Wates Group grew turnover by 10% in 2024 to £2.40bn (2023: £2.18bn) but pre-tax profit plummeted to £2.6m (2023: £44.9m).
Underlying profit before tax – before exceptional administrative expenses – was £31.4m, down from £44.9m in 2023.
At an operating level, the business actually made a loss of £300,000, compared to a £44.6m operating profit in 2023. However, with a forward order book of £8.64bn and end-of year cash position of £195.6m – up £57.6m over the year – directors say the group is set up for continued, sustainable growth in 2025.
Increased turnover is due in part to the acquisition of Liberty Group, a property services business, adding around 1,100 employees and taking Wates’ total workforce to almost 6,000 people, part of an overall increase of 36% on 2023.
The acquisition of Liberty means Wates now maintains 600,000 social houses – one in seven in England.
Much of the extra administrative costs that dampened profits was down to pension fund reorganisation. Members’ defined benefits from the Wates Pension Fund were transferred last year to pension specialist Clara-Pensions, thereby providing members with increased financial security in the longer term, according to the board, while also managing Wates Group’s pensions risk.
Commenting on the results, chief financial officer Philip Wainwright said: “For the 25th year in a row, Wates Group has delivered a profit before tax. The year also saw us reach a major milestone as we removed the net liability of our defined-benefit pension scheme. The financial impact of this has been classified as an exceptional item.
“The group achieved robust turnover growth in 2024, up 9.9% to £2.40bn (2023: £2.18bn), a record high, driven by delivery of large private and public-sector construction projects, engineering services within SES, fit out and refurbishment projects undertaken by Smartspace, and the Property Services line of business. Property Services experienced significant organic growth and benefitted from the acquisition of the Liberty Group business on 1st October 2024.
“Underlying group profit before tax of £31.4m (2023: £44.9m), while healthy, was constrained by several factors during the year. First was a larger post-tax loss from joint ventures and associates of £(10.2)m (2023: £(0.4)m), primarily due to additional costs to complete sites within our joint-venture housebuilding schemes. Secondly, the group made strong profits but also incurred losses in closing out a number of construction projects. Thirdly, 2024 was a quieter year in terms of consented land sales. In addition, investment in divisional overheads and support functions resulted in a £46.7m increase in underlying administrative expenses. The above constraints were offset to some extent by strong performance across the Property Services, Smartspace and SES businesses, with turnover growth delivering additional gross profit, up £32.0m on 2023. The combination of these factors resulted in underlying operating profit margin reducing by 0.9% to 1.1% (2023: 2.0%).”
Chief executive Eoghan O’Lionaird summarised: “Overall, we are performing well, with positive headline financial results: our highest-ever turnover at £2.40bn, a record £8.64bn order book of secured work, and a continued run of 25 years of delivering a profit before tax, albeit less profit than in 2023.”
Across the business, 2024 saw significant new project and contract wins, including a major regeneration project in Gresham, Middlesborough, the Victoria House life science hubs for Oxford Properties in London, and fit-out services for three Ministry of Justice projects, as well as breaking ground on the expansion programme at HMP Highpoint in Suffolk, which will deliver 741 prison places.
The Property Services division won contracts across the country, including responsive maintenance programmes with the Peabody housing association, as well as Social Housing Decarbonisation Fund-related work with London Borough of Brent and A2 Dominion Housing Group. The Property Services division increased its turnover by 30% in 2024 to £547.2m with its forward order book increasing to £2.7bn, enhanced following the acquisition of Liberty Group.
SES also secured a record amount of new work across a range of sectors including sports, education, industrial, commercial and life sciences.
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