Mace has posted record turnover and profit figures in its latest annual accounts, including its highest construction revenue for five years.
Turnover rose by 25 per cent in the 2023 calendar year to reach £2.36bn while pre-tax profit soared by 69 per cent to £61.7m.
The profit figure was restated to reflect the sale of its Mace Operate facilities management business last November.
Mace chief executive and chairman Mark Reynolds, who is stepping back from the chief executive role next January, said that 2023 “was a landmark year… seeing us take a major step towards our target of achieving annual revenues of more than £3bn by 2026”.
The firm, ranked eighth in the CN100 2023 table of top contractors, saw its margin broaden from 1.9 to 2.6 per cent.
Mace said international growth helped drive its performance, with contract wins in the Middle East, although the UK remained its largest geographical market and accounted for 93 per cent of total revenue.
Its construction operations delivered turnover of £1.73bn last year. This was a 26 per cent increase on the previous year’s £1.38bn and the highest annual total since 2018.
Mace Construct won 60 projects in 2023 – “the most we have ever secured in a 12-month period, 79 per cent of which was on a repeat-order basis”, said construction chief executive Gareth Lewis.
He added that 87 per cent of its £2bn revenue target had already been secured for 2024.
Major completions in London included the Forge office development (pictured) with Sir Robert McAlpine for Landsec, and a commercial retrofit and remodelling job for Great Portland Estates at 50 Finsbury Square.
Mace was also chosen as the delivery partner on three infrastructure projects and the asset replacement programme at London Heathrow Airport, including a virtual air traffic control tower using offsite construction methods.
The consultancy arm saw turnover grow by 24 per cent last year to reach £619.4m, on the back of projects for clients such as Manchester Airport, National Grid and the Ministry of Justice.
The group ended the year with cash at bank of £175.81m, up by 14 per cent on 2022. There was no short-term bank loan debt, although £50m is repayable after more than one year.
Dividends of £3.9m were paid out, slightly higher than the previous year’s £3.8m.
Staff headcount grew from 7,271 to 7,421 employees.
While Mace Construct delivered almost three-quarters of overall group revenue, Mace Consult boasted a secured order book of £3.9bn by the end of May 2024, more than three times as much as the construction arm’s £1.14bn.
“Consult’s forecast growth suggests that it will account for an increasing proportion of the group’s revenues in the future, which will increase average margins,” said Mace chief financial officer David Allen.
Simplifying the business model
Last year, the firm decided to step back from new direct property development and sold off its Mace Operate facilities management business in a management buyout.
Reynolds said the decision to step away from development and divest the facilities management business “will define the next decade of this organisation”, by simplifying the business model to enable the remaining Mace Construct and Mace Consult operations to work closer together.
“Development tied up a lot of capital for us over a long period,” he said. “At one point, our peak debt in March 2020 was £236m, all secured against assets. There are better ways for us as a contractor and consultant to deploy that money and get a better return for what we do. It’s actually been quite detrimental for the long-term business.”
Reynolds, who also co-chairs the Construction Leadership Council, told Construction News that he met chancellor Rachel Reeves twice last week after the election of a new Labour government earlier this month.
“More than ever, our industry needs consistency and clarity of pipeline,” he said in the accounts, which were signed off a week before the 4 July general election.
“Our growth relies on us and our supply chain understanding the likely pipeline of future investment and being able to scale our capacity and appetite for growth appropriately.”
Last October, Reynolds criticised the previous Conservative government’s decision to cancel the high-speed rail programme’s second phase, saying it will have a “chilling effect” on the UK construction sector.
Keir Starmer’s new Labour government would only deliver the Birmingham-to-Manchester leg of HS2 if it can be delivered within the fiscal constraints that Reeves has set out, he said.
“For HS2 phase two to go ahead there’d have to be some form of alternative finance arrangement, and the National Wealth Fund [proposed by the government] is probably not that. I think there is still a convincing argument for it to go ahead, but it needs an investable solution.”
Reynolds became chief executive of Mace in 2012 when turnover was £1bn so it has more than doubled in the years since. Asked for the secret of this success, his answer was simple: “Hard work.”
Listen to Mark Reynolds in conversation with CN editor Colin Marrs in the latest episode of our First Site podcast.
