Low contracting margins led to division's sell off

Building contracting's low margins triggered Gleeson's decision to part ways with this division as they "did not justify the associated risks".

After restructuring the operation, it was sold to an MBO "with sufficient financial resources to enable it to complete the ongoing contracts and to develop a portfolio of new contracts independently from the group".

In the absence of third-party funding, the fledgling - known as Gleeson Building - has been funded by the group and the directors of the MBO. When the ties are finally severed, the group is entitled to 45% of what is left.

Building contracting racked up a 44m loss even before the exceptional restructuring cost of 7.5m and of this loss, 9m related to "overhead under-recoveries caused by the decision to reduce in building turnover".

The bulk of the balance related to a small number of large and complex design and build projects undertaken by the Southern construction division.