Profits and revenues soar at listed housebuilding firm

Sheffield-headquartered listed housebuilder MJ Gleeson has reported strong half-year results this morning, with pre-tax profits soaring 62% to £22m and revenues increasing 52% to £118m.

Reporting on the six-month period to December 31 2018, the firm said its pre-tax profits rose 62% from £13.7m in 2017 to £22.3m in 2018 and revenues rose 52% from £77.4m to £118.3m for the same period.

Dermot Gleeson, Chairman of MJ Gleeson, said: “The Group has once again delivered an excellent performance, increasing operating profit in both divisions. Gleeson Homes’ growth plans remain on track.

 “We see no signs of customer caution and demand remains robust. Land remains available at sensible prices in both existing and new geographic areas. The two pilot offices in Penrith, Cumbria and Ashington, Northumberland have become full area offices, increasing the number of area offices to ten.

“Gleeson Strategic Land completed the same number of site sales as in the first half of the prior year, but the sites sold were significantly larger this half. Demand for consented sites remains strong from both large and medium-sized developers.

“Against this background, the Board is confident that the Group will deliver a result for the full year at least in line with expectations.”

The firm’s homes division said the average selling price (“ASP”) for the units sold in the period increased 2.4% to £127,400 (H1 17/18: £124,400) reflecting modest price increases and the effect of plot mix and development mix.

Gross margin on units sold in the period decreased 60 basis points to 31.6% (H1 17/18: 32.2%), as it expected, due to cost increases arising from increased build rates and changes in development mix.

At 31 December 2018, Gleeson Homes was selling from 67 sites, an increase of eight sites on the corresponding period last year. It expects to open a significant number of sites during the coming months and anticipate that the number of active selling sites will be approaching 70 by June 2019.

The firm added: “Demand for our low-cost homes remains strong; we are actively sourcing sites in existing and new areas within our target geographic regions.

“In July 2017 we announced our intention to double completions to 2,000 units per annum within five years. We are confident that we will achieve this.”

Gleeson Strategic Land, its land promotion business, continued to see strong demand from medium and large housebuilders for good quality residential sites in the South of England.

The division recorded the sale of three sites (H1 17/18: three sites), with planning consent for the residential development of a total of 483 plots (H1 17/18: 133 plots). Revenue increased £26.6m to £30.3m (H1 17/18: £3.7m), reflecting the larger size of the three sites sold.

Gross profit increased £7.2m to £10.3m (H1 17/18: £3.1m). Operating profit increased £6.7m to £9.0m (H1 17/18: £2.3m).

There are currently nine sites in the portfolio with either planning permission or a resolution to grant permission for a total of 2,432 plots (H1 17/18: 11 sites, 2,461 plots). Seven of these sites, which will deliver 1,454 plots, are currently being progressed for sale (H1 17/18: eight sites, 1,593 plots).

There are a further nine sites where the division is currently awaiting either the determination of a planning application or the outcome of a planning appeal.

Gleeson added: “The Strategic Land portfolio continues to be replenished. Two further sites, with the potential to deliver a total of 345 plots, were secured in the period and we anticipate that a number of new site agreements will be signed shortly.”