TIDMGLV
RNS Number : 4274Q
Glenveagh Properties PLC
26 February 2021
26 February 2021
Glenveagh Properties plc
Final Results 2020
STRONG PERFORMANCE IN 2020 DEMONSTRATING OPERATIONAL
CAPABILITY
Glenveagh Properties plc ("Glenveagh" or the "Group") a leading
Irish homebuilder announces its Final Results for the year ended 31
December 2020.
SUMMARY FINANCIALS
Year ended Year ended Change
31 December 31 December
2020 2019
------------------------------------- ------------------------ ------------------------ ------------------
Units 700 844 (17%)
------------------------------------- ------------------------ ------------------------ ------------------
Total Revenue EUR'm(1) 232 285 (19%)
------------------------------------- ------------------------ ------------------------ ------------------
Core ASP EUR'k (2) 311 321 (3%)
------------------------------------- ------------------------ ------------------------ ------------------
Gross profit 9.5 51.5 (81%)
------------------------------------- ------------------------ ------------------------ ------------------
Underlying gross profit
EUR'm(3) 29.8 51.5 (43%)
------------------------------------- ------------------------ ------------------------ ------------------
Underlying profit before
tax EUR'm (3) 4.5 26.7 (83%)
------------------------------------- ------------------------ ------------------------ ------------------
Land EUR'm 619 668 (7%)
------------------------------------- ------------------------ ------------------------ ------------------
Work-in-progress EUR'm 202 173 17%
------------------------------------- ------------------------ ------------------------ ------------------
Net cash EUR'm 36 53 (32%)
------------------------------------- ------------------------ ------------------------ ------------------
ATTRACTIVE CUSTOMER OFFERING DRIVING RESERVATIONS AND
COMPLETIONS
-- Customer leads +169% year-on-year in H2 2020
-- Average weekly private reservation rate per site +31% year-on-year in H2 2020
-- Strong forward sales with 950(4) units currently sold, signed, or reserved (2020:475)
SECTOR LEADING CONSTRUCTION CAPABILITIES HIGHLIGHTED
-- Strong delivery performance with 700-unit sales completed
notwithstanding site closures due to Covid-19
-- 1,150 completions expected for 2021(5) despite restrictions on construction due to Covid-19
-- 23 cumulative site openings since IPO with a further six scheduled for 2021
RECOGNISED AS PARTNER OF CHOICE FOR INSTITUTIONS AND THE
STATE
-- Contracts exchanged with institutional purchaser for the sale
of 132 units across two developments at Bray and Leixlip
-- Contracts exchanged with Real I.S. for the sale of 134 units
at Marina Village, with 65 completed to date
-- Reservations in the year-to-date from Approved Housing Body
("AHB") for 85 cost rental units at two Suburban developments
DISCIPLINED CAPITAL MANAGEMENT AND GROUP REFINANCING
-- Accelerated sales of non-core units and sites to facilitate a
EUR100 million cash inflow within 12 months, resulting in a EUR20
million impairment
-- EUR54 million of non-core proceeds received to date with a
further EUR42 million currently contracted for 2021
-- On track for EUR100 million plus reduction in land with EUR91 million achieved to date
-- Targeted EUR202 million WIP investment underpins 1,150(5) deliveries in 2021
-- Robust operational delivery resulted in a net-cash position
of EUR36 million (2019: EUR53 million)
-- Current net cash remains broadly in line with year-end
position despite restrictions on construction and selling
activity
-- Completion of five-year EUR250 million refinancing comprising
a term component (EUR100 million) and a committed RCF (EUR150
million)
COMMITMENT TO SUSTAINABILITY
-- Sustainability report published outlining the Group's efforts
across our six sustainability pillars
-- Emissions reduction initiatives and corresponding 25% Scope 1
and 2 intensity reduction target outlined
-- Commitments, targets and measurable outcomes published across our sustainability landscape
OUTLOOK AND UPDATED GUIDANCE
In what is a challenging operating environment where the Group
has yet to exit a second period of restrictions on housing delivery
(with only social housing units progressing), our sector leading
delivery capability has enabled the sale of 700 units in 2020 and
allowed the Group to target 1,150(5) units for 2021.
Demand for housing from our customers (private, institutional,
and state agencies) continues to be strong and market fundamentals
are in the Group's favour, more so now than in prior periods.
Management intends to present updated guidance to shareholders
as part of our AGM on 27 May which will address the following:
capital allocation; leverage policy; and medium-term ROE targets
for the Group.
GLENVEAGH'S CHIEF EXECUTIVE STEPHEN GARVEY COMMENTED:
"The Group reacted quickly and effectively to the challenges of
the Covid-19 pandemic, with the safety and wellbeing of our people,
customers and local communities our priority. At the same time, we
delivered a robust outcome for 2020, completing 700 units and are
well-placed to deliver 1,150 units in 2021 despite restrictions on
our construction operations.
I believe that the current challenges have broadened the
long-term opportunity for the Group, with the fall-off in land
transactions and commencement activity within the industry in 2020
a signal of the continuing gap between supply and demand. Our well
capitalised platform which delivers across three business segments
with access and affordability at the heart of our offering is best
placed to help address this undersupply. And our ambition remains
to scale the business to 3,000 units by 2024.
In, our first standalone Sustainability Report since we became a
public company in 2017, we set out our approach to reducing Green
House Gas ("GHG") emissions from our own operations and our supply
chain, and the steps we are taking to reduce, re-use and recycle
raw materials and resources.
We also explain the measures we are taking to keep our people
and our contractors safe, to source responsibly, to attract, retain
and inspire our people, to put customers at the heart of everything
we do, and to create sustainable communities.
I would like to thank all our staff and industry partners who,
despite the challenges faced, ensured we continued to operate
safely and deliver for our customers and the communities in which
we operate".
RESULTS PRESENTATION
A conference call for analysts and investors will take place at
8.30am this morning to present the financial and operational
results followed by a Q&A session. Please pre-register at the
link below to ensure your attendance is confirmed ahead of the
commencement of the call:
-- Click this link to register for the conference
Notes
1. Includes EUR24m of non-core revenues in each of 2019 and 2020
2. Change due largely to mix effects
3. Pre-asset impairment of EUR20.3 million in H1 2020
4. At 25 February, all scheduled for delivery in 2021
5. Including core and non-core. Assumes restrictions on
residential construction end no later than 5 April
For further information please contact:
Investors: Media:
Glenveagh Properties plc Gordon MRM
Michael Rice (CFO) Ray Gordon 087 241 7373
Conor Murtagh (Director, Strategy David Clerkin 087 830 1779
& IR) glenveagh@gordonmrm.ie
investors@glenveagh.ie
----------------------------
Note to Editors
Glenveagh Properties plc, listed on Euronext Dublin and the
London Stock Exchange, is a leading Irish homebuilder.
We are dedicated to expanding access to high-quality new homes,
with a focus on first time buyers and young families. We believe
that everyone should have access to high quality homes in
flourishing communities across Ireland.
We are focused on three core markets - suburban housing, urban
apartments and partnerships with local authorities and state
agencies. Since IPO we have opened 23 sites, delivering more than
1,800 units with 1,150 in the pipeline for 2021 and 3,000 units per
annum from 2024. The landbank we've assembled can deliver housing
that is both in demand and affordable.
www.glenveagh.ie
GLENVEAGH PROPERTIES PLC: BUSINESS AND FINANCIAL REVIEW
1. BUSINESS REVIEW
i. Group Sales
a. Overview
The Group's focus on starter-homes and PRS in affordable rental
locations continued to produce positive results from a sales
perspective with Glenveagh completing the sale of 700 units in 2020
and delivering to date reservations or completions on 83% of unit
deliveries for 2021 notwithstanding the challenging operating
environment due to COVID-19.
Having deliberately directed construction resource to units
which were signed or reserved at the time our sites resumed
construction in May, 700 unit completions represented a robust
outcome for the period - a 17% decline on prior year despite the
significant disruption caused earlier in the pandemic.
As anticipated, the Group's approach of concentrating on signing
and reserving units in H1 with completions primarily occurring in
H2 resulted in a delivery profile that was H2 weighted with 577 or
82% of closings occurring in H2. Our current expectation is that
the weighting towards H2 in 2021 will be less pronounced despite
the restrictions on construction experienced this year(5) .
The Group's redeveloped digital strategy is continuing to ensure
that a high volume of potential home buyers view our homes,
delivering more qualified prospects for the sales team. This
strategy has also positively impacted website traffic and has
delivered a substantial increase in leads which grew by 169%
year-on-year in H2.
At the same time, prospective purchasers have increased levels
of deposits from savings and are also benefitting from the
expansion of the help-to-buy scheme from EUR20,000 to EUR30,000.
The combination of these two effects is both widening access to
housing at lower price points and shifting purchasing habits
towards homes with an additional bedroom for those with improved
affordability.
Our revised digital strategy, improved customer experience and a
widening of the pool of qualified purchasers helped increase
average weekly private reservation rates by 31% in H2.
House Price Inflation ("HPI") in the Group's starter-home
focused Suburban segment accelerated from a neutral or marginally
positive position in H1 2020 to 3% in H2 2020. Most of the impact
of the increase in HPI is likely to become visible from 2022 with
most closings during 2021 completed based on H1 2020 pricing.
b. Suburban Starter-Home Sales
The solid momentum on existing open sites carried forward from
2019 with strong completions achieved on our multi-year sites at
Cois Glaisin, Taylor Hill, Cluain Adain and Ledwill Park.
We were particularly pleased with the performance of our new
selling sites where reservations were ahead of expectations with
pricing moving in a positive direction following early launches.
New sites that delivered sales for the first time in 2020 included
Barnhall Meadows, Bellingsmore, Oldbridge Manor and Silver
Banks.
Starter-home sites which concluded in the period include Cnoc
Dubh and Knightsgate.
Given the strong reservations achieved to date, new site and
phase launches in 2021 will be focused on units delivering from
2022.
As outlined at the time of our interim results in September,
interest from institutions continued to increase across our
Suburban portfolio. To further drive momentum and return on capital
across our active sites, we identified available deliveries for
Suburban PRS for 2021 and 2022 and signed our first transaction in
December for 61 Suburban duplex and housing units in Leixlip, Co.
Kildare. The transaction is reflective of our efforts to maximise
velocity by selling units across a range of segments on our larger
sites which have the capability to deliver over 100 units per
annum.
c. Urban Sales
The PRS sector in Ireland came through 2020 with considerable
resilience and the sector is now recognised as a long term and
stable asset class, with low vacancy and voids even in times of
significant economic upheaval.
Investment into PRS in Ireland has continued with several
high-profile transactions by institutional investors who have an
existing presence in Ireland completing transactions at attractive
yields in recent months.
PRS transactions in the final six months of the year accounted
for EUR1.029 billion, 53% of the overall investment market in the
Dublin region with offices coming in at 29%, followed by industrial
at 13% and retail at 4% [i] .
Against this backdrop, in December, the Group exchanged
contracts for the sale of 71 Urban apartment units in Bray, Co.
Wicklow. The transaction is a further demonstration of Glenveagh's
ability to partner with institutions and government bodies to
deliver sustainable rental product in attractive locations.
The extent of institutional demand for high-quality residential
product has not diminished and the Group continues to expect to
forward fund and forward sell a further series of Urban apartment
developments.
d. Non-core and high-end developments
At the Group's development at Marina Village, contracts have
been exchanged with Real I.S. for 134 units, with 65 completed to
date. The balance of the units are expected to complete in H1
2021.
Reflecting the sales progress delivered to date at our high-end
sites, our Proby Place and Holsteiner Park developments are now
sold-out.
The selling prices achieved across the Group's non-core
disposals have been in line with management expectations.
ii. Partnerships
As outlined at the time of the Group's Investor Day 2020, we
have identified a significant pipeline of units that have the
potential to be tendered by local authorities in the coming
years.
Following the completion of a competitive tender process in
August, the Group was selected as preferred bidder on its first
Partnership scheme of approximately 800 units at Oscar Traynor
Road, Dublin. However, in November elected councillors on Dublin
City Council voted against the transaction proceeding.
Nevertheless, the Group remains committed to ensuring that a
solution can be brought forward that ensures much needed housing is
delivered on the site within the shortest possible timeframe.
Separately, our Partnerships team are actively tendering on
schemes which, if awarded, could deliver an additional 1,200 units
across multiple tenure types.
While the exact format of future housing schemes has yet to be
finalised, there is a significant need for housing on State lands
across a range of tenures, and a requirement for the private sector
to support that housing delivery. Given the Group's construction
capabilities, private market expertise, and strong balance sheet,
Glenveagh remains best placed to participate in these processes
going forward.
iii. Group Construction Progress
Introduction
The resilience of the Group's construction progress despite the
difficult circumstances demonstrates the high calibre and
commitment of the construction team assembled and the effectiveness
of the Group's strategy of working with a large pool of independent
sub-contractors across our sites.
