Annual
Report
and
Accounts
2017
Glenveagh at a Glance
€
148
Employees
€284m
700+
250/750
7,342 Units
Capital
Deployed
Units under
construction
in 2018
2018/19
Unit Target
Current
Portfolio
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Chairman’s Letter 2
CEO’s Review 4
Strategy and Business Model
Strategic Overview 7
Glenveagh Homes 13
Glenveagh Living 28
CFO’s Review 32
Risk Management Report 36
Governance
Corporate Governance Statement 48
Audit & Risk Committee Report 56
Remuneration & Nomination Committee Report 64
Board of Directors 76
Directors’ Report 80
Financial Statements 89
Company Information 135
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Chairman’s
Letter
John Mulcahy
Co-Founder & Executive Chairman
It is with great pleasure that I present Glenveagh
Properties PLC’s (Glenveagh or the Company)
first Annual Report for the period ended 31
December 2017.
The period since the Company’s initial public
offering (IPO) on 13 October 2017 has been a
very busy and exciting time for the business and
the management team have made considerable
progress in that timeframe.
At IPO, the senior management team had three
immediate priorities to establish a stable and
scalable framework for the business: effectively
deploy the IPO proceeds of €550 million on
assembling a highly attractive landbank; develop
and scale the construction operations to ensure
the business meets its unit delivery targets; and
build a strong team to oversee and manage the
future growth in the business.
The Company has made significant progress
on each of these priorities, deploying more
than €284 million to date on the purchase of
39 sites with construction active on 7 sites and
a further 3 developments coming on-stream
later this year. Furthermore, the Company has
invested in experienced and ambitious personnel
expanding its employee base to 148 to ensure
the successful deployment of capital and scaling
of the business.
The Board is very pleased with the progress and
performance of the Company to date, including
the effective and considered deployment of
the IPO proceeds and the recruitment of key
personnel to the management team.
Market Opportunity
My Co-Founders and I were extremely positive
on the market opportunity for the Group at the
time of IPO. In the five months since then, our
confidence in being able to create, build and
scale a best in class homebuilder in Ireland
has only grown, and been corroborated by our
experience as only one of two PLCs focused
exclusively on the Irish residential market.
The Group believe that the Irish residential
market is in its ‘foundation for growth’ phase.
Demand for good quality, modern and value for
money houses and apartments is unquestioned.
Unemployment remains low, growth in the
broader economy is sustainable, and mortgage
availability has returned to sensible levels.
Our People
On behalf of the Board, I want to thank all
employees for their efforts and dedication
2
On behalf of the Board,
I want to thank all employees
for their efforts and dedication
throughout the IPO process and
for continuing that dedication in
helping to grow the business in
the five months hence.
throughout the IPO process and for continuing
that dedication in helping to grow the business
in the five months hence.
In addition, I would like to thank our wider
construction network, which includes over 675
contractors, for their commitment and contribution
which has allowed the business to make
significant progress on our sites within a short
period of time.
Governance
The Board requires that we achieve best practice
in corporate governance and recognises the
need for an effective direction from the Board.
To that end, as Chairman, I am very pleased
with the appointment of four very accomplished
non-executive directors and their wide range of
expertise and experience is of great benefit to
your company.
In addition, the Committees of the Board, which
were established in the period, are performing
effectively with regular reporting to the Board.
I would like to thank both the Board and the
Committee members for their excellent work
and their help and guidance to me during this
formative phase of the Company.
Returns to Shareholders
The Board declared as part of the IPO process,
that it does not anticipate paying a dividend
to shareholders in the immediate future as
the Company’s primary focus is investing the
IPO proceeds in assembling a highly attractive
landbank and delivering capital growth. As
disclosed in the Company’s prospectus, the Board
is committed to implementing a progressive
dividend policy for the benefit of shareholders in
the medium-term.
Outlook
The Board believes that the Company has
made a strong start to life as a PLC and is well
positioned to continue to deploy capital effectively
and deliver the houses and apartments in line
with the Company’s strategy. I would like to take
this opportunity to thank you, our shareholders,
and our stakeholders for your continued support
during this exciting time in the Company’s history,
as we implement our plans.
John Mulcahy
Co-Founder & Executive Chairman
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Glenveagh Properties PLC Annual Report and Accounts 2017
CEO’s
Review
Justin Bickle
Co-Founder and CEO
2017 Summary/Results
2017 was an important year for Glenveagh. Our
new Irish homebuilder PLC was formed from
three elements:
- People: three Founders and 85 staff at time
-
of IPO;
Land: a landbank formerly owned by Oaktree
(through Targeted Investment Opportunities
ICAV (TIO)) and a land portfolio formerly
owned by another private equity firm
(Project Kells); and
- Building Operations: the homebuilding
business of Bridgedale which was established
by my Co-Founder Stephen Garvey in 2003.
Investor demand for our proposition was
overwhelming. We raised €550 million of equity
from institutional investors globally, and the public
offering was 5.6 times over-subscribed. Investors
wished to participate in the Irish recovery and
to support a vehicle to deliver new homes, both
houses and apartments. We remain grateful for
their support.
Since our dual listing on the Irish and London
Stock Exchanges on 13 October 2017 we have had
three principal priorities:
Land acquisition;
-
- Building and selling 250 units during 2018; and
- Building out our business as a PLC.
Since IPO we have so far deployed over
€284 million of equity in a number of land
acquisitions, all but two of which have been
bilateral and off-market. We have been
encouraged by the size of our addressable land
market, which we calculated at €5 billion at time
of listing. Much of this land is held by ‘unnatural’
owners, including exiting private equity and
State entities of finite duration. While financial
discipline and rigour is required, attractive land
is relatively plentiful if you have permanent
capital, access to the right type of debt for
working capital, and the ability to build on a
volume basis.
During the financial period we were building and
selling homes for Oaktree under our contractual
arrangements agreed with them at the time of
IPO. From 1 January 2018 onwards, all of our built
and sold units are for the benefit of Glenveagh
and its shareholders. At the time of writing over
100 units have either been signed or reserved
in 2018.
Over the past five months we have also increased
our contracted headcount from 85 at time of IPO
to 148 in total. Most of these hires have been
directly sourced, using the Founders’ networks
and relationships over multiple property cycles in
Ireland. We feel very good about the quality of
the personnel we have attracted, and believe we
now have the team to become a scale player in
delivering homes in Ireland.
Economic Conditions
The Irish recovery has been well documented,
as has its relative outperformance of other
Eurozone economies. The recovery in Ireland
feels strong and sustainable and one based on
equity and investment, rather than reliance on
debt. Housebuilding though remains a cyclical
industry and as a senior management team we
are determined to avoid the boom and bust
of previous cycles and to build a resilient, long
term, business.
As an organisation, we have welcomed some of
the Irish Government’s recent initiatives to make
apartment building more cost effective and are
determined to play our part in tackling both the
private and public-sector under-supply of housing
stock in Ireland.
Glenveagh’s Strategy
Our strategy is simple: to deliver the types of
homes customers want and need. Our principal
geographic focus is on the Greater Dublin Area
where 88% of our landbank is situated, together
with delivery in Cork, Limerick and Galway.
Through Glenveagh Homes we build and sell
homes (houses and apartments). Over half of
our output will be starter homes in the commuter
belt, although we will also deliver mid-size and
executive homes. Our prices range from a two-
bedroomed house for €220,000 through to an
executive house for over €1 million. We pride
ourselves on the quality of our built product,
value for money and providing an excellent
service to our customers.
Given our relationships, and the need for
delivery of units and mixed tenure solutions in
the Irish market, we also work in partnerships
with third parties through Glenveagh Living.
Here we deliver completed units for margin and
an attractive ROCE for a number of market
participants including private rental (PRS)
investors, housing associations and others.
Our underwriting case and returns criteria
is the same as for Glenveagh Homes, but
through Glenveagh Living we de-risk our equity
investments post planning by forward selling
turnkey units to third parties, ensuring that we
are properly compensated for having purchased
the land and taken planning risk. We believe
€284m
Since IPO we have so far
deployed over €284 million
of equity in a number of
land acquisitions, all but two
of which have been bilateral
and off-market.
having two aspects to our business unlocks
greater land buying opportunities and builds
resilience across the cycle.
Outlook
Glenveagh is off to an encouraging start as a
PLC. We believe that the next four to five years
will see a sustained recovery in Irish residential
and the sector will become more institutional in
nature. We are determined to become a builder
of volume (1,000 units per annum for Glenveagh
Homes by 2020 and then 2,000 units per annum
by 2023) and a trusted counterparty to deliver
units in the Irish market through Glenveagh Living.
As our Executive Chairman John Mulcahy
mentioned, I too am very grateful to all the staff
of Glenveagh and their families for their hard
work in our first year of operations and look
forward to the future with optimism. Thank you for
your support.
Justin Bickle
Co-Founder and CEO
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Glenveagh Properties PLC Annual Report and Accounts 2017
Strategic
Overview
Corporate Strategy
The Company operates
a balanced business
model comprising two
complementary and
synergistic residential
delivery businesses -
Glenveagh Homes (Homes)
and Glenveagh Living
(Living). Via these synergistic
business units and our
central strategic support
structure, we aim to:
> Gain access to a wider spectrum of capital
deployment opportunities.
Our Homes and Living business units have the
capacity to provide the broad range of residential
delivery solutions that are necessary to successfully
address the supply demand imbalance.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Glenveagh Homes develops and builds
starter, mid-size, high-end and executive
homes with a focus on the greater Dublin
area, while Glenveagh Living’s strategic focus
is on designing, developing and delivering
residential solutions for institutional investors,
social and affordable landlords, State entities
and strategic landowners.
- Acquiring sites at attractive rates through
disciplined capital deployment and keeping
a long-term focus in what is an illiquid land
market. Offering minimal execution risk for
sellers we transact with helps ensure we are
successful in this regard;
- Optimising site size to deliver a multi-year
delivery opportunity for homes on sites. We
focus on schemes which will give us 4 to 6
years supply in each location; and
- Developing in attractive locations where the
demand/supply imbalance is most chronic
and where transport infrastructure (road and
rail) are strong or anticipated.
Living
Glenveagh Living’s strategic focus is on designing,
developing and delivering residential solutions
for institutional investors, social and affordable
landlords, State entities and strategic landowners.
Living is a partnership business with a focus on
relationship investing in what is a relationship
driven market. Specifically, the business aims to
capitalise on:
In achieving its objectives, Living focuses on its
core competencies:
- Deal structuring;
- Master planning and design;
- Project management and construction
delivery; and
- Delivering residential communities for
our partners.
Strategic Priorities
In achieving our corporate strategy, the strategic
priorities for the Company are to:
- Assemble a quality land bank capable of
fulfilling our business plan;
- Continue to scale the Group’s housing delivery
operations consistent with business plan
and targets;
Strengthen our reputation for product and
delivery innovation and become the Joint
Venture partner of choice through Glenveagh
Living; and
-
- Deliver a consistent and disciplined focus on
- The significant opportunity that exists in
margins and returns.
building rental communities; and
- The requirement for strategic partnerships in
the following segments:
- mixed use residential/retail;
- social housing; and
- affordable housing.
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> Reduce cyclicality and increase resilience
> Capitalise on the advantages of scale.
across the development cycle.
Buying land remains attractive today, but that
has the capacity to change as the residential
cycle turns. We aim to use back-to-back
contracts and forward sales to reduce cyclicality
and increase resilience. This approach provides
the Company with greater visibility of forward
revenues over time leaving Glenveagh less prone
to the market risk associated with individual
residential purchasers.
> Provide for delivery flexibility pre and
post site purchases.
We continuously evaluate exit options throughout
the site acquisition, planning, design and pre-
construction phases to ensure we optimise
returns and manage risk effectively. Key to this
approach is the ability to utilise our own in-house
construction resources or engage trusted third-
party contractors.
We are focused on enhancing the long-term
margin performance of the Company using
innovative design and construction methods.
Glenveagh‘s scale and experience across
a range of construction methods facilitates
the introduction of best in class design and
construction solutions including:
- Design and plot utilisation - maximising plot
utilisation with innovative design that offers
the customer an enhanced living environment;
- Utilising entrance, boundary and landscaping
as a key distinguishing feature of Glenveagh
developments;
- Placing an emphasis on system build and
-
off-site construction methods; and
Leveraging our purchasing power and
economics of scale opportunities.
Strategy by Business Unit
> Deliver efficient capital allocation via a
Homes
focus on:
- A disciplined approach to capital deployment;
- Data driven selection and appraisal;
-
Improved risk diversification and optimised
portfolio management.
Glenveagh Homes develops and builds starter,
mid-size, high-end and executive homes with
a focus on the Greater Dublin Area. We also
selectively deploy capital in Cork, Limerick
and Galway. Our target house and apartment
price range is from €220k to €1m+. The Homes
business unit focuses on:
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Glenveagh Properties PLC Annual Report and Accounts 2017
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Marina Village
Greystones, Co. Wicklow
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Glenveagh Properties PLC Strategy and Business Model G
Glenveagh
Homes
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Glenveagh Properties PLC Annual Report and Accounts 2017
COO’s
Review
Stephen Garvey
Chief Operations Officer
The Glenveagh Homes operations team have
made significant progress since IPO, implementing
strategic work plans towards 2018 targets in
tandem with the expansion of our sizeable
landbank to facilitate the achievement of our
medium to long term targets. This is all made
possible by the dynamic and innovative team we
have assembled across key operational functions
who continue to drive our company towards
realising the optimal standards and quality of
operation committed to since IPO.
Land Acquisition
The Glenveagh Homes landbank now has
the capacity to deliver in excess of 6,100 units,
increasing from c. 3,000 at the time of IPO.
We have maintained our focus on sites scaled
to allow us efficiently deliver optimal returns in
an appropriate timeframe. This is illustrated by
post IPO average site size acquisition of 350
units, an increase from 120 at the time of IPO.
The recently announced “Project Quattro” (two
sites in Donabate, Co. Dublin and 1 site in each
of Stamullen and Dunboyne Co. Meath) has
the capacity to deliver more than 1,400 units,
illustrative of the site scale our land acquisition
team continue to target. This is also indicative
of the attractive market opportunities which
our team are well placed to avail of in line with
strategic objectives.
Construction
2018 will see over 700 units under construction.
Our construction team is currently active on 7
sites with a further 3 sites coming on stream in
2018. Product under construction range from
starter homes at Cois Glaisín in Navan, Co.
Meath and Taylor Hill, Balbriggan, Co. Dublin
to high-end executive homes at Holsteiner Park,
Clonee, Co. Meath and Proby Place, Blackrock,
Co. Dublin. Construction at our apartment
developments at Marina Village, Greystones and
Herbert Hill, Dundrum is also well underway,
further demonstrating the diversity of our
product offering.
We continue to innovate our design and
construction solutions in order to optimise
margin performance in the medium to longer
term, while also committing to delivering to
scale through the further standardisation of
materials where possible and practicable across
our developments.
Sales and Marketing
We are on target to deliver on 250 closed sales
for 2018, already exceeding expectations with
more than 100 units either signed or reserved on
our three active sale sites at the time of writing.
We will also commence a block sale of our
The Glenveagh Homes operations team
have made significant progress since
IPO, implementing strategic work plans
towards 2018 targets in tandem with the
expansion of our sizeable landbank to
facilitate the achievement of our medium
to long term targets.
apartment development at Herbert Hill,
Dundrum in 2018 in response to the chronic
under-supply of quality apartment schemes in
the GDA, and following significant interest from
institutional investors.
What follows is a snapshot of the current status
of our live developments. I would like to take
this opportunity to acknowledge our extensive
network of over 675 contractors across a variety of
disciplines who play a key role in supporting and
enhancing our operations, enabling us to deliver
quality homes for the Irish residential market. We
look forward to broadening this vibrant network
into the future and working together to maintain
our momentum and strengthen our operations in
2018 and beyond.
Stephen Garvey
Chief Operations Officer
6,100
The Glenveagh Homes
landbank now has the
capacity to deliver in excess
of 6,100 units
1,400
The recently announced
“Project Quattro” has the
capacity to deliver more
than 1,400 units.
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Glenveagh Properties PLC Annual Report and Accounts 2017
2018 will see over
700 units under
construction. Our
construction team is
currently active on
7 sites with a further
3 sites coming on
stream in 2018.
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Glenveagh Homes
Active Sites
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2
Greater Dublin Area
Commuter Rail
Luas Green Line
Luas Red Line
National Road
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5
9
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3
7
1
Active Sites
Communter Rail
Luas Green Line
Luas Red Line
National Road
Site
Site cost1
(€m)
NDV2
(€m)
Potential
unit delivery
Current live sites
Total
2018
2019
2020
1. Glenveagh Marina Village
2. Glenveagh Cois Glaisín
3. Glenveagh Herbert Hill
4. Glenveagh Holsteiner Park
5. Glenveagh Taylor Hill
6. Glenveagh Cluain Adain
7. Glenveagh Proby Place
Sites opening in 2018
8. Maplewoods, Co. Cork
9. Ballyboughal, Co. Dublin
10. Knightsgate, Rush
2018 sites total
Other sites3
43
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3
31
7
11
2
5
9
154
57
42
12
152
57
24
30
21
39
276
274
90
15
610
246
23
131
57
129
7
70
-
15
67
25
10
6
15
35
588
1,851
250
-
140
70
90
-
68
50
13
50
42
50
573
152
129
70
-
-
70
50
-
50
-
44
413
587
Total Homes construction target
250
725
1,000
1. Ex. fees and stamp duty. 2. NDVs reflect management estimates and should not be viewed as management forecasts.
3. Sites not currently active.
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Greystones
Glenveagh
Marina Village
Navan
Glenveagh
Cois Glaisín
Name
Location
Potential
units
Cois Glaisín
Navan
Co. Meath
274
Unit mix
Houses
274
Apartments
-
Time to
Dublin City
Centre
c. 50 mins
DART/Train
LUAS
Bus
x
x
Price from
€225,000
Timelines
Start
Oct-17
Finish
2021
DART/Train
LUAS
Bus
Name
Location
Potential
units
Marina Village
Greystones
Co. Wicklow
276
Unit mix
Houses
59
Apartments
217
Time to
Dublin City
Centre
c. 50 mins
Price from
€400,000
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x
Timelines
Start
Oct-17
Finish
2020
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Glenveagh Properties PLC Annual Report and Accounts 2017
Dundrum
Glenveagh
Herbert Hill
Clonee
Glenveagh
Holsteiner Park
DART/Train
LUAS
Bus
Name
Location
Potential
units
Holsteiner Park
Clonee
Co. Meath
15
Unit mix
Houses
15
Apartments
-
Time to
Dublin City
Centre
c. 40 mins
Price from
€795,000
x
Timelines
Start
Oct-17
Finish
Dec-18
Name
Location
Potential
units
Herbert Hill
Dundrum
Dublin 16
90
Unit mix
Houses
3
Apartments
87
Time to
Dublin City
Centre
c. 15 mins
DART/Train
LUAS
Bus
x
Price from
€350,000
Timelines
Start
Oct-17
Finish
Mar-19
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Glenveagh Properties PLC Annual Report and Accounts 2017
Balbriggan
Glenveagh
Taylor Hill
Name
Location
Potential
units
Taylor Hill
Balbriggan
Co. Dublin
610
Unit mix
Houses
610
Apartments
-
Meath
Glenveagh
Cluain Adain
Name
Location
Potential
units
Time to Dublin
City Centre
DART/
Train
LUAS
Bus
Cluain Adain Clonmagadden
246
c. 55 mins
x
x
Co. Meath
Unit mix
Houses
Apartments
246
-
Price from
€220,000
Timelines
Start
Oct-17
Finish
2021
DART/Train
LUAS
Bus
Time to
Dublin City
Centre
c. 40 mins
Price from
€245,000
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Timelines
Start
Nov-17
Finish
2024
23
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Glenveagh Properties PLC Annual Report and Accounts 2017
Blackrock
Glenveagh
Proby Place
Name
Location
Potential
units
Proby Square
Blackrock
Co. Dublin
23
Unit mix
Houses
23
Apartments
-
Time to
Dublin City
Centre
c. 20 mins
Price from
€1,050,000
x
Timelines
Start
Oct-17
Finish
Q1 2019
North Co. Dublin
Glenveagh
Rush
Name
Location
Potential
units
Rush
North
Co. Dublin
129
Unit mix
Houses
129
Apartments
-
Time to
Dublin City
Centre
c. 35 mins
Price from
€325,000
DART/Train
LUAS
Bus
DART/Train
LUAS
Bus
x
Timelines
Start
Jul-18
Finish
Dec-20
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Glenveagh Properties PLC Annual Report and Accounts 2017
Middleton Co. Cork
Glenveagh
Maplewoods
Name
Location
Potential
units
Time to Cork
City Centre
Train
Bus
Maplewoods
Middleton
Co. Cork
131
c. 30 mins
Unit mix
Houses
131
Apartments
-
Price from
€240,000
Timelines
Start
TBC
Finish
TBC
North Co. Dublin
Glenveagh
Ballyboughal
Name
Location
Potential
units
Ballyboughal
North Co
Dublin
57
Unit mix
Houses
57
Apartments
-
Time to
Dublin City
Centre
c. 45 mins
DART/Train
LUAS
Bus
x
x
Price range
€255,000
Timelines
Start
Jan-18
Finish
Sep-19
Glenveagh Homes
Future Sites and Strategic Land
Future Home Sites
Strategic Land
Communter Rail
Luas Green Line
Luas Red Line
National Road
Commuter Rail
Luas Green Line
Luas Red Line
National Road
Greater
Dublin Area
16
8
5
2
13
9
15
12
14
10
11
3
17
4
1
6
7
Motorway Network
Motorway Network
Rail Network
Rail Network
Site
Future Sites
1. Keatingstown, Wicklow
2. Blessington, Co. Wicklow
3. Shrewsbury Road, Ballsbridge
4. Burkeen Road, Keatingstown
5. Great Connell Abbey Stud
6. Quinns Cross, Mungret
7. Castleredmond
8. Millennium Park, Naas
9. Hollystown
10. Citywest
11. Donabate (2x)
12. Dunboyne
13. Stamullen
Total
Site
Strategic Land
14. Castleknock Golf Club
15. Hilltown, Clonee
16. Kiladoon, Celbridge
17. Sigma -Bray
Total
Site cost1 Remaining Potential
NDV2 (€m)
units3
(€m)
Rail Network
Motorway Network
7
8
11
5
2
1
2
21
14
12
44
33
8
109
44
27
34
50
61
71
140
49
70
185
187
53
350
140
7
120
180
230
240
530
195
175
570
664
205
168
1,080
3,606
Zoning Site cost1
(€m)
Unzoned
Unzoned
Unzoned
Unzoned
8
2
2
2
14
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1. Ex. fees and stamp duty. 2. NDVs reflect management estimates and should not be viewed as management forecasts.
