Build-to-rent and student housing specialist warns underlying profit may not increase from half year level if sales fall through
Watkin Jones’ chief executive has stepped down as it issued a warning about its expected level of profit this year.
The build-to-rent and student housing specialist today announced Richard Simpson has departed as chief executive after four and a half years in the role with immediate effect.
Alex Pease, Watkin Jones’ group chief investment officer will serve as interim boss until the developer hires a permanent replacement. Watkin Jones declined to comment further on the reasons for Simpson’s departure.
The developer, in a trading update this morning, warned there is now a “greater degree of risk” that five scheme sales won’t complete by its year end of 30 September as previously expected.
It said that without any further sales its underlying pre-tax profit, which excludes one-off items, for the full year is unlikely to improve on the £2m reported for the first six months to March. The firm recorded an £800,000 pre-tax loss overall for this period.
In its interim results in May, it said it had five forward sales targeted for completion in its current financial year, and has since completed a sale of Titanic Quarter in Belfast.
But it admitted: “In the period since the interim results, market conditions have become more challenging. In particular, the recent increases in interest rates and prevailing economic uncertainty have impacted negatively on market liquidity. As a result, there is now a greater degree of risk over these transactions completing by the year end.”
It also said it expects to record a £10m impairment charge after reassessing the carrying value of some assets.
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It said: “In the event that we do not complete any new forward sales in the balance of the year, and taking into account the impairment charge referenced above, we would not expect to materially improve on the underlying profit before interest and tax recorded in H1 of £2m.”
Watkin Jones also said it was increasing the amount it has set aside for building safety remediation work from £30m to £35m.
The firm has had a torrid time over the past year. It made an £800,000 loss for the first half of the year and cut around 10% of its 400-strong workforce in the wake of last year’s mini-Budget. The £800,000 loss was however down on the loss of £16.6m for the same period the year before.
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