builders for generations
MJ Gleeson Group plc
Report and Accounts
for the year ended 30 June 2012
Contents
Financial Highlights
Board of Directors
Chairman’s Statement
Business Review
Corporate Social Responsibility Report
Directors’ Report
Directors’ Remuneration Report
Corporate Governance
Statement of Directors’ Responsibilities
Independent Auditors’ Report
1
2
4
6
14
16
18
22
27
28
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cashflow
Notes to the Financial Statements
Five Year Review
Advisers
30
31
32
34
36
64
Inside back cover
Frontcover:ValeCroft,Bolsover
LastinghamGreen,
Bradford
MJ Gleeson Group plc
The Group operates in the
following areas:
housebuilding on brownfield land
in the North of England with a
particular emphasis on low cost
homes;
enhancing the value of land options
by achieving residential planning
consents on greenfield sites,
primarily in the South of England.
MJ Gleeson Group plc
Revenue
£’000
2010
46,534
2011
41,353
2012
41,937
Profitbeforetax
continuingoperations
£’000
2010
447
2011
1,542
2012
3,797
Earningspershare
continuingoperations
(p)
1.30
2010
2011
3.02
2012
6.93
NetAssetspershare
(p)
2010
186
2011
188
2012
190
Financial highlights
2012
2011
Operatingprofitcontinuing activities
£3.3m
£0.9m
251%
GleesonStrategicLand operating profit
£3.7m
£2.7m
35%
GleesonHomes operating profit
£0.3m
£(0.4)m
Page 1
MJ Gleeson Group plc
Board of Directors
DermotGleeson,MA(Cantab)
Chairman
Joined the Board in 1975. Appointed Chief Executive in 1988 and Chairman in 1994. Relinquished
the post of Chief Executive in 1998. Chairman of the Nomination Committee. Currently a Non-
Executive Director of GB Group Holdings Limited (the parent company of GB Building Solutions
Limited, previously Gleeson Building Limited). Previously employed in the Conservative Party
Research Department, the European Commission and Midland Bank International Limited. Formerly,
a Trustee of the British Broadcasting Corporation, Chairman of the Major Contractors Group, a Board
Member of the Housing Corporation, a Director of the Construction Industry Training Board and a
Trustee of the Institute of Cancer Research.
JolyonHarrison,FCIOB,FIoD,FCMI
ChiefExecutiveOfficerandManagingDirector,GleesonHomes
Appointed to the Board on 1 July 2010 and appointed Chief Executive on 1 July 2012. Joined the
Group in November 2009 as Managing Director of Gleeson Homes. Jolyon has over 40 years of house
building experience, most recently as founder and Chairman of Pelham Construction/North Country
Homes Group and prior to that as Managing Director of Shepherd Homes. Currently Chairman of
York Housing Association, JDP Rooflines Limited and the Yorkshire region of the Home Builders
Federation. Formerly a member of the North East Housing Board and a Council member of the
National House Building Council.
AlanMartin,BSc,ACA
ChiefFinancialOfficerandCompanySecretary
Appointed January 2009. Previously Group Financial Controller, a position he had held since November
2006. Formerly Group Financial Controller, Psion PLC. Alan qualified as a Chartered Accountant in
1990, following which he specialised in corporate recovery with PricewaterhouseCoopers in London
and in Sydney, Australia.
Page 2
MJ Gleeson Group plc
RossAncell,ACA(NZ)
Non-ExecutiveDirector
Appointed October 2006. Senior Independent Director. Chairman of the Remuneration Committee
and member of the Audit and Nomination Committees. Executive Chairman and controlling
shareholder, Churngold Group of Companies and Independent Non-Executive Director of Galaxy
Entertainment Group Limited.
ColinDearlove,BA,FCMA
Non-ExecutiveDirector
Appointed December 2007. Independent Director. Chairman of the Audit Committee and member of
the Remuneration and Nomination Committees. Colin was at Barratt Developments PLC from 1981
to 2006 where he held a number of senior finance positions with the most recent being Group Finance
Director, from 1992 until his retirement in 2006.
ChristopherMills
Non-ExecutiveDirector
Appointed January 2009. Founder of Harwood Capital Management Group and formerly Chief
Investment Officer of J O Hambro Capital Management Limited from 1993 to 2011. He is also Chief
Executive and Investment Manager of North Atlantic Smaller Companies Investment Trust PLC, a UK
listed investment trust. Christopher has also been a director of several publicly quoted companies,
including Castle Support Services PLC, Catalyst Media Group plc, Inspired Gaming Group plc and
Prime Focus London PLC.
Page 3
MJ Gleeson Group plc
Chairman’s Statement
In the last three years, Gleeson Homes has very substantially
expanded its land bank, taking advantage of the low cost of
land in the North of England.
DermotGleeson,Chairman
Despite challenging market conditions, Gleeson Homes increased
private development sales by 50% to 255 units (2011: 170 units).
It also continued to expand its land bank, taking advantage of
the historically low land prices that still persist in most parts of
the North of England.
Financialperformance
The Group recorded an operating profit from continuing
operations of £3.3m, an increase compared to the previous year
of 251% (2011: £0.9m). Discontinued operations generated a
post-tax loss of £37k (2011: £73k).
Gleeson Strategic Land had a good year, experiencing both a high
level of success in securing residential planning consents for
green field sites in the South of England and strong demand for
such sites, once consented, from volume house builders.
Profit for the year attributable to equity holders of the parent
company totalled £3.6m (2011: £1.5m).
Net Assets increased by 1.2% to £100.4m (2011: £99.2m),
LowfieldPark,
Bolton-upon-Dearne
Page 4
MJ Gleeson Group plc
representing net assets per share of 190p (2011: 188p). Net cash
at 30 June 2012 was £13.9m (2011: £17.8m), the decrease of
£3.9m primarily reflecting the continuing expansion of the
Group’s land bank and work-in-progress.
AppointmentofCEO
Jolyon Harrison was appointed as Chief Executive Officer on 1
July 2012. Jolyon joined the Group in November 2009 as
Managing Director of Gleeson Homes and was appointed to the
Board in July 2010.
concentrates: low cost housing development on brown field sites
in the North of England; and the promotion through the planning
system and subsequent sale of high value green field sites in the
South. In consequence, the Board is confident that, barring a
further severe downturn in the UK economy generally, the Group
will continue to grow profits in the current year and beyond.
Employees
The average number of employees during the year increased
to 130 (2011: 100). The number at the year end was 166
(2011: 108).
DermotGleeson
Chairman
The Board would like to thank all of our employees for their
commitment to the Group and for the great and productive
efforts they have continued to make on its behalf.
DividendPolicy
A special dividend of 5p a share was paid to shareholders in
December 2011, at a total cost of £2.6m.
In the last three years, Gleeson Homes has very substantially
expanded its land bank. Although this policy has made
substantial demands on the Group’s cash resources, the sale of
non core assets has made it possible for the Group nonetheless
to return cash to shareholders by means of Special Dividends in
2010 and 2011. However, the priority that the Board has given to
investment for future growth has meant that there have been no
payments of regular dividends since 2008.
The expansion of the land bank has created a strong basis for a
substantial and sustained increase in the Group’s future turnover
and profits. Moreover, the prospect of rising revenue from house
sales combined with a planned reduction in the rate of growth
of the land bank means that the Group expects to become cash
generative in the second half of the current financial year and,
broadly, to remain so for the foreseeable future. Against this
background, the Board hopes to be able to recommence regular
dividend payments in 2013.
Prospects
The housing market continues to be constrained by the very
limited availability of mortgages, particularly for first time buyers.
However, the Group enjoys a very strong and competitive
presence in the two sectors of the market on which it now
August2010
August2012
GaisbyMill,
Bradford
Page 5
MJ Gleeson Group plc
Business Review
2012 has been an important year for the Group, in which it has
significantly improved its financial performance. Gleeson
Homes, which is now focused on the provision of low cost homes
in the North of England, has substantially increased the number
of sites it is developing and has returned to profitability. Gleeson
Strategic Land has continued to deliver a strong financial
performance from the sales of land in the South of England.
GROuPBuSINESSESANDStRAtEGy
The Group comprises ongoing businesses and businesses in
run-off:
Ongoingbusinesses
Gleeson Homes: A housebuilder focusing on development on
brownfield land, with a particular emphasis on low cost homes.
The strategy is to grow the business in the North of England,
particularly in areas of urban regeneration.
Gleeson Strategic Land: A land promotion business, mainly
operating in the South of England, that enhances the value of
land by securing residential planning consents. The strategy
continues to be to focus on greenfield sites in Southern England
likely to be attractive to volume housebuilders.
GleesonCapitalSolutions: Holds the Group’s PFI investments in
social housing. Following the Government’s announcement that
after the completion of the current round of projects, no further
social housing projects will be procured by means of the PFI, the
business unit will manage a phased run down of its operations.
Groupactivities: comprise the Board, Company Secretariat and
Group Finance.
Businessesinrun-off
Gleeson Commercial Property Developments: Having
completed the sale of its commercial property developments two
years ago, the run-off activity of the division consists of managing
its remaining leasehold interests.
EngineeringandBuildingContracting: The Group sold certain
contracts, assets and liabilities of the Engineering Division in
October 2006 to Black & Veatch Limited, and of the Building
Contracting Division in August 2005 to Gleeson Building Limited
(now GB Building Solutions Limited), a management buy-out
vehicle. The run-off activity of the former is reported as a
discontinued operation, whilst that of the latter is reported as a
continuing operation.
GaisbyMill,
Bradford
Page 6
MJ Gleeson Group plc
The business unit is continuing to take advantage of reduced land
prices in the North of England to build up a substantially enlarged
landbank. During the year, 16 sites were purchased and
subsequent to the year end a further 4 sites have been acquired.
These acquisitions have added 1,687 plots to the land bank. A
further 13 sites that have been conditionally purchased are
expected to add in excess of 1,079 plots to the landbank in the
near future. When and if these acquisitions are completed, the
landbank will total in excess of 3,790 plots.
During the year, 17 sites were started,
including 9 sites in the North East
region, which opened for business in
January 2011
August2010
August2012
BurnhamWalk,
Bradford
Page 7
PERFORMANCE
GLEESONHOMES
Gleeson Homes focuses on providing low cost homes on
brownfield land, principally in the North of England. The
business unit’s results for the year were as follows:
Revenue
Operating profit/(loss)
2012
2011
£32.6m
£0.3m
£35.4m
£(0.4)m
During the year, 279 (2011: 286) homes were sold, of which
private development sales totalled 255 (2011: 170), an increase
of 50% and sales to Registered Social Landlords (“RSLs”) totalled
24 (2011: 116). The reduction in sales to RSLs, which is the cause
of the reduction in revenue, is due to the focus on more
profitable private development sales.
A number of sites were particularly successful in the year such
as Grove Village, Manchester which sold 51 homes, Montreal
Gardens, North Huyton, which sold 28 homes and Stanhope,
Ashford where 37 homes were sold.
The Average Selling Price (“ASP”) for private development sales
was £118,000 (2011: £138,000) and for sales to RSLs was £101,000
(2011: £103,000). The decrease in ASP for private development
sales reflected a change in product mix, a higher proportion of
units having been sold in the South in the prior year.
The restricted availability of higher loan to value mortgages is a
continuing constraint on sales. The Government’s FirstBuy
scheme has helped to ameliorate this problem. It remains to be
seen whether or not the Government’s Funding for Lending
scheme will also be helpful in this context.
Included within Operating Profit were exceptional credits of
£3.0m (2011: £3.5m) relating to the partial reversal of inventory
write downs and the release of contract and restructuring
provisions.
At the year end, Gleeson Homes had 28 sites open, all of
which – apart from a development associated with a PFI project
in Kent – are in the North of England. During the year, 17 sites
were started, including 9 sites in the North East region, which
opened for business in January 2011. The northern sites are
located in County Durham, Derbyshire, Merseyside, Manchester,
Newcastle, Nottinghamshire, Tyneside and Yorkshire.
MJ Gleeson Group plc
Business Review continued
GLEESONStRAtEGICLAND
addition, heads of terms have been agreed for a further 10 sites
covering 176 acres.
Revenue
Operating profit
2012
2011
£8.2m
£3.7m
£5.8m
£2.7m
The demand for green field residential land in the South of
England from the major housebuilders remained strong
throughout the year. As a result of this demand, the business
unit was able to complete five land sales, with a combined
acreage of 115 acres.
At the year end, Gleeson Strategic Land’s portfolio totalled
3,653 acres (2011: 3,766 acres), of which 177 acres (2011: 185
acres) were owned, 2,337 acres (2011: 2,608 acres) were held
under option and 1,139 acres (2011: 973 acres) were under
planning promotion agreements. The geographic bias for the
portfolio is towards Southern England, predominantly in:
Buckinghamshire, Dorset, Essex, Hampshire, Hertfordshire, Kent,
Oxfordshire, Surrey, Sussex and Wiltshire. The Group currently
owns land with residential planning permission for in excess of
1,000 plots.
During the year, five new sites were secured via option,
promotion and subject to planning agreements, covering 228
acres, with the potential ability to deliver 1,408 houses. In
In March 2012, the National Planning Policy Framework was
published. The early signs suggest that this will have a beneficial
effect on land supply for development.
GLEESONCAPItALSOLutIONS
Revenue
Operating profit
2012
2011
£0.0m
£0.4m
£0.0m
£0.1m
Gleeson Capital Solutions holds the Group’s investments in social
housing PFI projects. In October 2011, the Group sold three of
its PFI
investments, namely: Grove Village, an estate
regeneration project in Manchester; Stanhope, an estate
regeneration project in Ashford, Kent; and AvantAge, an extra
care homes project in Cheshire. The sale generated gross
proceeds of £7.5m and a profit on sale of £0.3m. The Group’s
remaining PFI investment, Leeds Independent Living, a social
housing project in Leeds is expected to be sold during 2012.
The business unit is part of a consortium bidding for an estate
regeneration project in Brunswick, Manchester. The final bid
was submitted by the consortium in August 2012 and it is
expected that the Preferred Bidder will be announced during the
Autumn of 2012. In the year, speculative bid costs of £18k (2011:
£0.1m) were incurred, which were expensed.
GLEESONCOMMERCIALPROPERty
DEVELOPMENtS
The Group concluded the disposal of its commercial property
developments in the prior years. During the year, a leasehold
interest was, by agreement, terminated early, resulting in a
provision release of £0.2m.
GrangeRoad,CrawleyDown
Planningpermissionobtainedandsitesoldinyear
Page 8
MJ Gleeson Group plc
GLEESONCONStRuCtIONSERVICES
Continuingoperations
Discontinuedoperations
Revenue
Operating loss
2012
2011
£1.1m
£0.1m
£(0.1)m
£(0.1)m
Revenue
Operating loss
2012
2011
£0.0m
£0.4m
£(0.0)m
£(0.1)m
The Group retained sufficient assets and liabilities after the
disposal of its Gleeson Building Contracting Division in August
2005 for the results of these retained assets and liabilities to be
classified as continuing.
The business unit continued to resolve contractual matters within
the provisions set by management. Revenue of £1.1m was
recorded in the year for work performed on behalf of insurers in
order to resolve an outstanding matter. The operating loss
related to the unit’s running costs.
The Group disposed of sufficient assets and liabilities of Gleeson
Engineering Division in October 2006 for the results of these
retained assets to be classified as discontinued.
The retained element of Gleeson Engineering Division recorded
an operating loss for the year of £37k (2011: £73k), which
represented its running costs.
GROuPACtIVItIES
The charge for the year, which relates to the Board, Company
Secretariat and Group Finance, was £1.2m (2011: £1.4m).
LowfieldPark,
Bolton-upon-Dearne
Page 9
MJ Gleeson Group plc
Business Review continued
OPERAtINGRISkStAtEMENt
The Group has established risk management procedures, involving the identification, control and monitoring of risks at various levels
within the organisation. These risks include but are not limited to the following:
RiskscommontotheGroup
Funding
The Group must have sufficient cash resources and facilities to finance its operations.
