TIDMGLV
RNS Number : 3767M
Glenveagh Properties plc
14 September 2023
14 September 2023
Glenveagh Properties plc
Interim Results 2023
Glenveagh Properties plc ("Glenveagh" or the "Group") a leading
Irish homebuilder announces its Interim Results for the period
ended 30 June 2023.
Financial Highlights
Six Months to 30 Six Months to 30 Change
June 2023 June 2022
------------------------------- ------------------------------ ------------------------------- --------------------
Revenue EUR'm 171.6 200.0 -14%
------------------------------- ------------------------------ ------------------------------- --------------------
* Suburban 109.7 88.9 +23%
------------------------------- ------------------------------ ------------------------------- --------------------
* Urban 61.9 111.1 -44%
------------------------------- ------------------------------ ------------------------------- --------------------
Gross profit EUR'm 27.9 32.9 -15%
------------------------------- ------------------------------ ------------------------------- --------------------
* Suburban 20.5 15.4 +33%
------------------------------- ------------------------------ ------------------------------- --------------------
* Urban 7.5 17.5 -57%
------------------------------- ------------------------------ ------------------------------- --------------------
Gross margin 16.3% 16.5% -20 bps
------------------------------- ------------------------------ ------------------------------- --------------------
* Suburban 18.7% 17.3% +140 bps
------------------------------- ------------------------------ ------------------------------- --------------------
* Urban 12.1% 15.8% -370 bps
------------------------------- ------------------------------ ------------------------------- --------------------
Profit before tax
EUR'm 1.4 13.0 -89%
------------------------------- ------------------------------ ------------------------------- --------------------
Earnings Per Share
(cent) 0.21 1.32 -84%
------------------------------- ------------------------------ ------------------------------- --------------------
30 June 2023 30 June 2022
------------------------------- ------------------------------ ------------------------------- --------------------
Land EUR'm 447.0 513.0 -13%
------------------------------- ------------------------------ ------------------------------- --------------------
Work in Progress
EUR'm 317.6 291.9 +9%
------------------------------- ------------------------------ ------------------------------- --------------------
Operating cash flow
EUR'm (93.2) (17.5)
------------------------------- ------------------------------ ------------------------------- --------------------
Net Debt EUR'm 182.2 97.5 +EUR85m
------------------------------- ------------------------------ ------------------------------- --------------------
Total Equity EUR'm 637.2 707.2 -10%
------------------------------- ------------------------------ ------------------------------- --------------------
Suburban
Completions 333 257 +30%
------------------------------- ------------------------------ ------------------------------- --------------------
Suburban: Closed &
forward order book
- units(1) 1,782 1,831 -3%
------------------------------- ------------------------------ ------------------------------- --------------------
Suburban: Closed &
forward order book
- EUR'm(1) 563.1 588.1 -4%
------------------------------- ------------------------------ ------------------------------- --------------------
Group: Closed &
forward order book
- EUR'm(1) 1136.7 989.8 +15%
------------------------------- ------------------------------ ------------------------------- --------------------
(1) As at 11 September 2023. Prior year data disclosed
as at 9 September 2022
Trading Summary
-- We reiterate our FY 2023 guidance, anticipating an EPS outturn of 7.5-8.0 cents
-- The Group performed to expectation in H1 2023 and increased
suburban margin, secured approvals for both of its Partnerships
sites, and benefitted from strong planning momentum. Profitability
was impacted primarily by lower urban revenues, reflecting a higher
H1 2022 comparative that included approximately EUR63m from the
disposal of the East Road site, along with increased financing
costs
-- The Group has been granted permissions for approximately
4,000 units so far this year, some 700 of which are currently in
post-grant appeal periods
-- Our strategy of supply chain integration, combined with our
scale and long-term supply chain commitments, enabled us to
mitigate build cost inflation to a 4-5% level in H1 2023
-- In June we launched NUA, the innovative manufacturing and new
technology arm of the Group. NUA will lead innovation in modern
methods of construction in the Irish market. Significant investment
here is now largely completed and the business will have the
capacity to deliver over 2,000 units in FY 2024 from our three
off-site manufacturing facilities in Carlow, Arklow, and
Dundalk
-- Our share buyback programme, initiated on 6 January 2023, was
completed on 2 August 2023. Approximately EUR63 million was
returned to shareholders, bringing overall returns to over EUR300
million since May 2021
-- Strong progress was also made to further integrate
sustainability throughout the business, alongside the launch of our
Net Zero transition plan in March 2023
-- All suburban units capable of closing in FY 2023 are now
sold, signed or reserved. Further improvement in the suburban
margin is expected in FY 2023 to approximately 19%
-- Approximately EUR120m of revenue will be recognised in FY
2023 from the Group's Urban business segment
-- We anticipate making further efficiencies in our land
investment and expect land value to approach EUR400 million by 31
December 2023, with further efficiencies anticipated in FY 2024.
Work in progress (WIP) at year end is expected to increase on FY
2022 levels, to reflect ongoing developments in our urban
portfolio. Net debt is expected to reach 10-15% of net assets at
year end
Outlook
-- We continue to see a very positive long-term demand outlook
for the Irish residential housing market. Strong private demand is
underpinned by a robust economic environment, a fast-growing
population and supportive demand-side initiatives from the
Government
-- New opportunities are emerging to partner with multiple State
agencies as part of the Government's recent supply-side housing
initiatives. Significant additional funding has been proposed for
the Land Development Agency (LDA). In addition, one of our urban
schemes of over 250 units has been approved under the Croí Cónaithe
programme and this is expected to commence in Q4. Our scale,
operational capability and established expertise in partnership and
urban development models, leaves us ideally positioned to
participate in such initiatives. These have the potential to
generate significant incremental revenue and profits for the Group
over the medium term
-- The improved planning momentum means that the Group has
planning permission for all of its expected deliveries in FY 2024.
Based on planning lodgements year to date and anticipated in the
rest of this year, over 70% of our current landbank will be fully
planned and available for development by the end of FY 2024
-- We are currently active on 24 suburban and urban sites,
including all of our large suburban sites required for FY 2024
delivery
-- In our Partnerships business segment, enabling works have now
commenced on both our Ballymastone and Oscar Traynor Road sites and
we expect to deliver revenue of over EUR100 million in FY 2024,
with an anticipated gross margin of approximately 15%
-- A very healthy land portfolio and forward order book,
combined with strong planning momentum and robust operational and
manufacturing capability, gives the Group increasing confidence in
its capacity to generate strong revenue and profit growth across
its Suburban, Urban and Partnerships business segments in FY 2024.
We are comfortable with current consensus EPS expectations for FY
2024 of approximately 17 cents
-- We continue to remain focused on enhancing capital efficiency
and cash generation across the business, with a renewed focus on
investment in urban development activity in particular. Once our
capital allocation priorities are satisfied, we will continue to
return any excess cash identified to shareholders. This will
underpin the delivery of long-term operational growth and optimal
returns for shareholders, with our Return on Equity target of 15%
in 2024 our key capital metric
CEO Stephen Garvey commented:
"We began the year with three clear objectives - to grow our
portfolio of planned sites, to advance our Partnerships business,
and to transform our manufacturing business.
While planning delays proved challenging at the start to the
year, we have seen a strong upturn in permissions granted through
2023 and are on track to have over 70% of our current landbank
fully planned and available by the end of FY 2024.
We began 2023 with no planning achieved in our Partnerships
segment, to now being commenced on two of the largest such sites in
the country. We are proving that public and private entities can
work successfully together to deliver sustainable mixed tenure
developments.
Partnerships are how substantial housing volume can be delivered
effectively across all tenures. I encourage the Government to focus
on this area as a vehicle to address the housing crisis.
The continued reform of planning policy and system, as well as
the Government's demand and supply side initiatives, are showing
positive results too.
NUA is now at scale to deliver in 2024. This business gives us
an excellent platform for delivering greater volumes of
sustainable, high-quality, energy-efficient new homes using modern
methods of construction.
The outlook across Glenveagh's businesses is favourable and the
opportunities are compelling. We are ideally placed to serve what
continues to be strong private demand, in addition to working
constructively with State agencies on supply-side initiatives.
Accelerating the provision of new housing is critical to help
sustain economic strength and to accommodate our young and
fast-growing population."
Results Presentation
A webcast presentation of the results for analysts and
institutional investors will take place at 8.30am on 14 September
2023. The presentation slides will be available on the Investor
Relations section on www.glenveagh.ie from 7.00am on 14 September
2023.
This presentation can also be accessed live from the Investor
Relations section on www.glenveagh.ie or alternatively via
conference call.
