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Watkin Jones has reported "robust" results in a year in which it took a £20m hit from Covid and cladding costs.

Its annual results for the year to September 30 last year show a provision of £14.8m for remedial cladding work and £5.7m tackling the pandemic impact.

But the North Wales firm’s financial performance was solid.

Turnover stood at £354.1m - down from £374.8m in 2019 - while adjusted pre-tax profits were down 9.3% to £45.8m from £50.4m last year.

Key Points:

• Build to Rent is the significant growth market. WJ reported increased BtR revenues (FY 19 £77m) (FY 20 £94m).
• Covid-19 has amplified the advantages BtR has in matching with changing consumer needs, eg good home working facilities in a communal setting, for their living arrangements. 
• No long term impact of Covid-19 on the student sector and there is opportunity to grow the PBSA segment with students rejecting online/stay at home learning meaning a need for student accommodation very much exists.
• In light of the financial performance, WJ’s strong cash position and the Board’s confidence in its growth prospects WJ resumes its dividend proposing 7.35 pence per share
• Affordable housing is also key to the Watkin Jones future strategy and using the Group’s BtR skillset has commenced a trial in the North West which has the potential to deliver important social benefits through the provision of much-needed affordable homes.Secured, subsequent to the year end, their first affordable homes site for 245 homes in Crewe, with an offer progressing for the forward sale of 159 affordable and BtR homes.
• Exceptional costs of £20.5 million, including £14.8 million in relation to remediating cladding on a number of past developments and £5.7 million of additional costs in relation to Covid-19.

What the company said:

Richard Simpson, chief executive officer of Watkin Jones, said: “We delivered a robust financial performance for FY20, building on our strong first half despite the subsequent and ongoing disruption caused by Covid-19.

"Our operations have performed well and we have taken the opportunity to secure sites to significantly increase our development pipeline, positioning us to deliver our growth strategy as the º£½ÇÊÓƵ’s leading developer and manager of residential for rent.

“Covid-19 undoubtedly caused delays to investment activity in the period, however I am pleased to report that the resumption in forward sales that we have seen, coupled with the increase in the number of student beds for delivery in FY21 and the scheduled completion of four BtR developments, should see Watkin Jones return to growth in the coming year, assuming there is no further significant disruption to our activities.

"We are pleased with our progress in growing our BtR and PBSA development pipelines and remain very confident in the long term prospects for these markets.

“We have had a good start to FY21 with new forward sales and our developments progressing well. The current escalation of the pandemic and latest lockdown brings with it further operational challenges, not least of which to Fresh who continue to provide support to students in residence and those unable to return to their accommodation in January.

"However, we have limited direct exposure to the level of student occupancy and with our COVID-secure operations working effectively we are able to continue delivering our developments on site. In light of our strong performance and cash position, we have resumed our previous dividend policy and the Board is therefore proposing a full-year dividend of 7.35 pence per share.

“Overall, I am confident about our business and its prospects, which are supported by strong sector dynamics and investor demand.

"Throughout the pandemic, we have been able to adapt to the changing circumstances and this, together with our strong pipeline of future developments and increasing focus on our ESG agenda, will allow the Group to continue to deliver for its stakeholders."

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