Watkin Jones’ profit slumps as it sets aside £30m for cladding work

Watkin Jones is setting aside more than £30m to cover the cost of cladding repairs as required by the Building Safety Act.

The company, which specialises in built-to-rent and student housing, said it was making an exceptional charge of £30.4m for the work which it said it expected to be carried out over five years. At the half year it had said the figure for the work was £28m.

Income in the year to September 2022 fell 5% to £407m with pre-tax profit slumping two-thirds to £18m – although it said this was better than expected following the sale of two of its student accommodation developments that are already up and running. Operating profit was down 58% to £24m.

The firm admitted “it is unclear exactly” what fire safety remedial works will be needed” but added it had carried out a review of all its buildings above 11m that it had developed over the past 30 years “which concluded that an exceptional charge should be made for these potential costs” 

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Last autumn, Watkin Jones became the first major firm to start making job losses in the wake of the market turmoil caused by the mini-Budget in September with around 40 jobs of the 400 people it employs going.

It added revenue and profit had been reduced because of the market volatility in the wake of the mini-Budget which it said affected two sales that were planned to complete in September. It said these will now be signed off in its current financial year but the impact of the delay meant operating profit was 10% off what it had been expecting.