3. Subject to planning
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Glenveagh Properties PLC Annual Report and Accounts 2017
Living
Glenveagh
Living
Shane Scully
Managing Director of Glenveagh Living
There is
currently a
significant
undersupply
of, and strong
demand for,
rental units
in Ireland.
Background and
Objective
Homes and Living operate as
two complementary businesses
delivering residential
developments in Dublin, Cork,
Galway and Limerick. Homes
delivers these developments
to consumers, whereas Living
delivers these developments
to selected private and public
partners including institutional
investors, approved housing
bodies (“AHB”), local
authorities and the National
Asset Management Agency
(“NAMA”). Living’s objective is
to deliver best-in-class private
rental developments and social
and affordable developments
to our private and public
partners. This is a low-capital
and low-risk model which is
anticipated to result in strong
returns on capital employed.
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Market
Private Rental Sector
Developments
There is currently a significant
undersupply of, and strong
demand for, rental units in
Ireland. The existing rental units
have largely been provided by
small independent landlords
in poor quality older homes
and little purpose-built rental
accommodation is being
constructed in Ireland. With
c.18% of Ireland’s population
and c.24% of Dublin’s
population living in private
rental accommodation, the
Irish government is supportive
of improvements to the
rental sector and expanding
upon purpose-built rental
accommodation. In addition,
there is significant support
and appetite from institutional
investors for purpose-built
residential accommodation.
28
Strong
risk-adjusted
ROCE
Access to wider
spectrum of
opportunities
€
Delivery flexibility
- pre and post
site purchases
Glenveagh
Living
Reduced cyclicality
& increased
resilience
Improved portfolio
risk management
Living are committed to becoming the delivery
partner of choice for purpose-built rental
accommodation in Ireland and have acquired a
prime urban site capable of delivering a large
scale purpose-built rental development at East
Road in Dublin 1.
Social and Affordable Sector Developments
There is also a significant undersupply of social
and affordable housing in Ireland. There are
currently in excess of 90,000 households on local
authority waiting lists for social housing across
Ireland. The government aim to deliver c. 33,500
newly constructed social housing units by 2021.
Glenveagh’s predecessor, Bridgedale Homes,
delivered 67 social and affordable housing units
to an AHB, Clúid Housing Association (“Clúid”),
in 2017. Living intend to build upon this successful
delivery and are committed to becoming
the leading delivery partner for social and
affordable housing in Ireland.
Strategic Partners
Clúid Housing Association:
In February 2018, Living and Clúid entered into
a collaboration agreement under which we
will co-operate to source and develop projects
specifically targeting social housing needs in
Ireland. Clúid is the largest housing association
in Ireland and, to date, has provided 6,000
affordable homes to low income families in
housing need across Ireland. This collaboration
is a demonstration of Living’s commitment to the
social housing sector in Ireland.
Urbeo Residential
In March 2018, Living and Urbeo Residential
entered into a collaboration agreement under
which they will work closely together to identify
and develop projects for the provision of mixed
tenure and residential units in Dublin and other
Irish cities. Urbeo’s objective is to deliver a long-
term, sustainable source of accommodation to the
rental sector in Ireland. In pursuit of this aim, Urbeo
will acquire or forward fund social and affordable
rental developments in Ireland.
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Living’s objective is to deliver best-in-class
private rental developments and social
and affordable developments to our
private and public partners.
Sigma Retail Partners
In March 2018 Living and Sigma Retail Partners
(“Sigma”) entered into a Strategic Relationship
Agreement (the “SRA”). Sigma are leading
retail asset managers in Ireland. At present,
Sigma manage eight retail parks and five
community shopping centres nationwide. Sigma’s
management team have considerable experience
and have been involved in over 70% of retail
schemes in Ireland to date in various roles
including acquisition, disposal, letting and asset
management. Pursuant to the SRA, Living and
Sigma intend to collaborate in respect of potential
retail and residential development opportunities in
Ireland. Please see below for further details of a
recent collaboration with Sigma.
In addition to the foregoing partners, Living are
actively developing additional strategic private
and public partnerships.
450
Living intend to develop
purpose-built rental
accommodation, comprising
of c. 450 units, on the
East Road site.
Acquisitions
Site on East Road, Dublin 1
In January 2018, Living completed the acquisition
of a c. 5.2 acre site on East Road, Dublin 1. This
acquisition was a unique opportunity to acquire
prime development land, capable of large scale
development, in a central urban area. It was
also a demonstration of Living’s commitment to
placemaking and urban regeneration, which was
part of our message to investors at IPO.
Living intend to develop purpose-built rental
accommodation, comprising of c. 450 units, on the
site. Living are actively engaged with a design team
and intend to submit an application for planning
permission in 2018.
Sites in Tallaght, Galway and Bray
In March 2018, Living completed the acquisition of
development rights at:
- a c. 19-acre car park adjoining The Square
Shopping Centre, Tallaght, Dublin 24;
- a c. 5-acre site to the rear of Gateway Retail
Park, Galway; and
- a c. 10-acre site to the rear of Bray Retail Park,
Bray, County Wicklow;
(together the “Sites”). The Sites all adjoin retail
schemes operated by Sigma. Living intend to
develop residential accommodation, comprising
of c. 800 units, across the Sites. Living are
actively engaged with a design team and intend
to submit an application for planning permission
in 2019.
Sites in Tallaght, Galway
and Bray adjoining retail
schemes owned by Sigma
Top: East Road, Dublin 1
Bottom: The Square Shopping Centre, Tallaght
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Glenveagh Properties PLC Annual Report and Accounts 2017
CFO’s
Review
Michael Rice
Chief Financial Officer
Initial Public Offering
On 13 October 2017, Glenveagh Properties PLC
successfully completed an IPO with a share
price of €1 per ordinary share and a market
capitalisation at completion of €667 million.
The gross cash proceeds from the IPO were
€550 million.
Land Acquisitions
Since IPO, one of the key priorities of the business
has been deploying the equity raised, in a
structured and effective manner, on building a
highly attractive land portfolio. Following the
acquisition of the TIO portfolio as part of the IPO,
during the period c. €150 million was deployed
on acquiring land capable of delivering 2,758
additional units, giving a total land portfolio of
4,727 units at 31 December 2017.
A further €134 million of capital has now been
deployed, bringing the total number of units to
7,342. The Group has taken a very disciplined
approach to its capital deployment and has
reduced the average site cost per unit from €56k
at IPO to €52k for the post IPO acquisitions.
4,727
Total land portfolio
of 4,727 units at
31 December 2017
7,342
€284 million of capital has
been deployed, since IPO,
bringing the total number of
units to 7,342.
Cash Flow
The Company’s cash balance at 31 December 2017 was €351.8 million and the key cash flows during the
period are set out below:
€’m
Cash and cash equivalents at incorporation on 9 August 2017
IPO Proceeds (net of IPO costs and payment to Sispar*)
Project Kells (various)
Project Castle (Balbriggan)
East Road
Other land acquisition payments (including deposits)
Other working capital and capital expenditure
Cash and cash equivalents at 31 December 2017
2017
-
501.8
(44.5)
(23.9)
(45.1)
(15.5)
(21.0)
351.8
*As disclosed in the prospectus, a payment of c. €21 million was made to Sispar in full and final settlement of a profit share
entitlement in respect of the acquired development opportunity at Marina Village, Greystones.
Capital Structure and Group Financing
The Group funds itself through a combination of equity and debt. Following the period end, the Group
agreed a €250 million Revolving Credit Facility (‘RCF’) with a syndicate of domestic and international
banks for a three-year term. This facility will be used to finance the Group’s working capital
requirements and will allow the Group’s remaining capital to be deployed on increasing the Group’s
current land portfolio.
Financial Results for the Period
As part of acquiring Bridgedale Homes Limited, the Group had a commitment to provide asset
advisory and construction services to TIO until 31 December 2017. The revenue and gross profit for the
period relate solely to these services and are not indicative of the Glenveagh business model from 1
January 2018 onwards.
The key financial performance metrics for the period are as follows:
Revenue
Gross Profit
EBITDA* (before exceptional items)
EBITDA* (after exceptional items)
Basic and diluted loss per share
Period ended 31 December 2017
€1.4m
€0.5m
(€3.5m)
(€51.6m)
(13.7c)
*EBITDA is defined as statutory profit or loss for the period less interest; tax; depreciation and amortisation.
The results for the period include an exceptional charge of €47.5 million for the Founder Share scheme
and €0.6 million of IPO related expenses.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Founder Share Scheme
Financial KPIs
The exceptional charge of €47.5 million recorded
in the period is in respect of the non-cash
accounting expense for the Founder Shares issued
to the Founders of the company. This charge has
been independently valued and represents the full
fair value of these shares, with no further expense
to be recognised in future reporting periods
irrespective of the value which may or may not
accrue to the holders of the shares. No value has
accrued to date to the Founders under the terms
of the scheme and such value will only accrue on
achieving the pre-agreed performance conditions
of the scheme.
This non-cash exceptional charge has been
recognised in the Income Statement, with a
corresponding amount in the share-based
payment reserve (within equity), and therefore
has no net impact on the Net Asset Value
of the Group.
Finance Income & Expense
The finance expense for the period reflects the
current negative deposit rates and the impact of
these rates on the Group’s funds held on deposit.
The Group endeavours to place the funds on
longer term deposit, where possible, while also
being cognisant of the need to have funds readily
available for land acquisitions.
Share Price and Market
Capitalisation
The Company’s IPO share valuation was set at
€1 per ordinary share and, at 31 December 2017,
had subsequently increased to €1.18, giving the
Company a period-end market capitalisation of
€787 million.
The Group’s results for this financial period are not
indicative of future financial performance trends
due to the short accounting period, the recognition
of significant exceptional items and the completion
of the trading arrangements with TIO.
The Group has set a number of financial key
performance indicators (KPIs), with details
provided below. Going forward, these KPIs
will be used to measure the financial and
operational performance of the Group and will
be used to track progress in achieving short,
medium and long-term targets.
Gross Margin
Gross margin reflects the Net Development
Value (‘NDV’) of units sold less the costs directly
linked to the construction and sale of those units.
Gross margin is one of the key metrics used by
management in acquiring land and is continually
assessed on a phase by phase basis throughout
the life of a development.
Earnings before interest, tax, depreciation
and amortisation (EBITDA)
Group management consider EBITDA to be the
most appropriate measure for assessing the
operational profitability of the Group in any given
financial period. It is calculated by adding back
non-cash depreciation and amortisation charges
to the Group’s operating profit for a period.
Return on Capital Employed (ROCE)
The Group considers ROCE to be a key long
term corporate metric once the Group achieves
scale. The Group believes that ROCE is the best
measure of the Group’s ability to generate profits
from its asset base in a capital efficient manner.
Michael Rice
CFO
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Glenveagh Properties PLC Annual Report and Accounts 2017
Risk
Management
Report
As part of its oversight responsibilities, the Audit
& Risk Committee is responsible for reviewing the
adequacy and effectiveness of the Group’s risk
management process.
Principal Risks and Uncertainties
Arising from the risk management process,
principal risks and uncertainties have been
identified which could have a material impact on
the Group in achieving our strategic objectives.
These risks and uncertainties together with key
mitigating considerations are set out on pages
37 to 40.
The Board is responsible for ensuring good
corporate governance and prudent risk
management is implemented by the Group.
The Board has approved the Risk Management
Framework which provides a common risk
management process across the Group to
identify, assess, mitigate, monitor and report
risks which impact the Group. The Group’s risk
management process aims to ensure that all risks
to which the Group is exposed are identified,
understood and appropriate mitigating controls
are implemented to manage the risks effectively
and protect the Group.
The Group has a risk register to support the risk
management process and document the Group’s
risks, controls and their approved ratings based
on likelihood and impact from both an inherent
and residual perspective. The Board formally
reviews and approves the risk register on at least
a bi-annual basis.
The Board has approved the Risk
Management Framework which provides
a common risk management process
across the Group to identify, assess,
mitigate, monitor and report risks which
impact the Group.
Risk or uncertainty and potential impact
Key Mitigating Considerations
Adverse Macroeconomic Conditions
Glenveagh operates in a property
market that is cyclical by nature which
can lead to volatility of property values
and market conditions.
Geopolitical uncertainty (including Brexit)
could lead to a potential adverse impact
on the Group’s asset valuation and
financial performance due to factors
such as slowdown in economic growth,
increased interest rates and decline in
consumer confidence.•
The Group aims to maintain a reasonable but limited
stock of land (5-7 years).
The Group avoids any longer exposure through strict
land acquisition policies.
The Group has a robust acquisition policy and
approval process in place to ensure the best value is
achieved on assets and that they are aligned to the
strategic objectives of the Group.
Glenveagh Living will assist in reducing the cyclical
nature of the business through the delivery of
apartments and houses for the rental market.
Management and the Board actively monitor the
geopolitical risks and seek expert industry advice
where required.
Adverse changes to government policy
and regulations
The Group’s management and Board monitor
government policy on an ongoing basis.
A change in the domestic political
environment and/or government policy
(including tax legislation, support of the
housebuilding sector, Part V allowance and
first-time buyer assistance) could adversely
affect the Group’s financial performance.
Mortgage Availability and Affordability
Glenveagh understands that affordable
mortgage finance is a crucial funding
source for buyers in the residential property
market in Ireland.
Constraints on the availability and cost of
mortgage financing may have an adverse
impact on sales of the Group’s homes due
to a potential decline in customer demand
and ultimately the profitability of the Group.
Management’s site by site forecasts are conservative
by nature and allow for expected negative changes
in government policy and regulation.
The Group has the capability to redesign
developments as appropriate should it be required.
The Group will consider alternative sales strategies
where required to align to any changes in the
domestic political environment.
Management and the Board continuously monitor
government policy around mortgage availability.
The Group regularly engages with mortgage advisors
to gain valuable insights into the market and the
impact of regulatory changes impacting mortgage
lending.
The Group’s strategy can facilitate the adjustment of
delivery velocity if required.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Risk or Uncertainty and Potential Impact
Key Mitigating Considerations
Risk or Uncertainty and Potential Impact
Key Mitigating Considerations
Decline in Product Quality
Delivery of the highest quality homes is
central to the success of Glenveagh.
The Group continues to focus on ensuring
our products meet the desired standards
and is aware that significant negative
incidents including construction defects,
material environmental liabilities (including
hazardous or toxic substances), quality
deficiencies or perceptions thereof could
adversely impact the Group’s sales and
possibly result in litigation cases against
the Group with a potentially negative
impact on the Group’s brand and customer
satisfaction which are crucial to the
Group’s performance.
Inadequate Project Management
Inadequate oversight of the cost and
delivery of development projects adversely
affects expected return on investment.
Insufficient health and safety procedures
Glenveagh is focused on the wellbeing of
its employees, contractors / sub-contractors
and the general public.
The Group understands that failure to
implement and adhere to the highest
standard of Health & Safety practices can
lead to a significant risk to safety, health
and welfare of staff and other parties
resulting in increased costs and negatively
impact the timely and safe delivery of
a project.
Additionally, any failure in health or safety
performance or compliance, including delay
in responding to changes in health & safety
regulations may result in financial and / or
other penalties.
The Group has implemented robust quality control
procedures and strictly adheres to Building Control
(Amendment) Regulations requiring (among other
stipulations) the appointment of suitably qualified
engineers and architects.
The Group has an experienced and professional
support team in place.
The Group has a dedicated customer service
after-sales team.
The Group has fixed cost contracts in place with
sub-contractors and suppliers where possible.
The Group employs highly experienced and qualified
project managers who oversee a robust financial
planning process for each development and
continuously monitor and review the budget versus
actual costings. This includes regular updates to the
Executive Committee and Board of Directors.
A dedicated Health & Safety Officer is appointed and
in place.
The Group has a wealth of experience, adopts
best practice and regulations and has developed
and implemented formal best practice policies and
procedures to support and promote a robust Health
& Safety environment.
The Group ensures all staff are appropriately and
adequately trained.
The Group has a Safe-T certificate which is the
industry Health & Safety auditing standard.
There is adequate insurance cover in place to
deal with any claims that may arise from claims
due to injury.
Employee development and retention
The success of the Group is dependent on
recruiting, retaining and developing highly
skilled, competent people. The Group is
aware that loss of key personnel and/or the
inability to attract/retain adequately skilled
and qualified people could lead to:
- Poor operational and financial
-
performance
Inadequate staff knowledge and
understanding of policies & procedures;
- Reduced control environment;
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Insufficient transfer of knowledge
amongst staff to allow for succession
planning;
- Demotivated staff; and
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Failure to achieve/ deliver on the
Group’s strategic objectives.
The Group offers competitive and attractive
remuneration packages and where appropriate long
term interest alignment.
The Group offers the opportunity for advancement
through creating a positive working environment.
The Group has implemented a performance
management and appraisal process which includes
open channels of communication and feedback and
development plans for employees.
The Group is developing a succession plan to ensure
continuity of quality service and knowledge retention.
The Group ensures that all staff have access to
relevant internal and external training.
Availability and increased cost of
materials and labour
The Group has fixed cost contracts in place with
sub-contractors and suppliers where possible.
The Group has the potential to expand its purchasing
network should it be required and maintains flexibility
by not having an overreliance on any one supplier.
The Group engages in financial planning and
continuously monitors and reviews the budget versus
actual costings.
Shortages or increased costs of materials
and labour could lead to an increase
in construction costs and delays in the
completion of homes.
If the Group is unable to control its costs
or pass on any increase in costs to the
purchasers of the Group’s homes, source
the requisite labour, and/or renegotiate
improved terms with suppliers and
contractors, the Group’s margins may
reduce which could have an adverse
impact on the Group’s business operations
and financial condition.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Risk or Uncertainty and Potential Impact
Key Mitigating Considerations
Data protection and cyber security
The Group uses information technology to
perform operational and marketing activities
and to maintain its business records.
A cyber-attack could lead to potential
data breaches or disruption to the Group’s
systems and operations which in turn could
lead to damage to the Group’s reputation
and potential loss of customers and revenue.
Any security or privacy breach of the
information technology systems may
also expose the Group to liability and
regulatory scrutiny.
The Group has appointed a Head of IT to support the
Group in mitigating the risk of cyber and data security
breaches further.
The Group uses internal and external back-up systems
under the supervision of a third-party service provider
pursuant to agreements that specify certain security
and service level standards.
The Group has implemented sensitive data password
protection and all such information is stored in
secure locations.
The Group is proactively managing the cyber threat
and regularly engages a third party to perform a
system hygiene check to identify and remediate any
potential weaknesses or control gaps.
The Group is proactively managing the
cyber threat and regularly engages a third
party to perform a system hygiene check
to identify and remediate any potential
weaknesses or control gaps.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Governance
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Glenveagh Properties PLC Annual Report and Accounts 2017
Chairman’s
Introduction
John Mulcahy
Co-Founder & Executive Chairman
I am pleased to present my first Corporate
Governance Report as Chairman of the newly
formed Glenveagh Properties PLC. The following
sections demonstrate how your new Board has
used its authority and mandate to help drive
Glenveagh’s success and create value for all
shareholders and the wider stakeholder group.
Following the listing of the Company’s shares
on the Irish and London Stock Exchanges in
October 2017, the Board established a robust
corporate governance framework to enable
the discharge of our duties and responsibilities
to shareholders. In doing so, the Board has
formed two Board Committees composed
entirely of independent Non-Executive Directors
and focused on key governance concerns
– the Audit and Risk Committee and the
Remuneration and Nomination Committee.
We have also established an Executive
Committee, led by CEO Justin Bickle, to which
the day-to-day management of the business
has been delegated.
This report seeks to provide you with a clear and
meaningful explanation of how we discharge
our governance duties having regard to the
principles of good governance enshrined in the
UK Corporate Governance Code (‘the Code’)
and the Irish Corporate Governance Annex (‘the
Annex’). The Board is committed to maintaining
the highest standards of corporate governance
and ensuring that appropriate values and
behaviours are consistently embedded across all
business units and functions.
