Martin Smout, the chief executive of Gleeson Building, said this week that turnover would dip but predicted that the company would break even in the first year after its management buyout.
Martin Smout told Building that in its first year of independence, to the end of June 2006 he expected the firm to achieve a £205m turnover, £20m less than he forecast when the buyout from MJ Gleeson went through last September.
This means that the company is unlikely to make the £145,000 pre-tax profit it had anticipated. However, this prediction does take into account a £1.2m hit on acquisition costs and other exceptional items. Smout blamed the dip in turnover on delays to work starting on site.
Smout said the review of MJ Gleeson, which is being undertaken in the wake of an approach from venture capitalist Castle Acquisitions, was not disruptive to Gleeson Building, despite the fact its former parent still had a 20% stake.
He said: "It has an effect in terms of conversations round the coffee machine, but in terms of the business, no. We always said that we would look to exit MJ Gleeson in five years' time and it is no threat for us. If anything, it is an opportunity although it does mean there is a for-sale sign on MJ Gleeson."
Smout said the company's focus would be on the education and non-acute health sectors, having identified PFI, Building Schools for the Future and the NHS LIFT programme as priorities.
It’s about being selective in the residential sector because there are a lot of sharks out there
Martin Smout, Gleeson Building
It is also involved in residential and leisure work, but Smout said: "It is about being selective in the residential sector because there are a lot of sharks out there. We are not looking at megaschemes but there is a good middle market there for us. We are not looking to get into civils or nuclear."
Gleeson Building is about to appoint a director in charge of its PFI and BSF work. It has already appointed Paul Baxter, who worked for Smout at Wimpey. He joined from Laser Build, where he was managing director, to head a new office to cover Birmingham and the central and West Midlands.
In the past six months, Gleeson's highlights have included four contract wins worth £50m in the education sector and the completion of a £26m leisure centre in Crawley, West Sussex, and a joint venture with Oxford Hotels.
Gleeson Building's forward order book stood at £280m at the six-month stage, the same level as before the buyout, and Smout said the company was "planning for growth".