Health&safety
The Group must have adequate systems and procedures in place to mitigate, as far as possible, the
dangers inherent in the execution of work in the Group’s continuing businesses.
People
Insurance
The Group must attract and retain the right people to ensure the Group’s long-term success.
The Group must maintain suitable insurance arrangements to underpin and support the many areas in
which the Group is exposed to risk or loss.
Informationtechnology
The Group must have suitable systems to ensure that a reliable flow of information operates throughout
the Group and that the risk of system loss is mitigated by appropriate contingency plans.
RisksspecifictoGleesonHomes
Economicconditions
The housebuilding industry is sensitive to availability of mortgage finance, employment levels, private
and buy-to-let housing demand, interest rates, and consumer confidence.
RisksspecifictoGleesonStrategicLand
Planning
The lack of precision in the Government’s new National Planning Policy Framework may have a negative
impact upon the timing of planning consents because of the need to take more applications to Appeal.
RisksspecifictoGleesonCapitalSolutions
Bidcosts
Substantial bid costs can be incurred, without recovery, when seeking to win new projects.
Risksspecifictobusinessesinrun-off
EngineeringandBuildingContracting
Completionof
retainedprojects
Latentdefects
These businesses must complete outstanding work on retained projects within the provisions made by
management.
The Group is exposed to any latent defects that may arise on completed projects during the liability
period. Rectification of the defects must be completed within the provisions made by management.
Page 10
MJ Gleeson Group plc
Gleeson Capital Solutions recorded an operating profit of £0.4m
(2011: £0.1m). The result for the year included the £0.3m profit
on sale of three PFI investments which generated gross proceeds
of £7.5m. The sole project for which Gleeson Capital Solutions
is bidding did not achieve financial close during the year.
Gleeson Commercial Property Developments made an operating
profit of £0.2m (2011: loss £27k) due to the release of a surplus
provision following the early termination of a lease.
Gleeson Construction Services, the continuing element of which
comprises the run-off of the Gleeson Building Contracting
Division, recorded revenue of £1.1m (2011: £0.1m), on which an
operating loss of £0.1m (2011: £0.1m) was recorded.
FINANCEREVIEW
Overview
The profit before tax from continuing operations increased by
£2.3m to £3.8m (2011: £1.5m). Both of the main trading
businesses recorded much improved results, with Gleeson Homes
returning to profitability and Gleeson Strategic Land increasing
its operating profit by 35%.
keyperformanceindicators
Continuingoperations
Revenue
Operating profit
2012
2011
£41.9m
£3.3m
£41.4m
£0.9m
Continuingoperations
Gleeson Homes recorded an operating profit of £0.3m (2011: loss
£0.4m) on revenue of £32.6m (2011: £35.4m). The decrease in
revenue reflects the overall lower number of completed sales in
the year of 279 homes (2011: 286 homes). Sales of private
development homes increased by 50% to 255 (2011: 170) with
sales to RSLs reducing to 24 units (2011: 116). The average
selling price decreased by 6%, from £124,000 to £116,000 due to
the Group’s policy of progressively increasing the number of units
sold in the North of England. Included within the operating result
are the following exceptional credits:
2012
2011
OfficialopeningbyCoucillorO’Bryne
Reversal of inventories write downs
and contract provisions
£2.9m
£1.9m
Release of restructuring provisions
£0.1m
£1.6m
total
£3.0m
£3.5m
Gleeson Strategic Land recorded an operating profit of £3.7m
(2011: £2.7m) on revenue of £8.2m (2011: £5.8m) following the
sale of five sites, comprising 228 acres.
CawdorPark
CawdorPark,
Liverpool
Page 11
MJ Gleeson Group plc
Business Review continued
CulchethCroft,
Manchester
Page 12
Discontinuedoperations
Discontinued operations comprise the assets and liabilities of the
Gleeson Engineering Division of Gleeson Construction Services
which were not sold to Black & Veatch in October 2006. The
Division generated revenue of £38k (2011: £0.4m). An operating
loss of £37k (2011: £73k) was recorded.
Interest
Financial income of £0.6m (2011: £0.8m) consists of interest
earned on bank deposits, loans to joint ventures and the unwinding
of discounts on deferred receipts. Financial income was lower
than in the previous year mainly as a result of a reduced level of
discount being unwound due to a lower level of deferred receipts
outstanding.
Financial expenses of £19k (2011: £0.2m) consist of interest
payable on bank loans and overdrafts, bank charges and the
unwinding of discounts on deferred payments. Financial expenses
are lower in the current year due to lower bank charges and a
reduced level of discount being unwound in consequence of a
lower level of deferred payments outstanding.
tax
A net tax charge for continuing operations, excluding tax for joint
ventures, of £0.2m (2011: £42k credit) has been recorded in the
Income Statement. The Group now has £83.1m (2011: £85.6m)
of tax losses which can be carried forward indefinitely.
The total tax charge, including tax on discontinued operations
and tax attributable to joint ventures, was £0.1m (2011: £3k).
The net deferred tax asset recorded within the Balance Sheet
totals £0.7m (2011: £0.9m).
Earningspershare
Basic and diluted earnings per share were 6.9p (2011: 2.9p). For
continuing operations only, the basic and diluted earnings per
share were 6.9p (2011: 3.0p).
Dividend
A special dividend of 5p a share was paid to shareholders in
December 2011, at a total cost of £2.6m.
The Board does not propose a final dividend for the year ended
30 June 2012.
Disposals
The Group sold three of its PFI investments in October 2011. The
gross proceeds from the sale totalled £7.5m, with the profit on
sale of £0.3m.
MJ Gleeson Group plc
In the previous year, the Group disposed of the Operational
Management part of the Gleeson Capital Solutions business unit
to Pario Limited on 31 March 2011. There were no proceeds, gain
or loss for the disposal.
Balancesheet
At 30 June 2012, shareholders’ funds totalled £100.4m
(2011: £99.2m).
In the year, non-current assets were unchanged at £12.7m
(2011: £12.7m), which included an increase in Plant & Equipment
by £0.7m, with the acquisition of site equipment and the
capitalisation of show home setups; Loans and other investment
decreasing by £2.0m due to reclassification as Assets classified
as held for sale; Trade and other receivables increasing by £1.5m
due to further shared equity sales; and £0.2m decrease in
Deferred tax assets.
Current assets decreased by £4.3m to £103.5m (2011: £107.8m)
due to a £3.9m reduction in cash, £4.9m net reduction in Assets
classified as held for sale, a £2.5m reduction in trade and other
receivables, and a £7.0m increase in inventories.
Non-current liabilities decreased by £0.3m due to utilisation and
release of provisions, and current liabilities decreased by £5.3m,
including a decrease in deferred land payments by £3.6m and a
decrease in accruals by £2.2m.
Cashflow
The Group utilised £3.9m (2011: £0.7m) of cash in the
year, resulting in a net cash balance at 30 June 2012 of £13.9m
(2011: £17.8m).
Operating cash flows, including working capital movements,
utilised £8.6m (2011: generated £0.5m). Cash generated from
investing activities totalled £7.2m (2011: utilised £1.2m), which
included £7.2m net proceeds from the sale of three PFI
investments. Net cash flows from financing activities utilised
£2.5m (2011: £47k), including £2.6m (2011: £nil) on dividend
payments.
treasuryriskmanagement
The Group’s cash balances are centrally pooled and invested,
ensuring the best available returns are achieved consistent with
retaining sufficient liquidity for the Group’s operations. The
Group only deposits funds with financial institutions which have
a minimum credit rating of AA.
As the Group operates wholly within the UK, there is no
requirement for currency risk management.
Bankfacilities
The Group does not currently have a dedicated borrowing
facility.
Pension
The Group contributes to a defined contribution pension scheme.
A charge of £0.3m (2011: £0.3m) was recorded in the Income
Statement for pension contributions. The Group has no exposure
to defined benefit pension plans.
Goingconcern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position, are
set out in the Business Review. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities
are described above.
The Group meets its day-to-day working capital requirements
through its cash resources. Current economic conditions
inevitably create a degree of uncertainty, particularly over the
level of demand for the Group’s goods and services and the
availability of bank finance. However, the Group’s forecasts and
projections show that the Group is able to operate without the
need for debt finance for the foreseeable future.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern
basis in preparing the annual Report and Accounts.
Page 13
MJ Gleeson Group plc
Corporate Social Responsibility Report
Introduction
The Group recognises the importance that its activities have on
all its stakeholders, including shareholders, employees, customers,
the supply chain and the communities in which it operates.
Corporategovernance
The important aspects of the Group’s corporate governance are
set out in the Corporate Governance Report.
Health&safety
Health and Safety is of paramount importance to the Group and
is considered to be a key risk.
There have been no prohibition or improvement notices issued
to the Group during the year. There was one injury reportable
in the year under the Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations (RIDDOR). In the previous
2 years, the Group reported two and three injuries per year
respectively under RIDDOR.
GleesonApprenticeship
Schemes
Page 14
The overall accident
incidence rate (“AIR”) was zero
(2011: negligible) in spite of a significant increase in construction
activity. The AIR is an industry-wide indicator of health & safety
performance. The Group’s AIR has remained significantly
below the construction/housebuilding industry average of
493 injuries per 100,000 employees in the last 3 years, as
published by the HBF (Housebuilders Federation) and the Health
& Safety Executive.
CommunityMatters
The Group is heavily engaged in housing regeneration, and
its work is therefore at the heart of the communities where
this regeneration takes place. The Group is committed
to improving these communities and creating positive and long
term enhancement of the environment and the life of the
community itself.
The Group understands the importance of involving the
community before and during the construction of our
developments, and leaving a legacy once our works are
complete. The following are just some of the ways the Group
helps local communities:
• The Gleeson Community Sports Foundation – Our sports
foundation provides sponsorship opportunities for local junior
sports clubs. Local teams are invited to apply annually for
funding towards sports kit.
• Engagement with local schools – We work with schools to
educate children on the dangers of playing on building sites
and coordinate competitions and projects for pupils
throughout our developments.
• Apprenticeship Schemes – We are dedicated to giving people
the opportunity to start a career in the housebuilding industry.
We provide training packages for local unemployed people to
include apprenticeships in conjunction with a local college.
• Local jobs for local people – We are committed to giving
priority of employment to people living within two miles of
each site. We will assist local labour initiatives and make
lasting contributions to the local community and economy.
• Design for Disability – We carry out alterations to our homes
free of charge for disabled occupants. We acknowledge that
people with apparently identical disabilities may have totally
different needs and we are happy to adapt our homes to suit
their individual needs, such as installing wet rooms and
changes to the internal configuration.
MJ Gleeson Group plc
The Group has extended its apprenticeship programmes, and its
commitment to having all site based employees qualified and
fully carded Construction Skills Certification Scheme (CSCS) has
continued.
CharitableandPoliticalDonations
Charitable donations in 2012 totalled £3,475 (2011: £1,518).
No contributions were made to political parties (2011: £nil)
The group is commited to improving
the communities in which regeneration
is taking place and creating long term
enhancements of the environment and
the life of the community itself.
BoltonWoodsFootballClub
ArdwickLadsBoxingClub
theGleesonCommunity
SportsFoundation
Page 15
Environmentalmanagementsystems
The Group’s business units each have an environmental
management system which controls how environmental
performance is managed. At the operational level, the
environmental management system is contained within our
construction planning.
The Group’s environmental strategy is focused on:
• minimisation of environmental risk and maximisation of
environ mental opportunity; and
• ensuring knowledge and understanding is at a level where all
employees are aware of the environmental responsibilities
involved in their job.
Wastemanagement–minimisation&recycling
Site waste management plans are put in place at the start of
each project. Suitable recovery or disposal arrangements are
made for all waste. Arrangements are identified for dealing with
all waste in line with environmental agency recommendations.
timberpolicy
The Group has a timber purchasing policy which requires that all
timber provided or used in the manufacture of its products must
be obtained from a certified sustainable source. The Group
complied with this policy throughout the year.
Humanresources
It is the Group’s policy to ensure that it provides a safe,
professional and stable working environment, that all employees
are afforded equal opportunities and free from unlawful
discrimination regardless of their age, sex, colour, race, religion
or ethnic origin and that disabled persons are not disadvantaged.
It is gratifying to note that through the ongoing uncertainties of
the housebuilding sector, the Group’s employees have remained
loyal and committed with the voluntary turnover rate and
sickness absence rate well below the national average.
The Group believes its employees are fundamental to its success
and has continued to invest in them through training and
development programmes. The Group actively encourages all of
its employees to be fully engaged in the identification of their
own training needs in order to achieve their full potential and to
meet the requirements of the business.
Individual employee performance is regularly reviewed using the
Group’s Performance Development Review process and
objectives and targets are set for personal development.
MJ Gleeson Group plc
Directors’ Report
Resultsanddividends
During the year, the Group made a profit after taxation of £3.6m
(2011: £1.5m). The total distribution for the year was £2.6m
(2011: £nil). The Board does not propose a final dividend for the
year ended 30 June 2012.
Directors
During the year, the following served as Directors:
Dermot Gleeson
Chairman
Jolyon Harrison
Executive Director
Alan Martin
Executive Director
Ross Ancell
Non-Executive Director and Senior
Independent Director
Colin Dearlove
Non-Executive Director
Christopher Mills
Non-Executive Director
At the next Annual General Meeting of the Company, to be held
on 7 December 2012, all of the Directors will, voluntarily, offer
themselves for re-election. Of the Directors standing for
re-election, Jolyon Harrison and Alan Martin hold service
contracts that may be terminated by the Company with a notice
period of one year. Directors’ biographies are shown on pages 2
and 3.
Directors’interests
The Directors held the following beneficial interests in the
ordinary share capital of the Company:
Director
Dermot Gleeson
Jolyon Harrison
Alan Martin
Ross Ancell
Colin Dearlove
20Sept
2012
30 June
2012
30 June
2011
1,053,086
1,053,086
1,053,086
1,154,612
1,154,190
1,117,767
10,012
9,591
7,774
–
–
–
–
–
–
Christopher Mills
14,450,640 a 14,450,640 a 11,081,215 a
issue has increased by 34,077 shares since the date of publication
of the last Report and Accounts, following the issue of shares to
Jolyon Harrison as payment of his annual bonus.
Substantialshareholdings
On 20 September 2012, the shareholdings noted below,
representing 3% or more of the issued share capital, had been
notified to the Company. In addition, as at 20 September 2012,
Capita IRG Trustees Limited held 339,759 ordinary shares as
trustees of the Employee Share Purchase Plan.
Nameofshareholder
Number
ofshares
Proportion
oftotal
North Atlantic Value LLP
14,450,640
27.40%
Schroder Investment Management
Limited
Mrs J C Cooper & spouse*
7,266,010
2,809,615
13.78%
5.33%
* of which 542,800 are held in discretionary trusts of which she is a
Trustee.
Plantandequipment
Information relating to changes in plant and equipment is given
in note 11 to the financial statements.
Creditorpaymentpolicy
Payment terms are agreed with the Group’s suppliers and every
effort is made to adhere to these terms. Payments are made
when it can be confirmed that goods and/or services have been
provided in accordance with the relevant contractual conditions.
The Group’s average trade creditor payment period at 30 June
2012 was 50 days (2011: 50 days).
DisclosureofinformationtoAuditors
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Auditors are
unaware, and each Director has taken all the steps that he ought
to have taken as a Director to make himself aware of any
relevant audit information and to establish that the auditors are
aware of that information.
(a) Shares are held in name of North Atlantic Value LLP, of which
Christopher Mills is a Member
Sharecapital
The Company has issued share capital of 52,730,235 ordinary
shares of two pence each, as at 20 September 2012. Further
details are given in note 28. The number of ordinary shares in
takeoversdirective
Pursuant to S.992 of the Companies Act 2006 which implements
the EU Takeovers Directive, the Company is required to
disclose certain additional information. The following gives
those disclosures which are not covered elsewhere in this
Annual Report.
