M Winkworth (LSE:WINK) — Full Year Results

0:00 Good afternoon, and welcome to the M WINKWORTH PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. Just simply type in your questions and press send. Before we begin, I'd like to submit the following poll. And I'd like to hand you over to Dominic Aege, CEO. Good afternoon, sir.

0:21 Hi. I'm Dominic Aege, CEO of WINKWORTH, and this is Andrew Nichols, CFO of WINKWORTH PLC. I'd be delighted to be here to talk you through twenty twenty five results. So without much further ado, this slide is really for those of you that don't know us, just sort of how the model works. We established in 1835, a 190 years old, and we celebrated that last year. We have a 103 offices. We have two owned offices, 46 in The UK, and 59 offices in London. The oh, this one. Sorry.

1:08 Sorry. There's the model works that we charge 8% of gross revenue of the franchise network. We aim to provide a platform for an independent business to operate in the top three in their marketplace. We do that because we believe that makes them durable in all markets, maintaining profitability and able to invest and evolve themselves. Part of that platform, we provide all the services that an estate agent manager of a corporate agency would expect. So from marketing to training to digital to compliance knowledge and regulations, all the things at the end of the phone that they were used to, he had happened in the phone with us. As a model, we take options on the premises, so we don't take leases ourselves, and the contract is ten plus ten years personally guaranteed by the franchise.

2:06 So straight into 2025 and the operational overview. We had first half of twenty twenty five was incredibly strong. It's driven by the stump duty changing in April. So there was a surge of activity in q one, saw activity come through, which somewhat failed in the second half as we move towards the uncertainty of the autumn statement.

2:32 We saw lettings growth last year, and in fact, was a record year for us in terms of lettings revenue and a very strong sales performance across the network. We maintained our position as the largest sales agent in our operating area based on a number of properties exchanged in 2025. We opened four new offices. We re franchised seven as part of the portfolio management piece where we look to improve the offices that we have through introducing new talent to take them on to the next level. We made an investment, one off investment into our Prime Central London marketing. This is really to support a talented individual we brought in to our Knightsbridge office to turn that around and become a leader of Prime Central London for us, and we put some money behind him to help him with that turnaround.

3:27 We increased investment in consultancy to support the system development of the business and looking at automation of franchising accounts. And we sold our Crystal Palace office to neighboring franchisee.

3:44 In terms of the actual numbers to put a wee bit of flesh on those bones, network revenue for the year at 68,700,000 was up 6% on 2024. The sales split was 52, 48, with sales slightly up on the previous year. In terms of of of the split between lettings and sales revenue, Lettings revenue for the year was 39 point 32,900,000, and that was 3% up on the 32,000,000 in 2024, and it was 3% up at the half year as well. On the sales side, overall for the year at 35,800,000, it was 10% up on 2024.

4:35 It had been 27% up at the half year, so it sort of s reflects Dominic's earlier comments about the slowing in the second half of the year. In terms of of of WINKWORTH's actual revenue, it was down 1% at 10,740,000. Couple of reasons for that on the franchising business, which was up about a $150 year on year. The sales and lettings revenue was up by about $300 on the back of the strong lettings and sales performance in the year. Our ancillary fees were up by about $100 or so. Where the revenue had dropped year

5:18 on year was in what we call the assignment and license fees and our China desk, which had all which both had slower years than in 2025 and in 2024. On the owned offices side, revenue was down by about 200 k, and that is basically around our Crystal Palace office, which we will say a bit more about as the presentation proceeds. Cost of sales were down slightly due to less split commissions on our development and commercial business. The admin expenses were up about $550 year on year. Two elements to that. There were one off costs of about $300 and ongoing increases of about 250 k, which would be equivalent to about a 4% year on year increase.

6:11 In terms of the one off costs, Dominic's already alluded to the 100 k that we invested in marketing in Prime Central London. We spent about 70 k around an office move, the head office move. Two elements to that, the actual move cost, but also an element of of double rent, which clearly won't be repeated. We had a 100 k increase on the back of benefits and and salary increases, and we spent about 40 k on consultants on the automation points that Dominic's mentioned previously. With the 300 k profit on on the sale of of the Crystal Palace business, the net effect of that was that the profit before tax was down 11% to 2,110,000.

