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Gleeson pulls out of building

Shock decision sees managing director Andrew Muncey leave after two years in the post

GLEESON boss Andrew Muncey quit the company this week after it announced plans to pull out of building by selling the division to a management team.

The move destroyed Mr Muncey's strategy of growing the building business and was announced on Tuesday following a strategic review of the division, which uncovered losses of over £16 million.

Gleeson has agreed to sell the £300 million turnover arm to a management team led by building boss Martin Smout, who only joined in January.

The firm said: 'In the light of the board's decision to withdraw from building, Andrew Muncey has decided to resign as group managing director with immediate effect.'

Contacted by Construction News on Tuesday, Mr Muncey, who was previously head of Gleeson's southern construction arm before becoming group MD in May 2003, said: 'I haven't got anything to say.'

In December, Gleeson announced it would spend £5 million restructuring the building arm, cutting jobs, closing offices and capping the value of projects it bid for at around £20 million.

Before the review, the division employed 750 people.The business Mr Smout will inherit is expected to have around 600 staff.

At the time Mr Muncey said a restructure would get the building business back on track, pointing out that a similar revamp at its civils arm had produced dividends. He added: 'Civils has become a model part of the company.'

But the scale of the problems uncovered at building persuaded executive chairman Dermot Gleeson to sanction a break with its 100-year-old building ties.

One insider said: 'Andrew Muncey felt he could no longer continue in the post.He was responsible for the drive in the construction division, setting out the business plan for tremendous growth over the next five years.

What has happened made his position untenable.'

The firm said the losses related to 'large and highly complex' design and build projects, most of which have been completed.

Another insider said the building division would now follow some of Mr Muncey's restructuring blueprint.He said: 'The division was taking on a lot of highly serviced projects, some PFI, which carries a lot of risk.

The £15-£20 million bracket is the key value band.'

Gleeson Building will keep its name for the time being and the group has taken a minority stake in the operation. It is still expected to work on PFI projects but as a builder only for the group's specialist PFI division, Capital Solutions.

Among the building arm's high-profile problem contracts are the delayed £60 miln which have been completed.

Another insider said the building division would now follow some of Mr Muncey's restructuring blueprint. He said: 'The division was taking on a lot of highly serviced projects, some PFI, which carries a lot of risk.

'The £15-£20 million bracket is the key band.'

Gleeson Building will keep its name for the time being and the group has taken a minority stake in the operation. It is still expected to work on PFI projects but as a builder only for the group's specialist PFI division, Capital Solutions.

Among the building arm's high-profile problem contracts are the delayed £60 million Evelina children's hospital job in central London and the Clissold leisure centre in north London, mothballed by its council owner following a series of defects that have trebled costs to £30 million.

A former chief executive of McNicholas Construction, Mr Smout has signed a heads of agreement deal with Gleeson to buy the business, which the group hopes will be completed when it starts its new financial year on July 1.

In the six months to December the Gleeson group, which also includes its continuing housing, engineering and regeneration businesses, posted a £6.7 million pre-tax loss compared to a £3.3 million profit last time.Turnover slipped £40 million to £266 million.