Société Générale Annual Report 2020

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FY2020 Annual Report · Société Générale

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MJ Gleeson plc
Annual Report and Accounts 2020

INTRODUCTION

MJ Gleeson plc specialises in
low-cost house building
and strategic land promotion

St. James Court, Accrington, Lancashire

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Financial Highlights

Contents

REvENUE

£147.2m

2019: £249.9m

CASh & CASh EQUIvALENTS

£76.8m

2019: £30.3m

PROfIT BEfORE TAX

£5.6m

2019: £41.2m

NET ASSETS PER ShARE

366.1p

2019: 373.5p

EARNINGS PER ShARE

8.1p

2019: 61.0p

RETURN ON CAPITAL EMPLOYED

3.1%

2019: 25.9%

Strategic Report
Financial Highlights

What We Do

How We Operate

Chairman’s Statement

Market Overview

Chief Executive’s Statement

Business Model

Strategy

Business Review

Sustainability Report

Non-financial Reporting

Stakeholder Engagement

Financial Review

Risk Management

Governance Report
Chairman’s Introduction

The Board

Nomination Committee Report

Audit Committee Report

Remuneration Committee Report

Annual Report on Remuneration

Directors’ Report

Statement of Directors’ Responsibilities

Financial Statements
Independent Auditors’ Report

Consolidated Income Statement

Consolidated Statement of Comprehensive
Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Other Information
Five Year Review

Further Information

Corporate Directory

Shareholder Information

Financial Calendar

115

116

Cover:
Beatrice, Kings Park, Doncaster, South Yorkshire

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

WhAT WE DO

Building Homes.
Changing Lives.

We build affordable, quality homes. Where they are needed, for the people who
need them most.

We source

low-cost sites

We develop

unused land

We acquire land often in areas where no one else
wants to build and that helps to keep our land
costs low. This is an important first step in making
our homes affordable. We are increasing the
number of sites in our existing areas and
expanding into neighbouring regions such as
Lincolnshire and the West Midlands.

Our developments are located in areas where
there is often a need for regeneration; typically
brownfield sites that would otherwise remain
derelict or unused. Last year we invested
approximately £130m in our development
sites, creating attractive and well-planned
new homes for sale.

NUMBER Of PLOTS IN ThE PIPELINE

NUMBER Of ACTIvE BUILD SITES

13,801

2019: 13,575

2019: 69

Photo:
St. James Court, Accrington, Lancashire

Photo:
Carlisle Park, Swinton, South Yorkshire

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

We build

affordable homes

We create

communities

The cost of buying a Gleeson home is less than
renting for most buyers and can be as low as
£59 per week for one of our two-bed semi-
detached homes. More than 4 out of 5 of our
customers are first-time buyers and their
mortgage commitments remain sensibly low at
less than 2.9 times household income versus the
market average of 3.3 times.

We sell our homes to local people and many of
our buyers already live close to one of our sites.
We build modern brick homes using local
suppliers and employ local trades on our sites,
bringing jobs and investment to the community.
We care about creating safe and attractive
communities where people want to live.

AvERAGE SELLING PRICE

£130,900

2019: £128,900

COMMUNITIES DEvELOPED
OvER LAST 10 YEARS

150+

Photo:
Carrwood Park, Bradford, West Yorkshire

Photo:
first-time buyers, Clarence Court, Newton Aycliffe, County Durham

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

hOW WE OPERATE

Building the foundations
for growth

MJ Gleeson plc specialises in low-cost house building
and strategic land promotion. We have two distinct but
complementary businesses: building low-cost homes in
the North of England and the Midlands and strategic land
promotion in the South of England.

BY DIvISION

LOCATION Of SITES

Revenue

£6.3m

£147.2m

Total

£140.9m

Operating profit

£0.2m

£5.9m*

Total

£9.0m

Gleeson homes
Gleeson Strategic Land
* After Group costs of £3.3m

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

GLEESON hOMES

We build affordable, quality homes. Where they are
needed, for the people who need them most.

By establishing strong relationships with local
authorities, Gleeson homes acquires and redevelops
sites where there is an obvious need for social and
economic regeneration and builds new homes at
affordable prices.

We deliver a unique social benefit by helping people
to escape from housing poverty caused by the
“rent trap” and into home ownership and wealth
creation. Our homes are affordable enough to be
sold to a couple on the current National Living Wage
and mortgage repayments are usually less than local
council house rents.

We invest in the areas in which we build, ensuring that
we leave a thriving community once our developments
are complete.

GLEESON STRATEGIC LAND

We promote land, enhancing its value by securing
mainly residential planning consent. We focus on
sites in the South of England that are appealing to a
wide range of developers.

Gleeson Strategic Land has a team of highly skilled
planning, technical and land specialists who identify
development opportunities and work with stakeholders
to promote the land through the planning system.

We have a long history of delivering value through
securing planning consents that not only achieve the
best value but ultimately help to deliver attractive
residential developments in areas where housing
demand is high.

We invest intelligently in our land portfolio and work
closely with landowners, land agents, local authorities
and communities to secure residential planning
consents that are sustainable and sensitive to local
needs.

hOMES SOLD

1,072

2019: 1,529

STRATEGIC LAND
PORTfOLIO (PLOTS)

23,314

2019: 21,730

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ChAIRMAN’S STATEMENT

I would like to thank our

employees, subcontractors,
suppliers and customers for their
truly exceptional support in
response to the Covid-19 crisis.
This has been invaluable in helping
us to maintain the continuity of
our business.

Dermot Gleeson
Chairman

Gleeson homes’ sites and sales offices were
closed from 25 March 2020 until 14 May 2020
when we commenced a phased restart. This
resulted in a 30% drop in the number of
completions during the year to 1,072 new
homes (2019: 1,529) and also in a reduction in
the number of new sites opened.

I am delighted to report that Gleeson homes has started the new
financial year with a record forward order book and a record level
of work in progress. The Board has therefore reaffirmed its target
that Gleeson homes will reach 2,000 unit completions per annum
in 2022.

Since his appointment as Chief Executive Officer in 2019, James
Thomson has focused on ensuring that Gleeson homes has
the platform needed to support our growth ambitions and has
overseen significant changes across our organisational, build
process and sales structures. We used the period of shutdown to
review the division’s processes, resulting in further improvements
to both our health and safety regime and our operational efficiency
in a number of areas.

Gleeson Strategic Land was also adversely affected by the
pandemic, which caused the virtual closure of the land market.
however, a number of significant land sales that had been planned
for delivery during the final quarter of the year are now expected to
complete in the current financial year.

Market
Despite the continuing pandemic, the fundamentals of the housing
market remain strong. Demand for affordable new homes remains
high and we continue to see selling prices above pre-Covid-19
levels. Mortgage finance continues to be available, supported by
historically low interest rates.

Many families living in rented accommodation re-evaluated their
housing needs during the lockdown and took the opportunity
created by limited spending opportunities to save for a deposit on
a home of their own.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

help to Buy continues to assist first-time buyers into home
ownership and we welcome the announcement of the
Government’s decision to extend the deadline for buyers using
the existing scheme to 28 february 2021. The new scheme, which
comes into force from 1 April 2021, will be limited to first-time
buyers and subject to regional price caps. 84% of our customers
are first-time buyers and the selling price of almost all of our houses
is below the proposed caps.

Around two-thirds of our customers are key workers and in
recognition of the extraordinary contribution they are making we
introduced the Gleeson Key Worker Priority Programme, which
offers such workers a range of attractive benefits.

The strategic land market is seeing demand returning as medium
and large-sized housebuilders seek to replace completed
developments with good-quality consented sites.

Our people
We welcomed the support offered to businesses by the
Government’s Job Retention Scheme. 456 employees (76%) of our
employees were furloughed, all of whom have now returned
to work.

The Board and senior management accepted temporary salary
reductions ranging from 5% to 30% so that more junior colleagues
could continue to receive full or near-full pay. I am very grateful
for the commitment to the Company that has been shown by all
our employees during what has been an exceptionally challenging
period.

This year we launched our “vision, Mission and values” initiative in
which our employees sought, very successfully, to articulate and
embed the key values that they believe should drive the Company’s
behaviour. The detailed outcome of this important exercise is
set out in this Annual Report which is subject to approval by
shareholders at the AGM.

The results of our latest employee survey show that the level
of employee engagement and satisfaction with the Company
is very high.

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Board composition
We were delighted to appoint James Thomson as permanent
Chief Executive Officer on 2 December 2019.

Andrew Coppel, CBE and fiona Goldsmith joined the Board as
Non-Executive Directors on 1 October 2019. Ross Ancell and Colin
Dearlove stepped down as Non-Executive Directors on 30 June
2020. I would like to thank Ross and Colin for the many years
during which they served the Company with great distinction.

Leanne Johnson was appointed head of Legal and Company
Secretary on 25 March 2020.

The Board has decided to initiate a search for an additional
independent Non-Executive Director.

Ensuring financial resilience
As soon as the impact of Covid-19 became apparent, the Board
took swift action to reinforce the Group’s financial position. In April
we successfully completed a share placing to raise £16.4m (gross)
in proceeds. We also took the decision to draw down £60m of
the available £70m bank facility, agreed to have waived and reset
certain bank covenants, and to cancel the previously declared
interim dividend to retain £6.6m. A further £10m overdraft facility
remains undrawn and available. These actions meant that the
Group finished the year with a cash balance of £76.8m. The Group’s
cash balance, net of borrowings, at 30 June 2020 was £16.8m
(2019: £30.3m).

Whilst the Board is confident that the Group will see significant
growth in the current year, our priority is to ensure the continued
resilience of the business and to meet its interim target of delivering
2,000 homes per annum in 2022.

The Board has therefore taken the prudent decision not to propose
a final dividend (2019: 23.0 pence per share) but, in line with
its capital allocation policy, is committed to resuming dividend
payments on a progressive basis as soon as it is prudent to do so.

Outlook and summary
Our unique business model is focussed on building high-quality,
low-cost homes in the North of England and the Midlands and
continues to deliver homes to the people who need them most. The
majority of our customers are young, first-time buyers and around
two-thirds are key workers, who can now benefit from our recently
introduced Gleeson Key Worker Priority Programme.

We are currently seeing strong demand and expect this to continue
through the year as the demographics of our customer base and
the nature and price point of our product helps to insulate us from
the impacts of rising unemployment, the end of the stamp duty
holiday and the forthcoming changes to the help to Buy scheme.

We have therefore reaffirmed our interim target of delivering 2,000
homes per annum in 2022.

We expect the strategic land market will continue to recover as
housebuilders cautiously scale up their targets for the acquisition
of new sites.

The Board recognises the uncertainties arising from both the
continuing pandemic and the UK’s withdrawal from the EU.
Nonetheless, the Board is cautiously optimistic that the Group will
resume its pre-Covid-19 trajectory and deliver significant growth in
the current year and beyond.

Dermot Gleeson
Chairman
13 September 2020

OUR RESPONSE TO COVID-19

March 2020
• A controlled wind down and closure of site and sales

activity.

• Office-based staff moved to working remotely.
• To support customers that had already exchanged prior

to closure, we allowed a limited number to complete their
purchase and, in line with Government guidance, move
into their new homes.

• We drew down £60m of our £70m bank loan facility to

ensure adequate cash reserves were readily available. The
£10m overdraft facility remained undrawn.

April 2020
• 456 employees, representing 76% of the workforce,

were furloughed under the Government’s Job Retention
Scheme with the Company topping up salaries of those
affected up to a minimum of 80% and a maximum of 95%
of salary.

• All members of the Board took a voluntary reduction in

salary and fees of 30%.

• Senior management took a voluntary reduction of salary
of between 5% and 20%, weighted according to salary
bands.

• A successful share placement raised £16.4 million gross
proceeds from existing shareholders and other high-
quality institutional investors.

May 2020
• Implemented new Covid-19 safe working protocols
compliant with the Government’s Covid-19 secure
guidance and supported by Public health England and the
Construction Leadership Council.

• Restarted activity on half of our sites with a primary focus
on preparing site infrastructure and other ground-level
works.

• Reopened sales offices on a regional hub basis with 19

sales offices covering all sites. visits to these regional hubs
were by appointment only.

• Gleeson Key Worker Priority Programme launched to

strong interest.

June 2020
• Majority of staff returned from furlough by the end of June

2020.

• Plot build activity recommenced on the majority of sites to

build out the significant forward order book.

• Sales offices and show homes reopened together with

the launch of virtual show home tours on the Company’s
website.

SHARE PLACEMENT (GROSS PROCEEDS)

+£16.4m

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

MARKET OvERvIEW

The UK housing market
is failing to meet the desire
for home ownership

The housing market is not serving young
first-time buyers and low-income families;
the average price of a new home is nearly
£300,000 and only a quarter of
25 to 34-year-olds make it onto the
housing ladder.

THE DESIRE TO OWN REMAINS STRONG

UK home ownership rate (%)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

home ownership has fallen from a peak of around 73% in 2009
to around 65% in 2019. Most people still want to own their own
home, with 86% of the population preferring to buy than rent.
home ownership provides stability and financial security and
remains the most important milestone in life for many people.

1 IN 3 HOMES IN ENGLAND ARE RENTED

THE OWNERSHIP AGE GAP IS WIDENING

Home ownership by age group (%)

Owned

Rented

North, East
& Midlands

8.3m

4.3m

London
& South

7.4m

4.3m

0
1990

1995

2000

2005

2010

2015

2017

25-34

65 and over

Source: Ministry of housing, Communities & Local Government

There are now over 24 million homes in England, split
almost equally between the North and South. One-third
of homes across England are rented, equating to 4.3
million rented homes in the North, Midlands and East of
England. Of these, around 2.1 million homes are privately
rented and 2.2 million are rented from councils or housing
associations.

The demographic split of home ownership rates shows that
the market continues to underserve young people. Only a
quarter of those aged 25 to 34 own their own home, which
contrasts starkly with those approaching retirement where
more than half were homeowners by their 30th birthday.
The fundamentals of the housing market are unfavourable
for young buyers and without help from the “bank of mum
and dad” many young people will struggle to get on the
housing ladder.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

TOO FEW HOMES ARE BEING BUILT

House building volumes (000)

NEW HOMES ARE BUILT FOR THOSE
THAT ALREADY OWN

Average price of new build homes by builder (£000)

350

300

250

200

150

100

Government Target 300,000

All
Private enterprise

1980

1985

1990

1995

2000

2005

2010

2015

2019

Source: Ministry of housing, Communities & Local Government

The house building industry in England has been increasing
production to try to meet demand, building around 179,000
new homes last year, up from 170,000 in the previous year.
Whilst the supply of new homes has increased over the
last few years, it continues to fall a long way short of the
Government’s target of 300,000 new homes a year.

TOO FEW NEW HOMES FOR SALE BELOW £150,000

Housing transaction volumes

Below £150,000

Above £150,000

)
s
d
n
a
s
u
o
h
t
(
s
n
o
i
t
c
a
s
n
a
r
t

f
o
r
e
b
m
u
N

1 in15
new build

203

)
s
d
n
a
s
u
o
h
t
(
s
n
o
i
t
c
a
s
n
a
r
t

f
o
r
e
b
m
u
N

1 in 5
new build

254

New build

Resale

New build

Resale

As a whole, the industry is not building enough homes for sale
below £150,000. In the North, Midlands and East of England
only 6% of homes sold below £150,000 were new build
compared to 20% of homes over £150,000. This ratio highlights
the undersupply of affordable homes being built. Whilst there
are many terraced houses in the resale market, the age and
condition of these makes older terraced houses often more
expensive to run.

500

400

300

200

100

Gleeson
Homes

791

C
E
G
Other listed housebuilders 2019/20

The average price of a new build home in England last
year was £297,000 and the majority of other listed
housebuilders have an average selling price in excess of
£300,000. These prices are unaffordable to many young
first-time buyers and families on low incomes.

There is a large, underserved market for
low-cost homes for people who need
them the most across the North of
England and the Midlands.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ChIEf EXECUTIvE’S STATEMENT

Responding to
change

The last 12 months represent my
first full year at Gleeson and it is a
business that I am passionate
about. Prior to lockdown, we had
been focused on ensuring that the
business had the platform in place
to deliver our growth ambitions.

Consequently, it has been a year that has seen significant change
in the organisational structure of the business to support our
growth ambitions. Combined with the investment in safety, people
and sites, this has given us the confidence, despite the disruptions
caused by the pandemic, that we remain on track to meet the aim
of delivering 2,000 homes a year in 2022.

Our ambition is to maintain growth well beyond 2022, driven by the
underlying structural need for low-cost quality homes for first-time
buyers – one that is driven by household formation, the aspiration
to, and recognised benefits of, home ownership as well as the
simple fact that it is substantially cheaper to buy a Gleeson home
than to rent a similar property.

The last four months of the financial year, typically our strongest
selling period, required us to focus on responding to Covid-19. In
dealing with the impact of the pandemic, our first priority has been
to protect our employees, subcontractors, suppliers, customers
and the communities in which we operate.

for that reason, we took the decision in March to implement a
controlled shutdown of all our sites and sales offices and placed
76% of employees on furlough, utilising the Government’s Job
Retention Scheme to protect jobs. Trading during the final quarter
of the year, usually our strongest quarter, was almost entirely “lost”
resulting in Gleeson homes full year completions falling 29.9% to
1,072 (2019: 1,529) and Gleeson Strategic Land completing the sale
of only two sites during the year.

Over the period of shutdown we took the opportunity to replan
build programmes across all sites, prepare for new site openings
and implement robust Covid-secure working practices. We
recommenced build activity in May 2020 on a gradual, phased
basis, with initial on-site activity in late May and June focused on
site infrastructure and other groundworks ahead of returning to
plot build activity on some sites from mid-June. All sites are now
fully build active and all sales offices are open with strong interest
seen from customers.

Strategic Land, which had been expecting to complete a number
of significant land sales in the final quarter, did not complete any
further sales. Whilst these sales have been delayed, we expect
these will all still proceed to completion in this financial year as land
activity picks back up.

Whilst our financial results for this year have
been heavily impacted by Covid-19, I am
pleased with the positive steps that we have
taken this year and I believe that, in many
ways, we will emerge from this pandemic
stronger than we were 12 months ago.

James Thomson
Chief Executive Officer

Trading results
The impact of the shutdown and loss of fourth quarter completions
meant that operating profit for Gleeson homes fell by 70.1% to
£9.0m (2019: £30.1m).

Average selling prices at £130,900 were up 1.6% driven by 3.3%
higher underlying prices offset by changes in bed and site mix.
Gross margin on units decreased to 27.8% (2019: 30.1%) due to the
impact of Covid-19. Strategic Land had anticipated completing
most of its transactions during the final quarter of the year. house
building customers paused the purchase of sites during the final
quarter and, as a result, the division was broadly break-even with
an operating profit of £0.2m (2019: £13.0m).

Group profit before tax for the year fell by 86.4% to £5.6m (2019:
£41.2m).

The business took swift action to protect cash at the start of the
Covid-19 pandemic, including cancellation of the interim dividend,
pausing build activity and land acquisition, cutting discretionary
expenditure, furloughing 76% of staff, a freeze on recruitment and
senior managers and directors volunteering to accept significant
temporary pay cuts. The Group also drew down £60m of loans
from its £70m committed bank facility and raised a further £16.4m
of gross funds from a successful share placing in April 2020.

As a result, the business started the new financial year with a
strong balance sheet and £76.8m of cash. This will support our
growth ambitions and we expect to open a significant number of
new sites in the year ahead.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

KEY PERFORMANCE INDICATORS

Gleeson Homes volumes

2020

2019

2018

2017

2016

1,072

1,225

1,529

1,013

904

Units (homes) sold were heavily impacted by Covid-19.

Gleeson Homes land pipeline (plots)

2020

2019

2018

2017

2016

13,801

13,575

12,852

11,588

9,284

Land continues to be available to buy at sensible prices.

Gleeson Homes active build sites

2020

2019

2018

2017

2016

Gleeson homes opened 12 sites, completed 10 sites and in-
creased net active sites by 2 sites during the year.

Gleeson Strategic Land portfolio (plots)

Quality
Buying a house is the single biggest financial transaction in most
people’s lives and we want our customers to be delighted with their
new Gleeson home and with their experience of buying from us.

for that reason, we have invested in our Customer Care team,
introduced virtual tours of our show homes, launched our new
Gleeson homes customer website, enhanced the My Gleeson
portal and implemented the new Gleeson Quality Charter. This is
about embedding quality across the business and into everything
that we do, so we deliver what our customers want and expect
from us.

We have also partnered with In-house Research, an independent
customer research company, to gather feedback from our
customers. Our goal is to be “five star” wherever we operate and to
ensure we deliver a quality home to our customers, getting it right
first time, on time. Our customer recommendation scores at 88%
puts us in line with the hBf “four star” rating. Our objective is to be
“five star” by the end of this year.

Sustainability
Our vision is “Building homes. Changing Lives” and I am proud of
Gleeson homes’ mission: “Changing lives by building affordable,
quality homes. Where they are needed, for the people who need
them most”. Our vision, mission and values were developed by
colleagues across the business and embody what we do every day.

At the heart of what we do is build homes that are genuinely
affordable and provide our customers with the opportunity
for wealth creation through home ownership. It is substantially
cheaper to buy a Gleeson home than rent with a typical three-bed
Gleeson home costing as little as £76 per week with a help to Buy
mortgage compared to renting a three-bed home which costs
around £138 per week in the private rental market.

2020

2019

2018

2017

2016

23,314

21,730

22,838

21,505

21,111

A working couple on the Minimum Wage can buy a home on any
Gleeson homes development site. As a result, we believe 100% of
Gleeson homes turnover is aligned with achieving “access for all
to adequate, safe and affordable housing”. This is the first target
of the UN’s Sustainable Development Goal 11: “Sustainable Cities &
Communities”.

Land interests represent over 12 years of normal sales activity.

Operations
Gleeson homes strengthened its operational structure during
the year by recruiting and appointing Mark Knight as Managing
Director of the business. It also appointed three existing and
highly experienced directors to newly created Divisional Managing
Director roles for each of its newly created divisions covering the
North West, the North East and Yorkshire & Midlands.

We have also invested in our Commercial, Customer Care,
Marketing, hR and IT functions to strengthen the business and
ensure it grows sustainably towards, and beyond, our target
of 2,000 homes in 2022 which will represent a doubling of the
number of homes delivered by the business in five years.

The investment that we are making in our sites is transforming their
look and feel and enhancing the customer experience. Our sites,
sales offices and show homes are looking better than ever.

I am pleased with the steps we have taken this year to further
strengthen the business and I believe that we will emerge from this
pandemic in many ways stronger than we were 12 months ago.

The majority of our sites are on brownfield land, often in areas
of deprivation and in need of regeneration. We improve the
communities in which we operate and provide the opportunity for
our customers to escape the “rent trap”, create wealth and have the
security of owning their own home.

Our belief is that everyone who is involved in or affected by our
activities has the right to remain free from harm and return home
safe, every day. That is why we launched our homeSafe brand
this year: “homeSafe – everyone, every day”. It is fundamental to
ensuring that not only do we meet our legal and moral health and
safety duties, but that we strive to go above and beyond these
standards.

We are fully committed to sustainability, and social responsibility
has always been at the heart of our business. We have prepared
our first report on sustainability in the pages of this year’s Annual
Report to demonstrate our significant ongoing commitment to this
important area that is now attracting greater investor interest.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ChIEf EXECUTIvE’S STATEMENT CONTINUED

Trading and outlook
Whilst the business has been challenged this year by
the Covid-19 pandemic, I remain confident that we will
achieve our ambition of delivering 2,000 new homes
per year in 2022. We started the new financial year
with a strong forward order book up 52% on prior year
and work in progress up 55% as measured in terms of
unit equivalents built. Reservation rates have picked up
significantly post lockdown and selling prices on new
reservations are above pre-Covid levels. Build rates per
site are increasing and we expect to return to pre-Covid
levels of build activity by January 2021.

Whilst there remains uncertainty in the short term in
relation to both Covid-19 and the UK’s exit from the EU,
particularly in terms of unemployment, house prices and
mortgage availability, the market fundamentals for our
homes remain strong. These are driven by 200,000 new
households which are formed each year, many of which
are young people, leaving home and having families of
their own and the lack of supply of affordable new homes
for first-time buyers. Two-thirds of customer reservations
since May 2020 are from key workers who are those
that are keeping us all safe, fed and healthy at this
unprecedented time.

Our Strategic Land business enters the new financial year
with a strong pipeline and, as the industry picks back up,
the demand for consented land is expected to return.

As a result, we maintain our focus on strong growth in the
current financial year and beyond.

James Thomson
Chief Executive Officer
13 September 2020

OUR VISION, MISSION AND VALUES

OUR vISION

Building Homes.
Changing Lives.

OUR MISSION

Changing lives by building affordable,
quality homes. Where they are needed,
for the people who need them most.

OUR vALUES

We are Passionate
We are passionate about building
high-quality homes that are
affordable for everyone.

We are passionate about our
customers and ensuring they
enjoy buying their home from us.
Where we get things wrong, we
aim to put it right quickly and fairly.

We are proud of the strong
relationships we build with our
suppliers and contractors who
work alongside us.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

During the year, a team of brilliant and
passionate colleagues from across our
business joined forces in the pursuit
of the “voice Our values” project with the
aim to define our Mission, vision and
values.

The team worked together to help define the business’s core
values through a series of workshops and surveys across the
Group. By taking employees from different disciplines and at
different stages in their careers, the insights gained reflected
a true representation of the workforce and the diversity of
people that we employ.

During the workshops, colleagues openly shared their views
and experiences, exploring the culture and feel of life within
Gleeson. Taking part in a number of exploratory tasks that
encouraged open thinking, the team identified the three core
values that truly reflect the behaviours and attitudes that we hold
close in our dealings with colleagues, customers and stakeholders.
We are:

• Passionate
• Collaborative
• Respectful

You will find out more about how these values are embedded
across our business in the pages of this Annual Report and you
can watch the video at www.mjgleesonplc.com.

We are Collaborative
We work together collaboratively,
with shared goals, where information,
knowledge and ideas can be
discussed openly, honestly and free
from judgement.

We listen to our customers and work
with them throughout their buying
journey.

We collaborate with our external
partners and value their part in
helping us achieve our goals.

We are Respectful
We respect safety on all our sites and
are fully committed to ensuring our
colleagues and those who work on,
or visit our sites, return homeSafe –
everyone, every day.

We are respectful of our customers,
colleagues and partners by listening
to them and treating them equally
and fairly.

We undertake our business in an
ethical way, and we respect the
environment.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

BUSINESS MODEL

Delivering
sustainable growth

Our unique business model delivers value for stakeholders through close engagement
with our customers and their communities, productive cooperation with local
landowners, empowerment of our people and fair treatment of our supply chain.

Our two distinct divisions are complementary in generating long-term sustainable value.

WHAT WE DO

LAND ACQUISITION

PLANNING

BUILDING

GLEESON hOMES

We partner with local authorities
and private landowners to acquire
land in areas that will benefit from
investment, regeneration and
development for housing.

We have a carefully targeted buying
strategy with clearly defined and
challenging hurdle rates to ensure we
buy land at sensible prices, which is
essential to help ensure our homes
remain affordable.

We plan and design our developments
to transform areas of urban neglect
into attractive, environmentally
friendly and sustainable communities.

We work with local communities, local
authorities and councils to ensure our
developments balance the needs of all
stakeholders.

We prioritise partnering with local
suppliers and subcontractors wherever
possible, providing jobs and investment
in the local communities in which we
operate.

Our tightly controlled build procedures
and overhead costs, coupled with our
targeted land buying policy, ensure we
can provide good quality, affordable
housing.

GLEESON STRATEGIC LAND

Where we see the opportunity for
sustainable future land development,
we partner with landowners to
promote their land through the
planning process.

We use our in-house expertise and
our network of specialist consultants
and legal experts to steer the land
through the complexities of the
planning system to achieve a viable
and attractive planning consent.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

REINVESTMENT

GLEESON hOMES

GLEESON STRATEGIC LAND

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

WHY WE DO IT

CUSTOMERS AND
COMMUNITY

We provide high-quality, modern homes
built to the specification our customers
expect. Our buyers are often young
individuals and couples, key workers,
or families on low incomes who want
access to home ownership and an
escape from the “rent trap”.

Over the years we have helped
re-establish local communities and
invested in a wide range of projects
near our developments, including
transforming community facilities and
sponsoring local junior sports teams.

ShAREhOLDERS

Gleeson homes generated an
operating profit of £9.0m (2019:
£30.1m), which was severely
impacted by closing our sites for
the majority of the fourth quarter
in response to Covid-19.

We started the new financial year
with a significant forward order
book of 1,033 homes and over
1,000 homes already built or
part-built.

Through careful promotion and sale, we
provide high-quality consented land to a
range of mid-tier and large housebuilders
who ultimately deliver attractive and
sustainable developments to help ease the
housing shortage in the South of England.

Whilst Gleeson Strategic Land was
largely break-even, generating
£0.2m operating profit (2019:
£13.0m), it delivered £11.2m
operating cash flow from the
collection of receivables on
previous land sales. We started the
new financial year with a strong
pipeline of 11 consented sites
(3,855 plots).

REINVESTMENT

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGY

Generating value
for our stakeholders

Our strategy is anchored to our mission and vision – to build affordable,
quality homes. Where they are needed, for the people who need them
most. We also generate value for stakeholders through unlocking land
for development in the South of England.

The Covid-19 pandemic severely impacted our progress this year
against our current interim target to deliver 2,000 new homes
per annum in 2022. As a result of the pandemic, we completed
the sale of 1,072 homes compared to 1,529 in the previous year.
however, the business has demonstrated its underlying resilience
and demand has returned strongly. We are confident that we will
deliver our target of 2,000 units per annum in 2022.

Gleeson Homes
The housing market continues to fail to serve young buyers, key
workers and families on low incomes who are caught in the “rent
trap” and struggling to get onto the housing ladder due to the high
average price of a new home in the UK of nearly £300,000.

Gleeson homes has a proven and successful track record in
delivering new homes at affordable prices across the North of
England and the Midlands. Working alongside local authorities,
Gleeson homes has led the regeneration of many underserved
communities, enabling people to buy their own home and live and
work in their local area.

Gleeson Strategic Land
The fragmented planning landscape and underlying inertia to new
development in the South of England continues to slow the number
of new homes being built.

Gleeson Strategic Land works to navigate the complexities of the
planning system in order to deliver high-quality, consented land in
attractive locations to developers.

STRATEGIC PRIORITIES

PROGRESS IN 2019/20

PRIORITIES fOR 2020/21

GLEESON HOMES

Provide a safe place to work for everyone involved in
our sites

We take a “safety first, always” approach. Our highest priority
is that everyone who is involved with or affected by our works
remains free from harm and returns home safe every day.

Increase house building footprint

We will continue to increase the number of developments
across the North of England and the Midlands, targeting those
areas in need of regeneration.

Build quality, affordable homes

We will build good quality and energy-efficient homes to the
specification that our customers require, keeping build and
running costs low.

Our tight control of build costs and our efficient construction
methods, coupled with our clearly defined hurdle rates on land
purchases, will allow us to maintain profitability while keeping
our selling prices affordable to young, first-time buyers.

These sites can typically deliver new homes for sale within 12 to
24 months of a planning consent. Where sites are not viable for
residential consent, then alternative options such as consent for
commercial use may provide much needed employment land.

Increase land pipeline

We will continue to acquire land to support the growth of
Gleeson homes. We will start building as soon as we have
received an acceptable planning approval.

GLEESON STRATEGIC LAND
Strategic land promotion

We will continue to invest in our portfolio of land interests and
promote existing and new sites through the planning system
to deliver maximum value to our stakeholders.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

During the year we launched our new health and safety brand,

We will reduce our accident and incident rate by

homeSafe, across the business. We invested significantly in

continuing to embed our “safety first, always”

our site set-up and compounds, implementing new working

approach. We will monitor Government guidelines

protocols, working-at-height fall prevention systems and making

regarding Covid-19 and ensure that we are doing

each of our sites Covid-19 secure.

whatever is necessary to keep our employees,

suppliers, subcontractors and customers safe.

We ended the year with 71 active build sites, each with full

We plan to open 25 new sites over the next year and

Covid-19 compliant safety procedures in place, following a

expect to have 80 active build sites by June 2021.

phased reopening of sites in May 2020.

We strengthened our regional management structure, invested

We will continue to embed the Gleeson Quality

in our Customer Care team, introduced our new Gleeson

Charter, setting out what our customers can expect

Quality Charter and implemented enhanced quality assurance

from their house buying journey with us.

procedures to ensure that we hand over the quality of homes

that our customers expect.

We will use our enhanced regional structure to

focus on build efficiency and cost control so that we

We also partnered with In-house Research to gather feedback

continue to sell affordable homes while delivering

from our customers. Our goal is to be “five star” wherever we

strong margins.

operate.

