Firm set to return to black in 2022 after problem job and covid kept it in red last year
McLaren says it has not yet seen any of its jobs put on hold by jittery clients in the wake of the government’s mini-budget debacle.
The contractor, which also includes a development arm, admitted the events of the past few weeks had made clients more cautious with two-stage tenders taking longer to wrap up.
But chairman Kevin Taylor said this week: “At this point we haven’t seen any projects put on hold. It will be interesting to see the answer to that question in three months’ time.”
On Monday, new chancellor Jeremy Hunt binned most of his predecessor’s plans for growth after the pound crashed and the Bank of England was forced to step in to bail out pensions funds.
Taylor added: “People just want to see things settle down. We have been back and forth. The markets reacted poorly to the mini-budget and that’s been reversed. They won’t reverse it again, that’s it now.”
Taylor and group managing director Paul Heather, brought in earlier this year after leaving Sir Robert McAlpine last autumn, were speaking as the firm said the impact of the pandemic and a problem contract in Brighton kept it firmly in the red in the year to July 2021.
But Heather said it was on track to return to the black for the year to July 2022 with a “modest” profit – expected to be between £1m and £10m on turnover up one third to £726m.
The firm is expecting turnover for the current year, which ends next July, to be around £850m with 80% of that already secured 10 weeks into the new financial year with Heather adding McLaren has around half of its 2024 turnover also nailed down.
Heather said concrete frame subcontractor O’Keefe going bust over the summer had meant it had to resequence large parts of its Edward Street mixed-use scheme in Brighton. “It got delayed into a period when we got hit by a big increase in costs because of inflation,” Heather added.
The £75m deal for First Base is due to be wrapped up shortly but the problems, as well as the impact of covid and provisions to repair historic cladding work, meant the firm racked up a £12.4m pre-tax loss on top of the £13m loss it posted the year before.
McLaren said O’Keefe’s demise was the first of its major subcontractors to sink in the wake of the pandemic and Heather added: “We do our due diligence and we haven’t always chosen the cheapest but we’re finding at the moment that some firms can’t fix a price for a duration. We are having to think differently and bring stuff in and store it until we need it.”
McLaren, whose current jobs include a new HQ for the Lebanese firm that owns Currie & Brown and a scheme to turn the former Top Shop flagship into a new Ikea store, said it also spent upwards of £1.5m during the 2021 year upgrading its back office systems such as IT networks as its workloads grew bigger.
Heather, who before McAlpine worked at Skanska, said it was also looking at jobs that were traditionally the domain of the larger Tier 1 contractors. “There is nothing stopping us going after that size of project but there are opportunities across all levels from the £30m, £40m schemes through to those at £150m and £200m.”
Group cash at the year end was up from £39m to £44m with the accounts showing the firm was handed £197,000 in furlough money during the period, down from the £1.2m it picked up the year before.
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