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MJ Gleeson plc
Annual Report and
Accounts 2021
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MJ Gleeson plc Annual Report & Accounts 2021
MJ Gleeson plc
specialises in
low-cost house
building and land
promotion.
Highlights
Operational
Homes sold
1,812
(2020: 1,072)
Average selling price
£145,800
(2020: £130,900)
CO2e emissions (scope 1 & 2)
2.1 tonnes
per home sold
(2020: 2.8 tonnes)
Financial
Revenue
£288.6m
(2020: £147.2m)
Profit before tax
£41.7m
(2020: £5.6m)
Net assets per share
420.4p
(2020: 366.1p)
Earnings per share
58.2p
(2020: 8.1p)
Cash net of borrowings
Return on capital employed
£34.3m
(2020: £16.8m)
21.4%
(2020: 3.1%)
Cover: Florence, Sutton Heights,
Sutton-in-Ashfield, Nottinghamshire
Carlisle Park, Rotherham,
South Yorkshire
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Strategic Report
Contents
Strategic Report
At a Glance
Building Homes. Changing Lives.
Our Sustainable Approach
Our Values and Culture
Chairman’s Statement
Market Review
Our Sustainable Business Model
Key Performance Indicators
Q&A with Management
Chief Executive’s Statement
Business Review
Material Sustainability Issues
Our Sustainable Business Strategy
Communities, People, Environment
Sustainability Targets
UN Sustainable Development Goals
02
04
06
08
1 0
1 4
1 8
20
22
24
28
30
32
34
42
46
Sustainability in Action – Case Studies 48
TCFD Disclosures
SASB Disclosures
Financial Review
Risk Management
Section 172 Statement
Non-financial Reporting
58
60
64
68
74
76
Corporate Governance
80
Chairman’s Introduction
Board of Directors
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Sustainability Committee Report
Remuneration Committee Report
Annual Report on Remuneration
Directors’ Report
Statement of Directors’
Responsibilities
Financial Statements
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Other Information
Five Year Review
Further Information
84
86
94
98
106
1 1 0
1 1 4
126
129
132
140
140
1 41
142
144
145
170
1 7 1
01
Providing
high-quality,
affordable
homes to those
who need them
Read more on
Our Sustainable
Business Model
on pages 18 to 19
Sustainability:
People,
Communities
& the
Environment
Read more on
Our Sustainable
Business Strategy
on pages 32 to 33
Enabling home
ownership
for a vast
underserved
market
Read more on
Market Review
on pages 14 to 16
A culture that
attracts, retains
and promotes
the best people
Read more on Our
Values and Culture
on pages 8 to 9
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Key
Gleeson Homes
Gleeson Land
MJ Gleeson plc Annual Report & Accounts 2021
At a Glance
Divisional Breakdown
£288.6m
Revenue
Gleeson
Homes
£265.8m
Gleeson
Land
£22.8m
£43.1m
Operating profit*
Gleeson
Homes
£37.4m
Gleeson
Land
£11.1m
* After Group overheads of £5.4m
02
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Florence and Kellie-Jay,
Sutton Heights, Sutton-in-
Ashfield, Nottinghamshire
From “Gleeson Strategic Land” to “Gleeson Land”
Our land promotion business is focused on meeting the growing short-term needs of housebuilders for attractive,
well-planned sites that are “oven ready” for development. A large number of the sites we promote obtain a planning
permission and are sold within five years. We promote carefully selected, high-quality sites that can be delivered in a
reasonable timeframe. As such, these are not typically long-term strategic allocations or speculative land opportunities.
To better reflect the nature of the business, the division has been rebranded “Gleeson Land”. The statutory company
name currently remains Gleeson Strategic Land Limited.
03
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Gleeson HomesWe build affordable, quality homes. Where they are needed, for the people who need them most.Our mission is to change people’s lives through home ownership, primarily first time buyers and young families, many of whom are on low-to-average incomes and are key workers. We help people to escape from housing poverty caused by the “rent trap” and into home ownership, wealth creation, and better health and wellbeing. A couple working full time on the government’s National Living Wage can afford to buy a home on any of our developments. We build in areas of deprivation, regenerating communities and creating meaningful spaces where people want to live. These are often brownfield sites with access to transport, local facilities and employment. Most of our customers are from the local area and want to remain part of their local community. Our sustainable business approach is based around our relationships with communities, people and the environment. Gleeson LandWe promote land through the complex planning system. Unlocking value to deliver sustainable and attractive sites for other developers to build new homes, where they are needed.We carefully select and promote land through the planning process on behalf of landowners. Our highly skilled team of planning, technical and land specialists take a bespoke approach to every site. We carefully consider the constraints of a site, being sensitive to local needs and environmental aspects.We build strong relationships with landowners and take a proactive and personal approach to promoting their land. We work to achieve best value on their behalf, whilst delivering planning permissions that are implementable and ready for developers to start on site. We form an integral part of the supply chain for new housing, delivering high-quality consented land to housebuilders, predominantly in the South of England.Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Building Homes.
Building
affordable,
quality homes.
We build our homes with the needs of our
customers first and aim for 5-star quality
across all of our developments.
We will not hand over the keys to a home
unless we are proud to put our name to it.
Gleeson homes:
2, 3 or 4
bed houses
Significantly
cheaper
to buy than rent
Highly energy
efficient
Sold
freehold
Traditional approach:
Brick and block
construction
Front and rear
gardens
Driveways at the
side
£95,000
With prices from as low as
£95,000, a working couple
on the National Living Wage
can afford to buy on any of
our developments.
04
Model Walk, Worksop,
Derbyshire
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Gleeson homes:
Changing Lives.
Where they are
needed, for the
people who need
them most.
We exist to provide homes to a largely
underserved community of young, first
time buyers.
We strive to make homeownership a reality
for everyone.
Strategic Report
Gleeson customers:
80%
First time buyers
2 out of 3
Key workers
29 years old
Median buyer age
1 out of 3
Below 25 years old
£23,000
Median buyer income
51%
Single buyers
4 out of 5
of our homes are built in
the most deprived areas
of the UK. That compares
to 1 out of 4 for other
housebuilders.
05
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MJ Gleeson plc Annual Report & Accounts 2021
Our vision:
Building Homes.
Changing Lives.
Our mission:
Changing lives by
building affordable,
quality homes.
Where they are
needed, for the
people who need
them most.
Read more on Our Sustainable
Business Strategy on pages
32 to 33
Read more on Our Values and
Culture on pages 8 to 9
Rhea and Lewis, Petersmiths
Park, Ollerton, Nottinghamshire
06
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Our Sustainable Approach Our sustainable business strategy is built around our relationship with Communities, People and the Environment.
Our most material sustainability issues are:
Our business supports six UN Sustainable
Development Goals (“SDGs”) through its
activities:
Health and safety
Affordability
Land
Build quality
Carbon emissions
Sustainable cities
and communities
Gender equality
Decent work and
economic growth
Responsible
consumption
and production
Climate action
Life on land
Read more on our Material
Sustainability Issues on pages 30 to 31
Read more on our support of
UN SDGs on pages 46 to 47
We have engaged with our key stakeholders to understand their views on our material sustainability issues.
Customers
Employees
Shareholders
Read more on our Communities
on pages 34 to 35
Read more on our People on
pages 36 to 37
Local
Authorities
Banks
Read more on our relationship
with the Environment on pages
38 to 41
07
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CommunitiesWe want to create attractive, affordable places for young, first time buyers to live, creating sustainable communities. PeopleWe are committed to ensuring all employees and subcontractors will be treated fairly, kept safe and be paid a fair wage.EnvironmentWe take all reasonable measures to conduct our business in a way that minimises our impact on the environment and enhances the land we develop.Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Our Values
and Culture
Our Values
We are Passionate
We are passionate about building
high-quality homes that are
affordable for everyone.
We are passionate about our
customers and ensuring they enjoy
buying their home from us. Where
we get things wrong, we aim to
put it right quickly and fairly.
We are proud of the strong
relationships we build with our
suppliers and contractors who
work alongside us.
We are Collaborative
We work together collaboratively,
with shared goals, where
information, knowledge and ideas
can be discussed openly, honestly
and free from judgement.
We listen to our customers and
work with them throughout their
buying journey.
We collaborate with our external
partners and value their part in
helping us achieve our goals.
We are Respectful
We respect the right to a safe
working environment on all our
sites and in all our offices and are
fully committed to ensuring our
colleagues and those who work on,
or visit our sites and offices, return
HomeSafe – everyone, every day.
We are respectful of our customers,
colleagues and partners by listening
to them and treating them equally
and fairly.
We undertake our business in an
ethical way, and we respect the
environment.
Ahmed, Technical Site Engineer,
Greater Manchester
08
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Monitoring
our culture
Our annual “Your Voice” survey is
one of our engagement tools and
helps us monitor the views of
our colleagues across the business.
This year, we saw a 13% increase in response rate
and are proud of the fact that, from an independent
survey, we remain in the top quartile of companies
across the country for employee engagement. This is
important as it has been a challenging year including
for those colleagues who were furloughed during
the first lockdown, working remotely or dealing with
the stresses of the pandemic on both mental and
physical health. Despite these challenges, we saw an
improvement in scores across many areas, as well as
gaining a greater understanding of areas that need
more attention in the coming year.
We also use a Personal Development Review
process as a way to engage with all colleagues in a
structured way twice a year. Our people are asked to
reflect on how they have demonstrated our values,
engaging in a meaningful conversation with their
line manager about their aspirations, development
needs and performance.
Find out more on pages 36 and 37.
Our
employee
engagement
score
Our people
are proud
to work
for Gleeson
89%
(2020: 88%)
88%
(2020: 85%)
We are Passionate
We are passionate about what we do; Paul Hume,
a forklift operator at Petersmiths Park in Ollerton,
Nottinghamshire noticed there was an issue with
dust on the roads around the site and that hiring an
external road sweeper came at a cost.
Paul designed and created a dust-suppression
system to attach to his forklift, which meant he
could reduce the dust on the roads at a significantly
lower cost and reduce idle time.
His passion sets a great example and his design has
the potential for wider roll out on other sites.
We are Collaborative
We work collaboratively with the community;
during the construction of our Roseberry Court
development in Kirkleatham, Redcar the local
church kindly allowed us to use their land for the
site compound and welfare facilities.
Since the construction of Roseberry Court, the old
church was demolished and a new church built in
its place. To show our appreciation for letting us
use their land, Gleeson resurfaced the car park of
the church free of charge and provided a fenced
boundary between the church and our development.
We are Respectful
We respect our customers’ needs; when Oliver and
Charlotte requested permission to convert their
garage into a wet room and downstairs bedroom
for their 12-year-old daughter with severe mobility
limitations, we agreed to design and fund the entire
project. We worked with Sheffield City Council
and the NHBC to create a walk-in wet room and
bedroom including a hoist to allow easier movement
between the bed and wet room. No one should be
restricted in their own home based on disability.
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09
Our values in action – case studiesStrategic Report MJ Gleeson plc Annual Report & Accounts 2021
Chairman’s Statement
“
I am pleased to report a strong set
of results for the financial year to
June 2021, with revenue and profit
ahead of pre-Covid levels.”
Gleeson Homes completed a record 1,812
new homes and remains on track to meet
its target of delivering 2,000 new homes
in 2022.
Gleeson Land sold eight sites with the potential to
deliver 1,978 plots. Demand for consented sites has
returned to pre-Covid levels and in the current financial
year the division has already completed the sale of one
substantial site.
Market
The demand for Gleeson Homes’ high-quality, low-cost
homes remains very strong. Mortgage finance continues
to be available to our purchasers on favourable terms
and the government’s two new initiatives to help first
time buyers – the First Homes scheme and the 95%
mortgage guarantee scheme – will also help to support
demand in the market in which Gleeson operates. Due
to the low, affordable selling price of our homes and the
typical backgrounds of our customers, most purchases
of a Gleeson home are not subject to stamp duty and, as
a result, the first tapering of the stamp duty holiday in
June has had little impact on our performance. We do not
expect the end of the stamp duty holiday in September to
have any impact either on demand or revenue.
As has been widely publicised, the construction sector
as a whole is currently experiencing availability and cost
pressures with respect to labour and materials. So far,
however, due to its long-term, trusted relationships with
suppliers and subcontractors, Gleeson Homes has been
able to maintain both its build programmes and its gross
margins. We are cautiously confident it will continue
to do so.
10
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Dermot GleesonChairman Strategic Report
Calverley View, Bradford,
West Yorkshire
Gleeson Land has seen a strong increase in demand from
major housebuilders for high-quality, consented sites.
Despite the disruptive impact of the pandemic on local
authority planning departments, the division is continuing
to secure new and commercially attractive planning
consents. It has also added a number of new, high-quality
sites to its portfolio.
Our people
The last 18 months have been challenging. I wish to
express my very deep sense of gratitude to all our
employees for their remarkable resilience in what have
been very difficult circumstances and for their continuing
commitment to the Company’s success.
Sustainability
In last year’s Annual Report, we set out our commitment
to being a sustainable housebuilder aligned with UN
Sustainable Development Goals (“SDGs”), in particular
target 1 of SDG 11, “Sustainable cities and communities”,
which is to provide “access for all to safe and affordable
housing”. A young working couple can afford to buy
a high-quality home on any one of Gleeson Homes’
development sites.
The UK housing market as a whole is heavily skewed
towards the needs of middle and upper-income buyers
who already own a home. The average selling price of
houses in England is now over £325,000. In consequence,
and despite the rise in the number of new homes
being built, housing inequality in the UK remains a very
significant problem. I am proud of the contribution we are
making, both in practice and by our example, to resolving
that problem.
Our customers are young, first time buyers and people
on low incomes who would like to own their home but, in
many cases, believe themselves to be “priced out” of the
market. Gleeson’s high-quality, affordable homes enable
them to achieve their dream. What is more, by choosing
to live in a new, energy efficient home on a carefully
planned and designed Gleeson development, young first
time buyers give themselves the opportunity to become
active members of a strong and sustainable community.
I have been particularly impressed by the progress made
during the year with respect to employee development
and engagement. The most recent independently
assessed engagement scores show a further rise, placing
Gleeson in the top quartile of UK companies. We continue
to strive to be, and to be recognised as, one of the best
companies to work for in the UK.
Dividends
Following the suspension of dividend payments in 2020,
the Board resumed payments in April 2021, paying an
interim dividend of 5.0p per share.
Subject to shareholder approval at the 2021 Annual
General Meeting (“AGM”), the Board proposes to pay a
final dividend of 10.0p per share on 22 November 2021,
to shareholders on the register at the close of business
on 29 October 2021. The total dividend for the year to
30 June 2021 will, on that basis, be 15.0p.
The Board has also reviewed the Company’s capital
allocation policy, assessing the capital needs of both
shareholders and the Company as it continues to invest
for growth. The Board intends to maintain an earnings to
ordinary dividend cover ratio of between three and five
times and expects to pay a final dividend representing
two-thirds of the total dividend each year. This policy
will be reviewed periodically to ensure that it remains
appropriate.
11
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Chairman’s Statement
Continued
Summary and
outlook
Despite the pressures currently
affecting the supply of materials
and labour within the construction
industry, the prospects for Gleeson
Homes are very encouraging.
Mortgage rates and conditions
for first time buyers on low
incomes are unprecedented and
very favourable. As a result, there
is scope for further, controlled
increases in selling prices, while
ensuring that young working
couples on low incomes can
continue to afford to buy a high
quality home on any one of
Gleeson Homes’ development sites
– an objective which, for Gleeson,
has become a point of pride.
Gleeson Land is experiencing
strongly rising levels of interest
from housebuilders, many of
which are urgently seeking to fill
the gaps in their own land banks in
the South of England.
Against this backdrop, the Board
believes that the Group will be
able to continue its pre-pandemic
growth trajectory, both in the near
term and beyond.
Dermot Gleeson
Chairman
13 September 2021
Financial stability
The Group retains its strong
financial position and ended the
year with cash balances of £34.3m
and no debt (30 June 2020:
£16.8m net cash). In April this
year, the Group entered into a new
borrowing facility shared between
Lloyds Bank plc and Santander
UK plc. This has a limit of £105m
(previously £70m with Lloyds)
and gives the Group additional
liquidity to invest in growth.
I am pleased to confirm that
the Company has repaid all
financial support received by the
Group from the government’s
Coronavirus Job Retention
Scheme and retail grant and
rebates schemes.
Corporate
governance
I was very pleased in March this
year to welcome Elaine Bailey
to the Board, who has been
appointed as a Non-Executive
Director. Elaine, a former Chief
Executive of Hyde Housing
Group, brings to our deliberations
an exceptional breadth of
construction and housing-related
experience.
Elaine has been appointed as
Chair of the new Sustainability
Committee and as a member
of the Nomination, Audit, and
Remuneration Committees.
In December 2020, we established
the Sustainability Committee of
the Board to oversee the Group’s
approach to sustainability and
to environmental, social and
governance (“ESG”) issues. Its
first report, including a summary
of the work undertaken by the
Committee this year, is integrated
into our Annual Report.
12
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MJ Gleeson plc Annual Report & Accounts 2021 Strategic Report
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Rainsborough Park,
Knottingley, West Yorkshire
13
MJ Gleeson plc Annual Report & Accounts 2021
Market Review
The UK housing market is failing
to meet the needs of young, first
time buyers and people on low
incomes. The market is also failing
to deal with the complex issues of
housing inequality and the right to
safe, affordable housing. Too many
young working people who want
access to the health, wealth and
wellbeing benefits that come with
home ownership are unable to buy a
home and continue to live in rented
accommodation or live with parents.
Kilner Park, Doncaster,
South Yorkshire
14
Too few homes are being built
Housebuilding volumes have increased over
recent years, but they are still falling short of the
government’s target of 300,000 new homes per
year by the mid-2020s. This target could be further
hampered by inherent complexities in the planning
system and, more recently, challenges around the
supply and availability of materials and skilled
labour.
The net under-supply in the market will continue
to drive house prices and exacerbate the problems
for young people and those on lower incomes who
want to get onto the housing ladder.
Net additional dwellings in England
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Government Target
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Source: Gov.uk Components of net housing supply, England.
More than 1 in 3 homes are rented
4.1 million households in the North of England and
Midlands are renting. Despite the efforts of the
government, housebuilders and housing associations
to build more homes, the levels of home ownership
are below historic levels. In 2020, more than
one in three householders were living in rented
accommodation, either social or private rented.
However, the desire to own a home remains strong;
nine in ten young adults aspire to own a home and
over half (51%) of first time buyers listed it as one of
their top life goals1.
Household tenure by region (millions)
7.6
8.2
4.1
4.8
Owned
Rented
Owned
Rented
North of England & Midlands South of England & East
Source: Gov.uk Dwelling stock: by tenure and region.
1. Santander First-Time Buyer Study July 2019.
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The benefits of home ownership are clear
Not only are there health and wellbeing benefits
that come from home ownership, but there are clear
wealth benefits. According to a recent independent
report, nearly half of homeowners with a mortgage
agree they are able to save more because their
mortgage is cheaper than renting, and 1 in 3
homeowners see their mortgage as a means to
invest in their future. The typical homeowner can
gain wealth of £326,000 over thirty years compared
with renting, even before any potential house price
gains are factored in.
Young people are struggling to become
homeowners
Whilst home ownership among the young has been
increasing over the last few years, it remains low
with only one in ten people younger than 30 years
old owning their own home. Over the past two
decades there has been a shift towards the private
rental sector, with young people likely to remain
renters for longer. This is particularly apparent for
adults in the 25–34 age group; in 2007–08 only 28%
lived in private rented accommodation, increasing to
44% a decade later2.
Home ownership
Private rental
Home ownership below the age of 30
£209,000
Equity gained
after 30 years
£357,000
Total
payments
Wealth created
from buying
£326,000
No asset
£474,000
Rental
payments
30%
25%
20%
15%
10%
5%
0
500
Source: Equity Release Council. Rent assumes the average
rent rising by 2% p.a. Homeowner assumes £220,000 home
bought with a 30 year repayment mortgage, and subsequent
remortgages. Analysis includes other costs of ownership
including insurance and repairs.
5
7
9
1
0
8
9
1
5
8
9
1
0
9
9
1
5
9
9
1
0
0
0
2
5
0
0
2
1
0
0
2
5
1
0
2
0
2
0
2
Source: The Resolution Foundation.
2. ONS Living longer (February 2020).
Mortgage availability is improving
Mortgage approvals fell to a 10-year low in May 2020
but have recovered strongly, rising to just over 95,000
in June 2021. The availability of 90% loan-to-value
(“LTV”) mortgage products has also recovered in the
year from a low of 51 products in October 2020 to 481
at May 20213.
Easing of the mortgage market is supported by the
introduction of the government’s 95% LTV mortgage
guarantee scheme.
7
3
3
1
1
1
0
0
0
Number of all UK mortgage approvals
ct 2
r 2
2
Jan
p
O
A
5
1
0
ct 2
O
6
1
0
ct 2
O
3
1
0
ct 2
O
1
1
0
ct 2
O
2
1
0
ct 2
O
0
1
0
ct 2
O
4
1
0
ct 2
O
0
1
0
r 2
p
A
6
1
0
r 2
p
A
7
1
0
r 2
p
A
5
1
0
r 2
p
A
2
1
0
r 2
p
A
1
1
0
r 2
p
A
4
1
0
r 2
p
A
6
1
0
2
Jan
7
1
0
2
Jan
0
1
0
2
Jan
1
1
0
2
Jan
4
1
0
2
Jan
5
1
0
2
Jan
2
1
0
2
Jan
3
1
0
l 2
Ju
5
1
0
l 2
Ju
7
1
0
l 2
Ju
6
1
0
l 2
Ju
4
1
0
l 2
Ju
2
1
0
l 2
Ju
0
1
0
l 2
Ju
1
1
0
l 2
Ju
8
1
0
2
Jan
8
1
0
r 2
p
A
8
1
0
l 2
Ju
8
1
0
ct 2
O
9
1
0
2
Jan
9
1
0
r 2
p
A
9
1
0
l 2
Ju
9
1
0
ct 2
O
0
2
0
2
Jan
0
2
0
r 2
p
A
0
2
0
l 2
Ju
0
2
0
ct 2
O
1
2
0
2
Jan
1
2
0
r 2
p
A
120,000
100,000
80,000
60,000
40,000
20,000
0
House prices remain sensible in the North of
England and Midlands
House prices in the North of England and Midlands
have risen in the past year but remain sensible. Low
mortgage rates and rising wages, including the
National Living Wage, have improved affordability.
In the North of England and Midlands, mortgage
payments as a percentage of mean after tax pay
remain sensibly low at around 30%. However, saving
for a deposit is still seen as the biggest barrier to
achieving the home ownership dream.
House price index in England
South of England & East
North of England & Midlands
National Living Wage
160
150
140
130
120
110
100
90
80
1
0
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
7
0
0
2
8
0
0
2
9
0
0
2
1
0
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Source: Bank of England, not seasonally adjusted.
Source: Land Registry indexed prices (2007 = 100).
3. Moneyfacts.
15
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MJ Gleeson plc Annual Report & Accounts 2021
Market Review
Market Review
Continued
Continued
New build prices remain above the reach of many
young people
The average price of a new build home in England
is now £326,000. Prices are lower in the North of
England and Midlands at £257,000 but this is still out
of reach for many young people, especially those
on lower incomes. A working couple on the National
Living Wage, borrowing four times their combined
income and borrowing 90% of the purchase price can
afford to buy a home costing around £165,000.
New build average selling prices
£377,000
£257,000
£145,800
Homes are being built in more affluent areas
The majority of housebuilders are focused on
building new homes in more affluent areas. Three-
quarters of all new homes built in 2020 were in
more affluent areas, with only one-quarter built in
the most deprived4 areas of England. This disparity
reflects the fact that new homes are not being built
in the areas which need them the most.
New build homes sold by areas of deprivation
Other housebuilders
Gleeson Homes
76%
78%
24%
22%
South of
England & East
North of England
& Midlands
Gleeson Homes
Third most
deprived areas
More affluent
areas
Third most
deprived areas
More affluent
areas
Source: ONS Housing market simple average house prices by new
dwellings by region.
Source: Land Registry, Indices of Multiple Deprivation gov.uk.
4. Most deprived areas have been assessed as the lowest one-
third using the Indices of Multiple Deprivation.
Too few homes are built for sale below £175,000
The house building industry as a whole is not building
enough new homes for sale below £175,000. In the
North of England and Midlands, only 8% of homes
sold below £175,000 were new build compared to
21% priced above £175,000. This ratio highlights the
under-supply of affordable new homes. Whilst there
are many older terrace houses in the resale market,
the age and condition of these houses often makes
them more expensive to maintain and run.
Housing transaction volumes in the North of
England & Midlands
Below £175k
Above £175k
8%
21%
1 in 12
new build
1 in 5
new build
92%
79%
Resale
New build
Source: Land Registry.
16
Homes are getting more expensive to build
The cost of construction materials has risen
significantly since the beginning of 2020 and lead
times on deliveries have extended. This may impact
on the industry’s ability to meet the government’s
target of 300,000 new homes per year in the
short-term. In addition, the cost of implementing
the government’s Future Homes Standard will add
further cost to each home built.
Construction materials price indices for
new housing
130
125
120
115
110
105
100
95
90
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Source: ONS Construction materials price indices (2015 : 100).
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17
Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Our Sustainable Business Model
Gleeson Homes
Land acquisition
We acquire land in
areas of deprivation,
targeting brownfield
land opportunities. We
transform these into
meaningful spaces for
people to live.
We have clearly
defined gateway
processes to ensure
we buy land in the
right areas and at the
right price. This is
essential to keeping
our homes affordable.
Planning
We plan our
developments to
transform sites
into attractive
and sustainable
communities.
We work with
local authorities,
communities, residents
and other stakeholder
groups to achieve
an implementable
planning permission
that is sympathetic to
local needs.
Designing homes
Our homes are
designed to exceed
the latest planning and
building regulations.
For example, 98.2%
of our homes are EPC
rated B or above. All
are fitted with energy
efficient lighting
and low flow water
devices, which save 15
litres per person, per
day (12%) against the
requirements set by
Building Regulations.
Gleeson Land
New sites
We use land agents
and in-house search
capabilities to identify
and carefully select
new sites. We enter
into agreements
with landowners to
promote their land
through the planning
process.
Promotion
We engage with local
authorities, residents,
communities,
stakeholder groups
and statutory
consultees to promote
land for sustainable
housing development,
whilst balancing
stakeholder needs.
Planning
We have in-house
planning capabilities
and work closely with
planning and other
specialist consultants
to develop attractive,
sustainable and well-
designed plans for
housing.
Key inputs
Financial capital
We have a robust
capital model with
strong liquidity to
invest and grow the
business.
Land
We identify land
opportunities often
in areas where other
housebuilders do not
want to build.
Building
materials
We look to sustainably
source materials and
use local suppliers
where possible to
supply our sites.
Our people
Our people are key to
achieving the mission
and vision of our
business and they
share our values.
Local authority
relationships
We build relationships
with local authorities
and share our
sustainable approach
and vision.
Supply chain
partnerships
We partner with our
supply chain, using
local subcontractors
and labour.
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Strategic Report
Kilner Park, Doncaster,
South Yorkshire
Value for
stakeholders
Customers
We help our customers to
achieve long-term value
creation, security and
wellbeing through home
ownership.
Shareholders
We generate sustainable
value and returns for our
shareholders.
Our people
We invest in our
people, develop their
skills and reward them
appropriately.
Suppliers and
subcontractors
We create long-term
relationships with
our suppliers and
subcontractors, pay them
fairly and on time.
Communities
We regenerate deprived
areas and leave a positive
lasting legacy in the
communities who need it
the most.
Society
We change the lives of
people connected to our
business for the better,
bringing value to society
through our activities.
19
Sales and customer
experience
Our focus on quality
is absolute and we will
not hand over a home
that we are not 100%
proud of.
We strive to provide
a 5-star customer
experience and this
commitment to quality
extends throughout
the customer journey.
Outcome
We sell high-quality,
affordable homes
primarily to first time
buyers or young
families, many on low-
to-average incomes.
We enable people to
escape from housing
poverty caused by the
“rent trap” and into
home ownership and
wealth creation.
Build
Our health and safety
procedures are
designed to ensure
everyone remains safe
from harm.
We prioritise local
suppliers and trades,
providing investment
to the communities in
which we operate.
We are reducing
carbon emissions
from our activities and
working to minimise
our impact on the
environment.
Technical
We have our own
technical expertise to
ensure that our sites
are supplied free from
technical issues. In
doing so, we provide
developers with an
“oven ready” site that
is ready to start on.
Sales process
As one of the UK’s
largest land promoters,
we have strong
relationships with
medium and large-
sized housebuilders.
We bring high-quality
consented land to
market and look to
achieve best value for
landowners.
Outcome
We supply high-
quality land that has
the benefit of planning
permission, to other
housebuilders,
fulfilling a key stage
in the process of
delivering much
needed new homes.
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MJ Gleeson plc Annual Report & Accounts 2021
Key Performance Indicators
Sustainability KPIs
Financial KPIs
Health and safety (AIIR1)
Staff turnover (%)
Group profit before tax
(£m)
Link to strategy: Link to risk:
Link to strategy: Link to risk:
Link to strategy:
Link to risk:
Customer recommendation
score (%)
CO2e (scope 1 and 2)
tonnes per home sold
Cash net of borrowings
(£m)
Link to strategy: Link to risk:
Link to strategy: Link to risk:
Link to strategy: Link to risk:
First time buyers (%)
Waste (% of waste
diverted from landfill)
1. Accident Injury Incidence Rate measured
as the number of reportable incidents
per 100,000 employees and on-site
subcontractors.
Link to strategy: Link to risk:
Link to strategy: Link to risk:
20
Strategy
Sustainable growth
Build quality
Affordability
Climate change
People, wellbeing,
health and safety
Land
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33.037.041.25.641.720182017201920202021312341534.141.330.316.834.32018201720192020202111011234562.62.42.52.82.1201820172019202020214121126125127326121412115129No data available889120182017201920202021322018201720192020202136No data available878020182017201920208084722021No data available9698201820172019202020213592282482035562018201720192020202110
Strategic Report
Linkswood Park, Rotherham,
South Yorkshire
Financial KPIs
Operational KPIs
Total dividend (pence)
Gleeson Homes
Homes sold
Gleeson Homes
Build sites (year end)
Link to strategy: Link to risk:
Link to strategy: Link to risk:
Link to strategy: Link to risk:
Return on capital
employed2 (%)
Gleeson Homes
Land pipeline (plots)
Average selling price (£)
Link to strategy:
Link to risk:
Link to strategy: Link to risk:
Link to strategy: Link to risk:
2. Return on capital employed is calculated based on earnings before interest and tax (“EBIT”)
from continuing and discontinued operations, expressed as a percentage of the average of
opening and closing net assets after deducting deferred tax and cash net of borrowings.
Gleeson Land
Portfolio (sites)
Risks
Economic environment
People
Mortgage availability
Cyber and IT systems
Land availability
Health and safety
Government policy
and regulations
Build costs and availability
Build quality and
customer service
Financial control
Link to strategy: Link to risk:
Climate risk
Sustainability
21
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24.032.034.50.015.020182017201920202021110125.426.625.93.121.420182017201920202021Return on capital employed1,0131,2251,5291,0721,81220182017201920202021123415122,700125,200128,900130,900145,800201820172019202020213235112596569718120182017201920202021134111,58812,85213,57513,80115,863201820172019202020216341656160687120182017201920202021634112345678910111212341510
Q&A with Management
Q
A
Q
A
How has Gleeson dealt with the
impact of Covid-19?
Incredibly well, thanks to strong demand from our
customers and the commitment of all our
colleagues and subcontractors. We have been
fortunate that as an industry, with the exception of
the first lockdown, we have been able to operate
and trade through the pandemic, albeit under new
Covid-19 compliant procedures.
Our sites adapted by putting in place social
distancing measures and requiring only one trades-
person inside a house at any time. Our sales centres
operated under an appointment-only system, and
the majority of our office staff have been working
remotely. We are pleased to say that we have
continued to meet our customers’ expectations and
our focus on them has never waived.
I am really proud of how all my colleagues across
Gleeson adapted to the changes in their work and
personal lives and the resilience they have shown,
but I do not underestimate the pressure that it has
put on each and every one of them.
What have been the main challenges
of the past year?
The main challenge has been to continue with our
rapid pace of growth and business change, whilst
adapting to changing rules and regulations
imposed as a result of the pandemic. As a business,
it has taught us to be more agile in how we
respond and adapt to challenges which are outside
of our control. More recently, we are seeing
challenges in the form of rising costs and material
shortages, and we are continuing to adapt to these
and take actions to mitigate the impact on both
costs and build rate.
22
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James ThomsonChief ExecutiveMJ Gleeson plc Annual Report & Accounts 2021 Strategic Report
Q
A
Q
A
How has Gleeson developed its
approach to sustainability?
Sustainability has always been at the heart of what
we do, and our mission to provide affordable,
quality homes where they are needed, for the
people who need them most underpins everything
we do at Gleeson. This year we have undertaken a
detailed exercise to engage with our key
stakeholders to further understand their views
around the issues that affect our sustainability, and
we have taken this feedback under consideration
when developing our sustainable business strategy.
You can read more about our sustainable business
strategy on pages 32 to 33.
How has Gleeson invested in its
employees in the past year?
Our colleagues are our greatest asset, and we have
continued to invest in them in many ways. We
undertook more Mental Health First Aid training
sessions this year and now have over 30 Mental
Health First Aiders across the business. We were
already working on a programme to refresh our IT
equipment prior to the pandemic, but the move to
remote working has accelerated that and I’m
pleased with how well it has progressed. This has
been a key factor in enabling our people to
continue operating effectively. In addition, we have
created a series of online courses that are role-
specific and ensure our people get the training that
they need.
We have further increased our apprenticeship
programme and now have 70 apprentices across all
functions. Throughout the year, we have continued
to recruit, retain and promote the best people and
make sure that we have the right people in the
right roles.
Q
A
What are Gleeson’s strategic
priorities?
Our highest priority is safety and we have a “safety
first, always” culture through HomeSafe, our health
and safety programme, so that everyone who is
involved with, or affected by, our activities remains
free from harm and returns home safe every day.
Securing land on which we can build affordable
homes is the starting point for Gleeson Homes
and is critical for continued, sustainable growth.
Without a continuous supply of new sites, we can’t
build the homes that our customers need.
We are also focused on the impact of climate
change and the part we need to take in tackling it.
We continue to focus on quality, both build quality
and the customer journey, and are delighted to say
that we won a Gold Award in 2021 for Customer
Satisfaction after more than 90% of our customers
said they would recommend Gleeson.
Q
A
How has Gleeson fulfilled its vision
and mission this year?
Our vision and mission were developed by the
business and are very much embedded into our
culture and everything we do.
This year we sold 1,812 homes, primarily to first time
buyers or young families, many on low-to-average
incomes and two-thirds of whom were key workers.
A lot of our customers grew up in the areas that we
build, so they are able to stay close to family and
friends, strengthening their communities.
Many of these people would not have been able
to afford their own home and would either remain
living with parents or be stuck in the “rent trap”
without the opportunity to buy a Gleeson home.
I am immensely proud of our vision and what we
do: Building Homes. Changing Lives.
23
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MJ Gleeson plc Annual Report & Accounts 2021
Chief Executive’s Statement
“
After the unprecedented challenges
the country has faced over the last
18 months, I am pleased to report a
strong set of results this year.”
The delivery of 1,812 new homes was a
record result for Gleeson Homes and
18.5% ahead of pre-pandemic levels, an
outstanding performance and further
proof of the resilience of Gleeson’s
business model.
Gleeson Homes opened 27 new sites this year, which
was another record for the business, and we closed the
year with 81 build sites, of which 61 were actively selling.
This provides us with an excellent platform for sustainable
growth.
The newly rebranded Gleeson Land, previously Gleeson
Strategic Land, also had a successful year, selling eight
sites. Whilst this was below pre-pandemic levels, the
division completed the sale of a further site at the start of
this financial year, which represents a strong start to the
new financial year.
Market
The demand for low-cost, high-quality homes from first
time buyers remains as robust as ever and the broader
housing market has been strong. The main challenges
have been, and continue to be, around the price and
availability of materials and labour. This is an issue for the
industry as a whole and, so far, our strong supply chain
relationships and controlled selling price increases have
allowed us to trade through these issues. I expect this to
be a short-term challenge and one that will, in time, return
to normal levels.
Government policy is playing an important role in our
planning for the future. New building regulations, namely
Part L and Part F Building Regulations, are incorporated
into our plans and we are trialling air source heat pumps
24
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James ThomsonChief Executive Strategic Report
Number of homes sold
1,812 homes
2020: 1,072 homes
2019: 1,529 homes
Average selling price
£145,800
2020: £130,900
2019: £128,900
Active build sites
81 sites
2020: 71 sites
2019: 69 sites
Gleeson Land site sales
8 sites
2020: 2 sites
2019: 9 sites
Sustainability
Our mission of building affordable, quality homes where
they are needed and for the people that need them most
aligns fully with the UN SDG 11. Our customers tell us that
they buy a Gleeson home for their value and affordability,
their location and their good design. I am proud that we
are making it possible for young people, key workers and
people on low to middle-incomes to buy a home that they
want to live in, where they want to live and to help them
get onto the housing ladder with all the wealth, health and
wellbeing benefits that home ownership brings. A young
working couple on the National Living Wage can afford to
buy a Gleeson home on any of our development sites.
We publish our first sustainable business strategy this
year. In formulating this strategy, the Board sought the
views of stakeholders on the material sustainability issues
relevant to the Group. Growth, affordability, build quality,
health and safety, land regeneration and the reduction
of carbon emissions underpin our sustainable strategy.
With clear targets and actions, aligned with the issues
of importance to our stakeholders, this strategy will see
the Group continue to deliver sustainable growth for our
stakeholders and society.
25
on a number of developments. These will be the first
of many climate-focused changes as the government
progresses their vision of zero carbon ready homes. We
are supportive of these measures and our homes already
have better energy performance ratings than most other
new build homes, with over 98% of our homes having an
EPC rating of A or B.
Financial performance
Gleeson Homes delivered 1,812 new homes this year,
an increase of 69% on the prior year (2020: 1,072).
The average selling price of £145,800 was 11.4% higher,
reflecting an underlying increase of 9.3% and the impact
of site mix, and reflects the strong housing demand that
we are seeing across all our regions. We expect that
house price inflation will ease and that, combined with the
favourable mortgage market, will help ensure our homes
remain affordable. As a result of this strong performance,
Gleeson Homes delivered an operating profit of £37.4m
(2020: £9.0m).
Gleeson Land sold eight sites this year, with the potential
to deliver 1,978 plots. This generated an operating profit
of £11.1m (2020: £0.2m).
As a result, Group profit before tax was £41.7m
(2020: £5.6m).
During the year, the Group repaid £60.0m of loans drawn
on its revolving credit at the start of the pandemic. The
Group ended the year with a strong cash balance of
£34.3m and no debt (30 June 2020: £16.8m net cash).
Our balance sheet remains strong and will support our
future growth ambitions.
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Chief Executive’s Statement
Continued
People and health and safety
We have continued to invest in the business, as well as
ensuring that we have the right people in the right roles
and that colleagues are properly trained and supported to
do their jobs. Our focus on investing in our colleagues is
reflected in Gleeson receiving accreditation from Investors
In People during the year. I am also pleased to report
that employee engagement increased still further and
our independently assessed people engagement score
puts us once again very firmly in the top quartile of all UK
companies.
Health and safety has been an area of significant focus and
investment over the last two years so it was disappointing
to see the number of reportable incidents increase to ten
this year. We are addressing the issues that led to these
incidents and are increasing our investment in training, safe
working practices, inspections and reporting and I expect
to see this improve significantly.
Investment in site set-up with new compounds and
enhanced welfare facilities continued during the year.
We greatly value the relationships that we have with our
suppliers and subcontractors and I want Gleeson to be
their preferred choice of housebuilder to work with. We
are committed to paying fairly and on time for quality
workmanship and materials.
We have also invested in our Commercial, IT, HR and
Finance functions to make sure these can continue to
support the business as it grows.
Build quality and customer service
Our customers are at the heart of our business. This is the
most significant purchase many of our customers will ever
make and that’s why we want to get it right first time –
every time.
I am pleased to report that we achieved a customer
satisfaction score of 90.6% this year (equivalent to a
5-star rating). We will not hand over a new home that
we are not absolutely proud of. We have listened to our
customers and worked hard to make sure their buying
experience from us is positive from start to finish. We
will continue to push our performance as a strong 5-star
housebuilder on every site in every region. This work is
supported by our Customer First initiative which focuses
on ensuring every colleague across the business puts the
customer first.
As part of delivering a quality product and service, we
have also invested in our Customer Care team and this
year launched a fleet of new vans for our customer care
technicians. These technicians are dedicated to quickly
resolving any defects for our customers.
Land regeneration
Our Land and Planning team have had a record year
opening new sites and are central to supporting our
strategy of controlled growth. The land pipeline increased
by 14.9% to 15,863 plots on 152 sites and this will underpin
our future growth. Our land strategy continues to target
areas in need of regeneration. The majority of our sites
are located in the most deprived areas of England.
We deliver affordable, quality homes to this vastly
underserved sector of the market, often where no other
housebuilders want to build.
We transform land, often blighted by neglect, into areas
where people want to live. Many of our customers are
from the local area and want to remain close to friends
and family. They buy a Gleeson home because they get a
high-quality product that is affordable and cheaper to run
than the older housing stock in the surrounding areas.
26
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MJ Gleeson plc Annual Report & Accounts 2021 Isla, Briar Lea Park,
Carlisle, Cumbria
Climate and the environment
Climate change is the most important global issue we
face. Gleeson is committed to reducing the impact our
operations have on the environment and are reducing our
emissions by setting short and medium-term targets for
every home sold.
Last year, we announced an ambitious target to reduce
our direct emissions (scope 1 and 2) by 20% over three
years. I am pleased to report that, in our first year, we
are already close to achieving this target. Therefore, we
are increasing our three-year target to a 30% reduction
by 2023.
This year, we are also reporting our scope 3 emissions for
the first time, showing the total carbon emissions from
our supply chain and over the life of our homes. This is an
important first step to fundamentally assessing our wider
impact and taking action to reduce emissions throughout
our value chain, not just the emissions we produce
directly. Over the coming year we will be developing
a strategy to reduce our scope 3 emissions for every
home built.
Trading and outlook
In our Gleeson Homes division, demand remains robust
and it entered the new financial year in a strong position,
with a forward order book of £134.1m on 841 homes.
Whilst there are some challenges on material costs
and availability, I expect these to be short term and
manageable.
Gleeson Land starts the new financial year in a strong
position and with a pipeline of 71 sites, a record for the
division. These sites will deliver sustainable value and we
will continue to invest in new sites and in progressing
existing sites through the complex planning system. The
demand for consented land is expected to remain robust,
with land promoters playing an important role in the land
supply chain.
