Source - RNS
RNS Number : 7799K
MJ Gleeson PLC
26 September 2016
 

MJ GLEESON PLC

 

Audited results for the year ended 30 June 2016

 

MJ Gleeson plc, the community regeneration housebuilder and strategic land specialist, is pleased to announce another strong performance with revenue up 20.8%, profit before tax up 63.0% and a proposed final dividend of 10.0p per share.

 


2016

2015

Change


£m

£m

%





Revenue

142.1

117.6

+20.8





Pre-exceptional operating profit*

28.2

23.3

+21.0

Operating profit

28.2

22.0

+28.2





Pre-exceptional profit before tax*

28.2

23.4

+20.5

Profit before tax

28.2

17.3

+63.0





Net cash flow from operating & investing activities

13.9

8.1

+71.6





Cash and cash equivalents

23.2

15.8

+46.8

Net assets

152.9

136.5

+12.0





Basic earnings per share (normalised) **

42.6

34.2

+24.6

Basic earnings per share

42.6

22.8

+86.8





Dividend per share

14.5p

10.0p

+45.0





Return on capital employed

23.2%

21.1%

+10.0

           

            Notes:           There were no exceptional items in 2016.

* Pre-exceptional operating profit in 2015 excludes the impact of exceptional restructuring costs (£1.2m). Pre-exceptional profit before tax in 2015 also excludes (£4.9m) provision against investment in GB Group Holding Ltd.

** Normalised basic earnings per share in 2015 excludes the impact of exceptional restructuring costs (£1.2m) and provision against investments (£4.9m).

 

 

Strong performance across both divisions and confident in outlook

 

Gleeson Homes:

·      904 units sold (2015: 751 units)

·      Operating profit increased to £19.5m (2015: £17.4m)

·      Average Selling Price £125,700 (2015: £123,750)

·      Land pipeline, including conditionally purchased sites, of 9,284 plots (2015: 7,496 plots)

 

Gleeson Strategic Land:

·      Operating profit of £10.2m (2015: £8.1m) driven by increase in transactions during the year

·      Seven land sales completed during the year for 191 acres of residential and commercially developable land

·      Five new sites secured during the year

·      Portfolio at year end: 68 sites comprising 3,843 acres

 

Final dividend of 10.0 pence per share proposed (2015: 7.3 pence per share), resulting in total dividend for the year up 45% to 14.5 pence per share (2015: 10.0 pence per share).



 

Dermot Gleeson, Chairman of MJ Gleeson plc, said:

 

"Our twin track strategy - the development of low cost homes for open market sale in the North of England and strategic land sales in the South - goes from strength to strength, delivering increased margins, profits and cash.

"Gleeson Homes continues to see strong customer demand for its low cost homes. The opening of two new regional offices and the increase in its land pipeline to 9,284 plots will enable the division to continue to grow in what remains a strong market for low cost homes in the North of England. We have commenced rolling out our distinctive and highly successful business model across a wider geographic area. The potential number of purchasers of Gleeson Homes in this wider area is three times the comparable figure within our current market.

"Similarly, Gleeson Strategic Land continues to see strong demand for consented land in prime locations from a wide range of housebuilders. The division has a strong pipeline of sites, predominantly in the South of England, covering 3,843 acres (2015 3,936 acres), and expects to continue to enjoy a high level of success in promoting commercially attractive sites through the planning system.

"The Board has every confidence in the Group's outlook in both the short and longer term."

 

 

 

 

Enquiries:

 

MJ Gleeson plc


Tel: +44 1142 612900   

Jolyon Harrison    

Chief Executive Officer


Stefan Allanson

Chief Financial Officer





Instinctif


Tel: +44 20 7457 2020

Mark Garraway



Helen Tarbet



James Gray






N+1 Singer



Shaun Dobson


Tel: +44 20 7496 3000

Alex Laughton-Scott






Liberum



Neil Patel


Tel: +44 20 3100 2111

Richard Bootle






 



 

Chairman's Statement

 

I am pleased to report another year of strong growth in margins, profits, and cash.

 

Gleeson Homes increased unit sales by 20.4% to 904 units (2015: 751 units).  Gross margins continued to improve as a result of a modest increase in selling prices and stringent cost controls.  The division increased its land pipeline by 20 sites, comprising 1,788 plots, taking advantage of the relatively low land prices in our target areas in the North of England.

 

Gleeson Strategic Land increased operating profit by 25.9% to £10.2m. The division continued to secure attractive residential planning consents and to satisfy demand for development sites from both medium sized and volume housebuilders.

