REG - Watkin Jones plc - Full Year Results
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RNS Number : 6629L Watkin Jones plc 16 December 2025
16 December 2025
Watkin Jones plc
('Watkin Jones' or the 'Group')
Full Year Results for the year ended 30 September 2025
Resilient FY25 performance with £2bn of future pipeline opportunities
The Group announces its annual results for the year ended 30 September 2025
('FY25').
Adjusted Results ((1), (2)) Statutory Results
FY25 FY24 FY25 FY24
Revenue £279.8m £362.4m £279.8m £362.4m
Gross profit £26.5m £33.8m £19.4m £33.8m
Operating profit/(loss) £6.3m £10.6m £(5.8m) £3.6m
Profit / (loss) before tax £5.6m £9.2m £(8.7m) £(0.3m)
Basic earnings / (loss) per share 2.3p 3.5p (3.3p) 0.7p
Adjusted net cash(3) £70.5m £83.4m
(1) For FY25 Adjusted gross profit, Adjusted operating profit, Adjusted
profit before tax and Adjusted earnings per share are calculated before the
impact of exceptional charges of £7.1 million of land and asset impairments
within Cost of sales, £5.0 million provided for remedial costs associated
with building safety within Administrative expenses, and £2.2 million for the
unwinding of the discount rate on the building safety provision within Finance
costs.
(2) For FY24 Adjusted operating profit, Adjusted profit before tax and
Adjusted earnings per share are calculated before the impact of exceptional
charges of £7.0 million provided for remedial costs associated with building
safety within Administrative expenses and £2.5 million for the unwinding of
the discount rate on the building safety provision within Finance costs.
(3) Adjusted net cash is stated after deducting interest bearing loans and
borrowings, but before deducting IFRS 16 operating lease liabilities of £33.6
million at 30 September 2025 (30 September 2024: £40.8 million).
FY25 Highlights
· Revenue of £279.8 million:
- Predominantly derived from previously sold developments on site
together with three new development partnerships entered into during the
period;
· Good pipeline progression:
- Entry into a number of innovative transaction structures including
development partnership to deliver a 260-unit aparthotel in Southwark and
Glasgow Joint Venture delivering 784 beds;
- Achieved planning for a further c.1,140 PBSA and c.230 BTR units,
across three schemes; and
- Secured three BTR development sites to deliver c.1,100 units, subject
to planning.
· Adjusted operating profit of £6.3 million, reflecting:
- Delivery in line with margin guidance on previously sold developments,
including the successful practical completion of four schemes;
- Initial contribution from transactions signed in the year; and
- Effective cost management.
· Continued focus on cash management:
- Gross and adjusted net cash balances of £80.4 million and £70.5
million respectively, with a further £10.3 million of cash received from our
Glasgow transaction shortly after the year end.
· The provision for building safety works, net of contributions from
building owners, decreased by £1.6 million to £46.4 million:
- Cash outflow of £8.8 million, in line with expectations, including
completion of remediation works on six buildings; and
- Additional provision of £5.0 million.
· Non-cash impairment charge of £7.1 million in relation to two
balance sheet assets.
Outlook
· Enter the coming year with encouraging visibility provided by c.£340
million of contractually secured forward sold revenue for FY26 and future
years, and total development pipeline opportunities of c.£2 billion.
· Contracts exchanged at our PBSA scheme in Bristol to deliver 484
student beds, conditional on receipt of Gateway 2 approval.
· Recently signed letter of intent and team onsite to deliver a
294-unit aparthotel in Wimbledon representing c.£40 million of future
revenue.
· An active pipeline of development partnerships and Refresh
opportunities in line with our diversification strategy.
· Remain focused on the business performance drivers that are within
our control:
- Successfully delivering our in-build projects;
- Carefully managing our costs and cash; and
- Continuing to broaden our revenue base with new sources of income.
· Medium term outlook for our sectors remains attractive, with market
fundamentals continuing to drive investor sentiment and allocations.
Alex Pease, Chief Executive Officer of Watkin Jones, said:
"FY25 has seen the benefits of our evolved strategy help mitigate some of the
effects of the challenging backdrop over the last three years. This resilient
performance reflects a combination of strong operational delivery, a more
agile approach to transactional structuring, and the increasing contribution
from our diversified activities.
With a strong pipeline, highly skilled and motivated workforce and continued
revenue diversification, we enter 2026 with confidence in the strength of our
operational platform and our ability to create long-term value for our
stakeholders."
Analyst meeting
There will be an in-person presentation for analysts at 09:30am today, Tuesday
16th December, at the offices of MHP Group, 60 Great Portland Street, London
W1W 6RT, as well as a webcast and conference call with a facility for Q&A
for virtual attendees. For webcast / conference call details, please contact
jake.terry@mhpgroup.com (mailto:jake.terry@mhpgroup.com) . A copy of the Full
Year results presentation is available on the Group's website:
http://www.watkinjonesplc.com
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.
- ENDS -
For further information:
Watkin Jones plc
Alex Pease, Chief Executive Officer Tel: +44 (0) 20 3617 4453
Simon Jones, Chief Financial Officer watkinjones@mhpgroup.com (mailto:watkinjones@mhpgroup.com)
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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Singer Capital Markets (Joint Corporate Broker) Tel: +44 (0) 20 7496 3000
Sara Hale / Graham Hertrich / James Todd www.singercm.com
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Media enquiries:
MHP (Financial PR)
Reg Hoare / Rachel Farrington / Catherine Chapman Tel: +44 (0) 7711 191518
watkinjones@mhpgroup.com (mailto:watkinjones@mhpgroup.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 over 51,000 student beds
across 150 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 3,400 apartments across
19 schemes to date. In addition, Fresh, the Group's specialist accommodation
management business, manages c.21,000 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.
Chief Executive Officer's review
Alex Pease
Chief Executive Officer
The nature of the Watkin Jones operating model inevitably means that the
economic challenges of the last few years and lack of investment liquidity can
still be seen in this year's numbers as we deliver on transactions which we
first evaluated three to four years ago. If I look at the business today
however, the quality of our on-site delivery, the innovative structures seen
in our more recent transactions, and the strength of our senior team, I
believe Watkin Jones is well positioned to deliver on the strategy set out at
the start of 2024, aimed at building a more diversified set of revenue streams
alongside our core forward fund model. In particular, I remain confident in
our end market sectors across the residential for rent spectrum with strong
demand fundamentals and supply which has been severely inhibited in recent
times. I am also confident in our ability to innovate, adapt and diversify as
new market opportunities present themselves.
Performance
During FY25 we achieved practical completion on four projects, all of which
finished on or ahead of schedule. Our strong construction delivery and
effective management of build-cost inflation contributed to financial
betterments in our projects and as such our gross margin performance. Our
current in-build sites are all progressing materially to plan.
Notwithstanding the challenging market conditions, we were able to increase
the number of transactions in the year to four (up from two in FY24) to
include three development partnership transactions.
We were delighted to announce the sale of a new c.784‑bed purpose built
student accommodation scheme in Glasgow (the 'Ard') to a newly created joint
venture owned 95% by Maslow Capital and 5% by the Group. This transaction
represents a significant further step for the Group as we seek to diversify
our business model and create innovative development funding structures.
Our Venti House development in Stratford represents significant progress in
our strategy. This 397-bed purpose-built student accommodation scheme,
delivered through a joint venture with Housing Growth Partnership, is
progressing on schedule and within budget, with practical completion expected
in June 2026. We have already launched lettings, opened the show flat, and
secured strong early demand, including a nominations agreement in place for
51% of beds. Venti House reflects our commitment to delivering high-quality,
well-connected accommodation that meets the evolving needs of students and
partners alike.
Group revenue was £279.8 million (FY24: £362.4 million), down 22.8%. Gross
profit was £19.4 million (FY24: £33.8 million), while operating profit
before exceptional items was £6.3 million (FY24: £10.6 million), supported
by our rigorous cost control.
BTR revenues were lower as we built out our forward sold developments, with
three schemes reaching practical completion in the year. PBSA revenues were
lower, with limited opportunity for land sales and one scheme completing in
the year, but benefited from our commencement of the Ard scheme. Our Refresh
business had a solid year (see below), and we returned to growth in Fresh, our
accommodation management business. The Single Family Homes business benefited
from the start of a new development partnership in St Helens.
