M Winkworth (LSE:WINK) — Interim results for the six months ended 30 June 2022

0:02 Good morning, and welcome to the M WINKWORTH PLC interim results for the six month ended 06/30/2022 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 in the right hand corner of your screen. Just click q and a, scroll to the bottom, type your question, press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Andrew Nickel, CFO and Dominic Agass, CEO.

0:33 Very good morning to you. Morning. It's a pleasure to be here to talk through the results of the first half of twenty twenty two. So on that note, I will turn to slide three. So I thought it best to start with a sort of intro for those who don't know what the WINKWORTH system, the franchise model we run. Just so sort of a couple of bullet points on that, really. The model is that we have a 103 offices, six fifty offices in London. They are all independently owned independently owned and operated. Under that model, each franchisee takes their own lease, and they sign a contract for ten plus ten years with us. To secure our rights on that lease, we have an option on every premises. So the event the franchisee leaves, we can continue to trade from that site.

1:23 We the sort of main feature of WINKWORTH, so the USP versus other franchise models or point of really, is the London coverage. So because we're I think we were the first franchise in 1981, we sort of set up in Central London and moved out. And that is built built a a network that's fairly irreplaceable. Certainly from a franchise perspective due to the cost of entry, we're trying to set up and stay in Central London these days. Obviously, in those days, it was a bit cheaper. That really sort of separates us out in a number of ways. So it separates us out because it puts us into the prime markets and our brands operate in the middle to upper end. And it also delivers delivers our growth. So we grow with areas that affiliate with London. Lots of people in country markets such as Winchester or the like look to London buyers to sell the house that's important as a state agent to have that link. And, obviously, they can plug into our network of 58 London offices and offer that to their sellers. So it helps to find our market positioning and also helps us define our growth, which is really areas influenced by London.

2:39 The other important thing to say in the model is that the all the billing is done through us centrally. So we collect the money directly from the sisters and pay out to the franchisees once a week, deducting our 8% or any other costs that may arise, which is obviously good for ensuring there are no bad debts.

2:59 A little bit about businesses on this slide. We're second in terms of sales agreed in London in the first half of twenty twenty two. In the areas we cover, we sell more properties than than anyone else. We're establishing 35. And in brand recognition, we have a very high brand recognition. So that's a little bit about us. I suppose in terms of the periods that we've been trading the first half of twenty twenty two, I think the important thing to say is that the results are versus a very a boom half in 2021 driven by the stamp duty. So, actually, despite down, it was quite a strong first half. In terms of sales agreed versus twenty twenty one first half, we were just 16% down, which is quite a good performance.

3:50 In terms of versus 2019, which we see as the last normalized year, whether it wasn't a pandemic or stamp duty overlay, we were 50% ahead in terms of sales. So actually quite strong, but a record record first half to compare against. During that time, we are a very much people led business. That's the whole focus of our business and everything we do. And that's been important to us, which we'll discuss in the presentation as as we go through it, to focus on getting new talent in as that that's what we see as defining the success of our business and the ventures we do to to generate new revenue streams. So on that note, I'll pass you over to Andrew to talk through the sort of financial and operational highlights.

4:37 Thanks very much, Dominic. In terms of the highlights, we had 14% revenue growth from our owned offices. And as Dominic pointed out, we had a very strong performance versus the pre pandemic twenty nineteen H1 results. And you'll see in this slide, we refer to the 2019

5:00 figures as well as the 2021 ones. We opened two new franchise offices. And as part of our continued investment in the tech platforms that underpin the WINKWORTH offering, we had the successful launch of the latest version of the WINKWORTH website. We'll go into detail on those aspects as the presentation goes through. In terms of the numbers themselves, the network turnover was £27,700,000 That was 24% down on H1 twenty twenty one, but 29% up percent on the previous record of 2021.

5:49 Sales revenue is where the revenue hit has really come through. That was at 15,000,000 thirty nine percent down on H1 twenty twenty one. But just a bit of wee bit of color around that, in June 2021, the network sold £8,500,000 worth of properties. In July 2021, the network sold £850,000 of properties. So there's a real pull forward in 2021 into H1. This year, the lettings and sales split is coming back to a more normalized sort of fifty-fifty split. In terms of our revenue, that was £4,280,000 18% down on last year's numbers, but 68% up on 2019.

