Streamlining will help Kier reduce debt

Trading was particularly strong in the property division, where operating profits were up by a third at £34m. Sensibly, 85-90 per cent of all work is constructed on a pre-let basis, and building work covered offices, industrial property, care homes and student accommodation.

Greater emphasis has also been placed on partnership agreements within the residential division, where there is now a £2bn pipeline of work. It also launched a 10-year housebuilding joint venture with Homes England and Cross Keys Homes. This provides a capital efficient model for housing associations, local authorities and the private sector to deliver more much-needed affordable homes.

Construction covers building in such sectors as schools and hospitals, with the added bonus of further work from the Heathrow airport expansion project as well as work at other airports. Margins here are relatively thin at two per cent, but the order book currently stands at a record £5bn, with contracts awarded in the year to June totalling £2.7bn. A growing trend by public and private sector clients to operate through framework agreements has helped Kier to develop good earnings visibility, with over 70 per cent of all new work secured through these types of arrangements. Key awards included a 10-year defence infrastructure agreement worth up to £750m and a four-year agreement with Strathclyde University worth up to £250m.

The services division was underpinned by highways and utility business, with revenue boosted by the first full-year contribution from McNicholas. Operating margins were slightly lower at five per cent, but the order book rose from £4.7bn to £5.2bn, and 90 per cent of forecast revenue for the year to June 2019 has already been secured.

For that year, analysts at Numis are forecasting adjusted pre-tax profits of £153m and EPS of 129p.