Watkin Jones profits fall as development pipeline grows

The AIM-traded firm said its gross profit for the six months ended 31 March was down 2.3% year-on-year at £41.3m, while its operating profit was 1.8% weaker at £29.1m.

Its profit before tax lost 3.3% to end the half-year at £25.8m, and its EBITDA was off 2.5% at £33.4m.

Basic earnings per share fell 4.1% to 8.11p, while net cash at period end stood at £31.7m, down from £37.5m a year earlier.

The board declared a dividend of 2.6p per share, compared to the nil dividend at the interim point of the 2020 financial year.

On the operational front, Watkin Jones said work was on track on all 15 of its build-to-rent and purpose-built student accommodation developments currently being built.

It reported 3,424 new student bed property management mandates for its ‘Fresh’ division since the start of the year, adding that momentum had been maintained in its residential sales.

The company also reported continued progress in the forward sales market, with 909 beds across three purpose-built student accommodation developments contracted in the period, and a 462-bed student accommodation development contracted in Leicester post-period end.

A total of 722 build-to-rent apartments were in advanced legals for sale, with 216 in Hove, 184 in Leicester, and 322 in Lewisham.

Sale terms had also been agreed for a 295-bed purpose-built student accommodation development in Edinburgh for delivery in the 2023 financial year.

The company also said its development pipeline had been further enhanced, with future revenue value of £1.6bn now in its secured development pipeline, up from £1bn in the prior year.

A total of 542 build-to-rent apartments and 599 purpose-built student accommodation beds had been added to the pipeline since Watkin Jones’ last update in January.

Planning had also been secured for the firm’s first ‘co-living’ scheme, for 133 beds in Exeter, in which tenants would rent a private studio with shared communal facilities.

“As we begin to emerge from the pandemic, we are seeing increasing investor confidence in our market sectors,” said chief executive officer Richard Simpson.

“We've maintained the momentum from the second half of last year and made further good progress in securing new forward sales, adding to our development pipeline and keeping all our construction activities on track.”

Simpson said all parts of the business continued to perform well, and while first-half profit was “slightly below” last year, he said that was because the first half last year was primarily before the onset of Covid-19 disruption.

“The fundamentals supporting the markets for high quality build to rent and student accommodation assets remain strong, driving growing institutional demand, and combined with the continued progress we have made in the first half of the year, gives us confidence in our future trading.”

At 0955 BST, shares in Watkin Jones were down 1.65% at 239p.