6:47 Profit before tax at £1,070,000 was 46% down versus last year, but 84% up on 2019. We had £4,110,000 in the bank at June 2022, down slightly from £4,570,000 at June 'twenty one. But in the last year, we've paid out more than £800,000 of special dividends equating to sort of 6.4p per share in that period. We declared ordinary dividends of 5.4p in the first half, and that was up from 4.4p in the first half of last year. So really just getting to the business and the dynamics with business of sales and lettings revenue in the first half and how they performed.

7:39 What you can see from here, I suppose, is, first of all, the sort of tough comparisons that I've mentioned versus a very strong first half in 2021. I think the other thing you can see, though, is part of our business that's slightly missing at the moment. So, you know, when you look at the Central London revenue numbers, it has compared to 2019, it clearly hasn't grown back in the same proportion to the others. Now in part, well, that's basically due to pandemic issues. So either travel didn't open up, quarantines are in place for a number of countries. And so the international investment community weren't buying in the numbers. We're seeing that change now. And so within our business, within our different sections, if you like, so we sort see the country markets, the suburban markets and Central London as as different markets and different drivers.

8:30 We would expect to see Central London, which is less affected perhaps by cost of living and more about sentiment and the international appetite for London property start to accelerate and grow their share supporting our overall revenue.

8:47 So as I said, then that's the sales part. On the lessening side of things, broadly, it's it's the picture is one of growth because the board is above expectations. The lessening's revenue, it's been very strong. There's been some dramatic price increases in Lettings property due to a constraint of supply, particularly recent times in London as the return to cities is upon us. Again, though, you can see that Central London, whilst it grew significantly, has a long way to go to come back to a more normalized contributor. It should be above 2019. We do think lettings is a lead indicator there, and so we would expect sales to another sign of sales following suit in Central London.

9:36 The other part, I suppose, is worth pointing out is management. So in our lettings and management business, the property management's the sticky stickiest part of the business, and that has been growing outgrowing the lettings only part of the business significantly for a number of years now. So when you look at the h one performance on lettings only, that's 4% increase. But when you look at the management revenue stream, that's a 13% increase. And then when you look back to 2019, you're talking about a 31% increase. So our franchisees are adapting and getting better at retaining the sticky part, not just the sort of let them let them forget, do I say, element of the business. So that's positive for the durability of all offices and the sustainability of our revenues going forward.

10:34 Sorry. Backing this. So then what we talked about here is the breakdown of our revenue. So can see how it all works. I just mentioned this about Central London, usually performing, I mean, greater share of the pie. And I suppose this this is a slide that shows where it is as we stand. We're predominantly our revenue is predominantly driven by London revenue. But within that, Central London has been underperforming, and it has been performing for a number of years. Historically, it's around 20% of the pipe, and I've seen up to 25%. It grew in the first half, and that was based purely on the lettings growth outstripping other areas. But clearly, that's without the sales growth performing at its best.

11:24 That has a sort of oversized impact on our business because, obviously, the fees in Central London are far higher than the fees elsewhere due to the value of the properties. We look at the sort of income by type. So our subdivision of sales and lettings, which we've grown to sort of 50% previously. It slipped back, but that slip back is not due to a lack of performance on the lettings business. In fact, you know, the first half was the record ever revenue for the first half in lettings and grew strongly and continued that trend that's been going on for many years. But daily sales, as we said, was still was a strong part of our business. And so that's basically to see the value of the balance we have where, you know, both performing well, and we can lean on either one dependent on on the circumstances in front of us.

12:23 So again, just looking at the sort of detail of the business, this is the front top of the funnel, I suppose. The leading indicator for future activity is they register with us to look for the start of their journey. Sales, you know, you can see the impact of the last two years and why we reference 2019 as an important as the last normalized year, really, because, you know, these peaks and troughs are not normal, really. What you expect to see on sales applicants is that everything starts at its best in January. Everyone comes out of Christmas and and registers. And then every year, that that off. So that's just a normal normal trend you're seeing across those lines dipping off towards Christmas as other priorities come to fall. What it also shows us, I suppose, though, that is that our applicants are tracking 2021 now.

13:15 Our activities since July have been somewhat a little bit above 2021, which is hugely encouraging. I suppose the next portion that obviously first and second half of twenty twenty one were somewhat different in activity. It did did come off in the second half, but still, it's encouraging for the performance to date. The letting side of things, you can see how strong it's been. There's been a huge amount of activity, and that has been increasingly focused move from initially a country letting focus to London letting focus in terms of the peak activity regions with the peak activity for us. As I said, the issue is really constraints of supply. So there's a bit of a bouncing out playing out where there is very little around and that's pushing prices up significantly to about 20% rents in London areas, which is huge.

