Bumper year for Gleeson as Budget abolishes buyers’ stamp duty

AS CITY editor of The Yorkshire

Post, I’m expected to have a firm understanding of where our Yorkshire plcs are heading over the coming year.

Anyone who backed my share tip for 2016 (Clipper Logistics, the firm that distributes goods for blue chip retailers such as Asda, Morrisons, John Lewis and Asos) would have enjoyed a 33 per cent increase on their investment.

Unfortunately I didn’t do nearly so well in 2017.

I chose keyhole surgery instruments maker Surgical Innovations, which has actually had a really good year, but the market is yet to take note of the firm’s renaissance.

Three years ago the firm was in deep trouble – 2014 interim results revealed that revenues had more than halved from £3.9m to £1.8m and write-downs saw a dramatic swing to a loss of £3.2m.

In May 2015, full year results revealed the full scale of the problem with exceptional items of £8.4m. Revenues nearly halved to £4m and the group reported a whopping pre-tax loss of £9.8m.

Yet three months ago the group reported first half results at the top end of expectations, with a 14 per cent increase in revenue to £3.5m. It made a pretax profit of £300,000, up from a loss of £60,000 in the first half last year and an annual profit of £280,000 last year.

The shares peaked in August 2017 and anyone who cashed in then would have made an eight per cent gain. However by the end of 2017 they would have made a loss of 15 per cent. Sorry folks.

This year I’m going for urban regeneration housebuilder MJ Gleeson. The Sheffieldbased firm says customers are queueing up on site opening days as more home buyers look to buy houses in former pit villages and other deprived areas in the North of England.

The group’s forward order book at the end of November was up more than 30 per cent on last year.

The firm, which specialises in building houses on land that no-one else wants to buy and turning it into a desirable area that rejuvenates the local economy, said demand remains strong. Gleeson has said the Government’s Help to Buy scheme remains popular.

A hefty 63 per cent of Gleeson’s customers took advantage of Help to Buy last year and this look set to continue in 2018 whatever happens to the economy.

The Autumn Budget produced a windfall for housebuilders with the news that stamp duty is to be abolished for first-time buyers on properties up to £300,000, which was warmly welcomed by Gleeson.

Some 75 per cent of Gleeson’s customers are under the age of 35 and 92 per cent of them are first-time buyers.

Meanwhile, all of Gleeson’s houses are under £300,000 so the Chancellor has effectively abolished stamp duty for all of the group’s customers.

Gleeson’s shares closed 2017 at 770p after a strong year and I think more good news will come in 2018.