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BUILDING HOMES
CHANGING LIVES
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
INTRODUCTION
MJ Gleeson plc specialises
in low-cost house building
and strategic land promotion.
MacDonald Park, Farnworth, Greater Manchester
STRaTegIC RepORT
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OTheR INFORmaTION
CONTENTS
Strategic Report
Financial highlights
What We Do
how We Operate
Chairman’s Statement
market Overview
Chief executive’s Statement
Business model
Strategy
Business Review
Corporate Social Responsibility
Non-financial Reporting
Financial Review
Risk management
Governance
Board of Directors
Chairman’s Introduction
governance Report
Directors’ Report
audit Committee Report
Remuneration Committee Report
Remuneration policy Report
annual Report on Remuneration
FINANCIAL HIGHLIGHTS
Financial Statements
Statement of Directors’ Responsibilities
Independent auditors’ Report
Consolidated Income Statement
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
Our Website
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REVENUE
+27.0%
2019: £249.9m, 2018: £196.7m
CASH & CASH EQUIVALENTS
£30.3m
2018: £41.3m
PROFIT BEFORE TAX
+11.4%
2019: £41.2m, 2018: £37.0m
DIVIDEND FOR THE YEAR
+7.8%
2019: 34.5p, 2018: 32.0p
EARNINGS PER SHARE
+9.7%
2019: 61.0p, 2018: 55.6p
RETURN ON CAPITAL EMPLOYED
25.9%
2018: 26.6%
Cover: Ammie and Harper, Woodthorpe Park, Chesterfield, Derbyshire
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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WhaT We DO
BUILDING HOMES
CHANGING LIVES
We employ people with outstanding skills which we bring together to
build new homes and communities for the benefit of our customers, our
shareholders and society at large.
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 keeping 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 social and economic regeneration; typically
brownfield sites that would otherwise remain derelict or
unused. Last year we invested approximately £150m in our
development sites, creating attractive and well planned new
homes for sale.
NUMBER OF PLOTS IN THE PIPELINE
NUMBER OF ACTIVE SITES
13,575
2018: 12,852
69
2018: 65
Photo: Canal Walk, Burnley, Lancashire
Photo: Keats Court, Worksop, Nottinghamshire
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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WE BUILD
AFFORDABLE HOMES
WE CREATE
COMMUNITIES
The cost of buying a Gleeson home is less than renting for
many buyers and can be as low as £56 per week for one of our
average 2 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 do not build
apartments and we are opposed to leasehold. We are about
creating safe communities where people want to live. We build
traditional brick homes using local suppliers and employ local
trades on our sites, bringing jobs and investment to the
community.
AVERAGE SELLING PRICE
£128,900
2018: £125,200
Photo: The Black family, Cradock Court, Sheffield
Photo: Barnburgh View, Goldthorpe, South Yorkshire
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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hOW We OpeRaTe
CONTINUING TO GROW OUR
GEOGRAPHICAL FOOTPRINT
MJ Gleeson plc specialises in low-cost house building
and strategic land promotion. We have two distinct but
complementary businesses: house building on
brownfield land in the North of England and the Midlands
and strategic land promotion in the South of England.
BREAKDOWN BY DIVISION
OUR OPERATING AREAS
Revenue
£52.9m
£249.9m
Total
Operating profit
£13.0m
£41.0m*
Total
Gleeson Homes
Gleeson Strategic Land
* After Group costs of £2.1m
£197.0m
£30.1m
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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GLEESON HOMES
We build and sell low-cost homes to people
predominantly on low incomes in areas of
industrial decline and social and economic
deprivation.
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 often 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 are a specialist land promoter that enhances
the value of land by securing mainly residential
planning consents. 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
best value but ultimately help to deliver attractive
residential development in areas where housing
shortage issues are often acute.
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
1,529
2018: 1,225
STRATEGIC LAND
PORTFOLIO (PLOTS)
21,730
2018: 22,838
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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ChaIRmaN’S STaTemeNT
Overview
The Group had an excellent year. Gleeson Homes delivered its
largest annual volume growth, selling 1,529 homes, an increase of
304 homes (24.8%) on the prior year’s total of 1,225. During the
year we opened 19 new sites across the North of England and the
Midlands and had on average 65 sales outlets (2018: 61).
Gleeson Strategic Land also performed strongly. Nine land sales
were completed during the year, with the potential to deliver 1,755
new homes in the South of England. The business added a further
eight sites to its portfolio, which at the year end comprised 60
sites (2018: 61 sites).
Review of Strategic Land
In April 2019, the Board announced that it had appointed advisers
to explore a range of options for the Group’s Strategic Land
business. The Board also confirmed that a number of third parties
had expressed interest in acquiring Strategic Land.
Having considered the options and expressions of interest, the
Board has now concluded that the Group will derive greater
long-term value from retaining Strategic Land than from selling it.
The business is extremely well positioned to continue delivering
strong profits and cash, with a healthy portfolio of sites and a
highly skilled team.
Market context
Despite the uncertainties surrounding Brexit, the demand for our
low-cost homes from young first-time buyers and low-income
families in the North of England remains robust. Mortgage finance
is available to our customers on attractive terms and many of them
are also benefiting from the Government’s Help to Buy Scheme.
We are supportive of this Scheme, but we believe that it should be
amended so that it provides greater assistance to those who need
it most, in particular young people on low incomes.
The Board believes that Gleeson Homes is less exposed to the
potential problems arising from a no-deal Brexit than other large
housebuilders. We operate predominantly in the North of England
and employ small, locally-based suppliers and subcontractors on
our development sites and do not rely on foreign labour. Our
largest and most critical suppliers are well prepared for a no-deal
Brexit. They have planned alternative supply routes and have built
up short-term stocks to ensure that adequate supplies are
maintained.
I am pleased to report our highest annual
growth in homes sold and another year of
double-digit growth in profit. Our unique
model continues to bring substantial
benefits to our customers and to society
more widely by helping predominantly
young, first-time buyers and people on low
incomes into home ownership.
Dermot Gleeson
Chairman
Meanwhile, there is no evidence that the prospect of Brexit is
undermining the confidence of our actual and prospective
customers.
Gleeson Strategic Land continues to attract multiple bidders for
land in the South of England, where demand for high-quality sites
remains strong from both medium-sized and large housebuilders.
This demand is underpinned by the continued need for new homes
in areas of housing shortage.
Employees
The average number of employees during the year increased to 550
(2018: 480). The actual number of employees at the year end was
552 (2018: 509).
Towards the end of the year, the Group launched its new employee
engagement survey “Your Voice”. The results of this are being
collated and will provide us with a better understanding of how we
can work together to develop the structure, ways of working and
culture of our business. This will be fundamental to the next phase
of our growth, which will be driven by the engagement of our
people and a shared understanding of the “Gleeson Way”.
The Group’s strong performance during the year would not have
been possible without the skill, commitment and hard work of our
employees and subcontractors. On behalf of the Board, I would
like to thank them very sincerely and very warmly indeed.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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Board changes
Following the departure of the former Chief Executive Officer,
Jolyon Harrison, James Thomson was appointed to the Board in
June 2019 as interim Chief Executive Officer. James was formerly
Chief Executive of Keepmoat Homes Limited, one of the UK’s
largest housebuilders, where he remains a Non-Executive Director.
The Board is well-advanced in a search process, which includes
both internal and external candidates, to appoint a permanent
Chief Executive Officer. We hope to announce the outcome of this
process within the next three months.
The Board is also close to finalising a search process to find two
new Non-Executive Directors. We recognise the value in bringing
fresh talent and diversity to the Board and it is our intention to
make these appointments shortly.
Delivering returns for our shareholders
Our earnings per share grew by 9.7% to 61.0 pence (2018: 55.6
pence). In light of this, and of our confidence in the prospects for
the current financial year and beyond, the Board is recommending
a final dividend for the year of 23.0 pence per share (2018: 23.0
pence per share).
Combined with the interim dividend, this will give a total dividend
for the year of 34.5 pence per share (2018: 32.0 pence per share),
an increase compared to the previous year of 7.8%.
Subject to shareholder approval at the Annual General Meeting
(“AGM”), the final dividend will be paid on 13 December 2019
to shareholders on the register at the close of business on
15 November 2019. The ex-dividend date is 14 November 2019.
Outlook and summary
We remain comfortably on track to achieve our target of doubling
Gleeson Homes’ sales to 2,000 units p.a. over the five years from
2017 to 2022.
Meanwhile, the Board and the senior management team are united
in their ambition to continue to grow the value of the Group on a
sustainable basis.
Against this background, the Board is confident that our unique
business model will continue to deliver significant growth in both
revenue and profits in the current financial year and beyond.
Dermot Gleeson
Chairman
13 September 2019
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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maRKeT OveRvIeW
THE UK HOUSING MARKET
IS FAILING TO MEET THE
NEEDS OF HOME OWNERSHIP
The housing market is not serving
young 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 (%)
80
70
60
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Over the last 10 years home ownership has fallen from a peak
of around 73% in 2008 to around 65% in 2018. Most people
still want to own their own home; home ownership provides
stability and financial security with 86% of the population
preferring to buy than rent1. Owning a property remains the
most important milestone in life for many people.
1
Redfern Review November 2016, British Social Attitudes Survey
1 IN 3 HOMES IN ENGLAND ARE RENTED
THE OWNERSHIP AGE GAP IS WIDENING
Home ownership by age group (%)
Owned
Rented
North, East
& Midlands
8.2m
4.3m
London
& South
7.4m
4.3m
80
70
60
50
40
30
20
10
0
1990
1995
2000
2005
2010
2015
2017
25-34
65 and over
There are now over 24 million homes in England. More than
half, around 12.5 million, are in the North, Midlands and East of
England with around 11.7 million in London and the South.
One-third (8.6 million) of homes across England are rented
with 4.3 million of these homes in the North, Midlands and
East. Of these, around 2.1 million homes are privately rented
and 2.2 million are rented from councils or housing
associations.
Source: Labour Force Survey, Q4 various years
The demographic split of home ownership rates shows that the
market continues to under-serve 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.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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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 (£000)
350
300
250
200
150
100
50
Government Target 300,000
All
Private enterprise
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2018
Source: Ministry of Housing, Communities & Local Government
The house building industry in England has tried to respond,
building around 170,000 new homes last year, up from
160,000 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 (000)
Below £150,000
Above £150,000
1 in15
new build
203
1 in 5
new build
254
14
64
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 under-supply of affordable homes being built.
Whilst there are many terraced houses in the resale market,
lenders often require higher deposits than for new build
homes, which makes older terraced houses less affordable for
many people and these are often more expensive to run.
500
400
300
200
100
0
Gleeson
Homes
A
B
856
H
I
C
E
G
Other listed housebuilders 2018/19
D
F
The average price of a new build home in England last year
was £293,000 and the majority of other listed housebuilders
have an average selling price in excess of £300,000. That is
clearly a price which is unaffordable to many young first-time
buyers and families on low incomes.
There is a large, under-served market
building 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 2019
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ChIeF eXeCUTIve’S STaTemeNT
Following my appointment in June 2019, I have had the opportunity
to visit all of our area offices and over a third of our development
sites, meet many of the people and start to understand the
“Gleeson DNA” which is deeply embedded across the business.
I have assessed the business against what I believe is critical to
measuring the operational health of any housebuilder, including
land buying, build process, quality, health and safety, sales and
management structure. I am pleased to find that Gleeson is not
only a robust business in these areas but continues to look for
ways to improve and realise marginal gains.
It is clear that we have a unique model and a team of highly skilled
employees and subcontractors who are passionate about what
we do. We believe in the value of not only building good quality
low-cost homes for our customers, but also in creating
communities and the benefits it brings to wider society, often
transforming and regenerating areas previously blighted by
industrial decline or neglect.
Demand for our low-cost homes remains strong from first-time
buyers. We have an experienced management team and we are
comfortably on track towards achieving our stated target of
doubling volumes to 2,000 new homes per year by 2022.
Homes operational performance
Gleeson Homes delivered record growth in volumes this year,
selling 1,529 homes, an increase of 24.8% on the prior year.
Our land pipeline increased by 5.6% to 13,575 plots (2018: 12,852)
and the number of active outlets open at the year end increased
by 6.2% to 69 sites.
Operating profit grew by 14.9% to £30.1m. Operating margin fell
from 17.1% to 15.3% but this was largely anticipated and a result
of accelerating build rates on our existing sites and investment
in overheads to support growth. Consistent with other major
housebuilders, we have also experienced some cost pressures
on labour and materials, but we expect this to stabilise over the
forthcoming year.
I was delighted to join Gleeson as interim
Chief Executive Officer. This is a business
that I have admired from afar and, as I
have got to know the business and its
people over the last few months, it is not
only every bit as impressive as I imagined,
but more so.
James Thomson
Interim Chief executive Officer
Unique model
Our house prices remain truly affordable with the average selling
price for the year being £128,900 (2018: £125,200). The increase
was partly due to the mix of site locations and number of 2, 3 and 4
bed homes sold, and our aim remains to keep our homes
affordable to our customers whilst ensuring that we maximise our
revenue opportunities over the life of a development.
We sell to people who need a home with 4 out of every 5 customers
being first-time buyers. We sell to young people with 88 homes
sold this year being to people aged 21 or under.
We buy land at sensible prices and build good quality homes that
families on low incomes can afford. Our buyers are often from
the local area and want to remain living near family and friends.
Our model remains building traditional 2, 3 and 4 bedroom houses
with a front garden, back garden and a driveway. We firmly believe
this is what our buyers want and they value traditional bricks and
mortar. We do not build apartments and we do not engage in
part-exchange sales and are therefore not exposed to the
resale market.
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KEY PERFORMANCE INDICATORS
Gleeson Homes volumes
2019
2018
2017
2016
2015
2014
1,013
904
751
561
1,529
1,225
Units (homes) sold continued a strong growth trajectory.
Gleeson Homes land pipeline (plots)
2019
2018
2017
2016
2015
2014
13,575
12,852
11,588
9,284
7,496
5,065
Land continues to be available to buy at sensible prices.
Resilient market
Demand for low-cost homes in the North of England and the
Midlands remains strong. We are extending our model with new
sites soon to open in Lincolnshire and the West Midlands. We see
no signs of demand abating and we continue to deliver one of the
highest volume growth rates of any listed housebuilder.
More than 4 million homes are currently rented in our target market
in the North of England and the Midlands. The vast majority of our
buyers want to escape the “rent trap” and begin wealth creation
through home ownership.
Only one in fifteen (6%) of all house sales below £150,000 in the
North of England and the Midlands is a new build home. This
compares to three in fifteen (20%) of all house sales above
£150,000. Gleeson is the only listed housebuilder dedicated to
building low-cost homes in a market that is three times less
well-supplied than the rest of the market and, as a result, provides
significant opportunities for growth.
Our buyers are typically hardworking, lower-paid workers like
teachers, nurses, bus drivers, firefighters and secretaries. They
often have the ability to earn overtime and are not burdened by
student debt. They are woefully under-served by the housing
market and have seen the adverse impact on affordability over
the last five years with house prices significantly outgrowing
their wages.
69
65
59
Over the last five years, average weekly wages have risen by
14.5% whereas average house prices in England have risen by a
staggering 24.6%. Our homes start at just £89,000 meaning that
someone on the National Minimum Wage can afford to buy one of
our homes. We remain committed to ensuring that home ownership
is truly affordable for all.
Gleeson Homes active sites
2019
2018
2017
2016
2015
2014
48
43
35
Gleeson Homes opened 19 sites, completed 15 sites
and increased net active sites by 4 sites during the year.
Gleeson Strategic Land portfolio (plots)
2019
2018
2017
2016
2015
2014
21,730
22,838
21,505
21,111
21,150
21,500
Land interests represent over 12 years of sales.
Our buyers will buy a Gleeson home if it is well built, in the right
location and the cost of ownership is less than, or similar to,
renting. Ownership costs for a typical Gleeson home are less than
the cost of renting and the lifetime cost of buying is significantly
lower than renting, even if mortgage rates increase.
Buying a Gleeson home enables our customers to reduce their
outgoings and live in a comfortable home that provides them with
financial security and stability away from the uncertainties that
often comes with living in rented accommodation. When Gleeson
customers eventually retire, they will own their own home, have an
asset to pass to their children and will not require the level of
housing support that they would if they rented.
Just over two-thirds (68%) of our customers use the Government’s
Help to Buy scheme and the average priced house purchased with
Help to Buy this year was £134,480. The highest priced home that
used the scheme was £199,995. Nearly all (99.9%) of our homes
sold with Help to Buy would be below the new regional limits that
will come into force in 2021.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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ChIeF eXeCUTIve’S STaTemeNT CONTINUED
Quality
We are skilled at building high-quality homes for sale at affordable
prices. Gleeson Homes is uniquely focused on this segment of the
market, with other housebuilders offering a higher priced product
that does not meet the needs of our lower income customers. We
are focused on quality and we will only hand over homes that we
are proud of.
Strategic Land operational performance
Operating profit grew from £12.6m to £13.0m from 9 land
transactions in the year. Our Strategic Land business is in a strong
position with an experienced management team and a healthy
pipeline of 60 sites which could deliver over 21,000 residential
plots.
Although many major housebuilders have strong land banks we
continue to see high demand for good quality consented land in
the South of England.
We are investing in further new sites and advancing our existing
sites through the planning system. The current status of the
portfolio and pipeline of new sites gives us confidence in the
strength and sustainability of this business.
Current trading and outlook
I’ve been greatly impressed by what I’ve seen so far. We have a
unique business model, a clear target for growth and a highly
skilled team to deliver it.
There is a great deal of land available in our target areas and
opportunities for us to grow. Our homes continue to remain highly
affordable and mortgage finance remains readily available. We
have plenty of land on which to build homes, people to build them
and a strong team that can grow the business in a controlled and
profitable way.
The Gleeson Strategic Land business is in a strong position, with a
healthy portfolio and we continue to add good quality sites to the
portfolio on attractive terms.
We are confident that the current financial year will be another
excellent year for the Group.
James Thomson
Interim Chief executive Officer
13 September 2019
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OTheR INFORmaTION
RESPONSIBLE
HOUSE BUILDING
Our business model is founded on a close engagement with our customers and
their communities, productive cooperation with local landowners, empowerment
of our people and fair treatment of our supply chain to ensure that we are
building a “best in class” product.
Our model is unique and is driving growth which mutually benefits our
customers, our communities and our shareholders.
Our commitment to freehold
We believe that wherever possible home ownership should
include the land on which it is built. Where this is not
possible the homeowner should not be penalised.
Wherever possible we sell our homes as freehold. We only
sell homes as leasehold when we do not own the land and
this applies to three of our developments in the North West
where a peppercorn ground rent is payable on these homes.
Sustainable builders
Our unique approach to business was recognised in March
2018 when we were voted the most sustainable PLC in the
UK at the prestigious PLC Awards. The judges valued the
responsible approach that we take to building low-cost
homes including our use of environmentally-friendly
materials, such as gravel driveways which have a lower
carbon footprint than bonded materials and aid surface
water drainage.
Living Wage Foundation
We are proud to be the only major housebuilder accredited
by the Living Wage Foundation for paying our employees the
real Living Wage, or higher. The only exception to this is for
apprentices, where we pay above the Government’s
guidance for apprentices.
The Gleeson apprenticeship scheme
Since 2010 the Gleeson apprenticeship scheme has trained
many young people and this year we have a record 89
apprentices starting in September. The national lack of
skilled people such as bricklayers and joiners is adding to
the housing crisis. We are recruiting apprentices to help fill
the skills shortage through our apprenticeship scheme.
When they qualify a large number continue to work for us or
go on to a third year of their NVQ which can lead to becoming
a trainee Site Manager. Our office in Sheffield is a registered
CITB training centre which shows that we take their
training seriously.
YourWatch®
Our trademarked YourWatch® scheme provides our
residents with the anonymity to report their concerns
without repercussion via the YourWatch® website. We share
information with local police and residents, working in
partnership with local police in many areas to reduce crime
and antisocial behaviour.
The Gleeson Community Sports Foundation
Since the inception of the Foundation seven years ago,
we have sponsored over 100 junior sports teams by
providing brand new kit and funding for teams in and
around our developments.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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BUSINeSS mODel
DELIVERING
SUSTAINABLE VALUE
Our unique business model delivers value for shareholders,
customers, communities and our employees. Our business
model has two distinct divisions which are complementary
in generating long-term sustainable value.
CORE ACTIVITIES
laND aCQUISITION
plaNNINg
BUIlD
GLEESON HOMES
Successful land buying
We partner with local authorities and
private landowners to acquire land in
socially and economically deprived
areas which will benefit from
development and investment.
We have a carefully targeted land
buying strategy that has clearly
defined and challenging hurdle rates.
This ensures that we buy land at
sensible prices so that our homes
remain affordable.
Attractive developments
Our developments are designed to
transform areas that are often blighted
by urban neglect and dilapidation.
Our sites are landscaped in a way that
is attractive, environmentally friendly
and sustainable.
We build a range of two, three and four
bedroom detached and semi-detached
homes that are planned around a
well-established specification.
We work with local communities, local
authorities and councils to ensure that
our planned developments balance the
needs of stakeholders, whilst ensuring
our homes remain affordable.
Tightly controlled costs
We maintain tight control over build
and material costs.
We partner with local suppliers and
subcontractors wherever possible.
By using suppliers and subcontractors
that are local to our sites, we provide
jobs and investment in areas that are
often most in need.
We ensure that our overhead costs are
relatively low by having small and
similarly structured management teams
in each area office and by continuously
measuring their relative performance.
GLEESON STRATEGIC LAND
New land opportunities
We enter into contractual agreements
with landowners to promote their
land through the planning process
where we see an opportunity for
sustainable residential or other
development in the future.
Land promotion
Our team of specialist land surveyors
and town planners, along with legal
and technical experts, steer the land
through the planning system towards
achieving a viable and attractive
planning consent.
We invest intelligently in the
promotion of our sites, a process
which can sometimes be long
and complex.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
GLEESON HOMES
GLEESON STRATEGIC LAND
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
CUSTOmeRS
OUTpUT
Providing affordable homes
We ensure that our homes are affordable
and built to the specification that our
customers expect. Our average selling
price is £128,900 (2018: £125,200).
We offer our customers a range of
bespoke financial packages, including a
deposit saving scheme, to enable them
to become homeowners.
Our developments provide new homes
that are affordable to people from the
local area. Our buyers are often young,
motivated individuals and couples on
low incomes who can afford to buy one
of our homes and want to escape the
burden of renting.
Community regeneration
Over the years, Gleeson Homes
has played a key role in
regenerating many challenging
urban areas across the North
of England and, more recently,
the Midlands.
We have helped to re-establish
local communities and invested
in a wide range of projects near
to our sites, transforming
community facilities and
sponsoring over 100 local junior
sports teams.
Shareholder value
Gleeson Homes generated an
operating profit of £30.1m
(2018: £26.2m).
Stakeholder management
We have a long history of working with a
range of mid-tier and large housebuilders
to manage the sale of consented land.
Through careful promotion and sale, we
provide high-quality consented land to
developers who ultimately deliver
attractive and sustainable residential
development in areas where there is a
housing need.
Housing supply
During the year Gleeson
Strategic Land sold land
interests with the potential
to deliver 1,755 (2018: 1,970)
plots for housing development
to help ease the housing
shortage in the South
of England.
Shareholder value
Gleeson Strategic Land
generated an operating profit
of £13.0m (2018: £12.6m).
