Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- M Winkworth PLC (LSE:WINK, Financial) reported a 12% increase in network revenue, reaching GBP64.7 million, with sales revenue growing by 18%.
- The company achieved a record year for lettings, with a 6% growth to GBP32 million in revenue.
- Profit before tax increased by 10% to GBP2.36 million, and the company declared a 5% increase in ordinary dividends to 12.3p per share.
- M Winkworth PLC expanded its market share faster than any of the other top 10 estate agents in London, particularly in sales agreed.
- The company successfully opened three new offices and resold five offices to new operators, indicating strong growth and rejuvenation in its franchise network.
Negative Points
- Despite strong sales growth, the lettings side experienced slower growth, indicating potential challenges in balancing the two revenue streams.
- Administrative expenses increased, which could impact future profitability if not managed effectively.
- The company faces challenges in expanding into new geographic areas, such as Essex, due to reliance on finding suitable franchisees.
- There is a potential risk of over-reliance on the London market, which accounts for 75% of the company's revenue.
- The company may face challenges in maintaining its dividend growth if it needs to retain more cash for strategic investments or market uncertainties.
Q & A Highlights
Q: The new Knightsbridge franchisee arrives with proven success. Do you envisage more new franchisees being persuaded to take a Winkworth franchise from similar quality upmarket firms, and how can you make that prospect more attractive?
A: Dominic Agace, CEO: A large part of attracting new franchisees is sharing the success of current ones. The equity ownership and having your own business is a significant attraction. We are pleased with the current recruit and will continue to recruit others where possible.
Q: Why has Winkworth not expanded further into Essex, with only an outlier in Leigh-on-Sea?
A: Dominic Agace, CEO: Our growth is defined by the people we come across and can source. We are open to all areas that affiliate with London, but our expansion is driven by the availability of suitable franchisees.
Q: How much influence does Winkworth have with franchisees and the rate of commission they set for transactions?
A: Dominic Agace, CEO: The average commission is well above 1%. Winkworth aims to be competitive in local markets but does not seek to be the cheapest, as we believe we add value to our clients.
Q: What would be the ideal split between sales and lettings revenue over the next few years?
A: Dominic Agace, CEO: We do not prioritize one over the other. The balance between sales and lettings shows the strength of our business. We expect sales transactions to grow faster than lettings in the next year or two.
Q: Can Winkworth influence the split of sales and lettings revenue generated by franchisees?
A: Dominic Agace, CEO: We ensure that franchisees have credible propositions for both sales and lettings. We provide training, technology, and support to help them service both markets effectively.
Q: Will management retain greater cash on the balance sheet, potentially affecting dividend improvements?
A: Andrew Nicol, CFO: We have a plan to grow the business using some of the cash, but maintaining a progressive dividend remains a key priority.
Q: What are the current profit prospects for 2025 of the four own equity businesses?
A: Dominic Agace, CEO: The profit prospects are in line with expectations, with plans to grow over several years to reach their potential.
Q: How do you persuade headhunted talent to join Winkworth, and do they have different agreements compared to those who approach Winkworth directly?
A: Dominic Agace, CEO: The terms are the same for all franchisees, including the 8% fee. We may provide financial support via loans if needed to help them join.
Q: To what extent has Winkworth seen a spike in sales due to changes in stamp duty thresholds?
A: Dominic Agace, CEO: Stamp duty holidays have a distorting effect, but we are in a needs-based market with a lot of motivation to transact, beyond just stamp duty changes.
Q: Are you seeing any difference in profitability or operational performance between franchised and owned equity offices?
A: Dominic Agace, CEO: We try to replicate the franchise model in owned offices. The franchise model is more suited to smaller towns, while owned offices are in markets with higher revenue potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