Our land pipeline of owned and conditionally purchased plots at

We will continue to buy land at sensible prices to

30 June 2020 increased by 1.7% compared to the prior year end,

support our interim target of selling 2,000 homes

totalling 13,801 plots on 149 sites, of which 6,952 plots have been

per annum in 2022.

purchased subject to planning permission.

We will continue to seek planning consent for

attractive residential developments and will start on

sites as soon as this permission is granted.

As at 30 June 2020, we had a land portfolio comprising 68

We will continue to invest intelligently in our land

sites with the potential to deliver 23,314 plots and 44 acres of

portfolio whilst progressing our current interests

commercial land.

through the planning process.

Of these, 11 sites have had planning permission granted with the

As confidence returns, we will deliver high-quality

ability to deliver 3,855 plots.

consented land to housebuilders in the South

of England.

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

CURRENT TARGET

Double Gleeson Homes
volumes
20172022

2017

1,013 units

By 2022

2,000 units

STRATEGIC PRIORITIES

PROGRESS IN 2019/20

PRIORITIES fOR 2020/21

GLEESON HOMES

Provide a safe place to work for everyone involved in

our sites

We take a “safety first, always” approach. Our highest priority

is that everyone who is involved with or affected by our works

remains free from harm and returns home safe every day.

Increase house building footprint

We will continue to increase the number of developments

across the North of England and the Midlands, targeting those

areas in need of regeneration.

Build quality, affordable homes

We will build good quality and energy-efficient homes to the

specification that our customers require, keeping build and

running costs low.

Our tight control of build costs and our efficient construction

methods, coupled with our clearly defined hurdle rates on land

purchases, will allow us to maintain profitability while keeping

our selling prices affordable to young, first-time buyers.

Increase land pipeline

We will continue to acquire land to support the growth of

Gleeson homes. We will start building as soon as we have

received an acceptable planning approval.

GLEESON STRATEGIC LAND

Strategic land promotion

We will continue to invest in our portfolio of land interests and

promote existing and new sites through the planning system

to deliver maximum value to our stakeholders.

During the year we launched our new health and safety brand,
homeSafe, across the business. We invested significantly in
our site set-up and compounds, implementing new working
protocols, working-at-height fall prevention systems and making
each of our sites Covid-19 secure.

We will reduce our accident and incident rate by
continuing to embed our “safety first, always”
approach. We will monitor Government guidelines
regarding Covid-19 and ensure that we are doing
whatever is necessary to keep our employees,
suppliers, subcontractors and customers safe.

We ended the year with 71 active build sites, each with full
Covid-19 compliant safety procedures in place, following a
phased reopening of sites in May 2020.

We plan to open 25 new sites over the next year and
expect to have 80 active build sites by June 2021.

We strengthened our regional management structure, invested
in our Customer Care team, introduced our new Gleeson
Quality Charter and implemented enhanced quality assurance
procedures to ensure that we hand over the quality of homes
that our customers expect.

We also partnered with In-house Research to gather feedback
from our customers. Our goal is to be “five star” wherever we
operate.

We will continue to embed the Gleeson Quality
Charter, setting out what our customers can expect
from their house buying journey with us.

We will use our enhanced regional structure to
focus on build efficiency and cost control so that we
continue to sell affordable homes while delivering
strong margins.

Our land pipeline of owned and conditionally purchased plots at
30 June 2020 increased by 1.7% compared to the prior year end,
totalling 13,801 plots on 149 sites, of which 6,952 plots have been
purchased subject to planning permission.

We will continue to buy land at sensible prices to
support our interim target of selling 2,000 homes
per annum in 2022.

We will continue to seek planning consent for
attractive residential developments and will start on
sites as soon as this permission is granted.

As at 30 June 2020, we had a land portfolio comprising 68
sites with the potential to deliver 23,314 plots and 44 acres of
commercial land.

We will continue to invest intelligently in our land
portfolio whilst progressing our current interests
through the planning process.

Of these, 11 sites have had planning permission granted with the
ability to deliver 3,855 plots.

As confidence returns, we will deliver high-quality
consented land to housebuilders in the South
of England.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

BUSINESS REvIEW

Gleeson Homes
Building a strong forward order book

Gleeson homes enters the new financial year
in a strong position with a forward order book
of £145.3m on 1,033 units, work in progress
well advanced and a healthy pipeline of land
opportunities.

The Government’s help to Buy scheme remains popular with many
of our customers, with 66% of the homes sold during the year
utilising the scheme (2019: 68%). We also continue to provide our
own range of bespoke packages to assist potential customers to
become homeowners and recently launched our Key Worker Priority
Programme, providing a range of benefits to show our support for
key workers looking to purchase a new home.

GLEESON hOMES

UNITS SOLD

1,072 units

2019: 1,529 units

AvERAGE SELLING PRICE

£130,900

2019: £128,900

OPERATING PROfIT

£9.0m

2019: £30.1m

Unit volumes

2020

2019

2018

2017

2016

1,072

1,529

1,225

1,013

904

Land pipeline (plots)

2020

2019

2018

2017

2016

6,849

6,525

6,475

5,320

4,357

4,927

Total

6,952

13,801

7,050

13,575

6,377

6,268

12,852

11,588

9,284

■ Owned
■ Awaiting completion

Performance in the year was heavily impacted by the Covid-19
pandemic, with the division completing the sale of 1,072 homes, a
reduction of 29.9% compared to the previous year (1,529 homes).

however, we enter the new financial year with our strongest ever
forward sales position of £145.3m on 1,033 units (2019: £87.6m
on 677 units) and work in progress, as measured in terms of unit
equivalents built, up 55% on the prior year.

We opened 12 new build sites during the year and closed the year
with 71 active build sites (2019: 69), of which 65 were actively
selling (2019: 69). Our average active build and sales sites were 68
and 65 respectively (2019: 65 and 65). Our sales outlets are located
across the North of England and the Midlands, with plans to expand
our geographical reach. The business plans to open 25 sites during
the new financial year, which would be a record number, and
expects to have 80 active build sites by 30 June 2021.

The average selling price (“ASP”) for homes sold in the year was
£130,900 (2019: £128,900). The increase was influenced by a
combination of factors: house price inflation, mix of site locations
and the mix of two-, three- and four-bed homes sold. Our aim is to
ensure that our selling prices remain affordable for young first-time
buyers and low-income families.

Gross profit margin on homes sold decreased to 27.8% (2019:
30.1%) due to costs associated with responding to Covid-19.

The reduction in the volume of homes sold resulted in gross profit
decreasing by 34.1% to £39.1m, which included £0.1m in relation
to land sales (2019: £59.3m, £nil land sales), and operating profit
decreasing by 70.1% to £9.0m, including £0.1m in relation to land
sales (2019: £30.1m, £nil land sales). Operating margin decreased
from 15.3% to 6.4%.

We continue to acquire land at sensible prices. The pipeline
grew by 226 plots to stand at 13,801 plots at 30 June 2020. Of
these plots 6,849 are owned (2019: 6,525) and 6,952 plots are
conditionally purchased (2019: 7,050). The number of sites in
the land pipeline totalled 149 at year end, being five sites higher
than the prior year end; 27 new sites were added to the pipeline,
while 22 sites were completed or did not proceed to purchase. In
addition to owned and conditionally purchased plots, there are a
further 798 (2019: 473) plots which are being actively considered
for acquisition but will only proceed if they meet our strict criteria.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Case study

Enabling local people to remain
in the communities they love

Our new development in North huyton, near
Liverpool, has proven popular with first-time
buyers and young families.

Single mum-of-three Amy Gordon was keen to stay in the
Knowsley community she had called home for over seven years,
having built up a support network of trusted friends and reluctant
to move her children out of their school.

Amy, a self-employed driving instructor, initially purchased an
existing home in the area but, unfortunately, the sale fell through
when the Covid-19 pandemic hit. Amy and her children were left
sleeping on a friend’s living room floor during lockdown.

Eager to buy her own home, Amy approached the sales team at
our Rosebank development. The sales and build teams pulled out
all the stops to ensure that Amy was able to move into her new
Gleeson property, a four-bedroom detached home, in record time
despite the challenges from Covid-19.

Amy was one of several Gleeson customers who was able to
move into their new home during the lockdown; with social
distancing and safety precautions being carefully followed in line
with Government guidance.

“I love my new home,” says Amy. “Each of my children now has
their own bedroom, which avoids many arguments! Whilst I
initially purchased an older home, a new build has meant that
I have a blank canvas and I can paint and decorate to my own
taste. My new home also included flooring, turf and fencing to the
rear garden, which meant we could move in and enjoy our new
space straight away. We particularly enjoyed the use of our own
garden on the sunnier days during the lockdown.”

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

BUSINESS REvIEW

Gleeson Strategic Land
Building a strong pipeline of sites

Whilst the financial performance of the
division was severely impacted by the
Covid-19 crisis, we have continued to invest
sensibly in our land portfolio and advance
existing sites through the planning system.
The business comes into the new financial
year with a strong pipeline of sites ready for
sale.

Revenue from Gleeson Strategic Land fell to £6.3m (2019: £52.9m)
generated from the sale of two small sites during the year. The sites
sold totalled 26 acres with the potential to deliver 195 plots.

Our Strategic Land team is based in fleet, hampshire and the
portfolio continues to have a geographic bias towards the South
of England. Sites in the portfolio are expected to realise value over
the short, medium and long term driven by the planning context of
each individual site.

PLOTS SOLD

195 plots

2019: 1,755 plots

LAND PORTfOLIO

A number of large transactions were delayed as a result of the
Covid-19 pandemic and are now expected to complete in the
new financial year. As a result, operating profit of £0.2m was
significantly down on the previous year (2019: £13.0m).

23,314 plots

2019: 21,730 plots

OPERATING PROfIT

£0.2m

2019: £13.0m

As the land market takes tentative steps towards recovery, we
are seeing demand returning with enquiries from a broad range
of housebuilders. The land market, particularly for sites in prime
locations in the South of England, is expected to recover strongly.

At 30 June 2020, we had a portfolio totalling 68 sites (2019: 60
sites) with the potential to deliver 23,314 plots (2019: 21,730 plots)
plus 44 acres of commercial land (2019: 44 acres). During the
year, we secured planning permissions for five sites and acquired
interests in nine new sites. These new sites contributed a further
1,888 plots to the portfolio.

Despite the impact of Covid-19, we continue to see opportunities
to add well-located, strategic sites to the portfolio where we see
potential for future residential development and where we can
deliver maximum value for stakeholders.

AT JUNE 2020 (SITES)

AT JUNE 2020 (PLOTS)

11 (2019: 9)
Planning consented

7 (2019: 6)
Planning submitted

770 (2019: 770)
freehold

9 (2019: 8)
Allocated sites

68
(2019: 60)

23,314
(2019: 21,730)

7,760 (2019: 8,553)
held under option

41 (2019:37)
Not allocated

14,784 (2019: 12,407)
Promotion agreement

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Case study

Land at Hassocks, Mid Sussex

Outline planning consent for 500 dwellings,
a primary school and community building
along with improved pedestrian links to
hassocks and Burgess hill.

During the year, Gleeson Strategic Land secured outline
planning consent for a greenfield site on the edge of the existing
settlement boundary. This was promoted and allocated within
the Mid Sussex District Plan (adopted in March 2018) for land to
the north of Clayton Mills, hassocks for a development of 500
homes and a new primary school.

The site totals 30 hectares and incorporates 15 hectares for
attractive residential development including a mix of residential
accommodation to meet local needs. It also includes 10 hectares
of public open space (equivalent to 35% of the total site area)
plus three hectares for a new primary school and a new vehicular
access point.

The site is sympathetically designed so that open space is
located throughout the scheme, with residential properties
orientated to front onto the open spaces to create an attractive
street scene. The planning consent reflects the fact that this
is a development that combines townscape and landscape,
reinforcing locally distinctive patterns of development,
landscape and character.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

SUSTAINABILITY REPORT

Our commitment
to a sustainable future

The Board places social
responsibility at the heart of
everything that we do. There are
many things that the Company can
feel justifiably proud of:

• we transform people’s lives
through building and selling
high-quality, low-cost homes

• we regenerate once-neglected
areas into thriving communities

• we build homes for key workers

• we sell mostly to young, first-

time buyers

• we are a real Living Wage

employer

OUR SUSTAINABILITY REPORT FOR THE YEAR

WHAT WE DO WELL

60% brownfield
Of our active build sites, 60%
were previously brownfield; we
build where others won’t.

84% first-time buyers
Our customers are young,
first-time buyers on low-to-mid
income, looking to escaping the
“rent trap”.

8% fewer reportable
h&S incidents
Our Annual Incidence Injury
Rate (“AIIR”) reduced by 8% to
5 reportable injuries in the year.

64% key workers
Our Key Worker Priority
Programme is designed to
support those keeping us safe,
fed and healthy.

96% of waste
recycled
Most of our waste is either
recycled directly (87%) or is
converted to energy (9%).

88% customer
recommendation
Nearly nine out of ten of our
customers would recommend us.

fair Tax
We have been awarded the fair
Tax Mark showing we pay our
taxes fairly.

60 apprentices
We currently employ 60
apprentices across a range of
disciplines in site- and office-
based roles.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

OUR IMPROVEMENT
TARGETS

WHAT WE WANT
TO IMPROVE

OUR IMPROVEMENT
TARGETS

Health & safety
Our incident rate (AIIR),
359 per 100,000
employees, is higher
than the average
reported by the home
Builders federation.

Staff turnover
Our staff turnover of
36% is higher
than most other
housebuilders.

CO2 emissions
Our scope 1 & 2
emissions per house
sold are higher
than many other
housebuilders; see
page 35 for details.

Customer
satisfaction
88% of customers
would recommend
buying a Gleeson
home, which makes us
a 4-star housebuilder.

Health & safety
We will significantly
reduce our incident rate
and ensure that we are
a safe place to work in
every regard.

Staff turnover
We will reduce staff
turnover to at least
the industry average
or better.

CO2 emissions
We will reduce emissions
by 20% to less than 2
tonnes per home sold
within three years.

Customer
satisfaction
We will become a 5-star
housebuilder within one
year.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

100% real Living Wage
employer
We are accredited by the Living Wage
foundation for paying our employees
the real Living Wage.

Top quartile employee
engagement
We are in the highest 25% of
companies for employee engagement
in an independent survey.

6% median pay gap in
favour of women
We do not discriminate based on
gender; we encourage women into all
roles and reward our employees based
on their role and performance.

19 Mental health first
Aiders
We understand the importance of our
employees’ mental health and have a
structure in place to support colleagues.

SUSTAINABILITY REPORT CONTINUED

Our guiding
principles

Our mission:
Changing lives by building affordable,
quality homes. Where they are needed,
for the people who need them most.

We exist to transform lives and make home ownership
a reality for young people, low-income families and
first-time buyers. Our approach is based around our
impact on communities, people and the environment.

COMMUNITIES

PEOPLE

ENVIRONMENT

We build high-quality, affordable homes.
A working couple on the National Minimum
Wage can afford to buy a home on any
Gleeson homes development.

Through our Community Matters
programme we work closely with local
residents to build and support a sense
of pride and community by sponsoring
local sports teams and other community
activities.

We use local suppliers and trades people
wherever possible and pay them promptly.

We pay our fair share of taxes. We are
certified by the fair Tax Mark for having
achieved the highest standards of tax
transparency and disclosure.

We were the first listed housebuilder to be
accredited by the Living Wage foundation
for paying our employees a “real” living wage.

We are improving our health and safety
culture, working practices and systems
under our newly developed “homeSafe”
framework, including ensuring all of our
sites are Covid-19 secure.

We are supplementing our site health and
safety inspections with the use of additional
and dedicated NhBC health and safety
inspections.

We offer all employees access to
confidential, third-party support on a range
of health, wellbeing, financial, legal and
counselling issues.

We arrange school visits to development
sites to educate children on the value of a
career in house building, health and safety
and the role of women in construction.

We value our employees’ mental health as
much as their physical health and have 19
trained Mental health first Aiders across
the business.

We build on brownfield land – 60% of our
active and pipeline sites are on brownfield
sites – see pages 26 and 27 for a case study
on one of our sites.

We want to improve our CO2 emissions as
reported on page 35. Our improvement
plans are shown on page 25.

We divert 96% of waste generated on
our sites away from landfill, and we are
looking at ways of improving our waste
management.

We source 99.9% of the timber we use in
construction from fSC or PEfC certified
sources.

The Group is continuing to develop and
encourage more women into roles that
have traditionally been male occupied. This
includes better provisions on site for female
employees and subcontractors.

Our apprentices are tomorrow’s talent.
We currently employ 60 apprentices
(approximately 10% of staff) across a range
of disciplines.

We encourage employees to take part in
the Gleeson share ownership plan which
provides gifted shares.

Our approach to sustainability is aligned
with the United Nations Sustainable
Development Goals (“UNSDGs”) as follows:

We promote the health and wellbeing of
our employees through our Mental health
Pledge and have 19 trained Mental health
first Aiders.

We provide an employee assistance
programme to support the health and
wellbeing of employees.

We do not discriminate based on gender
and have a 6% median pay gap in favour
of women.

Women occupy 22% of our highest-paid
jobs and 15% of our lowest paid jobs.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

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fINANCIAL STATEMENTS

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Our improvement targets

TARGET 1:

health and safety incident rates (AIIR) will be
significantly reduced.

Actions:

Working-at-height safety systems
and practices will be improved on all
sites within one year.

Site compound and welfare facilities
will be improved on all new sites
and those with less than one year to
completion.

Employee health and safety
training will be reviewed, improved
and the amount of training per
employee increased during
the year.

Digital reporting on all accidents,
incidents, audits and health and
safety metrics will be introduced on
all sites within one year.

Independent health and safety
inspections by the NhBC will be
undertaken on all sites.

Two new divisional health and safety
managers roles will be created.

TARGET 3:

CO2 emissions per home sold will be reduced by
20% within three years.

Actions:

Within one year all forklift trucks will:

• be fitted with auto stop/start

functions.

• have lower carbon emitting

engines.

• include usage-tracking

technology to monitor speed and
idle time.

Reduce the use of diesel generator
fuel per site.

100% of electricity used in show
homes, sales offices and site cabins
will be sourced from zero carbon
sources within one year.

TARGET 2:
Staff turnover will be reduced
to at least the industry average
or better.

Actions:

Review and improve the staff recruitment
process including search, selection, interview
and pre-start onboarding.

Enhance our new starter onboarding process,
increase personal development reviews and
introduce post-probationary period reviews.

Continue to increase our employee
engagement initiatives by conducting regular
management roadshows, engagement
workshops and improving the frequency of
staff communication.

TARGET 4:

Customer satisfaction: we will
become a 5-star housebuilder
within one year.

Actions:

We have recently created a dedicated
Customer Care team in each region.

We have launched the Gleeson Quality Charter
confirming our commitment to our customers.

We will implement additional quality checklists
prior to final inspection.

We have engaged third-party inspectors to
undertake additional, independent quality
checks.

We are an accredited Living Wage
foundation employer and were the first
listed housebuilder to be accredited.

We have an active apprenticeship programme;
10% of our workforce are apprentices.

100% of Gleeson homes’ turnover is aligned
with achieving “access for all to adequate,
safe and affordable housing”. This is the
first target of UNSDG 11: “Sustainable Cities
& Communities”.

We comply with modern slavery and
trafficking legislation and ensure that all
workers involved in the supply chain are
free from slavery.

We remediate brownfield land; 60% of our
sites were previously brownfield.

We source 99.9% of our timber from fSC
accredited sources.

We recycle or divert to energy 96% of our
waste.

We have set a target to reduce Scope 1 & 2
carbon emissions by 20% within three years.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

SUSTAINABILITY REPORT CONTINUED

Case study
Carlisle Park, Rotherham, South Yorkshire

100 years of pollution

This site in Kilnhurst, South Yorkshire, had operated as a
chemical works for over 100 years.
•

It has acted as a bitumen processing plant, tar distillery, iron works and a
forge. The site had been derelict for five years before Gleeson acquired it
for development in 2012.

heavily contaminated site

There were three major challenges to the development of
the site:
• The land was heavily contaminated with non-aqueous phase liquids

(“NAPL”) of petroleum carbons, solvents including phenols, and other less
mobile polycyclic aromatic hydrocarbons.

• There were numerous un-surveyed foundations and obstructions from the

former chemical works.

•

It was unclear what services were passing below the site as the buried
services for water, gas and electric were not clearly set out.

£8.6m spent on remediation

Gleeson has spent £8.6m remediating the site over the
period of development including:
• 300,000m3 of contaminated ground was excavated, treated and

stabilised.

• 25,000m3 of derelict foundation concrete was broken out, crushed,

processed and reused.

• A proprietary geosynthetic clay layer, incorporating a bentonite clay layer,

was placed over the whole site.

• The site was then capped with a 1.7 meter thick layer of clean material

placed as a foundation above the capping layer.

high-quality, affordable homes
As a result of the remediation we:
• Cleaned the site.

• Stabilised the contamination.

• Reused all the stabilised materials on site.

• Exported and recycled for scrap the waste metals from the structure of

the chemical works.

All works were supervised by third-party consultants and approved by both
the regulators of Rotherham Borough Council and the Environment Agency.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

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Building Homes. Changing Lives.

On Carlisle Park we are building
381 high-quality, affordable 2, 3
and 4 bedroom homes.

These are modern, energy-efficient
homes, and all have a front and
rear garden and a driveway.

To date we have provided homes
for 260 people and families.

Emily and Stephen, ages 19 and 22, Plot 35, Carlisle Park

Carlisle Park in numbers:

£140,000

Average selling price

51%

Used help to buy

£18,000

Average salary of buyers

69%

First-time buyers

86%

Previously rented
or lived at home

Median age of buyer

11%

Nurses or care workers

83%

Under the age of 35

17%

Teachers

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

NON-fINANCIAL REPORTING

Non-financial
reporting

The following table summarises our approach to internal and external stakeholders to comply
with the Companies Act 2006 requirements regarding non-financial reporting:

EMPLOYEES

STATEMENT
We are committed to ensuring that all
our employees and stakeholders are
treated fairly and equitably. We have an
organisational culture that values passion,
collaboration and respect.

WAYS WE ENGAGE
• Policy on diversity, recruitment, equality and how

READ MORE
¼¼¼Page 24

• Performance in relation to greenhouse gas

¼¼¼Page 35

emissions as the scale of our operations increase

•

Investment in the communities, schools and areas
in which we operate

¼¼¼Pages 24–25 and 34–35

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

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STAKEhOLDER ENGAGEMENT

Engaging with
our stakeholders

We are committed to building positive relationships with all our stakeholders and to reflecting
their needs in our decision-making processes.

Section 172 statement
As required by s172 of the Companies Act 2006 (“the Act”), a director of a company must act in the way he or she
considers, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In so
doing, the director must have regards, amongst other matters, to the:
•
•
• need to foster the company’s business relationships with suppliers, customers and others;
•
• desirability of the company maintaining a reputation for high standards of business conduct; and
• need to act fairly between members of the Company.

likely consequences of any decision in the long term;
interests of the company’s employees;

impact of the company’s actions on the community and environment;

The following table identifies where in this report the Board has considered our stakeholders in key decision-making in
compliance with s172 of the Act.

REQUIREMENT

Long-term consequences
of any decisions

• Chairman’s Statement
• Chief Executive’s Statement
• viability Statement

Interests of
our employees

• Sustainability Report
• Employees pages in this section

¼¼Page 6
¼¼Page 10
¼¼Page 62

¼¼Pages 22–25
¼¼Pages 32–33

Interests of our suppliers,
customers, and others

• Customers pages in this section
• Subcontractors and suppliers page in this

¼¼Pages 30–31
¼¼Page 36

section

Impact on our community
and environment

• Sustainability Report
• Community pages in this section

Maintaining a reputation
for high standards
of business conduct

• Sustainability Report
• Whistleblowing policy
• Anti-bribery and corruption policy
• Shareholder page in this section

¼¼Pages 22–27
¼¼Pages 34–35

¼¼Pages 22–27
¼¼Page 61
¼¼Page 61
¼¼Page 35

Need to act fairly
between members
of the Company

• Board leadership and Company purpose section
• Shareholder page in this section

¼¼Pages 52–53
¼¼Page 35

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STAKEhOLDER ENGAGEMENT CONTINUED

Customers

Key Worker Priority Programme
At the start of the lockdown period we promised that we would
prioritise key workers once we got building again, and in May
we launched our Key Worker Priority Programme to fulfil that
promise and acknowledge the work they do to keep us safe,
fed and healthy.

Every key worker who registers with our Programme will be
entitled to a range of benefits and packages that will make
moving into their dream home even easier, including*:
•

48-hour priority access to new site openings and selected
plot releases
Exclusive preview appointments and viewings

•

My Gleeson
My Gleeson is our online portal dedicated to customer care.
Customers are able to log defects via an app or website 24/7
without having to wait for opening hours. This information is
given to site teams to liaise directly with customers to remedy
the issue, and customers can then sign off on completion
through the app. We are moving forward on using this data
to monitor defects across the business and to spot emerging
trends early in order to continue improving our customers’
experiences.

And, one of the following key options:
•

£1,000 voucher to spend on our Options Range, plus grass
to rear garden and fencing
Your mortgage paid for six months
Carpets and vinyl throughout the home

•
•

* These offers may change but were accurate at the date of these

accounts; terms and conditions along with the current offers can be
found at www.gleesonhomes.co.uk/key-workers

Virtual tours
As part of our efforts to keep both our customers and
employees safe, we have launched virtual tours so customers
can browse at their leisure from the comfort and safety of
their own home. virtual tours are currently available for six
of our most popular house types, with more being rolled out
soon.

The virtual tours have a Virtual Reality
mode for a more immersive experience.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

It’s so nice to know it’s our own
home. It’s been really nice to
decorate and do all the things we
have dreamed of and make it our
own. We’ve made friends with
neighbours and felt part of a little
community. It’s been a really good
first year!

Marc and Karl, Middlestone Meadows,
Spennymoor, County Durham

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fINANCIAL STATEMENTS

OThER INfORMATION

88%
of our customers have or
would recommend Gleeson
to their friends and family.

Customer satisfaction surveys
We use an independent agency to contact every customer
who buys a Gleeson home, inviting them to complete a
customer satisfaction survey. These surveys help us to
understand what our customers think about our service, our
communication, and our homes, in order to better meet their
needs going forward.

Customer care continues to be an area of focus for us and is
one of our sustainability targets outlined on page 25.

Strategic Land customers
In our Strategic Land division we maintain close connections
with our customers, primarily mid-tier and large
housebuilders. Through these connections we are confident
that we understand what they are looking for: good quality,
well-located, attractive residential sites that will enable
them to build communities and provide housing in parts of
the country where the housing shortage is acute. We know
that sustainability is a key element of a successful planning
consent, and there must be access to community facilities
such as shops and schools, good transportation links with
access to public transport as well as roads, and well-defined
open or green space.

Our commitment

When you buy with Gleeson, you can expect
a quality home and quality service all the way
through your buying journey and beyond.

We are committed to building quality, affordable
homes and delivering a service to you from the
moment you meet us, to the moment we hand
over your keys. After key handover, we also
commit to a two-year Gleeson warranty which
is backed by the NhBC Build Mark Warranty,
to give you absolute trust, peace of mind and
comfort in your new home.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Mrs. fiass and son, Oswald Park, Burnley, Lancashire

Gleeson Quality Charter
During the year we focused on creating the Gleeson Quality
Charter, which was successfully launched in July 2020. The
Quality Charter confirms our commitment to our customers
to instil confidence in their purchase and the customer
experience journey that follows. Our aim is to hand over
a home that our customers are not only happy with, but
proud of.

We are also creating a Gleeson Subcontractor Quality Charter
which all our subcontractors will be required to agree to. This
will let both our customers and our subcontractors know what
to expect in their relationship with Gleeson.

STAKEhOLDER ENGAGEMENT CONTINUED

Employees

Your Voice employee
engagement survey

Our first employee engagement survey, Your voice, was
launched in June 2019 with a follow up survey completed in
february 2020. These surveys helped us to identify key focus
areas for the business, understand what is really important to
our employees and determine where to focus our efforts for
improvement.

We have analysed the results and held discussions with the
senior leaders in each division to understand the results. We
have used the data and these discussions to share best practices
across the Group and really focus on our strengths, as well as
identifying areas for improvement.

As a direct result of these surveys we are currently creating
“Engagement Teams”, whereby colleagues from different
disciplines will be attending engagement workshops to delve
deeper into the themes that have arisen. The Engagement
Teams will be working together to explore and suggest solutions
and ideas for improving key areas in the business. We look
forward to completing our next survey in early 2021, which will
hopefully demonstrate how much progress has been made.

Declan Waugh, Joiner

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Elenya McCue, Operations Support Manager

Mental health
We signed the “Time to Change” employers pledge to end mental
health discrimination. 19 mental health first aiders have been
trained throughout the year. We also held “Time to Talk” days
across all offices during Mental health Week to promote mental
health wellbeing throughout the organisation.

@Home
When James Thomson became Interim Chief Executive
Officer in June 2019, he immediately started sharing
a weekly newsletter with the business called @home.
The newsletter consists of weekly updates on the latest
developments across the business and recognises
outstanding performance from individual employees.
The newsletter is a positive opportunity to update
employees each week on our successes and on changes
across the business, as well as allowing for colleagues to
get to know one another through our “In the Spotlight”
feature where we interview employees.

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fINANCIAL STATEMENTS

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Employee focus groups defined
our Vision, Mission and Values

In late 2019, a team of brilliantly passionate colleagues from
different disciplines and areas of the business joined together in
pursuit of the “voice our values” team project to define our values
as a company.

The process involved workshop meetings with small groups
allowing colleagues to speak openly and review the information
that had previously been collected from the wider employee group.
The team worked together to really think outside of the box to
define “us” and ultimately came up with three core values that
reflect the behaviours and attitudes we want to see towards our
colleagues, customers and external partners. The team presented
these core values, along with their suggested vision and Mission
statements, to the senior leadership team. The final product can
be seen on pages 12 and 13 of this Annual Report or you can view
a video recorded by our Chief Executive Officer, James Thomson,
and employees at www.mjgleesonplc.com.

We are extremely proud of what we stand for and how our vision,
Mission and values were created as it demonstrates the real views
of the people that work for us. Our values are reflected in our day-
to-day behaviours and in our interactions with one another.

Roadshows
Early in 2020 the senior leadership team took to the road to hold
local “roadshows” for all our employees, communicating half-year
results and the strategy of the business, with a significant portion
of time allowed for Q&A sessions with the Executive Directors and
senior management team. The roadshows proved to be a great
success and we hope to continue to hold these in the coming year
if we can do so safely in the context of Covid-19.

STAR Awards
Our employees are at the very heart of
our success as a business, and recognising
the Passion, Collaboration and Respect
that they show on a daily basis is crucial.
The STAR awards were developed as a
way to praise our STAR employees for
their commitment, drive and willingness
to work above and beyond expectations. Colleagues nominate
one another on a monthly basis and one apprentice and one
employee are selected in each division. STAR winners get to spin
the “Wheel of Glee” to win a prize!

We recognised a record number of employees during the
lockdown period of March thanks to our employees’ passion and
commitment in response to such a challenging situation.

Closing the gap
Gleeson is an equal opportunities employer and we strive to
pay our employees equally for the same or equivalent work,
regardless of their gender.

We will continue to carry out pay and benefits audits at regular
intervals and managers who are involved in these audits
understand the background to pay and benefits and how it
impacts their staff.

We take part in and sponsor Women in Construction and Women
in Property networking events where we gain more insight into
how we can encourage more females into construction.

We reinforce the message with our internal recruitment team
to seek ways of recruiting more females into the construction
industry. We continue to look at roles that females occupy and
review how our succession planning programme fits in with
these roles.

We are also reviewing all of our current job descriptions to make
sure that they are all inclusive. further details can be found in our
Gender Pay Gap Report on our website, www.mjgleesonplc.com.

Gender breakdown

Male

Non-Executive Directors

Executive Directors

Senior management

386

Other employees

Female

192

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STAKEhOLDER ENGAGEMENT CONTINUED

Community

Sports Foundation
Our Sports foundation provides sponsorship opportunities
for local junior sports clubs and teams in the areas in which we
are building. This year alone we spent almost £4,000 on junior
sports sponsorship, and in the history of the programme we have
sponsored over 100 clubs and teams including netball, football,
rugby, tennis, cricket, athletics, ice hockey, and boxing!

Fair Tax Mark
We have met the standards to be granted the fair Tax Mark.
This accreditation is provided to companies who pay the right
amount of tax, at the right time and in the
right place. We pay our tax fairly and in
line with what we owe and are open and
transparent over our tax affairs and our tax strategy, a copy of
which can be viewed on our website, www.mjgleesonplc.com.

