The group, which is divided into two divisions; Gleeson Homes, which specialises in urban regeneration and Gleeson Strategic Land, posted good interim results in February and today's update underlines the consistency of the group's trading performance.
Aside from robust performances from both divisions, the group's full-year results will also include an exceptional credit arising from the sale of its last remaining PFI investment as well as the expected release of a prior year provision. Cash at the group also remains strong with a balance of £9.7 million.
In the year to 30 June, Gleeson Homes sold 406 units, an increase of 44% compared with the previous year's total of 279. But this impressive increase in turnover was further leveraged by the fact that the proportion of units sold on recently acquired, higher margin sites improved significantly.
The group was able to report that as many as 75% of homes sold were from the higher-margin sites compared to the previous year's 31% leve. Replenishment of the group's land bank also continues apace and, as of 30 June, the group's portfolio at the year-end comprised 3,868 plots of which 1,240 are conditionally purchased. In addition, a further 2,000 plots are in the acquisition pipeline.
The order book for Gleeson Homes at 1 July totalled £25.9 million which translates as 221 homes and represents an improvement of 141% on last year's total of £10.8 million. It is figures like these which prompted broker N+1 Singer in May to note that the strong momentum in the homes division increased 'the likelihood that Gleeson will outperform FY14 estimates'.
The broker has today increased its forecasts by a large amount. Pre-tax profit for 2013 goes up 33% to £4.7 million, and by the same percentage for 2014 to £6.8 million. Singer upgrades pre-tax profit for 2014 by 15% to £9.8 million.
Gleeson continues to exploit strong demand from the major housebuilders for green field residential land in the South of the England. This concerns its Strategic Land arm, where the group focuses on the purchase of options over land in the South of England, with the objective of enhancing the value of the sites concerned by securing residential planning consents.
Seven sites comprising of 42.5 acres with planning for 439 plots were sold and the group reported that the land portfolio continued to be replenished with good quality opportunities. Option or promotion agreements have been secured on a total of ten sites, amounting to 203 in total which potentially translates as a further 1,200 plots.