Half-year Report

RNS Number : 7768G
Watkin Jones plc
01 June 2017
 



For immediate release

1 June 2017

 

Watkin Jones plc

('Watkin Jones' or the 'Group')

 

Half year results for the six months to 31 March 2017

 

Watkin Jones plc (AIM:WJG), a leading UK developer and constructor of multi occupancy property assets, with a focus on the student accommodation sector, announces its half year results for the six months ended 31 March 2017.  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 2017

H1 2016

Movement

 

Revenue

£133.7 million

£145.9 million

-8.4%

 

Gross profit

 

£29.1 million

 

£23.5 million

 

+23.8%

 

Adjusted EBITDA1

 

£21.9 million

 

£17.3 million

 

+26.6%

 

Adjusted profit before tax2

 

£21.1 million

 

£16.7 million

 

+26.6%

 

Statutory operating profit/(loss)

 

£19.4 million

 

(£9.5 million)

 

n/a

 

Statutory profit /(loss) before tax

 

£21.1 million

 

(£9.9 million)

 

n/a

 

Adjusted basic EPS2

 

6.7 pence

 

5.2 pence

 

+28.8%

 

Dividend per share

 

2.2 pence

 

1.33 pence

 

n/a

 

Net cash

 

£11.7 million

 

£15.4 million

 

-24.0%

 

·      Revenues for the half year were in line with management's expectations, down 8.4% on the prior half year due to the timing of forward development sales and £11.7 million of non-repeating inventory sales of completed residential apartments in the first half of the previous year.  Revenues are expected to be stronger in the second half of the current financial year

·    Strong profit growth for the half year driven by student accommodation developments. Gross profit for the period increased by 23.8% to £29.1 million (H1 2016: £23.5 million)

·      Gross margin for the six months to 31 March 2017 of 21.8% (H1 2016: 16.1%), reflecting the location and quality of student accommodation schemes in development, as well as a full six months contribution from Fresh Student Living, which was acquired into the Group on 25 February 2016.

·      Progressive dividend policy: 10% increase in the interim dividend to 2.2 pence per share (FY 2016: Interim dividend of 1.33 pence per share, equivalent to 2.0 pence per share on a full year basis)

·     £11.7 million net cash at 31 March 2017 (£15.4 million at 31 March 2016), reflecting normal seasonal working capital profile.

 

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. For H1 2016, the figure is stated before exceptional IPO costs.

2         For H1 2017 there is no difference between profit before tax and adjusted profit before tax. For H1 2016, adjusted profit before tax is stated before exceptional IPO costs.

3         For H1 2017 there is no difference between basic and adjusted basic EPS. For H1 2016, adjusted basic EPS is calculated using the profit for the period from continuing operations excluding exceptional IPO costs and based on the number of shares in issue at 30 September 2016.

 

Business Highlights

Student Accommodation Development

·      £216 million development value of seven student accommodation developments (2,580 beds) sold since 1 October 2016, including one operational asset (590 beds)

·   £292 million development value in legal negotiations for forward sale of nine further student accommodation developments (3,649 beds)

·    Development pipeline of over 11,200 student beds across 31 sites, with 15 forward sold and nine more in legal negotiations

·      Delivery pipeline:

·      FY 2017 deliveries - All ten student developments (3,314 beds) have been sold and are on target to be completed ahead of the 2017/18 academic year

·      FY 2018 deliveries - Ten student developments (3,415 beds) scheduled for delivery.  All sites are secured and have planning consents. Five developments are forward sold (1,854 beds) and the remaining five (1,561 beds) are in legal negotiation for sale

·      FY 2019 deliveries - Nine student developments (3,545 beds) scheduled for delivery.  Eight sites secured (3,191 beds), with the remaining site in legal negotiation to purchase. Six sites have planning (2,676 beds), with the remaining three sites progressing through planning.  One development forward sold (511 beds) and four developments (2,088 beds) in legal negotiations for sale

·      FY 2020 deliveries - two sites secured and one in legal negotiation to purchase, with a number of additional site acquisitions progressing.

