Haydon was sold to its management for £1 last November as Mears moved to focus on its core market of social housing and the care sector.

Record results for the year to December 31 2013 show pre-tax profit up to £36.6m from £29m last time as revenue rose to £898.2m from £675.9m.

The company said: “Haydon had been running at a loss for a number of years and was non-core as the major focus of the Group is in respect of developing our two core divisions.”

The deal to sell Haydon included writing down inter-company loans but Mears could claw-back up to £7m if the business is sold on again.

Mears is also hoping to receive £4m in loan repayments and tax relief benefits from Haydon this year.

Mears said: “As a result of the transaction, Mears incurred a loss on disposal of £18.5m.

“This loss is a non-cash item and is reflected within exceptional costs within the income statement.

“Based on the anticipated recovery, the transaction is expected to provide a cash upside of circa £4m within the next twelve months from a combination of payments received from Haydon and a tax benefit as a consequence of the transaction.”

The firm is confident about future prospects in the social housing market.

Chief executive David Miles said: “Our Social Housing business has long been recognised as the market leader in terms of operational performance and customer satisfaction.

“I believe that the opportunities for us in Social Housing remain very strong.”