Industry needs to keep spirit of collaboration forged during pandemic going, David Allen adds

Lessons learned during the pandemic need to be kept up to combat the impact of rocketing inflation, Wates鈥� chief executive has said.

Contractors are facing huge rises in costs with the firm鈥檚 boss David Allen saying its fuel bill has gone up by 50% in a little over a year with the war in Ukraine adding further to inflationary pressures.

He added: 鈥淚t [inflation] was a challenge before [the war] but it has become more intense [since].

鈥淎lmost everything has become much more expensive. Fuel was up 20% last year and already this year, it鈥檚 gone up 30%.鈥�

Sandwell Aquatics Centre 3

Wates is coming to the end of its work at the Sandwell Aquatics Centre which will be used during this summer鈥檚 Commonwealth Games in Birmingham

He said discussions with clients had been broadly favourable in how to tackle escalating costs. 鈥淲e are having rational conversations with our customers,鈥� he added. 鈥淭he nature of these conversations changed during the pandemic. [The industry and clients] had to collaborate in a new way in order to keep jobs moving forward.鈥�

But Allen said he didn鈥檛 expect the price hikes to taper off any time soon. 鈥淚t鈥檚 unlikely to resolve itself quickly. What鈥檚 going on is incredibly unusual. We haven鈥檛 had a war in Europe for 80 years.鈥�

He added that the rises, coupled with wage inflation for hard-to-find tradespeople, meant the onus was on the industry to design out costs.

鈥淢ore sustainable buildings use less energy, less materials. If you work with the customer, you end up with better value for money and greater efficiency.鈥�

Allen was speaking after the firm saw turnover last year jump 12% to 拢1.63bn on pre-tax profit up to 拢35.9m from just 拢839,000 in 2020 鈥� after the firm that year was forced to shell out more than 拢19m on covid and restructuring costs. Wates said its underlying operating profit was up to a record 拢40m from 拢16m last time.

David Allen, Chief Executive, Wates Group

Wates chief David Allen

The firm said net cash at the year-end was 拢158.9m, marginally down from 拢161.6m, but average daily net cash was up to 拢130.5m from 拢88m. Speaking about its balance sheet, Allen added: 鈥淚t means you鈥檙e not driven by short-term tactical decisions. You can be ready to invest in improving the capability of the business.鈥�

The firm said it won 拢2.3bn of new work last year and has a record order book of 拢7.1bn. It added that it had 7,500 homes under construction during 2021.

Its biggest business remains its construction arm although revenue fell 4% to 拢772m. Its property services business, which includes its housing repairs and FM operations, grew 13% to 拢473m.

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