 

Build to Rent Development

·      Build to Rent Development pipeline is growing.  One site secured with planning in Sutton, two further secured sites are progressing through planning in Belfast and Leicester and three further sites are in negotiation for development subject to planning.  These six schemes are currently targeted for delivery over the period FY 2019 - FY 2021.

 

Accommodation Management

·      Fresh Student Living - student beds under management increased from 8,310 beds in FY 2016 to 12,117 beds in FY 2017.  Currently contracted to increase to 19,532 beds under management by FY 2020

·      Five Nine Living - currently contracted to manage 535 Build to Rent units, including the scheme completed in Leeds in the current year.

 

Commenting on the results, Mark Watkin Jones, Chief Executive Officer of Watkin Jones plc, said: "We are very pleased to be reporting a strong set of half year results.  The Group has seen good profit growth in the first half, driven by our student accommodation developments which are fundamental to the business.  We are seeing increased institutional demand for good quality purpose built assets, and there are several new international funds that have entered the market recently, which highlights the continued attractiveness of the sector.  Our forward sale model and student accommodation pipeline of 31 developments provides us with excellent visibility on earnings and cash flow.

 

We are encouraged by the progress we have made in the Build to Rent sector and we are pleased that the Group has already secured an excellent site in London, with solid progress also being made on a number of other specific development projects.  Our student accommodation management businesses Fresh Student Living has had an excellent first half and is contributing well to overall Group performance.  The Group has made progress in developing the Five Nine Living business to provide similar letting and operational management services for the Build to Rent Sector.  Like our student accommodation development business, accommodation management provides us with good future earnings visibility.

 

On behalf of the Board I would like to thank all our staff for helping the Group deliver a very good first half year performance, and we look forward to the second half with much confidence."

 

 

 

Chief Executive's Statement

 

Results for the six months to 31 March 2017

The Board is pleased to report a growth in profits for the six months to 31 March 2017, compared to the same period last year.

 

Revenues for the half year were in line with management's expectations, down 8.4% on the prior half year due to the timing of forward development sales and £11.7 million of non-repeating inventory sales of completed residential apartments in the first half of the previous year.  Gross profit increased by £5.6 million to £29.1 million (H1 2016: £23.5 million), giving a significantly increased gross margin for the period of 21.8% (H1 2016: 16.1%), reflecting the location and quality of student accommodation schemes in development, as well as a full six months contribution from Fresh Student Living, which was acquired into the Group on 25 February 2016.

 

Overhead costs for the period amounted to £9.7 million, compared to £6.5 million for H1 2016.  The increase reflects the cost of additional personnel to support the growth in the business, a full six months overhead cost for Fresh Student Living and the additional overhead cost associated with operating as a listed company.

 

Operating profit, excluding exceptional costs, increased by 14.1% to £19.4 million (H1 2016: £17.0 million).

 

The Group made a profit on the disposal of its joint venture interest in Athena Hall (Jersey) Limited in the period of £0.9 million, realising a net cash inflow from the sale of £5.5 million.  The Group's share of profit in joint ventures amounted to £1.1 million (H1 2016: £ Nil) and arose in respect of developments in progress in Belfast.

 

After accounting for net finance costs of £0.3 million, the Group's profit before tax for the period amounted to £21.1 million (H1 2016: £9.9 million loss).

 

Adjusted EBITDA for the period, including the profits from the Group's joint venture interests, was £21.9 million and compares to an adjusted EBITDA for the prior period of £17.3 million, excluding exceptional IPO costs of £26.6 million.

 

Basic earnings per share were 6.7 pence for the period, an increase of 28.8% compared to the adjusted basic earnings per share for the prior period of 5.2 pence (calculated on a proforma basis using the profit for the period from continuing operations, excluding exceptional IPO costs, and based on the number of shares in issue at 30 September 2016).

 

Segmental review

 

Student accommodation development

Revenues from student accommodation development amounted to £115.2 million for the period and were £7.4 million lower than for the comparative period last year.  This was in line with management's expectation and is attributable to the timing of forward sales transactions.  The value of developments in progress for completion is higher than for the prior year and this will be reflected in the revenues for the full year.