2020 Summary
Reflective of Glenveagh's approach to prioritising the health
and safety of our people, significant time was spent during the
first closure period of April / May developing and implementing
protocols which would allow sites to return to operating
safely.
On 18 May the Group commenced the opening of approximately 80%
of active sites. While this gradual reopening impacted
productivity, particularly in the early stages, it facilitated the
embedding of the Covid-19 operating procedures across all our
sites. As a result, despite operating under more restrictive
operating procedures, productivity was running at approximately 80%
of pre-Covid-19 levels when all sites were back operational as
instances of Covid-19 on site remained very low throughout the
period. To further reduce the risks associated with the spread of
Covid-19, antigen testing has now been rolled-out across the
Group's operations.
A feature of the Group's construction operations over the last
12 months was increasing volume from our larger sites to minimize
site duration and further increase return on capital. As a result
of this approach and the closure of smaller non-core sites at Proby
Place and Holsteiner Park, the Group expects to deliver 1,150(5)
units in 2021 from a reduced number of sites vs 2020. This forms
part of the Group's approach to optimising it's investment in land
over the coming years and positioning newly opened sites in 2021 to
deliver significant volumes from 2022 onwards.
Despite the recent challenges, we have maintained and enhanced
the Group's infrastructure and capacity with the capability to
deliver 1,150(5) units in 2021 from existing construction sites
with all required planning permissions in place. In January 2021
construction was limited to private housing which could be
completed before 31 January and social housing which could be
delivered before the end of February. Following the introduction of
updated guidance in early February, at present, construction is
limited to social housing which can be completed before the end of
April. The expectation underpinning our 1,150 unit guidance for
2021 is that full operations will resume no later than 5 April.
Managing CPI
Notwithstanding the increasing availability of sub-contractors
to Glenveagh, the new Covid-19 operating protocols, when
implemented to a high standard (with minimum 2-metres social
distancing maintained), result in an additional cost of delivery.
Additionally, the industry was required to implement a 3% Sectoral
Employment Order wage increase from October which both the Group
and our sub-contractors had visibility from earlier in the year and
as such was reflected in pricing for future work during the
period.
However, with Covid-19 costs largely accounted for, a
significant portion of our costs locked-in for 2020 (approximately
80%), and more labour availability, we expect CPI in 2021 to be
approximately 3%.
In future periods the series of construction cost reduction
initiatives that are on-going will positively impact CPI. These
initiatives include the Group's timber frame factory and soil
recovery facility which are now both operational and will benefit
from a more predictable production schedule as sites re-open.
Furthermore, the Group's continued roll-out of standardised
house types combined with newly developed high-density housing
schemes currently in the planning processes will assist in managing
CPI into future periods.
iv. Planning
98% of the Group's lands are zoned residential with
approximately 4,300 available planned units.
The Group's progress on the planning front continues to convert
into lodgements and grants. During the period, the Group was
successful on 13 planning applications with a further 10 lodged and
awaiting a decision. The 23 applications combined will deliver over
3,600 planned units with 1,700 granted to date. Furthermore
approximately 6,000 units are in the design process
pre-lodgement.
Suburban Planning
Of the planning applications lodged in the period, 18 relate to
the Suburban segment and include units at Taylor Hill, Ruxton Oaks,
Oldbridge Manor, Ledwill Park, The Hawthorns, and Mount Woods.
An increasing feature of suburban planning is a requirement to
drive densities upwards to 40 units per hectare. To deliver the
best customer proposition which complies with these requirements,
the planning team have developed new innovative own-door
high-density suburban housing solutions which negate the need for
apartments on several of the Group's sites. Subject to planning
approval, the Group expects the first of such schemes to be
available from 2022.
Urban Planning
In 2020 we also progressed our Urban development portfolio in
terms of planning applications:
-- A planning application was granted in January on a portion of
the non-residential elements of the Castleforbes site (hotel and
office) where Glenveagh has entered a pre-let transaction with
Whitbread plc for a proposed 262-bedroom hotel ranging in height
from 6-9 storeys. The detailed design of this Hotel is complete in
anticipation of a start date on site in 2021;
o A planning application for a PRS scheme through the SHD
process was also made in respect of the remainder of the
Castleforbes site. The scheme comprises approx. 702 units and 4,217
sqm of non-residential uses including food and beverage offering, a
creche, cultural building and live / work units. A decision is
expected in Q2 2021;
-- In December an application was submitted at the Group's site
in Cork Docklands for 1,002 units;
-- A site which the Group acquired in H1 2020, Cluain Mhuire,
Blackrock, Co. Dublin is already in the planning process (141
units) and a decision is expected in Q2.
v. Development Land Portfolio Management
Overall transactional activity in the land market in Ireland was
down significantly in 2020 as a continuation of recent trends was
exacerbated by Covid-19. In total, 65 land sales were completed
totalling approximately EUR511 million - less than half of the
volume traded in 2019 [ii] . This trend is reflective of a market
where it is becoming increasingly difficult for private market
participants to source funding from alternative lenders, further
reducing the number of potential purchasers over the last 12
months.
The Group continues to take a disciplined and strategic approach
to land acquisitions concentrating on opportunities which have the
potential to enhance the Group's return on capital. With our net
euro investment in land now complete, we are focused on refining
our development land portfolio to drive return on capital and
position the Group to deliver its medium and long-term output
targets.
In 2020 the Group strategically added to its development land
portfolio via three [iii] attractive land acquisitions totalling
EUR16 million (excl. stamp duty and acquisition costs) capable of
delivering 475 units).
Furthermore, while the land market in Ireland continues to
mature, we are continuously looking at ways to reduce site duration
and improve return on capital. With that approach in mind, the
Group has exchanged contracts on its first two 'subject to
planning' transactions totalling approximately EUR9 million (227
units).
Looking ahead, three further sites are under negotiation or have
exchanged contracts which benefit from an existing planning
permission, allowing the Group to minimise site duration and
maximise ROCE.
vi. Sustainability Agenda Progress
Meeting the demand for affordable housing is one part of the
story; doing so responsibly is the other. We are taking the
necessary steps to deliver the social benefit of affordable housing
in a way which minimises impact on the environment, including using
land in the most efficient way, driving down waste, reusing
resources, reducing emissions during construction and delivering A
rated energy efficient homes across all our developments.
During 2020 we began to put in place systems to measure and
reduce our impact on the environment - including reporting Scope 1
and Scope 2 emissions - and to ensure we continue to operate in a
socially responsible and ethical way.
In a preview of the Group's annual report, we have published the
sustainability report, where we set out our approach to reducing
GHG emissions from our own operations and our supply chain, and the
steps we are taking to reduce, re-use and recycle raw materials and
resources.
As part of our environmental strategy, we have also set a 25%
emissions intensity reduction target for 2025 with a view to fully
align our following target with a global aspiration of net zero
greenhouse gas emissions by 2050.
We have revamped our reporting to align with Sustainable
Accounting Standards Board ("SASB") and support the Task Force on
Climate-related Financial Disclosures (TCFD). We also reported our
approach to the management of environmental risk via CDP for the
first time in FY20.
Further progress has been made with the commencement of the
integration of ISO 14001 - the international standard for
environmental management - into our operations, with a view to
achieving certification in 2021. As part of this process, we have
developed and documented a comprehensive Environmental Management
System.
2. FINANCIAL REVIEW
i. Group performance
Total unit completions for the year were 700 units (2019: 844
units), with 665 units delivered by our core sites and 35 units
delivered by our non-core sites.
Total group revenue was EUR232.3 million (2019: EUR284.6
million) for the year which primarily relates to unit sales of
EUR230.9 million (2019: EUR280.0 million) generated from the 700
unit completions. The Group generated core revenue of EUR208.7
million predominantly from 665 core units, marginally ahead of our
amended target of 650 units. The Average Selling Price on our core
units was EUR311k (2019: EUR321k) reflecting the Group's focus on
Suburban starter-home schemes.
Glenveagh delivered the 665 core units from 15 selling sites and
finished the year with 544 ([iv]) core units contracted or reserved
for 2021 (2019: 240) providing further evidence of the strong
demand and maturing sales profile within the business.
In the first half of the year, management reviewed the Group's
non-core assets, which make up less than 2% of our overall
landbank, in the context of its overall Group strategy. The
decision was made to accelerate the sale of the Group's non-core
units and sites to maximise cash generation. This facilitated a
substantial exit from non-core units and sites within 12 months
(versus more than 48 months at historic private reservation rates),
delivering a net cash inflow of more than EUR100 million.
The decision to accelerate the sale of non-core units and sites
resulted in an asset impairment charge of EUR20.3 million. Of the
Group's net realisation target of more than EUR100 million, EUR24
million was received in 2020 with a further EUR70 million
contracted or reserved at year end for 2021.
The Group's gross profit for the year amounted to EUR9.5 million
(2019: EUR51.5 million) with an overall gross margin of 4.1% (2019:
18.1%), which includes both the one-off impairment of EUR20.3
million as well as the disposal of non-core units.
The underlying core gross margin is 14.1% and reflects costs
associated with our Covid-19 safety measures and operating
protocols, in addition to negative mix effects as units at the
Group's new higher margin sites were delayed due to Covid-19. A
significant portion of the mix effect and the impact of increased
Covid-19 costs are expected to abate from 2021.
Gross Margin for 2021 is expected to increase to in excess of
16% with continued margin progression in 2022 towards our current
spot portfolio margin of 17%.
Our operating loss was EUR12.7 million (2019: profit of EUR29.4
million), which includes the one-off impairment of EUR20.3 million.
Pre this impairment, the Group generated an underlying operating
profit of EUR7.6 million and an operating margin of 3.3%. The
Group's central costs for the year were EUR20.2 million (2019:
EUR20.7 million), which along with EUR2.0 million (2019: EUR1.4
million) of depreciation and amortisation gives total
administrative expenses of EUR22.2 million (2019: EUR22.1
million).
Net finance costs for the year were EUR3.0 million (2019: EUR2.7
million), primarily reflecting interest on the drawn portion of our
Revolving Credit Facility, commitment fees on the undrawn element
of the facility and arrangement fees, which are being amortised
over the life of the facility.
Overall, the Group delivered a loss after tax of EUR13.9 million
(2019: profit of EUR22.8 million) and a loss per share of 1.60 cent
(2019: earnings per share of 2.62 cent).
ii. Balance Sheet
The Group's net asset value has decreased to EUR853.5 million at
31 December 2020 (2019: EUR866.5 million) due to the losses
incurred in the year.
The Group has decreased its land portfolio to EUR619.3 million
(2019: EUR667.8 million) at 31 December with the Group showing
significant progress in reducing its net investment in land as part
of its overall commitment to improve Balance Sheet efficiency.
The Group has continued to invest in work in progress in line
with the growth strategy of the business with a year-end balance of
EUR201.9 million (2019: EUR172.7 million). This well invested work
in progress is fully supported by contracted or reserved units and
will allow us to close these units relatively quickly once the
current lockdown measures are lifted.
The Group's non-core developments contribute EUR58.2 million to
work in progress at 31 December and this significant balance
highlights the importance of the strategy to accelerate the exit
from these completed non-core sites and generate in excess of
EUR100 million in cash. The Group's core work in progress is
EUR143.7 million and spread across 18 active construction sites,
which equates to an average work in progress figure of less than
EUR8 million per site, which is in line with management's
expectations for an efficient starter home development.
The Balance Sheet now reflects the approval by the Irish High
Court of the Group's application to redesignate EUR700.0 million of
Share Premium to Retained Earnings to allow for potential future
distributions under section 117 of the Companies Act 2014.
iii. Cash flow
The Group had a net cash inflow in the year of EUR44.1 million
(2019: outflow of EUR37.5 million) and ended the year in a net cash
position of EUR36.0 million (2019: EUR53.1 million).
The business reduced its net cash outflow from operating
activities to EUR10.7 million (2019: EUR69.6 million), which is a
strong performance given the Covid-19 restrictions in place during
the year. The Group had a net cash inflow from inventory for the
year of EUR0.1 million (2019: Cash outflow of EUR118.6 million)
with a net spend of EUR38.8 million on work in progress and a net
cash inflow of EUR38.9 million from land, which is in line with the
Group's strategy of continued investment in work in progress and
the reduction in our net investment in land.
The net cash position of EUR36.0 million (2019: EUR53.1 million)
at year-end is reflective of EUR137.3 million of cash, EUR99.9
million of debt from our Revolving Credit Facility and EUR1.3
million of lease liabilities. This strong cash position at year end
demonstrates that the business managed its financing through the
various Covid-19 challenges very effectivel y and leaves the
business with a strong balance sheet for the continued growth of
the business.
iv. Group financing
Subsequent to the year end, the Group finalised a new 5-year
debt facility. The facility is EUR250 million in total, consisting
of EUR100 million term debt and a committed Revolving Credit
Facility of EUR150 million. To ensure the optimal balance and
structure within the syndicate, the Group increased the number of
financial institutions participating in the syndicate from three to
four. Notwithstanding the difficult current climate, the Group is
pleased with the pricing obtained in the market, which was broadly
in line with the existing facility while also achieving an
extension in the tenor of the facilities to five years.
