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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Glenveagh Properties Plc | LSE:GLV | London | Ordinary Share | IE00BD6JX574 | ORD EUR0.001 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.005 | 0.40% | 1.25 | 1.23 | 1.27 | 1.27 | 1.27 | 1.27 | 48,991 | 16:35:21 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gen Contractor-oth Residentl | 607.94M | 47.11M | 0.0738 | 17.21 | 810.43M |
From Apr 2019 to Apr 2024
TIDMGLV
RNS Number : 9445R
Glenveagh Properties PLC
06 March 2019
Glenveagh Properties PLC
Final Results 2018
Glenveagh Properties PLC ("Glenveagh" or the "Group") a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange announces its Final Results for the year ended 31 December 2018.
Financial Highlights
-- Revenues of c. EUR84m inclusive of 275 units sales totalling EUR79m and land sales of EUR5m; -- Gross margin of EUR15.3m (18.2%);
-- Administration expenses for the year of EUR17.2m net of depreciation and amortisation (EUR0.2m) and exceptional costs (EUR0.4m);
-- Net loss after tax of EUR3.5m pre-exceptionals; -- Inventory of EUR719m inclusive of EUR101m investment in work-in-progress; and -- Net cash of EUR131m at 31 December.
Operational Highlights
-- Total site acquisition investment of c. EUR615m since IPO, including c.EUR50m (800 units) announced today;
-- The landbank, now in excess of 12,600 units, has been assembled at attractive rates in the context of both cost per site EUR51k[1] and site cost as a percentage of NDV 17%[2];
-- Actively constructing on 14 sites during 2018 with over 1,100 units under construction during the period, substantially de-risking delivery targets;
-- Construction costs in line with expectations with over 90% of costs associated with 2019 deliveries now agreed. CPI less than 3% on current tendering;
-- The Group are currently selling from eleven sites with 451 units sold, signed or reserved (excluding Herbert Hill, Dundrum) at 5 March (202 at 31 December);
-- Active in the Strategic Housing Development ("SHD") planning process with in excess of 5,500 units at various stages of the planning process during 2018 and 2019; and
-- Significant progress made towards obtaining planning and de-risking the Group's large scale 1,850+ unit PRS portfolio in addition to developing its long term Mixed-Tenure capabilities.
Project Arrow and Sites in Exclusivity
The Group has exchanged contracts to acquire two sites off-market for a consideration of approximately EUR50m ("Project Arrow").
Located at Leixlip and Newbridge Co. Kildare, the properties currently have full planning permission for 793 units:
-- Site 1: 47 acres at Barnhall, Leixlip, Co Kildare with planning permission for 450 units; and
-- Site 2: 47 acres at Kilbelin, Newbridge, Co Kildare with planning permission for 343 units.
Project Arrow further strengthens Glenveagh's focus on delivering starter homes in the Greater Dublin Area ("GDA"). Benefitting from strong planning permissions, construction is expected to commence in H2 2019 with the first units closing in 2020.
Further site acquisitions totalling EUR26m (730 units) across three GDA sites are in exclusivity. The blended cost per unit of Project Arrow and transactions in exclusivity is EUR51k (net of fees and stamp duty).
Glenveagh's Co-Founder and CEO Justin Bickle commented:
"2018 was a very strong execution year at Glenveagh. We were delighted to exceed our key targets, selling 275 homes in our first full year's trading, against our 250 goal, and continued to add new sites to our attractive and flexible land portfolio. The firm foundations we laid during the year gave us significant momentum heading into 2019 and position us favourably for long term success. 2018's achievements were the product of considerable hard work by many people across our organisation and support from our industry partners.
We remain very confident about the residential market backdrop in Ireland, as well as our ability to execute on our business plan. 2019 is off to a fast start, after two months of trading we already have 451 homes signed, closed or reserved while the Project Arrow acquisition announced today proves that our team are able to source and execute accretive land acquisitions off-market.
We believe that our focus on starter-homes in the private Build-to-Sell segment, private rental opportunities (PRS) across our business, and Mixed-Tenure schemes for local authorities is the right one to allow us to become a profitable and resilient homebuilder across the cycle. Our commitment to health and safety, customer service and product innovation is central to our mission. We are very proud to be named one of Ireland's Great Places to Work and the first homebuilder to receive such recognition.
We thank our shareholders for their ongoing support."
Outlook
Glenveagh's market backdrop remains very favourable with significant demand for housing, particularly starter-homes. With a significant portion of our costs agreed and 451 units sold, signed or reserved, we have strong visibility on delivering our unit guidance of 725 for the period. We remain on track to deploy the remaining EUR90 million share placing proceeds.
Results Presentation
A conference call for analysts and investors will take place at 8.30am (GMT) this morning to present the financial and operational results followed by a Q&A session. Dial-in details as follows:
-- Ireland +353 (0) 1 2460271 / UK +44 (0) 20 3059 2697 / USA +1 347 532 1806; -- Conference PIN: 5115865 followed by *0; -- Click this link to register for the conference.
For further information please contact:
Hot Features
Premium
Investors: Media:
Glenveagh Properties Gordon MRM
PLC
Ray Gordon 087 241 7373
Justin Bickle (CEO)
David Clerkin 087 830
Michael Rice (CFO) 1779
Conor Murtagh (Director, glenveagh@gordonmrm.ie
Strategy & IR)
investors@glenveagh.ie
-------------------------
Note to Editors
Glenveagh Properties PLC is a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange. With a focus on strategically located developments in the Greater Dublin Area, Cork, Limerick and Galway, the Group comprises two complementary divisions, Glenveagh Homes and Glenveagh Living.
Glenveagh Homes delivers high quality starter homes to its private and institutional customers with selective developments of mid-size and executive houses and apartments in areas of high demand.
Glenveagh Living delivers houses and apartments for the public sector and institutional investors. Its Partnerships business focusses on mixed-tenure and joint venture opportunities with the public sector in Ireland, while its PRS business delivers large-scale private rental product for institutional investors.
www.glenveagh.ie
Glenveagh Properties PLC: Business, Financial and Market Review
1. Business Review i. Our Development Land
In 2018 we moved quickly to de-risk our long-term sales objectives by assembling a starter-home focussed landbank with affordability and value-for-money at its core. Our landbank was assembled at attractive rates in the context of both cost per site (EUR50k vs EUR56k at IPO) and site cost as a percentage of NDV (17% vs 22% at IPO).
The Group's acquisitions occurred largely off market and our landbank now comprises over 12,600 units. Our sites are primarily located in the GDA (81%) with approximately 85% of the landbank sitting within our Homes business and 67% of the total units are expected to be houses (33% apartments), which is consistent with the land strategy we laid out at IPO.
Glenveagh is now positioned to deliver housing to the deepest segments of the market with 74% of Build-to-Sell units on forthcoming developments priced at EUR350k or less. With an average site size of approximately 265 units coupled with a focus on starter-homes, the portfolio is positioned to generate returns in the current mortgage and market environment within a short time-frame and has multiple exit options as outlined above.
ii. Planning
98% of our lands are zoned residential. We have the necessary Full Planning Permission ("FPP") in place to deliver all of our 2019 units with limited risk attaching to 2020. To further de-risk our near-term unit delivery targets and ensure we have 'shovel ready' sites available in the medium-term, we are highly active in the fast-track Strategic Housing Development ("SHD") planning process with in excess of 5,500 units at various stages of planning during 2018 and 2019. Our key planning objectives are to: add additional units to our 'shovel ready' portfolio; re-plan an element of our existing permissions to ensure we get the full benefits of product standardisation (particularly house type and layout); and where appropriate, increase densities on our sites.
iii. Construction Progress
We are now actively constructing on 15 sites. With over 1,100 units under construction during 2018 we have substantially de-risked our delivery targets for 2019 (725) and 2020 (1,000). Works have commenced at Maryborough Ridge (Mount Woods), Kilcock (Ledwill Park) and Blackrock Villas, all of which are delivering units in 2019 / early 2020. Further site openings for 2019 will include Stamullen, Hollystown and Leixlip.
iv. Sales
The Group finished 2018 with 275 unit sales. Performance on our starter-home schemes was strong despite show homes at Taylor Hill and Cluain Adain not opening until May and July respectively.
