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Clugston to refinance its PFI concessions

FINANCE Construction group aiming to increase capital to invest in further public bids

SCUNTHORPE-based construction group Clugston is considering refinancing its Private Finance Initiative concessions.

The firm has two PFI deals - Queens Medical Centre in Nottingham and Sedgefield Community School - that have been up and running for around two years.

John Burnett, chief executive of Clugston's construction arm, said: 'We're in the process of looking.By this time next year we'd hope that something positive will have come out.'

Clugston is preferred bidder on three more PFI deals and refinancing its concessions, which is similar in principle to re-mortgaging a domestic house, would enable it to invest in more bids.

Turnover at Clugston's construction arm rose £2.7 million to £68.2 million in the year to January 2004 and operating profits edged up £31,000 to £643,000, giving the business a margin of 0.9 per cent.

This operation includes drainage and pipeline subsidiary Ferro Monk, which suffered as spending on water projects failed to come on stream and jobs had to be cut.

Mr Burnett, who expects construction turnover to hit £80 million this year, added: 'Ferro Monk is still struggling as customer spending is sporadic. It is very difficult to get your resources right.'

Around 130 people left Clugston's payroll last year as the workforce was cut to 688.

Most of the remainder of Clugston's work comes from a distribution arm, where turnover reversed £855,000 to £12.5 million and operating profits slipped to £794,000 from £1 million.

Despite this, Clugston's cash position improved after offloading plant arm St Vincent to Speedy Hire and commercial parts operation HS Astec to its management for a total of £4 million.