REG - Watkin Jones plc - Half Year Results
Thu 07:00
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RNS Number : 4974K Watkin Jones plc 29 May 2025
29 May 2025
Watkin Jones plc
(the 'Group')
HY Results for the six months ended 31 March 2025
Positive operational progress underpinned by a resilient and diversified model
The Group announces its interim results for the half year ended 31 March 2025
('HY25' or 'the period').
Adjusted Results ((1)) Statutory Results
HY25 HY24 HY25 HY24
Revenue £129.2m £175.1m £129.2m £175.1m
Gross profit £14.4m £18.4m £14.4m £18.4m
Operating profit £0.4m £4.0m £0.4m £4.0m
Profit / (loss) before tax £0.2m £3.4m (£0.9m) £2.1m
Basic earnings / (loss) per share 0.05p 0.99p (0.27p) 0.62p
Adjusted net cash((2)) £73.4m £44.0m
(1) For HY25 Adjusted Profit before tax and Adjusted Earnings per share
are calculated before the impact of an exceptional finance cost of £1.1
million (HY24: £1.3 million) for the unwinding of the discount rate on the
Building Safety provision.
(2) Adjusted net cash is stated after deducting interest bearing loans and
borrowings, but before deducting IFRS 16 operating lease liabilities of £37.4
million as at 31 March 2025 (31 March 2024: £44.7 million).
HY25 Highlights
· Revenue of £129.2 million (HY24: £175.1 million) delivered
primarily from in-build schemes, with two reaching successful completion in
the period
· Two new development partnerships signed for schemes in Southwark and
St Helens
· Operating profit of £0.4m (HY24: £4.0 million) achieved as a result
of strong construction delivery, with gross margins in line with previous
guidance against a backdrop of continuing limited transactional liquidity in
the market
· Maintained focus on effective cash management resulting in improved
period end gross and net cash balances of £86.8 million and £73.4 million,
respectively (HY24: £67.1 million and £44.0 million, respectively)
· Recently secured one development site subject to planning,
selectively building future pipeline
· Planning submitted for a further 722 PBSA and Co-living beds across
two schemes
· The Board is prioritising the maintenance of financial flexibility
during this period of market disruption and consequently is not declaring an
interim dividend; the Board will keep this approach under review.
Outlook
· Whilst the external market backdrop remains challenging, we continue
to focus on the factors within our control:
- successfully delivering our in-build projects
- carefully managing our costs and cash, and
- further broadening our revenue base with new sources of income
· As UK economic sentiment recovers, transactional liquidity should
improve
· Medium term outlook remains robust, underpinned by attractive sector
fundamentals within both the PBSA and BTR markets
· c.£270 million of contractually secure forward sold revenue as at 31
March 2025, of which c.£105 million is for delivery in the second half of the
year. Total secured pipeline of c.£1.1 billion
· Several schemes are currently being marketed with a number of further
forward sales from this pipeline targeted in H2 25 to enable delivery of full
year performance in line with current market expectations
· Encouraging progress on Refresh, with an active pipeline being
pursued.
Alex Pease, Chief Executive Officer of Watkin Jones, said: "I am pleased to
report that trading in the first half was in line with our expectations,
despite the continuing challenging market backdrop, as a result of our focus
on operational delivery, cost management and cash generation. Our in-build
schemes continue to trade in line with our previous guidance, and the two new
development partnerships secured in the period demonstrate our ability to be
proactive and innovative in deploying our market-leading skills and experience
in constructing and refurbishing residential for rent real estate.
"We continue to actively market and engage with investors on our development
opportunities which are attracting interest, supported by the attractive
fundamentals of the PBSA and BTR sectors in which we operate. Whilst
transactional activity remains slow and subject to a continuing volatile
market backdrop, we are focussed on ensuring that the Group remains in the
best position to exploit opportunities as conditions improve."
Analyst meeting
There will be a pre-recorded audiocast of the HY25 Results presentation
available to view on the Group's website (www.watkinjonesplc.com
(https://protect.checkpoint.com/v2/___http:/www.watkinjonesplc.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzozNWJhMmY2Zjk1OTk3YWQ3ZGY4YWI3MTZkMjk2NWJkMTo2OmY3Yzg6MmVjZDUxNTg3YTljOWQ5YjU1MzJmMTIwNWJhYWU5Zjg4MTMyODcwYmJiZmU2ODMwMzdhNmU2NjA2MThlODlmNTpwOkY6Tg)
) from 7am (BST) today. At 9.30am (BST), there will be a live 30-minute
Q&A webcast for sell-side analysts, hosted by Alex Pease (CEO) and Simon
Jones (CFO). Those analysts wishing to join and receive dial in details
should register their interest via MHP
(mailto:watkinjones@mhpgroup.com?subject=I%20would%20like%20details%20of%20WJG%20analyst%20webcast%20please)
.