 

Financial Performance

 

Group revenues increased by 20.8% to £142.1m (2015: £117.6m). The Group recorded an operating profit from continuing operations of £28.2m, an increase compared to the previous year of 28.2% (2015: £22.0m). The post-tax loss from discontinued operations was £0.3m (2015: £0.2m).

 

Profit before tax increased by 63.0% to £28.2m (2015: £17.3m).

 

Gross margin on unit sales increased to 31.1% (2015: 29.6%) which helped to improve operating margin on unit sales to 17.1% (2015: 15.8%).

 

Net assets increased by 12.0% to £152.9m (2015: £136.5m), representing net assets per share of 283p (2015: 254p). Cash and cash equivalents at 30 June 2016 totalled £23.2m (2015: £15.8m).

 

Normalised basic earnings per share, excluding the impact of exceptional costs (2016: £nil, 2015: £6.1m) grew by 24.6% to 42.6p (2015: 34.2p). 

 

Market Context

 

Demand for low cost homes in the North of England remains strong.

 

Hard working, low income families remain committed to home ownership and the cost of owning a Gleeson home is, in many cases, cheaper than an equivalent council house rent. The Government's support through the Help to Buy Scheme, which has been extended to 2021, and rigorous control of costs in Gleeson Homes means that our selling prices remain exceptionally affordable.

 

Gleeson Homes has not seen any change in customer enquiries or sales due to the "Brexit" vote. Our mortgage advisors and other organisations with whom we work very closely, including on-line property websites, also report that there has been no drop in enquiries or demand for new homes. Gleeson Strategic Land has seen two of the major housebuilders try to renegotiate the terms of purchase, but mid-range housebuilders, who need replacement sites and are more interested in completing deals promptly, continue to bid competitively on all our land sales.

 

Overall the "Brexit" vote has not had a material effect on the Group's expectations. It is very much "business as usual".

 

Land

 

For Gleeson Homes, land continues to be available at relatively low cost. The division's land pipeline grew to a record high of 117 sites (2015: 97), comprising 9,284 plots owned or conditionally purchased (2015: 7,496). Gleeson Homes intends to commence building low cost homes on every site as soon as planning permission is obtained.

 

The division's strategic objective of 1,000 unit completions per annum is within sight and, as set out in the Strategic Report, we are taking advantage of the opportunity for substantial growth beyond this figure by rolling out the division's distinctive and highly successful business model across a wider geographical area.

 

Gleeson Strategic Land has a record number of sites in the South of England with planning consent or resolution to grant. Demand for prime sites in the South of England from a wide range of housebuilders remains strong.

 

Employees

 

The Group's strong performance during the year reflects the remarkable dedication and professionalism of our employees. On behalf of the Board, I would like to congratulate and thank them.

 

The average number of employees during the year increased to 314 (2015: 266).  The actual number of employees at the year-end was 333 (2015: 290).

 

Dividends

 

Reflecting the Group's strong financial performance and our confidence in the prospects for the current year and beyond, the Board is recommending a final dividend for the year of 10.0 pence per share (2015: 7.3 pence per share).  Combined with the interim dividend, this will give a total dividend for the year of 14.5 pence per share (2015: 10.0 pence per share), an increase compared to the previous year of 45.0%. Subject to shareholder approval at the Annual General Meeting ("AGM"), the final dividend will be paid on 15 December 2016 to shareholders on the register at close of business on 18 November 2016. The Board aims to maintain dividend cover between two and three times for the foreseeable future.

 

Summary and Outlook

 

We are in a strong position to deliver further growth. Market demand remains strong and Gleeson Homes' growing land pipeline provides the opportunity to open new sites in both existing and new regions in the North of England and the Midlands. Demand for consented green field sites in our Strategic Land division also remains strong across a wide range of housebuilders. Against this background, the Board is confident that the Group has significant scope to grow both revenue and profits in the current year and beyond.

 

 

 

 

 

 

Dermot Gleeson

 

 



 

STRATEGIC REPORT

 

GROUP BUSINESSES

 

The Group consists of two distinct but complementary businesses: housebuilding on brownfield land in the North of England and strategic land trading, primarily in the South of England.

 

Gleeson Homes:

 

Gleeson Homes continues to build significant value for shareholders as well as delivering a unique social benefit in helping people on lower incomes move from housing poverty caused by the 'rent trap' into home ownership and wealth creation.  Our homes are affordable enough to be sold to a couple on the current national living wage and quite often mortgage repayments are less than comparable council house rents.  

 

The key features of the Gleeson Homes business model are:

 

·     

·     

·     

·     

·     

 

Gleeson Strategic Land:

 

The key features of the Gleeson Strategic Land business model are:

·     

·      .  The business' team of land surveyors and town planners, along with legal and technical experts, steer the land through the planning process towards achieving a commercially attractive residential planning consent.