The structure and quantum of this facility will support the
significant growth of the business over the next 5 years and will
provide the flexibility and funding to allow the business to reach
its target of 3,000 units per annum.
The quantum available to the Group and the significant interest
from financial institutions during the refinancing process
continues to demonstrate that Glenveagh is a very strong
counterparty and a partner of choice within the industry.
Principal risks and uncertainties
The Board has undertaken a review of the principal risks and
uncertainties facing the business particularly in the context of
the Covid-19 pandemic which will continue to influence the Group's
risk management outlook in the coming months. This has resulted in
changes to certain risks identified in the 2019 annual report as
well as the addition of a new overall business risk related to the
pandemic. Set out below are the Group's updated principal risks and
uncertainties which could have a material risk on the Group
achieving our strategic objectives together with the key mitigation
considerations relevant to each risk.
Our risk Risk or uncertainty Key Mitigating Considerations
category and potential impact
External Covid-19 The Group has increased the
risk frequency of Executive Committee
Covid-19 has exposed meetings and Board updates
the Company to the to respond to the pandemic
impact of a macro risk with Covid-19 being a standing
related to an economic agenda point at all meetings.
slowdown and specific
risks as a result of The Group has increased the
government measures frequency of cashflow and sales
taken to contain the reporting to facilitate accurate
virus impacting availability business continuity planning.
and supply of materials
and labour, a reluctance The Group has updated and will
of buyers to transact continue to review on an on-going
in the current environment basis forecasts, cashflows
and interruption to and estimates about future
the business operations business performance.
due to the absence
of staff and sub-contractors. The Group has kept in constant
contact with Government and
Local Authority representatives
in addition to reviewing Government
responses to Covid-19.
The Group has put in place
a transparent and timely communications
strategy to update the market
and all stakeholders (employees,
sub-contractors, suppliers,
investors etc.) of the business
in relation to the plans put
in place by the Group in response
to Covid-19.
The Group has put in place
a number of specific actions
related to on-site health and
safety and construction, project
management, sales activity
and office operations which
are outlined in the risk specific
to each area.
--------------------------------- -----------------------------------------
External Adverse Macroeconomic The Group aims to maintain
risk Conditions a reasonable but limited stock
of land (c.5 years). The Group
Glenveagh operates has made significant progress
in a property market in 2020 in reducing its net
that is cyclical by investment in land in line
nature which can lead with strategy.
to volatility of property
values and market conditions. The Group avoids any long-term
exposure through strict land
Geopolitical uncertainty acquisition policies which
(including Brexit) are reviewed and updated on
could lead to a potential a regular basis to meet market
adverse impact on the sentiment and demand.
Group's asset valuation
and financial performance The Group has a robust acquisition
due to factors such policy and approval process
as slowdown in economic in place to ensure the best
growth, increased interest value is achieved on assets
rates and decline in and that they are aligned to
consumer confidence. the strategic objectives of
the Group.
The Urban and Partnerships
segments will assist in reducing
the cyclical nature of the
business through the delivery
of apartments and houses for
the rental market as well as
schemes with local authorities
or other government bodies.
Management and the Board actively
monitor the geopolitical risks
and seeks expert industry advice
where required.
--------------------------------- -----------------------------------------
External Mortgage Availability Management and the Board continuously
risk and Affordability monitor government policy around
mortgage availability.
Glenveagh understands
that affordable mortgage The Group regularly engages
finance is a crucial with mortgage advisors to gain
funding source for valuable insights into the
buyers in the residential market and the impact of regulatory
market in Ireland. changes impacting mortgage
lending.
Constraints on the
availability and costs The Group has increased the
of mortgage financing frequency of cashflow and sales
and any adverse impact reporting to facilitate accurate
on this as a result business continuity planning.
of Covid-19 may have
a negative impact on The Group has increased the
sales of the Group's frequency of Executive Committee
products due to a potential meetings and Board updates
decline in customer to respond to the pandemic
demand and ultimately with Covid-19 being a standing
the profitability of agenda point at all meetings.
the Group.
The Group's strategy can facilitate
the adjustment of delivery
velocity if required.
--------------------------------- -----------------------------------------
External Adverse changes to The Group's management and
risk government policy and Board monitor government policy
regulations on an ongoing basis.
A change in the domestic Group management's site by
political environment site forecasts are conservative
and/or government policy by nature and allow for expected
(including tax legislation, negative changes in government
support of the housebuilding policy and regulation.
sector, Part V allowance
and first-time buyer The Group has the capability
assistance) could adversely to redesign developments as
affect the Group's appropriate should it be required.
financial performance.
The Group will consider alternative
sales strategies where required
to align to any changes in
the domestic political environment.
--------------------------------- -----------------------------------------
Operational Availability and increased The Group has fixed cost contracts
risk cost of materials and in place with sub- contractors
labour and suppliers where possible.
Shortages or increased The Group has the potential
costs of materials to expand its purchasing network
and labour could lead should it be required and maintains
to an increase in construction flexibility by not having an
costs and delays in overreliance on any one supplier.
the completion of homes.
The Group engages in financial
As a result of Covid-19, planning and continuously monitors
there is a risk to and reviews budget versus actual
the Group of shortages costings.
in skilled sub-contractors
which are critical The Group continuously evaluates
to construction operations partnerships at a site level
and the delivery of with outsource labour providers
units in line with to ensure agreements are in
the Group's delivery line with the market rates.
matrix.
The Group has strong relationships
If the Group is unable across the construction industry
to control its costs in Ireland and with our existing
or pass on any increase and wider sub-contractor network.
in costs to the purchasers
of the Group's product, The Group's size and reputation
source the requisite in the market remains highly
labour, and / or renegotiate attractive to sub-contractors
improved terms with and suppliers.
suppliers and contractors,
the Group's margins
may reduce which could
have an adverse impact
on the Group's business
operations and financial
condition.
--------------------------------- -----------------------------------------
Operational Inadequate Project The Group has fixed cost contracts
risk Management in place with sub-contractors
and suppliers where possible.
Inadequate oversight
of the cost and delivery The Group employs highly experienced
of development projects and qualified commercial and
adversely affects expected finance teams who oversee a
return on investment. robust financial planning process
for each development and continuously
The delivery matrix monitor and review the budget
of development projects versus actual costings. This
could be impacted by includes regular updates to
the spread of Covid-19. the Executive Committee and
Board of Directors
The organisational structure
of the Commercial department
ensures oversight of all site
costs as the business matures
in line with the business plan.
The Group's integrated ERP
system provides commercial
reporting, automated payment
and sub-contractor accrual
functions. The system eliminates
manual processes and provides
for real time reporting for
more accurate decision making
at a project, sub project,
element and cost object level.
The Group has updated and will
continuously review all site
delivery matrix and update
these as necessary to reflect
the impact of Covid-19.
The Group has engaged in continuous
communications with our sub-contractor
network and supply chain to
ensure they are aware of the
Group's plans and to reduce
the impact of current restrictions
and to ensure a smooth return
to normal operations.
--------------------------------- -----------------------------------------
Operational Insufficient health The Group ensures all staff
risk and safety procedures are appropriately and adequately
trained.
Glenveagh is focused
on the wellbeing of The Group has a Grade A Safe-T
its employees, contractors certificate which is the industry
/ sub-contractors and Health & Safety auditing standard.
the general public.
The Group undertakes monthly
The Group understands Health & Safety audits through
that failure to implement both internal and external
and adhere to the highest parties.
standard of Health
& Safety practices The Group circulates a weekly
can lead to a significant incident monitoring report
risk to health, safety, to construction management.
and welfare of staff
and other parties resulting The Group has undertaken significant
in increased costs investment to implement best
and negatively impact practice and public health
the timely and safe advice for the return to working
delivery of a project. on site and in the office in
response to Covid-19.
Additionally, any failure
in health or safety There is adequate insurance
performance or compliance, cover in place to deal with
including delays in any
responding to changes claims that may arise from
in health & safety claims due to injury.
regulations may result
in financial and /
or other penalties.
--------------------------------- -----------------------------------------
Operational Employee development The Group offers competitive
risk and retention and attractive remuneration
The success of the packages and where appropriate
Group is dependent long-term interest alignment.
on recruiting, retaining
and developing highly The Group offers the opportunity
skilled, competent for advancement through creating
people. The Group is a positive working environment.
aware that loss of
key personnel and/ There is a Graduate Programme
or the inability to in place across all departments
attract / retain adequately to develop and ensure progression
skilled and qualified within the business for all
people could lead to: employees.
-- Poor operational
and financial performance The Group has in place a performance
-- Inadequate staff management and appraisal process
knowledge and understanding which includes open channels
of policies & procedures. of communication and feedback
-- Reduced control and development plans for employees.
environment.
-- Insufficient transfer The Group is developing a succession
of knowledge amongst plan to ensure continuity of
staff to allow for quality service and knowledge
succession planning. retention.
-- Demotivated staff;
and The Group has a dedicated Learning
-- Failure to achieve/ and Development manager with
deliver on the Group's a focus on developing and deploying
strategic objectives. CPD and upskilling of skilling
of staff.
The Group has implemented flexible
working arrangements for staff
following the Covid-19 pandemic
as well as offering support
to ensure employees have suitable
working from home arrangements.
The Group ensures that all
staff have access to relevant
internal and external training.
--------------------------------- -----------------------------------------
Operational Data protection and The Group's Head of IT leads
& reputational cyber security the Group's initiatives in
risk mitigating the risk of cyber
The Group uses information and data security breaches
technology to perform further.
operational and marketing
activities and to maintain The Group has a personal data
its business records. retention policy in place to
appropriately manage the information
A cyber-attack could held.
lead to potential data
breaches or disruption The Group uses internal and
to the Group's systems external back-up systems under
and operations which the supervision of a third-party
in turn could lead service provider pursuant to
to damage to the Group's agreements that specify certain
reputation and potential security and service level
loss of customers and standards.
revenue.
The Group has in place sensitive
Any security or privacy data password protection and
breach of the information all such information is stored
technology systems in secure locations and fully
may also expose the encrypted systems.
Group to liability
and regulatory scrutiny. The Group is proactively managing
the cyber threat, is continuously
monitoring and evolving systems
internally and have engaged
a third party to assist and
ensure that best practices
are implemented to identify
and remediate any potential
weaknesses or control gaps.
--------------------------------- -----------------------------------------
Reputational Decline in Product The Group has in place robust
risk Quality quality control procedures
and strictly adheres to Building
Delivery of the highest Control (Amendment) Regulations
quality homes is central requiring (among other stipulations)
to the success of Glenveagh. the appointment of suitably
qualified engineers and architects.
The Group continues
to focus on ensuring The Group has a dedicated Quality
our products meet the Manager to manage and report
desired standards and on site quality.
is aware that significant
negative incidents The Group has a dedicated Environmental
including construction Officer to advise on the business
defects, material environmental challenges from an environmental
liabilities (including perspective on a daily basis.
hazardous or toxic
substances), quality The Group has an experienced
deficiencies or perceptions and professional support team
thereof could adversely in place.
impact the Group's
sales and possibly The Group has a dedicated customer
result in litigation service after-sales team.
cases against the Group
with a potentially
negative impact on
the Group's brand and
customer satisfaction
which are crucial to
the Group's performance.
