Kier Group almost tripled its operating profits within its property division to £10m in the six months ended 31 December.
The massive increase, up from £3.4m in 2010, was caused by the group’s continuing strategy of selling its mature PFI investments, progress on its £700m development portfolio and activity in its homes business.
Kier said that private housing completions during the six-month period exceeded expectations with 280 completions – up from 176 in 2010. Affordable housing completions dropped from 217 to 196, but Kier said that this was in line with expectations.
Revenues within the property division fell during the period under review from £126m to £108m. Group turnover was down from almost £1.1bn to just over £1bn, with pretax profits up marginally from £31.3m to £34m.
Kier said that it expected to increase the level of capital investment in its development business to £80m by June 2013, on which it is targeting a 15% return on capital.
Chief executive Paul Sheffield said: “Our property division continues to trade well and is increasing its contribution to the group’s results. The £700m pipeline of development schemes, £30m of PFI assets and the ongoing activities of the homes businesses, including cash generation from the land bank, provide a robust platform to sustain strong performances from this division in the future.”
He added: “The current financial year will be challenging for the property market, with liquidity constraints a major factor at both corporate and consumer level. However, we believe this presents Kier with a significant opportunity to utilise its strong balance sheet position to unlock viable schemes that have been unable to progress due to the lack of funding.”