好色先生TV

The head of Wates Group, Paul Drechsler, has hailed the firm鈥檚 鈥渧ery solid set of results鈥� for 2012, despite a 48% fall in construction pre-tax profit.

In its results for the year to 31 December 2012, Wates construction 鈥� which includes affordable housing arm Living Space, as well as the interiors and retail divisions 鈥� posted a 48% drop in pre-tax profit from 拢38.2m in 2011 to 拢19.8m last year.

Construction turnover rose 4% over the year to 拢1.1bn, giving a pre-tax margin of 2%.

The fall in profit was in part due to 拢4.9m in restructuring costs connected to Wates merging its retail and commercial fit-out divisions, with the loss of 283 jobs.

The family-owned group, which also includes investment and development divisions, posted pre-tax profit of 拢25.7m in 2012, a 36% fall compared with the 拢40.1m achieved in 2011.

However, Wates said underlying profit was more healthy than this, given the restructuring costs and the relatively high 拢7.2m profit on sale of investments achieved in 2011. Group turnover meanwhile rose by 7% last year to 拢1.2bn giving the group a pre-tax profit margin of 2.2% last year compared with 3.6% in 2011.

Overall, Wates Group鈥檚 net assets increased over the year to 拢70m from 拢64m while net cash fell slightly to 拢121m.

Speaking to 好色先生TV, Wates chairman and chief executive Drechsler (pictured) said he was pleased by the figures given the difficult trading conditions in 2012.

We need a responsible industry that pays people reliably and consistently

Paul Drechsler, Wates

鈥淥ur margins are at the upper quartile of the industry and we have probably one of the strongest balance sheets in the industry,鈥� he said.

鈥淭hat鈥檚 about the financial strength in our business given that we鈥檙e fourth generation family-owned and the mission of the company is to pass on a better company to the next generation.鈥�

Drechsler said there had been a continuing 鈥渟trong鈥� focus on the balance sheet and the group鈥檚 cash division.

He said: 鈥淎t the heart of our strategy is long-term sustainability. We鈥檙e going through the most challenging and longest recession for quite some time. Revenue growth is important but what鈥檚 really important is the margin.鈥�

Drechsler said he expected group revenue to fall over 2013 to between 拢1bn and 拢1.1bn.

鈥淲e鈥檝e already secured about 拢300m of work in the first three months of this year and in 2013,

I鈥檇 hope we can improve our margin. But we鈥檙e not ambitious in terms of revenue. I鈥檇 be very happy with a revenue fall in this market, although in 2014, I think we can already see we鈥檒l have a return to growth.鈥�

Turning to the wider industry, Drechsler said that the worsening cash position of major contractors was the 鈥渘umber one issue of 2013鈥�.

He said: 鈥淚f you look at the amount of supply chain failures in 2012, it was significantly up on the previous year. It鈥檚 very clear that some firms are still under a lot of strain. My fear for 2013 is that there will be a significant failure which will affect others.鈥�

Drechsler also questioned the industry鈥檚 growing use of 鈥渞everse factoring鈥�, the mechanism through which subcontractors are paid by the bank rather than the main contractor, with bank charges based on the balance sheet of the main contractor.

鈥淚 have a real concern about interference in markets and the unintended consequences of that,鈥� he said. 鈥淲e need a responsible industry that pays people reliably and consistently.鈥