--------------------------------- -----------------------------------------
S
Gle nveagh Properties PLC
Consolidated statement of profit or
loss and other
comprehensive income
For the financial year ended 31
December 2020 2020 2019
Before
exceptional Exceptional
Note Total items items Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 10 232,296 284,637 - 284,637
Cost of sales (202,530) (233,150) - (233,150)
Impairment of Inventories 20 (20,291) - - -
Gross profit 9,475 51,487 - 51,487
Administrative expenses 11 (22,188) (21,005) (1,125) (22,130)
Operating (loss) / profit (12,713) 30,482 (1,125 29,357
Finance expense 12 (3,033) (2,666) - (2,666)
(Loss) / profit before tax 13 (15,746) 27,816 (1,125) 26,691
Income tax credit / (charge) 17 1,844 (3,944) 93 (3,851)
(Loss) / profit after tax attributable
to the
owners of the Company (13,902) 23,872 (1,032) 22,840
Other comprehensive income - - - -
Total comprehensive (loss) / income for
the year
attributable of the owners of the
Company (13,902) 22,840
Basic (loss) / earnings per share
(cents) 16 (1.60) 2.62
Diluted (loss) / earnings per share
(cents) 16 (1.60) 2.62
Glenveagh Properties PLC
Consolidated balance sheet
as at 31 December 2020
Note 2020 2019
EUR'000 EUR'000
Assets
Non-current assets
Property, plant and equipment 18 21,087 18,142
Intangible assets 19 712 944
Deferred tax asset 17 1,415 128
Restricted cash 24 708 1,500
23,922 20,714
Current assets
Inventory 20 821,169 840,487
Trade and other receivables 21 14,605 12,241
Income tax receivable 21 -
Cash and cash equivalents 27 137,276 93,224
973,071 945,952
Total assets 996,993 966,666
Equity
Share capital 26 1,052 1,052
Share premium 26 179,281 879,281
Retained earnings 629,044 (57,821)
Share-based payment reserve 44,129 44,035
Total equity 853,506 866,547
Liabilities
Non-current liabilities
Lease liabilities 28 287 319
287 319
Current liabilities
Trade and other payables 22 42,237 56,218
Income tax payable - 3,737
Loans and borrowings 23 99,934 39,569
Lease liabilities 28 1,029 276
143,200 99,800
Total liabilities 143,487 100,119
Total liabilities and equity 996,993 966,666
Michael Rice Stephen Garvey 25 February 2021
Director Director
Glenveagh Properties PLC
Consolidated statement of changes in equity
for the financial year ended 31 December 2020
Share Capital Share-based
Ordinary Founder Share payment Retained Total
shares shares premium reserve earnings equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1 January 2020 871 181 879,281 44,035 (57,821) 866,547
Total comprehensive loss for the
financial year
Loss for the financial year - - - - (13,902) (13,902)
Other comprehensive income - - - - - -
871 181 879,281 44,035 (71,723) 852,645
Transactions with owners of the Company
Equity-settled share-based payments - - - 861 - 861
Lapsed share options (Note 15) - - - (767) 767 -
Share premium reduction and transfer
to distributable reserves (Note 26) - - (700,000) - 700,000 -
- - (700,000) 94 700,767 861
Balance as at 31 December 2020 871 181 179,281 44,129 629,044 853,506
Glenveagh Properties PLC
Consolidated statement of changes in equity
for the financial year ended 31 December 2019
Share Capital Share-based
Ordinary Founder Share payment Retained Total
shares shares premium reserve earnings equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1 January 2019 871 181 879,281 43,443 (80,661) 843,115
Total comprehensive income for the
financial year
Profit for the financial year - - - - 22,840 22,840
Other comprehensive income - - - - - -
871 181 879,281 43,443 (57,821) 865,955
Transactions with owners of the Company
Equity-settled share-based payments - - - 592 - 592
- - - 592 - 592
Balance as at 31 December 2019 871 181 879,281 44,035 (57,821) 866,547
Glenveagh Properties PLC
Consolidated statement of cash flows
For the financial year ended 31 December 2020
2020 2019
Note EUR'000 EUR'000
Cash flows from operating activities
(Loss) / profit for the financial year (13,902) 22,840
Adjustments for:
Depreciation and amortisation 2,031 1,391
Impairment of Inventories 20 20,291 -
Finance costs 12 3,033 2,666
Equity-settled share-based payment
expense 15 861 592
Tax (credit) / charge 17 (1,844) 3,851
Profit on disposal of property, plant
and equipment 13 (33) (456)
10,437 30,884
Changes in:
Inventories 124 (118,605)
Trade and other receivables (2,343) (1,036)
Trade and other payables (13,916) 21,346
Cash used in operating activities (5,698) (67,411)
Interest paid (2,638) (2,472)
Tax (paid) / refund (3,201) 276
Transfer from restricted cash 24 792 -
Net cash used in operating activities (10,745) (69,607)
Cash flows from investing activities
Acquisition of property, plant and
equipment 18 (3,982) (7,747)
Acquisition of intangible assets 19 (174) (491)
Proceeds from the sale of property,
plant and equipment 41 1,160
Net cash used in investing activities (4,115) (7,078)
Cash flows from financing activities
Proceeds from loans and borrowings 23 70,000 120,000
Repayment of loans and borrowings 23 (10,000) (80,000)
Payment of lease liabilities (1,088) (792)
Net cash from financing activities 58,912 39,208
Net increase / (decrease) in cash and
cash equivalents 44,052 (37,477)
Cash and cash equivalents at the beginning
of the year 93,224 130,701
Cash and cash equivalents at the end
of the year 137,276 93,224
Glenveagh Properties PLC
Notes to the consolidated financial statements
For the financial year ended 31 December 2020
1 Reporting entity
Glenveagh Properties PLC ("the Company) is domiciled in the
Republic of Ireland. The Company's registered office is 15 Merrion
Square North, Dublin 2. These consolidated financial statements
comprise the Company and its subsidiaries (together referred to as
"the Group") and cover the financial year ended 31 December 2020.
The Group's principal activities are the construction and sale of
houses and apartments for the private buyer, local authorities and
the private rental sector.
2 Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS's) as adopted by the European Union which comprise standards
and interpretations approved by the International Accounting
Standards Board (IASB), and those parts of the Companies Act 2014
applicable to companies reporting under IFRS and Article 4 of the
IAS regulation.
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
The preparation of the Group's financial statements under
International Financial Reporting Standards ("IFRS"), as adopted by
the European Union, requires the Directors to make judgments and
estimates that affect the application of policies and the reported
amounts of assets, liabilities, income, expenses and related
disclosures. Actual results may differ from these estimates.
Critical accounting judgements
Management applies the Group's accounting policies as described
in Note 8 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
4 Use of judgements and estimates (continued)
Key sources of estimation uncertainty (continued)
(a) Carrying value of work-in-progress, estimation of costs to
complete and impact on profit recognition (continued)
accordingly the margin recognised reflects these evolving
assessments, particularly in relation to the Group's long-term
developments.
Covid-19 was declared a global pandemic by the World Health
Organisation during the year and the impact of the pandemic has
been considered in the Group's assessment of the carrying value of
its inventories at 31 December 2020, particularly with regard to
the potential implications for future selling prices, development
expenditure and construction programming. While the exact impact of
Covid-19 remains uncertain, 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.
As part of the assessment, which included a consideration of the
market capitalisation of the Group and the macro-economic factors
that influenced such market capitalisation, the Group has
re-evaluated its most likely exit strategies on its remaining high
end, private customer units in the context of the current market
environment and reflected these in its net realisable value
calculations at the balance sheet date. The revised sales strategy
on these developments is to exit within 12 months versus in excess
of 48 months at previously forecasted sales rates. The results of
this exercise required an impairment charge on two of our higher
Average Selling Price ("ASP") active sites and a small number of
other higher ASP sites in the portfolio where construction has not
commenced. Further detail in respect of the impairment charge for
the year is included in Note 20.
Management have performed a sensitivity analysis to assess the
impact of a change in estimated costs for developments on which
sales were recognised in the year. A 1% increase in estimated costs
recognised in the year, which is considered to be reasonably
possible, would reduce the Group's gross margin by approximately
58bps.
5 Measurement of fair values
A number of the Group's accounting policies and disclosures
require the measurement of fair values, both for financial and
non-financial assets and liabilities. Fair value is defined in IFRS
13, Fair Value Measurement, as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
When measuring the fair value of an asset or liability, the Group
uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based
on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair
values is included in the following notes:
-- Note 15 Share-based payments; and
-- Note 27 Financial instruments and financial risk management.
6 Changes in significant accounting policies
A number of amendments to standards (IFRS 3 Business
Combinations and Interest Rate Benchmark Reform) are effective from
1 January 2020 but they do not have a material effect on the
Group's financial statements.
(i) New significant accounting policies
(a) Accounting for government grants and disclosure of
government assistance
Grants that compensate the group for expenses incurred are
recognised in the consolidated statement of profit or loss and
other comprehensive income by offsetting against expenses on a
systematic basis in the periods in which the expenses are
recognised, unless the conditions for receiving the grant are met
after the related expenses have been recognised. In this case, the
grant is recognised when it becomes receivable.
There have been no other changes to significant accounting
policies during the financial year ended to 31 December 2020.
(ii) Standards not yet effective
(b) Interest rate benchmark reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4, and IFRS 16)
The amendments address issues that might affect financial
reporting as a result of the reform of an interest rate benchmark,
including the effects of changes to contractual cashflows, arising
from the replacement of an interest rate benchmark with an
alternative benchmark rate. The amendments provide practical relief
from certain requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 relating to:
- changes in the basis for determining contractual cash flows of
financial assets, financial liabilities and lease liabilities.
The amendments will require an entity to account for a change in
the basis for determining the contractual cash flows of a financial
asset or financial liability that is required by interest rate
benchmark reform by updating the effective interest rate of the
financial asset or financial liability.
At 31 December 2020, the Group has EUR250.0 million (of which
EUR125.0 million is committed) EURIBOR secured bank loans that will
be subject to IBOR reform. The Group expects that the interest rate
benchmark for these loans will be changed to Euro Short-Term Rate
(EURSTR) in 2021 and that no significant modification gain or loss
will arise as a result of applying the amendments to these
changes.
The amendments will require the Group to disclose additional
information about the entity's exposure to risks arising from
interest rate benchmark reform and related risk management
activities.
The Group plans to apply the amendments from 1 January 2021.
Application will not impact amounts reported for 2020 or prior
periods.
6 Changes in significant accounting policies (continued)
(iii) Other standards
The following new and amended standards are not expected to have
a significant impact on the Group's consolidated financial
statements.
- IFRS 16 Leases: Covid-19 related rent concessions (amendment)
- IAS 16 Property, Plant and Equipment: Proceeds for intend use (amendment)
- IFRS 3 Business Combinations: Reference to conceptual framework (amendment)
- IAS 1 Presentation of Financial Statements: Reference to Conceptual Framework (amendment)
7 Going concern
The Group has recorded a loss before tax of EUR15.7 million
(2019: Profit of EUR26.7 million) which included a non-cash
impairment charge of EUR20.3 million (2019: EURNil) relating to the
Group's inventory balance. The Group has a cash balance of EUR137.3
million (31 December 2019: EUR93.2 million) and under the terms of
its current debt facility, the Group is required to maintain a
minimum cash balance of EUR25.0 million. It has committed undrawn
funds available of EUR25.0 million (31 December 2019: EUR85.0
million) with a further uncommitted facility of EUR125.0 million
(31 December 2019: EUR125.0 million).
The Group has successfully completed a debt refinancing process
and has put in place a new EUR250.0 million facility. The new
facility is for a period of five years and has a term component of
EUR100.0 million and a committed Revolving Credit Facility of
EUR150.0 million. The facility is with a syndicate of domestic and
international banks and will provide the debt funding the business.
The Directors are satisfied that this facility will support the
growth of the business and provide adequate funding to allow the
business to achieve its strategic objectives. The Group's forecast
includes the terms of the new debt facility in advance of the
expiration of the current facility in April 2021 to complement the
Group's future operating cash flow in financing its working capital
requirement over the forecast period.
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 financial
statements. The preparation of this forecast considered the
potential and likely implications of the Covid-19 pandemic on the
Group's financial performance and position over the forecast period
including but not limited to the impact on selling prices and
strategies, development costs and construction programs.
The Group is forecasting compliance with all covenant
requirements under the current and future facility including the
interest cover covenant which is based on earnings before interest,
tax, depreciation and amortisation (EBITDA) excluding the non-cash
impairment charge. In addition, the Group expects to be profitable,
generate positive cashflows and be a in a net cash position next
year. 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
programs as a result of the ongoing impact of Covid-19.
While acknowledging the uncertainty that remains with regard to
the exact impact of Covid-19 including the potential risk of
further Government restrictions on construction activity on the
Group's cash flow forecast, 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 consolidated financial statements on a
going concern basis.
8 Significant accounting policies
The Group has consistently applied the following accounting
policies to all periods presented in these consolidated financial
statements, except if mentioned otherwise.
8.1 Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured
at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on
a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to
the issue of debt or equity securities.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss. Any contingent
consideration is measured at fair value at the date of acquisition.
If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then
it is not remeasured, and settlement is accounted for within
equity. Otherwise, other contingent consideration is
remeasured at fair value each reporting date and subsequent
changes in the fair value of the contingent consideration are
recognised in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases.
(iii) Joint operations
Joint operations arise where the Group has joint control of an
operation with other parties, in which the parties have direct
rights to the assets and obligations of the operation. The Group
accounts for its share of the jointly controlled assets and
liabilities and income and expenditure on a line by line basis in
the consolidated financial statements.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are
eliminated.
8.2 Revenue
The Group develops and sells residential properties and non-core
land. Revenue is recognised at the point in time when control over
the property has been transferred to the customer, which occurs at
legal completion. Revenue is measured at the transaction price
agreed under the contract.
8.3 Expenditure
Expenditure recorded in inventory is expensed through cost of
sales at the time of the related property sale. The amount of cost
related to each property includes its share of the overall site
costs. Administration expense is recognised in respect of goods and
services received when supplied in accordance with contractual
terms.
8 Significant accounting policies (continued)
8.4 Taxation
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
(i) Current tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary difference when they reverse, using tax
rates enacted or substantively enacted at the reporting date, and
reflects uncertainty related to income taxes, if any.
8 Significant accounting policies (continued)
8.4 Taxation (continued)
(ii) Deferred tax (continued)
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption. Deferred tax assets and liabilities are offset only if
certain criteria are met.