For further information:
Watkin Jones plc
Alex Pease, Chief Executive Officer Tel: +44 (0) 20 3617 4453
Simon Jones, Chief Financial Officer www.watkinjonesplc.com
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Peel Hunt LLP (Nominated Adviser & Joint Corporate Broker) Tel: +44 (0) 20 7418 8900
Mike Bell / Ed Allsopp www.peelhunt.com
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Jefferies Hoare Govett (Joint Corporate Broker) Tel: +44 (0) 20 7029 8000
James Umbers www.jefferies.com
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Media enquiries:
MHP Group
Reg Hoare / Rachel Farrington / Charles Hirst Tel: +44 (0) 7770 753544 / +44 (0) 7739 312199
watkinjones@mhpgroup.com www.mhpgroup.com
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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 over 50,000 student
beds across 147 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, where it has delivered 2,200
apartments across 12 schemes to date. In addition, Fresh, the Group's
specialist accommodation management business, manages c.20,000 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
(https://protect.checkpoint.com/v2/___http:/www.watkinjonesplc.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzozNWJhMmY2Zjk1OTk3YWQ3ZGY4YWI3MTZkMjk2NWJkMTo2OmY3Yzg6MmVjZDUxNTg3YTljOWQ5YjU1MzJmMTIwNWJhYWU5Zjg4MTMyODcwYmJiZmU2ODMwMzdhNmU2NjA2MThlODlmNTpwOkY6Tg)
.
Review of Performance
Results for the six months to 31 March 2025
Revenues for the period were £129.2 million (HY24: £175.1 million).
Operationally the Group's businesses have continued to perform well, with our
developments on site progressing in line with expectations. The decrease in
revenues reflects the continued lower level of transactional activity as well
as the contribution from the forward sale of our Gas Lane PBSA scheme in
Bristol in the HY24 comparator.
Gross profit was £14.4 million (HY24: £18.4 million), with gross margin at
11.1% slightly ahead of the prior year (HY24: 10.5%) and in line with our
current guidance.
Operating profit for the period on both a statutory and adjusted basis was
£0.4 million (HY24: £4.0 million), reflecting the decrease in revenues,
offset by continued strong cost control.
Net finance costs for the period were £1.3 million (HY24: £1.9 million).
Finance costs include £0.8 million (HY24: £0.8 million) in respect of the
interest on leases, and a discount rate unwind of £1.1 million (HY24: £1.3
million).
Loss before tax for the period was £0.9 million (HY24: profit before tax of
£2.1 million). Adjusted profit before tax for the period, which excludes
the exceptional finance costs of £1.1 million relating to the discount rate
unwind, was £0.2 million (HY24: £3.4 million). Adjusted basic earnings per
share for the period were 0.05 pence, compared to 0.99 pence for HY24.
Segmental review
Build to Rent ('BTR')
Revenues from BTR decreased by 9.5% in the period to £90.3 million (HY24:
£99.8 million). Revenues were derived from the build-out of our forward
sold developments, which are progressing well and on track for their
respective completions. Two schemes reached practical completion in the
period.
Gross profit for the period was £7.4 million (HY24: £9.3 million), with the
gross margin slightly reduced from the prior year to 8.2% (HY24: 9.3%).
Student accommodation ('PBSA')
Revenues from PBSA were lower than last year at £25.6 million (HY24: £61.0
million) reflecting the benefit of the forward sale in the prior year of our
Gas Lane scheme in Bristol, offset by continued strong build progress from our
other live schemes.
PBSA gross profit for the period was £3.9 million (HY24: £7.1 million) with
gross margin for the period increasing to 15.2% (HY24: 11.6%), benefiting from
our live schemes remaining on-programme and on-budget.
Refresh
Refresh, our asset refurbishment division launched in the prior year,
continued to demonstrate strong growth. Revenues for the period of £4.3
million (HY24: £0.5 million) reflected the division's success in an emerging
market, with expected contract margins remaining in line with initial
guidance.]
Accommodation management (Fresh)
Fresh achieved revenues of £4.2 million (HY24: £4.1 million), with units
under management broadly stable through the period. Two new schemes mobilised
towards the end of the period will benefit the second half.
Gross profit remained consistent with the prior period at £2.3 million (HY24:
£2.3 million), at a similar margin of 55.1% (HY24: 56.1%), reflecting strong
cost control in light of inflationary increases across operating expenses
including utilities.
Affordable-led Homes
The affordable-led residential development business continued to make progress
at our Crewe scheme and benefited from the start of a new development
partnership in St Helens. Revenue reduced to £4.8 million following
successful completion in FY24 of our Preston development (HY24: £8.9
million).
The gross profit achieved by the division reduced as a result of lower
revenues to £0.3 million (HY24: £0.4 million), at an improved margin of 6.3%
(HY24: 4.5%).
Balance sheet and liquidity
Our financial position and liquidity remain strong. We had a gross cash
balance at 31 March 2025 of £86.8 million (31 March 2024: £67.1 million),
whilst net cash stood at £73.4 million (31 March 2024: £44.0 million),
before deducting IFRS 16 lease liabilities.
