Barr highlights independence and moves to expand workforce Solomons and Rush spell out future strategy for Scottish construction company on the up and up

Solomons attempted to hammer home Barr's prospects as an independent player as the company prepared to file results for the year to March 31 which are expected to show pre-tax profits more than doubled, jumping from about GBP1.2m to GBP2.6m.

Operating profits are expected to be up about 45per cent at GBP3.7m with purely external turnover, stripping out intragroup transactions, 44per cent higher at some GBP215m.

Rush, who in 1995 sold the loss-making, Glasgow-based construction division of Shanks & McEwan for a nominal GBP1with cash on its balance sheet, highlighted a rise of more than GBP7m in Barr's net worth to in excess of GBP25m in the three years since he and his management team took over its running from Bill Barr. This appeared to confirm talk late last year, as the Barr auction was launched, that the company's owners were seeking a price of more than GBP25m. Solomons, while noting that the current management have an equity incentivisation programme based on operating profit, cash flow and "possible exit", said the Barr family still owned more than 50per cent of the issued share capital "at the present time", with Royal Bank of Scotland holding more than 20per cent, and the executive team also having in excess of 20per cent.

Solomons spoke publicly for the first time about "Project Burns", the name given to the exercise where the now Renfrewshire-based Barr invited and evaluated offers for all or parts of the business before deciding in the spring that none offered sufficient value.

This followed Project Dream, the name given to the turnaround exercise which Rush began three years ago. This involved selling non-core assets including a majority stake in Ayr United Football Club, which Rush said had been done to "take away the liability" rather than realise any significant price. It also brought the closure of housebuilding and facilities management operations and the disposals of interests in private finance initiative projects and of property.

Referring to Project Burns, Solomons said: "We were approached over a period of time for individual parts of the business, (with) some tentative (approaches) for all of the business. I think we took the view really on that they were bottom-fishing, and didn't take them seriously."

However, he added: "The board went to shareholders and shareholders basically gave us approval to explore those various opportunities, which we did. We appointed corporate financial advisers (Deloitte). We did (a sale) memorandum etcetera. It went far down the line. Due diligence was done and offers were received.

"The recovery, under Tony and the team, had gained momentum. When we looked at the strategy for the business and the prospects, the valuations (put on the company by bidders) just didn't come up to scratch. We went back to shareholders and shareholders agreed and were very happy to support the incumbent management going forward."

Bedfordshire-based Kier Group was one construction company which confirmed publicly that it had been in takeover talks with Barr.

Asked about the likely attitude to any fresh bid approaches which might arise, Solomons replied: "As chairman of the holding company, I think our stance would be, having gone through what we have gone through, we would be inclined not to respond too positively. Our strategy as a board is to remain independent, to recruit a senior executive.

"It has been a difficult period for staff, with all the publicity (surrounding the auction)."

All but about 100 of Barr's workforce are in Scotland, with a heavy concentration in Ayrshire and Wigtownshire.

A headhunter has been appointed to find the "senior executive", following 60-yearold Rush's decision to move on from a construction company which he ranks number two in size terms in Scotland to Balfour Beatty.

Solomons, who formerly chaired stockbroker Allied Provincial and the Scottish Stock Exchange, spoke highly of Barr's sports stadia business.

This business has built 60 stadia - with Celtic Park among the highest-profile.

He said: "We have moved from where we were three or four years ago, of being a civil engineering contractor, towards being an infrastructure contractor. What we have tried to do is work ourselves out of the normal contracting market. We are not there yet. We are getting there - getting into the higher margins based on providing higher technical skill.

"Our order book has got a substantial retail content now. It has substantial schools content. It has substantial stadia content."

Rush also pointed to value in Barr's steel fabrication plant in Creetown in Wigtownshire, pointing out increased costs of transport from such a far-flung location were offset by lower running expenses than similar facilities in more urban environments.

He pointed out Barr's steel design and fabrication capacity had enabled it to do jobs such as the new car park at Shields Road on the south side of Glasgow and the frames forTesco superstores - with the supermarket in Huntly in Aberdeenshire moving from foundations to opening in nine weeks even with work disrupted by snow.

This relationship with Tesco, Solomons emphasised, had been built up when formerAyr United chairman Bill Barr ran the company.

The business can trace its roots back to the late 19th century to builder and joinerW & J Barr & Sons, though its website points out that expansion into civil engineering and higher-value projects began in the late-1960s, with "major expansion" and moves into "non-core areas" from the late1980s to the turn of the century.

Rush, whose career has also included spells with Tarmac and Balfour Beatty, highlighted difficulties for local construction players in gaining the confidence of a UK national market-place. He pointed out that his more national following meant customers from outwith Barr's home territory had more confidence in giving it business.

He pointed to an increase in the output of the Barr quarries business, which with steel design is based in offices built on the former Killoch Colliery near Ochiltree in Ayrshire, from 800,000 to 1.5 million tonnes per year.

Rush said Barr's construction order book stood at GBP302m, and Solomons said this should grow further this financial year.

However, Solomons, who refers to Rush as a "workaholic", said: "In all my career in corporate broking, it has been one of the fastest turnarounds."

Rush, who is married to a Norwegian and has a second home in Norway, is tightlipped about what he might do next.

He said: "People say I will never retire and maybe I won't. It will depend on what comes up and when."