7:04 The owned offices contributed 3,250,000, as I say, down slightly on the previous year. Cash at the year end was a healthy 4,900,000. There's no debt, and we paid ordinary dividends in the year declared ordinary dividend in the year of thirteen point two three, which was 7% up on the previous year. So the next slide, we've talked about the different parts of the business and the performance throughout 2025. I suppose we can see the notable drops were in Central London, and unfortunately, particularly affected one by non dom vegetation changing affecting buyer demand at the higher end. And, clearly, the autumn statement where there's lots of rumors of wealth taxation, which caused people to pause. So it was a poor year for for Central London as a result of that.

8:00 The sort of positive thing looking at it on the letting side of things is that there was a small decline in lettings, but our conversion to property management overrode that. So lettings business grew as a whole to a new record, as I've said. And the core business, which is, I suppose, the outer London and increasingly country markets, performed very strongly from a sales perspective and suddenly from a lettings perspective. So looking at the breakdown of the network revenue, those of who have followed us before will see this as a fairly familiar chart. Reported fifty-fifty. Lessings business grew, but sales business outgrew it. So we're happy with that balance and it means that we're well positioned to take market share when activity switches from sales to lettings operate successfully in both marketplaces.

8:59 In terms of the the sort of three areas we divide our business into, you can see the division here. Ultimately, of the areas that we look at is Central London, which traditionally was 24%. It's had a difficult ten years, and we would expect that to grow in due course as we've seen prices drop in that area of value to opportunities increase.

9:31 So, this slide really talks about the demand in 2025 versus prior years. Why this is of interest is really it shows should show whether the price is going up or down, a number of applicants per property to buy, a number of tenants, a property to let through our database. I think what you can see is that, you know, there was no price growth last year. There's a lot of properties that came to the market and that was driven by increased cost of the last few years. So increased cost of mortgages, perhaps increased costs of baton school fees or build costs of developing houses people brought as well as mortgages coming up off their fixed term. So that led to, you know, a number of a large group of people bringing their properties to market and prepared to transact, which led to an increase in transactions last year.

10:23 On the letting side, lettings really just follows affordability. So it does track that and when prices become too high, then people use workarounds. So either they stay at home longer or more people share properties. More recently, you've seen this increase in HMOs from your sort of traditional two bedroom flat for young renters in cities. It also shows really that there has been some gains. Mean, there's going be an increase in first time buyers buying and clearly that most affects the lettings market. So all of that's meant that the price growth in recent years has abated and is fairly flat at the moment towards end of last year and coming to this year. In terms of our dividends, this slide shows the progressive dividends that that we pay as a company or we aim to pay as a company.

11:20 We pay quarterly dividends, unlike most of our peers, and we look to, as I said, pay progressive dividends. The block blocks are the actual dividends and then the shaded blocks are showing the couple of special dividends that we've paid since 2009 and a capital reorganization that took place in 2018. But I think it's it's a helpful chart that is amplified by this chart on total shareholder returns. So if you had bought a share in WINKWORTH on the 01/01/2017, it had generated by the end of twenty twenty five a return of a 189%, and that's a simple total return, not looking at the reinvestment of dividends.

12:27 So that's just sort of just a fresh driver of growth. We see these really as four areas. I mean, we look at it as our business is based on getting the best possible people into into it, best talented state agents, then supporting them to grow. There's sort of two two ways and and following them, and that would define this cadence of the growth of the business. So looking at each of these in turn, New franchising shows the ebb and flow of the offices. Effectively, this is growing through new offices in new locations with new talent. This is existing estates and converting to WINKWORTH. And existing franchisees expanding into new offices.

13:15 So as you can see in 2025,

13:18 we had a number of all London based. Out of the four, three were existing franchisees opening further offices, which hopefully shows the health of the network that people are looking to expand. Also means there'll be very strong franchisees going forward. We also resold seven.

13:37 This is part of what we call portfolio management. You know, we're a very old business, and we started franchising in 1981. And so there's a certain element of retirement, and there in that in that moment, there's an opportunity. If we can head on and find the right person to put in that office, then we can boost our returns significantly, not only in that office, but in in in further offices further appeal that we'll we'll talk about in in future slides. This is the pipeline number nine. We've actually four have opened, again, which we'll discuss in a second. But one further new office in the pipeline with four resales agreed.

