Student housing specialist says collapse of main contractor on job hit it for nearly £3.5m
Building safety remedial work and restructuring costs sent student housing and BTR specialist Watkin Jones sinking into the red last year.
The firm racked up a pre-tax loss £42.5m in the 12 months to September, compared to an £18.4m profit last time. Turnover edged up 1.5% to £413m.
It said underlying figures, without £35m of remedial costs and a £3m restructuring charge, would have seen it post a pre-tax loss of around £3m with operating profit breaking even.
The firm’s numbers were also hit by the collapse of a contractor on a student accommodation scheme in Exter which added an extra £3.4m to the construction cost while it was forced to fork out higher labour costs to complete schemes in Scotland and the South-west.
Watkin Jones also took an impairment charge of £5.5m on the disposal of its non-core land bank and pipeline assets while it made a further 15 people redundant last autumn on top of the 40 jobs it cut in the immediate aftermath of the Truss mini-Budget in September 2022.
New chief executive Alex Pease admitted it had been a “tough year” but added: “A huge amount of work has been done to get to a break-even operating profit.”
He said the business would focus on development partnerships and a strand of work it calls ‘refresh’, which comprises refurbishment of PBSA and private rental properties for ESG and building safety purposes.
He added: “We are seeing more opportunities with land consent at the moment and if the consents are there we have great partnership credentials with institutional capital […] so instead of us buying it we can partner with investors, they buy the assets we are planning, we enter a development agreement with them and deliver the building for them.”
At the year end, its development pipeline comprised 4,400 BTR apartments and 6,500 PBSA beds – worth a total of around £2bn.
The firm said it expected to return to the black this year with a profit of between £15m and £20m.
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