Private contractor proves it is out of the doldrums, recording a sharp rise in profit to £10.6m

Private contractor Wates has reported an impressive set of results for 2005. Pre-tax profit rose from £3.5m to £10.6m, while turnover increased 6% to £670m, reflecting better margins.

The biggest contributor to profit was Wates Living Space, the new-build and refurbishment business. Pre-tax profit increased 28% to £9.1m and the business had an order book of £444m at year-end.

The best improvement in performance was at Wates Construction, which works on public and commercial projects. Pre-tax profit rose 88% to £4.9m, after £150m of education projects.

Wates Retail, which is focused on retail fit-out and refurbishment, also showed strong growth, with a 38% increase in pre-tax profit to £3.6m.

Margins in construction overall increased to 3.1% from 2.6%. When Paul Drechsler joined the company as chief executive 18 months ago he said that one of his main aims was to push up margins because he did not see why the construction industry should accept low ones.

Drechsler said of the results: "They did come after a difficult year in 2004. We implemented a much more focused business after completing the review."

The group is split into five parts. There are four construction businesses in affordable housing, office fit-out and refurbishment, retail fit-out and refurbishment and public sector and commercial sector work. The fifth business is development, which is now focused on land management after Wates completed its exit from the executive homes market.

Wates chairman, Andrew Wates, has retired from the company and will be replaced by Drechsler who will also retain his role as chief executive.

James Wates has been appointed deputy chairman and Tim Wates was appointed as the company's third non-executive director.

Drechsler said that the management changes were all part of the handover of the business from the third to the fourth generation of the Wates family.

Drechlser said that the outlook for the rest of this year and next looked fairly positive. The company has a £1.2bn order book.

Wates results at a glance

  • Group pre-tax profit: £10.6m (+203%)
  • Group turnover: £670m (+6%)
  • Order book: £1.2bn
  • Wates Living Space pre-tax profit: £9.1m (+28%)
  • Wates Interiors pre-tax profit: £2.1m (+5%)
  • Wates Retail pre-tax profit: £3.6m (+38%)
  • Wates Construction: £4.9m (+88%)