14:23 So this model is part of the menu of options for talent. Just as refresh, those those out there. There's sort of two two ways this operate. One was we looked at areas where there are lots of transactions in London and where perhaps there was a disconnect with our performance. And we found the best possible person in the situation. Certain situations, that person doesn't have the funds to do it. And so we've acquired business and then provided to share incentive for delivering performance. That is the representative team. Crystal Palace and Pimlico, they're slightly different. They were driven through dispute. They arose and we took them on board of our own account to bring in the right talent, boost revenues, and then exit in due course.

15:12 And then there's development commercial investments, was looking at how that fitted with the offices to have to provide new homes, properties to the offices to sell as well as a new revenue stream from us. Last year, we consolidated though the this part of our business. So we sold off Crystal Palace, is an office we took over for a nonrenewal situation. We've grown the revenue significantly from around 200,000 to about $8,850,000, but it wasn't profitable. And we therefore, we felt that it was time to move it on to a neighboring franchisee who can maintain the eight cents for us and benefit from having a new office into their structure. So we've exited that one. DCI, we felt that it was a bit lumpy for and in the current marketplace, and therefore, we found actually new talent that we're taking on the franchise again with a franchisee of ours, and so we'll continue to benefit from them introducing properties to our franchise network and and our franchise fee from that business, but without the the costs ourselves.

16:20 So that really what that leaves us with is two really good businesses, you know, which hopefully this year ahead of simply ahead of weather where they stand last year, run by good operators that were, you know, incentivized and should be earning their shares, their stakes going forward. So that is a sort of tighter proposition going to 2026 and beyond.

16:45 So next, this is sort of the offices we've opened this year. This is the assisted acquisition. So where we have a talented operator and we want to support them in their ambitions to grow because we believe they will do a good job and therefore we will all benefit. So there's some bullet points here. Obviously, opened the Edmonton spa. He started incredibly well. He has in terms of the number one in market share for the last six months. He's only been there since 2024, which is which is a great feat. So he has acquired a piece of cloth business, which is for us is Stratford Upon Avon, Wellsbourne, Chippinghampton, Shipton On Star. These are some neighboring areas with a very good letting management business underneath it.

17:33 It will provide us we provide assistance acquisition of around 500,000 to it, and it provide us 200,000 a year franchise fee going forward. He not only has done very well for us in Lemmington Spa, but he's sort of a known entity to us having been a bit of a homegrown talent, having worked in our highly successful Islington office in the previous incarnation at WINKWORTH. So in this slide, I'm trying to explain the portfolio management element of our business. So really, this sort of follows the story where, you know, where good people come on board, good things happen. And, you know, not only do they boost revenue in the offices, they come on board in quite quickly if they perhaps the office has become a bit tired, but obviously, they then go on to open other offices. And and that then generates further income. And not only that, they then actually, which isn't on the side as you know, they boost their neighbors and there's a general network effect of sort of dropping these gems into the into the network and watching watching the good that can happen. So this really tries to portray the story since 2018 where where we've done that. We look to invest to make this happen now because, again, if it's the right person who's signing ten plus ten year contracts, you know, that investment is well worth it.

18:54 Mean, Andrew, do you have I suppose just to sort of give it a bit of a financial focus. In 2018, the offices that are identified as being open in 2018 generated about 9,000,000 of network revenue. By 2025, the offices that were open generated 18,000,000,000. So getting the right people in to run the offices and give them the opportunity to open other offices has a very, very positive impact on our network. Yeah. And I think it's a sort of for us, it's a way of deploying our cash in a very know, there is a lower risk version of this because it's within London where we have lots of franchisees and the name is very well established and we're sort of they're more do uppers. So it is just, on the lower risk element of generating growth.

19:47 So really, the next slide conveys, hopefully, what this does. So this shows, you know, our ambitions is that we're in the top three in each marketplace, we're offering them. We set up our business to provide platform for that to happen, and we get the people in who can then deliver on that platform. And that's but this gives you a long term picture of that happening. In particular, in London, really, where, you know, most of that activity is focused because it's an older network. And so there's sort of more opportunities for those that perhaps have done that run their course and looking for the golf course to introduce new blood and a bit of zest to some of them.

