Interim Results
Gleeson(M J)Group PLC
23 March 2004
MJ GLEESON GROUP PLC - INTERIM ANNOUNCEMENT
•Gleeson, the construction services, homes and property group, announces
that, in what is traditionally much the weaker half of the year, turnover
increased by 7.4% to £306.8m with pre-tax profit increasing to £3.3m (2002/
03: £0.3m) and earnings per share to 22.0p (2002/03: 3.4p). All three
business units - Construction Services, Homes and Properties - increased
their operating profits.
•Net assets per share totalled £14.79 (2002/03: £14.52), providing
substantial backing to the share price.
•An interim dividend per share of 7.02p, up 4.0%, has been declared.
•Construction Services increased turnover by 7.8% to £265.2m, generating
an operating profit of £2.3m (2002/03: loss of £0.2m). The Construction
Services order book at 1 March 2004 totalled £636m.
•Gleeson Homes made an operating profit of £2.0m (2002/03: £1.8m) on
turnover 5.0% lower at £37.7m. Additional selling outlets in the second half
are expected to support an increase on last year's 489 units to over 600 in
the year to June 2004. The average selling price is expected to be around
£204,000, compared with £195,000 a year ago. Record levels of profitability
are expected.
•Gleeson Regeneration, which was formed in February 2003 to enable the
Group to focus more closely on social housing and urban regeneration
schemes, has very recently been selected as Liverpool City's preferred
developer for the £300m redevelopment of the city centre's South Zone.
•Gleeson Properties turnover totalled £3.9m (2002/03: nil) and generated
an operating profit of £3.0m (2002/03: £1.9m). A modest programme of
disposals of development and investment properties is planned for the second
half. If achieved, Gleeson Properties should register a substantially
improved result.
•Dermot Gleeson, Executive Chairman, stated: 'The Board continues to
believe that 2003/04 should see a significant uplift in Group profits and
lay a strong basis for further profit growth thereafter.'
Enquiries:
M J Gleeson Group plc 020-8644 4321
Dermot Gleeson (Executive Chairman)
Andrew Muncey (Group Managing Director)
Colin McLellan (Finance Director)
Bankside Consultants Limited
Charles Ponsonby 020-7444 4166
CHAIRMAN'S INTERIM STATEMENT
FINANCIAL OVERVIEW
In what is traditionally much the weaker half of the year, turnover increased by
7.4% to £306.8m (2002/03: £285.7m). Profit before interest and tax, and profit
before tax, were substantially higher at £4.9m (2002/03: £1.3m) and £3.3m (2002/
03: £0.3m), respectively. Earnings per share were 22.0p (2002/03: 3.4p).
In achieving this, all three Business Units - Construction Services, Homes and
Properties - increased their operating profits.
Net interest payable increased to £1.7m (2002/03: £1.1m). Gearing at the period
end, a seasonally high point, was 70.9% (2002/03: 49.4%), mainly reflecting
Gleeson Homes' increased investment in land and in work in progress.
Net assets per share totalled £14.79 (2002/03: £14.52), providing substantial
backing to the share price.
INTERIM DIVIDEND
The Board has declared an interim dividend per share of 7.02p, up 4% on 2002/
03's 6.75p, which will be paid on 30th June 2004 to shareholders on the register
at the close of business on 4th June 2004, with an ex-dividend date of 2nd June
2004.
OPERATING REVIEW
Gleeson Construction Services
Gleeson Construction Services' turnover increased by 7.8% to £265.2m (2002/03:
£246.1m), generating an operating profit of £2.3m (2002/03: loss of £0.2m).
Building
The Building Divisions' turnover increased by 35.5% to £161.7m (2002/03:
£119.3m). A significant proportion of the work undertaken related to the
Government's substantial capital expenditure programme on hospitals and schools.
Civil and Process Engineering
The Engineering Division's turnover fell by 27.5% to £64.8m (2002/03: £89.4m)
following the completion of the Buxton cement works contract. The water sector,
which is one of the busiest markets in the UK construction industry and in which
Gleeson is the leading contractor, provided most of the Division's turnover.
