UK: North Wales-based developer Watkin Jones PLC saw its share price fall 35 per cent yesterday as the BTR specialist issued a profit warning and said chief executive Richard Simpson has stepped down with immediate effect.
The company said numerous pipeline property deals are now in question as a result of higher interest rates and prevailing economic uncertainty, with the company warning of “a greater degree of risk” to transactions completing by the year’s end. It added that it has been reviewing its balance sheet against the more challenging macro-economic backdrop and to factor in the increased cost of funding. It also said it will seek to sell a limited number of non-core assets.
Alongside a reassessment of the value of property on its books, the company is expected to write a £10 million impairment. Watkin Jones told investors it would no longer expect to materially improve on the £2 million of underlying profit reported for H1 2023. That forecast is based on the firm having no completions of forward sales by the end of 2023.
It also downgraded its profit forecast for 2024 by setting a range of £15 to 20 million.
Additionally, the company said it has upped its provisions for its “remedial works for legacy properties”, adding £30 to 35 million, based on the company’s intention to sign up to the UK government’s post-Grenfell fire safety initiative, the Responsible Actors Scheme.
In the wake of Simpson’s exit, the company has appointed Alex Pease, its chief investment officer, as interim chief executive. He will work closely with chief financial officer Sarah Sergeant.
Alan Giddins, chair of Watkin Jones, said: “On behalf of the board, I would like to thank Richard for his contribution to the Group over the last five years and in particular his leadership of the business through the challenges of the Covid pandemic. Alex Pease has been a key member of the group’s executive leadership team for the last 10 years…in taking on the role of interim CEO, Alex provides continuity in what remains a very challenging backdrop for the sector, as well as significant experience in the residential for rent market, which the board believes will help enable the Group to regain momentum ahead of market conditions improving.”
Ahead of its 30 September financial year end, the company said it currently has a £36 million net cash position, with gross cash marked as £68 million.
Last month Watkin Jones announced the forward funding of its Loft Lines BTR scheme in Belfast by L&G.
