Glenveagh Properties PLC

Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to Stephen Garvey. Please go ahead, sir.

Good morning, everyone, and thank you, operator. I am Stephen Garvey, Chief Executive of Glen Bay Properties. I'm joined today by my colleagues Conor Murtagh, our CFO, and Kate Halliday of Investor Relations. Thank you for joining our interim results call for the six-month end of 30 June 2026. This morning I'll take you through the executive summary on the H1 performance, the market, the policy backdrop and how our long-term strategy is showing up in home building, partnerships, land and innovation. Conor will take you through the financials, capital allocation and the outlook. And I'll come back at the end for any closing remarks. As always, we'll leave plenty of time for your questions towards the end. We begin in slide 4, which sets out the highlights of H1, including a sold-out 2026 and an EPS upgrade guidance, amongst many other milestones of note. Overall, this was a half of accelerating activity. Construction spend is up 34%, we launched 6 new sites, and the order book has gone to a record $1.8 billion, up 29% year-on-year. The results that second half is now fully underwritten. Within our home building segment, nearly 2,400 units are sold, contracted or reserved, up 62%, and every home we expect to close this year is already sold, contracted or reserved. Within our partnership segment, we have now seen strong increases in activity in the period, reflected by an increase of 43% in partnership revenue, standing at $176 million. Our land bank saw further enhancement, increasing to 21,000 units from 19,000 a year end, with limited incremental investment. We have now doubled our buy-back programme, which we began in January of this year, expanding it to €100 million. On completion, this programme of approximately €520 million will have been returned to shareholders since 2021. Today, we have also upgraded guidance. We now expect to deliver almost 2,900 equivalent units across the group this year, up from 2,750, and with more than 1,700 home building units, up from 1,600. We have upgraded our full-year earnings per share guidance to at least 21 cents, whereas in March we guided up to 21 cents, a mark of continued confidence in the trajectory of the business. These upgrades come on the back of a fully sold order book for 2026 and strong activity evidence from the construction spend on the ground. Turning to slide 5 and the robust underlying market fundamentals we are experiencing here in Ireland. The demand picture hasn't changed. Ireland's population continues to grow, increasing approximately 17% in the past decade. Our population is the youngest of our European peers with a median age of now 39.6 Over five years inward on the EU average. This points to a population of prime household formation age and contributes to the sustained structural housing demand we are seeing today. Employment is at an all-time high and the average weekly earnings rose 3.9% from Q2 2025 ahead of inflation. Mortgage approvals reached a record $17 billion annualised to March 2026, with drawdown values up almost 8% year-on-year. Household income and access to credit both remain supportive of affordability. Against that, national completions for the first half were just under 17,000 units, up 11% year-on-year. However, demand continues to outpace supply. Although 40,000 completions may be achieved in 2026, planning and commencement data suggest this number may not be sustainable into 2027. Looking now at policy on slide 6, there has been decisive and supportive government policy set out. The framework is now largely complete, while the focus has now shifted to implementation and delivery. The £275 billion in the National Development Plan front loads housing and water infrastructure, with capital ceasings rising annually and the National Planning Framework rezoning underway. These are all very encouraging developments. A number of key supports have been put in place, including Help to Buy has been extended to December 2029. The first home funding of approximately 390 million was put in place, with future plans to expand on which is now in progress. Cricona continues to bridge the apartment viability gap. Apartment VAT has been reduced from 13.5% to 9%, as well as the corporation's tax deduction of 50,000 per apartment till the end of 2013. and the focus on implementation can be seen through. On the back of the Planning Act 2024, the Housing Activation Officers are making a real difference on the ground. As well as infrastructural progress on two projects that are critical to the medium term housing supply, the Greater Dublin Drainage Project has moved into procurement and enabling works, while the Shannon Pipeline is in the final stages of planning. However, there is still more to do. As outlined in the inaugural Home Building Horizons Report 2026, it is clear that zoning, servicing and capacity enabling infrastructure still remain as constraints. But the direction of travel is clearly right and the job from here is implementation. We will continue to engage constructively to help translate policy into homes on the ground so that we can best contribute towards the national delivery targets. Taking a look at slide 7 now. I'd like to focus on the policy picture that is providing strong support to buyers in terms of affordability. How to buy in the first home scheme together account for just 4.5% of government's 7.5 billion housing package. And when you look at the chart on the right hand side, you can see that they can