Half year profits up to £21m for Watkin Jones
Recently-listed developer and constructor for the student sector Watkin Jones has enjoyed a 26.6% increase in half year adjusted pre-tax profits to £21.1m.
Revenue was down 8.4% to £133.7m for the six months to March 31 because of the timing of forward development sales and £11.7m of non-repeating inventory sales of completed residential apartments in the first half of the previous year.
The Bangor, North Wales-headquartered firm with offices in Runcorn, Cheshire, said revenues are expected to be stronger in the second half of the current financial year.
Watkin Jones’ gross margin for the period was up 21.8% (H1 2016: 16.1%), which it said reflected the location and quality of student accommodation schemes in development, as well as a full six months contribution from Fresh Student Living, which was acquired into the group in February, 2016.
The company announced a 10% increase in the interim dividend to 2.2p a share.
Meanwhile, it has sold of seven student accommodation developments (2,580 beds) worth £216m, including one operational asset (590 beds), since October 1, 2016.
It also has £292m development value in legal negotiations for forward sale of nine further student accommodation developments (3,649 beds).
Watkin Jones has a development pipeline of more than 11,200 student beds across 31 sites, with 15 forward sold and nine more in legal negotiations.
Chief executive Mark Watkin Jones, told TheBusinessDesk: “What we are most encouraged about is that our earnings have grown on the back of an improved gross margin.
“This reflects the quality of the pipeline that is in place and there are new clients knocking on the door.
“The asset management side of the business is also growing and taking a lot of market share.”
He went on: “The group has seen good profit growth in the first half, driven by our student accommodation developments which are fundamental to the business.
“We are seeing increased institutional demand for good quality purpose built assets, and there are several new international funds that have entered the market recently, which highlights the continued attractiveness of the sector.
“Our forward sale model and student accommodation pipeline of 31 developments provides us with excellent visibility on earnings and cash flow.
“We are encouraged by the progress we have made in the build to rent sector and we are pleased that the group has already secured an excellent site in London, with solid progress also being made on a number of other specific development projects.
“Our student accommodation management businesses Fresh Student Living has had an excellent first half and is contributing well to overall group performance.
“The group has made progress in developing the Five Nine Living business to provide similar letting and operational management services for the build to rent Sector. Like our student accommodation development business, accommodation management provides us with good future earnings visibility.”
