M Winkworth (LSE:WINK) — Full Year Results

0:02 Good afternoon, and welcome to the M WINKWORTH PLC full year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab. Sit the right corner of your screen. Simply type in your questions and press send. The company may have been in a position to answer every question received during the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Dominic Aghay, CEO. Good afternoon to you, sir. Afternoon. I'm Dominic Aghay, CEO of WINKWORTH PLC, and

0:34 this is Andrew Niccol, CFO of WINKWORTH PLC. And it's our pleasure to be here to present, our 2023, results. So I thought I'd start by refreshing on the WINKWORTH model for those of you that aren't familiar with it. Established in 1835 as a brand, it started franchising in 1981 and was the first company in The UK to franchise. We've grown from a sort of Central London outwards and now have 98 UK franchised offices. We own three offices ourselves in London, and we have 45 of the of the 98, 56 are in London and 45 outside, predominantly in the Southeast and Southwest. As the nature nature of our our growth means there are some USP in the franchising space is the London coverage, which is fairly irreplaceable.

1:23 It was done a long time ago when costs were lower for an estate agency to open up in Central London. And our network has really grown off that, say, to markets that affiliate with London. Sellers in, for example, the likes of look to London buyers to buy their houses for premiums, and so the appeal of being WINKWORTH for a later stage estate agent type. Our aspiration really is as a business is to create a platform for independent businesses run by successful agents who've had previous careers and before taking on their own business that allows them to operate in the top three in their marketplace. We believe in that because top three in terms of market share, I should say, for sales degrees. We believe in that because that may means we believe that there's they have a business that is profitable through the cycle.

2:13 So we aspire to continually evolve our platform and combine that with meeting the sort of and bring on board the best talent in the industry in partnership with them. Some key features of the model are it's a ten plus ten year contract, so twenty years with the right to renew after ten. We don't take the leases ourselves. The leases are taken by the local franchisee, but we have options on the premises that we could exercise should we need to. The franchise agreements are personally guaranteed by the franchisee. And from a sort of accounting perspective, all sales monies are billed and paid to us directly, and then we pay out to the franchisee. So that's obviously very good for our cash flow and ensuring that we don't have significant bad debts.

3:02 So that's the bit about the model. And then into 2023 and and how that that panned out for us. 2023 was a year of, sorry, a year of dramatic change in terms of cost of finance, and that meant that transactions in The UK market dropped. The despite that, our business remained very strong with lettings being around 50% of our business, picking up large part of the slack and being the let the record lettings year we've had. We're also the largest sales and lettings agent in the area we cover. We did exit some franchisees, but that provides some opportunities for us to refranchise those areas with, new talent. We opened four new offices, and we added another one of our new offices that we own in partnership with what we call an entrepreneurial manager. So that that is a model where they receive equity in that local business in return for delivering revenue and allows us to bring tons of people into the network that may not be able to afford the cost themselves.

4:07 And finally, I think we have to acknowledge that in the commercial business, it was a very difficult market, one of the more difficult ones in the last decade or so. And so that didn't progress as we'd wished. So that's a broad overview. We'll go on into that in in further detail, but over to numbers with Andrew. Thank you very much, Dominic, and good afternoon, everybody. In terms of the headline numbers, network revenue across all the offices was 57,800,000 in the year, down 8% on 2022. Within that, sales, as Dominic has alluded to, had a tough year. They were down 20% to 27,600,000. But lettings, again, as Dominic has alluded to, had another record year. They were up to 30,200,000 for the year.

5:01 And the overall split for this year was 52% lettings, 48% sales. In terms of the WINKWORTH actual revenue that's shown in the accounts, it was flat pretty much with last year at 9,270,000. Within that, inevitably, some some

5:22 ups and downs. On the owned offices side, it was down by about 90,000 year on year. Within that, our Tooting office was off by a 125,000 impacted by the sales market. Our Crystal Palace office, on the other hand, which is sort of earlier on in its growth cycle, was up a 135,000. The Pimlico business that we acquired, and we'll talk about in a bit more detail later on, introduced £75,000 of of income before the year end. And our development and commercial business had a a tough year, and that income was 170 down versus the previous year.

