Interserve is to move its focus towards contracts worth less than £10 million as it continues to back away from large loss-making construction projects.

Results for the six months to June 30 show the firm’s UK Construction division fell into the red compared to a £4.5m profit last time on turnover up to £536.2m from £468.3m.

The group attributed the loss to “the continuation of a long period of challenging market conditions, coupled with areas of underperformance in operational delivery”.

Interserve said they had now “refined our risk appetite in new work that we take on” and its construction workload is set to decline in the years ahead, with support services and facilities management continuing to grow in prominence within the Interserve portfolio.

In the first half of 2017 Interserve made a pre-tax profit of £24.9m on revenues of £1.65 billion. For the same period last year it lost £33.8m on £1.63bn revenues, due to difficulties building waste-to-energy centres.

Although it believes the decision to quit the energy from waste sector in 2016 remains appropriate, Interserve said “significant risks and uncertainties remain”.

Chief executive Adrian Ringrose said: “Trading in the first half of the year was mixed. In the UK, Support Services delivered robust volume but margins were impacted by a number of anticipated cost headwinds, while in Construction the continuation of a long period of challenging market conditions, coupled with areas of underperformance in operational delivery, resulted in a small loss for the division. We expect the restructuring and cost reduction measures we have taken in recent months to benefit both divisions’ performance during the second half of the year.

“Internationally, our Construction businesses delivered a strong performance, while Support Services International benefitted from the actions we took on its cost base in the second half of 2016, delivering a profit despite seeing a further drop in volumes. In Equipment Services, the updated strategic focus and associated operational initiatives are delivering the anticipated results.

“In our exited Energy from Waste business we are making progress on all projects. Overall we continue to believe the provision taken in 2016 remains appropriate, although significant risks and uncertainties remain.

“Despite the increased political and macro-economic uncertainty following the UK’s EU referendum and recent General Election, our outlook for the current year remains unchanged.”