TIDMWJG
RNS Number : 7866O
Watkin Jones plc
22 May 2018
For immediate release 22 May 2018
Watkin Jones plc
('Watkin Jones' or the 'Group')
Half year results for the six months to 31 March 2018
Watkin Jones plc (AIM:WJG), a leading UK developer and
constructor of multi occupancy property assets, with a focus on the
student accommodation and build to rent sectors, announces its half
year results for the six months ended 31 March 2018. The Board is
pleased to report a successful first six months of the financial
year with trading in line with its expectations.
Financial Highlights
H1 2018 H1 2017 Movement
GBP158.3 GBP133.7
Revenue million million +18.4%
Gross profit GBP34.5 million GBP29.1 million +18.6%
Operating profit GBP23.8 million GBP19.4 million +22.7%
Adjusted EBITDA(1) GBP24.5 million GBP21.9 million +11.9%
Profit before
tax GBP23.6 million GBP21.1 million +11.9%
Basic EPS 7.53 pence 6.69 pence +12.5%
Dividend per
share 2.47 pence 2.2 pence +12.3%
Net cash GBP38.4 million GBP11.7 million +328.2%
-- Revenues for the half year up 18.4% on the prior half year, driven by student accommodation developments.
-- Strong profit growth for the half year, with gross profit
increased by 18.6% to GBP34.5 million (H1 2017: GBP29.1 million)
and operating profit increased by 22.7% to GBP23.8 million (H1
2017: GBP19.4 million).
-- Gross margin for the six months to 31 March 2018 maintained at 21.8% (H1 2017: 21.8%).
-- 12.3% increase in the interim dividend to 2.47 pence per
share (FY 2017: Interim dividend of 2.2 pence per share), in line
with our progressive dividend policy.
-- Strong cash performance in the first half of the year, with
net cash at 31 March 2018 of GBP38.4 million (31 March 2017:
GBP11.7 million).
Notes
1 Adjusted EBITDA comprises operating profit from continuing
operations plus the Group's profit from joint ventures, adding back
charges for depreciation and amortisation.
Business Highlights
Student Accommodation Development
-- 15 developments (6,090 beds) currently forward sold.
-- Total development pipeline of over 10,300 student beds across 25 sites.
-- Delivery pipeline:
-- FY 2018 deliveries - All ten student developments (3,415 beds) have been forward sold.
-- FY 2019 deliveries - Six student developments (2,723 beds)
scheduled for delivery. All sites are secured and have planning
consents. Four developments currently forward sold (2,245
beds).
-- FY 2020 deliveries - Seven student developments
(approximately 3,000 beds) currently targeted for delivery, all of
which have been secured. Five of the sites have planning (over
2,000 beds) and one development is forward sold.
-- FY 2021 and FY 2022 deliveries - two sites secured (over
1,000 beds), with a number of additional site acquisitions
progressing.
Build to Rent Development
-- Development agreement entered into with M&G Real Estate
to deliver a 315 apartment scheme in Reading for occupation in
2021.
-- In the first half of the year, the Group secured a
significant development site in Uxbridge, for which it is
progressing the planning consent. In total, the Group is now in
control of five build to rent development sites, three of which
have planning, and remains in positive negotiations on several
other opportunities.
-- The Group expects to deliver over 1,500 build to rent apartments in the next five years.
-- The Board is currently at an early stage of exploring ways to
enhance shareholder returns from the longer term value creation
opportunity of the Group's build to rent programme, which includes
consideration of establishing a new investment vehicle to be
managed by Watkin Jones.
Accommodation Management
-- Student accommodation beds under management by Fresh Property
Group ('FPG') increased from 12,117 beds in FY 2017 to 16,185 beds
at the start of FY 2018.
-- Following the previously announced sale by the Curlew Student
Trust ('CST') of a portfolio of 14 student accommodation schemes
(the 'Enigma' portfolio), comprising 5,124 beds, FPG have now been
notified by the new owner that they will be retained to provide a
reduced level of financial reporting only services for 13 of the
schemes from 1 May 2018 until August 2018. However, for the 527 bed
Mannequin House scheme in Walthamstow, FPG currently remain engaged
to provide the full scope of letting services. FPG will be fully
compensated for the loss of revenues arising from the reduction in
the scope of services and early termination of contracts.
-- Curlew Capital have successfully launched a second Fund,
Curlew Student Trust 2 ("CST 2"), which has a similar strategy to
CST to forward fund and hold good quality student accommodation
assets in strong university towns and cities across the UK. FPG is
the preferred property manager for CST 2, which creates the
potential for longer-term business growth.