Page 16
MJ Gleeson Group plc
The structure of the Company’s share capital is shown on page
16 and within note 28. The rights of shareholders are set out in
the Company’s Articles of Association (the “Articles”). The
holders of ordinary shares are entitled to receive the Company’s
reports and accounts, to attend and speak at general meetings
of the Company, to exercise voting rights in person or by
appointing a proxy, and to receive a dividend where declared or
paid out of profits available for such a purpose.
The Company’s Articles give the Board power to appoint
Directors and also requires these Directors to retire and submit
themselves for election at the following Annual General Meeting.
A Director who retires in this way is eligible for election, but is
not taken into account when deciding how many Directors should
retire by rotation at the Annual General Meeting. Pursuant to the
Articles, at every Annual General Meeting, at least one-third of
the current Directors must retire by rotation. The Articles
themselves may be amended by special resolution. Once again,
at this year’s Annual General Meeting, all Directors will,
voluntarily, offer themselves for re-election in the interests of
good corporate governance.
The Board of Directors is responsible for the management of the
business of the Company and may exercise all the powers of the
Company subject to the provisions of the Company’s
Memorandum and Articles. The Articles contain specific
provisions and restrictions regarding the Company’s power to
borrow money. Powers relating to the issuing and buying back of
shares are also included in the Articles and shareholders are
asked to renew such powers each year at the Annual General
Meeting.
The agreements that alter or terminate upon a change of control
of the Company following a takeover have been identified as the
M J Gleeson Group plc Share Purchase Plan, the M J Gleeson
Group plc Performance Share Plan, and the Bond Facility
Agreement provided by Zurich Insurance plc. In the event of a
takeover of the company the share option schemes/plans would
vest and the bond facility agreements would potentially lapse.
Auditors
KPMG Audit Plc was re-appointed by the members at the last
Annual General Meeting and is considered to be independent.
The Directors will propose a resolution to the members at the
Annual General Meeting to be held on 7 December 2012 to
re-appoint KPMG Audit Plc as Auditors and to fix its
remuneration. KPMG Audit Plc has indicated its willingness to
continue in office.
AnnualGeneralMeeting
The Notice of the Annual General Meeting to be held on
7 December 2012, together with details of the Resolutions to be
considered, is set out in a separate circular.
Specialbusiness
As special business at the Annual General Meeting, the Directors
will seek shareholders’ approval of Resolutions as follows:
1. Resolution 10 seeks shareholders’ authority for the allotment
of Ordinary shares up to an aggregate maximum nominal
amount of £351,535 (being the nominal amount equal to
approximately one third of the issued share capital of the
Company) in substitution for all existing authorities. This
authority will expire at the conclusion of the next Annual
General Meeting or 15 months from the passing of the
resolution, if earlier.
2. Resolution 11 asks shareholders to waive their pre-emption
rights for a further year in respect of any rights issue and in
respect of the allotment of shares having a maximum
aggregate nominal value of £52,730 which is equivalent to
approximately 5% of the Company’s issued equity share capital
as at 20 September 2012.
3. Resolution 12 has been prepared in connection with the
renewal of the general authority to the Company to make
market purchases of its own shares having a maximum
aggregate nominal value of £105,460, being equivalent
to approximately 10% of the issued share capital as at
20 September 2012. The Directors would exercise this
authority only if they believed that to do so would be in the
interests of shareholders generally and would be likely to
result in an increase in earnings per share (“EPS”). Any EPS
targets included in employee share incentive schemes will be
adjusted to take account of any buyback.
4. Resolution 13 asks shareholders’ approval to call General
Meetings other than Annual General Meetings on not less than
14 clear days’ notice.
By order of the Board
AlanMartin
Company Secretary
20 September 2012
Page 17
MJ Gleeson Group plc
Directors’ Remuneration Report
Introduction
This report has been prepared in accordance with the Large and
Medium-Sized Companies and Groups (Accounts and Reports)
Regulations 2008. The report also meets the relevant
requirements of the Listing Rules of the Financial Services
Authority and describes how the Board has applied the principles
relating to Directors’ remuneration.
The Act requires the Auditors to report to the Company’s
members on the elements of the Remuneration Report that
require audit and to state whether in their opinion the report
has been properly prepared. To facilitate this, the report has
been divided into separate sections for audited and unaudited
information. Shareholders’ approval of this report will be sought
at the forthcoming Annual General Meeting.
INFORMAtIONNOtSuBJECttOAuDIt
RemunerationCommittee
The Remuneration Committee (“the Committee”) is a Board
Committee consisting entirely of Non-Executive Directors.
The following Directors were members of the Committee during
the year ended 30 June 2012: Ross Ancell (Chairman); Colin
Dearlove. The Secretary of the Committee is Alan Martin,
Company Secretary.
The Committee is responsible for recommending to the Board the
Group’s remuneration policy for the Executive Directors and such
other key employees as the Board may designate. The Committee
is also responsible for determining targets for any performance-
related pay schemes, the policy and scope of pension
arrangements and service agreements, termination payments
and compensation commitments for the Executive Directors. In
addition, the Committee gives guidance to the Chief Executive
Officer on pay policy matters for the Group as a whole. The terms
of reference of the Committee are available on the Group’s
website, or on request from the Company Secretary, and will also
be available at the location of the Annual General Meeting for a
period of 15 minutes in advance of the Meeting.
The Committee meets formally up to three times a year and at
such other times as the Chairman of the Committee shall require.
The Committee consults the Chairman of the Company, the Chief
Executive Officer and the Head of Human Resources concerning
its proposals. These individuals are not involved in the decisions
regarding their own remuneration. During the year, the
Committee received external professional advice from BDO LLP
on remuneration and share scheme issues. BDO LLP was selected
and appointed by the Remuneration Committee and has no other
connection with, nor provided any other services to, the Group.
Page 18
No one other than a Committee member is entitled to be present
at meetings unless invited by the Chairman of the Committee.
In formulating its recommendations, the Committee considered
pay and employment conditions throughout the Group and
complied with the Code.
The Committee met three times during the year and all members
were in attendance.
Remunerationpolicy
It is the Group’s policy to:
• set the remuneration of Executive Directors at a level which
will attract and retain executives of appropriate ability,
experience and integrity to manage the affairs of the Group;
• reward Executive Directors and senior managers below Board
level appropriately for their contributions to the success of the
Group but with reference to mid-market remuneration levels
offered by similar companies within the sector;
• ensure that a significant proportion of the Executive Directors’
overall remuneration is performance-related so that their
interests are more closely aligned with those of the shareholders;
• ensure that the performance targets in the short and long-term
incentive plans are challenging and are likely to result in
significantly enhanced total shareholder return; and
• ensure that regular contact is maintained with the principal
shareholders regarding remuneration matters.
The Committee believes that its policy is appropriate for the
Group and has no intention to amend it in the current year.
Nevertheless, the policy will be kept under regular review.
Basicsalary
The Committee reviews and makes recommendations regarding
the basic salary of the Executive Directors to the Board annually.
In making its recommendations, the Committee has regard to the
salaries paid to executives of comparable companies in the
housebuilding sector. Consideration is also given to the wider
remuneration environment, particularly in companies of a similar
size, and the performance and responsibilities of the Executive
Directors. Basic salary is the only element of remuneration that
is pensionable.
Benefitsinkind
Benefits in kind comprise free family medical insurance, a fuel
card and a company car or a car allowance.
Performance-relatedremuneration
Annualbonus
For the year ended 30 June 2012, the Executive Directors who
MJ Gleeson Group plc
held office throughout that year participated in an annual bonus
scheme under which they may potentially receive 100% of their
respective base salaries for achieving target performance. The
targets and range over which the bonus vests are set by the
Committee and are designed to be challenging and to produce
an equitable distribution of additional profits earned by superior
performance between the executive team and shareholders. The
performance measures for Alan Martin for the year ended 30 June
2012 were determined by the Committee to be based on
achieving a certain level of consolidated profit before tax and
also achieving a closing cash balance above a certain level. The
Committee determined that the performance measures for
Jolyon Harrison should be partially based upon the measures
noted above and also be based upon Gleeson Homes achieving a
certain level of profit before tax.
level, similar bonus
For senior managers below Board
arrangements are in place in order to incentivise and potentially
reward them through their ability to improve the performance
of their respective business units.
PerformanceSharePlan
The M J Gleeson Group plc Performance Share Plan (the “Plan”) was
approved by shareholders in 2007. The Plan generally provides for
provisional awards of shares worth up to 200% of an executive’s
basic salary each year. In December 2010, Jolyon Harrison and Alan
Martin were awarded shares worth 100% of base salary, with senior
managers being awarded shares worth up to 50% of their base salary.
Such awards will vest on the third anniversary of the date of award
to the extent that the performance targets have been met. For the
awards that were granted in December 2010 to vest, the Committee
resolved to impose targets for total shareholder return (“TSR”) over
the three financial years from 1 July 2010 to 30 June 2013. Current
outstanding awards are shown within the table on page 21.
SharePurchasePlan
Employees are encouraged to participate in the success of the
Group by way of a Share Purchase Plan, in which all employees,
including the Executive Directors, with more than one year’s
service are entitled to participate. The Plan permits up to 5% of
salary (up to a maximum of £125 per month) to be invested in
the Company’s shares, which the Company matches on a one
share for every three purchased by the employee. Shares
procured under the scheme must be held for at least three years.
Jolyon Harrison and Alan Martin both participated in this scheme.
Pensions
Jolyon Harrison and Alan Martin are both members of the
Company’s defined contribution pension scheme, which is open
to all qualifying employees. The Company contributes a
percentage of basic salary to the scheme.
Externalappointments
At the discretion of the Board, Executive Directors are allowed
to act as Non-Executive Directors of other companies and retain
any fees relating to those posts.
During the year Jolyon Harrison served as a Non-Executive Director
of an independent private group of companies in respect of which
he is entitled to a fee of £30,000 which he will be allowed to retain.
Performancegraph
The graph below shows a comparison of the total shareholder return
for the Company for each of the last five financial years set against
the total shareholder return for the FTSE Fledgling Index, of which
the Company is a member, and a comparator index of listed
housebuilders. The Comparator Group consists of a group of listed
housebuilders comprising Barratt Developments, Bellway, Bovis
Homes, Persimmon, Redrow, Taylor Wimpey and Telford Homes.
MJGleeson&IndexComparison–30June2007to30June2012
120
100
80
60
40
20
0
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
MJ Gleeson Group
FTSE Fledgling
Housebuilders
Page 19
MJ Gleeson Group plc
Directors’ Remuneration Report continued
Servicecontracts
In accordance with the Code, it is the policy of the Company that the service contracts of all Directors appointed to the Board will be
rolling and have notice periods of one year or less, unless it is necessary to offer a longer period initially. In line with this policy, all of
the Executive Directors, who served during the year, had service contracts that may be terminated by the Company with a notice period
of one year.
If the Company exercises its right of termination for any reason (other than in circumstances of misconduct), it will generally pay the
Director concerned all remuneration and benefits to which he is entitled for any unexpired period of notice, plus any accrued bonus.
Details of the contracts of the Executive Directors who served during the year are set out below:
Director
Dateoflatest
servicecontact
Dateappointed
totheBoard
Datelast
elected/re-elected
Datenextduefor
election/re-election
Jolyon Harrison
23/10/2009
01/07/2010
09/12/2011
Alan Martin
01/01/2009
01/01/2009
09/12/2011
07/12/2012
07/12/2012
Non-ExecutiveDirectors
In the past, each of the Non-Executive Directors has been appointed for a three-year period. In future, as each Non-Executive Director’s
letter of appointment approaches renewal, the term of appointment will be for one year. Non-Executive Directors’ remuneration is
set by the Board and is benchmarked against the remuneration paid to Non-Executive Directors of similar organisations. The fees paid
to the Non-Executive Directors during the year ended 30 June 2012 are set out in the table on page 21 and comprise the whole of their
remuneration. They are not entitled to participate in any of the employee benefit schemes and are not eligible to join the pension
scheme. Save for any fees due for any unexpired period of notice or term of appointment, no compensation is due on termination of
their appointment.
Details of their letters of appointment are set out below:
Director
Date
appointedto
theBoard
Datefirst
electedby
themembers
Dateof
mostrecent
letterof
appointment
Dateof
expiry
Datelast
elected/
re-elected
Datenext
duefor
election/
re-election
Periodsince
firstelected
(complete
years)
Dermot Gleeson
27/11/1975
04/02/1976
01/10/2011
30/09/2012
09/12/2011
07/12/2012
Ross Ancell
01/10/2006
10/01/2007
01/10/2011
30/09/2012
10/12/2011
07/12/2012
Colin Dearlove
03/12/2007
12/12/2008
09/11/2011
02/12/2012
10/12/2011
07/12/2012
Christopher Mills
01/01/2009
11/12/2009
01/01/2009
31/12/2012
10/12/2011
07/12/2012
36
5
3
2
The notice period for the Chairman, Dermot Gleeson, is six months. The letters of appointment for the other Non-Executive Directors
provides for a notice period of one month.
Page 20
MJ Gleeson Group plc
INFORMAtIONSuBJECttOAuDIt
Directors’emoluments
The emoluments of the Directors for the years ended 30 June 2011 and 30 June 2012 are shown below:
Note
Fee/Basic
£000
Bonus
£000
Benefits
inkind
£000
Subtotal
£000
Pension
£000
total
2012
£000
Total
2011
£000
Chairman
Dermot Gleeson
ExecutiveDirectors
Jolyon Harrison
Alan Martin
Non-ExecutiveDirectors
Ross Ancell
Colin Dearlove
Christopher Mills
Terry Morgan
a
(a) Retired 30 June 2011
Shareoptionsandawards
Director
30June
2011
Jolyon Harrison
242,857
Alan Martin
138,888
80
314
180
30
30
25
-
-
200
105
-
-
-
-
1
21
19
-
-
-
--
81
535
304
30
30
25
-
47
45
-
-
-
-
81
582
349
30
30
25
-
41
410
268
30
30
25
30
659
305
41
1,005
92
1,097
834
Granted/
awarded
during
year
Exercised
during
year
Options
lapsed
30June
2012
Scheme
Market
valueon
dateof
price exercise
Exercise
Datefrom
which
option
maybe
exercised
Expiry
–
–
–
–
–
–
242,857
PSP
210.00p
138,888
PSP
210.00p
–
–
17/12/2013 17/12/2016
17/12/2013 17/12/2016
•
•
•
No payment was made in relation to the grant of any options.
The middle market price on 30 June 2012 was 107 pence and the range during the year to 30 June 2012 was from 99 pence to 132 pence.
During the year, a charge of £65,000 (2011: £118,000 credit) was recorded in the Income Statement for share options awarded to the Executive Directors.
Approval
This Report was approved by the Board on 20 September 2012.
By order of the Board.
AlanMartin
Company Secretary
20 September 2012
Page 21
MJ Gleeson Group plc
Corporate Governance
The Board is committed to the principles of corporate governance contained in the June 2010 Financial Reporting Council’s UK Corporate
Governance Code (“the Code”) and for which the Board is accountable to shareholders and will continue to take a practical view of the
financial implications for their implementation to a group of its size.
StatementofCompliancewiththeCombinedCode
The Company has complied with the Code’s provisions throughout the year, save as noted below.
Until the appointment on 1 July 2012 of Jolyon Harrison as Chief Executive Officer, the Group did not have a CEO since the retirement
of Chris Holt in September 2010. During this period, Alan Martin as Chief Operating Officer and Jolyon Harrison as Managing Director
of Gleeson Homes reported to Dermot Gleeson, as Chairman. The Board considered these arrangements to be a sensible and cost
effective temporary response to the Group’s circumstances and requirements. The Board was satisfied that there are adequate checks
and balances in place, not least through the presence of three Non-Executive Directors, two of whom are considered independent, to
prevent an undue concentration of power in the hands of an individual Director. The appointment of Jolyon Harrison as CEO marks the
end of what was always intended to be a short term arrangement.