Conference call: Click here to register for conference call
Audio webcast: Click here for webcast
Registration and access details are also available at
www.glenveagh.ie/corporate/investor-centre/investors-events
For further information please contact:
Investors: Media:
Glenveagh Properties plc Gordon MRM
Michael Rice (CFO) Ray Gordon 087 241 7373
Jack Gorman (Head of IR and Corporate David Clerkin 087 830 1779
Affairs) glenveagh@gordonmrm.ie
investors@glenveagh.ie
----------------------------
Note to Editors
Glenveagh Properties plc, listed on Euronext Dublin and the
London Stock Exchange, is a leading Irish homebuilder.
Supported by innovation and supply chain integration, Glenveagh
are committed to opening access to sustainable high-quality homes
to as many people as possible in flourishing communities across
Ireland. We are focused on three core markets - suburban housing,
urban apartments and partnerships with local authorities and state
agencies.
www.glenveagh.ie
Forward-looking statements
This announcement does not constitute or form any part of an
invitation to underwrite, subscribe for or otherwise acquire or
dispose of any shares of Glenveagh Properties plc ("Glenveagh" or
"the Group").
This announcement contains statements that are, or may be deemed
to be, forward-looking statements. Forward-looking statements
include, but are not limited to, information concerning the Group's
possible or assumed future results of operations, plans and
expectations regarding demand outlook, business strategies,
financing plans, competitive position, potential growth
opportunities, potential operating performance improvements,
expectations regarding inflation, macroeconomic uncertainty,
geopolitical tensions, weather patterns, the effects of competition
and the effects of future legislation or regulations.
Forward-looking statements include all statements that are not
historical facts and can be identified by the use of
forward-looking terminology such as "may", "will", "should",
"expect", "anticipate", "project", "estimate", "intend",
"continue", "target", "ensure", "arrive", "achieve", "develop" or
"believe" (or the negatives thereof) or other variations thereon or
comparable terminology. Forward-looking statements are prospective
in nature and are based on current expectations of the Group about
future events, and involve risks and uncertainties because they
relate to events and depend on circumstances that will occur in the
future. Although Glenveagh believes that current expectations and
assumptions with respect to these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to be correct. Due to various risks and uncertainties, actual
events or results or actual performance of the Group may differ
materially from those reflected or contemplated in such
forward-looking statements. You are cautioned not to place undue
reliance on any forward-looking statements.
These forward-looking statements are made as of the date of this
document. Glenveagh expressly disclaims any obligation to update
these forward-looking statements other than as required by law.
The forward-looking statements in this announcement do not
constitute reports or statements published in compliance with any
of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC)
Regulations 2007 (as amended).
GLENVEAGH PROPERTIES PLC: BUSINESS AND FINANCIAL REVIEW
1. BUSINESS REVIEW
i. Group Sales
a. Overview
The Group had total revenue of EUR171.6 million (H1 2022:
EUR200.0 million), relating to the completion of 333 suburban units
(H1 2022: 257) in the period and revenue recognised from the
significant monetisation of Urban assets.
b. Suburban
The Group reported suburban revenue of EUR109.7 million, an
increase of 23% reflecting the Group's strong operational
performance in a market that continues to benefit from very strong
underlying demand.
In H1 2023, 333 suburban units were closed. This represented a
30% increase on the 257 units closed in H1 2022. Multiple sites are
now set up to deliver over 100 units per annum which allows the
business to generate enhanced operational efficiencies, that in
turn underpins faster profit generation and improvements in the
Group's Return on Equity.
ASP in H1 2023 was approximately EUR324k (H1 2022: EUR332k). A
mid-single digit increase in underlying House Price Inflation
("HPI") was more than offset by a change in both the product and
site mix in the period, reflecting our commitment to delivering
homes that are affordable for our customers.
Underlying market demand for new homes continued to be very
strong in H1 2023, driven by a robust economic environment, a
fast-growing population and supportive demand-side initiatives from
the Government.
In H1 2023, the Group delivered approximately 140 units
(approximately 40% of our suburban units) as part of these
Government support initiatives to provide social and affordable
housing.
On 1 January 2023 the scope of the First Home Scheme was
significantly extended to an additional cohort of buyers by
increasing the price ceilings that apply in 30 of Ireland's 31
local authority areas. A further upward adjustment was made to the
price ceiling in three local authorities on 1 July 2023. These
changes will provide more first-time buyers with enhanced access to
new housing developments. The scheme is designed to bridge the gap
between a first-time buyer's deposit and mortgage and the price of
the new home, providing up to 30% of the price of the home and
supporting affordability for first-time buyers, a key target market
for Glenveagh.
Customer affordability was further supported by the change in
the Central Bank of Ireland's macroprudential rules, announced in
October 2022 and effective from 1 January 2023. This increased
borrowing capacity materially among the first-time buyer cohort, up
to 4x income compared to a 3.5x limit previously.
c. Urban
We continue to make strong progress in our Urban business
segment, with a particular focus this year on building out the
significant projects that are already underway. All projects are on
track for delivery in FY 2023 and FY 2024 and are detailed in the
following table.
Urban assets Transaction H1 2023 H2 2023 FY 2024
Type revenue (EURm) revenue revenue
(EURm)* (EURm)*
Premier Inn
hotel Forward fund 13 3 -
-------------- ---------------- --------- ---------
Citywest Forward fund 24 13 10
-------------- ---------------- --------- ---------
Castleknock Forward fund 23 19 6
-------------- ---------------- --------- ---------
Marina Village Forward sale - 17 -
-------------- ---------------- --------- ---------
Cluain Mhuire Forward sale - - 70
-------------- ---------------- --------- ---------
* approximate revenue that is anticipated to be delivered in H2
2023 and FY 2024
The residual asset in the Docklands portfolio is the office
development of approximately 100,000sqft which is being constructed
in conjunction with the Premier Inn hotel. Notwithstanding a
challenging commercial office environment, the office development
is already attracting interest from high calibre clients due to its
location, pricing and impressive sustainability credentials.
Completion is anticipated in FY 2024.
The Group is also in negotiations with State agencies on a
number of its urban developments for prospective delivery from FY
2024 and beyond , including t he Croí Cónaithe programme which is
being advanced to activate the owner occupier apartment market. One
of our urban schemes of over 250 units has been approved under the
Croí Cónaithe programme and this is expected to commence in Q4.
d. Partnerships
Significant progress has been made by the Group in its
Partnerships business segment this year, leaving the business
ideally placed to deliver on its target to deliver revenue and
profits from this segment from FY 2024.
Both Ballymastone and Oscar Traynor Road received final planning
permissions and enabling works have commenced on both sites.
The Group expects to deliver revenue of over EUR100 million from
these two sites in FY 2024 , with an anticipated gross margin of
approximately 15%.
In addition, new resources and funding are now being provided by
the Government for supply-side housing initiatives, the most
significant recent initiative of which is proposed further funding
to the LDA.
Our scale, operational capability and established expertise in
partnership models leave us ideally positioned to advance such
opportunities as they relate to both our Urban and Partnerships
segments. These have the potential to generate significant
incremental revenue and profits for the Group over the medium
term.
ii. Forward Order Book
The continued strength of the Irish market is demonstrated
through our strong performance to date in 2023 and forward order
book, which total EUR1.14 billion. The forward order book in the
suburban business of EUR563.1 million, comprising 1,782 units,
gives good visibility on deliveries in FY 2023 and early FY 2024.
In addition, the forward order book includes revenue in FY 2023 and
FY 2024 to be recognised from the five executed transactions within
the Urban business segment, as well as the contracted element of
the Partnerships business segment.
Strong reservation rates in our Suburban business segment is
evidence of the strong underlying market demand that is supported
by the resilience of the domestic economy and by the updated
Housing for All initiatives and the change to the Central Bank of
Ireland's macroprudential rules that both became effective in
January 2023. Customer demand is further strengthened by the
continued undersupply across the market of high-quality, affordable
housing in Ireland.
We are currently active on 24 suburban and urban sites,
including all of our large suburban sites required for FY 2024
delivery.
iii. Planning Progress and Policy
The Group has made significant progress in what has been an
improving planning environment in FY 2023, increasing confidence on
unit delivery in FY 2024 and beyond. Additional resourcing has been
provided to An Bord Pleanála and the efficiency of its applications
processing is improving.
So far in 2023, we have lodged planning applications for
approximately 2,400 units. The Large-Scale Residential (LRD)
process is functioning well to date and the Group has lodged
several applications under this process, with several successful
grants already received within or ahead of guided timelines.