14:09 So at the moment, that balance is leading to positive rental growth for our business. And hopefully, that will continue to do. It is also something that I think is supportive of sales activity. And I think the the thing to note is that this cost and lack of availability of rentals property is a driver for buyers to to commit to purchasing. If if you're I was looking at a case the other day where to rent a flat in Fulham is for two bed flat is 2,500 to £3,000 per month. Now if you lock in a mortgage, you can get a mortgage on a four bed house in Finland for £2,500 a month. So I think that's quite a supportive driver. And as there's a continual aside from the kind of the hassle factor of people having to turn up to offices with their offer before viewing a property because they're so scared of losing out on that property. And I think that will, whilst you can lock in five year rates at historically low levels, will be very supportive of sales activity.

15:19 In terms of dividends, we look to pay dividends and declare dividends on a quarterly basis throughout the year. We look to pay progressive dividends. And I think this slide is is a good demonstrator of our track record on that. The blip in 2020 is clearly sort of pandemic related, but one of the key things to note from that is whilst our competitors were holding their dividends, not paying them, we continue to pay during that period, And we caught up in 2021 with some special dividends, trading conditions, allowing we will continue to look to pay progressive dividends.

16:10 So we need a bit more about the business, and that's where the brand is all important to us as a business and our licensing of it to the individuals. So this is really the next slide. This is really to say, you know, we have a cracking high street presence. We've had a few years. When we survey consumers each year, of the number one reason generally is they know that WINKWORTH brand is from that footprint from walking them down and seeing us on their local high street. So that's that's very important to us. But, obviously, we like to keep up with and evolve the business to ensure we're we're hitting the right channels to keep us successful and competitive in the marketplace. So Google, we've been doing for for many, many years actually and have in house results focused on ensuring that we succeed in coming up in the top three under the relevant searches. So a bit of explanation.

17:03 Estates it within is the estate it within each particular office. So state agency in Batseal, in Fulham, or in Islington, and the same with with lettings. From here, you can see that 88 out of the offices are in the top three under state agents in and in letting agents in. It's 91. Let's say that's a very good route that people type into Google when they want to look for an estate agent. If they haven't, we'll pass them on High Street, and they can come to us. And so that delivers leads to them through our website. Over a broader picture just to kind of show because we've been there for a while, we have an old website and we've developed, but historically, we were the first to have a website. We have very good traction. So if you type the state into London, we're second generally on Google.

17:51 And in The UK, despite not covering many parts of it, we're full. So that's that's where it hopefully shows we've evolved to the digital channels as much as the offline channels. And, really, there's a bit here about social media because this is something we're focusing on. It's a new route to generate leads for our business and our franchisees within it. It is growing. We're investing in resources internally and new videos and content that can hopefully continue to grow that reach to, again, ensure that we're just we're just continually evolving the business to ensure that it's competitive. We want to be in the industry. We're excited opportunity to I think mentioned it in the introduction. It And just shows, I suppose, within the the areas we cover, you know, we are number one in terms of sales agreed. It's so his interest is the online Purplebricks block, which I didn't think they've ever taken us in London, but in the country, they were had sold more than us. I think they would that graph would have been the other way around last year, but we sort of accelerated and and improved our position. So we're able to say we're the number one within the areas we cover versus our peers. And and that's not just we put these down because these are listed ones that the information is freely available from, but it actually covers all

19:22 estate agents in UK within our areas.

19:30 So for the franchising outlook, this is our what's our growth? I suppose here is the open book view of our the ebb and flow of the network over since the last five years or six years, and this half. You can see we've this year, we've grown also, I should probably say for those that aren't aware, there's sort of three routes to grow. One is someone approaches us, an experienced individual, and they have an area they'd like to open up with, and we help them set up a brand new business, and they launch it and if we support them through to success. One is another breach is existing estate agents looking to grow their market share or perhaps move into a higher sales price bracket.

