Last updated 5 August 2022
RJ McLeod (Contractors)
RJ McLeod is a Scottish building and civil engineering contractor. The group works in the roads, marine, infrastructure, energy, public realm and waste sectors. RJ McLeod has been trading for more than half a century, employs around 500 people and turns over nearly £200 million a year.
Financials
After falls in the two previous years, turnover recovered in 2020 and has since grown apace. In the 12 months to November 1 2021, turnover surged to £192.3 million (2020: £104.7 million) and profitability more than doubled. At a pre-tax level, profits reached £25.0 million (2020: £10.0 million). At an operating level, profits leapt to £23.6 million (2020: £9.5 million).
To view the financials for R.J. McLeod (Contractors) Ltd, visit Companies House and use Company ID SC028565.
Operations
RJ McLeod operates from a headquarters in Glasgow and another office in Dingwall. The group also has a property ownership division, Thomas Gebbie, and has wide exposure to the civil engineering sector and works on roads, marine, infrastructure, energy, street-scaping, waste, water and rail and also works in the building sector to some extent.
The group does a large amount of work for public sector clients from Transport Scotland and the Vehicle & Operator Services Agency to local authorities, such as East Ayrshire Council, and quangos, including the Clyde Gateway Trust, and is also working on the regeneration of Port Glasgow.
The company is working on the £36 million redevelopment of Portree Harbour in the Highlands (Project ID: 17291330) and a £15 million scheme to form slips roads at the Winchburgh junction of the M9 (Project ID: 20364119).
RJ McLeod has successfully expanded into the wind farm sector for clients such as E-Gen, RWE Renewables, SSE and Vattenfall on projects including the £400 million Scoop Hill Community Wind Farm (Project ID: 20480607). RJ McLeod is employed as a sub-contractor on these projects, where the often includes the cost of the turbines, which are typically not the group’s responsibility.
RJ McLeod is on a number of major framework agreements, including the £1.1 billion National Framework for Demolition and Land Preparation Works (Project ID: 21352602) and Pagabo’s £1.6 billion four-year Civils and Infrastructure framework (Project ID: 21270187).
Glenigan Data
In the 12 months to Q2 2022, RJ McLeod won main contracts totalling £62.8 million (2021: £73.3 million).
Conclusion: Whipping up a storm
A reduction in major public sector projects depressed civil engineering activity in Scotland and RJ Mcleod suffered as a consequence. After a fall in turnover in 2011, RJ McLeod strengthened in successive years only to fall away in 2017 revenue and a recovery did not emerge until 2020.
Turnover ballooned by 84% in the latest trading year and has more than doubled since 2019. This growth has been achieved without damaging profit margins. At an operating level, the margin hit 12.3% (2020: 9.1%), which is in the very top echelon for a contractor focused mainly on civil engineering.
The group has grown its workforce to service this exponential growth in workload. The average number of employees rose 19% to 473 people (2020: 397 people) and this pushed the wage bill up by 56% to £33.0 million (2020: £20.8 million).
Financing this growth has only been possible to the group’s debt free position and strong cash levels. At the end of October 2021, cash at bank and in hand strengthened to £55.0 million (2020: £41.7 million), while debts stood at £22.7 million (2020: £19.0 million).
As RJ McLeod had earlier sought to boost workload, the group surged into Glenigan’s top 100 ranking of the industry’s main contractors. However, as main contracting work has been replaced by more specialist work the group’s main contracting workload fell. RJ Mcleod dropped out of the Top 100 and remains outside this ranking, suggesting that the growth in turnover comes from work secured earlier in the cycle.
A move into the wind farm sector had buoyed revenue earlier and this sector remains a steady source of work but these projects can be prone to delays, particularly due to opposition at the planning stage. On the £30 million Moscow Wind Farm in Strathclyde, RJ Mcleod was appointed in 2018 but the scheme did not start for another three years with turbines finally delivered in the summer of 2022 (Project ID: 12027604).
The focus is mainly on civil engineering, which provided 93% of the order book by value in the 12 months to Q2 2022 with the balance in the building sector (2021: 100% civil engineering). The group has managed to grow turnover without taking on larger projects, which are inherently riskier. The value of the average main contract awarded in the 12 months to Q2 2022 was £8.9 million (2020: £14.7 million) according to Glenigan’s data.
Scottish contractors had voiced fears over the impact of Brexit on skills and confidence suffered as major civil engineering contracts were not replaced in the pipeline, but RJ McLeod’s appears to be defying these predictions and has emerged from the worst of the pandemic in strong shape and looks to be in a good position going forward.
Winning Work With RJ McLeod
RJ McLeod is a member of the Scottish Construction Safety Group, Grampian Occupational Safety and Health Group, the Scottish Plant Owners’ Association, the Scottish Renewables Forum and the Highland Renewable Energy Group. The group traditionally procured work through a lump sum basis but is embracing all new forms of procurement, including design and build, two stage tenders and partnering work.
The group works with Causeway and has extended its use of the group’s systems from Jobmaster and Tradex to an Enterprise Content Management system.
RJ McLeod is accredited to the Considerate Contractors scheme, CHAS and two Achilles’ schemes, the Utilities Vendor Database (UVDB) and UVDB Verify. Environmental activities are organised and managed through an Environmental Management System designed around the ISO 14001 Environmental Standard. The group’s environmental policy is reviewed regularly and available here. RJ Mcleod has held supply chain events with members of the supply chain on major projects such as the Bhlaraidh Wind Farm.
Key RJ McLeod procurement contacts include:
Bid manager – Hamish Seaton
Tel: 0141-764-2411
Estimator – Martin MacKenzie
Tel: 01349-860000