Pre-tax profits plunge 86% at listed house builder

Sheffield-headquartered house builder MJ Gleeson has seen its revenue and profits hit hard by the impact of the pandemic, as it reports its audited results for the year ended 30 June 2020.

Revenue fell 41% to £147.2m compared to 2019, while pre-tax profits dropped 86% in the same period, from £41.2m to £5.6m.

Gleeson Homes recorded 1,072 units sold (2019: 1,529 units), while Gleeson Strategic Land saw two land sales completed during the year (2019: nine). However it says it expects demand to return during 2021.

The business said its financial position remains resilient, with a gross cash balance of £76.8m (2019: £30.3m) and £60m worth of bank loans drawn down with proceeds of £16.4m (gross) from a share placement.

The company’s £10m overdraft facility remains undrawn.

James Thomson, chief executive of Gleeson, said: “The last four months of the financial year, typically our strongest selling period, required us to focus on responding to Covid-19.”

He added: ” Trading during the final quarter of the year was almost entirely “lost” resulting in Gleeson Homes full year completions falling 29.9% to 1,072 (2019: 1,529) and Gleeson Strategic Land completing the sale of only two sites during the year.”

Company chairman, Dermot Gleeson, added: “We are currently seeing strong demand and expect this to continue through the year as the demographics of our customer base and the nature and price point of our product helps to insulate us from the impacts of rising unemployment, the end of the stamp duty holiday and the forthcoming changes to the Help to Buy scheme.

“We have therefore re-affirmed our interim target of delivering 2,000 homes per annum in 2022 and will prioritise investment in the business to achieve it.

“We expect the strategic land market will continue to recover as house builders cautiously scale up their targets for the acquisition of new sites. 

“The Board recognises the uncertainties arising from both the continuing pandemic and the UK’s withdrawal from the EU.

“Nonetheless, our balance sheet remains strong and the Board is cautiously optimistic that the Group will see significant growth in the current year and beyond.”

Prior to Covid-19 hitting the UK, the house builder saw a record high for its shares in February with a price of 984p per share, before dropping to 566p a share at the end of March. Since then the share price has started to recover, when the market closed on Friday the Gleeson’s share price was 614p per share.