Sales for 2019 are off to a strong start with 451 units sold, signed or reserved at 5 March. This does not include our Herbert Hill development (90 units) which we expect to dispose of as a single transaction later in 2019. 2019 sales will benefit from a number of factors including:
-- five new site launches at Knightsgate, Semple Woods, Ledwill Park, Mount Woods and Blackrock Villas;
-- the prospective sale of our Herbert Hill development;
-- full-year of show home availability at Taylor Hill and Cluain Adain;
-- our Marina Village show apartments opening in H1; and
-- units available to our sales team earlier in the period due to strong construction progress.
v. Glenveagh Living ("Living")
Our Living business continues to focus on the PRS and Mixed-Tenure segments referenced above, together with seeking to undertake Joint Ventures with appropriate counter-parties in the Irish market.
PRS
During 2018 the Living business significantly progressed its highly attractive 1,850+ unit PRS land portfolio in terms of master planning, and design, and submitted its first fast-track planning application in respect of its East Road site in the Dublin Docklands for 560 units (against a 450 units initial underwrite). The balance of the portfolio will proceed through the application phase during 2019 with construction due to commence on East Road (conditional on planning) in 2020.
Given the scarcity value embedded in our PRS portfolio, three quarters of which was directly sourced off-market, the Living team have begun to explore their exit options for these sites, which it believes will likely become effective after planning is obtained in each case. The default exit structure is to forward fund / forward sell the existing portfolio either as a single portfolio or on an individual asset basis to institutional investors. We believe that such structures will become more common in the Irish market going forward and can lock in certainty of returns and outcomes for the Group and generate attractive ROCE.
Mixed-Tenure and Joint Ventures
During the past 12 months our Living team has spent significant time evaluating the benefits and advantages of undertaking Partnerships in Ireland in addition to delivering starter-homes (through Glenveagh Homes) and our PRS schemes across our business.
Glenveagh has identified a pipeline of over 5,000 units which are likely to be tendered by local authorities in the coming years. Of that pipeline, Glenveagh is actively tendering on schemes which, if awarded, could deliver up to 2,000 units across the three tenure types (private for sale, PRS and social / affordable). We are excited about the prospects of becoming a leading delivery partner of housing with local authorities and approved housing bodies ("AHBs") in Ireland and look forward to making demonstrable progress towards our longer-term goals during 2019.
2. Financial Review i. Group performance
2018 was a year of significant growth for Glenveagh and delivered a strong operational and financial performance. The total unit completions for the year were 275 units with overall group revenue of EUR84.2 million.
The Group's revenue from the 275 units equated to EUR79.0 million. Over 90% of these units came from our developments aimed at first-time buyers and the demand in this segment of the market remains very strong which is evident from our Average Selling Price ("ASP") for the year of EUR287k.
The Group's gross profit for the year amounted to EUR15.3 million with a corresponding gross margin of 18.2%. This strong margin performance demonstrates that the Group's target of 20% gross margin in 2020 is achievable.
Our operating loss pre-exceptional items for the year was EUR2.1 million. The Group's central costs for the year were EUR17.2 million, which along with EUR0.2 million of depreciation and amortisation gives total administrative expenses pre-exceptional items of EUR17.4 million. This investment in our central functions demonstrates our commitment to delivering the Group's medium-term operational and financial targets.
The exceptional costs of EUR0.4 million incurred in the year relate to certain costs and fees on the equity placing in August 2018.
ii. Balance Sheet
The Group's net asset value has increased to EUR843.1 million at 31 December 2018 (2017: EUR640.7 million), with the increase predominantly due to the equity placing.
The Group has shown substantial growth during the year with land and development rights increasing to EUR618 million (2017: EUR217.0 million), which equates to c.11,850 units at 31 December 2018. The Group has also invested heavily in work in progress with a significant operational ramp up from five active sites in the prior year to 14 and a related work in progress balance of EUR101.0 million at year end (2017: EUR11.1 million). The investment in the land portfolio and work in progress has been financed through the Group's net cash balances, which have decreased to EUR130.7 million at 31 December 2018 (2017: EUR351.8 million).
iii. Cash Flow
The Group deployed significant cash in the year as we continued the ramp up phase of the business. The cash outflows predominantly related to the EUR446 million deployed on land (including the acquisition of a subsidiary undertakings) and construction activity.
These significant cash movements, along with a number of other operational cash flows, gave rise to a net cash outflow for the Group of EUR221.1 million in the year, with the Group in a net cash position of EUR130.7 million (2017: EUR351.8 million) at year-end.
During the year, the Group drew down EUR26.0 million from the RCF in two separate tranches. The full amount was repaid prior to year-end to minimise the interest cost of the facility. We expect to utilise this debt facility to a greater extent in 2019 to finance the working capital requirements of new and existing sites.
3. Market Review i. The Land Market
The vacant site levy was 3% in 2018 and 7% in 2019 and is now impacting vendors' disposal decisions and timing thereof. There is a limited pool of prospective acquirers for large starter-home sites given the capital and delivery capability requirements to convert such sites. Furthermore, smaller sites are now being recycled at attractive rates by private builders with competition reduced on these sites.
The Group remains focussed on disciplined deployment of capital in line with key underwriting criteria (financial and operational). We expect to deploy the remainder of the proceeds from our 2018 share consistent with our previously stated timetable.
ii. Build-to-Sell ("BTS")
The strong demand for housing in Ireland is driven by the fundamentals of population growth (net migration 34k[3]), household formation, employment and affordability (wage growth 4.1%(3) ). Notwithstanding that, chronic undersupply continues to be a feature of housing delivery with c.18k dwellings delivered in 2018 versus demand estimates of 36k+[4].
We believe that the demand / supply imbalance in the residential sector will continue for some years, and ought to favour well capitalised homebuilders like Glenveagh who can deliver a significant number of homes each year using modern construction methods and reliable supply chains.
Glenveagh's view is that the deepest and most attractive part of the residential market is starter-homes, particularly in the GDA and other cities like Cork. Building modern, value for money and space efficient single-family homes is required in a growing economy like Ireland, and this is Glenveagh's core product.
iii. Private Rental Sector ("PRS")
The structural shift to rental is continuing in the Irish market and particularly in Dublin. Vacancy rates are low (1.4%(3) ) and rental growth remains strong (9.8%[5]). PRS has emerged as a recognised asset class and now accounts for 30% of real estate investment in Ireland (40% in Dublin[6]). Prime PRS Residential Net Initial Yields moved to below 4%[7] in February 2019 although Dublin's PRS yields remain higher than other major European gateway cities.
Based on our experience overseas, Glenveagh believe that PRS will be an increased feature of housing in Ireland in the coming years. PRS is attractive in Dublin given its young and growing population, the expectation of significant future population growth (30%+ forecast from 2010 to 2046[8]), low vacancy rates and attractive rental growth rates.
iv. Mixed-Tenure
The chronic housing shortage in Ireland is not just restricted to the private sector. The public sector housing crisis in Ireland is acute, with over 70,000 on waiting lists for appropriate accommodation.
The largest landowner in the Irish market is the State, either through major governmental agencies, or via local authorities. Our view is that, as in the UK, an increasing feature of housing provision in Ireland in the coming years will be through Mixed-Tenure schemes. This is part of our Partnership offering at Glenveagh Living but it draws on skills and resources embedded across our entire business.