Engagement with local schools
We have always worked closely with schools close to our
developments and engage with them in many ways, including:
• holding health and safety talks to discuss the dangers of

•

building sites;
inviting pupils to visit our sites to talk to the sales and build
teams to gain an understanding of what goes into creating
a Gleeson development; and

• holding “Design a Bedroom” competitions with the winning

entry being recreated in one of our show homes.

This year we also launched a competition to allow students at a
local school to name our development in Egremont, Cumbria.
Pupils at Bookwell Primary were tasked with creating a new name
for the 29-plot site, which is adjacent to the school. There were
some fantastic entries, but the winning entry was submitted by
Joel Pickering, a Year 4 student, who chose “florence Drive” —
inspired by the now defunct florence Mine, which is now home to
an arts centre. Joel was awarded with a personal £50 book token
and £150 worth of book tokens for his school library.

School Court, Pegswood, Northumberland

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Kellie’s Angels netball club, hapton, Lancashire

Sustainable planning
We work with local residents, specialists and local councils to
ensure we are properly considering the needs of the community
and the environment. We hold public consultations or attend
parish or other local events to understand the views of local
people and we strive to take these into account in developing
sustainable and sensitive planning applications. We work very
closely with specialist ecology consultants to ensure we are
being respectful of the environment including local wildlife,
water needs, carbon emissions and more.

Pride in home ownership
We foster a sense of pride in home ownership and engagement
in the local community by only selling to residents; we do not
sell to investors or landlords. We also believe that, wherever
possible, home ownership should include the land on which it is
built, and we sell our homes as freehold wherever possible. The
only times we sell homes as leasehold is when we do not own
the land ourselves, and a peppercorn ground rent is payable on
these homes.

Having those new houses coming
in… it has given that bit of civic
pride to people living there, living
locally. Very much more positive,
people taking pride. This new
housing really has given a boost to
that area.

Councillor Mathieson, Cottingham North,
East Riding of Yorkshire Council in response
to our application for a second phase of
development at Dane Park, hull

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fINANCIAL STATEMENTS

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Blooming Great Garden Competition
We hold an annual “Blooming Great Garden Competition”
across our sites for Gleeson homeowners to send in photos of
their gardens. A panel of Gleeson employees then selects the
winner, which is never an easy choice with so many fantastic
entries submitted! The competition helps to increase community
spirit whilst encouraging homeowners to maintain and show off
their gardens and build that sense of pride in their homes and
communities.

Carbon emissions
The following table contains details of our energy usage and
carbon emissions for the Group in line with the newly enacted
Streamlined Energy and Carbon Reporting (“SECR”) requirements.
All energy usage and carbon emissions originate in the UK. Our
carbon emissions for the year are calculated in accordance with
the requirements of the Greenhouse Gas Protocol – a Corporate
Accounting and Reporting Standard.

2020

2019

Tonnes
CO2e
2020

Global energy
usage

Tonnes
CO2e
2019

Global energy
usage

427 176,650 Litres
149

236,090 Litres
587
810,795 KwH 213 1,156,808 Kwh

60
210,968 KwH
2,071 750,974 Litres 2,499

331 1,420,709 KwH

278,317 Kwh
905,937 Litres
397 1,552,443 Kwh

Total emissions

Car fuel
Gas
Liquid petroleum

gas (LPG)
Gas oil/diesel
Electricity

David Johnston, winner, Rosebank, Knowsley, Merseyside

Shareholders

Investor meetings
The Executive Directors, Chairman and Senior Independent
Director regularly meet and talk with shareholders. Those
meetings provide an opportunity to both set out the Company’s
performance, during interim and full-year result roadshow
presentations, and to discuss shareholders’ views on risk,
governance and sustainability. During the year over 60 meetings
and calls were held with shareholders and investors.

Total

3,024

Per unit completion

2.8

3,755

2.5

Scope analysis per unit completion

Scope 1 — burnt fuels
Scope 2 — electricity

Total

Tonnes CO2e
2020

Tonnes CO2e
2019

2.5
0.3

2.8

2.2
0.3

2.5

Our emissions per house built are higher than many other
housebuilders. Our newly established Sustainability Committee has
set a target to reduce carbon emissions by 20% to less than
two tonnes per home sold within three years. further details are
found on page 25 of the Sustainability Report.

Investor presentations provide an
opportunity for engagement.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STAKEhOLDER ENGAGEMENT CONTINUED

Subcontractors and suppliers

Local jobs for local people
We are not just committed to building communities,
but involving the communities in which we build by
employing individuals who live within the local area of our
developments. We want to ensure that we are making a
real and lasting contribution to the local community and
economy. When we open a new development, we target
recruitment for all employees and contractors within close
proximity of the site so that we can provide employment
opportunities as well as access to affordable homes.

Modern slavery and human trafficking policy
We recognise modern slavery and human trafficking as important
human rights issues and we are committed to taking appropriate
and proportionate steps to ensure human rights are fully upheld
within our Group and our supply chain. We confirm that all our
existing suppliers and subcontractors have appropriate policies and
procedures in place to manage their own risks, and we require all
new suppliers and subcontractors to make the same confirmation
and agree to our modern slavery statement before we agree to
deal with them.

Our Build Managers, Site Managers and Assistant Site Managers
are most likely to spot issues and have all been trained on what
signs to look out for. Additionally, our hR department has been
trained on modern slavery relating to the construction industry and
all employees have been updated on “spotting the signs” in our
weekly newsletter. We will continue to issue updates and reminders
via internal communications including site noticeboards and the
weekly newsletter.

Specialist consultants
In both Gleeson Strategic Land and Gleeson homes we work
closely with specialist consultants who understand the needs
and requirements of planning committees. Their expertise help
us to achieve planning consent on well-planned and attractive
developments. In Strategic Land, we work closely with landowners
in order to maximise land value whilst balancing their needs with
other stakeholders.

Michael Crowley, forklift TruÔck Driver

Safe and secure sites
In January 2020 we launched our new health and safety brand
“homeSafe” reflecting our belief that everyone who is involved in,
or affected by, our development work has the right to remain free
from harm and return home safe every day.

During the year we standardised our site compound set-up,
reducing the risk of injury, increasing efficiency, and setting the
tone of the quality and professionalism that we expect on our sites.

We took these changes further to ensure that every site was
Covid-19 secure before allowing build to recommence following the
shutdown period. We implemented Covid-19 operating procedures
across all of our sites, sales areas, and offices, including social
distancing measures, appointing Covid-19 social distancing marshal
roles on site, increasing hand washing facilities and enhancing
cleaning regimes.

We will monitor the Covid-19 situation as it continues to evolve and
ensure that not only do we follow latest Government advice, but
that we are putting our employees and contractors safety at the
heart of our decisions.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Greymoor Meadows, Carlisle, Cumbria

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Lizzie fidler and Rachael Webb, Monteney Park, Sheffield

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

fINANCIAL REvIEW

Despite the significant challenges surrounding
the Covid-19 pandemic, we responded swiftly
and decisively to protect value and ensure that
we have the working capital needed to finance
our growth plans.

Stefan Allanson
Chief financial Officer

COVID-19 – FINANCIAL RESPONSE AND IMPACT

The results for this year have been heavily impacted by the
Covid-19 pandemic, with low levels of completions during our
final quarter, which is historically our strongest. having sold
811 homes in the first half of the year, we were comfortably on
track to deliver more than 1,700 completions for the full year,
but ended with 1,072 unit completions compared with 1,529 in
the prior year. Operating profit in Gleeson homes fell by 70.1%
to £9.0m.

Similarly, Gleeson Strategic Land was heavily impacted and
completed only two land sales during the year. Divisional
operating profit was £0.2m (2019: £13.0m). Our focus now is
on completing the land sales brought forward into the new
financial year.

Our response to the pandemic included the following:

Land and other spend
Land and other discretionary
spend was paused during the
period of shutdown.

Pay reductions
All members of the Board
took reductions in salaries or
fees of 30% from 6 April to
30 June.

Senior management took
reductions in salary of
between 5% and 20% for the
same period.

Share placement
We raised £16.4m gross funds
through a share placement
to existing shareholders and
other high-quality institutional
investors.

Loan facility draw down
We drew down £60m
of our £70m bank loan
facility to ensure adequate
cash reserves were readily
available. The £10m overdraft
facility remained undrawn.

Job Retention Scheme
We furloughed 76% of the
workforce, making use of the
Job Retention Scheme grants
to protect jobs, and topped
up the grants to between 80%
and 95% of salary.

At 30 June 2020 only 14%
remained on furlough.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Covid-19 impacted results
As a result of the Covid-19 pandemic, the results for the Group
are significantly below those reported for the previous financial
year. Revenue reduced by 41.1% to £147.2m (2019: £249.9m).

Gleeson homes revenue fell 28.5% to £140.9m (2019: £197.0m)
with its final quarter of completions almost entirely wiped out. As
a result, there was a 29.9% decrease in the number of homes sold
to 1,072 (2019: 1,529). Selling prices, however, held up strongly
with an increase to average selling price (“ASP”) for the year to
£130,900 (2019: £128,900).

Gleeson Strategic Land sold only two small sites during the year
generating revenue of £6.3m (2019: £52.9m). The land sales that
were planned in the final quarter are now expected to complete
in the new financial year.

Gross profit for the Group fell by 46.1% to £40.4m (2019:
£75.0m). The gross profit of Gleeson homes decreased by 34.1%
to £39.1m (2019: £59.3m). Gross profit margin also reduced, as
expected, from 30.1% to 27.8%. The impact of Covid-19 related
costs and provisions totalled £2.9m. This includes non-productive
site overhead costs incurred during the controlled closure and
lockdown period which would otherwise have been added to
work in progress; additional costs incurred due to extended site
durations resulting from reduced productivity levels impacting
site margins; increased provisions for abortive land bid costs on
sites not yet owned which may no longer be viable to purchase
as a result of heightened uncertainty; and additional costs
associated with operating under Covid-19 guidelines. The gross
profit achieved on sales in Gleeson Strategic Land was £1.3m
(2019: £15.7m).

Administrative expenses increased by £0.2m (0.5%) in the year
as investment to support the underlying growth of the business
continued. This investment was partially offset by £1.4m furlough
grant income under the Government’s Job Retention Scheme
during the months of April to June 2020. During the year,
settlement was also reached with the former Chief Executive
Officer on the terms of his departure.

Operating profit from continuing operations was £5.9m (2019:
£41.0m), a reduction of 85.6% on the previous year. Gleeson
homes contributed £9.0m (2019: £30.1m) and Gleeson Strategic
Land contributed £0.2m (2019: £13.0m), with Group overheads
being £3.3m

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Net finance expenses of £0.4m (2019: £0.2m income) consisted
of finance expenses of £1.1m (2019: £0.7m) being interest payable
on bank facilities, bank charges and the unwinding of discounts
on deferred payables partly offset by finance income of £0.7m
(2019: £0.9m) consisting of the unwinding of discounts on deferred
receivables on land sales and shared equity receivables.

As a result, the Group delivered profit before tax of £5.6m (2019:
£41.2m).

Tax
A total tax charge, including discontinued operations, of £0.7m
(2019: £7.7m) has been recorded, reflecting an effective rate of
tax of 14.1% (2019: 18.8%). This reflects a lower profit before tax,
the use of Land Remediation Relief available to the Group and the
impact of the change in the tax rate from 17% to 19% on the value of
deferred tax assets.

Deferred tax assets relating to unused tax losses have been
recognised to the extent that it is probable that taxable profits will
be available against which the asset can be utilised. The Group
now has £12.7m (2019: £13.0m) of gross tax losses, of which £3.8m
(2019: £4.1m) are recognised in calculating the deferred tax asset.
The deferred tax asset recorded within the consolidated statement
of financial position totals £2.2m (2019: £2.7m).

Discontinued operations
Discontinued operations incurred a loss after tax of £0.3m during the
year (2019: £0.3m). This related to the costs of Gleeson Construction
Services Limited, whose activity is limited to resolving claims from
the legacy businesses that were sold in 2005 and 2006. The level of
claims has now reduced to an insignificant level.

Profit for the year
The profit after tax for the year was £4.5m (2019: £33.3m).

Earnings per share
Reported basic earnings per share from continuing and
discontinued operations decreased by 86.7% to 8.1 pence (2019:
61.0 pence).

Return on capital employed
Return on capital employed reduced to 3.1% (2019: 25.9%)
reflecting significantly lower returns this year due to the impact of
Covid-19.

Dividends
In response to the Covid-19 crisis, the Board took the decision in
March 2020 to cancel the interim dividend of 12.0 pence per share
(2019: 11.5 pence per share). The interim dividend would have
equated to £6.6m.

As a result of the ongoing uncertainty and the impact of Covid-19,
the Board has also taken the decision not to propose a final
dividend for the year (2019: 23.0 pence per share), but, in line with
its capital allocation policy, is committed to resuming dividend
payments on a progressive basis as soon as it is prudent to do so.

Despite the remaining uncertainties and the impact of Covid-19
on this year’s result, the Board maintains its interim target that
Gleeson homes will deliver 2,000 homes per annum in 2022.
The Group, as a whole, expects to return to delivering significant
growth in the current year and beyond.

KEY PERFORMANCE INDICATORS

Divisional operating profit1 (£m)

2020

2019

2018

2017

2016

0.2 9.0

13.0

12.6

12.0

10.2

■ Gleeson Strategic Land
■ Gleeson homes

Group profit before tax (£m)

5.6

2020

2019

2018

2017

2016

Total dividend (pence)

30.1

26.2

22.8

19.5

41.2

37.0

33.0

28.2

2020

Nil

2019

2018

2017

2016

24.0

14.5

Cash balance (£m)

2020

2019

2018

2017

2016

30.3

41.3

34.1

23.2

Return on capital employed2 (%)

3.1

2020

2019

2018

2017

2016

34.5

32.0

76.8

25.9

26.6

25.4

23.2

Normalised earnings per share (pence)

8.1

2020

2019

2018

2017

2016

61.0

55.6

48.5

42.6

1 Gleeson homes operating profit includes profit on land sales of

£0.1m in 2020; £nil in 2019; £nil in 2018; £1.0m in 2017; and £nil in
2016.

2 Return on capital employed is calculated based on earnings

before interest and tax (“EBIT”) from continuing and discontinued
operations before exceptional items expressed as a percentage
of the average of opening and closing net assets after deducting
deferred tax balances and cash net of borrowings.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

fINANCIAL REvIEW CONTINUED

Statement of financial position
During the year to 30 June 2020, shareholders’ funds increased by
4.3% to £212.6m (2019: £203.9m). Net assets per share decreased
to 366 pence, a reduction of 2.1% year on year (2019: 374 pence).

In the year, non-current assets decreased by 7.7% to £20.3m (2019:
£22.0m). Property, plant and equipment balances increased in the
year mainly due to the recognition of right-of-use assets under IfRS
16 “Leases”, but this increase was more than offset by the reduction
in long-term debtors (£4.6m) and deferred tax assets (£0.5m).

Current assets increased by 16.4% to £301.7m (2019: £259.2m),
with inventories increasing by £33.2m to £216.3m and trade and
other receivables decreasing by £37.5m to £8.3m. Cash balances
of £76.8m include the funds received from drawing down £60m of
the Group’s £70m committed bank facility in March 2020, which
remained drawn at 30 June 2020.

Total liabilities increased by 41.5% to £109.4m (2019: £77.3m). Trade
payables were significantly lower than the previous year at £25.4m
(2019: £49.3m) reflecting the reduced level of build activity during
May and June. In addition, £3.1m of lease liabilities have been
recognised under IfRS 16 (2019: £nil).

Cash flow
The Group’s cash outflow before financing activities was £15.9m,
compared to cash generated in 2019 of £7.8m.

In March 2020, in response to the Covid-19 crisis, the Group drew
down £60m from its £70m committed bank facility. In April 2020,
the Group undertook a successful share placing to add a further
£15.9m, net of costs, to cash reserves.

After payment of the final dividend for 2019 (£12.6m) in December
2019, the Group increased cash balances by £46.5m.

Bank facilities
In October 2019, the Group increased its bank facility from £40m
to £70m and extended its maturity to October 2024. Of the facility,
£60m was fully drawn at the balance sheet date with the £10m of
overdraft facility remaining unutilised and available.

As set out in note 1 of the financial statements on page 93, the
bank facilities contain two covenants that are aligned to profit
generation on a 12-month rolling basis. As a result of the financial
modelling and risks to profitability against budget, the Group
has sought and agreed a waiver for certain covenant test dates
in the next 12 months. In their place a liquidity covenant has been
introduced.

Pension
The Group contributes to a defined contribution pension scheme.
A charge of £1.0m (2019: £1.0m) was recorded in the consolidated
income statement for pension contributions. The Group has no
exposure to defined benefit pension plans.

Stefan Allanson
Chief financial Officer
13 September 2020

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Broad Park, South Elmsall, West Yorkshire

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

RISK MANAGEMENT

How we
manage risk

Effective risk management is essential to the achievement of our strategic priorities. Risk
management controls are integrated across all levels of our business and operations.

The Board has overall responsibility for the Group’s management and assessment of risk, supported by the Audit Committee. Our risk
management framework includes a Group risk register which includes the primary risks to the business. The register identifies both
principal and emerging risks and informs a formal risk assessment process which considers the likelihood and impact of the identified
risks together with any mitigating controls that are already in place or are planned. This position is formally reviewed by the Audit
Committee at the majority of its scheduled meetings, including consideration of emerging risk areas.

Our risk management framework consists of the following components:

THE BOARD

• Sets the Group strategy and overall

• Reviews operational and financial

• Overall responsibility for monitoring

risk appetite

performance

key risks

AUDIT COMMITTEE

• Monitors the Group’s

financial control systems
and the integrity of
reporting

• Approves and advises on
the internal audit plan

• Monitors the performance,

• Monitors the management

effectiveness and
independence of external
audit

of key risks

• Monitors and manages day-to-day

operational and financial performance

• Responsible for the identification
of operational and strategic risks

• Ensures internal control policies

set by the Board are implemented

DIVISIONAL MANAGEMENT TEAMS

• Performs a risk-based internal audit

• Provides assurance to the

• Manages the Group’s insurance

programme

Audit Committee

policies and procedures

INTERNAL AUDIT

We identify our risks into three sources:

External – outside of our direct control with mitigation measures built into strategy
Strategic – directly related to the strategy of the Group
Operational – risks related to the day-to-day operation of the divisions

The Group’s risk framework shows how the
principal risks are rated by the Board in terms of
their potential impact on the business and the
likelihood of the risk transpiring. The inherent
risks are presented, before taking account of
mitigating actions.

Changes in how the Board have assessed the
risks during the year are seen in the economic
environment and the mortgage markets,
primarily driven by the Covid-19 pandemic and
the ongoing uncertainty over withdrawal from
the EU.

The table on pages 43 to 45 is provided to
ensure stakeholders appreciate those risks that
the Board has identified that will have a material
impact on the business should they arise.

T
C
A
P
M

3 4 5
6 8 9
10 14

1 2

LIKELIhOOD

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

COVID-19 RISK IMPACT
The Board did not identify the Covid-19 pandemic, or any future pandemic, as a specific risk item, but instead took it into consideration
when assessing the principal risks shown in the table below.

Risk

Assessment of Covid-19 impact

Economic
environment

The risk has increased this year as the Covid-19 pandemic has caused heightened uncertainty in the housing and strategic land
markets and increased the potential for a prolonged economic downturn. This would impact customer demand, affordability
and house prices.

9
1
-
D
v
O
C

Mortgage
availability

Land
availability

Build
costs and
availability

Health and
safety

The risk has increased this year as the impact of Covid-19 on levels of employment and lending could reduce mortgage
availability and have a detrimental impact on potential customers being able to purchase our homes.

The availability of land in our target areas has not been significantly impacted by Covid-19 and land continues to be available at
sensible prices.

The pandemic may still have a delayed effect on our supplier base as the Job Retention Scheme and other Government support
measures come to an end. however, the Group has a policy of utilising a wide supplier base and is, therefore, not overly reliant
on any single provider by region or trade.

We undertook a rigorous review of all our site and sales office procedures in line with relevant Government advice and social
distancing guidelines and are confident these measures will enable us to operate and build in a safe manner. for further details
on our health and safety actions in response to Covid-19, please see page 36.

Risk

Description of risk

1
Economic
environment

Residual risk:
high

An economic downturn or
uncertainty in the wider market
could affect buyer confidence and
the demand for new houses. This
could have a negative impact on
revenue, profit, cash generation
and the carrying value of the
Group’s assets.

2
Mortgage
availability

Residual risk:
high

The availability of mortgage
finance, particularly the deposit
requirements for first-time buyers,
is crucial to customer demand.
Restrictions on mortgage funding
could reduce demand for new
homes and strategic land sites
and negatively impact the Group’s
revenue and profit.

3
Land
availability

Residual risk:
Medium

An increase in land prices would
reduce the viability of sites in
Gleeson homes given the high
hurdle rates internally set, and
would increase competition for
promotional opportunities in
Gleeson Strategic Land, driving
down profitability and cash flow.

4
Planning
policy and
regulations

Residual risk:
Medium

Planning regulation changes due
to changes in Government policy
or complexities within the system
may affect the Group’s ability
to secure planning consent on a
timely basis, increasing the cost
of delivery of consented land for
development. Other Government
policy changes, including on help
to Buy, may adversely impact the
Group.

5
Build
costs and
availability

Residual risk:
Medium

Shortages or increased cost
of materials or skilled labour,
the failure of key suppliers or
the inability to secure supplies
on appropriate credit terms
could increase costs and delay
construction.

L
A
N
R
E
T
X
E

Change
in year

Assessment

Mitigation

Covid-19 and the UK’s
withdrawal from the EU
have created heightened
uncertainty in the housing
and strategic land markets
and increased the risk of
a prolonged economic
downturn.

• Lead indicators of the economy and housing

market are closely monitored.

• A cautious approach to funding is maintained.

• visitor and reservation rates, prices and

incentives are regularly reviewed.

• Investment in new sites and spend are carefully

monitored.

The impact of Covid-19
on levels of employment
and lending could reduce
mortgage availability and
have a detrimental impact on
potential customers being able
to purchase our homes.

• Lead indicators of mortgage availability are

closely monitored.

• Gleeson homes provides a range of customer

assistance packages.

• Continually innovate to find additional ways to

support customers.

• Work with key lenders to ensure products are

appropriate and available.

Land continues to be available
at sensible prices to support
the growth of Gleeson homes.

There are opportunities to
promote good quality land for
development in the South of
England.

• We have a clearly defined strategy and

geographic focus.

• We work closely with local authorities to

identify and purchase otherwise unwanted land
at sensible prices.

• There is a formal appraisal process and rigorous
adherence to margin requirements and rates
of return.

Many local authorities
now hold virtual planning
committees so that the
planning process can continue
despite the impact of Covid-19.

We await to see the impact of
the Government’s White Paper
on reforming the planning
landscape but we welcome the
intention to simplify and speed
up the process.

Whilst the full impact of
Covid-19 on the supply chain
is yet to be realised, we have
not seen a major impact on
material or labour availability
to date.

• Our planning experts monitor changes to

planning processes and legislation.

• We consult with central Government, Parliament

and local authorities, directly and through
industry bodies, to understand proposed
changes and highlight potential issues.

• Changes to help to Buy will not adversely

impact the Group, as the majority of our homes
are below the regional caps.

• The Group has multiple suppliers for both
labour contracts and material supplies.

• The Group seeks to partner with the supply

chain and has systems in place to monitor and
control their performance.

• Where appropriate, Group purchasing

arrangements are in place to ensure the supply
of materials at competitive prices.

• A dedicated subcontractor procurement

programme is used to optimise the sourcing of
subcontractor resource.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

RISK MANAGEMENT CONTINUED

Risk

Description of risk

Change
in year

Assessment

Mitigation

The Group has exposure to
receivables on deferred payment
terms, particularly on certain land
sales. These receivables could
not be collected due to customer
default, resulting in a reduction of
cash flow and profit.

Too much focus in specific
geographic areas increases
exposure to localised downturns
and saturated markets.

L 6
A
N
R
E
T
X
E

Credit risk

Residual risk:
Medium

C 7
G
E
T
A
R
T
S

Geographic
balance

Residual risk:
Medium

8
People

Residual risk:
Medium

failure to attract, develop and
retain good people with the right
skills may result in demotivated
staff, decreased productivity
or quality and stifled growth
opportunities.

The lack of leadership arising
from the sudden loss of senior
management could lead to a lack
of direction and a breakdown of
the Gleeson “model”, leading to
inefficiencies and demotivated
staff.

9
Cyber and IT
systems

Residual risk:
Medium

failure of the Group’s IT systems
or unauthorised access to systems
due to inadequate protection,
controls, processes or cyber
attack could result in data loss,
business disruption, reputational
damage or financial loss.

L
A
N
O
T
A
R
E
P
O

10
Health and
safety

Residual risk:
Medium

health and safety breaches can
result in injuries to employees,
subcontractors or site visitors,
delays in construction, additional
cost, reputational damage,
criminal prosecution or civil
litigation.

The risk to counterparty
solvency is closely monitored
and, given the size and nature
of those customers, the Group
does not expect any to default.

• Credit risk assessments are performed on all
customers buying land on deferred terms.

• The Group maintains security over the majority

of land sold on deferred terms.

There are still too few homes
being built for those wanting
affordable homes in the
North of England and the
Midlands. Our target areas and
sector of the housing market
continues to offer significant
opportunities for growth.

The increased focus on
recruitment, development,
and recognition of our people
has improved employee
engagement. The leadership
development and succession
programme put in place has
continued to enhance the
depth of senior leadership. It is
expected that these changes
will help us to continue to
attract, develop and retain
good quality people.

Covid-19 has forced the
majority of our office-based
employees to work from
home. New working protocols
are in place to mitigate the risk
of fraud and cyber crime. We
are investing significantly in
our IT systems and networks
so these remain secure and
up-to-date.

• Land is being acquired over a wide geography

of Northern England and the Midlands.

• house types have been aligned to a standard

product.

• We continue to grow our footprint into an

expanding geographic area where land prices
remain viable.

• We have regular performance and

development reviews.

• Our staff remuneration policy is regularly

reviewed and benchmarked against peers to
ensure it remains attractive and performance-
based.

• Employee share ownership is encouraged.

• We have an established leadership

development and succession planning
programme covering senior and mid-level
management.

• Industry standard systems are managed by a

central IT team with outsourced support.

• Contingency plans are in place and regularly

tested.

• The majority of data is held in secure externally

managed servers.

• IT Disaster Recovery Plan in place and regularly

reviewed.

• Regular testing has been conducted, in
particular during remote office working.

The health and safety of our
people and anyone associated
with our developments is
paramount to our business.
We responded quickly and
robustly to address the
challenges of Covid-19 and are
confident that our employees
and contractors can operate
safely in their working
environments.

• Experienced head of health and Safety in place
and investment in personnel to provide regional
support and guidance in all health and safety
matters.

• Our documented policies and procedures are
regularly reviewed and modified in order to
ensure continuous improvement.

• Launched “homeSafe – everyone, everyday”

to promote health and safety awareness across
the Group.

Inadequate insurance cover
where loss exists, including
latent defects that could arise
on completed projects during
the liability period could lead to
financial loss.

11
Uninsured
loss and
latent
defects

Residual risk:
Medium

Insurance cover, in particular
in relation to liabilities relating
to historic claims, has become
more difficult to obtain and
more costly.

• Reputable brokers are utilised to support and

advise on levels of cover required and emerging
areas of risk.

• Insurance policies are reviewed annually to

ensure sufficient cover is in place.

• We have experienced personnel dedicated to

dealing with latent defect claims.

• The provisions relating to completed contracts

are reviewed on a regular basis.

• The Company has segregated the continuing
businesses of the Group from the Group’s
legacy building contracting and engineering
businesses.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Risk

Description of risk

12
Corporate
liquidity

Residual risk:
Medium

An inability to meet obligations
as they fall due as a result of
insufficient cash or the bank
facility being unavailable due to
either breach of covenant or bank
failure could result in insolvency.

Lack of liquidity may also limit the
Group’s ability to take advantage
of business opportunities as
they become available and
consequently be a possible
impediment to future growth.

The Group could suffer loss from
financial fraud and the wilful
or negligent misstatement of
financial results.

Inadequate tax accounting
arrangements in the Group
due to either poor control or
poor understanding across the
business could lead to inaccurate
invoicing, incorrect payroll
treatment, fines, or criminal
conviction in the case of a
breach of the Corporate Criminal
Offences Act.

13
Financial
irregularity
or fraud

Residual risk:
Low

14
Tax control
environment

Residual risk:
Medium

L
A
N
O
T
A
R
E
P
O

15
Customer
service

Residual risk:
Medium

A failure to build new homes to
the standard and quality that our
customers expect, to not treat
our customers fairly, or to not
respond adequately to complaints
or rectify defects in a timely and
professional manner. Damage
to our reputation and adverse
publicity from perceived poor
build quality that would lead to
reduced confidence would impact
future revenues in a customer
driven environment.

Change
in year

Assessment

Mitigation

The Covid-19 pandemic will
make banks and lenders more
nervous about increasing the
levels of credit in the system.
The Group maintains a strong
relationship with its investors
and lenders.

• The Group has committed facilities of £70m

secured until October 2024.

• Cash is controlled by robust budgeting,

forecasting and cash management.

• The Executive Directors maintain regular

contact with investors and lenders to ensure
adequate bank facilities are in place.

• The Group completed a share placement

raising £16.4m of gross funds.

• Dividends, land spend and discretionary spend

have been cut to preserve liquidity.

The Group monitors the
risk and new protocols are
implemented if there is a
perceived risk from existing or
new working practices.

• The Group has financial and management
controls designed to segregate duties and
minimise opportunities for fraud.

• financial reporting processes are the subject of

rigorous and timely management reviews.

Although the tax environment
continues to evolve as a
result of changing legislation,
the Group has adequate
knowledge and experience to
maintain compliance with tax
legislation, supported by
third-party tax advisers.

We are embedding quality at
the heart of what we do. We
will not hand over a new home
to a customer where it does
not meet with our strict quality
requirements.

• Clear control procedures are documented and

reviewed regularly.

• External experts are employed to support

the production of corporation tax and other
returns.

• Regular reviews are carried out by external
experts to ensure systems and policies are
operating effectively.

• A Group tax risk register is maintained and
regularly reviewed by the Audit Committee.

• Staff training is conducted on compliance with
laws and regulations including relevant tax
legislation.

• Standardised house types and a considered

build rate reduce errors.

• An improved final inspection process identifies
issues and allows us to remedy them before
handing over to customers.

• Implemented the “Gleeson Quality Charter”

setting out what our customers can expect in
terms of quality assurance with regards their
new home purchase.

• Mapped out our “Customer Journey” laying

out key milestones in buying from us and what
should be done, and when.

• Invested in Customer Care teams across the

business.

Strategic Report approval statement
The Strategic Report, contained in pages 1 to 45, has been approved by the Board of Directors and is signed on its behalf by:

James Thomson
Chief Executive Officer
13 September 2020

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

build

opportunity

The Copley family, Kings Park, Doncaster, South Yorkshire

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

GOvERNANCE REPORT

It is my pleasure to introduce the Governance
Report, the Group’s first under the new UK
Corporate Governance Code 2018.

Dermot Gleeson
Chairman

Principal responsibilities
Principal responsibilities

Overall leadership
• Responsible for direction, management, performance,

and long-term success of the Group

• Set the strategy and objectives of the Group

• Assess risks and opportunities relating to the future

success of the business

• Monitor internal control and risk management

• Oversee the sub-committees: Nomination, Audit,

Remuneration, and Disclosure Committees

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Chairman’s
introduction

Board leadership and

Company purpose

The year to 30 June 2020 has been a year of significant change
in the Group’s governance: a new Chief Executive Officer was
appointed in December 2019; two new independent Non-Executive
Directors joined the Board in October 2019; and a new Company
Secretary was appointed in March 2020.

Board changes
following a rigorous and extensive search process, James
Thomson, who joined the Group as interim Chief Executive
Officer in June 2019, was appointed Chief Executive Officer on a
permanent basis in December 2019.

fiona Goldsmith and Andrew Coppel, CBE joined the Board as
independent Non-Executive Directors in October 2019. following
a period of handover, Colin Dearlove and Ross Ancell resigned
from the Board with effect from 30 June 2020. We have benefited
tremendously from their commitment and wise counsel, and, on
behalf of the Board, I would like to express our sincere thanks to
both of them.

following a period of handover, fiona has now been appointed
as Chair of the Audit Committee and the Company’s Workforce
Representative, and Andrew has been appointed as the Company’s
Senior Independent Director and Chair of the Remuneration
Committee.