20:34 So that's been going on, you know, over the last nine years. And in 2016, there were nine in the top three. This is for by right move in terms of market share for sales agreed in their respective areas. There were nine in our of our London network, and in 2025, there are 26 of our London network in that top three by market share. Overall in the so general WINKWORTH network, until the '16, there were 13. And 2025, there are 36. So plenty more to do, but, you know, that I suppose shows the improving quality of the network, not just the revenue growth, but, you know, in market share positions, it's getting stronger on individual office basis, hopefully, every year. So really just talking about operating area performance.

21:23 This is really, again, to kind of share a bit of good news, you know, as a as a model this is, you know, how the model stacks up in its operating area and how the offices within that model work. So this is compared to the top 10 in the area that we operate. So it is the second nine, if that makes sense, in the area. So we're more likely to set agree a sale on a property, more likely to exchange a property, less likely to withdraw a property, less likely to have a property fall through. And perhaps most impressively of all, in 2025, WINKWORTH had the highest conversion rate from a new instructional new listing of a property to exchange out of the top 10 estate agents in the operating area. So ultimately, that's that's the job.

22:08 And we are the best in our area of doing it, which is getting clients houses sold, which actually shows effectiveness of our franchise model in a competitive marketplace.

22:23 So then just to touch on digital evolution of the business, as we've sort of probably talked about, we always believe in evolving always, and digital is an important part of that and an investment in digital. We you know, people we are led by the people and are are very much a people business, and those relationships with our clients are utmost. And we seek to support that, those individuals, as talented people in our network with good technology where applicable and where it doesn't get in the way of those relationships. So broadly, you know, the new area is artificial intelligence and adapting to that to allow us to embed it in our systems where relevant, where it can add value, and where franchisees can benefit from it. So, you you know, central to that is the website, which we will sort of talk about in the next slide, but, you know, that is the sort of engine, if you like, of the WINKWORTH network.

23:21 And, you know, there's a big reboot going on with investing more than ever before on you know, we need to change it to become more searchable for more AI friendly to facilitate systems being put onto it that are useful and to allow it to be searched through AI more easily, which is important, obviously, ultimately to deliver more valuations for our offices. So that's one of sort of central bits of work that's going on this year. Beyond that, you know, we obviously do have a tech digital stack for offices, which some different providers provide different solutions for areas that we can really update to ensure they have the tools they need to make their lives more simple and are working on always working on improvements to our systems so we can provide a better service to our franchisees as well as helping franchisees understand their businesses more.

24:13 So I said, really, this is the engine room of the network. It delivers what's great to see on this one is 2020 was the sort of boom year for leads. And, you know, we've said last year was certainly not a boom year, but the leads we're generating in our network are increasing, have surpassed that. So, you know, we're talking about six six and a half thousand valuations a year going to that network, which is, you know, around 60 an office, which obviously, you know, very much validates any 8% fee. If you sort of say that they would sell 50 to 60% of those instead of 40 properties being sold, generating revenue from them far coming from the WINKWORTH website.

25:00 So that remains a central focus for our investment.

25:07 So really, so looking at 2025 and looking at the '26 and beyond, you know, we saw very strong first half of the year, slightly distorted by stamp to tax changes. And as we were hurt by the uncertainty ahead of the autumn statement, which perhaps came earlier and shut the year down earlier than than expected. Although perhaps not being as quite as dramatic as some of the news flow suggested. But, you know, in spite of that, we continue to, as we always do in in through the market through the market cycles, is continue to execute our plan. You know, it's a very simple plan of getting the best people we can onboard and backing them, and we will continue to do that. And to do that, we have to make sure we always evolve, and we're investing in our platform to make it, you know, competitive in a place where those good people wanna come.

