Tier one contractor Wates posted record annual turnover last year although its statutory pre-tax profit nosedived, its latest accounts show.
The firm – ranked 7th in last year’s CN100 index of top UK contractors – saw its revenue (excluding joint ventures) rise by 9.2 per cent from £2.1bn to £2.3bn for the year to 31 December 2024.
Its statutory pre-tax profit of £2.6m was down sharply on the previous year’s £44.9m. As a result, Wates’ statutory margin narrowed from 2.1 per cent in 2023 to 0.1 per cent.
The margin would have been 1.5 per cent but for £28.8m in exceptional items related to the transfer of pension liabilities, according to accounts released on Tuesday (8 April).
Group chief executive Eoghan O’Lionaird (pictured) described a “robust performance in difficult market conditions”, adding: “The business ended the year in a strong position with a solid cash balance.”
Wates’ cash holdings rose from £138m to £195.6m, including £13.1m held in construction project bank accounts for future payments to designated suppliers – higher than the £1.7m recorded in 2023.
No bank loans were taken out, compared with £20m that was borrowed – and repaid – in 2023. Wates has access to a £84m undrawn revolving credit facility, extended by six months in 2024.
Its forward order book grew by 1.2 per cent to £8.64bn, with the construction division accounting for £3.6bn.
Divisional turnover rose from £1.18bn to £1.27bn despite a “challenging economic environment”, construction executive managing director Steff Battle said.
The division won work worth £804m and ended the year with 312 active sites.
Key wins last year included a regeneration project in Middlesborough and the Victoria House life science hub in London.
Project starts included the 1,700-place HMP Gartree under the Alliance for New Prisons programme.
Provisions for liabilities – mainly remediation works – decreased from £75.6m to £53.2m. Directors estimated it will cost £42.8m to complete remediation, with up to £31.3m potentially recoverable from subcontractors.
Wates said the Building Safety Act presented both “a future opportunity and a risk”. It is focusing on “establishing the changes to our systems, processes and competencies needed” to meet regulatory requirements, “particularly in relation to high-risk buildings”.
Wates paid out £18.9m in dividends last year, up from £14.6m in 2023. Average monthly headcount grew from 4,321 to 5,192, with a wage bill of £330.1m, up from £282.5m.
Looking ahead, O’Lionaird highlighted the purchase of property repairs firm Liberty Group last October as significant.
“We don’t make a lot of acquisitions but this is an important one,” he told Construction News. “We think the age of conversion from gas to electric heating… is upon us.”
O’Lionaird also foresaw expansion in the fit-out market, especially in London. Wates set up a new fit-out division last November to target the capital’s commercial market.
The move was “opportunistic”, O’Lionaird said. “We haven’t been active in the commercial fit-out market in London, but it’s a market where we see growth.”
A 20-strong team, led by ex-ISG executive Lee Phillips, did not generate revenue last year “but will support entry into new markets from 2025”.
Wates acknowledged “uncertainty in the global political and economic environment”, particularly regarding tariffs imposed by the Trump administration.
O’Lionaird said it was “very clear… that tariffs will be good for nobody. But the direct impact on our industry and Wates remains to be seen”.
He added that he did not expect a significant impact since most materials Wates uses are from the UK, Ireland or Europe.
“But we have to be realistic that tariffs may have an impact in the broader economy… and we’re hoping and expecting that the [UK] government will continue to find ways to reach an accommodation.”
Ongoing projects this year include a £110.6m repair job at Parliament’s Victoria Tower. Wates was named as the contractor last Friday (4 April), although a company spokesperson told CN that the firm was at a 30-day standstill stage.
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