There are a number of government initiatives designed to increase the provision of housing in Ireland or which seek to alleviate the current housing crisis. For example, Rebuilding Ireland's goal is to ramp up delivery of housing from its current undersupply across all tenures. The Land Development Agency ("LDA") was formed during 2018 with EUR1.25bn of commitments to build 150,000 homes over next 20 years. Glenveagh looks forward to working with the LDA as it gets established and to being a leading contributor to the supply of housing in partnerships with these agencies in the future.
Ends
Consolidated statement of profit or loss and other comprehensive income
For the financial year ended 31 December 2018
Year Ended 31 December 2018 Period from incorporation on 7
August 2017 to 31 December 2017
Before Before
exceptional Exceptional exceptional Exceptional
Note items items Total items items Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue 10 84,179 - 84,179 1,425 - 1,425
Cost of sales (68,887) - (68,887) (901) (901)
Gross profit 15,292 - 15,292 524 - 524 Administrative expenses 11 (17,438) (409) (17,847) (4,187) (556) (4,743) Founder Shares: Share-based payment expense 11,14 - - - - (47,509) (47,509) Operating loss (2,146) (409) (2,555) (3,663) (48,065) (51,728) Finance expense (1,414) - (1,414) (69) - (69) Finance income - - - 16 - 16 Loss before tax 12 (3,560) (409) (3,969) (3,716) (48,065) (51,781) Income tax credit 16 39 - 39 397 - 397 Loss after tax attributable to the owners of the Company (3,521) (409) (3,930) (3,319) (48,065) (51,384) Other comprehensive income - - - - - - Total comprehensive loss for the period (3,930) (51,384) attributable of the owners of the Company Basic and diluted loss per share (cents) 15 (0.53) (13.73)
Consolidated balance sheet
as at 31 December 2018
31 December 31 December
Note 2018 2017
EUR'000 EUR'000
Assets
Non-current assets
Property, plant and equipment 17 11,497 1,476
Intangible assets 18 727 75
Deferred tax asset 16 208 151
Restricted cash 23 1,500 1,500
13,932 3,202
Current assets
Inventory 19 718,862 228,089
Trade and other receivables 20 14,507 69,374
Income tax receivable 340 326
Cash and cash equivalents 27 130,701 351,796
864,410 649,585
Total assets 878,342 652,787
Equity
Share capital 26 1,052 867
Share premium 879,281 666,381
Retained earnings (80,661) (74,112)
Share-based payment reserve 43,443 47,548
Total equity 843,115 640,684
Liabilities
Non-current liabilities
Trade and other payables 21 1,803 1,903
Finance lease liability 28 5 170
1,808 2,073
Current liabilities
Trade and other payables 21 33,386 9,946
Finance lease liability 28 33 84
33,419 10,030
Total liabilities 35,227 12,103
Total liabilities and equity 878,342 652,787
Consolidated statement of changes in equity
for the financial year ended 31 December 2018
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 2018 667 200 666,381 47,548 (74,112) 640,684
Total comprehensive loss for the
financial year
Loss for the financial year - - - - (3,930) (3,930)
Other comprehensive income - - - - - -
667 200 666,381 47,548 (78,042) 636,754
Transactions with owners of the Company
Issue of ordinary shares for cash 185 - 212,900 - - 213,085
Share issue costs - - - - (7,131) (7,131)
Conversion of Founder Shares to ordinary
shares 19 (19) - (4,512) 4,512 -
Equity-settled share-based payments - - - 407 - 407
204 (19) 212,900 (4,105) (2,619) 206,361
Balance as at 31 December 2018 871 181 879,281 43,443 (80,661) 843,115
Consolidated statement of changes in equity
for the period from incorporation on 9 August 2017 to 31 December 2017
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 9 August 2017 - - - - - -
Total comprehensive loss for the
period
Loss for the period - - - - (51,384) (51,384)
Other comprehensive income - - - - - -
- - - - (51,384) (51,384)
Transactions with owners of the Company
Issue of ordinary shares for cash 752 - 551,819 - - 552,571
Share issue costs - - - - (22,728) (22,728)
Re-designation as Founder Shares (200) 200 - - - -
Issue of ordinary shares related
to business combinations 4 - 4,423 - - 4,427
Issue of ordinary shares in consideration
for inventories 111 - 110,139 - - 110,250
Equity-settled share-based payments - - - 47,548 - 47,548
667 200 666,381 47,548 (22,728) 692,068
Balance as at 31 December 2017 667 200 666,381 47,548 (74,112) 640,684
Consolidated statement of cash flows
For the financial year ended 31 December 2018
Period from
incorporation
on 9 August
Year ended 2017 to 31
31 December December
2018 2017
Note EUR'000 EUR'000
Cash flows from operating activities
Loss for the financial year/period (3,930) (51,384)
Adjustments for:
Depreciation and amortisation 235 110
Finance costs 1,414 69
Finance income - (16)
Equity-settled share-based payment
expense 14 407 47,548
Tax credit 16 (39) (397)
Loss on disposal of property, plant
and equipment 17 18 -
(1,895) (4,070)
Changes in:
Inventories (432,031) (116,902)
Trade and other receivables 11,076 (69,295)
Trade and other payables 23,126 11,612
Cash used in operating activities (399,724) (178,655)
Interest paid (1,218) (68)
Tax paid (32) (211)
Net cash used in operating activities (400,974) (178,934)
Cash flows from investing activities
Acquisition of plant, property and
equipment 17 (10,622) (309)
Acquisition of intangible assets 18 (564) (38)
Cash acquired on acquisition 25 15 3,229
Transfer to restricted cash 23 - (1,500)
Acquisition of subsidiary (net of
cash acquired) 25 (13,663) -
Net cash (used in) / from investing
activities (24,834) 1,382
Cash flows from financing activities
Proceeds from issue of share capital 213,085 552,571 Issue costs paid (7,131) (22,728) Proceeds from loans and borrowings 26,000 - Repayment of loans and borrowings (26,000) - Transaction costs related to loans and borrowings (1,025) - Payment of finance lease liabilities (216) (495) Net cash from financing activities 204,713 529,348 Net (decrease)/increase in cash and cash equivalents (221,095) 351,796 Cash and cash equivalents at the beginning of the year/period 351,796 - Cash and cash equivalents at the end of the year/period 130,701 351,796
Notes to the consolidated financial statements
For the financial year ended 31 December 2018
1 Reporting entity and basis of preparation
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 2018. The comparative period was for the period from incorporation on 9 August 2017 to 31 December 2017. The Group's principal activities are the construction and sale of houses and apartments for the private buyer and local authorities.
The financial information set out in this document does not constitute the full statutory financial statements but has been derived from the consolidated financial statements for the year ended 31 December 2018, referred to as the 2018 Financial Statements. The 2018 Financial Statements are prepared under EU adopted International Financial Reporting Standards (IFRS). The 2018 Financial Statements were authorised for issue by the Board of Directors on 5 March 2019, have been audited and have received an unqualified audit report. The financial information has been prepared under the historical cost convention as modified by use of fair values for share-based payments and business combinations. The Group's accounting policies detailed in note 8 below are extracted from the 2018 Financial Statements.
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
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, apart from the estimation involved in 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 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.
4 Use of judgements and estimates (continued)
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 accordingly the margin recognised reflects these evolving assessments, particularly in relation to the Group's long-term developments.
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 14 Share-based payments; -- Note 25 Business combinations; and -- Note 27 Financial instruments and financial risk management. 6 New standards and interpretations and adoption of new accounting policies (i) New standards effective in the financial year
IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments became effective in the financial year. Due to the transition methods chosen by the Group in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards.
(a) IFRS 15 Revenue from Contracts with Customers
From 1 January 2018, IFRS 15, Revenue from Contracts with Customers replaced IAS 18 Revenue and IAS 11 Construction Contracts, setting out new revenue recognition criteria particularly with regard to performance obligations and assessment of when control of goods or services passes to the customer.
