Wates is set to pursue more joint ventures with local councils, after the arrangement landed them several bumper contracts over the last year.
Wates noted in its annual results this morning that it had returned to its pre-pandemic pre-tax profit, following a big hit from the coronavirus pandemic in 2020. Wates’s pre-tax profit for the year to 31 December 2021 came in at £35.9m, in comparison with a profit of £34.5m in 2019.
Company chief executive David Allen told Construction News he is “looking to pump in capital” to build more relationships with local councils.
The company secured a £700m strategic development partnership with Harrow Council in July, committing to build 1,500 homes in the area over the next decade.
Wates has tied up similar deals with Havering and Cardiff councils in the past few years. The Havering agreement is to regenerate 12 estates over 12 years with a value of £1bn. Meanwhile, in Cardiff, Wates is delivering 1,500 new homes over 10 years in a deal worth £190m.
“We are very proud of our relationship with councils in Harrow, Havering and Cardiff,” Allen said. “In these instances, we act as development managers and partners with local authorities, and we’re really keen to do more work in that area and are looking to pump in more capital to make that possible.”
Alongside partnerships with local councils, Allen said profits would also be invested in improving the digital operations of the business.
“We’re investing in data – we are bringing in the data scientists we need to get maximum insight from all of the information we hold about our business, about the buildings we create and about the buildings we maintain,” he said.
“We’ve had the licences, we’ve had the software and we’ve had the IT infrastructure for a number of years. This is about bringing in people with those data management skills who can help us make more of what we’ve already got.
“That will enable us to help all of our customers make really smart decisions about how they configure projects and their estates in the future.”
The investment plan also stretches to innovation within construction, Allen said. Last year, Wates ploughed funds into its offsite manufacturing factory in Coventry, known as Prism.
“We’ve invested heavily in design capabilities there and in creating additional capacity. We’re also really open to partnering with other people who have capabilities that will help us take a further step on the use of offsite manufacturing,” he added.
Wates has generally been focused on building organic growth, but Allen did not rule out pursuing acquisitions if the opportunity emerged.
“We’re really open-minded. If we saw an area where we could fill a gap with an acquisition, we would absolutely be prepared to do that. I’m sure the board would respond positively to proposals like that.”
But he echoed warnings made by Balfour Beatty chief executive Leo Quinn earlier this month in saying that inflation would “remain a significant challenge” for the sector.
“We’re going to need to respond with a great deal of intelligence and adaptability if we are going to succeed in managing that.”