Loss before tax for the year was £8.7 million (2024: loss of £0.3 million)
as a result of fewer transactions and schemes in progress, and the effect of
exceptional impairments to certain land and leased assets.
Managing our cash flow and maintaining our balance sheet strength are
priorities for us. We remain well financed, with the Group having adjusted net
cash of £70.5 million at the year-end (30 September 2024: £83.4 million).
Due to some delays in payments, a further c.£10m arrived in our accounts on
1st October. Total cash and available facilities were £130.1million (30
September 2024: £143.2 million).
Strategy
We made further good progress with our strategy, through which we are
diversifying our sources of income in residential to rent, driving operational
efficiency and ensuring we are a responsible business.
Diversifying our sources of income
Forward selling our own developments remains core to our business. At the same
time, we are determined to further broaden our revenue base, reflecting our
belief that we can monetise the business better and in more areas. This is
giving us an increasingly granular and repeatable income stream that adds to
our revenue visibility and gives us a higher level of coverage of our overhead
cost base at the start of the year. In the year we were able to increase
contributions from our diversified income streams to c.30% of revenues up from
c.20% in FY24.
Our vertically integrated platform, which encompasses investment, development,
delivery and operation, is a significant advantage for us, particularly in
challenging market environments. We can add value at multiple stages, which
enables us to make deals work by taking an appropriate blended margin, while
controlling risk at each point in the project lifecycle. Vertical integration
also opens up diversification opportunities such as development partnerships
and our Refresh business, where a construction capability is essential.
In FY25 we announced three development partnerships, to provide student
accommodation, single family homes and an aparthotel, which combines the
characteristics of apartments and co-living. These deals secured c.£100
million of revenue over the next three years and we have a significant
pipeline of opportunities. The partnerships highlight our ability to work
collaboratively with investors and be flexible in how we leverage our skills
and experience across all our sub-sectors.
We are now looking at the potential for partnering with universities to
support their student accommodation needs.
Our Refresh business continues to gain traction with solid revenues in FY25
and a growing quality pipeline. It can provide the Group with favourable
financial profiles, since it is typically quicker to progress these projects
to a delivery and revenue generating phase than a typical development project.
It also offers a wider range of project sizes, increasing granularity of
earnings. By its nature, Refresh has strong sustainability credentials, as it
reuses significant levels of materials and increases the lifespan of existing
buildings. Our pipeline has increased to £94 million and we are seeing
significant interest from potential clients requiring works to existing assets
or new clients seeking to acquire 'value add' opportunities. We expect the
conversion of opportunities into contracts to gain momentum as we build our
track record and we were pleased to secure our first repeat business this
year.
Our model also means we are well placed to provide other services to clients,
including asset management. In addition to generating income in its own right,
this could source new business for Fresh and Refresh. We continue to explore
the opportunities here.
Driving operational efficiency
We have strengthened our senior leadership group, taking the opportunity to
split our Group Delivery function between two new executive team members, Gwyn
Pritchard and Michael Bunyan, who respectively head Construction and Project
Services. We are seeing the benefits of the new structure, with both teams
highly focused on driving improvements in their own areas, while ensuring
strong co-ordination between them.
There are numerous examples of enhancements to our systems, processes and
organisation in the year, including further improvements to our cost
management and forecasting, supplier management and quality assurance.
Importantly, we have developed a rigorous approach to meeting the new
requirements of the Building Safety Act and its Gateway submissions, which we
believe can offer us an advantage in the market.
Being a responsible business
Sustainability remains a high priority for us and we made further good
progress with our strategy, which encompasses our people, the places we
develop and our impact on the planet.
Our people are fundamental to our business and ensuring that they remain
aligned and motivated is a key priority for me. I am extremely pleased that we
have increased significantly our engagement levels and employee net promoter
scores both year on year and over the last few years. This reflects our
considerable effort to increase communication with colleagues about the
strategy for the business, the progression of day to day operations, and their
confidence that we will act on their feedback. In FY26 we are launching a new
set of values, which authentically reflect who we are and the behaviours we
want to reward, as well as increasing our focus on career paths, succession
planning and training and development, to identify and bring through the
talent we need.
We continue to reduce our environmental impact, including through the
materials we choose and our growing use of Modern Methods of Construction, as
well as diverting 99.74% of waste from landfill. As part of our commitment to
the places we develop and the surrounding communities, we launched a Social
Value Framework in the year. This builds on and formalises the wide range of
work we already do, to maximise the benefits to each area.
Outlook
We believe our sectors remain among the best in UK real estate. The
operational markets for BTR and PBSA remain fundamentally undersupplied, with
limited new stock coming through. Residential for rent assets also remain
highly attractive to investors and we are seeing signs that global fundraising
is starting to pick up, with the UK likely to be a net beneficiary of
allocations when they come through.
One of the business's great strengths is its agility, adaptability and
resilience. The vertically integrated platform provides a huge range of skill
sets across the whole real estate development cycle. This allows us to pivot
and innovate in our transaction structures and markets we target.
Over the last 18 months we have created a more stable platform for the
business, through tight financial management, innovation in transactional
structures, diversification in the markets where we operate and alignment and
motivation of our people.
Going into FY26, we have c.£340 million of forward sold revenue and a total
pipeline of £2 billion of development opportunities. The short term outlook
for the market remains uncertain but we are well placed to execute those
opportunities when it does improve.
Alex Pease
Chief Executive Officer
16 December 2025
Operational review
Build To Rent
BTR apartments by estimated year of practical completion
Total pipeline FY26 FY27 FY28 FY29 FY30 +
Forward sold 1,686 1,426 260 - - -
Forward sales in the market 695 70 - - 625 -
Sites secured subject to planning 1,053 - - - - 1,053
Total secured pipeline 3,434 1,496 260 - 625 1,053
Total revenues for the year were £180.0 million (FY24: £211.3 million), down
14.8%. Revenues were generated by the build‑out of our forward sold
developments and the initial contribution from our development partnership for
a 260-unit aparthotel in Southwark, which we agreed in January 2025. During
the financial year, we reached practical completion on our 214-unit scheme in
Leatherhead, the Sherlock Street development in Birmingham with nearly 600
homes, and the 316-apartment Signal Box Yard scheme in Bath. We have four
further BTR schemes on site, in addition to the Southwark development
partnership, which are on track for their respective completions.
We were pleased to receive planning consent for our first co-living project in
Leeds, which will see us convert a vacant office block in the city centre into
230 homes. Three further sites have been secured in the year, subject to
planning, which will offer c.1,100 further homes.
The table above shows the current secured development pipeline for BTR. This
has an estimated future revenue value to us of £0.6 billion (FY24: £0.5
billion), of which £94 million is currently forward sold (FY24: £232
million).
Gross profit for the year was £16.0 million (FY24: £18.0 million), down
11.1%. The gross margin was 8.8% (FY24: 8.5%), with the projects completed in
the year being delivered ahead of both programme and budget.
Student Accommodation
PBSA beds by estimated year of practical completion
Total pipeline FY26 FY27 FY28 FY29 FY30+
Forward sold 1,869 397 204 1,268 - -
Forward sales in the market 3,425 - - 322 1,811 1,292
Sites secured subject to planning - - - - - -
Total secured pipeline 5,294 397 204 1,590 1,811 1,292
Revenue from PBSA was £67.7 million (FY24: £117.6 million), down 42.4%.
Revenue included the sale of the Ard development in Glasgow to a new joint
venture. Revenue in the prior year included the sale of the Gas Lane scheme in
Bristol. Gross profit was £4.4 million (FY24: £13.6 million). Excluding the
exceptional impairment of one right‑of‑use asset of £1.0 million,
gross profit was £5.4 million, resulting in a gross margin of 8.0% (FY24:
11.6%) as a result of a higher mix of development management schemes compared
to the prior year.
In FY25, we completed one scheme as planned, with our Bristol project reaching
practical completion. We had a further three projects in build at the year
end. In August 2025, we announced that we had signed a development partnership
to deliver c.200 PBSA units in Bristol. We expect this to generate more than
£28 million in revenue for us over the development period, with construction
scheduled to complete ahead of the 2027/28 academic year.