In our FY 2022 Results Statement we noted that the Group was
also exploring the option to re-lodge its four outstanding
Strategic Housing Development (SHD) applications, totalling 1,100
suburban units, into the LRD system. Three of these applications
subsequently received approval and the remaining application (for
approximately 170 units) is expected to be re-lodged into the LRD
system.
In FY 2023 to date, the Group has been granted permissions for
approximately 4,000 units across over twenty applications, some 700
of which are currently in post-grant appeal periods.
Overall, the Group is strongly positioned for longer term
growth. The Group has planning permission for all of its expected
deliveries in FY 2024. The improved planning momentum, combined
with our planning applications lodged so far this year and
anticipated for the remainder of 2023, mean that over 70% of our
current landbank will be fully planned and available for
development by the end of FY 2024.
We were encouraged by the Government's Draft Sustainable and
Compact Guidelines for Planning Authorities released in August
2023. Its effective implementation can help ensure medium density
residential schemes are more viable for developers and more
affordable for purchasers. We are also assessing how changes in
density requirements may impact the provision of apartments in
specific locations.
The Draft Planning & Development Bill 2022 was published in
January 2023 and following extensive review and consultation, new
legislation is expected before Government imminently.
The review of the National Planning Framework is underway and we
would urge that this review accurately reflects present and future
population requirements, supports viability and be designed for the
types of homes that the country wants and needs.
Solving the housing crisis effectively will also require
appropriate resourcing across all aspects of the design, planning
and development lifecycle. Providing ample resourcing to planning
bodies, local authorities and utility companies in the near term is
critical for the sustainable delivery of increased housing
supply.
iv. Development Land Portfolio Management
Given the Group's strong land portfolio, the business continues
to take a disciplined and strategic approach to land acquisitions
and remains focused on managing to a 4-5 year land portfolio at
scale.
A key strategic priority for the business has been to reduce the
net investment in land and improve capital efficiency and, in line
with this priority, the Group's land portfolio was EUR447.0 million
at 30 June 2023 (31 December 2022: EUR458.5 million). This
reduction was primarily driven by the movements in the suburban
portfolio, and we anticipate driving more efficiencies from the
landbank in the second half of the year.
The Group's land portfolio comprises approximately 14,800 units
with an average plot cost of approximately EUR30k. By number of
units, the Suburban segment accounts for 71% of the portfolio, with
the remainder comprising Urban segment (15)% and Partnerships
segment (14%). Approximately 70% of the overall portfolio is
located in the Greater Dublin Area.
The Group spent or has contracted to spend a total of
approximately EUR14.4 million on three land sites in H1 2023. These
three sites have the capacity to deliver up to 600 new homes in
sustainable communities.
The Group is focused on prioritising structured land
transactions which will enable more efficient standardisation of
the suburban portfolio as well as maintaining an efficient balance
sheet. The Group is sale agreed on three subject-to-planning deal
structures capable of delivering 450 homes. In addition, the Group
is sale agreed on two sites adjacent to an active construction
site, which will allow the Group to maximise construction and
operational efficiencies in this location by adding a further 160
homes. These five sites were sourced through the Group's Land
Campaign and are expected to complete in the second half of the
year.
A Residential Zoned Land Tax is being introduced in FY 2024,
replacing the current Vacant Site Levy, aimed at incentivising
landowners to use inactive zoned land for housing. This will be a
positive development in that it will provide additional land
investment opportunities for the Group. The Group is also actively
managing and reviewing its existing portfolio to determine the
extent of any relevant tax liability that it may incur.
v. Input Cost Inflation
The construction sector continues to face ongoing supply chain
constraints and volatile commodity prices that continue to impact
input cost price inflation. The Group has several strategies to
mitigate the impact of this inflationary environment. It
collaborates with supply chain partners to secure sustainable,
competitive pricing while maintaining supply security. It uses its
scale and purchasing power to negotiate competitive terms and
pricing, while the Group's supply chain integration strategy also
provides greater control over input costs. In April 2023 the
Government announced that development levies will be removed for a
limited time, a measure that is expected to mitigate against cost
pressures across the industry.
These mitigation strategies enabled us to manage build cost
inflation to a 4-5% level in H1 2023. As levels of house price
inflation in the new homes market were at similar levels, the
overall impact on margin was broadly neutral.
vi. Supply Chain Integration - NUA
In June we launched NUA, the innovative manufacturing and new
technology arm of the business that operates from our three
off-site manufacturing facilities in Carlow town, Arklow,
Co.Wicklow and Dundalk, Co.Louth. The sites are strategically
located to service all our sites effectively as a nationwide home
builder. At scale, NUA will have capacity to deliver over 2,000
units per year.
Significant investment is now largely completed so the focus is
on maximising the value from NUA and building the capability to
deliver our own housing requirements.
This innovation in offsite manufacturing will become
increasingly important as standardised house types become a much
larger component of our output in coming years, as the proportion
of Glenveagh designed planning units increases in the overall
portfolio. Standardising process and product across the business
will support an improved margin and return profile for the Group
overall. It will also enable the Group to meet its ambition to
incorporate high-density and standardised house types into the
manufacturing and delivery process.
vii. Sustainability Agenda Progress
The Group has placed environmental and social issues at the
heart of its Building Better strategy and has integrated
sustainability and business priorities into one overarching
strategy. Our progress and performance is underpinned by strong
governance structures with the Environmental and Social
Responsibility Committee in place at Board level.
The key milestone in H1 2023 was the launch of the Group's Net
Zero Transition Plan in March 2023, outlining its near-term and
long-term GHG emissions reduction targets for scopes 1, 2 and 3.
These targets call for a 46% absolute reduction in Scopes 1 & 2
by 2031 and a 55% reduction in Scope 3 emissions intensity
(tCO2e/100sqm) by 2031, using 2021 as the baseline year. Longer
term net zero targets have been set for scopes 1,2&3 by 2050.
All targets have been submitted to the Science Based Targets
initiative (SBTi) for validation.
One of the first actions to be considered in the Net Zero
Transition Plan focuses on transitioning sites to renewable fuel.
We have begun to switch our onsite power generators and plant
machinery to renewable fuel, namely Hydrotreated Vegetable Oil
(HVO).
The Group has also started to implement its Equity, Diversity
& Inclusion (ED&I) strategy, Building a Better Workplace,
that was launched in December 2022. In H1 2023 we once again
attained the Investors in Diversity Silver mark and have achieved
an overall result of 'Building Momentum'.
Our supply chain is critical to the actions that we take so we
were proud to become a founding partner of the Supply Chain
Sustainability School in Ireland in H1 2023. This will support the
development and enhancement of sustainability skills and knowledge
in the supply chain.
In February 2023 the Group agreed a new sustainability linked
finance facility that incorporates four specific sustainability Key
Performance Indicators ("KPIs") in line with those already set out
above.
For the remainder of FY 2023 the Group's main sustainability
focus will be on implementing actions to support our Net Zero
Transition Plan, developing our biodiversity and circular economy
strategies, and continuing our preparation to disclose under the
Corporate Sustainability Reporting Directive.
We have also continued to maintain and improve our ESG ratings.
Our Sustainalytics rating improved from 19.3 to 16.4 and is denoted
as 'Low-risk'. Our CDP rating is B and our MSCI rating is AA.
2. FINANCIAL REVIEW
i. Group Performance
Total group revenue was EUR172 million (H1 2022: EUR200 million
) from two main income streams:
-- EUR110 million in our suburban business, which predominantly
relates to our 333 suburban units closed in the period
-- EUR62 million from our urban business, comprising development
revenue from our forward funds of the Premier Inn hotel in
Castleforbes and our apartment developments in Citywest and
Castleknock
Glenveagh's suburban revenue of EUR110 million represents
significant growth for the primary segment of the business and
equates to a 23% increase in revenue versus H1 2022. The Group
delivered 333 units in the period at an Average Selling Price
("ASP") of approximately EUR324k (H1 2022: EUR332k). The reduction
in ASP reflects a combination of solid HPI, which is offset by
changes in the product and site mix in the period.
All suburban units capable of closing in FY 2023 are now sold,
signed or reserved. The progress made to date in 2023 demonstrates
the strong underlying demand for suburban housing, supported by the
updated initiatives from the Government and the Central Bank of
Ireland.
The Group's gross profit for the first half amounted to EUR27.9
million (H1 2022: EUR32.9 million ) with an overall gross margin of
16.3% (H1 2022: 16.5%).
Suburban gross margins improved to 18.7% (H1 2022: 17.3%) as the
business continues to benefit from enhanced operational
efficiencies and we remain confident of a full year suburban margin
of approximately 19%.