Leanne Johnson was appointed head of Legal and Company
Secretary in March 2020, taking over from Stefan Allanson, who
remains Chief financial Officer.

Culture
Earlier in the year we launched Our vision, Mission, and values
initiative, which is described in detail on pages 12 and 13. It is
pleasing that the results of our latest employee engagement
survey, Your voice, indicates that levels of employee engagement
and overall satisfaction are very high following the actions that
have been taken this year.

Engagement with stakeholders
The Board embraces the ethos behind the requirements of Section
172 of the Companies Act. Information on how we engage with our
stakeholders is set out in our Section 172 Statement on page 29.

The Governance Report below sets out our governance structure
and processes and the key activities undertaken by the Board
and its Committees during the financial year. As always, we would
welcome feedback about governance from our stakeholders.

We are closely monitoring the ongoing impact of Covid-19 and
developments in UK regulation in relation to how AGMs may be
held at this time. further details about the AGM will be provided
in the Notice of AGM. In the meantime, I would encourage
shareholders to submit any questions they may have for the Board
in advance by contacting the Company Secretary and we will
ensure the questions are answered in due course.

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Christopher Mills represents a major shareholder, harwood Capital
LLP, and is therefore not considered to be “independent” within the
definition of that term contained in the Code.

As a result, less than half of the Board, excluding the Chair, are
Non-Executive Directors who are considered to be independent
under the terms of the Code. This position has been reviewed by
the Board and whilst this was considered to be appropriate for
the business, the Board has decided to initiate a search for an
additional independent Non-Executive Director.

Provision 38
As disclosed in previous Annual Reports, the Chief financial Officer
received pension contributions of 15% of salary. As reported on
page 65, the Chief financial Officer has agreed to a voluntary
reduction over three years to 6.5%, bringing his contributions
into line with the maximum level available to the majority of the
workforce.

Dermot Gleeson
Chairman
13 September 2020

Code compliance
During the period under review, the Company, as a premium listed
company, was subject to the 2018 edition of the UK Corporate
Governance Code (“the Code”) issued by the financial Reporting
Council (“fRC”).

The Board and its Committees are responsible for ensuring that,
wherever possible, compliance with the Code is achieved. This
is demonstrated throughout this Governance Report and, of
particular note, are the Code principles as set out below with
references to further information.

Key sections within the Governance Report

Board leadership and Company purpose – page 48

Division of responsibilities – page 54

Composition, succession and evaluation – page 56

Audit, risk and internal control – page 58

Remuneration – page 64

Compliance statement
The Company has complied with all the principles of the Code
for the year ended 30 June 2020 and the vast majority of its
provisions. however, as in previous years, there are some instances
where the Company has chosen to take advantage of the flexibility
offered with the “comply or explain” principle when applying
certain provisions. The Code recognises that good governance
can be achieved by other means and the Board believes the
approach taken is the most appropriate for the Company and its
shareholders, whilst remaining consistent with the spirit of the
Code.

Provisions 9 and 19
The Chairman of the Board, Dermot Gleeson, was appointed to the
Board in 1975 and has previously been Executive Chairman and
Chairman and Chief Executive, and therefore was not considered
independent at the time of his appointment to Chairman. The
Board continues to support this appointment based on the
extensive knowledge of the Group and industry that Dermot brings
to the role and to Board discussions.

Provisions 10 and 11
As covered under “Board independence”, Ross Ancell and Colin
Dearlove had both served on the Board for more than nine years
from the date of their first election. Whilst the Board was satisfied
that they remained independent in character and judgement and
there were no relationships or circumstances which otherwise
affect, or could appear to affect, their independence, they have
each retired from the Board effective 30 June 2020.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ThE BOARD

The Board
of Directors

Dermot Gleeson MA (Cantab)
Chairman

James Thomson MA (Oxon), ACA
Chief Executive Officer

Stefan Allanson ACMA, FCT
Chief financial Officer

Joined the Board in 1975. Dermot was
appointed Chief Executive in 1988
and Chairman in 1994. he relinquished
the post of Chief Executive in 1998.
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.

Appointed to the Board in June 2019
as interim Chief Executive Officer and
appointed to the role permanently
on 2 December 2019. James was
previously Chief Executive of Keepmoat
homes. Prior to Keepmoat, James
was Group finance Director and Chief
Operating Officer of DTZ (now part of
Cushman & Wakefield). he qualified
as a Chartered Accountant with
PricewaterhouseCoopers and spent
ten years in investment banking with
hSBC and Deutsche Bank. James is a
local authority councillor for the City of
London and the Chairman of the City of
London Police Authority Board.

Appointed to the Board in July 2015.
Stefan joined the Group in June 2015
as Chief financial Officer designate
from Keepmoat homes where he held
the Deputy Chief financial Officer role.
Stefan qualified as an accountant in 1994,
following which he held senior finance
roles at honda Motor Co Limited, BTP plc,
The Skills Market Limited, The vita Group
Limited and Tianhe Chemicals.

Andrew Coppel CBE, FCA

Independent Non-Executive

Fiona Goldsmith FCA

Independent Non-Executive

Christopher Mills

Non-Executive Director

Director and Senior Independent

Director and Workforce

Director

N A R

Representative

N A R

Appointed to the Board in October

Appointed to the Board in October 2019.

Appointed to the Board in January 2009.

2019. Andrew is currently Chairman of

fiona is currently Non-Executive Director

Christopher is the founder of harwood

Dolphin Capital Investors, Arcadia Group,

and Chair of the Audit Committee at

Capital Management Group and formerly

and Shooting Stars Children’s hospices.

Safestyle UK plc and was formerly

Chief Investment Officer of J O hambro

following his executive career, including

Non-Executive Director and Chair of the

Capital Management Limited from 1993

roles at Queens Moat houses and De

Audit Committee at Walker Greenbank

to 2011. he is also Chief Executive and

vere Group, Andrew has undertaken

plc. following qualification at KPMG,

Investment Manager of North Atlantic

a number of non-executive positions

fiona held senior finance roles at first

Smaller Companies Investment Trust PLC,

including Crest Nicholson. following

Choice holidays plc and Land Securities

a UK listed investment trust. Christopher

seven years as Chairman of Tourism

Group plc.

Ireland, Andrew was appointed CBE in

2008 for services to Irish Tourism.

is a director of several publicly quoted

companies, including Augean plc and

EKf plc.

COMMITTEE KEY

Nomination Committee

A Audit Committee

R Remuneration Committee

Disclosure Committee

Committee Chair

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Dermot Gleeson MA (Cantab)

James Thomson MA (Oxon), ACA

Stefan Allanson ACMA, FCT

Chairman

Chief Executive Officer

Chief financial Officer

Joined the Board in 1975. Dermot was

Appointed to the Board in June 2019

Appointed to the Board in July 2015.

appointed Chief Executive in 1988

as interim Chief Executive Officer and

Stefan joined the Group in June 2015

and Chairman in 1994. he relinquished

appointed to the role permanently

as Chief financial Officer designate

the post of Chief Executive in 1998.

on 2 December 2019. James was

from Keepmoat homes where he held

Previously employed in the Conservative

previously Chief Executive of Keepmoat

the Deputy Chief financial Officer role.

Party Research Department, the

homes. Prior to Keepmoat, James

Stefan qualified as an accountant in 1994,

European Commission and Midland

was Group finance Director and Chief

following which he held senior finance

Bank International Limited. formerly

Operating Officer of DTZ (now part of

roles at honda Motor Co Limited, BTP plc,

a Trustee of the British Broadcasting

Cushman & Wakefield). he qualified

The Skills Market Limited, The vita Group

Corporation, Chairman of the Major

as a Chartered Accountant with

Limited and Tianhe Chemicals.

Contractors Group, a Board Member of

PricewaterhouseCoopers and spent

the housing Corporation, a Director of

ten years in investment banking with

the Construction Industry Training Board

hSBC and Deutsche Bank. James is a

and a Trustee of the Institute of Cancer

local authority councillor for the City of

Research.

London and the Chairman of the City of

London Police Authority Board.

Andrew Coppel CBE, FCA
Independent Non-Executive
Director and Senior Independent
Director

Fiona Goldsmith FCA
Independent Non-Executive
Director and Workforce
Representative

N A R

Christopher Mills
Non-Executive Director

Appointed to the Board in October
2019. Andrew is currently Chairman of
Dolphin Capital Investors, Arcadia Group,
and Shooting Stars Children’s hospices.
following his executive career, including
roles at Queens Moat houses and De
vere Group, Andrew has undertaken
a number of non-executive positions
including Crest Nicholson. following
seven years as Chairman of Tourism
Ireland, Andrew was appointed CBE in
2008 for services to Irish Tourism.

Appointed to the Board in October 2019.
fiona is currently Non-Executive Director
and Chair of the Audit Committee at
Safestyle UK plc and was formerly
Non-Executive Director and Chair of the
Audit Committee at Walker Greenbank
plc. following qualification at KPMG,
fiona held senior finance roles at first
Choice holidays plc and Land Securities
Group plc.

Appointed to the Board in January 2009.
Christopher is the 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
is a director of several publicly quoted
companies, including Augean plc and
EKf plc.

Leanne Johnson
head of Legal and Company Secretary

Appointed as Company Secretary in March 2020, Leanne is a qualified solicitor and is
head of Legal for the Group. Leanne trained at Irwin Mitchell and was Legal Counsel
for Keepmoat homes before joining MJ Gleeson plc.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ThE BOARD CONTINUED

The role of the Board
The Board is responsible to shareholders for the direction, management, performance, and long-term success of the Group. It sets
the Group’s strategy and objectives and oversees and monitors internal controls (in conjunction with the Audit Committee), risk
management, principal opportunities and risks, governance and viability of the Company. In doing so the Directors comply with their
duties under section 172 of the Companies Act 2006.

To ensure the Directors maintain control over strategic, financial, operational and compliance matters, the Board meets regularly during
the year and has formally adopted a schedule of matters which are required to be brought to it for decision.

Matters reserved for the Board or its Committees
• Strategy and financial policy
• Banking arrangements
• Approval of the interim and annual financial statements
• Risk management and internal control policy
• Major capital expenditure
• Acquisition of land
• Material investments or disposals
• Board structure and composition
• Terms of reference of the Board’s subcommittees
• Entering into or amending pension arrangements
• Approval of contractual arrangements which fall outside authority delegated to Executive Directors
• Dividend policy
• Pledging security over assets and providing Parent Company guarantees

In addition, the Board receives updates on governance, regulatory and legal matters to assist the Board in maintaining compliance with
the legislative requirements and best practice.

The Board has established certain principal Board Committees to assist it in fulfilling its oversight responsibilities, providing dedicated
focus on particular areas, as set out on page 55. These Committees play an important governance role through the work they carry out to
fulfil the responsibilities delegated by the Board.

Board and Committee meetings
Board and Committee attendance at scheduled meetings during the year is shown in the table below. Board packs, which include a
formal agenda, are circulated in advance of such meetings. The main purpose of these meetings is to permit the Board and Committees
to receive regular reports on the performance of the Group and address a wide range of matters, including health and safety, operational
performance, risk management and corporate strategy. 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.

Attendance at scheduled Board and Committee meetings

Dermot Gleeson
Ross Ancell (resigned 30 June 2020)
Colin Dearlove (resigned 30 June 2020)
Christopher Mills
fiona Goldsmith (appointed 1 October 2019)
Andrew Coppel (appointed 1 October 2019)
James Thomson
Stefan Allanson

Board

5 / 5
5 / 5
5 / 5
4 / 5
4 / 4
4 / 4
5 / 5
5 / 5

Audit
Committee

Disclosure
Committee

Remuneration
Committee

Nomination
Committee

4 / 4
4 / 4

3 / 3
2 / 3

2 / 2
2 / 2

1 / 1
1 / 1

1 / 1
1 / 1
1 / 1

1 / 1
1 / 1

Unscheduled meetings
Additional unscheduled meetings were held throughout the year in response to specific circumstances.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Shareholder relations
There is ongoing dialogue with institutional shareholders, including presentations following the publication of the interim and year end
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 AGM is an ideal forum at which to communicate with investors and encourage their participation. We are closely monitoring the
ongoing impact of Covid-19 and developments in UK regulation in relation to how AGMs may be held at this time, and further details will
be provided in the Notice of AGM. In the meantime, I would encourage shareholders to submit any questions they may have for the Board
in advance by contacting the Company Secretary and we will ensure the questions are answered in due course.

for investor relations the Company uses its website www.mjgleesonplc.com. The website includes statutory documents and
communications to shareholders, such as the Annual Report and the interim report.

Employee relations
Colin Dearlove was the Company’s appointed Workforce Representative for the majority of the year. In June 2019, the Group launched
its new employee engagement survey, Your voice, in order to better understand the views of our employees, levels of engagement and
areas for change, with a follow-up survey conducted in february 2020. Colin received and reviewed the results of these surveys and met
with staff members and the hR Director to understand the outputs and actions being taken.

fiona Goldsmith has been appointed Workforce Representative from July 2020, and further engagement opportunities are being
planned for the upcoming year.

Photo: Petersmith Park, Ollerton, Nottinghamshire.
L to R: Steve Preece, Site Manager, James Thomson,
Chief Executive Officer, Allen Marshall, Operations
Director, Jo fletcher, Assistant Site Manager

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ThE BOARD CONTINUED

Division of responsibilities

Board composition
At the date of this report, the Board comprises six Directors, four of whom are Non-Executive. The Directors’ biographies are set out on
pages 50 and 51.

The Board believes it maintains an appropriate balance of Executive and independent Non-Executive Directors given the size and
nature of the business. In addition, the Board considers that it has a suitable balance of skills, knowledge and experience in order for
it to discharge its duties and responsibilities effectively. This includes a combination of backgrounds and experiences which enable it
to function effectively and have dialogue that is both constructive and challenging. The Board also considers succession planning as
appropriate, including for the Chairman.

Division of roles
The roles of the Chairman, Dermot Gleeson, and the Chief Executive Officer, James Thomson, are clearly defined and they act in
accordance with the main and supporting principles and provisions of the Code.

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.

The Chairman is in regular contact with the Chief Executive Officer and Chief financial Officer to discuss current matters and has visited
Group operations outside the Board meeting calendar to meet divisional directors and managers.

The responsibilities of the Board, Chairman of the Board, Chief Executive Officer, Senior Independent Director, and the Terms of
Reference of each of the Committees can be found on our website www.mjgleesonplc.com.

Board independence
The Code states that at least half the Board, excluding the Chair, should be Non-Executive Directors whom the Board considers to be
independent. for the majority of the year, excluding the Chairman, there were five Non-Executive Directors, two of whom are considered
independent under the terms of the Code.

Ross Ancell and Colin Dearlove have both served on the Board for more than nine years from the date of their first election. Whilst the
Board was satisfied that they remained independent in character and judgement and there were no relationships or circumstances which
otherwise affect, or could appear to affect, their independence, they have each retired from the Board effective 30 June 2020.

Christopher Mills represents a major shareholder, harwood Capital LLP, and has been a Board member for more than ten years. The
Board remains fully satisfied that he continues to perform effectively as a Non-Executive Director.

The Board believes there is an appropriate balance, but has decided to initiate a search for an additional independent Non-Executive
Director.

Resources for the Board
All 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 to update and refresh their skills and knowledge.

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. On resignation, any concerns raised by an outgoing Director are circulated by the Chairman to the
remaining members of the Board.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

CORPORATE GOVERNANCE STRUCTURE

The Board

Nomination
Committee

Committee Chair
Dermot Gleeson

Board structure
• Review the structure, size
and composition of the
Board and its Committees

Succession
• Consider succession plans
for the Board and senior
management

•

Identify and nominate
candidates for Board-level
positions

Effectiveness
• Review the time

commitment required of
Non-Executive Directors
at least once a year

• Review the independence

of Non-Executive
Directors

Remuneration
Committee

Committee Chair
Andrew Coppel

Disclosure
Committee

Committee Chair
Stefan Allanson

Setting remuneration
• Recommend to the
Board the policy for
Executive Directors and
senior management
remuneration

• Set the remuneration of
the Chairman and the
Board

• Agree terms and

conditions of employment
for Executive Directors
and senior management

• Approve measures
and targets for any
performance-related
bonus and share schemes
and monitoring outturn

• Approve share awards

granted under long-term
incentive arrangements,
including the outturn on
such awards

• Agree terms of any

termination arrangements
for Directors and senior
management

• Review and approve

proposals for staff pay
and bonuses, including
examining market data
and benchmarking

Inside information
• Monitor the identification,
treatment and disclosure
of inside information and
to comply with other
disclosure obligations
falling on the Company
under the Listing Rules
and MAR

Disclosure policy
• Review the adequacy of

the Company’s disclosure
policy, including, where
appropriate, arranging
for the dissemination of
guidelines and training

Compliance of all public
disclosures
• Ensure that all regulatory

announcements,
shareholder circulars,
prospectuses and other
documents issued by the
Company under any legal
or regulatory requirement
are scrutinised in order
to ensure that they
comply with applicable
requirements

Audit
Committee

Committee Chair
fiona Goldsmith

Financial reporting
• Monitor the integrity of

the financial statements,
including any significant
financial reporting
judgements

• Advise the Board on
whether, taken as a
whole, the Annual Report
is fair, balanced and
understandable

Risk management and
internal audit
• Monitor the effectiveness

of the Company’s
internal controls and risk
management systems

• Monitor the effectiveness
of the Company’s internal
audit function including
approval of the annual
internal audit plan

• Review the procedures
for detecting fraud,
preventing bribery and
ensuring appropriate
whistleblowing
procedures in place

External audit
• Oversee the relationship

with the external
auditors including
their appointment,
independence and
objectivity and the
effectiveness of the
external audit process

¼ further details can be found on
pages 56 and 57

¼ further details can be found on
pages 58 to 61

¼ further details can be found on
pages 64 to 66 and 74 to 75

All of the Committee terms of reference can be found on the Company’s website at www.mjgleesonplc.com

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Nomination
Committee Report

Composition, succession and
evaluation

Dear Shareholder,
I am pleased to introduce and present the Nomination Committee
Report for the year ended 30 June 2020.

Members and attendance
Committee member

Scheduled meetings attended

Dermot Gleeson (Chair)
Ross Ancell 1
Colin Dearlove 1
fiona Goldsmith 2
Andrew Coppel 2

1 / 1
1 / 1
1 / 1
1 / 1
1 / 1

1 Resigned from the Committee 30 June 2020.
2 Appointed to the Committee 21 May 2020.

Operation of the Committee
The Committee comprises Non-Executive Directors of the Board.
The Chief Executive Officer, Chief financial Officer and Company
Secretary may attend meetings at the invitation of the Committee.

Committee meetings
The Committee is required, in accordance with its terms of
reference, to meet at least once a year. During the year, the
Committee formally met once and held additional meetings in
person and via e-mail to discuss additional matters.

Activities during the year
This year the Committee’s main activity was Board and senior
leadership succession planning, in particular the search for and
appointment of a new Chief Executive Officer and two Non-
Executive Directors. This was achieved through a mixture of formal
meetings and frequent informal exchanges. further detail on the
process involved is set out under Board changes.

Other areas of focus included:
• Review of the composition of the Board and the range of skills

and experience on the Board

• Board and management succession and approval of divisional

senior management

The Nomination Committee has had a busy
year and I am delighted to report on a number
of new appointments to the Board. These will
enable the Board to continue to fulfil its duties
effectively and bring fresh perspectives and
challenge to its dialogue.

Dermot Gleeson
Chair of the Nomination Committee

Principal responsibilities
Principal responsibilities

Board structure
• Review the structure, size and composition of the Board
and its Committees, to ensure they remain appropriate
with regard to maintaining a balance of skills, experience,
knowledge and diversity and to make recommendations to
the Board accordingly

•

Succession
• Consider succession plans taking into account challenges

and opportunities facing the Company and the skills
required

•

Identify and nominate candidates for the approval of the
Board to fill Board vacancies

Effectiveness
• Review the time commitment required of Non-Executive

• Review of Board diversity and independence
• Review of the composition of Board Committees and approval

Directors

• Review the independence of Non-Executive Directors

of changes

• Review of the Terms of Reference

Board changes
The Committee’s main activity in the year was the search for and
appointment of a new Chief Executive Officer and two Non-
Executive Directors. These vacancies were extensively advertised
with the assistance of an external search firm to help reach the
widest possible pool of eligible candidates and to identify the
individuals best qualified for the role.

fiona Goldsmith and Andrew Coppel were appointed as Non-
Executive Directors in October 2019 following the recommendation

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Nomination

Committee Report

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

of the Nomination Committee to the Board. Their biographies
can be found on page 51. fiona has subsequently been appointed
as the Workforce Representative, Chair of the Audit Committee
and member of the Nomination and Remuneration Committees.
Andrew has been appointed as the Senior Independent Director,
Chair of the Remuneration Committee, and member of the
Nomination and Audit Committees.

When considering the appointment of new Directors, the
Nomination Committee determines the skills and experience which
would be of benefit to the composition of the Board and then
evaluates candidates against that list to determine which candidate
would be most suitable. All nominations by the Committee are
made on the basis of merit and overall suitability, taking into
consideration the diversity of the Board.

In December 2019, James Thomson was appointed Chief Executive
Officer following a six-month search process during which time he
filled the role of interim Chief Executive Officer. having carefully
considered his existing time commitments, the Committee
determined he was able to provide appropriate time and energy to
the Group and his permanent appointment was confirmed.

Board diversity
We believe that it is in the interests of our shareholders that
appointments to the Board are made on the basis of merit,
therefore the Board does not set specific targets for boardroom
diversity. We are unreservedly opposed to discrimination on the
grounds of race, gender, sexual orientation, disability, age, religion
or beliefs.

The Committee also instructed the search for a head of Legal and
Company Secretary to split the role from Chief financial Officer
where it had been previously. In March 2020, Leanne Johnson joined
the Group as head of Legal and Company Secretary.

Board and Committee composition
The Committee reviewed the composition of each of the Board
subcommittees and recommended changes based on the new
Non-Executive Directors’ appointments.

Nomination Committee’s role
The Nomination Committee is responsible for considering
succession planning and appointments to the Board and
senior management, ensuring the appropriate balance of skills,
knowledge and experience within the Group. As of the date of this
report, the Board composition is as follows:

Board composition

Chairman

Executive

Independent Non-Executive

Non-independent Non-Executive

Board tenure

Less than 1 year

1 – 9 years

10 years +

Gender of the Board

Male

Female

We also believe that there are substantial benefits to be had from
having a Board composed of a diverse range of individuals, who
are able to contribute to boardroom deliberations from different
perspectives. This is a matter to which the Nomination Committee
gives consideration in its annual review of the Board’s composition
and for any new appointments.

Board evaluation
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. Colin Dearlove, as the Senior
Independent Director during the year, conducted an evaluation of
the Chairman’s performance in conjunction with his Non-Executive
Director colleagues and with input from the Executive Directors.
The outcome and conclusions reached from the conduct of these
evaluations were discussed by the Board and it was concluded that
the Board, its Committees and the Chairman continued to perform
effectively.

Re-election of Directors
The Company’s Articles of Association (“the Articles”) provide
that at each AGM at least one-third of the Directors shall retire
from office and shall be eligible for reappointment. however, the
Board has determined that all Directors will be subject to annual
re-election by shareholders and will do so at the next AGM. James
Thomson and Stefan Allanson each hold service contracts that may
be terminated by the Group with a notice period of one year.

Dermot Gleeson
Chair of the Nomination Committee
13 September 2020

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Audit Committee
Report

Audit, risk and internal control

Dear Shareholder,
I am pleased to introduce the Audit Committee Report for the
financial year ended 30 June 2020, which has been another busy
year for the Committee.

Members and attendance
Committee member

Scheduled meetings attended

Colin Dearlove 1
Ross Ancell 1
fiona Goldsmith 2
Andrew Coppel 2

4 / 4
4 / 4
3 / 3
2 / 3

1 Resigned from the Committee 30 June 2020.
2 Appointed to the Committee 31 October 2019.

Operation of the Committee
All members of the Committee are Independent Non-Executive
Directors. The Board is satisfied that the membership of the Audit
Committee meets the requirement for relevant and recent financial
experience. The biographies and professional qualifications of the
members are shown on pages 50 and 51.

The Chief Executive Officer, Chief financial Officer, Company
Secretary and other senior management are invited to attend
meetings, along with the Group’s internal and external auditors,
when required. The Committee also met with the Group’s internal
and external auditors without the presence of Executive Directors
or senior management on several occasions throughout the year.

Committee meetings
The Committee is required, in accordance with its terms of
reference, to meet at least three times a year. During the year, the
Committee formally met four times and held one unscheduled
meeting.

Activities during the year
During the year, the Committee dealt with the following key
matters:
• The Group’s interim and annual financial reporting
• Principal accounting matters and judgements
• Going concern and viability
• Credit risk monitoring
• Profit recognition
• Work in progress
• Tax affairs of the Group
• Legacy matters
• Compliance with Group policies and whistleblowing

arrangements

• External auditor effectiveness, independence, and fees
• Risk and assurance matters including reviewing:

– The Group risk register
–
–

Internal audit plans and reports
Internal control effectiveness

having been a member of the Audit Committee
following my appointment to the Board in
October 2019, I am very pleased to take up
the reins as Chair from Colin Dearlove. I would
like to thank Colin for his support during the
handover period.

Fiona Goldsmith
Chair of the Audit Committee

Principal responsibilities

Financial reporting
• Monitor the integrity of the financial statements of the Group

and any formal announcements relating to its financial
performance, including any significant financial reporting
judgements

• Advise the Board on whether, taken as a whole, the Annual

Report is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
performance, business model and strategy

Risk management and internal audit
• Review and monitor the effectiveness of the Company’s

internal controls and risk management systems

• Review and monitor the effectiveness of the Company’s
internal audit function including approval of the annual
internal audit plan

• Review the Company’s procedures for detecting fraud,
preventing bribery and ensuring there are appropriate
whistleblowing procedures in place

External audit
• Oversee the relationship with the external auditors including
their appointment, independence and objectivity and the
effectiveness of the external audit process

• Develop the policy on the supply of external audit services

by the external auditors, taking into account relevant ethical
guidance

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Activities during the year
Set out below are details of the matters undertaken by the
Committee during the year:

Financial reporting
The Committee reviewed the integrity of the Annual Report
and formal announcements relating to the Group’s financial
performance. Since the date of the last Annual Report, the
Committee has reviewed:
• the interim results for the six months to December 2019; and
• the 2020 Annual Report and preliminary announcement.

At the request of the Board, the Committee considered whether
the 2020 Annual Report taken as a whole is fair, balanced and
understandable and whether it provides the necessary information
for shareholders to assess the Company’s performance, business
model and strategy. In doing so, the Committee received
comments from management and the external auditors at
its meeting in September 2020. It also reviewed the annual
compliance procedures and management returns that support
the Group’s financial reporting governance framework and risk
management process for the year ended 30 June 2020.

The Committee was satisfied that, taken as a whole, the 2020
Annual Report is fair, balanced and understandable and provides
sufficient information for shareholders to assess the Company’s
performance, business model and strategy. The Committee
recommended as such to the Board.

Going concern and viability reporting
As described under “Significant issues considered during the year”,
the Committee satisfied itself that, based on the financial modelling
undertaken, the Company and Group have adequate resources
to continue in operation for the foreseeable future and operate in
compliance with their bank facilities.

This was considered in respect of both the going concern period
and a longer three-year viability period, as set out in the viability
statement on page 62 of the Governance Report.

Credit risk monitoring
The Group carries a number of deferred receivables mainly relating
to Gleeson Strategic Land in relation to land sales. At each of the
meetings where the Committee considered going concern and
viability, the Committee also separately examined the significant
balances due, the level of security held and the performance of the
respective counterparty to date. The Committee satisfied itself that
the level of credit risk faced by the Group remains low overall, even
in light of Covid-19.

Profit recognition
Throughout the year the Committee reviewed the processes,
controls and assumptions for recognising margin on development
sites including three particular areas: cost inflation, selling prices
and contingencies.

As described under “Significant issues considered during the year”,
the Committee satisfied itself that the associated processes and
controls have continued to operate effectively across the Group
and the assumptions applied by management in relation to profit
recognition are appropriate.

Work in progress
The Committee reviewed reports from the Group’s internal auditor
on the carrying value and recoverability of land and work in
progress on selected Gleeson homes sites. The Committee also
received reports on the recoverability and carrying value of work in
progress in Gleeson Strategic Land.

As described under “Significant issues considered during the year”,
the Committee satisfied itself that the carrying value of land and
work in progress remained appropriate.

Tax affairs of the Group
At its meetings in february and July 2020 the Committee received
a comprehensive update on the tax affairs of the Group. These
covered all aspects of Group taxes including vAT, corporation tax,
the Construction Industry Scheme (“CIS”), employment taxes, off-
payroll working rules (“IR35”) and other updates.

The Committee also reviewed the Group’s Tax Strategy statement
for the next financial year and recommended its approval to the
Board. This can be found on the Company’s website,
www.mjgleesonplc.com.

Review of legacy matters
The Committee received and reviewed reports on claims
associated with the legacy business, being the contracting and
engineering businesses sold more than ten years ago. Whilst the
level of claims has reduced to an insignificant level, the Committee,
in conjunction with the Chief financial Officer, continues to monitor
the status of claims and any liabilities.

Review of the Group’s risk register
The Committee reviewed the Group’s risk register at three of its
meetings during the year such that, as the operational, political and
economic environment changes including as a result of Covid-19,
the Committee understands the risks faced by the Group and how
these are addressed. This enables the Committee and the Board
to ensure that the major risks facing the Group are monitored and
that appropriate controls and mitigations are in place. As a result,
the Committee and the Board understand and manage the balance
of risks in the business.

Internal audit plan and findings
The Committee set the internal audit plan for the year ended
30 June 2020 at its meeting in July 2019. As covered under
“Internal audit”, the Committee received and reviewed reports
from the internal auditor throughout the year on internal audits
conducted across the business.

Other activities
During the year, the Committee also reviewed reports on IT and
cyber crime updates, corporate criminal offence, anti-bribery,
and malpractice monitoring, and a review by internal audit of vAT
returns and related processes.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

AUDIT COMMITTEE REPORT CONTINUED

Significant issues considered during the year
The significant issues considered by the Committee during the
year are those that present a risk of material misstatement to the
Group’s financial statements, being:

Carrying value of land and work in progress
The most significant asset carried by the Group is inventory, which
includes land and work in progress. The Group carries inventories
at the lower of cost and net realisable value, which is dependent on
estimates of total build or land promotion costs and future selling
prices. There is, therefore, a risk that land and work in progress
is held at a value in excess of the lower of cost and net realisable
value.

In addition, the allocation of inventories to cost of sales on the sale
of individual homes is dependent on estimates of total build costs
and future selling prices for each site as a whole. These estimates,
therefore, impact on the timing and amount of profit margin
recognised on sales of individual homes.

The Committee monitors the effectiveness of internal controls
exercised over the key processes employed by the Group in site
development activities and the forecasting of future costs, revenue
and profits.

The Committee receives regular reports regarding sales of homes
and the costs and possible future costs relating to individual sites.
As covered under “Activities during the year”, the Committee
reviewed the assumptions applied by management supporting the
profit margin to be recognised on the sale of individual homes and
concluded that they remain appropriate.

The Committee also receives regular reports on the carrying
value of land and work in progress in Gleeson homes and Gleeson
Strategic Land. The Committee reviewed these reports and
debated them with the internal auditor and with management. The
Committee satisfied itself that the carrying value of land and work
in progress across the Group remained appropriate.

Going concern and viability reporting
The Committee examined the financial forecasts for the Group
including the impact of a severe but plausible downturn in the
housing and strategic land markets as a result of the Covid-19
pandemic. These were examined by the Committee in conjunction
with its review of this Annual Report. The Committee satisfied
itself, and subsequently the Board, that the going concern basis
of preparation continues to be appropriate in the context of the
Group’s banking and liquidity position. further details can be found
in note 1 of the financial statements on page 93.

In accordance with the provisions of the Code, the Committee
considered the time period over which it could reasonably assess
the Group’s ability to continue to trade, taking into account the
Group’s financial budget period and operational forecasts. It
concluded that this should remain a three-year period as explained
in the viability statement on page 62. The Committee received
detailed financial analysis based on the Group’s latest budgets with
a severe but plausible scenario applied over the three-year period
and determined that there was a reasonable expectation that the
Group will be able to continue in operation, meet its liabilities as
they fall due and maintain compliance with its revised banking
covenants. The Committee recommended statements to this effect
to the Board to approve for inclusion in this Annual Report.

Carrying value of investments
As a result of the impact of Covid-19 on the underlying trading
performance of Group subsidiaries, the Committee satisfied itself
that the carrying value of investments held in the parent Company,
remains appropriate at the balance sheet date with no indicators of
impairment.

