15 February 2024
MJ GLEESON PLC
Results for the half year ended 31 December 2023
Graham Prothero, Chief Executive Officer, commented:
“The results for the half year reflect a robust performance given conditions in the housing market during 2023. Gleeson Homes entered the second half of the year with a strong forward order book and we are seeing encouraging signs of recovery in reservation rates.
In common with others within the sector, we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales. This has been exacerbated by additional costs on a number of older sites, which were brought to light by new management teams put in place following the organisational restructuring implemented last year. We have substantially tightened and standardised our operating and reporting processes and cost disciplines. I am pleased with the response from the teams and the new rigour in these areas as we implement these changes.
Gleeson Land continues to see strong interest from a range of both large and regional developers although the challenge of achieving planning has increased in the context of the revised NPPF and political sensitivities in an election year. We have made good progress in implementing the new structure set out at our Capital Markets Day in July 2023.
Against the backdrop of improving mortgage rates, we are seeing positive signs of a recovery in demand. We expect this to continue into the seasonally busier selling period over the coming weeks and months. Gleeson Homes continues to negotiate selective multi-unit sales and expects to enter into further agreements over the coming months for delivery in both the current and next financial year.
The business has traded well in difficult conditions and is well-placed to capitalise on a recovery in the market and resume its exciting growth strategy.”
| H1 23/24 | H1 22/23 | Change | |||
| Revenue | |||||
| Gleeson Homes | £142.3m | £166.7m | (14.6%) | ||
| Gleeson Land | £9.2m | £4.3m | 114.0% | ||
| Total | £151.5m | £171.0m | (11.4%) | ||
| Operating profit by division | |||||
| Gleeson Homes | £10.2m | £18.2m | (44.0%) | ||
| Gleeson Land | £1.0m | £1.4m | (28.6%) | ||
| Group operating profit | £8.8m | £16.8m | (47.6%) | ||
| Group profit before tax | £7.2m | £16.1m | (55.3%) | ||
| Net (debt)/cash | (£18.7m) | £13.5m | (£32.2m) | ||
| ROCE1 | 9.0% | 20.0% | (1,100bp) | ||
| EPS (basic) | 9.6p | 22.0p | (56.4%) | ||
| Dividend per share | 4.0p | 5.0p | (20.0%) | ||
1 Return on capital employed is calculated based on earnings before interest and tax and exceptional items (EBIT), expressed as a percentage of the average of opening and closing net assets for the prior 12 months after deducting deferred tax and cash and cash equivalents net of borrowings.
Gleeson Homes:
· 769 homes sold (H1 22/23: 894) reflecting the conditions experienced across the market
· Underlying net selling prices on open-market sales increased by 1.6% compared to H1 22/23
o Reported average selling prices reduced by 0.8% to £185,000 (H1 22/23: £186,400) as a result of the discounts on multi-unit sales and changes in mix
· Operating profit £10.2m (H1 22/23: £18.2m)
· Administrative expenses reduced by 11.7% to £24.8m (H1 22/23: £28.1m) following completion of the organisational restructure in FY23
· Gross margin 24.5% (H1 22/23: 27.7%)
· Three new sites opened (H1 22/23: three sites opened)
· Land pipeline* 18,168 plots (June 2023: 17,375 plots)
* Pipeline refers to plots on sites either purchased or contracted to purchase subject to planning.
Gleeson Land:
· One land sale completed (H1 22/23: one land sale)
· Completion of the final four phases of a previously sold site
· Four sites being marketed or in a sales process (H1 22/23: five sites)
· Successfully secured planning permission on four sites (H1 22/23: four sites)
· One new site added to the portfolio (H1 22/23: one site)
· Portfolio of 70 sites (June 2023: 70 sites)
Current trading and outlook:
· The Group is seeing encouraging signs of a recovery in demand.
· Net reservation rates were 0.50 in the 5 weeks to 9 February 2024 (5 weeks to 10 February 2023: 0.46).
· With our refreshed product range and broader marketing strategy now widely rolled out, the Company remains confident in delivering results for the year in line with expectations and reaffirms its medium term targets as outlined at the 2023 Capital Markets Day.
A presentation by Graham Prothero, CEO, and Stefan Allanson, CFO, which will also be webcast, will be held at 9:30am today.
To attend virtually by webcast, access via the following link:
Enquiries:
| MJ Gleeson plc | Tel: +44 1142 612900 | |
| Graham Prothero | Chief Executive Officer | |
| Stefan Allanson | Chief Financial Officer | |
| Hudson Sandler | Tel: +44 20 7796 4133 | |
| Mark Garraway | Tel: +44 7771 860 938 | |
| Charlotte Cobb | Tel: +44 7795 422 131 | |
| Harry Griffiths | Tel: +44 7860 630 046 | |
| Singer Capital Markets | Tel: +44 20 7496 3000 | |
| Shaun DobsonAlaina Wong | ||
| Liberum | Tel: +44 20 3100 2222 | |
| Richard Crawley |