The developer reported pre-tax profits of £25.3m for the year ended 30 September 2020, down from £47.9m in 2019 due to £20.5m of exceptional costs incurred by cladding remediation work and the effects of Covid-19.
Watkin Jones spent £5m on the remediation of cladding on previously developed buildings during the 12-month period and said it anticipates an additional £10m outlay for similar projects over the course of the next two financial years, according to a stock exchange filing.
In addition, the developer reported £5.7m in exceptional charges accrued as a result of the pandemic.
However, at £354m, Watkin Jones’ annual revenue was only marginally down compared to the previous 12-month period, when it reported turnover of £375m, according to the filing.
The firm attributed the 5.5% drop to the deferral of forward sales in the second half of the period amid pandemic-related uncertainty.
Despite challenging market conditions, Watkin Jones said it demonstrated its stability by repaying the £800,000 it received in furlough payments from the Government last year and reinstating dividends.
The developer plans to pay 7.35p per share to shareholders on 26 February 2021.
Watkin Jones added that the “early decision to conserve cash during the pandemic…helped us to achieve a strong closing cash balance of £134.5m” up from £115.7m in 2019.
Richard Simpson, chief executive officer of Watkin Jones, said: “We delivered a robust financial performance for FY20, building on our strong first half despite the subsequent and ongoing disruption caused by Covid-19.
“Our operations have performed well and we have taken the opportunity to secure sites to significantly increase our development pipeline, positioning us to deliver our growth strategy as the UK’s leading developer and manager of residential for rent.”
Watkin Jones has a build-to-rent pipeline of 4,700 apartments across 13 sites, to be delivered over the next five financial years, while its student accommodation pipeline comprises 9,900 beds across 20 sites, to be delivered over the next four years, it said.
Earlier this month, the developer lodged plans for a 425-bed student scheme in Fallowfield, Manchester.
Watkin Jones has also secured its first affordable homes site for 245 homes in Crewe, with an offer progressing for the forward sale of 159 units.
Simpson added: “The resumption of forward sales that we have seen, coupled with the increase in the number of student beds for delivery in full-year 2021 and the scheduled completion of build-to-rent developments, should see Watkin Jones return to growth in the coming year, assuming there is no further significant disruption to our activities.
“We have had a good start to FY21…and overall, I am confident about our business and its prospects, which are supported by strong sector dynamics and investor demand.”