BoardofDirectors
The Board is responsible to shareholders for the success of the Group. Its role is to set the strategic and financial framework within
which the Group operates, to monitor and review the performance of each of the business units and to ensure that the risks faced by
the Group are effectively managed. To facilitate this, the Board and its committees are provided with relevant and timely information
in advance of all meetings and when otherwise required. Due to the size and structure of the Group, all significant decisions are taken
at Board level. There is a formal schedule of matters that are reserved for a decision of the Board or its committees; these include the
approval of:
• strategy and financial policy;
• banking arrangements and any changes to them;
• interim and annual financial statements;
• risk management and internal control policy;
• major capital expenditure;
• acquisition of land;
• acquisitions and disposals;
• Board structure and composition;
• terms of reference of the Board’s sub-committees;
all of which were considered by the Board during the year.
At the date of this report, the Board comprises six Directors, four of whom are Non-Executive. Neither the Non-Executive Chairman,
who has previously served in an Executive capacity, nor Christopher Mills, who represents a major shareholder, North Atlantic Value
LLP, are considered to be “independent” within the definition of that term contained in the Code. All other Non-Executive Directors
are independent. The Directors’ biographies are set out on pages 2 and 3.
Following the introduction of s.175 of the Companies Act 2006 on 1 October 2008 and the authority given by shareholders at the 2008
Annual General Meeting to the Directors to authorise conflicts of interest, the Board has procedures in place to deal with conflicts of
interest. Under s.175, all Directors are under a duty to consider their positions fully at all times. They must advise the Chairman
immediately or, if the Chairman is conflicted, he must advise the Senior Independent Director. If a conflict is identified, permission or
refusal to authorise a conflict is given by the non-conflicted Directors subject to the appropriate quorum requirement being met without
counting the conflicted Director. The Board may vary or terminate the authorisation should the facts change or should the Board feel
it is no longer appropriate for such authorisation to be in place. A register of authorisations is maintained by the Company Secretary
which includes date of authorisation, expiry and comments on any special circumstances which might include the requirement of a
conflicted Director to absent himself from Board discussions or be precluded from receiving Board papers.
Page 22
MJ Gleeson Group plc
Ross Ancell is the Senior Independent Non-Executive Director.
Dermot Gleeson, Non-Executive Chairman, has previously been Executive Chairman and, prior to that, has held the post of Chairman
and Managing Director. The Board has considered the guidance set out in the Code and believes that it is in the Company’s best interests
that Dermot Gleeson be retained as Chairman.
The Chairman is responsible for leadership of the Board and ensuring its effectiveness. This role includes ensuring that the Directors
receive accurate, timely and clear information; facilitating the contribution of the Non-Executive Directors; and ensuring constructive
relations between the Executive and Non-Executive Directors.
During the year, the Board met on seven occasions. Board packs, which include a formal agenda, are circulated in advance of such
meetings. Attendance by individual Directors at Board meetings and by members at Committee meetings was as follows:
Noofscheduledmeetings
Attendance
Dermot Gleeson
Ross Ancell
Colin Dearlove
Christopher Mills
Jolyon Harrison
Alan Martin
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
7
7
6
7
5
7
7
4
*
4
4
*
**
***
3
***
3
3
*
****
***
2
2
2
2
*
*
***
*
Not a member of this Committee.
** Whilst not a member of this Committee, the Director was in attendance for the meetings to which he was invited.
*** Whilst not a member of this Committee, the Director was in attendance at all meetings
**** Whilst not a member of this Committee, the Director was in attendance for part of certain meetings.
The main purpose of these meetings is to permit the Board to receive regular reports on the performance of the Group and address a
wide range of key issues, including health & safety, operational performance, risk management and corporate strategy. Additional Board
meetings may be convened from time to time in response to specific circumstances.
During the course of the year, the Non-Executive Directors met without the Executive Directors present, both with and without the
Chairman being present.
The minutes of all meetings of the Board and of each of its Committees are recorded by the Company Secretary. As well as recording
the decisions taken, the minutes reflect any queries raised by the Directors and record any unresolved concerns.
On joining the Board, arrangements are made for all new Directors to meet their colleagues and other senior management, to ensure
an adequate induction to the Group.
Page 23
MJ Gleeson Group plc
Corporate Governance continued
All of the Directors have access to the advice and services of the Company Secretary and may, in furtherance of their duties, take
independent advice, at the Company’s expense. Training is arranged, as required.
On resignation, any concerns raised by an outgoing Director are circulated by the Chairman to the remaining members of the Board.
Directors and Officers’ Insurance is procured through the Company’s Insurance Brokers, Gallagher Heath Limited. The terms and
conditions are reviewed annually.
The Board continues to support the Malpractice Reporting Policy. The Policy has been communicated internally and is available for
review on the website.
Boardevaluation
During the year, under the leadership of the Chairman, the Board undertook an evaluation of its own performance. This was based on
completion of a detailed questionnaire and individual discussions between the Chairman and the Directors. Being a smaller listed
company, it was not considered necessary to have this year’s Board evaluation externally facilitated. Similarly, the Chairman of each
of the Audit, Remuneration and Nomination Committees conducted a performance review of each Board Committee. Ross Ancell, as
the Senior Independent Director, conducted an evaluation of the Chairman’s performance in conjunction with his Non-Executive Director
colleagues and with input from the other Executive Directors. The outcome and conclusions reached from the conduct of these
evaluations were discussed by the Board at its September Board Meeting. It was concluded that the Board, its Committees and the
Chairman continued to perform effectively.
AuditCommittee
The Audit Committee (“the Committee”) is a Board Committee consisting entirely of Non-Executive Directors. The following Directors
were members of the Committee during the year ended 30 June 2012:
Colin Dearlove (Chairman)
Ross Ancell
The Chairman invites the Chief Executive Officer and the Chief Financial Officer, and other senior management to attend, along with
the Group’s Auditors, when required.
The Committee’s formal terms of reference, which are reviewed annually, are available on the website and require it to:
• consider the appointment and fees of the Auditors;
• agree the nature and scope of the Audit;
• address the findings of the Audit;
• review and report to the Board on the half yearly and annual financial statements and on the Interim Management Statements;
• address any major accounting issues that arise;
• consider the position with regard to internal control, risk management and Internal Audit; and
• consider the award of any non-audit work to the Auditors.
The Committee meets at least three times a year and is afforded the opportunity to meet with the Auditors in the absence of the
Executive Directors.
The Committee receives a report from the Auditors highlighting any concerns and setting out management’s response to any
matters raised.
The Chief Financial Officer has responsibility for risk management and internal control and attends all Audit Committee meetings to
which he is invited to report on these matters.
Page 24
MJ Gleeson Group plc
During the year under review, the Audit Committee reviewed the independence of the Auditors. This included information about policies
and processes for maintaining independence, monitoring compliance with relevant requirements and ethical guidance, and consideration
of all relationships between the Group and the Auditors and their staff. The Audit Committee concluded that the Auditors were
independent.
The Audit Committee approves all non-audit services proposed to be undertaken by the Auditors. During 2012, in accordance with its
terms of reference, the Audit Committee approved the continuing appointment of KPMG as tax advisors to the Group.
RemunerationCommittee
Details of the Remuneration Committee are given in the Directors’ Remuneration Report which is set out on pages 18 to 21.
NominationCommittee
The Nomination Committee (“the Committee”) is a Board Committee consisting entirely of Non-Executive Directors. The following
Directors were members of the Committee during the year ended 30 June 2012:
Dermot Gleeson (Chairman)
Ross Ancell
Colin Dearlove
The Committee’s formal terms of reference, which are reviewed annually, are available on the website and require it to:
• regularly review the structure, size and composition of the Board and to make recommendations regarding any adjustments that are
considered to be necessary;
• identify and nominate for consideration candidates for any Board vacancies that may arise;
• put in place plans for succession, in particular to the Chairman and Chief Executive Officer; and
• make recommendations regarding the continued service (or not) of the Executive and Non-Executive Directors.
All Board appointments and re-appointments are considered by the Nomination Committee. In considering any new appointments to
the Board, the balance of skills, knowledge and experience on the Board are evaluated, together with the role to be filled and the
capabilities required to do so. All appointments are made on merit. There have been two scheduled meetings of the Committee, during
one of which its annual review of the Board was carried out.
Investorrelations
There is dialogue with institutional shareholders, including presentations following the publication of the Interim and Final Results and,
as appropriate, at other times during the year. Feedback from these meetings is provided to the Board.
The Board also welcomes the interest of private investors and believes that, in addition to the Annual Report and the Company’s
website, the Annual General Meeting (“AGM”) is an ideal forum at which to communicate with investors and encourage their
participation. At the AGM, the Chairman, together with the Chairmen of the Audit, Remuneration and Nomination Committees, will be
available to answer any relevant questions.
The text of the resolutions to be considered at the AGM appears in the Notice of Meeting. All proxy cards are to be returned to the
Company’s registrar which will collate the results and report to the Board. The number of proxy votes cast for and against each resolution
will be announced at the AGM and will also be set out in the subsequent Regulatory News Service announcement, a copy of which will
be made available on the website.
Detailed reviews of the performance and financial position of the Group’s operations are included in the Directors’ Report and Business
Review. The Board uses these, together with the Chairman’s Statement and this Report on Corporate Governance, to present a balanced
and understandable account of the Group’s position and prospects.
Page 25
MJ Gleeson Group plc
Corporate Governance continued
Riskmanagementandinternalcontrol
The Directors acknowledge their responsibility for the Group’s risk management procedures and systems of internal controls and for
reviewing their effectiveness. It should be recognised that all such systems and procedures are designed to manage rather than eliminate
the risk of failure to achieve business objectives, and can only provide reasonable, rather than absolute, assurance against material
misstatement or loss. Risk management and internal control within the Group’s operating units is delegated to the management
responsible for the operating unit, with the Board retaining ultimate responsibility.
The Board is of the view that there is an adequate ongoing process for identifying, evaluating and managing the Group’s significant
risks, which satisfies the internal control guidance for Directors detailed in provision C.2.1 of the Code. This process takes the form of
a formal Risk Management Policy supported by financial and management controls that are operated Group-wide and which are subject
to both internal review by the Chief Financial Officer and external review as part of the statutory audit carried out by the Auditors.
The Group’s system of internal control includes the following processes:
• The Board and management committees meet regularly to monitor performance against key performance indicators which include
cash management and financial and operational measures. A variety of financial and non-financial reports is produced to facilitate
this review process.
• The Board has established defined lines of authority to ensure that significant decisions are taken at an appropriate level.
• The Group employs individuals of appropriate calibre and provides any training that is necessary to enable them to perform their
role effectively. Key objectives and opportunities for improvement are identified through annual performance and development
reviews.
• Each business function has defined procedures and controls to identify and minimise business, operational and financial risks. These
procedures include segregation of duties, provision of regular performance information and exception reports, approval procedures
for key transactions and the maintenance of proper records. Compliance with these procedures and controls is certified annually by
management.
• The Group’s programme of insurance covers the major risks to the Group’s assets and business and is reviewed annually.
• The Chief Financial Officer has responsibility for the internal audit process and reports to the Audit Committee on such matters.
• Procedures are in place that require operating unit management to refer all investment and divestment decisions that exceed
prescribed limits in the first instance to the Group Capital Committee and then thereafter to the Board, for approval.
Regular reviews are undertaken in order to identify any changes in procedure that may be required in the light of changing
circumstances.
The overall Risk Management and Internal Control process is reviewed by both the Audit Committee and the Board. The Board also
confirms that the formal risk management process was reviewed during the year and continued to operate up to the date of approval
of these Accounts.
Page 26
MJ Gleeson Group plc
Statement of Directors’ Responsibilities
StAtEMENtOFDIRECtORS'RESPONSIBILItIESINRESPECtOFtHEANNuALREPORtANDtHEFINANCIALStAtEMENtS
The Directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law
they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group
and parent company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
ResponsibilitystatementoftheDirectorsinrespectoftheannualfinancialreport
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a
whole; and
• the Directors' report includes a fair review of the development and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties
that they face.
By order of the Board
JHarrison
Director
20 September 2012
AMartin
Director
Page 27
MJ Gleeson Group plc
Independent Auditors’ Report
INDEPENDENtAuDItORS'REPORttOtHEMEMBERSOFMJGLEESONGROuPPLC
We have audited the financial statements of MJ Gleeson Group plc for the year ended 30 June 2012 set out on pages 30 to 63. The
financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we
have formed.
RespectiveresponsibilitiesofDirectorsandAuditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 27, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an
opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scopeoftheauditofthefinancialstatements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 June 2012
and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied
in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
OpiniononothermattersprescribedbytheCompaniesAct2006
In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006;
• the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent
with the financial statements; and
• information given in the Corporate Governance Statement set out on pages 22 to 26 with respect to internal control and risk
management systems in relation to financial reporting processes and about share capital structures is consistent with the financial
statements.
Page 28
MJ Gleeson Group plc
Mattersonwhichwearerequiredtoreportbyexception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a Corporate Governance Statement has not been prepared by the company.
Under the Listing Rules we are required to review:
• the Directors’ statement, set out on page 13, in relation to going concern;
• the part of the Corporate Governance Statement on page 22 relating to the company’s compliance with the nine provisions of the
UK Corporate Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on Directors’ remuneration.
ChrisHearld(SeniorStatutoryAuditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
1 The Embankment
Neville Street
Leeds LS1 4DW
20 September 2012
Page 29
MJ Gleeson Group plc
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2012
Note
Continuingoperations
Revenue
Cost of sales
Grossprofit
Administrative expenses
Profit on sale of investment properties
Profit on sales of assets held for sale
Share of profit of joint ventures (net of tax)
13
Operatingprofit/(loss)
Financial income
Financial expenses
Profit/(loss)beforetax
Tax
Profit/(loss)fortheyearfromcontinuingoperations
Discontinuedoperations
Loss for the year from discontinued operations
(net of tax)
Profit fortheyearattributableto
equityholdersoftheparentcompany
Othercomprehensiveincome
Share of joint venture's cashflow hedges
totalcomprehensiveincomefortheyearattributable
toequityholdersofparentcompany
Earnings pershareattributableto
equityholdersofparentcompany
Basic and diluted
Earnings persharefrom
continuingoperations
Basic and diluted
7
7
8
3
10
10
2012
2012
Before Exceptional
items
Note4
£000
exceptional
items
£000
2012
£000
2011
Before
exceptional
items
£000
2011
Exceptional
items
Note 4
£000
2011
£000
41,937
-
41,937
41,353
-
41,353
(33,329)
2,879
(30,450)
(37,181)
1,821
(35,360)
8,608
2,879
11,487
4,172
1,821
5,993
(8,753)
76
(8,677)
(7,123)
1,648
(5,475)
101
341
3
300
561
(19)
842
-
-
-
101
341
3
18
-
392
-
-
-
2,955
3,255
(2,541)
3,469
18
-
392
928
-
-
561
(19)
793
(179)
-
-
793
(179)
2,955
3,797
(1,927)
3,469
1,542
(154)
-
(154)
42
-
42
688
2,955
3,643
(1,885)
3,469
1,584
(37)
3,606
(3)
3,603
6.86
6.93
(73)
1,511
(40)
1,471
2.88
3.02
The notes on pages 36 to 63 form part of these financial statements.
