M Winkworth PLC ($WINK)

Good afternoon, and welcome to the M Winkworth plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Dominic Agace, CEO. Good afternoon, sir.

Hi. I'm Dominic Agace, CEO of M Winkworth. And this is Andrew Nicol, CFO of M Winkworth plc. I'm delighted to be here to talk you through 2025 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 were established in 1835, 190 years old and celebrated that last year. We have 103 offices. We have 2 owned offices, 46 in the U.K., and 59 offices in London. That bigger -- 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 3 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 updated 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 10 plus 10 years personally guaranteed by the franchisee.

So turning to 2025 and the operational overview. We had first half of 2025 was incredibly strong, driven by the stamp duty changing in April. So there was a surge of activity in Q1, which saw activity come through, which somewhat faded in the second half as we move towards the uncertainty of the Autumn statement. We saw lettings growth last year. And in fact, it 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 the number of properties exchanged in 2025. We opened 4 new offices. We refranchised 7 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 them to help them with that turnaround. We increased investment in consultancy to support the system development of the business and looking at automation of the franchising accounts. And we sold our Crystal Palace office to neighboring franchisee. In terms of the actual numbers to put a bit of flesh on those bones, network revenue for the year at GBP 68.7 million was up 6% on 2024. The sales split was 52-48 with sales slightly up on the previous year. In terms of the split between lettings and sales revenue, lettings revenue for the year was GBP 32.9 million, and that was 3% up on the GBP 32 million in 2024, and it was 3% up at the half year as well. On the sales side, overall for the year at GBP 35.8 million, it was 10% up on 2024. It had been 27% up at the half year. So it reflects Dominic's earlier comments about the slowing in the second half of the year. In terms of Winkworth's actual revenue, it was down 1% at GBP 10.74 million. A couple of reasons for that. On the franchising business, which was up about GBP 150,000 year-on-year, the sales and lettings revenue was up by about GBP 300,000 on the back of the strong lettings and sales performance in the year. Our ancillary fees were up by about GBP 100,000 or so, where the revenue had dropped year-on-year was in what we call the assignment and license fees and our China desk, which had -- which both had slower years than in 2025 than in 2024. On the owned offices side, revenue was down by about GBP 200,000, 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 GBP 550,000 year-on-year. Two elements to that. There were one-off costs of about GBP 300,000 and ongoing increases of about GBP 250,000, which would be equivalent to about a 4% year-on-year increase. In terms of the one-off costs, Dominic has already alluded to the GBP 100,000 that we invested in marketing in Prime Central London. We spent about GBP 70,000 around office move, the head office move. Two elements to that, the actual move costs, but also an element of double rent, which clearly won't be repeated. We had a GBP 100,000 increase on the back of benefits and salary increases, and we spent about GBP 40,000 on consultants on the automation points that Dominic has mentioned previously. With the GBP 300,000 profit on the sale of the Crystal Palace business, the net effect of that was that, the profit before tax was down 11% to GBP 2.11 million. The owned offices contributed GBP 3.25 million, as I say, down slightly on the previous year. Cash at the year-end was a healthy GBP 3.9 million. There's no debt, and we paid ordinary dividends in the year -- declared ordinary dividend in the year of 13.2p, which was 7% up on the previous year.

So the next slide, we talked about the different parts of the business and the performance throughout 2025. I suppose you can see the notable drops were in Central London, unfortunately particularly affected one by London station changing, affecting buyer demand at the higher end. And clearly, the Autumn statement where there was lots of rumors of wealth taxation, which caused people to pause. So it was a poor year for Central London as a result of that. The sort of positive thing looking at 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 said. And the core business, which is, I suppose, the outer London and increasing country markets performed very strongly from a sales perspective and solidly from a lettings perspective. So looking at the breakdown of the network revenue. Those of you who have followed us before will see this as a fairly familiar chart. We're broadly 50-50. Lettings 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 and operate successfully in both marketplaces. In terms of the sort of 3 areas we divide our business into, you can see the division here. Ultimately, one of the areas that we look at is Central London, which traditionally was at 24%. It's had a difficult 10 years, and we would expect that to grow in due course as we've seen prices drop in that area and value, so opportunities increase. So this slide really talks about the demand in 2025 versus prior years. Why this is of interest is really it shows -- it should show whether the price is going up or down, a number of applicants per property to buy, a number of tenants per property to let through our database. I think what you can see is that 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 that on school fees or build costs of developing how this people brought as well as mortgages coming up of their fixed terms. So that led to 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. 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 2-bedroom flat for young renters in cities. It also shows really that there has been some gains. I mean there's been 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 the end of last year and coming into this year.

