Gleeson profits treble as the word spreads

'‹Urban regeneration housebuilder MJ Gleeson said its pre-tax profit almost trebled to £11.3m in its first half as more home buyers look to buy houses in former pit villages and other deprived areas in the North of England.

The Sheffield-based firm specialises in building houses on land that no-one else wants to buy and turning the developments into desirable areas that rejuvenate the local economy.

Jolyon Harrison, the CEO of MJ Gleeson, said: “We are gradually expanding in a very controlled way. More people are hearing about us and word is spreading.

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“We are constantly talking to more local authorities. 50 per cent of the land we buy is local authority. They have land no-one else wants to buy and we develop areas that no-one else wants to buy. The synergy is perfect. We have a knock-on effect on the surrounding area.”

One new development will be on the car park at the failed Earth Centre in Doncaster, which was intended to be a world centre for sustainable development, but closed down more than 10 years ago.

“We will build a couple of hundred houses there. It’s an important site for South Yorkshire, a great symbolic thing. The Earth centre is on the side of the hill looking very sad and redundant,” said Mr Harrison.

He added that he had no idea what will happen to the centre, but didn’t rule out Gleeson trying to buy it at some stage to extend the development.

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The group said it saw strong trading in the half year to December 31.

Group revenue rose 52 per cent to £64.8m, reflecting strong performances in both Gleeson Homes and Gleeson Strategic Land.

Gleeson Homes increased unit sales by 25 per cent to 400 units and acquired a further 823 plots during the first half of the year, increasing the pipeline to 7,919 plots by the end of December.

The average selling price for houses increased 0.3 per cent to £125,000 from £124,600.

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The group is looking to expand and has identified an office in Liverpool and it is also looking at Cumbria and North Midlands.

60 per cent of sales benefited from the Government’s Help to Buy scheme and Gleeson’s own bespoke purchaser assistance packages have also proved popular.

“Help to Buy is very useful, but we are not dependent on it. A third of our customers use Help to Buy because it’s there rather than they need it,” said Mr Harrison.

Gleeson said that in light of the strong results and its confidence in the future, the board will increase the interim dividend by 67 per cent to 4.5p per share. It said that against this backdrop, it is confident that full year trading will be in line with expectations.

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Analyst James Tetley at N+1 Singer said: “Gleeson’s interims confirm another period of significant growth and a strong performance from both divisions. The group is well on track to meet full year expectations following the latest forecast upgrades in December.

“Gleeson is unique amongst the listed housebuilders. It sells good quality affordable homes to first time buyers on low incomes in the North of England, often helping to regenerate challenging communities. At the same time it achieves sector leading earnings growth and above average margins.

“Management’s ambition now extends beyond the original 1,000 home target and we see potential for significant scale to be added over coming years. Gleeson remains one of our ‘Best Ideas’ for 2016.”​