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
15
STRaTegY
CREATING SUSTAINABLE GROWTH
FOR OUR STAKEHOLDERS
Delivering an increasing number of affordable homes to
people across the North of England and the Midlands and
unlocking the potential of land in the South of England for
residential or other development.
Gleeson Homes
The demand for new homes in England continues to outstrip
supply and, even despite the uncertainties of Brexit, house prices
continue to rise across many parts of the country. Nowhere is this
felt more strongly than by young, hard working first-time buyers
and people on low incomes who are caught in the “rent trap” and
who are increasingly unable to get onto the housing ladder.
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 under-served
communities, enabling people to buy their own home and live and
work in their local area. Through targeted land buying and careful
cost control across our business, we remain committed to keeping
our homes affordable to the sector of the housing market that we
serve.
Targeted growth
In 2017, we set a target of 2,000 unit completions per annum within
5 years. We delivered a record 1,529 new homes in the year to
30 June 2019, an increase of 304 units (24.8%) over the prior year.
Demand remains extremely strong and we are comfortably on track
towards achieving our target.
Gleeson Strategic Land
The supply of new homes in the South of England continues to
suffer due to a fragmented planning landscape and underlying
inertia to new development in many areas.
Gleeson Strategic Land works to obtain planning consent on sites
by navigating the complexities of the planning system. This
enables us to supply high-quality consented land to developers,
who can start to deliver new homes for sale typically within 12 to
24 months of a planning consent.
Where residential consent is not a viable option then we may seek
alternative types of planning permission such as for commercial
use to provide much needed employment land.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC pRIORITIeS
pROgReSS IN 2018/19
pRIORITIeS FOR 2019/20
GLEESON HOMES
Increase house building footprint
We will increase the number of active developments across the
North of England and the Midlands, targeting areas that are in
need of regeneration.
Build quality affordable homes
We will build good quality homes to the specification that our
customers require. We will ensure that our homes are energy
efficient and have low running costs. We will use appropriate
construction methods to build efficiently.
We will tightly control build costs and acquire land in line
with our defined hurdle rates. This will enable us to maintain
profitability whilst keeping our average selling prices
(“ASPs”) low.
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 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.
We were active on 69 sites at 30 June 2019 having opened
19 new sites during the year and completed development on 15 sites.
Our pilot offices in Penrith and Ashington became fully staffed area
offices, and we ended the year with 10 area offices across the North
of England and the Midlands.
We will continue to open new sites and
anticipate an increase to more than 80 active
sites during the coming year.
We will remain on track towards achieving our
2017 stated target of 2,000 unit completions per
annum by 2022.
Last year MJ Gleeson plc was voted the most sustainable business in the
UK at the national PLC Awards. This recognised our sustainable business
model and approach to building affordable homes in areas that are most
We will continue to use efficient building
techniques in order to keep our costs low,
selling prices affordable and to maintain
in need of regeneration using cost-effective and environmentally-friendly
strong margins.
materials.
Land continues to be available at sensible prices. Gross margin decreased
on driveways where appropriate, which are
from 32.7% to 30.1% as a result of costs associated with increased build
environmentally friendly, cost-effective and aid
rates, labour and material costs. However, we have mitigated the impact
surface water drainage.
We will continue to use materials such as gravel
as far as possible through tight control over costs and modest
price increases.
Our land pipeline of owned and conditionally purchased plots at 30 June
We will continue to buy land at sensible prices to
2019 increased by 5.6%, totalling 13,575 plots, of which 7,050 plots have
support the growth of the business in 2019/20
been purchased subject to planning permission.
and beyond.
On average, we completed the sale of the first house within 15 months
of legally completing the purchase of a new site with an acceptable
planning permission.
We will continue to seek planning permissions
for attractive residential developments and will
start on sites as soon as we have an acceptable
planning permission.
At 30 June 2019, we had a land portfolio of 60 sites, which can deliver
21,730 plots and 44 acres of commercial land.
During the year, we achieved planning consents on 8 sites and acquired
interests in 8 new sites.
We will continue to invest in advancing our land
portfolio through the planning system to ensure
the delivery of sustainable profits and cash
flows for 2019/20 and beyond.
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
CURRENT TARGET
Double Gleeson Homes volumes
20172022
2017
1,013 units
BY 2022
2,000 units
STRaTegIC pRIORITIeS
pROgReSS IN 2018/19
pRIORITIeS FOR 2019/20
GLEESON HOMES
Increase house building footprint
We will increase the number of active developments across the
North of England and the Midlands, targeting areas that are in
need of regeneration.
Build quality affordable homes
We will build good quality homes to the specification that our
customers require. We will ensure that our homes are energy
efficient and have low running costs. We will use appropriate
construction methods to build efficiently.
We will tightly control build costs and acquire land in line
with our defined hurdle rates. This will enable us to maintain
profitability whilst keeping our average selling prices
(“ASPs”) low.
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 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.
We were active on 69 sites at 30 June 2019 having opened
19 new sites during the year and completed development on 15 sites.
Our pilot offices in Penrith and Ashington became fully staffed area
offices, and we ended the year with 10 area offices across the North
of England and the Midlands.
Last year MJ Gleeson plc was voted the most sustainable business in the
UK at the national PLC Awards. This recognised our sustainable business
model and approach to building affordable homes in areas that are most
in need of regeneration using cost-effective and environmentally-friendly
materials.
Land continues to be available at sensible prices. Gross margin decreased
from 32.7% to 30.1% as a result of costs associated with increased build
rates, labour and material costs. However, we have mitigated the impact
as far as possible through tight control over costs and modest
price increases.
We will continue to open new sites and
anticipate an increase to more than 80 active
sites during the coming year.
We will remain on track towards achieving our
2017 stated target of 2,000 unit completions per
annum by 2022.
We will continue to use efficient building
techniques in order to keep our costs low,
selling prices affordable and to maintain
strong margins.
We will continue to use materials such as gravel
on driveways where appropriate, which are
environmentally friendly, cost-effective and aid
surface water drainage.
Our land pipeline of owned and conditionally purchased plots at 30 June
2019 increased by 5.6%, totalling 13,575 plots, of which 7,050 plots have
been purchased subject to planning permission.
On average, we completed the sale of the first house within 15 months
of legally completing the purchase of a new site with an acceptable
planning permission.
We will continue to buy land at sensible prices to
support the growth of the business in 2019/20
and beyond.
We will continue to seek planning permissions
for attractive residential developments and will
start on sites as soon as we have an acceptable
planning permission.
At 30 June 2019, we had a land portfolio of 60 sites, which can deliver
21,730 plots and 44 acres of commercial land.
During the year, we achieved planning consents on 8 sites and acquired
interests in 8 new sites.
We will continue to invest in advancing our land
portfolio through the planning system to ensure
the delivery of sustainable profits and cash
flows for 2019/20 and beyond.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
17
BUSINeSS RevIeW
GLEESON HOMES
A UNIQUE LOW-COST
BUSINESS MODEL
Gleeson Homes delivered its largest
annual volume growth selling 1,529
homes.
During the year we opened 19 new sites and had on average 65
selling outlets open compared to 61 during the prior year. The
outlets are located across the North of England and the Midlands.
The number of outlets at the end of the year increased to 69
(2018: 65) and is expected to rise to 80 or more by the end of the
current financial year.
The average selling price (“ASP”) for the homes sold in the year
was £128,900 (2018: £125,200). The increase was influenced by
a combination of factors: house price inflation, the mix of site
locations and the mix of 2, 3 and 4 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 decreased to 30.1% (2018: 32.7%) mainly due
to the costs associated with increased build rates and higher
labour and material costs.
The increase in the volume of homes sold and higher ASP resulted
in gross profit increasing by 18.4% to £59.3m (2018: £50.1m).
Operating profit increased 14.9% to £30.1m (2018: £26.2m).
Operating margin decreased from 17.1% to 15.3% as a result of
lower gross margin and investment in overheads to support the
growth plans of the business.
We continue to acquire land in the North of England and the
Midlands at sensible prices. The pipeline grew by 723 plots to
stand at 13,575 plots at 30 June 2019. Of these plots 6,525 are
owned (2018: 6,475) and 7,050 plots are conditionally purchased
(2018: 6,377). The mix of sites in the pipeline was, however,
weighted towards slightly larger sites, with the number of sites in
the land pipeline totalling 144 at year end, being 5 sites lower than
the prior year end; 30 new sites were added to the pipeline, while
35 sites were completed or did not proceed to purchase. In
addition to owned and conditionally purchased plots, there are a
further 473 (2018: 354) plots which are being actively considered
for acquisition but will only proceed if they meet our strict
returns criteria.
The Government’s Help to Buy Scheme remains popular with many
of our customers, with 68% of the homes sold during the year
utilising the scheme (2018: 66%). We also continued to provide our
own range of bespoke packages to assist potential customers to
become homeowners.
Gleeson Homes
UNITS SOLD
+24.8%
2019: 1,529 units
2018: 1,225 units
LAND PIPELINE
+5.6%
2019: 13,575 plots
2018: 12,852 plots
OPERATING PROFIT
+14.9%
2019: £30.1m
2018: £26.2m
Operating profit on unit sales (£m)
2019
2018
2017
2016
2015
2014
Unit volumes
2019
2018
2017
2016
2015
2014
14.7
9.1
30.1
26.2
21.8
19.5
1,529
1,225
1,013
904
751
561
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
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FINaNCIal STaTemeNTS
OTheR INFORmaTION
CASE STUDY
HOME OWNERSHIP FOR YOUNG PEOPLE
New homes in Longtown are being
snapped up by local residents,
including 19-year-old Sophie Jackson.
Home ownership may seem like a pipe dream to many young
people, but a 19-year-old from Hethersgill has made her
property dreams a reality thanks to a new Gleeson
development in Longtown.
We opened our Briar Lea Park development off Brampton Road
in September 2018, with local residents quickly snapping up
new build two, three and four bedroom semi and detached
homes.
Sophie Jackson recently completed on her first property after
moving out of her mother’s village home to be closer to work.
Initially believing a new build home to be out of her price
range, Miss Jackson was surprised to discover that she could
actually afford a three-bedroom semi-detached property after
attending one of our Mortgage Clinic events.
“The mortgage clinic actually helped a lot! I was able to ask a
lot of questions and was absolutely delighted when they said
that a three-bedroom home would be within my budget”, said
Miss Jackson. “The development is close to my workplace and
is also within walking distance of a few shops. It’s quite rural,
but also close to Longtown, which is where I wanted to base
myself after moving from Hethersgill. As I am only 19, I wanted
a new build property so I could just move in and not worry
about doing any DIY or renovation work. It was a bit of blank
canvas when I first moved in, but it is nice and homely now.
I was also able to choose my kitchen, which I just love!”
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
19
BUSINeSS RevIeW
GLEESON STRATEGIC LAND
INVESTING INTELLIGENTLY
IN OUR LAND PORTFOLIO
We continue to replenish our land
portfolio with high-quality new sites and
to advance our existing sites through the
planning system.
Revenue from Gleeson Strategic Land grew by 22.2% to £52.9m
(2018: £43.3m) driven predominantly by the mix of sites sold in
the year. The 9 sites sold totalled 203 acres with 8 of these having
the potential to deliver 973 plots across the South of England, in
addition to one legacy site that was jointly owned and capable of
delivering 782 plots (2018: 1,970 plots).
Operating profit reflects the value added by Gleeson Strategic
Land on land transactions through securing attractive residential
planning consents and managing the onward sale to developers.
Operating profit increased by 3.2% to £13.0m (2018: £12.6m) which
was driven by the quality and mix of sites sold.
We continue to see strong demand from a wide range of developers
including large national and mid-sized housebuilders. The land
market, particularly for sites in prime locations in the South of
England, remains buoyant despite the uncertainties caused
by Brexit.
At the year end, we had a portfolio totalling 60 sites (2018: 61 sites)
with the potential to deliver 21,730 plots (2018: 22,838 plots)
plus 44 acres of commercial land (2018: 67 acres). The portfolio
comprises 770 plots (2018: 1,552 plots) that were wholly or part
owned by the Group, 8,553 plots (2018: 8,754 plots) that were held
under option, and 12,407 plots (2018: 12,532 plots) that were the
subject of promotion agreements.
PLOTS SOLD
1,755 plots
2018: 1,970 plots
LAND PORTFOLIO
21,730 plots
2018: 22,838 plots
OPERATING PROFIT
+3.2%
2019: £13.0m
2018: £12.6m
Operating profit (£m)
The portfolio is at varying stages through the planning system and
at 30 June 2019 we had 9 sites (2,929 plots) which were consented
or had a resolution to grant; 6 sites which had a planning
application submitted and awaiting decision; and 8 sites with
applications being worked up prior to submission. The balance of
the portfolio consists of sites which are being promoted through
the development plan process.
2019
2018
2017
2016
2015
2014
13.0
12.6
12.0
10.2
8.1
4.8
During the year, we secured planning consents for 8 sites and
acquired interests in 8 other new sites. These new sites
contributed a further 1,064 plots to the portfolio.
Opportunities for new land readily come forward and we use our
knowledge and expertise to select and promote the sites where we
see the potential for future residential development and where we
can deliver maximum value for stakeholders.
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.
Site sales
2019
2018
2017
2016
2015
2014
9
10
8
5
7
7
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
CASE STUDY
LAND SOUTH WEST OF AYLESBURY
The land forms part of a major strategic
urban extension for 1,550 residential
units with a relief road, primary school,
community buildings and public open
space.
During the year, Gleeson Strategic Land submitted a planning
application for a 106 hectare site capable of delivering in the
region of 1,550 new homes to the South West of Aylesbury. The
area is allocated within the Vale of Aylesbury Local Plan and is
a greenfield site on the edge of the existing settlement.
Development of the site would include the provision of a link
road through the site to divert traffic around the south of
Aylesbury town centre. It would respect the principles of the
Garden Town status of Aylesbury by providing 50% open
space and also provide a new primary school and community
buildings. We are working with the promoters of HS2 to protect
the route alignment and provide appropriate mitigation in the
form of landscape buffers and noise mitigation.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
21
CORpORaTe SOCIal ReSpONSIBIlITY
WE ARE RECOGNISED AS
AN ETHICAL BUSINESS
We have been recognised for our ethical approach
to business which carefully considers our role in the
community and the environment throughout our
business activities.
OUR PEOPLE
Employing local people
At Gleeson, we pride ourselves on giving back to the community
and we specifically look at recruiting local people for our
development sites. When searching for candidates, our
recruitment team will prioritise location as a key factor as we value
the importance and benefits of having local people working for us.
Where possible, when a new site is opening, we target recruitment
towards areas within close proximity of the site, ensuring that we
not only provide affordable homes for local people, but we provide
employment opportunities for them too.
An example of the success of this initiative is James Harnett who
started his employment at Gleeson Homes as a fork lift truck driver
at our St. Aidan’s View development in County Durham. James is
local to the area and has made great progress in his career with us,
having recently been promoted to Assistant Site Manager after eight
months of being a Trainee Assistant Site Manager.
Apprenticeship scheme
We are extremely proud of our apprenticeship scheme and we are
dedicated to giving people the opportunity to start a career in the
house building industry. The national shortage of skilled trades,
such as bricklayers and joiners, is adding to the housing crisis.
We are recruiting apprentices to help fill the skills shortage
through our apprenticeship scheme. We are also continuing to
invest in our office-based apprenticeships, both across our area
offices and at our head office in Sheffield. Local school leavers
are invited to join our technical, quantity surveying, land buying
or finance departments.
The scheme is growing every year and in September 2019,
we will welcome 30 trade and 15 office apprentices who will be
commencing their first year of the apprenticeship programme,
17 trade and 8 office apprentices who will be commencing their
second year and 9 trade and 10 office apprentices who will be
commencing their third year.
Our apprenticeship scheme offers a fantastic opportunity for
school leavers or those looking to start a new career in the house
building industry. One example is Daniel Hawkes who works as
an Apprentice Quantity Surveyor (QS) at our Gateshead Office.
Dan has been with us for 2 years and we look forward to him
joining our team when his apprenticeship ends as a full time
Assistant QS.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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OTheR INFORmaTION
Our commitment to mental health
Mental health awareness has become a massive focus in the UK
over the last couple of years and we understand the significant
impact that mental health can have in the construction industry.
We have been working hard on a campaign to raise awareness of
mental health and break down the stigma that surrounds it in the
industry. This is something we feel extremely passionate about
and we want to make sure our employees’ mental health is as
much of a priority as their physical health.
Our plan to support our employees has been approved by the
mental health campaign “Time to Change”, which is a UK-wide
movement aiming to reduce mental health-related stigma and
discrimination. We will shortly be signing up to “The Employer
Pledge” that demonstrates our commitment to change how we
think and act about mental health in the workplace. In doing so,
we will join over 900 other companies across the UK and a variety
of different industries that are putting the mental health of their
employees at the top of their agenda.
A team of Gleeson employees
completed the Tough Mudder
Challenge and raised over
£1,600 for Mind, the mental
health charity.
Women in construction
There is no escaping the fact that the construction industry is a
male-dominated environment. However, at Gleeson Homes, we
have some incredible trailblazing women working for us. From
Assistant Build Managers to our first ever female Site Manager,
these women are paving the way in our organisation and are role
models for future generations of women who want to make a career
in construction.
Julie Darby manages Fretson Park, a development with 103 plots
about 3 miles from Sheffield city centre. She joined us in April
2019 as the first female Site Manager at Gleeson Homes, having
previously been a site manager elsewhere for 5 years. Being
organised is key to any Site Manager role and this is one of the
things that Julie enjoys the most. Big on customer care, Julie says
“I absolutely love being a Site Manager and I love being the only
woman on site but that can be a challenge in itself. Female Site
Managers are few and far between and for the older men working
on site, it’s a new concept. I have a brilliant team and the
camaraderie is second to none. I’d love to see more women on site
and I’m happy that I can inspire others to build a career in
construction”.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
23
CORpORaTe SOCIal ReSpONSIBIlITY CONTINUED
OUR COMMUNITY
Gleeson Community Sports Foundation
Over the last seven years we have sponsored over 100 junior
sports teams through the Gleeson Community Sports Foundation.
By providing funding we are able to supply brand new kit for young
people participating in many different activities including football,
tennis, cricket, athletics, ice hockey and many more!
One example is Wath Stars JFC who are an FA charter standard
Junior Football Club. They were founded in 2010 to create a safe,
fun, inclusive environment for children in the Dearne Valley area to
play grassroots football. Currently the Club has over 120 children
ranging from 6 to 17 years old, with 9 teams playing league
football. In July 2019 the Club started up its first ever girls-only
squad, one of very few in the area. The teams play in the Sheffield
and District Junior Football league, which has over 100 registered
clubs and boasts that out of the 23 players in the England 2018
World Cup squad, 5 of those played as children in this league. An
amazing statistic and fantastic inspiration for the young children
who play in this league.
Engagement with local schools
We work closely with schools located near to our developments
and projects include:
• Design a bedroom competition – pupils design their dream
bedroom in a shoebox and the winning design is recreated in
one of our show homes on the site.
• Site visits – we invite pupils to visit a local development to see
the opportunities for a job in construction and house building.
• Health and safety talks – we visit local schools to discuss
health and safety and the dangers of playing near a building
site.
One example is Gracie-Mae Garner, aged 5, who designed this
amazing Dr. Who-themed bedroom at our Crawford Park
development in Blyth.
Many of the children in Wath Stars JFC live
in underprivileged areas and through
sponsorship and funding you help the Club
to give these children a safe place to play the
game we all love. Thank you!
Lisa Adams
Treasurer for Wath Stars JFC
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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FINaNCIal STaTemeNTS
OTheR INFORmaTION
YourWatch®
All of our buyers are automatically enrolled into YourWatch®,
Gleeson’s neighbourhood watch online alert platform. The scheme
has over 4,000 subscribers across our developments and is
designed to keep residents updated on how to keep their homes
and communities safe.
YourWatch® is successful due to residents being able to report a
problem anonymously. On receipt of the alerts we are able to send
information to other residents and share this with the police where
necessary. We continue to work with local residents, communities
and local authorities to create safe and attractive places to live
that transform the lives of residents and build community spirit.
The Bloomin’ Great Gleeson Garden Competition
This is the fourth year of the competition and our most popular
to date with over 150 entries. Homeowners were invited to send
in a photo of their garden for a panel of Gleeson staff to choose
the winners.
The standard of the entries we received was exceptional this year
so choosing a winner was extremely difficult. The competition
helps to increase community spirit whilst encouraging
homeowners to maintain and show-off their gardens.
OUR ENVIRONMENT
Award winning
In 2018 we were voted the most sustainable PLC in the UK at the
prestigious PLC Awards. The judges were impressed with our
sustainable approach to building low-cost homes and the way that
we work with our local communities, providing both homes and
employment to local people. They also valued our commitment to
paying the real Living Wage, being the only major UK housebuilder
accredited by the Living Wage Foundation.
Environmentally friendly materials
We use sustainable materials such as environmentally friendly
gravel on driveways wherever possible. Gravel driveways emit less
CO2, help to prevent flooding, deter burglars and car thieves and
are a more affordable alternative throughout their life when
compared to other surfaces. The amount of CO2 saved this year
from using gravel on the driveways of all our homes versus tarmac
would be in excess of 362 tonnes!
Greenhouse gas emissions
Our greenhouse gas emissions for the year ended 30 June 2019 are
calculated in accordance with the requirements of the Greenhouse
Gas Protocol – A Corporate Accounting and Reporting Standard.
Emissions have been calculated using the UK Government’s
CHG Conversion Factors for Company Reporting: 2019 and
2018 respectively.
Scope 1: Emissions from combustion of fuel
Scope 2: Electricity, heat, steam and
cooling purchased for own use
Total emissions
Emissions per £m revenue
Tonnes CO2e
2019
Tonnes CO2e
2018
3,358
2,910
397
3,755
15.03
264
3,174
16.13
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
25
NON-FINaNCIal RepORTINg
In this section we describe our approach to the environment, employees, social
matters, human rights and anti-bribery and corruption in accordance with the new
Non-Financial Reporting Regulations set out in sections 414CA and 414CB of the
Companies Act 2006.
Employees
We are committed to ensuring that all of our employees and other
stakeholders are treated fairly and equitably. This includes
providing our employees and subcontractors with a safe and
healthy working environment.
We have an organisational culture which promotes diversity,
inclusivity, personal development and respect. We want people to
be part of our organisation and have a shared understanding of the
Gleeson mission, vision and values.
Find out more about our:
• policy on diversity, recruitment, equality and how we engage
with our employees on page 45;
• approach to employee relations and appointment of a new
Workforce Representative on page 41;
• health and safety reporting and the investment that we are
making in our health and safety team on page 45;
• gender pay gap reporting as set out in the Remuneration
Committee Report on page 55 with the full report available at
www.mjgleesonplc.com; and
• commitment to employing local people, training and developing
our apprentices, raising awareness about mental health and
promoting women in construction on pages 22 to 23.
Anti-bribery and corruption
The Group is committed to the highest standards of ethics,
honesty and integrity. Our anti-bribery and corruption policy
outlines the expected standards of conduct that employees,
subcontractors, suppliers and any other third parties who engage
with our business are expected to follow.
This includes rules around giving and receiving gifts, hospitality
and entertainment; procedures for engaging new suppliers and
subcontractors; and procedures for monitoring and raising “red
flags” in relation to suspicious requests or invoices received by the
business that could be an indicator of criminal activity including
tax evasion.
