The firm’s latest trading statement said Q3 revenue was up 4.3% to £39.85m thanks to a “modest upturn in UK construction activity.”

But the problem contracts saw group losses during the period deepen to £430,000 from £340,000 during the same period last year.

The firm said: “The Building and Civil Engineering division has been totally restructured, but performance is still suffering from the legacy of old loss-making contracts.

“Further delays have been experienced on two major projects and these have had a significant effect on profitability.

“Current contracts, with the exception of these two major schemes, which are still ongoing, are trading profitably.”

North Midland’s Nomenca water business is performing ahead of expectations but the highways arm made a small loss during the period.

North Midland added: “Cash collection remains particularly difficult in certain sectors of the business and is being exacerbated by the contractual situation being experienced on some contracts.

“There has been a net cash outflow during the quarter, but the Group continues to operate well within its bank facilities.

“An improvement on the half year result is still anticipated.

“However, there is considerable uncertainty over the completion costs and the outturn claim value of the two major problematical contracts and these could have a material effect on the result for the year.”