Page 30
Consolidated Statement of Financial Position
at 30 June 2012
MJ Gleeson Group plc
Non-currentassets
Plant and equipment
Investment properties
Investments in joint ventures
Loans and other investments
Investments in subsidiaries
Trade and other receivables
Deferred tax assets
Currentassets
Inventories
Trade and other receivables
UK corporation tax
Cash and cash equivalents
Assets classified as held for sale
totalassets
Non-currentliabilities
Provisions
Currentliabilities
Trade and other payables
Provisions
totalliabilities
Netassets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
totalequity
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
Note
11
12
13
14
15
17
24
16
17
8
26
18
22
21
22
28
922
748
15
258
803
15
47
-
-
4,896
6,902
4,896
-
5,369
725
-
30,200
3,838
894
-
420
52
-
-
4,896
31,001
-
567
12,675
12,710
35,563
36,516
76,495
11,183
15
13,862
1,990
69,497
13,679
-
-
58,636
49,814
-
-
-
17,763
6,868
9,011
17,975
-
-
103,545
107,807
67,647
67,789
116,220
120,517
103,210
104,305
(219)
(219)
(480)
(480)
-
-
-
-
(15,249)
(19,809)
(22,425)
(24,700)
(358)
(1,075)
(100)
(65)
(15,607)
(20,884)
(22,525)
(24,765)
(15,826)
(21,364)
(22,525)
(24,765)
100,394
99,153
80,685
79,540
1,055
6,114
120
1,054
6,039
120
1,055
6,114
120
1,054
6,039
120
93,105
91,940
73,396
72,327
100,394
99,153
80,685
79,540
The financial statements were approved by the Board of Directors on 20 September 2012 and were signed on its behalf by:
JHarrison
Director
AMartin
Director
The notes on pages 36 to 63 form part of these financial statements.
Page 31
MJ Gleeson Group plc
Consolidated Statement of Changes in Equity
for the year ended 30 June 2012
GROuP
At1July2010
totalcomprehensiveincomefortheperiod
Profit for the period
Othercomprehensiveincome
Cashflow hedges
totalcomprehensiveincomefortheperiod
transactionswithowners,recordeddirectlyinequity
Contributionsanddistributionstoowners
Share issue
Purchase of own shares
Share-based payments
transactionswithowners,recordeddirectlyinequity
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Note
total
£000
1,053
5,969
120
90,701
97,843
-
-
-
1
-
-
1
-
-
-
70
-
-
70
-
-
-
-
-
-
-
1,511
1,511
(40)
(40)
1,471
1,471
-
(118)
(114)
(232)
71
(118)
(114)
(161)
At30June2011
1,054
6,039
120
91,940
99,153
totalcomprehensiveincomefortheperiod
Profit for the period
Othercomprehensiveincome
Cashflow hedges
totalcomprehensiveincomefortheperiod
transactionswithowners,recordeddirectlyinequity
Contributionsanddistributionstoowners
Share issue
Own shares disposed
Share-based payments
Dividends
transactionswithowners,recordeddirectlyinequity
9
-
-
-
1
-
-
-
1
-
-
-
75
-
-
-
75
-
-
-
-
-
-
-
-
3,606
3,606
(3)
(3)
3,603
3,603
-
39
149
76
39
149
(2,626)
(2,626)
(2,438)
(2,362)
At30June2012
1,055
6,114
120
93,105
100,394
Page 32
MJ Gleeson Group plc
COMPANy
At1July2010
totalcomprehensiveincomefortheperiod
Profit for the period
totalcomprehensiveincomefortheperiod
transactionswithowners,recordeddirectlyinequity
Contributionsanddistributionstoowners
Share issue
Purchase of own shares
Share-based payments
transactionswithowners,recordeddirectlyinequity
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Note
total
£000
1,053
5,969
120
66,873
74,015
-
-
1
-
-
1
-
-
70
-
-
70
-
-
-
-
-
-
5,818
5,818
5,818
5,818
-
(250)
(114)
(364)
71
(250)
(114)
(293)
At30June2011
1,054
6,039
120
72,327
79,540
totalcomprehensiveincomefortheperiod
Profit for the period
totalcomprehensiveincomefortheperiod
transactionswithowners,recordeddirectlyinequity
Contributionsanddistributionstoowners
Share issue
Purchase of own shares
Share-based payments
Dividends
transactionswithowners,recordeddirectlyinequity
-
-
1
-
-
-
1
-
-
75
-
-
-
75
-
-
-
-
-
-
-
3,739
3,739
3,739
3,739
-
(193)
149
76
(193)
149
(2,626)
(2,626)
(2,670)
(2,594)
9
At30June2012
1,055
6,114
120
73,396
80,685
Page 33
MJ Gleeson Group plc
Consolidated Statement of Cashflow
for the year ended 30 June 2012
Operatingactivities
Profit before tax from continuing operations
Loss before tax from discontinued operations
Depreciation of plant and equipment
Share-based payments
Profit on sale of investment properties
Profit on sale of assets held for sale
Share of profit of joint ventures (net of tax)
Financial income
Financial expenses
Dividends received
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
Note
3
11
13
3,797
(37)
1,542
(73)
3,886
5,825
-
-
3,760
1,469
3,886
5,825
229
149
(101)
(341)
(3)
(561)
19
-
92
(114)
(5)
-
(392)
(808)
179
21
149
-
-
-
19
(114)
-
-
-
(1,175)
(1,026)
13
92
-
(4,760)
(6,302)
Operatingcashflowsbeforemovementsinworkingcapital
3,151
421
(1,866)
(1,506)
(Increase)/decrease in inventories
Decrease in receivables
Decrease in payables
Increase in amounts due from subsidiary undertakings
(6,998)
810
6,580
5,749
(5,545)
(12,214)
-
53
(23)
-
-
(11,003)
-
629
(1,485)
(8,448)
Cash(utilised)/generatedfromoperatingactivities
(8,582)
536
(12,839)
(10,810)
Tax received
Interest paid
-
(13)
218
(132)
-
(13)
41
(97)
Netcashflowsfromoperatingactivities
(8,595)
622
(12,852)
(10,866)
Page 34
MJ Gleeson Group plc
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
Note
Investingactivities
Proceeds from disposal of assets held for sale
Proceeds from disposal of investment properties
Interest received
Dividends received
Purchase of plant and equipment
Loans made to joint ventures
Impairment of investments
Repayment of loans to joint ventures and other investments
7,209
156
665
-
11
(893)
-
-
68
-
154
299
-
(200)
(1,999)
-
511
-
-
1,086
4,760
(16)
-
800
1
Netcashflowsfrominvestingactivities
7,205
(1,235)
6,631
Financingactivities
Proceeds from issue of shares
Purchase of own shares
Own shares disposed
Dividends paid
76
-
39
9
(2,626)
71
(118)
-
-
76
(193)
-
(2,626)
-
-
1,172
6,302
-
-
-
1,000
8,474
71
(250)
-
-
Netcashflowsfromfinancingactivities
(2,511)
(47)
(2,743)
(179)
Netdecreaseincashandcashequivalents
Cashandcashequivalentsatbeginningofyear
(3,901)
17,763
(660)
18,423
(8,964)
17,975
(2,571)
20,546
Cashandcashequivalentsatendofyear
26
13,862
17,763
9,011
17,975
Page 35
MJ Gleeson Group plc
Notes to the Financial Statements
for the year ended 30 June 2012
1. ACCOuNtINGPOLICIES
M J Gleeson Group plc ("the Company") is a company incorporated in the United Kingdom.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”) and equity account
the Group’s interest in joint ventures.
Statementofcompliance
Both the Company financial statements and the Group financial statements have been prepared and approved by the Directors in accordance
with International Financial Reporting Standards as adopted by the EU ("IFRSs").
Basisofpreparation
Assets and liabilities in the financial statements have been valued at historic cost except where otherwise indicated in these accounting policies.
Judgements made by management in the application of IFRSs, that have significant effect on the financial statements and estimates, include the
carrying value of land held for development, work-in-progress, investment in subsidiaries, loans to joint ventures, amounts recoverable on
contracts and trade receivables.
The Company has taken advantage of section 408 of the Companies Act 2006 and consequently the Income Statement of the parent company is
not presented as part of these accounts. The profit of the parent company for the financial year amounted to £3,738,000 (2011: £5,818,000).
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
Basisofconsolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary undertakings. Joint ventures
are accounted for using the equity method of accounting.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable
or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair value. Any excess of the fair value
of consideration given for the acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. In circumstances
where the fair values of the identifiable net assets exceed the cost of acquisition, the excess is immediately recognised in the income statement.
Revenuerecognition
Revenue represents the fair value of work done on contracts performed during the year on behalf of customers or the value of goods and services
delivered to customers. Revenue is recognised as follows:
• Revenue from homes sales, other than construction contracts, is recognised when contracts to sell are completed and title has passed.
• Revenue from property and land sales is recognised at the earlier of when contracts to sell are completed and title has passed or when
unconditional contracts to sell are exchanged.
• Revenue from rental income from investment properties is recognised as the Group becomes entitled to the income.
• Revenue from construction services activities represents the value of work carried out during the year, including amounts not invoiced.
Revenue and margin on construction contracts are recognised by reference to the stage of completion of the contract at the accounts date. The
stage of completion is determined by valuing the cost of the work completed at the accounts date and comparing this to the total forecasted
cost of the contract. Full provision is made for all forecasted losses. Variations in contract work, claims and incentive payments are included to
the extent that it is probable that they will result in revenue and that they are capable of being reliably measured.
Prudent provision against claims from customers or third parties is made in the year in which the Group becomes aware that a claim may arise.
Segmentreporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results
are reviewed regularly by the Chief Executive Officer to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available. Inter-segment pricing is determined on an arm’s length basis. Segment
results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the period to acquire plant and equipment.
Page 36
MJ Gleeson Group plc
Impairment:Financialassets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence
that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the
asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no
impairment loss had been recognised.
Impairment:Non-financialassets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised
in profit or loss.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no
impairment loss had been recognised.
Exceptionalitems
Items that are both material in size and unusual or infrequent in nature are presented as exceptional items in the Income Statement. The
Directors are of the opinion that the separate recording of exceptional items provides helpful information about the Group's underlying business
performance. Examples of events that may give rise to the classification of items as exceptional are the restructuring of existing and newly-
acquired businesses, gains or losses on the disposal of businesses or individual assets, and asset impairments, including land, work-in-progress
and amounts recoverable on construction contracts.
Restructuringcosts
Restructuring costs are recognised as exceptional items in the Income Statement when the Group has a detailed plan that has been communicated
to the affected parties. A liability is accrued for unpaid restructuring costs.
Leasing
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments
made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over
the period of the lease.
Financeincomeandexpenses
Finance income comprises interest income on funds invested, dividend income and the unwinding of discounts on deferred receipts. Interest
income is recognised as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date that
the Group’s right to receive payment is established.
Finance expenses comprise interest expense on borrowings and unwinding of the discount on deferred payments and provisions. All borrowing
costs are recognised in the income statement using the effective interest method.
Plantandequipment
Depreciation is charged so as to write off cost of assets over their estimated useful lives, using the straight-line method, on the following bases:
Plant and machinery
between 3 and 6 years
Depreciation of these assets is charged to the Income Statement.
Investmentproperties
Investment properties, which are largely ground rent properties held to earn rentals and/or for capital appreciation, are stated at their fair
values at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the Income
Statement in the period in which they arise.
Page 37
MJ Gleeson Group plc
Notes to the Financial Statements continued
The Group's freehold investment properties are carried at Directors' valuation. The following assumptions have been used to determine the
fair value:
i) a review of the current prices of similar properties in the same location and condition,
ii) a review of the current and future rental income for current and future leases and the cash outflows that are expected in respect of these
properties; and
iii) a review of submitted offers where the properties were being marketed for sale.
Assetsclassifiedasheldforsale
Assets classified as held for sale, represent a joint venture investment where the sale process has commenced and a sale within the next
12 months is expected. The assets are reviewed for impairment on classification as available for sale and any impairment is charged to the
Income Statement. The assets are reviewed again for impairment at the year end and any impairment is charged to the Income Statement.
Jointventures
A joint venture is an entity over which the Group is in a position to exercise joint control through participation in the financial and operating
policy decisions of the venture. The joint venture entity operates in the same way as other enterprises, except that a contractual arrangement
between the venturers establishes joint control over the economic activity of the entity. Joint ventures are accounted for using the equity
method of accounting. The Group's share of the results of joint ventures is reported in the income statement as part of the operating profit and
the net investment disclosed in the Balance Sheet. Revaluation gains and losses which arise on investment properties are recognised in the
Income Statement in share of joint venture results net of any related deferred tax.
Loansandotherinvestments
Loans are originally stated at fair value and subsequently carried at amortised cost less impairment. Other investments are stated at fair value,
with any resultant gains or losses taken to equity.
Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and the estimated costs necessary to make the sale. Deferred land purchases are included
in inventories at their net present values at original purchase date. Land options are included in inventories at the lower cost or net
realisable value.
Amountsduefromconstructioncontractcustomers
Amounts due from construction contract customers represent the value of work carried out at the balance sheet date, less a provision for
foreseeable losses less progress billings (see revenue recognition accounting policy).
Availableforsalefinancialassets
Available for sale financial assets due after more than one year, which represent receivables in respect of shared equity properties, are recorded
at fair value, being the amount receivable by the Group discounted to present day values. The difference between the amount receivable by
the Group and the initial fair value is credited over the deferred term to finance income, with the financial asset increasing to its full cash
settlement value on the anticipated receipt date. Credit risk is accounted for in determining fair values and appropriate discount factors are
applied. The Group holds a second charge over property sold under shared equity schemes.
tradereceivables
Trade receivables are initially measured at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised in the Income
Statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the
asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial
recognition.
Derivativefinancialinstruments
Derivative financial instruments (interest rate swaps) are used in joint ventures to hedge long term interest rate risk. These are recorded in the
joint venture at fair value. The fair value of interest rate swaps is the Group share of the estimated amount that the joint venture would receive
or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap
counterparties. The gain or loss on remeasurement to fair value is recognised immediately in the Income Statement of the joint venture. However,
where derivatives qualify for hedge accounting, recognition of the effective part of the hedge of any gain or loss on the derivative financial
instrument is recognised directly in the hedging reserve of the joint venture. Any ineffective portion of the hedge is recognised immediately in
the Income Statement of the joint venture. The recycling of cash flow hedged when the swaps are crystallised is recognised as a movement in
other comprehensive income.
Page 38
MJ Gleeson Group plc
Cashandcashequivalents
Cash and cash equivalents comprise cash on hand, demand deposits, other short-term highly liquid investments that are readily convertible to a
known amount of cash and are subject to an insignificant risk of changes in value, and bank overdrafts. The Group had no bank overdrafts at the
year end.
Discontinuedoperations
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of
operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of or has been abandoned.
Discontinued operations are presented in the income statement (including the comparative period) as a single line entry recording the gain or
loss of the discontinued operation and the gain or loss recognised on the remeasurement to fair value less costs to sell. If the discontinued
operations are sold, the net gain or loss from the sale is also recognised in the single line entry.
tradeandotherpayables
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest
rate method.
tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Income Statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying values of assets and liabilities for financial reporting purposes and the
values used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future and the Group can control the timing of
the reversal. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilised.
Employeebenefits
Obligations for contributions to defined contribution pension schemes are charged to the Income Statement in the period to which the
contributions relate.
Shareoptions
The share option schemes allow employees to acquire shares in the ultimate parent company; these awards are granted by the ultimate parent
company. The fair value of options granted is recognised as an employee expense, with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value
of the options granted is measured using the Monte Carlo valuation model, taking into account the terms and conditions upon which the options
were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where forfeiture
is due only to share prices not achieving the threshold for vesting. The cost of the share-based award relating to each subsidiary is calculated,
based on an appropriate apportionment, at the date of grant and recharged through intercompany.
OwnsharesheldbyEmployeeBenefittrusts
The Group has elected to treat the Employee Benefit Trusts (“EBT”) as separate legal entities and as subsidiaries of the parent. Any loan
made to the EBT is accounted for as an intercompany loan with the parent. These shares are not treasury shares as defined by the London
Stock Exchange.
Dividends
Dividends are recorded in the Group's financial statements when paid. Final dividends are recorded in the Group's financial statements in the
period in which they receive shareholder approval.
Criticalaccountingjudgementsandkeysourcesofestimationuncertainty
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
Page 39
MJ Gleeson Group plc
Notes to the Financial Statements continued
estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
The key judgement and sources of estimation uncertainty at the balance sheet date are:
Landandwork-in-progress
Valuations which include an estimation of costs to complete and remaining revenues are carried out at regular intervals throughout the year,
during which site development costs are allocated between units built in the current year and those to be built in future years. These assessments
include a degree of inherent uncertainty when estimating the profitability of a site and in assessing any impairment provisions which may be
required.
