Last updated 6 January 2023
Watkin Jones Plc
Founded in 1791 by carpenter Huw Jones, Watkin Jones works across housebuilding and contracting with a particular specialism in student accommodation, which the group provides across the UK. Watkin Jones floated on the Alternative Investment Market in March 2016 and today turns over more than £400 million a year and employs around 400 people.
Financials
In the year to September 2022, revenue at Watkin Jones fell 5.4% to £407.1 million (2021: £430.2 million) and operating profits fell by 4.5% to £54.7 million (2021: £57.3 million). Profit before tax fell at the same rate to £48.8 million (2021: £51.1 million).
To view the financials for Watkin Jones Plc, visit Companies House and use Company ID 09791105.
Operations
Watkin Jones operates out of three offices in Bangor, Chester and central London and has four main operating divisions.
Student Accommodation
This is Watkin Jones’ speciality and since 1999 the group has built more than 25,000 student units from places as diverse as Bristol, Edinburgh, Leicester and Liverpool. The group works directly for universities, such as Heriot Watt in Scotland and Kaplan International College, and private student accommodation providers and investors such as Bailey Lane, Summix and Superscheme.
Watkin Jones also develops schemes itself, which are then sold on to clients, such as Bournemouth University. In 2022, 1,813 beds were delivered by this division across seven schemes (2021: 3,192 beds) and turnover fell 31% to £180.0 million (2021: £259.9 million) and profit before tax slumped to £26.4 million (2021: £50.4 million).
Fresh Property
This is the student accommodation management division, which was bought by Watkin Jones in February 2016 for £15.0 million. In 2018, the portfolio was reduced by 4,597 units as a key client, Curlew, sold a portfolio but at September 2020 Fresh more than 22,000 rooms under management across 66 sites in colleges and universities across the UK.
In 2022, turnover rose to £9.1 million (2021: £7.8 million) and the division moved out of the red with a pre-tax profit of £0.1 million (2021: £0.1 million loss).
Build to Rent
In 2017, Watkin Jones began developing homes to rent with work focused in Reading (with M&G Real Estate) and Wembley, north London (with Singaporean group Kelaty Propco).
Five schemes totalling more than 2,000 apartments were forward sold in 2022 and there is a secured pipeline of 11 schemes comprising 4,380 units. In 2022, turnover at this division boomed again to £191.2 million (2021: £138.6 million), which produced a pre-tax profit of £32.8 million (2021: £29.8 million).
In 2021, planning permission was secured for a 778-apartment scheme in Belfast (Project ID: 21044662) and sites for 230 flats in Leeds (Project ID: 22185124) and 82 flats in Hove (Project ID: 22185125) were secured.
Affordable Homes
This division works in North Wales, Macclesfield, Preston, and Bath. In 2022, revenue at this division slumped 36% to £14.5 million (2021: £22.7 million) and pre-tax profit dropped to £1.9 million (2021: £2.6 million).
Glenigan Data
Glenigan’s research shows Watkin Jones winning orders for external clients valued at a total of £109.0 million in the 2022 calendar year (2021: £17.0 million).
Glenigan’s data also shows Watkin Jones did not submit any detailed planning applications to build new homes in 2022 (2021: 0 units).
Conclusion: Shift in focus paying off
Earnings across all key measures declined in the latest financial year and in November 2022, the group announced plans to shed 10% of its 400-strong workforce. Rising material and labour prices has had an impact and hit profitability, which had only just recovered after taking a hit from new planning regulations on cladding for high rise buildings in the wake of the Grenfell disaster.
This comes as the group increases exposure to the build-to-rent sector. Major schemes progressing include a £60 million scheme for 365 flats in Lewisham developed with Meyer Homes and MB Lewisham (Project ID: 17213522).
Despite a recent fall, the prospects for the core student accommodation business are good. This division has a total pipeline of 6,457 beds and a secured development pipeline of £1.0 billion (2021: £0.9 billion), of which £130 million was forward sold at the end of the last financial year (2021: £160 million).
House-building was impacted by supply chain shortages and the transition to affordable housing but the development pipeline has risen to more than 500 homes.
A boom in student accommodation work had sent Watkin Jones urging up Glenigan’s ranking of the industry’s top 100 contractors only to fall out of this echelon completely in 2019 but in 2022 Watkins Jones returned and was ranked in 75th position.
This work for external clients has increased the risk level and the value of the average contract award for external clients in 2022 rose to £27.3 million according to Glenigan’s research (2021: £17.0 million).
The group sought to conserve cash during the pandemic but adjusted net cash slumped a third in the latest year to £82.6 million (2021: £124.3 million). Build-to-rent is making a major contribution yet planning activity being at a low level. This suggests that land is mainly being purchased oven ready with planning permission rather than developed through the planning pipeline, which is more expensive.
The departure at the start of 2018 of Mark Watkin Jones from the family who set up the business took Watkin Jones another step further away from its roots. The group’s floatation raised £131 million and produced a £20 million windfall for the directors, but also upped the ante in terms of trading. Institutional shareholders who backed the group’s institutional public offering (IPO) are focused on earnings per share and the long-term strategy.
With student numbers peaking, the core student accommodation sector looks to have peaked. Build-to-rent looks set to fill this drop-off although weakness in the wider economy may make 2023 more challenging.
Winning Work With Watkin Jones
Watkin Jones is a member of a number of trade organisations, including the Considerate Constructors Scheme, and is accredited to ISO 14001 and the Construction Health and Safety Assessment Scheme. The company is also a member of the National House-Building Council.
Watkin Jones operates a detailed database of approved suppliers and subcontractors and new firms can only be added once quality, safety, environmental and financial checks have been carried out. Details on the company’s supply chain and its procedures can be found here.
Key Watkin Jones procurement contacts include:
Operations director – Sean Curran, tel: 01248-362516
Technical manager – Graham Nelson, tel: 01248-362516
Subcontractor procurement officer – Elen Davies, tel: 01248-362516
Senior cost manager – Ian Davies, tel: 01248-362516