TIDMGLE
RNS Number : 6354L
MJ Gleeson PLC
14 September 2021
MJ GLEESON PLC 14 September 2021
("Gleeson" or "the Group" or "the Company")
Audited results for the year ended 30 June 2021
Record performance despite industry-wide headwinds.
Homes sold, revenue and profit before tax above pre-Covid
levels.
Gleeson, the low-cost housebuilder and land promotion
specialist, announces audited results for the year ended 30 June
2021 ("2021").
2021 2020 Change 2019 Change
(2020 v 2021) (2019 v 2021)
Revenue GBP288.6m GBP147.2m +96% GBP249.9m +15.5%
Operating profit GBP43.1m GBP5.9m +631% GBP41.0m +5.1%
Profit before tax* GBP41.7m GBP5.6m +645% GBP41.2m +1.2%
EPS 58.2p 8.1p +619% 61.0p -4.6%
Cash net of borrowings GBP34.3m GBP16.8m +GBP17.5m GBP30.3m +GBP4.0m
ROCE 21.4% 3.1% +1,830bps 25.9% -450bps
Dividend per share (total) 15.0p - n/a 34.5p -19.5p
*All results classified as continuing for the year ended 30 June
2021
Sustainable business model
Gleeson Homes:
-- Volumes up 69% to 1,812 homes sold (2020: 1,072, 2019: 1,529)
-- ASP up 11.4% to GBP145,800 (2020: GBP130,900) - underlying increase 9.3%
-- On track to deliver 2,000 homes sold in year ending 30 June 2022
-- Gross profit margin on homes sold 28.5% (2020: 27.8%, 2019: 30.1%)
-- Operating profit up 316% to GBP37.4m (2020: GBP9.0m, 2019: GBP30.1m)
-- 27 new sites opened (2020: 12, 2019: 19)
-- Land pipeline up 2,062 plots to 15,863 plots (2020: 13,801 plots)
Gleeson Land:
-- Operating profit of GBP11.1m (2020: GBP0.2m, 2019: GBP13.0m)
-- Eight land sales completed during the year (2020: two, 2019: nine)
-- Six sites with planning consent or resolution to grant with
the potential to deliver 2,210 plots
-- Portfolio: 71 sites (2020: 68 sites) with the potential to
deliver 22,315 plots (2020: 23,314 plots)
-- Demand expected to remain strong
Resilient financial position
-- Cash net of borrowings GBP34.3m (2020: GBP16.8m)
-- Capital allocation policy to support growth agenda
o 10p final dividend (2020: nil)
o 15p total dividend (2020: nil)
o Earnings to cover dividends between 3 times and 5 times
o Interim dividend to represent 1/3(rd) of expected dividend
Dermot Gleeson, Chairman, commented:
"These are an excellent set of results. Our profits, revenue and
volumes all exceeded pre-Covid levels, which represents a record
performance for the Group. This was achieved thanks to the
resilience of our business model and the talent within the
business. Our strategy of building low-cost, high-quality homes in
the North of England and the Midlands and unlocking value by
promoting land through the planning system in the South of England,
ensured the business recovered strongly through what was a tough
year.
We are managing industry-wide supply chain pressures well and
remain confident of delivering Gleeson Homes' interim target of
2,000 homes sold in the current financial year. Demand remains
robust, we have a growing pipeline of sites, an experienced
management team and a strong platform for continued growth. We
continue to operate in a market underserved by other housebuilders,
and as a result our homes are as needed and in demand as ever.
The market for consented sites has recovered and Gleeson Land's
pipeline continues to grow. The division's experienced management
team remains focussed on delivering sites with sustainable and
implementable residential planning permission to other developers
in the South of England and is well placed to drive sustainable
growth over the medium term.
Against this background, the Board is cautiously confident that
the Group will deliver significant growth in both revenue and
profits in the current year and beyond."
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of the company is Stefan Allanson, Chief Financial
Officer.
LEI: 21380064K7N2W7FD6434
Enquiries:
MJ Gleeson
plc Tel: +44 1142 612900
James Thomson Chief Executive Officer
Stefan Allanson Chief Financial Officer
Instinctif Tel: +44 79 4993 9237
Tim Linacre Tel: +44 20 7457 2045
N+1 Singer
Shaun Dobson Tel: +44 20 7496 3000
Hannah Woodley
James Moat
Liberum
Neil Patel Tel: +44 20 3100 2222
Chairman's Statement
I am pleased to report a strong set of results for the financial
year to June 2021, with revenue and profit ahead of pre-Covid
levels.
Gleeson Homes completed a record 1,812 new homes and remains on
track to meet its target of delivering 2,000 new homes in 2022.
Gleeson Land sold eight sites with the potential to deliver
1,978 plots. Demand for consented sites has returned to pre-Covid
levels and in the current financial year the division has already
completed the sale of one substantial site.
Market
The demand for Gleeson Homes' high-quality, low-cost homes
remains very strong. Mortgage finance continues to be available to
our purchasers on favourable terms and the government's two new
initiatives to help first time buyers - the First Homes scheme and
the 95% mortgage guarantee scheme - will also help to support
demand in the market in which Gleeson operates. Due to the low,
affordable selling price of our homes and the typical backgrounds
of our customers, most purchases of a Gleeson home are not subject
to stamp duty and, as a result, the first tapering of the stamp
duty holiday in June has had little impact on our performance. We
do not expect the end of the stamp duty holiday in September to
have any impact either on demand or revenue.
As has been widely publicised, the construction sector as a
whole is currently experiencing availability and cost pressures
with respect to labour and materials. So far, however, due to its
long-term, trusted relationships with suppliers and subcontractors,
Gleeson Homes has been able to maintain both its build programmes
and its gross margins. We are cautiously confident it will continue
to do so.
Gleeson Land has seen a strong increase in demand from major
housebuilders for high-quality, consented sites. Despite the
disruptive impact of the pandemic on local authority planning
departments, the division is continuing to secure new and
commercially attractive planning consents. It has also added a
number of new, high-quality sites to its portfolio.
Sustainability
In last year's Annual Report, we set out our commitment to being
a sustainable housebuilder aligned with UN Sustainable Development
Goals ("SDGs"), in particular target 1 of SDG 11, "Sustainable
cities and communities", which is to provide "access for all to
safe and affordable housing". A young working couple can afford to
buy a high-quality home on any one of Gleeson Homes' development
sites.
The UK housing market as a whole is heavily skewed towards the
needs of middle and upper-income buyers who already own a home. The
average selling price of houses in England is now over GBP325,000.
In consequence, and despite the rise in the number of new homes
being built, housing inequality in the UK remains a very
significant problem. I am proud of the contribution we are making,
both in practice and by our example, to resolving that problem.
