UK Construction Services saw £9m in payouts as the division is streamlined from six business units to three and 650 staff will be cut from the 12,000-strong workforce as 35 offices close.

The figures were contained in half-year result to June 29 2012 released to the City today.

The restructuring and cuts will be complete by January 2013 and will cost up to £75m but will deliver £50m in annual savings to help Balfour cope with tougher construction markets.

Headline results show group revenue increased to £5.535bn from £5.222bn last time while pre-tax profits edged-up to £154m from £138m.

But things were tougher in the construction market where profit dipped to £53m from £67m despite revenue rising to £3.5bn from £3.27bn.

Construction margins also fell from 2% to 1.5% as “volume and margin pressure remain.”

Balfour said it is now adapting to a “post-Olympics” world in the UK after delivering major public projects including the Aquatics centre.

The firm said: “In the ‘post-Olympics’ world, the UK business has been focusing on replenishing the order book with more varied, smaller, often private sector projects.

“Our depth of capability across a range of end-markets is benefitting us in this regard; our UK order book and revenue have declined by 3% and 2% respectively in the first half, in a marketplace that has continued to shrink.

“Against this difficult backdrop, the cost reduction initiatives as well as good operational performance have held profitability at the expected level.

“Although the traditional building and civil markets are challenging, our diverse skill set stands us in good stead in emerging sectors.”

Balfour has sealed a series of waste treatment jobs and is waiting for the nod on three schemes worth up to £300m.

Support services saw revenue grow to £828m from £757m but profits fell to just £10m from £25m as margins dropped to 1.2% from 3.3%.

Balfour blamed the profit fall on start-up costs for new contracts and said it expects second-half margins to be more than 5.1%.

Balfour is currently bidding for the new Highways Agency Area 6 Asset Support Contract after recently winning Area 10.

Highways maintenance business “remains strong” after £90m of wins in the first half.

Chief executive Ian Tyler said: “We have delivered another set of solid results in challenging markets and remain on track to meet our expectations for the full year.

“We are making good progress on the early stages of our growth strategy in key industry verticals where our deep asset knowledge differentiates us from the competition.”