MJ Gleeson: £14m hit and office closures

MJ Gleeson’s days of doom and gloom are far from over. The group has announced yet another round of “staying alive” measures that will cost a total of almost £14m.

The string of hits is made up of £13m against on-going operations and another £1m from discontinued business.

Once a major player in the construction industry as it followed the ‘hybrid’ model of running both construction and housebuilding operations side by side, Gleeson has suffered recently, selling off most of the family silver to survive the muddles of the past.

In the six months to 31 December 2007 turnover of £50m resulted in a pre-tax loss of £300,000.

The latest string of hits includes:

Regeneration & Homes, North West and Yorkshire - £1m.

This charge will result from the decision to close the Sheffield office and to then chase future opportunities in Yorkshire from the Bury office in Lancashire.

Regeneration & Homes, South - £3.5m

The entire region is to be “run-off” as Gleeson “does not enjoy the same level of market presence as its counterparts in the north."

Assets will be trade for cash over the next 18 months.

Non-strategic land and housebuilding work in progress - £6m

Assets are currently over-valued and the figures currently being carried on the books are to be slashed.

Commercial property - £1.6m

In 2002, Gleeson sold a refurbished property in Glasgow and provided a rental guarantee to the purchaser on certain floors until June 2012.

A tenant pulled out in June 2007 and now, after juggling with possibilities, Gleeson feels it needs to put a price on what it calls the weaker Glasgow office market.

Group overheads - £0.7m

Basically the head office is too large and Gleeson “will be commencing a consultation process with head office employees to reduce the head office cost base.”

Discontinued business - £1m

Back in October 2006, the group sold its Gleeson Engineering division to Black & Veatch. As part of this, the group has now sold its 41% holding in Stirling Water Seafield Holding, thereby eliminating the requirement for any future investment in the PFI entity and “substantially reduce potential liabilities on the construction contract."

However, at the end of all this the group offers a cheerful take on the future, saying: “the strong cash positive balance sheet, portfolio of long-term urban regeneration agreements and strategic land bank of sites means it is well equipped to manage the challenges ahead.”