Gleeson revenue falls £105m but sales are recovering

Sheffield-based affordable housebuilder MJ Gleeson plc said on Monday it expects revenue for the year ending June 30 to fall to £145 million from £249.9 million in the previous year.

However, MJ Gleeson said “customer demand is recovering strongly” as it re-opens sites — and that reservation levels, which had fallen to 25% of pre-Covid levels, have increased significantly in the last two weeks to 70% of pre-Covid levels.

It also said its forward order book for sales in the next financial year currently stands at £135.2 million on 940 plots, compared to £87.6 million on 677 plots at June 30, 2019.

In a trading update for the financial year ending June 30, 2020, MJ Gleeson said: “The company announced on 14 May 2020 that it would begin to implement its plan for a phased restart of activity on sites.

“Sites are re-opening as planned and customer demand is recovering strongly.

“Of our 67 build sites 62 have so far re-opened and construction activity has recommenced on 43 sites with activity initially focussed on preparing site infrastructure and ground-level works.

“Plot build activity is recommencing in a phased and controlled manner.

“By the end of this month plot build activity will have recommenced on the majority of sites. 

“Current safe-working protocols are, as expected, having an impact on productivity and build rate.

“However, we believe there is scope to improve productivity and build rate by the introduction of new working practices within the Covid-19 Secure protocols.

“Sales offices and show homes have reopened on 40 sites and will reopen on a further 15 sites by the end of this month.

“Virtual show home tours have been launched on the Company’s website and the Gleeson Key Worker Priority Programme launched in May 2020 is generating strong interest.

“Reservation levels, which had, in the past months, fallen to 25% of pre-Covid levels, have increased significantly in the last two weeks with reservations at 70% of pre-Covid levels.

“We continue to see price increases being achieved on newly released plots for sale on most sites and incentives remaining low.

“We have not experienced any impact on lender valuations.

“The company enabled 43 customers to complete their purchase and move into their homes during April and May bringing year to date sales to 1,037 homes by 31 May 2020.

“Completions are expected to continue at a similar pace during June. 

“To date, the company has brought back from furlough 275 of the 456 staff furloughed in April.

“In total, 30% of staff remain furloughed but the company expects that all staff will have returned to work by 30 July 2020.

“The board, therefore, expects group revenue for FY2020 will be circa £145m (FY2019: £249.9m).

“The forward order book for sales in the next financial year currently stands at £135.2m on 940 plots (30 June 2019: £87.6m on 677 plots). 

“Pre Covid-19, the company had planned to open 17 new sites during the final quarter of this financial year.

“Three new sites have been opened and a further site is expected to open in the next two weeks bringing the total number of build sites to 71 by 30 June 2020 (30 June 2019: 69 build sites). 

“Gleeson Strategic Land completed the sale of two small sites before the end of March and will not complete any more sales before 30 June 2020.

“Gleeson will provide a post year end update on 9 July 2020.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.