Chief executive says booming M&E arm proving trump card in winning work

Wates is being asked by clients to look at bigger jobs than it has previously with the firm’s chief executive saying its M&E arm is proving to be a key difference from its rivals.

Construction is Wates’ biggest business and last year posted its highest ever average project value of just over £48m.

The firm has set up a major projects division and larger schemes it is carrying out include work at Canada Water for British Land, including a £150m scheme called Printworks, which involves turning a former 1980s newspaper printing facility into mixed-use, as well as a £450m gigafactory scheme in Sunderland.

Canada Water 3

Wates is carrying out work at British Land’s Canada Water scheme in east London which includes building a new residential tower

Announcing a record set of group results, chief executive Eoghan O’Lionaird said its booming SES M&E business was proving to be a trump card for the firm with revenue at the business up 73% to £299m.

“We think SES is the premier M&E contractor in the UK and a combination of Wates [construction] and SES is attractive to [clients],” he added. “We’re developing a reputation as a safe pair of hands.”

Its construction arm saw revenue grow 22% to £1.17bn but O’Lionaird cautioned: “We are not chasing revenue. We will do jobs if we feel we can add value and there is profitability in there.”

The firm said a number of firms in its supply chain had gone bust on them in the past year, despite the firm increasing the frequency of payment runs. “We do everything we can to help the supply chain because it hits us in any number of ways,” O’Lionaird added.

And he said more clients were running the rule over firms’ balance sheets before moving to appoint them. “There is no doubt we are seeing more of that.”

Group revenue topped £2bn for the first time in its 127-year history to end up at £2.2bn, a rise of 15% on last time.

Pre-tax profit was up by one third to £46m with the firm’s year-end cash sitting at £138m, down from £207m last time, although Wates said this was because of investments made in the business over the year. The firm is also debt-free with its order book flat at £8.5bn.

Its housing business grew revenue 4% to £323m and O’Lionaird said he expected an uptick in sales after the firm completed 276 homes last year with over 3,000 under construction.

But he added the government needed to reform the planning system and also restructure the way it funds social housing. Revenue from its property services business, which carries out maintenance and refurbishment work, was up 9% to £545m.