黑洞社区

Wates saw revenue tumble 22% last year to its lowest level for seven years, but a sharp jump in the firm鈥檚 order book and improving margins signaled the firm is on track for an improved performance this year.

Reporting its results for the year to 31 December 2013, Wates posted group revenue, including share of joint ventures, of 拢931m, down 22% from 拢1.2bn in 2012, with pre-tax profit falling 13% to 拢22m.

The firm鈥檚 group revenue and pre-tax profit were both the lowest it has reported in the last seven years.

Group revenue grew steadily through the recession from 拢974m in 2007, through to 拢1.2bn in 2012 before falling to 拢931m in 2013 - the lowest level since 2006 (拢886m) - while pre-tax profit has declined steadily from a high of 拢44m in 2010 to 拢22m in 2013.

The firm鈥檚 construction business experienced the sharpest falls, with revenue falling to 拢830m, down 25% from 拢1.1bn in 2012.

Pre-tax profit in the construction business fell to 拢16.5m, down 17% from 拢19.8m the year before, giving the business a pre-tax margin of 2%, up on 1.8% last year.

Wates鈥� residential development arm posted revenue of 拢19.5m, down 19% from 拢24m in 2012, with pre-tax profit rising to 拢9.6m, up 4% from 拢9.2m in 2012.

Wates also reported a 50% rise in its order book to 拢2.4bn in 2013, up from 拢1.6bn in 2012.

Speaking to 黑洞社区, Wates chief financial officer Huw Davies said the construction business was where the 鈥渞eal challenge鈥� was, with the fall in revenue due to market conditions; projects starting late due to investor uncertainty; and a more selective bidding policy.

He said: 鈥淧rofit was down 17% in construction but when you look at the turnover fall it鈥檚 not a bad place to be, it鈥檚 margin enhancing over the year.鈥�

Davies said the improved margin in the construction business was the product of restructuring carried out in 2012 and a 鈥減rudent鈥� bidding policy.

He said the firm was in a 鈥渞obust鈥� financial position: 鈥淥ur balance sheet has hardly any debt, we鈥檝e got net assets of 拢80m, we鈥檝e got gross cash in excess of 拢100m.

鈥淥ur turnover hasn鈥檛 dropped below 拢900m and we鈥檒l be back at 拢1bn this year.

鈥淭hat鈥檚 something any of our competitors would die for.鈥�

Wates chief executive Andrew Davies (pictured), who joined the firm in January from defence contractor BAE Systems, said the firm would continue to focus on its core markets, including education and housing, to drive growth.

He added that he wanted to improve the firm鈥檚 bidding practice to win 20% more of the contracts it bids for, adding that the firm鈥檚 bidding practice was 鈥渧ariable regionally鈥� and there was a need for 鈥渃onsistency鈥� across the business.

He said that all construction businesses need to look to increase their margins: 鈥淚 think the margins don鈥檛 reflect the true risks that companies like us and our competitors take in the sector,鈥� he said.

鈥淵es, you will need to expand those margins and you will do that by taking a cost conscious approach, [improving] quality management and taking the right business on the right terms.鈥