Mj Gleeson Plc · LSE:GLE
Mj Gleeson — Investor Day (July 2023)
73 slides from Mj Gleeson's investor day presentation, Jul 7, 2023
Slide 1: Capital Markets Day
Capital Markets Day 7th July 2023 Petersmiths Park, Ollerton, Nottinghamshire 1
Slide 2: Welcome
Welcome 2
Slide 3: Putting in place the foundations for future growth
Putting in place the foundations for future growth 3
Slide 4: Agenda
Agenda Welcome and introductions 10:45 – 10:50 Graham Prothero Setting the scene and trading update 10:50 – 11:00 Graham Prothero Market backdrop 11:00 – 11:20 Stefan Allanson Group strategic development 11:20 – 11:45 Graham Prothero Break 11:45 - 12:00 Gleeson Land 12:00 - 12:25 Guy Gusterson Glees
Slide 5: Presenting today…
Presenting today… Graham Prothero Stefan Allanson CEO CFO Mark Knight Guy Gusterson Chief Executive, Managing Director, Gleeson Homes Gleeson Land 5
Slide 6: Colleagues in attendance
Colleagues in attendance Bryan Simpson Andrew Davies Steve Gamble Divisional Divisional Land and Planning Managing Director, Managing Director, Director Central Division Northern Division James Thomson Non-Executive Chair Helen Randerson Mark Phelan Costas Moraitis Partnerships Customer Experience I
Slide 7: Regional and site colleagues
Regional and site colleagues Allen Marshall Craig Hart Maxine Baxter Regional Managing Regional Construction Sales Manager Director Director Gaia Martellucci Rod Latham Tim Jones Field Sales Manager Site Manager Assistant Site Manager Josh Hutchinson Sam Smith Paul Hulme Sales Executive Multi-Skille
Slide 8: Six months in…
Six months in… • Arrived in a challenging market environment • Group’s resilience and potential immediately apparent, underpinned by: • Talented & highly motivated teams • Robust balance sheet • Strong market positions • Gleeson Homes has an excellent land pipeline, superb product and a huge and und
Slide 9: We have an exciting opportunity
We have an exciting opportunity Current market environment enabled us to Looking ahead: further strengthen the business: • Short-term: consolidating changes and • Restructuring for growth adapting to new market conditions • Ensuring costs in line with projected • Medium and long-term: delivering rea
Slide 10: Trading update and immediate outlook
Trading update and immediate outlook 10
Slide 11: Delivering in a challenging environment
Delivering in a challenging environment • Results for FY2023 expected to be in line with expectations Key stats • 1,723 completions for FY2023 • Shift in buyer demographics in H2 Completions: 1,723 (FY2022 2,000) – First-time buyers represent circa 50% ASP: £186,200 (FY2022 FTB demand expected to co
Slide 12: Current year outlook: Homes
Current year outlook: Homes • Settle the restructured model • Restart land buying & site openings – plan to open 20-25 sites p/a • Change in buyer demographics - refocusing our marketing • Lead generation and visitor levels: hesitancy impacting conversion rates • Deploying range of initiatives to tr
Slide 13: Market backdrop
Market backdrop 13
Slide 14: Land & planning
Land & planning Planning rejection rate (%major Rejection rate for of major developments) residential developments (%) • Government policies and environmental issues are having an impact on planning and housing starts in England • Planning taking longer and more uncertain – but rejection rate stable
Slide 15: Supply chain – healthy, and costs softening
Supply chain – healthy, and costs softening • Materials: Availability high Call-off periods & delivery times back to normal Fuel prices falling Prices beginning to ease • Labour: Availability good Lower rates for bricklayers, groundworkers, roofers & joiners • Build cost inflation: • +10% in 12 mont
Slide 16: 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) 4.1 million households renting 0.6 million households on Local Authority waiting lists 2.1 million adults living with parents Little choice
Slide 17: 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: House prices and inflation London up 76% Indexed December 2007 North of England & East Midlands up 36% Below rise in RPI of 74% • Since 2014: National Living Wage up 65% Gleeson prices up 53% • Since Augu
Slide 18: Mortgage rates and costs
Mortgage rates and costs • Buyers still adjusting to higher cost of buying • Mortgage rates up in recent weeks, but are below October 2022 peak Best available first-time-buyer mortgage rates: • Alternative products available following end of HtB in 5-yr fixed 2-yr fixed Variable March 2023 85% LTV 5
Slide 19: Cost of home ownership
Cost of home ownership • Rental costs increasing in North of England & East Midlands Cost of a 2 bedroom home 3-bed house rent up 5.3% in last 4 months to £231 per week (£ per week) • Low-cost homes remain attractive versus renting alternative • Typical Gleeson 2-bed home costs £176 per week to buy
Slide 20: House price comparison
House price comparison • Gleeson Homes’ selling prices significantly below other developers new build prices Gleeson Homes ASP vs Other housebuilders ASP £340,600 average new build house price in England (£’000) £272,600 average price of other housebuilders in Gleeson’s regions 54% higher than Glees
Slide 21: Affordability