As Glenveagh is below the FTSE 350 and qualifies
under the Annex as a “smaller company” during
the period under review, some of the provisions do
not apply. The Board and its Executive Committee
recognise good governance is the bedrock which
supports the effective and prudent management
of the business, and helps drive long-term value
creation for shareholders. As such, we strive to
apply the principles of the Code wherever possible.
This section includes reports from the respective
chairs of the Audit and Risk Committee and
Remuneration and Nomination Committee.
Following Glenveagh’s IPO, the Audit and Risk
Committee has focused in particular on ensuring
the effective management and control of risks
is embedded throughout the business, which is
of particular significance in a Company growing
and expanding.
Further, the Remuneration and Nomination
Committee has focused on developing an
Executive remuneration policy that is properly
aligned to the Company’s risk appetite, long-
term strategy and shareholders’ interests. The
Remuneration and Nomination Committee has
It is my intention that the following
sections shall demonstrate how
your new Board has used its
authority and mandate to help drive
Glenveagh’s success and create value
for all shareholders and the wider
stakeholder group.
reviewed the mix of skills and experience on the
Board to ensure the Board fully meets the needs
of the Company.
The Board as a whole has reviewed the annual
report and financial statements, and is pleased
to confirm that they consider the report and
financial statements, taken as a whole, to be fair,
balanced and understandable.
John Mulcahy
Chairman
Operational and
Financial Targets
1,000
Target unit
completions in 2020
20%
Target gross
margin at scale
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Glenveagh Properties PLC Annual Report and Accounts 2017
7
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Corporate
Governance
Statement
This statement, in addition to the Audit and
Risk Committee Report and the Remuneration
and Nomination Committee Report, outlines
how Glenveagh Properties PLC has applied,
and intends to apply, the principles and
provisions set out in the UK Corporate
Governance Code issued by the FRC in April
2016 (‘the Code’) and the Irish Corporate
Governance Annex (‘the Annex’). The full text
of the Code and the Annex can be obtained
from the following websites respectively:
www.frc.org.uk
www.ise.ie
Compliance with the UK
Corporate Governance Code
and Irish Annex
The Group is committed to the principles of
corporate governance contained in the Code, for
which the Board is accountable to shareholders.
The Annex issued by the ISE also applies to the
Group, under the provisions of which the Group
was regarded as a smaller company under the
Code throughout the period under review. The
Directors consider that for the period from IPO
to 31 December 2017, the Group has been in
compliance with the provisions of the Code
with one exception.
Provision A.3.1
While the Code requires the Board Chairman
to be independent on appointment, the Board
believes the appointment of an Executive
Chairman to be the most appropriate choice
for the Board and the Group at this time.
In light of the Group’s recent IPO, the Board
believes the experience, knowledge and full-
time commitment of the current Chairman to be
an essential element in the Group’s continued
success and growth. Further, the Board believes
the Chairman encourages debate and challenge
and sets high ethical standards while, at all times,
demonstrating his commitment to good corporate
governance standards.
Given the Board’s unanimous decision to
appoint an Executive Chairman, the Board’s
Senior Independent Director has expressed her
willingness to take on additional responsibilities,
as required. There also continues to be a clear
division of responsibilities (which is described
further below) between the Chairman and the
CEO. As such, the Board is satisfied that no one
individual or group has dominated its decision
making and there has been sufficient challenge of
executive management in meetings of the Board.
As part of its ongoing review of effectiveness
of the Board in its discharge of its duties, the
Board, with the assistance of the Remuneration
and Nomination Committee, will continue
to review the appropriateness of the current
governance arrangements.
Corporate Governance
Framework
The Board is responsible for setting and guiding
the strategic direction of the organisation. The
Board supports the Group’s organisational
aspirations by providing leadership, monitoring
compliance and overseeing internal controls to
ensure a robust corporate governance framework
is in place. The Board’s aim is to ensure the long-
term success of the Company and to provide
sustainable value for its shareholders and all
key stakeholders.
The Board has delegated responsibility for
management of the Group to the Chief Executive
Officer and the Executive Committee.
The Board
The Board is currently comprised of seven
Directors: three Executive Directors, including
the Executive Chairman, three independent
Non-Executive Directors and one Non-Executive
Director. For further detail on Directors, please see
the Board biographies on pages 76 to 79.
The Board is satisfied that the size of the Board
is appropriate and that its members provide
the necessary skills and experience to lead the
organisation. Board composition will be reviewed
on an ongoing basis to ensure the Board has the
appropriate balance of skills and diversity.
Furthermore, the Board is satisfied the balance
of Executive and Non-Executive Directors is
appropriate to best facilitate constructive and
effective challenge and debate. The Board
believes that all Non-Executive Directors have
consistently demonstrated independent behaviour
and thought in fulfilling their duties as Directors.
The Board
Audit & Risk Committee
- Robert Dix
- Lady Barbara Judge
- Richard Cherry
Renumeration &
Nomination Committe
- Richard Cherry
- Lady Barbara Judge
- Robert Dix
Executive Committee
- Justin Bickle (CEO, Executive Director)
- John Mulcahy (Executive Chairman)
- Stephen Garvey (COO, Executive Director)
- Michael Rice (CFO)
- Shane Scully (MD Glenveagh Living)
- Wesley Rothwell (CCO)*
- Diarmuid Leahy (CPO)*
*Wesley Rothwell (Chief Commercial Officer) and Diarmuid Leahy (Chief People Officer) were not employees of the Group in the
period under review. Both joined the Group in January 2018 and were appointed to the Executive Committee on commencement
of their employment.
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Glenveagh Properties PLC Annual Report and Accounts 2017
The current Board composition provides an
appropriate balance of skills and experience
including property, construction, accounting
and finance. The current skills mix equips Board
members in effectively discharging their duties.
Independence
The Board believes there to be a strong
independent representation on the Board. For the
purpose of the independence requirements laid
out by the Code, the Board has classified Lady
Barbara Judge, Robert Dix and Richard Cherry to
be independent.
The Board has satisfied itself as to the
independence of individual directors based on
the requirements laid out in provision B.1.1 of
the UK Corporate Governance Code 2016. The
Board believes that all of the Non-Executive
Directors have consistently demonstrated
independent behaviour and thought in fulfilling
their duties as Directors.
Schedule of Matters
Reserved for the Board
The Board reserves to itself a formal schedule
of matters on which it exercises final decision.
Certain other matters are delegated to formally
established Board Committees. The key matters
reserved for Board decision include matters
relating to:
- Approval of the Group’s strategic aims and
objectives;
- Reviewing management’s corporate and
financial performance;
- Approval of major capital expenditure,
investments, material contracts, significant
acquisitions and disposals;
- Approval of interim and full-year financial
statements;
- Approval of annual budgets;
- Overview of risk management and internal
controls;
- Appointment of Executive and Non-Executive
Directors; and
- On the recommendation of the Remuneration
and Nomination Committee, determining the
remuneration for Executive Directors, Company
Secretary and Non-Executive Directors.
Board Meeting Attendance
Since the formation of the PLC Board in
September 2017 following the re-registration of
Glenveagh Properties Limited as a PLC, the Board
has met formally on 5 occasions.
Agendas for meetings and Board papers are
circulated in advance of meetings. The Company
Secretary is responsible for the coordination and
organisation of Board meetings, and is accessible
to advise all Board members as required.
Attendance at Board meetings from the formation
of the PLC Board to 31 December 2017 is set out in
the table below:
Board Member
Meetings
Held*
In
Attendance**
John Mulcahy
Justin Bickle
Stephen Garvey
5
5
5
Lady Barbara Judge 4
Richard Cherry
Robert Dix
Caleb Kramer
4
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4
5
5
5
3
4
4
3
*Meetings held refers to the number of meetings
held following each Directors’ appointment.
**Directors are deemed to be in attendance
where participation in the meeting is in person or
by conference call.
Directors Terms of Appointment
In accordance with the provisions of the Code,
appointments to the Board shall be for a period
of no more than three years.
Directors serving on the Board for a term beyond
six years will be subject to a particularly rigorous
review, including consideration of the potential
need to refresh the Board.
The Executive Directors have service agreements
with the Group which have notice periods of
six months. The Non-Executive Directors have
letters of appointment which set out the terms
of appointment. The Directors are required to
offer themselves for re-election annually at the
Company’s AGM.
Newly appointed Directors are provided with
an in-depth induction on joining the Board.
The Chairman is responsible for ensuring
the new Directors receive a full, formal and
tailored induction.
New Director Induction and
Ongoing Training/Development
Implementing a formal induction process not
only equips Directors with a comprehensive
understanding of their role and responsibilities,
the Group and the operations of the Board
but also allows for the efficient and effective
integration of new Board members.
Throughout their time on the Board, Directors
shall regularly review their individual skills
and knowledge and, where necessary, ensure
that any training and development needs are
addressed, as required. Additional support
and ongoing training is provided as seen fit,
to reinforce Directors’ understanding of key
challenges facing the organisation.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Clarity of Roles and Responsibilities
There is a clear division of responsibility set out in writing between the Chairman, Chief Executive
Officer, Senior Independent Director and Company Secretary which has been communicated to all
Board members and summarised as follows:
Role
Responsibility
Executive Chairman
– John Mulcahy
The Chairman is responsible for leadership of the Board, promoting
its effectiveness in all aspects of its role and ensuring its key duties are
discharged to an acceptable degree. The Chairman ensures the Board
members receive accurate and timely information, enabling them to play
a full and constructive role in the development and determination of the
Group’s strategy. He is responsible for creating an environment which
encourages open dialogue and constructive challenge. He ensures that there
is effective communication with the shareholders. Although the Chairman
holds a number of other directorships, the Board has satisfied itself that these
do not impact on his role as Chairman.
Chief Executive
Officer
– Justin Bickle
The Board delegates the ongoing management of the Group’s business to
the CEO. The CEO is responsible for the execution of the agreed strategy
and implementation of the decisions of the Board with a view to creating
value for shareholders and the wider stakeholder base. He is ultimately
responsible for all day-to-day management decisions and actions following
this. The CEO acts as a direct liaison between the Board and management,
and communicates to the Board on behalf of management. He also
communicates on behalf of the organisation’s external stakeholders.
Senior Independent
Director –
Lady Barbara Judge
The Senior Independent Director of the Group is available to shareholders
who have concerns that cannot be addressed through the Chairman or CEO
and will attend meetings with major shareholders as necessary. She acts as
a sounding board for the Chairman and to serve as an intermediary for the
other Directors as necessary. She also leads an annual meeting with the
Non-Executive Directors to appraise the Chairman’s performance.
Company Secretary
– Chloe McCarthy
The Company Secretary is accessible to all Directors, who may avail of her
advice and services. She must ensure that Board procedures are followed.
She is also responsible for advising the Board on all governance matters
and this is communicated through the Chairman. In addition, the Company
Secretary facilitates the induction of new Directors and assists with the
ongoing training and development of the Board.
Background and Objective
Glenveagh Homes (“GH”) and Glenveagh Living
(“GL”) operate as two complimentary businesses
delivering residential developments in Dublin,
Cork, Galway and Limerick. GH delivers these
developments to consumers, whereas GL
delivers these developments to selected private
and public partners including institutional
investors, approved housing bodies (“AHB”), local
authorities and the National Asset Management
Agency (“NAMA”). GL’s objective is to access a
wide spectrum of opportunities and to deliver
best-in-class private rental developments and
social and affordable developments to our
private and public partners. This is a low-capital
and low-risk model which is anticipated to result
in strong returns on capital employed.
Market
Private Rental Developments
There is currently a significant undersupply of,
and strong demand for, rental units in Ireland.
The existing rental units have largely been
provided by small independent landlords in
poor quality older homes and little purpose-built
rental accommodation is being constructed in
Ireland. With c.18% of Ireland’s population and
c.24% of Dublin’s population living in private
rental accommodation, the Irish government
is supportive of improvements to the rental
sector and expanding upon purpose-built rental
accommodation. In addition, there is significant
support and appetite from institutional investors
for purpose-built residential accommodation. GL
are committed to becoming the delivery partner
of choice for purpose-built rental accommodation
in Ireland and have acquired a prime urban site
capable of delivering a large scale purpose-built
rental development in Dublin 1. Please see below
for further details of this acquisition.
Social and Affordable Developments
There is also a significant undersupply of social
and affordable housing in Ireland. There are
currently in excess of 90,000 households on
local authority waiting lists for social housing
across Ireland. The government aim to deliver c.
33,500 newly constructed social housing units by
2021. Bridgedale Homes delivered 67 social and
affordable housing units to an AHB, Clúid Housing
Association (“Clúid”), in 2017. GL intend to build
upon this successful delivery and are committed to
becoming the leading delivery partner for social
and affordable housing in Ireland.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Board Performance Evaluation
Directors’ Conflicts of Interest
As required by the Code, the Board policies
include a provision for an annual Board self-
evaluation process and this will be supplemented
by an external evaluation, to be carried out every
three years.
As part of the annual evaluation process, the
performance of the Board as a whole, the Board’s
processes, its Committees and the performance
of the Directors on an individual basis shall be
assessed. This includes an evaluation of:
- The balance of skills, experience and
knowledge of the Group on the Board;
- Diversity of the Board (including gender);
- How the Board works together as a unit; and
Individual Director’s ability to contribute
-
effectively, ongoing commitment to their role
as a Director and, if relevant, Committee
members.
The Chairman is responsible for overseeing the
annual Board evaluation process. As part of
this process, the Chairman shall meet annually
with Non-Executive Directors to discuss Board
performance, the conduct of Board and
Committee meetings and general corporate
governance of the Company.
Additionally, the Senior Independent Director
and the other Non-Executive Directors will
meet annually to conduct an evaluation of the
Chairman’s performance.
It is primarily the responsibility of the Chairman
to ensure the results of the evaluation are acted
upon appropriately.
The Companies Act 2014 specifies that it is the
duty of a Director of a company who is in any
way, either directly or indirectly, interested in a
contract or proposed contract with the Group
to declare the nature of his interest at a Board
meeting. A record of all such declarations is
maintained by the Company which may be
inspected by any Director, auditor or shareholder
at the registered office of the Group.
Subject to certain exceptions, Directors are
prohibited from voting at Board or Committee
meetings on any resolution concerning a
matter in which they, or a member of their
immediate family, have a direct or indirect
interest which is material or a duty which
conflicts or may conflict with the interests of the
Group. Typically, Directors will absent themselves
from discussions of such transactions at Board
or Committee meetings.
The Company has established a comprehensive
Conflicts of Interest policy which is shared with
Directors and subject to regular review.
Internal Control and Risk
Management
The Board has in place an ongoing process for
identifying, evaluating and managing significant
risks that the Group may face. Oversight of
the Group’s system of internal controls, risk
management and governance frameworks
is a key priority of the Board and has been
delegated to the Audit and Risk Committee.
As part of the annual evaluation
process, the performance of the Board
as a whole, the Board’s processes, its
Committees and the performance of
the Directors on an individual basis
shall be assessed.
A robust process has been in place for the period
under review and up to the date of approval of
the financial statements. Given the Company’s
recent incorporation, the Company’s risk
framework is evolving, with some risk mitigation
arrangements only in existence for a short period
of time. The Board will continue to monitor
and improve its risk management framework
throughout 2018.
The Group has documented its financial policies,
processes and controls, which will be subject to
a regular review to ensure the systems remain fit
for purpose. The key elements of the system of
internal controls include:
- Clearly defined organisation structure and
lines of authority;
- A finance manual which clearly sets out the
Group financial policies, procedures and
related controls;
- A risk management policy;
- Annual Budgets and Strategic Plans are
reviewed and approved annually by the
Board; and
- An independent internal audit team reporting
directly to the Audit and Risk Committee.
The Board has delegated responsibility to the
Audit and Risk Committee for the monitoring and
reviewing of the Group’s risk management and
internal controls framework.
Shareholder Relations
The Company is committed to maintaining open
and transparent communications with its investors.
In addition to communications via the relevant
stock exchanges, channels of communication are
enhanced via meetings with its largest investors
and institutional shareholders, presentations
to brokers and analysts, and making relevant
information available on the Group website,
www.glenveagh.ie. A total of 39 meetings with
investors and shareholders have taken place since
the Company’s IPO.
Ultimately, the responsibility for creating
effective communication with shareholders
lies with the Chairman. However, on a day-to-
day basis the CEO keeps the Board informed
in relation to shareholder views. Further, the
Senior Independent Director is also available to
shareholders should they have concerns that
contact through the normal channels of Group
Chairman, CEO, CFO, Company Secretary or
other Executives cannot resolve or for which such
contact would be inappropriate.
Annual General Meeting
The AGM provides another platform for effective
and meaningful interaction between the Board,
other key Executives and shareholders. The Group
encourages communication with all shareholders,
and welcomes their participation at Annual
General Meetings. Presentations will be given
from the CEO and on behalf of the Board, and
shareholders in attendance will be invited to ask
questions during the presentations as well as
informally afterwards.
Board Committees
Audit & Risk Committee
The main purpose of the Audit & Risk Committee
is to provide oversight of the Group’s financial
reporting process, audit process, compliance with
laws and regulations, system of internal controls
and risk identification and mitigation.
For detailed information on the Audit and Risk
Committee please see the Committee’s report set
out on pages 56 to 63.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee
is focused on examining the necessary skills and
characteristics to be an effective Board Director
and recommending and monitoring appropriate
compensation for both Executive and Non-
Executive Directors.
The Remuneration and Nomination Committee is
also responsible for ensuring that Non-Executive
and Executive remuneration arrangements
support the strategic aims of the business and
enable the recruitment, motivation and retention
of senior executives, while also complying with the
requirements of regulation.
For detailed information on the Remuneration
and Nomination Committee please see the
Committee’s report set out on pages 64 to 72.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Audit
and Risk
Committee
Report
Robert Dix
Chairman, Audit and Risk Committee
As Chairman of Glenveagh Properties PLC’s Audit
and Risk Committee, I am pleased to present the
Committee’s Report for the period under review.
The Audit and Risk Committee has satisfied itself,
and has advised the Board accordingly, that the
2017 annual report and financial statements are
fair, balanced and understandable, and provide
the information necessary for shareholders to
assess the Company’s performance, business
model and strategy.
As this report will demonstrate, I am confident
in saying that since its formation, the Audit
and Risk Committee has met its obligations as
appropriate in its first year of formation and
continues to monitor changes in the financial
and regulatory environment within which the
organisation operates.
Roles and Responsibilities
Following the formation of the Board and,
subsequently, the Audit and Risk Committee
during the period, the Committee set about
establishing its Terms of Reference, which are now
available on the Company’s website. The Terms of
Reference will be reviewed annually and amended
in line with any future organisational changes to
ensure they continue to be fit for purpose.
At a high level, the duties carried out by the Audit
and Risk Committee relate to:
Financial reporting;
•
• Risk management;
•
Internal controls;
• Compliance; and
• Oversight of the company’s relationship with
the external auditor.
These responsibilities are intended to be
performed in conjunction with the management
team, and internal/external auditors.
The key function of the Committee is oversight of the Company’s internal control and
risk management systems. This involves the following responsibilities:
- Review the adequacy and effectiveness of the Group’s internal controls including the
systems established to identify, assess, manage and monitor risks and receive reports
from management on the effectiveness of these, including the conclusions of any
testing carried out by internal or external auditors and other assurance providers
- Review the principal risks identified in the annual report and the statements on the
Company’s internal controls and risk management framework
- Review and approve the risk management policy and the Company’s risk register and
appetite statement, prior to submission to the Board for its approval
- Advise the Board on the Company’s current risk exposures and future strategy for
managing such risks
- Review relevant risk reporting, including incident breach reporting in order to assess
the effectiveness of the Company’s risk management process
Other responsibilities of the Audit and Risk Committee are set out in its Terms of Reference
and are detailed in the table below.
As this report will demonstrate,
I am confident in saying that since
its formation, the Audit and Risk
Committee has met its obligations
as appropriate in its first year of
formation and continues to monitor
changes in the financial and regulatory
environment within which the
organisation operates.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Other Responsibilities
Integrity of Financial
Statements and
Announcements
Examine the integrity of annual and half-yearly reports, interim
management statements, preliminary announcements and any other formal
statement relating to financial performance
Other Responsibilities
External Audit
Evaluate and approve material accounting policies, estimates and
judgements
Review policies used to determine if the annual report (including financial
statements) are fair, balanced and understandable
Assess the application of significant accounting policies and any
proposed changes
Review methods and approaches for significant or unusual transactions
Review all material information presented in the annual report, including
but not limited to the Strategy and Business Model overview and Corporate
Governance Statement
Maintain awareness in relation to the implications of new accounting
standards and changes in the regulatory environment
Compliance,
Whistleblowing
& Fraud
Review the adequacy and security of the Company’s arrangements for
its employees and contractors to raise concerns, in confidence, about
possible wrongdoing in financial reporting or other matters, ensuring that
arrangements allow proportionate and independent investigation of such
matters and appropriate follow up action
Review the Company’s procedures for detecting fraud
Review the Company’s systems and controls for the prevention of bribery
and receive reports on non-compliance
Internal Audit
Review and approve the role and authority of internal audit (including
external party if internal audit function is outsourced), monitor and review
the effectiveness of its work, and approve the internal audit charter to
ensure its appropriateness for the current needs of the organisation
Review the internal audit plan for the upcoming financial year to ensure its
alignment with the key risks of the business, and receive regular reports on
work carried out
Approve the internal audit charter annually ensuring it is appropriate for the
current needs of the organisation and determine whether it is satisfied with
the quality, experience and expertise of internal audit
Ensure internal audit have the necessary scope to carry out its mandate
and encourage open communication between functions
Assess the performance of the internal audit function by carrying out an
annual assessment of the effectiveness of the function
Monitor the relationship with the external auditor which includes assessment
and confirmation of independence
Assess the effectiveness and performance of the external auditor
Approve external audit plans for the half and full year ends
Review the external auditor’s findings in relation to annual and half-yearly
financial statements
Review the process and timing for retendering the Group’s external audit
Meet with the external auditor without management being present
Consider the ratio between audit and non-audit fees
Committee
Effectiveness
Implement changes in relation to matters arising from previous year’s
Committee evaluation which identified areas for improvement
Create an action plan to address development areas identified
in the Committee’s annual evaluation
Audit and Risk Committee
Composition
The Audit and Risk Committee comprises three
independent Non-Executive Directors; Robert Dix
(Chairman), Richard Cherry and Lady Barbara
Judge. The biographies of these Directors can be
found on pages 77 and 78.
