Yet Edinburgh-based Morrison Construction was yesterday basking in the glory of an impressive first set of preliminary results since the shares were placed at 115p in October, valuing the company at pounds 77m. Morrison's warm reception continued, with the shares rising 2p to 163p on the figures.
The reason Morrison has been able to buck the market trend is that only a third of its business comes from traditional competitive tenders. The rest is gleaned from public finance initiative (PFI) work, property development projects and working with clients on creative design solutions.
Proof that Morrison is not chasing market share for low- or no-margin work came from the turnover figure, which fell in the year to March from pounds 218m to pounds 210m .But operating margins continued on their upward path, rising from 3.5 per cent to 5.5 per cent, resulting in pre-tax profits 50 per cent higher at pounds 11.4m. All four divisions - even housing - chipped in, though the biggest contribution came from building and property development, where operating profits of pounds 6.1m were made on sales of pounds 98.4m.
The pounds 19m capital injection from the placing has left the balance sheet in good shape with net cash standing at pounds 18.2m.
Brokers tweaked their forecasts higher and now look for pre-tax profits of about pounds 14m. Further growth could come if overseas contracts - only 5 per cent of turnover - bear fruit or new life is breathed into the Government's struggling PFI initiative. In the meantime, a forward p/e ratio of 12 looks about right.