Group says underlying performance is strong after selling loss-making contracting division.

MJ Gleeson’s building contracting division made a loss of £44.1 m, with restructuring costing a further £7.5 m in the year ending 30 June 2005. The operation was sold in a management buyout in July, funded by the group and the directors of the MBO. Gleeson says that although the change brought about a considerable one-off cost, it significantly reduced the group’s exposure to risk, and that excluding the discontinued operation profits were actually up by 57% to £43.7 m.

The Group’s homes and regeneration business had a successful year, with turnover up 43% to £159.6 m, and operating profits rising 38% to a record £17 m, while the property development and investment division performed steadily to record an operating profit of £5.9m. These results tempered losses from the contracting division, with the group overall recording a pre-tax loss of £13.2 m.

Looking towards the coming year, chairman Dermot Gleeson said in a statement that he did not expect significant growth in homes and regeneration. He added that the construction services arm of the group had an order book worth over £600 m on 1 October, of which 90% related to low-risk partnering agreements for utilities and the public sector.

He said: “the withdrawal from general building contracting has very substantially reduced the Group's risk profile. The task now is to develop to the full the profit generating potential of the Group's continuing operations and to identify new opportunities in related sectors.”