Disposal of Engineering Div

Gleeson(M J)Group PLC
19 October 2006


Thursday 19 October 2006

 

 

                              M J GLEESON GROUP PLC

                                                                                

                    £36.0m disposal of Engineering Division                     

                                                                                

As an important part of the implementation of the Group's strategic review,
which is now nearing completion, Gleeson announces the disposal of its
Engineering Division+ to Black & Veatch Corporation, a US-based global
engineering, consulting and construction company, for a cash consideration of
£36.0m.

 

The Engineering Division is an engineering services business predominantly
involved in delivering water-related construction through alliancing with water
businesses. Its main office is situated in Leatherhead, Surrey and it operates
throughout England and Scotland, with 950 employees working out of seven
business units.

 

The Engineering Division assets generated an unaudited operating profit of £2.8m
in the year to 30 June 2006. As at 30 June 2006, the Engineering Division had
gross assets of £40.1m, including net cash of £21.1m.

 

The disposal has resulted in a cash balance transfer to Black & Veatch of £14.5m
to zero the negative net assets (excluding cash) of the Engineering Division at
completion, subject to any completion accounts adjustments. Hence, the net cash
inflow to Gleeson as a result of the transaction is £21.5m (before tax and
expenses), which will be used to reduce its indebtedness.

 

The Division is led by Tony Collins, 50, who has 28 years' service with Gleeson.
He became Divisional Managing Director in October 2001 and oversaw the
Division's highly successful Asset Management Programme 4 strategy, which
resulted in all existing AMP3 Alliances (with South West Water, Thames Water and
Yorkshire Water) being renewed and two new Alliances (with Severn Trent Water
and Northumberland Water) being added. In addition, in 2006, the Division agreed
an extension to the existing Quality & Standards 2 Programme with Scottish
Water.

 

Tony is ably supported by his leadership team, comprising Commercial Director
Charlie Boyle and Executive Directors Steve Miller and Mike Robinson, all of
whom are long-serving employees, with a total of 65 years' service with Gleeson
between them.

 

Dermot Gleeson, Chairman, said 'I am delighted that we have found a purchaser
for our highly respected Engineering Division which, in addition to providing
good value for our shareholders, will be able to offer the Division's employees
significantly enhanced career opportunities. I wish our engineering personnel,
many of whom I have known for many years, the very best for the future.

 

Selling the Engineering Division, which is a substantial and complex business,
was always potentially the most challenging part of the implementation of the
Group's Strategic Review. Now that it is sold, we can focus on an appropriately
reduced infrastructure for the Group going forward.'

 

Gleeson expects to issue its Preliminary Announcement for the year to 30 June
2006 on 27 October 2006.

 

 

+Only live contracts and associated assets and liabilities are being disposed as
part of the transaction

 

Notes for Editors:

 

On 31 March 2006, Gleeson announced the outcome of its strategic review. Gleeson
would concentrate on three related areas: housing regeneration, commercial
property development and strategic land trading. Gleeson MCL Limited (a
construction services business involved in railway engineering contracting) was
sold in March and Concrete Repairs Limited (a specialist structural renovation
business) and the bulk of the commercial property portfolio were sold in June.
The reduction in Gleeson Homes' activities outside the housing regeneration
sector, involving the run down of its non-strategic land holdings, continues.


 
Enquiries:                                                             
                                                                       
Gloucester plc                                            020-8644 4321
Paul Wallwork (Interim Chief                                           
Executive)                                                             
Chris Holt (Interim Finance Director)                                  
                                                                       
Close Brothers Corporate Finance                                       
Limited                                                                
Peter Alcaraz                                             020-7655 3139
                                                                       
Bankside Consultants Limited                                           
Charles Ponsonby                                          020-7367 8851

 

 



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