Our customers are young, first time buyers and people on low
incomes who would like to own their home but, in many cases,
believe themselves to be "priced out" of the market. Gleeson's
high-quality, affordable homes enable them to achieve their dream.
What is more, by choosing to live in a new, energy efficient home
on a carefully planned and designed Gleeson development, young
first time buyers give themselves the opportunity to become active
members of a strong and sustainable community.
Our people
The last 18 months have been challenging. I wish to express my
very deep sense of gratitude to all our employees for their
remarkable resilience in what have been very difficult
circumstances and for their continuing commitment to the Company's
success.
I have been particularly impressed by the progress made during
the year with respect to employee development and engagement. The
most recent independently assessed engagement scores show a further
rise, placing Gleeson in the top quartile of UK companies. We
continue to strive to be, and to be recognised as, one of the best
companies to work for in the UK.
Dividends
Following the suspension of dividend payments in 2020, the Board
resumed payments in April 2021, paying an interim dividend of 5.0p
per share.
Subject to shareholder approval at the 2021 Annual General
Meeting ("AGM"), the Board proposes to pay a final dividend of
10.0p per share on 22 November 2021, to shareholders on the
register at the close of business on 29 October 2021. The total
dividend for the year to 30 June 2021 will, on that basis, be
15.0p.
The Board has also reviewed the Company's capital allocation
policy, assessing the capital needs of both shareholders and the
Company as it continues to invest for growth. The Board intends to
maintain an earnings to ordinary dividend cover ratio of between
three and five times and expects to pay a final dividend
representing two-thirds of the total dividend each year. This
policy will be reviewed periodically to ensure that it remains
appropriate.
Financial stability
The Group retains its strong financial position and ended the
year with cash balances of GBP34.3m and no debt (30 June 2020:
GBP16.8m net cash). In April this year, the Group entered into a
new borrowing facility shared between Lloyds Bank plc and Santander
UK plc. This has a limit of GBP105m (previously GBP70m with Lloyds)
and gives the Group additional liquidity to invest in growth.
I am pleased to confirm that the Company has repaid all
financial support received by the Group from the government's
Coronavirus Job Retention Scheme and retail grant and rebates
schemes.
Corporate governance
I was very pleased in March this year to welcome Elaine Bailey
to the Board, who has been appointed as a Non-Executive Director.
Elaine, a former Chief Executive of Hyde Housing Group, brings to
our deliberations an exceptional breadth of construction and
housing-related experience.
Elaine has been appointed as Chair of the new Sustainability
Committee and as a member of the Nomination, Audit, and
Remuneration Committees.
In December 2020, we established the Sustainability Committee of
the Board to oversee the Group's approach to sustainability and to
environmental, social and governance ("ESG") issues. Its first
report, including a summary of the work undertaken by the Committee
this year, is integrated into our Annual Report.
Summary and outlook
Despite the pressures currently affecting the supply of
materials and labour within the construction industry, the
prospects for Gleeson Homes are very encouraging.
Mortgage rates and conditions for first time buyers on low
incomes are unprecedented and very favourable. As a result, there
is scope for further, controlled increases in selling prices, while
ensuring that young working couples on low incomes can continue to
afford to buy a high quality home on any one of Gleeson Homes'
development sites - an objective which, for Gleeson, has become a
point of pride.
Gleeson Land is experiencing strongly rising levels of interest
from housebuilders, many of which are urgently seeking to fill the
gaps in their own land banks in the South of England.
Against this backdrop, the Board believes that the Group will be
able to continue its pre-pandemic growth trajectory, both in the
near term and beyond.
Dermot Gleeson
Chairman
13 September 2021
Chief Executive's Statement
After the unprecedented challenges the country has faced over
the last 18 months, I am pleased to report a strong set of results
this year. The delivery of 1,812 new homes was a record result for
Gleeson Homes and 18.5% ahead of pre-pandemic levels, an
outstanding performance and further proof of the resilience of
Gleeson's business model.
Gleeson Homes opened 27 new sites this year, which was another
record for the business, and we closed the year with 81 build
sites, of which 61 were actively selling. This provides us with an
excellent platform for sustainable growth.
The newly rebranded Gleeson Land, previously Gleeson Strategic
Land, also had a successful year, selling eight sites. Whilst this
was below pre-pandemic levels, the division completed the sale of a
further site at the start of this financial year, which represents
a strong start to the new financial year.
Key performance indicators
2021 2020 2019
Number of homes
sold 1,812 1,072 1,529
----------- ----------- -----------
Average selling GBP145,800 GBP130,900 GBP128,900
price
----------- ----------- -----------
Active build sites 81 71 69
----------- ----------- -----------
Gleeson Land site
sales 8 2 9
----------- ----------- -----------
Market
The demand for low-cost, high-quality homes from first time
buyers remains as robust as ever and the broader housing market has
been strong. The main challenges have been, and continue to be,
around the price and availability of materials and labour. This is
an issue for the industry as a whole and, so far, our strong supply
chain relationships and controlled selling price increases have
allowed us to trade through these issues. I expect this to be a
short-term challenge and one that will, in time, return to normal
levels.
Government policy is playing an important role in our planning
for the future. New building regulations, namely Part L and Part F
Building Regulations, are incorporated into our plans and we are
trialling air source heat pumps on a number of developments. These
will be the first of many climate-focused changes as the government
progresses their vision of zero carbon ready homes. We are
supportive of these measures and our homes already have better
energy performance ratings than most other new build homes, with
over 98% of our homes having an EPC rating of A or B.
Financial performance
Gleeson Homes delivered 1,812 new homes this year, an increase
of 69% on the prior year (2020: 1,072). The average selling price
of GBP145,800 was 11.4% higher, reflecting an underlying increase
of 9.3% and the impact of site mix, and reflects the strong housing
demand that we are seeing across all our regions. We expect that
house price inflation will ease and that, combined with the
favourable mortgage market, will help ensure our homes remain
affordable. As a result of this strong performance, Gleeson Homes
delivered an operating profit of GBP37.4m (2020: GBP9.0m).
Gleeson Land sold eight sites this year, with the potential to
deliver 1,978 plots. This generated an operating profit of GBP11.1m
(2020: GBP0.2m).
As a result, Group profit before tax was GBP41.7m (2020:
GBP5.6m).
During the year, the Group repaid GBP60.0m of loans drawn on its
revolving credit at the start of the pandemic. The Group ended the
year with a strong cash balance of GBP34.3m and no debt (30 June
2020: GBP16.8m net cash). Our balance sheet remains strong and will
support our future growth ambitions.
Sustainability
Our mission of building affordable, quality homes where they are
needed and for the people that need them most aligns fully with the
UN SDG 11. Our customers tell us that they buy a Gleeson home for
their value and affordability, their location and their good
design. I am proud that we are making it possible for young people,
key workers and people on low to middle-incomes to buy a home that
they want to live in, where they want to live and to help them get
onto the housing ladder with all the wealth, health and wellbeing
benefits that home ownership brings. A young working couple on the
National Living Wage can afford to buy a Gleeson home on any of our
development sites.
