MJ Gleeson emerges from 'mother of all hybrid' muddle thanks to Wallwork's sort-out

MJ Gleeson Group’s massive transformation has pushed on past the mid-point and will be complete by June, said chief executive Paul Wallwork this morning.

Interim financial results (six months to 31 December 2006) show a pre-tax loss of £300,000 well down on the £5m loss in the comparable period of the previous year.

The risk of MJ Gleeson completely imploding has been avoided thanks to massive surgery which has resulted in the disposal of several of its former business streams.

When Wallwork took over in the hot seat 15 months ago, he faced what he calls the mother of all hybrid companies.

“It was strategically unfocused and indebted to the banks,” he says. “I had to deal with those issues right away. The transformation has resulted in a smaller group with focus and one which is net cash positive.

“As a result, the future is in our hands. As it was, there was a danger of the banks taking control and if they had, then they’d have done what I’ve done though I do think with having being able to handle it our way, I’ve done more for Gleeson shareholders than the banks would have done.”

An attempt to analysis of the picture behind the headline result of a small £300,000 loss opens up a complex set of counter-acting elements, including large costs relating to disposed businesses and one-off profits made on two PFI equity disposals.

Having sold its traditional housebuilding and construction operations, MJ Gleeson will in future act as a regeneration specialist in three areas: 

• Building - both for private sale and for social housing. 
• Gleeson Services – trading as Powermaster, involved in the fit-out of kitchens being installed as part of government’s Decent Homes regeneration initiatives.
• Gleeson Strategic Land 

Once the slimmed-down group is running smoothly, annual turnover is expected to climb to £150m-£180m over the next two years. Employee numbers run to 500.

Wallwork also announced this morning that Gleeson is to exit commercial property activities.

The group is still relatively short of assets, and if property could be sold to the value of around £30m, this money would then be invested in strategic land where better returns can be achieved.

Wallwork believes the timing is right as the commercial market has peaked.