20:17 They're approaching speaking to them and hopefully bringing them on board. And the third move would be sort of existing franchisees, opening further offices or us supporting them with assisted, well, with funds to be able to acquire competitors or lettings portfolios and grow their book accordingly. So can understand it does ebb and flow which one drives the growth over the years depending on the market in boom market. Clearly, the cold start, as we call it, is the most favorable route in a more difficult market. The conversion is a more favorable route. And, hopefully, the opening up of second offices and third offices by existing franchisees is It's also a third of our business, but it's also something that it shows the that it's a positive network where people are happy to grow their businesses. So the first, we have within our network now been in the country for a number of years and reaching maturity across those offices, very much reaching maturity in those offices.

21:17 And we know the talented individuals we have in different regions we have that we are happy to back and believe they're highly capable to grow their business with our funding. So the first two well, the two the 2022 on this chart are exactly that. So Crediton is our extra franchisee. It's been with us many years. We helped to lead successful business. We helped them to acquire a Tiburton business last year and this year, the credit's new business to form Golden Triangle for his market also to add to make the 5th Devon office, hopefully, a localized regional hub that's a point of growth for us going forward. We actually lent some money to him to enable him to buy that business.

22:04 Bristol is a fantastic opportunity for us. It is similarly our bath franchisees who were, like, Frank, husband and wife team who was partners, an active partners who came to us to run a registered office and used to operate. One of them used to be a manager in Bristol. So there's an opportunity to acquire a listings business there. We provide some funding alongside the bank, and they've acquired a business in Bishopston that hopefully will be the first of several in Bristol and sort of again a new point of growth for us by supporting quality quality franchisees. The other things that and beyond that, I suppose, we have a sort of pipeline at the moment of a number of about five offices. Four of those well, she's a bit more than five, but four of those are another assisted acquisition.

22:55 And then one or two from existing one's a cold start and one's existing franchisee opening a further office. So, hopefully, they will come to fruition, although not there yet. And the other thing two important things saved,

23:06 which which is important to us, is we spend a lot of time ensuring that because of portfolio management, that really it's ensure that we have it's as valuable to us to get a tired franchise, you know, that maybe been reached the end of it sort of proactive lifestyle lifespan, if you like, and we introduce new vigor to it through sort of hungry franchisees who will acquire the business and that use their energy to take it forward. And where we've done that, we've seen fantastic results. So, I mean, recent recent sales have been needing Sheppard's Bush, but they've all all increased increased revenue. Revenue. I think they will beat 2021 revenue this year. The revenue increases on these key locations, if you like, key offices.

23:51 What it really means, the opportunity is probably the equivalent to opening four or five new offices. So it's a way for us to grow our revenue as well as sort of reinforcing, reinvigorating our existing network and making the most out of key locations, key assets where where we can generate the sense.

24:15 So the other part of our strategy is we've looked at let's go through it here. We for those that don't know, we I'm taking this view that there is a huge amount of potential in certain offices. We can look at right now and see where the transactions are in our marketplace, in particular, London and and where we can come across some fantastic talented people, but they may not have the funds to kind of take on the office, which would obviously be in our usually in our interest. So certain situations sorry. I've actually got the wrong slide. I'll go to the slide I'm talking about and come back to that one. In certain situations, we have acquired local franchisees, local offices where we feel there's a significant upside, and we put in place this alternative person we've identified.

25:10 We give them equity reward for delivering numbers, delivering revenue and profits and turning it around. And really, the first of which was the tutoring office, which has been sort of storming success. It's number one now in this marketplace before we reach maturity as don't prefer to go off to number one. But the lessons will continue to grow, and it's it's a well run business with an equity partner in there. So we're in partnership. Since then, we've also done the Crystal Palace business that is growing. It's not going to contribute much profit this year, but we'd expect it to contribute profits next year. It's on track to grow by about 2030% this year in terms of revenue lines, again, with a partner in place to become equity on hitting certain numbers. So we're finding this quite an effective way of delivering revenue for us,

26:05 generating 8% sales in an area that has great potential and obviously securing the best talent where they may not be otherwise been able to to join the business. The third one at the moment we have is the business called this commercial business, developments and commercial investments. It sits well for us since year second year to fill with us because it is a central business that is we're quite well it's a business that leans to having a central central business, not a localized business. And it's a huge part of the network that we don't have. Obviously, we're a residential sales and lettings business. So I can leverage off the network and have referrals from from franchisees. It basically sells, you know, gyms or mixed use buildings or commercial sites that can be developed into by into new build properties, and then that will obviously feed into developing a new build business.

