Watkin Jones posted a pre-tax profit of £23.6m for the six months ended 31st March 2019, which was just 0.9% down on the £23.6m made in the same period a year before.
The 2019 result includes an exceptional charge of £2.6m paid to new chief executive Richard Simpson, who joined from Unite Group in January 2019. The payment is compensation for his loss of outstanding incentives that he had accrued at Unite, where he was group property director.
Watkin Jones’ revenue for the half-year was flat at £159.1m, up just 0.5% on the £158.3m of the previous year.
Gross profit increased 9% to £37.6m (H1 2018: £34.5m) and adjusted profit before tax increased by 10% to £26.0 million (H1 2018: £23.6m).
The company has a development pipeline of more than 9,000 student beds across 20 sites, targeted for delivery between FY 2019 and FY 2022.
Its build to rent (BtR) business has a secured development pipeline of eight sites, from which it is targeting to deliver approximately 1,800 apartments by 2023. Five of these sites have planning (1,031 apartments).
In the first half of its current financial year Watkin Jones secured a significant development site in Woking, on which it expects to develop 336 apartments, subject to planning, for delivery in FY 2023. It also obtained planning consents for its 166 apartment scheme in Sutton, London, and for a 90 apartment scheme in Belfast, both for delivery in FY 2021.
Chief executive Richard Simpson said: "We are pleased to report another strong set of results, in-line with our expectations. The financial performance of the group continues to be underpinned by robust student accommodation development activity and we are very encouraged by the increased contribution from the group's other operating divisions.
“Institutional investor demand for our student accommodation developments is strong and we continue to see quality new investors entering the market, such as DWS at Wembley. Similarly, investor momentum is growing in the BtR market, with a significant increase in reported transaction volumes in the first quarter of 2019. The majority of these transactions are forward fund purchases of assets, which plays to Watkin Jones strategy and heritage. We are able to leverage our proven expertise in developing and managing multi-occupancy residential rental accommodation and to continue be a partner of choice for institutional clients looking for scale.
“I continue to be very excited by the opportunities in this business, seeing the market dynamics for both student accommodation and BtR so strongly supportive of the group's forward sale model. Together with our pipeline of forward sold and secured development sites, this will continue to provide excellent visibility on future earnings and cash flow. Consequently, the board remains confident in the prospects for the group."