Mj Gleeson Plc · LSE:GLE
Mj Gleeson — H1 FY2022 Earnings Presentation
45 slides from Mj Gleeson's earnings presentation, March 2022
Slide 1: Results for the half year ended 31 December 2021
Results for the half year ended 31 December 2021 Amanda and Norah, Sutton Heights, Nottinghamshire
Slide 2: Results for the half year ended 31 December 2021
Results for the half year ended 31 December 2021 • Overview 3 James Thomson • Financial Review 5 Stefan Allanson • Business Review 16 James Thomson • Summary and Outlook 33 James Thomson • Appendices 36 2
Slide 3: Overview
Overview > ®gleeson:.
Slide 4: Strong performance – full year results ahead of expectations
Strong performance – full year results ahead of expectations • Strong selling price growth, whilst maintaining compelling affordability • Improving supply chain environment; some challenges remain • Business operationally and structurally well positioned to achieve further controlled growth • On tra
Slide 5: Financial Review
Financial Review > ®gleeson:.
Slide 6: Financial highlights
Financial highlights H1 20/21 H1 19/20 • Revenue: Up 21.7% to £173.5m £142.6m £105.0m • Operating profit: Up 20.6% to £25.2m £20.9m £13.3m • PBT: Up 21.7% to £24.7m £20.3m £13.3m *excluding Group overheads • EPS: Up 22.0% to 34.4 pence 28.2 pence 19.6 pence • Net Cash: Up £6.6m to £38.2m £31.6m £30.
Slide 7: Income statement
Income statement £ million H1 21/22 H1 20/21 Change Notes Gleeson Homes 150.2 134.4 +11.8% Selling prices up 14.7%, homes sold 2.0% lower Gleeson Land 23.3 8.2 +184% 3 sites sold, of which 1 option (H1 20/21: 4 sites, no options) Revenue 173.5 142.6 +21.7% Gleeson Homes 22.5 20.5 +9.8% Gleeson Land
Slide 8: Gleeson Homes results
Gleeson Homes results • 932 homes sold • Up 14.9% on pre-Covid H1 19/20 • Down 2.0% on prior year (flattered by carry-over of delayed completions from Covid lockdown in prior year) • ASP up 14.7% to £161,200 (H1 20/21: £140,600) • Underlying selling prices up 12.8% • Turnover up 11.8% to £150.3m (H1
Slide 9: Footprint growing, demand strong
Footprint growing, demand strong • 8 sites opened (H1 20/21: 17 sites opened) – Expect to open a total of 25 sites in the year • 6 sites closed (H1 20/21: 8 sites closed) – Expect to close a total of 21 sites in the year • Expect to end the year with approximately 85 build sites and 65 sales sites •
Slide 10: Pipeline increasing
Pipeline increasing 16,242 • Pipeline up 8.7% to 16,242 plots on 158 sites 14,937 • 83 active build sites 13,625 12,966 12,001 • 75 pipeline sites (conditionally purchased or owned but not yet active) • 70 conditionally purchased sites, 5 owned • 6 with planning • 9.1 years supply (on an LTM basis)
Slide 11: Gleeson Land results
Gleeson Land results • Three land sales completed (H1 20/21: Four) • Total developable plots 1,176 (H1 20/21: 745) • Gross profit £7.0m (H1 20/21: £3.7m) • Overheads £1.5m (H1 20/21: £1.1m) • Operating profit £5.5m (H1 20/21: £2.6m) 0.2 11
Slide 12: Balance sheet
Balance sheet £ million 31 December 31 December 2021 2020 Notes Gleeson Homes Land 84.9 72.7 £10,900 per plot (Dec 20: £9,700) WIP 129.4 115.3 £1.56m per site (Dec 20: £1.44m) Gleeson Land Land 15.6 15.5 WIP 14.8 17.9 Total inventories 244.7 221.4 Other assets 42.1 34.2 £19m Gleeson Homes, £22m Glee
Slide 13: Cash flow
Cash flow £ million H1 21/22 H1 20/21 Notes Profit before tax from continuing operations 24.7 20.3 Depreciation, legacy costs and other 2.6 2.1 Depreciation, finance costs and share based payment charges Working capital movements (10.2) (0.3) Cash generated from operating activities 17.1 22.1 Tax (5
Slide 14: Dividends
Dividends • Reflecting capital allocation policy (revised in September 2021) to support growth • Interim dividend up 20% to 6 pence per share • Final dividend to represent 2/3rd of full year total • Dividend cover to remain between 3 and 5 times Nil 14
Slide 15: Progress on sustainability targets
Progress on sustainability targets Target Progress 1. Health and safety incident rate Nil RIDDOR incidents (AIIR = 0); monthly independent inspections on all (“AIIR”) below industry average sites; enhanced working-at-height procedures in place 2. Employee engagement in the Employee wellbeing toolkit
Slide 16: Business Review
Business Review ® ®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 Land We promote land, enhancing its value by securing mainly residential planning consent. 17
Slide 18: Gleeson Land
Gleeson Land ® ®gleeson:.
