Bangor based construction and development company Watkin Jones releases Group Trading Statement for 2014.
The Group achieved a substantial growth in sales to £255m, from £138m last year. This was a significant level of turnover for the Group, originating primarily from sales in the student accommodation sector.
Whilst the underlying construction activity for the Group increased in the year, part of the sales growth came from the sale of a development completed in the previous year and from the sale of several sites that had been held by the Group for a number of years.
Profit before tax for the year was £12.5m, as compared to £5.0m last year. It is very pleasing to see the increase achieved in the Group’s profit. However, the return on sales of 4.9% must be viewed as disappointing by comparison to the Group’s historic performance. Last years report commented that the Group had suffered as a consequence of the requirement to repay its borrowings with Lloyds Banking Group and that as a result, it did not have the cash resources or funding to acquire the sites needed to maintain profitability. This impacted significantly on the prior year performance and has also effected the current year. As noted above, many of the student accommodation sales achieved were of historic sites and in some cases, these had been subject to impairment provisions to reduce them to their realisable value. As expected, the margin achieved on these sales was low.
Strategically, however, the sales achieved have enabled the Group to continue to reduce its gearing and to strengthen its cash position. For the year the Group generated an increase in cash of £19.5m to £25.9m, whilst bank loans were reduced by a further £27.5m to £15.6m. This is a dramatic improvement in the Group’s cash position compared to its highly geared level several years ago.
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