Building Homes.
Changing Lives.
Annual Report and Accounts 2022
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MJ Gleeson plc
specialises in low-cost
house building and
land promotion.
Contents
Strategic Report
Highlights
At a Glance
Our Sustainable Approach
Chairman’s Statement
Market Review
Our Business Model
Our Business Strategy
Key Performance Indicators
Q&A with Management
Chief Executive’s Statement
Business Review
Financial Review
Risk Management
Communities
People
Environment
Sustainability Targets
Task Force on Climate-Related
Financial Disclosures
Sustainability Accounting
Standards Board
Section 172 Statement
Non-financial Reporting
Corporate Governance
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
Remuneration Policy Report
Directors’ Report
Statement of Directors’ Responsibilities
in Respect of the Financial Statements
Financial Statements
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Other Information
Five Year Review
Further Information
Cover image: Ava, Elijah and Acer,
Greymoor Meadows, Carlisle, Cumbria
Acklam Gardens,
Middlesbrough, North Yorkshire
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Changing lives by building affordable, quality homes.
We build our homes putting our customers’ needs first and aim for 5-star
quality across all our sites. We won’t hand over the keys to a home unless
we’re proud to put our name to it.
A couple on the
National Living Wage
can afford to buy a
home on any of our
developments.
Gleeson homes are:
Highly energy efficient
Cheaper to
buy than rent
5-star build quality
Always sold freehold
Built to meet our customers’ needs:
2, 3 or 4-bed
homes
Off-road parking
Brick and block
construction
Front and rear
gardens
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.
Gleeson customers are:
82%
of our homes sold are in
the most deprived areas
of the UK or on
brownfield land.
74% first time buyers
50% single buyers
On low incomes – £24,000
median buyer income
Young – 29 years old
median buyer age
--
Unlocking land for development with a highly successful land
promotion business.
We have a skilled team who navigate sites through the planning system for
sale to other housebuilders to develop. This plays a crucial role in the supply
of new homes.
Gleeson Land has:
+90%
planning success rate
demonstrates our
outstanding
track record.
A pipeline of
over 20,000
plots
Over 3,500 plots in the planning
process plus 3,800 plots allocated
for new homes
MJ Gleeson plc
Annual Report & Accounts 2022
01
Strategic Report Operational highlights
Homes sold
2,000
2021: 1,812
Average selling price
£167,300
2021: £145,800
CO2e emissions
(scope 1 & 2)
1.86 tonnes
per home sold
2021: 2.05 tonnes
Highlights
Financial highlights
Revenue
£373.4m
2021: £288.6m
Profit before tax and
exceptional items
£55.5m
2021: £41.7m
Profit before tax
£42.6m
2021: £41.7m
Earnings per share
(pre-exceptional items)
78.1p
2021: 58.2p
Cash and cash
equivalents
£33.8m
2021: £34.3m
Return on capital
employed
(pre-exceptional items)
25.4%
2021: 21.4%
02
MJ Gleeson plc
Annual Report & Accounts 2022
At a Glance
Our locations
Revenue
£373.4m
revenue
Gleeson Homes £334.6m
(2021: £265.8m)
Gleeson Land £38.8m
(2021: £22.8m)
(2021: £288.6m)
Operating profit1
£56.8m
operating
profit1,2
(2021: £43.1m)
Gleeson Homes £51.2m
(2021: £37.4m)
Gleeson Land £11.1m
(2021: £11.1m)
1 Pre-exceptional items
2 After Group overheads of £5.5m (2021: £5.4m)
Hannah and Daisy, Rainsborough Park, Knottingley, West Yorkshire
Gleeson Homes
We 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
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 mostly in areas of deprivation
or on brownfield sites, regenerating
communities and creating meaningful
spaces where people want to live. Access to
transport, local facilities and employment
are key considerations when choosing the
locations of our developments. Many 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 Land
We 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 all aspects of a site, being
sensitive to local needs and environmental
constraints to ensure we promote sites that
can be delivered sustainably.
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 to
meet their immediate needs, predominantly
in the South of England.
Annual Report & Accounts 2022 03
MJ Gleeson plc
Strategic Report Our Sustainable Approach
Material sustainability issues
In 2021 the Group engaged with stakeholders and undertook a detailed materiality assessment to identify the
environmental, social and economic issues most important to the Group. This assessment considered a wide
range of factors, including the Group’s strategic priorities, risks, stakeholder views, market trends, socio-economic
changes, environmental factors, government policy and other matters. The principal material sustainability issues
identified remain unchanged in the current year and are shown in the table below.
Material
sustainability
issue
What are
the risks?
Affordability
Build quality
Health
and safety
Land
Carbon
emissions
Affordability is the number
one reason our customers
buy a Gleeson home. If
we do not ensure our
homes remain affordable it
would impact our business
model and our ability to
sell new homes to those
who need them most,
predominantly first time
buyers and families on low
to average incomes. This
could negatively impact
our brand and lead to a loss
of sales.
Our customers expect
a high-quality product
from us. If we fail to build
homes that meet their
expectations then it could
result in higher defect
claims, damage brand
reputation and lead to
poor sales.
Health and safety is
a priority 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.
Where
do we see
opportunities?
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
new homes.
Through our absolute focus
on quality and regular
inspection processes, we
are able to minimise the
number of defects and
rectification work required.
We see the opportunity for
continuous improvement
to operate as a 5-star
housebuilder across all sites
ensuring we provide a high-
quality product and service
to all of our customers.
We have made significant
progress this year on health
and safety and will continue
to enhance our health and
safety reporting, training
and awareness across the
business. We have the
opportunity to continue
to improve our health and
safety performance and
have identified a number of
further actions, as set out
on page 65.
Land is a fundamental
Like all companies, we have
component of Gleeson Homes
a role to play in addressing
and the risk of new sustainable
climate change. If we do not
development sites not being
act to reduce our carbon
available to acquire at a low
cost and in areas in need of
emissions, this could result in
damage to the environment
regeneration could impact the
from our operations, being
success of the Gleeson Homes
out of line with other
model and its ability to open
housebuilders and stakeholder
new sites.
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.
expectations, being unable
to meet government policy
requirements, reputational
damage and increased costs
of capital.
Through continued focus
on identifying low-cost
land opportunities in areas
often not viable for other
housebuilders, we keep our
Integrating carbon emissions
tracking and reporting
throughout our business is
enabling us to take action
on the areas that directly
land costs low and ensure our
generate the most emissions.
homes remain affordable. We
There is opportunity to
see continued opportunities
extend this both upstream
to source low-cost land in our
and downstream for our
target geographical areas.
We also continue to identify
new land opportunities
across the South of England
for promotion by Gleeson
Land through proactive land
searching and strong land
agent relationships.
scope 3 emissions and to
improve the data collected.
Through the design of our
homes and adapting our build
processes we can continue to
reduce our carbon footprint.
Further actions are set out on
page 65.
Springfield Meadows, Bolsover, Derbyshire
04
MJ Gleeson plc
Annual Report & Accounts 2022
Material
sustainability
issue
What are
the risks?
Affordability is the number
one reason our customers
buy a Gleeson home. If
we do not ensure our
Our customers expect
a high-quality product
from us. If we fail to build
homes that meet their
homes remain affordable it
expectations then it could
result in higher defect
claims, damage brand
reputation and lead to
poor sales.
would impact our business
model and our ability to
sell new homes to those
who need them most,
predominantly first time
buyers and families on low
to average incomes. This
could negatively impact
our brand and lead to a loss
of sales.
Health and safety is
a priority 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.
Where
do we see
opportunities?
The need for affordable
housing across the UK
continues to grow, which
supports our unique
model and sustainable
Through our absolute focus
We have made significant
on quality and regular
inspection processes, we
are able to minimise the
number of defects and
progress this year on health
and safety and will continue
to enhance our health and
safety reporting, training
business strategy. We have
rectification work required.
and awareness across the
a significant opportunity
to open more sites and
expand our geographical
reach to provide more
We see the opportunity for
business. We have the
continuous improvement
opportunity to continue
to operate as a 5-star
to improve our health and
housebuilder across all sites
safety performance and
people with access to safe,
ensuring we provide a high-
have identified a number of
affordable, high-quality
quality product and service
further actions, as set out
new homes.
to all of our customers.
on page 65.
UN Sustainable Development Goals
The UN Sustainable Development Goals (“SDGs”) 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. We recognise the critical
role that business and industry has in advancing these. As a business we not only transform the lives of
our customers by providing safe, affordable housing, but we understand that there are also many other
stakeholders impacted by our activities. We continue to operate our business in support of six SDGs which
we believe are the most material to our strategy and values.
Affordability
Build quality
Health
and safety
Land
Carbon
emissions
Land is a fundamental
component of Gleeson Homes
and the risk of new sustainable
development 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.
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.
Through continued focus
on identifying low-cost
land opportunities in areas
often not viable for other
housebuilders, we keep our
land costs low and ensure our
homes remain affordable. We
see continued opportunities
to source low-cost land in our
target geographical areas.
We also continue to identify
new land opportunities
across the South of England
for promotion by Gleeson
Land through proactive land
searching and strong land
agent relationships.
Like all companies, we have
a 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.
Integrating carbon emissions
tracking and reporting
throughout our business is
enabling us to take action
on the areas that directly
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 continue to
reduce our carbon footprint.
Further actions are set out on
page 65.
Sustainable
cities and
communities
Gender
equality
Decent work
and economic
growth
Responsible
consumption
and production
Climate
action
Life
on land
MJ Gleeson plc
Annual Report & Accounts 2022
05
Strategic Report Our Sustainable Approach
CONTINUED
Our sustainability targets
Read more about our targets and actions on pages 62 and 63.
55
Target achieved
2021: 556
90%
Target achieved
2021: 89%
Health and safety incident rate (“AIIR”)
will be reduced to the industry
standard or lower in the year
Our employee engagement will be
maintained in the upper quartile of
all companies
90.7%
Target achieved
2021: 90.6%
1.86 tCO2e 2021: 2.05 tCO2e
On track
We will maintain our 5-star customer
recommendation status
We will reduce our carbon emissions
by 30% over three years to 1.75 tonnes
by 2023
06
MJ Gleeson plc
Annual Report & Accounts 2022
Communities
People
Environment
We want to create
attractive, affordable places
for young, first time buyers
to live, creating sustainable
communities.
We are committed to
ensuring all employees,
subcontractors and
suppliers are treated
fairly, kept safe and paid
a fair wage.
Progress:
Delivered 2,000 affordable,
quality homes where they are
needed and created meaningful
spaces where people want to live.
Maintained our 5-star
status based on customer
recommendation scores.
Rolled out our “Customer First”
programme which is focused
on improving the end-to-end
customer experience.
Stepped up our inspections
within 48 hours of obtaining
Certificate of Mortgage Lending
(“CML”), which helps address any
defects ahead of handing over
the keys to our customers.
Developed systems for improved
data collection on all aspects of
inspections, defects management
and customer care.
Maintained accreditation by the
Fair Tax Foundation for paying
our fair share of taxes.
Progress:
Employee engagement has
improved for the third year
in a row, placing Gleeson in
the top 10% of all businesses
independently surveyed.
Enhanced our health and safety
procedures and independent site
inspections on all build sites.
Enhanced our tracking of
near misses and launched
an awareness campaign for
reporting of near misses.
Introduced training and
development passports for
apprentices to ensure all new
starters are onboarded in the
right way.
Enhanced our Modern Slavery
and Human Trafficking Statement
to include wider human rights.
Continued to be accredited as a
Real Living Wage employer.
We take all reasonable
measures to conduct our
business in a way that
minimises our impact
on the environment and
enhances the land we
develop.
Progress:
Further reduced our scope 1 and
2 emissions by 9% to 1.86 tonnes
CO2e per home sold.
Enhanced our data capture on
the embodied and in-use carbon
emissions of our homes, and
understanding of how legislation
will impact this.
Upgraded all forklift trucks
to the latest, energy-efficient
models and committed to
using eco-cabins on all new
development sites.
Introduced a new biofuel policy
and increased our use of biofuel
across the business, which has a
lower carbon footprint.
Continued to monitor waste
generated on sites and maximise
our diversion of waste from
landfill through recycling and
energy recovery.
Macaulay Park, Grimsby, Lincolnshire
MJ Gleeson plc
Annual Report & Accounts 2022
07
Strategic Report
Chairman’s Statement
It is a great source
of satisfaction that
Gleeson has been
recognised by
the independent
consultant People
Insight as one of the
best companies in
the UK to work for.”
Dermot Gleeson
Chairman
08
I am delighted to report that the Group has
delivered a record level of revenue and profit.
This is testimony to the Group’s robust operational
capability and also to the strong demand for our
affordable homes in the North of England and the
Midlands, and for our consented residential sites in
the South.
The continuing demand for affordable homes enabled
us to deliver our medium-term target of doubling our
annual homes sales to 2,000 homes by 2022.
We are not complacent about the risks in the wider
macroeconomic environment. However, we believe that
the affordability and energy-efficiency of our homes
will continue to make them highly attractive to young,
first time buyers who wish to escape the “rent trap” or
who live with their parents and want to get onto the
property ladder.
Performance and dividend
Group revenue increased by 29.4% to £373.4m (2021:
£288.6m), whilst profit before tax and exceptional items
was up 33.1% to £55.5m (2021: £41.7m).
In April 2022, the Company signed the Department for
Levelling Up, Housing and Communities’ (“DLUHC”)
pledge in respect of remediating buildings with life-
critical fire-safety issues on buildings over 11 metres
in which the Group had, over the last 30 years,
some involvement in developing. Based on the work
undertaken on buildings covered under the pledge, the
Group has recorded an exceptional provision this year
of £12.9m. As a result, Group profit before tax after
exceptional items was £42.6m (2021: £41.7m).
The Group continues to maintain a strong financial
position with a well-capitalised balance sheet, ending
the year with cash and cash equivalents of £33.8m
(2021: £34.3m). It also continues to have a £105m
borrowing facility available, provided by Lloyds Bank plc
and Santander UK plc, which was undrawn at year end.
Subject to shareholder approval at the 2022 Annual
General Meeting (“AGM”), the Board proposes to pay a
final dividend of 12.0p per share on 25 November 2022,
to shareholders on the register at the close of business
on 28 October 2022. The total dividend for the year
to 30 June 2022 will be 18.0p. 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.
Strategy
Gleeson Homes is one of the UK’s fastest-growing
housebuilders. Our rate of growth is attributable to the
fact that the business is focused on a segment of the
market where there is both strong current demand and
a structural shortage of supply.
MJ Gleeson plc Annual Report & Accounts 2022 The Gleeson team
It is a great source of satisfaction that Gleeson has
been recognised by the independent consultant People
Insight as one of the best companies in the UK to
work for.
Our vision – Building Homes. Changing Lives. – has
been enthusiastically embraced by our workforce at
every level. It was the commitment and hard work of
the entire team that enabled us to deliver our milestone
target of 2,000 sales during the year. I wish to express
the Board’s deep gratitude to all of our staff and
operatives for their contribution to this remarkable
achievement.
Summary and outlook
This is another excellent performance which reflects not
only the strong operational capability of our business
but also the continuing structural under-supply of
affordable homes for first time buyers on low incomes.
As well as being affordable, our high-quality homes
are also very energy efficient, costing significantly less
to run than most houses in the UK, particularly in the
rented sector. As a result, our homes are much sought
after, and demand remains resilient.
Gleeson Land’s market remained robust throughout
the year and the business delivered a strong result.
Demand in the South of England for quality sites with
sustainable and implementable residential planning
permission remains strong and the division is well-
placed to drive further sustainable growth.
The Board has reviewed a range of macroeconomic
forecasts and, notwithstanding the current outlook
for the broader economy, remains confident that
the Group, with its defensive qualities and unique
position within the wider house building sector, is well-
positioned to deliver further profitable growth in the
current financial year.
Dermot Gleeson
Chairman
14 September 2022
There are nine million rented households in England, of
which just under half are in the North of England and
Midlands, the areas in which we operate. Meanwhile,
74% of the homes that we sold in the financial year
were to first time buyers either living at home or in
rented accommodation. According to Rightmove, the
cost of renting in the UK increased by 12% in the last
12 months and, in our regions, annual rental costs were
16% higher last year than the annual cost of buying a
comparable 2-bed Gleeson home. Moreover, Gleeson
homeowners see significant savings on their energy
bills which are, based on current energy prices, £700
lower per year on a typical 2-bed home compared to
older housing. This saving will continue to rise as the
cost of energy increases.
During the year Gleeson Homes continued to open
more sites than it closed and the division is confident
that its strong land pipeline and the country’s severe
shortage of affordable, energy-efficient homes will
enable it to deliver further sustainable and profitable
growth over the medium and longer term.
We have invested significantly over recent years in
our systems, operating structure and central services
in order to provide ourselves with the ability to
grow and to expand our geographical reach in a
controlled manner.
Gleeson Land will also benefit from the continuing
demand from the major housebuilders for high-quality
consented sites in the South of England. The congestion
in the planning system has exacerbated the shortage of
development land and Gleeson Land is well-placed to
benefit from this over the next three to five years.
Board
James Thomson will step down as Chief Executive
Officer on 31 December 2022 and will be succeeded
on 1 January 2023 by Graham Prothero, currently Chief
Operating Officer at Vistry Group plc.
James has played a pivotal role in achieving the 2,000
homes target for Gleeson Homes and in embedding
the cultural and structural changes needed to ensure
that the Group continues to achieve high levels of
sustainable growth. We are delighted that he has
agreed to remain on the Board as a Non-Executive
Director.
Andrew Coppel resigned in March 2022. Fiona
Goldsmith was subsequently appointed Senior
Independent Director and Elaine Bailey was appointed
Interim Chair of the Remuneration Committee, with
both appointments effective 24 March 2022.
The Board has initiated a search process to appoint a
further Non-Executive Director to the Board this year.
09
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Market Review
Market Review
Amidst the rising costs of living, affordability is now more important than ever. With the average
annual energy bill continuing to increase, buyers are becoming more focused on the superior
energy efficiency of new homes, which far surpasses older housing stock. But with a wavering
government approach on planning policy causing delays and continued supply chain pressures,
the delivery of new homes is not matching up to the country’s needs.
Housing market dynamics
01
Too few homes
are being built
The number of net additional
dwellings fell to 216,000 last
year, with 195,000 of these
from new build completions.
Against this decline it looks
likely the government will
step away from its pledge
of 300,000 new homes per
annum by the middle of this
decade. This shortfall in supply
will invariably lead to pressure
on house prices and could
reduce the ability of young, first
time buyers to get onto the
housing ladder.
Analysis also suggests there
is a need for 145,000 new
affordable homes each year,
which is 67% of net additions
in 2020/21. This compares
to actual affordable housing
delivery for the same period,
including social and affordable
rental, of 52,000 homes, or
24% of net additions. This
demonstrates the chronic
under-supply of affordable
homes in England1.
1 Gov.uk Affordable housing supply,
England
Chart: Gov.uk Components of net
housing supply, England
Net additional dwellings in
England
02
One-third of
homes are
rented
More than one-third of homes
in England are rented, and
that proportion applies equally
in the North and South.
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, 21% of dwellings
in the private rented sector
failed to meet the Decent
Homes Standard. In addition,
the wellbeing of those living
in rented accommodation, as
measured by the average life
satisfaction score, was nearly
10% lower for renters than
homeowners, with some 7% of
rented dwellings also reported
to be overcrowded1.
Not surprisingly, the desire to
own a home remains strong and
the majority of people would
choose to buy a home (87%)
rather than rent (12%)2.
1 English Housing Survey 2020/21
2 British Social Attitudes Survey,
October 2019
Chart: ONS Dwelling stock by tenure
and region, England
Housing tenure by region in
England (millions)
North of England and Midlands
03
Young adults
living at home
is rising
The number of young adults
between the ages of 18 and 25
living at home with parents in
the UK is continuing to rise and
will soon be in excess of 60%.
This has risen by nearly 20%
over the last decade and the
average age of first time buyers
is now 32 years1.
The biggest barrier for
young people to buy a home
remains saving a deposit. The
proportion of young adults
who would need more than
half their annual salary for a
10% deposit for the median
property in their area has
increased from 33% to 78% in
the last 20 years. As a result,
young people are struggling
to get onto the housing
ladder, increasing the risk of
inequality between generations
as older generations benefit
at the expense of younger
generations2.
1 English Housing Survey 2020/21
2
Institute for Fiscal Studies, Barriers
to home ownership for young adults
Chart: Labour Force Survey (LFS), ONS
Total young adults living at
Total young adults living at home
home (18-25 year olds)
(18-25 year olds)
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
7
0
/
6
0
0
2
Government target
Owned
Rented
4.1
South of England and East
1
1
/
0
1
0
2
0
1
/
9
0
0
2
9
0
/
8
0
0
2
8
0
/
7
0
0
2
Net housing supply
2
1
/
1
1
0
2
3
1
/
2
1
0
2
4
1
/
3
1
0
2
5
1
/
4
1
0
2
6
1
/
5
1
0
2
7
1
/
6
1
0
2
8
1
/
7
1
0
2
9
1
/
8
1
0
2
0
2
/
9
1
0
2
1
2
/
0
2
0
2
New build completions
Owned
Rented
4.9
7.7
8.2
65%
60%
55%
50%
45%
7
9
9
1
9
9
9
1
1
0
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
3
1
0
2
5
1
0
2
7
1
0
2
9
1
0
2
1
2
0
2
10 MJ Gleeson plc
Annual Report & Accounts 2022
04
Rental prices
have increased
significantly
Rental prices across the UK
increased between 10.5% and
12.0% in the 12 months to June
2022. Lack of supply, partly
driven by private landlords
exiting the market, is pushing
up rental prices, with some
tenants being priced out of
certain areas. In March 2022,
34% of renters reported their
rent had increased in the last six
months, compared with the 19%
of homeowners who reported
their mortgage payments had
increased1.
As a result, rent affordability is
becoming stretched with single-
person households spending
37% of gross income on rent,
up from the 10-year average
of 36%, and 18.5% for sharers,
up from 18%2. The rate of
rental price growth is expected
to ease this year to a more
moderate 4.5% by the end of
2022, but whether wage growth
improves rent affordability
remains to be seen3.
1 ONS The rising cost of living and its
impact on individuals, April 2022
2 Savills UK housing market update,
July 2022
3 Hometrack, UK Rental market report,
Q1 2022
Chart: ONS Index of private housing
rental prices and private sector
measures of rents
05
Household bills
impacting most
at risk
Higher energy and housing
costs have resulted in more
adults reporting difficulty
in paying their household
bills. At March 2022, 34%
of adults living in the most
deprived areas of England
found it difficult to pay their
bills, compared with 17% in
the least deprived areas of
England. While rising bills will
affect all households, they
disproportionately affect those
in deprived areas.
In addition, a higher proportion
of renters (37%) compared to
homeowners (23%) reported
finding it more difficult to pay
household bills compared with
a year ago. Property renters
are more concentrated in lower
income areas than homeowners
and are therefore more affected
by changes in the cost of living.
Source: ONS The rising cost of
living and its impact on individuals,
April 2022
06
Average
selling prices
are rising
UK average house prices
increased by 12.8% over the
year to May 20221. After the
first UK lockdown, the end
of 2020 saw average house
price growth accelerate. This
continued into 2021 and house
price growth has remained
strong since then. The UK
average house price in May
2022 was £283,000 for all
dwellings (resale and new
build) and £327,000 for new
build alone.
Whilst average new build prices
in the North of England and
Midlands are comparatively
lower (£266,000) than the
South of England and East
(£376,000), that does not
make the prospects of home
ownership any better. For
example, the North East and
Yorkshire and the Humber
continue to have the lowest
levels of home ownership in the
country outside of London2.
1 Gov.uk UK House price index,
May 2022
2 Gov.uk Dwelling stock by tenure
and region, England
Chart: ONS Housing market simple
average house prices
Private rental prices (new lets) percentage
Private rental prices (new lets)
change over the last 3 years
annual percentage change
Percentage of adults reporting
difficulty in paying their usual
household bills
New build average selling prices
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
2019
2020
2021
2022
Homelet rental index
Zoopla
Rightmove
Rightmove
Most deprived quintile
2021
2022
25%
34%
Least deprived quintile
2021
2022
10%
17%
South &
East of
England
North of
England and
Midlands
Gleeson
Homes
£376,000
£266,000
£167,300
MJ Gleeson plc
Annual Report & Accounts 2022
11
Strategic Report Market Review
Market Review
CONTINUED
CONTINUED
Housing market dynamics (continued)
Challenges facing housebuilders
07
Too few homes
built for first
time buyers
08
Too few homes
built where
needed
01
Interest rates
are expected
to rise
Linked to average selling
price is the fact that the
house building industry is not
building enough homes for
sale below £175,000. Only
4% of new homes sold last
year in the North of England
and Midlands were below
£175,000, compared to 96%
that were resale properties.
This compares to properties
over £175,000, where 16%
of properties sold were new
build. This ratio highlights the
under-supply of affordable
new homes.
Whilst there are many older
houses in the resale market,
the age and condition of these
homes often makes them more
expensive to maintain and run.
It is 41% cheaper to heat and
power a 2-bed Gleeson home
versus an average comparable-
sized older dwelling. With
energy prices rising, this will
make a significant financial
difference to the living costs of
new build homeowners.
Source: Land Registry data
Housing transaction volumes
in the North of England and
Midlands
4%
16%
Below
£175,000
Above
£175,000
96%
84%
New build
Resale
The majority of other
housebuilders are focused on
building homes in more affluent
areas. Four out of five new
homes built in 2021 were in
more affluent areas, with less
than one-fifth built in the most
deprived areas in England1. This
disparity shows clearly that not
enough homes are being built
in the areas that need them
the most.
Whilst building new homes is
part of the solution, creating
jobs and opportunities in
these areas will reverse levels
of deprivation over time.
Unsurprisingly, those in the
most deprived areas have
the highest levels of both
employment deprivation
and income deprivation. This
is where the government’s
“levelling up” ambition has
an important role to play in
creating employment in towns
and cities across the North of
England and Midlands.
1 Most deprived areas assessed as
the lowest third using the indices of
multiple deprivation
Chart: Land Registry data
Chart: Gov.uk Indices of multiple
deprivation
In August 2022, the Bank of
England raised UK interest
rates from 1.25% to 1.75%. As
the Bank struggles to contain
inflation, rates will rise in the
coming year. However, it is
widely expected that inflation
will return to more normalised
levels and interest rates are not
expected to reach the highs
seen over a decade ago.
The majority of new build
buyers lock in their mortgage
rates for between two and
five years, thereby protecting
themselves from the short-
term impact of interest rate
increases. A further 0.5% rise in
interest rates would add around
£97 per month to the mortgage
cost of the average new build
home in the North of England
and Midlands.
Mortgage approvals over the 12
months to May 2022 remained
above the historic average
of the last decade and the
relaxation of mortgage lending
rules from August 2022 will
provide a benefit, especially for
first time buyers.
Source: Bank of England
New build homes sold in areas
of deprivation, England
UK interest rates
Other housebuilders
17%
Third most
deprived areas
More affluent
areas
Gleeson Homes
Third most
deprived areas
More affluent
areas
21%
%
10
9
8
7
6
5
4
3
2
1
0
83%
79%
0
0
0
2
2
0
0
2
4
0
0
2
6
0
0
2
8
0
0
2
1
0
0
2
2
1
0
2
4
1
0
2
6
1
0
2
8
1
0
2
0
2
0
2
2
2
0
2
12
MJ Gleeson plc
Annual Report & Accounts 2022
02
Cost of building
a home has
increased
03
Planning delays
risk impacting
new homes
04
Environmental
issues
restricting land
The cost of new housing
materials rose sharply over the
last 12 months, up 22% year-
on-year to April 2022. This
includes changes to fuel duty in
April 2022, which removed the
entitlement to use red diesel
and rebated biodiesel for most
sectors, including construction.
Availability of materials has
started to show signs of
easing. In May 2022, 8.6%
of construction companies
reported not being able to get
the goods, materials or services
they needed compared to 17.5%
a year earlier.
However, labour shortages
continued to be a factor. In June
2022, 25.0% of construction
firms reported experiencing
worker shortages compared to
24.6% six months earlier1.
In addition, new building
regulations and the
Environment Act will add
significantly to the cost of
building homes from next year.
1 Business insights and impact on the
UK economy
Chart: Gov.uk Statistics of building
materials and components
The granting of major
planning applications suffered
a significant decline when
Covid-19 hit and has struggled
to recover since. The planning
process has been slowed not
only by staff shortages in local
councils, but also by local
authorities holding back on
reviewing their Local Plans
while potential changes in
policy are debated and subject
to the political direction on
housing strategy. What is clear,
however, is that delays in the
planning system are putting
pressure on the delivery of
new homes.
The majority of people are
supportive of new homes;
57% support more homes
being built in their local
area, whilst 23% oppose. As
expected, opposition for new
homes is higher from existing
homeowners (28%) than private
renters (15%) and from those
over 45 compared to those
aged 18-251.
1 British Social Attitudes Survey,
October 2019 – Public attitudes to
house building
Chart: ONS, Planning applications
decided and granted, England
Construction material price
index – new housing
Major residential planning
applications granted in England
2017–2022
160
150
140
130
120
110
100
7
1
-
n
a
J
7
1
-
r
p
A
7
1
-
l
u
J
7
1
-
t
c
O
8
1
-
n
a
J
8
1
-
r
p
A
8
1
-
l
u
J
8
1
-
t
c
O
9
1
-
n
a
J
9
1
-
r
p
A
9
1
-
l
u
J
9
1
-
t
c
O
0
2
-
n
a
J
0
2
-
r
p
A
0
2
-
l
u
J
0
2
-
t
c
O
1
2
-
n
a
J
1
2
-
i
p
A
1
2
-
l
u
J
1
2
-
t
c
O
2
2
-
n
a
J
2
2
-
r
p
A
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
7
1
0
2
7
1
0
2
7
1
0
2
7
1
0
2
8
1
0
2
8
1
0
2
8
1
0
2
8
1
0
2
9
1
0
2
9
1
0
2
9
1
0
2
9
1
0
2
0
2
0
2
0
2
0
2
0
2
0
2
0
2
0
2
1
2
0
2
1
2
0
2
1
2
0
2
1
2
0
2
2
2
0
2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
New protections for nature and
the environment in England are
gathering pace, in part enabled
by the Environment Act 2021.
These include targets such
as biodiversity net gain and
restrictions to manage flood
risk, water stress and nutrient
neutrality in certain areas.
The purpose of these is to
restore and protect nature. The
challenge is balancing these
aims with creating habitable
spaces and communities for
people to live.
Nutrient neutrality means
that planning applications in
certain areas are currently
blocked unless developers
can demonstrate there will be
zero nutrient impact on rivers,
estuaries and wetlands. The
Home Builders Federation
estimates that around 100,000
homes are being held up by
nutrient neutrality. Whilst there
are solutions on the horizon,
these may reduce the viability
of new developments in
affected areas and take time to
implement fully.
The requirements for
biodiversity net gain may
also restrict development. It
currently includes brownfield
land sites, which can have a
surprisingly high biodiversity
value, particularly where
a site has “rewilded”. The
requirement to demonstrate a
net biodiversity gain following
completion may, therefore, have
the adverse affect of limiting
the viability of these sites and
deterring regeneration.
MJ Gleeson plc
Annual Report & Accounts 2022
13
Strategic Report Our Business Model
Group business model
Gleeson Homes contributes 90% of Group revenue and operating profit and is
the key driver of growth in the business. The Homes division requires significant
capital investment in land and work in progress as we acquire new sites to build
more high-quality, affordable homes.
Gleeson Homes
Land acquisition
Planning
Designing homes
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.
Gleeson Land
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.
Our homes are designed
to exceed the latest
planning and building
regulations.
For example, we are
moving away from
traditional gas central
heating to highly-
efficient air source heat
pumps. This technology
will be used for all new
specification Gleeson
homes and all new homes
from June 2023.
New sites
Promotion
Planning
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.
We engage with
local authorities,
residents, communities,
stakeholder groups and
statutory consultees
to promote land for
sustainable housing
development,
whilst balancing
stakeholder
needs.
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
high levels of liquidity
to invest and grow the
business.
Land
We buy land in areas
of deprivation or
brownfield land, where
homes can be sold at
an affordable price,
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 share our
core 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 where
possible.
Maddy and Jess,
Erin Court,
Chesterfield,
Derbyshire
14
MJ Gleeson plc Annual Report & Accounts 2022 By contrast, Gleeson Land is low capital intensive and highly cash-generative. By
promoting land in attractive areas where there is a strong housing need, it forms part
of the supply chain for other housebuilders. Together, these divisions support the
sustainable growth of the Group and contribute to the delivery of much needed new
homes across England.
Build
Sales process
Outcome
Our health and safety
procedures are designed
to ensure everyone
connected to our sites
remains safe and free
from harm.
We are reducing carbon
emissions in our build
activities and supply
chain and working to
reduce our impact on the
environment including
through waste reduction
and recycling.
Our focus on quality is
absolute and we will not
hand over a home that we
are not proud of.
We strive to provide
a 5-star customer
experience and this
commitment to quality
extends throughout the
customer journey.
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.
Technical
Sales process
Outcome
We have our own in-
house 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.
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.
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.
Value for
stakeholders
Customers
We help our customers
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 and pay
them fairly and on time.
Communities
We regenerate deprived
areas and brownfield
land, leaving a positive
lasting legacy for 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 the
delivery of new homes.
15
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Our Business Strategy
Our business strategy
incorporates our objective
for growth, together with
the environmental, social
and governance priorities
that are most important
to the Group.
Each of these strategic priorities has a link to
the UN SDGs most relevant to our business as
set out on page 5. It is through the achievement
of these strategic priorities and targets that the
Group creates sustainable value for stakeholders
and society.
Sustainable growth
Objective
Increase the number of new homes built and extend our
geographical reach.
Target
Gleeson Homes achieved its medium-term target of selling
2,000 homes per year and intends to continue a high-
growth trajectory over the medium to long term.
Progress
The platform for continued sustainable growth is in place
with a healthy pipeline of sites and a strong regional and
head office management team.
Link to sustainability performance
Our developments create communities that are inclusive,
safe, resilient and sustainable. This year we enabled 2,000
mostly young, first time buyers and people on
low to average incomes to own their own home, escape the
“rent trap” and enjoy the health, wealth and wellbeing
benefits that home ownership provides. Our growth will
enable more people to achieve these benefits in the areas
that need it most. Our growth will also enable more people,
including apprentices, to join Gleeson and be part of an
inclusive and rewarding work environment.
Link to SDGs
Affordability
Objective
Keep our homes affordable by purchasing land at low cost,
managing build costs, sourcing responsibly and building
efficiently, using local suppliers and subcontractors where
possible.
Target
To ensure that a couple in full-time employment on the
National Living Wage can afford to buy a home on any one
of our development sites.
Progress
A couple working full time on the government’s National
Living Wage continue to be able to afford to buy a home
on 100% of our active sales sites.
Link to sustainability performance
Homes on our developments start from as low as £115,000
and the median income of our customers is £24,000, with
50% being single buyers.
We are committed to building high-quality homes that are
affordable to those on the lowest incomes. 79% of the
homes we sold this year were in the most economically
deprived areas of England, where income deprivation
is high.
Affordable housing in these areas is fundamental to allow
people to remain close to friends and family, often in the
communities they grew up in.
Link to SDGs
16
MJ Gleeson plc
Annual Report & Accounts 2022
Daisy and Charlie, Rainsborough Park,
Knottingley, West Yorkshire
Build quality
Objective
Build high-quality, energy-efficient homes to the
specification that our customers expect.
Target
To be a 5-star housebuilder on all our development sites.
Progress
Our customer recommendation score is 90.7%, which puts
us in line with the Home Builders Federation 5-star rating.
Link to sustainability performance
Our customers benefit from safe and affordable housing in
areas that are often blighted by deprivation and neglect.
Many existing houses in these areas, including private and
social rented accommodation, fall short of the Decent
Homes Standard and are often overcrowded. We are proud
that our continued focus on quality, which is reflected in
our strong customer recommendation score, means that
our customers benefit from living in comfortable, modern,
energy-efficient homes.
Link to SDGs
Climate change
Objective
Protect the environment and reduce carbon emissions for
the homes that we build and sell.
Target
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).
Progress
Our scope 1 and 2 carbon emissions per home sold reduced
by 9% in the year, to 1.86 tonnes of CO2e per home sold.
This is a 26% reduction over the last two years. We remain
on track to achieve a 30% reduction by 2023.
Link to sustainability performance
We have made further progress in reducing scope 1 and
2 carbon emissions this year and are making positive
changes to our operations – see details on page 54.
We have also completed trials of installing air source
heat pumps and these will have a significant benefit in
reducing the in-use emissions of the homes we build.
We have controlled our waste generation through
reduction, recycling and waste diversion – see details on
pages 56 and 57. Our sustainable procurement policies
ensure we continue to buy from reputable sources,
including sustainably sourced timber.
Link to SDGs
17
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Our Business Strategy
CONTINUED
Land – Gleeson Homes
Objective
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.
Target
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.
Progress
The average cost per plot acquired in the year was below
15% of expected selling price and four out of every five
sites in the land pipeline are either brownfield or in areas
of deprivation.
Land – Gleeson Land
Objective
Source high-quality sites that are well located to deliver
attractive residential planning consents for sustainable
development.
Target
To obtain more planning permissions in each financial year
than sites sold.
Progress
We acquired seven sites this year. Of the 71 sites in the
portfolio at 30 June 2022, three had the benefit of planning
consent or resolution to grant. Only four sites achieved
planning permission during the year, compared to six sites
sold, due to severe delays in the planning system.
Link to sustainability performance
Our land pipeline stands at 16,814 plots on 160 sites. 78% of
our pipeline plots are located on brownfield land or in the
most deprived areas in England as measured by the indices
of multiple deprivation. These are the areas most in need of
regeneration across the North of England and Midlands.
New sites are carefully selected considering the risks and
mitigations for flooding or water stress, so that our
developments do not unduly impact the land on which
we build.
Link to SDGs
Link to sustainability performance
During the year we submitted planning applications
for 10 sites with the potential to deliver 1,428 plots.
Our applications are sensitive to the local environment,
including protecting greenbelt, National Parks and
Areas of Outstanding Natural Beauty (“AONB”). This
inter-relationship between meeting housing need and
protecting land, ecosystems and biodiversity requires
careful planning and stakeholder engagement.
Link to SDGs
18
MJ Gleeson plc
Annual Report & Accounts 2022
Arthur, The Pastures,
Newark, Nottinghamshire
People, wellbeing, health
and safety
Objectives
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 and culture of the Group and to promote a diverse
and inclusive working environment.
Targets
To reduce our health and safety incident rate (“AIIR”) to
lower than the industry average.
To maintain our employee engagement score in the upper
quartile of all surveyed companies.
Progress
Our AIIR for the year was 55 and was significantly below
the Home Builders Federation’s industry average of 239.
In our latest employee survey, we had a 90%
engagement score, which maintains our position in the
top quartile of all companies surveyed.
Link to sustainability performance
The safety of our people and everyone involved with
our business remains the highest priority. We have
increased the number and frequency of independent
site inspections and the awareness and monitoring of
incidents and near misses. Our health and safety results
this year reflect these improvements.
We are committed to having an inclusive and diverse
workforce that protects human rights, achieves equality
and empowers women in roles that have traditionally
been male occupied. We are committed to developing
young people at the start of their career through our
apprenticeship and graduate programmes. Details
about our people can be found on pages 48 to 51.
Link to SDGs
MJ Gleeson plc
Annual Report & Accounts 2022
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Strategic Report Key Performance Indicators
Sustainability KPIs
Health and safety (AIIR1)
Employee engagement (%)
Customer recommendation
score (%)
Link to strategy:
5
Link to risk:
9, 12
Link to strategy:
5
Link to risk:
7, 12
Link to strategy:
2
Link to risk:
6, 12
CO2e (scope 1 and 2) tonnes
per home sold
First time buyers (%)
Waste (% of waste diverted
from landfill)
Link to strategy:
4
Link to risk:
11, 12
Link to strategy:
3
Link to risk:
1, 2, 6, 12
Link to strategy:
4
Link to risk:
11, 12
Financial KPIs
Cash and cash equivalents
net of borrowings (£m)
Group profit before tax
(pre-exceptional items) (£m)
Return on capital employed2
(%)
Link to strategy:
1
Link to risk:
1, 10
Link to strategy:
1
Link to risk:
1, 2, 3, 4, 5, 10
Link to strategy:
1
Link to risk:
1, 2, 3, 4, 5, 10
Total dividend (pence)
Link to strategy:
1
Link to risk:
1, 10
20
1 Accident Injury Incidence Rate measured
as the number of reportable incidents
per 100,000 employees and on-site
subcontractors.
2 Return on capital employed is calculated
based on earnings before interest, tax
and exceptional items (“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 and
cash equivalents net of borrowings.
2019201820202021202241.330.316.834.333.82019201820202021202232.034.50.015.018.0201920182020202120222.412.462.822.051.8620192018202020212022No data available91889120192018202020212022908988No data available20192018202020212022807484808720192018202020212022989996No data available55635922824855201920182020202120222019201820202021202237.041.25.641.755.52019201820202021202226.625.93.121.425.4Return on capital employedMJ Gleeson plc Annual Report & Accounts 2022 Kayden and Dale, Calverley View,
Bradford, West Yorkshire
Operational KPIs
Gleeson Homes –
Homes sold
Gleeson Homes –
Average selling price (£)
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p
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Strategy
Sustainable growth
Build quality
Affordability
Climate change
People, wellbeing,
health and safety
Land
Link to strategy:
1
Link to risk:
1, 2, 3, 4, 5
Link to strategy:
3
Link to risk:
1, 2, 3, 5, 12
Read more about Our Business
Strategy on pages 16 to 19
Gleeson Homes –
Build sites (year end)
Gleeson Homes –
Land pipeline (plots)
Risks
Link to strategy:
1
Link to risk:
1, 3, 4
Link to strategy:
6
Link to risk:
1, 3, 4
Gleeson Land –
Portfolio (sites)
Link to strategy:
6
Link to risk:
1, 3, 4
Economic environment
Mortgage availability
Land availability
Government policy
and regulations
Build costs and availability
Build quality and
customer service
People
Cyber and IT systems
Health and safety
Financial control
Climate risk
Sustainability
Read more about Risk Management
on pages 34 to 39
MJ Gleeson plc
Annual Report & Accounts 2022
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123456123456789101112201920182020202120221,2251,5291,0721,8122,00020192018202020212022125,200128,900130,900145,800167,3002019201820202021202265697181872019201820202021202212,85213,57513,80115,86316,814201920182020202120226160687171
Q&A with Management
Q What have been the main successes of the
past year?
