MJ Gleeson takes £11m hit and makes 65 redundant

MJ Gleeson has unveiled yet another string of “staying alive” measures – it will be taking a one-off hit of more than £11m which includes £1m in redundancies costs and £9.6m in asset write-downs. The group will also make 65 people redundant.

Gleeson’s relentless downsizing had already resulted in the head office being switched from Cheam to Fleet, Hampshire.

But now Fleet is a building too far, and Gleeson’s head office will move to Sheffield and squeeze into the base already housing one of the group’s divisions, Powerminster Gleeson Services.

Axing headquarters staff will cost £500,000 and there will be a further £100,000 charge under the terms of the lease at Fleet.

There are two more elements to the latest twists in the Gleeson story:

Gleeson Capital Solutions is to take a £500,000 charge made up of £300,000 in redundancy costs and £200,000 to exit office leases. The operation will move to Bury, Greater Manchester, where it will snuggle up with Gleeson Regeneration & Homes.

Gleeson Regeneration & Homes together with Gleeson Strategic Land also adds to the blues with another £500,000 charge, made up of a £300,000 redundancy cost element and £200,000 as a result of the exit from leased office space. These redundancies will happen in March 2009.

In an interim management statement issued this afternoon, the group said that since its last statement two months ago: “Housing sales volumes have continued to fall, putting further pressure on selling prices. These trading difficulties have impacted both the group's balance sheet and operations.”

Gleeson Regeneration & Homes and Gleeson Strategic Land has undertaken a valuation exercise and concluded that it is appropriate to provide for a reduction in value of its assets by 7% - which amounts to a figure of £5.6m.

Gleeson Commercial Property Developments has jumped through the same hoop and the carrying value of its assets have been trimmed by £4m, a drop of 22%. 

Paul Wallwork, chief executive, said that Gleeson has maintained a net cash positive balance during the period and has not drawn down any of its £50m bank facility.