Our Glasgow scheme with Maslow, also commenced on site during the year. This
deal secures c.£115 million of revenue for the Group over three years.
We continued to replenish our development pipeline during FY25, obtaining
planning on 2 sites with capacity for c.1,100 beds, including a 322-bed
project in Bristol's Temple Quarter. The secured development pipeline for PBSA
is shown in the table above. The pipeline has an estimated future revenue
value to us of £0.8 billion (FY24: £0.8 billion), of which c.£200 million
is currently forward sold (FY24: £60 million).
Refresh
Refresh had an encouraging year, generating total revenues of £10.0 million
(FY24: £10.9 million), with gross profit of £1.5 million (FY24: £1.5
million) at an improved margin of 15.0% (FY24: 13.8%). The business completed
five projects in the year, with two on site at the year end. We were pleased
to secure our first repeat business for clients during FY25.
We have a significant potential pipeline, with c.£94 million of opportunities
currently being tracked. There are strong prospects in PBSA, where much of the
stock is outdated. Transactions are an important catalyst for refurbishment
works and much of the PBSA transaction volume in 2025 has been on stock older
than five years.
Investors recognise our ability to reposition assets for them, potentially
increasing revenues and capital values, and repurposing of stock is emerging
as a key target for capital. In addition to PBSA, we are engaging with new
markets such as hospitality.
Single Family Homes
This business is a natural complement to our BTR developments, with its focus
on developing single family homes for rent across a range of tenures,
typically including a substantial affordable homes element.
Revenue in the year benefited from the start of the development partnership we
announced in December 2024, to develop and deliver 295 homes for Torus, the
largest affordable housing provider in North West England. The transaction is
expected to generate revenue of around £48 million for us over approximately
40 months and has the potential to create further value for us in the future.
In addition, the business completed its affordable element of our development
in Crewe, along with five private sales in the year (FY24: 20 sales), with the
reduction reflecting the successful completion of our Preston development
in FY24.
Revenue for the year was £13.7 million (FY24: £12.9 million) with £0.8
million gross loss (FY24: £0.2 million loss).
Accommodation Management
Student beds and BTR apartments under management:
FY25: 21,019
FY24: 18,656
Student net promoter score:
FY25: +35
FY24: +36
Revenues in Fresh increased by 3% to £8.4 million (FY24: £8.1 million),
reflecting an increase in student bed numbers, acquired through in-year
takeovers. The business secured 3,781 beds across 13 schemes during the year,
which was a strong performance. Notably, this included a 1,347-bed portfolio
in the Republic of Ireland, which strengthens our position in this market.
This growth was partially offset by the loss of 1,404 beds across five
schemes, with four of these schemes being sold, resulting in the service
transferring in‑house or to other providers. In addition to the student
schemes won in the year, Fresh secured a co-living scheme which is due to
mobilise in 2026. In total, at the end of FY25 Fresh had 21,019 units under
management across 66 schemes (FY24: 18,656 units across 58 schemes).
We have a track record of excellent service and we maintained our student net
promoter score in the Global Student Living Index (GSLI) with a score of +35
(FY24: +36), well above the benchmark of +20 for other large private
operators. We saw improved scores for participating schemes, with ten
properties obtaining a Platinum rating (FY24: seven), 20 achieving Gold (FY24:
16) and 14 attaining Silver (FY24: 13). More than 3,700 of our residents took
part in the survey. During the year, Fresh was nominated for several awards
and was the winner of the 'Best Individual Property' award for The Waterways
scheme at the Global Student Living Awards.
We continued to develop our client reporting portal during the year and
launched it in December 2025. It will enable clients to access data on their
assets' financial, operational and ESG performance in near real time,
assisting their onward reporting. We also upgraded our Yardi property
management platform, to provide more functionality and refresh the property
listings on our websites. The business is adopting AI tools to improve
efficiency and the customer experience, for example to transform marketing
content into social media formats. We have a roadmap for other AI tools we
intend to introduce through 2026.
Financial review
Successful sale of our Glasgow scheme, cost control and broadening our
offering contribute to solid performance in FY25.
Adjusted results(1) Statutory results
FY25 FY24 FY25 FY24
£m £m £m £m
Revenue 279.8 362.4 279.8 362.4
Gross profit 26.5 33.8 19.4 33.8
Operating profit/(loss) 6.3 10.6 (5.8) 3.6
Profit/(loss) before tax 5.6 9.2 (8.7) (0.3)
1) A reconciliation between adjusted and statutory results is shown
below reflecting the impact of exceptional items in the year.
Revenue
Group revenue for the year was £279.8 million (FY24: £362.4 million), down
22.8%. Revenue was primarily generated by our in-build developments, with the
reduction from previous years reflecting fewer transactions and schemes in
progress given the challenging market backdrop, as well as the accounting
treatment of the transaction of our Glasgow development, which was executed as
a disposal of subsidiary, rather than traditional land sale. Revenue did,
however, benefit from a number of development management opportunities secured
in year which, whilst not contributing a significant day-one value akin to a
land sale, enhance the Group's strong secured pipeline.
On a segmental basis, revenue in the year was as follows:
FY25 FY24
£m £m
Build To Rent 180.0 211.3
Student Accommodation 67.7 117.6
Affordable-led Homes 13.7 12.9
Accommodation Management 8.3 8.1
Refresh 10.0 10.9
Corporate 0.1 1.6
Group revenue 279.8 362.4
Information on divisional revenue performance can be found in the operational
review above.
Gross profit
Gross profit for the year was £19.4 million (FY24: £33.8 million), a
decrease of 42.6%, impacted by exceptional impairments to land (£6.1 million
within the Corporate segment) and right-of-use assets (£1.0 million within
the Student Accommodation segment), and the impact of reduced revenues.
Excluding these exceptional impairments, gross profit was £26.5 million
(FY24: £33.8 million) and gross margins remained broadly flat at 9.5% (FY24:
9.3%).
On a segmental basis, gross profit in the year was as follows
FY25 FY24
£m £m
Build To Rent 16.0 18.0
Student Accommodation 4.4 13.6
Affordable-led Homes (0.8) (0.2)
Accommodation Management 4.6 4.4
Refresh 1.5 1.5
Corporate (6.3) (3.5)
Gross profit 19.4 33.8
See the operational review above for more information on divisional gross
profits. Corporate is primarily central costs such as plant, insurance and
legal expenses that are not allocated to a business unit.
Operating profit
Operating loss for the year was £5.8 million (FY24: profit of £3.6
million). After adding back the £7.1 million of exceptional impairments
within gross margin noted above and the £5.0 million increase to the building
safety provision described below, adjusted operating profit for the year was
£6.3 million (FY24: £10.6 million), benefiting from the £8.2 million profit
on divestment of the Glasgow PBSA scheme.
Administration expenses, excluding the impact of exceptional items, reduced to
£28.3 million (FY24: £29.5 million), demonstrating a focus on cost control
in the face of continued inflation in services costs and wages.
Finance costs
Finance costs for the year were £4.3 million (FY24: £4.9 million). These
costs included:
· the finance cost of capitalised leases under IFRS 16, which totalled
£1.5 million (FY24: £1.7 million);
· an exceptional charge of £2.2 million (FY24: £2.5 million) for the
unwind of the discount of the building safety provision (see below); and
· fees associated with the availability of our revolving credit
facility (RCF).
Loss before tax
Loss before tax for the year was £8.7 million (FY24: loss before tax of
£0.3 million). Adjusted profit before tax, which excludes the impact of the
exceptional items, was £5.6 million (FY24: £9.2 million).
Taxation
The corporation tax credit was £0.3 million (FY24: credit of £2.2 million).
The effective tax credit rate was less than the standard UK corporation tax
rate of 25% for the year, primarily as a result of the derecognition of
certain deferred tax assets, offset by tax reliefs utilised on disposal of a
subsidiary. Cash tax in respect of FY25 was minimal, as a result of utilising
brought forward tax losses.
Information on our tax strategy can be found in the Investor section of our
website, watkinjonesplc.com.
Earnings per share
Basic loss per share from continuing operations for the year was 3.3 pence
(FY24: 0.7 pence earnings per share). Adjusted basic earnings per share,
which excludes the impact of exceptional items, was 2.3 pence (FY24: 3.5
pence).