Five years ago we set a target to double the number
of homes sold to 2,000 by 2022, and I am immensely
proud to say we achieved that target this year despite
the obvious challenges over the last two and a half
years. We couldn’t have achieved this milestone without
the commitment, collaboration and passion of every
one of our colleagues.
Whilst hitting this target is one of the most visible
successes, it is certainly not our only one. In Gleeson
Homes we opened 23 build sites during the year and
added 33 sites to our land pipeline. In Gleeson Land we
sold six sites and added seven to our portfolio.
We continue to make advances in our sustainability
performance (more on that later) and our customer
satisfaction score is 90.7%.
Our employee engagement score is top decile and we
remain an employer of choice.
Q What have been the main challenges?
One of the main challenges for all housebuilders has
been the availability and rising costs of both materials
and labour. We have worked closely with our suppliers
to ensure continued availability of materials and have
been able to increase selling prices to offset the rise
in costs, but we continue to monitor these closely and
take appropriate actions to mitigate the impact.
We also face the ongoing challenge of delays in the
planning system, which is impacting our pipeline of
sites with planning permission in both Gleeson Homes
and Gleeson Land. Despite these challenges, we’ve
been able to increase our geographical footprint and
grow the number of sites on which we’re building.
We have faced
a number of
significant
challenges this
year, but we have
been successful in
navigating these
to continue our
sustainable growth
trajectory.”
James Thomson
Chief Executive
22
MJ Gleeson plc Annual Report & Accounts 2022 Q How has Gleeson improved its sustainability
performance over the past year?
I am proud to say that we achieved, or are on track to
achieve, each of the four key sustainability targets we
set last year. Our health and safety incidents and carbon
emissions decreased whilst our employee engagement
and customer satisfaction scores increased. You can
read more details about each of these on pages 62
and 63.
We have continued to embed sustainable practices
into our operations and we have launched a number of
new initiatives aimed at reducing our carbon emissions
and environmental impact further, whilst continuing
to provide the affordable, high-quality homes our
customers expect from us.
As always, there is more that we can, and should, do to
improve our sustainability performance, and we have
appointed a Group Sustainability Manager to drive this
forward across the business. We have also laid out a
number of actions we are committed to taking this year
on page 65.
Q How has Gleeson invested in its colleagues
over the past year?
As always, I believe that our colleagues are our greatest
asset, and we have continued to invest in them this year.
We created a new role for a Head of Organisational
Development who is responsible for driving forward
the development of talent throughout the business.
This increased focus on development and progression
has seen many of our colleagues promoted into
more senior roles as we strengthen our succession
planning across the business. In order to support
our colleagues in management positions, our Human
Resources team developed and implemented training
for people managers, and over 1,200 hours of training
were delivered to these managers. We also launched
a Wellbeing Toolkit to ensure that all colleagues have
easily accessible resources to support their financial,
social, emotional and physical wellbeing.
Q Why are you stepping down as CEO at the
end of this calendar year?
I am not leaving Gleeson and will remain on the Board
as a Non-Executive Director.
I joined Gleeson three years ago with two clear aims
– deliver 2,000 home sales by 2022 and ensure that
Gleeson has the people, organisational structures and
resources in place to continue to deliver growth in a
sustainable way for the medium and long term, which I
have done. Together with the Board, I have also helped
identify and recruit a new CEO, Graham Prothero, who
has the experience and track record to take Gleeson
forwards.
Q What are you most proud of in your tenure
at Gleeson?
Gleeson would not be what it is without the colleagues
that work here. I am incredibly proud of the passion
that everyone has across the business for “Building
Homes. Changing Lives.” Defining the vision, mission
and values of Gleeson at the start of my tenure has
meant that the business has a clear social purpose and
one that everyone who works here is passionate about.
During my tenure, employee engagement has improved
to be in the top decile, our customer recommendation
scores have improved to over 90% and our health and
safety track record has improved considerably. That
has been supported by investment in people, training,
health and safety, site set-up and the workplace.
Saxon Grange,
Boston,
Lincolnshire
23
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Chief Executive’s Statement
Gleeson Homes builds high-quality, low-cost
homes for first time buyers and people on
low to average incomes, a part of the housing
market that has been chronically underserved
and where demand will continue to outstrip
supply for the foreseeable future.
Five years ago, we set an ambitious target to double the
size of Gleeson Homes with the aim of delivering 2,000
new homes in 2022. Reaching this target has been a
great achievement and everyone at Gleeson should feel
proud of the part they have played.
Whilst we are delighted to have delivered 2,000 new
homes this year, we know that we are barely making
a dent in demand. This drives our ambition and our
resolve to change even more lives than we do today
by building affordable, quality homes, where they are
needed for those who need them most.
Results
Group
Profit before tax and exceptional items increased by
33.1% to £55.5m (2021: £41.7m).
The Group ended the year with cash and cash
equivalents of £33.8m (2021: £34.3m) and continues to
have a strong balance sheet and significant liquidity to
invest in new sites and future growth.
In signing the Department for Levelling Up, Housing
and Communities’ (“DLUHC”) pledge in April 2022,
the Group gave its commitment to investigate
and remediate any life-critical fire-safety issues on
buildings over 11 metres in which the Group had some
involvement in developing over the last 30 years.
Following a detailed assessment of the buildings
covered by the pledge, an exceptional provision of
£12.9m has been recorded this year. This estimate of
the life-critical fire-safety remediation costs for these
buildings is based on reviews and surveys completed
to date. We are in the process of undertaking a
programme of intrusive inspections and fire risk
assessments, where permitted by the building owners.
Like all housebuilders, we have also been subject to
the additional 4% residential property developers tax
(“RPDT”) from April 2022, which was designed to
raise at least £2bn over a 10-year period towards the
government’s cost of dealing with defective cladding.
This comes on top of the planned rise in corporation tax
from April 2023 from 19% to 25%.
Gleeson Homes
As a result of a strong performance in both volume
and selling price, Gleeson Homes delivered a record
operating profit pre-exceptional items of £51.2m, up
36.9% on the previous year (2021: £37.4m).
The delivery of 2,000 homes this year represented a
10.4% increase on the previous year (2021: 1,812 homes),
which had been flattered by delayed completions
carried over from the first Covid-19 lockdown. Growth
in the second half of the year was notably strong with
volumes up 24% following the opening of a record 27
sites in the previous year and a planned step-up in build
rate to pre-Covid levels.
The result for
the year was
an outstanding
performance,
reflecting the
inherent resilience of
our business model.”
James Thomson
Chief Executive
24
MJ Gleeson plc Annual Report & Accounts 2022 The average selling price of homes sold during the
year increased by 14.7% to £167,300 due to underlying
selling prices increasing 11.8% and changes in the mix of
homes sold.
Whilst ensuring that our homes remain affordable, we
were able to increase selling prices at a rate which
ensured that we offset increases in material and labour
costs. This enabled us to increase gross margin by 0.5%
to 29.0% (2021: 28.5%).
We successfully increased our operational footprint,
opening 23 new Gleeson Homes sites and are now
building on 87 sites across the North of England and
Midlands (30 June 2021: 81 build sites). A further 73
sites, which are progressing through a congested
planning system, will allow us to continue growing our
footprint over the coming years.
Gleeson Homes established a new regional office in
West Yorkshire in July 2022 as a result of the growing
pipeline of sites and strong customer demand across
Yorkshire. This is the division’s newest office and brings
the business to a total of nine regions.
We started the new financial year with a forward
order book of 618 plots (2021: 841 plots) reflecting our
intentional management of sales releases to optimise
both prices and the customer journey.
Gleeson Land
Gleeson Land delivered a gross profit for the year of
£13.8m (2021: £13.7m) and operating profit of £11.1m
(2021: £11.1m). The division sold six sites during the year
with the potential to deliver 1,443 plots for housing
development (2021: eight sites, 1,978 plots).
The pipeline of sites is strong and demand from
medium and large housebuilders for well-located,
consented sites continues unabated.
Market
The fundamentals of the housing market, driven by the
structural under-supply of homes in the UK and new
household formation, continue to ensure strong demand.
In our core segment of the market, where the lack of
supply is felt most keenly, we expect this to continue,
reinforced by cost of living pressures which will further
enhance the attractiveness of a Gleeson home even after
factoring in future interest rate rises.
The average selling price of a new build home in our
geographic regions is £266,000, 59% higher than the
average selling price of a Gleeson home at £167,300.
Gleeson Homes is therefore uniquely positioned to
serve customers who might previously have been
considering a more expensive property but who, in the
current environment, will look at more affordable price
points. We are already seeing interest from these value-
driven customers.
Employment levels remain high and mortgage
availability, supported by the recent relaxation of
lending rules, is robust. Whilst the withdrawal of the
Help to Buy scheme, which closes for new applications
in October 2022, means no government support for
homebuyers for the first time in over 20 years, it is not
expected to impact the affordability of, or demand for,
a Gleeson home.
The market served by Gleeson Land for consented
residential development land has also benefitted from
strong demand from housebuilders looking to re-stock
their immediate and short-term land pipelines. As the
issues in the planning system show no signs of being
resolved quickly, the demand for attractive, well-located
sites with residential planning permission is expected to
remain robust.
Following recent corporate transactions in the sector,
Gleeson Land is now one of only two large land
promoters whose interests are aligned with landowners.
Most other large land promoters are owned by a major
developer promoting land for their own development
purposes.
Investing in the future
In 2020 we put in place a number of medium-term
initiatives to reinforce the operational resilience and
performance of the business.
This was underpinned by significant investment
across our systems, operating structure and central
services. We have completed a major review of our
senior management and regional teams. We are now
seeing significant benefits from the investment across
our Commercial, Customer Care, Marketing, HR, H&S
and IT functions. In addition, we have transformed
the look and feel of our sites, and have improved the
customer journey.
We can always do more but, for now, we have
significantly strengthened the business and ensured
that it is well-positioned to grow at pace, sustainably.
Sustainability
Home ownership
Our vision of “Building Homes. Changing Lives.”
and our mission of “Changing lives by building
affordable, quality homes. Where they are needed,
for the people who need them most.” supports UN
Sustainable Development Goal 11 (“Sustainable cities
and communities”) to provide access for all to “safe and
affordable housing”. I am proud that a young working
couple on the National Living Wage can afford to buy
a high-quality home on any one of our developments.
This year 82% of the homes that we sold were either
in the most deprived areas of the country or on
brownfield land in need of regeneration.
Climate and the environment
We have made good progress this year in further
reducing the carbon emissions in our direct operations
by 9%, down to 1.86 tonnes per home sold. This comes
on top of the 18% reduction we achieved the previous
year. The embodied carbon in the homes that we build,
including from our supply chain and our homes in use,
remains a key area of focus and we have significantly
increased the accuracy and our understanding of this
“scope 3” measure this year. We are already taking
steps to switch to lower carbon materials, where viable,
such as using concrete bricks or reconstituted stone
rather than kiln-fired clay bricks.
25
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Chief Executive’s Statement
CONTINUED
Government policy continues to have a significant
impact on the design, construction and materials used
in our homes, brought about through the Future Homes
Standard and changes in building regulations. These
requirements are built into our plans, most notably the
changeover from gas boilers to air source heat pumps
and installation of EV charging points. Whilst these
technologies increase the cost and embodied carbon of
each home we build, they will ultimately have a long-
term benefit in reducing the carbon emissions of our
homes in use over their lifetime.
We are supportive of the measures to improve energy
efficiency and our homes already have better energy
performance ratings than most other homes, with 97% of
our homes having an EPC “B” rating or above. Customers
also benefit from living in an energy-efficient and well-
insulated home. The average Gleeson home requires 49%
less energy to heat and power than existing housing, and
the average Gleeson buyer of a 2-bed home currently
save over £700 per year on their energy bills based on
actual usage data. The saving will continue to rise as the
cost of energy increases.
The increasing push towards nationally described space
standards (“NDSS”) has the unintended consequences
of making homes larger and more expensive despite it
being clear that this is not what many customers want,
and will play a part in increasing the embodied carbon
emissions of building our homes.
People and health and safety
We could not have achieved our 2,000 homes target
without the hard work, commitment, focus and passion
of every single colleague as well as the support of our
subcontractors, supply chain and other professionals. I
am hugely proud of the contribution that everyone has
made in helping us deliver our target.
Our independently-assessed people engagement score
increased from 89% to 90% this year with a higher
response rate across the Group, placing us amongst the
top 10% of all companies surveyed across the country.
As a result, we were recognised by People Insight and
awarded the “Outstanding Workplace” award. This is
an important recognition of the progress that we have
made in developing the culture, values and people
experience across the Group.
On health and safety performance, the number of
reportable incidents fell from 10 last year to one this
year, but we remain ever vigilant. Health and safety has
been an area of significant investment with a focus on
training, safe working practices, site inspections and
reporting. Every development site receives a monthly
visit by independent health and safety inspectors,
which is an important control to ensure we benchmark
ourselves against best-practice in the industry.
Build quality and customer service
Build quality remains a priority and for many customers
buying a Gleeson home represents the single largest
financial commitment of their lives. For this reason, we
have to get it right and meet their expectations in terms
of quality and customer experience.
Putting the customer at the heart of what we do means
understanding what our customers want as part of
26
Carlisle Park,
Rotherham,
South Yorkshire
their home-buying experience. We have invested in our
“Customer First” campaign this year and it is pleasing
to see that this has helped us to maintain our customer
recommendation score at 90.7% (2021: 90.6%), which
keeps us in line with the Home Builders Federation
5-star rating.
Gleeson is already registered under the New Homes
Quality Code (“NHQC”) and we fully support its
principles. Whilst we are already compliant with many
of the NHQC’s obligations, some of our processes are
being updated to meet these new requirements.
Land
Our pipeline of owned and conditionally purchased
sites increased by 6.0% to 16,814 plots on 160 sites. We
continue to target brownfield land and sites in areas of
deprivation and 78% of our pipeline plots are located
on brownfield land or in the most deprived areas. This
is land most in need of regeneration across the North of
England and Midlands.
Gleeson Land added a further seven sites to its portfolio
and has a healthy pipeline of 71 sites, with the potential
to deliver 20,241 plots and 25 acres of commercial
land. Increasingly, to progress these sites successfully,
Gleeson Land has to strike the right balance in delivering
housing numbers with protecting land, ecosystems and
biodiversity. Ultimately, developers are looking for well-
planned, well-located, sustainable sites and getting the
balance right helps us to achieve best value.
MJ Gleeson plc Annual Report & Accounts 2022 S
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Trading and outlook
We have had a good start to the current financial
year. First time buyer demand, driven by the shortage
of new homes, remains strong. Moreover, the cost of
living challenges faced by many home buyers means
the affordability of our homes is leading to additional
interest from customers who might not previously have
considered a Gleeson home.
Gleeson Land is also benefitting from the shortage
of high-quality consented land, exacerbated by
congestion in the planning system. The delays and
complexities in the planning system serve only to fuel
demand and maintain land prices as developers bid for
consented land.
Importantly, we are now seeing the benefits of a
significant investment programme across our systems,
operating structure and central services which
collectively will ensure that the Group has the ability to
grow and expand its geographical reach in a controlled
manner.
As a result, I believe Gleeson is well-positioned to
deliver further profitable growth in the financial year.
James Thomson
Chief Executive Officer
14 September 2022
MJ Gleeson plc
Annual Report & Accounts 2022
27
Business Review
Gleeson Homes
Market context and position
•
Home ownership remains below
aspirational levels
•
•
•
Gleeson Homes is distinct by focusing on
quality, low-cost homes
Gleeson Homes’ growth reflects strong market
demand, which is expected to continue
Affordable housing is a large, resilient and
underserved segment of the market
The housing market remained strong throughout
the year with house prices in the UK growing by
12.8% over the year to May 20221. Whilst house price
increases are widely expected to cool in the short
to medium term, the under-supply of high-quality,
energy-efficient housing is expected to continue to
drive house building activity.
Gleeson Homes is one of the fastest-growing
housebuilders in the sector, having doubled the
number of homes sold over the last five years. We
are focused on a distinctly underserved segment
of the market – young, first time buyers on low to
average incomes – where demand is expected to
continue unabated.
Competitive advantages
•
Affordability is the most important factor for our
customers
•
•
•
It is cheaper to buy a Gleeson home than rent –
with lower energy costs than existing housing
Large and high-quality land pipeline – over eight
years’ supply
Well-designed homes that meet our customers’
needs and expectations
Gleeson Homes’ buyers are motivated to move
by need. The average cost of a new build home in
our geographic areas, the North of England and
Midlands, is 59% higher than the average cost of a
Gleeson home, at £167,300, and it remains cheaper
to buy than to rent.
As the cost of energy continues to rise, buyers are
increasingly focused on energy efficiency, and the
average Gleeson home uses 49% less energy than
existing housing. Whilst the cost of living crisis
may restrict the ability of some first time buyers
to buy from other housebuilders, Gleeson Homes
is well positioned to serve these customers as well
as benefit from home movers who gravitate to our
lower price point.
1 Gov.uk UK House price index, May 2022
28
Results
Gleeson Homes delivered its medium-term strategic
objective of doubling home sales within five years by
completing the sale of 2,000 homes during the year
(2021: 1,812 homes). This was an increase of 10.4% on
the previous year, which had been flattered by delayed
completions carried over from the first Covid-19
lockdown.
Revenue increased by 25.9% to £334.6m (2021:
£265.8m), exclusively from home sales (2021: included
£1.5m from land sales). The average selling price of
homes sold during the year increased by 14.7% to
£167,300 (2021: £145,800), driven by higher underlying
selling prices up 11.8% and changes in the mix of site
locations and house types.
Strong selling price increases more than offset
significant material and labour cost increases, albeit the
issues with materials availability eased in the second
half of the year. As a result, gross profit margin on
homes sold increased to 29.0% (2021: 28.5%).
The increase in the volume of homes sold, average
selling price and gross profit margin resulted in gross
profit increasing by 28.0% to £96.9m (2021: £75.7m,
including £0.4m from land sales). Operating costs were
well controlled after the significant investment made
in the business structure, operations and headcount in
recent years. Administrative expenses as a proportion
of turnover reduced from 14.5% to 13.8% which helped
underlying operating profit increase by 36.9% to
£51.2m (2021: £37.4m, including £0.4m land sales) and
operating margin increased from 14.1% to 15.3%.
Building safety
The Group has established an exceptional provision of
£12.9m for the estimated costs to remediate life-critical
fire-safety issues on buildings over 11 metres in which
the Group had some involvement in developing over the
last 30 years.
Sites
Gleeson Homes opened 23 new build sites during the
year and started the new financial year with 87 active
build sites (2021: 81), of which 61 were actively selling
(2021: 61). This has been achieved despite the ongoing
congestion in the planning system which continues
to impact the time taken to obtain planning consent,
agree pre-start conditions and acquire new sites. Our
average active build sites and sales sites were 83 and
63 respectively (2021: 78 and 64).
Gleeson Homes’ developments are located across
the North of England and the Midlands, with plans
to continue expanding in existing areas and into
neighbouring regions. The business expects to open
a further 22 sites during the new financial year and be
building on approximately 90 sites by 30 June 2023.
MJ Gleeson plc Annual Report & Accounts 2022
Pipeline
Land continues to be available at sensible prices. The
pipeline of owned and conditionally purchased sites
increased by 6.0% to 16,814 plots on 160 sites at 30
June 2022, representing over eight years of sales (2021:
15,863 plots on 152 sites). Of the total plots, 8,478 plots
are owned (2021: 7,930 plots) and 8,336 plots have
been conditionally purchased subject to receiving
planning permission (2021: 7,933).
During the year, 33 new sites were added to the
pipeline, whilst 25 sites were completed or did not
proceed to purchase. In addition to owned and
conditionally purchased plots, there are a further
336 plots (2021: 205 plots) which are being actively
considered for acquisition but will only proceed if they
meet our strict criteria.
Help to Buy
The number of customers using the government’s Help
to Buy scheme, which will close to new applications
in October 2022, reduced as expected to 53% (2021:
69%). The withdrawal of the scheme is not expected to
impact demand and we continue to provide a range of
other bespoke packages to assist potential customers.
These include our Key Worker Priority Programme
and Forces Property Direct programme, which provide
priority access and vouchers toward optional extras for
key workers and military personnel.
Outlook
Strong first time buyer demand, driven by the acute
shortage of new homes, is expected to continue, albeit
with more modest house price growth widely expected
in the short term. Crucially, the affordability of our homes
will help to mitigate the impact of both inflationary
pressures and higher interest rates for first time buyers
and home movers, which will continue to drive demand.
Pipeline
Total plots
16,814
(2021: 15,863)
Total plots
16,814
(2021: 15,863)
Plots owned
8,478
(2021: 7,930)
Plots conditionally
purchased
8,336
(2021: 7,933)
Plots on brownfield
land or areas of
deprivation
13,189
(2021: 12,953)
Plots on greenfield
land or more
affluent areas
3,625
(2021: 2,910)
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Balderstones, Rochdale,
Greater Manchester
Homes sold
2,000 homes
2021: 1,812 homes
Average selling price
£167,300
2021: £145,800
Operating profit
(pre-exceptional items)
£51.2m
2021: £37.4m
Operating margin
(pre-exceptional items)
15.3%
(2021: 14.1%)
MJ Gleeson plc
Annual Report & Accounts 2022
29
Strategic Report
Business Review
CONTINUED
Gleeson Land
Market context and position
•
Gleeson Land is one of the largest residential
land promoters in England
Land promoters deliver two out of every five
consented sites to housebuilders
Planning delays are slowing the residential
planning process
Increasing demand for consented land is leading
to higher land values
•
•
•
The market for consented land remains strong, with
demand being seen from housebuilders of all sizes.
We are receiving a high number of bids on the sites
we bring to market and bidders are seeking to be
more competitive on their offers.
At the same time, the supply of consented land has
been adversely impacted by planning delays which
are affecting both developers and land promoters
alike. The planning process has been slowed by staff
shortages in local councils and local authorities
holding back on reviewing their Local Plans whilst
potential changes in planning policy are uncertain.
Natural England’s guidance on nutrient neutrality,
together with phosphate and nitrate mitigation
requirements, has also caused further delays across
the industry and Gleeson Land is currently unable
to progress planning on nine sites until a resolution
is agreed. These factors have led to pressure on
land supply, which in turn has increased land values,
with annual growth of UK greenfield residential
development land values up 9.9% to June 20221.
Competitive advantages
•
High planning success rate, including
through appeal
•
•
Strong relationships with all major housebuilders
Strong pipeline of sites held under promotion or
option agreements
•
High cash conversion
Gleeson Land specialises in sourcing high-quality
land opportunities to promote for residential
development. We have a dedicated and highly-
skilled team who navigate the complexities of the
planning system, plus an in-house technical team
experienced in dealing with drainage, flooding,
landscaping and other physical site constraints. We
have an outstanding planning success rate of over
90% and bring high-quality, “technically solved”
sites to market.
The business operates a low capital intensity model,
securing land interests either through option or
promotional agreements rather than taking freehold
land ownership, therefore avoiding the speculative
risk on land value. Gleeson Land generates a high
cash return which enables continuous investment in
the portfolio and sites. Our reputation, experience
and relationships with landowners, agents, local
authorities and other stakeholders set us apart.
30
Results
During the year, the business sold six sites with
residential planning permission for 1,443 plots (2021:
eight sites, 1,978 plots) at an average of £9,550 gross
profit per plot (2021: £6,910 per plot). These were
sold to a range of housebuilders, and increasingly we
are seeing housing associations and smaller private
housebuilders bidding on equally competitive terms to
major housebuilders. Total gross profit for the year was
£13.8m (2021: £13.7m).
Revenue from land sales increased to £38.8m (2021:
£22.8m), driven by the mix of option and planning
promotion sites sold (which have different accounting
treatments for revenue recognised on sale). Included
within revenue is £2.5m relating to further phases of
a legacy site sold in 2019. The sites sold in the year
totalled 221 gross acres.
Overheads for the business continue to be well
controlled at £2.7m (2021: £2.6m). As a result, operating
profit remained in line with the prior year at £11.1m
(2021: £11.1m).
Portfolio
This year Gleeson Land added seven sites (904 plots)
to its portfolio secured under option and promotion
agreements, and split two existing sites. Three legacy
sites which were no longer viable to promote were
aborted.
At 30 June 2022, the business had a portfolio totalling
71 sites (2021: 71 sites) with the potential to deliver
20,241 plots (2021: 22,315 plots) plus 25 acres of
commercial land (2021: 44 acres).
The portfolio is expected to realise value over the short,
medium and long term, driven by the planning context
of each site. It continues to have a geographic bias
towards the South of England where land values are
highest.
We continue to see opportunities to add well-located,
attractive sites to the portfolio both through our strong
relationships with land agents and through proactive
in-house land sourcing. We carefully select sites where
we see the potential for development and where we can
unlock maximum value for landowners.
Planning
This year Gleeson Land submitted planning applications
for 10 sites with the potential to deliver 1,428 plots
(2021: 10 sites, 1,281 plots). Whilst in the prior year the
slowdown in the planning system was attributable to
the impact of Covid-19, other factors are now delaying
applications in certain local authorities including
potential changes to planning policy and environmental
issues such as nitrate and phosphate mitigation and
nutrient neutrality.
Whilst the planning system remains extremely
congested, our team is experienced in navigating these
challenges and we have a record number of sites being
promoted through the planning system.
1 Savills Residential Development Land Q2 2022
MJ Gleeson plc Annual Report & Accounts 2022
m
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Water Lane,
North Angmering,
West Sussex
(525 plots)
Plots sold
1,443
(6 sites)
2021: 1,978 (8 sites)
Portfolio
71 sites
2021: 71 sites
Operating profit
£11.1m
2021: £11.1m
Outlook
Although the shortage of consented land in the market is
having a positive increase in land values, a cautious approach
is maintained for the future outlook. Land value growth is
expected to slow as developers contend with more modest
house price growth and supply chain pressures. However,
Gleeson Land is well positioned to deal with the market
dynamics with an agile, low capital intensity model and
resources to invest in its portfolio. It has a strong pipeline
of sites at different stages in the planning process that will
continue to support profit delivery and growth.
Portfolio planning status
Sites with planning consent or resolution to grant
11
11
2020
2020
2021
2021
2022
2022
6
6
3
3
Sites awaiting planning decision
7
7
2020
2020
2021
2021
2022
2022
Portfolio (plots)
Planning consented or resolution to grant
Planning consented or resolution to grant
Planning submitted
Planning submitted
15
15
16
16
Total
20,241
(2021: 22,315)
Promotion agreement:
13,564 plots
(2021: 14,583)
Held under option:
6,188 plots
(2021: 6,953)
Freehold:
489 plots
(2021: 779)
Planning consented or resolution to grant
MJ Gleeson plc
Annual Report & Accounts 2022
31
Strategic Report
Financial Review
The Group
delivered a strong
performance for the
year with revenue
up 29.4% and
underlying profit
before tax and
exceptional items up
33.1%.”
Stefan Allanson
Chief Financial Officer
32
Strong trading results – pre-exceptional items
Group revenue increased by 29.4% to £373.4m (2021:
£288.6m) as a result of significant growth in Gleeson
Homes and the mix of sites sold by Gleeson Land.
Gleeson Homes’ revenue increased by 25.9% to
£334.6m (2021: £265.8m) driven by a 10.4% increase in
the number of homes sold to 2,000 (2021: 1,812) and a
14.7% increase in the average selling price (“ASP”) to
£167,300 (2021: £145,800), driven by underlying selling
prices up 11.8% and changes in the mix of sites and
house types.
Gleeson Land sold six sites in the year (2021: eight
sites). Revenue increased by 70.2% to £38.8m (2021:
£22.8m), driven by the mix of sites sold under option
and promotion agreements.
Underlying gross profit for the Group increased by
24.0% to £110.7m (2021: £89.3m), with gross profit in
Gleeson Homes increasing by 28.0% to £96.9m (2021:
£75.7m). The gross profit margin for Gleeson Homes
increased to 29.0% (2021: 28.5%) as increases in selling
prices more than offset cost inflation. Gross profit for
Gleeson Land remained relatively flat at £13.8m (2021:
£13.7m) due to continued congestion in the planning
system slowing the progress of sites in the pipeline.
Administrative expenses increased by £7.3m (15.5%)
in the year to £54.5m (2021: £47.2m) as investment to
support the future growth of the business continued.
Underlying Group operating profit was £56.8m, a 31.8%
increase (2021: £43.1m) on the prior year. This growth
was driven by the 36.9% increase in operating profit in
Gleeson Homes to £51.2m (2021: £37.4m) with Gleeson
Land operating profit remaining flat at £11.1m (2021:
£11.1m). Group overheads were £5.5m (2021: £5.4m).
Net finance expenses of £1.3m (2021: £1.4m) consisted
of finance expenses of £1.5m (2021: £1.7m) being
interest payable on bank facilities, bank charges and
the unwinding of discounts on deferred payables,
partly offset by finance income of £0.2m (2021: £0.3m)
consisting of the unwinding of discounts on deferred
receivables on land sales and shared equity receivables.
As a result, the Group delivered underlying profit before
tax and exceptional items of £55.5m (2021: £41.7m).
Exceptional items – building safety provision
In April 2022, MJ Gleeson plc signed the Department
for Levelling Up, Housing and Communities’ (“DLUHC”)
pledge, taking responsibility for performing or funding
mitigation works to address life-critical fire-safety issues
on buildings over 11 metres in which the Group had,
over the last 30 years, some involvement in developing
and to secure withdrawal of those buildings from the
Building Safety Fund and ACM Funds.
Following the detailed assessment of the buildings
covered by the pledge, an exceptional provision of
£12.9m was recorded. This is management’s best
estimate of the life-critical fire-safety remediation
costs for these buildings based on reviews and surveys
completed to date. We are in the process of undertaking
a programme of intrusive inspections and fire risk
assessments, where permitted by the building owners.
MJ Gleeson plc Annual Report & Accounts 2022 Cash and bank facilities
The Group generated cash before financing activities
of £9.7m (2021: £21.2m). After dividend payments of
£9.3m, lease payments of £0.5m and the purchase
of own shares of £0.4m, the Group had a net cash
outflow of £0.5m (2021: £42.5m outflow, reflecting
the repayment of borrowings of £60.0m in November
2020).
At 30 June 2022, the Group had cash and cash
equivalents of £33.8m (2021: £34.3m).
The Group continues to have a £105m borrowing facility
available, provided by Lloyds Bank plc and Santander
UK plc.
Dividends
As a result of the strong financial performance in the
year and our confidence in our future growth, the
Board proposes a final dividend of 12.0p per share,
which equates to £7.0m. The dividend will be paid on
25 November 2022 to shareholders on the register at
the close of business on 28 October 2022. Combined
with the interim dividend of 6.0p per share paid in
April 2022, the total dividend for the year will be 18.0p,
representing an increase of 20% on the prior year (2021:
total dividend of 15.0p per share).
The Board intends to maintain an earnings to ordinary
dividend cover ratio of between three and five times
and expects to continue paying a final dividend
representing two-thirds of the total dividend each year.
Stefan Allanson
Chief Financial Officer
14 September 2022
Tax
The pre-exceptional tax charge was £10.0m, which
represents an effective tax rate of 18.0%. Included in
the tax charge is £0.1m related to the newly-enacted
residential property developers tax (“RPDT”), which
was effective from 1 April 2022 and applies to profit
from residential development activity.
A tax credit of £2.5m was recognised in respect of
the exceptional provision. This resulted in a total tax
charge for the year of £7.5m (2021: £7.8m), reflecting an
effective tax rate of 17.7% (2021: 18.8%).
The effective tax rate will increase from next year as a
result of a full year of RPDT and the planned increase
in the standard rate of corporation tax to 25% from
April 2023.
Profit for the year
Underlying profit after tax for the year increased 34.2%
to £45.5m, while reported profit, net of the exceptional
charge, increased 3.5% to £35.1m (2021: £33.9m).
Earnings per share
Underlying basic earnings per share increased by
34.2% to 78.1 pence (2021: 58.2 pence). Reported basic
earnings per share increased to 60.2 pence (2021: 58.2
pence).
Improved return on capital employed
Pre-exceptional return on capital employed increased
400 basis points to 25.4% (2021: 21.4%) driven by the
strong returns in Gleeson Homes.
Strong balance sheet
During the year to 30 June 2022, shareholders’ funds
increased by 11.1% to £272.2m (2021: £244.9m). Net
assets per share increased to 467 pence, an increase of
11.2% year on year (2021: 420 pence).
Non-current assets increased during the year by 11.9%
to £14.1m (2021: £12.6m). This was primarily due to an
increase in property, plant and equipment of £1.4m,
being mostly the cost of sales offices, show homes and
site compounds.
Current assets increased by 17.6% to £353.5m (2021:
£300.5m), with inventories increasing by £46.9m to
£286.9m, mostly as a result of investment in Gleeson
Homes land and build activity, and trade and other
receivables increasing by £6.8m to £29.2m (2021:
£22.4m). Cash and cash equivalents reduced marginally
from £34.3m to £33.8m. Corporation tax receivable
decreased by £0.3m to £3.6m.
Total liabilities increased by £27.2m to £95.4m (2021:
£68.2m). This includes the £12.9m building safety
provision made in the year, as well as a £10.9m increase
in accruals and deferred income to £37.9m (2021:
£27.0m), and a £2.1m increase in trade payables to
£36.5m (2021: £34.4m). Land creditors remained low at
£10.7m (2021: £7.8m).
33
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Risk Management
Effective risk management is essential to the achievement of our strategic priorities and
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
• Has overall responsibility
for monitoring key risks
The Board
Audit Committee
• 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
• Monitor and manage day-
to-day operational and
financial performance
Divisional Management Teams
•
Identify operational and
strategic risks
Internal Audit
• Ensure internal control
policies set by the Board
are implemented
• Undertakes a programme
of risk-based internal
audit activities
• Provides assurance to the
Audit Committee
• Manages the Group’s
insurance policies
We categorise our risks into two sources:
External – macro risks, outside of our direct control
Operational – risks related to the day-to-day
operation of the business, within our control
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 controls and actions.
The Board has assessed the risks during the year and
determined that the risk relating to the economic
environment has increased due to the current economic
climate and cost of living crisis, while the risk relating to
sustainability has decreased due to mitigating actions
taken by the Group. More detail can be found in the
following risk table.
High
t
c
a
p
m
I
10
2
7
3
9
11
4
5
1
12
6
8
Low
Low
Likelihood
High
34
MJ Gleeson plc Annual Report & Accounts 2022 Risk
1
Economic
environment
Residual risk:
High
Change in year:
Increased
Strategic
priorities:
1, 3
2
Mortgage
availability
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
1, 3
3
Land
availability
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
1, 3, 6
Description of risk
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 new homes and
negatively impact
Group revenue and
profit.
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 land
opportunities in
Gleeson Land, driving
down profitability and
cash flow.
The rapidly-rising cost of
living crisis together with
rising inflation and interest
rates all contribute to
uncertainty in the housing
and land markets and
increase the risk of an
economic downturn.
• Lead indicators of the
economy and housing market
are closely monitored.
• A cautious approach to
funding is maintained.
• Visitor and reservation rates,
prices and incentives are
regularly reviewed.
•
Investment in new sites and
spend are carefully controlled.
Mortgage availability
remains relatively stable and
mortgage approvals have
returned almost to pre-
pandemic levels. Lending
is supplemented by the
government’s 95% LTV
mortgage guarantee scheme
and the relaxation of lending
restrictions.
• 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.
Although land prices have
increased, we continue
to find land available to
purchase at prices that
meet our hurdle rates to
support the growth of
Gleeson Homes.
Gleeson Land continues
to source opportunities to
sign up and promote good-
quality land for development
across the South of England.
• We have a clearly defined land
strategy and geographic focus
which are regularly reviewed
by the Executive Directors.
• We work closely with local
authorities to identify and
purchase 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.
Strategic priorities
1 Sustainable growth
4 Climate change
2 Build quality
3 Affordability
5 People, wellbeing, health and safety
6 Land
Read more about Our Business
Strategy on pages 16 to 19
35
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Risk Management
CONTINUED
Risk
4
Government
policy and
regulations
Residual risk:
High
Change in year:
No change
Strategic
priorities:
1, 3
5
Build
costs and
availability
Residual risk:
High
Change in year:
No change
Strategic
priorities:
1, 2, 3
6
Build quality
and customer
service
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
2
Description of risk
Assessment
Mitigation
Planning regulation
changes due to
changes in government
policy or delays within
the system may affect
the Group’s ability
to secure planning
consents on a timely
basis. Other policy
changes, including
changes to building
regulations, the Future
Homes Standard and
further legislation
relating to building
safety may adversely
impact revenue, profit
and cash flow.
Shortages or increased
cost of materials or
skilled labour, 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.
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 and impact
future revenue and
cash flow.
Changes to building
regulations continue to
change the way our homes
are built and impact build
costs.
Additional environmental
requirements including
biodiversity net gain,
nutrient neutrality and
phosphate and nitrate
mitigation are also creating
new obstacles in pursuing
planning permissions.
Further legislative
changes to building safety
requirements may impact
the costs required to
remediate affected buildings.
Inflationary pressures,
Covid-19, Brexit, and the
war in Ukraine continue to
impact the supply chain
with price increases on
certain labour and materials
together with availability
constraints. Whilst some of
these pressures have eased,
there remains ongoing risk.
• Our planning and technical
experts closely monitor
changes to legislation.
• Forthcoming changes to
building regulations are built
into site cost plans.
• We consult with government,
local authorities and industry
bodies to understand proposed
changes and highlight issues.
• The Board closely monitors
the changes in building safety
legislation and engages with
industry bodies.
• The Group is strategically
procuring supplies ahead of
issues or stoppages on sites.
• Price increases are mitigated
by rising average selling prices.
• Group purchasing
arrangements are in place to
ensure continuity of supply.
• We have strong, established
relationships with key suppliers
and subcontractors.
The customer and customer
experience are at the heart
of what we do. We will not
hand over a new home
where it does not meet our
quality requirements and
we have a strict inspection
process in place. We have
already committed to the
New Homes Quality Code
and we have continued to
invest in our customer care
team and after sales support
to ensure any defects or
issues are rectified quickly.
• We registered early for the
New Homes Quality Code.
• A strict final inspection process
identifies issues and allows
us to remedy these before
handover.
• Our 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 quality control.
• We continue to invest in our
customer care team.
36
MJ Gleeson plc Annual Report & Accounts 2022 Description of risk
Assessment
Mitigation
Risk
7
People
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
5
Failure to attract,
develop and retain
good-quality 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.
The focus on recruitment,
development, and
recognition is reflected in
high scores on our annual
employee survey. The
leadership development
and succession programme
has continued to strengthen
the management team. Our
focus on making Gleeson
one of the best companies to
work for will help to attract,
develop and retain good-
quality people.
8
Cyber and
IT systems
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
1
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.
New working protocols were
put in place following the
sudden shift to working from
home in 2020 to mitigate
the risk of fraud and cyber
crime. We continue to
invest significantly in our IT
systems and networks so
these remain secure and up
to date, whilst continuing to
support remote working as
needed.
• 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 surveys.
• Our people have access to
training throughout their
career at Gleeson.
• Our remuneration policy is
reviewed and benchmarked to
ensure it remains attractive.
•
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.
• Enhanced network and
cyber controls have been
implemented during the year.
9
Health and
safety
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
5
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 health and safety of
our people and anyone
associated with our
developments is paramount
to our business, and we
continued to improve our
training and awareness
across the business.
• Experienced health and safety
team in place to provide
regional support, inspections
and training.
• Our “HomeSafe – everyone,
every day” campaign promotes
the focus on health and safety
awareness across the Group.
• Regular independent
inspections of all
development sites.
•
We have specific actions to
improve health and safety
reporting and performance.
• Documented policies and
procedures are updated to
ensure continued focus and
improvement.
37
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Risk Management
CONTINUED
Risk
10
Financial
control
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
1, 3
11
Climate risk
Residual risk:
Medium
Change in year:
No change
Strategic
priorities:
4
Description of risk
Assessment
Mitigation
The Group could
suffer losses from
financial fraud or error,
poor financial or tax
controls, credit risk
or through having
inadequate insurance.
An inability to meet
obligations as they
fall due 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 be a possible
impediment to future
growth.
The physical effects of
climate change could
result in reduced land
availability, disrupted
build programmes or
shortages of materials
due to more frequent
extreme weather
events.
The risk of financial fraud or
error is closely monitored
by management, the
Audit Committee, and
the Board. 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.
• The Group has robust financial
and tax controls designed to
segregate duties and minimise
opportunities for fraud or error.
• The Group has committed
banking facilities of £105m
until October 2024, shared
between two established
lenders.
• 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.
• External experts are employed
to support the production
of corporation tax and other
returns.
The speed at which climate-
related legislation and
expectations on corporate
business to respond
to climate change is
accelerating. The Group is
taking progressive action
to monitor and reduce the
impact of our activities on
the environment both now
and in the future.
• We undertake detailed
flood, environmental, and
biodiversity assessments as
part of preparing planning
applications.
• We set 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.
38
MJ Gleeson plc Annual Report & Accounts 2022 Risk
12
Sustainability
Residual risk:
Medium
Change in year:
Decreased
Strategic
priorities:
1, 2, 3, 4, 5, 6
Description of risk
Assessment
Mitigation
Stakeholder expectations
relating to corporate
sustainability are rapidly
evolving. We continue to
actively engage with our
stakeholders to understand
expectations, and monitor
sustainability best practice.
The risk has decreased
in the year due to the
appointment of a new Group
Sustainability Manager and
a full year of oversight by
the Sustainability Committee
(established partway
through the prior year), as
well as the implementation
of additional controls and
monitoring relating to our
sustainability targets.
• The Sustainability Committee
oversees the development,
implementation, and reporting
of sustainability initiatives.
• A new Group Sustainability
Manager was appointed during
the year and is responsible for
embedding the sustainability
strategy into operations.
