Interim Results

Gleeson(M J)Group PLC 25 March 2003 M J GLEESON GROUP plc - INTERIM ANNOUNCEMENT • Gleeson, the construction services, homes and property group, announces that, in what is traditionally the weaker half of the year, turnover increased by 22.6% to £285.7m, but pre-tax profit was lower at £0.3m (2001/02: £3.3m) and earnings per share reduced to 3.4p (2001/02: 23.0p). • Net assets per share totalled £14.52 (2001/02: £14.34), providing substantial backing for the recent share price. • Reflecting their belief in the underlying strength of the Group's business, the Directors have declared an increased interim dividend per share of 6.75p, up 3.9%. • Construction Services increased turnover by 32.2% to £246.1m but generated an operating loss of £0.2m (2001/02: profit £4.3m). Whilst there will be a significant improvement in the Division's operating margin in the second half, a disappointing outcome for the year is likely following the further £5.0m provision which has been made against the Buxton cement contract (as announced on 14 March 2003). The Engineering Division will henceforth tender for traditionally procured work only in exceptional circumstances; this will substantially reduce the Group's exposure to construction risk. • On turnover 12.4% lower at £39.7m, Gleeson Homes made an operating profit of £1.8m (2001/02: loss of £1.5m). Gleeson Homes will make a substantially increased contribution to Group profits in the second half. • Gleeson Properties made an operating profit of £1.9m (2001/02: £3.5m), with no developments being sold in the period (2001/02: £1.6m). Gleeson continues to examine the possibility, referred to at the AGM on 8 January 2003, of transferring the Group's property investment portfolio, together with the related debt, into a non-recourse vehicle, in conjunction with a financial partner. • Dermot Gleeson, Executive Chairman, stated with regard to prospects ' But for the additional Buxton provision and, possibly, a small level of slippage in property sales, prospects for the current year are overall substantially unchanged since the time of the preliminary announcement in October 2002. A considerable improvement continues to be expected in 2003/04.' Enquiries: M J Gleeson Group plc 020-8644 4321 Dermot Gleeson (Executive Chairman) David Eyre (Group Managing Director) Colin McLellan (Finance Director) Bankside Consultants Limited Charles Ponsonby 020-7444 4166 / 07789-202 312 CHAIRMAN'S INTERIM STATEMENT In my AGM address on 8 January 2003, I said that the prospects for the current year were substantially as indicated in my Statement in the Report & Accounts: a much improved performance by Gleeson Homes and buoyant trading by the Building Divisions were likely to be significantly offset by the softening of the commercial property market, by temporary difficulties in the Engineering Division and by the impact of higher insurance costs. This assessment remains broadly valid except that, as announced on 14 March 2003, the prudent decision to make an additional £5m provision for loss on the Buxton cement works engineering contract means that it is no longer likely that the result for the current year will match last year's. Accordingly, six successive years of profits increases up to 2000/01 will be followed by two successive years of decreases - a disappointment that we believe we will put behind us in 2003/04. FINANCIAL OVERVIEW In what is traditionally the weaker half of the year, turnover increased by 22.6% to £285.7m (2001/02: £233.0m), but profit before interest and tax decreased to £1.3m (2001/02: £4.9m) and pre-tax profit was lower at £0.3m (2001/ 02: £3.3m). Earnings per share were 3.4p (2001/02: 23.0p). Reflecting lower averages of both indebtedness and interest rates, net interest payable fell to £1.1m (2001/02: £1.6m). Gearing at the period end, a seasonally high point, was 49.4% (2001/02: 47.8%). On 17 December 2002, the Board purchased for cancellation 200,000 of the Company's shares (1.92% of its issued share capital) at a price of £7.80 per share, increasing both net assets per share and prospective earnings per share, while having an only marginally adverse effect on the Group's gearing. Net assets per share totalled £14.52 (2001/02: £14.34), providing substantial backing to the recent share price. DIVIDENDS Reflecting their belief in the underlying strength of the Group's business, the Directors have declared an interim dividend per share of 6.75p, up 3.9% on 2001 /02's 6.5p, which will be paid on 30 June 2003 to shareholders on the register at the close of business on 30 May 2003. OPERATING REVIEW Construction Services Construction Services increased turnover by 32.2% to £246.1m (2001/02: £186.1m) but generated an operating loss of £0.2m (2001/02: profit £4.3m). Once again, over 80% of work was on a PFI or partnering basis. Building The Building Divisions' turnover increased by 22.9% to £119.3m (2001/02: £97.1m). A significant proportion of the work undertaken related to the Government's substantial capital expenditure programme for hospitals and schools. The Southern Construction Division was the best