Find out more about our:
• whistleblowing policy and monitoring of malpractice reporting
on page 51;
• anti-bribery and corruption policies on page 51; and
• reporting of registers of gifts and hospitality given or received
by Directors and employees of the Group on page 51.
Human rights and social matters
The Group is committed to upholding basic human rights across
our business and with our stakeholders. Our employee policies
cover all aspects of basic human rights including time off for leave,
dependents, parental leave allowances and flexible working
arrangements.
Our grievance and fair treatment at work policies ensure that our
employees, suppliers and subcontractors connected to our
business can speak up about any concerns without fear of
retribution.
We value the relationships that we have with our suppliers and
subcontractors. The Group strives to pay a fair price and to pay
them in line with the terms set.
Find out more about our:
• policy in regards to preventing modern slavery and human
trafficking which can be found on our website at www.
mjgleesonplc.com;
• payment terms and performance in relation to payment
practices which can be found at www.gov.uk;
• commitment to pay the real Living Wage or higher to our
employees on page 55 ; and
• commitment to provide freehold ownership, giving our buyers
the right to buy the land on which their home is built and not
under leasehold as set out on page 13.
Community and environment
We recognise that we have a responsibility to reduce the impact of
our operations on the environment within the scope of what we do
as a business. Our aim is to create more sustainable ways of
undertaking our operations to conserve energy, save money and
deliver efficiency.
We also invest in the communities, local areas and the supply
chain around our development sites. Wherever possible we employ
local people and use local suppliers and subcontractors. This
brings investment to the local community but also reduces the
environmental impact of travel to and from our sites.
Find out more about our:
• focus on using environmentally friendly construction materials
such as gravel on driveways on page 25;
• performance in relation to greenhouse gas emissions as the
scale of our operations increase as set out on page 25; and
investment in the communities, schools and areas in which we
operate on pages 24 to 25.
•
26
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Barnburgh View, Goldthorpe, South Yorkshire
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
27
FINaNCIal RevIeW
REVENUE
+27.0%
2019: £249.9m
2018: £196.7m
GROSS PROFIT
+14.9%
2019: £75.0m
2018: £65.3m
OPERATING PROFIT
EARNINGS PER SHARE
+11.1%
2019: £41.0m
2018: £36.9m
+9.7%
2019: 61.0 pence
2018: 55.6 pence
PROFIT BEFORE TAX
NET ASSETS PER SHARE
+11.4%
2019: £41.2m
2018: £37.0m
+8.4%
2019: 374 pence
2018: 345 pence
28
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
The Group delivered another year of
strong growth with operating profit in
Gleeson Homes up 14.9% and Group
profit before tax up 11.4%.
Stefan Allanson
Chief Financial Officer
Profitability
Group revenue increased this year by 27.0% to £249.9m
(2018: £196.7m). This was driven by revenue in Gleeson Homes
which increased by 28.4% to £197.0m (2018: £153.4m) as a
result of a 24.8% increase in the number of homes sold to 1,529
(2018: 1,225) and an increase in average selling price (“ASP”) to
£128,900 (2018: £125,200). Revenue in Gleeson Strategic Land
increased by £9.6m to £52.9m (2018: £43.3m) mainly due to the
mix of sites sold during the year.
Gross profit for the Group increased by 14.9% to £75.0m
(2018: £65.3m). The gross profit of Gleeson Homes increased by
18.4% to £59.3m (2018: £50.1m) despite gross profit margin
reducing, as expected, from 32.7% to 30.1% due to both additional
costs arising from faster build rates and higher labour and material
costs. The gross profit of Gleeson Strategic Land increased by 3.3%
to £15.7m (2018: £15.2m).
Administrative expenses increased by £5.6m (19.5%) as a result
of investment in overheads to support business growth and pay
increases. It also included full year running costs for the Gleeson
Homes’ offices in Northumberland and Scunthorpe, which opened
during the previous year. Additionally, the number of active sales
outlets increased to 69 from 65 at the end of the prior year.
Operating profit from continuing operations was £41.0m
(2018: £36.9m), an increase of 11.1% over the previous year.
Growth in operating profit was driven by strong trading results in
both Gleeson Homes and Gleeson Strategic Land. Operating profit
for Gleeson Homes increased by 14.9% to £30.1m (2018: £26.2m)
while operating profit for Gleeson Strategic Land increased by
3.2% to £13.0m (2018: £12.6m).
Finance income of £0.9m (2018: £0.4m) consisted primarily of the
unwinding of discounts on deferred receivables on land sales and
shared equity receivables. Interest earned on unwinding of
discounts was higher than the prior year as a result of carrying
more deferred receivables during the year. Finance expenses of
£0.7m (2018: £0.3m) consisted of interest payable on bank loans
and overdrafts, bank charges and interest and unwinding of
discounts relating to deferred payables on land purchases.
As a result, the Group delivered profit before tax of £41.2m
(2018: £37.0m), an increase of 11.4% on the prior year.
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Tax
A total tax charge of £7.7m (2018: £6.6m) has been recorded,
reflecting an effective rate of tax of 18.8% (2018: 17.8%).
KEY PERFORMANCE INDICATORS
Divisional operating profit1 (£m)
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 £13.0m (2018: £21.2m) of gross tax losses, of which £4.1m
(2018: £12.3m) are recognised in calculating the deferred tax asset.
2019
2018
2017
2016
2015
13.0
12.6
12.0
30.1
26.2
22.8
10.2
8.1
19.5
17.4
The deferred tax asset recorded within the consolidated statement
of financial position totals £2.7m (2018: £3.7m).
Discontinued operations
Discontinued operations incurred a loss after tax of £0.3m during
the year (2018: £0.3m). This related to the costs of Gleeson
Construction Services Limited, whose only 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.
2014
4.8
9.4
Group profit before tax (£m)
2019
2018
2017
2016
2015
2014
17.3
12.2
Profit for the year
The profit after tax for the year was £33.3m (2018: £30.2m).
Total dividend (pence)
■ Gleeson Homes
■ Gleeson Strategic Land
41.2
37.0
33.0
28.2
24.0
34.5
32.0
30.3
41.3
34.1
2019
2018
2017
2016
2015
2014
14.5
10.0
6.0
Cash balance (£m)
2019
2018
2017
2016
2015
2014
23.2
15.8
13.7
Return on capital employed2 (%)
2019
2018
2017
2016
2015
2014
25.9
26.6
25.4
23.2
21.1
13.7
Normalised earnings per share (pence)
2019
2018
2017
2016
2015
2014
34.2
17.2
61.0
55.6
48.5
42.6
1 Gleeson Homes operating profit includes profit on land sales of £nil in 2019;
£nil in 2018; £1.0m in 2017; £nil in 2016; £2.7m in 2015; and £0.3m in 2014.
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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
29
Earnings per share
Reported basic earnings per share from continuing and
discontinued operations increased by 9.7% to 61.0 pence (2018:
55.6 pence).
Return on capital employed
Return on capital employed decreased by 70 basis points to 25.9%
(2018: 26.6%) reflecting growth and increase in capital employed,
which increased from £143.1m to £170.9m. This increase was
driven by increased net receivables in Gleeson Strategic Land and
increased investment in build WIP in Gleeson Homes.
Final dividend
Reflecting the financial strength of the Company as well as our
confidence in the short-term outlook, the Board has proposed a
final dividend of 23.0 pence per share (2018: 23.0 pence per share).
Combined with the interim dividend, the dividend for the full year
totals 34.5 pence representing an increase of 7.8% on the prior
year (2018: 32.0 pence per share).
The Board aims to maintain ordinary dividend cover between 1.75
times and 2.75 times.
Statement of financial position
During the year to 30 June 2019, shareholders’ funds increased by
8.4% to £203.9m (2018: £188.1m). Net assets per share increased
to 374 pence, an increase of 8.4% year on year (2018: 345 pence).
In the year, non-current assets decreased by 27.6% to £22.0m
(2018: £30.4m). The main reason for the change is the decrease
in deferred receivables of £7.2m in addition to a £0.6m reduction
in shared equity receivables and a decrease in deferred tax assets
of £1.0m.
Current assets increased by 22.0% to £259.2m (2018: £212.4m),
with inventories increasing by £22.6m to £183.1m and trade and
other receivables increasing by £35.2m to £45.8m, offset by cash
balances decreasing by £11.0m to £30.3m.
Total liabilities increased by 41.3% to £77.3m (2018: £54.7m).
This was mainly due to trade and other payables of £73.8m (2018:
£51.6m) being £22.2m higher due to an increase in deferred land
payables in Gleeson Strategic Land.
FINaNCIal RevIeW CONTINUED
Cash flow
The Group generated £7.8m (2018: £21.6m) of cash in the year before
the payment of dividends of £18.8m (2018: £14.4m), resulting in a net
cash balance at 30 June 2019 of £30.3m (2018: £41.3m).
Operating cash flows before working capital movements generated
£42.7m (2018: £38.6m). Investment in working capital of £27.9m
(2018: £11.4m) resulted in cash generated from operating activities of
£14.8m (2018: £27.2m).
Tax and interest payments amounted to £6.2m (2018: £5.3m).
Cash outflows from investing activities totalled £0.8m
(2018: £0.3m outflow). Net cash outflows from financing activities
totalled £18.8m (2018: £14.4m), including £18.8m (2018: £14.4m) on
dividend payments.
Treasury risk management
The Group’s cash balances are centrally pooled and invested,
ensuring the best available returns are achieved whilst retaining
sufficient liquidity for the Group’s operations. The Group deposits
funds only with financial institutions which have a minimum credit
rating of A. As the Group operates wholly within the UK, there is no
requirement for currency risk management.
Bank facilities
During the year, the Group exercised the accordion option on its
£20m bank borrowing facility with Lloyds Bank plc to increase the
facility to £40m and extended it to 31 August 2021. The facility
provides the Group with additional flexibility and was undrawn at the
balance sheet date.
Subsequent to the year end, the Group has agreed heads of terms
with Lloyds Bank plc to increase the facility to £70m for five years to
September 2024.
Pension
The Group contributes to a defined contribution pension scheme.
A charge of £1.0m (2018: £0.7m) 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 2019
30
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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OTheR INFORmaTION
Woodhorn Park, Ashington, Northumberland
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
31
RISK maNagemeNT
The Group operates a system of internal control and
risk management procedures in order to identify,
monitor and control the Group’s material risks. These
risks include but are not limited to the following:
RISK
DeSCRIpTION OF RISK
mITIgaTION
Economic environment
The impact of economic fragility and
uncertainty in the market.
The risk has increased with
uncertainty around the terms of UK
exit from the EU as the deadline for
withdrawal approaches.
Mortgage availability
The limited availability of mortgages
for house buyers.
The risk has not changed during
the year.
Land
An inability to source sufficient land
at an acceptable cost to meet the
Group’s business needs.
The risk has not changed during
the year.
Planning policy and regulations
The potentially damaging
uncertainties in the planning regime
may affect the Group’s ability to
secure planning consents on a
timely basis.
The risk has not changed during
the year.
People
An inability to attract, develop or
retain good people.
The development of management
capabilities as the Gleeson Homes
business continues to expand.
A lack of senior level succession
plans.
The risk has not changed during
the year.
Build costs
An inability to secure materials and
skilled labour on a timely basis at
suitable prices.
The risk has increased with raw
material cost inflation and rising
labour costs, together with shortages
of certain subcontractors becoming
more of a factor for UK
housebuilders.
Any uncertainty in the wider economy,
including interest rate rises, could affect
buyer confidence and the demand for new
houses. This could have a negative impact on
revenue, profits, cash generation and the
carrying value of the Group’s assets.
• Sites are selected to meet the needs of the local
community.
• Prices and incentives are regularly reviewed.
• Lead indicators of the housing market, such as visitors to
sites and reservation rates, are closely monitored.
• A cautious approach to funding is maintained.
• Brexit preparations undertaken include discussions with
our supply chain to mimimise disruption.
The availability of mortgage finance,
particularly the deposit requirements for
first-time buyers, is crucial to customer
demand. Restrictions on mortgages granted
could reduce demand for new homes and
strategic land sites and negatively impact the
Group’s revenue and profits.
• Gleeson Homes provides a range of customer assistance
packages.
• We continually innovate to find additional ways to assist
customers to buy a home.
• We work with key lenders to ensure products are
appropriate and available.
• Help to Buy continues to provide support to new buyers.
Gleeson Homes needs to acquire consented
land at sensible prices and in appropriate
areas in the North, Midlands and East of
England in order to construct and sell homes
to deliver profit. Gleeson Strategic Land
needs to acquire interests in land in the
South of England so that it can promote the
land through the planning system and
subsequently sell it in order to deliver profit.
• 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.
• The Group has further strengthened its land buying team
during the year.
Increased complexity in some aspects of the
planning process may slow down, or increase
the cost of, the delivery of consented land for
development or sale and so negatively impact
the Group’s revenue and profits.
• We have a very high level of in-house expertise devoted
to monitoring and complying with planning regulations
and to achieving implementable planning consents.
• We consult with central government, parliament and
local authorities, both directly and via industry bodies,
in order to understand proposed changes to regulations
and to highlight potential issues.
• The National Planning Policy Framework supports our
business model and should assist the planning
application process.
The loss of key staff or the failure to attract,
develop and retain people with the right skills
may have a detrimental impact on the
business.
• We have an established leadership development and
succession planning programme covering senior and
mid-level management.
• We have programmes that appropriately reward the
The lack of development of Gleeson Homes’
management could restrict profitable and
sustainable growth.
The lack of leadership arising from the
sudden loss of senior management.
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.
achievement of performance targets.
• The Group encourages employee share ownership.
• Our apprenticeship scheme enables us to identify and
secure the loyalty of talented individuals at an early age.
• We perform regular performance and development
reviews.
• We monitor staff turnover and benchmark remuneration
against competitors.
• An interim CEO was appointed on the same day the
incumbent CEO left the business and there was no
disruption to the business.
• 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
employed to optimise the sourcing of scarce
subcontractor resource.
32
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
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FINaNCIal STaTemeNTS
OTheR INFORmaTION
RISK
DeSCRIpTION OF RISK
mITIgaTION
Customer service
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.
The risk is new this year.
Adverse publicity, damage to our reputation
or a perception of poor build quality could
lead to reduced levels of confidence from our
buyers or demand from potential customers.
Rectification of defects could lead to higher
costs.
Health and safety
A failure to prevent unsafe practices
within our construction activities,
causing injury or death.
The risk has not changed during
the year.
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 Group has strengthened its Customer Services
function and introduced a new portal “My Gleeson” for
customers.
• Senior management closely monitor Customer Service
performance and responses.
• We use reputable suppliers and subcontractors and
there is close monitoring of onsite performance and
build quality.
• Our completion process requires an extensive detailed
inspection of a property prior to handover.
• Our documented policies and procedures are regularly
reviewed and modified in order to ensure continuous
improvement.
• Dedicated health and safety personnel ensure
implementation and adherence to these policies and
procedures.
• Performance is reviewed both by local management and
the Board.
Latent defects/uninsured loss
Financial losses may result from
latent defects that could arise on
completed projects during the
liability period.
The risk has not changed during
the year.
Corporate liquidity
The Group needs appropriate
banking facilities for its short-term
liquidity and long-term funding
needs.
The risk has not changed during
the year.
Financial irregularity/
non-compliance
The Group could suffer loss from
significant fraud, the
misrepresentation of financial
results or non-compliance with laws
and regulations. This includes the
failure to operate appropriate
controls to ensure compliance with
relevant tax legislation.
The risk has not changed during
the year.
Credit risk
The Group could suffer loss as a
result of default from customers.
The risk has not changed during
the year.
Information technology
Failure of information management
systems, loss of data or cyber attack.
The risk has not changed during
the year.
The Group may be exposed to latent defects
which occur during the liability period on
completed construction contracts that have
not been transferred to the purchaser of the
relevant construction business. Although
subcontractors will normally resolve such
defects, the Group will become liable if the
subcontractor is no longer trading, potentially
resulting in additional cost.
• We have experienced personnel dedicated to dealing
with such claims.
• Insurance policies are in place to minimise Group
liabilities, wherever possible.
• 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.
The Group may be unable to meet short-term
liabilities as a result of failure to manage
liquidity.
• The Group maintains strong financial disciplines.
• Cash generation is controlled by robust budgeting,
forecasting and cash management disciplines.
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 Executive Directors maintain regular contact with
investors and lenders to ensure adequate bank facilities
are in place with appropriate covenants and headroom.
• The Group has borrowing facilities in place until August
2021 and is currently in the process of increasing the
facility to £70m for 5 years to September 2024.
Negative publicity could have an adverse
effect on the Group’s reputation and the
Group could experience lower confidence
levels from customers and suppliers. Failure
to comply with legislation could result in
penalties and interest being levied on the
Group.
• The Group has financial and management controls
designed to segregate duties and minimise any
opportunities for fraud.
• Financial reporting processes are the subject of rigorous
and timely management reviews.
• Staff training is conducted on compliance with laws and
regulations including relevant tax legislation.
The Group has exposure to receivables on
deferred payment terms, particularly on
certain land sales.
• 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.
The Group could suffer operational
inefficiencies or penalties as a result of a loss
of data or system failure or as a result of
cyber attack.
• 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.
Strategic Report approval statement
The Strategic Report, contained in pages 1 to 33, has been approved by the Board of Directors and is signed on its behalf by:
James Thomson
Interim Chief executive Officer
13 September 2019
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
33
GOVERNANCE
Board of Directors
Chairman’s Introduction
governance Report
Directors’ Report
audit Committee Report
Remuneration Committee Report
Remuneration policy Report
annual Report on Remuneration
36
38
39
44
48
54
56
64
34
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
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OTheR INFORmaTION
Lowfield Park, Bolton upon Dearne, South Yorkshire
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
35
BOaRD OF DIReCTORS
THE BOARD
The Board consists of the Chairman, two Executive
Directors and three Non-Executive Directors.
Dermot Gleeson
ma (Cantab)
Chairman
James Thomson
ma (Oxon), aCa
Interim Chief executive Officer
Stefan Allanson
aCma, FCT
Chief Financial Officer and
Company Secretary
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. He is
Chairman of the Nomination Committee.
Appointed to the Board on 10 June 2019 as
interim Chief Executive Officer. James was
previously Chief Executive of Keepmoat
Homes, where he remains on the board as a
Non-Executive Director. Prior to Keepmoat,
James was Group Finance Director and
Chief Operating Officer of DTZ (now part of
Cushman & Wakefield). He is a Chartered
Accountant, qualifying with
PricewaterhouseCoopers and spent
10 years in investment banking with HSBC
and Deutsche Bank. James is a local
authority councillor for the City of London
and Deputy 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. He is Chairman of the
Disclosure Committee.
COMMITTEE KEY
Audit Committee
Remuneration Committee
Nomination Committee
Disclosure Committee
Committee Chairman
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Colin Dearlove
Ba, FCma, Cgma
Non-executive Director
Ross Ancell
FCa (aNZ)
Non-executive Director
Christopher Mills
Non-executive Director
Appointed to the Board in December 2007.
Colin held a number of senior finance
positions at Barratt Developments plc with
the most recent being Group Finance
Director from 1992 until his retirement in
2006. He is the Senior Independent
Director, Chairman of the Audit Committee
and a member of the Remuneration and
Nomination Committees.
Appointed to the Board in October 2006.
Ross is Chairman of Churngold Construction
Holdings Limited and Independent
Non-Executive Director of Galaxy
Entertainment Group Limited (listed in
Hong Kong). Ross is a Fellow of Chartered
Accountants Australia and New Zealand.
He is Chairman of the Remuneration
Committee and a member of the Audit and
Nomination Committees.
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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
37
I am pleased to introduce this report,
which outlines the Company’s approach
to corporate governance and sets out
how the Board is taking steps to meet the
requirements of the new Code.
Dermot Gleeson
Chairman
ChaIRmaN’S INTRODUCTION
As a premium listed company on the London Stock Exchange,
the Group was subject to the 2016 edition of the UK Corporate
Governance Code (“the Code”) for the year to 30 June 2019.
The Board believes that compliance with the Code assists it to
provide the Group with effective leadership and to embed good
governance into the values, ethics and culture of the business.
The new Code of Conduct that was published in July 2018 applies
to the Company for the year to 30 June 2020 and the Board is
taking steps to meet the requirements of the updated Code.
These include making changes to the composition of the Board
and we are currently engaged in a search process for two new
Non-Executive Directors. Our intention is to make these
appointments shortly.
Following the departure of Jolyon Harrison, the Board is also
currently engaged in a search process for a permanent Chief
Executive Officer.
As Chairman, I am responsible for the leadership of the Board and
for ensuring that it fulfils its responsibilities to all of the Group’s
stakeholders. The Directors believe that the Board’s discussions
should always be conducted courteously but should also be,
when appropriate, robust and challenging. The Board also seeks
to maintain a constructive dialogue with external stakeholders
and to take account of shareholder feedback.
This report contains further details of the Group’s governance
arrangements, together with the narrative reporting variously
required by the Code, the Listing Rules and the Disclosure and
Transparency Rules.
Dermot Gleeson
Chairman
13 September 2019
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gOveRNaNCe RepORT
Governance statement
During the period under review, the Company, as a premium listed
company, was subject to the 2016 edition of the UK Corporate
Governance Code (“the Code”) issued by the Financial Reporting
Council (“FRC").
The Code recognises that not all of its provisions are necessarily
relevant to smaller listed companies and the Code states that
departures from its provisions should not be automatically
treated as breaches of the Code. The Directors believe that the
Code is correctly applied as and where relevant to the Company
and are satisfied that in areas of departure from the Code the
departure is for good reason.
Further explanations of how the main principles and the
supporting principles have been applied are set out on page 42.
The new Code of Conduct published in July 2018 (“the new Code”)
applies to the Company from 1 July 2019 and the Company will
disclose its compliance with the new Code in its Annual Report for
the financial year ending 30 June 2020.
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 36 and 37.
Following the departure of the former Chief Executive Officer,
Jolyon Harrison, a new interim Chief Executive Office, James
Thomson, was appointed to the Board in June 2019. All of the
other Directors served throughout the year to 30 June 2019.
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.
All of the Directors have access to the advice and services
of the Company Secretary and may, in furtherance of their
duties, take independent advice at the Company’s expense.
Training is arranged as required 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.
Board effectiveness
The roles of the Chairman, Dermot Gleeson, and the Chief
Executive Officer, James Thomson (appointed on an interim basis
on 10 June 2019) and previously Jolyon Harrison (departed on
10 June 2019), are clearly defined and they act in accordance with
the main and supporting principles 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
to discuss current matters and has visited Group operations
outside the Board meeting calendar to meet divisional directors
and managers.
Board independence
During the year, Ross Ancell and Colin Dearlove were the Board’s
independent Non-Executive Directors and fulfilled the
requirement that a “smaller company”, as defined by the Code,
should have two such directors. Colin Dearlove is the Senior
Independent Non-Executive Director.
Ross Ancell will have completed 13 years of service and Colin
Dearlove 12 years of service on the Board at the date of the 2019
AGM on 5 December 2019. The Board greatly values both Ross
Ancell’s and Colin Dearlove’s expertise and understanding of the
Group’s operations and strategy. The Executive Board remains
satisfied that both Ross Ancell and Colin Dearlove are independent
of character and judgement, and their reappointment is in the
interests of the Group and its shareholders.
The Board has also initiated a search process to find two new
Non-Executive Directors. The intention is to make these new
appointments to the Board shortly.