The Group had undrawn headroom of £36.2 million on its revolving credit
facility ('RCF') with HSBC at 31 March 2025, giving total cash and available
facilities of £123.0 million, with a further optional £10.0 million
accordion facility.
Our strong liquidity position has been delivered through the receipt of bullet
payments due following practical completions on a number of schemes, offset by
the impact of our normal annual cash profile, which sees a higher utilisation
of cash in the first half of the year. Our inventory and work in progress
balance increased by a net £5.8 million, to £100.1 million as a result of
enabling works we have carried out on sites we have in the market.
Contract assets and receivables at 31 March 2025 stood at £34.3 million and
£27.4 million and had decreased £2.2 million and £3.8 million respectively
from the position at 30 September 2024. The contract assets relate primarily
to the final payments to be received on completion of the forward sold
developments in build, which increase as developments progress. Contract and
trade liabilities amounted to £82.4 million at 31 March 2025 and had
decreased by £6.9 million since FY24 year-end position.
Building Safety
We continue to focus on the delivery of our building safety rectification
obligations and have completed works on two buildings in the period with cash
spend in line with expectations. As previously reported, there remains
significant uncertainty in this area across the sector and, as for many other
participants in our industry, assets in scope and the scope and cost of works
continue to evolve.
Based on developments in the period to date, our provision remains unchanged
and we will continue to monitor this as discussions with building owners and
building investigations continue. We have utilised £4.0 million net of
contributions received from our Building Safety provision in HY25, completing
remedial works at two properties, with the discount on the provision also
being unwound by £1.1 million, resulting in a gross provision at 31 March
2025 of £57.0 million offset by reimbursement assets of £11.9 million.
ESG
Our ESG initiatives continue to progress significantly, with the majority of
our targets met or exceeded. These include achievement of BREEAM Excellent /
HQM 4* across the design of all schemes, EPC B and at least Wired score Gold.
In line with our commitment to the local environment we have achieved a
minimum rating of Excellent in the Considerate Constructor scheme. We continue
to drive social value in our developments including support of local
initiatives, refurbishment of community spaces and recent engagement with DIY
SOS in support of a local project.
We have recently signed a national charity framework with Mind, helping raise
money and support the good mental health of our colleagues.
As many of our key ESG objectives have a 2025 timing, we will be refreshing
our targets with a focus on social value and will announce these revised
targets in line with our annual report.
Dividend
The Board is continuing to prioritise the maintenance of financial flexibility
during this period of market disruption and consequently is not declaring an
interim dividend; the Board will keep this approach under review.
Outlook
We continue to focus on the factors within our control such as managing the
delivery of our in-build schemes, controlling costs and cash and broadening
our revenue base.
During the second half, these will continue to be our priorities together with
focusing on the successful divestment of the schemes that we have in the
market. Whilst the market for these assets remains challenging our schemes are
attracting interest with a number of further forward sales from this pipeline
targeted in H2 25 to enable delivery of full year performance in line with
current market expectations.
Alex Pease
Chief Executive Officer
29 May 2025
Consolidated Statement of Comprehensive Income
for the six month period ended 31 March 2025 (unaudited)
6 months to 31 March 2025 6 months to 31 March 2024
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Revenue 5 129,176 - 129,176 175,100 - 175,100
Cost of sales (114,765) - (114,765) (156,686) - (156,686)
Gross profit 14,411 - 14,411 18,414 - 18,414
Administrative expenses 6 (13,989) - (13,989) (14,411) - (14,411)
Operating profit 422 - 422 4,003 - 4,003
Finance income 955 - 955 580 - 580
Finance costs (1,205) (1,090) (2,295) (1,207) (1,259) (2,466)
Profit/(loss) before tax 172 (1,090) (918) 3,376 (1,259) 2,117
Income tax (expense)/credit 8 (43) 272 229 (844) 315 (529)
Profit/(loss) for the year attributable to ordinary equity holders of the 129 (818) (689) 2,532 (944) 1,588
parent
Other comprehensive income
That will not be reclassified to profit or loss in subsequent periods:
Net gain/(loss) on equity instruments designated at fair value through other 9 - 9 (244) - (244)
comprehensive income, net of tax
Total comprehensive income/(loss) for the year attributable to ordinary equity 138 (818) (680) 2,288 (944) 1,344
holders of the parent
Pence Pence Pence Pence Pence Pence
Earnings per share for the year attributable to ordinary equity holders of the
parent
Basic earnings/(loss) per share 9 0.050 (0.318) (0.268) 0.987 (0.368) 0.619
Diluted earnings/(loss) per share 9 0.050 (0.318) (0.268) 0.970 (0.362) 0.608
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2024
Year ended 30 September 2024
Before
exceptional Exceptional
items items Total
Notes £'000 £'000 £'000
Continuing operations
Revenue 5 362,371 - 362,371
