WATK TKIN JONES ES PLC FULL YEAR AR RESULTS S fo for year r - - PowerPoint PPT Presentation
Richard Simpson CEO Philip Byrom CFO WATK TKIN JONES ES PLC FULL YEAR AR RESULTS S fo for year r ended d 30 Septemb tember er 2018 record results and continued momentum 15 January 2019 FINANCIAL NCIAL HIGHLIG LIGHT
fo for year r ended d 30 Septemb tember er 2018 “record results and continued momentum”
15 January 2019
Richard Simpson – CEO Philip Byrom – CFO
Bagot St Street, , Birmingh ngham 492 Beds | Completed 2018
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£50.1M (FY17: £43.3M).
dividend policy.
RESULT LTS SUMMARY
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Bridge idge St Street, Cardi diff 477 Beds | Completed 2018
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the 18/19 academic year, including first contracts in Ireland, substantially offsetting the previously announced loss of 4,597 beds following the portfolio sale by the Curlew Student Trust.
schemes (FY18: 16,617 student beds and BTR apartments across 57 schemes).
ACCOMM OMMODA ODATI TION ON MANA NAGEMENT
and FY21.
STUDENT DENT ACCOMM OMMODA ODATI TION ON DEVEL ELOP OPMENT ENT PIPEL ELINE
Wembley.
Reading and Wembley, for delivery over the period FY20 to FY22.
including the possibility of establishing a new investment vehicle.
BUILD TO RENT NT DEVEL ELOP OPMENT ENT PIPEL ELINE
RESI SIDEN ENTI TIAL
BOARD RD CHANG NGES ES
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Duncan House, se, St Stratf tford d 511 Student Beds & 45 Residential Units | Due for completion August 2019
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Revenue by Division (£ million)
Student Accommodation Accommodation Management Residential Build to Rent Corporate
Gross Profit by Division (£ million)
Student Accommodation Accommodation Management Residential Build to Rent Corporate
Group
ateme ement t
£ mill llion
FY18 FY17
Student accommodation
312.7 256.1
Build to rent
3.8 1.2
Residential
30.0 18.1
Accommodation management
7.3 6.1
Corporate
9.3 20.4
Revenue
363.1 301.9
Student accommodation
60.7 56.5
Build to rent
1.0 0.7
Residential
4.4 3.0
Accommodation management
4.5 3.8
Corporate
1.8
Gross profit
72.4 63.5
Gross Margin
20.0% 21.0%
Overheads
Operating profit before exceptional income
49.6 42.7
Operating margin before exceptional income
13.7% 14.1%
Exceptional income
4.3
0.1 0.9
Share of profit in joint ventures
1.0 0.5
Net finance costs
Profit before tax
54.3 43.3
Adjusted EBITDA
52.0 45.2
Adjusted EBITDA margin
14.3% 15.0%
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Revenue nue an and d Gross Profi fit t by Segment ent
reflecting the delivery of 3,415 beds in FY18 and good build progress on forward sold developments for delivery in FY19 and FY20.
completed on 30 September 2018, remained strong at 20.7% (FY17: 22.1%). Reduction compared to FY17 reflects high margin contribution from certain developments completed in FY17.
7,500 beds provides excellent earnings and cashflow visibility.
Student accommodation (£ million) Build to rent (£ million)
contribution from the Reading scheme, which commenced construction in H2 FY18.
15%.
approximately 1,500 apartments across seven sites, including Reading and Wembley, for delivery between FY19 and FY22.
312.7 256.1 60.7 56.5
FY18 FY17 Revenue Gross Profit
3.8 1.2 1.0 0.7
FY18 FY17 Revenue Gross Profit
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Revenue nue an and d Gross Profi fit t by Segment ent
FY17 driving a 65.7% increase in revenue to £30.0 million (FY17: £18.1 million).
£6.0million) were completed at the legacy site in Droylsden, Manchester.
achieved for the division was 22.2% (FY17: 25.0%).
residential apartment schemes in Bath and Stratford.
Residential (£ million) Accommodation Management (£ million)
19.7% to £7.3 million (FY17: £6.1million).
61.9%).
schemes (3,740 beds) from the start of FY19 (30% increase on FY18, excluding the lost Curlew beds).
third parties and 48% by Watkin Jones.
BTR apartments at the start of FY19, increasing to 19,078 by FY21.
30.0 18.1 4.4 3.0
FY18 FY17 Revenue Gross Profit
7.3 6.1 4.5 3.8
FY18 FY17 Revenue Gross Profit
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Hollis lis Croft, t, Sheffie ield ld 972 Beds | Due for completion July 2019
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STUDENT ACCOMMODATION PIPELINE SUMMARY
5 beds (10 0 schemes) es) comp mplet leted in FY18 18.
ured develop
ment nt pipeli line ne of 17 scheme mes s (7,53 534 4 beds) ) scheduled for delivery in FY19-FY2 Y21. 1.
mes s (2,72 723 3 beds) for delivery in FY19 of which 5 s schemes mes (2,6 ,646 46 beds) forward sold.
mes s (2,60 606 6 beds) for delivery in FY20 of which 4 s schemes mes (1, 1,844 44 beds) forward sold.
mes s (2,20 205 5 beds) for delivery in FY21, with a further 2 scheme mes s (791 1 beds) in legals.
