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Watkin Jones Beats Expectations

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Watkin Jones has reported a rise in annual profits slightly above expectations, driven by student accommodation sales.

Pre-tax profit for the year ending September increased by 26% to £54.3, with revenue rising 20% to £363.1m.

Whilst gross margins marginally declined from 21% to 20%, they remained strong and in line with company targets.

Isolating its student accommodation business, the developer reported a 22.1% increase in revenue to £312.7m, with a gross margin of 19.4%. During the year the company completed on ten student accommodation developments across the UK, with a combined total of 3,415 beds.

In 2019 the business is expected to deliver a further six schemes with 2,723 beds. Five of these developments have been forward sold and the remaining scheme is already secured.

An additional 2,606 units could be delivered in 2020, whilst four development sites have been secured for delivery in 2021 with around 2,205 beds.

Fresh Property Group (FPG), which manages student accommodation developed by Watkin Jones and third parties, generated revenue of £7.3m for the period. The group recorded a gross profit of £4.5m, representing a gross margin of 61.8%.

FPG picked up an extra 14 schemes with effect from the start of the 2018-19 academic year, taking its total beds under management to 15,421 units. Of these schemes, 48% were developed by Watkin Jones with the remaining developed by third parties.

Commenting on the results, Richard Simpson, Chief Executive of Watkin Jones, said: "Today Watkin Jones has reported a record set of full year results which show that the Group has performed strongly across all key financial metrics of the business. We continue to have excellent visibility of our future revenues and earnings, supported by the pipeline of forward sold and secured sites for student accommodation. The locations and forward sale values we have achieved for these schemes underpin our earnings expectations from this division over the next twelve months and beyond."