Cost of sales (328,565) - (328,565)
Gross profit 33,806 - 33,806
Administrative expenses 6 (29,499) (7,001) (36,500)
Profit on disposal of subsidiary 6,260 - 6,260
Operating profit/(loss) 10,567 (7,001) 3,566
Share of loss in joint ventures (8) - (8)
Finance income 1,008 - 1,008
Finance costs (2,356) (2,517) (4,873)
Profit/(loss) before tax 9,211 (9,518) (307)
Income tax (expense)/credit (178) 2,380 2,202
Profit/(loss) for the year attributable to ordinary equity holders of the 9,033 (7,138) 1,895
parent
Other comprehensive income
That will not be reclassified to profit or loss in subsequent periods:
Net loss on equity instruments designated at fair value through other (236) - (236)
comprehensive income, net of tax
Total comprehensive income/(loss) for the year attributable to ordinary equity 8,797 (7,138) 1,659
holders of the parent
Pence Pence Pence
Earnings per share for the year attributable to ordinary equity holders of the
parent
Basic earnings/(loss) per share 3.521 (2.782) 0.739
Diluted earnings/(loss) per share 3.497 (2.763) 0.734
Consolidated Statement of Financial Position
as at 31 March 2025 (unaudited)
31 March 31 March 30 September
2025 2024 2024
Notes £'000 £'000 £'000
Non-current assets
Intangible assets 10,767 11,326 11,047
Investment property (leased) 18,606 22,062 20,751
Right of use assets 5,136 6,433 5,747
Property, plant and equipment 1,317 1,450 1,401
Investment in joint ventures 7,884 1 7,952
Reimbursement assets 7 10,774 4,010 6,147
Deferred tax asset 15,319 11,510 15,090
Other financial assets 875 871 866
70,678 57,663 69,001
Current assets
Inventory and work in progress 100,062 118,885 94,266
Contract assets 34,323 52,735 36,538
Trade and other receivables 27,350 34,043 31,191
Reimbursement assets 7 1,099 5,680 1,470
Current tax receivables 2,523 7,544 2,461
Cash and cash equivalents 12 86,827 67,088 96,962
252,184 285,975 262,888
Total assets 322,862 343,638 331,889
Current liabilities
Trade and other payables (80,547) (88,151) (86,054)
Contract liabilities (1,900) - (3,252)
Interest-bearing loans and borrowings - - -
Lease liabilities (7,733) (6,291) (7,750)
Provisions 7 (6,581) (22,545) (12,090)
(96,761) (116,987) (109,146)
Non-current liabilities
Interest-bearing loans and borrowings (13,443) (23,131) (13,591)
Lease liabilities (29,689) (38,368) (33,019)
Provisions 7 (50,399) (33,140) (43,543)
(93,531) (94,639) (90,153)
Total Liabilities (190,292) (211,626) (199,299)
Net assets 132,570 132,012 132,590
Equity
Share capital 2,567 2,567 2,567
Share premium 84,612 84,612 84,612
Merger reserve (75,383) (75,383) (75,383)
Fair value reserve of financial assets at FVOCI 171 181 162
Share-based payment reserve 2,440 2,067 1,780
Retained earnings 118,163 117,968 118,852
Total Equity 132,570 132,012 132,590
Consolidated Statement of Changes in Equity
for the six month period ended 31 March 2025 (unaudited)
Share Fair value of financial assets at FVOCI Share-based payment reserve Total
Share Premium £'000 £000 Retained £'000
Capital £'000 Merger earnings
£'000 Reserve £'000
£'000
Balance at 30 September 2023 2,564 84,612 (75,383) 425 1,407 116,380 130,005
Profit for the period - - - - - 1,588 1,588
Share-based payments - - - - 660 - 660
Issue of shares 3 - - - - - 3
Other comprehensive loss - - - (244) - - (244)
Balance at 2,567 84,612 (75,383) 181 2,067 117,968 132,012
31 March 2024
- - - - 307 307
Profit for the period -
Share-based payments - - - - 241 - 241
Other comprehensive income - - - (19) - 27 8
Deferred tax debited directly to equity - - - - - 22 22
Recycled reserve for fully vested share-based payment schemes - - - - (528) 528 -
Issue of shares - - - - - - -
Balance at 30 September 2024 2,567 84,612 (75,383) 162 1,780 118,852 132,590
- - - - - (689) (689)
Loss for the period
Share-based payments - - - - 660 - 660
Issue of shares - - - - - - -
Other comprehensive income - - - 9 - - 9
Dividend paid (note 10) - - - - - - -
Balance at 2,567 84,612 (75,383) 171 2,440 118,163 132,570
31 March 2025
Consolidated Statement of Cash Flows
for the six month period ended 31 March 2024 (unaudited)
6 months to 6 months to 12 months to
31 March 31 March 30 September
2025 2024 2024
Notes £'000 £'000 £'000
Cash flows from operating activities
Cash (outflow)/inflow from operations 11 (5,868) 2,676 27,521
Interest received 644 580 1,008
Interest paid (1,130) (1,206) (2,177)
Tax paid - (348) 3,872
Net cash (outflow)/inflow from operating activities (6,354) 1,702 30,224
Cash flows from investing activities
Acquisition of property, plant and equipment (129) (36) (120)
Proceeds on disposal of property, plant and equipment - 100 12
Proceeds on disposal of a subsidiary - - 6,260
Repayment of related party loan following disposal of subsidiary - - 18,540
Investment in joint venture interests - - (7,951)
Net cash (outflow)/inflow from investing activities (129) 64 16,741
Cash flows from financing activities
Payment of principal portion of lease liabilities (3,652) (1,670) (7,370)
Drawdown of RCF - - -
Repayment of bank loans and RCF - (5,439) (15,064)
Net cash outflow from financing activities (3,652) (7,109) (22,434)
Net (decrease)/increase in cash (10,135) (5,343) 24,531
Cash and cash equivalents at 96,962 72,431 72,431
beginning of the period
Cash and cash equivalents at 86,827 67,088 96,962
end of the period 12
Notes to the consolidated financial information
1. General information
Watkin Jones plc (the 'Company') is a limited company incorporated in the
United Kingdom under the Companies Act 2006 (Registration number 09791105).