The Board believes that Committee members
offer a balanced suite of expertise, including
financial expertise and experience in the legal
and property sectors. Particularly, the Board
considers that the Committee Chairman has
sufficient recent and relevant financial experience
for the role and that there is sufficient financial
and commercial experience within the Audit and
Risk Committee as a whole. This vast array of skills
enables the Audit and Risk Committee to carry
out its duties and responsibilities as detailed in
the Committee’s Terms of Reference.
Meeting
Following formation in October 2017, the Audit
and Risk Committee met once during the period
under review. All Committee members were in
attendance at this meeting with the exception
of Lady Barbara Judge. On occasion, special
attendees including the CFO were invited to
attend all or part of Committee meetings as
deemed appropriate and necessary by the
Committee Chairman.
Activities
During this initial reporting period, the
Committee focused primarily on obtaining an
overview and an understanding of the Group’s
internal control environment which included the
consideration of internal audit requirements,
following which Deloitte were appointed as the
Group’s internal auditors. The Committee also
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Glenveagh Properties PLC Annual Report and Accounts 2017
In respect of the 2017 annual report,
the Committee considered the Group’s
risk management framework and the
key business risks as disclosed in the
Risk Management Report as part of its
review of the Group’s risk register.
assessed external audit requirements, after which
KPMG were appointed as external auditors
of the Group. Subsequent consideration and
approval was given to a policy in relation to the
provision of non-audit services by the Group’s
external auditors.
In respect of the 2017 annual report, the
Committee considered the Group’s risk
management framework and the key business
risks as disclosed in the Risk Management Report
as part of its review of the Group’s risk register.
The Committee also assessed whether suitable
accounting policies had been adopted in the
preparation of the results for the period and
whether management had made appropriate
estimates and judgements. In particular, the
Committee focused on areas that involved a
significant level of judgement or complexity (as
outlined in the financial reporting section om
pages 61 and 62). The Committee also considered
the view expressed by the external auditor, KPMG,
in making these assessments.
Fair, Balanced and
Understandable
-
-
It considers the annual report and financial
statements, taken as a whole, to be fair
balanced and understandable; and
It provides the information necessary for
shareholders to assess the Company’s
position and performance, business model
and strategy.
At the request of the Board, the Committee
considered whether the annual report and
financial statements for the period met these
requirements. The Committee considered
the content of the document and discussed
with management the approach taken to its
preparation, in particular the planning, co-
ordination and review activities. The Committee
also noted the process undertaken by KPMG.
The Audit and Risk Committee subsequently
confirmed to the Board that the annual
report, taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the Group’s
position and performance, business model
and strategy.
Financial Reporting
The Code outlines that the Board is responsible
for preparing the annual report and financial
statements. It also requires the Board to
confirm that:
The significant issues considered by the Audit
and Risk Committee in relation to the financial
statements for the period ended 31 December
2017 and how each of them was addressed were
as follows:
Significant Issue Considered
Committee Activity
The Committee has considered the
accounting treatment adopted by
management and disclosure in respect
of the material transactions noted and
is satisfied with same.
Acquisition Accounting
The Group has undertaken certain material acquisitions during
the period.
On 13 October 2017 and conditional on IPO, the Company acquired
100% of the share capital of both Glenveagh Homes Limited
(formerly Bridgedale Homes Limited) and Glenveagh Contracting
Limited (formerly Bridgedale Contracting Limited) for consideration
of €4.1 million and €0.3 million respectively. Consideration was
settled by way of issue of shares in the Company equal to the fair
value of the shares acquired.
On the same date, the Group completed the asset acquisition
(also conditional on IPO) of a number of sites from a related party
(Targeted Investment Opportunities ICAV). In total, 13 assets were
acquired at an aggregate cost of €110.25 million which was also
settled by issue of shares to that value in the Company.
Management have accounted for the above transactions in
accordance with the relevant accounting standards and appropriate
disclosure has been made in note 23 of financial statements.
Share-based payments
As part of the IPO process, two share-based payment
arrangements were entered into with members of the executive
and management teams.
The Founder Shares issued to John Mulcahy, Justin Bickle
(beneficially held by Durrow Ventures) and Stephen Garvey entitle
them to share 20% of the Company’s Total Shareholder Return
(being the increase in market capitalisation of the Company, plus
dividends or distributions in the relevant period) (“TSR”) 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. Management engaged an independent valuation
expert who valued the Founder Shares at €47.5 million at grant
date. This expense was recognised in its entirety in profit or loss
(with a corresponding impact on equity and therefore no impact on
net assets) in the period based on the contractual terms attaching
to the shares.
1.6 million options were also issued to certain executives (excluding
the Founders) and members of the management team under a
long-term incentive plan (“LTIP”) in the period and will vest on
the third anniversary of listing subject to achievement of certain
performance conditions related to the Company’s TSR over the
period. An independent valuation expert valued the LTIP options at
grant date and this expense will be recognised in profit or loss over
the vesting period with €0.04 million recognised in the period to 31
December 2017.
The Committee considered the
accounting requirements for both
share-based payment arrangements.
This involved:
- Obtaining an understanding of the
classification of and accounting
for the share-based payment
transactions through discussion
with management and a review of
accounting analysis performed by
management;
- Discussion in relation to the
approach to the calculation of
the grant date fair value of each
instrument;
- Consideration of the significant
assumptions used by the
independent valuation expert; and
- Consideration of the extensive
disclosures included in the financial
statements.
The Committee is satisfied the
accounting treatment adopted reflects
the terms of the arrangements and
disclosures included in notes 14 and
24 of the consolidated financial
statements are appropriate.
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61
Glenveagh Properties PLC Annual Report and Accounts 2017
Significant Issue Considered
Committee Activity
Carrying value of inventory
The carrying value of the Group’s inventory is €228 million at 31
December 2017 which comprises the cost of development land
acquired and the cost of the work completed thereon to date.
Inventory is required to be carried at the lower of cost and net
realisable value.
At period end management undertook an exercise to assess the
net realisable value of the inventory balance in order to assess the
carrying value at that date. There is a significant level of judgement
involved in this exercise which includes a review of future cash flows
associated with each individual site in order to validate current
profitability projections. The exercise indicated no evidence of
impairment and therefore no adjustment to the carrying value
was required at 31 December 2017.
The Committee considered the
period end approach to the inventory
carrying value review and discussed
same with management.
Based on the results of the process
undertaken by management, the
Committee was satisfied with the
carrying value of work in progress and
development land at period end.
Each of the above areas received particular focus
from the external auditor, who provided detailed
analysis and assessment of each matter in their
report to the Committee.
Internal Audit
Given Glenveagh’s current scale and the current
position in its life cycle, the Group does not
have an “in-house” internal audit function. The
Committee has considered this position and
does not deem it a matter of concern given the
Company’s limited trading in the period under
review. During the period, the decision was
taken to outsource the internal audit function
to an independent third party (Deloitte) with
the intention of the Audit and Risk Committee
maintaining ownership of the internal audit
agenda and reviewing the effectiveness of the
function on an annual basis.
External Auditor
KPMG has been appointed as external auditor
of the Group. The Audit and Risk Committee
considers and makes recommendations to the
Board, to be put to shareholders for approval at
the AGM, in relation to the appointment,
re-appointment or removal of the Auditor.
Audit effectiveness
The effectiveness of the external audit process
is assessed by the Audit and Risk Committee,
which meets regularly throughout the year with
the audit partner and senior audit managers.
In conducting this review, the Audit and Risk
Committee concluded that the audit process as a
whole had been conducted robustly and that the
team selected to undertake the audit had done
so thoroughly and professionally.
In assessing the independence and objectivity
of the external auditor, the Audit and Risk
Committee considered the internal processes
which the External Auditor has in place to ensure
their independence and objectivity is monitored
and reviewed sufficiently. Further, the Audit
and Risk Committee took into account senior
management’s satisfaction with KPMG, including
its level of planning and coordination, ability to
meet delivery dates and objectives, preparedness
and organisation, ability to firmly challenge
management and quality of communication.
Auditor independence and non-audit services
KPMG have formally confirmed their
independence to the Audit and Risk Committee.
In order to further ensure independence, the
Committee has a policy on the provision of
non-audit services by the external auditor that
seeks to ensure that the services provided by the
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external auditor are not, or are not perceived to
be, in conflict with auditor independence. Analysis
of fees paid or payable at period end to KPMG
in respect of services provided in the period are
analysed in the table below:
Audit fees
Tax advisory fees
Tax compliance fees
IPO related fees
€ ‘000
100
27
41
728
At the end of the period under review, non-audit
fees paid to KPMG, excluding the once-off IPO
costs, represented 68% of total audit fees.
It is the Company’s practice to engage KPMG on
assignments in addition to their statutory audit
duties where their expertise and experience with
the Group are important. During the period,
KPMG were retained to provide reporting
accountant services in relation to the listing of
the Company’s shares on the main markets of
the London and Irish Stock Exchanges. The Audit
and Risk Committee considered this appropriate
given the once-off nature of the Company’s
IPO and KPMG’s extensive knowledge of
the business and the Company’s internal
processes. On that basis, the Company incurred
professional fees with the external auditor that
exceeded the audit fee. KPMG also provided
certain tax compliance and advisory services
in the period which were also considered and
deemed appropriate by the Committee.
The Committee has approved a policy on the use
of the external auditor for non-audit services and
continually monitors the ratio of audit to non-
audit fees, acknowledging the legislation which
will apply to the Company from 2020 onwards
requiring fees for non-audit services to be capped
at 70% of the average statutory audit fee over the
previous 3 year period. Further, in reviewing non-
audit services provided by the external auditor,
the Committee considers whether the non-audit
service is a permissible service under the relevant
legislation and any real or perceived threat to the
external auditor’s independence and objectivity
to include, among other considerations, a review
of: the nature of the non-audit services; whether
the experience and knowledge of the external
auditor makes it the most suitable supplier of the
non-audit services; and the economic importance
of the Company to the external auditor. The
policy on the supply of non-audit services includes
a case by case assessment of the services to be
provided and the costs of the services by the
external auditor taking into account any relevant
ethical guidance on the matter.
Robert Dix
Chairman
Audit and Risk Committee
The effectiveness of the external audit
process is assessed by the Audit and
Risk Committee, which meets regularly
throughout the year with the audit
partner and senior audit managers.
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63
Remuneration
and Nomination
Committee
Report
Richard Cherry
Chairman, Remuneration and
Nomination Committee
quality required to run the Company successfully
without paying more than is necessary, having
regard to views of shareholders and other
stakeholders. In developing the remuneration
policy, the Committee has regard to the risk
appetite of the Company and alignment to the
Company’s long term strategic goals.
The full terms of reference were reviewed in
connection with the IPO process and approved
in November 2017. For further information please
see Glenveagh’s website for the Committee
Terms of Reference.
It is our intention to operate in line with the
approved remuneration policy. We welcome and
will consider any shareholder feedback on the
remuneration policy and Annual Remuneration
Report for 2017.
Richard Cherry
Chairman,
Remuneration and Nomination Committee
I am pleased to present the Remuneration
and Nomination Committee (“the Committee”)
report for 2017 which provides a summary of the
activities carried out by the Committee during the
period under review. The primary objective of the
Committee is to:
- determine and agree with the Board of
Directors the remuneration policy for the
Executive Directors and senior management
of the Company;
- within the terms of such agreed policy,
determine the individual remuneration
package for the Executive Directors;
- monitor the structures and levels of
-
remuneration for other senior executives and
make recommendations if appropriate; and
to review the composition of the Board and
to plan for its progressive refreshing with
regard to balance and structure as well as
succession planning.
Following the Company’s IPO in October 2017,
the Committee reviewed and approved a
comprehensive remuneration policy as laid out in
this report. In fulfilling its primary objectives, the
Committee has developed appropriate annual
and long term incentive arrangements as part of
its remuneration policy.
The remuneration policy is intended to attract,
retain and motivate executive management of the
Committee Composition
The Committee comprises three Independent
Non-Executive Directors; Richard Cherry
(Chairman), Robert Dix and Lady Barbara Judge.
The biographies of these Directors can be found
on pages 77 and 78.
The Board believes that Committee members
offer a balanced suite of expertise, meeting the
specific requirements of this Committee. This vast
array of skills enables the Committee to carry out
its duties and responsibilities as detailed in the
Committee Terms of Reference.
Roles and Responsibilities
The Committee was put in place to assist the
Board in fulfilling its obligations laid out in the
Committee Terms of Reference. The Terms of
Reference will be reviewed annually and amended
in line with organisational changes to ensure they
are fit for purpose.
The principal responsibilities and duties of the
Committee include:
- Assessing the effectiveness and performance
of the Board and each of its Committees
including consideration of the balance
of skills, experience, independence and
knowledge of the Company on the Board,
its diversity, including gender, how the Board
works together as a unit, and other factors
relevant to its effectiveness;
- Where necessary, making recommendations
to the Board based on the above
considerations;
- Considering succession planning for
Directors and members of senior
management, including the identification
and assessment of potential Board
candidates, and making recommendations
to the Board for its approval;
- Preparing job specifications for the
appointment of a Chairman; Senior
Independent Non-Executive Director; and
other Non-Executive Directors;
- Have responsibility for setting the
remuneration policy for all Executive Directors
including pension rights and any other
compensation payments;
- Recommend and monitor the level and
structure of remuneration for other
senior management;
- Review the ongoing appropriateness and
relevance of the remuneration policy, taking
into account all factors which it deems
necessary, including the risk appetite of the
Company and alignment to the Company’s
long strategic term goals;
- Review the total individual remuneration
package of each Executive Director, the
Company Chairman and other designated
senior executives including any bonuses,
incentive payments and share options or other
share awards; and
- Oversee any major changes in employee
benefits structures throughout the Company
or Group.
These responsibilities are performed in conjunction
with the Executive Committee, and particularly the
Chief People Officer (“CPO”).
The Board believes that Committee
members offer a balanced suite
of expertise, meeting the specific
requirements of this Committee.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Remuneration Policy
The following table outlines the key details of the Executive Directors’ remuneration policy. In designing
this remuneration policy, the objective of the Committee is to continue to attract, retain and motivate
executive management of the quality required to run the Company successfully, having regard to views
of shareholders and other stakeholders. The Committee is satisfied that the remuneration framework is in
alignment with the Company’s risk appetite and its long term strategic goals.
Element
Operation
Base Salary
To attract
and retain
high calibre
individuals
Base salaries are reviewed by the Committee
annually in the last quarter of the year with any
adjustments to take effect from 1 January of the
following year.
Factors taken into account in the review include
the individual’s role and level of responsibility,
personal performance and general developments
in pay in the market generally and across the
Company.
Base salary for Executive Directors is inclusive of
fees receivable by the Executive as a Director of
the Company.
Maximum Opportunity
There are no prescribed maximum
salaries or maximum increases.
Increases will normally reflect
increases across the Company
and in the market generally.
However, increases may be
higher or lower to reflect certain
circumstances such as changes
in responsibility or in the case of
newly appointed individuals to
progressively align salary with
market norms. In line with good
practice, market movements will
not be considered in isolation but
in conjunction with other factors.
Benefits
To be
competitive
with the
market
Annual Bonus
To reward the
achievement
of annual
performance
targets
In addition to their base salaries, Executive
Directors’ benefits include life and health
insurance and a car allowance in line with
typical market practice.
No maximum levels are prescribed
as benefits will be related to each
individual’s circumstances.
Individuals will receive annual cash bonus awards
based on the achievement of financial and
non-financial targets agreed prior to the start of
each financial year. Threshold levels will be set
for minimum and maximum awards with pro-rata
payments between the two points made based on
relative achievement levels against agreed targets.
The maximum award for Executive
Directors as a percentage of base
salary is as follows:
Executive Chairman 75%
CEO 100%
COO 100%
Annual bonus awards will be based 60% on
financial KPIs and 40% on non-financial KPIs.
The financial KPIs will ensure that employees
are aligned with shareholders’ interests and the
parameters that the Company will be assessed on
by the market in the long-term. The financial KPI
targets will be set annually based on the budget
and strategic plan process carried out in Q3/Q4
every year.
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Board Nomination Activities
Meetings
The Board, in its current composition, was
established shortly after the Company’s successful
IPO in October 2017 to perform the responsibilities
outlined above. In 2018, the Committee will
focus on putting in place a Board performance
evaluation process and, as part of this evaluation,
assess the balance of skills and experience
provided by the Board in its current composition.
The Committee will be responsible for identifying
and nominating for the approval of the Board,
candidates to fill Board vacancies as and when
they arise. No Board performance evaluation was
performed in 2017 given the recent IPO and short
financial period.
At present, the Committee is satisfied that the
Board provides the appropriate balance of skills
and experience to meet the current needs of
the Company.
Reporting
The Chairman of the Committee reports to the
Board on the activities of the Committee. The
Chairman of the Committee will attend the Annual
General Meeting to answer questions on the report
on the Committee’s activities and matters within
the scope of the Committee’s responsibilities.
66
The Committee met once during the period
ended 31 December 2017. All Committee members
were in attendance at this meeting with the
exception of Lady Barbara Judge. Special
attendees including the CEO, CFO and external
advisers were invited to attend all or part of this
Committee meeting as deemed appropriate and
necessary by the Committee Chairman.
External Advisers
During the period under review, the Committee
obtained independent advice from external
remuneration consultants, Mercer, in relation
to market trends, comparator benchmarking,
developments in remuneration policies and
practice and governance best practice. Mercer
also advised the Committee on the drafting of the
proposed new long-term incentive plan (“LTIP”),
and the selection of an appropriate comparator
peer group in relation thereto. Mercer are
members of the Remuneration Consultants Group
and signatories to its Code of Conduct, and all
advice is provided in accordance with this code.
Glenveagh Properties PLC Annual Report and Accounts 2017
Element
Operation
Annual Bonus (continued)
Maximum Opportunity
Element
Operation
Founder Share Scheme (continued)
Maximum Opportunity
To reward the
achievement
of annual
performance
targets
The Committee retains discretion to adjust any
award to reflect the underlying financial position
of the Company and to agree awards outside of
the above framework in respect of recent joiners
and leavers.
Founder Share Scheme
To incentivise
the three
founders of
Glenveagh
to grow the
business
through initial
five-year
period
In lieu of a long-term incentive plan, Executive
Directors (the Company’s founding shareholders)
are entitled to participate in the Founder Share
Scheme. If predetermined targets are met, the
Scheme will reward the Founders through an
allotment of ordinary shares or a cash equivalent.
The scheme will run over five years from 2018 to
2022. Performance will be assessed separately
over five separate Test Periods, with shares vesting
based on performance in that Test Period. The Test
Period is from 1 March to 30 June each year.
Vesting of awards is subject to a performance
condition. In order for awards to vest, for a period
of 15 or more consecutive business days during the
Test Period, the Closing Share Price must exceed
the Adjusted Issue Price1 by 12.5%. This percentage
increase is to be on a compound basis.
If the performance condition is satisfied, the
founders are entitled to convert Founder Shares
into such number of ordinary shares which, at the
Highest Average Closing Price of an ordinary share
during the Test Period, have an aggregate value
equal to the Founder Share Value.
200,000,000 Founder Shares are
held by the Company’s three
founding shareholders as follows:
John Mulcahy
Justin Bickle*
Stephen Garvey
20,000,000
90,000,000
90,000,000
*Beneficially held by Durrow
Ventures
1. The Adjusted Issue Price is defined as the IPO Offer Price (€1) as adjusted to reflect any subsequent consolidation or
subdivision of ordinary shares or any allotment of ordinary shares pursuant to a capitalisation of profits or reserves.
The Founder Share Value shall be calculated as
20% of the TSR in the relevant period, being (i) the
first time the performance condition is satisfied,
the period from Admission to the Test Period in
which the performance condition is first satisfied;
and (ii) for subsequent Test Periods, the period
from the end of the previous Test Period in respect
of which Founder Shares were last converted
or redeemed to the Test Period in which the
performance condition is next satisfied.
Retirement Benefits
The Company operates a defined contribution
pension scheme for Executive Directors. Pension
contributions are calculated on base salary only.