Affordability Gleeson 2-bedroom ASP v Affordability for a couple on NLW • Incomes increasing, especially lower paid National Living Wage increased 9.7% in April 2023 • Mortgage payments are affordable for FTB in North of England and East Midlands % of take home pay Mortgage costs as a percentage of
Slide 22: Buyer demographic changing
Buyer demographic changing • Interest remains high, but buyers are hesitant and lack urgency • Pandemic related excess savings and availability of overtime means many lower income buyers have deposits • PRS and RPs more actively buying newbuild • Gleeson Homes’ product and pricing increasingly attra
Slide 23: Committed to sustainability
Committed to sustainability • UNSDG 11: “Sustainable Cities & Communities” • Target 1: “Access for all to adequate, safe and affordable housing” • A couple earning the National Living Wage can afford a house on every Gleeson development • Focus on biodiversity • Newly appointed Senior Ecologist • Ne
Slide 24: Summary
Summary • Planning taking longer . . . our pipelines are strong • Build costs easing • Structural under-supply . . . too few affordable, quality homes being built • Mortgage availability strong, rates increasing but below October 2022 peak • Buyers can afford the deposit . . . but hesitant and lack
Slide 25: Group strategic development
Group strategic development 25
Slide 26: Medium-term opportunity
Medium-term opportunity • Strong growth potential in both businesses • Gleeson Land well-placed to expand its regional presence and rate of acquisitions • Gleeson Homes has a visible route to 3,000 units in the medium term, implying double-digit percentage growth • Opportunities to improve both marg
Slide 27: However, the prize could be much bigger
However, the prize could be much bigger Gleeson Homes: broadening out our proven Gleeson Land: expanding the footprint model • Do more where we are already • Refreshed our product to broaden appeal and attract • Geographic expansion into areas sharing same market the squeezed middle dynamics • Widen
Slide 28: Gleeson Homes: Broadening out our proven model
Gleeson Homes: Broadening out our proven model 28
Slide 29: 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) 4.1 million households renting 0.6 million households on Local Authority waiting lists 2.1 million adults living at home • Little choice of
Slide 30: Putting foundations in place for growth
Putting foundations in place for growth • Business structure and improved standardisation • Land model clarification • Developing our potential in digital and data • Exploring the opportunities in partnerships • Balance sheet / firepower • Refreshed and expanded product range • Improve build quality
Slide 31: Business structure and improved standardisation
Business structure and Development improved standardisation Regional office • Restructure complete • 6 regional management teams across the same geographic coverage • Standardised operating structure • Opportunities for incremental regional expansion 31
Slide 32: Land model clarification
Land model clarification • Purchase criteria simplified • A couple on NLW can afford to buy on any Gleeson site • Recognise variability in different regions and locations • Improve review process and agility 32
Slide 33: Opportunities in partnerships
Opportunities in partnerships • Forward funding structure enhances returns • Access to land • Opportunity to develop and de-risk larger, more efficient sites • Developer skillset • Our product is well located, well designed and well priced • Increasingly receiving approaches from local authorities,
Slide 34: Balance sheet: delivering our potential
Balance sheet: delivering our potential • Strong balance sheet – Net cash at year-end of £5m – Banking facilities of £105m – Low level of land creditors at £13.5m • Well-capitalised to deliver medium-term potential • Maintained capital allocation policy: balancing growth aspirations with shareholder
Slide 35: Break
Break 35
Slide 36: Gleeson Land: Expanding the footprint
Gleeson Land: Expanding the footprint 36
Slide 37: Agenda
Agenda 1. Observations on the business 2. Market overview 3. Growth strategy 4. Summary 37
Slide 38: Observations on the business
Observations on the business Strong Quality of team Quality of Outperforming foundations to and track record portfolio relative to peers grow from 38
Slide 39: Market overview
Market overview • Average 7 year investment horizon • Compelling business model – Low risk - we do not own the land – Huge potential • Land sale market functioning despite volume housebuilders ‘pausing’ • Business adapting well to planning challenges • Growth strategy important in light of increasin
Slide 40: Summary
Summary • Solid foundations and great potential • Organic growth strategy – capital efficient • Increase market share in South East and South West • Expand into underserved high demand / high value areas • Leverage data and technology to accelerate growth and differentiate 40
Slide 41: Gleeson Homes: Refreshing our product
Gleeson Homes: Refreshing our product 41
Slide 42: Elevating the offering
Elevating the offering • Two-year elevation refresh process complete • New range reflects our geographic coverage and changing customer preferences • Nationally described Space Standards Range meetings planning changes and Future Homes • Attractive product enables access to wider customer demographi
Slide 43: Urban Refresh
