Announcing a £9 million pre-tax profit from a £41m loss in the first half to the end of December, Kier said today it returned to reported operating profit of £29m following a half-year loss of £24m in the same period 12 months earlier.

Revenues fell to £1.6 billion from £1.9bn previously, which the firm attributed to its focus on winning and executing contracts with appropriate risk/reward.

Following the £110m sale of its housing business last week, Kier said it expects actions taken to right size the group as part of the turnaround strategy will result in continued improved financial performance and has set medium-term targets of £4bn-£4.5bn revenue and an adjusted operating profit margin of around 3.5%.

The strategy also includes a proposed equity raise in the range of £190m to £240m, expected in the coming weeks, to help tackle its deficit.

Andrew Davies, chief executive, said: “I am pleased to report that the execution of the strategic imperatives outlined in June 2019 has resulted in significant improvements in both our financial results and free cash flow for the re-shaped group. With the announcement of the sale of Kier Living on 16 April, we have achieved many of the milestones required to improve cash generation and reduce net debt.

“The process of simplifying the group has been substantially completed through the exit of non-core businesses and the adoption of an appropriate cost base. These actions will have delivered annualised cost savings of at least £115m by the end of FY21. We recognize there is much more opportunity within the business and will continue to drive continuous improvement through our Performance Excellence culture.

“With the group focused on UK Government and regulated industries, it is well-placed to benefit from the announced and committed increased spend in these areas. We have secured places on the Frameworks through which much of the increased spend is expected to come and our nationwide coverage combined with project management expertise gives us confidence in the outlook for Kier over the next few years.

“During the pandemic, the health and safety of our employees has been a clear focus and I would like to thank all my colleagues who have worked hard to get the company to where it is today.

“The proposed equity raise, which we plan to launch in the coming weeks, subject to market conditions, together with the continued support of our lending group, will further strengthen the group’s balance sheet by reducing net debt and will facilitate investment in the business to help drive sustainable, profitable organic growth and the achievement of our medium term financial targets. The second half of the year has started well seeing a continuation of the positive trends of the first half and we are confident of achieving further progress this year in line with our expectations.”