Specialist Subsidiaries
The total turnover of the Group's specialist Construction Services subsidiaries,
principal amongst which are Gleeson MCL Limited, Powerminster Limited and
Concrete Repairs Limited, increased to £40.7m (2002/03: £38.5m).
Gleeson Homes
Gleeson Homes made an operating profit of £2.0m (2002/03: £1.8m) on turnover
5.0% lower at £37.7m (2002/03: £39.7m).
In the half year, 197 units were sold at an average selling price of £181,000;
compared with 191 and £207,000, respectively, in the first half of 2002/03.
These minor reductions in turnover and selling prices reflect a fall in unit
sales by Gleeson Classic Homes which specialises in small but very high value
developments.
Gleeson Properties
Gleeson Properties turnover totalled £3.9m (2002/03: nil) and generated an
operating profit of £3.0m (2002/03: £1.9m). The sale of a development site at
Milton Keynes generated £3.9m of turnover and £1.2m of profit. Gross rental
income totalled £2.4m (2002/03: £2.3m).
The property investment portfolio remains concentrated on the office and
industrial warehouse sectors. During the half year an office development in
Fleet, Hampshire was acquired for £2.6m.
PROSPECTS
Gleeson Construction Services
The Construction Services order book at 1 March 2004 totalled £636m. Of this,
over 60% related to relatively low risk three to five year partnering
agreements, and 20% related to PFI/PPP. Approximately half of the order book was
water-related with the next most important categories being residential, rail,
schools and hospitals.
The present buoyant trading conditions enjoyed by the Building Divisions seem
likely to be sustained for some time, The Government remains committed to
maintaining high levels of capital spending, particularly in the health and
education sectors. Moreover there appear to be opportunities for increased work
in the retail sector for the Southern Building Division, whilst work for
residential developers remains an important activity for the Northern Building
Division. As a result, both the Building Divisions expect steady growth in the
current year.
The Engineering Division has commenced work on the £100m Katrine Water Project
and its major role in Scottish Water's £1bn capital expenditure programme
provides a strong platform for further expansion.
Gleeson Homes
Additional selling outlets in the second half are expected to support an
increase on last year's 489 units to over 600 in the year to June 2004. The
average selling price is expected to be around £204,000, compared with £195,000
a year ago. Success in the year in bringing a number of strategic land
opportunities through the planning system should make it possible for a small
number of land sales to contribute to record levels of profitability.
The market remained strong during the first half, and the forward sales position
for the balance of the year is very satisfactory. Improvement in the quality of
the land bank has been maintained and sufficient plots will be in place to see
further growth in 2005 and beyond.
Gleeson Regeneration
Gleeson Regeneration was formed in February 2003 to enable the Group to focus
more closely on social housing and urban regeneration schemes. It is currently
engaged in the £60m Grove Village, Manchester, PFI project, the first PFI
project for social housing in the UK, and has very recently been selected as
Liverpool City's preferred developer for the £300m redevelopment of the city
centre's 'South Zone'.
Gleeson Properties
The commercial property market is benefiting from higher demand from tenants and
owner-occupiers. In this context, a modest programme of disposals of development
and investment properties is planned for the second half. If achieved, Gleeson
Properties should register a substantially improved result.
SUMMARY
The Board continues to believe that 2003/04 should see a significant uplift in
Group profits and lay a strong basis for further profit growth thereafter.
AWARDS
Since March 2003, the Company has been included in the FTSE's socially
responsible investment index series, the FTSE4Good. It has also recently won the
Corporation of London's Liveable City Environmental Management Award.
In addition, the Sunday Times earlier this month adjudged the Group to be one of
the 20 best companies to work for in the UK and the best company in the
construction sector. These accolades have the potential to bring considerable
business benefits to the Group, particularly in the public sector.
