Last checked at 19 Jul 2023 07:00
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.
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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 | |
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 | |
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