Neither Dermot Gleeson, Chairman, who has previously been
Executive Chairman and, prior to that, held the post of Chairman
and Chief Executive, nor Christopher Mills, who represents a
major shareholder, Harwood Capital LLP, are considered to be
“independent” within the definition of that term contained in
the Code.
Dermot Gleeson has been connected with the Company for a long
period and the Board greatly values his experience of the Group.
The Board remains fully satisfied that he continues to perform
effectively as a Non-Executive Director and as Chairman.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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gOveRNaNCe RepORT CONTINUED
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. We are
unreservedly opposed to discrimination on the grounds of race,
gender, sexual orientation, disability, age, religion or beliefs.
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.
For vacant Board positions, the Nomination Committee agrees
a role description and a detailed specification of the kind of
person for whom it is looking. The latter sets out the objective
criteria against which the suitability of candidates will be
assessed, including knowledge, experience, measurable skills
and personal qualities. Care is taken to ensure that the criteria
effectively prevent all forms of unfair discrimination influencing
the selection process.
Vacancies are extensively advertised. In addition, the Board
normally appoints an executive search firm to help it to reach the
widest possible pool of eligible candidates and to identify the
individuals best qualified for the role.
The Board selects at least three of its Directors to act as a panel
for the purpose of overseeing the selection process and it is
committed to ensuring that everyone involved in the selection of
candidates is fully aware of the UK’s equality legislation and the
Board’s diversity policy.
Key actions of the Board
The Board is responsible to shareholders for the success of the
Group. Its role is to set the strategic and financial framework within
which the Group operates, to monitor and review the performance
of each of the divisions and to ensure that the risks faced by the
Group are effectively managed. To facilitate this, the Board and its
Committees are provided with relevant and timely information in
advance of all meetings and when otherwise required.
Due to the size and structure of the Group, all significant
decisions are taken at Board level. There is a formal schedule of
matters that are reserved for the Board or its Committees, which
includes the approval of:
• strategy and financial policy;
• banking arrangements and any changes to them;
•
interim and annual financial statements;
• risk management and internal control policy;
• major capital expenditure;
• acquisition of land;
• acquisitions and disposals;
• Board structure and composition;
• terms of reference of the Board’s sub-committees;
• entering into or amending pension arrangements;
• approval of contractual arrangements which fall outside
authority delegated to Executive Directors;
• dividend policy; and
• pledging security over assets and providing Parent Company
guarantees.
All these matters were reviewed by the Board at various times
during the year. In addition, the Board receives updates on
governance, regulatory and legal matters at various points in the
year to assist the Board in maintaining compliance with the
legislative requirements and best practice.
Board and Committee meetings
During the year, the Board met on six occasions. Board packs, which include a formal agenda, are circulated in advance of such
meetings. Attendance by individual Directors at scheduled Board meetings and by members at scheduled Committee meetings was as
set out below:
Attendance by individual Directors at scheduled Board and Committee meetings
Number of scheduled meetings^
Attendance
Dermot Gleeson
Ross Ancell
Colin Dearlove
Christopher Mills
Jolyon Harrison (departed 10 June 2019)
James Thomson (appointed 10 June 2019)
Stefan Allanson
Board
Audit
Committee
Disclosure
Committee
Remuneration
Committee
Nomination
Committee
6
6
6
6
5
5
1
6
4
n
4
4
n
4v
–
4v
2
n
n
n
n
2
–
2
2
n
2
2
n
1v
1v
2v
1
1
1
1
n
–
1v
1v
Includes the scheduled Board and Committee meetings that were held on 2 July 2019 in respect of the year ended 30 June 2019
^
n Not a member of this Committee
v Whilst not a member of this Committee, the Director was in attendance at meetings
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The Board is of the view that there is an adequate ongoing process
for identifying, evaluating and managing the Group’s significant
risks, which satisfies the internal control guidance for Directors
detailed in provision C.2.1 of the Code. This process takes the
form of a formal risk management policy supported by financial
and management controls that are operated Group-wide and
which are subject to both internal review by the Chief Financial
Officer and internal auditor and external review as part of the
statutory audit carried out by the auditors.
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. At the AGM, the
Chairman, together with the Chairmen of the Audit, Remuneration,
Disclosure and Nomination Committees, will be available to
answer any relevant questions.
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 financial statements, and the interim report.
Employee relations
In line with the requirements of the new Code, Colin Dearlove was
appointed as the Company’s Workforce Representative during the
year. A programme and timetable for this role is currently being
developed. Towards the end of the year, the Group launched its
new employee engagement survey “Your Voice” and Colin
Dearlove will receive the results of this survey, meet with the
workforce and understand the outputs and actions being taken.
It is also intended that he will receive any reports raised via the
whistleblowing helpline where such reports are raised by
employees. Further details of the actions undertaken by the
Workforce Representative will be reported in the next Annual
Report for the year to 30 June 2020.
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 key issues, including health
and safety, operational performance, risk management and
corporate strategy. Additional Board meetings may be convened
from time to time in response to specific circumstances.
During the course of the year, the Non-Executive Directors met
without the Executive Directors present, both with and without
the Chairman being present.
The minutes of all meetings of the Board and of each of its
Committees are recorded by the Company Secretary. As well as
recording the decisions taken, the minutes reflect any queries
raised by the Directors and record any unresolved concerns.
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, 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 at
its meeting in September 2019. It was concluded that the Board,
its Committees and the Chairman continued to perform
effectively.
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 48 to 52.
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 that 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.
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Compliance statement
The Company has complied with the main principles of the 2016
edition of the UK Corporate Governance Code applicable to all
premium listed companies. The following provisions are those
where the Company is not strictly in compliance with the Code
but where the Directors believe that it remains appropriate and
justified, and which do not compromise the standards of good
governance applied by the Board:
A.3.1, B.1.1
As covered under “Board independence”, the Chairman,
Dermot Gleeson, has previously been Executive Chairman and,
prior to that, held the posts of Chairman and Chief Executive.
The Board has considered the guidance set out in the Code
and believes that it is in the Company’s best interests that
Dermot Gleeson be retained as Chairman.
B.1.1
As covered under “Board independence”, Ross Ancell and
Colin Dearlove have both served on the Board for more than nine
years from the date of their first election. The Board is satisfied
that they remain independent in character and judgement and
there were no relationships or circumstances which otherwise
affect, or could appear to affect, their independence.
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.
B.6.3
As covered under “Board evaluation”, the performance of the
Chairman is appraised by both the Non-Executive and Executive
Directors. As a smaller listed company, it is felt that this is the
most appropriate approach.
Audit Committee
The Audit Committee is a Board sub-committee consisting entirely
of Non-Executive Directors. The members of the Committee are
Colin Dearlove (Chairman) and Ross Ancell. The Chairman invites
the Chief Executive Officer, the Chief Financial Officer and other
senior management to attend, along with the Group’s internal and
external auditors, when required.
The Audit Committee met on a number of occasions during the
year to 30 June 2019, including four scheduled meetings, with
both members being in attendance for all meetings.
A full report from the Audit Committee is presented separately on
pages 48 to 52 and forms part of the Governance Report.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
Disclosure Committee
The Disclosure Committee was set up by the Board in
September 2016 to comply with the requirements of the Market
Abuse Regulation (“MAR"), which came into effect on 3 July 2016.
The members of the Disclosure Committee are Stefan Allanson
(appointed Chairman 10 June 2019, previously Jolyon Harrison
who departed on 10 June 2019) and James Thomson. Other
Directors, executives and external advisers may attend by
invitation as appropriate. The Disclosure Committee’s formal
terms of reference, which are reviewed annually, are available on
the Company’s website and require it to:
• draw up and maintain procedures, systems and controls for 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;
implement, monitor compliance and review the adequacy of
the Company’s disclosure policy, including where appropriate
arranging for the dissemination of guidelines and training; and
•
• 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.
The Disclosure Committee met on two occasions during the year
to 30 June 2019. The main activities undertaken by the Disclosure
Committee during the year included:
• reviewing the regulatory announcements of the Group to
ensure that these complied with the Company’s disclosure
policy;
• reviewing the list of insiders and any significant changes
together with agreeing dates for closed trading periods;
• confirming that there have been no instances of actual or
potential inside information not being disclosed or being
disclosed late to the market;
• reviewing the Company’s disclosure and media policy;
• reviewing disclosure items, the advice received and
conclusions around any items of non-disclosure; and
• reviewing the terms of reference of the Disclosure Committee
such that these remain appropriate.
Remuneration Committee
The Remuneration Committee is responsible for setting the
remuneration of the Chairman and the Executive Directors.
The members of the Remuneration Committee are Ross Ancell
(Chairman) and Colin Dearlove.
The Remuneration Committee met on a number of occasions
during the year to 30 June 2019, including two scheduled
meetings, to consider and approve the remuneration of the
Chairman and the Executive Directors.
Further details of the remuneration policy and the package for
each Director serving during the year to 30 June 2019 are set out in
the Remuneration Report on pages 54 to 69.
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Nomination Committee
The Nomination Committee is a Board sub-committee consisting
entirely of Non-Executive Directors. The members of the
Nomination Committee are Dermot Gleeson (Chairman), Ross
Ancell and Colin Dearlove.
Viability statement
In accordance with provision C2.2 of the 2016 edition of the UK
Corporate Governance Code, the Directors have assessed the
viability of the Company and the Group over a longer period than
the 12 months required by the “going concern” principle.
The principal responsibility of the Nomination Committee is to
consider succession planning and appointments to the Board and
to senior management, so as to maintain the appropriate balance
of skills, knowledge and experience within the Company. The
Nomination Committee’s formal terms of reference, which are
reviewed annually, are available on the Company’s website and
require it to:
• regularly review the structure, size and composition of the
Board and to make recommendations regarding any
adjustments that are considered necessary;
identify and nominate for consideration candidates for any
Board vacancies that may arise;
•
• put in place plans for succession, in particular for the Chairman
and Chief Executive Officer; and
• make recommendations regarding the continued service (or
not) of the Executive and Non-Executive Directors.
All Board appointments and reappointments are considered by
the Nomination Committee. The Nomination Committee met on a
number of occasions during the year to 30 June 2019 including on
one scheduled occasion. The main activities undertaken by the
Nomination Committee during the year included:
• reviewing the requirements of the new Code of Conduct
published in July 2018 including the requirements on the
structure, size and composition of the Board;
• overseeing the appointment of a search agent and agreeing
their terms of business for the recruitment of two independent
Non-Executive Directors and a permanent Chief Executive
Officer, outlining the skills and experience required;
• reviewing leadership development and succession planning in
respect of the Executive Directors and key management in the
business; and
• reviewing the terms of reference of the Nomination Committee
such that these remain appropriate.
Two separate independent search agents have been appointed for
the recruitment of the new members of the Board. Neither of these
search agents has any connection to the Company or Group.
The principle of boardroom diversity is strongly supported by the
Board and the Group’s policy in respect of Board diversity is set
out on page 40. For new appointments, the Nomination
Committee agrees a description of the role and a specification
based on skills, knowledge and experience and criteria which
prevent all forms of discrimination.
The Board does not set specific targets for boardroom diversity,
believing that appointments should be made on the basis of
merit. In its search for new members of the Board, the Nomination
Committee pays due regard to the impact of these appointments
on Board diversity.
The Directors conducted their assessment over a period of three
years to 30 June 2022, which is in line with the Group’s financial
budget review period and the operational period of a number of
the Group’s housing developments. This has enabled a
meaningful assessment of viability to be undertaken, utilising
detailed financial budgets which incorporate individual site cash
flow forecasts.
In making their assessment, the Directors have considered the
business risks facing the Group and how the Group mitigates
such risks, which are summarised on pages 32 and 33 of the
Strategic Report.
The majority of risks in Gleeson Homes are operational in nature,
and hence these risks are already taken into account in the
individual site cash flow forecasts. The Directors have considered
sensitivities to the individual site cash flow forecasts prepared
based on realistically possible changes to principal assumptions
such as build and sales rates, prices, build costs and gross
margins. Additionally the Directors have considered further
measures which may need to be taken to mitigate the impact of
macroeconomic and industry-wide risks, including the ability of
the Group to curtail investment expenditure in new land
purchases and defer new site starts.
For Gleeson Strategic Land, the Directors have considered the
impact of delays to the completion of land sales and reduction in
land selling prices. The business model is such that it has the
flexibility to reduce expenditure on progressing new and existing
sites and to continue to realise cash from consented land albeit at
lower levels of profitability.
Furthermore, a core principle of the Group is to maintain a
cautious approach to debt funding, reflecting the inherent cyclical
nature of the UK property market. After the year end, the Group
has agreed heads of terms to increase its committed bank facility
from £40m to £70m for 5 years to September 2024. This will give
the Group additional flexibility in managing its working capital for
growth and supports its viability assessment for the three year
period.
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 period of their assessment.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
43
DIReCTORS’ RepORT
The Directors have the pleasure of presenting the
Annual Report and the audited financial statements
for the year ended 30 June 2019.
Strategic Report
We present a review of the business during the year to 30 June
2019 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 33.
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 the requirements of the
governance statement can be found in the Governance Report on
pages 38 to 43.
Results and dividends
The results of the Group are set out in the consolidated income
statement on page 78. The subsidiary companies affecting the
profit or net assets of the Group in the year are listed in note 13 to
the financial statements.
An interim dividend of 11.5 pence per share was paid to
shareholders on 5 April 2019 (2018: 9.0 pence). The Board
proposes to pay, subject to shareholder approval at the 2019
AGM, a final dividend of 23.0 pence per share (2018: 23.0 pence)
in respect of the 2019 financial year on 13 December 2019 to
shareholders on the register at the close of business on
15 November 2019. On this basis, the total dividend for the year
will be 34.5 pence per share (2018: 32.0 pence).
Business review
The review of the development and performance of the business
of the Group during the year and the future outlook of the Group is
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 29. The Group’s policy in respect of financial
instruments is set out within the accounting policies on pages 83
to 86 and details of credit risk, capital risk management, liquidity
risk and interest rate risk are given in note 16 to the financial
statements.
Going concern
The Group’s business activities, together with the factors likely to
affect its future development, performance and position, are set
out in the Strategic Report on pages 1 to 33. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities are described in the Financial Review on pages 28 to 30.
The Group meets its day-to-day working capital requirements
through its own cash resources and a bank borrowing facility,
which was entered into in March 2016 and extended to August
2021 during the year. At 30 June 2019, the Group had a cash
balance of £30.3m (2018: £41.3m) and the bank borrowing facility
was undrawn (2018: undrawn).
As part of their regular going concern review the Directors
specifically address all the risk areas that they consider material
to the assessment of liquidity and going concern.
This report is also discussed with the external auditors. Based
on this analysis and an assessment of potential cash risks,
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and for at least 12 months from the date of the
financial statements. Accordingly, the Directors continue to adopt
the going concern basis of accounting in preparing the financial
statements.
Political and charitable donations
The Company made no political donations in the year or in the
previous year. Charitable donations during the year totalled
£2,000 (2018: £2,000).
Directors and Directors’ interests
The Directors of the Company and their biographical details are
shown on pages 36 and 37. Jolyon Harrison left the business on
10 June 2019 and James Thomson was appointed as the interim
Chief Executive Officer on the same date. A search process for
a permanent Chief Executive Officer is currently ongoing.
Details of any related party transactions with Directors of the
Company are shown in note 27 to the financial statements.
The beneficial and non-beneficial interests of the Directors
and their connected persons in the shares of the Company at
30 June 2019 and as at the date of this report are disclosed in
the Remuneration Report on page 66. Details of the interests of
the Executive Directors in share options and awards of shares can
be found on page 66 within the same report.
Appointment and replacement 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 of
the Company to be held on 5 December 2019. Of the Directors
standing for re-election, Stefan Allanson and James Thomson hold
service contracts that may be terminated by the Group with a
notice period of one year and six months respectively.
Directors’ 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.
44
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
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OTheR INFORmaTION
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.
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.
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. 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.
Every effort is made by the Group to retain and support employees
who become disabled whilst in the employment of the Group.
The Company has issued share capital of 54,587,753 ordinary
shares, with a nominal value of £1.1m. Further details are given in
note 24 to the financial statements.
At 30 June 2019 the Group employed the following number of
people (excluding Non-Executive Directors):
Substantial shareholdings
At 31 August 2019, the shareholdings noted below, representing
3% or more of the issued share capital, had been notified to the
Company.
Executive team
Senior management
Other employees
Name of Shareholder
Number
of shares
Proportion
of total
Total
Female
Male
Number
% Number
%
0
3
164
167
0%
13%
31%
30%
2
20
363
385
100%
87%
69%
70%
Total
Number
2
23
527
552
Funds managed by Harwood Capital LLP 6,109,640
4,433,247
Schroder Investment Management
3,638,055
Sanford DeLand Asset Management
2,712,917
Royal London Asset Management
2,484,428
Standard Life Aberdeen
2,358,205
Mrs J C Cooper & spouse*
1,896,193
Mr Jolyon Harrison
1,775,329
Polar Capital (London)
1,687,309
JP Morgan Chase & Co
11.19%
8.12%
6.66%
4.97%
4.55%
4.32%
3.47%
3.25%
3.09%
Employee involvement
The Group regularly provides its employees with information on
matters of concern to them. We consult with our employees in
order to ensure that their views can be taken into account when
making decisions. In July 2019 we issued a company-wide
employee engagement survey and will use the results to help
shape business decisions going forward. We use our internal
website “Gleegle” to disseminate information and engage with
our employees.
* of which 119,500 shares are held in discretionary trusts of which Mrs J C Cooper is
a Trustee.
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. Full consideration is given to the diverse
needs of our employees and potential recruits and we are fully
compliant with all current legislation.
The Group is committed to upholding basic human rights within
its business. The Group generates all its revenue from operations
within the United Kingdom and its supply chain is sourced from
within the United Kingdom. Our supplier acceptance processes
ensure we comply with national regulations and legislation. Our
culture is aimed at ensuring that employees can grow to their full
potential. We seek to improve employee retention by providing
benefits that employees value including a Group stakeholder
pension (including life assurance arrangements), private medical
insurance, income replacement (PHI) arrangements and childcare
vouchers. Employee share ownership continues to be encouraged
through participation in the Group Share Purchase Plan.
Health and safety
The health and safety of our employees and subcontractors is
paramount. There were 4 reportable injuries in the year (2018: 7)
and 2 (2018: nil) dangerous occurrences under the Reporting of
Injuries, Diseases and Dangerous Occurrences Regulations
(“RIDDOR”).
Towards the end of 2018, a new Head of Health and Safety was
appointed. Three new Regional Health and Safety Advisors have
joined the business in early 2019 to ensure health and safety
support is in place for all of our area offices. These appointments
have been made to ensure the health and safety challenges faced
during continued growth in construction activities are properly
managed and controlled.
Updated health and safety procedures have also been introduced.
An example of this is the introduction of a new site inspection
report. The new report has a simple “traffic light” scoring matrix
replacing the previous numerical scored reports. This gives a
clearer, simplified process for inspection reporting. Items within
the report have been amended to ensure that relevant data and
trends can be more easily analysed and reported.
The Board and management team are focused on the continued
development of the health and safety function across the Group.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
45
Winding up
Under the Articles, if the Company is in liquidation, the liquidator
may, with the sanction of a special resolution of the Company and
any other authority required by law:
• divide among the shareholders in specie the whole or any part
of the assets of the Company and, for that purpose, value any
assets and determine how the division shall be carried out as
between the shareholders or different classes of shareholders;
or
• vest the whole or any part of the assets in trustees upon such
trusts for the benefit of shareholders as the liquidator with the
like sanction shall think fit.
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.
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.
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.
DIReCTORS’ RepORT CONTINUED
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 are contained in the
Corporate Responsibility Report forming part of the Strategic
Report on page 25.
Shareholder additional information
Under Section 992 of the Companies Act 2006, the Company is
required to disclose certain additional information where not
covered elsewhere in this Annual Report:
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 Directors (“the Board”)
for the time being 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
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.
Deadlines for voting rights
Full details of the deadlines for exercising voting rights in respect
of the resolutions to be considered at the AGM to be held on
5 December 2019 are set out in the Notice of the AGM.
Dividends and distributions
The Company may, by ordinary resolution, declare a dividend to
be paid to the shareholders but no dividend shall exceed the
amount recommended by the Board. The Board may pay interim
dividends and also any fixed rate dividend whenever the financial
position of the Company justifies its payment in the opinion of
the Board.
46
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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, Link Asset Services, or to
the Company directly.
Auditor
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 5 December
2019.
Disclosure of information to auditor
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
auditor is 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 auditor is aware of that information.
Annual General Meeting
The Notice of the AGM to be held on 5 December 2019, together
with details of the Resolutions to be considered, will be sent out
in a separate circular.
Deadlines for voting rights
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
Stefan Allanson
Company Secretary
13 September 2019
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.
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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
47
I am pleased to introduce the Audit
Committee report which describes the
work of the Committee this year in
supporting the Board to fulfil its
responsibilities.
Colin Dearlove
Chairman, audit Committee
aUDIT COmmITTee RepORT
Statement from the Chairman of the Audit Committee
I am pleased to introduce the Audit Committee report for the
financial year ended 30 June 2019 which has been another busy
year for the Committee. The Committee continues to play an
important role in supporting the Board in a wide range of areas
including corporate governance, risk management, financial
reporting and control.
During the year, the Committee undertook all of its regular
activities including receiving and reviewing the Annual Report and
regulatory announcements made by the Company, examining
going concern and viability, internal and external audit findings
and internal controls and their effectiveness.
In addition, the Committee completed a number of other actions
during the year including a review of the tax affairs of the Group
and its readiness for the Senior Accounting Officer (“SAO”) regime
as well as a specific review of costs and margin in Gleeson
Homes, with input from external advisers. The Committee also
undertook reviews of how gross margin is applied on a site-by-site
basis, assessed Group credit risk, inventory recovery, legacy
matters, and reviewed and approved the internal audit plan for
the year to June 2020.
The Committee serves to ensure that the relevant codes and
regulations are adhered to and that the business continues to
operate in a well-controlled and financially responsible manner.
Colin Dearlove
Chairman, audit Committee
13 September 2019
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OTheR INFORmaTION
Audit Committee membership
The Audit Committee is a Board committee consisting entirely of
Non-Executive Directors. The members of the Committee are
Colin Dearlove (Chairman) and Ross Ancell.
Colin Dearlove, as Chairman of the Committee, has relevant
financial experience as the former Group Finance Director of
Barratt Developments plc. Ross Ancell also has recent relevant
financial experience as Chairman of Churngold Construction
Holdings Limited. The biographies and qualifications of the
members are shown on pages 36 and 37. The Board has
determined that the Audit Committee has competence relevant to
the sector in which the Company operates.
The Chairman routinely invites the Chief Executive Officer, Chief
Financial Officer and other senior management to attend meetings
of the Committee, along with the Group’s internal and external
auditors, when required. The Committee also meets with the
Group’s internal and external auditors without the presence of the
Company’s management.
Responsibilities and terms of reference
The role of the Committee is to:
• 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;
• 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;
• oversee the relationship with the external auditor including
their appointment, independence and objectivity and the
effectiveness of the external audit process; and
• develop the policy on the supply of external audit services by
the external auditor, taking into account relevant ethical
guidance.
Following a review by the Committee at its meeting in February
2019 the terms of reference of the Committee were updated to
include clarification that the Committee as a whole should have
relevant experience in the sector in which the Company operates,
and other minor amendments.