provide a significant impact for first time buyers. To understand the relevance to our own platform, this is why we build on-door housing and why our product primarily sits below $500,000. Our focus is to maximise affordability where the demand is strongest, and this is why our average selling price will trend down, not up. Which brings me to slide 8, and our land bank. As we've previously mentioned, we own a high-quality, well-located, fully-assembled land bank. This provides us with the visibility required to plan and achieve our medium-term objectives. Our land bank has expanded to approximately 21,000 units after disposals, with limited incremental capital investment, up from 19,000 units at year-end. Targeted land investment of 33 million added 1,100 plots to the business. Planning and design gains added a further 900 units, and rezoning of our own strategic land holdings to residential use added a further 600 units at no extra cost. Almost 75% of these homes will be located in the Greater Dublin area and the majority will be owned or product, which is the deepest and most resilient part of the market. This will support the delivery of 2,900 to 3,700 units per annum through to 2030, without material further investment in the near term. Slide 9 details our investment case and having spoke to the compelling market opportunity, I'll turn now to our operational review to take you through the progress across the platform. Slide 11 Our home building segment is underpinned by the fact that all units expected to close in 2026 are now sole contracted or reserved. With 155 units closed in the first half and just under 64 million of revenue, our cumulative spend in the period which is up 34% year-on-year underpins the delivery into the second half of the year. As you look into H2, our forward order book comprised of nearly 2,400 home building units sold, contracted or reserved, up 62% year-on-year. We've launched six new sites in H1 with a further seven phases selling across other existing developments. Turning to slide 12, Our partnership segment continues to grow in scale and significance, and as we proudly operate as an established partner of choice for the state and state agencies for large-scale affordable delivery, underpinned by a provable and scalable model. We continue to make progress on our active sites in Belmoston, Oskartown Road and Moortown, continuing to contribute, and we are currently in active discussions on approximately 1,000 units on Glenvale lands. with an expectation to provide further details on this at full year results. Looking at slide 13, we have a robust pipeline of partnership opportunities which provide a strong medium-term visibility underpinning the next phase of growth. With over 7,000 units and an established net developer value of approximately €3 billion, there is ample opportunity that the business can capture over the medium term. An increasing proportion of the pipeline land is internally sourced, reflecting the natural progression of state-led procurement as it begins to ramp up their process on the back of policy directives. Importantly, we know we have more land to bring forward as these opportunities convert, and we can continue to replenish the pipeline and sustain a healthy runway for future partnership opportunities. A meaningful share of the pipeline has planning granted, Highlighting the quality and the maturity of these opportunities. As I mentioned in March, we are not going after everything in this pipeline. We are focused on what is best suited for us, which is the best product we can build efficiently and at a scale we need, and where our platform adds the most value. Partnership continues to be a key priority for the group, noting our status as a partner of choice continues. Sustainable growth as the segment continues to mature. Taking you now to slide 15, where I'll turn your attention to our home of the future, our manufacturing-led and innovation-driven strategy, including the rationale behind it. Firstly, taking a step back and bringing your attention towards two central costs in the industry that are trending notably upwards. The carbon tax is at €71 a tonne today, legislated to reach €100 per tonne by 2030, which we expect to materially affect the cost of material down the line. And on the labour side, the industry employs approximately 178,000 people today and needs about 280,000 by 2030. Gross new entrances added 40,000 people. Retirees took out around 17,000. and policy and productivity measures are expected to contribute the equivalent of about 24,000 people over the next number of years. This still leaves a shortfall of over 50,000 construction workers. And that is before you account for the National Development Plan competing for the exact same workforce. The cost and labour challenges are coming and we have assembled a structured hedge against them. Which takes me on to slide 16. Our integrated system tackles these challenges head on, reducing our construction timeline from 18 weeks to less than 12 weeks. Across a network of three factories in Carlow, Arklow and Dundalk, spanning 400,000 square foot in total, we are leveraging a system of sequential benefits by increasing the proportion of build process that we can pre-manufacture in-house. Timber Frame and Light Gauge Steel are already embedded across the entire platform. That sets us up for implementation of our external wall system, which reduces the reliance on wet trades on site. Lighter wall unlocks our insulated raft foundation system, reducing concrete usage and lowering embodied carbon. And