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Interest rates prompt Kier to keep PFI stakes

FINANCE

KIER is unlikely to sell more of its Private Finance Initiative stakes provided investment returns stay at current levels.

The firm has £18.2 million set aside for PFI work with 11 schemes either operational, under construction or at preferred bidder stage.

Kier sold a stake last year on a scheme in Port Talbot, south Wales, but chief executive John Dodds does not expect any more sales. He said: 'At the moment, the yield is 15 per cent and that's a good investment.'

Kier's contracting arm is taking on more Government work, which comprised 37 per cent of orders and should hit 40 per cent this year.

Mr Dodds said: 'In health, ProCure 21 is slower than we expected but we still secured £140 million-worth of work.'

A strong level of orders for new homes from the previous year helped Kier overcome a weakening housing market in the final quarter of last year.

Kier sold 721 homes in the second half, up from 562 in the same period a year previously. Sales were boosted by housing association work but this pushed the average selling price down £4,300 to £180,500.

Kier is ploughing money into buying land for housing and had 5,256 plots at the end of last year, which is four years' supply at current build rates.