·     

 

STRATEGIC DEVELOPMENT AND PRIORITIES

 

The strategy of the Group is to build a larger and increasingly profitable business by increasing the number of housing regeneration sites in its target markets, increasing its housebuilding land pipeline and improving profitability on the sale of individual units and of land with residential planning permission. 

 

Gleeson Homes has a proven and successful business model. Working alongside local authorities, Gleeson Homes has played a key role in regenerating whole communities, allowing people to continue living in, or return to, their home neighbourhoods.

 

We have been growing our regional footprint for some years and we continue to do so. Two new regional offices were opened during the year in Wakefield and St Helens, taking the number of regional offices to six (including established offices in Sheffield, Bury, Wynyard and Chester-le-Street). Gleeson Homes believes its model of providing affordable homes for people on low incomes in areas that are in need of regeneration can also be rolled-out in other areas in the North and Midlands.

 

Gleeson Homes is now comfortably in sight of its target of 1,000 unit completions per annum. We expect to reach this target, on an annualised run rate basis, during the financial year ending 30 June 2017. Once this milestone is reached, we will outline new medium term growth targets.

 

Based on our estimate of the addressable customer base within the expanded catchment area in which we intend to grow, we believe that this business has the potential to achieve a sales rate of 3,000 units per annum.

 

Our strategic priorities are set out below:

 

Increased housebuilding footprint:

 

Improve margins:

 

Build quality, sustainable homes:

 

Increased land pipeline:

 

Progress planning applications:

 

Cash generation:

 

Robust Health & Safety:

 

DISCONTINUED OPERATIONS

 

Building and Engineering Contracting:

                                                                                 


Units sold

Operating profit - units sold

Land pipeline (units)

 

*2015 excludes £2.7m profit on land sales (2016: nil)

 

904 homes were sold during the year, an increase of 20.4% on the prior year's total of 751.  During the year Gleeson Homes opened 18 new sites and had on average 43 selling outlets open compared to 39 during the prior year.  The outlets were located in Cleveland, County Durham, Derbyshire, Lancashire, Greater Manchester, Merseyside, Northumberland, North Yorkshire, Nottinghamshire, Tyne and Wear, South Yorkshire and West Yorkshire.  The number of outlets at the end of the year increased to 48 compared to 43 at the prior year end and is expected to increase to over 50 during the course of the current financial year.

 

 

The proportion of homes sold from newer, higher margin sites reduced to 87% reflecting the acceleration of sales on our last remaining legacy site.

 

Gross profit margin on units sold increased to 31.1% (2015: 29.6%) due to increased average selling prices, lower land costs and the maintenance of a very stringent approach to cost control.

 

Gleeson Homes margin on unit sales

2012

2013

2014

2015

2016

Gross Profit

20.4%

27.8%

29.8%

29.6%

31.1%

Operating Profit exc. Land

0.9%

8.4%

13.3%

15.8%

17.1%

The increase in the volume of homes sold along with the improved gross profit margin on units sold has resulted in gross profit on units sold increasing by 28.7% to £35.4m (2015: £27.5m). There were no land sales within the Homes division during the year (2015: £2.7m gross profit on one land sale).

 

Operating profit on unit sales increased 32.7% to £19.5m (2015: £14.7m). Operating profit on land sales was nil (2015: £2.7m). Gleeson Homes reported total operating profit of £19.5m (2015: £17.4m).

 

Gleeson Homes has a large range of bespoke packages to assist customers to become homeowners, including "Save and Build", "First Rung", "Advance to Buy", and "Aspire to Own". The Government's Help to Buy Scheme remains popular amongst many of our customers, with 61% of the homes sold in the year utilising this scheme.

 

Competition amongst mortgage lenders has helped to both reduce borrowing costs and to increase availability. A range of mortgage lenders provide finance to Gleeson home buyers and the number of providers is increasing. The recent reduction in bank base rates has further reduced borrowing costs and increased mortgage affordability.

 

Gleeson Homes was able to continue to acquire land in the North of England and the Midlands at relatively low cost. This was a busy year of land acquisition which saw the land pipeline grow by 20 sites to a total of 117 at year end; 35 new sites were added to the pipeline, while 15 sites were either completed or we did not proceed to purchase. In terms of units, the pipeline grew by 1,788 units to stand at 9,284 units at June 2016. Of these units 4,357 are owned (2015: 3,680) and 4,927 units are conditionally purchased (2015: 3,816).  In addition to owned and conditionally purchased units, there are a further 997 units which are being actively considered for acquisition but will only proceed to purchase if they meet our strict returns criteria.

