Watkin Jones Gains Limelight Today. Here's Why.

Highlights

• Revenue Stability: Generated £362.4 million, primarily from sold developments and new business lines.
• Profit Surge: Adjusted operating profit rose sharply to £10.6 million from £0.2 million in FY23.
• Strengthened Cash Position: Gross cash increased to £97.0 million, reflecting disciplined cash management.

Watkin Jones plc (LSE:WJG), a leading developer of purpose-built student accommodation (PBSA) and build-to-rent (BTR) housing, announced a robust performance for the financial year ended September 30, 2024. Despite challenging investment market conditions, the Group achieved improved profitability, enhanced cash reserves, and promising pipeline growth.

FY24 Financial and Operational Highlights

Revenue and Profit Growth:
The Group reported revenue of £362.4 million, driven by developments sold in previous years and supplemented by two additional development sales during FY24. Watkin Jones also saw a significant jump in adjusted operating profit, which surged from £0.2 million in FY23 to £10.6 million. Key contributors included:

• The sale of two schemes, including the Stratford joint venture, which generated base profit and future value potential.
• Completion of six schemes, achieving gross margins consistent with guidance.
• Cost-saving measures implemented during FY23.

Cash Position:
The Group focused on cash generation, closing the year with gross cash of £97.0 million and adjusted net cash of £83.4 million, reflecting its disciplined financial management.

Pipeline Development:

• Achieved planning consent for approximately 2,600 new PBSA beds across four schemes.
• Secured two additional PBSA development sites, pending planning approval.

Building Safety Provisions:
The Group reduced its net provision for building safety works by £6.7 million to £48.0 million. This reflects remediation work on three properties and a £7.0 million additional provision for changes in scope and other properties.

Strategic Focus and Future Outlook

Investment Market Recovery:
While the investment market remains slow, signs of recovery are emerging, potentially tied to future reductions in gilt and interest rates. Watkin Jones remains optimistic about medium-term prospects, supported by strong sector fundamentals driving investor interest.

Near-Term Priorities:
The Group is committed to managing factors within its control, including:

• Delivering in-progress projects efficiently.
• Maintaining cost discipline and cash flow management.
• Broadening its revenue base through new income streams such as its Refresh initiative, which achieved a successful first year and continues to grow its active pipeline.

Pipeline and Partnerships:
With a pipeline valued at nearly £2 billion, Watkin Jones has approximately £300 million in contractually secured forward-sold revenue as of September 30, 2024. Recent developments include:

• A new development partnership to deliver 295 homes in St Helens.
• Two additional schemes under letters of intent.
• Extension of HSBC’s £50 million banking facility by two years.