-- FPG is currently contracted to manage 14,821 student beds
across 52 schemes from the start of the 2018/19 academic year and
is contracted to manage 17,053 student beds across 58 schemes by FY
2021.
-- FPG has been appointed to manage two new student
accommodation schemes in Dublin (576 beds), which will come on
stream for the 2018/19 and 2019/20 academic years respectively.
-- The number of build to rent apartments under management is
contracted to increase from the current 532 apartments, across five
schemes, to 806 apartments, across six schemes, by FY 2021, FPG
having recently won a bid to manage a 274 apartment scheme in
Manchester.
CEO Succession
-- As announced on 18 May 2018, Richard Simpson has been
appointed to succeed Mark Watkin Jones as CEO. Richard will be
joining Watkin Jones from Unite Group plc ('Unite'), the FTSE250
manager and developer of purpose-built student accommodation, where
he is Group Property Director. Richard will join the Board of
Watkin Jones as CEO effective on 2 January 2019.
-- Mark Watkin Jones has committed to providing ongoing support
to the Group as CEO for as long as is needed, and to work with
Richard for a transitional period following his start to ensure an
orderly handover.
Commenting on the results, Mark Watkin Jones, Chief Executive
Officer of Watkin Jones plc, said: "We are delighted to report
strong growth in revenue and profits in the first six months of the
financial year. Results were in line with our expectations,
reflecting good build progress on forward sold student
accommodation developments. We are continuing to see strong demand
for our student accommodation developments and are pleased that
demand from institutional investors, keen to acquire scale in this
maturing asset class, remains robust. We have an excellent
development pipeline and we are excited about several other
opportunities expected to be added to the pipeline in the second
half of the year.
We are also highly encouraged by the recent development funding
agreement with M&G which highlights our continued progress in
the build to rent sector. The M&G agreement represents an
important addition to Watkin Jones' build to rent strategy,
alongside the Group's growing owned site pipeline. The Group is now
in control of five build to rent development sites and remains in
positive negotiations on several other opportunities. We remain
optimistic about the scale of opportunities this sector offers.
The fundamentals for each of our business segments remain
positive and the market dynamics strongly support the Group's
forward sale model, providing us with good future visibility on
earnings and cashflows. On behalf of the Board I would like to
thank all our staff for helping us deliver an excellent first half
year performance. The Board is confident in the outlook for the
Group."
Chief Executive's Statement
Results for the six months to 31 March 2018
The Board is pleased to report a strong growth in revenue and
profits for the six months to 31 March 2018, compared to the same
period last year.
Revenues for the half year were in line with management's
expectations, up 18.4% on the prior half year to GBP158.3 million,
reflecting the good build progress on forward sold student
accommodation developments in the first half of the year. Gross
profit increased by GBP5.4 million to GBP34.5 million (H1 2017:
GBP29.1 million). The gross margin for the period of 21.8% has been
maintained at the same level as for the prior half year, and
continues to be driven by the location and quality of student
accommodation schemes in development, as well as further growth in
the profits earned by FPG.
Overhead costs for the period amounted to GBP10.7 million,
compared to GBP9.7 million for H1 2017. The increase is largely
personnel related and reflects both salary increases and the cost
of additional personnel to support the growth in the business.
Operating profit increased by 22.7% to GBP23.8 million (H1 2017:
GBP19.4 million).
The Group made a profit on the disposal of its joint venture
interest in Rufus Estates Limited in the period of GBP0.1 million.
This was a legacy joint venture interest relating to a development
site in Chester. The consideration for the sale amounted to GBP0.4
million.
After accounting for net finance costs of GBP0.3 million, the
Group's profit before tax for the period amounted to GBP23.6
million, compared to GBP21.1 million for the prior half year, an
increase of 11.9%.
Adjusted EBITDA for the period, including the profits from the
Group's joint venture interests, was GBP24.5 million (H1 2017:
GBP21.9 million).
Basic earnings per share were 7.53 pence for the period, an
increase of 12.5% compared to the 6.69 pence per share for H1
2017.
Segmental review
Student accommodation
Revenues from student accommodation development amounted to
GBP142.2 million for the period, compared to GBP115.2 million for
the comparative period last year, an increase of 23.5%. This strong
growth in revenues was in line with management's expectations and
reflects the good build progress in the period on the forward sold
developments which are for delivery in FY 2018 and FY 2019.
The gross margin for the period on student accommodation
developments amounted to 20.7%, compared to 21.7% for H1 2017. The
student accommodation margin has remained strong on the mix of
developments in progress, with the slight drop being more a
reflection of a particularly high margin contribution from certain
developments that were completed in FY 2017.