Old Style Urban Refresh Simplified detailing Single brick solution Verge detailing modernised Grey door option
Slide 44: Rural Refresh
Old Style Rural Refresh Arched Heads Cottage style windows Traditional canopy variations Simplified brick detailing Reed green door option
Slide 45: Contemporary Refresh
Old Style Contemporary Refresh Feature window Modern anthracite frames Streamlined detailing Contemporary door / canopy Modern dormer style to specific types
Slide 46: Stone Refresh
Old Style Old Style Stone Refresh Cottage style windows Traditional canopy variations Simplified window head detailing Black doors
Slide 47: Render elevations
Render elevations Render to front elevation Brick soldier course heads and sills Lean to canopy to front door Brick corbels
Slide 48: Sustainable, but aesthetic, solutions
Sustainable, but aesthetic, solutions • Highly efficient and popular with early adopters • Some negative sentiment regarding early product designs • Upcoming model due to be rolled-out following supplier discussions 48
Slide 49: Business Information Modelling Update
Business Information Modelling Update
Slide 50: Business Information Modelling Update
Business Information Modelling Update
Slide 51: Business Information Modelling Update
Business Information Modelling Update
Slide 52: Business Information Modelling (BIM) timeline
Business Information Modelling (BIM) timeline Commence trial site Phase 1&2 – Group Managed Phase 3&4 – Full Roll Out Phase 1 – Develop models Phase 3 – Regional Roll Out Forecasted completion end 2023 Phase 2 – Cost Certainty Phase 4 – Customer Engagement Full quantities available end 2023 COINS in
Slide 53: Lunch and site tour
Lunch and site tour 53
Slide 54: Gleeson Homes: Scaling up our infrastructure
Gleeson Homes: Scaling up our infrastructure 54
Slide 55: Restructuring
Restructuring • Restructure delivers a leaner and more scalable business Each region capable of 500 homes p/a • New, more efficient local sales hub model Tailored marketing initiatives • Purchasing power provides economies of scale • Ability to expand into additional regions Lincolnshire from East Y
Slide 56: Developing future skills and leadership
Developing future skills and leadership • Newly formed Gleeson Academy – sales, commercial and build • Leadership Development Programme creating pipeline of future management Revamped PDR Gleeson Competency Framework and Conversations Land Graduate Programme, second cohorts commence 2024 NVQ program
Slide 57: Build quality and customer satisfaction
FY23 Build quality and 5 Star customer satisfaction 4 Star • Opportunity to create an industry leading “customer journey” Targeting 5 Star customer satisfaction across all regions • Customer and quality led approach Digital transformation Standardising product Customer care investment • Embedding in
Slide 58: FY24 month one
FY24 FY24 month one 5 Star • Customer surveys beginning to be submitted 4 Star • 6/9 regions are at 5 star ratings 3 Star • FY24 Summary – 5 Star 93.5% (YTD) 2 Star 58
Slide 59: Targeted regional sales and marketing
Targeted regional sales and marketing • Enhanced sales processes, with the restructuring empowering regional sales teams • Developing a “sales academy”, providing continuous learning and training Central in-house sales and CRM trainers • Tailored and data-led marketing initiatives and incentives Tar
Slide 60: Attractive and affordable price points
Attractive and affordable price points Competitor price range of houses available for sale surrounding Petersmiths Park £600,000 £500,000 £487,495 £439,995 £389,995 £391,995 £400,000 £376,995 £300,000 £266,995 £278,995 £278,995 £247,000 £271,995 £200,000 £216,995 £204,495 £187,995 £190,995 £169,995
Slide 61: The foundations for future growth
The foundations for future growth • Restructuring makes us more efficient • Fast-tracking skills and management development • Rolling out high quality product range and specification • Reinforcing sales and marketing systems with data-led targeting • Ensuring price point remains attractive and, more
Slide 62: Closing remarks
Closing remarks 62
Slide 63: The aspiration
The aspiration Gleeson Homes: broadening out our proven Gleeson Land: expanding the footprint model • Do more where we are already • Refreshed our product to broaden appeal and attract • Geographic expansion into areas sharing same market the squeezed middle dynamics • Widening our marketing to olde
Slide 64: Questions and answers
Questions and answers 64
Slide 65: Thank you
Thank you MJ Gleeson plc 5 Europa Court, Sheffield Business Park Sheffield S9 1XE
Slide 66: Appendix
Appendix 66
Slide 67: Product coming soon
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Slide 68: Front elevation
FRONT ELEVATION GROUND FLOOR PLAN ‘SIDE ELEVATION FLOOR AREA 130.83m*, 1408" ‘SIDE ELEVATION ‘369 House Type Urban Planning Drawing ¥:100 @ a2] 28.0423 | LR 12-369-U-0001
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Slide 70: Front elevation, side elevation, rear elevation
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Slide 72: Front elevation
FRONT ELEVATION GROUND FLOOR PLAN SIDE ELEVATION FIRST FLOOR PLAN REAR ELEVATION SIDE ELEVATION y Hace | 350 House Type ‘Urban Planning Drawing 72100 @ A2] 28.0423 [UR | Os 121-550-U-0001
Slide 73: iw a = C=
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