• We publish and monitor clear
targets to ensure our business
operates in a sustainable and
socially responsible way.
• We report in line with the
recommendations of the
Financial Stability Board’s
Task Force on Climate related
Financial Disclosures (“TCFD”)
and Sustainability Accounting
Standards Boards (“SASB”)
Standards.
The Group could
fail to meet the
expectations of our
stakeholders relating
to our sustainability
responsibilities
including climate
change, health and
safety, governance,
build quality and
customer service.
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.
Hardwicke Place,
Hartlepool,
County Durham
39
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Building homes.
We build homes our customers want to live in, that are
designed around their needs.
We build two, three and four-bed homes in a variety of
styles and floorplans designed to suit modern living. All
of our homes feature stylish and well-designed kitchens,
gardens at the front and back of the house and private
driveways for off-street parking. We also offer a wide
range of custom specifications and optional upgrades
including flooring, appliances, landscaping and more,
allowing our customers to tailor their homes to their
taste, needs and budget.
We use high-quality, cost-effective materials in building
our homes and regularly review these to ensure they
continue to best suit our needs. We have sustainable
Group procurement policies for materials, packaging
and waste management and carefully consider the
environmental impact of the elements that go into
building our homes. This year we have significantly
enhanced our understanding of the embodied carbon
emissions from our supply chain as part of quantifying
our scope 3 carbon emissions. More details can be
found in the Environment section on pages 52 to 60.
We recently refreshed the exterior designs of our
homes and are rolling this out across our new
development sites. These have an updated look and
modern feel. We have also added rendering and
reconstituted stone exteriors, as well as contemporary
doors, windows and dormer styles on certain sites.
Communities
We put our
customers
and their
communities
at the heart
of everything
we do.
Our vision and mission are not just
words on a page; they are built into
the fabric of what we do and how
we operate.
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.
40 MJ Gleeson plc
Annual Report & Accounts 2022
Changing lives.
Buying a Gleeson home does not just provide our
customers with a place to live, it can change their lives
in many ways. The customer stories shared here speak
for themselves, and are only a few of the 2,000 lives
changed this year.
In addition to the health and wellbeing benefits that
come from home ownership, there are clear financial
benefits. According to a recent independent report,
nearly half of all 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 generate wealth of £326,000
over thirty years compared with renting, even before
any potential house price gains are factored in.
Wealth creation through
home ownership
Home ownership
Home ownership
Private rental
Private rental
£209,000
Equity gained
after 30 years
£209,000
Equity gained
after 30 years
No asset
No asset
Wealth
created
from buying
£326k
£357,000
Total
payments
£357,000
Total
payments
£474,000
Rental
payments
£474,000
Rental
payments
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
Customer case study – to see more visit mjgleesonplc.com
Changing the lives of
Katie & Liam
Out of their parents’ houses and into their own home
At the ages of 24, Katie and Liam
were ready to move out of their
parents’ homes and into their
own space. Katie is a keen baker
and yearned for her own kitchen
to cook in and Liam was
desperate for a garage for his
bike and tools.
After visiting Gleeson’s Greencroft
View development, Katie and
Liam were surprised and pleased
to find that they would be able to
afford a detached home with a
garden and garage for their first
home, and that their mortgage
would only be £400 per month.
Additionally, using the government’s
Help to Buy scheme meant they
only needed a 5% deposit, allowing
them to purchase their first home
sooner than they expected.
Katie and Liam are thrilled with
their own space and are enjoying
the independence that has come
from home ownership. Liam’s
commute to work has been cut in
half following the move, giving
him a better work-life balance,
and the couple have made new
friends on their development.
Katie said: “After looking at other
developers, we felt like Gleeson
offered the best value for money
and the customer service was
second to none. The Sales
Executive who guided us through
the process was really friendly
and knowledgeable and answered
any questions we had. As first
time buyers, this was invaluable
and made our buying experience
feel really easy, especially in the
early stages when we were
finding our feet with the process.”
Buyers: Katie and Liam (both 24)
Occupations: Recruitment Assistant and Glassblower
Date of purchase: June 2021
Development: Greencroft View, Stanley, County Durham
House type: Kilkenny, 3-bed detached + garage
Purchase price: £139,995
Mortgage cost: £400 per month
Previous rental cost: Lived with parents
Liam said: “Since moving into our
new home, we have a new sense
of freedom and responsibility. We
are really grateful that Gleeson
has given us the opportunity to
get onto the property ladder and
that we have been able to afford
a three-bedroom detached home
at just 24 years old.”
41
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Communities
CONTINUED
Customer case study – to see more visit mjgleesonplc.com
Changing the life of Amber
Giving her the freedom she dreamed of, while saving her money
Amber had dreamed of buying her first
home before she turned 30, which
Gleeson made possible.
Previously, Amber was living with her
partner and renting a small one-bedroom
flat with no outdoor space or parking,
paying £550 per month in rent.
Buyer: Amber (29)
Occupation: NHS Clerk
Date of purchase: April 2022
Development: Linkswood Park, Rotherham,
South Yorkshire
House type: Kerry, 2-bed semi
Purchase price: £117,775
Mortgage cost: £380 per month
Previous rental cost: £550 (1-bed flat)
When her relationship ended and
Amber was looking for her own home,
she was drawn to Linkswood Park, her
local Gleeson development, because
her brother had bought a Gleeson
home on a different development three
years earlier. Through her brother’s
experience and recommendation, she
already knew our homes were
affordable and great quality.
Amber found the plot of her dreams and
reserved it as soon as it was released
for sale. She was even more delighted
that her mortgage would be £170 per
month less than her previous rent.
Amber is thrilled that she chose to buy
a Gleeson home and is enjoying
decorating her blank canvas with none
of the restrictions she had when renting.
Amber said: “I was blown away by the
affordability of a Gleeson home. In my
rented flat I was paying £550 per
month and in my beautiful new home,
which is twice the size, I’m only paying
£380 per month on my mortgage. Plus,
in my new home my energy bills are
really affordable because it is so well
insulated and cosy. I am over the moon
that I’ve got a garage; it helps with
storage and I love that my car is not
parked on a busy main road anymore.
Having my own garden is brilliant too!
I’ve made friends with my neighbours
and have already had them over for a
barbecue. The sense of community on
our development is great and just what
I wanted as a single buyer. I love my
new sense of freedom, being able to
decorate and personalise my home,
having so much more space, and I’m
saving money too!”
Customer case study – to see more visit mjgleesonplc.com
Changing the lives of Ben & Rebecca’s family
From cramped military accommodation to a spacious family home
After 11 years of living in military accommodation, Ben
and Rebecca were thrilled to move into their Gleeson
home in Hull with their two children in December 2021.
After living with the restrictions of military housing
for so long, the couple were ready for their own space
that they could personalise and make their own.
Ben and Rebecca heard about Gleeson through Forces
Property Direct who helped them with their mortgage
process and paperwork, tailoring their advice to the
needs of military personnel. After years of living in
three-bedroom terraced properties with minimal outdoor
space, the detached Renmore, complete with a driveway
and a big garden, was the clear winner for their family.
The couple were delighted to discover how affordable
home ownership actually is, enjoying a relatively low
mortgage cost and low monthly bills due to the energy
efficiency of their new home.
Rebecca said: “It’s a breath of fresh air to have a brand
new home that we can call our own. Prior to buying
with Gleeson, in our rented military houses we couldn’t
put our own stamp on the décor; we had always
dreamt of choosing our own kitchen design or being
able to paint the walls, which Gleeson made possible
with their fantastic options and extras range. Ben has
always wanted a spacious kitchen of his own for
cooking and entertaining, which the Renmore provides.”
Ben said: “Our lives have completely changed for the
better since buying with Gleeson. We love that every
room in our home is a blank canvas with plenty of
space and our sons both have their own bedrooms,
which is brilliant. We’re now closer to family, good
schools and jobs, so it has been a win-win all around.
We’re not wasting our money on rent, and can really
plan for the future in our beautiful new home.”
42
MJ Gleeson plc Annual Report & Accounts 2022 Buyers: Julie (68) and Neville (66)
Occupations: Retired Social Services Care
Worker and Retired Engineer
Date of purchase: November 2021
Development: Barnburgh View, Barnsley,
South Yorkshire
House type: Wicklow, 3-bed semi
Purchase price: £164,995
Mortgage cost: Mortgage free
Customer case study – to see more visit mjgleesonplc.com
Changing the lives of Julie & Neville
Living mortgage free in their forever home
Retirees Julie and Neville were ready to get away
from their noisy, terraced house on a busy road and
enjoy a quieter life. Their old house was too small for
family gatherings and made it difficult to have their
three-year-old granddaughter stay overnight.
Since moving in, Julie and Neville have made friends
with a number of their neighbours. They love having
family over to their new home, and enjoy taking their
granddaughter to the park that Gleeson built on the
development.
Julie and Neville considered buying an older home
but were worried about how much work they would
need to do and the running costs. Prior to discovering
Gleeson, they were put off by the high cost of other
new build homes, and were thrilled to discover they
could live mortgage free in a Gleeson home.
When they visited our Barnburgh View development,
they immediately felt at home. They loved the rolling
fields and picturesque views the development
provided, and felt very welcomed by the Gleeson
sales team. Julie and Neville chose the Wicklow
house style after seeing its open staircase, ample
storage, and roomy bedrooms.
Julie said: “It’s great being mortgage free in our dream
home; we will never need to move again. We love our
home and it’s very energy efficient, which keeps our bills
low. We hardly ever need to have our heating on but are
always warm and cosy, plus being mortgage free means
that we have more money left over at the end of the
month to spend on treating our grandchildren!”
Neville said: “We’re so pleased that we chose to buy a
new build. We’ve loved moving into a freshly-painted
blank canvas, and have enjoyed furnishing it and
creating rooms tailored to our needs. It’s much easier
to have family over now we live in a larger home, and
we’re relishing being able to entertain. Our garden is
ideal with space for the grandkids to play in, a shed, a
bird table, and even an agility station for our dogs.”
Buyers: Ben (32) and Rebecca (36)
Occupations: Armed Forces Chef and Hairdresser
Date of purchase: December 2021
Development: Dane Park, Dunswell, Hull
House type: Renmore, 3-bed detached
Purchase price: £176,000
Mortgage cost: £600 per month
Previous rental cost: £456 (military accommodation)
43
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Communities
CONTINUED
Building affordable, quality homes.
Affordability is one of our key strategic objectives
(see page 16) and supports target one of UN SDG 11 to
“ensure access for all to adequate, safe and affordable
housing”. The UN SDGs we support can be found on
page 5.
Homes on our developments can start from as low as
£115,000 for a 2-bed semi-detached house, depending
on location, and the average selling price is significantly
below the average cost of all new build homes in
England of £327,0001.
Whilst our average selling price increased this year
to £167,300, buying a Gleeson home remains highly
affordable and we continue to meet our requirement
that a couple in full-time employment on the National
Living Wage can afford to buy a home on every one of
our developments.
Additionally, the average selling price of other new build
homes in the North of England and Midlands is 59%
higher than the average selling price of a Gleeson home.
Average selling price of new build homes
in the North of England and Midlands
£266,000
£167,300
Owning a Gleeson home is cheaper than renting.
Mortgage costs are less than the equivalent rental
cost, and with energy costs continuing to increase, the
savings generated from owning an energy-efficient
Gleeson home are significant.
Owning a Gleeson home costs less
than renting – typical 2-bed home
Total
£736
Energy bills4
£142
Rent3
£594
Total
£596
Energy bills4
£83
Mortgage2
£513
Gleeson
Homes
All other
housebuilders
Gleeson
home
Private
rental
1 ONS House price simple averages.
2 Mortgage payments: Standard 90% LTV, 35-year repayment mortgage, fixed payments for five years, from a high street bank at August
2022. Mortgage payments based on average price of a 2-bed Gleeson home during the year.
3 Rental payments: ONS average private rental costs for a 2-bed house in the North of England and Midlands as at June 2022 (adjusted
for 6% p.a. inflation).
4 Energy bills: Average electricity and gas usage using energy prices per August 2022. Gleeson Homes based on actual usage data
provided by British Gas. Private rental based on “Great Homes” website using data from the National Energy Efficiency Database
(gov.uk).
Our focus on affordability does not mean that we
sacrifice on quality in any way. Building high-quality,
energy-efficient homes is one of our key strategic
objectives (see page 17). Our independently assessed
customer recommendation score of 90.7% puts us in
line with the Home Builders Federation 5-star rating,
and we achieved the Gold Award for customer
satisfaction from In-house Research, an independent
third party who conducts our customer
satisfaction surveys.
We proudly offer a Gleeson Quality Charter to all our
customers as our commitment to both a quality home
and exceptional service all the way through the buying
journey and beyond. We have a customer care portal,
MyGleeson, for customers to log issues and receive
updates, and dedicated customer care teams to
promptly deal with issues as they arise. All our homes
come with a 2-year Gleeson warranty and a 10-year
NHBC Build Mark Warranty or similar, and we have
already committed to the government’s New Homes
Quality Charter.
44
MJ Gleeson plc Annual Report & Accounts 2022 Where they are needed.
We build mostly in areas of deprivation or on
brownfield land, preferring to regenerate areas that
have been left derelict, rundown or neglected, which
are often a blight to the local area. We transform this
land into thriving communities, providing much-needed
homes for local residents.
Our customers are often from the local area, with over
half living within 10 miles of their new Gleeson home.
We often have younger customers buying homes near
to their families, or family members buying homes
on the same development to stay near to each
other. Our developments open up new housing
opportunities in locations where there are not
enough high-quality homes available for people
who want to live in the area.
The map shows Gleeson Homes active build sites and
pipeline sites in our target areas in the North of England and
Midlands based on average selling price (shaded darker green)
and affordability (hashed).
For the people
who need them most.
Our customers are often young, first time buyers who
are escaping the “rent trap” or moving out of their
parents’ homes.
We know that this will be the largest purchase many of
our customers have made in their lives, and we support
them through the journey. We can talk potential
customers through a range of support options including
Help to Buy, First Homes and shared ownership options,
as well as recommending trusted mortgage advisers.
We have recently launched a first time buyer podcast
with weekly episodes to help our customers with advice
and tips when buying their first home.
We offer special incentive packages for key workers
and members of the armed forces and are proud to
support these individuals and families as they support
our wider communities.
Gleeson
customers are:
Young
29 years old median buyer age
74%
first time buyers
50%
single buyers
on a low to average income
£24,000
median buyer income
45
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Communities
CONTINUED
Pride in home ownership.
What we don’t do:
We don’t
build flats
We don’t
sell leasehold
We don’t
do part-exchange
We don’t
sell to investors
We foster a sense of pride in home ownership and
engagement in the local community by only selling to
owner occupiers. All our homes are sold with a covenant
that restricts our customers and future owners from
privately letting their homes. We also believe that home
ownership should include the land on which it is built,
and we sell our homes as freehold wherever possible.
We have one remaining development in the North
West where we do not own the land ourselves, and a
peppercorn ground rent is payable on these homes.
We also sell a small number of homes to registered
housing providers who offer shared ownership
opportunities as a way of making home ownership
accessible for more people.
Community beyond our customers.
Our commitment to the community extends
beyond our customers as we aim to make a
difference in the areas in which we build and
contribute in a positive way.
We have a long history of partnering with
local schools, including giving health and
safety talks, inviting school trips onto our
sites for children to learn about house
building and holding “design a bedroom” and
“street naming” competitions. We want our
developments to be part of the community
and get children involved in creating and
burying time capsules or planting flowers
and trees.
We recognise the health and wellbeing
benefits that local sports teams and charities
can bring and offer support and sponsorship
to those local to our developments.
Additionally, our colleagues regularly get
involved in fundraising efforts for local causes.
The Bradley Lowery Foundation, on the next
page, is one such example.
46
MJ Gleeson plc
Annual Report & Accounts 2022
Our commitment to our communities also
extends to good corporate practices. For the
past 10 years, the British public has voted
corporate tax avoidance as the number one
issue that businesses need to address1. We are
proud to do our part in addressing this by
paying our taxes fairly and responsibly, and
reporting on them transparently. This
commitment is demonstrated by our
accreditation with the Fair Tax Mark
Foundation, which we have held since 2020,
when we were the first housebuilder to
achieve accreditation.
1
IBE Survey: Attitudes of the British Public
to Business Ethics 2022, by the Institute of
Business Ethics
The Bradley Lowery
Foundation
One charity that is close to the
hearts of our colleagues is the
Bradley Lowery Foundation in
the North East. The
Foundation is named after
six-year-old Bradley Lowery,
who lost his fight to stage 4
high risk neuroblastoma, a rare
and aggressive form of
childhood cancer. The Bradley
Lowery Foundation aims to
support families who are
fundraising for treatment or
equipment that is not readily
available or covered by the
NHS. Gleeson got involved
with the Foundation because
Bradley used to live across the
street from our Hardwicke
Place, Blackhall Colliery
development in Tees Valley. In
addition to naming two streets
on the development after him
– Bradley Lowery Way and
Sunshine Place – our colleagues
in the region have undertaken
numerous fundraising events
including skydiving and
walking the equivalent of
Land’s End to John O’Groats
to raise almost £9,000.
The Foundation is currently
developing plans to build a
holiday home called “Super
Brad’s Pad” for sick children
and their families and we are
supporting this build both with
our fundraising efforts as well
as involving our suppliers and
contractors where we can.
Annual Report & Accounts 2022 47
MJ Gleeson plc
Strategic Report 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 is our third year running the survey, and both
participation and overall scores have increased every
year. 76% of our colleagues completed the survey this
year, up from 68% last year. Our overall engagement
score increased to 90% which puts us in the top decile
of companies surveyed across the country for employee
engagement. We are incredibly proud that we have
been awarded an “Outstanding Workplace” award,
which reflects this achievement.
We use our personal development review process as a
way to engage with all colleagues in a structured way
at least twice a year. Our people reflect on how they
have demonstrated our shared values and engage in
meaningful conversations with their line manager about
their aspirations, development needs and performance.
People
Our values
and culture
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 subcontractors 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.
48
MJ Gleeson plc Annual Report & Accounts 2022 Achieving our goals relies on
having people in the right roles,
with the right training and
development, who share our vision,
mission and values.
One of our key strategic objectives is to attract, retain
and develop employees who share the values, culture
and objectives of the Group.
How we attract the right employees
Attracting the best candidates and developing talent in
our business is crucial to ensure that we have the right
skills for operational delivery and future growth.
Apprentices
We have a long-standing and active apprenticeship
programme across the business, and we currently
have 79 apprentices – approximately 10% of our total
workforce – training in a variety of office and site-based
roles, including 20 colleagues completing training
through an apprenticeship route as part of further skills
development. 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 once their apprenticeship
is completed.
Graduate programme
In August 2021, we launched our first graduate
programme with 11 new Land Graduates in the Gleeson
Homes land team. This is a two-year structured
programme for university graduates that includes a
blend of on- and off-the-job learning. Graduates receive
mentoring from Gleeson colleagues as well as attending
workshops covering topics including technical land
issues, planning, valuation and commercial management
and interpersonal skills.
Early Talent Partner
In recognition of the importance of attracting and
developing talent early in their careers, we have
appointed a new Early Talent Partner to specifically
focus on developing our apprentice and graduate
programmes and support the development of our
colleagues in these programmes.
Tom, Land Graduate,
Richard, Land Manager,
Rob, Head of Technical, Hardwicke Place,
Hartlepool, County Durham
Supporting our apprentices as they progress
Name: Katie Wilson
Job title: Assistant Quantity Surveyor
Location: Midlands
Why did you choose
a Gleeson apprenticeship?
I chose a Gleeson apprenticeship as it
was a great opportunity to get into the
construction industry and train in an area
that I wanted to progress in. Gleeson has
really supported me in my role and allowed
me to learn and develop to be the best I
can be.
How did you progress following your
apprenticeship?
I started as an Apprentice Quantity
Surveyor and in June 2021 I completed my
Level 3 BTEC Diploma in Construction and
the Built Environment with Distinctions,
along with an NVQ in Construction
Contracting Operations. I am now an
Assistant Quantity Surveyor and am
studying for a Level 4 HNC in Construction
and the Built Environment as part of my
Level 4 Quantity Surveying Apprenticeship
Standard.
What made you want
to progress within
Gleeson?
Gleeson has taken
the time to support
my development and
aspirations. I have
developed incredible on-the-job skills and
practical understanding that wouldn’t have
been possible only by attending college.
What are your future
development aspirations?
I am currently working towards becoming
a fully qualified Quantity Surveyor.
What advice would you give to someone
considering doing an apprenticeship?
Be confident and always be open to taking
on new things!
49
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report People
CONTINUED
How we develop our employees
Continuous development is important both for
individuals as they progress through their careers, and
for the success of our business as we continue to grow.
We support our colleagues’ development in a number
of ways, including:
New appointments
In recognition of the importance of talent development
across the business, we appointed a Head of
Organisational Development, who leads a team made
up of a Learning and Development Manager and the
Early Talent Partner. Together this team is responsible
for driving forward the development of talent
throughout the organisation.
People management training
A new training programme for people managers
was created during the year. People managers
attended three workshops that covered topics
such as manager responsibilities, team wellbeing,
performance management, effective communication
and employment law. Over 1,200 hours of training were
delivered to people managers across the business and
this training is now included in the onboarding process
for new people managers coming into the business as
well as those promoted internally.
Supply Chain Sustainability School
This year we partnered with the
Supply Chain Sustainability School
which aims to upskill those working
within the built environment sector.
This partnership enables us to provide
additional training to colleagues and
to work collaboratively with other
housebuilders, subcontractors and suppliers in the
construction industry to achieve common goals in areas
such as climate action, resource use and biodiversity.
Throughout the next 12 months we will be developing
targeted learning pathways based on job roles to help
upskill and further develop colleagues throughout the
business.
What we do to help retain our employees
We believe that retaining good people depends on
a variety of factors that extend beyond just financial
incentives and are constantly reviewing ways to make
Gleeson an even better place to work.
Communication and engagement
We recognise the importance of keeping employees
informed of operational, financial, and strategic
business matters and do this in a number of ways,
including:
• @Home – a weekly newsletter from the Chief
Executive sent to all colleagues;
• Gleeson Employee Roadshows and Q&A – twice
a year the Executive Directors host all-employee
roadshows to update on progress in the year,
communicate important messages, and answer
questions;
•
the Hub – our company intranet which contains up-
to-date information for employees; and
• videos – over the past two years we have produced
a range of videos introducing Gleeson Homes,
Gleeson Land, our approach to sustainability,
recruitment, and many more which can be found on
our website, mjgleesonplc.com.
In addition, our annual Your Voice survey provides an
opportunity for all employees to provide anonymous
feedback on a wide range of topics. We were pleased
that both participation and overall engagement
increased again this year for the third year in a row.
Wellbeing
In January 2022, we launched our Wellbeing Toolkit,
which is available to all employees on the Hub, the
company intranet. It includes advice, guidance, tips,
support services and information on all areas of
wellbeing including financial, social, emotional and
physical aspects. It also includes details of mental
health support services and contact information for our
Mental Health First Aiders.
We also provide an Employee Assistance Programme
for all employees, and our private healthcare policy
includes up to eight free counselling sessions.
Our focus for the next 12 months will continue to be
targeted around how we can encourage and support
our employees with looking after their wellbeing,
including an emphasis on financial wellbeing due to the
ongoing increases in the cost of living.
Recognition
Our STAR awards are a way to recognise our people 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.
Employee recognition is an area of focus and we
are continually looking to innovate and improve its
effectiveness for both office and site-based colleagues.
Other employee information
Real Living Wage
We are proud to be accredited
as a real Living Wage employer,
which means that we pay all of
our colleagues and subcontractors
at least the real Living Wage, an
independently-calculated rate of
pay that is based on the actual
cost of living. The real Living
Wage exceeds the National Living Wage (set by the
government) and covers all employees aged 18 and
older, with the exception of apprentices. Receiving this
accreditation demonstrates our clear commitment to
our colleagues as well as making it clear that we expect
the same from our suppliers and subcontractors.
Diversity and inclusion
We aim to create a working environment that provides
equal opportunities for all. Promoting and embedding
our values of being passionate, collaborative and
respectful forms the foundation for a diverse and
inclusive work environment.
50
MJ Gleeson plc Annual Report & Accounts 2022 Health and Safety Manager nominated
for 100 Most Influential Women in Construction
Paula Clark, Health and Safety Manager
for the North East division, has been
nominated in the National
Builder Federation Top 100
Most Influential Women
in Construction Awards.
These awards are aimed at
showcasing women in the
sector in order to make female
and non-binary role models
more visible and accessible, and help to
shine a light on those that are working to
support equality, diversity, inclusion and
equity across the industry through their
actions and support of others.
Paula has been at Gleeson for two years and
has been influential in improving awareness
and reducing the risk of accidents and near
misses across her region. We wish her the
best of luck in the awards!
Selection for
employment and
promotion is based
on merit, following an
objective assessment of ability and experience, after
giving full and fair consideration to all applications. We
are also committed to ensuring that our workplaces are
free from discrimination and that everyone is treated
with dignity and respect. All new employees receive
mandatory diversity and inclusion training as part of
their induction.
Every effort is made to retain and support employees
who become disabled while working within the Group
and we continue to remove physical barriers for
disabled colleagues or applicants.
Promoting women in construction
We, and the construction industry overall, need to do
more to promote women working in the industry. We
are continuously seeking ways to reduce the barriers
to women entering and advancing their careers in
construction. We work in partnership with Women in
Construction and Women in Property to develop new
ways of recruiting more females into our organisation
and we are making progress; of the 11 new Land
Graduates hired in the year, eight are female.
We continue to look at the roles in the business
that females occupy and review how our succession
planning programme fits with these roles, including a
talent-mapping exercise. Since beginning this exercise,
many of our internal promotions have been to females
taking on more senior roles, and this is an area which
continues to receive focus.
Gender pay gap
In 2022, our median gender pay gap was 3% (2021: 11%).
This shows that we are making progress on closing the
gap and 48% of women now occupy the upper two pay
quartiles compared to 44% in 2021. Further information
about our gender pay gap and what we are doing to
address it is included in our Gender Pay Gap Review
which is available at mjgleesonplc.com.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
Gender breakdown:
Male
Chairman
Female
Non-Executive Directors
Executive Directors
Senior management
Other employees
531
257
One employee
10 employees
We recognise the importance of gender
equality and inclusivity and understand that
the gender identification employees have on
record may not match how all employees self-
identify as some employees may not identify
as either male or female. For data purposes
none of our colleagues have identified as non-
binary at the time of reporting.
MJ Gleeson plc
Annual Report & Accounts 2022
51
45 tonnes CO2e...
Carbon emissions
Carbon emissions over the life of a Gleeson
home (tonnes)
109
45
43
1.86
Scope 1, 2 & 3
build
Scope 3 in-use
(60 years)
Scope 1 & 2 build
Scope 3 build
Lifetime carbon emissions from a Gleeson home
An average Gleeson home currently generates 154 tonnes
of CO2e over its life, with 45 tonnes attributable to the
build process, including supply chain and materials
emissions, and 109 tonnes attributable to the in-use
emissions of the home over a 60-year period.
We have reduced scope 1 and 2 emissions by 9% this year
(26% in total over the last two years) and have started to
take actions to reduce embedded scope 3 emissions. We
recognise the majority of emissions arise from the build
process and in-use emissions and are examining the ways in
which we can reduce these.
For the detailed analysis and methodology used in calculating
our scope 1, 2 and 3 emissions, see pages 59 and 60.
The carbon cost of building a home
Gleeson and our supply chain generate an average of 45
tonnes of CO2e for every home built. Last year we estimated
that an average Gleeson home contributed 30 tonnes
of CO2e. This year we have been working closely with
our supply chain to calculate embodied emissions more
accurately. Total emissions for a Gleeson home range from
38 tonnes to 60 tonnes, depending on the house type and
size. This has been independently verified by an external
sustainability consulting expert. Based on our latest data
and the mix of house types sold in the year, the average
emissions for a Gleeson home was 45 tonnes.
Environment
Building
homes involves
the use of
materials and
construction
processes
which have
an impact on
the natural
environment.
We are committed to taking all
reasonable measures to minimise
our impact on the environment,
whilst balancing the need to
deliver affordable, quality homes.
Our environmental priorities
are reducing carbon emissions,
carefully managing our use
of natural resources, and
minimising waste.
Carrwood Park,
Bradford, West Yorkshire
52
MJ Gleeson plc
Annual Report & Accounts 2022
...the carbon cost of building a home
*Internal & external walls 34%
Plaster finish 1%
Bricks 9%
Cement 14%
Insulation 2%
Timber 2%
Steel 1%
Blocks 5%
Roof 4%
Heating & plumbing 6%
Windows & doors 5%
Internal & external walls* 34%
Kitchen and bathroom 7%
Other (including waste) 14%
Foundations & substructure 13%
Roads & infrastructure 8%
Energy used on site and offices 9%
Regulatory changes – Future Homes Standard
The government has introduced significant changes
to building regulations to support its Future Homes
Standard, requiring new build homes in England to
produce 31% less carbon emissions compared to the old
regulations by 2023 and 75-80% less emissions by 2025.
The Future Homes Standard requires new build homes
to be “future-proofed with low carbon heating and
world-leading levels of energy efficiency”. This requires
significant changes such as the removal of gas boilers,
increased insulation, the installation of electric vehicle
charging points and increased space requirements.
The immediate impact of these regulatory changes is to
increase the embodied carbon emissions from building
our homes, which requires additional carbon-intensive
materials. This will result in the average embodied
carbon intensity increasing from 45 tonnes to 54 tonnes
per home built.
However, when taken over the lifetime of a home,
which is notionally assessed over 60 years, the in-use
emissions for our customers from heating and powering
their homes falls significantly. This will, in part, be driven
by the wider decarbonisation of the electricity grid as
the UK switches to more renewable energy sources.
Impact of the Future Homes Standard on
total CO2e emissions over 60 years (tonnes)
154
109
45
Current
Build emissions
94
40
54
Future Homes
Standard1
In-use emissions
(60 years)
1
Includes assumption of decarbonisation of the UK electricity
grid based on BEIS Updated energy and emissions
projections 2019.
53
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Environment
CONTINUED
How are we reducing carbon emissions?
Scope 1 and 2
Carbon emissions from scope 1 and 2 activities reduced
from 2.05 tonnes of CO2e per home in 2021 to 1.86 in
2022, a decrease of 9% in the year and 26% since 2020
(adjusted for the impact of Covid-19). This puts us well
on track to achieving our strategic target of reducing
CO2e by 30% to 1.75 tonnes in the three years to 2023.
Scope 1 and 2 emissions comprise direct emissions
from energy purchased and used by the Group, such
as diesel, natural gas and liquid petroleum gas used
on sites and in our offices, as well as the emissions
associated with the consumption of energy from
purchased electricity. This year we have continued
to make changes to our business operations, without
sacrificing quality or efficiency, in order to reduce these
direct emissions.
Our largest carbon-emitting fuel is diesel, which is used
by forklift trucks, plant and machinery and generators,
so we have focused on ways to reduce diesel usage
across the business.
Forklift trucks – Last year we announced that we
had upgraded 59% of our forklift truck fleet to newer
models which included lower carbon-emitting engines,
start/stop function and tracking to monitor usage and
idle time. We have now completed this transition and
100% of the forklifts on our sites are the newer, more
energy-efficient models, reducing CO2e from forklift
trucks by 8%. This has generated a saving of 144 tonnes
of CO2e this year.
Generator usage – Over the past two years we have
significantly reduced our generator usage – which
use diesel to power them – through more considered
planning of on-site temporary facilities. In particular,
we have changed the timing of our site build and sales
activities in order to reduce generator usage, which has
been a significant factor in the 26% reduction in CO2e in
the past two years.
Biodiesel/HVO fuel – This year we trialled the use
of hydro-treated vegetable oil (“HVO”) fuel as an
alternative to red diesel and regular diesel on 14 sites.
The outcome of this trial was encouraging and we
saved 143 tonnes of CO2e versus regular diesel and 154
tonnes of CO2e versus red diesel, equivalent to 93% and
94% respectively. Extrapolated across all of our sites,
this could generate potential savings of circa 2,000
tonnes of CO2e, reducing our CO2e per home built
by 0.9 tonnes. Following this trial, we implemented a
Group-wide fuel policy that promotes the use of HVO
fuel where it is available at a reasonable price and will
continue to monitor price, usage and availability.
Eco-cabins – This year we trialled eco-cabins on seven
new build sites. The eco-cabins consist of a number of
energy-efficient features, including 100W solar panels
to provide enough power for periods of low activity,
supplemented by a small diesel generator for periods
of peak usage, motion-activated lights, water-saving
technologies, and battery charging systems that use
less energy to charge. Our trial showed the eco-cabins
generated a fuel saving of approximately 50 litres
of diesel per week, equivalent to a carbon saving of
54
approximately 126kg of CO2e per week. Our colleagues
on the trial sites also reported that the eco-cabins are
much quieter without having a noisy generator running
continuously to provide power.
Our second largest carbon-emitting fuel is petrol and
diesel for business mileage. In order to address this,
we implemented a new company car policy this year
to incentivise employees to choose low-emission
and electric vehicles and placed a cap on vehicle
carbon emissions. In addition, the new policy offers
a significantly improved choice of vehicles to our
colleagues, enhancing the company benefits. We will
begin to see the positive impact of this change and the
associated carbon emission savings more fully in 2023.
Scope 3 – build process
An average of 43 tonnes CO2e scope 3 emissions were
emitted for every home sold during the year.
As part of our commitment to understanding and
reducing the sources of embodied carbon in our supply
chain, we have been working closely with our supply
chain to obtain Environmental Product Declarations
(“EPDs”) for 62% of the materials we use. Where we
have not been able to obtain EPDs industry standards
have been used.
Undertaking detailed analysis has allowed us to
understand the main contributors of embodied carbon
in the homes that we build. The top 10 contributors,
which account for 60% of the total embodied carbon in
a home, are set out below:
Top 10 CO2e contributors in the
build process
Tonnes of
CO2e % of total
Cement mortar
Clay brick
Fuel used on site
Concrete blocks
Ready mix concrete
Windows and doors
Road surfacing
Radiators
Cavity wall insulation
Fiberglass roof materials
Total
6.6
3.7
3.2
3.0
2.7
2.2
1.8
1.7
1.0
0.9
26.8
15%
8%
7%
7%
6%
5%
4%
4%
2%
2%
60%
We are working closely with our supply chain partners
to identify alternative materials with lower embodied
carbon without sacrificing quality.
We started with clay bricks and identified that changing
to concrete bricks could achieve a 49% reduction in
CO2e when compared with clay. This year we built 52
homes using concrete bricks, including reconstituted
stone. This equates to a carbon saving of 94 tonnes of
CO2e on bricks alone.
Whilst concrete bricks have significantly lower
embodied carbon than clay bricks, concrete products
still have high levels of embodied carbon, and we are
continuing to evaluate lower-carbon alternatives.
MJ Gleeson plc Annual Report & Accounts 2022 Air source heat pumps
As part of the Future Homes Standard, new homes
will be required to produce 75-80% less in-use
carbon emissions compared with pre-transitional
regulations. One of the largest sources of carbon
emissions in homes is heating a home with a gas
boiler. Finding an alternative heat source is therefore
critical in reducing in-use emissions.
We engaged with industry-leading manufacturers
and subcontractors to research and design an
efficient and cost-effective solution, and selected air
source heat pumps (“ASHP”) as the best solution for
our homes.
Air source heat pumps are located outside of the
home. Much like a refrigerator working in reverse, air
is pulled into the ASHP and pushed through a coil
of fluid. The fluid is then compressed, which causes
it to heat up, and pushed into the heating system to
heat the home. By harnessing this process, an ASHP
can take a single kilowatt of electricity and make
three kilowatts of heat energy, making it extremely
energy efficient.
We installed our first ASHP in a detached home
on Erin Court, Derbyshire, in September 2021. In
partnership with Sheffield Hallam University we ran
a number of tests, including assessing the efficiency
and running costs. These test results showed an
impressive efficiency of 293% compared to the 94%
efficiency of a gas boiler.
Since this initial test we have continued to work
with Sheffield Hallam University and our ASHP
manufacturer to make changes, and further testing
is now under way to provide a better understanding
on the effects of seasonality on ASHP efficiency.
As these continue, we have taken the decision
to move from traditional gas boilers to ASHP
technology. We are already installing ASHPs on
certain developments, and they will be installed in
all new homes built from June 2023.
Fuel used on site is another large contributor of
embodied emissions. Our efforts to reduce these
emissions is set out in the scope 1 and 2 section on
the previous page, particularly the changes to forklift
trucks, generator usage and biodiesel/HVO fuel.
We continue to include embodied carbon intensity
considerations into our procurement processes as well
as considering sustainable packaging and suitable
alternatives to reduce waste.
As our supply chain catches up with understanding
the carbon intensity in their own value chain, we will
continue to request key material suppliers to disclose
their environmental impact and carbon reduction plans
and to offer lower-carbon alternatives. One of our key
areas of focus will be on cement mortar that we source
from a number of suppliers and is our number one
contributor to carbon emissions.
Scope 3 – in-use emissions
The largest contributor of carbon emissions from a new
build home arises from the in-use emissions over the
lifetime of a home. Over a 60-year period, the in-use
emissions are estimated to be 109 tonnes of CO2e –
almost 2.5 times higher than the embodied carbon in
building the house.
We build high-quality, affordable homes that are
energy efficient. 97% of our homes achieve an energy
performance rating (“EPC”) of B or above compared to
the house building industry average of 86%.
When compared to existing dwellings, a Gleeson home
produces 48% lower carbon emissions due to its higher
energy efficiency.
Annual emissions to heat and power
a home (CO2e tonnes)
2.7
1.4
Gleeson
home
Existing
homes
The Future Homes Standard is designed to reduce the
emissions over the lifetime of the house and this is
being implemented by changes in building regulations.
One significant change is the move away from gas-fired
boilers in homes. Alternative technologies are being
widely taken up and one of the most efficient is air
source heat pumps.
55
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Environment
CONTINUED
Natural resources
Land
Our developments are located in areas where there is a
need for regeneration; typically areas of deprivation or
brownfield sites that would otherwise remain derelict
or unused. 82% of our homes sold this year were in
the third most deprived areas of the country or on
brownfield land.
management during construction for site processes
such as dust suppression. Our strategy will also
include improving the tracking of water consumption
across sites with actual usage data, rather than using
estimates. We will be engaging with water companies
to identify supply risks, improve data and maximise
water reduction opportunities.
Water consumption
2022
2021
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 58 sets out an example of the
brownfield land remediation that we undertake.
Water stress
Areas of serious water stress are areas where the
demand for water is a high proportion of the rainfall
which is available to meet that demand, or will be in
the future. Where demand is higher than availability,
this places significant stress on the environment
as additional resources are needed to make up the
shortfall.
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 2022, 23% of
homes sold were in areas of serious water stress. In
total, 38% of plots in the Gleeson Homes land pipeline
are classified as being in an area of serious water stress.
We do not undertake any water abstractions from
ground or surface waters.
Licenced water usage
We recognise that water is a valuable resource and
during the next 12 months, we will be developing a
water strategy to reduce our reliance on licenced
water supply. As part of the work supporting the
development of our strategy, we will evaluate the
feasibility of incorporating grey water usage into our
operating activities, including exploring initiatives such
as rainwater harvesting and the use of surface water
Cubic metres of water
consumed
Cubic metres of water
consumed per home sold
Cubic metres of water
consumed per build site
90,692
78,143
45
43
1,093
1,007
All our homes are fitted with dual-flush toilets, low-flow
taps and showers and water meters. They are designed
to achieve an internal water use of less than 110 litres
per person per day. This is 12% lower than the maximum
allowance specified by building regulations, saving both
natural resources and our customers on their water
bills. We are working to design further efficiencies and
collaborating with our supply chain with the aim of
reducing this to less than 100 litres per person per day.
Waste
In the year, we diverted 99% (2021: 98%) of waste
generated in our operations away from landfill through
recycling or conversion to energy. We continue to
maintain our commitment of zero waste to landfill1.
We will continue to engage with specialist waste
management providers and implement initiatives such
as pallet repatriation, re-use of waste materials on site
and engage with our supply chain to minimise incoming
packaging waste. We will also be developing targeted,
role-specific training and awareness including waste
management practices.
1 The common interpretation of “zero waste to landfill” is that at
least 99% of waste diversion from landfill is achieved.
56
MJ Gleeson plc Annual Report & Accounts 2022 Supply chain and sustainable materials
We are committed to reviewing the impact on the
environment throughout our supply chain and, in
particular, are taking the following actions:
• We source 99.9% of the timber we use in
construction from FSC or PEFC certified sources.
• We engage with suppliers to use packaging
materials that are recyclable or biodegradable where
possible.
• We continue to evaluate alternative materials to
those currently used, where these have lower
embodied carbon emissions and can be more easily
recycled or reused.
In 2022, Gleeson partnered with The Supply Chain
Sustainability School. This enables us to upskill
colleagues and work collaboratively with other
housebuilders, contractors and suppliers to achieve
common goals in delivering a sustainable future.
Additional information
We take our environmental responsibilities seriously;
we meet all of our compliance obligations and
are committed to protecting the environment and
preventing pollution. During the year, Gleeson has
not been subject to any environmental prosecutions,
enforcement or warnings.
57
Our total waste this year amounted to 12,272 tonnes
(2021: 13,511 tonnes), a waste intensity of 6.1 tonnes
(2021: 7.5 tonnes) per home sold. Absolute waste
has decreased by 9% despite the 10.4% increase in
homes sold as a result of the measures being taken
on sustainable procurement, packaging and waste
management. We continue to work with our supply
chain and internal stakeholders to firstly reduce waste
generated, then to maximise waste recovery options.
Hazardous waste is generally limited to packaging
containing hazardous residues such as paint tins,
sealant and adhesive cartridges. These are specifically
handled by our specialist waste management providers.
Biodiversity
From November 2023, biodiversity net gain
requirements, which were introduced in the
Environment Act 2021, require developers to ensure
that all new developments demonstrate a 10% increase
(net gain) in habitat value for wildlife compared with
a pre-development baseline. On many brownfield sites
that have been rewilded by nature, this can be more
challenging to achieve than an equivalent agricultural or
greenfield site. However, we are working towards these
targets on all future developments and developing our
biodiversity strategy not only to meet the obligations,
but also provide significant increases to biodiversity
where it is viable to do so.