The Group has a strong student accommodation development
pipeline, currently comprising 25 development sites which will
deliver over 10,300 beds to the market with an appraised net
development value of approximately GBP900 million. This compares to
a development pipeline of 31 development sites delivering 11,200
beds, with a development value of GBP920 million, reported in the
Group's interim report last year. The Group is currently in
negotiation on a number of other opportunities which it is expected
will further add to this pipeline in the second half of the
year.
All developments for completion in the current financial year
are sold (3,415 beds).
Six developments (2,723 beds) are scheduled for delivery in FY
2019 and of these, four have so far been forward sold (2,245 beds).
This delivery schedule reflects a recent commercial agreement with
one of our clients, at their request, to defer the completion of
one development until FY 2020. Although the Group will see a
smaller number of beds delivered in FY 2019, the overall value of
schemes in build during FY 2019 for delivery in FY 2019 and FY 2020
is expected to be in line with previous guidance.
Looking ahead to FY 2020, seven developments (approximately
3,000 beds) are currently targeted for delivery, all of which are
secured. Five of the sites have planning (over 2,000 beds) and one
of the developments is forward sold.
The Group currently has two development sites secured for FY
2021 and FY 2022 delivery (over 1,000 beds).
Build to Rent development
The Group has continued to make good progress with its build to
rent development pipeline.
As announced on 18 May 2018, Watkin Jones has entered into a
development funding agreement with M&G Real Estate ('M&G')
to deliver a 315 apartment build to rent scheme in Reading. Under
the agreement, the Group will receive GBP68.5 million for the
development works which it is to carry out. Construction works will
commence immediately, with completion of the development targeted
for 2021. The purpose-designed build to rent scheme, which is
located at the Thames Quarter, close to the rail station and town
centre, comprises 315 high specification studio, one, two and three
bed apartments. Residents will benefit from outstanding facilities,
including a triple height atrium, cinema room, multiple private
dining facilities, tenant lounges and a selection of rooftop
terraces, providing views overlooking the River Thames. The Reading
scheme is a significant addition to the Group's build to rent
pipeline.
In the first half of the year the Group secured a significant
development site in Uxbridge, for which it is progressing the
planning consent. In total, the Group is in control of five build
to rent development sites and remains in positive negotiations on
several other opportunities. Including Reading, the Group expects
to deliver over 1,500 build to rent apartments in the next five
years.
Following an initial marketing exercise for the Group's scheme
in Sutton, keen expressions of interest have been received from
several parties. However, it has not yet been possible to progress
this interest further pending a satisfactory conclusion to
discussions with the Greater London Authority and the London
Borough of Sutton as to the level of affordable housing provision
for the scheme. The Sutton scheme is one of the first to be
negotiated in London since the Affordable Housing and Viability
Supplementary Planning Guidance was issued by the Mayor of London
in August 2017 and this is providing some initial practical
application difficulties which have yet to be resolved.
Residential
In the six months to 31 March 2018, the residential development
business achieved 28 sales completions, as compared to 31 in H1
2017. The low level of sales completions in the first half is
consistent with last year and reflects the current seasonality of
the business, with sales heavily weighted to the second half as new
developments in build come on stream. As at 31 March 2018, 67 sales
were legally exchanged or reserved for completion in the second
half of the year providing us with good visibility for the
remainder of the year (H1 2017: 31 sales exchanged/reserved).
Revenues for the residential development business amounted to
GBP5.3 million, compared to GBP5.7 million for the equivalent prior
period. The lower sales value is attributable to sales from legacy
sites at nil margin, which amounted to GBP1.9 million in H1 2018,
compared to GBP2.9 million in H1 2017.
Accommodation management
For the six months ended 31 March 2018, the Fresh Property Group
('FPG') increased its revenues to GBP3.7 million (H1 2017: GBP3.0
million) and its gross profit to GBP2.4 million (H1 2017: GBP1.9
million), giving a gross margin of 65.3% (H1 2017: 63.2%). The
further improvement in the gross margin reflects the benefit of the
increase in scale of FPG's operations.
FPG had 16,185 student accommodation beds under management
across 53 schemes at the start of FY 2018, compared to 12,117 beds
across 43 schemes at the start of FY 2017.
Following the previously announced sale by the Curlew Student
Trust ('CST') of a portfolio of 14 student accommodation schemes
(the 'Enigma' portfolio), comprising 5,124 beds, FPG have now been
notified by the new owner that they will be retained to provide a
reduced level of financial reporting only services for 13 of the
schemes from 1 May 2018 until August 2018, when the management
agreements will be terminated. However, for the 527 bed Mannequin
House scheme in Walthamstow, FPG currently remain engaged to
provide the full scope of letting services. FPG will be fully
compensated for the loss of revenues arising from the reduction in
the scope of services and early termination of contracts.
