Stephen Stone had just taken up the top job at Crest Nicholson when rumours began to circulate that Gerald Ronson’s Heron International was hatching a second takeover bid.
His response is to keep a cool head and take care of business.
The bird is circling, and the word is that it is preparing to swoop. That’s how Crest Nicholson’s senior management refer to the rumour that Gerald Ronson’s predatory Heron International is contemplating a second bid for the company. The housebuilder’s top brass have joked about “the bird” since Ronson’s failed bid in March, but the gag masks the fact that its new chief executive is taking the rumour, and Ronson, with deadly seriousness.
Stephen Stone, 51, took up the top job on at the start of November and 22 days later was contentedly releasing a trading statement to the effect that business at Crest had been in line with expectations, with private housing completions up 3% from the 2004 total of 1812 units and average selling price up 5% to £220,000. The following day, Stone’s honeymoon was over as stories circulated that Ronson was poised to take another stab at him.
When Heron, which owns a 23.4% stake in Crest, made its first bid in March, a fierce fight ensued in which the housebuilder triumphed. Under stock exchange rules, Heron had to wait six months before making a second bid. The expiry of the time limit has inevitably triggered speculation … which Stone refuses to be drawn on. All he’ll say is: “We’re simply concentrating on what we have to do and we have got a clear strategy on how to do it.”
Like his predecessor John Callcutt, Stone is stamping his personality on the company.
For the ebullient Callcutt, that meant the “differentiator strategy”, intended to make Crest stand out through the design of its homes and its customer service. Sure enough, the company has since won a string of awards for design and customer service and has been bedecked with government praise for schemes such as Ingress Park in Greenhithe, Kent, designed by Gardner Stewart Architects. Behind the scenes, however, the company was grappling with the cost of having 68 house types on one site.
Stone’s personality is different from Callcutt’s. Those who have worked with him describe him as “focused, a very good negotiator”, “hands on” and “a details man”. So, not surprisingly, Stone plans to bring a more rigorous discipline and standardised processes to the differentiator strategy. There is even talk of “standard house plans”.
Stone is quick to point out, though, that he is not advocating a return to bashing out boxes. He says: “There’ll be standardisation, but it won’t apply to the exterior of homes. It’s crazy that half our portfolio is apartments but we have a hundred different types.” Stone estimates that the build costs of industry leader Persimmon are about 10-15% lower than his own, so he sees clear scope for savings: “If we can save £1 per square foot, that will be £3m on the bottom line.”
He also recalls one particularly challenging non-housing assignment from an Architectural Association tutor: to design a brothel accessed via a gent’s urinal …
Despite talk of tough conditions for housebuilders, Stone sees opportunity in all areas of his company, which has been nudged into the housebuilding top 10 by the Persimmon–Westbury deal. There is potential for organic growth in private housebuilding in areas where the company does not have much coverage, such as between the Midlands and the M25, he believes.
The company has won a lead over many of its competitors with its activities in urban regeneration (it was a triple winner at this year’s Regeneration Awards), and now regularly finds itself competing against Berkeley Group for urban projects. Major mixed-use schemes such as the 1 million ft2 Bristol Harbourside, designed by Edward Cullinan Architects, will deliver 300 homes next year.
The renewal of existing social housing estates has risen to prominence with Park Central in Birmingham, and the company is pushing to do more, notably as one of two bidders to redevelop the Ferrier estate in Kidbrooke, south London.
It was the chance to head Crest’s eastern region a decade ago that brought east London-born Stone to the company. He served as chief operating officer under Callcutt, who remains at the company as deputy chairman with a brief to cover large-scale regeneration. The two have made a close team with, as one person put it, “Stephen being a Porsche driver and John happy with a banger”.
Having trained as an architect, Stone has been the ideal man to deliver Callcutt’s quality agenda. “It has been very helpful in that I can look at a piece of land and visualise the opportunities there,” he says. He wanted to work in housebuilding because it produced his most difficult student assignments, and found his first job in the industry working for Trisha Gupta, Countryside Properties’ chief architect.
A youth centre in the borough of Newham, clad with bright yellow cladding panels (designed in his “Richard Rogers period”) is testament to his design skills. He also recalls one particularly challenging non-housing assignment from an Architectural Association tutor: to design a brothel accessed via a gent’s urinal, an exercise intended to teach students about circulation.
There may not be much call for that skill in a top 10 housebuilder, but in an industry dominated by accountants and land directors, Stone’s combination of architectural training and business focus may help crack a challenge housebuilders have long wrestled with: how to balance quality and cost. If, that is, he can keep the bird at bay.
Best and worst …
What’s the best thing about your new job?
Going into the office or on site and not knowing what you will have to do. I don’t have a set diary. Also, I love standing back and seeing what a transformation development can bring to areas such as Park Central.
And what’s the worst thing?
That you are responsible for 900 people, and that therefore you have just got to keep pedalling …