REG - Glenveagh Properties - Full Year Trading Statement 2023

Glenveagh PropertiesAnnouncement

10/01/2024 07:00

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RNS Number : 1677Z  Glenveagh Properties plc  10 January 2024

10 January 2024

Glenveagh Properties plc

Full Year Trading Statement 2023

Glenveagh Properties PLC ("Glenveagh" or the "Group") is today issuing a
trading update for the year ended 31 December 2023 ahead of the publication
of its full year results on Wednesday, 28 February 2024.

FY 2023 Performance Summary

                                          Year Ended            Year Ended 31 December  Change

                                          31 December           2022

                                          2023
 Revenue €'m                              608                   645                     -6%
 Gross profit €'m                         113                   108                     +5%
 Gross margin                             18.5%                 16.8%                   +170 bps
 Operating profit €'m                     71                    70                      +1%
 Profit before tax €'m                    55                    63                      -13%
 Earnings Per Share (cent)                8.0                   7.6                     +5%
 Net Debt €'m                             51                    14                      +€37m

 Suburban Completions                     1,328                 1,354                   -2%
 Suburban: forward order book - units(1)  680                   408                     +67%
 Group: forward order book - €'m(1)       641.8                 344.6                   +86%

(1) As at 9 January 2024. Prior year data as at 5 January 2023

 

·   In FY 2023 we increased suburban revenue and margin, generated revenue
from our Partnerships business segment for the first time, and benefitted from
strong planning momentum after the planning delays experienced in FY 2022. We
delivered EPS at the top end of our guided range

·  During 2023 we were granted permissions for approximately 4,600 units,
almost 700 of which are currently in post-grant appeal periods. We also lodged
planning applications for approximately 2,900 units during the year

·  Net Debt was maintained at prudent levels as we continued to generate
efficiencies from our landbank while also investing in our WIP for FY 2024,
completing our significant investment in NUA and returning approximately
€63m to shareholders

·   We strongly advanced our operational capabilities in FY 2023,
incorporating standardised house types into the manufacturing and delivery
process, while enhancing build quality and customer service. We launched NUA
as our off-site manufacturing business with capacity to deliver over 2,000
units, embedding innovation and modern methods of construction into our
product offering

·  We also progressed with our sustainability agenda, launching our Net
Zero transition plan, including science-based targets (SBTs), in March 2023.
Today we have published our Biodiversity strategy setting out our plan to take
action to address the challenge of biodiversity loss across our value chain

Outlook

·    The long-term demand outlook for the Irish residential housing market
remains very positive, supported by a resilient domestic economy, a
fast-growing population and supportive State initiatives. Given our proven
operational capability and our established expertise in partnership and urban
development models, we are very well placed to grow as a scale operator in the
market

·  We expect to generate strong revenue and profit growth across each of
our Suburban, Urban and Partnerships business segments in FY 2024. This growth
is underpinned by our healthy land portfolio and forward order book, continued
planning momentum and strong operational and manufacturing capability. We are
comfortable with current consensus EPS expectations for FY 2024 of
approximately 17 cent

·    Our forward suburban order book of 680 units contracted or reserved
for FY 2024 provides good visibility on deliveries in early FY 2024. Strong
reservation rates reflect robust private demand and supportive State
initiatives in the market

·    In addition to urban revenue from already contracted projects, we
anticipate a renewed focus on urban development activity in FY 2024 as new
opportunities emerge to partner with multiple state agencies as part of the
Government's supply-side housing initiatives. Significant additional funding
has been proposed for the Land Development Agency (LDA) and we have been
successfully shortlisted to participate in its development programme that will
be advanced in early FY 2024

·  We expect to deliver revenue from our Partnerships segment of over
€100m in FY 2024, with an anticipated gross margin of approximately 15%. We
expect to commence the construction of almost 1,300 homes under our
partnership schemes this year

·    We continue to remain focused on enhancing capital efficiency and
cash generation across the business.  Once our capital allocation priorities
are satisfied, we remain committed to returning any excess cash identified to
shareholders

·    Further guidance will be provided in the Full Year Results
announcement on 28 February 2024

 

CEO Stephen Garvey commented:

"Glenveagh is strongly positioned for a pivotal year in 2024. We effectively
responded to the challenges at the start of 2023 by delivering on key
strategic priorities and this progress provides a solid platform to deliver at
significant scale this year. Our healthy land portfolio and forward order book
means that in 2024 we will provide the keys to approximately 2,700 new homes
across the business. This is all underpinned by our proven operational and
manufacturing capabilities that embrace sustainability and modern methods of
construction.