Effectiveness of internal controls and risk
management systems
The Committee is responsible for reviewing and monitoring the
effectiveness of internal controls and risk management systems on
behalf of the Board. 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 are
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 division 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 to the Committee. The
Group’s programme of insurance covers the major risks to the
Group’s assets and business and is reviewed annually.

• Authorities are in place that require divisional management
to refer all investment and divestment decisions that exceed
prescribed limits to either the Group Capital Committee or 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 effectiveness of the overall internal control framework and risk
management process is monitored by both the Audit Committee
and the Board. As part of this, the Committee reviews the annual
compliance returns completed by each divisional management
team which confirm that key financial controls have been in
operation throughout the year and that an effective control
environment has been maintained.

Each divisional management team also completes an annual risk
assessment. The results of this are reviewed by the Committee and
risks identified are incorporated into the Group risk register. The
Risk Management section on pages 42 to 45 sets out details of the
key risks that the business may face and how it mitigates them.

The Committee has satisfied itself that an appropriate system
of internal controls and risk management processes have been
maintained throughout the year to safeguard shareholder interests
as well as the Group’s assets in accordance with the requirements
of the Code.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Whistleblowing arrangements
The Company has in place a whistleblowing policy, internal
whistleblowing mailbox (monitored by the head of Legal and
Company Secretary) and an independent external whistleblowing
helpline. This enables all employees of the Group to confidentially
report any malpractice or matters of concern they have regarding
the actions of employees, management and Directors, any unlawful
behaviour or breaches of the Company’s policies or practices.
The head of Legal and Company Secretary keeps and maintains
a register of reports received through both internal and external
processes.

During the year, employee awareness was enhanced on the
Company’s whistleblowing policy through the induction process,
newsletters, posters and other reminders that, “If you see
something, say something”.

The Committee reviews the output of malpractice reporting at
least every six months.

Anti-bribery and corruption policy
The Company values its long-standing reputation for ethical
behaviour and integrity. Conducting its business with a zero
tolerance approach to all forms of corruption is central to these
values, the Group’s image and reputation. The Company policy sets
out the standards expected of all Group employees in relation to
anti-bribery and corruption and the Board has overall responsibility
for ensuring this policy complies with the Group’s legal and ethical
obligations and that everyone in the organisation complies with it.

This policy is also relevant for third parties who perform services
for or on behalf of the Group. We require those parties to adhere
to this policy or have in place equivalent policies and procedures to
combat bribery and corruption.

The Committee reviews a report on the registers of gifts and
hospitality given or received by Directors and employees of the
Group at least every six months.

Internal audit
The Committee is responsible for reviewing and approving
the annual internal audit plan. This continues to cover a broad
scope of activities across the Group focused on areas of risk and
management judgement.

During the year, the Committee received seven reports
from the internal auditor on the findings of internal audits
conducted throughout the business, together with proposed
recommendations to rectify any issues identified. The findings of
these reports were actively debated by the Committee with the
internal auditor and with management. The Committee monitored
the follow-up on actions identified.

The Committee reviewed the effectiveness of the internal audit
function and concluded that it has operated effectively and
provided a suitable level of independent scrutiny across the
operations of the Group.

External audit
PricewaterhouseCoopers LLP was first appointed as auditors to the
Group in December 2016 following a competitive audit tender and
was most recently reappointed following approval by shareholders
at the AGM on 5 December 2019.

The new lead audit partner for the year ended 30 June 2020 is
Andy Ward, following a period of handover with his predecessor.

In february 2020, the auditors presented their audit strategy
memorandum to the Committee, identifying their assessment
of key risks in the Group’s financial reporting. In July 2020, the
auditors updated the Committee on changes to their audit
approach and strategy in response to the impact of the Covid-19
pandemic. for the 2020 financial year, as in prior years, the primary
risk identified was in relation to the carrying value of land and work
in progress. Additionally, as a result of the Covid-19 pandemic on
underlying trading performance, the carrying value of investments
in subsidiaries was identified as a primary risk in relation to the
Company only.

The Committee formulates and oversees the Group’s policy on
monitoring external auditor objectivity and independence in
relation to non-audit services and is responsible for the approval of
all audit and non-audit fees for services provided by the Company’s
auditors. As a result of the EU Audit Reforms Regulations (as
amended 11 June 2016) the auditors are excluded from undertaking
a range of work on behalf of the Group to ensure that the nature of
non-audit services performed or fee income earned relative to the
audit fees does not compromise, and is not seen to compromise,
the auditors’ independence, objectivity or integrity.

for the year to 30 June 2020, there were no non-audit fees paid
to the external auditors. Details of the audit fees incurred are
disclosed in note 4 to the financial statements.

The Committee assesses the performance and effectiveness
of the external auditors on an annual basis. When making their
assessment, the Committee considers feedback from the Chief
financial Officer and other senior finance management, the
auditors’ fulfilment of the agreed audit plan, and the auditors’
objectivity and independence during the process. The Committee
also holds private meetings with the auditors on an annual basis.
Matters discussed include the auditors’ assessment of business
risks and management activity thereon, the transparency and
openness of interactions with management and confirmation
that there has been no restriction in scope placed on them by
management.

The Committee concluded that the audit process had been
conducted robustly and PricewaterhouseCoopers LLP’s
performance as auditors to the Company was considered to be
satisfactory. As the auditors have indicated their willingness to
continue in office, a resolution that they be reappointed will be
proposed at the next AGM of the Company on 3 December 2020.

Under current regulations the Company is not due to re-tender its
audit until 2026; however, the Committee will continue to monitor
the performance of the external auditors during this time and make
recommendations accordingly.

Fiona Goldsmith
Chair of the Audit Committee
13 September 2020

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

AUDIT, RISK AND INTERNAL CONTROL

Risk management and internal control
The Directors acknowledge their responsibility for the Group’s risk management procedures and systems of internal controls and for
reviewing their effectiveness. further details on the Group’s risk management procedures and systems of internal controls and how the
Board and Audit Committee review their effectiveness are included in the Audit Committee Report on pages 58 to 61.

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 divisions is delegated to the management responsible for the division, with the
Board retaining ultimate responsibility.

The Group operates internal controls that ensure the Group’s financial statements are reconciled to the underlying financial ledgers. A
review of the consolidated accounts and financial statements is completed by management to ensure that the financial performance and
position of the Group are appropriately reflected.

During the year being reported, and in making this statement, the Board carried out a robust assessment of the principal risks and
uncertainties facing the Group, including those that would threaten the Group’s business model, future performance, solvency and/
or liquidity. The Board is of the view that there is an adequate ongoing process for identifying, evaluating and managing the Group’s
significant risks. 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 internal auditor and external
review as part of the statutory audit carried out by the external auditors.

Viability statement
The Directors have assessed the viability of the Company and the Group over a period longer than the 12 months required by the going
concern principle.

The Directors conducted their assessment over a period of three years to 30 June 2023, which is in line with the Group’s financial budget
approved by the Board in July 2020. It is also aligned to the operational period of a number of Gleeson homes developments. This has
enabled a meaningful assessment of viability to be undertaken, utilising detailed Board approved financial budgets which incorporate
individual site cash flow forecasts. These also include the impact of Covid-19 on current operations and reflected a prudent view on
recovery with a corresponding impact on volumes and selling prices.

The Directors have considered sensitivities from the impact of a severe but plausible downturn in the housing and strategic land markets
as a result of the Covid-19 pandemic including the potential scenario of a second lockdown. further details can be found in note 1 of the
financial statements on page 93.

Additionally, the Directors have considered the measures which would need to be taken to mitigate the impact of these sensitivities
including the ability of the Group to curtail expenditure on new land purchases, new site starts, reduce overheads and cut discretionary
spend. This would include reducing future dividend payments in response to a severe but plausible downturn.

for Gleeson Strategic Land, the Directors have considered the impact of extended delays to the completion of land sales and a reduction
in land selling prices. The business model is such that it has the flexibility to reduce expenditure on progressing new and existing sites,
together with overheads in order to scale the business accordingly.

A core principle of the Group is to maintain a cautious approach to debt funding. The Group has a committed bank facility of £70m
available until October 2024, with £60m of the revolving credit facility fully drawn at 30 June 2020 resulting in a cash balance of £76.8m.
The available £10m overdraft facility remained unutilised. Based on these facilities, the Group continues to have a high level of liquidity,
including under the severe but plausible scenario, to continue in operation and meet its liabilities as they fall due.

As set out in note 1 of the financial statements on page 93, the bank facilities contain two covenants that are aligned to profit generation
on a 12-month rolling basis. As a result of the financial modelling and risks to profitability against budget, the Group has sought and
agreed a waiver for certain covenant test dates in the next 12 months. In their place a liquidity covenant has been introduced.

Based on the results of this assessment, the Directors have a reasonable expectation that the Company and the Group will be able to
continue in operation and meet its liabilities as they fall due over the three-year viability period.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Briar Lea Park, Carlisle, Cumbria

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Remuneration
Committee Report

Remuneration

Dear Shareholder,

The report is split into two sections:

This statement, which provides an overview of the key
decisions made on Directors’ remuneration during the year;
and

2. The Annual Report on Remuneration, which provides details

of the remuneration earned by Directors during the year to
30 June 2020 and how we intend to apply the Directors’
Remuneration Policy during the year to 30 June 2021.

The Directors’ Remuneration Policy (the “Policy”) was approved by
shareholders at the AGM on 5 December 2019 (with 98.2% of votes
cast in favour) and became effective from that date. There are no
proposals to amend the Policy at the 2020 AGM. The Committee
addressed the factors in Provision 40 of the 2018 UK Corporate
Governance Code when determining the Policy (see below).

The full Policy can be found in the 2019 Annual Report and
Accounts which is available to download from the Company’s
website, www.mjgleesonplc.com.

Permanent appointment of Chief Executive Officer
James Thomson made a significant positive impact as interim Chief
Executive Officer and was appointed to the role on a permanent
basis on 2 December 2019.

It was agreed at the outset of James Thomson’s appointment that,
if he was appointed as Chief Executive Officer on a permanent
basis, his salary and annual bonus opportunity would be reviewed.
Therefore, with effect from 2 December 2019, James Thomson’s
annual salary was increased from £485,000 to £500,000 and
his maximum bonus opportunity was increased from 100% of
salary to 125% of salary. further details are set out on page 68. for
reference, the previous Chief Executive Officer salary was set at
£505,000.

James Thomson’s pension opportunity remains at 6.5% of salary,
in line with the level available to the majority of the workforce.

Pay and performance outcomes for 2020
The year to 30 June 2020 has been heavily impacted by the
Covid-19 pandemic leading to a minimal level of completions
during the shutdown and final quarter. The number of units
completed fell from 1,529 in the prior year to 1,072 this year with
operating profit in Gleeson homes falling by 70.1% to £9.0m. This
includes the impact of certain costs directly related to the Covid-19
pandemic.

Similarly, Gleeson Strategic Land was heavily impacted and only
completed two land sales during the year. Divisional operating
profit fell to broadly break-even at £0.2m (2019: £13.0m) with the
focus now on the deals carried forward into the new financial year.

On behalf of the Board, I am pleased to present
the Annual Report on Remuneration for 2020,
my first report as the Chair of the Remuneration
Committee. I would like to take this opportunity to
thank Ross Ancell for his dedicated contribution
and service as the previous Chair of the
Committee for nine years to 30 June 2020 when
he retired from the Board.

Andrew Coppel
Chair of the Remuneration Committee

Principal responsibilities

Setting remuneration
• Recommend to the Board the policy for Executive Directors

and senior management remuneration

• Set the remuneration of the Chairman and the Board

• Agree terms and conditions of employment for Executive

Directors and senior management

• Approve measures and targets for any performance-related

bonus and share schemes, and monitoring outturn

• Approve share awards granted under long-term incentive

arrangements, including the outturn on awards

• Agree terms of any termination arrangements for Directors

and senior management

• Review and approve proposals for staff pay and bonuses,

including examining market data and benchmarking

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

As a result, the Group’s profit before tax from continuing
operations fell by 86.4% to £5.6m. After discontinued operations,
Group profit before tax was £5.3m (2019: £40.9m).

Group liquidity remains strong with a cash balance of £76.8m
at 30 June 2020, including £60m drawn down on the Group’s
revolving credit facility, and the Group has a further £10m overdraft
available on its committed bank facility. The Group has a strong
balance sheet and, despite the severe impact that the Covid-19
pandemic has had on results, the Group is well positioned for future
growth.

As such, it was agreed that the definition of TSR be adjusted for
the 2017 LTIP awards to take the average share price measured
over the six months prior to the end of the performance period
(1 January 2020 to 30 June 2020). The decision to adjust the
definition of TSR for all participants, including Stefan Allanson, was
agreed at a Committee meeting in May 2020 prior to the end of the
performance period.

Based on the adjusted definition of TSR, the Group achieved a
three-year TSR of £8.69 against a target range of £7.20 to £8.00
per share. The 2017 LTIP award therefore vested in full. The vested
award (net of tax) is subject to a two-year holding period.

Annual bonus
As referenced in the 2019 Annual Report on Remuneration,
James Thomson’s award was based on Group profit before
tax performance (as regards 50% of the potential award) and
strategic and personal performance (similarly as regards 50% of
the potential award). Stefan Allanson’s potential award was based
wholly upon Group profit before tax performance.

The Group achieved profit before tax for both continuing and
discontinued operations of £5.3m for the year ended 30 June
2020. This was below the threshold target of £43.6m and the profit
related element of the bonus award lapsed in full.

As regards to the proportion of James Thomson’s award based on
strategic and personal performance, taking into account the impact
of Covid-19 on underlying financial performance, the Committee
considered it appropriate to assess the vesting outcome as 90% of
the bonus achievable. The Committee considered that this struck a
fair and equitable balance between recognising James Thomson’s
exceptional performance since his appointment and taking into
account feedback from shareholders and employees.

Accordingly, James Thomson earned a bonus equal to 45% of the
maximum amount payable under his total bonus potential. Stefan
Allanson did not earn a bonus in respect of the year. further details
are set out on pages 68 and 69.

Approximately 7% of employees based at head office and area
offices received a discretionary bonus at the year end, reflecting
their exceptional contribution in the most difficult of circumstances.
The Company also has a policy of paying 50% of full-year bonuses
to staff in January, based on progress against the full-year forecast.
Approximately 63% of employees were paid a bonus in January
2020 on this basis.

Long Term Incentive Plan (“LTIP”)
The 2017 LTIP awards were subject to performance targets based
on Total Shareholder Return (“TSR”). TSR is defined as the average
share price measured over the three months prior to the end
of the performance period (1 April 2020 to 30 June 2020) plus
cumulative dividends per share paid over the performance period.

As with all listed housebuilders, the Group’s share price was
adversely impact by the Covid-19 pandemic during the three
months to 30 June 2020. During the 11-month period prior to
March 2020, the Group’s share price was consistently in excess of
£8.00 and, therefore, the 2017 LTIP awards would have been on
track to vest in full. The Committee felt that, given the purpose
of the LTIP award is to motivate and reward performance over a
longer term, it was appropriate to adjust the performance target to
take account of the impact of Covid-19.

for completeness, if no adjustment had been made to the
definition of TSR then 80% of the LTIP award would have vested.
further details are set out on pages 69 and 70.

Covid-19 pandemic – salary and fee reductions
Around 76% of the Group’s workforce were furloughed under the
Government’s Job Retention Scheme for a period of at least six
weeks. To align the Board with employees and retain cash within
the business, the Board agreed to a 30% reduction in salary and
fees for the period from 6 April 2020 to 30 June 2020. Senior
management also agreed to temporary reductions in salary of
between 5% and 20%.

Remuneration in 2021
Salary
No salary or fee increases have been awarded to the Directors for
the year to 30 June 2021 (2019: no salary or fee increases awarded
in respect of the year to 30 June 2020).

Pension
Reflecting best practice and the expectations of shareholders and
proxy voting agencies, Stefan Allanson volunteered to reduce his
pension from 15% to 6.5% of salary, in stages over the next two
years. With effect from 1 July 2020 his pension will reduce to 12%,
from 1 July 2021 it will reduce to 9% and from 1 July 2022 it will
reduce to 6.5%. This will bring it in line with the level available to the
majority of the workforce.

Annual bonus
The maximum bonus that can be earned in the year will be
125% of salary for both Executive Directors. The Committee has
increased Stefan Allanson’s maximum bonus opportunity (from
100% of salary for the year ended 30 June 2020) to recognise
his experience and contribution to the business, and to provide
alignment with James Thomson’s maximum bonus opportunity.
The Committee will also ensure that the performance targets are
appropriately stretching and reflective of the increase in maximum
bonus opportunity.

Of the award, 80% will be based on profit performance and 20%
will be based on strategic and personal performance. Details of
the profit, strategic and personal performance targets will be
fully disclosed in the Annual Report on Remuneration for the year
ending 30 June 2021.

The Executive Directors will be required to accept one-third of any
bonuses earned in the form of shares to be held for a minimum
two-year period.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Risk – we promote long-term sustainable performance through
sufficiently stretching performance targets, whilst ensuring that
the incentive framework does not encourage Executive Directors
to take inappropriate business risks (including environmental,
financial, social, health, safety and governance risks).

Predictability – detailed information on the potential values that
may be earned through the remuneration arrangements are set out
in the Directors’ Remuneration Policy.

Proportionality – to ensure that total remuneration delivered fairly
reflects Company and individual performance. The Committee
has the discretion to override formulaic outturns where it believes
the outcome is not truly reflective of underlying performance
during the performance period and to ensure fairness to both
shareholders and participants.

Alignment to culture – when determining the Policy, the
Committee was clear to make decisions to drive the appropriate
behaviours and ensure alignment with the Company’s culture and
long-term strategy.

Stakeholder engagement
The Committee consults with major shareholders and their
representative bodies on remuneration matters, particularly if any
material changes are proposed to the remuneration policy. In these
instances, the Committee seeks feedback from shareholders and
develops and considers its proposals in light of this feedback. The
Committee also takes remuneration advice from Deloitte LLP.

The Committee does not consult with employees on Directors’
remuneration but regularly reviews the remuneration of the wider
workforce to ensure that it is attuned to general pay and conditions
when considering Directors’ remuneration (e.g. in determining
salary increases for Executive Directors the Committee reviews
salary increases across the Group).

Conclusion
We are committed to a responsible approach to executive pay
and I trust that our Annual Report on Remuneration reflects this.
I will be available at the AGM to respond to any questions and
discuss any aspects of the Annual Report on Remuneration or the
Committee’s activities.

Andrew M Coppel CBE
Chair of the Remuneration Committee
13 September 2020

REMUNERATION COMMITTEE REPORT CONTINUED

LTIP
The maximum LTIP opportunity will be 150% of salary for
both Executive Directors with 50% of the award based on EPS
performance and 50% based on relative TSR performance
measured over a period of three financial years ending 30 June
2023. Any awards that vest will be subject to a minimum two-year
holding period.

The Committee will consider the share price at the grant date when
deciding the share price to be used to determine the number of
shares to be granted and what provisions to include to mitigate the
potential risk of “windfall gains” if and to the extent caused by the
current Covid-19 pandemic impact on share price.

further details are set out on page 74.

Gender pay gap
During the year, the Committee reviewed the gender pay gap
statistics for the Group. The Group’s median gender pay gap is
-6.03%, indicating women are paid more than men, versus the
national average of 17.9% in favour of men. Women occupy 22% of
the highest paid jobs and 15% of the lowest paid jobs.

The Group is continuing to develop and encourage more women
into roles that have traditionally been male occupied. This
includes better provisions on sites for female employees and
subcontractors. In respect of pay, the Group does not discriminate
on the grounds of gender and operates an equal pay policy.

further details are set out in the Group’s Gender Pay Gap Report
which can be found at www.mjgleesonplc.com.

Real Living Wage
The Group was the first major housebuilder to be accredited
by the Living Wage foundation. Other housebuilders have now
followed our lead and the Group believes that all employees in all
sectors should be paid the real Living Wage or higher. The only
exception to this is for apprentices, where the Group pays above
the Government’s guidelines.

The Committee looks closely at market data when it comes to
approving employee pay and rewards to ensure that these remain
competitive and enable the Group to attract, motivate and retain
high-quality staff.

How the Committee addressed the factors in
Provision 40 of the 2018 UK Corporate Governance
Code when determining the Policy
Our Directors’ Remuneration Policy is designed to support an
effective pay-for-performance culture which enables the Company
to attract, retain and motivate Executive Directors who have
the necessary experience and expertise to deliver the Group’s
objectives and strategy. The Policy has been determined based
on the following principles taking into account Provision 40 of the
2018 UK Corporate Governance Code.

Clarity and simplicity – the Committee ensures that remuneration
packages are simple and transparent and take into account
remuneration and related policies for the wider workforce.
Performance targets are set in line with Group budgets and plans
and reviewed and tested by the Committee.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Annual Report
on Remuneration

The Remuneration Committee’s Annual Report on Remuneration for the year ended
30 June 2020 is set out below, including remuneration for the year ended 30 June 2020
and the implementation of the Directors’ Remuneration Policy for 2021.

The auditors are required to report on the following information up to and including the table on Directors’ interest in shares.

Single total figure of remuneration for each Director for the years ended 30 June 2020 and 30 June 2019

2020

2019

fixed Pay

variable Pay

fixed Pay

variable Pay

Salary
& fees1
£000

Benefits
£000

Pension
£000

Subtotal
£000

Annual
bonus
£000

value of
LTIP
awards
£000

Subtotal
£000

Total
£000

Salary
& fees
£000

Benefits
£000

Pension
£000

Subtotal
£000

Annual
bonus
£000

value of
LTIP
awards2
£000

Subtotal
£000

Total
£000

Chairman
Dermot
Gleeson

Executive
Directors
James
Thomson3

Stefan
Allanson

Non–
Executive
Directors4
Ross Ancell

Colin
Dearlove

Christopher
Mills

Andrew
Coppel

fiona
Goldsmith

116

–

117

–

117

125

458

514

255

–

255

769

–

126

293

358

–

535

893

315

380

–

Total

1,083

79 1,205

255

535

790 1,995

631

700

–

126

–

588

968

–

588

588 1,288

1 The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic. The salaries and

fees disclosed in the 2020 column are after the 30% reduction.

2 The value of the LTIP award in the 2019 column has been restated to reflect the actual number of awards which vested on 11 November 2019, including

dividend equivalents, using the share price on the date of vesting (£8.00).

3 James Thomson was appointed as interim Chief Executive Officer on 10 June 2019. On 2 December 2019 he was appointed to the role on a permanent basis

and his salary was increased from £485,000 to £500,000 per annum.

4 Ross Ancell and Colin Dearlove stepped down from the Board on 30 June 2020. Andrew Coppel and fiona Goldsmith were appointed to the Board on

1 October 2019.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ANNUAL REPORT ON REMUNERATION CONTINUED

Notes to the single total figure of remuneration
Salary and fees
Details of annual salaries for Executive Directors for the years ended 30 June 2020 and 30 June 2019 are set out below.

James Thomson1
Stefan Allanson

Rate of salary from
2 December 20192
£000

Rate of salary from
1 July 20192
£000

Rate of salary from
1 July 2018
£000

500
n/a

485
315

1 James Thomson’s salary was increased to £500,000 per annum on 2 December 2019 following his appointment to the role of Chief Executive Officer on a

permanent basis.

2 The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.

Details of fees for Non-Executive Directors for the years ended 30 June 2020 and 30 June 2019 are set out below.

Chairman1
Non-Executive Director fee
fee for chairing a Committee

Rate of fees from
1 July 20192
£000

Rate of fees from
1 July 2018
£000

125
47.25
10.5

Includes a fee of £10,500 for chairing the Nominations Committee.

1
2 The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.

Taxable benefits provided to Executive Directors
The main benefits available to the Executive Directors during the year ended 30 June 2020 (and their associated values) were:
car allowance of £13,000 for James Thomson and £13,000 for Stefan Allanson; car fuel of £5,000 for James Thomson and £3,000 for
Stefan Allanson; £5,000 received in respect of the sale of annual leave for James Thomson; private medical insurance of £1,000 for
Stefan Allanson; and matching shares granted under the hMRC tax-qualifying all-employee scheme of £1,000 for James Thomson and
£1,000 for Stefan Allanson.

Pension
The Executive Directors are eligible to participate in the MJ Gleeson Group Pension Plan, a defined contribution arrangement. During the
year ended 30 June 2020, James Thomson received cash in lieu of pension contributions of 6.5% of salary (2020: £32,000) and Stefan
Allanson received pension contributions and cash in lieu of pension contributions of 15% of salary (2020: £47,000).

Determination of annual bonus
James Thomson was initially awarded a maximum bonus opportunity of 100% of salary following his appointment as interim Chief
Executive Officer. This was increased to 125% of salary following his appointment to the role on a permanent basis. James Thomson’s
maximum bonus opportunity is therefore calculated as follows:

Interim Chief Executive Officer
Permanent Chief Executive Officer

100% of £485,000 salary prorated over the period 1 July 2019 to 1 December 2019
125% of £500,000 salary prorated over the period 2 December 2019 to 30 June 2020

Maximum
opportunity
£000

202
365

567

As referenced in the 2019 Annual Report on Remuneration, James Thomson’s award was based on Group profit before tax performance
(as regards 50% of the potential award) and strategic and personal performance (as regards 50% of the potential award).

Stefan Allanson was awarded a maximum bonus opportunity of 100% of salary based wholly upon Group profit before tax performance.

Profit performance
The Group achieved profit before tax for both continuing and discontinued operations of £5.3m for the year ended 30 June 2020. This
was below the threshold target of £43.6m and the profit-related element of the bonus award lapsed in full.

Target

Threshold
Target
Maximum

Straight-line vesting between threshold and maximum.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Profit measure
£m

43.6
44.6
46.6

Bonus
achievable as
percentage of
maximum

20%
50%
100%

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Chief Executive Officer: Strategic and personal performance
James Thomson’s performance against his strategic and personal performance objectives for the year ended 30 June 2020 is detailed
below.

Objective

Performance

Develop, propose and implement an organisational structure
that is able to support business growth towards 2,000 plots
per annum by 2022.

New regional structure implemented in Gleeson homes with the
appointment of a new homes Managing Director, Divisional
Managing Directors for each region and an underlying reporting
structure that will support growth.

Develop plans for the senior management team, including an
assessment of their ability for taking on wider responsibilities
within the business and their development needs. Includes
building on the work of, and working in conjunction with,
third-party advisers.

Plans are in place for senior management who in turn have
assessed the competence and capability of their own teams. This
has been supported through collaboration with third-party
advisers to help develop the management team and develop
succession plans.

Take the lead on the possible sale of the Strategic Land division
with Group advisers and implement the Board’s decisions.

The possible sale was re-assessed in the early part of the financial
year and it was appropriately concluded in September 2019 that
the business was to be retained. The sale process was, therefore,
aborted by a decision of the Board.

The Committee considered it appropriate to assess the vesting outcome as 90% of the bonus achievable on these objectives. The
Committee considered that this struck a fair and equitable balance between recognising James Thomson’s exceptional performance
since his appointment and taking into account feedback from shareholders and employees. Approximately 7% of employees based at
head office and area offices received a discretionary bonus at the year end, reflecting their exceptional contribution in the most difficult
of circumstances. The Company also has a policy of paying 50% of full-year bonuses to staff in January, based on progress against the
full-year forecast. Approximately 63% of employees were paid a bonus in January 2020 on this basis.

Bonus outcome
The total bonus outcome for each Executive Director is therefore:

James Thomson
Stefan Allanson

Bonus payable

% maximum

45%
0%

£000

255
0

2017 LTIP
The 2017 LTIP awards were subject to performance targets based on TSR. TSR is defined as the average share price measured over the
three months prior to the end of the performance period (1 April 2020 to 30 June 2020) plus cumulative dividends per share paid over
the performance period.

As explained in the Chair’s statement on page 65, the Committee felt it appropriate to adjust the TSR definition such that the average
share price was measured over the six months prior to the end of the performance period (1 January 2020 to 30 June 2020).

Details of the TSR performance targets and performance outcome are set out in the table below.

Threshold
Maximum
Actual performance
Outcome

(3-year performance period ended 30 June 2020)

TSR

vesting %

£7.20
£8.00
£8.69
100% of award to vest1

20%
100%

If no adjustment had been made to the definition of TSR then actual performance would have been £7.80 and 80% of the award would have vested.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ANNUAL REPORT ON REMUNERATION CONTINUED

Therefore, the vesting outcome is as follows:

Executive Director

Stefan Allanson

Number of
shares granted

Number of
shares vesting
based on
performance

Dividend
equivalents1
£000

Total value of
award on
vesting2
£000

Amount of
award
attributable to
share price
appreciation
since grant3
£000

69,231

535

1. The 2017 LTIP included dividend equivalent terms such that additional plan shares are awarded based on the value of dividends payable on the number of

vested plan shares between the award date and vesting date.

2. Calculated based on the share price on the date of vesting (8 July 2020: £6.91). The total value of award on vesting includes the dividend equivalents.
3. The Company’s share price increased by £0.41 between the date of grant (26 September 2017) and the date of vesting (8 July 2020). The proportion of the

total value of award on vesting attributable to share price growth is therefore 6%.

LTIP awards granted in the year ended 30 June 2020
The Committee granted conditional share awards under the LTIP equivalent to 150% of salary to James Thomson and Stefan Allanson
on 10 December 2019. The awards are based on the achievement of EPS performance (as regards two-thirds of the awards) and relative
TSR performance (as regards one-third of the awards) measured over a period of three financial years ending 30 June 2022. The awards
will vest following the end of the performance period once the Committee has determined whether the performance targets have been
satisfied. vested awards will be subject to a two-year holding period following the end of the performance period.

Details of the awards are as follows:

Director

James Thomson
Stefan Allanson

Number of shares granted face value at grant £0001

93,750
59,063

750
473

1. Calculated based on the mid-market closing share price as at the date immediately preceding the date of grant (9 December 2019: £8.00).

EPS
Relative TSR1

Threshold (20%)
of award vests

Maximum 100%
of award vests2

74.6 pence
Median

87.9 pence
Upper quartile

1. To be compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Properties, Crest Nicholson,

Galliford Try, McCarthy & Stone, Persimmon, Redrow, Taylor Wimpey and vistry Group.

2. Straight-line vesting between threshold and maximum performance.

Payment made to former Directors and payments for loss of office during the year to 30 June 2019

Jolyon harrison, the former Chief Executive Officer, stepped down from the Board on 10 June 2019. The terms of his cessation of
employment were agreed during the year and were as follows:

• A payment in lieu of notice equal to six months of salary, based on his final salary of £505,000. This was paid on 2 December 2019.
• A payment for loss of office of £47,000. This was paid on 2 December 2019.
• The Committee determined that two-thirds of Jolyon harrison’s 2017 LTIP award would vest taking into account time served during

the vesting period and performance up to the date of cessation of employment. The 2017 LTIP award vested on 2 December 2019 and
was capable of exercise from that date. The value of the 2017 LTIP award that vested was equal to £1,182,000 (147,692 shares x £8.00,
being the mid-market closing share price on 2 December 2019).

• As disclosed in last year’s Annual Report on Remuneration, the TSR performance targets attached to the 2015 and 2016 LTIP awards
were met in full and therefore 100% of the awards remained capable of vesting. The Committee determined that Jolyon harrison’s
2015 and 2016 LTIP awards would vest in full on 2 December 2019 and be capable of exercise from that date. The value of the 2015 and
2016 LTIP awards were disclosed in last year’s single total figure of remuneration table.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Directors’ shareholdings and share interests

Shareholding guideline
Within-employment and post-employment shareholding guidelines were introduced with effect from 1 July 2019. The within-employment
shareholding guideline requires Executive Directors to build up and retain a holding in shares equivalent to 200% of salary. As at 30 June
2020, James Thomson and Stefan Allanson held shares equivalent to 19% of salary and 189% of salary respectively.

Share interests
The interests of the Directors serving during the year and of their connected persons in the ordinary share capital of the Company as at
30 June 2020 are as shown below:

Director

Chairman
Dermot Gleeson

Executive Directors
James Thomson

Stefan Allanson

Non-Executive Directors
Ross Ancell
Colin Dearlove
Christopher Mills3
Andrew Coppel
fiona Goldsmith

Scheme Owned outright

Unvested and
subject to
performance

Unvested and
not subject to
performance1

vested and
exercised

Total as at
30 June 2020

1,088,918

–

Shares
LTIP 2019
Shares
LTIP 2015
LTIP 2016
LTIP 20172
LTIP 2018
LTIP 2019

12,541
–
79,016
–
–
–
–
–

Shares
Shares
Shares
Shares
Shares

–
900
6,355,000
6,500
5,000

–
93,750
–
–
–
69,231
67,500
59,063

–
–
–
–
–

–

90
–
396
–
–
–
–
–

–
–
–
–
–

–

1,088,918

–
–
–
28,421
65,789
–
–
–

12,631
93,750
79,412
28,421
65,789
69,231
67,500
59,063

–
–
–
–
–

–
900
6,355,000
6,500
5,000

1. Matching shares granted under the hMRC tax-qualifying all-employee scheme that have not yet vested.
2. The 2017 LTIP awards vested in full on 8 July 2020 following Committee approval of the outcome of the performance targets. Stefan Allanson exercised 77,345
shares (including 8,114 shares from dividend equivalents) under the 2017 LTIP on 16 July 2020. Stefan Allanson sold 36,461 shares to cover taxes and retained
the remaining 40,884 shares.

