Mj Gleeson Plc · LSE:GLE
Mj Gleeson — FY2024 Earnings Presentation
67 slides from Mj Gleeson's earnings presentation, Sep 18, 2024
Slide 1: Results for the full year ended June 2024
Results for the full year ended June 2024 “Results in-line with expectations as Gleeson Homes delivers a strong performance” 18 September 2024 1
Slide 2: Contents
Contents Overview 3 Financial Performance 9 Operations & Strategy 21 Summary & Outlook 33 Appendices 36 Graham Prothero Stefan Allanson CEO CFO 2
Slide 3: Overview
Overview 3
Slide 4: Results overview
Results overview Gleeson Homes: • Delivered an above expectation performance, with operating profit over £30m • 1,772 homes sold (2023: 1,723) • Good progress in Partnerships • 5-star customer recommendation in every region • Pipeline increased to 179 sites and over 19,000 plots to deliver growth Gl
Slide 5: Recent trading
Recent trading Last 10 weeks • Improved sales rate following base rate reduction Net reservations up 28% v prior year • Recent open market sales rate up 28% over prior year: • 10 weeks to 6 September 2024: 0.50 • 10 weeks to 8 September 2023: 0.39 Gross reservations Cancellations • Pricing remains r
Slide 6: Government policies encouraging for the sector
Government policies encouraging for the sector • We welcome the ambition from Government across housing targets and prioritisation of affordable housing • Key focus areas: • Reform of the NPPF: • Measures to support increased delivery of new build housing • Emphasis on grey belt and brownfield • Res
Slide 7: Building the affordable homes the country needs
Building the affordable homes the country needs • Selling prices affordable to lower income households • £371,500 average new build house price in England* • £281,000 average new build house prices in North & East Midlands* • 51% higher than Gleeson’s average selling price of £185,700 • Affordable a
Slide 8: Highly affordable
Highly affordable • Affordable for low-income buyers • Mortgage payments 22% take home pay v UK average 31%* • National Living Wage (NLW) increased by 9.8% from April 2024 • A couple on the NLW can afford a home costing £211,513 • 37% higher than Gleeson’s average 2-bed home • Higher than Gleeson av
Slide 9: Financial Performance
Financial Performance 9
Slide 10: Group income statement
Group income statement Year ended 30 Year ended 30 June 2024 June 2023 Change Notes £ million Gleeson Homes 329.0 320.8 2.6% Homes sold up 2.8%, ASP down 0.3% Gleeson Land 16.3 7.5 117.3% 4 sites sold (2023: 3) & completion of a site sold in 2019 Revenue 345.3 328.3 5.2% Gleeson Homes 30.3 35.0 -13.
Slide 11: Gleeson Homes
Gleeson Homes • Homes sold up 2.8% to 1,772 (2023: 1,723) • Including 346 private multi-unit sales (2023: 115) • ASP down 0.3% to £185,700 (2023: £186,200) • +1.5% increase in underlying* selling prices • Gross prices up 4.5% • Average incentives**: £8,100, 4.4% (2023: £2,800, 1.5%) • Customer extra
Slide 12: Gleeson Homes
Gleeson Homes • Gross profit of £79.2m (2023: £86.5m) • Gross profit per home sold £44.7k (2023: £50.2k) • Gross margin on unit sales 24.1% (2023: 27.0%) • Increased incentives & lower extras • Multi-unit sales at 10% - 15% discounts • Cost increases on older sites nearing completion • Extended site
Slide 13: Gleeson Homes
Gleeson Homes • Other operating income £0.3m (2023: £0.4m) • Operating profit £30.3m (2023: £35.0m) • Operating margin 9.2% (2023: 10.9%) • ROCE 12.2% (2023: 16.1%) * FY23 results are stated before £1.0m exceptional restructuring costs and FY22 results are stated before £12.9m exceptional building s
Slide 14: Gleeson Homes forward order book
Gleeson Homes forward order book • Open market sale forward orders up 12.3% on prior year • Multi-unit orders* lower than prior year • Reflects large multi-unit sales agreed June 2023 *Includes s106 multi-unit Affordable Homes for-rent sold to Registered Providers 14