8.5 Share-based payment arrangements
The grant date fair value of equity-settled share-based payment
arrangements granted to employees is generally recognised as an
expense, with a corresponding increase in equity, over the vesting
period of the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related
service and non-market performance conditions are expected to be
met, such that the amount ultimately recognised is based on the
number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment
awards with non-vesting conditions or market conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no true-up for differences between
expected and actual outcomes.
8.6 Exceptional items
Exceptional items are those that are separately disclosed by
virtue of their nature or amount in order to highlight such items
within the consolidated statement of profit or loss for the
financial year. Group management exercises judgement in assessing
each particular item which, by virtue of its scale or nature,
should be highlighted as an exceptional item. Exceptional items are
included within the profit or loss caption to which they
relate.
During the financial year, there were no costs considered
exceptional items (Note 11). The Directors believe that separate
presentation of exceptional expenses is useful to the reader as it
allows clear presentation of the results of the underlying business
and is relevant for an understanding of the Group's performance in
the financial year.
8.7 Property, plant and equipment
Property, plant and equipment is carried at historic purchase
cost less accumulated depreciation. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation is provided to write off the cost of the assets on a
straight-line basis to their residual value over their estimated
useful lives at the following annual rates:
-- Buildings 2.5%
-- Plant and machinery 14-20%
-- Fixtures and fittings 20%
-- Computer Equipment 33%
The assets' residual values, carrying values and useful lives
are reviewed on an annual basis and adjusted if appropriate at each
reporting date.
Where an impairment is identified, the recoverable amount of the
asset is identified and an impairment loss, where appropriate, is
recognised in the statement of profit or loss and other
comprehensive income.
8 Significant accounting policies (continued)
8.7 Property, plant and equipment (continued)
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within
administration expenses in the statement of profit or loss and
other comprehensive income.
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the expenditure
will flow to the Group.
8.8 Intangible assets - computer software
Computer software is capitalised as intangible assets as
acquired and amortised on a straight-line basis over its estimated
useful life of 3 years, in line with the period over which economic
benefit from the software is expected to be derived.
The assets' useful economic lives and residual values are
reviewed and adjusted, if appropriate, at each reporting date.
8.9 Inventory
Inventory comprises property in the course of development,
completed units, land and land development rights.
Inventories are valued at the lower of cost and net realisable
value. Direct cost comprises the cost of land, raw materials and
development costs but excludes indirect overheads. Land purchased
for development, including land in the course of development, is
initially recorded at cost.
Where such land is purchased on deferred settlement terms, and
the cost differs from the amount that will subsequently be paid in
settling the liability, this difference is charged as a finance
cost in the statement of profit or loss and other comprehensive
income over the period to settlement.
A provision is made, where appropriate, to reduce the value of
inventories and work-in-progress to their net realisable value.
8.10 Financial instruments
Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are
initially recognised at fair value and are subsequently measured
based on their classification as described below. Their
classification depends on the purpose for which the financial
instruments were acquired or issued, their characteristics and the
Group's designation of such instruments. The standards require that
all financial assets and financial liabilities be classified as
fair value through profit or loss ("FVTPL"), amortised cost, or
fair value through other comprehensive income ("FVOCI").
8 Significant accounting policies (continued)
8.10 Financial instruments (continued)
Classification of financial instruments
The following summarises the classification and measurement the
Group has elected to apply to each of its significant categories of
financial instruments:
IFRS 9
Type Classification
------------------------------ ----------------
Financial assets
Amortised
Cash and cash equivalents cost
Amortised
Other receivables cost
Amortised
Restricted cash cost
Amortised
Construction bonds cost
Financial liabilities
Amortised
Bank indebtedness cost
Accounts payable and accrued Amortised
liabilities cost
Cash and cash equivalents
Cash and cash equivalents include cash and short-term
investments with an original maturity of three months or less.
Interest earned or accrued on these financial assets is included in
other income.
Other receivables
Such receivables are included in current assets, except for
those with maturities more than 12 months after the reporting date,
which are classified as non-current assets. Loans and other
receivables are included in trade and other receivables on the
consolidated balance sheets and are accounted for at amortised
cost. These assets are subsequently measured at amortised cost. The
amortised cost is reduced by impairment losses. The Group
recognises impairment losses on an 'expected credit loss' model
(ECL model) basis in line with the requirements of IFRS 9. Interest
income and impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.
Restricted cash
Restricted cash includes cash amounts which are classified as
non-current assets and held in escrow until the completion of
certain criteria.
Construction bonds
Construction bonds includes amounts receivable in relation to
the completion of construction activities on sites. These assets
are included in trade and other receivables on the consolidated
balance sheets and are accounted for at amortised cost.
Other liabilities
Such financial liabilities are recorded at amortised cost and
include all liabilities.
8.11 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events and it is
probable that an outflow of resources will be required to settle
that obligation, and the amount has been reliably estimated.
Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability,
where the effect of discounting is considered significant. The
unwinding of the discount is recognised as a finance cost.
8 Significant accounting policies (continued)
8.12 Pensions
The Group operates a defined contribution scheme. The assets of
the scheme are held separately from those of the Group in a
separate fund. Obligations for contributions to defined
contribution plans are expensed as the related service is
provided.
8.13 Leases
i. As a lessee
At commencement or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component and non-lease component on the
basis of its relative stand-alone prices. However, for the leases
of property the Group has elected not to separate non-lease
components and account for the lease and non-lease components as a
single lease component. The Group recognises a right-of-use asset
and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or
the site on which it is located, less any lease incentives
received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and motor vehicles. In
addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease, or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
The Group determines its incremental borrowing rate with
reference to its current financing sources and makes certain
adjustments to reflect the terms of the lease and type of the asset
leased.
Lease payments included in the measurement of the lease
liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in the future lease payments arising from a change in an index or
rate, if there is a change in the Group's estimate of the amount
expected to be payable under a residual value guarantee, if the
Group changes its assessment of whether it will exercise a
purchase, extension or termination option or if there is a revised
in-substance fixed lease payment.
8 Significant accounting policies (continued)
8.13 Leases (continued)
i. As a lessee (continued)
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero. The
Group presents right-of-use assets that do not meet the definition
of investment property in 'property, plant and equipment' and lease
liabilities in 'lease liability' in the statement of financial
position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value assets and short-term
lease. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease
term.
ii) As a lessor
In certain instances the Group acts as a lessor in relation to
certain property assets. These arrangements are not material to the
Group's consolidated financial statements.
8.14 Government Grants
Grants that compensate the group for expenses incurred are
recognised in the consolidated statement of profit or loss and
other comprehensive income by offsetting against expenses on a
systematic basis in the periods in which the expenses are
recognised, unless the conditions for receiving the grant are met
after the related expenses have been recognised. In this case, the
grant is recognised when it becomes receivable.
8.15 Share capital
(i) Ordinary shares
Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity (retained
earnings).
(ii) Founder Shares
Founder Shares were initially issued as ordinary shares and
subsequently re-designated as Founder Shares. Following
re-designation, the instruments are accounted for as equity-settled
share-based payments as set out at Note 8.5 above.
8.16 Finance income and costs
The Group's finance income and finance costs include:
-- Interest income
-- Interest expense
Interest income and expense is recognised using the effective
interest method.
9 Segmental information
The Group has considered the requirements of IFRS 8 Operating
Segments in the context of how the business is managed and
resources are allocated.
In 2019, the Group was organised into two key reportable
operating segments being Glenveagh Homes and Glenveagh Living.
During the year, the Group's operating segments changed in line
with our refined strategy and are set out below. As a result of the
change in the Group's reportable segments, the Group has restated
the previously reported segment information for the year ended 31
December 2019.
The Group is organised into three key reportable segments, being
Suburban, Urban and Partnerships. Internal reporting to the Chief
Operating Decision Maker ("CODM") is provided on this basis. The
CODM has been identified as the Executive Committee.
The Group currently operates solely in the Republic of Ireland
and therefore no geographically segmented financial information is
provided.
Suburban
The Suburban segment is focussed primarily on high quality
housing (with some low rise apartments) with demand coming from
private buyers and institutions. Our core Suburban product is
affordable (EUR350,000 or below) and located in well serviced
communities predominantly in the Greater Dublin Area and Cork.
Urban
Urban's strategic focus is developing apartments to deliver to
institutional investors. The apartments are located primarily in
Dublin and Cork, but also on sites adjacent to significant rail
transportation hubs. Urban's strategy is to deliver the product to
institutional investors through a forward sale, or forward fund
transaction providing longer term earnings visibility.
Partnerships
A Partnership will typically involve the Government, local
authorities, or state agencies contributing their land on a reduced
cost, or phased basis into a development agreement with Glenveagh.
Approx. 50% of the product is delivered back to the government or
local authority via social and affordable homes. This provides
longer term access to both land and deliveries for the business and
provides financial incentive by reducing risk from a sales
perspective.
9 Segmental information (continued)
Segmental financial results
Restated
31 December 31 December
2020 2019
EUR'000 EUR'000
Revenue
Suburban 201,973 255,405
Urban 30,323 29,232
Partnerships - -
Revenue for reportable segments 232,296 284,637
Restated
31 December 31 December
2020 2019
EUR'000 EUR'000
Operating (loss) / profit
Suburban 15,399 38,799
Urban (15,662) 2,312
Partnerships (1,166) (349)
Operating (loss) / profit for
reportable segments (1,429) 40,762
Reconciliation to results for
the period
Segment results - operating
(loss) / profit (1,429) 40,762
Finance expense (3,033) (2,666)
Directors' remuneration (1,574) (2,712)
Corporate function payroll costs (2,741) (3,816)
Depreciation (2,031) (1,155)
Professional fees (1,736) (1,257)
Share-based payment expense (861) (592)
Gain on sale of property, plant
and equipment 33 456
Other corporate costs (2,374) (2,329)
(Loss) / profit before tax (15,746) 26,691
There are no individual costs included within other corporate
costs that is greater than the amounts listed in the above
table.
27
9 Segmental information (continued)
Segment assets and liabilities
Restated
31 December 2020 31 December 2019
Suburban Urban Partnerships Total Suburban Urban Partnerships Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment assets 522,478 298,691 467 821,636 545,681 294,806 675 841,162
Reconciliation
to Consolidated
Balance Sheet
Deferred tax
asset 1,415 128
Trade and other
receivables 14,138 11,566
Income tax
receivable 21 -
Cash and cash
equivalents 137,276 93,224
Restricted cash 708 1,500
Property, plant
and equipment 21,087 18,142
Intangible
assets 712 944
996,993 966,666
Segment
liabilities - - 46 46 - - - -
Reconciliation
to Consolidated
Balance Sheet
Trade and other
payables 42,191 56,218
Loans and
Borrowings 99,934 39,569
Lease
liabilities 1,316 595
Income tax
payable - 3,737
143,487 100,119
10 Revenue 2020 2019
EUR'000 EUR'000
Residential property sales 230,879 280,035
Land sales 673 4,300
Income from property rental and other
income 744 302
232,296 284,637
All revenue is earned in the Republic of Ireland.
11 Exceptional items 2020 2019
EUR'000 EUR'000
Redundancy costs - 817
Hollystown Golf and Leisure Limited
closure costs - 308
- 1,125
There were no costs classified as exceptional items in
accordance with the Group's accounting policy set out at Note 8.6
in the financial year.
In the prior financial year, redundancy and restructuring costs
and costs associated with the cessation of the Hollystown Golf and
Leisure Limited business of EUR1.1m were classified as exceptional
items.
12 Finance Expense
2020 2019
EUR'000 EUR'000
Interest on secured bank loans 3,006 2,634
Finance cost on lease liabilities 27 32
3,033 2,666
13 Statutory and other information
2020 2019
EUR'000 EUR'000
Amortisation of intangible assets
(Note 19) 406 299
Depreciation of property, plant and
equipment (Note 18)* 2,722 1,937
Employment costs (Note 14) 24,400 28,567
Profit on disposal of property, plant
and equipment (33) (456)
Audit of Group, Company and subsidiary
financial statements** 200 120
Other assurance services 15 15
Tax advisory services 78 18
Tax compliance services 31 32
324 185
Directors' remuneration
Salaries, fees and other emoluments 1,459 2,605
Pension contributions 115 88
1,574 2,693
*Includes EUR1.1 million (2019: EUR0.8 million) capitalised in
inventory during the year ended 31 December 2020
**Included in the auditor's remuneration for the Group is an
amount of EUR0.015 million (2019: EUR0.015 million) that relates to
the Company's financial statements.
14 Employment costs
The average number of persons employed by the Group (including
executive directors) during the financial year was 315 (Executive
Committee: 3; Non-executive Directors: 5, Construction: 188; and
Other: 119). (2019: Executive Committee: 4; Non-executive
Directors: 4, Construction: 198; and Other: 107)
The aggregate payroll costs of these employees for the financial
year were:
2020 2019
Before
Exceptional Exceptional
Total items items Total
EUR'000 EUR'000 EUR'000 EUR'000
Wages and salaries 20,535 23,723 745 24,468
Social welfare costs 2,064 2,316 72 2,388
Pension costs - defined contribution 940 1,119 - 1,119
Share-based payment expense
(Note 15) 861 592 - 592
24,400 27,750 817 28,567
EUR11.2 million (2019: EUR12.9 million) of employment costs were
capitalised in inventory during the financial year.
