Keith Miller, group chief executive, put the £2.4m loss in the first half of the year down to an “extremely competitive contracting market” and the traditional contract approach used in a small number of projects.

He said the construction division had been hit by insolvency of subcontractors and difficulties in recovering the cost of client variations to project specifications.

“We no longer tender for projects on this traditional contract basis unless they are projects with clients with whom we have on-going longterm strategic relationships. The group is seeking recovery of these costs.

Construction turnover was 70% up on the first half last year.

The order book has increased by 18% to £1.8bn and is now weighted towards frameworks and PPP projects where there are higher barriers to entry and more secure margins.

Strong returns from the housing business helped to lift group profits from £400,000 last year to £4m on revenue up 27% to £362m.

Housing completions remained flat at 819 units, but sales have accelerated since the half year resulting in 92% of target sales being secured for 2013.

Housing operating profit increased by 50% to £6.6m due to increased gross margin contribution from newly acquired sites.

Miller said: “We plan to grow volumes over the next three years beyond 2,000 units per annum with an increasing weighting towards the Midlands and South of England.”

Developments operating profit increased by 15% to £6.9m driven by strong trading in Aberdeen and at Omega, Warrington.