Gleeson is riding high as it decides to keep land division

Gleeson sells homes to young, first time buyers on low incomes
Gleeson sells homes to young, first time buyers on low incomes
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Low-cost housebuilder MJ Gleeson has announced a strong annual performance and said it has decided against selling its strategic land division after the division reported a record year.

The Sheffield-based firm has explored options for its strategic land business and received several takeover offers for it, but has decided against selling it.

The firm's interim chief executive James Thomson said: "I'm delighted to say the board has decided to keep the strategic land business.

"We received approaches for the business and we had to take that seriously and to have a look at that.

"There's a good outlook for that business, a strong pipeline, but importantly it does generate good levels of profit and high levels of cash. It's very complementary to the overall group."

Gleeson said that despite the uncertainties caused by Brexit, demand for its homes is extremely strong. It added that Gleeson Homes is well on track to deliver its milestone target of doubling annual completions to 2,000 units by 2022.

Mr Thomson said: "Fundamentally, we are in the best part of the market. We are selling to young, first time buyers on low incomes.

"Young people are growing up, leaving home, getting married and having kids. It's affordable. People aspire to have a home."

He said a typical Gleeson customer is probably paying £350 to £550 a month in rent.

"They can buy a two-bedroom Gleeson home for just under £250 a month or a three-bedroom home for just under £300 a month, saving £150 to £200.

"Fundamentally, it's an economic decision," he added.

Following the departure of the former chief executive, Jolyon Harrison, earlier this year, former Keepmoat chief executive Mr Thomson was appointed to the board in June as interim chief executive.

The group said the board is well-advanced in a search process, which includes both internal and external candidates, and it hopes to appoint a permanent chief executive in the next three months.

Analyst Robin Hardy at Shore Capital said: "There is no news yet on the appointment of a new CEO, but we still believe that interim CEO James Thomson (ex Keepmoat Homes, the closest rival to Gleeson in the affordable homes market) is likely to be appointed and will be a strong successor to Jolyon Harrison, the former chief who helped establish Gleeson in this market place."

Mr Thomson said: "It's for the board to decide. My hat is clearly in the ring."

Asked what changes he would make if he is successful, he said: "The business has a very, very good business model and I would not change that.

"The business buys land cheaply and well in regeneration areas, typically brownfield. It builds very cost effectively and cheaper than any other housebuilder and it is the only quoted housebuilder that focuses on low income, low cost housing."

However, he said there are things the group can do to support and potentially improve the business as it moves forward.

"With growth, you have to operate the business slightly differently in terms of the organisation structure," he said.

"I come from Keepmoat where over the last seven years we took the business from 1,500 homes to over 4,000. That does require a less centralised approach."

If successful, Mr Thomson plans a move towards a regional structure covering Yorkshire and the Midlands, North West and Cumbria, the North East and Northumberland.

Gleeson announced an 11 per cent jump in pre-tax profits to £41m in the year to June 30 and an 8 per cent rise in the dividend.