MJ Gleeson Faces Greater Impact From Taxes Than Middle East Conflict

UK housebuilder MJ Gleeson has stated that a combination of inflation and tax changes are presenting greater financial challenges than the ongoing war in the Middle East. The company indicated that the tax and regulatory burden, alongside inflationary pressures, continues to affect the viability of its projects and will limit near-term profit margin recovery.

The outlook for the new financial year remains uncertain due to the economic consequences of geopolitical events and potential policy shifts from a new UK government, according to the firm's trading update for the year ending June 30.

Despite these challenges, MJ Gleeson expects to report annual profits in line with forecasts. This performance is attributed to a strong showing from its Gleeson Homes division, which compensated for earlier delays in land sales from its land promotion arm. Graham Prothero, chief executive of MJ Gleeson, noted a robust operating result against a subdued housing market and a cautious land market.

Gleeson Homes, which accounts for over 95 percent of the company's revenue, completed 1,968 home sales in the fiscal year ending June 30, an increase of 9.8 percent compared to the previous year. The company anticipates adjusted annual pre-tax profit for fiscal year 2026 to be approximately £10.1 million. For fiscal year 2027, adjusted group pre-tax profit is projected to average £19.3 million, with forecasts ranging between £17 million and £21.3 million.

Net reservation rates averaged 0.77 per site per week throughout the year, an increase from 0.71, though rates excluding multi-unit deals saw a decrease in the latter half of the year. The forward order book for plots has risen to 848.

MJ Gleeson concluded the year with a net debt of £2.6 million and £15.5 million in land creditors. The company is adopting a cautious strategy regarding working capital and site acquisitions amid macroeconomic uncertainty. Prothero expressed confidence in the company's position to capitalize on future market recoveries, citing the strength of its homes business and its land portfolio.

Regarding planning, the firm acknowledged improvements in the wider planning system but emphasized the need for further action to address bottlenecks that have constrained Gleeson Homes' development sites. This is expected to result in the business operating from slightly fewer sites in FY2027 than previously planned.

The company is scheduled to release its audited full-year results on September 15. Shares in MJ Gleeson have declined by more than 36 percent over the past year, though they saw a slight increase on Friday morning.