performing of the three Divisions. Civil and Process Engineering The Engineering Division's turnover increased by 31.5% to £89.4m (2001/02: £68.0m). The water sector, which is one of the busiest markets of the UK construction industry and in which Gleeson is the leading contractor, continued to provide the bulk of the Division's turnover. Specialist Subsidiaries The total turnover of the Group's specialist Construction Services subsidiaries, Powerminster Limited, Concrete Repairs Limited, Gleeson MCL Limited and Hesselberg Hydro (1991) Limited, increased to £38.5m (2001/02: £28.7m). Homes On turnover 12.4% lower at £39.7m (2001/02: £45.3m), Gleeson Homes made an operating profit of £1.8m (2001/02: loss of £1.5m). In the half year, 191 units were sold at an average selling price of £207,000; this compares with 240 and £171,000, respectively, in the first half of 2001/02. Property Gleeson Properties made an operating profit of £1.9m (2001/02: £3.5m). No developments were sold in the period (2001/02: £1.6m). The Property Investment portfolio, whose book value, in the absence, as usual, of an interim valuation, increased to £59.8m (2001/02: £59.1m), remains concentrated on the office and industrial warehouse sectors. During the half year, there were neither acquisitions nor disposals. Gross rental income fell marginally to £2.3m (2001/02 £2.4m). BOARD As was announced on 3 February 2003, Andrew Muncey has been appointed Group Managing Director with effect from 1 May 2003, on the retirement of David Eyre. Andrew Muncey, 46, joined Gleeson as Deputy Managing Director of the Southern Construction Division in 1997, became Managing Director of that Division in May 1999 and was promoted to the Group Board in October 2001. He has a First Class Honours Degree in Civil Engineering from the University of Wales and was previously Construction Director of Walter Llewellyn & Sons Ltd. His appointment, against external and internal competition, reflects, amongst other things, his considerable success in substantially increasing the turnover and transforming the profitability of the Southern Construction Division. David Eyre, who will be 65 in June 2003, joined the Group in 1965, was appointed to the Board in 1995 and became Group Managing Director in 1998. David has played an indispensable role in the conversion of the Group into one of the United Kingdom's leading construction companies. His fellow Directors are conscious that they, and the Group as a whole, owe a deep debt of gratitude to a remarkable, able and very congenial colleague. PROSPECTS Construction Services The Construction Services order book at 1 March 2003 totalled £703m, of which £452m related to relatively low risk four to seven year partnering agreements. In addition, the Group expects to carry out in the order of £200m of business as a result of its membership of the Stirling Water Consortium, one of the two preferred bidders for Scottish Water's £1.5 billion Asset Delivery Programme to be undertaken over four years. The Group continues to anticipate that the present buoyant trading conditions enjoyed by its Building Divisions, in particular by the Southern and Northern Construction Divisions, will be sustained for some time, not least by Government expenditure plans. Against the background of its continuing success in securing work on a partnering basis, the Engineering Division will no longer bid for traditionally procured work unless there is an exceptionally compelling reason to do so. This important strategic decision will substantially reduce the Division's exposure to construction risk. Gleeson MCL, the railway contractor, has a record level of work in hand, including a seven year partnering agreement, worth over £100m, with the Tubelines Consortium for the modernisation of 36 stations on London Underground's Piccadilly Line. Whilst there will be a significant improvement in the Construction Services' operating margin in the second half, a disappointing outcome for the year is likely, following the further provision which has been made against the Buxton contract. Gleeson Homes The new management team remains confident that the current year will be a considerably better one for Gleeson Homes. A slight increase on last year's 477 unit sales is expected, with average selling prices in excess of £205,000 compared with £181,000 in 2001/02. Accordingly, Gleeson Homes will make a substantially increased contribution to Group profits in the second half of the financial year. The land bank is of increasingly good quality and 85% of the plots with planning consent required to meet next year's sales target are already secured. Gleeson Properties If, as is possible, a proportion of Gleeson Properties' very modest current sales programme slips into next year, the Division's profits in the second half will be broadly similar to the figure for the first half. We continue to examine the possibility, to which I referred at the AGM on 8 January 2003, of transferring the Group's property investment portfolio into a non-recourse vehicle, in conjunction with a financial partner. Gleeson Regeneration Gleeson Regeneration