As a result of the impact of the Covid-19 pandemic, the Group
availed of the Temporary Wage Subsidy Scheme in Ireland from 17
April 2020 to 2 August 2020. The Group fully withdrew from the
scheme effective from 3 August 2020.
The Temporary Wage Subsidy Scheme is available to employers who
have lost a minimum of 25% of turnover as a result of the Covid-19
pandemic and who kept employees on their payroll during this time.
The scheme has been availed of for employees who were temporarily
not working (laid off) or on reduced hours and / or reduced pay.
All grants received by the Group has been offset against the
related costs in cost of sales and administrative expenses in the
statement of comprehensive income.
Throughout the duration of involvement the Group was in
compliance with all the conditions of the scheme.
15 Share-based payment arrangements
The Group operates three equity-settled share-based payment
arrangements being the Founder Share scheme, the Long-Term
Incentive Plan ("LTIP") and the Savings Related Share Option Scheme
(known as the Save As You Earn or "SAYE" scheme). As described
below, options were granted under the terms of the LTIP and SAYE
schemes during the financial year.
(a) Founder Share Scheme
The founders of the Company (John Mulcahy, Justin Bickle
(beneficially held by Durrow Ventures), and Stephen Garvey)
subscribed for a total of 200,000,000 ordinary shares of EUR0.001
each for cash at par value during 2017, which were subsequently
converted to Founder Shares in advance of the Company's initial
public offering. These shares entitle the Founders to share 20% of
the Company's Total Shareholder Return ("TSR") (being the increase
in market capitalisation of the Company, plus dividends or
distributions in the relevant period) in each of five individual
testing periods up to 30 June 2022, subject to achievement of a
performance condition related to the Company's share price. Further
details in respect of the Founder Shares are outlined in Note
26.
Following the completion of the third test period (which ran
from 1 March 2020 until 31 December 2020), it was confirmed that,
the performance condition related to the Company's share price was
not satisfied and therefore the Founder Share Value in respect of
the test period was EURNil and accordingly no Founder Shares were
converted to ordinary shares during the financial year.
(b) LTIP
On 28 February 2020, the Remuneration Committee approved the
grant of 5,185,560 options to certain members of the management
team (which do not include the Founders) in accordance with the
terms of the Company's LTIP. These options will vest on completion
of a three-year service period from grant date subject to the
achievement of certain performance condition hurdles based on the
Company's Total Shareholder Return (TSR) and Earnings per Share
(EPS) across the vesting period. 50% of the awards will vest based
on the Company's TSR with 50% based on EPS targets. The EPS based
options will vest based on the Group's Adjusted EPS* for the
financial year ended 31 December 2022. 25% of the options will vest
should the Group achieve 9.5 cents per share with 100% vesting at
12.5 cents per share. Options will vest on a pro rata basis for
performance between 9.5 cents and 12.5 cents per share. The TSR
targets are in line with all previous grants under the scheme with
25% of the award vesting once the 3-year annualised TSR reaches
6.25% per annum with the remaining options vesting on a pro rata
basis up to 100% if TSR of 12.5% is achieved. The entire grant of
options remain outstanding at 31 December 2020. In line with the
Group's remuneration policy, LTIP awards granted to Executive
Directors from 2020 onwards include a holding period of at least
two years post exercise.
Number of Number of
Options Options
2020 2019
LTIP options in issue at 1 January 4,685,800 2,351,743
Granted during the financial year 5,185,560 2,750,293
Forfeited during the financial year (991,726) (416,236)
Lapsed during the financial year (1,204,178) -
LTIP options in issue at 31 December 7,675,456 4,685,800
Exercisable at 31 December - -
15 Share-based payment arrangements (continued)
(b) LTIP (continued)
The fair value of LTIP options granted in the period was
measured using a Monte Carlo simulation. Service and non-market
conditions attached to the arrangements were not taken into account
when measuring fair value. The inputs used in measuring fair value
at grant date were as follows:
2020 2019
Tranche Tranche
1 1
Fair value at grant date EUR0.23 EUR0.32
Share price at grant date EUR0.75 EUR0.85
Valuation methodology Monte Carlo Monte Carlo
Exercise price EUR0.001 EUR0.001
Expected volatility 26.6% 27.0%
Expected life 3 years 3 years
Expected dividend yield 0% 0%
Risk free rate -0.8% -0.55%
The exercise price of all options granted under the LTIP to date
is EUR0.001 and all options have a 7- year contractual life.
Given the Group did not have an extensive trading history at
grant date, expected share price and TSR volatility was based on
the volatility of a comparator group of peer companies over the
expected life of the equity instruments granted together with
consideration of the Group's actual trading volatility to date.
The Group recognised an expense of EUR0.8 million (2019: EUR0.6
million) in the consolidated statement of profit or loss in respect
of options granted under the LTIP.
(*Adjusted EPS is defined as Basic Earnings Per Share as
calculated in accordance with IAS 33 Earnings Per Share subject to
adjustment by the Remuneration Committee at its discretion, for
items deemed not reflective of the Group's underlying performance
for the financial year.)
(c) SAYE Scheme
On 1 October 2020, the Remuneration Committee approved the grant
of 445,500 options to employees of the Group. Under the terms of
the scheme, employees may save up to EUR500 per month (2019: EUR500
per month) from their net salaries for a fixed term of three or
five years and at the end of the savings period they have the
option to buy shares in the Company at a fixed exercise price of
EUR0.60.
Details of options outstanding and grant date fair value
assumptions
2020 2019
Number Number Number Number
of of of of
Options Options Options Options
3 Year 5 Year 3 Year 5 Year
SAYE options in issue at
1 January 806,340 202,000 341,640 150,000
Granted during the financial
year 355,500 90,000 771,420 195,000
Cancelled during the financial
year (202,800) (37,000) (306,720) (143,000)
SAYE options in issue at
31 December 959,040 255,000 806,340 202,000
15 Share-based payment arrangements (continued)
(c) SAYE Scheme (continued)
Details of options outstanding and grant date fair value
assumptions (continued)
2020 2019
3 Year 5 Year 3 Year 5 Year
Fair value at grant date EUR0.25 EUR0.25 EUR0.21 EUR0.21
Share price at grant date EUR0.76 EUR0.76 EUR0.75 EUR0.75
Valuation Methodology Monte Carlo Monte Carlo Monte Carlo Monte Carlo
Exercise price EUR0.60 EUR0.60 EUR0.60 EUR0.60
Expected volatility 34.3 % 35.5 % 27.5% 29.6%
Expected life 3 years 5 years 3 years 5 years
Expected dividend yield 0 % 1.37 % 0% 1.4%
Risk free rate -0.83% -0.81% -0.82% -0.78%
The weighted average exercise price of all options granted under
the SAYE to date is EUR0.71.
Given the Group did not have an extensive trading history at
grant date, expected share price and TSR volatility was based on
the volatility of a comparator group of peer companies over the
expected life of the equity instruments granted together with
consideration of the Group's actual trading volatility to date.
The Group recognised an expense of EUR0.05 million (2019:
EUR0.01 million) in the consolidated statement of profit or loss in
respect of options granted under the SAYE scheme.
16 (Loss) / earnings per share
a) Basic (loss) / earnings per share
The calculation of basic (loss) / earnings per share has been
based on the profit attributable to ordinary shareholders and the
weighted average numbers of shares outstanding for the financial
year. There were 871,333,550 ordinary shares in issue at 31
December 2020 (2019: 871,333,550).
2020 2019
(Loss) / profit for the financial year attributable to ordinary shareholders
(EUR'000) (13,902) 22,480
Weighted average number of shares for the financial year 871,333,550 871,333,550
Basic (loss) / earnings per share (cents) (1.60) 2.62
16 (Loss) / earnings per share (continued)
a) Basic (loss) / earnings per share (continued)
2020 2019
No. of shares No. of shares
Reconciliation of weighted average number of shares (basic)
Issued ordinary shares at beginning and end of financial year 871,333,550 871,333,550
Diluted (loss) / earnings per share
2020 2019
(Loss) / profit for the financial year attributable to ordinary shareholders (EUR'000) (13,902) 22,840
Weighted average number of shares for the financial year 871,333,550 871,333,550
Diluted (loss) / earnings per share (cents) (1.60) 2.62
2020* 2019
No. of shares No. of shares
Reconciliation of weighted average number of shares (diluted)
Weighted average number of ordinary shares (basic) 871,333,550 871,333,550
Effect of share options on issue** - -
871,333,550 871,333,550
*The number of potentially issuable shares in the Group held
under option or Founder Share arrangements at 31 December 2020 is
188,682,294 (2019: 185,692,638).
**Under IAS 33, Founders Shares and LTIP arrangements have an
assumed test period ending on 31 December 2020. Based on this
assumed test period no ordinary shares would be issued through the
conversion of Founder Shares and LTIP as the performance conditions
were not met.
At 31 December 2020 1,202,040 options (2019: 1,116,340) were
excluded from the diluted weighted average number of ordinary
shares because their effect would have been anti-dilutive. As a
result, there was no difference between basic and diluted earnings
per share.
17 Income tax
2020 2019
Before
Exceptional Exceptional
items Items Total
EUR'000 EUR'000 EUR'000 EUR'000
Current tax (credit) / charge
for the financial year (557) 3,864 (93) 3,771
Deferred tax (credit) / charge
for the financial year (1,287) 80 - 80
Total income tax (credit)
/ charge (1,844) 3,944 (93) 3,851
The tax assessed for the financial year differs from the
standard rate of tax in Ireland for the financial year. The
differences are explained below.
2020 2019
EUR'000 EUR'000
(Loss) / profit before tax for the financial
year (15,746) 26,691
Tax (credit) / charge at standard Irish income
tax rate of 12.5% (1,968) 3,336
Tax effect of:
Income taxed at the higher rate of corporation
tax 40 222
Non-deductible expenses - other 359 230
Adjustment in respect of prior year (over)/under
accrual (5) -
Other adjustments (270) 63
Total income tax (credit) / charge (1,844) 3,851
Movement in deferred tax balances
Balance at Balance at
1 January Recognised 31 December
in
2020 profit or 2020
loss
EUR'000 EUR'000 EUR'000
Tax losses carried forward 128 1,287 1,415
128 1,287 1,415
The deferred tax asset accrues in Ireland and therefore has no
expiry date. Based on the return to profitability forecast in the
Group's 3-year strategy 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.
18 Property, plant and Land & Fixtures Plant & Computer
equipment
buildings & fittings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 January 2020 13,166 762 6,308 553 20,789
Additions 2,097 420 3,137 143 5,797
Disposals - (20) (400) (2) (422)
At 31 December 2020 15,263 1,162 9,045 694 26,164
Accumulated depreciation
At 1 January 2020 (779) (228) (1,396) (244) (2,647)
Charge for the financial
year (914) (171) (1,436) (201) (2,722)
Disposals - 10 281 1 292
At 31 December 2020 (1,693) (389) (2,551) (444) (5,077)
Net book value
At 31 December 2020 13,570 773 6,494 250 21,087
Land & Fixtures Plant & Computer
buildings & fittings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 January 2019 7,713 748 3,341 407 12,209
Recognition of right-of-use
asset on initial application
of IFRS 16 876 - 351 - 1,227
Adjusted at 1 January
2019 8,589 748 3,692 407 13,436
Additions 5,281 21 2,616 146 8,064
Disposals (704) (7) - - (711)
At 31 December 2019 13,166 762 6,308 553 20,789
Accumulated depreciation
At 1 January 2019 (36) (89) (500) (87) (712)
Charge for the financial
year (743) (141) (896) (157) (1,937)
Disposals - 2 - - 2
At 31 December 2019 (779) (228) (1,396) (244) (2,647)
Net book value
At 31 December 2019 12,387 534 4,912 309 18,142
The depreciation charge for the year includes EUR1.1 million
(2019: EUR0.8 million) which was capitalised in inventory at 31
December 2020.
18 Property plant and equipment (continued)
Property plant and equipment includes right of use assets of
EUR1.3 million (2019: EUR0.6 million) related to leased properties
and motor vehicles. During the year, the Group entered into new
lease agreements for the use of motor vehicles (EUR0.3 million) and
land and buildings for its office facility in Maynooth, Co. Kildare
(EUR1.5 million). The land and buildings lease commenced in June
2020 for a duration of two years. On lease commencement, the Group
recognised EUR1.8 million (2019: EUR0.1 million) of right-of-use
assets and lease liabilities.
