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Interest rates prompt Kier to keep PFI stakes


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.