The Company is domiciled in the United Kingdom and its registered address is
12 Soho Square, London, W1D 3QF.
The principal activities of the Company and its subsidiaries (collectively the
'Group') are the development and management of multi-occupancy residential
rental properties.
The consolidated interim financial statements of the Group for the six month
period ended 31 March 2025 comprises the Company and its subsidiaries. The
basis of preparation of the consolidated interim financial statements is set
out in note 2 below.
The financial information for the six months ended 31 March 2025 is
unaudited. It does not constitute statutory financial statements within the
meaning of Section 434 of the Companies Act 2006. The consolidated interim
financial statements should be read in conjunction with the financial
information for the year ended 30 September 24 which has been prepared in
accordance with international accounting standard in conformity with the
requirements of the Companies Act 2006. The report of the auditors on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498(2) of the
Companies Act 2006.
This report was approved by the directors on 29 May 2025.
2. Basis of preparation
This set of condensed consolidated interim financial statements has been
prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by
the UK. The interim financial statements have been prepared based on the UK
adopted International Financial Reporting Standards "IFRS" that are expected
to exist at the date on which the Group prepares its financial statements for
the year ended 30 September 2025. To the extent that IFRS at 30 September
2025 do not reflect the assumptions made in preparing the interim financial
statements, those financial statements may be subject to change.
The interim financial statements have been prepared on a going concern basis
and under the historical cost convention.
The interim financial statements have been presented in pounds sterling and
all values are rounded to the nearest thousand (£'000), except when otherwise
indicated.
The preparation of financial information in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of the
amount, event or actions, actual events may ultimately differ from those
estimates.
The interim financial statements do not include all financial risk information
and disclosures required in the annual financial statements and they should be
read in conjunction with the financial information that is presented in the
Company's audited financial statements for the year ended 30 September 2024.
There has been no significant change in any risk management policies since the
date of the last audited financial statements.
Going concern
At 31 March 2025, the Group had a robust liquidity position, with cash and
available headroom in its banking facilities totalling £123.0 million made up
of cash balances of £86.8 million and RCF headroom of £36.2 million. The RCF
can be used for the acquisition of land and associated development works, and
allows for a further £10.0 million accordion option within the facility.
Good liquidity has been maintained through the period, providing the Group
with a good level of cash and available banking facilities for the year ahead.
Group forecasts have been prepared that have considered the Group's current
financial position and market circumstances. We have prepared a base case
cash flow for the period to 30 June 2026 which is aligned to the Group's
business plan and trading assumptions for that period. Our currently secured
cash flow, derived from our forward sold developments and other contracted
income, net of overheads and tax, results in utilisation over the forecast
period albeit our cash position remains resilient. In addition to the
secured cash flow, the base case forecast assumes a number of new sales which,
if achieved, will improve that liquidity position.
In addition to the base case forecast, we have considered the possibility of
continued disruption to the forward sale market given the market turbulence
seen in the UK over recent years. This is our most significant risk as it
would greatly limit our ability to achieve any further disposals. We have
run a reasonable downside scenario to assess the possible impact of the above
risks, such that forward sales and new site acquisitions are delayed by up to
nine months. The cash forecast prepared under this scenario illustrates that
adequate liquidity is maintained through the forecast period and the financial
covenants under the RCF would still be met.
The minimum total cash and available facilities balance under this scenario is
£79.7 million (excluding the £10.0 million accordion facility).
We consider the likelihood of events occurring which would exhaust the total
cash and available facilities remaining to be remote. However, should such
events occur, management would be able to implement reductions in
discretionary expenditure and consider the sale of the Group's land sites to
ensure that the Group's liquidity was maintained.
Based on the thorough review and robust downside forecasting undertaken, and
having not identified any material uncertainties that may cast any significant
doubt, the Board is satisfied that the Group will be able to continue to trade
for the period to 30 June 2026 and has therefore adopted the going concern
basis in preparing the financial statements.