Slide 19: Our Mission: We promote land through the complex planning system
Our Mission: We promote land through the complex planning system. Unlocking value for landowners and delivering sustainable and attractive sites for new homes. Promoting Land. 19 Unlocking Value.
Slide 20: Promoting Land. Unlocking Value.
Promoting Land. Unlocking Value. • Gleeson Land a top 4 promoter • Land promoters deliver 2 out of every 5 large consented sites to housebuilders 25.9% 25.4% • High planning success rate high, but planning can take time 21.4% • Selective on new sites • Strong interest from all major housebuilders on
Slide 21: Pipeline ripe but planning congested
Pipeline ripe but planning congested • Number of sites awaiting a planning decision remains at 15 sites (June 2021: 15 sites) • Planning system remains congested • 1 site consented during the period (and only 2 sites were consented in FY20/21) • 2 sites awaiting appeal (5 sites at June 2021, 0 sites
Slide 22: Land pipeline by planning status
• Chartsoverview Pipeline and • graphs 32pt 71 sites (Dec 20: 70 sites) • 21,155 plots (Dec 20: 23,015 plots) • 3 sites consented on which 1,234 plots can be delivered (Dec 20: 9 sites, 3,209 plots) As at 31 As at 31 As at 31 December 2021 December 2020 December 2019 No. Sites Plots No. Sites Plots
Slide 23: Gleeson Homes
Gleeson Homes 23 gleeson
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. Parson Green, 24 ```` South Yorkshire
Slide 25: Increasing prices – maintaining affordability
Increasing prices – maintaining affordability • 12.8% underlying price increase (14.7% reported) v H1 20/21 • 4-bed prices up 13.4%, 2-bed and 3-bed prices up 12.7% • Improved extras range – average spend £2,200 per home sold • Over the last 7 ½ years • Average new build prices have increased by 49%
Slide 26: Affordability remains compelling
Affordability remains compelling • Increases in the National Living Wage support affordability of Gleeson homes • NLW currently £8.91 per hour • A young couple working full time can afford a 2-bed home on any Gleeson site without Help-to-Buy • £165k affordability for a couple on NLW* • £131k Gleeson
Slide 27: Affordability and mortgage market
Affordability and mortgage market • HtB scheme ends in April 2023 • 55% of Gleeson customers used HtB in H1 21/22 • Down from 69% in FY 20/21 due to new HtB restrictions and buoyant second-mover market with low stock • Demonstrates robustness of Gleeson customers • New schemes: Deposit Unlock, First
Slide 28: Industry pressures
Industry pressures • Supply chain • Material shortages easing – no stoppages on any Gleeson site • Material costs and sub-contractor rates • Energy costs • Selling price increases more than covering cost increases Source: BEIS • Wage inflation, skills shortage • Planning system still congested • Tim
Slide 29: Gleeson Homes – what we don't do
Gleeson Homes – what we don't do 29
Slide 30: Our customers
Our customers • 3 out of 4 first-time buyers • Majority are key workers • 16% homes bought by a nurse or social/care worker • 6% homes bought by a teacher or teaching assistant • 29 years old - median age • 75% of customers are 35 years old or younger • 5% of customers are retired • 3% of customers
Slide 31: Couple first time buyers
Couple first time buyers Buyer name: Louise, 24 and Maddy, 28 Occupation: Charity and HR Date of purchase: March, 2021 Development: Linkswood Park, Rotherham House type: Cork, 2 bedroom semi-detached Purchase price: £105,995 Mortgage cost £310 pcm Previous rental cost: £500 pcm (one-bedroom flat) Lo
Slide 32: Couple first time buyers
Couple first time buyers Buyer name: Abby, 26 and Dan, 27 Occupation: Administrator and Construction Coordinator Date of purchase: June, 2021 Development: Barnburgh View, Barnsley House type: Kilkenny, 3 bedroom detached Purchase price: £181,995 Mortgage cost £467 per month Throughout lockdown, Abby
Slide 33: Summary and Outlook
Summary and Outlook * ®gleeson:.