We publish our first sustainable business strategy this year. In
formulating this strategy, the Board sought the views of
stakeholders on the material sustainability issues relevant to the
Group. Growth, affordability, build quality, health and safety,
land regeneration and the reduction of carbon emissions underpin
our sustainable strategy. With clear targets and actions, aligned
with the issues of importance to our stakeholders, this strategy
will see the Group continue to deliver sustainable growth for our
stakeholders and society.
People and health and safety
We have continued to invest in the business, as well as ensuring
that we have the right people in the right roles and that
colleagues are properly trained and supported to do their jobs. Our
focus on investing in our colleagues is reflected in Gleeson
receiving accreditation from Investors In People during the year. I
am also pleased to report that employee engagement increased still
further and our independently assessed people engagement score puts
us once again very firmly in the top quartile of all UK
companies.
Health and safety has been an area of significant focus and
investment over the last two years so it was disappointing to see
the number of reportable incidents increase to ten this year. We
are addressing the issues that led to these incidents and are
increasing our investment in training, safe working practices,
inspections and reporting and I expect to see this improve
significantly.
Investment in site set-up with new compounds and enhanced
welfare facilities continued during the year. We greatly value the
relationships that we have with our suppliers and subcontractors
and I want Gleeson to be their preferred choice of housebuilder to
work with. We are committed to paying fairly and on-time for
quality workmanship and materials.
We have also invested in our Commercial, IT, HR and Finance
functions to make sure these can continue to support the business
as it grows.
Build quality and customer service
Our customers are at the heart of our business. This is the most
significant purchase many of our customers will ever make and
that's why we want to get it right first time - every time.
I am pleased to report that we achieved a customer satisfaction
score of 90.6% this year (equivalent to a 5-star rating). We will
not hand over a new home that we are not absolutely proud of. We
have listened to our customers and worked hard to make sure their
buying experience from us is positive from start to finish. We will
continue to push our performance as a strong 5-star housebuilder on
every site in every region. This work is supported by our Customer
First initiative which focuses on ensuring every colleague across
the business puts the customer first.
As part of delivering a quality product and service, we have
also invested in our Customer Care team and this year launched a
fleet of new vans for our customer care technicians. These
technicians are dedicated to quickly resolving any defects for our
customers.
Land regeneration
Our Land and Planning team have had a record year opening new
sites and are central to supporting our strategy of controlled
growth. The land pipeline increased by 14.9% to 15,863 plots on 152
sites and this will underpin our future growth. Our land strategy
continues to target areas in need of regeneration. The majority of
our sites are located in the most deprived areas of England. We
deliver affordable, quality homes to this vastly underserved sector
of the market, often where no other housebuilders want to
build.
We transform land, often blighted by neglect, into areas where
people want to live. Many of our customers are from the local area
and want to remain close to friends and family. They buy a Gleeson
home because they get a high-quality product that is affordable and
cheaper to run than the older housing stock in the surrounding
areas.
Climate and the environment
Climate change is the most important global issue we face.
Gleeson is committed to reducing the impact our operations have on
the environment and are reducing our emissions by setting short and
medium-term targets for every home sold.
Last year, we announced an ambitious target to reduce our direct
emissions (scope 1 and 2) by 20% over three years. I am pleased to
report that, in our first year, we are already close to achieving
this target. Therefore, we are increasing our three-year target to
a 30% reduction by 2023.
This year, we are also reporting our scope 3 emissions for the
first time, showing the total carbon emissions from our supply
chain and over the life of our homes. This is an important first
step to fundamentally assessing our wider impact and taking action
to reduce emissions throughout our value chain, not just the
emissions we produce directly. Over the coming year we will be
developing a strategy to reduce our scope 3 emissions for every
home built.
Trading and outlook
In our Gleeson Homes division, demand remains robust and it
entered the new financial year in a strong position, with a forward
order book of GBP134.1m on 841 homes. Whilst there are some
challenges on material costs and availability, I expect these to be
short term and manageable.
Gleeson Land starts the new financial year in a strong position
and with a pipeline of 71 sites, a record for the division. These
sites will deliver sustainable value and we will continue to invest
in new sites and in progressing existing sites through the complex
planning system. The demand for consented land is expected to
remain robust, with land promoters playing an important role in the
land supply chain.
As a result, I believe we will continue to grow in a sustainable
and controlled manner and we remain firmly on track to meet our
near-term target of delivering 2,000 new homes in the coming
financial year.
James Thomson
Chief Executive Officer
13 September 2021
Gleeson Homes - Business Review
Gleeson Homes delivered a record number of homes sold, sites
opened and operating profit with all three metrics exceeding
pre-Covid levels. We also saw significant growth in the land
pipeline and we enter the new financial year with a strong forward
order book.
2021 2020 2019
Homes sold 1,812 1,072 1,529
----------- ----------- -----------
Average selling GBP145,800 GBP130,900 GBP128,900
price
----------- ----------- -----------
Operating profit GBP37.4m GBP9.0m GBP30.1m
----------- ----------- -----------
Gleeson Homes completed the sale of 1,812 homes during the year,
an increase of 69% compared to the prior year (2020: 1,072 homes)
and 18.5% more than the pre-Covid year to June 2019 (2019: 1,529
homes). Revenue increased by 88.6% to GBP265.8m (2020: GBP140.9m)
of which GBP1.5m related to land sales (2020: GBP0.5m land
sales).
We entered the new financial year with a strong forward sales
position of GBP134.1m on 841 units (2020: GBP145.3m on 1,033
units). The reduction in the forward order book compared to the
prior year was due to the successful completion of home sales which
had been delayed by the Covid-19 pandemic in the final quarter of
the previous year.
We opened a record 27 new build sites during the year and start
the new financial year with 81 active build sites (2020: 71), of
which 61 were actively selling (2020: 65). Our average active build
and sales sites were 78 and 64 respectively (2020: 68 and 65). Our
sales outlets are located across the North of England and the
Midlands, with plans to continue expanding our geographical reach.
The business plans to open a further 25 sites during the new
financial year and expects to be building on approximately 90 sites
by 30 June 2022.
The average selling price for homes sold in the year was
GBP145,800 (2020: GBP130,900), an increase of 11.4%. The increase
was influenced by a combination of factors: house price inflation
of 9.3%, mix of site locations and the mix of two, three and
four-bed homes sold. Buying a Gleeson home remains highly
affordable and a young working couple on the National Living Wage
can afford to buy a Gleeson home on any one of our development
sites.
