14th Jan 2020 09:42
(Alliance News) - Watkin Jones PLC on Tuesday reported a fall in annual profit, on increased exceptional costs, but revenue rose on a strong contribution from the company's Build to Rent unit.
Watkin Jones is a developer and manager of residential for-rent properties, with a focus on student accommodation.
In 2019, the Bangor, Wales headquartered construction firm's pretax profit slipped 8.5% to GBP49.7 million from GBP54.3 million in 2018.
Watkin Jones recorded an exceptional charge of GBP2.6 million in 2019 compared to an exceptional gain of GBP4.3 million the year before. Excluding exceptional items, the company's operating profit grew 5.4% to GBP52.3 million from GBP49.6 million.
The firm's gross margin improved to 20.5% from 20.0%.
Revenue grew 3.2% to GBP374.8 million from GBP363.1 million.
Watkin Jones declared a total dividend of 8.35 pence for the year, up 9.9% on the 7.6p distributed in 2018.
Chief Executive Richard Simpson said: "We are pleased to report another year of growth for Watkin Jones, which demonstrates the strength and resilience of our capital light business model. Despite the difficult macro environment caused by Brexit-related uncertainty, the group has delivered further profitable growth, in line with expectations."
The company completed six purpose-built student accommodation developments, totalling 2,723 beds, in 2019. Watkin Jones said seven developments, with 2,609 beds, expected to be delivered in 2020 are all forward sold. The company has forward sold 1,928 beds for 2021 and has a further 1,325 beds in the pipeline for 2021.
For 2022, the company has 2,642 beds in its delivery pipeline.
Watkin Jones said its student accommodation properties remain its core revenue generator but noted its Build to Rent business made a "significant contribution" in 2019.
"We expect it to become an increasingly important growth driver for the group in the coming years. Watkin Jones is now firmly positioned as the UK's leading developer and manager of residential for rent schemes," Simpson said.
Watkin Jones has forward sold 159 BtR homes in 2020, with a further 782 in 2021. For 2020, the company has 71 forward sold BtR homes but a total of 818 in its delivery pipeline.
Looking ahead, Simpson said: "We are positive about the outlook for both the student accommodation and BtR sectors. There is continued investor appetite in those markets and we are confident in our ability to expand our position as market leader. We therefore expect to continue to grow the business, in line with our strategy, and believe that the group has a bright future."
Shares in Watkin Jones were 0.2% higher in London on Tuesday morning at 242.00 pence each.
By Paul McGowan; [email protected]
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