Urban gross margin was 12.1% in H1 2023 (H1 2022: 15.8%). This
margin is consistent with our expectations and has reduced from the
prior period due to the profit from the sale of our East Road site
for EUR63m in H1 2022.
Our operating profit for the six month period was EUR8.8 million
(H1 2022: EUR16.0 million ). The Group's central costs for the
period were EUR17.9 million (H1 2022: EUR15.9 million ), which
along with EUR1.2 million (H1 2022: EUR1.0 million ) of
depreciation and amortisation gives total administrative expenses
of EUR19.1 million (H1 2022: EUR16.9 million ).
Net finance costs for the first half increased significantly to
EUR7.5 million (H1 2022: EUR3.0 million ), primarily impacted by a
one-off release of EUR1.8m associated with our previous financing
facility, increased interest rates, and higher average debt
levels.
Overall, the Group delivered an earnings per share of 0.21 cent
(H1 2022: 1.32 cent).
ii. Balance Sheet and Cash Flow
Consistent with prior periods, the business has invested capital
in the first half of 2023 which will unwind and deliver revenue in
H2 2023 and into FY 2024. On that basis, our inventory at period
end was EUR764.6 million (31 December 2022: EUR685.7 million).
Our land efficiency strategy continues to reduce our net
investment in land with EUR447.0 million of land inventory at 30
June 2023 (31 December 2022: EUR458.5 million ). We believe that
further reductions can be made in this regard, while still
supporting the significant growth the business has projected in the
coming years and we expect to reduce land inventory further towards
EUR400 million by year end.
The Group has continued to invest in work in progress in line
with the growth strategy of the business with a period end balance
of EUR317.6 million (31 December 2022: EUR227.2 million ). The
increase year on year relates to our investment in the urban
business, namely our forward sold developments in Cluain Mhuire,
Dublin and Marina Village, Greystones and the ongoing construction
of the office development in the Dublin Docklands.
The total work in progress in the urban business at 30 June 2023
is EUR78 million with all ongoing developments due to close in H2
2023 or 2024. The remaining work in progress across the business of
approximately EUR240 million is lower year on year, reflecting
continued efficiencies and enhanced capital management on our key
suburban sites.
The business has increased its investment in Property, Plant
& Equipment during the first half of the year, resulting from
our continued focus on innovation and our supply chain initiatives,
with specific investment in our manufacturing facility in Carlow.
This investment is now largely complete with the focus turning to
maximising the value and efficiencies from these facilities.
At 30 June 2023 the reduced equity figure reflected the fourth
share buyback programme which was conducted through the period and
which totalled approximately EUR59 million. In H1 2023, a total of
60.6 million shares were repurchased and subsequently cancelled.
This buyback programme is now complete, having returned
approximately EUR63 million to shareholders and bringing total
shareholder returns to over EUR300m since May 2021.
Net debt at period end increased to EUR182 million (31 December
2022: EUR14 million) reflecting the WIP investment in the suburban
units due to close in H2 and the ongoing urban developments, which
are due to close later in the year and in FY 2024. We continue to
anticipate that net debt will reach 10-15% of net assets by the end
of FY 2023.
Though from a relatively low base, the Group made progress in
increasing Return on Equity to 6.6% from 5.8% in H1 2022.
iii. Group Financing
In February 2023, the Group finalised a new five-year
sustainability linked finance facility of EUR350 million,
consisting of a EUR100 million term component and a revolving
credit facility of EUR250 million, which is a direct replacement of
our previous EUR250 million debt facility. This new facility is
with our existing banking syndicate, at interest rates consistent
with those of the previous facility and includes financial and
sustainability covenants that better reflect the current strategy
and growth ambitions of the business.
This facility will ensure that the business has the appropriate
financial structure to support the operational growth of the
business over the next five years, while also ensuring the business
can maximise its Return on Equity for shareholders.
Statement of Directors' responsibilities in respect of the
condensed consolidated interim financial statements for the half
year ended 30 June 2023
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 ("Transparency Directive"), and the
Transparency Rules of the Central Bank of Ireland.
In preparing the condensed set of consolidated financial
statements included within the half-yearly financial report, the
directors are required to:
- prepare and present the condensed set of consolidated
financial statements in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU, and the Transparency Directive and
the Transparency Rules of the Central Bank of Ireland;
- ensure the condensed set of consolidated financial statements has adequate disclosures;
- select and apply appropriate accounting policies;
- make accounting estimates that are reasonable in the circumstances; and
- assess the Entity'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 Entity or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for designing, implementing and
maintaining such internal controls as they determine is necessary
to enable the preparation of the condensed set of consolidated
financial statements that is free from material misstatement
whether due to fraud or error.
We confirm that to the best of our knowledge:
(1) the condensed set of consolidated financial statements
included within the half-yearly financial report of Glenveagh
Properties plc for the six months ended 30 June 2023 ("the interim
financial information") which comprises the condensed consolidated
statement of profit or loss and other comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated
statement of changes in equity, the condensed consolidated
statement of cash flows and the related explanatory notes, have
been presented and prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU, the Transparency
Directive and Transparency Rules of the Central Bank of
Ireland.
(2) The interim financial information presented, as required by
the Transparency Directive, includes:
a. an indication of important events that have occurred during
the first 6 months of the financial year, and their impact on the
condensed set of consolidated financial statements;
b. a description of the principal risks and uncertainties for
the remaining 6 months of the financial year
c. related parties' transactions that have taken place in the
first 6 months of the current financial year and that have
materially affected the financial position or the performance of
the enterprise during that period; and
d. any changes in the related parties' transactions described in
the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first 6
months of the current financial year.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Entity's
website. Legislation in the Republic of Ireland governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
On behalf of the Board
Stephen Garvey Michael Rice 13 September 2023
Director Director
Independent auditor's review report on the condensed
consolidated interim financial statements to the members of
Glenveagh Properties PLC
Conclusion
We have been engaged by the Entity to review the Entity's
condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2023
which comprises the condensed consolidated statement of profit or
loss and other comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated statement of changes in
equity, the condensed consolidated statement of cash flows and a
summary of significant accounting policies and other explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly financial report for the
six months ended 30 June 2023 is not prepared, in all material
respects in accordance with International Accounting Standard 34
Interim Financial Reporting ("IAS 34") as adopted by the EU and the
Transparency (Directive 2004/109/EC) Regulations 2007
("Transparency Directive"), and the Central Bank (Investment Market
Conduct) Rules 2019 ("Transparency Rules of the Central Bank of
Ireland).
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (Ireland) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (Ireland) 2410") issued for use in Ireland. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (Ireland)
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (Ireland) 2410. However, future events or
conditions may cause the Entity to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Entity will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Transparency Directive and the Transparency Rules of the
Central Bank of Ireland.
The directors are responsible for preparing the condensed set of
consolidated financial statements included in the half-yearly
financial report in accordance with IAS 34 as adopted by the
EU.
As disclosed in note 1, the annual financial statements of the
Entity for the year ended 31 December 2022 are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU.
In preparing the condensed set of consolidated financial
statements, the directors are responsible for assessing the
Entity'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 Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on
the condensed set of consolidated financial statements in the
half-yearly financial report based on our review.
Our conclusion, including our conclusions relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion section of
this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Entity in accordance with the
terms of our engagement to assist the Entity in meeting the
requirements of the Transparency Directive and the Transparency
Rules of the Central Bank of Ireland. Our review has been
undertaken so that we might state to the Entity those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Entity for our
review work, for this report, or for the conclusions we have
reached.
