Mj Gleeson Plc · LSE:GLE
Mj Gleeson — FY2019 Earnings Presentation
27 slides from Mj Gleeson's earnings presentation, Sep 16, 2019
Slide 1: MJ Gleeson plc Results for the year ended 30 June 2019
MJ Gleeson plc 16 September 2019 Results for the year ended 30 June 2019
Slide 2: Business as usual
Business as usual Strong finish to the year Gleeson Homes volumes up 25%, pipeline strong at 13,575 plots (9 years) Strategic Land sold 9 sites (973 plots + Thanet), portfolio strong at 21,730 plots Healthy balance sheet, £30m cash Business model clear and unchanged Experienced managemen
Slide 3: Financial Review
Financial Review Masefield Park, Chesterfield, Derbyshire Stefan Allanson 3 Chief Financial Officer
Slide 4: Another strong year
Another strong year Operating profit up 11.1% to £41.0m (2018: £36.9m) PBT up 11.4% to £41.2m (2018: £37.0m) Earnings per share up 9.7% at 61.0p (2018: 55.6p) Cash balance down to £30.3m (June 2018: £41.3m) ROCE down 70 bp at 25.9% (2018: 26.6%) Total dividend up 7.8% to 34.5p (2018: 32.
Slide 5: Growth in profit & dividends, investment in WIP & receivables
Growth in profit & dividends, investment in WIP & receivables 34.5p 32.0p 24.0p 14.5p 10.0p 5
Slide 6: Income Statement
Income Statement Year Year ended ended Change Notes £m June 19 June 18 Revenue Homes 197.0 153.4 +28.4% Volume & ASP Growth Strategic Land 52.9 43.3 +22.2% Higher total developable plots 249.9 196.7 +27.0% Homes 30.1 26.2 +14.9% Turnover growth offset by lower GP% Strategic Land 13.0 12.6 +3.2% Grou
Slide 7: Balance sheet
Balance sheet 30 June 30 June Notes £m 2019 2018 Homes Land 58.0 59.1 £8,885 per plot (2018: £9,145) WIP 96.5 72.4 Investment in build WIP Strategic Land Land 12.9 13.2 WIP 15.7 15.8 Total Inventories 183.1 160.5 Other assets 67.8 41.0 Strategic Land receivables £50m (2018: £24m) Liabilities (77.3)
Slide 8: Cash flow
Cash flow Year ended Year ended Notes £m June 19 June 18 Profit before tax from continuing operations 41.2 37.0 Depreciation, loss from disc. ops and other 1.5 1.6 Working capital movements (27.9) (11.4) Cash generated from operating activities 14.8 27.2 £11m increase in Strategic Land net receivabl
Slide 9: Dividend
Dividend Final dividend recommended of 23.0 pence per share 34.5p (2018: 23.0 pence per share) 32.0p 24.0p Giving a total ordinary dividend for the year of 34.5 pence per share, up 7.8% 14.5p 10.0p Dividend cover maintained between 1.75 and 2.75 times 9
Slide 10: Business Review
Business Review Mackeson Park, Ashton under Lyne, Greater Manchester James Thomson 10 Chief Executive Officer
Slide 11: Business model - Reminder
Business model - Reminder Gleeson Homes We build and sell low-cost homes to young, first-time buyers on low incomes, typically in areas of urban regeneration and on brownfield land Gleeson Strategic Land We promote land, enhancing the value of land by securing residential planning consents 11
Slide 12: Gleeson Strategic Land
190 200M Sam, "8 House } \Allotment Gardens Gleeson Strategic Land
Slide 13: Strategic Land: Valuable profit and cash generator
Strategic Land: Valuable profit and cash generator Review of options by Lazard & Co: Significant interest from multiple parties Large and valuable pipeline Growth opportunity over the medium term Strong cash generator Demand remains strong from both large and medium-sized housebuilders
Slide 14: Strategic Land: Overview
Strategic Land: Overview 9 land sales completed (2018: 10 land sales) 8 sites: 973 developable plots 1 site: 782 developable plots (Thanet, last major owned site, little profit) Operating profit up 3.2% to £13.0m (2018: £12.6m) 8 new site interests acquired 5 7 8 10 9 Land sales Thanet 3