As a result, I believe we will continue to grow in a
sustainable and controlled manner and we remain firmly
on track to meet our near-term target of delivering 2,000
new homes in the coming financial year.
James Thomson
Chief Executive Officer
13 September 2021
27
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Strategic Report Business Review
Gleeson
Homes
Gleeson Homes delivered a record
number of homes sold, sites opened and
operating profit with all three metrics
exceeding pre-Covid levels. We also saw
significant growth in the land pipeline
and we enter the new financial year with
a strong forward order book.
Gleeson Homes completed the sale of 1,812 homes during
the year, an increase of 69.0% compared to the prior year
(2020: 1,072 homes) and 18.5% more than the pre-Covid
year to June 2019 (2019: 1,529 homes). Revenue increased
by 88.6% to £265.8m (2020: £140.9m) of which £1.5m
related to land sales (2020: £0.5m land sales).
We entered the new financial year with a strong forward
sales position of £134.1m on 841 units (2020: £145.3m
on 1,033 units). The reduction in the forward order book
compared to the prior year was due to the successful
completion of home sales which had been delayed
by the Covid-19 pandemic in the final quarter of the
previous year.
We opened a record 27 new build sites during the year
and start the new financial year with 81 active build sites
(2020: 71), of which 61 were actively selling (2020: 65).
Our average active build and sales sites were 78 and 64
respectively (2020: 68 and 65). Our sales outlets are
located across the North of England and the Midlands,
with plans to continue expanding our geographical reach.
The business plans to open a further 25 sites during
the new financial year and expects to be building on
approximately 90 sites by 30 June 2022.
The average selling price for homes sold in the year was
£145,800 (2020: £130,900), an increase of 11.4%. The
increase was influenced by a combination of factors:
house price inflation of 9.3%, mix of site locations and
the mix of two, three and four-bed homes sold. Buying
a Gleeson home remains highly affordable and a young
working couple on the National Living Wage can afford to
buy a Gleeson home on any one of our development sites.
Gross profit margin on homes sold increased to 28.5%
(2020: 27.8%) as increases in selling prices more than
offset cost inflation, including the costs of operating
under Covid-safe working practices.
The increase in the volume of homes sold and gross profit
margin resulted in gross profit increasing by 93.6% to
£75.7m, which included £0.4m in relation to land sales
(2020: £39.1m, £0.1m land sales), and operating profit
increasing by 315.6% to £37.4m, including £0.4m in
relation to land sales (2020: £9.0m, £0.1m land sales).
Operating margin increased from 6.4% to 14.1%.
28
Homes sold
1,812
2020: 1,072 homes
2019: 1,529 homes
Average selling price
£145,800
2020: £130,900
2019: £128,900
2020: £9.0m
2019: £30.1m
Operating profit
£37.4m
We had a
successful year in
land acquisitions
and continued to
acquire land at
sensible prices.
The pipeline grew
by 2,062 plots to
stand at 15,863
plots at 30 June
2021. Of these plots
7,930 are owned
(2020: 6,849)
and 7,933 plots are conditionally purchased (2020: 6,952).
The number of sites in the land pipeline totalled 152 at year
end, being three sites higher than the prior year end; 34
new sites were added to the pipeline, while 31 sites were
completed or did not proceed to purchase. In addition to
owned and conditionally purchased plots, there are a further
205 (2020: 798) plots which are being actively considered
for acquisition but will only proceed if they meet our
strict criteria.
The government’s Help to Buy scheme remains popular
with many of our customers, with 69% of the homes sold
during the year utilising the scheme (2020: 66%). We also
continue to provide a range of bespoke packages to assist
potential customers to become homeowners, including our
Key Worker Priority Programme and Forces Property Direct,
which provide priority access and vouchers toward optional
extras for key workers and military personnel looking to
purchase a new home.
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MJ Gleeson plc Annual Report & Accounts 2021 Strategic Report
Monteney Park, Sheffield,
South Yorkshire
Plots sold
1,978
2020: 195 plots
2019: 1,755 plots
Portfolio
71 sites
2020: 68 sites
2019: 60 sites
Operating profit
£11.1m
value over the
short, medium
and long term,
driven by the
planning context
of each site. Our
Gleeson Land
team is based in
Fleet, Hampshire, and the portfolio continues to have
a geographic bias towards the South of England.
2020: £0.2m
2019: £13.0m
This year we submitted planning applications for ten
sites with the potential to deliver 1,281 units. Like other
promoters and developers, we saw a marked slow-down
in the planning system due to Covid-19. Whilst this system
is, in some ways, now more challenging than it has ever
been, our highly experienced team of people and advisors
are skilled in navigating these complexities to achieve
attractive residential planning permissions.
We continue to see opportunities to add well-located
sites to the portfolio. We carefully select sites where we
see the potential for sustainable development and where
we can unlock maximum value for stakeholders. We aim
to be the promoter of choice for landowners and our
track record is testament to our success.
29
Gleeson Land
The market for consented land recovered
during the year leading to the sale of
eight sites.
Revenue from Gleeson Land increased to £22.8m
(2020: £6.3m), generated from the sale of eight sites
in the year (2020: two sites). The sites sold totalled
276 acres with the potential to deliver 1,978 plots
(2020: 26 acres and 195 plots).
As a result, operating profit increased to £11.1m
(2020: £0.2m). Planning delays caused by the pandemic
during the year resulted in fewer sites achieving planning
consents and fewer site sales than hoped for.
The business has completed the sale of a further site
since the beginning of the new financial year and the
outlook for the year remains promising.
The business continued to invest selectively in its land
portfolio. This year we added a further ten sites (1,594
plots) secured under option and promotion agreements
and split one existing site prior to sale.
At 30 June 2021, we had a portfolio totalling 71 sites
(2020: 68 sites) with the potential to deliver 22,315 plots
(2020: 23,314 plots) plus 44 acres of commercial land
(2020: 44 acres). This portfolio is expected to realise
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MJ Gleeson plc Annual Report & Accounts 2021
Material Sustainability Issues
Our materiality process
This year the Group undertook a
detailed materiality assessment to
identify the environmental, social and
economic issues most important to
the Group and its stakeholders.
This assessment considered a wide range of
factors, including the Group’s strategic priorities,
principal risks, stakeholder views, market trends,
socio-economic changes, environmental factors,
government policy and other matters. It also reflects
the UN Sustainable Development Goals relevant to
the Group, as set out on pages 46 to 47.
The purpose of this assessment has been to help
develop both the Group’s sustainable business
strategy, which can be found on pages 32 to 33, and
the Group’s sustainability reporting to stakeholders.
Materiality matrix
The materiality matrix reflects the relative
importance to the Group and its stakeholders of the
16 sustainability issues identified. Our stakeholders’
assessment of materiality is broadly aligned with the
Company’s own assessment.
High
l
s
r
e
d
o
h
e
k
a
t
S
o
t
e
c
n
a
t
r
o
p
m
I
Medium
5
1
4
3
2
9
7
8
6
13
12
14
11
10
15
16
Health and safety
Land
Affordability
Carbon emissions
Build quality
Planning and
government policy
Customer
satisfaction
Employee
engagement
Corporate
governance
Wellbeing
Training and skills
Waste recycling
Sustainable
materials
Equality
Biodiversity
Water usage
Medium
Importance to Company
High
Lisa, Assistant Site Manager, Dane
Park, Hull, East Yorkshire
30
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1
2
3
4
5
12345678910111213141516
1
Identify material issues
We identified 16 sustainability issues
relevant to the Group. Based on
an internal assessment, these were
then ranked in terms of relevant
importance to the Company.
2
Stakeholder engagement
Stakeholders including shareholders,
customers, employees, banks and
local authorities were asked to share
their views and rank the 16 material
sustainability issues. Interviews were
also held with selected stakeholders.
3
Prioritisation and selection
Based on our assessment and
findings from the stakeholder
engagement process, five
sustainability issues were identified
as most material to the Group.
4
Integration
The five most material sustainability
issues form part of the Group’s
sustainable business strategy and
strategic priorities, approved by
the Sustainability Committee and
the Board.
5
Review
The importance and relevance of
the five most material sustainability
issues will be adjusted as necessary
in response to future changes and
stakeholder views.
What are the risks?
Where do we see opportunities?
y Affordability is the number one
reason why our customers buy a
Gleeson home. If we do not ensure
our homes remain affordable it
would impact on our business
model and our ability to sell new
homes to those who need them
most, predominantly first time
buyers and low-income families.
This could impact our brand and
lead to a loss of sales as customers
look elsewhere.
y Our customers expect a high-
quality product from us. If we fail
to build homes that meet their
expectations then it could result
in defect claims, damage to brand
reputation and poor sales.
t
i
l
i
b
a
d
r
o
f
f
A
t
i
l
a
u
q
d
l
i
u
B
The need for affordable housing
across the UK continues to grow,
which supports our unique model
and sustainable business strategy.
We have a significant opportunity
to open more sites and expand
our geographical reach to provide
more people with access to safe,
affordable, high-quality homes.
Through our absolute focus on
quality and regular inspection
processes, we are able to reduce
the number of defects and any
rectification work required. We
see opportunity in continuing to
operate as a 5-star housebuilder
across all sites and providing a
high-quality product and service to
our customers.
y Health and safety is a priority
t
e
f
a
s
d
n
a
h
t
l
a
e
H
across our business and unsafe
working practices, policies or
procedures could result in harm to
employees, subcontractors or site
visitors, causing personal injury,
delays in construction, additional
cost, reputational damage and
potentially criminal prosecution or
civil litigation.
Through enhancing our health and
safety monitoring and reporting,
we will use this information to
tackle areas that pose the highest
health and safety risks. We have
the opportunity to improve our
health and safety performance
and statistics and have identified
a number of actions as set out on
page 45.
n
a
L
d Land is a fundamental component
of our business and the risk of new
sites not being available to acquire
at a low cost and in areas in need
of regeneration could impact the
success of the Gleeson Homes'
model and its ability to open
new sites.
Through continued focus on
low-cost land opportunities in
areas often not viable for other
housebuilders, we keep our
land costs low and ensure that
our homes remain affordable.
We see continued low-cost
land opportunities in our target
geographical areas.
The availability of high-quality,
well-located land in the South of
England is also fundamental to the
success of Gleeson Land, without
which future sales would be
restricted.
s Like all companies, we have a
n
o
i
s
s
i
m
e
n
o
b
r
a
C
role to play in addressing climate
change. If we do not act to
reduce our carbon emissions, this
could result in damage to the
environment from our operations,
being out of line with other
housebuilders and stakeholder
expectations, being unable to meet
government policy requirements,
reputational damage, and increased
costs of capital.
We have pro-active land searching
capabilities and continue to identify
new land opportunities across the
South of England for promotion by
Gleeson Land.
Integrating carbon emissions
tracking and reporting throughout
our business enables actions to
be taken on areas that generate
the most emissions. There is
opportunity to extend this both
upstream and downstream for our
scope 3 emissions and to improve
the data collected. Through the
design of our homes and adapting
our build processes we can reduce
our carbon footprint. Further
actions are set out on page 45.
31
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Strategic Report
MJ Gleeson plc Annual Report & Accounts 2021
Our Sustainable Business Strategy
Our sustainable business strategy incorporates the Group’s strategic objective for
growth, together with the environmental, social and governance priorities that are
most important to the Group.
Strategic priorities Objectives
Targets
Progress
Link to UN SDGs
Sustainable
growth
To build 2,000
new homes per
year by 2022.
Increase the
number of new
homes built
and extend our
geographical
reach.
Build quality
Affordability
Climate change
Build high-quality,
energy-efficient
homes to the
specification that
our customers
require.
To be a 5-star
housebuilder
on all our
development
sites.
Keep our homes
affordable
through
managing build
costs, sourcing
responsibly
and building
efficiently, utilising
local suppliers and
subcontractors
where possible.
To ensure that a
couple in full-
time employment
on the National
Living Wage
can afford to
buy a home on
every one of our
development
sites.
Protect the
environment and
reduce carbon
emissions for the
homes that we
build and sell.
To reduce our
scope 1 and 2
carbon emissions
by 30% to less
than 1.75 tonnes
per home within
three years (2020:
base year).
We have a robust platform
for continued growth with
a strengthened regional
management structure. Our
site opening plan underpins
future growth.
We are on track to deliver
2,000 units in the next financial
year, achieving our 5-year
target to double volume.
UN SDG 11 – By increasing the
number of new homes built
we are able to provide access
to safe, affordable homes for
more people who need them.
UN SDG 8 – As our business
grows, we will provide
investment, job opportunities,
training and skills to more
people including apprentices.
Our customer recommendation
score is 90.6%. This meets our
target and puts us in line with
the Home Builders Federation
five-star rating.
UN SDG 11 – Our mission is to
build high-quality homes that
provide safe and affordable
housing to the people who
need them most.
A couple working full time on
the government’s National
Living Wage can afford a home
on 100% of our active sales
sites.
UN SDG 11 – The cost of buying
a Gleeson home is less than
renting for most buyers and
can be as low as £59 per week.
This supports target 1 of UN
SDG 11 by providing access to
affordable housing.
Our scope 1 and 2 carbon
emissions per home sold
reduced by 18% in the year.
UN SDG 13 – We have set
targets to reduce carbon
emissions per home sold.
UN SDG 12 – We have
committed to increasing
the proportion of waste
diverted from landfill. We are
developing further initiatives
to reduce our impact on the
environment, including fuel
and water usage.
This year we have published
our scope 3 emissions and
intend to set a target to reduce
these per home sold.
We have established new
sustainability policies for
Climate and the Environment,
Procurement, Packaging,
Timber and Waste
Management.
98% of our construction waste
is currently diverted from
landfill.
32
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Strategic Report
Greymoor Meadows,
Carlisle, Cumbria
Each strategic priority has a link to the UN SDGs that are relevant to the Group as set
out on pages 46 to 47. It is through the achievement of these strategic priorities and
targets that the Group creates sustainable value for stakeholders and society.
Strategic priorities Objectives
Targets
Progress
Link to UN SDGs
People,
wellbeing,
health and safety
Land
Gleeson Homes
“Safety first,
always”.
Everyone who is
involved with, or
affected by, our
business remains
free from harm
and returns home
safe every day.
To attract, retain
and develop
employees who
share the values,
culture and
objectives of
the Group.
To sustainably
grow our land
pipeline, sourcing
land in areas
that are in need
of regeneration
where homes can
be built for sale at
low cost.
To reduce our
health and safety
incident rate
(“AIIR”) to lower
than the industry
average.
Our AIIR rate for the year to
30 June 2021 was 556 versus
the industry average of 264.
We have not met our target
this year, see page 42 for more
details.
To maintain
our employee
engagement
score in the
upper quartile
of all surveyed
companies.
In our latest engagement
survey we scored 89% which
puts us in the top quartile
of all companies from an
independent survey.
UN SDG 8 – Our HomeSafe
approach reflects our
belief that everyone who is
involved in, or affected by,
our development work has
the right to remain free from
harm and return home safe
every day.
UN SDG 5 – We are committed
to ensuring that all of our
employees are treated fairly
and equitably.
To acquire land at
an average cost
per plot below
15% of expected
selling price in
order to keep our
homes affordable,
targeting land
in areas of
deprivation
and in need of
regeneration.
64% of our active build sites
are on brownfield land, with
four out of five in the most
economic deprived areas in
England. We often choose sites
which are not viable for other
housebuilders.
UN SDG 15 – Our
developments are located in
areas where there is a need
for regeneration; typically
brownfield sites that would
otherwise remain derelict or
unused. We invest in our sites,
creating attractive and well-
planned developments with
green space and biodiversity.
Land
Gleeson Land
To source high-
quality sites that
are well located
to deliver
attractive
residential
planning consents
for sustainable
development.
To obtain
more planning
permissions in
each financial
year than
sites sold.
We acquired a further ten
sites this year with the
portfolio increasing by a net
three sites. The total portfolio
is 71 sites, with six having the
benefit of planning consent or
resolution to grant.
UN SDG 15 – Gleeson Land
invests in its portfolio and
works closely with landowners,
land agents, local authorities
and communities to secure
residential planning consents
that are sustainable and
sensitive to local ecosystems
and biodiversity.
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33
MJ Gleeson plc Annual Report & Accounts 2021
Communities
Gleeson Homes has a clear mission:
Changing lives by building
affordable, quality homes.
Where they are needed, for
those that need them most.
Affordable home
ownership
Buying a Gleeson home is cheaper
than renting an equivalent house.
We build homes in areas where
prices are lower and where land costs
are low, using traditional building
methods and standard house designs
so we can sell at affordable prices.
Creating communities for
young people
A young couple earning the National
Living Wage, working full time, can
afford to buy a Gleeson home on any
one of our developments. We are
proud to be able to say this and it is
a key test of affordability for every
site we buy.
The average cost of a Gleeson home
in 2021 was £145,800. This is 43%
lower than the average cost of all
other new build houses in the North
of England and Midlands.
Cost of owning and renting
(£/month)
Number of bedrooms
4
2
3
Cost of
buying
Cost of
renting
258
327
422
537
628
923
Mortgage payments: Standard 75% Help
to Buy, 35 year repayment mortgage, fixed
payments for the first five years, from a High
Street bank. Mortgage payments based on
average selling prices during the year.
Rental payments: ONS average private rental
costs for a house in the North of England and
Midlands.
High quality homes, where
they are needed
We build high-quality homes with a
front and rear garden and a driveway
for parking. We build where people
want to live, in the community they
grew up in, close to their families, on
sites with good transport links and
close to areas of employment. All our
homes come with a 2-year Gleeson
warranty and a 10-year NHBC Build
Mark Warranty or similar.
We build in areas of deprivation, in
need of regeneration, often where
other housebuilders choose to
ignore. Four out of five of our active
build sites are in the third most
deprived areas of the country.
New build selling prices in the
North of England and Midlands
Housebuilder sales in deprived
areas
£257,000
78%
£145,800
24%
Gleeson
Homes
All other
housebuilders
Gleeson
Homes
All other
housebuilders
Source: ONS housing market simple average
house prices by new dwellings by region.
Source: Land Registry, Indices of Multiple
Deprivation gov.uk.
Paying our fair share
Gleeson was proud to be the first
housebuilder to be accredited
by the Fair Tax Foundation for
our commitment to responsible
tax conduct and transparency.
We are proud to pay the right
amount of tax in the right place at
the right time.
transparent in their disclosure; it says
a lot about their values, integrity and
ability to trade in a sustainable way.
Profitable companies should pay their
fair share of tax and be honest and
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Strategic Report
Frankie and Libby, Carrwood Park,
Bradford, West Yorkshire
Supporting our
communities -
“Community Matters”
We involve ourselves actively
in the communities in which
we are building, before and
during the construction of our
developments and by leaving
a legacy once our work is
complete. The following are just
some of the ways we help local
communities.
Our Gleeson Community Sports
and Charity Foundation provides
funding for local charities, sports
clubs and teams. So far we have
sponsored over 100 clubs and
teams including netball, football,
rugby, tennis, cricket, athletics,
ice hockey and boxing.
Our Schools Programme
encourages children from local
schools to “Street Naming”
competitions and “Design a
Bedroom” competitions for
our new developments, and we
arrange site visits for children to
learn about house building.
We hold an annual “Blooming
Great Garden Competition”
across our sites for Gleeson
homeowners to show off their
gardens, which encourages a
strong sense of pride in their
homes and communities.
35
High quality homes, where
they are needed
We build high-quality homes with a
front and rear garden and a driveway
for parking. We build where people
want to live, in the community they
grew up in, close to their families, on
sites with good transport links and
close to areas of employment. All our
homes come with a 2-year Gleeson
warranty and a 10-year NHBC Build
Mark Warranty or similar.
We build in areas of deprivation, in
need of regeneration, often where
other housebuilders choose to
ignore. Four out of five of our active
build sites are in the third most
deprived areas of the country.
Housebuilder sales in deprived
areas
78%
24%
Gleeson
Homes
All other
housebuilders
Source: Land Registry, Indices of Multiple
Deprivation gov.uk.
5-star build and service
We believe that low cost should not
mean low quality or poor service.
We use third-party inspectors to
undertake additional, independent
quality checks throughout the build
process.
We engage a third-party survey
company to undertake independent
surveys of all our customers. 90.6%
of our customers recommended
Gleeson, equivalent to a 5-star
rating for housebuilder.
We provide all of our customers
with access to MyGleeson, a
customer care portal, and have
local customer care teams that deal
promptly with any issues.
The Gleeson Quality Charter is our
commitment to a quality home and
quality service all the way through
the buying journey and beyond.
For those that need them
We build homes that young, first
time buyers on low incomes can
afford. We provide additional
benefits to key workers, which
includes 48-hour priority access
on new releases, exclusive preview
appointments and viewings plus
£1,000 to spend on our Options
Range*.
This year, we launched our
partnership with Forces Property
Direct to help British military
personnel get onto the property
ladder providing the same benefits
as key workers.
* These offers may change but were
accurate at the date of this Annual
Report; terms and conditions along
with the current offers can be found at
www.gleesonhomes.co.uk/key-workers
Gleeson customers:
What we don’t do:
• 80% first time buyers
• We don’t build flats
• 2 out of 3 are key workers
• We don’t sell leasehold
• 77% aged 35 years or
• We don’t do part-exchange
younger
• 51% sold to single buyers
• £23,000 median income
• We don’t sell to investors
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MJ Gleeson plc Annual Report & Accounts 2021
People
Achieving our goals relies on having
people in the right roles, with the right
training and development, who share in
our vision, mission and values.
By investing in the development of our colleagues, we
are living up to our vision of “Building Homes. Changing
Lives.” for both our customers and our people.
Apprentices
Investing in our people from the
start of their career is important to
us, which is why we have an active
apprenticeship programme across
the business; we currently have 70
apprentices – approximately 10% of
our total workforce – training in a
variety of office and site-based roles.
Our apprentices get an average
of two years on-the-job training
and an NVQ (or equivalent). In
many cases, they stay on with us
for further training or move into
permanent roles.
In March 2021, we held the second
annual Gleeson Apprenticeship
Week for our current and potential
future apprentices. The Gleeson
Apprenticeship Week included
career conversations with our
existing apprentices, recognition
through the Apprentice Awards, and
hosting virtual events for prospective
apprentices. We received over 2,000
applications for our apprenticeship
roles for the upcoming year and will
continue to expand this programme
as the business grows.
Investors in People
In November 2020, we became fully
accredited by Investors in People,
demonstrating our commitment to
providing an environment where we
actively attract, retain, and promote
the best people. We were assessed
36
against nine categories within the
framework of “Leading”, “Supporting”
and “Improving” our people based on
research into what makes a company
succeed in the long term, and trends
in how successful companies lead
and support their people. We were
primarily assessed through interviews
with our employees and the feedback
we received was highly encouraging.
It also provided valuable insights into
the areas where we need to continue
to focus.
Mental health
With training led by our mental
health and wellbeing training
provider, Resilient People, we
provided mental health first aid
courses this year to a further 13
employees. These employees are
trained to recognise the symptoms of
mental health issues, offer support to
colleagues and assist when a mental
health crisis arises. We now have over
30 Mental Health First Aiders across
the business, with more training
sessions planned.
STAR awards
Our STAR awards are a way to praise
employees for their commitment,
drive and willingness to work above
and beyond expectations. Colleagues
can nominate one another on a
monthly basis and the winners are
recognised in our weekly newsletter
and win prizes!
Gender pay and
diversity
We believe that everyone
should be paid fairly, regardless
of their gender. We pay equally
for doing the same job and
encourage women to apply for
roles at all levels.
We do not discriminate based
on gender and have a 43%
median pay gap in favour of
women. Women occupy 14% of
our highest-paid jobs and 14%
of our lowest-paid jobs.
We have also improved the
gender diversity of our Board,
with two female Non-Executive
Directors along with Leanne
Johnson, our Company
Secretary.
Gender balance and equality
are high on our agenda. Our
internal recruitment team are
always seeking ways to improve
gender balance, including on
our sites. We participate in
Women in Construction and
Women in Property events to
help us gain insights on how
to encourage more women
into the industry. We continue
to look at roles and review
how our succession planning
programme fits with these roles
in regard to gender balance.
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Strategic Report
We also review all of our job
descriptions to make sure that
these remain fully inclusive.
Gender breakdown
Male
Female
Chairman
Non-Executive Directors
Executive Directors
Senior Management
Other Employees
471
206
One employee
10 Employees
@Home
Our weekly newsletter, @Home, is the
most direct and frequent method of
communication between the Chief
Executive and all employees. It is
used to keep people up-to-date with
the latest developments across the
business including customer service
stories, health and safety matters,
people recognition, successes from
across the business and more.
@Home contains stories that focus
on our people, as well as stories
about our customers and how we are
changing lives every day.
Roadshows
In early 2020, the Executive Directors
and senior management launched
the all-company “roadshows” with
the team travelling to each division
to communicate key messages
and updates and give staff the
opportunity to ask questions.
The roadshows received such high
praise in the employee engagement
survey that they have now become
a recurring annual fixture in the
calendar. This year the Gleeson
Employee Virtual Roadshow was
held via Zoom due to Covid-19
restrictions, giving each of our
employees the opportunity to watch
live and interact through “breakout
rooms” for each department.
Feedback on the virtual sessions was
very positive, and we will continue
to assess the best way to deliver the
roadshows in the coming year.
Kay, Sales Manager,
Yorkshire South and West
Investment in
training and
development
A key factor in making sure we
have skilled people in the right
roles is through the training we
provide. A dedicated Training
Manager ensures that the right
training is provided to the right
people across the business.
During the year, we also
partnered with a third party
to provide our people with
essential training on topics such
as health and safety, modern
slavery, anti-money laundering,
GDPR and cyber security, as
well as job-specific training.
These online sessions mean that
all of our employees can access
them regardless of when they
start and we can roll-out regular
updates as needed.
We have also refreshed our
annual personal development
review process to remove
ratings and instead focus on
meaningful conversations with
our colleagues. The introduction
of a half-year “check-in”
reinforces the message that
development is ongoing, not
just something to be reviewed
annually.
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MJ Gleeson plc Annual Report & Accounts 2021
Environment
Carbon emissions
The built environment contributes around 40% of the
UK’s total carbon emissions, with around half of this being
from “in-use” sources such as heating, lighting, cooking
and running appliances1. This has reduced over the years
as the UK moves towards decarbonising the electricity
grid, with total in-use emissions having reduced by about
a fifth since 1990 despite there being approximately a
quarter more homes.2
This will continue with the government’s Future Homes
Standard, with the first of these changes to Part L and
Part F of the Building Regulations setting new energy
and ventilation requirements from 2025.
These changes will improve the energy performance of
new homes, with homes being highly energy efficient,
with low carbon heating and zero carbon ready by 2025.
We recognise the impact that the built environment has
on carbon emissions, both from the construction of new
homes and in-use emissions. We are working hard to
reduce our carbon footprint and this strategic priority is
part of our sustainable business strategy, which can be
found on pages 32 to 33.
1. Source: UK Green Building Council.
2. Source: UK government press release - Rigorous new targets for
green building revolution (January 2021).
The carbon cost of building a home
Gleeson and its supply chain emit 30 tonnes of CO2e for every home built.
CO2e emissions to build a Gleeson home
Plot build (scope 3)
Infrastructure (scope 3)
Business operations (scope 1 & 2)
Tonnes of
CO2e
27
1
2
Total
30
Note: Table does not include in-use emissions.
*Internal and external wall breakdown
12% Brick
18% Cement
4% Insulation
3% Plaster
7% Blocks
17% Roof
6% Heating and
plumbing
2% Other fittings
44% Internal and
external walls*
5% Exterior windows
and doors
16% Foundations
and substructure
3% Roads and
infrastructure
7% Scope 1 & 2
emissions
Whilst this is a significant amount of carbon emissions per home, understanding the composition of the embodied
carbon in our homes is key to the next stage of our carbon reduction strategy.
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Reducing our emissions
We have already made substantial progress towards
our published target of reducing our scope 1 and 2
emissions to less than 2.00 tonnes per home by 2023.
Our direct emissions this year were 2.05 tonnes per
home and, as a result, we have set a new CO2e reduction
target of less than 1.75 tonnes per home by 2023. Our
actions to achieve this are set out on page 45.
Scope 1, 2 and 3 emissions per home sold
(CO2e tonnes)
Source: Refer to methodology on pages 40 to 41. The chart
includes in-use emissions for a 10 year period for reference.
Our scope 3 emissions are currently based on
estimates and industry data. In order to improve the
accuracy of our scope 3 emissions, we plan to:
• engage with our supply chain to obtain
•
•
Environment Product Declarations (“EPDs”) which
disclose the actual carbon intensity of materials so
that we can improve the accuracy of reporting;
include embodied carbon intensity considerations
into our sustainable procurement processes;
require key material suppliers to provide their
environmental impact and carbon reduction
plans, with these factors being considered in our
procurement decisions;
• engage with our customers to obtain actual energy
usage data to improve the accuracy of our “in-use”
emissions data; and
• use this information to continue to review the
design and specification of our homes to ensure
they become more energy efficient, enabling our
customers to live a sustainable lifestyle in their
new home.
As we enhance the accuracy and understanding
of our scope 3 emissions data, we will be developing
our scope 3 carbon reduction strategy over the
coming year.
Strategic Report
Zena and Adrianna, Kings Park,
Doncaster, South Yorkshire
In-use emissions
Whilst the carbon emissions from housebuilding are
clearly significant at 30 tonnes per home sold, the
emissions from homes in-use, even over 10 years,
contributes a further 17.7 tonnes of carbon emissions.
We are looking at ways to reduce the in-use emissions for
our customers through heating and energy efficiency.
Heating
We welcome the government’s ambition to achieve zero
carbon homes. We are currently progressing trials of
air-source heat pumps and third-party analysis shows
that the benefit of this technology alone, excluding
further decarbonisation of the UK electricity grid, would
reduce in-use carbon emissions of the homes that we
sold this year by 50% over ten years. This represents a
transformative change to the way in which our homes
will be heated in future and the level of carbon emissions
they produce.
Energy efficiency
We pride ourselves in building high-quality, affordable
homes that are energy efficient. 98.2% of our homes
achieve an energy performance rating of B or above
compared to the house building industry average of 85%.
When compared to all other new and existing dwellings,
this means that a Gleeson home produces 42% lower
carbon emissions due to its higher energy efficiency.
Annual emissions to heat and power a home
(CO2e tonnes)
3.1
1.8
3.5
3.0
2.5
2.0
1.5
1.0
0.5
Gleeson
All Dwellings
Source: Based on actual energy data from customers and EB7 - Live
tables on Energy Performance of Buildings Certificates (gov.uk).
This allows us to play our part in helping our customers
live sustainable lifestyles in their new homes, saving on
average £450 per year against the energy costs of an
existing dwelling.
Annual cost to heat and power a home
£1,196
£740
Gas
Electricity
1,200
1,000
800
600
400
200
Gleeson
All Dwellings
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2.0527.151015202530Scope 3 - plot buildScope1 & 21.017.7Scope 3 - in-useemissions (10 years)Scope 3 - infrastructureCarbon emissions - homes built Environment
Continued
Our scope 1 and 2 emissions in detail
The table below shows the energy usage and carbon emissions for the Group in line with the Streamlined Energy
and Carbon Reporting (“SECR”) requirements. All energy usage and carbon emissions originate in the UK. Our
carbon emissions are calculated in accordance with the requirements of the Greenhouse Gas Protocol – a Corporate
Accounting and Reporting Standard.
2021
Global
energy usage
Tonnes of
CO2e
490 203,871 Litres
479 2,615,295 kWh
2020
2019
Tonnes of
CO2e
427
149
Global
energy usage
176,650 Litres
810,795 kWh
Tonnes of
CO2e
Global
energy usage
587 236,090 Litres
213 1,156,808 kWh
84 392,472 kWh
2,288 829,440 Litres
1,500 Litres
0.25
380 1,788,610 kWh
3,721
2.05
210,968 kWh
750,974 Litres
–
1,420,709 kWh
45
2,071
–
331
3,024
2.822
60
278,317 kWh
2,499 905,937 Litres
–
397 1,552,443 kWh
–
3,755
2.46
Scope 1 and 2
Car fuel
Gas
Liquid Petroleum Gas
(“LPG”)
Gas oil/diesel
HVO/biodiesel
Electricity
Total scope 1 and 2
Per home sold
Scope analysis
Scope 1 and 2
Scope 1 – Burnt fuels
Scope 2 – Electricity
Scope 2 – Location-based
Scope 2 – Market-based1
Per home sold (Location-based)
Per home sold (Market-based1)
2021 tonnes
of CO2e
3,341
2020 tonnes
of CO2e
2,692
2019 tonnes
of CO2e
3,358
380
196
2.05
1.95
331
331
2.822
2.822
397
397
2.46
2.46
1. The Group reports location-based and market-based scope 2 electricity data. Market-based data is based on the emissions from electricity
purchased by the Group. Location-based uses the average emissions intensity of the UK electricity grid. Purchased renewable sources of
electricity used on our sites is supported by Renewable Energy Guarantees of Origin (“REGO”) certificates.
2. Removing the impact of Covid-19 gives an adjusted carbon intensity reference of 2.50 tonnes per home sold for 2020.
Divisional analysis
Scope 1 and 2 (2021)
Scope 1 – Burnt Fuels
Scope 2 – Electricity
Total
Gleeson
Homes
tonnes of
CO2e
3,327
369
3,696
Gleeson
Land
tonnes of
CO2e
14
11
25
Scope 1 and 2 methodology
The Group reports the sources of material greenhouse
gas emissions from its main activities, categorised as
scope 1 and 2. Scope 1 comprises direct emissions from
sources purchased and used by the Group, such as diesel,
natural gas and liquid petroleum gas on sites and in our
offices. Scope 2 comprises emissions associated with the
consumption of energy from purchased electricity.
Our largest carbon emitting fuel is diesel, which is used by
forklift trucks, generators, plant and machinery. Emissions
are calculated using the volume of litres purchased during
the year and multiplying by the applicable conversion
factor to convert into CO2 equivalent.
Our second largest carbon emitting fuel is petrol and
diesel for business car mileage. This is calculated by
taking the total spend on fuel, compared against business
mileage submissions. An average miles per gallon is used
to calculate the volume of fuel burnt for business mileage.
This is multiplied against a standard conversion factor to
convert this into CO2 equivalent.
Due to the disruption to office-based working caused by
the Covid-19 pandemic during the year, the additional gas
and electricity consumption associated with our office-
based employees working remotely has been estimated.
This is based on estimated data and extrapolated for the
proportion of employees working remotely.
Our scope 3 emissions in detail
Scope 1 and 2 emissions are only part of the equation,
and the upstream and downstream emissions as a result
of our operations are significant. Scope 3 includes the
emissions generated by our supply chain in the services
and materials that we purchase, the construction
processes that we subcontract, and the in-use emissions
of our homes.
This year, we have worked with external consultants to
assist us with calculating our embodied scope 3 emissions
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MJ Gleeson plc Annual Report & Accounts 2021 for each home that we build and sell. This is set out
below, on a single-year basis and over a nominal life of
60 years.
Scope 3 (2021)
Plot build
Infrastructure
Total scope 3 (excluding in-use)
Per home sold
In-use emissions (60 yrs)
Total scope 3 (including in-use)
Per home sold
Tonnes of CO2e
49,110
1,741
50,852
28.1
194,292
245,143
135.3
Scope 3 methodology
For emissions from plot build, all of the materials used for
each house type plus emissions from construction work
(including infrastructure such as roads and sewers) on
site, transport, replacements, and end-of-life was used to
estimate the embodied carbon emissions.
This calculation was carried out for our most common
house types, collectively accounting for 91.4% of total
2021 homes sold. An estimate was used for the remaining
house types to give the total annual emissions from house
building.
For in-use emissions, actual energy spend data from
customers was converted to energy consumption and
carbon emissions, then projected forward (assuming
broadly stable energy usage) to arrive at a 60-year in-use
carbon emissions total for each house type.
Environment
Natural resources
Land
Our developments are located in areas where there is a
need for regeneration; typically in areas of deprivation
and on brownfield sites that would otherwise remain
derelict or unused. Four out of five of our homes sold are
in the third most deprived areas of the country and 77%
of the homes sold were on brownfield land.
We invest in our sites, creating attractive and well-
planned developments with green open space and access
to local facilities. We continue to purchase land in areas
that are in need of regeneration, but with good transport
links and access to local facilities and employment.
Page 53 sets out an example of the brownfield land
remediation that we undertake.
Water stress
We typically acquire sites and build in areas of relatively
low water stress, being located in the North of England
and Midlands. For the year to 30 June 2021, 6% of
the homes sold were in areas of high water stress.
In total, less than one in five plots in the Gleeson Homes
land pipeline is classified as being in an area of high
water stress.
Water usage
This year, we have estimated our water consumption for
sites and offices. We are currently developing a water
strategy to reduce our reliance on mains water supply and
incorporate grey water usage into our operating activities,
this includes exploring initiatives such as rainwater
harvesting on sites. Our strategy also includes improving
the tracking of water consumption across the business
with actual usage data, rather than estimates.
Water consumption
Cubic metres of water
consumed
Cubic metres of water
consumed per home built
Cubic metres of water
consumed per build site
2021
2020
78,143
66,001
43
1,007
62
973
All of our homes are fitted with dual flush toilets, low flow
taps and showers and water meters. They are designed
to achieve a maximum internal water use of 110 litres per
person per day. This is 12% lower than the requirements
specified by Building Regulations, saving both a natural
resource and our customers on their water bills.
Sustainable materials
During the year, we launched new policies on sustainable
procurement and sustainable packaging to ensure that we
are reducing our impact on natural resources.
As part of this:
• we source 99.9% of the timber we use in construction
from FSC or PEFC certified sources;
• we are engaging with suppliers to use packaging
materials that are recyclable or biodegradable where
possible; and
• we will be examining alternative materials to those
currently used, where these have lower embodied
carbon emissions and can be more easily recycled
or reused.
Waste
During the year, we launched a new sustainable waste
management policy. In the year, we diverted 98%
(2020: 96%) of construction waste away from landfill
either being recycled or converted to energy. We are
working with specialist waste management providers to
continue to further improve this rate of diversion from
landfill with the aim of achieving 100%.
During the year, our construction waste amounted to
13,511 tonnes, a waste intensity of 7.5 tonnes per home
sold. As part of the measures being taken on sustainable
procurement, packaging and waste management, we are
working to reduce this figure.
Biodiversity
It is expected that the government is likely to pass an
amendment to the Environment Bill that will increase the
focus on biodiversity as part of the planning process with a
requirement for a 10% increase in habitat value for wildlife
compared with a pre-development baseline. On many
brownfield sites that have rewilded, this can be more
challenging than an equivalent greenfield site. However,
we are working towards these targets on all future
developments and developing our biodiversity strategy.
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Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Sustainability Targets
Progress against our 2021 improvement targets
In our annual report last year, we set out a number of ambitious sustainability targets.
Our progress against these targets and actions is set out below.
Health and safety incident rate
(“AIIR”) will be significantly
reduced
OFF TARGET
Staff turnover will be reduced
to at least the industry average
or better
ON TARGET
Our staff turnover for the year was 32% versus the
industry average of 38% (source: ONS). Our voluntary
staff turnover, which excludes redundancy, retirement
or fixed-term contracts was 20%. Our independently
assessed employee engagement score increased to 89%
this year (2020: 88%) and 88% of colleagues
(2020: 85%) are proud to say that they work for
Gleeson. This shows that good progress has been made
on engaging with our people and we believe this will
continue to have a direct impact on reducing the level of
voluntary staff turnover.
2021 actions
Review and improve the
staff recruitment process
including search,
selection, interview and
pre-start onboarding.
Update
We are taking a more
hands-on approach to
recruitment with our own
in-house team seeking
candidates directly rather
than relying on external
recruitment agencies.
Result
✓
Enhance our new starter
onboarding process,
increase personal
development reviews
and introduce post-
probationary period
reviews.
Continue to increase our
employee engagement
initiatives by conducting
regular management
roadshows, engagement
workshops and
improving the frequency
of staff communication.
Our induction process
has been updated and
includes inductions
being delivered to new
colleagues, virtually where
required, on their start
date. Updated templates
for personal development
reviews have been issued
and cascaded across the
business.
We hosted our first virtual
management roadshow
which was well received
across the business. A
new e-learning system
was launched in Autumn
2020 and new leadership
and management training
rolled out for employees
in partnership with a
third-party provider.
✓
✓
Our AIIR for the year to 30 June 2021 was 556
(2020: 359). This remains above the industry average
of 264 over the same period and was the result
of ten reportable incidents involving slips, trips
or falls, working from height or use of equipment.
This was a disappointing result despite the significant
improvements that have been made to safety
procedures, systems and training. Each of these
incidents have been investigated and improved working
practices and procedures put in place to reduce the
risk of further incidents. Health and safety remains
our highest priority and we continue to promote our
HomeSafe philosophy to ensure that a strong health and
safety culture is embedded across the Group.
2021 actions
Working-at-height safety
systems and practices
will be improved on all
sites within one year.
Update
Decking systems are now
used on all sites.
Site compound and
welfare facilities will be
improved on all new sites
and those with less than
one year to completion.
All new sites and sites
with more than 12 months
of further build activity
have new compounds and
welfare facilities.
Employee health and
safety training will be
reviewed, improved and
the amount of training
per employee increased
during the year.
Full focus on the training
log with the training
department. This is
ongoing but training
material has been
reviewed and updated.
Digital reporting on all
accidents, incidents,
audits and health and
safety metrics will be
introduced on all sites
within one year.
Internal digital reporting
is not yet in place but
we have engaged third-
party consultants to help
develop a digital reporting
service.
Independent health and
safety inspections by the
NHBC will be undertaken
on all sites.
Two new divisional
health and safety
manager roles will be
created.
42
All sites independently
inspected but the NHBC
have ceased doing health
and safety inspections.
From July 2021, we have
engaged a third party
to undertake these
independent inspections.
These roles have been
appointed and a further
two trainees added to
the Group’s health and
safety team.
Result
✓
✓
✓
✗
✓
✓
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Customer satisfaction: we will
become a 5-star housebuilder
within one year
ON TARGET
We achieved an independently assessed customer
recommendation score of 90.6% (2020: 88.0%) this year.
This equates to the Home Builders Federation (“HBF”)
5-star rating.
2021 actions
We have recently
created a dedicated
Customer Care team in
each region.
Update
New customer
relationship managers
now cover all sites and
do independent quality
checks.
Result
✓
We launched the
Gleeson Quality
Charter confirming
our commitment to
customers.
We will implement
additional quality
checklists prior to final
inspection.
We have engaged
third-party inspectors
to undertake additional,
independent quality
checks.
Customer questionnaires
are sent once homes
have been completed and
customer satisfaction and
recommendation scores
are recorded and reported
to the Executive Directors
every month.
Customer relationship
managers who are
independent to the sales
process conduct final
quality inspections. Any
defects are followed
up within 48 hours to
ensure rectification prior
to handover. Inspection
KPIs are reported to
the Executive Directors
every month.