KPMG 13 September 2023
Chartered Accountants
1 Stokes Place
St. Stephen's Green
Dublin, Ireland
Glenveagh Properties PLC
Condensed consolidated statement of profit or loss and other
comprehensive income
for the six months ended 30 June 2023
Note 30 June 30 June
2023 2022
EUR'000 EUR'000
Revenue 8 171,581 200,007
Cost of sales (143,647) (167,143)
Gross profit 27,934 32,864
Administrative expenses (19,088) (16,871)
Operating profit 8,846 15,993
Finance expense (7,462) (3,037)
Profit before tax 1,384 12,956
Income tax 10 (129) (3,385)
Profit after tax 1,255 9,571
Items that are or may be reclassified
subsequently to profit or loss:
Fair value movement on cashflow
hedges 870 -
Cashflow hedges reclassified to 5 -
profit or loss
Total other comprehensive income 875 -
Total comprehensive profit for
the period
attributable of the owners of
the Company 2,130 9,571
Basic earnings per share (cents) 0.21 1.32
Diluted earnings per share (cents) 0.21 1.31
Glenveagh Properties PLC
Condensed consolidated balance sheet
as at 30 June 2023
30 June 31 December
Note 2023 2022
Assets EUR'000 EUR'000
Non-current assets
Goodwill 5,697 5,697
Property, plant and equipment 12 60,858 51,750
Intangible assets 1,730 1,770
Derivative contracts 875 -
Deferred tax asset 10 1,360 619
70,520 59,836
Current assets
Inventory 11 764,661 685,751
Trade and other receivables 69,410 58,671
Income tax receivable 2,913 -
Restricted cash 458 458
Cash and cash equivalents 61,747 71,085
899,189 815,965
Total assets 969,709 875,801
Equity
Share capital 13 663 719
Share premium 13 179,578 179,416
Undenominated capital 396 335
Retained earnings 407,649 465,680
Cashflow hedge reserve 875 -
Share-based payment reserve 48,010 46,968
Total equity 637,171 693,118
Liabilities
Non-current liabilities
Loans and borrowings 14 237,410 71,221
Lease liabilities 3,967 4,216
Trade and other payables 3,500 3,500
244,877 78,937
Current liabilities
Trade and other payables 84,670 93,234
Income tax payable - 565
Derivative contracts interest 5 -
Loans and borrowings 14 2,175 9,419
Lease liabilities 811 528
87,661 103,746
Total liabilities 332,538 182,683
Total liabilities and equity 969,709 875,801
Glenveagh Properties PLC
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2023
Share Capital
----------------------
Share-based
Ordinary Deferred Undenominated Share payment Cashflow Retained Total
shares Shares capital premium reserve hedge reserve earnings equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1
January
2023 638 81 335 179,416 46,968 - 465,680 693,118
Total
comprehensive
profit for the
year
Income for the
year - - - - - - 1,255 1,255
Fair value
movement on
cashflow hedges - - - - - 870 - 870
Cashflow hedges
reclassified
to profit and
loss - - - - - 5 - 5
Other - - - - - - - -
comprehensive
income
- - - - - 875 1,255 2,130
Transactions with
owners
of the Company
Equity-settled
share-based
payments - - - - 1,042 - - 1,042
Exercise of
options 5 - - 162 - - - 167
Purchase of own
shares
(Note 13) (61) - 61 - - - (59,286) (59,286)
(56) - 61 162 1,042 - (59,286) (58,077)
Balance as at 30
June
2023 582 81 396 179,578 48,010 875 407,649 637,171
Glenveagh Properties PLC
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2022
Share Capital
--------------------------------------
Share-based
Ordinary Founder Undenominated Treasury Share payment Retained Total
shares shares capital shares premium reserve earnings equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1
January
2022 771 181 100 - 179,310 45,251 558,468 784,081
Total comprehensive
profit
for the period
Profit for the period - - - - - - 9,571 9,571
Other comprehensive - - - - - - - -
income
- - - - - - 9,571 9,571
Transactions with
owners
of the Company
Equity-settled
share-based
payments - - - - - 975 - 975
Purchase of own shares
(Note 13) (73) - 73 - - - (87,477) (87,477)
(73) - 73 - - 975 (87,477) (86,502)
Balance as at 30 June
2022 698 181 173 - 179,310 46,226 480,562 707,150
Glenveagh Properties PLC
Condensed consolidated statement of cash flows
for the six months ended 30 June 2023
30 June 30 June
2023 2022
Note EUR'000 EUR'000
Cash flows from operating activities
Profit for the period 1,255 9,571
Adjustments for :
Depreciation and amortisation 1,324 1,018
Finance costs 7,462 3,037
Profit on sale of property, plant
and equipment (216) (38)
Equity-settled share-based payment
expense 9 1,042 975
Tax expense 10 129 3,385
10,996 17,948
Changes in :
Inventories (71,076) (36,895)
Trade and other receivables (17,600) (8,328)
Trade and other payables (8,294) 16,552
Cash used in operating activities (85,974) (10,723)
Interest paid (2,790) (2,625)
Tax paid (4,479) (4,167)
Net cash used in operating activities (93,243) (17,515)
Cash flows from investing activities
Acquisition of property, plant and
equipment 12 (11,825) (12,995)
Acquisition of intangible assets (115) (357)
Transfer from restricted cash 15 - 25,000
Proceeds from the sale of property,
plant and equipment 954 9
Net cash (used in) / from investing
activities (10,986) 11,657
Cash flows from financing activities
Proceeds from borrowings 250,001 90,000
Repayment of loans and borrowings (92,500) (5,000)
Transaction costs related to loans
and borrowings (3,535) -
Purchase of own shares (59,061) (87,029)
Proceeds from exercise of share options 167 -
Payment of lease liabilities (181) (384)
Net cash from / (used in) financing
activities 94,891 (2,413)
Net decrease in cash and cash equivalents
in the
period (9,338) (8,271)
Cash and cash equivalents at the
beginning of the period 71,085 116,176
Cash and cash equivalents at the
end of the period 61,747 107,905
Glenveagh Properties PLC
Notes to the condensed consolidated interim financial
statements
1 Reporting entity
Glenveagh Properties PLC ("the Company") is domiciled in the
Republic of Ireland. The Company's registered office is Block C,
Maynooth Business Campus, Maynooth, Co. Kildare, W23 F854. These
condensed consolidated interim financial statements comprise the
Company and its subsidiaries (together referred to as "the Group")
and cover the six month period ended 30 June 2023 ("the period").
The Group's principal activities are the construction and sale of
residential houses and apartments for the private buyer, local
authorities and institutional investors. The condensed consolidated
interim financial statements for the six months ended 30 June 2023
are unaudited and does not constitute statutory financial
statements as defined in the Companies Act 2014. A copy of the
financial statements for the financial year ended 31 December 2022
are available on the Company's website (https://glenveagh.ie/) and
will be filed with the Companies Registration Office. The auditor's
report accompanying those financial statements was unqualified.
2 Statement of compliance
The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU and should be read in conjunction with the
Group's last annual consolidated financial statements as at and for
the financial year ended 31 December 2022 ("last annual financial
statements") which have been prepared in accordance with IFRS as
adopted by the EU. The interim financial statements do not include
all of the information required for a complete set of IFRS
financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in the Group's financial position
and performance since the last annual financial statements. The
accounting policies adopted are consistent with those of the
previous accounting period. As disclosed in note 5, during the
period the Group has transacted derivative contracts relating to an
interest rate swap to manage the interest rate risk arising from
floating rate borrowings.
3 Functional and presentation currency
These consolidated financial statements are presented in Euro
which is the Company's functional currency. All amounts have been
rounded to the nearest thousand unless otherwise indicated.
4 Use of judgements and estimates
In preparing these interim financial statements, management has
made judgements and estimates that effect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. No individual judgment or estimate
is deemed to have a significant impact upon the financial
statements apart from those supporting the assessment of the
carrying value of the Group's inventories as described below.
Critical accounting judgements
Management applies the Group's accounting policies when making
critical accounting judgements, of which no individual judgement is
deemed to have a significant impact upon the financial
statements.
Key sources of estimation uncertainty
The key source of significant estimation uncertainty impacting
these financial statements involves assessing the carrying value of
inventories as detailed below.
(a) Carrying value of work-in-progress, estimation of costs to
complete and impact on profit recognition
The Group holds inventories stated at the lower of cost and net
realisable value. Such inventories include land and development
rights, work-in-progress and completed units.
As residential development is largely speculative by nature, not
all inventories are covered by forward sales contracts.
Furthermore, due to the nature of the Group's activity and, in
particular the scale of its developments and the length of the
development cycle, the Group has to allocate site-wide development
costs between units being built and/or completed in the current
year and those for future years. It also has to forecast the costs
to complete on such developments. These estimates impact
management's assessment of the net realisable value of the Group's
inventory balance and also determine the extent of profit or loss
that should be recognised in respect of each development in each
reporting period.
In making such assessments and allocations, there is a degree of
inherent estimation uncertainty. The Group has established internal
controls designed to effectively assess and centrally review
inventory carrying values and ensure the appropriateness of the
estimates made. These assessments and allocations evolve over the
life of the development in line with the risk profile, and
accordingly the margin recognised reflects these evolving
assessments, particularly in relation to the Group's long-term
developments. The impact of sustainability and other macroeconomic
factors have been considered in the Group's assessment of the
carrying value of its inventories at 30 June 2023, particularly
with regard to the potential implications for future selling
prices, development expenditure and construction programming.
Management has considered a number of scenarios on each of its
active developments and the consequential impact on future
profitability based on current facts and circumstances together
with any implications for future projects in undertaking its net
realisable value calculations.
5 New significant accounting policies
Standards issued but not yet effective
A number of new standards and amendments to standards are
effective for annual periods beginning after 1 January 2023 and
earlier application is permitted.