PIPELINE PROVIDES EARNINGS VISIBILITY
Student accommodation pipeline locations
500 1000 1500 2000 2500 3000 3500 4000 FY18 FY19 FY20 FY21 Number of Beds - Unsecured Under Offer/In Legals Sites Number of Beds - Secured Sites Number of Beds - Under Offer/In Legals Number of Beds - Forward Sold
Number of Beds
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Bath Lane, , Leice icester 322 Units | Due for commencement 2019
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BUILD TO RENT PIPELINE SUMMARY
1,500 500 apa apartmen ments in the secured development pipeline across 7 schemes mes:
develop elopment ment si sites es (593 593 apa apartments) ents) under negotiation/in legals to acquire.
Build to Rent pipeline locations
200 400 600 800 1000 1200 FY19 FY20 FY21 FY22/23 Number of Apartments - Unsecured Under Offer/In Legals Number of Apartments - Secured Units Number of Apartments - Under Offer / In Legals Number of Apartments - Forward Sold
Number of Apartments
GROWING MOMENTUM
apar artmen tments ts under development agreements at Reading and Wembley for FY21 completion.
elopmen ent sit sites es secur secured ed (863 ap apartmen tments ts), of which 4 sites (599 apartments) have planning.
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Bailey y Fields lds, Sheffie ield ld 543 Beds | Completed 2018
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UK Un Univer ersity sity educat cation
applications v available spaces
Full-time student numbers
Students (000s) 677 700 718 718 700 690 465 496 512 532 535 534 534 1,710 1,728 1,730 1,771 1,827 1,855 1,878 2,000 1,800 1,600 1,400 1,200 1,000 800 654 600 400 200 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Applicants Acceptances Full-time students Source: UCAS, HESA
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UK PBSA Market
students v reality
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cycle
at c.1.7%
c.25bps
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Sutt tton n Court t Road, d, Sutt tton n 165 Apartments | Due for completion 2020 18
Source: Office for National Statistics
25 50 75 100 125 150 175 200 225 250 275 300 Since 1949 Last 5 years Current Required rate
Number of Permanent Properties Completed in the UK per annum (‘000s) 31% below average since 1949
100 125 150 175 200 225 250 275 300 1990 1995 2000 2005 2010 2015 2020 2025 Household creation New dwellings
Dwelling creation must increase by 54% to match level of household creation
House Completions Are Significantly Below Historical Averages Household Creation Is Notably above New Dwellings Creation
2.20 2.25 2.30 2.35 2.40 2.45 2.50 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 To-date Projection
Dwelling and Household creation (‘000s per annum)
UK Population is Forecast to Grow by 7.3 million by 2035 Average Household Size is Declining
55,000 60,000 65,000 70,000 75,000 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 To-date Projection
UK Population (‘000s) Average Household Size
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updates
amenities
Source: Making the most of build to rent report, January 2017
Bespoke Product Service on Demand Lifestyle Flexibility
Growth
increased by 19% from 2006 - 2016 Choic ice
through choice
responsibility
flexibility
to move jobs every 5 years and have 9 jobs over their working life Quality lity
meet Decent Homes Standards
for Build to Rent when compared to equivalent new build Buy to Let
The Customer is Looking for an Alternative…
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UK Real Estate Market2
BTR UK Market Scale
UK’s Current BTR Position
Retirement / Care Homes UK Student Housing Maturity phase Growth phase Introduction phase Time Maturity
BTR Accommodation Market Evolution1
UK Real Estate Market UK Residential Market Value UK Privately Rented Residential Market
UK Commercial Market Value £883bn UK Residential Market Value £5,914bn 19% Private Rented £1,124bn 81% Owner Occupied and Social 97% Private BTL ~3% Institutional £34bn
1.CBRE 2.Source: Green Street Advisors
Total Market Value £6,797bn
placed 2018 Investor Activity
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Market t St Stre reet, t, New ewcastle le 225 Beds | Completed 2018
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accommodation pipeline
revenues
Avon Studios, Bath
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Oxford d House, se, Bournemo nemouth th 486 Beds | Completed 2018
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September 2018 relate to Fresh.
as a result of a distribution from the Curlew Student Fund following the sale of a portfolio
mainly due to expenditure on the residential and academic elements of the mixed use development site at Stratford.
£9.3 million, primarily due to the receipt of proceeds from the sale of a hotel in Bournemouth.
million, reflecting the Group’s increased activity levels.
increased by £41.3 million to £106.6 million.
September 2018 (FY17: £41.0 million).
