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Regeneration focus at Kier as profits rise

FINANCE - Contractor forms regeneration steering group as overall turnover and profits rise

KIER has formed a steering group to make a determined attempt at breaking into urban regeneration work.

Kier chief executive John Dodds said: 'To do urban regeneration, you ideally need contracting, social housing, residential and property development arms - and we've got all four.

'We've got representatives from the four divisions on this new steering group and we see lots of opportunity in this area.'

Kier's ambitions had been hampered by losses at its social housing operation and these continued into the year to June 2004. But the deficit was reduced to a figure Mr Dodds described as 'minor' He added: 'We had a bad year last year and hoped we'd break even this year but we didn't.

'In the current year, we will also lose a bit but we'll then be breaking even in 2006.'

Kier, whose chairman Colin Busby has retired after 35 years with the contractor, is also considering selling its 50 per cent stake in the Private Finance Initiative concession that is running Hairmyres Hospital in Scotland after refinancing the deal.

Kier has closed eight other PFI deals but will not refinance any of these. Finance director Deena Mattar explained: 'Hairmyres was an early deal and we got better terms.'

Excluding a goodwill write-off, Kier's contracting margins touched 1.5 per cent and the group is aiming to increase margins to 1.75 per cent within the next two years.

To reduce risk and achieve this level, Kier continues to reduce the workload at its major projects division, where turnover halved to £168.7 million last year.

In contrast, orders are booming at the regional operation, where turnover surged to £862 million from £787.6 million in 2003.