REG - Watkin Jones plc - Trading Update

Watkin JonesAnnouncement

19/07/2023 07:00

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RNS Number : 4346G  Watkin Jones plc  19 July 2023

 For immediate release  19 July 2023

 

Watkin Jones plc

('Watkin Jones' or the 'Group')

 

Trading Update

 

Watkin Jones today provides the following trading update for the year ending
30 September 2023.

 

At the time of the interim results on 23 May, we announced the forward sale of
our PBSA scheme in Bristol and noted that we had five other forward sales
targeted for completion in FY23, two of which were under offer. Since then, we
have completed the announced forward sale of Titanic Quarter in Belfast. In
the period since the interim results, market conditions have become more
challenging. In particular, the recent increases in interest rates and
prevailing economic uncertainty have impacted negatively on market liquidity.
As a result, there is now a greater degree of risk over these transactions
completing by the year end.

 

We have also reviewed our balance sheet against this more challenging
macro-economic backdrop and increased cost of funding. We continue to explore
the sale of a limited number of non-core assets on our balance sheet and
consider it prudent to reassess the carrying value of certain assets with the
expectation that this will result in an impairment charge of c. £10m.

 

Our schemes in build continue to progress in line with expectations. In the
event that we do not complete any new forward sales in the balance of the
year, and taking into account the impairment charge referenced above, we would
not expect to materially improve on the Underlying PBIT recorded in H1 of
£2m. Our current expectation is that these challenging market conditions will
persist into FY24, and against this more cautious backdrop, our FY24 PBIT is
likely to be in the range of £15m to £20m.

 

In line with recent announcements from other developers, we expect to increase
our exceptional provision for remedial works for legacy properties by an
additional £30m to £35m. This represents our current best estimate,
primarily reflecting our intention to sign the Government's Responsible Actors
Scheme, and our obligation to reimburse funds under the scheme, as well as an
update to cost estimates on remedial works for properties provided for in
FY22. The cash cost of this is expected to be spread over the next five years.
We are reviewing details of the Welsh Developers Pact and await further
information on the scope of the Scottish Safer Buildings Accord to understand
any implications for the Group.

 

Watkin Jones remains a UK market leader in residential for rent development,
focused on sectors with a very attractive long term growth outlook. The
strength of our balance sheet and agility of the business allow us to remain
proactive in the market. At 30 June 2023 our gross and net cash position was
£68m and £36m respectively.

 

- Ends -

 

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
 Alex Pease, Interim 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
 James Umbers/David Sheehan / Paul Bundred                                      www.jefferies.com (http://www.jefferies.com/)

 

Media enquiries:

 Buchanan
 Henry Harrison-Topham / Jamie Hooper  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 48,000 student beds
across 143 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 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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