Gleeson result down but payout increases

The weakened state of the construction and house building industries contributed to a 16 per cent fall in pre-tax profits to pounds 9.9m at MJ Gleeson, the Surrey- based contractor.

The final dividend, however, rose by 7.5 per cent to 9.4p on the back of a strong balance sheet and a 29 per cent increase to pounds 4.6m in net rental income. The total dividend is 12.75p.

'We had a fairly reasonable year,' Colin McLellan, finance director, said. 'We are ungeared, our cash flow is adequate and profits are quite good. There are not many construction and property companies that are providing any kind of profit.'

He said the company had been flexible on house prices although it refused to take on houses in part-exchange. Gleeson has spent about pounds 7m this year on replacement plots for its land bank.

The property portfolio was valued at pounds 55.1m, a deficit of pounds 7.2m on the previous valuation. Mr McLellan said: 'Our property values have fallen by 11.5 per cent. But that's encouraging when many people have seen values fall by 40 or 50 per cent.'

In previous years, he said, one third of the portfolio was valued. The decision to value all the properties was taken because of the weak property market.

Gleeson said the group's geographic and operational spread should insulate it against the worst effects of the recession. The company expects investment by water companies to boost the civil engineering division, which has a strong presence in water and sewage treatment.

Earnings dropped from 75.49p to 67.1p. Yesterday the shares were unchanged at 583p.