 

The gross margin for the period on student accommodation developments amounted to 21.7%, compared to 17.9% for H1 2016. This is a further strong improvement in the gross margin reflecting the increased contribution from higher margin developments in progress.

 

The Group has a strong student accommodation development pipeline, currently comprising 31 development sites which will deliver in excess of 11,200 beds to the market with an appraised development value in excess of £920 million. This compares to a pipeline of 31 development sites delivering 11,300 beds, with a development value of £850 million, reported in the Group's interim report last year. Of the current development pipeline, 28 are for delivery by FY 2019 and three are for delivery in FY 2020.

 

All developments for completion in the current financial year are sold (3,314 beds), including one operational asset, and all are on target for completion ahead of the 2017/18 academic year.

 

Ten developments (3,415 beds) are scheduled for delivery in FY 2018 and of these, five have been forward sold and five are in advanced legal negotiations for sale.

 

Looking ahead to FY 2019, nine developments (3,545 beds) are currently scheduled for delivery, eight of which are secured and the purchase of the remaining site is in legal negotiation.  Six of the sites have planning (2,676 beds), with the remaining three sites progressing through planning.  One development has been forward sold (511 beds) and four developments (2,088 beds) are in legal negotiations for sale.

 

Since 1 October 2016, seven developments have been sold (2,580 beds) and nine are in legal negotiations to sell (3,649 beds), with a total development value of £509 million.  By comparison, this is more than double the £200 million value of sites forward sold or entered into legal negotiations in the equivalent prior period.

 

 

Build to Rent development

The Group has made good progress in securing its Build to Rent development pipeline.  During the period a site has been acquired in Sutton, London with planning for 132 units, two secured sites in Belfast and Leicester are progressing through planning and three further sites are in negotiation for development subject to planning.  These six schemes are currently targeted for delivery over the period FY 2019 to FY 2021.

 

Significant work has been undertaken in preparing the Group's Build to Rent development specification, which has been essential in order to specify our product offering to potential clients and to enable potential schemes to be appropriately costed.

 

Accommodation management

Fresh Student Living Limited ('Fresh'), which provides ongoing student letting and management services, was acquired by the Group on 25 February 2016 in order to complete the Group's end-to-end service offering to its clients, from the sourcing of sites through to the operational management of the completed developments.  Fresh receives a fee for its management services, with all the direct operating costs of a property remaining the responsibility of the property owner.  Fresh is engaged under management contracts which are typically for between three and seven years, although some are for longer.

 

For the six months ended 31 March 2017, Fresh contributed revenues of £3.0 million and a gross profit of £1.9 million, giving a gross margin of 63.2%.  For the comparative one month period from the date of acquisition to 31 March 2016, Fresh contributed revenues of £0.4 million. For comparative purposes, for the six months ended 31 March 2016, Fresh recorded revenues of £2.2 million.

 

Fresh continues to grow rapidly in terms of its beds under management.  For the current year, Fresh is contracted to manage 12,117 beds across 43 schemes.  This compares to 8,310 beds across 32 schemes under management in the prior year.  By FY 2020, Fresh is currently contracted to manage 19,532 beds across 65 schemes, which is an increase of 1,608 beds since the date of the Group's last interim report and an increase of 896 beds since the Group published its Annual Report in January.  Opportunities to develop the Fresh business are a key focus for management and we continue to succeed in winning contracts to manage non-Watkin Jones Group developed assets.

 

Aligned to Fresh, the Group has made progress in developing the Five Nine Living Limited ("Five Nine") business to provide similar letting and operational management services to the Build to Rent sector.  Five Nine now has 535 units under management, across five schemes, including the scheme recently completed in Leeds.

 

 

Residential development

In the six months to 31 March 2017, the residential development business achieved 31 sales completions, as compared to 79 in H1 2016.  The lower number of sales completions was in line with management's expectation and reflects the fact that in the first half of last year the division completed sales of 60 apartments from two legacy development sites at Gorse Stacks, Chester and Logie Green, Edinburgh that were in stock at the start of the period.  Excluding sales at these two developments, sales of new build stock are ahead of the prior year.  Expected new build sales for this year are heavily weighted to the second half.