Building Safety Provision
The Group holds a provision for building safety remedial works, for which the
legislative and construction background was disclosed in the Group's audited
financial statements for the year ended 30 September 2024.
This is a highly complex area with significant estimates in respect of the
cost of remedial works, the quantum of any legal expenditure associated with
the defence of the Group's position in this regard, and the extent of those
properties within the scope of the applicable government guidance and
legislation, which continue to evolve. All our buildings were signed off by
approved inspectors as compliant with the relevant Building Regulations at the
time of completion.
The amount provided for these works has been estimated by reference to recent
industry experience and external quotes for similar work identified. The
investigation of the works required at many of the buildings is at an early
stage and therefore it is possible that these estimates may change over time
or if government legislation and regulation further evolves.
As a number of other housebuilders and developers have done over the last 12
months, we have included an additional amount of contingency within our
provision to reflect further buildings being identified as requiring
remediation, or for unforeseen remediation costs beyond management's current
knowledge. We have also implemented a consistent contingency policy across
the properties where work is yet to start.
We expect this cost to be incurred within the next four financial years, and
the provision has been discounted to its present value accordingly. The
timing of this expenditure will be dependent on the timely engagement by
building owners, revisions to programme under the new BSA Gateways, and the
availability of appropriately qualified subcontractors.
We continue to make progress with negotiating contributions from clients to
mitigate our liability in relation to these remedial works and at the balance
sheet date have recognised reimbursement assets of £11.9 million (30
September 2024: £7.6 million).
At the period end the Group remained in discussions with a number of property
owners whereby the legal responsibility or confirmation of fire safety
remediation requirements remains uncertain and which therefore form part of
the Group's contingent liabilities. As referred to above, the clarification of
whether these liabilities crystallise is dependent on multiple factors which
are expected to be concluded in the next 12 to 24 months.
At the same time the Group continues to explore opportunities to recover the
costs of remediation through the Group's insurance providers and supply chain.
However, no benefit has been assumed within the provision unless contractual
terms have been established.
We will continue to keep abreast of any changes to legislation and guidance,
recognising that the approach to building safety continues to evolve.
Should the costs associated with these remedial works increase by 10%, the
provision required would increase by £3.1 million. Should the discount rate
applied to the calculation reduce by 1%, the provision required would increase
by £0.7 million. Further details of the provision are set out in note 7.
Should an additional property be identified which requires remedial works for
which the Group is liable, it would be reasonable to estimate the additional
cost at £0.9 million.
3. Accounting policies
The accounting policies used in preparing these interim financial statements
are the same as those set out and used in preparing the Company's audited
financial statements for the year ended 30 September 2024.
4. Segmental reporting
The Group has identified six segments for which it reports under IFRS 8
'Operating segments', as follows:
A Student accommodation - the development of purpose-built
student accommodation;
B Build to rent - the development of build to rent
accommodation;
C Residential - the development of residential property for
sale;
D Refresh - the refurbishment, redevelopment and repurposing
of existing accommodation;
E Accommodation management - the management of student
accommodation and build to rent property; and
F Corporate - revenue from the development of commercial
property forming part of mixed-use schemes and other revenue and costs not
solely attributable to any one other operating segment.
Performance is measured by the Board based on gross profit as reported in the
management accounts. Apart from inventory and work in progress, no other
assets or liabilities are analysed into the operating segments.
6 months to 31 March 2025 (unaudited) Student Build to Residential Refresh Accommodation Corporate Total
Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segmental revenue 25,605 90,278 4,758 4,343 4,175 17 129,176
Segmental gross profit 3,903 7,351 264 615 2,301 253 14,687
Impairment of inventory for aborted pipeline assets - - - - - (276) (276)
Gross profit/(loss) 3,903 7,351 264 615 2,301 (23) 14,411
Administration expenses - - - - (2,391) (11,598) (13,989)
Finance income - - - - - 955 955
Finance costs - - - - - (1,205) (1,205)
Exceptional finance costs - - - - - (1,090) (1,090)