Dividends
The Board has continued to prioritise the Group's financial flexibility during
the current period of market disruption and has therefore not declared any
dividends in respect of FY25. The Board will keep this under review.
At 30 September 2025, the Company had distributable reserves of £42.3 million
available to pay dividends.
EBITDA
EBITDA was £8.5 million (FY23: £11.2 million). Adjusted EBITDA, which
excludes the impact of the building safety provision charge, was £13.5
million (FY24: £18.2 million), with an adjusted EBITDA margin of 4.8% (FY24:
5.0%).
Return on capital employed
The return on capital employed (ROCE) for the year reduced to 11.6% (FY24:
14.8%) as a result of the reduced profit in the year.
Impairments
The Group recorded an impairment charge of £6.1 million in relation to one
land asset which has experienced adverse market conditions specific to that
location and circumstances.
It also recorded a £1.0 million impairment charge against its Europa
leasehold asset as a result of reduced occupancy in the 2025/26 academic year.
Building safety
We continue to focus on delivering our building safety rectification
obligations and completed works on a further six buildings in FY25, with a
cash outflow of £8.8 million in line with our expectations.
Following the conclusion of investigations undertaken, necessary remedial
works were identified at further properties, and the scope of works at a
number of properties already under remediation has been revised. An additional
net provision of £5.0 million (30 September 2024: £7.0 million) has
therefore been made during the year, for which further information is provided
in the notes to the financial statements.
As for many other participants in our industry, the properties in scope of the
government's guidance and legislation continue to evolve, as do the range and
cost of works. We are monitoring this as building investigations and
discussions with building owners continue. The provision recognised represents
our best estimate of the amounts required to remediate those properties where
we expect remediation works to be required. However, as disclosed in the notes
to the financial statements, there are a number of properties for which the
Group's liability remains uncertain and, as such, we consider these to be
contingent liabilities until such time as there is greater clarity on the
Group's obligations or the extent, if any, of remedial works required.
As shown in the table below, at the year end our net provision reduced to
£46.4 million (FY24: £48.0 million), after offsetting a £10.3 million
reimbursement asset (FY24: £7.6 million) representing agreed customer
contributions to the remediation works.
Our current expectation is for a cash outflow of c.£20 million in FY26 with
the balance between FY27 and FY29. Given these costs will be incurred in
future years, the provision is discounted to its present value. As the
discount unwinds over time, the change in the present value is recognised as
an exceptional finance cost, as described above.
Building safety provision and reimbursement
asset
Provision Asset Total
£m £m £m
At 1 October 2024 55.6 (7.6) 48.0
Arising during the year 8.7 (3.7) 5.0
Utilised in the year (10.2) 1.4 (8.8)
Unwind of discount rate 2.6 (0.4) 2.2
At 30 September 2025 56.7 (10.3) 46.4
Statement of financial position
At 30 September 2025, non-current assets amounted to £69.6 million
(FY24: £69.0 million), with the most significant item being the carrying
value of the leased student accommodation investment properties amounting to
£15.7 million (FY24: £20.8 million), which has reduced with depreciation and
an exceptional impairment charge of £1.0 million taken against the Europa
asset as a result of reduced occupancy in the 2025/26 academic year.
The deferred tax asset, predominantly relating to carried forward tax losses
from the years ended 30 September 2023 and 2024, amounted to £15.1 million
(FY24: £15.1 million) and is expected to be fully utilised in the short to
medium term.
Right‑of‑use assets relating to office and car leases amounted to £4.6
million (FY24: £5.7 million). Intangible assets relating to Fresh amounted
to £10.5 million (FY24: £11.0 million) and were reduced by the amortisation
charge of £0.5 million in the year.
The movement in the building safety provision and associated reimbursement
assets is described above.
Inventory and work in progress was £86.9 million (FY24: £94.3 million),
with the decrease reflecting the exceptional land asset impairment of £6.1
million (see note 4) and the forward sale during the year of our Glasgow PBSA
development, offset by continued investment in our pipeline.
Contract assets decreased in the year to £29.1 million (FY24: £36.5 million)
reflecting the final payment balances which are received on completion of
developments during the year, particularly from a number of BTR and PBSA
developments which were close to completion at the prior year end. Contract
liabilities increased by £0.7 million during the year to £4.0 million,
reflecting timing of invoicing.
Interest-bearing loans and borrowings reduced to £9.9 million at 30 September
2025 (FY24: £13.6 million) reflecting the repayment of borrowings in respect
of our Glasgow development.
Lease liabilities were reduced to £33.7 million (FY24: £40.8 million),
reflecting capital repayments made in the year offset by indexed rent
increases on our student leased investment properties.
At the year end, we had a cash balance of £80.4 million and loans of £9.9
million, resulting in an adjusted net cash position (excluding lease
liabilities) of £70.5 million. At 30 September 2024, we had a cash balance of
£97.0 million and loans of £13.6 million, resulting in an adjusted net cash
position of £83.4 million. Including the impact of lease liabilities, net
cash was £36.8 million (FY24: £42.6 million).
Cash flow
In a typical year, the Group's cash balance peaks around the year end, as we
receive the final payments on student accommodation developments completing
ahead of the new academic year, as well as initial proceeds from the latest
forward sales.
The Group is then a net user of cash until the following year end, as a result
of outflows such as tax and dividend payments (when paid), overhead costs
and land purchases.
However, as in the prior year, we expect our cash flow profile in FY26 will
be more evenly spread than in previous years. This reflects the anticipated
physical completions of some of our BTR developments in FY26, which will
result in the Group receiving these final payments throughout the year.
The cash balance at the year end is still important for funding our
day‑to‑day cash requirements and for putting the Group in a strong
position when bidding for new sites.
The Group's net cash outflow from operating activities for the year was
£14.1 million (FY24: inflow of £30.2 million), as a result of continued
investment in our pipeline and timing of receipts, with £10.3 million
of income from the forward sale of our Glasgow development being collected
just after year end. Proceeds from the sale of our Glasgow subsidiary are
included in investing rather than operating cashflows.
Net finance costs paid totalled £1.0 million (FY24: £1.2 million), including
the finance charges on the capitalised lease liabilities of £1.5 million
(FY24: £1.7 million). No dividends were paid in the year (FY24: £nil).
Exceptional costs
Year ended Year ended
30 September 2025 30 September 2024
£'000 £'000
Recognised in cost of sales
Impairment of land asset 6,100 -
Impairment of right-of-use asset 1,010 -
Total exceptional items recognised in cost of sales 7,110 -
Recognised in administrative expenses
Building Safety provision 5,000 7,001
Total exceptional items recognised in administrative expenses 5,000 7,001
Recognised in finance costs
Unwind of discount rate on Building Safety provision 2,181 2,517
Total exceptional items recognised in finance costs 2,181 2,517
Total exceptional costs 14,291 9,518
Cash and net debt
FY25 FY24
£m £m
Operating profit before exceptional items 6.3 10.6
Loss on disposal of fixed assets - 0.1
Depreciation and amortisation 7.2 6.9
Profit on disposal of subsidiary (8.2) (6.3)
(Increase)/decrease in working capital (18.3) 16.2
Finance costs paid (1.0) (1.2)
Tax (paid)/received (0.1) 3.9
Net cash flow from operating activities (14.1) 30.2
Purchase of fixed assets (0.1) (0.1)
Cash flow from joint venture interests including Stratford disposal 8.9 16.9
Payment of lease liabilities (7.9) (7.3)
Repayment of borrowings (3.4) (15.1)
(Decrease)/increase in cash (16.6) 24.6
Cash at beginning of year 97.0 72.4
Cash at end of year 80.4 97.0
Less: borrowings (9.9) (13.6)
Net cash before deducting lease liabilities 70.5 83.4
Less: lease liabilities (33.7) (40.8)
Net cash 36.8 42.6
Total cash and available facilities
FY25 FY24
£m £m
Cash and cash equivalents 80.4 97.0
Revolving credit facility (RCF) 50.0 50.0
Drawn balance on RCF (10.4) (13.8)
£10 million accordion facility 10.0 -
Overdraft - 10.0
Total cash and available facilities 130.0 143.2
Bank facilities
The Group holds an RCF with HSBC, which was amended and extended during the
year, to a value of £50.0 million with an additional £10.0 million accordion
which we can use to fund land acquisitions and development work. The RCF had
£10.4 million drawn against it at the year end (30 September 2024: £13.8
million), and runs to 15 November 2027.
