Announcing a pre-tax profit rise of 28% to 13.8m for the year to 30 June 1999, Busby expressed his support for the new procurement routes. He said that, on balance, the PFI was significantly cutting time and cost overruns on projects.
He added: "I am optimistic that the government can be a best practice client, and I think the PFI and prime contracting will help that process. At this stage in any process there will be people who have misgivings, but we are convinced it is the right thing for the government and for us to do. The doubters have their place in life, but frankly, they are wrong."
Several companies have voiced concerns about the risk associated with PFI contracts and, more recently, the conditions attached to prime contracts. Prime contracting was introduced by the Ministry of Defence and gives one firm responsibility for co-ordinating the rest of the construction team.
But Busby said Kier PFI and prime contracting work would form an important part of his push to double margins in the next two years. He said operating margins in the construction division for the year were static at 0.5%. But a 25% increase in turnover helped lift operating profit one-quarter to £4m.
Busby said the good result was the result of a non-confrontational approach to clients. "A lot of the things the industry has been trying to achieve under various fancy names we have been doing for a while," he said.
The construction division was hit by a £1.5m operating loss in its international arm. Busby said this was because of "patchy" aid funding in the group's traditional markets and severe competitive pressures in Hong Kong.
Operating profit at the homes division rose by more than half to £12m on turnover up 63% to £105.2m. Busby said the acquisition of Bellwinch Homes in June 1998 was successful and had pushed up annual sales by 114 units to 600. Average sale price rose 27% to £130 400.
Busby said he welcomed the recent 0.25% interest rate rise: "It annoys me when housebuilders criticise the Bank of England for rises. I am more concerned with whether I have a sensible business in five years' time than I am with how many houses I can sell in the next five weeks."
