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Half Yearly Report

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RNS Number : 7746F
MJ Gleeson PLC
25 February 2015
 

 

25 February 2015

 

MJ GLEESON PLC

 

Interim results for the half-year ended 31 December 2014

 

Gleeson (GLE.L), the urban regeneration and strategic land specialist, announces another strong performance for the six months to 31 December 2014, including a 24% increase in revenue, 56% increase in operating profit and 145% increase in interim dividend.

 

 


H1 2014

H1 2013


£m

£m

Continuing operations



Revenue

42.6

34.4

Operating profit

4.0

2.6

Profit attributable to equity holders

3.2

3.6*




Cash and cash equivalents

8.4

7.7

Net assets

128.9

114.7




Basic earnings per share (p)

6.0p

6.7p




Interim dividend per share (p)

2.7p

1.1p




Net assets per share (p)

240p

216p

* The prior year includes an exceptional deferred tax credit of £1.1m

                                                

Key Points

 

·     Significant increase in revenue and profits driven by strong trading performance by Gleeson Homes

·     Gleeson Homes:

Sales increased 24% to 321 units (2013: 258)

Gross margin improved to 28.8% (2013: 25.9%)

Land pipeline in excess of 5,200 plots, including owned sites and sites in the process of being acquired

·     Gleeson Strategic Land:

Two sites (16.5 acres combined) sold

Ten sites in the portfolio have either planning permission or a resolution to grant permission

Twelve sites awaiting either the determination of a planning application or the outcome of a planning appeal

·     Interim dividend increased 145% to 2.7 pence per share (2013: 1.1 pence)

 

 

Dermot Gleeson, Chairman of MJ Gleeson, commented:

 

"This was another excellent result, as the Group continues to benefit from its distinctive twin track strategy within the housing sector.

 

The forward order book for Gleeson Homes, which totalled 299 homes at 31 December 2014 has continued to improve during January and early February and the Board now expects to record an increase in completions in the year to 30 June 2015 of not less than 30% against the prior year total of 561 units. Gleeson Strategic Land continues to progress the sale of a number of sites and anticipates an increase in profits compared to the prior year.  Against this background, the Board remains confident that the Group's trading performance will match current market expectations."

 

 

Enquiries:

 

MJ Gleeson plc


Tel: +44 1252 360 300

Jolyon Harrison

Chief Executive Officer


Alan Martin

Chief Financial Officer





Instinctif Partners


Tel: +44 20 7457 2020

Helen Tarbet



James Gray






N+1 Singer



Shaun Dobson


Tel: +44 20 7496 3000

Emily Watts

Ben Griffiths



 

 

 

 

Notes to Editors

 

MJ Gleeson plc operates in the house building sector through the following business units: Gleeson Homes, which focuses on estate regeneration and housing development on brownfield land in the North of England; and Gleeson Strategic Land, which purchases options over land in the South of England with the objective of enhancing the value of the site concerned by securing residential planning permission.

 

 

CHAIRMAN'S STATEMENT

 

 

 

Results Overview

 

I am delighted to report another excellent first half result, as the Group continues to benefit from its distinctive twin track strategy within the housing sector.  Revenue increased by 24% to £42.6m (2013: £34.4m), whilst operating profit rose 56% to £4.0m (2013: £2.6m), reflecting, in particular, a very strong performance by Gleeson Homes.  Profit before tax for the Group increased 48% to £3.9m (2013: £2.7m).

 

Business Review

 

Gleeson Homes

 

Gleeson Homes, which specialises in the provision of high quality, low cost homes for people on low incomes in the North of England, enjoyed further strong growth in both revenue and profits.

 

Revenue increased 22% to £40.2m (2013: £33.0m), reflecting a 24% rise in the total number of homes sold from 258 to 321.  The average selling price ("ASP") for the homes sold in the period increased by 3.8% to £124,600 (2013: £120,000).  This reflected small uplifts in prices on most sites, coupled with increases of approximately 8% on a number of higher volume developments.

 

Gross margin for the period was 28.8% (2013: 25.9%), comfortably above our 25% target. This was driven by a combination of the increase in the ASP, the continuing improvement in the proportion of homes sold from new, higher margin sites and the maintenance of very stringent cost control.

 

The division's operating margin increased by 23% to 13.0% (2013: 10.6%) and operating profit increased by 51% to £5.2 m (2013:  £3.5m). 

 

43% of completions in the period benefited from the Government's Help to Buy scheme.  In addition, our own bespoke purchaser assistance packages continued to prove attractive.

 

At 31 December 2014, we were selling from 39 sites, an increase of six sites on the corresponding period last year, and a further six sites are due to open in the period to June 2015.

