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- The property developer posted an adjusted pre-tax profit of £9.2m last year.
- Under the law, Watkin Jones reduced its annual pre-tax losses to £0.3m.
Watkin Jones returned to profit last year despite “moderate” investment demand for purpose-built student accommodation and build-to-rent properties.
The property developer, which completed the sale of two major PBSA projects last year, posted an adjusted pre-tax profit of £9.2m for the 12 months to September, having suffered a loss of £9.2m. £2.9m in the previous 12 months.
Its better result reflected future sales of the student accommodation 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 set up with the Housing Growth Partnership, a social impact investor part-owned by Lloyds Banking Group.
Watkin Jones said its earnings also benefited from the successful completion of six developments and cost control actions implemented in the previous year.
Profits rose even though the company’s total revenue fell 12.3 per cent to £362.4 million, mainly because the HGP deal was accounted for as the disposal of a subsidiary rather than a sale of land.
Recovery: Watkin Jones returned to profit last year after completing the sale of two major purpose-built student accommodation (PBSA) projects.
Under the law, the company reduced its annual pre-tax losses from £42.5m to just £0.3m as its building security costs fell from £6.7m to £48 million.
Watkin Jones Stock The shares soared 12.2 per cent to 22.3p on Thursday morning, although they have still more than halved in the last six months.
The AIM-listed group cut its profit forecasts in August after revealing it experienced a “slower than expected” summer market, mainly due to uncertainty around interest rate cuts.
The Bank of England only cut the UK base rate twice in 2024, both times by 0.25 percentage points, as inflation picked up in 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 quickly as expected.”
He added: ‘While the investment market has continued to pose challenges, the sectors in which we operate remain attractive.
“PBSA is still short of supply 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 £300 million in contractually secure forward sales revenue.
Watkin Jones has since partnered with Torus to build 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 path of rates becomes clearer.
“We believe that once visibility improves, there could be a marked increase in sales, development and profitability.”
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