The company reported a 12% fall in revenues in the six months to 31 December 2010 to £24.0m and a meagre pre-tax profit of £100,000 on continuing operations.
The MJ Gleeson Group now operates solely in the house building sector following the sale of Powerminster Gleeson Services in 2010, completing the group's withdrawal from building, civil engineering and FM contracting. Business units are now: Gleeson Regeneration and Homes, focusing on housing and regeneration on brownfield land in the north of England; Gleeson Strategic Land, which buys options over land in the south of England to get residential planning permission; and Gleeson Capital Solutions, which manages PFI investments in social housing and takes the lead in securing new PFI opportunities.
The fall in revenue was attributed to a decline at Gleeson Strategic Land and Gleeson Commercial Property Developments. Gleeson Regeneration & Homes increased its revenue by 48% to £20.6m, selling 171 homes in the period at an average price of £122,000. In the first half of fiscal 2009/10 it sold 99 homes at an average price of £134,000.
However, the Regeneration & Homes division made an operating loss of £800,000.
The decrease in average selling price was primarily a result of a change in the mix of product sold, with like-for-like sales showing a modest increase in price. Of the units sold, 86 (2009: 29) were sales to registered social landlords. Sales to private purchasers increased 21% to 85 units (2009: 70), with all continuing sites recording increased volume.
Taking advantage of low land prices in the north of England, Gleeson conditionally purchased five sites in the period and expects to be selling from all of these by the end of the financial year in June. These acquisitions will add a further 286 plots to the land bank. Further land acquisitions are anticipated during the remainder of the year.
Gleeson Strategic Land recorded revenue of £3.4m resulting from one land sale in the period, compared to two sales bringing in £9.8m last time.
Chairman Dermot Gleeson said: "Although conditions in the housing market remain difficult, not least as a result of a continuing dearth of mortgage finance, Gleeson Regeneration & Homes has achieved an encouraging increase in both site visitors and completions. This reflects the business unit's enhanced ability to provide first time buyers in regeneration areas with homes that represent exceptional value for money. Meanwhile, the demand from volume housebuilders for residential land in the South of England remained at the improved levels seen in the previous financial year and Gleeson Strategic Land completed one land sale and agreed terms for a second.
“The extremely cautious approach of mortgage lenders and the widespread uncertainty regarding employment prospects make it likely that the housing market overall will remain subdued for some time. However, the action taken over the last year to reduce costs substantially without compromising quality means that the group is now able to offer buyers at the lower end of the market homes that are very competitively priced. As a result, the board believes it should be possible to continue to achieve steady sales growth."
As part of the repositioning of the company, and to signal both its ecological credentials and Irish roots, the group has changed the colour of its logo from red to green.
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