27 May 2021
Glenveagh Properties PLC (“Glenveagh” or the “Group”) a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange is holding its AGM today at 10:30 a.m. at 15 Merrion Square North, Dublin 2. This statement comments on the Group’s year-to-date trading and outlook for 2021.
Update summary
Speaking today, Stephen Garvey, CEO, said: “Despite the unprecedented challenges posed by Covid-19, our business will deliver our target of 1,150 homes this year, with all now sold, signed or reserved. Our path to building 3,000 homes per year by 2024 is clear and we remain focused on delivering quality, sustainable homes that represent value for money for our customers.”
Trading Environment
The on-going accommodation shortage, combined with higher savings rates, has resulted in a strong market backdrop for the Group. As a result, all 1,150 units for 2021 have now been sold, signed, or reserved and the business will look to start building its order book for 2022 over the summer months. For new reservations in the period, HPI of 5% is evident across our Suburban schemes.
Following a period of restrictions on construction activity which began in early January, full operations resumed on the Group’s existing construction sites from the 12th of April. In addition, the business has commenced construction on three new suburban sites which will deliver units from 2022.
As a result of the ‘catch-up’ in activity levels following the full re-opening of residential construction and global commodity price increases, we are experiencing CPI of approximately 5% on current tenders which will largely impact on deliveries from 2022.
Partnerships
Earlier this week, the Group welcomed the decision of Fingal County Council to vote in favour of proceeding with the proposed development of 1,200 new homes at Ballymastone, near Donabate in North County Dublin.
The Group was selected by the council as their preferred bidder following a competitive public tender process. The project will deliver much-needed housing units in the area, across a mix of social and affordable homes together with homes for the private market.
We will now move forward with the formal planning application and would hope to be ready to begin development in 2022.
Land Acquisitions
The Group added to its development land portfolio in the period via eight new sites, two of which are adjacent to existing sites owned by the Group. Total consideration for these sites was approximately €48m (excl. fees and taxes) and can deliver over 1,900 units.
Inclusive of recent site acquisitions and our first Partnership scheme, the Group’s landbank is now approximately 17,000.
Funding and liquidity
Given the strong progress made in respect of non-core disposals, notwithstanding a continued investment in land and work-in-progress, the Group are in a strong liquidity position with available funds of €230m.
Capital Allocation and ROE Target
The Group remains disciplined in its approach to the allocation of capital with the overriding objective of enhancing shareholder value. Our capital allocation framework prioritises:
Furthermore, the Board believes that the opportunities beyond 2024 are significant. The Board will therefore ensure that the Group has the resources to deliver the 3,000 units per annum from 2024, as well as the ability to invest in the next phase of growth.
In doing so, we will maintain a strong balance sheet with prudent leverage not exceeding 15% of net assets.
Beyond this we will consider the return of excess capital to shareholders in a manner which retains flexibility to capitalise on future growth opportunities. In this regard, we will continuously assess our medium-term plans which take account of investment in the business, growth opportunities, cash generation and net debt.
Based on the above parameters, we have currently identified €75m as excess capital and the Board intends to commence a share buyback programme of up to €75m on 28 May 2021.
Executive Change
John Mulcahy, Executive Chairman, has informed the Board of his intention to transition to a non-executive Chairman role, effective from 1 January 2022.
John believes that the company is at the appropriate stage of its evolution for his role to transition to a non-executive capacity and will work closely with the other executive directors for the rest of the year to ensure a smooth transition of all executive duties.
Sustainability
The Group continues to make progress across our six Sustainability pillars. In the period Glenveagh achieved two certifications from the National Standards Authority of Ireland (NSAI) - ISO 14001 Environmental Management and ISO 45001 Occupational Health and Safety. The ISO 14001 certification will help ensure that our business is focused on reducing our environmental impact, supported by effective management processes. ISO 45001 demonstrates that we are committed to improving employee safety, reducing workplace risks, and creating better, safer working conditions. A further update on our Sustainability agenda progress will be provided at the time of our Interim Results.
Outlook
Our confidence in the future of our business is driving us to continue to pursue our growth strategy, delivering positive cash flows and ensuring we are well placed to continue to grow market share. This is underpinned by our strong balance sheet and capital allocation strategy, with a focus on delivering returns for our shareholders. Given the operational and demand backdrop being experienced, the Group remains confident in delivering 1,150 units in 2021.