 

Gleeson Strategic Land

 


Revenue

Operating profit

Land sales (no. of sites)

 

Revenue from Gleeson Strategic Land grew by 32.1% to £28.4m (2015: £21.5m) which reflects an increase in the number of successful land transactions to 7 (2015: 5). Operating profit shows the value added by the Gleeson Strategic Land business on land transactions during the year. Operating profit increased by 25.9% to £10.2m (2015: £8.1m). As with revenue, the profit growth was driven by the increase in transactions during the year.

 

 

At the year end, our Strategic Land business had a portfolio totalling 68 sites (2015: 68 sites). We acquired 5 new sites and sold 7 sites in the year. Two of the sites sold were split prior to sale and one part of each was retained. The portfolio comprises 3,843 acres (2015: 3,936 acres), of which 178 acres (2015: 159 acres) were wholly or part owned by the Group; 2,115 acres (2015: 2,073 acres) were held under option; and 1,550 acres (2015: 1,704 acres) were the subject of promotion agreements. The portfolio of sites continues to have a geographic bias towards the South of England, predominantly in Buckinghamshire, Devon, Dorset, Essex, Hampshire, Hertfordshire, Kent, Oxfordshire, Somerset, Surrey, Sussex and Wiltshire. The 68 sites have the potential to deliver circa 21,111 plots (2015: 21,150 plots).

Financial Review

·     

·     

·     

·     

·     

·     

·     

·     

* Normalised earnings per share exclude the impact of exceptional costs (2016: £nil, 2015: £6.1m).


2013

2014

2015

2016

Profit before tax (£m)

£5.8m

£12.2m

£17.3m

£28.2m

Operating Profit excluding group overheads

2013

2014

2015

2016

Gleeson Homes

£4.0m

£9.4m

£17.4m

£19.5m

Gleeson Strategic Land

£3.5m

£4.8m

£8.1m

£10.2m

 

Note: Gleeson Homes operating profit in 2015 includes £2.7m from the sale of surplus land. There were no land sales in 2016.

There were no provisions made during the year. During 2015 the Group fully provided for the £4.9m carrying value of its investment in GB Group Holdings Ltd.


2013

2014

2015

2016

Total dividend (pence)

2.5p

6.0p

10.0p

14.5p

 


2013

2014

2015

2016

Cash balance (£m)

£9.9m

£13.7m

£15.8m

£23.2m

 



 

CONSOLIDATED INCOME STATEMENT

for the year ended 30 June 2016

 

2016


2015

 £000

 £000

 142,065

 117,588

(94,509)

(77,287)

 47,556

 40,301

(19,390)

(17,019)

-  

(1,236)

(19,390)

(18,255)

 28,166

 22,046

-  

(4,896)

 512

 496

(440)

(383)

 28,238

 17,263

(4,934)

(4,848)

 23,304

 12,415

(345)

(207)


 22,959

 12,208

 42.59 p


 22.77 p

 42.51 p


 22.61 p

 43.23 p


 23.16 p

 43.15 p


 22.99 p


 



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 June 2016

 


2016

2015

 £000

 £000

          22,959

            12,208







              (584)

                    -  



              (584)

                    -  



          22,375

            12,208

 

 



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2016


2016

2015

 £000

 £000


 1,274

 1,236

 506

 506

-  

 15

 13,527

 19,606

 4,567

 5,668

 19,874

 27,031

 114,238

 108,222

 23,284

 17,530

 23,244

 15,809

 160,766

 141,561

 180,640

 168,592

(100)

(59)

(26,904)

(31,790)

(111)

(214)

(620)

-  

(27,635)

(32,004)

(27,735)

(32,063)

 152,905

 136,529

 1,082

 1,074

 23

 23

-  

-  

(584)

-  

 152,384

 135,432

 152,905

 136,529

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2016

Share capital

Available for sale reserve

Retained earnings

Total

 

£000

£000

£000

£000

 






 

              1,063

                 120

 

-

          120,472

 128,091

 






 






 

        -  

                -  

-

  12,208

   12,208

 

        -  

                -  

-

   12,208

   12,208

 






 






 






 

11

             -

-

           -  

          66

 

  50

-

-

           -  

          50

 

(50)

-

-

-

(50)

 

77,324

(120)

-

 (70,736)

         -

 

    ( 77,324)

-

-

77,324

-

 

-

-

-

-

(25)

(25)

 

-

-

-

-

266

266

 

-

-

-

-

(4,077)

(4,077)

 

    11

 

(120)

 

-

           2,752

           (3,770)

 






 

              1,074

 

-

 

-

          135,432

        136,529

 