The Group conducted a review of inventory and, following cost savings and improvements in sales values, impairments which had been made in
a prior year were reversed to the extent that they were no longer required. The review was conducted on a site by site basis, using valuations
that incorporated selling price, based on local management and the Board’s assessment of market conditions existing at the balance sheet date.
Investmentsandinvestmentsinsubsidiaries
Investments and investments in subsidiaries are stated at the lower of cost and net realisable value, which is dependent upon management's
assessment of future trading activity and is therefore subject to a degree of inherent uncertainty.
Loanstojointventures
Loans to joint ventures are stated at the lower of the value of the loan and net realisable value, which is dependent upon management's assessment
of future trading activity of the joint venture and is therefore subject to a degree of inherent uncertainty.
Amountsrecoverableoncontractsandtradereceivables
Management has reviewed the recoverability of amounts recoverable on contracts and trade receivables, which is dependent upon management's
assessment the recoverability of receivables and is therefore subject to a degree of inherent uncertainty.
Availableforsalefinancialassets(sharedequity)
Management has reviewed the valuation of the available for sale financial assets in the light of current market conditions, expected house price
inflation, cost of money and the expected time to realisation of the assets and is therefore subject to a degree of inherent uncertainty.
Adoptionofnewandrevisedstandards
For the year ended 30 June 2012, there were no additional and relevant standards for the Group to adopt.
Standardsnotyetapplied
There are a number of standards and interpretations issued by the International Accounting Standards Board that are effective for
financial statements after this reporting period. The following have not been adopted by the Group in preparing the accounts for the year ended
30 June 2012:
Standard
IFRS 9 'Financial Instruments'
IFRS 10 'Consolidated Financial Statements'
IFRS 11 'Joint Arrangements'
IFRS 12 'Disclosure of Interests in Other Entities'
IFRS 13 'Fair Value Measurement'
IAS 27 'Separate Financial Statements'
IAS 28 'Investments in Associates and Joint Ventures'
Dueforadoptiony/e
1 January 2015
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
The application of these standards and interpretations is not expected to have a material impact on the Group’s reported financial performance
or position. However, they may give rise to additional disclosures being made in the financial statements.
Page 40
MJ Gleeson Group plc
2. SEGMENtALANALySIS
For management purposes, the Group is organised into the following five operating divisions:
• Gleeson Homes focuses on estate regeneration and housing development on brownfield land in the North of England.
• Gleeson Strategic Land focuses on the purchase of options over land in the South of England.
• Gleeson Capital Solutions manages the Group's Private Financing Initiative investments in social housing.
• Gleeson Commercial Property Developments is engaged in commercial property development in the UK.
• Gleeson Construction Services includes constructions services in the UK.
Segment information about the Group's operations, including joint ventures, is presented below:
Revenue
Continuingactivities:
Gleeson Homes
Gleeson Strategic Land
Gleeson Capital Solutions
Gleeson Commercial Property Developments
Gleeson Construction Services
Discontinuedactivities:
Gleeson Construction Services
totalrevenue
Profitonactivities
Gleeson Homes
Gleeson Strategic Land
Gleeson Capital Solutions
Gleeson Commercial Property Developments
Gleeson Construction Services
Group activities
Financial income
Financial expenses
Profit before tax
Tax
Profit fortheyearfromcontinuingoperations
Loss for the year from discontinued operations (net of tax)
Profit fortheyearattributabletoequityholdersoftheparentcompany
2012
£000
2011
£000
32,634
8,173
-
3
1,127
41,937
38
38
35,440
5,770
-
2
141
41,353
353
353
41,975
41,706
306
3,655
411
183
(63)
4,492
(1,237)
561
(19)
3,797
(154)
3,643
(400)
2,710
110
(27)
(54)
2,339
(1,411)
793
(179)
1,542
42
1,584
(37)
(73)
3,606
1,511
All rental income from investment properties, totalling £4,000 (2011: £20,000), is reported within the Gleeson Homes segment. All revenue for
the Gleeson Construction Services segment is in relation to long term contracts. The revenue in the Gleeson Homes segment relates to the sale
of residential properties and land. All revenue for Gleeson Strategic Land segment is in relation to the sale of land. Service revenues are reported
by Gleeson Capital Solutions.
Page 41
MJ Gleeson Group plc
Notes to the Financial Statements continued
Balance sheet analysis of business segments:
Gleeson Homes
Gleeson Strategic Land
Gleeson Capital Solutions
Gleeson Commercial Property Developments
Gleeson Construction Services
Group Activities
Net cash
Other information:
Continuingoperations:
Gleeson Homes
Gleeson Strategic Land
Group Activities
2012
Assets
£000
2012
Liabilities
£000
2012
Netassets
£000
65,783
26,907
2,053
7
1,922
5,686
13,862
(7,315)
(3,077)
(76)
(74)
(4,051)
(1,233)
-
58,468
23,830
1,977
(67)
(2,129)
4,453
13,862
2011
Assets
£000
55,600
29,710
8,991
54
2,601
5,798
17,763
2011
Liabilities
£000
2011
Net assets
£000
(6,707)
(6,602)
(210)
(721)
(5,865)
(1,259)
-
48,893
23,108
8,781
(667)
(3,264)
4,539
17,763
116,220
(15,826)
100,394
120,517
(21,364)
99,153
2012
Capital
additions
£000
2012
Depre-
ciation
£000
2011
Capital
additions
£000
2011
Depre-
ciation
£000
866
11
16
893
205
3
21
229
197
3
-
200
73
1
18
92
All the Group’s operations are carried out in the United Kingdom.
3. DISCONtINuEDOPERAtIONS
The Group disposed of certain assets and liabilities of the Gleeson Engineering Division of Gleeson Construction Services to Black and Veatch
Limited (“B&V”) in a prior period and treated this as a discontinued operation. A small number of contracts were legally retained but the
operations were taken over by B&V on the Group’s behalf on a cost plus basis. Consequently, the Group has no involvement in the day-to-day
running of these contracts and acts as an intermediary. At the time of the sale, the remaining costs to complete the contracts were considered
insignificant in relation to the separately identifiable division as a whole.
Note
2012
£000
38
16
54
(91)
(37)
-
(37)
-
(37)
7
2011
£000
353
(353)
-
(88)
(88)
15
(73)
-
(73)
Revenue
Cost of sales
Grossprofit
Administrative expenses
Operatingloss
Financial income
Lossbeforetax
Tax
Lossfortheyearfromdiscontinuedoperations
Page 42
MJ Gleeson Group plc
Note
10
2012
p
2011
p
(0.07)
(0.14)
2012
£000
(37)
-
(37)
2011
£000
(88)
15
(73)
Losspershare:impactofdiscontinuedoperations
Basic and diluted
The cashflow statement includes the following relating to operating loss on discontinued operations:
Operating activities
Financing activities
4. ExCEPtIONALItEMS
Impairmentofinventoriesandcontractprovisions
At 30 June 2012, the Group conducted a review of the net realisable value of the land and work-in-progress carrying values of its sites in the light
of the condition of the UK housing market. Where the estimated net present realisable value is greater than the carrying value within the Balance
Sheet, the Group has partially reversed the impairment previously made.
Restructuringcosts
During the year, the Group reversed £76,000 (2011: £1,648,000) in relation to onerous lease provisions provided for and treated as exceptional
in prior years.
Exceptional income may be summarised as follows:
Re-instatement of inventories and contract provisions
Reversal of restructuring costs
2012
£000
2,879
76
2,955
2011
£000
1,821
1,648
3,469
In the year ended 30 June 2012, £2,955,000 (2011: £3,469,000) of exceptional income was reported in the Gleeson Homes division.
5. ExPENSESANDAuDItORS'REMuNERAtION
Profit for the year is stated after charging/(crediting):
Staff costs
Depreciation of plant and equipment (continuing operations)
Profit on sale of investment properties
Rental income from investment properties
Auditors' remuneration for:
• Audit of these financial statements
• Audit of financial statements of subsidiaries pursuant to legislation
• Taxation services
• Other services
Note
6
2012
£000
6,636
229
(101)
(4)
10
50
39
65
2011
£000
5,497
92
(5)
(20)
10
55
47
38
Page 43
MJ Gleeson Group plc
Notes to the Financial Statements continued
6. StAFFCOStS
Wages and salaries
Redundancy
Share-based payments
Social security costs
Other pension costs
Note
23
Group
2012
£000
5,560
16
149
595
316
6,636
Group
2011
£000
4,731
61
(114)
501
318
5,497
The average monthly number of employees (including Directors) during the year was:
Gleeson Homes
Gleeson Strategic Land
Gleeson Capital Solutions
Group Activities
The average number of people employed by the Company (including Directors) during the year was 11 (2011: 12).
Directors'remuneration
Full details of the Directors' remuneration is provided in the audited part of the Directors' Remuneration Report on pages 18 to 21.
7. FINANCIALINCOMEANDExPENSES
Continuingoperations
Discontinuedoperations
total
Company
2012
£000
Company
2011
£000
789
-
34
100
61
984
Group
2012
No.
111
8
-
11
130
2012
£000
199
240
1
121
561
-
(13)
(6)
(19)
747
23
(198)
95
100
767
Group
2011
No.
76
8
4
12
100
2011
£000
114
440
39
215
808
(2)
(119)
(58)
(179)
15
542
629
2012
£000
2011
£000
-
-
15
-
15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Group
Financialincome
Interest on bank deposits
Interest on joint venture loans
Other interest
Unwinding of discount on deferred receipts
Financialexpenses
Interest on bank overdrafts and loans
Bank charges
Unwinding of discount on deferred payments
2012
£000
199
240
1
121
561
-
(13)
(6)
(19)
2011
£000
114
440
24
215
793
(2)
(119)
(58)
(179)
Netfinancialincome
542
614
Note 20 discloses any further exposure for the Group to interest rate risk.
Page 44
MJ Gleeson Group plc
Continuingoperations
Discontinuedoperations
total
2011
£000
(201)
(201)
100
(14)
73
(42)
45
3
2012
£000
2011
£000
2012
£000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(15)
(15)
115
(8)
62
154
(9)
145
2011
£000
(201)
(201)
100
(14)
73
(42)
45
3
(15)
(15)
115
(8)
62
154
(9)
145
8. tAx
Group
Currenttax:
Adjustment in respect of prior years
Note
2012
£000
Deferredtax:
Current year expense
Adjustment in respect of prior years
Impact of rate change
Corporationtax expense/(credit)fortheyear
Joint ventures tax (credit)/expense for the year
totaltax
24
24
24
On 1 April 2012, the rate of Corporation tax reduced from 26% to 24%. The weighted average rate of corporation tax was 25.50% (2011: 27.75%)
of the estimated assessable profit for the year.
The charge for the year can be reconciled to the profit per the Income Statement as follows:
Profit before tax on continuing operations
Add joint venture tax for the year
Loss before tax from discontinued operations
Profit beforetax
taxchargeatstandardrate
Tax effect of:
Non-taxable income
Expenses that are not deductible in determining taxable profits
Losses arising in the year carried forward
Utilisation of tax losses not previously recognised
Changes in tax rates
Adjustments in respect of prior years
tax chargeandeffectivetaxratefortheyear
9. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
Special dividend paid on 16 December 2011 of 5p per share
There is no final dividend proposed for the year ended 30 June 2012 (2011: nil p per share)
2011
%
2012
%
Note
13
3
2012
£000
3,797
(9)
3,788
(37)
3,751
2011
£000
1,542
45
1,587
(73)
1,514
957
25.5
420
27.7
(125)
45
-
(771)
62
(23)
145
(3.3)
1.2
-
(20.6)
1.7
(0.6)
3.9
(164)
-
718
(829)
73
(215)
3
2012
£000
2,626
2,626
-
(10.8)
-
47.4
(54.8)
4.8
(14.2)
0.2
2011
£000
-
-
-
Page 45
MJ Gleeson Group plc
Notes to the Financial Statements continued
10. EARNINGS/(LOSS)PERSHARE
Fromcontinuinganddiscontinuedoperations
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purposes of basic earnings per share, being net profit or loss
attributable to equity holders of the parent company
Profit from continuing operations
Loss from discontinued operations
Profit for the purposes of basic and diluted earnings per share
Numberofshares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Fromcontinuingoperations
Basic and diluted
Fromdiscontinuedoperations
Basic and diluted
Fromcontinuinganddiscontinuedoperations
Basic and diluted
2012
£000
2011
£000
3,643
(37)
3,606
1,584
(73)
1,511
2012
No.000
2011
No. 000
52,574
52,458
-
-
52,574
52,458
2012
p
6.93
2012
p
2011
p
3.02
2011
p
(0.07)
(0.14)
2012
p
6.86
2011
p
2.88
Page 46
11. PLANtANDEquIPMENt
Costorvaluation
At 1 July 2010
Additions
Disposals
At 30 June 2011
Additions
Disposals
At 30 June 2012
Accumulateddepreciation
At 1 July 2010
Charge for the year
Disposals
At 30 June 2011
Charge for the year
Disposals
At 30 June 2012
Netbookvalue
At 30 June 2012
At 30 June 2011
At 1 July 2010
MJ Gleeson Group plc
Group
Plantand
machinery
£000
Company
Plantand
Machinery
£000
1,544
200
(81)
1,663
893
(24)
2,532
1,394
92
(81)
1,405
229
(24)
1,610
922
258
150
713
-
-
713
16
-
729
642
19
-
661
21
-
682
47
52
71
The Group has recorded a depreciation expense of £229,000 (2011: £92,000), of which £102,000 (2011: £30,000) has been charged in cost of sales
and £127,000 (2011: £62,000) in administrative expenses.
The Company has recorded a depreciation expense of £21,000 (2011: £19,000), all of which has been charged in administrative expenses.
12. INVEStMENtPROPERty
Group
Costorvaluation
At 1 July 2010
Additions
Disposals
At 30 June 2011
Disposals
At 30 June 2012
Investment properties are included at Directors' valuation.
Freehold
investment
property
£000
873
79
(149)
803
(55)
748
Page 47
MJ Gleeson Group plc
Notes to the Financial Statements continued
13. INtEREStINJOINtVENtuRES
Shareofresultsandinvestmentinjointventures
At 1 July
Share of results for the year
Share of tax expense
Share of profit in joint ventures (net of tax) for the year
Cashflow hedges
Note
2012
£000
(6)
9
Classified as assets held for sale
18
At 30 June
2012
£000
15
3
(3)
15
-
15
2011
£000
437
(45)
2011
£000
2,124
392
(40)
2,476
(2,461)
15
On 30 June 2012, an investment in Leeds Independent Living Accommodation Company Holdings Ltd was considered, under IFRS 5, to be Assets
held for sale (note 18). Profits for the year from this joint venture has been recorded within the share of results for the year.
On 30 June 2011, investments in AvantAge (Cheshire) Holdings Ltd, Chrysalis (Stanhope) Holdings Ltd, and Grove Village Holdings Ltd were
considered, under IFRS 5, to be Assets held for sale (note 18). Profits for the year from these joint ventures have been recorded within the share
of results for the prior year. These Joint Ventures were sold in the year.
Share of profit in joint ventures are included within the Gleeson Capital Solutions division.
AggregateamountsinrespectofGroupshareofjointventures
Note
18
2012
£000
1,534
19,215
(275)
(20,341)
133
(118)
15
-
15
2,010
(2,016)
(6)
9
3
2011
£000
6,376
58,451
(1,835)
(60,401)
2,591
(115)
2,476
(2,461)
15
9,720
(9,283)
437
(45)
392
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Cashflow hedges
Classified as assets held for sale
At 30 June
Revenue
Expenses
Profit before tax
Tax
Profit for the year
There are no significant contingent liabilities in the joint ventures.