In terms of our dividends, this slide shows the progressive dividends that we pay as a company or we aim to pay as a company. We pay quarterly dividends unlike most of our peers, and we look to, as I said, pay progressive dividends. The blocks are the actual dividends and then the shaded blocks are showing the couple of special dividends that we paid since 2009 and the capital reorganization that took place in 2018. But I think 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 1st of January 2017, it had generated by the end of 2025, a return of 189%. And that's a simple total return, not looking at the reinvestment of dividends.

So that's sort of just a fresh driver of growth. We see these really as 4 areas. I mean, we look at it as our business is based on getting the best possible people into it, the talented state agents and then supporting them to grow. There is 2 ways and following them, and that will define the sort of 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 sort of grown through new offices in new locations with new talent. This is existing estate agents converting to Winkworth and existing franchisees expanding into new offices. As you can see in 2025, we had a number of all London-based. Out of the 4, 3 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 7. This is part of what we call portfolio management. We are a very old business and we are franchising since 1981. And so there's a certain element of retirement. And there in that moment, there's an opportunity. If we can head hunt and find the right person to put in that office, then we can boost our returns significantly not only in that office, but in further offices, further afield that we'll talk about in the future slides. This year is the pipeline of 9. We've actually 4 have opened, again, which we'll discuss in a second course is we've got one further new office in the pipeline with 4 resales agreed. So this model is part of the menu of options for talent, just to sort of refresh those out there. There's sort of 2 ways to 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 situation that person doesn't have the funds to do it. And so we've acquired the business and then provided a share incentive for delivering performance. That is a reference, Tooting. 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. And then the development commercial investments, which 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 this part of our business. So we sold off Crystal Palace, which is an office we took over for a non-renewal situation. We've grown the revenue significantly from around GBP 200,000 to about GBP 850,000, but it wasn't profitable. And therefore, we felt that it's time to move it on to a neighboring franchisee can maintain the GBP 0.08 for us per annum and we benefit from having a new office into their structure. So we exited that one. DCI, we felt that it was a bit lumpy for -- 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 our franchisee from that business but without the costs ourselves. So really what that leaves us with is 2 really good businesses. We shaped this year ahead of -- since we had -- where they last year, run by good operators that were incentivized and should be earning their shares, their stakes going forward. So that is a sort of tighter proposition going into 2026 and beyond. So next, this is our 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 to Leamington Spa. He started incredibly well. He has #1 in market share for the last 6 months. He's only been there since 2024, which is a great fleet. So he has acquired the Peter Clarke business, which is 4 offices: Stratford-upon-Avon, Wellesbourne, Chipping Campden and Shipston-on-Stour. These are some neighboring areas with a very good lettings management business underneath it. It will provide us -- we provide assisted acquisition of around GBP 500,000 to it, and it provides us a GBP 200,000 a year franchise fee going forward. He not only has done very well for us and Leamington Spa, but it's sort of a known interest for us having been a bit of a homegrown talent, having worked in our highly successful Islington office in the previous incarnation at Winkworth. So this slide tries to explain the portfolio management element of our business. So really, this sort of follows a story where good people come on board, good things happen. And not only do they boost revenue in the offices they come on board in quite quickly if they have the office and become retired, but obviously, they then go on to open other offices and that then generates further income. And not only that, they then actually -- which isn't on the slide, they boost their neighbors, and there's a general network effect of sort of dropping these gems into the network and watching the good that can happen. So this really tries to portray the story since 2018 of where we've done that. We look to invest to make this happen now because, again, if it's the right person who're signing 10 plus 10-year contracts, that investment is well worth it. 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 opened in 2018 generated about GBP 9 million of network revenue. By 2025, the offices that were open generated GBP 18 million. 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.

