Mj Gleeson Plc · LSE:GLE
Mj Gleeson — FY2018 Earnings Presentation
26 slides from Mj Gleeson's earnings presentation, Sep 17, 2018
Slide 1: MJ Gleeson plc
MJ Gleeson plc 17 September 2018 1
Slide 2: Onwards and Upwards
Onwards and Upwards ➢ Strong financial performance ➢ Developers still buying land – 9 consented sites, 7 progressing to sale ➢ Pipeline over 12,800 plots (10.5 years development) ➢ Unique, sustainable and robust market segment ➢ On track to double Homes volumes to 2,000 units p.a. by 2022 ➢ Resource
Slide 3: Financial Review
Financial Review Stefan Allanson Chief Financial Officer MJ Gleeson plc – results for the period ended 30 June 2018 3
Slide 4: Strong financial performance
Strong financial performance ➢ Operating profit up 11.8% to £36.9m (2017: £33.0m) ➢ PBT up 12.1% to £37.0m (2017: £33.0m) ➢ Operating cash flow before dividends up 9.6% to £21.6m (2017: £19.7m) ➢ Cash balance up 21.1% at 30 June 2018 to £41.3m (30 June 2017: £34.1m) ➢ Earnings per share up 14.6% at
Slide 5: Strong growth . . . Strong results
Strong growth . . . Strong results Operating profit (£m) Operating cash flow+ (£m) 45.0 (excluding group overheads) 25.0 21.6 40.0 19.7 35.0 26.2 20.0 22.8 30.0 Gleeson 15.0 13.9 25.0 19.5 17.4 Homes 20.0 Gleeson 10.0 8.1 15.0 Strategic 5.6 10.0 9.4 12.6 Land 12.0 5.0 10.2 5.0 8.1 4.8 - - 2014 2015
Slide 6: Income statement
Income statement Year ended Year ended Change Notes June 18 June 17 £m £m Revenue Homes 153.4 130.5 +17.5% Includes land sales: 2018: £nil, 2017: £6.2m Strategic Land 43.3 29.9 +44.8% 196.7 160.4 +22.6% Homes 26.2 22.8 +14.9% Includes land sales: 2018: £nil, 2017: £1.0m Strategic Land 12.6 12.0 +5.0
Slide 7: Balance sheet
Balance sheet 30 June 30 June 2018 2017 £m £m Homes Land 59.1 48.4 WIP 72.4 62.5 Strategic Land Land 13.2 15.7 WIP 15.8 15.9 Total inventories 160.5 142.5 Other assets 41.0 39.2 Other liabilities (54.7) (44.4) Cash & cash equivalents 41.3 34.1 Net assets 188.1 171.4 MJ Gleeson plc – results for the
Slide 8: Cash flow
Cash flow Year ended Year ended June 18 June 17 £m £m Profit before tax from continuing operations 37.0 33.0 Depreciation, loss from discontinued operations and other operating items 1.6 1.1 Working capital movements (11.4) (10.0) Cash generated in operating activities 27.2 24.1 Tax (5.2) (4.4) Inte
Slide 9: Dividend
Dividend ➢ Final dividend recommended of 23.0 pence Dividends per share (2017: 17.5 pence per share) 35.0 p 32.0p 30.0 p ➢ Giving a total ordinary dividend for the year of 32.0 pence per share, up 33% on 25.0 p 24.0p previous year (2017: 24.0 pence per share) Total dividend for the year 20.0 p 23.0
Slide 10: Business Review
Business Review Jolyon Harrison Chief Executive Officer MJ Gleeson plc – results for the period ended 30 June 2018 10
Slide 11: Business model
Business model Gleeson Homes We build and sell low-cost homes to people on low incomes in areas of industrial decline and social and economic deprivation Gleeson Strategic Land Land promotion, enhancing the value of land by securing residential planning consents MJ Gleeson plc – results for the peri
Slide 12: Strategic Land overview
Strategic Land overview ➢ 10 land sales completed (2017: 8 land Operating profit (£m) sales) for 1,970 plots (2017: 841 plots) 14.0 12.6 12.0 12.0 10.2 ➢ 2 sales pre-consent for 1,120 plots 10.0 8.1 8.0 6.0 4.8 ➢ Operating profit up 5.0% to £12.6m 4.0 (2017: £12.0m) 2.0 - 2014 2015 2016 2017 2018 ➢
Slide 13: Planning status of current portfolio
Planning status of current portfolio Strategic Land sites: an excellent portfolio No. Sites Acres Plots Planning consented 9 269 2,089 Planning submitted 8 410 2,746 Allocated sites 11 1,209 6,655 Not allocated 33 2,093 11,348 Total 61 3,981 22,838 MJ Gleeson plc – results for the period ended 30 Ju
Slide 14: Dedicated to the North, Midlands & East