25:59 And then as a result of that, we want to continue to we moved our dividend up by 7%. And that is hopefully we continue to do that for our shareholders in 2026 and beyond. So I think that is our presentation. And I'll see if you have any questions, it would be great to answer them. Thank you both for updating investors questions just by using the Q and A tab situated on the right hand corner of your screen. And for your reference, a recording of today's presentation will be available on the investment company platform shortly after the meeting has ended. Dominic, Andrew, as you can see, we received a number of questions during today's presentation. If I could please hand back to you to read out the questions and give responses appropriate to do so, and I'll pick up from you at the end.

26:47 Thank you very much indeed. First question, congratulations on the Peter Clark deal. How did this come about, and can we expect more similar transactions? Yeah. So I you know, part of we have a team who are looking at suitable acquisitions for our franchise network to help our franchisees realize those acquisitions and us provide support, obviously, where they need to be. So that was something that landed nicely with a very capable franchisee that we are prepared to back and was a high quality business. And so, hopefully, there will be more, you know, we it is something that we are we do make sure that we look carefully at that blend of the right franchisee in the right position at the right time to make the acquisition as well as the acquisition being there.

27:42 The first half of twenty twenty five was very strong in sales. Does this make h 01/2025 comparison difficult?

27:51 Yes. Yes. It probably will do because the stamp duty I mean, I think it's it's started pretty well 2026, but but obviously, it doesn't have the surge in March of people rushing to make the savings by completing their property sale before stamp duty change. So, you know, that's what we expect. It'll be it'll be a different comparison, but, obviously, we have a it'll be a different year overall with with many different dynamics. It's all part of our considerations. With London sales slowing and the share price down since May 2025, how do you see this affecting your revenues going forward into 2026, 2027? I should have I'm sorry. I think I think I mean, this year started pretty well.

28:48 We're now in a sort of fairly you know, I suppose that what's going on externally is slightly out of our control and Optimum continues to just be holding up pretty well. You know, I suppose there is a big factor about how long it goes on for. And I suppose people are perhaps looking at that and and thinking that it's there might be a bit of uncertainty out there and and therefore share prices adjusted. You know, we're we're just the model we are is, I think, a very strong model. It's been through all sorts of cycles. You know, we continue with our goal of investing through those cycles to get the right people on board, and and the rest will follow. So, you know, once that if we get the right people on board, the revenue will follow, and then the share price will follow that. Thanks, Dominic.

29:37 What are management's sorry. Bear with me. What are management's broader thoughts now on company owned branches after exiting Crystal Palace following a seemingly disappointing profit performance? Is the board now starting to favor returning to a 100% franchisee operation? Yeah. So I think it's always been I think it's always been this menu. I do have a menu of options. So, you know, we just the different tools to deploy for different situations, and I think we see it as one of those tools to deploy. I say Chris Palace came about through a nonrenewal actually, so it was sort of failed situation that either we would have lost that office or we could turn it around. And, it was it it didn't make the profits on the way, but we, you know, didn't lose any money on it, and we've got a significantly boosted revenue and a successful office going forward.

30:31 I think everything is different. We are never going you know, we're always gonna stay true to our franchising model as first and foremost and not be carried away and actually, and obviously, there's all things that would that would override that because we understand, you know, the the business we are, which is, you know, low fixed cost dividend, progressive dividend paying franchise business. But we do think that perhaps it's a useful part of the mix for certain situations to to improve quality network, improve therefore the standard of network and and and the future future prospects of it. So are franchisees encouraged by shares in the company to keep invested? If not, why not?

31:18 Yeah. I think a number of franchisees, do you have shares in the company? I suppose we don't, you know, which as a public company, you know, they're very aware of our results that we share with them, and, you know, that's that's up to them to set in with whether they wish to invest in in the company or not. How do you ensure quality how do also, how do you ensure quality control as the network expands? I suppose that's, hopefully, the skills we've developed over many years. So it's a good combination, really. I mean, I think it all comes down to the right people getting in at the start. You know, if you've gotten the right person to start, then everything follows. Clearly, that won't happen a 100% of the time because nothing's ever a 100%. And in those situations, you know, we have very much evolved contracts in place to uphold the best standards, and we have teams here to look at the offices that we fail. Standards may not be being met, and if needs be, we'll address it. I suppose, you know, that has happened over the years as well. So I think that's part of what our skill sets and management team alongside the COO is of doing that, ensuring that we we maintain those standards.