NHBC inspections are
completed at various
stages throughout the
build process. From
July 2021, third-party
inspectors have been
engaged to perform
additional, independent
quality checks.
✓
✓
✓
Strategic Report
Carlisle Park, Rotherham,
South Yorkshire
CO2e emissions per home sold
will be reduced by 20% within
three years
ON TARGET
As set out on page 40 our scope 1 and 2 emissions for
the year were 2.05 tonnes of CO2e per home sold
(2020: 2.50 tonnes adjusted1, 2.82 tonnes reported).
The reduction to 2.05 tonnes of CO2e per home sold this
year is an 18% reduction on the adjusted carbon intensity
of 2.50 tonnes and puts us well on track. Given the
substantial progress made, we have increased our CO2e
reduction target to 1.75 tonnes per home sold as set out
on page 45.
2021 actions
Within one year all of
our forklifts will:
• be fitted with auto
stop/start functions;
•
•
lower carbon
emitting engines;
and
include usage
tracking to monitor
speed and idle time.
Reduce the use of diesel
generator fuel per site.
Update
We upgraded 59% of our
forklift trucks to the new
model by 30 June 2021. A
shortage of these higher
specification forklift
models has resulted in a
delay in deploying these
across all sites.
Result
✗
We have enhanced our
on-site processes which
include:
•
•
relocation of sales
activities from cabins
to show homes
thereby avoiding the
use of generators; and
reviewed site start
up plans to ensure
utilities are on site
sooner.
This has contributed to
a reduction in our diesel
usage in comparison
to 2019, which was not
impacted by Covid-19.
✓
100% of electricity used
in show homes, sales
offices and site cabins
will be sourced from
zero carbon sources
within one year.
100% of mains electricity
supplied to site was
provided by certified
renewable sources.
✓
1. For the purposes of setting a target in 2020, the impact of
Covid-19 was removed to give an adjusted carbon intensity
reference of 2.50 tonnes per home sold. Therefore, the target set
in the prior year was to reduce scope 1 and 2 carbon emissions by
20% to less than 2.00 tonnes per home sold within three years.
43
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MJ Gleeson plc Annual Report & Accounts 2021
Sustainability Targets
Continued
What we want to
improve:
Health and safety
Our incident rate (“AIIR”), at
556 per 100,000 employees, has
increased and is higher than the
industry average reported by the
Home Builders Federation.
Staff engagement
We want all our colleagues to be
happy, motivated and engaged
with the values and strategy of
the business.
Customer satisfaction
We want to continue improving
our build quality and the
customer journey.
Carbon emissions
Our scope 1 and 2 emissions
have reduced significantly but
remain higher than some other
housebuilders.
Derek, Site Worker,
Greencroft View, County Durham
44
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Our new sustainability targets
Our employee
engagement will
be maintained in
the upper quartile
of all companies
during 2021/22
Customer
satisfaction: we
will maintain our
5-star1 status
throughout
2021/22
Climate: CO2e
target reduction
increased from
20% (2.0 tonnes)
to 30% (1.75
tonnes) by 2023
Actions:
• Enhance
communication across
the Group including
online forums,
regional roadshows
and company-wide
communications.
• Launch employee
wellbeing “toolkit”
which will give all of
our employees the
resources to obtain
relevant support.
• Further develop
the apprenticeship
programme to
broaden skills and
retain talent.
• Enhance our
recognition schemes
to incorporate
Company values
and improve on-site
participation.
Actions:
Actions:
• Roll out of a
•
•
“Customer First”
campaign across all
developments.
100% quality
inspections to be
achieved within 48
hours of obtaining
CML (Certificate for
Mortgage Lending).
Improve Customer
Care systems and
reporting to integrate
all elements of
inspections, defect
management and
customer care.
• Engage and provide
training to third-
party subcontractors
and suppliers on our
“Customer First”
requirements.
1. This is 90% or above
customer recommendation
score as polled by an
independent survey
company, which is
equivalent to the HBF
5-star rating.
• All forklift trucks to
be upgraded to the
newer models within
one year.
• Complete our eco-
cabin trial and, if
successful, roll out
across all new sites.
• Complete our
biodiesel trial and, if
successful, roll out
across sites.
• Review energy
efficiency measures in
each of our offices.
• Ensure electricity
purchased for
sites continues to
come from certified
renewable sources
with Renewable
Energy Guarantees of
Origin (“REGO”).
• Launch a generator
usage policy to
reduce reliance on
generators and fuel
usage.
Health and safety
incident rate
(“AIIR”) will be
reduced to the
industry standard
or lower in
the year
Actions:
•
Introduce
independent
unannounced safety
inspections on every
active build site at
least once per month.
• Launch a Training
and Development
Passport that will
be mandatory for all
apprentices.
• Enhance working-at-
height procedures
through additional
training for all site
management and
enhanced working
practices.
• Provide bi-annual
supply chain and
subcontractor
HomeSafe workshops
focusing on health
and safety.
• Deliver a company-
wide campaign
focusing on slips,
trips and falls and
manual handling for
all employees.
• Enhance tracking
and reporting of near
misses across the
business and raise
awareness.
• Assess feasibility
and implement
digital recording of
personnel on all sites.
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45
Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
UN Sustainable Development Goals
In 2015, the United
Nations reviewed the
global priorities for
creating a sustainable
future and produced
the 2030 Agenda
for Sustainable
Development.
As part of this, 17 Sustainable
Development Goals (“SDGs”)
were launched to promote
actions to be taken to end
poverty and set the world on a
path of peace, prosperity and
opportunity for all on a healthy
planet. In 2020, we shared our
commitment to these goals and
set out how and where these
are supported by the activities
of the Group.
These initiatives have been
carefully considered in creating
our sustainable business
strategy (see pages 32 to 33),
which fully supports target
one of SDG 11 – Sustainable
cities and communities, by
providing “access for all to
adequate, safe and affordable
housing”. As part of our
materiality assessment (see
pages 30 to 31), we engaged
with a number of stakeholders
who backed our commitment
to supporting these goals in
our mission of Building Homes.
Changing Lives.
We recognise that as a
business, we not only change
the lives of our customers
by offering many their first
step onto the property ladder
that would otherwise be
unattainable, but there are also
many other stakeholders who
are impacted by our activities.
As a result, we have adopted six
of the Sustainable Development
Goals, which we believe we
support and the details of
which are reported here.
46
UN SDG Targets
5.1 – End all forms of discrimination
against all women and girls everywhere.
5.5 – Ensure women’s full and effective
participation and equal opportunities
for leadership at all levels of decision-
making in political, economic and
public life.
5.a – Undertake reforms to give women
equal rights to economic resources, as
well as access to ownership and control
over land and other forms of property,
financial services, inheritance and
natural resources, in accordance with
national laws.
How this is supported by us:
Gleeson is an equal opportunities
employer and we strive to pay our
employees equally for the same or
equivalent work, regardless of their
gender.
We take part in and sponsor Women in
Construction and Women in Property
events. Our recruitment team are active
in seeking to recruit more women into
the industry.
We continue to look at roles that
women occupy and review how our
succession planning programme fits
with these roles.
We review job descriptions, roles and
responsibilities to make sure these are
inclusive.
KPIs
Median pay gap in favour of women
reported in our 2021 Gender Pay Gap
Report.
29% of the Board and 31% of the Senior
Management team are female.
Overall 30% of our workforce are
female.
UN SDG Targets
8.5 – By 2030, achieve full and
productive employment and decent
work for all women and men, including
for young people and persons with
disabilities, and equal pay for work of
equal value.
8.6 – By 2020, substantially reduce the
proportion of youth not in employment,
education or training.
8.8 – Protect labour rights and promote
safe and secure working environments
for all workers, including migrant
workers, in particular women migrants,
and those in precarious employment.
How this is supported by us:
We are committed to ensuring that all
employees, potential recruits and other
stakeholders are treated fairly and
equitably.
Recruitment and advancement is based
upon individual skills and aptitude
irrespective of race, nationality, gender
identity, sexual orientation, disability,
age, religion or beliefs.
We continue to carry out pay and
benefit benchmarking at regular
intervals against other employers to
ensure that we pay our employees
fairly.
Our HomeSafe brand reflects our belief
that everyone who is involved in, or
affected by, our development work has
the right to remain free from harm and
return home safely every day.
KPIs
We directly employ 672 people on our
sites and in our offices, an increase of
67 people on last year.
100% real Living Wage employer and
the first housebuilder to be accredited
by the Living Wage Foundation.
Top quartile company for employee
engagement.
Accredited with Investors in People as a
business that “Makes work better”.
At June 2021 we had 70 apprentices
employed representing 10% of the
workforce.
AIIR Rate – 556 (Industry average: 264)
– see further comments on page 42.
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Strategic Report
Oliver, Carrwood Park,
Bradford, West Yorkshire
UN SDG Targets
15.3 – By 2030, combat
desertification, restore
degraded land and soil,
including land affected by
desertification, drought and
floods, and strive to achieve
a land degradation-neutral
world.
15.9 – By 2020, integrate
ecosystem and biodiversity
values into national and
local planning, development
processes, poverty reduction
strategies and accounts.
How this is supported by us:
Our developments are
located in areas where
there is often a need for
regeneration; typically
brownfield sites that would
otherwise remain derelict or
unused.
We build in the most
deprived areas of the UK,
regenerating land and
building new homes where
they are needed most.
We invest in our sites,
creating attractive and well-
planned developments with
green space and biodiversity.
KPIs
77% of homes sold in the
year to 30 June 2021 were
on brownfield land.
For the year to 30 June 2021,
only 6% of the homes sold
were in areas of high water
stress.
Over £175m spent on site
development including land
remediation during 2021.
47
UN SDG Targets
11.1 – By 2030, ensure access
for all to adequate, safe and
affordable housing and basic
services and upgrade slums.
UN SDG Targets
12.2 – By 2030, achieve the
sustainable management
and efficient use of natural
resources.
UN SDG Targets
13.2 – Integrate climate
change measures into
national policies, strategies
and planning.
12.5 – By 2030, substantially
reduce waste generation
through prevention,
reduction, recycling and
reuse.
How this is supported by us:
We have committed to
diverting at least 95% of
waste from landfill and are
implementing initiatives
to further reduce waste
volumes.
We have established new
policies for Sustainable
Procurement, Sustainable
Packaging, Timber and Waste
Management.
KPIs
For the year to 30 June 2021,
98% of our construction
waste was diverted from
landfill.
99.9% of our timber is
sourced from FSC/PEFC
approved sources.
13.3 – Improve education,
awareness-raising and human
and institutional capacity on
climate change mitigation,
adaptation, impact reduction
and early warning.
How this is supported by us:
We set a target to reduce
our scope 1 and 2 carbon
emissions by 20% to less than
two tonnes per home sold
within three years.
We have published our scope
3 emissions for the first time
this year.
We have established a new
Climate and Environment
policy.
KPIs
For the year to 30 June 2021,
we generated 2.05 tonnes
of scope 1 and 2 carbon
emissions per home sold.
This was a reduction of 18%
from the previous financial
year, excluding the impact of
Covid-19.
We have increased our three-
year reduction target to 30%
or 1.75 tonnes per home.
We will be taking steps to
refine our scope 3 data and
to reduce carbon emissions
in building products and
construction operations.
How this is supported by us:
Gleeson Homes’ mission is
“Changing lives by building
affordable, quality homes.
Where they are needed,
for the people who need
them most.”
Our sustainable business
model is based around our
impact on communities,
people and the environment.
We exist to transform lives
and make home ownership
a reality for young people,
low-income families and first
time buyers. This creates
communities and provides
benefits to wider society.
We partner with local
authorities and private
landowners to acquire land
in areas that will benefit from
investment, regeneration and
development for housing that
is affordable to local people.
KPIs
91.6% (£264.2m) of Group
revenue in the year to 30
June 2021 supported UN SDG
11 through the provision of
safe and affordable housing.
Our average selling price of
£145,800 is significantly lower
than the new build industry
average of £326,000.
Four out of five of our
customers are first time
buyers and two out of three
of our customers are key
workers.
The median age of our
customers is 29 and 77% are
35 years old or younger. Our
homes start from £95,000
and the median income of
our customers is £23,000.
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MJ Gleeson plc Annual Report & Accounts 2021
Sustainability in Action
Sustainability in Action
Customer case studies
“
Being a homeowner is such a proud
feeling. It’s definitely more than just
bricks and mortar.”
Buyer:
Corina (31)
Occupation:
Social worker
Year of purchase:
2020
Development:
Ransom Court,
Nottingham
House type:
Cork, 2-bed semi
Purchase price:
£136,995
Mortgage cost:
£370 per month,
Help to Buy
Previous rental cost:
£550 per month
(1-bed flat)
48
Social worker Corina
was renting a small
one-bedroom flat in
Nottingham before
purchasing her two-
bedroom Gleeson home
in September 2020.
A single buyer, Corina was overjoyed
that a developer in the area was
catering for first time buyers, with
a Help to Buy Equity Loan and a
scheme specifically for key workers.
The rent on Corina’s one-bedroom
flat was £550 per month, so she was
delighted to find that her mortgage
would be just £370 per month, a
saving of £180 every month. Making
use of our Key Worker Priority
Scheme, Corina also benefitted from
£1,000 towards upgrades and extras
in her home, which she chose to
spend on a premium kitchen.
Corina said: “Gleeson was ideal
for me because the homes are so
affordable. The price point is great,
particularly for single buyers. Many
homes in the nearby area were
much more expensive and other
housebuilders in Nottingham were
charging thousands of pounds more
for the same size house.”
“Without Gleeson I would have been
stuck renting or would have had to
purchase something similar in size to
my flat. Being a homeowner is such
a proud feeling, it’s definitely more
than just bricks and mortar.”
“The location of my home is great.
It’s so close to the city centre which
makes commuting really easy and
it’s surrounded by trees and lovely
places to go for walks. I completely
fell in love with my house type,
despite being a two-bedroom
semi it’s so spacious and is laid out
perfectly for having friends round.”
A new Gleeson home has given
Corina something to focus on
throughout the pandemic and
beyond. Since moving in she has
begun blogging images of her home
and interior design tips, connecting
with other Gleeson homeowners via
Instagram.
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Changing the life of a single buyer Strategic Report
“
We are so grateful to own such a
beautiful home at just 22 and 24
years old.”
Buyers:
Charmaine (22)
& Brad (24)
Occupations:
Merchandising
Administrator and
Assistant Buyer
Year of purchase:
2020
Development:
Balderstones,
Greater Manchester
House type:
Renmore, 3-bed
detached
Purchase price:
£172,995
Mortgage cost:
£450 per month
Previous rental cost:
£600 per month
(2-bed flat)
49
Charmaine and Brad
purchased their three-
bedroom detached home
at our Balderstones
development in Rochdale in
November 2020.
Both working in the fashion industry
in Manchester, Brad and Charmaine
had been renting a two-bedroom flat
in the city centre. Spending the first
lockdown throughout the hot summer
months in a small flat without a garden
made the couple realise how much
they wanted to buy their own home.
The couple were thrilled by the price
of Gleeson homes, and they all had
gardens and driveways, together with
range of extras and options. Sold on the
idea of moving into a new home which
is low maintenance and cheaper to run,
the couple were even more delighted
when their plot of choice was ready just
four months after they reserved.
With the location of their
development only five minutes from
the motorway, the couple can easily
get to work in Manchester and now
enjoy city life close by, with their
own home to return to.
With amenities like the Trafford
Centre less than half an hour away,
as well as a plethora of local shops
and supermarkets within walking
distance, Balderstones is an ideal
development for young couples like
Brad and Charmaine.
The pair had initially been saving
to go on holiday to Thailand, so are
very glad that they used the money
for their new home instead.
Charmaine said:“We can’t believe how
affordable our home is. We didn’t
think we’d be able to buy a house, but
Gleeson proved us wrong. Our home
actually works out cheaper than the
rent and bills we were paying for a two-
bedroom flat, which is just incredible
considering the size difference.”
“We definitely made the right
decision investing in our home rather
than a holiday! Plus, because our
home is so affordable, we will still
be able to have treats like holidays
when the time is right.”
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Helping young people into home ownership MJ Gleeson plc Annual Report & Accounts 2021
Sustainability in Action
Customer case studies
“
Our number one reason for
choosing Gleeson was the price. It’s
amazing the amount of home you
get for your money compared to
other developers.”
Buyers:
Lauren (23) & Matt
(25)
Occupation:
Civil servants
Year of purchase:
2021
Development:
Crawford Park,
Blyth
House type:
Kilkenny, 3-bed
detached
Purchase price:
£149,995
Mortgage cost:
£360 per month
Previous rental cost:
£530 per month
(1-bed flat)
50
50
Spending the last two
years renting a one-
bedroom flat, Lauren and
Matt were keen to get
onto the property ladder,
but never imagined
they would be able to
own a three-bedroom
detached house.
Giving them so much more
space and saving them £170 a
month, their new home has been
transformational.
Lauren and Matt moved into their
three-bedroom home in March 2021.
The couple were paying £530 per
month in rent for their flat and are
now paying just £360 per month
for their mortgage. Their previous
flat had no parking, garden, or
communal outdoor space. With only
one bedroom the pair could never
have friends or family over to stay,
and their bedroom was next to the
communal stairwell, so they heard
noise from other residents at all
hours of the night.
Eager to purchase a new build,
Lauren and Matt viewed various
developers but were amazed at the
price of a Gleeson home.
Matt said: “Our number one reason
for choosing Gleeson was the price.
It’s amazing the amount of home
you get for your money compared to
other developers. We looked at other
nearby sites and for our budget we
could only get a two-bedroom house
or a three-bedroom semi-detached
house, but with Gleeson we could
get a detached house with a garage
and a garden. It really was a no
brainer. A big tick for us was the fact
that every Gleeson home comes with
a garden, which was something we
were craving.”
Lauren continued: “We love
everything about our home. We are
saving so much money every month
by not renting, instead we are paying
for a house that actually belongs to
us, which is a great feeling.”
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Escaping the rent trap and starting their new lives At the age of 15, Tania was
homeless and lived on the
streets in York. This year
she bought her second
Gleeson home with her
partner Josh.
Teachers Tania and Josh both bought
as single buyers on our Rainsborough
Park development in 2018, with Tania
buying a two-bedroom semi-detached
Cork for £101,995 and Josh purchasing
a three-bedroom semi-detached
Fergus for £125,995.
They soon met and fell in love and
realised that they could combine the
existing equity in their homes and
purchase a new Gleeson home on
the development together. When the
existing three-bedroom detached
Kilkenny show home was released
for sale, Josh and Tania were quick to
reserve it, paying just £184,995.
Being a homeowner has a special
significance for Tania.
Tania said: “I’ve faced a lot of adversity
in my life, spending time on the streets
and in homeless shelters, but I’m
so proud of how I’ve turned my life
around. I was amazed when I could
buy my first Gleeson home with just a
£4,500 deposit, and that my mortgage
repayments would be only £350 per
month. Moving onto Rainsborough
Park changed everything, I feel like I
have much more of a sense of purpose
now I’m a homeowner and of course, I
met Josh.”
Josh said: “Before buying my first
home, I was renting a small terraced
property, paying £800 per month, now
in our second Gleeson home, which
we bought fully furnished, we only pay
£500 per month for our mortgage.
Buying here has changed our lives,
we love the development, love the
area and the community. We plan on
staying on Rainsborough Park for life,
and already have our eye on the four
bedroom properties which will be
released as part as Phase Three. With
Gleeson you get so much for your
money, the quality is fantastic and the
process is so straightforward.”
Strategic Report
“
Buying here has changed our lives, we
love the development, love the area
and the community.“
House type:
Kilkenny, 3-bed
detached
Purchase price:
£184,995
Mortgage cost:
£500 per month
Buyers:
Tania (26) & Josh
(28)
Occupation:
Teachers
Year of purchase:
2021
Development:
Rainsborough Park,
Knottingley, West
Yorkshire
For more customer case studies,
including videos, visit our website at:
www.mjgleesonplc.com
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From homeless to home owner MJ Gleeson plc Annual Report & Accounts 2021
Sustainability in Action
Environment – Gleeson Homes case studies
In our 2020 Annual
Report, we set a target
to upgrade our fleet
of forklift trucks to the
latest JCB models.
These have more efficient engines
and incorporate start/stop
technology to reduce engine idling.
They also have live data monitoring
such as speed, fuel consumption,
operator warnings and various
safety alerts.
At 30 June 2021, 59% of our forklift
trucks had been upgraded to these
newer models, which has reduced
forklift diesel fuel consumption
by 4% this year. This fuel saving
will continue to increase with the
changeover and our “real world”
on-site testing shows that it will
deliver a 12% saving in fuel per
forklift truck for a full year:
New
model
Old
model Saving
Time spent at idle
13%
29%
57%
Fuel consumption
(litres per hour)
Operating
Idle
Combined
Carbon Emissions
5.57
1.71
4.09
1.43
5.83
1.89
4.67
1.63
4.5%
10%
12%
12%
As part of this changeover, we have
secured an ongoing agreement to
upgrade units in future as they age
or become inefficient. Given these
are one of the major users of fuel
on our development sites, this will
help us to continue reducing our
carbon emissions.
In addition, we are trialling the
use of hydrotreated vegetable
oil (HVO) biodiesel on a number
of sites as we assess moving
away from more pollutive fuels.
HVO biodiesel produces up to
90% lower carbon emissions
than standard diesel. Subject to
successful trials, we will look to
move our forklift fleet over to HVO
biodiesel.
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Cleaner, more efficient forklift trucksMJ Gleeson plc Annual Report & Accounts 2021 1
2
3
4
100 years of coal mining
Model Walk near Worksop sits on part of the former Creswell
Colliery, which was in operation from 1894 until its closure in
1991. The site has an extensive history and, following its closure,
the land remained derelict and disused for around 25 years until
it was acquired by Gleeson Homes.
A heavily contaminated site
Since its closure, all of the old mining buildings were removed
by the former owners, but the site had extensive rubble, hard
standing and detritus across it. In addition, parts of the site
were contaminated from the former activities including the
presence of polycyclic aromatic hydrocarbons, arsenic and
naphthalene together with areas that were infested with
Japanese knotweed.
Regeneration of the land
A detailed planning application was submitted by Gleeson
Homes in 2016. Following years of neglect and anti-social
behaviour on the land, the scheme received unanimous support.
The site required extensive remediation including the removal
of hardstanding, brick, glass, contaminated topsoil, Japanese
knotweed and other contaminants. There were also varying
capping depths required across the site and additional radon
precautions in certain areas.
A model site
The site has 197 plots with two, three and four-bed homes
and open space. Special designs were needed for the homes
fronting onto the historic Model Village conservation area to
address and celebrate a unique setting. The development has
also paved the way for the regeneration of the remainder of the
former colliery to the south and west, providing high-quality,
affordable homes for local people.
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Regenerating land - Model Walk, Worksop, DerbyshireStrategic Report Sustainability in Action
Sustainability in Action
Continued
Environment – Gleeson Land case studies
Gleeson Land submitted
a planning application
for 67 homes along
with open space and
allotments.
We seek planning permissions that
are sensitive to local ecology and
wildlife. Our scheme at Westbury
Leigh incorporates natural
greenspace as well as allotments
for residents. It is planned with
landscaping that is in keeping with
the local area and surrounds the
development.
The site also lies within a
consultation zone for the greater
horseshoe bat, with a roost to
the west of the site. Survey data
demonstrated that there was
horseshoe bat activity on the
western site boundary. In order to
preserve this activity, we worked
closely with Natural England and our
planners to retain and protect the
existing area of plantation woodland
on the western boundary.
In addition, new bat habitats
comprising supplementary native
trees and shrubs are planned
along the eastern boundary of the
plantation woodland to buffer it
from the built development. A “dark
buffer” is established which would
safeguard the flight route of the
bats and protect the activity of this
protected species. In this buffer
there would be light no more than
that associated with a full moon.
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Protecting native species at Westbury Leigh, WiltshireMJ Gleeson plc Annual Report & Accounts 2021 Gleeson Land obtained
planning approval for
254 homes along with
significant areas of
open space.
We work to ensure that our schemes
are sustainable and offer improved
facilities for local residents, which
leads to stronger communities.
Incorporating areas of natural
greenspace is a major factor in
every application, as well as how
the development fits alongside the
existing local urban and natural
environment.
At Manor Farm in Tongham, we
obtained planning permission for a
site that includes 254 homes, creates
a route through the site to connect
existing developments, provides
open space including children’s play
areas, utilises sustainable urban
drainage systems and creates a
significant Suitable Alternative
Natural Greenspace (“SANG”) of
over 17 hectares.
This space provides outdoor areas
for the community to use, along
with a new car park and pedestrian
accesses from the development.
It is also sufficient in size to
provide greenspace for two other
development applications locally.
The SANG land was sensitively
landscaped with planting of trees
and hedgerows around gravel paths
to enhance the existing natural
environment and attract local
wildlife to the area.
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Creating open space at Manor Farm, Tongham, SurreyStrategic Report Sustainability in Action
People
Adam Barrass
Bricklayer
Before starting his apprenticeship with Gleeson, Adam
played football in Malta for one season, then returned
to England to work in a food packing factory. Adam
was keen to learn a trade and, as his father worked as a
bricklayer on a Gleeson development, he applied for a
bricklaying apprenticeship with Gleeson and started at
our Forge Court development in Sunderland in 2018.
Adam made a strong impression with the site team from
his first day with his enthusiasm, can-do attitude and
collaborative approach. He was clear about his ambitions
and during the development conversations that we have
with all colleagues, he discussed his desire to move into
site management or health and safety after learning
his trade.
He quickly progressed through his Level 2 bricklaying
qualification, gaining recognition from his tutors at
college and winning several awards, whilst continuing
to perform strongly on site. He went on to complete his
Level 3 apprenticeship with distinction in early 2021.
Oliver Hume
Finance
When Oliver started his Finance apprenticeship with
Gleeson in 2017, he was 18 years old and worked at
McDonalds. He did not have any prior accounting
knowledge, but was keen to get his AAT (Association of
Accounting Technicians) qualification because his mum
had recently finished her own AAT qualification.
56
When a Trainee Health and Safety Advisor role became
available in the North East Division, Adam was a natural
fit and he is continuing to learn and grow in his new role
with us.
Oliver signed up for an AAT Level 3 apprenticeship and
initially joined the purchase ledger team to start learning
the fundamentals of finance at Gleeson. He quickly
established himself as a rising star with his enthusiasm,
flexibility and fast learning. Within six months Oliver
moved to the treasury team where he learned a whole
new set of skills.
Oliver passed all of his exams on the first sitting and
completed his Level 3 apprenticeship with distinction
within 18 months. He immediately moved to a Level 4
apprenticeship whilst continuing to play a valued role in
the Finance team.
His exams were put on hold during the first Covid-19
lockdown, but Oliver continued to support the business
when his colleagues were on furlough, showing his
flexibility and knowledge in different areas.
In December 2020, he successfully completed his Level 4
apprenticeship and was promoted to the role of Assistant
Management Accountant. He is currently continuing his
academic journey and studying for his CIMA professional
qualification with the support of Gleeson.
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Investing in our apprenticesMJ Gleeson plc Annual Report & Accounts 2021 Strategic Report
Sarah Marsden, Divisional Managing
Director of the Gleeson Homes North
Eastern Division, has been with Gleeson
for over 11 years in a number of senior
roles. She started in the construction
industry over 20 years ago as a sales
negotiator, and worked her way up
through various roles including Sales
Director, Group Operations Director, and
now, Divisional Managing Director.
On being a woman in construction, Sarah said:
“I’ve been in the construction industry for 21
years and I’m pleased to say there is far greater
diversity and equality now than when I first
started. In fact, the last 20 years have been quite
transformational. At school, the construction
industry was the stereotypical route for non-
academic males, and for females a career in
construction was not encouraged. I got into the
industry by selling new homes on site and I’ve
worked hard to progress my career becoming
the youngest female Director in my former
company. I’ve worked at Gleeson for 11 years
now and I haven’t directly experienced any real
prejudice or bias, quite the opposite, I have been
fortunate to receive support and respect from
my colleagues and peers alike. I would, however,
be confident enough to call out any negative
behaviour.”
“I strongly encourage a career in the construction
industry from all interested and enthusiastic
applicants – there is a broad spectrum of
opportunity for all, regardless of talent, gender
or preference. It’s a great sector to be a part of.”
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Promoting women in construction MJ Gleeson plc Annual Report & Accounts 2021
TCFD Disclosures
Task Force on Climate-related
Financial Disclosures
The Financial Stability Board created the Task Force on Climate-
related Financial Disclosures (“TCFD”) to improve and increase
reporting of climate-related financial information.
Responding to the TCFD requirements, we aim to increase our
disclosures in line with its recommendations.
Strategy
The actual and potential impacts of climate-related risks
and opportunities on the organisation’s businesses,
strategy, and financial planning where such information is
material.
Climate change has the potential to significantly impact
our business strategy through restricting land availability,
disrupted build programmes, material and labour
shortages and increased costs. It also has the risk of
impacting the homes and communities we build through
flooding, overheating and water shortages.
Forthcoming changes to building regulations, namely
Part L (Conservation of fuel and power) and Part F
(Ventilation), will change the way our homes are supplied
with power and heating. These are potentially the first
of many climate-focused amendments to building
regulations as the government progresses their vision
of zero carbon ready homes. Our sustainable business
strategy and the design of our homes will continue to
factor in these changes to building regulations.
Another impact of climate change and more frequent
extreme weather events is the risk of more frequent
flooding, making certain areas unsuitable to build on. This
would reduce the availability of land and consequently
increase the cost of developable land. It could also
increase the costs of installing flood mitigation on certain
planning developments.
Increases in temperature could require alternative
strategies to ensure that new homes remain habitable and
prevent overheating. These could include passive cooling
measures including better shading, reflective surfaces and
cover for homes.
We continue to assess changes to climate-related risks
and the potential impact on the Group, its strategy and
any financial impacts.
Governance
The organisation’s governance around climate-related
risks and opportunities.
The Board has ultimate responsibility for climate-related
risks and opportunities, with the day-to-day approach
in responding to climate-related risks and wider
sustainability topics being managed by the Executive
Directors.
The Sustainability Committee is a sub-committee of the
main Board and meets on a bi-annual basis to discuss the
strategic direction, climate-related risks and opportunities
and to assess progress on ongoing sustainability projects,
including those focused on carbon reduction. Find out
more on pages 106 to 108.
Bi-annual updates are also provided to the Audit
Committee outlining any changes to the assessment of
sustainability risks, material issues, policies, disclosure
requirements and progress against sustainability targets.
Below the Board, operational directors and heads
of department have responsibility for integrating
sustainability into their respective areas. This includes
compliance with the Group’s sustainability policies in the
following areas:
• Climate and environment;
• Sustainable procurement;
• Sustainable packaging;
• Sustainable timber; and
• Sustainable waste management.
This year, we have introduced internal sustainability
KPIs within the monthly reporting to the Board. The
approved budget for the next financial year also includes
sustainability targets and metrics. Progress against these
will be tracked to ensure our sustainable values are
embedded throughout the business.
We have also appointed a Head of Safety, Health,
Environmental and Quality (“SHEQ”) who will support
the senior management team in integrating sustainability
throughout the business.
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Strategic Report
Risk management
How the organisation identifies, assesses, and manages
climate-related risks.
Climate change and sustainability have been identified as
principal risks for the Group. Find out more on page 73.
The Group risk register is formally reviewed by the Audit
Committee at the majority of its scheduled meetings,
including consideration of emerging risk areas or changes
to existing risks. Find out more on pages 98 to 105.
A separate, detailed sustainability risk register is
also maintained which covers the risks for the Group
associated with environmental, social and governance
matters.
The sustainability risk register is managed by the
Sustainability Committee and reviewed, at least, on a
bi-annual basis with any amendments reported to the
Audit Committee as part of its monitoring of principal and
emerging Group risks.
Each risk on the sustainability risk register is assessed
against its potential impact, timeframe, likelihood,
severity and mitigating actions. Progress on mitigating
actions against short-term risks are prioritised by the
Sustainability Committee.
Rainsborough Park,
Knottingley, West Yorkshire
Metrics and targets
The metrics and targets used to assess and manage
relevant climate-related risks and opportunities where
such information is material.
Our climate performance is measured by reference to an
intensity target published in 2020. Last year we set a target
of reducing our scope 1 and 2 emissions by 20% per home
sold within three years. This will result in a carbon intensity
of less than 2.0 tonnes of CO2e per home sold. This year
we have reduced our scope 1 and 2 carbon emissions to
2.05 tonnes of CO2e per home sold. Due to the substantial
progress made, we have increased our CO2e reduction
target to 1.75 tonnes per home sold as set out on page 45.
Our climate performance metric for scope 1 and 2
emissions is calculated by taking total metric tonnes of
CO2e divided by the number of legally completed house
sales in a financial period.
This year we are also reporting a “market-based” and
“location-based” metric for our scope 2 (electricity) usage.
In addition, this year we are reporting our scope 3 emissions
which covers the indirect upstream and downstream carbon
emissions of our value chain; this includes the emissions
generated by our supply chain in the services and materials
they provide to our business, the construction process, and
over the life of the homes that we build.
Further details on our scope 1, 2 and 3 emissions, including
methodology, can be found in the Environment section on
pages 38 to 41. Sustainability KPIs are set out on page 20.
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MJ Gleeson plc Annual Report & Accounts 2021
SASB Disclosures
SASB Criteria
Our approach
Land Use and Ecological Impacts
.
1 Number of (1) Lots and
a
(2) homes delivered
0
6
on redevelopment
1
-
B
sites
H
-
F
I
In the year to 30 June 2021, we added 2,740 brownfield land plots to our land pipeline.
This accounted for 52% of plots acquired in the year. The total number of brownfield plots
held at 30 June 2021 was 7,606 (48%).
In the year to 30 June 2021, we sold 1,387 homes on brownfield land. This accounted for
77% of our total annual house sales.
.
2 Number of (1) lots
a
and (2) homes
0
6
delivered in
1
-
B
regions with High
H
or Extremely High
-
F
Baseline Water Stress
I
.
3 Total amount of
a
monetary losses
0
6
as a result of
1
-
B
legal proceedings
H
associated with
-
F
environmental
I
regulations
.
4 Discussion of
a
0
6
1
-
B
H
-
F
I
process to integrate
environmental
considerations into
site selection, site
design, and site
development and
construction
Notes
We consider brownfield land includes sites upon previously developed land, below ground
disturbance (including mining or waste disposal) or land that contains contamination from
previous use.
In the year to 30 June 2021, we acquired 1,767 plots in regions of high water stress.
This accounted for 33% of plots acquired in the year. The total number of plots in areas
of high water stress at 30 June 2021 was 2,945 (19%).
In the year to 30 June 2021, we sold 106 homes in areas of high water stress. This
accounted for 6% of our total annual house sales.
We incurred no monetary losses in relation to environmental matters in the year.
Site selection
We operate a “Gateway” procedure in our site acquisition process to ensure that each site
meets our hurdles at various stages throughout the purchase. At the earliest step, Gateway
1, a site will be reviewed at a high level to ensure that it meets with our guiding core
principles and requirements; of particular importance at this stage is our objective to bring
forward development on brownfield sites or sites in need of regeneration in a manner which
safely and sustainably returns such sites back into meaningful use whilst simultaneously
alleviating any environmental issues which may have been left behind by legacy
landowners. On clearing this hurdle further due diligence will be carried out, in part guided
by our in-house appraisal document which carries a checklist to prompt consideration of all
factors affecting sustainable development including matters of contamination, noise, odour,
impact on ecology and biodiversity, proximity to transport links and local facilities.
Site design
We work with a panel of partner architects to ensure that our designs accord with National
and Local Planning Policy and Guidance, whilst providing a development where our
customers want to live and which is sympathetic to existing constraints including existing
local development. Through the planning process we will procure the expertise of third-
party consultants in various technical disciplines including all aspects of environmental
assessment such as ecology, contamination, noise and odour to ensure that any constraints
are appropriately integrated into our designs, or appropriate mitigation measures are
identified in order to bring forward appropriate and sustainable development.
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Strategic Report
Frankie, Carrwood Park,
Bradford, West Yorkshire
SASB Criteria
Our approach
Workforce Health and Safety
.
1 (1) Total recordable
a
0
2
3
-
B
H
-
F
I
incident rate (“TRIR”)
and (2) fatality rate for
(a) direct employees
and (b) contract
employees
We measure health and safety performance using an Annual Injury Incidence Rate (“AIIR”)
metric. Our AIIR for reportable injuries per 100,000 employees and contractors was 556 in
2021 (2020: 359). The industry average for the house building sector over the same period
was 264 (2020: 263) (Source: Home Builders Federation).
In the year we reported 10 RIDDOR incidents (2020: 5).
There were no fatalities.
Notes
Reportable injuries are aligned to the UK’s Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations (“RIDDOR”).
The figure reported is the consolidated figure for all direct employees and subcontractors.
Design for Resource Efficiency
.
1 (1) Number of homes
a
that obtained a
0
1
4
certified HERS® Index
-
B
Score and (2) average
H
score
-
F
I
.
2 Percentage of
a
installed water
0
1
fixtures certified
4
-
to WaterSense®
B
H
specifications
-
F
I
.
3 Number of homes
a
delivered certified
0
1
to a third-party
4
-
multi-attribute green
B
H
building Standard
-
F
I
The Energy Performance Certificate (“EPC”) is the UK equivalent to the HERS Index.
98.2% of our homes achieve an EPC rating of B or higher due to efficient design and build
characteristics in each of our standardised house types.
WaterSense is not applicable to the UK.
All of our homes are designed to achieve a maximum internal water use of 110 litres per
person per day and a possible 5 litres per day external use where external taps are fitted.
All of our homes are fitted with dual flush toilets, low flow taps and showers and water
meters.
All of our homes are subject to UK building regulations which include standards for energy
and water efficiency as detailed in criteria IF-HB-410a.1 and IF-HB-410a.2.
There is no widely adopted green building standards that outline specification or
sustainability credentials of homes in the UK.
The historic Code for Sustainable Homes was withdrawn by the government with the view
that these requirements would be embedded into the latest building regulations.
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MJ Gleeson plc Annual Report & Accounts 2021
SASB Disclosures continued
SASB Criteria
Our approach
Design for Resource Efficiency
.
4 Description of risks
a
0
1
4
-
B
H
-
F
I
and opportunities
related to
incorporating
resource efficiency
into home design,
and how benefits are
communicated to
customers
Our homes already incorporate facilities to assist our customers in living a sustainable
lifestyle in their new home such as dual flush toilets, low flow taps and showers and
water meters. In addition, our homes are fitted with low energy lighting and are thermally
efficient, with 98.2% of our homes achieving an EPC rating of B or above.
We use sustainable materials where possible, such as environmentally friendly gravel on
drives. Gravel drives emit significantly lower CO2 in construction and over their lifetime
versus a bonded surface material and are permeable allowing better water run-off and
reducing the risk of flooding.
These benefits are communicated to customers as part of the handover process and in our
new home handbooks to explain to customers how to get the most out of their new home
and minimise the running costs.
Forthcoming changes to building regulations, Part L (Conservation of fuel and power) and
Part F (Ventilation), will change the way our homes are supplied with power and heating.
In readiness, we are trialling the use of air-sourced heat pumps as a means of heating.
These absorb heat from the outside air to heat the home and hot water, and are more
efficient reducing household bills and lifetime CO2 emissions from a home.
We are also examining the installation of EV charging points in homes and how to manage
the associated infrastructure requirements on sites.
We continue to assess the design, structure and build of our homes to ensure they meet
the requirements of the latest building regulations and our customers expectations. At the
same time, we have to manage the impact of these changes with the need to keep our
homes affordable, which is fundamental to our sustainable business strategy.
Community Impacts of New Developments
We strive to build low-cost, sustainable new homes where they are needed and for the people
who need them most. This ethos is present in our site selection strategy where we will always
consider matters such as access and proximity to existing infrastructure and services, as well
as economic and employment centres. We always aim to bring forward developments that
are in close proximity to existing services and with good access to services and facilities.
This often comes hand-in-hand with our objective to regenerate brownfield sites and sites
near areas which already have a high provision of rental properties, as these target site
typologies are often already well served by local facilities.
Where existing access is restricted by location, we work with consultants and the local
authority to identify mitigation measures that might be taken to improve services and access
to services. Often this will form part of a transport assessment and travel plan which might
identify improvements to local public transport infrastructure to improve the sustainability of
the site, or ways in which other sustainable (non-car) transport methods can be promoted.
Most brownfield land in the UK would be classified as an infill site and 90% of our
development sites meet this criteria at 30 June 2021.
In the year to 30 June 2021, we completed the sale of 1,731 homes on infill sites
representing 96% of total unit completions.
Notes
Brownfield land is previously developed land. The majority of brownfield land sites are
served by existing infrastructure such as roads, power lines, sewerage and water, and other
necessary facilities.
We consider all of our sites to be cluster developments which meet the definition of a
“compact development”. As a result, we delivered 1,812 homes on such developments in
the year to 30 June 2021 (2020: 1,072 homes).
.
1 Description of how
b
0
1
4
-
B
H
-
F
I
proximity and access
to infrastructure,
services, and
economic centres
affect site selection
and development
decisions
.
(2) homes delivered
on infill sites
2 Number of (1) lots and
b
0
1
4
-
B
H
-
F
I
.
3 (1) Number of homes
b
delivered in compact
0
1
developments and (2)
4
-
average density
B
H
-
F
I
62
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Strategic Report
Kilner Park, Doncaster,
South Yorkshire
SASB Criteria
Our approach
.
3 (1) Number of homes
b
delivered in compact
0
1
developments and
4
-
(2) average density
B
H
continued
-
F
I
Gleeson Homes typically builds low-density developments delivering on average 100-150
homes per site. The average density of our developments is 14 homes per net acre with
some developments having a density as low as 11 homes per net acre.
Notes
A cluster development is defined as a development that “produces very attractive and
marketable communities and makes it easier for developers to preserve environmentally
sensitive lands, such as wetlands and forests by allowing lots to be grouped on certain
portions of a site, rather than spread uniformly across a site, so that other areas of the site
may remain undisturbed as open space.”
Climate Change Adaptation
.
1 Number of lots located
a
in 100-year flood
0
2
zones
4
-
B
H
-
F
I
In the year to 30 June 2021, we acquired 1,481 plots in regions within flood zone 3. This
accounted for 28% of plots acquired in the year. The total number of plots within areas of
flood zone 3 at 30 June 2021 was 2,687 (17%)
In the year to 30 June 2021, we had 235 unit completions within areas of flood zone 3. This
accounted for 13% of our total annual completions.
Notes
As per the Environment Agency, flood zone definitions are set out below:
• Flood Zone 1 – land assessed as having a less than 1 in 1,000 annual probability of river
or sea flooding (<0.1%).
• Flood Zone 2 – land assessed as having between a 1 in 100 and 1 in 1,000 annual
probability of river flooding (1%-0.1%), or between a 1 in 200 and 1 in 1,000 annual
probability of sea flooding (0.5%-0.1%) in any year.