Gross profit margin on homes sold increased to 28.5% (2020:
27.8%) as increases in selling prices more than offset cost
inflation, including the costs of operating under Covid-safe
working practices.
The increase in the volume of homes sold and gross profit margin
resulted in gross profit increasing by 93.6% to GBP75.7m, which
included GBP0.4m in relation to land sales (2020: GBP39.1m, GBP0.1m
land sales), and operating profit increasing by 315.6% to GBP37.4m,
including GBP0.4m in relation to land sales (2020: GBP9.0m, GBP0.1m
land sales). Operating margin increased from 6.4% to 14.1%.
We had a successful year in land acquisitions and continued to
acquire land at sensible prices. The pipeline grew by 2,062 plots
to stand at 15,863 plots at 30 June 2021. Of these plots 7,930 are
owned (2020: 6,849) and 7,933 plots are conditionally purchased
(2020: 6,952). The number of sites in the land pipeline totalled
152 at year end, being three sites higher than the prior year end;
34 new sites were added to the pipeline, while 31 sites were
completed or did not proceed to purchase. In addition to owned and
conditionally purchased plots, there are a further 205 (2020: 798)
plots which are being actively considered for acquisition but will
only proceed if they meet our strict criteria.
The government's Help to Buy scheme remains popular with many of
our customers, with 69% of the homes sold during the year utilising
the scheme (2020: 66%). We also continue to provide a range of
bespoke packages to assist potential customers to become
homeowners, including our Key Worker Priority Programme and Forces
Property Direct, which provide priority access and vouchers toward
optional extras for key workers and British military personnel
looking to purchase a new home.
Gleeson Land - Business Review
The market for consented land recovered during the year leading
to the sale of eight sites.
2021 2020 2019
Plots sold 1,978 195 1,755
--------- -------- ---------
Land portfolio
(sites) 71 68 60
--------- -------- ---------
Operating profit GBP11.1m GBP0.2m GBP13.0m
--------- -------- ---------
Revenue from Gleeson Land increased to GBP22.8m (2020: GBP6.3m),
generated from the sale of eight sites in the year. The sites sold
totalled 276 acres with the potential to deliver 1,978 plots.
As a result, operating profit increased to GBP11.1m (2020:
GBP0.2m). Planning delays caused by the pandemic during the year
resulted in fewer sites achieving planning consents and fewer site
sales than hoped for.
The business has completed the sale of a further site since the
beginning of the new financial year and the outlook for the year
remains promising.
The business continued to invest selectively in its land
portfolio. This year we added a further ten sites (1,594 plots)
secured under option and promotion agreements and split one
existing site prior to sale.
At 30 June 2021, we had a portfolio totalling 71 sites (2020: 68
sites) with the potential to deliver 22,315 plots (2020: 23,314
plots) plus 44 acres of commercial land (2020: 44 acres). This
portfolio is expected to realise value over the short, medium and
long term, driven by the planning context of each site. Our Gleeson
Land team is based in Fleet, Hampshire and the portfolio continues
to have a geographic bias towards the South of England.
This year we submitted planning applications for ten sites with
the potential to deliver 1,281 units. Like other promoters and
developers, we saw a marked slow-down in the planning system due to
Covid-19. Whilst this system is, in some ways, now more challenging
than it has ever been, our highly experienced team of people and
advisors are skilled in navigating these complexities to achieve
attractive residential planning permissions.
We continue to see opportunities to add well-located sites to
the portfolio. We carefully select sites where we see the potential
for sustainable development and where we can unlock maximum value
for stakeholders. We aim to be the promoter of choice for
landowners and our track record is testament to our success.
Financial Review
The Group returned to strong growth this year with revenue and
profit ahead of pre-Covid levels. The balance sheet remains well
capitalised with net cash at 30 June 2021 of GBP34.3m. The
refinancing undertaken this year provides the Group with additional
liquidity to invest in growth.
Key performance indicators
2017 2018 2019 2020 2021
Group operating profit GBP33.0m GBP36.9m GBP41.0m GBP5.9m GBP43.1m
--------- --------- --------- --------- ---------
Profit before tax GBP33.0m GBP37.0m GBP41.2m GBP5.6m GBP41.7m
--------- --------- --------- --------- ---------
Earnings per share
(basic)(1) 48.5p 55.6p 61.0p 8.1p 58.2p
--------- --------- --------- --------- ---------
Dividends per share 24.0p 32.0p 34.5p nil 15.0p
--------- --------- --------- --------- ---------
Cash net of borrowings GBP34.1m GBP41.3m GBP30.3m GBP16.8m GBP34.3m
--------- --------- --------- --------- ---------
Return on capital
employed(2) 25.4% 26.6% 25.9% 3.1% 21.4%
--------- --------- --------- --------- ---------
(1) Continuing and discontinued operations 2017-2020. In 2021,
discontinued operations have been presented within continuing
operations.
(2) Return on capital employed is calculated based on earnings
before interest and tax ("EBIT") from continuing and discontinued
operations, expressed as a percentage of the average of opening and
closing net assets after deducting deferred tax and cash net of
borrowings.
Strong revenue and profit growth
The Group returned to growth with revenue increasing by 96.1% to
GBP288.6m (2020: GBP147.2m) which was 15.5% higher than the
pre-Covid year to June 2019 of GBP249.9m.
Gleeson Homes revenue increased by 88.6% to GBP265.8m (2020:
GBP140.9m) and was 34.9% higher than the pre-Covid year to June
2019 (GBP197.0m). This was due to an increase in the number of
homes sold to 1,812 (2020: 1,072) - a 69.0% increase and an 18.5%
increase when compared to 2019 and higher selling prices.
Selling prices were higher with average selling prices ("ASP")
in the year being GBP145,800 (2020: GBP130,900, 2019: GBP128,900).
Whilst selling prices have risen, these remain well below the
average new build selling prices across the North of England and
Midlands and remain affordable for young, first time buyers.
Gleeson Land increased revenues by 261.9% to GBP22.8m (2020:
GBP6.3m, 2019: GBP52.9m) having sold eight sites this year in
comparison to two small sites in the prior year and nine sites in
2019. Demand for consented land has returned following the
disruption caused by the pandemic, albeit some challenges remain
with delays in the planning system.
As a result, gross profit for the Group increased by 121.0% to
GBP89.3m (2020: GBP40.4m), with the gross profit of Gleeson Homes
increasing by 93.6% to GBP75.7m (2020: GBP39.1m, 2019: GBP59.3m).
The gross profit margin for Gleeson Homes increased to 28.5% (2020:
27.8%, 2019: 30.1%) as increases in selling prices more than offset
cost inflation. In part, gross margin in the prior year was also
impacted by Covid-19-related costs and provisions of GBP2.9m.
