Richard Simpson, Chief Executive Officer of Watkin Jones, said:
“The rapid roll-out of the COVID-19 vaccine in the UK and decline in infections is beginning to restore some normality and confidence to the UK economy and our market sectors. We've maintained momentum from the second half of last year, making further good progress in securing new forward sales, adding to our development pipeline and with our construction activities all on track.
“We anticipate our profit for the first half of the year to be in line with our expectations and slightly below last year, which was before the onset of the disruption caused by the pandemic.
“The fundamentals supporting the markets for high quality build to rent and student accommodation assets remain strong and with the continued progress we have made in the first half of the year, gives us confidence in our future trading.”
H1-2021 performance
· Adjusted EBIT anticipated to be in line with our expectations and slightly below H1-2020, which was before the COVID-19 disruption to our operations and the markets in which we operate.
· Good half year liquidity position, with gross cash of c.£88.0 million (H1-2020: £72.4 million) and net cash of c.£31.0 million (H1-2020: £37.5 million), after deducting site specific loans.
· Construction activities on track across all BtR and PBSA developments.
· Revenues from Fresh property management business resilient, despite short term disruption across the higher education sector; income supported by new mandates won since the start of the year for 2,619 PBSA beds.
· Sales levels within the Homes business robust.
· Cladding remedial works relating to fire safety progressing in line with previous guidance; increased clarity in future direction of government policy supportive of our position.
· Affordable housing pilot progressing to plan.
Continued momentum in securing forward sales
· Contracts exchanged subsequent to the period end for the sale of our 462 bed PBSA development in Leicester to Deutsche Finance International ('DFI') for a value of £35.6 million, payable on completion of the asset. The development is scheduled for completion in FY-2021 ahead of the 2021/22 academic year and is to be managed by Fresh. This transaction represents DFI's second acquisition of PBSA in the UK and their first with Watkin Jones.
· Legals progressing on the forward sale of our BtR developments in Leicester, Hove and Lewisham (London) and terms agreed for the forward sale of a 295 bed PBSA scheme in Edinburgh, subject to planning.
· Total forward sales of four PBSA developments (1,371 beds) since the start of the year.
· Legals progressing for the forward sale of 159 homes on our affordable housing pilot site in Crewe.
Development pipeline further enhanced since our last update in January
· New PBSA site for 350 beds secured in Swansea.
· Secured development pipeline currently comprises approximately 4,500 BtR apartments and 8,250 PBSA beds (H1-2020: 2,660 BtR apartments and 7,200 PBSA beds), with a future revenue value of c.£1.4 billion, excluding the revenue delivered in the period (H1-2020: £1.0 billion).
· Legal negotiations progressing on attractive new sites to be acquired across all residential for rent segments.
Board succession
As part of our orderly Board succession planning, several changes are being planned for the future. Having led the Board successfully since the Group's IPO in 2016, Grenville Turner, Non-Executive Chairman, is intending to retire at the end of this year and a search for his successor has commenced. In addition, Phil Byrom, Chief Financial Officer, is planning to retire next year, after nearly 20 years' service in both the private family company and through its transition to being publicly listed. The recruitment process for his successor has also been started.
Notice of Interim Results
The Group's Interim Results will be announced on Tuesday, 18 May 2021. There will be a conference call for analysts at 09.30am on the day of the announcement, hosted by CEO Richard Simpson and CFO Phil Byrom. Please contact Buchanan at watkinjones@buchanan.uk.com if you would like to receive the dial in details.