- IAS 8 Accounting policies, changes in accounting estimates and
errors: Definition of accounting estimates and errors
(amendment)
- IAS 1 Presentation of financial statements: Amendments to IAS
1 presentation of financial statements and IFRS practice statement
2 making materiality judgements (amendment)
- IFRS 17 Insurance contracts - amendments to IFRS 17 insurance contracts (amendment)
- IFRS 17 Insurance contracts - initial application of IFRS 17
and IFRS 9 - Comparative information (amendment)
- IAS 12 Income taxes - Deferred tax related to assets and
liabilities arising from a single transaction (amendment)
- IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures: Supplier Finance Arrangements (amendment)
(not yet effective)
- IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (amendment)
- IAS 1 Presentation of Financial Statements:
o Classification of Liabilities as Current or Non-current Date
(amendment) (not yet effective)
o Classification of Liabilities as Current or Non-current -
Deferral of Effective Date (amendment) (not yet effective)
o Non-current Liabilities with Covenants (amendment) (not yet
effective)
- IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendment) (not yet effective)
Derivatives and hedging
The Group has transacted derivatives relating to an interest
rate swap to manage the interest rate risk arising from floating
rate borrowings. Derivatives are initially recognised at fair value
on the date a derivative contract is entered into, and they are
subsequently remeasured to their fair value at the end of each
reporting period. The accounting for subsequent changes in fair
value depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged.
The group designates certain derivatives as hedges of a
particular risk associated with the cash flows of recognised assets
and liabilities and highly probable forecast transactions (cash
flow hedges).
Changes in the fair value of derivative hedging instruments
designated as cash flow hedges are recognised in other
comprehensive income to the extent that the hedge is effective. The
gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.
Amounts accumulated in other comprehensive income are
reclassified to profit or loss in the same periods that the hedged
items affect profit or loss. The reclassified gain or loss relating
to the effective portion of interest rate swaps hedging variable
rate borrowings is recognised in profit or loss within finance
income or costs respectively.
If the hedging instrument no longer meets the criteria for hedge
accounting, expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. The cumulative gain or
loss previously recognised in other comprehensive income remains
there until the forecast transaction occurs, unless the hedged
transaction is no longer expected to occur, in which case the
cumulative
gain or loss that was previously recognised in other
comprehensive income is transferred to profit and loss.
At inception of the hedge relationship, the group documents the
economic relationship between hedging instruments and hedged items,
including whether changes in the cash flows of the hedging
instruments are expected to offset changes in the cash flows of
hedged items. The group documents its risk management objective and
strategy for undertaking its hedge transactions.
The full fair value of a hedging derivative is classified as a
non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current
asset or liability when the remaining maturity of the hedged item
is less than 12 months.
There have been no other changes to significant accounting
policies during the period to 30 June 2023.
6 Going concern
The Group has recorded a profit before tax of EUR1.4 million
(2022: EUR12.9 million). The Group has an unrestricted cash balance
of EUR36.7 million (31 December 2022: EUR82.9 million) exclusive of
the minimum cash balance of EUR25.0 million which the Group is
required to maintain under the terms of its debt facilities. The
Group has committed undrawn funds available of EUR60.0 million (31
December 2022: EUR30.0 million).
Management has prepared a detailed cash flow forecast in order
to assess the Group's ability to continue as a going concern for at
least a period of twelve months from the signing of these interim
financial statements. The preparation of this forecast considered
the principal risks facing the Group, including those risks that
could threaten the Group's business model, future performance,
solvency or liquidity over the forecast period.
The Group is forecasting compliance with all covenant
requirements under the current facilities including the interest
cover covenant which is based on earnings before interest, tax,
depreciation and amortisation (EBITDA) excluding any non-cash
impairment charges or reversals. Total debt must not exceed
adjusted EBITDA by a minimum of 4 times, this is calculated on both
a forward and trailing twelve-month basis. Other assumptions within
the forecast include the Group's expected selling prices and sales
strategies as well as its investment in work in progress which
reflect updated development programmes.
The Directors confirm that they believe the Group has the
appropriate working capital management strategy, operational
flexibility and resources in place to continue in operational
existence for the foreseeable future and has accordingly prepared
the condensed consolidated interim financial statements on a going
concern basis.
7 Segmental information
Segmental financial results
30 June 30 June
2023 2022
EUR'000 EUR'000
Revenue
Suburban 109,651 88,946
Urban 61,930 111,061
Partnerships - -
Revenue for reportable segments 171,581 200,007
30 June 30 June
2023 2022
EUR'000 EUR'000
Operating profit / (loss)
Suburban 13,477 9,327
Urban 6,076 16,776
Partnerships (739) (581)
Operating profit for reportable
segments 18,814 25,522
Reconciliation to results for
the period
Segment results - operating profit 18,814 25,522
Finance expense (7,462) (3,037)
Directors' remuneration (1,064) (1,208)
Corporate function payroll costs (2,874) (2,523)
Depreciation and amortisation (1,170) (1,018)
Professional fees (1,057) (2,129)
Share-based payment expense (1,042) (975)
Profit on sale of property, plant
and equipment 216 38
Other corporate costs (2,977) (1,714)
Profit before tax 1,384 12,956
Segment assets and liabilities
30 June 2023 31 December 2022
Suburban Urban Partnerships Total Suburban Urban Partnerships Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment assets 651,199 178,277 9,266 838,742 590,321 153,018 6,452 749,791
Reconciliation to
Consolidated
Balance Sheet
Deferred tax asset 1,360 620
Derivative contracts 875 -
Trade and other receivables 1,484 785
Cash and cash equivalents 61,747 71,085
Income tax receivable 2,913 -
Property, plant and equip
ment 60,858 51,750
Intangible assets 1,730 1,770
969,709 875,801
Segment liabilities 61,829 16,894 269 78,992 69,138 9,876 159 79,173
Reconciliation to
Consolidated
Balance Sheet
Trade and other payables 9,179 17,561
Loans and Borrowings 239,585 80,640
Derivative contracts 5 -
Lease liabilities 4,777 4,744
Income tax payable - 565
332,538 182,683
8 Revenue
30 June 30 June
2022 2021
EUR'000 EUR'000
Suburban
Core 109,651 86,336
Non-core - 2,610
109,651 88,946
Urban
Core 58,870 109,960
Non-core 3,060 1,101
61,930 111,061
Total Revenue 171,581 200,007
As in the prior year, the Group expects significantly more
closing activity (and consequently increased revenue) in the second
half of the financial year as a result of the seasonality that
currently exists within the Group's development cycle.
Core suburban product relates to affordable starter homes for
first time buyers. Core urban product relates primarily to
apartments suitable for institutional investors. Non-core suburban
and urban product relates to high-end, private developments and
sites. Non-core suburban and urban cost of sales is mostly
attributable to land and development expenditure costs for high
end, private developments and sites.
Urban core revenue includes income from the sale of land and
development revenue from construction contracts that are recognised
over time by reference to the stage of completion of the contract
with the customer. Development revenue recognised in the period
related to the development of the sites at Barn Oaks Apartments,
Castleforbes and Carpenterstown and amounted to EUR58.9 million (30
June 2022: EUR30.5 million) with EUR34.9 million (31 December 2022:
EUR32.1 million) outstanding in contract receivables at the period
end. The payment terms for these contracts are between 30 and 90
days.
9 Share-based payment arrangements
(a) Description and reconciliation of options outstanding
Number of Number of
Options Options
2023 2022
LTIP options in issue at 1 January 13,022,830 10,583,334
Granted during the period 5,515,311 4,568,698
Forfeited during the period (381,427) (163)
Lapsed during the period (1,067,076) -
Exercised during the period (3,226,235) (1,309,820)
LTIP options in issue at 30 June 13,863,403 13,842,049
Exercisable at 30 June 388,859 1,015,962
SAYE - reconciliation of options outstanding
Number of Number
Options of
2023 Options
2022
SAYE in issue at 1 January 755,220 964,740
Forfeited during the period (1,167) -
Lapsed during the period (720) -
Exercised during the period (270,333) -
SAYE options in issue at 30 June 483,000 964,740
Exercisable at 30 June 48,000 2,520
The options outstanding at 30 June 2023 had an exercise price
EUR0.001 (2022: EUR0.001) and a weighted-average contractual life
of 7 years (2022: 7 years).
