Watkin Jones Plc - Full Year Results

Financial Highlights

 

FY 2017

FY2016

Movement

 

 

 

 

Revenue

301.9 million

 

£267.0 million

 

+13.1%

 

Gross profit

£63.5 million

 

£53.8 million

 

+18.0%

 

EBITDA

(2016 adjusted)1

 

£45.2 million

 

£41.6 million

 

+8.6%

 

Operating profit

(2016 adjusted)2

 

£42.7 million

£37.9 million

+12.7%

Profit before tax

 

 

£43.3 million

£13.3 million

+326.3%

Basic EPS
(2016 adjusted)
3

 

14.0 pence

12.4 pence

+12.9%

 

Net cash

£41.0 million

£32.2 million

+27.3%

 

Dividend per share

6.6 pence

4.0 pence

10.0%

 

Notes

1.    For FY17, there is no difference between EBITDA and adjusted EBITDA.  EBITDA comprises operating profit from continuing operations plus the Group's profit from joint ventures, adding back charges for depreciation and amortisation.  For FY16, adjusted EBITDA is stated before exceptional IPO costs.

2.    For FY17, there is no difference between operating profit and adjusted operating profit.  For FY16, adjusted operating profit is stated before exceptional IPO costs.

3.     For FY17, there is no difference between basic and adjusted basic EPS. For FY16, adjusted basic EPS is calculated using the profit for the period from continuing operations excluding exceptional IPO costs and is based on the number of shares in issue at 30 September 2016.

 

·      Revenue and gross profit growth were strong and in line with our expectations, driven by student accommodation developments

·      Further increase in the gross margin, reflecting the strong locations of our student accommodation developments and a full-year contribution from Fresh Student Living, which was acquired in FY16

·      Final dividend of 4.4 pence per share to give a total dividend of 6.6 pence, up 10.0% in line with our progressive dividend policy (FY16 total dividend was 4.0 pence for the period after our IPO, equivalent to 6.0 pence on a full-year basis)

·      Continued robust cash performance, with a net cash inflow from operating activities of £19.2 million (FY16: £15.1 million after exceptional IPO costs), with a further £22.8 million of cash received in October 2017, relating to forward sales agreed before the year end

·      Net cash of £41.0 million at 30 September 2017 (30 September 2016: £32.2 million)

 

Business Highlights

 

Student accommodation development

·      All ten student accommodation developments for FY17 delivered ahead of the 2017/18 academic year (3,314 beds)

·      17 student accommodation developments (6,578 beds) were sold during the year, including one operational asset (590 beds), and had a total development value of £506.0 million

·      Total development pipeline of 9,120 student beds across 23 sites, with 15 forward sold (6,090 beds)

 

Delivery pipeline:

·     FY18 deliveries - all ten student developments (3,415 beds) scheduled for delivery ahead of the 2018/19 academic year are forward sold

·      FY19 deliveries - five student developments (2,675 beds) scheduled for delivery ahead of the 2019/20 academic year have already been forward sold

·      A further eight development sites (3,030 beds) have been secured and are targeted for delivery during FY19 to FY21

 

Build to rent development

·      The build to rent development pipeline continues to gain momentum.  The Group has five development sites, which it owns or has exchanged contracts to acquire, and is in separate negotiations on several other opportunities.  From these it is targeting to develop approximately 1,500 units during the period FY18 to FY22, subject to securing the remaining necessary planning consents

·      Successfully completed the Group's first build to rent development in Leeds (322 units)

 

Accommodation management

·      Created the Fresh Property Group, operating under the Fresh Student Living and Five Nine Living brands, bringing our accommodation management businesses under a single leadership

·      16,082 student beds under management for the 2017/18 academic year (52 schemes) up from 12,337 beds under management for the 2016/17 academic year (44 schemes)

·     Contracted to manage 535 build to rent units, across five schemes, including the scheme completed in Leeds during the year

 

 

Commenting on the results, Mark Watkin Jones, Chief Executive Officer of Watkin Jones plc, said:

 

"We are delighted to report another impressive set of final results demonstrating our ability to continue the strong momentum established during our first year on the AIM market.  The Group has generated strong revenue and earnings growth, driven by our core student accommodation development business.  We are also pleased to report further increases in gross margin, supported by the strong location of our student accommodation developments and first full year contribution from Fresh Property Group, the Group's accommodation management business.  This has contributed to a double-digit increase in earnings and an increase to the net cash on the balance sheet.

 

The delivery of all anticipated student accommodation developments in the year, combined with continued growth in the value of our development pipeline, is delivering a secure and growing base of revenue, earnings and cash flow, which in turn enables the Group to develop new business opportunities to enhance that growth.

 

We will look to replicate our strength and expertise in student accommodation in the build to rent sector.  Our build to rent division made significant progress in the year and we were delighted to deliver our first development.  As the sector continues to attract a growing number of UK and international funds it's pleasing to see our development pipeline grow, which will contribute further to the visibility of earnings that is fundamental to our business model.

 

The Group will continue to demonstrate its ability to generate significant returns for its shareholders and the Board looks forward with continued confidence.

 

As also announced today, after careful consideration I have decided that it is necessary for me to step back from my position as Chief Executive Officer.  The Group has reported strong results today and with excellent earnings visibility, Watkin Jones is in a strong position to achieve continued success in both student accommodation and build to rent.  Solid foundations are in place for my successor to work with, including an excellent management team that has supported me over the years in successfully growing the business and who will continue to drive Watkin Jones forward for the long-term benefit of our shareholders."