(Alliance News) - Watkin Jones PLC on Tuesday said its half year results were in line with expectations, though its performance was hurt by the collapse of a contractor.

Shares in the London-based student accommodation developer and manager fell by 15% to 81.50 pence in London on Tuesday morning.

Its statutory pretax loss narrowed to GBP766,000 for the six months that ended March 31, from GBP16.6 million a year prior.

Revenue, however, was down 20% at GBP153.9 million from GBP193.0 million a year prior, which the company said was due to no new forward sales being completed in the period, compared to three in the first half of the last financial year.

Helping to narrow its loss, Watkin Jones said exceptional costs amounted to GBP1.1 million, down markedly from GBP28.0 million year-on-year. The costs last year were related to the UK building safety pledge, to cover the cost of cladding repairs.

The building safety pledge was established following the Grenfell Tower fire in London in 2017 to ensure the safety of high-rise buildings, by removing combustible materials such as cladding.

On an adjusted basis, pretax profit slumped 97% to GBP300,000 from GBP11.4 million. It reported a gross margin of 10.4%, weakening from 15.5% year-on-year.

"The lower margin was in line with our current margin guidance, with incremental impact from additional build costs incurred at our scheme in Exeter where the main contractor went into liquidation," Watkin Jones added.

The company declared an interim dividend of 1.4 pence per share, down 52% from 2.9 per share last year.

Looking forward, the company expects that the second half of its financial year will be "materially stronger", with forward sales adding to performance from in-build developments.

Watkin Jones said it was targeting up to five further forward sales in the current financial year, with its full year earnings performance dependent on the results of these transactions.

In the longer-term, the company said it was encouraged by the recovery in the forward fund market, and that it was starting to see potential new land acquisition opportunities.

"We look to the second half of the year with confidence and are particularly pleased to have secured the forward sale transaction in Bristol to complete further forward sales before the year-end," said Chief Executive Officer Richard Simpson.

"The overall recovery in the forward fund market is encouraging, however the group will maintain a cautious approach to managing the pipeline."

By Will Neill, Alliance News reporter

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