 






 

        -  

                -  

 

-

  22,959

22,959

 

-

-

(584)

-

(584)

 

        -  

              -  

(584)

22,959

22,375

 






 






 






 

8

             -

-

           -  

8

 

              -  

-

-

(46)

(46)

              -  

-

-

420

420

              -  

-

-

(6,381)

(6,381)

8

 

-

 

-

(6,007)

(5,999)





1,082

(584)

152,384

152,905

CONSOLIDATED STATEMENT OF CASH FLOW

for the year ended 30 June 2016

 

 

2016

2015

 £000

 £000



28,238

 17,263 

 (336)

 (207)

 27,902 

 17,056 



 763 

 798 

           420 

           266

 (73)

 (171)

           129 

          104 

 -

 (50)

15

-

-

 (22)

(512)

 (496)

 440

 383 



      29,084 

     17,868 



       -

       4,896

 (6,016)

 (7,506)

 (604)

 (16,420)

(4,940)

       9,602



      17,524

       8,440 



 (3,224)

 (79)

 (440)

 (383)



      13,860 

       7,978 





         926

          735 

          -

          236 

     8

            15

-

 (3)

 (940)

 (870)



         (6) 

          113 





-

 (1,933)

8

 66 

 (46)

 (25)

 (6,381)

 (4,077)



 (6,419)

 (5,969)





7,435

 2,122 

      15,809

     13,687 

      23,244

     15,809 



 


2016

2015



 £000

 £000

 113,633 

 96,078 

 28,432 

 21,510 

 142,065 

 117,588 



 - 

 237 



 142,065 

 117,825 





 19,465 

 17,384 

 10,163 

 8,147 

 29,628 

 25,531 

(1,462)

(2,249)

-

      (1,236)

-

      (4,896)

          512

      496 

 (440)

 (383)

 28,238 

 17,263 

     (4,934)

     (4,848)

 23,304 

 12,415 



 (345)

         (207)



 22,959 

 12,208 


Gleeson Construction Services

 

Total

Gleeson Construction Services

Total


2016

2016

2015

2015


£000

£000

£000

£000






Revenue

         -

         -

           237

      237

Cost of sales

(6)

(6)

(275)

(275)

Gross loss

            (6)

          (6)

            (38)

(38)






Administrative expenses

 (330)

 (330)

 (169)

 (169)

 

Operating loss

 (336)

 (336)

 (207)

 (207)






Loss before tax

 (336)

 (336)

 (207)

 (207)






Tax

             (9)

         (9)

             -

       -

Loss for the year from discontinued operations

 (345)

 (345)

 (207)

 (207)






Loss per share - impact of discontinued operations





2016


2015



p


p






Basic


(0.64)


(0.39)






The cash flow statement includes the following relating to the operating loss on discontinued operations:








2016


2015



£000


£000






Operating activities


(47)


(73)

2016

2015

£000

£000



-

(1,236)

-

(4,896)

 -

  (6,132)

2015

2015

£000

£000

 4 

 4 

 1 

 508 

 491 

 512 

 496 





 (440)

 (383)

 (440)

 (383)



 72 

 113 

Continuing operations

Discontinued operations

Total

2016

2015

2016

2015

2016

2015

£000

£000

£000

£000

£000

£000



3,797

-

-

-

3,797

-

45

          3

 -

 -

45

 3







3,842

          3

 - 

 - 

3,842

 3













1,335

  4,959

7

 -

1,342

 4,959

(519)

(54)

-

-

(519)

(54)

276

 (60)

2

-

278

 (60) 







  1,092

  4,845

9

 -

1,101

 4,845







4,934

  4,848

9

-

4,943

 4,848







2016

2015

£000

£000



28,238

17,263

(336)

(207)

27,902

17,056





5,580

3,539



99

1,313

(417)

 -

(60)

-

 -

110

(74)

-

289

(60)

45

-

(519)

(54)

4,943

4,848



 

2016

2015

£000

£000





2,433 

1,448 

  3,948 

  2,629 

 6,381 

 4,077 

2016

2015

£000

£000



23,304

12,415

 (345)

 (207)

22,959

12,208


2016

2015

No. 000

No. 000


53,907

53,614



-

103

383

54,010

53,997


2016

2015



43.23p

23.16p

43.15p

22.99p




 (0.64)p

 (0.39)p

(0.64)p

(0.39)p




42.59p

22.77p

42.51p

22.61p



2016

2015

£000

£000



22,959

12,208

-

6,132



22,959

18,340



2016

2015



42.59p

34.21p

42.51p

33.96p


This information is provided by RNS
The company news service from the London Stock Exchange
 
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