Housebuilding exit hits Gleeson profit

A trading statement from MJ Gleeson Group has warned of a dive in this year's anticipated profits. The news comes from the Gleeson Homes division.

Terry Massingham, chief executive, was fairly upbeat about the situation. "We're indicating that there will be a postponing of profits," he said. "It's not a catastrophe.

"We set out to do many things and have already achieved a lot. One of the aims has been to dispose of the landbank. It has a total value of around £70m. The more that potential buyers feel that a deal prior to our year end, which is 30 June, matters to us, the more we are vulnerable to last-minute cuts in the price on offer.

"We have recognised that an artificial deadline was bad. What we are announcing here is that income will be deferred rather than lost." Gleeson Homes is shifting out of traditional speculative house-building and into the urban regeneration arena. The result of the desire to quit the arena swiftly has been that Gleeson has been agreeing to house sales at lower profit margins. "We want an orderly and quick transition," said Massingham.

The division's profit contribution is now expected "to be very substantially below market expectations". Since taking over the reins Massingham has undertaken a major reshaping of the group, necessary to distance Gleeson from its board's poor decision making in the past. Discussions for the sale of the Concrete Repairs division are advanced. There is reported to be of "substantial" interest in the Engineering division. Gleeson's commercial property investment portfolio is also up for sale

The latest news did little to ruffle the City as Gleeson's shares,
which had been trading at 380p, eased by just 10p.

[Contract Journal, 1 June 2006, p12]