 

Gleeson Homes continues to take advantage of the low land prices that prevail in many parts of the North of England.  The land pipeline of owned and conditionally purchased plots at 31 December 2014 increased by 30% compared to the prior year, totalling 5,267 plots, of which 1,588 plots have been purchased subject to planning permission.  In addition, a further 1,900 plots are under negotiation.

 

Gleeson Strategic Land 

 

Whilst Gleeson Homes takes advantage of low land prices in the North of England to build homes that people on low incomes can afford, Gleeson Strategic Land deploys its planning expertise to help landowners take advantage of the high prices that house builders are willing to pay for good quality greenfield residential sites in the South of England.

 

The business unit recorded revenue of £2.4m (2013: £1.5m) as a result of two land sales in the period, with a combined acreage of 16.5 acres (2013: two land sales, with combined acreage of 4 acres).  The division's operating profit in the period was £0.8m (2013: £0.1m).

 

There are currently ten sites in the portfolio with planning permission or a resolution to grant permission.  Seven of these sites, which will deliver 797 plots, are being progressed for possible sale in the current financial year.

 

During the period, planning applications for five sites, with the potential to deliver in excess of 500 plots were submitted.  In total, there are 12 sites where the division is currently awaiting either the determination of a planning application or the outcome of a planning appeal.

 

The strategic land portfolio continues to be replenished, with a further two agreements, involving a total of 84 acres with the potential to deliver 530 plots, having been secured in the period.

 

At 31 December 2014 the strategic land portfolio totalled 3,897 acres (2013: 3,772 acres), of which 154 acres (2013: 155 acres) were owned, 2,090 acres (2013: 2,354 acres) were controlled under option, and 1,652 acres (2013: 1,263 acres) were subject to planning promotion agreements. The portfolio, in which the Group has an overall 69% beneficial interest, has the potential for in excess of 21,000 plots.

 

Group Restructuring

 

The details of the Group restructuring, which I first mentioned in my Chairman's Statement accompanying the December 2013 interim results, were disclosed to shareholders in a circular on 4 November 2014.  The restructuring, which was by means of a Scheme of Arrangement under Part 26 of the Companies Act, was approved by shareholders on 26 November 2014 and was subsequently sanctioned by the High Court on 18 December 2014.  Subsequent to the sanction of the High Court, shareholders were issued one share in MJ Gleeson plc for every share they held in MJ Gleeson Group plc.  The shares of MJ Gleeson plc were admitted to the premium segment of the Official List and to trading on the main market of the London Stock Exchange on 19 December 2014 and the shares in MJ Gleeson Group plc were simultaneously cancelled.  The non-legacy assets of the Group were transferred to MJ Gleeson plc on 23 December 2014 by way of a dividend in specie.  The restructuring was completed with the High Court approval of a capital reduction of MJ Gleeson plc, which reduced the nominal value of the shares from 146 pence per share to 2 pence per share and created a reserve of profits.

 

The restructuring has resulted in the separation of the Group's core ongoing and future businesses from the legacy businesses, whilst ensuring that potential future creditors of the legacy businesses are provided for on a prudent and reasonable basis.

 

Dividend and Dividend timetable

 

In the light of these strong results and of our confidence in the future, the Board is declaring an interim dividend of 2.7 pence per share.

 

This interim dividend, which marks an increase of 145% over the prior year (2013: 1.1 pence per share), follows the 4.9 pence per share final dividend for the year ended 30 June 2014 and reflects the Board's intention to maintain a progressive dividend policy, in which the final dividend will normally represent roughly two thirds of the total dividend.  The dividend will be paid on 2 April 2015 to shareholders on the register at close of business on 6 March 2015 with an associated ex-entitlement date of 5 March 2015.

 

Relocation and Board Change

 

In the interests of greater efficiency and lower overhead costs, it has been decided to locate all of the Group's financial staff in our Sheffield office.  However, Alan Martin, the Group's Chief Financial Officer, who is currently based in our Hampshire office, has, with regret, informed the Board that he does not feel able, for personal reasons, to relocate to the North of England.  In consequence, he will in due course be leaving the Group.

 

Alan has played a crucial role in the radical repositioning of MJ Gleeson in recent years and deserves no small part of the credit for the consequent improvement in our financial performance.  On behalf of the Board, our staff and our shareholders, I wish to thank Alan for everything he has achieved for us and to wish him and his family the very best for the future.

 

I am pleased to report that the search for Alan's successor is progressing well and we expect to make an announcement regarding Alan's departure date and his replacement shortly.

 

Outlook

 

The forward order book for Gleeson Homes, which totalled 299 homes at 31 December 2014 has continued to improve during January and early February and the Board now expects to record an increase in completions in the year to 30 June 2015 of not less than 30% against the prior year total of 561 units. Gleeson Strategic Land continues to progress the sale of a number of sites and anticipates an increase in profits compared with the prior year.  

