Glenveagh Properties PLC

Hello and welcome to Glanvay Infraim Results 2025. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your Teleton keypad to register your question. I will now hand you over to your host, Stephen Garvey, CEO, The Begin to Race Conference. Thank you.

Good morning and thank you, Laura. I am Stephen Garvey, CEO of Glenveig. I'm joined today by our CFO, Conor Murtaugh. We appreciate you joining our interim results call for the first six months, end of the 30th of June, 2025. This morning, I'll walk you through the key highlights, the market, the policy context, and how our strategy is showing up in home building, partnerships, land and innovation. Conor will take you through the financials and capital allocation and I will return to the outlook and closing remarks. As always we will leave plenty of time for your questions at the end. Let's begin on slide 4 which sets out our headline numbers for the first half of the year. This period demonstrated the strength of our building better strategy. We set out scale delivery, deepened our partnerships with the state and drove operational efficiency through innovation and that's exactly what's reflected in our results. Our focus on standardization and vertical integration is now embedded across the business, making us more resilient and more efficient as we grow. The benefits of our early investment in innovation are visible in our margin profile and our ability to deliver at scale even as the market evolves. This is also the first interim period where our partnership segment has made a material contribution to group profit. This is a real milestone for us and reflects the strength of our public-private model. We are now recognized as a partner of choice for the state with a growing pipeline and strong demand for our homes. We continue to manage our capital with discipline, optimizing our land bank and maintaining a strong balance sheet, even as we accelerated delivery. Our buyback program continues to create value for shareholders and we are seeing the benefits of a more efficient, more focused approach to capital deployment. We will discuss these elements in greater detail as we progress this morning. For now, I want to emphasise that the strategy we set out a few years ago is delivering for our customers, our partners and our shareholders. Turning to slide 5, let's take a moment here to consider what sets Glenveig apart from the current environment. The need for new homes in Ireland remains acute and government policy is more focused than ever on increasing supply. This is happening against a backdrop of continued economic strength and a supportive policy environment so the market opportunity is clear. What gives us confidence is the way we've positioned the business to capture the opportunity. We've built a sector-leading platform, one that's not just about scale but about delivering high-quality homes in the right locations, supported by a uniquely integrated operating model. Our early investment in innovation and standardization is now delivering tangible benefits, making our business more resilient and more efficient as we grow. We are seeing the benefits of our deepening partnerships with the state and hard-won reputation as a partner of choice for public housing delivery. This is supported by a disciplined approach to capital allocation and a strong balance sheet. Our focus on profitable growth, active land bank management and ongoing investment in our supply chain is enabling us to create long-term value for the business and drive sustainable returns for our shareholders. Providing further context, slide 6 shows that the long-term demand outlook for housing in Ireland remains exceptionally strong. We continue to see positive trends in income and employment, with both wages and job creation rising steadily across the economy. Alongside this, Ireland's population growth remains robust, driven by sustained net inward migration well above the European average. Mortgage lending activity is also maintaining a healthy pace, first-time buyers accounting for a significant share of drawdowns. supported by government schemes. The underlying drivers of demand for new homes are strengthening. Turning to slide 7, we can see in more detail how government policy and recent market initiatives are creating a genuine supportive environment for housing delivery. The National Development Plan and the Planning and Development Act 2024 are setting ambitious targets and providing significant funding alongside the infrastructure and planning certainly needed to achieve them. On the demand side, Supports such as Help to Buy and the First Home Scheme continue to underpin affordability for buyers. They both have been extended, giving buyers and