then our roof cladding substitutes heavier finishes with modular offsite friendly systems. Finally, our energy and water systems which are designed to reduce peak consumption as well as lower the running costs for our customers are already being implemented with new systems rolling out into the second half of 2026. As we roll out each of these systems we are progressively increasing the pre-manufactured value or PMV reaching 70% by 2030 if not there beforehand. Slide 17, the rollout of the system from now until 2030. Timber frame and energy systems are 100% of the portfolio today, with the new energy specification phasing in from the second half of this year. The external wall and foundation systems start with 200 units in 2027 and ramps up from there, and the lightweight roof phases in from 2029, all of them at 100% of production in 2030. The bottom row highlight the pre-manufactured value progression of these work streams rolled out and the ramp up. Today we sit at approximately 45% with nearly half of Glenbate's home already made indoors. By 2030 we'll sit at 70%. We have built this integrated system for approximately 75 million euros of capital with a further 15 million remaining across this year and next year. To emphasise the scale and the sophistication of this strategy, it took us about seven years to assemble. Part of its strength is that it's not easily replicated, requiring standardisation, design for manufacturing and an attractive on-door focused land bank of scale and workforce experience. Combined with the market conditions and the government's force, we continue to view this as an exciting enhancement of our development and delivery capabilities. and I'm looking forward to keeping you updated as we roll out the integrated system into future updates. With that, I'll hand you over to Conor to take you through the financials. Thanks Stephen and good morning everyone.

I'll start with the income statement on slide 19 with a focus on the performance highlights for the half. Revenue for the half was £240 million against £342 million for the same period last year. Home building contributed 64 million from 155 closed units and partnerships 176 million up 43% which includes approximately 10 million of land sales. This step down in group revenue relates to the phasing of home building completion and the second half waiting that we set out for you in March. As Stephen has said already, every home we expect to close in 2026 is sold, contracted or reserved and construction spend is 34% ahead in the period to June on similar volumes. Looking closer at the mix, average selling price was approximately £402,000 in the first half against £377,000 in H1 2025 owing to site mix. Life for life pricing is firm across every active site. We expect an ASP of approximately £380,000 for the full year and around £350,000 on a spot basis over the medium term as our own standardised product takes an increasing share. That pricing direction is deliberate. Affordability is the strategy with a view to continuing to meet buyer needs. Group gross profit in H1 was 37 million at a margin of 15.5% against 19.5% for the same period in 2025. This movement purely reflects a higher proportion of partnerships revenue in the half at 73% against 36% last year with partnerships obviously carrying a lower margin. Underlying performance in both segments moves in the right way however. Home building margin was 21.9% up 50 basis points and we expect approximately 21% for the full year with H1 flattered by mix on low volumes. Partnerships gross profit grew 16% to 23 million at a 13.2% margin in line with our expectations. Administration expenses including depreciation reduced 3.6% to 24 million and I will come on to talk about overhead trends a bit more in a few moments. Net finance costs were 12.3 million versus 9.6 million last year, reflecting higher average net debt and the write-off of unamortised borrowing costs on our previous facility. We expect approximately 24 million in finance costs for the full year. That leaves profit before tax of 1 million. As we mentioned, we have upgraded our full year guidance from up to 21 cents to at least 21 cents on the back of the sold-out order book for 2026 and accelerated construction delivery. Moving to slide 20, this gives a picture of the progressive dilution of overheads we have seen as we scale the business. Alongside scale benefits, active cost management and the deployment of AI across the business, each support our expectation of an overhead base below 5% of revenue for the full year, which further declines as a percentage of revenue to follow in future years. Turning to the balance sheet on slide 21, total assets of approximately 1.45 billion off from 1.25 billion at year end. Land excluding development rights was 559 million against 534 million at year end, an increase of 5%, resulting from the 33 million of targeted acquisitions and limited releases due to lower home building volumes, which will all now come in H2. Work in progress increased 46% to $505 million from $347 million a year ago, with construction spend up 34% year-on-year, underpinning the outturn for 2026. Contract assets were $137 million, and the unwind of this through H2, alongside a growing forward-funded component within partnerships, structurally improves cash conversion as we continue to scale. The post-year-end contract asset balance will be significantly below 100 million. On slide 22, we take a look at net debt, which was 423 million at 30 June against 168 million at year-end. Operating cash outflow in the house was 