MJ Gleeson (LSE:GLE) rose 5.3% to 241.1p after a trading update covering the 11 weeks to 24 April that said Adjusted Group Profit before Tax for the year to 30 June is expected to be in line with market consensus.
The Gleeson Homes parent, in a trading update covering the 11 weeks to 24 April, reported resilient trading since its H1 results with net reservation rates of 0.88 per site per week (0.59 excluding bulk reservations) for the 11 weeks to 24 April versus 0.86 (0.64 excluding bulk) in the same period last year, and said underlying open-market and partnership selling prices have been broadly stable while modest build cost inflation has emerged and protecting margin remains a priority.
Following Project Transform, the Group will integrate Yorkshire East into Yorkshire South and West from 1 July and reallocate certain sites into the Midlands to sharpen efficiency and refocus investment, generating annualised regional overhead savings of £0.9m.
The related restructuring costs are estimated at up to £3.1m comprising £0.3m of cash restructure costs and a non-cash impairment of conditionally purchased land assets of between £1.5m and £2.8m, which will be recognised as an exceptional item in the full-year accounts.
Management has identified issues on previously completed legacy developments chiefly in Yorkshire and expects to establish remedial cost provisions of between £5.2m and £7.1m in the current financial year for works to be undertaken over the next three to four years, and those legacy provisions are expected to be excluded from Adjusted results.
Gleeson Land is progressing the sale of five sites including one project representing approximately 50% of the plots forecast to be sold in the year and has secured a technical solution accepted by the highways authority, with sale timing subject to formal technical approval.
Adjusted operating profit and Adjusted Group Profit before Tax are currently expected to exclude exceptional items and additional completed site cost provisions totalling between £7m and £10.2m in addition to £0.3m exceptional items recognised in the interim results and an estimated £4.5m of exceptional restructuring costs announced in February, and the company's compiled consensus for Group Profit Before Tax and Exceptional items for the year is £18.2m with a range of £12.9m to £20.5m.
"We are pleased that Gleeson Homes' trading performance has been resilient in an uncertain market environment," Graham Prothero, Chief Executive Officer, said.