27:01 That new build business will then feed the properties generated for the commercial business back to the network on splits. So, hopefully, we generate extra revenues in the middle by exploiting a sort of new sector of the property market. The offices benefit from new properties that they probably weren't going to get otherwise because they went to other new central new homes departments. And so, hopefully, it's a sort of virtuous circle to deliver growth for us. And, again, it's it's growing significantly. It's profitable hopefully, we'll deliver growth going forward.

27:34 We are, as I said, the beginning, look to actually focus on this sort of people element. And so we are looking at other opportunities where when discussions with, as I say, this are talented people, is the phrase, talented people to do the next one of these. We are aware we are a we're not changing the model, but we find this is a positive revenue, but for learning to the front end, introducing new talent to network funds is a positive avenue. But obviously, we want to maintain ourselves as a fixed cost light business model capable of paying progressive dividends and so don't want it to become the new model as such. So going back to slide eight.

28:19 That's the only thing got to talk about.

28:23 This really is about central services, and I'll be fairly brief on it, but it's a department that calls through the database to generate. So we believe that the risk reward balance is correct in the franchise network. Obviously, the franchisee is taking the risk and deserves the 92% of the reward. But we want the network to be as competitive as possible. So we want it to be seamless for the consumer and client so they get the benefit of both the sort of owner operator delivering heart and soul and a competitive platform behind them. So this goes through the database and calls clients. So, for example, someone's registered in Kensington, and they've got a flat in South Kent, you know, they'll contact them and say, look.

29:09 Can we would you like us to to value your flat in South Kent and thereby sort of join the dots? So pass that valuation over to the local office, which otherwise might have been missed or between the facts. So that gives 10% to all valuations at WINKWORTH, so it's quite a positive. And actually, when you look at it with the website, website lives around 25%. So outside of brand value or other added benefits, I suppose, this is delivering about this is the website delivering 30 a third, should we say, of valuations going to website, hopefully separating our offering out, making it compelling to independents and to ensuring that we're able to try to target that top three in each marketplace.

30:01 In terms of the digital side of things, I talked about it a wee bit in the introduction. We have a vision for the WINKWORTH network, as Dominic was saying, is very much people focused. So we're looking at making sure we have very strong local operators that they have a very visible high street presence. But the critical other element to it is that their offering is supported by very good tech, and the website is is is a key part of that. As Dominic said, we had the first website in the estate agency field. Yep. Sorry. Sorry. My fault. And we just launched version 10 of that in April of this year.

30:51 We've had a new look and feel. It was focusing on things like user experience, functionality, a particular focus on the mobile first design where we get a significant number of users coming through mobile. And each of the offices has a microsite that they can tailor to give them their own particular unique flavor, getting part of the strong local operators aspect to it. In terms of the conversion rate, so visitors converting to leads,

31:27 the rate in H1 of this year was 1.63%, which is a record, and that compares with H1 twenty twenty one, the old site, which was 1.21%. It's not just about the website. What we're looking at doing is sort of integrating the website with our underlying CRM databases and the like. So now that the website has been launched and embedded down, focus on the second half of the year, we'll be looking at integrating with that CRM system.

32:06 A number of aspects to it. We're looking at sort of personalizing the visits so that we can make visitors, their journey, more efficient and more effective. We're looking at analytics around that to track how people interact with us so that we can look to benefit from that. In terms of the integration with the CRM side of things, there's two key drivers for that. We want to drive leads to the business, and we want also to offer the franchisees the opportunities to introduce efficiencies into their local businesses. Just a brief slide on the leads side of things.

32:54 As Dominic said, it's a key part, leads from the website, of generating business for the network. And although the number of visitors to the site has dropped off since the peaks during the pandemic, They're still high. And with the conversion rate that we've been able to get, we're very much in line with the last couple of years in terms of the leads being generated. There seems to be a step change on pre pandemic levels. So really, summary, yes, we're looking at the looking at half and then looking at 2022 and beyond.

33:40 I will just get this one. As we've gone through the various parts of 2022, lettings record first half, sales significantly down, but against a sort of once in a generation period, I would suggest, in my time anyway. The mark of the business has retained this sort of highly competitive nature in terms of the second in sales agreed in London and first in the areas we cover. Our revenue was down. The impact of the wholly owned businesses or partnership businesses offset that to a certain extent, not totally reflect the network. Dividends were grown and 5.4p as we like to pay a progressive dividend. Have continued, obviously, hopefully, are several more to squeeze through this year.