 

Against this background, the Board remains confident that the Group's trading performance for the year as a whole will match current market expectations.

 

Financial Overview

 

Income Statement

 

Group revenue increased by 24% to £42.6m (2013: £34.4m), primarily due to the increased number of houses sold by Gleeson Homes.  Gross profit increased 39% to £13.0m (2013: £9.4m) due to the increase in activity and the improvement in the gross margin to 30.6% (2013: 27.2%)

 

The Group's operating profit increased by 56% to £4.0m (2013: £2.6m).  The operating profit improvement is recorded after including the costs of the group restructuring which totalled £1.0m.   Net interest expense of £0.1m (2013: income £0.1m) resulted in profit before tax increasing by 48% to £3.9m (2013: £2.7m).  The tax charge for the period was £0.6m, whereas the prior year credit of £1.0m, included an exceptional deferred tax credit of £1.1m.  The profit after tax from continuing operations totalled £3.3m (2013: £3.7m).  Discontinued operations recorded a post-tax loss of £0.1m (2013: £0.1m) and so the profit for the period attributable to equity holders totalled £3.2m (2013: £3.6m).

 

Balance Sheet and Cash Flow

 

Total shareholders' equity stood at £128.9m at 31 December 2014 compared to £114.7m at 31 December 2013.  This equates to net assets per share of 240p (2013: 216p).

 

The Group's net cash balance at 31 December 2014 was £8.4m, reflecting a net cash outflow of £5.3m in the period.  

 

Risks and Uncertainties

 

The principal risks and uncertainties that have been identified as being capable of affecting the Group's performance in the second half are set out below.  The principal risks of our business are set out in full on pages 12 and 13 of the Report and Accounts for the year ended 30 June 2014.

 

Housing Demand

 

Security of employment, interest rates and mortgage availability are the key determinants of house buyers' confidence. Though the general economy continues to grow, employment prospects remain uncertain in some geographic areas; and, although interest rates remain low, mortgage finance remains, by historic standards, relatively restricted for high loan-to-value mortgages.  To minimise cash outflows, the Group continues to build to demand in a strictly controlled manner.

 

Planning consents

 

The Group derives profit from the sale of land to other developers, which it acquires through the exercise of option or promotion agreements when it succeeds in obtaining appropriate planning consents.  Although the demand for consented land is strong, it is always difficult to predict with any precision the date by which planning consents can be obtained.

 

 

Dermot Gleeson

Chairman

 

 

 

Condensed Consolidated Statement of Comprehensive Income

for the six months to 31 December 2014

 



 Unaudited
Six months to 31 December 2014

 Unaudited
Six months to 31 December 2013

Audited
Year to
30 June 2014


Note

£000

£000

£000






Continuing operations





Revenue


 42,628 

 34,448 

 81,442 

Cost of sales before reinstatement of inventories and contract provisions


 (29,602)

 (25,066)

 (55,497)

Reinstatement of inventories and contract provisions

7

 - 

 - 

 800 

Cost of sales


 (29,602)

 (25,066)

 (54,697)

Gross profit


 13,026 

 9,382 

 26,745 






Administration before restructuring costs


 (8,037)

 (6,819)

 (14,681)

Restructuring costs

7

 (999)

 - 

 - 

Administrative expenses


 (9,036)

 (6,819)

 (14,681)

Operating profit


 3,990 

 2,563 

 12,064 






Financial income


 159 

 211 

 485 

Financial expenses


 (227)

 (119)

 (389)

Profit before tax


 3,922 

 2,655 

 12,160 






Tax for the period before recognition of additional deferred tax asset on tax losses brought forward


 (606)

 (58)

 (2,827)

Recognition of additional deferred tax asset on tax losses brought forward

7

 - 

 1,103 

 8,326 

Tax

8

 (606)

 1,045 

 5,499 

Profit for the period from continuing operations


 3,316 

 3,700 

 17,659 






Discontinued operations





Loss for the period from discontinued operations (net of tax)

9

 (83)

 (144)

 (231)






Total comprehensive income for the period attributable to equity shareholders of parent company


 3,233 

 3,556 

 17,428 

 

 

Earnings per share attributable to equity holders of parent company

 

              Basic

 11

 6.03 p

 6.73 p

 32.92 p






              Diluted

 11

 6.00 p

 6.63 p

 32.36 p

 

 

Earnings per share from continuing operations

 

              Basic

 11

 6.19 p

 7.00 p

 33.36 p






              Diluted

 11

 6.15 p

 6.90 p

 32.79 p






 

 

 

Condensed Consolidated Statement of Financial Position

as at 31 December 2014

 