19 Intangible assets
Computer
Licence Software Total
EUR'000 EUR'000 EUR'000
Cost
At 1 January 2020 149 1,225 1,374
Additions - 194 194
Disposals - (60) (60)
At 31 December 2020 149 1,359 1,508
Accumulated amortisation
At 1 January 2020 (100) (330) (430)
Charge for the year - (406) (406)
Disposals - 40 40
At 31 December 2020 (100) (696) (796)
Net book value
At 31 December 2020 49 663 712
Computer
Licence Software Total
EUR'000 EUR'000 EUR'000
Cost
At 1 January 2019 149 709 858
Additions - 516 516
At 31 December 2019 149 1,225 1,374
Accumulated amortisation
At 1 January 2019 - (131) (131)
Charge for the year (100) (199) (299)
At 31 December 2019 (100) (330) (430)
Net book value
At 31 December 2019 49 895 944
20 Inventory
2020 2019
EUR'000 EUR'000
Land held for development 605,244 647,513
Development expenditure (ii) 201,917 172,683
Development rights (iii) 14,008 20,291
821,169 840,487
EUR198.9 million (2019: EUR227.3 million) of inventory was
recognised in 'cost of sales' during the year ended 31 December
2020.
(i) Impairment of inventories
During the financial year, the Group amended its sales strategy
on its remaining high end, private customer units which was
reflected in its net realisable value calculations at the balance
sheet date. The revised sales strategy on these developments is to
exit within 12 months versus in excess of 48 months at previously
forecasted sales rates. The Group also identified three non-core
assets which are also suited to higher ASP product on which
construction has not commenced and has amended its exit strategy on
these sites from development to site sale.
This assessment has resulted in an impairment charge of EUR20.3
million which was recognised in cost of sales in the financial year
with EUR10.3 million allocated to land and the remainder (EUR10.0
million) allocated to work in progress.
(ii) Employment cost capitalised
EUR11.2 million of employment costs (net of Temporary Wage
Subsidy Scheme Payments received which have been accounted for in
accordance with IAS 20 'Accounting for Government Grants and
Disclosure of Government Assistance') incurred in the year have
been capitalised in inventory (2019: EUR12.9 million) .
(iii) Development rights
Tallaght, Dublin 24 / Gateway Retail Park, Co. Galway
In March 2018, the Group entered into an Acquisition and Profit
Share Agreement ("APSA") with Targeted Investment Opportunities
ICAV ("TIO"), a wholly owned subsidiary of OCM Luxembourg EPF III
S.a.r.l. Under the terms of the APSA, the Group acquired certain
development rights in respect of sites at The Square Shopping
Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra,
Co. Galway for aggregate consideration of approximately EUR13.9
million (including stamp duty and acquisition costs). The
development rights will (subject to planning) entitle the Group to
develop at least 750 residential units under two joint business
plans to be undertaken with Sigma Retail Partners (on behalf of
TIO) which will also entitle TIO to control and benefit from any
retail development at both sites. The Directors have determined
that joint control over both sites exists and the arrangements have
been accounted for as joint operations in accordance with IFRS 11
Joint Arrangements. For further information regarding the APSA, see
Note 29 of these financial statements.
Maryborough Ridge, Cork
In December 2018, the Group entered into a licence agreement to
develop 18.65 acres at Maryborough Ridge, Cork. During 2020, the
Group accelerated the licence fee payments required to exit the
agreement. At 31 December 2020, an amount of EUR6.9 million (2019:
EUR6.4 million) that was previously included in development rights
is now included within land held for development.
21 Trade and other receivables
2020 2019
EUR'000 EUR'000
Trade receivables 1,948 3,412
Other receivables 1,985 2,482
Prepayments 462 393
Construction bonds 7,670 4,401
Deposits for sites 2,540 1,553
14,605 12,241
The carrying value of all financial assets and trade and other
receivables is approximate to their fair value and are repayable on
demand.
22 Trade and other payables
2020 2019
EUR'000 EUR'000
Trade payables 3,457 7,455
Payroll and other taxes 1,671 2,755
Inventory accruals 17,416 22,017
Other accruals 5,874 5,709
VAT payable 13,819 18,282
42,237 56,218
Non-current - -
Current 42,237 56,218
42,237 56,218
The carrying value of all financial liabilities and trade and
other payables is approximate to their fair value and are repayable
on demand.
23 Loans and Borrowings
(a) Loans and borrowings
The Group is party to a Revolving Credit Facility for a total of
EUR250.0 million (of which EUR125.0 million is committed) with a
syndicate of domestic and international banks for a term of 3 years
at an interest rate of one-month EURIBOR (subject to a floor of 0
per cent.) plus a margin of 2.5%. At 31 December 2020, EUR100.0
million (31 December 2019: EUR40.0 million) had been drawn on the
facility. Pursuant to the RCF agreement, there is a fixed and
floating charge in place over certain land assets of the Group as
continuing security for the discharge of any amounts drawn
down.
31 December 31 December
2020 2019
EUR'000 EUR'000
Revolving Credit Facility 100,000 40,000
Unamortised borrowing costs (104) (446)
Interest accrued 38 15
Total loans and borrowings 99,934 39,569
_________ _________
The Group's RCF was entered into with AIB, Barclays and HSBC and
is subject to primary financial covenants calculated on a quarterly
basis:
- A maximum net debt to net assets ratio; and
- A minimum EBITDA to net interest coverage ratio calculated on a trailing 12 month basis
23 Loans and Borrowings (continued)
(b) Reconciliation of movements of liabilities to cash flows
arising from financing activities
2020 Cash flows Non-cash changes
-----------------------------------------------------------------------
Opening Credit Credit Payment Interest Amortisation Interest Interest New leases Closing 2020
2020 facility facility of lease Paid of transaction on RCF on lease
drawdown repayment liability costs liability
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Liabilities
Loans and
borrowings 40,000 70,000 (10,000) - - - - - - 100,000
Unamortised
transaction
costs (446) - - - - 342 - - - (104)
Lease
liability 595 - - (1,088) - - - 27 1,782 1,316
Interest
accrual 15 - - - (2,638) - 2,660 - - 38
40,164 70,000 (10,000) (1,088) (2,638) 342 2,660 27 1,782 101,250
43
23 Loans and Borrowings (continued)
(b) Reconciliation of movements of liabilities to cash flows
arising from financing activities (continued)
2019 Cash flows Non cash changes
-----------------------------------------------------------------------
Opening Credit Credit Payment Interest Amortisation Interest Interest IFRS 16 New leases Closing
2019 facility facility of lease Paid of transaction on RCF on lease - transition 2019
drawdown repayment liability costs liability adjustment
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Liabilities
Loans and
borrowings - 120,000 (80,000) - - - - - - - 40,000
Unamortised
transaction
costs (788) - - - - 342 - - - - (446)
Lease
liability 38 - - (792) - - - 32 1,227 90 595
Interest
accrual 196 - - - (2,472) - 2,291 - - - 15
(554) 120,000 (80,000) (792) (2,472) 342 2,291 32 1,227 90 40,164
44
23 Loans and Borrowings (continued)
(c) Net funds reconciliation
31 December 31 December
2020 2019
EUR'000 EUR'000
Cash and cash equivalents 137,276 93,224
Loans and borrowings (99,934) (39,569)
Lease liabilities (1,316) (595)
Total net funds 36,026 53,060
(d) Lease Liabilities
Lease liabilities are payable as follows:
31 December 2020
--------------------------------------
Present value Future value
of minimum of minimum
lease lease
payments Interest payments
EUR'000 EUR'000 EUR'000
Less than one year 1,029 49 1,078
Between one and two years 283 11 294
More than two years 4 1 5
1,316 61 1,377
24 Restricted cash
2020 2019
EUR'000 EUR'000
Balance at 1 January 1,500 1,500
Transfers to cash and cash equivalents (792) -
708 1,500
The restricted cash balance relates to funds held in escrow
until the completion of certain infrastructural works relating to
the Group's residential development at Balbriggan, Co. Dublin. In
November 2020, EUR0.8 million of the funds were received following
the completion of the first phase of these works. At 31 December
2020, the estimated fair value of restricted cash is equivalent to
its carrying value.
25 Subsidiaries
The principal subsidiary companies and the percentage
shareholdings held by Glenveagh Properties PLC, either directly or
indirectly, pursuant to Section 314 of the Companies Act 2014 at 31
December 2020 are as follows:
Company Principal activity % Reg.office
Glenveagh Properties (Holdings)
Limited Holding company 100% 1
Glenveagh Treasury DAC Financing activities 100% 2
Glenveagh Contracting Limited Property development 100% 2
Glenveagh Homes Limited Property development 100% 2
Greystones Devco Limited Property development 100% 2
Marina Quarter Limited Property development 100% 2
GLV Bay Lane Limited Property development 100% 2
Glenveagh Living Limited Property development 100% 1
GL Partnership Opportunities
DAC Property development 100% 1
Castleforbes Development Company
DAC* Property development 100% 1
Hollystown Golf & Leisure Limited Golf Club operations 100% 2
1 15 Merrion Square North, Dublin 2, D02 YN15
2 Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7
*In July 2020 by special resolution and approval of the
Registrar of Companies the entity formally know as GL Partnerships
Opportunities II DAC was renamed Castleforbes Development Company
DAC.
Pursuant to section 316 of the Companies Act 2014, a full list
of subsidiaries will be annexed to the Company's Annual Return to
be filed in the Companies Registration Office in Ireland.
26 Capital and reserves
(a) Authorised share capital
2020 2019
Number of Number of
shares EUR'000 shares EUR'000
Ordinary Shares of EUR0.001
each 1,000,000,000 1,000 1,000,000,000 1,000
Founder Shares of EUR0.001
each 200,000,000 200 200,000,000 200
Deferred Shares of EUR0.001
each 200,000,000 200 200,000,000 200
1,400,000,000 1,400 1,400,000,000 1,400
(b) Issued and fully paid share capital and share premium
At 31 December 2020 Share Share
Number of capital premium
shares EUR'000 EUR'000
Ordinary Shares of EUR0.001
each 871,333,550 871 179,281
Founder Shares of EUR0.001
each 181,006,838 181 -
1,052,340,388 1,052 179,281
At 31 December 2019 Share Share
Number of Capital premium
shares EUR'000 EUR'000
Ordinary Shares of EUR0.001
each 871,333,550 871 879,281
Founder Shares of EUR0.001
each 181,006,838 181 -
1,052,340,388 1,052 879,281
26 Capital and reserves (continued)
(c) Reconciliation of shares in issue
In respect of current year Ordinary Founder Share Share
shares shares capital premium
'000 '000 EUR'000 EUR'000
In issue at 1 January 2020 871,333 181,007 1,052 879,281
Share premium transfer to
distributable reserves - - - (700,000)
871,333 181,007 1,052 179,281
In respect of prior year Ordinary Founder Share Share
shares shares capital premium
'000 '000 EUR'000 EUR'000
In issue at 1 January 2019 871,333 181,007 1,052 879,281
871,333 181,007 1,052 879,281
(d) Rights of shares in issue
Ordinary Shares
The holders of Ordinary Shares are entitled to one vote per
Ordinary Share at general meetings of the Company and are entitled
to receive dividends as declared by the Company.
Founder Shares
Founder Shares do not confer on any holder thereof the right to
receive notice of, attend, speak or vote at general meetings of the
Company except in relation to resolutions regarding the voluntary
winding up of the Company or the granting of further Founder
Shares. Founder Shares do not entitle their holder to receive
dividends.
Founder Shares entitle the Founders of the Company namely,
Justin Bickle (through Durrow Ventures), Stephen Garvey and John
Mulcahy to share 20% of the Company's TSR (calculated by reference
to the change of control price plus dividends and distributions
made) between admission and the change of control (less the value
of any ordinary shares (at their original conversion or redemption
price)) which have previously been converted or redeemed in the
five years following the IPO of the Company.
This entitlement is subject to the achievement of a performance
condition related to the Company's share price, specifically that a
compound rate of return of 12.5% (adjusted for any dividends or
other distributions and returns of capital made but excluding the
value of any Founder Shares which have been redeemed) is achieved
across five testing periods.
Following completion of the third test period (which ran from 1
March 2020 until 31 December 2020), it was confirmed that, the
performance hurdle condition was not satisfied and therefore the
Founder Shares Value for the test period was zero, and accordingly
no Founder Shares were converted to ordinary shares in respect of
this test period.
26 Capital and reserves (continued)
(d) Rights of shares in issue (continued)
Capital re-organisation
During the year, further to resolutions passed by shareholders
of the Company on 17 December 2019, the Irish High Court approved
the Group's application on 16 March 2020 to redesignate EUR700.0
million of Share Premium to Retained Earnings to allow for future
distributions under section 117 of the Companies Act 2014.
(e) Nature and purpose of reserves
Share based payment reserve
The share-based payment reserve comprises amounts equivalent to
the cumulative cost of awards by the Group under equity settled
share-based payment arrangements being the Group's Long Term
Incentive Plan and the SAYE scheme. On vesting, the cost of awards
previously recognised in the share-based payments reserve is
transferred to retained earnings. Details of the share awards, in
addition to awards which lapsed in the year, are disclosed in Note
15.