3. Shares are held by funds managed by harwood Capital LLP of which Christopher Mills is a Member/Director.

As at 31 August 2020, the total interests held by James Thomson was 12,693 and Stefan Allanson was 120,357. The Company has not
been advised of any other changes to the interests of Directors and their connected persons to those set out in the table above.

LTIP awards
Additional details of the outstanding LTIP awards held by Executive Directors serving during the year are set out below.

Executive Director

Scheme

30 June 2019

during year

Granted

vested and
exercised

during year

Lapsed
in year

Share price at
grant date

Total interests
outstanding at
30 June 2020

End of
performance
period

James Thomson

LTIP 2019

Stefan Allanson

LTIP 2015
LTIP 2016
LTIP 20171
LTIP 2018
LTIP 2019

–

28,421
65,789
69,231
67,500
–

93,750

–
–
–
–
59,063

–

28,421
65,789
–
–
–

–

–
–
–
–
–

£8.00

£4.82
£5.70
£6.50
£7.04
£8.00

93,750

30/06/22

–
–
69,231
67,500
59,063

30/06/18
30/06/19
30/06/20
30/06/21
30/06/22

1. As noted above, the 2017 LTIP awards vested in full on 8 July 2020 following Committee approval of the outcome of the performance targets.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ANNUAL REPORT ON REMUNERATION CONTINUED

TSR performance
We have compared the Company’s TSR performance over the last ten years with the TSR for the fTSE Small Cap Index, of which the
Company is a member, and a comparator index of listed housebuilders. The peer group consists of a group of listed housebuilders
comprising Barratt Developments, Bellway, Berkeley, Countryside Properties, Crest Nicholson, Galliford Try, McCarthy & Stone,
Persimmon, Redrow, Taylor Wimpey and vistry Group.

MJ Gleeson plc TSR comparison to index and peer group 1 July 2010 to 30 June 2020:

£1,200

£1,000

£800

£600

£400

£200

£0
u l y 1

MJ Gleeson
Housebuilders
FTSE SmallCap

e 1

e 2

Chief Executive Officer’s remuneration 2011 to 2020

Year

2020
2019
20191
20181
2017
2016
2015
2014
2013
20122
2011

Chief Executive Officer

James Thomson
James Thomson (appointed 10 June 2019)
Jolyon harrison (departed 10 June 2019)
Jolyon harrison
Jolyon harrison
Jolyon harrison
Jolyon harrison
Jolyon harrison
Jolyon harrison (appointed 1 July 2012)
N/A
Chris holt

Single figure
of total
remuneration
£000

Annual bonus
paid against
maximum
opportunity

LTIP awards
vesting against
maximum
opportunity

769
31
2,482
3,056
2,816
873
2,917
793
1,615
–
417

45%
–
0%
100%
100%
100%
100%
100%
81%
–
0%

–
–
100%
100%
100%
0%
100%
0%
100%
–
0%

1 The values have been restated to reflect the actual number of awards which vested on 11 November 2019, including dividend equivalents, using the share price

on the date of vesting (£8.00).

2 No Chief Executive Officer held office during 2012.

Annual percentage change in remuneration of Directors and employees
The table below sets out the annual percentage change in each of the Directors’ remuneration compared to the average employee
remuneration.

% Change

Chairman
Dermot Gleeson

Executive Directors
James Thomson2
Stefan Allanson

Non-Executive Directors
Ross Ancell
Colin Dearlove
Christopher Mills
Andrew Coppel3
fiona Goldsmith3

Average employee4

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

2019 to 2020

Salary
& fees1

Benefits

Bonus

-7%

n/a
-7%

-7%
-7%
-7%
n/a
n/a

n/a
2%

–
–
–
–
–

–

n/a
0%

–
–
–
–
–

4.4%

8.2%

-8.1%

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

1. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.

There has therefore been a reduction in salaries and fees received by Directors during the year ended 30 June 2020 compared to the previous year.

2. Appointed to the Board on 10 June 2019 and therefore the annual percentage change in remuneration is not applicable.
3. Appointed to the Board on 1 October 2019 and therefore the annual percentage change in remuneration is not applicable.
4. The annual percentage change of the average remuneration of the Group’s salaried employees, calculated on a full-time equivalent basis.

Chief Executive Officer pay ratio
The table below sets out the Chief Executive Officer’s total remuneration as a ratio against the full-time equivalent remuneration of the
25th, 50th (median) and 75th percentile employees.

Year

2020

Method

25th percentile pay ratio

Median pay ratio

75th percentile pay ratio

Option B

28:1

20:1

12:1

Option B methodology was selected on the basis that it is an efficient and robust approach. The remuneration figures for the employee
at each quartile were determined with reference to 30 June 2020. Sensitivity analysis has been performed around the 25th, 50th and
75th percentile employees to ensure that they are reasonably representative.

A substantial proportion of the Chief Executive Officer’s total remuneration is performance-related and delivered in shares. The ratios will
therefore depend significantly on the Chief Executive Officer’s annual bonus and LTIP outcomes, and may fluctuate year-to-year.

The Board believes that the median pay ratio is consistent with the Group’s wider policies on employee pay, reward and progression.

Total pay and benefits used to calculate the ratios
The table below shows the employee percentile pay and benefits used to determine the above pay ratios and the salary component for
each figure.

£000

Chief Executive Officer1

25th percentile

Median

75th percentile

Total pay and benefits2
Salary component

769
458

28
26

39
35

62
53

1 The Chief Executive Officer’s remuneration is the total single figure remuneration for the year ended 30 June 2020 as disclosed on page 67.
2 The employee percentile pay and benefits has been calculated based on the amount paid or receivable for the year ended 30 June 2020. The calculations are

on the same basis as required for the Chief Executive Officer’s remuneration for total single figure purposes.

Relative importance of spend on pay
Set out below is the amount spent on remuneration for all employees of the Group (including Executive Directors) and the total amounts
paid in distributions to shareholders over the year.

Remuneration for all employees
Total distributions paid

2020
£m

27.2
–

2019
£m

29.9
18.8

Difference
in spend
£m

-2.7
-18.8

Difference as
percentage

-9%
-100%

Terms of engagement
The Chief Executive Officer’s service agreement is on a rolling basis and requires 12 months’ notice of termination on either side. The
Chief financial Officer’s service agreement is on a rolling basis and requires six months’ notice of termination from the Chief financial
Officer and 12 months’ notice of termination from the Company. The dates of the Executive Directors’ service agreements are as follows:

James Thomson
Stefan Allanson

Date of service agreement

2 December 2019
29 June 2015

All Non-Executive Directors are engaged for an initial period of three years which thereafter may be extended on an annual basis,
subject to re-election at each AGM. The appointment of the Chairman may be terminated by either side on six months’ notice and the
appointment of the other Non-Executive Directors may be terminated on either side on one month’s notice. The dates of each Non-
Executive Director’s original appointment are as follows:

Dermot Gleeson
Ross Ancell1
Colin Dearlove1
Christopher Mills
Andrew Coppel
fiona Goldsmith

1 Ross Ancell and Colin Dearlove stepped down from the Board on 30 June 2020.
2 Subject to re-election at the 2020 AGM.

Date of original appointment

Expiry of current term

27 November 1975
1 October 2006
3 December 2007
1 January 2009
1 October 2019
1 October 2019

30 September 20202
30 June 2020
30 June 2020
30 September 20202
30 September 20222
30 September 20222

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

ANNUAL REPORT ON REMUNERATION CONTINUED

Implementation of the new policy for the year to 30 June 2021
Executive Directors
Salary
No salary increase has been awarded to the Executive Directors for the year to 30 June 2021. This is in line with the wider workforce.

James Thomson
Stefan Allanson

Salary from
1 July 2020
£

Salary as at
30 June 2020
£

500,000
315,000

Pension
Reflecting best practice and the expectations of shareholders and proxy voting agencies, Stefan Allanson has volunteered to have his
pension opportunity reduced from 15% to 12% of salary with effect from 1 July 2020 and it will reduce to 9% on 1 July 2021 and 6.5% on
1 July 2022. This will bring it in line with the level available to the majority of the workforce.

James Thomson’s pension opportunity was set at 6.5% of salary on his appointment as Chief Executive Officer.

Annual bonus
The maximum bonus that can be earned in the year will be 125% of salary for both Executive Directors. The Committee has increased
Stefan Allanson’s maximum bonus opportunity (from 100% of salary for the year ended 30 June 2020) to recognise his experience and
contribution to the business, and to provide alignment with James Thomson’s maximum bonus opportunity. The Committee will also
ensure that the performance targets are appropriately stretching and reflective of the increase in maximum bonus opportunity.

80% of the award will be based on profit performance and 20% will be based on strategic and personal performance. Details of the profit,
strategic and personal performance targets will be fully disclosed in the Annual Report on Remuneration for the year ending 30 June
2021.

The Executive Directors will be required to defer one-third of any bonuses earned into shares for a two-year period.

LTIP
The maximum LTIP opportunity will be 150% of salary for both Executive Directors. 50% of the award will be based on EPS performance
and 50% will be based on relative TSR performance measured over a period of three financial years ending 30 June 2023. Any awards
that vest will be subject to a two-year holding period.

The EPS and relative TSR performance targets for the proposed awards will be set by the Committee within the next six months and will
be fully disclosed in the Annual Report on Remuneration for the year ending 30 June 2021.

The Committee will consider the share price at the grant date when deciding the share price to be used to determine the number of
shares to be granted and what provisions to include to mitigate the potential risk of “windfall gains” if and to the extent caused by the
current Covid-19 pandemic impact on share price.

Chairman and Non-Executive Directors fees
No fee increase has been awarded to the Chairman or Non-Executive Directors for the year to 30 June 2021. The Chairman’s fee
therefore remains unchanged at £125,000 and this includes a fee of £10,500 for chairing the Nomination Committee. The fees for the
Non-Executive Directors also remain unchanged at £47,250 plus an additional fee of £10,500 for chairing a Board Committee.

The Remuneration Committee
The Committee was chaired by Ross Ancell during the year ended 30 June 2020. The other Committee members were Colin Dearlove,
Andrew Coppel and fiona Goldsmith. Andrew Coppel and fiona Goldsmith were appointed to the Committee on 1 October 2019.

Ross Ancell and Colin Dearlove stepped down from the Board on 30 June 2020, following which, Andrew Coppel was appointed as
Committee Chair.

Each of the Non-Executive Directors are independent and have no potential conflicts of interest arising from cross directorships and no
day-to-day involvement in running the business.

Biographical details of the members of the Committee are shown on pages 50 and 51, and details of their attendance at the meetings of
the Committee during the year ended 30 June 2020 are shown on page 52.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Role and responsibilities of the Remuneration Committee
The Committee’s primary purpose is to make recommendations to the Board on the Group’s framework for Executive Directors and
senior management remuneration. The Board has also delegated responsibility to the Committee for determining the remuneration,
benefits and contractual arrangements of the Chairman and the Executive Directors. No individual is involved in deciding their own
remuneration.

The Committee has written terms of reference available on the Company’s website, www.mjgleesonplc.com, and its responsibilities
include:
• recommending to the Board the policy for Executive Directors and senior management remuneration;
• agreeing the remuneration of the Chairman of the Board;
• agreeing the terms and conditions of employment for Executive Directors, including their annual remuneration and pension

arrangements, and reviewing such provisions for senior management;

• agreeing the measures and targets for any performance-related bonus and share schemes;
• ensuring that, on termination, contractual terms and payments made are fair both to the Company and the individual so that failure is

not rewarded; and

• agreeing the terms of reference of any remuneration consultants that it appoints.

Activities during the year
The Committee met on a number of occasions during the year, two of which were scheduled meetings. Papers were circulated in
advance of each meeting for all matters considered. The main activities undertaken by the Committee during the year included:
• reviewing and approving the remuneration outcomes of the Executive Directors and senior management for the year ended 30 June

2019 and assessing the fairness of these remuneration outcomes;

• agreeing performance targets for the remuneration of the Executive Directors and senior management for the year ended 30 June

2020 and monitoring progress against these targets during the year;

• reviewing the remuneration arrangements of the Executive Directors, including Stefan Allanson’s pension opportunity and James

Thomson’ salary and maximum bonus opportunity following his permanent appointment as Chief Executive Officer;

• reviewing proposals for a settlement agreement for the former Chief Executive Officer, Jolyon harrison, and working to reach an

agreement on such proposals;

• developing and agreeing with shareholders a three-year remuneration policy;
• restructuring incentive arrangements for other directors and senior managers in particular for the new regional/divisional structure;
• reviewing and agreeing furlough arrangements and salary reductions during the Covid-19 pandemic including claiming of JRS grants;
• reviewing and approving proposals for staff pay and bonuses, including examining benchmarking data and market information from

third-party advisers;

• reviewing gender pay across the Group and approving gender pay reporting; and
• reviewing the terms of reference of the Committee such that these remain appropriate.

Remuneration Committee – support and advice
The Committee is supported by the human Resources Director, Beth Broughton, and the head of Legal and Company Secretary, Leanne
Johnson. The Company also took advice from Deloitte LLP who were appointed in July 2019.

Deloitte LLP is a founder member of the Remuneration Consultants Group and as such voluntarily operates under its Code of Conduct in
relation to executive remuneration in the UK. The Committee is satisfied that the appointment of Deloitte LLP is in accordance with the
Company’s policy on the provision of non-audit services to the Group and that the external advice received is objective and independent.

The fees paid to Deloitte LLP for their services to the Committee during the year, based on time and expenses, amounted to £38,000.

Deloitte LLP also provided advice to the Company during the year in relation to share plans.

Statement of voting at the Annual General Meeting
The following table sets out actual voting in respect of the resolutions to approve the Remuneration Policy and Annual Report on
Remuneration at the Company’s AGM.

2019 AGM: Approval of the
Annual Report on Remuneration

2019 AGM: Approval of the
Director’s Remuneration Policy

votes in favour

votes against

No.

% Total votes cast

votes withheld

38,213,708

98.3%

656,229

1.7%

38,869,937

2,801

38,188,152

98.2%

681,785

1.8%

38,869,937

2,801

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

DIRECTORS’ REPORT

Statutory, regulatory
and other information

Qualifying third party indemnity
Directors risk personal liability under civil and criminal law for
many aspects of the Company’s main business decisions. As
a consequence, the Directors could face a range of penalties
including fines and/or imprisonment. In keeping with normal
market practice, the Company believes that it is prudent, and in the
best interests of the Company, to protect the individuals concerned
from the consequences of innocent error or omission.

The Company obtains Directors’ and Officers’ liability insurance
in order to indemnify Directors and other senior officers of the
Company and its subsidiaries. This insurance policy does not
provide cover where the Director or officer has acted fraudulently
or dishonestly.

In addition, subject to the provisions of and to the extent permitted
by relevant statutes, under the Articles, the Directors and other
officers throughout the year, and at the date of approval of these
financial statements, were indemnified out of the assets of the
Company against liabilities incurred by them in the course of
carrying out their duties or the exercise of their powers.

Substantial shareholdings
At 31 August 2020, the shareholdings noted below, representing
3% or more of the issued share capital, had been notified to the
Company.

Name of Shareholder

funds managed by harwood Capital
LLP
Sanford DeLand Asset Management
Schroder Investment Management
Polar Capital
The Cooper family*
Royal London Asset Management
Aberdeen Standard Investments

Number
of shares

Proportion
of total

6,355,000

10.91%

4,817,500
4,784,254
2,408,727
2,258,205
2,250,968
2,081,034

8.27%
8.21%
4.13%
3.88%
3.86%
3.57%

* Of which 538,890 shares are held in trusts of which Mrs J C Cooper is a

Trustee.

This section contains the remaining matters on which the Directors
are required to report each year that do not appear elsewhere in
the Annual Report.

Strategic Report
We present a review of the business during the year to 30 June
2020 and of the position of the Group at the end of the financial
year together with a description of the principal risks and
uncertainties faced by the Group in the Strategic Report on pages
1 to 45.

Business review
The review of the development and performance of the business
during the year, any significant events up to the date of this Report,
and the future outlook of the Group are set out in the Chairman’s
Statement on pages 6 and 7, the Chief Executive’s Statement on
pages 10 to 12 and the Business Reviews on pages 18 and 20.

The key performance indicators are set out in the Strategic Report
on pages 11 and 39. The Group’s policy in respect of financial risk
management and financial instruments, details of credit risk, capital
risk management, liquidity risk and interest rate risk are given in
note 16 to the financial statements.

Dividends
As set out in the Chairman’s Statement on pages 6 and 7, the Board
does not propose to pay a dividend relating to the year ended
30 June 2020. In 2019 the Company paid an interim dividend of 11.5
pence and a final dividend of 23.0 pence.

Governance statement
The Disclosure Guidance and Transparency Rules require certain
information to be included in a governance statement in the
Directors’ Report. Information that fulfils these requirements,
including how the Group has complied with the UK Corporate
Governance Code and our internal control and risk management
systems, can be found in the Governance Report on pages 48 to
78.

Political donations
The Company made no political donations in the year or in the
previous year.

Directors and Directors’ interests
The Directors of the Company as of the date of this Report
and their biographical details are shown on pages 50 and 51.
Additionally, Colin Dearlove and Ross Ancell were Directors during
the course of the year, and both resigned effective 30 June 2020.

Details of any related party transactions with Directors of the
Company are shown in note 28 to the financial statements.

The beneficial interests of the Directors and their connected
persons in the shares of the Company at 30 June 2020 and as
at the date of this report are disclosed in the Annual Report on
Remuneration on page 71. Details of the interests of the Executive
Directors in share options and awards of shares can be found on
page 71 within the same report.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Employees
We are committed to ensuring that all employees, potential
recruits and other stakeholders are treated fairly and equitably.
The principles of equality and diversity are important to us
and advancement is based upon individual skills and aptitude
irrespective of race, gender identity, sexual orientation, disability,
age, religion or beliefs.

Shareholder additional information
The Company is required to disclose certain additional information
where not covered elsewhere in this Annual Report:

Share capital
The Company has one class of share in issue, being ordinary shares
with a nominal value of 2 pence each, with no right to fixed income.

Our policy for selection and promotion is based on an assessment
of an individual’s ability and experiences; we consider all applicants
on their merits and have processes and procedures in place to
ensure that individuals with disabilities are given fair consideration.

At 30 June 2020 the Company had issued share capital of
58,067,535 ordinary shares, with a nominal value of £1.2m. further
details are given in note 25 to the financial statements.

Rights and obligations attaching to shares
Subject to the Companies Act 2006 and other shareholders’
rights, any share may be issued with such rights and restrictions
as the Company may by ordinary resolution decide or, if no
such resolution has been passed or so far as the resolution does
not make specific provision, as the Board of the Company may
decide. Subject to the Companies Act 2006, the Articles and any
resolution of the Company, the Board may deal with any unissued
shares as it may decide.

Amendment to the Articles of Association
Any amendments to the Articles may be made in accordance
with the provisions of the Companies Act 2006 by way of special
resolution.

Voting
Under and subject to the provisions of the Articles and subject
to any special rights or restrictions as to voting attached to any
shares, on a show of hands, every shareholder present in person
at a general meeting of shareholders shall have one vote and on a
poll every shareholder who was present in person or by proxy shall
have one vote for every share of which they are the holder. Under
the Companies Act 2006, shareholders are entitled to appoint a
proxy to exercise all or any of their rights to attend and to speak
and vote on their behalf at a general meeting or class meeting.

Restrictions on voting
A shareholder shall not be entitled to vote at any general meeting
or class meeting in respect of any shares held by them unless all
calls and other sums presently payable by them in respect of that
share have been paid.

Variation of rights
The Articles specify that the special rights attached to any class of
shares may, either with the consent in writing of holders of three-
fourths of the issued shares of that class or with the sanction of a
special resolution passed at a separate meeting of such holders
(but not otherwise), be modified or abrogated.

Every effort is made to retain and support employees who become
disabled whilst in the employment of the Group.

We are committed to developing our employees so they can
maximise their career potential, and our aim is to provide rewarding
career opportunities in an environment where equality of
opportunity is paramount. We seek to improve employee retention
by providing benefits that employees value including a Group
stakeholder pension (including life assurance arrangements),
private medical insurance and income replacement (“PhI”)
arrangements.

Employee share ownership continues to be encouraged through
participation in the Group Share Purchase Plan.

Employee involvement
Employees are updated through weekly e-mailed newsletters from
the Chief Executive Officer and other e-mail memos as necessary,
in addition to discussions with line managers. We also use our
internal website “Gleegle” to disseminate information and engage
with our employees. Updates on financial and economic factors
affecting the Group’s performance are given to all employees
following results announcements at half year and year end, and in
January 2020 we introduced “roadshows” across the business for
senior management to update all staff on matters of importance.

We regularly consult with our employees to ensure that their views
can be taken into account when making decisions. During the year
we launched our company-wide employee engagement survey,
Your voice, and have been using the results to help shape business
decisions going forward.

Directors engage with employees through the appointed
Workforce Representative; more details can be found on page 53.

Stakeholder engagement
Details regarding our stakeholder engagement including suppliers,
customers and shareholders, and the effect on the principal
decisions made in the year, can be found on page 29.

Greenhouse gas emissions
All disclosures concerning the Group’s greenhouse gas emissions,
as required to be disclosed under regulations introduced by the
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013 and the Streamlined Energy and Carbon
Reporting (“SECR”) requirements are contained in the Strategic
Report on page 35.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

DIRECTORS’ REPORT CONTINUED

Transfer of shares
Under and subject to the restrictions in the Articles, any
shareholder may transfer all or any of their shares in certificated
form by transfer in writing in any usual form or in any other form
which the Board may approve. The Board may, save in certain
circumstances, refuse to register any transfer of a certificated share
not fully paid up. The Board may also refuse to register any transfer
of certificated shares unless it is:
•
in respect of only one class of shares;
in favour of no more than four transferees;
•
• duly stamped or exempt from stamp duty;
• delivered to the office or at such other place as the Board may

decide for registration; and

• accompanied by the certificate for the shares to be transferred
and such other evidence (if any) as the Board may reasonably
require to show the right of the intending transferor to transfer
the shares.

Authority to purchase own shares
At the 2019 AGM, shareholders gave the Company authority to
purchase up to the nominal value of ordinary shares of £109,204
of its own ordinary shares, representing 10% of its issued ordinary
share capital. No purchases have been made pursuant to this
authority and a resolution will be put to shareholders at the 2020
AGM to renew the authority for a further period of one year.

Repurchase of shares
Subject to the provisions of the Companies Act and to any rights
conferred on the holders of any class of shares, the Company
may purchase all or any of its shares of any class, including any
redeemable shares.

Appointment and replacement of Directors
The Directors shall not, unless otherwise determined by an ordinary
resolution of the Company, be less than three or more than 15 in
number. Directors may be appointed by the Company by ordinary
resolution or by the Board.

A Director appointed by the Board shall retire from office at
the next AGM of the Company but shall then be eligible for
reappointment. The Board may appoint one or more Directors
to hold any office or employment with the Company for such
period (subject to the Companies Act requirements) and on such
terms as it may decide and may revoke or terminate any such
appointment. At each AGM any Director who has been appointed
by the Board since the previous AGM and any Director selected to
retire by rotation shall retire from office. At each AGM, one-third of
the Directors are required to retire by rotation or, if the number is
not an integral multiple of three, the number nearest to one-third
but not exceeding one-third. In addition, any Director who has
been a Director at the preceding two AGMs is required to retire by
rotation, provided that they were not appointed or reappointed at
either such AGM or ceased to be a Director and been reappointed
since either such AGM. Notwithstanding this, the Board has
determined that all Directors will be subject to annual re-election
by shareholders at each AGM.

The Company may, by ordinary resolution of which special notice
has been given in accordance with the Companies Act, remove any
Director before their period of office has expired notwithstanding
anything in the Articles or in any agreement between that Director
and the Company.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

A Director may also be removed from office by the service of
a notice to that effect signed by or on behalf of all the other
Directors, being not less than three in number.

Powers of the Directors
The business of the Company shall be managed by the Board
which may exercise all the powers of the Company, subject to
the provisions of the Articles and any ordinary resolution of the
Company. The Articles specify that the Board may exercise all
the powers of the Company to borrow money and to mortgage
or charge all or any part of its undertakings, property and assets
and uncalled capital and to issue debentures and other securities,
subject to the provisions of the Articles.

Takeovers and significant agreements
The Company is party to the following significant agreements
that take effect, alter or terminate on a change of control of the
Company following a takeover bid:
• the Company’s share schemes and plans;
• the Company’s payment guarantee bonds except with prior

written consent from the bond provider; and

• the revolving credit facility whereby upon a “change of control”

all amounts become due and payable.

Information rights
Beneficial owners of shares who have been nominated by the
registered holder of those shares to enjoy information rights under
Section 146 of the Companies Act 2006 are required to direct all
communications to the registered holder of their shares, rather
than to the Company’s registrars or to the Company directly.

Disclosure of information to auditors
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 Company’s auditors
are unaware, and the Directors have taken all the steps that they
ought to have taken as Directors to make themselves aware of any
relevant audit information and to establish that the Company’s
auditors are aware of that information.

Auditors
As set out on page 61, the auditors, PricewaterhouseCoopers
LLP, have indicated their willingness to continue in office, and a
resolution that they be reappointed will be proposed at the next
AGM on 3 December 2020.

Annual General Meeting
The Notice of the AGM to be held on 3 December 2020, together
with details of the Resolutions to be considered, will be sent out in
a separate circular. full details of the deadlines for exercising voting
rights in respect of the resolutions to be considered at the AGM will
be set out in the Notice of the AGM.

By order of the Board

Leanne Johnson
Company Secretary
13 September 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

STATEMENT Of DIRECTORS’ RESPONSIBILITIES
IN RESPECT Of ThE fINANCIAL STATEMENTS

Each of the Directors, whose names and functions are listed in
Board of Directors confirm that, to the best of their knowledge:
• the Company financial statements, which have been prepared in
accordance with IfRSs as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position and
profit of the Company;

• the Group financial statements, which have been prepared in

accordance with IfRSs as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position and
profit of the Group; and

• the Strategic Report includes a fair review of the development
and performance of the business and the position of the Group
and Company, together with a description of the principal risks
and uncertainties that it faces.

By order of the Board

James Thomson
Director
13 September 2020

Stefan Allanson
Director

The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulation.

Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
International financial Reporting Standards (“IfRSs”) as adopted
by the European Union and Company financial statements in
accordance with International financial Reporting Standards
(“IfRSs”) as adopted by the European Union. 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 Company and of the profit or loss of
the Group and Company for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them

consistently;

• state whether applicable IfRSs as adopted by the European
Union have been followed for the Group financial statements
and IfRSs as adopted by the European Union have been
followed for the Company financial statements, subject to any
material departures disclosed and explained in the financial
statements;

• make judgements and accounting estimates that are reasonable

and prudent; and

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.

The Directors are also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company and
enable them to ensure that the financial statements and the Annual
Report on Remuneration comply with the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS
Regulation.

The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

build

to order

Kings Park, Doncaster, South Yorkshire

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT
TO ThE MEMBERS Of MJ GLEESON PLC

Report on the audit of the financial statements
Opinion
In our opinion, MJ Gleeson plc’s group financial statements and
company financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s and of the

company’s affairs as at 30 June 2020 and of the group’s profit
and the group’s and the company’s cash flows for the year then
ended;

• have been properly prepared in accordance with International
financial Reporting Standards (IfRSs) as adopted by the
European Union and, as regards the company’s financial
statements, as applied in accordance with the provisions of the
Companies Act 2006; and

• 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.

We have audited the financial statements, included within the
Annual Report and Accounts (the “Annual Report”), which
comprise: the statement of financial position as at 30 June 2020;
the consolidated income statement and consolidated statement
of comprehensive income, the statement of cash flows, and the
statement of changes in equity for the year then ended; and the
notes to the financial statements, which include a description of the
significant accounting policies.

Our opinion is consistent with our reporting to the Audit
Committee.

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.

Independence
We remained independent of the group in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the fRC’s Ethical Standard,
as applicable to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements.

To the best of our knowledge and belief, we declare that non-
audit services prohibited by the fRC’s Ethical Standard were not
provided to the group or the company.

We have provided no non-audit services to the group or the
company in the period from 1 July 2019 to 30 June 2020.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Our audit approach
Overview

Materiality

Audit scope

Key audit
matters

• Overall group materiality:

£1,405,000 (2019: £2,060,000),
based on 5% of a three year average
of profit before tax
(2019: profit before tax).
• Overall company materiality:

£1,334,750 (2019: £1,264,000),
based on 1% of total assets, capped
at a component materiality level.

• The reporting units where we

performed audit work accounted for
100% of the Group’s profit before
tax and 100% of the Group’s total
assets.

• Carrying value of land and work in

•

progress (Group)
Impact of Covid-19 (Group and
company)

• Carrying value of investments

(Company)

The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.

Capability of the audit in detecting irregularities,
including fraud
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to breaches of health and safety and breaches
of the relevant tax legislation, and we considered the extent to
which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements
such as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls),
and determined that the principal risks were related to the posting
of inappropriate journal entries to improve the group’s result for
the period, and management bias in key accounting estimates.
The group engagement team shared this risk assessment with
the component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit
procedures performed by the group engagement team and/or
component auditors included:
• Discussions with management, including consideration of

known or suspected instances of non-compliance with laws and
regulation and fraud;

• Challenging assumptions and judgements made by

management in their significant accounting estimates, in
particular in relation to forecast selling prices and forecast costs
to complete on individual sites in the Gleeson homes segment,
and in relation to the valuation of work in progress in the
Gleeson Strategic Land segment (see related key audit matters
below);
Identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations. Specifically
we tested journal entries which inflated the group result for
the period with unusual offset entries, and we tested journal
entries impacting cash with unusual offset entries to detect any
potentially fraudulent cash extraction from the business.

•

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

Key audit matter

how our audit addressed the key audit matter

Carrying value of land and work
in progress (Group)
We focused upon this area because the value of the
Group’s land and work in progress represent a significant
proportion of assets in the Group statement of financial
position.

further, determining the recoverable amount of land and
work in progress requires a high degree of estimation.

for work in progress in Gleeson homes, the key
judgements include forecasting future costs to complete
and selling prices which can be affected by market
conditions and unexpected events.

In Gleeson Strategic Land, the valuation of work in
progress requires judgement regarding the future viability
of each project. Based upon this assessment, it may be
necessary to record provisions to determine the final
carrying value of work in progress for each site.

for land and work in progress in Gleeson homes, we:
• Assessed the adequacy of controls over the authorisation and recording
of costs, including testing of controls over the allocation of costs to the
correct sites.

• visited a sample of sites to confirm the existence and condition of

the work in progress, and also to evaluate the reasonableness of the
assessment of stage of completion.

• Attendance at a sample of quarterly valuation meetings to evidence

controls and procedures undertaken and judgements made as part of
the valuation process.

• Tested and agreed a sample of land and work in progress costs incurred
during the year, including land additions and build costs, to supporting
evidence as well as reviewing the proportion of that expenditure
recognised as a cost of sale in the year in respect of units sold.

• Tested the percentage completion of units across a sample of sites and
checked that forecasts have been appropriately updated for expected
costs and selling prices to completion. We also assessed the level of
gross margins achieved against those recorded previously and future
forecasts.

• Assessed the historical accuracy of management’s forecasting.
• Tested forecast costs to complete, including forecast preliminary costs,

to supporting documentation for a sample of sites.

• Performed an independent assessment of cost accruals and build

contingency via enquiry and corroboration to supporting evidence.

for work in progress in Gleeson Strategic Land, we:
• Tested a sample of costs incurred during the year.
• Tested the transfer from work in progress to cost of sales for those sites

sold during the year.

• Discussed and challenged the status of a sample of projects with

management and corroborated explanations received.

• Recalculated the provision made by management against year-end work

in progress by applying the Group’s provisioning methodology.

Based on the procedures performed we did not identify any material
adjustments to the carrying value of the Group’s land and work in progress
at year end.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT
TO ThE MEMBERS Of MJ GLEESON PLC CONTINUED

Key audit matter

how our audit addressed the key audit matter

Impact of Covid-19
(Group & company)
Refer to the viability statement on page 62 and note 1
(Going concern).

