Mj Gleeson Plc · LSE:GLE
Mj Gleeson — FY2020 Earnings Presentation
42 slides from Mj Gleeson's earnings presentation, Sep 14, 2020
Slide 1: MJ Gleeson plc Results for the year ended 30 June 2020
MJ Gleeson plc 14 September 2020 1 Results for the year ended 30 June 2020
Slide 2: Results for the year ended 30 June 2020
Results for the year ended 30 June 2020 ➢ CEO introduction 3 – James Thomson ➢ Financial review 7 – Stefan Allanson ➢ Business review 16 – James Thomson ➢ Summary 39 – James Thomson 2
Slide 3: CEO introduction
CEO introduction suing Homes. chnsins Lies gleeson
Slide 4: Priority to protect people and secure the business
Priority to protect people and secure the business ➢ Swift response £16m equity raised, £60m loan drawn, 76% staff furloughed, land and discretionary spend freeze, Board and senior management temporary pay cuts, interim dividend cancelled ➢ Activity during shutdown All site build plans reprogrammed,
Slide 5: Covid-secure operations
Covid-secure operations ➢ Covid-secure in place across the business ➢ All sites operational ➢ All HSE Covid spot checks passed ➢ Protocols include: ➢ Covid-19 Site Operating Procedures ➢ Enhanced and controlled site entry ➢ Social distancing marshals ➢ Specific signage ➢ One-way pedestrian routes, w
Slide 6: Emerging stronger and on track for 2,000 homes p.a. in FY22
Emerging stronger and on track for 2,000 homes p.a. in FY22 ➢ Swift response to Covid-19 to protect people and strengthen the business ➢ FY20 performance significantly impacted by Covid-19 in Q4 ➢ Demand robust: selling everything we release ➢ Strong business model ➢ Structural development ➢ Platfor
Slide 7: Financial review
Financial review suing Homes. chnsins Lies gleeson
Slide 8: Full year heavily impacted by Covid-19 in Q4
Full year heavily impacted by Covid-19 in Q4 ➢ Full year results significantly impacted by Covid-19: ➢ Homes volumes down 29.9% at 1,072 homes sold (2019: 1,529 homes sold) ➢ Strategic Land sold two small sites (2019: nine sites sold) ➢ Operating profit: £5.9m (2019: £41.0m) ➢ PBT: £5.6m (2019: £41.
Slide 9: Results significantly impacted by Covid-19
Results significantly impacted by Covid-19 9
Slide 10: Income statement
Income statement £ million Year ended Year ended 30 June 2020 30 June 2019 Change Notes Homes 140.9 197.0 -28.5% Strategic Land 6.3 52.9 -88.1% Revenue 147.2 249.9 -41.1% Homes 9.0 30.1 -70.1% Strategic Land 0.2 13.0 -98.5% Group overhead (3.3) (2.1) +57.1% Reallocated overhead costs Operating profi
Slide 11: Gleeson Strategic Land results
Gleeson Strategic Land results ➢ Two small land sales completed (2019: nine) ➢ Total developable plots 195 (2019: 1,755) ➢ Gross profit £1.3m (2019: £15.7m) ➢ Overheads £1.1m (2019: £2.7m) ➢ Reduced bonus and long-term incentive ➢ Operating profit £0.2m (2020: £13.0m) (Thanet) 11
Slide 12: Gleeson Homes results
Gleeson Homes results ➢ Unit sales down 29.9% to 1,072 (2019: 1,529) ➢ ASP increased 1.6% to £130,900 (2019: £128,900) ➢ Underlying selling prices 3.3% higher ➢ Turnover down 28.5% to £140.9m (2019: £197.0m) ➢ Includes £0.5m for two small land sales (2019: £nil) ➢ Gross profit down 34.1% to £39.1m (
Slide 13: Balance sheet
Balance sheet £ million 30 June 30 June 2020 2019 Notes Homes Land 64.9 58.0 £9,500 per plot (2019: £8,900) WIP 119.2 96.5 £1.68m per site, 2 more build sites Strategic Land Land 15.0 12.9 Number of sites up 8 at 68 WIP 17.2 15.7 Total inventories 216.3 183.1 Other assets 28.9 67.8 £14m Homes, £14m
Slide 14: Cash flow
Cash flow £ million Year ended Year ended 30 June 2020 30 June 2019 Notes Profit before tax from continuing operations 5.6 41.2 Depreciation, loss from disc. ops. and other 3.3 1.5 £0.8m IFRS16, £0.7m movement on finance costs Working capital movements (19.2) (27.9) Cash generated from operating act
Slide 15: Our approach to sustainability
Our approach to sustainability The Board places social responsibility at the heart of everything that we do. There are many things that the Company can feel justifiably proud of: • we transform people’s lives through building and selling high-quality, low-cost homes • we regenerate once- neglected a
Slide 16: Business review
Business review suing Homes. chnsins Lies gleeson
Slide 17: Business Model
Business Model Gleeson Homes We build and sell high-quality, low-cost homes to young, first-time buyers on low to mid incomes, where they are needed, for people who need them most. Gleeson Strategic Land We promote land, enhancing its value by securing mainly residential planning consent.
