Wates profit falls 94%

Wates’ statutory pre-tax profit dropped to £2.6m last year, a huge 94% drop on the £44.9m reported the year prior.

Compared with the pre-tax number, the family-owned construction firm reported a relatively more modest decline in its underlying profit figures for the year to 31 December 2024.

Underlying pre-tax profit, which excludes certain one-off items, was down 30% to £31.4m.

The stark difference between the statutory and underlying figures was the product of an £28.8m exceptional charge that arose from the firm transferring its defined benefit pension obligations to a third party. 

These pension liabilities have now been moved off balance sheet to the Clara-Pensions superfund, which the firm said would provide members with increased financial security in the longer term while also managing the group’s pensions risk.

The more modest decline in underlying profit numbers was attributed to heavy investment by the firm, higher-than-expected costs in housebuilding joint ventures and losses incurred in closing out “a number of construction projects”.

The firm’s chief executive, Eoghan O’Lionaird, said investments were made in supply chain, quality, sustainability, safety, data and analytics – areas where he said there was potential to create “competitive advantage” into the future.

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He said the investments were made on the basis of Wates’ expectation that it would bring in significant new orders and that “the revenue line was quite strong throughout that year”.

The firm also made an acquisition in the year, taking on a maintenance firm called Liberty.

Despite the drop in profit, the group said the results marked 25 years without making a loss. Turnover in the year stood at £2.3bn in the period, up 9.2%, and the group recorded an additional £100m of income from its share of joint ventures’ and associates’ turnover.

Around £1.3bn of turnover came from construction business, 7% up from £1.18bn, whil residential turnover dropped from £322.7m to £281.5m.

Wates reported a forward order book of £8.64bn, up 1.2% on the previous year. 

The firm said the new fit out business it set up last autumn to target London commercial work, and which is headed by ISG’s former fit out boss Lee Phillips, has 20 people on its books.