REG - MJ Gleeson Plc - Half-year Report <Origin Href="QuoteRef">GLEG.L</Origin> - Part 2

MJ GLEESONAnnouncement

27/02/2017 07:06

- Part 2: For the preceding part double click  ID:nRSa8495Xa 

costs allows users to
assess the performance of the underlying business. There were no exceptional
costs in the current or comparative period, therefore normalised earnings per
share are the same as reported earnings per share. 
 
7. Financial instruments 
 
The fair value of the Group's financial assets and liabilities are not
materially different from the carrying values. The following summarises the
major methods and assumptions used in estimating the fair values of financial
instruments. 
 
Available for sale financial assets 
 
                                                               Unaudited 31 December  Unaudited      Audited 30 June  
                                                               2016 Level 3           31 December    2016Level 3      
                                                                                      2015 Level 3                    
                                                               £000                   £000           £000             
                                                                                                                      
 Balance at start of period                                    6,611                  7,938          7,938            
 Additions                                                     -                      -              -                
 Redemptions                                                   (393)                  (502)          (853)            
 Unwind of discount (financial income)                         53                     57             110              
 Fair value movement recognised in Other Comprehensive Income  (136)                  -              (584)            
 Balance at end of period                                      6,135                  7,493          6,611            
 
 
Available for sale financial assets represent shared equity loans advanced to
customers and secured by way of a second charge on the property sold. They are
carried at fair value which is determined by discounting forecast cash flows
for the residual period of the contract. The difference between the nominal
value and the initial fair value is credited over the deferred term to
financial income, with the financial asset increasing to its full cash
settlement value on the anticipated receipt date. 
 
Forecast cash flows are determined using inputs based on current market
conditions and the Group's historic experience of actual cash flows resulting
from such arrangements. These inputs are by nature estimates and as such the
fair value has been classified as Level 3 under the fair value hierarchy laid
out in IFRS 13: Fair Value Measurement. There have been no transfers between
fair value levels in the period. 
 
7. Financial instruments (cont.) 
 
Significant unobservable inputs into the fair value measurement calculation
include regional house price movements based on the Group's actual experience
of regional house pricing and management forecasts of future movements, the
anticipated period to redemption of loans which remain outstanding and a
discount rate based on current observed market interest rates offered to
private individuals on secured second loans. 
 
The key assumptions applied in calculating fair value as at the balance sheet
date were: 
 
·      Forecast regional house price inflation: 2.0% - 3.5% 
 
·      Average period to redemption: 5.5 years 
 
·      Discount rate: 8% 
 
The sensitivity analysis of changes to each of the key assumptions applied in
calculating fair value, whilst holding all other assumptions constant, is as
follows: 
 
 Change in assumption                                      Increase / (decrease) in fair value £'000  
 Forecast regional house price inflation - increase by 1%  326                                        
 Average period to redemption - increase by 1 year         (316)                                      
 Discount rate - decrease by 1%                            311                                        
 
 
Redemptions in the period of shared equity loans carried at £423,000 generated
a profit on redemption of £30,000 which has been recognised within
Administrative expenses in the Consolidated Income Statement. 
 
In addition, a change in value of available for sale assets of £106,000 has
been recognised in Other Comprehensive Income. This is made up as follows: 
 
                                                               Unaudited 31 December  Unaudited     Audited 30 June  
                                                               2016                   31 December   2016             
                                                                                      2015                           
                                                               £000                   £000          £000             
                                                                                                                     
 Fair value movement recognised in Other Comprehensive Income  (136)                  -             (584)            
 Fair value recycled through profit and loss                   30                     -             -                
 Total movement recognised in Other Comprehensive Income       (106)                  -             (584)            
 
 
8. Group pension scheme 
 
The Group operates a defined contribution pension plan. The assets of the
pension plan are held separately from those of the Group in funds under the
control of the trustees. 
 
The total pension cost charged to the Consolidated Income Statement in the six
months to 31 December 2016 of £302,000 (six months to 31 December 2015:
£275,000; year to 30 June 2016: £545,000) represents contributions payable to
the defined contribution pension plan by the Group at rates specified in the
plan rules.  At 31 December 2016, contributions of £75,000 (31 December 2015:
£42,000; 30 June 2016: £67,000) due in respect of the current reporting period
had not been paid over to the pension plan. Since the period end, this amount
has been paid. 
 
9. Related party transactions 
 
There have been no material transactions with related parties during the
period. 
 
There have been no material changes to the related party arrangements as
reported in note 31 of the Report and Accounts for the year ended 30 June
2016. 
 
9. Related party transactions (cont.) 
 
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. 
 
10. Seasonality 
 
Reservations in Gleeson Homes are largely unaffected by seasonal variations
and tend to be driven more by the timing of site openings than by seasonality.
However, completions in the second half of the financial year tend to be
higher than the first half. 
 
There is no seasonality in the Gleeson Strategic Land division. 
 
Statement of Directors' responsibility 
 
for the six months to 31 December 2016 
 
The Directors confirm that, to the best of our knowledge: 
 
a)   the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting' as adopted by the European Union; 
 
b)   the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and 
 
c)   the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein). 
 
The Board 
 
The Board of Directors of MJ Gleeson plc at 30 June 2016 and their respective
responsibilities can be found on pages 30 to 31 of the MJ Gleeson plc Report
and Accounts 2016. There have been no changes since that date. 
 
By order of the Board, 
 
Stefan Allanson 
 
Chief Financial Officer 
 
24 February 2017 
 
This information is provided by RNS
The company news service from the London Stock Exchange