REG - MJ Gleeson Plc - Trading Update & Notice of Results

MJ GLEESONAnnouncement

11/07/2022 07:00

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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: +44 (0) 20 7796 4133
 Mark Garraway    Tel: +44 (0) 7771 860 938

 Charlotte Cobb   Tel: +44 (0) 7795 422 131

 

 Singer Capital Markets  Tel: +44 (0) 20 7496 3000
 Shaun Dobson            Tel: +44 (0) 207 496 3006

 Rachel Hayes            Tel: +44 (0) 207 496 3189

 

 Liberum     Tel: +44 (0) 20 3100 2222
 Neil Patel  Tel: +44 (0) 7972 770 197

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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