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MJ Gleeson building nicely

RESULTS: Home sales at MJ Gleeson are up sharply, while land sales are starting to accelerate - and the half-year dividend has been resumed, too
February 28, 2013

Housebuilder and strategic land specialist MJ Gleeson (GLE) continued it renaissance in the wake of a major restructuring, boosting revenue strongly at the half-year stage and turning the previous year's loss into a profit. Moreover, there's a net cash pile and the half-year dividend has been resumed.

IC TIP: Buy at 182p

On the homebuilding side, Gleeson Homes pushed private sales ahead by 53 per cent to 164 units and, while average prices fell from £117,000 to £115,000, this was an expected consequence of a strategic decision to concentrate on building low-cost homes in regeneration areas. However, the proportion of units sold on higher-margin land rose significantly and the percentage of sales from low-margin sites fell from 75 per cent to 34 per cent. The group was operating out of 27 sites at the year-end and a further eight are expected to open before June.

On the strategic land side, turnover doubled to £7m and operating profits rose 55 per cent to £1.7m, reflecting three land sales comprising 13 acres. Contracts have also been exchanged on the sale of a 77-acre site in Thanet in which the group has a half share. Six new sites, comprising 126 acres, were also acquired - maintaining the strategic land bank at 3,608 acres, or a potential 22,100 plots.

MJ GLEESON (GLE)
ORD PRICE:182pMARKET VALUE:£96m
TOUCH:182-183p12-MONTH HIGH:191pLOW: 104p
DIVIDEND YIELD*:0.3%PE RATIO:22
NET ASSET VALUE:193pNET CASH:£10.2m

Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201118.8-0.20-0.39nil*
201226.11.332.480.50
% change+39---

Ex-div: 6 Mar

Payment: 5 Apr

*Excludes 5p special dividend, paid in December 2011