 

Revenues for the residential development business amounted to £6.3 million, compared to £16.4 million for the equivalent prior period. The gross margin improved to 17.5% from 7.4% in the prior period.  This improvement reflects the impact of nil margin sales totalling £7.9 million in H1 2016 from the legacy development site at Gorse Stacks, Chester.

 

Dividend

The Board has adopted a progressive dividend policy and has declared an interim dividend for the period of 2.2 pence per share, which is a 10% increase on the full year equivalent interim dividend paid last year.  It will be paid on 30 June 2017 to shareholders on the register at close of business on 9 June 2017.  The shares will go ex-dividend on 8 June 2017.  The Board expects to announce a similar increase in the full year dividend.

 

In the prior year an interim dividend of 1.33 pence per share was paid. As Watkin Jones plc was only admitted to trading on AIM shortly before the end of the first half year in FY 2016, the Group declared interim and final dividends representing two thirds of the value the Board would have declared had the Company been admitted to trading for the full year. On this basis the pro forma interim dividend for the six months to 31 March 2016 would have been 2.0 pence per share.

 

Balance sheet and cashflow

The Group had net cash at 31 March 2017 of £11.7 million, comprising cash of £25.1 million less borrowings of £13.4 million.  This compares to net cash at 31 March 2016 of £15.4 million and at 30 September 2016 of £32.2 million.

 

The reduction in net cash for the period of £20.5 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 cash outflow in the first half of the year reflects payments made in respect of land acquisitions required for the development pipeline, predominantly those which are currently in legal negotiations for sale.  Other cash outflows related to dividends (£6.8 million) and tax (£3.1 million). Cash benefitted from the proceeds from the disposal of the Group's joint venture interest in Athena Hall (Jersey) Limited (£5.5 million) and a cash inflow from the Group's development joint ventures in Belfast (£2.0 million).

 

The completion of the forward sale of those developments currently in legal negotiations, together with the final payments due on completion of this year's schemes will contribute significantly to the Group's cash position in the second half of the year.

 

The Group's interest in joint ventures was reduced by £5.3 million in the period as a consequence of the disposal of the Group's interest in Athena Hall (Jersey) Limited.

 

Inventory and work in progress fell by £2.0 million in the period to £126.0 million.  However, a further reduction is expected in the second half of the year as the forward sales of the sites currently in legal negotiations complete.

 

Outlook

The Group's student accommodation development business continues to be underpinned by the attractive fundamentals of the student accommodation market, with the Group continuing to see strong demand from UK and international clients.  We have seen increased institutional demand for good quality purpose built assets, with a number of new international funds recently entering the market.  This has had a positive effect on development values as competition has increased and yields have sharpened.  Clients looking for scale see partnering with Watkin Jones as the best way to secure new assets in prime locations.  The forward sale model and student accommodation pipeline of 31 sites provides the Group with excellent visibility on future earnings and cash flow.

 

Encouraging progress has been made in the Build to Rent sector, with development opportunities gathering momentum.  The Group has secured an excellent site with planning in Sutton, London and we are actively progressing on other sites through the planning process as well as negotiating several specific development opportunities.

 

The student accommodation management business through Fresh is expected to continue making an increased contribution to the Group's results. We have high visibility on the significant growth in its contracted beds under management through to FY 2020 and we will continue to target further expansion of this burgeoning business.  Leveraging the expertise in Fresh, the Five Nine Living offer to the Build to Rent sector is becoming established and we remain positive in the future outlook for this still evolving market.

 

The status of the forward sold student accommodation development pipeline, together with the progress being made in the Group's other business segments, supports a positive outlook for the Group's performance.