developers greater confidence to plan ahead. There's also a strong policy push for modern methods of construction and using state land at scale through the Land Development Agency and local authorities. But as we've said before, meeting Ireland's housing needs will require more than just policy ambition. It will take sustained private sector capital, adequately zoned land, public sector resources and critical infrastructure. The success of our partnership platform shows how public and private resources can be pooled effectively to deliver much needed homes. We shaped our strategy around this shift and we are beginning to see material results, which we will talk about shortly. In the short term, the policy environment is evolving for the better. And that gives us real confidence in our ability to continue delivering at scale. And let's dive deeper into our segments, starting with home building on slide eight. Just a quick reminder that at the start of the year, we announced with the 2024 results that we have simplified our reporting on home building previously suburban and partnerships previously urban and partnerships. This was a standout period for home building with delivery nearly doubling year on year. The momentum reflects the strong demand and the benefits of our differential model and strategy. Standardisation, scalable sites, vertical integration are all coming true in our results. Excellence in our execution saw major completions at Kilmartin Grove and Hereford Park, as well as major progress across a number of developments and a number of new sites starting earlier in the year. Our average selling price was elevated in the first half due to mix, but we expect that to normalise as the year progresses. Margin expansion and home building was driven by the choices we made to invest efficiently and repeatedly. With the forward order book at around 1.4 billion, we have strong visibility for the rest of the year and well into 2026. Turning to slide 9, let's talk about partnerships. For the first time, this segment made a material profit contribution, reflecting the scale and momentum in this part of the business. We now have six active sites underway, including new contributions from Moortown, New Road, the Cork Docklands, which is a development in collaboration with the Land Development Agency, alongside Ballymastone, Oxford Trenner Road and Foxford Burns. This growing pipeline underpinned by robust client momentum and repeated demand from public sector clients gives us strong visibility on future delivery. Moving to slide 10, we can see how our land portfolio remains a source of strength and flexibility. The portfolio has been carefully assembled to align with our strategy. It is focused on supporting high-quality own-door homes in right locations, with 74% of our units in the Greater Dublin area. We continue to maintain a strong cost discipline, with the average plot cost at €32,000, and the land bank supports an attractive embedded margins and capital returns. Importantly, this land bank gives us capacity to deliver between 2,600 and 3,600 equivalent units per year through to 2030. underpinning our medium-term delivery objectives. We have also been actively managing the portfolio, with over 60 million of land sales either closed or at advanced stages, ensuring we remain flexible and capital efficient as the market evolves. Finally, just a note, the recent publication of the National Planning Framework is expected to materially positively impact our strategic land bank, resulting in a lower capital deployment requirement in future land periods. Turning to slide 11, our commitment to innovation remains a core pillar to our strategy. We continue to invest significantly in this area. Phase 2 of our innovation program is now underway via a 25 million commitment to expand our off-site manufacturing facilities in Carlow, including an additional facade line alongside our timber frame platform. At the heart of this is NUA, our in-house manufacturing and innovation platform. Through NUA, we are moving beyond traditional building methods and embracing innovative lightweight alternatives, such as a new wall system, roof cladding and floor cassettes. Our exclusive perpetual license for integrated external facades is now a key part of this, allowing us to increase pre-manufactured value and improve further efficiencies. Offsite manufacturing and modern methods of construction are already delivering tangible improvements in cost control, build efficiency, and margin performance. All of which makes Venvay more resilient, more efficient, and better positioned to deliver at scale as the market evolves. With that context, I'll hand you over to Clarence to talk you through the financials and the capital allocation.