• Flood Zone 3 – land assessed as having a 1 in 100 or greater annual probability of river
flooding (>1%), or a 1 in 200 or greater annual probability of flooding from the sea
(>0.5%) in any year.
Note: These flood zones refer to the probability of river and sea flooding, ignoring the
presence of defences.
Climate risk has been identified as a principal external risk for the Group as set out on
page 73. The Group risk register is formally reviewed by the Audit Committee at the majority
of its scheduled meetings, including any changes to risk ratings and mitigations. Climate risk
has been classified as having a medium level of residual risk. This is assessed both from the
potential physical aspects of climate change and how they will impact our business strategy,
and also the compliance aspects of climate change with increased regulation (including
changes to building regulations in response to climate change) and disclosure requirements.
At 30 June 2021, our owned land pipeline stood at 7,930 plots (2020: 6,849 plots).
In the year to 30 June 2021, we completed 1,812 homes (2020: 1,072 homes).
In the prior year, we sold fewer homes due to the impact of Covid-19 and the UK national
lockdown, which resulted in most of our sites being closed between April and May 2020.
Notes
Completions means all legally completed sales to customers during the year.
In the year to 30 June 2021, we were actively selling from an average of 61 sales sites
(2020: 65 active sales sites).
Notes
Active sales sites are sites which are actively selling homes and typically average 26 homes
per year.
63
.
2 Description of
a
0
2
4
-
B
H
-
F
I
climate change risk
exposure analysis,
degree of systematic
portfolio exposure,
and strategies for
mitigating risks
controlled lots
.
A Number of
0
0
0
-
B
H
-
F
I
.
delivered
B Number of homes
0
0
0
-
B
H
-
F
I
.
selling communities
C Number of active
0
0
0
-
B
H
-
F
I
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MJ Gleeson plc Annual Report & Accounts 2021
Financial Review
“
The Group returned to strong
growth this year with revenue
and profit ahead of pre-Covid
levels. The balance sheet remains
well capitalised with net cash
at 30 June 2021 of £34.3m. The
refinancing undertaken this
year provides the Group with
additional liquidity to invest
in growth.”
Strong revenue and profit growth
The Group returned to growth with revenue increasing
by 96.1% to £288.6m (2020: £147.2m) which was 15.5%
higher than the pre-Covid year to June 2019 of £249.9m.
All government furlough grants claimed under the Job
Retention Scheme, totalling £1.3m, were repaid during
the year of which £0.7m was included in cost of sales and
£0.6m was included in administrative expenses.
Gleeson Homes revenue increased by 88.6% to £265.8m
(2020: £140.9m) and was 34.9% higher than the pre-
Covid year to June 2019 (£197.0m). This was due to an
increase in the number of homes sold to 1,812
(2020: 1,072) – a 69.0% increase and an 18.5% increase
when compared to 2019 and higher selling prices.
Selling prices were higher with average selling prices
(“ASP”) in the year being £145,800 (2020: £130,900,
2019: £128,900). Whilst selling prices have risen, these
remain well below the average new build selling prices
across the North of England and Midlands and remain
affordable for young, first time buyers.
Gleeson Land increased revenues by 261.9% to £22.8m
(2020: £6.3m, 2019: £52.9m) having sold eight sites
this year in comparison to two small sites in the prior
year and nine sites in 2019. Demand for consented land
has returned following the disruption caused by the
pandemic, albeit some challenges remain with delays in
the planning system.
As a result, gross profit for the Group increased by 121.0%
to £89.3m (2020: £40.4m), with the gross profit of
Gleeson Homes increasing by 93.6% to £75.7m
(2020: £39.1m, 2019: £59.3m). The gross profit margin for
Gleeson Homes increased to 28.5% (2020: 27.8%,
2019: 30.1%) as increases in selling prices more than offset
cost inflation. In part, gross margin in the prior year was
also impacted by Covid-19-related costs and provisions
of £2.9m.
Administrative expenses increased by £12.7m or 36.8%
in the year to £47.2m (2020: £34.5m) as investment to
support the underlying growth of the business continued.
64
Group operating profit was £43.1m, a significant increase
on the previous year operating profit of £5.9m and 5.1%
higher than the pre-Covid operating profit of £41.0m in
2019. Of this, Gleeson Homes contributed £37.4m
(2020: £9.0m, 2019: £30.1m) and Gleeson Land
contributed £11.1m (2020: £0.2m, 2019: £13.0m). Group
overheads were £5.4m (2020: £3.3m, 2019: £2.1m).
Net finance expenses of £1.4m (2020: £0.4m expense)
consisted of finance expenses of £1.7m (2020: £1.1m)
being interest payable on bank facilities, bank charges
and the unwinding of discounts on deferred payables,
partly offset by finance income of £0.3m (2020: £0.7m)
consisting of the unwinding of discounts on deferred
receivables on land sales and shared equity receivables.
Finance expenses includes £0.4m of arrangement fees
on the previous bank facility that were written off upon
completing the new club facility in April 2021.
As a result, the Group delivered profit before tax of
£41.7m (2020: £5.6m, 2019; £41.2m).
Tax
The total tax charge for the year was £7.8m
(2020: £0.7m), reflecting an effective rate of tax of 18.8%
(2020: 14.1%).
Deferred tax assets relating to tax losses have been
utilised in full this year, such that the remaining deferred
tax asset recognised in relation to tax losses is now £nil.
The remaining deferred tax asset of £1.2m recognised
in the statement of financial position, comprises capital
allowances, short-term timing difference and future relief
on share-based payments.
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Stefan AllansonChief Financial Officer Strategic Report
Discontinued operations
The costs of Gleeson Construction Services Limited,
whose activity is limited to resolving claims from the
legacy businesses that were sold in 2005 and 2006, were
disclosed in previous years as a discontinued operation.
As the level of claims has now reduced to an insignificant
level and no longer warrants separate disclosure, the
costs associated with this activity of £0.4m
(2020: £0.3m) have been classified within continuing
operations this year, under Group overheads.
Profit for the year
The profit after tax for the year was £33.9m
(2020: £4.5m).
Earnings per share
Basic earnings per share significantly increased to
58.2 pence (2020: 8.1 pence, 2019: 61.0 pence, both
from continuing and discontinued operations as
previously reported).
Return on capital employed
Return on capital employed increased to 21.4%
(2020: 3.1%, 2019: 25.9%) reflecting the significant increase
in earnings compared to the prior year. This is lower than
the return on capital employed pre-Covid in 2019 of 25.9%,
driven by investment in working capital and inventory due
to a higher number of new sites that are only at build stage
but not yet contributing to sales, with net assets having
increased by 20.1% since June 2019.
Dividends
Following the suspension of dividend payments in 2020,
the Board resumed payments in April 2021 paying an
interim dividend of 5.0p per share, which totalled £2.9m.
As a result of the strong financial performance to June
2021, and subject to shareholder approval, the Board
proposes to pay a final dividend of 10.0p per share, which
equates to £5.8m.
The Board is committed to making dividend payments on
a progressive basis. Following a review of the Company’s
capital allocation policy this year, the Board intends to
maintain an earnings-to-ordinary-dividend cover ratio
of between three and five times and to pay an interim
dividend representing one-third of the total dividend
each year.
Statement of financial position
During the year to 30 June 2021, shareholders’ funds
increased by 15.2% to £244.9m (2020: £212.6m). Net
assets per share increased to 420 pence, an increase of
14.8% year on year (2020: 366 pence).
Non-current assets reduced during the year by 37.9%
to £12.6m (2020: £20.3m). This was primarily due to a
reduction in Gleeson Land’s deferred land sale receipts
from £8.6m at June 2020 to £2.1m at June 2021.
Current assets remained similar to June 2020 at £300.5m
(2020: £301.7m), with inventories increasing by £23.7m
to £240.0m and trade and other receivables increasing
by £14.1m to £22.4m (2020: £8.3m). Gross cash balances
reduced from £76.8m to £34.3m following repayment of
the £60.0m borrowings on the Group’s revolving credit
facility that was drawn at the end of 2020. Corporation
tax receivables increased by £3.6m to £3.9m.
Total liabilities reduced by £41.2m to £68.2m
(2020: £109.4m). This reflects the repayment of the
£60.0m borrowing in November 2020, partly offset by
an increase in trade payables of £9.0m to £34.4m
(2020: £25.4m) and other payables of £9.4m to £27.0m
(2020: £17.6m), reflecting the return to pre-Covid
activity levels.
65
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Financial Review
Continued
Cash flow
The Group generated cash before financing activities of £21.2m, compared to a cash outflow of £15.9m in 2020. After
payment of interim dividends of £2.9m, lease payments of £0.8m and the repayment of borrowings of £60.0m in
November 2020, the Group had a net cash outflow of £42.5m (2020: net cash inflow of £46.5m reflecting the draw
down of £60.0m in March 2020).
Bank facilities
At 30 June 2021, the Group had cash and cash equivalents balances of £34.3m and no debt (30 June 2020: £16.8m net
cash being £76.8m gross cash net of £60.0m borrowings drawn on the Group’s committed facility).
In April 2021, the Group negotiated a committed club facility with Lloyds Bank plc and Santander UK plc. The facility
has a limit of £105m (previously £70m with Lloyds Bank plc), expires in October 2024 and provides the Group with
additional funding to finance growth.
Pension
The Group contributes to a defined contribution pension scheme. A charge of £1.2m (2020: £1.0m) was recorded
in the Consolidated Income Statement for pension contributions. The Group has no exposure to defined benefit
pension plans.
Stefan Allanson
Chief Financial Officer
13 September 2021
Group operating profit
(£m)
Profit before tax1 (£m)
Earnings per share -
basic2 (pence)
Dividends per share
(pence)
Cash net of borrowings
(£m)
Return on capital
employed3 (%)
1.
2.
In 2021, costs associated with legacy businesses have been included in profit before tax from continuing operations. In prior years,
these costs were included in discontinued operations and therefore excluded from profit before tax.
In 2021, costs associated with legacy businesses have been presented within continuing operations and earnings per share in 2021 is
presented as continuing operations. In prior years, these costs were reported as discontinued operations and earnings per share up to
2020 is presented as continuing and discontinued operations.
3. Return on capital employed is calculated based on earnings before interest and tax (“EBIT”) from continuing and discontinued
operations, expressed as a percentage of the average of opening and closing net assets after deducting deferred tax and cash
net of borrowings.
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41.02018201720192020202143.15.936.933.05.641.22018201720192020202141.737.033.08.161.02018201720192020202158.255.648.50.034.52018201720192020202115.032.024.030.32018201720192020202134.316.841.334.13.125.925.42018201720192020202121.426.6MJ Gleeson plc Annual Report & Accounts 2021 Gleeson Homes pre-Covid 2019 to 2021
Gleeson Homes operating profit increased from £30.1m in 2019 to £37.4m in
2021. Higher sales volumes of 1,812 homes (2019: 1,529) contributed £10.9m
additional gross profit. Higher average selling prices (“ASP”) of £145,800
(2019: £128,900) contributed £9.2m additional profit. This additional gross
profit was partly offset by lower gross margin of 28.5% (2019: 30.1%),
accounting for £4.2m of lower profit and higher overhead costs of £9.0m due
to inflation and investment in the business structure, operations and headcount.
Gleeson Homes operating profit 2019 to 2021 (£m)
9.2
-4.2
-9.0
0.4
37.4
10.9
30.1
2019
Homes
sold
Selling
prices
Gross
profit
margin
Over-
heads
Land
sales
2021
NOTE: Gleeson Homes operating profit in 2019 included certain Group costs that have been
classified in Group administrative expenses since 2020.
Homes sold
Average number of homes sold per
sales site
Build sites opened
Average selling price
Gross profit per home sold
Gross profit margin per home sold
Overheads per home sold
2021
1,812
2020
1,072
2019
1,529
28.3
27
£145,800
£41,600
16.5
12
£130,900
£36,400
23.5
19
£128,900
£38,800
28.5%
27.8%
30.1%
£21,300
£28,200
£19,300
The Covid-19 shutdown before the end of the previous financial year resulted
in higher numbers of built, part-built and forward sold homes being carried
forward into the year. It also led to the purchase and opening of sites that had
been expected to achieve planning before 30 June 2020 to be acquired and
opened during the financial year.
The average selling price of homes sold increased by 11.4% from 2020
reflecting strong underlying price increases of 9.3% and the effect of site mix.
Gross profit margin of 28.5% reflects some recovery from the Covid-impacted
gross margin of 27.8% in the previous year, but was lower than the pre-Covid
gross margin of 30.1% reported in the year to June 2019. Nevertheless, gross
profit per home sold of £41,600 was £2,800 per home (7.2%) higher than
the gross profit per home sold in the pre-Covid year to June 2019. Note the
repayment of furlough monies this year through cost of sales, reduced gross
profit per home sold by approximately £375 per home.
Overhead costs per home sold were £21,300 which was £2,000 per home
(10.4%) higher than the pre-Covid year to June 2019 reflecting higher average
employment costs and investment in customer care, health and safety
and information management systems. This also included the repayment
of furlough monies through overheads, which increased overheads by
approximately £300 per unit sold.
Strategic Report
Debbie, Sales Executive,
Canal Walk, Hapton,
Greater Manchester
67
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Risk Management
Effective risk management is essential to the achievement of our strategic priorities.
Risk management controls are integrated across all levels of our business and
operations.
The Board has overall responsibility for the Group’s management and assessment of risk, supported by the Audit
Committee. Our risk management framework includes a Group risk register which includes the key risks to the business.
The register identifies both principal and emerging risks and informs a formal risk assessment process that considers
the likelihood and impact of the identified risks together with any mitigating controls that are already in place or
planned. This position is formally reviewed by the Audit Committee at the majority of its scheduled meetings, including
consideration of emerging risk areas and changes in risk ratings.
Our risk management framework consists of the following components:
• Sets the Group strategy
and overall risk appetite
• Reviews operational and
financial performance
• Overall responsibility for
monitoring key risks
• Monitors the Group’s
systems, controls and
integrity of reporting
• Approves and advises
on the internal audit
plan and monitors
the effectiveness of
internal audit
• Monitors the
performance,
effectiveness and
independence of
external audit
• Monitors the
management
of principal and
emerging risks
• Monitors and manages
• Responsible for the
day-to-day operational and
financial performance
identification of operational
and strategic risks
• Ensures internal control
policies set by the Board
are implemented
• Undertakes a programme
• Provides assurance to the
of risk-based internal audit
activities
Audit Committee
• Manages the Group’s
insurance policies
We categorise our risks into two sources:
External – outside of our direct control
Operational – risks related to the day-to-day operation
of the divisions
The Group’s risk framework shows how the principal risks
are rated by the Board in terms of their potential impact on
the business and the likelihood of the risk transpiring. The
risk matrix is presented after taking account of mitigating
actions.
The Board has assessed the risks during the year and the
risks associated with government policy and regulation
and build costs and availability have increased. Mortgage
availability has recovered well since the start of the
pandemic last year and, therefore, this risk has reduced.
The table on pages 69 to 73 is provided to ensure
stakeholders appreciate those risks that the Board has
identified that will have a material impact on the business
should they arise.
12
2
3
7
9
11
1
10
4
5
t
c
a
p
m
I
6
8
68
Low
Likelihood
High
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The BoardDivisional Management TeamsInternal AuditAudit CommitteeMJ Gleeson plc Annual Report & Accounts 2021
Rationalisation of risks
The prior year Annual Report included 15 principal risks. As reported at the Interim this year, two further risks have
been added (Sustainability and Climate change). In order to preserve the clarity of reporting of risks to stakeholders,
a number of risks have either been combined this year or renamed for presentation purposes. These remain separately
monitored on the Group’s risk register, but where these have similar characteristics they have been presented under a
combined heading for clarity as set out below:
Old risk title
New risk title
Comments
3. Land availability
7. Geographic balance
3. Land availability
The ability to extend our operations into new geographic
areas is linked to land availability in those areas, where
those sites meet our hurdle rates..
4. Planning policy and
regulations
4. Government policy
and regulations
Wider government policy and regulatory changes,
including changes to building regulations, are considered
as part of this risk, so it has been renamed for clarity.
15. Customer service
s
e
g
n
a
h
C
6. Credit risk
11. Uninsured loss and latent
defects
12. Corporate liquidity
13. Financial irregularity
or fraud
14. Tax control environment
6. Build quality and
customer service
Build quality was previously described under customer
service, but warrants separate identification as one of
our material sustainability issues and strategic priorities.
10. Financial control
All of these elements form part of the Group’s financial
and tax control environment and management
of financial risks. These are, therefore, addressed
collectively under the heading “Financial control”.
Risk
1
Economic
environment
Residual risk:
High
2
Mortgage
availability
Residual risk:
Medium
Description of risk
Change
in year
Assessment
Mitigation
An economic downturn
or uncertainty in the
housing market could
affect buyer confidence
and the demand for new
homes and consented
land. This would have
an adverse impact on
Group revenue, profit,
cash generation and
carrying value of assets.
The availability of
mortgage finance,
particularly the deposit
requirements for first
time buyers, is crucial to
our customers’ ability to
purchase. Restrictions
on mortgage funding
could reduce demand
for both new homes
and for consented
development sites and
negatively impact Group
revenue and profit.
The Covid-19 pandemic
continues to create
uncertainty in the
housing and land
markets with the risk of
a prolonged economic
downturn remaining. This
risk remains unchanged.
• Lead indicators of the economy
and housing market are closely
monitored.
• A cautious approach to funding
is maintained.
• Visitor and reservation rates,
prices and incentives are regularly
reviewed.
•
Investment in new sites and spend
are carefully controlled.
Despite the Covid-19
pandemic, mortgage
availability has improved
and the range of
85% and 90% LTV
mortgages is increasing,
supplemented by the
government’s 95% LTV
mortgage guarantee
scheme.
• Lead indicators of mortgage
availability are closely monitored.
• Gleeson Homes provides a range of
customer assistance packages.
• We innovate to find new ways to
support our customers.
• We work with key lenders to ensure
products are appropriate and
available.
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69
Strategic Report Risk Management
Continued
Description of risk
Change
in year
Assessment
Mitigation
An increase in land
prices or decrease
in land availability
would reduce the
viability of sites in
Gleeson Homes given
the high hurdle rates
internally set, and would
increase competition
for promotional
opportunities in
Gleeson Land, driving
down profitability and
cash flow.
Planning regulation
changes due to changes
in government policy or
complexities within the
system may affect the
Group’s ability
to secure planning
consent on a timely
basis. Other policy
changes, including
changes to building
regulations, the Future
Homes Standard and
Help to Buy, may
adversely impact
revenue, profit and
cash flow.
Shortages or increased
cost of materials or
skilled labour, and the
failure of key suppliers
or the inability to secure
supplies on appropriate
terms could increase
costs and delay build
programmes, reducing
revenue and profit.
Land continues to be
available at sensible
prices to support the
growth of Gleeson
Homes.
There are opportunities
to sign up and promote
good-quality land for
development in the
South of England.
• We have a clearly defined land
strategy and geographic focus.
• We work closely with local
authorities to identify and purchase
otherwise unwanted land at sensible
prices.
• There is a formal gateway process
and rigorous adherence to margin
requirements and rates of return.
• We have proactive land searching
capabilities and strong relationships
with land agents.
Changes to building
regulations, namely Part
L (Conservation of fuel
and power) and Part F
(Ventilation), will change
the way our homes are
built and increase build
costs. These are likely
to be the first of many
climate-policy inspired
changes to building
regulations.
• Our planning and technical experts
monitor changes to legislation and
building regulations.
• Forthcoming changes to building
regulations are built into site cost
plans and forecasts.
• We consult with government, local
authorities and industry bodies to
understand proposed changes and
highlight issues.
• The end of Help to Buy is not
expected to reduce demand. The
government’s First Homes and other
initiatives will continue to support
first time buyers.
Covid-19 and, to some
extent, Brexit are
impacting the supply
chain, with price
increases on certain
labour and materials
together with availability
constraints.
• The Group is strategically procuring
ahead of issues or stoppages on
sites.
• Price increases are mitigated in part
by rising average selling prices.
• Group purchasing arrangements
are in place to ensure continuity of
supply and pricing.
• We have strong, established
relationships with key suppliers and
subcontractors.
Risk
3
Land
availability
Residual risk:
Medium
4
Government
policy and
regulations
Residual risk:
High
5
Build
costs and
availability
Residual risk:
High
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MJ Gleeson plc Annual Report & Accounts 2021 Description of risk
Change
in year
Assessment
Mitigation
Risk
6
Build
quality and
customer
service
Residual risk:
Medium
7
People
Residual risk:
Medium
A failure to build
new homes to the
standard and quality
that our customers
expect, to not treat our
customers fairly, or not
respond adequately to
complaints or rectify
defects in a timely and
professional manner.
Adverse publicity from
perceived poor build
quality would damage
our reputation, lead
to lower sales, impact
future revenues and
cash flows.
Failure to attract,
develop and retain
good people with the
right skills may result
in overstretched and
demotivated staff,
decreased productivity
or quality and stifled
growth opportunities.
Inadequate succession
planning could result in
inefficiency and a loss of
key knowledge from the
business.
8
Cyber and IT
systems
Residual risk:
Medium
Failure of the Group’s IT
systems or unauthorised
access to systems
due to inadequate
protection, controls,
processes or cyber
attack could result
in data loss, business
disruption, reputational
damage or financial loss.
We are embedding the
customer and customer
experience at the heart
of what we do. We will
not hand over a new
home where it does
not meet our quality
requirements and there
is a strict inspection
process. We have
invested in our Customer
Care team and after
sales support to ensure
any defects or issues are
rectified quickly.
• Strict final inspection process
identifies issues and allows us to
remedy before handover.
• Gleeson Quality Charter sets out
what our customers can expect in
terms of quality.
•
•
Independent build inspections and
buyer surveys ensure a high level of
control of quality and service.
Investment in our Customer Care
team centrally and across the
regions.
• New technician vans in each region
to respond quickly to customer
issues and fix any defects.
The focus on
recruitment,
development, and
recognition reflects
in high engagement
scores. The leadership
development and
succession programme
put in place has
continued to strengthen
the management team.
Our focus on making
Gleeson one of the best
companies to work
for means that we will
continue to attract,
develop and retain good-
quality people.
The Covid-19 pandemic
resulted in the majority
of our office-based
employees working from
home. New working
protocols are in place to
mitigate the risk of fraud
and cyber crime. We are
investing significantly
in our IT systems and
networks so these
remain secure and
up-to-date.
• We have a clear mission, vision and
values that our people share.
• We have regular performance and
development reviews.
• Action is taken from the feedback
gained from our employee
engagement surveys.
• Our people have access to quality
training and we have invested in
new online training.
• Our staff remuneration policy is
reviewed and benchmarked to
ensure it remains attractive.
• Employee share ownership is
encouraged.
• We have an established leadership
and succession planning
programme.
•
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 on
secure external servers and backed
up regularly.
• Regular testing is conducted on
the security of our systems and IT
architecture.
• Enhanced network and cyber
controls have been implemented
during the year.
• Regular reminders are sent and
training is provided on the risks of
cyber attack and what to look for.
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Strategic Report Risk Management
Continued
Description of risk
Change
in year
Assessment
Mitigation
Health and safety
failures can result in
injuries to employees,
subcontractors or
site visitors, resulting
in harm to people,
delays in construction,
additional cost,
reputational damage,
criminal prosecution or
civil litigation.
The Group could suffer
loss from financial fraud
or error, poor financial
or tax controls, credit
risk or through having
inadequate insurance
cover where risks exists.
An inability to meet
obligations as they
fall due as a result of
insufficient cash or
the bank facility being
unavailable due to either
breach of covenant
or bank failure could
result in insolvency.
Lack of liquidity
may also limit the
Group’s ability to take
advantage of business
opportunities as they
become available and
consequently be a
possible impediment to
future growth.
The health and safety
of our people and
anyone associated
with our developments
is paramount to our
business. We continued
to operate Covid-19 safe
policies and procedures
throughout the year.
The increase in
reportable incidents
during the year does
not reflect a worsening
of health and safety
risk across the business.
However, the incidents
reported have led to
improved procedures.
The Covid-19 pandemic
presented an
environment with the
potential for risk due
to fraud or error and
these risks are closely
monitored. Although
the financial regulatory
and tax environment
continues to evolve, the
Group has adequate
knowledge and
experience to maintain
compliance, supported
by third-party advisers.
The Group maintains a
strong relationship with
its lenders, insurance
providers and investors.
• Experienced Head of Safety, Health,
Environment & Quality (“SHEQ”) in
place and investment in personnel
to provide regional support,
inspections and training.
• Our “HomeSafe – everyone, every
day” approach promotes the focus
on health and safety awareness
across the Group.
• Our documented policies and
procedures are regularly reviewed
and modified as needed in order to
ensure continuous improvement.
• We arrange for regular
independent inspections of all
our development sites.
• We have established specific
actions to improve health and safety
reporting and performance against
the industry average.
• The Group has robust financial and
tax controls designed to segregate
duties and minimise opportunities
for fraud or error.
• Financial reporting is subject to
rigorous and timely management
reviews.
• The Group has moved from reliance
on a single bank by establishing
a new banking relationship with
another high street bank.
• The Group has secured committed
facilities of £105m until October
2024, shared between two
established lenders.
• Cash is controlled by robust
forecasting and daily cash tracking.
• The Group maintains security
over the majority of land sold on
deferred terms.
• External firms are used to provide
“health checks” over systems
and processes, in particular on
Group taxes.
• External experts are employed
to support the production of
corporation tax and other returns.
Risk
9
Health and
safety
Residual risk:
Medium
10
Financial
control
Residual risk:
Medium
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MJ Gleeson plc Annual Report & Accounts 2021 Change
in year
New
Risk
11
Climate risk
Residual risk:
Medium
Description of risk
The physical effects of
climate change could
result in reduced land
availability, disrupted
build programmes
and/or shortages of
materials due to more
frequent extreme
weather events.
12
Sustainability
Residual risk:
Medium
New
The evolution of the
Company’s business
strategy to embed
sustainable practices
within its day-to-day
activities is essential to
ensure that our business
model remains relevant
and sustainable and
that we continue to
meet the expectations
of our employees,
customers, suppliers,
subcontractors,
communities, investors
and other stakeholders.
Assessment
Mitigation
The speed at which
climate-related
legislation and society’s
expectations on
corporate business
to respond to climate
change is accelerating.
The Group is taking
progressive and
proactive action to
monitor and reduce the
impact of our activities
on the environment
both now and in the
future, and ensure that
our reporting is in line
with the expectations of
stakeholders.
Failure to ensure we
remain a sustainable
business could affect
the Group’s ability to
secure sites, planning
permissions, attract
house buyers, recruit
new employees, appeal
to investors or raise
finance when needed.
By not having clear
targets and effective
communication of our
sustainability strategy,
this could result in
damage to the Group’s
reputation.
• We have clear targets to reduce
our carbon emissions and waste
from sites.
• We track carbon emissions, waste
and other initiatives to evaluate the
success of our actions.
• We report in line with the
recommendations of the Financial
Stability Board’s (“FSB”) Task
Force on Climate related Financial
Disclosures (“TCFD”) and with SASB
Standards.
• We have published our scope 3
emissions for the first time this year,
and are assessing how to reduce the
embedded carbon in our homes.
• The Group has established a
Sustainability Committee, which
reports to the Board.
• We have established a sustainable
business strategy following an
active stakeholder engagement
process.
• We have clear targets to ensure
that our business operates
in a sustainable and socially
responsible way.
• The business is focused on ensuring
progress against targets for material
sustainability issues.
• We have prepared an integrated
Annual Report for the first time this
year, incorporating our sustainability
priorities throughout.
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Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Section 172 Statement
Section 172 Statement
As required by s172 of the Companies Act 2006
(“the Act”), a director of a company must act in the
way they consider, in good faith, would most likely
promote the success of the company for the benefit
of its members as a whole, and in doing so, have
regard, among other matters, to:
a. the likely consequences of any decision in the
long term;
b. the interests of the company’s employees;
c. the need to foster the company’s business
relationships with suppliers, customers and
others;
Board decision-making
Ahead of matters being put to the Board for
consideration, we undertake significant levels of
engagement with relevant stakeholders so that full
consideration is given to how such decisions will
impact on our key stakeholders.
Our key stakeholders include:
• Shareholders
• Employees
• Customers
• Suppliers and subcontractors
• Banks
d. the impact of the company’s operations on the
• Local authorities
community and the environment;
e. the desirability of the company maintaining
a reputation for high standards of business
conduct; and
f. the need to act fairly between the members of
the company.
• Government and regulators
Key examples of stakeholder engagement
enhancing strategic decision making and promoting
the success of the Group are set out in the tables
below.
Decision
Setting our
sustainable
business strategy
Discussion topics with, and feedback from,
stakeholders
Action taken by the Board as a result of
stakeholder feedback
Directors engaged with shareholders, employees,
banks, customers and local authorities when
considering the key material sustainability issues
affecting our business.
The Board reviewed the Company’s material
sustainability issues and the findings of the
stakeholder engagement process. The Board
approved the Group’s sustainable business strategy
and targets on pages 32 to 33.
Repayment of
furlough and other
Covid-19-related
government grants
Directors engaged with major shareholders and
analysts in considering whether it was appropriate
for the Group to retain monies received under
government support programmes following the
end of the first national lockdown.
The Board approved the full repayment of all
government grant monies and reliefs received
including £1.3m received under the Job Retention
Scheme and £0.6m of grants and rebates received
under the Covid Retail, Hospitality and Leisure
Grant Fund.
Prioritising our
customers and key
workers
Directors engaged with prospective customers to
understand how the Group could help key workers
during the Covid-19 pandemic. This involved
discussions on the types of benefits we could offer
that would make moving into their new homes
even easier for key workers.
The Board supported the introduction of the Key
Worker and Armed Forces priority programmes
offering a range of benefits including money off
on extras and incentives for their new home and
priority access to new home releases.
Promoting mental
health awareness
The Directors recognised the impact of the
Covid-19 pandemic on mental health. They
engaged with employees and mental health
charities to ensure the Group was able to support
employees during the pandemic and beyond.
The Board supported Mental Health First Aid
courses being offered to all employees in
conjunction with MHFA England. A number of
employees act as Mental Health Champions,
arrange communications and events promoting
mental health awareness and support.
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Strategic Report
Model Walk,
Worksop, Derbyshire
Factor
considered
How this factor has been considered in the year Actions taken by the Board as a result
Long-term
consequences
of any decisions
• The Group undertakes future planning up to five
years in critical areas and develops a strategy
which will enable it to deliver its long-term
objectives.
•
Increased the Group’s revolving credit facility
through a new club facility agreement, enabling
the Group to open more development sites in
the future.
• Extended participation in the Company’s long term
incentive plan to the senior management team.
• Broadened the Group’s apprenticeship
programme to strengthen the talent pipeline.
Interests of our
employees
• The Group arranges an independent annual
• Used the government’s Job Retention Scheme
employee engagement survey called Your Voice.
• The Group conducts an annual pay and benefits
benchmarking exercise.
to put employees on furlough and avoid making
redundancies. All government monies were
subsequently repaid in full.
• Executive Directors carry out regular site
and office visits and undertake roadshows to
communicate with all employees, including
interactive question and answer sessions.
• Responded to the action points arising from the
Your Voice surveys.
• Made significant investment in recruitment,
training and development.
• An open-door culture is reinforced in a weekly
newsletter from the Chief Executive.
• Enhanced pay and benefits packages where the
external benchmarking identified differentials.
Interests of
our suppliers,
customers and
others
• The Group conducts supplier and subcontractor
• Accelerated payment runs and made
roadshows.
• The Group holds open discussions with our
supply chain about productivity, quality and
health and safety.
• Customer feedback is obtained through surveys
conducted by a third party.
• Target to be a five-star builder across all divisions.
improvements to our purchase-to-pay process.
• Updated terms and conditions with our suppliers
and subcontractors.
•
•
Improved the customer journey and launched
our “Customer First” initiative.
Introduced our Key Worker and Armed Forces
priority programmes.
Impact on our
community and
environment
• The Board established a new Sustainability
Committee with a focus on communities, people
and the environment.
• Focus on the Group’s existing Community
Matters programme to work closely with the
communities where we build.
• Developed new sustainability policies and
established a sustainable business strategy.
• Set ambitious sustainability targets for the short
and medium-term, including carbon reduction.
• Sustainability targets delegated to senior
management and linked to Executive bonuses.
• Strengthened communities by refusing to sell
to buy-to-let investors so homes are lived in by
their owners.
Maintaining a
reputation for
high standards
of business
conduct
• The Group ensures adherence to the highest
• Compliance training modules issued across the
standards of conduct.
• Our employees are paid at least the real Living
Wage and we require our subcontractors to do
the same.
• The Group achieved accreditation from the Fair Tax
Foundation for paying its fair share of taxes.
• Zero tolerance on violations of human rights,
slavery, bullying and harassment.
• Responsibility for overseeing compliance is
delegated to senior management.
business, including Whistleblowing, Bullying and
Harassment, Modern Slavery and Bribery and
Corruption.
• Due diligence checks are completed on
our supply chain to ensure they uphold our
standards.
• Regular reporting on governance and
compliance matters to the Audit Committee.
Need to act
fairly between
members of the
Company
• The Company has one class of shares in issue so
all shareholders benefit from the same rights as
set out in the Company’s Articles of Association.
• The 2020 AGM was held behind closed doors in
accordance with the government’s emergency
legislation in response to Covid-19. Shareholders
were offered the ability to join the meeting via
telephone, and to raise questions in advance.
• The Company resumed paying a dividend in
April 2021.
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Non-financial reporting
The following table summarises our approach to internal and external stakeholder engagement to comply with the
Companies Act 2006 requirements regarding non-financial reporting:
Statement
Ways we engage
Read more
Employees
We are committed to
ensuring that all our
employees and stakeholders
are treated fairly and
equitably. We have an
organisational culture that
values passion, collaboration
and respect.
Anti-bribery and corruption
• Policy on diversity, recruitment, equality and how we
• Page 127
engage with our employees
• Approach to employee relations and the involvement
• Page 113
of our Workforce Representative
• Health and safety reporting and the investment that
we are making in our health and safety team and
culture
• Gender pay gap reporting
• Commitment to employing local people, training and
developing our apprentices, raising awareness about
mental health and promoting women in construction
• Pages 42 and 45
• Pages 36 and 112 and
www.mjgleesonplc.com
• Pages 36 to 37
We are committed to the
highest standards of ethics,
honesty and integrity and
expect the same from all
parties we engage with.
• Whistleblowing policy and monitoring of malpractice
• Page 103
reporting
• Anti-bribery and corruption policies
• Reporting of registers of gifts and hospitality given or
received by Directors and employees of the Group
• Page 103
• Page 103
Human rights and social matters
We are committed to upholding
basic human rights across
our business and with all our
stakeholders. Our employee
policies cover all aspects of
basic human rights and our
grievance and fair treatment
at work policies ensure anyone
connected with our business
can speak up about concerns
without fear of retribution.
• Policy and controls preventing modern slavery and
• Page 104 and
human trafficking
www.mjgleesonplc.com
• Payment terms and performance in relation to
• www.gov.uk and
payment practices
www.mjgleesonplc.com
• Commitment to pay the real Living Wage or higher
• Page 46 and 112
to our employees
• Commitment to provide freehold ownership, selling
our customers the land on which their home is built
and not under leasehold
• Page 35
Community and environment
We are committed to creating
more sustainable ways of
undertaking our operations
to conserve energy, reduce
waste and minimise our impact
on the environment. We also
invest in the communities, local
areas and the supply chain
around our development sites.
• Focus on using sustainably sourced timber
• Page 41
• Performance in relation to greenhouse gas
• Pages 38 to 41
emissions as the scale of our operations increase
•
Investment in the communities, schools and areas in
which we operate
• Pages 34 to 35
Strategic Report approval statement
The Strategic Report, contained in pages 2 to 76 has been approved by the Board of Directors and is signed on its
behalf by:
James Thomson
Chief Executive Officer
13 September 2021
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Tailor, Balderstones, Rochdale,
Greater Manchester
77
Strategic Report MJ Gleeson plc Annual Report & Accounts 2021
Corporate
Governance
Contents
Chairman’s Introduction
Board of Directors
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Sustainability Committee Report
Remuneration Committee Report
Annual Report on Remuneration
Directors’ Report
Statement of Directors’
Responsibilities
80
84
86
94
98
106
110
114
126
129
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Corporate Governance
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Grangemoor Park, Widdrington,
Northumberland
79
MJ Gleeson plc Annual Report & Accounts 2021
Chairman’s Introduction
“
The Group and our employees
have demonstrated tremendous
resilience in response to the
Covid-19 pandemic and we have
been successful in navigating the
challenges this year brought.”
I am pleased to present the Governance Report for the
year ended 30 June 2021.
This financial year has been set against the backdrop of
the Covid-19 pandemic and this has, for all companies,
brought its own unique set of challenges.
The Board has strived to ensure that the business
continued to operate effectively and safely throughout the
pandemic, whilst still delivering on its objectives. I would
like to take this opportunity to thank all of our employees
for their hard work and resilience in helping to achieve this.
The Group has been extremely fortunate that, after the
first UK lockdown, it was able to return to operating on its
development sites with appropriate Covid-19-safe working
practices in place. On behalf of the Board, I would like to
extend my gratitude to the government for the measures
which made this possible, which has enabled the Group
to continue building high-quality, low-cost homes for the
benefit of young first-time buyers and other stakeholders.
Board changes
The Board announced in its 2020 Annual Report that
it had decided to initiate a search for an additional
independent Non-Executive Director. I am pleased to
report that, following an externally facilitated search
process, Elaine Bailey joined the Board on 1 March 2021.
Elaine has been appointed as Chair of the Sustainability
Committee and a member of the Nomination, Audit, and
Remuneration Committees. Further details can be found
in the Nomination Committee Report on pages 94 to 97.
Committee changes
In December 2020, we established a new Committee
of the Board to oversee the Group’s approach to
sustainability. The first Sustainability Committee
Report can be found on pages 106 to 108.
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Dermot GleesonChairman Corporate Governance
Petersmiths Park, Ollerton,
Nottinghamshire
Code compliance
Implementation of the 2018 UK Corporate
Governance Code
During the period under review, the Company, as a
premium listed company, was subject to the 2018 edition
of the UK Corporate Governance Code (“the Code”)
issued by the Financial Reporting Council (“FRC”).
The Board and its Committees are responsible for
ensuring that, wherever possible, compliance with the
Code is achieved. This is demonstrated throughout this
Governance Report and, of particular note, are the Code
principles as set out on page 82. Where the Board has not
complied with provisions of the Code, these are set out in
the compliance statement on page 91.
Dermot Gleeson
Chairman
13 September 2021
The Disclosure Committee was formally dissolved
during the year and a management team responsible for
overseeing compliance with disclosure regulations was
created. This is now overseen by the Chief Executive
Officer, James Thomson; Chief Financial Officer, Stefan
Allanson; and Company Secretary, Leanne Johnson, who
report to the Audit Committee, whose terms of reference
include regulatory disclosures.
Culture
The Board continues to promote and implement
Our Vision, Mission and Values, which are described
in more detail on pages 8 and 9. The results of our
latest employee engagement survey, Your Voice,
indicated that employee engagement has once again
increased and overall satisfaction is very high, which
is particularly pleasing following a year in which many
faced unprecedented challenges both personally and
professionally. I am confident that actions taken by
the Board and management embed an honest and
transparent culture within the Group, which serves to
promote the long-term success of the business.
Our commitment to engaging
with stakeholders
The Board embraces the ethos behind the requirements
of Section 172 of the Companies Act. Information on how
we engage with our stakeholders is set out in our Section
172 Statement on pages 74 and 75.
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81
Chairman’s Introduction
Continued
Section of the
Code
Board
leadership
and Company
purpose
How we have applied the Code
The Group is led by an effective and entrepreneurial Board, which
promotes the long-term success of the Group and engages with its
shareholders and other stakeholders.
The Board has established the Group’s purpose and strategy and is
satisfied that these are aligned with the Group’s culture and values.
The Board has established and oversees an effective governance and
risk framework.
The Board promotes effective engagement with the workforce, with
open lines of communication where employees can raise matters of
both concern and opportunity.
Further
information
See pages
84 to 87
Division of
responsibilities
The Chairman leads the Board, which includes an appropriate
combination of Executive Directors and Non-Executive Directors.
Board relations are constructive and Board members are able to
demonstrate objective judgement.
See pages
88 to 90
There is a clear division of responsibility between leadership of the Board
(the Chairman of the Board) and the executive leadership of the Group’s
business (the Chief Executive Officer and the Chief Financial Officer), and
the Non-Executive Directors provide constructive challenge, strategic
guidance and advice, and have sufficient time to meet their Board
responsibilities.
There are relevant policies and processes in place for the Board to receive
timely and clear information, and function effectively and efficiently.
Composition,
succession and
evaluation
Board appointments are subject to a formal, rigorous and transparent
procedure, based on objective criteria that promotes diversity.
A comprehensive and tailored induction programme is in place for new
Directors joining the Board, led by the Chairman, Company Secretary
and Executive Directors.
See pages
94 to 97
The Nomination Committee oversees an effective succession plan, which
takes into consideration a desired combination of skills, experience,
knowledge and diversity of the Board. The Board is subject to an annual
evaluation that considers Group and individual Director performance.
Audit, risk and
internal control
The Board has established formal and transparent policies and
procedures to ensure the independence and effectiveness of internal
and external audit functions, and satisfies itself on the integrity of
financial and narrative statements.
See pages
98 to 105
The Board presents a fair, balanced and understandable assessment
of the Group’s position and prospects.
The Board has established procedures to manage risk, oversee the
internal control framework and determine the nature and extent of the
principal risks of the Group to achieve its strategic objectives.
Remuneration The Group has designed the remuneration policies and practices to
support the Group’s strategy and promote long-term sustainable success.
See pages
110 to 125
Executive remuneration is aligned to the Group’s purpose and values and
is clearly linked to the successful delivery of our sustainable strategy.
There is a formal and transparent procedure for developing the Executive
remuneration policy and determining Director and senior management
remuneration. The Remuneration Committee is able to exercise
independent judgement and discretion when authorising remuneration
outcomes, taking into account Group and individual performance.
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MJ Gleeson plc Annual Report & Accounts 2021 Corporate Governance
Oliver and Charlotte, Carrwood
Park, Bradford, West Yorkshire
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Board of Directors
Dermot
Gleeson
MA Cantab
James
Thomson
Stefan
Allanson
MA (Oxon), ACA
ACMA, FCT
Andrew
Coppel
CBE, FCA
Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
and Senior Independent
Director
Fiona
Goldsmith
FCA
and Workforce
Representative
Christopher
Mills
Elaine
Bailey
Non-Executive Director
Non-Executive Director
Non-Executive Director
Head of Legal and
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Appointment to the
Board
Dermot was appointed to
the Board in 1975.
Appointment to the
Board
James was appointed to
the Board in June 2019.
Appointment to the
Board
Stefan was appointed to
the Board in July 2015.