34:27 We see ongoing growth. We see one of our wholly owned or partnership businesses having reached maturity, but the other two, a fair way of it. So we expect more to come from that. As I said, Tuteen has got to number one, and hopefully, the others will follow. Going looking forward, our aspiration is always to be the first option for agents wishing to set up their own business operating in the prime markets, and that's what we align ourselves to. We do believe those individuals need to be supported digitally as well as the sort of analog platform. So we continue to invest in evolving the platform through digital evolution. That said, as we said, we got across, you know, first and foremost, it is about people for us.

35:13 They are critical to the success of the business and any ventures we undertake. So we will be guided by the ability to work with these talented people. We do have, hopefully, more of these active participation businesses that we'll be able to bring online into course. We hope to keep our target of six new franchise offices, conversion new franchise or existing expansion. And I think within the markets, what we're seeing at the moment is, well, first of all, Central London has some way to go before sort of, I'd call it, full recovery. I think we're seeing that now. I also think the other part to note is that the prime markets at the moment, the best part of our business for the best is, you know, houses in zones two, three in London. You know, these family houses are very popular achieving significant prices above what they were in January.

36:08 And London having not really shone for many years, really, not over sort of fiscal uncertainty, I suppose, and on parliament fears and all the like has sort of picked up this year significantly at the moment. So that's a busy part of the market for us. Within all that, we have you know, we retained a solid cash balance so that one for risk it gets a dividend, so it gives us good security and also so that we can take advantage whichever opportunity comes our way. We're in a position to act quickly should we wish with the cash we have on our balance sheet and obviously no debt. And therefore, we hope that we will continue to be able to pay a progressive dividend. That's that. Thank you. Fantastic.

36:57 Thank you very much indeed, Dominic, Andrew, for the presentation. Ladies and gentlemen, please continue to submit your questions using the Q and A tab situated in the top right hand corner of your screen. Sure the team take a few moments to review those questions submitted today. I'd like to remind you that recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Perhaps before we just go on to some of the live questions, we did receive a number of pre submitted questions. And if I may just read out the first one. Think some of this you have covered off market wise, but if there's anything further to add. How are you finding the second half of the year for London rental and sales market? Has it started to slow? If markets are slowing, does that provide you an opportunity to onboard new franchisees and therefore grow your market share? Yes. The answer is it's been very busy.

37:45 August is always hard to tell. It's August, but it's been a good August in terms of agreed. You said it's a bit above 2021 activity. Rentals is incredibly hot still. Price increase is short of supply. We were really September is a key month for both sales and rentals as everyone comes back for holidays. Early indications are that it is busy. So at the moment, the the property market from our perspective is is looking quite strong. The in terms of the question about opportunities, yes. I mean, I think with every different market, there's a different approach for us. You know, we have as I was trying to say in the new markets, it's new new ops people coming to us, starting new offices, and giving it a go. And in more difficult markets, it's those, almost a defensive nature, looking to grow share market share to ensure profitability in a lesser transactional market. So and and then then on the other side, obviously, you know, the opportunities for our sort of more our partnership businesses where we have a greater equity stake, you know, they arise and the prices reduce if the market is not as strong as it has been. So the beauty is with strong balance sheet and some cash, we can adapt which way we're focused dependent on the market conditions.

39:01 Fantastic. Thank you very much. The next question we've got here, what are you doing right that Foxen's is not that you've resulted in your superior performance? Everything. It's just I would say, you know, it's it's people led. I think we've we're long term business. You know, we'd be very steadily in a considered manner with the right people. And I think when you look at where, you know, really in those sort of outer London areas into outwards, we have some long term, incredibly experienced, successful operators who are delivering. And, you know, the the move I feel the general environment is moving towards, you know, local business. People wanna connect with a proprietor, they wanna do business with them. And someone with experience in our platform, I think, puts us in a good place, hopefully, versus all competitors.