6:08 On the franchising side, the 8% drop in or the drop in 8% fee income from sales took about 500,000 off our income. That was partially offset by the increase in let's, which added a 110 k. Overall, franchising was up slightly on the previous year on the back of some license fees we collected from franchisees both for early terminations and for for for new franchises being sold across. And our Asia Pacific desk returned to life, had a very strong year in comparison with the previous year, and that was up a £120,000. Cost of sales was pretty much in line year on year.

6:57 Admin expenses across the group were up by about £600,000. That was sort of 350,000 from the owned offices on the back of some increase in Crystal Palace as a result of them gearing up, increases as a result of bringing the Lumley One Pimlico business on board, and increases in respect of the development in commercial business, a lot of which was attributable to the new homes business that we launched in the year. On the franchising side, it was up £250,000 largely on the back of salary increases for staff, a general pay increase, and some catch up on some underpaid under rewarded staff from previous years, and a sort of a $50 general cost inflation impact.

7:54 We generated a £250,000 profit from the acquisition of the Pimlico business, meaning that the profit before tax for the year was very much in line with management expectations at 2,150,000. We had 4,550,000 in the bank at the end of the year, and we declared dividends up 6% versus 2022 at eleven point seven p. So we thought we'd put the slide in to show sort of the different activity of different parts of our business. As well as sales and lettings, we have different geographies that operate at different times in in different markets. So I suppose what you can see from this is on the sales side, out to London, as we would call it, was more affected in other areas. I suppose our view on that is it's an area where there is a lower affordability, and so it's more affected by the changing cost in finance.

8:52 What we did see is this didn't need significant price reductions. Really, this was a a feature that this the seller size, mortgage side is supported after reforms 2014 and the stress testing, but it did lead to lower transactions last year in that sector in the market. On the letting side, you can see the different areas. Really, the country outgrew the other areas. That's a large part due to the fact we also we tend to support the acquisitions for portfolios for franchisees in the country, which boosted the lettings revenue. It was broadly a year of two halves for lettings where it's very strong and some of the demand has abated in towards the end of the year and the start of this year while still obviously being a positive market.

9:43 So this is just to share our the breakdown of our revenues. As I said, we're sort of geographic and divisional, I suppose, revenue streams. In terms of divisional sales and lettings, we broadly inverted. So lettings grew last year sales rank, and so that the balance between the fifty two forty eight or forty six and fifty four switched. It's obviously a fantastic part of our business that we have this balance. And then again on the revenue by area, you can see the different parts of our business. The bulk coming from that Outer London area where we're obviously very well long established mature businesses.

10:29 But we have a growing section of our business, which is outside of London, what we call country markets that we envisage will continue to grow the section as that is really the focus of of supported acquisitions. So where we we help franchisees acquire further portfolios or businesses to grow their own. And Central London grew in a small manner. We expect further growth in that as the Central London market recovers.

10:59 So, really, this is a chart that I suppose is is really a pricing chart as much as much as anything. It's on this what it's showing is the number of applicants we register per property we have to sell. And, again, on the letting side, the number of tenants we register per property we have to let. So, really, it gives you a five year period, and you can see the different ebb and flow of demand, which in theory drive prices across both divisions. I suppose lettings is probably the most interesting. You know, we have seen a drop in demand from the boom years where you had 15% price increases in rental rental price increases. I think we'll see this year, particularly in London, that we won't see price increases whilst there will still be growth in the market. On the sales side, broadly, you can see that the demand dropped last year. However, q four was clearly ahead of q four twenty twenty two.

11:54 Really, last year, I suppose, was a story where there were several moments of inflation fears, and where interest rates would peak, particularly in sort of June. That took sort of three or four months for the market to settle down. Mortgages were withdrawn, mortgage were repriced. They sort of settled back down over the course of three, four months leading to picks a slight pick up towards the end. And then clearly, as of January time, there were people we saw that the the trajectory was down with interest rates. So same mortgage rates reduced then, and we saw a pickup in activity of 23% of sales agreed in the first quarter of this year versus the first quarter of last year.

