Low-cost housebuilder MJ Gleeson posted a double-digit rise in earnings for last year as it shrugged off Brexit uncertainties and enjoyed continued demand in the north of England.
The developer reported £41.2m of pre-tax profits during 2019, rising 11 per cent from £37m in the previous 12 months.
Revenues jumped 27 per cent to nearly £250m, while earnings per share rose 10 per share.
MJ Gleeson, which operates both Gleeson Homes and Gleeson Strategic Land, also said the record performance had led the board to keep Strategic Land within the group, having previously mulled selling off that arm.
Some of Britain’s property giants have been dented in recent months by a slowdown in activity, particularly in London and the south of England, where buyers and sellers have taken a wait-and-see approach amid the current Brexit uncertainty.
Yet MJ Gleeson, which typically builds low-cost homes in the north of England and the midlands, said today that it has enjoyed “extremely strong” demand for its properties despite Brexit jitters.
Interim chief executive James Thompson put the rise in profits down to three fundamental reasons: “We’re able able to buy land cheaply in areas where others don’t want to compete with us, we can also build houses very cost effectively, and we’re selling to part of the market that has the strongest demand,” he told City A.M.
On the government’s controversial Help to Buy scheme, Thompson added: “The challenge with Help to Buy is that a couple of large housebuilders have grown very rapidly, which has attracted some bad press around the levels of super compensation.”
Earlier this summer MJ Gleeson sacked its chief executive after he came to blows with the board over pay.
Jolyon Harrison, who had been in the post since 2012, stepped down with immediate effect.
The board said it was “not possible to find a mutually acceptable basis for Mr Harrison to continue”, spooking investors and sending shares down 11 per cent.
However, over the last 12 months the firm’s share price has climbed almost 18 per cent overall, closing at 850p on Friday.
MJ Gleeson has yet to appoint a new chief executive, but City analysts expect current interim boss Thomson to take the role.
“As we have stated before, we believe that Gleeson is a growth business in an otherwise cyclical sector and, as such, merits the premium rating on which it stands,” said Shore Capital analysts in a note this morning.
They added: “The model of selling only lower priced homes (average selling price <£130,000) to lower income families in locations the national house builders would consider unattractive remains a unique one but still one that offers ample opportunity for growth.”
Broker Liberum added: Gleeson’s unique low cost homes business model gives it unchallenged exposure to a very under-served part of the British housing market.”