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McLaren eyes Premier League boost after turnover growth

McLaren Construction is eyeing the chance to develop a Premier League football club’s new training facilities and build a new stadium for a club outside the top division as it plots expansion in sport and leisure developments as part of an overall consolidation drive this year.

Chairman Kevin Taylor told CN the contractor and property developer would be seeking to increase margins this year after McLaren posted a turnover boost of £110 million to 31 July 2012, even though pre-tax profit dropped from £7m to £6.1m.

Tottenham Hotspur confirmed McLaren as its main contractor to build a new supermarket and commercial/educational space to the north of its proposed new stadium last year.

McLaren Construction was previously employed by Spurs to build the club’s new state-of-the-art training centre in Enfield (pictured) and Mr Taylor confirmed the company was taking aim at more sports-related developments.

He said: “We have one other Premier League training centre within our sights and we are one of two looking to build a stadium with a [non-Premier League] team. We have got individuals we have recruited at a senior level to help us with that.”

Among the London clubs in the top division considering new training facilities or expansion are QPR, Reading and Chelsea, while West Ham is currently preferred bidder to move into the Olympic Stadium.

McLaren’s targeted strategy of expansion in London saw a 349 per cent increase in revenue in the city in the year, while revenue grew in the Midlands and North (79 per cent) and South (14 per cent).

Mr Taylor said the company would continue to operate from its regional offices including Leeds, Warrington and Birmingham and had no plans to open new regional offices, as it now has a “national presence”.

He added that recruitment would be limited in the year ahead, with the possible exception of one or two senior appointments. He expected average project values to stay at around £10m, although the firm is not averse to taking on smaller contracts to suit clients’ needs.

“The national market is very tough,” Mr Taylor said. “On average our contract values will remain consistent with last year but if a customer wants us to do a smaller job we will. What we won’t do is over-promise.

“We do see contracts we have to walk away from [because of rivals’ cheap bids]. I wouldn’t call it suicide bidding but it’s inevitable that contractors will do it at certain points because they need projects more than at other times.”

McLaren’s sole overseas operation, in the United Arab Emirates, is expected to expand into new sectors while building on existing areas of expertise.

McLaren Construction and UAE managing director Phil Pringle said the firm had secured new projects in some core sectors including distribution, retail, residential and hotels, and will also target continued expansion into commercial offices, mixed-use buildings, student accommodation, education, sports and leisure.

Mr Pringle told CN: “The market in London is a small area but the volume of work is significant compared to the rest of the country. The further north you get the decent opportunities are less in quantity and the market is more aggressive in terms of price.

“The clients we work for don’t expect cheapest price bids. It’s not always the answer in terms of quality and delivery. Like Land Securities don’t put massive long tender lists together, they keep it at a maximum of four.

“There is a lot of hungry contractors in the north who need to chase work and we are not getting into sucide bidding as that only leads to one thing when people are buying work.”

Mr Taylor dismissed the suggestion the company could be sold as “nonsense” and added: “Being a privately owned business gives us a big advantage because we are agile, and Phil and I can make quick decisions. We have already looked at other international areas but have decided not to go forward in those.”

Mr Pringle said the company had looked at countries including India and China in terms of growth, but had ruled them out for now. He said the group would focus on Dubai, Abu Dhabi and opportunities in Qatar when trying to win work abroad.

The company is not actively looking at acquisitions, Mr Taylor said, and would rather grow organically, but he would not rule out acquisitions in future “as and when opportunities arise”.

McLaren financial highlights

  • Total turnover increased from £266.6m in 2011 to £376.4m in 2012.
  • Profit before tax was £6.1m – down from £7m in 2011 – while total operating profit was just under £4m (2011: £5.3m).
  • Turnover increased in the target regions of London (349 per cent), the South (14 per cent) and in the Midlands and the North (77 per cent).
  • The group’s development pipeline now has an estimated gross development value of more than £500m.
  • The company paid £17.5m in wages and salaries to staff in 2012 (2011: £13.7m) and its average monthly number of employees was 313 (2011: 253).
  • McLaren’s property division contributed more than 7 per cent to the construction division’s turnover in 2012.

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