We have considered the carrying value of Company investments within the
specific key audit matter; Carrying value of investments, and the carrying
value of land and work in progress within the specific key audit matter:
Carrying value of land and work in progress.

The ongoing Covid-19 pandemic is having a significant
impact on the UK economy in which the Group operates.
As a result, the Group and Company have faced
operational challenges and there remains significant
uncertainty as to the duration of the pandemic and what
its lasting impact will be on the economy.

The pandemic was a present condition at 30 June 2020
and has subsequently continued to change. The Directors
have considered the potential impact of the evolving
pandemic across the business and on the financial
statements.

The Directors have considered the impact on the carrying
value of the Company’s investments for any potential
impairment as a result of the ongoing pandemic, and also
the carrying value of land and work in progress.

In relation to the Group’s going concern assessment, the
Directors have considered the implications of Covid-19
and have undertaken an assessment including a review
of the anticipated performance and forecast future cash
flows of the Group and the potential ongoing impact of
the ongoing pandemic.

To support this assessment, the Directors have prepared
a Board approved July budget and cashflow forecast for
the three year period to 30 June 2023 reflecting what
they expect the impact of the Covid-19 pandemic to be.

They have stress tested the cash flow forecasts reflecting
what they consider to be a severe yet plausible downside
scenario resulting from the consequences of Covid-19 as
described in the going concern statement on page 93.

The Group has sought and agreed a waiver for certain
covenant test dates in the next 12 months.

The outcome of management’s assessment is that, in their
view, it remains appropriate to prepare the Group and
Company financial statements on a going concern basis.

Carrying value of investments (Company)
We focused upon this area because of the size of the
balance and the significant judgement required in
determining the carrying value.

The key judgement is the underlying cash generation and
profitability of the group as a whole which can be affected
by market conditions and unexpected events, including
the Covid-19 pandemic.

We have re-evaluated our risk assessment, including the going concern risk
of the Group. Based on the Directors’ assessment and our audit procedures
thereon as described below, we consider our original risk assessment to
remain appropriate and therefore consider going concern to be a normal
risk for the Group.

In assessing management’s consideration of the potential impact on the
Group going concern assessment of Covid-19, we have undertaken the
following audit procedures:

• We obtained from management their latest forecasts that support the
Board’s assessment and conclusions with respect to the going concern
basis of preparation of the financial statements.

• We assessed the management accounts for the financial year to date
and checked that these were consistent with the starting point of
management’s forecasts. We also checked the arithmetical accuracy of
management’s forecasts.

• We evaluated management’s Board approved July budget and cashflow
forecast and severe yet plausible downside scenario for the period to
30 December 2021. We challenged the adequacy and appropriateness of
the underlying assumptions and significant forecast cashflows.

• We understood the mitigating actions taken by management to date,

and confirmed the available mitigating actions in management’s model
are within their control and can be taken on a timely basis, if needed.
• We evaluated the level of forecast liquidity and forecast compliance with
the bank facility covenants, which included further downside sensitivity
to management’s severe but plausible downside and agreed to source
documentation.

Our findings and conclusions in respect of going concern are set out in the
‘Going concern’ section below.

We have evaluated management’s disclosures in the financial statements in
relation to Covid-19 and are satisfied that they are consistent with the risks
affecting the Group, their impact assessment and the procedures that we
have performed.

We compared the carrying value of the investments and the intercompany
receivables as at 30 June 2020 to the subsidiary’s net assets and assessed
the future cash flows of the subsidiaries.

We also assessed the market capitalisation of the Company as at 30 June
2020.

Based on this work we are satisfied that the carrying value of the
investments held by the company are supported.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in
which they operate.

The Group is organised into two main operating divisions being Gleeson homes and Gleeson Strategic Land, and each operating division
represents a single reporting unit.

The Group financial statements are a consolidation of these 2 reporting units, the Group’s discontinued operations, and the Group’s
central entities which include a further 3 reporting units.

Of the Group’s 6 reporting units, we identified 4 which, in our view, required an audit of their complete financial information, either due to
their size or their risk characteristics.

This, together with additional procedures performed on the Group’s remaining centralised functions, gave us the evidence we needed for
our opinion on the Group financial statements as a whole.

All work was performed by the Group audit team.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality

How we determined it

Rationale for benchmark applied

Group financial statements

Company financial statements

£1,405,000 (2019: £2,060,000).

£1,334,750 (2019: £1,264,000).

5% of a three year average of profit before tax (2019:
5% of profit before tax).

1% of total assets, capped at a component
materiality level, as noted below.

Based on the benchmarks used in the annual report,
profit before tax is the primary measure used by
the shareholders in assessing the performance of
the group, and is a generally accepted auditing
benchmark. Due to the impact on this benchmark in
fY20 caused by the Covid-19 pandemic a three year
average has been utilised.

We believe total assets is the primary
measure used by shareholders in
assessing the performance of the entity.

for each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range
of materiality allocated across components was between £53,149 and £1,344,750. Certain components were audited to a local statutory
audit materiality that was also less than our overall group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £70,250 (Group
audit) (2019: £103,000) and £66,738 (Company audit) (2019: £63,200) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT
TO ThE MEMBERS Of MJ GLEESON PLC CONTINUED

Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation

We are required to report if we have anything material to add or draw attention to
in respect of the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting
in preparing the financial statements and the directors’ identification of any material
uncertainties to the group’s and the company’s ability to continue as a going concern
over a period of at least twelve months from the date of approval of the financial
statements.

We are required to report if the directors’ statement relating to Going Concern in
accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge
obtained in the audit.

Outcome

We have nothing material to add or to draw
attention to.

however, because not all future events or
conditions can be predicted, this statement is
not a guarantee as to the group’s and company’s
ability to continue as a going concern.

We have nothing to report.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06), ISAs
(UK) and the Listing Rules of the financial Conduct Authority (fCA) require us also to report certain opinions and matters as described
below (required by ISAs (UK) unless otherwise stated).

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’
Report for the year ended 30 June 2020 is consistent with the financial statements and has been prepared in accordance with applicable
legal requirements. (CA06)

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did
not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)

The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity
of the group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on page 62 of the Annual Report that they have carried out a robust assessment of the principal risks

facing the group, including those that would threaten its business model, future performance, solvency or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 62 of the Annual Report as to how they have assessed the prospects of the group, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a
reasonable expectation that the group will be able to continue in operation and meet its liabilities as they fall due over the period of
their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the
principal risks facing the group and statement in relation to the longer-term viability of the group. Our review was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statements; checking
that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the “Code”); and considering
whether the statements are consistent with the knowledge and understanding of the group and company and their environment
obtained in the course of the audit. (Listing Rules)

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 59, that they consider the Annual Report taken as a whole to be fair, balanced

and understandable, and provides the information necessary for the members to assess the group’s and company’s position and
performance, business model and strategy is materially inconsistent with our knowledge of the group and company obtained in the
course of performing our audit.

• The section of the Annual Report on pages 58 to 61 describing the work of the Audit Committee does not appropriately address

matters communicated by us to the Audit Committee.

• The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant

provision of the Code specified, under the Listing Rules, for review by the auditors.

Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities in respect of the financial statements, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the fRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.

Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from

branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment
following the recommendation of the audit committee, we were appointed by the directors on 14 November 2016 to audit the financial
statements for the year ended 30 June 2017 and subsequent financial periods. The period of total uninterrupted engagement is 4 years,
covering the years ended 30 June 2017 to 30 June 2020.

Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
13 September 2020

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

CONSOLIDATED INCOME STATEMENT
fOR ThE YEAR ENDED 30 JUNE 2020

Continuing operations
Revenue
Cost of sales

Gross profit
Impairment losses
Administrative expenses
Other operating income

Operating profit
finance income
finance expenses

Profit before tax
Tax

Profit for the year from continuing operations

Discontinued operations
Loss for the year from discontinued operations (net of tax)

Profit for the year attributable to the equity holders of the parent

Earnings per share from continuing and discontinued operations

Basic
Diluted

Earnings per share from continuing operations

Basic
Diluted

CONSOLIDATED STATEMENT Of COMPREhENSIvE INCOME
fOR ThE YEAR ENDED 30 JUNE 2020

Profit for the year

Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Change in value of shared equity receivables at fair value
Movement in tax on share-based payments taken directly to equity

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

The notes on pages 93 to 113 form part of these financial statements.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Note

7
7

10
10

Note

16
8

2020
£000

2019
£000

147,181
(106,744)

40,437
(257)
(34,533)
282

5,929
708
(1,071)

5,566
(758)

4,808

249,899
(174,936)

74,963
–
(34,256)
292

40,999
906
(693)

41,212
(7,648)

33,564

(289)

4,519

(297)

33,267

8.13 p
8.04 p

8.65 p
8.55 p

60.97 p
59.84 p

61.51 p
60.37 p

2020
£000

4,519

2019
£000

33,267

13
265

278

131
240

371

4,797

33,638

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

STATEMENT Of fINANCIAL POSITION
AT 30 JUNE 2020

Group

2020
£000

Note

Non-current assets
Property, plant and equipment
Investment properties
Investments in subsidiaries
Trade and other receivables
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
UK corporation tax

Total assets

Non-current liabilities
Trade and other payables
Provisions

Current liabilities
Loans and borrowings
Trade and other payables
Provisions
UK corporation tax

Total liabilities

Net assets

Equity
Share capital
Share premium
Retained earnings

Total equity

11
12
13
15
21

14
15
23

17
19

18
17
19

2019
£000

2,343
257
–
16,759
2,659

22,018

183,121
45,795
30,306
–

259,222

Company

2020
£000

2019
£000

–
–
100,800
–
331

101,131

–
73,930
15,313
133

89,376

1
–
100,800
–
239

101,040

–
21,666
1,058
3,027

25,751

–
–

–

–
–

–

(8,774)
(130)

(8,904)

–
(65,068)
–
(3,372)

(60,000)
(66,873)
–
–

–
(63,358)
–
–

(63,358)

(68,440)

(126,873)

5,913
–
–
12,238
2,176

20,327

216,336
8,328
76,807
253

301,724

(11,866)
(200)

(12,066)

(60,000)
(37,365)
(15)
–

(97,380)

322,051

281,240

190,507

126,791

(109,446)

(77,344)

(126,873)

(63,358)

212,605

203,896

63,634

63,433

1,161
15,843
195,601

212,605

1,092
–
202,804

203,896

1,161
15,843
46,630

63,634

1,092
–
62,341

63,433

Retained earnings of the Company
The loss of the Company in the financial year amounted to £3,891,000 (2019: £2,319,000).

The financial statements on pages 88 to 113 were approved by the Board of Directors on 13 September 2020 and signed on its behalf by:

James Thomson
Director

Stefan Allanson
Director

Registration number: 9268016

The notes on pages 93 to 113 form part of these financial statements.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STATEMENT Of ChANGES IN EQUITY
fOR ThE YEAR ENDED 30 JUNE 2020

Group

Note

At 1 July 2018
Total comprehensive income for the year
Profit for the year
Other comprehensive income

Total comprehensive income for the year

Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Sale of own shares
Share-based payments
Dividends

Transactions with owners, recorded directly in equity

At 30 June 2019

Adjustment on adoption of IfRS 16 on 1 July 2019

Total comprehensive income for the year
Profit for the year
Other comprehensive income

Total comprehensive income for the year

Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends

Transactions with owners, recorded directly in equity

26
9

Share
capital
£000

1,092

–
–

–

–
–
–

–

1,092

–

–
–

–

69
–
–
–

Share
premium
£000

Retained
earnings
£000

Total
equity
£000

–

–
–

–

–
–
–

–

–
–

–

187,007

188,099

33,267
371

33,638

33,267
371

33,638

32
960
(18,833)

(17,841)

202,804

203,896

(87)

4,519
278

4,797

4,519
278

4,797

15,843
–
–
–

–
(63)
717
(12,567)

15,912
(63)
717
(12,567)

15,843

(11,913)

3,999

At 30 June 2020

1,161

15,843

195,601

212,605

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

Company

Note

At 1 July 2018
Total comprehensive expense for the year
Loss for the year
Other comprehensive income

Total comprehensive expense for the year

Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Purchase of own shares
Share-based payments
Dividends

Transactions with owners, recorded directly in equity

At 30 June 2019

Total comprehensive expense for the year
Loss for the year
Other comprehensive income

Total comprehensive expense for the year

Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends

Transactions with owners, recorded directly in equity

26
9

Share
capital
£000

1,092

–
–

–

–
–
–

–

1,092

–
–

–

69
–
–
–

Share
premium
£000

–

–
–

–

–
–
–

–

–
–

–

Retained
earnings
£000

82,518

(2,319)
57

(2,262)

Total
equity
£000

83,610

(2,319)
57

(2,262)

(42)
960
(18,833)

(17,915)

62,341

63,433

(3,891)
67

(3,824)

(3,891)
67

(3,824)

15,843
–
–
–

–
(37)
717
(12,567)

15,912
(37)
717
(12,567)

15,843

(11,887)

4,025

At 30 June 2020

1,161

15,843

46,630

63,634

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STATEMENT Of CASh fLOWS
fOR ThE YEAR ENDED 30 JUNE 2020

Operating activities
Profit/(loss) before tax from continuing operations
Loss before tax from discontinued operations

Depreciation of property, plant and equipment
Share-based payments
Profit on redemption of shared equity receivables
Loss on disposal of property, plant and equipment
Impairment of investment properties
finance income
finance expenses

Operating cash flows before movements in working capital
Increase in inventories
Decrease/(increase) in receivables
(Decrease)/increase in payables
(Increase)/decrease in amounts due from subsidiary undertakings
Increase in amounts due to subsidiary undertakings

Cash (used)/generated in operating activities
Tax received
Tax paid
finance costs paid

Net cash flow (deficit)/surplus from operating activities

Investing activities
Proceeds from disposal of shared equity receivables
Proceeds from disposal of investment properties
Interest received
Purchase of property, plant and equipment

Net cash flow (deficit)/surplus from investing activities

Financing activities
Increase in loans and borrowings
Net proceeds from issue of shares
(Purchase)/sale of own shares
Dividends paid
Principal element of lease payments

Net cash flow surplus/(deficit) from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Note

11
26
16
11
12
7
7

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Group

Company

2019
£000

2020
£000

2019
£000

(2,373)
–

(2,373)
–
960
–
–
–
(37)
328

(1,122)
–
(37)
(143)
16,663
2,315

17,676
37
(5,944)
(344)

11,425

–
–
35
(1)

(3,915)
–

(3,915)
1
717
–
–
–
(37)
692

(2,542)
–
(27)
189
(51,837)
9,442

(44,775)
–
(3,596)
(719)

(49,090)

–
–
37
–

2020
£000

5,566
(307)

5,259
2,289
717
(223)
254
257
(708)
1,071

8,916
(33,215)
42,207
(28,236)
–
–

(10,328)
–
(3,596)
(728)

(14,652)

1,065
–
64
(2,410)

(1,281)

60,000
15,912
(63)
(12,567)
(848)

62,434

41,212
(264)

40,948
1,108
960
(226)
152
–
(906)
693

42,729
(22,604)
(27,133)
21,820
–
–

14,812
37
(5,944)
(314)

8,591

995
1
72
(1,866)

(798)

–
–
32
(18,833)
–

(18,801)

60,000
15,912
(37)
(12,567)
–

63,308

–
–
(42)
(18,833)
–

(18,875)

46,501

(11,008)

14,255

(7,416)

30,306

76,807

41,314

30,306

1,058

15,313

8,474

1,058

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

NOTES TO ThE fINANCIAL STATEMENTS
fOR ThE YEAR ENDED 30 JUNE 2020

1 Accounting policies
MJ Gleeson plc (“the Company”) is a public limited company which is listed on the London Stock Exchange and is incorporated and
domiciled in the United Kingdom. The address of the registered office is 6 Europa Court, Sheffield Business Park, Sheffield, S9 1XE.

Basis of preparation
The consolidated financial statements of the Company and the Group have been prepared in accordance with International financial
Reporting Standards (“IfRS”) and IfRS Interpretations Committee (“IfRS IC”) interpretations as adopted by the European Union and
the Companies Act 2006 applicable to companies reporting under IfRS. The consolidated financial statements have been prepared on
a going concern basis and under the historical cost convention, except as otherwise stated below.

The principal accounting policies set out below have been applied consistently to all periods presented in these financial statements
with the exception of the accounting policy for leases following the implementation of IfRS 16 “Leases”. further details can be found in
note 29.

The Company has taken advantage of section 408 of the Companies Act 2006 and consequently a statement of comprehensive
income of the Company is not presented as part of these financial statements.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings
(together referred to as “the Group”).

Going concern
During the year, the Group took a number of actions in response to the Covid-19 pandemic in order to protect liquidity. This included
cancellation of the interim dividend, pausing build activity and land acquisition, cutting discretionary spend and implementing
temporary pay cuts.

The Group also took the prudent step of drawing £60m of its £70m revolving credit facility, which remained fully drawn at year end
resulting in a cash balance of £76.8m. In addition, the Group has a £10m overdraft facility which remained unutilised. In April 2020, the
Group also completed a successful placing of shares that raised £15.9m after fees.

Current forecasts are based on the latest three-year budget approved by the Board in July 2020. This incorporated the impact of
Covid-19 on current operations and reflected a cautious view on recovery with a corresponding impact on volumes and selling prices.

These forecasts were then subject to a range of sensitivities including a severe but plausible scenario together with the likely
effectiveness of mitigating actions. The assessment considered the impact of a number of realistically possible, but severe and
prolonged, changes to principal assumptions including:
• second Covid-19 lockdown during which time minimal activity occurs;
• reduction in Gleeson homes volumes of approximately 20%;
• reduction in Gleeson homes selling prices by 7.5%; and
• prolonged impact on the timing of Gleeson Strategic Land transactions and land values.

Under these sensitivities, after taking mitigating actions, the Group continues to have a sufficient level of liquidity to continue in
operation and meet its liabilities as they fall due.

The Group’s bank facilities contain a covenant relating to the ratio of EBIT (Earnings Before Interest and Tax) on a 12-month rolling
basis to interest costs (interest cover) together with a covenant relating to the ratio of net debt to EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortisation) on a 12-month rolling basis. As a result of the financial modelling and risks to profitability against
the budget, the Group has sought and agreed a waiver for certain covenant test dates in the next 12 months. In their place a liquidity
covenant has been introduced.

Based on the results of the analysis undertaken and the covenant waiver agreed with the bank, the Directors have a reasonable
expectation that the Company and the Group have adequate resources available to continue in operation for the foreseeable future and
operate in compliance with their bank facilities. As such, the financial statements for the Company and the Group have been prepared
on a going concern basis.

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.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

1 Accounting policies CONTINUED
Revenue recognition
Revenue represents the fair value of the consideration received or receivable in respect of the sale of homes and land net of vAT and
discounts which is based on an underlying signed legal agreement. Revenue is recognised when control transfers to a customer as follows:
• Revenue from the sale of homes is a single performance obligation which is satisfied when control is transferred to the customer,

which is deemed to be on legal completion when title of the property passes to the customer. Where deposit and exchange funds are
received in advance, no revenue is recognised until legal completion occurs and the remaining funds are received.

• Revenue from land sales is typically a single performance obligation which is satisfied at the earlier of when contracts to sell are
completed and title has passed or when unconditional contracts to sell are exchanged and control has passed to the customer.
variable consideration such as overages are not recognised until the point at which it is considered highly probable that there will not
be a significant future reversal, which typically occurs when the amount is agreed by both parties. Payment terms vary by land sale;
where deferred receipts exceed one year from completion, the transaction price is adjusted to reflect the time value of money.

The Group has adopted the practical expedient allowed under IfRS 15 that states an entity need not adjust the amount of consideration
for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity
transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur
expenses, including revenue and expenses that relate to transactions with any of the Group’s other components, and for which discrete
financial information is available. All segment operating results are reviewed regularly by the Executive Directors to make decisions about
resources to be allocated to the segment and to assess its performance. 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 property, plant and equipment.

Discontinued operations
A discontinued operation is a component of the Group’s business that represents a separate major line of business that has been
disposed of or has been abandoned. Discontinued operations are presented in the consolidated income statement (including the
comparative period) as a single line entry recording the gain or loss of the discontinued operation.

Finance income and expenses
finance income comprises interest income on bank deposits and the unwinding of discounts on deferred receipts. Interest income is
recognised as it accrues, using the effective interest method.

finance expenses comprise interest and fees on bank facilities, leases and the unwinding of discounts on deferred payments. Also
included are the amortisation of fees associated with the arrangement of the financing. Interest expense is recognised in the consolidated
income statement using the effective interest method.

Government grants
Grants are credited to the consolidated income statement over the period of time in which the conditions are satisfied. Grants are
deducted from the related expense within cost of sales or administrative expenses in the consolidated income statement.

Leasing
As set out in note 29, IfRS 16 “Leases” applied to the Group from 1 July 2019 replacing IAS 17 “Leases” and IfRIC 4 “Determining whether
an arrangement contains a lease”.

The Group assesses whether a contract is, or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and
a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as
leases with a lease term of 12 months or less) and leases of low-value assets. for these leases, the Group recognises the lease payments as
an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased assets are consumed.

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses an incremental borrowing rate which is the
rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment.

Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus any initial direct costs and
an estimate of asset retirement obligations, less any lease incentives. Subsequently, right-of-use assets are measured at cost, less any
accumulated depreciation and any accumulated impairment losses, and are adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the length of the lease.

The Group applies IAS 36 “Impairment of assets” to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss in line with the Group’s impairment accounting policy.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

1 Accounting policies CONTINUED
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is
charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following basis:

Property: over the term of the lease for right-of-use assets
Plant and equipment: between three and six years

Depreciation of these assets is charged to the consolidated income statement.

Investments
Investments are stated at cost less impairment.

Investment properties
Investment properties, which are ground rent properties held to earn rentals and/or for capital appreciation, are stated at fair value. Gains
or losses arising from changes in the fair values of investment properties are included in the consolidated income statement in the period
in which they arise.

Inventories
Inventories are valued at the lower of cost and net realisable value and are subject to regular impairment reviews. Inventories comprise
all direct costs incurred in bringing the individual inventories to their present state at the reporting date, including direct materials, direct
labour costs and related overheads, less the value of any impairment losses.

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 value.

Shared equity receivables
Shared equity receivables are loans offered to certain customers to assist in the purchase of their home. Shared equity receivables are
recorded at fair value through other comprehensive income (“OCI”), representing the amount receivable by the Group discounted to
present day values. The difference between the nominal value 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. The Group holds a second
charge over property sold under shared equity schemes. Changes in the fair value of shared equity receivables are recognised in other
comprehensive income. Interest calculated using the effective interest method and impairment losses on shared equity receivables are
recognised in the consolidated income statement.

Trade receivables
Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and cash held in solicitors’ client accounts on the Group’s behalf
and are subject to an insignificant risk of changes in value.

Impairment: financial assets
The Group assesses the expected credit losses associated with its financial assets carried at amortised cost on a forward-looking basis.
for trade receivables, the Group applies the simplified approach as permitted by IfRS 9 “financial instruments”, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.

Impairment: non-financial assets
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 of disposal. 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 the consolidated income statement.

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.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

1 Accounting policies CONTINUED
Trade and other payables
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective
interest rate method.

Loans and borrowings
Interest bearing bank loans are initially measured at fair value (being proceeds received, net of direct issue costs) and are subsequently
measured at amortised cost. Capitalised finance costs are held in other receivables and amortised over the period of the facility.

Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the consolidated 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 or receivable 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 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.

Employee benefits
Defined contribution pension plans
Obligations for contributions to defined contribution pension schemes are charged to the consolidated income statement in the period
to which the contributions relate.

Share options
Share option schemes allow employees to acquire shares in 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 entitled to the options. The fair value of the options granted is measured using generally accepted
option pricing models, 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 performance conditions
not being met. These awards are granted by the ultimate Parent Company and 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.

Own shares held by Employee Benefit Trusts
The Group has elected to treat the Employee Benefit Trusts (“EBT”), which hold shares for the purpose of the employee share purchase
plans, as separate legal entities and as subsidiaries of the Company. Any loan made to the EBT is accounted for as an intercompany loan
with the Company. These shares are not treasury shares as defined by the London Stock Exchange.

Dividends
Dividends are recorded in the financial statements when paid. final dividends are recorded in the financial statements in the period in
which they receive shareholder approval.

Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IfRS 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 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 sources of estimation uncertainty at the balance sheet date are:

Inventories (land and work in progress)
Inventories are stated at the lower of cost and net realisable value. The assessment of net realisable value is performed on a site-by-site
basis taking into account an estimation of costs to complete and remaining revenue. These 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.

Shared equity receivables
The valuation of shared equity receivables is made 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 estimation uncertainty.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

1 Accounting policies CONTINUED
Adoption of new and revised standards
for the year ended 30 June 2020, the Group has applied the following new and revised standards that were mandatorily effective for an
accounting period beginning on or after 1 January 2019.

IfRS 16
IfRS 9 (Amended)
Annual improvements

“Leases” (issued January 2016)
“financial instruments” (issued October 2017)
Issued 2015 – 2017 (issued December 2017)

Note 29 sets out the impact of IfRS 16 “Leases”. The adoption of the remaining standards and amendments has not had any material
impact on the disclosures or amounts reported in these financial statements.

Standards not yet applied
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 Company in preparing the financial
statements for the year ended 30 June 2020:

IfRS 3
IfRS 9, IAS 39 and IfRS 17
IAS 1 and IAS 8
IAS 1
Amendments to References to the Conceptual framework in IfRS Standards (issued 2018)

“Business Combinations” (amended 2018)
“Interest Rate Benchmark Reform” (issued 2019)
“Definition of Material” (issued 2018)
“Classification of Liabilities” (issued 2020)

The application of the standards and interpretations not yet applied is not expected to have a material impact on the Group and
Company’s financial performance or position, or give rise to additional disclosures in the financial statements.

2 Segmental analysis
The Group is organised into the following two operating divisions under the control of the Executive Board, which is identified as the
Chief Operating Decision Maker as defined under IfRS 8 “Operating segments”:
• Gleeson homes
• Gleeson Strategic Land

All of the Group’s operations are carried out entirely within the United Kingdom. Segment information about the Group’s operations is
presented below:

Note

2020
£000

2019
£000

Revenue
Continuing activities:
Gleeson homes
Gleeson Strategic Land

Total revenue

Divisional operating profit
Gleeson homes
Gleeson Strategic Land

Group administrative expenses
finance income
finance expenses

Profit before tax
Tax

Profit for the year from continuing operations

Loss for the year from discontinued operations (net of tax)

Profit for the year

140,860
6,321

147,181

197,034
52,865

249,899

8,960
229

9,189
(3,260)
708
(1,071)

5,566
(758)

4,808

(289)

4,519

30,068
13,013

43,081
(2,082)
906
(693)

41,212
(7,648)

33,564

(297)

33,267

The revenue in the Gleeson homes segment primarily relates to the sale of residential properties. In addition, within revenue for Gleeson
homes is £510,000 relating to land sales (2019: £nil). All revenue for the Gleeson Strategic Land segment is in relation to the sale of land
interests. There are no revenues relating to Group activities.

No single customer accounts for more than 10% of revenue (2019: £26,521,000 from one single customer).

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

2 Segmental analysis CONTINUED
Balance sheet analysis of business segments:

Gleeson homes
Gleeson Strategic Land
Group activities/discontinued operations
Net cash/(borrowings)

Other information:

Continuing operations:
Gleeson homes
Gleeson Strategic Land
Group activities

Assets
£000

198,201
45,902
1,141
76,807

2020

Liabilities
£000

(37,082)
(9,831)
(2,533)
(60,000)

Net assets
£000

161,119
36,071
(1,392)
16,807

322,051

(109,446)

212,605

Assets
£000

171,608
78,861
465
30,306

281,240

2019

Liabilities
£000

(41,755)
(33,520)
(2,069)
–

Net assets
£000

129,853
45,341
(1,604)
30,306

(77,344)

203,896

2020

Capital
additions
£000

Depreciation
£000

2019

Capital
additions
£000

Depreciation
£000

2,397
13
–

2,410

2,182
106
1

2,289

1,838
27
1

1,866

1,096
11
1

1,108

3 Discontinued operations
The activity of Gleeson Construction Services Limited now only relates to remedial works and historic employment liability claims, and
the division is classified as discontinued.

Revenue
Cost of sales

Gross loss
Administrative expenses

Operating loss

Loss before tax
Tax

Note

Loss for the year from discontinued operations

The cash flow statement includes the following relating to the operating loss on discontinued operations:

Operating activities

4 Expenses and auditors’ remuneration
Profit for the year is stated after charging:

Staff costs
Depreciation of property, plant and equipment
Impairment of investment properties
Loss on disposal of property, plant and equipment
Operating lease expenses
Auditors' remuneration:

Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation

Note

6
11
12
11
22

2020
£000

–
–

–
(307)

(307)

(307)
18

(289)

2020
£000

(409)

2020
£000

27,193
2,289
257
255
–

115
40

2019
£000

–
–

–
(264)

(264)

(264)
(33)

(297)

2019
£000

(361)

2019
£000

29,922
1,108
–
152
745

81
19

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

5 Other operating income

Profit on redemption of shared equity receivables
Other operating income

6 Staff costs

Wages and salaries
Redundancy
Share-based payments
Social security costs
Other pension costs

Note

2020
£000

223
59

282

Group

Company

Note

2020
£000

22,499
274
717
2,677
1,026

27,193

2019
£000

24,840
–
960
3,113
1,009

29,922

2020
£000

1,498
–
403
294
84

2,279

2019
£000

226
66

292

2019
£000

866
–
230
214
66

1,376

Included within staff costs is £1,381,000 of furlough grant income from the Government’s Job Retention Scheme introduced in response
to the Covid-19 pandemic. Redundancy costs relate to an internal reorganisation of our regional structure and our sales team.

The monthly average number of employees during the year was:

Gleeson homes
Gleeson Strategic Land
Group activities

Group

2020
No.

572
15
3

590

2019
No.

535
13
2

550

The monthly average number of Company employees and Non-Executive Directors during the year was nine (2019: six).

Key management remuneration
Key management personnel, as defined under IAS 24 “Related party disclosures”, have been identified as the Board of Directors, as the
controls operated by the Group ensure that all key decisions are reserved for the Board. full details of the Directors’ remuneration,
including amounts paid to the former Chief Executive Officer, are provided in the audited part of the Annual Report on Remuneration on
pages 67 to 71.

7 Finance income and expenses

Finance income
Interest on bank deposits
Unwinding of discount on long-term receivables
Other interest

Finance expenses
Interest on bank overdrafts and loans
Bank facility charges
Unwinding of discount on long-term payables
Unwinding of discount on lease liabilities
Other external interest

Net finance (expense)/income

2020
£000

37
640
31

708

(430)
(262)
(256)
(119)
(4)

(1,071)

(363)

2019
£000

36
843
27

906

(53)
(275)
(351)
–
(14)

(693)

213

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

8 Tax

Current tax
Current year expense
Adjustment in respect of prior years

Current tax expense for the year

Deferred tax
Current year (income)/expense
Adjustment in respect of prior years
Impact of rate change

Deferred tax expense/(credit) for the year

Total tax charge/(credit)

Note

21
21
21

Continuing operations

Discontinued operations

Total

Group

2020
£000

647
91

738

(7)
113
(86)

758

2019
£000

2020
£000

2019
£000

6,397
(28)

6,369

1,350
(118)
47

1,279

7,648

–
–

–

–
–
(18)

(18)

–
–

–

37
–
(4)

2020
£000

647
91

738

(7)
113
(104)

740

2019
£000

6,397
(28)

6,369

1,387
(118)
43

1,312

7,681

Corporation tax has been calculated at 14.1% of assessable profit for the year (2019: 18.8%). The applicable UK corporation tax rate is 19%,
which has been effective from 1 April 2017.

The charge for the year can be reconciled to the profit before tax per the consolidated income statement as follows:

Profit before tax from continuing operations
Loss before tax from discontinued operations

Profit before tax

Profit before tax multiplied by the standard rate of UK corporation tax

19% (2019: 19%)

Tax effect of:
Expenses not deductible for tax purposes
Relief for share-based payments
Non-qualifying depreciation
Land remediation relief
Impact of change in tax rate
Impact of rate differences
Adjustments in respect of prior years — current tax
Adjustments in respect of prior years — deferred tax

Total tax charge and effective tax rate for the year

2020

2019

Note

£000

5,566
(307)

5,259

41,212
(264)

40,948

999

19.0

7,780

19.0

7
7
19
(182)
(105)
–
(118)
113

740

0.1
0.1
0.4
(3.5)
(2.0)
–
(2.2)
2.2

4
–
–
–
–
43
(28)
(118)

–
–
–
–
–
0.1
–
(0.3)

14.1

7,681

18.8

The difference between the headline rate of 19% and effective tax rate of 14.1% is primarily driven by Land Remediation Relief that the
Group is eligible to claim in relation to the remediation of contaminated land (-3.5%). The remaining differences relate to an increase in
the rate at which deferred tax is recognised. Deferred tax on temporary differences were previously recognised at a rate of 17% but are
now recognised at a rate of 19% based on the rate substantively enacted at the balance sheet date (-2.0%), and other timing differences
(+0.6%).

