Interim Results

Gleeson(M J)Group PLC 27 March 2001 M J GLEESON GROUP plc - INTERIM ANNOUNCEMENT * Gleeson, the construction services, housebuilding and property group, announces a 15.5% increase in interim pre-tax profit to £5.3 m in what is traditionally the less active half of the year: Half year ended 31 December 2000 1999 Increase Turnover £184.5m £141.1m 30.1% PBIT £7.4m £5.6m 31.8% PBT £5.3m £4.6m 15.5% Earnings per share 36.7p 31.8p 15.4% Dividend per share 6.00p 5.15p 16.5% Net assets per share £13.60 £12.65 7.5% * Construction Services turnover increased by 32% to £134.4 m and its operating profit to £2.7 m from £0.4 m. Currently, Gleeson has partnering agreements with eight water companies that will generate some £400 m of relatively low risk turnover over the next four years. * Gleeson Homes improved its turnover by 27% to £50.1 m and its operating profit by 14.6% to £3.2 m. The housing market has strengthened in the early part of 2001 and, although unit sales for the year are expected to total around 600 compared to 720 in 99/00, average selling prices are predicted to increase to about £180,000. * Gleeson Properties contributed an operating profit of £2.4 m (99/00: £ 2.7 m) with, as anticipated, no development properties being sold during the period. The property development programme has a predicted end value of some £70 m and a satisfactory stream of income is expected to flow from realisations over the next 18 months. * Dermot Gleeson, Executive Chairman, stated 'In the past five years, Gleeson has achieved compound annual growth in profit before tax of 16.6%. The order book at 31 December 2000 of £648 m (almost all of it in Construction Services) was over three times higher than a year ago or, indeed, at any time in the past. The Board is hopeful that this level of performance can be broadly sustained in the current year and beyond.' Enquiries: M J Gleeson Group plc 020-86 44 43 21 Dermot Gleeson (Executive Chairman) David Eyre (Group Managing Director) Colin McLellan (Finance Director) Bankside Consultants Limited 020-72 20 74 77 Charles Ponsonby CHAIRMAN'S STATEMENT FINANCIAL OVERVIEW In what is traditionally the less active half of the year, turnover increased by over 30% to £184.5m (1999/00: £141.1m), profit before interest and tax by 32% to £7.4m (1999/00: £5.6m) and pre-tax profit by 15.5% to £5.3m (1999/00: £ 4.6m). Earnings per share were 15.4% higher at 36.7p (1999/00: 31.8p). Reflecting the increased level of investment in the property development programme and in Gleeson Homes' work in progress, net interest payable more than doubled to £2,059,000 (1999/00: £994,000). Gearing rose to 51.4% but is expected to fall by the year end. Net assets per share increased to £13.60. DIVIDEND The Directors have declared an interim dividend per share of 6.0p, up 16.5% on 1999/00's 5.15p, which will be paid on 29 June 2001 to shareholders on the register at the close of business on 1 June 2001. OPERATING REVIEW Construction Services The Construction Divisions and subsidiaries increased their turnover by 32% to £134.4m (1999/00: £101.6m) and operating profit to £2.7m (1999/00: £0.4m). The completion during 1999/00 of a number of lossmaking design and build housing contracts was a significant factor in the 1.6% improvement in construction margins to just over 2%. Civil and Process Engineering The Engineering Division's revenue increased by 23% to £71.7m (1999/00: £ 58.2m). The water sector, in which Gleeson is the leading UK contractor, continued to provide the bulk of the Division's turnover and completion of the main works on the £95m Edinburgh PFI Sewage Treatment Project was achieved on programme. Building The Building Divisions' turnover increased by 30% to £55.3m (1999/00: £42.5m). Construction is now well underway on the £46m PFI project at St. George's Hospital, Tooting in South London. Specialist subsidiaries The total turnover of the Group's specialist construction subsidiaries increased by 13% to £16.6m (1999/00: £14.7m) and satisfactory margins were maintained. Housebuilding Gleeson Homes increased turnover by 27% to £50.1m (1999/00: £39.4m) and operating profit by 14.6% to £3.15m (1999/00: £2.75m). Unit sales were 20% lower but the Division's average selling price increased by over 50% to £ 180,000. At the half year end, Gleeson Homes' land bank, of which approximately 70% is brownfield, comprised