The Group has adopted IFRS 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard at the date of initial application 1 January 2018. Based on the Group's assessment of IFRS 15, adoption of this standard had no impact on the prior period financial statements. The Group's new accounting policy is included in Note 8.
6 New standards and interpretations and adoption of new accounting policy (continued) (i) New standards effective in the financial year (continued)
(a) IFRS 15 Revenue from Contracts with Customers (continued)
Revenue - policy applicable before 1 January 2018
Revenue comprises the fair value of consideration received or receivable, net of value-added tax, rebates and discounts. Revenue is recognised once the value of the transaction can be reliably measured and the significant risks and rewards of ownership have been transferred.
Revenue represents the amounts receivable from the sale of houses and other fee income directly associated with property development, including asset advisory and construction services. Where the Group concludes that it operates as an agent for services rendered, (i.e. the Group takes no title, development or inventory risk) only commission earned is recognised as revenue. On the sale of homes, revenue is recognised at legal completion.
(b) IFRS 9 Financial Instruments
IFRS 9 Financial Instruments came into effect on 1 January 2018 replacing IAS 39 Financial Instruments: Recognition and Measurement and requires changes to the classification and measurement of certain financial instruments from that under IAS 39. The Group has adopted IFRS 9 using the cumulative effect method with the effect of initially applying this standard at the date of initial application 1 January 2018. Based on an assessment performed of the key areas in scope of IFRS 9 which includes but is not limited to, additional disclosures required by IFRS 7 'Financial Instruments - Disclosures', the majority of the Group's financial assets and liabilities will continue to be accounted for on an identical basis under IFRS 9 as they were under IAS 39. Glenveagh adopted the new standard on the required effective date of 1 January 2018 and has not restated comparative information. The Group's new accounting policy is included in Note 8.
Financial instruments - Policy applicable before 1 January 2018
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within administration expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against administration expenses in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances in hand and at the bank, including bank overdrafts repayable on demand.
Cash and cash equivalents that are not available for use by the Group are presented as restricted cash. Amounts of restricted cash which cannot be exchanged or used to settle a liability for at least 12 months after the end of the reporting period are classified as non-current assets.
6 New standards and interpretations and adoption of new accounting policy (continued) (i) New standards effective in the financial year (continued)
(b) IFRS 9 Financial Instruments (continued)
Financial instruments - Policy applicable before 1 January 2018 (continued)
Trade and other payables
Trade and other payables on normal terms are not interest bearing and are stated at their nominal value which is considered to be their fair value. Trade payables on extended terms are recorded at their fair value at the date of acquisition of the asset to which they relate. The discount to nominal value is amortised over the period of the credit term and charged to finance costs.
Financial instruments
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held to maturity financial assets, loans and receivables and available for sale financial assets.
The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair value through profit or loss and other financial liabilities.
-- Non-derivative financial assets and financial liabilities - recognition and derecognition
The Group initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instruments.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial assets expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Group currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
-- Non-derivative financial assets - measurement
These assets are initially measured at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at amortised cost using the effective interest method, as adjusted for any impairments.
-- Non-derivative financial liabilities (including interest bearing loans and borrowings) - measurement
Non-derivative financial liabilities are initially measured at fair value less directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
6 New standards and interpretations and adoption of new accounting policy (continued)
(b) IFRS 9 Financial Instruments (continued)
Financial instruments - Policy applicable before 1 January 2018 (continued)
Financial Instruments (continued)
For interest-bearing borrowings any difference between initial carrying amount and redemption value is recognised in profit or loss over the period of the borrowings on an effective interest basis.
-- Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any directly attributable transaction costs are recognised in profit or loss as incurred.
Embedded derivatives are separated from the host contract and accounted for at fair value through profit or loss if certain criteria are met.
Impairment of financial assets
An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss when they occur and are reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment is reversed through profit or loss.
(ii) Adoption of new accounting policies
There were also two other changes to the Group's significant accounting policies since the last annual financial statements which were adopted due to specific transactions entered into during the year. The first change is the adoption of an accounting policy in respect of joint operations in accordance with IFRS 11 Joint Arrangements. This was required as a result of the transaction described in Notes 19 and 29 in respect of the Group's interests in sites at The Square Shopping Centre, Tallaght and Gateway Retail Park, Knocknacarra, Co. Galway. The second change was the adoption of an accounting policy in respect of interest bearing loans and borrowings following the execution of a revolving credit facility (RCF) in the financial year as set out in Note 22. Both new accounting policies are included in Note 8.
A number of other new standards are also effective from 1 January 2018 but they do not have a material effect on the consolidated financial statements.
(iii) Standards not yet effective
IFRS 16 Leases addresses the definition of a lease, recognition and measurement of leases and establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted for on balance sheet for lessees. The standard replaces IAS 17 Leases, and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2019 and earlier application is permitted subject to EU endorsement.
6 New standards and interpretations and adoption of new accounting policies (continued) (iii) Standards not yet effective (continued)
The Group will not early adopt the standard and will therefore apply IFRS 16 for the first time for the financial year ending 31 December 2019.
The Group is currently evaluating the potential impact on its consolidated financial statements resulting from the application of IFRS 16 by carrying out a review of its contracted leases. Due to the limited number of leases to which Group is party and the profile of those leases, the adoption of IFRS 16 will not have a material impact on the Group's consolidated financial statements. Notes 28 and 30 outline the extent of the Group's lease commitments at 31 December 2018.
(iv) Annual improvements to IFRS Standards 2015-2017 (issued on 12 December 2017)
The changes under the Annual Improvements to IFRS Standards 2015 - 2017 Cycle are in relation to the following:
- IFRS 3 Business Combinations: This amendment clarifies that a company remeasures its previously held interest in a joint operation when it obtains control of the business.
- IFRS 11 Joint Arrangements: This amendment clarifies that a company does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.
- IAS 12 Income Taxes: This amendment clarifies that a company accounts for all income tax consequences of dividend payments in the same way.
- IAS 23 Borrowing Costs: This amendment clarifies that a company treats as part of general borrowings any borrowing originally made to develop an asset when the asset is ready for its intended use or sale.
(v) IFRIC 23 Uncertainty over Income tax treatments:
IFRIC 23 clarifies the application of recognition and measurement requirements of IAS 12 Income Taxes when there is uncertainty over income tax treatments. The interpretation specifically provides guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and circumstances.
7 Going concern
The Group has recorded a loss before tax of EUR3.9 million (2017: EUR51.2 million). The Group has a cash balance of EUR130.7 million (2017: EUR351.8 million) and has committed undrawn funds available of EUR125.0 million. Having considered the Group's cash flow forecasts, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to prepare the 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 - policy applicable from 1 January 2018
The Group develops and sells residential properties. 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 on the profit or loss for the financial year comprises current and deferred tax. Income tax is recognised in the income statement, except to the extent that it relates to items recognised directly in other comprehensive income or equity.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the financial year and any adjustment to the tax payable or receivable in respect of previous periods. The amount of current tax payable or receivables 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 is measured at the tax rates that are expected to apply in the periods in which temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
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 and future profitability. 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.
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, the grant date fair value of the share-based payment is
8 Significant accounting policies (continued)
8.5 Share-based payment arrangements (continued)
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.
In the current year, listing costs associated with the placing of shares in the Group's Firm Placing and Open Offer (EUR0.4 million) are considered exceptional items (see Note 11). The directors believe that separate presentation of these 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.
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 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 Significant accounting policies (continued)
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.
8.10 Financial instruments - policy applicable from 1 January 2018
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").
