Coronavirus Update

Watkin Jones PLC- Full Year Results for Year Ended 30th September 2020

This content has been sourced from: https://www.investegate.co.uk/watkin-jones-plc/rns...

 

FY20

FY19

(Restated1)

Change

(%)

Revenue

£354.1m

£374.8m

-5.5%

Gross profit

£75.9m

£80.0m

-5.1%

Adjusted operating profit2

£51.7m

£55.6m

-7.1%

Adjusted profit before tax2

£45.8m

£50.4m

-9.3%

Adjusted basic earnings per share2

14.7p

16.1p

-8.7%

Dividend per share

7.35p

8.35p

-12.0%

Adjusted net cash3

£94.8m

£76.8m

+23.4%

 

 

 

 

Statutory operating profit

£31.2m

£53.0m

-41.1%

Statutory profit before tax

£25.3m

£47.9m

-47.1%

Basic earnings per share

8.2p

15.2p

-45.8%

 

 

Financial Highlights

 

· Solid financial performance, showing the resilience of the business during a challenging period for the UK economy.

· Revenue down 5.5% for the year, primarily as a result of forward sales of developments being deferred due to COVID-19 uncertainty.

· Robust gross margin for the year of 21.4% (FY19: 21.4%).

· Impact of COVID-19 disruption on operational delivery minimised and additional construction cost substantially mitigated, with FY20 planned deliveries all completed.

· All Government financial assistance received to support furloughed staff, totalling £0.8 million, repaid at the start of FY21.

· Full-year final dividend of 7.35 pence per share proposed, in line with policy of 2.0x cover by adjusted earnings, reflecting strength of financial performance and cash position.

· Strong liquidity position:

-  £134.5 million gross cash at 30 September 2020 (30 September 2019: £115.6 million).

-  £94.8 million net cash (after deducting loans, but excluding IFRS 16 operating lease liabilities), up from £76.8 million at 30 September 2019.

-  £100.0 million revolving credit facility with HSBC renewed to May 2025, of which £65.0 million was undrawn at 30 September 2020.

· Exceptional costs of £20.5 million, including £14.8 million in relation to remediating cladding on a number of past developments and £5.7 million of additional costs in relation to COVID-19.

 

Business Highlights

Further good progress with delivering our strategy.

Build to rent development - good progress with developments for delivery in FY21 and strong growth in pipeline

· Exciting progress with BtR strategy, delivering 159?unit scheme in Bournemouth and making good progress on site with developments at Reading, Wembley, Sutton and Stratford, which are all on track for completion in FY21.

· Secured four significant new sites in Birmingham, Bath, Glasgow and Lewisham, London and, subsequent to the year end, a site in Belfast.

· 928 apartments across five sites forward sold for delivery over the period to FY22. Further three sites (722 apartments) currently in negotiation for sale for delivery over the period FY22 to FY23.

· Planning obtained for 538 BtR apartments on schemes in Brighton and Hove and Lewisham, London.

· Total secured development pipeline of 4,466 apartments across 13 sites, for delivery between FY21 and FY25.

 

 

BtR apartments

 

Total pipeline

FY21

FY22

FY23

FY24

FY25

Forward sold

928

857

71

-

-

-

Forward sales in negotiation

722

-

184

538

-

-

Sites secured with planning

-

-

-

-

-

-

Sites secured subject to planning

2,816

-

-

-

1,117

1,699

Total secured

4,466

857

255

538

1,117

1,699

Site acquisitions in legals

247

-

-

-

247

-

Total BtR pipeline

4,713

857

255

538

1,364

1,699

 

Student accommodation development - completed FY20 schemes and those for FY21 on track, pipeline increased

· Resilient operational performance, with 2,609 beds delivered. Six developments were completed ahead of the academic year despite lockdown restrictions and one scheme subsequent to the year end.

· 2,730 beds across six sites forward sold for delivery in FY21, with a further development (462 beds) in negotiation for forward sale.

· 1,168 beds across four sites forward sold for delivery in FY22, including sites in Bristol, York and Leicester forward sold subsequent to the year end.

· Added prime sites to the pipeline in Bristol, Bath, Edinburgh, Guildford and Manchester.

· Obtained planning for 1,217 PBSA beds across five sites, including an additional 100 beds at Kelaty House, Wembley.

· Signed an on-campus partnership agreement with Cranfield University for delivery in FY21 (415 beds) and FY22 (198 beds).

· Total secured development pipeline of 7,910 student beds across 20 sites, for delivery between FY21 and FY24.

 

 

PBSA beds

 

Total pipeline

FY21

FY22

FY23

FY24

FY25

Forward sold

3,898

2,730

1,168

-

-

-

Forward sales in negotiation

714

462

-

252

-

-

Sites secured with planning

1,117

-

777

340

-

-

Sites secured subject to planning

2,181

-

-

1,846

335

-

Total secured

7,910

3,192

1,945

2,438

335

-

Site acquisitions in legals

1,998

-

-

662

570

766

Total PBSA pipeline

9,908

3,192

1,945

3,100

905

766

 

Accommodation management (Fresh) - strong operational performance in the face of the pandemic

· Fresh continued to perform well during the pandemic, as we focused on supporting student and tenant welfare.

· At 30 September 2020, Fresh managed 20,179 student beds and BtR apartments across 66 schemes (30 September 2019: 17,721 beds and apartments, across 64 schemes).

· Nine new PBSA schemes (3,593 beds) mobilised in the year, ready for occupation and management from the start of the 2020/21 academic year.

· Won mandates during the year for the future management of 1,414 PBSA beds.

· Currently appointed to manage 21,790 student beds and BtR apartments by FY23, including expected renewals.

· Began to implement new management system for both BtR and student accommodation, for roll out in FY21.

· Achieved COVID-secure accreditation for the properties Fresh manages and provided significant support to student and residential tenants throughout the pandemic.

 

Residential - solid performance and exploring opportunities to develop a presence in affordable housing

· Good performance against backdrop of COVID-19 pandemic, with 95 sales completions (FY19: 150 completions), including 25 apartments in our developments at Stratford and Bath.

· Completed the 35-apartment development at Trafford Street, Chester, which was forward sold in FY19.

· Strong pick up in sales in the summer months following the lifting of the initial COVID-19 lockdown measures and introduction of temporary stamp duty relief, with 25 sales reserved or exchanged going into FY21.

· Commenced development of a site for 97 homes in Preston, including 34 affordable homes.

· Pilot testing opportunity to combine our residential delivery capability with our proven residential for rent development model in the affordable housing sector.

· Secured, subsequent to the year end, our first affordable homes site for 245 homes in Crewe, with an offer progressing for the forward sale of 159 affordable and BtR homes.

 

Analyst meeting

 

A meeting for analysts will be held virtually at 09.30am today, 19 January 2021.  A copy of the Final Results presentation is available at the Group's website: http://www.watkinjonesplc.com

 

An audio webcast of the conference call with analysts will be available after 12pm today:

https://webcasting.buchanan.uk.com/broadcast/5fda032ac26cbe3059348df4