Business Weekly - Cambridge, UK

A spread of businesses across more than one sector is saving Bedfordshire property developer, Kier plc, from major damage in the fall out of the world credit crisis.

Kier said that market conditions had deteriorated further since it first warned three months ago that the credit shortage was clearly having an effect on its Homes and Property businesses. However, the company said there was limited evidence of it affecting its Construction and Support Services businesses.

In its interim management statement for the period covering 1 January 2008 to date, Kier said its construction division continued its strong performance again reaching record levels of cash and order books.

Kier Regional was recently appointed by BAA plc as one of five framework contractors on a £650m, five-year project while the company has continued to see a strong flow of work in the education sector both on framework agreements and through traditional methods of procurement.

The Kent Building Schools for the Future project is closer to financial close which will provide an initial £100m of schools work with a potential for £150m more and Kier Construction has recently secured new contracts in Dubai.

In Support Services the Building Maintenance business followed a £400m, 10year Stoke contract with a £26m, four-year deal with East Durham Homes and has a strong pipeline of further contracts.

Conditions in the housing market have deteriorated further, however, over the last two months as mortgage availability and mortgage terms have continued to tighten, reflected in Kier's reservation levels for that period which are around 35 per cent lower than at the same time in 2007 leading to a reduction in expectations for sales for the year to 30 June 2008.

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