Curlew Capital have successfully launched a second Fund, Curlew
Student Trust 2 ('CST 2'), backed again by clients of CBRE Global
Investment Partners, and which has a similar strategy to CST to
forward fund and hold good quality student accommodation assets in
strong university towns and cities across the UK. FPG is the
preferred property manager for CST 2.
From the start of the 2018/19 academic year FPG is currently
contracted to manage 14,821 student beds across 52 schemes and this
number is contracted to increase to 17,053 student beds under
management across 58 schemes by FY 2021.
The number of build to rent apartments under management is
contracted to increase from the current 532 apartments across five
schemes to 806 apartments across six schemes by FY 2021, FPG having
recently won a bid to manage a 274 apartment scheme in
Manchester.
FPG is in active discussions regarding opportunities to secure
new management contracts in both the student accommodation and
build to rent sectors under the Fresh Student Living and Five Nine
Living brands. This includes opportunities in Dublin, where FPG has
recently been appointed to manage two new student accommodation
schemes (576 beds) which will come on stream for the 2018/19 and
2019/20 academic years respectively. It is also expected that the
recent successful launch of CST2 will provide an additional
opportunity for future business growth. FPG is working with CST2 in
appraising several new schemes.
Balance sheet and cashflow
The Group had net cash at 31 March 2018 of GBP38.4 million,
comprising cash of GBP61.6 million less borrowings of GBP23.2
million. This compares to net cash at 31 March 2017 of GBP11.7
million and at 30 September 2017 of GBP41.0 million.
The reduction in net cash for the period of GBP2.6 million (H1
2017: GBP20.5 million) reflects the Group's normal cashflow profile
which, depending on the timing of forward development sales, sees a
cash utilisation in the first half of the year, followed by cash
generation in the second half of the year as development sites for
delivery in future years are forward sold and the significant final
payments due on completion of the current year's developments are
received. The low net cash utilisation in H1 2018 compared to H1
2017 reflects the timing benefit of the receipt of GBP22.8 million
of cash relating to forward sales of the Group's development sites
at Pittodrie Street, Aberdeen and Midland Road, Bath, which were
agreed during FY 2017, but could not be contractually completed
until the beginning of FY 2018.
The Group generated a cash inflow from operating activities for
the period of GBP7.0 million (H1 2017: GBP19.9 million cash
outflow), after accounting for tax paid of GBP8.3 million. The
Group's cash position also benefitted from a partial distribution
from the Curlew Student Fund of GBP1.7 million resulting from the
sale of the Enigma portfolio. The cash cost of the FY 2017 final
dividend paid in the period amounted to GBP11.2 million.
The Group's investment in joint ventures was reduced by GBP0.3
million in the period as a result of the disposal of the Group's
interest in Rufus Estates Limited, whilst other financial assets
were reduced by GBP1.6 million to GBP1.1 million after accounting
for the distribution from the Curlew Student Fund referred to
above.
Inventory and work in progress increased by GBP20.3 million in
the period to GBP145.5 million, reflecting a modest level of
investment in new student accommodation and build to rent sites, as
well as an increase in work in progress for the residential
business relating to the new developments in build. This trend is
expected to reverse in the second half of the year as the forward
sales of the sites currently in legal negotiation complete and the
targeted residential sales are achieved.
Dividend
In announcing the Group's FY 2017 full year results, the Board
stated its intention of aiming to pay dividends at a level that
will be two times covered by annual earnings and that it would
fully implement this policy by FY 2019. Therefore, in line with
this intention, the Board has declared an interim dividend for the
period of 2.47 pence per share, which is a 12.3% increase on the
interim dividend paid last year. It will be paid on 29 June 2018 to
shareholders on the register at close of business on 8 June 2018.
The shares will go ex-dividend on 7 June 2018.
Outlook
The Board is confident in the outlook for the Group, with the
fundamentals for each of its business segments remaining
positive.
The Group continues to see strong demand for its student
accommodation developments from both UK and international clients.
The UK student accommodation market is continuing to attract
institutional investors keen to acquire scale in this maturing
asset class, which remains supported by the growth in student
numbers and the progressive move to high quality purpose-built
accommodation. There have been a number of new international funds
entering the market, with increasing momentum from investors
located in the Far East, as well as UK funds repositioning
themselves to be competitive in acquiring new assets. The depth of
institutional demand continues to have a positive effect on
development values, with yields continuing to sharpen, and
investors increasingly willing to partner with Watkin Jones to
acquire portfolios of assets on a forward fund basis. The market
dynamics strongly support the Group's forward sale model and this,
combined with the secured pipeline of development sites continues
to provide the Group with excellent visibility on future earnings
and cash flow.
