Member Info for Xanderanne

1. Pretend that sales are good when direct sales are 0.59 per site/week compared to 0.64 last year which is a 8% drop and don’t reveal that the number of sites is lower so one low number times another low number gives a low forward order number so don’t reveal that also.

2. In your previous 3.5 years you have bought land at prices that were unviable so impair the sites to the value of £1.5m to £2.8m and instead of taking this write-down as part of trading; call it an exceptional item.

3. In your previous 3.5 years you have ignored the cost of completing estate roads in order to maximise profit but now that the figures are so big that they can’t be ignored (£5.2m to £7.1m) blame others by calling them legacy items and instead of dealing with them as part of trading call this exceptional in spite of the fact that discovering a legacy item of this size after 3.5 years sounds like incompetence.

4. Give a little warning that being in line with market consensus depends on a single land sale and if it doesn’t happen it’s someone else’s fault.

5. Above all, blame someone else.

………….when first we practice to deceive.

The first of April naturally brings to mind the forthcoming trading update from GLE and following recent good results from Persimmon, Bellway and Miller the numbers will be a “tangled web”, comprising a deliberately confusing mixture of open market forward orders with unprofitable bulk sales and a reduction of debt by panic-selling prime housing sites from the homes business thereby robbing future performance.

If they swerve a profit warning it will not be by good management, more by Scott’s tangled web. It will be interesting to see how many times the word “robust” is used.

He’s 77 and Google says “Data from the IMF in 2025 indicates that “70s are the new 50s” with 70 year olds in 2022 displaying cognitive and physical abilities comparative to 53- and 56-year olds in 2000 respectively”.

I understand that he successfully continues to restore and race high powered classic Grands Prix cars and owns another house building business so it appears there’s plenty of life in the old dog yet. He recreated GLE from the ashes in 2009 and my guess is that he could do the same now in double quick time and restore the share price to its former glory. When he left, the share price dropped £2.

With his track record and reputation, in spite of his age, I wonder how much the share price would increase on his return?

If the brilliant Jolyon Harrison (I used to love his quirky presentations) had stayed in post, shareholder profits would be C£100m higher and market cap. would be double the current value which makes the alleged reasons for his dismissal look trivial by comparison. If the board brought him back he would steady the ship and renew investor confidence.

The CEO calls this a “Robust” result, it isn’t.

Revenue is artificially boosted by unprofitable bulk sales and part exchange has been introduced as an emergency measure capped to £7.5M presumably by the increasingly frustrated Board. Operating profit down by17.6%, pretax profit down by 52.8%, EPS down 43.8%, debt increased from £0.8m in June to £22.5m in December. Reservation rates may have increased from 0.44 to 0.48 in the first 6 months, an increase of 9% but the number of selling sites has decreased from 65 to 53, a decrease of 18%, do the arithmetic! The bottom end of consensus is 1,884 completions which is possible but not probable but the bottom end of consensus for PTP is £24m and EPS is 29.2p which both look unattainable especially with a worrying £4.5m impairment, worryingly punted into the second half. The CEO says that the final result depends on the market turning (therefore not his fault) but will give an update in April only 8 weeks away. Also worrying is the CFO’s statement in June that they will open “significantly more sites each year” and he could see “profit before tax broadly triple and GLEE resume its position as the fastest growing housebuilder in the UK. Who’s kidding who?

I predict another profit warning in April but I am stuck with this as a hold pending management change or an offer.

Are we expecting another profit warning, I wonder?

The recent trading update ominously omits to tell us the split between profitable open market sales and unprofitable bulk sales but in June 2023 when the CEO took over, the profitable half year sales were 894 compared to the current 848, of which it is reasonable to assume that a third of the current number are unprofitable bulk sales therefore back-sliding both on numbers and profitability.

Also in the back-sliding category is the number of sites down from 71 in 2023 to the current 53 despite the statement in 2023 that “land is accessible at reasonable prices”.

To pile on the misery, nett cash has deteriorated from £13.5m positive to current debt of £22.5m. But everything’s hunky dory because Project Transform plus “further changes to complete the operational restructure” are under way to reverse this CEO’s 2023 “restructuring of Gleeson Homes from nine regional management teams to six”. “The process resulted in annualised administrative overhead cost savings of £3.2m, at a one-off cost of £1m. These savings will be realised from FY2024 onwards” ….” putting the business in great shape” (RNS:7/07/2023).

The savings clearly haven’t happened, and Project Transform has cost a further £1.2m. Where has all the shareholder cash gone?

In 2019 James Thompson told us that he was going to reorganise (1) GLEE . in readiness for "growth and greater profitability" to better Jolyon Harrison's 1,529 sales, £41mPT profit with 550 employees and a GM of 32%.

Three years later after Dermot Gleeson's departure, Prothero took the reins and announced a £1m "restructure"(2) for "growth and greater profitability" selling 1,608 houses (+115 bulk) with PT profit down to £31m, employees up to 806 and GM now 29%.

2024 saw 1,477 houses sold (+346 bulk) PT profit down to £25m, 756 employees and GM on homes down to 24%.

2025 sees 1,588 houses sold (+205 bulk) , PT profit down to £22m, GM 19% at best, and a further "£1.2m restructure" presumably in readiness for "growth and greater profitability".

Conclusion: following Harrison's departure in 2019 and 3 subsequent "restructures" the GM has deteriorated by 40%, PT profit is down 59% and the Market Cap. is down 60% but the number of employees has increased by 37% and the number of house sales has hardly changed.

All in the name of "growth and greater profitability".

The new Chair seems to be very competent but this shareholder wonders what the return of power-couple Dermot Gleeson/Jolyon Harrison would really do to "growth and greater profitability" and of course, the share price.

The say everything comes in threes so after this second profit warning the 3rd will be after the new Chair gets an independent body to carry out an investigation into the numbers and discovers that they have been pushed a tad too far to get just inside expectations. 1,793 completions less 205 bulk sales = 1588 proper house sales. By comparison in 2019 Jolyon Harrison (still around) completed 1,529 proper house sales and made £41m PT Profit. Prothero has been in post since 2022 so this disaster is down to him. He has got rid of his nearest rival Mark Knight an experienced housebuilder and effectively replaced him with an accountant. Good move! This needs a radical solution.

With gross margin down to 19% from 32% in 2019 and a further warning about 2026 there's nothing silly about the price drop. GLE homes division has never done land sales before so blaming a poor result on the failure of one is a red herring. An addiction to bulk sales and an attempt to compete with the big boys who have more clout with planners and better sales tactics has brought GLE to its knees. The board needs to appoint a charismatic dyed in the wool house builder to take it back to 2019 when GM was 30%+ and OP was £40m+ with plenty in hand. Lawrie Barratt did it in 1991 & 1997 and Steve Morgan (who famously said "Accountants shouldn't run housebuilders") did it in 2009. Who could that be? Fortune favours the brave.

In 2019 when Jolyon Harrison was CEO, Wages & Salaries were £25m and OP was £41m. That's £1.65 of OP per £ of W&S. In 2024 W&S is £41m and OP is £29m. That's 70p of OP per £ of W&S. In 2019, 552 employees sold 1,529 houses. In 2024 730 employees sold 1772 houses but 346 of them were unprofitable bulk sales. Gross margin in 2019 was 30% and now 20%. MJG has got fat. To add to the misery, Harrison is rumored to have started a rival business with possible links to Avant. Look out for an IPO soon.