Chief Executive John Morgan said the firm had made provisions of £13m against amounts recoverable on a small number of construction contracts.

During the same period last year Morgan Sindall booked a £19m pre-tax profit.

Construction margins also slumped from 1.5% to 1.1% as the battle to secure work intensified across the sector.

Morgan said the firm had received legal advice and opinion that outstanding amounts were recoverable.

But based upon an assessment of progress made towards recovering the cash and the expected time, cost and risk of pursuing legal remedies, the board considered it a prudent estimate of overall likely resolution.

Earlier this year the Enquirer revealed that Morgan Sindall had run into serious problems with its nuclear submarine jetty contract at Faslane.

Revenue in the first six months of the year edged up 2% to £1.019bn with an order book up 1% to £3.1bn and its regeneration pipeline standing at £2.2bn, up on the year end by 5%.

A strong focus on cash flow management saw £12m net debt at the end of last year turned into £40m net cash at the end of June.

Chief Executive, John Morgan said: “The first half has seen difficult market conditions across all of our markets, with competitive pressures impacting on margins and profitability.

“The improved positive cash position, however, demonstrates the underlying strength of the business and the benefit of a sustained focus on cash management, which will remain.

Morgan added: “Looking ahead to the second half, overall market conditions are not expected to significantly improve.

“The business will continue to focus on cash management and will look to improve the order book selectively, such that it is well-positioned to take advantage of the growth and investment opportunities in its markets as they arise.”