Construction and engineering group Birse said full year profits had halved after delays hit the start of contracts.

Birse, which operates in construction, plant hire and services, said pretax profits before one-off items in the year to April 30 had fallen to £3.3 million from £6.6 million a year ago.

The Doncaster-based firm, which was involved in road works in the Masshouse development in Birmingham, said a switch by customers to a new type of contract, in which firms like Birse carry out project design and planning as well as construction, had reduced production volumes and demand for heavy plant hire.

Operating profits in its construction division, which does roads, railways and other infrastructure work, had subsequently fallen to £2.6 million from £4.4 million previously.

However, Birse said it would recover the lost

production in future periods.

It added that its record £507 million order book and the quality of its new

contracts left it well placed to benefit.

Chairman Peter Watson said: "With record order and inquiry levels in our core operations, combined with the quality of contract awards secured in the year, we continue to add impetus to the group's underlying forward momentum." In May, Birse unveiled a management shake-up involving the departure of finance boss and company secretary Heather Craven and the linking of the latter role to the legal director ' s position. Birse said its accounting director of three years, Gerry Roche, would replace Ms Craven, who became finance director in 2001.

The company is hoping the shake-up will help it to get to grips with issues including an ongoing legal dispute with Citibank, which it said in December had cost it £1.3 million.

As a result of the one-off charge, it reported a fall in interim pretax profits to £ 917 , 000 against £ 1.8 million the year before.

Birse said the restructuring of its Birse Build division was proceeding broadly according to plan, although uncertainties remained. The division, which has been pulling out of market sectors where it was not considered to be achieving adequate returns, reduced preexceptional operating losses to £7 million from £8.7 million a year ago.

Birse said the Citibank litigation was continuing.