Gleeson in record month as profits hit £22.3m
LOW COST housebuilder MJ Gleeson enjoyed its strongest ever month for reservations in January after it posted a pre-tax profit of £22.3m in its interim results.
The Sheffield firm’s figures were an increase of 63 per cent on previous profits and led to analysts putting a ‘buy’ notice on the firm.
Gleeson will now hand an increase in the interim dividend of 27.8 per cent to 11.5p per share.
MJ Gleeson specialises in providing housing to people on lower incomes and based in areas which have seen industrial decline.
Its average selling price went up by 2.4 per cent to £127,000 with another nine sites having been handed planning permission.
Jolyon Harrison, chief executive of the firm, told The Yorkshire Post that the work the firm did was very much designed to please all parties.
For every 10 houses the firm builds it means 8.8 council homes become vacant, freeing up space on waiting lists.
“It means everyone is happy,” he said.
“Eighty per cent of our customers come from rented accommodation.
“We build on brownfield sites so that we are not impinging on Green Belt.”
Mr Harrison said that the firm was very much concentrating on growing its presence in the North of England but also looking to expand beyond there.
“We are looking at everywhere in the North of England,” he said. “We will only expand where there is a good deal.
“We are very strong in Yorkshire. If you look at the history of what analysts have had to say about us, we have always produced good margins, we produce cash, we are socially responsible and people understand what we do.”
The firm currently has a land pipeline of 12,966 plots, as well as 10 area managers across 10 offices.
Mr Harrison said that the mood in these offices had improved in recent months and that they were not experiencing some of the more downbeat emotions felt elsewhere in the housing market.
“Footfall is up 30 per cent on our website,” he said. “Six months ago some of our offices managers were worried about not having
enough bricklayers. Now that is not just happening.”
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.”
Analysts at Liberum hailed the results saying: “Management expects full-year profits at least in line with expectations and we leave PBT estimates unchanged.
“However, with seven strategic sites being marketed and a very strong order book in homes, we are very confident in our H2 expectations.
“Gleeson easily warrants its premium to the other housebuilders as it is delivering 3-4x faster volume growth without absorbing cash significantly and at much lower risk.”