We recognise the importance of the linkage between
biodiversity and environmental amenity within the
built environment. Our developments incorporate
design features such as open spaces, sustainable
drainage systems (“SuDS”) and soft landscaping such
as plants and trees to complement the surrounding
natural infrastructure and support the wider natural
environment. Every Gleeson home sold includes
garden space which provides the opportunity for our
customers to create outdoor living spaces to enjoy.
During the coming year we will be strengthening
our team with ecology expertise and aligning our
biodiversity actions into a focused biodiversity strategy
(see targets on page 65).
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Environment
CONTINUED
Case study: Regenerating land
Kilner Park, South Yorkshire
Coal, coke and bottles
Kilner Park is named after the world famous Kilner
jars, which were manufactured at nearby Providence
Glassworks in Conisbrough up until 1937.
Kilner Park is situated on the old Denaby Main colliery
and coking plant which served the Kilner jar factory.
The colliery operated from the 1860s, finally closing in
1968. The area was left derelict until the land was
developed for the “Earth Centre”, opening in 1999 and
then closing in 2004.
Land degradation
100 years of coal mining and coking had taken its toll
by significantly degrading the land through physical
use and contamination, primarily from the coal mining
and processing wastes, which often include various
heavy metals, polycyclic aromatic hydrocarbons and
other contaminants which are damaging to the natural
environment and to human health.
Regeneration of the land
The site underwent significant remediation works to
remove contaminants, demolition waste and other
detritus before work began on the Earth Centre.
Following its closure the site was largely demolished
and remained vacant for a considerable number
of years before further significant remediation was
undertaken to remove fly tipped waste and clear
invasive plant species. Large amounts of road
surfacings and the existing capping material used for
the Earth Centre car park were removed, with new
layers of capping placed in readiness for build.
A legacy for the future
Kilner Park has 175 plots comprising of two, three and
four-bed family homes. Designs were carefully
considered by engaging with stakeholders from the
local community and the local authority who had clear
visions on how they wanted to see the site developed.
The development provides affordable, quality homes
with easy access to public transport infrastructure and
amenities, and sits alongside other redevelopment
serving to elevate the entire area and leave a lasting
legacy for future generations of home owners.
58
MJ Gleeson plc Annual Report & Accounts 2022 Carbon emissions – detailed information
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 and carbon emissions originate in the UK. Our carbon
emissions are calculated in accordance with the Greenhouse Gas Protocol – a Corporate Accounting and Reporting
Standard.
Scope 1 and 2
Gas oil / diesel
Car fuel
HVO fuel / biofuel
Electricity
Gas
Liquid petroleum
gas (“LPG”)
Total scope 1 and 2
Per home sold
2022
2021
2020
Tonnes of
CO2e
Energy usage
Tonnes of
CO2e
Energy usage
Tonnes of
CO2e
Energy usage
2,009
750,257 litres
2,288
829,440 litres
2,071
750,974 litres
783
328,960 litres
9
55,900 litres
518 2,676,613 kWh
290 1,576,126 kWh
490
0.25
380
203,871 litres
1,500 litres
1,788,610 kWh
479 2,615,295 kWh
427
176,650 litres
–
331
149
–
1,420,709 kWh
810,795 kWh
105
488,701 kWh
84
392,472 kWh
45
210,968 kwH
3,714
1.86
3,721
2.05
3,024
2.821
1 Removing the impact of Covid-19 gives an adjusted carbon intensity reference of 2.50 tonnes per home sold for 2020.
Scope analysis
Scope 1 and 2
Scope 1 – burnt fuels
Scope 2 – electricity
– location based1
– market based1
Per home sold
(location based1)
Per home sold
(market based1)
2022
Tonnes of
CO2e
2021
Tonnes
of CO2e
2020
Tonnes
of CO2e
3,196
3,341
2,692
518
260
1.86
1.73
380
196
331
331
2.05
2.822
1.95
2.822
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
2022
2021
Scope 1 and 2
(tonnes of CO2e)
Gleeson
Homes
Gleeson
Land
Gleeson
Homes
Gleeson
Land
Scope 1 –
burnt fuels
Scope 2 –
electricity
Total
3,172
509
3,681
24
9
33
3,327
369
3,696
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 directly 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. In April 2022, the government prohibited
the use of red diesel in the construction industry and
as an alternative we have switched to a combination of
regular white diesel and HVO biodiesel.
Our second largest carbon emitting fuel is petrol
and diesel for company vehicles. This is calculated
by taking the total litres of each fuel purchased, split
proportionally based on business mileage submissions.
This is multiplied against a standard conversion factor
to convert this into CO2 equivalent.
Our scope 3 emissions in detail
Tonnes of CO2e
Plot build
Infrastructure
Total scope 3 (excluding in-use)
Per home sold
In-use emissions (60 years)
Total scope 3 (including in-use)
Per home sold
Restated1
2021
2022
78,729
7,450
86,179
43
218,639
304,818
152
71,169
6,750
77,918
43
197,402
275,320
152
1 2021 reported figures have been restated to reflect the increased
detail of bill of quantities, supplier EDPs and our improved
understanding of scope 3 emissions.
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MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Environment
CONTINUED
Scope 3 methodology
For emissions from build, all of the materials used for
each house type plus emissions from construction
work on site (including infrastructure such as roads and
sewers), transport and end-of-life replacements are
used to estimate the embodied carbon emissions.
We use the “bill of quantities” to understand every
individual component of our homes and the volume
of materials required for the build, including an
apportionment of site infrastructure such as roads and
utilities. To date, we have obtained EPDs reporting
the embodied carbon emissions for 62% of the
materials used in our homes and applied these, where
appropriate, in calculating the scope 3 build emissions.
The remaining 38% are calculated based on standard
industry emissions data by material.
This assessment was carried out for our most common
house types, collectively accounting for 89% of total
homes sold in the year to 30 June 2022. The remaining
11% is extrapolated based on floor area and other known
material quantities in the remaining house types to give
the total annual emissions from house building.
The figures reported for 2021 have been restated to
reflect the increased detail of bill of quantities, supplier
EPDs and our improved understanding of scope 3
emissions.
For in-use emissions, actual energy spend data from
customers is converted to energy consumption and
carbon emissions, then projected forward (assuming
broadly stable energy usage) to arrive at the 60-year
in-use carbon emissions total for each house type.
Our methodology and calculation of our scope 3
emissions have been independently verified by an
external consultant for accuracy, completeness and to
ensure we are reporting in accordance with the GHG
protocol.
Springfield Meadows,
Bolsover, Derbyshire
60 MJ Gleeson plc
Annual Report & Accounts 2022
MJ Gleeson plc
Annual Report & Accounts 2022
61
Strategic Report Sustainability Targets
Progress against our 2022 improvement targets
Health and safety incident rate (“AIIR”) will be reduced to the industry
standard or lower in the year
Target achieved
Reportable incidents (“RIDDORs”) reduced significantly to a single incident during the year. As a result, our AIIR for
the year to 30 June 2022 reduced to 55 (2021: 556) and was below the HBF industry average of 239.
2022 actions
Update
Result
Introduce independent, unannounced
safety inspections on every active build site
at least once per month.
These were introduced. 704 independent site inspections were
completed during the year with 89% achieving at or above our
90% benchmark. The average site score was 94%.
Launch a training and development
passport mandatory for all apprentices.
Training and development passports have been rolled out for all
apprentices.
Enhance working-at-height procedures
through additional training and enhanced
working practices.
An updated and improved scaffolding specification was
introduced in January 2022 and implemented across all sites.
Provide bi-annual supply chain and
subcontractor HomeSafe workshops
focusing on health and safety.
Workshops were undertaken in a number of regions but had
not been completed bi-annually by the end of the year due to
resource constraints.
Deliver a company-wide campaign on slips,
trips and falls and manual handling training.
A campaign on slips, trips and falls was delivered and manual
handling training has been provided to all colleagues.
Enhance tracking and reporting of near
misses and raise awareness of importance.
A Group-wide awareness campaign on near misses was
launched and a centralised data-capture system introduced.
Assess feasibility and implement digital
recording of personnel on all sites.
A feasibility assessment was successfully completed and
implementation of the new system has commenced. This has
not yet been introduced on all sites.
Our employee engagement will be maintained in the upper quartile of
all companies
Target achieved
Our independently-assessed employee engagement score increased to 90% this year (2021: 89%) and 89% of
colleagues (2021: 88%) are proud to say that they work for Gleeson. This places Gleeson in the upper decile of all
UK companies surveyed.
2022 actions
Update
Result
Enhance communication across the Group
including online forums, regional roadshows
and company-wide communications.
All-employee roadshows, a weekly newsletter, @Home, and “At
a Glance” notice boards on all our sites and regional offices are
used to communicate regularly with colleagues.
Launch employee “Wellbeing Toolkit” which
will give all of our employees the resources
to obtain relevant support.
The Wellbeing Toolkit was launched in the year. Regular
reminders are sent out in @Home reminding employees and
signposting them to the Toolkit.
Further develop the apprenticeship
programme to broaden skills and retain
talent.
Training and development plans are in place for all apprentices
which record their progression and support requirements.
Enhance our recognition schemes to
incorporate Company values and improve
on-site participation.
We are exploring options to enhance our recognition
programme, but further work is required to include site-based
employees who do not have access to a company laptop. This
action was not met and will be carried over into 2023.
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MJ Gleeson plc
Annual Report & Accounts 2022
We will maintain our 5-star customer recommendation status
Target achieved
We achieved an independently-assessed customer recommendation score of 90.7% (2021: 90.6%) this year. This is
equivalent to a Home Builders Federation (“HBF”) 5-star rating.
2022 actions
Update
Result
Roll out a “Customer First” campaign
across all developments.
“Customer First” programme has been rolled out, and is
integrated into onboarding and training processes.
100% quality inspections to be achieved
within 48 hours of obtaining CML
(Certificate for Mortgage Lending).
We have inspected 100% of plots within 96 hours of legal
completion, with 68% inspections within 48 hours of CML. The
inspections not achieved within 48 hours of CML are a result of
resource limitations during the first half of the year.
Improve customer care systems and
reporting to integrate all elements of
inspections, defect management and
customer care.
We have improved systems and processes for pre-completion
inspections and established weekly divisional, regional and
site-level defects reporting. We have developed applications to
measure sales administration performance and generate action
logs for issues identified.
Engage and provide training to third-
party subcontractors and suppliers on our
“Customer First” requirements.
Nine regional seminars and presentations were held during
the year for selected subcontractors to further embed our
Customer First programme.
We will reduce our carbon emissions by 30% over three years to
1.75 tonnes by 2023
On track
As set out on page 59 our scope 1 and 2 emissions for the year were 1.86 tonnes of CO2e per home sold
(2021: 2.05 tonnes, 2020: 2.50 tonnes adjusted for the impact of Covid-19).
This is a 9% reduction from 2021 and 26% reduction from 2020, which puts us well on track to meet our CO2e
reduction target of 1.75 tonnes per home sold by next year.
2022 actions
Update
Result
All forklift trucks to be upgraded to the
newer models within one year.
All forklifts have been replaced with the new, more fuel-
efficient models.
Complete our eco-cabin trial and, if
successful, roll out across all new sites.
Eco-cabin trial completed and carbon emission savings of
126kg CO2e per week generated. We will continue rolling
out eco-cabins on all new sites in 2023.
Complete our biodiesel trial and, if
successful, roll out across sites.
Biodiesel trial completed and carbon emissions savings of
154 tonnes generated. We have implemented a fuel policy
to promote the use of biodiesel across the Group.
Review energy efficiency measures in
each of our offices.
We have engaged an energy broker and consultant to
develop an efficiency plan which will commence in 2023.
Ensure electricity purchased for sites
continues to come from certified
renewable sources with Renewable
Energy Guarantees of Origin (“REGO”).
We continue to procure electricity on a 100% renewable-
sources tariff which is supported by REGO certification.
Launch a generator usage policy to
reduce generator fuel usage.
Our generator usage policy has been successfully launched
and implemented across the business.
MJ Gleeson plc
Annual Report & Accounts 2022
63
Strategic Report
Sustainability Targets
CONTINUED
What we want to improve
Health and safety
Our incident rate (“AIIR”), at 55 per 100,000
employees, has reduced significantly and is
lower than the industry average reported by
the Home Builders Federation. We want to
continue to improve our health and safety
performance through training, awareness and
proactive engagement with all colleagues.
Staff engagement
We want all our colleagues to continue to
be happy, motivated and engaged in their
work. We want them to share the values and
strategy of the business.
Customer satisfaction
We want to continue improving our build
quality and customer journey, and our
focus will be on the systems, training and
ongoing engagement with our suppliers and
subcontractors to support this.
Carbon emissions
Our scope 1 and 2 emissions have reduced
significantly but remain higher than some
other housebuilders. We want to fully
understand our office energy consumption to
identify and realise energy efficiencies across
all offices.
Greencroft
View, Stanley,
County Durham
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MJ Gleeson plc
Annual Report & Accounts 2022
Our 2023 sustainability targets
Health and safety
incident rate
(“AIIR”) will be
lower than the
industry average in
the year
Our employee
engagement will
be maintained in
the upper quartile
of all companies
We will maintain
our 5-star status
with a 90% or
above customer
recommendation
score1
We will reduce our
carbon emissions
by 30% over
three years to 1.75
tonnes in 2023
Actions:
Actions:
Actions:
Actions:
• Deliver enhanced
temporary-works
training and
implement focused
action plans.
• Enhance our
campaign on slips,
trips and falls
across all sites and
offices.
• Provide training to
all site management
colleagues on
underground
services and
utilities.
Introduce additional
spot checks on
monthly health and
safety focus areas.
•
• Further develop our
digital near miss
reporting systems
to deliver improved
data and root-cause
analysis.
• Enhance our new
starter onboarding
programme to
improve pre-
commencement
support and
communication.
• Create regional
focus groups to
target and action
key findings from
the annual Your
Voice employee
engagement
survey.
• Provide resources
for site-based staff
to enable them to
participate more
easily in the Your
Voice survey.
• Deliver targeted
learning and
development
pathways for our
colleagues.
• Undertake
quarterly talent
mapping meetings
to gain insights
into development,
performance and
succession plans.
• Develop and
implement a
digitised quality
inspection and
monitoring system
for key build stages.
•
Implement an
enhanced customer
contact workflow
to improve pre-
completion
communication.
• As an early adopter
of the New Homes
Quality Code,
ensure adherence
to its standards.
• Enhance “My
Gleeson” data
recording to enable
better root-cause
understanding and
allow preventative
actions to be taken.
•
•
Increase our
percentage of
issues resolved
within 30 days
by 10%.
Improve our
customer
satisfaction
score for
“Communication”
(pre completion)
by 5%.
•
Install eco-cabins,
which reduce
carbon emissions,
on all new sites.
• Trial the use of
more efficient
generators for use
on sites to reduce
fuel consumption.
•
Improve energy
efficiency across
our offices.
• Promote the use of
biodiesel across all
of our sites.
• Continue to
enhance our
company car
scheme to
encourage more
colleagues to
switch to electric or
hybrid vehicles.
• Continue to
progress actions in
respect of reducing
scope 3 emissions
as set out on pages
54 and 55.
Other environmental actions
We are also committed to a number of other actions aligned with our strategic objective of protecting the
environment beyond reducing carbon emissions, including, but not limited to:
• Develop a Group-wide water strategy to address water consumption, waste and re-use of water.
• Develop a biodiversity strategy that will align with and complement our existing activities and planning
strategies.
• Achieve zero waste to landfill by further improving waste management practices and data recording.
• Deliver sustainability training through targeted learning and development pathways in collaboration with the
Supply Chain Sustainability School.
1 As polled by an independent survey company, which is equivalent to the Home Builders Federation 5-star rating
65
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report 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
continually enhance our disclosures in line with its
recommendations and market practice. We also
disclose climate-related governance, strategy, risk
management and metrics as part of the Carbon
Disclosure Project (“CDP”).
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 targets being managed by the Executive
Directors.
The Sustainability Committee is a sub-committee of
the main Board and meets to discuss the strategic
direction of the Group in respect of sustainability,
climate-related risks and opportunities and to assess
progress on ongoing sustainability projects, including
carbon emissions reduction. Find out more on pages
106 to 109.
Regular updates are provided to the Audit Committee
and Board 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 sustainability
matters in their respective areas, including managing
compliance with the Group’s sustainability policies:
• climate and environment;
• sustainable procurement;
• sustainable packaging;
• sustainable timber usage;
• sustainable fuel usage; and
• sustainable waste management.
This year we appointed a Group Sustainability Manager
who supports senior management and the Executive
Directors in delivering our sustainability strategy.
The Group Sustainability Manager is responsible
for managing carbon emissions reduction projects,
environmental compliance and developing strategies
for water and biodiversity, amongst other matters.
During the year we also created a Sustainability
Action Team and Climate Action Team which are
responsible for the development and delivery of our
wider sustainability initiatives, including progressing
our current year actions as set out on page 65. These
teams include the Chief Financial Officer, the Managing
Director of Gleeson Homes, and other members
of senior management who are held accountable
for delivering measurable progress against our
sustainability targets.
Risk management
How the organisation identifies, assesses, and
manages climate-related risks.
The Board has overall responsibility for the Group’s
management and assessment of risks, supported by the
Sustainability and Audit Committees.
The Group risk register is formally reviewed by the
Audit Committee at the majority of its meetings,
including consideration of emerging risk areas
or changes to existing risks. Climate change and
sustainability have been identified as principal risks for
the Group. Find out more on pages 38 and 39.
The Group’s risk management framework includes a
separate sustainability risk register, which includes key
climate-related and other sustainability risks for the
business.
The sustainability risk 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 reviewed by the Sustainability
Committee as part of its bi-annual review of the
sustainability risk register.
Any changes to risk scores on the sustainability risk
register are then considered in the context of the
Group risk register in respect of the principal risks of
climate change and sustainability. Proposed changes
are reported to the Audit Committee and Board as
part of its monitoring of principal and emerging Group
level risks.
During the year, the Group completed an exercise to
define the risk classification criteria in respect of its risk
term, likelihood and impact. This is outlined below.
Risk term
Risk term was determined by considering the four risk
scenarios, set out on pages 68 and 69, and balancing
the anticipated timescales of the climate-related
scenarios against the actions and mitigations required.
Our risk terms have been defined as:
•
1-3 years = short term
• 4-10 years = medium term
•
10+ years = long term
Likelihood and impact
Internal stakeholder meetings were undertaken
to discuss the risk scenarios and the likelihood of
occurrence together with the impact they would have
on the business.
Impact was assessed based on the estimated financial
costs attributable to the realisation of part, or all, of
these scenarios:
• Less than £1m = low impact
• £1m-£3m = medium impact
• £3m+ = high impact
66
MJ Gleeson plc Annual Report & Accounts 2022 Moorland Green,
Gateshead,
Tyne and Wear
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 regulatory changes,
government policy, stakeholder expectations and the
direct effects of climate change such as weather events,
loss of developable land and the impact on biodiversity
and the wider natural environment.
During the year we have used the process of scenario
planning to aid our assessment of climate-related
risks and opportunities and the potential impact on
the Group, its strategy and any financial impacts. As
part of this evaluation, we have identified the four
most significant climate-related risk scenarios that
could impact the Group. Each of these risks has been
assessed against its defining risk category, risk term,
likelihood and financial impact. These four risk scenarios
are set out in the table on pages 68 and 69.
Risk category
TCFD places climate-related risks into two major
categories:
• Transition risks focus on financial and reputational
risk relating to transitioning to a lower-carbon
economy and include four sub-categories of policy
and legal risk, technology risk, market risk and
reputation risk.
• Physical risks relate to the actual or potential
impacts of climate change and include two sub-
categories of acute and chronic. Acute risks are
event-driven such as flooding, and chronic are
longer-term events such as rising temperatures and
sea-level rise.
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
a carbon-intensity target. In 2020, we set a target of
reducing our scope 1 and 2 emissions by 20% per home
sold within three years. This would have resulted in a
carbon intensity of less than 2.0 tonnes of CO2e per
home sold. Due to the significant progress made during
2021, we increased our carbon reduction target from
20% (2.0 tonnes of CO2e) to 30% (1.75 tonnes of CO2e)
by the end of 2023. This year we have reduced our
scope 1 and 2 carbon emissions to 1.86 tonnes of CO2e
per home sold and remain well on track meet our CO2e
reduction target by next year. Our carbon emissions
figures can be found on page 59.
Our climate performance metric for scope 1 and 2
emissions is calculated by the total metric tonnes of
CO2e from our direct operations, divided by the number
of legally completed house sales in a financial period.
We report both “market-based” and “location-based”
metric for our scope 2 (electricity) usage.
During the year, we have progressed our understanding
and data accuracy of 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. This level of accuracy of scope 3 data will
be critical in developing our carbon reduction pathway.
The embodied scope 1, 2 and 3 emissions per home
sold of 45 tonnes of CO2e will be used internally for the
purposes of assessing our principal and emerging risks,
as well as further carbon reduction strategies.
Further details on our scope 1, 2 and 3 emissions,
including methodology, can be found in the
Environment section on pages 52 to 60. Sustainability
KPIs are set out on page 20.
67
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Task Force on Climate-Related
Financial Disclosures CONTINUED
Climate scenarios
We have considered a +1.5⁰C, a +2.0⁰C and a “business as usual” +4⁰C scenario. Climate-related emerging regulation
is considered to be a +1.5⁰C scenario as it is driven by the UK government in line with the Paris Agreement. We have
assumed a +4⁰C scenario (worst case) for the remaining risks.
Risk
Climate-
related
emerging
regulation
Risk category
and scenario
Description
Targets and
actions
Transition
– policy
and legal
+1.5⁰C
scenario
The Future Homes Standard requires
new build homes in England to produce
31% less carbon emissions compared
to the old regulations by 2023 and
75-80% less emissions by 2025. These
require changes such as the removal
of gas boilers, increased insulation,
the installation of electric vehicle
charging points and increased space
requirements.
We fully support the UK government in
their carbon reduction commitments,
however, there is an inherent financial
impact to our business to meet the
requirements of the new building
regulations.
In response to the Future Homes
Standard, we are switching from
our existing gas boiler specification
to a more efficient air source heat
pump installation.
The air source heat pump will
remove the dependence on
gas for heating our homes and
capitalise on the benefits of the
decarbonisation of the electricity
grid. We expect this to reduce
in-use emissions by 54 tonnes per
home over the 60 year assessment
period.
We are also required to improve
the thermal efficiency of new
build homes. As a result, improved
insulation is required with the aim
of reducing the amount of energy
required to heat a home.
Increased frequency and severity of
adverse weather events are likely to
cause increased disruption to our build
programmes and pose increased health
and safety risks if not managed carefully.
Our sites are set up to minimise the
effects of normal weather events
as much as reasonably possible.
Extreme events, including extreme
rainfall, pose a significant risk.
We will be developing our water
strategy in the coming year, which
will include mapping out actions to
improve resilience to these types of
adverse weather events.
Risk term
Short
Likelihood
Virtually
certain
Financial
impact
High
Risk term
Medium
Likelihood
Likely
Financial
impact
Low
Adverse
weather
events
affecting
build
progress
Physical
– acute/
event driven
Current
trajectory
+4⁰C scenario
Loss of
developable
land due to
flooding
Physical –
chronic
Current
trajectory
+4⁰C scenario
68
Extreme rainfall poses significant
risks to construction sites and makes
activities such as working at height
more dangerous. It can also make other
site activities such as groundworks
virtually impossible due to poor working
conditions.
Site flooding and storm damage are likely
to have further impact on our business
as build delays and remedial works cause
additional disruption to build rate.
As a result of climate change, the UK
has become wetter over the past few
decades. Increased seasonal flooding
and sea-level rise may pose greater
risk to available land for development.
Loss of developable land will impact
the geographic locations of our
developments, reducing the available
land bank and leading to increased land
costs.
Additionally, there is greater emphasis
on designing better water management
solutions across our developments
and the inclusion of flood-resilient
design measures, which can impact the
number of plots per development and
increase costs.
We acquire and develop land
following planning regulations
including addressing flood risk.
Virtually all of our developments
incorporate sustainable drainage
systems (“SuDS”) to reduce surface
run off. Further development of
flood prevention measures and
mitigations will be undertaken in
line with any changes to planning
or building regulations.
Risk term
Long
Likelihood
Likely
Financial
impact
High
MJ Gleeson plc Annual Report & Accounts 2022
Risk
Biodiversity
loss and
net gain
Risk category
and scenario
Description
Targets and
actions
In addition to satisfying planning
compliance obligations, we will
be developing our biodiversity
strategy during 2023. We are proud
of the fact that our developments
already include green spaces and
soft landscaping to complement
and provide a linkage to the
surrounding natural environment
and existing green infrastructure.
Risk term
Short
Likelihood
Likely
Financial
impact
Medium
Physical –
chronic
Current
trajectory
+4⁰C scenario
From November 2023, the Environment
Act 2021 will require developers to
ensure that all new developments
achieve a 10% increase (net gain) in
habitat value for wildlife compared with
a pre-development baseline.
When brownfield sites have been left
for a period of time they often become
“rewilded” by nature, making it more
challenging to achieve a net gain in
biodiversity as the baseline measure
is often far greater than a comparable
greenfield development.
All development works undertaken
are compliant with relevant legislation
and with appropriate mitigation being
undertaken where required, including
protected species and the management
of invasive and injurious plant species.
This can result in increased costs.
The additional space required for
biodiversity may reduce the number of
plots per development and could make
some future sites unviable.
Saphron, Dane Park, Hull, East Yorkshire
69
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report
Sustainability Accounting Standards Board
Land use and ecological impacts
Code / SASB criteria
Our approach
IF-HB-160a.1
Number of (1) lots and
(2) homes delivered on
redevelopment sites
In the year to 30 June 2022, we added 1,475 (2021: 2,740) brownfield land plots to our land pipeline.
This accounted for 58% (2021: 52%) of plots acquired in the year. The total number of brownfield
plots held at 30 June 2022 was 6,262 (37%) (2021: 7,606, 48%).
In the year to 30 June 2022, we had 1,211 (2021: 1,387) home sales on brownfield sites. This
accounted for 61% (2021: 77%) of our total annual completions.
Notes: We consider brownfield land to include 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 2022, we acquired 1,202 plots in regions of serious water stress. This
accounted for 47% of plots acquired in the year (2021: 1,767 plots, 33%). The total number of plots
in areas of serious water stress at 30 June 2022 was 6,433, 38% of the pipeline (2021: 2,945, 19%).
In the year to 30 June 2022, we had 457 (2021: 106) home sales in areas of serious water stress.
This accounted for 23% (2021: 6%) of our total annual completions.
In July 2021, the Environment Agency (“the EA”) changed their classification of areas of water
stress from a “Low”, “Moderate”, “Serious” scale to a “Serious” or “Not Serious” scale. This change
in classification has resulted in sites previously classified as “Moderate” increasing to “Serious” in
the year.
Notes: Serious water stress is defined as “the current household demand for water is a high
proportion of the current effective rainfall which is available to meet that demand; or, the future
household demand for water is likely to be a high proportion of the effective rainfall which is likely
to be available to meet that demand”.
The water stress method takes a long-term view of the availability and demand for public water
supply, rather than a snapshot of shorter or peak periods. It accounts for future population
growth, climate change, environmental needs and increased resilience. It reflects and supports the
commitments that water companies have made to reduce leakage and water consumption.
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 our guiding core principles and requirements;
of particular importance at this stage is our objective to bring forward development of affordable
homes on mostly brownfield sites or sites in areas of deprivation 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 previous landowners. On clearing this
hurdle, further due diligence is 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.
When designing the layout for our sites we undertake an initial assessment of development
schemes using the generic Dwelling Emission Rates in order to improve energy efficiency of
each type through orientation and plotting. This assessment considers landform, layout, building
orientation, landscaping and other surrounding features of each home. All of our homes have
driveways for off-street parking and outdoor garden space for customers to enjoy.
IF-HB-160a.2
Number of (1) lots and
(2) homes delivered
in regions with High
or Extremely High
Baseline Water Stress
IF-HB-160a.3
Total amount of
monetary losses
as a result of
legal proceedings
associated with
environmental
regulations
IF-HB-160a.4
Discussion of
process to integrate
environmental
considerations into site
selection, site design,
and site development
and construction
70
MJ Gleeson plc Annual Report & Accounts 2022 Code / SASB criteria
Our approach
IF-HB-160a.4
(continued)
Discussion of
process to integrate
environmental
considerations into site
selection, site design,
and site development
and construction
Site development and construction
Material selection is carefully considered during the construction of our homes as the specification
and quality of build materials can directly influence the projected CO2e emissions. All of our
properties are currently built with traditional cavity wall construction, thermally-efficient light
aggregate blocks and high-performance insulation within the cavity.
Where contractors are required to source materials for key building elements, we stipulate that
they use suppliers capable of demonstrating certification to high tier levels in the Chain of Custody
certification process and have been independently certified by the BRE Framework Standard for
Responsible Sourcing (BES 6001) or ISO 14001.
We take waste management very seriously and the segregation of all waste materials is paramount
in reducing the amount of waste taken to landfill. This is managed by having the following
procedures in place:
• Target benchmarks for resource efficiency set in accordance with best practice.
• Procedures and commitments to minimise non-hazardous, construction waste at design stage.
• Procedures for minimising hazardous waste.
• Monitoring, measuring and reporting of hazardous and non-hazardous site waste production
according to the defined waste groups.
• Diversion of waste from landfill should adhere strictly to the principles of the waste hierarchy of
reduce; reuse; recycle; recover.
Our site operations report their fuel consumption by type of plant and machinery on a monthly
basis so we can identify and target any inefficiencies within our construction activities.
We also have a number of initiatives ongoing in order to reduce the environmental impact of our
sites, with further details on pages 54 to 57.
Workforce health and safety
Code / SASB criteria
Our approach
IF-HB-320a.1
(1) Total recordable
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 55 in 2022 (2021: 556).
The industry average for the house building sector was 239 (2021: 264) (Source: Home Builders
Federation).
In the year we reported one RIDDOR incident (2021: 10 RIDDOR incidents). The improvement in
performance has come from various actions completed during the year, with further details set out
on page 62.
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 contractors.
Design for resource efficiency
Code / SASB criteria
Our approach
IF-HB-410a.1
(1) Number of homes
that obtained a
certified HERS® Index
Score and (2) average
score
IF-HB-410a.2
Percentage of installed
water fixtures certified
to WaterSense®
specifications
The Energy Performance Certificate (“EPC”) is the UK equivalent to the HERS Index.
96.8% 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 (2021: 98.2%).
WaterSense is not applicable in the UK.
All our homes are fitted with dual-flush toilets, low-flow taps and showers and water meters.
They are designed to achieve an internal water use of less than 110 litres per person per day; the
specification for sanitary ware and fittings to be used throughout the homes has been modified to
suit this requirement.
This is 12% lower than the maximum allowance specified by building regulations, saving both
natural resources and our customers money on their water bills. We are working to design further
efficiencies in collaboration with our supply chain to reduce this to less than 100 litres per person
per day.
71
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Sustainability Accounting Standards Board
CONTINUED
Code / SASB criteria
Our approach
IF-HB-410a.3
Number of homes
delivered certified
to a third-party
multi-attribute green
building Standard
IF-HB-410a.4
Description of risks
and opportunities
related to
incorporating
resource efficiency
into home design,
and how benefits are
communicated to
customers
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 are 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.
Throughout the design stage of our homes, we apply a “fabric first” approach to energy efficiency
by bringing together a house type range and specification designed to reduce the consumption of
energy by the homeowner. An energy consultant is appointed on every site to provide site and plot-
specific energy ratings. Testing regimes and certification is issued to assist in the control of the quality
of construction which in turn reduces the carbon emissions of each home by ensuring we build a
thermally-efficient, well-insulated building with low heat losses.
In order to further improve on building regulation compliance, the following are also incorporated into
the design of our homes:
• energy-efficient boiler or air source heat pump;
•
time and temperature zone control for boiler systems;
• air permeability rating of five or better; and
• natural / positive input ventilation.
Reviews are carried out on a six-monthly basis to monitor forthcoming changes to building regulations
and consider optional extras that can be offered to customers in line with trends and expectations.
These often lead to updates in specification and design, allowing improvements to be made where
practicable. Any proposed changes are carefully considered as we balance the impact of changes with
the need to keep our homes affordable, which is fundamental to our sustainable business strategy.
Smart meters are provided as standard where available, so that our customers can easily keep track of
their energy usage and efficiencies.
We use sustainable materials where possible, such as introducing concrete bricks to our build material
specification. Concrete bricks have significantly lower embodied carbon emissions compared to a
traditional kiln-fired clay brick allowing us to reduce our scope 3 emissions. More details can be found
on pages 54 and 55.
These benefits are communicated to customers as part of the handover process, in our new home
handbooks and our Gleeson first time buyer podcast, which was launched during the year. This explains
to customers what to expect when they become homeowners, how to get the most out of their new
home and minimise their running costs.
We are installing electric vehicle charging points in our homes on some of our sites to understand the
associated infrastructure requirements in advance of “Part S” building regulations being implemented.
Community impacts of new developments
Code / SASB criteria
Our approach
IF-HB-410b.1
Description of how
proximity and access
to infrastructure,
services, and economic
centers affect
site selection and
development decisions
We always consider matters such as access and proximity to existing infrastructure and services,
as well as economic and employment centres when selecting our sites. We aim to bring forward
developments which are in close proximity to existing services, with good access to services and
facilities. This often comes hand-in-hand with our objective to develop brownfield sites, in areas of
deprivation which often have a high provision of surrounding rental properties, as these target site
typologies are already well served.
Where access to facilities is more limited, we work with consultants and the local authority to
identify mitigation measures that might be taken to improve services and access. 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.
Notes: The UK government’s National Planning Policy Framework (“NPPF”) also requires
consideration of the opportunities presented by existing or planned investment in infrastructure.
IF-HB-410b.2
Number of (1) lots and
(2) homes delivered on
infill sites
91% (2021: 90%) of our developments were infill sites at 30 June 2022.
In the year to 30 June 2022, we completed the sale of 1,900 (2021: 1,731) homes on infill sites
representing 95% (2021: 96%) of total homes sold.
Notes: Infill sites are sites served by existing infrastructure such as roads, power lines, sewerage and
water, and other necessary facilities.
72
MJ Gleeson plc Annual Report & Accounts 2022 Code / SASB criteria
Our approach
IF-HB-410b.3
(1) Number of homes
delivered in compact
developments and (2)
average density
We consider all of our sites to be cluster developments which meet the definition of a “compact
development”. As a result, we delivered 2,000 homes on such developments in the year to 30 June
2022 (2021: 1,812 homes).
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
Code / SASB criteria
Our approach
IF-HB-420a.1
Number of lots located
in 100-year flood
zones
In the year to 30 June 2022, we acquired 625 plots in regions within flood zone 3. This accounted
for 25% of plots acquired in the year (2021: 1,481 plots acquired, 28% of plots acquired).
The total number of pipeline plots within areas of flood zone 3 at 30 June 2022 was 2,158 (13%)
(2021: 2,687 pipeline plots, 17% of total pipeline).
In the year to 30 June 2022, we had 222 home sales within areas of flood zone 3. This accounted
for 11% of our total annual completions (2021: 235 home sales, 13% of total 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
These flood zones refer to the probability of river and sea flooding, ignoring the presence of
defences.
IF-HB-420a.2
Description of
climate change risk
exposure analysis,
degree of systematic
portfolio exposure,
and strategies for
mitigating risks
Climate risk has been identified as a principal external risk for the Group as set out on page 38. 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 any 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 and
disclosure requirements.
Further analysis of the climate risks we have identified are reported within our disclosures in
accordance to TCFD on pages 66 to 69.
Activity metrics
Code / SASB criteria
Our approach
IF-HB-000.A
Number of controlled
lots
IF-HB-000.B
Number of homes
delivered
IF-HB-000.C
Number of active
selling communities
At 30 June 2022, our owned land pipeline stood at 8,478 plots (2021: 7,930 plots).
In the year to 30 June 2022, we completed 2,000 homes (2021: 1,812 completions).
Notes: Completions mean all legally completed sales to customers during the year.
In the year to 30 June 2022, we were actively selling from an average of 63 sales sites (2021: 64
active sales sites).
Notes: Active sales sites are sites which are actively selling homes and typically average 28 home
sales per year.
73
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report 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;
d. the impact of the company’s
operations on the 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.
Springfield
Meadows,
Bolsover,
Derbyshire.
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;
•
local authorities; and
• government and regulators.
Key examples of stakeholder engagement
enhancing strategic decision making and
promoting the success of the Group are set out in
the table on pages 75 to 77.
74
MJ Gleeson plc Annual Report & Accounts 2022 Decision
Signing the
Department for
Levelling Up,
Housing and
Communities’
(“DLUHC”)
pledge letter
Initiating safety
inspections
of mid-rise
and high-rise
buildings the
Group played
a part in
developing
Investing
in talent
development
Discussion topics with, and feedback from,
stakeholders
Action taken by the Board as a result of
stakeholder feedback
The Directors engaged with government
departments, the Home Builders
Federation (“HBF”), shareholders and
insurers when considering the impact
of signing DLUHC’s pledge letter in
April 2022, which commits developers
to remediating mid-rise and high-rise
buildings with life-critical fire-safety
defects.
The Directors engaged with government
departments, the HBF, shareholders and
advisers to discuss the responsibilities of
the Group in remediating mid-rise and
high-rise buildings that the Group played
a part in developing over the last 30 years.
The Board considered the impact of the
letter, stakeholder feedback, and the Group’s
responsibility to residents of those buildings
which the Group played a part in developing
over the last 30 years and elected to sign and
publish the pledge letter.
The Board initiated a review on all buildings over
11 metres tall that the Group played a part in
developing in the last 30 years. This involved an
extensive exercise to locate records and compile
a list of buildings affected. Desktop surveys were
then undertaken and a programme of intrusive
inspections and fire risk assessments has
commenced where permitted by the building
owners.
The Directors recognise the value of
retaining talent within the business
to reduce workforce attrition rates
and support the development of each
employee. Through engagement with
the workforce and external stakeholders
including local colleges, they identified
a need for the Group to grow and retain
talent organically.
The Board supported the introduction of a Land
Graduate programme, a two-year structured
programme to harness the talent of recent
graduates and develop their skills to support
the future growth of the Group. The Board has
also supported the development and delivery
of people manager training across the Group,
while members of the senior management team
received professional development coaching.
Prioritising
the health and
safety and
wellbeing of our
colleagues and
subcontractors
The Directors engaged with the workforce,
external advisers and stakeholders
including the Health and Safety
Executive, the National House Building
Council (“NHBC”), the HBF and private
health and safety consultants regarding
health and safety matters across the
business and the Group’s commitment to
prioritise the wellbeing of employees and
subcontractors.
The Board is keen to maintain its reputation
for high standards of ethical and business
conduct and supports our HomeSafe approach,
which encompasses a number of new policies,
procedures and objectives for health and safety
on both development sites and in offices.
Significant activities to promote the HomeSafe
brand and key health and safety reminders have
been undertaken throughout the year. The Board
supported the launch of the “Wellbeing Toolkit”
in the year, accessible to all employees.
75
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report Section 172 Statement
CONTINUED
Key examples as to how the Board has regard for the s172 factors can be found in the table below:
Factor considered
Long-term
consequences
of any decisions
Interests of our
employees
Interests of
our suppliers,
customers and
others
How this factor has been considered
in the year
Actions taken by the Board
as a result
• 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.
• The Group invests in information
technology and cyber security to
enable it to meet new technological
demands and protect the business
against cyber threats.
• Extensive analysis and forecasting work
was undertaken on securing the Group’s
land pipeline.
• A long-term talent mapping pipeline has
been developed across the business.
• A Land Graduate programme was
introduced to strengthen the talent pipeline
and build for the future.
•
Invested in both personnel and new IT
systems to improve quality, streamline
processes, increase productivity and
mitigate the risk of cyber threats.
• The Group arranges an anonymous
and independently conducted
employee engagement survey called
Your Voice.
• The Group conducts an annual pay
and benefits benchmarking exercise.
• Directors carry out regular site and
office visits and undertake roadshows
to communicate with all employees,
including interactive question-and-
answer sessions.
• An open-door culture is reinforced
from the top down.
• Responded to the action points arising
from the Your Voice surveys.
• Changed the participation rules of our
Share Incentive Plan so that employees
become eligible to join as soon as they
complete their probationary period.
• Enhanced pay and benefits packages
where the external benchmarking
identified a gap.
• Made significant investment in recruitment,
training and development which included
an expansion of the Human Resources
department to include an Organisational
Development team.
• Customer feedback and satisfaction
scores are considered at Board
meetings. The Board is committed
to focusing on our customers and
prioritising the customer journey.
• The Group conducts supplier and
subcontractor roadshows in order to
engage with our supply chain and
encourage open communication.
• 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 5-star builder across
all divisions built into Executive
bonus targets.
• Appointed a new Customer Excellence
Director during the year and launched our
"Customer First" initiative.
• Registered with the New Homes Quality
Board and have signed up to the New
Homes Quality Code.
• Made further improvements to our
purchase-to-pay process and reduced the
average time taken to pay suppliers and
subcontractors.
• Updated consultant appointment
documents to manage risk and ensure clear
communication with all parties.
• Signed up to the government’s First Homes
scheme.
• Set ambitious sustainability targets for
people, environment and communities in
line with our sustainable business strategy
and embedded these within the Executive
bonus structure.
76
MJ Gleeson plc Annual Report & Accounts 2022 Factor considered
Impact on our
community and
environment
Maintaining a
reputation for
high standards
of business
conduct
How this factor has been considered
in the year
Actions taken by the Board
as a result
• The Sustainability Committee and
Sustainability Action Team closely
monitor progress against the
sustainability targets set for the year.
• Focus on the Group’s existing
Community Matters programme to
work closely with the communities
where we build.
• Developed and published new
sustainability policies.
• Set ambitious sustainability targets for
the short and medium term, including the
reduction of carbon emissions.
• Appointed a Group Sustainability Manager.