The Committee’s updated terms of reference can be found at
www.mjgleesonplc.com
Activities during the year
The Committee met on four scheduled occasions during the year
to 30 June 2019, with both members being in attendance for all
meetings. Scheduled Committee meetings generally take place
prior to Board meetings and the Committee Chairman provides the
Board with a report on the activity of the Committee and the
matters of particular relevance to the Board in the conduct of their
work. The key activities undertaken by the Committee during the
year were:
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 draft interim results for the 6 months to December 2018
which were reviewed by the Committee at its meeting in
February 2019; and
• the draft 2019 Annual Report and preliminary announcement
which were reviewed by the Committee at its meeting in
September 2019.
At the request of the Board, the Committee considered whether
the 2019 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 2019. 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 2019.
The Committee was satisfied that, taken as a whole, the 2019
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
The Committee examined the financial forecasts for the Group
including scenarios to model the impact of potential downturns in
the housing and strategic land markets. These were examined by
the Committee in conjunction with both its review of the Annual
Report and interim announcement. 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 funding and liquidity position.
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 review period and operational forecasts.
It concluded that this should remain a three-year period as
explained on page 43. The Committee received detailed financial
analysis based on the Group’s latest budgets with sensitivities
applied over a three-year period and determined that there was a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due. The Committee
recommended statements to this effect to the Board to approve
for inclusion in the Annual Report.
The viability statement is shown on page 43 of the Governance
Report with further explanation of the timespan and variables
considered.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
49
aUDIT COmmITTee RepORT CONTINUED
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 counterparty to date. The Committee satisfied
itself that the level of credit risk faced by the Group remains low
overall.
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. The Committee also received a report from
external advisers, KPMG LLP, who completed a review of specific
site valuations and the assumptions being used.
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, 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 2019 at its meeting in July 2018. 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.
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.
Other activities
During the year, the Committee also reviewed reports on IT and
cyber crime updates, corporate criminal offences, anti-bribery,
and malpractice monitoring, and a review by internal audit of
payroll and CIS accounting.
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 meeting in February 2019 the Committee received a
comprehensive update covering the tax affairs of the Group. This
included an update on the Senior Accounting Officer (“SAO”)
regime and actions undertaken by the Group in readiness. The
update covered all other aspects of Group taxes including VAT,
corporation tax, deferred tax, land remediation relief, the
construction industry scheme (“CIS”), employment taxes, stamp
duty land tax, and other minor updates.
The Committee also reviewed the Group’s Tax Strategy Statement
and recommended its approval to the Board.
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 10 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.
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.
50
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OTheR INFORmaTION
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.
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 32 and 33
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.
Whistleblowing arrangements
The Company has operated a whistleblowing arrangement
throughout the year whereby all employees of the Group are able,
via an independent third party, to confidentially report any
malpractice or matters of concern they have regarding the actions
of employees, management and Directors and any breaches of the
Company’s anti-bribery and corruption policy.
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. The Group expects those persons 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 nine 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 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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
51
aUDIT COmmITTee RepORT CONTINUED
External audit
PricewaterhouseCoopers LLP were reappointed as the Company’s
auditor following approval by shareholders at the AGM on
6 December 2018.
At its meeting in February 2019, PricewaterhouseCoopers LLP
provided their audit strategy memorandum for the Committee,
identifying their assessment of key risks in the Group’s financial
reporting. For the 2019 financial year, as in prior years, the
primary risk identified was in relation to the carrying value of land
and work in progress.
The Committee formulates and oversees the Group’s policy on
monitoring external auditor objectivity and independence in
relation to non-audit services. As a result of the EU Audit Reforms
Regulations (as amended 11 June 2016) the auditor is 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 auditor’s independence, objectivity or
integrity.
For the year to 30 June 2019, there were no non-audit fees paid to
the external auditor. Details of the audit fees incurred are
disclosed in note 4 to the financial statements.
The Committee assesses the effectiveness of the external audit
process annually with the auditor and with management. The
Committee holds private meetings with the auditor on an annual
basis. Matters discussed include the auditor’s 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 ensures that the auditor has exercised
professional scepticism in its audit. The Committee has reviewed
and is satisfied with the performance of PricewaterhouseCoopers
LLP. 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 of the Company
on 5 December 2019.
Colin Dearlove
Chairman, audit Committee
13 September 2019
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STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Kerriane, Ashurst Park, Skelmersdale, Lancashire
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
53
RemUNeRaTION COmmITTee RepORT
Statement from the Chairman of the
Remuneration Committee
Dear Shareholder,
On behalf of the Board, I am pleased to present our Directors’
Remuneration Report for 2019.
The report is split into three parts:
• this letter, which provides an introduction to the report;
• the proposed Directors’ Remuneration Policy for which we will
be seeking shareholder approval at the 2019 AGM; and
• the Annual Report on Remuneration, which describes how the
policy was implemented in the year to June 2019 and how it will
be implemented for the year to June 2020.
Our new Directors’ Remuneration Policy
Our current policy was approved by shareholders at the 2016 AGM
and is approaching the end of its three-year term. A new policy will
therefore be put to shareholders for approval at the 2019 AGM.
Our current policy received a 79.8% vote in favour. Our 2017 and 2018
Annual Reports on Remuneration received votes in favour of 77.0%
and 81.0% respectively. While the majority of shareholders have
been supportive, we are aware of a number of areas where we are
becoming increasingly out of line with best practice on
remuneration.
The Committee has therefore used this opportunity to bring our
remuneration arrangements into line with market practice and best
practice over the next three-year policy period, taking into account
changes to the UK Corporate Governance Code and shareholder
feedback in recent years. The proposed remuneration policy has also
been updated to ensure that it has sufficient flexibility over the next
three years to support potential changes to business needs.
In particular:
• Maximum pension opportunity for the interim Chief Executive
Officer and any newly appointed Executive Directors will be aligned
with the level available to the majority of the wider workforce.
• Mandatory annual bonus deferral will apply from 2021.
• A normal maximum Long Term Incentive Plan (“LTIP")
opportunity of 150% of salary has been introduced. The current
overall maximum LTIP opportunity of 300% of salary has been
reduced to 200% of salary, to be used in exceptional
circumstances only.
54
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
I am pleased to set out the Group’s
remuneration strategy and a significantly
revised remuneration policy for which
we will be seeking shareholder approval
at the AGM.
Ross Ancell
Chairman, Remuneration Committee
• Within-employment and post-employment shareholding
guidelines have been introduced.
• Malus and clawback circumstances have been expanded to
include corporate failure.
The key policy changes are set out on page 56.
Executive Director changes
As announced on 10 June 2019, Jolyon Harrison stepped down
from the Board with immediate effect and remains on garden
leave until 8 December 2019. The terms in respect of Jolyon
Harrison’s cessation of employment, including the treatment of
unvested LTIP awards, have not yet been agreed. Full disclosure
will be provided once these terms have been agreed.
In line with the remuneration reporting regulations, estimated
values have been included within the single total figure disclosure
on page 64 for the 2015 LTIP and 2016 LTIP awards. This is on the
basis that the Total Shareholder Return (“TSR") performance
targets attached to the awards were met in full and therefore
100% of the awards remain capable of vesting, notwithstanding
that the Committee is still to determine whether such awards
granted to Jolyon Harrison will ultimately vest.
James Thomson was appointed as interim Chief Executive Officer
with effect from 10 June 2019. James Thomson’s remuneration
arrangements are set out below.
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Pay and performance outcomes for 2019
The Group delivered another set of strong results during the year
with profit before tax from continuing operations increasing by
11.4% to £41.2m. Cash balances reduced, as expected, from
£41.3m to £30.3m reflecting investment in Gleeson Homes,
increased deferred receivables in Gleeson Strategic Land and
higher dividend payments. Total dividends for the year are
proposed to increase by 7.8% to 34.5 pence per share.
Annual bonus
The Chief Financial Officer’s annual bonus was based on the
achievement of Group profit before tax for both continuing and
discontinued operations of between £42.0m and £43.5m. The
Group achieved profit before tax for both continuing and
discontinued operations of £40.9m, which is an increase of 11.1%
against the previous year. Accordingly, the Chief Financial Officer
did not earn a bonus in respect of the year.
Two-thirds of Jolyon Harrison’s, the former Chief Executive Officer,
annual bonus was based on the achievement of Group profit
before tax targets, as disclosed above. The threshold was not met
for the year. One-third of his bonus was based on non-financial
succession and leadership development objectives. The
Committee determined that the non-financial objectives were not
achieved. Accordingly, Jolyon Harrison did not earn a bonus in
respect of the year.
LTIP
The 2016 LTIP granted to the Chief Financial Officer was based on
the achievement of a three-year TSR performance condition which
ended on 30 June 2019. The Group achieved a three-year TSR of
902 pence against a target range of 585 and 650 pence per share.
Accordingly, the LTIP is expected to vest in full. The vested award
(net of tax) will be subject to a two-year holding period.
The terms in respect of Jolyon Harrison’s cessation of employment
have not yet been agreed. The Committee has therefore not
determined whether the 2016 LTIP will ultimately vest.
The Committee considers that the outturn of both the annual
bonus and long-term incentive award fairly represents the Group’s
underlying financial performance over the respective performance
periods.
Further information is set out on page 65.
Implementation in 2020
Base salary
The interim Chief Executive Officer’s salary has been set at
£485,000.
The Executive Directors have voluntarily agreed to freeze their
base salaries for the year to 30 June 2020 and the Chief Financial
Officer’s salary remains unchanged at £315,000. The fees for
Non-Executive Directors have also been frozen for the year.
Annual bonus
The maximum annual bonus opportunity will be 100% of salary for
the interim Chief Executive Officer and Chief Financial Officer.
For the interim Chief Executive Officer, 50% of the award will be
based on profit performance and 50% on strategic and personal
performance reflecting the terms agreed on his appointment.
Strategic and personal performance metrics will be based on
leadership development and management structure.
For the Chief Financial Officer, the award will continue to be based
wholly on profit performance. Details of the profit, strategic and
personal performance targets will be fully disclosed in the
Directors’ Remuneration Report for 2020.
LTIP
The normal maximum long-term incentive opportunity will be
150% of salary for both the interim Chief Executive Officer
and Chief Financial Officer. The award will be based on the
achievement of earnings per share (“EPS") performance (as
regards two-thirds of the award) and relative TSR performance
(as regards one-third of the award) measured over a period of
three financial years ending 30 June 2022. The weighting of the
performance metrics reflects the level of stretch required to
maintain our current price earnings multiple compared to TSR
comparator group peers. The Committee will review the weighting
of the performance metrics annually. Any awards that vest will be
subject to a two-year holding period.
EPS and relative TSR performance metrics provide further
alignment with our overall strategy of creating value growth for
our stakeholders. The use of these metrics also provides
alignment with market practice and other housebuilders.
Further information is set out on page 68.
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
8.7% versus the national average of 17.9%.
The Group does not discriminate on the grounds of gender and
operates an equal pay policy. The Group is currently developing
a number of initiatives to support the recruitment, retention and
promotion of female employees within roles that have
traditionally been male occupied.
Further details are set out in the Group’s gender pay report which
can be found at www.mjgleesonplc.com.
Real Living Wage
The Group is proud to be the only major housebuilder to be
accredited by the Living Wage Foundation. It pays all of its
employees the real Living Wage or higher with the only exception
being for apprentices, where it pays above the Government’s
guidelines for apprentices.
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 and retain good
quality staff.
Conclusion
We are committed to a responsible approach to executive pay as
I trust that the proposed changes to the Directors’ Remuneration
Policy demonstrates. I hope that you are supportive of our new
policy. I will be available at the AGM to respond to any questions
and discuss any aspects of the new policy, Annual Report on
Remuneration or the Committee’s activities.
Ross Ancell
Chairman, Remuneration Committee
13 September 2019
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
55
RemUNeRaTION pOlICY RepORT
This part of the report sets out the remuneration policy for the
Group and has been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
General reward principles
In setting the remuneration policy for the Executive Directors, the
Committee takes into account the following general principles:
• 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;
• to ensure that the remuneration packages are simple and
transparent and take into account remuneration and related
policies for the wider workforce;
• to ensure alignment with the Company’s culture and clearly
linked to the long-term strategy;
• to encourage long-term shareholdings that promote
sustainable success and support alignment with shareholder
interests;
• to 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); and
• to ensure that total remuneration delivered fairly reflects
Company and individual performance.
Changes to the remuneration policy
The current policy was approved by shareholders at the 2016 AGM
and is approaching the end of its three-year term. A new policy
will therefore be put to shareholders for approval at the
forthcoming AGM. Subject to approval the policy will take effect
from the end of the AGM.
The Committee has updated the policy to take account of changes
to the UK Corporate Governance Code, to provide further
alignment with best practice, and to ensure that the policy has
sufficient flexibility over the next three years to support potential
changes to business needs. No substantial changes have been
made to the variable pay structure.
The Committee has consulted with major shareholders on the
updated policy. The key policy changes are as follows:
• The overall maximum pension opportunity of 25% of salary
under the current policy has been removed. The Chief Financial
Officer’s current pension opportunity of 15% of salary has been
retained as it reflects a preexisting contractual arrangement.
The maximum pension opportunity for the interim Chief
Executive Officer and any newly appointed Executive Directors
will be aligned with the level available to the majority of the
wider workforce (currently 6.5% of salary).
• Up to 20% of maximum opportunity may be earned for
threshold performance under the annual bonus. This has been
increased from 0% in order to provide a modest bonus
opportunity for achieving stretching targets at threshold. The
Committee will set the threshold vesting level on an annual
basis and will ensure that financial and non-financial targets
are sufficiently stretching at both threshold and maximum
taking into account internal budget and broker forecasts.
• Mandatory deferral will apply to any bonuses earned in respect
of the years to 30 June 2021 and 30 June 2022. Executive
Directors will be required to defer one-third of any bonuses
earned into shares for a two-year period. Voluntary deferral
will continue to apply to any bonuses earned in respect of the
year to 30 June 2020, reflecting the terms agreed with the
interim Chief Executive Officer on appointment.
• A minimum of 50% of the annual bonus shall be based on
financial performance metrics. This has been reduced from the
current minimum of two-thirds of the annual bonus to ensure
that performance metrics can be appropriately aligned with the
key financial and non-financial strategic areas of the business.
The weighting of performance metrics for the year to 30 June
2020 is set out on page 68. The Committee will review the
weighting of performance metrics annually.
• The overall maximum LTIP opportunity was previously 300% of
salary. A normal maximum LTIP opportunity of 150% of salary
has been introduced. The overall maximum LTIP opportunity
has also been reduced from 300% to 200% of salary and will
be used in exceptional circumstances only in line with best
practice.
• The policy includes no provision to grant one-off long-term
•
•
incentive awards to current Executive Directors outside of the
LTIP.
Introduces flexibility to determine LTIP performance metrics
annually to reflect the Group’s strategy and key performance
indicators. This provides alignment with market practice.
Introduces within-employment and post-employment
shareholding guidelines in line with the UK Corporate
Governance Code and best practice.
•
• The circumstances in which malus and clawback may apply to
annual bonus and LTIP awards have been expanded to include
corporate failure.
Introduces flexibility to provide Non-Executive Directors with
benefits linked to the performance of their duties, such as, but
not limited to, the use of secretarial support and travel costs.
This provides alignment with market practice.
56
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Components of Executive Directors’ remuneration
The key elements of the remuneration package for each Executive Director are set out in the table below:
Element
BASE SALARY
Purpose and link
to strategy
Provide a competitive base level of remuneration to support the recruitment and retention of Executive Directors
with the necessary experience and expertise to deliver the Group’s strategy.
Operation
Salaries are normally reviewed annually taking into account a number of factors, such as, but not limited to:
• personal performance
• Company performance
• inflation and earnings forecasts
• state of the marketplace generally
• pay and conditions elsewhere in the Group
Maximum
opportunity
While there is no prescribed maximum salary, increases will normally be in line with increases awarded to the
wider workforce.
Salary increases above this level may be awarded to take account of individual circumstances such as, but not
limited to:
• an increase in responsibilities or scope of the role;
• an Executive Director’s development or performance in role (e.g. to align a newly appointed Executive Director’s
salary with the market over time);
• where there has been a change in market practice; or
• where there has been a change in the size and/or complexity of the Group.
Increases may be implemented over such time as the Committee deems appropriate.
Performance
targets
N/A
Element
BENEFITS
Purpose and link
to strategy
Provide a competitive benefits package to support the recruitment and retention of Executive Directors with the
experience and expertise necessary to deliver the Group’s strategy.
Operation
Maximum
opportunity
Performance
targets
The Company provides cash benefits and benefits in kind to Executive Directors. These include but are not
limited to:
• company car or cash equivalent;
• private fuel;
• private medical insurance – family cover;
• life insurance;
• permanent health insurance;
• annual health check;
• holiday and sick pay;
• professional subscriptions; and
• reimbursement of expenses incurred on Group matters.
Other benefits may be offered based on individual circumstances (e.g. relocation allowances on recruitment).
Whilst there is no prescribed maximum, the value of benefits is based on the underlying cost to the Group,
individual circumstances and market practice.
N/A
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
57
RemUNeRaTION pOlICY RepORT CONTINUED
Element
PENSION
Purpose and link
to strategy
Operation
Maximum
opportunity
To provide an appropriate level of retirement benefits to Executive Directors.
The Company will contribute to the Group’s defined contribution pension scheme, or to personal pension
arrangements at the request of the Executive Director.
The Company may also consider a cash alternative (e.g. where an Executive Director has reached the HMRC’s
lifetime or annual allowance limit).
Salary is the only element of the Executive Directors’ remuneration that is pensionable.
For the Chief Financial Officer, the maximum Company contribution or pension allowance is 15% of salary.
For the interim Chief Executive Officer and any newly appointed Executive Directors, the maximum Company
contribution or pension allowance will be aligned with the level available to the majority of the wider workforce.
Performance
targets
N/A
Element
ANNUAL BONUS
Purpose and link to
strategy
To incentivise the achievement of key financial and strategic targets for the forthcoming year without encouraging
excessive risk taking.
Operation
Awards are based on performance metrics set by the Committee (typically measured over a financial year) against
financial and non-financial objectives. The Committee will determine the bonus to be delivered following the end
of the relevant financial year based on performance against these metrics.
The Committee has the discretion to override the formulaic outturn of the bonus to determine the appropriate
level of bonus payable 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.
Executive Directors may elect to voluntarily defer up to 100% of any bonuses earned in shares for a two-year
period.
Mandatory deferral will apply to any bonuses earned in respect of the years to June 2021 and June 2022. Executive
Directors will be required to defer one-third of any bonuses earned into shares for a two-year period. The
Committee may, however, decide to pay such bonuses in cash where the amount to be deferred would, in the
opinion of the Committee, be so small as to make the operation of deferral burdensome.
Amounts equivalent to any dividends or shareholder distributions may be made in respect of deferred bonus
awards at vesting, if the Committee so determines. Such amounts will normally be paid in shares.
Malus and clawback provisions will apply. Further details are set out on page 61.
Maximum
opportunity
Maximum opportunity of 150% of base salary. Maximum opportunity for the year to June 2020 will be set at 100%
of salary.
Performance
targets
Up to 20% of maximum is earned for threshold performance and up to 50% of maximum is earned for target
performance. There will be broadly straight-line vesting between threshold, target and maximum.
Performance metrics are determined annually reflecting the Group’s strategy and key performance indicators.
A minimum of 50% of the bonus shall be based on financial performance metrics.
58
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Element
LONG TERM INCENTIVE PLAN (“LTIP”)
Purpose and link
to strategy
To incentivise and reward Executive Directors for delivering long-term performance and achievement of Group
strategy, and provide alignment with shareholder interests.
Operation
Awards may be granted annually to Executive Directors in the form of a conditional share award, nil cost option or
such form as has the same economic effect.
Vesting of awards will be dependent on the achievement of performance metrics set by the Committee, normally
over at least a three-year performance period.
The Committee has the discretion to override the formulaic vesting outturn of the LTIP to determine the
appropriate level of vesting 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.
Awards will be subject to a two-year holding period following the end of the performance period, and shares will
not typically be released until the end of the holding period. Alternatively, awards may be granted on the basis
that shares can be acquired following the end of the performance period but that, other than to cover Income Tax
and NIC and any exercise price, shares may not be disposed of or otherwise dealt with until the end of the holding
period.
Amounts equivalent to any dividends or shareholder distributions may be made in respect of awards at vesting,
if the Committee so determines. Such amounts will normally be paid in shares.
Malus and clawback provisions will apply. Further details are set out on page 61.
The normal maximum award is 150% of salary in respect of a financial year.
A maximum award of up to 200% of salary in respect of a financial year may be granted in exceptional
circumstances (e.g. on recruitment).
Awards will vest between 20% and 100% for performance between threshold and maximum, with broadly
straight-line vesting between these points.
Performance metrics are determined annually reflecting the Group’s strategy and key performance indicators.
Maximum
opportunity
Performance
targets
Element
HMRC TAX-QUALIFYING ALL-EMPLOYEE SCHEME
Purpose and link to
strategy
The HMRC tax-qualifying all-employee scheme has been designed to encourage all employees to become
shareholders in the Company and thereby align their interests with shareholders.
Operation
Maximum
opportunity
Performance
targets
The Company operates an all-employee scheme in which the Executive Directors are eligible to participate (which
is in line with HMRC legislation and is open to all eligible staff).
The maximum set by legislation from time to time.
N/A
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
59
RemUNeRaTION pOlICY RepORT CONTINUED
Remuneration policy for Non-Executive Directors
Element
FEES FOR NON-EXECUTIVE DIRECTORS
Purpose and link
to strategy
To support the recruitment and retention of Non-Executive Directors and a Chairman with the necessary
experience to advise and assist with establishing and monitoring the Group’s strategic objectives.
Operation
Fees for Non-Executive Directors are determined by the Chairman and the Executive Directors. Fees for the
Chairman are set by the Remuneration Committee.
Maximum
opportunity
Fees may include a basic fee and additional fees for further responsibilities (e.g. chairing Board committees or
acting as Senior Independent Director).
Fees are set at levels with reference to sector and similar sized UK listed companies. Time commitment and
responsibilities are also taken into account.
The Chairman is part of the Group private health scheme. Non-Executive Directors may be eligible to receive
benefits linked to the performance of their duties, such as, but not limited to, the use of secretarial support and
travel costs.
Fee increases will normally be in line with increases awarded to the wider workforce.
Fee increases above this level may be awarded to take account of individual circumstances such as, but not
limited to:
• an increase in responsibilities, scope or time commitment of the role;
• where there has been a change in market practice; or
• where there has been a change in the size and/or complexity of the Group.
Overall fees paid to Non-Executive Directors will remain within the limits set by the Company’s Articles of
Association.
Performance
targets
N/A
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Post-employment: Executive Directors are required to retain a
holding in “relevant shares” equal to:
• 200% of salary (or their actual shareholding at the point of
departure if lower) for the first 12 months following departure;
• 100% of salary (or their actual shareholding at the point of
departure if lower) for the subsequent 12 months.
“Relevant shares” do not include shares which the Executive
Director has purchased or which have been acquired pursuant to
LTIP awards granted before 1 July 2019. Unless the Committee
determines otherwise, an Executive Director or former Executive
Director shall be deemed to have disposed of shares which are not
“relevant shares” before “relevant shares”.
Remuneration policy for the broader employee population
The executive remuneration framework set out in this report
follows similar principles as that applied to the Group’s senior
leadership team to ensure that management is rewarded on a
consistent basis. Any differences that exist arise either because
of the Committee’s assessment of business need or commercial
necessity.