 Unaudited

 Unaudited

 Audited


 31 December 2014

 31 December 2013

 30 June
2014


 £000

 £000

 £000





Non-current assets




Plant and equipment

 1,036 

 1,452 

 1,268 

Investment properties

 563 

 583 

 571 

Investments in joint ventures

 15 

 15 

 15 

Loans and other investments

 4,896 

 4,896 

 4,896 

Trade and other receivables

 7,958 

 8,070 

 8,116 

Deferred tax assets

 9,926 

 6,069 

 10,513 


 24,394 

 21,085 

 25,379 

Current assets




Inventories

 106,550 

 96,213 

 100,717 

Trade and other receivables

 11,710 

 9,203 

 12,794 

Cash and cash equivalents

 8,374 

 7,651 

 13,687 


 126,634 

 113,067 

 127,198 





Total assets

 151,028 

 134,152 

 152,577 





Non-current liabilities




Loans and borrowings

 - 

 (2,047)

 - 

Provisions

 (67)

 (77)

 (75)


 (67)

 (2,124)

 (75)





Current liabilities




Loans and borrowings

 (685)

 (179)

 (1,933)

Trade and other payables

 (21,195)

 (16,903)

 (22,182)

Provisions

 (214)

 (234)

 (214)

UK corporation tax

 - 

 - 

 (82)


 (22,094)

 (17,316)

 (24,411)





Total liabilities

 (22,161)

 (19,440)

 (24,486)









Net assets

 128,867 

 114,712 

 128,091 





Equity




Share capital

 78,448 

 1,062 

 1,063 

Share premium account

 - 

 6,396 

 6,436 

Capital redemption reserve

 - 

 120 

 120 

Retained earnings

 50,419 

 107,134 

 120,472 

Total equity

 128,867 

 114,712 

 128,091 

 

 

 

Condensed Consolidated Statement of Changes in Equity

for the six months to 31 December 2014

 

 


Share capital

Share premium account

Capital redemption reserve

Retained earnings

Total


£000

£000

£000

£000

£000







At 1 July 2013 (audited)

 1,058 

 6,343 

 120 

 104,568 

 112,089 







Total comprehensive income for the period






Profit for the period

 - 

 - 

 - 

 3,556 

 3,556 

Total comprehensive income for the period

 - 

 - 

 - 

 3,556 

 3,556 







Transactions with owners, recorded directly in equity






Contributions and distributions to owners






Share issue

 4 

 53 

 - 

 - 

 57 

Purchase of own shares

 - 

 - 

 - 

 (32)

 (32)

Share-based payments

 - 

 - 

 - 

 98 

 98 

Dividends

 - 

 - 

 - 

 (1,056)

 (1,056)

Transactions with owners, recorded directly in equity

 4 

 53 

 - 

 (990)

 (933)







At 31 December 2013 (unaudited)

 1,062 

 6,396 

 120 

 107,134 

 114,712 







Total comprehensive income for the period






Profit for the period

 - 

 - 

 - 

 13,872 

 13,872 

Total comprehensive income for the period

 - 

 - 

 - 

 13,872 

 13,872 







Transactions with owners, recorded directly in equity






Contributions and distributions to owners






Share issue

 1 

 40 

 - 

 - 

 41 

Purchase of own shares

 - 

 - 

 - 

 4 

 4 

Share-based payments

 - 

 - 

 - 

 46 

 46 

Dividends

 - 

 - 

 - 

 (584)

 (584)

Transactions with owners, recorded directly in equity

 1 

 40 

 - 

 (534)

 (493)







At 30 June 2014 (audited)

 1,063 

 6,436 

 120 

 120,472 

 128,091 







Total comprehensive income for the period






Profit for the period

 - 

 - 

 - 

 3,233 

 3,233 

Total comprehensive income for the period

 - 

 - 

 - 

 3,233 

 3,233 







Transactions with owners, recorded directly in equity






Contributions and distributions to owners






Share issue

 61 

 32 

 - 

 - 

 93 

Scheme of arrangement with shareholders

 77,324 

 (6,468)

 (120)

 (70,736)

 - 

Purchase of own shares

 - 

 - 

 - 

 (25)

 (25)

Share-based payments

 - 

 - 

 - 

 104 

 104 

Dividends




 (2,629)

 (2,629)

Transactions with owners, recorded directly in equity

 77,385 

 (6,436)

 (120)

 (73,286)

 (2,457)







At 31 December 2014 (unaudited)

 78,448 

 - 

 - 

 50,419 

 128,867 

 

 

 

Condensed Consolidated Statement of Cash Flow

for the six months to 31 December 2014

 


 Unaudited

 Unaudited

 Audited


 Six months to
31 December
2014

 Six months to
 31 December
2013

 Year to
30 June
2014


 £000

 £000

 £000





Operating activities




Profit before tax from continuing operations

 3,922 

 2,655 

 12,160 

Loss before tax from discontinued operations

 (105)