Page 48
MJ Gleeson Group plc
Jointventure
Genesis Estates (Manchester) Ltd
Gleeson Black and Veatch Joint
Venture Partnership
Principalactivity
Residential property
development
Construction
Leeds Independent Living
Accommodation Company Holdings Ltd
Assisted housing
Percentageof
equityheld
Classof
shares
Countryof
incorporation
year
enddate2
50%
60% 1
33%
Ordinary
shares
A Ordinary
shares
England
26 March
England
30 June
England
31 December
The Gleeson Capital Solution Partners
Joint Venture Partnership
Construction - Engineering
35% 1
England
30 June
1 All decisions have to be taken unanimously by the shareholders.
2 Where the year end date of the joint venture is not coterminous with the Group's, management accounts are used to incorporate the joint venture's share
of results in line with the Group's year end.
Classofshares
The following describes the voting rights for those joint ventures which have issued A, B and C shares.
LeedsIndependentLivingAccommodationCompanyHoldingsLtd
A, B and C shares rank pari passu in all respects except as provided within Articles of Association with respect to appointment and removal of Directors,
transfer of shares and voting at general meetings.
14. LOANSANDOtHERINVEStMENtS
Grouploans&otherinvestments
At 1 July
Additions
Repayments
Classified as assets held for sale
At 30 June
Jointventureloans
Loans&otherinvestments
total
Note
18
2012
£000
2,006
240
(256)
(1,990)
2011
£000
4,484
2,442
(513)
(4,407)
-
2,006
2012
£000
4,896
-
-
-
4,896
2011
£000
4,896
-
-
-
4,896
2012
£000
6,902
240
(256)
(1,990)
2011
£000
9,380
2,442
(513)
(4,407)
4,896
6,902
On 30 June 2012, an investment in Leeds Independent Living Accommodation Company Holdings Ltd was considered, under IFRS 5, to be Assets
held for sale (note 18). Interest receivable on this loans has been recorded within financial income.
On 30 June 2011, loans to AvantAge (Cheshire) Holdings Limited, Chrysalis (Stanhope) Holdings Ltd, and Grove Village Holdings Limited
were considered, under IFRS 5, to be Assets held for sale (note 18). In the prior year, interest receivable on these loans was recorded within
financial income.
The loans and other investments represent equity in GB Group Holdings Limited, details of which are provided below. There is no interest on the
loan and no specified term.
The Directors consider that the carrying amount of loans and other investments approximates to their fair value.
Page 49
MJ Gleeson Group plc
Notes to the Financial Statements continued
Companyloans&otherinvestments
The Company has no loans.
At 1 July
At 30 June
Otherinvestments
2012
£000
4,896
4,896
2011
£000
4,896
4,896
The other investments represent equity in GB Group Holdings Limited, details of which are provided below.
The Directors consider that the carrying amount of loans and other investments approximates to their fair value.
Jointventureloans
The Group has made the following unsecured loans to:
Group
AvantAge (Cheshire) Holdings Ltd
Chrysalis (Stanhope) Holdings Ltd
Grove Village Holdings Ltd
Leeds Independent Living Accommodation
Company Holdings Ltd
Note
2012
£000
-
-
-
1,990
2011
£000
1,650
842
1,915
2,006
1,990
6,413
Interest
rate
terms
10.72%
10.50%
9.07%
12.00%
Joint venture sold in the year
Joint venture sold in the year
Joint venture sold in the year
25 years
Classified as held for sale
19
(1,990)
(4,407)
-
2,006
Joint venture loans are repayable at the earlier of the sale of the investment or the expiry of the term.
GBBuildingSolutionsLimitedandGBGroupHoldingsLimited(“GBGH”)
The Group has £4,896,000 invested in voting and non-voting ordinary shares that in total provide voting rights over 20% of the equity with the
remainder of the voting rights owned equally by the three executive directors. The operating and financial policies of GBGH are set by the three
executive directors. Dermot Gleeson sits on the Board of GBGH, in an oversight role as non-Executive Director, to monitor the performance
of GBGH in the light of the Group's investment in it. The shareholding structure and the fact that all significant operational decisions are
taken by the executive directors means that the Group, and Dermot Gleeson, are not able to exert any significant influence. The Group can
prevent GBGH from departing from the original business plan, which was to engage in contracting in the construction sector. There are no
transactions of significance between the parties. The asset is treated as an investment because the Group has no significant control or influence
over the company.
Following a review of the of the investment, no indicators of impairment have been identified.
Page 50
15. INVEStMENtSINSuBSIDIARIES
Cost
At 1 July 2010
Repayments
At 30 June 2011
Impairment in investments
Repayments
At30June2012
MJ Gleeson Group plc
Subsidiary
under-
takings
£000
32,001
(1,000)
31,001
(800)
(1)
30,200
The repayments in the year reflect the dissolution of dormant subsidiaries within the Group.
The repayments in the prior year reflect the reduction in the share capital of a number of non-operational companies within the Group.
Investments in subsidiary undertakings are included in the balance sheet at cost less any provision for diminution in value. At 30 June 2012, the
company impaired its investment in Gleeson Constrution Services where the net assets are below the cost of the investment.
Principalsubsidiaryundertakings
The following are the principal subsidiary undertakings of M J Gleeson Group plc. M J Gleeson Group plc owns 100% of the ordinary share capital
of the subsidiaries, all of which are incorporated in England.
RegisteredinEnglandandWalesandoperateintheunitedkingdom
Subsidiary
Principalactivity
Gleeson Capital Solutions Limited
Provision of bid management
Gleeson Construction Services Limited
Construction services
Gleeson Developments Limited
House building, housing regeneration and strategic land trading
Gleeson PFI Investments Limited
Investment in equity shares and loan stock of project companies delivering services
under the Government's Private Finance Initiative
Gleeson Properties Limited
Commercial property development
Gleeson Regeneration Limited
House building and housing regeneration
Gleeson Strategic Land Limited 1
Strategic land trading
Norfolk Park Limited
House building and housing regeneration
A full list of the subsidiary companies within the Group will be filed at Companies House with the Company's Annual Return.
1 shares held by Gleeson Developments Limited
16. INVENtORIES
Work-in-progress
2012
£000
76,495
76,495
2011
£000
69,497
69,497
During the year, there was a write up to net realisable value of work-in-progress of £2,879,000 (2011: £3,221,000) in relation to work-in-progress
previously impaired.
Page 51
MJ Gleeson Group plc
Notes to the Financial Statements continued
17. tRADEANDOtHERRECEIVABLES
Currentassets
Trade receivables
Amounts due from construction contract customers
VAT recoverable
Prepayments and accrued income
Amount due from subsidiary undertakings
Non-currentassets
Available for sale financial assets
Note
19
Group
2012
£000
5,564
1,540
489
3,590
-
Group
2011
£000
7,899
4,018
302
1,460
-
Company
2012
£000
Company
2011
£000
103
-
-
220
58,313
127
-
-
160
49,527
49,814
11,183
13,679
58,636
5,369
3,838
-
-
16,552
17,517
58,636
49,814
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value and includes an allowance for
doubtful debts estimated by the Group's management based on prior experience and their assessment of specific circumstances.
Available for sale financial assets due after more than one year, represent receivables in respect of shared equity properties. These are recorded
at fair value, being the amount receivable by the Group discounted to present day values. The difference between the nominal and the initial
fair value is credited over the deferred term to finance income, with the financial asset increasing to its full cash settlement value on the
anticipated receipt date. Credit risk is accounted for in determining fair values and appropriate discount factors are applied. The Group holds
a second charge over property sold under shared equity schemes.
See note 20 for reference to credit risk associated with trade receivables.
The Company recharges subsidiaries for all staff-related costs, insurance and interest on intercompany loans. The total costs recharged for the
year totalled £5,098,000 (2011: £4,386,000).
The Company charges interest at Bank of England base rate plus 1% on £64,432,000 (2011: £59,432,000) of the unimpaired intercompany loan
adjusted for bank balances held within the company. At 30 June 2012, this figure was £70,504,000 (2011: £62,138,000).
18. NON-CuRRENtASSEtSCLASSIFIEDASHELDFORSALE
At 30 June 2012, the joint venture within the Gleeson Capital Solutions division is presented as available for sale. Following an impairment review,
the directors do not consider it necessary to impair the joint ventures on reclassification.
At 30 June 2011, three joint ventures within the Gleeson Capital Solutions division are presented as available for sale. These were sold during
the year generating a profit of £341,000.
Investments in joint ventures
Loans and other investments
Note
13
14
Group
2012
£000
-
1,990
1,990
Group
2011
£000
2,461
4,407
6,868
The joint ventures investments at the start of the year which were classified as held for sale, all of which were sold in the year were:
AvantAge (Cheshire) Holdings Ltd
Chrysalis (Stanhope) Holdings Ltd
•
•
• Grove Village Holdings Ltd
The joint venture investment at 30 June 2012, which was classified as held for sale is:
•
Leeds Independent Living Accommodation Company Holdings Ltd
The Company does not hold any assets classified as held for sale.
Page 52
19. CONStRuCtIONCONtRACtS
Contracts in progress at the balance sheet date:
Amounts due from contract customers included in trade and other receivables
Amounts due to contract customers included in trade and other payables
Contract costs incurred plus recognised profits less recognised losses to date
Less: progress billings
MJ Gleeson Group plc
Note
17
21
Group
2012
£000
1,540
(60)
1,480
Group
2011
£000
4,018
(121)
3,897
932,736
(931,256)
1,032,679
(1,028,782)
1,480
3,897
At 30 June 2012, retentions held by customers for contract work amounted to £355,000 (2011: £661,000).
Amounts due to contract customers included in trade and other payables represent the balance of advances received on construction contracts
at the year end.
20. FINANCIALINStRuMENtS
Riskexposure
M J Gleeson Group plc operates a central treasury function providing services to the Group. The treasury function arranges loans and funding,
invests any surplus liquidity and manages financial risk. The treasury function is not a profit centre and no speculative trades are permitted or
executed. It operates within specific policies, agreed by the Board, to control and monitor financial risk within the Group. Prudent and controlled
use of financial instruments is permitted where appropriate, principally to reduce fluctuation in interest costs.
Cashandcashequivalents
Cash and cash equivalents comprises cash and short-term deposits with a maturity of three days or less held by the Group and the Company. The
carrying amount of these assets equals their fair value.
Creditrisk
The Group's principal financial assets are trade and other receivables and investments.
The Group's and Company's credit risk is primarily attributable to its trade and other receivables. The amounts presented in the balance sheet
are net of allowance for doubtful debts, estimated by the Group's management based on prior experience and their assessment of specific
circumstances.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings
assigned by international credit rating agencies.
At 30 June 2012, the Group's most significant customer, a housebuilder, accounted for £4,239,000 (2011: £4,245,000) of the trade and other
receivables carrying amount and relates to a deferred receipt. The Group's turnover with this customer in the year is £4,239,000 (2011: £Nil).
The Group has no other significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
tradereceivablesageing
The ageing of gross trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
Past due more than one year
All trade receivables are from UK customers.
Group
2012
£000
4,618
21
35
60
830
5,564
Group
2011
£000
7,363
40
109
68
319
7,899
Company
2012
£000
Company
2011
£000
-
-
-
41
62
54
-
7
-
66
103
127
Page 53
MJ Gleeson Group plc
Notes to the Financial Statements continued
Trade receivables past due more than one year largely represents retentions within the Gleeson Homes division.
In addition to the above, the Company has intercompany receivables which are repayable on demand.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 July
Impairment loss recognised
Balance at 30 June
Marketrisk
The Group has no significant exposure to currency risk or equity risk.
Group
2012
£000
84
7
91
Group
2011
£000
Company
2012
£000
Company
2011
£000
24
60
84
84
7
91
24
60
84
Interestraterisk
The Group closely monitors its exposure to variations in interest rates and, if this is significant as a result of the quantum of debt and level of
interest rates, will hedge the exposure using approved financial instruments such as interest rate swaps. At the year end, the Group had no debt
or related interest rate swaps.
A 1% increase in interest rates would improve the annual income of the Group and Company by £139,000 (2011: £178,000) based on the cash
balance at the year end. A 1% decrease would cause income to fall by the same amount.
Certain of the Group's joint ventures use interest rate swaps to manage their exposure to interest rate movement on their bank borrowings. The
Group's share of the interest rate swap contract with notional value of £17,753,000 (2011: £18,455,000) has fixed interest payments at an average
rate of 5.15% (2011: 5.15%) for periods up until 2035.
Groupshareofinterestpayablebynon-recoursefundedjointventuresonhedgedinstruments
Interest payable:
Within one year
Within two to five years
After five years
Group
2012
£000
1,038
3,719
9,207
Group
2011
£000
Company
2012
£000
Company
2011
£000
1,083
3,899
10,092
1,038
3,719
9,207
1,083
3,899
10,092
15,074
13,964
15,074
13,964
Liquidityrisk
The Group meets its day-to-day liquidity requirements through cashflow.
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates
at the balance sheet date and the periods in which they reprice:
2012
Effective
interest
rate
%
2012
Due
within
oneyear
£000
2011
Effective
interest
rate
%
0.00-0.50
2.10
6,862
7,000
0.00-0.50
1.00-1.18
13,862
2011
Due
within
one year
£000
10,763
7,000
17,763
Bank balances
Short term deposits
Net cash
Page 54
MJ Gleeson Group plc
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting
agreements:
Non-derivativefinancialliabilities
Asat30June2012
Trade and other payables 1
Asat30June2011
Trade and other payables 1
Carrying Contractual
cashflows
amount
£000
£000
6mths
orless
£000
6-12mths
£000
1-2yrs
£000
2-5yrs
£000
Morethan
5yrs
£000
12,094
(12,095)
(7,916)
12,094
(12,095)
(7,916)
(520)
(520)
(3,625)
(3,625)
13,973
(13,978)
(8,981)
13,973
(13,978)
(8,981)
(713)
(713)
(3,756)
(3,756)
(34)
(34)
(428)
(428)
-
-
(100)
(100)
1 Excludes amounts due to construction contract customers
The non-derivative financial liabilities of the Company in the current and prior year are predominantly intercompany balances which are payable
on demand. The external balances are payable within 6 months.
Exposuretocurrencyrisk
The Group has no exposure to foreign currency risk.
Fairvalues
The fair value of the Group's financial assets and liabilities are not materially different from the carrying values. The following summarises the
major methods and assumptions used in estimating the fair values of financial instruments.
The table below analyses financial instruments measured at fair value, into a fair value hierarchy based on the valuation technique used to
determine fair value.
Level 3: inputs for assets or liability that are not based on observable market data.
Available for sale financial assets
Note
17
2012
Level3
£000
5,369
5,369
2012
total
£000
5,369
5,369
2011
Level3
£000
3,838
3,838
2011
total
£000
3,838
3,838
Available for sale financial assets due after more than one year, represent receivables in respect of shared equity properties (see note 17).
Interestbearingloansandborrowings
Fair value is based on discounted expected future principal and interest cash flows.
Capitalmanagement
In line with the disclosure requirements of IAS 1, Presentation of Financial Statements, the Group regards its capital as being the equity as shown
in the Statement of changes in equity.
Note 28 to the Financial Statements provides details regarding the Company's share capital movements in the period and there were no breaches
of any requirements with regard to any relevant conditions imposed by either the UKLA or the Company's Articles of Association during the period
under review.
The primary objective of the Group's capital management is to ensure that it maintains investor, creditor and market confidence and to support
its business and to maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the
capital structure, the Group may adjust the dividend payment to shareholders and issue or return capital to shareholders.
Neither the Company nor any of the subsidiaries are subject to externally imposed capital requirements.
Page 55
MJ Gleeson Group plc
Notes to the Financial Statements continued
21. tRADEANDOtHERPAyABLES
Currentliabilities
Amounts due to construction contract customers
Trade payables
Other taxation and social security
VAT payable
Accruals and deferred income
Amount due to subsidiary undertakings
Note
19
Group
2012
£000
60
10,797
331
113
3,948
-
Group
2011
£000
Company
2012
£000
Company
2011
£000
121
13,228
267
50
6,143
-
-
339
195
113
486
21,292
-
513
170
50
458
23,509
24,700
15,249
19,809
22,425
The Directors consider that the carrying amount of trade payables approximates their fair value. There is no interest charge to the Company for
amounts due to subsidiaries.
