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 HTS Bagot St Street, , Birmingh ngham 492 Beds | Completed 2018 2
FIN INAN ANCIAL IAL HIG IGHLIG IGHTS • Revenue up by 20.3% to £363.1M (FY17: £301.9M) driven by student accommodation developments. • Robust gross margin at 20.0% (FY17: 21.0%), in line with our expectations. • Adjusted operating profit up by 16.2% to £49.6M (FY17: £42.7M). • Adjusted EBITDA up by 15.1% to £52.0M (FY17: £45.2M). • Exceptional income of £4.3M (FY17: £Nil) RESULT LTS SUMMARY • Profit before tax up by 25.6% to £54.3M (FY17: £43.3M) and adjusted profit before tax up by 15.7% to £50.1M (FY17: £43.3M). • Adjusted basic EPS up by 13.8% to 16.0 pence per share (FY17 14.0 pence per share). • Net cash up by 95.5% at 30 th September 2018 to £80.2M (FY17: £41.0M). • Dividend up by 15.2% to 7.6 pence per share (FY17: 6.6 pence per share) in line with our progressive dividend policy. 3
BUSINESS INESS HIG IGHLIGHT LIGHTS MAINT INTAINING INING VI VISIB IBILI ILITY Bridge idge St Street, Cardi diff 477 Beds | Completed 2018 4
BUSINESS INESS HIG IGHLI LIGHT GHTS S – MAIN INTAIN AINING ING VIS ISIBILI IBILITY • Ten developments (3,415 beds) completed as scheduled in FY18. STUDENT DENT • Nine developments (4,490 beds) pre-sold to investors for delivery in FY19 and FY20. ACCOMM OMMODA ODATI TION ON DEVEL ELOP OPMENT ENT • Current secured development pipeline of over 7,500 beds across 17 sites for delivery between FY19 PIPEL ELINE and FY21. • Development agreements entered into to deliver 315 apartments in Reading and 300 apartments in Wembley. BUILD TO RENT NT • Secured development pipeline of approximately 1,500 apartments across seven sites, including DEVEL ELOP OPMENT ENT Reading and Wembley, for delivery over the period FY20 to FY22. PIPEL ELINE • The Board continues to explore ways to enhance shareholder returns from the BTR opportunity, including the possibility of establishing a new investment vehicle. • Completed 175 sales (FY17: 94 sales), comprising homes and apartments in the North West. RESI SIDEN ENTI TIAL • Strong underlying growth – FPG appointed as manager for 14 new student schemes (3,740 beds) for 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. ACCOMM OMMODA ODATI TION ON MANA NAGEMENT • FPG contracted to manage 15,421 student beds and BTR apartments at the start of FY19 across 56 schemes (FY18: 16,617 student beds and BTR apartments across 57 schemes). • FPG contracted to manage 19,078 student beds and BTR apartments across 71 schemes by FY21 • Richard Simpson joined the Board as CEO on 2 January 2019. BOARD RD CHANG NGES ES • Liz Reilly will join the Board as an Independent NED on 21 January 2019. 5
GR GROUP UP PE PERF RFORMANC ORMANCE Duncan House, se, St Stratf tford d 511 Student Beds & 45 Residential Units | Due for completion August 2019 6
IN INCOME ME STATEM EMENT ENT Group oup Income ome Stat ateme ement t Revenue by Division (£ million) £ mill llion Student FY18 FY17 Accommodation Student accommodation 312.7 256.1 Accommodation Build to rent 3.8 1.2 Management Residential 30.0 18.1 Residential Accommodation management 7.3 6.1 Corporate 9.3 20.4 Build to Rent Revenue 363.1 301.9 Student accommodation 60.7 56.5 Corporate Build to rent 1.0 0.7 Residential 4.4 3.0 Accommodation management 4.5 3.8 Corporate 1.8 -0.5 Gross profit 72.4 63.5 Gross Profit by Division Gross Margin 20.0% 21.0% (£ million) Overheads -22.8 -20.8 Student Operating profit before exceptional income 49.6 42.7 Accommodation Operating margin before exceptional income 13.7% 14.1% Accommodation Exceptional income 4.3 - Management Profit on disposal of interest in joint venture 0.1 0.9 Share of profit in joint ventures Residential 1.0 0.5 Net finance costs -0.7 -0.8 Profit before tax 54.3 43.3 Build to Rent Adjusted EBITDA 52.0 45.2 Corporate Adjusted EBITDA margin 14.3% 15.0% 7
