Public Relations)                                                              Tel : [phone]

Tim Draper

FinnCap                                                                                                         Tel : [phone]

Matthew Robinson/Rose Herbert (Corporate Finance)

Stephen Norcross/Mia Gardner  (Corporate Broking)

Overview

As anticipated, this is turning out to be an unusual year. Although we have been conscious of the fluctuations and disruption caused in the market by various major events taking place in the UK over the summer, our business has taken these in its stride and if, as seems likely, the market returns to normal in the second half of the year, we expect to meet our targets.  

In my last statement I emphasised that we were building our network outside of London, devoting time and energy to broadening Winkworth's influence in order to reach other wealthy parts of the UK. This operation has proved very successful and, bearing in mind the slowing of the London market during this period, we are very happy with the timing of our efforts to expand into the country. There is no doubt, also, that the Government's new policy of incentivising banks to stimulate an increase in mortgage loans will produce more activity in the country and strengthen that market, thus enabling Winkworth to reap the rewards of  our early 'counter-cyclical' expansion away from London.

I can report that the improvements we have made to our systems and structure, regardless of outside influences, has proved beneficial and we are pursuing this commitment. We have invested in our brand and strategy in order to refine our message and differentiate ourselves from our competitors, while creating a platform for all future marketing to work from.  This has led to exceptional costs, as stated in our accounts, but these are very much an investment in the brand for the next three years. We believe we have a sound base on which to build for the future and are well placed to strengthen our market position.

The London market remains of prime importance to us and we have continued to invest in parts of the capital where previously we have had only modest representation. We are still on line for substantial growth between 2012 and 2015, but we expect much of this to come from outside of London as we build on our existing presence in the country and as our earlier expansion efforts there mature.  
 

Simon Agace
Non-Executive Chairman
24th September 2012

Business Review

Fallout from the Eurozone crisis led to the cost of mortgages increasing steadily throughout the first half of the year and the price growth in the residential market seen in the early months of 2012 cooled as a result. In the first quarter, London remained the driving force while the country market remained subdued. The top end of the London market, however, was negatively impacted by the increased property transaction costs introduced in the Budget, with an increase in stamp duty to 7% for properties valued at over £2m and to 15% for overseas companies buying UK property.

Against this background, the gross sales and lettings income of Winkworth's franchisees rose by 8% to £17.6m (£16.3m) in the first half of 2012. London remained the driving force for our business, representing 80% of gross sales and lettings income. This fell, however, from 86% in 2011 as we continue to diversify our income base by expanding into the country, with 9 out of the 11 new offices opened last year being outside of London.

Winkworth's sales for the first half of the year rose by 5.8% to £1.89 million (2011: £1.79 million). Profit before taxation fell to £421,140 (2011: £564,846) as a result of £90,000 of exceptional costs relating to the brand modernisation exercise currently underway and a relatively weak international performance. Cash generated from operations rose to £241,387 (2011: £35,585).

Transactions have ebbed and flowed this year as a steadily improving picture has been affected by major public events. The government's stamp duty measures combined with Eurozone concerns have led to a cooling off of the super prime market and, as a result, we have found that activity has been focused on the family house market where mortgage lending has been closely targeted by banks.

Overall, UK mortgage availability continued to run at approximately 50% of the average level seen in 1993-2007 but, more encouragingly, mortgage lending rose by 7% on the first half of 2011. Against this background Winkworth grew its property sales transactions by 14%, outperforming growth in UK completed sales of 11% by 3%. Transactions at our country offices rose by 45% year-on-year while transactions in London, which accounted for approximately two-thirds of the total, were flat over the period. Our country house department, which services high net worth individuals looking to buy outside of London, remains very successful.

Rentals and property management continued to grow within our business, representing 39% of group turnover compared to 38% in 2011. First half revenues grew by 9% compared to 2011, again most dynamically in the country where rentals and property management income grew by 74% compared to 6% in London. This growth is set to continue as mortgage availability remains difficult, in particular for young professionals, forcing potential home-owners to rent. As a consequence, rental prices in the areas most sought after by young professionals are expected to continue to rise. At the top end of the market, however, rents have weakened as corporate budgets are reduced and greater uncertainty over employment in the city puts downward pressure on rents.

So far in 2012 we have made a significant investment in our marketing strategy in order to position ourselves to grow market share across our existing network. We have increased spending on our brand and website to improve both efficiency and the customer experience, and we have added a China department to our international business to support the growing number of Chinese buyers in London. According to our most recent statistics, Chinese buyers have grown as a market force for the last four quarters running and now represent 27% of all international buyers in central London. These investments will ensure we continue to progress our client proposition and so help improve our market share in 2013.

We have opened five new offices so far this year in Worcester Park, Cheam, Weybridge, Grantham and Canterbury with one closure and we are on track to meet our target of 8 new offices in 2012.   With two further contracts exchanged on offices set to open in 2013,  we are positioning ourselves well for attaining our targets in the next financial year.