 (136)

 (131)


 3,817 

 2,519 

 12,029 





Depreciation of plant and equipment

 407 

 414 

 828 

Share-based payments

 104 

 98 

 144 

Profit on sale of investment properties

 (172)

 (314)

 (313)

Loss on sale of other property, plant and equipment

 32 

 - 

 - 

Profit from the sale of assets held for sale

 (32)

 - 

 (21)

Capitalisation of available for sale assets

 (22)

 (239)

 (426)

Financial income

 (159)

 (211)

 (485)

Financial expenses

 227 

 119 

 389 

Operating cash flows before movements in working capital

 4,202 

 2,386 

 12,145 





(Increase)/decrease in inventories

 (5,833)

 607 

 (3,897)

Decrease in receivables

 1,073 

 4,194 

 995 

Decrease in payables

 (1,026)

 (8,637)

 (3,484)

Cash (utilised by)/generated from operating activities

 (1,584)

 (1,450)

 5,759 





Tax paid

 (82)

 - 

 - 

Interest paid

 (176)

 (98)

 (477)





Net cash flows from operating activities

 (1,842)

 (1,548)

 5,282 





Investing activities




Proceeds from disposal of available for sale assets

 180 

 25 

 244 

Proceeds from disposal of investment properties

 272 

 479 

 490 

Interest received

 93 

 156 

 194 

Purchase of plant and equipment

 (207)

 (399)

 (629)





Net cash flows from investing activities

 338 

 261 

 299 





Financing activities




(Repayment of)/increase in loans and borrowings

 (1,248)

 33 

 (260)

Proceeds from issue of shares

 93 

 57 

 98 

Purchase of own shares

 (25)

 (32)

 (28)

Dividends paid

 (2,629)

 (1,056)

 (1,640)





Net cash flows from financing activities

 (3,809)

 (998)

 (1,830)









Net (decrease)/increase in cash and cash equivalents

 (5,313)

 (2,285)

 3,751 





Cash and cash equivalents at beginning of period

 13,687 

 9,936 

 9,936 





Cash and cash equivalents at end of period

 8,374 

 7,651 

 13,687 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1. Basis of preparation

 

The Interim Report of the Group for the six months ended 31 December 2014 has been prepared in accordance with IAS 34 "Interim Financial Reporting" and International Financial Reporting Standards ("IFRS") as adopted for use in the European Union ("EU") and in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority.

 

The Interim Report does not constitute financial statements as defined in Section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for full annual statements. It should be read in conjunction with the Report and Accounts for the year ended 30 June 2014, which is available either on request from the Group's registered office, Sentinel House, Harvest Crescent, Ancells Business Park, Fleet, Hampshire, GU51 2UZ or can be downloaded from the corporate website www.mjgleeson.com. 

 

The comparative figures for the financial year ended 30 June 2014 are not the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies.  The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters which the auditor drew attention to by way of emphasis without qualifying their report and (iii) did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

 

Going concern

In determining the appropriate basis of preparation of the Interim Report, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

 

The Group's business activities, together with factors that are likely to affect its future development, financial performance and financial position are set out in the Chairman's Statement along with the principal risks and uncertainties that have been identified as being capable of affecting the Group's performance in the second half of the financial year.

 

In December 2013, the Group entered into a 3 year, £20 million revolving credit facility with Lloyds Bank, secured by a charge over the Group's assets.  The Group meets its day-to-day working capital requirements through its cash resources and the revolving credit facility. 

 

The Group's forecasts and projections show that the Group is able to operate within the limits of the revolving credit facility, for the foreseeable future.

 

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the Interim Report.

 

This Interim Report was approved for issue by the Board of Directors on 24 February 2015.

 

 

2. Accounting policies

 

The accounting policies adopted are consistent with those of the Report and Accounts for the year ended 30 June 2014, as described in those financial statements. 

 

 

3. Responsibility statement

 

The Directors confirm that this Interim Report has been prepared in accordance with IAS 34 and that the Chairman's Statement and the notes to the financial statements herein includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

4. Cautionary statement

 

This Interim Report contains certain forward looking statements with respect to the financial condition, results, operations and business of MJ Gleeson plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this Interim Report should be construed as a profit forecast.

 

 

5. Directors' liability

 

Neither the Company nor the Directors accept any liability to any person in relation to this Interim Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with Section 90A of the Financial Services and Marketing Act 2000.