Administrative expenses increased by GBP12.7m or 36.8% in the
year to GBP47.2m (2020: GBP34.5m) as investment to support the
underlying growth of the business continued. All government
furlough grants claimed under the Job Retention Scheme, totalling
GBP1.3m, were repaid during the year of which GBP0.7m was included
in cost of sales and GBP0.6m was included in administrative
expenses.
Group operating profit was GBP43.1m, a significant increase on
the previous year operating profit of GBP5.9m and 5.1% higher than
the pre-Covid operating profit of GBP41.0m in 2019. Of this,
Gleeson Homes contributed GBP37.4m (2020: GBP9.0m, 2019: GBP30.1m)
and Gleeson Land contributed GBP11.1m (2020: GBP0.2m, 2019:
GBP13.0m). Group overheads were GBP5.4m (2020: GBP3.3m, 2019:
GBP2.1m).
Net finance expenses of GBP1.4m (2020: GBP0.4m expense)
consisted of finance expenses of GBP1.7m (2020: GBP1.1m) being
interest payable on bank facilities, bank charges and the unwinding
of discounts on deferred payables, partly offset by finance income
of GBP0.3m (2020: GBP0.7m) consisting of the unwinding of discounts
on deferred receivables on land sales and shared equity
receivables. Finance expenses includes GBP0.4m of arrangement fees
on the previous bank facility that were written off upon completing
the new club facility in April 2021.
As a result, the Group delivered profit before tax of GBP41.7m
(2020: GBP5.6m, 2019; GBP41.2m).
Tax
The total tax charge for the year was GBP7.8m (2020: GBP0.7m),
reflecting an effective rate of tax of 18.8% (2020: 14.1%).
Deferred tax assets relating to tax losses have been utilised in
full this year, such that the remaining deferred tax asset
recognised in relation to tax losses is now GBPnil. The remaining
deferred tax asset of GBP1.2m recognised in the statement of
financial position, comprises capital allowances, short-term timing
difference and future relief on share-based payments.
Discontinued operations
The costs of Gleeson Construction Services Limited, whose
activity is limited to resolving claims from the legacy businesses
that were sold in 2005 and 2006, were disclosed in previous years
as a discontinued operation. As the level of claims has now reduced
to an insignificant level and no longer warrants separate
disclosure, the costs associated with this activity of GBP0.4m
(2020: GBP0.3m) have been classified within continuing operations
this year, under Group overheads.
Profit for the year
The profit after tax for the year was GBP33.9m (2020:
GBP4.5m).
Earnings per share
Basic earnings per share significantly increased to 58.2 pence
(2020: 8.1 pence, 2019: 61.0 pence, both from continuing and
discontinued operations as previously reported).
Return on capital employed
Return on capital employed increased to 21.4% (2020: 3.1%, 2019:
25.9%) reflecting the significant increase in earnings compared to
the prior year. This is lower than the return on capital employed
pre-Covid in 2019 of 25.9%, driven by investment in working capital
and inventory due to a higher number of new sites that are only at
build stage but not yet contributing to sales, with net assets
having increased by 20.1% since June 2019.
Dividends
Following the suspension of dividend payments in 2020, the Board
resumed payments in April 2021 paying an interim dividend of 5.0p
per share, which totalled GBP2.9m.
As a result of the strong financial performance to June 2021,
and subject to shareholder approval, the Board proposes to pay a
final dividend of 10.0p per share, which equates to GBP5.8m.
The Board is committed to making dividend payments on a
progressive basis. Following a review of the Company's capital
allocation policy this year, the Board intends to maintain an
earnings-to-ordinary-dividend cover ratio of between three and five
times and to pay an interim dividend representing one-third of the
total dividend each year.
Statement of financial position
During the year to 30 June 2021, shareholders' funds increased
by 15.2% to GBP244.9m (2020: GBP212.6m). Net assets per share
increased to 420 pence, an increase of 14.8% year on year (2020:
366 pence).
Non-current assets reduced during the year by 37.9% to GBP12.6m
(2020: GBP20.3m). This was primarily due to a reduction in Gleeson
Land's deferred land sale receipts from GBP8.6m at June 2020 to
GBP2.1m at June 2021.
Current assets remained similar to June 2020 at GBP300.5m (2020:
GBP301.7m), with inventories increasing by GBP23.7m to GBP240.0m
and trade and other receivables increasing by GBP14.1m to GBP22.4m
(2020: GBP8.3m). Gross cash balances reduced from GBP76.8m to
GBP34.3m following repayment of the GBP60.0m borrowings on the
Group's revolving credit facility that was drawn at the end of
2020. Corporation tax receivables increased by GBP3.6m to
GBP3.9m.
Total liabilities reduced by GBP41.2m to GBP68.2m (2020:
GBP109.4m). This reflects the repayment of the GBP60.0m borrowing
in November 2020, partly offset by an increase in trade payables of
GBP9.0m to GBP34.4m (2020: GBP25.4m) and other payables of GBP9.4m
to GBP27.0m (2020: GBP17.6m), reflecting the return to pre-Covid
activity levels.
Cash flow
The Group generated cash before financing activities of
GBP21.2m, compared to a cash outflow of GBP15.9m in 2020. After
payment of interim dividends of GBP2.9m, lease payments of GBP0.8m
and the repayment of borrowings of GBP60.0m in November 2020, the
Group had a net cash outflow of GBP42.5m (2020: net cash inflow of
GBP46.5m reflecting the draw down of GBP60.0m in March 2020).
Bank facilities
At 30 June 2021, the Group had cash and cash equivalents
balances of GBP34.3m and no debt (30 June 2020: GBP16.8m net cash
being GBP76.8m gross cash net of GBP60.0m borrowings drawn on the
Group's committed facility).
In April 2021, the Group negotiated a committed club facility
with Lloyds Bank plc and Santander UK plc. The facility has a limit
of GBP105m (previously GBP70m with Lloyds Bank plc), expires in
October 2024 and provides the Group with additional funding to
finance growth.
Pension
The Group contributes to a defined contribution pension scheme.
A charge of GBP1.2m (2020: GBP1.0m) was recorded in the
Consolidated Income Statement for pension contributions. The Group
has no exposure to defined benefit pension plans.
Gleeson Homes pre-Covid 2019 to 2021
Gleeson Homes operating profit increased from GBP30.1m in 2019
to GBP37.4m in 2021. Higher sales volumes of 1,812 homes (2019:
1,529) contributed GBP10.9m additional gross profit. Higher average
selling prices ("ASP") of GBP145,800 (2019: GBP128,900) contributed
GBP9.2m additional profit. This additional gross profit was partly
offset by lower gross margin of 28.5% (2019: 30.1%), accounting for
GBP4.2m of lower profit and higher overhead costs of GBP9.0m due to
inflation and investment in the business structure, operations and
headcount.