The State is also providing a positive backdrop of targeted and effective
input, in the form of supportive initiatives on both the demand and supply
side, which are making a real difference to increasing supply. This is aided
by encouraging improvements in the planning policy and system. As the biggest
source of landbank for the development of new homes and with the extent of its
funding capacity, the State will continue to be the major driver in resolving
Ireland's accommodation shortage, in partnership with the housebuilding
industry.

The strong performance in our Partnerships business shows how much can be
achieved when public and private entities work together to deliver what
Ireland needs - sustainable, high-quality, energy-efficient, mixed tenure
developments that will alleviate the supply shortage. That said, there remains
plenty to do to ensure the country can accelerate housing supply and provide
an opportunity for home ownership at the pace Ireland needs. The industry
requires a housing target that accurately reflects current and future
population requirements, designed for viable, desirable homes in locations
where there is demand. To sustainably deliver increased housing supply
requires appropriately aligning resourcing for planning bodies, local
authorities and utility companies and ensuring the availability of land with
critical infrastructure. Prioritising these actions as a matter of urgency
will enhance industry wide efforts to expedite the delivery of quality homes
and ultimately contribute to building flourishing communities."

 

TRADING OVERVIEW

The Group reported total revenue for the year of €608m (FY 2022: €645m),
including a first time contribution from our Partnerships business segment.
Excluding the FY 2022 disposal of the East Road site for approximately €63m,
that did not recur in FY 2023, there was a modest increase in Group revenue.

Group gross margin was 18.5%, ahead of the 16.8% margin reported in FY 2022,
reflecting an improved suburban margin of approximately 20% and
notwithstanding the continued elevated inflation experienced by the business
of 4-5% during FY 2023.

The Group's operating profit was approximately €71m in FY 2023 (FY 2022:
€70m).

Earnings Per Share increased by 5% to 8.0 cents, at the top end of Group
guidance.

The Group ended the year with net debt of approximately €51m. Further
efficiencies were generated in our net investment in land and the landbank
value (excluding development rights) at 31 December 2023 was below €410m (31
December 2022: €455m). There was strong underlying cash generation from unit
sales in the second half of the year.

SUBURBAN

The Group reported suburban revenue of approximately €471m, modestly above
the FY 2022 revenue of €455m. FY 2023 revenue primarily comprised 1,328 unit
sales and the suburban Average Selling Price ("ASP") of approximately €336k
(FY 2022: €330k) reflecting the Group's strong operational performance in a
challenging environment. ASP increased by 2% as a result of portfolio mix and
house price inflation in the period.

FY 2023 suburban gross margin was approximately 20% and improved as the
business benefitted from enhanced operational efficiencies that we achieved
through rigorous management of our supply chain, augmented by an impact from
land sales of approximately 70bps.

The Group spent or has contracted to spend a total of approximately €38m on
six land sites in FY 2023. These sites have the capacity to deliver
approximately 1,050 new own-door housing in sustainable communities. The Group
is also prioritising structured land transactions which will enable more
efficient standardisation of the suburban portfolio as well as maintaining an
efficient balance sheet. Four of the six land transactions are structured
deals allowing the group to progress with planning applications.

Glenveagh finished the year with 680 suburban units contracted or reserved for
FY 2023 (FY 2022: 408).

URBAN

Urban revenue decreased by 36% to approximately €121m in FY 2023, reflecting
a higher FY 2022 comparative that included approximately €63m from the
disposal of the East Road site, that did not recur in FY 2023.

In FY 2023 two of our key contracted urban projects, Marina Village and
Premier Inn, were completed. All of the remaining contracted projects - Cluain
Mhuire, Citywest and Castleknock - are on track for delivery in FY 2024.

Urban gross margin was approximately 13% in FY 2023, broadly in line with the
FY 2022 margin.

In November 2023 we were approved under the Croí Cónaithe (Cities) Scheme to
develop 274 owner occupier apartments for sale on the open market in
Blackrock, Cork. Our scale, operational capability and established expertise
in partnership and urban development models, leave us ideally positioned to
participate in such initiatives. These have the potential to generate
significant incremental revenue and profits for the Group.

PARTNERSHIPS

Both Ballymastone and Oscar Traynor Road received final planning permissions
in H2 2023 and construction works commenced on both sites in the final
quarter. As a result, we reported our first revenue in this business segment
of approximately €17m.

The Group expects to deliver revenue of over €100m from these two sites in
FY 2024, with an anticipated gross margin of approximately 15%.

 

 

 

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 Affairs)   David Clerkin 087 830 1779

 investors@glenveagh.ie                           glenveagh@gordonmrm.ie

 

 

 

Notes to Editors

About Glenveagh Properties PLC

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 is 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 (http://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 (the "Company" or "Glenveagh").

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 Company'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 Company
about future events, and involve risks and uncertainties because they relate
to events and depend on circumstances that will occur in the future. Although
the Company 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 Company
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. The
Company 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).

 

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