12:37 In terms of of our returns to shareholders, for people who don't know about us, we pay aim to pay quarterly dividends, and we aim to pay a progressive dividend as long clearly as as as trading commit conditions permit. And I think this slide shows very clearly that that performance. The white line shows the revenue growth over the period since flotation. The bar charts show the amount of pence per share paid out in dividends, special dividends, and there was a capital reorganization in 2018. So we really wanted to articulate the different drivers and growth of our business and the routes we are to to to push revenue forward as a business. So we see this as sort of four part with a new franchising, which I suppose is the most obvious obvious one for us, which is new people approaching us, and we've worked from another agent and look want to have the business on their own. And they're looking for the support we can provide them and find a site to open a business. It also includes

13:57 agencies converting to WINKWORTH where they're looking to grow their market share. It also is franchisees opening second offices. On the assisted acquisition support panel, that is really where we work with trusted franchisees who have a track record to support them financially to acquire further businesses, in particular, let's say, portfolios to bolt into their business. The owned businesses is the section of our business where we, work with entrepreneurial managers who we we own the business, but effectively, they gain shares in that business for delivering targets. And that may be over the course of several years and includes Crystal Palace tooting and most recently Pimlico.

14:45 And portfolio management is sort of new area we're looking to, again, articulate the work we do within the business to ensure that it's a healthy and strong network and that, you know, we we generate. We're we're a very old business, and there's a great opportunity bringing in new blood in certain areas, which you can take the businesses forward, and that has a meaningful impact for us.

15:14 So we tried to articulate this in the slide, which I will leave Andrew to walk you through, to try and demonstrate the last five years of portfolio management and the sort of impact it has on on our revenue, and, hopefully, we'll do going forward. So just sort of taking the the the overall logic of the slide, there's revenue on the left hand axis and time on the bottom axis. And it's looking at progression as moving from left to right, left being 2018, right being 2023 last year. In 2018, the offices on here that we resold to new managers were generating about 7,700,000 of network revenue.

16:08 We've changed those operators, and they have improved their performance. And not only have they just improved the performance in the particular offices that they took over, they have opened additional offices as well, such that in 2023, the same group of original offices plus the new offices they'd opened were generating an additional 3,300,000 of network revenue. So it's an increase of 46% across that period. And that's a sort of a level of increase that should be as long as they continue to perform, embedded in and be increased each year as we go forward. And it's just worth saying, I suppose, this is a more pro we had a much more proactive focus on this in the last few years.

16:59 You know, we're keen to have a market for franchisees to exit, and that means, you know, from our point of view, making sure and making sure that when they, you know, do exit, wish to sell, that we get the best in class in place so that every time there is a a sale, you know, we we go forward as a business, really. And so we expect many more to join this graph over the next couple of years as we implied in our in our statements, hopefully, that will be a good driver of growth going forward. So, really, we talk about people, and and people are are the most important thing in our business, and our franchisees are clearly the most important people in our business. So we put the slide up there to give a bit of a flavor and a couple of stories, of places where we've invested in people and the results we've got out of it.

17:49 Charlie was our first entrepreneurial manager. He in Tooting, he launched it. It was doing 200,000 when he took it over. And when he left, it did 1,600,000. So he is very capable as a person. He has now decided to take the next step and will be hopefully owning two franchises himself, WINKWORTH franchises himself, which will will hopefully also benefit from as he delivers on them. And we've brought in the next entrepreneurial manager into the tutoring seat to, to to take the journey forward. Lucy, was a was from a established agency in Bath, with her partner, Matthew.

18:37 They acquired a the WINKWORTH business in Bath, we had a small part helping them to do so with small investment. They had then gone on since then to buy a lettings portfolio in Bristol, which we provided some monies towards to help them in partnership with the bank, acquire the portfolio. From revenue point of view, when Ash joined, it was a 111,000, and they currently generate 800,000 of revenue. But it is early days, and and we feel there'll be more. Our Malfourke team, Jamie and Kylie, who are sort of very much stars of the area, They we invested a small amount of money in helping them open each of their offices, and they've been a number over over four offices over since 2019, I believe, and taking revenue obviously from zero to 1,400,000.

