MJGleeson Regulatory News (GLE)

24 May 2006 07:02

Gleeson(M J)Group PLC24 May 2006 MJ GLEESON GROUP PLC Strategy Update and Trading Statement M J Gleeson Group plc announces that the implementation of its new strategy,announced on 31st March 2006, is ahead of programme. In particular: • As previously announced, the sale of Gleeson MCL to Morgan Sindall plc, for a cash consideration of £23.3m, a substantial premium to book value, has been completed. • The Group is in advanced discussions regarding the sale of Concrete Repairs Limited. • There has been substantial interest in Gleeson's Engineering Division, a market leader in capital projects for the water and waste water sector, which is being prepared for sale. • The Group has tendered its commercial property investment portfolio for disposal and considerable interest has been generated. In addition: • An exercise has been undertaken to review and rationalise the Group's overhead cost base, including the relocation of the Head Office to existing Group premises at Fleet in Hampshire from Cheam in Surrey. Consultation with the affected employees is underway and it is anticipated that the exercise will be complete by the end of the summer. • The structural changes to the Board are nearly complete, with a short list of Non-Executive Directors under consideration. The move substantially to reduce the traditional speculative house buildingactivities of Gleeson Homes in favour of a much greater emphasis on housing forsale in urban regeneration areas has started. However, the implementation ofradical change is inevitably disruptive and, in consequence, the greater part ofthe profit previously anticipated to be recognised in this current year, ending30th June 2006, will now be deferred into the next financial year. Furthermore,because of patchy market conditions, combined with a desire to achieve sales,there has been a reduction in profit margin on some sites. Therefore, the resultof the Homes Division, and in consequence the underlying result of the Group(before net one-off profits from the implementation of the strategic review),for the year ending 30th June 2006 is now expected to be very substantiallybelow market expectations. The Group remains confident that its decision to refocus its activities willenhance shareholder value. The Board continues to anticipate issuing a pre-close update in July 2006. Dermot Gleeson, Chairman, said "Whilst the results for the Homes Division, whichhas embarked on a programme of radical strategic change, will be belowexpectations this financial year, we are making excellent progress with both thedisposal programme and the refocusing of the business." Enquiries:M J Gleeson Group plc Tel: 020-8644 4321Terry Massingham (Chief Executive) Bankside Consultants Limited Charles Ponsonby Tel: 020-7367 8851 This information is provided by RNS The company news service from the London Stock Exchange