All outstanding disputes with subcontractors and major contractors have now been settled at a cost of £1.2m.

That meant a drop in underlying pre-tax profits for 2014 to £700,000 from £2.6m last time.

But revenues rose to £227.5m from £217.1m and T Clarke’s board is confident the firm is well placed to benefit from the improving construction market.

Chief executive Mark Lawrence said: “With a record order book and early signs of margins beginning to improve the Board looks forward to 2015 and beyond with renewed confidence.”

Chairman David Henderson admitted that the claims had caused him “sleepless nights”.

He said: “The emergence and resolution of two challenging issues, one a damages claim relating to a pre-acquisition contract at a subsidiary, and the other a protracted final account settlement in our Mission Critical division, coincided with my arrival as Chairman, and it is right to record that these did cause us all – me included – some sleepless nights.

“However, if you set their costs aside and look at the overall performance of the group, then it was a successful year. In the second half of the year, you could say ‘the decks were cleared for action’ – and we saw action in the shape of a series of significant contract wins in London and also, though less widely reported at the time, across the rest of the UK.

“While some in the construction sector were just hanging on and others were, sadly, failing to do even that, TClarke was extremely busy preparing itself.

“This is not a standstill company – this is a company that drives change through the industry – changes in best practice and ways of working that will keep it at the forefront of the sector.

“During 2015, the company will initiate further strategic changes in structure, all of which will be designed to help the business to maximise the value – both long and short term – which we can generate from the upcycle.”