MJ Gleeson plc Report and Accounts
2017MJ Gleeson plc
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 - delivered another excellent year of increased volumes, margins, profit and cash.
Gleeson Homes achieved its milestone target of 1,000 unit sales per annum and has set a new milestone target of 2,000 unit sales per annum within the next 5 years.
Affordability remains very attractive and demand exceeds supply, with buyers queueing on site opening days. The division opened another area office, bringing the total number of area offices to seven plus two pilot offices, and has a pipeline of owned and conditionally purchased sites containing 11,588 plots, equivalent to more than 11 years of sales.
Gleeson Strategic Land also had a record year and continues to benefit from strong demand for consented land in prime locations from both medium sized and large housebuilders. The division has a strong pipeline of sites, predominantly in the South of England, which have the opportunity of developing 21,505 plots, and anticipates continuing to enjoy a high level of success in promoting commercially attractive sites through the planning system.
The Board is confident in the Group's short and longer term outlook.
Contents
1 | Financial Highlights | 37 | Governance Report | 85 | Consolidated Statement of |
2 | Chairman's Statement | 38 | Board of Directors | Financial Position | |
40 | Governance | 86 | Consolidated Statement of | ||
4 | Strategic Report | 47 | Directors' Report | Changes in Equity | |
5 | Group Businesses | 52 | Audit Committee Report | 88 | Consolidated Statement of |
8 | Key Performance Indicators (KPIs) | 58 | Remuneration Committee Report | Cashflow | |
10 | Chief Executive's Statement | 90 | Notes to the Financial | ||
14 | Business Performance | 75 | Financial Statements | Statements | |
16 | Strategic Development and | 76 | Statement of Directors' | ||
Priorities | Responsibilities | 118 | Further Information | ||
18 | Corporate Social | 77 | Independent Auditors' Report | 119 | Five Year Review |
Responsibility | 84 | Consolidated Income Statement | 120 | Corporate Directory | |
28 | Financial Review | 84 | Consolidated Statement of | 120 | Shareholder Information |
33 | Operating Risk Statement | Comprehensive Income | 120 | Financial Calendar |
Cover: Sophie, Masefield Park, Holmewood, Derbyshire
Financial Highlights
Profit before tax +17%2017: £33.0m, 2016: £28.2m
Cash and cash equivalents +47%2017: £34.1m, 2016: £23.2m
Dividend for the year +66%2017: 24.0p, 2016: 14.5p
Operating margin 20.6%2016: 19.8%
Return on capital employed 25.4%2016: 23.2%
Earnings per share 48.5p2016: 42.6p
Carlisle Park, Swinton, South Yorkshire
1
Chairman's Statement
" I am pleased to report a milestone year for volumes and
"
another excellent year of growth in margins, profit and cash.
Dermot Gleeson Chairman
Gleeson Homes exceeded 1,000 unit sales for the first time, increasing volumes by 12.1% to 1,013 units (2016: 904 units). Gross margins on plot sales strengthened to 33.0% as a result of changes to site mix, increase in selling prices and robust cost controls resulting in a 16.9% increase in operating profit to £22.8m (2016: £19.5m). Taking advantage of relatively low land prices in its target areas in the North of England, the division increased its land pipeline by 2,304 plots and
24 sites.
Gleeson Strategic Land increased operating profit by 17.6% to £12.0m (2016: £10.2m) by continuing to secure attractive residential planning consents and satisfying demand for development sites from both medium sized and large housebuilders.
Profit before tax increased by 17.0% to £33.0m (2016:
£28.2m). Profit for the year attributable to equity holders of the parent company was £26.2m (2016: £23.0m).
Earnings per share grew by 13.8% to 48.5p (2016: 42.6p).
Return on capital employed increased by 220 basis points to 25.4% (2016: 23.2%).
Market context
Demand for low cost homes in the North of England was very strong with long queues forming on launch days at new development sites.
Affordability for low income families buying a Gleeson home remained attractive and mortgage availability continued
to support the young first time buyers who make up a large proportion of Gleeson Homes buyers.
The Government's White Paper on housing, published in
February 2017, was supportive of the approach to affordable housing on which Gleeson Homes' business model is based and contains proposals which will, if adopted, make it easier for the division to secure planning permissions.
Gleeson Strategic Land continued to experience strong demand from both medium-sized and large housebuilders for consented land in high value areas in the South of England and attracted multiple bidders for all of its land sales.
Land
We remain one of the few developers building low cost homes on brownfield sites in challenging communities and such
sites continue to be available at relatively low cost. Gleeson Homes' land pipeline grew by 2,304 plots and 24 sites to a record high of 141 sites (2016: 117), comprising 11,588 plots owned or conditionally purchased (2016: 9,284). The division will continue to commence building on sites as soon as a fully implementable planning permission is obtained.
Gleeson Strategic Land continued to source developable sites in the South of England. During the year it obtained planning consent on 6 sites; and entered agreements involving 6 new sites, potentially providing development opportunities on an additional 1,846 plots. Demand
for prime sites with planning consent in the South of England from a wide range of housebuilders remains extremely strong.
Employees
The Group's strong performance during the year reflects the dedication and hard work of our employees.
On behalf of the Board, I would like to congratulate and thank them very warmly indeed.
2 MJ Gleeson plc: Report and Accounts for the year ended 30 June 2017
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