The group, through its joint arrangement, is continuing to negotiate a significant claim against Transport Scotland on the AWPR contract, construction of which was concluded in early 2019.

It also repeated its plan to pursue this through formal dispute resolution before December 2019 should its discussions with the client not reach a satisfactory conclusion.

The contractor said it has recorded £152m of losses in total in relation to AWPR, and that the total assessed value in respect of claims under the contract is over twice that of the £100m figure.

“Negotiations remain in progress with our client but the final outcome is unknown and when concluded could result in a material difference to the position assumed,” it added.

The firm said it remained confident it would settle the claim before the December deadline.

Construction revenue fell by 18% to £1,386.8m (2018: £1,687.4m), while the £61.5m operating loss was even worse than the previous year’s £29.1m loss. Excluding £46.4m of exceptional one-off costs relating to restructuring and contract write-offs, the operating loss was £15.0m this time (2018: £15.9m profit).

Chief executive Graham Prothero said: “Construction’s result for the year has been impacted by challenges with both legacy and some current projects and by the restructure, which is now complete.  The business continues to see good demand in its Building and Infrastructure divisions and is focusing on disciplined growth across its core sectors of building, water and highways, which we believe will deliver improved margins.”

He added: “The underlying portfolio of newer contracts is performing well, with margins that reflect their associated risk profile.”

The firm said it has now completed restructuring the construction arm which could soon operate as a separate business if Bovis Homes’ offer to buy Galliford Try’s housing business in a £1bn share and cash offer is finalised.

Mr Protheron said:  “The potential combination of our Linden Homes and Partnerships businesses with Bovis Homes represents a superb opportunity.

“It enhances the prospects for all three of our businesses to thrive as strategically focused and well-financed operations with excellent opportunities for growth. 

“The transaction allows construction to continue trading as a standalone well capitalised business.”