15% of base salary.
To attract
and retain
high calibre
individuals
and reward
sustained
contribution
Policy for Leavers
Salary and Benefits
Payments are made only in respect of annual salary excluding benefits for the relevant notice period.
The notice period for the Executive Directors is 6 months. In all cases, the notice period applies to both
the Company and the Executive.
Annual Bonus
In order for annual bonus payments to be made, Executive Directors must be employed by the
Company on the bonus payment date.
Founder Share Scheme
If one of the Founders ceases to be a Director or employee of the Company, he will retain his
Founder Shares.
Remuneration Policy for Non-Executive Directors
Non-Executive Directors (NEDs) have letters of appointment which set out their duties and responsibilities.
The appointments are initially for a three-year term but are terminable on one month’s notice.
The NEDs each receive a fee which is set by the Committee and approved by the Board on advice
from the independent professional advisors. The NEDs are paid a basic fee of €60,000 per annum with
additional fees payable to the Senior Independent Non-Executive Director of €30,000 per annum. NEDs
will receive an additional €15,000 for taking on Chairmanship of the Audit and Risk Committee and
Remuneration and Nomination Committee.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Accordingly, the NED contracts detail the following annual fees:
Annual Remuneration Report for 2017
NED
Role
Lady Barbara Judge
Senior Independent Non-Executive Director
Robert Dix
Richard Cherry
Independent Non-Executive Director and Chairman, Audit & Risk
Committee
Independent Non-Executive Director and Chairman, Remuneration
& Nomination Committee
Caleb Kramer
Non-Executive Director
Fee (€)
90,000
75,000
75,000
60,000
NEDs are not eligible to participate in any company pension plan. The Non-Executive Directors do not have
service contracts and do not participate in any bonus or share option schemes.
Other Executive Committee Members Incentive Arrangement
Members of the Executive Committee that do not sit on the Board of Directors (“Other ExCO Members”)
(Shane Scully, MD Glenveagh Living, and Michael Rice, CFO in the period under review) are remunerated in
line with the policy outlined above for Executive Directors (with the exception of the Founder Share Scheme)
by way of a base salary, an annual cash bonus as well as health insurance and pension entitlements.
Other ExCo members also participate in the Company’s LTIP. The LTIP, during the Company’s initial
development phase, grants Executives and other members of the management team options over a
number of ordinary shares in the Company.
Participants are allocated options based on a percentage of their gross salary. The number of options is
calculated based on that percentage of gross salary divided by the share price on the date of grant. LTIP
awards are granted subject to performance conditions.
Options will vest based on the achievement of Total Shareholder Return (“TSR”) targets as follows over a
three-year vesting period:
25% of the options will vest based on 6.25% compound TSR growth per annum;
-
- The remaining options vest on a straight-line basis to a maximum of 100% when 12.5% compound
TSR growth per annum is reached; and
- TSR growth performance will be assessed on a cumulative basis over the full vesting period.
The Committee plans to grant further awards in Q1 of 2019 following the release of the 2018 results. All
LTIP awards granted going forward will be subject to a 3 year vesting period from grant date. Any vesting
of awards is subject to Committee discretion that it is satisfied the Company’s underlying performance
has shown a sustained improvement in the period since the date of grant.
The following table illustrates remuneration awarded to Directors for the period from IPO (13 October
2017) to 31 December 2017:
Name
Fees/Salary (1)
Benefits (2)
Employer Pension
Contribution (3)
John Mulcahy
Justin Bickle
Stephen Garvey
Lady Barbara Judge
Robert Dix
Richard Cherry
Caleb Kramer
€68,182
€102,273
€85,127
€19,726
€16,438
€16,438
€13,151
€4,205
€5,000
€4,205
-
-
-
-
-
€5,114
€3,977
-
-
-
-
Total
€72,387
€112,387
€93,309
€19,726
€16,438
€16,438
€13,151
€321,335
€13,410
€9,091
€343,836
1. Amounts reflect Directors’ fees in respect of Non-Executive Directors and salaries in respect of Executive Directors
2. Benefits largely relate to car allowances provided to Executive Directors in accordance with their employment
contracts.
3. Only Executive Directors are eligible to receive pension contributions. Non-Executive Directors do not receive pension
contributions.
4. In addition to the above, a share-based payment expense of €47.5 million was recognised in the period in respect of
the Founder Share scheme. Further detail is included in note 14 of the consolidated financial statements.
Base Salary
The salaries of the Executive Directors for the period from IPO to 31 December 2017 are set out above.
The Committee engaged independent consultants, Mercer, to carry out a benchmarking report on the
Executives base salary levels and total remuneration packages. They selected similar sized companies
from an industry peer group as well as other similar sized Irish plcs.
When determining the appropriate levels of remuneration, the Committee also considered the changes
in scope and responsibilities of certain Executive Directors following the completion of the IPO in
October 2017.
The base salaries of Executive Directors (as set out in the table on page 72) will remain unchanged for
the 2018 financial year.
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Annual Bonus
No annual bonus was paid to Executive Directors during the period under review.
Executive Directors’ first annual bonus payments will be made in relation to performance over a 16-month
period to 31 December 2018. A threshold level of achievement in respect of agreed financial and non-
financial KPIs must be achieved before any level of bonus is payable. Targets will be set at a challenging
level and where target performance levels have been met, Executive Directors will be eligible to receive
between 50-70% of annual salary. In the event stretch performance is achieved, Executive Directors will be
awarded maximum bonus entitlement (75% to 100%). Entitlements for Executive Directors are set out below.
Name
Role
John Mulcahy
Justin Bickle
Stephen Garvey
Executive Chairman
CEO
COO
Salary
300,000
450,000
350,000
Target – Max
Annual Bonus
50 – 75%
70 - 100%
70 – 100%
Annual bonus payments for Executive Directors will be based 60% on financial KPIs and 40% on
non-financial KPIs.
Long-term Incentives – Founder Share Scheme
In lieu of a long-term incentive scheme, Executive Directors (the Company’s founding shareholders) are
entitled to participate in the Founder Share Scheme. This scheme, set out in detail on pages 68 and 69
will be in operation for 2018 with the first Test Period running from 1 March 2018 to 30 June 2018.
In designing the renumeration policy,
the objective of the Committee is to
continue to attract, retain and motivate
executive management of the
quality required to run the Company
successfully, having regard to views of
shareholders and other stakeholders.
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Board of
Directors
John Mulcahy
(Irish - Age: 68): Founder and Executive Chairman
First appointment to the Board: 2017
Experience: John Mulcahy is a chartered surveyor and has over 40
years’ experience in the Irish real estate sector. Previously, he was
a member of the board (from 2012 to 2014), and Head of Asset
Management (from 2011 to 2014), at National Asset Management
Agency and, prior to that, was chairman and CEO of JLL’s operations
in Ireland from 2002 to 2010. John was also a founding member of
the RICS Asset Valuations Standards Committee and the Property
Advisory Committee of the National Pension Reserve Fund.
Other Appointments:
- Chairman of Irish Property Unit Trust.
- Board member of TIO ICAV, and Quinta do Lago S.A.,
a Portuguese resort developer.
Justin Bickle
(British - Age: 47): Founder and CEO
First appointment to the Board: 2017
Experience: Justin Bickle has over 22 years’ senior level experience
in the private equity, legal, finance and property fields. Through
his role in Oaktree Capital’s European Private Equity team, he has
significant experience in operational real estate portfolio companies
in the UK and Europe and their activities in, among other things,
residential housebuilding, retirement housebuilding, student
accommodation and aparthotels. He is formerly a partner in the
Financial Restructuring department at US law firm Cadwalader,
Wickersham & Taft LLP and an Executive Fellow in Finance at
London Business School.
Other Appointments:
- Chairman of TIO ICAV.
- Chairman of the English National Ballet.
76
Stephen Garvey
(Irish - Age: 38): Founder and COO
First appointment to the Board: 2017
Experience: Stephen Garvey has over 20 years’ experience in
the construction and property industry. His experience includes
working with many of the large Irish property developers, including
Menolly Homes, Shelester Properties, Glenman Corporation and
McCabe Builders. In 2003, Stephen founded Bridgedale Homes Ltd,
Glenveagh’s predecessor company, which focused on constructing
residential developments in the Greater Dublin Area. In his role
as CEO of Bridgedale, he sourced and negotiated the acquisition
of development sites, secured external finance, formulated and
implemented business plans for each project and managed the
overall delivery of residential units. Since 2014, Stephen has advised
and managed on the acquisition of 2,101 units in the Irish residential
development market on behalf of TIO RLF.
Lady Barbara Judge, CBE
(British - Age: 71): Senior Independent Non-Executive Director
First appointment to the Board: 2017
Experience: Lady Barbara Judge, CBE, has over 35 years’ experience
in the financial, legal and property industries. She completed her
second term as chairman of the UK Pension Protection Fund in
2016. Lady Judge previously served as a Commissioner of the U.S.
Securities and Exchange Commission, as a director of Samuel
Montagu & Co in Hong Kong and as founder and chairman of
Private Equity Investor plc. Lady Judge has significant experience
in the real estate sector, including her previous positions on the
boards of Quintain Estates and Development plc and Richard
Ellis International (now CBRE). Lady Judge is a graduate of the
University of Pennsylvania and received a Juris Doctor degree with
honours from New York University Law School. She was appointed
Commander of the Order of the British Empire in 2010.
Other Appointments:
- Chairman of Cifas.
- Chairman LoopUp.
Committee Memberships:
- Member of the Audit and Risk Committee.
- Member of the Remuneration and Nomination Committee.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Robert Dix
(Irish - Age: 64):
Independent Non-Executive Director
First appointment to the Board: 2017
Experience: Robert was formerly a partner and head of Transaction
Services at KPMG Ireland until his retirement in 2008. He currently
operates his own firm, Sopal Limited, which advises organisations
on capital markets, corporate governance and strategic planning
issues. Robert is a graduate of Trinity College, Dublin and is a Fellow
of Chartered Accountants Ireland.
Other Appointments:
- CEO of Sopal Limited.
- Non-Executive Director and Chairman of Quinn Property Group.
- Non-Executive Director and Chairman of the Audit Committee
of Allianz plc and Dalata Hotel Group plc.
- Also holds Non-Executive Directorships at a number of other
private companies including Roadbridge Holdings Limited.
Committee Memberships:
- Chairman of the Audit and Risk Committee.
- Member of the Remuneration and Nomination Committee.
Richard Cherry
(British - Age: 56):
Independent Non-Executive Director
First appointment to the Board: 2017
Experience: Richard was formerly a Director and Chief Executive of
the Partnerships business at UK housebuilder Countryside, where
he worked for over 35 years until his retirement in September 2017.
He served on the main board for 30 years and previously held the
roles of Group New Business Director and Deputy Chairman. He
has significant experience in the real estate sector, including in the
execution of partnership projects with public authorities and housing
associations. Richard is a graduate of the University of Reading and is
a Fellow of the Royal Institution of Chartered Surveyors.
Other Appointments:
- None
Committee Memberships:
- Chairman of the Remuneration and Nomination Committee.
- Member of the Audit and Risk Committee.
Caleb Kramer
(American - Age: 48):
Non-Executive Director
First appointment to the Board: 2017
Experience: Caleb is Managing Director and Portfolio Manager
(Europe) at Oaktree Capital. Prior to joining Oaktree in 2000, Caleb
co-founded Seneca Capital Partners LLC, a private equity investment
firm. From 1994 to 1996, he was employed by Archon Capital Partners,
an investment firm. Prior to 1994, he was an associate in mergers and
acquisitions at Dillon Read and Co. Inc. and an analyst at Merrill
Lynch and Co. Inc. Caleb received a B.A. degree in Economics from
the University of Virginia.
Other Appointments:
- Managing Director and Portfolio Manager (Europe) at Oaktree
Capital Management (UK) LLP.
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Directors’
Report
The Directors present their first annual
report and audited consolidated
financial statements of Glenveagh
Properties PLC for the period ended
31 December 2017.
The Chairman’s Letter, CEO’s Review, CFO’s
Review, Corporate Governance Statement and all
other sections of the annual report and financial
statements, to which cross reference is made, are
incorporated into the Directors’ Report by reference.
- Glenveagh Homes - (Previously Bridgedale
Homes Limited) Focused on the development
of residential homes for sale principally in the
Greater Dublin Area.
- Glenveagh Living - Formed to undertake joint
Principal Activities
Glenveagh Properties PLC (“Glenveagh”) is the
ultimate parent company of the Group. The
Company was incorporated on 9 August 2017 and
completed its IPO on 13 October 2017, listing its
shares on the Irish and London Stock Exchanges.
The Company’s principal activities are the
development and building of starter, mid-size
executive and high-end homes (both houses and
apartments) in Ireland, with a principal focus on
the Greater Dublin Area, either for itself or on
behalf of third parties.
The Company is comprised of two key
business units:
ventures and partnerships to deliver housing
for the Irish State, social and affordable
housing for approved housing bodies, and
to deliver private rental units for investors
including institutional pension funds.
Results and Dividends
The Company did not pay a dividend during the
period under review. At present, the Company
is primarily seeking to achieve capital growth
for its shareholders. Accordingly, the Company
does not anticipate paying a dividend in the
foreseeable future. However, in the long-term
as the Company matures, it intends to follow a
progressive dividend policy and pay dividends
to shareholders, as and when the Directors
consider appropriate.
Business Review
The CEO’s Review on pages 4-5 and CFO’s
Review on pages 32 to 35 of the annual report set
out management’s review of the Company’s key
business milestones and highlights for the period
under review which include:
-
Successful IPO raising gross proceeds of
€550m resulting in admission to the Irish and
London Stock Exchanges
- Effective use of equity with €150 million of IPO
-
-
proceeds deployed at 31 December 2017 with
a further €134 million deployed to date in 2018
Significant landbank now accumulated with
capacity to deliver more than 4,700 homes at
31 December 2017 (increased to over 7,300 to
date in 2018)
Significant progress made since IPO in building
out the operational, commercial and corporate
infrastructure which will provide the platform to
achieve residential unit delivery targets
Glenveagh’s strategy
Following the successful IPO in October 2017, the
Company has made significant steps towards the
achieving its key strategic aims. These priorities
have been reviewed once again by the Board
following IPO and remain unchanged from those
communicated to shareholders in its Prospectus,
as follows:
- Assemble and maintain a quality landbank
capable of fulfilling the Company’s long-term
business plan;
- Continue to scale the Company’s housing
-
delivery operations consistent with its business
plan and targets;
Strengthen reputation for product and delivery
innovation, with Glenveagh Living becoming
Ireland’s residential joint venture partner of
choice; and
- Maintain consistent and disciplined focus on
returns and margins.
Principal Risks and Uncertainties
As per Section 327(1)(b) of the Companies
Act 2014 and Regulation 5(4)(c)(ii) of the
Transparency Directive (2004/109/EC)
Regulations 2007, Glenveagh is required to
describe the principal risks and uncertainties
faced by the Group. These are addressed in the
Risk Management report on pages 36 to 40.
Subsequent Events
Development land acquisition and related
transactions
The acquisition of the site known as “East
Road” referred to in Note 19 of the consolidated
financial statements completed on 12 January
2018 for c. €45m including acquisition costs.
The following land acquisitions were announced
on 29 January 2018 resulting in an aggregate
spend of in excess of €25 million:
- The Group has signed contracts to acquire
a development site at Citywest Road, Dublin
24 which has the capacity to deliver 195
residential units, subject to planning. The site
is strategically located in close proximity to
the Fortunestown Luas stop and to Citywest
Shopping Centre.
- The Group also announced the signing of an
unconditional contract to acquire a major site
at Hollystown, Dublin 15. This 162-acre site is
occupied by Hollystown Golf Club who will
continue to operate on a business as usual
basis, with 19 acres on the site zoned for
residential development and the remainder
zoned as open space. It is estimated that
this site will deliver 200 family homes on the
residential development land between 2019
and 2023, subject to planning.
The Group has also entered into a Strategic
Relationship Agreement (“SRA”) with Sigma
Asset Management Limited (“Sigma”) whereby
the parties have agreed to cooperate
in identifying and developing mixed-use
development opportunities in Ireland on an
exclusive basis. In parallel, the Group has
entered into an Acquisition and Profit Share
Agreement (“APSA”) agreement with Target
Investment Opportunities ICAV, under which
Glenveagh Living will acquire the residential
development rights to land adjoining The Square
Shopping Centre Tallaght, Dublin 24 and a
c. 5-acre site to the rear of Gateway Retail Park,
Galway. In addition, a 9.8-acre site to the rear
of Bray Retail Park, Bray, County Wicklow will be
acquired by Glenveagh Homes. The three sites
combined have the capacity to deliver more
than 800 units. The aggregate consideration
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payable by Glenveagh is €16m (including fees
and stamp duty).
On 13 March 2018, the Group announced that it
had entered into a contract to acquire four sites
in the GDA: two in Donabate Co. Dublin; one
at Dunboyne Co. Meath; and one at Stamullen
Co. Meath, which are capable of delivering
1,435 starter houses and apartments, subject
to planning. The transaction involves cash
consideration of €90 million (including fees
and stamp duty) and is scheduled to close in
Q2 2018.
Debt financing
The Group has executed an agreement to enter
into a three year €250m revolving credit facility
with a syndicate of domestic and international
banks. This facility will be used to finance the
working capital requirements of the Group over
that period.
Corporate Governance
Glenveagh employs a robust corporate
governance framework and promotes the highest
standards of ethics throughout the organisation.
For more information on how Glenveagh achieves
these standards, please see the Corporate
Governance Statement on pages 48 to 55.
Code of Conduct
Throughout the organisation, the Board of
Glenveagh promotes high ethical standards, in
relation to all of its stakeholders i.e. investors,
customers, suppliers and the environment within
which its business operates. Everyone in the
organisation is expected to encourage and
adhere to these standards.
Corporate Social Responsibility
Glenveagh’s vision is to build homes and create
communities that make life better for our
customers. This is achieved through Glenveagh’s
community and people-focus, strong ethical
principles and other CSR initiatives. Glenveagh’s
Board and Executive Committee are committed to
conducting business in a sustainable and socially
responsible manner. Following the successful
completion of the IPO, CSR will be a key focus for
the Board and the Company in 2018 and beyond.
Health and Safety
The construction of homes has the potential to
be dangerous and so health and safety is of
paramount importance to the Company and
to the Board. The Company operates a ‘‘Safety
Management System’’ across its business which is
managed by the Company’s Health and Safety
Officer who reports to the Construction Directors.
The Company promotes a very strong internal
culture in relation to health and safety which is
applied on a day-to-day basis by site managers
on project sites.
Accounting Records
It is the responsibility of the Directors to ensure
that accounting records, as required by Sections
281 to 285 of the Companies Act 2014, are kept
by the Company. The necessary systems and
resources have been implemented by the Directors
which include employing accounting personnel
with appropriate qualifications and experience
and providing adequate resources to the finance
department. The accounting records of the
Company are maintained at Block B, Maynooth
Business Campus, Maynooth, Co. Kildare.
Glenveagh employs a robust corporate
governance framework and promotes
the highest standards of ethics
throughout the organisation.
Share capital
Takeover Regulations
The issued share capital of the Company at
13 March 2018 consists of 667,049,000 ordinary
shares and 200,000,000 Founder Shares. Both
share classes have a nominal value of €0.001.
Holders of ordinary shares are entitled to one
vote per ordinary share at general meetings of
the Company while no voting rights are conferred
on holders of Founder Shares. Founder Shares
may be converted to ordinary shares (or an
equivalent value in cash) in the future subject to the
achievement of performance hurdles related to the
Company’s share price. Further detail is set out in
Note 24 of the consolidated financial statements.
The Group has also established a long-term
incentive plan which grants certain employees
options over ordinary shares in the Company
which vest over a 3 year period. Further detail in
relation to this plan is set out in Note 14 of the
consolidated financial statements.
The Company’s Founder Share and long-term
incentive plans contain change of control
provisions.
Founder Shares
In the event of a change of control of the
Company at any time prior to 30 June 2022 which
results in an offer to all holders of shares, if the
performance condition has been satisfied
and such offer becomes unconditional in all
respects, the Founder Shares shall convert into
such number of ordinary shares which, at such
offer price, have an aggregate value equal to his
relative proportion of 20% of the Total Shareholder
Return (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.
Long-term incentive plan
The Remuneration and Nomination Committee will
determine the extent to which unvested awards will
vest with regard to the extent that the applicable
performance condition has been satisfied up to the
date of the change of control event.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Directors’ and Secretary’s Interests in Shares
The table below sets out the interests of the Directors and Company Secretary in shares of the Company
at 31 December 2017.
Political Donations
No political contributions were made which
require disclosure under the Electoral Act, 1997.
Ordinary Shares
Founder Shares
Deferred Shares Ordinary Shares
under option
Subsidiaries
John Mulcahy
Justin Bickle
Stephen Garvey
Lady Barbara Judge
Robert Dix
Richard Cherry
Caleb Kramer*
Chloe McCarthy
500,100
350,450
4,427,450
100,000
300,000
1,000,000
-
-
20,000,000
90,000,000
90,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65,000
*Caleb Kramer is Oaktree Capital Management’s representative on the Board of Directors.
