Birse profit halves after loss in building division

Contractor Birse has put a halving of pre-tax profits down to higher than expected cost incurred on the closure of two of its regional contracting offices.

The firm's building division, which will now only concentrate on local authority education work in the North of England, posted a £4.6m loss for the six months to 31 October on turnover of £39m.

The firm said it had to speed up finishing work in the two office to be closed, in the Midlands and the South, which incurred higher costs.

A statement to the City today said uncertainty still remained over the closures. It said: "Although good progress has been made, until the restructuring of Birse Build is complete and in particular legacy issues resolved there is further uncertainty for the group over the performance of this business."

The firm posted overall pre-tax profits of £917,000, down from £1.8m in 2003 on turnover of £190m.The firm's civil engineering division improved its performance, posting an operating profit of £5.6m up £1m on last year.

Group managing director Martin Budden said the firm was turning the corner, despite the drop in profits. He said: "With more regular work flows anticipated in some of our more favoured civil engineering markets we remain on course to drive forward the underlying longer term performance of the group and improve the overall quality of the business."

The firm said it was continuing its dispute with Citibank over a fit-out job and this was likely continue until 2006. The firm has challenged an adjudicator's decision against Birse determined on 24 February this year and said it had been advised it had a realistic prospect of having the award against it reduced. The company statement said: "Whilst a professional dialogue continues between Citibank and ourlselves attempts to reach a resolution have so far failed. It is therefore important that we continue to take action that we consider best protect the postion of the group."