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:
Original New
carrying carrying
amount amount
under under
IFRS 9 IAS 39 IFRS 9
Type IAS 39 classification Classification EUR'000 EUR'000
---------------------------- ------------------------ ----------------- ---------- ----------
Financial assets
Amortised
Cash and cash equivalents Loans and receivables cost 130,701 130,701
Amortised
Other receivables Loans and receivables cost 70 70
Amortised
Restricted cash Loans and receivables cost 1,500 1,500
Amortised
Construction bonds Loans and receivables cost 3,377 3,377
Financial liabilities
Amortised - -
Bank indebtedness Other liabilities cost
Accounts payable
and Amortised
accrued liabilities Other liabilities cost 35,189 35,189
8 Significant accounting policies (continued)
8.10 Financial instruments - policy applicable from 1 January 2018 (continued)
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. IFRS 9 replaces the 'incurred loss' model in IAS 39 with an 'expected credit loss' model (ECL model). The new impairment model applies to financial assets measured at amortised cost, contract assets and debt instruments at FVOCI, but not to investment in equity instruments. Interest income and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Other liabilities
Such financial liabilities are recorded at amortised cost and include all liabilities.
Fair value through profit and loss
Financial instruments in this category are recognised initially and subsequently at fair value. Gains and losses arising from changes in fair value are presented within the profit and loss account in the consolidated statement of profit and loss and other comprehensive income in the period in which they arise. Financial assets and liabilities at FVTPL are classified as current, except for the portion expected to be realized or paid more than 12 months after the reporting date, which is classified as non-current.
Derivatives
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.
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.
8.12 Pensions
The Company operates a defined contribution scheme. The assets of the scheme are held separately from those of the Company in a separate fund. Obligations for contributions to defined contribution plans are expensed as the related service is provided.
8 Significant accounting policies (continued)
8.13 Finance lease liabilities
Leases of property, plant and equipment that transfer to the Group substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.
8.14 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.
8.15 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.
The Group is organised into two key reportable operating segments being Glenveagh Homes and Glenveagh Living. Internal reporting to the Chief Operating Decision Maker ("CODM") is provided on this basis. The CODM has been identified as the Executive Committee (as detailed in the Corporate Governance Statement).
The Group currently operates solely in the Republic of Ireland and therefore no geographically segmented financial information is provided.
Glenveagh Homes
Homes develops and builds starter, mid-size and executive and high-end homes (both houses and apartments) for the residential market in Ireland, with a focus principally on the Greater Dublin Area, as well as the Cork, Limerick and Galway regions.
9 Segmental information (continued)
Glenveagh Living
Living's strategic focus is on designing, developing and delivering residential solutions for institutional investors, social and affordable landlords, government entities and strategic landowners. Glenveagh Living intends to augment its operations with partnership arrangements to design, develop and deliver residential schemes for purchase by institutional investors, approved housing authorities and governmental and local authorities in Ireland. Glenveagh Living is also the Group's delivery platform for Private Rental Sector ("PRS") projects, which are residential projects that governmental authorities promote by offering a range of financial incentives, such as by granting guarantees and other financial risk sharing incentives, in order to increase the supply of properties in the build-to-rent market. Glenveagh Living develops residential schemes for private sector investors in PRS projects.
Segmental financial results
Period from
Incorporation
On 9 August
Year ended 2017 to 31
31 December December
2018 2017
EUR'000 EUR'000
Revenue
Glenveagh Homes 84,115 1,425
Glenveagh Living 64 -
Revenue for reportable segments 84,179 1,425
Operating profit/(loss)
Glenveagh Homes 6,311 (3,127)
Glenveagh Living (1,306) (93)
Operating profit/(loss) for
reportable segments 5,005 (3,220)
Reconciliation to results for
the year/period
Segment results - operating
profit/(loss) 5,005 (3,220)
Finance expense (1,414) (69)
Finance income - 16
Corporate expenses (7,560) (999)
Share-based payment expense:
Founder Shares - (47,509)
Loss before tax (3,969) (51,781)
9 Segmental information (continued)
Segment assets and liabilities
2018 2017
Glenveagh Glenveagh Glenveagh Glenveagh
Homes Living Total Homes Living Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Segment assets 632,503 130,324 762,827 260,237 44,621 304,858
Reconciliation to Consolidated
Balance Sheet
Deferred tax asset 71 14
Trade and other receivables 1,117 8,769
Cash and cash equivalents 106,650 339,146
Property, plant and equipment 7,677 -
878,342 652,787
Segment liabilities 30,708 2,660 33,368 11,228 484 11,712
Reconciliation to Consolidated
Balance Sheet
Trade and other payables 1,663 391
Interest accrual 196 -
35,227 12,103
10 Revenue Period from
incorporation
on 9 August
Year ended 2017 to 31
31 December December 2017
2018
EUR'000 EUR'000
Residential property sales 78,971 -
Land sales 4,950 -
Income from property rental and other
income 258 -
Asset advisory and management services - 147
Construction services - 1,278
84,179 1,425
Revenue earned by the Group in the prior financial period is in respect of certain contractual services undertaken on behalf of a related party as disclosed in the prior period consolidated financial statements.
11 Exceptional items Period from
incorporation
on 9 August
Year ended 2017 to 31
31 December December 2017
2018
EUR'000 EUR'000
Administration expenses 409 556
Founder Shares share-based payment
expense (Note 14) - 47,509
409 48,065
In the current financial year, listing costs of EUR0.4 million relating to the Group's Firm Placing and Open Offer have been classified as exceptional items in accordance with the Group's accounting policy set out at Note 8.6.
In the prior financial period, costs of EUR0.6 million relating to the Company's Initial Public Offering listing fees and other related expenses and EUR47.5 million relating to Founder Shares (see Note 14) were classified as exceptional items in the prior financial period.
12 Other information Period from incorporation on 9 August
2017 to 31 December 2017
Year ended 31 December 2018
EUR'000 EUR'000
Amortisation of intangible assets (Note 18) 61 50
Depreciation of property, plant and
equipment (Note 17)* 645 75
Operating lease rentals 771 189
Employment costs (Note 13) 19,885 50,569
Loss on disposal of property, plant and
equipment 18 -
*Includes EUR0.5 million (2017: EUR0.015 million) capitalised in inventory during the year
ended 31 December 2018
Auditor's remuneration
Audit of Group, Company and subsidiary
financial statements* 120 100
Other assurance services 315 728
Tax advisory services 48 27
Tax compliance services 29 41
512 896
Directors' remuneration
Salaries, fees and other emoluments 1,963 335
Pension contributions 40 9
Founder Shares share-based payment expense
(Note 14) - 47,509
2,003 47,853
*Included in the auditor's remuneration for the Group is an amount of EUR0.015 million (2017: EUR0.015 million) that relates to the Company's financial statements.
13 Employment costs
The average number of persons employed by the Group (including executive directors) during the financial year was 200 (Executive Committee: 5; Construction: 126; and Other: 69). (2017: Executive Committee: 5; Construction: 64; and Other: 35)
The aggregate payroll costs of these employees for the financial year were:
Period from incorporation on 9
August 2017 to 31 December 2017
Year ended
31 December Before
2018 exceptional Exceptional
Total items items Total
EUR'000 EUR'000 EUR'000 EUR'000
Wages and salaries 16,998 2,660 - 2,660
Social welfare costs 1,685 280 - 280
Pension costs - defined
contribution 795 81 - 81
Share-based payment expense
(Note 14) 407 39 47,509 47,548
19,885 3,060 47,509 50,569
EUR7.3 million (2017: EUR1.0 million) of employment costs were capitalised in inventory during the year.
14 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) which is a new scheme that was approved during the 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 the prior period, 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.
An expense of EUR47.5 million was recognised in the consolidated statement of profit or loss in the period ended 31 December 2017 with a corresponding increase in the share-based payment reserve. This represented the full grant date fair value of the Founder Shares which was recognised at grant date on the basis that no service condition attaches to the shares under the terms of the scheme. There has been no expense recognised in the current financial year and none will be recognised in future reporting periods. The following were the key assumptions used in determining the fair value at of Founder Shares grant date:
Founder
shares
Fair value at grant date EUR0.24
Share price at grant date EUR1.00
Exercise price N/A
Expected volatility 34.12%
Expected life 5 years
Expected dividend yield 0%
Risk free rate -0.023% -
+0.18%
As set out in Note 26, 18,993,162 Founder Shares were converted to ordinary shares during the year following the completion of the first test period. This resulted in the re-classification of the portion of the EUR47.5 million share-based payment expense noted above which related to these shares (being EUR4.5 million) from the share-based payment reserve to retained earnings.