Yes. I think it's sort of -- for us, it's a way of deploying our cash in a very -- 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 sort of -- they're more [indiscernible] So it is hopefully on the lower risk element of generating growth. So really the next slide conveys hopefully what this does. So this shows, our ambition is that we're in the top 3 in each marketplace. And we set up our business to provide the platform for that to happen and we get the people in who can then deliver on that platform. And this gives you a long-term picture of that happening, particularly in London really where 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 run their course and looking for the golf course to introduce new bloods and a bit of that to some of them. So -- so that's been going on over the last 9 years. And in 2016, there were 9 in the top 3. This is by Rightmove in terms of market share for sales agreed in their respective areas. There are 9 in our -- of our London network. And in 2025, there are 26 of our London network in that top 3 by market share. Overall, in the sort of general Winkworth network in 2016, there were 13, and 2025, there are 36. So plenty more to do, but that, I suppose, shows the improving quality of the network, not just the revenue growth, but in market share positions, it's getting stronger on an individual office basis, hopefully, every year. So really just talk about operating area performance. This is really again to kind of share a bit of good news as the model, this is 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 the second 9 that makes sense in the area. So we're more likely to 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 instruction or new listing of a property to exchange, the top 10 estate agents in the operating area. So ultimately, that's the job, and we are the best in our area of doing it, which is getting clients' houses sold, which shows the effectiveness of our franchise model in a competitive marketplace. So then just to touch on digital evolution of the business. As we sort of probably talked about, we always believe in evolving always, and digital is an important part of that and investment in digital. We people -- we are led by the people and are very much a people business and those relationships with our clients are utmost, and we seek to support those individuals, there's talented people in our network with good technology where applicable and where it doesn't get in the way of those relationships. So broadly, the new area is artificial intelligence and adapting to that to allow us to embed it in our systems where it is relevant and where it can add value and where franchisees can benefit from it. So Central to that is the website, which we will sort of talk about in the next slide, but that is the sort of engine, if you like, of the Winkworth network. And there was a big reboot going on. We're investing more than ever before. We need to change it to become more searchable, more AI friendly to facilitate systems being put on to that are useful and to allow to be searched through AI more easily, which is important obviously ultimately to deliver more valuations for our offices. So that's one of the sort of central bits of work that's going on this year. Beyond that, we obviously do have a tech digital stack for offices with some different providers provide different solutions for areas that we update to ensure they have the tools they need to make their lives more simple and they're 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. I said really, this is the engine room of the network. It delivers -- what's great to see on this one is 2020 was, I see, it's a sort of boom year for leads. And we said last year was certainly not a boom year, but the leads we're generating in our network are increasing and have surpassed that. So we're talking about 6,500 valuations a year going to that network, which is around 60 an office, which obviously very much validates any 8% fee if you sort of say that they would sell 50% to 60% of those 30 or 40 properties being sold, generating revenue from them coming from the Winkworth website. So that remains a central focus for our investment. So really looking at 2025 and looking to '26 and beyond, we saw a very strong first half of the year, slightly distorted by stamp tax changes. As if, we were hurt by the uncertainty ahead of the Autumn statement, which perhaps came earlier and shut the year down earlier than expected, although perhaps not being quite as dramatic as some of the news flow suggested. But despite all that, we continue to -- as we always do through the market cycles is continue to execute our plan. It's a very simple plan of getting the best people we can on board 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 competitive in a place where those good people want to come. 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 if you have any questions, it would be great to answer them.

Thank you both for updating investors today. [Operator Instructions] And for your reference, recording of today's presentation will be available on the Investor Meet 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.

Thank you very much indeed. First question, congratulations on the Peter Clarke deal. How did this come about? And can we expect more similar transactions?

Yes. So 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 the needs 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. It is something that we are -- we do make sure that we look carefully at that blend of the right franchisee and the right position at the right time to make the acquisition as well as the acquisition being there.

The first half of 2025 was very strong in sales. Does this make H1 2025 comparison difficult?

Yes. Yes, it probably will do the stamp duty. I mean, I think, it started pretty well in 2026. 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 that's what we expect. It will be a different comparison. But obviously, we have -- it will be a different year overall 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 think -- I mean, this year has started pretty well. We're now in a sort of -- I suppose, what's going on externally is slightly out of our control and property markets continues to be holding up pretty well. I suppose there is a big factor about how long it goes on for. And I suppose people are perhaps looking at that and thinking that it's -- there might be a bit of uncertainty out there and therefore, our share price is adjusted. We're just -- the model we are is, I think, a very strong model. It's been through all sorts of cycles. We continue with our goal of investing through those cycles to get the right people on board and the rest will follow. So once that -- if we get the right people on board, the revenue will follow and then the share price will follow that.