The principles that underpin our executive remuneration
philosophy also cascade throughout the organisation, although
quantum will vary by level and the provision of certain
components of remuneration (such as benefits, allowances and
long-term incentives) will vary by seniority.
The Group operates an HMRC tax-qualifying all-employee scheme
in order to encourage share ownership across the wider workforce.
Legacy arrangements
The Committee retains discretion to make any remuneration
payment outside of policy:
• where the terms of the payment were agreed before the policy
came into effect;
• where the terms of the payment were agreed at a time when
the relevant individual was not a Director of the Company, and
in the opinion of the Committee, the payment was not in
consideration of the individual becoming a Director of the
Company; or
• to satisfy contractual arrangements under legacy remuneration
arrangements.
Illustration of the application of remuneration policy
The following charts illustrate the future remuneration packages
of the interim Chief Executive Officer and Chief Financial Officer
under the policy set for the year to June 2020 onwards for various
indicative levels of performance:
Application of malus and clawback
Malus and clawback apply to annual bonus, deferred bonus and
LTIP awards as follows:
Annual bonus
Deferred bonus
LTIP
Malus
Clawback
To such time as
payment is made
Up to two years
following payment
To such time as the
award vests
N/A
To such time as the
award vests
Up to two years
following vesting
Malus and clawback may apply in the following circumstances:
• material misstatement of the Group’s audited accounts;
• an error in the information on which the award was granted or
vests including an error in assessing any applicable
performance metrics;
• fraud or serious misconduct on the part of the participant;
• censure or reputational damage to the Group that is a result of
the participant’s behaviour or actions; or
• a material corporate failure.
Selection of performance metrics and target setting
In the selection of performance metrics the Committee takes into
account the Group’s strategic objectives and short and long-term
business priorities. The performance metrics selected reward the
delivery of stretching financial performance and the creation of
shareholder value.
The performance targets chosen are set in accordance with the
Group’s operating plan and are reviewed annually to ensure they
are sufficiently stretching. In selecting the targets the Committee
also takes into account analysts’ forecasts, economic conditions
and the Committee’s expectation of performance over the
relevant period.
The Committee retains discretion to vary or substitute
performance metrics and/or targets if events occur (e.g. a change
in strategy, a material acquisition and/or a divestment of a Group
business or a change in prevailing market conditions) which cause
the Committee to determine that the performance metrics and/or
targets are no longer appropriate and that amendment is required
so that they achieve their original purpose.
Share awards may be adjusted in the event of a variation of share
capital or a demerger, dealing, special dividend or other event
that may affect the Company’s share price.
Shareholding guidelines
The Committee introduced for the year to June 2020 formal
within-employment and post-employment shareholding
guidelines for Executive Directors.
Within-employment: Executive Directors are required to build up
and retain a holding in shares equal to 200% of salary. Until the
shareholding guideline is met, 50% of any shares vesting under
the Deferred Bonus Plan or LTIP (post payment of Income Tax and
NIC) must be retained.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
61
RemUNeRaTION pOlICY RepORT CONTINUED
INTERIM CHIEF EXECUTIVE OFFICER
The dates of the Executive Directors’ service agreements are:
J Thomson
J Thomson
Base salary, benefits and pension
Annual bonus
LTIP
£924k
£924k
16%
16%
26%
26%
£536k
£536k
100%
100%
58%
58%
£1,748k
£1,748k
41%
41%
28%
28%
31%
31%
£2,112k
£2,112k
52%
52%
23%
23%
25%
25%
Minimum
Minimum
performance
performance
Performance in
Performance in
line with expectations
line with expectations
Maximun
Maximun
performance
performance
Maximum performance
Maximum performance
(with 50% share
(with 50% share
price increase)
price increase)
CHIEF FINANCIAL OFFICER
S Allanson
Base salary, benefits and pension
Annual bonus
LTIP
£1,168k
40%
27%
33%
£1,404k
50%
23%
27%
£380k
100%
£632k
25%
60%
15%
Minimum
performance
Performance in
line with expectations
Maximun
performance
Maximum performance
(with 50% share
price increase)
For the purpose of this analysis, the following assumptions have
been made:
• fixed elements comprise base salary, pension and other benefits;
• base salary levels applying on 1 July 2019;
• benefit levels are assumed to be the same as 2019;
• minimum performance reflects fixed remuneration as above,
and assumes no award under the annual bonus and no vesting
is achieved under the LTIP;
• performance in line with expectations reflects fixed
remuneration as above, and assumes 50% of annual bonus is
earned and 20% of the LTIP vests;
• maximum performance reflects fixed remuneration as above,
and assumes full bonus pay out and full vesting under the LTIP;
and
• the final illustration is based on the same assumptions as the
maximum performance illustration, but also assumes, for the
purposes of the LTIP, that share price increases by 50% over
the performance period.
Service agreements and policy in respect of loss of office
The interim Chief Executive Officer’s service agreement is on a
rolling basis and requires 6 months’ notice of termination on
either side. This increases to 12 months’ notice of termination
on either side in the event that the Committee confirms that the
current incumbent’s role becomes permanent.
The Chief Financial Officer’s service agreement is on a rolling
basis and requires 6 months’ notice of termination from the
Chief Financial Officer and 12 months’ notice of termination from
the Company.
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MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
Executive Director
James Thomson
Stefan Allanson
Date of service agreement
10 June 2019
29 June 2015
Payment in lieu of notice
The Company has discretion to make a payment in lieu of notice.
Such payment may include salary and compensation for benefits
and pension contributions for the unexpired period of notice.
Annual bonus
The payment of a bonus will be at the discretion of the Committee
on an individual basis and will be dependent on a number of
factors, including the circumstances of the individual’s departure
and contribution to the business during the financial year.
Any bonus will normally be pro rated for time in service during
the performance period and will normally, subject to performance,
be paid at the usual time. In exceptional circumstances the
Committee may decide that an Executive Director’s bonus will be
paid early at the time of cessation of employment.
Any bonus earned for the year of departure and, if relevant,
for the prior year may be paid wholly in cash at the discretion of
the Committee. There will be no bonus payment in the event
of gross misconduct or wilful neglect.
Deferred bonus plan
Awards under the deferred bonus plan will be determined by the
Plan rules.
Unvested awards will normally lapse on cessation of employment.
However, if a participant departs under good leaver provisions
(i.e. participants who leave early on account of injury, disability,
death, a sale of their employer or business in which they were
employed, statutory redundancy, retirement or any other
reason at the discretion of the Committee), then unvested
awards may remain capable of vesting at the normal vesting
date. In exceptional circumstances, the Committee may decide
that the participant’s awards will vest at the date of cessation
of employment. A pro rata reduction of the awards will be applied
by reference to the time of cessation (although the Committee has
discretion to disapply pro rating if the circumstances warrant it).
LTIP
Awards under the LTIP will be determined by the Plan rules.
Unvested awards will normally lapse on cessation of employment.
However, if a participant departs under good leaver provisions (i.e.
participants who leave early on account of injury, disability, death,
a sale of their employer or business in which they were employed,
statutory redundancy, retirement or any other reason at the
discretion of the Committee), then unvested awards will remain
capable of vesting at the normal vesting date. To the extent that
awards vest, a two-year holding period would then apply. In
exceptional circumstances, the Committee may decide that the
participant’s awards will vest and be released early at the date of
cessation of employment or some other time (e.g. at the end of the
performance period). In either case, vesting depends on the extent to
which the performance metrics have been satisfied and a pro rata
reduction of the awards will be applied by reference to the time of
cessation (although the Committee has discretion to disapply time
pro rating if the circumstances warrant it).
If a participant leaves for any reason (other than summary dismissal)
after an award has vested but before it has been released (i.e. during
a holding period), their award will ordinarily continue to be released
at the normal release date. In exceptional circumstances, the
Committee may decide that the participant’s award will be
released early.
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
Change of control
Awards under the deferred bonus plan will vest early in the event
of change of control or substantial exit. The level of vesting will be
determined taking into account such factors that the Committee
considers relevant including, but not limited to, the time served
from the grant date to the date of the relevant event.
Awards under the LTIP will vest early in the event of a change of
control or substantial exit. The level of vesting will be determined
taking into account the extent to which performance metrics
are satisfied at the date of the relevant event and, unless the
Committee determines otherwise, awards will be pro rated for
time served from the grant date to the date of the relevant event.
Other payments
In appropriate circumstances, payments may also be made in
respect of accrued holiday, outplacement and legal fees.
Awards under the HMRC tax-qualifying all-employee scheme may
vest and, where relevant, be exercised in the event of cessation
of employment or change of control in accordance with the Plan
rules. The terms applying to any buy-out awards on cessation of
employment or change of control would be determined when the
award is granted.
The Committee reserves the right to make any other payments in
connection with an Executive Director’s cessation of employment
where such payments are made in good faith in discharge of an
existing legal obligation (or by way of damages for breach of such
an obligation) or by way of settlement of any claim arising in
connection with the cessation of employment.
Chairman and other Non-Executive Directors’
terms of engagement
The Chairman and the Non-Executive Directors are not employees;
they have letters of appointment which set out their duties and
responsibilities. The dates of each Non-Executive Director’s
original appointment are as follows:
Non-Executive Director
Date of original appointment
Dermot Gleeson
Ross Ancell
Colin Dearlove
Christopher Mills
27/11/1975
01/10/2006
03/12/2007
01/01/2009
Expiry of current term
(subject to re-election
at the 2019 AGM)
30/09/2020
30/09/2020
30/09/2020
30/09/2020
All Non-Executive Directors have specific terms of engagement,
being 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.
There is no entitlement to compensation in the event of Non-
Executive Directors’ fixed term agreements not being renewed or
the agreement terminating earlier.
Recruitment policy
The remuneration of a new Executive Director will normally
include salary, benefits, pension and participation in the annual
bonus and LTIP schemes in accordance with the policy for
Executive Directors’ remuneration. The Committee may include
other elements of remuneration which it considers appropriate,
subject to the principles and limits referred to below.
Salary will be set to reflect the skills and experience of the
Executive Director being appointed and the market rate for the role.
If it is considered appropriate to appoint a new Executive Director
on a below market salary (for example, to allow them to gain
experience in the role) their salary may be increased to a market
level by way of a series of above-inflation increases over two to
three years.
Although it is not the Company’s policy to provide buy-out awards
as a matter of course, the Committee may offer additional cash
payments and/or share-based awards (on a one-time basis or
ongoing) where it considers these to be in the best interests of the
Group (and therefore shareholders). Such payments or awards will
be based solely on remuneration forfeited when leaving the
former employer and will reflect the delivery mechanism, time
horizons and performance requirement attaching to that
remuneration. Such payments or awards are limited to the
expected value of the remuneration forfeited. Where considered
appropriate, such payments or awards will be subject to forfeiture
or malus and clawback provisions on early departure.
The Committee will not offer non-performance related variable
remuneration. The maximum level of variable remuneration which
may be granted (excluding buy-out awards) is 350% of salary.
Other elements may be included in the following circumstances:
• An interim appointment being made to fill an Executive Director
•
•
•
role on a short-term basis.
If exceptional circumstances require that the Chairman or a
Non-Executive Director takes on an executive function on a
short-term basis.
If an Executive Director is recruited at a time in the year when it
would be inappropriate to provide an annual bonus or LTIP
award for that year. Subject to the limit on variable
remuneration set out above, the quantum in respect of the
period employed during the year may be transferred to the
subsequent year.
If the Executive Director is required to relocate, reasonable
relocation, travel and subsistence payments may be provided.
Any share awards referred to in this section will be granted as far
as possible under the Company’s share plans. To the extent that
this is not possible, share awards may be granted outside of these
plans as permitted under the Listing Rules.
In the case of an internal appointment, any ongoing remuneration
obligations or variable pay element awarded in respect of the
prior role shall be allowed to continue according to its original
terms, adjusted as relevant to take into account the appointment.
Fees payable to a newly appointed Chairman or Non-Executive
Director will be in line with the fee policy in place at the time of
appointment.
Statement of consideration of employment conditions
elsewhere in the Group
The Committee does not consult with employees on Directors’
remuneration but regularly reviews the remuneration of the wider
workforce to ensure 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).
Statement of consideration of shareholder views
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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
63
aNNUal RepORT ON RemUNeRaTION
The Remuneration Committee’s Annual Report on Remuneration for the year ended
30 June 2019 is set out below, including remuneration for the year ended 30 June 2019
and the implementation of the new Remuneration Policy for 2020.
The auditor is 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 2019 and 30 June 2018
Chairman
Dermot Gleeson
Executive Directors
James Thomson (appointed 10 June 2019)
Jolyon Harrison2 (departed 10 June 2019)
Stefan Allanson
Non-Executive Directors
Ross Ancell
Colin Dearlove
Christopher Mills
2019
Salary
& fees
£000
Benefits
£000
Annual
bonus
£000
Value of
LTIP
awards1
£000
Pension
£000
Total
£000
Salary
& fees
£000
Benefits
£000
Annual
bonus
£000
Value of
LTIP
awards1
£000
Pension
£000
Total
£000
2018
125
1
–
–
–
126
120
1
–
–
–
121
28
505
315
58
58
47
1
18
18
–
–
–
–
–
– 1,988
612
–
2
31
76 2,587
992
47
–
480
300
–
–
–
–
–
–
–
–
–
58
58
47
56
56
45
–
18
17
–
–
–
–
–
480 2,068
234
300
–
–
72 3,118
896
45
–
–
–
–
–
–
–
–
–
56
56
45
1,136
38
– 2,600
125 3,899 1,057
36
780 2,302
117 4,292
1
2
The 2018 column shows the value of 2015 LTIP awards that met their performance conditions at 30 June 2018. The 2019 column includes the value of the 2016 LTIP awards
that met their performance conditions at 30 June 2019. These awards currently remain unvested and the amounts have therefore been calculated using the average share
price for the three-month period to 30 June 2019 (£8.25). Also included in the 2019 column are amounts paid to the Executive Directors in respect of dividends earned on
the 2015 LTIP awards that have met their performance targets and the dividend equivalents that are earned on the 2016 LTIP awards between the date of grant and the date
of vesting. See page 65 for further details. For reference, the value of the 2015 LTIP awards disclosed in the Annual Report on Remuneration for the year ended 30 June 2018
was calculated using the average share price for the three-month period to 30 June 2018 (£7.47).
The TSR performance targets attached to the 2015 LTIP and 2016 LTIP awards were met in full and therefore 100% of the awards remain capable of vesting. However, the
terms in respect of Jolyon Harrison’s cessation of employment have not yet been agreed. The Committee has therefore not determined whether the unvested 2015 LTIP and
2016 LTIP awards will ultimately vest.
Notes to the single total figure of remuneration
Taxable benefits provided to Executive Directors
The main benefits available to the Executive Directors during the year to 30 June 2019 (and their associated values) were: car allowance
of £13,000 for Jolyon Harrison, £13,000 for Stefan Allanson and £1,000 for James Thomson; car fuel of £3,000 for Jolyon Harrison, £3,000
for Stefan Allanson and £nil for James Thomson; private medical insurance of £1,000 for Jolyon Harrison, £1,000 for Stefan Allanson and
£nil for James Thomson; and matching shares granted under the HMRC tax-qualifying all-employee scheme of £1,000 for Jolyon Harrison
and £1,000 for Stefan Allanson.
Determination of annual bonus
The annual performance-related bonus for the Chief Financial Officer for the year to 30 June 2019 was based wholly upon achieving a
profit-related target. The profit-related target was the Group’s profit before tax both for continuing and discontinued operations in the
year to 30 June 2019, with the threshold and maximum figures set as below and straight-line vesting between threshold and maximum.
Target
Threshold
Maximum
Profit measure
£m
Bonus achievable
as percentage
of salary
42.0
43.5
0%
100%
The Group achieved profit before tax for both continuing and discontinued operations of £40.9m for the year to 30 June 2019.
Accordingly, the threshold profit target was not met for the year and no bonus is to be paid to Stefan Allanson.
Two-thirds of the former Chief Executive Officer, Jolyon Harrison’s, annual bonus was based on the achievement of Group profit before
tax targets, as disclosed above. The threshold was not met for the year. One-third of his bonus was based on non-financial succession
and leadership development objectives. The Committee determined that these non-financial objectives were not achieved. Accordingly,
no bonus is to be paid to Jolyon Harrison.
64
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
LTIP
The 2015 LTIP and 2016 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 plus cumulative dividends per share paid over the
performance period. Details of the TSR performance targets and performance outcome are set out in the tables below.
Threshold
Maximum
Actual performance
Outcome
December 2016 award
(3 year performance period ended 30 June 2019)
September 2015 award
(3 year performance period ended 30 June 2018)
TSR
5.85
6.50
9.02
Vesting %
20%
100%
TSR
4.92
6.15
8.02
Vesting %
20%
100%
100% of award to vest
100% of award to vest
Therefore, based on TSR performance, the vesting outcome is as follows:
Director
Award
Number of shares
granted
Number of shares
vesting based on
performance
Dividend
equivalents3, 4
£000
Total estimate
value of award on
vesting5
£000
Amount of award
attributable to
share price
appreciation since
grant6
£000
Jolyon Harrison2 (departed 10 June 2019)
September 20151
Stefan Allanson
December 2016
September 20151
December 2016
250,737
210,526
28,421
65,789
250,737
210,526
28,421
65,789
48
204
5
64
2,068
1,941
234
606
863
539
98
168
1. The 2015 LTIP awards were scheduled to vest in full on 30 September 2018. However, in light of various business activities during the year the Board agreed to delay the
vesting. The 2015 LTIP awards are expected to vest during the year to 30 June 2020.
2. The terms in respect of Jolyon Harrison’s cessation of employment have not yet been agreed. The Committee has therefore not determined whether the unvested 2015 LTIP
and 2016 LTIP awards will ultimately vest.
3. The Committee determined that, until such time as the 2015 LTIP awards are vested, the dividends that would otherwise have been earned on the shares following the end
of the performance period (equivalent to the number of shares that would have vested minus those sold to meet income tax and National Insurance obligations) were
payable to the Executive Directors.
4. The 2016 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. This has been estimated based on dividends being reinvested into plan shares between the award date and vesting date
and valued using the average share price over the last three months of the financial year (£8.25).
5. Calculated based on the average share price over the last three months of the financial year (£8.25). The total estimate value of award on vesting for the 2016 LTIP awards
includes the estimated dividend equivalents.
6. The Company’s share price increased by £3.44 and £2.56 respectively between the grant dates of the 2015 LTIP and 2016 LTIP awards and the year to 30 June 2019.
Pension
The Executive Directors are eligible to participate in the MJ Gleeson Group Pension Plan, a defined contribution arrangement. During the
year to 30 June 2019, Jolyon Harrison received pension contributions of 15% of salary (2019: £76,000) and Stefan Allanson received
pension contributions of 15% of salary (2019: £47,000). The interim Chief Executive Officer, James Thomson, received cash in lieu of
pension contributions of 6.5% of salary (2019: £2,000) in line with the proposed Directors’ Remuneration Policy.
LTIP awards granted in the year to 30 June 2019
The Committee granted conditional share awards under the LTIP equivalent to 150% of salary to the Chief Financial Officer on 9 October
2018. Vesting of the awards is subject to TSR performance (as defined above) over the three-year period to 30 June 2021. The awards will
vest following the end of the performance period once the Committee has determined whether the performance target has been
satisfied. Vested awards are subject to a two-year holding period following the end of the performance period (on a net of tax basis).
Details of the awards are set out below:
Director
Stefan Allanson
Number of shares
granted
Face value at
grant1
Threshold vesting
For achieving TSR of £8.002
Maximum vesting
For achieving TSR of £10.002
67,500
475,000
20% of maximum
100% of maximum
1. Calculated based on the mid-market closing share price as at 9 October 2018 (£7.04).
2. Straight-line vesting between threshold and maximum.
Payment made to former Directors and payments for loss of office during the year to 30 June 2019
There were no payments made to former Directors and no payments for loss of office during the year. Full disclosure of the terms in
respect of Jolyon Harrison’s cessation of employment will be provided once these have been agreed.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
65
aNNUal RepORT ON RemUNeRaTION CONTINUED
Directors’ shareholdings and share interests
There were no shareholding requirements for the Directors for the year to 30 June 2019.
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 2019 (or date of departure if earlier) are as shown below:
Director
Chairman
D Gleeson
Executive Directors
J Thomson (appointed 10 June 2019)
J Harrison1 (departed 10 June 2019)
S Allanson
Non-Executive Directors
R Ancell
C Dearlove
C Mills2
Scheme
Owned outright
Unvested and
subject to
performance
Unvested and not
subject to
performance3
Total
as at 30 June 2019
Shares
1,086,821
–
–
1,086,821
Shares
Shares
LTIP 2015
LTIP 2016
LTIP 2017
LTIP 2018
Shares
LTIP 2015
LTIP 2016
LTIP 2017
LTIP 2018
–
1,895,923
–
–
–
–
16,505
–
–
–
–
Shares
Shares
Shares
–
–
6,109,640
–
–
–
–
221,538
–
–
–
–
69,231
67,500
–
–
–
–
270
250,737
210,526
–
–
269
28,421
65,789
–
–
–
1,896,193
250,737
210,526
221,538
–
16,774
28,421
65,789
69,231
67,500
–
–
–
–
–
6,109,640
1. The terms in respect of Jolyon Harrison’s cessation of employment have not yet been agreed. The Committee has therefore not determined whether the unvested 2015 LTIP
and 2016 LTIP awards will ultimately vest.
2. Shares are held by funds managed by Harwood Capital LLP of which Christopher Mills is a Member/Director.
3.
Includes matching shares granted under the HMRC tax-qualifying all-employee scheme that have not yet vested.
As at 31 August 2019, the total interests held by Joylon Harrison was 1,896,193 and Stefan Allanson was 16,823. 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 Directors serving during the year are set out below.
Executive Director
Scheme
30 June 2018
Granted during
year
Vested during year
Lapsed in year
J Harrison
(departed 10
June 2019)
S Allanson
LTIP 20151
LTIP 20162
LTIP 2017
LTIP 20151
LTIP 20162
LTIP 2017
LTIP 2018
250,737
210,526
221,538
28,421
65,789
69,231
–
–
–
–
–
–
–
67,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Share price at
grant date
Total interests
outstanding
at 30 June 2019
End of
performance
period
4.82
5.70
6.50
4.82
5.70
6.50
7.04
250,737
210,526
221,538
28,421
65,789
69,231
67,500
30/06/18
30/06/19
30/06/20
30/06/18
30/06/19
30/06/20
30/06/21
1. The 2015 LTIP awards were scheduled to vest in full on 30 September 2018. However, in light of various business activities during the year the Board agreed to delay the
vesting. The 2015 LTIP awards are expected to vest during the year to 30 June 2020.
2. The 2016 LTIP awards will vest once the Committee has approved the outcome of the performance targets.
66
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
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 comparator group consists of a group of listed
housebuilders comprising Barratt Developments, Bellway, Bovis Homes, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and
Telford Homes.