19:34 So and have plans to go forward again. So, really, it was just to show, you know, where we believe the success we can get if we help people who are talented, who may not quite have the full funds themselves, but where we can help, we can gain great gains. And and part of that is, you know, we are entering to very long term relationship, partnerships with them of twenty years. You know? So the money we put in is obviously there's plenty of time for that to come back and and pay in dividends over the years. So this slide, this shows the ebb and flow of the franchise network over the last few years or since 2017. As you can see, you know, we, you know, growth, real session closures.

20:23 You know, it's all part really of us, of what we want is a healthy and strong network. So we want you know, we know that as a business, if we have offices that are perhaps under formula struggling, that does have a knock on effect on our network. It also has a knock on effect on our future growth because, clearly, if we open a seek to open an office beside the one that is not not trading as well as perhaps it could be, clearly, the position is why would we open with WINKWORTH if the neighbor is not not operating. So to have a strong network, we're happy to walk away from from certain markets. And there's always different story behind each each each situation. We're happy to walk away from from different markets. But it'd be that we're confident we can come back, and we can go and find find the right people to to push on the next time.

21:20 So, really, this is a chart on the owned businesses where she talked about, so Tutu, Crystal Palace, Pimlico, and development and commercial. And, hopefully, it shows the trajectory. Last year, it moved backwards slightly. Really, being frankly, it was due to to the commercial market development of commercial business. It was a very difficult market. I believe that, you know, going forward, it'll be a great asset to this business. And as the markets improve, we're clearly most affected by interest rate rises as they invest because it's investment only product.

21:58 In terms of just the others, market share, to sort of fill everyone in. Crystal Palace was, end of the year, fourth in this local market. Obviously, our ambition is top three. So far this year, it is second, pretty close to first. Tooting, with the changes, is second was second last year. Hopefully, we'll get it back to first. Again, it's in the top three. And Pimnico is very early days, but the signs are are hopefully pretty promising. So we are optimistic about the future.

22:30 So we need to put this in to to to talk about and just acknowledge the with part acknowledge that we're, you know, we're evolving the business and the platform, and part of that is digital. Part of that is digital infrastructure, Andrew will talk about, and part of that is digital marketing. And and, you know, we normally put up a slide, which I suppose doesn't change much, so so we don't continue to put it up. But if you type in a state agent in for them or state in in, perhaps, there will be we should come up in the top three of that search, which delivers a huge amount of leads

23:08 to our website and then onto the franchisees as as valuations and, hopefully, instructions to sell. But social media is also a growing importance, so we thought we'd just share that. We have 90 across our network, 90,000 followers. It is growing. We're working on sort of new fun initiatives like we have a a driver who we supported since Formula four. It's not just us. It's us in the network, which is surprisingly a good way of linking without being overly expensive our brand to another brand, an industry that we suppose is complementary for being a prime business and also having a link to an influencer that can help support our social media as well as, you know, events at the Williams factory and tickets to Silverstone through social media for our franchisees.

24:04 So this is more just some statistics from '28, which has seemed to be the industry source at the moment. It shows that in our the area we cover, we're number one for sales agreed, number one for let's agreed. And and and the third one, which is, I suppose, more nuanced, but really what it shows is the nature of WINKWORTH. So it's about efficiency. So we

24:27 sell, you know, more than everyone by one across London of what we list. So we set expectations, hopefully, as a business, and we deliver on those expectations. So that means that we're generating long term goodwill within our local communities rather than perhaps short term gains. So so I sort of put that up as a as a point of interest.

24:55 As Dominic has said, it's not just the people. The people are very, very important, but the platforms that they're operating from and through are also very, very important. And we have a vision that we will, as a group, have strong local, me, strong local agents who are properly embedded into their local areas, who are supported by very, very strong effective tech. It's a way of future proofing the business and a way of making sure that the offices can be as competitive as they are able.