Thanks, Stephen, and good morning, everyone. I'll take you through the financials for the first half of 2025. starting with the income statements, then moving to the balance sheet, land and cash flow, and finally our capital allocation priorities. As always, we'll outline the key drivers behind the numbers and what they mean for the business. If we can turn to slide 13. As Stephen noted, the first half of 2025 marked a period of strong growth for Glenveig. Group revenue reached $342 million, up 124% on last year. This uplift reflects the momentum we've built in both home building and partnerships, with delivery volumes and on-site partnership activity both moving in our favour. Gross profit increased to approximately 67 million and our gross margin expanded to 19.5%, up 130 basis points. This margin improvement is as a result of several years of investment in standardisation, scale and vertical integration, in addition to mixed benefits. Work in progress rose to approximately £347 million, which is in line with our plans to ramp up home building output and deliver on the decreed Kineha scheme. Net assets finished the first half at £748 million and reflects approximately £35 million of capital returns in the period. Altogether, it shows we're supporting growth in a disciplined way, optimising working capital, managing our land bank and maintaining a strong balance sheet. Moving to the lambda slide then. Continuing on the income statement there, we're seeing the benefits of delivering more homes on large repeatable sites and our offsite manufacturing is now contributing program certainty, quality and cost control. A feature of both business segments in 2025 is the completion of sites and phases with cost contingencies unutilized supporting margin expansion. Underlying gross margin in the home building segment excluding non-core sales at Shrewsbury Road and land sales was 22.8%. Nevertheless, Spot home building margins in the group's medium term delivery pipeline are approximately 21%, with SiteMix continuing to be a principal driver as the business monetizes its vintage land bank and scales to 2,000 units with a focus on return on capital. Growth margin in partnerships in H1 was 16.2%, ahead of target owned to SiteMix and unutilized contingency due to strong cost control. Similar to home building, site mix will play a significant role in future periods as the business scales up and the group completes the transition out of its remaining urban sites. $400 million in revenues remains an achievable current year and medium term target with visibility on replacing existing partnership sites with new wins increasing over the period. Operating profit for the first half was $42.1 million. Net finance costs were 9.6 million, reflecting a higher opening debt level following last year's land acquisitions. Profit before tax was 32.5 million, and earnings per share came in at 5.2 cent. Moving to the balance sheet on slide 14. Focusing in on the key numbers here. Land balance excluding development rights was 536 million, down from year end as we continue to actively manage the land bank and focus on capital efficiency. I'll come back to land on the next slide. Work in progress rose to 347 million, which is in line with our plans to ramp up home building and deliver on the decree scheme. Altogether, it shows we're supporting growth in a disciplined way, optimizing working capital, managing our land bank, and maintaining a strong balance sheet. Moving to slide 15, I touched on it briefly and you can see how our land bank is evolving and supporting our growth agenda. The 536 million land balance at June 2025 represents a peak investment level for us. From here, we're focused on reducing capital intensity, delivering units from our existing land bank and executing targeted disposals. We remain on track to complete land sales of 100 million across 2025 and 2026. More than 60 million of that is already closed or at advanced stages of contract. This strategy is about prioritizing capital employed in land and focusing on sites of scale that can support delivery in both home building and partnerships. Given the strength of the land bank's goals in terms of scale and product type, i.e. owned or homes, we can both grow the business and reduce capital deployed in land towards 400 to 450 million over the next number of years. Next, slide 16 shows our cash flow. Operating cash outflow was 10.8 million, a material improvement from the 194 million outflow in H1 last year. That is driven by higher completions, greater contribution from partnerships and tighter working capital management. Importantly, net debt was 230 million, a lower figure than this time last year, despite a materially higher starting position. Moving forward, we continue to invest selectively where returns are strongest, principally funding construction with investing in innovation and returning surplus capital to shareholders, which brings me to slide 17, where we have our capital allocation priorities. Our medium-term visibility is as strong as it has been. We have clear line of sight in unit growth combined with land bank reduction on replenishing the partnerships pipeline on freeing up capital while capturing manufacturing benefits that will provide a structural medium-term cost advantage. Against that backdrop we continue to focus on four key priorities. Firstly, land. We're actively reducing our land bank as I set out primarily through unit delivery and targeted unit sales. But importantly, we will sustain, as Stephen mentioned, the capacity to deliver 2,600 to 3,600 units per annum. Secondly, work in progress. Investment here is supporting the planned increase in home building outputs to 1,900 units in 2027, which remains a core driver of revenue growth. Third, supply chain and innovation. We're investing in offsite manufacturing and next generation building approaches. That includes a 25 million commitment to deliver a new external facade line and facility upgrade, which will transform how we deliver homes. Approximately 10 million of spend will occur in 2025, 10 in 26 with the balance in 2027. And finally, returning excess cash. The buyback program announced in May has been expanded from 85 million to 105 million. That's been made possible by strong operation and performance, robust cash generation and good visibility on land sales. To date, approximately 84 million has been deployed under the current program. This disciplined, balanced approach is supporting growth, innovation and value creation while also maintaining a strong financial position. That's the conclusion of the financial review. Stephen, I'll hand back to you for the outlook and to close out.