- The property developer reported a £9.2m adjusted pre-tax profit last year
- On a statutory basis, Watkin Jones slashed its annual pre-tax losses to £0.3m
Watkin Jones swung back to profit last year despite ‘subdued’ investment demand for purpose-built student accommodation and built-to-rent properties.
The property developer, which completed the sale of two major PBSA schemes last year, reported an adjusted pre-tax profit of £9.2million for the 12 months ending September, having made a £2.9million loss in the previous 12 months.
Its improved result reflected the forward sales of student housing developments at Gas Lane in Bristol and Stratford in East London, which have a combined total of 657 beds.
The Stratford scheme was sold to a new joint venture Watkin Jones created with the Housing Growth Partnership, a social impact investor partly owned by Lloyds Banking Group.
Watkin Jones said its earnings also benefited from the successful completion of six developments and cost control actions implemented the prior year.
Profits rose despite the firm’s total revenue falling by 12.3 per cent to £362.4million, mainly due to the HGP deal being counted as the disposal of a subsidiary instead of a land sale.
Recovery: Watkin Jones swung back to profit last year after completing the sale of two major purpose-built student accommodation (PBSA) schemes
On a statutory basis, the company slashed its annual pre-tax losses from £42.5million to just £0.3million as its building safety costs fell by £6.7million to £48million.
Watkin Jones shares shares shot up 12.2 per cent to 22.3p on Thursday morning, although they have still more than halved in the past six months.
The AIM-listed group lowered its earnings guidance in August after revealing that it experienced a ‘slower than expected’ summer market, mostly because of uncertainty around interest rate cuts.
The Bank of England only reduced the UK base rate twice in 2024, both times by 0.25 percentage points, as inflation rebounded over the second half of the year.
Alex Pease, chief executive of Watkin Jones, said on Thursday that the ‘slow pace of base rate cuts and the general election meant sales activity had not improved as fast as anticipated’.
He added: ‘While the investment market has continued to be challenging, the sectors in which we operate remain attractive.
‘PBSA is still undersupplied, and BTR [Build to Rent] offers a key solution to the UK’s housing shortage, helping to accelerate the delivery of new homes and fostering communities.’
As of September 2024, the company has around £300million of contractually secure forward sold revenue.
Since then, Watkin Jones has partnered with Torus to construct 295 more affordable homes in St Helens.
Broker Progressive Equity Research said: ‘There appears to be significant appetite among investors to deploy capital – but only when the trajectory for rates becomes clearer.
‘We believe that, once visibility improves, there could be a marked uplift in sales, development and profitability.’
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