(b) LTIP
The Group's LTIP was approved in 2017 and a total of 2,427,565 options have subsequently been granted to members of the senior management team (excluding Executive Directors). 839,065 options were granted in two separate tranches in the current year. All options granted to date are subject to the same service and performance conditions.
LTIP 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 TSR across the vesting period. 25% of the award will vest once the 3-year annualised TSR reaches 6.25% per
14 Share-based payment arrangements (continued)
(b) LTIP (continued)
annum with the remaining options vesting on a pro rata basis up to 100% if TSR of 12.5% is achieved.
Details of options outstanding and grant date fair value assumptions
Number of Number
Options of
2018 Options
2017
LTIP options in issue at the beginning
of the financial year/period 1,588,500 -
Granted during the financial year/period 839,065 1,588,500
Cancelled during the financial year/period (75,822) -
LTIP options in issue at the end
of the financial year/period 2,351,743 1,588,500
2018 2018 2017
Tranche 1 Tranche 2
Fair value at grant date EUR0.48 EUR0.31 EUR0.64
Share price at grant date EUR1.16 EUR0.87 EUR1.16
Valuation methodology Monte Carlo Monte Carlo Monte Carlo
Exercise price EUR0.001 EUR0.001 EUR0.001
Expected volatility 34.3% 28.1% 36.6%
Expected life 3 years 3 years 3 years
Expected dividend yield 0% 0% 0%
Risk free rate -0.45% -0.42% -0.088%
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 Company 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 Company's actual trading volatility to date.
The Group recognised an expense of EUR0.4 million (2017: EUR0.04 million) in the consolidated statement of profit or loss in respect of options granted under the LTIP.
14 Share-based payment arrangements (continued)
(c) SAYE Scheme
The SAYE scheme was approved by the Board during the year and a total of 506,040 options have subsequently been granted to employees of the Group. Under the terms of the scheme, employees may save up to 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.
Details of options outstanding and grant date fair value assumptions
Number of Number
Options of
3 Year Options
5 Year
SAYE options in issue at 1 January - -
2018
Granted during the financial year/period 356,040 150,000
Cancelled during the financial year/period (14,400) -
SAYE options in issue at 31 December
2018 341,640 150,000
3 Year 5 Year
Fair value at grant date EUR0.20 EUR0.23
Share price at grant date EUR1.03 EUR1.03
Valuation Methodology Monte Carlo Monte Carlo
Exercise price EUR1.00 EUR1.00
Expected volatility 26.8% 29.6%
Expected life 3 years 5 years
Expected dividend yield 0% 1.4%
Risk free rate -0.14% -0.42%
Given the Company 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 Company's actual trading volatility to date.
The Group recognised an expense of EUR0.01 million consolidated statement of profit or loss in respect of options granted under the SAYE scheme.
15 Loss per share
The calculation of basic loss per share has been based on the loss 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 2018 (2017: 667,049,000). Ordinary shares potentially issuable from share-based payment arrangements are anti-dilutive due to the loss in the financial year meaning there is no difference between basic and diluted earnings per share. The number of potentially issuable shares in the Company held under option or Founder Share arrangements at 31 December 2018 is 183,850,221 (2017: 201,588,500).
Period from
incorporation
on 9 August
Year ended 2017 to 31
31 December December
2018 2017
Loss for the year attributable to ordinary shareholders (EUR'000) (3,930) (51,384)
Weighted average number of shares for the financial year/period 745,664,898 374,284,264
Basic and diluted loss per share (cents) (0.53) (13.73)
2018 2017
No. of shares No. of shares
Reconciliation of weighted average number of shares
Issued ordinary shares at beginning of financial year/period 667,049,000 1
Effect of Founder Shares Converted 7,545,229 -
Effect of shares re-designated as Founder Shares - (188,888,889)
Effect of shares issued related to business combinations - 2,428,701
Effect of shares issued for cash 71,070,669 500,260,076
Effect of shares issued as consideration for inventories - 60,484,375
745,664,898 374,284,264
See Note 26 for further information in relation to significant share issuances.
16 Income tax
Period from
incorporation
Year ended on 9 August
31 December 2017 to 31
2018 December 2017
EUR'000 EUR'000
Current tax charge/(credit) for the
financial year/period 18 (246)
Deferred tax credit for the financial
year/period (57) (151)
Total income tax credit (39) (397)
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.
Period from
incorporation
Year ended on 9 August
31 December 2017 to 31
2018 December 2017
EUR'000 EUR'000
Loss before tax for the financial year/period (3,969) (51,781)
Tax credit at standard Irish income
tax rate of 12.5% (496) (6,473)
Tax effect of:
Income taxed at the higher rate of corporation
tax 324 5
Non-deductible expenses - Founder Share
expense - 5,938
Non-deductible expenses - other 109 248
Other adjustments 24 (115)
Total income tax credit (39) (397)
Movement in deferred tax
balances
Balance at Balance at
1 January Recognised 31 December
in
2018 profit or 2018
loss
EUR'000 EUR'000 EUR'000
Tax losses carried forward 151 57 208
151 57 208
16 Income tax (continued)
The deferred tax asset accrues in Ireland and therefore has no expiry date. 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.
17 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 2018 - 331 1,161 57 1,549
Acquisitions through
business
combinations (Note
25) - - 62 - 62
Additions 7,713 417 2,136 356 10,622
Disposals - - (18) (6) (24)
At 31 December 2018 7,713 748 3,341 407 12,209
Accumulated depreciation
At 1 January 2018 - (15) (50) (8) (73)
Charge for the year (36) (74) (452) (83) (645)
Disposals - - 2 4 6
At 31 December 2018 (36) (89) (500) (87) (712)
Net book value
At 31 December 2017 - 316 1,111 49 1,476
At 31 December 2018 7,677 659 2,841 320 11,497
The depreciation charge for the year includes EUR0.5 million (2017: EUR0.015 million) which was capitalised in inventory at 31 December 2018.The Group leases plant and machinery under finance lease arrangements. As at 31 December 2018, the net book value of leased equipment was EUR0.05 million (2017: EUR0.3 million).
18 Intangible assets
Computer
Licence Software Total
EUR'000 EUR'000 EUR'000
Cost
At 1 January 2018 - 145 145
Acquisitions through business
combinations (Note 25) 149 - 149
Additions - 564 564
At 31 December 2018 149 709 858
Accumulated amortisation
At 1 January 2018 - (70) (70)
Charge for the year - (61) (61)
At 31 December 2018 - (131) (131)
Net book value
At 31 December 2017 - 75 75
At 31 December 2018 149 578 727
19 Inventory
2018 2017
EUR'000 EUR'000
Land held for development (i) 597,028 216,964
Development expenditure 100,964 11,125
Development rights (ii) 20,870 -
718,862 228,089
EUR66.6 million (2017: EUR0.9 million) of inventory was recognised in 'cost of sales' during the year ended 31 December 2018.
19 Inventory (continued) (i) Development land acquisitions completed during the year
East Road
The Group entered into an unconditional contract to acquire a 2-hectare site in the North Docklands, Dublin known as "East Road" in December 2017. At 31 December 2017 an amount of EUR44.6 million was recognised within trade and other receivables reflecting the payment of full consideration
and related stamp duty and acquisition costs at that date. The transaction completed in January 2018 resulting in the transfer of this amount to inventory.
