MJ Gleeson : Prelim 2017 22Sep_Final Clean

MJ GLEESON PLC

Audited results for the year ended 30 June 2017

MJ Gleeson plc, the community regeneration housebuilder and strategic land specialist, is pleased to announce another strong performance with profit before tax up 17%, cash flow up 42% and a proposed final dividend of 17.5p per share.

Gleeson Homes:

• Operating profit increased to £22.8m (2016: £19.5m)

   1,013 units sold (2016: 904 units)

• Average Selling Price £122,700 (2016: £125,700) due to completion of the final legacy site and mix

• Target to double unit sales to 2,000 p.a. within 5 years

• Land pipeline, including conditionally purchased sites, of 11,588 plots (2016: 9,284 plots)

  Gleeson Strategic Land:

• Operating profit of £12.0m (2016: £10.2m) driven by increase in transactions during the year

• Eight land sales completed during the year with the potential to deliver 841 residential plots

• Planning consent secured during the year for 1,495 residential plots

• Portfolio: 65 sites with the potential to deliver 21,505 plots

Final dividend of 17.5 pence per share proposed (2016: 10.0 pence per share), resulting in total dividend for the year up 66% to 24.0 pence per share (2016: 14.5 pence per share).

"Our twin track strategy - the development of low cost homes for open market sale in the North of England and strategic land sales in the South - delivered another excellent year of increased volumes, margins, profit and cash.

Gleeson Homes achieved its milestone target of 1,000 unit sales per annum and has set a new milestone target of 2,000 unit sales per annum within the next 5 years. Affordability remains very attractive and demand exceeds supply, with buyers queueing on site opening days. The division opened another area office in Nottinghamshire, bringing the total number of area offices to seven plus two pilot offices, and has a pipeline of owned and conditionally purchased sites containing 11,588 plots, equivalent to more than 11 years of sales at current build rates.

Gleeson Strategic Land also had a record year and continues to benefit from strong demand for consented land in prime locations from both medium sized and large housebuilders. The division has a strong pipeline of sites, predominantly in the South of England, which have the opportunity of developing 21,505 plots, and anticipates continuing to enjoy a high level of success in promoting commercially attractive sites through the planning system.

The Board is confident in the Group's short and longer term outlook."

I am pleased to report a milestone year for volumes and another excellent year of growth in margins, profit and cash.

Gleeson Homes exceeded 1,000 unit sales for the first time, increasing volumes by 12.1% to 1,013 units (2016: 904 units). Gross margins on plot sales strengthened to 33.0% as a result of changes to site mix, increase in selling prices and robust cost controls resulting in a 16.9% increase in operating profit to £22.8m (2016:

£19.5m). Taking advantage of relatively low land prices in its target areas in the North of England, the division increased its land pipeline by 2,304 plots and 24 sites.

Gleeson Strategic Land increased operating profit by 17.6% to £12.0m (2016: £10.2m) by continuing to secure attractive residential planning consents and satisfying demand for development sites from both medium sized and large housebuilders.

Profit before tax increased by 17.0% to £33.0m (2016: £28.2m). Profit for the year attributable to equity holders of the parent company was £26.2m (2016: £23.0m).

Earnings per share grew by 13.8% to 48.5p (2016: 42.6p).

Return on capital employed increased by 220 basis points to 25.4% (2016: 23.2%).

Market context

Demand for low cost homes in the North of England was very strong with long queues forming on launch days at new development sites.

Affordability for low income families buying a Gleeson home remained attractive and mortgage availability continued to support the young first time buyers who make up a large proportion of Gleeson Homes buyers.

The Government's White Paper on housing, published in February 2017, was supportive of the approach to affordable housing on which Gleeson Homes' business model is based and contains proposals which will, if adopted, make it easier for the division to secure planning permissions.

Gleeson Strategic Land continued to experience strong demand from both medium-sized and large housebuilders for consented land in high value areas in the South of England and attracted multiple bidders for all of its land sales.

Land

We remain one of the few developers building low cost homes on brownfield sites in challenging communities and such sites continue to be available at relatively low cost. The Gleeson Homes' land pipeline grew by 2,304 plots and 24 sites to a record high of 141 sites (2016: 117), comprising 11,588 plots owned or conditionally purchased (2016: 9,284). The division will continue to commence building on sites as soon as a fully implementable planning permission is obtained.

Gleeson Strategic Land continued to source developable sites in the South of England. During the year it obtained planning consent on 6 sites; and entered agreements involving 6 new sites, potentially providing development opportunities on an additional 1,846 plots. Demand for prime sites with planning consent in the South of England from a wide range of housebuilders remains extremely strong.

Employees

The Group's strong performance during the year reflects the dedication and hard work of our employees. On behalf of the Board, I would like to congratulate and thank them very warmly indeed.

The average number of employees during the year increased to 370 (2016: 314). The actual number of employees at the year-end was 405 (2016: 333).

Dividends

Reflecting the Group's strong financial performance and our confidence in the prospects for the current year and beyond, the Board is recommending a final dividend for the year of 17.5 pence per share (2016: 10.0 pence per share). Combined with the interim dividend, this will give a total dividend for the year of 24.0 pence per share (2016: 14.5 pence per share), an increase compared to the previous year of 65.5%.

Subject to shareholder approval at the Annual General Meeting ("AGM"), the final dividend will be paid on 14 December 2017 to shareholders on the register at close of business on 17 November 2017. The Board aims to maintain ordinary dividend cover between two and three times for the foreseeable future.

Summary

We have started the new financial year in a strong position. Robust customer demand and continuing site availability will allow Gleeson Homes to continue to grow volumes and profit. Following the achievement in June of the division's interim target of 1,000 unit completions per annum, the Board has now set a new target of 2,000 unit completions per annum within 5 years. Meanwhile, Gleeson Strategic Land continues to experience strong demand for consented greenfield sites. Against this background, the Board is confident that the Group has significant scope to grow both revenue and profits in the current year and beyond.

Dermot Gleeson

Chairman

22 September 2017