Nicholas Down, group managing director, said the company had performed well over last year, focusing on building a strong customer base with a target of 80% of revenue from Government funded clients.
This was achieved by March this year, but the focus and belt-tightening saw revenue slide 17% to £119m.
The group would have returned a reasonable profit but was hit by costs from a long-running contract dispute.
“Subsequent to the year end the company has had to recognise significant write-downs on certain completed contracts where client solvency and the potential for substantial legal costs led to the directors taking the decision to write back carrying values by £3.1m leading to the loss,” said Down.
“The company no-longer contracts with clients of this nature and this write-down is one-off in nature,” he added.
The 2017 accounts do not name the project.
Although Dawnus has been wrapped up in protracted legal battles with a client over a 245-bed hotel complex in Poole in Dorset.
Back in 2015 work was halted on the £7m project when a pile struck high voltage power cables alerting Dawnus that drawings supplied by Scottish Electric Power Distribution were incorrect, leading to 30-week delay.
Disputes later arose and there were four adjudications with the hotel project client Marsh Life. Dawnus was ultimately forced to seek enforcement action for around £1.5m in the High Court only to see the local client then collapse into liquidation last summer.