The pay row is believed to involve a sum of £6.5m
Clarke said: “We have now agreed the previously disputed final account for the major project within our Mission Critical division.
“As part of the agreement all outstanding monies have now been received but T Clarke will recognize a sizeable loss on the project.”
Clarke is still working for the main contractor it was in dispute with.
The firm said: “Whilst convinced of the merits and strengths of our entitlement under the contract, the Board took what it believed to be a pragmatic view to avoid costly litigation.
“This would have distracted the business and potentially damaged ongoing relationships and, in fact may not have led to an overall improvement in the settlement.
“To underline the importance of achieving a constructive settlement, projects in excess of £25m have recently been secured with the principal contractor concerned.”
The statement added: “As a consequence of the loss on the Mission Critical Project, we expect a significant reduction in profits in the current year.
“We now expect to report underlying profits before tax of between £0.5m and £1.0m.”
Clarke bosses are confident about future prospects after winning a string of deals.
The firm said: “The forward order book as at 30September stood at a record £280m, up from £275m at 30 June with £160m secured for 2015 and £70m for 2016 and beyond.
“In addition, several high value projects are in the latter stages of negotiation.
“This strong order book and pipeline provides your Board with significant confidence for the future prosperity and further development of TClarke.
“Our markets are in good shape and we are being invited to tender for some of the most high profile projects in the UK.
“Our reputation for delivering exceptional quality services will also reward our shareholders through improvements in the Group’s financial performance.”