Our growth Tip of the Year MJ Gleeson (GLE) delivered a sparkling first-half performance that saw operating profits up over 180 per cent at £11.3m, while shareholders were rewarded with a two-thirds jump in the dividend.
The strategic land operation, where the company pulls land through the planning process and sells it to housebuilders, accounted for a lion's share of the big increase in profits, with the number of sites sold doubling to four. This pushed operating profits up from £0.7m to £4.2m. There are currently 10 sites within the 3,849 acre portfolio that have planning consent; four of which could be sold in the current financial year.
Gleeson also builds homes at an affordable price, exclusively in the north of England. "Any couple in full-time employment can afford to buy one of our houses," says chief executive Jolyon Harrison. And unlike the broader housing market, average selling prices were up just £400 at £125,000. Benign material costs and the group's rapid payment scheme for sub-contractors helped to keep a lid on costs, helping to boost operating margins from 13 per cent to 15.4 per cent. Sales rose by nearly a quarter to 400 units, and plans are in place to expand the housebuilding side into new areas, with a new office in Liverpool scheduled to open in the second half.
Analysts at N+1 Singer are forecasting adjusted pre-tax profits for the year to June 2016 of £27.4m and EPS of 40.6p (from £23.4m and 34.3p in FY2015).
MJ GLEESON (GLE) | ||||
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ORD PRICE: | 598p | MARKET VALUE: | £324m | |
TOUCH: | 585-604p | 12-MONTH HIGH: | 630p | LOW: 350p |
DIVIDEND YIELD: | 2.0% | PE RATIO: | 18 | |
NET ASSET VALUE: | 262p | NET CASH: | £9.6m |
Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
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2014 | 42.6 | 3.9 | 6.2 | 2.7 |
2015 | 64.8 | 11.3 | 16.8 | 4.5 |
% change | +52 | +189 | +172 | +67 |
Ex-div: 3 Mar Payment: 4 Apr |