Profit/(loss) before tax 3,903 7,351 264 615 (90) (12,961) (918)
Taxation - - - - - 229 229
Profit/(loss) for the period 3,903 7,351 264 615 (90) (12,732) (689)
Inventory and WIP 44,014 31,331 22,831 207 - 1,679 100,062
Student Build to Residential Refresh Accommodation Corporate Total
6 months to 31 March 2024 (unaudited) Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segmental revenue 60,482 99,755 8,920 545 4,067 1,331 175,100
Segmental gross profit 7,020 9,266 403 87 2,347 111 19,234
Impairment of inventory for aborted pipeline assets - - - - - (820) (820)
Gross profit 7,020 9,266 403 87 2,347 (709) 18,414
Administration expenses - - - - (2,512) (11,899) (14,411)
Finance income - - - - - 580 580
Finance costs - - - - - (1,207) (1,207)
Exceptional finance costs - - - - - (1,259) (1,259)
Profit/(loss) before tax 7,020 9,266 403 87 (165) (14,494) 2,117
Taxation - - - - - (529) (529)
Profit/(loss) for the period 7,020 9,266 403 87 (165) (15,023) 1,588
Inventory and WIP 74,729 18,200 23,986 - - 1,970 118,885
Year ended Student Build to Residential Refresh Accommodation Corporate Total
30 September 2024 Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Segmental revenue 117,604 211,267 12,879 10,896 8,064 1,661 362,371
Segmental gross profit 13,634 18,019 (232) 1,548 4,390 (2,784) 34,575
Impairment of land assets - - - - - (769) (769)
Gross profit 13,634 18,019 (232) 1,548 4,390 (3,553) 33,806
Administration expenses - - - - (4,799) (24,700) (29,499)
Profit on disposal of subsidiary 6,260 - - - - - 6,260
Exceptional administrative expenses - - - - - (7,001) (7,001)
Operating profit 19,894 18,019 (232) 1,548 (409) (36,925) (3,566)
Share of operating loss in joint ventures - - - - - (8) (8)
Finance income - - - - - 1,008 1,008
Finance costs - - - - - (2,356) (2,356)
Exceptional finance costs - - - - - (2,517) (2,517)
Profit/(loss) before tax 19,894 18,019 (232) 1,548 (409) (39,127) (307)
Taxation - - - - - 2,202 2,202
Profit/(loss) for the period 19,894 18,019 (232) 1,548 (409) (36,925) 1,895
Inventory and WIP 42,701 25,958 23,511 508 - 1,588 94,266
5. Disaggregated revenue information
6 months to 31 March 2025 (unaudited) Student Build to Residential Refresh Accommodation Corporate Total
Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Type of goods or service
Construction contracts or development agreements 19,955 90,278 3,748 4,343 - - 118,324
Sale of land - - - - - - -
Sale of completed property - - 1,000 - - - 1,000
Rental income 5,650 - 10 - - 17 5,677
Accommodation management - - - - 4,175 - 4,175
Total revenue from contracts with customers 25,605 90,278 4,758 4,343 4,175 17 129,176
Timing of revenue recognition
Goods transferred at a point in time - - 1,000 - - - 1,000
Services transferred over time 25,605 90,278 3,758 4,343 4,175 17 128,176
Total revenue from contracts with customers 25,605 90,278 4,758 4,343 4,175 17 129,176
6 months to 31 March 2024 (unaudited) Student Build to Residential Refresh Accommodation Corporate Total
Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Type of goods or service
Construction contracts or development agreements 46,306 99,755 - 545 - - 146,606
Sale of land 9,850 - - - - - 9,850
Sale of completed property - - 8,909 - - 1,276 10,185
Rental income 4,326 - 11 - - 55 4,392
Accommodation management - - - - 4,067 - 4,067
Total revenue from contracts with customers 60,482 99,755 8,920 545 4,067 1,331 175,100
Timing of revenue recognition
Goods transferred at a point in time 14,176 - 8,909 - - 1,276 24,361
Services transferred over time 46,306 99,755 11 545 4,067 55 150,739
Total revenue from contracts with customers 60,482 99,755 8,920 545 4,067 1,331 175,100
Year ended Student Build to Residential Refresh Accommodation Corporate Total
30 September 2024 Accommodation rent management
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Type of goods or service
Construction contracts or development agreements 97,765 211,267 6,699 10,896 - - 326,627
Sale of land 9,850 - - - - 1,457 11,307
Sale of completed property - - 6,159 - - - 6,159
Rental income 9,989 - 21 - - 204 10,214
Accommodation management - - - - 8,064 - 8,064
Total revenue from contracts with customers 117,604 211,267 12,879 10,896 8,064 1,661 362,371
Timing of revenue recognition
Goods transferred at a point in time 9,850 - 6,453 - - 1,457 17,760
Services transferred over time 107,754 211,267 6,426 10,896 8,064 204 344,611
Total revenue from contracts with customers 117,604 211,267 12,879 10,896 8,064 1,661 362,371
6. Exceptional costs
6 months to 6 months to 12 months to
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Recognised in administrative expenses
Building Safety provision - - 7,001
Total exceptional items recognised in administrative expenses - - 7,001
Recognised in finance costs
Unwind of discount rate on Building Safety provision 1,090 1,259 2,517
Total exceptional items recognised in finance costs 1,090 1,259 2,517
Total exceptional costs 1,090 1,259 9,518
No further exceptional administrative expenses related to the Building Safety
provision have been incurred in the period ended 31 March 2025. The
provision made in the prior year has been unwound to its present value,
resulting in finance costs of £1,090,000 in this period.
