REG - Glenveagh Properties - Interim Results 2023
14/09/2023 07:15
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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 June 2023 Six Months to 30 June 2022 Change
Revenue €'m 171.6 200.0 -14%
- Suburban 109.7 88.9 +23%
- Urban 61.9 111.1 -44%
Gross profit €'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 €'m 1.4 13.0 -89%
Earnings Per Share (cent) 0.21 1.32 -84%
30 June 2023 30 June 2022
Land €'m 447.0 513.0 -13%
Work in Progress €'m 317.6 291.9 +9%
Operating cash flow €'m (93.2) (17.5)
Net Debt €'m 182.2 97.5 +€85m
Total Equity €'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 - €'m(1) 563.1 588.1 -4%
Group: Closed & forward order book - €'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 €63m 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 €63 million was returned to
shareholders, bringing overall returns to over €300 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 €120m 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 €400 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 €100 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
(https://protect-eu.mimecast.com/s/VgMCCJNPvcqgGk5CVacKk?domain=event.loopup.com)
Audio webcast: Click here for webcast
(https://protect-eu.mimecast.com/s/AWEnCKL6wh2ZgQmivCIgK?domain=channel.royalcast.com)
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 Affairs) David Clerkin 087 830 1779
investors@glenveagh.ie (mailto:investors@glenveagh.ie) glenveagh@gordonmrm.ie (mailto:glenveagh@gordonmrm.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 (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 ("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 €171.6 million (H1 2022: €200.0 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 €109.7 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 €324k (H1 2022: €332k). 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 Type H1 2023 revenue (€m) H2 2023 revenue (€m)* FY 2024
revenue (€m)*
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 the
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 €100 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 €1.14
billion. The forward order book in the suburban business of €563.1 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 €447.0 million at 30 June 2023 (31
December 2022: €458.5 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 €30k. 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 €14.4
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 €172 million (H1 2022: €200 million) from two main
income streams:
· €110 million in our suburban business, which predominantly
relates to our 333 suburban units closed in the period
· €62 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 €110 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 €324k (H1 2022: €332k).
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 €27.9 million (H1
2022: €32.9 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 €63m in H1 2022.
Our operating profit for the six month period was €8.8 million (H1 2022:
€16.0 million). The Group's central costs for the period were €17.9
million (H1 2022: €15.9 million), which along with €1.2 million (H1 2022:
€1.0 million) of depreciation and amortisation gives total administrative
expenses of €19.1 million (H1 2022: €16.9 million).
Net finance costs for the first half increased significantly to €7.5 million
(H1 2022: €3.0 million), primarily impacted by a one-off release of €1.8m
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 €764.6 million (31
December 2022: €685.7 million).
Our land efficiency strategy continues to reduce our net investment in land
with €447.0 million of land inventory at 30 June 2023 (31 December 2022:
€458.5 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 €400 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 €317.6 million (31
December 2022: €227.2 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 €78
million with all ongoing developments due to close in H2 2023 or 2024. The
remaining work in progress across the business of approximately €240 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 €59 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 €63 million to shareholders and
bringing total shareholder returns to over €300m since May 2021.
Net debt at period end increased to €182 million (31 December 2022: €14
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 €350 million, consisting of a €100 million term
component and a revolving credit facility of €250 million, which is a direct
replacement of our previous €250 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
€'000 €'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 profit or loss 5 -
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 €'000 €'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
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'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
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'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 €'000 €'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/
(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 €1.4 million (2022: €12.9
million). The Group has an unrestricted cash balance of €36.7 million (31
December 2022: €82.9 million) exclusive of the minimum cash balance of
€25.0 million which the Group is required to maintain under the terms of its
debt facilities. The Group has committed undrawn funds available of €60.0
million (31 December 2022: €30.0 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
€'000 €'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
€'000 €'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
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'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 equipment 60,858 51,750
Intangible 1,730 1,770
assets
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
€'000 €'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 €58.9
million (30 June 2022: €30.5 million) with €34.9 million (31 December
2022: €32.1 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 of
Options Options
2023 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 €0.001 (2022:
€0.001) 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 €1.12 €1.16
Share price at grant date €1.12 €1.16
The exercise price of all options granted under the LTIP to date is €0.001
and all options have a 7- year contractual life.
(c) Expense recognised in profit or loss
The Group recognised an expense of €1.0 million (2022: €1.0 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
€'000 €'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 tax balances Balance Balance at
at 1 January Prior period Recognised in 30 June
2023 remeasurement the period 2023
€'000 €'000 €'000 €'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: €Nil).
11 Inventory 30 June 31 December
2023 2022
€'000 €'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
€7.0 million of employment costs incurred in the period have been
capitalised in inventory (June 2022: €6.7million).
12 Property, plant and equipment
During the period, the Group recognised total additions to property, plant and
equipment of €11.8 million (six months ended 30 June 2022: €13.3 million)
which included expenditure on land and buildings of €8.5 million (six months
ended 30 June 2022: €9.0 million), with €3.3 million (six months ended 30
June 2022: €4.3 million) invested in plant and machinery, fixtures and
fittings and computer equipment. Depreciation recognised in the period was
€2.3 million (six months ended 30 June 2022: €1.9 million). Net disposals
of plant and machinery in the period of €0.6m (six months ended 30 June
2022: €0.1 million).
During the period, the Group entered into new lease agreements for the use of
motor vehicles €0.2 million (six months ended 30 June 2022: €Nil).
13 Share capital and share premium
(a) Authorised share capital
As at 30 June 2023 and 31 December 2022 Number of
shares €'000
Ordinary shares of €0.001 each 1,000,000,000 1,000
Deferred shares of €0.001 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 €'000 €'000
Ordinary shares of €0.001 each 581,075,456 582 179,578
Deferred shares of €0.001 each 81,453,077 81 -
662,528,533 663 179,578
As at 31 December 2022 Number of Share capital Share premium
shares €'000 €'000
Ordinary shares of €0.001 each 638,131,722 638 179,416
Deferred shares of €0.001 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 €59.3 million. On 2 August 2023,
the Group completed the fourth share buyback programme repurchasing 63,813,172
shares for a cost of €62.7 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 €350.0 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. €240.0 million has been drawn
on the new debt facility (31 December 2022: €82.5 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 €969.7 million (31 December 2022: €875.8 million).
30 June 31 December
2023 2022
€'000 €'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 follows: 30 June 31 December
2023 2022
€'000 €'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
€25.0 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 €969.7 million (31
December 2022: €875.8 million).
(b) Net funds reconciliation
30 June 31 December
2023 2022
€'000 €'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 for Significant
identical assets & Significant other unobservable
liabilities observable inputs inputs Total
€'000 €'000 €'000 €'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
€'000 €'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
€'000 €'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 €350.0 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. €240.0 million has been drawn
on the new debt facility (31 December 2022: €82.5 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
€'000 €'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 €50.0 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
€25.0 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
€'000 €'000 €'000 €'000 €'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
€'000 €'000 €'000 €'000 €'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 €1.1 million (2022: €0.9 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 €100.0 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
€100.0 million with this stepping down to €50.0 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 value of hedging instruments recognised in OCI
Line items in profit or loss that includes hedge ineffectiveness
Hedge ineffectiveness recognised in profit or loss
Nominal amount
Assets Liability
(€'000) (€'000) (€'000) (€'000) (€'000) (€'000) (€'000) (€'000)
Interest rate swap 100,000 875 - 870 - Loss on derivative financial instruments 5 Financing 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 €nil. 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 €12.4 million (excluding stamp duty and legal fees).
Deposits totalling €7.4 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 €62.7 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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