Slide 18: Gleeson Strategic Land
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Slide 20: Q4 land sales paused
Q4 land sales paused ➢ Majority of land sales in 2020 were scheduled for Q4 ➢ Two small sites sold in Q3 ➢ Developers suspended land purchases at onset of lockdown ➢ Cautious return of land buyers ➢ Four site sales recommenced ➢ Two new sites being marketed – initial interest appears strong ➢ We hop
Slide 21: Site acquisition and planning
Site acquisition and planning ➢ 9 new site interests acquired (with potential for 1,888 residential plots) ➢ 6 planning applications submitted (634 plots) ➢ 5 sites received planning consent / resolution to grant (1,076 plots) ➢ 2 sites allocated in local plans (261 plots) ➢ Portfolio larger and str
Slide 22: Planning status
Planning status ➢ 68 sites (30 June 2019: 60 sites) ➢ 23,314 plots (30 June 2019: 21,730 plots) ➢ 3,855 plots on 11 sites consented (30 June 2019: 2,929 plots on 9 sites) As at 30 June 2020 As at 30 June 2019 No. Sites Plots No. Sites Plots 11 Planning consented Planning consented 11 3,855 9 2,929 7
Slide 23: Gleeson Homes
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Slide 24: Our Mission: Changing lives by building affordable, quality homes
Our Mission: Changing lives by building affordable, quality homes. Where they are needed, for the people who need them most. Petersmith Park, Ollerton Nottinghamshire
Slide 25: Demand strong, focussing on building out forward orders
Demand strong, focussing on building out forward orders ➢ Forward orders up 52% at 1,033 plots (2019: 677 plots) ➢ WIP equivalent units up 55% at 522 eq. units (2019: 336 eq. units) ➢ Build rate: ➢ Currently at 0.42 units per site per week (87% pre-Covid levels) ➢ Aiming for 0.48 units per site per
Slide 26: Roadmap to target of 2,000 units p.a.
Roadmap to target of 2,000 units p.a. ➢ Build rate was approaching 0.5 units per site per week pre-Covid (equivalent to 25 units per site p.a.) ➢ Targeting 25 units per site p.a. by December 2020 ➢ 2,000 units p.a. achievable on 80 sites selling 25 units p.a. ➢ 65 active sales sites at 30 June 2020
Slide 27: Strong land pipeline
Strong land pipeline ➢ Pipeline up 1.7% to 13,801 plots on 149 sites ➢ 71 active build sites ➢ 78 pipeline sites ➢ 69 conditionally purchased sites, 9 owned ➢ 10 with planning ➢ 9 years supply at 2019 sales rate ➢ Average cost less than £10,000 per plot ➢ 60% brownfield – little competition ➢ Land b
Slide 28: Market overview
Market overview ASP – North of England ➢ One-third of households are renting ➢ Over 4 million households renting in our geographic area ➢ Under-supply of affordable homes to buy Other housebuilders Gleeson ➢ No other major housebuilders selling below £150,000 £205,500 £130,900 ➢ Gleeson prices highl
Slide 29: Customer demographics
Customer demographics ➢ 84% first-time buyers ➢ 2/3rd key workers ➢ 11% customers are nurses/care workers ➢ 6% customers are teachers ➢ 29 years old - median age ➢ 74% of customers are 35 years old or younger ➢ 4% of customers are retired ➢ 4% of customers are 21 years old or younger ➢ £20,900 p.a.