Slide 15: Gleeson Homes sites
Gleeson Homes sites • Planning delays impacted build and sales site starts • Build sites • 10 sites opened (2023: 3 sites opened) • Building on 79 sites (2023: 82 sites) • Expect to open over 20 sites by June 2025 • Expect between 70 & 75 sites by June 2025 • Sales outlets • 4 outlets opened for sal
Slide 16: Gleeson Land
Gleeson Land • 4 land sales completed (2023: 3 land sales) • All promotion sales (2023: all promotion sales) • 520 developable plots (2023: 413) • Gross profit £5.3m (2023: £3.6m) • Gross profit* per plot £16,550 (2023: £11,400) • Overheads £3.1m (2023: £2.6m) • Investment in capabilities and struct
Slide 17: Group balance sheet
Group balance sheet £ million 30 June 2024 30 June 2023 Notes Gleeson Homes Land 100.0 97.1 £12,800 per plot (2023: £12,100) WIP 214.2 214.0 £2.7m per site (2023: £2.6m) Gleeson Land Land 13.8 15.5 71 sites (2023: 70 sites) WIP 17.2 18.0 Total inventories 345.2 344.6 Other assets 19.9 26.5 £16m Glee
Slide 18: Building safety
Building safety • Wholly committed to remediating life-critical fire-safety issues Stage of work No. of buildings • Identified 17 buildings over 11 metres • 16 buildings below 18 metres, 1 building at 18.3 metres Work underway 5 • 4 with some cladding (none fully clad) • Remediation works focused on
Slide 19: Group cash flow
Group cash flow Year ended Year ended £ million 30 June 2024 30 June 2023 Notes Profit before tax 24.8 30.5 Depreciation and other 8.4 5.8 Depreciation, provisions, finance costs and SBP charges Working capital movements (5.6) (45.9) June 2023 reflects investment in Part L Cash generated from operat
Slide 20: Dividends
Dividends • Recommended final dividend of 7.0 pence per share • Paid on 22 November 2024 • Total dividend for the year 11.0 pence per share • Dividend cover of 3.0 times • Capital allocation policy to support site opening plans and growth • Dividend cover to remain between 3 and 5 times 20
Slide 21: Operations & Strategy
Operations & Strategy 21
Slide 22: Gleeson Homes
Gleeson Homes 22
Slide 23: Market context
Market context • House prices generally higher than last year • Build costs have been stable • Improving base rate and mortgage lending environment Source: Bank of England • Earnings growth highest amongst low-earners • Recent political commentary around Autumn statement restraining confidence • Awa
Slide 24: Partnerships will accelerate the delivery of homes
• Partnerships will accelerate the delivery of homes, Open market enabling us to reach 3,000 homes per year sooner Partnership site site than under our traditional sales model Site size 50-200 plots 100-900 plots • Political will to “catalyse private capital” in expanding Sales rate 30-50 homes p.a.
Slide 25: Progress in partnerships
Progress in partnerships • Two partnership deals signed to date • Secured “Investment Partner” status with Homes England providing access to grant funding • Actively progressing discussions with a number of prospective partners • Every region working on multiple partnerships sites • Targeting minimu
Slide 26: Waterloo Sidings, Leeds; Shetcliffe Lane, Bradford
Waterloo Sidings, Leeds Defunct railway sidings in Halton Moor, 147 plots 47 forward sold for rental and shared ownership Shetcliffe Lane, Bradford Former industrial land, 106 plots 26 58 homes forward sold for single family rental
Slide 27: A pipeline for growth
A pipeline for growth • Pipeline up 10.1% to 19,138 plots on 179 sites • 79 active build sites • 12 owned, not yet active • 88 conditionally purchased sites • High quality pipeline to support growth • Average cost c.£15,100 per plot (2023: £14,300) • Land continues to be available at sensible prices
Slide 28: The route to 3,000 homes p.a.
