Wates chief executive said the company was “facing a battle for survival” when the first Covid-19 lockdown was enforced, but ended the year “with a positive result”.
Wates saw turnover slide 11% in 2020 to £1.45bn (2019: £1.63bn. Underlying pre-tax profit was £12.3m but there were one-of furlough costs of £12.5m and restructuring costs of £6.7m (there were 268 redundancies – 7% of the workforce).
Balanced against this was a one-off lift of £7.7m from the government’s coronavirus job retention scheme grant income, giving Wates a total pre-tax profit for the year of £1.7m (including joint ventures), compared to £36.2m in 2019.
The company secured £2.4bn of new work in 2020 enabling it to end the year with a record forward order book of £6.6bn, up 13.5% from 2019.
It began 2021 with £215.9m of cash (and £161.6m of net cash, which was £50.8m up on 2019) and with access to a further £120m undrawn revolving credit facility.
Wates Residential increased its turnover by 21.1% and accounted for 52% of all work won across the group, including its appointment as development partner for Harrow Council’s £600m, 1,500-home regeneration scheme.
Chief executive David Allen said: “We began 2020 with enormous optimism, having just achieved the highest level of profits the group had generated for almost a decade and a record order book. Within three months, the pandemic left us facing a battle for survival. That we finished the year with a positive result is a credit to the remarkable efforts, resilience and adaptability of everyone at Wates.
“The pandemic challenged us to work in different ways and to adapt. We reorganised our business to focus on helping to tackle the UK’s housing shortage, supporting the public sector to build back better and investing in the modern methods of construction that will enable us to meet our customer’s needs in the future. Together, we have set the business up to succeed and we remain committed to our goal of becoming the most sustainable, trusted and progressive business in the sector.”
He said that Wates had emerged from 2020 a stronger, better company. And pay cuts imposed during the first three months of lockdown were reimbursed in full in February 2021 salaries.
“The social distancing requirements on sites resulted in a 42% drop in the workforce at the end of the first quarter of 2020. However, the corresponding reduction in productivity was less than half this figure (in part because of our increased use of offsite manufacturing),” he said. "Across the group, productivity never dipped below 50% of pre-pandemic levels and by the end of December, parts of the group were achieving productivity levels in excess of 100%.
“Over the last 12 months, Wates has adapted to new ways of working, restructured our business to ensure its long-term sustainability and became a leaner, fitter organisation. We improved productivity and implemented flexible working patterns that might otherwise have taken a decade to introduce. We took radical steps to be more inclusive and diverse and we have generated more social value in the communities we serve than ever before.
“The group weathered the storm of 2020 brilliantly and we begin 2021 confident that we can prosper, despite the difficulties with which the UK started the year, and thrive as never before once those difficulties are behind us.”