Substantial Shareholdings
As of 31 December 2017, and 13 March 2018, the company has been notified of the following interests of
3% or more in its share capital:
Shareholder
31 December 2017
13 March 2018
Ordinary Shares
held
%
Ordinary Shares
held
%
Oaktree Capital Management
110,250,000
16.53
110,250,000
16.53
1
2
3
4
5
GIC (Singapore)
FIL Investment International
Pelham Capital Mgt
Rye Bay Capital
6 Wellington Mgt Company
7
8
9
Capital Research Global Investors
UBS Securities
JP Morgan Asset Mgt
10 Morgan Stanley
63,000,000
36,286,377
29,270,000
28,332,672
27,701,672
23,965,000
23,142,844
22,135,671
18,154,791
9.44
5.44
4.39
4.25
4.15
3.59
3.47
3.32
2.72
63,000,000
41,725,378
29,270,000
26,804,847
11,461,933
23,965,000
5,617,789
22,460,640
36,460,040
9.44
6.26
4.39
4.02
1.72
3.59
0.84
3.37
5.47
Information in relation to the Company’s
subsidiaries is set out in note 22 to the financial
statements. The Company does not have any
branches outside of Ireland.
Going Concern
The Directors have assessed the financial position
of the Company in light of relevant business risks
facing the construction industry as a whole and
the Company’s strategic plan. They believe that
the Company is well placed to manage and
mitigate these risks. Thus, they have a reasonable
expectation that the Company has adequate
resources to continue in operational existence
for 12 months from the date of approval of the
financial statements.
Viability Statement
In accordance with provision C.2.2 of the UK
Corporate Governance Code issued by the FRC in
April 2016 (‘the Code’), the Directors are required
to assess the prospects of the Company, explain
the period over which they have done so and
state whether they have a reasonable expectation
that the Company will be able to continue in
operation and meet its liabilities as they fall due
over this period of assessment.
The Directors have concluded that three years
was an appropriate period for the assessment.
The three-year period was chosen having regard
to the following:
- The Group’s strategic plan is based on a
3 year horizon;
- The current “start-up” phase that the Group
is in does not lend itself to longer term
strategic forecasting and subsequently
any statement with foresight greater than
three years would have to be made with a
considerable level of estimation;
- The Group’s debt facility, which was executed
post period end (and discussed in note 29 of
the consolidated financial statements) has a
three year term; and
- The inherent short-cycle nature of the
residential market in Ireland, including the
Group’s forward sales and project pipeline,
does not lend itself to making long term
projection statements greater than three years.
It is recognised that such future assessments are
subject to a level of uncertainty that increases
with time, and therefore future outcomes cannot
be guaranteed or predicted with certainty.
The Group’s strategic plan was approved by
the Board at its meeting in January 2018 and is
based on forecasts undertaken by management
of the relevant business functions. The plan
reflects construction cost and house price
inflationary assumptions which were reviewed at
Board and management level. The risk factors
outlined in the Risk Management Report on
pages 36 to 40 were also considered in the
strategic plan process. Based on the above
assessment the Directors have a reasonable
expectation that the Group will be able to
continue in operation and meet its liabilities as
they fall due over the three year period.
Directors’ Compliance Statement
The Directors are aware of their responsibility
for securing the Company’s compliance with
its relevant obligations in accordance with
Section 225(2)(a) of the Companies Act 2014. In
accordance with Section 225 (2)(b) of the Act, the
Directors confirm that they have:
i. Drawn up a Compliance Policy Statement
setting out the Company’s policies (that are,
in the opinion of the Directors, appropriate to
the Company) in respect of the compliance by
the Company with its Relevant Obligations;
ii. Put in place appropriate arrangements or
structures that, in the opinion of the Directors,
provide reasonable assurance of compliance
in all material respects with the Company’s
Relevant Obligations; and
iii. Have conducted a review of the arrangements
or structures that the Directors have put in
place to ensure material compliance with the
Company’s Relevant Obligations during the
financial period to which this report relates.
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Glenveagh Properties PLC Annual Report and Accounts 2017
Audit Information
As far as each Director is aware, there is
no relevant audit information of which the
Company’s auditors are unaware. Each Director
has taken all the steps that they ought to have
taken as Directors in order to make themselves
aware of any relevant audit information and to
establish that the Company’s auditors are aware
of that information.
Auditor
In accordance with Section 383(2) of the
Companies Act 2014 the Company’s auditors,
KPMG, appointed on 21 August 2017, will continue
in office. A resolution authorising the Directors to
fix the auditor’s remuneration will be proposed at
the Annual General Meeting.
Annual General Meeting
The 2018 Annual General Meeting will take
place on 29 June 2018 at the Herbert Park Hotel,
Ballsbridge, Dublin 4 at 10am.
Justin Bickle
Director
Stephen Garvey
Director
13 March 2018
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Glenveagh Properties PLC Annual Report and Accounts 2017
D
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Glenveagh Properties PLC Annual Report and Accounts 2017
Statement of directors’ responsibilities in respect
of the annual report and the financial statements 90
Independent auditor’s report to the
members of Glenveagh Properties PLC 92
Consolidated statement of profit or
loss and other comprehensive income 98
Consolidated balance sheet 99
Consolidated statement of changes in equity 100
Consolidated statement of cash flows 101
Notes to the consolidated financial statements 102
Company balance sheet 130
Company statement of changes in equity 131
Notes to the Company financial statements 132
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Glenveagh Properties PLC Financial Statements
Statement of Directors’ responsibilities in respect of the annual report
and the financial statements
Statement of Directors’ responsibilities in respect of the annual report
and the financial statements (continued)
The Directors are responsible for preparing
the annual report and the Group and Company
financial statements, in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
Group and Company financial statements for each
financial period. Under that law, the Directors
are required to prepare the Group financial
statements in accordance with IFRS as adopted by
the European Union and applicable law including
Article 4 of the IAS Regulation. The Directors
have elected to prepare the Company financial
statements in accordance with FRS 101 Reduced
Disclosure Framework as applied in accordance
with the provisions of Companies Act 2014.
Under company law the Directors must not
approve the Group and Company financial
statements unless they are satisfied that they give
a true and fair view of the assets, liabilities and
financial position of the Group and Company
and of the Group’s profit or loss for that period.
In preparing each of the Group and Company
financial statements, the Directors are required to:
−
−
select suitable accounting policies
and then apply them consistently;
− make judgements and estimates
that are reasonable and prudent;
state whether they have been prepared
in accordance with IFRS as adopted by
the EU, and as regards the Company,
as applied in accordance with the
Companies Act 2014; and
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and the Company will continue in business.
−
The Directors are also required by the
Transparency (Directive 2004/109/EC) Regulations
2007 and the Transparency Rules of the Central
Bank of Ireland to include a management report
containing a fair review of the business and a
description of the principal risks and uncertainties
facing the Group.
The Directors are responsible for keeping
adequate accounting records which disclose
with reasonable accuracy at any time the assets,
liabilities, financial position and profit or loss of
the Company and which enable them to ensure
that the financial statements of the Company
comply with the provision of the Companies Act
2014. The Directors are also responsible for taking
all reasonable steps to ensure such records are
kept by its subsidiaries which enable them to
ensure that the financial statements of the Group
comply with the provisions of the Companies Act
2014 including Article 4 of the IAS Regulation.
They are also responsible for safeguarding the
assets of the Company and the Group, and hence
for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for preparing
a directors’ report that complies with the
requirements of the Companies Act 2014.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Group’s and
Company’s website www.glenveagh.ie. Legislation
in the Republic of Ireland concerning the
preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
−
−
The Directors’ report contained in the
annual report includes a fair review of
the development and performance of the
business and the position of the Group and
Company, together with a description of
the principal risks and uncertainties that
they face; and
The annual report and financial statements,
taken as a whole, provides the information
necessary to assess the Group’s performance,
business model and strategy and is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Responsibility statement as required by the
Transparency Directive and UK Corporate
Governance Code
Each of the Directors, whose names and functions
are listed on pages 76 to 79 of this annual
report, confirm that, to the best of each person’s
knowledge and belief:
−
The Group financial statements, prepared
in accordance with IFRS as adopted by the
European Union and the Company financial
statements prepared in accordance with
FRS 101 Reduced Disclosure Framework as
applied in accordance with the provisions of
the Companies Act 2014, give a true and fair
view of the assets, liabilities, and financial
position of the Group and Company at 31
December 2017 and of the loss of the Group
for the period then ended;
On behalf of the board
Justin Bickle
Director
Stephen Garvey
Director
13 March 2018
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Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Independent auditor’s report to the members of Glenveagh Properties PLC
1 Opinion: our opinion is unmodified
We have audited the financial statements of
Glenveagh Properties PLC (“the Group”) for the
period from incorporation on 9 August 2017 to 31
December 2017 which comprise the Group Income
Statement and Statement of Comprehensive
Income, the Group and Parent Balance Sheets,
the Group and Parent Statements of Changes in
Equity, the Group Cash Flow Statement and the
related notes, including the accounting policies
in note 8. The financial reporting framework that
has been applied in their preparation is Irish Law
and International Financial Reporting Standards
(IFRS) as adopted by the European Union and,
as regards the Company financial statements,
as applied in accordance with the provisions of
the Companies Act 2014 and FRS 101 Reduced
Disclosure Framework.
In our opinion:
−
−
−
−
−
the Group financial statements give a
true and fair view of the assets, liabilities
and financial position of the Group as at
31 December 2017 and of its loss for the
period then ended;
the Company statement of financial
position gives a true and fair view of the
assets, liabilities and financial position of
the Company as at 31 December 2017;
the Group financial statements have been
properly prepared in accordance with IFRS
as adopted by the EU;
the Company financial statements have
been properly prepared in accordance with
FRS 101 Reduced Disclosure Framework issued
by the UK’s Financial Reporting Council as
applied in accordance with the provisions
of the Companies Act 2014; and
the Group financial statements and
Company financial statements have been
properly prepared in accordance with the
requirements of the Companies Act 2014 and,
as regards the Group financial statements,
Article 4 of the IAS Regulation.
Basis for opinion
− We conducted our audit in accordance
with International Standards on Auditing
(Ireland) (“ISAs (Ireland)”) and applicable
law. Our responsibilities under those
standards are further described in the
Auditor’s Responsibilities section of our
report. We believe that the audit evidence
we have obtained is a sufficient and
appropriate basis for our opinion. Our
audit opinion is consistent with our report
to the audit committee.
− We were appointed as auditor by the
directors on 21 August 2017. The period
of total uninterrupted engagement is the
period ended 31 December 2017. We have
fulfilled our ethical responsibilities under,
and we remained independent of the Group
in accordance with, ethical requirements
applicable in Ireland, including the Ethical
Standard issued by the Irish Auditing and
Accounting Supervisory Authority (IAASA)
as applied to listed public interest entities.
No non-audit services prohibited by that
standard were provided.
2 Key audit matters: our assessment
of risks of material misstatement
Key audit matters are those matters that, in our
professional judgment, were of most significance
in the audit of the financial statements and
include the most significant assessed risks of
material misstatement (whether or not due to
fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of
our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key
audit matters, in decreasing order of audit
significance, were as follows:
Independent auditor’s report to the members of Glenveagh Properties PLC
(continued)
Carrying value of Inventory €228 million
Refer to page 106 (accounting policy) and page 116 (financial disclosures)
The key audit matter
Inventory, relating to work-in-progress on sites
under development and land yet to be developed,
represent a significant asset balance of the Group.
How the matter was addressed in our audit
Our audit procedures included, amongst others:
− Obtaining and documenting our
Work-in-progress is held at the lower of cost
and net realisable value. Net realisable value is
determined based on estimates of total build
costs (including future costs to complete) and
future selling prices. The forecasting of such
amounts is inherently judgmental.
For each development project, site wide residential
development costs are allocated between units
built in the current period and units to be built in
future years, which requires further judgement.
understanding of the process to determine
the net realisable value of the Group’s
work-in-progress and testing the design and
implementation of the relevant controls therein.
For all new land acquisitions, inspecting
purchase contracts to agree the costs of
acquisition including related purchase costs.
Agreeing amounts paid to corroborative
documentary evidence so as to confirm
the correct allocation of costs to each
development.
Testing a sample of forecast costs to fixed
price contracts and comparing forecast
residential unit sales prices to comparable
market data.
Evaluating the sensitivity of the development
margin to a change in sales prices and costs
and challenging key assumptions in the
models, where we considered it appropriate
to do so.
Considering the adequacy of the Group’s
disclosures regarding the carrying value of
inventory.
−
−
−
−
−
Overall, we found the key assumptions used in
the calculations of net realisable value and the
related disclosures in respect of work-in-progress
to be appropriate.
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Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Independent auditor’s report to the members of Glenveagh Properties PLC
(continued)
Independent auditor’s report to the members of Glenveagh Properties PLC
(continued)
Valuation of share-based payment expense relating to Founder Shares €47.5 million
Refer to page 105 (accounting policy) and pages 111 to 112 (financial statement discloures)
3 Our application of materiality and
an overview of the scope of our audit
5 We have nothing to report on the other
information in the annual report
The key audit matter
The Company incurred a non-cash charge
of €47.5 million on IPO representing the fair
value of Founder Shares granted on that date.
How the matter was addressed in our audit
Our audit procedures included, amongst others:
− Obtaining and documenting our
The accounting and measurement of the Founder
Shares award is complex; it’s fair value depends
on a number of significant assumptions and
the recognition of the award in the financial
statements is based on the terms and conditions
of the award.
understanding of the process to account
for and value the Founder Shares and
testing the associated design and
implementation of the relevant controls.
Reading the relevant terms and conditions
of the Founder Shares award as per
the Company’s Constitution to obtain an
understanding as to how the terms
were reflected in the measurement of
the estimated fair value of the award.
Reading the report of the Company’s
valuation expert and involving our
in-house valuation expert to assess
and challenge the significant valuation
assumptions therein.
Considering the adequacy of the
Company’s disclosures in the financial
statements and in particular the
disclosure of the key judgements.
−
−
−
We found the key assumptions used in the
calculation of the fair value of the Founder Shares
award to be appropriate and the disclosures in
respect of the award to be adequate.
The materiality for the Group financial statements
as a whole was set at €3.3million. This has
been calculated with reference to a benchmark
of total assets which we consider to be one of
the principal considerations for members of the
Group in assessing the financial performance of
the Group as the principal focus of the Group
in the financial period has been the deployment
of capital raised. Materiality represents
approximately 0.5% of this benchmark. We report
to the Audit and Risk Committee all corrected and
uncorrected misstatements we identified through
our audit with a value in excess of €0.2million.
The directors are responsible for the other
information presented in the annual report
together with the financial statements. The other
information comprises the information included in
the directors’ report, CEO’s Review, CFO’s Review,
Risk Management Report, Corporate Governance
Statement, Audit and Risk Committee Report and
Report of the Remuneration and Nomination
Committee. Our opinion on the financial
statements does not cover the other information
and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
Materiality for the parent company financial
statements as a whole was set at €3.3 million.
This was determined with reference to a
benchmark of total assets but restricted to
the absolute amount of group materiality. We
reported to the Audit and Risk Committee any
corrected or uncorrected identified misstatements
exceeding €0.2 million.
We subjected all of the Group’s reporting
components to audits for group reporting
purposes. The work on all components was
performed by the Group audit team.
4 We have nothing to report on going concern
We are required to report to you if:
−
−
we have anything material to add or
draw attention to in relation to the directors’
statement in note 7 to the financial statements
on the use of the going concern basis of
accounting with no material uncertainties that
may cast significant doubt over the Group
and Company’s use of that basis for a period
of at least twelve months from the date of
approval of the financial statements; or
if the related statement under the Listing
Rules set out on page 85 is materially
inconsistent with our audit knowledge.
We have nothing to report in these respects.
Our responsibility is to read the other information
and, in doing so, consider whether, based on our
financial statements audit work, the information
therein is materially misstated or inconsistent with
the financial statements or our audit knowledge.
Based solely on that work we have not identified
material misstatements in the other information.
Based solely on our work on the other information;
−
−
−
we have not identified material
misstatements in the directors’ report;
in our opinion, the information given in
the directors’ report is consistent with the
financial statements;
in our opinion, the directors’ report has been
prepared in accordance with the Companies
Act 2014.
Disclosures of principal risks and
longer-term viability
Based on the knowledge we acquired during
our financial statements audit, we have nothing
material to add or draw attention to in relation to:
the Principal Risks disclosures describing
−
these risks and explaining how they are
being managed and mitigated;
the directors’ confirmation within the Risk
Management Report on page 36 that they
have carried out a robust assessment of the
principal risks facing the Group, including
those that would threaten its business
model, future performance, solvency and
liquidity; and
−
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Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Independent auditor’s report to the members of Glenveagh Properties PLC
(continued)
Independent auditor’s report to the members of Glenveagh Properties PLC
(continued)
−
the directors’ explanation in the Risk
Management Report of how they have
assessed the prospects of the Group,
over what period they have done so
and why they considered that period
to be appropriate, and their statement
as to whether they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the period
of their assessment, including any related
disclosures drawing attention to any
necessary qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items
and report to you in the following circumstances:
−
−
−
Fair, balanced and understandable:
if we have identified material inconsistencies
between the knowledge we acquired during
our financial statements audit and the
directors’ statement that they consider that
the annual report and financial statements
taken as a whole is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy;
Report of the Audit Committee: if the section
of the annual report describing the work of
the Audit Committee does not appropriately
address matters communicated by us to the
Audit Committee;
Statement of compliance with UK Corporate
Governance Code: if the directors’ statement
does not properly disclose a departure from
provisions of the UK Corporate Governance
Code specified by the Listing Rules for
our review.
We have nothing to report in these respects.
In addition as required by the Companies Act
2014, we report, in relation to information given in
the Corporate Governance Statement on pages
48 to 55, that:
−
based on the work undertaken for our
audit, in our opinion, the description of
the main features of internal control
and risk management systems in relation
to the financial reporting process and
information relating to voting rights and
other matters required by the European
Communities (Takeover Bids (Directive
2004/EC) Regulations 2016 and specified
for our consideration, is consistent with the
financial statements and has been prepared
in accordance with the Act; and
based on our knowledge and understanding
of the company and its environment
obtained in the course of our audit,
we have not identified any material
misstatements in that information.
−
We also report that, based on work undertaken
for our audit, other information required
by the Act is contained in the Corporate
Governance Statement.
6 Our opinions on other matters prescribed by
the Companies Act 2014 are unmodified
We have obtained all the information and
explanations which we consider necessary
for the purpose of our audit.
In our opinion, the accounting records of the
Company were sufficient to permit the financial
statements to be readily and properly audited
and the Company’s statement of financial position
is in agreement with the accounting records.
7 We have nothing to report on other matters on
which we are required to report by exception
The Companies Act 2014 requires us to report to
you if, in our opinion, the disclosures of directors’
remuneration and transactions required by
sections 305 to 312 of the Act are not made.
The Listing Rules of the Irish Stock Exchange and
the UK Listing Authority require us to review:
−
−
the directors’ statement, set out on page 85,
in relation to going concern and longer-term
viability;
the part of the Corporate Governance
Statement on pages 48 to 55 relating to the
Company’s compliance with the provisions of
the UK Corporate Governance Code and the
Irish Corporate Governance Annex specified
for our review; and
certain elements of disclosures in the report
to shareholders by the Board of Directors’
remuneration committee.
−
8 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set
out on page 90, the directors are responsible
for: the preparation of the financial statements
including being satisfied that they give a true
and fair view; such internal control as they
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error;
assessing the Group and parent Company’s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern;
and using the going concern basis of accounting
unless they either intend to liquidate the Group or
the parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and to issue
our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but
does not guarantee that an audit conducted
in accordance with ISAs (Ireland) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud, other
irregularities or error and are considered
material if, individually or in aggregate, they
could reasonably be expected to influence the
economic decisions of users taken on the basis of
the financial statements. The risk of not detecting
a material misstatement resulting from fraud or
other irregularities is higher than for one resulting
from error, as they may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control and may involve any
area of law and regulation not just those directly
affecting the financial statements.
A fuller description of our responsibilities
is provided on IAASA’s website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-
458b-9b8f-a98202dc9c3a/Description_of_
auditors_responsiblities_for_audit.pdf
9 The purpose of our audit work and
to whom we owe our responsibilities
Our report is made solely to the Company’s
members, as a body, in accordance with section
391 of the Companies Act 2014. Our audit work
has been undertaken so that we might state to
the Company’s members those matters we are
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company
and the Company’s members, as a body, for our
audit work, for our report, or for the opinions we
have formed.
