MJ Gleeson on track to meet full-year expectations

Community regeneration housebuilder MJ Gleeson announced a “strong performance” for its first half on Monday, with profit before tax up 19.1% and an increase in the interim dividend of 38.5% to 9.0p per share.

The London-listed firm’s Gleeson Homes division saw unit sales increase 31.5% to 593 units, with its average selling price up 2.5% to £124,400.

Its revenue improved 34.7% to £73.7m, while its gross margin increased to 32.2% from 31.9% and its operating profit rose 44.7% to £12.3m.

The company’s operating margin increased to 16.7% from 15.5% a year earlier, with the board reporting a land pipeline of 12,001 plots, up from 11,588 plots at the start of the period.

A new pilot office was opened in Ashington, Northumberland during the period, bringing total to seven area offices and three pilot offices.

At the Gleeson Strategic Land division, the company completed three land sales, in line with the same period a year earlier.

The operating profit of the division was lower at £2.3m, down from £4.0m, which was expected and due to the smaller site size.

MJ Gleeson said it had 11 sites with planning permission, or a resolution to grant permission, a reduction from 13 sites.

The board confirmed the interim dividend had increased 38.5% to 9p per share, with the full-year dividend cover policy revised to between 1.75x and 2.75x.

“The group has once again delivered a very encouraging start to the year,” said chairman Dermot Gleeson.

“Gleeson Homes continued to benefit from its unique business model, increasing unit sales by 31.5% and operating profit by 44.7%.”

Gleeson said land remained available to the company at what he called “sensible prices”, with demand for its homes among its customer base remaining strong.

“The division continues to source additional sites in both existing and new geographic areas and has recently opened another pilot office in Ashington, Northumberland.

“Gleeson Strategic Land completed the same number of site sales as in the prior first half year period.”

As anticipated, however, Gleeson noted the sites were of a smaller size.

“Demand for consented sites remains strong from both large and medium sized developers.

“The division has a significant number of sites progressing to sale and is confident of achieving stronger second half results than in the comparable period last year,” Gleeson said.

“Against this background, the board is confident that the group will deliver a result for the full year in line with expectations.”