Gleeson Homes operating profit 2019 to 2021 (GBPm)
GBPm
Operating profit
2019 30.1
------
Homes sold 10.9
------
Selling prices 9.2
------
Gross profit margin (4.2)
------
Overheads (9.0)
------
Land sales 0.4
------
Operating profit
2021 37.4
------
NOTE 1: Gleeson Homes operating profit in 2019 included certain
Group costs that have been classified in Group administrative
expenses since 2020.
2021 2020 2019
Homes sold 1,812 1,072 1,529
----------- ----------- -----------
Average number of homes sold
per sales site 28.3 16.5 23.5
----------- ----------- -----------
Build sites opened 27 12 19
----------- ----------- -----------
Average selling price GBP145,800 GBP130,900 GBP128,900
----------- ----------- -----------
Gross profit per home sold GBP41,600 GBP36,400 GBP38,800
----------- ----------- -----------
Gross profit margin per home
sold 28.5% 27.8% 30.1%
----------- ----------- -----------
Overheads per home sold GBP21,300 GBP28,200 GBP19,300
----------- ----------- -----------
The Covid-19 shutdown before the end of the previous financial
year resulted in higher numbers of built, part-built and forward
sold homes being carried forward into the year. It also led to the
purchase and opening of sites that had been expected to achieve
planning before 30 June 2020 to be acquired and opened during the
financial year.
The average selling price of homes sold increased by 11.4% from
2020 reflecting strong underlying price increases of 9.3% and the
effect of site mix. Gross profit margin of 28.5% reflects some
recovery from the Covid-impacted gross margin of 27.8% in the
previous year, but was lower than the pre-Covid gross margin of
30.1% reported in the year to June 2019. Nevertheless, gross profit
per home sold of GBP41,600 was GBP2,800 per home (7.2%) higher than
the gross profit per home sold in the pre-Covid year to June 2019.
Note the repayment of furlough monies this year through cost of
sales, reduced gross profit per home sold by approximately GBP375
per home.
Overhead costs per home sold were GBP21,300 which was GBP2,000
per home (10.4%) higher than the pre-Covid year to June 2019
reflecting higher average employment costs and investment in
customer care, health and safety and information management
systems. This also included the repayment of furlough monies
through overheads, which increased overheads by approximately
GBP300 per unit sold.
Stefan Allanson
Chief Financial Officer
13 September 2021
AUDITED CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2021
2021 2020
GBP000 GBP000
Continuing operations*
Revenue 288,575 147,181
Cost of sales (199,230) (106,744)
---------------- ---------------
Gross profit 89,345 40,437
Impairment losses - (257)
Administrative expenses (47,185) (34,533)
Other operating income 923 282
---------------- ---------------
Operating profit 43,083 5,929
Finance income 377 708
Finance expenses (1,749) (1,071)
---------------- ---------------
Profit before tax 41,711 5,566
Tax (7,839) (758)
---------------- ---------------
Profit for the year from continuing operations 33,872 4,808
Discontinued operations*
Loss for the year from discontinued operations
(net of tax) - (289)
Profit for the year attributable to the equity
holders of the parent 33,872 4,519
================ ===============
Earnings per share from continuing and discontinued
operations*
Basic n/a 8.13 p
Diluted n/a 8.04 p
================ ===============
Earnings per share from continuing operations
Basic 58.16 p 8.65 p
Diluted 58.07 p 8.55 p
================ ===============
*All results classified as continuing for the year ended 30 June
2021
AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2021
2021 2020
GBP000 GBP000
Profit for the year 33,872 4,519
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss
Change in value of shared equity receivables
at fair value 33 13
Movement in tax on share-based payments taken
directly to equity 302 265
-------- -----------------
Other comprehensive income for the year, net
of tax 335 278
-------- -----------------
Total comprehensive income for the year 34,207 4,797
======== =================
AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2021
2021 2020
GBP000 GBP000
Non-current assets
Property, plant and equipment 6,684 5,913
Trade and other receivables 4,672 12,238
Deferred tax assets 1,233 2,176
12,589 20,327
========= ==========
Current assets
Inventories 239,961 216,336
Trade and other receivables 22,378 8,328
UK corporation tax 3,875 253
Cash and cash equivalents 34,331 76,807
300,545 301,724
========= ==========
Total assets 313,134 322,051
========= ==========
Non-current liabilities
Trade and other payables (6,917) (11,866)
Provisions (236) (200)
--------- ----------
(7,153) (12,066)
========= ==========
Current liabilities
Loans and borrowings - (60,000)
Trade and other payables (61,027) (37,365)
Provisions (23) (15)
(61,050) (97,380)
========= ==========
Total liabilities (68,203) (109,446)
========= ==========
Net assets 244,931 212,605
========= ==========
Equity
Share capital 1,165 1,161
Share premium 15,843 15,843
Retained earnings 227,923 195,601
Total equity 244,931 212,605
========= ==========
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2021
Share Share Retained Total
capital premium earnings equity
GBP000 GBP000 GBP000 GBP000
At 1 July 2019 1,092 - 202,804 203,896
Adjustment on adoption of IFRS
16 on 1 July 2019 - - (87) (87)
Total comprehensive income for
the year
Profit for the year - - 4,519 4,519
Other comprehensive income - - 278 278
Total comprehensive income for
the year - - 4,797 4,797
========= ========= ========== =========
Transactions with owners, recorded
directly in equity
Contributions and distributions
to owners
Share issue 69 15,843 - 15,912
Purchase of own shares - - (63) (63)
Share-based payments - - 717 717
Dividends - - (12,567) (12,567)
Transactions with owners, recorded
directly in equity 69 15,843 (11,913) 3,999
========= ========= ========== =========
At 30 June 2020 1,161 15,843 195,601 212,605
========= ========= ========== =========
Total comprehensive income for
the year
Profit for the year - - 33,872 33,872
Other comprehensive income - - 335 335
Total comprehensive income for
the year - - 34,207 34,207
====== ======= ======== ========
Transactions with owners, recorded
directly in equity
Contributions and distributions
to owners
Share issue 4 - - 4
Purchase of own shares - - (61) (61)
Share-based payments - - 1,089 1,089
Dividends - - (2,913) (2,913)
Transactions with owners, recorded
directly in equity 4 - (1,885) (1,881)
====== ======= ======== ========
At 30 June 2021 1,165 15,843 227,923 244,931
====== ======= ======== ========
AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2021
2021 2020
GBP000 GBP000
Operating activities*
Profit before tax from continuing operations 41,711 5,566
Loss before tax from discontinued operations - (307)
--------- ------------
41,711 5,259
Depreciation of property, plant and equipment 2,772 2,289
Share-based payments 1,089 717
Profit on redemption of shared equity receivables (230) (223)
Loss on disposal of property, plant and equipment 200 254
Impairment of investment properties - 257
Disposal of right-of-use assets 50 -
Finance income (377) (708)
Finance expenses 1,749 1,071
Operating cash flows before movements in working
capital 46,964 8,916
Increase in inventories (23,626) (33,215)
(Increase)/decrease in receivables (6,709) 42,207
Increase/(decrease) in payables 19,706 (28,236)
Cash generated/(used) in operating activities 36,335 (10,328)
Tax paid (10,216) (3,596)
Finance costs paid (1,934) (728)
Net cash flow surplus/(deficit) from operating
activities 24,185 (14,652)
========= ============
Investing activities
Proceeds from disposal of shared equity receivables 858 1,065
Proceeds from disposal of property, plant and
