Despite challenging market conditions, the construction arm lifted operating profit by a fifth to £21m as regional building grew strongly.

Overall Kier group pre-tax profit rose 12% to £46m on stable turnover of £2bn.

Kier today also announced  a deal with housing association and care services provider Cross Keys Homes to form a housing delivery joint venture.

Haydn Mursell, chief executive of Kier, said: “The joint venture represents a strategic milestone for Kier Residential. This transaction enables us to accelerate our strategy to recycle the capital employed in the Kier private land bank to drive the future growth of the group and improve our overall ROCE.”

Construction operating margins edged up to 2%, reflecting strong risk management and the significant growth in regional building.

Construction’s  current order book of £3.3bn represents all of the targeted revenue for the 2017 financial year and this has been underpinned by recent regional construction awards.

Since the start of the year, Kier has been awarded a raft of new work worth over £200m.

In Wales, this includes a £36m comprehensive school for Torfaen County Borough Council. In London, Kier has been appointed to build the £24m Maria Fidelis FCJ Catholic School and a £17.3m contract to redevelop two properties to provide a resource and community services centre for adult social care, both projects are in Camden.

Nigel Brook, Kier executive director for construction and infrastructure services, said: “Work across the division is evenly split between public and private sector, leaving us well-placed to capitalise on the Government’s areas of focus as well as growing sectors such as aviation and biotech.

“Our regional operations continue to perform well, reinforcing Kier’s position as the UK’s leading regional builder. Our extensive network of regional offices enables us to work closely with public and private sector clients across the country to understand their requirements on a local level.”

Across the group as a whole, strong pipeline conversion at both services and construction lifted the orderbook to £9bn.

Kier booked a £39m profit on the disposal of Mouchel Consulting while also making a further £33m provisi0n for winding down its Caribbean operations.

In Hong Kong, Kier has substantially completed its two major transport infrastructure projects with final account discussions due to complete this year.

Mursell added: “We remain confident of achieving our goal of double-digit profit growth on average each year to 2020.”