Chief Executive John Morgan said all divisions were now performing well with strong cash generation and the group expected to outperform expectations this year.

Group revenue rose 7% to £2.5bn in 2016 with the outlook looking better in the year ahead as the order book jumped nearly a third to £3.6bn.

“These results demonstrate the considerable strategic and operational progress made in the group over the last few years and the underlying quality of the business,” said Morgan.

“The UK is struggling to cope with the increasing demand for affordable housing and there is a clear need for Government to deliver urban regeneration and infrastructure investment to support future economic growth.”

He added: “Morgan Sindall Group has strong established positions in these markets, and the balance sheet and cash position to fund further investment and growth.

“From this strong base, we are confident in the outlook and expect the positive momentum across the group to continue through 2017 and beyond.

“With significant opportunities in partnership housing, the continued improvement in operational delivery in construction & infrastructure, and the size and quality of our secured order book in fit-out and elsewhere across the group, we are well-placed to deliver a result for the year which is slightly above our previous expectations.”

Construction, which accounted for 60% of construction and infrastructure divisional revenue, at £788m,  was up 16% compared to the prior year, while infrastructure revenue dropped 3% to £533m on the prior year.

But infrastructure’s order book increased by 53% against the prior year to £1.3bn while construction’s order book fell 21% to £590m.

Infrastructure delivered an operating margin of 1.6%, while construction was broadly break-even.

Partnership Housing operating profit rose 40% to £13.4m. Morgan said the business had seen a sizeable increase in its dialogue with local authorities and housing associations on opportunities for future land and development partnerships.

The firm’s Overbury fit-out business ended the year with a record order book of £446m.

The group ended the year with net cash of £208m, as a result of a net cash inflow of £151m.