Watkin Jones warns on profits, announces CEO departure

At the time of its interim results in May, it announced the forward sale of its PBSA (purpose-built student accommodation) scheme in Bristol and five other forward sales targeted for completion in FY23, two of which were under offer.

However, the company said in an update on Wednesday that since the interims, recent interest rate increases and "prevailing economic uncertainty have impacted negatively on market liquidity", meaning there is now "a greater degree of risks" over these transactions completing by the year end.

The firm also said it has reviewed its balance sheet against the more challenging macro-economic backdrop and increased cost of funding. It continues to explore the sale of a limited number of non-core assets and considers it "prudent" to reassess the carrying value of certain assets, which it expects to results in an impairment charge of around £10m.

Watkin Jones said its schemes in build continue to progress in line with expectations. However, in the event that it does not complete any new forward sales in the balance of the year, and taking into account the impairment charge, it does not expect to "materially improve" on the underlying profit of £2m reported for the first half.

"Our current expectation is that these challenging market conditions will persist into FY24, and against this more cautious backdrop, our FY24 PBIT is likely to be in the range of £15m to £20m," it said.

The group also said it expects to increase its exceptional provision for remedial works for legacy properties by an additional £30m to £35m. The cash cost of this is expected to be spread over the next five years.

Also on Wednesday, Watkin Jones announced the departure of chief executive Richard Simpson.

Chief investment officer Alex Pease will take on the role of interim CEO with immediate effect, while a formal process is undertaken to confirm a permanent CEO appointment.