MJ Gleeson plc TSR comparison to peer group and index 30 June 2009 to 30 June 2019
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
01/07/2009
MJ Gleeson Housebuilders FTSE Small Cap
01/07/2010
01/07/2011
01/07/2012
01/07/2013
01/07/2014
01/07/2015
01/07/2016
01/07/2017
01/07/2018
30/06/2019
Chief Executive Officer’s remuneration 2010 to 2019
Year
Chief Executive Officer
2019 James Thomson (appointed 10 June 2019)
2019 Jolyon Harrison (departed 10 June 2019)
2018 Jolyon Harrison
2017 Jolyon Harrison
2016 Jolyon Harrison
2015 Jolyon Harrison
2014 Jolyon Harrison
2013 Jolyon Harrison (appointed 1 July 2012)
20121 N/A
2011 Chris Holt
2010 Chris Holt
Single figure of
total remuneration
£000
Annual bonus paid
against maximum
opportunity
LTIP awards
vesting against
maximum
opportunity
31
2,587
3,118
2,816
873
2,917
793
1,615
–
417
326
–
0%
100%
100%
100%
100%
100%
81%
–
0%
25%
–
100%2
100%2
100%
0%
100%
0%
100%
–
0%
0%
1 No Chief Executive Officer held office during 2012.
2
The TSR performance targets attached to the LTIP awards granted in 2015 and 2016 were met in full and therefore 100% of the awards remain capable of vesting. However,
the terms in respect of Jolyon Harrison’s cessation of employment have not yet been agreed. The Committee has therefore not determined whether the unvested 2015 LTIP
and 2016 LTIP awards will ultimately vest.
Chief Executive Officer’s change in remuneration
Set out below is a comparison of the change in remuneration of the Chief Executive Officer from 30 June 2018 to 30 June 2019, compared
to the change in remuneration of the Group’s salaried employees, excluding Executive Directors.
Chief Executive Officer
Average of salaried employees
Percentage change from 2018 to 2019
Annual
salary
5.0%1
5.2%
Bonus
(100)%2
15.1%
Value of taxable
benefits
(1.9)%1
7.1%
1
For the purposes of the above table, salary and benefits for the year to 30 June 2019 are based on a pro rata combination of salary and benefits received by Jolyon Harrison
and James Thomson.
2 No bonus was received by Executive Directors for the year to 30 June 2019 as the performance conditions were not met.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
67
aNNUal RepORT ON RemUNeRaTION CONTINUED
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
2019
£m
29.9
18.8
2018
£m
26.2
14.4
Difference in
spend
£m
3.7
4.4
Difference as
percentage
14.1%
30.6%
Implementation of the new policy for the year to 30 June 2020
Executive Directors
Base salaries
The Executive Directors have voluntarily frozen their base salaries for the year to 30 June 2020. The average increase for monthly paid
salaried employees at 1 July 2019 was 4.4%.
James Thomson (appointed 10 June 2019)
Stefan Allanson
Base salary from
1 July 2019
£
485,000
315,000
Base salary for the
year to
30 June 2019
£
485,000
315,000
Annual bonus
The maximum bonus that can be earned in the year will be 100% of base salary for both the interim Chief Executive Officer and Chief
Financial Officer. For the interim Chief Executive Officer, 50% of the award will be based on profit performance and 50% on strategic and
personal performance reflecting the terms agreed on his appointment. Strategic and personal performance metrics will be based on
leadership development and management structure. For the Chief Financial Officer, the award will be based wholly on profit
performance.
As noted on page 56, no mandatory deferral will apply to any bonus earned in respect of the year to June 2020, reflecting the terms
agreed with the interim Chief Executive Officer on appointment.
Details of the profit, strategic and personal performance targets will be fully disclosed in the Directors’ Remuneration Report for the year
to June 2020.
Long term incentive plan
The Committee proposes to make awards to the interim Chief Executive Officer and Chief Financial Officer in the year to 30 June 2020.
The maximum long-term incentive opportunity will be 150% of salary for both the interim Chief Executive Officer and Chief Financial
Officer. The award will be based on the achievement of EPS performance (as regards two-thirds of the award) and relative TSR
performance (as regards one-third of the award) measured over a period of three financial years ending 30 June 2022. Any awards that
vest will be subject to a two-year holding period.
EPS and relative TSR performance metrics provide further alignment with the overall Group strategy of creating value growth for our
stakeholders. The use of these metrics also provides alignment with market practice and other housebuilders. The weighting of the
performance metrics reflects the level of stretch required to maintain our current price earnings multiple compared to TSR comparator
group peers. The Committee will review the weighting of the performance metrics annually. The EPS and relative TSR performance
targets for the proposed awards are set out below:
EPS
Relative TSR1
Threshold (20%) of
awards vest2
Maximum (100%) of
awards vest2
74.6 pence
87.9 pence
Median Upper quartile
1. To be compared against a group of listed houebuilders comprising Barratt Developments, Bellway, Berkeley, Bovis Homes, Countryside Properties, Crest Nicholson,
Galliford Try, McCarthy & Stone, Persimmon, Redrow and Taylor Wimpey.
2. Broadly straight-line vesting between threshold and maximum performance.
Pension
There are no changes to the pension benefits of the interim Chief Executive Officer and Chief Financial Officer for the year to 30 June
2020; current arrangements are set out on page 65. Executive Directors may continue to opt to receive a cash allowance in lieu of
pension payments.
Chairman and Non-Executive Directors fees
In line with the decision by the Executive Directors to not accept an increase to their base salaries, the Committee determined that the
Chairman’s fee should be frozen for the year to 30 June 2020. The Chairman’s fee therefore remains unchanged at £125,000 and this
includes a fee of £10,500 for chairing the Nomination Committee.
The Board as a whole determine the fees for the Non-Executive Directors. As above, these have also been frozen for the year to 30 June
2020. The fees for the Non-Executive Directors therefore remain unchanged at £47,250 plus an additional, unchanged, fee of £10,500 for
chairing a Board Committee.
68
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STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
The Remuneration Committee
During the year under review the Committee was chaired by Ross Ancell. The other Committee member is Colin Dearlove. Both of the
Directors are independent Non-Executive Directors and they have no personal financial interest in matters to be decided, 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 36 and 37, and details of their attendance at the meetings of
the Committee during the year ended 30 June 2019 are shown on page 40.
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 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, which are available on the Company’s website, and its responsibilities include:
• recommending to the Board the policy for executive and senior management remuneration;
• 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;
• agreeing the remuneration of the Chairman of the Board;
• 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 2018 and assessing the fairness of these remuneration outcomes;
• agreeing performance targets for the remuneration of the Executive Directors and senior management for the financial year ended
30 June 2019 and monitoring progress against these targets during the year;
• appointing remuneration consultants, Deloitte LLP, to advise on the proposed remuneration policy and reporting matters;
• reviewing and approving the proposed remuneration policy that will be put to shareholders for approval at the 2019 AGM;
• agreeing proposals for remuneration of the Executive and Non-Executive Directors, including the remuneration of the interim
Chief Executive Officer, and application of the proposed remuneration policy for the year ending 30 June 2020;
• reviewing proposals for a remuneration agreement for the former Chief Executive Officer, Jolyon Harrison, and working to reach an
agreement on such proposals;
• reviewing share awards vesting and approving amounts paid to the Executive Directors in respect of dividends earned on unvested
shares that otherwise would have vested;
• reviewing and approving proposals for staff pay and bonuses, including examining benchmarking data and market information from
third party advisers;
• reviewing and approving gender pay reporting for the Group; 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 Company Secretary, Stefan Allanson.
The Company also took advice from Deloitte LLP who were appointed after the year end.
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.
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.
Votes in favour
Votes against
No.
%
No.
%
Total votes cast
Votes withheld
2018 AGM: Approval of the
Annual Report on Remuneration
2016 AGM: Approval of the
Directors’ Remuneration Policy
28,474,455
81.04%
6,660,072
18.96% 35,134,527
2,824,392
32,203,333
79.80%
8,152,122
20.20% 40,355,455
5,625
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
69
FINANCIAL STATEMENTS
Statement of Directors’ Responsibilities
in respect of the Financial Statements
Independent auditors’ Report
to the members of mJ gleeson plc
Consolidated Income Statement
Statement of Financial position
Statement of Changes in equity
Statement of Cash Flows
Notes to the Financial Statements
72
73
78
79
80
82
83
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OTheR INFORmaTION
Woodhorn Park, Ashington, Northumberland
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
71
STaTemeNT OF DIReCTORS’ ReSpONSIBIlITIeS
IN ReSpeCT OF The FINaNCIal STaTemeNTS
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
Directors’ Remuneration Report 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.
Directors’ confirmations
The Directors consider that the Annual Report and financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group and Company’s position and
performance, business model and strategy.
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.
In the case of each Director in office at the date the Directors’
Report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group and Company’s auditors are
unaware; and
• they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Group and
Company’s auditors are aware of that information.
By order of the Board
James Thomson
Director
Stefan Allanson
Director
13 September 2019
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OTheR INFORmaTION
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 2019 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 Group and Company statement of financial position
as at 30 June 2019; the Group consolidated income statement and
consolidated statement of comprehensive income, the Group and
Company statement of cash flows, and the Group and Company
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 2018 to 30 June 2019.
Our audit approach
Overview
• Overall Group materiality:
£2,060,000 (2018: £1,850,900),
based on 5% of profit before tax.
Materiality
• Overall Company materiality:
£1,264,000 (2018: £1,503,000),
based on 1% of total assets.
Audit scope
Key audit
matters
• 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.
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); and
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.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
73
INDepeNDeNT aUDITORS’ RepORT TO The memBeRS OF
mJ gleeSON plC CONTINUED
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
We focused upon this area because
the value of the Group’s land and work
in progress represents a significant
proportion of assets in the Group
statement of financial position.
Further, determining the carrying
value of land and work in progress
requires a high degree of judgement.
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.
• Sample 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.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
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 two reporting units, the Group’s discontinued operations, and the Group’s
central entities which include a further two reporting units.
Of the Group’s five reporting units, we identified four 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.
74
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FINaNCIal STaTemeNTS
OTheR INFORmaTION
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:
Group financial statements
Company financial statements
Overall materiality
£2,060,000 (2018: £1,850,900).
£1,264,000 (2018: £1,503,000).
How we determined it
5% of profit before tax.
1% of total assets.
Rationale for benchmark
applied
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.
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 £60,900 and £1,957,000. 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 £103,000 (Group
audit) (2018: £92,545) and £63,200 (Company audit) (2018: £75,150) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
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.
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. For
example, the terms on which the United Kingdom may withdraw
from the European Union are not clear, and it is difficult to
evaluate all of the potential implications on the Group’s trade,
customers, suppliers and the wider economy.
We have nothing to report.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
75
INDepeNDeNT aUDITORS’ RepORT TO The memBeRS OF
mJ gleeSON plC CONTINUED
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 2019 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 41 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 43 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)
Other Code provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the Directors, on page 72, 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 48 to 52 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)
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OTheR INFORmaTION
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of the Director’s responsibilities in respect of the financial statements set out on page 72,
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 three
years, covering the years ended 30 June 2017 to 30 June 2019.
Ian Marsden (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered accountants and Statutory auditors
Leeds
13 September 2019
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
77
CONSOlIDaTeD INCOme STaTemeNT
FOR THE YEAR ENDED 30 JUNE 2019
Continuing operations
Revenue
Cost of sales
Gross profit
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 2019
Profit for the year
Other comprehensive income/(expense)
Items that may be subsequently reclassified to profit or loss
Change in value of shared equity receivables at fair value through OCI
Movement in deferred tax on share-based payments taken directly to equity
Other comprehensive income/(expense) for the year, net of tax
Total comprehensive income for the year
The notes on pages 83 to 101 form part of these financial statements.
78
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
Note
2019
£000
2018
£000
2
5
7
7
8
3
10
10
10
10
16
20
249,899
(174,936)
74,963
(34,256)
292
40,999
906
(693)
41,212
(7,648)
33,564
196,741
(131,474)
65,267
(28,670)
257
36,854
418
(253)
37,019
(6,526)
30,493
(297)
(257)
33,267
30,236
60.97 p
59.84 p
55.55 p
54.69 p
61.51 p
60.37 p
56.02 p
55.15 p
2019
£000
2018
£000
33,267
30,236
131
240
371
31
(237)
(206)
33,638
30,030
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
STaTemeNT OF FINaNCIal pOSITION
AT 30 JUNE 2019
Non-current assets
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
Trade and other payables
Provisions
UK corporation tax
Total liabilities
Net assets
Equity
Share capital
Retained earnings*
Total equity
Note
11
12
13
15
20
14
15
22
17
18
17
18
Group
2019
£000
2,343
257
–
16,759
2,659
22,018
183,121
45,795
30,306
–
259,222
281,240
2018
£000
1,737
258
–
24,626
3,731
30,352
160,517
10,602
41,314
–
212,433
242,785
Company
2019
£000
2018
£000
1
–
100,800
–
239
–
–
100,800
–
127
101,040
100,927
–
21,666
1,058
3,027
25,751
–
38,291
8,474
2,625
49,390
126,791
150,317
(8,774)
(130)
(8,904)
(9,176)
(110)
(9,286)
–
–
–
–
–
–
(65,068)
–
(3,372)
(42,441)
(49)
(2,910)
(63,358)
–
–
(66,707)
–
–
(68,440)
(45,400)
(63,358)
(66,707)
(77,344)
(54,686)
(63,358)
(66,707)
203,896
188,099
63,433
83,610
24
28
1,092
202,804
1,092
187,007
203,896
188,099
1,092
62,341
63,433
1,092
82,518
83,610
* Retained earnings have been restated for 1 July 2017 and 30 June 2018 as a result of changes in accounting standards. See note 28 for further information.
Retained earnings of the Company
The loss of the Company in the financial year amounted to £2,319,000 (2018: £2,090,000).
The financial statements on pages 78 to 101 were approved by the Board of Directors on 13 September 2019 and signed on its behalf by:
James Thomson
Director
Stefan Allanson
Director
Registration number: 9268016
The notes on pages 83 to 101 form part of these financial statements.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
79
STaTemeNT OF ChaNgeS IN eQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Group
At 1 July 2017
Total comprehensive income for the year
Profit for the year
Other comprehensive expense
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Sale of own shares
Share-based payments
Dividends
Transactions with owners, recorded directly in equity
At 30 June 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
Note
24
25
9
25
9
Share
capital
£000
Retained
earnings*
£000
Total
equity
£000
1,082
170,289
171,371
–
–
–
10
–
–
–
10
30,236
(206)
30,030
30,236
(206)
30,030
–
95
1,026
(14,433)
10
95
1,026
(14,433)
(13,312)
(13,302)
1,092
187,007
188,099
–
–
–
–
–
–
–
33,267
371
33,638
33,267
371
33,638
32
960
(18,833)
32
960
(18,833)
(17,841)
(17,841)
At 30 June 2019
1,092
202,804
203,896
* Retained earnings have been restated for 1 July 2017 and 30 June 2018 as a result of changes in accounting standards. See note 28 for further information.
80
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
STaTemeNT OF ChaNgeS IN eQUITY CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
Company
At 1 July 2017
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
At 30 June 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
Note
24
25
9
25
9
Share
capital
£000
Retained
earnings
£000
Total
equity
£000
1,082
98,035
99,117
–
–
–
10
–
–
–
10
(2,090)
3
(2,087)
(2,090)
3
(2,087)
–
(23)
1,026
(14,433)
10
(23)
1,026
(14,433)
(13,430)
(13,420)
1,092
82,518
83,610
–
–
–
–
–
–
–
(2,319)
57
(2,262)
(2,319)
57
(2,262)
(42)
960
(18,833)
(42)
960
(18,833)
(17,915)
(17,915)
1,092
62,341
63,433
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
81
STaTemeNT OF CaSh FlOWS
FOR THE YEAR ENDED 30 JUNE 2019
Note
3
11
25
16
11
7
7
Operating activities
Profit/(loss) before tax from continuing operations
Loss before tax from discontinued operations
Depreciation of plant and equipment
Share-based payments
Profit on redemption of shared equity receivables
Loss on disposal of plant and equipment
Finance income
Finance expenses
Operating cash flows before movements in working capital
Increase in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Decrease in amounts due from subsidiary undertakings
Increase in amounts due to subsidiary undertakings
Cash generated in operating activities
Tax received
Tax paid
Interest paid
Investing activities
Proceeds from disposal of shared equity receivables
Proceeds from disposal of investment properties
Interest received
Purchase of plant and equipment
Net cash flow (deficit)/surplus from investing activities
Financing activities
Proceeds from issue of shares
Sale/(purchase) of own shares
Dividends paid
Net cash flow deficit from financing activities
11
9
Group
2019
£000
2018
£000
Company
2019
£000
2018
£000
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)
37,019
(217)
36,802
971
1,026
(167)
152
(418)
253
38,619
(17,967)
(3,247)
9,855
–
–
27,260
–
(5,156)
(172)
(2,373)
–
(2,373)
–
960
–
–
(37)
328
(1,122)
–
(37)
(143)
16,663
2,315
17,676
37
(5,944)
(344)
995
1
72
(1,866)
(798)
960
45
29
(1,376)
(342)
–
–
35
(1)
34
(2,012)
–
(2,012)
1
1,026
–
–
(97)
165
(917)
–
140
(65)
7,722
3,920
10,800
–
(5,156)
(165)
5,479
–
–
194
–
194
–
32
(18,833)
10
95
(14,433)
–
(42)
(18,833)
10
(23)
(14,433)
(18,801)
(14,328)
(18,875)
(14,446)
Net cash flow surplus from operating activities
8,591
21,932
11,425
Net (decrease)/increase in cash and cash equivalents
(11,008)
7,262
(7,416)
(8,773)
Cash and cash equivalents at beginning of year
41,314
34,052
8,474
17,247
Cash and cash equivalents at end of year
22
30,306
41,314
1,058
8,474
82
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
NOTeS TO The FINaNCIal STaTemeNTS
FOR THE YEAR ENDED 30 JUNE 2019
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 principal accounting policies set out below have been applied consistently to all periods presented in these financial statements
with the exception of policies for Revenue and Financial Instruments. These policies have been updated following the implementation of
IFRS 15 “Revenue from contracts with customers” and IFRS 9 “Financial instruments”. Further details can be found in note 28. Assets
and liabilities in the financial statements have been valued at historic cost except where otherwise indicated in these accounting
policies.
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
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for at least 12 months from the date of the financial statements. Thus they
continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
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. Revenue is recognised when control transfers to a customer as follows:
• Revenue from homes sales is recognised when control is transferred to the customer, which is deemed to be on legal completion
when title of the property passes to the customer.
• Revenue from land sales is recognised at the earlier of when contracts to sell are completed and title has passed or when
unconditional contracts to sell are exchanged 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.
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 operating segments’ 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 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, and the unwinding of discounts on deferred payments. Interest expense
is recognised in the consolidated income statement using the effective interest method.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
83
NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
1 Accounting policies continued
Leasing
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income
statement on a straight-line basis over the period of the lease.
Plant and equipment
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:
Plant and equipment: between 3 and 6 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 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, dividends, 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, 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 to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are
recognised in 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.
84
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
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.
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 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 2019
85
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
1. Accounting policies continued
Adoption of new and revised standards
For the year ended 30 June 2019, the Group has applied the following new and revised standards that were mandatorily effective for an
accounting period beginning on or after 1 January 2018.
Standard
Annual improvements
IFRS 2 (Amended)
IFRS 9
IFRS 15
IFRS 15 (Amended)
Issued 2014 – 2016
“Share-based payments” (issued June 2016)
“Financial instruments” (issued July 2014)
“Revenue from contracts with customers” (issued May 2014)
“Revenue from contracts with customers” (issued April 2016)
Note 28 sets out the impact of IFRS 9 “Financial instruments” and IFRS 15 “Revenue from contracts with customers”. The adoption of the
remaining standards and amendments has not had any material impact on the disclosures or the 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 2019:
Standard
IFRS 16
IFRS 9 (Amended)
Annual improvements
“Leases” (issued January 2016)
“Financial instruments” (issued October 2017)
Issued 2015 – 2017 (issued December 2017)
Effective for periods
beginning on or after
1 January 2019
1 January 2019
1 January 2019
IFRS 16 will introduce a “right-of-use asset” and a lease liability representing future lease payments to the statement of financial
position in respect of leases to which the Company and the Group is a party. This will not have a material net impact on the reported
equity of the Company and the Group. If the new Standard was to be applied at the balance sheet date, the total assets of the Group
would increase by £2,633,000 and total liabilities would increase by £2,770,000. Consequently, the net impact would be a decrease in
net assets of £137,000. There would be £nil impact on the Company’s statement of financial position. There will be no impact on cash
flows of the Group and the Company as a result of the new standard.
Enhanced disclosures will be required for IFRS 16 and these will be included in the financial statements for the year to 30 June 2020.
The application of the remaining 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.
86
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
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:
Revenue
Continuing activities:
Gleeson Homes
Gleeson Strategic Land
Total revenue
Profit on activities
Gleeson Homes
Gleeson Strategic Land
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
Note
2019
£000
2018
£000
197,034
52,865
249,899
153,397
43,344
196,741
30,068
13,013
43,081
(2,082)
906
(693)
41,212
(7,648)
33,564
26,165
12,633
38,798
(1,944)
418
(253)
37,019
(6,526)
30,493
3
(297)
(257)
33,267
30,236
The revenue in the Gleeson Homes segment relates to the sale of residential properties. All revenue for the Gleeson Strategic Land
segment is in relation to the sale of land interests.
Revenue of £26,521,000 was derived from a single external customer, which makes up more than 10% of total Group revenue. This
revenue was attributable to the Gleeson Strategic Land segment.
Balance sheet analysis of business segments:
Gleeson Homes
Gleeson Strategic Land
Group activities/discontinued operations
Net cash
Assets
£000
171,608
78,861
465
30,306
2019
Liabilities
£000
(41,755)
(33,520)
(2,069)
–
Net assets
£000
129,853
45,341
(1,604)
30,306
Assets
£000
147,634
53,391
446
41,314
2018
Liabilities
£000
(33,895)
(18,412)
(2,379)
–
Net assets
£000
113,739
34,979
(1,933)
41,314
281,240
(77,344)
203,896
242,785
(54,686)
188,099
Other information:
Continuing operations:
Gleeson Homes
Gleeson Strategic Land
Group activities
2019
Capital
additions
£000
1,838
27
1
1,866
Depreciation
£000
1,096
11
1
1,108
2018
Capital
additions
£000
Depreciation
£000
1,367
9
–
1,376
965
5
1
971
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
87
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
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
Loss for the year from discontinued operations
The cash flow statement includes the following relating to the operating loss on discontinued operations:
2019
£000
–
–
–
(264)
(264)
(264)
(33)
(297)
2019
£000
(361)
2018
£000
–
–
–
(217)
(217)
(217)
(40)
(257)
2018
£000
(321)
2019
£000
29,922
1,108
152
745
2018
£000
26,182
971
152
543
Note
6
11
11
21
Note
16
81
19
2019
£000
226
66
292
69
14
2018
£000
167
90
257
2018
£000
1,102
165
230
62
1,559
Group
Company
Note
25
19
2019
£000
24,840
960
3,113
1,009
29,922
2018
£000
21,255
1,026
3,160
741
26,182
2019
£000
866
230
214
66
1,376
Operating activities
4 Expenses and auditors’ remuneration
Profit for the year is stated after charging:
Staff costs
Depreciation of plant and equipment
Loss on disposal of plant and equipment
Operating lease expenses
Auditors’ remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
5 Other operating income
Profit on redemption of shared equity receivables
Other operating income
6 Staff costs
Wages and salaries
Share-based payments
Social security costs
Pension costs
88
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
6 Staff costs continued
The monthly average number of employees during the year was:
Gleeson Homes
Gleeson Strategic Land
Group activities
Group
2019
No.
535
13
2
550
2018
No.