13 March 2018
Ruaidhri Gibbons
for and on behalf of
KPMG
Chartered Accountants,
Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2, Ireland
96
97
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Consolidated statement of profit or loss and other comprehensive income
For the period from incorporation on 9 August 2017 to 31 December 2017
Consolidated balance sheet
as at 31 December 2017
Revenue
Cost of sales
Gross profit
Before
exceptional
items
€’000
Note
Exceptional
items
€’000
10
1,425
(901)
524
-
-
-
Total
€’000
1,425
(901)
524
Administrative expenses
Founder Shares: Share-based
payment expense
11
(4,187)
(556)
(4,743)
11,14
-
(47,509)
(47,509)
Operating loss
Finance expense
Finance income
Loss before tax
Income tax credit
Loss after tax attributable to the
owners of the Company
Other comprehensive income
Total comprehensive loss for the period
attributable of the owners of the Company
Basic loss per share (cents)
Diluted loss per share (cents)
12
16
15
15
(3,663)
(69)
16
(3,716)
397
(48,065)
-
-
(48,065)
-
(51,728)
(69)
16
(51,781)
397
(3,319)
(48,065)
(51,384)
-
-
-
(51,384)
(13.73)
(13.73)
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Restricted cash
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Retained earnings
Share-based payment reserve
Total equity
Liabilities
Non-current liabilities
Trade and other payables
Finance lease liability
Current liabilities
Trade and other payables
Finance lease liability
Total liabilities
Total liabilities and equity
Note
31 December 2017
€’000
17
16
21
18
19
25
24
20
26
20
26
1,476
75
151
1,500
3,202
228,089
69,700
351,796
649,585
652,787
867
666,381
(74,112)
47,548
640,684
1,903
170
2,073
9,946
84
10,030
12,103
652,787
98
99
Justin Bickle
Director
Stephen Garvey
Director
13 March 2018
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Consolidated statement of changes in equity
For the period from incorporation on 9 August 2017 to 31 December 2017
Consolidated statement of cash flows
For the period from incorporation on 9 August 2017 to 31 December 2017
Share Capital
Ordinary
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Share-based
payment
reserve
€’000
Retained
earnings
€’000
Total
equity
€’000
-
-
(51,384)
(51,384)
-
-
(51,384)
(51,384)
-
552,571
(22,728)
(22,728)
-
-
-
-
-
4,427
110,250
47,548
Cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation and amortisation
Finance costs
Finance income
Equity-settled share-based payment expense
Tax credit
Changes in:
Inventories
Trade and other receivables
Trade and other payables
Cash used in operating activities
Interest paid
Tax paid
-
-
-
-
551,819
-
-
4,423
110,139
-
-
-
-
-
-
-
-
-
-
47,548
Balance as at 9 August 2017
Total comprehensive loss for the period
Loss for the period
Other comprehensive income
Transactions with owners of the Company
Issue of ordinary shares for cash
Share issue costs
-
-
-
-
752
-
-
-
-
-
-
-
Re-designation as Founder Shares
(200)
200
Issue of ordinary shares
related to business combinations
Issue of ordinary shares in
consideration for inventories
Equity-settled share-based payments
Balance as at 31 December 2017
4
111
-
667
667
-
-
-
200
666,381
47,548
(22,728) 692,068
Net cash used in operating activities
200
666,381
47,548
(74,112) 640,684
Cash flows from investing activities
Acquisition of plant, property and equipment
Acquisition of intangible assets
Cash acquired on acquisition
Transfer to restricted cash
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue costs paid
Payment of finance lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents in the period
Cash and cash equivalents at 9 August 2017
Cash and cash equivalents at 31 December 2017
100
101
Note
14
16
23
21
2017
€’000
(51,384)
110
69
(16)
47,548
(397)
(4,070)
(116,902)
(69,295)
11,612
(178,655)
(68)
(211)
(178,934)
(309)
(38)
3,229
(1,500)
1,382
552,571
(22,728)
(495)
529,348
351,796
-
351,796
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
1 Reporting entity
Glenveagh Properties PLC (“the Company)
is domiciled in the Republic of Ireland. The
Company’s registered office is 25-28 North Wall
Quay, Dublin 1. These consolidated financial
statements comprise the Company and its
subsidiaries (together referred to as “the Group”)
and cover the period from incorporation on
9 August 2017 to 31 December 2017. The Group’s
principal activities are the construction and
sale of residential houses, the provision
of construction services and the provision
of asset advisory services.
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 those involving estimations, which
are detailed below.
(a) Carrying value of work in progress
and estimation of costs to complete
The Group holds inventories stated at the lower
of cost and net realisable value. Such inventories
include land, 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.
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.
(b) Accounting for share-based payments
The Group operates two equity settled share-
based payment arrangements as set out in
Note 14. The grant date valuation of instruments
awarded to founders and employees is a
significant judgement and the calculations involve
a level of complexity and estimation. The Group
engages an independent valuation expert to
calculate the grant date fair value of instruments
granted and further detail in relation to the
methodology and assumptions used in
the valuation is set out in Note 14.
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 23 Business combinations; and
Note 25 Financial instruments and
financial risk management.
6 New standards and interpretations
A number of new standards, amendments to
standards and interpretations are effective
for financial periods beginning on various
dates after 1 January 2018, and have not
been applied in preparing these financial
statements. The Group does not plan to
adopt these standards early; instead it intends
to apply them from their effective dates as
determined by their dates of EU endorsement.
The following standards and amendments
are not yet endorsed by the EU:
−
−
−
−
−
−
−
IFRS 14 Regulatory Deferral Accounts. Sale or
contribution of assets between an investor and
its associate or joint venture (September 2014)
(Amendments to IFRS 10 and IAS 28).
Classification and Measurement of
Share-based Payment Transactions
(June 2016) (Amendments to IFRS 2).
Annual Improvements to IFRS Standards
2014-2016 Cycle (December 2016).
Foreign Currency Transactions and
Advance Consideration (December 2016)
(IFRIC Interpretation 22).
Transfers of Investment Property (December
2016) (Amendments to IAS 40). IFRIC 23
Uncertainty over Income Tax Treatments
(June 2017).
Amendments to IAS 28: Long-term
interests in Associates and Joint Ventures.
IFRS 17 Insurance Contracts (2017).
From an initial consideration of upcoming
endorsed standards and amendments, the
Directors have determined that the following in
particular may have an effect on the consolidated
financial statements of the Group. The potential
impact of these standards is under review.
However, due to the short duration of this financial
reporting period, the Group do not believe that
there will be a material impact on the results of
the operations and financial position presented.
IFRS 15 Revenue from contracts with customers
IFRS 15 establishes the principles that an entity
shall apply to report useful information to users
of financial statements about the nature, amount,
timing and uncertainty of revenue and cashflows
arising from a contract with a customer. The
core principle of the standard is that an entity
shall recognise revenue to depict the transfer of
promised goods or services to customers in an
amount that reflects the consideration to which
the entity expects to be entitled in exchange
for those goods or services. Application of the
standard is mandatory for annual reporting
periods starting from 1 January 2018 onward and
has been endorsed by the EU. Earlier application
is permitted. The standard replaces IAS 18
Revenue and IAS 11 Construction Contracts and
related interpretations.
102
103
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
6 New standards and interpretations (continued)
IFRS 9 Financial instruments
IFRS 9 Financial instruments replaces the guidance
in IAS 39 and applies to periods beginning on
or after 1 January 2018 and has been endorsed
by the EU. It includes requirements on the
classification and measurement of financial assets
and liabilities; it also includes an expected credit
losses model that replaces the current incurred
loss impairment model.
IFRS 16 Leases
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 statement
of financial position 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.
7 Going concern
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
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) 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
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.
8 Significant accounting policies (continued)
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.
8.4 Taxation
Income tax on the profit or loss for the period
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 period and any adjustment to the tax payable
or receivable in respect of a previous period. The
amount of current tax payable or receivable is the
best estimate of the tax amount expected to be
paid or received that reflects uncertainty related
to income taxes, if any. It is measured using tax
rates enacted or substantively enacted at the
reporting date. Current tax also includes any tax
arising from dividends.
Current tax assets and liabilities are offset only if
certain criteria are met.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of
assets and liabilities for financial reporting
purposes and the amounts used for taxation
purposes. Deferred tax is 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.
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 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 Group
statement of profit or loss for the period. 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.
104
105
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
8 Significant accounting policies (continued)
8.8 Intangible assets – computer software
8 Significant accounting policies (continued)
8.6 Exceptional items (continued)
In the current financial period, the Founder Share
share-based payment expense (€47.5 million)
(see Note 14) and costs incurred associated with
the Company’s IPO (€0.6 million) are considered
exceptional items. 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 period.
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:
Plant and machinery
−
− Motor vehicles
−
−
Fixtures and fittings
Computer Equipment
14%
20%
15%
33%
The assets’ residual values, carrying values
and useful lives are reviewed on an annual basis
and adjusted if appropriate at each balance
sheet date.
Where an impairment is identified, the
recoverable amount of the asset is identified
and an impairment loss, where appropriate, is
recognised in the income statement.
Gains and losses on disposals are determined
by comparing the proceeds with the carrying
amount and are recognised within administration
expenses in the income statement. Subsequent
expenditure is capitalised only if it is probable that
the future economic benefits associated with the
expenditure will flow to the Group.
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 balance sheet date.
8.9 Inventory
Inventory comprises property in the course of
development, completed units and land.
Property in the course of development and
completed units 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 income statement over the period
to settlement.
A provision is made, where appropriate,
to reduce the value of inventories and work
in progress to their net realisable value.
8.10 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.
8.10 Trade and other receivables (continued)
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.
8.11 Cash and cash equivalents
Cash and cash equivalents comprises 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.
8.12 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.
8.13 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.
106
107
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.
8.14 Pensions
The Group operates a defined contribution scheme.
The assets of the scheme are held separately from
those of the Group in a separate fund. Obligations
for contributions to defined contribution plans are
expensed as the related service is provided.
8.15 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.
8.16 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.
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
8 Significant accounting policies (continued)
9 Segmental information
8.19 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.
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 operates and is managed as a single
operating segment engaged primarily in the
construction of residential houses and apartments
for resale. Internal reporting to the Chief
Operating Decision Maker (“CODM”) reflects this
position. 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.
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.
(ii) Non-derivative financial assets
– measurement loans and receivables
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.
(iii) Non-derivative financial liabilities
– 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. 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.
(iv) 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.
8 Significant accounting policies (continued)
8.17 Finance income and costs
The Group’s finance income and finance
costs include:
−
−
Interest income;
Interest expense;
Interest income or expense is recognised
using the effective interest method.
8.18 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.
(i) 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 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 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.
108
109
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
10 Revenue
Construction services
Asset advisory and management services
2017
€’000
1,278
147
1,425
13 Employment costs
The average number of persons employed by the Group (including Executive Directors) during the period
was 104 (Executive Committee: 5; Construction: 64; and Other 35).
The aggregate payroll costs of these employees for the period were:
Revenue earned by the Group in the period is in respect of certain contractual services as disclosed in
Note 27 Related party transactions.
11 Exceptional items
Administration Expenses (i)
Founder Shares share-based payment expense (Note 14)
2017
€’000
556
47,509
48,065
Wages and salaries
Social welfare costs
Pension costs - defined contribution
Share-based payment expense (Note 14)
(i) Costs of €0.6 million relating to the Company’s IPO listing fees and other related expenses have been
classified as exceptional items in accordance with the Group’s accounting policy set out at Note 8.6.
Before
exceptional
items
€’000
Exceptional
items
€’000
2,660
280
81
39
-
-
-
47,509
Total
€’000
2,660
280
81
47,548
3,060
47,509
50,569
12 Statutory and other information
Amortisation of intangible assets
Depreciation of property, plant and equipment*
Operating lease rentals
Employment costs (Note 13)
*Includes €0.015 million capitalised in inventory at 31 December 2017
Auditor’s remuneration
Audit of Group, Company and subsidiary financial statements
Other assurance services
Tax advisory services
Tax compliance services
Directors’ remuneration
Salaries, fees and other emoluments
Pension contributions
Founder Shares share-based payment expense (Note 14)
2017
€’000
50
75
189
50,569
2017
€’000
100
728
27
41
896
2017
€’000
335
9
47,509
47,853
€1.0 million of employment costs were capitalised in inventory at period end.
14 Share-based payment arrangements
(a) Description
At 31 December 2017, the Group had the following share-based payment arrangements:
(i) Founder Shares
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 €0.001 each for cash at par
value in the period, which were subsequently converted to Founder Shares in advance of the Company’s
IPO. 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 24.
(ii) Long term incentive plan (“LTIP”)
On 21 November 2017, the Remuneration and Nomination Committee approved the grant of 1,588,500
options to certain members of the management team (which do not include Executive Directors) in
accordance with the terms of the Company’s LTIP. These options will vest on completion of a three-year
service period from grant date subject to the achievement of certain performance condition hurdles
based on the Company’s TSR across the vesting period. 25% of the award will vest once the three-year
annualised TSR reaches 6.25% per annum with the remaining options vesting on a pro rata basis up to
100% if TSR of 12.5% is achieved. The entire grant of options remain outstanding at 31 December 2017.
110
111
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
14 Share-based payment arrangements (continued)
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 period. Ordinary shares
potentially issuable from share-based payment arrangements are anti-dilutive due to the loss in the
period 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 2017 is 201,588,500.
Loss for the period attributable to ordinary shareholders (€’000)
Weighted average number of shares for the period
Basic and diluted loss per share (cents)
Reconciliation of weighted average number of shares
Share issued on incorporation
Effect of shares issued on 11 August 2017
Effect of shares re-designated as Founder Shares
Effect of shares issued related to business combinations
Effect of IPO issue
Effect of shares issued as consideration for inventories
See Note 24 for further information in relation to significant share issuances.
2017
(51,384)
374,284,264
(13.73)
2017
No. of shares
1
197,223,207
(188,888,889)
2,428,701
303,036,869
60,484,375
374,284,264
The terms and conditions of both arrangements are set out in detail in the Remuneration and
Nomination Committee Report and are summarised below:
Scheme
Number of
instruments
Vesting conditions
Expiry date
Founder Shares
200,000,000
Compound rate of return of 12.5% on the
Company’s share price in each testing period
30 June 2022
LTIP
1,588,500
3 years’ service from grant date and market
condition based on the Company’s TSR over
the 3-year vesting period
13 October 2024
(b) Measurement of fair values
The fair value of grants under both arrangements was measured using a Monte Carlo simulation.
Service and non-market conditions attached to the arrangements were not taken into account when
measuring fair value. The inputs used in measuring fair value at grant date were as follows:
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk free rate
Founder Shares
€0.24
€1.00
N/A
34.12%
5 years
0%
LTIP
€0.64
€1.157
€0.001
36.63%
3 years
0%
-0.023% - +0.18%
-0.088%
Given the Company did not have a 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.
(c) Expense recognised in profit or loss
The expense recognised in profit or loss relating to the Founder Shares was €47.5 million, and is presented
as an exceptional item, with a corresponding increase in the share-based payment reserve in equity. This
represents the full grant date fair value of the Founder Shares which is required to be recognised at grant
date in accordance with the terms and conditions of the award, which do not contain a required term of
service. There will be no further impact on profit or loss in future reporting periods.
A charge of €0.04 million was recognised in the period in respect of options granted under the LTIP.
112
113
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
16 Income tax
17 Property, plant and equipment
2017
€’000
(246)
(151)
(397)
2017
€’000
(51,781)
(6,473)
5
5,938
248
(115)
(397)
Cost
At 9 August 2017
Acquisitions through business
combinations (Note 23)
Additions
Disposals
At 31 December 2017
Accumulated depreciation
At 9 August 2017
Charge for the period
Disposals
At 31 December 2017
Net book value
At 31 December 2017
Fixtures &
fittings
€’000
Motor
vehicles
€’000
Plant &
machinery
€’000
Computer
equipment
€’000
Total
€’000
-
284
49
(2)
331
-
(17)
2
(15)
316
-
113
-
-
113
-
(8)
-
(8)
-
819
229
-
1,048
-
(42)
-
(42)
-
26
31
-
57
-
(8)
-
(8)
-
1,242
309
(2)
1,549
-
(75)
2
(73)
105
1,006
49
1,476
The depreciation charge for the period includes €0.015 million which was capitalised in inventory at
31 December 2017.
The Group leases plant and machinery under finance lease arrangements. As at 31 December 2017,
the net book value of leased equipment was €0.3 million.
Current tax credit for the period
Deferred tax credit for the period
Total income tax credit
The tax assessed for the period differs from the standard rate of tax in Ireland for the period.
The differences are explained below.
Loss before tax for the period
Tax credit at standard Irish income tax rate of 12.5%
Tax effect of:
Income taxed/expenses deductible at the higher rate of corporation tax
Non-deductible expenses - Founder Share expense
Non-deductible expenses - other
Other adjustments
Total income tax credit
Movement in deferred tax balances
Tax losses carried forward
Balance on
incorporation
at 9 August
2017 €’000
-
-
Recognised in
profit or loss
€’000
151
151
Balance at
31 December
2017
€’000
151
151
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.
114
115
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
18 Inventory
19 Trade and other receivables
Land held for development
Development expenditure
31 December
2017
€’000
216,964
11,125
228,089
The Group acquired a significant bank of development land in two transactions which were conditional
on the successful completion of the Company’s IPO on 13 October 2017. The sites acquired were referred
to as the “Conditionally Acquired Sites” in the Company’s IPO prospectus.
(i) TIO RLF Acquisition Agreement
The Company, Targeted Investment Opportunities ICAV (acting solely in respect of its sub fund, TIO
RLF), OCM Luxembourg EPF III QIF Holdings Sarl (OCM) and Glenveagh Contracting Limited (previously
known as Bridgedale Contracting Limited) entered into an agreement whereby the Company acquired
either land, or the right to develop, at thirteen sites located in the Greater Dublin Area. Ordinary
shares to the value of €110.25 million were issued to OCM as consideration (excluding stamp duty and
acquisition costs) for the land acquired.
In accordance with the TIO RLF Acquisition Agreement, the Group purchased the development rights
to construct and sell residential units in the Marina Village, Greystones development. The Group
made a payment of €21 million in full and final settlement of future payment obligations under these
development rights. This amount is accordingly recognised in inventory at the period end, as a cost of
the Marina Village, Greystones development.
(ii) Project Kells
Glenveagh Homes Limited (formerly known as Bridgedale Homes Limited) acquired a further 11 sites
(also predominantly in the Greater Dublin Area) which were referred to as Project Kells in the Company’s
IPO prospectus for cash consideration of €41.6 million.
(iii) Braddington Developments Limited
The Group acquired a development site at Ballyboughal, Co. Dublin for €4.2 million. The details of this
asset acquisition are set out in Note 23.
The Group has continued to both build its landbank and progress construction on active sites since
the IPO which is reflected in the period end balance of €228 million. The directors have considered the
carrying value of inventory at 31 December 2017 and, in particular, due to current market conditions and
the proximity of period end to the acquisition date of all sites, are satisfied that all inventory is held at the
lower of cost and net realisable value.
Trade receivables from related party
Prepayments and other receivables
VAT recoverable
Construction bonds
Deposits for sites
Payment in respect of site acquisition and associated fees*
Income tax receivable
31 December
2017
€’000
1,192
599
16,912
1,139
4,953
44,579
326
69,700
*This amount relates to payment of the purchase price, stamp duty and acquisition costs for a two
hectare site in Dublin’s North Docklands known as “East Road”. An unconditional 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 trade and other receivables is approximate to their fair value.
20 Trade and other payables
Trade payables
Trade payables due to related party (Note 27)
Payroll and other taxes
Inventory accruals
Other accruals
Non-current
Current
31 December
2017
€’000
3,036
1,434
922
4,057
2,400
11,849
1,903
9,946
11,849
116
117
The carrying value of all trade and other payables is approximate to their fair value.
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
21 Restricted cash
23 Business combinations
The restricted cash balance relates to a sum of monies held in escrow until the completion of certain
infrastructural works relating to the Group’s residential development at Balbriggan, Co. Dublin on which
construction has recently commenced.
22 Subsidiaries
During the period, the Company acquired 100% of the share capital of the following legal entities in
connection with (and conditional on) the Company’s IPO:
Bridgedale Homes Limited (subsequently renamed Glenveagh Homes Limited) (GHL)
Bridgedale Contracting Limited (subsequently renamed Glenveagh Contracting Limited) (GCL)
−
−
− Greystones Devco Limited (GDL)
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 2017 are as follows:
The table below summarises the fair value of consideration transferred and assets and liabilities acquired
in respect of each acquisition at 13 October 2017.
Company
Principal activity
%
Reg office
Glenveagh Properties (Holdings) Limited
Holding company
100%
Glenveagh Homes Limited*
Property development
100%
Glenveagh Contracting Limited**
Property development
100%
Glenveagh Living Limited
Property development
100%
Greystones Devco Limited
Property development
100%
Braddington Developments Limited
Dormant company
Feathermist Limited
Dormant company
100%
100%
*Formerly Bridgedale Homes Limited
**Formerly Bridgedale Contracting Limited
1 25-28 North Wall Quay, Dublin 1, DO1H1041
2 Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7
1
2
2
1
1
2
2
Property, plant and equipment
Intangible assets
Equity accounted investee
Trade and other receivables
Cash and cash equivalents
Amounts owed from related party
Trade and other payables
Income tax payable
Amounts owed to related party
Finance lease
Fair value of net assets acquired
Consideration
Cash consideration
Fair value of shares issued
Total consideration
GHL
€’000
1,062
11
1,847
2,650
2,559
-
GCL
€’000
GDL
€’000
38
76
-
684
70
34
142
-
-
1,191
600
-
(3,180)
(565)
(1,879)
(124)
(33)
(671)
4,121
-
4,121
4,121
-
-
(31)
306
-
306
306
(7)
-
(47)
-
-
-
-
118
119
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
23 Business combinations (continued)
GHL & GCL
Consideration of €4.1 million was transferred in respect of the acquisition of GHL while €0.3 million was
transferred in respect of GCL. Both amounts were satisfied by way of issue of shares in the Company
at the IPO offer price of €1 per share, representing fair value at acquisition date. The purpose of the
acquisitions was to acquire the construction operations, expertise and experience of the Bridgedale
business based at Maynooth Business Campus, Maynooth, Co. Kildare.