almost 1,800 plots with planning permission, with a further 1,750 acres under option. Gleeson Homes' early focus on brownfield land, combined with its success in winning more major awards for brownfield developments over the last two years than any other housebuilder, is generating a significant flow of off-market and other attractive opportunities. Property Gleeson Properties contributed an operating profit of £2.4m (1999/00: £2.7m). Property Investment The portfolio remains focused on the office and industrial warehouse sectors, with approximately two-thirds by value situated in London and the South East. A review of the Group's commercial property investments is likely to lead to a number of disposals and acquisitions over the next six months. The Group's portfolio of investment properties will be professionally revalued as at 30 June 2001. Property Development for Sale As anticipated, no development properties were sold during the period. PROSPECTS General Against the background of attractive trading conditions in all the major markets in which the Group operates, the Board continues to believe that prospects are extremely promising. The order book at 31 December 2000 of £ 648m (almost all of it in Construction Services) was over three times higher than a year ago or, indeed, at any time in the past. Construction Services The construction divisions and subsidiaries are well placed to benefit from increased Government spending on health, education, transport and social housing - for the first time for some years, construction GDP is expected to rise for an extended period at a faster rate than national GDP. Currently, Gleeson has partnering agreements with eight water companies that will generate some £400m of relatively low risk turnover over the next four years. The recently announced appointment of Gleeson MCL Limited (acquired in January 2000 as Mabey Construction Co. Limited) as an alliance contractor to work with London Underground on the Bakerloo, Victoria and Central Lines Station Modernisation Programme is an encouraging step towards the attainment of the Group's strategic aim of achieving a major presence in the rail sector. Construction margins should benefit from the fact that over 80% of current orders have been secured on a partnering or a PFI basis. Housebuilding The housing market has strengthened in the early part of 2001 and, although unit sales for the year are expected to total around 600 compared to 720 in 1999/00, average selling prices are predicted to continue to increase. The switch in focus from unit sales to higher values, coupled with the coming on stream of a higher level of strategic land, will contribute to improved margins which have been adversely affected by the Division's pursuit of exceptionally fast organic growth over the last three years. Property Tenant and investor demand in the office and industrial warehouse sectors - the Company's main current areas of development activity - remains generally strong. The programme of property development for sale has an anticipated end value of some £70m and a satisfactory stream of income is expected to flow from realisations over the next 18 months. BOARD John McKenna was appointed to the Board of the Company as a non-executive Director with effect from 1 February 2001. John McKenna, 63, who has over 40 years' experience in the construction industry in the UK and overseas, was previously Managing Director of Taylor Woodrow Construction Limited and a member of the Executive Board of Taylor Woodrow plc until his retirement in December 1997. CONCLUSION In the past five years, Gleeson has achieved compound annual growth in profit before tax of 16.6%. The Board is hopeful that this level of performance can be broadly sustained in the current year and beyond. Dermot Gleeson 27 March 2001 Executive Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 months 6 months Year ended ended 31 ended 31 30 June December December 2000 2000 1999 Unaudited Unaudited Audited £000 £000 £000 £000 £000 £000 Turnover: group and share of joint venture Existing operations 184,547 141,091 344,209 Acquisitions - - 9,620 Less: share of joint ventures' - - (4,222) turnover ______ ______ ______ Group turnover 184,547 141,091 349,607 Cost of sales (165,874) (128,299) (316,915) ______ ______ ______ Gross profit 18,673 12,792 32,692 Investment property income 3,005 