• Sustainability targets delegated to senior
management and linked to Executive and
senior management bonuses.
• The Group has policies and
procedures in place to ensure it
operates to the highest 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 re-accreditation
from the Fair Tax Foundation for
paying its fair share of taxes.
• Zero tolerance on violations of
• Compulsory compliance training modules
undertaken across the business, including
Whistleblowing, Bullying and Harassment,
Modern Slavery and Anti-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.
human rights, slavery, bullying or
harassment.
•
Instructed an external GDPR audit to assess
our data protection credentials.
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.
• Following the closed-door AGM in 2020
due to Covid-19 restrictions, the Company
returned to an in-person AGM in 2021 with
access to all shareholders.
• Engaged major shareholders in preparing
the proposed Remuneration Policy.
77
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report 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
• Employee policies on diversity, recruitment, equality
• Page 133
and all significant life events
• Anti-Harassment and Bullying Policy, Health and
• mjgleesonplc.com
Safety Policy, Equal Opportunities Policy
• Approach to employee relations and the involvement
• Page 131
of our Workforce Representative
• Health and safety reporting and improving the safety
and welfare of colleagues and visitors to our sites
and offices
• Commitment to employing local people, training and
developing all our colleagues, especially apprentices,
and promoting women in construction
• Gender pay gap reporting
• Pages 62 and 65
• Pages 48 to 51
• Pages 51 and 112 and
mjgleesonplc.com
• Whistleblowing Policy and monitoring of malpractice
• Page 104 and
reporting
• Approach to anti-bribery and corruption
mjgleesonplc.com
• Pages 104 and 105
• Anti-Bribery Policy, Anti-Money Laundering Policy,
• mjgleesonplc.com
Corporate Criminal Offence Policy
• Reporting of registers of gifts and hospitality given or
received by Directors and employees of the Group
• Page 105
• Modern Slavery and Human Trafficking Policy
• Page 105 and
mjgleesonplc.com
• Payment terms and performance in relation to
• gov.uk and
payment practices
mjgleesonplc.com
• Commitment to pay the real Living Wage or higher to
• Pages 50 and 112
our employees
• Commitment to provide freehold ownership, selling
our customers the land on which their home is built
and not selling under leasehold
• Page 46
• Data Protection Policy
• mjgleesonplc.com
Employees
We are committed
to ensuring that all
our colleagues and
stakeholders are treated
fairly and equitably. We
have a culture that values
passion, collaboration
and respect.
Anti-bribery and
corruption
We are committed to
the highest standards
of ethics, honesty and
integrity and expect the
same from all parties we
engage with.
Human rights and
social matters
We are committed to
upholding human rights
across our business and
with all our stakeholders.
Our employee policies
cover all aspects of
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.
78
MJ Gleeson plc Annual Report & Accounts 2022
Statement
Ways we engage
Read more
Environmental
matters and
community
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.
Other information
Additional non-financial
information required
under the Companies Act.
• Monitoring and reporting of carbon emissions (scope 1,
• Pages 52 to 60
2 and 3) related to our homes
• Target set to reduce our scope 1 and 2 carbon
• Page 65
emissions
• Focus on more efficient and more sustainable materials
• Pages 54 and 55
•
•
Sustainable Procurement Policy, Timber Sourcing
Policy, Climate & Environmental Policy, Waste Policy,
Packaging Policy
Investment in the communities, schools and areas in
which we operate
• mjgleesonplc.com
• Pages 46 and 47
• Our Business Model
• Pages 14 and 15
• Principal risks affecting the Group and mitigating
• Pages 34 to 39
actions undertaken
• Sustainability and operational key performance
• Pages 20 and 21
indicators
Strategic Report approval statement
The Strategic Report contained in pages 2 to 79 has been approved by the Board of Directors and is signed on its
behalf by:
James Thomson
Chief Executive Officer
14 September 2022
79
MJ Gleeson plc Annual Report & Accounts 2022Strategic Report
Corporate
Governance
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
Remuneration Policy Report
Directors’ Report
Statement of Directors’ Responsibilities
in Respect of the Financial Statements
82
86
88
94
98
106
110
113
123
132
136
80
MJ Gleeson plc
Annual Report & Accounts 2022
Stefan Allanson,
Chief Financial Officer,
and Fiona Goldsmith,
Non-Executive Director,
Canal Walk,
Burnley, Lancashire
MJ Gleeson plc
Annual Report & Accounts 2022
81
Corporate Governance Chairman’s Introduction
In a year in which the housing sector experienced a
wide variety of challenges, the Board ensured that our
Executives and operatives were able to work within a
clearly-defined and coherent strategic framework.
This made it possible for the Group to achieve its
medium-term target of doubling annual sales to 2,000
homes. I would like to take this opportunity to thank all
our colleagues for the very great efforts they made to
achieve this important milestone.
The Board’s overall strategy gives high priority to
environmental, social and governance issues, and its
commitment to sustainability is embedded in all its
operations. Details of how we put sustainability into
practice are within the Strategic Report on pages 40
to 60.
Board changes
Andrew Coppel resigned from his role as Non-Executive
Director on 16 March 2022, and the Board is in the
process of seeking a suitable replacement. Fiona
Goldsmith has been appointed as the new Senior
Independent Director of the Board and Elaine Bailey
has become the Interim Chair of the Remuneration
Committee. The Board is committed to increasing the
number of independent Non-Executive Directors and
also to achieving greater diversity in its composition in
the course of the current financial year.
On 27 April 2022 the Board announced that James
Thomson will be stepping down from his role as Chief
Executive Officer from 31 December 2022. He will be
replaced from 1 January 2023 by Graham Prothero, who
is currently Chief Operating Officer of Vistry Group plc.
James will remain on the Board as a Non-Executive
Director.
Further details can be found in the Nomination
Committee Report on pages 94 to 97.
Culture
The Board continues to promote and embed our vision,
mission and values, which are described in more detail
on pages 40 and 48. The results of the latest employee
engagement survey, Your Voice, indicated that
employee engagement has once again increased and
overall satisfaction is very high.
I am pleased that the Board members, both collectively
and individually, were able to visit a number of our sites
this year. It was humbling to see the great work that is
being undertaken daily by our colleagues to support
the strategic growth of the business.
I am confident that the Board and management
continue to embed an honest and transparent culture
within the Group, which enhances our long-term
prospects.
I am pleased to
present the Corporate
Governance Report
for the year ended
30 June 2022.”
Dermot Gleeson
Chairman
82
MJ Gleeson plc Annual Report & Accounts 2022 Meadowcroft,
Winterton,
Lincolnshire
Building responsibly
The Board is committed to building responsibly.
In April 2022 the Group announced it had signed
the Department for Levelling Up, Housing and
Communities’ (“DLUHC”) pledge confirming that
we will take responsibility for performing or funding
mitigation works to address life-critical fire-safety
issues on buildings over 11 metres which the Group had
some involvement in developing. We are committed
to working with the owners of those buildings to
investigate and remediate, where necessary, any life-
critical fire-safety issues in order to protect the lives of
residents and ensure their homes are mortgageable.
Code compliance
During the period under review, the Company, as a
premium listed company, was subject to the 2018
edition of the UK Corporate Governance Code (the
“Code”) issued by the Financial Reporting Council (the
“FRC”). The Board and its Committees are responsible
for ensuring that, wherever possible, compliance with
the Code is achieved. This is demonstrated throughout
this Corporate Governance Report and, in particular,
in the Code principles as set out on page 84. Where
the Board has not complied with provisions of the
Code, these are set out in the compliance statement on
page 85.
Our commitment to
engaging with stakeholders
The Board embraces the ethos behind the requirements
of Section 172 of the Companies Act, and information
on how we engage with our stakeholders is set out in
our Section 172 Statement on pages 74 to 77.
Dermot Gleeson
Chairman
14 September 2022
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Chairman’s Introduction
CONTINUED
Section of the Code
How we have applied the Code
Board leadership
and Company
purpose
See pages 86 to 90
The Group is led by an effective and experienced 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.
Division of
responsibilities
See pages 90 and 92
The Chairman leads the Board, which includes a combination of Executive
Directors and Non-Executive Directors. Board relations are constructive and
Board members are able to demonstrate objective judgement.
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). 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.
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.
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.
Composition,
succession and
evaluation
See pages 94 to 97
Audit, risk
and internal control
See pages 98 to 105
The Board has established formal and transparent policies and procedures
to ensure the independence and effectiveness of internal and external audit
functions, and has satisfied itself on the integrity of financial and narrative
statements.
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
See pages 110 to 131
The Board has designed the remuneration policies and practices to support the
Group’s strategy and promote long-term sustainable success.
Executive remuneration is aligned with 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.
84
MJ Gleeson plc Annual Report & Accounts 2022 Louise, Group Sales Director, and
Amanda, Marketing Director
Code compliance statement
The Company has complied with all of the principles
of the Code for the year ended 30 June 2022 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
Chief Executive, Chairman and Chief Executive, and
Executive Chairman, and therefore was not considered
independent at the time of his appointment as
Chairman of the Board. The Board continues to support
his appointment based on the extensive knowledge of
the Group and industry that Dermot brings to the role
and to Board discussions.
Provision 11
Christopher Mills represents a major shareholder,
Harwood Capital LLP, and is therefore not considered
to be independent within the definition of that term
contained in the Code. As a result, following the
resignation of Andrew Coppel, less than half of the
Board, excluding the Chairman, are Non-Executive
Directors who are considered to be independent under
the terms of the Code. The Board has begun a search
for an additional independent Non-Executive Director.
Provision 38
The Chief Financial Officer received a pension
contribution of 9% in the year. This reflects the
voluntary reduction previously reported from 15% to
6.5% over a three-year period to align his Company
pension contributions with the level available to the
majority of the workforce. From 1 July 2022, Company
contributions reduced to 6.5%. Further details can be
found in the Annual Report on Remuneration on pages
113 to 122.
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022
Board of Directors
Dermot Gleeson
MA CANTAB
James Thomson
MA (OXON), ACA
Stefan Allanson
ACMA, FCT
Fiona Goldsmith
FCA
Chairman
Chief Executive
Officer
Chief Financial
Officer
Non-Executive Director,
Senior Independent
Director and Workforce
Representative
Committee membership
N(C)
Committee membership
S
Committee membership
S
Committee membership
A(C) N R
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.
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
House building 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 and
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.
Key strengths
House building and
construction. Public
limited companies.
Health and safety.
Strategy development.
Organisational culture.
Acquisitions and mergers.
External appointments
A local authority councillor
for the City of London,
Chair of the City of
London Police Authority
Board, and Non-Executive
Director of the Serious
Fraud Office.
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, BTP
plc, The Skills Market, The
Vita Company and Tianhe
Chemicals.
Key strengths
House building and
construction. Public
limited companies.
Accounting and finance. IT.
Business continuity. Risk
management. Strategy
development. Commercial.
External appointments
None.
Appointment to the Board
Fiona was appointed to
the Board in October 2019.
Background and
experience
Fiona previously held
executive finance roles
at First Choice Holidays
plc and Land Securities
Company plc. She was also
Non-Executive Director at
Walker Greenbank. Fiona
qualified as an accountant
at KPMG.
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, and Non-Executive
Director of KCOM Group
Limited.
86
MJ Gleeson plc Annual Report & Accounts 2022
Christopher Mills
Elaine Bailey
Leanne Johnson
LLB
Non-Executive Director
(Non-independent)
Independent Non-
Executive Director
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
House building and
construction. Corporate
governance. Legal.
Regulatory and
compliance. IT.
Committee membership
N/A
Appointment to the Board
Christopher was
appointed to the Board in
January 2009.
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. Acquisitions
and mergers. Strategy
development. Risk
management. Business
development.
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.
Committee membership
S(C) R(C)* A N
*Interim
Appointment to the Board
Elaine was appointed to
the Board in March 2021.
Background and
experience
Elaine was previously
Chief Executive Officer of
the Hyde Group housing
association and held a
number of senior roles at
Serco. She has extensive
experience in housing,
engineering, construction
and government services.
Elaine is a chartered
member of the Institution
of Structural Engineers.
Key strengths
House building and
construction. Strategy
development. Health and
safety. Risk management.
Business development.
Commercial.
External appointments
Non-Executive roles at
Residential Secure Income
plc, McCarthy & Stone
(Shared Ownership)
Limited, Andium Homes
Limited, CHAS, and
Trustee for The Greenslade
Family Foundation.
Key:
N – Nomination
Committee
A – Audit
Committee
S – Sustainability
Committee
R – Remuneration
Committee
(C) – Committee Chair
Directors who served during
the year
Andrew Coppel resigned from
his role as Non-Executive
Director on 16 March 2022
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022
Corporate Governance Report
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.
There is a clear and effective division of responsibilities
between Board members. The Chairman is responsible
for the overall effectiveness of the Board and, in doing
so, promotes the highest standards of integrity and
corporate governance. The Chief Executive Officer leads
the business in delivering the Group’s overall strategy
and works closely with the Chairman and the Chief
Financial Officer. The Non-Executive Directors provide
constructive challenge, strategic guidance and hold
management to account. More detailed descriptions
of the roles of the Board members can be found in the
table on pages 90 and 91.
Board composition and independence
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 experience, which enable it to
function effectively and to have a dialogue that is both
constructive and challenging. However, the Board is
cognisant that following the resignation of Andrew
Coppel on 16 March 2022, the Board does not meet the
independence provisions of the Code, and has therefore
initiated a search for a new independent Non-Executive
Director.
Matters reserved for the Board or its
Committees
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, including:
• Determining the Board’s structure and composition,
including Board appointments, removals and
succession planning.
• Agreeing the Group’s strategy and financial policy.
• Approving banking and financing arrangements.
• Approving the interim and annual financial
statements.
• Agreeing and overseeing risk management and
internal control effectiveness.
• Agreeing major capital expenditure, material
investments and the acquisition or disposal of land.
• Entering into and amending pension arrangements.
• Approving contractual arrangements that fall
outside authority delegated to Executive Directors.
• Approving the dividend policy and dividend
payments.
• Pledging security over assets and providing Parent
Company guarantees.
In addition, the Board receives updates on
sustainability, governance, finance, 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.
88
MJ Gleeson plc Annual Report & Accounts 2022 Board and Committee attendance
Board and Committee attendance at scheduled meetings during the year is shown in the table below. Board packs
and agendas are circulated in advance of such meetings. The main purpose of these meetings is to give the Board
and Committees regular reports on the performance of the Group and address a wide range of matters, including
health and safety, operational performance, risk management, governance and corporate strategy. Outside of the
scheduled meetings, the Board and its Committees meet regularly to discuss specific matters. 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 follow up actions.
Board
Scheduled: 6
Audit
Scheduled: 4
Remuneration
Scheduled: 3
Nomination
Scheduled: 1
Sustainability
Scheduled: 3
Dermot Gleeson
James Thomson
Stefan Allanson
Fiona Goldsmith
Christopher Mills
Elaine Bailey
Former Directors:
Andrew Coppel1
6
6
6
6
6
6
–
–
–
4
–
4
–
–
–
3
–
3
3/3
3/3
1/1
1
–
–
1
–
1
–
–
3
3
–
–
3
–
1 Andrew Coppel resigned from the Board on 16 March 2022.
The table includes the scheduled Board and Committee meetings that were held during the year and in early July
2022 in respect of the year ended 30 June 2022.
Board activities
The following table summarises the key activities undertaken by the Board during the year:
Topic
Key activities in 2022
Financial and
risk
• Approved the Annual Report and Accounts and interim financial statements.
• Considered the Group’s long-term viability and approved the going concern disclosures.
• Reviewed monthly business updates and trading performance.
• Approved the budget for the next financial year 2023 and plan for financial years 2024
to 2027.
• Approved the payment of interim and final dividends for the year.
• Considered the impact of legislative changes to the Defective Premises Act, and the
financial implications of remedial works to medium-rise and high-rise buildings pursuant
to the Department for Levelling Up, Housing and Communities’ pledge and approved
required provisions.
• Approved the Group’s tax strategy for the financial year.
• Approved Group insurance policies for the next financial year.
Controls and
governance
• Appointed a new Chief Executive Officer with industry experience following the
resignation of James Thomson, which is effective 31 December 2022.
• Reviewed the Group risk register and internal control assessments.
• Approved enhanced controls within the Group’s Commercial function with additional
reporting to the Audit Committee and Board.
• Reviewed and approved an updated Modern Slavery and Human Trafficking Statement.
• Reviewed and approved updated Terms of Reference for the Remuneration and
Sustainability Committees.
• Reviewed a new Cyber Incident Response Plan.
Strategy
• Monitored progress against the Group’s strategic priorities.
• Reviewed and approved the Group’s sustainability targets.
• Considered the financial risk to the business ahead of the closure of the Help to Buy
scheme to new applications in October 2022.
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CONTINUED
Topic
Key activities in 2022
People and
employee
engagement
• Undertook regular workforce engagement via the Executive Directors and senior
management.
• Conducted visits to the Group’s offices and development sites to engage with colleagues.
• Employee roadshows were hosted by the Executive Directors, providing employees with
insight into the Group’s performance and strategy.
• The Workforce Representative engaged with the HR Director reviewing the results of the
employee engagement survey, Your Voice.
Sustainability
• Published new sustainability-led Group policies.
• Reviewed progress against sustainability targets and actions undertaken.
• Reviewed the Group’s sustainability risk register.
• Approved new sustainability targets linked to Executive remuneration.
• Approved the recruitment of a Group Sustainability Manager.
Shareholder
engagement
• Engaged with shareholders on material sustainability issues.
• Consulted with major shareholders on issues such as Directors’ remuneration and the
proposed Remuneration Policy.
• 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 RNS.
•
Invited and responded to questions received ahead of the 2021 AGM.
Key responsibilities of the Board
The following table summarises the key responsibilities of the Board:
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.
90
MJ Gleeson plc Annual Report & Accounts 2022 Chief
Executive
Officer
• 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.
• 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.
Chief
Financial
Officer
• 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 their 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.
• Being 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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CONTINUED
Corporate governance structure
The Board
Nomination
Committee
Audit
Committee
Dermot Gleeson
Committee Chair
Fiona Goldsmith
Committee Chair
Sustainability
Committee
Elaine Bailey
Committee Chair
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
Monitor the Group’s
sustainability strategy
to ensure it remains
consistent with the
Group’s mission, vision
and sustainability
policies.
Determine
appropriate targets
that will improve
the sustainability of
the Group.
Develop the Group’s
long-term carbon
emissions reduction
pathway.
Sustainability policy
Develop and agree
sustainability policies
that align with the
Group’s approach to
sustainability.
Ensure the policy
is fully understood
and implemented by
the Group’s business
operations.
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 Group.
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 relation-
ship with the external
auditors, including
their appointment,
independence and
objectivity, and the
effectiveness of the
external audit process.
Remuneration
Committee
Elaine Bailey
Interim
Committee Chair
Setting remuneration
Set the remuneration
of the Chairman and
the Board.
Recommend to the
Board the policy for
Executive Directors and
senior management
remuneration.
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 monitor
outturn.
Approve share
awards granted under
long-term incentive
arrangements, including
the outturn on such
awards.
Approve 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.
All of the Committee terms of reference can be found on the Company’s website at mjgleesonplc.com
92
MJ Gleeson plc Annual Report & Accounts 2022 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 internal control systems 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 review
by the Chief Financial Officer and internal auditor. The
Group’s principal risks and the mitigating actions the
Group has implemented to manage them can be found
on pages 34 to 39.
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 2025, which is covered
by the Group’s financial budget and plan approved
by the Board in May 2022. It is also aligned to the
average 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 153.
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.
A core principle of the Group is to maintain a cautious
approach to debt funding. Following the refinancing
undertaken in the prior 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 and cash equivalents balance of
£33.8m (2021: £34.3m).
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
Group will be able to continue in operation and meet
their 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.
93
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Nomination Committee Report
Key achievements for 2022
• Appointment of Graham Prothero as Chief
Executive Officer effective 1 January 2023.
• Appointment of Fiona Goldsmith as Senior
Independent Director effective 24 March 2022.
Areas of focus for 2023
• Appointment of a new independent Non-
Executive Director.
• Promoting ethnic diversity across the Board
and general workforce.
• Board evaluations to be undertaken by a third-
party assessor.
Committee members
• Dermot Gleeson (Chair)
• Fiona Goldsmith
• Elaine Bailey
Dear shareholder,
I am pleased to present the Nomination Committee
Report for the year ended 30 June 2022.
Operation of the Committee
The Committee comprises the Chairman of the Board
and two independent Non-Executive Directors. The
biographies and professional qualifications of the
members are shown on pages 86 and 87. The Chief
Executive Officer, Chief Financial Officer and Company
Secretary attend meetings at the invitation of the
Committee.
Committee meetings
The Committee is required, in accordance with its terms
of reference, to meet at least once a year. During the
year, the Committee formally met once and had three
unscheduled meetings to consider a range of matters.
Activities during the year
The Committee’s main activity during the year was to
find a suitable successor for the Chief Executive Officer,
James Thomson, who has played a pivotal role in
embedding the cultural and structural changes needed
to deliver the Group’s strategic targets over the last
three years.
Other areas of focus included:
• Appointing Fiona Goldsmith as Senior Independent
Director effective 24 March 2022.
• Reviewing the composition of the Board and its
range of skills and experience.
The Committee’s
priority during the year
was the search for a
new Chief Executive
Officer to succeed
James Thomson when
he stands down at the
end of the calendar
year. The focus for
the year ahead will
be to appoint a new
independent Non-
Executive Director to
the Board.”
Dermot Gleeson
Chair of the Nomination
Committee
94
MJ Gleeson plc Annual Report & Accounts 2022 • Board and management succession planning.
• Reviewing Board diversity and independence.
• Annual review of the Committee’s terms of
reference.
• Reviewing the annual Board evaluation
questionnaire and findings.
Board appointments
In the search for a suitable successor for the Chief
Executive Officer, the Committee undertook an
independent, wide-ranging search process both
internally and externally. On 27 April 2022, the
Committee was pleased to recommend to the Board
that Graham Prothero be appointed as Chief Executive
Officer. Graham is currently Chief Operating Officer at
Vistry Group plc and will join the Board from 1 January
2023. Graham has an outstanding track record and
significant experience in the house building sector,
making him the ideal candidate to lead the Group in the
next phase of its growth.
Committee changes
Following Andrew Coppel’s resignation on 16 March
2022, Fiona Goldsmith was appointed as Senior
Independent Director and Elaine Bailey was appointed
as the Interim Chair of the Remuneration Committee
effective 24 March 2022.
Re-election of Directors
The Company’s Articles of Association (“the Articles”)
provide that, at each Annual General Meeting (“AGM”),
at least one-third of the Directors shall retire from
office and 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 has served notice of
his resignation and will stand down as Chief Executive
Officer on 31 December 2022. He will still stand for
re-election at the AGM, covering his remaining time
in position. Stefan Allanson holds a service contract
that may be terminated by the Company with a notice
period of one year.
Diversity and inclusion
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. We understand that a
diverse Board with a range of views enhances decision
making, which is beneficial to the Group’s long-term
success and is in the interests of the Company’s
stakeholders.
The Board diversity policy was approved in 2017 and
sets the framework for Board appointments to ensure
that candidates are assessed against objective criteria
which do not place any candidate at a disadvantage.
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 currently set specific
targets for boardroom diversity. However, in light of the
forthcoming changes to the Listing Rules announced
by the FCA, the Board will review its policy during the
current financial year and consider the steps needed
to promote ethnic diversity on the Board and in the
general workforce.
Since the appointment of Fiona Goldsmith to the role
of Senior Independent Officer on 24 March 2022, at
least one of the senior Board positions is occupied by
a woman.
The Group has an equality and diversity policy in
respect of its wider workforce, with further details set
out on page 133.
Board tenure
Years Board Members
1-5
6–9
10+
Independence
Chairman
Executive
Independent
Non-Executive
Non-Independent
Non-Executive
Gender balance
Male
Female
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022
Nomination Committee Report
CONTINUED
Board appointment process
1.
Information obtained through Board evaluations and
succession planning is used to identify gaps in skills,
experience, independence and knowledge.
2. The recruitment process commences, assisted by
independent, external consultants to determine
desired objective criteria. A longlist of candidates is
prepared for the Nomination Committee to review,
and from this a shortlist of candidates is selected for
interview.
3. Interviews held with the Chairman, Non-Executive
Directors and Executive Directors (separately).
4. Nomination Committee recommends a candidate to
the Board for approval.
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.
How this supports a diverse succession
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 succession 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
Last year, the Board announced that it would undertake
an external evaluation of the Board’s performance in
2022. Having considered the announcement of James
Thomson’s resignation as Chief Executive Officer and
with the search for a new independent Non-Executive
Director underway, the Board agreed to delay this
process until the new Board members are in place. The
Board will, therefore, undertake an external evaluation
in 2023. The Board does, however, understand the
importance of having a rigorous and transparent Board
evaluation process, and therefore, during the year, the
Board undertook a review of its own effectiveness, that
of its Committees and 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 is therefore
committed to undertaking an external Board evaluation
in 2023, when the Board changes have been effected.
Fiona Goldsmith, in her 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.
96
MJ Gleeson plc Annual Report & Accounts 2022 Macaulay Park,
Grimsby, Lincolnshire
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:
Findings from the 2022 Board
evaluation
Actions planned
Following the resignation of Andrew
Coppel, the Board has too few
independent Directors.
A review of Board composition has resulted in the Board commencing
a search for an additional independent Non-Executive Director. This
will realign the Board with the independence provisions of the Code.
The Board should undertake regular
reviews of its composition and factor
this into succession planning.
Increased focus on Board composition, skills and diversity. This will
include an updated review of senior management succession planning.
The Board holds open, transparent and
robust discussions.
Continue to communicate effectively as a Board with open and
transparent discussions and use this dialogue to reach robust
conclusions.
The Board makes an effective and
balanced contribution to strategy, risk
assessment and corporate governance.
The Board Committees are operating
effectively, and the Committee Chairs
are effective in their leadership.
Continue to regularly review risk and opportunity across the business,
in line with the Company’s overall strategy.
Appoint a permanent Chair of the Remuneration Committee and
continue to hold an appropriate number of Committee meetings
with pre-approved agendas, focusing on key issues with challenging
debate.
Dermot Gleeson
Chairman
14 September 2022
97
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Audit Committee Report
Key achievements for 2022
• Close monitoring of commercial processes,
cost management, profit and margin
recognition.
• Assessing the recent changes brought about
by the Building Safety Act 2022 and its impact
on the Group and its financial statements.
• Assessing emerging and principal risks,
including those related to climate change,
environmental, social and governance matters.
• Obtaining assurance over areas of risk or
complexity, including taxes, carrying value of
certain assets and IT security.
Areas of focus for 2023
• Continued focus on commercial processes,
cost management, profit and margin
recognition.
• Monitoring changes in government legislation
and regulation in relation to building safety
and its impact on the Group.
• Ongoing assurance over the financial controls,
tax compliance and risk management
processes of the Group.
• Monitoring the resilience and security of key
business systems against cyber risks and other
threats.
• Reviewing and developing the Group’s internal
audit processes and plan.
Committee members
• Fiona Goldsmith (Chair)
• Elaine Bailey
Dear shareholder,
I am pleased to introduce the Audit Committee Report
for the financial year ended 30 June 2022, which has
been another busy year for the Committee.
Operation of the Committee
Both 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 86
and 87.
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.
The Committee continues
to have a busy agenda
supporting the Board in
responding to change
and monitoring the
effectiveness of the
Group’s systems of risk
management and control,
including audit and
financial reporting.”
Fiona Goldsmith
Chair of the Audit Committee
98
MJ Gleeson plc Annual Report & Accounts 2022 Northbeck Grange,
Bradford, West Yorkshire
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.
• Assessing compliance with Group policies and
whistleblowing.
• Assessing external auditor effectiveness,
independence and fees.
• 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
− regulatory compliance, including with the UK
Market Abuse Regulation, GDPR, anti-bribery
and corruption and Corporate Criminal Offence.
Activities during the year
During the year, the Committee dealt with the following
key matters:
• Approving the Group’s interim and annual financial
reporting.
• Reviewing principal accounting matters and
judgements.
• Monitoring profit recognition and cost management.
• Obtaining assurance over carrying value of work in
progress.
• Reviewing going concern and viability.
• Reviewing Group credit risk.
• Reviewing tax matters and approving the Group’s
tax strategy.
• Monitoring legacy matters, including those impacted
by the Building Safety Act 2022.
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Audit Committee Report
CONTINUED
Audit Committee activities in 2022
Activity
Work carried out
Outcome
The Committee was satisfied
that, taken as a whole, the
2022 Annual Report and
Accounts is fair, balanced
and understandable and
provides sufficient information
for shareholders to assess
the Company and 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 margin
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.
The Committee satisfied
itself that the processes and
controls associated with
Group taxes remain robust.
Financial
reporting – fair,
balanced and
understandable
The Committee reviewed the integrity of this Annual
Report and Accounts and formal announcements
made during the year relating to the Group’s financial
performance.
Risk
management
At the request of the Board, the Committee considered
whether the 2022 Annual Report and Accounts taken as
a whole is fair, balanced and understandable and whether
it provides the necessary information for shareholders to
assess the Company’ and Group’s performance, business
model and strategy. In doing so, the Committee received
comments from management and the external auditors
at its meeting in September 2022. It also reviewed
the annual compliance procedures and management
confirmations that support the Group’s financial reporting
governance framework and risk management process for
the year ended 30 June 2022.
The Committee received an update on the Group risk
register at four of its scheduled meetings during the
year. A summary of the principal Group risks, mitigating
actions and any changes during the year is set out in
Risk Management on pages 34 to 39.
The Committee fully understands the risks faced by
the Group and how these are being addressed. This
process ensures that the Committee meets its obligation
to oversee the effectiveness of risk management, and
allows it to confirm to the Board that appropriate
controls and mitigations are in place and operating
effectively.
Profit margin
recognition
Throughout the year, the Committee reviewed the
processes, controls and assumptions for recognising
profit margin on development sites, including three
particular areas: cost inflation, selling prices and
contingencies. See further details under “Financial
reporting and significant judgements” on page 102.
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”.
The Committee received regular updates on Group tax
matters. These cover all aspects of compliance, including
VAT, Corporation Tax, the newly-enacted Residential
Property Developers Tax, Construction Industry Scheme
and employment taxes including off-payroll working
arrangements.
The Committee reviewed the Group’s Tax Strategy
statement for the year to 30 June 2022 and
recommended its approval to the Board. A copy of the
Tax Strategy statement can be found on the Company’s
website, mjgleesonplc.com.
Work in
progress
Group taxes
100
MJ Gleeson plc Annual Report & Accounts 2022 Activity
Work carried out
Outcome
Legacy matters
The Committee received and reviewed reports on
claims associated with the Legacy businesses, being the
contracting and engineering businesses sold more than
10 years ago.
Building safety
The Committee approved risk assessments on all
buildings over 11 metres tall that the Group played
a part in developing during the last 30 years and
received reports on the outcome of those inspections.
The Committee received updates on the latest
legal requirements under the Building Safety Act
2022 and continues to monitor this evolving area of
government policy.
Internal audit
The Committee set the internal audit plan for financial
year ended 30 June 2022 at its meeting in September
2021. The Committee received and reviewed reports
from the internal auditor throughout the year on internal
audits conducted across the business.
The Committee, in conjunction
with the Chief Financial
Officer, continues to monitor
the status of claims and any
remaining liabilities.
The Committee is satisfied
that the Group is meeting
the commitments made
in the pledge letter to the
Department for Levelling Up,
Housing and Communities
(“DLUHC”) and that it is
acting responsibly to meet its
obligations.
The Committee remains
satisfied with the effectiveness
of the internal audit function.
External audit
The Committee received and reviewed the external
auditors’ Group audit plan at its meeting in February
2022. Following completion of the audit of the Group,
the external auditors presented their findings to the
Committee in September 2022.
The Committee remains
satisfied with the effectiveness
of the external auditors and
the audit process.
Other activities
During the year, the Committee also reviewed reports on IT and cyber security,
corporate disclosures, GDPR, credit risk, Corporate Criminal Offence, anti-bribery
and malpractice monitoring.
Springfield Meadows,
Bolsover, Derbyshire
101
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 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:
Activity
Work carried out
Outcome
Margin
recognition
Carrying
value of land
and work in
progress
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 profit.
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 recognised on the sale of individual homes
and concluded that they remain appropriate.
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.
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 profit.
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 associated processes
and controls have continued to
operate effectively across the
Group and the assumptions
applied by management
in relation to profit margin
recognition are appropriate.
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 inventory value is
appropriate.
Building safety
The Committee reviewed, challenged and agreed the
basis on which the Group’s review and assessment of
buildings over 11 metres in which the Group played a
part in developing was carried out. The Committee
considered the assessment of costs associated with
life-critical fire-safety remediation in respect of any such
buildings and the findings from independent experts.
More details can be found in note 18 to the financial
statements.
The Committee considered and agreed the
appropriateness of presenting the costs associated with
life-critical fire-safety remediation as an exceptional item
in these financial statements, including discussions with
the external auditors.
The Committee satisfied itself
that the processes undertaken
by the Group in respect of
the identification, assessment
and estimation of life-critical
fire-safety remediation costs
were robust and the provisions
recognised were appropriate.
The Committee satisfied itself
that the presentation of such
costs as an exceptional item in
these financial statements is
appropriate.
102
MJ Gleeson plc Annual Report & Accounts 2022 Activity
Work carried out
Outcome
Climate
change and
environmental
risks
Going concern
and viability
reporting
The Committee reviewed the risk of climate change
impacting the Group as part of the risk register review
during its regular meetings.
Climate change has the potential to impact the Group
through restricted land availability, disrupted build
programmes, material and labour shortages and
increased costs. This could impact the carrying value
of assets, including land held in inventory, or require
specific provisions to be made.
The Committee satisfied
itself that no provisions or
impairment of assets have
been recognised in these
financial statements as a
result of climate change or
environmental risks and that
this remains 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 and Accounts.
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 and Accounts. 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 153.
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 93. 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 Company
and 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
(Company
only)
The Committee reviewed the carrying value of the
investment in subsidiaries during the year.
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
£0.1m at 30 June 2022. This has no impact on the
consolidated Group.
The Committee satisfied itself
that the carrying value of
investments held in the Parent
Company remains appropriate
with no other indicators of
impairment.
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Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Audit Committee Report
CONTINUED
Financial Reporting Council
During the year, the Committee monitored the Group’s
engagement with external stakeholders relevant to the
Committee’s areas of oversight, including the Financial
Reporting Council (the “FRC”). In February 2022, the
Group received a letter from the Corporate Reporting
Review Team of the FRC in relation to the Group’s
2021 Annual Report and Accounts as part of its regular
review and assessment of the quality of corporate
reporting in the UK. This letter did not raise any specific
questions or queries that required a substantive
response or explanation, but did note a number of
matters where they believed that users of the accounts
would benefit from improvements to the existing
disclosures. All the proposed specific enhancements
to the disclosures in the accounts have been taken into
account in the preparation of this Annual Report and
Accounts.
This review considered compliance with reporting
requirements and does not provide any assurance
over the disclosures that were reviewed. The FRC
(which includes the FRC’s officers, employees and
agents) accepts no liability for reliance on them by the
Company or any third party, including but not limited to
investors and shareholders.
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 senior 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 senior management, 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 changes identified
are incorporated into the Group risk register. The Risk
Management section on pages 34 to 39 sets out details
of the principal risks that the business faces and how it
mitigates them.
The Committee has satisfied itself that an appropriate
system of internal controls and risk management
processes has 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 Group 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 to confidentially report any malpractice or
matters of concern they have regarding the actions of
employees, management or Directors, or any unlawful
behaviour or breaches of the Group’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 Group’s whistleblowing policy through the induction
process, newsletters, posters and reminders that “If
you see something, say something”. Employees also
undertake a mandatory online course which is designed
to raise awareness of reportable issues or incidents.
Anti-bribery and corruption policy
The Group 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 Group’s image and reputation.
104
MJ Gleeson plc Annual Report & Accounts 2022 The Group policy sets out the standards expected of
all Group employees in relation to anti-bribery and
corruption. The Board has overall responsibility for
ensuring this policy complies with the Group’s legal and
ethical obligations and that everyone in the organisation
complies with it. This policy is also relevant for third
parties who supply goods or perform services for or on
behalf of the Group. We require those parties to adhere
to this policy or have in place equivalent policies and
procedures to combat bribery and corruption.
Employees also undertake a mandatory online course,
which is designed to raise awareness of bribery and
corruption offences and penalties for both individuals
and the Group.
The Committee reviews a report on the registers of
gifts and hospitality given or received by Directors and
employees of the Group at least every six months. No
incidents of bribery or corruption involving the Group
or its employees were reported to the Committee
during the year.
Human rights and modern slavery
During the year, the Group established new processes
to enhance modern slavery checks and safeguards
within the business, enhanced the on-boarding process
for its supply chain and undertook regular audits of its
development sites. All employees undertake mandatory
online training on spotting the potential signs of slavery
within the workplace and are actively encouraged to
raise concerns through the whistleblowing lines. The
modern slavery focus group established in the prior
year is led by the Chief Financial Officer and comprises
members of senior management and the Head of Legal
and Company Secretary.
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 six 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
discussed 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 independent 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 15 November 2021.
In February 2022, the auditors presented their
Group audit plan to the Committee, identifying
their assessment of key risks in the Group’s financial
reporting. For the 2022 financial year, as in prior years,
the key audit matters identified were in relation to the
carrying value of land and work in progress in Gleeson
Homes and Gleeson Land and the carrying value of
investments in subsidiaries in relation to the Company
only. Subsequently, the valuation of building safety
provisioning was added as a key audit matter for the
year to 30 June 2022.
The Committee formulates and oversees the Group’s
policy on monitoring the 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
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 2022, 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 its assessment, the Committee considers
feedback from the Chief Financial Officer and other
senior finance management, the auditors’ fulfilment of
the agreed audit plan, and the auditors’ objectivity and
independence during the process. The Committee also
holds private meetings with the auditors on an annual
basis. Matters discussed include the auditors’ assessment
of business risks and management activity thereon,
the transparency and openness of interactions with
management and confirmation that there has been no
restriction in scope placed on them by management.
The Committee concluded that the audit process had
been conducted robustly and PricewaterhouseCoopers
LLP’s performance as independent auditors to the
Group was considered to be satisfactory. As the
auditors have indicated their willingness to continue
in office, a resolution that they be reappointed will
be proposed at the next AGM of the Company on 18
November 2022.
Under current regulations the Group is not required 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 Company has complied throughout the reporting
year with the provisions of The Statutory Audit Services
for Large Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
Fiona Goldsmith
Chair of the Audit Committee
14 September 2022
105
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Sustainability Committee Report
Key achievements for 2022
• Review of Group sustainability risks and
mitigating actions.
• Review of progress against 2022 sustainability
targets and setting of 2023 targets, including
reducing carbon emissions.
• Review of progress on scope 3 carbon
emissions data validation.
• Review of Group reporting and disclosures,
in particular climate risk scenario modelling
for TCFD.
Areas of focus for 2023
• Monitoring progress against 2023
sustainability targets.
• Developing the Group’s long-term carbon
emissions reduction pathway.
• Developing the Group’s water and biodiversity
strategies.
• Enhancing the Group’s climate-related
reporting disclosures and communications.
Committee members
• Elaine Bailey (Chair)
• James Thomson
• Stefan Allanson
Dear shareholder,
I am pleased to introduce our second Sustainability
Committee Report, for the Committee’s first full year in
operation after it was formed in December 2020.
Operation of the Committee
The Committee is comprised of the Chair, the Chief
Executive Officer and the Chief Financial Officer. Other
members of the Board, senior management or external
advisers 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 twice a year, and
the Committee met twice during the year. The terms of
reference were amended during the year to increase the
number of scheduled meetings to three times a year
as the Committee recognises the importance of its role
in continuing to monitor and integrate sustainability
practices and targets across the business.
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.”
Elaine Bailey
Chair of the
Sustainability Committee
106
MJ Gleeson plc Annual Report & Accounts 2022 Jack,
Briar Lea Park,
Longtown,
Cumbria
Activities during the year
During the year, the Committee dealt with the following
key matters:
• Reviewing progress against 2022 sustainability
targets and actions.
• Agreeing new sustainability targets and actions
for 2023.
• Reviewing the Group’s sustainability risk register.
• Recruitment of the Group Sustainability Manager.
• Agreeing further steps for the Group in respect of:
− “near miss” accident reporting;
− enhancing employee engagement;
− enhancing the customer experience;
− reducing the Group’s scope 1 and 2 carbon
emissions;
− scope 3 emissions data and a carbon reduction
pathway;
− water and biodiversity strategies; and
− developing climate-related disclosures in
accordance with the Task Force on Climate-
related Financial Disclosures (“TCFD”) and the
Sustainability Accounting Standards Board
(“SASB”).
Our aims
We are currently developing our long-term carbon-
reduction strategy. As we set out last year, the starting
point for this carbon reduction plan is a complete and
in-depth analysis of the scope 1, 2 and 3 emissions in
our build processes and supply chain in order to model
a pathway that is both robust and implementable.
Whilst we have made significant progress in
understanding our scope 3 emissions this year and
validating these to Environmental Product Declarations
(the details of which can be found on page 60) we have
further to go before we establish a robust and realistic
medium and long-term strategy.
In the short-to-medium term, our aim is to set
sustainability targets and actions that can be
quantified and that are, 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 effectively, and
drives purposeful outcomes which ultimately drive the
business towards achieving its long-term sustainable
business strategy.
We are all aware of the potential impacts of climate
change and the risks not only to our business but the
communities in which we build. We are already seeing
some effects in the form of emerging environmental
issues, including phosphate and nitrate mitigation,
nutrient neutrality, flooding and water stress, that are
impacting the sector in terms of the planning process
and land availability. Our aim is to continue to adapt
and stay one step ahead in our approach to land
buying, materials, technology and processes in order
to manage and mitigate the effects of these on our
business.
Our aim is also 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 our
reporting.
107
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Sustainability Committee Report
CONTINUED
Sustainability Committee activities in 2022
Activity
Work carried out
Outcome
Our TCFD reporting has been updated to
reflect climate risk scenario planning.
Our detailed validation of scope 3 emissions
will enable us to develop our medium and
long-term carbon reduction pathway.
