Alongside £20m annual savings from its Future Proofing Kier streamlining programme, the group aims to reduce debt to £250m and be in a net cash position by 2021.

The debt reduction plan was highlighted as Kier reported pre-tax profit for the year ending June 2018 of  £137m from stable revenue of £4.5bn.

Its robust results caught out short-selling hedge funds that had been circling Kier after making a killing on Carillion. Shares rose 7% in early trading in the City.

Haydn Mursell, chief executive, said:  “We have launched the Future Proofing Kier programme which will streamline the business thereby enabling us to deliver a more efficient service to clients, respond to changes in our markets and capitalise on growth opportunities, while, importantly, also accelerating the reduction of the group’s net debt position.

“Our strong market-leading positions, our record £10.2bn construction and services order books, and our £3.5bn property development and residential pipelines, will see the group deliver on its Vision 2020 targets.

“In addition, the Future Proofing Kier programme positions the group well for an improvement in operating margins and higher cash generation, culminating in a net cash position for FY21.”

He said that Kier would stabilise its investment in its property and residential divisions to help deliver targets.

Across the group divisions, construction revenue remained stable at £2bn with an underlying operating profit increase of 5% to £42m.

Construction experienced strong revenue growth during the fourth quarter following a decline earlier in the year as a result of slower site starts and adverse weather.

Construction margins were also stable at 2%.

Service division revenue rose 10% to £1.85bn, helped by the acquisition of McNicholas Construction.

Kier said services operating margins remained robust at 5% helping to generate an underlying operating profit of £93m.

Property revenue increased 20% to £218m, generating an underlying operating profit rise of a third to £34m, while the residential business delivered a 14% uptick in operating profit to £26m on stable revenue of £374m.