Kier Group said that its construction and support services businesses had helped it towards a leap in pre-tax profits of 12.1% to £89.2m in its annual results, despite the effects of the credit crunch on its development and residential arms.

It said that a drop in housing sales of18.6% over the period to 30 June 2008 had pushed it towards examining its residential land holdings, to see if there was a possibility of commercial development on the sites.

Chief executive John Dodds said: ‘The benefits of operating a hybrid model have been particularly highlighted this year as the four principal legs of our business experience different market fundamentals.

‘Continued demand in our construction and support services businesses has contrasted with the sudden and dramatic effect of the credit crunch on the demand for private housing and development properties.’

The property division made a pre tax profit of £4.1m but Kier warned that it was ‘more difficult than we have seen for some time’.

However, it said that the group’s focus on non-speculative developments and long term partnership, such as its recently signed partnership with Network Rail to redevelop seven of its stations, would provide steady income.

It also wrote down the value of its land bank by £31.3m and faced £9.5m in costs for the restructure of its housebuilding business in July, which led to the loss of 350 jobs.