Watkin Jones PLC · LSE:WJG
Watkin Jones — Investor Day (November 2021)
36 slides from Watkin Jones's investor day presentation, Nov 2, 2021
Slide 1: Growth trajectory enhanced by affordable homes and ESG framework
Growth trajectory enhanced by affordable homes and ESG framework Capital Markets Day – 2nd November 2021 Creating the future of living
Slide 2: Welcome and agenda
Welcome and agenda Richard Simpson, CEO 2
Slide 3: Agenda
Agenda 1 Introduction from our Chair, 5 ESG strategy, Alan Giddins Richard Simpson, CEO 2 Introduction from our CFO Designate, 6 Affordable homes, Sarah Sergeant Alex Pease, Chief Investment Officer 3 Investment case, 7 Summary, Richard Simpson, CEO Richard Simpson, CEO 4 FY2021 trading update, Phil
Slide 4: Introduction from our Chair
Introduction from our Chair Alan Giddins 4
Slide 5: Introduction from our CFO Designate
Introduction from our CFO Designate Sarah Sergeant 5
Slide 6: Investment case
Investment case Richard Simpson, CEO 6
Slide 7: Drivers of growth
Drivers of growth Secured £1.7bn development pipeline Established track record of end to end — delivery Balance sheet strength Secured earnings Structural growth of residential for rent sector Growth in institutional demand Capital Light development model Existing institutional relationships Consume
Slide 8: Market leader in residential for rent
Market leader in residential for rent Operations Reputation and relationships Track record 20 years in residential for rent 46,000 PBSA beds delivered 1,700 BtR apartments delivered Expertise Understanding of local markets and planning 8
Slide 9: A track record of financial out-performance
A track record of financial out-performance TSR Total shareholder return March 2016 IPO to 30 Sep 2021 - 350p • 172% TSR (c.20% CAGR) • + 39% above FTSE All Share 300p • + 45% above AIM100 • Share price + 126 pence 250p • Dividends paid + 36.5 pence ROCE 200p • 5 year average ROCE* + 68% 150p Revenu
Slide 10: Growing popularity of Build-to-rent
Growing popularity of Build-to-rent Private rental housing in England Growing BtR satisfaction through COVID 19 6 100% 6.0 5 80% 4 4.44 73% 60% Number of 63% 61% households in millions 3 3.36 55% 56% 52% 40% 2 2.03 20% 1 0 0 2000 2010 2020 2030 (e) BtR Private BtR Private BtR Private landlord landlo
Slide 11: Build-to-rent – future growth
Build-to-rent – future growth 19% Rental share of £75 Investment by 2025 (2021 £41 billion)2 billion UK households1 15% Forecast rental growth by 20252 £544 billion Forecast market maturity; 1.75 million homes; 5.2 million residents3 11 Source: 1 MHCLG (or MLUHC) English Housing Survey 2019-20; 2 Kn
Slide 12: UK PBSA – future growth
UK PBSA – future growth • Long term growth drivers 2,500,000 – UK demographics – Growth in UK 18-year-olds Government target increase in international students – Ageing university estates 2,000,000 Projected growth in UK students by 20352 • H1 2021 transactions up by 47 per cent4 1,500,000 – £2 bill
Slide 13: Set up for growth
Set up for growth Market leadership built on 20 years of consistent delivery • Experts in forward funded development • Unrivalled understanding of residential for rent • Deep institutional relationships Continued investment in key capabilities • Investment, development and planning • Single BtR and
Slide 14: FY2021 trading update
FY2021 trading update Phil Byrom CFO and Sarah Sergeant CFO Designate 14
Slide 15: Pre-close trading update FY2021
Pre-close trading update FY2021 Continued operational Pipeline enhanced Strong financials Capital efficiency delivery • 12 developments • 13 sites acquired • Operating profit • High capital efficiency completed: • 12 planning consents in line with expectations • Forecast ROCE* of c.70% – 3,192 PBSA
Slide 16: Delivering growth – Build-to-rent
Delivering growth – Build-to-rent • Illustrative revenue growth by year Illustrative land & development revenues • 4,012 BtR apartments (9,111 beds) Development £'m revenue 400 in secured pipeline Land revenue 300 • Future revenue value c.£0.95 billion 200 • Forward sales model delivers revenue 100
Slide 17: Delivering growth – PBSA
Delivering growth – PBSA • Illustrative revenue growth by year Illustrative land & development revenues 400 • 7,142 PBSA beds in secured pipeline Development £'m revenue 300 Land revenue • Future revenue value c.£0.8 billion 200 • Revenue growth to £300 million by 100 FY23 supported by secured pipel