 

 

6. Segmental analysis

                                               

For management purposes, the Group is organised into the following two operating divisions:                                              

•    Gleeson Homes                                           

•    Gleeson Strategic Land

                                   

In addition the following divisions are considered as discontinued:

 

•    Gleeson Capital Solutions     

•    Gleeson Construction Services

 

 



Unaudited

Unaudited

Audited



Six months to
 31 December
2014

Six months to
31 December
2013

Year to
30 June
2014


Note

 £000

 £000

 £000

Revenue





Continuing activities:





Gleeson Homes


 40,194 

 32,963 

 70,646 

Gleeson Strategic Land


 2,434 

 1,485 

 10,796 



 42,628 

 34,448 

 81,442 






Discontinued activities:

9

 185 

 100 

 100 






Total revenue


 42,813 

 34,548 

 81,542 






 



Unaudited

Unaudited

Audited



Six months to
 31 December
2014

Six months to
31 December
2013

Year to
30 June
2014


Note

 £000

 £000

 £000

Profit on activities





Gleeson Homes


 5,238 

 3,480 

 9,408 

Gleeson Strategic Land


 739 

 75 

 4,844 



 5,977 

 3,555 

 14,252 

Group Activities


 (1,987)

 (992)

 (2,188)

Financial income


 159 

 211 

 485 

Financial expenses


 (227)

 (119)

 (389)

Profit before tax


 3,922 

 2,655 

 12,160 

Tax


 (606)

 1,045 

 5,499 

Profit for the period from continuing operations


 3,316 

 3,700 

 17,659 






Loss for the period from discontinued operations (net of tax)

9

 (83)

 (144)

 (231)






Profit for the period attributable to equity holders of the parent company


 3,233 

 3,556 

 17,428 

 

 

7. Exceptional items                           

                                   

Restructuring costs                             

During the period, the Group underwent a restructuring by means of a Scheme of Arrangement under Part 26 of the Companies Act.  The Scheme of Arrangement was approved by shareholders on 26 November 2014 and was sanctioned by the High Court on 18 December 2014.

 

Following the sanction of the High Court, shareholders were issued one share in MJ Gleeson plc for every one share they held in MJ Gleeson Group plc. The shares of MJ Gleeson plc were admitted and listed on the London Stock Exchange on 19 December 2014 and the shares of MJ Gleeson Group plc were cancelled.

 

The non-legacy assets of the Group were transferred to MJ Gleeson plc on 23 December 2014 by way of a dividend in specie.

 

The restructuring was completed with the High Court approving a capital reduction of MJ Gleeson plc, which reduced the nominal value of the shares from 146 pence per share to 2 pence per share and creating a reserve of profits.

                                   

 

Re-instatement of inventories and contract provisions

Every 6 months, at the balance sheet date, the Group conduct a review of the net realisable value of the land and work-in-progress against their carrying values of its sites in the light of the condition of the UK housing market.  Where the estimated net present realisable value is greater than the carrying value within the Balance Sheet, the Group has partially reversed the impairment previously made.                                   

                                   

Deferred tax on tax losses                              

During the period, the Group recognised £Nil (six months ended 31 December 2013: £1,103,000, year ended 30 June 2014: £8,326,000) of previously unrecognised deferred tax asset in relation to tax losses available to offset against future profits.                            

                       

 

Exceptional items may be summarised as follows:                                  

 


Unaudited

Unaudited

Audited


Six months to
31 December
2014

Six months to
31 December
2013

Year to
30 June
2014


 £000

 £000

 £000





Restructuring costs

 (999)

 - 

 - 

Re-instatement of inventories and contract provisions

 - 

 - 

 800 

Deferred tax on tax losses

 - 

 1,103 

 8,326 


 (999)

 1,103 

 9,126 

 

 

In the six months ended 31 December 2014, £Nil (six months ended 31 December 2013: £Nil, year ended 30 June 2014: £800,000) of exceptional income was reported in the Gleeson Homes division and £Nil (six months ended 31 December 2013: £1,103,000, year ended 30 June 2014: £8,326,000) was reported as tax.

                                   

In the six months ended 31 December 2014, £999,000 (six months ended 31 December 2013: £Nil, year ended 30 June 2014: £Nil) of exceptional expense was reported in the Group Activities division.              

 

 

8. Tax

 

The accounts for the six months to 31 December 2014 include a tax charge of 15.3% of profit before tax (31 December 2013: 39.1% credit; 30 June 2014: 44.9% credit). The Group's effective tax rate continues at a lower level than the underlying UK tax rate of 21.0% (31 December 2013: 23.0%; 30 June 2014: 22.5%) due to tax adjustment for allowable payments in the tax period (prior periods lower level due to the Group recognising and utilising previously unrecognised tax losses).

