M Winkworth: Growth As Expected
Edison | Apr 19, 2015 05:15AM ET
Growth as expected
M Winkwrth (LONDON:WINKM) delivered strong growth in 2015 (revenue up 11%, pre-tax profits up 14%). Central London saw 15% lower transactions, but still generated revenue growth. Non-London offices grew revenue by 21%. The group continues to expand its footprint and 35% of revenue comes from lettings/property management. It cannot be immune to election-related uncertainty, but we still expect steady progress in 2015.
2014 results
Revenue was 11.3% to £5.5m, marginally ahead of expectations. Costs were well controlled with statutory profit before tax up by 14% to £1.93m (Edison estimate £1.89m). Basic statutory EPS was up 18% to 11.8p (Edison estimate 11.7p, 2013: 10.1p) and the dividend increased by 11.3% to 5.9p. The group continues to be heavily weighted to London (just over 80% of sales) despite a 21% increase in revenues from country offices. In central London sales transactions fell 15%, but revenues grew 2% with 14% growth in lettings and a 13% increase in average fee per sale. Country office transactions rose 15% and revenues by 21%. Groupwide, lettings and management accounted for 35% of sales. Portfolio management continued with six new offices (Reading, Salisbury, Enfield, Rambsury, London Colney and Spain) and four closures (Walthamstow, Sheffield, South Woodford and India). Loans to franchisees have now exceeded £1m, generating good interest income.
2015 Outlook
Election uncertainty has been flagged by the company (and other estate agent managements) as a key uncertainty for H115. The full year outlook is clearly dependent on the election result and consensus estimates remain that house prices over the full year will show modest appreciation, with non-London prices rising faster than London. Revenue growth is likely to be more muted, although we note the lettings/management business is likely to remain robust (target contribution 50% of revenue). Additionally, two new offices have been opened so far this year (Nottingham, New Forest) with plans to open a further six.
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