Appointment to the
Board
Andrew was appointed to
the Board in October 2019.
Background and
Experience
Dermot became Chief
Executive of the Company
in 1988 and Chairman in
1994. He relinquished the
post of Chief Executive
in 1998. Formerly the
Chairman of the Major
Contractors Group, a Board
member of the Housing
Corporation and a Director
of the Construction
Industry Training Board.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Corporate governance.
Risk management.
Strategy development. HR.
Commercial.
External appointments
None.
Background and
Experience
James was previously Chief
Executive of Keepmoat
Homes; Group Finance
Director and Chief
Operating Officer of
DTZ (now part of
Cushman & Wakefield).
He qualified as a Chartered
Accountant with
PricewaterhouseCoopers
and spent ten years in
investment banking.
Background and
Experience
Stefan was previously
Deputy Chief Financial
Officer of Keepmoat
Homes. He 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 Company
Limited and Tianhe
Chemicals.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Health and safety.
Strategy development.
Organisational and cultural.
Acquisitions and mergers.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Accounting and finance. IT.
Business continuity. Risk
management. Strategy
development. Commercial.
External appointments
A local authority councillor
for the City of London and
the Chair of the City of
London Police Authority
Board.
External appointments
None.
Background and
Experience
Andrew previously held
executive roles at Queens
Moat Houses and De Vere
Group, and has undertaken
a number of non-executive
positions including Crest
Nicholson. Following seven
years as Chairman of
Tourism Ireland, Andrew
was appointed CBE in 2008
for services to Irish Tourism.
Key Strengths
Public limited companies.
Accounting and finance.
Corporate governance.
Acquisitions and mergers.
Risk management. Strategy
development.
External appointments
Chair of Trustees for the
Shooting Star Children’s
Hospices.
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Leanne
Johnson
LLB
Company Secretary
Appointed as Company
Secretary in March 2020,
Leanne is a qualified
solicitor and is Head of
Legal for the Company.
Leanne trained at Irwin
Mitchell and was Legal
Counsel for Keepmoat
Homes before joining
MJ Gleeson plc.
Leanne is also a graduate
Chartered Governance
Professional.
Appointment to the
Appointment to the
Appointment to the
Board
Board
Board
Fiona was appointed to the
Christopher was appointed to
Elaine was appointed to the
Board in October 2019.
the Board in January 2009.
Board in March 2021.
Background and
Experience
Fiona previously held
executive finance roles
at First Choice Holidays
plc and Land Securities
Background and
Experience
Background and
Experience
Christopher is the founder
Elaine was previously
of Harwood Capital
Chief Executive Officer of
Management Group and
the Hyde Group housing
previously Chief Investment
association and held a
Company plc. Fiona was
Officer of J O Hambro
number of senior roles at
also Non-Executive Director
Capital Management
Serco. Elaine has extensive
at Walker Greenbank. She
Limited with an extensive
experience in housing,
qualified as an accountant
background in investment
engineering, construction
at KPMG.
management.
and government services.
Elaine is a chartered
member of the Institution
of Structural Engineers.
Key Strengths
Key Strengths
Key Strengths
Accounting, finance and
Public limited companies.
Housebuilding and
Key Strengths
Housebuilding and
audit. Risk management.
Accounting, finance
construction. Strategy
construction. Corporate
Corporate governance.
and audit. Acquistions
development. Health and
governance. Legal.
Acquisitions and mergers.
and mergers. Strategy
safety. Risk management.
Regulatory and compliance.
Compliance and regulation.
development. Risk
Business development.
IT.
management. Business
Commercial.
development.
External appointments
Non-Executive Director
and Chair of the Audit
External appointments
Managing Director
of Harwood Capital
External appointments
Non-Executive roles at
Residential Secure Income
Committee of Safestyle UK
Management Group, Chief
plc, McCarthy & Stone
plc.
Executive Officer of North
(Shared Ownership)
Atlantic Smaller Companies
Limited, the Health and
Investment Trust Plc, and a
Safety Executive, Andium
Non-Executive Director of
Homes Limited, CHAS, and
several publicly quoted and
Trustee for The Greenslade
private companies.
Family Foundation.
MJ Gleeson plc Annual Report & Accounts 2021
Audit Committee
Sustainability Committee
Nomination Committee
Committee Chair
Remuneration Committee
Dermot
Gleeson
MA Cantab
James
Thomson
Stefan
Allanson
MA (Oxon), ACA
ACMA, FCT
Andrew
Coppel
CBE, FCA
Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
and Senior Independent
Director
Fiona
Goldsmith
FCA
Non-Executive Director
and Workforce
Representative
Christopher
Mills
Elaine
Bailey
Non-Executive Director
Non-Executive Director
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Committee membership
Appointment to the
Board
Fiona was appointed to the
Board in October 2019.
Appointment to the
Board
Christopher was appointed to
the Board in January 2009.
Appointment to the
Board
Elaine was appointed to the
Board in March 2021.
Background and
Experience
Fiona previously held
executive finance roles
at First Choice Holidays
plc and Land Securities
Company plc. Fiona was
also Non-Executive Director
at Walker Greenbank. She
qualified as an accountant
at KPMG.
Background and
Experience
Christopher is the founder
of Harwood Capital
Management Group and
previously Chief Investment
Officer of J O Hambro
Capital Management
Limited with an extensive
background in investment
management.
Key Strengths
Public limited companies.
Accounting, finance
and audit. Acquistions
and mergers. Strategy
development. Risk
management. Business
development.
Key Strengths
Accounting, finance and
audit. Risk management.
Corporate governance.
Acquisitions and mergers.
Compliance and regulation.
External appointments
Non-Executive Director
and Chair of the Audit
Committee of Safestyle UK
plc.
Background and
Experience
Elaine was previously
Chief Executive Officer of
the Hyde Group housing
association and held a
number of senior roles at
Serco. Elaine has extensive
experience in housing,
engineering, construction
and government services.
Elaine is a chartered
member of the Institution
of Structural Engineers.
Key Strengths
Housebuilding and
construction. Strategy
development. Health and
safety. Risk management.
Business development.
Commercial.
External appointments
Managing Director
of Harwood Capital
Management Group, Chief
Executive Officer of North
Atlantic Smaller Companies
Investment Trust Plc, and a
Non-Executive Director of
several publicly quoted and
private companies.
External appointments
Non-Executive roles at
Residential Secure Income
plc, McCarthy & Stone
(Shared Ownership)
Limited, the Health and
Safety Executive, Andium
Homes Limited, CHAS, and
Trustee for The Greenslade
Family Foundation.
Appointment to the
Appointment to the
Appointment to the
Appointment to the
Board
Board
Board
Board
Dermot was appointed to
James was appointed to
Stefan was appointed to
Andrew was appointed to
the Board in 1975.
the Board in June 2019.
the Board in July 2015.
the Board in October 2019.
Background and
Experience
Background and
Experience
Background and
Experience
Background and
Experience
Dermot became Chief
James was previously Chief
Stefan was previously
Andrew previously held
Executive of the Company
Executive of Keepmoat
Deputy Chief Financial
in 1988 and Chairman in
Homes; Group Finance
Officer of Keepmoat
1994. He relinquished the
Director and Chief
post of Chief Executive
Operating Officer of
Homes. He qualified as
an accountant in 1994,
executive roles at Queens
Moat Houses and De Vere
Group, and has undertaken
a number of non-executive
in 1998. Formerly the
Chairman of the Major
DTZ (now part of
following which he held
positions including Crest
Cushman & Wakefield).
senior finance roles at
Nicholson. Following seven
Contractors Group, a Board
He qualified as a Chartered
Honda Motor Co Limited,
years as Chairman of
member of the Housing
Accountant with
BTP plc, The Skills Market
Tourism Ireland, Andrew
Corporation and a Director
PricewaterhouseCoopers
Limited, The Vita Company
was appointed CBE in 2008
of the Construction
and spent ten years in
Limited and Tianhe
for services to Irish Tourism.
Industry Training Board.
investment banking.
Chemicals.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Corporate governance.
Risk management.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Health and safety.
Key Strengths
Housebuilding and
construction. Public
limited companies.
Key Strengths
Public limited companies.
Accounting and finance.
Corporate governance.
Accounting and finance. IT.
Acquisitions and mergers.
Strategy development.
Business continuity. Risk
Risk management. Strategy
Strategy development. HR.
Organisational and cultural.
management. Strategy
development.
Commercial.
Acquisitions and mergers.
development. Commercial.
External appointments
External appointments
External appointments
None.
A local authority councillor
None.
External appointments
Chair of Trustees for the
Shooting Star Children’s
Hospices.
for the City of London and
the Chair of the City of
London Police Authority
Board.
Leanne
Johnson
LLB
Head of Legal and
Company Secretary
Appointed as Company
Secretary in March 2020,
Leanne is a qualified
solicitor and is Head of
Legal for the Company.
Leanne trained at Irwin
Mitchell and was Legal
Counsel for Keepmoat
Homes before joining
MJ Gleeson plc.
Leanne is also a graduate
Chartered Governance
Professional.
Key Strengths
Housebuilding and
construction. Corporate
governance. Legal.
Regulatory and compliance.
IT.
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Corporate Governance
Corporate Governance Report
Board composition
The Board 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 to discharge its duties
effectively. This includes a combination of backgrounds
and experiences, which enable it to function effectively
and to have a dialogue that is both constructive and
challenging. The Board also considers that its succession
planning processes are appropriate, including for the
Chairman.
Role of the Board
The Board is responsible to shareholders for the direction,
management, performance, and long-term success of the
Group. It sets the Group’s strategy and objectives and
oversees and monitors internal controls (in conjunction
with the Audit Committee), risk management, principal
opportunities and risks, governance and viability of the
Group. In doing so, the Directors comply with their duties
under section 172 of the Companies Act 2006. To ensure
the Directors maintain control over strategic, financial,
operational and compliance matters, the Board meets
regularly during the year and has formally adopted a
schedule of matters that are required to be brought
to it for decision.
Board and Committee attendance
Board and Committee attendance at scheduled meetings
during the year is shown in the table on page 87. Board
packs, which include a formal agenda, are circulated in
advance of such meetings. The main purpose of these
meetings is to permit the Board and Committees to
receive regular reports on the performance of the Group
and address a wide range of matters, including health
and safety, operational performance, risk management
and corporate strategy. The minutes of all meetings of the
Board and of each of its Committees are recorded by the
Company Secretary. As well as recording the decisions
taken, the minutes reflect any queries raised by the
Directors and record any unresolved concerns.
Matters reserved for the
Board or its Committees
Certain matters are reserved for the Board or its
Committees, including:
• To determine the Board’s structure and composition,
including Board appointments, removals and
succession planning.
• Agree the Group’s strategy and financial policy.
• Approve banking and financing arrangements.
• Approve the interim and annual financial statements.
• Agree and oversee risk management and internal
control policy.
• Agree major capital expenditure, material investments
or the acquisition or disposal of land.
• Entering into and amending pension arrangements.
• Approve contractual arrangements that fall outside
authority delegated to Executive Directors.
• Approve the dividend policy and annual dividend
payments.
• Pledging security over assets and providing Parent
Company guarantees.
In addition, the Board receives updates on sustainability,
governance, regulatory and legal matters to assist
the Board in maintaining compliance with legislative
requirements and best practice. The Board has established
the following Board Committees to assist it in fulfilling its
oversight responsibilities, providing dedicated focus on
particular areas:
• Nomination Committee
Page 94
• Audit Committee
Page 98
• Sustainability Committee
Page 106
• Remuneration Committee
Page 110
These Committees play an important governance
role through the work they carry out to fulfil the
responsibilities delegated by the Board.
Board independence
The Group recognises the importance of having a well-
functioning Board that can exercise objective judgement
and hold management to account. We are pleased to
advise that, following the appointment of Elaine Bailey
in March 2021, at least half of the Board (excluding the
Chairman) are independent Non-Executive Directors in
compliance with Provision 11 of the Code.
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MJ Gleeson plc Annual Report & Accounts 2021 Board activities
Topic
Key activities in 2021
Financial
and risk
• Reviewed monthly business updates and trading performance.
• Approved the budget and plan for financial years 2022 through 2024.
• Concluded a new revolving credit facility agreement with two leading banks (Lloyds and
Santander), significantly increasing the Group’s available liquidity.
• Approved the repayment of all government grants received in relation to Covid-19.
• Approved the payment of an interim dividend in April 2021.
Controls and
governance
• Appointed a new independent Non-Executive Director with construction experience.
• Approved an updated Group risk register that establishes secondary risk owners, including
senior management.
• Reviewed and approved updated delegated levels of authority with appropriate levels of
control delegated to Executive Directors and management teams.
• Approved enhanced controls within the Group’s Commercial function with additional
reporting to the Audit Committee and Board.
• Reviewed and approved an updated defence manual.
Strategy
• Monitored progress against the Group’s strategic priorities.
• Approved an updated sustainable business strategy that integrates sustainability into the
business strategy, with clear targets focused on strategic priorities.
People and
employee
engagement
• Undertook regular workforce engagement via Executive Directors and senior management.
• Employee roadshows were hosted by the Executive Directors, giving employees an insight
into the Group’s performance and strategy.
Sustainability
• Subcontractor and supplier roadshows were hosted by the Executive Directors.
• Workforce Representative engaged with the HR Director reviewing the results of the
employee engagement survey.
• Board members undertook site and office visits to engage with our employees.
• Formed the Sustainability Committee, chaired by Elaine Bailey and comprising the Executive
Directors.
• Published new sustainability-led Group policies.
• Reviewed progress against sustainability targets actions undertaken.
• Approved a new sustainable business strategy.
•
Implemented new targets that are linked to Executive remuneration.
• Published a charitable donations policy.
Shareholder
engagement
• Engaged with shareholders on material sustainability issues.
• Held shareholder meetings on issues such as Directors’ remuneration.
• Presented full and half-year results to investors and analysts.
• Reviewed monthly investor relations reports and annual shareholder body reports.
• Released regular business updates via the RNS.
•
Invited and responded to questions received ahead of the 2020 AGM.
Dermot Gleeson
James Thomson
Stefan Allanson
Andrew Coppel
Fiona Goldsmith
Christopher Mills
Elaine Bailey
(joined March 2021)
Board
Scheduled: 6
Audit
Scheduled: 4
Remuneration
Scheduled: 2*
Nomination
Scheduled: 1
Sustainability
Scheduled: 2**
Disclosure***
6
6
6
6
6
6
2
n/a
n/a
n/a
4
4
n/a
–
n/a
n/a
n/a
2
2
n/a
–
1
n/a
n/a
1
1
n/a
–
1
2
2
n/a
n/a
n/a
1
n/a
1
1
n/a
n/a
n/a
n/a
The table includes the scheduled Board and Committee meetings that were held in early July 2021 in respect of the year ended 30 June 2021.
* The Board has decided to include a further scheduled Remuneration Committee meeting next year.
** The Board has decided to include a further scheduled Sustainability Committee meeting next year.
*** Disclosure Committee dissolved in March 2021.
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Corporate Governance MJ Gleeson plc Annual Report & Accounts 2021
Corporate Governance Report
Continued
Key responsibilities
Chairman
• Ensuring the effective running of the Board.
• Promoting the highest standards of integrity and corporate governance
throughout the Group.
• Chairing Board meetings and setting agendas.
• Ensuring that the Board as a whole plays a full and constructive part in the
development and determination of the Group’s strategy and overall commercial
objectives.
• Ensuring that the Board receives accurate, timely and clear information on:
a. the Group’s performance;
b. the issues, challenges and opportunities facing the Group; and
c. matters reserved to it for decision.
• Ensuring compliance with the Board’s approved procedures, including the
schedule of matters reserved to the Board and each Committee’s terms of
reference.
• Engaging with the Board outside of formal meetings on a group or individual
basis, as required.
•
Initiating change and succession planning in Board appointments to build and
maintain a highly effective Board.
• Ensuring effective communication between the Group and its shareholders and
ensuring that members of the Board develop an understanding of the views of
the major stakeholders.
• Ensuring that there is a properly constructed induction programme for new
Directors.
• Ensuring that the performance of the Board as a whole, its Committees, and
individual Directors is formally and rigorously evaluated at least once a year.
• Diligently performing such duties and exercising such powers as may, from
time to time, be assigned by the Board for the successful running of the
Group’s business.
• Proposing and developing the Group’s strategy and overall commercial objectives
in close consultation with the Chairman and the Board.
• Maintaining relationships with major stakeholders.
• Ensuring effective dialogue with the Chairman on the important and strategic
issues facing the Group.
• Ensuring that the Executive Directors give appropriate priority to providing
reports to the Board, which contain accurate, timely and clear information.
• Ensuring that the Executive Directors comply with the Board’s approved
procedures, including the schedule of matters reserved to the Board and each
Committee’s terms of reference, and providing input on appropriate changes to
the same.
• Keeping the Board alerted to forthcoming complex, contentious or sensitive
issues affecting the Group.
• Providing information and advice on succession planning, to the Chairman, the
Nomination Committee, and to members of the Board, particularly in respect of
Executive Directors and senior management.
• Setting the Group’s culture and values from the top.
Chief Executive Officer
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Corporate Governance
Barnburgh View, Barnsley,
South Yorkshire
Chief Financial Officer
• Devising and implementing the Group’s financial strategy and policies.
• Responsible for the management of the finance, tax, IT, legal, internal audit, and
treasury functions.
• Responsible for the Group’s investor relations activities.
• Developing budgets and financial plans.
• Principal owner of the Group’s risk register.
• Managing the Group’s insurance strategy and policies.
• Managing the Group’s relationship with the external auditors.
• Devising and implementing the Group’s sustainability strategy, policies, and
actions.
Senior Independent Director
• Chairing Board and Nomination Committee meetings in the absence of the
Chairman.
• Leading the annual evaluation of the Chairman’s performance.
• Leading the succession planning process for the Chairman.
• Acting as a sounding board for the Chairman on Board and Nomination
Committee matters.
• Being available to shareholders or other stakeholders if they have concerns about
the Chairman, Chief Executive Officer or Chief Financial Officer, and to intervene
in any circumstances arising from such concerns.
•
Intervening in, and leading on, settlement discussions relating to any
disagreements between the Chief Executive Officer and Chairman.
• Calling a meeting of the Non-Executive Directors if, in his reasonable opinion,
it is necessary in relation to any of the matters above or otherwise.
Non-Executive Directors
• Effectively scrutinising and holding to account the performance of the
Executive Directors.
• Evaluating and appraising the performance of the Executive Directors and senior
management against agreed targets, and agreeing remuneration in line with the
remuneration policy.
• Monitoring the financial information, risk management and control processes of
the Group to make sure that they are sufficiently robust.
• Ensuring a rigorous process for the appointment and removal of Executive
Directors.
Company Secretary
• Supporting the Chairman and Chief Executive Officer in fulfilling their duties
especially in respect of Board agendas, induction, training and the evaluation of
Board and Committee effectiveness.
• Available to all Directors for advice and support.
• Keeping the Board regularly updated on governance matters and best practice.
• Ensuring Group policies and procedures are maintained and updated on a regular
basis.
• Attending and maintaining a record of the matters discussed and approved at
Board and Committee meetings.
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89
Corporate Governance Report
Continued
Corporate governance structure
The Board
Nomination
Committee
Audit
Committee
Sustainability
Committee
Remuneration
Committee
Committee Chair
Dermot Gleeson
Committee Chair
Fiona Goldsmith
Committee Chair
Elaine Bailey
Committee Chair
Andrew Coppel
Board
structure
• Review the structure,
size and composition
of the Board and its
Committees.
Succession
• Consider succession
plans for the
Board and senior
management.
•
Identify and nominate
candidates for Board-
level positions.
Effectiveness
• Review the time
commitment required
of Non-Executive
Directors at least
once a year.
• Review the
independence of
Non-Executive
Directors.
Sustainability strategy
• Develop a
sustainability
strategy consistent
with the Group’s
mission, vision and
sustainability policies.
• Determine
appropriate targets
that will improve the
sustainability of the
Group.
• Determine
appropriate short,
medium and long-
term sustainability
targets.
Sustainability
policy
• Develop and agree
with the Board a
sustainability policy
that will set the
Group’s approach to
sustainability.
• Ensure the policy
is fully understood
and implemented by
the Group’s business
operations.
Setting remuneration
• Recommend to the
Board the policy
for Executive
Directors and
senior management
remuneration.
• Set the remuneration
of the Chairman and
the Board.
• Agree terms
and conditions
of employment
for Executive
Directors and senior
management.
• Approve measures
and targets for
any performance-
related bonus and
share schemes and
monitoring outturn.
• Approve share
awards granted under
long-term incentive
arrangements,
including the outturn
on such awards.
• Agree terms of
any termination
arrangements for
Directors and senior
management.
• Review and approve
proposals for staff
pay and bonuses,
including examining
market data and
benchmarking.
Financial reporting
and disclosures
• Monitor the integrity
of the financial
statements, including
any significant
financial reporting
judgements.
• Advise the Board
on whether, taken
as a whole, the
Annual Report is
fair, balanced and
understandable.
• Oversee the regulatory
reporting requirements
of the Company.
Risk management and
internal audit
• Monitor the
effectiveness of the
Group’s internal
controls and risk
management systems.
• Monitor the
effectiveness of the
Group’s internal audit
function including
approval of the annual
internal audit plan.
• Review the
procedures for
detecting fraud,
preventing bribery
and ensuring
appropriate
whistleblowing
procedures in place.
External audit
• Oversee the
relationship with
the external
auditors including
their appointment,
independence and
objectivity, and the
effectiveness of the
external audit process.
All of the Committee terms of reference can be found on the Company’s website at www.mjgleesonplc.com
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MJ Gleeson plc Annual Report & Accounts 2021 Corporate Governance
Code compliance
statement
The Company has complied with
all the principles of the Code for
the year ended 30 June 2021 and
the vast majority of its provisions.
However, as in previous years,
there are some instances where
the Company has chosen to
take advantage of the flexibility
offered with the “comply or
explain” principle when applying
certain provisions.
The Code recognises that good
governance can be achieved
by other means and the Board
believes the approach taken is
the most appropriate for the
Group and its shareholders, whilst
remaining consistent with the
spirit of the Code.
Provisions 9 and 19
The Chairman of the Board,
Dermot Gleeson, was appointed
to the Board in 1975 and has
previously been Executive
Chairman, Chairman and Chief
Executive, and therefore was
not considered independent at
the time of his appointment to
Chairman. The Board continues to
support this appointment based
on the extensive knowledge
of the Group and industry that
Dermot brings to the role and to
Board discussions.
Provision 38
The Chief Financial Officer
received a pension contribution
of 12% in the year. This reflects
the voluntary reduction
previously reported from 15% to
6.5% over a three-year period to
align his pension contributions
with the level available to the
majority of the workforce. Further
details can be found in the
Annual Report on Remuneration
on pages 114 to 125.
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Kilner Park, Doncaster,
South Yorkshire
91
A core principle of the Group is to
maintain a cautious approach to debt
funding. Following the refinancing
undertaken this year, the Group
has a committed bank facility of
£105m available until October 2024,
with a one-year extension option
provided by two banks. The facility
was undrawn at the year end and the
Group had a cash balance of £34.3m
(30 June 2020: £16.8m net cash).
Based on these facilities, the Group
continues to have a high level of
liquidity including under the severe
but plausible scenario, to continue in
operation, meet its liabilities as they
fall due and remain in compliance
with its financial covenants over
the assessed period. The mitigating
actions required do not disrupt the
Group’s ability to grow over the long
term.
Based on the results of this
assessment, the Directors have a
reasonable expectation that the
Company and the Group will be able
to continue in operation and meet
its liabilities as they fall due over the
three-year viability period.
Assessing the Group’s prospects
beyond the assessed period, the
Directors consider that the demand
for affordable, quality new homes
will remain strong fundamentally due
to market under-supply. The Group
maintains a well-capitalised balance
sheet and operates a sustainable
business model that will continue to
deliver long-term growth.
Corporate Governance Report
Continued
Viability statement
In accordance with the Code, the
Directors have assessed the viability
of the Company and the Group over
a period longer than the 12 months
required by the going concern
principle. This takes account of the
current position and circumstances
of the Group, and the potential
impact of its principal risks.
The Directors conducted their
assessment for a period of three
years to 30 June 2024, which is in
line with the Group’s financial budget
approved by the Board in May 2021.
It is also aligned to the operational
period of a number of Gleeson
Homes’ developments. This has
enabled a meaningful assessment of
viability to be undertaken, utilising
detailed Board-approved financial
budgets that incorporate individual
site cash flow forecasts.
The Directors have considered
sensitivities from the impact of
a severe but plausible downturn
in the housing and land markets.
For Gleeson Homes, this included
the impact of a downturn in both
volumes and selling price, combined
with material cost increases. For
Gleeson Land, the Directors have
considered the impact of delays
to the completion of land sales
combined with a reduction in land
values. Further details can be found
in note 1 of the financial statements
on page 145.
Additionally, the Directors have
considered the measures that
would need to be taken to mitigate
the impact of these sensitivities,
including the ability of the Group
to curtail expenditure on new land
purchases, new site starts, reduce
overheads and cut discretionary
spend. This would include reducing
future dividend payments in
response to a severe but plausible
downturn.
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 98 to 105.
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 senior management
responsible for the division, with
the Board retaining ultimate
responsibility.
The Group operates internal controls
to ensure the Group’s financial
statements are reconciled to the
underlying financial ledgers. A review
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 or liquidity. The Board is of
the view that there is an adequate
ongoing process for identifying,
evaluating and managing the
Group’s significant risks. This process
takes the form of a formal risk
management policy supported by
financial and management controls,
which are operated Group-wide and
are subject to both internal review
by the Chief Financial Officer and
internal auditor, and external review
as part of the statutory audit carried
out by the external auditors.
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MJ Gleeson plc Annual Report & Accounts 2021
Corporate Governance
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Lindsey, Norah and Evie, Birch
Green, Skelmersdale, Merseyside
93
Nomination Committee Report
2021 key achievements
• Appointment of Elaine Bailey as an
independent Non-Executive Director, which
further strengthens the Board’s knowledge
and experience.
• Appointment of Elaine Bailey to all Board
sub-committees and as Chair of the
Sustainability Committee.
Areas of focus for 2022
• Board evaluation to be undertaken by a
third-party assessor.
• Preparation of a skills audit and matrix
to assist with Board succession planning.
Committee members
• Dermot Gleeson (Chair)
• Andrew Coppel
• Fiona Goldsmith
• Elaine Bailey
“
I am very pleased to welcome
to the Board Elaine Bailey, who
has been appointed as Non-
Executive Director. Elaine brings an
exceptional breadth of construction
and housing-related experience.”
Dear shareholder,
I am pleased to present the Nomination Committee
Report for the year ended 30 June 2021.
Operation of the Committee
The Committee comprises four Non-Executive Directors
of the Board. The Chief Executive Officer, Chief Financial
Officer and Company Secretary attend meetings at the
invitation of the Committee.
During the year, the Committee formally met once and
had two unscheduled meetings to consider a range of
matters.
Activities during the year
The Committee’s main activity during the year was to
strengthen and diversify the Board, with the appointment
of Elaine Bailey as an additional independent Non-
Executive Director and Chair of the recently formed
Sustainability Committee.
Other areas of focus included:
• Review of the composition of the Board and the range
of skills and experience.
• Board and management succession planning.
• Review of Board diversity and independence.
• Annual review of the Committee’s terms of reference.
• Review of the internal annual Board evaluation
questionnaire and findings.
Board appointments
The Board worked with external recruitment consultants
to commence the search for a new independent Non-
Executive Director in October 2020. It was important, in
support of the development of the Group’s strategy and
succession planning, to recruit a Director with a broad
skillset and relevant experience.
Following a rigorous recruitment process, Elaine Bailey
was appointed on 1 March 2021. Elaine brings a wealth
of experience in housing, engineering, construction, and
government services gained from a career across the
private, public, regulated and not-for-profit sectors.
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Dermot GleesonChair of the Nomination CommitteeMJ Gleeson plc Annual Report & Accounts 2021 Committee changes
Following her appointment to
the Board, Elaine Bailey was also
appointed as Chair of the newly
formed Sustainability Committee and
member of the Audit, Remuneration
and Nomination Committees.
Re-election of
Directors
The Company’s Articles of
Association (“the Articles”) provide
that, at each AGM, at least one-
third of the Directors shall retire
from office and shall be eligible for
reappointment. However, the Board
has determined that all Directors
will be subject to annual re-election
by shareholders and will do so at
the next AGM. James Thomson and
Stefan Allanson each hold service
contracts that may be terminated by
the Company with a notice period of
one year.
Diversity policy
We believe that the composition
and quality of the Board should
be in keeping with the size, and
geographical spread of the Group,
its sector, culture and status
as a listed company. A diverse
Board with a range of views
enhances decision-making, which
is beneficial to the Group’s long-
term success and in the interests
of the Company’s stakeholders.
However, we believe that it is in the
interests of our shareholders that
appointments to the Board and our
senior management team are made
on the basis of merit; therefore,
the Board does not set specific
targets for boardroom diversity.
We are unreservedly opposed to
discrimination on the grounds of
race, nationality, gender identity,
sexual orientation, disability, age,
religion or beliefs.
The Board diversity policy was
approved in 2017 and sets the
framework for Board appointments
to ensure that candidates are
assessed by objective criteria, which
do not place any candidate at a
disadvantage. This policy is kept
under review by the Nomination
Committee to reflect changes and
developments in regulation.
The Group also implements an
equality and diversity policy in
respect of its wider workforce, with
further details set out on page 127.
Board
Senior management
Direct reports
Male 5
Female 2
Male 14
Female 7
Male 57
Female 37
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Corporate Governance Nomination Committee Report
Continued
Board tenure
Nomination Committee priorities in 2021
Outcome
Work carried out
Priorities
Priority 1
Appointment of a new
independent Non-
Executive Director
1–5 years 4
6–9 years 1
Over 9 years 2
Independence
Priority 2
Appointment of an
additional independent
Non-Executive
Director to the
Audit, Remuneration,
Nomination and
Sustainability
Committees
The Committee reviewed
the Board’s composition and
recommended that a further
independent Non-Executive
Director be appointed to
enhance Board effectiveness
and ensure compliance with
Provision 11 of the Code.
The Nomination Committee
undertook a formal, rigorous
and transparent recruitment
and appointment process,
supported by external
consultants.
The Committee undertook a
review of Board Committee
composition. Whilst the
Group is a smaller listed
company and is only obliged
to have two members on
each of its committees, the
Board agreed that a further
independent Non-Executive
Director would enhance
committee effectiveness and
succession planning.
Elaine Bailey was
appointed to the
Board on 1 March
2021.
Elaine Bailey
was appointed
as the Chair of
the Sustainability
Committee
and a member
of the Audit,
Remuneration
and Nomination
Committees on
25 March 2021.
Board appointment process
1
Information obtained
through Board evaluation
and succession planning is
used to identify gaps in skills,
experience, independence and
knowledge.
Chairman 1
Executive 2
Independent Non-Executive 3
Non-Independent
Non-Executive 1
2
The recruitment process is
commenced, assisted by
external consultants who
determine desired objective
criteria. A shortlist of
candidates is prepared for
Board interviews.
3
Interviews with the Chairman,
Non-Executive Directors
and Executive Directors
(separately).
Nomination Committee
recommend a candidate to the
Board for approval.
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MJ Gleeson plc Annual Report & Accounts 2021 Succession planning
We recognise that succession planning is an important
contributor to the Group’s long-term sustainable success.
Succession planning for the Board is monitored regularly
and is considered in detail during the Board’s annual
performance evaluation.
Board inductions
Following successful appointment to the Board,
new Directors receive a comprehensive and tailored
induction programme. The induction programme
facilitates their understanding of the Group and the key
drivers of business performance and is an opportunity
for the Directors to meet key members of the senior
management team and undertake site visits.
Elaine Bailey spent two days with the Executive Directors
and senior management team at the Group’s head office
in Sheffield. During the induction, Elaine visited two
development sites and met a number of our site-based
employees.
How this supports a diverse pipeline
The process undertaken in Stage 1 identifies a recruitment
need by looking at the tenure of each individual Director,
the background, knowledge and skill set of each Director,
and Board composition as a whole.
This process enables the Nomination Committee to
implement plans for the short, medium and long term,
which support a diverse pipeline.
External advisers
The Nomination Committee uses external advisers where
required to assist with the recruitment process. During
the year the Group used the services of a search agent
with no connections to the Group or any of the Directors.
Board performance evaluation
Process
During the year, the Board undertook an evaluation of its
own effectiveness, that of its Committees as well as that
of individual Directors. This was based on completion of a
detailed questionnaire and individual discussions between
the Chairman and the Directors.
Being a smaller listed company, the Company is not
required by the Code to undertake an external Board
evaluation. However, the Nomination Committee is
committed to ensuring that a rigorous and effective
Board evaluation is conducted and has, therefore, decided
to undertake an external Board evaluation in 2022, when
the current Board has had a full year to settle into its role.
This year, the Board agreed to include additional
questions in the Board evaluation, which asked the Board
to consider how Board discussions are balanced so they
are not unduly dominated by any one individual or group
of individuals, whether the Non-Executive Directors
provide effective challenge to the Executive Directors and
the Board’s approach to succession planning.
Andrew Coppel, in his role as Senior Independent
Director, conducted an evaluation of the Chairman’s
performance in conjunction with the other Non-Executive
Directors and with input from the Executive Directors.
Outcome
The outcome and conclusions reached from these
evaluations were discussed by the Board and it was
concluded that the Board, its Committees and the
Chairman continued to perform effectively. Findings and
actions arisings are considered in more detail below.
Dermot Gleeson
Chairman
13 September 2021
Findings from the 2021 Board evaluation
Actions planned
• Board composition and depth of experience has
• Continue to monitor the composition and depth
improved through the appointment of Elaine Bailey.
of experience of the Board through annual Board
evaluations and periodic reviews.
• Board decisions are implemented properly and in a
• Maintain regular Board meetings and additional
timely manner.
meetings as needed, with follow up on progress against
agreed actions.
• The Board holds open, transparent and robust
• Continue to communicate effectively as a Board with
discussions.
• The Board has a good understanding of shareholder
views and expectations.
• The Board scored itself lowest on its approach to
succession planning.
open and transparent discussions and use this dialogue
to reach robust conclusions.
• Continue to engage with stakeholders and ensure
their views are understood and acted upon where
appropriate.
• Actions to be agreed and progress monitored during
the year to June 2022 in respect of Board and senior
management succession planning.
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Corporate Governance MJ Gleeson plc Annual Report & Accounts 2021
Audit Committee Report
“
The Committee continues to have a
busy agenda supporting the Board
by monitoring the effectiveness
of the Group’s systems of risk
management and control, together
with internal and external audit
processes and financial reporting.”
Dear shareholder,
I am pleased to introduce the Audit Committee Report
for the financial year ended 30 June 2021, which has been
another busy year for the Committee.
Operation of the Committee
All members of the Committee are independent
Non-Executive Directors. The Board is satisfied that
the membership of the Audit Committee meets the
requirement for relevant and recent financial experience.
The biographies and professional qualifications of the
members are shown on pages 84 and 85.
The Chief Executive Officer, Chief Financial Officer,
Company Secretary and other senior management are
invited to attend meetings, along with the Group’s internal
and external auditors, when required. The Committee
also met with the Group’s internal and external auditors
without the presence of Executive Directors or senior
management on several occasions throughout the year.
Committee meetings
The Committee is required, in accordance with its terms
of reference, to meet at least three times a year. During
the year, the Committee formally met four times and held
two unscheduled meetings.
2021 key achievements
• Close monitoring of commercial processes, cost
management, profit and margin recognition.
• Assessing the impact of the Covid-19 pandemic
on going concern and viability, and the financial
reporting of the Group.
• Assessing emerging and principal risks,
including those related to climate change and
environmental, social and governance matters.
• Obtaining assurance over areas of risk or
complexity including taxes, carrying value of
assets and IT security.
Areas of focus for 2022
• Continued focus on commercial processes, cost
management, profit and margin recognition.
• Ongoing assurance over the financial controls,
tax compliance and risk management processes
of the Group.
• Resilience and security of key business systems
against cyber risks and other threats.
• Developing further the Group’s financial
reporting including in relation to climate
change.
Committee members
• Fiona Goldsmith (Chair)
• Andrew Coppel
• Elaine Bailey
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Fiona GoldsmithChair of the Audit Committee Corporate Governance
Activities during the year
During the year, the Committee dealt with the following
key matters:
• Reviewing tax matters and approving the Group’s tax
strategy.
• Monitoring Legacy matters.
• Assessing compliance with Group policies and
• Approving the Group’s interim and annual financial
whistleblowing.
reporting.
• Assessing external auditor effectiveness,
• Reviewing principal accounting matters and
independence and fees.
judgements.
• Reviewing new reporting disclosures including climate
related disclosures under TCFD.
• Monitoring profit recognition and cost management.
• Obtaining assurance over work in progress and
carrying value.
• Reviewing going concern and viability.
• Reviewing Group credit risk.
• Monitoring risk and assurance matters including:
− reviewing the Group risk register;
− internal audit plans and reports;
− external audit strategy and findings;
− internal control effectiveness;
− IT and cyber security reports; and
− GDPR compliance.
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99
Audit Committee Report
Continued
Audit Committee activities in 2021
Activity
Work carried out
Financial reporting
– fair, balanced and
understandable
The Committee reviewed the integrity of this Annual
Report and formal announcements made during the
year relating to the Group’s financial performance.
At the request of the Board, the Committee considered
whether the 2021 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 2021. 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 2021.
The Committee reviewed the Group risk register at three
of its scheduled meetings during the year. A summary
of Group risks and any changes during the year is set
out in Risk Management on pages 68 to 73.
The Committee fully understands the risks faced by the
Group and how these are being addressed. This enables
the Committee and the Board to ensure that the major
risks facing the Group are monitored and appropriate
controls and mitigations are in place.
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.
See further details under “Financial reporting and
significant judgements”.
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 Land. See further details under “Financial
reporting and significant judgements”.
Risk management
Profit recognition
Work in progress
100
Outcome
The Committee was satisfied
that, taken as a whole, the 2021
Annual Report is fair, balanced
and understandable and provides
sufficient information for shareholders
to assess the Group’s performance,
business model and strategy. The
Committee recommended as such
to the Board.
The Committee and the Board fully
understand and manage the balance
of risks in the business.
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.
The Committee satisfied itself that
the carrying value of land and
work in progress in both Gleeson
Homes and Gleeson Land remains
appropriate.
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MJ Gleeson plc Annual Report & Accounts 2021 Corporate Governance
Rachael and Beatrice,
Springfield Meadows,
Chesterfield, Derbyshire
Activity
Group taxes
Legacy matters
Internal audit
External audit
Work carried out
Outcome
The Committee received regular updates on Group tax
matters. These cover all aspects of compliance including
VAT, Corporation Tax, Construction Industry Scheme
and employment taxes including off-payroll working
arrangements. The Committee also received updates
on potential changes to taxes including the proposed
Residential Property Developers Tax and other updates.
The Committee reviewed the Group’s Tax Strategy
statement for the year to 30 June 2021 and
recommended its approval to the Board. A copy of the
Tax Strategy statement can be found on the Company’s
website www.mjgleesonplc.com.
The Committee received and reviewed reports on
claims associated with the Legacy businesses, being the
contracting and engineering businesses sold more than
ten years ago.
The Committee set the internal audit plan for the
year ended 30 June 2021 at its meeting in July 2020.
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 covered under “External audit”, the Committee
received and reviewed the external auditors’ Group
audit plan at its meeting in February 2021. Following
completion of the audit of the Group, the external
auditors presented their findings to the Committee in
September 2021.
The Committee satisfied itself
that the processes and controls
associated with Group taxes remain
robust.
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
remaining liabilities.
The Committee remains satisfied
with the effectiveness of the internal
audit function.
The Committee remains satisfied
with the effectiveness of the external
auditors and the audit process.
Other activities
During the year, the Committee reviewed reports on IT and cyber security, GDPR, credit risk, Corporate Criminal
Offence, anti-bribery, and malpractice monitoring. New sustainability disclosures, which follow the recommendations of
the Task Force on Climate-related Financial Disclosures (“TCFD”) as included in this Annual Report on pages 58 and 59,
were also reviewed by the Committee.
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101
Audit Committee Report
Continued
Financial reporting and significant judgements
The significant financial reporting matters and areas of significant judgement considered by the Committee during the
year are those that present a risk of material misstatement to the Group’s financial statements, being:
Area
Work carried out
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. The Committee
reviewed the assumptions applied by management supporting the profit
margin to be recognised on the sale of individual homes and concluded that
they remain appropriate.
The Committee also receives regular reports on the carrying value of land
and work in progress in Gleeson Homes and Gleeson 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 remains appropriate.
Going
concern
and viability
reporting
The Committee examined the financial forecasts for the Group including the
impact of a severe but plausible downturn in the housing and land markets.
These were examined by the Committee in conjunction with its review of this
Annual Report. The Committee satisfied itself, and subsequently the Board,
that the going concern basis of preparation continues to be appropriate in the
context of the Group’s banking and liquidity position. Further details can be
found in note 1 of the financial statements on page 145.
In accordance with the provisions of the Code, the Committee considered
the time period over which it could reasonably assess the Group’s ability to
continue to trade, taking into account the Group’s financial budget period and
operational forecasts. It concluded that this should remain a three-year period
as explained in the viability statement on page 92. The Committee received
detailed financial analysis based on the Group’s latest budgets with a severe
but plausible scenario applied over the three-year period and determined that
there was a reasonable expectation that the Group will be able to continue in
operation, meet its liabilities as they fall due and maintain compliance with its
banking covenants.
Carrying
value of
investments
The activity of the Legacy businesses was previously disclosed as a
discontinued operation. Given the level of claims has now reduced to an
insignificant level, the Committee concluded that this no longer warrants
separate disclosure as a discontinued operation. For this reason, the Legacy
businesses have been presented within continuing operations, under Group
activities in the current year as set out in note 3 to the financial statements.
Following a review of the carrying value of investments in the Parent Company,
the Company’s investment in the Legacy businesses was written down by
£1.7m in the Company only. This has no impact on the consolidated Group.
102
Outcome
The Committee
satisfied itself that
the carrying value
of land and work in
progress remains
appropriate.
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.
The Committee
satisfied itself
that, based on the
financial modelling
undertaken, the
Company and Group
have adequate
resources to
continue in operation
for the foreseeable
future and operate
in compliance with
their bank facilities.
The Committee
recommended
statements to
this effect to the
Board to approve
for inclusion in this
Annual Report.
The Committee
satisfied itself that
the carrying value of
investments held in
the Parent Company,
remains appropriate
at the balance
sheet date with no
other indicators of
impairment.
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MJ Gleeson plc Annual Report & Accounts 2021 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 significant decisions that
exceed prescribed limits to either the Executive
Directors or the Board for approval.