Homes: Dedicated to the North, Midlands & East ➢ Home ownership has fallen across England to 63% England ➢ Yet, most people still want to own Number of households (millions) their own home ➢ Gleeson buyers are predominantly first-time-buyers, living at home or renting North, Mids Owned Rented & East
Slide 15: Affordable for the majority
Homes: Affordable for the majority ➢ A couple on the National Living Wage can afford to buy a 2-bed Gleeson home England ➢ Mortgage repayments £54 per week* Average house prices (all newbuild) Average Increase Increase less ➢ House prices in our market remain prices 2017 since 2007 inflation (RPI) s
Slide 16: Limited competition
Homes: Limited competition ➢ Few housebuilders meeting low-cost demand in the North, Midlands and Housing transaction volumes in East of England: the North, Midlands & East ➢ 1 in 5 (20%) house sales above Below £150,000 Above £150,000 £150,000 are newbuild 300 300 254 Number of transactions (thousa
Slide 17: Building communities
Homes: Building communities ➢ Covenants to ensure community cohesion ➢ No leasehold sales ➢ Living Wage Employer ➢ No sales to investors (no Buy-to-Let) ➢ Sustainable development (PLC award 2018) ➢ Local procurement and builders ➢ YourWatch® service across all developments ➢ Community Makeover / Blo
Slide 18: Challenging the norms of housebuilding
Homes: Challenging the norms of housebuilding Gleeson Other listed Homes housebuilders Serving an under-supplied market: (Lowes t - Hi ghes t) ➢ Traditional newbuild houses Average Selling Price (Private sales) £125,200 £234,000 - £880,000 ➢ No flats First Time Buyers 87% 35% - 50% (% of private sal
Slide 19: Homes: continued strong demand
Homes: continued strong demand ➢ Unit sales up 20.9% to 1,225 (2017: 1,013) Unit completions 1,400 ➢ ASP increased 2.0% to £125,200 1,225 1,200 (2017: £122,700) due to higher prices 1,013 and mix 1,000 904 House sales p.a. ("units") ➢ Sales outlets increased to 65 at June 800 751 2018 (June 2017: 59
Slide 20: Homes: margins broadly flat
Homes: margins broadly flat Gross margin ➢ Gross profit on unit sales up 22.2% to on unit sales * £50.1m (2017: £41.0m) 34.0% 33.0% 32.7% 31.1% 32.0% 29.8% 29.6% 30.0% ➢ No land sales (2017: £1.0m gross 28.0% profit on land sales) 26.0% 24.0% 22.0% ➢ Gross margin on unit sales marginally 20.0% 2014
Slide 21: Homes: land available at sensible prices
Homes: land available at sensible prices ➢ Pipeline up 11%, net 1,264 plots increase ➢ Owned up 22% to 6,475 plots Land pipeline ➢ Average cost unchanged at c£9k 12,852 11,588 12,000 ➢ 12,852 plots at 30 June 2018 (June 2017: 11,588) 10,000 9,284 6,377 Number of plots 6,268 7,496 Awaiting ➢ 149 site
Slide 22: Regional expansion
Homes: Regional expansion ➢ Growing area offices ➢ 8 area offices (June 2017: 7 offices), and ➢ 2 “pilot” offices in Penrith & Ashington ➢ Developing management capacity ➢ Area managers appointed in 8 regions ➢ Leadership development programme now in 3rd year ➢ Managing Director and Chief Operations
Slide 23: Homes: structure to support growth
Homes: structure to support growth Homes CEO – Jolyon Harrison management team of 8 directors with Chief Operations Officer Managing Director depth and breadth Sarah Marsden Bryan Simpson of experience LAND – Steve Gamble TECHNICAL – Tony Lee FINANCE – Simon Topliss SALES – Louise McCue COMMERCIAL –
Slide 24: Summary and outlook
Summary and outlook ➢ Strong 1st year of 5 year plan to deliver 2,000 units p.a. by 2022 ➢ Demand strong for both low cost homes and consented greenfield land ➢ Dedicated to a unique and sustainable market segment ➢ Dividend growth reflects strong cash generation and confidence ➢ Expect continued pr
Slide 25: MJ Gleeson plc
gleeson MJ Gleeson plc
Slide 26: Appendix: Current land market
Appendix: Current land market Prime “A” Guildford, Twickenham, Surrey , inner M25 Hot interest from all major housebuilders Prime “B” Shaftesbury, Farnham, Witney, Tunbridge Wells, Haywards Heath Strategic Very hot interest from builders building less than 2,500 units a year. Major housebuilders wil