Morrison's 5.1% margin

Morrison Construction Group's ability to generate tip-top margins goes on. Last week the group unveiled an interim operating profit margin of 5.1 per cent, up on the 4.9 per cent figure achieved in the same period last year.

"Very satisfactory," said Sir Fraser Morrison, chairman, as he unveiled the group's latest interim results (six months to 30 September) last week. Pre-tax profit rose to £7.6 million (£6.7 million) on turnover of £200 million (£170 million).

Morrison has three business streams: construction achieved an operating margin of 3.8 per cent, while the development division made 10.6 per cent. Morrison's overseas division, however, ran up a loss of £190,000, though the figure was well down on the previous loss of £900,000.

Sir Fraser announced a major restructuring of the company: Michael Martin is md of the new infrastructure division, Stephen McBrierty moves from group finance director to head the property division, while Gordon Morrison wins the post of MD of facilities management.

Some 80 per cent of Morrison's construction division's £140 million-a-year turnover comes from non-traditional methods of working. "With partnering, we enter an agreement to work to a budget," said Sir Fraser. "Then we come up with creative ideas and if we improve on the original figure, we split the improvements 50:50."

Keith Howell, group MD, said that term contracting is particularly suited to an innovative approach because the contractor is able to review the process and revise its methodology the next time round.

Morrison's FM business currently runs to £100 million a year. Most is locked into partnering contracts and FM is the fastest-growing part of Morrison's business. "We can grow it organically by 30-40 per cent a year," said Sir Fraser.

Asked if acquisitions were on the cards, Sir Fraser declined to be pinned down. "In March we announced our third set of full-year results [since flotation]. They were good, raising our profile so that people now bring proposals to us," he said, adding: "You would expect us to be measured and careful."

Morrison is keen to expand overseas in Russia and Eastern Europe despite a rocky ride in St Petersburg where two speculative developments with a combined value of £16 million are now expected to do little more than break even. One is a newly completed 6,000m2 office development, the other a hotel which is yet to be built.

While a slowdown in economic growth in the UK may be just round the corner, Morrison has seen no sign of this in either the volume of orders being taken or in margins. "Our forward workload is at a record £330 million," said Keith Howell, group MD, "and £100 million of this is post-March 2000, a result of long-term FM contracts."