Total cash and available facilities at 30 September 2025 therefore stood at
£130.0 million (30 September 2024: £143.2 million).
Going concern
We have undertaken a thorough review of the Group's ability to continue to
trade as a going concern for the period to 31 January 2027. The basis of the
review and an analysis of the downside risks is set out in the notes to the
financial statements.
Alternative performance measures (APMs)
We use APMs as part of our financial reporting, alongside statutory reporting
measures. These APMs are provided for the following reasons:
1. to present users of the annual report with a clear view of what we
consider to be the results of our underlying operations, enabling consistent
comparisons over time and making it easier for users of the report to identify
trends;
2. to provide additional information to users of the annual report about
our financial performance or position;
3. to show the performance measures used by the Board in determining
dividend payments; and
4. to show the performance measures that are linked to remuneration for
the Executive Directors.
The following APMs appear in this annual report
Reconciliation
FY25 FY24
Reason for use £'000 £'000
Adjusted operating (loss)/profit 1 Operating (loss)/profit (5,761) 3,566
Add: exceptional items in operating (loss)/profit 12,110 7,001
Adjusted operating profit 6,349 10,567
Adjusted profit/(loss) before tax 1,4 Loss before tax (8,680) (307)
Add: exceptional items 14,291 9,518
Adjusted profit before tax 5,611 9,211
Adjusted basic earnings/(losses) per share 1,3,4 (Loss)/profit after tax (8,406) 1,895
Add: exceptional items 14,291 9,518
Less: tax on exceptional items - (2,380)
Adjusted profit/(loss) after tax 5,885 9,033
Weighted average number of shares 256,564,829 256,564,829
Adjusted basic earnings/(losses) per share 2.3 pence 3.5 pence
EBITDA 1 Operating (loss)/profit (5,761) 3,566
Add: share of loss in joint ventures - (8)
Add: impairment of pipeline assets 276 769
Add: exceptional impairment of land assets 6,100 -
Add: exceptional impairment of right-of-use assets 1,010 -
Add: depreciation 6,346 6,346
Add: amortisation 559 559
EBITDA 8,530 11,232
Adjusted EBITDA 1 EBITDA 8,530 11,232
Add: exceptional items in administrative expenses 5,000 7,001
Adjusted EBITDA 13,530 18,233
Adjusted net cash 2 Net cash 36,834 42,602
Add: lease liabilities 33,631 40,769
Adjusted net cash 70,465 83,371
Return on capital employed 1,2 Adjusted operating profit 6,349 10,567
Net assets at 30 September 124,994 132,590
Less: adjusted net cash (70,465) (83,371)
Less: intangible assets (10,487) (11,047)
Less: investment property (leased) (15,681) (20,751)
Less: right-of-use assets (4,585) (5,747)
Add: lease liabilities 33,631 40,769
Adjusted net assets at 30 September 57,407 52,443
Adjusted net assets at 1 October 52,443 90,177
Average adjusted net assets 54,925 71,310
Return on capital employed 11.6% 14.8%
Simon Jones
Chief Financial Officer
16 December 2025
Consolidated statement of comprehensive income
for the year ended 30 September 2025
Year ended 30 September 2025 Year ended 30 September 2024
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Revenue 5 279,837 - 279,837 362,371 - 362,371
Cost of sales (253,345) (7,110) (260,455) (328,565) - (328,565)
Gross profit 26,492 (7,110) 19,382 33,806 - 33,806
Administrative expenses 6 (28,306) (5,000) (33,306) (29,499) (7,001) (36,500)
Profit on disposal of subsidiary 8,163 - 8,163 6,260 - 6,260
Operating profit/(loss) 6,349 (12,110) (5,761) 10,567 (7,001) 3,566
Share of loss in joint ventures - - - (8) - (8)
Finance income 1,359 - 1,359 1,008 - 1,008
Finance costs (2,097) (2,181) (4,278) (2,356) (2,517) (4,873)
Profit/(loss) before tax 5,611 (14,291) (8,680) 9,211 (9,518) (307)
Income tax credit/(expense) 274 - 274 (178) 2,380 2,202
Profit/(loss) for the year attributable to ordinary equity holders of the 5,885 (14,291) (8,406) 9,033 (7,138) 1,895
parent
Other comprehensive income
That will not be reclassified to profit or loss in subsequent periods:
Net profit/(loss) on equity instruments designated at fair value through other 27 - 27 (236) - (236)
comprehensive income, net of tax
Total comprehensive income/(loss) for the year attributable to ordinary equity 5,912 (14,291) (8,379) 8,797 (7,138) 1,659
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 2.293 (5.568) (3.275) 3.521 (2.782) 0.739
Diluted earnings/(loss) per share 9 2.288 (5.563) (3.275) 3.497 (2.763) 0.734
Consolidated statement of financial position
as at 30 September 2025
30 September 30 September
2025 2024
Notes £'000 £'000
Non-current assets
Intangible assets 10,487 11,047
Investment property (leased) 15,681 20,751
Other right-of-use assets 4,585 5,747
Property, plant and equipment 828 1,401
Investment in joint ventures 14,515 7,952
Reimbursement assets 11 7,710 6,147
Deferred tax assets 15,090 15,090
Other financial assets 679 866
69,575 69,001
Current assets
Inventory and work in progress 86,851 94,266
Contract assets 29,123 36,538
Trade and other receivables 41,015 31,191
Reimbursement assets 11 2,565 1,470
Current tax receivable 2,911 2,461
Cash and cash equivalents 80,398 96,962
242,863 262,888
Total assets 312,438 331,889
Current liabilities
Trade and other payables (83,169) (86,054)
Contract liabilities (4,005) (3,252)
Lease liabilities (8,223) (7,750)
Provisions 11 (22,286) (12,090)
(117,683) (109,146)
Non-current liabilities
Interest-bearing loans and borrowings (9,933) (13,591)
Lease liabilities (25,408) (33,019)
Provisions 11 (34,420) (43,543)
(69,761) (90,153)
Total liabilities (187,444) (199,299)
Net assets 124,994 132,590
Equity
Share capital 2,567 2,567
Share premium 84,612 84,612
Merger reserve (75,383) (75,383)
Fair value reserve of financial assets at FVOCI 189 162
Share‑based payment reserve 1,808 1,780
Retained earnings 111,201 118,852
Total equity 124,994 132,590
Consolidated statement of changes in equity
for the year ended 30 September 2025
Fair value
reserve of
financial Share-based
Share Share Merger assets payment Retained
capital premium reserve at FVOCI reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 September 2023 2,564 84,612 (75,383) 425 1,407 116,380 130,005
Profit for the year - - - - - 1,895 1,895
Other comprehensive income - - - (263) - 27 (236)
Total comprehensive income - - - (263) - 1,922 1,659
Share-based payments - - - - 901 - 901
Recycled reserve for fully vested share-based payment schemes - - - - (528) 528 -
Issue of new share capital 3 - - - - - 3
Deferred tax debited directly to equity - - - - - 22 22
Dividend paid - - - - - - -
Balance at 30 September 2024 2,567 84,612 (75,383) 162 1,780 118,852 132,590
Loss for the year - - - - - (8,406) (8,406)
Other comprehensive income - - - 27 - - 27
Total comprehensive income - - - 27 - (8,406) (8,379)
Share-based payments - - - - 642 - 642
Recycled reserve for fully vested share-based payment schemes - - - - (614) 614 -
Issue of new share capital - - - - - - -
Deferred tax credited directly to equity - - - - - 141 141
Dividend paid - - - - - - -
Balance at 30 September 2025 2,567 84,612 (75,383) 189 1,808 111,201 124,994
Consolidated statement of cash flows
for the year ended 30 September 2025
Year ended Year ended
30 September 30 September
2025 2024
Notes £'000 £'000
Cash flows from operating activities
Cash (outflow)/inflow from operations 12 (13,101) 27,521
Interest received 1,359 1,008
Interest paid (2,314) (2,177)
Tax (paid)/received (61) 3,872
Net cash (outflow)/inflow from operating activities (14,117) 30,224
Cash flows from investing activities
Acquisition of property, plant and equipment (129) (120)
Proceeds on disposal of property, plant and equipment - 12
Proceeds on disposal of subsidiary 9,122 6,260
Repayment of related party loan following disposal of subsidiary 6,558 18,540
Investments in joint venture interests (6,750) (7,951)
Net cash inflow from investing activities 8,801 16,741
Cash flows from financing activities
Payment of principal portion of lease liabilities (7,807) (7,370)
Drawdown of RCF - -
Repayment of bank loans and RCF (3,441) (15,064)
Net cash outflow from financing activities (11,248) (22,434)
Net (decrease)/increase in cash (16,564) 24,531
Cash and cash equivalents at 1 October 2024 and 1 October 2023 96,962 72,431
Cash and cash equivalents at 30 September 2025 and 30 September 2024 80,398 96,962
NOTES TO THE Consolidated FINANCIAL statements
for the year ended 30 September 2025
1. General information
Watkin Jones plc (the 'Company') is a public limited company incorporated in
the United Kingdom under the Companies Act 2006 (registration number 9791105)
and its shares are listed on the Alternative Investment Market of the London
Stock Exchange. The Company is domiciled in the United Kingdom and its
registered address is 12 Soho Square, London, United Kingdom, W1D 3QF.
