14 September 2023
MJ Gleeson plc (GLE.L)
(“Gleeson” or “the Group” or “the Company”)
Audited results for the year ended 30 June 2023 (“FY2023”)
Results in-line with expectations, reflecting shifting buyer demographics
Pre-emptive actions and higher selling prices ensured resilient operating margins
Graham Prothero, CEO, commented:
“I am pleased to report a robust performance despite the impact on buyer confidence as a result of current economic volatility. We maintained an acceptable sales rate, supported by our first multi-unit and investor sales. We were pleased to see growing levels of interest from purchasers who might previously have considered more expensive homes from other developers, but who are attracted by the combination of Gleeson’s affordable price points and high quality.
We took advantage of the quieter market to restructure Gleeson Homes, right-sizing the business for current market conditions and, more importantly, creating a standardised operating platform for the exciting growth which lies ahead. We continued to secure excellent opportunities in our landbank, and we have entered the new financial year in good shape.
Gleeson Land achieved impressive planning successes, and continues to see good demand for consented land, with the rate of conversion partially constrained by increased caution among developers. The business is successfully adding to an already strong portfolio and is strengthening both its regional coverage and research and analysis capabilities.
As set out at our recent Capital Markets Day, we are excited about the longer-term growth opportunities for the business and look forward, as economic conditions stabilise, to achieving our ambition for the business and realise its medium-term potential of delivering 3,000 homes a year.
I believe we have a resilient business operating in an undersupplied market segment, a robust balance sheet, great prospects and an excellent team to ensure that we continue to successfully navigate the current environment and take full advantage of the significant opportunities ahead.”
Group financial highlights
| 2023 | 2022 | Change | |
| Revenue | |||
| Gleeson Homes | £320.8m | £334.6m | (4.1%) |
| Gleeson Land | £7.5m | £38.8m | (80.7%) |
| Total | £328.3m | £373.4m | (12.1%) |
| Operating profit by division | |||
| Gleeson Homes1 | £35.0m | £51.2m | (31.6%) |
| Gleeson Land | £1.0m | £11.1m | (91.0%) |
| Profit before tax and exceptional items | £31.5m | £55.5m | (43.2%) |
| Exceptional items | (£1.0m) | (£12.9m) | |
| Cash and cash equivalents | £5.2m | £33.8m | (£28.6m) |
| EPS (pre-exceptional items)1 | 42.9p | 78.1p | (45.1%) |
| ROCE2 | 13.0% | 25.4% | (1,240bps) |
| Dividend per share (total) | 14.0p | 18.0p | (22.2%) |
1 Stated before exceptional restructuring costs of £1.0m in 2023 and building safety provisions of £12.9m in 2022
2 Return on capital employed is calculated based on earnings before interest, tax and exceptional items (“EBIT”), expressed as a percentage of the average of opening and closing net assets after deducting deferred tax and cash and cash equivalents net of borrowings
Divisional highlights
Gleeson Homes:
· 1,723 homes sold (2022: 2,000)
· Average selling price up by 11.3% at £186,200 (2022: £167,300), underlying prices up 7.6%
· Gross profit margin on homes sold of 27.0% (2022: 29.0%)
· Operating profit pre-exceptional items of £35.0m (2022: £51.2m)
· 82 build sites (30 June 2022: 87) of which 71 are actively selling (30 June 2022: 61)
· Land pipeline up by 561 plots to 17,375 plots (2022: 16,814)
Gleeson Land:
· Three land sales completed during the year (2022: six)
· Six sites with planning or resolution to grant (2022: three)
· Portfolio: 70 sites (2022: 71) with the potential to deliver 17,831 plots (2022: 20,241)
· 18 sites awaiting a planning decision (2022: 16 sites)
Current trading and outlook
Economic uncertainty has continued to subdue the wider market over the summer months. Gleeson Homes’ net reservation rate for the 9 weeks to 1 September 2023 was 0.43 per site per week compared with 0.54 per site per week over the comparable period last year. Cancellation rates of 0.10 per site per week were unchanged from the comparable period last year.
However, with a steadying mortgage market and the implementation of a range of sales and marketing initiatives, including the introduction of a shared ownership package, we anticipate an increase in our net reservation rates during the Autumn selling season. We also continue to receive interest in multi-unit transactions, which would further strengthen sales.
Gleeson Land started the financial year in a stronger position with six consented sites and has already completed the sale of one significant site. Demand for consented sites remains strong and further site sales are anticipated throughout the year.
We therefore view the current year with confidence, whilst remaining cautious around continuing risks in the wider economy and any further impact on customer demand. As market conditions improve, we look forward to returning to significant growth.
Analyst presentation
A presentation by Graham Prothero, CEO, and Stefan Allanson, CFO, will be held at 09:30 this morning at the offices of Hudson Sandler, 25 Charterhouse Square, London, EC1M 6AE. To attend:
· by webcast, visit the company website: www.mjgleesonplc.com/investors or access via the following link: https://brrmedia.news/GLE_FY23
· by telephone, please dial-in using the below details:
· Number: +44 (0) 808 109 0700
· Code: MJ Gleeson Full Year Results
About MJ Gleeson plc (www.mjgleesonplc.com)
MJ Gleeson plc comprises two divisions: Gleeson Homes and Gleeson Land.
Gleeson Homes is the leading low-cost, affordable housebuilder. Its customers are typically buyers with a median income of £26,000. Its two-bedroom homes start from £106,500. Gleeson’s vision is “Building Homes. Changing Lives”, prioritising areas where people need affordable housing the most. Our aim is to ensure that on all of our developments, a material proportion of the homes are affordable to a couple earning the National Living Wage. Buying a Gleeson home typically costs less than renting a similar property. All Gleeson homes are traditional brick built semi or detached homes. Gleeson offers a wide mix of two, three and four bedroom layouts.
Gleeson Land is the Group’s land promotion division, which identifies development opportunities and works with stakeholders to promote land through the residential planning system.
As a high-quality, affordable housebuilder, Gleeson has strong and inherent sustainability credentials. Its social purpose underpins the Company’s strategy and Gleeson measures itself closely against UN SDGs 5, 8, 11, 12, 13 and 15. More details on the Company’s approach to sustainability can be found at: mjgleesonplc.com/sustainability
Enquiries:
| MJ Gleeson plc | +44 1142 612900 | |
| Graham Prothero | Chief Executive Officer | |
| Stefan Allanson | Chief Financial Officer | |
| Hudson Sandler | +44 20 7796 4133 | |
| Mark Garraway | +44 7771 860938 | |
| Charlotte Cobb | +44 7795 422131 | |
| Harry Griffiths | +44 7860 630 046 | |
| Singer Capital Markets | +44 20 7496 3000 | |
| Shaun Dobson | ||
| James Moat | ||
| Liberum | ||
| Richard Crawley | +44 20 3100 2222 | |