The Board is encouraged by the progress the Group has made in
the build to rent sector. The completion of the development funding
agreement with M&G for the market leading scheme in Reading
represents a significant addition to the Group's build to rent
pipeline and the Board is optimistic that this will lead to similar
development opportunities. In view of the scale of opportunity that
the burgeoning build to rent sector offers, the Group is currently
at an early stage of exploring ways to enhance shareholder returns
from the sector, which includes consideration of establishing a new
investment vehicle ('NewCo') to be managed by Watkin Jones. The
NewCo, which may be listed, would act as a prospective acquirer of
the Group's build to rent developments on a forward fund basis.
Watkin Jones would consider taking a minority stake in the NewCo,
which would allow the Group to further benefit from the long term
value proposition in the build to rent sector, alongside an
incremental fee stream from the management of the NewCo and the
opportunity for Fresh Property Group to provide the accommodation
management services.
The residential development business has several promising new
developments in build, including apartment schemes in Bath and
Stratford, which should see the division making an increasing
contribution to the Group's results.
The prospects for the student accommodation management business
remain positive. Whilst the loss of student beds under management
from the sale of the Enigma portfolio of assets by the Curlew
Student Fund will result in a modest drop in the total beds under
management for the 2018/19 academic year, the longer term growth
prospects remaining encouraging, especially as Fresh Property Group
is well placed to capitalise on the growing opportunity in the
build to rent sector.
The fundamentals for each of the Watkin Jones' business segments
remain positive and the market dynamics strongly support the
forward sale model, providing good future visibility on earnings
and cashflows. The Board is confident in the outlook for the
Group.
Mark Watkin Jones
Chief Executive Officer
22 May 2018
For further information:
Watkin Jones plc
Mark Watkin Jones, Chief Tel: +44 (0) 1248 362
Executive Officer 516
Philip Byrom, Chief Financial www.watkinjonesplc.com
Officer
Peel Hunt LLP (Nominated Adviser and Broker) Tel: +44 (0) 20 7418
8900
Mike Bell / Justin Jones / Matthew Brooke-Hitching www.peelhunt.com
Jefferies Hoare Govett (Joint Broker) Tel: +44 (0) 20 7029
8000
Max Jones / Will Soutar www.jefferies.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Richard
Oldworth Tel: +44 (0) 20 7466
Jamie Hooper / Catriona Flint 5000
watkinjones@buchanan.uk.com www.buchanan.uk.com
Notes to Editors
Watkin Jones is a leading UK developer and constructor of multi
occupancy property assets, with a focus on the student
accommodation and build to rent sectors. The Group has strong
relationships with institutional investors, and a reputation for
successful, on-time-delivery of high quality developments. Since
1999, Watkin Jones has delivered more than 34,500 student beds
across 107 sites. In addition, Fresh Property Group, the Group's
specialist accommodation management company, manages more than
16,000 student beds on behalf of its institutional clients. Watkin
Jones has also been responsible for over 50 residential
developments, ranging from starter homes to executive housing and
apartments. The Group is now expanding its development and
management operations into the build to rent sector.
The Group's competitive advantage lies in its experienced
management team and business model, which enables it to offer an
end-to-end solution for investors, delivered entirely in-house with
minimal reliance on third parties, across the entire life cycle of
an asset.
Watkin Jones was admitted to trading on AIM in March 2016 with
the ticker WJG.L. For additional information please visit:
www.watkinjonesplc.com
Consolidated Statement of Comprehensive Income
for the six month period ended 31 March 2018 (unaudited)
6 months to 6 months to 12 months to
31 March 31 March 30 September
2018 2017 2017
Notes GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 158,319 133,676 301,914
Cost of sales (123,779) (104,558) (238,383)
------------ ------------ --------------
Gross profit 34,540 29,118 63,531
Administrative expenses (10,693) (9,682) (20,846)
Operating profit 23,847 19,426 42,685
Profit on disposal of interest in joint venture 5 121 930 930
Share of profit in joint ventures - 1,119 519
Finance income 59 72 101
Finance costs (391) (432) (957)
------------ ------------ --------------
Profit before tax from continuing operations 23,636 21,115 43,278
Income tax expense 6 (4,416) (4,031) (7,478)
------------ ------------ --------------
Profit for the period attributable to ordinary equity holders of
the parent 19,220 17,084 35,800
============ ============ ==============
Other comprehensive income
Net gain on available-for-sale financial assets 66 46 130
------------ ------------ --------------
Total comprehensive income for the period attributable to