Current tax related to equity-settled share-based payments
Deferred tax related to equity-settled share-based payments

Total tax recognised directly in other comprehensive income

Note

Group

Company

2020
£000

767
(502)

265

2019
£000

–
240

240

2020
£000

112
(45)

2019
£000

–
57

100

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

9 Dividends

Amounts recognised as distributions to equity holders in the year:
Interim dividend for the year ended 30 June 2020 of £nil (2019: 11.5p) per share
final dividend for the year ended 30 June 2019 of 23.0p (2018: 23.0p) per share

There are no dividends paid or proposed for the year ended 30 June 2020 (2019: 34.5p).

10 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:

Earnings

Profit from continuing operations
Loss from discontinued operations

Profit for the purposes of basic and diluted earnings per share

Number of shares

Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:

Share-based payments

Weighted average number of ordinary shares for the purposes of diluted earnings per share

Continuing operations

Basic earnings per share
Diluted earnings per share

Discontinued operations

Basic loss per share
Diluted loss per share

Continuing and discontinued operations

Basic earnings per share
Diluted earnings per share

2020
£000

–
12,567

12,567

2019
£000

6,278
12,555

18,833

2020
£000

4,808
(289)

4,519

2020
No. 000

55,583

625

56,208

2020
p

8.65
8.55

2020
p

(0.52)
(0.51)

2020
p

8.13
8.04

2019
£000

33,564
(297)

33,267

2019
No. 000

54,566

1,027

55,593

2019
p

61.51
60.37

2019
p

(0.54)
(0.53)

2019
p

60.97
59.84

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

101

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

11 Property, plant and equipment

Cost or valuation
At 1 July 2018
Additions
Disposals

At 30 June 2019
Initial recognition of right-of-use assets at 1 July 2019
Additions
New leases entered in the year
Disposals

At 30 June 2020

Accumulated depreciation
At 1 July 2018
Charge for the year
Disposals

At 30 June 2019
Charge for the year
Disposals

At 30 June 2020

Net book value
At 30 June 2018

At 30 June 2019

At 30 June 2020

Group

Plant and
equipment
£000

5,392
1,866
(625)

6,633
551
2,410
93
(1,994)

7,693

3,655
1,108
(473)

4,290
1,814
(1,740)

4,364

1,737

2,343

3,329

Property
£000

–
–
–

–
2,868
–
191
–

3,059

–
–
–

–
475
–

475

–

2,584

Company

Plant and
equipment
£000

14
1
(14)

1
–
–
–
–

14
–
(14)

–
1
–

–

Total
£000

5,392
1,866
(625)

6,633
3,419
2,410
284
(1,994)

10,752

3,655
1,108
(473)

4,290
2,289
(1,740)

4,839

1,737

2,343

5,913

The Group has recorded a depreciation charge of £2,289,000 (2019: £1,108,000), of which £395,000 (2019: £292,000) has been
charged in cost of sales and £1,894,000 (2019: £816,000) in administrative expenses.

At 30 June 2020, the net book value of right-of-use assets was £2,946,000 (2019: £nil), of which £2,584,000 is within property and
£362,000 is within plant and equipment. The depreciation charge recorded for right-of-use assets was £761,000 (2019: £nil).

The Company recorded a depreciation charge of £1,000 (2019: £nil).

12 Investment properties

At 1 July 2018
Disposals

At 30 June 2019
Impairment loss recognised

At 30 June 2020

Group
£000

258
(1)

257
(257)

–

Investment properties, which comprise a legacy portfolio of ground rent properties, are stated at fair value based on valuation by the
Directors. On the basis that the recoverability of this portfolio, as a whole, is considered less certain, the asset has been impaired in full at
30 June 2020.

102

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

13 Investments in subsidiaries

Cost
At 1 July 2018, 30 June 2019, and 30 June 2020

Company
£000

100,800

The Directors have reviewed the carrying value of investments at the balance sheet date, including the impact of Covid-19 on underlying
operations, and consider that these remain appropriate.

Principal subsidiary undertakings
The following are the principal subsidiary undertakings of MJ Gleeson plc. MJ Gleeson plc owns 100% of the ordinary share capital of
the subsidiaries, all of which are incorporated in England and Wales and operate in the United Kingdom. The registered address for all
subsidiary undertakings of MJ Gleeson plc is 6 Europa Court, Sheffield Business Park, Sheffield, S9 1XE.

Company name

Gleeson Developments Limited
Gleeson Regeneration Limited
Gleeson Developments (North East) Limited
Gleeson Strategic Land Limited
Gleeson Strategic Land (fleet) Limited1

1 Shares held by Gleeson Strategic Land Limited.

Principal activity

house building
house building
house building
Strategic land trading
Strategic land trading

The following are the other subsidiary companies of MJ Gleeson plc:

Company name

Principal activity

MJ Gleeson Group Limited
Gleeson Construction Services Limited2
Colroy Limited3
haredon Developments Limited3
Gleeson Capital Solutions Limited
Gleeson Classic homes Limited1
Gleeson homes (Southern) Limited1
Gleeson housing Developments Limited1
Gleeson PfI Investments Limited
Gleeson Properties Limited
Gleeson Properties (Kingley) Limited3
Gleeson Properties (Petersfield) Limited3
Gleeson Services Limited
KW Cannock Properties Limited
MJ Gleeson (International) Limited
MJG (Management) Limited
Oakmill Properties Limited3
Sindale Properties Limited1

Intermediate holding company
In run off – Construction services
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*
Dormant*

1 Shares held by Gleeson Developments Limited.
2 Shares held by MJ Gleeson Group Limited.
3 Shares held by Gleeson Properties Limited.
* Exempt from audit by virtue of s479A of the Companies Act 2006.

14 Inventories

Land held for development
Work in progress

Group

2020
£000

79,941
136,395

216,336

2019
£000

70,923
112,198

183,121

Net realisable value provisions held against inventories at 30 June 2020 were £5,249,000 (2019: £2,224,000). The cost of inventories
recognised as an expense in cost of sales was £107,181,000 (2019: £175,798,000).

Company
The Company held no inventories at 30 June 2020 (2019: £nil).

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

103

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

15 Trade and other receivables

Trade receivables
vAT recoverable
Prepayments and accrued income
Shared equity receivables
Amount due from subsidiary undertakings

Non-current
Current

Group

Company

2020
£000

14,328
1,358
1,212
3,668
–

20,566

12,238
8,328

20,566

2019
£000

55,204
2,162
752
4,436
–

62,554

16,759
45,795

62,554

2020
£000

11
20
457
–
73,442

73,930

–
73,930

73,930

2019
£000

6
36
19
–
21,605

21,666

–
21,666

21,666

The Directors consider that the carrying amount of trade and other receivables approximates their fair value and includes an allowance
for impairment of trade receivables.

See note 16 for reference to credit risk associated with trade receivables and further disclosures in respect of shared equity receivables.

Amounts due from subsidiary undertakings are unsecured, repayable on demand, and interest free. Expected credit losses are based
on the assumption that repayment of the loan is demanded at the reporting date. No allowance for expected credit losses is deemed
necessary in respect of amounts owed by Group undertakings.

Included within non-current receivables is £8,570,000 relating to deferred receivables (2019: £12,323,000) due on the sale of land and
£3,668,000 of shared equity receivables (2019: £4,436,000).

16 Financial instruments
Risk exposure
The Company 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.

Cash and cash equivalents
Cash and cash equivalents comprises cash, demand deposits and cash held in solicitors’ client accounts on the Group’s behalf. The
carrying amount of these assets equals their fair value.

Credit risk
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 Group applies a simplified approach
in calculating expected credit losses. The Group does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime expected credit losses at each reporting date. The expected credit loss is based on the risk of default estimated by the Group’s
management based on prior experience, forward-looking assessments of the economic environment and relative counterparty risk. for
this purpose, a default is determined to have occurred if the Group becomes aware of evidence that it will not receive all contractual cash
flows that are due. The Directors consider that the carrying value of trade receivables approximates to their fair value and no expected
credit loss is recognised.

The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.

At 30 June 2020, the Group’s most significant credit risk was with a listed housebuilder and amounted to £10,287,000 (2019:
£29,991,000) of the trade and other receivables carrying amount, with the deferred receivables secured by way of first legal charge over
the land. The fair value of any land held as security is considered by management to be sufficient in relation to the carrying amount of the
receivable to which it relates.

The Group’s remaining credit risk is spread over a number of counterparties and customers.

104

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

16 Financial instruments CONTINUED
Trade receivables ageing
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

Group

2020
£000

14,182
88
–
2
152

14,424

2019
£000

51,662
1,138
4
78
2,806

55,688

Company

2020
£000

2019
£000

11
–
–
–
–

6
–
–
–
–

All trade receivables are from UK customers. The amounts due are included at expected realisable value.

Included in trade receivables not past due are £8,570,000 (2019: £12,323,000) receivables due in more than one year.

In addition to the above, the Company has intercompany receivables which are repayable on demand.

The movement in the allowance for impairment of trade receivables during the year was as follows:

Balance at 1 July
Impairment loss recognised
Release of impairment allowance

Balance at 30 June

Group

2020
£000

484
–
(388)

2019
£000

68
416
–

484

Company

2020
£000

–
–
–

–

2019
£000

–
–
–

–

Trade and other receivables deemed to have no reasonable expectation of recovery following unsuccessful attempts to pursue the debt
are written off in the financial statements, but are still subject to enforcement activity. Subsequent recoveries of amounts previously
written off are credited to the consolidated income statement.

Market risk
The Group has no significant exposure to currency risk or equity risk.

Interest rate risk
The Group closely monitors its exposure to variations in interest rates but has limited exposure. At the year end, the Group had
borrowings as set out in note 18. The Group has no other material interest-bearing financial liabilities.

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their weighted average
interest rates:

Bank borrowings
Bank overdraft

2020

2019

Weighted
average interest
rate
%

2.42
2.87

Weighted
average interest
rate
%

2.23
3.73

2020
£000

(60,000)
–

2019
£000

–
–

Based on average net cash balances during the year, a 0.5% (2019: 0.5%) change in interest rates, which the Directors consider to be a
reasonably possible change, would affect profitability before tax by £62,000 (2019: £32,000).

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

105

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

16 Financial instruments CONTINUED
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements:

Non-derivative financial liabilities

Group

As at 30 June 2020
Loans and borrowings
Trade and other payables
Lease liabilities

As at 30 June 2019
Trade and other payables

Carrying
amount
£000

Contractual
cash flows
£000

On demand
or within
6 months
£000

6-12 months
£000

1-2 years
£000

2-5 years
£000

More than
5 years
£000

(60,000)
(46,148)
(3,083)

(60,000)
(46,378)
(3,467)

(60,000)
(35,961)
(442)

(109,231)

(109,845)

(96,403)

–
(480)
(391)

(871)

–
(7,950)
(552)

(8,502)

–
(1,987)
(1,329)

(3,316)

(73,842)

(74,330)

(58,542)

(5,073)

(8,802)

(1,913)

–
–
(753)

(753)

–

Company
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 six months.

Exposure to currency risk
The Group has no direct exposure to foreign currency risk.

Fair values
The fair values of the Group’s financial assets and liabilities are not materially different from the carrying values. Shared equity receivables
are measured at fair value through other comprehensive income (“fvOCI”). The following summarises the major methods and
assumptions used in estimating the fair values of financial instruments.

Shared equity receivables measured at FVOCI

Balance at 1 July
Redemptions
Unwind of discount (finance income)
fair value movement recognised in other comprehensive income

Balance at 30 June

Group

2020
£000

4,436
(793)
61
(36)

3,668

2019
£000

4,997
(679)
77
41

4,436

Shared equity receivables represent shared equity loans advanced to customers and secured by way of a second charge on the property
sold. They are carried at fair value which is determined by discounting forecast cash flows for the residual period of the contract. The
difference between the nominal value 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.

Redemptions in the year of shared equity loans carried at fair value of £793,000 (2019: £679,000) generated a profit on redemption of
£223,000 (2019: £226,000) which has been recognised in other operating income in the consolidated income statement.

In addition, a net change in the value of shared equity receivables of £13,000 (2019: £131,000) has been recognised in other
comprehensive income. This is made up as follows:

fair value movement recognised in other comprehensive income
fair value recycled through profit and loss

Total movement recognised in other comprehensive income

106

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Group

2020
£000

(36)
49

2019
£000

41
90

131

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

16 Financial instruments CONTINUED
forecast cash flows are determined using inputs based on current market conditions and the Group’s historic experience of actual cash
flows resulting from such arrangements. These inputs are by nature estimates and as such the fair value has been classified as Level 3
under the fair value hierarchy laid out in IfRS 13 “fair value measurement”. There have been no transfers between fair value levels in the
financial year.

Significant unobservable inputs into the fair value measurement calculation include regional house price movements based on the
Group’s actual experience of regional house pricing and management forecasts of future movements, the anticipated period to
redemption of loans which remain outstanding and a discount rate based on current observed market interest rates offered to private
individuals on secured second loans.

The key assumptions applied in calculating fair value as at the balance sheet date were:
• forecast regional house price inflation: 2.0%
• Average period to redemption: 5 years
• Discount rate: 8%

The sensitivity analysis of changes to each of the key assumptions applied in calculating fair value, whilst holding all other assumptions
constant, is as follows:

Change in assumption

forecast regional house price inflation – increase by 1%
Average period to redemption – increase by 1 year
Discount rate – decrease by 1%

2020

2019

Increase/
(decrease)
in fair value
£000

181
(204)
173

218
(246)
208

Capital risk management
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 25 to the financial statements provides details regarding the Company’s share capital movements in the year.

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 maximise shareholder value.

The Group manages its capital structure and makes adjustments to it in 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.

17 Trade and other payables

Trade payables
Lease liabilities
Other taxation and social security
Contract liabilities
Accruals and deferred income
Amount due to subsidiary undertakings

Non-current
Current

Group

Company

2020
£000

25,432
3,083
1,280
1,858
17,578
–

49,231

11,866
37,365

49,231

2019
£000

49,319
–
1,438
666
22,419
–

73,842

8,774
65,068

73,842

2020
£000

137
–
48
–
1,178
65,510

66,873

–
66,873

66,873

2019
£000

117
–
52
–
632
62,557

63,358

–
63,358

63,358

Amounts due to subsidiary undertakings are unsecured, repayable on demand, and interest free.

Included within non-current payables is £9,706,000 relating to deferred payables due on the purchase of land (2019: £8,774,000) and
£2,160,000 of lease liabilities (2019: £nil).

Contract liabilities relate to customer deposits and exchange monies that have not yet met the performance obligations to be classified as
revenue. Of the prior year balance, £640,000 has been recognised in revenue in the current year as the performance obligations were met.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

107

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

18 Loans and borrowings

Revolving credit facility

Group and Company

2020
£000

60,000

2019
£000

–

The Directors consider that the carrying amount of loans and borrowings approximates their fair value.

The Company, together with certain other companies in the Group, has given cross guarantees in respect of the bank facilities available
to Group undertakings in the normal course of business. At 30 June 2020, borrowings covered by these guarantees amount to
£60,000,000 (2019: £nil).

These borrowings are secured by a fixed and floating charge over the assets of the Group, and are for a fixed term. Repayment is due at
the end of the fixed term unless the borrowings are extended for a further period of time.

19 Provisions

At 1 July 2018
Provisions made during the year
Provisions released during the year

At 30 June 2019
Provisions made during the year

At 30 June 2020

Non-current
Current

Group
Dilapidations
£000

159
20
(49)

130
85

215

2019
£000

130
–

130

2020
£000

200
15

215

Dilapidations
The dilapidations provision covers the Group’s leased property estate. The expected provision needed at the end of each lease is
recognised straight-line over the term of the lease. There is no material uncertainty in either the timing or amount.

Company
At 30 June 2020, the Company did not have any provisions (2019: £nil).

20 Employee benefits
Defined contribution pension plan
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 consolidated income statement of £1,026,000 (2019: £1,009,000) represents contributions
payable to the pension plan by the Group at rates specified in the plan rules. At 30 June 2020, contributions of £154,000 (2019:
£132,000) 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 £84,000 (2019: £66,000) represents contributions payable to the defined
contribution pension plan by the Company at rates specified in the plan rules.

108

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

21 Deferred tax assets
Group
The deferred tax assets recognised by the Group and movements thereon during the current and prior year are as follows:

At 1 July 2018
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change

At 30 June 2019
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Arising on initial recognition of right-of-use assets
Impact of rate change

At 30 June 2020

Plant and
equipment
£000

440
(23)
(89)
–
4

332
35
308
–
–
43

718

Short-term
timing
differences
£000

Shared-based
payments
£000

158
102
233
–
(25)

468
(8)
(120)
–
21
38

399

802
(106)
173
240
(12)

1,097
–
(266)
(502)
–
2

331

Losses
£000

2,331
145
(1,704)
–
(10)

762
(140)
85
–
–
21

728

Total
£000

3,731
118
(1,387)
240
(43)

2,659
(113)
7
(502)
21
104

2,176

At the balance sheet date, the Group has gross tax losses of £12,706,000 (2019: £13,015,000) of which £3,840,000 (2019: £4,149,000)
have been recognised as a deferred tax asset. The Group has unrecognised tax losses of £8,866,000 (2019: £8,866,000) available for
offset against future profits. Losses may be carried forward indefinitely against future taxable trading profits.

Of the total deferred tax asset, £880,000 (2019: £1,615,000) is expected to be recovered within 12 months of the balance sheet date.

Company
The deferred tax assets recognised by the Company and movements thereon during the current and prior year are as follows:

At 1 July 2018
Adjustment in respect of prior year
Credit to income
Credit to equity
Impact of rate change

At 30 June 2019
Credit to income
Credit to equity
Impact of rate change

At 30 June 2020

Plant and
equipment
£000

Losses
£000

Short-term
timing
differences
£000

Shared-based
payments
£000

2
–
–
–
–

2
–
–
–

–
–
–
–
–

–
85
–
–

1
15
19
–
(2)

33
23
–
–

124
(18)
44
57
(3)

204
22
(44)
6

188

Total
£000

127
(3)
63
57
(5)

239
130
(44)
6

331

At the balance sheet date, the Company has gross tax losses of £830,000 (2019: £nil) which have been recognised as a deferred tax asset.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

109

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

22 Operating leases
Operating leases – lessee

Minimum lease payments under non-cancellable operating leases recognised as an expense for the year

Group

2020
£000

–

2019
£000

745

At the balance sheet date, the Group has outstanding commitments for minimum lease payments under non-cancellable operating
leases, which fall due as follows:

Within one year
Within two to five years
After five years

Group

2020
£000

–
–
–

–

2019
£000

858
2,227
1,176

4,261

following implementation of IfRS 16 “Leases”, lease liabilities are now reported within trade and other payables (note 17). There are no
material leases outside the scope of IfRS 16. further details on the adoption of IfRS 16 “Leases” can be found in note 29.

23 Net cash/(debt)

Cash and cash equivalents
Borrowings

Cash net of borrowings
Lease liabilities

Net cash/(debt)

Group

Company

2020
£000

76,807
(60,000)

16,807
(3,083)

13,724

2019
£000

30,306
–

30,306

2020
£000

15,313
(60,000)

(44,687)
–

(44,687)

2019
£000

1,058
–

1,058

At 30 June 2020, monies held by solicitors on behalf of the Group and included within cash and cash equivalents were £1,910,000
(2019: £3,396,000).

No monies were held by solicitors on behalf of the Company at the balance sheet date (2019: £nil).

Net cash/(debt) at 1 July 2019
Cash flows

Net cash/(debt) at 30 June 2019

Recognised on adoption of IfRS 16 on 1 July 2019 (see note 29)

Cash flows
New leases
finance expense

Net cash/(debt) at 30 June 2020

41,314
(11,008)

30,306

–

46,501
–
–

76,807

Cash and cash
equivalents
£000

Borrowings
£000

Cash net of
borrowings
£000

41,314
(11,008)

30,306

Lease

liabilities
£000

–
–

–

Total
£000

41,314
(11,008)

30,306

–

(3,527)

–
–

–

(60,000)
–
–

(13,499)
–
–

848
(284)
(120)

(12,651)
(284)
(120)

(60,000)

16,807

(3,083)

13,724

24 Bonds and securities
Group and Company
At 30 June 2020, the Group had bonds and securities of £29,456,000 (2019: £39,055,000) provided by financial institutions in support
of ongoing contracts.

The Directors have determined that the Group and Company require no specific provision for bonds, securities or guarantees for
subsidiary companies.

110

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

25 Share capital

Issued and fully paid 2p ordinary shares:
At 1 July
Shares issued during year
At 30 June

2020

2019

Number

£000

Number

£000

54,587,753
3,479,782
58,067,535

1,092
69
1,161

54,587,753
–
54,587,753

1,092
–
1,092

Ordinary shares
The Company has one class of ordinary share which carries no rights to fixed income. All issued shares are fully paid.

On 8 April 2020 the Group issued 2,730,100 new ordinary shares at 600 pence per share with a nominal value of 2 pence each through a
share placing. fees incurred as part of the placing amounted to £483,000; the proceeds are shown net of these fees.

During the year, the Group issued 749,682 new ordinary shares at the nominal value of 2 pence per share as a result of share-based
payments as set out in note 26 (2019: nil).

At 30 June 2020, the Employee Benefit Trusts (“EBT”) held 16,000 shares (2019: 15,000) at a cost of £107,000 (2019: £113,000) which
have not yet vested unconditionally. The shares are held in the EBT for the purpose of satisfying matched share awards that have been
granted under the employee share ownership plans.

26 Share-based payments
The Group operates a number of share-based payment schemes, a summary of which is shown below. Additional information regarding
the share-based payment arrangements for Executive Directors, including those relating to the former Chief Executive Officer, is set out
in the Annual Report on Remuneration on pages 67 to 75. All schemes are equity-settled.

Date of grant

Outstanding at 1 July 2018
Granted in the year
forfeited
Exercised

Outstanding at 30 June 2019
Granted in the year
forfeited
Exercised

Share purchase plans

MJ Gleeson
Group plan
No. of shares

MJ Gleeson
Group 2014
plan
No. of shares

PSP
30/09/15
No. of shares

PSP
04/10/16
No. of shares

LTIP
12/12/16
No. of shares

LTIP
26/09/17
No. of shares

LTIP
09/10/18
No. of shares

LTIP
10/12/19
No. of shares

27,215
–
(14)
(4,976)

22,225
–
–
(4,332)

19,732
6,349
(101)
(5,067)

20,913
7,282
(15)
(3,001)

279,158
–
–
–

14,000
–
–
–

276,315
–
–
–

279,158
–
–
(279,158)

14,000
–
–
(14,000)

276,315
–
–
(276,315)

409,793
–
(19,731)
–

390,062
–
(73,846)
(147,692)

–
67,500
–
–

67,500
–
–
–

–
–
–
–

–
212,721
–
–

Outstanding at 30 June 2020

17,893

25,179

–

168,524

67,500

212,721

Remaining contractual life

Weighted average exercise price
Weighted average share price at date

Rolling
scheme
–

of exercise – current year

£4.94

£10.81

Weighted average share price at date

of exercise – prior year

£7.78

£7.37

nil
–

n/a

nil
–

n/a

nil
–

n/a

nil
–

n/a

12
months
–

24
months
–

n/a

fair value is used to measure the value of the outstanding options. The weighted average life for all schemes outstanding at the end of
the year was 13 months (2019: 6 months).

Share purchase plan
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.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

111

NOTES TO ThE fINANCIAL STATEMENTS CONTINUED
fOR ThE YEAR ENDED 30 JUNE 2020

26 Share-based payments CONTINUED
Performance share plans/long term incentive plan
The fair value per option 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:

Date of grant

The model inputs were:

Share price at grant date
Total shareholder return target
Exercise price
Expected volatility1
Expected dividends
Expected life
Risk-free interest rate
fair value of one option

PSP
30/09/15

PSP
04/10/16

LTIP
12/12/16

LTIP
26/09/17

LTIP
09/10/18

LTIP
10/12/19

£4.82
£6.15
£0.00
32%
2.00%
3 years
0.76%
£2.37

£5.70
£6.50
£0.00
30%
n/a2

£5.95
£6.50
£0.00
30%
3.20%

£8.00
n/a3
£0.00
27%
n/a2
3 years 31 months 33 months 33 months 31 months
0.57%
0.50%
£3.64
£3.40

£7.04
£10.00
£0.00
35%
n/a2

£6.50
£8.00
£0.00
36%
n/a2

0.30%
£3.15

0.60%
£2.95

0.98%
£3.41

1 Expected volatility was determined by calculating the historical volatility of the Company’s share price; volatility was measured over the previous three years.
2 Awards made under the LTIP allows, on vesting, for an additional award of shares to be made to the option holder equivalent to the dividends paid over the

vesting period on the underlying shares.

3 The 2019 LTIP grant includes EPS and relative TSR targets for the Executive Directors as set out on page 70 together with non-market, profit-related targets

for other participants. Non-market conditions are not factored into the fair value but are instead captured by adjusting the number of shares expected to vest.

The total share-based payment cost charged to the consolidated income statement was £717,000 (2019: £960,000).

27 Capital commitments
At 30 June 2020, the Group had no material capital commitments (2019: £nil). The Company had no capital commitments (2019: £nil).

28 Related party transactions
Identity of related parties
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.

Transactions with key management personnel
The Group’s key management personnel are the Executive and Non-Executive Directors, as identified on pages 50 and 51.

In the prior year, the Group entered into a conditional agreement to purchase an area of land from hampton Investment Properties
Ltd (“hIPL”) for £1,200,000. hIPL is a company in which North Atlantic Smaller Companies Investment Trust plc (“NASCIT”), which
is a substantial shareholder in the Company, holds a majority interest. In addition, Christopher Mills, a Non-Executive Director of the
Company, is considered a related party by virtue of his interest in and directorship of NASCIT and his position as a Director of hIPL.
The land, if purchased, will form part of a new Gleeson homes site being developed in the ordinary course of business. Approval of this
purchase was granted by the majority of shareholders at the AGM in December 2019.

As announced during the year, a settlement agreement was reached with the former Chief Executive Officer, Jolyon harrison, on the
terms of his departure.

Other than disclosed above, there were no other transactions with key management personnel in either the current or prior year.

Identity of related parties with which the Company has transacted
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.

Subsidiaries

Administrative expenses

Receivables outstanding

Payables outstanding

2020
£000

1,977

2019
£000

1,771

2020
£000

73,442

2019
£000

21,605

2020
£000

65,510

2019
£000

62,557

112

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

29 Adoption of new accounting standards
IFRS 16 “Leases”
IfRS 16 “Leases” applied to the Group from 1 July 2019, replacing IAS 17 “Leases” and IfRIC 4 “Determining whether an arrangement
contains a lease”. The new standard has been adopted using the modified retrospective approach, under which the cumulative effect of
the initial application is recognised in retained earnings at 1 July 2019. Comparative information has not been restated.

On adoption of IfRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases
under IAS 17. These liabilities are initially measured at the present value of the remaining lease payments, discounted using the Group’s
incremental borrowing rate as of 1 July 2019. The weighted average incremental borrowing rate applied to lease liabilities on 1 July 2019
was between 3.0% and 3.5%.

In applying IfRS 16 for the first time, the Group has used a number of practical expedients permitted by the standard:
• The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
• The accounting for leases with a remaining lease term of less than 12 months from the date of initial application as short-term leases.
• The exclusion of initial direct costs from the measurement of right-of-use assets at the date of initial application.
• The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
• The election to not separate non-lease components (e.g. maintenance) from lease components on specific classes of assets, namely

vehicles.

The impact on transition to IfRS 16 at 1 July 2019 was that the Group recognised an additional £3,419,000 of right-of-use assets and
£3,527,000 of lease liabilities. Additionally, a deferred tax asset of £21,000 was recognised and the net difference of £87,000 has been
recognised in retained earnings.

A reconciliation between operating lease commitments previously reported in the financial statements for the year ended 30 June 2019
discounted at the Group’s incremental borrowing rate and the lease liabilities recognised in the balance sheet on initial application of IfRS
16 is shown below.

Reconciliation of operating lease commitments disclosure and IFRS 16 lease liabilities
Operating lease commitments at 30 June 2019 as previously reported
Discounted at the Group’s incremental borrowing rate at 1 July 2019
Leases agreed but not yet commenced
Other*

Total lease liabilities as at 1 July 2019

* Primarily attributable to short-life leases that do not meet the criteria for capitalisation under the practical expedients detailed above.

Impact of IFRS 16 on consolidated income statement
Depreciation
Property
Plant and equipment

Interest expense included as finance cost

£000

4,261
(527)
(191)
(16)

3,527

2020
£000

(475)
(286)

(761)
(119)

(880)

Note

11
11

The previous accounting policy relating to leases as disclosed in the 2019 Annual Report was as follows:

“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 consolidated income
statement on a straight-line basis over the period of the lease.”

This has now been replaced with the accounting policy found on page 94.

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

113

build

confidence

Carrwood Park, Bradford, West Yorkshire

114
114

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

STRATEGIC REPORT

GOvERNANCE REPORT

fINANCIAL STATEMENTS

OThER INfORMATION

fIvE YEAR REvIEW

Revenue

Operating profit
Net finance (expense)/income

Profit before tax

Tax charge

Profit after tax

Discontinued operations

Profit for the year

Total assets
Total liabilities

Net assets

Total dividend per share for the year
Earnings per share from continuing operations
Earnings per share — normalised*
Net assets per share

* Normalised earnings per share include discontinued operations.

2020
£000

2019
£000

2018
£000

2017
£000

2016
£000

147,181

249,899

196,741

160,384

142,065

5,929
(363)

5,566

(758)

4,808

(289)

4,519

322,051
(109,446)

212,605

pence

–
8.7
8.1
366

40,999
213

41,212

(7,648)

33,564

36,854
165

37,019

(6,526)

30,493

32,963
49

33,012

(6,488)

26,524

28,166
72

28,238

(4,934)

23,304

(297)

(257)

(310)

(345)

33,267

30,236

26,214

22,959

281,240
(77,344)

242,785
(54,686)

215,742
(44,371)

180,640
(27,735)

203,896

188,099

171,371

152,905

pence

34.5
61.5
61.0
374

pence

32.0
56.0
55.6
345

pence

24.0
49.1
48.5
317

pence

14.5
43.2
42.6
283

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

115

fURThER INfORMATION

CORPORATE DIRECTORY

OUR WEBSITE

for more information on our homes, investor relations and
career opportunities please visit www.mjgleesonplc.com.

Registered office
MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield S9 1XE

Solicitors
Simmons & Simmons
City Point
One Ropemaker Street
London EC2Y 9SS

Registered number
9268016
Incorporated in
England and Wales

Stockbrokers
N+1 Singer
One Bartholemew Lane
London EC2N 2AX

Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY

Registrars and
transfer office
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Company Secretary
Leanne Johnson

Auditors
PricewaterhouseCoopers
LLP
Central Square
29 Wellington Street
Leeds LS1 4DL

Bankers
Lloyds Bank plc
10 Gresham Street
London EC2v 7AE

SHAREHOLDER INFORMATION

ABOUT THIS REPORT

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which is fully recyclable, biodegradable and chlorine free. It is
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The report has been printed using environmentally friendly
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for further use and recycling initiatives are in place for all other
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The print house chosen for production of this report is fSC® and
ISO 14001 certified with strict procedures in place to safeguard the
environment through all processes, including ongoing initiatives to
reduce carbon footprint.

Shareholder enquiries
Any shareholder with enquiries should, in the first instance,
contact our registrars using the address provided in the Corporate
Directory.

Share price information
London Stock Exchange
Symbol: GLE

Investor relations
MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield S9 1XE

E-mail: enquiries@mjgleeson.com
Tel: 0114 261 2900

FINANCIAL CALENDAR
financial year end

full year results announced

Annual General Meeting

30 June 2020

14 September 2020

3 December 2020

116

MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2020

Briar Lea Park, Longtown, Cumbria

Thank you!We would like to thank our employees who are essential to our success.Their skill and dedication has been invaluable in making Gleeson what it is today.M

MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield S9 1XE

Email: enquiries@mjgleeson.com
Tel: 0114 261 2900
www.mjgleesonplc.com