209 million. We are guiding net debt to reduce to approximately 120 million by year end underpinned by the order book position that we talked about and the unwind of the working progress bill from the first half which converts the cash as those loans close in addition to the natural unwind in the contract assets and partnerships. Across WIP, land and contract assets alone there is approximately 300 million to unwind in H2. From 2027 we expect home building completions to be spread more evenly, relatively speaking, across the year. This will return net debt both on average and half year to normalise ranges and give a more consistent lower net debt position through the year. We continue to target average net debt of 15-25% of gross assets, with a swift transition from the upper end of the range this year to closer to the lower end of 15% in 2027. Slide 23 then sets out our evolving land bank between now and the end of 27. As I noted our land balance sits at approximately 558 million which includes the 33 million spent in H1. We continue to remain on track to take approximately 100 million out of total land investment by December 2027. This has been facilitated not only by our well invested position and plots but also by rezoning Planning and Design Games, which have added to our land bank a zero additional cost. As the country accelerates new land zonings, we expect our strategic land portfolio to continue to contribute developable plots to the business, beyond what is in the $21,000 outlined, supporting the targeted reduction in balance sheet value, as there is no additional cost of these units. Land sale guidance for this year is now approximately 20 million down from 45 million with a further 25 million of land sales now anticipated in 2027. Slide 24 highlights the group's refinancing which we completed in April and is future proofing the group's funding position. Total committed funding is now 550 million up from 450 million in the previous facilities. This is a new five-year, 450 million RCS with our existing lenders, AIB, Bank of Ireland, Barclays and Home Building Finance Ireland, with ING now also joining the syndicate. Alongside it, a new 100 million of seven-year private placement was completed with MetLife, which brings long-dated institutional capital into the structure for the first time and further broadens the lender base. with approximately 57 million of project level facilities. Total funding across the group is now over 600 million. The funding suite in its totality represents a step change for the business in terms of counterparty expansion, tenure, available liquidity, economics and covenants. The private placement carries a fixed coupon out to 2023 while a five year interest rate cap is in place on 100 million of the OCS. both combined largely de-risk the group's average debt requirements from interest rate risks in future periods. Moving to capital allocation on slide 25. The priorities of discipline and balance are unchanged, but the demands on capital are now beginning to fall rapidly. The land bank is fully assembled, the manufacturing programme is substantially complete with approximately 15 million left to spend, and shorter build cycles and better delivery profiles means every unit delivered will benefit from greater economies of scale and sites will absorb less working capital, which brings us to returns. The current buyback began as a £25 million programme in January and was extended to £50 million in May. Today we've added a further £50 million. That takes the authorised programme to £100 million, running to no later than 31 March 2027. On completion, approximately 520 million will have been returned to shareholders since 2021, with share count down well over 40%. Looking forward on slide 26, I want to point to key elements of our exceptionally strong 2026 outlook. This is underpinned by a resilient demand environment, clear policy visibility, and our ability to deliver the right product, principally high quality own door housing in the best locations at the right price. On EPS we are now guiding full year EPS for 2026 to be at least 21 cent, revised from up to 21 cent in March. We expect to complete more than 2,900 total equivalent units this year and of those in excess of 1,700 will be home building units. The combined 2026 and 2027 home building output of 3,600 reflects a deliberate reallocation of some of our land bank towards partnerships, where units delivered on Glen Bay land are forward funded and capital light. As these schemes convert, the group sees scope for partnerships to outperform its 60 million average annual gross profit guidance, with a corresponding acceleration in group return on capital employed. The segment is, in fact, to deliver its guided annual profit of in excess of 60 million in 2026, with a further 1,000-unit pipeline in Glen Bay sites providing visibility into future periods. Home building gross margin is expected to remain at approximately 21%, supported by standardisation, scale benefits and the site economics embedded in our portfolio. Our land sales as mentioned previously are now expected to be approximately 20 million for 2026 with a further 5 million in 2027 and we remain on track to take 100 million out of the balance sheet value invested in land by 2027. And lastly, net debt is expected to materially reduce to approximately 120 million by year end with the business having entered a structurally lower capital phase of delivery from Q3 of this year. Thanks again for joining this morning and I'll pass you back to Stephen for his concluding remarks.