But the firm said it remained confident about the outlook going forward as its urban regeneration business started to see an uplift and generated construction contracts.

Unveiling year-end results John Morgan, executive chairman, said the medium term outlook for business was promising as it invested in a raft of urban regeneration projects.

Pre-tax profits across the group fell 12% to £45m on sales ahead 6% at £2.2bn.

Worsening market conditions also saw the year-end cash balance fall to around £100m compared to £150m last time.

On the construction side, Morgan Sindall’s forward orderbook is down from £2bn to £1.6bn, altough across the group orders were stable at £3.4bn.

Over the coming year, Morgan Sindall said it would continue to reduce its exposure to the public sector, which has been pared down from 70% in 2009 to 50% last year.

It said there were signs of a slow recovery in the London commercial construction market and fitout work is expected to improve from next year as a raft of leases expiries across the country.

Morgan said preparations were already underway to enable the division to capitalise from this expected wave of new opportunities.

Morgan said: “We are pleased to report a solid set of results for 2011 in line with expectations, despite continued challenging markets.

“We are benefiting from being a broadly based business, offering creative, integrated solutions for increasingly complex projects, with a track record of delivery.

He added: “We continue to invest for sustainable growth in the medium-term while maintaining a strong balance sheet and dividend.”