Outlook

Now that the festivities surrounding the London Olympics are over and with the most recent government initiatives to lower the cost of mortgages in place, we expect the second half of the year, where typically we achieve 60% of our income, to show greater activity and for 2012 to end well.  In a still subdued market we anticipate that overall transactions in the UK will rise by 10% in 2012 following an upturn in the final quarter. While Eurozone uncertainty remains, we expect the top end of the rental market to remain soft but for the rentals business overall to continue to be a driver of growth.

In the near term, we see our growth coming from our increasing number of country offices, where in 2012 to-date we have added 26% to the average property price listed and, as a result of these being plugged into the Winkworth network, increased average fees by 13%. We plan to further extend our footprint through the successful conversion of strategically-located existing businesses to the Winkworth brand, adding value to these agencies and their client proposition while positioning ourselves to obtain the maximum benefit from a return to more normalised levels of transactions.  

Dominic Agace

Chief Executive Officer

24^th September 2012

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 90 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 period 1 January 2012 to 30 June 2012

						(Unaudited)			(Unaudited)
						Period			Period
						1.1.12			1.1.11		(Audited)
						to			to		Year ended
						30.6.12			30.6.11		31.12.11
						£			£		£
CONTINUING OPERATIONS
Revenue						1,893,902			1,790,763		3,978,662
Cost of sales						(526,127)			(401,226)		(843,095)
GROSS PROFIT						1,367,775			1,389,537		3,135,567
Administrative expenses						(952,276)			(825,435)		(1,944,760)
OPERATING PROFIT						415,499			564,102		1,190,807
Finance income						5,641			744		10,667
PROFIT BEFORE TAXATION						421,140			564,846		1,201,474
Taxation						(96,263)			(172,675)		(325,042)
PROFIT FOR THE PERIOD						324,877			392,171		876,432
OTHER COMPREHENSIVE INCOME
Unrealised exchange (loss)/gain						(8,550)			8,952		(6,258)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD						316,327			401,123		870,174
Profit attributable to:
Owners of the parent						324,877			394,073		878,334
Non-controlling interests						-			(1,902)		(1,902)
						324,877			392,171		876,432

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period 1 January 2012 to 30 June 2012

				(Unaudited)		(Unaudited)
				Period		Period
				1.1.12		1.1.11		(Audited)
				To		to		Year ended
				30.6.12		30.6.11		31.12.11
		Notes		£		£		£
Earnings per share expressed
in pence per share:		2
Basic and diluted				2.56		3.28		7.11
Total comprehensive income attributable to:
Owners of the parent				316,327		403,025		872,076
Non-controlling interests				-		(1,902)		(1,902)
				316,327		401,123		870,174

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2012

								(Unaudited)		(Unaudited)		(Audited)
								30.06.2012		30.06.2011		31.12.2011
		Notes						£		£		£
ASSETS
NON-CURRENT ASSETS
Goodwill								195,884		217,993		203,437
Intangible assets			3					961,947		690,942		894,701
Property, plant and equipment								298,507		322,792		309,885
Investments								7,200		7,200		7,200
Trade and other receivables								145,878		100,000		135,574
								1,609,416		1,338,927		1,550,797
CURRENT ASSETS
Trade and other receivables								636,475		714,547		503,535
Cash and cash equivalents								1,558,191		1,674,795		1,878,306
								2,194,666		2,389,342		2,381,841
TOTAL ASSETS								3,804,082		3,728,269		3,932,638
EQUITY
SHAREHOLDERS' EQUITY
Share capital								63,381		63,381		63,381
Share premium								1,718,469		1,731,265		1,718,469
Translation reserve								25,617		49,377		34,167
Retained earnings								1,364,135		1,163,457		1,394,193
TOTAL EQUITY								3,171,602		3,007,480		3,210,210
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax								31,357		42,500		34,347
CURRENT LIABILITIES
Trade and other payables								337,876		308,557		457,614
Bank borrowings								180,054		159,242		77,447
Tax payable								83,193		210,490		153,020
								601,123		678,289		688,081
TOTAL LIABILITIES								632,480		720,789		722,428
TOTAL EQUITY AND LIABILITIES								3,804,082		3,728,269		3,932,638

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period 1 January 2012 to 30 June 2012