The Committee was satisfied with progress
against the 2022 targets.
The Committee approved the targets and
actions proposed for 2023.
The Committee and the Board fully
understand and manage the balance of risks
in the business.
The Committee approved the disclosures for
inclusion in this Annual Report and Accounts.
Carbon
emissions
Sustainability
targets
Sustainability
risk register
Climate-
related
disclosures
The Committee has continued to review the
progress made on our carbon emissions
reduction and the impact that regulatory
change will have. This has been included
in our climate risk scenario planning that
forms part of our TCFD reporting on pages
66 to 69.
The continuation of our scope 3 emissions
evaluation for embodied and in-use carbon
has significantly improved the accuracy of
our carbon data and understanding.
The Committee received updates on
progress against the 2022 sustainability
targets that were published in last
year’s Annual Report and Accounts. The
Committee challenged where progress
was falling short of the targets set and the
corrective actions being taken. Progress
against our published 2022 targets can be
found on pages 62 and 63.
The Committee reviewed and approved the
targets and actions for 2023. These can be
found on page 65.
The Committee reviewed the sustainability
risk register. This assesses both the
inherent and mitigated risks of the material
sustainability issues relevant to the Group.
Group-level risks, including those related to
climate change and sustainability, informed
by the sustainability risk register, are
monitored by the Audit Committee and the
Board as set out in Risk Management on
pages 34 to 39.
The Committee reviewed the draft and
final disclosures for inclusion in this Annual
Report and Accounts. This includes the
disclosures based on the recommendations
of the TCFD, which can be found on pages
66 to 69, and the relevant SASB Industry
Standards, which can be found on pages
70 to 73.
Elaine Bailey
Chair of the Sustainability Committee
14 September 2022
108
MJ Gleeson plc Annual Report & Accounts 2022 Canal Walk,
Burnley,
Lancashire
MJ Gleeson plc
Annual Report & Accounts 2022
109
Corporate Governance Remuneration Committee Report
Key achievements for 2022
• Reviewing and proposing the new Directors’
Remuneration Policy for 2023 and
subsequent years.
• Reviewing and assessing the fairness of 2022
bonus and LTIP outcomes.
• Agreeing performance targets for Executive
Director remuneration for 2023.
• Reviewing and approving proposals for staff
pay and bonuses.
Areas of focus for 2023
• Setting targets for Executive remuneration
that align to the Group’s business strategy.
• Reviewing wider workforce remuneration
and related policies.
Committee members
• Elaine Bailey (Interim Chair)
• Fiona Goldsmith
Dear shareholder,
I am pleased to present the Directors’ Remuneration
Report for 2022.
The report is split into three sections:
1. This statement, which provides an overview of the
key decisions made on Directors’ remuneration
during the year;
2. The Annual Report on Remuneration, which provides
details of the remuneration earned by Directors
during 2022, and how we intend to apply the
Directors’ Remuneration Policy during 2023; and
3. The proposed Directors’ Remuneration Policy for
which we will be seeking shareholder approval at
the 2022 AGM.
Our new Directors’ Remuneration Policy
Our current Remuneration Policy was approved by
shareholders at the 2019 AGM (with 98.2% of votes
cast in favour) and is approaching the end of its
three-year term. A new Directors’ Remuneration
Policy (“Remuneration Policy”) will therefore be put to
shareholders for approval at the 2022 AGM.
The Committee has undertaken a comprehensive
review of the Executive remuneration framework and
concluded that it continues to support the delivery of
business strategy and the creation of shareholder value.
Therefore, no changes are proposed to the overall
framework. Minor refinements have been proposed to
the Remuneration Policy to provide greater alignment
with best practice corporate governance principles and
to reflect “good housekeeping”. As part of the review,
the Committee wrote to major shareholders to advise of
the proposed refinements and invite any feedback.
I am pleased to present
the Annual Report on
Remuneration and the
proposed Directors’
Remuneration Policy.”
Elaine Bailey
Interim Chair of the
Remuneration Committee
110
MJ Gleeson plc Annual Report & Accounts 2022 The proposed refinements are as follows:
• Post-employment shareholding guideline
Guidelines were introduced in 2019 which required
Executive Directors to hold shares equivalent to
200% of salary for the first 12 months following
departure and 100% of salary for the subsequent
12 months (or their actual shareholding at the point
of departure if lower). The guidelines have been
updated with effect from 1 July 2022 to reflect
best practice and guidance from the Investment
Association. Executive Directors are now required
to hold shares equivalent to 200% of salary for
two years following departure (or their actual
shareholding at the point of departure if lower).
• Leaver provisions for deferred bonus awards
The leaver provisions have been updated to reflect
that, if an Executive Director departs for any reason,
unvested deferred bonus awards will ordinarily
continue to vest at the normal vesting date. The
exception being that unvested awards will lapse
immediately if an Executive Director is summarily
dismissed. This is so that the policy fully aligns with
the approach adopted by the Committee in practice,
which the Committee considers to be in line with
market practice.
Executive Director changes
As announced on 27 April 2022, James Thomson will
step down as Chief Executive Officer on 31 December
2022. He will remain on the Board as a Non-Executive
Director. Graham Prothero will succeed James Thomson
as Chief Executive Officer with effect from
1 January 2023.
previous employer. The Committee notes that the
additional 50% of salary serves as a performance-
based buy-out award, which has a significantly lower
face value and longer time horizons compared to
the awards forfeit. The LTIP award will be subject
to the same performance metrics as the award to
be granted to Stefan Allanson (see page 112). The
maximum LTIP opportunity for subsequent years will
be 150% of salary.
Pay and performance outcomes for 2022
Results for the year
Gleeson Homes delivered its medium-term strategic
objective of doubling home sales within five years by
completing the sale of 2,000 new homes during the
year, an increase of 10.4% on the prior year. It opened
23 new sites and closed the year with 87 build sites, of
which 61 were actively selling.
The average selling price increased by 14.7% to
£167,300, which offset significant material and labour
cost increases experienced across the sector. As a
result, Gleeson Homes delivered an operating profit of
£51.2m pre-exceptional items (2021: £37.4m).
Gleeson Land sold six sites during the year with the
potential to deliver 1,443 plots for housing development
and delivered operating profit of £11.1m (2021: £11.1m).
It ended the year with a portfolio of 71 sites (2021: 71
sites) with the potential to deliver 20,241 plots.
As a result of the strong performance in both divisions,
Group profit before tax (pre-exceptional items) was
£55.5m (2021: £41.7m), which was significantly ahead of
market expectations.
The treatment of James Thomson’s remuneration is set
out on page 116. The Committee has agreed the following
remuneration arrangements for Graham Prothero:
The Group also set a number of sustainability targets
for 2022. The performance against these targets is set
out on pages 62 and 63.
• An annual salary of £540,000 which is positioned
within the market competitive range compared to
FTSE SmallCap companies and is competitively
positioned against housebuilder peers.
• A one-off relocation allowance of £25,000.
• A pension opportunity equal to 6.5% of salary, which
is in line with the level available to the majority of
the wider workforce.
• An annual bonus opportunity of 150% of salary,
which is in line with the maximum limit included
in the Remuneration Policy. For the year ended 30
June 2023, the bonus opportunity will be prorated
to reflect the period of his service as Chief Executive
Officer during the year.
• A maximum LTIP opportunity of 250% of salary
for the year ending 30 June 2023. This is a one-
off exceptional award level which the Committee
considers to be appropriate in the context of
recruiting Graham Prothero and to ensure that he
is appropriately incentivised over the longer term.
The award opportunity has been determined based
on the exceptional LTIP limit included within the
Remuneration Policy (200% of salary), which may
be used to recruit an Executive Director, with an
additional 50% of salary to buy out LTIP awards
that were forfeit by Graham Prothero on leaving his
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
customer satisfaction, site openings, forward order
book, sustainability targets and Gleeson Land’s maturity
of portfolio. Stefan Allanson’s strategic and personal
objectives were based on site openings, forward order
book, sustainability targets and Gleeson Land’s maturity
of portfolio.
James Thomson and Stefan Allanson each earned
a bonus equal to 89% and 86.25% of maximum
respectively (equivalent to 111.3% and 107.8% of salary)
based on the outcome of the performance targets. See
pages 114 and 115.
The Committee considered the bonus outcome for
the profit element and the strategic and personal
performance element alongside broader perspectives,
including underlying business performance and
affordability and the experience of employees and other
stakeholders. The Committee considered the outcome
to be appropriate and no discretion was applied to the
bonus outcome.
111
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Remuneration Committee Report
CONTINUED
Long Term Incentive Plan (“LTIP”)
James Thomson and Stefan Allanson were each granted
an LTIP award in 2019 equal to 150% of salary. The
awards were subject to performance targets based
on Earnings per Share (“EPS”) (as regards two-thirds
of the award) and relative Total Shareholder Return
(“TSR”) (as regards one-third of the award). 27.4% of
the awards will vest, taking into account performance
against the EPS and relative TSR targets. See page 115.
The Committee considers the vesting outcome to be
appropriate, recognising that the Group has continued
to perform strongly, both financially and strategically,
in a volatile economic environment over the last
three years. No discretion to the vesting outcome has
therefore been applied.
Vested awards will be subject to a two-year
holding period.
Remuneration in 2023
Salary
A 4% salary increase has been awarded to Stefan
Allanson with effect from 1 July 2022. This compares
to an average of 5.6% for the wider workforce. No
salary increase has been awarded to James Thomson
on account of him stepping down as Chief Executive
Officer on 31 December 2022.
Pension
James Thomson and Stefan Allanson will each receive a
pension opportunity equal to 6.5% of salary, which is in
line with the level available to the majority of the wider
workforce.
Annual bonus
The maximum bonus opportunity for James Thomson
and Stefan Allanson will be 125% of salary. James
Thomson’s bonus opportunity will be prorated to reflect
the period of his service as Chief Executive Officer
during the year.
In line with the previous year, 80% of the award will
be based on financial performance and 20% will be
based on strategic and personal performance. Details
of the profit target and the strategic and personal
performance targets will be fully disclosed in the
Annual Report on Remuneration for the year ending 30
June 2023. The Committee has discretion to amend the
bonus 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.
LTIP
The maximum LTIP opportunity for Stefan Allanson will
be 150% of salary. James Thomson will not be granted
an LTIP award.
In line with the previous year, 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 to 30 June 2025. The Committee
has discretion to amend the vesting outcome where
it considers that it is not a fair reflection of business
performance. Any shares that vest will be subject
112
to a two-year holding period. See page 121 for details of
the performance targets.
Chairman and Non-Executive Directors fees
The Committee agreed that the Chairman’s fee for
2023 will remain at £128,000, and this includes a fee of
£10,500 for chairing the Nomination Committee, which
also remains unchanged.
The fees for the Non-Executive Directors increased 4%
from £48,500 to £50,500 plus an additional, unchanged,
fee of £10,500 for chairing a Board Committee. This
compares to an average increase of 5.6% for the wider
workforce. The Senior Independent Director will receive
an additional fee of £10,000.
Gender pay gap
The Group’s median gender pay gap is 3%, versus the
2021 national median of 8% in favour of men. Women
occupy 20% of the highest paid jobs and 35% of the
lowest paid jobs.
The Group is continuing to develop and encourage
more women into roles that have traditionally been
male occupied. This includes better provisions on sites
for female employees and subcontractors. In respect of
pay, the Group does not discriminate on the grounds of
gender and operates an equal pay policy.
Further details are set out in the Group’s Gender Pay
Review, which can be found at 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.
Conclusion
I trust the information presented in this report
enables our shareholders to understand how we have
operated our Remuneration Policy over the year and
the rationale for our decision making. We believe that
the Remuneration 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 proposed
Remuneration Policy, Annual Report on Remuneration
or the Committee’s activities.
Elaine Bailey
Interim Chair of the Remuneration Committee
14 September 2022
MJ Gleeson plc Annual Report & Accounts 2022 Chairman
Dermot
Gleeson
Executive
Directors
James
Thomson
Stefan
Allanson
Non–
Executive
Directors
Elaine
Bailey1
Andrew
Coppel2
Fiona
Goldsmith
Christopher
Mills
Annual Report on Remuneration
The Remuneration Committee’s Annual Report on Remuneration for the year ended 30 June 2022 is set out below,
including remuneration for the year ended 30 June 2022 and the implementation of the new Remuneration Policy
for 2023.
The auditors are required to report on the following information up to and including the table on Directors’
shareholdings and share interests on page 117.
Single total figure of remuneration for each Director for the years ended
30 June 2022 and 30 June 2021
2022
2021
Fixed pay
Variable pay
Fixed pay
Salary
& fees Benefits Pension Subtotal
Annual
bonus
Value
of LTIP
awards Subtotal
Salary
& fees Benefits Pension Subtotal
Total
Variable pay
Value
of LTIP
awards Subtotal
Annual
bonus
Total
£000
£000
£000
£000
£000
£000
£000 £000
£000
£000
£000
£000
£000
£000
£000
£000
128
1
–
129
–
–
–
129
125
1
–
126
–
–
–
126
513
323
23
18
33
569
570
153
723 1,292 500
29
370
348
97
445
815
315
62
42
59
49
–
–
–
–
–
–
–
–
62
42
59
49
–
–
–
–
–
–
–
–
–
–
62
42
59
19
58
58
–
47
250 1,168 2,448 1,122
49
–
Total
1,176
42
62 1,280
918
21
17
–
–
–
–
39
33
554
619
–
619
1,173
38
370
380 454
834 1,204
–
–
–
–
71
19
58
58
47
–
–
–
–
–
–
–
–
–
–
–
–
19
58
58
47
1,232
999 454
1,453 2,685
1 Elaine Bailey was appointed to the Board on 1 March 2021.
2 Andrew Coppel resigned from the Board on 16 March 2022.
Notes to the single total figure of remuneration
Salary and fees
Details of annual salaries for Executive Directors for the years ended 30 June 2022 and 30 June 2021 are set
out below.
James Thomson
Stefan Allanson
Salary from
1 July 2021
£
Salary from
1 July 2020
£
512,500
322,875
500,000
315,000
Details of fees for Non-Executive Directors for the years ended 30 June 2022 and 30 June 2021 are set out below.
Chairman1
Non-Executive Director fee
Fee for chairing a Committee
1
Includes a fee of £10,500 for chairing the Nomination Committee.
Fees from
1 July 2021
£
Fees from
1 July 2020
£
128,000
48,500
10,500
125,000
47,250
10,500
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Taxable benefits provided to Executive Directors
The main benefits available to the Executive Directors during the year ended 30 June 2022 (and their associated
values) were: car allowance of £13,000 for James Thomson and £13,000 for Stefan Allanson; car fuel of £8,000
for James Thomson and £3,000 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 2022, James Thomson received cash in lieu of pension contributions
of 6.5% of salary (2021: 6.5% of salary) and Stefan Allanson received cash in lieu of pension contributions of 9% of
salary (2021: 12% 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 (pre-exceptional items) of £55.5m for the year ended 30 June 2022. This was
above the maximum and therefore 100% of the profit-related element of the bonus award was earned.
Target
Threshold
Target
Maximum
Profit measure
£m
48.8
51.4
53.9
Bonus achievable
as percentage of
maximum1
20%
50%
100%
1 Straight-line vesting between threshold and maximum.
Strategic and personal performance
Performance against strategic and personal objectives for the year ended 30 June 2022 is detailed below.
James Thomson
Objective
Customer satisfaction
Gleeson Homes to maintain a 5-star rating throughout
2022, meaning customer recommendation scores as
polled by an independent survey company to average
at least 90% for the year.
Site openings
Target range of 23 to 26 build site openings by
30 June 2022.
Forward order book
Gleeson Homes to commence 2023 with an order
book of at least 940 forward orders.
Performance
Gleeson Homes maintained a 5-star rating as the
average customer recommendation score for the
year was 90.7%.
Weighting Outcome
4%
4%
23 build sites were opened during the year.
4%
1%
The forward order book at 30 June 2022 was 618.
The target was abandoned to optimise revenue
and improve the customer journey.
Sustainability targets
Achieve the 2022 sustainability targets published in the
2021 Sustainability Report:
• The health and safety incident rate (AIIR) was
55, significantly below the industry average
of 239.
• Health and safety incident rate (AIIR) to be reduced
to the industry standard or lower in 2022.
• Employee engagement will be maintained in the
upper quartile of companies surveyed during 2022.
• Gleeson Homes to maintain a 5-star rating
throughout 2022.
• Carbon emissions will reduce to 1.75 tonnes of
CO2e by 2023.
Gleeson Land – maturity of portfolio
Improve the maturity of the Gleeson Land portfolio
by increasing the number of sites with planning
consent or resolution to grant to more than six.
• Employee engagement score was 90%,
maintaining our position in the upper
quartile.
• Gleeson Homes maintained a 5-star rating as
the average customer recommendation score
for the year was 90.7%.
• Carbon emissions were 1.86 tonnes, a
reduction of 9% from the prior year and on
track to meet the 2023 target.
At 30 June 2022 there were three sites with
planning consent or resolution to grant.
114
4%
0%
4%
4%
4%
0%
20%
9%
MJ Gleeson plc Annual Report & Accounts 2022 Stefan Allanson
Objective
Site openings
Target range of 23 to 26 build site openings by
30 June 2022.
Forward order book
Gleeson Homes to commence 2023 with an order
book of at least 940 forward orders.
Sustainability targets
Achieve the 2022 sustainability targets published in
the 2021 Sustainability Report:
• Health and safety incident rate (AIIR) to be reduced
to the industry standard or lower in 2022.
• Employee engagement will be maintained in the
upper quartile of companies surveyed during 2022.
• Gleeson Homes to maintain a 5-star rating
throughout 2022.
• Carbon emissions will reduce to 1.75 tonnes of
CO2e by 2023.
Gleeson Land – maturity of portfolio
Improve the maturity of the Gleeson Land portfolio
by increasing the number of sites with planning
consent or resolution to grant to more than six.
Performance
23 build sites were opened during the year.
Weighting Outcome
1.25%
5%
The forward order book at 30 June 2022 was 618.
The target was abandoned to optimise revenue
and improve the customer journey.
• The health and safety incident rate (AIIR) was
55, significantly below the industry average
of 239.
• Employee engagement score was 90%,
maintaining our position in the upper
quartile.
• Gleeson Homes maintained a 5-star rating as
the average customer recommendation score
for the year was 90.7%.
• Carbon emissions were 1.86 tonnes, a
reduction of 9% from the prior year and on
track to meet the 2023 target.
At 30 June 2022 there were three sites with
planning consent or resolution to grant.
5%
0%
5%
5%
5%
0%
20%
6.25%
The Committee considered the bonus outcome for the profit and strategic and personal performance elements
alongside broader perspectives, including underlying business performance and affordability and the experience
of employees and other stakeholders. 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
% of maximum
89.0%
86.25%
£000
570
348
In accordance with the Remuneration Policy, one-third of the bonus payable is deferred into shares for two years.
2019 LTIP
The 2019 LTIP awards were subject to performance targets based on EPS (as regards two-thirds of the award) and
relative TSR (as regards one-third of the award).
Details of the performance targets and performance outcome are set out in the table below:
Threshold – 20% vesting
Maximum – 100% vesting
Actual performance
Vesting outcome
3-year performance period ended 30 June 2022
EPS for the year ended
30 June 2022
74.6 pence
87.9 pence
78.12 pence
41.2% vesting
Relative TSR1
Median
Upper quartile
Below median
0% vesting
Total
27.4% vesting
1 Compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Partnerships, Crest
Nicholson, Galliford Try, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
Number of shares
granted
Number of shares
vesting based on
performance
Dividend
equivalents1,2
£000
Total value of
award on vesting2
£000
Amount of award
attributable to share price
appreciation since grant
James Thomson
Stefan Allanson
93,750
59,063
25,733
16,211
4
3
153
97
0%
0%
1
2
The 2019 LTIP included dividend equivalent terms such that additional shares are awarded based on the value of dividends payable on the
number of vested plan shares between the award date and release date. The value of the dividend equivalents has been calculated based
on the period between the award date and 30 June 2022.
Calculated based on the three-month average share price to 30 June 2022 (£5.78). The total value of the award on vesting includes
the dividend equivalents. The exact value of the dividend equivalents and resulting number of shares will be calculated following the
release date.
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The Committee considers the vesting outcome to be appropriate, recognising that the Group has continued to
perform strongly, both financially and strategically, in a volatile economic environment over the last three years. No
discretion to the vesting outcome has therefore been applied.
Vested awards will be subject to a two-year holding period.
LTIP awards granted in the year ended 30 June 2022
LTIP awards equal to 150% of salary were granted to James Thomson and Stefan Allanson on 27 September 2021.
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 2024.
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 any 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
Face value at grant
£0001
94,441
59,498
769
484
1 Calculated based on the mid-market closing share price as at the date preceding the date of grant (24 September 2021: £8.14).
EPS for the year ending 30 June 2024
Relative TSR1
Threshold (20%) of
award vests
Maximum (100%)
of award vests2
82p
93p
Median
Upper quartile
1 To be compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Partnerships,
Crest Nicholson, Galliford Try, 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.
James Thomson will step down as Chief Executive Officer on 31 December 2022. He will remain on the Board as a
Non-Executive Director. The table below discloses how this will impact on his remuneration.
Element
Base salary, benefits
and pension
Annual bonus
Agreed treatment
Will continue to receive his salary, benefits and pension until he steps down as Chief Executive
Officer.
Will be eligible to receive a bonus for the year ending 30 June 2023, with a maximum opportunity
equal to 125% of salary prorated for time served as Chief Executive Officer during the year.
Any bonus earned will be paid at the usual time. One-third of any amount earned will be deferred
into shares which will vest after two years.
Deferred bonus
awards
Unvested deferred bonus awards will continue to vest in accordance with their normal vesting
timetable.
LTIP awards
Unvested LTIP awards will:
• continue to vest in accordance with their normal vesting timetable, subject to the achievement
of the relevant performance metrics; and
• be prorated for time served as Chief Executive Officer during the relevant vesting periods.
Any shares that vest will be subject to a two-year post-vesting holding period.
No LTIP award will be granted in respect of the year ending 30 June 2023.
James Thomson will be required to comply with the post-employment shareholding guidelines (as detailed on
page 117).
116
MJ Gleeson plc Annual Report & Accounts 2022 Directors’ shareholdings and share interests
Shareholding guideline
The Group operates within-employment and post-employment shareholding guidelines for the Executive Directors.
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 2022, James Thomson and Stefan Allanson held shares
equivalent to 45% of salary and 249% of salary respectively (calculated using the mid-market closing share price on
30 June 2022, £5.14).
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 2022 (or the date that they stepped down from the Board, if earlier) are as
shown below:
Owned
outright
Unvested and
subject to
performance
Unvested and
not subject to
performance
Vested and
exercised
Total as at
30 June 2022
Scheme
Director
Chairman
Dermot Gleeson
Executive Directors
James Thomson
Shares
1,088,493
Shares
31,201
LTIP 20193
LTIP 2020
LTIP 2021
Deferred bonus
share award 2021
–
–
–
–
Stefan Allanson
Shares
147,756
LTIP 20182
LTIP 20193
LTIP 2020
LTIP 2021
Deferred bonus
share award 2021
Non-Executive Directors
Elaine Bailey
Andrew Coppel4
Fiona Goldsmith
Christopher Mills5
Shares
Shares
Shares
Shares
–
–
–
–
–
–
6,500
10,000
6,055,000
–
–
93,750
121,753
94,441
–
–
–
59,063
76,704
59,498
–
–
–
–
–
–
2421
–
–
–
24,094
2421
–
–
–
–
14,796
–
–
–
–
–
–
–
–
–
–
–
50,549
–
–
–
–
–
–
–
–
1,088,493
31,443
93,750
121,753
94,441
24,094
147,998
50,549
59.063
76,704
59,498
14,796
–
6,500
10,000
6,055,000
1
Matching shares granted under the HMRC tax-qualifying all-employee scheme that have not yet vested.
2 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.
3
27.4% of the 2019 LTIP awards will vest based on the outcome of the performance targets.
4 Andrew Coppel resigned from the Board on 16 March 2022.
5 Shares are held by funds managed by Harwood Capital LLP of which Christopher Mills is a Member/Director.
As at 31 August 2022, the total interests held by James Thomson were 41,277, Stefan Allanson were 147,832 and
Christopher Mills were 6,555,000. 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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LTIP awards
Additional details of the outstanding LTIP awards held by Executive Directors serving during the year are set
out below.
93,750
30 June
2021
Executive
Director
Scheme
James Thomson LTIP 20192
LTIP 2020
LTIP 2021
Stefan Allanson LTIP 20181
LTIP 20192
59,063
LTIP 2020 76,704
LTIP 2021
67,500
121,753
–
–
Granted
during year
Vested and
exercised
during year
Lapsed
during
year
Share price
at grant
date
Total
interests
outstanding
at 30 June
2022
End of
performance
period
–
–
94,441
–
–
–
59,498
–
–
–
–
–
–
50,549
20,925
–
–
–
–
–
–
£8.00
£6.16
£8.14
£7.04
£8.00
£6.16
£8.14
93,750
121,753
94,441
–
59,063
76,704
59,498
30/06/22
30/06/23
30/06/24
30/06/21
30/06/22
30/06/23
30/06/24
1 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.
2 27.4% of the 2019 LTIP awards will vest based on the outcome of the performance targets.
TSR performance
We have compared the Company’s TSR performance over the last 10 years with the TSR for the FTSE SmallCap
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 Partnerships,
Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
MJ Gleeson plc TSR comparison to index and peer group 1 July 2012 to 30 June 2022:
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
MJ Gleeson plc
Housebuilders
FTSE SmallCap
1,200
1,000
800
600
400
200
0
Jul-12
118
MJ Gleeson plc Annual Report & Accounts 2022 Chief Executive Officer’s remuneration 2013 to 2022
Year
2022
2021
2020
2019
2019
2018
2017
2016
2015
2014
2013
Chief Executive Officer
James Thomson
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)
Single figure of
total remuneration
£000
Annual bonus paid
against maximum
opportunity
LTIP awards
vesting against
maximum
opportunity
1,292
1,173
769
31
2,482
3,056
2,816
873
2,917
793
1,615
89%
99%
45%
–
–
100%
100%
100%
100%
100%
81%
27%
n/a
n/a
n/a
100%
100%
100%
n/a
100%
n/a
100%
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 Goldsmith6
Christopher Mills
Average employee7
2021 to 2022
2020 to 2021
2019 to 2020
Salary &
Salary &
Salary &
fees Benefits
Bonus
fees1 Benefits
Bonus
fees1 Benefits
Bonus
2.4%
–
–
7.6%
(9.1%)
–
(7.1%)
–
–
2.5%
2.5%
9.5%
(7.9%)
5.9% (8.4%)
9.1%
7.6%
(11.5%) 142.6%
(4.9%)
n/a
n/a
(7.1%)
n/a
1.7%
n/a
n/a
2.2%
2.6%
4.1%
–
–
–
–
–
–
–
–
12.2%
0.2%
n/a
n/a
n/a
7.6%
2.2%
–
–
–
–
–
–
–
–
9.3% 49.9%
n/a
n/a
n/a
(7.1%)
4.4%
–
–
–
–
8.2%
(8.1%)
n/a
–
–
–
–
–
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, 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, therefore the percentage change in remuneration for 2019 to 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, therefore the percentage change in remuneration is not applicable.
5 Appointed to the Board on 1 October 2019 and resigned on 16 March 2022, therefore the percentage change in remuneration is not
applicable.
6 Appointed to the Board on 1 October 2019, therefore the annual percentage change in remuneration for 2019 to 2020 and 2020 to 2021
is not applicable. For 2021 to 2022, the base fee increased by 2.5% but the additional fee for chairing the Audit Committee remained
unchanged.
7 The annual percentage change of the average remuneration of the Group’s salaried employees, calculated on a full-time equivalent basis.
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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
2022
2021
2020
Method
Option B
Option B
Option B
25th percentile pay ratio
44:1
Median pay ratio
37:1
75th percentile pay ratio
20:1
64:1
28:1
40:1
20:1
17:1
12:1
Under Option B, using the hourly rate from our 2022 gender pay gap data, three employees have been identified as
the best equivalents of our 25th, 50th, and 75th percentile.
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, including reviewing the employees either side of the identified individuals to ensure
their full year’s remuneration is reasonable. No assumptions or estimates were used and no adjustments to pay
were made.
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. Additionally, the Chief Executive Officer’s total remuneration was lower
in 2020 as his salary was temporarily reduced by 30% and he received a 45% bonus in response to Covid-19.
The median pay ratio has fallen slightly this year primarily due to the increase in the Chief Executive Officer’s total
remuneration including the value of LTIP awards in the year, as described above.
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 Remuneration Policy should be implemented. The Committee is satisfied that
there is a good level of alignment in relation to pay policies throughout the Group and that the median pay ratio is
consistent with the Group’s wider policies on employee pay, reward and progression.
Total pay and benefits used to calculate the ratios
The table below shows the employee percentile pay and benefits used to determine the above pay ratios and the
salary component for each figure.
£000
2022
Total pay and benefits2
Salary component
2021
Total pay and benefits2
Salary component
2020
Total pay and benefits2
Salary component
Chief Executive Officer1
25th percentile
Median
75th percentile
1,292
513
1,173
500
7693
4583
29
25
18
18
28
26
35
33
30
25
39
35
65
50
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 119.
2 The employee 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.
Remuneration for all employees
Total distributions paid
2022
£m
47.2
9.3
2021
£m
39.8
2.9
Difference in
spend
£m
7.4
6.4
Difference
as percentage
18.6%
220.7%
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MJ Gleeson plc Annual Report & Accounts 2022 Implementation of the new policy for the year ending 30 June 2023
Executive Directors
Salary
A 4% salary increase has been awarded to Stefan Allanson with effect from 1 July 2022. This compares to an
average of 5.6% for the wider workforce. No salary increase has been awarded to James Thomson on account of
him stepping down as Chief Executive Officer on 31 December 2022.
James Thomson
Stefan Allanson
Salary from
1 July 2022
£
Salary as at
30 June 2022
£
512,500
335,790
512,500
322,875
Pension
The Executive Directors will receive a pension opportunity equal to 6.5% of salary, which is in line with the level
available to the majority of the wider workforce.
Annual bonus
The maximum bonus opportunity for James Thomson and Stefan Allanson will be 125% of salary. James Thomson’s
bonus opportunity will be prorated to reflect the period of his service as Chief Executive Officer during the year.
80% of the award will be based on financial performance and 20% will be based on strategic and personal
performance. Details of the profit target and the strategic and personal performance targets will be fully disclosed
in the Annual Report on Remuneration for the year ending 30 June 2023. The Committee has discretion to amend
the bonus 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.
LTIP
The maximum LTIP opportunity for Stefan Allanson will be 150% of salary. James Thomson will not be granted an
LTIP award.
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 2025. The Committee has discretion to amend the vesting
outcome where it considers that it is not a fair reflection of business performance. Any shares that vest will be
subject to a two-year holding period.
The Committee will consider whether there has been any “windfall gains” when determining the vesting outcome,
taking into account the factors set out on page 116.
Details of the EPS and relative TSR performance targets are set out below.
EPS for the year ending 30 June 2025
Relative TSR1
Threshold (20%) of
award vests
Maximum (100%) of
award vests2
90p
Median
103p
Upper quartile
1 To be compared against a group of listed housebuilders comprising Barratt Developments, Bellway, Berkeley, Countryside Partnerships,
Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
2 Straight-line vesting between threshold and maximum performance.
Chairman and Non-Executive Directors fees
The Committee agreed that the Chairman’s fee for 2023 will remain at £128,000, and this includes a fee of £10,500
for chairing the Nomination Committee, which also remains unchanged.
The fees for the Non-Executive Directors increased 4% from £48,500 to £50,500 plus an additional, unchanged, fee
of £10,500 for chairing a Board Committee. This compares to an average increase of 5.6% for the wider workforce.
The Senior Independent Director will receive an additional fee of £10,000.
The Remuneration Committee
The Committee was chaired by Andrew Coppel until his resignation on 16 March 2022. Elaine Bailey was appointed
as Interim Chair of the Remuneration Committee from 24 March 2022. The other Committee member was Fiona
Goldsmith.
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 86 and 87, and details of their
attendance at the meetings of the Committee during the year ended 30 June 2022 are shown on page 89.
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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, 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.
Activities during the year
The Committee met on 10 occasions during the year,
three 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:
• agreeing the remuneration arrangements for James
Thomson in connection with him stepping down
from his role as Chief Executive Officer;
• agreeing the remuneration arrangements for
Graham Prothero in connection with his future
appointment as Chief Executive Officer;
•
reviewing and approving the proposed
Remuneration Policy that will be put to shareholders
for approval at the 2022 AGM;
•
reviewing and approving the annual bonus and LTIP
outcomes of the Executive Directors and senior
management for the year ended 30 June 2021 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 2022;
•
•
•
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 2023;
reviewing proposals for staff pay and bonuses,
including examining benchmarking data and market
information from third-party advisers; 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 and the Head of Legal and Company Secretary.
The Company took advice from Deloitte LLP, who were
appointed as remuneration advisers 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 £43,000. Deloitte LLP
also provided advice to the Company during the year in
relation to share plans.
The Company also took advice from its legal advisers,
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.
45,638,381
98.9
510,150
%
1.1
38,188,152
98.2
681,785
1.8
38,869,937
Total votes
cast
Votes
withheld
46,148,531
1,900
2,801
2021 AGM: Approval of the
Annual Report on Remuneration
2019 AGM: Approval of the
Directors’ Remuneration Policy
Approved by the Board and signed on its behalf by:
Elaine Bailey
Interim Chair of the Remuneration Committee
14 September 2022
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MJ Gleeson plc Annual Report & Accounts 2022 Remuneration Policy Report
This part of the report sets out the Directors’ Remuneration Policy for the Group and has been
prepared in accordance with The Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013.
General reward principles
Our Directors’ Remuneration Policy (the “Remuneration
Policy”) is designed to support an effective pay-
for-performance culture, which enables the Group
to attract, retain and motivate Executive Directors
who have the necessary experience and expertise to
deliver the Group’s objectives and strategy. In setting
the Remuneration Policy, the Committee considers
the following general reward principles, taking into
account Provision 40 of the 2018 UK Corporate
Governance Code:
Changes to the remuneration policy
During the year to 30 June 2022, the Committee
conducted a review of the Remuneration Policy and
concluded that it continues to align with the general
reward principles set out above and supports the
delivery of business strategy and the creation of
shareholder value. Therefore, no significant changes are
proposed to the Remuneration Policy. The proposed
refinements (as noted on page 111) provide greater
alignment with best practice corporate governance
principles and to reflect “good housekeeping”.
In determining the Remuneration Policy the Committee
followed a robust process which included discussions
on the content of the policy at Committee meetings.
The Committee considered input from management
and its independent advisers and consulted with major
shareholders, representing circa 45% of the Company’s
issued share capital.
• Clarity and simplicity – ensure that the
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
are reviewed and tested by the Committee.
• Risk – to promote long-term sustainable
performance through sufficiently stretching
performance targets, whilst ensuring that the
incentive framework does not encourage Executive
Directors to take inappropriate business risks
(including environmental, financial, social, health,
safety and governance risks).
• Predictability – detailed information on the potential
values that may be earned through the remuneration
arrangements are set out on page 129.
• Proportionality – to ensure that total remuneration
delivered is fair and reflects Group and individual
performance. The Committee has 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
Remuneration Policy, the Committee was clear to
make decisions to drive the appropriate behaviours
and ensure alignment with the Group’s culture and
long-term strategy.
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Components of Executive Directors’ remuneration
The key elements of the remuneration package for each Executive Director are set out in the table below:
Element
Base salary
Purpose and link to
strategy
Provide a competitive base level of remuneration to support the recruitment and retention of
Executive Directors with the experience and expertise necessary to deliver the Group’s strategy.
Operation
Salaries are normally reviewed annually taking into account a number of factors, such as, but not
limited to:
• personal performance;
• Company and Group performance;
•
•
inflation and earnings forecasts;
state of the marketplace generally; and
• pay and conditions elsewhere in the Group.
Maximum
opportunity
Whilst there is no prescribed maximum salary, increases will normally be in line with increases
awarded to the wider workforce.
Salary increases above this level may be awarded to take account of individual circumstances such
as, but not limited to:
• an increase in responsibilities or scope of the role;
• an Executive Director’s development or performance in role (e.g. to align a newly appointed
Executive Director’s salary with the market over time);
• where there has been a change in market practice; or
• where there has been a change in the size and/or complexity of the Group.
Increases may be implemented over such time as the Committee deems appropriate.
Performance targets
N/A
Element
Benefits
Purpose and link to
strategy
Provide a competitive benefits package to support the recruitment and retention of Executive
Directors with the experience and expertise necessary to deliver the Group’s strategy.
Operation
The Company provides cash benefits and benefits in kind to Executive Directors. These include, but
are not limited to:
• company car or cash equivalent;
• private fuel;
• private medical insurance – family cover;
•
life insurance;
• permanent health insurance;
• annual health check;
• holiday and sick pay;
• professional subscriptions; and
•
reimbursement of expenses incurred on Group matters.
Maximum
opportunity
Other benefits may be offered based on individual circumstances (e.g. relocation allowances
on recruitment). Whilst there is no prescribed maximum, the value of benefits is based on the
underlying cost to the Group, individual circumstances and market practice.
Performance targets
N/A
124
MJ Gleeson plc Annual Report & Accounts 2022 Element
Pension
Purpose and link to
strategy
To provide an appropriate level of retirement benefits to Executive Directors.
Operation
The Company will contribute to the Group’s defined contribution pension scheme or to personal
pension arrangements at the request of the Executive Director.
The Company may also consider a cash alternative (e.g. where an Executive Director has reached
the HMRC’s lifetime or annual allowance limit).
Base salary is the only element of the Executive Directors’ remuneration that is pensionable.
Maximum
opportunity
The maximum Company contribution or pension allowance is aligned with the level available to the
majority of the wider workforce (currently 6.5% of salary).
Performance targets
N/A
Element
Annual bonus
Purpose and link to
strategy
To incentivise the achievement of key financial and strategic targets for the forthcoming year
without encouraging excessive risk taking.
Operation
Awards are based on performance metrics set by the Committee (typically measured over a
financial year) against financial and non-financial targets. The Committee will determine the bonus
to be delivered following the end of the relevant financial year based on performance against these
targets.
The Committee has the discretion to override the formulaic outturn of the bonus to determine
the appropriate level of bonus payable where it believes the outcome is not truly reflective of
underlying performance during the performance period and to ensure fairness to both shareholders
and participants.
Executive Directors are required to defer one-third of any bonus earned into shares for a two-year
period. The Committee may, however, decide to pay such bonuses in cash where the amount to be
deferred would, in the opinion of the Committee, be so small as to make the operation of deferral
burdensome.
Amounts equivalent to any dividends or shareholder distributions may be made in respect of
deferred bonus awards at vesting, if the Committee so determines. Such amounts will normally be
paid in shares.
Malus and clawback provisions will apply. Further details are set out on page 127.
Maximum
opportunity
Maximum opportunity of up to 150% of salary in respect of a financial year.
Up to 20% of maximum is earned for threshold performance and up to 50% of maximum is earned
for target performance. There will be broadly straight-line vesting between threshold, target and
maximum.
Performance targets
Performance metrics are determined annually reflecting the Group’s strategy and key performance
indicators. A minimum of 50% of the bonus shall be based on financial performance metrics.
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Element
Long term incentive plan (“LTIP”)
Purpose and link to
strategy
To incentivise and reward Executive Directors for delivering long-term performance and
achievement of Group strategy, and provide alignment with shareholder interests.
Operation
Awards may be granted annually to Executive Directors in the form of a conditional share award, nil
cost option or such form as has the same economic effect.
Vesting of awards will be dependent on the achievement of performance metrics set by the
Committee, normally over at least a three-year performance period.
The Committee has the discretion to override the formulaic vesting outturn of the LTIP to
determine the appropriate level of vesting where it believes the outcome is not truly reflective of
underlying performance during the performance period and to ensure fairness to both shareholders
and participants.
Awards will be subject to a two-year holding period following the end of the performance period,
and shares will not typically be released until the end of the holding period. Alternatively, awards
may be granted on the basis that shares can be acquired following the end of the performance
period but that, other than to cover income tax, national insurance and health and social care levy
and any exercise price, shares may not be disposed of or otherwise dealt with until the end of the
holding period.
Amounts equivalent to any dividends or shareholder distributions may be made in respect of
awards at vesting, if the Committee so determines. Such amounts will normally be paid in shares.
Malus and clawback provisions will apply. Further details are set out on page 127.
Maximum
opportunity
The normal maximum award is 150% of salary in respect of a financial year.
A maximum award of up to 200% of salary in respect of a financial year may be granted in
exceptional circumstances (e.g. on recruitment).
Awards will vest between 20% and 100% for performance between threshold and maximum, with
broadly straight-line vesting between these points.
Performance targets
Performance metrics are determined annually reflecting the Group’s strategy and key performance
indicators.
Element
HMRC tax-qualifying all-employee scheme
Purpose and link to
strategy
The HMRC tax-qualifying all-employee scheme has been designed to encourage all employees to
become shareholders in the Company and thereby align their interests with shareholders.
Operation
Maximum
opportunity
The Company operates an all-employee scheme in which the Executive Directors are eligible to
participate (which is in line with HMRC legislation and is open to all eligible staff).
The maximum set by legislation from time to time.
Performance targets
N/A
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MJ Gleeson plc Annual Report & Accounts 2022 Remuneration policy for Non-Executive Directors
Element
Fees for Non-Executive Directors
Purpose and link to
strategy
To support the recruitment and retention of Non-Executive Directors and a Chairman with the
necessary experience to advise and assist with establishing and monitoring the Group’s strategic
objectives.
Operation
Fees for Non-Executive Directors are determined by the Chairman and the Executive Directors.
Fees for the Chairman are determined by the Remuneration Committee.
Fees may include a basic fee and additional fees for further responsibilities (e.g. chairing Board
Committees or acting as Senior Independent Director).
Fees are set at levels with reference to sector and similar-sized UK listed companies. Time
commitment and responsibilities are also taken into account.
The Chairman is part of the Group private health scheme. Non-Executive Directors may be eligible
to receive benefits linked to the performance of their duties, such as, but not limited to, the use of
secretarial support and travel costs.
