Watkin Jones has barely scraped a profit for the first half of the year as it slashed the value of its development pipeline.
The residential developer’s pretax adjusted profit fell to £300,000 for the six months to the end of March, a 97.4% fall on the same period last year. Statutory results show an £800,000 loss from gross profit of £16.1m.
Chief executive Richard Simpson said the results were “in line with expectations” and showed the firm was “managing build costs and our supply chain well”.
He added: “We are also encouraged by the early signs of build inflation reducing, which should lead to future buying gains.”
However, he said the firm would “continue to take a risk-managed approach” to its development pipeline “through this period of volatility”. That has resulted in the pipeline’s value falling from around £2bn to £1.7bn
Basic earnings per share fell from 3.65p to 0.11p
The BTR and PBSA developer pulled in revenue of £153.9m, a 20% fall from the £193m it declared for H1 2022.
It said the revenue was from its forward sold developments which are currently on site, but no new forward sales had been made in the period.
Last year, Watkin Jones made a statutory loss of £16.6m, but this after it paid out £28m as a result of the Building Safety Act.
However, Simpson was confident that the second half of the year would be “materially stronger”, and the longer term presented significant opportunities.
Watkins Jones currently has 12 developments on track, with five due to achieve practical completion this summer. It has contracts for £650m of forward sales expected to come through over the next two to three years.
It added that it was starting to see new land acquisition opportunities and was in exclusivity on around £500m of expected revenue from new development opportunities.
Simpson added: “We look to the second half of the year with confidence and are particularly pleased to have secured the forward sale transaction in Bristol and expect to complete further forward sales before the year end. The overall recovery in the forward fund market is encouraging, however the group will maintain a cautious approach to managing the pipeline. In addition to growing confidence in the sector, we are seeing attractive land acquisition opportunities and these coupled with our excellent operational performance leave us confident for the future.”
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