Willmott Dixon, the privately owned construction and interiors company, publishes interim results for the six months to 30^th June 2024.

Highlights:

• Turnover: £561.1m (HY 2023: £589.0m)
  • 69% of turnover via long term frameworks, 55% with repeat customers
  • Record order book, pipeline exceeding £3bn
• Profit before tax, goodwill and exceptional items: £13.2m (FY23 £5.2m loss, HY23 £5.3m)
• Profit before tax: £10.0m, ahead of expectations (FY23 £14.4m loss, HY23 £1.3m loss)
• Shareholder funds: £166.0m (FY23 158.8m, HY23 £169.5m)
• Cash at bank: £109.3m (FY23: £115.1m, HY23 £114.7m)
• Debt free with access to committed bank facilities of £30m

Statement from chief executive officer Graham Dundas:

I’m pleased to start with the excellent news of a prompt and healthy return to profit for the business after a difficult 2023. While market conditions remain competitive, both profit and turnover are ahead of our forecasts, underlining my confidence in our ability to deliver profitable long-term growth.

Results

The first half of the year has seen a strong all-round performance from the group, with each of our subsidiary companies materially contributing to the profit delivered.

Turnover in the first six months of 2024 was relatively consistent at £561.1m (HY23: £589.0m) but our headline profit before tax, goodwill and exceptional items grew to £13.2m, a strong recovery from last year’s £5.2m loss. This translated to a profit before tax of £10.0m (FY23: loss of £14.4m).

Our strong start to the year is further illustrated by cash at the bank of £109.3m, with shareholders’ funds increasing to £166.0m (FY23: £158.8m). We have a robust, debt-free balance sheet and access to committed bank facilities of £30.0m, with an additional £20.0m accordion provision.

Workload

Our secured order book and future pipeline has never been stronger, exceeding £3bn in total for the first time. Willmott Dixon agreed over £1.0bn of new orders by August and 98% of budgeted workload for 2024 is now contracted. This underlines both the high demand for construction work, and our success in overcoming the challenges of a tough macro-economic environment, such as the high inflation which delayed several projects over the last 18 months.

In addition to a record secured orderbook, we also have preconstruction appointments on projects expected to deliver a further £1.5bn of work once successfully converted into main contract awards. This growth in orders comes whilst remaining very selective in our bidding activity; our projects remain predominantly with valued repeat customers and in sectors where we have a proven track-record of success.

Currently 69% of turnover comes through our frameworks, and over 55% of turnover is with repeat customers. Framework highlights in this period include our re-appointment to the fourth iteration of the SEWSCAP framework covering South and Mid Wales and securing our first project under the National Procure Partnerships Framework.

Other notable highlights include the activity flowing through the DfE framework, where we have secured £224.0m of work, making us one of the most successful companies in its league tables, and Pagabo, where we have followed completion of the Stockport Interchange with the recent project to build Lincolnshire Secure Children's Home.

Sustainable “net zero” projects also remain an important growth area for the business. Our pipeline reflects the continued growth in customer demand for property that is ‘net zero in operation’, as shown by the University of Staffordshire’s student village at its Stoke-on-Trent campus, which will be built to Passivhaus design principles, as well as the Bridgend College development and a new campus for Wigan & Leigh College (below).

Likewise, our specialised skills are providing tangible value in support of customers’ requirements to reduce embodied carbon during the construction process, alongside best-in-class post-occupancy energy performance.

Our workload remains evenly balanced across all our core markets, particularly leisure, housing, regeneration, education, healthcare (new-build and fit-out) and heritage property restoration. We are also seeing increased investment in facilities to improve town centres and urban connectivity, similar to our successful Stockport Interchange project.

Market conditions

The recent demise of ISG was both shocking and sad; while we operate in a competitive industry, no one likes to see another company fail. Its failure does, however, further underline why our approach to risk and selective bidding remains crucial to our long-term success. We believe our repeat business and long-term relationships, as well as our stringent internal processes, are critical in this regard.

Alongside the failure of ISG, the requirements of the Building Safety Act will see a further shift in customer mindset from ‘lowest bid’ to ‘best quality’ in analysing tenders, with additional scrutiny placed on a company’s financial robustness.

While we await the new Government’s spending review, scheduled for Spring 2025, demand for capital projects at national and local level will continue to drive new opportunities. As these come out for procurement via our frameworks, we will only bid for projects where we have the right resources and capabilities to deliver.

Recognition for our company, people and projects

We have recently achieved several notable accolades that underline how we are driving positive change in areas like sustainability, diversity and inclusion. Following on from our success earlier this year in securing another King’s Award for Enterprise, this time for sustainable development, we were again included in The Times Top 50 Employers for Gender Equality 2024 guide (below), an important benchmark recognising the very best companies for workplace inclusion.

Future prospects

Our focus on operational excellence and healthy pipeline means we are on track for returning to full year profit in 2024 and growth in 2025. We are emerging as a stronger business with the challenges of 2023 behind us. However, while positive and cautiously optimistic, we are not complacent.

Our markets remain strong, and the new Government’s focus on economic growth will lead to new investment in the building blocks of that growth, in the community infrastructure that encourages inward investment, connectivity and civic pride of place.

Reflecting on my first six months as CEO, I’m excited to be working with a group of very talented people who share the same vision of a company that delivers a career of a lifetime for our people, brilliant buildings for our customers and predictable profit for our long-term success.