Trading Update & Notice of Results

RNS Number : 9256R

MJ Gleeson PLC

11 July 2022

 

MJ Gleeson plc (GLE.L)

("Gleeson" or "the Company")

For immediate release 

11 July 2022

Trading Update & Notice of Results

Full year results expected to be significantly ahead of expectations

Trading Update

MJ Gleeson plc (GLE.L), the low-cost housebuilder and land promoter, today provides an update for the year ended 30 June 2022 ("FY2022").

Gleeson Homes

Gleeson Homes delivered its medium-term strategic objective of doubling home sales within five years by completing the sale of 2,000 homes during FY2022, an increase of 10.4% compared with the previous year which had been flattered by delayed completions carried over from the first Covid-19 lockdown. Home sales in the second half of the year were up 24.0% on the comparable period (H2 FY2022: 1,068 homes sold; H2 FY2021: 861 homes sold).

Strong selling price increases offset significant material and labour cost increases experienced across the sector in the period. Availability of labour and materials eased throughout the second half of the year.

The average selling price of Gleeson homes sold during the year increased by 14.7% to £167,300 due to underlying selling prices up circa 12% and changes in mix. Despite this, buying a Gleeson home remains highly affordable. A young working couple on the National Living Wage can afford to buy a home on any of the Company's sites and the cost of buying a typical Gleeson home remains less than the cost of renting.

The time taken from plot release to reservation reduced significantly during the year to 34 days (FY2021: 49 days), reflecting the ongoing shortage of high-quality affordable homes available to young, first-time buyers. Reservation rates over the last eight weeks reflect continued confidence amongst Gleeson's customers and, at 0.54 net reservations per week, are up 16% on the same period last year.

Outlook

Gleeson Homes opened 23 new build sites during the year, starting the new financial year at 87 sites (30 June 2021: 81 build sites) of which 61 are actively selling (30 June 2021: 61 selling sites). This has been achieved despite the ongoing congestion in the planning system which continues to impact the time taken to obtain planning consent, agree pre-start conditions and acquire sites.

Land continues to be available at sensible prices. The pipeline of owned and conditionally purchased sites increased by 6.0% to 16,814 plots on 160 sites at 30 June 2022 (representing over eight years of sales), of which 8,336 plots on 68 sites have been conditionally purchased subject to receiving planning permission.

Looking ahead, the Board believes that strong first-time buyer demand, intensified by the acute shortage of new homes, will continue unabated over the medium term. Crucially, the affordability of our homes will continue to help mitigate the impact of both inflationary pressures and higher interest rates on Gleeson customers. In addition to the lower cost of buying a Gleeson home compared to renting, Gleeson customers also see a significant reduction in energy bills when they move into well-insulated and energy-efficient Gleeson homes, which further reinforces demand. 

Gleeson Land

During the year, Gleeson Land sold six sites with the potential to deliver 1,443 plots for housing development.

The ongoing difficulties in the planning system are delaying the progress of viable sites which are expected to attract strong demand from housebuilders once planning consent is achieved. The number of Gleeson Land sites awaiting a planning decision increased to 16 sites with the potential to deliver 3,559 plots for housing development (30 June 2021: 15 sites and 3,020 plots awaiting a planning decision).

Outlook

The portfolio of sites at 30 June 2022 includes three sites with either planning permission or resolution to grant and which have the potential to deliver 1,206 plots for housing development (30 June 2021: six sites, 2,210 plots).

The portfolio comprises 71 sites, with the potential to deliver 20,241 plots, and 25 acres of commercial land.

Group

The Group ended the year with cash balances of £33.8m and no debt (30 June 2021: £34.3m cash and no debt).

When the Board signed the DLUHC Pledge in respect of remediating any buildings over 11 metres with life-critical fire safety issues, it said that it was not aware of any such issues in respect of the 15 buildings it had been historically involved in developing but would undertake a further assessment to determine that this remained the case. That initial assessment has been concluded and the Company is making good progress on undertaking a more comprehensive review which it expects to conclude by the end of the summer. Should any remedial works at any of the buildings be required, an appropriate provision will be taken in the results for the year ended 30 June 2022.

Following such a strong performance, the Board expects the results for the financial year to 30 June 2022 to be significantly ahead of market expectations and remains confident in the Group's future prospects.

James Thomson, Chief Executive Officer, commented:

"This is a very strong out-turn for the year. I am particularly delighted that, by completing the sale of 2,000 homes during the year, we delivered on our strategic objective of doubling home sales within five years, meaning that we have been able to supply more affordable housing to those that need it most.

"We have started the new financial year in a strong position. Notwithstanding the ongoing congestion in the planning system and the wider macro-economic environment, the Board believes that the scale of pent-up demand for low-cost homes will continue to drive significant growth into 2023 and beyond."

Notice of Results

The Company will report its audited full year results on Thursday, 15 September 2022. A presentation for analysts and investors will be held at 09:30 that morning at The London Stock Exchange and will also be webcast.

ENDS

Enquiries:

Hudson Sandler	Tel: [phone]
Mark Garraway Charlotte Cobb	Tel: [phone] Tel: [phone]

Singer Capital Markets	Tel: [phone]
Shaun Dobson Rachel Hayes	Tel: [phone] Tel: [phone]

Liberum	Tel: [phone]
Neil Patel	Tel: [phone]

This announcement is released by MJ Gleeson plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.  Upon the publication of this announcement, this information is considered to be in the public domain.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Stefan Allanson, Chief Financial Officer.

LEI: 21380064K7N2W7FD6434

 

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