463
11
6
480
The monthly average number of Company employees and Non-Executive Directors during the year was 6 (2018: 6).
Directors’ remuneration
Full details of the Directors’ remuneration is provided in the audited part of the Remuneration Report on pages 64 to 66.
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 charges
Unwinding of discount on long-term payables
Other external interest
Net finance income
8 Tax
Current tax
Current year expense
Adjustment in respect of prior years
Current tax expense for the year
Deferred tax
Current year expense
Adjustment in respect of prior years
Impact of rate change
Deferred tax expense for the year
Total tax charge
2019
£000
36
843
27
906
(53)
(275)
(351)
(14)
(693)
213
Continuing operations
Discontinued operations
Note
2019
£000
2018
£000
2019
£000
2018
£000
Total
2019
£000
Group
6,397
(28)
6,369
1,350
(118)
47
1,279
7,648
5,569
(36)
5,533
1,003
(33)
23
993
6,526
20
20
20
–
–
–
37
–
(4)
33
33
–
–
–
45
–
(5)
40
40
6,397
(28)
6,369
1,387
(118)
43
1,312
7,681
2018
£000
18
396
4
418
–
(165)
(83)
(5)
(253)
165
2018
£000
5,569
(36)
5,533
1,048
(33)
18
1,033
6,566
Corporation tax has been calculated at 18.8% of assessable profit for the year (2018: 17.8%). The applicable UK corporation tax rate is
19%, effective from 1 April 2017.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
89
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
8 Tax continued
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% (2018: 19%)
Tax effect of:
Expenses not deductible for tax purposes
Relief for share-based payments
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
9 Dividends
Note
£000
%
£000
%
2019
2018
3
41,212
(264)
40,948
37,019
(217)
36,802
7,780
19.0
6,992
4
–
43
(28)
(118)
–
–
0.1
–
(0.3)
10
(385)
18
(36)
(33)
7,681
18.8
6,566
19.0
0.0
(1.0)
0.0
(0.1)
(0.1)
17.8
20
Amounts recognised as distributions to equity holders in the year:
Interim dividend for the year ended 30 June 2019 of 11.5p (2018: 9.0p) per share
Final dividend for the year ended 30 June 2018 of 23.0p (2017: 17.5p) per share
2019
£000
2018
£000
6,278
12,555
18,833
4,902
9,531
14,433
The proposed final dividend for the year ended 30 June 2019 of 23.0p per share (2018: 23.0p) brings the total dividend for the year to
34.5p (2018: 32.0p).
The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these financial
statements. The total estimated final dividend to be paid is £12,694,000.
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
90
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
2019
£000
33,564
(297)
33,267
2018
£000
30,493
(257)
30,236
2019
No. 000
2018
No. 000
54,566
54,428
1,027
55,593
2019
p
61.51
60.37
2019
p
(0.54)
(0.53)
862
55,290
2018
p
56.02
55.15
2018
p
(0.47)
(0.46)
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
10 Earnings per share continued
Continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
11 Plant and equipment
Cost or valuation
At 1 July 2017
Additions
Disposals
At 30 June 2018
Additions
Disposals
At 30 June 2019
Accumulated depreciation
At 1 July 2017
Charge for the year
Disposals
At 30 June 2018
Charge for the year
Disposals
At 30 June 2019
Net book value
At 30 June 2017
At 30 June 2018
At 30 June 2019
2019
p
60.97
59.84
2018
p
55.55
54.69
Group
Plant and
equipment
£000
Company
Plant and
equipment
£000
4,954
1,376
(938)
5,392
1,866
(625)
6,633
3,470
971
(786)
3,655
1,108
(473)
4,290
1,484
1,737
2,343
14
–
–
14
1
(14)
1
13
1
–
14
–
(14)
–
1
–
1
The Group has recorded a depreciation charge of £1,108,000 (2018: £971,000), of which £292,000 (2018: £231,000) has been charged in
cost of sales and £816,000 (2018: £740,000) in administrative expenses.
The Company has recorded a depreciation charge of £nil (2018: £1,000).
12 Investment properties
At 1 July 2017
Disposals
At 30 June 2018
Disposals
At 30 June 2019
Investment properties, which comprise a legacy portfolio of ground rent properties, are stated at fair value based on valuation by
the Directors.
Group
£000
303
(45)
258
(1)
257
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
91
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
13 Investments in subsidiaries
Cost
At 1 July 2017, 30 June 2018, and 30 June 2019
Company
£000
100,800
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.
Principal activity
House building
House building
House building
Strategic land trading
Strategic land trading
Principal activity
Intermediate holding company
In run off – Construction services
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
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.
The following are the other subsidiary companies of MJ Gleeson plc:
Company name
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
1 Shares held by Gleeson Developments Limited.
2 Shares held by MJ Gleeson Group Limited.
3 Shares held by Gleeson Properties Limited.
14 Inventories
Land held for development
Work in progress
Net realisable value provisions held against inventories at 30 June 2019 were £2,224,000 (2018: £2,325,000).
The cost of inventories recognised as an expense in cost of sales was £175,798,000 (2018: £132,278,000).
92
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
2019
£000
70,923
112,198
183,121
2018
£000
72,329
88,188
160,517
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
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
2019
£000
55,204
2,162
752
4,436
–
62,554
16,759
45,795
62,554
2018
£000
29,631
–
600
4,997
–
35,228
24,626
10,602
35,228
2019
£000
6
36
19
–
21,605
21,666
–
21,666
21,666
2018
£000
4
15
5
–
38,267
38,291
–
38,291
38,291
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.
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 Directors consider that the carrying value of trade receivables
approximates to their fair value.
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 2019, the Group’s most significant credit risk was with a listed housebuilder and amounted to £29,991,000 (2018:
£23,471,000) of the trade and other receivables carrying amount, with the deferred receivables secured by way of first legal charge over
the land. The Group’s remaining credit risk is spread over a large number of counterparties and customers.
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
2019
£000
51,662
1,138
4
78
2,806
55,688
2018
£000
25,732
1,060
–
2,784
123
29,699
Company
2019
£000
2018
£000
6
–
–
–
–
6
4
–
–
–
–
4
93
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
16 Financial instruments continued
All trade receivables are from UK customers.
Trade receivables past due more than one year are largely retentions within the Gleeson Homes division. The amounts due are included
at expected realisable value.
Included in trade receivables not past due are £12,323,000 (2018: £19,629,000) 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
Balance at 30 June
Market risk
The Group has no significant exposure to currency risk or equity risk.
Group
Company
2019
£000
68
416
484
2018
£000
68
–
68
2019
£000
–
–
–
2018
£000
–
–
–
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 no debt
or other material interest-bearing financial liabilities.
A 1% increase in interest rates would improve the annual income of the Group by £303,000 (2018: £413,000) based on the cash balance
at the year end. A 1% decrease would cause income to fall by the same amount.
Liquidity risk
During the year, the Group exercised the accordion option on its £20,000,000 credit facility with Lloyds Bank plc to increase the facility
to £40,000,000 and extended the maturity date to 31 August 2021. As at 30 June 2019 the Group was not drawn on the facility.
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective
interest rates at the balance sheet date:
Bank balances
2019
2018
Effective
interest
rate
%
0.50
Due within
one year
£000
30,306
Effective
interest
rate
%
0.25
Due within
one year
£000
41,314
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 2019
Trade and other payables
As at 30 June 2018
Trade and other payables
Carrying
amount
£000
Contractual
cash flows
£000
6 months or
less
£000
6–12 months
£000
1–2 years
£000
2–5 years
£000
(73,842)
(74,330)
(58,542)
(73,842)
(74,330)
(58,542)
(5,073)
(5,073)
(8,802)
(8,802)
(1,913)
(1,913)
Carrying
amount
£000
Contractual
cash flows
£000
6 months or
less
£000
6–12 months
£000
1–2 years
£000
2–5 years
£000
More than 5
years
£000
–
–
More than 5
years
£000
(51,617)
(52,260)
(36,332)
(51,617)
(52,260)
(36,332)
(6,108)
(6,108)
(4,560)
(4,560)
(5,260)
(5,260)
–
–
94
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
16. Financial instruments continued
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. The following
summarises the major methods and assumptions used in estimating the fair values of financial instruments. Following the
implementation of IFRS 9 “Financial instruments” shared equity receivables are measured at fair value through other comprehensive
income (FVOCI) as set out in note 28.
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
2019
£000
4,997
(679)
77
41
4,436
2018
£000
5,669
(703)
90
(59)
4,997
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 £679,000 (2018: £703,000) generated a profit on redemption of
£226,000 (2018: £167,000) 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 £131,000 (2018: £31,000) 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
Group
2019
£000
41
90
131
2018
£000
(59)
90
31
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%
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
95
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
16 Financial instruments continued
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%
Increase/
(decrease) in fair
value (£000)
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 24 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
Other taxation and social security
VAT payable
Accruals and deferred income
Amount due to subsidiary undertakings
Non-current
Current
Group
Company
2019
£000
49,319
1,438
–
23,085
–
73,842
8,774
65,068
73,842
2018
£000
33,142
1,149
1,927
15,399
–
51,617
9,176
42,441
51,617
2019
£000
117
52
–
632
62,557
63,358
–
63,358
63,358
2018
£000
126
90
–
698
65,793
66,707
–
66,707
66,707
Group
Dilapidations
£000
211
(52)
159
20
(49)
130
2018
£000
110
49
159
Amounts due to subsidiary undertakings are unsecured, repayable on demand, and interest free.
18 Provisions
At 1 July 2017
Provisions released during the year
At 30 June 2018
Provisions made during the year
Provisions released during the year
At 30 June 2019
Non-current
Current
96
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
2019
£000
130
–
130
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
18 Provisions continued
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.
Company
At 30 June 2019, the Company did not have any provisions (2018: £nil).
19 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 £1,009,000 (2018: £741,000) represents contributions payable
to the defined contribution pension plan by the Group at rates specified in the plan rules. At 30 June 2019, contributions of £132,000
(2018: £90,000) 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 £66,000 (2018: £62,000) represents contributions payable to the defined
contribution pension plan by the Company at rates specified in the plan rules.
20 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 2017
Adjustment in respect of prior year
(Charge)/credit to income
Charge to equity
Impact of rate change
At 30 June 2018
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change
At 30 June 2019
Plant and
equipment
£000
395
4
43
–
(2)
440
(23)
(89)
–
4
332
Short-term
timing
differences
£000
Share-based
payments
£000
214
(1)
(61)
–
6
158
102
233
–
(25)
468
1,010
(30)
66
(237)
(7)
802
(106)
173
240
(12)
1,097
Losses
£000
3,382
60
(1,096)
–
(15)
2,331
145
(1,704)
–
(10)
762
Total
£000
5,001
33
(1,048)
(237)
(18)
3,731
118
(1,387)
240
(43)
2,659
A reduction in the UK corporation tax rate from 19% to 17% with effect from 1 April 2020 was substantively enacted into law before the
balance sheet date. In the opinion of the Directors, some timing differences are expected to reverse prior to 1 April 2020, and some
after 1 April 2020. Therefore deferred tax has been provided at a mixed rate between 19% and 17% for relevant timing differences on a
company by company basis to arrive at the consolidated position. If all of the deferred tax balances were restated at a rate of 17% rather
than 19%, the total deferred tax asset would reduce by £120,000 to £2,539,000.
At the balance sheet date, the Group has gross tax losses of £13,015,000 (2018: £21,215,000) of which £4,149,000 (2018: £12,349,000)
have been recognised as a deferred tax asset. The Group has unrecognised tax losses of £8,866,000 (2018: £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, £1,615,000 (2018: £2,287,000) is expected to be recovered within 12 months of the balance sheet date.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
97
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
20 Deferred tax assets continued
Company
The deferred tax assets recognised by the Company and movements thereon during the current and prior year are as follows:
Plant and
equipment
£000
Short-term
timing
differences
£000
Share-based
payments
£000
At 1 July 2017
Adjustment in respect of prior year
Credit to income
Credit to equity
Impact of rate change
At 30 June 2018
Adjustment in respect of prior year
Credit to income
Credit to equity
Impact of rate change
At 30 June 2019
21 Operating leases
Operating leases – lessee
2
–
–
–
–
2
–
–
–
–
2
115
(114)
–
–
–
1
15
19
–
(2)
33
Minimum lease payments under non-cancellable operating leases recognised as an expense for the year
85
3
37
3
(4)
124
(18)
44
57
(3)
204
Group
2019
£000
745
745
Total
£000
202
(111)
37
3
(4)
127
(3)
63
57
(5)
239
2018
£000
543
543
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
Land and building lease terms vary between one to ten years.
The Company had no minimum lease payments under non-cancellable operating leases.
22 Cash and cash equivalents
At 1 July 2017
Cash flow
At 30 June 2018
Cash flow
At 30 June 2019
Group
2019
£000
858
2,227
1,176
4,261
2018
£000
577
1,499
960
3,036
Group
£000
34,052
7,262
41,314
(11,008)
30,306
Company
£000
17,247
(8,773)
8,474
(7,416)
1,058
98
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
23 Bonds and securities
Group and Company
At 30 June 2019, the Group had bonds and securities of £39,055,000 (2018: £22,537,000) 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.
Bank guarantees
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 2019, borrowings covered by these guarantees amount to £nil (2018: £nil).
24 Share capital
Group and Company
Issued and fully paid ordinary shares:
At 1 July
Shares issued during year
At 30 June
2019
Number
000
54,588
–
54,588
£000
1,092
–
1,092
2018
Number
000
54,120
467
54,588
£000
1,082
10
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.
The number of ordinary shares of 2p in issue at 30 June 2019 was 54,587,753 (2018: 54,587,753).
At 30 June 2019, the Employee Benefit Trusts (“EBT") held 15,000 shares (2018: 28,000) at a cost of £113,000 (2018: £219,000) 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.
25 Share-based payments
The Group operates a number of share option schemes, a summary of which is shown below. Additional information regarding the
share-based payment arrangements for Executive Directors is set out in the Remuneration Report on pages 54 to 69. All schemes are
equity-settled.
Date of grant
Outstanding at 1 July 2017
Granted in the year
Forfeited
Exercised
Outstanding at 30 June 2018
Granted in the year
Forfeited
Exercised
Share purchase plans
MJ Gleeson
Group plan
No. of shares
38,926
–
(4)
(11,707)
27,215
–
(14)
(4,976)
MJ Gleeson
Group 2014
plan
No. of shares
14,800
5,701
(26)
(743)
19,732
6,349
(101)
(5,067)
279,158
–
–
–
279,158
–
–
–
Outstanding at 30 June 2019
22,225
20,913
279,158
Remaining contractual life
Weighted average exercise price
Weighted average share price at date of
exercise – current year
Weighted average share price at date of
exercise – prior year
Rolling
scheme
–
Rolling
scheme
–
£7.78
£7.37
£7.21
£6.37
nil
–
n/a
n/a
Fair value is used to measure the value of the outstanding options.
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
14,000
–
–
–
14,000
–
–
–
14,000
276,315
–
–
–
276,315
–
–
–
–
409,793
–
–
409,793
–
(19,731)
–
276,315
390,062
–
–
–
–
–
67,500
–
–
67,500
3 months
–
nil
–
12 months
–
24 months
–
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
99
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 NOTeS TO The FINaNCIal STaTemeNTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2019
25 Share-based payments continued
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.
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
£4.82
£6.15
£0.00
32%
2.00%
3 years
0.76%
£2.37
£5.95
£6.50
£0.00
30%
3.20%
3 years
0.30%
£3.15
£5.70
£6.50
£0.00
30%
n/a2
31 months
0.60%
£2.95
£6.50
£8.00
£0.00
36%
n/a2
33 months
0.50%
£3.40
£7.04
£10.00
£0.00
35%
n/a2
33 months
0.98%
£3.41
Expected volatility was determined by calculating the historical volatility of the Company’s share price; volatility was measured over the previous 3 years.
1
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.
The total share-based payment cost charged to the consolidated income statement was £960,000 (2018: £1,026,000).
26 Capital commitments
At 30 June 2019, the Group had capital commitments of £nil (2018: £nil). The Company had no capital commitments (2018: £nil).
27 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 36 and 37, and certain
other senior managers.
During the 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. The purchase
will only proceed with the approval of a majority vote of shareholders; approval is likely to be sought at the next AGM.
During the year the Group purchased an area of land from Jolyon Harrison, who was CEO of the Group at the time of the transaction, for
£98,750. The land forms part of a new Gleeson Homes site being developed in the ordinary course of business. The price paid by the
Group was supported by an independent valuation and approved by the Board.
In the prior year, the Group purchased cladding materials from a company, JDP Contracting Services Limited, in which Jolyon Harrison
(CEO of the Group at the time of the transaction) is a Director. During the current year the Group purchased £nil (2018: £38,000) goods
from the company. The terms were at normal market rates and payment terms and there were no guarantees provided. The amount owed
to JDP Contracting Services Limited at 30 June 2019 was £1,000 (2018: £3,000).
Other than disclosed above, there were no other transactions with key management personnel in either the current or prior year.
100
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
27 Related party transactions continued
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
2019
£000
1,771
1,771
2018
£000
727
727
2019
£000
21,605
21,605
2018
£000
38,267
38,267
2019
£000
62,557
62,557
2018
£000
65,793
65,793
28 Adoption of new accounting standards
IFRS 9 “Financial instruments”
IFRS 9 “Financial instruments” applied to the Group from 1 July 2018, replacing IAS 39 “Financial instruments: recognition and
measurement”. The new standard requires that financial assets that are within the scope of IFRS 9 are measured at amortised cost,
fair value through profit and loss (“FVTPL”) or fair value through other comprehensive income (“FVOCI”). The Group has adopted the
modified retrospective transition approach, including adopting the practical expedient.
The majority of the Group’s financial assets and liabilities continue to be accounted for on the same basis under IFRS 9 as they were
under IAS 39. The exception to this is the Group’s shared equity portfolio. These were previously held under IAS 39 as Available for Sale
Financial Assets. This classification is not available under IFRS 9 and the assets have been reclassified as FVOCI. The available for
sale reserve that was previously classified separately in equity has been reclassified as part of retained earnings.
Changes in fair value are recognised initially in other comprehensive income (“OCI”). When the asset is derecognised or reclassified,
changes in fair value previously recognised in OCI and accumulated in equity are reclassified to profit and loss on a basis that always
results in an asset measured at FVOCI having the same effect on profit and loss as if it were measured at amortised cost.
Impairment of financial assets
IFRS 9 also requires that an expected credit loss model, rather than an incurred credit loss model, is applied. This requires the
assessment of the expected credit loss on each class of financial asset at each reporting date.
The main class of financial asset held by the Group is trade and other receivables, principally receivables for land sold on deferred
terms. As the period for deferment is short and security is held, the risk of loss to the Group is considered to be sufficiently mitigated
and credit risk is considered low. The Group also has financial assets in the form of shared equity receivables as set out in note 16.
These are measured at fair value through OCI and the assessment of fair value includes consideration of credit risk across the portfolio.
Other receivables include completion monies for house sales which exist only for short periods of time and mainly relate to the Help to
Buy scheme, exposing the Group to limited credit risk. Hence, the application of the expected credit risk model has had no material
impact on the financial statements.
The effect of implementing IFRS 9 is as follows:
Retained earnings (pre-IFRS 9)
Available for sale reserve now classified as part of retained earnings
Retained earnings (post-IFRS 9)
There is no impact to the Company from the implementation of IFRS 9.
30 June 2019
£000
30 June 2018
£000
1 July 2017
£000
203,330
(526)
187,664
(657)
170,977
(688)
202,804
187,007
170,289
IFRS 15 “Revenue from contracts with customers”
IFRS 15 “Revenue from contracts with customers” applied to the Group from 1 July 2018, replacing IAS 18 “Revenue and related
interpretations”. The standard has been adopted using the modified retrospective approach. There is no impact on retained earnings in
prior years nor on the profit in the current period, as the timing of revenue recognition has not changed under IFRS 15.
•
•
In respect of house sales, the performance obligation is satisfied on the transfer of control of the home to the customer. This occurs
on legal completion.
In respect of land sales, the performance obligation is satisfied on the transfer of control of the land to the buyer. The relevant facts
and circumstances are considered to determine when control has transferred, which is either when contracts to sell are completed
and title has passed or when unconditional contracts to sell are exchanged.
Elements of variable consideration, such as overages, are recognised where these are highly probable. This has had no impact on the
financial statements.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
101
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2019 OTHER INFORMATION
Five Year Review
Further Information
Corporate Directory
Shareholder Information
Financial Calendar
Our Website
103
104
104
104
104
104
St. Aidan’s View, Chilton, County Durham
102
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
STRaTegIC RepORT
gOveRNaNCe
FINaNCIal STaTemeNTS
OTheR INFORmaTION
FIve YeaR RevIeW
Revenue
2019
£000
2018
£000
2017
£000
2016
£000
2015
£000
249,899
196,741
160,384
142,065
117,588
Exceptional restructuring costs
–
–
–
–
(1,236)
Operating profit
Provision for diminution in value of investments
Net finance income
Profit before tax
Tax (charge)/credit
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
40,999
–
213
41,212
(7,648)
33,564
36,854
–
165
37,019
32,963
–
49
33,012
28,166
–
72
28,238
22,046
(4,896)
113
17,263
(6,526)
(6,488)
(4,934)
(4,848)
30,493
26,524
23,304
12,415
(297)
(257)
(310)
(345)
(207)
33,267
30,236
26,214
22,959
12,208
281,240
(77,344)
242,785
(54,686)
215,742
(44,371)
180,640
(27,735)
168,592
(32,063)
203,896
188,099
171,371
152,905
136,529
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
pence
10.0
23.2
34.2
254
* Normalised earnings per share include discontinued operations and exclude the impact of exceptional costs.
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
103
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
Registered number
9268016
Incorporated in
England and Wales
Company secretary
Stefan Allanson
Auditor
PricewaterhouseCoopers LLP
Central Square
29 Wellington Street
Leeds LS1 4DL
Bankers
Lloyds Bank plc
10 Gresham Street
London EC2V 7AE
Solicitors
Simmons & Simmons
City Point
One Ropemaker Street
London EC2Y 9SS
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
SHAREHOLDER INFORMATION
ABOUT THIS REPORT
The paper in this report is a Forest Stewardship Council
(“FSC®”) certified product, produced with a FSC® mixed
sources pulp which is fully recyclable, biodegradable and
chlorine free. It is manufactured within a mill which complies
with the international environmental ISO 14001 standard.
The report has been printed using environmentally friendly
vegetable-based inks. Formulated on the basis of renewable
raw materials, vegetable oils are non-hazardous and from
renewable sources. Over 90% of solvents and developers
used are recycled for further use and recycling initiatives are
in place for all other waste associated with this production.
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
Email: enquiries@mjgleeson.com
Tel: 0114 261 2900
FINaNCIal CaleNDaR
Financial year end
30 June 2019
Full year results announced
16 September 2019
Ex-dividend date for final dividend
14 November 2019
Record date for final dividend
15 November 2019
Annual General Meeting
Final dividend payment
5 December 2019
13 December 2019
104
MJ GLEESON PLC ANNUAL REPORT AND ACCOUNTS 2019
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.
Carlisle Park, Swinton, South Yorkshire
M
J
G
L
E
E
S
O
N
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
A
N
D
A
C
C
O
U
N
T
S
2
0
1
9
gleeson
MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield S9 1XE
Email: enquiries@mjgleeson.com
Tel: 0114 261 2900
www.mjgleesonplc.com