25:41 We're continuing to invest in getting our data into one source from all the different areas that we use. We've been able to link up our CRM system with our website so we can see a sort of, for want of a better word, cradle to grave transition between people linking up to the website and coming through ultimately to sell or or or or lease their properties through WINKWORTH. With the data in the one place, we can work out how best to use it, and that's the next stage of the iteration. It'll take time to really come to fruition, but it's a sort of a a journey that we're on that we'll be investing in over the years to come. And that will support franchisees, enable them to be successful, and it'll help us as the franchisor get us of a network wide view about things and and improve our decision making as well.

26:46 In terms of the sort of specifics about adding value to the franchisees, this is just one example of sort of a tangible demonstration of the investment into the digital side of the business in action. The this data is provided to offices on a monthly basis and has at a glance the key stats for each individual office. It's basically a tool for agents going out on valuations to be able to be absolutely up to date and provide part of the story and convince people to go with WINKWORTH.

27:34 It also, at the sort of franchisor level, gives us an overall view of what's working, what's not working, and what can be improved. The website is absolutely critical to this. We've invested a lot over the years. WINKWORTH was, I think, the first estate agency to build its own website back in the nineteen nineties, and we've taken it on from there. We've invested, as I say, in the platform. We went in twenty nineteen, twenty twenty to a new platform that's enabled us to take things to a increased level. The number of leads generated, valuation leads in particular generated by the site, has increased over that period.

28:24 And we get about five to 600 valuation leads a month through the website, about 30% of leads into the business on that basis. The new website, it launched at the time of the pandemic pretty much. So sort of twenty twenty, twenty twenty one pandemic and coming out of pandemic are a bit of an anomaly. But I think 2022 and 2023 are heading back to more normal levels, and you'll see that they are at a step change from where we were back in 2019 pre pandemic. So I suppose to in summary, it's to look at where we've been last year and where we're going.

29:14 I've gone through last year, I suppose. We've remained strong business. Our lettings performed a record year. We continue to pay a progressive dividend. Our profit before taxation was down, but we felt we outperformed the general sales market. We kept a clean balance sheet. We did open four new offices, and and so we may and we made progress on our strategy of bringing people on and and and working towards having the best possible people in the best possible seats throughout our So going forward in 2024, you know, the aim for us these these are ongoing aims, clearly. The aspiration for us is to be the first option for agents business operating in prime markets.

30:00 We want to continue make sure that we continue to deliver our end. So we wanna be have a platform that that enables our franchisees to to be in the top three in terms of market share within their area. But we are a people led business, and and we recognize that. And we spend, you know, a vast amount of our our efforts to ensure that we get the right people in and and and and proactively go and find them where they they may not have applied. Our target is we target new have a new equity participation office on place. We're looking forward to those entrepreneurial managers having shares in those businesses, and we're looking forward to their growth as they go through the development stage to maturity and and hopefully significant profit contributors.

30:46 We target six new franchises each year. We are you know, that is driven by the quality of the people we meet and and the markets that that they're looking to work with and whether they affiliate with our business. We seek to seek to build on the established network we have in a complementary manner. We see Central London improving, which we said we boost that part of the pie chart. And, actually, this year, think some of the highlights is is is is London has perhaps outperformed, which obviously places us well with 75% of our revenue coming from from the London markets. And finally, balance, you know, and balance sheet strength positions us well. So we we, you know, have the funds we feel to to make the move to to to execute the strategy or to execute to deliver revenue going forward.

31:42 So I think that's that's our presentation. And, hopefully, there well, look, I look forward to answering some questions in a bit if if there are any questions you have. But but I hope that was a bit of interest. Perfect. Dominic, Andrew, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just for the company to take a few moments to view those questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Dominic, Andrew, as you can see, we have received a number of questions throughout today's presentation. If I could just hand back to you just to read out those questions and give responses where it is appropriate to do so. I'll pick up from you both at the end. Sure. Perfect. So that's so the first question we had, I will read out. Forgive me if I yeah. My reading.