39:53 You very much indeed. Next question here we've got is, notably, the inventory is being hardwired with some branches yet to gain a single sales instruction so far in h two, making lettings more of a focus. The buy select markets increasingly become more important in the areas that you farm with major investors and institutions heavily involved. Is this an area where you're currently making active steps to exploit? And if so, what's the success? Where do you see WINKWORTH's role here? Yeah. So I think yeah. I mean, I I know stock level is dependent on area and value of stock and less of these businesses underneath it. So I I would say I don't think there's any complaints from any of our franchisees at the moment about difficulties. I think everyone's it's a happy camp, I suppose, is the first thing to say. The beyond that, what are our steps? I mean, there is a challenge of PRS to institutional investment in build to rent, and I think some of the interesting parts of having a commercial business in the middle, development commercial investment business, is that starts starts to to put put a foot in that camp. So there are lots of opportunities to grow that in many directions, and one of them would be to look at more at the rental side or from a sort of institutional investment perspective. That's That's not something we're doing at the moment, but it does because clearly it's growing. We wanna focus on its transactional investment nature to grow initially. It's something that gives us an opportunity to develop that channel in due course.

41:15 That's great. Thank you very much indeed. And the final question, which we did kind of part cover off in the first one, but good to see current franchisees expanding into new territories, Southwest, South Coast, Norfolk, Tooting and Crystal Palace, two franchises where you hold a major stake and have been very successful. Just a little surprise there'd be no new additions. This is likely to change in the near future. Yeah. So exactly. I mean, I we were, you know, we were considered business. We're not. We're people led and opportunity led. We don't want to get ourselves in a position where we're beholden to open over a set time frame because we feel that might push the wrong decisions. So we will we are, like I said, to say, in discussion with some pretty talented people, and there are some opportunities that we'd like to see come on board.

42:02 We are focused on developing that at a pace that is easily digestible and staying true to our franchise, not something our franchise nature and their sort of defensive defensive qualities of our Woolworthiness ability to generate significant cash and pay progressive dividends. That's fantastic. Thank you very much indeed. That does conclude the pre submitted questions. As you can see, we have had a number of questions submitted throughout today's presentation. If I may ask you just click on that q and a tab. And where appropriate to do so, if you could just read out your question and give your response, and I'll pick up from you at the end. Thank you. No problem. The investment in digital, so as I we're boundary investment in digital, is this internal platforms to increase efficiency also or just external? As we covered off in in the sort of the digital element of the presentation, we're looking to do both. We're looking to make sure that franchisees have have access to a very strong tech platform.

42:59 Very good. Okay. Next one. A large number of franchisees in top three, as you said, but small minority who are not that productive, what is your business model to improve that performance training, terminate etcetera? So many, many ways, I suppose. Dialogue is really where where it sits at its core. Speaking to them, you know, we're not if they're not in the top three, it's not it's not the end of the world for us. We want to ensure they're doing a good job. They are good. They have generated good worth adding to the goodwill of the brand. They're not letting one down. No one's letting down the franchisee. Our aspiration is top three, so so giving giving them them facilities and speaking to them about how they can achieve that. Clearly, if there are situations sometimes you find that there are many the franchising is such a personal thing that there's so many million different situations. But sometimes, if someone's perhaps done their years, you know, it is a a tiring job.

43:57 The state agency is highly competitive and takes huge amount of energy. And sometimes you find that we're very old. In 1981, we started franchising. May have just sort of lost the the pizzazz for it all. And in which case, we'll speak to them. That dialogue will be, well, look. Why don't you we've got people to buy businesses. Why don't you sell, take time out, destress, you know, and we can trade it to a new sort of perhaps more energetic individual. Or the conversation is, look. Why don't you bring someone in the same way we've done with Tutu? You know, the if you found your energy levels are dropping, you know, there is a way you bring in young talent. And a lot of our franchisees have done this, bringing young talent that, you know, have an opportunity to have the security of a small stake and work in independent business with a long term chance to take over that business. So, really and, obviously, we do we do have training and everything else.

44:48 But, really, it's dialogue, I suppose, to see what fits the personal circumstances. You mentioned the full example of rent versus buy cost. Interest rates are clearly going to 4.5% plus. Will Central London be less affected than the rest of the country? It would also seem to change the full example to renting being more attractive at least in the short term. So I guess interest rates is the big big question. I saw spoke to someone with someone the other day that was quite interesting. He said that the I mean, employment's the primary driver for us. The interest rates decide your the size of the property by the location, but employment's the one that decides the the market, market, really. So that's an interesting look at it. I think, you know, it's worth remembering 2007, which is actually 6%.