 

 

9. Discontinued operations

                                               

The trading of Gleeson Construction Services now only relates to remedial works and the division is classified as discontinued.                                               

                                               

The Gleeson Capital Solutions division sold its final PFI in February 2013 and the division is considered to be discontinued.                                      

 



Unaudited Six months to 31 December 2014



Gleeson Capital Solutions

Gleeson Construction Services

Total



£000

£000

£000






Revenue


 - 

 185 

 185 

Cost of sales


 - 

 (207)

 (207)

Gross loss


 - 

 (22)

 (22)






Administrative expenses


 - 

 (83)

 (83)

Operating loss


 - 

 (105)

 (105)






Loss before tax


 - 

 (105)

 (105)






Tax


 - 

 22 

 22 






Loss for the period from discontinued operations


 - 

 (83)

 (83)






 

 








Unaudited Six months to 31 December 2013



Gleeson Capital Solutions

Gleeson Construction Services

Total



£000

£000

£000






Revenue


 - 

 100 

 100 

Cost of sales


 - 

 (72)

 (72)

Gross profit


 - 

 28 

 28 






Administrative expenses


 - 

 (164)

 (164)

Operating loss


 - 

 (136)

 (136)






Loss before tax


 - 

 (136)

 (136)






Tax


 - 

 (8)

 (8)






Loss for the period from discontinued operations


 - 

 (144)

 (144)













Audited Year ended 30 June 2014



Gleeson Capital Solutions

Gleeson Construction Services

Total



£000

£000

£000






Revenue


 - 

 100 

 100 

Cost of sales


 - 

 (46)

 (46)

Gross profit


 - 

 54 

 54 






Administrative expenses


 - 

 (185)

 (185)

Operating loss


 - 

 (131)

 (131)






Loss before tax


 - 

 (131)

 (131)






Tax


 (77)

 (23)

 (100)






Loss for the period from discontinued operations


 (77)

 (154)

 (231)

 

 

10. Dividends

 


Unaudited

Unaudited

Audited


Six months to
31 December
2014

Six months to
31 December
2013

Year to
30 June
2014


 £000

 £000

 £000

Amounts recognised as distributions to equity holders in the year:








Final dividend for the year ended 30 June 2013 of 2.0p per share

 - 

 1,058 

 1,058 

Interim dividend for the year ended 30 June 2014 of 1.1p (2013: 0.5 p) per share

 - 

 - 

 582 

Final dividend for the year ended 30 June 2014 of 4.9p per share

 2,629 

 - 

 - 


 2,629 

 1,058 

 1,640 

 

 

On 24 February 2015 the Group declared an interim dividend of 2.7 pence per share at a total cost of £1,449,832. The dividend has not been provided for and there are no tax consequences for the Group.

 

 

11. Earnings per share

 

From continuing and discontinued operations

The calculation of the basic and diluted earnings per share is based on the following data:

 

Earnings

 Unaudited

 Unaudited

 Audited

 


 Six months to
31 December
2014

 Six months to
 31 December
2013

 Year to
 30 June
2014

 


 £000

 £000

 £000

 

Earnings for the purposes of basic earnings per share, being net




 

profit/(loss) attributable to equity holders of the parent company




 

Profit from continuing operations

 3,316 

 3,700 

 17,659 

 

Loss from discontinued operations

 (83)

 (144)

 (231)

 





 

Earnings for the purposes of basic and diluted earnings per share

 3,233 

 3,556 

 17,428 

 





 





 

Number of shares

 31 December 
2014 

 31 December 
2013 

 30 June 
2014 

 


No. 000

No. 000

No. 000

 





 

Weighted average number of ordinary shares for the purposes of




 

basic earnings per share

 53,577 

 52,821 

 52,941 

 

Effect of dilutive potential ordinary shares:




 

Share options

 350 

 805 

 915 

 





 

Weighted average number of ordinary shares for the purposes of




 

diluted earnings per share

 53,927 

 53,626 

 53,856 

 









From continuing operations

 31 December
2014

 31 December
2013

 30 June
2014

 


p

p

p

 





 

Basic

 6.19 

 7.00 

 33.36 

 





 

Diluted

 6.15 

 6.90 

 32.79 

 





 





 





 

From discontinued operations

 31 December
2014

 31 December
2013

 30 June
2014

 


p

p

p

 





 

Basic

(0.16)

(0.27)

(0.44)

 





 

Diluted

(0.16)

(0.27)

(0.44)

 













From continuing and discontinued operations

 31 December
2014

 31 December
2013

 30 June
2014

 


p

p

p

 





 

Basic

 6.03 

 6.73 

 32.92 

 





 

Diluted

 6.00 

 6.63 

 32.36 

 





 





 





 


 31 December
2014

 31 December
2013

 30 June
2014

 

Normalised Earnings per share

 £000

 £000

 £000

 

From continuing and discontinued operations




 

Profit for the purposes of basic and diluted earnings per share

 3,233 

 3,556 

 17,428 

 

Excluding the impact of recognising unrecognised tax losses

 - 

 - 

 (8,326)

 

Normalised earnings

 3,233 

 3,556 

 9,102 

 





 





 


 31 December
2014

 31 December
2013

 30 June
2014

 


p

p

p

 





 

Basic

 6.03 

 6.73 

 17.19 

 





 

Diluted

 6.00 

 6.63 

 16.90 

 

 

 

12. Related party transactions

                                   

Identity of related parties                   

                                   

The Group has a related party relationship with its joint ventures and key management personnel.   

