| 23 January 2024 |
Watkin Jones plc
(the ‘Group’)
FY 2023 Results
Well positioned to capitalise on a market recovery
The Group announces its annual results for the year ended 30 September 2023 (‘FY23’):
| Adjusted Results (1) | Statutory Results | |||||
| FY23 | FY22 | Change (%) | FY23 | FY22 | Change (%) | |
| Revenue | £413.2m | £407.1m | 1.5% | £413.2m | £407.1m | 1.5% |
| Gross profit | £34.9m | £67.6m | (48.4)% | £34.9m | £67.6m | (48.4)% |
| Operating profit/(loss) | £0.2m | £54.7m | (99.6)% | £(38.0)m | £24.3m | (256.4)% |
| (Loss)/profit before tax | £(2.9)m | £48.8m | (105.9)% | £(42.5)m | £18.4m | (331.0)% |
| Basic (loss)/earnings per share | (0.6)p | 14.8p | (104.1)% | (12.7)p | 5.2p | (344.2)% |
| Dividend per share | 1.4p | 7.4p | (81.1)% | 1.4p | 7.4p | (81.1)% |
| Adjusted net cash(2) | £43.9m | £82.6m | (46.9)% | |||
(1) For FY23 Adjusted Operating profit, Adjusted Loss before tax and Adjusted Basic Loss per share are calculated before the impact of the exceptional charge of £35.0 million for the further costs of building safety remedial works and restructuring costs of £3.1 million
(2) Adjusted net cash is stated after deducting interest bearing loans and borrowings, but before deducting IFRS 16 operating lease liabilities of £45.2 million at 30 September 2023 (30 September 2022: £49.1 million)
Key Highlights
· Revenue of £413.2 million from our previously sold developments on site and two forward sales
· Adjusted operating profit of £0.2 million, reflecting low levels of forward sale market activity, together with:
o lower margins across certain in-build schemes as anticipated, together with additional site-specific costs related to accelerated completions on two schemes and a third-party contractor insolvency
o £4.6 million book loss on the sale of three PRS assets
o impairment charge of £5.5 million on our non-core land bank and certain pipeline assets which are no longer economically viable
· Exceptional charge in the year of £38.1 million
o £35.0 million further provision for building safety remedial works. Costs expect to be incurred over a period of up to five years
o £3.1 million one-off restructuring costs associated with realignment of the Group’s cost base, delivering c.£4.0 million of annualised run rate savings
· End year with c.£500 million of contractually secure forward sold revenue
· Gross and adjusted net cash balance of £72.4 million and £43.9 million respectively, reflecting strong cash collections in the later part of the year and proceeds from non-core asset sales
· The Board has decided not to recommend a final dividend in respect of FY23 given the uncertain market backdrop but remains committed to its progressive dividend policy as earnings recover
Outlook: FY24
· Current secured revenue from previously sold developments, on site, of c.£300 million, covering FY24 cost base
· Forward fund market showing early signs of recovery as interest rates stabilise
· All current development schemes on track, supported by continuing moderation in build cost inflation
· Guidance for FY24 adjusted operating profit of £15-20 million unchanged.
Outlook: Medium term
· Market leading business operating in the most attractive segments of the UK residential for rent market, where we continue to see strong tenant demand and rental growth
· Significant pent up investor demand and growing allocations for high quality assets
· Secured development pipeline of £1.5 billion (estimated future revenue):
o £0.5 billion forward sold; £0.3 billion secured with planning; £0.7 billion in planning (of which £0.1 billion secured since the year end)
· Currently in exclusivity on a further £0.4 billion of land opportunities (subject to planning)
· Partnership track record, delivery capability and Fresh are material differentiators
· Strategic focus on extracting more value from the Group’s existing capabilities, through Development Partnerships and Refresh (refurbishment / repurposing development opportunities).
Alex Pease, Chief Executive Officer of Watkin Jones, said “Significant cost inflation and volatility in real estate funding markets meant that FY23 represented a period of unprecedented challenge for the business. However, I am pleased that against this backdrop the Group demonstrated resilience and agility, taking a number of important actions operationally.
Whilst funding conditions remain difficult, the outlook is gradually improving and the strong asset performance in PBSA and BTR sectors gives me confidence in the longer-term market recovery and return to growth. In the near term, we remain focussed on driving improvements to the productivity and efficiency of the business, as well as looking at opportunities to extract more value from our sector expertise and end-to-end capabilities.
Watkin Jones continues to have a market-leading team and offering to the residential for rent sectors and we are taking the right steps to ensure we are well placed to capitalise on this, as conditions improve.”
Analyst meeting
A meeting for analysts will be held in person at 11.00am today, Tuesday 23rd January 2024, at Buchanan, 107 Cheapside, London EC2V 6DN. A copy of the Full Year results presentation is available at the Group’s website: http://www.watkinjonesplc.com
An audio webcast of the meeting with analysts will be available after 12pm today:
https://stream.buchanan.uk.com/broadcast/65952d93b012a6d30b474616
For further information:
| Watkin Jones plc | ||
| Alex Pease, Chief Executive Officer | Tel: +44 (0) 20 3617 4453 | |
| Sarah Sergeant, Chief Financial Officer | www.watkinjonesplc.com | |
| Peel Hunt LLP (Nominated Adviser & Joint Corporate Broker) | Tel: +44 (0) 20 7418 8900 | |
| Mike Bell / Ed Allsopp | www.peelhunt.com | |
| Jefferies Hoare Govett (Joint Corporate Broker) | Tel: +44 (0) 20 7029 8000 | |
| James Umbers/David Sheehan / Paul Bundred | www.jefferies.com | |