HOUSEBUILDER MJ Gleeson Group said strong demand for homes in deprived areas of Yorkshire and the North led to a 112 per cent leap in half-year operating profits.
Gleeson said demand for three-bedroom houses in former pit villages and other deprived areas of Yorkshire is driving the regeneration of some of the most unloved parts of the county.
Gleeson said it started 2014 with a very encouraging level of visitors and the number of reservations secured in January and early February is well ahead of 2013.
The Northern housebuilder said its new developments attract “hard-working people” on low wages who are typically moving from a council estate to their first owned home.
Chairman Dermot Gleeson said: “Revenues and profits for the first half of the year showed a strong increase over last year, driven by increasing demand for affordable homes amongst our core customer base in the North of Eng- land.”
The group’s operating profit increased by 112 per cent to £2.6m in the six months to December 31 and pre-tax profits more than doubled to £2.7m.
Gleeson’s chief executive Jolyon Harrison said the group’s buyers are typically in their 40s with grown-up children.
“They’ve got a good work ethic. They’re good, solid, working class people who currently live in a council house and they want to better themselves.
“Most customers move from within half a mile of their current location so they are near friends and family.”
He said that the group’s developments, which offer three-bedroom detached or semi-detached properties, help to bring a sense of pride into areas of industrial decline and social deprivation, which has a knock-on, beneficial effect on the area.
The group said its Gleeson Homes division benefited from families wanting good quality, affordable homes in their existing local communities which resulted in a 73 per cent increase in revenue to £33.0m.
This reflected a 56 per cent rise in the total number of units sold from 165 to 258.
The division’s operating profit increased by £3.2m to £3.5m. The strong improvement was due to the increase in overall volume of sales, along with the improvement in the proportion of units sold from the newer higher margin sites.
The average selling price increased to £120,000 from £115,000 due to price increases on a number of high-volume sites.
Mr Gleeson said the group’s commitment to ensuring that its homes stay affordable for its core customers means that prices are not expected to increase significantly in the near future.
He added that the Government’s Help to Buy initiative has proved attractive to customers, with 44 per cent of completions in the half year benefiting from the scheme.
At the end of last year, Gleeson Homes was selling from 33 sites, an increase of six sites on the previous period, and a further six sites are due to open in the period to June 2014.
Gleeson is taking advantage of the low land prices prevalent in many parts of the North of England and it is in active discussions about the acquisition of further sites.
If these come off, they will add 1,940 plots to the land pipeline, taking the total number of owned plots to over 6,000.
Gleeson said its Strategic Land division benefited from high demand for good quality, green field sites from housebuilders operating in Southern England.
The division won planning permission on three sites which will deliver a combined total of 380 plots when the sites are sold in due course.
In addition, 12 planning applications with the potential to deliver a total of 1,737 plots were submitted during the period and Gleeson said it will submit more during the second half of the financial year.
It added that the strategic land portfolio continues to be replenished, with a further four agreements, involving a total of 81 acres with the potential to deliver 545 plots.
Gleeson said it anticipates further substantial improvements in the group’s trading performance in both the current year and beyond.
Mr Gleeson said that as a mark of its confidence in the future, an interim dividend of 1.1p per share will be paid.
The dividend, which marks an increase of 120 per cent over the previous year when it paid out 0.5p per share, follows a 2.0p per share final dividend for the year to June 2013.
Gleeson said that although the general economy is now in growth, employment prospects remain uncertain in some geographic areas.
It added that although interest rates remain low, mortgage finance remains, by historic standards, relatively restricted for high loan-to-value mortgages.