ENGINEERING and manufacturing group Tanfield has reported a growing order book, despite announcing pre-tax losses of £2.5m yesterday.

The County Durham-based group said turnover had increased to more than £5m as it moved away from traditional engineering activities and into higher margin manufacturing and technical assembly markets.

Announcing interim results, the AIM-listed company reported a gross profit of more than £3m.

However, it said write-offs and exceptional costs associated with the group's exit from the automotive components sector resulted in an overall pre-tax loss.

Tanfield Group was formed in January after a takeover by the digital imaging company comeleon. It recorded losses of £7m last year.

The company said contract wins in the health, defence, industrial vehicle and power generation sectors had increased the workforce from 160 to 230, as well as doubling the size of its order book.

Tanfield chief executive Roy Stanley said: "We have now completely exited the automotive components supply business, which previously represented around 40 per cent of group turnover, and this has been replaced with higher value and longer term technical assembly contracts elsewhere within the group."

The company has won contracts to supply assemblies for several fighting vehicles, as well as construction vehicles and aerial access platforms.

Mr Stanley said: "Real progress continues to be made in re-shaping the business and taking it into new market areas which should provide a solid base for further growth."