The route to 3,000 homes p.a. • Under supplied market segment, with strong underlying demand for high-quality affordable homes Medium-term, FY24 stable market • Business well-positioned to achieve growth: scenario • Pipeline of 100 future sites Sales rate* 0.55 0.60 • Controlled expansion, opening c
Slide 29: Gleeson Land
Gleeson Land 29
Slide 30: Implementing the growth strategy
Implementing the growth strategy • Key senior hires - team strengthened to 20 experienced technical, land and planning experts • Formation of three operating regions to focus our teams and drive growth • Senior appointments with regional expertise • Market-leading data analytics capabilities deliver
Slide 31: Success in site acquisitions
Success in site acquisitions • Market remains competitive, but seeing a good level of opportunities • 5 new sites secured in the period for 852 plots (100 acres) • A further 6 sites with offers accepted and being progressed for c2,800 plots (475 acres) • Win rate has doubled compared to the prior ye
Slide 32: Navigating the system
Navigating the system • 4 planning applications submitted (2023: 11) • 5 sites granted permission (2023: 6) • Planning consent refused on 6 sites, of which 5 via appeal • Impact of general election timing • These sites will be promoted through the local plan process • Consequently, current full year
Slide 33: Summary & Outlook
Summary & Outlook 33
Slide 34: Summary & outlook
Summary & outlook • Results in line with expectations, with Gleeson Homes delivering a strong performance • Seeing a tentative improvement in sales rates • Agreed first partnership transactions and in active dialogue with additional partners • Encouraging signals from the Government on housing and p
Slide 35: Q&A
Q&A 35
Slide 36: Appendices
Appendices 36
Slide 37: Gleeson Homes and Gleeson Land
Gleeson Homes We build and sell high-quality, low-cost homes where they are needed, for people who need them most. Gleeson Land We promote land, enhancing its value by securing mainly residential planning consent. 37
Slide 38: Gleeson Land – Pipeline
Gleeson Land – Pipeline • 71 sites (June 23: 70 sites) • 16,911 plots (June 23 : 17,831 plots) • 1,473 plots on 7 sites with consent / resolution to grant (June 2023: 1,400 plots on 6 sites) As at 30 June 2024 As at 30 June 2023 No. Sites Plots No. Sites Plots Planning consented / resolution to gran
Slide 39: Significantly cheaper to buy than rent
Significantly cheaper to buy than rent 85% LTV 90% LTV Rented house – Number of Average Gleeson mortgage mortgage new lettings bedrooms price (cost per week) (cost per week) (cost per week) 2 bed £159,500 £148 £162 £202 3 bed £195,100 £181 £198 £254 4 bed £247,600 £230 £251 £346 All mortgage payment
Slide 40: Customer demographics & case studies
Customer demographics & case studies 40
Slide 41: Customer demographics
Customer demographics • Change in demographic due to affordability and quality: • First-time buyers: up slightly to 56% (80% three years ago) • Median age: up two years at 34 years old (29 years old two years ago) • Over 55 year-olds: slightly higher at 22% (10% two years ago) • Youngest buyer 18 ye
Slide 42: Our case studies
Our case Agnieszka and Rafael studies Buyer name: Occupation: Agnieszka, 41 and Rafael, 40 Civil Servant and Business Analyst Date of purchase: December 2023 Development: Rainsborough Park, West Yorkshire House type: 3-bedroom, detached Kilkenny Purchase price: £219,995 Mortgage: £630 per month Agni
Slide 43: Our case studies
Our case Tim and Catherine studies Buyer name: Occupation: Tim, 33 and Catherine, 29 Catherine owns a hair salon, where they both work Date of purchase: February 2024 Development: Crown Gardens, Mansfield House type: 3-bedroom, semi-detached Tyrone Purchase price: £211,995 Mortgage: £950 per month T
Slide 44: Our case studies
Our case Imogen and Josh studies Buyer name: Occupation: Imogen, 25 and Josh, 27 Homeless Charity Worker and Assistant Manager at a gym Date of purchase: December 2023 Development: Canal Walk, Burnley House type: 2-bedroom, semi-detached Cork Purchase price: £179,995 Mortgage: £812 per month After b
Slide 45: Our case studies
Our case Katherine studies Buyer name: Occupation: Katherine, 56 Mortgage Specialist Date of purchase: December 2023 Development: Hays Park, Halifax House type: 3-bedroom, semi-detached Wexford Purchase price: £204,995 Mortgage: £497 per month Katherine previously lived in a large 4-bed townhouse, m
Slide 46: Our case studies
Our case Kim studies Buyer name: Occupation: Kim, 61 PA for a property consultant company Date of purchase: December 2023 Development: The Pastures, Newark House type: 2-bedroom, semi-detached Mayfield Purchase price: £164,995 Mortgage: £539 Previous rent p/m: £750 per month After previously renting
Slide 47: Our case studies
Our case Cam and Olivia studies Buyer name: Occupation: Cam, 27 and Olivia, 23 Personal Trainer and Primary School Teacher Date of purchase: May 2024 Development: Crown Garden, Mansfield House type: 3-bedroom, detached Liffey Purchase price: £249,995 Mortgage: £653 per month Shared Ownership Rent: £
Slide 48: Our case studies
Our case Megan and Jordan studies Buyer name: Occupation: Megan, 26 and Jordan, 28 University Employee and Process Engineer Date of purchase: January 2024 Development: Middlestone Meadows, Spennymore House type: 3-bedroom, detached Renmore Purchase price: £189,995 Mortgage: £1,091 per month After bo