32:37 Sorry. Okay. The furthest North franchisees are currently spread is Northampton. Is this by choice, or is that because no suitable franchisees have come forward? Crystal Palace and Tooting have demonstrated over a period of time the shared equity approach has been beneficial to both franchisee and shareholders. Appreciate regional hubs have expanded with financial assistance, but still no new shared equity recruits. The current market has encouraged many entrepreneurial agents to go solo. Many have joined the eXp UK network where we expect to see some more shared equity venues, to improve revenue. And if not, why not? The regional hubs have been successful. Knowledge has expanded rapidly with healthy sales inventories. Always a clear and present danger that the urge to have one's own name above the floor the door outweighs the benefits of being passed the WINKWORTH family that can't be helped. One of course way to head this off is to invite those high performers onto the board, share options, etcetera, to keep them fully vested, yet there's a singular lack of representation, the top performing franchisees on the board or on a share register with sizable holdings. Why is that?

33:41 So I will to sort of try and break that down into into a couple of sections and forgive me if I miss miss some of it. But, you know, in terms of expansion and where we go, I hope that can cost it. We're we're very much guided by talent. You know, we have talent and geographical fit, I suppose, the the big drivers for us, and that will guide us. We'd like our business to grow, as I said, in a sort of lily pad manner so that each one has the best chance of benefiting from previous ones', goodwill. In terms of the entrepreneurial partnerships, we're actually looking forward to them having shares. I said, Charlie, who we had a little, picture of earlier, you know, he he delivered that journey. It's worked out fantastically well for us. He's received some funds for selling those shares back to us and now is looking to own two WINKWORTH franchises themselves. So in some ways, that's the perfect story of of for us, of a journey bringing talent in who perhaps didn't have the funds and now has the funds and and and is going forward. So we're very aware of that.

34:38 We do want you know, people are very invested in, you know, these their own businesses locally, and we believe that is where the incentive should be, particularly with our owned offices. Their their shares in in those owned offices is is where they're gonna earn their monies and where their whole focus should be. So so we do feel that there is significant rewards there. You know? And I think the other part, you know, we're keen to we are keen to offer get talent into all parts of our business. We we have you know, South London has been where new talent has come in, you know, where other opportunities perhaps for a franchisee exiting comes in. We'll work very hard to ensure we get the best in class in there. And and if that needs, you know, help on our part to get to get them in, then then we'll do so because the benefits are so significant over such a long time.

35:27 And then in terms of sort of, you know, the the feedback loop, I suppose, we do have, you know, picking one or one or the other to be on on a board. It doesn't seem right. We do have forums, multiple forums, where we engage monthly with the talent within our industry, and we do that to get feedback on any of the issues of the day. So we we make sure we integrate their view into our our business decisions and our strategy going forward. So I suppose I feel we have the setup at the moment and the commitment through the local ownership of shares that that will secure the talent talent going forward. I hope that hope that covers it. And then next question. Foxen's, they claimed sales market share growth in q one. What is your view on this with respect to competitive pressure, or is this just noise in one quarter?

36:23 I yes. I'm sure I'm sure I don't know for myself. I mean, if they said it, they obviously obviously did. I think we're I was we're a different type of business in in many ways, and I suppose we're in London, we're very long established with goodwill in many areas. And so I I think, you know, in some ways, it's it's positive for us because the more challenges there are for independent businesses, the more it gives us talent. So, you know, there was a period of time where there were Purplebricks when they launched. You know, they were actually a sort of feeder of franchisees to us because people wanted a future proof of their business and have the support of of us to be competitive. So, you know, we look at all these things as as as opportunities, and I suppose we we back ourselves as as mature and established agents in London to to to meet them.

37:21 Next question is, you mentioned in the RNS final results that there's a big problem in Central London of Airbnb versus Letting. Can you expand on this in detail the situation? As you see it, legislation which has been enacted in other universities, Airbnb is unlikely to come here, in my opinion. So I will carry out by saying this is, I think, the chair chairman's statement. So I will try and clarify the the thinking behind it all. I think the yeah. I mean, it it is Airbnb and short term rentals, I suppose, across The UK is is a threat to the to long term rental market because people are looking to it for greater returns, and in particular, in London where the yields are lower. You know, to get a greater yield, people people were turning to that market. So it is a threat for long term renting stock availability.