equipment 7 -
Interest received 6 64
Purchase of property, plant and equipment (3,839) (2,410)
Net cash flow deficit from investing activities (2,968) (1,281)
========= ============
Financing activities
(Repayment)/increase of loans and borrowings (60,000) 60,000
Net proceeds from issue of shares 4 15,912
Purchase of own shares (61) (63)
Dividends paid (2,913) (12,567)
Principal element of lease payments (723) (848)
Net cash flow (deficit)/surplus from financing
activities (63,693) 62,434
========= ============
Net (decrease)/increase in cash and cash equivalents (42,476) 46,501
Cash and cash equivalents at beginning of year 76,807 30,306
Cash and cash equivalents at end of year 34,331 76,807
========= ============
*All results classified as continuing for the year ended 30 June
2021
NOTES TO THE FINANCIAL INFORMATION
for the year ended 30 June 2021
1. Accounting policies
Statement of compliance
The Group Financial Statements have been prepared and approved
by the directors in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act
2006 (IFRS) and the applicable legal requirements of the Companies
Act 2006. Additionally, the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules require the directors to
prepare the group financial statements in accordance with
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
Notes on the preliminary statement
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 30 June 2021 or
2020, but is derived from those accounts. Statutory accounts for
2020 have been delivered to the Registrar of Companies, and those
for 2021 will be delivered in due course. The auditors have
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
Cautionary statement
This Report contains certain forward-looking statements with
respect to the financial condition, results, operations and
business of MJ Gleeson plc. These statements and forecasts involve
risk and uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements and forecasts. Nothing in this Report should be
construed as a profit forecast.
Directors' liability
Neither the Company nor the Directors accept any liability to
any person in relation to this Report except to the extent that
such liability could arise under English law. Accordingly, any
liability to a person who has demonstrated reliance on any untrue
or misleading statement or omission shall be determined in
accordance with section 90A of the Financial Services and Markets
Act 2000.
Basis of preparation
The accounting policies adopted in the preparation of these
accounts are consistent with those described in the Annual Report
and Accounts for the year ended 30 June 2020.
Going concern
During the year, the Group negotiated a committed club facility
with Lloyds Bank plc and Santander UK plc. The facility has a limit
of GBP105m (previously GBP70m with Lloyds Bank plc), which expires
in October 2024 and provides the Group with additional liquidity
and investment funding.
The Group has maintained its strong financial position and ended
the year with cash balances of GBP34.3m and no debt (30 June 2020:
GBP16.8m net cash).
Current forecasts are based on the latest three-year budget
approved by the Board in May 2021. This reflected a cautious view
on the trading outlook based on the current market and the degree
of macro-economic risk that remains from the ongoing Covid-19
pandemic.
These forecasts were then subject to a range of sensitivities
including a severe but plausible scenario together with the likely
effectiveness of mitigating actions. The assessment considered the
impact of a number of realistically possible, but severe and
prolonged changes to principal assumptions from a downturn in the
housing and land markets including:
-- reduction in Gleeson Homes volumes of approximately 15%;
-- reduction in Gleeson Homes selling prices by 5%;
-- material build cost increases of 10% over and above the levels forecast; and
-- a delay on the timing of Gleeson Land transactions and land selling values.
Under these sensitivities, after taking mitigating actions, the
Group continues to have a sufficient level of liquidity, operate
within its financial covenants and meet its liabilities as they
fall due.
Based on the results of the analysis undertaken, the Directors
have a reasonable expectation that the Company and the Group have
adequate resources available to continue in operation for the
foreseeable future and operate in compliance with the Group's bank
facilities and financial covenants. As such, the financial
statements for the Company and the Group have been prepared on a
going concern basis.
2. Segmental analysis
The Group is organised into the following two operating
divisions under the control of the Executive Board, which is
identified as the Chief Operating Decision Maker as defined under
IFRS 8 "Operating Segments":
-- Gleeson Homes
-- Gleeson Land
All of the Group's operations are carried out entirely within
the United Kingdom. Segment information about the Group's
operations is presented below:
2021 2020
GBP000 GBP000
Revenue
Continuing activities*:
Gleeson Homes 265,770 140,860
Gleeson Land 22,805 6,321
Total revenue 288,575 147,181
======== ========
Divisional operating profit
Gleeson Homes 37,437 8,960
Gleeson Land 11,080 229
-------- --------
48,517 9,189
Group administrative expenses* (5,434) (3,260)
Finance income 377 708
Finance expenses (1,749) (1,071)
-------- --------
Profit before tax 41,711 5,566
Tax (7,839) (758)
-------- --------
Profit for the year from continuing operations* 33,872 4,808
Loss for the year from discontinued operations
(net of tax)* - (289)
Profit for the year 33,872 4,519
======== ========
* The activities of Gleeson Construction Services Limited were
previously disclosed as discontinued operations but are now
considered wholly immaterial to the Group and are presented within
continuing operations in the year ended 30 June 2021.
The revenue in the Gleeson Homes segment primarily relates to
the sale of residential properties. In addition, within revenue for
Gleeson Homes is GBP1,521,000 relating to land sales (2020:
GBP510,000). All revenue for the Gleeson Land segment is in
relation to the sale of land interests. There is no revenue
relating to Group activities.
No single customer accounts for more than 10% of revenue (2020:
no single customer).
Balance sheet analysis of business segments:
2021 2020
Assets Liabilities Net Assets Liabilities Net
assets assets
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gleeson Homes 233,328 (54,892) 168,436 198,201 (37,082) 161,119
Gleeson Land 50,487 (9,106) 41,381 45,902 (9,831) 36,071
Group activities 4,988 (4,205) 783 1,141 (2,533) (1,392)
Net cash/(debt) 34,331 - 34,331 76,807 (60,000) 16,807
-------- ------------ -------- -------- ------------ --------
313,134 (68,203) 244,931 322,051 (109,446) 212,605
======== ============ ======== ======== ============ ========
3. Tax
Continuing Discontinued
operations operations Total
2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Current tax:
Current year expense 7,261 647 - - 7,261 647
Adjustment in respect of
prior years (533) 91 - - (533) 91
Current tax expense for the
year 6,728 738 - - 6,728 738
------- ------- ------- ------- ------- -------
Deferred tax:
Current year expense/(credit) 674 (7) - - 674 (7)
Adjustment in respect of
prior years 589 113 - - 589 113
Impact of rate change (152) (86) - (18) (152) (104)
Deferred tax expense/(credit)
for the year 1,111 20 - (18) 1,111 2
------- ------- ------- ------- ------- -------
Total tax charge/(credit) 7,839 758 - (18) 7,839 740
======= ======= ======= ======= ======= =======
Corporation tax has been calculated at 18.8% of assessable
profit for the year (2020: 14.1%). The applicable UK corporation
tax rate is 19%, which has been effective from 1 April 2017.
