The boss of affordable house-builder MJ Gleeson (GLE) has ‘no concern whatsoever’ that Brexit will have a negative impact on his business.
To back up his bullish stance, Jolyon Harrison and his colleagues have lifted the dividend for the year to 30 June by 45% to 14.5p a share.
This followed a 63% rise in pre-tax profit to £28.2 million during the period, despite sales climbing only 20.8% to £142.1 million. The difference is accounted for by an improvement in the margin to 31.2%, from 29.6% last year, and the company selling more land.
Shares moved 3.1% higher to 603.2p on the news as shareholders maintain their confidence in the company’s model of building affordable homes in the north of England.
The region suffers from high demand and under-supply. ‘There is a queue whenever we release properties for sale,’ he said.
At the heart of Gleeson’s success is that it builds homes with an average selling price of £125,700. Harrison believes that with 80% of his customers being first time buyers, those securing a mortgage could pay less a month than they were in rental accommodation.
Harrison adds that since the referendum Gleeson has not seen any change in demand or visits to the website. ‘Not the slightest blip on the graph.’
So he is not altering plans to build between 15% and 20% more homes each year and targets opening new offices in the Midlands and Cumbria.
The other side of Gleeson’s business is also vibrant. This involves selling land with planning permission to major and mid-sized housebuilders.
Selling more land saw operating profits in this division grow 25.9% to £10.2 million.
N+1 Singer’s analysts remain upbeat. ‘Gleeson Homes is on track for a 1,000 unit run rate in the current year, at which point a new medium term target will be announced.
‘A recently enlarged regional ‘catchment area’ offers plenty of scope for recent momentum to be sustained. Gleeson remains an N+1 Singer Best Idea for 2016,’ they write.