好色先生TV

Listed contractor Gleeson has dramatically pulled out of the building sector after its main contracting division racked up a 拢16.6m loss for the second half of last year.

Tuesday鈥檚 announcement of the management buyout of Gleeson 好色先生TV ends a black month for listed contractors, following losses on contracts declared by rivals Mowlem and Alfred McAlpine.

The trio鈥檚 plight underlines the fact that, despite healthy workloads, many contractors are still facing wafer-thin margins and high risk.

Gleeson鈥檚 struggling division is to be sold to a management team led by recent recruits Martin Smout and Peter Stone, the division鈥檚 managing director and commercial director respectively. The deal is understood to be a mixture of a buyout and earn-out, whereby the management would pay Gleeson back based on future results. The division has a turnover of about 拢200m and has 500 staff, having cut about 100 jobs in the past six months. It is understood negotiations are under way as to which party would retain liabilities for completed contracts.

好色先生TV understands the decision to pull out was made about a month ago and follows a reorganisation of the division late last year.

A Gleeson statement said the loss mainly related to 鈥渓arge and highly complex design-and-build contracts鈥�. These include two completed schemes: the delayed 拢60m Evelina Children鈥檚 Hospital in south London and the 拢45m Tally Ho Corner mixed-use scheme in north London. Final accounts have yet to be signed on both schemes.

The sale will further reduce the group鈥檚 exposure to construction risk

Dermot Gleeson, group chairman

Sources close to the firm said that closer inspection of the division during its restructuring had led to a rethink. One source said: 鈥淭he more the team looked at the division, the less attractive it became compared with the other parts of the business. 好色先生TV in the UK still seems to be thin margins and big risks. It doesn鈥檛 seem to get any better.鈥�

Rivals, however, claimed that the firm had taken on too many big jobs. One said: 鈥淭hey took those jobs on the wrong terms.鈥� One rival also speculated Gleeson鈥檚 move could be mirrored by Mowlem, which reported a 拢7.4m loss at the start of the month due to poorly performing UK contracts in its M&E business.

The losses and sale also led to a change in senior management at Gleeson itself, with group managing director Andrew Muncey resigning, and Gleeson Homes managing director Terry Massingham becoming chief executive.

The building division鈥檚 troubles led to a 拢6.7m pre-tax loss for Gleeson for the six months to 31 December 2004. The group said its regeneration and housing divisions had performed ahead of expectations.

Dermot Gleeson, the group chairman, said: 鈥淭he proposed sale of Gleeson 好色先生TV will further reduce, very substantially, the group鈥檚 exposure to construction risk.鈥�

• 好色先生TV understands that Alfred McAlpine took a 拢27m hit last year partly because of a problematic construction contract in Guildford. The 拢11.5m Onslow House office scheme is not expected to be finished until next month, two years after its initial completion date.