Watkin Jones PLC on Wednesday reported an annual fall in revenue and profit as it said it is shifting its focus to higher-margin business via build-to-rent housing and student accommodation, away from the affordable housing business.

The London-based housing developer, contractor and manager said revenue fell 5.4% in the financial year that ended September 30, down to £407.1 million from £430.2 million a year before.

Pretax profit plummeted by 64% to £18.4 million from £51.1 million. The company reported exceptional costs £30.4 million in the most recent financial year relating to the new UK building safety act, compared to none a year prior.

The new rules call for the removal of flammable cladding from tall buildings and were put in place in response to the fatal Grenfell Tower fire in London in 2017.

Watkin Jones also explained that market volatility in the wake of the UK mini budget hit the end of its financial year, delaying two forward sale transactions.

The firm cut total dividend payments by 9.8% to 7.4 pence for the recent year, from 8.2p the year before.

Looking ahead, Watkin Jones noted ‘strong’ liquidity and ‘very good’ visibility over its development pipeline, while it announced it will slow down its affordable housing business, to focus on higher margins, which it aims to achieve via more-mature purpose-built student accommodation and build-to-rent developments. During the current financial year 2023 that started on October 1 last year, it expects supply chain availability to improve and cost inflation to moderate.

Watkin Jones shares fell 6.2% to 102.20 pence each on Wednesday morning in London.

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