Slide 30: Gleeson homes
Gleeson homes We build high-quality, low-cost homes for young, first-time buyers ➢ All Gleeson homes are: ➢ Traditional brick and block construction ➢ 2, 3 or 4 bed houses ➢ Significantly cheaper to buy than rent ➢ And have: ➢ Front and rear gardens ➢ Driveways down the side ➢ What Gleeson doesn’t d
Slide 31: Help to Buy
Help to Buy ➢ 66% customers use Help to Buy ➢ Help to Buy is changing from 1 April 2021: ➢ Extended to 2023 ➢ Regional price caps ➢ Restricted to first time buyers only (84% of our customers) ➢ Gleeson selling prices below regional caps ➢ 1 sale above cap in 2020 ➢ ASP in forward order book 34% belo
Slide 32: House prices
House prices ➢ House price growth in last 10 years: ➢ 79% in London ➢ 41% across UK ➢ 19% in the North ➢ RPI has increased 35% ➢ Since 2007, house prices in the North are: ➢ 4% higher in nominal terms ➢ -16% lower in real terms * Source: Land Registry, all house sales in the North of England Decembe
Slide 33: Platform for future growth in place
Platform for future growth in place ➢ Organisational structure ➢ Health and safety ➢ Build and site investment ➢ Sales and customer focus 33
Slide 34: Organisational structure
Organisational structure James Thomson Stefan Allanson CEO CFO Mark Knight James Pitt MD Gleeson Homes MD Gleeson Strategic Land Formerly Divisional Chairman Formerly Land Director for Barratt Keepmoat Homes, Ops Dir/MD plc, joined Gleeson as Land Director Miller Homes, David Wilson in 2010. Homes S
Slide 35: Health and safety
Health and safety ➢ HomeSafe - everyone, every day ➢ Working at height ➢ Welfare facilities ➢ NHBC site inspections ➢ Mental health champions ➢ Investment in health and safety team ➢ Target to significantly reduce incident rate New decking system 35
Slide 36: Build and site investment
Build and site investment OLD site compound NEW site compound ➢ Site set-up ➢ Materials handling and storage ➢ Welfare facilities ➢ Build discipline ➢ Quality of subcontractors 36
Slide 37: Sales and customer focus
Sales and customer focus ➢ Independent customer surveys by In-house: ➢ Currently 88% score – equivalent to HBF 4-star ➢ Target to be above 90% by year end - 5-star ➢ Gleeson Quality Charter ➢ MyGleeson portal for new owners ➢ Regional customer care teams ➢ New Gleeson Homes customer website ➢ Myster
Slide 38: Selling price upside potential remains
Selling price upside potential remains ➢ Prices remain highly affordable ➢ 7% higher underlying prices on reservations during last year ➢ Forward order ASP 8.6% higher at £140,600 ➢ The Government’s National Living Wage has increased by 30% over the past 5 years ➢ Gleeson prices have increased by on
Slide 39: Summary
Summary suing Homes. chnsins Lies gleeson
Slide 40: Summary
Summary ➢ Strong start to new financial year: ➢ Business strengthened and able to grow sustainably ➢ Demand robust, prices still increasing, ambitious site opening plan ➢ Strong platform for continued growth in place ➢ 2,000 homes p.a. in FY22 target reaffirmed ➢ Strategic Land well positioned with
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Slide 42: Thank you
Thank you Gleeson (Head Office) 5 Europa Court, Sheffield Business Park Sheffield S9 1XE 42