Regular reviews are undertaken in order to identify any
changes in procedure or controls 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 68 to 73 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 in place a formal whistleblowing policy,
internal whistleblowing mailbox monitored by the Head
of Legal and Company Secretary, and an independent
external whistleblowing helpline. These enable all
employees of the Company to confidentially report any
malpractice or matters of concern they have regarding
the actions of employees, management or Directors, any
unlawful behaviour or breaches of the Company’s policies
or practices, without fear of recrimination. The policy
includes a process for proportionate and independent
investigation of any reports received. This may involve
an informal review, an internal inquiry, or a more formal
investigation. Whenever possible, feedback is given to the
whistleblower on the outcome of any investigation.
The Head of Legal and Company Secretary maintains a
register of reports received through both internal and
external processes, which is reviewed by the Committee
at least every six months.
During the year, employee awareness was enhanced
on the Company’s whistleblowing policy through the
induction process, newsletters, posters and reminders
that “If you see something, say something”. The
Company also launched a mandatory online course for
all employees, which is designed to raise awareness of
reportable issues or incidents.
Anti-bribery and corruption policy
The Company values its long-standing reputation for
ethical behaviour and integrity. Conducting its business
with the highest ethical standards and a zero-tolerance
approach to all forms of corruption is central to these
values, the Company’s image and reputation. The
Company policy sets out the standards expected of
all Company employees in relation to anti-bribery and
corruption and the Board has overall responsibility for
ensuring this policy complies with the Company’s legal and
ethical obligations and that everyone in the organisation
complies with it. This policy is also relevant for third parties
who supply goods or perform services for or on behalf of
the Company. We require those parties to adhere to this
policy or have in place equivalent policies and procedures
to combat bribery and corruption.
During the year, the Company also rolled out a mandatory
online course for all employees, which is designed to
raise awareness of bribery and corruption offences and
penalties for both individuals and the Company.
The Committee reviews a report on the registers of
gifts and hospitality given or received by Directors and
employees of the Company at least every six months. No
incidents of bribery or corruption were reported to the
Committee during the year.
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Corporate Governance Audit Committee Report
Continued
Human rights and modern slavery
During the year, the Company established new processes
to enhance modern slavery checks and safeguards within
the business. This is led by the Chief Financial Officer
and comprises senior management and the Company
Secretary.
As part of this, the Company launched a new modern
slavery awareness campaign through a refreshed policy,
newsletters, posters, regular site audits and enhanced
due diligence checks on the supply chain. The Company
also launched a mandatory e-learning course for all
employees, which is designed to raise awareness of
modern slavery in the workplace and what to look for.
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 eight reports
from the internal auditor on the findings of internal
audits conducted throughout the business, together
with proposed recommendations to rectify any issues
identified. The findings of these reports were actively
debated by the Committee with the internal auditor and
with management. The Committee monitored the follow
up on actions identified.
The Committee reviewed the effectiveness of the internal
audit function and concluded that it has operated
effectively and provided a suitable level of independent
scrutiny across the operations of the Group.
External audit
PricewaterhouseCoopers LLP were first appointed
as auditors to the Group in December 2016 following
a competitive audit tender, and were most recently
reappointed following approval by shareholders at the
AGM on 3 December 2020.
In February 2021, the auditors presented their Group
audit plan to the Committee, identifying their assessment
of key risks in the Group’s financial reporting. For the
2021 financial year, as in prior years, the primary risk
identified was in relation to the carrying value of land
and work in progress in Gleeson Homes and Gleeson
Land. Consistent with the prior year and as a result of
the Covid-19 pandemic, the carrying value of investments
in subsidiaries was also identified as a primary risk in
relation to the Company only.
The Committee formulates and oversees the Group’s
policy on monitoring external auditors’ objectivity and
independence in relation to non-audit services and is
responsible for the approval of all audit and non-audit
fees for services provided by the Company’s auditors.
As a result of the EU Audit Reforms Regulations (as
amended 11 June 2016), and the FRC’s revised ethical
104
standard (as revised December 2019), the auditors are
excluded from undertaking a range of work on behalf of
the Group to ensure that the nature of non-audit services
performed or fee income earned relative to the audit fees
does not compromise, and is not seen to compromise, the
auditors’ independence, objectivity or integrity.
For the year to 30 June 2021, there were no non-audit
fees paid to the external auditors. Details of the audit
fees incurred are disclosed in note 4 to the financial
statements.
The Committee assesses the performance and
effectiveness of the external auditors on an annual basis.
When making their assessment, the Committee considers
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MJ Gleeson plc Annual Report & Accounts 2021 Paul, Bricklayer, Dane Park,
Hull, East Yorkshire
feedback from the Chief Financial Officer and other
senior finance management, the auditors’ fulfilment of
the agreed audit plan, and the auditors’ objectivity and
independence during the process. The Committee also
holds private meetings with the auditors on an annual
basis. Matters discussed include the auditors’ assessment
of business risks and management activity thereon,
the transparency and openness of interactions with
management and confirmation that there has been no
restriction in scope placed on them by management.
indicated their willingness to continue in office, a
resolution that they be reappointed will be proposed at
the next AGM of the Company on 15 November 2021.
Under current regulations the Company is not due to
re-tender its audit until 2026; however, the Committee
will continue to monitor the performance of the external
auditors during this time and make recommendations
accordingly.
The Committee concluded that the audit process had
been conducted robustly and PricewaterhouseCoopers
LLP’s performance as auditors to the Company was
considered to be satisfactory. As the auditors have
Fiona Goldsmith
Chair of the Audit Committee
13 September 2021
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Corporate Governance Sustainability Committee Report
2021 key achievements
• Approval of the Group’s sustainable business
strategy and sustainability policies.
• Review of Group sustainability risks and
mitigating actions.
• Review of progress against 2021 sustainability
targets and setting 2022 targets.
• Review of Group reporting and disclosures
on climate change and sustainability.
Areas of focus for 2022
• Monitoring progress against 2022 sustainability
targets.
• Enhancing the Group’s climate-related
reporting disclosures and communications.
• Agreeing next steps on areas including water
and biodiversity strategy and scope 3 emission
reduction.
Committee members
• Elaine Bailey (Chair)
• James Thomson
• Stefan Allanson
“
The Sustainability Committee
supports the Board in ensuring the
business operates in a responsible
manner, adding value to society,
improving communities, enhancing
people’s lives and reducing our
impact on the environment.”
Dear shareholder,
I am pleased to introduce the first Sustainability Committee
Report for the financial year ended 30 June 2021. The
Committee was newly formed in December 2020 to
oversee the Group’s approach to sustainability.
Operation of the Committee
The Committee comprises of the Chair, the Chief
Executive Officer and the Chief Financial Officer. Other
members of the Board, senior management or external
advisors are invited to attend for all or part of any
meeting as and when required.
Committee meetings
The Committee is required, in accordance with its terms
of reference, to meet at least two times a year. The
Committee met twice during the year and held one
unscheduled meeting.
Activities during the year
During the year, the Committee dealt with the following
key matters:
• Approving the Group’s sustainability policy.
• Reviewing progress against 2021 sustainability targets.
• Agreeing new sustainability targets.
• Approving the Group’s sustainable business strategy.
• Reviewing the Group’s sustainability risk register.
• Reviewing the results of a stakeholder engagement
process on material sustainability issues.
• Reviewing climate-related reporting disclosures (TCFD
and SASB).
• Benchmarking peer group sustainability reporting and
disclosures.
• Reviewing new sustainability policies on charitable
donations, climate and environment, procurement,
packaging, waste management and timber.
• Agreeing further steps for the Group in respect of:
− scope 3 emissions reporting;
− water and biodiversity strategies; and
− reducing diesel usage.
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Elaine BaileyChair of the Sustainability CommitteeMJ Gleeson plc Annual Report & Accounts 2021 We also recognise the need for a long-term strategic
view, in particular around the environment and climate
change. That is why we have taken the first step in
publishing our full scope 3 emissions this year for every
home sold. This will be a key area of focus for the coming
year in developing our carbon reduction strategy.
We also aim to provide clarity and leadership in our
reporting on sustainability, sharing the Group’s targets
and performance, including where we have not achieved
targets and the areas for improvement. We believe that
stakeholders value this honesty in reporting.
Our aims
The creation of the Sustainability Committee
emphasises the importance that the Board places on
the environmental, social and economic value that the
Company delivers to its stakeholders and to society.
Our ultimate aim to “do no harm, do good” is reflected in
the Group’s sustainable business model and its support of
the relevant UN Sustainable Development Goals (“SDGs”),
in particular target 1 of SDG 11 for “access for all to safe
and affordable housing”.
The business has a strong approach to sustainability, built
around communities, people and the environment and
is leading the way in many areas such as affordability,
customer satisfaction and employee engagement.
However, we recognise that there is more to do, in
particular in respect of health and safety, carbon
emissions and climate change.
As a Committee, we are focused on agreeing meaningful
targets that can be achieved in a reasonable timeframe
and ideally within the tenure of those who are measured
against them. This enables environmental, social and
governance targets to be linked to performance and
remuneration more effectively, and drives purposeful
outcomes.
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Corporate Governance Sustainability Committee Report
Continued
Sustainability Committee activities in 2021
Activity
Work carried out
Outcome
Sustainable
business
strategy
The Committee reviewed the sustainable business
strategy, which sets out the Group’s approach to
sustainability including the objectives and targets. This is
on pages 32 and 33.
The Committee approved the
Group’s sustainable business
strategy and recommended as
such to the Board.
Sustainability
targets
The strategy was reviewed by external consultants
and developed in conjunction with the results of the
stakeholder engagement process, which can be found on
pages 30 and 31. The Committee reviewed the findings
of the stakeholder engagement process, including the
responses to questionnaires and interviews undertaken.
The Committee received updates on progress against
the 2021 sustainability targets that were published in
the prior year annual report. The Committee challenged
where progress was falling short of the targets set and
the mitigating actions being taken. Progress against our
published 2021 targets can be found on pages 42 and 43.
The Committee reviewed the proposed targets
and actions for 2022. These can be found on page 45.
The Committee was satisfied
with progress against three of
the 2021 sustainability targets,
but recognises that more work
needs to be done for the Group
to achieve its health and safety
targets.
The Committee approved the
targets and actions proposed for
2022.
Sustainability
risk register
The Committee reviewed the sustainability risk register.
This assesses both the inherent and mitigated risks of
the material sustainability issues relevant to the Group.
The Committee and the Board
fully understand and manage the
balance of risks in the business.
Group level risks, including those related to climate
change and sustainability, are monitored by the Audit
Committee and the Board as set out in risk management
on pages 68 to 73.
Sustainability
policies
The Committee reviewed the Group sustainability
policy. This is structured around three key themes:
Communities, People and the Environment, and sets out
the principles that underpin our sustainable approach.
The Committee approved the
Group’s sustainability policies for
publication on the Company’s
website www.mjgleesonplc.com.
The Committee reviewed policies for the following:
• Charitable giving;
• Climate and environment;
• Sustainable procurement;
• Sustainable packaging;
• Sustainable waste management; and
• Sustainable timber.
Climate-
related
disclosures
The Committee reviewed the draft and final disclosures
for inclusion in this Annual Report. This includes the
disclosures based on the recommendations of the
Task Force on Climate-related Financial Disclosures
(“TCFD”), which can be found on pages 58 and 59, and
the relevant Sustainability Accounting Standards Board
(“SASB”) Industry Standard, which can be found on
pages 60 to 63.
The Committee intends to review
policies on at least an annual
basis to ensure that these are
appropriate to support the Group’s
sustainability objectives.
The Committee approved the
disclosures for inclusion in this
Annual Report.
Elaine Bailey
Chair of the Sustainability Committee
13 September 2021
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Kaivan and Luca, Holbeck Park,
Burnley, Greater Manchester
109
Remuneration Committee Report
“
I am pleased to present the
Annual Report on Remuneration
for 2021. We are committed to a
responsible approach to Executive
pay and I trust this Annual Report
on Remuneration reflects this
sentiment.”
Dear shareholder,
The report is split into two sections:
1. This statement, which provides an overview of the key
decisions made on Directors’ remuneration during the
year; and
2. The Annual Report on Remuneration, which provides
details of the remuneration earned by Directors during
the year to 30 June 2021, and how we intend to apply
the Directors’ Remuneration Policy during the year to 30
June 2022.
The Directors’ Remuneration Policy was approved by
shareholders at the AGM on 5 December 2019 (with
98.2% of votes cast in favour) and became effective from
that date. There are no proposals to amend the Policy at
the 2021 AGM. The Committee addressed the factors in
Provision 40 of the 2018 UK Corporate Governance Code
when determining the Policy (see below).
The full Policy can be found in the 2019 Annual Report
and Accounts, which is available to download from the
Company’s website at www.mjgleesonplc.com.
The Policy is approaching the end of its three-year term.
The Committee will conduct a comprehensive review of the
Policy this year to ensure it remains closely aligned with the
Group’s strategy and culture, and will seek consultation with
major shareholders on any proposed material changes.
Pay and performance outcomes
for 2021
Gleeson Homes delivered a record 1,812 new homes this
year, an increase of 69.0% on the prior year (2020: 1,072).
It opened 27 new sites, which was also a record for the
business and closed the year with 81 build sites, of which 61
were actively selling.
The average selling price of £145,800 was 11.4% higher and
reflects continued strong demand. As a result, Gleeson Homes
delivered an operating profit of £37.4m (2020: £9.0m).
Gleeson Land sold eight sites during the year with the
potential to deliver 1,978 plots for housing and delivered
operating profit of £11.1m (2020: £0.2m). It ended the year
with a portfolio of 71 sites (2020: 68 sites) with the potential
to deliver 22,315 plots.
2021 key achievements
• Agreeing performance targets for Executive
Director remuneration for 2021.
• Reviewing and assessing the fairness of 2021
outcomes.
• Assessing potential targets for Executive
Director remuneration for 2022.
• Reviewing and approving proposals for staff
pay and bonuses.
• Reviewing and approving gender pay reporting.
Areas of focus in 2022
• Setting targets for Executive remuneration
that align to the Group’s sustainable
business strategy.
• Reviewing the Directors’ Remuneration Policy
for the purposes of setting a new policy
for 2023 and subsequent years.
• Engaging with shareholders on Executive
remuneration and remuneration policy
development.
• Reviewing wider workforce remuneration
and related policies.
Committee members
• Andrew Coppel (Chair)
• Fiona Goldsmith
• Elaine Bailey
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Andrew M Coppel CBEChair of the Remuneration Committee and Senior Independent DirectorMJ Gleeson plc Annual Report & Accounts 2021 As a result of the strong performance in both divisions,
Group profit before tax was £41.7m (2020: £5.6m).
In the prior year, the Group also set a number of
sustainability targets for 2021. The performance against
these targets is set out on pages 42 and 43.
Annual bonus
The Executive Directors were each awarded an annual
bonus opportunity equal to 125% of salary based on Group
profit before tax (as regards 80% of the potential award)
and strategic and personal performance (as regards 20%
of the potential award). James Thomson’s strategic and
personal objectives were based on: build site openings;
forward order book performance; ESG performance;
customer satisfaction; and employee engagement. Stefan
Allanson’s strategic and personal objectives were based on:
build site openings; forward order book performance; work
in progress; effective risk management; ESG performance;
and broadening banking relationships.
James Thomson and Stefan Allanson each earned a bonus
equal to 99.0% and 96.5% of maximum respectively
(equivalent to 123.8% and 120.6% of salary) based on the
outcome of the performance targets. See pages 116 and 117.
The Committee considered the bonus outcome for the
profit and strategic and personal performance elements
alongside broader perspectives including: underlying
business performance and affordability; the experience of
shareholders; and the experience of employees and other
stakeholders. The following was noted:
• The Group resumed paying dividends, with a 5 pence
interim dividend per share paid in April 2021. A final
dividend equal to 10p per share is expected to be paid
in November 2021, subject to shareholder approval.
• The Company’s share price has increased by 36%
over the year ended 30 June 2021 owing to strong
performance during the year as the Group continues to
recover from the impact of the Covid-19 pandemic.
•
In January 2021, the Group repaid in full the £1.3m
of support that it received under the Government’s
Coronavirus Job Retention Scheme.
• For the wider workforce, 89.9% of eligible staff were
paid a bonus for the year, which on average equated to
11.2% of salary.
The Committee considered the outcome to be appropriate
and no discretion was applied to amend the outcome.
Long Term Incentive Plan (“LTIP”)
Stefan Allanson was granted an LTIP award in 2018 equal
to 150% of salary. 69% of the maximum award vested on
6 July 2021 based on performance against absolute Total
Shareholder Return targets measured over the three-year
performance period ended 30 June 2021. See page 118.
The Committee considered the vesting outcome to be
appropriate taking into account the strong returns delivered
to shareholders over the three-year performance period and
no discretion was applied to amend the amount vesting.
Under the Policy, Stefan Allanson is required to hold the
vested shares until 30 June 2023 (other than to sell shares
to cover taxes arising on exercise).
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Corporate Governance Remuneration Committee Report
Continued
Remuneration in 2022
Salary
A 2.5% salary increase was awarded to the Executive
Directors, Non-Executive Directors and Chairman with
effect from 1 July 2021, in line with the standard increase
across the wider workforce.
Pension
Reflecting best practice and the expectations of
shareholders and proxy voting agencies, in 2020 Stefan
Allanson volunteered to have his pension opportunity
reduced to bring it in line with the level available to
the majority of the wider workforce by 1 July 2022. His
pension opportunity reduced from 12% to 9% of salary on
1 July 2021 and will reduce to 6.5% of salary on 1 July 2022.
James Thomson’s pension allowance was set at 6.5% of
salary on his appointment as Chief Executive Officer.
Annual bonus
The maximum bonus that can be earned in the year will be
125% of salary for both Executive Directors.
80% of the award will be based on profit performance and
20% will be based on strategic and personal performance,
which comprise site openings, forward order book, build
quality and customer satisfaction, and sustainability targets
including health and safety, staff turnover, employee
engagement and carbon emission reduction. Details of the
profit, strategic and personal performance targets will be
fully disclosed in the Annual Report on Remuneration for
the year ending 30 June 2022.
The Executive Directors will be required to defer one-third
of any bonuses earned into shares for a two-year period.
LTIP
The maximum LTIP opportunity will be 150% of salary for
both Executive Directors with 50% of the award based
on EPS performance and 50% based on relative TSR
performance measured over a period of three financial
years ending 30 June 2024. Any awards that vest will be
subject to a two-year holding period. See page 119 for
details of performance targets.
The Committee has discretion to amend the vesting
outcome of annual bonus and LTIP awards where it
considers that it is not a fair reflection of business
performance.
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 -43%, indicating that the median pay for
women is more than men, versus the national median of
15.5% in favour of men. Women occupy 14% of the highest
paid jobs and 14% of the lowest paid jobs.
The Group is continuing to develop and encourage
more women into roles that have traditionally been
male occupied. This includes better provisions on sites
for female employees and subcontractors. In respect of
112
pay, the Group does not discriminate on the grounds of
gender and operates an equal pay policy.
Further details are set out in the Group’s Gender Pay Gap
Report, which can be found at www.mjgleesonplc.com.
Real Living Wage
The Group was the first major housebuilder to be accredited
by the Living Wage foundation. Other housebuilders have
now followed our lead and the Group believes that all
employees in all sectors should be paid the real Living Wage
or higher. The only exception to this is for apprentices,
where the Group pays above the government’s guidelines.
The Committee looks closely at market data when it comes
to approving employee pay and rewards to ensure that
these remain competitive and enable the Group to attract,
motivate and retain high-quality staff.
How the Committee addressed the
factors in Provision 40 of the 2018
UK Corporate Governance Code
when determining the Policy
Our Directors’ Remuneration Policy is designed to support
an effective pay-for-performance culture, which enables the
Company to attract, retain and motivate Executive Directors
who have the necessary experience and expertise to deliver
the Group’s objectives and strategy. The Policy has been
determined based on the following principles, taking into
account Provision 40 of the 2018 UK Corporate Governance
Code.
Clarity and simplicity – the Committee ensures that
remuneration packages are simple and transparent, and
take into account remuneration and related policies for the
wider workforce. Performance targets are set in line with
Group budgets and plans and reviewed and tested by the
Committee.
Risk – we promote long-term sustainable performance
through sufficiently stretching performance targets, whilst
ensuring that the incentive framework does not encourage
Executive Directors to take inappropriate business risks
(including environmental, financial, social, health, safety and
governance risks).
Predictability – detailed information on the potential values
that may be earned through the remuneration arrangements
are set out in the Directors’ Remuneration Policy.
Proportionality – to ensure that total remuneration
delivered fairly reflects Company and individual
performance, the Committee has the discretion to override
formulaic outturns where it believes the outcome is
not truly reflective of underlying performance during
the performance period and to ensure fairness to both
shareholders and participants.
Alignment to culture – when determining the Policy,
the Committee was clear to make decisions to drive the
appropriate behaviours and ensure alignment with the
Company’s culture and long-term strategy.
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MJ Gleeson plc Annual Report & Accounts 2021 Shareholder and employee
engagement
The Group obtained a vote in favour of 60.7% in respect
of the 2020 Annual Report on Remuneration. Whilst
the Committee was pleased that the Annual Report on
Remuneration was approved by shareholders, it also
acknowledges the views of shareholders who opposed
the resolution. The concerns of such shareholders related
to the discretion applied to the vesting outcome of Stefan
Allanson’s 2017 LTIP award in light of the Covid-19 pandemic
and its impact on TSR.
The Committee is committed to a responsible approach
to executive pay and, following the 2020 AGM, we
have reviewed our process for determining variable pay
outcomes to ensure it is robust and appropriately takes into
account broader perspectives, including underlying business
performance and the experience of shareholders, employees
and other stakeholders.
The Committee also offered the Company’s largest
shareholders the opportunity to discuss their thoughts on
Executive remuneration, and the feedback provided will be
considered as part of the Directors’ Remuneration Policy
review.
More generally, 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.
Rainsborough Park,
Knottingley, West Yorkshire
As the Workforce Representative, Fiona Goldsmith engages
directly with employees on a range of topics of interest
to them, including Executive remuneration. Workforce
engagement activities included site and office visits
undertaken during the year, reviewing the results of the
Group’s employee engagement survey, and discussions with
senior management and staff on business performance and
matters of concern.
The Committee regularly reviews the remuneration of the
wider workforce to ensure that it is attuned to general pay
and conditions when considering Directors’ remuneration
(e.g. in determining salary increases for Executive Directors
the Committee reviews salary increases across the Group).
Conclusion
I trust the information presented in this report enables our
shareholders to understand both how we have operated our
Directors’ Remuneration Policy over the year and rationale
for decision making. We believe that the Policy operated as
intended and we consider that the remuneration received
by the Executive Directors during the year was appropriate
taking into account Group and personal performance, and
the experience of shareholders and employees.
I will be available at the AGM to respond to any questions
and discuss any aspects of the Annual Report on
Remuneration or the Committee’s activities.
Andrew M Coppel CBE
Chair of the Remuneration Committee
and Senior Independent Director
13 September 2021
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Corporate Governance Annual Report on Remuneration
The Remuneration Committee’s Annual Report on Remuneration for the year ended 30 June 2021 is set out below,
including remuneration for the year ended 30 June 2021 and the implementation of the Directors’ Remuneration Policy
for 2022.
The auditors are required to report on the following information up to and including the table on Directors’ interest in
shares.
Single total figure of remuneration for each Director for the years ended
30 June 2021 and 30 June 2020
2021
Fixed pay
Salary
& fees Benefits Pension Subtotal
Variable pay
Value of
LTIP
Annual
bonus
awards Subtotal
Total
2020
Fixed pay
Variable pay
Salary
& fees1 Benefits Pension Subtotal
Annual
bonus
Value of
LTIP
awards Subtotal
Total
Chairman
Dermot
Gleeson
Executive
Directors
James
Thomson
Stefan
Allanson
Non–
Executive
Directors
Elaine
Bailey2
Andrew
Coppel3
Fiona
Goldsmith3
Christopher
Mills
Total
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
125
1
–
126
–
–
–
126
116
1
–
117
–
–
–
117
500
315
21
17
33
554
619
–
619
1,173
458
24
32
514
255
–
255
769
38
370
380 454
834 1,204
293
18
47
358
–
535
535
893
19
58
58
–
–
–
–
–
–
19
58
58
–
–
–
–
–
–
–
–
–
19
58
58
–
32
32
–
–
–
–
–
–
–
32
32
–
–
–
–
–
–
–
–
–
–
32
32
47
1,122
–
39
–
47
71 1,232
–
47
999 454 1,453 2,685
–
–
44
975
–
43
–
44
79 1,097
–
255
–
535
–
44
790 1,887
1. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.
The salaries and fees disclosed in the 2020 column are after the 30% reduction.
2. Elaine Bailey was appointed to the Board on 1 March 2021.
3. Andrew Coppel and Fiona Goldsmith were appointed to the Board on 1 October 2019.
Notes to the single total figure of remuneration
Salary and fees
Details of annual salaries for Executive Directors for the years ended 30 June 2021 and 30 June 2020 are set out below.
James Thomson1
Stefan Allanson
Rate of salary from
1 July 2020
£000
Rate of salary from
2 December 2019
£000
Rate of salary from
1 July 20192
£000
500
315
500
n/a
485
315
1.
James Thomson’s salary was increased to £500,000 per annum on 2 December 2019 following his appointment to the role of Chief Executive
Officer on a permanent basis.
2. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.
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MJ Gleeson plc Annual Report & Accounts 2021 Details of fees for Non-Executive Directors for the years ended 30 June 2021 and 30 June 2020 are set out below.
Chairman1
Non-Executive Director fee
Fee for chairing a Committee
Rate of fees from
1 July 2020
£000
125
47.25
10.5
Rate of fees from
1 July 20192
£000
125
47.25
10.5
1.
Includes a fee of £10,500 for chairing the Nomination Committee.
2. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.
Taxable benefits provided to Executive Directors
The main benefits available to the Executive Directors during the year ended 30 June 2021 (and their associated values)
were: car allowance of £13,000 for James Thomson and £13,000 for Stefan Allanson; car fuel of £6,000 for James
Thomson and £2,000 for Stefan Allanson; private medical insurance of £1,000 for James Thomson and £1,000 for
Stefan Allanson; and matching shares granted under the HMRC tax-qualifying all-employee scheme of £1,000 for James
Thomson and £1,000 for Stefan Allanson.
Pension
The Executive Directors are eligible to participate in the MJ Gleeson Group Pension Plan, a defined contribution
arrangement. During the year ended 30 June 2021, James Thomson received cash in lieu of pension contributions of
6.5% of salary (2020: 6.5% of salary) and Stefan Allanson received pension contributions and cash in lieu of pension
contributions of 12% of salary (2020: 15% of salary).
Determination of annual bonus
The Executive Directors were each awarded a maximum bonus opportunity of 125% of salary based on Group profit
before tax (as regards 80% of the potential award) and strategic and personal performance (as regards 20% of the
potential award).
Profit performance
The Group achieved profit before tax of £41.7m for the year ended 30 June 2021. This was above the maximum and
therefore 100% of the profit-related element of the bonus award was earned.
Target
Threshold
Target
Maximum
Straight-line vesting between threshold and maximum.
Profit measure
£m
32.7
34.4
36.1
Bonus achievable
as percentage of
maximum
20%
50%
100%
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Corporate Governance Annual Report on Remuneration
Continued
Strategic and personal performance
Performance against strategic and personal performance objectives for the year ended 30 June 2021 is detailed below.
James Thomson
Objective
Site openings
Target range of 25 to 28 build site openings
by 30 June 2021.
Forward order book
Gleeson Homes to commence 2022 with an order
book of at least 820 forward orders.
Environment, Social and Governance (“ESG”)
Establish focus internally on the Group’s ESG
targets set out in the 2020 Sustainability Report
and implement substantive measures to achieve
the medium-term goals.
MJ Gleeson plc to be recognised widely for its
ESG credentials, for shares to be held by investors
where this is a requirement and to establish focus
internally on the Company’s targets set out in
the Sustainability Report and to have put in place
substantive steps to achieve the medium-term
goals during the current financial year.
Customer satisfaction
If either all three Homes Divisions achieve and
maintain a 5-star rating, or Gleeson Homes as
a whole achieves and maintains 90% or higher
“would recommend Gleeson”, then 100% of the
bonus for this target will be paid.
Employee engagement
The Group is positioned within the top quartile
as measured by the People Insight Survey
Improvements in Your Voice results versus prior
year.
Performance
Weighting
Outcome
27 sites were opened during the year.
The forward order book at 30 June 2021
was 841.
Shareholders scored 4.3 out of 5
for “how sustainable do you believe
Gleeson’s business model is?” (where 4
is ‘above average’ and 5 is ‘very good’).
Shares were held by four leading ESG
investors.
Internal focus established through
sustainability working teams with data
captured on all four targets and actions.
See pages 42 and 43.
Health and safety target to significantly
reduce incident rate was missed.
Gleeson Homes achieved a 5-star
InHouse rating of 90.6% for the year
ended 30 June 2021.
4%
4%
4%
4%
4%
3%
4%
4%
Top quartile and score improved from
88% to 89%.
4%
4%
20%
19%
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MJ Gleeson plc Annual Report & Accounts 2021
Stefan Allanson
Objective
Site openings
Target range of 25 to 28 build site openings
by 30 June 2021.
Environment, Social and Governance (“ESG”)
Establish focus internally on the Group’s ESG
targets set out in the 2020 Sustainability
Report and implement substantive measures
to achieve the medium-term goals.
MJ Gleeson plc to be recognised widely for
its ESG credentials, for shares to be held by
investors where this is a requirement and to
establish focus internally on the Company’s
targets set out in the Sustainability Report
and to have put in place substantive steps to
achieve the medium-term goals during the
current financial year.
Work in progress (“WIP”) and
forward order book
Gleeson Homes to commence 2022 with
a strong WIP position of 1,230 slabs, and
a strong forward order book of 820
forward orders.
Effective management of risk
Effective management of risk across the
Group, including Group risk management,
commercial, legal and finance.
Broaden banking relationships
To broaden our banking relationships
beyond Lloyds by June 2021.
Performance
Weighting
Outcome
27 sites were opened during the year.
Shareholders scored 4.3 out of 5 for “how
sustainable do you believe Gleeson’s
business model is?” (where 4 is ‘above
average’ and 5 is ‘very good’).
Shares were held by four leading ESG
investors.
Internal focus established through
sustainability working teams with data
captured on all four targets and actions.
See pages 42 and 43.
Health and safety target to significantly
reduce incident rate was missed.
Forward order book at 30 June 2021
was 841.
Slabs at 30 June 2021 were 1,141.
Enhanced Group risk register, new
sustainability register established.
Audit delivered on time with a clean
audit report.
Legal risk register established.
Finance team fully partnered with MDs and
DMDs and managing risks across the Group.
Further improvements to be made on
commercial risk management.
Santander added as a second bank and
committed borrowing facility increased
from £70m to £105m with £35m from
Santander.
4%
4%
4%
3%
4%
2%
4%
3.5%
4%
4%
20%
16.5%
The Committee considered the bonus outcome for the profit and strategic and personal performance elements
alongside broader perspectives including: underlying business performance and affordability; the experience of
shareholders; and the experience of employees and other stakeholders. See page 111 for further details. The Committee
considered the outcome to be appropriate and no discretion was applied to the bonus outcome.
Bonus outcome
The total bonus outcome for each Executive Director is therefore:
James Thomson
Stefan Allanson
Bonus payable
% maximum
99.0%
96.5%
£000
619
380
In accordance with the Remuneration Policy, one-third of the bonus payable is deferred into shares for two years.
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Corporate Governance
Annual Report on Remuneration
Continued
2018 LTIP
The 2018 LTIP awards were subject to performance targets based on TSR. TSR is defined as the average share price
measured over the three months prior to the end of the performance period (1 April 2021 to 30 June 2021) plus
cumulative dividends per share paid over the performance period.
Details of the TSR performance targets and performance outcome are set out in the table below.
Threshold
Maximum
Actual performance
Outcome
Therefore, the vesting outcome is as follows:
3-year performance period
ended 30 June 2021
TSR
vesting %
£8.20
£10.00
£9.23
69% of award
to vest
20%
100%
Amount of award
attributable
to share price
appreciation
since grant3
£000
Total value
of award on
vesting2
£000
Number of
shares granted
Number of
shares vesting
based on
performance
Dividend
equivalents1
£000
Executive Director
Stefan Allanson
67,500
46,575
36
454
21.6%
1. The 2018 LTIP included dividend equivalent terms such that additional plan shares are awarded based on the value of dividends payable on
the number of vested plan shares between the award date and vesting date.
2. Calculated based on the share price on the date of vesting (6 July 2021: £8.98). The total value of award on vesting includes the dividend
equivalents.
3. The Company’s share price increased by £1.94 between the date of grant (9 October 2018) and the date of vesting (6 July 2021).
The proportion of the total value of award on vesting attributable to share price growth is therefore 21.6%.
The Committee considered the vesting outcome to be appropriate taking into account the strong returns delivered to
shareholders over the three-year performance period and no discretion was applied to the outcome.
LTIP awards granted in the year ended 30 June 2021
The Committee granted awards under the LTIP equivalent to 150% of salary to James Thomson and Stefan Allanson
on 24 September 2020. The awards are based on the achievement of EPS performance (as regards 50% of the
awards) and relative TSR performance (as regards 50% of the awards) measured over a period of three financial years
ending 30 June 2023. As disclosed in the 2020 Directors’ Remuneration Report, the Committee chose to defer target
setting for six months from the date of grant of awards in line with guidance published by the Investment Association.
The targets were set and disclosed via an RNS announcement in March 2021.
Following the end of the performance period, the Committee will determine whether the performance targets have
been satisfied. Eligible awards will vest following a two-year holding period after the end of the performance period.
The Committee has discretion to amend the vesting outcome where it considers that it is not a fair reflection of
business performance. In particular, the Committee will consider whether there has been any “windfall gains” when
determining the vesting outcome taking into account a number of factors, including:
• share price performance over the performance period on an absolute basis and relative basis against peer companies;
• underlying financial performance of the Group during the performance period; and
•
the impact of the Covid-19 pandemic and any other significant events during the performance period on the Group’s
share price or market as a whole.
Details of the awards are as follows:
Director
James Thomson
Stefan Allanson
Number of
shares granted
121,753
76,704
Face value at
grant £0001
750
472
1. Calculated based on the mid-market closing share price as at a date preceding the date of grant (22 September 2021: £6.16).
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MJ Gleeson plc Annual Report & Accounts 2021 EPS for the year ending 30 June 2023
Relative TSR1
Threshold
(20%) of award
vests
70.0 pence
Median
Maximum
(100%) of award
vests2
82.5 pence
Upper quartile
1. To be compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Properties, Crest
Nicholson, Galliford Try, McCarthy & Stone, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
2. Straight-line vesting between threshold and maximum performance.
Payment made to former Directors and payments for loss of office
No payments were made to former Directors and no payments for loss of office were made during the year ended
30 June 2021 (2020: £nil).
Directors’ shareholdings and share interests
Shareholding guideline
Within-employment and post-employment shareholding guidelines were introduced with effect from 1 July 2019. The
within-employment shareholding guideline requires Executive Directors to build up and retain a holding in shares
equivalent to 200% of salary. As at 30 June 2021, James Thomson and Stefan Allanson held shares equivalent to 23.3%
of salary and 343.1% of salary respectively.
Share interests
The interests of the Directors serving during the year and of their connected persons in the ordinary share capital of
the Company as at 30 June 2021 are as shown below:
Director
Chairman
Dermot Gleeson
Executive Directors
James Thomson
Stefan Allanson
Non-Executive Directors
Elaine Bailey
Andrew Coppel
Fiona Goldsmith
Christopher Mills
Scheme
Owned
outright
Unvested
and
subject to
performance
Unvested
and not
subject to
performance1
Shares
1,088,918
–
Shares
LTIP 2019
LTIP 2020
Shares
LTIP 20172
LTIP 20183
LTIP 2019
LTIP 2020
12,541
–
–
120,407
–
–
–
–
Shares
Shares
Shares
Shares4
–
6,500
5,000
6,055,000
–
93,750
121,753
–
–
67,500
59,063
76,704
–
–
–
–
–
158
–
–
238
–
–
–
–
–
–
–
–
Vested and
exercised
Total as at
30 June 2021
–
1,088,918
–
–
–
–
77,345
–
–
–
12,966
93,750
121,753
120,645
77,345
67,500
59,063
76,704
–
–
–
–
–
6,500
5,000
6,055,000
1. Matching shares granted under the HMRC tax-qualifying all-employee scheme that have not yet vested.
2. The 2017 LTIP awards vested in full on 8 July 2020 following Committee approval of the outcome of the performance targets. Stefan
Allanson exercised 77,345 shares (including 8,114 shares from dividend equivalents) under the 2017 LTIP on 16 July 2020. Stefan Allanson sold
36,461 shares to cover taxes and retained the remaining 40,884 shares.
3. 69% of the 2018 LTIP awards vested on 6 July 2021 following Committee approval of the outcome of the performance targets. Stefan
Allanson exercised 50,549 shares (including 3,974 shares from dividend equivalents) under the 2018 LTIP on 20 July 2021. Stefan Allanson
sold 23,829 shares to cover taxes and retained the remaining 26,720 shares.
4. Shares are held by funds managed by Harwood Capital LLP of which Christopher Mills is a Member/Director.
As at 31 August 2021, the total interests held by James Thomson was 13,014 and Stefan Allanson was 147,411. 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.
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Corporate Governance Annual Report on Remuneration
Continued
LTIP awards
Additional details of the outstanding LTIP awards held by Executive Directors serving during the year are set out below.
Executive
Director
James Thomson
Stefan Allanson
Scheme
LTIP 2019
LTIP 2020
LTIP 2017
LTIP 2018
LTIP 2019
LTIP 2020
30 June
2020
93,750
–
69,231
67,500
59,063
–
Granted
during
year
Vested and
exercised
during year
Lapsed
in year
Share price
at grant
date
Total
interests
outstanding
at 30 June
2021
End of
performance
period
–
121,753
–
–
–
76,704
–
–
77,345
–
–
–
–
–
–
–
–
–
£8.00
£6.16
£6.50
£7.04
£8.00
£6.16
93,750
121,753
–
67,500
59,063
76,704
30/06/22
30/06/23
30/06/20
30/06/21
30/06/22
30/06/23
1. As noted above, the 2017 LTIP awards vested in full on 8 July 2020 following Committee approval of the outcome of performance targets.
Stefan Allanson exercised 77,345 shares (including 8,114 shares from dividend equivalents) under the 2017 LTIP on 16 July 2020.
2. As noted above, 69% of the 2018 LTIP awards vested on 6 July 2021 following Committee approval of the outcome of the performance
targets.
TSR performance
We have compared the Company’s TSR performance over the last ten years with the TSR for the FTSE Small Cap Index,
of which the Company is a member, and a comparator index of listed housebuilders. The peer group consists of a group
of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Properties, Crest Nicholson,
Galliford Try, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
MJ Gleeson plc TSR comparison to index and peer group 1 July 2011 to 30 June 2021:
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
MJ Gleeson plc
Housebuilders
FTSE SmallCap
1,200
1,000
800
600
400
200
0
Jul-11
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MJ Gleeson plc Annual Report & Accounts 2021 Chief Executive Officer’s remuneration 2011 to 2021
Year
2021
2020
2019
2019
2018
2017
2016
2015
2014
2013
20121
Chief Executive Officer
James Thomson
James Thomson
James Thomson (appointed 10 June 2019)
Jolyon Harrison (departed 10 June 2019)
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison (appointed 1 July 2012)
n/a
Single figure
of total
remuneration
£000
Annual bonus
paid against
maximum
opportunity
LTIP awards
vesting against
maximum
opportunity
1,173
769
31
2,482
3,056
2,816
873
2,917
793
1,615
–
99%
45%
–
–
100%
100%
100%
100%
100%
81%
–
–
–
–
100%
100%
100%
–
100%
–
100%
–
1. No Chief Executive Officer held office during 2012.
Annual percentage change in remuneration of Directors and employees
The table below sets out the annual percentage change in each of the Directors’ remuneration compared to the
average employee remuneration.
% change
Chairman
Dermot Gleeson
Executive Directors
James Thomson2
Stefan Allanson3
Non-Executive Directors
Elaine Bailey4
Andrew Coppel5
Fiona Goldsmith5
Christopher Mills
Average employee6
2020 to 2021
2019 to 2020
Salary
& fees1
Benefits
Bonus
Salary
& fees1
Benefits
Bonus
8%
9%
8%
n/a
n/a
n/a
8%
2.2%
-9%
-11%
-5%
–
–
–
–
9.3%
–
143%
n/a
–
–
–
–
49.9%
-7%
n/a
-7%
n/a
n/a
n/a
-7%
4.4%
–
n/a
2%
–
–
–
–
8.2%
–
n/a
–
–
–
–
–
-8.1%
1. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.
As such, the table above shows a reduction in salaries and fees between years ended 30 June 2019 and 30 June 2020, and an increase in
salaries and fees between years ended 30 June 2020 and 30 June 2021. With the exception of James Thomson (see page 114), there were no
increases to salaries or fees during the years ended 30 June 2020 and 30 June 2021.
2. Appointed to the Board on 10 June 2019 and therefore the percentage change in remuneration between years ended 30 June 2019 and
30 June 2020 is not applicable.
3. Stefan Allanson did not receive a bonus in respect of the year ended 30 June 2020.
4. Appointed to the Board on 1 March 2021 and therefore the percentage change in remuneration is not applicable.
5. Appointed to the Board on 1 October 2019 and therefore the annual percentage change in remuneration is not applicable.
6. The annual percentage change of the average remuneration of the Group’s salaried employees, calculated on a full-time equivalent basis.
The increase reflects the reversal of pay cuts that were implemented for certain employees for the period 6 April 2020 to 30 June 2020 in
response to the Covid-19 pandemic.
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Corporate Governance Annual Report on Remuneration
Continued
Chief Executive Officer pay ratio
The table below sets out the Chief Executive Officer’s total remuneration as a ratio against the full-time equivalent
remuneration of the 25th, 50th (median) and 75th percentile employees.
Year
2021
2020
Method
Option B
Option B
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
64:1
28:1
40:1
20:1
17:1
12:1
Option B methodology was selected on the basis that it is an efficient and robust approach. The remuneration
figures for the employee at each quartile were determined as at the final day of the relevant financial year. Sensitivity
analysis has been performed around the 25th, 50th and 75th percentile employees to ensure that they are reasonably
representative.
A substantial proportion of the Chief Executive Officer’s total remuneration is performance-related and delivered in
shares. The ratios will therefore depend significantly on the Chief Executive Officer’s annual bonus and LTIP outcomes,
and may fluctuate year-to-year.
During 2020 in response to the Covid-19 pandemic, the Board agreed to a 30% reduction in salary and fees for the
period 6 April 2020 to 30 June 2020. This reduced the Chief Executive Officer’s pay and, therefore, the pay ratios for
the prior year. In addition, the bonus paid to the Chief Executive Officer in the prior year was at 45% of the maximum
bonus due to the financial performance in that year compared to the bonus achieved being 99% of the maximum bonus
for 2021.