27 Financial instruments and financial risk management
The consolidated financial assets and financial liabilities are
set out below. While all financial assets and liabilities are
measured at amortised cost, the carrying amounts of the
consolidated financial assets and financial liabilities approximate
to fair value. Trade and other receivables and trade and other
payables approximate to their fair value as the transactions which
give rise to these balances arise in the normal course of trade
and, where relevant, with industry standard payment terms and have
a short period to maturity (less than one year).
Financial instruments: financial assets
2020 2019
The consolidated financial assets can
be summarised as follows: EUR'000 EUR'000
Trade receivables 1,948 3,412
Other receivables 1,985 2,482
Construction bonds 7,670 4,401
Deposits for sites 2,540 1,553
Cash and cash equivalents 137,276 93,224
Restricted cash (non-current) 708 1,500
Total financial assets 152,127 106,572
Cash and cash equivalents are short-term deposits held at
variable rates.
27 Financial instruments and financial risk management (continued)
Financial instruments: financial liabilities
2020 2019
EUR'000 EUR'000
Trade payables 3,457 7,455
Lease liabilities 1,316 595
Inventory accruals 17,416 22,017
Other accruals 5,874 5,709
Loans & borrowings 99,934 39,569
Total financial liabilities 127,997 75,345
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;
- credit risk - the risk that a counter-party will default on
their contractual obligations resulting in a financial loss to the
Group; and
- market risk - the risk that changes in market prices, such as
interest rates and equity prices 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. 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.
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies
(continued)
Liquidity risk (continued)
31 December 2020
Carrying Contractual Less than 1 year More than
amount cash flows 1 year to 2 years 2 years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Lease liabilities 1,316 1,377 1,078 295 4
Trade payables 3,457 3,457 3,457 - -
Inventory accruals 17,416 17,416 17,416 - -
Other accruals 5,874 5,874 5,874 - -
Loans and borrowings 99,934 100,010 100,010 - -
127,997 128,134 127,835 295 4
31 December 2019
Carrying Contractual Less than 1 year More than
amount cash flows 1 year to 2 years 2 years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Finance lease obligations 595 595 276 319 -
Trade payables 7,455 7,455 7,455 - -
Inventory accruals 22,017 22,017 22,017 - -
Other accruals 5,709 5,709 5,709 - -
Loans and borrowings 39,569 41,244 40,862 382 -
75,345 77,020 76,319 701 -
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies
(continued)
Liquidity risk (continued)
Funds available
2020 2019
EUR'000 EUR'000
Revolving credit facility* (undrawn committed) 25,000 85,000
Cash and cash equivalents 137,526 93,224
162,526 178,224
*The Group's RCF contains a mechanism through which the
committed amount can be increased up to EUR250.0 million.
The Group's RCF is subject to primary financial covenants
calculated on a quarterly basis:
- A maximum net debt to net assets ratio; and
- A minimum EBITDA to net interest coverage ratio.
Credit risk
The Group's exposure to credit risk encompasses the financial
assets being: trade and receivables and cash and cash equivalents.
Credit risk is managed by regularly monitoring the Group's credit
exposure to each counter-party to ensure credit quality of
customers and financial institutions in line with internal limits
approved by the Board.
There has been no impairment of trade receivables in the year
presented. The impairment loss allowance allocated against trade
receivables, cash and cash equivalents and restricted cash is not
material. The credit risk on cash and cash equivalents is limited
because counter-parties are leading international banks with
minimum long-term BBB- credit-ratings assigned by international
credit agencies. The maximum amount of credit exposure is the
financial assets in this note.
Market risk
The Group's exposure to market risk relates to changes to
interest rates and stems predominately from its debt obligations.
In 2018, the Group entered in to a RCF for a total of EUR250.0
million (of which EUR125.0 million is committed) with a syndicate
of domestic and international banks for a term of 3 years at an
interest rate of EURIBOR (subject to a floor of 0 per cent.) plus
2.5%. EUR100.0 million (2019: EUR40.0 million) had been drawn on
the facility at 31 December 2020. The Group has an exposure to cash
flow interest rate risk where there are changes in the EURIBOR
rates.
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 RCF with variable interest rates
based upon EURIBOR. At the year ended 31 December 2020 it is
estimated that an increase of
100 basis points to EURIBOR would have decreased the Group's
profit before tax by EUR0.093 million assuming all other variables
remain constant and the rate change is only applied to the loans
that are exposed to movement sin EURIBOR.
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies
(continued)
Market risk (continued)
A fundamental review and reform of major interest rate
benchmarks has been undertaken globally. There is now roadmap
setting out actions to ensure a transition from interbank offered
rates (IBORs) by the end of 2021. From 2021 financial firms will be
able to offer non-IBOR linked interest rates and have formalised
plans to amend legacy agreements.
IBOR continues to be used as a reference rate in financial
markets and is used in the valuation of instruments with
maturities. Therefore, the Group believes the current market
structure supports the valuation of our debt obligations as at 31
December 2020.
The Group expects that the interest rate benchmark will be
changed to Euro Short-Term Rate (EURSTR) in 2021 and that no
significant modification gain or loss will arise as a result of
applying the amendments to these changes.
Capital management
The Group finances its operations by a combination of
shareholders' funds and working capital. The Group's objective when
managing capital is to maintain an appropriate capital structure in
the business to allow management to focus on creating sustainable
long-term value for its shareholders, with flexibility to take
advantage of opportunities as they arise in the short and medium
term. This allows the Group to take advantage of prevailing market
conditions by investing in land and work-in-progress at the right
point in the cycle.
28 Leases
A. Leases as lessee (IFRS 16)
The Group leases a property and motor vehicles. The leases
typically run for a period of 1-3 years, with an option to renew
the lease after that date. Lease payments are renegotiated every
1-3 years to reflect market rentals.
The Group leases certain motor vehicles with contract terms of
one year. These leases are short term and leases of low-value
items. The Group has elected not to recognise right-of-use assets
and lease liabilities for these leases.
Information about leases for which the Group is a lessee is
presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties (that do not
meet the definition of investment property) and motor vehicles are
presented as property, plant and equipment (see Note 18).
28 Leases continued)
A. Leases as lessee (IFRS 16) (continued)
i. Right-of-use assets (continued)
Motor
Property Vehicles Total
EUR'000 EUR'000 EUR'000
2020
Balance at 1 January 280 293 573
Additions to right-of-use
assets 1,455 303 1,758
Depreciation charge for
the year (711) (304) (1,015)
Balance at 31 December 1,024 292 1,316
Motor
Property Vehicles Total
EUR'000 EUR'000 EUR'000
2019
Balance at 1 January 876 351 1,227
Additions to right-of-use
assets - 90 90
Depreciation charge for
the year (596) (148) (744)
Balance at 31 December 280 293 573
ii. Amounts recognised in profit or loss
2020 2019
EUR'000 EUR'000
2020 - Leases under IFRS
16
Interest on lease liabilities 27 32
Expenses relating to short-term
leases 12 80
iii. Amounts recognised in statement of cash flows
2020 2019
EUR'000 EUR'000
Total cash outflow on leases 1,088 792
B. Leases as lessor
In certain instances, the Group acts as a lessor in relation to
certain property assets. These arrangements are not material to the
Group's consolidated financial statements.
29 Related party transactions
(i) Key Management Personnel remuneration
Key management personnel comprise the Non-Executive Directors
and the Executive Committee. The aggregate compensation paid or
payable to key management personnel in respect of the financial
year was the following:
2020 2019
EUR'000 EUR'000
Short-term employee benefits 1,460 2,912
Post-employment benefits 115 116
LTIP and SAYE share-based payment
expense 99 66
1,674 3,094
Compensation of the Group's key management personnel includes
salaries, non-cash benefits and contributions to a post-employment
defined contribution plan.
(ii) Other related party transaction
Acquisition of development rights
The Group entered into the APSA with TIO, a wholly owned
subsidiary of OCM Luxembourg EPF III S.a.r.l. (OCM) (and an entity
in which John Mulcahy is a director) on 12 March 2018.
Under the terms of the APSA, the Group acquired certain
development rights in respect of sites at The Square Shopping
Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra,
Co. Galway for aggregate consideration of approximately EUR13.9
million (including stamp duty and transaction costs). The
development rights will (subject to planning) entitle the Group to
develop at least 750 residential units under two joint business
plans to be undertaken with Sigma Retail Partners (on behalf of
TIO) which will also entitle TIO to control and benefit from any
retail development at both sites.The Directors have determined that
joint control over both sites exists and the arrangements have been
accounted for as joint operations in accordance with IFRS 11 Joint
Arrangements. This accounting treatment was re-assessed at the end
of the reporting period and the Directors concluded that it remains
appropriate.
The APSA also stipulates that TIO would be entitled to share, on
a 50/50 basis, any residual profit remaining after the Group's
purchase consideration plus interest and residential development
cost plus 20% has been deducted from sales revenue in relation to
the residential development opportunity at The Square Shopping
Centre, Tallaght, Dublin 24, Gateway Retail Park, Knocknacarra, Co.
Galway and a third site, Bray Retail Park, Bray, Co. Wicklow.
The agreement defines certain default events including TIO not
possessing good and marketable title over the development sites and
TIO not transferring good and marketable title over the development
sites. On the occurrence of a default event, the Group shall be
entitled to recover the aggregate purchase consideration in respect
of the development rights. OCM has agreed to guarantee this
obligation of TIO.
30 Commitments and contingent liabilities
(a) Commitments arising from development land acquisitions
In addition to the contingent liabilities outlined in Note 29
above, the Group had the following commitments at 31 December 2020
relating to development land acquisitions:
Land acquisition subject to re-zoning
During 2018, the Group contracted to acquire 66 acres of
currently unzoned land in the Greater Dublin Area subject to
appropriate residential zoning being awarded in the next local
authority development plan on at least 30 acres of the site.
Once this minimum threshold is achieved, the Group has committed
to acquiring the entire site at a fixed price per acre on land
zoned for residential development with the remaining land to be
acquired at market value.
Hollystown Golf and Leisure Limited ("HGL")
During 2018, the Group acquired 100 per cent of the share
capital of HGL.
Under the terms of an overage covenant signed in connection with
the acquisition, the Group has committed to paying the vendor an
amount equal to an agreed percentage of the uplift in market value
of the property should any lands owned by HGL, that are not
currently zoned for residential development be awarded a
residential zoning.
This commitment has been treated as contingent consideration and
the fair value of the contingent consideration at the acquisition
date was initially recognised at EURnil. At the reporting date, the
fair value of this contingent consideration was considered
insignificant.
Contracted acquisitions
At 31 December 2020, the Group had contracted to acquire five
development sites; two in North County Dublin, two in Co. Kildare
and one in Co. Kilkenny for aggregate consideration of
approximately EUR24 million (excluding stamp duty and legal fees).
Deposits totalling EUR2.3 million were paid pre-year end and are
included within trade and other receivables at 31 December
2020.
31 Subsequent events
On 12 February 2021, the Group has successfully completed a debt
refinancing process and has put in place a new EUR250.0 million
facility. The new facility is for a period of five years and has a
term component of EUR100.0 million and a committed Revolving Credit
Facility of EUR150.0 million. The facility is with a syndicate of
domestic and international banks and will provide the debt funding
for the business.
At 31 December 2020 the Group had contracted to sell 134 units
in Marina Village, Greystones, Co. Wicklow, 71 units in Dargan
Hall, Bray, Co. Wicklow and 61 units in Barnhall Meadows, Leixlip,
Co. Kildare for a total consideration of EUR119.0 million.
On 3 February 2021, the Group completed the first phase of the
contracted sales at the Marina Village development comprising of 65
units for a consideration of EUR31.7 million.
On 6 January 2021, the Government announced a third national
lockdown in response to Covid-19 which required all non-essential
construction to stop on 8 January 2021 with the exception of
private housing that will be completed by 31 January 2021 and
social housing that will be completed by 28 February 2021. Selling
activity has continued virtually throughout the period and our
forecast sales activity for 2021 remains unchanged subject to
Government confirmation that a reopening of the sites will commence
on 5 April 2021. The third national Covid-19 lockdown is a
non-adjusting post balance sheet event.
32 Profit / (Loss) of the Parent Company
The parent company of the Group is Glenveagh Properties PLC. In
accordance with section 304 of the Companies Act 2014, the Company
is availing of the exemption from presenting its individual
statement of profit or loss and other comprehensive income to the
Annual General Meeting and from filing it at the Companies
Registration Office. The Company's profit after tax for the
financial year was EUR0.034 million (for the period ended 31
December 2019: loss of EUR1.1m).
33 Approved financial statements
The Board of Directors approved the financial statements on 25
February 2021.
[i] Source: Hooke & MacDonald - The Dublin Residential
Investment Report H2 2020
[ii] Source: CBRE
[iii] Of the three acquisitions, one site totalling EUR6m signed
in 2020 but completed in early 2021
[iv] As at 31 December 2020
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