ordinary equity holders of the parent 19,286 17,130 35,930
============ ============ ==============
Earnings per share for the period attributable to ordinary equity Pence Pence Pence
holders of the parent
Basic earnings per share 7 7.529 6.693 14.024
============ ============ ==============
Consolidated Statement of Financial Position
as at 31 March 2018 (unaudited)
31 March 31 March 30 September
2018 2017 2017
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 14,682 15,242 14,962
Property, plant and equipment 5,004 3,098 4,911
Investment in joint ventures 1,536 670 1,816
Deferred tax asset 533 263 277
Other financial assets 9 1,143 2,603 2,698
22,898 21,876 24,664
----------- ---------- -------------
Current assets
Inventory and work in progress 145,548 126,040 125,220
Trade and other receivables 27,401 20,839 36,299
Cash and cash equivalents 11 61,606 25,111 65,325
234,555 171,990 226,844
----------- ---------- -------------
Total assets 257,453 193,866 251,508
=========== ========== =============
Current liabilities
Trade and other payables (91,193) (56,960) (88,664)
Provisions (699) (253) (699)
Other financial liabilities (13) (35) (13)
Interest-bearing loans and borrowings (1,401) (4,307) (1,505)
Current tax liabilities (4,635) (6,992) (8,199)
(97,941) (68,547) (99,080)
----------- ---------- -------------
Non-current liabilities
Interest-bearing loans and borrowings (21,852) (9,131) (22,823)
Deferred tax liabilities (1,368) (1,139) (1,368)
Provisions (2,006) (1,957) (2,006)
(25,226) (12,227) (26,197)
----------- ---------- -------------
Total Liabilities (123,167) (80,774) (125,277)
=========== ========== =============
Net assets 134,286 113,092 126,231
=========== ========== =============
Equity
Share capital 2,553 2,553 2,553
Share premium 84,612 84,612 84,612
Merger reserve (75,383) (75,383) (75,383)
Available-for-sale reserve 465 315 399
Retained earnings 122,039 100,995 114,050
Total Equity 134,286 113,092 126,231
=========== ========== =============
Consolidated Statement of Changes in Equity
for the six month period ended 31 March 2018 (unaudited)
Share Share Merger Available-for-sale Retained
Capital Premium Reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 September
2016 2,553 84,612 (75,583) 269 90,681 102,732
Profit for
the period - - - - 17,130 17,130
Dividend
paid (note
8) - - - - (6,816) (6,816)
Other comprehensive
income - - - 46 - 46
Balance at
31 March
2017 2,553 84,612 (75,383) 315 100,995 113,092
========= ======== ========= ================== ========== ========
Profit for
the period - - - - 18,670 18,670
Dividend
paid (note
8) - - - - (5,615) (5,615)
Other comprehensive
income - - - 84 - 84
Balance at
30 September
2017 2,553 84,612 (75,383) 399 114,050 126,231
========= ======== ========= ================== ========== ========
Profit for
the period - - - - 19,220 19,220
Dividend
paid (note
8) - - - - (11,231) (11,231)
Other comprehensive
income - - - 66 - 66
Balance at
31 March
2018 2,553 84,612 (75,383) 465 122,039 134,286
========= ======== ========= ================== ========== ========
Consolidated Statement of Cash Flows
for the six month period ended 31 March 2018 (unaudited)
6 months 6 months 12 months
to to to
31 March 31 March 30 September
2018 2017 2017
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash inflow/(outflow)
from operations 10 15,632 (16,445) 25,378
Interest received 59 72 101
Interest paid (367) (420) (1,083)
Interest element of
finance lease rental
payments (24) (12) (33)
Tax paid (8,251) (3,140) (5,117)
--------- --------- -------------
Net cash inflow/(outflow)
from operating activities 7,049 (19,945) 19,246
========= ========= =============
Cash flows from investing
activities
Acquisition of property,
plant and equipment (349) (441) (336)
Proceeds on disposal
of property, plant and
equipment - 42 42
Proceeds from disposal
of interest in joint
venture 250 5,510 5,510
Purchase of other financial
assets (33) - -
Cash distribution received
from other financial
assets 9 1,670 - -
Loan repayments from
joint ventures - 2,043 73
Net cash inflow from
investing activities 1,538 7,154 5,289
========= ========= =============
Cash flows from financing
activities
Dividend paid 8 (11,231) (6,816) (12,431)
Capital element of finance
lease rental payments (397) (233) (605)
Drawdown of bank loans 3,178 - 24,833
Repayment of bank loans (3,856) (2,270) (18,228)
Net cash outflow from
financing activities (12,306) (9,319) (6,431)
========= ========= =============
Net (decrease)/increase
in cash (3,719) (22,110) 18,104
Cash and cash equivalents
at
beginning of the period 65,325 47,221 47,221
--------- --------- -------------
Cash and cash equivalents
at
end of the period 11 61,606 25,111 65,325
========= ========= =============
Notes to the consolidated financial information
1. General information
Watkin Jones plc (the 'Company') is a limited company
incorporated in the United Kingdom under the Companies Act 2006
(Registration number 09791105). The Company is domiciled in the
United Kingdom and its registered address is Units 21-22, Llandygai
Industrial Estate, Bangor Gwynedd, LL57 4YH.