What are management's -- sorry, 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 100% franchisee operation?

Yes. So I think it's always been this menu, a menu of options. So we just -- there are different tools to deploy for different situations. And I think we see it as one of those tools to deploy. I say, Crystal Palace came back through a non-renewal actually. So it was a failed situation that either we would have lost that office or we could turn it around. And yes, it was -- it didn't make the profits along the way, but we didn't lose any money on it, and we've got a significantly boosted revenue and a successful office going forward. I think everything is different. We are never -- we're always going to stay true to our franchising model as first and foremost, and not be carried away and actually or things that would override that because we understand the business we are, which is 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 improve the quality of network, improve, therefore, the standard of the network and the future prospects. Our franchisees encouraged to buy shares and the companies keep invested. If not, why not? Yes, I think a number of franchisees, do you have shares in the company? I suppose we don't. As a public company, they're very aware of our results that we share with them, and that's up to them to certain, whether they wish to invest in the company or not. How do you ensure quality -- 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. If we got the right person start, then everything follows. Clearly, that won't happen 100% of the time, because nothing is over 100%. And in those situations, 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 met. And if needs be, we'll address it. I suppose that has happened over the years as well. So I think that's part of what our skill set as a management team alongside the COO is of doing that and ensuring that we maintain those standards.

What is your appetite for deploying your cash balance toward acquisitions, this versus returning capital?

I think the -- we want to pay a progressive dividend. I guess some more monies as much as me. And I -- we do want to do acquisitions for the right deal, I say that's the cadence.

The part 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 price. There is a benefit, we think, to having a quality people in the network who are delivering in their local areas. What is the likely impact of the renters rights bill on lettings in 2026?

I think the impact has 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 ongoing consolidation of the sector. But really, that is -- it will adjust, and I think we're sort of in a peak moment now, seeing property management revenue, as I showed in the slide earlier, sort of overcome a decline in lettings revenue last year as those landlords look to have their properties managed to deal with the new legislation and that outweighs perhaps those that might be exiting the sector. One of the big challenges, I think you adjust the legislation. I think one of the challenges is the taxation changes in the by sector that meant that there's less lower leverage for -- less leverage is possible for investor. So it's less open to some. So I think that's probably a factor in a slightly reduced sector to years gone by, but I think it will stabilize post the legislation come into place.

Thanks for a candid presentation. Since the Iran war started, have the people who left the U.K. during the last couple of years, are they returning back to the U.K.? What's been your experience? Probably a bit too early to say.

Yes. I think there's been a lot of -- I mean, there's been stories of lots of 100,000 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 a huge amount of people coming back to U.K. now. And I suppose that's one of the big questions for Prime Central London is what's making sure it has international appeal, because that's sort of what's been missing for the last 10 years.

Do you expect to see further consolidation in the sector after the moves made by Foxton's and TPFG?

I think that the consolidation will slow actually. I think there's been -- I think there are people there always -- there's several big agencies and 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 there'll be slightly less large -- with a slightly flatter lettings revenue rather than the automatic growth of old, and I think there'll be less aggregators looking to acquire big premiums those books, which perhaps opens a bit more for us to convert some to Winkworth to grow the market share and to acquire those hopefully values that we feel are slightly more appropriate.

What has to happen for Greater London transactions to move significantly beyond GBP 73,000 a year?

That's the magic question. I think it was obviously significantly higher. I think it was GBP 123,000 in 2008. I think that's about right. So the question is where 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 2 things have affected it. And I think affordability has been working through those changes. So, say, [indiscernible] the most acute version, but really, there hasn't been much price growth for a long time in London. As people have -- prices got to the point where they had to be worked through. So rather than crashing, they 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, can I please just ask you for a few closing comments?

Yes, sure. I think, I said 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 really is our primary focus. And to do that, we invest in our business to make it appealing to those people. So yes, I think if that's the one headline to leave with, 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'll now be automatically 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.