The Board believes that the median pay ratio is consistent with the Group’s wider policies on employee pay, reward
and progression. The Committee has reviewed the remuneration policies and practices for the wider workforce in
conjunction with considering how the Directors’ Remuneration Policy should be implemented. The Committee is
satisfied that there is a good level of alignment in relation to pay policies throughout the company and that the the
median pay ratio is consistent with the Group’s wider policies on employee pay, reward and progression.
Total pay and benefits used to calculate the ratios
The table below shows the employee percentile pay and benefits used to determine the above pay ratios and the salary
component for each figure.
£000
2021
Total pay and benefits2
Salary component
2020
Total pay and benefits2
Salary component3
Chief Executive
Officer1
25th percentile
Median
75th percentile
1,173
500
769
458
18
18
28
26
30
25
39
35
68
60
62
53
1. The Chief Executive Officer’s remuneration is the total single figure remuneration for the relevant financial year as disclosed on page 114.
2. The employee percentile pay and benefits has been calculated based on the amount paid or receivable for the financial year. The calculations
are on the same basis as required for the Chief Executive Officer’s remuneration for total single figure purposes.
3. The Board agreed to a 30% reduction in salary and fees for the period 6 April 2020 to 30 June 2020 in response to the Covid-19 pandemic.
Relative importance of spend on pay
Set out below is the amount spent on remuneration for all employees of the Group (including the Executive Directors)
and the total amounts paid in distributions to shareholders over the year.
2021
£m
39.8
2.9
2020
£m
27.2
–
Difference
in spend
£m
Difference as
percentage
12.6
2.9
46.3%
n/a
Remuneration for all employees
Total distributions paid
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MJ Gleeson plc Annual Report & Accounts 2021 Terms of engagement
The Chief Executive Officer’s service agreement is on a rolling basis and requires 12 months’ notice of termination
on either side. The Chief Financial Officer’s service agreement is on a rolling basis and requires six months’ notice of
termination from the Chief Financial Officer and 12 months’ notice of termination from the Company. The dates of the
Executive Directors’ service agreements are as follows:
James Thomson
Stefan Allanson
Date of service
agreement
2 December 2019
29 June 2015
All Non-Executive Directors are engaged for an initial period of three years, which thereafter may be extended on an
annual basis, subject to re-election at each AGM. The appointment of the Chairman may be terminated by either side
on six months’ notice and the appointment of the other Non-Executive Directors may be terminated on either side on
one month’s notice. The dates of each Non-Executive Director’s original appointment are as follows:
Dermot Gleeson
Christopher Mills
Andrew Coppel
Fiona Goldsmith
Elaine Bailey
Date of original appointment
Expiry of current term1
27 November 1975
1 January 2009
1 October 2019
1 October 2019
1 March 2021
30 September 2021
30 September 2021
30 September 2022
30 September 2022
29 February 2024
1. Subject to re-election at the 2021 AGM.
Implementation of the new policy for the year to 30 June 2022
Executive Directors
Salary
A 2.5% salary increase has been awarded to the Executive Directors with effect from 1 July 2021, in line with the
standard increase across the wider workforce, noting that the average increase was 4.1%.
James Thomson
Stefan Allanson
Salary from
1 July 2021
£
512,500
322,875
Salary as
at 30 June
2021
£
500,000
315,000
Pension
Reflecting best practice and the expectations of shareholders and proxy voting agencies, in 2020 Stefan Allanson
volunteered to have his pension opportunity reduced to bring it in line with the level available to the majority of the
wider workforce by 1 July 2022. Stefan Allanson’s pension opportunity reduced from 12% to 9% of salary on 1 July 2021
and will reduce to 6.5% of salary on 1 July 2022.
James Thomson’s pension allowance was set at 6.5% of salary on his appointment as Chief Executive Officer.
Annual bonus
The maximum bonus that can be earned in the year will be 125% of salary for both Executive Directors.
80% of the award will be based on profit performance and 20% will be based on strategic and personal performance.
Details of the profit, strategic and personal performance targets will be fully disclosed in the Annual Report on
Remuneration for the year ending 30 June 2022. The Committee has discretion to amend the vesting outcome where it
considers that it is not a fair reflection of business performance.
The Executive Directors will be required to defer one-third of any bonuses earned into shares for a two-year period.
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Corporate Governance Annual Report on Remuneration
Continued
LTIP
The maximum LTIP opportunity will be 150% of salary for both Executive Directors. 50% of the award will be based on
EPS performance and 50% will be based on relative TSR performance measured over a period of three financial years
ending 30 June 2024. The Committee has discretion to amend the vesting outcome where it considers that it is not a
fair reflection of business performance.
The vesting date for the shares will be following a two-year holding period, on or around the date on which the
Company announces its financial results for the financial year ending 30 June 2026.
Details of the EPS and relative TSR performance targets are set out below.
EPS for the year ending 30 June 2024
Relative TSR
Threshold (20%)
of award vests
Maximum (100%)
of award vests2
82.0p
Median
93.0p
Upper quartile
1. To be compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Properties, Crest
Nicholson, Galliford Try, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
2. Straight-line vesting between threshold and maximum performance.
Chairman and Non-Executive Directors fees
In line with the pay increase of 2.5% to the wider workforce, the Committee agreed that the Chairman’s fee for 2022
should increase from £125,000 to £128,000, and this includes a fee of £10,500 for chairing the Nomination Committee,
which remains unchanged. The fees for the Non-Executive Directors increased from £47,250 to £48,500 plus an
additional, unchanged, fee of £10,500 for chairing a Board Committee.
The Chairman and Non-Executive Directors fees will be reviewed during the year ending 30 June 2022 as part of a
wider review of the Directors’ Remuneration Policy.
The Remuneration Committee
The Committee was chaired by Andrew Coppel during the year ended 30 June 2021. The other Committee members
were Fiona Goldsmith and Elaine Bailey, who was appointed to the Committee on 26 March 2021.
Each of the Non-Executive Directors are independent and have no potential conflicts of interest arising from cross
directorships and no day-to-day involvement in running the business.
Biographical details of the members of the Committee are shown on pages 84 and 85, and details of their attendance
at the meetings of the Committee during the year ended 30 June 2021 are shown on page 87.
Role and responsibilities of the Remuneration Committee
The Committee’s primary purpose is to make recommendations to the Board on the Group’s framework for Executive
Directors and senior management remuneration. The Board has also delegated responsibility to the Committee for
determining the remuneration, benefits and contractual arrangements of the Chairman and the Executive Directors. No
individual is involved in deciding their own remuneration.
The Committee has written terms of reference available on the Company’s website, www.mjgleesonplc.com, and its
responsibilities include:
•
recommending to the Board the policy for Executive Directors and senior management remuneration;
• agreeing the remuneration of the Chairman of the Board;
• agreeing the terms and conditions of employment for Executive Directors, including their annual remuneration and
pension arrangements, and reviewing such provisions for senior management;
• agreeing the measures and targets for any performance-related bonus and share schemes;
• ensuring that, on termination, contractual terms and payments made are fair both to the Company and the
individual so that failure is not rewarded;
• engaging with shareholders on Executive Directors and senior management remuneration;
•
reviewing wider workforce remuneration and related policies; and
• agreeing the terms of reference of any remuneration consultants that it appoints.
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MJ Gleeson plc Annual Report & Accounts 2021 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 annual bonus and LTIP outcomes of the Executive Directors and senior management
for the year ended 30 June 2020 and assessing the fairness of these outcomes;
• agreeing performance targets for annual bonus and LTIP awards for the Executive Directors and senior management
for the year ended 30 June 2021;
•
•
•
•
reviewing potential performance metrics and targets for annual bonus and LTIP awards for the Executive Directors
and senior management to be granted in respect of the year ending 30 June 2022;
reviewing and approving proposals for staff pay and bonuses, including examining benchmarking data and market
information from third-party advisers;
reviewing gender pay across the Group and approving gender pay reporting; and
reviewing the terms of reference of the Committee such that these remain appropriate.
Remuneration Committee – support and advice
The Committee is supported by the Human Resources Director, Beth Broughton, and the Head of Legal and Company
Secretary, Leanne Johnson.
The Company took advice from Deloitte LLP, who were appointed by the Committee in July 2019 following a tender
process. Deloitte LLP is a founder member of the Remuneration Consultants Group and, as such, voluntarily operates
under its Code of Conduct in relation to executive remuneration in the UK. The Committee is satisfied that the
appointment of Deloitte LLP is in accordance with the Company’s policy on the provision of non-audit services to
the Group and that the external advice received is objective and independent. The fees paid to Deloitte LLP for their
services to the Committee during the year, based on time and expenses, amounted to £24,500. Deloitte LLP also
provided advice to the Company during the year in relation to share plans.
The Company also took advice from its legal advisors, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), under
its annual retainer. Skadden were appointed in November 2020. The Committee is satisfied that the advice received
from Skadden 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
2020 AGM: Approval of the Annual
Report on Remuneration
2019 AGM: Approval of the Directors’
Remuneration Policy
27,757,341
60.7
18,002,509
39.3 45,759,850
72,289
38,188,152
98.2
681,785
1.8
38,869,937
2,801
The Board was disappointed with the overall voting result approving the Annual Report on Remuneration. Both prior
to and following the AGM, the Chair of the Remuneration Committee (the “Committee”) offered major shareholders
the opportunity to engage with the Board and discuss their thoughts on remuneration matters. The primary concern
of those shareholders who provided feedback was the Committee’s adjustment of the performance period under
the Company’s long term incentive plan relating to Stefan Allanson’s award. The Committee would like to assure
shareholders that it is committed to taking a responsible approach to Director remuneration, and took, what it deemed
at the time, appropriate and responsible actions in the circumstances. In keeping with the Investment Association
guidance, an update statement was sent to the Investment Association and can be found on the corporate website
www.mjgleesonplc.com.
The Committee considers that the remuneration policy, which was approved by shareholders in 2019, continues to
be aligned with the Company’s strategy and shareholder interests. This will be reviewed in consultation with advisory
bodies next year and put to shareholders at the 2022 AGM.
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Corporate Governance
Directors’ Report
Statutory, regulatory and other information
This section contains the remaining
matters on which the Directors are
required to report each year that do not
appear elsewhere in the Annual Report.
Strategic Report
We present a review of the business during the year to
30 June 2021 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 76.
Business review
The review of the development and performance of the
business during the year, any significant events up to the
date of this Report, and the future outlook of the Group
are set out in the Chairman’s Statement on pages 10 to 12,
the Chief Executive’s Statement on pages 24 to 27
and the Business Reviews on pages 28 and 29.
The Group’s sustainable business strategy is set out
in the Strategic Report on pages 32 and 33. The key
performance indicators are set out in the Strategic Report
on pages 20 and 21.
The Group’s policy in respect of financial risk
management and financial instruments, details of credit
risk, capital risk management, liquidity risk and interest
rate risk are given in note 15 to the financial statements.
Dividends
The Company may, by ordinary resolution, declare a
dividend to be paid to shareholders but no dividend shall
exceed the amount recommended by the Board. The
Board may also agree to pay interim dividends when the
financial position of the Company, in the opinion of the
Board, justifies it.
During the previous year, in response to the Covid-19
pandemic, the Board suspended dividend payments.
These were resumed during the year and, in April 2021,
the Company paid an interim dividend to shareholders of
5.0p per share.
The Board proposes to pay, subject to shareholder
approval at the 2021 AGM, a final dividend of 10.0p per
share on 22 November 2021, to shareholders on the
register at the close of business on 29 October 2021. The
total dividend for the year to 30 June 2021 will be 15.0p.
Qualifying third-party indemnity
Directors risk personal liability under civil and criminal
law for many aspects of the Company’s main business
decisions. As a consequence, the Directors could face a
range of penalties including fines and/or imprisonment.
In keeping with normal market practice, the Company
believes that it is prudent, and in the best interests of the
Company, to protect the individuals concerned from the
consequences of innocent error or omission.
126
The Company obtains Directors’ and Officers’ liability
insurance in order to indemnify Directors and other
senior officers of the Company and its subsidiaries.
This insurance policy does not provide cover where the
Director or officer has acted fraudulently or dishonestly.
In addition, subject to the provisions of and to the extent
permitted by relevant statutes, under the Articles, the
Directors and other officers throughout the year, and at
the date of approval of these financial statements, were
indemnified out of the assets of the Company against
liabilities incurred by them in the course of carrying out
their duties or the exercise of their powers. A deed of
indemnity was approved by the Board in November 2020.
Substantial shareholdings
At 31 August 2021, the shareholdings noted below,
representing 3% or more of the issued share capital, had
been notified to the Company.
Name of shareholder
Funds managed by
Harwood Capital LLP
Schroder Investment
Management
Sandford DeLand
Asset Management
Polar Capital
The Cooper Family*
Highclere International
Investors
Royal London
Asset Management
Canaccord Genuity
Wealth Management
Number
of shares
Proportion
of total
6,055,000
10.38%
4,792,454
8.22%
4,660,000
2,303,453
2,257,465
7.99%
3.95%
3.87%
2,236,382
3.84%
2,152,283
3.69%
2,077,500
3.56%
* Of which 538,150 shares are held in trusts of which Mrs J Cooper
is a Trustee
Governance statement
The Disclosure Guidance and Transparency Rules require
certain information to be included in a governance
statement in the Directors’ Report. Information that
fulfils these requirements, including how the Group has
complied with the UK Corporate Governance Code and
our internal control and risk management systems, can be
found in the Corporate Governance section on pages 78
to 129.
Political donations
The Company made no political donations in the year or
in the previous year.
Directors and Directors’ interests
The Directors of the Company as of the date of this
Report and during the year and their biographical details
are shown on pages 84 and 85.
Details of any related party transactions with Directors
of the Company are shown in note 26 to the financial
statements.
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MJ Gleeson plc Annual Report & Accounts 2021 The beneficial interests of the Directors and their
connected persons in the shares of the Company at
30 June 2021 are disclosed in the Annual Report on
Remuneration on page 119. Details of the interests of the
Executive Directors in share options and awards of shares
can be found on page 120 within the same Report.
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.
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 to retain and support employees
who become disabled whilst in the employment of the
Group.
We are committed to developing our employees so they
can maximise their career potential, and our aim is to
provide rewarding career opportunities in an environment
where equality of opportunity is paramount. We seek to
improve employee retention by providing benefits that
employees value, including a Group stakeholder pension
(including life assurance arrangements), private medical
insurance and income replacement arrangements.
Employee share ownership continues to be encouraged
through participation in the Group Share Purchase Plan
under which the Company contributes one share for
every three shares purchased.
Employee involvement
Our people are at the heart of our business and are
involved in decision making across the business in a
variety of ways. More details on employee engagement
can be found on pages 36 and 37.
Stakeholder engagement
Details regarding our stakeholder engagement including
suppliers, customers, local authorities and shareholders,
and the effect on the principal decisions made in the year,
can be found on pages 74 and 75.
Greenhouse gas emissions
All disclosures concerning the Group’s greenhouse gas
emissions, as required to be disclosed under regulations
introduced by the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013 and the
Streamlined Energy and Carbon Reporting (“SECR”)
requirements are contained in the Strategic Report on
pages 40 and 41.
Shareholder additional information
The Company is required to disclose certain additional
information where not covered elsewhere in this Annual
Report:
Share capital
The Company has one class of share in issue, being
ordinary shares with a nominal value of 2 pence each,
with no right to fixed income.
At 30 June 2021, the Company had issued share capital
of 58,255,788 ordinary shares, with a nominal value of
£1.2m. Further details are given in note 23 to the financial
statements.
Rights and obligations attaching to shares
Subject to the Companies Act 2006 and other
shareholders’ rights, any share may be issued with such
rights and restrictions as the Company may by ordinary
resolution decide or, if no such resolution has been
passed or so far as the resolution does not make specific
provision, as the Board of the Company may decide.
Subject to the Companies Act 2006, the Articles and any
resolution of the Company, the Board may deal with any
unissued shares as it may decide.
Amendment to the Articles of Association
Any amendments to the Articles may be made in
accordance with the provisions of the Companies Act
2006 by way of special resolution.
Voting
Under and subject to the provisions of the Articles and
subject to any special rights or restrictions as to voting
attached to any shares, on a show of hands, every
shareholder present in person at a general meeting of
shareholders shall have one vote and on a poll every
shareholder who was present in person or by proxy
shall have one vote for every share of which they are the
holder. Under the Companies Act 2006, shareholders are
entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at a
general meeting or class meeting.
Restrictions on voting
A shareholder shall not be entitled to vote at any general
meeting or class meeting in respect of any shares held by
them unless all calls and other sums presently payable by
them in respect of that share have been paid.
Variation of rights
The Articles specify that the special rights attached to
any class of shares may, either with the consent in writing
of holders of three-fourths of the issued shares of that
class or with the sanction of a special resolution passed at
a separate meeting of such holders (but not otherwise),
be modified or abrogated.
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
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Corporate Governance Directors’ Report
Statutory, regulatory and other information Continued
register any transfer of a certificated share not fully paid
up. The Board may also refuse to register any transfer of
certificated shares unless it is:
•
•
in respect of only one class of shares;
in favour of no more than four transferees;
• duly stamped or exempt from stamp duty;
• delivered to the office or at such other place as the
Board may decide for registration; and
• accompanied by the certificate for the shares to be
transferred and such other evidence (if any) as the
Board may reasonably require to show the right of the
intending transferor to transfer the shares.
Authority to purchase own shares
At the 2020 AGM, shareholders gave the Company
authority to purchase up to the nominal value of ordinary
shares of £116,511 of its own ordinary shares, representing
approximately 10% of its issued ordinary share capital. No
purchases have been made pursuant to this authority and
a resolution will be put to shareholders at the 2021 AGM
to renew the authority for a further period of one year.
Repurchase of shares
Subject to the provisions of the Companies Act and to
any rights conferred on the holders of any class of shares,
the Company may purchase all or any of its shares of any
class, including any redeemable shares.
Appointment and replacement of Directors
The Directors shall not, unless otherwise determined by
an ordinary resolution of the Company, be less than three
or more than 15 in number. Directors may be appointed
by the Company by ordinary resolution or by the Board.
A Director appointed by the Board shall retire from
office at the next AGM of the Company but shall then be
eligible for reappointment. The Board may appoint one
or more Directors to hold any office or employment with
the Company for such period (subject to the Companies
Act requirements) and on such terms as it may decide
and may revoke or terminate any such appointment.
At each AGM, any Director who has been appointed
by the Board since the previous AGM and any Director
selected to retire by rotation shall retire from office.
At each AGM, one-third of the Directors are required
to retire by rotation or, if the number is not an integral
multiple of three, the number nearest to one-third
but not exceeding one-third. In addition, any Director
who has been a Director at the preceding two AGMs is
required to retire by rotation, provided that they were not
appointed or reappointed at either such AGM or ceased
to be a Director and been reappointed since either such
AGM. Notwithstanding this, the Board has determined
that all Directors will be subject to annual re-election by
shareholders at each AGM.
The Company may, by ordinary resolution of which special
notice has been given in accordance with the Companies
Act, remove any Director before their period of office has
expired notwithstanding anything in the Articles or in any
agreement between that Director and the Company. 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.
128
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 Group’s revolving credit facility whereby upon
a “change of control” all amounts become due and
payable.
Information rights
Beneficial owners of shares who have been nominated by
the registered holder of those shares to enjoy information
rights under Section 146 of the Companies Act 2006 are
required to direct all communications to the registered
holder of their shares, rather than to the Company’s
registrars or to the Company directly.
Disclosure of information to auditors
The Directors who held office at the date of approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which
the Company’s auditors are unaware, and the Directors
have taken all the steps that they ought to have taken as
Directors to make themselves aware of any relevant audit
information and to establish that the Company’s auditors
are aware of that information.
Auditors
As set out on page 105, 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
15 November 2021.
Annual General Meeting
The Notice of the AGM to be held on 15 November 2021,
together with details of the Resolutions to be considered,
will be sent out in a separate circular. Full details of the
deadlines for exercising voting rights in respect of the
resolutions to be considered at the AGM will be set out in
the Notice of the AGM.
By order of the Board
Leanne Johnson
Company Secretary
13 September 2021
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MJ Gleeson plc Annual Report & Accounts 2021 Statement of Directors’ Responsibilities
in Respect of the Financial Statements
Directors’ confirmations
The Directors consider that the Annual Report and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s and Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are
listed in the Governance Report confirm that, to the best
of their knowledge:
•
•
the Group and Company financial statements,
which have been prepared in accordance with
international accounting standards in conformity with
the requirements of the Companies Act 2006 and
international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union, give a true and fair
view of the assets, liabilities, financial position and
profit of the Group and loss of the Company; 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’s 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’s and Company’s auditors are aware of that
information.
By order of the Board
James Thomson
Director
13 September 2021
Stefan Allanson
Director
13 September 2021
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 and
the Company financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. Additionally,
the Financial Conduct Authority’s Disclosure Guidance
and Transparency Rules require the directors to prepare
the group financial statements in accordance with
international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
The company has also prepared financial statements in
accordance with and international financial reporting
standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
Under Company law, 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
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 international accounting
standards in conformity with the requirements of
the Companies Act 2006 and international financial
reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European
Union have been followed, 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 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 also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s 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.
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.
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Corporate Governance MJ Gleeson plc Annual Report & Accounts 2021
Financial
Statements
Contents
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
132
140
140
141
142
144
145
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Notes to the Financial Statements
Financial Statements
Paul and Natalie, Leadmills Walk,
Richmond, Richmondshire
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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 2021 and of the group’s
profit and the group’s and company’s cash flows for the year then ended;
• have been properly prepared in accordance with international accounting standards in conformity with the requirements
of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which
comprise: the Statement of Financial Position as at 30 June 2021; the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, the Statements of Changes in Equity and the Statement of Cash Flows 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.
Separate opinion in relation to international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union
As explained in note 1 to the financial statements, the group and company, in addition to applying international accounting
standards in conformity with the requirements of the Companies Act 2006, have also applied international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the group and company financial statements have been properly prepared in accordance with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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.
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We have provided no non-audit services to the company or its controlled undertakings in the period under audit.
• The reporting units where we performed audit work accounted for 100% of the Group's profit before tax and 100% of the
Our audit approach
Overview
Audit scope
Group's total assets.
Key audit matters
• Carrying value of land and work in progress (group)
•
Impact of COVID-19 (group and parent)
• Carrying value of investments (parent)
Materiality
• Overall group materiality: £2,086,000 (2020: £1,405,000) based on 5% of profit before tax (2020: 5% of a three year
average of profit before tax).
• Overall company materiality: £1,423,000 (2020: £1,334,750) based on 1% of total assets.
• Performance materiality: £1,564,500 (group) and £1,067,500 (company).
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
The scope of our audit
statements.
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.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Carrying value of land and work in progress (group)
We focused upon this area because the value of the
For land and work in progress in Gleeson Homes, we: •
Group's land and work in progress represent a significant
Assessed the adequacy of controls over the authorisation
proportion of assets in the Group statement of financial
and recording of costs, including testing of controls over
position. Further, determining the recoverable amount of
the allocation of costs to the correct sites. • Visited a
land and work in progress requires a high degree of
sample of sites to confirm the existence and condition of
estimation. For work in progress in Gleeson Homes, the
the work in progress, and also to evaluate the
key judgements include forecasting future costs to
reasonableness of the assessment of stage of completion.
complete and selling prices which can be affected by
• Attended a sample of quarterly valuation meetings to
market conditions and unexpected events. In Gleeson
evidence controls and procedures undertaken and
Land, the valuation of work in progress requires
judgements made as part of the valuation process. •
judgement regarding the future viability of each project.
Tested and agreed a sample of land and work in progress
Based upon this assessment, it may be necessary to
costs incurred during the year, including land additions and
build costs, to supporting evidence as well as reviewing
MJ Gleeson plc Annual Report & Accounts 2021
We have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• 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.
Key audit matters
• Carrying value of land and work in progress (group)
•
• Carrying value of investments (parent)
Impact of COVID-19 (group and parent)
Materiality
• Overall group materiality: £2,086,000 (2020: £1,405,000) based on 5% of profit before tax (2020: 5% of a three year
average of profit before tax).
• Overall company materiality: £1,423,000 (2020: £1,334,750) based on 1% of total assets.
• Performance materiality: £1,564,500 (group) and £1,067,500 (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
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.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Carrying value of land and work in progress (group)
We focused upon this area because the value of the
Group's land and work in progress represent a significant
proportion of assets in the Group statement of financial
position. Further, determining the recoverable amount of
land and work in progress requires a high degree of
estimation. For work in progress in Gleeson Homes, the
key judgements include forecasting future costs to
complete and selling prices which can be affected by
market conditions and unexpected events. In Gleeson
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
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.
• Attended a sample of quarterly valuation meetings to
evidence controls and procedures undertaken and
judgements made as part of the valuation process. •
Tested and agreed a sample of land and work in progress
costs incurred during the year, including land additions and
build costs, to supporting evidence as well as reviewing
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Financial Statements
record provisions to determine the final carrying value of
work in progress for each site.
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
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.
Impact of COVID-19 (group and parent)
COVID-19 was declared a global pandemic by the World
Health Organisation on 11 March 2020 and the on-going
response is having an unprecedented impact on the
economy which has been considered as part of the audit.
Management have considered the implications across the
business, including the going concern assessment, the
impact on asset impairment assessments, and
appropriate disclosures in the Annual Report. In respect of
the going concern assessment, management have
prepared detailed analyses to assess the potential impact
on revenue, profit and cash flows of a severe but plausible
downside risk scenario. This analysis includes
consideration of the group’s liquidity and loan covenants.
In doing so, management have made assumptions that
are critical to the outcome of these considerations.
Because of its significance to the financial statements and
to our audit, we determined that management’s
consideration of the potential impact of COVID-19 on
going concern is a key audit matter.
Our audit procedures performed in respect of the impact of
COVID-19 on management's going concern assessment,
and our conclusion in respect of going concern, are
included in the “Conclusions relating to going concern”
section below. We have evaluated and challenged
management on how they reflected the impact on future
cash flows of COVID-19 in their impairment analyses and
the consistency of their assumptions with the forecasts
used in their going concern assessment. We have also
evaluated how management have reflected the impact on
the recoverability of land and work in progress which is
covered in the previous key audit matter. We have
considered the impact of the ongoing pandemic on internal
controls and the management's ability to maintain
appropriate segregation of duties.We have reviewed
management’s disclosures in the financial statements in
relation to COVID-19 and are satisfied that they are
consistent with the risks affecting the group, their impact
assessment and the procedures that we have performed.
Carrying value of investments (parent)
We focused upon this area because of the size of the
balance and the significant judgement required in
determining the carrying value. The key judgement is the
underlying cash generation and profitability of the Parent
Company's subsidiaries which can be affected by market
conditions and unexpected events, including the ongoing
Covid-19 pandemic.
We compared the carrying value of the investments as at
30 June 2021 to the subsidiary’s net assets and assessed
the future cash flows of the subsidiaries. We assessed the
requirement for, and the value of, the impairment recorded
in the year. We also assessed the market capitalisation of
the Company as at 30 June 2021, and compared it to the
net assets of the Group and Parent Company. Based on
this work we are satisfied that the carrying value of the
investments held by the company are supported.
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.
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The Group is organised into two main operating divisions being Gleeson Homes and Gleeson Land, and each operating
division represents a single reporting unit. The Group financial statements are a consolidation of these 2 reporting units and
the Group’s central entities which include a further 3 reporting units. Of the Group’s 5 reporting units, we identified 4 which,
in our view, required an audit of their complete financial information, either due to their size or their risk characteristics. This,
together with additional procedures performed on the Group’s remaining centralised functions, gave us the evidence we
needed for our opinion on the Group financial statements as a whole. All work was performed by the Group audit team .
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
£2,086,000 (2020: £1,405,000).
Financial statements - company
£1,423,000 (2020: £1,334,750).
Overall
materiality
How we
Rationale for
benchmark
applied
determined it
profit before tax)
5% of profit before tax (2020: 5% of a three year average of
1% of total assets
Based on the benchmarks used in the annual report, profit
We believe total assets is the
before tax is the primary measure used by the shareholders
primary measure used by
in assessing the performance of the group, and is a
generally accepted auditing benchmark.
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 £44,300 and £1,982,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £1,564,500 for the
group financial statements and £1,067,500 for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £104,300
(group audit) (2020: £70,250) and £71,150 (company audit) (2020: £66,738) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern
basis of accounting included:
• We obtained from management their latest assessments that support their conclusions with respect to the going concern
basis of preparation of the financial statements and confirmed the mathematical accuracy of these assessments;
• We evaluated the historical accuracy of the budgeting process to assess the reliability of the data;
• We evaluated management’s base case forecast and severe but plausible downside scenario and challenged the
adequacy and appropriateness of the underlying assumptions; and
MJ Gleeson plc Annual Report & Accounts 2021
The Group is organised into two main operating divisions being Gleeson Homes and Gleeson Land, and each operating
division represents a single reporting unit. The Group financial statements are a consolidation of these 2 reporting units and
the Group’s central entities which include a further 3 reporting units. Of the Group’s 5 reporting units, we identified 4 which,
in our view, required an audit of their complete financial information, either due to their size or their risk characteristics. This,
together with additional procedures performed on the Group’s remaining centralised functions, gave us the evidence we
needed for our opinion on the Group financial statements as a whole. All work was performed by the Group audit team .
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
£2,086,000 (2020: £1,405,000).
Financial statements - company
£1,423,000 (2020: £1,334,750).
5% of profit before tax (2020: 5% of a three year average of
profit before tax)
1% of total assets
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 £44,300 and £1,982,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £1,564,500 for the
group financial statements and £1,067,500 for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £104,300
(group audit) (2020: £70,250) and £71,150 (company audit) (2020: £66,738) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern
basis of accounting included:
• We obtained from management their latest assessments that support their conclusions with respect to the going concern
basis of preparation of the financial statements and confirmed the mathematical accuracy of these assessments;
• We evaluated the historical accuracy of the budgeting process to assess the reliability of the data;
• We evaluated management’s base case forecast and severe but plausible downside scenario and challenged the
adequacy and appropriateness of the underlying assumptions; and
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Financial Statements
•
In conjunction with the above we have also reviewed management’s analysis of both liquidity and covenant compliance
to satisfy ourselves that no breaches are anticipated over the period of assessment.
Corporate governance statement
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group's and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's
and the company's ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
• The section of the Annual Report describing the work of the Audit Committee.
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 2021 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
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.
Directors’ Remuneration
In our opinion, the part of the Annual Report on Remuneration to be audited has been properly prepared in accordance with
the Companies Act 2006.
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The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement
as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit,
and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The directors’ explanation as to their assessment of the group's and company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether
the statement is consistent with the financial statements and our knowledge and understanding of the group and company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the group’s and company's position, performance,
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
business model and strategy;
systems; and
We have nothing to report in respect of our responsibility to report when 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.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities in respect of the financial statements, the directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied
that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
MJ Gleeson plc Annual Report & Accounts 2021
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement
as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit,
and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The directors’ explanation as to their assessment of the group's and company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether
the statement is consistent with the financial statements and our knowledge and understanding of the group and company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the group’s and company's position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when 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.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities in respect of the financial statements, the directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied
that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
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Financial Statements
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 obtained 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 Annual Report on Remuneration 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 members 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 5 years, covering the years ended 30 June 2017 to 30 June 2021.
Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
13 September 2021
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to the Listing Rules and health and safety 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 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 deliberate manipulation of results via improper revenue recognition,
management bias in key accounting estimates and posting of inappropriate journal entries to manipulate the group’s result
for the period. Audit procedures performed by the engagement team 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, particularly in
•
relation to the valuation of land and work in progress; and
Identifying and testing journal entries on a sample basis, in particular journal entries posted with unusual account
combinations or posted by unexpected users. Specifically we tested journal entries with credits to revenue, duplicate
journals, and journals transferring costs within work in progress.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
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.
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MJ Gleeson plc Annual Report & Accounts 2021
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 obtained 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 Annual Report on Remuneration 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 members 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 5 years, covering the years ended 30 June 2017 to 30 June 2021.
Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
13 September 2021
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139
Financial Statements
Consolidated Income Statement
For the year ended 30 June 2021
Continuing operations*
Revenue
Cost of sales
Gross profit
Impairment losses
Administrative expenses
Other operating income
Operating profit
Finance income
Finance expenses
Profit before tax
Tax
Profit for the year from continuing operations
Discontinued operations*
Loss for the year from discontinued operations (net of tax)
Profit for the year attributable to the equity holders of the parent
Earnings per share from continuing and discontinued operations
Basic
Diluted
Earnings per share from continuing operations
Basic
Diluted
* All results classified as continuing for the year ended 30 June 2021 (see note 3)
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Change in value of shared equity receivables at fair value
Movement in tax on share-based payments taken directly to equity
Other comprehensive income for the year (net of tax)
Total comprehensive income for the year
The notes on pages 145 to 169 form part of these financial statements.
Note
2021
£000
2020
£000
2
5
7
7
8
3
10
10
10
10
Note
15
8
288,575
(199,230)
89,345
–
(47,185)
923
43,083
377
(1,749)
41,711
(7,839)
33,872
147,181
(106,744)
40,437
(257)
(34,533)
282
5,929
708
(1,071)
5,566
(758)
4,808
–
33,872
(289)
4,519
n/a*
n/a*
58.16 p
58.07 p
8.13 p
8.04 p
8.65 p
8.55 p
2021
£000
33,872
2020
£000
4,519
33
302
335
13
265
278
34,207
4,797
140
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MJ Gleeson plc Annual Report & Accounts 2021 Statement of Financial Position
At 30 June 2021
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
UK corporation tax
Cash and cash equivalents
Total assets
Non-current liabilities
Trade and other payables
Provisions
Current liabilities
Loans and borrowings
Trade and other payables
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Note
11
12
14
20
13
14
21
16
18
17
16
18
23
Group
Company
2021
£000
6,684
–
4,672
1,233
12,589
239,961
22,378
3,875
34,331
300,545
2020
£000
5,913
–
12,238
2,176
20,327
216,336
8,328
253
76,807
301,724
2021
£000
2020
£000
–
99,067
–
567
99,634
–
37,889
3,754
1,023
42,666
–
100,800
–
331
101,131
–
73,930
133
15,313
89,376
313,134
322,051
142,300
190,507
(6,917)
(236)
(7,153)
(11,866)
(200)
(12,066)
–
–
–
–
–
–
–
(61,027)
(23)
(61,050)
(60,000)
(37,365)
(15)
(97,380)
–
(88,654)
–
(88,654)
(60,000)
(66,873)
–
(126,873)
(68,203)
244,931
(109,446)
212,605
(88,654)
53,646
(126,873)
63,634
1,165
15,843
227,923
244,931
1,161
15,843
195,601
212,605
1,165
15,843
36,638
53,646
1,161
15,843
46,630
63,634
Retained earnings of the Company
The loss of the Company in the financial year amounted to £8,250,000 (2020: £3,891,000).
The financial statements on pages 140 to 169 were approved by the Board of Directors on 13 September 2021 and
signed on its behalf by:
James Thomson Stefan Allanson
Director
Director
Company registration number: 09268016
The notes on pages 145 to 169 form part of these financial statements.
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141
Financial Statements Statement of Changes in Equity
For the year ended 30 June 2021
Group
Note
At 1 July 2019
Adjustment on adoption of IFRS 16 on 1 July 2019
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded directly in equity
At 30 June 2020
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded directly in equity
23
24
9
23
24
9
Share
capital
£000
1,092
–
–
–
–
69
–
–
–
69
Share
premium
£000
–
–
–
–
–
Retained
earnings
£000
202,804
(87)
Total
equity
£000
203,896
(87)
4,519
278
4,797
4,519
278
4,797
15,843
–
–
–
–
(63)
717
(12,567)
15,912
(63)
717
(12,567)
15,843
(11,913)
3,999
1,161
15,843
195,601
212,605
–
–
–
4
–
–
–
4
–
–
–
–
–
–
–
–
33,872
335
34,207
33,872
335
34,207
–
(61)
1,089
(2,913)
4
(61)
1,089
(2,913)
(1,885)
(1,881)
At 30 June 2021
1,165
15,843
227,923
244,931
142
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MJ Gleeson plc Annual Report & Accounts 2021 Statement of Changes in Equity
For the year ended 30 June 2021
Company
Note
At 1 July 2019
Total comprehensive expense for the year
Loss for the year
Other comprehensive income
Total comprehensive expense for the year
Transactions with owners, recorded directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded directly in equity
At 30 June 2020
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
23
24
9
23
24
9
Share
capital
£000
1,092
–
–
–
69
–
–
–
69
Share
premium
£000
–
–
–
–
Retained
earnings
£000
62,341
(3,891)
67
(3,824)
Total
equity
£000
63,433
(3,891)
67
(3,824)
15,843
–
–
–
–
(37)
717
(12,567)
15,912
(37)
717
(12,567)
15,843
(11,887)
4,025
1,161
15,843
46,630
63,634
–
–
–
4
–
–
–
4
–
–
–
–
–
–
–
–
(8,250)
187
(8,063)
(8,250)
187
(8,063)
–
(105)
1,089
(2,913)
4
(105)
1,089
(2,913)
(1,929)
(1,925)
At 30 June 2021
1,165
15,843
36,638
53,646
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143
Financial Statements Statement of Cash Flows
For the year ended 30 June 2021
Operating activities
Profit/(loss) before tax from continuing operations
Loss before tax from discontinued operations
Adjustments for:
Depreciation of property, plant and equipment
Share-based payments
Profit on redemption of shared equity receivables
Loss on disposal of property, plant and equipment
Impairment of investments in subsidiaries
Impairment of investment properties
Disposals of right-of-use assets
Finance income
Finance expenses
Group
Company
2021
£000
41,711
–
41,711
2,772
1,089
(230)
200
–
–
50
(377)
1,749
2020
£000
5,566
(307)
5,259
2,289
717
(223)
254
–
257
–
(708)
1,071
2021
£000
(8,300)
–
(8,300)
–
1,089
–
–
1,733
–
–
–
1,490
Note
3
11
24
15
11
12
7
7
Operating cash flows before movements in working capital
Increase in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Decrease/(increase) in amounts due from subsidiary
undertakings
Increase in amounts due to subsidiary undertakings
46,964
(23,626)
(6,709)
19,706
8,916
(33,215)
42,207
(28,236)
(3,988)
–
341
1,227
–
–
–
–
42,532
20,655
2020
£000
(3,915)
–
(3,915)
1
717
–
–
–
–
–
(37)
692
(2,542)
–
(27)
189
(51,837)
9,442
Cash generated/(used) in operating activities
Tax paid
Finance costs paid
Net cash flow surplus/(deficit) from operating activities
36,335
(10,216)
(1,934)
24,185
(10,328)
(3,596)
(728)
(14,652)
60,767
(10,216)
(1,827)
48,724
(44,775)
(3,596)
(719)
(49,090)
Investing activities
Proceeds from disposal of shared equity receivables
Proceeds from disposal of property, plant and equipment
Interest received
Purchase of property, plant and equipment
Net cash flow (deficit)/surplus from investing activities
Financing activities
(Repayment)/increase of loans and borrowings
Net proceeds from issue of shares
Purchase of own shares
Dividends paid
Principal element of lease payments
Net cash flow (deficit)/surplus from financing activities
11
17
23
9
858
7
6
(3,839)
(2,968)
1,065
–
64
(2,410)
(1,281)
–
–
–
–
–
–
–
37
–
37
(60,000)
4
(61)
(2,913)
(723)
(63,693)
60,000
15,912
(63)
(12,567)
(848)
62,434
(60,000)
4
(105)
(2,913)
–
(63,014)
60,000
15,912
(37)
(12,567)
–
63,308
Net (decrease)/increase in cash and cash equivalents
(42,476)
46,501
(14,290)
14,255
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
76,807
34,331
30,306
76,807
15,313
1,023
21
1,058
15,313
144
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MJ Gleeson plc Annual Report & Accounts 2021 Notes to the Financial Statements
1 Accounting policies
MJ Gleeson plc (“the Company”) is a public limited company that is listed on the London Stock Exchange and is
incorporated and domiciled in England. The address of the registered office is 6 Europa Court, Sheffield Business Park,
Sheffield, S9 1XE.
Basis of preparation
Both the Parent Company Financial Statements and the Group Financial Statements have been prepared and approved
by the directors in accordance with International Accounting Standards in conformity with the requirements of
the Companies Act 2006 (IFRS) and the applicable legal requirements of the Companies Act 2006. In addition to
complying with international accounting standards in conformity with the requirements of the Companies Act 2006,
the Financial Statements also comply with International financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost
convention, except as otherwise stated below.
The principal accounting policies set out below have been applied consistently to all periods presented in these
financial statements.
The Company has taken advantage of section 408 of the Companies Act 2006 and consequently a statement of
comprehensive income of the Company is not presented as part of these financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary
undertakings (together referred to as “the Group”).
Going concern
During the year, the Group negotiated a committed club facility with Lloyds Bank plc and Santander UK plc. The facility
has a limit of £105m (previously £70m with Lloyds Bank plc), which expires in October 2024 and provides the Group
with additional liquidity and investment funding.
The Group has maintained its strong financial position and ended the year with cash balances of £34.3m and no debt
(30 June 2020: £16.8m net cash).
Current forecasts are based on the latest three-year budget approved by the Board in May 2021. This reflected a
cautious view on the trading outlook based on the current market and the degree of macro-economic risk that remains
from the ongoing Covid-19 pandemic.
These forecasts were then subject to a range of sensitivities including a severe but plausible scenario together with
the likely effectiveness of mitigating actions. The assessment considered the impact of a number of realistically
possible, but severe and prolonged changes to principal assumptions from a downturn in the housing and land markets
including:
•
•
reduction in Gleeson Homes volumes of approximately 15%;
reduction in Gleeson Homes selling prices by 5%;
• material build cost increases of 10% over and above the levels forecast; and
• a delay on the timing of Gleeson Land transactions and land selling values.
Under these sensitivities, after taking mitigating actions, the Group continues to have a sufficient level of liquidity,
operate within its financial covenants and meet its liabilities as they fall due.
Based on the results of the analysis undertaken, the Directors have a reasonable expectation that the Company and the
Group have adequate resources available to continue in operation for the foreseeable future and operate in compliance
with the Group’s bank facilities and financial covenants. As such, the financial statements for the Company and the
Group have been prepared on a going concern basis.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date
that control ceases.
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Financial Statements Notes to the Financial Statements
continued
1 Accounting policies continued
Revenue recognition
Revenue represents the fair value of the consideration received or receivable in respect of the sale of homes and land
net of value added tax and discounts, which is based on an underlying signed legal agreement. Revenue is recognised
when control transfers to a customer as follows:
• Revenue from the sale of homes and sales extras, is a single performance obligation that is satisfied when control
is transferred to the customer, which is deemed to be on legal completion when title of the property passes to
the customer. Where deposit and exchange funds are received in advance, no revenue is recognised until legal
completion occurs and the remaining funds are received.