The principal activities of the Company and its subsidiaries
(collectively the 'Group') are those of property development and
the management of properties for multiple residential
occupation.
The consolidated interim financial statements of the Group for
the six month period ended 31 March 2018 comprises the Company and
its subsidiaries. The basis of preparation of the consolidated
interim financial statements is set out in note 2 below.
The financial information for the six months ended 31 March 2018
is unaudited. It does not constitute statutory financial statements
within the meaning of Section 434 of the Companies Act 2006. The
consolidated interim financial statements should be read in
conjunction with the financial information for the year ended 30
September 2017, which has been prepared in accordance with IFRSs as
adopted by the European Union. The report of the auditors on those
financial statements was unqualified, did not contain an emphasis
of matter paragraph and did not contain any statement under section
434 of the Companies Act 2006.
This report was approved by the directors on 21 May 2018.
2. Basis of preparation
The interim financial statements have been prepared based on
IFRS that are expected to exist at the date on which the Group
prepares its financial statements for the year ended 30 September
2018. To the extent that IFRS at 30 September 2018 do not reflect
the assumptions made in preparing the interim financial statements,
those financial statements may be subject to change.
The interim financial statements have been prepared on a going
concern basis and under the historical cost convention.
The interim financial statements have been presented in pounds
sterling and all values are rounded to the nearest thousand
(GBP'000), except when otherwise indicated.
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual events may ultimately differ from those
estimates.
The interim financial statements do not include all financial
risk information and disclosures required in the annual financial
statements and they should be read in conjunction with the
financial information that is presented in the Company's audited
financial statements for the year ended 30 September 2017. There
has been no significant change in any risk management policies
since the date of the last audited financial statements.
3. Accounting policies
The accounting policies used in preparing these interim
financial statements are the same as those set out and used in
preparing the Company's audited financial statements for the year
ended 30 September 2017.
4. Segmental reporting
The Group has identified four segments for which it reports
under IFRS 8 'Operating segments'. The following represents the
segments that the Group operates in:
a. Student accommodation - the development of purpose built student accommodation;
b. Build to rent - the development of build to rent accommodation;
b. Residential - the development of traditional residential property; and
c. Accommodation management - the management of student
accommodation and build to rent property.
Corporate - revenue from the development of commercial property
forming part of mixed use schemes and other revenue and costs not
attributable to any one division.
The build to rent segment was introduced for the first time in
FY17. This is a new segment in which the Group is to commence
development activities. During FY17 and the six months ended 31
March 2018, several build to rent opportunities were secured,
leading to a holding of inventory and work in progress for this
segment at 31 March 2017 and 31 March 2018.
All revenues arise in the UK.
Performance is measured by the Board based on gross profit as
reported in the management accounts.
6 months Build
to 31 March Student to Accommodation
2018 (unaudited) Accommodation rent Residential management Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental
revenue 142,203 626 5,279 3,727 6,484 158,319
--------------- -------- ------------ -------------- ---------- ---------
Segmental
gross profit 29,365 315 533 2,433 1,894 34,540
Administration
expenses - - - - (10,693) (10,693)
Profit on
sale of interest
in joint
venture - - - - 121 121
Finance income - - - - 59 59
Finance costs - - - - (391) (391)
Profit/(loss)
before tax 29,365 315 533 2,433 (9,010) 23,636
Taxation - - - - (4,416) (4,416)
--------------- -------- ------------ -------------- ---------- ---------
Profit/(loss)
for the period 29,365 315 533 2,433 (13,426) 19,220
=============== ======== ============ ============== ========== =========
Inventory
and work
in progress 39,442 46,562 50,793 - 8,821 145,618
------- ------- ------- ------ --------
6 months Build
to 31 March Student to Accommodation
2017 (unaudited) Accommodation rent Residential management Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental
revenue 115,158 599 5,670 2,964 9,285 133,676
--------------- -------- ------------ -------------- ---------- --------
Segmental
gross profit 25,025 401 694 1,872 1,126 29,118
Administration
expenses - - - - (9,692) (9,692)
Profit on
sale of interest
in joint
venture - - - - 930 930
Share of
profit in
joint venture - - - - 1,119 1,119
Finance income - - - - 72 72
Finance costs - - - - (432) (432)
--------------- -------- ------------ -------------- ---------- --------
Profit/(loss)
before tax 25,025 401 694 1,872 (6,877) 21,115
Taxation - - - - (4,031) (4,031)
--------------- -------- ------------ -------------- ---------- --------
Profit/(loss)
for the period 25,025 401 694 1,872 (10,908) 17,084
=============== ======== ============ ============== ========== ========
Inventory
and work
in progress 46,211 26,257 37,725 - 15,847 126,040
------- ------- ------- ------- --------
5. Disposal of interest in joint venture
On 29 March 2018 the Group disposed of its joint venture
interest in Rufus Estates Limited, realising a profit on the
disposal of 121,000. The proceeds received from the disposal
amounted to GBP400,000, of which GBP250,000 was received on 29
March 2018 and GBP150,000 is to be paid by 30 June 2018.