45:35 There, you know, the lending criteria has changed dramatically since these days. There aren't the self serve mortgages where people sort of didn't necessarily have the actual income. And, you know, the gearing that banks have stress tested those buyers by greater degrees. So I think most importantly is in the direction of employment going forward. And I suppose in answer to the question of the dynamics, it does change it. Rents are continuing to grow, though. And so both costs are going up, and we will see. But we're in a very different position as a business and as franchisees, I think, important to say than than than than previous moments. I mean, we've been through I've been through twenty years. I've been through a few, you know, the two thousand eight pandemic.

46:22 You know, we've got very good businesses that can adapt to all circumstances. 50% of businesses and lettings. That's grown 8% a year for twenty years. It's it's twelve years since 2008. So there is uncertainty, and we can't deny that. We will see how Liz plays out with her policies. But I think at the moment, I can say that the property market's busy. And then is the availability of rental stock likely to prove a long term structural issue? So I think it is of concern. Yes. Huge concern. I rentals has always tracked wage inflation pretty close closely. Usually, 30% of take home pay nationally and 50% in London because people fill London properties with more and more people.

47:09 But, yes, it is challenging. I mean, I think in the country, I believe there's there's more investment gains by to let. Really, what's happened is the changes all meant that by to let requires less debt, less leverage. So, you know, back in the day, it was you could get 75% loan to value and buy to let, and it would sort of stack up and you wait for capital growth. Now, you know, you can't really have more than 50% loan to value. And so it's a good investment if you're probably at a lower property price level where you can afford not to have so much debt. In London, we've seen, you know, a sell off, which, you know, does is that trend, that link between wage inflation and rental prices going to break? I would suggest that it may well do because I'm not sure what the solution is. So it's a challenge.

47:56 At the moment, rents are going up. Our revenue is going up. I think the balance of our business, you know, if their people aren't renting, they will be buying. So we're sort of well placed either way, but I think some of the policies have been a bit negative for rental supply in London. Sorry. What's this? Dividend dividend covers less than 1.2 times in this half. Oh god. Sorry. Let's try this. Okay. One question for Andrew. Think dividend cover is less than 1.2 times this half may decrease in future if the progressive dividend policy is pursued and earnings stagnate due to reduced sales activity. What is the board's policy of dividend cover, and would the board be comfortable with the dividend cover of less than one?

48:47 Interesting question. I think we are committed to paying quarterly dividends where trading permits. I think it would have to be some some fairly dramatic changes to our circumstances to to impact on that. Short term, interesting question. I it's something the board would have to consider have a drop to to less than one. I suppose our commitment was shown by the pandemic, wasn't it? Where we paid the quarterly dividend amidst the lockdown with a 20% reduction. So we are committed to that dividend, we're able to do that because of the defensive nature of our business and comfort in the lettings business underpinning it all. So I suppose that's our view on it. We're keen to maintain that.

49:47 Is this the new one? Immediately yeah. Media economic mass aside, how do you see the medium term level of sales transactions evolving following the pandemic fluctuations? Are you likely to revert to 10 levels? Do you think it should be should be higher than 02/1619? So I I believe they're gonna be higher because I think that these were quite bad years for London. For us, anyway, I'm not saying nationally. I wouldn't know all the parts quite as well. But London, you know, we're talking pretty grim years, those years. So we do look at the comparators of being up until '19. It is a normal year, but at the same time, it was a pretty grim year in terms of sentiment for the property market. So I think that's supportive of levels staying above that.

50:35 And I think that there's all the q and a questions. So I hope I've covered that we've covered them off. And I think that No. I think you have covered off pretty much all those questions you came from. Excellent. Well, good to be able to present to you guys. Thanks very That's fantastic. Andrew, Dominic, thank you indeed for updating investors today. Dominic, I don't know if you've got any final closing comments just before we redirect investors to give you any feedback. I think I've probably had to be quite extensive and sort of run through it all. So not particularly. I think it's we're as I say, we're not a short term business. We're in the long term. We're sort of growing progressively. We keep it at the core. We're not going to gear up the business. We've got cash supply, cash balance sheet. Neighbors take opportunities when they arise, but we will do that as and when they are that they're to see value. Yeah. I think think that is our summon. That's fantastic.

51:30 Dominic, Andrew, thank you indeed for updating investors today. Can I please ask investors not to close the session? Should be automatically redirected to bribe your feedback, and all the management team can better understand your views and expectations. This will only take a few moments to complete, and that's 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. That concludes today's session. Thank you, and good afternoon to you.