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Gleeson held back by construction downturn

TOUGH conditions in the construction industry have left MJ Gleeson, the contracting and property investment company, with a pre-tax profit of pounds 8.2m in the year to 30 June, sharply down on last year's pounds 9.94m, writes Rupert Bruce.

Colin McLellan, finance director, said: 'The competition is very fierce. Prices are at what we would consider to be unacceptable levels.'

But rents from two new investment properties that have been let and an increasing number of sales at Gleeson Homes in the past six months have partly offset the decline. Gleeson Homes sold 383 houses last year compared with 326 the year before.

Turnover on continuing operations has fallen from pounds 183.1m to pounds 168m and earnings per share are down from 67.1p to 57.54p.

None the less, Mr McLellan feels he can afford to hold the final dividend at 9.4p because Gleeson had net cash of pounds 16.1m at the year-end, an increase of pounds 2.6m. But the group does not expect to keep cash at this level in the coming year.

On prospects for the forthcoming year, Mr McLellan said: 'I think on the contracting side there is an unhealthy level of competition, but we are hopeful that we are a well-established contracting outfit and we will soldier through these difficult times.

'On the housing side, we have more reservations and completions in hand than we had at this time last year, so there are some grounds for moderate optimism.'

The shares were unchanged at 923p.