Birse halves losses as contracting picks up

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A RETURN to the black in contracting and housebuilding helped Birse Group, the construction and property company, to halve its losses in the six months to October, writes Tom Stevenson.

The figures reflected the company's heavy debt burden before a share placing in December transformed the balance sheet. Operating profits of pounds 580,000, compared with a pounds 429,000 loss last year, were more than outweighed by interest payable of pounds 2m (pounds 2.3m). The pre-tax loss of pounds 1.4m (pounds 2.7m) followed two years of losses amounting to pounds 30m.

Peter Birse, chairman, said he thought the worst of the recession was now behind the company. But he warned that any improvements in construction markets would not be substantial or rapid.

At the time of Birse's financial restructuring in December, the company had borrowings of pounds 46.5m and net assets of only pounds 12.4m. Following the issue of 125 million shares to raise pounds 24m, a pro forma balance sheet shows debts of pounds 17.3m and net gearing of 49 per cent.

The loss per share was 2.1p (3.6p loss) and, as forecast, there was no interim dividend. The shares closed unchanged at 38.5p.