Watkin Jones (WJG) H2 2024 (Q&A) earnings summary

Executive summary

• Delivered strong operational and financial performance in FY24, focusing on internal efficiencies, cost control, and resilience despite challenging market conditions.

• Achieved significant improvement in Adjusted Operating Profit to £10.6m and maintained a strong year-end gross cash position of £97m, with net cash at £83.4m.

• Renewed and extended HSBC facility for two years, enhancing financial flexibility for future growth.

• Maintained and slightly increased PBSA market share to 16%, with a growing and diversified pipeline.

• Diversified revenue streams through Refresh refurbishment and development partnership businesses.

Financial highlights

• Adjusted operating profit rose to £10.6m, up from £0.2m in FY23, excluding exceptional charges.

• Core trading gross profit increased 12% to just over £14m year-over-year, with gross margin up to 11.1% from 8.7%.

• Revenue declined by 12% year-over-year to £362.4m, mainly due to JV accounting for the Stratford scheme; half of the decline attributed to this.

• Overhead costs reduced by £600k year-over-year, despite 3.5% inflation.

• Trading cash flow improved to £55m from an outflow of £31.5m in the prior year.

Outlook and guidance

• Market conditions remain volatile, with recovery pace tied to interest and gilt rate reductions.

• Focus on cost control, cash management, and pipeline growth; cautious on transaction completion numbers for year-end.

• Medium-term goal to grow Refresh and development partnerships from 20% to 40% of revenue.

• Margins expected to stabilize at 14%-15% for core deals, above most competitors.

• Dividend resumption planned once market recovery and income visibility improve.