	Share		Retained		Translation		Share		Shareholders'
	capital		earnings		reserve		premium		equity
	£		£		£		£		£
Balance at 1 January 2011	57,144		1,044,720		40,425		777,213		1,919,502
Issue of share capital	6,237		-		-		954,052		960,289
Total comprehensive income	-		394,073		8,952		-		403,025
Dividends paid	-		(275,336)		-		-		(275,336)
Balance at 30 June 2011	63,381		1,163,457		49,377		1,731,265		3,007,480
Issue of share capital	-		-				(12,796)		(12,796)
Total comprehensive income	-		484,261		(15,210)		-		469,051
Dividends paid	-		(253,525)				-		(253,525)
Balance at 31 December 2011	63,381		1,394,193		34,167		1,718,469		3,210,210
Total comprehensive income	-		324,877		(8,550)		-		316,327
Dividends paid	-		(354,935)		-		-		(354,935)
Balance at 30 June 2012	63,381		1,364,135		25,617		1,718,469		3,171,602
							Non-controlling		Total
							interests		equity
							£		£
Balance at 1 January 2011							1,902		1,921,404
Issue of share capital							-		960,289
Total comprehensive income							(1,902)		401,123
Dividends paid							-		(275,336)
Balance at 30 June 2011							-		3,007,480
Issue of share capital							-		(12,796)
Total comprehensive income							-		469,051
Dividends paid							-		(253,525)
Balance at 31 December 2011							-		3,210,210
Total comprehensive income							-		316,327
Dividends paid							-		(354,935)
Balance at 30 June 2012							-		3,171,602

M WINKWORTH PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

for the period 1 January 2012 to 30 June 2012

			(Unaudited)		(Unaudited)
			Period		Period
			1.1.12		1.1.11		(Audited)
			To		to		Year ended
			30.6.12		30.6.11		31.12.11
	Notes		£		£		£
Cash flows from operating activities
Cash generated from operations	i		241,387		35,585		1,118,136
Tax paid			(169,080)		(126,540)		(344,525)
Net cash from/(used in) operating activities			72,307		(90,955)		773,611
Cash flows from investing activities
Purchase of intangible fixed assets			(126,359)		(505,000)		(772,744)
Purchase of tangible fixed assets			(19,376)		(82,754)		(137,867)
Interest received			5,641		749		10,667
Net cash used in investing activities			(140,094)		(587,005)		(899,944)
Cash flows from financing activities
Share issue			-		960,289		947,493
Equity dividends paid			(354,935)		(275,336)		(528,861)
Net cash (used in)/from financing activities			(354,935)		684,953		(418,632)
(Decrease)/increase in cash and cash equivalents			(422,722)		6,993		292,299
Cash and cash equivalents at beginning of period			1,800,859		1,508,560		1,508,560
Cash and cash equivalents at end of period	ii		1,378,137		1,515,553		1,800,859

M WINKWORTH PLC

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

for the period 1 January 2012 to 30 June 2012

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

	(Unaudited)		(Unaudited)
	Period		Period
	1.1.12		1.1.11		(Audited)
	to		to		Year ended
	30.6.12		30.6.11		31.12.11
	£		£		£
Profit before taxation	421,140		564,846		1,201,474
Depreciation and amortisation	89,763		42,514		141,215
Loss on disposal of property, plant and equipment	-		-		35,600
Exchange rate variance	7,178		-		(2,950)
Finance income	(5,641)		(744)		(10,667)
	512,440		606,616		1,364,672
Increase in trade and other receivables	(143,244)		(316,227)		(140,789)
Decrease in trade and other payables and provisions	(127,809)		(254,804)		(105,747)
Cash generated from operations	241,387		35,585		1,118,136

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:

	30.6.12		30.6.11		31.12.11
	£		£		£
Cash and cash equivalents	1,558,191		1,674,795		1,878,306
Bank overdrafts	(180,054)		(159,242)		(77,447)
	1,378,137		1,515,553		1,800,859

M WINKWORTH PLC

NOTES TO THE CONSOLIDATED INTERIM RESULTS

for the period 1 January 2012 to 30 June 2012

1.          ACCOUNTING POLICIES

              Basis of preparation

The interim report for the six months ended 30 June 2012 and the comparative information for the periods ended 30 June 2011 and 31 December 2011 does 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 2011 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 2012 and 30 June 2011 is unaudited. The financial information for the year ended 31 December 2011 is derived from the group's audited annual report and accounts.

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 same accounting policies and methods of computation are followed in the condensed set of financial statements as were applied in the group's latest annual audited financial statements.  

2.          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 in issue during the period.

There are no dilutive potential shares in issue.

			Weighted
			average		Per-share
	Earnings		number		amount
	£		of shares		pence
Period ended 30.06.12	324,877		12,676,238		2.56
Period ended 30.06.11	394,073		12,028,371		3.28
Year ended 31.12.11	878,334		12,345,752		7.11

M WINKWORTH PLC

NOTES TO THE CONSOLIDATED INTERIM RESULTS

for the period 1 January 2012 to 30 June 2012

3.          INTANGIBLE ASSETS

	£
Net book value at 1 January 2011	203,463
Additions	505,000
Amortisation	(17,521)
Net book value at 30 June 2011	690,942
Additions	267,744
Amortisation	(63,985)
Net book value at 31 December 2011	894,701
Additions	126,359
Amortisation	(59,113)
Net book value at 30 June 2012	961,947

 

END

 

 

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