was formed in February 2002 to enable the Group to focus more closely on social housing and urban regeneration schemes. As part of a consortium, it is currently working on the £60m Grove Village, Manchester, PFI project, the first substantial PFI project for social housing in the United Kingdom, which is anticipated to achieve commercial close today. Summary But for the additional Buxton provision, and, possibly, a small level of slippage in property sales, prospects for the current year are overall substantially unchanged since the time of the preliminary announcement in October 2002. A considerable improvement continues to be expected in 2003/04. Dermot Gleeson Executive Chairman 25 March 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 months 6 months ended 31 ended 31 December Year ended December 2001 30 June 2002 Unaudited 2002 Unaudited Audited £000 £000 £000 £000 £000 £000 Turnover: group and share of joint venture Existing operations 285,723 233,016 580,634 Less: share of joint ventures' turnover - - (7,792) ______ ______ ______ Group turnover 285,723 233,016 572,842 Cost of sales (266,959) (214,555) (525,797) ______ ______ ______ Gross profit 18,764 18,461 47,045 Investment property income 2,318 2,376 7,133 Net operating expenses (19,233) (15,927) (35,905) ______ ______ ______ Operating profit 1,849 4,910 18,273 Share of results of joint ventures (584) (100) (619) Profit on sale of investment properties 78 134 457 ______ ______ ______ Profit on ordinary activities before 1,343 4,944 18,111 interest Interest receivable 186 143 523 Less: interest payable (1,274) (1,791) (3,557) _____ _____ _____ (1,088) (1,648) (3,034) _____ _____ _____ Profit on ordinary activities before 255 3,296 15,077 taxation Taxation on profit on ordinary activities 83 (989) (4,864) _____ _____ _____ Profit after taxation 338 2,307 10,213 Dividends (670) (656) (3,288) _____ _____ _____ Retained (loss)/profit for the period (332) 1,651 6,925 _____ _____ _____ Earnings per share 3.35p 22.96p 101.50p Earnings per share - fully diluted 3.33p 22.85p 100.78p Interim dividend per share 6.75p 6.50p SUMMARISED CONSOLIDATED BALANCE SHEET As at As at As at 31 December 31 December 30 June 2002 2001 2002 Unaudited Unaudited Audited £000 £000 £000 Fixed assets Intangible assets 5,256 5,563 5,409 Tangible assets 88,518 87,315 87,169 Investments 6,059 5,785 5,810 ______ ______ ______ 99,833 98,663 98,388 Current assets Stocks 138,285 151,061 119,152 Debtors 116,896 89,382 110,691 Cash at bank and in hand 144 322 308 ______ ______ ______ 255,325 240,765 230,151 Creditors: amounts falling due within one year (207,312) (191,343) (178,905) ______ ______ ______ Net current assets 48,013 49,422 51,246 Total assets less current liabilities 147,846 148,085 149,634 Provisions for liabilities and charges 360 262 360 ______ ______ ______ Net assets 148,206 148,347 149,994 ______ ______ ______ Capital and reserves Called up share capital 1,021 1,035 1,040 Share premium account 1,689 2,729 3,127 Capital redemption reserve fund 100 100 100 Revaluation reserve 10,685 15,038 10,676 Profit and loss account 134,711 129,445 135,051 ______ ______ ______ Total shareholders' funds 148,206 148,347 149,994 ______ ______ ______ SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 6 months ended 6 months ended Year 31 December 31 December ended 2002 2001 30 June Unaudited Unaudited 2002 Audited £000 £000 £000 Net cash (outflow)/inflow from operating (27,936) (26) 37,208 activities Returns on investments and servicing of finance 1,251 653 4,271 Taxation (3,144) (3,787) (6,148) Capital expenditure and financial investment (4,746) (17,283) (19,518) Acquisition and disposals - (176) - Equity dividends paid - - (3,160) Financing (1,457) 306 709 ______ ______ ______ (Increase)/decrease in net debt (36,032) (20,313) 13,362 ====== ====== ====== NOTES 1. Segmental analysis 6 months ended 6 months ended Year December December ended 2002 2001 June Unaudited Unaudited 2002 Audited £000 £000 £000 Analysis of turnover on continuing operations: Construction United Kingdom 244,726 184,315 424,813 Jersey 1,326 1,804 3,417 ______ ______ ______ 246,052 186,119 428,230 Homes - United Kingdom 39,671 45,297 112,970 Property - United Kingdom - 1,600 31,642 ______ ______ ______ 285,723 233,016 572,842 ====== ====== ====== Operating profit on continuing activities: Construction (226) 4,285 10,053 Homes 1,841 (1,517) 575 Property 1,867 3,514 10,730 Central costs (1,633) (1,372) (3,085) ______ ______ ______ 1,849 4,910 18,273 ====== ====== ====== 2. The interim statement was approved by the Board of Directors on 24 March 2003. 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 2002 which are set out in the Company's Annual Report. 4. The abridged results for the year ended 30 June 2002 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 of the 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 277,400 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. This information is provided by RNS The company news service from the London Stock Exchange

Companies

MJ Gleeson (GLE)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today