 

Mark Watkin Jones

Chief Executive Officer

1 June 2017

 

 

For further information:

Watkin Jones plc

 

Mark Watkin Jones, Chief Executive Officer

Tel: +44 (0) 1248 362 516

Phil Byrom, Chief Financial Officer

www.watkinjonesplc.com

 

 

Peel Hunt LLP (Nominated Adviser & Joint Corporate Broker)

Tel: +44 (0) 20 7418 8900

Mike Bell / Justin Jones / Matthew Brooke-Hitching

www.peelhunt.com

 

 

 

 

Jefferies Hoare Govett (Joint Corporate Broker)

Tel: +44 (0) 20 7029 8000

Max Jones / Will Souter

www.jefferies.com

     

 

Media enquiries:

Buchanan

 

Henry Harrison-Topham / Richard Oldworth

Jamie Hooper / Steph Watson

 

Tel: +44 (0) 20 7466 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 sector.  The Group has strong relationships with institutional investors, and a good reputation for successful, on-time-delivery of high quality developments.  Since 1999, Watkin Jones has delivered over 31,800 student beds across 98 sites, making it a key player and leader in the UK purpose built student accommodation market.  In addition, Watkin Jones has been responsible for over 50 residential developments, ranging from starter homes to executive housing and apartments.

 

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 2017 (unaudited)

 

 

 

 

6 months to

31 March 2017

 

6 months to

31 March 2016

12 months to

30 September

2016

 

Continuing operations

Notes

£'000

£'000

£'000

Revenue

 

133,676

145,888

266,980

Cost of sales

 

(104,558)

(122,359)

(213,169)

Gross profit

 

29,118

23,529

53,811

Administrative expenses

 

(8,924)

(6,042)

(14,551)

Distribution costs

 

                     (768)

                        (464)

                    (1,377)

Operating profit before exceptional IPO costs

 

19,426

17,023

37,883

Exceptional IPO costs

 

-

(26,561)

(26,561)

Operating profit/(loss)

 

19,426

(9,538)

11,322

Profit on disposal of interest in joint venture

 

5

 

930

 

-

 

-

Share of profit in joint ventures

 

1,119

-

2,972

Finance income

 

72

127

252

Finance costs

 

(432)

(466)

(1,282)

Profit/(loss) before tax from continuing operations

 

21,115

(9,877)

13,264

Income tax expense

6

(4,031)

(3,348)

(8,179)

Profit/(loss) for the period from continuing operations

 

17,084

(13,225)

5,085

Discontinued operations

Profit/(Loss) after tax for the period from discontinued operations

 

                             -

                             86

                        (878)

Profit/(loss) for the period attributable to ordinary equity holders of the parent

 

17,084

(13,139)

4,207

Other comprehensive income

 

 

 

 

Net gain on available-for-sale financial assets

 

 

46

 

87

 

116

Total comprehensive  income/(loss) for the period attributable to ordinary equity holders of the parent

 

 

17,130

 

(13,052)

 

4,323

 

 

 

 

 

Earnings per share for the period attributable to ordinary equity holders of the parent

 

Pence

Pence

 

Pence

 

 

Basic earnings per share

 

7

 

6.693

 

(96.892)

 

3.123

Basic earnings per share for continuing operations

 

7

 

6.693

 

(97.526)

 

3.774

Adjusted basic earnings per share for continuing operations (excluding operating exceptional costs)

7

 

 

6.693

 

 

97.814

 

 

23.489

 

 

Consolidated Statement of Financial Position

as at 31 March 2017 (unaudited)

 

 

 

31 March

2017

31 March

2016

30 September

2016

 

Notes

£'000

£'000

£'000

Non-current assets

 

 

 

 

Intangible assets

 

15,242

15,572

15,521

Property, plant and equipment

 

3,098

4,648

1,876

Investment in joint ventures

 

670

5,077

5,950

Deferred tax asset

 

263

1,369

262

Other financial assets

 

2,603

2,505

2,545

 

 

21,876

29,171

26,154

Current assets

 

 

 

 

Inventory and work in progress

 

126,040

90,022

128,157

Trade and other receivables

 

20,839

20,761

16,436

Cash and cash equivalents

10

25,111

32,604

47,221

 

