City opinion formers say he is a candidate for best chief executive in UK contracting, and the Square Mile has backed his Euro ambitions by tripling his firm's share price. So Amec's boss must be a happy man, mustn't he?
TWO WEEKS AGO, SOMETHING ALMOST unprecedented happened in the City. A construction company announced its results to the financial equivalent of rave reviews. Buy notes circulated; the talk was of promises delivered. But the man at the centre of it all, Amec chief executive Peter Mason, was not about to take a break from running a £3.4bn business to celebrate his success. "Oh no," he says. "I just had a gin and tonic on the train home to Cheshire."

Misplaced modesty indeed, but Mason's dislike of putting himself on display appears to go deep. Later, he talks about the City's reaction in even more dissociative terms. "Good results are only the start. I see the problems and issues, rather than the good things. I don't sound miserable, do I?" Actually, the way he tells it, he does.

But a quick grin or raised eyebrow – even a smile when some City flattery is repeated – suggest that he may not be telling the whole story. He is not really miserable or downbeat. He is just a practical contractor who has seen too many others fall to earth after flights of fancy. He is private and, well, Scottish. And guid, prudent, Presbyterian Scottish at that.

The City has long admired the single-minded focus that keeps Mason at his desk 11 hours a day and away from the distractions of the conference circuit. "He's a first-rate operator, and a leading candidate for best chief executive in UK contracting," says Mark Aedy, a managing director at investment bank Bankers Trust and a firm friend. "He gets a big tick in our book," adds another senior banker.

What they appreciate is the determination that is transforming Amec from another low-margin contractor into a "life-of-asset" designer, contractor and services provider. For Amec, the building business will become no more than the "sandwich filling" that occupies perhaps two years in a 10- or 20-year client relationship. The results are already showing: profit is up 50% to £71.4m, thanks in part to margins reaching 4% on service contracts.

In particular, the City admires Amec's resolve to join the European superleague. Mason's 1996 decision to buy a 42% stake in French electrical, rail and building contractor Spie – a move that pre-dated recent talk of cross-border contracting - is now considered something of a masterstroke. The deal originated in Mason's high regard for Spie when he worked with the company on the Channel Tunnel, and is now delivering a healthy profit of £14.4m on 2.5% margins.

And if, as expected, Amec exercises its option to buy Spie outright in 2001, the combined turnover of £4.3bn and a balance sheet of about £300m should leave Amec well placed to compete with Hochtief or Dragados to take stakes in, and profits from, the world's most valuable private finance initiative and infrastructure projects. "Between Amec and Spie, we should have a lot of the skills covered," Mason says.

Mason certainly seems more prepared to enter the European arena than other industry chief executives. "Over time, rightly or wrongly, I see Europe becoming more of a single entity," he says. "We are already seeing investors and fund managers looking across Europe for investments, and could see one European market for equities."

The City's response to all this was to lift the firm's share price to a high of 244p, continuing the re-rating of Amec's shares from 70p since Mason arrived from Balfour Beatty three years ago. But some believe that Amec's share price is still artificially low because of its association with other unpopular construction stocks. Now at about 225p, shares are trading at only 10 times their earnings per share, which some analysts believe is inconsistent with Amec's future prospects.

The positive reaction was partly down to Mason's City-friendly decision not to categorise turnover under construction, civil engineering and oil and gas, and instead to list it under capital projects, services and housing and investment. The recalculation produced a "high-quality" fee income of £859m for services, a figure seized on triumphantly by analysts as greater than outsourcing giant Serco's turnover.

However, the figures offer little encouragement to any contractor hoping to follow Amec. Two business areas with high barriers to entry – oil and gas services and rail maintenance – account for £380m and infrastructure services another £150m. The new holy grail of buildings-related facilities management accounts for only £60m, and seems low in view of Amec's re-branding.

Of course, as with the decisions to enter these restricted sectors, the seeds of Amec's current success were sown long before Mason was poached. He describes his contribution as "cleaning and moving along" the transition, and dismantling internal barriers. "When I came, everything was managed from firm silos," he says.

Over time, rightly or wrongly, I see Europe becoming more of a single entity

Others attribute his success to recognising that his expertise lies in strategy, and allowing board members such as chief operating officer David Robson and divisional MDs to handle day-to-day operations.

The Mason story

Ayrshire-born Mason, 52, studied civil engineering at Glasgow University. His career in senior management started in 1980 as managing director of Norwest Holst's Scottish business. From 1992-96, he was chief executive of Balfour Beatty, joining Amec just in time to beat off a raid by Kvaerner. Steve Kinsella of specialist contractor Dew Pitchmastic, a colleague from his days at both Balfour and Norwest Holst, says that he was "good at relating to everybody – the loyalty he commanded was exceptional".

Mason was also a City favourite long before Amec. In fact, his star was in the ascendant after he steered the management buyout of Norwest Holst in 1985, a deal that marked his transition from rank-and-file contractor to business strategist. Six years later, when Norwest Holst was bought by French giant SGE Groupe, his stake fetched more than £1m, and he is said to live in "some style" in his 16th-century house in Cheshire.

He takes his practical style home with him. His weekends are occupied with "project managing" home improvements and renovating classic cars. In fact, anything that does not involve a plan and outcome does not seem to be his strong point. Although Amec's head office is next door to London's Barbican Centre, he is unabashed to admit that he has never been there. He does not hanker after an alternative career, and the response to more subjective questions tends to be a variation on "I hadn't thought of it like that".

What now?

Mason is far more comfortable talking about the next milestones on the Amec success story. The path ahead has already been marked out, and includes the sale of 1700-unit, £200m-turnover Fairclough Homes to Texas-based Centex, and a decision on the future of loss-making German subsidiary Kittelberger, now reduced to caretaking three small contracts.

Fairclough was becoming an uneasy fit with the rest of Amec's businesses, given the contrast between its relatively short cycles and Amec's longer-term horizons. "There was a legitimate financial synergy – the rest of the business generates cash and housebuilding uses it – but no activity relationship between Fairclough and the rest of the business," Mason explains. Cash freed by the sale will be invested in PFI projects.

He also takes the opportunity to draw a line under last year's speculation that Amec was interested in Tarmac's contracting arm. Mason confirms that "we looked at a number of major UK businesses, but it wasn't for us. We have worked hard to exit traditional UK contracting". In fact, Mason seems satisfied that Amec – or the Amec/Spie combination – has reached an optimum size, but would consider "bolting on technical or design skills that would bring a competitive advantage".

Other developments include increasing the percentage of negotiated work above its current 60%, working with the Ministry of Defence to make prime contracting a success, courting more of the high-tech and pharmaceutical clients that made such a contribution to this year's results, and cashing in on the leading edge of corporate PFI.

Personal effects

Who’s who in your family? I’m married to Beverly. I have two sons – Philip works for Sky Sports and Barry owns a pub and restaurant in Cheshire. And two stepchildren – William is studying for A levels, and Gemma has just graduated in history. What car do you drive? A Mercedes. Beverly has a Shogun. What do you do in your leisure time? I spend it with family and friends in Cheshire. I’m always happy to get home. I walk the dog or do work on the house –I don’t like sitting around. I try to go to Murrayfield for the rugby a couple of times a year. What book are you reading? An old book, 1915-ish, about Ernest Shackleton’s ill-fated expedition to Antarctica. It was a Christmas present. I’m usually reading something – usually junk. Did you look forward to this part of the interview? No.