Slide 18: Creating Kelaty House: A case study
Creating Kelaty House A case study 18
Slide 19: ESG strategy
ESG strategy Richard Simpson, CEO 19
Slide 20: Future people – investing in our workforce
Future people – investing in our workforce Health and safety Employee engagement Diversity Welfare Training and development Volunteering 20
Slide 21: Future places – creating sustainable communities
Future places – creating sustainable communities Industry standards Innovation NPS (resident and client satisfaction) Amenity space WiFi Considerate Contractors Community and charity scheme 21
Slide 22: Future planet – sustainable operations
Future planet – sustainable operations Waste Water Carbon dioxide 22
Slide 23: Decarbonisation strategy
Decarbonisation strategy Car fleet Agile working Renewable energy Machinery and plant Energy efficient Fresh Supply chain Embodied carbon Modern methods buildings partnership of construction 23
Slide 24: ESG – investing in the future
ESG – investing in the future • BREEAM/HQM modelling exercises and “It is imperative that we all play supply chain dialogue – c.1-2 per cent increase in gross our part to ensure buildings deliver development costs on the net-zero commitment to tackle climate change. This will future-proof Build cost
Slide 25: ESG dashboard
ESG dashboard • Increase employee engagement • NPS (customer) +10 by 2025 • Net zero Scope 1 and 2 carbon emissions by to 80% by 2025 and +20 by 2030 2030 • Voluntary staff T/O 20% by 2025 and • NPS (client) +10 by 2025 and plus 25 by 2030 • Meaningful impact on Scope 3 emissions 15% by 2030 • 100%
Slide 26: Affordable homes
Affordable homes Alex Pease, Chief Investment Officer 26
Slide 27: Affordable homes – Our model
Affordable homes – Our model Our approach • Land led • Future sold • Mixed model: regulated, affordable, BtR, private sale • Homes England funding • Increased affordable provision 27
Slide 28: Affordable homes – Historic under supply
Affordable homes – Historic under supply 150,000 Government target 145,000 p.a. 480,000 140,000 130,000 Reduction in council 120,000 housing since 20001 110,000 100,000 90,000 135,000 80,000 70,000 Reduction in net supply of ‘social Affordable housing supply 60,000 rent homes’ in the last decade1 50
Slide 29: Affordable homes – Changing landscape
Affordable homes – Changing landscape Private capital • 70% of Private Registered English PRPs’ gross investment expenditure by source Providers’ (PRP)* investment £m Private finance % total funding sourced from private 12,000 80% finance** 70% • c.80* per cent of private and 10,000 institutional in
Slide 30: Affordable homes – WJ capabilities
Affordable homes – WJ capabilities • Capital light model • Established housebuilding capability • Existing institutional relationships • Development expertise: investment, planning, divestment, construction • Positive planning and ESG Perspective 30
Slide 31: The WJ model in practice
The WJ model in practice • Sydney Rd, Crewe – 245 units • 115% increase in affordable units generated • Underpinned by Homes England funding • Excellent Forward Fund Liquidity with blend of private and traditional bidders • Returns in line with target model • ESG benefits including: Timber Frame Tri
Slide 32: Affordable homes – The growth opportunity
Affordable homes – The growth opportunity • Potential to scale to 1,000 units Units p.a. by FY27 Affordable 1,200 homes sites 1,000 • Current Homes pipeline of Land bank sites 800 c.1,000 units 600 • Revenue projection modelled 400 200 on typical 200 unit scheme: 0 FY22 FY23 FY24 FY25 FY26 FY27 Unit
Slide 33: Summary
Summary Richard Simpson, CEO 33
Slide 34: Strong market dynamics
• Strong market dynamics • Large and growing development pipeline • End to end development capability • Capital light model • Visibility of earnings • Accretive growth opportunities • Strong ESG credentials 34
Slide 35: 35
35
Slide 36: Disclaimer
Disclaimer This presentation has been prepared by or on behalf of Watkin Jones plc (“Watkin Jones”). The information set out in this presentation is not intended to form the basis of any contract. By attending (whether in person, by telephone or webcast) this presentation or by reading the presentat