Maximum
opportunity
Fee increases will normally be in line with increases awarded to the wider workforce.
Fee increases above this level may be awarded to take account of individual circumstances such as,
but not limited to:
• an increase in responsibilities, scope or time commitment of the role;
• where there has been a change in market practice; or
• where there has been a change in the size and/or complexity of the Group.
Overall fees paid to Non-Executive Directors will remain within the limits set by the Company’s
Articles of Association.
Performance targets
N/A
Application of malus and clawback
Malus and clawback apply to annual bonus, deferred bonus and LTIP awards as follows:
Annual bonus
Deferred bonus
LTIP
Malus
To such time as payment is made
To such time as the award vests
To such time as the award vests
Clawback
Up to two years following payment
N/A
Up to two years following vesting
Malus and clawback may apply in the following
circumstances:
• material misstatement of the Group’s audited
accounts;
• an error in the information on which the award was
granted or vests including an error in assessing any
applicable performance metrics;
•
fraud or serious misconduct on the part of the
participant;
• censure or reputational damage to the Group that is
a result of the participant’s behaviour or actions; or
• a material corporate failure.
Selection of performance metrics
and target setting
In the selection of performance metrics the Committee
takes into account the Group’s strategic objectives
and short and long-term business priorities. The
performance metrics selected reward the delivery of
stretching financial performance and the creation of
shareholder value.
The performance targets chosen are set in accordance
with the Group’s operating plan and are reviewed
annually to ensure they are sufficiently stretching. In
selecting the targets the Committee also takes into
account analysts’ forecasts, economic conditions and
the Committee’s expectation of performance over the
relevant period.
The Committee retains discretion to vary or substitute
performance metrics and/or targets if events occur
(e.g. a change in strategy, a material acquisition and/
or a divestment of a Group business or a change
in prevailing market conditions) which cause the
Committee to determine that the performance metrics
and/or targets are no longer appropriate and that
amendment is required so that they achieve their
original purpose.
Share awards may be adjusted in the event of a
variation of share capital or a demerger, dealing, special
dividend or other event that may affect the Company’s
share price.
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CONTINUED
Shareholding guidelines
The Committee operates formal within-employment
and post-employment shareholding guidelines for
Executive Directors.
• Within-employment – Executive Directors are
required to build up and retain a holding in shares
equal to 200% of salary. Until the shareholding
guideline is met, 50% of any shares vesting under
the Deferred Bonus Plan or LTIP (post payment of
income tax, national insurance and health and social
care levy) must be retained.
• Post-employment – Executive Directors are required
•
Legacy arrangements
The Committee retains discretion to make any
remuneration payment outside of policy:
• where the terms of the payment were agreed before
the policy came into effect;
• where the terms of the payment were agreed
at a time when the relevant individual was not a
Director of the Company, and in the opinion of the
Committee, the payment was not in consideration
of the individual becoming a Director of the
Company; or
to satisfy contractual arrangements under legacy
remuneration arrangements.
Illustration of the application
of remuneration policy
The following charts illustrate the future remuneration
packages of the Chief Executive Officer and Chief
Financial Officer under the policy set for the year to
June 2023 for various indicative levels of performance.
James Thomson will step down as Chief Executive
Officer on 31 December 2022. Graham Prothero will
succeed James Thomson as Chief Executive Officer
with effect from 1 January 2023.
A chart has been prepared based on the remuneration
package for James Thomson for 1 July to 31 December
2022 (see page 116 for further details). This includes:
• salary and benefits for the period 1 July to
31 December 2022; and
• annual bonus opportunity prorated for the period
1 July to 31 December 2022.
No LTIP award will be granted to James Thomson in
respect of the year ending 30 June 2023.
A chart has been prepared based on the remuneration
package for Graham Prothero for 1 January to 30 June
2023 (see page 111 for further details). This includes:
• salary and benefits for the period 1 January to
30 June 2023;
• annual bonus opportunity prorated for the period
1 January to 30 June 2023; and
• LTIP award to be granted following appointment.
to retain a holding in “relevant shares” equal to
200% of salary (or their actual shareholding at the
point of departure if lower) for two years following
departure.
“Relevant shares” do not include shares which the
Executive Director has purchased or which have been
acquired pursuant to LTIP awards granted before 1 July
2019. Unless the Committee determines otherwise, an
Executive Director or former Executive Director shall
be deemed to have disposed of shares which are not
“relevant shares” before “relevant shares”.
Remuneration policy for the
broader employee population
The Executive remuneration framework set out in this
report follows similar principles as that applied to the
Group’s management team to ensure that management
is rewarded on a consistent basis. Any differences
that exist arise either because of the Committee’s
assessment of business need or commercial necessity.
The principles that underpin our Executive
remuneration philosophy also cascade throughout the
organisation, although quantum will vary by level and
the provision of certain components of remuneration
(such as benefits, allowances and long-term incentives)
will vary by seniority.
The 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. The Group operates an HMRC tax-qualifying
all-employee scheme in order to encourage share
ownership across the wider workforce.
128
MJ Gleeson plc Annual Report & Accounts 2022 Illustration of the application
of remuneration policy
CONTINUED
James Thomson – Chief Executive Officer
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
3,000
2,500
2,000
1,500
1,000
500
£287k
0
100%
£448k
36%
64%
£610k
£610k
53%
47%
53%
47%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Maximum
performance
(with 50% share
price increase)
Base salary, benefits and pension Annual bonus
Graham Prothero – Chief Executive Officer designate
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
3,000
2,500
2,000
1,500
1,000
500
£321k
0
100%
£2,748k
£2,073k
£792k
34%
25%
41%
65%
73%
20%
15%
15%
12%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Maximum
performance
(with 50% share
price increase)
Base salary, benefits and pension Annual bonus LTIP
Stefan Allanson – Chief Financial Officer
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
3,000
2,500
2,000
1,500
1,000
500
£376k
0
100%
£1,299k
39%
32%
29%
£1,551k
49%
27%
24%
£686k
15%
30%
55%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Maximum
performance
(with 50% share
price increase)
Base salary, benefits and pension Annual bonus LTIP
For the purpose of this analysis, the following
assumptions have been made:
•
fixed elements comprise base salary, pension and
other benefits;
• base salary levels applying on 1 July 2022
(or 1 January 2023 in the case of Graham Prothero);
• benefit levels are assumed to be the same as for the
year to June 2022 (Graham Prothero’s assumed to
be the same as James Thomson’s plus an additional
relocation benefit);
• minimum performance reflects fixed remuneration
as above, and assumes no award under the annual
bonus and no vesting is achieved under the LTIP;
• performance in line with expectations reflects fixed
remuneration as above, and assumes 50% of annual
bonus is earned and 20% of the LTIP vests;
• maximum performance reflects fixed remuneration
as above, and assumes full bonus payout and full
vesting under the LTIP; and
•
the final illustration is based on the same
assumptions as the maximum performance
illustration, but also assumes, for the purposes of
the LTIP, that share price increases by 50% over the
performance period.
Service agreements and policy
in respect of loss of office
The 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:
Executive Director
James Thomson
Stefan Allanson
Date of service agreement
2 December 2019
29 June 2015
Payment in lieu of notice
The Company has discretion to make a payment in
lieu of notice. Such payment may include salary and
compensation for benefits and pension contributions
for the unexpired period of notice.
Annual bonus
The payment of a bonus will be at the discretion of the
Committee on an individual basis and will be dependent
on a number of factors, including the circumstances
of the individual’s departure and contribution to the
business during the financial year.
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Remuneration Policy Report
CONTINUED
Any bonus will normally be prorated for time in service
during the performance period and will normally,
subject to performance, be paid at the usual time. In
exceptional circumstances the Committee may decide
that an Executive Director’s bonus will be paid early at
the time of cessation of employment.
Any bonus earned for the year of departure and, if
relevant, for the prior year, may be paid wholly in cash
at the discretion of the Committee. There will be no
bonus payment in the event of gross misconduct or
wilful neglect.
Deferred bonus plan
Awards under the deferred bonus plan will be
determined by the Plan rules.
If a participant leaves for any reason (other than
summary dismissal) during the deferral period, their
award will ordinarily continue to vest at the normal
vesting date. In exceptional circumstances, the
Committee may decide that the participant’s award will
vest at the date of cessation of employment.
LTIP
Awards under the LTIP will be determined by the
Plan rules.
Unvested awards will normally lapse on cessation of
employment. However, if a participant departs under
good leaver provisions (i.e. participants who leave early
on account of injury, disability, death, a sale of their
employer or business in which they were employed,
statutory redundancy, retirement or any other reason at
the discretion of the Committee), then unvested awards
will remain capable of vesting at the normal vesting
date. To the extent that awards vest, a two-year holding
period would then apply. In exceptional circumstances,
the Committee may decide that the participant’s
awards will vest and be released early at the date of
cessation of employment or some other time (e.g. at the
end of the performance period). In either case, vesting
depends on the extent to which the performance
metrics have been satisfied and a pro rata reduction of
the awards will be applied by reference to the time of
cessation (although the Committee has discretion to
disapply time prorating if the circumstances warrant it).
If a participant leaves for any reason (other than
summary dismissal) after an award has vested but
before it has been released (i.e. during a holding
period), their award will ordinarily continue to be
released at the normal release date. In exceptional
circumstances, the Committee may decide that the
participant’s award will be released early.
Change of control
Awards under the deferred bonus plan will vest early in
the event of change of control or substantial exit. The
level of vesting will be determined taking into account
such factors that the Committee considers relevant,
including, but not limited to, the time served from the
grant date to the date of the relevant event.
Awards under the LTIP will vest early in the event of
a change of control or substantial exit. The level of
vesting will be determined taking into account the
extent to which performance metrics are satisfied at the
date of the relevant event and, unless the Committee
determines otherwise, awards will be prorated for
time served from the grant date to the date of the
relevant event.
Other payments
In appropriate circumstances, payments may also be
made in respect of accrued holiday, relocation and
legal fees.
Awards under the HMRC tax-qualifying all-employee
scheme may vest and, where relevant, be exercised
in the event of cessation of employment or change
of control in accordance with the Plan rules. The
terms applying to any buy-out awards on cessation of
employment or change of control would be determined
when the award is granted.
The Committee reserves the right to make any other
payments in connection with an Executive Director’s
cessation of employment where such payments are
made in good faith in discharge of an existing legal
obligation (or by way of damages for breach of such an
obligation) or by way of settlement of any claim arising
in connection with the cessation of employment.
Chairman and other Non-Executive Directors’
terms of engagement
The Chairman and the Non-Executive Directors are
engaged under letters of appointment which set out
their duties and responsibilities. The dates of each Non-
Executive Director’s original appointment are as follows:
Non-Executive
Director
Dermot Gleeson
Christopher Mills
Fiona Goldsmith
Elaine Bailey
Date of original
appointment
27/11/1975
01/01/2009
01/10/2019
01/03/2021
Expiry of current
term (subject to
re-election at the
2022 AGM)
30/09/2022
30/09/2022
30/09/2022
29/02/2024
All Non-Executive Directors have specific terms of
engagement, being an initial period of three years
which thereafter may be extended on an annual basis,
subject to re-election at each AGM. The appointment of
the Chairman may be terminated on either side on six
months’ notice and the appointment of the other Non-
Executive Directors may be terminated on either side
on one month’s notice.
There is no entitlement to compensation in the event
of Non-Executive Directors’ fixed term agreements not
being renewed or the agreement terminating earlier.
130
MJ Gleeson plc Annual Report & Accounts 2022 Any share awards referred to in this section will be
granted as far as possible under the Company’s share
plans. To the extent that this is not possible, share
awards may be granted outside of these plans as
permitted under the Listing Rules.
In the case of an internal appointment, any ongoing
remuneration obligations or variable pay element
awarded in respect of the prior role shall be allowed
to continue according to its original terms, adjusted as
relevant to take into account the appointment.
Fees payable to a newly appointed Chairman or Non-
Executive Director will be in line with the fee policy in
place at the time of appointment.
Statement of consideration of employment
conditions elsewhere in the Group
The Non-Executive Workforce Representative engages
directly with employees on a range of topics of
interest to them, including Directors’ remuneration.
Workforce engagement activities include site and office
visits, 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 it is attuned to general
pay and conditions when considering Directors’
remuneration (e.g. in determining salary increases
for Executive Directors the Committee reviews salary
increases across the Group).
Statement of consideration of shareholder
views
The Committee consults with major shareholders and
their representative bodies on remuneration matters,
particularly if any material changes are proposed to the
remuneration policy. In these instances the Committee
seeks feedback from shareholders and develops and
considers its proposals in light of this feedback.
Recruitment policy
The remuneration of a new Executive Director
will normally include salary, benefits, pension and
participation in the annual bonus and LTIP schemes
in accordance with the policy for Executive Directors’
remuneration. The Committee may include other
elements of remuneration which it considers
appropriate, subject to the principles and limits referred
to below.
Salary will be set to reflect the skills and experience of
the Executive Director being appointed and the market
rate for the role.
If it is considered appropriate to appoint a new
Executive Director on a below-market salary (for
example, to allow them to gain experience in the role)
their salary may be increased to a market level by way
of a series of above-inflation increases over two to
three years.
Although it is not the Company’s policy to provide
buy-out awards as a matter of course, the Committee
may offer additional cash payments and/or share-
based awards, on a one-time basis or ongoing, where
it considers these to be in the best interests of the
Group and shareholders. Such payments or awards
will be based solely on remuneration forfeited when
leaving the former employer and will reflect the
delivery mechanism, time horizons and performance
requirement attaching to that remuneration. Such
payments or awards are limited to the expected value
of the remuneration forfeited. Where considered
appropriate, such payments or awards will be subject
to forfeiture or malus and clawback provisions on early
departure.
The Committee will not offer non-performance related
variable remuneration. The maximum level of variable
remuneration which may be granted (excluding buy-out
awards) is 350% of salary.
Other elements may be included in the following
circumstances:
• An interim appointment being made to fill an
Executive Director role on a short-term basis.
•
•
If exceptional circumstances require that the
Chairman or a Non-Executive Director takes on an
executive function on a short-term basis.
If an Executive Director is recruited at a time in the
year when it would be inappropriate to provide an
annual bonus or LTIP award for that year. Subject to
the limit on variable remuneration set out above, the
quantum in respect of the period employed during
the year may be transferred to the subsequent year.
•
If the Executive Director is required to relocate,
reasonable relocation, travel and subsistence
payments may be provided.
131
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Directors’ Report
Statutory, regulatory and other information
The Board of Directors present their Annual Report
and audited financial statements of the Group for
the financial year ended 30 June 2022. 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 and Accounts.
Strategic Report
We present a review of the business during the year to
30 June 2022 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 2 to 79.
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
8 and 9, the Chief Executive’s Statement on pages 24 to
27 and the Business Reviews on pages 28 to 31.
The Group’s business strategy is set out in the Strategic
Report on pages 16 to 19. 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 year, the Company paid a final dividend of
10.0p (approved by shareholders at the Annual General
Meeting on 15 November 2021) for financial year 2021
and an interim dividend in respect of financial year
2022 to shareholders of 6.0p per share.
The Board proposes to pay, subject to shareholder
approval at the 2022 AGM, a final dividend of 12.0p per
share on 25 November 2022, to shareholders on the
register at the close of business on 28 October 2022. The
total dividend for the year to 30 June 2022 will be 18.0p.
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.
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.
132
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 2022, 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
Schroder Investment
Management
Sanford DeLand Asset
Management
Polar Capital
Mrs J C Cooper & spouse1
Royal London Asset
Management
Canaccord Genuity Wealth
Management
Amati Global Investors
Highclere International
Investors
Number
of shares
Proportion
of total
6,555,000
11.24%
4,737,454
8.13%
4,000,000
2,303,453
2,257,465
6.86%
3.95%
3.87%
2,163,139
3.71%
2,147,500
2,059,140
3.68%
3.53%
2,054,403
3.52%
1 Of which 538,150 shares are held in trusts of which Mrs J C
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 82 to 135.
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 86 and 87.
Details of any related party transactions with Directors
of the Company are shown in note 27 to the financial
statements.
The beneficial interests of the Directors and their
connected persons in the shares of the Company at
30 June 2022 are disclosed in the Annual Report on
Remuneration on page 117. Details of the interests of
the Executive Directors in share options and awards of
shares can be found on page 118 within the same Report.
MJ Gleeson plc Annual Report & Accounts 2022 Employees diversity and inclusion
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,
ethnicity, 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 scheme
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. During the year, the
Group extended invitations to join the Group Share
Purchase Plan to all employees who had completed
their probationary employment period.
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 in the People section on pages 48 to 51
and in the Section 172 Statement on pages 74 to 77.
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 to 77.
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 Environment section
of the Strategic Report on pages 59 and 60.
Disclosures required under Listing Rule 9.8.4
There are no disclosures required by LR9.8.4 that apply
to the Company.
Shareholder additional information
The Company is required to disclose certain additional
information where not covered elsewhere in this Annual
Report and Accounts:
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 2022, the Company had issued share capital
of 58,306,337 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 register any transfer of a certificated share not fully
paid up.
133
Corporate GovernanceMJ Gleeson plc Annual Report & Accounts 2022 Directors’ Report
CONTINUED
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 2021 AGM, shareholders gave the Company
authority to purchase up to the nominal value of
ordinary shares of £116,612 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 2022 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.
134
Brittany and
Maddie,
Model Walk,
Worksop,
Nottinghamshire
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.
MJ Gleeson plc Annual Report & Accounts 2022 Disclosure of information to auditors
In accordance with the Statement of Directors’
Responsibilities in Respect of the Financial Statements
on page 136, the Directors who held office at the date
of approval of this Directors’ Report have confirmed
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.
Independent auditors
As set out on page 105, the independent 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 18 November 2022.
Annual General Meeting
The Notice of the AGM to be held on 18 November
2022, 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
14 September 2022
MJ Gleeson plc
Annual Report & Accounts 2022
135
Corporate Governance Statement of Directors’ Responsibilities
in Respect of the Financial Statements
The Directors are responsible for preparing the Annual
Report and Accounts 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 UK-adopted
international accounting standards.
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 UK-adopted international
accounting standards 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.
Directors’ confirmations
The Directors consider that the Annual Report and
Accounts and the financial statements, 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 UK-adopted
international accounting standards, give a true
and fair view of the assets, liabilities and financial
position of the Group and Company, and of the
profit of the Group; and
the Strategic Report includes a fair review of the
development and performance of the business and
the position of the Group and Company, together
with a description of the principal risks and
uncertainties that it faces.
In the case of each Director in office at the date the
Directors’ report is approved:
•
•
so far as the Director is aware, there is no relevant
audit information of which the Group’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
Stefan Allanson
Director
14 September 2022
14 September 2022
136
Steven, Fork Lift
Truck Driver,
Hardwicke Place,
Hartlepool,
County Durham
MJ Gleeson plc Annual Report & Accounts 2022 MJ Gleeson plc
Annual Report & Accounts 2022
137
Corporate Governance Financial
Statements
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
140
148
148
149
150
152
153
138
MJ Gleeson plc
Annual Report & Accounts 2022
Harris
and Lucy,
Calverley View,
Bradford,
West Yorkshire
139
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 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 2022 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 UK-adopted international accounting standards; 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 Statements of Financial Position as at 30 June 2022; the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, Statement of Changes in Equity for the Group and Company, and the Statements 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.
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.
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
• Enquiries have been made of management regarding their risk assessment and governance process in place to address
climate risk impacts, with no significant risk of material misstatement identified in this respect
140
Key audit matters
• Carrying value of land and work in progress (group)
• Valuation of building safety provisioning (group)
• Carrying value of investments (parent)
• Overall group materiality: £2,772,000 (2021: £2,086,000) based on 5% of profit before tax before exceptionals (2021: 5%
• Overall company materiality: £1,625,000 (2021: £1,423,000) based on 1% of total assets.
• Performance materiality: £2,079,000 (2021: £1,564,500) (group) and £1,218,750 (2021: £1,067,500) (company).
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
Materiality
of profit before tax).
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 building safety provisioning is a new key audit matter this year. The impact of Covid-19, which was a key audit matter
last year, is no longer included because of the reduced risk the ongoing Covid-19 pandemic poses to the group. Otherwise,
the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
We focused upon this area because the value of the
For land and work in progress in Gleeson Homes, we:
Carrying value of land and work in progress (group)
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
house building division), 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 land promotion
division), the valuation of work in progress requires
judgement regarding the future viability of each project.
Based upon this assessment, it may be necessary to
record provisions to determine the final carrying value of
work in progress for each site.
•
•
•
•
•
•
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 the
proportion of that expenditure recognised as a cost of sale
in the year in respect of units sold.
Assessed the historical accuracy of management’s
forecasting through investigation of any sites with unusual
or unexpected margins, based on an auditors expected
range.
Tested a sample of forecast costs to complete, including
forecast preliminary costs, to supporting documentation for
a sample of sites.
MJ Gleeson plc Annual Report & Accounts 2022
Key audit matters
• Carrying value of land and work in progress (group)
• Valuation of building safety provisioning (group)
• Carrying value of investments (parent)
Materiality
• Overall group materiality: £2,772,000 (2021: £2,086,000) based on 5% of profit before tax before exceptionals (2021: 5%
of profit before tax).
• Overall company materiality: £1,625,000 (2021: £1,423,000) based on 1% of total assets.
• Performance materiality: £2,079,000 (2021: £1,564,500) (group) and £1,218,750 (2021: £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 building safety provisioning is a new key audit matter this year. The impact of Covid-19, which was a key audit matter
last year, is no longer included because of the reduced risk the ongoing Covid-19 pandemic poses to the group. Otherwise,
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
house building division), 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 land promotion
division), the valuation of work in progress requires
judgement regarding the future viability of each project.
Based upon this assessment, it may be necessary to
record provisions to determine the final carrying value of
work in progress for each site.
For land and work in progress in Gleeson Homes, we:
•
•
•
•
•
•
Assessed the adequacy of controls over the authorisation
and recording of costs, including testing of controls over
the allocation of costs to the correct sites.
Visited a sample of sites to confirm the existence and
condition of the work in progress, and also to evaluate the
reasonableness of the assessment of stage of completion.
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 the
proportion of that expenditure recognised as a cost of sale
in the year in respect of units sold.
Assessed the historical accuracy of management’s
forecasting through investigation of any sites with unusual
or unexpected margins, based on an auditors expected
range.
Tested a sample of forecast costs to complete, including
forecast preliminary costs, to supporting documentation for
a sample of sites.
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Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022
•
•
Performed an independent assessment of a sample of cost
accruals and build contingency via enquiry and
corroboration to supporting evidence.
Reviewed the disclosures in the annual accounts in respect
of this critical accounting estimate.
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 all those sites sold during the year.
Discussed and challenged the status of a sample of
projects with management and corroborated explanations
received, as necessary.
Assessed the group's provisioning methodology.
Recalculated the provision made by management against
year-end work in progress by applying the Group’s
provisioning methodology and challenged and corroborated
as necessary.
Reviewed the disclosures in the annual accounts in respect
of this critical accounting estimate.
Based on the procedures performed we did not identify any
material adjustments to the carrying value of the Group’s land and
work in progress at year end.
We have reviewed the detailed desktop reports prepared by the
external surveyors and estimates made by inhouse resource and
have engaged our own internal experts to assess the rigour and
scepticism applied. In terms of audit procedures undertaken we:
•
•
•
•
•
•
•
Utilised auditors’ experts.
Assessed the objectivity, competence and capability of the
external experts engaged by management.
Challenged management on their assumptions in arriving
at the monetary value of the provision.
Performed sensitivities over the key assumptions used by
in-house resources.
Considered the impact of other relevant legislation (such as
recoverability of VAT) and external factors (availability of
subcontractors, impact of inflation on cash flows for
remediation).
Assessed the completeness of the provisioning,
considering whether all buildings have been captured and
whether all aspects of costing have been captured,
including consultation with our auditors' expert.
Challenged management on their accounting against the
recognition criteria of IAS 37, and reviewed the relevant
disclosure requirements of IAS 37.
Based on the procedures performed we did not identify any
material adjustments to the provision included in the group
accounts. We are also satisfied that the recognition and disclosure
of the provision is in line with IAS 37, and the disclosure of the
estimates and sensitivities are in line with IAS 1.
We compared the carrying value of the investments as at 30 June
2022 to the subsidiaries’ net assets and assessed the future cash
flows of the subsidiaries. We have assessed the key assumptions
underpinning these cash flows. We assessed the requirement for,
and the value of, the impairment recorded in the year. We also
assessed the market capitalisation of the Group as at 30 June
2022 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.
Valuation of building safety provisioning (group)
In April 2022, MJ Gleeson plc signed the 'Department for
Levelling Up, Housing and Communities' ("DLUHC")
Pledge, which commits the Group to fund the remediation
of life-critical fire safety issues on buildings over 11
metres, which over the last 30 years the Group was
involved in developing. Management have included a
provision representing the remediation cost for the 14
buildings identified as 'in scope' based on a programme of
desktop assessments performed by an external firm of
surveyors, and estimates made by inhouse qualified
resource. The provision is identified as a source of
estimation uncertainty as there are certain inherent
factors that would change the level of provision required
in future years. The key assumptions are the potential
cost of investigation, the costs of replacement materials
and works, the cost of disruption to residents, and the
timing of forecast expenditure. Hence, we identified the
valuation of building safety provisioning as a significant
risk.
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 as well as the new Building Safety Act
extending the liability period for defective claims from 6 to
30 years.
142
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.
The Group is organised into two main operating divisions being Gleeson Homes and Gleeson 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
Overall
materiality
£2,772,000 (2021: £2,086,000).
Financial statements -
company
£1,625,000 (2021:
£1,423,000).
How we
5% of profit before tax before exceptionals (2021: 5% of profit before
1% of total assets
determined it
tax)
Rationale for
benchmark
applied
Based on the benchmarks used in the annual report, profit before tax is
We believe total assets is
the primary measure used by the shareholders in assessing the
performance of the group, and is a generally accepted auditing
the primary measure used
by shareholders in
benchmark. Given the exceptional item is non-trading in nature and not
assessing the performance
representative of the underlying operations of the business, it was
of the entity.
deemed appropriate to exclude this from our calculation of materiality.
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 £40,500 and £2,663,400. 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% (2021: 75%) of overall materiality, amounting to
£2,079,000 (2021: £1,564,500) for the group financial statements and £1,218,750 (2021: £1,067,500) for the company
financial statements.
was appropriate.
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
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £138,600
(group audit) (2021: £104,300) and £81,250 (company audit) (2021: £71,150) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
MJ Gleeson plc Annual Report & Accounts 2022
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.
The Group is organised into two main operating divisions being Gleeson Homes and Gleeson 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
Overall
materiality
£2,772,000 (2021: £2,086,000).
How we
determined it
5% of profit before tax before exceptionals (2021: 5% of profit before
tax)
Financial statements -
company
£1,625,000 (2021:
£1,423,000).
1% of total assets
Rationale for
benchmark
applied
Based on the benchmarks used in the annual report, profit before tax is
the primary measure used by the shareholders in assessing the
performance of the group, and is a generally accepted auditing
benchmark. Given the exceptional item is non-trading in nature and not
representative of the underlying operations of the business, it was
deemed appropriate to exclude this from our calculation of materiality.
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 £40,500 and £2,663,400. 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% (2021: 75%) of overall materiality, amounting to
£2,079,000 (2021: £1,564,500) for the group financial statements and £1,218,750 (2021: £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 £138,600
(group audit) (2021: £104,300) and £81,250 (company audit) (2021: £71,150) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
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Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022
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; and
• We evaluated the historical accuracy of the budgeting process to assess the reliability of the data; and
• We evaluated management’s base case forecast and severe but plausible downside scenario and challenged the
adequacy and appropriateness of the underlying assumptions; and
• Undertook further sensitivities over key assumptions in management severe but plausible downside assessment; and
•
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; and
• We have reviewed management's disclosures in respect of going concern.
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.
statements;
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, which includes reporting based on the Task
Force on Climate-related Financial Disclosures (TCFD) recommendations. 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.
144
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 2022 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.
In our opinion, the part of the Annual Report on Remuneration to be audited has been properly prepared in accordance with
Directors’ Remuneration
the Companies Act 2006.
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
• 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
MJ Gleeson plc Annual Report & Accounts 2022
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 2022 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.
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.
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Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022
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.
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 health and safety legislation and building 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 Listing Rules and 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; and
• Reviewed the Group's board meeting minutes for the duration of the year and up to the date of signing; and
• 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 the expected cash outflows in respect of the building safety
provision; and
Identifying and testing journal entries on a sample basis, in particular journal entries posted with unusual account
combinations, posted by unexpected users, or which meet our fraud risk criteria. 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.
146
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.
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 6 years, covering the years ended 30 June 2017 to 30 June 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of
the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’
report provides no assurance over whether the annual financial report will be prepared using the single electronic format
specified in the ESEF RTS.
Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
14 September 2022
MJ Gleeson plc Annual Report & Accounts 2022
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.
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 6 years, covering the years ended 30 June 2017 to 30 June 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of
the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’
report provides no assurance over whether the annual financial report will be prepared using the single electronic format
specified in the ESEF RTS.
Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
14 September 2022
147
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022
Consolidated Income Statement
For the year ended 30 June 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
Finance income
Finance expenses
Profit before tax
Tax
Profit for the year attributable to the equity
holders of the parent
Earnings per share
Basic
Diluted
2022
Pre-
exceptional
items
£000
2022
Exceptional
items
(note 3)
£000
Note
2022
Total
£000
2
373,409
–
373,409
(262,753)
(12,867)
(275,620)
110,656
(54,543)
684
(12,867)
97,789
–
–
(54,543)
684
56,797
(12,867)
43,930
172
(1,482)
–
–
172
(1,482)
55,487
(12,867)
42,620
(9,976)
2,445
(7,531)
5
7
7
8
2021
£000
288,575
(199,230)
89,345
(47,185)
923
43,083
377
(1,749)
41,711
(7,839)
45,511
(10,422)
35,089
33,872
10
10
78.12 p
77.92 p
60.23 p
60.08 p
58.16 p
58.07 p
Consolidated Statement of
Comprehensive Income
For the year ended 30 June 2022
Profit for the year
45,511
(10,422)
35,089
2022
Pre-
exceptional
items
£000
2022
Exceptional
items
(note 3)
£000
Note
2022
Total
£000
2021
£000
33,872
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
15
8
120
–
120
–
–
–
120
–
120
33
302
335
45,631
(10,422)
35,209
34,207
The notes on pages 153 to 179 form part of these financial statements.
148
MJ Gleeson plc Annual Report & Accounts 2022 Statements of Financial Position
At 30 June 2022
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
Trade and other payables
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Own shares
Retained earnings
Total equity
Group
Company
Note
2022
£000
2021
£000
2022
£000
2021
£000
11
12
14
20
13
14
21
16
18
16
18
23
23
8,112
–
5,051
941
14,104
6,684
–
–
–
98,994
99,067
4,672
1,233
12,589
–
452
–
567
99,446
99,634
286,882
239,961
29,243
3,565
33,764
22,378
3,875
34,331
353,454
300,545
–
77,196
3,565
1,001
81,762
–
37,889
3,754
1,023
42,666
367,558
313,134
181,208
142,300
(9,703)
(12,049)
(21,752)
(6,917)
(236)
(7,153)
–
–
–
–
–
–
(72,291)
(1,339)
(61,027)
(122,265)
(88,654)
(23)
–
–
(73,630)
(61,050)
(122,265)
(88,654)
(95,382)
(68,203)
(122,265)
(88,654)
272,176
244,931
58,943
53,646
1,166
15,843
(471)
255,638
272,176
1,165
15,843
–
227,923
244,931
1,166
15,843
(471)
42,405
58,943
1,165
15,843
–
36,638
53,646
Retained earnings of the Company
The profit of the Company in the financial year amounted to £13,252,000 (2021: loss of £8,250,000).
The financial statements on pages 148 to 179 were approved by the Board of Directors on 14 September 2022 and
signed on its behalf by:
James Thomson
Director
Stefan Allanson
Director
Company registration number: 09268016
The notes on pages 153 to 179 form part of these financial statements.
149
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Statement of Changes in Equity
For the year ended 30 June 2022
Group
At 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive income for
the year
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners,
recorded directly in equity
At 30 June 2021
Profit for the year
Other comprehensive income
Total comprehensive income for
the year
Share issue
Transfer of own shares
Purchase of own shares
Utilisation of own shares
Share-based payments
Movement in tax on share-based
payments taken directly to equity
Dividends
Transactions with owners,
recorded directly in equity
Note
Share
capital
£000
Share
premium
£000
1,161
15,843
–
–
–
4
–
–
–
4
–
–
–
–
–
–
–
–
1,165
15,843
–
–
–
1
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
23
24
9
23
23
23
23
24
8
9
Own
shares
£000
Retained
earnings
£000
Total
equity
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(136)
(403)
68
–
–
–
195,601
212,605
33,872
335
33,872
335
34,207
34,207
–
(61)
1,089
(2,913)
4
(61)
1,089
(2,913)
(1,885)
(1,881)
227,923
244,931
35,089
35,089
120
120
35,209
35,209
–
136
–
268
1,568
1
–
(403)
336
1,568
(128)
(128)
(9,338)
(9,338)
(471)
(7,494)
(7,964)
At 30 June 2022
1,166
15,843
(471)
255,638
272,176
150
MJ Gleeson plc Annual Report & Accounts 2022 Statement of Changes in Equity
For the year ended 30 June 2022
Company
At 1 July 2020
Loss for the year
Other comprehensive income
Total comprehensive expense for
the year
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners,
recorded directly in equity
At 30 June 2021
Profit for the year
Total comprehensive income for
the year
Share issue
Transfer of own shares
Purchase of own shares
Utilisation of own shares
Share-based payments
Movement in tax on share-based
payments taken directly to equity
Dividends
Transactions with owners,
recorded directly in equity
Note
Share
capital
£000
1,161
Share
premium
£000
15,843
–
–
–
4
–
–
–
4
–
–
–
–
–
–
–
–
1,165
15,843
–
–
1
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
23
24
9
23
23
23
23
24
8
9
Own
shares
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
(136)
(403)
68
–
–
–
Retained
earnings
£000
46,630
Total
equity
£000
63,634
(8,250)
(8,250)
187
187
(8,063)
(8,063)
–
(105)
1,089
(2,913)
4
(105)
1,089
(2,913)
(1,929)
(1,925)
36,638
53,646
13,252
13,252
13,252
13,252
–
136
–
268
1,568
1
–
(403)
336
1,568
(119)
(119)
(9,338)
(9,338)
(471)
(7,485)
(7,955)
At 30 June 2022
1,166
15,843
(471)
42,405
58,943
151
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Statements of Cash Flows
For the year ended 30 June 2022
Operating activities
Profit/(loss) before tax
Adjustments for:
Depreciation of property, plant and equipment
Share-based payments
Profit on redemption of shared equity receivables
Increase in provisions including exceptional items
Loss on disposal of property, plant and equipment
Impairment of investments in subsidiaries
Disposal of right-of-use assets
Finance income
Finance expenses
Operating cash flows before movements in working
capital
Increase in inventories
(Increase)/decrease in receivables
Increase in payables
(Increase)/decrease in amounts due from subsidiary
undertakings
Increase in amounts due to subsidiary undertakings
Cash generated/(used) in operating activities
Tax paid
Finance costs paid
Net cash flow surplus/(deficit) from operating activities
Investing activities
Proceeds from disposal of shared equity receivables
Proceeds from disposal of property, plant and
equipment
Interest received
Dividends from subsidiaries
Purchase of property, plant and equipment
Net cash flow (deficit)/surplus from investing activities
Financing activities
Repayment 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 from financing activities
Group
Company
Note
2022
£000
2021
£000
2022
£000
2021
£000
42,620
41,711
13,248
(8,300)
11
24
15
18
11
12
7
7
11
23
9
17
3,124
1,568
(375)
13,129
403
–
–
(172)
1,482
2,772
1,089
(230)
–
200
–
50
(377)
1,749
–
1,568
–
–
–
73
–
(20,014)
–
1,089
–
–
–
1,733
–
–
1,336
1,490
61,779
46,964
(3,789)
(3,988)
(46,921)
(23,626)
(8,165)
13,244
(6,709)
19,706
–
280
265
–
–
–
–
19,937
36,335
(7,059)
(1,043)
11,835
(10,216)
(1,934)
24,185
1,566
858
–
20
–
7
6
–
(3,684)
(2,098)
(3,839)
(2,968)
(34,310)
35,382
(2,172)
(7,178)
(946)
(10,296)
–
–
14
20,000
–
20,014
–
341
1,227
42,532
20,655
60,767
(10,216)
(1,827)
48,724
–
–
–
–
–
–
–
1
(403)
(9,338)
(564)
(60,000)
4
(61)
(2,913)
(723)
–
1
(403)
(9,338)
–
(60,000)
4
(105)
(2,913)
–
(10,304)
(63,693)
(9,740)
(63,014)
Net decrease in cash and cash equivalents
(567)
(42,476)
(22)
(14,290)
Cash and cash equivalents at beginning of period
34,331
76,807
1,023
15,313
Cash and cash equivalents at end of period
21
33,764
34,331
1,001
1,023
152
MJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
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, United Kingdom. The address of the registered office is 6 Europa Court,
Sheffield Business Park, Sheffield, S9 1XE.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became
UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK
Endorsement Board. The Group and Company transitioned to UK-adopted International Accounting Standards
in its consolidated Group and Company financial statements on 1 July 2021. This change constitutes a change
in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework.
Both the Company financial statements and the Group financial statements have been prepared and approved by
the Directors in accordance with UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The consolidated Group and Company 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 the
Group and Company 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”).
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
Going concern
The Group’s business activities are set out in the Strategic Report on pages 2 to 79. The principal risks identified are
reported under Risk Management on pages 34 to 39.
In the prior year to 30 June 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), 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 and cash equivalents of
£33.8m (30 June 2021: £34.3m).
Current forecasts are based on the latest three-year budget approved by the Board in May 2022. This reflected a
cautious view on the trading outlook based on the current market and the degree of macro-economic risk.
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 combined 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 20%;
reduction in Gleeson Homes selling prices by 5% recovering over a medium term of five years;
• 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 certain 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.
153
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
1 Accounting policies CONTINUED
Revenue recognition
Revenue represents the fair value of the consideration received or receivable in respect of the sale, or sale and
leaseback, 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, or sale and leaseback, 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, including land sold under option agreements, freehold land sales, or fixed-price 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.
Segmental 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 segmental 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. Segmental results, assets and liabilities include items directly attributable to a
segment, as well as those that can be allocated on a reasonable basis. Segmental capital additions is the total cost
incurred during the period to acquire property, plant and equipment.
Exceptional items
Exceptional items are defined as items of income or expenditure which, in the opinion of the Directors, are
material or unusual in nature or of such significance that they require separate disclosure on the face of the
income statement in accordance with IAS 1 “Presentation of financial statements”. Should these items be reversed,
disclosure of this would also be as exceptional items.
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 income statement using the effective interest method.
Government grants
Grants are credited to the 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 income statement.
154
MJ Gleeson plc Annual Report & Accounts 2022 1 Accounting policies CONTINUED
Leases
The Group assesses whether a contract is, or contains, a lease at inception of the contract. The Group recognises
a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-
value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line
basis over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
A lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the Group uses an incremental borrowing rate 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.
For a modification that decreases the scope of the lease, the lease liability is remeasured at the effective date of
the modification using a revised discount rate representative of the remainder of the lease term. Where this is not
readily determined, the incremental cost of borrowing will be used. The carrying amount of the right-of-use asset
will decrease to reflect the partial or full termination of the lease. Any gain or loss relating to the lease modification
is recognised in the income statement.
Non-financial assets
1. 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 income statement.
2. Investments
Investments are stated at cost less impairment.
3. 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 condition at
the reporting date, including direct materials, direct labour costs and related overheads, and the costs incurred in
promoting land, less the value of any impairment losses. Inventories are recognised in cost of sales as an allocation
of the latest forecast gross margin expected to be generated over the remaining life of that site, which is an output
of the site valuation process. These valuations, which are carried out at regular intervals throughout the year, use
actual and forecast selling prices, land costs and build costs. Land purchased with deferred consideration terms is
included in inventories at its net present value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale. In Gleeson Homes, the key assumptions
underpinning the assessment of net realisable value are forecast costs to complete, site margins, contingencies and
selling prices. In Gleeson Land, expected land value, planning outcome, the remaining duration of the promotion or
option agreement and forecast costs to complete are used to determine net realisable value.
155
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
1 Accounting policies CONTINUED
Impairment of non-financial assets
The carrying amounts of 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 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.
Financial assets
1. Shared equity receivables
Shared equity receivables are loans that were 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 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 income statement.
2. Trade and other receivables
Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost using
the effective interest method, less any provision for impairment.
Deferred land receivables are discounted to present values when repayment is due in more than one year after
initial recognition.
3. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and cash held in solicitors’ client accounts on
the Group’s behalf and are subject to an insignificant risk of changes in value.
Impairment of financial assets
An assessment of expected credit losses associated with financial assets carried at amortised cost is undertaken
on a forward-looking basis. For trade receivables, the simplified approach as permitted by IFRS 9 “Financial
instruments” is applied, which requires expected lifetime losses to be recognised from initial recognition of the
receivables.
Non-financial liabilities
1. Provisions
Provisions are recognised when there is a present legal or constructive obligation arising from past events and it is
probable there will be an outflow of resources required to settle the obligation. Provisions are measured at the best
estimate of the Directors and discounted to present value where the effect is material.
2. Contingent liabilities
Where there is a possible obligation arising from past events that will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events then, unless the possibility of such an outflow of resources in
settlement is remote, a contingent liability is disclosed.
156
MJ Gleeson plc Annual Report & Accounts 2022 1 Accounting policies CONTINUED
Financial liabilities
1. 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.
Deferred land payables are discounted to present values when repayment is due in more than one year after initial
recognition.
2. 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, less any provision for impairment.
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable 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
1. Defined contribution pension plans
Obligations for contributions to defined contribution pension schemes are charged to the income statement in the
period to which the contributions relate.