• Revenue from land sales is typically a single performance obligation that is satisfied at the earlier of when
unconditional contracts to sell are exchanged and control has passed to the customer or when contracts to sell
are completed and title has passed. Revenue from planning promotion agreements is recognised at the point at
which the Group is unconditionally entitled to a share of the disposal proceeds under the terms of the promotion
agreement contract. Payment terms vary on each land sale; where deferred receipts exceed one year from
completion, the transaction price is adjusted to reflect the time value of money. Variable consideration such as an
overage is 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 all parties
The Group has adopted the practical expedient allowed under IFRS 15 “Revenue from contracts with customers” that
states an entity need not adjust the amount of consideration for the effects of a significant financing component if the
entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a
customer and when the customer pays for that good or service will be one year or less.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other
components, and for which discrete financial information is available. All segment operating results are reviewed
regularly by the Executive Directors to make decisions about resources to be allocated to the segment and to assess
its performance. Segment results, assets and liabilities include items directly attributable to a segment, as well as those
that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment.
Discontinued operations
A discontinued operation is a component of the Group’s business that represents a separate major line of business
that has been disposed of or has been abandoned. Discontinued operations are presented in the consolidated income
statement in 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 receivables.
Interest income is recognised as it accrues, using the effective interest method.
Finance expenses comprise interest and fees on bank facilities, leases and the unwinding of discounts on deferred
payables. Also included is the amortisation of fees associated with the arrangement of financing. Interest expense is
recognised in the consolidated income statement using the effective interest method.
Government grants
Grants are credited to the consolidated income statement over the period of time in which the conditions are satisfied.
Grants are deducted from the related expense within cost of sales or administrative expenses in the consolidated
income statement.
Leasing
The Group assesses whether a contract is, or contains, a lease at inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets.
For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits
from the leased assets are consumed.
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A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses an
incremental borrowing rate that is the rate of interest that the lessee would have to pay to borrow over a similar term,
and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus any
initial direct costs and an estimate of asset retirement obligations, less any lease incentives. Subsequently, right-of-
use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and are
adjusted for certain remeasurements of the lease liability. Depreciation is calculated on a straight-line basis over the
length of the lease.
The Group applies IAS 36 “Impairment of assets” to determine whether a right-of-use asset is impaired and accounts
for any identified impairment loss in line with the Group’s impairment accounting policy.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line
method, on the following basis:
Property: over the term of the lease for right-of-use assets
Plant and equipment: between three and six years
Depreciation of these assets is charged to the consolidated income statement.
Investments
Investments are stated at cost less impairment.
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, and the costs incurred in promoting land
under planning promotion agreements, 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. The key assumptions underpinning the assessment of
net realisable value are forecast costs to complete, site margins, contingencies, selling prices and expected land values
in the case of land sales and planning promotion agreements. Deferred land purchases are included in inventories at
their net present value.
Shared equity receivables
Shared equity receivables are loans offered to certain customers to assist in the purchase of their home. Shared equity
receivables are recorded at fair value through other comprehensive income (“OCI”), representing the amount receivable
by the Group discounted to present day values. The difference between the nominal value and the initial fair value is
credited over the deferred term to finance income, with the financial asset increasing to its full cash settlement value
on the anticipated receipt date. The Group holds a second charge over property sold under shared equity schemes.
Changes in the fair value of shared equity receivables are recognised in other comprehensive income. Interest
calculated using the effective interest method and impairment losses on shared equity receivables are recognised in the
consolidated income statement.
Trade receivables
Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and cash held in solicitors’ client accounts on the
Group’s behalf and are subject to an insignificant risk of changes in value.
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147
Financial Statements Notes to the Financial Statements
continued
1 Accounting policies continued
Impairment: financial assets
The Group assesses the expected credit losses associated with its financial assets carried at amortised cost on a
forward-looking basis. For trade receivables, the Group applies the simplified approach as permitted by IFRS 9
“Financial instruments”, which requires expected lifetime losses to be recognised from initial recognition of the
receivables.
Impairment: non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs of disposal. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount.
Impairment losses are recognised in the consolidated income statement.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.
Trade and other payables
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using
the effective interest rate method.
Loans and borrowings
Interest bearing bank loans are initially measured at fair value (being proceeds received, net of direct issue costs) and
are subsequently measured at amortised cost. Capitalised finance costs are held in other receivables and amortised
over the period of the facility.
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the consolidated income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying values of assets and liabilities for financial
reporting purposes and the values used for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable
that future taxable profits will be available against which the asset can be utilised.
Employee benefits
Defined contribution pension plans
Obligations for contributions to defined contribution pension schemes are charged to the consolidated income
statement in the period to which the contributions relate.
Share options
Share option schemes allow employees to acquire shares in the ultimate Parent Company. The fair value of options
granted is recognised as an employee expense, with a corresponding increase in equity. The fair value is measured at
grant date and spread over the period during which the employees become entitled to the options. The fair value of
the options granted is measured using generally accepted option pricing models, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual
number of share options that vest, except where forfeiture is due only to performance conditions not being met. These
awards are granted by the ultimate Parent Company and the cost of the share-based award relating to each subsidiary
is calculated, based on an appropriate apportionment, at the date of grant and recharged through intercompany.
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MJ Gleeson plc Annual Report & Accounts 2021 1 Accounting policies continued
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. For Gleeson Homes, 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. For Gleeson Land, the assessment
of net realisable value is performed on a site-by-site basis. Net realisable value is largely dependent on the prospect of
obtaining successful planning consent. Given this, there is some uncertainty over the net realisable value of each site.
These assessments include a degree of inherent uncertainty when estimating the profitability of a site and in assessing
any impairment provisions that 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.
Adoption of new and revised standards
For the year ended 30 June 2021, the Group has applied the following new and revised standards that were mandatorily
effective for an accounting period beginning on or after 1 January 2020.
IFRS 3 “Business combinations” (amended 2018)
IFRS 9, IAS 39 and IFRS 17 “Interest rate benchmark reform” (issued 2019)
IAS 1 and IAS 8 “Definition of material” (issued 2018)
The adoption of these standards and amendments has not had any material impact on the disclosures or amounts
reported in these financial statements.
Standards not yet applied
There are a number of standards and interpretations issued by the International Accounting Standards Board that are
effective for financial statements after this reporting period. The following have not been adopted by the Company in
preparing the financial statements for the year ended 30 June 2021:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest rate benchmark reform – phase 2” (effective 1
January 2021)
IAS 1 “Classification of liabilities” (effective 1 January 2023)
Amendments to IFRS 3 “Business combinations”, IAS 16 “Property, plant and equipment”, IAS 37 “Provisions, contingent
liabilities and contingent assets” (effective 1 January 2022)
Amendments to IAS 1 “Presentation of financial statements” (effective 1 January 2023)
Amendments to IAS 8 “Accounting policies” (effective 1 January 2023)
The application of the standards and interpretations not yet applied is not expected to have a material impact on the
Group and Company’s financial performance or position, or give rise to additional disclosures in the financial statements.
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Financial Statements Notes to the Financial Statements
continued
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 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
Gleeson Homes
Gleeson Land
Total revenue
Divisional operating profit
Gleeson Homes
Gleeson Land
Group administrative expenses
Finance income
Finance expenses
Profit before tax
Tax
Note
2021
£000
2020
£000
265,770
22,805
288,575
140,860
6,321
147,181
37,437
11,080
48,517
(5,434)
377
(1,749)
41,711
(7,839)
33,872
–
33,872
8,960
229
9,189
(3,260)
708
(1,071)
5,566
(758)
4,808
(289)
4,519
Profit for the period from continuing operations
Loss for the year from discontinued operations (net of tax)
3
Profit for the year
The revenue in the Gleeson Homes segment primarily relates to the sale of residential properties. In addition, within
revenue for Gleeson Homes is £1,521,000 relating to land sales (2020: £510,000). All revenue for the Gleeson Land
segment is in relation to the sale of land interests. There is no revenue relating to Group activities.
No single customer accounts for more than 10% of revenue (2020: no single customer).
Balance sheet analysis of business segments:
Gleeson Homes
Gleeson Land
Group activities
Cash net of borrowings
30 June 2021
30 June 2020
Assets
£000
223,328
50,487
4,988
34,331
313,134
Liabilities
£000
(54,892)
(9,106)
(4,205)
–
(68,203)
Net assets/
(liabilities)
£000
168,436
41,381
783
34,331
244,931
Assets
£000
198,201
45,902
1,141
76,807
322,051
Liabilities
£000
(37,082)
(9,831)
(2,533)
(60,000)
(109,446)
Net assets/
(liabilities)
£000
161,119
36,071
(1,392)
16,807
212,605
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MJ Gleeson plc Annual Report & Accounts 2021 2 Segmental analysis continued
Other information:
Gleeson Homes
Gleeson Land
Group activities
2021
2020
Capital
additions
£000
Depreciation
£000
Capital
additions
£000
Depreciation
£000
3,833
6
–
3,839
2,664
107
1
2,772
2,397
13
–
2,410
2,182
106
1
2,289
3 Discontinued operations
The activity of Gleeson Construction Services Limited was previously disclosed as a discontinued operation. Whilst
the Directors expect that Gleeson Construction Services Limited will continue to manage the unwind of historic
construction and employment liability claims, these are now at a level that is wholly immaterial to the Group and this
no longer warrants separate disclosure as a discontinued operation. For this reason, the costs associated with Gleeson
Construction Services Limited of £356,000 have been represented within continuing operations, under Group activities,
in the current year in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”.
Revenue
Cost of sales
Gross loss
Administrative expenses
Operating loss
Loss before tax
Tax
Loss for the year from discontinued operations
2021
£000
–
–
–
–
–
–
–
–
The cash flow statement includes the following relating to the operating loss on discontinued operations:
Operating activities
4 Expenses and auditors’ remuneration
Profit for the year is stated after charging/(crediting):
Staff costs
Depreciation of property, plant and equipment
Impairment of investment properties
Profit on redemption of shared equity receivables
Loss on disposal of property, plant and equipment
Auditors' remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Non-audit services
2021
£000
–
2021
£000
39,814
2,772
–
(230)
200
203
57
–
Note
6
11
15
11
2020
£000
–
–
–
(307)
(307)
(307)
18
(289)
2020
£000
(409)
2020
£000
27,193
2,289
257
(223)
255
115
40
–
151
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Financial Statements Notes to the Financial Statements
continued
5 Other operating income
Profit on redemption of shared equity receivables
Other operating income
6 Staff costs
Wages and salaries
Redundancy
Share-based payments
Social security costs
Other pension costs
Total
Note
15
2021
£000
230
693
923
Group
Company
Note
24
19
2021
£000
33,427
–
1,089
4,109
1,189
39,814
2020
£000
22,499
274
717
2,677
1,026
27,193
2021
£000
2,394
–
758
586
78
3,816
2020
£000
223
59
282
2020
£000
1,498
–
403
294
84
2,279
In January 2021, the Group repaid all furlough grants claimed under the Government’s Coronavirus Job Retention
Scheme. This is reflected as an additional £1,381,000 of staff costs in 2021 to reverse the furlough grant income
recognised in 2020. Prior year redundancy costs relate to an internal reorganisation of our regional structure and our
sales team.
The monthly average number of employees during the year was:
Gleeson Homes
Gleeson Land
Group activities
Group
2021
No.
625
16
4
645
2020
No.
572
15
3
590
The monthly average number of Company employees and Non-Executive Directors during the year was eight
(2020: nine).
Key management remuneration
Key management personnel, as defined under IAS 24 “Related party disclosures”, have been identified as the Board of
Directors, as the controls operated by the Group ensure that all key decisions are reserved for the Board. Full details of
the Directors’ remuneration are provided in the audited part of the Annual Report on Remuneration on pages 114 to 125.
7 Finance income and expenses
Finance income
Interest on bank deposits
Unwinding of discount on long-term receivables
Other interest income
Finance expenses
Interest on bank overdrafts and loans
Bank facility charges
Unwinding of discount on long-term payables
Unwinding of discount on lease liabilities
Other external interest
Net finance expenses
152
2021
£000
–
370
7
377
(818)
(672)
(185)
(72)
(2)
(1,749)
(1,372)
2020
£000
37
640
31
708
(430)
(262)
(256)
(119)
(4)
(1,071)
(363)
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MJ Gleeson plc Annual Report & Accounts 2021 8 Tax
Current tax
Current year expense
Adjustment in respect of
prior years
Current tax expense for
the year
Deferred tax
Current year expense/
(credit)
Adjustment in respect of
prior years
Impact of rate change
Deferred tax expense/
(credit) for the year
Total tax charge/(credit)
Note
20
20
20
Continuing operations
Discontinued operations
Total
2021
£000
7,261
(533)
6,728
674
589
(152)
1,111
7,839
2020
£000
647
91
738
(7)
113
(86)
20
758
2021
£000
2020
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
(18)
(18)
(18)
2021
£000
7,261
(533)
6,728
674
589
(152)
1,111
7,839
2020
£000
647
91
738
(7)
113
(104)
2
740
Corporation tax has been calculated at 18.8% of assessable profit for the year (2020: 14.1%). The applicable UK
corporation tax rate is 19%, which has been effective from 1 April 2017.
The charge for the year can be reconciled to the profit before tax per the consolidated income statement as follows:
Total tax charge reconciliation
Profit before tax from continuing operations
Loss before tax from discontinued operations
Profit before tax
Tax at current corporation tax rate
Expenses not deductible for tax purposes
Non-qualifying depreciation
Relief for share-based payments
Capital allowances super deduction
Land remediation relief
Impact of change in tax rate
Impact of rate differences
Adjustments in respect of prior years – current tax
Adjustments in respect of prior years – deferred tax
Total tax charge and effective tax rate for the year
Note
3
20
2021
2020
£000
41,711
–
41,711
7,925
3
64
(6)
(51)
–
–
(152)
(533)
589
7,839
%
19.0%
0.0%
0.2%
(0.0%)
(0.1%)
–
–
(0.4%)
(1.3%)
1.4%
18.8%
£000
5,566
(307)
5,259
999
7
19
7
–
(182)
(105)
–
(118)
113
740
%
19.0%
0.1%
0.4%
0.1%
–
(3.5%)
(2.0%)
–
(2.2%)
2.2%
14.1%
The difference between the headline rate of 19% and the effective tax rate of 18.8% is primarily driven by the
adjustments in respect of prior year when the tax computations were finalised.
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Financial Statements Notes to the Financial Statements
continued
8 Tax continued
The current tax charge for the year can be reconciled to the profit before tax per the consolidated income statement as
follows:
Current tax charge reconciliation
Profit before tax from continuing operations
Loss before tax from discontinued operations
Profit before tax
Tax at current corporation tax rate
Tax effect of:
Expenses not deductible for tax purposes
Non-qualifying depreciation
Relief for share-based payments
Capital allowances super deduction
Land remediation relief
Impact of capital allowances in excess of depreciation
(Utilisation)/creation of losses
Adjustments in respect of prior years – current tax
Short-term timing differences
Current tax charge for the year
Tax recognised directly in equity
2021
2020
£000
41,711
–
41,711
7,925
122
64
86
(51)
–
(200)
(634)
(533)
(51)
6,728
%
19.0%
0.3%
0.2%
0.2%
(0.1%)
–
(0.5%)
(1.5%)
(1.3%)
(0.1%)
16.1%
£000
5,566
(307)
5,259
999
7
19
(259)
–
(182)
307
85
(118)
(120)
738
Group
Company
Current tax related to equity-settled share-based
payments
Deferred tax related to equity-settled share-based
payments
Total tax credit recognised directly in other
comprehensive income
Note
20
2021
£000
(134)
(168)
2020
£000
(767)
502
(302)
(265)
9 Dividends
Amounts recognised as distributions to equity holders:
Interim dividend for the year ended 30 June 2021 of 5.0p (2020: £nil) per share
Final dividend for the year ended 30 June 2020 of £nil (2019: 23.0p) per share
2021
£000
(55)
(132)
(187)
2021
£000
2,913
–
2,913
%
19.0%
0.1%
0.4%
(4.9%)
–
(3.5%)
5.8%
1.6%
(2.2%)
(2.3%)
14.0%
2020
£000
(112)
45
(67)
2020
£000
–
12,567
12,567
A final dividend of 10.0 pence per share has been proposed for year ended 30 June 2021, equating to £5,831,000
(2020: £nil).
154
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MJ Gleeson plc Annual Report & Accounts 2021 10 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Profit from continuing operations
Loss from discontinued operations
Profit for the purposes of basic and diluted earnings per share
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
– Share-based payments
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Continuing operations
Basic earnings per share
Diluted earnings per share
Discontinued operations*
Basic loss per share
Diluted loss per share
Continuing and discontinued operations*
Basic earnings per share
Diluted earnings per share
*All results classified as continuing for the year ended 30 June 2021 (see Note 3)
2021
£000
33,872
–
33,872
2020
£000
4,808
(289)
4,519
2021
No. 000
2020
No. 000
58,235
55,583
97
58,332
2021
p
58.16
58.07
2021
p
n/a
n/a
2021
p
n/a
n/a
625
56,208
2020
p
8.65
8.55
2020
p
(0.52)
(0.51)
2020
p
8.13
8.04
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Financial Statements Notes to the Financial Statements
continued
11 Property, plant and equipment
Cost or valuation
At 1 July 2019
Initial recognition of right-of-use assets at 1 July 2019
Additions
New leases entered in the year
Disposals
At 30 June 2020
Additions
New leases entered in the year
Leases ended/exited in the year
Disposals
At 30 June 2021
Accumulated depreciation
At 1 July 2019
Charge for the year
Disposals
At 30 June 2020
Charge for the year
Leases ended/exited in the year
Disposals
At 30 June 2021
Net book value
At 1 July 2019
At 30 June 2020
At 30 June 2021
Group
Property
£000
Plant and
equipment
£000
–
2,868
–
191
–
3,059
–
650
(982)
–
2,727
–
475
–
475
476
(161)
–
790
–
2,584
1,937
6,633
551
2,410
93
(1,994)
7,693
3,839
82
–
(1,226)
10,388
4,290
1,814
(1,740)
4,364
2,296
–
(1,019)
5,641
2,343
3,329
4,747
Total
£000
6,633
3,419
2,410
284
(1,994)
10,752
3,839
732
(982)
(1,226)
13,115
4,290
2,289
(1,740)
4,839
2,772
(161)
(1,019)
6,431
2,343
5,913
6,684
Company
Plant and
equipment
£000
1
–
–
–
–
1
–
–
–
–
1
–
1
–
1
–
–
–
1
1
–
–
The Group has recorded a depreciation charge of £2,772,000 (2020: £2,289,000), of which £544,000 (2020:
£395,000) has been charged in cost of sales and £2,228,000 (2020: £1,894,000) in administrative expenses.
At 30 June 2021, the net book value of right-of-use assets was £2,108,000 (2020: £2,946,000), of which £1,940,000
(2020: £2,584,000) is within property and £168,000 (2020: £362,000) is within plant and equipment. The depreciation
charge recorded for right-of-use assets was £749,000 (2020: £761,000).
The Company recorded a depreciation charge of £nil (2020: £1,000).
156
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MJ Gleeson plc Annual Report & Accounts 2021 12 Investments in subsidiaries
Cost
At 1 July 2019
At 30 June 2020
Impairment
At 30 June 2021
Company
£000
100,800
100,800
(1,733)
99,067
The Directors have reviewed the carrying value of investments at the balance sheet date, including the impact of
Covid-19 on underlying operations, and concluded an impairment of £1.7m was necessary. The Directors consider the
carried forward investment carrying values to be appropriate.
Principal subsidiary undertakings
The following are the principal subsidiary undertakings of MJ Gleeson plc. MJ Gleeson plc owns 100% of the ordinary
share capital of the subsidiaries, all of which are incorporated in England and Wales and operate in the United Kingdom.
The registered address for all subsidiary undertakings of MJ Gleeson plc is 6 Europa Court, Sheffield Business Park,
Sheffield, S9 1XE.
Company name
Gleeson Developments Limited
Gleeson Regeneration Limited
Gleeson Developments (North East) Limited
Gleeson Strategic Land Limited
Gleeson Strategic Land (Fleet) Limited1
1. Shares held by Gleeson Strategic Land Limited.
Principal activity
House building
House building
House building
Land promotion and sale
Land promotion and sale
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
2. Shares held by Gleeson Developments Limited.
3. Shares held by MJ Gleeson Group Limited.
4. Shares held by Gleeson Properties Limited.
* Exempt from audit by virtue of s479A of the Companies Act 2006.
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*
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157
Financial Statements Notes to the Financial Statements
continued
13 Inventories
Land held for development
Work in progress
2021
£000
97,550
142,411
239,961
2020
£000
79,941
136,395
216,336
Net realisable value provisions held against inventories at 30 June 2021 were £5,470,000 (2020: £5,249,000). The
amount of inventory write-down recognised as an expense in the period was £1,216,000 (2020: £3,269,000) and
the amount of reversal of previously recognised inventory write-down was £859,000 (2020: £243,000). The cost of
inventories recognised as an expense in cost of sales was £197,533,000 (2020: £107,181,000).
Company
The Company held no inventories at 30 June 2021 (2020: £nil).
14 Trade and other receivables
Current receivables
Trade receivables
VAT recoverable
Prepayments and accrued income
Amounts due from subsidiary undertakings
Non-current receivables
Trade receivables
Shared equity receivables
Group
Company
2021
£000
17,825
3,403
1,150
–
22,378
2,150
2,522
4,672
2020
£000
5,758
1,358
1,212
–
8,328
8,570
3,668
12,238
2021
£000
–
28
357
37,504
37,889
–
–
–
2020
£000
11
20
457
73,442
73,930
–
–
–
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 15 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.
158
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MJ Gleeson plc Annual Report & Accounts 2021 15 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.
The Group’s and Company’s credit risk is primarily attributable to its trade and other receivables. The Group applies a
simplified approach in calculating expected credit losses. The Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime expected credit losses at each reporting date. The expected credit loss
is based on the risk of default estimated by the Group’s management based on prior experience, forward-looking
assessments of the economic environment and relative counter-party risk. For this purpose, a default is determined to
have occurred if the Group becomes aware of evidence that it will not receive all contractual cash flows that are due.
The Directors consider that the carrying value of trade receivables approximates to their fair value and no expected
credit loss is recognised.
The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit ratings
assigned by international credit rating agencies.
At 30 June 2021, the Group’s most significant credit risk was with a listed housebuilder and amounted to £7,569,000
(2020: £10,287,000) of the trade and other receivables carrying amount, with the deferred receivables secured by
way of first legal charge over the land. The fair value of any land held as security is considered by management to be
sufficient in relation to the carrying amount of the receivable to which it relates.
The Group’s remaining credit risk is spread over a number of counterparties and customers.
Group
Financial assets
Cash and cash equivalents
Trade receivables
Shared equity receivables
Financial liabilities
Loans and borrowings
Land payables
Trade and other payables
Lease liabilities
Book value
Carrying value
2021
£000
34,331
19,975
3,002
57,308
2020
£000
76,807
14,328
4,436
95,571
2021
£000
34,331
19,975
2,522
56,828
2020
£000
76,807
14,328
3,668
94,803
Book value
Carrying value
2021
£000
–
(11,373)
(54,249)
(2,322)
(67,944)
2020
£000
(60,000)
(6,852)
(39,296)
(3,083)
(109,231)
2021
£000
–
(11,373)
(54,249)
(2,322)
(67,944)
2020
£000
(60,000)
(6,852)
(39,296)
(3,083)
(109,231)
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Financial Statements Notes to the Financial Statements
continued
15 Financial instruments continued
Company
Financial assets
Cash and cash equivalents
Trade receivables
Financial liabilities
Loans and borrowings
Trade and other payables
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
Book value
Carrying value
2021
£000
1,023
–
1,023
2020
£000
15,313
11
15,324
2021
£000
1,023
–
1,023
2020
£000
15,313
11
15,324
Book value
Carrying value
2021
£000
–
(2,489)
(2,489)
2020
£000
(60,000)
(1,363)
(61,363)
2021
£000
–
(2,489)
(2,489)
2020
£000
(60,000)
(1,363)
(61,363)
Group
Company
2021
£000
19,965
–
8
12
129
20,114
2020
£000
14,182
88
–
2
152
14,424
2021
£000
2020
£000
–
–
–
–
–
–
11
–
–
–
–
11
All trade receivables are from UK customers. The amounts due are included at expected realisable value.
Included in trade receivables not past due are £2,150,000 (2020: £8,570,000) receivables due in more than one year.
In addition to the above, the Company has intercompany receivables which are repayable on demand.
The movement in the allowance for impairment of trade receivables during the year was as follows:
Balance at 1 July
Impairment loss recognised
Release of impairment allowance
Balance at 30 June
Group
Company
2021
£000
96
43
–
139
2020
£000
484
–
(388)
96
2021
£000
2020
£000
–
–
–
–
–
–
–
–
Trade and other receivables deemed to have no reasonable expectation of recovery following unsuccessful attempts
to pursue the debt are written off in the financial statements, but are still subject to enforcement activity. Subsequent
recoveries of amounts previously written off are credited to the consolidated income statement.
Market risk
The Group has no significant exposure to foreign currency risk or equity risk.
160
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MJ Gleeson plc Annual Report & Accounts 2021 15 Financial instruments continued
Interest rate risk
The Group closely monitors its exposure to variations in interest rates but has limited exposure. Loans and borrowings
are set out in note 17. The Group has no other material interest-bearing financial liabilities.
Bank borrowings
Bank overdraft
2021
Weighted average
interest rate
%
2.13
–
£000
–
–
2020
Weighted average
interest rate
%
2.42
2.87
£000
(60,000)
–
Based on average net cash balances during the year, a 0.5% change in interest rates, which the Directors consider to be
a reasonably possible change, would affect profit before tax by £65,000-£86,000 (2020: £62,000).
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources available to meet its obligations as
they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the
expected cash flow timings of financial assets and liabilities with the use of cash and cash equivalents and loans and
borrowings as set out in Note 17. At the balance sheet date, the total unused committed amount was £105,000,000
(2020: £10,000,000) and cash and cash equivalents were £34,331,000 (2020: £76,807,000).
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
30 June 2021
Trade and other payables
Lease liabilities
30 June 2020
Loans and borrowings
Trade and other payables
Lease liabilities
Carrying
amount
£000
(65,622)
(2,322)
(67,944)
Contractual
cash flows
£000
(65,666)
(3,501)
(69,167)
Carrying
amount
£000
Contractual
cash flows
£000
(60,000)
(46,148)
(3,083)
(109,231)
(60,000)
(46,378)
(3,467)
(109,845)
On demand
or within
6 months
£000
(55,423)
(320)
(55,743)
On demand
or within
6 months
£000
(60,000)
(35,961)
(442)
(96,403)
6–12
months
£000
(5,035)
(247)
(5,282)
6–12
months
£000
–
(480)
(391)
(871)
1–2
years
£000
(5,208)
(441)
(5,649)
1–2
years
£000
–
(7,950)
(552)
(8,502)
2–5
years
£000
–
(1,033)
(1,033)
2–5
years
£000
–
(1,987)
(1,329)
(3,316)
More than
5 years
£000
–
(1,460)
(1,460)
More than
5 years
£000
–
–
(753)
(753)
Company
The non-derivative financial liabilities of the Company in the current and prior year are predominantly intercompany
balances that are payable on demand. The external balances are payable within six months.
Fair values
The fair values of the Group’s financial assets and liabilities are not materially different from the carrying values.
Shared equity receivables are measured at fair value through other comprehensive income (“FVOCI”). The following
summarises the major methods and assumptions used in estimating the fair values of financial instruments.
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Financial Statements Notes to the Financial Statements
continued
15 Financial instruments continued
Shared equity receivables measured at FVOCI
Balance at 1 July
Redemptions
Shared equity provision
Unwind of discount (finance income)
Fair value movement recognised in other comprehensive income
Balance at 30 June
Group
2021
£000
3,668
(594)
(600)
49
(1)
2,522
2020
£000
4,436
(793)
–
61
(36)
3,668
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 £594,000 (2020: £793,000) generated a
profit on redemption of £230,000 (2020: £223,000), 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 £33,000 (2020: £13,000) 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
2021
£000
(1)
34
33
2020
£000
(36)
49
13
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 that 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%
162
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MJ Gleeson plc Annual Report & Accounts 2021 15 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%
2021
2020
Increase/
(decrease) in
fair value
£000
Increase/
(decrease) in
fair value
£000
156
(173)
149
181
(204)
173
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 23 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 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.
16 Trade and other payables
Current payables
Trade payables
Lease liabilities
Other taxation and social security
Contract liabilities
Accruals and deferred income
Amounts due to subsidiary undertakings
Non-current payables
Trade payables
Lease liabilities
Group
Company
2021
£000
29,272
566
1,891
2,294
27,004
–
61,027
5,161
1,756
6,917
2020
£000
15,726
923
1,280
1,858
17,578
–
37,365
9,706
2,160
11,866
2021
£000
109
–
68
–
2,312
86,165
88,654
–
–
–
2020
£000
137
–
48
–
1,178
65,510
66,873
–
–
–
Amounts due to subsidiary undertakings are unsecured, repayable on demand, and interest free.
Contract liabilities relate to customer deposits and exchange monies that have not yet met the performance obligations
to be classified as revenue. Of the prior year balance, £1,836,000 (2020: £640,000) has been recognised in revenue in
the current year as the performance obligations were met.
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163
Financial Statements Notes to the Financial Statements
continued
17 Loans and borrowings
Revolving credit facility
2021
£000
–
–
2020
£000
(60,000)
(60,000)
The Directors consider that the carrying amount of loans and borrowings approximates their fair value.
In April 2021, the Group negotiated a committed club facility with Lloyds Bank plc and Santander UK plc. The facility
has a limit of £105m (previously £70m with Lloyds Bank plc), expires in October 2024 and has a one year optional
extension provided by both banks.
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 2021, borrowings covered by
these guarantees amount to £nil (2020: £60,000,000).
These borrowings are secured by a fixed and floating charge over the assets of the Group, and are for a fixed term.
Repayment is due at the end of the fixed term unless the borrowings are extended for a further period of time.
18 Provisions
As at 1 July 2019
Provisions made during the year
As at 30 June 2020
Provisions made during the year
As at 30 June 2021
Current provisions
Non-current provisions
Group
dilapidations
£000
(130)
(85)
(215)
(44)
(259)
2020
£000
(15)
(200)
(215)
2021
£000
(23)
(236)
(259)
Dilapidations
The dilapidations provision covers the Group’s leased property estate. The expected provision needed at the end of
each lease is recognised straight-line over the term of the lease. There is no material uncertainty in either the timing or
amount.
Company
At 30 June 2021, the Company did not have any provisions (2020: £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 £1,190,000 (2020: £1,026,000) represents
contributions payable to the defined contribution pension plan by the Group at rates specified in the plan rules. At 30
June 2021, contributions of £176,000 (2020: £154,000) 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 £78,000 (2020: £84,000) represents contributions payable
to the defined contribution pension plan by the Company at rates specified in the plan rules.
164
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MJ Gleeson plc Annual Report & Accounts 2021 20 Deferred tax assets
Group
At 1 July 2019
Adjustment in respect of prior year
Credit/(charge) to income
Charge to equity
Impact of rate change
Arising on initial recognition of right-of-use assets
At 30 June 2020
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change
At 30 June 2021
Plant and
equipment
£000
332
35
308
–
43
–
718
(344)
(200)
–
54
228
Short-term
timing
differences
£000
Share-based
payments
£000
468
(8)
(120)
–
38
21
399
(151)
67
–
30
345
1,097
–
(266)
(502)
2
–
331
–
93
168
68
660
Losses
£000
762
(140)
85
–
21
–
728
(94)
(634)
–
–
–
Total
£000
2,659
(113)
7
(502)
104
21
2,176
(589)
(674)
168
152
1,233
At the balance sheet date, the Group has unrecognised tax losses of £8,876,000 (2020: £8,866,000) available for
offset against future profits. Losses may be carried forward indefinitely against future taxable trading profits. These
losses have not been recognised as a deferred tax asset as it is not considered probable that there will be suitable
profits or gains available in future periods against which they may be offset. All tax losses previously recognised as a
deferred tax asset have now been utilised (2020: £3,840,000).
Of the total deferred tax asset, £331,000 (2020: £880,000) is expected to be recovered within 12 months of the
balance sheet date.
Company
At 1 July 2019
Adjustment in respect of prior year
Credit to income
Charge to equity
Impact of rate change
Arising on initial recognition of right-of-use assets
At 30 June 2020
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change
At 30 June 2021
Plant and
equipment
£000
Losses
£000
Short-term
timing
differences
£000
Share-based
payments
£000
2
–
–
–
–
–
2
–
–
–
–
2
–
–
85
–
–
–
85
(12)
(73)
–
–
–
33
–
23
–
–
–
56
(14)
29
–
17
88
204
–
22
(44)
6
–
188
–
103
132
54
477
Total
£000
239
–
130
(44)
6
–
331
(26)
59
132
71
567
165
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Financial Statements Notes to the Financial Statements
continued
21 Net cash/(debt)
Cash and cash equivalents
Borrowings
Cash net of borrowings
Lease liabilities
Net cash/(debt)
Group
Company
2021
£000
34,331
–
34,331
(2,322)
32,009
2020
£000
76,807
(60,000)
16,807
(3,083)
13,724
2021
£000
1,023
–
1,023
–
1,023
2020
£000
15,313
(60,000)
(44,687)
–
(44,687)
At 30 June 2021, monies held by solicitors on behalf of the Group and included within cash and cash equivalents were
£4,870,000 (2020: £1,910,000).
No monies were held by solicitors on behalf of the Company at the balance sheet date (2020: £nil).
Net cash/(debt) at 1 July 2019
Recognised on adoption of IFRS 16 on 1 July 2019
Cash flows
New leases
Finance expenses
Net cash/(debt) at 30 June 2020
Cash flows
New leases
Lease disposals
Finance expenses
Net cash/(debt) at 30 June 2021
Cash
and cash
equivalents
£000
30,306
–
46,501
–
–
76,807
(42,476)
–
–
–
34,331
Borrowings
£000
Cash net of
borrowings
£000
Lease
liabilities
£000
–
–
(60,000)
–
–
(60,000)
60,000
–
–
–
–
30,306
–
(13,499)
–
–
16,807
17,524
–
–
–
34,331
–
(3,527)
848
(284)
(120)
(3,083)
723
(732)
842
(72)
(2,322)
Total
£000
30,306
(3,527)
(12,651)
(284)
(120)
13,724
18,247
(732)
842
(72)
32,009
22 Bonds and securities
At 30 June 2021, the Group had bonds and securities of £37,828,000 (2020: £29,456,000) 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.
23 Share capital
Issued and fully paid 2p ordinary shares:
At 1 July 2019
Shares issued during year
At 30 June 2020
Shares issued during year
At 30 June 2021
166
Number
£000
54,587,753
3,479,782
58,067,535
188,253
58,255,788
1,092
69
1,161
4
1,165
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MJ Gleeson plc Annual Report & Accounts 2021 23 Share capital continued
Ordinary shares
The Company has one class of ordinary share that carries no rights to fixed income. All issued shares are fully paid.
During the year, the Group issued 188,253 new ordinary shares at the nominal value of 2 pence per share as a result of
share-based payments as set out in note 24.
In the prior year, the Group issued 2,730,100 new ordinary shares at 600 pence per share with a nominal value of 2
pence each through a share placing, in addition to 749,682 new ordinary shares at the nominal value of 2 pence per
share as a result of share-based payments as set out in note 24.
At 30 June 2021, the Employee Benefit Trusts (“EBT”) held 9,000 shares (2020: 16,000) at a cost of £84,000 (2020:
£107,000) 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.
24 Share-based payments
The Group operates a number of share-based payment schemes, a summary of which is shown below. The share
purchase plans encourage employee share ownership whereby the Company contributes one share for every three
shares purchased and is available to employees after one year of employment. The long term incentive plans (“LTIP”)
are part of the remuneration packages for the Executive Directors and senior management. Additional information
regarding the share-based payment arrangements for the Executive Directors is set out in the Annual Report on
Remuneration on pages 114 to 125. All schemes are equity-settled.
Share purchase plans
MJ Gleeson
Group plan
No. of
shares
MJ Gleeson
Group 2014
plan
No. of
shares
PSP
30/09/2015
No. of
shares
PSP
04/10/2016
No. of
shares
LTIP
12/12/2016
No. of
shares
LTIP
26/09/2017
No. of
shares
LTIP
09/10/2018
No. of
shares
LTIP
10/12/2019
No. of
shares
LTIP
24/09/2020
No. of
shares
Outstanding at
1 July 2019
Granted in the year
Forfeited
Exercised
Outstanding at
30 June 2020
Granted in the year
Forfeited
Exercised
Cancelled
Outstanding at
30 June 2021
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
22,225
–
–
(4,332)
17,893
–
–
(1,815)
–
25,179
8,538
(8)
(4,484)
–
16,078
29,225
20,913
7,282
(15)
279,158
–
–
(3,001) (279,158)
14,000
–
–
276,315 390,062
–
(73,846)
(14,000) (276,315) (147,692)
–
–
67,500
–
–
–
–
212,721
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
168,524
–
–
–
–
–
– (168,524)
–
–
67,500
–
(20,925)
–
–
212,721
–
–
–
(19,969)
–
394,153
–
–
–
–
nil
–
–
46,575
192,752
394,153
nil
nil
12
months
24
months
–
–
–
–
Rolling
scheme
Rolling
scheme
nil
nil
–
–
–
–
£8.48
£8.15
n/a
n/a
n/a
n/a
n/a
n/a
n/a
£4.94
£10.81
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Fair value is used to measure the value of the outstanding options. The weighted average life for all schemes
outstanding at the end of the year was 19 months (2020: 13 months).
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167
Financial Statements Notes to the Financial Statements
continued
24 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
30/09/2015
PSP
04/10/2016
LTIP
12/12/2016
LTIP
26/09/2017
LTIP
09/10/2018
LTIP
10/12/2019
LTIP
24/09/2020
£4.82
£5.95
£5.70
£6.50
£7.04
£8.00
£6.16
£6.15
£0.00
32%
2.00%
3 years
0.76%
£2.37
£6.50
£0.00
30%
3.20%
3 years
0.30%
£3.15
£6.50
£0.00
30%
n/a2
£8.00
£0.00
36%
n/a2
£10.00
£0.00
35%
n/a2
31 months 33 months 33 months
0.98%
£3.41
0.60%
£2.95
0.50%
£3.40
n/a3
£0.00
27%
n/a2
n/a3
£0.00
33%4
n/a2
31 months 33 months
0.10%
£4.644
0.57%
£3.64
5. Expected volatility was determined by calculating the historical volatility of the Company’s share price; volatility was measured over the
previous three years.
6. 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.
7. The 2019 and 2020 LTIP grants include EPS and relative TSR targets for the Executive Directors as set out on page 120 together with non-
market, profit-related targets for other participants. Non-market conditions are not factored into the fair value but are instead captured by
adjusting the number of shares expected to vest.
8. Volatility rates and fair value of options vary based on the type of target set; the weighted average of the three types is shown.
The total share-based payment cost charged to the consolidated income statement was £1,089,000 (2020: £717,000).
25 Capital commitments
At 30 June 2021, the Group had no material capital commitments (2020: £nil). The Company had no capital
commitments (2020: £nil).
26 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 84 to 85.
During the year, the Group exchanged contracts on a conditional agreement to purchase an area of land from Hampton
Investment Properties Ltd (“HIPL”) for £1,050,000. HIPL is a company in which North Atlantic Smaller Companies
Investment Trust plc (“NASCIT”), a substantial holder in the company, holds a majority investment. In addition,
Christopher Mills, a Non-Executive Director of the Company, is considered a related party by virtue of his interest in and
directorship of NASCIT and his position as a Director of HIPL. The land, if purchased, will form part of a new Gleeson
Homes site being developed in the ordinary course of business. Approval of this purchase was granted by the majority
of shareholders at the AGM in December 2019.
Other than disclosed above, there were no other transactions with key management personnel in either the current or
prior year.
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MJ Gleeson plc Annual Report & Accounts 2021 26 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
2021
£000
2,943
2020
£000
1,977
2021
£000
2020
£000
2021
£000
2020
£000
37,504
73,442
(86,165)
(65,510)
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169
Financial Statements Five Year Review
Revenue
Operating profit
Net finance (expense)/income
Profit before tax
Tax charge
Profit after tax
Discontinued operations
Profit for the year
Total assets
Total liabilities
Net assets
2021
£000
288,575
2020
£000
2019
£000
2018
£000
2017
£000
147,181
249,899
196,741
160,384
43,083
(1,372)
41,711
(7,839)
33,872
–
33,872
5,929
(363)
5,566
(758)
4,808
40,999
213
41,212
36,854
165
37,019
32,963
49
33,012
(7,648)
33,564
(6,526)
30,493
(6,488)
26,524
(289)
4,519
(297)
33,267
(257)
30,236
(310)
26,214
313,134
(68,203)
244,931
322,051
(109,446)
212,605
281,240
(77,344)
203,896
242,785
(54,686)
188,099
215,742
(44,371)
171,371
Total dividend per share for the year
Earnings per share from continuing operations
Earnings per share – normalised*
Net assets per share
pence
15.0
58.2
58.2
420
pence
–
8.7
8.1
366
pence
34.5
61.5
61.0
374
pence
32.0
56.0
55.6
345
pence
24.0
49.1
48.5
317
* Normalised earnings per share include discontinued operations in prior years – reported in continuing operations from 2021 onwards.
170
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MJ Gleeson plc Annual Report & Accounts 2021 Our website
For more information on our
homes, investor relations and
career opportunities please
visit www.mjgleesonplc.com.
Further Information
Corporate directory
Registered office
MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield S9 1XE
Registered number
09268016
Incorporated in
England and Wales
Company Secretary
Leanne Johnson
Auditors
PricewaterhouseCoopers LLP
Central Square
29 Wellington Street
Leeds LS1 4DL
Bankers
Lloyds Bank plc
10 Gresham Street
London EC2V 7AE
Santander UK plc
2 Triton Square
Regent’s Place
London NW1 3AN
Solicitors
Skadden, Arps, Slate,
Meagher & Flom (UK) LLP
40 Bank Street
Canary Wharf
London E14 5DS
Stockbrokers
Singer Capital Markets
One Bartholemew Lane
London EC2N 2AX
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
Registrars and transfer
office
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Shareholder information
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: companysecretary@mjgleeson.com
Tel: 0114 261 2900
Financial calendar
Financial year end
30 June 2021
Full year results announced
14 September 2021
Annual General Meeting
15 November 2021
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.
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171171
Other Information Promoting
Land.
Unlocking
Value.
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2
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MJ Gleeson plc
6 Europa Court
Sheffield Business Park
Sheffield
S9 1XE
companysecretary@mjgleeson.com
0114 261 2900
www.mjgleesonplc.com
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