Legal and restructuring costs and delayed contracts causes Birse pre-tax profit to fall to £270,000.

Profit at Birse Group has been hit by a legal cost of £2.9m for the year ended 30 April 2005. The sum relates to litigation with Citibank, which also cost the group £4.4m last year.

Pre-tax profit without the exceptional legal cost fell 50% to £3.3m. Birse blamed delayed contract starts and the continued reorganisation of Birse Build, which made pre-operational losses of £7m.

In a joint statement chairman Peter Watson and group managing director Martin Budden said: “In our core engineering operations the transition to new customer procurement practices has suppressed production volumes in the year and also reduced demand for the hire of heavy duty plant.”

Birse was opptimistic that the lost production would be recovered in the future and said that a record order book of £507m in core operations would “add impetus to the group’s underlying forward momentum.”

On May 9 Birse completed the sale of The Cabin Company. The net proceeds of £5.3m will contribute £1m of pre-tax profit towards the 2005/2006 results.