2. Share-based payments
Equity-settled share-based payments (“share options”) include awards granted under the Group’s Long Term
Incentive Plan (“LTIP”), which are measured at fair value at the date of grant. Fair value is measured using
generally accepted option pricing models, taking into account the terms and conditions upon which the options
were granted. The fair value of options granted is recognised as an employee expense with a corresponding
credit to equity, spread on a straight-line basis over the vesting period. Where non-market vesting conditions
apply, the expense is based on the estimate of shares that will eventually vest. These awards are granted by the
Company and the cost of the share-based award relating to each subsidiary is calculated, based on an appropriate
apportionment, at the date of grant and recharged through intercompany.
Own shares held by Employee Benefit Trusts
The Employee Benefit Trusts (“EBT”) holds shares in the Company for the purpose of settling employee share
purchase plan awards, deferred bonus awards for the Executive Directors, and employee share options through
shares purchased from the market. The cost of the Company’s purchase of its own shares is shown as a reduction in
shareholders’ equity through the “own shares” reserve until such time as they are vested to employees.
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.
157
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
1 Accounting policies CONTINUED
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements 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 that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year at the balance sheet date are listed below.
Due to the reduced carrying value of shared equity receivables, the Group has determined that the valuation of
shared equity is no longer a key source of estimation uncertainty. Margin recognition and building safety provisions
have been added as new key sources of estimation uncertainty in the year.
1. Margin recognition
Cost of sales is recognised for completed home sales as an allocation of the latest forecast gross margin expected
to be generated over the remaining life of that site, which is an output of the site valuation process. These
valuations, which are updated at regular intervals throughout the year, use actual and forecast selling prices, land
costs and build costs and are sensitive to future movements in both the estimated costs to complete and expected
selling prices. These estimates are reflected in the margin recognised on sites in relation to sales recognised in
the current and future years. There is a degree of inherent uncertainty in making such estimates. The Group has
established internal controls that are designed to ensure an effective assessment of estimates is made for the costs
to complete developments. If gross margin on homes sold decreased by 100 basis points, profit before tax in the
year would have been £3.3m lower (2021: £2.7m lower).
2. Carrying value of 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. If forecast gross margins reduced by 5%, there would be no material impact on profit before tax
or the carrying value of inventory.
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. If a single
site in the portfolio failed to obtain planning permission before expiration of the agreement, the carrying value
would decrease by £0.4m (2021: £0.4m), based on an average site. The single largest WIP balance in the portfolio
is £2.4m (2021: £2.0m).
3. Building safety
As set out in note 18, the Group is undertaking a review of all buildings over 11 metres in which the Group had,
over the last 30 years, some involvement in developing. The Group has identified 14 buildings where it acted as
developer and has confirmed its commitment for performing or funding mitigation works to address life-critical
fire-safety issues by signing the Department for Levelling Up, Housing and Communities (“DLUHC”) pledge. The
Group originally notified DLUHC of 15 buildings in total, but one building has subsequently been identified as being
developed by another housebuilder.
The Group has recorded a building safety provision which represents the best estimate of the life-critical fire-
safety remediation costs for these 14 buildings. The building safety provision requires a number of key estimates
and judgements in its calculation. If it is deemed that the costs are probable and can be reliably measured then, as
per IAS 37 “Provisions, contingent liabilities and contingent assets”, a provision is recorded. If costs are considered
possible or cannot be reliably estimated then they are recorded as contingent liabilities. The key judgements
include, but are not limited to, the identification of these properties, the time period to consider and which
properties should then be included. Judgement is also required in respect of the underlying nature of the building
and materials used where intrusive surveys have not yet been carried out. The key estimates applied to these
properties include the potential costs of investigation, the costs of replacement materials and works, the costs of
disruption to residents of these buildings and the timing of forecast expenditure.
If forecast remediation costs on these buildings were 20% higher, the exceptional charge in the consolidated
income statement would be £2.6m higher. See note 18 for further details.
158
MJ Gleeson plc Annual Report & Accounts 2022 1 Accounting policies CONTINUED
4. Climate change and environmental risk
Significant judgement is required to assess the impact of climate change on the operations of the business and
the carrying value of its assets, including land held in inventory. 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. No provisions or impairment of assets have been recognised in these financial
statements. Scenario analysis is presented in the TCFD section on pages 66 to 69.
5. Carrying value of investments (Company only)
Investments are stated at cost less impairment. Significant judgement is required to determine if an impairment
trigger has taken place, and in calculating an impairment, judgement is required to determine the value in use or
net realisable value. It was identified that Gleeson Construction Services Limited incurred a loss during the year,
which is an indicator that an impairment loss may have occurred – see note 12 for further details. For the investment
held in MJ Gleeson Group Limited, an increase in the loss of MJ Gleeson Group Limited or its subsidiary, Gleeson
Construction Services Limited, of 10% would lead to an increase in the impairment of £15,000.
Adoption of new and revised standards
For the year ended 30 June 2022, the Group and Company have applied the following new and revised standards
that were mandatorily effective for an accounting period beginning on or after 1 January 2021:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest rate benchmark reform – phase 2” (effective
1 January 2021)
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 Group
and Company in preparing the financial statements for the year ended 30 June 2022:
• Amendments to IFRS 3 “Business combinations”, IAS 16 “Property, plant and equipment”, IAS 37 “Provisions,
contingent liabilities and contingent assets” (effective 1 January 2022)
•
IAS 1 “Classification of liabilities” (effective 1 January 2023)
• Amendments to IAS 8 “Accounting policies, changes in accounting estimates and errors” (effective 1
January 2023)
• Amendments to IAS 12 “Taxation” (effective 1 January 2023)
• Amendments to IAS 1 “Presentation of financial statements” (deferred until not earlier than 1 January 2024)
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.
159
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
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. Segmental 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
Profit for the year
2022
Pre-
exceptional
items
£000
2022
Exceptional
items
(note 3)
£000
2022
Total
£000
334,571
38,838
373,409
–
–
–
334,571
38,838
373,409
2021
£000
265,770
22,805
288,575
51,227
11,061
62,288
(5,491)
172
(1,482)
55,487
(9,976)
45,511
(12,867)
–
(12,867)
38,360
11,061
49,421
37,437
11,080
48,517
(5,491)
(5,434)
–
–
–
172
(1,482)
(12,867)
42,620
2,445
(7,531)
(10,422)
35,089
377
(1,749)
41,711
(7,839)
33,872
The revenue in the Gleeson Homes segment primarily relates to the sale of residential properties. In addition,
within revenue for Gleeson Homes is £nil relating to land sales (2021: £1,521,000). 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 (2021: no single customer).
Balance sheet analysis of business segments:
2022
2021
Assets
£000
Liabilities
£000
280,481
(85,170)
49,230
4,083
33,764
(5,869)
(4,343)
–
367,558
(95,382)
Net assets/
(liabilities)
£000
195,311
43,361
(260)
33,764
272,176
Assets
£000
223,328
50,487
4,988
34,331
313,134
Liabilities
£000
Net assets
£000
(54,892)
168,436
(9,106)
(4,205)
–
41,381
783
34,331
(68,203)
244,931
2022
2021
Capital
additions
£000
3,684
–
–
3,684
Depreciation
£000
3,022
102
–
3,124
Capital
additions
£000
3,833
6
–
3,839
Depreciation
£000
2,664
107
1
2,772
Gleeson Homes
Gleeson Land
Group activities
Cash and cash equivalents
Other information:
Gleeson Homes
Gleeson Land
Group activities
160
MJ Gleeson plc Annual Report & Accounts 2022 3 Exceptional items
In April 2022, MJ Gleeson plc signed the Department for Levelling Up, Housing and Communities’ (“DLUHC”)
pledge, which confirms that the Group takes responsibility for performing or funding mitigation works to address
life-critical fire-safety issues on buildings over 11 metres in which the Group had, over the last 30 years, some
involvement in developing and to secure withdrawal of those buildings from the Building Safety Fund and
ACM Funds.
The Group was involved in the development of 14 buildings over 11 metres, none of which were over 18 metres.
The Group originally notified DLUHC of 15 buildings in total, but one building has subsequently been identified as
having not been developed by Gleeson. The remaining buildings were developed before the Group exited from its
legacy businesses and dedicated itself to low-cost house building and land promotion.
As a result of the work carried out to date, which is set out in note 18, the Group has recognised a provision of
£12,867,000 (2021: £nil) for life-critical fire-safety remedial works in relation to these buildings. The cost of the
building safety provision has been recognised as an exceptional item within cost of sales.
Exceptional items for the year relate solely to building safety.
2022
£000
12,867
2021
£000
–
Cost of sales
4 Expenses and auditors’ remuneration
Profit for the year is stated after charging/(crediting):
Staff costs
Depreciation of property, plant and equipment
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
5 Other operating income
Profit on redemption of shared equity receivables
Other operating income
Note
6
11
15
11
Note
15
2022
£000
47,220
3,124
(375)
403
254
66
–
2022
£000
375
309
684
6 Staff costs
Wages and salaries
Share-based payments
Social security costs
Other pension costs
Group
Company
Note
24
19
2022
£000
39,023
1,568
5,235
1,394
47,220
2021
£000
33,427
1,089
4,109
1,189
39,814
2022
£000
2,071
921
588
70
3,650
In the prior year, 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.
161
2021
£000
39,814
2,772
(230)
200
203
57
–
2021
£000
230
693
923
2021
£000
2,394
758
586
78
3,816
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
6 Staff costs CONTINUED
The monthly average number of employees, excluding Non-Executive Directors, during the year was:
Gleeson Homes
Gleeson Land
Group activities
Group
2022
No.
730
14
4
748
2021
No.
625
16
4
645
The monthly average number of Company employees and Non-Executive Directors during the year was nine
(2021: eight).
Key management remuneration
Key management personnel, as defined under IAS 24 “Related party disclosures”, have been identified as the Board
of Directors, the Managing Directors of Gleeson Homes and Gleeson Land, and the Divisional Managing Directors of
Gleeson Homes. A summary of key management remuneration is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments1
Group
Company
2022
£000
3,990
134
1,302
5,426
2021
£000
3,943
139
948
5,030
2022
£000
2,248
62
921
3,231
2021
£000
2,234
71
758
3,063
1 Share-based payments reflects the IFRS 2 “Share-based payment” charge through the income statement.
2022
£000
2021
£000
2
152
18
172
(820)
(516)
(49)
(97)
–
(1,482)
(1,310)
–
370
7
377
(818)
(672)
(185)
(72)
(2)
(1,749)
(1,372)
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
162
MJ Gleeson plc Annual Report & Accounts 2022 8 Tax
Current tax
Current year expense
Adjustment in respect of prior years
Current tax expense for the year
Deferred tax
Current year expense
Adjustment in respect of prior years
Impact of rate change
Deferred tax expense for the year
Note
20
20
20
2022
£000
7,571
(165)
7,406
253
(165)
37
125
2021
£000
7,261
(533)
6,728
674
589
(152)
1,111
Total tax charge
7,531
7,839
Corporation tax has been calculated at 17.7% of assessable profit for the year (2021: 18.8%). The applicable UK
corporation tax rate is 19%, which has been effective from 1 April 2017.
Total tax charge reconciliation
The charge for the year can be reconciled to the profit before tax per the consolidated income statement as
follows:
Total tax charge
Profit before tax
Note
2022
£000
42,620
%
2021
£000
41,711
%
Tax at current corporation tax rate
8,098
19.0
7,925
19.0
Expenses not deductible for tax purposes
Non-qualifying depreciation
Relief for share-based payments
Capital allowances super deduction
Land remediation relief
Impact of rate differences
Adjustments in respect of prior years –
current tax
Adjustments in respect of prior years –
deferred tax
Residential property developers tax
Total tax charge and effective tax rate for
the year
13
82
84
(161)
(412)
37
–
0.2
0.2
(0.4)
(0.9)
0.1
3
64
(6)
(51)
–
(152)
(165)
(0.4)
(533)
20
(165)
120
(0.4)
0.3
589
–
7,531
17.7
7,839
0.0
0.2
0.0
(0.1)
–
(0.4)
(1.3)
1.4
–
18.8
The difference between the headline rate of 19% and the effective tax rate of 17.7% is primarily driven by land
remediation relief, residential property developers tax and the adjustments in respect of prior years when the tax
computations were finalised. See further explanations following the current tax reconciliation.
163
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
8 Tax CONTINUED
Current tax charge reconciliation
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
Profit before tax
Note
2022
£000
42,620
%
2021
£000
41,711
%
Tax at current corporation tax rate
8,098
19.0
7,925
19.0
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 of losses
Adjustments in respect of prior years –
current tax
Residential property developers tax
Short-term timing differences
Current tax charge and effective tax rate for
the year
13
82
263
(161)
(412)
(292)
–
(165)
141
(161)
–
0.2
0.6
(0.4)
(0.9)
(0.6)
–
(0.4)
0.3
(0.4)
122
64
86
(51)
–
(200)
(634)
(533)
–
(51)
7,406
17.4
6,728
0.3
0.2
0.2
(0.1)
–
(0.5)
(1.5)
(1.3)
–
(0.1)
16.1
20
The most significant factor impacting the Group’s current tax charge is land remediation relief, whereby tax relief is
granted on an additional 50% of qualifying land remediation expenditure. This is for costs incurred on remediating
contaminated land and bringing it to a safe and usable condition for the purposes of development. Many of our
sites are on brownfield land and require significant remediation prior to use. The government provides this benefit
as an incentive to remediate contaminated land. No deferred tax is recognised on this permanent benefit.
The impact of capital allowances in excess of depreciation arises where assets qualify for capital allowances in a
different period than they are depreciated for accounting purposes. A temporary timing difference is created and
deferred tax is recognised on the difference between the carrying amount of the asset and the amount deductible
for tax purposes in future years.
The anticipated tax relief for share-based payments is lower than the IFRS 2 “Share-based payment” charge
recognised in the accounts for the year, with current and deferred tax being recognised to reflect this difference.
The actual corporation tax relief will be based on the future share price at the point which awards vest. As the
future vesting price of these awards is not yet known, then the closing share price at the end of the year is used
to calculate whether the tax deduction is higher or lower than the charge recognised in the accounts. Current and
deferred tax is recognised to reflect this timing difference.
From 1 April 2022, residential property developers tax (“RPDT”) is charged at 4% on certain profits from residential
development activities. No deferred tax is recognised in relation to this permanent difference. The additional 4%
RPDT is recognised as part of the tax expenses and creates a permanent difference in excess of the headline rate of
corporation tax at 19%.
Short-term timing differences comprise items other than depreciation of property, plant and equipment where the
amount is included in the tax computation in a different period from when it is recognised in the income statement.
Deferred tax is provided on these items.
Prior period adjustments relate to estimates and judgements included in the prior year accounts and subsequently
adjusted when the tax computations were finalised and submitted to HMRC. This primarily relates to the land
remediation relief claim, which was calculated after the accounts were signed.
Non-deductible expenditure is a permanent difference and comprises business expenses, such as entertaining costs,
recognised in the income statement but not allowable as a deduction against taxable income.
164
MJ Gleeson plc Annual Report & Accounts 2022 8 Tax CONTINUED
Tax recognised on equity-settled share-based payments
Current tax related to equity-settled share-based
payments
Deferred tax related to equity-settled share-based
payments
Total tax recognised on equity-settled share-
based payments
Note
20
Group
2022
£000
(39)
167
128
2021
£000
(134)
(168)
(302)
Company
2022
£000
2021
£000
(39)
158
119
(55)
(132)
(187)
In accordance with IAS 12 “Income taxes”, the tax relating to items recognised directly in equity should also
be recognised directly in equity. In the prior year, the tax relating to equity-settled share-based payments was
recognised in other comprehensive income.
9 Dividends
Amounts recognised as distributions to equity holders:
Interim dividend for the year ended 30 June 2022 of 6.0p (2021: 5.0p) per share
Final dividend for the year ended 30 June 2021 of 10.0p (2020: £nil) per share
2022
£000
3,507
5,831
9,338
2021
£000
2,913
–
2,913
A final dividend of 12.0p per share has been proposed for the year ended 30 June 2022, equating to £6,999,000
(2021: £5,831,000). This is subject to approval by shareholders at the AGM on 18 November 2022 and has not been
recognised in these financial statements.
10 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Profit for the year
Exceptional items
Tax on exceptional items
Profit for the year – pre-exceptional items
Note
3
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
Basic earnings per share
Diluted earnings per share
Basic earnings per share – pre-exceptional items
Diluted earnings per share – pre-exceptional items
2022
£000
35,089
12,867
(2,445)
45,511
2022
No. 000
2021
£000
33,872
–
–
33,872
2021
No. 000
58,259
58,235
145
97
58,404
58,332
2022
p
60.23
60.08
78.12
77.92
2021
p
58.16
58.07
58.16
58.07
165
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
11 Property, plant and equipment
Cost or valuation
At 1 July 2020
Additions
New leases entered in the year
Leases exited in the year
Disposals
At 30 June 2021
Additions
New leases entered in the year
Leases exited in the year
Disposals
At 30 June 2022
Accumulated depreciation
At 1 July 2020
Charge for the year
Leases exited in the year
Disposals
At 30 June 2021
Charge for the year
Leases exited in the year
Disposals
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Group
Plant and
equipment
£000
Property
£000
3,059
–
650
(982)
–
2,727
–
1,133
(68)
–
3,792
475
476
(161)
–
790
467
(6)
–
1,251
2,584
1,937
2,541
7,693
3,839
82
–
(1,226)
10,388
3,684
206
(34)
(1,701)
12,543
4,364
2,296
–
(1,019)
5,641
2,657
(28)
(1,298)
6,972
3,329
4,747
5,571
Total
£000
10,752
3,839
732
(982)
(1,226)
13,115
3,684
1,339
(102)
(1,701)
16,335
4,839
2,772
(161)
(1,019)
6,431
3,124
(34)
(1,298)
8,223
5,913
6,684
8,112
Company
Plant and
equipment
£000
1
–
–
–
–
1
–
–
–
–
1
1
–
–
–
1
–
–
–
1
–
–
–
The Group has recorded a depreciation charge of £3,124,000 (2021: £2,772,000), of which £609,000
(2021: £544,000) has been charged in cost of sales and £2,515,000 (2021: £2,228,000) in administrative expenses.
At 30 June 2022, the net book value of right-of-use assets was £2,773,000 (2021: £2,108,000), of which
£2,541,000 (2021: £1,940,000) is within property and £232,000 (2021: £168,000) is within plant and equipment.
The depreciation charge recorded for right-of-use assets was £602,000 (2021: £749,000). Refer to note 17 for
further details.
The Company recorded a depreciation charge of £nil (2021: £nil).
166
MJ Gleeson plc Annual Report & Accounts 2022 12 Investments in subsidiaries
Cost
At 1 July 2020
Impairment
At 30 June 2021
Impairment
At 30 June 2022
Company
£000
100,800
(1,733)
99,067
(73)
98,994
The investments in subsidiaries are assessed annually to determine if there is any indication that any of the
investments might be impaired. Gleeson Construction Services Limited incurred a loss during the year, which is an
indicator that an impairment loss may have occurred and, therefore, the recoverable amount of the investment was
calculated.
MJ Gleeson Group Limited is the intermediate holding company of Gleeson Construction Services Limited and does
not generate revenue or incur any significant costs of its own. Gleeson Construction Services Limited manages the
unwind of historic construction and employment liability claims and does not generate any revenue, but it incurs
losses each year which reduce the net asset value.
The recoverable amount of MJ Gleeson Group Limited and its subsidiary, Gleeson Construction Services Limited,
was determined based on a value-in-use calculation incorporating cash flow projections. Given the timing of claims
settlements is not fully known, the related cash flows are assumed to be incurred within one year of the balance
sheet date and are not discounted.
The carrying value of the investment in MJ Gleeson Group Limited was £6,067,000 and the recoverable amount
was calculated as £5,994,000, resulting in an impairment loss of £73,000.
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 Land Limited
(formerly Gleeson Strategic Land Limited)
Gleeson Land (Fleet) Limited1
(formerly Gleeson Strategic Land (Fleet) Limited)
1 Shares held by Gleeson Land Limited.
Principal activity
House building
House building
House building
Land promotion and sale
Land promotion and sale
167
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
12 Investments in subsidiaries CONTINUED
The following are the other subsidiary companies of MJ Gleeson plc:
Principal activity
Intermediate holding company
Legacy construction services
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Dormant4
Company name
MJ Gleeson Group Limited
Gleeson Construction Services Limited2
Colroy Limited3
Haredon Developments Limited3
Gleeson Capital Solutions Limited
Gleeson Classic Homes Limited1
Gleeson Homes Southern Limited1
Gleeson Housing Developments Limited1
Gleeson PFI Investments Limited
Gleeson Properties Limited
Gleeson Properties (Kingley) Limited3
Gleeson Properties (Petersfield) Limited3
Gleeson Services Limited
KW Cannock Properties Limited
MJ Gleeson (International) Limited
MJG (Management) Limited
Oakmill Properties Limited3
Sindale Properties Limited1
1 Shares held by Gleeson Developments Limited.
2 Shares held by MJ Gleeson Group Limited.
3 Shares held by Gleeson Properties Limited.
4 Exempt from audit by virtue of s479A of the Companies Act 2006.
13 Inventories
Land held for development
Work in progress
2022
£000
113,745
173,137
286,882
2021
£000
97,550
142,411
239,961
Net realisable value provisions held against inventories at 30 June 2022 were £5,933,000 (2021: £5,470,000). The
amount of inventory write-down recognised as an expense in the period was £3,341,000 (2021: £1,216,000) and the
amount of reversal of previously recognised inventory write-down was £2,211,000 (2021: £859,000). The cost of
inventories recognised as an expense in cost of sales was £261,293,000 (2021: £197,533,000).
Company
The Company held no inventories at 30 June 2022 (2021: £nil).
168
MJ Gleeson plc Annual Report & Accounts 2022 14 Trade and other receivables
Current receivables
Trade receivables
VAT recoverable
Prepayments and accrued income
Shared equity receivables
Amounts due from subsidiary undertakings
Non-current receivables
Trade receivables
Shared equity receivables
Group
Company
2022
£000
20,423
6,615
978
1,227
–
2021
£000
17,825
3,403
1,150
–
–
29,243
22,378
4,793
258
5,051
2,150
2,522
4,672
2022
£000
–
86
19
–
77,091
77,196
–
–
–
2021
£000
–
28
357
–
37,504
37,889
–
–
–
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.
15 Financial instruments
The Group and Company’s finance assets and liabilities are as follows:
Group
Financial assets
Cash and cash equivalents
Trade and other receivables
Shared equity receivables
Financial liabilities
Land payables
Trade and other payables
Lease liabilities
Company
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Book value
Carrying value
2022
£000
33,764
25,216
1,844
60,824
2021
£000
34,331
19,975
3,002
57,308
2022
£000
33,764
25,216
1,485
60,465
2021
£000
34,331
19,975
2,522
56,828
Book value
Carrying value
2022
£000
(14,622)
(64,363)
(3,009)
(81,994)
2021
£000
(11,373)
(54,249)
(2,322)
(67,944)
2022
£000
(14,622)
(64,363)
(3,009)
(81,994)
2021
£000
(11,373)
(54,249)
(2,322)
(67,944)
Book value
Carrying value
2022
£000
1,001
2021
£000
1,023
2022
£000
1,001
2021
£000
1,023
Book value
Carrying value
2022
£000
(2,807)
2021
£000
(2,489)
2022
£000
(2,807)
2021
£000
(2,489)
169
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
15 Financial instruments CONTINUED
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.
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 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 and other receivables
approximates to their fair value and no expected credit loss is recognised as it is wholly immaterial.
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 2022, the Group’s most significant credit risk was with a housebuilder and amounted to £7,539,000
(2021: £7,569,000) 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 the Board 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.
The ageing of gross trade receivables at the reporting date was:
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121–365 days
Past due more than one year
Group
2022
£000
25,413
–
71
203
29
25,716
2021
£000
19,965
–
8
12
129
20,114
Company
2022
£000
2021
£000
–
–
–
–
–
–
–
–
–
–
–
–
All trade receivables are from UK customers. The amounts due are included at expected realisable value.
Included in trade receivables not past due are £4,793,000 (2021: £2,150,000) 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
2022
£000
139
217
(96)
260
2021
£000
2022
£000
2021
£000
96
43
–
139
–
–
–
–
–
–
–
–
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 income statement.
Market risk
The Group has no significant exposure to foreign currency risk or equity risk.
170
MJ Gleeson plc Annual Report & Accounts 2022 15 Financial instruments CONTINUED
Interest rate risk
The Group closely monitors its exposure to variations in interest rates but has limited exposure. At 30 June 2022
the Group had no material interest-bearing financial liabilities.
Bank borrowings
Bank overdraft
2022
Weighted average
interest rate
2021
Weighted average
interest rate
%
2.95
–
£000
–
–
%
2.13
–
£000
–
–
Based on average net cash balances during the year, a 1.5% change in interest rates, which the Directors consider
to be a reasonably possible change, would affect profit before tax by £71,000–£200,000 (2021: £65,000–£86,000
impact based on 0.5% change).
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 monitoring forecast and actual cash flows and matching
the expected cash flow timings of financial assets and liabilities with the use of cash and cash equivalents and
loans and borrowings. At the balance sheet date, the total unused committed amount was £105,000,000 (2021:
£105,000,000) and cash and cash equivalents were £33,764,000 (2021: £34,331,000).
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 2022
Trade and other
payables
Lease liabilities
30 June 2021
Trade and other
payables
Lease liabilities
Carrying
amount
£000
Undiscounted
contractual
cash flows
£000
On demand
or within
6 months
£000
78,985
3,009
81,994
79,182
3,369
82,551
70,172
369
70,541
Carrying
amount
£000
Undiscounted
contractual
cash flows
£000
On demand
or within
6 months
£000
65,622
2,322
67,944
65,666
3,501
69,167
55,423
320
55,743
6–12
months
£000
1,634
342
1,976
6–12
months
£000
5,035
247
5,282
1–2
years
£000
6,426
628
7,054
1–2
years
£000
5,208
441
5,649
2–5
years
£000
More than
5 years
£000
950
1,257
2,207
–
773
773
2–5
years
£000
More than
5 years
£000
–
1,033
1,033
–
1,460
1,460
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.
171
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
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
2022
£000
2,522
(1,071)
–
35
(1)
2021
£000
3,668
(594)
(600)
49
(1)
1,485
2,522
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 £1,071,000 (2021: £594,000) generated a
profit on redemption of £375,000 (2021: £230,000), 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 £120,000 (2021: £33,000) 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
2022
£000
(1)
121
120
2021
£000
(1)
34
33
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%
• Average period to redemption: 5 years
• Discount rate: 8%
The sensitivity analysis of changes to each of the key assumptions applied in calculating fair value, whilst holding all
other assumptions constant, is as follows:
Change in assumption
Forecast regional house price inflation – increase by 1%
Average period to redemption – increase by 1 year
Discount rate – decrease by 1%
2022
Increase/
(decrease)
in fair value
£000
2021
Increase/
(decrease)
in fair value
£000
107
(116)
102
156
(173)
149
172
MJ Gleeson plc Annual Report & Accounts 2022 15 Financial instruments CONTINUED
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
2022
£000
29,171
667
2,385
2,212
37,856
–
72,291
7,361
2,342
9,703
2021
£000
29,272
566
1,891
2,294
27,004
–
61,027
5,161
1,756
6,917
2022
£000
2021
£000
6
–
77
–
2,724
119,458
122,265
–
–
–
109
–
68
–
2,312
86,165
88,654
–
–
–
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, £2,294,000 (2021: £1,836,000) has been
recognised in revenue in the current year as the performance obligations were met.
17 Leases
The Group’s lease portfolio includes office properties, company cars and a small number of show homes.
2022
Plant and
equipment
£000
898
(666)
232
Property
£000
3,604
(1,063)
2,541
Total
£000
4,502
(1,729)
2,773
Property
£000
2,634
(697)
1,937
Right-of-use assets
Cost
Accumulated depreciation
Net book value
Lease liabilities
Current liabilities
Non-current liabilities
Total lease liabilities
2021
Plant and
equipment
£000
726
(555)
171
2022
£000
667
2,342
3,009
Total
£000
3,360
(1,252)
2,108
2021
£000
566
1,756
2,322
173
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
17 Leases CONTINUED
Amounts recognised in the consolidated income statement
Depreciation on right-of-use property assets
Depreciation on right-of-use plant and equipment assets
Interest on lease liabilities
Total
Amounts recognised in the statement of cash flows
Principal element of lease payments
Interest element of lease payments
Total cash outflow
18 Provisions
Group
As at 1 July 2020
Provisions made during the year
As at 30 June 2021
Provisions made during the year
As at 30 June 2022
Current provisions
Non-current provisions
2022
£000
467
135
97
699
2022
£000
564
97
661
Dilapidations
£000
Building
safety
£000
215
44
259
262
521
–
–
–
12,867
12,867
2022
£000
1,339
12,049
13,388
2021
£000
476
273
72
821
2021
£000
723
72
795
Total
£000
215
44
259
13,129
13,388
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 on a straight-line basis over the term of the lease. There is no material uncertainty in either
the timing or amount.
Building safety
The building safety provision includes estimated costs to remediate life-critical fire-safety issues on buildings over 11
metres in which the Group had some involvement in developing over the last 30 years. By signing the Department
for Levelling Up, Housing and Communities’ (“DLUHC”) pledge, the Group has committed to put right life-critical
fire-safety issues in relation to these buildings.
The Group was involved in the development of 14 buildings over 11 metres, none of which were over 18 metres.
The Group originally notified DLUHC of 15 buildings in total, but one building has subsequently been identified as
having not been developed by Gleeson. The Group retains no freehold ownership of these or any other buildings.
All of the buildings, including any external wall systems or cladding, were signed off by approved inspectors as
compliant with the relevant building regulations at the time of their completion.
During the year, the Group completed an extensive exercise to locate the records of all buildings affected in which, over
the last 30 years, the Group had some involvement in developing. A third-party firm of surveyors was then engaged
to examine the 14 buildings covered under the DLUHC pledge and desktop surveys were undertaken. A programme of
intrusive inspections and fire risk assessments has commenced, where permitted by the building owners.
As a result of the work performed, a provision of £12,867,000 has been recognised which represents the Board’s
best estimate of the life-critical fire-safety remediation costs for these 14 buildings, which may change as the
programme of intrusive inspections progresses. The Group has provided for the cost of remediation where there is
a liability, where build issues have been identified or it is considered that such build issues are likely to exist.
The Group will review the building safety provision at each reporting date and, where necessary, adjust it to reflect
the current best estimate of these costs.
Company
At 30 June 2022, the Company did not have any provisions (2021: £nil).
174
MJ Gleeson plc Annual Report & Accounts 2022
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 £1,394,000 (2021: £1,190,000) represents
contributions payable to the defined contribution pension plan by the Group at rates specified in the plan rules. At
30 June 2022, contributions of £254,000 (2021: £176,000) 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 £70,000 (2021: £78,000) represents contributions
payable to the defined contribution pension plan by the Company at rates specified in the plan rules. At 30 June
2022, contributions of £2,000 (2021: £2,000) 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.
20 Deferred tax assets
Group
At 1 July 2020
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change
At 30 June 2021
Adjustment in respect of prior year
(Charge)/credit to income
Charge to equity
Impact of rate change
At 30 June 2022
Plant and
equipment
£000
718
(344)
(200)
–
54
228
165
(310)
–
(93)
(10)
Losses
£000
728
(94)
(634)
–
–
–
–
–
–
–
–
Short-term
timing
differences
£000
Share-based
payments
£000
399
(151)
67
–
30
345
–
(153)
–
(15)
177
331
–
93
168
68
660
–
210
(167)
71
774
Total
£000
2,176
(589)
(674)
168
152
1,233
165
(253)
(167)
(37)
941
At the balance sheet date, the Group has unrecognised tax losses of £8,876,000 (2021: £8,876,000) 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 (2021: £nil).
Of the total deferred tax asset, £216,000 (2021: £331,000) is expected to be recovered within 12 months of the
balance sheet date.
Company
At 1 July 2020
Adjustment in respect of prior year
(Charge)/credit to income
Credit to equity
Impact of rate change
At 30 June 2021
(Charge)/credit to income
Charge to equity
Impact of rate change
At 30 June 2022
Plant and
equipment
£000
2
–
–
–
–
2
–
–
–
2
Short-term
timing
differences
£000
Share-based
payments
£000
56
(14)
29
–
17
88
(72)
–
(16)
–
188
–
103
132
54
477
88
(158)
43
450
Losses
£000
85
(12)
(73)
–
–
–
–
–
–
–
Total
£000
331
(26)
59
132
71
567
16
(158)
27
452
175
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
21 Net cash/(debt)
Cash and cash equivalents
Lease liabilities
Net cash/(debt)
Group
Company
2022
£000
33,764
(3,009)
30,755
2021
£000
34,331
(2,322)
32,009
2022
£000
1,001
–
1,001
2021
£000
1,023
–
1,023
At 30 June 2022, monies held by solicitors on behalf of the Group and included within cash and cash equivalents
were £15,417,000 (2021: £4,870,000).
No monies were held by solicitors on behalf of the Company at the balance sheet date (2021: £nil).
Net cash/(debt) at 1 July 2020
Cash flows
New leases
Leases exited in the year
Finance expenses
Net cash/(debt) at 30 June 2021
Cash flows
New leases
Leases exited in the year
Finance expenses
Net cash/(debt) at 30 June 2022
Cash
and cash
equivalents
£000
Borrowings
£000
Cash net of
borrowings
£000
76,807
(60,000)
(42,476)
60,000
16,807
17,524
–
–
–
34,331
(567)
–
–
–
33,764
–
–
–
–
–
–
–
–
–
–
–
–
34,331
(567)
–
–
–
Lease
liabilities
£000
(3,083)
723
(732)
842
(72)
Total
£000
13,724
18,247
(732)
842
(72)
(2,322)
32,009
661
94
(1,339)
(1,339)
88
(97)
88
(97)
33,764
(3,009)
30,755
22 Bonds and securities
At 30 June 2022, the Group had bonds and securities of £44,149,000 (2021: £37,828,000) 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 2020
Shares issued during year
At 30 June 2021
Shares issued during year
At 30 June 2022
Number
£000
58,067,535
188,253
58,255,788
50,549
58,306,337
1,161
4
1,165
1
1,166
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 50,549 ordinary shares (2021: 188,253 ordinary shares) at the nominal value of
2 pence per share in settlement of share-based payments as set out in note 24.
Own shares reserve
The own shares reserve was established in the year and represents the cost of shares in MJ Gleeson plc purchased in
the market or issued by the Company and held by the Employee Benefit Trusts (“EBT”) on behalf of the Company in
order to satisfy deferred bonus shares, share-based payments and other share awards that have been granted by the
Company.
The EBT has agreed to waive the right to dividends on shares held within the EBT, and these shares do not count
in the calculation of the weighted average number of shares used to calculate earnings per share until such time as
they vest to the relevant employee.
Own shares held by the EBT
176
2022
2021
Number
60,769
£000
471
Number
–
£000
–
MJ Gleeson plc Annual Report & Accounts 2022 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 the completion of their probationary period. The long term
incentive plans (“LTIP”) are part of remuneration 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 113 to 122. All schemes are equity-settled.
Share purchase plans
MJ Gleeson
Group plan
No. of
shares
MJ Gleeson
Group
2014 plan
No. of
shares
17,893
–
–
25,179
8,538
(8)
LTIP
26/09/17
No. of
shares
LTIP
09/10/18
No. of
shares
LTIP
10/12/19
No. of
shares
LTIP
24/09/20
No. of
shares
LTIP
27/09/21
No. of
shares
168,524
67,500
212,721
–
–
–
(20,925)
–
–
–
(19,969)
–
–
–
394,153
–
–
–
–
–
–
–
–
–
46,575
192,752
394,153
–
–
(46,575)
–
–
–
–
363,532
(18,179)
(7,805)
–
–
–
192,752
375,974
355,727
nil
–
nil
12 months 24 months
–
–
–
(1,815)
(4,484)
(168,524)
–
–
16,078
–
–
29,225
9,404
(19)
(1,444)
(7,083)
14,634
Rolling
scheme
31,527
Rolling
scheme
–
–
–
–
–
–
–
–
nil
–
£7.35
£7.33
n/a
n/a
n/a
n/a
n/a
£8.48
£8.15
n/a
n/a
n/a
n/a
n/a
Date of grant
Outstanding at
1 July 2020
Granted in the year
Forfeited
Exercised
Cancelled
Outstanding at
30 June 2021
Granted in the year
Forfeited
Exercised
Outstanding at
30 June 2022
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
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 14 months (2021: 19 months).
Share purchase plans
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.
177
Financial StatementsFinancial StatementsMJ Gleeson plc Annual Report & Accounts 2022 Notes to the Financial Statements
For the year ended 30 June 2022
CONTINUED
24 Share-based payments CONTINUED
Long Term Incentive Plan (“LTIP”)
The fair value of options granted is calculated using either a modified Monte Carlo model or Black-Scholes 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 dividends2
Expected life
Risk-free interest rate
Fair value of one option
LTIP
09/10/18
LTIP
10/12/19
LTIP
24/09/20
LTIP
27/09/21
£7.04
£10.00
£0.00
35%
n/a
£8.00
n/a3
£0.00
27%
n/a
£6.16
n/a3
£0.00
33%
n/a
£8.14
n/a3
£0.00
34%
n/a
33 months
31 months
33 months
33 months
0.98%
£3.41
0.57%
£3.64
0.10%
£4.645
0.5%4
£5.355
1 Expected volatility was determined by calculating the historical volatility of the Company’s share price; volatility was measured over the
previous three years.
2 Awards made under the LTIP allow, on vesting, for an additional award of shares to be made to the option holder equivalent to the
dividends paid over the vesting period on the underlying shares.
3 The 2019, 2020 and 2021 LTIP grants include EPS and relative TSR targets for the Executive Directors as set out on page 118 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.
4 Risk-free interest rate varies based on the type of target set; the weighted average is shown.
5 Volatility rates and fair value of options vary based on the type of target set; the weighted average is shown.
The total share-based payment cost charged to the consolidated income statement was £1,568,000
(2021: £1,089,000).
25 Contingent liabilities
As set out in note 18, the Group is undertaking a review of all of its historic building contracts for buildings over
11 metres in which, over the last 30 years, the Group had some involvement in developing. All of these buildings,
including any external wall systems or cladding, were signed off by approved inspectors as compliant with the
relevant building regulations at the time of their completion.
These financial statements have been prepared based on currently available information and the current best
estimate of the extent and future costs of work required, based on the reviews and physical inspections undertaken
to date. However, these estimates may be updated as further inspections are completed, as work progresses or if
government legislation and regulations change.
26 Capital commitments
At 30 June 2022, the Group had no material capital commitments (2021: £nil). The Company had no capital
commitments (2021: £nil).
178
MJ Gleeson plc Annual Report & Accounts 2022 27 Related party transactions
Identity of related parties
The Group has a related party relationship with 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
86 and 87, the Managing Directors of Gleeson Homes and Gleeson Land, and the Divisional Managing Directors of
Gleeson Homes.
During the previous 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.
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
3,470
2,943
77,091
37,504
(119,458)
(86,165)
Administrative expenses
2021
£000
2022
£000
Receivables outstanding
2021
£000
2022
£000
Payables outstanding
2022
£000
2021
£000
MJ Gleeson plc
Annual Report & Accounts 2022
179
Financial StatementsFinancial Statements Other
Information
Five Year Review
Further Information
182
183
180
MJ Gleeson plc
Annual Report & Accounts 2022
Saphron,
Dane Park,
Hull,
East Yorkshire
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MJ Gleeson plc Annual Report & Accounts 2022
Five Year Review
Revenue
Operating profit pre-exceptional items
Exceptional items
Operating profit
Net finance (expense)/income
Profit before tax
Tax charge
Profit after tax
Discontinued operations1
Profit for the year
Total assets
Total liabilities
Net assets
2022
£000
373,409
56,797
(12,867)
43,930
(1,310)
42,620
2021
£000
288,575
43,083
–
43,083
(1,372)
41,711
(7,531)
35,089
(7,839)
33,872
2020
£000
147,181
5,929
–
5,929
(363)
5,566
(758)
4,808
2019
£000
249,899
40,999
–
40,999
213
41,212
2018
£000
196,741
36,854
–
36,854
165
37,019
(7,648)
33,564
(6,526)
30,493
–
–
35,089
33,872
(289)
4,519
(297)
(257)
33,267
30,236
367,558
(95,382)
272,176
313,134
322,051
281,240
242,785
(68,203)
(109,446)
(77,344)
(54,686)
244,931
212,605
203,896
188,099
Total dividend per share for the year
Earnings per share
Earnings per share – pre-exceptional items
Net assets per share
pence
pence
pence
18.0
60.2
78.1
467
15.0
58.2
58.2
420
–
8.7
8.7
366
pence
34.5
61.5
61.5
374
pence
32.0
56.0
56.0
345
1 All results classified as continuing from 2021.
182
MJ Gleeson plc Annual Report & Accounts 2022 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
Independent 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 Bartholomew Lane
London EC2N 2AX
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
Registrars and transfer office
Equiniti
Aspect House
Spencer Road
Lancing BN99 6DA
Our website
For more information on our
homes, investor relations and career
opportunities please visit
www.mjgleesonplc.com.
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About this report
The paper in this report is a Forest Stewardship Council
(“FSC®”) certified product, produced with a FSC® mixed
sources pulp which is fully recyclable, biodegradable
and chlorine free. It is manufactured within a mill which
complies with the international environmental ISO
14001 standard.
The report has been printed using environmentally
friendly vegetable-based inks. Formulated on the basis
of renewable raw materials, vegetable oils are non-
hazardous and from renewable sources. Over 90% of
solvents and developers used are recycled for further
use and recycling initiatives are in place for all other
waste associated with this production.
The print house chosen for production of this report
is FSC® and ISO 14001 certified with strict procedures
in place to safeguard the environment through all
processes, including ongoing initiatives to reduce
carbon footprint.
Shareholder 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
Hudson Sandler
25 Charterhouse Square
London ECM1 6AE
Email: mgarraway@hudsonsandler.com
Tel: 07771 860938
Financial calendar
Financial year end
30 June 2022
Full year results announced
15 September 2022
Annual General Meeting
18 November 2022
MJ Gleeson plc
Annual Report & Accounts 2022
183
Financial Statements
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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