The contractor warned its profits for the year to March will be £7 million down on pre-Christmas projections.

The firm revealed a trio of other legacy construction contracts won more than 18 months ago had offset improvements at the group’s profitable fit-out, engineering, retail and international divisions.

ISG also said it was pulling out of London prime residential work at a cost of £6m and had made provisions for increased losses of £11m related to the closure of its Tonbridge office and associated contracts announced last year.

In a trading statement issued to the London Stock Exchange, ISG said the decisions followed the completion of an internal contracts performance review.

“This review has focussed on the appropriateness of internal judgements and forecasts of contract recoveries,” it said.

“In particular the review has focussed on projects that were procured more than eighteen months ago when market conditions were less favourable, where there has been project deterioration and on the close out of outstanding contracts within previously discontinued operations.”

The news follows £6m of project wins for the firm in Scotland last month including the creation of a new hotel and retail outlet and an office refurbishment for Network Rail.