Trading Statement

RNS Number : 5473W

M Winkworth Plc

22 November 2010

 

22 November 2010

M Winkworth plc

Trading Statement

M Winkworth plc ("Winkworth"), the leading franchisor of real estate agencies, is providing the following Trading Statement for the period from July to September 2010.

Summary

The third quarter of 2010 saw a further strong performance from our franchise offices against a background of relatively low transaction volumes, particularly outside London, and a weaker pricing environment than in the first half of the year.

For the first nine months of the year, Winkworth's revenues grew at a rate some 20% higher than the comparable period in 2009. In terms of the number of properties sold, existing offices reported a 42% year-on-year increase, while the new offices added in 2010 reported an increase of 149%, highlighting the dynamic performance of new franchisees and the impact that these have on the growth of the business.

With six new franchises signed to-date and a further two due to sign by the end of the year, we expect to meet our objective of opening eight new offices in 2010. With a further four offices in the pipeline, we anticipate a good start to our organic expansion in 2011 and are well placed to accelerate our rate of development. We are encouraged that the number of franchise applicants has doubled to 107 year to-date from 54 this time last year.

Our country house department, a fee earning central service set up to improve our country house marketing offering, is now fully operational. By improving visibility of the country house market through our 58 London offices we expect to grow our share of this market over time.

We expect to exceed our profit targets for 2010.

Outlook

After an initial rapid rebound in early 2010 driven by buyer enthusiasm and an acute constraint in supply in certain categories, the UK residential sales market has slowed in recent months, leading to price slippage from the peak levels achieved in 2010.

The key determinants for 2011 will be:

·      the outlook for interest rates

·      the ongoing shortage of financing availability for first time buyers

·      the impact of austerity measures, especially outside of London

We anticipate another low volume year in 2011 with transactions remaining at a similar level to 2010.. We expect to see prices continuing to move upwards in prime markets, perhaps by a further 5%, underpinned by low interest rates and a discounted currency. Less prime markets are expected to see a consolidation in pricing levels after having retreated by 5-10% in the second half of 2010.

In the private rental sector, we envisage an ongoing shortage of supply, created by a lack of investment over the last three years and by sales of buy-to-let properties by landlords looking to de-leverage their portfolios. This should ensure ongoing upward pressure on rents and we anticipate that, on average, these may increase by 5% in 2011.

Our balance sheet continues to strengthen and we are further exploring opportunities to acquire small to mid-sized chains of franchised offices to incorporate into the Winkworth brand. We remain confident of our organic growth and, with a robust business model bolstered by the impact of new office openings, expect to continue to grow our market share.

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)

Tom Jenkins (Corporate Broking)

About Winkworth

Winkworth is a leading franchisor of residential real estate agencies and is listed on 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

 

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