Wates ‘open-minded’ to acquisitions to hit £2bn revenue target

Wates has said it will look at more deals similar to the swoop it made on Shepherd last year as it presses on with its plan to become a £2bn turnover contractor.

The firm picked up Shepherd’s M&E and FM arms last September along with a number of contracts from its construction business, adding up to £300m in revenue.

Wates chief executive Andrew Davies (pictured) told Building turnover this year will hit £1.5bn and said he was “open-minded to possibilities” of further deals. He added: “We did need to grow. You get better recovery [of profit] when you grow and that’s what’s been happening.”

Turnover in 2015 increased 21% to £1.27bn, up from £1.05bn the previous year, while the firm’s order book leapt a third to £4bn, up from £3bn.

But Davies said the priority this year was to bed in the Shepherd deals, which have seen it spend £1.8m on integration costs.

You get better recovery of profit when you grow and that’s what’s been happening

Andrew Davies, Wates

Despite the bill, the firm posted a 26% increase in pre-tax profit to £30.3m, up from £24.1m.

Davies said the Shepherd buys had given it a “formidably strong business in the North” to complement the firm’s existing strength in southern England, and “capability in the M&E space”.

He added: “Market conditions are still very challenging. Our strategy of disciplined growth has paid dividends.”

Wates also spent £750,000 adopting BIM last year and Davies said it will plough a similar figure into the initiative this year.

This week, any firm wanting to be considered for central government construction work had to be BIM level 2 compliant. Davies added: “We’re investing a lot of money [in BIM]. In truth it’s going to take time but it will get traction.”

He argued BIM was worth the cost: “It enables you to win projects … and [ultimately] it should save money.”

Wates improved its cash position, with £127.4m at the bank, up from £87.4m.