The principal activities of the Company and its subsidiaries (collectively
the 'Group') are those of property development and the management of
properties for multiple residential occupation.
The consolidated financial statements for the Group for the year ended
30 September 2025 comprise the Company and its subsidiaries. The basis of
preparation of the consolidated financial statements is set out in note 2
below.
2. Basis of preparation
The financial statements of the Group have been prepared and approved by the
Directors in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and in accordance with United
Kingdom adopted International Accounting Standards.
The preparation of financial information in conformity with International
Financial Reporting Standards (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 financial information set out above does not constitute the Group's
statutory accounts for the years ended 30 September 2025 or 2024, but is
derived from those accounts. Statutory accounts for 2024 have been delivered
to the Registrar of Companies, and those for 2025 will be delivered in due
course. The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain statements under Section 498(2) or (3) of the Companies
Act 2006.
The accounting policies set out in the notes have, unless otherwise stated,
been applied consistently to all periods presented in these financial
statements. The financial statements are prepared on the historical cost basis
except as disclosed in these accounting policies.
The financial statements are presented in pounds sterling and all values are
rounded to the nearest thousand (£'000), except when otherwise indicated.
2.1 Going concern
The Directors have undertaken a thorough review of the Group's ability to
continue to trade as a going concern for the period to 31 January 2027 (the
'forecast period'). This review has been undertaken taking into consideration
the following matters.
Liquidity
At 30 September 2025, the Group had a robust liquidity position, with cash and
available headroom in its banking facilities totalling £130.1 million, as set
out below.
£m
Cash balances 80.4
RCF headroom 39.7
Accordion facility 10.0
Total cash and available facilities 130.1
Strong liquidity has been maintained through the first quarter of the year
ending 30 September 2026, providing the Group with a good level of cash and
available banking facilities for the year ahead.
All financial covenants under this facility were met at 30 September 2025 and
are forecast to be met throughout the period to 31 January 2027.
Business model
Our business model is capital light. By forward selling or acting as
development partners for the majority of our build to rent, purpose built
student accommodation and Refresh developments, we receive payment before we
incur any significant development cash outflows.
By controlling our pipeline we are able to ensure that we only commit
expenditure to projects that are either development partnerships, are forward
sold or on which we are undertaking a modest level of enabling works.
In certain circumstances we may decide to continue construction activities
beyond the initial enabling phase, without a forward sale agreement in place,
but we take this decision based on our available liquidity and can suspend the
works should it prove necessary. This greatly limits our exposure to
development expenditure which is not covered by cash income.
Sites are normally secured on a subject to satisfactory planning basis, which
gives us time to manage the cash requirements and to market them. We also take
a cautious approach to managing our land acquisition programme to ensure that
we have sufficient liquidity available to complete the acquisition of the
sites without any new forward sales being secured.
The Fresh business receives a regular contractual monthly fee income from its
multiple clients and the short to medium‑term risk to its revenue stream
is low.
Our Refresh business involves little initial investment or rolling working
capital, with works completed generally certified and invoiced on a monthly
basis.
For our Affordable Homes business, which is currently relatively small and
only has a few sites in build, we manage our development expenditure so that,
other than for infrastructure works, we only commit expenditure where it is
supported by a forward sales position.
We also receive rental income from tenants on our leased PBSA assets.
Our business model and approach to cash management therefore provides a high
degree of resilience.
Counterparty risk
The Group's clients are predominantly blue-chip institutional funds, and the
risk of default is low. The funds for a forward sold development are normally
specifically allocated by the client or backed by committed debt funding.
For forward sold developments, our cash income remains ahead of our
development expenditure through the life of the development, such that if we
were exposed to a client payment default, we could suspend the works, thereby
limiting any cash exposure.
Fresh has many clients and these are mostly institutional funds with low
default risk.
Base case cash forecast
We have prepared a base case cash forecast for the forecast period, based on
our current business plan and trading assumptions for the year. This is well
supported by our forward sold pipeline of three PBSA developments and four BTR
developments for delivery during the period FY26 to FY28, as well as the
reserved/exchanged and forward sales for our Affordable Homes business and the
contracted income for Fresh and Refresh. Our current secured cash flow,
derived from our forward sold developments and other contracted income, net of
overheads and tax, results in a modest cash utilisation over the forecast
period, with the result that our liquidity position is maintained.
As part of this, the Board has also assessed the appropriateness of the
phasing of payments for building safety remediation from the building safety
provision together with the overall level of the provision as noted in note
11.
In addition to the secured cash flow, the base case forecast assumes a number
of new transactions securing future revenues and further house sales which, if
achieved, will result in a further strengthening of our liquidity position.
Risk analysis
In addition to the base case forecast, we have considered the possibility of
continued disruption to the 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 model scenario, such that forward sales and
new site acquisitions are delayed by up to six months, to assess the possible
impact of the above risks. Whilst there remains a more medium-term risk
regarding the likelihood that existing challenges in the macro-environment
will continue, together with the uncertainties of the BSA legislation, the
level of estimated cash spend required in the coming year, and the possibility
of further liabilities materialising, 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
was £93.6 million (£103.6 million including our accordion facility).
We consider the likelihood of events occurring which would exhaust the total
cash and available facilities balances 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
currently held on balance sheet at a reduced priced if necessary to enable a
quick sale, to ensure that the Group's liquidity was maintained.
Conclusion
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 31 January 2027 and has therefore adopted the going concern
basis in preparing the financial statements.
3. Accounting policies
The results for the year have been prepared on a basis consistent with the
accounting policies set out in the Watkin Jones plc Annual Report for the year
ended 30 September 2025.
4. Building safety provision
The Group holds a provision for building safety remedial works which requires
a number of significant judgements and estimates to be made by management, for
which the legislative background was disclosed in the Group's annual report
and financial statements for the year ended 30 September 2024.
The Group is a member of the Responsible Actors Scheme (RAS) in England. By
signing up to the RAS, the Group is required to sign the Developers'
Remediation Contract (the 'Contract') which requires us to:
· take responsibility for all necessary work to address life-critical
fire safety defects arising from the design and construction of buildings 11
metres and over in height that we developed or refurbished in England over the
30 years ending on 4 April 2022;
· keep residents in those buildings informed about progress towards
meeting this commitment; and
· reimburse taxpayers for funding spent on remediating their buildings,
i.e. where leaseholders have accessed the Building Safety Fund to remediate
their properties.
Under the obligations of the scheme we have written to building owners to
understand their position regarding those buildings.
The Contract is intended to cover leasehold buildings rather than PBSA or BTR,
and therefore the significant majority of buildings that the Group has
developed over the last 30 years are outside the scope of the Contract. There
are 13 leasehold buildings falling within the scope of the RAS, and five of
these are included within the provision, with no further leasehold buildings
being added during the year ended 30 September 2025.