(b) Measurement of fair values
The EPS and ROE related performance conditions are non-market
conditions and do not impact the fair value of the EPS or ROE based
awards at grant date which is equivalent to the share price at
grant date. The inputs used in measuring fair value at grant date
were as follows:
2023 2022
Fair value at grant
date EUR1.12 EUR1.16
Share price at grant
date EUR1.12 EUR1.16
The exercise price of all options granted under the LTIP to date
is EUR0.001 and all options have a 7- year contractual life.
(c) Expense recognised in profit or loss
The Group recognised an expense of EUR1.0 million (2022: EUR1.0
million) in the consolidated statement of profit or loss in respect
of options granted under the LTIP and SAYE arrangements.
10 Income tax
30 June 30 June
2023 2022
EUR'000 EUR'000
Current tax charge for the period 750 3,507
Deferred tax credit for the period (621) (122)
Total income tax charge 129 3,385
Movement in deferred Balance Balance
tax balances at
at 1 January Prior period Recognised 30 June
in
2023 remeasurement the period 2023
EUR'000 EUR'000 EUR'000 EUR'000
Expenses deductible in
future periods 619 120 621 1,360
The expenses deductible in future periods arise in Ireland and
have no expiry date. Based on profitability achieved in the period,
the continued forecast profitability in the Group's strategic plan
and the sensitivities that have been applied therein, management
has considered it probable that future profits will be available
against which the above losses can be recovered and, therefore, the
related deferred tax asset can be realised.
Global minimum tax
To address concerns about uneven profit distribution and tax
contributions of large multinational corporations, various
agreements have been reached at a global level, including an
agreement by over 135 jurisdictions to introduce a global minimum
tax rate of 15%. In December 2022, the Organisation for Economic
Co-operation and Development ("OCED") released a draft legislative
framework that is expected to be used by individual jurisdictions
that signed the agreement to amend their local tax laws. Once
changes to the tax laws in any jurisdiction in which the Group
operates are enacted or substantively enacted, the Group may be
subject to the top-up tax. Currently, the Group operates solely in
the Republic of Ireland, based on current criteria there is no
current tax impact in the period ended 30 June 2023 (six months
ended 30 June 2022: EURNil).
11 Inventory 30 June 31 December
2023 2022
EUR'000 EUR'000
Land 443,806 455,280
Development expenditure work in progress 317,624 227,240
Development rights 3,231 3,231
764,661 685,751
(i) Employment cost capitalised
EUR7.0 million of employment costs incurred in the period have
been capitalised in inventory (June 2022: EUR6.7million).
12 Property, plant and equipment
During the period, the Group recognised total additions to
property, plant and equipment of EUR11.8 million (six months ended
30 June 2022: EUR13.3 million) which included expenditure on land
and buildings of EUR8.5 million (six months ended 30 June 2022:
EUR9.0 million), with EUR3.3 million (six months ended 30 June
2022: EUR4.3 million) invested in plant and machinery, fixtures and
fittings and computer equipment. Depreciation recognised in the
period was EUR2.3 million (six months ended 30 June 2022: EUR1.9
million). Net disposals of plant and machinery in the period of
EUR0.6m (six months ended 30 June 2022: EUR0.1 million).
During the period, the Group entered into new lease agreements
for the use of motor vehicles EUR0.2 million (six months ended 30
June 2022: EURNil).
13 Share capital and share premium
(a) Authorised share capital
As at 30 June 2023 and 31 December 2022 Number of
shares EUR'000
Ordinary shares of EUR0.001 each 1,000,000,000 1,000
Deferred shares of EUR0.001 each 200,000,000 200
1,200,000,000 1,200
(b) Issued and fully paid share capital and share premium
As at 30 June 2023 Number of Share capital Share premium
shares EUR'000 EUR'000
Ordinary shares of EUR0.001 each 581,075,456 582 179,578
Deferred shares of EUR0.001 each 81,453,077 81 -
662,528,533 663 179,578
As at 31 December 2022 Number of Share capital Share premium
shares EUR'000 EUR'000
Ordinary shares of EUR0.001 each 638,131,722 638 179,416
Deferred shares of EUR0.001 each 81,453,077 81 -
719,584,799 719 179,416
On 6 January 2023, a fourth share buyback programme commenced to
repurchase up to 10% of the Group's issued share capital such that
the maximum number of shares which can be repurchased under this
buyback is 63,813,172. As at 30 June 2023 the total number of
shares purchased under the fourth buyback programme was 60,552,834
at a total cost of EUR59.3 million. On 2 August 2023, the Group
completed the fourth share buyback programme repurchasing
63,813,172 shares for a cost of EUR62.7 million. All repurchased
shares were cancelled.
14 Loans and Borrowings
(a) Loans and borrowings
In February 2023, the Group entered into a new five-year
sustainability linked finance facility of EUR350.0 million, with a
syndicate of domestic and international banks, at an interest rate
of one-month EURIBOR (subject to a floor of 0 per cent) plus a
margin of 2.7-2.8%. The debt facility interest rates are linked to
the Group meeting certain sustainability performance targets
aligned to its sustainability strategy. The sustainability
performance targets are in respect of decarbonisation and the
Group's Equity, Diversity and Inclusion strategy. The prior period
debt facilities were fully repaid by the Group during the period to
30 June 2023. EUR240.0 million has been drawn on the new debt
facility (31 December 2022: EUR82.5 million). Pursuant to the debt
facility agreement, there is fixed and floating charges and
assignments in place over all the assets of the Group as continuing
security for the discharge of any amounts drawn down. The assets
carrying value at the end of the period is EUR969.7 million (31
December 2022: EUR875.8 million).
30 June 31 December
2023 2022
EUR'000 EUR'000
Debt facilities 240,001 82,500
Unamortised transaction costs (3,298) (1,877)
Interest accrued 2,882 17
Total loans and borrowings 239,585 80,640
Loans and borrowings are payable as 30 June 31 December
follows:
2023 2022
EUR'000 EUR'000
Less than one year 2,175 9,419
Between one and two years (707) 9,401
More than two years 238,117 61,820
Total loans and borrowings 239,585 80,640
The Group's new debt facilities are subject to the following
primary financial covenants:
- A maximum total debt to gross asset value ratio of 40%;
- Loans to eligible assets value does not equal or exceed 65%;
- The Group is required to maintain a minimum cash balance of
EUR25.0 million throughout the term of the debt facility;
- EBITDA must exceed net interest costs by a minimum of 3 times
and is calculated on a trailing twelve-month basis.
- Total debt must not exceed adjusted EBITDA by a minimum of 4
times, this is calculated on a trailing twelve-month basis,
and;
- Total debt must not exceed projected adjusted EBITDA by a
minimum of 4 times, this is calculated on a forward twelve-month
basis.
All covenants have been complied with in the 6 month period for
the new debt facilities and in financial year 2022 for the previous
debt facilities.
Debt facilities are secured by a debenture incorporating fixed
and floating charges and assignments over all the assets of the
Group. The carrying value of the total assets of the Group as at 30
June 2023 is EUR969.7 million (31 December 2022: EUR875.8
million).
(b) Net funds reconciliation
30 June 31 December
2023 2022
EUR'000 EUR'000
Restricted cash 458 458
Cash and cash equivalents 61,747 71,085
Loans and borrowings (239,585) (80,640)
Lease liabilities (4,777) (4,744)
Total net debt (182,157) (13,841)
15 Financial instruments and financial risk management
(a) Accounting classification and fair value
The Group classifies and discloses the fair value for each class
of financial instrument based on the fair value hierarchy in
accordance with IFRS 13. The fair value hierarchy distinguishes
between market value data obtained from independent sources and the
Group's own assumptions about market value. The hierarchy levels
are defined below:
- Level 1 - Inputs based on quoted prices in active markets for
identical assets or liabilities;
- Level 2 - Inputs based on factors other than quoted prices
included in Level 1 and may include quoted prices for similar
assets and liabilities in active markets, as well as inputs that
are observable for the asset or liability (other than quoted
prices), such as interest rates and yield curves that are
observable at commonly quoted intervals; and
- Level 3 - Inputs which are unobservable for the asset or
liability and are typically based on the Group's own assumptions as
there is little, if any, related market activity. The Group's
assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgement and considers
factors specific to the asset or liability.
The Group's assessment of the significance of a particular input
to the fair value measurement in its entirety requires judgement
and considers factors specific to the asset or liability.
The following table presents the Group's estimates of fair value
on a recurring basis based on information available at 30 June
2023, aggregated by the level in the fair value hierarchy within
which those measurements fall.
30 June 2023* Level 1 Level 2 Level 3
Quoted prices
in
active markets Significant
for
identical Significant unobservable
assets & other
liabilities observable inputs Total
inputs
EUR'000 EUR'000 EUR'000 EUR'000
Recurring Measurement
Assets
Derivative contracts - 875 - 875
- 875 - 875
Recurring Measurement
Liabilities
Contingent consideration - - (5,000) (5,000)
Total - 875 (5,000) (4,125)
*The period ended 30 June 2023 is the first period the Group has
transacted in derivative contracts, see note 5.
