Contractor Birse is set to reduce its building division to a turnover of £30m after revealing the operation cost them £30m in the past five years
The arm had a turnover of £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 £30m business in 2005/06, and that the workforce would reduce by half to “not more than 100”. The former head office in Northampton has closed, as have the division’s southern regional operations.
The division has been beset by problems in recent years, including a £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: “If you excluded the loss-making building business we would have a £12 or 13m pre-tax profit business. It will take us two to three years to get there.”
The move follows the firm posting pre-tax profits of £2m, up from £1.3m in 2003, on turnover of £417m, down from £483m last year.
Budden said the group was now concentrating on civil and process engineering. He said: “That’s what this group was first based on. Everything else grew from that base.”
Turnover at the firm’s civils arm, which works in the road and rails market as well having a dedicated business for London Underground work, steadied at £241m, and operating profit grew by £5m to £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: “We have seen tenders but we have yet to see them turn into work. It’s a cumbersome system. A tender is accepted by the PPP vehicle, then has to be accepted by London Underground.”