In 2023, the Welsh Government announced a new agreement with developers to
tackle fire safety defects in medium high‑rise residential buildings, known
as the Developers' Pact, which the Group signed during the year ended 30
September 2024. The Group has been approached in respect of one property which
we have provided for on the basis that remedial works are required. In our
view, based on the investigative procedures that we have carried out, there
are no further remedial works required to any other Welsh properties.
The Housing (Cladding Remediation) (Scotland) Act was passed in June 2024 and
contained provision for the Responsible Developers Scheme, a remediation
agreement for which the specific details are still to be agreed with
developers. It is the Group's expectation that the basis for this scheme will
be consistent with the RAS, such that it is intended to cover leasehold
buildings. The Group has constructed one leasehold property in Scotland, which
remains under contract. In our view, based on the investigative procedures
that we have carried out, there is no remedial work required on that property.
Based on our internal review procedures described above, the provision
includes an estimation of works required in relation to buildings identified
as requiring remediation.
Provisions are recognised when three criteria are met: 1) the Group has a
present obligation as a result of a past event; 2) it is probable that an
outflow of resources will be required to settle the obligation; and 3) a
reliable estimate can be made of the obligation.
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. For those properties not covered by the
RAS, the Group is under no obligation to contact property owners.
In addition, the legislation underpinning the determination of liability for
remediation of fire safety issues is complex, with case law evolving. 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 certain of these 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. If further
buildings are identified this could also increase the required provision, but
the potential quantity of this change cannot be readily determined in the
absence of such identification through further claims or investigative work.
As a number of other housebuilders and developers have done, the provision
includes an amount for contingency to reflect further buildings being
identified as requiring remediation, or for unforeseen remediation costs
beyond management's current knowledge. We have implemented a consistent
contingency policy across properties where work is yet to start.
During the year ended 30 September 2025, the Group continued to work closely
with residents and building owners within our legacy portfolio. Works were
completed at six properties, all of which were included in the prior year's
provision.
Following the conclusion of certain investigations undertaken, necessary
remedial works were identified at further properties and appropriate costs
provided.
As remediation of the remaining properties in the Group's programme continues,
the scope of works at a number of these properties has been revised. Whilst
for certain properties the required level of remediation has reduced from
original estimates, at others the anticipated scope and cost for remediation
has increased. In addition, the Group has continued to incur legal costs, both
in respect of ongoing discussions with property owners and recoveries from the
Group's supply chain.
An additional net provision of £5.0 million (30 September 2024: £7.0
million) for remedial works has therefore been made during the year, whilst
broadly maintaining the level of contingency held from the prior year to
reflect the continued levels of uncertainty of extent of remediation required.
The provision, net of expected reimbursements, at 30 September 2025 was
therefore £46.4 million (30 September 2024: £48.0 million).
We expect this cost to be incurred over the next four 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 received
£1.4 million of such contributions during the year. At the balance sheet
date the Group has recognised reimbursement assets remaining of £10.3 million
(30 September 2024: £7.6 million). These are expected to be recovered over
the next four years.
At 30 September 2025, the Group remained in discussions with a number of
property owners for 13 properties 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.
Of the outstanding net provision, £6.0 million is fixed as a result of legal
settlements agreed with building owners. However, for the remaining
liabilities, should the costs associated with the remedial works increase by
10%, the provision required would increase by £3.5 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 11.
Remedial works required on any additional property identified will range in
cost. Whilst liabilities could be higher than recent experience, in the last
two years, following detailed diligence with respect to scope of works, the
range of liabilities has been between a net cost of £nil and c.£2 million,
and the average net cost has been £0.9 million for properties requiring
remediation.
The Group will continue to keep abreast of any changes to legislation and
guidance, recognising that the approach to building safety continues to
evolve.
5. Segmental reporting
Accounting policy
Operating segments are identified in a manner consistent with the internal
reporting provided to the chief operating decision‑maker. The Group
determines its reportable segments having regard to permitted aggregation
criteria with the principal condition being that the operating segments should
have similar economic characteristics. For the purposes of determining its
operating segments, the chief operating decision‑maker has been identified
as the Executive Committee. This committee approves investment decisions,
allocates the Group's resources and reviews the internal reporting in
order to assess performance.
The Group has identified six segments for which it reports under IFRS 8
'Operating Segments'. The following represents the segments that the Group
operated in during FY25 and FY24:
a. Student Accommodation - the development of purpose built student
accommodation;
b. Build To Rent - the development of build to rent accommodation;
c. Affordable Homes - the development of residential housing;
d. Refresh - the refurbishment, redevelopment and repurposing of existing
accommodation;
e. Accommodation Management - the management of student accommodation and
build to rent/private rental sector (PRS) 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.
All revenues arise in the UK.
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.
Student Affordable Accommodation
Accommodation Build To Rent Homes Refresh Management Corporate Total
Year ended 30 September 2025 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 67,704 179,967 13,689 9,995 8,371 111 279,837
Segmental gross profit/(loss) 5,366 16,031 (849) 1,487 4,634 99 26,768
Impairment of inventory for aborted pipeline assets - - - - - (276) (276)
Exceptional impairment of land assets - - - - - (6,100) (6,100)
Exceptional impairment of right‑of‑use assets (1,010) - - - - - (1,010)
Gross profit/(loss) 4,356 16,031 (849) 1,487 4,634 (6,277) 19,382
Administration expenses - - - - (4,834) (23,472) (28,306)
Profit on disposal of subsidiary 8,163 - - - - - 8,163
Exceptional administrative expenses - - - - - (5,000) (5,000)
Operating profit/(loss) 12,519 16,031 (849) 1,487 (200) (34,749) (5,761)
Share of loss in joint ventures - - - - - -- -
Finance income - - - - - 1,359 1,359
Finance costs - - - - - (2,097) (2,097)
Exceptional finance costs - - - - - (2,181) (2,181)
Profit/(loss) before tax 12,519 16,031 (849) 1,487 (200) (37,668) (8,680)
Taxation - - - - - 274 274
Continuing profit/(loss) for the year 12,519 16,031 (849) 1,487 (200) (37,394) (8,406)
Loss for the year attributable to ordinary equity shareholders of the parent (8,406)
Inventory and work in progress 41,023 23,061 20,861 210 - 1,696 86,851
Student Affordable Accommodation
Accommodation Build To Rent Homes Refresh Management Corporate Total
Year ended 30 September 2024 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 117,604 211,267 12,879 10,896 8,064 1,661 362,371
Segmental gross profit/(loss) 13,634 18,019 (232) 1,548 4,390 (2,784) 34,575
Impairment of land assets - - - - - (769) (769)
Gross profit/(loss) 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/(loss) 19,894 18,019 (232) 1,548 (409) (35,254) 3,566
Share of 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
Continuing profit/(loss) for the year 19,894 18,019 (232) 1,548 (409) (36,925) 1,895
Profit for the year attributable to ordinary equity shareholders of the parent 1,895
Inventory and work in progress 42,701 25,958 23,511 508 - 1,588 94,266
6. Exceptional costs
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
Recognised in cost of sales
Impairment of land asset 6,100 -
Impairment of right-of-use asset 1,010 -
Total exceptional items recognised in cost of sales 7,110 -
Recognised in administrative expenses
Building Safety provision 5,000 7,001
Total exceptional items recognised in administrative expenses 5,000 7,001
Recognised in finance costs
Unwind of discount rate on Building Safety provision 2,181 2,517
Total exceptional items recognised in finance costs 2,181 2,517
Total exceptional costs 14,291 9,518
During the year the Group obtained an independent valuation of one of its land
assets which identified that, as a result of adverse market conditions
specific to that location and the circumstances of the property in question,
the realisable value for the asset was below its carrying value. As a result,
the Group has taken an exceptional impairment charge of £6,100,000.
Due to lower than expected occupancy rates in one of the Group's student
leasehold properties, the Group has taken an impairment charge of £1,010,000
against the associated IFRS 16 right-of-use asset to reduce the carrying value
to the net present value of expected cash flows for the property.
There has been an additional charge of £5,000,000 (2024: charge of
£7,001,000) taken in relation to provisions made for Building Safety related
costs. The provision made in the prior year has been unwound to its present
value, resulting in £2,181,000 (2024: £2,517,000) of finance costs. Further
information on these charges is included in note 4 and note 11.
