Group announces 'deeply disappointing' traditional housing results as it appoints Tube Lines chief executive to the board
Gleeson has cut its pre-tax losses by £14m following six months of radical restructuring. In results released this morning the group revealed a loss before tax of £3m for the year to 30 June 2006 compared to £17.8m for the previous year.
The group also announced the appointment of Tube Lines chief executive Terry Morgan as a non-executive director.
Gleeson now focuses on urban generation and over the last six months Gleeson has sold several contracting businesses including Gleeson Engineering Division, which Black & Veatch acquired earlier this month for £36m.
The disposal of Gleeson MCL and Concrete Repairs helped contribute to an overall profit after tax of £9.6m but the proceeds of the sale of the engineering division will not be accounted for until next year’s financial results. Year end net debt fell to £14.7m from £102.3m at 31 December 2005.
The group said that the year had been ‘deeply disappointing’ for its traditional housing business. Second half sales were much lower than expected and construction cost overruns, and a £7.5m write-down resulted in an overall loss for the homes business of £11.6m.
Gleeson said it would continue to build the remainder of its traditional housing developments but would then focus on urban regeneration.
Dermot Gleeson said: “There is much work still to be done to deliver the transformational change which our new strategic vision requires. However, the board remains convinced that the refocusing of the group's activities will enable it to achieve a substantial and sustained improvement in its operating performance and to deliver to shareholders higher and more consistent returns.”
Gleeson said that risk had been reduced by the “virtual exit from both building and civil engineering contracting, by the scaling down of traditional house building, by the narrowing of management's focus and by the elimination of material indebtedness.”
Terry Morgan becomes a board member on November 1. Commenting on the appointment Gleeson said: “One of the threads running through Terry Morgan's broadly-based CV is the successful management of change. This will be of great help to us as we develop and implement the group's new corporate strategy.”