Dermot Gleeson
Chairman 23rd March 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 months 6 months Year ended
ended 31 December ended 31 December 30 June
2003 2002 2003
Unaudited Unaudited Audited
£000 £000 £000 £000 £000 £000
Turnover: group and
share of joint
venture
Existing operations 306,762 285,723 633,030
Less: share of joint
ventures' turnover - - (8,466)
______ ______ ______
Group turnover 306,762 285,723 624,564
Cost of sales (283,959) (266,959) (575,906)
______ ______ ______
Gross profit 22,803 18,764 48,658
Investment property 2,381 2,318 4,613
income
Net operating (19,838) (19,233) (40,045)
expenses
______ ______ ______
Operating profit 5,346 1,849 13,226
Share of results of
joint (400) (584) (1,275)
ventures
Profit on sale of
investment - 78 95
properties
______ ______ ______
Profit on ordinary
activities before 4,946 1,343 12,046
interest
Interest receivable 305 186 493
Less: interest (1,958) (1,274) (3,054)
payable
_____ _____ _____
(1,653) (1,088) (2,561)
_____ _____ _____
Profit on ordinary
activities before 3,293 255 9,485
taxation
Taxation on profit
on (1,070) 83 (3,666)
ordinary activities
_____ _____ _____
Profit after 2,223 338 5,819
taxation
Dividends (718) (670) (3,519)
_____ _____ _____
Retained (loss)/
profit for (1,505) (332) 2,300
the period
_____ _____ _____
======= ======= =======
Earnings per share 21.98p 3.35p 58.03p
Earnings per share -
fully 21.71p 3.33p 57.77p
diluted
Interim dividend per 7.02p 6.75p
share
SUMMARISED CONSOLIDATED BALANCE SHEET
As at As at As at
31 December 31 December 30 June
2003 2002 2003
Unaudited Unaudited Audited
£000 £000 £000
Fixed assets
Intangible assets 4,948 5,256 5,102
Tangible assets 96,815 88,518 93,590
Investments 4,118 6,059 4,478
______ ______ ______
105,881 99,833 103,170
Current assets
Stocks 165,558 138,285 130,013
Debtors 115,871 117,256 121,321
Cash at bank and in hand 141 144 150
______ ______ ______
281,570 255,685 251,484
Creditors: amounts falling due within one
year (235,308) (207,312) (204,332)
______ ______ ______
Net current assets 46,262 48,373 47,152
______ ______ ______
Net assets 152,143 148,206 150,322
______ ______ ______
======== ======== ========
Capital and reserves
Called up share capital 1,029 1,021 1,024
Share premium account 3,762 1,689 3,450
Capital redemption reserve fund 120 100 120
Revaluation reserve 9,424 10,685 9,480
Profit and loss account 137,808 134,711 136,248
______ ______ ______
Total shareholders' funds 152,143 148,206 150,322
______ ______ ______
======== ======== ========
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
6 months ended 6 months ended Year
31 December 31 December ended
2003 2002 30 June
Unaudited Unaudited 2003
Audited
£000 £000 £000
Net cash (outflow)/inflow from
operating activities (47,901) (27,936) 6,882
Returns on investments and servicing
of finance 391 1,251 2,191
Taxation (1,432) (3,144) (5,885)
Capital expenditure and financial
investment (5,063) (4,746) (14,749)
Acquisition and disposals (50) - (862)
Equity dividends paid - - (3,296)
Financing 317 (1,457) (1,241)
______ ______ ______
Decrease in net debt (53,738) (36,032) (16,960)
====== ====== ======
NOTES
1. Segmental analysis
6 months ended 6 months ended Year
December December ended
2003 2002 June
Unaudited Unaudited 2003
Audited
£000 £000 £000
Analysis of turnover on continuing
operations:
Construction
United Kingdom 263,689 244,726 517,165
Jersey 1,525 1,326 4,128
______ ______ ______
265,214 246,052 521,293
Homes - United Kingdom 37,668 39,671 103,271
Property - United Kingdom 3,880 - -
______ ______ ______
306,762 285,723 624,564
====== ====== ======
Operating profit on continuing
activities:
Construction 2,252 (226) 4,634
Homes 2,012 1,841 9,053
Property 3,003 1,867 2,639
Central costs (1,921) (1,633) (3,100)
______ ______ ______
5,346 1,849 13,226
====== ====== ======
2. The interim statement was approved by the Board of Directors on 22 March
2004.
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 2003 which are set out in the Company's Annual Report.
4. The abridged results for the year ended 30 June 2003 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 170,371 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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