McLaren Construction ended its 2022/23 financial year with revenue of £964m, a 22 per cent increase on its 2021/22 total of £751.7m – and it expects further growth in the year to come.
The latest annual financial results exceeded expectations, as McLaren had forecast full-year turnover of £878.5m in the 2021/22 accounts filed with Companies House.
The increased revenue translated into a higher pre-tax profit of £6.4m, compared with £2.04m in the previous year, which followed a Covid-related loss of £12.4m in 2020/21. The 0.7 per cent margin in the year ending 31 July 2023 was more than double the previous year’s 0.3 per cent.
Speaking to Construction News from the contractor’s corporate headquarters in Canary Wharf, group chief executive Paul Heather predicted that the current trading year will see turnover “go beyond £1bn”, adding: “We can see a good pipeline, and good opportunities to keep us in that region.”
But while breaking the £1bn barrier would be a welcome achievement, group chairman Kevin Taylor emphasised that “quality of construction and sustainable profitability will always be the most important goals for myself and our executive team”.
In a statement, the London-based contractor cited “strong performances in the commercial-office, leisure, industrial & logistics, residential and data-centre markets” as the main reasons behind its second consecutive year of turnover growth, following a 39 per cent leap in the year to 31 July 2022 as the firm recovered from the impact of the Covid pandemic.
More than £200m of revenue is in the pipeline from work in health, education, building-safety recladding (for local authorities and private developers) and refurbishment. Heather referred to McLaren’s experience in “heavy cut-and-carve repurposing of existing buildings” with the completed Hub Victoria scheme in London. Ongoing refurb work for the contractor in the capital includes an office tower job for Thirty High near Victoria Station and the overhaul of Angel Square in Islington.
“We’re seeing more and more inquiries [for office refurbishment and modernisation], particularly in relation to the decarbonisation agenda,” Heather added.
In its results announcement, McLaren noted that it has a place on 21 frameworks for local and central government, such as the Department for Education and the NHS, which Heather and Taylor said aligns with a corporate strategy to broaden the contractor’s public sector footprint.
“There’s a push into the life-sciences market,” Heather added. “I think our expertise in industrial logistics, data centres and health all folds into that. We notice a number of schemes on the drawing board that we’ll be interested in.”
The firm handed over 19 projects over its latest financial year and work continues on 75 jobs in the £10m-£220m value range. Examples include the £200m ExCeL events venue (pictured) in East London, with completion targeted for October this year. McLaren replaced Sir Robert McAlpine on that job in November 2022.
Heather said that delivering large projects “is in McLaren’s DNA”, but he added that “we are also staying faithful to our roots by continuing to work on smaller contracts. We will not turn our back on this as we grow because we wish to spread our skillset across a range of different projects and to develop our teams accordingly.”
McLaren is investing 0.3 per cent of turnover (£2.9m) into digital transformation, building safety and sustainability. Taylor described this as “future-proofing” and Heather emphasised that ploughing revenue back into the business is essential.
“Quite rightly, the Building Safety Act [BSA] is making contractors get things right in terms of making sure that when we hand a building over, everything is in line with what’s required,” said Heather. “And that takes a lot of technology input and training. A management system that we have in place is being updated to accommodate the [BSA] gateways that have been put in place.”
He added that McLaren’s learning and development department “is as busy as it’s ever been”.