 

171,990

143,387

191,814

Current liabilities

 

 

 

 

Trade and other payables

 

(56,960)

(59,421)

(90,781)

Provisions

 

(253)

(339)

(253)

Other financial liabilities

 

(35)

(56)

(63)

Interest-bearing loans and borrowings

 

(4,307)

(16,329)

(14,970)

Current tax liabilities

 

(6,992)

(3,165)

(6,018)

 

 

(68,547)

(79,310)

(112,085)

Non-current liabilities

 

 

 

 

Interest-bearing loans and borrowings

 

(9,131)

(912)

(43)

Deferred tax liabilities

 

(1,139)

(1,463)

(1,151)

Provisions

 

(1,957)

(2,124)

(1,957)

 

 

(12,227)

(4,499)

(3,151)

Total Liabilities

 

(80,774)

(83,809)

(115,236)

Net assets

 

113,092

88,749

102,732

Equity

 

 

 

 

Share capital

 

2,553

2,550

2,553

Share premium

 

84,612

84,612

84,612

Merger reserve

 

(75,383)

(75,383)

(75,383)

Available-for-sale reserve

 

315

240

269

Retained earnings

 

100,995

76,730

90,681

Total Equity

 

113,092

88,749

102,732

 

 

 

Consolidated Statement of Changes in Equity

for the six month period ended 31 March 2017 (unaudited)

 

 

Share

Capital

£'000

Share

Premium

£'000

 

 

Merger

Reserve

£'000

Available-for-sale reserve

£'000

 

Retained

earnings

£'000

Total

£'000

 

 

 

 

 

 

 

30 September 2015

1,000

6,300

-

153

105,597

113,050

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(13,139)

(13,139)

Other comprehensive income

-

-

-

87

-

87

Dividend paid prior to IPO (note 8)

-

-

-

-

(10,000)

(10,000)

Share restructuring prior to IPO

1,695

167,864

-

-

-

169,559

Capital reduction prior to IPO

-

(167,864)

-

-

167,864

-

Issue of shares on IPO

855

84,586

-

-

-

85,441

Issue of shares to employees of Fresh Student Living Limited

-

26

-

-

-

26

Group reconstruction of Watkin Jones plc and Watkin Jones Group Limited

(1,000)

(6,300)

(75,383)

-

(173,592)

(256,275)

Balance at

31 March 2016

2,550

84,612

(75,383)

240

76,730

88,749

Profit for the period

-

-

 

-

-

17,346

17,346

Dividend paid (note 8)

-

-

-

-

(3,395)

(3,395)

Issue of shares to employee SIP

3

-

-

-

-

3

Other comprehensive income

-

-

 

-

29

-

29

Balance at

30 September 2016

2,553

84,612

(75,383)

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

 

 

Consolidated Statement of Cash Flows

for the six month period ended 31 March 2017 (unaudited)

 

 

 

6 months to

31 March

2017

6 months to

31 March

2016

12 months to

30 September

2016

 

Notes

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Cash (outflow)/inflow from operations

9

(16,445)

6,907

24,457

Interest received

 

72

127

252

Interest paid

 

(420)

(382)

(1,408)

Interest element of finance lease rental payments

 

(12)

(12)

(22)

Tax paid

 

(3,140)

(6,911)

(8,152)

Net cash (outflow)/inflow from operating activities

 

(19,945)

(271)

15,127

 

Cash flows from investing activities

 

 

 

 

Acquisition of property, plant and equipment

 

(441)

(5)

(150)

Proceeds on disposal of property, plant and equipment

 

42

1

2,750

Acquisition of Fresh Student Living Limited (net of cash acquired)

 

-

(14,496)

(14,496)

Proceeds from disposal of interest in joint venture

 

5,510

-

-

Loan repayments from joint ventures

 

2,043

2,143

4,242

Purchase of other financial assets

 

-

(1,024)

(1,024)

Net cash inflow/(outflow) from investing activities

 

7,154

(13,381)

(8,678)

 

Cash flows from financing activities

 

 

 

 