Slide 49: Sustainability
Sustainability 49
Slide 50: Sustainability
Sustainability • Our commitment to sustainability is central to our mission of transforming lives by building affordable, quality homes for those who need them most • Submitted net zero targets for validation by SBTi • 5-star housebuilder – in all regions • Crime data shows Gleeson developments bene
Slide 51: Sustainability
Sustainability • A couple working full time on the National Living Wage can afford a Gleeson Home on any of our developments • 5-star build and service, in every region • Crime data shows Gleeson developments benefit high risk areas • 85% employee engagement score, with 83% saying they are proud to
Slide 52: Science Based Targets submission
Science Based Targets submission • Committed to set science based targets with the SBTi, which we submitted for validation in June 2024, for near-term and net zero targets across scopes 1, 2 & 3 • Validation process will commence in October 2024 • Important milestone for the Group, demonstrating on
Slide 53: Net zero targets
Net zero targets • By submitting our targets for validation by the SBTi we have committed to a net-zero target by 2050. • Targets will be a combination of an absolute reduction for scope 1 and 2 and an intensity reduction for scope 3 • Air Source Heat Pumps (ASHPs) have been installed for all homes
Slide 54: Reducing crime in unsafe areas
Reducing crime in unsafe areas • Our developments can help to reduce crime in the areas in which they’re situated • We have demonstrated the social value that building new homes in ‘tough’ areas can bring • The overall crime rate in areas of Gleeson sites reduced by 15% more than the average reducti
Slide 55: Progress on sustainability targets
Progress on sustainability targets Target Outcome 1. Health and safety incident rate (“AIIR”) AIIR decreased to 166 and below industry average. will be reduced to the industry average or ✓ lower in the year 2. Our employee engagement will be Employee engagement score of 85%, this places maintained i
Slide 56: New sustainability targets
New sustainability targets Target Key actions 1. Health and safety incident rate (“AIIR”) will be Average SHE Site Inspection score of at least 85%, launch lower than 220 (HBF average last three years) digital Contracts manager site SHE audit tool, quarterly regional supply chain H&S webinars 2. Emp
Slide 57: Market Backdrop
Market Backdrop 57
Slide 58: 2024 General Election
2024 General Election MP constituencies in the South of England Pre 2024 Election Post 2024 Election 58
Slide 59: Planning environment
Planning environment Length of planning approval Major planning applications Applications decided within period (years) granted statutory time period (Major – 13 weeks, Minor – 8 weeks) 59 Source: Department for Levelling Up, Housing and Communities, England. Lichfields, Insights, Start to Finish
Slide 60: Healthy supply chain
Healthy supply chain • Materials: • Availability high • Call-off periods & delivery times back to normal • Material costs down -4% in last year (bricks, lintels, windows) • Labour: • Availability good • Labour rates up +4% in last year (groundworkers, roofers & joiners) Source: Brick stocks Departme
Slide 61: Structural under-supply of quality, affordable homes
Structural under-supply of quality, affordable homes • Shortage of affordable homes in North of England and Household tenure Midlands: (millions of households) • 4.2 million households renting • 0.6 million households on Local Authority waiting lists • 2.1 million adults living with parents • Little
Slide 62: Highly affordable
Highly affordable • Selling prices affordable to lower income households • £371,500 average new build house price in England* • £281,000 average new build house prices in North & East Midlands* • 51% higher than Gleeson’s average selling price of £185,700 • £185,700 average Gleeson selling price in
Slide 63: Mortgage rates and costs
Mortgage rates and costs • Buyers starting to adjust to higher cost of borrowing • Alternative products available following end of HtB in March 2023 Best available first-time-buyer mortgage rates: • First Homes, Shared Ownership, Deposit Unlock, HtB Mortgage guarantee, Own New 5-yr fixed 2-yr fixed
Slide 64: House prices – North of England isn't North London
House prices – North of England isn’t North London • Price increases since 2007 vary by region: • London up 95% • North of England & East Midlands up 48% • Below rise in RPI of 84% • Since 2014: • National Living Wage up 65% • Gleeson prices up 53% • Since August 2022: • London house prices down 4%
Slide 65: Income growth strongest for lowest earners
Income growth strongest for lowest earners • Wage growth in the last 6 years has favoured lower earners • National Living Wage up 10% in real terms • This in conjunction with reductions in interest rates and increased mortgage availability will drive confidence in the housing market • In the North o
Slide 66: Home ownership by income and age
Home ownership by income and age • 25-34 year olds, dropped to 44.7% from 58.6% in 2003-04 • Only 9% of 2nd quintile earners own their home • One third of second quintile earners (27%) Source: HBF & English Housing Survey Source: HBF & English Housing Survey 66
Slide 67: Thank you
Thank you MJ Gleeson plc 5 Europa Court, Sheffield Business Park Sheffield S9 1XE 67