6. Income taxes
The tax expense for the period has been calculated by applying
the estimated tax rate for the financial year ending 30 September
2018 of 18.62% to the profit for the period.
7. Earnings per share
Basic earnings per share ("EPS") amounts are calculated by
dividing the net profit or loss for the year attributable to
ordinary equity holders of the parent by the weighted average
number of ordinary shares in issue during the year.
There is no difference between basic earnings per share and
diluted earnings per share as there are no dilutive share option
arrangements in place.
The following table reflects the income and share data used in
the basic EPS computations:
6 months to 6 months to 12 months to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
Profit attributable to ordinary equity holders of the parent 19,220 17,084 35,800
Weighted average number of ordinary shares for basic earnings per
share 255,268,875 255,268,875 255,268,875
Pence Pence Pence
Basic earnings per share
Basic profit for the period attributable to ordinary equity holders
of the parent 7.529 6.693 14.024
8. Dividends
6 months to 6 months to 12 months to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
Final dividend paid in February 2017 of 2.67 pence - 6,816 6,816
Interim dividend paid in June 2017 of 2.2 pence - - 5,615
Final dividend paid in February 2018 of 4.4 pence 11,231 - -
------------ ------------ --------------
11,231 10,000 12,431
============ ============ ==============
An interim dividend of 2.47 pence per ordinary share will be
paid on 30 June 2018. This dividend was declared after 31 March
2018 and as such the liability of GBP6,305,000 has not been
recognised at that date.
9. Other financial assets
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
Financial instruments at fair value
Available-for-sale financial assets at fair value through other comprehensive
income 1,143 2,603 2,698
Other financial assets 1,143 2,603 2,698
========= ========= =============
The available-for-sale financial assets at fair value comprise
units held in the Curlew Student Trust, A Guernsey registered
unitised fund established to invest in student accommodation (the
"Fund"). The Group has invested a total of GBP2,150,000 (2017
GBP2,150,000) in the Fund, including GBP150,000 invested by Fresh
Student Living Limited prior to its acquisition by the Group, as
part of an agreement to develop student accommodation properties
for the Fund, which were completed in the years ending 30 September
2014 and 30 September 2015. As at 31 March 2018, the Group held
1,839,991 units (H1 2017: 1,839,991 units) in the Fund.
In the period ended 31 March 2018, the Group received
GBP1,670,000 from the Fund, by way of a partial distribution of
cash following the sale by the Fund of a portfolio of assets.
Further cash distributions are expected to be made by the Fund in
connection with the sale once the Fund's accounts have been
completed and audited.
10. Reconciliation of operating profit to net cash flows from operating activities
6 months 6 months 12 months
to to to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
Profit before tax from
continuing operations 23,636 21,115 43,278
Profit before tax 23,636 21,115 43,278
Depreciation 255 133 520
Amortisation of intangible
assets 280 280 559
Profit on sale of plant
and equipment - (26) (26)
Finance income (59) (72) (101)
Finance costs 391 432 957
Profit on disposal
of interest in joint
venture (121) (930) (930)
Share of profit in
joint ventures - (1,119) (519)
(Increase)/decrease
in inventory and work
in progress (20,328) 2,117 2,937
Interest capitalised
in development land,
inventory and work
in progress - - 159
Decrease/(increase)
in trade and other
receivables 9,060 (4,581) (21,523)
Increase/(decrease)
in trade and other
payables 2,528 (33,794) (428)
Provision for property
lease commitment - - 495
--------- --------- --------------
Net cash inflow/(outflow)
from operating activities 15,632 (16,445) 25,378
--------- --------- --------------
11. Analysis of net cash
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 61,606 25,111 65,325
Finance leases (2,493) (955) (2,890)
Bank loans (20,760) (12,483) (21,438)
-------------- -------------- ------------------
Net cash 38,353 11,673 40,997
============== ============== ==================
- Ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEMFMFFASEFI
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