Coronavirus Update

Watkin Jones Plc - Half Year Results March 2021

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Watkin Jones plc

('Watkin Jones' or the 'Group')

Half year results for the six months to 31 March 2021

'Maintaining momentum as confidence returns'

Watkin Jones plc (AIM:WJG), the UK's leading developer and manager of residential for rent, with a focus on the build to rent ('BtR') and purpose built student accommodation ('PBSA') sectors, announces its results for the six months ended 31 March 2021 ('H1-2021' or the 'period').

Financial Highlights

 

H1-2021

H1-2020

(Restated1)

Movement

 

 

 

 

 

 

Revenue

 

£178.4 million

 

£185.7 million

 

-3.9%

 

Gross profit

 

£41.3 million

 

£42.3 million

 

-2.3%

 

Operating profit

 

£29.1 million

 

£29.6 million

 

-1.8%

 

Profit before tax

 

£25.8 million

 

£26.7 million

 

-3.3%

 

EBITDA

 

£33.4 million

 

£34.2 million

 

-2.5%

 

Basic earnings per share

 

8.11 pence

 

8.46 pence

 

-4.1%

 

Dividend per share

 

2.6 pence

 

Nil pence

 

-

 

Cash

 

£88.7 million

 

£72.4 million

 

-

 

Net cash2

 

£31.7 million

 

£37.5 million

 

-

Commenting on the interim results, Richard Simpson, Chief Executive Officer of Watkin Jones, said: "As we begin to emerge from the pandemic, we are seeing increasing investor confidence in our market sectors.  We've maintained the momentum from the second half of last year and made further good progress in securing new forward sales, adding to our development pipeline and keeping all our construction activities on track 

"All parts of the business have continued to perform well, and whilst our profit for the first half of the year was slightly below last year, this was because the first half last year was largely 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, driving growing institutional demand, and combined with the continued progress we have made in the first half of the year, gives us confidence in our future trading."

Financial headlines

  • £29.1 million operating profit, slightly below last year's pre-pandemic level
  • 33% of revenue was from BtR, showing its increasing importance to the Group (H1-2020: 22%)
  • 23.2% gross margin, up 0.4% points (H1-2020: 22.8%), with a robust performance across all our businesses
  • £146.3 million total liquidity available, being cash and available debt facilities (H1-2020: £153.4 million)2.6 pence per share interim dividend (H1-2020: nil pence)

Notes

1.  The comparative results for H1-2020 have been restated for an adjustment to opening IFRS 16 lease assets and liabilities.  Further details are provided in note 3 to the interim financial statements.

2.  Net cash is stated after deducting site specific bank loans and other interest-bearing loans, but before deducting IFRS 16 lease liabilitie

Business Highlights

Operational resilience demonstrated across all parts of the Group

  • Work is on track on all 15 BtR and PBSA developments currently being built
  • 3,424 new student bed property management mandates for Fresh since the start of the year
  • Residential sales momentum maintained

Continued progress in forward sales market

  • 909 beds across three PBSA developments contracted in the period
  • 462-bed PBSA development in Leicester contracted after the half yea
  • 722 BtR apartments in advanced legals for sale, these being Hove (216 apartments), Leicester (184 apartments) and Lewisham (322 apartments)
  • 295-bed PBSA development in Edinburgh for delivery in FY23, sale terms agreed

Development pipeline further enhanced

  • £1.6 billion future revenue value now in our secured development pipeline (up from £1.0 billion last year):

 

Current

H1-2020

January 2021 Update

BtR (apartments)

5,008

2,660

4,466

PBSA (beds)

8,509

7,200

7,910

Future revenue value

c.£1.6 billion*

c.£1.0 billion*

c.£1.5 billion

* Excluding the revenue delivered in the period.

  • 542 BtR apartments and 599 PBSA beds added to our pipeline since our last update in January 2021:

 

BtR

(apartments)

PBSA

(beds)

January 2021 update

4,466

7,910

New sites secured:

 

 

 Edinburgh

524

286

 Swansea

-

350

 

524

636

Design changes

18

(37)

Current

5,008

8,509


Planning secured for our first co-living scheme, for 133 beds in Exeter, in which tenants have a private studio with shared communal facilities

Market dynamics supportive

  • Significant increase in institutional demand for PBSA; confidence returning in occupancy levels for 2021-2022 academic year
  • Growing institutional demand for BtR

Affordable homes opportunity

  • Pilot on track