Slide 34: Summary and outlook
Summary and outlook • Strong first half performance • Strong demand for both highly affordable, low-cost homes and consented land • 2,000 homes this year – full year results to be ahead of expectations • Strong balance sheet and operating structure supports further controlled growth • Fresh medium-t
Slide 35: Fergus and Tyrone, Kilner Park, South Yorkshire
Fergus and Tyrone, Kilner Park, South Yorkshire 35
Slide 36: Appendices
Appendices * ®gleeson:.
Slide 37: Gleeson Homes model
Gleeson Homes model We build high-quality, low-cost homes for young, first- time buyers • 4 out of 5 sites in deprived areas, in need of regeneration • Majority of sites are brownfield • Sites well located with good transport links and access to employment • All Gleeson homes are: • Traditional bric
Slide 38: Home ownership improves wealth, health and wellbeing
Home ownership improves wealth, health and wellbeing Home ownership Renting (private) • Home ownership benefits individuals and society • Owners save/create £326,000 value over 30 years £209,000 Wealth created through home Value of No asset ownership • Less housing support when owners retire home af
Slide 39: Buying substantially lower cost than renting
Buying substantially lower cost than renting Number of Average Gleeson Mortgage payments (per week) Rent for equivalent bedrooms price (H1 FY22 sales) 75% LTV, 90% LTV, no. beds (per week) Help to Buy Standard mortgage 2-bed £131,000 £67 £87 £132 3-bed £166,000 £85 £110 £152 4-bed £216,000 £110 £143
Slide 40: Large, underserved market
Household tenure Large, underserved market (millions of households) North of England & South of England & Midlands East • 1 in 3 households are renting • 4.1 million rented homes in the North of England 7.6 8.2 and Midlands 4.1 4.8 • Housebuilding sector is building largely in affluent areas Owned R
Slide 41: Strong platform for growth
Strong platform for growth • 3 Divisions: Yorkshire & Midlands, North Eastern, North West • 8 Regions • Capacity to deliver 500 home sales p.a. • 9th Region opening July 2022 • Build rate can increase to support strong demand • From c30 homes per site p.a. - still low by industry standards • Ambitio
Slide 42: Sustainability
Sustainability • Strategy focused on the Environment, Communities and People • UNSDG 11: "Sustainable Cities & Communities" • Target 1: “access or all to adequate, safe and affordable housing" • A couple on the Government’s National Living Wage can afford to buy a Gleeson home on any one of our deve
Slide 43: Further sustainability progress
Further sustainability progress • Waste recycling/energy use Increased from 98% to 99% • Sustainably sourced timber 99.9% • Home energy efficiency 96.8% homes rated “B”, down from 98.2% due to LPG use on remote sites with no access to natural gas from the grid • Air-Source Heat Pumps Successful tria
Slide 44: Organisational structure
Organisational structure James Thomson Stefan Allanson CEO CFO Steve Gamble Mark Knight James Pitt Land & Planning Director MD Gleeson Homes MD Gleeson Land Formerly Land Director at Gladedale Formerly Divisional Chairman Formerly Land Director for Barratt Homes. 20+ years land buying Keepmoat Homes
Slide 45: Thank you
Thank you Gleeson (Head Office) 5 Europa Court, Sheffield Business Park Sheffield S9 1XE 45