7. Provisions
Building Safety provision
Reimbursement
Provision asset Total
£'000 £'000 £'000
At 1 October 2024 55,633 (7,617) 48,016
Arising during year 4,646 (4,646) -
Utilised (4,562) 563 (3,999)
Unwind of discount rate 1,263 (173) 1,090
At 31 March 2025 56,980 (11,873) 45,107
The provision is classified as follows:
Reimbursement
Provision asset Total
At 31 March 2025 £'000 £'000 £'000
Current 6,581 (1,099) 5,482
Non-current 50,399 (10,774) 39,625
Total 56,980 (11,873) 45,107
Reimbursement
Provision asset Total
At 31 March 2024 £'000 £'000 £'000
Current 22,545 (5,680) 16,865
Non-current 33,140 (4,010) 29,130
Total 55,685 (9,690) 45,995
A net provision of £48,016,000 was held at 30 September 2024 for the Group's
anticipated contribution towards the cost of building safety remedial works.
No new net provision has been recognised during the period ended 31 March
2025.
The net provision at 31 March 2025 amounts to £45,107,000, of which
£5,482,000 is expected to be incurred in the next twelve months to 31 March
2026, with £39,625,000 expected to be incurred between 1 April 2026 and 30
September 2029. The provision has been discounted to its present value
accordingly, at a risk-free rate of 4.15% based on UK five-year gilt yields
(2024: 4.10%).
The judgements and estimates surrounding this provision and corresponding
reimbursement assets are set out in note 2.
8. Income taxes
The tax expense for the period has been calculated by applying the expected
effective tax rate for the financial year ending 30 September 2025 of 25.00%
to the profit for the period.
9. Earnings per share
Basic earnings per share ("EPS") amounts are calculated by dividing the net
profit or loss for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares in issue during the
year.
The following table reflects the income and share data used in the basic EPS
computations:
6 months to 6 months to 12 months to
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
(Loss)/profit for the period attributable to ordinary equity holders of the (689) 1,588
parent
1,895
1,090 1,259 9,518
Add back exceptional items for the period
(272) (315) (2,380)
Less corporation tax benefit from exceptional items for the period
Adjusted profit for the period attributable to ordinary equity holders of the 129 2,532 9,033
parent
Number of shares Number of shares Number of shares
Number of ordinary shares for basic earnings per share 256,653,097 256,476,560
256,564,829
Adjustments for the effects of dilutive potential ordinary shares 395,495 4,562,022
1,736,691
Weighted average number for diluted earnings per share 257,048,592 261,038,582
258,301,520
Pence Pence Pence
Basic (loss)/earnings per share
Basic (loss)/profit for the period attributable to ordinary equity holders of (0.268) 0.619 0.739
the parent
Adjusted basic earnings/(loss) per share (excluding exceptional items after
tax)
Adjusted profit/(loss) for the period attributable to ordinary equity holders 0.050 0.987 3.521
of the parent
Diluted (loss)/earnings per share
Basic (loss)/profit for the period attributable to diluted equity holders of (0.268) 0.608 0.734
the parent
Adjusted diluted earnings/(loss) per share (excluding exceptional items after
tax)
Adjusted profit/(loss) for the period attributable to diluted equity holders 0.050 0.970 3.497
of the parent
10. Dividends
6 months to 6 months to 12 months to
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Dividends paid - - -
- - -
No interim dividend is proposed for the period ended 31 March 2025 (31 March
2024: nil pence per ordinary share). As such, no liability (31 March 2024:
liability of £nil) has been recognised at that date. At 31 March 2025, the
Company had distributable reserves available of £41,643,000 (31 March 2024:
£41,115,000).
11. Reconciliation of profit before tax to net cash flow
from operating activities
6 months to 6 months to 12 months to
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
(Loss)/profit before tax (918) 2,117 (307)
Depreciation of leased investment properties and right-of-use assets 2,962 2,933 5,935
Depreciation of plant and equipment 212 225 411
Amortisation of intangible assets 280 280 559
Profit of disposal of subsidiary - - (6,260)
Loss on sale of plant and equipment - 21 91
Finance income (955) (580) (1,008)
Finance costs 2,295 2,466 4,873
Share of loss in joint ventures - - 8
(Increase)/decrease in inventory and work in progress (5,797) 4,631 10,711
Decrease/(increase) in contract assets 2,214 13,633 29,830
Decrease/(increase) in trade and other receivables 3,841 1,061 3,913
(Decrease)/increase in contract liabilities (1,351) (1,469) 1,783
(Increase)/decrease in reimbursement assets (4,083) 1,425 3,748
Decrease in trade and other payables (5,312) (13,309) (14,689)
Increase/(decrease) in provisions 84 (11,418) (12,978)
Increase in share-based payment reserve 660 660 901
Net cash (outflow)/inflow from operating activities (5,868) 2,676 27,521
12. Analysis of net cash/(debt)
31 March 31 March 30 September
2025 2024 2024
£'000 £'000 £'000
Cash at bank and in hand 86,827 67,088 96,962
Bank loans (13,443) (23,131) (13,591)
Net cash before deducting lease liabilities 73,384 43,957 83,371
Lease liabilities (37,422) (44,659) (40,769)
Net cash/(debt) 35,962 (702) 42,602
- Ends -
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