22. PROVISIONS
At 1 July 2011
Provisions made during the year
Provisions used during the year
Provisions released during the year
At30June2012
Non-current
Current
Group
Restruc-
turing
costs
£000
95
35
(29)
(1)
100
-
100
100
Group
Group
Onerous
leases
£000
1,460
-
(732)
(251)
477
219
258
477
total
£000
1,555
35
(761)
(252)
577
219
358
577
Restructuring
The restructuring costs are to cover the cost of the redundancies where existing employees could not be retained within the Group.
Onerousleases
Onerous leases relate to sublet and vacant properties. Where the rent receivable on the properties is less than the rent payable, a provision
based on present value of the net cost is made to cover the expected shortfall. The lease commitments range from 1 to 5 years. Market conditions
have a significant impact on the assumptions for future cash flows.
At 1 July 2011
Provisions used during the year
At30June2012
Non-current
Current
Page 56
Company
Restruc-
turing
costs
£000
65
35
100
-
100
100
Company
total
£000
65
35
100
-
100
100
MJ Gleeson Group plc
23. EMPLOyEEBENEFItS
Definedcontributionpensionplan
The Group operates a defined contribution pension plan. The assets of the pension plan are held separately from those of the Group in funds
under the control of the trustees.
Group
The total pension cost charged to the Income Statement of £316,000 (2011: £318,000) represents contributions payable to the defined contribution
pension plan by the Group at rates specified in the plan rules. At 30 June 2012, contributions of £40,000 (2011: £37,000) due in respect of the
current reporting period had not been paid over to the pension plan. Since the year end, this amount has been paid.
Company
The total pension cost charged to the Income Statement of £61,000 (2011: £100,000) represents contributions payable to the defined contribution
pension plan by the Company at rates specified in the plan rules.
24. DEFERREDtAx
Group
The deferred tax assets recognised by the Group and movements thereon during the current and prior year are as follows:
At 1 July 2010
Charge to income
Impact of rate change
At 30 June 2011
Charge to income
Impact of rate change
At 30 June 2012
An analysis of the deferred tax balances for financial reporting purposes is as follows:
Deferred tax asset
Deferred tax liabilities
Plantand
machinery
£000
Short-term
timing
differences
£000
951
(86)
(67)
798
(89)
(56)
653
102
-
(6)
96
(18)
(6)
72
Group
2012
£000
725
-
725
total
£000
1,053
(86)
(73)
894
(107)
(62)
725
Group
2011
£000
894
-
894
On 28 July 2010, a change in corporate tax rates was substantively enacted, with corporation tax reduced from 26% to 24% with effect from
1 April 2012. The 2012 Budget on 23 March 2012 announced that the UK corporation tax rate will reduce to 22% by 2014. The first phase of this
reduction to 23% from 1 April 2013 was substantively enacted on 3 July 2012.
At the balance sheet date, the Group has unused tax losses of £83,089,000 (2011: £85,575,000) available for offset against future profits. No
deferred tax asset has been recognised in respect of these losses (2011: £nil) due to the continuing uncertain conditions in the housing market.
Losses may be carried forward indefinitely against future taxable profits.
Page 57
MJ Gleeson Group plc
Notes to the Financial Statements continued
Company
The deferred tax assets recognised by the Company and movements thereon during the current and prior year are as follows:
At 1 July 2010
Charge to income
Impact of rate change
At 30 June 2011
Charge to income
Impact of rate change
At 30 June 2012
Plantand
machinery
£000
Short-term
timing
differences
£000
606
(9)
(42)
555
(98)
(37)
420
13
-
(1)
12
(12)
-
-
total
£000
619
(9)
(43)
567
(110)
(37)
420
At the balance sheet date, the Company had unused tax losses of £6,665,000 (2011: £6,695,000) available for offset against future profits. No
deferred tax asset has been recognised in respect of these losses. Losses may be carried forward indefinitely.
25. OPERAtINGLEASEARRANGEMENtS
Operatingleases:lessee
Minimum lease payments under non-cancellable operating leases
recognised as an expense for the year
Minimum lease payments
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
1,240
1,240
1,428
1,428
-
-
43
43
At the balance sheet date, the Group has outstanding commitments for minimum lease payments under non-cancellable operating leases, which
fall due as follows:
Group
Within one year
Within two to five years
After five years
2012
Landand
buildings
£000
416
1,301
89
1,806
2011
Land and
buildings
£000
1,365
1,399
374
3,138
The Company had no minimum lease payments under non-cancellable operating leases.
Plant and equipment leases are entered into for a three year term. Land and building lease terms vary between one to ten years, depending on
market conditions.
In the current year, onerous lease provisions of £251,000 were released (2011: £1,712,000). See note 22 for details.
Where possible, the Group always endeavours to sub-lease any vacant space on short-term lets. An onerous lease provision is recognised where
the rents receivable over the lease term are less than the obligation to the head lessor. The Group's investment properties are also leased to a
number of tenants for varying terms.
Page 58
MJ Gleeson Group plc
Operatingleases:lessor
The Group's total future minimum sub-lease receipts expected under non-cancellable sub-leases as at 30 June 2012 is £841,000 (2011: £1,526,000).
These receipts are included within the minimum rent receivables table below.
The Company has no (2011: £nil) future minimum sub-lease receipts.
Minimum rental income under operating leases recognised as revenue for the year
Group
2012
£000
367
Group
2011
£000
546
Included in the figures above is £363,000 (2011: £526,000) which relates to properties which the Group had previously occupied as operating
lease lessees and have now sublet. The balance of £4,000 (2011: £20,000) relates to investment properties.
At the balance sheet date, the minimum rent receivables under non-cancellable operating leases are as follows:
Group
Within one year
Within two to five years
After five years
26. ANALySISOFCASHANDCASHEquIVALENtS
At 1 July 2010
Cashflow
At30June2011
Cashflow
At30June2012
27. BONDSANDSuREtIES
2012
Landand
buildings
£000
2011
Land and
buildings
£000
70
771
-
841
546
644
336
1,526
Group
£000
Company
£000
18,423
(660)
20,546
(2,571)
17,763
17,975
(3,901)
(8,964)
13,862
9,011
GroupandCompany
As at 30 June 2012, the Group had bonds and sureties of £4,491,000 (2011: £5,143,000) provided by financial institutions in support of
ongoing contracts.
The Directors have determined that the Group and Company require no specific provision for bonds, sureties or guarantees for subsidiary
companies.
Page 59
MJ Gleeson Group plc
Notes to the Financial Statements continued
28. SHARECAPItAL
Issued and fully paid Ordinary shares:
At the beginning of the year
Shares issued
At the end of the year
2012
No.000
2012
£000
2011
No. 000
52,696
34
52,730
1,054
1
1,055
52,644
52
52,696
2011
£000
1,053
1
1,054
Ordinaryshares
The Company has one class of Ordinary share which carries no rights to fixed income.
The number of Ordinary shares of 2p in issue as at 30 June 2012 was 52,730,235 (2011: 52,696,158).
At 30 June 2012, the Employee Benefit Trusts ("EBT") held 225,000 (2011: 1,034,000) shares at a cost of £364,000 (2011: £1,269,000). The shares
are held in the EBT for the purpose of satisfying options that have been granted under the executive and employee share ownership plans. Of
these ordinary shares, the right to dividend has been waived on none of these shares (2011: 67,898).
Details of share options are given in note 29.
29. SHARE-BASEDPAyMENtS
During the year to 30 June 2012, the Group had two share-based payment arrangements.
The recognition and measurement principles in IFRS 2 have not been applied to those options granted before 7 November 2002 in accordance
with the transitional provisions in IFRS 1 and IFRS 2.
A summary of the share-based payment arrangements are shown below:
Arrangement
Contractuallife
Vestingconditions
Share purchase plan
10 years
From 1 March 2009 the Group matches shares purchased by
employees on a 1 for 3 basis. Prior to this date the Group matched
shares purchased by employees on a 4 for 3 basis. The shares purchased
by the employees are immediately exercisable. The Group matching
shares are only exercisable after 3 years.
Settlementbasis
Equity
Performance share plan
(“PSP”)
3 years
For executive directors and senior executives the award will vest in
whole or in part on or after the third anniversary of the date of grant
if performance conditions have been met. The condition is based on
the total shareholder return on the three financial years from 1 July
2010 to 30 June 2013. None of these shares are currently exercisable.
Equity
Page 60
MJ Gleeson Group plc
Shareoptionsgrantedafter7November2002
Fair value is used to measure the value of the outstanding options.
Sharepurchaseplan
The fair value of each share granted in the share purchase plan is equal to the share price at the date of the grant. Shares are granted on a
monthly basis.
Performanceshareplan
The fair value per option for the performance share plan scheme has been calculated using a modified Monte Carlo model. The inputs into the
model at each grant date and the estimated fair value were as follows: The input for expected dividends has been set at 0% as the award vests
according to the increase in share price after adding back any dividends paid.
Dateofgrant
The model inputs were:
Share price at grant date
Exercise price
Expected volatility
Expected dividends
Expected life
Risk-free interest rate
Fair value of one option
PSP
17/12/10
£1.28
£1.26
45%
1.56%
3 years
1.69%
£0.50
Expected volatility was determined by calculating the historical volatility of the Company's share price. For the 17/12/10 scheme the volatility
was measured over the previous 3 years.
Further details of the option plans are as follows:
Dateofgrant
Outstanding at 1 July 2010
Granted in the year
Forfeited
Lapsed
Exercised
Outstanding at 30 June 2011
Granted in the year
Forfeited
Exercised
Outstanding at 30 June 2012
Remaining contractural life
Weighted average exercise price
Weighted average share price at date of exercise - current year
Weighted average share price at date of exercise - prior year
Sharepur-
chaseplan
Monthly
No.of
shares
259,103
12,016
(640)
-
(192,494)
77,985
15,197
(2,347)
(9,317)
PSP
17/12/10
No.of
shares
-
863,168
-
(24,119)
-
839,049
-
-
-
81,518
839,049
Rolling
scheme
1.5 years
No.of
shares
-
£1.23
£1.15
No.of
shares
£1.26
-
-
Page 61
MJ Gleeson Group plc
Notes to the Financial Statements continued
Shareoptionsgrantedpriorto7November2002
Dateofgrant
Outstanding at 1 July 2010
Exercised
Outstanding at 30 June 2011
Exercised
Outstanding at 30 June 2012
Remaining contractual life
Weighted average exercise price
Weighted average share price at date of exercise - current year
Weighted average share price at date of exercise - prior year
Sharepur-
chaseplan
Monthly
No.of
shares
9,127
(7,500)
1,627
(280)
1,347
Rolling
scheme
-
£1.23
£1.15
30. CAPItALCOMMItMENtS
During the year, the Group entered into a contract to purchase land for development resulting in a capital commitment of £1,436,000 at 30 June
2012 (2011: £3,852,000).
31. RELAtEDPARtytRANSACtIONS
Identityofrelatedparties
The Group has a related party relationship with its joint ventures and key management personnel.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
transactionswithkeymanagementpersonnel
The Group's key management personnel are the executive and non-executive Directors, as identified in the Directors' Remuneration Report on
pages 18 to 21.
Other than disclosed in the Directors' Remuneration Report, there were no other transactions with key management personnel in either the
current or proceeding year.
Provisionofgoodsandservicestojointventures
Grove Village Ltd
Chrysalis (Stanhope) Ltd
AvantAge (Cheshire) Ltd
Leeds Independent Living Accommodation Company Ltd
Sales to related parties were made at market rates.
Page 62
2012
£000
5
4
2
252
263
2011
£000
203
194
264
143
804
Purchaseofgoodsandservicesfromjointventures
There have been no purchases of goods or services from joint ventures.
Amountsowedbyandowedtojointventures
The amounts owed by joint ventures, including those classified as held for sale, are shown below:
Loans and other investments
Assets classified as held for sale
Prepayments and accrued income
MJ Gleeson Group plc
Note
14
18
17
2012
£000
-
1,990
98
2,088
2011
£000
2,006
4,407
74
6,487
The amounts owed to joint ventures at 30 June 2012 totalled £Nil (2011 £Nil).
IdentityofrelatedpartieswithwhichtheCompanyhastransacted
The Company receives charges from various suppliers in respect of services for the whole Group. The Company allocates and consequently
invoices these charges to subsidiaries.
Related party transactions:
Subsidiaries
Subsidiaries
Administrativeexpenses
2012
£000
5,098
5,098
2011
£000
4,386
4,386
Receivablesoutstanding
Payablesoutstanding
2012
£000
2011
£000
2012
£000
58,313
49,527
21,292
58,313
49,527
21,292
2011
£000
23,509
23,509
Page 63
MJ Gleeson Group plc
Five Year Review
for the years ended 30 June
Revenue
Operating profit/(loss)
Net finance income
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Discontinued operations
Profit/(loss) for year attributable to
equity holders of the parent company
Total assets
Total liabilities
Net assets
Total dividend per share
Earnings/(loss) per share from continuing operations
Net assets per share
Page 64
IFRS
2012
£000
IFRS
2011
£000
IFRS
2010
£000
IFRS
2009
£000
IFRS
2008
£000
41,937
41,353
46,534
43,030
71,125
3,255
542
3,797
928
614
(323)
770
(51,558)
(23,897)
868
3,559
1,542
447
(50,690)
(20,338)
(154)
42
3,643
1,584
235
682
(2,609)
(5)
(53,299)
(20,343)
(37)
(73)
2,455
1,844
2,003
3,606
1,511
3,137
(51,455)
(18,340)
116,220
120,517
131,380
140,069
213,021
(15,826)
(21,364)
(33,537)
(37,637)
(59,284)
100,394
99,153
97,843
102,432
153,737
p
5.00
6.93
190
p
-
3.02
188
p
15.00
1.30
186
p
-
p
2.00
(102.25)
(38.97)
195
294
MJ Gleeson Group plc
Advisers
BANkERS
Santander UK Plc
Davidson House, Forbury Square, Reading RG1 3EU
CORPORAtEFINANCEADVISERS
KPMG Corporate Finance
1 The Embankment, Neville Street, Leeds LS1 4DW
SOLICItORS
Simmons & Simmons
CityPoint, One Ropemaker Street, London EC2Y 9SS
REGIStEREDAuDItORS
KPMG Audit Plc
1 The Embankment, Neville Street, Leeds LS1 4DW
StOCkBROkERS
Singer Capital Markets Limited
One Hanover Street, London W15 1YZ
REGIStRARS&tRANSFEROFFICE
Capita Registrars
The Registry, Bourne House, 34 Beckenham Road
Beckenham, Kent BR3 4TU
REGIStEREDOFFICE
MJ Gleeson Group plc
Sentinel House, Harvest Crescent, Ancells Business Park
Fleet, Hampshire GU51 2UZ
Registered Number
479529
The paper in this report is a FSC certified product, produced with an FSC
mixed sources pulp which is fully recyclable, biodegradable & Chlorine
free. It is manufactured within a mill which complies with the
international environmental ISO 14001 standard.
It has been printed using environmentally friendly vegetable based inks,
formulated on the basis of renewable raw materials, vegetable oils are
non-hazardous from renewable sources. Over 90% of solvents and
developers are recycled for further use and recycling initiatives are in
place for all other waste associated with this production. The printers are
FSC and ISO 14001 certified with strict procedures in place to safeguard
the environment through all their processes and are working on initiatives
to reduce their Carbon Footprint.
Designed and produced by Complete Design Limited.
Printed by Woodrow Press Limited.
ISO 14001
REGISTERED FIRM
MJ Gleeson Group plC
Sentinel House
Harvest Crescent, Ancells Business Park
Fleet, Hampshire GU51 2UZ
Tel: 01252 360 300
Fax: 01252 621 666
Email: enquiries@mjgleeson.com
www.mjgleeson.com