Millennium Park, Naas, Co. Kildare
On 22 December 2017, the Group announced it had entered into an unconditional contract to acquire a development site at Millennium Park, Naas, Co. Kildare. At 31 December 2017 an amount of EUR2.1 million was recognised within trade and other receivables reflecting a deposit paid. This transaction completed in January 2018 resulting in a further payment of EUR20.5 million bringing total consideration including stamp duty and acquisition costs to EUR22.6 million.
Citywest, Dublin
In January 2018, the Group exchanged contracts to acquire a development site at Citywest Road, Dublin 24. This transaction completed in December 2018 for total consideration of EUR12.9 million (including fees and stamp duty).
Hollystown Golf & Leisure Limited
The acquisition of Hollystown Golf & Leisure Limited on 28 February 2018 resulted in an increase in inventory of EUR14.6 million at the date of acquisition reflecting fair value of development land acquired at that date. Further detail in relation to this transaction is outlined in Note 25.
Project Quattro
On 13 March 2018 the Group entered into a contract to acquire four sites in the Greater Dublin Area ("GDA"): two in Donabate, Co. Dublin; one at Dunboyne, Co. Meath; and one at Stamullen, Co. Meath. The transaction involved cash consideration of EUR90 million (including fees and stamp duty) and completed in April 2018.
Tyrellstown, Dublin
In July 2018, the Group acquired a c. 113-hectare site (39 hectares of which are zoned residential) in Tyrellstown, Dublin 15. The exact purchase price is commercially sensitive but is in excess of EUR65 million.
Project Bill / Project Hector / Cork Docklands
In June 2018, the Group acquired three sites for an aggregate consideration of in excess of EUR44 million (excluding fees and stamp duty). These acquisitions were announced by the Company on 29 June 2018 and included, Project Bill under the terms of the Project Bill Acquisition Agreement signed on 28 June 2018; Project Hector under the terms of the Project Hector Acquisition Agreement signed on 29 June 2018 and a site in the Cork Docklands under the terms of the Cork Docklands Acquisition Agreement signed on 18 June 2018.
19 Inventory (continued) (i) Development land acquisitions completed during the year (continued)
Castleforbes, North Docklands, Dublin
In June 2018, the Group acquired a loan secured against Castleforbes Business Park for total consideration of EUR59.9 million (including fees and stamp duty) together with the separate acquisition of common areas and roads on the site for EUR5.4 million (including fees and stamp duty) which were obtained through the Group's acquisition of Bulwark Limited. The purchase completed on 9 July 2018. Subsequent to acquisition, the Group secured title to the full site (including roads and common areas) through the settlement of the loan resulting in the classification of Castleforbes Business Park within inventory at 31 December 2018.
(ii) Development rights
Tallaght, Dublin 24 / Gateway Retail Park, Co. Galway
On 12 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
On 22 December 2018, the Group entered into a licence agreement to develop 18.65 acres at Maryborough Ridge, Cork. At 31 December 2018 an amount of EUR6.9 million was recognised within inventory reflecting the licence fee paid to date. Subject to meeting the conditions of the licence agreement, a further amount of EUR6.1 million will be paid in the future as outlined in Note 30.
20 Trade and other receivables
2018 2017
EUR'000 EUR'000
Trade receivables 249 -
Trade receivables from related party - 1,192
Other receivables 70 107
Prepayments 1,065 492
Unamortised transaction costs on debt
facility 788 -
VAT recoverable 6,461 16,912
Construction bonds 3,377 1,139
Deposits for sites 2,497 4,953
Payment in respect of site acquisition
and associated fees* - 44,579
14,507 69,374
*This amount related to payment of the purchase price, stamp duty and acquisition costs for a 2-hectare site in Dublin's North Docklands known as "East Road". A conditional contract was signed in December 2017 with payment transferred to the vendor's legal representatives in advance of period end. The transaction subsequently completed in January 2018.
The carrying value of all financial assets and trade and other receivables is approximate to their fair value.
21 Trade and other payables
2018 2017
EUR'000 EUR'000
Trade payables 7,821 3,036
Trade payables due to related party - 1,434
Payroll and other taxes 2,787 922
Inventory accruals 21,289 4,057
Other accruals 3,096 2,400
Interest accrual 196 -
35,189 11,849
Non-current 1,803 1,903
Current 33,386 9,946
35,189 11,849
The carrying value of all financial liabilities and trade and other payables is approximate to their fair value.
22 Loans and Borrowings
In April 2018, the Group entered into 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 one-month EURIBOR (subject to a floor of 0 per cent.) plus a margin. Amounts drawn during the year were repaid in full pre-year end resulting in a EURnil principal balance outstanding at 31 December 2018. There is a commitment fee payable on the undrawn down value of the RCF. The amount payable at the reporting date is outlined in Note 21. Pursuant to the RCF agreement, there is a fixed and floating charge in place over certain assets of the Group as continuing security for the discharge of any amounts drawn down.
23 Restricted cash
The restricted cash balance relates to EUR1.5 million held in escrow until the completion of certain infrastructural works relating to the Group's residential development at Balbriggan, Co. Dublin. The estimated fair value of restricted cash as at 31 December 2018 is its carrying value.
24 Subsidiaries
The subsidiary companies (all of which are resident in Ireland) and the percentage shareholdings held by Glenveagh Properties PLC, either directly or indirectly, at 31 December 2018 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% 1 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 GL Partnership Opportunities II DAC Property development 100% 1 Hollystown Golf & Leisure Limited Golf Club operations 100% 2 GLL PRS HoldCo Limited Dormant company 100% 1 GLL Partnership HoldCo Limited Dormant company 100% 1 GLL HoldCo Limited Dormant company 100% 1 Into the Future (South) Limited Dormant company 100% 2 Feathermist Limited Dormant company 100% 2 Braddington Developments Limited Dormant company 100% 2 Bulwark Limited Dormant company 100% 1 1 15 Merrion Square North, Dublin 2, D02 YN15 2 Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7 25 Business combinations
On 28 February 2018, Glenveagh Homes Limited (a subsidiary of the Company) acquired 100 per cent. of the share capital of Hollystown Golf and Leisure Limited (HGL). The table below summarises the fair value of consideration transferred and assets and liabilities assumed at that date.
EUR'000
Property, plant and equipment 62
Intangible assets 149
Inventory 14,654
Trade and other receivables 102
Cash and cash equivalents 15
Trade and other payables (1,319)
Fair value of net assets acquired 13,663
Consideration
Cash consideration 13,663
Total consideration 13,663
Consideration of EUR13.7 million was paid in respect of this acquisition which was primarily executed to access the development potential of land owned by 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.
HGL has not had a material impact on the consolidated loss for the post acquisition period and had the acquisition taken place at beginning of the financial year the impact would still not have been material.
26 Share capital and share premium
(a) Authorised share capital
2018 2017
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 share capital and share premium
At 31 December 2018 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
At 31 December 2017 Share Share
Number of Capital premium
shares EUR'000 EUR'000
Ordinary Shares of EUR0.001
each 667,049,000 667 666,381
Founder Shares of EUR0.001
each 200,000,000 200 -
867,049,000 867 666,381
(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 2018 667,049 200,000 867 666,381
Issued for cash 185,291 - 185 212,900
Conversion of Founder Shares 18,993 (18,993) - -
871,333 181,007 1,052 879,281
26 Share capital and share premium (continued)
(c) Reconciliation of shares in issue (continued)
In respect of prior year Ordinary Founder Share Share
shares shares capital premium
'000 '000 EUR'000 EUR'000
In issue at incorporation - - - -
on 9 August 2017
Issued for cash 200,001 - 200 -
Re-designation as Founder
Shares (200,000) 200,000 - -
IPO issue 552,371 - 552 551,819
Issued in business combination 4,427 - 4 4,423
Issued as consideration for
inventories 110,250 - 111 110,139
667,049 200,000 867 666,381
(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 first test period (which ran from 1 March 2018 until 30 June 2018), it was confirmed that, Founder Share Value for the first test period would be satisfied by way of the conversion of 18,993,162 Founder Shares into the same number of Ordinary Shares of EUR0.001 each and these new shares were subsequently issued. All new Ordinary Shares issued in respect of the conversion of Founder Shares are subject to a lock-up period, with 50% of the new Ordinary Shares subject to a one-year lock-up period and the balance subject to a two-year lock-up. The closing market price of the Company's shares on 29 June 2018 was EUR1.15 per share.
