M Winkworth's rental business boosts profits amid challenging conditions

3rd Apr 2019 11:24

(Sharecast News) - M Winkworth's shares jumped on Wednesday after the company reported that a strong performance from its rental business resulted in profit and revenue growth, despite a 4% decline in overall sales transactions and a 6% drop in sales in London amid stretched affordability, uncertainty around Brexit and continued declines in property prices.The estate and letting agent franchisor scored profit before tax of £1.5m for 2018, up 6% compared to the year before, on a 10% increase in revenues to £6.0m as rental income rose 8% to £23.1m.Gross revenues from its franchise network meanwhile edged up to £46.5m from £46.2m, with a 6% drop in property sales revenue to £23.4m offset by a 8% rise in rentals to £23.1m.Dominic Agace, chief executive of M Winkworth, said: "We are pleased with our results for 2018, achieved in a sales market which remains testing. A weaker outcome in sales was compensated for by ongoing growth in our very successful rentals business, which now accounts for half of group revenues. After opening six new offices last year and reselling another six to new management, we expect this year to see new opportunities as some competing agencies seek to plug into to the Winkworth platform to grow their market share and others look to sell their portfolios."New franchising applicants were up 78% to 282 in 2018 and a statement from Winkworth said current market conditions have created an exciting opportunity to continue bringing in new and talented operators with successful track records.The AIM traded company had cash and cash equivalents of £2.9m at the end of the year, down from £3.6m at the same point the year before, with a dividend of 7.45p declared and paid, up from 7.25p the year before."So far this year, we are generating new franchising applicants and a pipeline for new offices broadly in-line with 2018. We expect a delay in some of the new applicants coming onboard as they await the outcome of Brexit negotiations, but we do envisage that these will come though once there is greater clarity. We will continue to invest in the digital platform and the services we provide to franchisees to support their expertise and skills with a strong central platform," said Agace.M Winkworth's shares were up 7.62% at 113.00p at 1105 BST.