Group Statement of Financial Position
£ million
30 30-Sep ep-18 18 30 30-Sep ep-17 17 Intangible assets 14.4 15.0 Property, plant and equipment 4.8 4.9 Investment in joint ventures 2.6 1.8 Deferred tax asset
Other financial assets 1.4 2.7 Non-current assets 23.2 24.7 Inventory and WIP 132.8 125.2 Trade and other receivables 27.0 36.3 Cash and cash equivalents 106.6 65.3 Current assets 266.4 226.8 Total assets 289.6 251.5 Trade and other payables
Provisions
Interest bearing loans and borrowings
Current tax liabilities
Current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Non-current liabilities
Total liabilities
Net assets 153.0 126.2 26
million net cash inflow from operating activities.
benefitted from a receipt of £38.8 million from the forward sale of four assets on 30 September 2018.
dividend of 5.13 pence will cost £13.1 million.
million.
by £41.3 million compared to 30 September 2018.
borrowings of £26.4 million.
Group Statement of Cash Flows
£ million
FY18 FY17 Operating profit before exceptional items 49.6 42.7 Exceptional items 4.3
1.3 1.0 (Increase)/decrease in working capital 11.3
Finance costs paid
Tax paid
Net cash inflo low from operatin ing g activ ivit itie ies 54.4 19.2 Net cash flow from purchase of fixed assets
Cash flow from joint venture interests 1.6 5.6 Cash distribution from other financial assets 1.4
Cash flow from borrowings 1.7 6.0 Increase in cash 41.3 18.1 Cash at beginning of period 65.3 47.2 Cash at end of period 106.6 65.3 Less: borrowings
Net cash 80.2 41.0
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Midla dland nd Road, d, Bath 94 Student Beds & 14 Keyworker Studios | Completed 2018
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management at the start of FY19
14,875
PBSA Beds Under Management
546
BTR units Under Management
5
BTR Schemes
Total Number of Schemes
KEY FACTS 51
PBSA Schemes
358 Total Staff 75 Central Services Staff £108m Cash Under Management £1.5bn Assets Under Management
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Market t St Stre reet, t, New ewcastle le 225 Beds | Completed 2018
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Identify site Negotiation of
acquisition Obtain planning permission Discussions with University/ key stakeholders Value added
Land sale & development agreement Construction Asset management
SITE PROCUREMENT & PLANNING TRANSACTION AND FUNDING CONSTR STRUCT UCTION ION AND D DELI LIVER VERY SCHEME MANAGEMENT
Forward sale to Institutional investors Typically 2 ½ years 3 - 7 years
Forward sell site to fund on receipt of planning For £6.0 .0 milli lion Additional Planning gain payment from fund on receipt of planning Say £1.0 .0 million lion Profit: £1.7 .7 million lion (£7M M in less £5M M land less 3rd
rd Party plann
nning ing costs of £300K)
Build costs £22.7 million ion Construction & Development Profit £5.3 milli lion
Refundable deposit (10%) Typically lly £500,000 3rd party planning cost Say £300,000 Consultancy/build £20,000/s 0/scheme eme Mobilisation/build £150/bed ed Management/per annum £320/be bed
landlord/leaseholder Typical Top Down Appraisal • Say 500 Bed Scheme X Rent X Term X Yield = Gross Development Value less 20% Return Hurdle = Balance for Build, Funding Cost and Land acquisition cost Theoretical Example of funding for a Development with a GDV of £35M and land cost of £5M
Cash flow:
+£2.5 million (Uplift on land + Planning Gain Payment + Deposit
Cash flow:
+£5.3 million
Cash flow:
(£0.8) million (Deposit + 3rd party Planning Fees)
Cash flow:
+£160,000 p.a.
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This presentation is for information purposes only and no reliance may be placed up on it. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in this presentation. The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of Watkin Jones plc (“Watkin Jones”). For more detailed information, please see the full year results announcement for the twelve months ended 30 September 2018 which can be found on the Investors section of the Watkin Jones website - www.watkinjonesplc.com. This presentation does not constitute or form part of any offer or invitation for sale or subscription of, or any solicitation of any offer to buy or subscribe for, any securities of Watkin Jones. The making of this presentation does not constitute a recommendation regarding any such securities. Any projections or other forward-looking statements are made by the Directors of Watkin Jones in good faith based on the information available to them at 15 January 2019 and reflect the Directors’ knowledge and information available at that date and their beliefs and expectations. These statements may involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward‐looking statements. Any
results contemplated in the forward‐looking statements may not actually be achieved. Unless otherwise required by applicable law, regulation or accounting standard, Watkin Jones does not intend to update any projections or other forward-looking statements contained in this presentation. Each forward-looking statement speaks only as at 15 January 2019 and Watkin Jones and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in the presentation is intended to be, or intended to be construed as, a profit forecast or profit estimate and no statement in the presentation should be interpreted to mean that earnings per Watkin Jones share for the current or future financial years will necessarily match or exceed the historical earnings per Watkin Jones share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Past performance of securities in Watkin Jones cannot be relied upon as a guide to the future performance of such securities.
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Richard Simpson Philip Byrom Chief Executive Officer Chief Financial Officer
Watkin Jones plc Llandygai Industrial Estate Bangor Gwynedd LL57 4YH www.watkinjonesplc.com