2,976 5,968 Net operating expenses (14,391) (10,586) (22,684) ______ ______ ______ Operating profit on continuing activities: Existing operations 7,287 5,182 15,614 Acquisitions - - 362 _____ ______ ______ 7,287 5,182 15,976 Share of results of joint ventures 72 403 872 Profit on sale of investment - - 1,912 properties ______ ______ ______ Profit on ordinary activities 7,359 5,585 18,760 before interest Interest receivable 76 160 215 Less: Interest payable (2,135) (1,154) (2,868) _____ _____ _____ (2,059) (994) (2,653) _____ _____ _____ Profit on ordinary activities 5,300 4,591 16,107 before taxation Taxation on profit on ordinary (1,590) (1,377) (4,497) activities _____ _____ _____ Profit after taxation 3,710 3,214 11,610 Dividends (607) (521) (2,682) _____ _____ _____ Retained profit for the period 3,103 2,693 8,928 _____ _____ _____ Earnings per share 36.66p 31.76p 114.71p Earnings per share - fully diluted 36.67p 31.75p 114.62p Interim dividend per share 6.00p 5.15p SUMMARISED CONSOLIDATED BALANCE SHEETS As at As at As at 31 31 30 June December December 2000 2000 1999 Unaudited Unaudited Audited £000 £000 £000 Fixed assets Intangible assets 5,871 - 6,025 Tangible assets 85,877 85,601 82,906 Investments 6,038 3,371 5,745 ______ ______ ______ 87,786 88,972 94,676 Current assets Stocks 155,734 110,045 129,564 Debtors 48,900 48,340 60,853 Cash at bank and in hand 1,606 1,175 1,609 ______ ______ ______ 206,240 159,560 192,026 Creditors: Amounts falling due within one (165,338) (119,521) (151,117) year ______ _______ ______ Net current assets 40,902 40,039 40,909 Total assets less current liabilities 138,688 129,011 135,585 Provisions for liabilities and charges 305 255 305 ______ ______ ______ Net assets 138,993 129,266 135,890 ______ ______ ______ Capital and reserves Called up share capital 1,022 1,022 1,022 Share premium account 1,657 1,657 1,657 Capital redemption reserve fund 100 100 100 Revaluation reserve 20,442 25,640 20,471 Profit and loss account 115,772 100,847 112,640 ______ ______ ______ Total shareholders' funds 138,993 129,266 135,890 ______ ______ ______ SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 6 months 6 months Year ended ended ended 31 December 31 December 30 June 2000 1999 2000 Unaudited Unaudited Audited £000 £000 £000 Net cash outflow from operating activities (29,212) (23,610) (7,026) Dividends from joint ventures - - - Returns on investments and servicing of 1,143 2,070 3,306 finance Taxation (1,992) (31) (4,055) Capital expenditure and financial (1,804) (1,408) 1,117 investment Acquisition and disposals - - (5,114) Equity dividends paid - - (2,282) ______ ______ ______ Increase in net debt (31,865) (22,979) (14,054) ====== ====== ====== NOTES 1. Segmental analysis 6 months 6 months Year ended ended ended December December June 2000 1999 2000 Unaudited Unaudited Audited £000 £000 £000 Analysis of turnover on continuing operations: Construction United Kingdom 133,243 99,672 237,198 Africa - 269 494 Jersey 1,155 1,703 3,423 ______ ______ ______ 134,398 101,644 241,115 Homes - United Kingdom 50,149 39,447 106,969 Property - United Kingdom - - 1,523 ______ ______ ______ 184,547 141,091 349,607 ====== ====== ====== Operating profit on continuing activities: Construction 2,851 390 3,333 Homes 3,153 2,746 8,178 Property 2,417 3,049 6,456 Central costs (1,134) (1,003) (1,991) ______ ______ ______ 7,287 5,182 15,976 ====== ====== ====== 2. The interim statement was approved by the Board of directors on 26 March 2001. 3. The interim accounts have been prepared in accordance with the accounting policies adopted in the preparation of the accounts for the year ended 30 June 2000 which are set out in the Company's Annual Report. 4. The abridged results for the 12 months to 30 June 2000 do not constitute Statutory Accounts within the meaning of S240 of the Companies Act 1985. The Auditors' Report on these Accounts was unqualified and did not contain any statement under S237 Companies Act 1985. 5. In accordance with FRS 14, the earnings per share figure is based on a weighted average number of shares which excludes 99,500 shares on which dividends have been waived. 6. Copies of this interim announcement will be circulated to shareholders and will also be available from the Company Secretary at Haredon House, London Road, North Cheam, Surrey SM3 9BS.

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