Dividend paid

8

(6,816)

(10,000)

(13,395)

Issue of shares prior to IPO

 

-

88,151

88,151

Issue of shares on IPO

 

-

85,441

85,441

Cash outflow on group reconstruction of Watkin Jones plc and Watkin Jones Group Limited

 

-

(173,592)

(173,592)

Capital element of finance lease rental payments

 

(233)

(180)

(278)

Repayment of bank loans

 

                (2,270)

                (2,834)

                (4,825)

Net cash outflow from financing activities

 

(9,319)

(13,014)

(18,498)

 

 

 

 

 

Net decrease in cash

 

(22,110)

(26,666)

(12,049)

Cash and cash equivalents at

beginning of the period

 

47,221

59,270

59,270

Cash and cash equivalents at

end of the period

 

10

25,111

32,604

47,221

 

 

 

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 2017 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 2017 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 2016, 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 31 May 2017.

 

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 2017.  To the extent that IFRS at 30 September 2017 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 (£'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 2016.  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 2016.

 

4.      Segmental reporting

 

The Group has identified three segments for which it reports under IFRS 8 'Operating segments'.  The following represents the segments that the Group operates in:

 

a.         Student Accommodation Development - Purpose built student accommodation developments.

b.         Residential Development - The development of traditional residential property.

c.          Fresh Accommodation Management - The management of purpose built student accommodation and private rented sector property. 

 

Corporate - central revenue and costs not solely attributable to any one division.

 

All revenues arise in the UK.

 

Performance is measured by the Board based on gross profit as reported in the management accounts.

 

6 months ended

31 March 2017

(unaudited)

Student

Accommodation

Development

Accommodation

Management

 

Residential

Development

Corporate

Total

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Segmental revenue

               115,158

                  2,964

                  6,269

             9,285

     133,676

Segmental gross profit

25,025

1,872

1,095

1,126

29,118

Administration expenses

-

-

-

(8,924)

(8,924)

Distribution costs

-

-

-

(768)

(768)

Profit on disposal of interest in joint venture

-

-

-

930

930

Share of profit in joint ventures

-

-

-

1,119

1,119

Finance income

-

-

-

72

72

Finance costs

-

-

 

(432)

(432)

Profit/(loss) before tax

25,025

1,872

1,095

(6,877)

21,115

Taxation

-

-

-

(4,031)

(4,031)

Profit/(loss) for the period

25,025

1,872

1,095

(10,908)

17,084

Inventory and work in progress

46,211

-

56,529

23,300

126,040

 

 

 

 

6 months ended

31 March 2016

(unaudited)

Student

Accommodation

Development

Accommodation

Management

 

Residential

Development

Corporate

Total

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Segmental revenue

122,587

407

16,398

6,496

145,888

Segmental gross profit

21,971

261

1,217

80

23,529

Administration expenses

-

-

-

(6,042)

(6,042)

Distribution costs

-

-

-

(464)

(464)

Exceptional IPO costs

-

-

-

(26,561)

(26,561)

Finance income

-

-

-

127

127

Finance costs

-

-

-

(466)

(466)

Profit/(loss) before tax

21,971

261

1,217

(33,326)

(9,877)

Taxation

-

-

-

(3,348)

(3,348)

Profit/(loss) for the period

21,971

261

1,217

(36,674)

(13,225)

 

 

 

 

 

 

Inventory and work in progress

                25,060  

                              -

                              5,303

86,981

Inventory and work in progress - discontinued

 

 

 

 

3,041

Total inventory and work in progress

 

 

 

 

90,022

 

 

 

 

 

 

 

5.      Disposal of interest in joint venture

On 9 December 2016 the Group disposed of its joint venture interest in Athena Hall (Jersey) Limited, realising a profit on the disposal of £930,000. The proceeds received from the disposal, including the repayment of a loan to Athena Hall (Jersey) Limited, amounted to £6,210,000, of which £700,000 remains owed by way of a loan to the purchaser and is repayable within 3 years from the date of the transaction.