Slide 15: Strategic Land: Planning status
Strategic Land: Planning status Portfolio remains strong Quality sites with strong residential development potential No. Sites Acres Plots Planning consented 9 450 2,929 Planning submitted 6 402 2,583 Allocated sites 8 977 4,554 Not allocated 37 2,331 11,664 Total 60 4,160 21,730 15
Slide 16: Gleeson Homes
Carlisle Park, Swinton, South Yorkshire Gleeson Homes 16
Slide 17: Homes: Relentless growth in demand
Homes: Relentless growth in demand Household formations growing 210,000 new households p.a.* One-third of English households are renting Over 4 million households renting in our geographic area Gleeson Homes cheaper to buy than rent** 2-bed, £106k home - mortgage costs £56 per week 3-b
Slide 18: Homes: Ownership equals lower costs and wealth creation
Homes: Ownership equals lower costs and wealth creation A typical 3-bed Gleeson home buyer will be £366,000 better off than renting: Lower payments over 35 years (mortgage & HtB compared with rent) £106,000 Value of home owned in 35 years £260,000 Gleeson home Affordable Rent £260,000 Value of
Slide 19: Homes: Selling prices very affordable
Homes: Selling prices very affordable Selling price increases have been below market Over the last 5 years: Average newbuild prices have increased by 22% Gleeson prices have increased by 7% Few incentives needed to complete a sale Average incentives below 1% Build rate lagging demand
Slide 20: Homes: Demand remains strong
Homes: Demand remains strong Unit sales up 24.8% to 1,529 (2018: Unit completions 1,225 units) 1,800 1,600 1,529 ASP increased 3.0% to £128,900 1,400 (2018: £125,200) 1,225 1,200 House sales p.a. ("units") 1,013 1,000 904 Sales outlets increased to 69 at 30 FY 751 800 691 H1 June 2019 (30 June
Slide 21: Homes: Margins settled, as expected
Homes: Margins settled, as expected Gross profit on sales up 18.4% to £59.3m (2018: £50.1m) Gross margin on sales 30.1% (2018: 32.7%) Accelerated build activity, increased build cost Operating profit on sales up 14.9% to £30.1m (2018: £26.2m) Operating margin on sales 15.3% (2018: 17.1%) *
Slide 22: Homes: Land available at sensible prices
Homes: Land available at sensible prices Pipeline up 6%, net 723 plot increase 13,575 69 active sites 12,852 75 sites conditionally purchased or not yet 11,588 active 9,284 9 years supply at 2019 sales rate 7,496 Average cost remains c£9k per plot Acquiring land in new areas: Lincolnsh
Slide 23: Homes: Roadmap to 2,000 units p.a. and beyond
Homes: Roadmap to 2,000 units p.a. and beyond Acquiring land at sensible prices 9-year pipeline & land remains available at sensible prices Acquiring land in new areas: Lincolnshire and West Midlands Strengthening management structure Strengthening teams in 10 existing area offices Ops D
Slide 24: Summary and outlook
Summary and outlook Strong 2nd 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 large, growing and underserved market segment Continuing to strengthen management structure Expect continued progress th
Slide 25: Appendices
Appendices Carlisle Park, Swinton, South Yorkshire 25
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
Slide 27: Appendix: Wealth creation through home ownership
Appendix: Wealth creation through home ownership Over 35 years: Wealth creation compared to renting ‐ over 35 years, 3‐bed home Rental payments amount to: £'000 Rent £212k Social rent, or Social Affordable Private Total rent assuming 2% p.a. increases 212 293 366 £293k Affordable rent, or Glee