Watkin Jones has reported a substantial upturn in revenue as the pandemic has highlighted the advantages of Build to Rent.
Watkin Jones, a UK-based developer and manager of residential for rent with a focus on the build to rent and purpose built student accommodation sectors, has announced its annual results for the year ended 30 September 2020. Build to Rent is the significant growth market. WJ reported increased BtR revenues (FY 19 £77m) (FY 20 £94m).
In light of the financial performance, WJ’s strong cash position and the Board’s confidence in its growth prospects WJ is resuming its dividend proposing 7.35 pence per share.
The company reported a solid financial performance, showing the resilience of the business during a challenging period for the UK economy.
Highlights
- Revenue down 5.5% for the year, primarily as a result of forward sales of developments being deferred due to COVID-19 uncertainty.
- Robust gross margin for the year of 21.4% (FY19: 21.4%).
- Impact of COVID-19 disruption on operational delivery minimised and additional construction cost substantially mitigated, with FY20 planned deliveries all completed.
- All Government financial assistance received to support furloughed staff, totalling £0.8 million, repaid at the start of FY21.
- Full-year final dividend of 7.35 pence per share proposed, in line with policy of 2.0x cover by adjusted earnings, reflecting strength of financial performance and cash position.
Richard Simpson, Chief Executive Officer of Watkin Jones, said: “We delivered a robust financial performance for FY20, building on our strong first half despite the subsequent and ongoing disruption caused by COVID-19. Our operations have performed well and we have taken the opportunity to secure sites to significantly increase our development pipeline, positioning us to deliver our growth strategy as the UK’s leading developer and manager of residential for rent.
“COVID-19 undoubtedly caused delays to investment activity in the period, however I am pleased to report that the resumption in forward sales that we have seen, coupled with the increase in the number of student beds for delivery in FY21 and the scheduled completion of four BtR developments, should see Watkin Jones return to growth in the coming year, assuming there is no further significant disruption to our activities. We are pleased with our progress in growing our BtR and PBSA development pipelines and remain very confident in the long term prospects for these markets.
“We have had a good start to FY21 with new forward sales and our developments progressing well. The current escalation of the pandemic and latest lockdown brings with it further operational challenges, not least of which to Fresh who continue to provide support to students in residence and those unable to return to their accommodation in January.
“However, we have limited direct exposure to the level of student occupancy and with our COVID-secure operations working effectively we are able to continue delivering our developments on site. In light of our strong performance and cash position, we have resumed our previous dividend policy and the Board is therefore proposing a full-year dividend of 7.35 pence per share.
“Overall, I am confident about our business and its prospects, which are supported by strong sector dynamics and investor demand. Throughout the pandemic, we have been able to adapt to the changing circumstances and this, together with our strong pipeline of future developments and increasing focus on our ESG agenda, will allow the Group to continue to deliver for its stakeholders.
“I would like to take this opportunity to thank all the people across the Watkin Jones Group for their outstanding contribution in the most challenging of times. I want to thank them all for their hard work and their willingness to innovate, overcome problems and adapt to new ways of working which has set the foundations for our future growth.”
