Cladding and Covid costs Watkin Jones £20.5m

Grant Prior 2 months ago
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Results at Watkin Jones have been hit by exceptional charges of £20.5m to cover the costs of replacing cladding on student accommodation blocks and Covid disruption.

Figures for the year to September 30 2020 show a provision of £14.8m for remedial cladding work and £5.7m tackling the pandemic impact.

But the firm’s financial performance was solid despite the exceptional costs with adjusted pre-tax profits down 9.3% to £45.8m from £50.4m last time on a reduced turnover of £354.1m from £374.8m.

Richard Simpson, Chief Executive Officer 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 UK’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, 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.”

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