 

 

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 2017 of 19.1% 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:

 

 

Period

ended 31

March

2017

Period

ended 31

March

2016

Year

ended 30

September

2016

 

£'000

£'000

£'000

 

Profit/(Loss) attributable to ordinary equity holders of the parent

17,084

(13,139)

4,207

Profit/(Loss) from continuing operations attributable to ordinary equity holders of the parent

17,084

(13,225)

5,085

Adjusted profit from continuing operations attributable to ordinary equity holders of the parent (excluding exceptional IPO costs)

17,084

13,264

31,646

 

 

 

 

Weighted average number of ordinary shares for basic earnings per share

255,268,875

13,560,440

134,729,152

 

 

Pence

 

Pence

 

 

Pence

 

Basic earnings per share

 

 

 

Basic profit/(loss) for the period attributable to ordinary equity holders of the parent

6.693

(96.892)

3.123

 

Basic earnings per share from continuing operations

 

 

 

Basic profit/(loss) for the period attributable to ordinary equity holders of the parent

6.693

(97.526)

3.774

 

Adjusted basic earnings per share from continuing operations (excluding exceptional IPO costs)

 

 

 

Basic profit for the period attributable to ordinary equity holders of the parent

6.693

97.814

23.489

Using the number of shares in issue at 30 September 2016, the adjusted proforma basic earnings per share from continuing operations (excluding exceptional IPO costs) for the 6 months ended 31 March 2016 would have been 5.196 pence and for the year ended 30 September 2016 would have been 12.397 pence.

 

 

8.      Dividends

 

 

Period

ended 31

March

2017

Period

ended 31

March

2016

Year

ended 30

September

2016

 

£'000

£'000

£'000

 

Dividend paid prior to IPO

-

10,000

10,000

Interim dividend paid in June 2016 of 1.33 pence

-

-

3,395

Final dividend paid in February 2017 of 2.67 pence

               6,816

                       -

 

                       -

 

               6,816

            10,000

            13,395

 

 

An interim dividend of 2.2 pence per ordinary share will be paid on 30 June 2017. This dividend was declared after 31 March 2017 and as such the liability of £5,616,000 has not been recognised at that date.

 

 

9.      Reconciliation of operating profit to net cash flows from operating activities

 

 

6 months

ended 31

March

2017

6 months

ended 31

March

2016

Year

ended 30

September

2016

 

£'000

£'000

£'000

Profit/(loss) before tax from continuing operations

21,115

(9,877)

13,264

Profit/(loss) before tax from discontinued operations

-

108

(1,098)

Profit/(loss) before tax

21,115

(9,769)

12,166

Depreciation

133

253

341

Amortisation of intangible assets

280

47

326

(Profit)/loss on sale of plant and equipment

(26)

2

80

Issue of shares to employee SIP and employees of Fresh Student Living Limited

-

-

29

Finance income

(72)

(127)

(252)

Finance costs

432

466

1,282

Profit on disposal of interest in joint venture

(930)

-

-

Share of profit in joint ventures

(1,119)

-

(2,972)

Decrease/(increase) in inventory and work in progress

2,117

29,539

(8,474)

Interest capitalised in development land, inventory and work in progress

-

122

148

(Increase)/decrease in trade and other receivables

(4,581)

1,054

5,353

(Decrease)/increase in trade and other payables

(33,794)

(14,680)

16,682

Provision for property lease commitment

-

-

(252)

Net cash(outflow)/ inflow from operating activities

(16,445)

6,907

24,457

 

 

 

10.    Analysis of net cash

 

 

 

6 months

ended 31

March 2017

6 months

ended 31

March 2016

12 months

ended 30

September 2016

 

 

£'000

£'000

£'000

 

Cash at bank and in hand

 

 

25,111

 

32,604

 

47,221

Finance leases

 

(955)

(358)

(260)

Bank loans

 

                 (12,483)

                     (16,883)

                   (14,753)

 

Net cash

 

                    11,673

                        15,363

                      32,208

 

 

 

- Ends -


This information is provided by RNS
The company news service from the London Stock Exchange
 
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