All of the exceptional costs in the year were treated as allowable deductions
for corporation tax purposes.
7. Total operating profit
This is stated after charging:
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
Audit services to the parent company 100 100
Audit services to the subsidiaries 425 425
Amortisation of intangible assets 559 559
Impairment of land assets (see note 6) 6,376 769
Depreciation:
Property, plant and equipment 691 411
Investment property (leased) 4,532 4,432
Right-of-use assets 1,359 1,503
Loss on disposal of property, plant and equipment 11 91
8. Income taxes
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
Current income tax
UK corporation tax on profits for the year - -
Adjustments in respect of prior periods (415) 745
Foreign taxes - -
Total current tax (415) 745
Deferred tax
Origination and reversal of temporary differences 141 (1,272)
Adjustments in respect of prior year - (1,675)
Remeasurement of deferred tax for changes in tax rates - -
Total deferred tax 141 (2,947)
Total tax credit (274) (2,202)
Reconciliation of total tax credit:
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
Loss before tax (8,680) (307)
Loss multiplied by standard rate of corporation tax in the UK of 25% (2024: (2,170) (77)
25%)
Fixed asset differences 26 -
Expenses not deductible 258 369
Income not taxable (2,041) (1,565)
Deferred tax not recognised 4,068 -
Other differences - 25
Adjustments in respect of prior periods (415) 745
Prior year adjustment to deferred tax - (1,699)
At the effective rate of tax of 12.6% (2024: 717.3%) (274) (2,202)
Income tax credit reported in the statement of profit or loss (274) (2,202)
As a result of the Finance Act 2021, the rate of UK corporation tax increased
to 25% from 6 April 2023. The deferred tax assets and liabilities held by the
Group at the start of the current year reflect this increase. The deferred tax
asset arising from losses in the period has not been recognised.
The Group has a current tax debtor of £2,911,000 (2024: £2,461,000) in
relation to historic payments made on account.
9. Earnings per share
The following table reflects the income and share data used in the basic and
diluted EPS computations:
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
(Loss)/profit for the year attributable to ordinary equity holders of the (8,406) 1,895
parent
Add back exceptional costs for the year (note 6) 14,291 9,518
Less corporation tax benefit from exceptional costs for the year - (2,380)
Adjusted profit for the year attributable to ordinary equity holders of the 5,885 9,033
parent (excluding exceptional items after tax)
Year ended Year ended
30 September 30 September
2025 2024
Number of Number of
shares shares
Weighted average number of ordinary shares for basic earnings per share 256,653,097 256,564,829
Adjustment for the effects of dilutive potential ordinary shares 574,738 1,736,691
Weighted average number for diluted earnings per share 257,227,835 258,301,520
Year ended Year ended
30 September 30 September
2025 2024
Pence Pence
Basic (loss)/earnings per share
Basic (loss)/profit for the year attributable to ordinary equity holders of (3.275) 0.739
the parent
Adjusted basic earnings per share (excluding exceptional items after tax)
Adjusted profit for the year attributable to ordinary equity holders of the 2.293 3.521
parent
Diluted (loss)/earnings per share
Basic (loss)/profit for the year attributable to diluted equity holders of the (3.275) 0.734
parent
Adjusted diluted earnings per share (excluding exceptional items after tax)
Adjusted profit for the year attributable to diluted equity holders of the 2.288 3.497
parent
10. Dividends
No final dividend is proposed for the year ended 30 September 2025 (2024: nil
pence per ordinary share). As such, no liability (2024: liability of £nil)
has been recognised at that date. At 30 September 2025, the Company had
distributable reserves available of £42,257,000 (30 September 2024:
£41,643,000).
11. Provisions
Building Safety provision
Reimbursement
Provision asset Total
£'000 £'000 £'000
At 1 October 2023 65,594 (10,865) 54,729
Arising during year 8,147 (1,146) 7,001
(Utilised)/received (21,125) 4,894 (16,231)
Unwind of discount rate 3,017 (500) 2,517
At 1 October 2024 55,633 (7,617) 48,016
Arising during year 8,709 (3,709) 5,000
(Utilised )/received (10,162) 1,397 (8,765)
Unwind of discount rate 2,527 (346) 2,181
At 30 September 2025 56,707 (10,275) 46,432
The balance can be classified as follows:
Reimbursement
Provision asset Total
Year ended 30 September 2025 £'000 £'000 £'000
Current 22,286 (2,565) 19,721
Non-current 34,421 (7,710) 26,711
Total 56,707 (10,275) 46,432
Reimbursement
Provision asset Total
Year ended 30 September 2024 £'000 £'000 £'000
Current 12,090 (1,470) 10,620
Non-current 43,543 (6,147) 37,396
Total 55,633 (7,617) 48,016
A provision of £48,016,000 was held at 30 September 2024, net of
reimbursement assets, for the Group's anticipated contribution towards the
cost of building safety remedial works. Provisions and reimbursement assets
are not offset in the balance sheet, although movements in these are presented
net in the income statement.
A further net increase in provision of £5,000,000 has been made during the
year ended 30 September 2025 for building safety remediation costs. The
judgements and estimates surrounding this provision and corresponding
reimbursement assets are set out in note 4.
The net provision at 30 September 2025 amounts to £46,432,000, of which
£19,721,000 is expected to be incurred in the year ending 30 September 2026
and £26,711,000 is expected to be incurred between 1 October 2026 and 30
September 2029. The provision has been discounted to the present value of its
risk-adjusted cashflows, at a risk-free rate of 3.89% based on UK five-year
gilt yields (2024: 4.54%).
12. Reconciliation of profit before tax to net cash flows from operating
activities
Year ended Year ended
30 September 30 September
2025 2024
£'000 £'000
Loss before tax (8,680) (307)
Depreciation of leased investment properties and right-of-use assets 5,892 5,935
Impairment of right-of-use assets 1,010 -
Depreciation of plant and equipment 691 411
Amortisation of intangible assets 559 559
Profit on disposal of subsidiary (8,163) (6,260)
Loss on disposal of property, plant and equipment 11 91
Finance income (1,359) (1,008)
Finance costs 4,278 4,873
Share of loss in joint ventures - 8
Decrease in inventory and work in progress 856 10,711
Decrease in contract assets 7,415 29,830
(Increase)/decrease in trade and other receivables (9,823) 3,913
Increase in contract liabilities 753 1,783
(Increase)/decrease in reimbursement assets (2,312) 3,748
Decrease in trade and other payables (3,418) (14,689)
Decrease in provisions (1,453) (12,978)
Increase in share‑based payment reserve 642 901
Net cash (outflow)/inflow from operating activities (13,101) 27,521
13. Analysis of net cash/(debt)
At beginning Other
of year Cash flow movements At end of year
30 September 2025 £'000 £'000 £'000 £'000
Cash at bank and in hand 96,962 (16,564) - 80,398
Bank loans (13,591) 3,441 217 (9,933)
Net cash before deducting lease liabilities 83,371 (13,123) 217 70,465
Lease liabilities (40,769) 9,277 (2,139) (33,631)
Net cash/(debt) 42,602 (3,846) (1,922) 36,834
At beginning Other
of year Cash flow movements At end of year
30 September 2024 £'000 £'000 £'000 £'000
Cash at bank and in hand 72,431 24,531 - 96,962
Bank loans (28,530) 15,064 (125) (13,591)
Net cash before deducting lease liabilities 43,901 39,595 (125) 83,371
Lease liabilities (45,195) 9,089 (4,663) (40,769)
Net cash/(debt) (1,294) 48,684 (4,788) 42,602
Cash at bank and in hand as at 30 September 2025 includes £40,000 of cash
deposited by the Group in an escrow account in connection with a development
in progress, access to which is contingent upon the completion of certain
development works (30 September 2024: £53,000). Non‑cash movements relate
to the amortisation of bank loan arrangement fees and changes to the value of
lease liabilities as a result of leases entered into or terminated in the
period or due to movements in the rent inflation rates assumed
14. Annual Report
Copies of this announcement are available from the Company at 12 Soho Square,
London W1D 3QF. The Group's Annual Report for the year ended 30 September 2025
will be posted to shareholders shortly and will be available on our website at
www.watkinjonesplc.com.
( )
( ENDS )
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