The following table shows the carrying amounts and fair values
of financial assets and financial liabilities.
Carrying Amount
Financial assets at
amortised cost
30 June 31 December
2023 2022
EUR'000 EUR'000
Financial assets not measured at fair
value
Trade receivables 6,524 9,224
Amounts recoverable on construction
contracts 34,852 32,113
Other receivables 2,992 2,282
Construction bonds 14,108 12,140
Deposits for sites 9,461 2,049
Cash and cash equivalents 61,747 71,085
Restricted cash (current) 458 458
Total financial assets 130,142 129,351
Cash and cash equivalents are short-term deposits held at
variable rates.
Carrying amount
Other financial liabilities
30 June 31 December
2023 2022
EUR'000 EUR'000
Financial liabilities not measured
at fair value
Trade payables 14,855 7,132
Lease liabilities 4,777 4,744
Inventory accruals 45,702 33,600
Other accruals 13,432 16,372
Loans and borrowings 239,585 80,640
Total financial liabilities 318,351 142,488
Trade payables and other current liabilities are non-interest
bearing.
Financial risk management objectives and policies
As all of the operations carried out by the Group are in Euro
there is no direct currency risk, and therefore the Group's main
financial risks are primarily:
- liquidity risk - the risk that suitable funding for the
Group's activities may not be available;
- market risk - the risk that changes in market prices, such as
interest rates will affect the Group's income or the value of its
holdings of financial instruments.
This note presents information and quantitative disclosures
about the Group's exposure to each of the above risks, its
objectives, policies and processes for measuring and managing risk,
and the Group's management of capital.
Liquidity risk
Liquidity risk is the risk that the Group may not be able to
generate sufficient cash reserves to settle its obligations in full
as they fall due or can only do so on terms that are materially
disadvantageous. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring, unacceptable losses or
risking damage to the Group's reputation. The Group's liquidity
forecasts consider all planned development expenditure.
In February 2023, the Group entered into a new five-year
sustainability linked finance facility of EUR350.0 million, with a
syndicate of domestic and international banks, at an interest rate
of one-month EURIBOR (subject to a floor of 0 per cent) plus a
margin of 2.7-2.8%. The debt facility interest rates are linked to
the Group meeting certain sustainability performance targets
aligned to its sustainability strategy. The sustainability
performance targets are in respect of decarbonisation and the
Group's Equity, Diversity and Inclusion strategy. The prior period
debt facilities were fully repaid by the Group during the period to
30 June 2023. EUR240.0 million has been drawn on the new debt
facility (31 December 2022: EUR82.5 million). The Group has an
exposure to cash flow interest rate risk where there are changes in
the EURIBOR rates.
Management monitors the adequacy of the Group's liquidity
reserves against rolling cash flow forecasts. In addition, the
Group's liquidity risk management policy involves monitoring
short-term and long-term cash flow forecasts. Set out below are
details of the Group's contractual cash flows arising from its
financial liabilities and funds available to meet these
liabilities.
Funds available 30 June 31 December
2023 2022
EUR'000 EUR'000
Debt facilities* (undrawn committed) 60,000 150,000
Cash and cash equivalents 61,747 71,543
121,747 221,543
*In addition to this, the Group's debt facilities contains a
mechanism through which the committed amount can be increased by a
further EUR50.0 million.
The Group's new debt facilities are subject to the following
primary financial covenants:
- A maximum total debt to gross asset value ratio of 40%;
- Loans to eligible assets value does not equal or exceed 65%;
- The Group is required to maintain a minimum cash balance of
EUR25.0 million throughout the term of the debt facility;
- EBITDA must exceed net interest costs by a minimum of 3 times
and is calculated on a trailing twelve-month basis.
- Total debt must not exceed adjusted EBITDA by a minimum of 4
times, this is calculated on a trailing twelve-month basis,
and;
- Total debt must not exceed projected adjusted EBITDA by a
minimum of 4 times, this is calculated on a forward twelve-month
basis.
30 June 2023
Carrying Contractual Less than 1 year More than
amount cash flows 1 year to 2 years 2 years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Lease liabilities 4,777 5,529 941 926 3,662
Trade payables 14,855 14,855 14,855 - -
Inventory accruals 45,702 45,702 45,702 - -
Other accruals 13,432 13,432 13,432 - -
Loans and borrowings 239,858 312,222 15,479 15,479 281,264
318,351 391,740 90,409 16,405 284,926
31 December 2022
Carrying Contractual Less than 1 year More than
amount cash flows 1 year to 2 years 2 years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Lease liabilities 4,744 5,057 84 16 4,957
Trade payables 7,132 7,132 7,132 - -
Inventory accruals 33,600 33,600 33,600 - -
Other accruals 16,372 16,372 16,372 - -
Loans and borrowings 80,640 89,488 11,563 11,546 66,379
142,488 151,649 68,751 11,562 71,336
Market risk
Interest rate risk reflects the Group's exposure to fluctuations
in interest rates in the market. This risk arises from bank loans
that are drawn under the Group's debt facilities with variable
interest rates based upon EURIBOR. At the period ended 30 June 2023
it is estimated that an increase of
100 basis points to EURIBOR would have decreased the Group's
profit before tax by EUR1.1 million (2022: EUR0.9 million) assuming
all other variables remain constant, and the rate change is only
applied to the loans that are exposed to movements in EURIBOR.
As part of the Group's strategy to manage our interest rate
risk, the Group entered into an interest rate swap on 28 February
2023 to hedge the interest rate risk associated with the EUR100.0
million term loan element of our new debt facilities. The interest
rate swap is in place for the 5-year period of the facility
agreement. The nominal amount hedged for years one and two is
EUR100.0 million with this stepping down to EUR50.0 million for the
remaining three years of the facility agreement.
The Group is also exposed to interest rate risk on its cash and
cash equivalents. These balances attract low interest rates and
therefore a relative increase or decrease in their interest rates
would not have a material effect on the Group's profit.
A fundamental review and reform of major interest rate
benchmarks is being undertaken globally, including the replacement
of some interbank offered rates (IBORs) with alternative nearly
risk-free rates (referred to as 'IBOR reform'). The Group has no
exposure to these changes as it only has exposure to EURIBOR
interest rates which is outside the scope of the current
reform.
The amounts relating to items designated as hedging instruments
and hedge ineffectiveness were as follows:
As at 30 June 2023 For the six months ended 30 June 2023
Carrying Amount
amount reclassed
from
hedging
reserve
to profit
or loss
Changes
in the Line items
value of Hedge in profit
hedging ineffectiveness or loss that
instruments recognised includes
Nominal Assets Liability recognised in profit hedge
amount in OCI or loss ineffectiveness
(EUR'000) (EUR'000) (EUR'000) (EUR'000) (EUR'000) (EUR'000) (EUR'000) (EUR'000)
---------------- ---------------- ----------------- ------------------ ---------------------- ---------------------- ---------------- ----------------
Loss on
Interest derivative
rate financial Financing
swap 100,000 875 - 870 - instruments 5 costs
16 Commitments and contingent liabilities
Hollystown Golf and Leisure Limited ("HGL")
During 2018, the Group acquired 100 per cent of the share
capital of HGL. Under the terms of an overage covenant signed in
connection with the acquisition, the Group has committed to paying
the vendor an amount equal to an agreed percentage of the uplift in
market value of the property should any lands owned by HGL, that
are not currently zoned for residential development be awarded a
residential zoning. This commitment has been treated as contingent
consideration and the fair value of the contingent consideration at
the acquisition date was initially recognised at EURnil. At the
reporting date, the fair value of this contingent consideration was
considered insignificant.
Contracted acquisitions
At 30 June 2023, the Group had contracted to acquire two
development sites; one in County Kildare, and one in County Galway
for an aggregate consideration of approximately EUR12.4 million
(excluding stamp duty and legal fees). Deposits totalling EUR7.4
million were paid pre-period end and are included within trade and
other receivables at 30 June 2023.
17 Subsequent events
On 2 August 2023, the Group completed its fourth share buyback
programme repurchasing 63,813,172 shares for a cost of EUR62.7
million. All repurchased shares were cancelled.
18 Approved financial statements
The Directors approved the condensed consolidated interim
financial statements on 13 September 2023.
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END
IR LJMPTMTJBBBJ
(END) Dow Jones Newswires
September 14, 2023 02:00 ET (06:00 GMT)
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