A concerted push into the shop fit-out market helped Wates Construction on its way to a strong order book for the current year, according to finance director Jonathan Houlton.

Having bought shopfitter Charles Barrett Interiors in June 1998, prospects for 1999 have been boosted further by the recent award of a £25m contract to fit out John Lewis’ flagship store in Southampton.

The contracting arm of Wates recorded a rise in pre-tax profit of almost one-third to £6.8m for last year, although turnover increased slightly less, by 20% to £289m. Profit was aided by an 18% improvement in operating margins to 1.3% of contracting turnover.

During the year, the company was asked to participate in the Construction Best Practice Programme. It also set up a specialist rail division in Crewe. Houlton says the next nine months’ strategy will be built around supply-chain improvements and partnering with clients.

The company claims that 60% of its work is negotiated and 50% is “delivered through long-term relationships”. It lists Orange, Brixton Estate, SmithKline Beecham and Glaxo Wellcome among its established clients. “It seems that the newer growth industries such as pharmaceuticals and telecoms are more open to long-term relationships,” said Houlton.

He added that Wates plans to become more involved in the private finance initiative following its recent gaining of preferred bidder status on a schools project in North Wales.