                                   

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.                                  

 

                                   

Transactions with key management personnel                                  

Transactions in the period between the Group and with key management personnel were limited to those relating to remuneration as disclosed in the audited accounts for the year to 30 June 2014. There has been no material change in these arrangements since the year end.                               

                                   

Amounts owed by and owed to joint ventures are analysed below:                         

                                   

The amounts owed by joint ventures at 31 December 2014 totalled £35,000 (31 December 2013: £31,000, 30 June 2014 £31,000).                                   

                                   

The amounts owed to joint ventures at 31 December 2014 totalled £Nil  (31 December 2013: £Nil; 30 June 2014: £Nil).                                  

 

 

13. Group pension scheme                                         

                                               

The Group operates a defined contribution pension plan. The assets of the pension plan are held separately from those of the Group in funds under the control of the trustees.  The total pension cost charged to the income statement in the six months to 31 December 2014 of £257,000 (six months to 31 December 2013: £204,000; year to 30 June 2014: £451,000)  represents contributions payable to the defined contribution pension plan by the Group at rates specified in the plan rules.  At 31 December 2014, contributions of £64,000 (31 December 2013: £50,000; 30 June 2014: £53,000) due in respect of the current reporting period had not been paid over to the pension plan.  Since the period end, this amount has been paid.                                            

 

 

14. Share capital

                       

On 18 December 2014, the Company entered into a scheme of arrangement with the shareholders of MJ Gleeson Group plc whereby the Company obtained 100% of the share capital in MJ Gleeson Group plc in consideration of one share issued to shareholders of MJ Gleeson Group Plc for every one share held in MJ Gleeson Group plc.              

                       

Prior to the scheme of arrangement on 18 December 2014, the share capital of the Group (MJ Gleeson Group plc) was:                    

 

Ordinary shares of 2p each -  MJ Gleeson Group plc

 

 


2014



No.

£000




As at 1 July 2014

 53,154,084 

 1,063 

Shares issued

 543,397 

 11 

As at 18 December 2014

 53,697,481 

 1,074 

 

 

As a result of the scheme of arrangement on 18 December 2014, the share capital of MJ Gleeson plc was:

 

Ordinary shares of £1 each - MJ Gleeson plc

 


2014



No.

£000




Issued on incorporation on 16 October 2014

 2 

 - 

Shares cancelled on 18 December 2014

 (2)

 - 

As at 18 December 2014

 - 

 - 




At 31 December 2014

 - 

 - 

 

 

Redeemable non-voting preference shares of £1 each - MJ Gleeson plc

 


2014



No.

£000




Issued on incorporation on 16 October 2014

 50,000 

 50 

As at 18 December 2014

 50,000 

 50 




At 31 December 2014

 50,000 

 50 

 

 

Ordinary shares of £1.46 each - MJ Gleeson plc

 


2014



No.

£000




At 16 October 2014

 - 

 - 

Issued on 18 December 2014

 53,697,480 

 78,398 

As at 18 December 2014

 53,697,480 

 78,398 




At 31 December 2014

 53,697,480 

 78,398 

 

 

Ordinary shares of 2p - MJ Gleeson Group plc                       

The company has one class of Ordinary share which carries no rights to fixed income.                   

                       

 

Ordinary shares of £1 - MJ Gleeson plc                      

On 16 October 2014, the Company was incorporated with 2 Ordinary shares of £1 each.  These were fully paid.  On 18 December 2014, these shares were gifted to a nominee of the Company and cancelled.                     

 

 

Redeemable non-voting preference shares of £1 each - MJ Gleeson plc                   

On 16 October 2014, the Company was incorporated with 50,000 redeemable, non-voting preference shares of £1 each.  These shares are unpaid.                    

                       

 

Ordinary shares of £1.46 each - MJ Gleeson plc                     

On 18 December 2014, the Company entered into a Scheme of Arrangement with the shareholders of MJ Gleeson Group plc whereby the Company obtained 100% of the share capital in MJ Gleeson Group plc in consideration of one share issued to shareholders of MJ Gleeson Group plc for every one share held in MJ Gleeson Group plc.               

 

 

15. Post balance sheet events

 

Following the year end, the Company has completed a share capital reduction, reducing the nominal value of the 53,697,480 Ordinary shares of 146 pence to shares of 2 pence.  The Ordinary share capital has reduced from £78,398,000 to £1,074,000 with a corresponding increase in retained earnings.

 


This information is provided by RNS
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