For the period ended 31 December 2017, GHL contributed revenue of €0.9 million and a loss after tax of
€3.2 million while GCL contributed revenue of €0.1 million and a profit after tax of €0.1 million.
GDL
The Company acquired one ordinary share in GDL (being 100% of its ordinary share capital) for €1 being
the fair value of the net assets at acquisition date as shown above. This entity (being the development
entity for Marina Village, Greystones) was acquired in connection with the acquisition of the rights and
obligations of the development opportunity at Marina Village, Greystones Co. Wicklow. For the period
ended 31 December 2017, GDL contributed revenue of €0.4 million and a profit after tax of €0.1 million.
If the acquisitions of GHL; GCL; and GDL had occurred on 9 August 2017, management estimate that
the aggregate increase in consolidated revenue would have been €3.3 million, while the consolidated
loss before tax would have decreased by €0.9 million.
The disclosures provided above in relation to the results of the acquired entities since acquisition and
the estimated impact on the Group’s revenue and loss, if the acquisitions had taken place at the
beginning of the period are provided purely to comply with the disclosure requirements of IFRS 3 Business
Combinations. It should be noted that trading activity in the period represented the completion of certain
trading arrangements with a related party which are described in Note 27. These arrangements ceased
as of 31 December 2017 and from 1 January 2018, as disclosed in the IPO prospectus, the Group’s business
model has significantly changed whereby all the Group’s residential construction activity, and related
sales, are for its benefit and not on behalf of another entity. The results disclosed should not therefore,
be taken as an indicator of future financial performance of the acquired entities.
Braddington Developments Limited & Feathermist Limited
Included on GHL’s balance sheet at acquisition was €1.8 million in respect of an equity accounted
investment (joint venture) in Feathermist Limited. In order to acquire a development site at Ballyboughal
Co. Dublin, GHL acquired 100% of the ordinary share capital of Braddington Developments Limited
(being the other shareholder in Feathermist Limited) conditional on IPO, for cash consideration of €2.6
million. This was accounted for as an asset acquisition and the Ballyboughal site (valued at €4.2 million
on acquisition) is included in Group inventory at the balance sheet date.
24 Share capital and share premium
(a) Authorised share capital
Ordinary shares of €0.001 each
Founder Shares of €0.001 each
Deferred shares of €0.001 each
Number of
shares
1,000,000,000
200,000,000
200,000,000
1,400,000,000
€’000
1,000
200
200
1,400
(b) Issued share capital and share premium at 31 December 2017
Ordinary shares of €0.001 each
Founder Shares of €0.001 each
(c) Reconciliation of shares in issue
In issue at incorporation on 9 August 2017
Issued for cash
Re-designed as Founder Shares
IPO issue
Issued in business combination (Note 23)
Issued as consideration for inventories (Note 18)
Number of
shares
Share capital
€’000
Share premium
€’000
667,049,000
200,000,000
867,049,000
667
200
867
666,381
-
666,381
Ordinary
shares
Founder
Shares
1
200,000,999
(200,00,000)
552,371,000
4,427,000
110,250,000
-
-
200,000,000
-
-
-
In issue at 31 December 2017
667,049,000
200,000,000
120
121
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
24 Share capital and share premium (continued)
25 Financial instruments and financial risk management
(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.
The Group’s financial assets and financial liabilities are set out below. While all financial assets and
liabilities are carried at amortised cost, the carrying amounts of the Group’s financial assets and financial
liabilities approximate to fair value. Trade receivables (which are receivable from a related party) 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).
Founder Shares
Financial instruments: financial assets
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 (being the increase in the market
capitalisation of the Company plus dividends or distributions in the relevant period) 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. The testing periods run from 1 March to 30 June each
year, with the first period being 1 March 2018 to 30 June 2018. The Founder Shares will be converted into
ordinary shares in the Company or (at the discretion of the Company) be paid out in cash in an amount
equal to 20% of the Company’s TSR.
(e) Significant share issuances in the period
(i) 200,000,000 ordinary shares were issued to the Founders of the Company at par value (€0.001) on
15 August 2017 and were subsequently re-designated as Founder Shares on 17 August 2017.
(ii) The Company issued 550,000,000 ordinary shares for cash consideration of €1 per share by way of
its initial public offering on 13 October 2017.
(iii) 2,250,000 ordinary shares were issued to certain Directors of the Company for cash consideration
of €1 per share in connection with the IPO. Further details of Directors’ interests are included in the
Director’s Report.
(iv) 121,000 shares were issued to individuals connected to Glenveagh Homes Limited and Glenveagh
Contracting Limited (as disclosed in the IPO prospectus) on 13 October 2017 at €1 per share.
(v)
4,427,000 ordinary shares were issued as consideration for the Company’s acquisition of Glenveagh
Homes Limited (formerly Bridgedale Homes Limited) and Glenveagh Contracting Limited (formerly
Bridgedale Contracting Limited) on 13 October 2017.
(vi) 110,250,000 ordinary shares were issued as consideration for the acquisition of development land
acquired in connection with the Company’s IPO. Further information in relation to these transactions
is included in Note 18.
Trade receivables from related party
Other receivables
Cash and cash equivalents
Restricted cash (non-current)
Total financial assets
Cash and cash equivalents are short-term deposits held at fixed rates.
Financial instruments: financial liabilities
Trade payables
Amounts due to related party
Finance lease obligation
Total financial liabilities
31 December 2017
€’000
1,192
107
351,796
1,500
354,595
31 December 2017
€’000
3,036
1,434
254
4,724
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 counterparty will default on their contractual obligations resulting in a loss
to the Group.
122
123
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
25 Financial instruments and financial risk management (continued)
26 Finance lease liabilities
Finance lease liabilities are payable as follows:
Current portion
Non-current portion
Less than one year
Between one and two years
More than two years
2017
€’000
84
170
254
Future minimum
lease payments
€’000
Interest
€’000
Present value of
minimum lease
payments
€’000
94
94
99
287
10
10
13
33
84
84
86
254
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.
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.
31 December 2017
Carrying
amount
€’000
Contractual
cash flows
€’000
Less than
1 year
€’000
1 year
to 2 years
€’000
More than
2 years
€’000
254
3,036
1,434
4,724
287
3,036
1,434
94
3,036
1,434
4,757
4,564
94
-
-
94
99
-
-
99
Finance lease obligations
Trade payables
Amounts due to related party
Credit risk
The Group’s exposure to credit risk encompasses the financial assets being: trade and other receivables,
cash and cash equivalents and restricted cash. Credit risk is managed by regularly monitoring the credit
quality of customers and financial institutions.
There has been no impairment of trade receivables in the period presented. The credit risk on cash and
cash equivalents is limited because counterparties are leading international banks with long-term BBB-
credit-ratings assigned by international credit agencies. The maximum amount of credit exposure is the
financial assets in this note.
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.
124
125
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
27 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 period
was the following:
Short-term employee benefits
Post-employment benefits
LTIP share-based payment expense
Founder Shares share-based payment expense
(ii) IPO related transactions
2017
€’000
456
27
10
47,509
48,002
The following transactions took place in connection with the Company’s IPO and meet the definition
of related party transactions in accordance with IAS 24 Related Party Transactions. All of the below
transactions were disclosed in the Company’s IPO prospectus and were conditional on the successful
completion of the IPO.
Acquisition of Glenveagh Homes Limited and Glenveagh Contracting Limited
As outlined in Note 23, the Company acquired 100% of the issued share capital of Glenveagh Homes
Limited (formerly known as Bridgedale Homes Limited) (GHL) and Glenveagh Contracting Limited
(formerly known as Bridgedale Contracting Limited) (GCL) on 13 October 2017. The sole shareholder of
these companies was Stephen Garvey who is a Director of the Company. This acquisition was completed
in accordance with the terms of a share exchange agreement under which Stephen Garvey received
4,121,000 and 306,000 shares in the Company for his interest in GHL and GCL respectively. Based on
the IPO offer price of €1 per share, the total value of the shares transferred equalled the fair value of the
shares in the acquired entities at the date of acquisition.
TIO Acquisition Agreement
As outlined in Note 18, the Company entered into an agreement with Targeted Investment Opportunities
ICAV (TIO) (an entity in which Justin Bickle and John Mulcahy are Directors) to acquire 13 development
sites in the Greater Dublin Area as well as TIO’s interest in the development opportunity at Marina
Village, Greystones, Co. Wicklow. In consideration for the assets acquired, 110,250,000 shares in the
Company with an aggregate fair value of €110.25 million (based on the IPO offer price of €1 per share)
were issued to TIO’s sole shareholder (OCM Luxembourg EPF III QIF Holdings Sarl (OCM)). This equated
to the fair value of the assets acquired based on independent valuations carried out on each of the
assets under the terms of the RCIS Global Standards 2017 (“Red Book”) as at 31 August 2017.
27 Related party transactions (continued)
(ii) IPO related transactions (continued)
Acquisition of Greystones Devco Limited
On 13 October 2017, GHL acquired 100% of the issued share capital of Greystones Devco Limited (being
1 ordinary share) (GDL) for €1 from OCM which equalled the fair value of the net assets acquired at
that date.
Acquisition of Braddington Developments Limited
In advance of the IPO, GHL held 35.6% of the issued share capital of Feathermist Limited (Feathermist), an
entity which owned the site at Ballyboughal, Co. Dublin. Braddington Developments Limited (Braddington)
held the other 64.4% of Feathermist share capital. Stephen Garvey is a Director of Feathermist.
On 13 October 2017, GHL acquired 100% of the issued share capital of Braddington thereby indirectly
acquiring the residual 64.4% of the issued share capital of Feathermist for total cash consideration of
€2,587,704. This amount represented Braddington’s interest in the asset acquired (land at Ballyboughal,
Co. Dublin) based on an independent “Red Book” valuation carried out at 31 August 2017.
(iii) Post IPO transactions
As disclosed in the IPO prospectus, the Group continued to trade with TIO until period end in order to
complete certain arrangements that were in progress at the time of the IPO. As a result, the following
transactions arose in the period:
− GHL continued to construct residential homes at Cois Glaisín, Johnstown, Navan Co. Meath, Miltown
Meadows, Ashbourne, Co. Meath and Holsteiner Park, Clonee Co. Meath on behalf of TIO RLF (a
sub fund of TIO) in the period. Revenue of €891,837 was earned in respect of these services in the
period and the balance outstanding at 31 December 2017 was €254,119.
− GCL continued to act as asset advisor to TIO RLF in the period. This role involved GCL providing
management and advisory services. Revenue of €147,009 was recognised in the period in respect of
these services. There was no balance due to GCL at period end from TIO RLF.
− GDL provided construction services to TIO RLF in relation to the Marina Village development at
−
Greystones Co. Wicklow. Revenue of €386,581 was recognised in respect of these services. An
amount of €928,236 was outstanding from TIO RLF at 31 December 2017 (which includes amounts
owing in respect of expenses incurred which were re-charged to TIO RLF at nil margin and therefore
not accounted for as revenue in the period).
As part of the TIO Acquisition Agreement noted above, certain homes on some of the acquired
sites (being Marina Village, Greystones, Co. Wicklow; Holsteiner Park, Clonee, Co. Meath and Cois
Glaisín, Navan, Co. Meath) were retained by TIO. The agreement required the Company to purchase
any of these units that remained unsold at the end of the period from TIO at an agreed sales price.
A liability for €1,434,000 was recognised at 31 December 2017 in respect of this obligation with a
corresponding increase in inventory.
126
127
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the consolidated financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
28 Commitments and contingent liabilities
30 Loss of the Parent Company
The parent company of the Group is Glenveagh Properties PLC. In accordance with section 304 of the
Companies Act 2014, the Company is availing of the exemption from presenting its individual statement
of profit or loss and other comprehensive income to the Annual General Meeting and from filing it at
the Companies Registration Office. The Company’s loss after tax for the period ended 31 December
2017, determined in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
is €47.8 million.
31 Approved financial statements
The Board of Directors approved the financial statements on 13 March 2018.
On 22 December 2018, the Company announced that it had entered into an unconditional contract to
acquire a development site at Millennium Park Naas, Co. Kildare. As at 31 December 2017, this transaction
was subject to completion with a deposit of €2.1 million, paid at that date. Other than this transaction
and the transaction noted in Note 19, the Company had no other commitments or contingent liabilities at
31 December 2017.
29 Subsequent events
Development land acquisition and related transactions
The acquisition of the site known as “East Road” referred to in Note 19 completed on 12 January 2018 for
c. €45 million including acquisition costs. The acquisition of the site at Millennium Park, Naas, Co. Kildare
(noted in Note 28) closed on 29 January 2018.
The following land acquisitions were announced on 29 January 2018 resulting in an aggregate spend of
in excess of €25 million:
−
−
The Group has signed contracts to acquire a development site at Citywest Road, Dublin 24 which
has the capacity to deliver 195 residential units, subject to planning. The site is strategically located
in close proximity to the Fortunestown Luas stop and to Citywest Shopping Centre.
The Group also announced the signing of an unconditional contract to acquire a major site at
Hollystown, Dublin 15. This 162-acre site is occupied by Hollystown Golf Club who will continue to
operate on a business as usual basis, with 19 acres on the site zoned for residential development
and the remainder zoned as open space. It is estimated that this site will deliver 200 family homes
on the residential development land between 2019 and 2023, subject to planning.
On 13 March 2018, the Group announced that it had entered into a contract to acquire four sites in the
GDA: two in Donabate Co. Dublin; one at Dunboyne Co. Meath; and one at Stamullen Co. Meath, which
are capable of delivering 1,435 starter homes and apartments, subject to planning. The transaction involves
cash consideration of €90 million (including fees and stamp duty) and is scheduled to close in Q2 2018.
The Group has also entered into a Strategic Relationship Agreement (“SRA”) with Sigma Retail Partners
(“Sigma”) whereby the parties have agreed to cooperate in identifying and developing mixed-use
development opportunities in Ireland on an exclusive basis. In parallel, the Group has entered into an
Acquisition and Profit Share Agreement (“APSA”) with TIO, under which Glenveagh Living will acquire
the residential development rights to land adjoining The Square Shopping Centre Tallaght, Dublin 24
and a c. 5-acre site to the rear of Gateway Retail Park, Galway. In addition, a 9.8-acre site to the rear
of Bray Retail Park, Bray, County Wicklow will be acquired by Glenveagh Homes. The three sites
combined have the capacity to deliver more than 800 units. The aggregate consideration payable
by Glenveagh is c. €16 million (including acquisition costs).
Debt financing
The Group has executed an agreement to enter into a three-year revolving credit facility with a syndicate
of domestic and international banks for a total of €250 million. This facility will be used to finance the
working capital requirements of the Group over that period.
128
129
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Company balance sheet
as at 31 December 2017
Company statement of changes in equity
For the period from incorporation on 9 August 2017 to 31 December 2017
Assets
Non-current assets
Investments in subsidiaries
Current assets
Trade and other receivables
Amounts owed by subsidiaries
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Retained earnings
Share-based payment reserve
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total liabilities and equity
Note
31 December 2017
€’000
Share Capital
Ordinary
shares
€’000
Founder
Shares
€’000
Share
premium
€’000
Share-based
payment
reserve
€’000
Retained
earnings
€’000
Total
equity
€’000
Balance as at 9 August 2017
Total comprehensive loss for the period
Loss for the period
Other comprehensive income
Transactions with owners of the Company
Issue of ordinary shares for cash
Share issue costs
-
-
-
-
752
-
-
-
-
-
-
-
Re-designation as Founder Shares
(200)
200
Issue of ordinary shares
related to business combinations
Issue of ordinary shares in
consideration for inventories
Equity-settled share-based payments
Balance as at 31 December 2017
4
111
-
667
667
-
-
-
-
551,819
-
-
4,423
110,139
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(47,831)
(47,831)
-
-
(47,831)
(47,831)
-
552,571
(22,728)
(22,728)
-
-
-
-
-
4,427
110,250
47,548
-
47,548
200 666,381
47,548 (22,728) 692,068
200 666,381
47,548 (70,559) 644,237
3
4
7
6
4,064
4,064
8,752
568,005
63,806
640,563
644,627
867
666,381
(70,559)
47,548
644,237
390
390
644,627
Justin Bickle
Director
Stephen Garvey
Director
13 March 2018
130
131
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the Company financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
Notes to the Company financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
1 Basis of preparation
3 Investments in subsidiaries
The financial statements have been prepared on a going concern basis under the historical cost
convention in accordance with the Companies Act 2014 and Generally Accepted Accounting Practice in
the Republic of Ireland (Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note
2 describes the principal accounting policies under FRS 101, which have been applied. The Company has
applied the exemptions available under FRS 101 in respect of the following disclosures:
−
−
−
−
−
−
−
Statement of Cash Flows
Disclosures in respect of transactions with wholly owned subsidiaries
Certain requirements of IAS 1 Presentation of Financial Statements
Disclosures required by IFRS 7 Financial Instrument Disclosures
Disclosures required by IFRS 13 Fair Value Measurement; and
The effects of new but not yet effective IFRSs
Disclosures in respect of capital management
As noted in Note 30 of the consolidated financial statements, the Company has also availed of the
exemption from presenting the individual statement of profit or loss and other comprehensive income. The
Company’s loss for the period from incorporation on 9 August 2017 to 31 December 2017 was €47.8 million.
2 Significant accounting policies
Significant accounting policies specifically applicable to these individual Company financial statements
and which are not included within the accounting policies for the consolidated financial statements are
detailed below.
(a) Investments in subsidiaries
Investments in subsidiaries are accounted for in these individual Company financial statements on the
basis of the direct equity interest, rather than on the basis of the reported results and net assets of
investees. Investments in subsidiaries are carried at cost less impairment.
The capital contributions arising from share-based payment charges represents the Company’s
granting rights over its equity instruments to employees of the Company’s subsidiaries. This results in a
corresponding increase in investment in subsidiary.
(b) Intra-group guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of
companies within the Group, the Company considers these to be insurance arrangements and accounts
for them as such. The Company treats the guarantee contract as a contingent liability until such time as it
becomes probable that it will be required to make a payment under the guarantee.
Investments in subsidiaries
Accumulated cost of share-based payments in respect of subsidiaries
31 December
2017
€’000
4,025
39
4,064
Details of subsidiary undertakings are given in Note 22 of the consolidated financial statements.
4 Trade and other receivables
VAT receivable
Prepayments and other receivables
5 Amounts due from subsidiaries
Amounts due from subsidiaries
31 December
2017
€’000
8,500
252
8,752
31 December
2017
€’000
568,005
568,005
Amounts owed by subsidiaries are non-interest bearing and are repayable on demand
132
133
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Notes to the Company financial statements
For the period from incorporation on 9 August 2017 to 31 December 2017
6 Trade and other payables
Trade payables
Accruals
Payroll and other taxes
31 December
2017
€’000
127
208
55
390
7 Share capital and share premium
For further information on share capital and share premium, refer to Note 24 of the consolidated financial
statements.
8 Financial instruments
The carrying value of the Company’s financial assets and liabilities are a reasonable approximation of
their fair value.
Relevant disclosures on Group financial instruments and risk management are given in Note 25 of the
consolidated financial statements.
The Company has considered triggers for impairment, including market capitalisation and determined
there was no trigger.
9 Share-based payments
For information in relation to share-based payment arrangements impacting the Company, refer to
Note 14 of the consolidated financial statements.
10 Related party disclosures
See Note 27 of the consolidated financial statements for information in relation to related party
transactions.
(i) Remuneration of key management
Key management of the Company is defined as the Directors of the Company. The compensation of key
management personnel is set out in the Remuneration and Nomination Committee report.
Company Information
Directors
Registrars
Bankers
Executive Directors
John Mulcahy
Justin Bickle
Stephen Garvey
Non-Executive Directors
Lady Barbara Judge, CBE
Robert Dix
Richard Cherry
Caleb Kramer
Company Secretary
Chloe McCarthy
Registered Office
Glenveagh Properties PLC
25-28 North Wall Quay
Dublin 1
D01 H104
Ireland
Allied Irish Bank, plc
Bankcentre
Ballsbridge
Dublin 4
Barclays Bank Ireland plc
2 Park Place
Hatch Street
Dublin 2
HSBC Bank plc
One Grand Canal Square
Grand Canal Harbour
Dublin 2
Website
www.glenveagh.ie
Stockbrokers
Davy Group
Davy House
49 Dawson Street
Dublin 2
Ireland
Computershare Investor
Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
D18 Y2X6
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St. Stephen’s Green
Dublin 2
Solicitor
A&L Goodbody
North Wall Quay
Dublin 1
D01 H104
Kane Tuohy
The Malt House North
Grand Canal Quay
Dublin 2
D02 R239
Byrne Wallace
88 Harcourt Street
Dublin 2
D02 DK18
134
135
Glenveagh Properties PLC Annual Report and Accounts 2017Glenveagh Properties PLC Financial Statements
Glenveagh Properties PLC
25-28 North Wall Quay
Dublin 1
DO1 H104
Ireland
E: enquiries@glenveagh.ie
Block B, Maynooth Business Campus
Maynooth, Co. Kildare
W23 W5X7
Ireland
T: +353 (0)1 610 6546
glenveagh.ie