38:10 And I think I think that was what he was conveying. Clearly, I think there are some there's lots of legislation we looked at around it to ensure that, you know, there is a healthy short term rental market for those international businessmen and those that want to come and visit London without being, you know, competing directly, not taking it from the from the long term rental market. So I think he was looking at that as a sort of industry challenge and, you know, because of Central London is the most popular internationally, most significant there. So, hopefully, that that answers that. And then this might be one for Andrew. Gross franchisee income per branch was circa $5.80 for 2023.

38:56 What is the high low range of gross income per branch within the network, and what is the level management considered branch to be underperforming? Would be very helpful if management formally disclose gross franchisee income per branch's KPI so shareholders can monitor the board's plans to revitalize growth ambition within network. I suppose I'll I mean, I can start on that and then and and say, it it varies hugely what is acceptable or not. If you're if you're running a business in Dartmouth, you know, it is a very low cost but no revenue business. If you're running one in in in Central London or or these areas, prime prime areas in London, they're they are, you know, expensive but have high high revenue potential. So to to average it out is always it's always difficult one because it doesn't really reflect either, I suppose, is is is is the cop out to that one. But I but I think we can see what we can do in terms of transparency on that.

39:51 Part of the reasons why we're investing in London or the entrepreneurial managers is because we're selecting our markets based on the analysis of the potential of those markets. And and we do that because we wanna make we understand that, you know, to have a investor as well as a franchisee, you need to have a higher revenue market to make room for both. And so, again, they they've they've come into site in category, London generally has a higher revenue per outlet potential than perhaps other markets. Clearly, when you get to to sort of other cities, it it's probably comparable, but the fees quite aren't quite as high. I hope that covers it. I think I yes. One size, unfortunately, doesn't fit all. It's something we do look at, but there's not one key metric that we could apply to all offices fairly, really.

40:52 I think I think the other thing is here now. I suppose that's why we look at market share per area, really, because that's fairer if you're sort of within the three of your area, then then, you know, that is generally speaking, there might be some exceptions, you know, a sustainable place to be. And so that's why it's it's when we look at that, but that could be very different revenue in in in, as I say, this sort of a Dartmouth to a to a Chelsea. And then how many company controlled offices would WINKWORTH ideally like to own in, say, five years' time? Two teams successful, five times in purchase value of office at one minute plus. Several more tutoring like investments, and in theory, make more of a positive difference to WINKWORTH's current 23 market cap than several more conventional franchise offices.

41:44 I think the answer to that is the agenda we started with with these offices is to bring people in that are really good at what they do, who don't have the money. And, you know, we are a franchise business, and, you know, the better the people we have, the better our 8%. And and we we want to maintain our model as a franchise business. We do see where opportunities done come up, and we have done the analysis on the markets, and we have the talent accessible opportunities to do this agenda. But we're also very wary that, you know, we there is a development cycle for each office, and it probably is three years. We what we're doing is is taking a business that is not in in top three, perhaps lower down the the level, and we're investing in it with the right people and resources to put it in the top three. And and and that takes time to feed through.

42:35 So so we don't want too many in a development cycle phase or exposed to the ups and downs of the market to say when we feel they're established in that top three, we feel that they're they're through us they're through the cycle business. So that guides us. We don't have ambition at this point to have. I suppose we would look at another one once we've developed, you know, once we're sure that, you know, the Crystal Palace is is delivering for this year and is off and running and and then we might do, but then we would also look to to probably exit one. So, you know, the game is not to be long term owners of businesses. It is to bring the talent and boost revenue opportunities from key markets where there are high revenue opportunities. And then and then, you know, let once you've got the 8% going for twenty years, then we can move our resources to the next place.