The charge for the year can be reconciled to the profit per the
consolidated income statement as follows:
2021 2020
GBP000 GBP000
Profit before tax on continuing operations 41,711 5,566
Loss before tax from discontinued operations - (307)
Profit before tax 41,711 5,259
======= =======
Profit before tax multiplied by the standard
rate of UK corporation tax 19% (2020: 19%) 7,925 999
Tax effect of:
Expenses not deductible for tax purposes 3 7
Non-qualifying depreciation 64 19
Relief for share-based payments (6) 7
Capital allowances super deduction (51) -
Land remediation relief - (182)
Impact of change in tax rate - (105)
Impact of rate differences (152) -
Adjustments in respect of prior years - current
tax (533) (118)
Adjustments in respect of prior years - deferred
tax 589 113
Total tax charge for the year 7,839 740
======= =======
Tax recognised directly in equity 2021 2020
GBP000 GBP000
Current tax related to equity-settled share-based
payments (134) (767)
Deferred tax related to equity-settled share-based
payments (168) 502
Total tax recognised directly in other comprehensive
income (302) (265)
======= =======
4. Dividends
2021 2020
GBP000 GBP000
Amounts recognised as distributions to equity
holders in the year:
Interim dividend for the year ended 30 June
2021 of 5.0p (2020: GBPnil) per share 2,913 -
Final dividend for the year ended 30 June 2020
of GBPnil (2019: 23.0p) per share - 12,567
2,913 12,567
======= ========
A final dividend of 10.0 pence per share has been proposed for
the year ended 30 June 2021, equating to GBP5,831,000 (2020:
GBPnil).
5. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2021 2020
Earnings GBP000 GBP000
Profit from continuing operations 33,872 4,808
Loss from discontinued operations* - (289)
Profit for the purposes of basic and diluted
earnings per share 33,872 4,519
======== ========
2021 2020
No. 000 No. 000
Number of shares
Weighted average number of ordinary shares
for the purposes of
basic earnings per share 58,235 55,583
Effect of dilutive potential ordinary shares:
* share-based payments 97 625
Weighted average number of ordinary shares
for the purposes of
diluted earnings per share 58,332 56,208
======== ========
2021 2020
p p
Continuing operations
Basic earnings per share 58.16 8.65
Diluted earnings per share 58.07 8.55
======== ========
Continuing and discontinued operations*
Basic earnings per share n/a 8.13
Diluted earnings per share n/a 8.04
======== ========
*All results classified as continuing for the year ended 30 June
2021
6. Financial instruments
The fair values of the Group's financial assets and liabilities
are not materially different from the carrying values. Shared
equity receivables are measured at fair value through other
comprehensive income ("FVOCI"). The following summarises the major
methods and assumptions used in estimating the fair values of
financial instruments.
Shared equity receivables at FVOCI
Group
2021 2020
GBP000 GBP000
Balance at 1 July 3,668 4,436
Redemptions (594) (793)
Shared equity provision (600) -
Unwind of discount (finance income) 49 61
Fair value movement recognised in other comprehensive
income (1) (36)
Balance at 30 June 2,522 3,668
======= =======
Shared equity receivables 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 finance income,
with the financial asset increasing to its full cash settlement
value on the anticipated receipt date.
Redemptions in the year of shared equity loans carried at fair
value of GBP594,000 (2020: GBP793,000) generated a profit on
redemption of GBP230,000 (2020: GBP223,000), which has been
recognised in other operating income in the consolidated income
statement.
In addition, a net change in the value of shared equity
receivables of GBP33,000 (2020: GBP13,000) has been recognised in
other comprehensive income. This is made up as follows:
Group
2021 2020
GBP000 GBP000
Fair value movement recognised in other comprehensive
income (1) (36)
Fair value recycled through profit and loss 34 49
Total movement recognised in other comprehensive
income 33 13
======= =======
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 financial year.
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%
-- Average period to redemption: 5 years
-- Discount rate: 8%
6. Financial instruments (cont.)
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:
2021 2020
Change in assumption Increase/(decrease) Increase/(decrease)
in fair value in fair value
GBP000 GBP000
Forecast regional house price inflation
- increase by 1% 156 181
Average period to redemption -
increase by 1 year (173) (204)
Discount rate - decrease by 1% 149 173
7. Related party transactions
During the year, the Group exchanged contracts on a conditional
agreement to purchase an area of land from Hampton Investment
Properties Ltd ("HIPL") for GBP1,050,000. HIPL is a company in
which North Atlantic Smaller Companies Investment Trust plc
("NASCIT"), a substantial holder in the company, holds a majority
investment. In addition, Christopher Mills, a Non-Executive
Director of the Company, is considered a related party by virtue of
his interest in and directorship of NASCIT and his position as a
Director of HIPL. The land, if purchased, will form part of a new
Gleeson Homes site being developed in the ordinary course of
business. Approval of this purchase was granted by the majority of
shareholders at the AGM in December 2019.
Other than disclosed above, there were no other transactions
with key management personnel in either the current or prior
year.
Statements of Directors' Responsibilities
The Statement of Directors' Responsibilities is made in respect
of the full Annual Report and the financial statements not the
extracts from the financial statements required to be set out in
the Announcement.
The 2021 Annual Report and Accounts comply with the United
Kingdom's Financial Conduct Authority Disclosure Guidance and
Transparency Rules in respect of the requirement to produce an
annual financial report.
We confirm that to the best of our knowledge:
-- the Group and Company financial statements, which have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit of the Group and loss of the Company; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
The Directors consider that the Annual Report and financial
statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group and Company's position and performance, business model
and strategy.
By order of the Board
James Thomson Stefan Allanson
Chief Executive Officer Chief Financial Officer
13 September 2021
The 2021 Annual Report and financial statements is to be
published on the Company's website at www.mjgleesonplc.com and sent
out to those shareholders who have elected to continue to receive
paper communications. Copies will be available from The Company
Secretary, 6 Europa Court, Sheffield Business Park, Sheffield, S9
1XE.
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END
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