REG - Watkin Jones plc - FY-2022 Trading Update

Watkin JonesAnnouncement

04/10/2022 07:00

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RNS Number : 6354B  Watkin Jones plc  04 October 2022

     4 October 2022

 

 

Watkin Jones plc

 

FY-2022 Trading Update

 

Watkin Jones plc (the "Group") provides the following trading update for the
year ended 30 September 2022 (the 'year' or 'FY-2022'):

 

FY-2022 trading

 

The Group delivered a strong operational performance in the second half of the
year, continuing to manage and deliver across both its PBSA and BTR
development programmes.

 

Investor demand for residential for rent assets has remained strong, with
three BTR schemes (in Leatherhead, Bath and Cardiff) and three PBSA schemes
(in Nottingham, Swansea and Bath) forward sold in H2-2022, bringing the total
of forward sales transacted in the year to £0.9 billion, compared to £0.3
billion at H1-2022.  In addition, the Group achieved a strong financial
outcome on the sale of the two leasehold assets, which had previously been
flagged.

 

While in H1-2022 build cost inflation was mitigated by increasing asset
values, the Group has seen some pricing and margin softness on sales concluded
in the second half, with purchasers facing increased funding costs. Two
forward sales that were planned to close in September have been impacted by
the recent market volatility, and these are now planned to transact in
FY-2023. As a result, whilst H2-2022 performance was materially stronger than
H1-2022, the Board now expects FY-2022 underlying operating profit to be c.10%
below current market expectations.

 

The Group continues to benefit from a strong balance sheet with gross and net
cash, as at 30 September 2022, of approximately £105 million and £75 million
respectively.

 

Outlook

 

Whilst there remains considerable uncertainty around macroeconomic conditions
in the short term, the Group retains very good visibility over its development
pipeline, has low levels of asset exposure and strong liquidity.

 

We have good revenue visibility coming into the next financial year with c.
£270m of revenue secured, and expect demand from institutions for residential
for rent assets to remain robust. However we also believe it is prudent to
assume that margin pressure as a result of purchasers' elevated borrowing
costs will continue into FY-2023.

 

Our balance sheet strength provides a distinct competitive advantage for the
Group. We will seek to take advantage of attractive land acquisition
opportunities, which should support margin recovery as market conditions
normalise.

 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 as it forms part of UK Domestic
Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

 

For further information:

 Watkin Jones plc
 Richard Simpson, Chief Executive Officer  Tel: +44 (0) 20 3617 4453
 Sarah Sergeant, Chief Financial Officer   www.watkinjonesplc.com (http://www.watkinjonesplc.com/)

 Peel Hunt LLP (Nominated Adviser & Joint Corporate Broker)                  Tel: +44 (0) 20 7418 8900
 Mike Bell / Ed Allsopp                                                      www.peelhunt.com (http://www.peelhunt.com/)

 Jefferies Hoare Govett (Joint Corporate Broker)                             Tel: +44 (0) 20 7029 8000
 Max Jones / James Umbers                                                    www.jefferies.com (http://www.jefferies.com/)

 

 

Media enquiries:

 Buchanan
 Henry Harrison-Topham / Stephanie Whitmore  Tel: +44 (0) 20 7466 5000
 watkinjones@buchanan.uk.com                 www.buchanan.uk.com

 

 

Notes to Editors

Watkin Jones is the UK's leading developer and manager of residential for
rent, with a focus on the build to rent, student accommodation and affordable
housing sectors The Group has strong relationships with institutional
investors, and a reputation for successful, on-time-delivery of high quality
developments.  Since 1999, Watkin Jones has delivered 46,000 student beds
across 136 sites, making it a key player and leader in the UK purpose-built
student accommodation market, and is increasingly expanding its operations
into the build to rent sector.  In addition, Fresh, the Group's specialist
accommodation management business, manages over 22,000 student beds and build
to rent apartments on behalf of its institutional clients.  Watkin Jones has
also been responsible for over 80 residential developments, ranging from
starter homes to executive housing and apartments.

 

The Group's competitive advantage lies in its experienced management team and
capital-light business model, which enables it to offer an end-to-end solution
for investors, delivered entirely in-house with minimal reliance on third
parties, across the entire life cycle of an asset.

 

Watkin Jones was admitted to trading on AIM in March 2016 with the ticker
WJG.L.  For additional information please visit www.watkinjonesplc.com
(http://www.watkinjonesplc.com/)

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