Watkin Jones Plc – FY-2021 Trading Update

Watkin Jones plc

('WJ' or the 'Group')

FY-2021 Trading Update

Strong operational and financial performance; delivery pipeline enhanced

Watkin Jones plc (AIM:WJG), the UK's leading developer and manager of residential for rent homes, announces the following trading update for the year ended 30 September 2021 (the 'year' or '2021').

Financial highlights

• Operating profit for the year is anticipated to be in line with expectations.
• £430 million forecast revenue, which is slightly below expectations, but with a stronger gross margin, reflecting the timing of land sales either side of the year end.
• £125 million net cash at the end of the year, c. 50% above expectations.

Operational highlights

BtR and PBSA delivery

• All 5 BtR schemes (1,041 apartments) and 7 PBSA schemes (3,192 beds) scheduled for delivery in 2021 completed and handed over.
• Development works on track across 13 sites in build.
• Despite inflationary pressures, overall build costs are being closely managed and remain in line with our forecasts.

Accommodation management (Fresh)

• 22,220 student beds and BtR apartments currently under management by Fresh, an increase of 10.1% from last year.
• Positive customer satisfaction ratings achieved by Fresh during the pandemic, enhancing its brand.

Homes

• Residential sales of 79 homes in 2021.
• Affordable homes pilot on track – planning consents secured for 296 homes on sites in Crewe and Llay, Wrexham and forward sales of 182 homes agreed.

Strong institutional demand

Good progress made in securing forward sales:

• 3 BtR schemes (722 apartments) and 8 PBSA schemes (2,435 beds) forward sold since the start of 2021, with a total revenue value to WJ of c. £450 million.
• The above includes new forward sales achieved since our 6 September trading update, with a total revenue value to WJ of c. £227 million:
• 322 BtR apartments in Lewisham, South-East London, for delivery in two phases in 2023 and 2024, sold to L&G.
• 645 PBSA beds across two developments in Edinburgh, for delivery in 2022, sold to Singapore Press Holdings (a Singapore listed media and property group).
• 286 PBSA beds in Colchester, for delivery in 2023, to be built under a development agreement with Moorfield.
• 551 apartment BtR development in Birmingham and 295 bed PBSA development in Edinburgh in legals for sale.

Continued enhancement of secured BtR and PBSA development pipeline

Since our 6 September trading update WJ has:

• Secured planning consents for 877 PBSA beds on sites in Birmingham and Nottingham.
• Added further sites to the pipeline, which now has a future revenue value of £1.75 billion:

BtR pipeline

PBSA pipeline

*The change since H1-2021 excludes 2021 deliveries.

• Our pipeline for BtR and PBSA deliveries for 2023 has been reduced as a result of Covid-19 related planning delays.  However, with the growth in the 2024 and 2025 pipeline, our forward sale model still ensures multi-year revenue performance through 2022 and 2023.

Richard Simpson, Chief Executive Officer of Watkin Jones, said: “It's been a year of good progress for Watkin Jones.  Our end-to-end development capability, combined with favourable market dynamics and our capital light business model, has enabled us to deliver a strong operational and financial performance.  During the year, we continued to enhance the future value of our BtR and PBSA pipeline and reinforce our reputation with institutional investors as the UK's leading residential for rent developer.  This, together with the ongoing re-focusing of our homes business into the affordable housing market, provides a robust platform for sustained earnings growth.”