Strong progress made with over 800 completions and 22% growth in closed and forward order book; on track to deliver full year EPS guidance
Glenveagh Properties PLC ("Glenveagh" or the "Group") is today issuing a trading update for the six months ended 30 June 2024 ahead of the publication of its H1 2024 results on 5 September 2024.
H1 2024 Performance Summary
- Over 800 units of the 2,700 full year target completed in H1 2024 (H1 2023: 333)
- Strong closed and forward order book of €1172m across our three business segments, increasing by 22% from €963m as at our AGM Trading Update on 2 May 2024. The closed and forward order book in the Suburban business of €710m, comprising 2,057 units, gives strong visibility on deliveries and revenue in H2 2024
- H1 revenue of approximately €150m (H1 2023: €172m). Urban performance reflected the completion of 510 units from existing forward fund transactions, where approximately 90% of revenue has already been recognised in prior periods. Suburban completions of 294 units (H1 2023: 333) were impacted by the scheduling of closings, which are now occurring early in the third quarter. Partnerships segment revenue was in line with expectations
- Suburban gross margin now expected to be in excess of 20% in FY 2024, compared to an underlying margin of 19.3% in FY 2023, driven by our enlarged scale, increased standardisation of product and processes, and continued integration of manufacturing
- Partnership sites comprising over 2,000 units now operating at scale, with revenue and profit to accelerate in H2 due to strong construction progress. A third Partnerships contract is now subject to final legal agreement, and we are in advanced negotiations on a fourth agreement, which combined will add approximately 1,000 units to our Partnerships pipeline
- Placed on the LDA framework panel to accelerate the delivery of mixed tenure homes. In advanced negotiations with LDA to commence the activation of our Urban portfolio in Cork Docklands via a forward fund transaction, with additional LDA partnership opportunities possible over time
- Progressing with forward fund transactions on two urban developments totalling 260 units, including the transaction noted in our AGM Trading Update in May
- Strong planning momentum with permissions granted for approximately 1,300 units in H1 with over 95% of units targeted for FY 2025 now with planning permissions granted
- Net debt increase as anticipated to approximately €250m (H1 2023: €182m), driven by increased WIP investment which will unwind as unit deliveries accelerate in H2
Outlook
- FY 2024 is a milestone year of growth for Glenveagh. Our strong forward order book, operational momentum, and continued progress in manufacturing underpins our full year EPS guidance which anticipates a more than doubling of EPS to approximately 17 cent (FY 2023: 8 cent), and Return on Equity target of approximately 15%
- We continue to invest in accordance with our capital allocation priorities, notably in land where we are now seen as the partner of choice for landowners in attractive Suburban and Partnership led locations. A number of significant land transactions are now being explored in this regard
- These acquisition opportunities, should they materialise, are in highly attractive locations that are fully aligned with the ambitions of national and regional planning policy. These will also underpin long-term operational growth and optimal returns for shareholders, supported by our resolute focus on enhancing Return on Equity and our commitment to manage the size of the landbank to below €400m over the long term. Once our capital allocation priorities are satisfied, we remain committed to returning any excess cash identified to shareholders
CEO Stephen Garvey commented:
“We continue to make excellent progress across our business and are firmly on track to meet our objectives for the year.
Our performance provides further evidence of our key strengths and capabilities – our planning and design expertise; our skilled and motivated workforce; our state-of-the-art vertically integrated manufacturing operation; and our ability to enhance and accelerate housing delivery at scale through greater standardisation while optimising modern methods of construction.
The targeted industry initiatives implemented by the Government via Housing For All has provided much momentum to new home output across the market delivering approximately 35,000 units per annum and strong commencement growth in 2024. Yet as we continue to scale up our activities and deliver more homes at pace, it is more important than ever that we build on the initiatives already in place and implement the structures required for the market to deliver over 50,000 units per annum. We know the enormous potential there is for advancing quality housing delivery through collaborative State and private sector projects, working in tandem with shared objectives, and the collective deployment of resources and capital.
Glenveagh’s ability to deliver great value, high-quality, sustainable homes at scale via our innovative and proven vertically integrated operation positions the business at the forefront of meeting the needs of a growing economy and rapidly expanding population, supported by motivated legislators and a strong fiscal position.”