26 Share capital and share premium (continued) (e) Significant share issuances during the year
(i) On 9 August 2018, the Company issued 18,993,162 Ordinary Shares (through the conversion of 18,993,162 Founder Shares) to the Founders of the Company namely Justin Bickle (through Durrow Ventures), Stephen Garvey and John Mulcahy.
(ii) On 14 August 2018, the Company issued 185,291,388 Ordinary Shares at EUR1.15 per share by way of a Firm Placing and Open Offer, raising gross proceeds of EUR213.1 million. EUR7.1 million of directly attributable share issue costs have been recognised in equity (retained earnings).
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
2018 2017
The consolidated financial assets can
be summarised as follows: EUR'000 EUR'000
Trade receivables 249 -
Trade receivables from related party - 1,192
Other receivables 70 107
Construction bonds 3,377 1,139
Deposits for sites 2,497 4,953
Cash and cash equivalents 130,701 351,796
Restricted cash (non-current) 1,500 1,500
Total financial assets 138,394 360,687
Cash and cash equivalents are short-term deposits held at variable rates.
27 Financial instruments and financial risk management (continued)
Financial instruments: financial liabilities
2018 2017
EUR'000 EUR'000
Trade payables 7,821 3,036
Trade payables due to related party - 1,434
Finance lease obligation 38 254
Inventory accruals 23,713 4,057
Other accruals 672 2,400
Total financial liabilities 32,244 11,181
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)
Liquidity risk (continued)
31 December 2018
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 38 42 36 6 -
Trade payables 7,821 7,821 7,821 - -
Inventory accruals 23,713 23,713 23,713 - -
Other accruals 672 672 672 - -
Loans and borrowings* - 2,920 1,252 1,252 416
32,244 35,168 33,494 1,258 416
*Contracted cash flows on loans and borrowings relate to commitment fee payable on the RCF.
31 December 2017
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 254 287 94 94 99
Trade payables 3,036 3,036 3,036 - -
Amounts due to related
party 1,434 1,434 1,434 - -
Inventory accruals 4,057 4,057 4,057 - -
Other accruals 2,400 2,400 2,400 - -
Loans and borrowings - - - - -
11,181 11,214 11,021 94 99
27 Financial instruments and financial risk management (continued)
Liquidity risk (continued)
Funds available
2018 2017
EUR'000 EUR'000
Revolving credit facility* (undrawn committed) 125,000 -
Cash and cash equivalents 130,701 351,796
255,701 351,796
*The Group's RCF contains a mechanism through which the committed amount can be increased up to EUR250.0 million. Under the terms of the Group's RCF, the Group is required to maintain a minimum cash balance of EUR25.0 million in cash in cash equivalents throughout the term of the facility.
The Group's RCF is subject to primary financial covenants calculated on a quarterly basis:
- A maximum net debt to net assets ratio; - A minimum cash reserves limit; 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 April 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 a margin. All amounts drawn under the facility during the year were repaid in full in advance of year end which is reflected in the EURnil balance at 31 December 2018. The Group has an exposure to cash flow interest rate risk where there are changes in the EURIBOR rates. As the balance on the RCF was EURnil at 31 December 2018 no interest rate sensitivities have been provided.
27 Financial instruments and financial risk management (continued)
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 Finance lease liabilities
Finance lease liabilities are payable as follows:
2018 2017
EUR'000 EUR'000
Current portion 33 84
Non-current portion 5 170
38 254
At 31 December 2018
Future Present value
minimum of minimum
lease lease
payments Interest payments
EUR'000 EUR'000 EUR'000
Less than one year 36 3 33
Between one and two years 6 1 5
More than two years - - -
42 4 38
28 Finance lease liabilities (continued)
At 31 December 2017
Future Present value
minimum of minimum
lease lease
payments Interest payments
EUR'000 EUR'000 EUR'000
Less than one year 94 10 84
Between one and two years 94 10 84
More than two years 99 13 86
287 33 254
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:
2018 2017
EUR'000 EUR'000
Short-term employee benefits 2,359 456
Post-employment benefits 74 27
LTIP and SAYE share-based payment
expense 50 10
Founder Shares share-based payment
expense - 47,509
2,483 48,002
(ii) Other related party transaction
As set out in Note 19 above, 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 and Justin Bickle are directors) 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.
29 Related party transactions (continued)
(ii) Other related party transactions (continued)
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.
The APSA also stipulates certain profit-sharing arrangements in relation to the residential development opportunity at both sites together with a third site at Bray Retail Park, Bray, Co. Wicklow under which TIO would be entitled to a share of profit on any residential development should certain returns be achieved.
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 Notes 25 and 29 above, the Group had the following commitments at 31 December 2018 relating to development land acquisitions:
Land acquisition subject to re-zoning
In April 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.
Maryborough Ridge, Cork
(i) Acquisition of development land
On 22 December 2018, the Group entered into an unconditional contract to acquire 24.34 acres of zoned land for residential development at Maryborough Ridge a development site at Douglas, Co. Cork for total consideration of EUR12.5 million. At 31 December 2018 an amount of EUR1.3 million was recognised within trade and other receivables reflecting a deposit paid and the transaction subsequently completed in February 2019.
(ii) Licence agreement
The Group also entered into a licence agreement to develop a further 18.65 acres at the Maryborough Ridge site. At 31 December 2018 an amount of EUR6.9 million was recognised in inventory reflecting the initial licence fee paid and related stamp duty and acquisition costs. The remaining EUR6.1 million of the licence fee is payable in equal instalments in line with milestones outlined in the licence agreement which will bring the total consideration to approximately EUR13.0 million.
30 Commitments and contingent liabilities (continued)
Maryborough Ridge, Cork (continued)
(ii) Licence agreement (continued)
Under the terms of the licence agreement, the Group has committed to paying the vendor further variable amounts dependent on the number of units developed and unit sale prices achieved in excess of those contemplated in the licence agreement. As these commitments are based on uncertain future events, the Group has treated them as contingent liabilities. The Group will reassess these commitments at each reporting date.
Castleknock
As at 31 December 2018, the Group had contracted to acquire a development site at Carpenterstown Road, Castleknock, Co. Dublin for total consideration of EUR9.3 million. A deposit of EUR0.9 million was paid pre-year end and is classified within other receivables at 31 December 2018. The transaction completed on 16 January 2019.
(b) Operating lease commitments
Total commitments under non-cancellable operating leases are due as follows:
Minimum Minimum
Payments Payments
2018 2017
EUR'000 EUR'000
Less than one year 805 279
Between 1 - 5 years 500 52
More than 5 years - -
1,305 331
31 Subsequent events
Subsequent to year end, the Group entered into a contract to acquire two further sites in the GDA: one at Leixlip, Co. Kildare and one at Newbridge, Co. Kildare which have full planning permission to deliver 793 starter-homes and apartments. These transactions involve aggregate cash consideration of approximately EUR50 million (excluding stamp duty and fees) and are scheduled to complete in Q2 2019.
Other than this acquisition and the completion of the Maryborough Ridge development land acquisition noted in Note 30, no other events requiring disclosure have occurred since 31 December 2018.
[1] Excluding fees and stamp duty
[2] Management estimates. At 31 December 2018
[3] Source: CSO
[4] Source: Davy
[5] Daft.ie
[6] In Q4 - Source: Hooke MacDonald
[7] CBRE
[8] European Commission
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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March 06, 2019 02:02 ET (07:02 GMT)
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