Contractor Birse is set to reduce its building division to a turnover of 拢30m after revealing the operation cost them 拢30m in the past five years
The arm had a turnover of 拢109m for the year to 30 April but will now specialise in education work in northern England.
Martin Budden, the group managing director, said the group expected the firm to become a 拢30m business in 2005/06, and that the workforce would reduce by half to 鈥渘ot more than 100鈥�. The former head office in Northampton has closed, as have the division鈥檚 southern regional operations.
The division has been beset by problems in recent years, including a 拢5.5m loss on Leicester City football stadium and an adjudication case on a fit-out job for Citibank. It is expected to incur further losses for the period 2004/05 because of problem contracts that date back three years.
Budden said the shift in the business would increase the overall profitability of the company. He said: 鈥淚f you excluded the loss-making building business we would have a 拢12 or 13m pre-tax profit business. It will take us two to three years to get there.鈥�
The move follows the firm posting pre-tax profits of 拢2m, up from 拢1.3m in 2003, on turnover of 拢417m, down from 拢483m last year.
Budden said the group was now concentrating on civil and process engineering. He said: 鈥淭hat鈥檚 what this group was first based on. Everything else grew from that base.鈥�
Turnover at the firm鈥檚 civils arm, which works in the road and rails market as well having a dedicated business for London Underground work, steadied at 拢241m, and operating profit grew by 拢5m to 拢13.6m for the period.
Budden said that London Underground work for the two PPP consortiums was starting to come through, but the bidding process was slow.
He said: 鈥淲e have seen tenders but we have yet to see them turn into work. It鈥檚 a cumbersome system. A tender is accepted by the PPP vehicle, then has to be accepted by London Underground.鈥�
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