18 September 2024
MJ Gleeson plc (GLE.L)
(“Gleeson” or “the Group” or “the Company”)
Audited results for the year ended 30 June 2024 (“FY2024”)
Results in line with expectations as Gleeson Homes delivers a strong performance
Graham Prothero, CEO, commented:
“I am pleased to report a resilient financial performance, delivering results in line with expectations, and good progress against our strategic growth objectives.
Gleeson Homes exceeded expectations, completing the sale of 1,772 new homes and delivering an operating profit of over £30m. We have continued to invest in growth, building Gleeson Homes’ pipeline of sites and total plots, and are now set to return to opening more sites each year than are completed, underpinning strong volume growth in future years.
Having outlined our strategy for growth last year, we are delighted to have signed Gleeson Homes’ first partnership agreement during the year, followed by a second post-period end in August. Diversifying into partnerships will complement our open market business, reducing risk, enhancing efficiency and leveraging economies of scale while accelerating our growth.
We were also pleased that Gleeson Homes received a strong customer recommendation score of 95.3%, achieving five-star status in each of our six regions.
Profits in Gleeson Land were held back by the vagaries of the planning system, but the business has continued to implement its growth strategy, deepening its regional presence and embedding data and analytics throughout its processes. The business is now well positioned for growth, benefiting from a strong land pipeline and, with the election behind us, what is expected to be a more stable planning environment.
Looking ahead, we welcome the Government’s proposed policy reforms with a focus on affordable housebuilding and planning reform, which should benefit both Gleeson Homes and Gleeson Land. Having spent the last year and a half on positioning the business for growth and introducing several related strategic initiatives, we now look forward to executing our strategy and delivering our growth target of 3,000 annual completions.”
| Group financial highlights | 2024 | 2023 | Change |
| Revenue | |||
| Gleeson Homes | £329.0m | £320.8m | 2.6% |
| Gleeson Land | £16.3m | £7.5m | 117.3% |
| Total | £345.3m | £328.3m | 5.2% |
| Operating profit by division | |||
| Gleeson Homes1 | £30.3m | £35.0m | (13.4%) |
| Gleeson Land | £2.2m | £1.0m | 120.0% |
| Profit before tax and exceptional items | £24.8m | £31.5m | (21.3%) |
| Exceptional items | £nil | (£1.0m) | |
| Cash and cash equivalents | £12.9m | £5.2m | £7.7m |
| EPS (pre-exceptional items)1 | 33.1p | 42.9p | (22.8%) |
| ROCE2 | 10.1% | 13.0% | (290 bp) |
| Dividend per share (total) | 11.0p | 14.0p | (21.4%) |
Divisional highlights
Gleeson Homes:
| · | 1,772 homes sold (2023: 1,723) |
| · | Underlying3 selling prices increased by 1.5%, with changes in mix resulting in a 0.3% reduction in average selling prices to £185,700 |
| · | Gross profit margin on homes sold of 24.1% (2023: 27.0%) |
| · | Operating profit of £30.3m (2023: £35.0m pre-exceptional items, £34.0m post exceptional items) |
| · | 79 build sites (30 June 2023: 82) of which 62 are actively selling (30 June 2023: 71) |
| · | Net reservation rates for the year, excluding multi-unit sales4, up 15.8% at 0.44 per site per week (2023: 0.38) |
| · | Achieved five-star customer recommend status in each of our six regions |
| · | Land pipeline up by 1,763 plots to 19,138 plots (2023: 17,375) |
Gleeson Land
| · | Four sales completed under promotion agreements during the year (2023: three) |
| · | Seven sites with planning or resolution to grant (2023: six) |
| · | Portfolio: 71 sites (2023: 70) with the potential to deliver 16,911 plots (2023: 17,831) |
| · | 11 sites awaiting a planning decision (2023: 18 sites) |
Current trading and outlook
July’s long-awaited reduction in interest rates undoubtedly raised confidence among customers. The Board is hopeful for a more stable economic outlook, notwithstanding the recent commentary from government, which, along with the expected cuts in interest rates and the availability of cheaper mortgages, should see buyer confidence continue to build over the coming months.
Gleeson Homes’ net reservation rates have been improving and in the 10 weeks to 6 September 2024 was 0.50 per site per week compared with 0.39 per site per week over the comparable period last year, an increase of 28%. Cancellation rates were 0.11 per site per week compared with 0.10 per site per week over the comparable period last year.
With a number of sites close to achieving planning and in sale processes, Gleeson Land is expected to deliver an improved performance in FY2025.
In an improving market environment, the Company is confident that Gleeson Homes will meet market expectations5 for the current year and, more importantly, fulfil an ambitious programme of site openings which, supplemented by a growing pipeline of partnership transactions, will drive the exciting growth planned for FY2026 and beyond.
In delivering our objective of 3,000 new homes per annum, the Company anticipates its profitability could broadly triple and the Company would resume its position as the fastest growing listed housebuilder in the UK.
1 Stated before exceptional restructuring costs of £nil in 2024 and £1.0m in 2023. Basis EPS in 2023 was 41.5p per share.
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
3 Underlying selling price changes are based on average reported revenue changes on open market completions, on sites with completions in both the current and previous periods, adjusted for the effect of garage mix and bed mix
4 A multi-unit sale is a sale of 5 or more properties to either a private investor or Registered Provider for affordable rent.
5 Analyst consensus for FY2025 and FY2026 can be found at: https://www.mjgleesonplc.com/investors/analyst-coverage/
Analyst presentation
A presentation by Graham Prothero, CEO, and Stefan Allanson, CFO, will be held at 09:00 this morning at the offices of Hudson Sandler, 25 Charterhouse Square, London, EC1M 6AE.
The presentation will be webcast live, and is available via our website at www.mjgleesonplc.com/investors or via the following link: https://stream.brrmedia.co.uk/broadcast/66b9e567a0ca1675708f76e0.