SE SEGMEN GMENTAL AL SU SUMMAR MMARY Revenue nue an and d Gross Profi fit t by Segment ent Student accommodation Build to rent (£ million) (£ million) Revenue Gross Profit Revenue Gross Profit 312.7 3.8 256.1 1.2 1.0 60.7 56.5 0.7 FY18 FY17 FY18 FY17 • Revenues for FY18 up by 22.1% to £312.7 million, reflecting the delivery of 3,415 beds in FY18 and • Increased revenues in FY18 reflects the initial good build progress on forward sold developments contribution from the Reading scheme, which for delivery in FY19 and FY20. commenced construction in H2 FY18. • Gross margin, excluding the forward sales that • Gross margin from build to rent initially targeted at completed on 30 September 2018, remained 15%. strong at 20.7% (FY17: 22.1%). Reduction • The Group has a secured delivery pipeline of compared to FY17 reflects high margin contribution approximately 1,500 apartments across seven sites, from certain developments completed in FY17. including Reading and Wembley, for delivery • Robust student accommodation pipeline of over between FY19 and FY22. 7,500 beds provides excellent earnings and cashflow visibility. 8
SE SEGMEN GMENTAL AL SU SUMMAR MMARY Revenue nue an and d Gross Profi fit t by Segment ent Residential Accommodation Management (£ million) (£ million) Revenue Gross Profit Revenue Gross Profit 30.0 7.3 6.1 18.1 4.5 3.8 4.4 3.0 FY18 FY17 FY18 FY17 • Revenues for the Fresh Property Group (“FPG”) up • 175 sales completed in FY18, compared to 94 for 19.7% to £7.3 million (FY17: £6.1million). FY17 driving a 65.7% increase in revenue to £30.0 • Strong gross margin maintained at 61.8% (FY17: million (FY17: £18.1 million). 61.9%). • Nil margin sales totalling £10.2 million (FY17: • FPG appointed as manager for 14 new student £6.0million) were completed at the legacy site in schemes (3,740 beds) from the start of FY19 (30% Droylsden, Manchester. increase on FY18, excluding the lost Curlew beds). • Excluding nil-margin sales, the gross margin • 52% of schemes under management developed by achieved for the division was 22.2% (FY17: 25.0%). third parties and 48% by Watkin Jones. • FY19 and FY20 are set to benefit from sales of • Contracted to manage 15,421 student beds and residential apartment schemes in Bath and BTR apartments at the start of FY19, increasing to Stratford. 19,078 by FY21. 9
STUDEN UDENT T ACCOMMOD OMMODATION TION DEVEL VELOPMENT OPMENT PI PIPE PELINE LINE Hollis lis Croft, t, Sheffie ield ld 972 Beds | Due for completion July 2019 10
STUDENT ACCOMMODATION DEVELOPMENT PIPELINE PIPELINE PROVIDES EARNINGS VISIBILITY STUDENT ACCOMMODATION PIPELINE SUMMARY • 3,415 5 beds (10 0 schemes) es) comp mplet leted in FY18 18. • Secur ured develop opme ment nt pipeli line ne of 17 scheme mes s (7,53 534 4 beds) ) scheduled for delivery in FY19-FY2 Y21. 1. • 6 scheme mes s (2,72 723 3 beds) for delivery in FY19 of which 5 s schemes mes (2,6 ,646 46 beds) forward sold. • 7 scheme mes s (2,60 606 6 beds) for delivery in FY20 of which 4 s schemes mes (1, 1,844 44 beds) forward sold. • 4 scheme mes s (2,20 205 5 beds) for delivery in FY21, with a further 2 scheme mes s (791 1 beds) in legals. 4000 3500 3000 Number of Beds - Unsecured Number of Beds Under Offer/In Legals Sites 2500 Number of Beds - Secured Sites 2000 Number of Beds - Under 1500 Offer/In Legals 1000 Number of Beds - Forward Sold 500 Student accommodation 0 pipeline locations FY18 FY19 FY20 FY21 11
BUI UILD LD TO RE RENT NT DEVEL VELOPMENT OPMENT PI PIPE PELINE LINE Bath Lane, , Leice icester 322 Units | Due for commencement 2019 12
BUILD TO RENT DEVELOPMENT PIPELINE GROWING MOMENTUM BUILD TO RENT PIPELINE SUMMARY • Circa 1,500 500 apa apartmen ments in the secured development pipeline across 7 schemes mes: • 615 ap apar artmen tments ts under development agreements at Reading and Wembley for FY21 completion. • 5 developm elopmen ent sit sites es secur secured ed (863 ap apartmen tments ts), of which 4 sites (599 apartments) have planning. • 2 develop elopment ment sites si es (593 593 apartments) apa ents) under negotiation/in legals to acquire. 1200 Number of Apartments - 1000 Number of Apartments Unsecured Under Offer/In Legals 800 Number of Apartments - Secured Units 600 Number of Apartments - 400 Under Offer / In Legals 200 Number of Apartments - Forward Sold Build to Rent pipeline 0 locations FY19 FY20 FY21 FY22/23 13
STUDENT ENT ACCOMMO MODATION TION MARK RKET ET Bailey y Fields lds, Sheffie ield ld 543 Beds | Completed 2018 14
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