43:26 That's actually right. Next question. How has the digital investment benefited the group? Has this impacted and enhanced the in local markets? Hopefully, Benjie, the element of the presentation on the digital side has has sort of covered off that to a large degree. The top performing offices use the website very, very hard to boost their business. It generates leads for them. They are able to go out and be very competitive when they're on their their valuation visits to potential customers.

44:17 I think the, you know, the data and and management and marketing of data is increasingly important for our franchisees. And so we're delivering the tools to to offer, you know, to offer them, you know, sell more properties in one area is a great thing to sell a client. There there are various other things and and providing them that they can also give give some easy visibility of their business to understand how they can how they can improve it if they need to. So but we do do it in conjunction and to make sure it is useful rather than proceed. Interest for the year was 88,000, which does not seem a lot with 4 to 5,000,000 cash and naught 600,000 loans to franchisees. Why not place some of the cash in short term deposits paying greater interest?

45:05 Also, what interest rate are the franchisees paying on their loans? So to take the first part of the question, we have actually put funds on longer term deposit towards the back end of the year, and that's something we're monitoring. We're balancing the our ability to lock up cash for longer periods with our ability to actually be able to deploy those funds into building the business as we've been talking about during the presentation, which might impact our ability to earn interest in the short term, but will actually significantly improve the performance of the business in the longer in the longer term.

45:51 Interest rates for the franchisee loans tend to be a certain amount over base. It fluctuates depending on where the the business is based and and what we want to do for certain businesses. We will be very competitive on the rates. For others, it'll be very similar to bank rates. So Interest received 80,000. Does that imply the average cash balance in the year was much lower than the year end than at the year end? It does fluctuate during the year, and, typically, the cash does build up towards the back end of the year.

46:40 That's a function, John W, of the nature of our business where a lot of the effort, the activity comes in q three, which will determine very much how the year pans out and into q four. On average, how many employees does each franchise do you have? Again, huge variation. You know, fully full blooded is to sales manager, lettings manager, two negotiators each, property manager, lettings administrator, sales administrator. And at the smaller end, you know, in a small village, it will be probably a team of two or three. So it it does vary depending on the potential of the market, suppose, and and the decision franchisee, how much they wish to push it.

47:39 Can you please provide insight into the company's long term strategies and initiatives aimed at addressing the ongoing trend of increasing admin cost per franchised office? The company incurs started around 2015. I suppose the I think if I get that right, that's the owned office per franchised office the company incurs. Is that owned office or franchised office? Is the company not to judge? This will be trend will increase our own cost per franchise. We don't have actual visibility of the costs per franchised office, but I guess there is always an ongoing competitiveness to invest in one's business. We can where where we're able, we can do offer effectively discounted rates. So we, as the franchisor, will sign up to various providers and be able to pass on the savings as a result of our our sort of scale onto franchisees where appropriate.

48:45 With choosing, now the most evasive equity aligned owner has moved on, how can you ensure the subsequent employee agent continues to save momentum without the equity carrot? So the simple answer is is we we we we don't. So the lettings manager there is an important part of the business. He's also, whilst not getting the headlines, delivered a fantastic lettings business that's growing significantly or three three plus times. So, you know, she'll be receiving some extra this year. And, obviously, the new person in the hot seat on the sales side, that is the goal. You know, we have a view that that that the management in these businesses can grow up to 10 plus percent. So so there was plenty for people to go to go for who deliver deliver the revenue, really.

49:38 I think that's all we've got at the moment, isn't it? Yeah. Perfect. Dominic, Andrea, just jump in there, thank you for answering those questions from investors. Of course, the company can review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which I is particularly important to you both, Dominic, could I just ask you for a few closing comments? Yeah. Look. Thank thank you for joining us. Hopefully, it's we've tried to articulate different parts of our business. You know, we feel we're we've got a strong strategy with multiple routes, and and we're gonna sort of push forward there. And and, hopefully, when you join us next time, we'll be able to kind of keep you up with the evolution and and successes it delivers. So so thank you. That's great. Dominic, Andrew, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

50:33 This won't take a few moments to complete, but some shall be greatly valued by the company. On behalf of the management team of M WINKWORTH PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.