32:34 What is your appetite for deploying your cash balance toward acquisitions versus returning capital? I think the we want to pay a progressive dividend. I think some won't won't confuse much as me, I think, isn't it? And I you know, we do want to do acquisition, but they're right, though. I said that's the the cadence The principal part is is is the fact that they're right, and they will generate the sort of returns that we need as a business that we are looking for as a business. And to come back on the earlier question, we need to make sure that they're the right people coming into the network. It's not growth at any any price. There is a benefit, we think, to having a quality quality people in the network who are delivering in their local areas.

33:25 What is the likely impact of the renters' rights bill on lettings in 2026? I think that the let the impact's been coming through for '25 and '26 for some time now. I think what you're seeing is some landlords exiting because they are happy with new regulations. I think that's some people are worried that there'll be issues with attaining possession of their properties. So I think you'll see a ongoing consolidation of the sector. But, really, I suppose the it will adjust, and I think we're sort of in a peak moment now. So far, you're seeing property management revenues, as showed in the slide earlier, sort of overcome a decline in lettings revenue last year as those landlords look to have their property managed to deal with the new legislation, and that outweighs perhaps those that might be exiting the center the sector.

34:22 One of the big challenges think you would adjust the legislation. I think one of the challenges is the taxation changes, the budget sector that meant that there's less lower leverage for less leverage is possible for biotech investors. So, you know, it's less open to some. So I think that that's probably a factor in a slightly reduced sector to years gone by, but I think it will stabilize post the legislation comes in place. Thanks for a candid presentation. Since the Iran war started, have the people who left The UK during the last couple of years, are they returning back to The UK? What's been your experience? Probably a bit too early to say. Yeah. Yeah. So I think well, I think there's been a lot of I mean, if you saw lots of those, hundreds of thousand people returning from The Middle East for rentals. I think we've seen the odd rental contract taken up, particularly short term rentals in Central London, but I wouldn't say we're seeing huge amount of people coming back to UK now. And I suppose, you know, that's one of big questions for prime Central London is is what's you know, making sure it has international appeal because that's sort of what's been missing for the last ten years.

35:38 Do you expect to see further consolidation in the sector after the moves made by Foxtons and TPFG? I think that the consolidation will slow, actually. I think there's been I think there are people there are always there's several big agencies, and they always have been in every era looking to grow through acquisition, and we are no different in terms of we're looking to grow by acquisition. I think it'll be slightly less. We're only large you know, with a slightly flatter lettings revenue rather than, you know, the automatic growth of old, and I think there'll be less aggregators looking to acquire big premiums, those books, which perhaps opens opens to draw a bit more for us to convert some to WINKWORTH to grow the market share and and to acquire, I suppose, hopefully values that we feel are slightly more appropriate.

36:30 What has to happen for Greater London transactions to move significantly beyond 73,000 a year? That's the that's the magic question. There's I think it was obviously significantly higher. I think it was a 123,000 in 2008. I think that's about right. So the question is where are those transactions gone? I think it shows the potential for transactions. Clearly, the big factor in there, there have been several factors. One has been the I think London was affected by Brexit and stamp duty. So I think those two things have affected it, and I think affordability has been working through those changes. So, you know, in basic Citroen's the most acute version, but really, there hasn't been much price growth for a long time in London.

37:21 As, you know, people have prices got to the point where they had to be worked through. So rather than crushing, they've just stayed basically flat. And that meant that they become more affordable. And as they become more affordable, transactions will pick up. Thank you very much indeed. That's the end of the questions. Thank you both for answering questions from investors today. Before we ask investors to share their feedback, which I know is particularly important to the company, Dominic, could I please just ask you for a few closing comments? Yeah. Sure. I think I think I've saved some pretty much a few times, really, that the company is set up on the premise that we want best in class people in our network. And that when best in class people join our network, then good things will follow and will flow from that. And so that that really is our primary focus.

38:09 And to do that, we invest in our business to make it appealing to those people. So, yeah, I think if that's the one headline to leave with, that that would be that. That's great. Thank you both once again for your presentation this afternoon. Can I please ask investors not to close this session as you now be redirected to provide your feedback, which help the company better understand your views and expectations? On behalf of the management team of M WINKWORTH PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.